First Bank Announces First Quarter Net Income of $7.0 Million and EPS of $0.36

Source: Nasdaq GlobeNewswire / 26 Apr 2023 15:31:01 America/Chicago

HAMILTON, N.J., April 26, 2023 (GLOBE NEWSWIRE) -- First Bank (Nasdaq Global Market: FRBA) (the Bank) today announced its first quarter 2023 financial results, demonstrating continued strength and resilience in a challenging economic environment. The Bank achieved net income of $7.0 million, or $0.36 per diluted share, and maintained solid returns on average assets, equity, and tangible equityⁱ at 1.03%, 9.70%, and 10.16%, respectively. Excluding merger-related expenses and losses on sale of investment securities, First Bank’s first quarter 2023 adjusted diluted earnings per shareⁱⁱ were $0.38, adjusted return on average assetsⁱⁱ was 1.11% and adjusted return on average tangible equityⁱⁱ was 11.17%.

Compared to the same period last year, the Bank's net income and returns on assets, equity, and tangible equity were lower, reflecting broader industry headwinds, primarily increased market interest rates and deposit costs. However, the Bank remains confident in its ability to navigate the current economic landscape and achieve sustainable growth in earnings and book value over the long term.

First Quarter 2023 Performance Highlights:

Total loans reached $2.39 billion at March 31, 2023, marking a 2.3% increase from the end of the linked quarter at December 31, 2022.
Total deposits ended the quarter at $2.24 billion at March 31, 2023, a 2.3% decline from the end of the linked quarter at December 31, 2022.
Continued strong asset quality throughout the quarter, as net charge-offs represented 0.05% of average loans on an annualized basis, and nonperforming loans increased slightly to 0.33% at March 31, 2023, compared to 0.27% at December 31, 2022.
Net Interest Margin (NIM) for the quarter of 3.52%, down 5 basis points from first quarter 2022, and 17 basis points from the linked quarter ended December 31, 2022.
Efficiency ratioⁱⁱⁱ of 54.42%, up from the prior quarter reflecting the interest rate environment, inflationary pressures and the impact from strategic investments.
Steady growth in book value per share to $15.03 and tangible book value per share^iv to $14.05 at March 31, 2023. Tangible book value per share^iv increased $0.16 from the end of the linked quarter at December 31, 2022, and $1.26 from March 31, 2022, underlining continued value creation for shareholders.

Patrick L. Ryan, the President, and CEO of First Bank, reflected on the quarterly results, stating, “Despite the prevailing challenges in the banking industry, the strength of our relationships and our community-banking model helped minimize the impact of industry deposit outflows. While not immune to the challenges associated with higher funding costs and inflationary expenses, I’m proud of our ability to generate a return on average assets in excess of one percent, even after factoring in costs associated with the pending merger and the sale of certain investment securities.”

The Bank’s risk management strategy was further emphasized by the strong asset-quality metrics. Mr. Ryan stated, “Our focus on risk management underlines our commitment to prudent, sustainable growth and responsible stewardship of our assets and the assets of our communities.”

Mr. Ryan acknowledged that margins may compress further as long as the yield curve remains inverted, and funds leave the banking industry in search of higher returns. Nevertheless, he expressed confidence in the Bank's ability to manage these pressures through portfolio optimization, prudent reinvestment in higher-yielding C&I loans, and expense savings initiatives.

First Bank's strategic C&I expansion plans remain on track, with steady growth and building pipelines in four key areas: i) Small Business Administration (SBA) lending, ii) small business lending, iii) Private Equity/Fund Banking, and iv) Asset-Based Lending. While each initiative is relatively small in comparison to the overall loan portfolio at this point, collectively these groups will help us achieve several long-term goals: i) reduced reliance on commercial real estate lending, ii) continued growth in high-quality commercial deposits, and iii) a higher yielding and lower duration loan portfolio.

The Malvern Bancorp acquisition is currently tracking in-line with the Bank’s original timeline, with First Bank and Malvern Bancorp shareholder votes on April 28, 2023, all regulatory filings in place and regulatory approvals in process. Assuming all closing conditions are completed, closing is currently expected on June 30, 2023.

First Bank remains committed to prioritizing technology to enhance its online services and support growth as a middle-market commercial bank, with efforts aimed at enhancing online deposit and loan generation capabilities. By merging technology with traditional personal banking relationships, the Bank will effectively provide the right blend of service and convenience to its customer base.

First Bank's capital position and liquidity remain strong, with a stockholders' equity to assets ratio of 10.44% and tangible stockholders' equity to tangible assets ratio^v of 9.83%. Mr. Ryan expressed his confidence in the Bank’s ability to expand relationships with new and existing customers, maintain a strong asset quality position, and effectively manage expenses, even in the face of inflationary and competitive pressures.

Mr. Ryan concluded that “Our results during the first quarter of 2023 demonstrate the strength of our relationships and the quality of our community-focused business model. While we are required to report on a quarterly basis, we continue to think strategically with a long-term goal of generating superior returns through the cycle. Short-term industry headwinds will not distract us from achieving our long-term value-creation goals. As I look toward the rest of this year, our new C&I business units, enhanced technology capabilities and our integrated franchise across the wealth belts of New Jersey and mainline Philadelphia will leave us very well positioned to take advantage of a better interest rate environment and continued strong demand for community banking services.”

Income Statement

In the first quarter of 2023, First Bank's net interest income increased to $22.8 million, representing a rise of $1.6 million, or 7.8%, compared to the same period in 2022. The increase was primarily driven by the $232.4 million increase in average loans in the first quarter of 2023 compared to the first quarter of 2022.

The Bank's tax equivalent net interest margin decreased by five basis points to 3.52% compared to the prior year quarter and by 17 basis points from the fourth quarter of 2022. The decrease was primarily driven by the increase in deposit costs which was partially offset by the increase in average loan yields.

The Bank's provision for credit losses increased to $1.1 million in the first quarter of 2023, compared to $642,000 in the same period of the previous year and $716,000 in the preceding quarter of 2022. The increase was in line with organic loan growth.

In the first quarter of 2023, non-interest income was $964,000, a decrease from $1.3 million during the same period in 2022. The decrease was primarily due to approximately $6.8 million in investment sales in the first quarter of 2023, which generated $207,000 in losses on sales of securities and a decline in loan fees, primarily loan swap fees, of $156,000. The declines were partially offset by a $104,000 increase in gains on sale of loans. The investment sales were executed to generate additional cash, earning a higher yield to the investments sold with an anticipated earn-back on the losses of less than 18 months. Loan swap activity continues to be slow which resulted in the reduced loan swap income, but SBA loan sale activity picked up during the first quarter of 2023.

Non-interest expense for the first quarter of 2023 was $13.5 million, an increase of $2.4 million, or 21.4%, compared to $11.1 million for the prior year quarter. The higher non-interest expense was primarily due to a $1.3 million or 20.3% increase in salaries and employee benefits, and $461,000 in merger-related costs in the first quarter of 2023. The increase in salaries and employee benefits was due to both merit adjustments and inflationary market adjustments, increased headcount, primarily due to new locations and growth initiatives, and increases in employee benefit costs.

On a linked quarter basis, first quarter 2023 non-interest expense increased $1.0 million, or 8.3%, compared to $12.5 million for the fourth quarter of 2022 primarily due to higher salaries and employee benefits and occupancy and equipment expense. The increase in salaries and employee benefits was due to the same factors as noted above, and the increase in occupancy expense was primarily due to the Bank’s new northern New Jersey regional banking center in Fairfield, New Jersey and the Bank’s move into an upgraded branch and regional center in West Chester, Pennsylvania.

The Bank's income tax expense for the first quarter of 2023 was $2.2 million with an effective tax rate of 23.7%, compared to $2.5 million with an effective tax rate of 23.4% for the first quarter of 2022 and $2.9 million with an effective tax rate of 24.3% for the fourth quarter of 2022.

Balance Sheet

First Bank reported total assets of $2.82 billion as of March 31, 2023, an increase of $84.0 million, or 3.1%, from $2.73 billion at December 31, 2022. The Bank's increase in loans during the twelve-month period ended March 31, 2023, reflects growth of $227.6 million, which is in line with the Bank's target loan growth rate for the period.

As of March 31, 2023, the Bank's total deposits were $2.24 billion, an increase of $63.9 million, or 2.9%, from $2.18 billion at March 31, 2022, but a decrease of $52.1 million, or 2.3%, from $2.29 billion at December 31, 2022. Non-interest-bearing deposits totaled $463.9 million at March 31, 2023, which represents a decrease of $39.9 million, or 7.9%, from December 31, 2022. In contrast, time deposits increased from 23.1% of total deposits at December 31, 2022, to 24.7% at March 31, 2023, a result of customers moving into time deposit products to obtain a higher yield.

As of March 31, 2023, the Bank's stockholders' equity totaled $294.2 million, growth of $4.7 million, or 1.6%, compared to $289.6 million at December 31, 2022. The increase was mainly driven by the first-quarter 2023 net income and a decline in accumulated other comprehensive loss. The increase was offset somewhat by the Bank’s $1.2 million in cash dividends during the three months ended March 31, 2023.

As of March 31, 2023, the Bank continued to exceed all regulatory capital requirements to be considered well-capitalized with a Tier 1 Leverage ratio of 10.30%, a Tier 1 Risk-Based capital ratio of 10.30%, a Common Equity Tier 1 Capital ratio of 10.30%, and a Total Risk-Based capital ratio of 12.51%. The Bank's strong capital position provides a cushion against potential losses and supports its ability to pursue growth opportunities.

Asset Quality

First Bank's asset quality metrics for the first quarter of 2023 remained favorable, with net charge-offs of $315,000 compared to a net recovery of $213,000 in the previous quarter and net charge-offs of $247,000 in the first quarter of 2022. Nonperforming loans increased from $6.3 million at December 31, 2022, to $7.8 million at March 31, 2023, although they decreased from $12.6 million at the end of the first quarter of 2022. Nonperforming loans as a percentage of total loans were 0.33% at March 31, 2023, up from 0.27% at December 31, 2022, but down from 0.58% at the end of the first quarter of 2022. Despite the slight increase in nonperforming loans, the allowance for loan credit losses to nonperforming loans remains healthy at 382.3% at March 31, 2023, which was a modest decrease from 407.6% at December 31, 2022, but a significant increase from 191.7% at the end of the first quarter of 2022. The allowance for credit losses as a percentage of total loans increased to 1.25% at March 31, 2023 from 1.09% at December 31, 2022, primarily due to the implementation of the adoption of the Current Expected Credit Losses (CECL) accounting standard during the first quarter of 2023.

Balance Sheet Positioning for the Current Environment

First Bank enhanced its liquidity position in the first quarter of 2023. Total cash and cash equivalents increased $35.1 million during the first quarter to $161.0 million at March 31, 2023. The decline in deposits and the increased use of the Bank’s insured reciprocal deposit product contributed to a decline in adjusted estimated uninsured deposits (estimated uninsured deposits minus uninsured deposits of states and political subdivisions which are secured or collateralized as required under state law) from $808.1 million at December 31, 2022 to $628.5 million at March 31, 2023.

During the first quarter of 2023 the Bank sold approximately $6.9 million in available for sale securities, significantly increased its available funding with the Federal Home Loan Bank through pledging additional commercial loans, and registered for the Federal Reserve’s Bank Term Funding Program (BTFP). Subsequent to quarter end, the Bank has rolled out some enhanced in-market deposit promotions and added additional collateral for the BTFP and Federal Reserve discount window. These actions have led to a significantly improved available liquidity position. Our available liquidity to adjusted estimated uninsured deposits ratio was approximately 100% at March 31, 2023. Available liquidity includes cash and due from banks, market value of the Bank’s investment securities, currently available funding sources minus pledged securities and restricted cash. This enhanced liquidity position coupled with the flexibility that the Bank will gain after the Malvern Bancorp transaction is closed, provides the Bank with a strong liquidity base and a diverse source of funding options.

The tangible stockholders' equity to tangible assets ratio was 9.83% as of March 31, 2023, indicating that the Bank has a sufficient cushion to absorb potential losses.

Overall, First Bank has a strong capital and liquidity position, which it believes provides a solid foundation to navigate future challenges that may arise. The Bank is committed to managing risk prudently while pursuing growth opportunities and delivering value to its shareholders.

Cash Dividend Declared

On April 18, 2023, First Bank’s Board of Directors declared a quarterly cash dividend of $0.06 per share to common stockholders of record at the close of business on May 12, 2023, payable on May 24, 2023.

Conference Call

First Bank will host its earnings call on Thursday, April 27, 2023 at 9:00 AM eastern time. The direct dial toll free number for the live call is 1-844-200-6205 and the access code is 583346. For those unable to participate in the call, a replay will be available by dialing 1-866-813-9403 (access code 164395) from one hour after the end of the conference call until July 25, 2023. 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 18 full-service branches in Cinnaminson, Cranbury, Delanco, Denville, Ewing, Flemington (2), Hamilton, Lawrence, Monroe, Pennington, Randolph, Somerset and Williamstown, New Jersey; and Doylestown, Trevose, Warminster and West Chester, Pennsylvania. With $2.8 billion in assets as of March 31, 2023, 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 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, sustain its internal growth rate, and 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 market values; the effects of the recent turmoil in the banking industry (including the failures of two financial institutions); the impact of disease pandemics, including 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 and 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 Bank’s ability to generate liquidity internally or raise capital on favorable terms, including continued access to the debt and equity capital markets; and 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 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 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.

___________________________________

ⁱ Return on average tangible equity is a non-U.S. GAAP financial measure and is calculated by dividing net income by average tangible equity (average equity minus average goodwill and other intangible assets). 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 Adjusted diluted earnings per share, adjusted return on average assets and adjusted return on average tangible equity are non-U.S. GAAP financial measures and are calculated by dividing net income adjusted for certain merger-related expenses and other one-time gains or expenses by diluted weighted average shares, average assets and average tangible 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.

ⁱⁱⁱ 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.

^iv Tangible book value per share is a non-U.S. GAAP financial measure and is calculated by dividing common shares outstanding by tangible equity (equity minus goodwill and other intangible assets). 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.

^v Tangible stockholders' equity to tangible assets ratio is a non-U.S. GAAP financial measure and is calculated by dividing tangible equity (equity minus goodwill and other intangible assets) by tangible assets (total assets minus goodwill and other intangible assets). 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: Andrew Hibshman, Chief Financial Officer
(609) 643-0058, andrew.hibshman@firstbanknj.com

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

			March 31, 2023			December 31, 2022
Assets
Cash and due from banks			$	20,627		$	17,577
Restricted cash				11,700			13,580
Interest bearing deposits with banks				128,715			94,759
		Cash and cash equivalents		161,042			125,916
Interest bearing time deposits with banks				747			1,293
Investment securities available for sale, at fair value				91,818			98,956
Investment securities held to maturity, net of allowance for securities credit losses of
	$227 at March 31, 2023 and $0 at December 31, 2022 (fair value of $41,773 at
	March 31, 2023 and $42,465 at December 31, 2022)			46,270			47,193
Restricted investment in bank stocks				12,180			6,214
Other investments				8,829			8,372
Loans, net of deferred fees and costs				2,392,583			2,337,814
	Less: Allowance for loan credit losses			29,893			25,474
		Net loans		2,362,690			2,312,340
Premises and equipment, net				11,502			10,550
Other real estate owned, net				-			-
Accrued interest receivable				8,562			8,164
Bank-owned life insurance				58,476			58,107
Goodwill				17,826			17,826
Other intangible assets, net				1,496			1,579
Deferred income taxes, net				13,679			13,155
Other assets				21,780			23,275
		Total assets	$	2,816,897		$	2,732,940

Liabilities and Stockholders' Equity
Liabilities:
Non-interest bearing deposits			$	463,926		$	503,856
Interest bearing deposits				1,777,878			1,790,096
		Total deposits		2,241,804			2,293,952
Borrowings				223,416			90,932
Subordinated debentures				29,759			29,731
Accrued interest payable				1,968			1,218
Other liabilities				25,729			27,545
		Total liabilities		2,522,676			2,443,378
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; 21,200,398
	shares issued and 19,569,334 shares outstanding at March 31, 2023 and
	21,082,819 shares issued and 19,451,755 shares outstanding at December 31, 2022			104,862			104,512
Additional paid-in capital				80,718			80,695
Retained earnings				130,808			127,532
Accumulated other comprehensive loss				(6,324	)		(7,334	)
Treasury stock, 1,631,064 shares at March 31, 2023 and December 31, 2022				(15,843	)		(15,843	)
		Total stockholders' equity		294,221			289,562
		Total liabilities and stockholders' equity	$	2,816,897		$	2,732,940

FIRST BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except for share data, unaudited)

		Three Months Ended
		March 31,
			2023			2022
Interest and Dividend Income
Investment securities—taxable		$	1,022		$	576
Investment securities—tax-exempt			38			37
Interest bearing deposits with banks,
Federal funds sold and other			1,252			130
Loans, including fees			31,700			22,143
	Total interest and dividend income		34,012			22,886

Interest Expense
Deposits			9,413			1,009
Borrowings			1,364			288
Subordinated debentures			440			440
	Total interest expense		11,217			1,737
Net interest income			22,795			21,149
Credit loss expense			1,091			642
	Net interest income after credit loss expense		21,704			20,507

Non-Interest Income
Service fees on deposit accounts			228			252
Loan fees			89			245
Income from bank-owned life insurance			369			373
Losses on sale of investment securities, net			(207	)		-
Gains on sale of loans			141			37
Gains on recovery of acquired loans			57			124
Other non-interest income			287			236
	Total non-interest income		964			1,267

Non-Interest Expense
Salaries and employee benefits			7,872			6,544
Occupancy and equipment			1,579			1,424
Legal fees			203			142
Other professional fees			651			687
Regulatory fees			234			193
Directors' fees			214			218
Data processing			618			596
Marketing and advertising			240			164
Travel and entertainment			219			88
Insurance			173			165
Other real estate owned expense, net			18			83
Merger-related expenses			461			-
Other expense			1,021			818
	Total non-interest expense		13,503			11,122
Income Before Income Taxes			9,165			10,652
Income tax expense			2,176			2,494
Net Income		$	6,989		$	8,158

Basic earnings per common share		$	0.36		$	0.42
Diluted earnings per common share		$	0.36		$	0.41
Cash dividends per common share		$	0.06		$	0.06

Basic weighted average common shares outstanding			19,503,013			19,532,811
Diluted weighted average common shares outstanding			19,667,194			19,768,452

FIRST BANK AND SUBSIDIARIES
AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES
(dollars in thousands, unaudited)

	Three Months Ended March 31,
		2023								2022
	Average						Average		Average						Average
	Balance			Interest			Rate(5)		Balance			Interest			Rate(5)
Interest earning assets
Investment securities (1) (2)	$	153,760		$	1,068		2.82	%	$	134,033		$	621		1.88	%
Loans (3)		2,363,365			31,700		5.44	%		2,131,014			22,143		4.21	%
Interest bearing deposits with banks,
Federal funds sold and other		96,071			1,084		4.58	%		121,422			50		0.17	%
Restricted investment in bank stocks		8,257			101		4.96	%		5,616			63		4.55	%
Other investments		8,641			67		3.14	%		8,073			17		0.85	%
Total interest earning assets(2)		2,630,094			34,020		5.25	%		2,400,158			22,894		3.87	%
Allowance for loan losses		(29,331	)							(24,057	)
Non-interest earning assets		144,472								146,674
Total assets	$	2,745,235							$	2,522,775

Interest bearing liabilities
Interest bearing demand deposits	$	319,242		$	979		1.24	%	$	298,274		$	61		0.08	%
Money market deposits		756,490			4,987		2.67	%		706,368			448		0.26	%
Savings deposits		153,639			346		0.91	%		190,222			164		0.35	%
Time deposits		532,997			3,101		2.36	%		350,223			336		0.39	%
Total interest bearing deposits		1,762,368			9,413		2.17	%		1,545,087			1,009		0.26	%
Borrowings		131,211			1,364		4.22	%		76,492			288		1.53	%
Subordinated debentures		29,742			440		5.92	%		29,632			440		5.94	%
Total interest bearing liabilities		1,923,321			11,217		2.37	%		1,651,211			1,737		0.43	%
Non-interest bearing deposits		499,989								583,543
Other liabilities		29,751								17,874
Stockholders' equity		292,174								270,147
Total liabilities and stockholders' equity	$	2,745,235							$	2,522,775
Net interest income/interest rate spread (2)					22,803		2.88	%					21,157		3.44	%
Net interest margin (2) (4)							3.52	%							3.57	%
Tax equivalent adjustment (2)					(8	)							(8	)
Net interest income				$	22,795							$	21,149

(1) Average balance of investment securities available for sale is based on amortized cost.
(2) Interest and average rates are presented on a tax equivalent basis 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
	3/31/2023			12/31/2022			9/30/2022			6/30/2022			3/31/2022
EARNINGS
Net interest income	$	22,795		$	23,751		$	24,563		$	22,910		$	21,149
Provision for loan losses		1,091			716			216			1,298			642
Non-interest income		964			1,446			944			1,463			1,267
Non-interest expense		13,503			12,465			11,737			11,409			11,122
Income tax expense		2,176			2,916			3,348			2,843			2,494
Net income		6,989			9,100			10,206			8,823			8,158

PERFORMANCE RATIOS
Return on average assets (1)		1.03	%		1.35	%		1.57	%		1.38	%		1.31	%
Adjusted return on average assets (1) (2)		1.11	%		1.40	%		1.57	%		1.38	%		1.31	%
Return on average equity (1)		9.70	%		12.61	%		14.46	%		12.92	%		12.25	%
Adjusted return on average equity (1) (2)		10.43	%		13.11	%		14.46	%		12.92	%		12.25	%
Return on average tangible equity (1) (2)		10.39	%		13.53	%		15.55	%		13.93	%		13.22	%
Adjusted return on average tangible equity (1) (2)		11.17	%		14.07	%		15.55	%		13.93	%		13.22	%
Net interest margin (1) (3)		3.52	%		3.69	%		3.97	%		3.76	%		3.57	%
Total cost of deposits (1)		1.69	%		1.21	%		0.50	%		0.23	%		0.19	%
Efficiency ratio (2)		54.42	%		47.68	%		46.01	%		46.81	%		49.62	%

SHARE DATA
Common shares outstanding		19,569,334			19,451,755			19,447,206			19,483,415			19,634,744
Basic earnings per share	$	0.36		$	0.47		$	0.52		$	0.45		$	0.42
Diluted earnings per share		0.36			0.46			0.52			0.45			0.41
Adjusted diluted earnings per share (2)		0.38			0.48			0.52			0.45			0.41
Tangible book value per share (2)		14.05			13.89			13.43			13.08			12.79
Book value per share		15.03			14.89			14.44			14.10			13.81

MARKET DATA
Market value per share	$	10.10		$	13.76		$	13.67		$	13.98		$	14.22
Market value / Tangible book value		71.90	%		99.07	%		101.80	%		106.84	%		111.14	%
Market capitalization	$	197,650		$	267,656		$	265,843		$	272,378		$	279,206

CAPITAL & LIQUIDITY
Tangible stockholders' equity / tangible assets (2)		9.83	%		9.96	%		9.97	%		9.95	%		9.79	%
Stockholders' equity / assets		10.44	%		10.60	%		10.64	%		10.64	%		10.48	%
Loans / deposits		106.73	%		101.91	%		103.34	%		103.15	%		99.41	%

ASSET QUALITY
Net charge-offs (recoveries)	$	315		$	(213	)	$	705		$	404		$	247
Nonperforming loans		7,820			6,250			5,107			11,888			12,591
Nonperforming assets		7,820			6,250			5,400			12,181			12,884
Net charge offs (recoveries) / average loans (1)		0.05	%		(0.04	%)		0.13	%		0.07	%		0.05	%
Nonperforming loans / total loans		0.33	%		0.27	%		0.23	%		0.53	%		0.58	%
Nonperforming assets / total assets		0.28	%		0.23	%		0.20	%		0.47	%		0.50	%
Allowance for loan losses / total loans		1.25	%		1.09	%		1.08	%		1.12	%		1.12	%
Allowance for loan losses / nonperforming loans		382.26	%		407.58	%		480.61	%		210.58	%		191.72	%

OTHER DATA
Total assets	$	2,816,897		$	2,732,940		$	2,638,060		$	2,581,192		$	2,587,038
Total loans		2,392,583			2,337,814			2,263,377			2,233,278			2,164,944
Total deposits		2,241,804			2,293,952			2,190,192			2,165,163			2,177,895
Total stockholders' equity		294,221			289,562			280,749			274,702			271,068
Number of full-time equivalent employees (4)		252			238			228			233			219

(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 8 full-time equivalent seasonal interns as of June 30, 2022.

FIRST BANK AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(dollars in thousands, unaudited)

		As of the Quarter Ended
		3/31/2023			12/31/2022			9/30/2022			6/30/2022			3/31/2022
LOAN COMPOSITION
Commercial and industrial		$	394,734		$	354,203		$	323,984		$	321,205		$	321,979
Commercial real estate:
	Owner-occupied		539,112			533,426			517,448			523,108			499,379
	Investor		958,574			951,115			942,151			925,643			896,435
	Construction and development		143,955			142,876			126,206			117,011			96,585
	Multi-family		220,101			215,990			214,819			201,269			193,865
	Total commercial real estate		1,861,742			1,843,407			1,800,624			1,767,031			1,686,264
Residential real estate:
	Residential mortgage and first lien home equity loans		94,060			93,847			96,194			98,841			99,992
	Home equity–second lien loans and revolving lines of credit		29,316			33,551			31,670			30,491			30,485
	Total residential real estate		123,376			127,398			127,864			129,332			130,477
Consumer and other			16,413			16,318			14,654			19,694			30,096
	Total loans prior to deferred loan fees and costs		2,396,265			2,341,326			2,267,126			2,237,262			2,168,816
Net deferred loan fees and costs			(3,682	)		(3,512	)		(3,749	)		(3,984	)		(3,872	)
	Total loans	$	2,392,583		$	2,337,814		$	2,263,377		$	2,233,278		$	2,164,944

LOAN MIX
Commercial and industrial			16.5	%		15.2	%		14.3	%		14.4	%		14.8	%
Commercial real estate:
	Owner-occupied		22.5	%		22.8	%		22.9	%		23.4	%		23.1	%
	Investor		40.1	%		40.7	%		41.6	%		41.5	%		41.4	%
	Construction and development		6.0	%		6.1	%		5.6	%		5.2	%		4.5	%
	Multi-family		9.2	%		9.2	%		9.5	%		9.0	%		8.9	%
	Total commercial real estate		77.8	%		78.8	%		79.6	%		79.1	%		77.9	%
Residential real estate:
	Residential mortgage and first lien home equity loans		3.9	%		4.0	%		4.3	%		4.4	%		4.6	%
	Home equity–second lien loans and revolving lines of credit		1.2	%		1.4	%		1.4	%		1.4	%		1.4	%
	Total residential real estate		5.1	%		5.4	%		5.7	%		5.8	%		6.0	%
Consumer and other			0.7	%		0.7	%		0.6	%		0.9	%		1.4	%
Net deferred loan fees and costs			(0.1	%)		(0.1	%)		(0.2	%)		(0.2	%)		(0.1	%)
	Total loans		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

FIRST BANK AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(dollars in thousands, unaudited)

		As of the Quarter Ended
		3/31/2023			12/31/2022			9/30/2022			6/30/2022			3/31/2022
DEPOSIT COMPOSITION
Non-interest bearing demand deposits		$	463,926		$	503,856		$	584,025		$	600,402		$	597,333
Interest bearing demand deposits			310,140			322,944			343,042			318,687			314,564
Money market and savings deposits			914,063			935,311			860,577			929,075			936,848
Time deposits			553,675			531,841			402,549			316,999			329,150
	Total Deposits	$	2,241,804		$	2,293,952		$	2,190,193		$	2,165,163		$	2,177,895

DEPOSIT MIX
Non-interest bearing demand deposits			20.7	%		22.0	%		26.7	%		27.7	%		27.4	%
Interest bearing demand deposits			13.8	%		14.1	%		15.7	%		14.7	%		14.5	%
Money market and savings deposits			40.8	%		40.8	%		39.3	%		42.9	%		43.0	%
Time deposits			24.7	%		23.1	%		18.3	%		14.7	%		15.1	%
	Total Deposits		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

FIRST BANK AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES
(in thousands, except for share data, unaudited)

	As of or For the Quarter Ended
	3/31/2023			12/31/2022			9/30/2022			6/30/2022			3/31/2022
Return on Average Tangible Equity
Net income (numerator)	$	6,989		$	9,100		$	10,206		$	8,823		$	8,158

Average stockholders' equity	$	292,174		$	286,283		$	280,093		$	273,829		$	270,147
Less: Average Goodwill and other intangible assets, net		19,379			19,533			19,669			19,823			19,916
Average Tangible stockholders' equity (denominator)	$	272,795		$	266,750		$	260,424		$	254,006		$	250,231

Return on Average Tangible equity (1)		10.39	%		13.53	%		15.55	%		13.93	%		13.22	%

Tangible Book Value Per Share
Stockholders' equity	$	294,221		$	289,562		$	280,749		$	274,702		$	271,068
Less: Goodwill and other intangible assets, net		19,322			19,405			19,599			19,768			19,854
Tangible stockholders' equity (numerator)	$	274,899		$	270,157		$	261,150		$	254,934		$	251,214

Common shares outstanding (denominator)		19,569,334			19,451,755			19,447,206			19,483,415			19,634,744

Tangible book value per share	$	14.05		$	13.89		$	13.43		$	13.08		$	12.79


Tangible Equity / Assets
Stockholders' equity	$	294,221		$	289,562		$	280,749		$	274,702		$	271,068
Less: Goodwill and other intangible assets, net		19,322			19,405			19,599			19,768			19,854
Tangible stockholders' equity (numerator)	$	274,899		$	270,157		$	261,150		$	254,934		$	251,214

Total assets	$	2,816,897		$	2,732,940		$	2,638,060		$	2,581,192		$	2,587,038
Less: Goodwill and other intangible assets, net		19,322			19,405			19,599			19,768			19,854
Tangible total assets (denominator)	$	2,797,575		$	2,713,535		$	2,618,461		$	2,561,424		$	2,567,184

Tangible stockholders' equity / tangible assets		9.83	%		9.96	%		9.97	%		9.95	%		9.79	%


Efficiency Ratio
Non-interest expense	$	13,503		$	12,465		$	11,737		$	11,409		$	11,122
Less: Merger-related expenses		461			452			-			-			-
Adjusted non-interest expense (numerator)	$	13,042		$	12,013		$	11,737		$	11,409		$	11,122

Net interest income	$	22,795		$	23,751		$	24,563		$	22,910		$	21,149
Non-interest income		964			1,446			944			1,463			1,267
Total revenue		23,759			25,197			25,507			24,373			22,416
Add: Losses on sale of investment securities, net		207			-			-			-			-
Adjusted total revenue (denominator)	$	23,966		$	25,197		$	25,507		$	24,373		$	22,416

Efficiency ratio		54.42	%		47.68	%		46.01	%		46.81	%		49.62	%

(1) Annualized.

FIRST BANK AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES
(dollars in thousands, except for share data, unaudited)


	For the Quarter Ended
	3/31/2023			12/31/2022			9/30/2022			6/30/2022			3/31/2022

Adjusted diluted earnings per share,
Adjusted return on average assets, and
Adjusted return on average equity

Net income	$	6,989		$	9,100		$	10,206		$	8,823		$	8,158
Add: Merger-related expenses⁽¹⁾		364			357			-			-			-
Add: Losses on sale of investment securities, net⁽¹⁾		164			-			-			-			-
Adjusted net income	$	7,517		$	9,457		$	10,206		$	8,823		$	8,158

Diluted weighted average common shares outstanding		19,667,194			19,649,282			19,668,133			19,794,657			19,768,452
Average assets	$	2,745,235		$	2,680,807		$	2,575,742		$	2,568,443		$	2,522,775
Average equity	$	292,174		$	286,283		$	280,093		$	273,829		$	270,147
Average Tangible Equity	$	272,795		$	266,750		$	260,424		$	254,006		$	250,231

Adjusted diluted earnings per share	$	0.38		$	0.48		$	0.52		$	0.45		$	0.41
Adjusted return on average assets⁽²⁾		1.11	%		1.40	%		1.57	%		1.38	%		1.31	%
Adjusted return on average equity⁽²⁾		10.43	%		13.11	%		14.46	%		12.92	%		12.25	%
Adjusted return on average tangible equity⁽²⁾		11.17	%		14.07	%		15.55	%		13.93	%		13.22	%

(1) Items are tax-effected using a federal income tax rate of 21%.
(2) Annualized.

First Bank Announces First Quarter Net Income of $7.0 Million and EPS of $0.36

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