GlobeNewswire Inc | Jul 27, 2020 04:43PM EDT

July 27, 2020

Net Income of $7.4 Million for First Six Months of 2020

For the Second Quarter and First Half of 2020: Continued Strong Loan Origination,Solid Revenue Growth, Effective Management of Non-Interest Expense

HAMILTON, N.J., July 27, 2020 (GLOBE NEWSWIRE) -- First Bank (Nasdaq Global Market: FRBA) today announced results for the three and six months ended June 30, 2020. Net income for the second quarter of 2020 was $4.1 million, or $0.21 per diluted share, compared to $2.8 million, or $0.15 per diluted share, for the second quarter of 2019. Return on average assets and return on average equity for the second quarter of 2020 were 0.74% and 7.33%, respectively, and 0.64% and 5.64%, respectively, for the second quarter of 2019. Net income for the first six months of 2020 was $7.4 million, or $0.36 per diluted share, compared to $7.1 million, or $0.38 per diluted share, for the same period in 2019.

Second Quarter 2020 Performance Highlights:

-- Total net revenue (net interest income plus non-interest income) of $18.2 million for the quarter increased $3.1 million, or 20.7%, from $15.1 million, compared to the prior year quarter. -- Total loans of $1.96 billion at June 30, 2020 increased $406.5 million, including $190.5 million in Paycheck Protection Program (PPP) loans, or 26.2%, from June 30, 2019, and increased $231.4 million, or 13.4%, from December 31, 2019. -- Total deposits of $1.92 billion at June 30, 2020 increased $479.8 million, or 33.2%, from June 30, 2019 and $282.4 million, or 17.2%, compared to December 31, 2019. -- Despite the ongoing challenges presented by the COVID-19 pandemic, asset quality metrics remained solid during the quarter, with net charge-offs of $1.0 million, or an annualized 0.21% of average loans, for second quarter 2020, compared to net charge-offs of $481,000 for second quarter 2019. Nonperforming loans at June 30, 2020 were $14.1 million, $14.6 million on June 30, 2019, and $13.8 million on March 31, 2020. The ratio of nonperforming loans to total loans was 0.72% at June 30, 2020 compared to 0.94% at June 30, 2019, and 0.79% at March 31, 2020. -- Successful subordinated note issuance with net proceeds of $29.5 million. Completion of approved share repurchase program with a total of 1.0 million shares repurchased during the first six months of 2020. -- Continued effective non-interest expense management was reflected in the second quarter 2020 efficiency ratioi of 53.64% compared to 59.76% for second quarter 2019, and 58.03% for the linked first quarter of 2020.

Our intense focus on customer service was reflected in our second quarter results highlighted by strong loan origination, double-digit net revenue growth, a continuation of solid asset quality metrics, and effective non-interest expense management, said Patrick L. Ryan, President and Chief Executive Officer. This solid team effort was realized despite considerable logistical hurdles and the economic challenges related to the COVID-19 pandemic. These pandemic headwinds have in no way subsided, however our team continues to perform above and beyond to make certain that the Banks customers receive the support necessary to weather the current storm.

While our second quarter loan growth, prior to deferred loan fees and costs, of more than $202 million was driven primarily by PPP lending, it also included approximately $12 million in non-PPP loan growth. An additional benefit of our significant participation in the PPP lending program has been the strong increase in deposits. Participation in the PPP lending program, and our other efforts to drive commercial deposit growth, led to strong growth in both the first and second quarters of 2020. The increase in non-interest bearing deposits in the first half of 2020 was particularly significant, growing by more than $183 million during that period. In addition to the deposits that were linked to the PPP program, we also realized solid core deposit growth related to new and existing commercial banking relationships. We are also excited about developing additional relationships with the approximately 150 new customers introduced to us through the PPP program.

We took appropriate steps during the first half of 2020 to ensure that First Bank had adequate liquidity to meet the potential needs of our customers. Our liquidity position remains strong reflecting a funding base of core non-interest bearing demand deposit accounts and low-cost interest-bearing savings, interest checking and money market deposit accounts. The significant increase in non-interest bearing deposits has allowed us to lower time deposit and core deposit rates in a much lower rate environment. We expect to continue to move deposit costs lower which will help stabilize or improve our margin.

Our provision for loan losses for the first and second quarters were notably higher compared to prior quarters primarily due to continued uncertainty about the duration of, and the level of economic disruption from the COVID-19 pandemic. We are closely monitoring loan deferrals and the impact to our borrowers due to the pandemic. While its impossible to predict how ultimately our loan portfolio will perform in this difficult environment, we believe our strong credit underwriting standards will put us in a good position to manage the potential negative impact. We are also seeing some positive trends as over 40% of deferred loans have reached their deferred payment due date and more than three-quarters of these loans have made their regular payment.

Our earnings performance has benefited from PPP loan generated fees and loan swap fees. In addition, weve done a good job of lowering deposit costs helping to stabilize our margin. At the same time non-interest expense has been managed effectively, reflected in a lower efficiency ratio. We are well capitalized, have strong liquidity and the capital structure flexibility to adapt to these unprecedented times.

Income Statement

First Banks net interest income for the second quarter of 2020 was $16.3 million, an increase of $2.2 million, or 15.3%, compared to $14.2 million in the second quarter of 2019. This increase was driven by a $1.5 million, or 7.3%, increase in interest and dividend income, along with a $665,000 decrease in total interest expense.

The increase in interest income was primarily a result of a $377.0 million increase in average loans compared with the second quarter of 2019. The reduction in interest expense was a result of a 48-basis point reduction for the average rates paid on interest bearing liabilities. Six-month 2020 net interest income totaled $32.2 million, an increase of $4.0 million or 14.2%, compared to $28.2 million for 2019. The increase in the 2020 year to date net interest income was also driven by strong growth in average loans, which increased by $321.3 million, or 21.4%, from the prior year period.

The second quarter 2020 tax equivalent net interest margin was 3.07%, a decrease of 30 basis points compared to the prior year quarter and a decrease of 23 basis points compared to the linked first quarter of 2020. The decrease compared to second quarter 2019 was primarily the result of a 74-basis point reduction in the average rate for interest-earning assets. The 74 basis point reduction was primarily the result of the 75 basis point decrease in the targeted federal funds rate during the second half of 2019 and the 150 basis point reduction in March of 2020. The decrease was also impacted by the yield on PPP loans which reduced the average rate on interest earning assets by approximately 7 basis points during the quarter ended June 30, 2020. The lower interest rates for interest-earning assets was partially offset by a 48-basis point reduction in the average cost of interest-bearing deposits, reflecting the repricing of time deposits lower, as well as lower interest rates for money markets and interest bearing demand deposits.

The tax equivalent net interest margin for the six months ended June 30, 2020 was 3.18%, a decrease of 23 basis points compared to the same period in 2019. The decrease in the six-month net interest margin was also a result of lower average interest rates for interest-earning assets, which declined by 51 basis points. The reduction in the rate for interest-earning assets was partially mitigated by a 30-basis point reduction in the cost of total interest-bearing liabilities, primarily interest bearing deposits.

The provision for loan losses for the second quarter of 2020 was $3.0 million, an increase of $1.3 million compared to $1.7 million in the second quarter of 2019. The increase in the provision compared to second quarter 2019, is primarily attributable to uncertainty in relation to potential credit losses due to the ongoing COVID-19 pandemic. The provision for loan losses for the first six months of 2020 totaled $5.9 million compared to $2.1 million for the same period in 2019. The increase in the six-month provision for loan losses was primarily a result of the same factors as discussed for the three-month period.

Second quarter 2020 non-interest income increased by $956,000 to $1.9 million, compared to $924,000 in second quarter 2019, primarily the result of a $500,000 increase in loan fees, primarily loan swap fees, and a $318,000 increase in income from bank owned life insurance compared to the second quarter of 2019. Non-interest income totaled $3.1 million for the six months ended June 30, 2020 compared to $1.6 million for the same period in 2019. This increase in non-interest income for the first six months of 2020, was primarily a result of the same sources of revenue described for the three-month period.

Non-interest expense for second quarter 2020 totaled $9.8 million, an increase of $640,000, compared to $9.1 million for the prior year quarter. The higher non-interest expense compared to second quarter 2019 was primarily a result of increased occupancy and equipment expense related to the addition of the Grand Bank locations as well as increased costs associated with repairs, maintenance and cleaning throughout the Banks facilities, higher other professional fees due, in part, to consultants used to assist the Banks PPP lending activity and increased salaries and employee benefits expense, also related to the Grand Bank acquisition.

On a linked quarter basis non-interest expense decreased $148,000 to $9.8 million for second quarter 2020 compared to $9.9 million for the linked first quarter of 2020. The lower non-interest expense compared to the linked first quarter of 2020, was primarily a result of reduced data processing costs reflecting completion of integration activities for the Grand Bank locations, which ended the need to retain the services of Grand Banks prior data processing vendor as well as other cost saving initiatives that began in the second quarter of 2020.

Non-interest expense for the first six months of 2020 totaled $19.7 million, an increase of $1.6 million, or 8.6%, compared to $18.1 million for the same period in 2019. The increase was primarily a result of increased salaries and employee benefits, higher occupancy and equipment expense, as well as increased other expense, legal fees, other professional fees and regulatory fees. Increases to the prior expense categories were partially offset by reduced merger-related expenses, marketing and advertising, and travel and entertainment costs.

Pre-provision net revenueii for the second quarter of 2020 was $8.4 million, an increase of $2.3 million, or 39.0%, compared to $6.1 million for the second quarter of 2019, and up $1.2 million, or 17.7%, compared to $7.2 million in the linked first quarter of 2020.

Income tax expense for the three months ended June 30, 2020 was $1.3 million, with an effective tax rate of 24.7% compared to $1.4 million for the three months ended June 30, 2019, with an effective tax rate of 33.0%, and $1.0 million for the linked first quarter of 2020, with an effective tax rate of 23.7%. Income tax expense for the six months ended June 30, 2020 was $2.4 million, with an effective tax rate of 24.2% compared to $2.5 million for the first six months of 2019, with an effective tax rate of 25.8%. The Company expects an effective tax rate in a range of 24% to 25% for the remainder of 2020.

Balance Sheet

Total assets at June 30, 2020 were $2.30 billion, an increase of $469.9 million, or 25.7%, compared to $1.83 billion at June 30, 2019, and an increase of $289.0 million, or 14.4%, from December 31, 2019. Total loans were $1.96 billion at June 30, 2020, an increase of $406.5 million, or 26.2%, compared to $1.55 billion at June 30, 2019, and an increase of $231.4 million, or 13.4%, from the 2019 year end. Total loans as of June 30, 2020 increased $196.6 million from $1.76 billion at the end of the linked first quarter of 2020. The growth during the second quarter 2020 was mainly derived from commercial and industrial loans originated as a result of funding available through the PPP.

Total deposits were $1.92 billion at June 30, 2020, an increase of $479.8 million, or 33.2%, compared to $1.44 billion at June 30, 2019, and an increase of $282.4 million, 17.2%, from December 31, 2019. Non-interest-bearing deposits totaled $459.1 million at June 30, 2020, an increase of $167.2 million, or 57.3%, from March 31, 2020, reflective of continued growth in commercial deposits primarily related to PPP loan program.

On May 29, 2020, First Bank entered into a Subordinated Note Purchase Agreement with certain institutional accredited investors pursuant to which the Bank sold and issued $30.0 million in aggregate principal amount of 5.50% Fixed-to-Floating Rate Subordinated Notes due June 1, 2030. The Notes qualify as Tier 2 capital for regulatory capital purposes. The Bank utilized the net proceeds of the offering of $29.5 million to redeem their outstanding $22.0 million subordinated notes on June 30, 2020, and will use the remainder of the net proceeds for general corporate purposes.

Stockholders equity was $226.4 million at June 30, 2020 and on December 31, 2019. Stockholders equity at June 30, 2020 reflects treasury stock purchases of $7.9 million and $1.2 million in cash dividends during the first six months of 2020 offset by net income of $7.4 million, stock option exercises and an increase in accumulated other comprehensive income of $836,000.

As of June 30, 2020, the Bank continued to exceed all regulatory capital requirements to be considered well capitalized, with a Tier 1 Leverage ratio of 9.26%, a Tier 1 Risk-Based capital ratio of 10.37%, a Common Equity Tier 1 Capital ratio of 10.37%, and a Total Risk-Based capital ratio of 12.93%.

Asset Quality

First Banks asset quality metrics have remained relatively stable and favorable during the past 12 months. Net charge-offs were $1.0 million for the second quarter of 2020, compared to net charge-offs of $481,000 for the second quarter of 2019 and net charge-offs of $699,000 for the first quarter of 2020. Net charge-offs as an annualized percentage of average loans were 0.21% in second quarter 2020, compared to 0.13% in second quarter 2019 and 0.16% in the linked first quarter 2020. Nonperforming loans as a percentage of total loans at June 30, 2020 were 0.72%, compared with 0.94% on June 30, 2019 and 0.79% at March 31, 2020. Nonperforming loans were $14.1 million at June 30, 2020, down from $14.6 million on June 30, 2019, and up slightly from $13.8 million on March 31, 2020. The allowance for loan losses to nonperforming loans was 152.25% at June 30, 2020, compared with 115.13% at the end of second quarter 2019 and 141.00% at March 31, 2020.

COVID-19 Response

First Bank participated in the PPP, established by the Coronavirus Aid, Relief, and Economic Securities Act (CARES Act), during the second quarter of 2020. PPP is a specialized low-interest loan program funded by the U.S. Treasury Department and administered by the U.S. Small Business Administration (SBA). The PPP provides borrower guarantees for lenders, as well as loan forgiveness incentives for borrowers that utilize the loan proceeds to cover compensation-related business operating costs. As of July 15, 2020, First Bank has submitted and received approval from the SBA for 1,151 PPP loans totaling approximately $190.9 million. First Bank realized gross fees of $6.9 million from the SBA from the origination of these loans. These fees, net of the associated direct origination costs of approximately $519,000, are being amortized through interest income over the life of the PPP loans.

First Bank continues to monitor and analyze its COVID-19 related financial hardship payment deferrals (COVID-19 deferrals) based on asset class and borrower type. Through July 15, 2020, the Bank granted COVID-19 deferrals, primarily for 90 days, for a total of 616 loans representing approximately $430.7 million of existing loan balances. As of July 15, 2020, 291 loans totaling $180.4 million of these deferred loans have already come due for their first payment since their 90 day deferral was put in place. Out of the 291 loans, 260 loans or $144.6 million have made a payment and the Bank anticipates regular payments will continue on these loans. The Bank is working with the remainder of these customers and expects the majority will also get back on track with normal payments or will take an additional 90 day deferral. Early results are positive with 79% of COVID-19 deferrals that came due by July 15, 2020 now paying as agreed. While these trends are positive, future results will be dependent on the pandemic and its impact on the local business conditions in New Jersey and Pennsylvania.

First Bank has focused on proactively working with its borrowers in the industries hardest hit by the COVID-19 pandemic. First Banks hospitality and restaurant loan portfolio totaled $160.9 million at June 30, 2020 or 8.23% of total loans. Hospitality loans totaling $59.0 million have received a COVID-19 related deferral out of a total of $74.9 million total loans, or 79%. Of these COVID-19 deferred loans, as of July 15, 2020, loans totaling $20.0 million have already come due for their first payment since their 90 day deferral was put in place. Of the $20.0 million in loans, $7.7 million have made a payment and the Bank anticipates regular payments will continue on these loans. The Bank is in discussions with the remainder of these early deferrals about either additional deferral time, return to partial payment, or return to full repayment. Restaurant loans totaling $46.0 million have received a COVID-19 related deferral out of a total of $86.0 million total loans or 53%. Of these COVID-19 deferred loans, as of July 15, 2020, loans totaling $29.7 million have already come due for their first payment since their 90 day deferral was put in place. Of the $29.7 million, $29.2 million have made a payment and the Bank anticipates regular payments will continue on these loans.

Requests for deferrals have significantly decreased with only approximately $4.0 million of the $430.7 million in total deferrals occurring in the first 15 days of July. As of the July 15, 2020 date, the portfolio of deferred loans was $286.2 million, a reduction of $144.5 million, or 34%, compared to the peak deferral portfolio of $430.7 million. If the remainder of the deferrals behave in a similar way to the initial 42% that reached the end of their 90-day deferral period by July 15, 2020, the entire deferral portfolio would be $89.3 million, or 4.6% of total loans as of June 30, 2020.

Consistent with industry regulatory guidance, borrowers that were otherwise current on loan payments that were granted COVID-19 related financial hardship payment deferrals will continue to be reported as current loans throughout the agreed upon deferral period, will continue to accrue interest and will not be required to be accounted for as a troubled debt restructuring. This will also apply to borrowers that request a second 90 day deferral request.

Cash Dividend Declared

On July 21, 2020, First Banks Board of Directors declared a quarterly cash dividend of $0.03 per share to common stockholders of record at the close of business on August 7, 2020, payable on August 21, 2020.

Share Repurchase Program

On October 23, 2019, First Bank announced that the Board of Directors authorized, and the Bank had received regulatory approval for, the repurchase of up to 1.0 million shares of First Bank common stock in the open market. The Bank repurchased 1.0 million shares of common stock during the first six months of 2020 for an aggregate purchase price of approximately $7.9 million. The Company currently has no plans to expand its authorization to repurchase shares of its common stock.

Conference Call

First Bank will host its earnings call on Tuesday, July 28, 2020 at 9:00 AM eastern time. The direct dial toll free number for the call is 1-844-825-9784. For those unable to participate in the call, a replay will be available by dialing 1-877-344-7529 (access code 10145757) from one hour after the end of the conference call until October 28, 2020. Replay information will also be available on First Banks 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, Hamilton, Hamilton Square, Lawrence, Mercerville, Pennington, Randolph, Somerset and Williamstown, New Jersey; and Doylestown, Trevose, Warminster and West Chester, Pennsylvania. With $2.3 billion in assets as of June 30, 2020, 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 Banks future financial performance, business and growth strategy, projected plans and objectives, and related transactions, integration of acquired businesses, 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 Banks 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 declines in housing markets; the impact of disease pandemics, such as the novel strain of coronavirus disease (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, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations being issued in accordance with this statute and potential 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 Banks 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. 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 Banks Annual Report on Form 10-K and any updates to those risk factors set forth in First Banks joint 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 Banks 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 Banks behalf may issue.

_______________i 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.

ii Pre-provision net revenue is a non-U.S. GAAP financial measure and is calculated by adding net interest income and non-interest income and subtracting non-interest expense adjusted by certain non-recurring items. 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: Patrick L. Ryan, President and CEO(609) 643-0168, patrick.ryan@firstbanknj.com

FIRST BANK AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF FINANCIAL CONDITION(in thousands, except for share data)

June 30, 2020 December 31, (unaudited) 2019Assets Cash and due from banks $ 24,434 $ 16,751Federal funds sold - 40,000Interest bearing deposits with banks 99,723 25,041Cash and cash equivalents 124,157 81,792Interest bearing time deposits with banks 7,160 6,087Investment securities available for sale 66,757 47,462Investment securities held to maturity (fairvalue of $43,790at June 30, 2020 and $47,100 43,013 46,612at December 31, 2019)Restricted investment in bank stocks 6,585 6,652Other investments 6,469 6,388Loans, net of deferred fees and costs 1,955,007 1,723,574Less: Allowance for loan losses 21,441 17,245Net loans 1,933,566 1,706,329Premises and equipment, net 11,320 11,881Other real estate owned, net 1,142 1,363Accrued interest receivable 8,656 4,810Bank-owned life insurance 49,677 49,580Goodwill 16,253 16,253Other intangible assets, net 1,939 2,083Deferred income taxes 10,088 10,400Other assets 13,812 13,895Total assets $ 2,300,594 $ 2,011,587 Liabilities and Stockholders' Equity Liabilities: Non-interest bearing deposits $ 459,123 $ 275,778Interest bearing deposits 1,464,143 1,365,089Total deposits 1,923,266 1,640,867Borrowings 104,897 105,476Subordinated debentures 29,475 21,964Accrued interest payable 790 1,076Other liabilities 15,716 15,811Total liabilities 2,074,144 1,785,194Stockholders' Equity: Preferred stock, par value $2 per share;10,000,000 shares authorized; no shares issued - -and outstandingCommon stock, par value $5 per share;40,000,000 shares authorized; 20,629,892 sharesissued and 19,629,892 shares outstanding at 102,573 101,887June 30, 2020 and 20,458,665 shares issued andoutstanding at December 31, 2019Additional paid-in capital 78,384 78,112Retained earnings 52,514 46,367Accumulated other comprehensive income 863 27Treasury stock, 1,000,000 shares at June 30, (7,884 ) -2020Total stockholders' equity 226,450 226,393Total liabilities and stockholders' equity $ 2,300,594 $ 2,011,587

FIRST BANK AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (in thousands, except for share data, unaudited) Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Interest and Dividend IncomeInvestment $ 612 $ 527 $ 1,162 $ 1,078 securities?taxableInvestment 76 91 154 189 securities?tax-exemptInterest bearing deposits with banks,Federal funds sold 203 450 626 976 and otherLoans, including fees 21,088 19,412 42,251 38,080 Total interest and 21,979 20,480 44,193 40,323 dividend income Interest Expense Deposits 4,565 5,282 9,951 10,228 Borrowings 550 636 1,109 1,100 Subordinated 536 398 934 796 debenturesTotal interest 5,651 6,316 11,994 12,124 expenseNet interest income 16,328 14,164 32,199 28,199 Provision for loan 2,977 1,721 5,909 2,086 lossesNet interest incomeafter provision for 13,351 12,443 26,290 26,113 loan losses Non-Interest Income Service fees on 116 116 287 208 deposit accountsLoan fees 649 149 934 179 Income frombank-owned life 592 274 936 541 insuranceGains on sale of 38 55 117 55 loansGains on recovery of 293 187 474 322 acquired loansOther non-interest 192 143 346 292 incomeTotal non-interest 1,880 924 3,094 1,597 income Non-Interest Expense Salaries and employee 5,308 5,137 10,692 10,217 benefitsOccupancy and 1,548 1,283 2,964 2,644 equipmentLegal fees 235 127 455 239 Other professional 569 360 1,025 787 feesRegulatory fees 277 177 510 294 Directors' fees 215 194 430 394 Data processing 430 451 994 882 Marketing and 81 225 225 450 advertisingTravel and 13 135 114 246 entertainmentInsurance 122 97 318 184 Other real estate 94 44 211 113 owned expense, netMerger-related - 110 - 228 expensesOther expense 875 787 1,744 1,449 Total non-interest 9,767 9,127 19,682 18,127 expenseIncome Before Income 5,464 4,240 9,702 9,583 TaxesIncome tax expense 1,347 1,400 2,352 2,473 Net Income $ 4,117 $ 2,840 $ 7,350 $ 7,110 Basic earnings per $ 0.21 $ 0.15 $ 0.37 $ 0.38 common shareDiluted earnings per $ 0.21 $ 0.15 $ 0.36 $ 0.38 common shareCash dividends per $ 0.03 $ 0.03 $ 0.03 $ 0.06 common share Basic weightedaverage common shares 19,651,675 18,670,010 19,984,351 18,653,533 outstandingDiluted weightedaverage common shares 19,744,571 18,954,171 20,165,724 18,950,589 outstanding

FIRST BANK AND SUBSIDIARIESAVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES(dollars in thousands, unaudited) Three Months Ended June 30, 2020 2019 Average Average Average Average Balance Interest Rate Balance Interest Rate (5) (5)Interestearning assetsInvestmentsecurities $ 105,248 $ 704 2.69 % $ 94,021 $ 637 2.72 %(1) (2)Loans (3) 1,905,227 21,088 4.45 % 1,528,231 19,412 5.09 %Interestbearing deposits withbanks,Federal fundssold and 120,343 73 0.24 % 52,338 318 2.44 %otherRestrictedinvestment in 6,584 92 5.62 % 6,899 86 5.00 %bank stocksOther 6,457 38 2.37 % 6,278 46 2.94 %investmentsTotalinterest 2,143,859 21,995 4.13 % 1,687,767 20,499 4.87 %earningassets (2)Allowance for (20,000 ) (15,848 ) loan lossesNon-interestearning 127,537 110,913 assetsTotal assets $ 2,251,396 $ 1,782,832 Interestbearing liabilitiesInterestbearing $ 164,325 $ 131 0.32 % $ 144,699 $ 256 0.71 %demanddepositsMoney market 531,535 1,138 0.86 % 346,277 1,419 1.64 %depositsSavings 135,805 268 0.79 % 75,039 135 0.72 %depositsTime deposits 634,281 3,028 1.92 % 629,054 3,472 2.21 %Totalinterest 1,465,946 4,565 1.25 % 1,195,069 5,282 1.77 %bearingdepositsBorrowings 104,109 550 2.12 % 115,685 636 2.21 %Subordinated 32,515 536 6.59 % 21,893 398 7.27 %debenturesTotalinterest 1,602,570 5,651 1.42 % 1,332,647 6,316 1.90 %bearingliabilitiesNon-interestbearing 406,498 232,444 depositsOther 16,423 15,945 liabilitiesStockholders' 225,905 201,796 equityTotalliabilitiesand $ 2,251,396 $ 1,782,832 stockholders'equityNet interestincome/ 16,344 2.71 % 14,183 2.97 %interest ratespread (2)Net interestmargin (2) 3.07 % 3.37 %(4)Taxequivalent (16 ) (19 ) adjustment(2)Net interest $ 16,328 $ 14,164 income (1) Average balance of investment securities available for sale is based on amortized cost.(2) Interest and average rates are tax equivalent using a federal income tax rate of 21%.(3) Average balances of loansinclude loans on nonaccrual status.(4) Net interest income divided by average total interest earning assets.(5) Annualized.

FIRST BANK AND SUBSIDIARIESAVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES(dollars in thousands, unaudited) Six Months Ended June 30, 2020 2019 Average Average Average Average Balance Interest Rate Balance Interest Rate (5) (5)Interestearning assetsInvestmentsecurities $ 98,553 $ 1,348 2.75 % $ 96,604 $ 1,307 2.73 %(1) (2)Loans (3) 1,824,020 42,251 4.66 % 1,502,766 38,080 5.11 %Interestbearing deposits withbanks,Federal fundssold and 105,815 343 0.65 % 58,219 694 2.40 %otherRestrictedinvestment in 6,549 202 6.20 % 6,328 193 6.15 %bank stocksOther 6,438 81 2.53 % 6,255 89 2.87 %investmentsTotalinterest 2,041,375 44,225 4.36 % 1,670,172 40,363 4.87 %earningassets (2)Allowance for (18,761 ) (15,676 ) loan lossesNon-interestearning 127,698 110,719 assetsTotal assets $ 2,150,312 $ 1,765,215 Interestbearing liabilitiesInterestbearing $ 162,643 $ 293 0.36 % $ 149,617 $ 518 0.70 %demanddepositsMoney market 487,550 2,628 1.08 % 337,319 2,708 1.62 %depositsSavings 131,215 590 0.90 % 79,552 270 0.68 %depositsTime deposits 647,024 6,440 2.00 % 630,900 6,732 2.15 %Totalinterest 1,428,432 9,951 1.40 % 1,197,388 10,228 1.72 %bearingdepositsBorrowings 103,269 1,109 2.16 % 104,000 1,100 2.13 %Subordinated 27,244 934 6.86 % 21,879 796 7.28 %debenturesTotalinterest 1,558,945 11,994 1.55 % 1,323,267 12,124 1.85 %bearingliabilitiesNon-interestbearing 347,539 225,854 depositsOther 16,641 16,652 liabilitiesStockholders' 227,187 199,442 equityTotalliabilitiesand $ 2,150,312 $ 1,765,215 stockholders'equityNet interestincome/ 32,231 2.81 % 28,239 3.02 %interest ratespread (2)Net interestmargin (2) 3.18 % 3.41 %(4)Taxequivalent (32 ) (40 ) adjustment(2)Net interest $ 32,199 $ 28,199 income (1) Average balances of investment securities available for sale are based on amortized cost.(2) Interest and average rates are tax equivalent using a federal income tax rate of 21%.(3) Average balances of loansinclude loans on nonaccrual status.(4) Net interest income divided by average total interest earning assets.(5) Annualized.

FIRST BANK AND SUBSIDIARIESQUARTERLY FINANCIAL HIGHLIGHTS(in thousands, except for share and employee data, unaudited) As of or For the Quarter Ended 6/30/2020 3/31/2020 12/31/2019 9/30/2019 (1) 6/30/2019EARNINGS Net interest $ 16,328 $ 15,871 $ 16,191 $ 13,976 $ 14,164 incomeProvision for 2,977 2,932 340 1,558 1,721 loan lossesNon-interest 1,880 1,214 1,493 905 924 incomeNon-interest 9,767 9,915 9,309 11,928 9,127 expenseIncome tax 1,347 1,005 2,789 306 1,400 expenseNet income 4,117 3,233 5,246 1,089 2,840 PERFORMANCE RATIOSReturn onaverage assets 0.74 % 0.63 % 1.02 % 0.23 % 0.64 %(2)Adjusted returnon average 0.74 % 0.63 % 1.16 % 0.81 % 0.66 %assets (2) (3)Return onaverage equity 7.33 % 5.69 % 9.24 % 2.11 % 5.64 %(2)Adjusted returnon average 7.33 % 5.69 % 10.53 % 7.34 % 5.82 %equity (2) (3)Return onaverage tangible 7.97 % 6.19 % 10.06 % 2.31 % 6.11 %equity (2) (3)Adjusted return onaverage tangible 7.97 % 6.19 % 11.46 % 8.02 % 6.37 %equity (2) (3)Net interest 3.07 % 3.30 % 3.34 % 3.15 % 3.37 %margin (2) (4)Efficiency ratio 53.64 % 58.03 % 52.64 % 57.19 % 59.76 %(3)Pre-provision $ 8,441 $ 7,170 $ 8,375 $ 6,371 $ 6,071 net revenue (3) SHARE DATA Common shares 19,629,892 20,141,204 20,458,665 20,460,078 18,757,965 outstandingBasic earnings $ 0.21 $ 0.16 $ 0.26 $ 0.06 $ 0.15 per shareDiluted earnings 0.21 0.16 0.25 0.06 0.15 per shareAdjusted dilutedearnings per 0.21 0.16 0.29 0.20 0.15 share (3)Tangible bookvalue per share 10.61 10.33 10.17 9.92 9.85 (3)Book value per 11.54 11.23 11.07 10.83 10.78 share MARKET DATA Market value per $ 6.52 $ 6.94 $ 11.05 $ 10.83 $ 11.74 shareMarket value /Tangible book 61.46 % 67.20 % 108.66 % 109.59 % 119.14 %valueMarket $ 127,987 $ 139,780 $ 226,068 $ 221,583 $ 220,219 capitalization CAPITAL & LIQUIDITYTangiblestockholders' 9.12 % 10.03 % 10.44 % 10.02 % 10.19 %equity / tangibleassets (3)Stockholders' 9.84 % 10.81 % 11.25 % 10.83 % 11.05 %equity / assetsLoans / deposits 101.65 % 101.90 % 105.04 % 105.52 % 107.28 % ASSET QUALITY Net charge-offs $ 1,013 $ 699 $ 325 $ 1,084 $ 481 Nonperforming 14,083 13,814 22,746 15,841 14,554 loansNonperforming 15,225 14,975 24,108 17,705 15,330 assetsNet charge offs/ average loans 0.21 % 0.16 % 0.07 % 0.28 % 0.13 %(2)Nonperformingloans / total 0.72 % 0.79 % 1.32 % 0.91 % 0.94 %loansNonperformingassets / total 0.66 % 0.72 % 1.20 % 0.87 % 0.84 %assetsAllowance forloan losses / 1.10 % 1.11 % 1.00 % 0.99 % 1.08 %total loansAllowance for loanlosses / 152.25 % 141.00 % 75.82 % 108.77 % 115.13 %nonperforming loans OTHER DATA Total assets $ 2,300,594 $ 2,092,444 $ 2,011,587 $ 2,044,938 $ 1,830,695 Total loans 1,955,007 1,758,364 1,723,574 1,743,897 1,548,540 Total deposits 1,923,266 1,725,547 1,640,867 1,652,608 1,443,497 Totalstockholders' 226,450 226,259 226,393 221,510 202,242 equityNumber offull-time 209 208 216 216 195 equivalentemployees (5) (1) Includes effects of Grand Bank merger effective September 30, 2019.(2) Annualized. (3) Non-U.S. GAAP financial measure that we believe provides management andinvestors with information that is useful in understanding ourfinancialperformance and condition. See accompanying table, "Non-U.S. GAAP FinancialMeasures", for calculation and reconciliation.(4) Tax equivalentusing a federal income tax rate of21%.(5) Includes 4 and 15 full-time equivalent seasonal interns as of June 30, 2020 and 2019, respectively.

FIRST BANK AND SUBSIDIARIESQUARTERLY FINANCIAL HIGHLIGHTS(dollars in thousands, unaudited) As of the Quarter Ended 6/30/2020 3/31/2020 12/31/2019 9/30/2019 (1) 6/30/2019LOAN COMPOSITIONCommercial and $ 428,494 $ 247,654 $ 239,090 $ 236,932 $ 219,930 industrialCommercial real estate:Owner-occupied 392,096 387,217 395,995 405,485 370,498 Investor 689,891 678,568 673,300 685,006 619,174 Constructionand 131,791 124,496 105,709 113,281 93,916 developmentMulti-family 132,942 131,566 119,005 103,858 88,801 Totalcommercial 1,346,720 1,321,847 1,294,009 1,307,630 1,172,389 real estateResidential real estate:Residentialmortgage andfirst lien 117,796 118,020 123,917 127,337 92,760 home equityloansHomeequity?secondlien loans and 29,371 33,764 32,555 35,264 26,695 revolvinglines ofcreditTotalresidential 147,167 151,784 156,472 162,601 119,455 real estateConsumer and 40,230 38,902 35,810 38,584 38,529 otherTotal loansprior to 1,962,611 1,760,187 1,725,381 1,745,747 1,550,303 deferred loanfees and costsNet deferredloan fees and (7,604 ) (1,823 ) (1,807 ) (1,850 ) (1,763 )costsTotal loans $ 1,955,007 $ 1,758,364 $ 1,723,574 $ 1,743,897 $ 1,548,540 LOAN MIX Commercial and 21.9 % 14.1 % 13.9 % 13.6 % 14.2 %industrialCommercial real estate:Owner-occupied 20.1 % 22.0 % 23.0 % 23.3 % 23.9 %Investor 35.3 % 38.6 % 39.1 % 39.3 % 40.0 %Constructionand 6.7 % 7.1 % 6.1 % 6.5 % 6.1 %developmentMulti-family 6.8 % 7.5 % 6.9 % 6.0 % 5.7 %Totalcommercial 68.9 % 75.2 % 75.1 % 75.0 % 75.7 %real estateResidential real estate:Residentialmortgage andfirst lien 6.0 % 6.7 % 7.2 % 7.3 % 6.0 %home equityloansHomeequity?secondlien loans and 1.5 % 1.9 % 1.9 % 2.0 % 1.7 %revolvinglines ofcreditTotalresidential 7.5 % 8.6 % 9.1 % 9.3 % 7.7 %real estateConsumer and 2.1 % 2.2 % 2.0 % 2.2 % 2.5 %otherNet deferredloan fees and (0.4 %) (0.1 %) (0.1 %) (0.1 %) (0.1 %)costsTotal loans 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % (1) Includes effects of GrandBank merger effective September 30, 2019.

FIRST BANK AND SUBSIDIARIESNON-U.S. GAAP FINANCIAL MEASURES(in thousands, except for share data, unaudited) As of or For the Quarter Ended 6/30/2020 3/31/2020 12/31/2019 9/30/2019 (1) 6/30/2019Return onAverage TangibleEquityNet income $ 4,117 $ 3,233 $ 5,246 $ 1,089 $ 2,840 (numerator) Averagestockholders' $ 225,905 $ 228,471 $ 225,200 $ 204,759 $ 201,796 equityLess: AverageGoodwill andother 18,236 18,309 18,377 17,412 17,450 intangibleassets, netAverageTangiblestockholders' $ 207,669 $ 210,162 $ 206,823 $ 187,347 $ 184,346 equity(denominator) Return onAverage 7.97 % 6.19 % 10.06 % 2.31 % 6.11 %Tangibleequity Tangible BookValue Per ShareStockholders' $ 226,450 $ 226,259 $ 226,393 $ 221,510 $ 202,242 equityLess: Goodwilland other 18,192 18,245 18,336 18,485 17,406 intangibleassets, netTangiblestockholders' $ 208,258 $ 208,014 $ 208,057 $ 203,025 $ 184,836 equity(numerator) Common sharesoutstanding 19,629,892 20,141,204 20,458,665 20,460,078 18,757,965 (denominator) Tangible bookvalue per $ 10.61 $ 10.33 $ 10.17 $ 9.92 $ 9.85 share TangibleEquity / AssetsStockholders' $ 226,450 $ 226,259 $ 226,393 $ 221,510 $ 202,242 equityLess: Goodwilland other 18,192 18,245 18,336 18,485 17,406 intangibleassets, netTangibleequity $ 208,258 $ 208,014 $ 208,057 $ 203,025 $ 184,836 (numerator) Total assets $ 2,300,594 $ 2,092,444 $ 2,011,587 $ 2,044,938 $ 1,830,695 Less: Goodwilland other 18,192 18,245 18,336 18,485 17,406 intangibleassets, netAdjusted totalassets $ 2,282,402 $ 2,074,199 $ 1,993,251 $ 2,026,453 $ 1,813,289 (denominator) Tangibleequity / 9.12 % 10.03 % 10.44 % 10.02 % 10.19 %assets Efficiency Ratio (2)Non-interest $ 9,767 $ 9,915 $ 9,309 $ 11,928 $ 9,127 expenseLess:Merger-related - - - 3,418 110 expensesAdjustednon-interest $ 9,767 $ 9,915 $ 9,309 $ 8,510 $ 9,017 expense(numerator) Net interest $ 16,328 $ 15,871 $ 16,191 $ 13,976 $ 14,164 incomeNon-interest 1,880 1,214 1,493 905 924 incomeTotal revenue 18,208 17,085 17,684 14,881 15,088 Adjusted totalrevenue $ 18,208 $ 17,085 $ 17,684 $ 14,881 $ 15,088 (denominator) Efficiency 53.64 % 58.03 % 52.64 % 57.19 % 59.76 %ratio Pre-ProvisionNet Revenue (2)Net interest $ 16,328 $ 15,871 $ 16,191 $ 13,976 $ 14,164 incomeNon-interest 1,880 1,214 1,493 905 924 incomeLess:Non-interest 9,767 9,915 9,309 11,928 9,127 expenseAdd:Merger-related - - - 3,418 110 expensesPre-provision $ 8,441 $ 7,170 $ 8,375 $ 6,371 $ 6,071 net revenue (1) Includes effects of GrandBank merger effective September 30, 2019.(2) During the current quarter the efficiency ratio and pre-provision netrevenue calculations were changed from the way these figures were calculated inprevious periods.The prior quarter numbers have been adjusted accordingly.Gains on recovery of acquired loans are no longer removed from the revenuenumbers as management hasdetermined that these amounts have become part ofour core operations and should not be removed in our adjusted totals.

FIRST BANK AND SUBSIDIARIESNON-U.S. GAAP FINANCIAL MEASURES(dollars in thousands, except for share data, unaudited) For the Quarter Ended 6/30/2020 3/31/2020 12/31/2019 9/30/2019 (1) 6/30/2019 Adjusted dilutedearnings per share,Adjusted returnon average assets, andAdjusted returnon average equity (2) Net income $ 4,117 $ 3,233 $ 5,246 $ 1,089 $ 2,840 Add:Merger-related - - - 2,700 87 expenses (3)Add: DeferredTax Asset - - 730 - - revaluationAdjusted net $ 4,117 $ 3,233 $ 5,976 $ 3,789 $ 2,927 income Diluted weightedaverage common 19,744,571 20,565,867 20,666,729 18,976,574 18,954,171 sharesoutstandingAverage assets $ 2,251,396 $ 2,049,229 $ 2,037,127 $ 1,859,818 $ 1,782,832 Average equity $ 225,905 $ 228,471 $ 225,200 $ 204,759 $ 201,796 Average Tangible $ 207,669 $ 210,162 $ 206,823 $ 187,347 $ 184,346 Equity Adjusted dilutedearnings per $ 0.21 $ 0.16 $ 0.29 $ 0.20 $ 0.15 shareAdjusted returnon average 0.74 % 0.63 % 1.16 % 0.81 % 0.66 %assets (4)Adjusted returnon average 7.33 % 5.69 % 10.53 % 7.34 % 5.82 %equity (4)Adjusted returnon average 7.97 % 6.19 % 11.46 % 8.02 % 6.37 %tangible equity(4) (1) Includes effects of GrandBank merger effective September 30, 2019.(2) During the current quarter the adjusted net income calculation was changedfrom the way it was calculated in previous periods. The prior quarter numbershavebeen adjusted accordingly. Gains on recovery of acquired loans are nolonger removed from adjusted net income as management has determined thattheseamounts have become part of our core operations and should not beremoved in our adjusted totals.(3) Items are tax-effected using a federal income tax rate of 21%.(4) Annualized.