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First Bank Reports 2013 Earnings of $1.7 Million; Total Assets Reach $467 Million

HAMILTON, NJ--(Marketwired - February 24, 2014) - First Bank (NASDAQ: FRBA) today announced fourth quarter and full year 2013 results. Net income for the quarter was $311,000 or $0.05 per diluted share, compared to net income of $1,000,000 or $0.21 per diluted share for the fourth quarter of 2012 and $492,000 or $0.10 per diluted share for the third quarter of 2013. 

Net income for the year ended December 31, 2013 totaled $1.7 million or $0.33 per diluted share compared to net income of $2.6 million or $0.63 per diluted share for the prior year. The decrease in net income reflects the depletion of certain tax benefits during 2012 as First Bank's 2013 results were fully taxable.

President and Chief Executive Officer Patrick L. Ryan discussed the results: "Strong top-line growth continued during the fourth quarter, but further clean-up of the pre-recap loan portfolio led to lower bottom-line results. All things considered, 2013 turned out to be a good year for First Bank: assets increased $116 million or 33%; loans increased $80 million or 31%; deposits increased $90 million or 29%; we opened another new branch; we announced and received regulatory approval for our pending acquisition of Heritage Community Bank; and we closed our initial public offering raising gross proceeds of $23 million in new equity capital. As a result of these positive developments throughout the year, our strategic positioning has improved significantly. 

"Our asset quality profile continued to improve during 2013. Criticized and classified loans and OREO, including other repossessed assets, declined from $14.9 million at December 31, 2012 to $11.2 million at December 31, 2013, a reduction of 25%. When you add in our higher capital base at year end, these adversely classified assets dropped to 19% of our risk-based capital, down from 44% a year earlier."

Ryan continued, "We expect to finalize the Heritage merger during the first quarter. Once completed we will be an approximately $600 million franchise with eight (8) branches and sufficient capital available for continued growth. We remain excited about our prospects in an industry where headwinds are subsiding and renewed consolidation should create additional expansion opportunities."

Fourth Quarter and Full Year 2013 Highlights

  • Balance Sheet
    • Total assets at December 31, 2013 were $466.8 million, an increase of $41.1 million or 9.7% compared to September 30, 2013 and an increase of $116.0 million or 33.1% compared to December 31, 2012. 
    • Total loans reached $340.0 million at year end, an increase of $26.0 million or 8.3% compared to September 30, 2013 and an increase of $79.9 million or 30.7% compared to December 31, 2012. Loan growth occurred across all product categories consistent with our current loan mix.
    • Total deposits reached $399.1 million, an increase of $20.8 million or 5.5% compared to September 30, 2013 and an increase of $90.1 million or 29.1% compared to December 31, 2012. 
    • Book equity increased to $52.5 million at December 31, 2013, driven primarily by the new capital raised in the November capital offering. 
    • Book value per share was $6.16 at December 31, 2013 compared to $6.73 per share at September 30, 2013 and $6.62 per share at December 31, 2012; dilution from the capital offering was the biggest driver of the decline during the fourth quarter.
  • Income Statement
    • Net interest income for the fourth quarter of 2013 totaled $3.6 million, an increase of $137 thousand or 3.9% compared to $3.5 million for the third quarter of 2013. Net interest income totaled $13.2 million for the full year 2013, an increase of $2.3 million or 20.8% compared to the full year 2012. Strong loan growth led net interest income higher during all periods.
    • Non-interest income for the fourth quarter of 2013 totaled $102 thousand, an increase of $16 thousand or 18.6% compared to $86 thousand for the third quarter of 2013. Non-interest income totaled $512 thousand for the full year 2013 compared to $394 thousand for the full year 2012. The year over year increase of $118 thousand or 29.9% was largely the result of an SBA loan sale in 2013.
    • Non-interest expense for the fourth quarter of 2013 totaled $2.5 million, an increase of $44 thousand or 1.8% compared to $2.4 million for the third quarter of 2013. Increases in staff and consultants along with higher marketing costs drove the expense growth during the quarter. Non-interest expense totaled $9.4 million for the full year 2013, an increase of $1.7 million or 21.9% compared to $7.7 million for the full year 2012.
    • Pre-tax income for the fourth quarter of 2013 totaled $507 thousand, a decrease of $328 thousand or 39.3% compared to $835 thousand for the third quarter of 2013. A higher provision for loan losses drove the reduction in pre-tax income. Pre-tax income totaled $2.8 million for the full year 2013, an increase of $529 thousand or 23.4% compared to $2.3 million for the full year 2012. Strong loan growth drove the increase in pre-tax income for the year.
    • The provision for loan losses in the fourth quarter of 2013 totaled $733 thousand, an increase of $437 thousand or 147.6% compared to $296 thousand for the third quarter of 2013. Elevated charge offs associated with two, pre-recap loan relationships drove the need for a significantly higher provision during the quarter. The provision for loan losses totaled $1.5 million for the full year 2013, an increase of $177 thousand or 13.0% compared to $1.4 million for the full year 2012. Higher net charge offs in 2013 compared to 2012 ($952 thousand compared to $589 thousand) coupled with strong loan growth in 2013 led to the higher provision expense for the year.
  • Other items
    • The net interest margin (NIM) for the fourth quarter of 2013 was 3.38% compared to 3.57% for the third quarter of 2013 and 3.75% for fourth quarter of 2012. The NIM, on a tax equivalent basis, for the full year 2013 was 3.47% compared to 3.68% for the full year 2012. The low rate environment coupled with increased pricing pressure on commercial loans led to the margin compression during the quarter and the full year.
    • Non-performing assets (NPAs) were $5.1 million or 1.09% of total assets at December 31, 2013 compared to $5.9 million or 1.69% of total assets at December 31, 2012.
    • Non-accrual loans totaled $3.3 million at December 31, 2013. Loans 30-59 days past due totaled $4.8 million. We had no loans 60-89 days past due nor did we have any loans over 90 days past due and still accruing at year-end 2013. OREO (including other repossessed assets) totaled $1.8 million.
    • Regulatory capital ratios at December 31, 2013:
      • Tier 1 Leverage ratio of 11.89%
      • Tier 1 Risk-Based capital ratio of 14.11%
      • Total Risk-Based capital ratio of 15.35%
    • The allowance for loan losses to total loans at December 31, 2013 was 1.38% compared to 1.57% at December 31, 2012.
    • 59 full-time equivalent employees (FTEs) at December 31, 2013, compared to 48 FTEs at December 31, 2012.
    • Loan portfolio breakdown at December 31, 2013:
      • Commercial Acquisition, Construction and Development (ACD) loans equaled 6.9% of total loans
      • Commercial Real-Estate, Investor (CREI; including multi-family) loans equaled 41.0% of total loans
      • Commercial Real-Estate, Owner-occupied (CREO) loans equaled 23.5% of total loans
      • Commercial and Industrial (C&I) loans equaled 17.8% of total loans
      • Residential, Consumer and Other loans equaled 10.8% of total loans
    • Non-interest bearing deposits totaled $48.2 million at December 31, 2013 or 12.1% of total deposits.

About First Bank
First Bank (www.firstbanknj.com) is a New Jersey state-chartered bank with five full-service branches in Ewing, Hamilton, Lawrence, Somerset and Williamstown, New Jersey. With $467 million in assets as of December 31, 2013, First Bank offers a traditional range of deposit and loan products to individuals and businesses in its Central and Southern New Jersey markets. First Bank's common stock is listed on the Nasdaq Global Market under the symbol "FRBA". 

This news release contains certain forward-looking statements, either expressed or implied, which are provided to assist the reader in understanding anticipated future financial performance. These statements involve certain risks, uncertainties, estimates and assumptions made by management, which are subject to factors beyond First Bank's control and could impede its ability to achieve these goals. These factors include those listed in our Registration Statement on From 10 under the caption "Item 1A- Risk Factors", and general economic conditions, trends in interest rates, the ability of our borrowers to repay their loans, and results of regulatory exams, among other factors.

                         FIRST BANK AND SUBSIDIARY                          
                   (in thousands, except for share data)                    
                                                         December 31,       
                                                       2013         2012    
                                                   -----------  ----------- 
Cash and due from banks                            $     9,787  $     6,234 
Interest bearing deposits with banks                    13,927       17,694 
                                                   -----------  ----------- 
    Cash and cash equivalents                           23,714       23,928 
                                                   -----------  ----------- 
Interest bearing time deposits with banks                4,903        1,469 
Investment securities available for sale                65,017       43,265 
Investment securities held to maturity (fair value                          
 of $15,353 and $7,052 at December 31, 2013 and                             
 2012, respectively)                                    15,414        6,693 
Restricted investment in bank stocks                     1,131          824 
Other investments                                        5,000        5,000 
Loans, net of deferred fees and costs                  339,975      260,039 
  Less: Allowance for loan losses                        4,675        4,084 
                                                   -----------  ----------- 
    Net loans                                          335,300      255,955 
Premises and equipment, net                              1,787        1,901 
Other real estate owned, net                             1,664        2,604 
Accrued interest receivable                              1,232        1,033 
Bank-owned life insurance                                8,805        5,154 
Deferred income taxes                                    2,352        2,225 
Other assets                                               473          731 
                                                   -----------  ----------- 
    Total assets                                   $   466,792  $   350,782 
                                                   ===========  =========== 
Liabilities and Stockholders' Equity                                        
  Non-interest bearing                             $    48,186  $    27,460 
  Interest bearing                                     350,927      281,588 
                                                   -----------  ----------- 
    Total deposits                                     399,113      309,048 
Long-term borrowings                                    14,000       10,219 
Accrued interest payable                                   156          139 
Other liabilities                                        1,016          351 
                                                   -----------  ----------- 
    Total liabilities                                  414,285      319,757 
                                                   -----------  ----------- 
Stockholders' Equity:                                                       
Preferred stock, par value $2.00 per share;                                 
 authorized 5,000,000 shares at December 31, 2013                           
 and 1,000,000 shares at December 31, 2012; no                              
 shares issued and outstanding                               -            - 
Common stock, par value $5 per share; authorized                            
 20,000,000 shares at December 31, 2013 and                                 
 10,000,000 shares at December 31, 2012; issued and                         
 outstanding 8,520,299 shares at December 31, 2013                          
 and 4,686,965 shares at December 31, 2012              42,602       23,435 
Additional paid-in capital                              13,052       11,277 
Accumulated deficit                                     (2,290)      (3,998)
Accumulated other comprehensive (loss) income             (857)         311 
                                                   -----------  ----------- 
    Total stockholders' equity                          52,507       31,025 
                                                   -----------  ----------- 
    Total liabilities and stockholders' equity     $   466,792  $   350,782 
                                                   ===========  =========== 
                         FIRST BANK AND SUBSIDIARY                          
                     CONSOLIDATED STATEMENTS OF INCOME                      
                   (in thousands, except for share data)                    
                                 Three Months Ended         Year Ended      
                                    December 31,           December 31,     
                               ---------------------  --------------------- 
                                  2013       2012        2013       2012    
                               ---------- ----------  ---------- ---------- 
Interest and Dividend Income                                                
Investment securities -                                                     
 taxable                       $      303 $      212  $      969 $      674 
Investment securities - tax-                                                
 exempt                                52         21         138         54 
Interest bearing deposits and                                               
 other                                 55         39         173        158 
Federal funds sold                      -          -           -          1 
Loans, including fees               4,127      3,498      15,341     13,323 
                               ---------- ----------  ---------- ---------- 
   Total interest and dividend                                              
    income                          4,537      3,770      16,621     14,210 
                               ---------- ----------  ---------- ---------- 
Interest Expense                                                            
Deposits                              874        772       3,215      3,136 
Borrowings                             55         39         199        142 
                               ---------- ----------  ---------- ---------- 
   Total interest expense             929        811       3,414      3,278 
                               ---------- ----------  ---------- ---------- 
Net interest income                 3,608      2,959      13,207     10,932 
Provision for loan losses             733        418       1,543      1,366 
                               ---------- ----------  ---------- ---------- 
Net interest income after                                                   
 provision for loan losses          2,875      2,541      11,664      9,566 
                               ---------- ----------  ---------- ---------- 
Non-Interest Income                                                         
Service fees on deposit                                                     
 accounts                              18         18          75         82 
Loan fees                               4         13          33         45 
Title insurance fees                    7         20          30         59 
Income on bank-owned life                                                   
 insurance                             41         36         151        142 
Gains on sale of investment                                                 
 securities                             -          -          18          - 
Gains on sale of loans held                                                 
 for sale                               -          -         134          - 
Other non-interest income              32         31          71         66 
                               ---------- ----------  ---------- ---------- 
   Total non-interest income          102        118         512        394 
                               ---------- ----------  ---------- ---------- 
Non-Interest Expense                                                        
Salaries and employee benefits      1,251        823       4,751      3,963 
Occupancy and equipment               369        283       1,410      1,091 
Legal fees                             18        (11)        203        143 
Other professional fees               179         75         562        296 
Regulatory fees                        83         90         253        234 
Directors' fees                        57         25         231        112 
Data processing                       107         61         413        362 
Marketing and advertising             148         45         347        214 
Travel and entertainment               60         61         163        155 
Insurance                              29         37         114        122 
Other real estate owned                                                     
 expense, net                          34        343         385        420 
Litigation settlement                   -          -           -        150 
Other expense                         135        159         557        440 
                               ---------- ----------  ---------- ---------- 
   Total non-interest expense       2,470      1,991       9,389      7,702 
                               ---------- ----------  ---------- ---------- 
Income Before Income Taxes            507        668       2,787      2,258 
Income tax expense (benefit)          196       (332)      1,079       (330)
                               ---------- ----------  ---------- ---------- 
Net Income                     $      311 $    1,000  $    1,708 $    2,588 
                               ========== ==========  ========== ========== 
Basic earnings per share       $     0.05 $     0.21  $     0.33 $     0.63 
Diluted earnings per share     $     0.05 $     0.21  $     0.33 $     0.63 
Basic weighted average common                                               
 shares                         6,436,965  4,658,194   5,128,061  4,083,012 
Diluted weighted average                                                    
 common shares                  6,509,078  4,664,964   5,172,233  4,083,012 

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