PR Newswire | Apr 29, 2021 08:03AM EDT

The First Quarter Of The Prior Year

04/29 07:00 CDT

First Resource Bank Announces First Quarter Results; Net Income Grew 41% Over The First Quarter Of The Prior Year EXTON, Pa., April 29, 2021

EXTON, Pa., April 29, 2021 /PRNewswire/ -- First Resource Bank (OTCQX: FRSB) announced financial results for the three months ended March 31, 2021.

Highlights for the first quarter of 2021 included:

* Net income grew 41% over the first quarter of the prior year * Total interest income grew 7% over the prior year, while total interest expense declined 35% in that same time period * Total deposits grew 7% in the quarter, led by total checking deposit growth of 11% * Total loans grew 12% * $23.3 million of new Paycheck Protection Program (PPP) loans completed * Total assets increased 5%, ending the quarter at $444 million

Glenn B. Marshall, CEO, stated, "Growth is the word that best summarizes the first quarter of 2021 at First Resource Bank. Loan and deposit growth started the year incredibly strong and we continue to see tangible benefits on both sides of the balance sheet from our participation in this latest round of the Paycheck Protection Program. The first quarter 41% increase in profitability over the prior year, coupled with significant balance sheet growth during the quarter, sets the year up for success."

Net income for the quarter ended March 31, 2021 was $905,664, which compares to $1,118,435 for the previous quarter and $640,139 for the first quarter of the prior year.

Total interest income decreased 6% when comparing the first quarter of 2021 to the fourth quarter of 2020. This decrease was driven by lower fees recognized as interest income in association with PPP loan forgiveness during the first quarter of 2021 as compared to the prior quarter.

Total interest income rose 7% from $3,979,535 for the three months ended March 31, 2020 to $4,272,194 for the three months ended March 31, 2021. This increase was the result of 34% loan growth when comparing March 31, 2021 to a year prior, partially mitigated by a 68 basis point decline in loan yields when comparing the first quarter of 2020 to the first quarter of 2021. This loan yield decline is a result of lower yielding PPP loans booked in the second and third quarters of 2020 and the first quarter of 2021 and the impact of the Federal Reserve 150 basis point rate cuts in March 2020, partially offset by fees recognized in association with PPP loan forgiveness during the first quarter.

Total interest expense decreased 15% when comparing the first quarter of 2021 to the fourth quarter of 2020. This decrease was driven by a 13 basis point decrease in the cost of deposits during the quarter. Interest expense on deposits continues to be actively managed to lower costs.

Total interest expense decreased 35% from $1,075,516 for the three months ended March 31, 2020 to $701,489 for the three months ended March 31, 2021. The vast majority of this decreased expense was related to an overall 84 basis point decline in the cost of interest bearing deposits, led by a 63 basis point decrease in the cost of money market accounts and an 81 basis point decrease in the cost of certificates of deposit, year over year. Overall interest expense was also mitigated by strong growth in non-interest bearing deposits, which increased 108% when comparing March 31, 2021 to the year prior.

Net interest income was $3,570,705 for the quarter ended March 31, 2021 as compared to $3,718,405 for the previous quarter, a decline of 4%. The net interest margin decreased 10 basis points from 3.69% for the quarter ended December 31, 2020 to 3.59% for the quarter ended March 31, 2021. The overall yield on interest earning assets decreased 21 basis points during the first quarter led by a 44 basis point decrease in loan yields to 4.74%, which was partially mitigated by lower cash balances in the first quarter of 2021 as compared to the fourth quarter of 2020. The cost of interest bearing deposits decreased 13 basis points during the first quarter to 0.77%, with the majority of that decrease attributed to lower cost money market accounts and certificates of deposit.

The provision for loan losses increased from $229,538 for the three months ended December 31, 2020 to $240,153 for the three months ended March 31, 2021. The provision for loan losses increased from $144,033 for the three months ended March 31, 2020, to $240,153 for the three months ended March 31, 2021.

Marshall noted, "The increase in provision for loan loss expense is directly attributed to higher growth in loans. Credit quality remains incredibly strong and there were no new issues noted during the quarter."

The allowance for loan losses to total loans was 0.83% at March 31, 2021 as compared to 0.86% at December 31, 2020 and 0.89% at March 31, 2020. Excluding PPP loans, which are 100% guaranteed by the SBA, the allowance for loan losses to total loans was 0.95% at March 31, 2021 and December 31, 2020. Non-performing assets consisted of non-performing loans of $382 thousand at March 31, 2021, unchanged from the prior quarter. Non-performing assets to total assets were 0.09% at March 31, 2021, unchanged from the prior quarter.

Non-interest income for the quarter ended March 31, 2021 was $177,761, as compared to $224,391 for the previous quarter and $284,006 for the first quarter of the prior year. There was no swap referral fee income received in the first quarter of 2021, as compared to $69,000 in the fourth quarter of 2020 and $148,000 in the first quarter of 2020.

Non-interest expense increased $65 thousand, or 3%, in the three months ended March 31, 2021 as compared to the prior quarter. The increase was primarily due to an increase in salaries and benefits, occupancy, and other costs, partially offset by a decrease in advertising costs. Non-interest expense increased $129 thousand, or 6%, when comparing the first quarter of 2021 to the first quarter of 2020. This increase was primarily attributed to an increase in salaries and benefits costs.

Deposits grew a net $24.1 million, or 7%, from $358.0 million at December 31, 2020 to $382.1 million at March 31, 2021. During the first quarter, non-interest bearing deposits increased $5.7 million, or 6%, from $99.9 million at December 31, 2020 to $105.6 million at March 31, 2021. Interest-bearing checking balances increased $8.1 million, or 34%, from $23.7 million at December 31, 2020 to $31.8 million at March 31, 2021. Money market deposits increased $13.6 million, or 10%, from $140.5 million at December 31, 2020 to $154.1 million at March 31, 2021. Certificates of deposit decreased $3.3 million, or 4%, from $93.9 million at December 31, 2020 to $90.6 million at March 31, 2021. Between March 31, 2021 and March 31, 2020, total deposits have grown 41% with tremendous checking and money market growth partially offset by a decline in certificates of deposit.

President and Chief Financial Officer, Lauren C. Ranalli, stated, "Total checking deposits increased 11% in the first quarter, reducing our reliance on higher cost forms of funding. We continue to expand new relationships we have earned through our participation in the Paycheck Protection Program as well as referrals from existing customers. The disruption in our market is palpable and we are well positioned to continue to earn new customers."

The loan portfolio increased $40.9 million, or 12%, during the first quarter from $338.9 million at December 31, 2020 to $379.8 million at March 31, 2021, with strong growth in commercial real estate, construction loans and commercial business loans partially offset by a decline in consumer loans. Excluding PPP activity, net loan growth was 9.4% for the quarter.

The following table illustrates the composition of the loanportfolio:

Mar. 31, Dec. 31, Mar. 31,

2021 2020 2020

Commercial real estate $ 258,294,933 $ 227,224,196 $ 207,501,619

Commercial construction 28,258,507 24,925,050 24,410,257

Commercial business 75,300,652 66,555,149 34,845,303

Consumer 17,991,186 20,235,647 17,518,022

Total loans $ 379,845,278 $ 338,940,042 $ 284,275,201

Total stockholder's equity increased $884 thousand, or 3%, from $31.5 million at December 31, 2020 to $32.3 million at March 31, 2021, primarily due to net income generated, partially offset by a decline in the unrealized gain/loss position of the investment portfolio. During the quarter ended March 31, 2021, book value per share grew 30 cents, or 3%, to $11.62.

Total assets increased $20.0 million, or 5% during the first quarter of 2021, with growth in loans primarily funded by deposit growth and investment maturities.

Selected Financial Data:

Balance Sheets (unaudited)

March 31, December 31,

2021 2020

Cash and due from banks $ 29,235,562 $ 26,008,820

Time deposits at other banks 599,000 599,000

Investments 17,189,160 43,060,035

Loans 379,845,278 338,940,042

Allowance for loan losses (3,164,133) (2,907,023)

Premises & equipment 8,326,566 8,380,269

Other assets 12,371,457 10,353,164

Total assets $ 444,402,890 $ 424,434,307

Non-interest bearing deposits $ 105,562,406 $ 99,898,323

Interest-bearing checking 31,826,348 23,726,721

Money market 154,117,023 140,480,421

Time deposits 90,619,835 93,919,651

Total deposits 382,125,612 358,025,116

Short term borrowings - -

Long term borrowings 21,158,000 24,206,000

Subordinated debt 5,943,773 7,940,649

Other liabilities 2,835,531 2,806,732

Total liabilities 412,062,916 392,978,497

Total stockholders' equity 32,339,974 31,455,810

Total Liabilities & $ 444,402,890 $ 424,434,307 Stockholders' Equity

Qtr Ended Qtr Ended Qtr Ended Qtr Ended Qtr EndedPerformance Statistics(unaudited) Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,

2021 2020 2020 2020 2020

Net interest margin 3.59% 3.69% 3.53% 3.50% 3.69%

Nonperforming loans/ 0.10% 0.11% 0.40% 0.41% 0.49% Total loans

Nonperforming assets/ 0.09% 0.09% 0.35% 0.36% 0.41% Total assets

Allowance for loan losses/ 0.83%** 0.86%** 0.78%** 0.76%** 0.89% Total loans

Average loans/Average 84.4% 81.4% 88.7% 87.4% 84.9% assets

Non-interest expenses*/ 2.29% 2.20% 2.34% 2.50% 2.71% Average assets

Earnings per share - basic $0.33 $0.41 $0.29 $0.24 $0.23 and diluted

Book value per share $11.62 $11.32 $10.93 $10.65 $10.39

Total shares outstanding 2,782,251 2,779,607 2,776,551 2,773,686 2,770,755

* Annualized

** Excluding PPP loans, the allowance for loan losses/total loans was 0.95% atMarch 31, 2021, 0.95% at December 31, 2020, 0.93% at September 30, 2020 and0.91% at June 30, 2020.

Income Statements (unaudited)

Qtr. Ended Qtr. Ended Qtr. Ended Qtr. Ended Qtr. Ended

Mar. 31, Dec. 31, Sept. 30, June 30, Mar. 31,

2021 2020 2020 2020 2020

INTEREST INCOME

Loans, including fees $4,169,912 $4,439,471 $4,038,794 $3,879,732 $3,814,235

Securities 96,260 93,928 101,768 104,900 118,005

Other 6,022 10,990 2,365 2,600 47,295

Total interest income 4,272,194 4,544,389 4,142,927 3,987,232 3,979,535

INTEREST EXPENSE

Deposits 499,622 581,982 653,243 742,578 885,915

Borrowings 108,743 117,995 120,795 127,446 122,116

Subordinated debt 93,124 126,007 77,467 67,485 67,485

Total interest expense 701,489 825,984 851,505 937,509 1,075,516

Net interest income 3,570,705 3,718,405 3,291,422 3,049,723 2,904,019

Provision for loan 240,153 229,538 129,894 51,045 144,033losses

Net interest incomeafter provision for loan 3,330,552 3,488,867 3,161,528 2,998,678 2,759,986losses

NON-INTEREST INCOME

BOLI income 44,523 36,852 37,125 37,067 37,050

Referral fee income - 69,000 - 27,100 148,000

Gain on sale of SBA - - - - -loans

Other 133,238 118,539 99,738 72,367 98,956

Total non-interest 177,761 224,391 136,863 136,534 284,006income

NON-INTEREST EXPENSE

Salaries & benefits 1,432,259 1,405,431 1,386,212 1,373,036 1,328,471

Occupancy & equipment 262,501 238,406 261,166 228,216 252,370

Professional fees 89,413 95,238 96,936 98,492 92,161

Advertising 61,683 80,279 72,390 64,011 66,278

Data processing 149,633 146,147 131,351 135,936 139,483

Other 383,951 349,074 336,144 396,808 371,641

Total non-interest 2,379,440 2,314,575 2,284,199 2,296,499 2,250,404 expense

Income before income tax 1,128,873 1,398,683 1,014,192 838,713 793,588expense

Federal income tax 223,209 280,248 198,786 161,726 153,449expense

Net income $905,664 $1,118,435 $ 815,406 $ 676,987 $ 640,139

About 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