First Bank Reports Fourth Quarter 2022 Net Income of $9.1 Million and Full Year Net Income of $36.3 Million
01/25/2023 - 04:33 PM
Quarterly Results Highlighted by Agreement to Acquire Malvern Bancorp, Strong Organic Loan Growth, Continued Revenue Expansion, and Outstanding Asset Quality Metrics
HAMILTON, N.J., Jan. 25, 2023 (GLOBE NEWSWIRE) -- First Bank (Nasdaq Global Market: FRBA) today announced results for the fourth quarter and full year 2022. Net income for the fourth quarter of 2022 was $9.1 million , or $0.46 per diluted share, compared to $7.8 million , or $0.40 per diluted share, for the fourth quarter of 2021. Return on average assets, return on average equity and return on average tangible equityi for the fourth quarter of 2022 were 1.35% , 12.61% and 13.53% , respectively, compared to 1.27% , 11.77% , and 12.63% , respectively, for the fourth quarter of 2021. Excluding merger-related expenses, First Bank’s fourth quarter 2022 adjusted diluted earnings per shareii were $0.48, adjusted return on average assetsii was 1.40% and adjusted return on average tangible equityii was 14.07% . Excluding merger-related expenses, fourth quarter 2021 adjusted diluted earnings per share were $0.42, adjusted return on average assets was 1.33% and adjusted return on average tangible equity was 13.26% .
Full year 2022 net income was $36.3 million , an increase of $860,000, or 2.4% , compared to $35.4 million for 2021. Diluted earnings per share for 2022 were $1.84, an increase of $0.05, or 2.8% , compared to $1.79 per diluted share for 2021. Return on average assets and return on average equity for the full year 2022 were 1.40% and 13.07% , respectively. Excluding merger-related expenses, full year 2022 adjusted diluted earnings per share were $1.86, adjusted return on average assets was 1.42% and adjusted return on average equity was 13.20% . Excluding merger-related expenses, full year 2021 adjusted diluted earnings per share were $1.81, adjusted return on average assets was 1.48% and adjusted return on average equity was 14.16% .
Fourth Quarter and Full Year 2022 Performance Highlights:
Announced agreement to acquire Malvern Bancorp, Inc. and Malvern Bank during the fourth quarter of 2022. The acquisition is expected to close in the second quarter of 2023 and will add approximately $785.3 million of deposits and $824.7 million of loans. Total net revenue (net interest income plus non-interest income) of $25.2 million for the fourth quarter of 2022 increased $2.3 million , or 10.3% , compared to the prior year quarter, while full year total net revenue was $97.5 million , an increase of $7.8 million , or 8.8% , compared to 2021. Total loans of $2.34 billion at December 31, 2022 reflected growth of $74.4 million , or 3.3% , from the end of the linked third quarter of 2022 and $212.4 million , or 10.0% , from December 31, 2021. Excluding Paycheck Protection Program (PPP) loan declines, loan growth was $74.8 million and $259.9 million for the quarter and year ended December 31, 2022, respectively. PPP loans outstanding at December 31, 2022 were $3.5 million . Total deposits of $2.29 billion at December 31, 2022 increased by $103.8 million , or 4.7% , from the end of the linked third quarter of 2022 and $179.4 million , or 8.5% , from December 31, 2021. Non-interest-bearing demand deposits decreased to 22.0% of total deposits at December 31, 2022, compared to 26.4% at December 31, 2021, while time deposits increased to 23.1% at December 31, 2022 from 18.5% of total deposits at December 31, 2021. Asset quality metrics remained strong during the fourth quarter of 2022, with annualized net recoveries to average loans of 0.04% , and nonperforming loans to total loans of 0.27% at December 31, 2022, compared to 0.61% at December 31, 2021. Ongoing focus on cost containment resulted in the eighth consecutive quarter of an efficiency ratioiii below 50% , at 47.68% for the fourth quarter of 2022. “We are proud of our solid performance in the fourth quarter and for the full year of 2022 which was highlighted by continued strong organic loan growth, revenue expansion and outstanding asset quality metrics. We are well positioned heading into 2023, despite the uncertain economic environment,” said Patrick L. Ryan, President and Chief Executive Officer. “In the fourth quarter, we continued to achieve strong organic loan growth, 13.3% annualized, while we continued to benefit from our strong underwriting standards with nonperforming assets to total assets of only 23 basis points at December 31, 2022. Strong commercial and industrial loan opportunities drove the need for accelerated deposit gathering during the quarter and while deposit pricing pressure has impacted our cost of deposits and net interest margin, we continue to operate at healthy profitability levels, achieving peer-leading returns on average assets.”
Mr. Ryan continued, “Our persistent focus on cost containment is essential in the current economic environment. We know how to operate lean, as evidenced by an efficiency ratio below 50% for the last eight consecutive quarters.”
“2023 will be an exciting year for us. Our strategic merger with Malvern Bancorp will provide critical mass and operating leverage in our highly attractive Southeastern Pennsylvania markets. New initiatives in small business and asset-based lending will help drive additional commercial and industrial loan growth. And, perhaps most importantly, new deposit sales teams will help drive additional commercial and municipal deposit growth. Our reputation as a committed and valuable financial partner continues to be strengthened by our earnings profile, our organic expansion, and our growth through acquisitions.”
“We are pleased to announce another $0.06 quarterly dividend, which reflects an annualized yield of 1.77% based on the January 17, 2023 closing price of our common stock, as part of our ongoing focus on creating shareholder value.”
Income Statement
First Bank’s net interest income for the fourth quarter of 2022 was $23.8 million , an increase of $3.1 million , or 15.1% , compared to $20.6 million in the fourth quarter of 2021, driven by a $9.0 million increase in total interest and dividend income, principally loan interest income, offset somewhat by a $5.9 million increase in total interest expense, primarily from the increase in cost of deposits. Net interest income decreased $812,000 from the linked third quarter of 2022 due to the increase in interest expense of $4.3 million partially offset by the increase in interest and dividend income of $3.5 million .
Full year 2022 net interest income totaled $92.4 million , an increase of $10.5 million , or 12.8% , compared to $81.9 million for 2021. The increase was primarily a result of higher interest income from loans due to substantial loan growth and higher loan yields, which was partially offset by increased interest expense related to the increased cost of deposits. Reflective of the rapidly increasing interest rate environment, the average cost of interest bearing deposits increased 36 basis points. The average cost of money market and time deposits increased 54 and 31 basis points, respectively. Interest and dividend income increased by $16.1 million , driven by solid growth in average loans, which increased by $167.2 million , or 8.2% , from the prior year, and a 30 basis point increase in the average yield on loans.
The fourth quarter 2022 tax equivalent net interest margin was 3.69% , an increase of 17 basis points compared to 3.52% for the prior year quarter and a decrease of 28 basis points compared to 3.97% in the linked third quarter of 2022. The decline in the margin compared to the linked third quarter of 2022 was primarily a result of a 90 basis point increase in the cost of interest bearing deposits. The full year 2022 tax equivalent net interest margin was 3.75% , an increase of 19 basis points compared to 3.56% for the full year 2021. The increase in the full year net interest margin was principally a result of the 39 basis point increase in earning asset yields partially offset by the increase in the cost of interest bearing deposits.
First Bank reported a provision for loan losses of $716,000 for the fourth quarter of 2022, compared to a provision for loan losses of $825,000 in the fourth quarter of 2021. The provision for the quarter ended December 31, 2022, was due to loan growth offset somewhat by net recoveries and continued stable asset quality metrics. For full year 2022, the Bank reported a provision for loan losses of $2.9 million , compared to a credit to the provision of $232,000 in 2021. Provision expense for the full year 2022 reflected the strong growth in loans, low level of net charge-offs and strong credit quality metrics.
Fourth quarter 2022 non-interest income of $1.4 million decreased from $2.2 million during the fourth quarter 2021. The decrease between the periods was primarily the result of a decline in gains on sale of Small Business Administration (SBA) loans and gains on recovery of acquired loans in the fourth quarter 2022. Non-interest income totaled $5.1 million for the full year ended December 31, 2022, compared to $7.8 million for 2021, primarily a result of a decrease in gains on the sale of loans, loan fees and gains on recovery of acquired loans.
Non-interest expense for fourth quarter 2022 of $12.5 million increased $640,000, or 5.4% , compared to $11.8 million for the prior year quarter. The higher non-interest expense compared to fourth quarter 2021 was primarily a result of higher marketing and advertising costs, other expense, occupancy and equipment expenses and travel and entertainment costs. The increases in marketing and advertising and travel and entertainment costs were primarily due to these expenses being unusually low in the fourth quarter of 2021. The increases in other expense and occupancy and equipment expenses were primarily due to a full quarter of expenses for the two new branches acquired by the Bank in December 2021.
On a linked quarter basis, fourth quarter 2022 non-interest expense increased $728,000 t o $12.5 million compared to $11.7 million for the third quarter of 2022. The increase was primarily due to merger-related costs associated with the pending Malvern Bancorp acquisition and an increase in performance-based bonus accruals. Excluding the merger-related expenses in the fourth quarter of 2022, non-interest expense increased $276,000, or 2.4% , when compared to the linked prior quarter.
Non-interest expense for the full year 2022 totaled $46.7 million , an increase of $3.6 million , or 8.3% , compared to $43.2 million for 2021. The increase was primarily a result of increased salaries and employee benefits, and to a lesser extent increases in other expense, other professional fees, travel and entertainment and data processing. These increases were primarily due to two new branches acquired by the Bank in December 2021 and other increases associated with the continued growth of the Bank.
Income tax expense for the three months ended December 2022 was $2.9 million with an effective tax rate of 24.3% , compared to $2.4 million with an effective tax rate of 23.2% for the fourth quarter of 2021 and $3.3 million with an effective tax rate of 24.7% for the third quarter of 2022. Income tax expense for the full year ended December 31, 2022, was $11.6 million with an effective tax rate of 24.2% , compared to $11.3 million for the full year 2021 with an effective tax rate of 24.2% .
Balance Sheet
Total assets at December 31, 2022 were $2.73 billion , an increase of $209.2 million , or 8.3% , compared to $2.52 billion at December 31, 2021. Total loans increased $212.4 million , or 10.0% , to $2.34 billion at December 31, 2022 compared to $2.13 billion at December 31, 2021. Total loans as of December 31, 2022 increased $74.4 million , or 3.3% , from $2.26 billion at September 30, 2022. The increase in loans during the fourth quarter of 2022 was due to commercial and industrial and commercial real estate loan growth.
Total deposits were $2.29 billion at December 31, 2022, an increase of $103.8 million , or 4.7% , compared to $2.19 billion at September 30, 2022, and an increase of $179.4 million , or 8.5% , from December 31, 2021. Non-interest-bearing deposits totaled $503.9 million at December 31, 2022, a decrease of $80.2 million , or 13.7% , from September 30, 2022, primarily due to a shift in the mix of deposits to interest-bearing accounts, which increased $183.9 million , or 11.5% in the fourth quarter. The shift in deposits was due, in part, to certain higher non-interest bearing balances shifting to interest bearing accounts as a result of a notably higher interest rate environment.
Stockholders’ equity was $289.6 million at December 31, 2022, compared to $266.7 million on December 31, 2021. The growth of $22.9 million , or 8.6% , in stockholders’ equity was primarily a result of full year 2022 net income of $36.3 million , partially offset by a $7.1 million increase in accumulated other comprehensive loss, $3.5 million in treasury stock purchases and cash dividends paid of $4.7 million for the full year ending December 31, 2022. The increase in accumulated other comprehensive loss was due to an increase in unrealized losses on the Bank’s available for sale investment securities, primarily resulting from the current interest rate environment.
As of December 31, 2022, the Bank continued to exceed all regulatory capital requirements to be considered well capitalized, with a Tier 1 Leverage ratio of 10.41% , a Tier 1 Risk-Based capital ratio of 10.40% , a Common Equity Tier 1 Capital ratio of 10.40% , and a Total Risk-Based capital ratio of 12.49% .
Asset Quality
First Bank’s asset quality metrics have remained solid during the year ended December 31, 2022. Net recoveries were $213,000 for the fourth quarter of 2022, compared to net charge-offs of $6,000 for the fourth quarter of 2021 and net charge-offs of $705,000 for the third quarter of 2022. Net recoveries as an annualized percentage of average loans were 0.04% in fourth quarter 2022, compared to annualized net charge-offs of 0.00% in fourth quarter 2021. Nonperforming loans were $6.3 million at December 31, 2022, down from $13.0 million on December 31, 2021, and up slightly from $5.1 million on September 30, 2022. Nonperforming loans as a percentage of total loans at December 31, 2022 were 0.27% , compared with 0.61% at December 31, 2021 and 0.23% at September 30, 2022. The allowance for loan losses to nonperforming loans was 407.58% at December 31, 2022, compared with 182.65% at December 31, 2021, and 480.61% at September 30, 2022.
Cash Dividend Declared
On January 17, 2023, First Bank’s Board of Directors declared a quarterly cash dividend of $0.06 per share to common stockholders of record at the close of business on February 10, 2023, payable on February 24, 2023.
Conference Call
First Bank will host its earnings call on Thursday, January 26, 2023 at 9:00 AM eastern time. The direct dial toll free number for the live call is 1-844-200-6205 and the access code is 106228. For those unable to participate in the call, a replay will be available on First Bank’s website at www.firstbanknj.com under the “About Us” tab. Click on “Investor Relations” to access the replay of the conference call.
About First Bank
First Bank is a New Jersey state-chartered bank with 18 full-service branches in Cinnaminson, Cranbury, Delanco, Denville, Ewing, Flemington (2), Hamilton, Lawrence, Monroe, Pennington, Randolph, Somerset and Williamstown, New Jersey; and Doylestown, Trevose, Warminster and West Chester, Pennsylvania. With $2.7 billion in assets as of December 31, 2022, First Bank offers a full range of deposit and loan products to individuals and businesses throughout the New York City to Philadelphia corridor. First Bank's common stock is listed on the Nasdaq Global Market under the symbol “FRBA.”
Forward Looking Statements
This press release contains certain forward-looking statements, either express or implied, within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information regarding First Bank’s future financial performance, business and growth strategy, projected plans and objectives, and related transactions, integration of acquired businesses, including the proposed acquisition of Malvern Bancorp, Inc. and Malvern Bank, First Bank’s ability to recognize anticipated operational efficiencies, and other projections based on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material. Such forward-looking statements are based on various facts and derived utilizing important assumptions, current expectations, estimates and projections about First Bank, any of which may change over time and some of which may be beyond First Bank’s control. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing. Further, certain factors that could affect our future results and cause actual results to differ materially from those expressed in the forward-looking statements include, but are not limited to: whether First Bank can: successfully implement its growth strategy, including identifying acquisition targets and consummating suitable acquisitions; continue to sustain its internal growth rate; provide competitive products and services that appeal to its customers and target markets; difficult market conditions and unfavorable economic trends in the United States generally, and particularly in the market areas in which First Bank operates and in which its loans are concentrated, including the effects of inflation and declines in housing market values; the impact of disease pandemics, including COVID-19, on First Bank, its operations and its customers and employees; an increase in unemployment levels and slowdowns in economic growth; First Bank's level of nonperforming assets and the costs associated with resolving any problem loans including litigation and other costs; changes in market interest rates may increase funding costs and reduce earning asset yields thus reducing margin; the impact of changes in interest rates and the credit quality and strength of underlying collateral and the effect of such changes on the market value of First Bank's investment securities portfolio; the extensive federal and state regulation, supervision and examination governing almost every aspect of First Bank's operations including changes in regulations affecting financial institutions, and expenses associated with complying with such regulations; uncertainties in tax estimates and valuations, including due to changes in state and federal tax law; First Bank's ability to comply with applicable capital and liquidity requirements, including First Bank’s ability to generate liquidity internally or raise capital on favorable terms, including continued access to the debt and equity capital markets; possible changes in trade, monetary and fiscal policies, laws and regulations and other activities of governments, agencies, and similar organizations. First Bank’s ability to obtain regulatory approvals and meet other closing conditions to its proposed acquisition of Malvern Bancorp and Malvern Bank; delays in closing the merger; difficulties and delays in integrating the acquired business or fully realizing cost savings and other benefits of the proposed merger; and business disruptions following the merger. For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Forward-Looking Statements” and “Risk Factors” in First Bank’s Annual Report on Form 10-K and any updates to those risk factors set forth in First Bank’s proxy statement, subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. If one or more events related to these or other risks or uncertainties materialize, or if First Bank’s underlying assumptions prove to be incorrect, actual results may differ materially from what First Bank anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and First Bank does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. All forward-looking statements, expressed or implied, included in this communication are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that First Bank or persons acting on First Bank’s behalf may issue.
i Return on average tangible equity is a non-U.S. GAAP financial measure and is calculated by dividing net income by average tangible equity (average equity minus average goodwill and other intangible assets). For a reconciliation of this non-U.S. GAAP financial measure, along with the other non-U.S. GAAP financial measures in this press release, to their comparable U.S. GAAP measures, see the financial reconciliations at the end of this press release.
ii Adjusted diluted earnings per share, adjusted return on average assets and adjusted return on average tangible equity are non-U.S. GAAP financial measures and are calculated by dividing net income adjusted for certain merger-related expenses and other one-time gains or expenses by diluted weighted average shares, average assets and average tangible equity, respectively. For a reconciliation of these non-U.S. GAAP financial measures, along with the other non-U.S. GAAP financial measures in this press release, to their comparable U.S. GAAP measures, see the financial reconciliations at the end of this press release.
iii The efficiency ratio is a non-U.S. GAAP financial measure and is calculated by dividing non-interest expense less merger-related expenses by adjusted total revenue (net interest income plus non-interest income). For a reconciliation of this non-U.S. GAAP financial measure, along with the other non-U.S. GAAP financial measures in this press release, to their comparable U.S. GAAP measures, see the financial reconciliations at the end of this press release.
CONTACT: Andrew Hibshman, Chief Financial Officerandrew.hibshman@firstbanknj.com
FIRST BANK AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (in thousands, except for share data, unaudited) December 31, 2022 December 31, 2021 Assets Cash and due from banks $ 17,577 $ 25,076 Interest bearing deposits with banks 108,339 129,431 Cash and cash equivalents 125,916 154,507 Interest bearing time deposits with banks 1,293 2,170 Investment securities available for sale, at fair value 98,956 94,584 Investment securities held to maturity (fair value of $42,465 at December 31, 2022 and $39,718 at December 31, 2021) 47,193 39,547 Restricted investment in bank stocks 6,214 5,856 Other investments 8,372 8,062 Loans, net of deferred fees and costs 2,337,814 2,125,437 Less: Allowance for loan losses 25,474 23,746 Net loans 2,312,340 2,101,691 Premises and equipment, net 10,550 9,883 Other real estate owned, net - 772 Accrued interest receivable 8,164 5,681 Bank-owned life insurance 58,107 56,633 Goodwill 17,826 17,826 Other intangible assets, net 1,579 2,145 Deferred income taxes 13,155 11,081 Other assets 23,275 13,306 Total assets $ 2,732,940 $ 2,523,744 Liabilities and Stockholders' Equity Liabilities: Non-interest bearing deposits $ 503,856 $ 558,775 Interest bearing deposits 1,790,096 1,555,827 Total deposits 2,293,952 2,114,602 Borrowings 90,932 95,281 Subordinated debentures 29,731 29,620 Accrued interest payable 1,218 399 Other liabilities 27,545 17,176 Total liabilities 2,443,378 2,257,078 Stockholders' Equity: Preferred stock, par value $2 per share; 10,000,000 shares authorized; no shares issued and outstanding - - Common stock, par value $5 per share; 40,000,000 shares authorized; 21,082,819 shares issued and 19,451,755 shares outstanding at December 31, 2022 and 20,851,506 shares issued and 19,472,364 shares outstanding at December 31, 2021 104,512 103,704 Additional paid-in capital 80,695 79,563 Retained earnings 127,532 95,924 Accumulated other comprehensive loss (7,334 ) (206 ) Treasury stock, 1,631,064 shares at December 31, 2022 and 1,379,142 shares at December 31, 2021 (15,843 ) (12,319 ) Total stockholders' equity 289,562 266,666 Total liabilities and stockholders' equity $ 2,732,940 $ 2,523,744
FIRST BANK AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (in thousands, except for share data, unaudited) Three Months Ended Year Ended December 31, December 31, 2022 2021 2022 2021 Interest and Dividend Income Investment securities—taxable $ 945 $ 553 $ 2,998 $ 2,149 Investment securities—tax-exempt 40 36 149 169 Interest bearing deposits with banks, Federal funds sold and other 1,205 136 2,093 660 Loans, including fees 29,324 21,791 102,021 88,136 Total interest and dividend income 31,514 22,516 107,261 91,114 Interest Expense Deposits 6,875 1,105 11,883 5,684 Borrowings 448 330 1,244 1,779 Subordinated debentures 440 440 1,761 1,761 Total interest expense 7,763 1,875 14,888 9,224 Net interest income 23,751 20,641 92,373 81,890 Provision for loan losses 716 825 2,872 (232 ) Net interest income after provision for loan losses 23,035 19,816 89,501 82,122 Non-Interest Income Service fees on deposit accounts 210 246 941 760 Loan fees 369 384 683 1,338 Income from bank-owned life insurance 362 386 1,474 1,436 Gains on sale of loans 4 392 296 1,892 Gains on recovery of acquired loans 216 554 672 1,235 Other non-interest income 285 249 1,054 1,093 Total non-interest income 1,446 2,211 5,120 7,754 Non-Interest Expense Salaries and employee benefits 7,261 7,229 27,383 25,404 Occupancy and equipment 1,407 1,265 5,689 5,762 Legal fees 193 130 695 769 Other professional fees 651 623 2,649 2,133 Regulatory fees 173 170 851 855 Directors' fees 173 221 743 876 Data processing 617 584 2,476 2,264 Marketing and advertising 177 1 682 526 Travel and entertainment 189 65 479 148 Insurance 189 172 727 655 Other real estate owned expense, net 26 68 295 165 Merger-related expenses 452 498 452 643 Other expense 957 799 3,612 2,952 Total non-interest expense 12,465 11,825 46,733 43,152 Income Before Income Taxes 12,016 10,202 47,888 46,724 Income tax expense 2,916 2,363 11,601 11,295 Net Income $ 9,100 $ 7,839 $ 36,287 $ 35,429 Basic earnings per common share $ 0.47 $ 0.40 $ 1.86 $ 1.81 Diluted earnings per common share $ 0.46 $ 0.40 $ 1.84 $ 1.79 Cash dividends per common share $ 0.06 $ 0.06 $ 0.24 $ 0.15 Basic weighted average common shares outstanding 19,446,770 19,469,404 19,503,837 19,611,381 Diluted weighted average common shares outstanding 19,649,282 19,725,294 19,716,661 19,815,747
FIRST BANK AND SUBSIDIARIES AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES (dollars in thousands, unaudited) Three Months Ended December 31, 2022 2021 Average Average Average Average Balance Interest Rate (5) Balance Interest Rate (5)Interest earning assets Investment securities (1) (2) $ 152,386 $ 993 2.59 % $ 133,768 $ 596 1.77 % Loans (3) 2,277,238 29,324 5.11 % 2,035,059 21,791 4.25 % Interest bearing deposits with banks, Federal funds sold and other 112,829 1,067 3.75 % 145,742 46 0.13 % Restricted investment in bank stocks 5,545 85 6.08 % 5,912 73 4.90 % Other investments 8,381 53 2.51 % 7,323 17 0.92 % Total interest earning assets (2) 2,556,379 31,522 4.89 % 2,327,804 22,523 3.84 % Allowance for loan losses (24,981 ) (23,529 ) Non-interest earning assets 149,409 143,124 Total assets $ 2,680,807 $ 2,447,399 Interest bearing liabilities Interest bearing demand deposits $ 328,191 $ 800 0.97 % $ 265,789 $ 59 0.09 % Money market deposits 721,866 3,375 1.85 % 656,772 404 0.24 % Savings deposits 183,746 417 0.90 % 181,253 165 0.36 % Time deposits 489,478 2,283 1.85 % 399,768 477 0.47 % Total interest bearing deposits 1,723,281 6,875 1.58 % 1,503,582 1,105 0.29 % Borrowings 70,941 448 2.51 % 83,066 330 1.58 % Subordinated debentures 29,713 440 5.92 % 29,603 440 5.95 % Total interest bearing liabilities 1,823,935 7,763 1.69 % 1,616,251 1,875 0.46 % Non-interest bearing deposits 538,304 550,718 Other liabilities 32,285 16,214 Stockholders' equity 286,283 264,216 Total liabilities and stockholders' equity $ 2,680,807 $ 2,447,399 Net interest income/interest rate spread (2) 23,759 3.20 % 20,648 3.38 % Net interest margin (2) (4) 3.69 % 3.52 % Tax equivalent adjustment (2) (8 ) (7 ) Net interest income $ 23,751 $ 20,641 (1) Average balance of investment securities available for sale is based on amortized cost. (2) Interest and average rates are presented on a tax equivalent basis using a federal income tax rate of 21% . (3) Average balances of loans include loans on nonaccrual status. (4) Net interest income divided by average total interest earning assets. (5) Annualized.
FIRST BANK AND SUBSIDIARIES AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES (dollars in thousands, unaudited) Year Ended December 31, 2022 2021 Average Average Average Average Balance Interest Rate Balance Interest Rate Interest earning assets Investment securities (1) (2) $ 143,460 $ 3,178 2.22 % $ 118,673 $ 2,353 1.98 % Loans (3) 2,204,028 102,021 4.63 % 2,036,855 88,136 4.33 % Interest bearing deposits with banks, Federal funds sold and other 104,057 1,694 1.63 % 134,109 248 0.18 % Restricted investment in bank stocks 5,457 285 5.22 % 7,312 348 4.76 % Other investments 8,193 114 1.39 % 6,727 64 0.95 % Total interest earning assets (2) 2,465,195 107,292 4.35 % 2,303,676 91,149 3.96 % Allowance for loan losses (24,702 ) (23,753 ) Non-interest earning assets 146,851 140,594 Total assets $ 2,587,344 $ 2,420,517 Interest bearing liabilities Interest bearing demand deposits $ 323,824 $ 1,395 0.43 % $ 225,945 $ 224 0.10 % Money market deposits 719,743 5,923 0.82 % 627,211 1,772 0.28 % Savings deposits 184,510 989 0.54 % 179,705 739 0.41 % Time deposits 378,292 3,576 0.95 % 458,980 2,949 0.64 % Total interest bearing deposits 1,606,369 11,883 0.74 % 1,491,841 5,684 0.38 % Borrowings 69,916 1,244 1.78 % 115,343 1,779 1.54 % Subordinated debentures 29,672 1,761 5.93 % 29,561 1,761 5.96 % Total interest bearing liabilities 1,705,957 14,888 0.87 % 1,636,745 9,224 0.56 % Non-interest bearing deposits 579,691 514,137 Other liabilities 24,057 15,903 Stockholders' equity 277,639 253,732 Total liabilities and stockholders' equity $ 2,587,344 $ 2,420,517 Net interest income/interest rate spread (2) 92,404 3.48 % 81,925 3.40 % Net interest margin (2) (4) 3.75 % 3.56 % Tax equivalent adjustment (2) (31 ) (35 ) Net interest income $ 92,373 $ 81,890 (1) Average balance of investment securities available for sale is based on amortized cost. (2) Interest and average rates are presented on a tax equivalent basis using a federal income tax rate of 21% . (3) Average balances of loans include loans on nonaccrual status. (4) Net interest income divided by average total interest earning assets.
FIRST BANK AND SUBSIDIARIES QUARTERLY FINANCIAL HIGHLIGHTS (in thousands, except for share and employee data, unaudited) As of or For the Quarter Ended 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021 EARNINGS Net interest income $ 23,751 $ 24,563 $ 22,910 $ 21,149 $ 20,641 Provision for loan losses 716 216 1,298 642 825 Non-interest income 1,446 944 1,463 1,267 2,211 Non-interest expense 12,465 11,737 11,409 11,122 11,825 Income tax expense 2,916 3,348 2,843 2,494 2,363 Net income 9,100 10,206 8,823 8,158 7,839 PERFORMANCE RATIOS Return on average assets (1) 1.35 % 1.57 % 1.38 % 1.31 % 1.27 % Adjusted return on average assets (1) (2) 1.40 % 1.57 % 1.38 % 1.31 % 1.33 % Return on average equity (1) 12.61 % 14.46 % 12.92 % 12.25 % 11.77 % Adjusted return on average equity (1) (2) 13.11 % 14.46 % 12.92 % 12.25 % 12.36 % Return on average tangible equity (1) (2) 13.53 % 15.55 % 13.93 % 13.22 % 12.63 % Adjusted return on average tangible equity (1) (2) 14.07 % 15.55 % 13.93 % 13.22 % 13.26 % Net interest margin (1) (3) 3.69 % 3.97 % 3.76 % 3.57 % 3.52 % Total cost of deposits (1) 1.21 % 0.50 % 0.23 % 0.19 % 0.21 % Efficiency ratio (2) 47.68 % 46.01 % 46.81 % 49.62 % 49.57 % SHARE DATA Common shares outstanding 19,451,755 19,447,206 19,483,415 19,634,744 19,472,364 Basic earnings per share $ 0.47 $ 0.52 $ 0.45 $ 0.42 $ 0.40 Diluted earnings per share 0.46 0.52 0.45 0.41 0.40 Adjusted diluted earnings per share (2) 0.48 0.52 0.45 0.41 0.42 Tangible book value per share (2) 13.89 13.43 13.08 12.79 12.67 Book value per share 14.89 14.44 14.10 13.81 13.69 MARKET DATA Market value per share $ 13.76 $ 13.67 $ 13.98 $ 14.22 $ 14.51 Market value / Tangible book value 99.07 % 101.80 % 106.84 % 111.14 % 114.53 % Market capitalization $ 267,656 $ 265,843 $ 272,378 $ 279,206 $ 282,544 CAPITAL & LIQUIDITY Tangible stockholders' equity / tangible assets (2) 9.96 % 9.97 % 9.95 % 9.79 % 9.85 % Stockholders' equity / assets 10.60 % 10.64 % 10.64 % 10.48 % 10.57 % Loans / deposits 101.91 % 103.34 % 103.15 % 99.41 % 100.51 % ASSET QUALITY Net (recoveries) charge-offs $ (213 ) $ 705 $ 404 $ 247 $ 6 Nonperforming loans 6,250 5,107 11,888 12,591 13,001 Nonperforming assets 6,250 5,400 12,181 12,884 13,773 Net (recoveries) charge offs / average loans (1) (0.04 %) 0.13 % 0.07 % 0.05 % 0.00 % Nonperforming loans / total loans 0.27 % 0.23 % 0.53 % 0.58 % 0.61 % Nonperforming assets / total assets 0.23 % 0.20 % 0.47 % 0.50 % 0.55 % Allowance for loan losses / total loans 1.09 % 1.08 % 1.12 % 1.12 % 1.12 % Allowance for loan losses / total loans (excluding PPP loans) 1.09 % 1.09 % 1.13 % 1.13 % 1.15 % Allowance for loan losses / nonperforming loans 407.58 % 480.61 % 210.58 % 191.72 % 182.65 % OTHER DATA Total assets $ 2,732,940 $ 2,638,060 $ 2,581,192 $ 2,587,038 $ 2,523,744 Total loans 2,337,814 2,263,377 2,233,278 2,164,944 2,125,437 Total deposits 2,293,952 2,190,192 2,165,163 2,177,895 2,114,602 Total stockholders' equity 289,562 280,749 274,702 271,068 266,666 Number of full-time equivalent employees (4) 238 228 233 219 217 (1) Annualized. (2) Non-U.S. GAAP financial measure that we believe provides management and investors with information that is useful in understanding our financial performance and condition. See accompanying table, "Non-U.S. GAAP Financial Measures," for calculation and reconciliation. (3) Tax equivalent using a federal income tax rate of 21% . (4) Includes 8 full-time equivalent seasonal interns as of June 30, 2022.
FIRST BANK AND SUBSIDIARIES QUARTERLY FINANCIAL HIGHLIGHTS (dollars in thousands, unaudited) As of the Quarter Ended 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021 LOAN COMPOSITION Commercial and industrial $ 354,203 $ 323,984 $ 321,205 $ 321,979 $ 350,103 Commercial real estate: Owner-occupied 533,426 517,448 523,108 499,379 475,576 Investor 951,115 942,151 925,643 896,435 855,913 Construction and development 142,876 126,206 117,011 96,585 109,292 Multi-family 215,990 214,819 201,269 193,865 173,728 Total commercial real estate 1,843,407 1,800,624 1,767,031 1,686,264 1,614,509 Residential real estate: Residential mortgage and first lien home equity loans 93,847 96,194 98,841 99,992 106,204 Home equity–second lien loans and revolving lines of credit 33,551 31,670 30,491 30,485 31,375 Total residential real estate 127,398 127,864 129,332 130,477 137,579 Consumer and other 16,318 14,654 19,694 30,096 27,762 Total loans prior to deferred loan fees and costs 2,341,326 2,267,126 2,237,262 2,168,816 2,129,953 Net deferred loan fees and costs (3,512 ) (3,749 ) (3,984 ) (3,872 ) (4,516 ) Total loans $ 2,337,814 $ 2,263,377 $ 2,233,278 $ 2,164,944 $ 2,125,437 LOAN MIX Commercial and industrial 15.2 % 14.3 % 14.4 % 14.8 % 16.5 % Commercial real estate: Owner-occupied 22.8 % 22.9 % 23.4 % 23.1 % 22.4 % Investor 40.7 % 41.6 % 41.5 % 41.4 % 40.2 % Construction and development 6.1 % 5.6 % 5.2 % 4.5 % 5.1 % Multi-family 9.2 % 9.5 % 9.0 % 8.9 % 8.2 % Total commercial real estate 78.8 % 79.6 % 79.1 % 77.9 % 75.9 % Residential real estate: Residential mortgage and first lien home equity loans 4.0 % 4.3 % 4.4 % 4.6 % 5.0 % Home equity–second lien loans and revolving lines of credit 1.4 % 1.4 % 1.4 % 1.4 % 1.5 % Total residential real estate 5.4 % 5.7 % 5.8 % 6.0 % 6.5 % Consumer and other 0.7 % 0.6 % 0.9 % 1.4 % 1.3 % Net deferred loan fees and costs (0.1 %) (0.2 %) (0.2 %) (0.1 %) (0.2 %) Total loans 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
FIRST BANK AND SUBSIDIARIES QUARTERLY FINANCIAL HIGHLIGHTS (dollars in thousands, unaudited) As of the Quarter Ended 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021 DEPOSIT COMPOSITION Non-interest bearing demand deposits $ 503,856 $ 584,025 $ 600,402 $ 597,333 $ 558,775 Interest bearing demand deposits 322,944 343,042 318,687 314,564 293,647 Money market and savings deposits 935,311 860,577 929,075 936,848 871,074 Time deposits 531,841 402,549 316,999 329,150 391,106 Total Deposits $ 2,293,952 $ 2,190,193 $ 2,165,163 $ 2,177,895 $ 2,114,602 DEPOSIT MIX Non-interest bearing demand deposits 22.0 % 26.7 % 27.7 % 27.4 % 26.4 % Interest bearing demand deposits 14.1 % 15.7 % 14.7 % 14.5 % 13.9 % Money market and savings deposits 40.8 % 39.3 % 42.9 % 43.0 % 41.2 % Time deposits 23.1 % 18.3 % 14.7 % 15.1 % 18.5 % Total Deposits 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
FIRST BANK AND SUBSIDIARIES NON-U.S. GAAP FINANCIAL MEASURES (in thousands, except for share data, unaudited) As of or For the Quarter Ended 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021 Return on Average Tangible Equity Net income (numerator) $ 9,100 $ 10,206 $ 8,823 $ 8,158 $ 7,839 Average stockholders' equity $ 286,283 $ 280,093 $ 273,829 $ 270,147 $ 264,216 Less: Average Goodwill and other intangible assets, net 19,533 19,669 19,823 19,916 17,910 Average Tangible stockholders' equity (denominator) $ 266,750 $ 260,424 $ 254,006 $ 250,231 $ 246,306 Return on Average Tangible equity (1) 13.53 % 15.55 % 13.93 % 13.22 % 12.63 % Tangible Book Value Per Share Stockholders' equity $ 289,562 $ 280,749 $ 274,702 $ 271,068 $ 266,666 Less: Goodwill and other intangible assets, net 19,405 19,599 19,768 19,854 19,971 Tangible stockholders' equity (numerator) $ 270,157 $ 261,150 $ 254,934 $ 251,214 $ 246,695 Common shares outstanding (denominator) 19,451,755 19,447,206 19,483,415 19,634,744 19,472,364 Tangible book value per share $ 13.89 $ 13.43 $ 13.08 $ 12.79 $ 12.67 Tangible Equity / Assets Stockholders' equity $ 289,562 $ 280,749 $ 274,702 $ 271,068 $ 266,666 Less: Goodwill and other intangible assets, net 19,405 19,599 19,768 19,854 19,971 Tangible stockholders' equity (numerator) $ 270,157 $ 261,150 $ 254,934 $ 251,214 $ 246,695 Total assets $ 2,732,940 $ 2,638,060 $ 2,581,192 $ 2,587,038 $ 2,523,744 Less: Goodwill and other intangible assets, net 19,405 19,599 19,768 19,854 19,971 Tangible total assets (denominator) $ 2,713,535 $ 2,618,461 $ 2,561,424 $ 2,567,184 $ 2,503,773 Tangible stockholders' equity / tangible assets 9.96 % 9.97 % 9.95 % 9.79 % 9.85 % Efficiency Ratio Non-interest expense $ 12,465 $ 11,737 $ 11,409 $ 11,122 $ 11,825 Less: Merger-related expenses 452 - - - 498 Adjusted non-interest expense (numerator) $ 12,013 $ 11,737 $ 11,409 $ 11,122 $ 11,327 Net interest income $ 23,751 $ 24,563 $ 22,910 $ 21,149 $ 20,641 Non-interest income 1,446 944 1,463 1,267 2,211 Total revenue $ 25,197 $ 25,507 $ 24,373 $ 22,416 $ 22,852 Less: Gains on sale of investment securities, net - - - - - Less: Gains on recovery of acquired loans Adjusted total revenue (denominator) $ 25,197 $ 25,507 $ 24,373 $ 22,416 $ 22,852 Efficiency ratio 47.68 % 46.01 % 46.81 % 49.62 % 49.57 % (1) Annualized.
FIRST BANK AND SUBSIDIARIES NON-U.S. GAAP FINANCIAL MEASURES (dollars in thousands, except for share data, unaudited) For the Quarter Ended 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021 Adjusted diluted earnings per share, Adjusted return on average assets, and Adjusted return on average equity Net income $ 9,100 $ 10,206 $ 8,823 $ 8,158 $ 7,839 Add: Merger-related expenses (1) 357 - - - 393 Adjusted net income $ 9,457 $ 10,206 $ 8,823 $ 8,158 $ 8,232 Diluted weighted average common shares outstanding 19,649,282 19,668,133 19,794,657 19,768,452 19,725,294 Average assets $ 2,680,807 $ 2,575,742 $ 2,568,443 $ 2,522,775 $ 2,447,399 Average equity $ 286,283 $ 280,093 $ 273,829 $ 270,147 $ 264,216 Average Tangible Equity $ 266,750 $ 260,424 $ 254,006 $ 250,231 $ 246,306 Adjusted diluted earnings per share $ 0.48 $ 0.52 $ 0.45 $ 0.41 $ 0.42 Adjusted return on average assets (2) 1.40 % 1.57 % 1.38 % 1.31 % 1.33 % Adjusted return on average equity (2) 13.11 % 14.46 % 12.92 % 12.25 % 12.36 % Adjusted return on average tangible equity (2) 14.07 % 15.55 % 13.93 % 13.22 % 13.26 % (1) Items are tax-effected using a federal income tax rate of 21% . (2) Annualized.
FIRST BANK AND SUBSIDIARIES NON-U.S. GAAP FINANCIAL MEASURES (dollars in thousands, except for share data, unaudited) Year Ended December 31, 2022 2021 Adjusted diluted earnings per share, Adjusted return on average assets, and Adjusted return on average equity Net income $ 36,287 $ 35,429 Add: Merger-related expenses (1) 357 508 Adjusted net income $ 36,644 $ 35,937 Diluted weighted average common shares outstanding 19,716,661 19,815,747 Average assets $ 2,587,344 $ 2,420,517 Average equity $ 277,639 $ 253,732 Average Tangible Equity $ 257,905 $ 235,764 Adjusted diluted earnings per share $ 1.86 $ 1.81 Adjusted return on average assets 1.42 % 1.48 % Adjusted return on average equity 13.20 % 14.16 % Adjusted return on average tangible equity 14.21 % 15.24 % (1) Tax-effected using a federal income tax rate of 21%
