EXTON, Pa., Jan. 25, 2017 /PRNewswire/ -- First Resource Bank (OTCQX: FRSB) announced fourth quarter and full year financial results through December 31, 2016. Net income for the year ended December 31, 2016 was $1,281,233, as compared to $1,185,769 for the prior year.
Highlights for the year ended December 31, 2016 included:
-- Achieved record net income, 8% higher than the prior year.
-- Net income available to common shareholders grew 12% over the prior
year.
-- Total interest income grew 16% over the prior year.
-- Deposits grew 22%, to end the year at a record high, $202.7 million.
-- Loans outstanding grew 12%, to end the year at a record high, $197.8
million.
-- Total assets grew 16%, to end the year at $240.9 million.
-- Asset quality improved significantly, with nonperforming assets to total
assets declining from 1.17% at December 31, 2015 to 0.63% at December
31, 2016.
-- Redeemed the remaining 25% of the Bank's preferred stock issued to the
Small Business Lending Fund.
-- Issued a 5% stock dividend.
Glenn B. Marshall, President & CEO, stated, "2016 was a tremendous year for First Resource Bank. We are seeing the positive results of the investments made over the last few years in the Bank's future including hiring quality staff and expanding the branch system. The record balance sheet growth experienced in 2016 has built a recurring revenue stream that will continue to benefit the Bank in the future."
Net income for the quarter ended December 31, 2016 was $390,990, which compares to $332,009 for the previous quarter and $252,344 for the fourth quarter of the prior year. After accounting for preferred stock dividends, net income available to common shareholders for the quarter ended December 31, 2016 was $390,990. This compares to net income available to common shareholders of $332,009 for the quarter ended September 30, 2016 and $244,297 for the quarter ended December 31, 2015. Preferred stock dividends were eliminated in March 2016 with the redemption of all preferred stock outstanding.
Net income for the year ended December 31, 2016 was $1,281,233, an 8% increase as compared to the prior year. This increase in net income is due to 14% higher net interest income in 2016 as compared to 2015, partially offset by lower SBA loan sale gains and higher operating expenses as compared to the prior year. Gains on sales of SBA loans totaled $55 thousand in 2016 as compared to $389 thousand in 2015. Marshall noted, "Gains on SBA loans can be unpredictable and we are incredibly proud that the Bank's annual net income rose 8% in 2016 despite this decline in SBA loan sales." Net income available to common shareholders increased 12% as compared to the prior year, increasing from $1,139,598 for the year ended December 31, 2015 to $1,278,656 for the year ended December 31, 2016.
Net interest income was $2,050,560 for the quarter ended December 31, 2016 as compared to $1,929,513 for the previous quarter, an improvement of 6%. The net interest margin increased 2 basis points from 3.69% for the quarter ended September 30, 2016 to 3.71% for the quarter ended December 31, 2016. The overall yield on interest earning assets remained unchanged at 4.69%. The total cost of interest bearing liabilities declined 3 basis points during the fourth quarter. The deposit cost of funds decreased 2 basis points during the fourth quarter, to 0.94%.
Net interest income for the year ended December 31, 2016 was $7,663,971, as compared to $6,715,443 for the year ended December 31, 2015, an improvement of 14%. The net interest margin for the year ended December 31, 2016 was 3.78% as compared to 3.80% for the prior year. This margin compression is attributed to $4 million in subordinated debt that was issued in September and October of 2015 which had a full year impact in 2016. Loan yields increased to 5.06% in 2016, as compared to 4.98% in the prior year, while the deposit cost of funds declined from 0.97% in 2015 to 0.95% in 2016.
Non-interest income for the quarter ended December 31, 2016 was $139,274, as compared to $77,946 for the previous quarter and $75,825 for the fourth quarter of the prior year. There were $55 thousand in gains on sales of SBA loans recognized during the fourth quarter of 2016, as compared to no gains in the prior quarter or the fourth quarter of 2015.
Non-interest income for the year ended December 31, 2016 was $370,897 as compared to $702,904 for the prior year. Gains on sale of SBA loans were $55 thousand during 2016 and $389 thousand during 2015.
Non-interest expense increased $49 thousand, or 3%, in the three months ended December 31, 2016 as compared to the prior quarter. The increase was primarily due to growth in salaries and benefits expense, professional fees and other expense, partially offset by a decrease in advertising expenses.
Non-interest expense increased $669,399, or 13%, in the year ended December 31, 2016 as compared to the prior year. This increase was due to growth in salaries and benefits expense, higher occupancy, data processing, software, training and deposit expenses, primarily related to the expansion into the West Chester branch beginning in April 2015, partially offset by lower professional fees, advertising expense, supplies expense and other real estate owned expenses.
Deposits grew $18.9 million, or 10%, from $183.8 million at September 30, 2016 to $202.7 million at December 31, 2016. During the fourth quarter, non-interest bearing deposits increased $1.5 million, or 9%, from $17.3 million at September 30, 2016 to $18.8 million at December 31, 2016. Interest-bearing checking balances increased $1.6 million, or 24%, from $6.5 million at September 30, 2016 to $8.1 million at December 31, 2016. Money market deposits grew $17.3 million, or 23%, from $74.7 million at September 30, 2016 to $92.0 million at December 31, 2016. Certificates of deposit decreased $1.6 million, or 2%, from $85.3 million at September 30, 2016 to $83.7 million at December 31, 2016.
During 2016, total deposits increased $36.7 million, or 22%, from $166.0 million at December 31, 2015 to $202.7 million at December 31, 2016, with the majority of that growth in money market accounts. During 2016, non-interest bearing deposits grew 33%, interest checking deposits grew 27%, money market deposits grew 52% and certificates of deposit declined 1.4%.
The loan portfolio increased $8.8 million, or 5%, during the fourth quarter from $189.0 million at September 30, 2016 to $197.8 million at December 31, 2016. All loan categories, except for consumer, contributed to the growth during the quarter.
During 2016, the loan portfolio grew $21.7 million, or 12%, from $176.1 million at December 31, 2015 to $197.8 million at December 31, 2016, with the majority of that growth in commercial business and commercial real estate loans.
The following table illustrates the composition of the loan portfolio:
Dec. 31, Dec. 31,
2016 2015
---- ----
Commercial real estate $130,284,708 $115,857,098
Commercial construction 17,024,921 16,703,701
Commercial business 26,435,709 18,620,360
Consumer 24,093,510 24,921,308
---------- ----------
Total loans $197,838,848 $176,102,467
============ ============
The allowance for loan losses to total loans was 0.80% at December 31, 2016 as compared to 0.82% at December 31, 2015 and 0.79% at September 30, 2016. Non-performing assets, which include non-performing loans of $1.5 million and other real estate owned of $54 thousand, totaled $1.5 million at December 31, 2016, a 44% decrease as compared to the prior quarter. Non-performing assets to total assets decreased from 1.21% at September 30, 2016 to 0.63% at December 31, 2016. This decrease at December 31, 2016 was due to one credit relationship that had $1.2 million over 90 days past due at September 30, 2016 pending sale of a property that closed on October 5, 2016 and those loans were then brought current.
During the year ended December 31, 2016, total stockholder's equity increased $64 thousand as net income available to common shareholders of $1.3 million was offset by the redemption of $1.3 million in preferred stock in March of 2016. Total stockholder's equity increased 2% from $17.3 million at September 30, 2016 to $17.6 million at December 31, 2016, primarily due to net income generated.
During the year ended December 31, 2016, total assets grew $33 million, or 16%. This growth was the result of $21.7 million in loan growth and $9.4 million in investment securities growth, funded by a $36.7 million increase in deposits, partially offset by a $4 million decrease in borrowings. Total assets increased 9% from $222 million at September 30, 2016 to $241 million at December 31, 2016 supported by strong deposit growth during the fourth quarter.
Selected Financial Data:
Balance Sheets (unaudited)
December 31, December 31,
2016 2015
---- ----
Cash and due from banks $3,210,601 $1,254,982
Investments 28,959,596 19,543,548
Loans 197,838,848 176,102,467
Allowance for loan losses (1,579,068) (1,450,836)
Premises & equipment 5,955,748 6,223,326
Other assets 6,530,305 6,378,550
--------- ---------
Total assets $240,916,030 $208,052,037
============ ============
Non-interest bearing deposits $18,849,933 $14,200,995
Interest-bearing checking 8,106,745 6,392,765
Money market 91,971,538 60,453,093
Time deposits 83,726,935 84,936,708
---------- ----------
Total deposits 202,655,151 165,983,561
----------- -----------
Short term borrowings - 10,177,000
Long term borrowings 15,607,500 9,409,500
Subordinated debt 3,969,108 3,960,615
Other liabilities 1,065,532 966,129
--------- -------
Total liabilities 223,297,291 190,496,805
----------- -----------
Preferred stock - 1,271,000
Common stock 2,100,299 1,977,328
Surplus 12,136,088 11,484,125
Accumulated other
comprehensive income (loss) (73,849) 32,207
Retained earnings 3,456,201 2,790,572
--------- ---------
Total stockholders' equity 17,618,739 17,555,232
---------- ----------
Total Liabilities & $240,916,030 $208,052,037
Stockholders' Equity
Performance Statistics
(unaudited)
Qtr Ended Qtr Ended Qtr Ended Qtr Ended Qtr Ended
Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31,
2016 2016 2016 2016 2015
---- ---- ---- ---- ----
Net interest margin 3.71% 3.69% 3.86% 3.85% 3.68%
Nonperforming loans/ 0.73% 1.39% 1.28% 1.71% 1.31%
Total loans
Nonperforming assets/ 0.63% 1.21% 1.16% 1.57% 1.17%
Total assets
Allowance for loan losses/ 0.80% 0.79% 0.77% 0.79% 0.82%
Total loans
Average loans/Average 83.9% 85.2% 88.5% 87.7% 85.1%
assets
Non-interest expenses*/ 2.61% 2.67% 2.80% 2.99% 2.69%
Average assets
Earnings per share - basic $0.19 $0.16 $0.15 $0.12 $0.12
and diluted**
Book value per share** $8.39 $8.30 $8.13 $7.98 $7.84
Total shares outstanding 2,100,299 2,082,721 2,080,360 1,979,234 1,977,328
* Annualized
** Per share data has been adjusted retroactively for all periods presented to reflect the 5% stock dividend paid in 2016.
Income Statements (unaudited)
Qtr. Ended Qtr. Ended Qtr. Ended Qtr. Ended Qtr. Ended
Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31,
2016 2016 2016 2016 2015
---- ---- ---- ---- ----
INTEREST INCOME
Loans, including fees $2,497,685 $2,378,314 $2,288,773 $2,215,684 $2,149,344
Securities 78,237 61,203 61,264 64,186 60,049
Other 11,994 11,099 132 1,108 5,571
------ ------ --- ----- -----
Total interest income 2,587,916 2,450,616 2,350,169 2,280,978 2,214,964
--------- --------- --------- --------- ---------
INTEREST EXPENSE
Deposits 412,849 396,349 362,111 354,627 365,375
Borrowings 56,665 56,907 52,197 43,343 33,950
Subordinated debt 67,842 67,847 67,486 67,485 62,429
------ ------ ------ ------ ------
Total interest expense 537,356 521,103 481,794 465,455 461,754
------- ------- ------- ------- -------
Net interest income 2,050,560 1,929,513 1,868,375 1,815,523 1,753,210
--------- --------- --------- --------- ---------
Provision for loan losses 91,061 43,737 64,125 24,861 110,446
------ ------ ------ ------ -------
Net interest income after provision for loan losses 1,959,499 1,885,776 1,804,250 1,790,662 1,642,764
NON-INTEREST INCOME
BOLI income 29,129 29,528 29,330 29,281 29,890
Gain on sale of SBA loans 54,708 - - - -
Other 55,437 48,418 51,413 43,653 45,935
------ ------ ------ ------ ------
Total non-interest income 139,274 77,946 80,743 72,934 75,825
NON-INTEREST EXPENSE
Salaries & benefits 840,314 830,995 809,699 832,994 704,372
Occupancy & equipment 193,331 190,840 192,932 194,695 186,665
Professional fees 92,623 73,631 72,489 76,851 83,234
Advertising 23,352 35,394 38,667 42,048 39,203
Data processing 88,497 91,782 87,968 86,514 83,772
Other 284,104 250,501 239,039 262,868 259,701
------- ------- ------- ------- -------
Total non-interest expense 1,522,221 1,473,143 1,440,794 1,495,970 1,356,947
--------- --------- --------- --------- ---------
Income before income tax expense 576,552 490,579 444,199 367,626 361,642
Federal Income Tax expense 185,562 158,570 140,084 113,507 109,298
------- ------- ------- ------- -------
Net income $390,990 $332,009 $304,115 $254,119 $252,344
======== ======== ======== ======== ========
Preferred stock dividends - - - (2,577) (8,047)
--- --- --- ------ ------
Net income available to common shareholders
$390,990 $332,009 $304,115 $251,542 $244,297
======== ======== ======== ======== ========
Income Statements (unaudited)
Twelve Months Twelve Months
Ended Ended
December 31, December 31,
2016 2015
---- ----
INTEREST INCOME
Loans $9,380,456 $8,117,987
Investments 264,890 197,691
Other 24,333 13,815
------ ------
Total interest income 9,669,679 8,329,493
--------- ---------
INTEREST EXPENSE
Deposits 1,525,936 1,403,124
Borrowings 209,112 125,688
Subordinated debt 270,660 85,238
------- ------
Total interest expense 2,005,708 1,614,050
--------- ---------
Net interest income 7,663,971 6,715,443
--------- ---------
Provision for loan losses 223,784 282,375
------- -------
Net interest income after
provision for loan losses 7,440,187 6,433,068
NON-INTEREST INCOME
BOLI income 117,268 120,060
Gain on sale of SBA loans 54,708 389,160
Gain on sale of securities - 15,641
Other 198,921 178,043
------- -------
Total non-interest income 370,897 702,904
NON-INTEREST EXPENSE
Salaries & benefits 3,314,002 2,771,624
Occupancy & equipment 771,798 708,421
Professional fees 315,594 319,443
Advertising 139,461 156,800
Data processing 354,761 319,899
Other non-interest expense 1,036,512 986,542
--------- -------
Total non-interest expense 5,932,128 5,262,729
--------- ---------
Pre-tax income 1,878,956 1,873,243
Tax expense 597,723 687,474
------- -------
Net income $1,281,233 $1,185,769
========== ==========
Preferred stock dividends (2,577) (46,171)
------ -------
Net income available to common
shareholders $1,278,656 $1,139,598
========== ==========
About First Resource Bank
First Resource Bank is a locally owned and operated Pennsylvania state-chartered bank, serving the banking needs of businesses, professionals and individuals in Chester County, Pennsylvania. The Bank offers a full range of deposit and credit services with a high level of personalized service. First Resource Bank also offers a broad range of traditional financial services and products, competitively priced and delivered in a responsive manner to small businesses, professionals and residents in the local market. For additional information visit our website at www.firstresourcebank.com. Member FDIC.
This press release contains statements that are not of historical facts and may pertain to future operating results or events or management's expectations regarding those results or events. These are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. These forward-looking statements may include, but are not limited to, statements about our plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts. When used in this press release, the words "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates", or words of similar meaning, or future or conditional verbs, such as "will", "would", "should", "could", or "may" are generally intended to identify forward-looking statements. These forward-looking statements are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are either beyond our control or not reasonably capable of predicting at this time. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. Actual results may differ materially from the results discussed in these forward-looking statements. Readers of this press release are accordingly cautioned not to place undue reliance on forward-looking statements. First Resource Bank disclaims any intent or obligation to update publicly any of the forward-looking statements herein, whether in response to new information, future events or otherwise.
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SOURCE First Resource Bank
