FIRST RESOURCE BANK ANNOUNCES MOST PROFITABLE QUARTER TO DATE; NET INCOME GREW 20% OVER THE PRIOR QUARTER

EXTON, PA – First Resource Bank (OTCQX: FRSB) announced financial results for the three months ended March 31, 2018.

Highlights for the first quarter of 2018 included:

• Net income of $480,992 was the highest quarterly profit in the Bank’s history • Net income grew 20% over the quarter ended December 31, 2017 and 18% over the quarter ended March 31, 2017 • Total interest income grew 3% over the quarter ended December 31, 2017 and 14% over the quarter ended March 31, 2017 • Total loans grew 11% when comparing March 31, 2018 to March 31, 2017 • Net interest margin increased 8 basis points from 3.90% in the quarter ended December 31, 2017 to 3.98% for the quarter ended March 31, 2018
Glenn B. Marshall, President & CEO, stated, “We are pleased with first quarter results as we were able to deploy federal income tax savings into enhancing our staffing and moving forward with plans for a third branch, while still achieving record profitability. The Bank’s scalability has been enhanced with personnel moves made during the quarter and we are very excited about our planned geographic expansion into the Wayne, Pennsylvania market.”
Net income for the quarter ended March 31, 2018 was $480,992, which compares to $401,757 for the previous quarter and $406,553 for the first quarter of the prior year. The first quarter of 2018 was impacted by the lower corporate federal income tax rate as a result of the Tax Cuts and Jobs Act enacted on December 22, 2017.
Net interest income was $2,397,303 for the quarter ended March 31, 2018 as compared to $2,348,581 for the previous quarter, an improvement of 2%. The net interest margin increased 8 basis points from 3.90% for the quarter ended December 31, 2017 to 3.98% for the quarter ended March 31, 2018. The overall yield on interest earning assets increased 14 basis points during the first quarter led by a 3 basis point increase in loan yields to 5.23%. The cost of interest bearing deposits increased 3 basis points during the first quarter to 0.96%.
Non-interest income for the quarter ended March 31, 2018 was $115,742, as compared to $93,721 for the previous quarter and $261,270 for the first quarter of the prior year. There were no gains on sales of SBA loan recognized during the first quarter of 2018 and the fourth quarter of 2017,
as compared to $155 thousand in gains on sales of SBA loans recognized during the first quarter of 2017.
Non-interest expense increased $169 thousand, or 10%, in the three months ended March 31, 2018 as compared to the prior quarter. The increase was primarily due to an increase in salaries and benefits, occupancy, advertising, data processing and other costs, partially offset by a decrease in professional fees.
Deposits grew a net $615 thousand from $210.9 million at December 31, 2017 to $211.5 million at March 31, 2018. During the first quarter, non-interest bearing deposits increased $52 thousand, totaling $25.0 million at December 31, 2017 and March 31, 2018. Interest-bearing checking balances decreased $1.2 million, or 12%, from $9.8 million at December 31, 2017 to $8.6 million at March 31, 2018. Money market deposits decreased $836 thousand, or 1%, from $108.5 million at December 31, 2017 to $107.7 million at March 31, 2018. Certificates of deposit increased $2.6 million, or 4%, from $67.7 million at December 31, 2017 to $70.2 million at March 31, 2018.
The loan portfolio grew $5.8 million, or 3%, during the first quarter from $217.5 million at December 31, 2017 to $223.3 million at March 31, 2018, with the majority of that growth in commercial real estate loans and construction loans.
The following table illustrates the composition of the loan portfolio:

Mar. 31, 2018
Dec. 31, 2017
Mar. 31, 2017 Commercial real estate $ 151,113,428 $ 147,895,320 $ 133,235,684 Commercial construction 22,295,657 19,794,234 19,716,986 Commercial business 28,297,067 28,315,241 26,727,194 Consumer 21,600,352 21,459,111 22,347,176 Total loans $ 223,306,504 $ 217,463,906 $ 202,027,040

The allowance for loan losses to total loans was 0.85% at March 31, 2018 as compared to 0.81% at December 31, 2017 and 0.81% at March 31, 2017. Non-performing assets consisted of nonperforming loans of $3.0 million at March 31, 2018, a 1% decrease as compared to the prior quarter. Non-performing assets to total assets increased from 1.13% at December 31, 2017 to 1.17% at March 31, 2018.
Total stockholder’s equity increased 2% from $23.2 million at December 31, 2017 to $23.5 million at March 31, 2018, primarily due to net income generated. Book value per share increased 14 cents during the first quarter of 2018 to $8.97 per share at March 31, 2018.
Total assets decreased $10.7 million, or 4% during the first quarter of 2018. This decline was primarily the result of short term investments purchased near year-end that matured early in the first quarter which were funded with overnight borrowings.
Selected Financial Data: Balance Sheets (unaudited) March 31, 2018 December 31, 2017
Cash and due from banks $ 1,689,709 $ 2,998,367 Time deposits at other banks 599,000 599,000 Investments 20,353,738 36,219,930 Loans 223,306,504 217,463,906 Allowance for loan losses (1,888,321) (1,751,953) Premises & equipment 5,755,854 5,671,763 Other assets 8,000,132 7,353,942 Total assets $ 257,816,616 $ 268,554,955 Non-interest bearing deposits $ 25,039,012 $ 24,987,354 Interest-bearing checking 8,574,495 9,755,198 Money market 107,664,560 108,500,566 Time deposits 70,238,585 67,658,995 Total deposits 211,516,652 210,902,113 Short term borrowings 2,653,000 17,997,000 Long term borrowings 14,915,500 11,287,500 Subordinated debt 3,979,726 3,977,603 Other liabilities 1,227,818 1,227,099 Total liabilities 234,292,696 245,391,315 Total stockholders’ equity 23,523,920 23,163,640 Total Liabilities & Stockholders’ Equity $ 257,816,616 $ 268,554,955

Performance Statistics (unaudited)

Qtr Ended Mar. 31, 2018

Qtr Ended Dec. 31, 2017

Qtr Ended Sept. 30, 2017

Qtr Ended June 30, 2017

Qtr Ended Mar. 31, 2017 Net interest margin 3.98% 3.90% 3.96% 3.87% 3.70% Nonperforming loans/ Total loans 1.35% 1.39% 1.54% 0.99% 0.71% Nonperforming assets/ Total assets 1.17% 1.13% 1.28% 0.83% 0.60% Allowance for loan losses/ Total loans 0.85% 0.81% 0.86% 0.80% 0.81% Average loans/Average assets 86.1% 84.3% 84.6% 84.3% 82.3% Non-interest expenses*/ Average assets 2.84% 2.57% 2.68% 2.78% 2.75% Earnings per share – basic and diluted $0.18 $0.15 $0.18 $0.18 $0.19 Book value per share $8.97 $8.83 $8.72 $8.55 $8.61 Total shares outstanding 2,623,575 2,621,887 2,619,773 2,617,596 2,102,476
* Annualized

Income Statements (unaudited) Qtr. Ended Mar. 31, 2018

Qtr. Ended Dec. 31, 2017

Qtr. Ended Sept 30, 2017

Qtr. Ended June 30, 2017

Qtr. Ended Mar. 31, 2017 INTEREST INCOME Loans, including fees $2,849,596 $2,768,463 $2,714,301 $2,615,571 $2,503,577 Securities 130,141 113,230 109,255 102,142 98,823 Other 2,563 15,593 13,976 10,888 21,723 Total interest income 2,982,300 2,897,286 2,837,532 2,728,601 2,624,123 INTEREST EXPENSE Deposits 441,063 433,287 410,731 408,308 409,673 Borrowings 76,810 47,575 47,005 49,122 50,935 Subordinated debt 67,124 67,843 67,847 67,486 67,124 Total interest expense 584,997 548,705 525,583 524,916 527,732 Net interest income 2,397,303 2,348,581 2,311,949 2,203,685 2,096,391 Provision for loan losses 134,322 89,233 123,974 20,085 120,024 Net interest income after provision for loan losses 2,262,981 2,259,348 2,187,975 2,183,600 1,976,367 NON-INTEREST INCOME BOLI income 35,040 28,258 28,473 28,522 28,370 Gain on sale of SBA loans – – 41,536 – 155,337 Other 80,702 65,463 65,797 71,030 77,563 Total non-interest income 115,742 93,721 135,806 99,552 261,270 NON-INTEREST EXPENSE Salaries & benefits 1,028,005 923,583 947,285 895,634 863,822 Occupancy & equipment 194,772 175,539 188,968 187,672 190,781 Professional fees 87,452 90,275 82,922 144,447 113,494 Advertising 62,222 24,802 41,717 47,905 42,475 Data processing 105,617 102,435 93,119 98,353 96,278 Other 317,187 309,388 292,103 294,235 332,733 Total non-interest expense 1,795,255 1,626,022 1,646,114 1,668,246 1,639,583 Income before income tax expense 583,468 727,047 677,667 614,906 598,054 Federal income tax expense 102,476 325,290 215,963 197,205 191,501 Net income $ 480,992 $ 401,757 $ 461,704 $ 417,701 $ 406,553

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About First Resource Bank
First Resource Bank is a locally owned and operated Pennsylvania state-chartered bank with two full-service branches, serving the banking needs of businesses, professionals and individuals in Chester County, Pennsylvania. 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. 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.

FIRST RESOURCE BANK ANNOUNCES MOST PROFITABLE QUARTER TO DATE; NET INCOME GREW 20% OVER THE PRIOR QUARTER

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