First Half 2019 Net Income is $7.1 Million

For the Second Quarter and First Half of 2019: Continued Strong Loan Origination,
Solid Revenue Growth, Strong Period-End Capital Levels

HAMILTON, N.J., July 24, 2019 (GLOBE NEWSWIRE) -- First Bank (Nasdaq Global Market: FRBA) today announced results for the three and six months ended June 30, 2019. Net income for the second quarter of 2019 was $2.8 million, or $0.15 per diluted share, compared to $4.0 million, or $0.22 per diluted share, for the second quarter of 2018. Return on average assets and return on average equity for the second quarter of 2019 were 0.64% and 5.64%, respectively, and 1.02% and 9.09%, respectively, for the second quarter of 2018. Net income for the first six months of 2019 was $7.1 million, or $0.38 per diluted share, compared to $8.1 million, or $0.44 per diluted share, for the same period in 2018. First Bank’s second quarter 2019 adjusted diluted earnings per share¹ was $0.15, adjusted return on average assets1 was 0.63% and adjusted return on average equity1 was 5.52%. Second quarter 2018 adjusted diluted earnings per share was $0.24, adjusted return on average assets was 1.13% and adjusted return on average equity was 10.12%. 

Second Quarter 2019 Performance Highlights:

• Total net revenue (net interest income plus non-interest income) for the quarter increased $695,000 to $15.1 million, compared to the same prior year quarter.
• Total loans of $1.55 billion at June 30, 2019 were up $155.2 million, or 11.1%, from June 30, 2018, and $86.0 million, or 5.9%, from December 31, 2018.
• Total deposits of $1.44 billion at June 30, 2019 were up $122.4 million, or 9.3%, from June 30, 2018 and $50.3 million, or 3.6%, compared to December 31, 2018.
• Asset quality metrics continued to be solid, with net charge-offs of $481,000, or an annualized 0.13% of average loans, for second quarter 2019, compared to net recoveries of $75,000 for second quarter 2018. The ratio of nonperforming loans to total loans was 0.94% at June 30, 2019 compared to 0.61% at June 30, 2018, and 0.50% at March 31, 2019.
• Continued effective expense management was reflected in the second quarter 2019 efficiency ratio² of 60.51% compared to 60.95% for the linked first quarter of 2019, with opportunities for additional improvement going forward.

Patrick L. Ryan, President and Chief Executive Officer, commented, “Our 2019 second quarter results were impacted by higher-than-normal credit costs and an adjustment to reflect our new estimated, effective tax rate.  Adjusting for those items, our operating results were basically in line with prior quarters.  We have work to do in order to move from steady earnings back to earnings growth.  Our core deposit growth initiatives, expense management and continued benefits from M&A will be the levers to help drive earnings growth in the future.  Despite challenges, the second quarter was a solid and productive period characterized by loan growth of more than $51 million, diligent expense control and year-over-year net interest income growth. Our team continues to successfully compete for appropriate lending opportunities in a challenging and highly competitive business environment. The Bank’s non-interest expense has remained relatively flat over the last three quarters, exhibiting our commitment to expense control which is reflected in an efficiency ratio that has been near or below 60% for several quarters. This has been achieved while we have continued to invest in building our team to generate and handle the significant growth realized during that same period. During the second quarter of 2019 we also continued to advance through the process of obtaining regulatory and shareholder approvals to complete the proposed acquisition of Grand Bank, N.A. which we expect to complete during the third quarter of 2019.

“Consistent with most of the banking industry, we are dealing with funding cost headwinds and are very focused on acquiring the necessary funds needed to maintain our lending growth momentum. We continue to use a mix of customer deposits and other sources to address our funding needs in the most cost effective manner. To address net interest margin compression we continue to focus on attracting lower cost commercial deposits. In the second quarter of 2019, we successfully grew $22.8 million in non-interest bearing deposits which were related principally to commercial relationships.

“Our second quarter 2019 provision for loan losses increased $1.4 million to $1.7 million, in part due to a specific reserve that was required on a single commercial and industrial loan relationship. Our commercial loan portfolio has been built on our relationship-based lending strategy with customers within our core banking footprint, and because of our prudent underwriting standards and adherence to concentration limits, we remain comfortable that the credit risk in our portfolio is well managed. Our net charge-offs and nonperforming loans ratios remain at very manageable levels and we believe that our allowance for loan losses level remains appropriate.

“Our two-pronged strategy of investing in organic and acquired growth has resulted in total assets of more than $1.8 billion at June 30, 2019, and positions First Bank for our next threshold target of $2.0 billion in assets. We continue to see opportunities to use both strategies within our service area and expect to strategically and tactically grow our franchise through the remainder of 2019.”

Income Statement

The Bank’s net interest income for second quarter 2019 was $14.2 million, an increase of $531,000, or 3.9%, compared to $13.6 million in the second quarter of 2018. This increase was driven by a $2.8 million, or 15.9%, increase in interest and dividend income, primarily a result of a $185.9 million increase in average loans and a 10 basis point increase in the average rate on loans compared with the second quarter of 2018. This was partially offset by an increase in interest expense of $2.3 million compared to the 2018 second quarter, which was primarily the result of average balance and interest rate increases for money market deposits and time deposit accounts. Six month 2019 net interest income totaled $28.2 million, an increase of $2.0 million or 7.5%, compared to $26.2 million for 2018. The increase in the 2019 year to date net interest income was also driven by strong growth in average loans, which increased by $202.8 million, or 15.6%, from the same prior year period.

The second quarter 2019 net interest margin was 3.37%, a decrease of 26 basis points compared to the same prior year quarter and a decrease of 8 basis points compared to the linked first quarter of 2019. The decrease compared to second quarter 2018 was primarily the result of higher average balances of interest bearing liabilities (primarily money market deposits, time deposit accounts and borrowings) and a 57 basis point increase in the average rate on total interest bearing deposits.

The net interest margin for the six months ended June 30, 2019 was 3.41%, a decrease of 22 basis points compared to the same period in 2018. The decrease in the six month net interest margin, as with the three month decrease, was driven by higher average balances for interest bearing liabilities (primarily money market deposits and time deposit accounts) and a 55 basis point increase in the average rate on total interest bearing deposits.

The provision for loan losses for the second quarter of 2019 was $1.7 million, an increase of $1.0 million compared to $701,000 in the second quarter of 2018. The increase in the provision compared to second quarter 2018 reflecting a specific reserve for a commercial and industrial loan relationship, an increased level of net charge-offs, and loan growth for the quarter. The provision for loan losses for the first six months of 2019 totaled $2.1 million compared to $1.7 million for the same period in 2018. The increase in the six month provision for loan losses was primarily reflective of the same factors as for the three month period.

Second quarter 2019 non-interest income increased by $164,000 to $924,000, compared to $760,000 in second quarter 2018, primarily the result of a one-time swap referral loan fee, an increase in service fees on deposit accounts and an increase in gains on recovery of acquired loans compared to the second quarter of 2018. Non-interest income totaled $1.6 million for the six months ended June 30, 2019 compared to $1.3 million for the same period in 2018. This increase in non-interest income was primarily reflective of the same factors as for the three month period.

Non-interest expense for second quarter 2019 totaled $9.1 million, an increase of $473,000, compared to $8.7 million for the same prior year quarter, and $127,000 higher compared to $9.0 million for the linked first quarter of 2019. The higher non-interest expense compared to second quarter 2018 was primarily a result of increased salaries and employee benefits, occupancy and equipment expense and other expense, partially offset by a decrease in merger-related expenses and other professional fees. The higher salaries and employee benefits expense reflects a full quarter of cost associated with the acquired Delanco locations as well as other staffing additions during and since the second quarter of 2018 to support further growth. Non-interest expense for the first six months of 2019 totaled $18.1 million, an increase of $2.2 million, or 13.9%, compared to $15.9 million for the same period in 2018. The increase was also primarily a result of increased salaries and employee benefits, higher occupancy and equipment expense and other expense, partially offset by reduced merger-related expenses and lower other professional fees.

Pre-provision net revenue³ for the second quarter of 2019 was $5.9 million, compared to $6.3 million for the second quarter of 2018, and up $193,000, or 3.4%, compared to $5.7 million in the linked first quarter of 2019.

Income tax expense for the six months ended June 30, 2019 was $2.5 million, with an effective tax rate of 25.8%, compared to $1.9 million for the first six months of 2018, with an effective tax rate of 18.7%.  Income tax expense for the three months ended June 30, 2019 was $1.4 million, with an effective tax rate of 33.0%, compared to $1.0 million for the three months ended June 30, 2018, with an effective tax rate of 20.2%, and $1.1 million for the linked first quarter of 2019, with an effective tax rate of 20.1%. In May 2019, New Jersey issued clarifying statements related to the impact of the new tax legislation enacted in July 2018, specifically related to the combined income tax reporting for certain members of a commonly controlled unitary business group. These statements provided clarity on First Bank’s New Jersey state tax liability and affected the Bank’s effective tax rate.

Balance Sheet

Total assets at June 30, 2019 were $1.83 billion, an increase of $189.7 million, or 11.6%, compared to $1.64 billion at June 30, 2018 and an increase of $119.5 million, or 7.0%, from December 31, 2018. Total loans were $1.55 billion at June 30, 2019, an increase of $155.2 million, or 11.1%, compared to $1.39 billion at June 30, 2018, and an increase of $86.0 million, or 5.9%, from the 2018 year end. Total loans as of June 30, 2019 increased $51.5 million compared to the linked first quarter of 2019. The growth during the second quarter 2019 was mainly derived from commercial real estate loans and commercial and industrial loans.

Total deposits were $1.44 billion at June 30, 2019, an increase of $122.4 million, or 9.3%, compared to $1.32 billion at June 30, 2018, and an increase of $50.3 million, or 3.6%, from December 31, 2018. Non-interest bearing deposits totaled $241.4 million at June 30, 2019, an increase of $22.8 million, or 10.5%, from March 31, 2019, reflective of continued growth in commercial deposits.

Stockholders’ equity increased to $202.2 million at June 30, 2019, up $7.4 million or 3.8% compared to December 31, 2018. The increase was primarily the result a $6.0 million increase in retained earnings.

As of June 30, 2019, the Bank continued to exceed all regulatory capital requirements to be considered well capitalized, with a Tier 1 Leverage ratio of 10.42%, a Tier 1 Risk-Based capital ratio of 10.55%, a Common Equity Tier 1 Capital ratio of 10.55%, and a Total Risk-Based capital ratio of 12.78%.

Asset Quality

First Bank’s asset quality metrics increased from low levels, but remained healthy during the second quarter. Net charge-offs were $481,000 for the second quarter of 2019, compared to net recoveries of $75,000 for second quarter of 2018 and net recoveries of $16,000 for the first quarter of 2019. Net charge-offs as an annualized percentage of average loans were 0.13% in second quarter 2019, compared to net recoveries as an annualized percentage of average loans of 0.02% in second quarter 2018 and 0.00% in the linked first quarter 2019. Nonperforming loans as a percentage of total loans at June 30, 2019 were 0.94%, compared with 0.61% on June 30, 2018 and 0.50% at March 31, 2019. Nonperforming loans increased to $14.6 million at June 30, 2019, up from $7.5 million on March 31, 2019, primarily reflecting the movement of a commercial and industrial lending relationship to nonaccrual status. The allowance for loan losses to nonperforming loans was 115.13% at June 30, 2019, compared with 158.77% at the end of second quarter 2018 and 206.85% at March 31, 2019.
                                      
Cash Dividend Declared

On July 16, 2019, First Bank’s 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 9, 2019, payable on August 23, 2019. The Board of Directors believes that this dividend provides stockholders an added tangible benefit, and that it is appropriate given the Company’s current financial performance, momentum and near-term prospects.

Grand Bank Acquisition

On March 19, 2019, First Bank announced a definitive agreement to acquire Grand Bank, N.A. in a stock transaction valued at approximately $19.4 million. The merger has been unanimously approved by the boards of directors of both institutions and is expected to be completed in the third quarter of 2019, subject to the approval of First Bank and Grand Bank shareholders, as well as customary regulatory approvals.

Conference Call

First Bank will host an earnings call on Thursday, July 25, 2019 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 10133276) from one hour after the end of the conference call until October 25, 2019.  Replay information will also be available on First Bank’s 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 16 full-service branches in Cinnaminson, Cranbury, Delanco, Denville, Ewing, Flemington, Hamilton, Lawrence, Pennington, Randolph, Somerset and Williamstown, New Jersey, and Doylestown, Trevose, Warminster and West Chester, Pennsylvania. With $1.83 billion in assets as of June 30, 2019, 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 exchange 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 Bank’s 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 Bank’s 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; the ability to complete the Grand Bank, N.A. merger as expected and within the expected timeframe, and the possibility that one or more of the conditions to the completion of such merger may not be satisfied; 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; 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; First Bank's ability to comply with applicable capital and liquidity requirements, including First Bank’s 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 Bank’s Annual Report on Form 10-K and any updates to those risk factors set forth in First Bank’s 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 Bank’s 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 Bank’s behalf may issue.

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1} Adjusted diluted earnings per share, adjusted return on average assets and adjusted return on average equity are non-U.S. GAAP financial measures and are calculated by dividing net income adjusted for certain merger-related expenses and income and other one-time gains or expenses by diluted weighted average shares, average assets and average equity, respectively.  For a reconciliation of these non-U.S. GAAP financial measures, 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. 

² 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 adjusted for gains on sale of investment securities and gains on recovery of acquired loans).  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.

³ 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.

FIRST BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except for share data)
				June 30, 2019
				(unaudited)				December 31, 2018
Assets
Cash and due from banks				$	12,795			$	13,547
Federal funds sold					25,000				25,000
Interest bearing deposits with banks					48,858				16,883
		Cash and cash equivalents			86,653				55,430
Interest bearing time deposits with banks					6,871				5,925
Investment securities available for sale					48,871				51,260
Investment securities held to maturity (fair value of $43,493
	at June 30, 2019 and $49,411 at December 31, 2018)				43,170				49,811
Restricted investment in bank stocks					8,285				5,803
Other investments					6,292				6,203
Loans held for sale					-				-
Loans, net of deferred fees and costs					1,548,540				1,462,516
	Less: Allowance for loan losses				16,756				15,135
		Net loans			1,531,784				1,447,381
Premises and equipment, net					11,084				11,003
Operating lease right-of-use assets					8,567				-
Other real estate owned, net					776				1,455
Accrued interest receivable					5,034				4,258
Bank-owned life insurance					40,891				40,350
Goodwill					16,074				16,074
Other intangible assets, net					1,332				1,475
Deferred income taxes					9,896				10,216
Other assets					5,115				4,515
		Total assets		$	1,830,695			$	1,711,159
Liabilities and Stockholders' Equity
Liabilities:
Non-interest bearing deposits				$	241,401			$	219,034
Interest bearing deposits					1,202,096				1,174,170
		Total deposits			1,443,497				1,393,204
Borrowings					146,253				93,351
Subordinated debentures					21,910				21,856
Operating lease liabilities					9,016				-
Accrued interest payable					1,181				1,045
Other liabilities					6,596				6,867
		Total liabilities			1,628,453				1,516,323
Stockholders' Equity:
Preferred stock, par value $2 per share; 10,000,000 shares authorized;
	no shares issued and outstanding				-				-
Common stock, par value $5 per share; 40,000,000 shares authorized;
	issued and outstanding 18,757,965 shares at June 30, 2019
	and 18,676,056 shares at December 31, 2018				93,376				93,132
Additional paid-in capital					67,738				67,417
Retained earnings					41,209				35,222
Accumulated other comprehensive loss					(81	)			(935	)
		Total stockholders' equity			202,242				194,836
		Total liabilities and stockholders' equity		$	1,830,695			$	1,711,159

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,
				2019			2018			2019			2018
Interest and Dividend Income
Investment securities—taxable				$	527		$	543		$	1,078		$	1,087
Investment securities—tax-exempt					91			112			189			226
Interest bearing deposits with banks,
Federal funds sold and other					450			307			976			549
Loans, including fees					19,412			16,714			38,080			32,005
	Total interest and dividend income				20,480			17,676			40,323			33,867
Interest Expense
Deposits					5,282			3,168			10,228			5,916
Borrowings					636			477			1,100			921
Subordinated debentures					398			398			796			796
	Total interest expense				6,316			4,043			12,124			7,633
Net interest income					14,164			13,633			28,199			26,234
Provision for loan losses					1,721			701			2,086			1,700
	Net interest income after provision for loan losses				12,443			12,932			26,113			24,534
Non-Interest Income
Service fees on deposit accounts					116			65			208			118
Loan fees					149			48			179			80
Income from bank-owned life insurance					274			271			541			491
Gains on sale of investment securities, net					-			3			-			3
Gains on sale of loans					55			55			55			55
Gains on recovery of acquired loans					187			151			322			223
Other non-interest income					143			167			292			313
	Total non-interest income				924			760			1,597			1,283
Non-Interest Expense
Salaries and employee benefits					5,137			4,252			10,217			8,251
Occupancy and equipment					1,283			1,182			2,644			2,147
Legal fees					127			137			239			262
Other professional fees					360			520			787			941
Regulatory fees					177			152			294			289
Directors' fees					194			174			394			302
Data processing					451			428			882			848
Marketing and advertising					225			188			450			375
Travel and entertainment					135			97			246			197
Insurance					97			86			184			156
Other real estate owned expense, net					44			56			113			77
Merger-related expenses					110			731			228			951
Other expense					787			651			1,449			1,114
	Total non-interest expense				9,127			8,654			18,127			15,910
Income Before Income Taxes					4,240			5,038			9,583			9,907
Income tax expense					1,400			1,019			2,473			1,851
Net Income				$	2,840		$	4,019		$	7,110		$	8,056
Basic earnings per share				$	0.15		$	0.22		$	0.38		$	0.45
Diluted earnings per share				$	0.15		$	0.22		$	0.38		$	0.44
Cash dividends per common share				$	0.03		$	0.03		$	0.06		$	0.06
Basic weighted average common shares outstanding					18,670,010			18,175,617			18,653,533			17,803,492
Diluted weighted average common shares outstanding					18,954,171			18,517,953			18,950,589			18,165,242

FIRST BANK AND SUBSIDIARIES
AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES
(dollars in thousands, unaudited)
	Three Months Ended June 30,
	2019											2018
	Average								Average			Average								Average
	Balance				Interest				Rate (5)			Balance				Interest				Rate (5)
Interest earning assets
Investment securities (1) (2)	$	94,021			$	637			2.72	%		$	111,191			$	679			2.45	%
Loans (3)		1,528,231				19,412			5.09	%			1,342,365				16,714			4.99	%
Interest bearing deposits with banks,
Federal funds sold and other		52,338				318			2.44	%			42,825				145			1.36	%
Restricted investment in bank stocks		6,899				86			5.00	%			6,323				126			7.99	%
Other investments		6,278				46			2.94	%			6,112				36			2.36	%
Total interest earning assets (2)		1,687,767				20,499			4.87	%			1,508,816				17,700			4.71	%
Allowance for loan losses		(15,848	)										(13,265	)
Non-interest earning assets		110,913											86,269
Total assets	$	1,782,832										$	1,581,820
Interest bearing liabilities
Interest bearing demand deposits	$	144,699			$	256			0.71	%			170,101			$	257			0.61	%
Money market deposits		346,277				1,419			1.64	%			263,943				722			1.10	%
Savings deposits		75,039				135			0.72	%			87,313				103			0.47	%
Time deposits		629,054				3,472			2.21	%			539,666				2,086			1.55	%
Total interest bearing deposits		1,195,069				5,282			1.77	%			1,061,023				3,168			1.20	%
Borrowings		115,685				636			2.21	%			107,156				477			1.79	%
Subordinated debentures		21,893				398			7.27	%			21,786				398			7.31	%
Total interest bearing liabilities		1,332,647				6,316			1.90	%			1,189,965				4,043			1.36	%
Non-interest bearing deposits		232,444											208,951
Other liabilities		15,945											5,605
Stockholders' equity		201,796											177,299
Total liabilities and stockholders' equity	$	1,782,832										$	1,581,820
Net interest income/interest rate spread (2)						14,183			2.98	%							13,657			3.35	%
Net interest margin (2) (4)									3.37	%										3.63	%
Tax equivalent adjustment (2)						(19	)										(24	)
Net interest income					$	14,164										$	13,633
(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 loans include loans on nonaccrual status.
(4) Net interest income divided by average total interest earning assets.
(5) Annualized.

FIRST BANK AND SUBSIDIARIES
AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES
(dollars in thousands, unaudited)
	Six Months Ended June 30,
	2019											2018
	Average								Average			Average								Average
	Balance				Interest				Rate (5)			Balance				Interest				Rate (5)
Interest earning assets
Investment securities (1) (2)	$	96,604			$	1,307			2.73	%		$	112,341			$	1,360			2.44	%
Loans (3)		1,502,766				38,080			5.11	%			1,299,965				32,005			4.96	%
Interest bearing deposits with banks,
Federal funds sold and other		58,219				694			2.40	%			36,770				263			1.44	%
Restricted investment in bank stocks		6,328				193			6.15	%			6,106				216			7.13	%
Other investments		6,255				89			2.87	%			6,095				70			2.32	%
Total interest earning assets (2)		1,670,172				40,363			4.87	%			1,461,277				33,914			4.68	%
Allowance for loan losses		(15,676	)										(12,492	)
Non-interest earning assets		110,719											80,173
Total assets	$	1,765,215										$	1,528,958
Interest bearing liabilities
Interest bearing demand deposits	$	149,617			$	518			0.70	%		$	160,213			$	485			0.61	%
Money market deposits		337,319				2,708			1.62	%			240,230				1,200			1.01	%
Savings deposits		79,552				270			0.68	%			80,656				191			0.48	%
Time deposits		630,900				6,732			2.15	%			540,929				4,040			1.51	%
Total interest bearing deposits		1,197,388				10,228			1.72	%			1,022,028				5,916			1.17	%
Borrowings		104,000				1,100			2.13	%			107,429				921			1.73	%
Subordinated debentures		21,879				796			7.28	%			21,772				796			7.31	%
Total interest bearing liabilities		1,323,267				12,124			1.85	%			1,151,229				7,633			1.34	%
Non-interest bearing deposits		225,854											200,378
Other liabilities		16,652											5,662
Stockholders' equity		199,442											171,689
Total liabilities and stockholders' equity	$	1,765,215										$	1,528,958
Net interest income/interest rate spread (2)						28,239			3.02	%							26,281			3.34	%
Net interest margin (2) (4)									3.41	%										3.63	%
Tax equivalent adjustment (2)						(40	)										(47	)
Net interest income					$	28,199										$	26,234
(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 loans include loans on nonaccrual status.
(4) Net interest income divided by average total interest earning assets.
(5) Annualized.

FIRST BANK AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(in thousands, except for share and employee data, unaudited)
		As of or For the Quarter Ended
		6/30/2019				3/31/2019				12/31/2018				9/30/2018				6/30/2018 (5)
EARNINGS
Net interest income		$	14,164			$	14,035			$	14,152			$	14,558			$	13,633
Provision for loan losses			1,721				365				1,026				721				701
Non-interest income			924				673				984				1,185				760
Non-interest expense			9,127				9,000				9,190				8,214				8,654
Income tax expense			1,400				1,073				823				1,372				1,019
Net income			2,840				4,270				4,097				5,436				4,019
PERFORMANCE RATIOS
Return on average assets (1)			0.64	%			0.99	%			0.94	%			1.28	%			1.02	%
Adjusted return on average assets (1) (2)			0.63	%			0.99	%			0.90	%			1.22	%			1.13	%
Return on average equity (1)			5.64	%			8.79	%			8.42	%			11.45	%			9.09	%
Adjusted return on average equity (1) (2)			5.52	%			8.76	%			8.00	%			10.98	%			10.12	%
Net interest margin (1) (3)			3.37	%			3.45	%			3.44	%			3.60	%			3.63	%
Efficiency ratio (2)			60.51	%			60.95	%			61.78	%			53.02	%			55.64	%
Pre-provision net revenue (2)		$	5,884			$	5,691			$	5,686			$	7,245			$	6,316
SHARE DATA
Common shares outstanding			18,757,965				18,735,291				18,676,056				18,665,664				18,640,484
Basic earnings per share		$	0.15			$	0.23			$	0.22			$	0.29			$	0.22
Diluted earnings per share			0.15				0.23				0.22				0.29				0.22
Adjusted diluted earnings per share (2)			0.15				0.22				0.21				0.28				0.24
Tangible book value per share (2)			9.85				9.71				9.50				9.28				9.01
Book value per share			10.78				10.64				10.43				10.22				9.95
MARKET DATA
Market value per share		$	11.74			$	11.53			$	12.12			$	13.15			$	13.90
Market value / Tangible book value			119.14	%			118.78	%			127.60	%			141.69	%			154.24	%
Market capitalization		$	220,219			$	216,018			$	226,354			$	245,453			$	259,103
CAPITAL & LIQUIDITY
Tangible stockholders' equity / tangible assets (2)			10.19	%			10.33	%			10.47	%			10.19	%			10.35	%
Stockholders' equity / assets			11.05	%			11.22	%			11.39	%			11.10	%			11.30	%
Loans / deposits			107.28	%			103.19	%			104.98	%			101.88	%			103.76	%
ASSET QUALITY
Net charge-offs (recoveries)		$	481			$	(16	)		$	7			$	(103	)		$	(75	)
Nonperforming loans			14,554				7,501				6,362				7,346				8,372
Nonperforming assets			15,330				8,952				7,817				8,612				10,486
Net charge offs (recoveries) / average loans (1)			0.13	%			0.00	%			0.00	%			(0.03	%)			(0.02	%)
Nonperforming loans / total loans			0.94	%			0.50	%			0.44	%			0.52	%			0.61	%
Nonperforming assets / total assets			0.84	%			0.50	%			0.46	%			0.50	%			0.64	%
Allowance for loan losses / total loans			1.08	%			1.04	%			1.03	%			1.00	%			0.97	%
Allowance for loan losses / nonperforming loans			115.13	%			206.85	%			237.90	%			192.16	%			158.77	%
OTHER DATA
Total assets		$	1,830,695			$	1,777,301			$	1,711,159			$	1,717,146			$	1,640,999
Total loans			1,548,540				1,497,086				1,462,516				1,411,380				1,370,769
Total deposits			1,443,497				1,450,774				1,393,204				1,385,329				1,321,068
Total stockholders' equity			202,242				199,337				194,836				190,672				185,506
Number of full-time equivalent employees (4)			195				181				186				174				183
(1) Annualized.
(2) Non-U.S. GAAP financial measure that we believe provides management and investors with information that is useful in understanding our financial performance and condition.  See accompanying table, "Non-U.S. GAAP Financial Measures", for calculation and reconciliation.
(3) Tax equivalent using a federal income tax rate of 21%.
(4) Includes 15 and 12 full-time equivalent seasonal interns as of 6/30/2019 and 6/30/2018, respectively.
(5) Includes effects of Delanco Bancorp, Inc. merger effective April 30, 2018.

FIRST BANK AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(dollars in thousands, unaudited)
			As of the Quarter Ended
			6/30/2019				3/31/2019				12/31/2018				9/30/2018				6/30/2018 (1)
LOAN COMPOSITION
Commercial and industrial			$	219,930			$	204,159			$	195,786			$	185,157			$	177,679
Commercial real estate:
	Owner-occupied			370,498				361,671				355,062				361,224				351,333
	Investor			619,174				583,849				567,407				553,096				517,964
	Construction and development			93,916				99,368				85,064				77,890				92,667
	Multi-family			88,801				87,598				87,930				65,391				67,787
	Total commercial real estate			1,172,389				1,132,486				1,095,463				1,057,601				1,029,751
Residential real estate:
	Residential mortgage and first lien home equity loans			92,760				94,143				101,341				104,940				98,786
	Home equity–second lien loans and revolving lines of credit			26,695				27,486				28,563				27,915				27,319
	Total residential real estate			119,455				121,629				129,904				132,855				126,105
Consumer and other				38,529				40,517				43,070				37,401				38,942
Net deferred loan fees and costs				(1,763	)			(1,705	)			(1,708	)			(1,634	)			(1,708	)
	Total loans		$	1,548,540			$	1,497,086			$	1,462,515			$	1,411,380			$	1,370,769
LOAN MIX
Commercial and industrial				14.2	%			13.6	%			13.4	%			13.1	%			13.0	%
Commercial real estate:
	Owner-occupied			23.9	%			24.2	%			24.3	%			25.6	%			25.6	%
	Investor			40.0	%			39.0	%			38.8	%			39.2	%			37.8	%
	Construction and development			6.1	%			6.6	%			5.8	%			5.5	%			6.8	%
	Multi-family			5.7	%			5.9	%			6.0	%			4.6	%			4.9	%
	Total commercial real estate			75.7	%			75.7	%			74.9	%			74.9	%			75.1	%
Residential real estate:
	Residential mortgage and first lien home equity loans			6.0	%			6.3	%			6.9	%			7.4	%			7.2	%
	Home equity–second lien loans and revolving lines of credit			1.7	%			1.8	%			2.0	%			2.0	%			2.0	%
	Total residential real estate			7.7	%			8.1	%			8.9	%			9.4	%			9.2	%
Consumer and other				2.5	%			2.7	%			2.9	%			2.7	%			2.8	%
Net deferred loan fees and costs				(0.1	%)			(0.1	%)			(0.1	%)			(0.1	%)			(0.1	%)
	Total loans			100.0	%			100.0	%			100.0	%			100.0	%			100.0	%
(1) Includes effects of Delanco Bancorp, Inc. merger effective April 30, 2018.

FIRST BANK AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES
(in thousands, except for share data, unaudited)
	As of or For the Quarter Ended
	6/30/2019				3/31/2019				12/31/2018				9/30/2018				6/30/2018 (1)
Tangible Book Value Per Share
Stockholders' equity	$	202,242			$	199,337			$	194,836			$	190,672			$	185,506
Less:  Goodwill and other intangible assets, net		17,406				17,467				17,549				17,521				17,605
Tangible stockholders' equity (numerator)	$	184,836			$	181,870			$	177,399			$	173,151			$	167,901
Common shares outstanding (denominator)		18,757,965				18,735,291				18,676,056				18,665,664				18,640,484
Tangible book value per share	$	9.85			$	9.71			$	9.50			$	9.28			$	9.01
Tangible Equity / Assets
Stockholders' equity	$	202,242			$	199,337			$	194,836			$	190,672			$	185,506
Less:  Goodwill and other intangible assets, net		17,406				17,467				17,549				17,521				17,605
Tangible equity (numerator)	$	184,836			$	181,870			$	177,399			$	173,151			$	167,901
Total assets	$	1,830,695			$	1,777,301			$	1,711,159			$	1,717,146			$	1,640,999
Less:  Goodwill and other intangible assets, net		17,406				17,467				17,549				17,521				17,605
Adjusted total assets (denominator)	$	1,813,289			$	1,759,834			$	1,693,722			$	1,699,625			$	1,623,394
Tangible equity / assets		10.19	%			10.33	%			10.47	%			10.19	%			10.34	%
Efficiency Ratio
Non-interest expense	$	9,127			$	9,000			$	9,190			$	8,214			$	8,654
Less:  Merger-related expenses		110				118				-				37				731
Adjusted non-interest expense (numerator)	$	9,017			$	8,882			$	9,190			$	8,177			$	7,923
Net interest income	$	14,164			$	14,035			$	14,152			$	14,558			$	13,633
Non-interest income		924				673				984				1,185				760
Total revenue		15,088				14,708				15,136				15,743				14,393
Less:  Gains on sale of investment securities, net		-				-				-				-				3
Less:  Gains on recovery of acquired loans		187				135				260				321				151
Adjusted total revenue (denominator)	$	14,901			$	14,573			$	14,876			$	15,422			$	14,239
Efficiency ratio		60.51	%			60.95	%			61.78	%			53.02	%			55.64	%
Pre-Provision Net Revenue
Net interest income	$	14,164			$	14,035			$	14,152			$	14,558			$	13,633
Non-interest income		924				673				984				1,185				760
Less:  Gains on sale of investment securities, net		-				-				-				-				3
Less:  Gains on recovery of acquired loans		187				135				260				321				151
Less:  Non-interest expense		9,127				9,000				9,190				8,214				8,654
Add:  Merger-related expenses		110				118				-				37				731
Pre-provision net revenue	$	5,884			$	5,691			$	5,686			$	7,245			$	6,316
(1) Includes effects of Delanco Bancorp, Inc. merger effective April 30, 2018.

FIRST BANK AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES
(dollars in thousands, except for  share data, unaudited)
	For the Quarter Ended
	6/30/2019				3/31/2019				12/31/2018				9/30/2018				6/30/2018 (1)
Adjusted diluted earnings per share,
Adjusted return on average assets, and
Adjusted return on average equity
Net income	$	2,840			$	4,270			$	4,097			$	5,436			$	4,019
Add: Merger-related expenses (2)		87				93				-				29				577
Less:  Gains on sale of investment securities, net (2)		-				-				-				-				2
Less: Gains on recovery of acquired loans (2)		148				107				205				253				119
Adjusted net income	$	2,779			$	4,257			$	3,892			$	5,212			$	4,475
Diluted weighted average common shares outstanding		18,954,171				18,955,624				18,937,468				18,949,285				18,517,953
Average assets	$	1,782,832			$	1,747,414			$	1,721,107			$	1,688,550			$	1,581,820
Average equity	$	201,796			$	197,061			$	193,074			$	188,326			$	177,299
Adjusted diluted earnings per share	$	0.15			$	0.22			$	0.21			$	0.28			$	0.24
Adjusted return on average assets (3)		0.63	%			0.99	%			0.90	%			1.22	%			1.13	%
Adjusted return on average equity (3)		5.52	%			8.76	%			8.00	%			10.98	%			10.12	%
(1) Includes effects of Delanco Bancorp, Inc. merger effective April 30, 2018.
(2) Items are tax-effected using a federal income tax rate of 21%.
(3) Annualized.

 

CONTACT:  Patrick L. Ryan, President and CEO
(609) 643-0168, patrick.ryan@firstbanknj.com 

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