FIRST RESOURCE BANCORP, INC. ANNOUNCES 2024 FIRST QUARTER RESULTS; CONTINUED BALANCE SHEET GROWTH OFFSETS MARGIN COMPRESSION

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First Resource Bancorp, Inc. announced its financial results for the first quarter of 2024, showcasing growth in total interest income, net interest income, and total loans. Despite challenges with rising deposit costs and margin compression, the company reported positive metrics such as no non-accrual loans, a 3% increase in book value per share, and net income of $1.3 million. The provision for credit losses decreased, and non-interest income saw a notable increase. Total deposits and the loan portfolio also experienced growth, albeit with some fluctuations in different deposit categories. Overall, the company's financial performance remained resilient in a challenging market environment.

Positive

• Total interest income grew by 31% over the previous year
• Net interest income increased by 7% year-over-year
• Total loans grew by 4% in the first quarter of 2024
• No non-accrual or non-performing loans as of March 31, 2024
• Book value per share increased by 3% to $15.34
• Net income for the quarter was $1.3 million
• Provision for credit losses decreased year-over-year
• Non-interest income increased significantly
• Total deposits grew by 3% in the first quarter
• Loan portfolio expanded by 4% in the first quarter
• Company's financial performance remained resilient

Negative

• None.

EXTON, Pa., April 25, 2024 /PRNewswire/ -- First Resource Bancorp, Inc. (OTCQX: FRSB), the holding company for First Resource Bank, announced financial results for the three months ended March 31, 2024. 

Lauren C. Ranalli, President and CEO, stated, "In a market where many of our peers are reducing lending, we've seized the chance to further expand the Bank. Our robust loan growth and disciplined pricing strategies have helped offset rising deposit costs to some extent. Net interest income remained largely steady compared to the previous quarter, despite the ongoing margin compression."

Highlights for the first quarter of 2024 included:

• Total interest income grew 31% over the prior year
• Net interest income grew 7% over the prior year
• Total loans grew 4% during the first quarter, or 14% annualized
• Total deposits grew 3% during the first quarter, or 11% annualized
• Swap loan referral income totaled $182 thousand during the first quarter, more than double the entire prior year
• There were no non-accrual or non-performing loans as of March 31, 2024
• Book value per share grew 3% to $15.34

Net income for the quarter ended March 31, 2024 was $1.3 million, or $0.43 per common share, compared to $1.6 million, or $0.53 per common share, for the previous quarter and $1.3 million, or $0.41 per common share, for the first quarter of the prior year. Annualized return on average assets was 0.92% for the first quarter of 2024 compared to 1.00% for the first quarter of 2023. Annualized return on average equity was 11.39% for the first quarter of 2024 compared to 12.57% for the same period a year prior. 

Total interest income increased quarterly by $200 thousand, or 2%, from $8.2 million for the fourth quarter of 2023 to $8.4 million for the first quarter of 2024. This increase was driven by 4% growth in loans during the first quarter.

Total interest income increased $2.0 million, marking a 31% rise from $6.4 million in the first quarter of 2023 to $8.4 million in the corresponding period of 2024. This increase was driven by a 14% expansion in loans compared to the previous year, complemented by an increased rate environment, favorably affecting interest-earning assets. 

Total interest expense increased 7% when comparing the first quarter of 2024 to the fourth quarter of 2023. This increase stemmed from an 8 basis point rise in the cost of money market accounts and a 29 basis point increase in the cost of time deposits, alongside a higher volume of time deposits quarter over quarter. Additionally, interest expense on FHLB borrowings increased by 7% due to a rise in the average balance and cost of advances during the first quarter of 2024 compared to the fourth quarter of 2023.

Total interest expense increased by 82%, climbing from $2.0 million in the first quarter of 2023 to $3.7 million for the first quarter of 2024. The primary driver of this increased expense was a 114 basis point rise in the cost of money market deposits and a 198 basis point increase in the cost of time deposits, coupled with a greater volume of money market accounts and time deposits year over year.

"Rising deposit costs are one of the biggest challenges facing the industry at the moment," commented Ranalli. "To address this, we've allocated substantial internal resources towards optimizing our cost of funds while simultaneously growing our deposit portfolio to support loan growth. Our management team has been bolstered by the addition of an experienced retail banking executive and our lending and deposit teams are collaborating closely, creating synergies via joint calling efforts in the pursuit of new deposit relationships."

In the first quarter of 2024, net interest income saw a slight decrease of $49 thousand, or 1%, compared to the previous quarter. The net interest margin also contracted by 4 basis points, declining from 3.39% in the fourth quarter of 2023 to 3.35% in the first quarter of 2024. The overall yield on interest-earning assets rose by 13 basis points during the first quarter, primarily driven by a 12 basis point increase in the yield on loans and an expanded loan volume, resulting in a total yield on loans of 6.14% for the first quarter of 2024. Conversely, due to increases in costs for money market and time deposit accounts, alongside a rise in the volume of time deposit accounts, the cost of interest-bearing deposits increased by 20 basis points to 3.45% during the first quarter. Consequently, the total cost of deposits increased by 18 basis points, climbing from 2.59% in the fourth quarter of 2023 to 2.77% in the first quarter of 2024.

The provision for credit losses was $64 thousand in the first quarter of 2024 compared to a negative $263 thousand in the fourth quarter of 2023. The negative reserve observed in the fourth quarter of 2023 was unusual, partly due to specific reserves established as of September 30, 2023, for credits that were resolved during the fourth quarter and became unnecessary as of December 31, 2023. Year over year, the provision for credit losses decreased to $64 thousand in the first quarter of 2024 from $66 thousand in the first quarter of 2023. 

As of March 31, 2024, the allowance for credit losses to total loans stood at 0.80%, slightly lower than the 0.81% recorded at December 31, 2023, and lower than the 0.91% reported at March 31, 2023. At both March 31, 2024 and December 31, 2023, there were no non-performing assets.

Non-interest income in the first quarter of 2024 amounted to $396 thousand, a notable increase compared to $208 thousand in the previous quarter and $200 thousand in the first quarter of the prior year. Specifically, swap referral fee income totaled $182 thousand in the first quarter of 2024, compared to none in the fourth and first quarters of 2023.

Non-interest expenses increased $210 thousand, or 7%, in the first quarter of 2024 compared to the prior quarter. Increases in salaries & employee benefits, professional fees, data processing, and other costs were partially offset by decreases in occupancy & equipment and advertising. 

Non-interest expenses increased $424 thousand, or 15%, when comparing the first quarter of 2024 to the first quarter of 2023. Non-interest expenses to average assets were 2.28% for the first quarter of 2024 compared to 2.15% for the previous quarter and 2.29% for the first quarter of the prior year.

Deposits increased a net $13.9 million, or 3%, from $499.3 million at December 31, 2023 to $513.2 million at March 31, 2024. During the first quarter, non-interest-bearing deposits increased $1.1 million, or 1%, from $95.4 million at December 31, 2023 to $96.4 million at March 31, 2024. Interest-bearing checking balances decreased $3.3 million, or 8%, from $39.8 million at December 31, 2023 to $36.5 million at March 31, 2024. Money market deposits increased $3.5 million, or 1%, from $231.4 million at December 31, 2023 to $234.9 million at March 31, 2024. Certificates of deposit increased $12.6 million, or 10%, from $132.7 million at December 31, 2023 to $145.4 million at March 31, 2024. Between March 31, 2023 and March 31, 2024, total deposits grew 10%, with strong non-interest-bearing checking, money market, and time deposit growth partially offset by a decline in interest-bearing checking. At March 31, 2024, approximately 81% of total deposits were insured or otherwise collateralized, slightly up from 80% in the prior quarter.

The loan portfolio expanded by $18.6 million, representing a 4% increase, from $531.4 million at December 31, 2023 to $550.0 million at March 31, 2024. While there was robust growth in commercial real estate loans and commercial business loans, this was partially offset by decreases in construction loans and consumer loans when comparing loan balances at December 31, 2023 to loan balances at March 31, 2024. The decrease in construction loans was largely attributed to projects reaching completion and transitioning to permanent financing within the commercial real estate portfolio.

Ranalli added "Commercial real estate loans represent a significant concentration for the Bank which we monitor very closely. This type of lending is a core competency for us and we have the proper risk management tools in place to continuously track this exposure."

The following table illustrates the composition of the loan portfolio:

	Mar. 31, 2024		Dec. 31, 2023		Mar. 31, 2023
Commercial real estate	$  444,909,373		$  413,221,898		$  383,875,127
Commercial construction	35,337,226		48,838,199		39,761,445
Commercial business	51,780,407		50,224,869		42,682,372
Consumer	17,979,804		19,099,155		16,793,036
Total loans	$  550,006,810		$  531,384,121		$  483,111,980

 

Investment securities totaled $17.4 million at March 31, 2024 as compared to $25.8 million at December 31, 2023. At March 31, 2024, the held-to-maturity investment portfolio book value was $8.7 million, with a fair market value of $7.7 million, resulting in an unrealized loss of $998 thousand. This unrealized loss, net of tax, of $788 thousand is less than 1.7% of total equity at March 31, 2024. The remainder of the investment portfolio was classified as available for sale with a book value of $10.0 million and a fair value of $8.7 million, resulting in an unrealized loss of $1.3 million. This unrealized loss, net of tax, of $1.1 million is included in accumulated other comprehensive loss on the balance sheet.

Total stockholders' equity saw a $1.3 million increase, representing a 3% rise, from $46.1 million at December 31, 2023 to $47.5 million at March 31, 2024, primarily due to net income generated. During the quarter ended March 31, 2024, book value per share increased by 43 cents, or 3%, reaching $15.34.

Selected Financial Data: Balance Sheets (unaudited)
	March 31, 2024		December 31, 2023
Cash and due from banks	$   22,314,437		$   23,820,615
Time deposits at other banks	100,000		100,000
Investments	17,382,019		25,840,840
Loans	550,006,810		531,384,121
Allowance for credit losses	(4,383,877)		(4,311,306)
Premises & equipment	7,683,039		7,639,939
Other assets	17,923,286		18,142,682
Total assets	$ 611,025,714		$ 602,616,891
Noninterest-bearing deposits	$   96,439,591		$   95,384,366
Interest-bearing checking	36,493,267		39,760,054
Money market	234,873,774		231,407,653
Time deposits	145,383,468		132,738,973
Total deposits	513,190,100		499,291,046
Short term borrowings	28,000,000		35,000,000
Long term borrowings	9,530,000		9,530,000
Subordinated debt	5,981,258		5,978,134
Other liabilities	6,842,893		6,682,220
Total liabilities	563,544,251		556,481,400
Common stock	3,096,138		3,093,414
Surplus	19,796,666		19,767,634
Accumulated other comprehensive loss	(1,055,206)		(1,038,486)
Retained earnings	25,643,865		24,312,929
Total stockholders' equity	47,481,463		46,135,491
Total liabilities &      stockholders' equity	$ 611,025,714		$ 602,616,891

 

Performance Statistics (unaudited)
	Qtr Ended Mar. 31, 2024	Qtr Ended Dec. 31, 2023	Qtr Ended Sep. 30, 2023	Qtr Ended Jun. 30, 2023	Qtr Ended Mar. 31, 2023
Net interest margin	3.35 %	3.39 %	3.57 %	3.64 %	3.57 %
Nonperforming loans/    total loans	0.00 %	0.00 %	0.14 %	0.15 %	0.16 %
Nonperforming assets/    total assets	0.00 %	0.00 %	0.13 %	0.14 %	0.14 %
Allowance for credit losses/    total loans	0.80 %	0.81 %	0.88 %	0.89 %	0.91 %
Average loans/average    assets	92.4 %	91.1 %	92.2 %	91.6 %	91.6 %
Non-interest expenses*/    average assets	2.28 %	2.15 %	2.19 %	2.29 %	2.29 %
Efficiency ratio	65.5 %	63.1 %	60.1 %	62.5 %	63.6 %
Earnings per share – basic    and diluted**	$0.43	$0.53	$0.51	$0.47	$0.41
Book value per share**	$15.34	$14.91	$14.31	$13.85	$13.43
Total shares outstanding**	3,096,138	3,093,414	3,090,838	3,088,019	3,085,576
Weighted average shares outstanding**	3,094,951	3,092,277	3,089,441	3,086,782	3,084,634

*  Annualized

** Per share data for prior periods was restated to reflect the 5% stock dividend paid in June 2023.

 

Income Statements (unaudited)
	Qtr. Ended Mar. 31, 2024		Qtr. Ended Dec. 31, 2023		Qtr. Ended Sep. 30, 2023		Qtr. Ended Jun. 30, 2023		Qtr. Ended Mar. 31, 2023
INTEREST INCOME
Loans, including fees	$8,228,102		$7,941,483		$7,633,163		$6,923,177		$6,223,153
Securities	120,713		133,125		125,882		120,133		131,350
Other	31,735		105,679		33,221		67,207		28,174
Total interest income	8,380,550		8,180,287		7,792,266		7,110,517		6,382,677
INTEREST EXPENSE
Deposits	3,519,176		3,277,096		2,696,301		2,267,015		1,819,643
Borrowings	105,860		98,901		195,150		64,267		126,620
Subordinated debt	93,124		93,124		93,124		93,123		93,124
Total interest expense	3,718,160		3,469,121		2,984,575		2,424,405		2,039,387
Net interest income	4,662,390		4,711,166		4,807,691		4,686,112		4,343,290
Provision for credit losses	63,651		(263,073)		71,017		20,327		66,299
Net interest income after provision for credit losses	4,598,739		4,974,239		4,736,674		4,665,785		4,276,991
NON-INTEREST INCOME
Service charges and other fees	100,164		94,656		109,894		107,841		99,570
BOLI income	51,356		50,730		50,237		49,281		47,691
Swap referral fee income	182,060		-		75,649		-		-
Other	62,548		62,701		61,527		55,740		53,013
Total non-interest income	396,128		208,087		297,307		212,862		200,274
NON-INTEREST EXPENSE
Salaries & benefits	2,045,083		1,873,831		1,893,558		1,844,356		1,834,921
Occupancy & equipment	289,202		289,361		282,025		260,284		257,741
Professional fees	137,482		123,336		119,258		119,447		115,303
Advertising	81,745		83,506		58,354		65,917		67,195
Data processing	176,685		167,921		172,288		159,795		147,808
Other	584,926		567,428		543,465		611,336		468,225
Total non-interest expense	3,315,123		3,105,383		3,068,948		3,061,135		2,891,193
Income before federal income tax expense	1,679,744		2,076,943		1,965,033		1,817,512		1,586,072
Federal income tax expense	348,807		429,920		401,490		366,371		321,784
Net income	$1,330,937		$1,647,023		$1,563,543		$1,451,141		$1,264,288

 

About First Resource Bancorp, Inc.

First Resource Bancorp, Inc. is the holding company of First Resource Bank. First Resource Bank is a locally owned and operated Pennsylvania state-chartered bank with three full-service branches, serving the banking needs of businesses, professionals and individuals in the Delaware Valley. 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

FAQ

What was the total interest income growth for First Resource Bancorp, Inc. in the first quarter of 2024?

Total interest income grew by 31% over the prior year for First Resource Bancorp, Inc.

Did First Resource Bancorp, Inc. report any non-accrual or non-performing loans as of March 31, 2024?

There were no non-accrual or non-performing loans as of March 31, 2024, for First Resource Bancorp, Inc.

What was the net income for First Resource Bancorp, Inc. in the first quarter of 2024?

The net income for First Resource Bancorp, Inc. for the first quarter of 2024 was $1.3 million.

How much did the provision for credit losses decrease by in the first quarter of 2024?

The provision for credit losses decreased in the first quarter of 2024 for First Resource Bancorp, Inc.

What was the percentage increase in book value per share for First Resource Bancorp, Inc. in the first quarter of 2024?

The book value per share increased by 3% to $15.34 for First Resource Bancorp, Inc. in the first quarter of 2024.