• First Bank Reports Fourth Quarter 2022 Net Income of $9.1 Million and Full Year Net Income of $36.3 Million

    Source: Nasdaq GlobeNewswire / 25 Jan 2023 15:33:01   America/Chicago

    HAMILTON, N.J., Jan. 25, 2023 (GLOBE NEWSWIRE) -- First Bank (Nasdaq Global Market: FRBA) today announced results for the fourth quarter and full year 2022. Net income for the fourth quarter of 2022 was $9.1 million, or $0.46 per diluted share, compared to $7.8 million, or $0.40 per diluted share, for the fourth quarter of 2021. Return on average assets, return on average equity and return on average tangible equityi for the fourth quarter of 2022 were 1.35%, 12.61% and 13.53%, respectively, compared to 1.27%, 11.77%, and 12.63%, respectively, for the fourth quarter of 2021. Excluding merger-related expenses, First Bank’s fourth quarter 2022 adjusted diluted earnings per shareii were $0.48, adjusted return on average assetsii was 1.40% and adjusted return on average tangible equityii was 14.07%. Excluding merger-related expenses, fourth quarter 2021 adjusted diluted earnings per share were $0.42, adjusted return on average assets was 1.33% and adjusted return on average tangible equity was 13.26%.

    Full year 2022 net income was $36.3 million, an increase of $860,000, or 2.4%, compared to $35.4 million for 2021. Diluted earnings per share for 2022 were $1.84, an increase of $0.05, or 2.8%, compared to $1.79 per diluted share for 2021. Return on average assets and return on average equity for the full year 2022 were 1.40% and 13.07%, respectively. Excluding merger-related expenses, full year 2022 adjusted diluted earnings per share were $1.86, adjusted return on average assets was 1.42% and adjusted return on average equity was 13.20%. Excluding merger-related expenses, full year 2021 adjusted diluted earnings per share were $1.81, adjusted return on average assets was 1.48% and adjusted return on average equity was 14.16%.

    Fourth Quarter and Full Year 2022 Performance Highlights:

    • Announced agreement to acquire Malvern Bancorp, Inc. and Malvern Bank during the fourth quarter of 2022. The acquisition is expected to close in the second quarter of 2023 and will add approximately $785.3 million of deposits and $824.7 million of loans.

    • Total net revenue (net interest income plus non-interest income) of $25.2 million for the fourth quarter of 2022 increased $2.3 million, or 10.3%, compared to the prior year quarter, while full year total net revenue was $97.5 million, an increase of $7.8 million, or 8.8%, compared to 2021.

    • Total loans of $2.34 billion at December 31, 2022 reflected growth of $74.4 million, or 3.3%, from the end of the linked third quarter of 2022 and $212.4 million, or 10.0%, from December 31, 2021. Excluding Paycheck Protection Program (PPP) loan declines, loan growth was $74.8 million and $259.9 million for the quarter and year ended December 31, 2022, respectively. PPP loans outstanding at December 31, 2022 were $3.5 million.

    • Total deposits of $2.29 billion at December 31, 2022 increased by $103.8 million, or 4.7%, from the end of the linked third quarter of 2022 and $179.4 million, or 8.5%, from December 31, 2021. Non-interest-bearing demand deposits decreased to 22.0% of total deposits at December 31, 2022, compared to 26.4% at December 31, 2021, while time deposits increased to 23.1% at December 31, 2022 from 18.5% of total deposits at December 31, 2021.
    • Asset quality metrics remained strong during the fourth quarter of 2022, with annualized net recoveries to average loans of 0.04%, and nonperforming loans to total loans of 0.27% at December 31, 2022, compared to 0.61% at December 31, 2021.  

    • Ongoing focus on cost containment resulted in the eighth consecutive quarter of an efficiency ratioiii below 50%, at 47.68% for the fourth quarter of 2022.

    “We are proud of our solid performance in the fourth quarter and for the full year of 2022 which was highlighted by continued strong organic loan growth, revenue expansion and outstanding asset quality metrics. We are well positioned heading into 2023, despite the uncertain economic environment,” said Patrick L. Ryan, President and Chief Executive Officer. “In the fourth quarter, we continued to achieve strong organic loan growth, 13.3% annualized, while we continued to benefit from our strong underwriting standards with nonperforming assets to total assets of only 23 basis points at December 31, 2022. Strong commercial and industrial loan opportunities drove the need for accelerated deposit gathering during the quarter and while deposit pricing pressure has impacted our cost of deposits and net interest margin, we continue to operate at healthy profitability levels, achieving peer-leading returns on average assets.”

    Mr. Ryan continued, “Our persistent focus on cost containment is essential in the current economic environment. We know how to operate lean, as evidenced by an efficiency ratio below 50% for the last eight consecutive quarters.”

    “2023 will be an exciting year for us. Our strategic merger with Malvern Bancorp will provide critical mass and operating leverage in our highly attractive Southeastern Pennsylvania markets. New initiatives in small business and asset-based lending will help drive additional commercial and industrial loan growth. And, perhaps most importantly, new deposit sales teams will help drive additional commercial and municipal deposit growth. Our reputation as a committed and valuable financial partner continues to be strengthened by our earnings profile, our organic expansion, and our growth through acquisitions.”

    “We are pleased to announce another $0.06 quarterly dividend, which reflects an annualized yield of 1.77% based on the January 17, 2023 closing price of our common stock, as part of our ongoing focus on creating shareholder value.”

    Income Statement

    First Bank’s net interest income for the fourth quarter of 2022 was $23.8 million, an increase of $3.1 million, or 15.1%, compared to $20.6 million in the fourth quarter of 2021, driven by a $9.0 million increase in total interest and dividend income, principally loan interest income, offset somewhat by a $5.9 million increase in total interest expense, primarily from the increase in cost of deposits. Net interest income decreased $812,000 from the linked third quarter of 2022 due to the increase in interest expense of $4.3 million partially offset by the increase in interest and dividend income of $3.5 million.

    Full year 2022 net interest income totaled $92.4 million, an increase of $10.5 million, or 12.8%, compared to $81.9 million for 2021. The increase was primarily a result of higher interest income from loans due to substantial loan growth and higher loan yields, which was partially offset by increased interest expense related to the increased cost of deposits. Reflective of the rapidly increasing interest rate environment, the average cost of interest bearing deposits increased 36 basis points. The average cost of money market and time deposits increased 54 and 31 basis points, respectively. Interest and dividend income increased by $16.1 million, driven by solid growth in average loans, which increased by $167.2 million, or 8.2%, from the prior year, and a 30 basis point increase in the average yield on loans.

    The fourth quarter 2022 tax equivalent net interest margin was 3.69%, an increase of 17 basis points compared to 3.52% for the prior year quarter and a decrease of 28 basis points compared to 3.97% in the linked third quarter of 2022. The decline in the margin compared to the linked third quarter of 2022 was primarily a result of a 90 basis point increase in the cost of interest bearing deposits. The full year 2022 tax equivalent net interest margin was 3.75%, an increase of 19 basis points compared to 3.56% for the full year 2021. The increase in the full year net interest margin was principally a result of the 39 basis point increase in earning asset yields partially offset by the increase in the cost of interest bearing deposits.

    First Bank reported a provision for loan losses of $716,000 for the fourth quarter of 2022, compared to a provision for loan losses of $825,000 in the fourth quarter of 2021. The provision for the quarter ended December 31, 2022, was due to loan growth offset somewhat by net recoveries and continued stable asset quality metrics. For full year 2022, the Bank reported a provision for loan losses of $2.9 million, compared to a credit to the provision of $232,000 in 2021. Provision expense for the full year 2022 reflected the strong growth in loans, low level of net charge-offs and strong credit quality metrics.

    Fourth quarter 2022 non-interest income of $1.4 million decreased from $2.2 million during the fourth quarter 2021. The decrease between the periods was primarily the result of a decline in gains on sale of Small Business Administration (SBA) loans and gains on recovery of acquired loans in the fourth quarter 2022. Non-interest income totaled $5.1 million for the full year ended December 31, 2022, compared to $7.8 million for 2021, primarily a result of a decrease in gains on the sale of loans, loan fees and gains on recovery of acquired loans.

    Non-interest expense for fourth quarter 2022 of $12.5 million increased $640,000, or 5.4%, compared to $11.8 million for the prior year quarter. The higher non-interest expense compared to fourth quarter 2021 was primarily a result of higher marketing and advertising costs, other expense, occupancy and equipment expenses and travel and entertainment costs. The increases in marketing and advertising and travel and entertainment costs were primarily due to these expenses being unusually low in the fourth quarter of 2021. The increases in other expense and occupancy and equipment expenses were primarily due to a full quarter of expenses for the two new branches acquired by the Bank in December 2021.

    On a linked quarter basis, fourth quarter 2022 non-interest expense increased $728,000 to $12.5 million compared to $11.7 million for the third quarter of 2022. The increase was primarily due to merger-related costs associated with the pending Malvern Bancorp acquisition and an increase in performance-based bonus accruals. Excluding the merger-related expenses in the fourth quarter of 2022, non-interest expense increased $276,000, or 2.4%, when compared to the linked prior quarter.

    Non-interest expense for the full year 2022 totaled $46.7 million, an increase of $3.6 million, or 8.3%, compared to $43.2 million for 2021. The increase was primarily a result of increased salaries and employee benefits, and to a lesser extent increases in other expense, other professional fees, travel and entertainment and data processing. These increases were primarily due to two new branches acquired by the Bank in December 2021 and other increases associated with the continued growth of the Bank.

    Income tax expense for the three months ended December 2022 was $2.9 million with an effective tax rate of 24.3%, compared to $2.4 million with an effective tax rate of 23.2% for the fourth quarter of 2021 and $3.3 million with an effective tax rate of 24.7% for the third quarter of 2022. Income tax expense for the full year ended December 31, 2022, was $11.6 million with an effective tax rate of 24.2%, compared to $11.3 million for the full year 2021 with an effective tax rate of 24.2%.

    Balance Sheet

    Total assets at December 31, 2022 were $2.73 billion, an increase of $209.2 million, or 8.3%, compared to $2.52 billion at December 31, 2021. Total loans increased $212.4 million, or 10.0%, to $2.34 billion at December 31, 2022 compared to $2.13 billion at December 31, 2021. Total loans as of December 31, 2022 increased $74.4 million, or 3.3%, from $2.26 billion at September 30, 2022. The increase in loans during the fourth quarter of 2022 was due to commercial and industrial and commercial real estate loan growth.

    Total deposits were $2.29 billion at December 31, 2022, an increase of $103.8 million, or 4.7%, compared to $2.19 billion at September 30, 2022, and an increase of $179.4 million, or 8.5%, from December 31, 2021. Non-interest-bearing deposits totaled $503.9 million at December 31, 2022, a decrease of $80.2 million, or 13.7%, from September 30, 2022, primarily due to a shift in the mix of deposits to interest-bearing accounts, which increased $183.9 million, or 11.5% in the fourth quarter. The shift in deposits was due, in part, to certain higher non-interest bearing balances shifting to interest bearing accounts as a result of a notably higher interest rate environment.

    Stockholders’ equity was $289.6 million at December 31, 2022, compared to $266.7 million on December 31, 2021. The growth of $22.9 million, or 8.6%, in stockholders’ equity was primarily a result of full year 2022 net income of $36.3 million, partially offset by a $7.1 million increase in accumulated other comprehensive loss, $3.5 million in treasury stock purchases and cash dividends paid of $4.7 million for the full year ending December 31, 2022. The increase in accumulated other comprehensive loss was due to an increase in unrealized losses on the Bank’s available for sale investment securities, primarily resulting from the current interest rate environment.

    As of December 31, 2022, the Bank continued to exceed all regulatory capital requirements to be considered well capitalized, with a Tier 1 Leverage ratio of 10.41%, a Tier 1 Risk-Based capital ratio of 10.40%, a Common Equity Tier 1 Capital ratio of 10.40%, and a Total Risk-Based capital ratio of 12.49%.

    Asset Quality

    First Bank’s asset quality metrics have remained solid during the year ended December 31, 2022. Net recoveries were $213,000 for the fourth quarter of 2022, compared to net charge-offs of $6,000 for the fourth quarter of 2021 and net charge-offs of $705,000 for the third quarter of 2022. Net recoveries as an annualized percentage of average loans were 0.04% in fourth quarter 2022, compared to annualized net charge-offs of 0.00% in fourth quarter 2021. Nonperforming loans were $6.3 million at December 31, 2022, down from $13.0 million on December 31, 2021, and up slightly from $5.1 million on September 30, 2022. Nonperforming loans as a percentage of total loans at December 31, 2022 were 0.27%, compared with 0.61% at December 31, 2021 and 0.23% at September 30, 2022. The allowance for loan losses to nonperforming loans was 407.58% at December 31, 2022, compared with 182.65% at December 31, 2021, and 480.61% at September 30, 2022.

    Cash Dividend Declared

    On January 17, 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 February 10, 2023, payable on February 24, 2023.

    Conference Call

    First Bank will host its earnings call on Thursday, January 26, 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 106228. For those unable to participate in the call, a replay will 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 $2.7 billion in assets as of December 31, 2022, 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, including the proposed acquisition of Malvern Bancorp, Inc. and Malvern Bank, First Bank’s 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; 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 inflation and declines in housing market values; 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; possible changes in trade, monetary and fiscal policies, laws and regulations and other activities of governments, agencies, and similar organizations. First Bank’s ability to obtain regulatory approvals and meet other closing conditions to its proposed acquisition of Malvern Bancorp and Malvern Bank; delays in closing the merger; difficulties and delays in integrating the acquired business or fully realizing cost savings and other benefits of the proposed merger; and business disruptions following the merger. 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.

    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)
           
        December 31, 2022 December 31, 2021
    Assets    
    Cash and due from banks$17,577  $25,076 
    Interest bearing deposits with banks 108,339   129,431 
      Cash and cash equivalents 125,916   154,507 
    Interest bearing time deposits with banks 1,293   2,170 
    Investment securities available for sale, at fair value 98,956   94,584 
    Investment securities held to maturity (fair value of $42,465 at   
     December 31, 2022 and $39,718 at December 31, 2021) 47,193   39,547 
    Restricted investment in bank stocks 6,214   5,856 
    Other investments 8,372   8,062 
    Loans, net of deferred fees and costs 2,337,814   2,125,437 
     Less: Allowance for loan losses 25,474   23,746 
      Net loans 2,312,340   2,101,691 
    Premises and equipment, net 10,550   9,883 
    Other real estate owned, net -   772 
    Accrued interest receivable 8,164   5,681 
    Bank-owned life insurance 58,107   56,633 
    Goodwill 17,826   17,826 
    Other intangible assets, net 1,579   2,145 
    Deferred income taxes 13,155   11,081 
    Other assets 23,275   13,306 
      Total assets$2,732,940  $2,523,744 
           
    Liabilities and Stockholders' Equity   
    Liabilities:   
    Non-interest bearing deposits$503,856  $558,775 
    Interest bearing deposits 1,790,096   1,555,827 
      Total deposits 2,293,952   2,114,602 
    Borrowings 90,932   95,281 
    Subordinated debentures 29,731   29,620 
    Accrued interest payable 1,218   399 
    Other liabilities 27,545   17,176 
      Total liabilities 2,443,378   2,257,078 
    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; 21,082,819  
     shares issued and 19,451,755 shares outstanding at December 31, 2022 and   
     20,851,506 shares issued and 19,472,364 shares outstanding at December 31, 2021   104,512   103,704 
    Additional paid-in capital 80,695   79,563 
    Retained earnings 127,532   95,924 
    Accumulated other comprehensive loss (7,334)  (206)
    Treasury stock, 1,631,064 shares at December 31, 2022 and 1,379,142 shares   
     at December 31, 2021 (15,843)  (12,319)
      Total stockholders' equity 289,562   266,666 
      Total liabilities and stockholders' equity$2,732,940  $2,523,744 
           


    FIRST BANK AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF INCOME
    (in thousands, except for share data, unaudited)
     
               
        Three Months Ended Year Ended
        December 31,  December 31,
         2022  2021  2022  2021 
    Interest and Dividend Income       
    Investment securities—taxable$945 $553 $2,998 $2,149 
    Investment securities—tax-exempt 40  36  149  169 
    Interest bearing deposits with banks,       
      Federal funds sold and other 1,205  136  2,093  660 
    Loans, including fees 29,324  21,791  102,021  88,136 
     Total interest and dividend income 31,514  22,516  107,261  91,114 
               
    Interest Expense       
    Deposits  6,875  1,105  11,883  5,684 
    Borrowings 448  330  1,244  1,779 
    Subordinated debentures 440  440  1,761  1,761 
     Total interest expense 7,763  1,875  14,888  9,224 
    Net interest income 23,751  20,641  92,373  81,890 
    Provision for loan losses 716  825  2,872  (232)
     Net interest income after provision for loan losses 23,035  19,816  89,501  82,122 
               
    Non-Interest Income       
    Service fees on deposit accounts 210  246  941  760 
    Loan fees  369  384  683  1,338 
    Income from bank-owned life insurance 362  386  1,474  1,436 
    Gains on sale of loans 4  392  296  1,892 
    Gains on recovery of acquired loans 216  554  672  1,235 
    Other non-interest income 285  249  1,054  1,093 
     Total non-interest income 1,446  2,211  5,120  7,754 
               
    Non-Interest Expense       
    Salaries and employee benefits 7,261  7,229  27,383  25,404 
    Occupancy and equipment 1,407  1,265  5,689  5,762 
    Legal fees 193  130  695  769 
    Other professional fees 651  623  2,649  2,133 
    Regulatory fees 173  170  851  855 
    Directors' fees 173  221  743  876 
    Data processing 617  584  2,476  2,264 
    Marketing and advertising 177  1  682  526 
    Travel and entertainment 189  65  479  148 
    Insurance  189  172  727  655 
    Other real estate owned expense, net 26  68  295  165 
    Merger-related expenses 452  498  452  643 
    Other expense 957  799  3,612  2,952 
     Total non-interest expense 12,465  11,825  46,733  43,152 
    Income Before Income Taxes 12,016  10,202  47,888  46,724 
    Income tax expense 2,916  2,363  11,601  11,295 
    Net Income$9,100 $7,839 $36,287 $35,429 
               
    Basic earnings per common share$0.47 $0.40 $1.86 $1.81 
    Diluted earnings per common share$0.46 $0.40 $1.84 $1.79 
    Cash dividends per common share$0.06 $0.06 $0.24 $0.15 
               
    Basic weighted average common shares outstanding 19,446,770  19,469,404  19,503,837  19,611,381 
    Diluted weighted average common shares outstanding 19,649,282  19,725,294  19,716,661  19,815,747 
               


    FIRST BANK AND SUBSIDIARIES
    AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES
    (dollars in thousands, unaudited)
                
                
     Three Months Ended December 31,
      2022   2021 
     Average    AverageAverage    Average
     Balance Interest Rate (5) Balance Interest Rate (5)
    Interest earning assets           
    Investment securities (1) (2)$152,386  $993  2.59% $133,768  $596  1.77%
    Loans (3) 2,277,238   29,324  5.11%  2,035,059   21,791  4.25%
    Interest bearing deposits with banks,           
       Federal funds sold and other 112,829   1,067  3.75%  145,742   46  0.13%
    Restricted investment in bank stocks 5,545   85  6.08%  5,912   73  4.90%
    Other investments 8,381   53  2.51%  7,323   17  0.92%
        Total interest earning assets (2) 2,556,379   31,522  4.89%  2,327,804   22,523  3.84%
    Allowance for loan losses (24,981)      (23,529)    
    Non-interest earning assets 149,409       143,124     
         Total assets$2,680,807      $2,447,399     
                
    Interest bearing liabilities           
    Interest bearing demand deposits$328,191  $800  0.97% $265,789  $59  0.09%
    Money market deposits 721,866   3,375  1.85%  656,772   404  0.24%
    Savings deposits 183,746   417  0.90%  181,253   165  0.36%
    Time deposits 489,478   2,283  1.85%  399,768   477  0.47%
           Total interest bearing deposits 1,723,281   6,875  1.58%  1,503,582   1,105  0.29%
    Borrowings 70,941   448  2.51%  83,066   330  1.58%
    Subordinated debentures 29,713   440  5.92%  29,603   440  5.95%
          Total interest bearing liabilities 1,823,935   7,763  1.69%  1,616,251   1,875  0.46%
    Non-interest bearing deposits 538,304       550,718     
    Other liabilities 32,285       16,214     
    Stockholders' equity 286,283       264,216     
         Total liabilities and stockholders' equity$2,680,807      $2,447,399     
    Net interest income/interest rate spread (2)   23,759  3.20%    20,648  3.38%
    Net interest margin (2) (4)    3.69%     3.52%
    Tax equivalent adjustment (2)   (8)      (7)  
    Net interest income  $23,751      $20,641   
                
    (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
    AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES
    (dollars in thousands, unaudited)
                
                
     Year Ended December 31,
      2022   2021 
     Average    AverageAverage    Average
     Balance Interest Rate Balance Interest Rate
    Interest earning assets           
    Investment securities (1) (2)$143,460  $3,178  2.22% $118,673  $2,353  1.98%
    Loans (3) 2,204,028   102,021  4.63%  2,036,855   88,136  4.33%
    Interest bearing deposits with banks,           
       Federal funds sold and other 104,057   1,694  1.63%  134,109   248  0.18%
    Restricted investment in bank stocks 5,457   285  5.22%  7,312   348  4.76%
    Other investments 8,193   114  1.39%  6,727   64  0.95%
         Total interest earning assets (2) 2,465,195   107,292  4.35%  2,303,676   91,149  3.96%
    Allowance for loan losses (24,702)      (23,753)    
    Non-interest earning assets 146,851       140,594     
         Total assets$2,587,344      $2,420,517     
                
    Interest bearing liabilities           
    Interest bearing demand deposits$323,824  $1,395  0.43% $225,945  $224  0.10%
    Money market deposits 719,743   5,923  0.82%  627,211   1,772  0.28%
    Savings deposits 184,510   989  0.54%  179,705   739  0.41%
    Time deposits 378,292   3,576  0.95%  458,980   2,949  0.64%
           Total interest bearing deposits 1,606,369   11,883  0.74%  1,491,841   5,684  0.38%
    Borrowings 69,916   1,244  1.78%  115,343   1,779  1.54%
    Subordinated debentures 29,672   1,761  5.93%  29,561   1,761  5.96%
          Total interest bearing liabilities 1,705,957   14,888  0.87%  1,636,745   9,224  0.56%
    Non-interest bearing deposits 579,691       514,137     
    Other liabilities 24,057       15,903     
    Stockholders' equity 277,639       253,732     
         Total liabilities and stockholders' equity$2,587,344      $2,420,517     
    Net interest income/interest rate spread (2)   92,404  3.48%    81,925  3.40%
    Net interest margin (2) (4)    3.75%     3.56%
    Tax equivalent adjustment (2)   (31)      (35)  
    Net interest income  $92,373      $81,890   
                
    (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.        
                


    FIRST BANK AND SUBSIDIARIES
    QUARTERLY FINANCIAL HIGHLIGHTS
    (in thousands, except for share and employee data, unaudited)
               
      As of or For the Quarter Ended
      12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021
    EARNINGS          
       Net interest income $23,751  $24,563  $22,910  $21,149  $20,641 
       Provision for loan losses  716   216   1,298   642   825 
       Non-interest income  1,446   944   1,463   1,267   2,211 
       Non-interest expense  12,465   11,737   11,409   11,122   11,825 
       Income tax expense  2,916   3,348   2,843   2,494   2,363 
       Net income  9,100   10,206   8,823   8,158   7,839 
               
    PERFORMANCE RATIOS           
       Return on average assets (1)  1.35%  1.57%  1.38%  1.31%  1.27%
       Adjusted return on average assets (1) (2)  1.40%  1.57%  1.38%  1.31%  1.33%
       Return on average equity (1)  12.61%  14.46%  12.92%  12.25%  11.77%
       Adjusted return on average equity (1) (2)  13.11%  14.46%  12.92%  12.25%  12.36%
       Return on average tangible equity (1) (2)  13.53%  15.55%  13.93%  13.22%  12.63%
       Adjusted return on average tangible equity (1) (2)  14.07%  15.55%  13.93%  13.22%  13.26%
       Net interest margin (1) (3)  3.69%  3.97%  3.76%  3.57%  3.52%
       Total cost of deposits (1)  1.21%  0.50%  0.23%  0.19%  0.21%
       Efficiency ratio (2)  47.68%  46.01%  46.81%  49.62%  49.57%
               
    SHARE DATA          
       Common shares outstanding  19,451,755   19,447,206   19,483,415   19,634,744   19,472,364 
       Basic earnings per share $0.47  $0.52  $0.45  $0.42  $0.40 
       Diluted earnings per share  0.46   0.52   0.45   0.41   0.40 
       Adjusted diluted earnings per share (2)  0.48   0.52   0.45   0.41   0.42 
       Tangible book value per share (2)  13.89   13.43   13.08   12.79   12.67 
       Book value per share  14.89   14.44   14.10   13.81   13.69 
               
    MARKET DATA          
       Market value per share $13.76  $13.67  $13.98  $14.22  $14.51 
       Market value / Tangible book value  99.07%  101.80%  106.84%  111.14%  114.53%
       Market capitalization $267,656  $265,843  $272,378  $279,206  $282,544 
               
    CAPITAL & LIQUIDITY          
       Tangible stockholders' equity / tangible assets (2)  9.96%  9.97%  9.95%  9.79%  9.85%
       Stockholders' equity / assets  10.60%  10.64%  10.64%  10.48%  10.57%
       Loans / deposits  101.91%  103.34%  103.15%  99.41%  100.51%
               
    ASSET QUALITY          
       Net (recoveries) charge-offs $(213) $705  $404  $247  $6 
       Nonperforming loans  6,250   5,107   11,888   12,591   13,001 
       Nonperforming assets  6,250   5,400   12,181   12,884   13,773 
       Net (recoveries) charge offs / average loans (1)  (0.04%)  0.13%  0.07%  0.05%  0.00%
       Nonperforming loans / total loans  0.27%  0.23%  0.53%  0.58%  0.61%
       Nonperforming assets / total assets  0.23%  0.20%  0.47%  0.50%  0.55%
       Allowance for loan losses / total loans  1.09%  1.08%  1.12%  1.12%  1.12%
       Allowance for loan losses / total loans (excluding PPP loans) 1.09%  1.09%  1.13%  1.13%  1.15%
       Allowance for loan losses / nonperforming loans  407.58%  480.61%  210.58%  191.72%  182.65%
               
    OTHER DATA          
       Total assets $2,732,940  $2,638,060  $2,581,192  $2,587,038  $2,523,744 
       Total loans  2,337,814   2,263,377   2,233,278   2,164,944   2,125,437 
       Total deposits  2,293,952   2,190,192   2,165,163   2,177,895   2,114,602 
       Total stockholders' equity  289,562   280,749   274,702   271,068   266,666 
       Number of full-time equivalent employees (4)  238   228   233   219   217 
               
    (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
       12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021
    LOAN COMPOSITION          
    Commercial and industrial $354,203  $323,984  $321,205  $321,979  $350,103 
    Commercial real estate:          
     Owner-occupied  533,426   517,448   523,108   499,379   475,576 
     Investor  951,115   942,151   925,643   896,435   855,913 
     Construction and development  142,876   126,206   117,011   96,585   109,292 
     Multi-family  215,990   214,819   201,269   193,865   173,728 
         Total commercial real estate  1,843,407   1,800,624   1,767,031   1,686,264   1,614,509 
    Residential real estate:          
     Residential mortgage and first lien home equity loans  93,847   96,194   98,841   99,992   106,204 
     Home equity–second lien loans and revolving lines of credit  33,551   31,670   30,491   30,485   31,375 
         Total residential real estate  127,398   127,864   129,332   130,477   137,579 
    Consumer and other  16,318   14,654   19,694   30,096   27,762 
         Total loans prior to deferred loan fees and costs  2,341,326   2,267,126   2,237,262   2,168,816   2,129,953 
    Net deferred loan fees and costs  (3,512)  (3,749)  (3,984)  (3,872)  (4,516)
         Total loans $2,337,814  $2,263,377  $2,233,278  $2,164,944  $2,125,437 
                
    LOAN MIX          
    Commercial and industrial  15.2%  14.3%  14.4%  14.8%  16.5%
    Commercial real estate:          
     Owner-occupied  22.8%  22.9%  23.4%  23.1%  22.4%
     Investor  40.7%  41.6%  41.5%  41.4%  40.2%
     Construction and development  6.1%  5.6%  5.2%  4.5%  5.1%
     Multi-family  9.2%  9.5%  9.0%  8.9%  8.2%
         Total commercial real estate  78.8%  79.6%  79.1%  77.9%  75.9%
    Residential real estate:          
     Residential mortgage and first lien home equity loans  4.0%  4.3%  4.4%  4.6%  5.0%
     Home equity–second lien loans and revolving lines of credit  1.4%  1.4%  1.4%  1.4%  1.5%
         Total residential real estate  5.4%  5.7%  5.8%  6.0%  6.5%
    Consumer and other  0.7%  0.6%  0.9%  1.4%  1.3%
    Net deferred loan fees and costs  (0.1%)  (0.2%)  (0.2%)  (0.1%)  (0.2%)
         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
       12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021
    DEPOSIT COMPOSITION          
    Non-interest bearing demand deposits $503,856  $584,025  $600,402  $597,333  $558,775 
    Interest bearing demand deposits  322,944   343,042   318,687   314,564   293,647 
    Money market and savings deposits  935,311   860,577   929,075   936,848   871,074 
    Time deposits  531,841   402,549   316,999   329,150   391,106 
     Total Deposits $2,293,952  $2,190,193  $2,165,163  $2,177,895  $2,114,602 
                
    DEPOSIT MIX          
    Non-interest bearing demand deposits  22.0%  26.7%  27.7%  27.4%  26.4%
    Interest bearing demand deposits  14.1%  15.7%  14.7%  14.5%  13.9%
    Money market and savings deposits  40.8%  39.3%  42.9%  43.0%  41.2%
    Time deposits  23.1%  18.3%  14.7%  15.1%  18.5%
     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
     12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021
    Return on Average Tangible Equity         
    Net income (numerator)$9,100  $10,206  $8,823  $8,158  $7,839 
              
    Average stockholders' equity$286,283  $280,093  $273,829  $270,147  $264,216 
    Less: Average Goodwill and other intangible assets, net 19,533   19,669   19,823   19,916   17,910 
    Average Tangible stockholders' equity (denominator)$266,750  $260,424  $254,006  $250,231  $246,306 
              
    Return on Average Tangible equity (1) 13.53%  15.55%  13.93%  13.22%  12.63%
              
    Tangible Book Value Per Share         
    Stockholders' equity$289,562  $280,749  $274,702  $271,068  $266,666 
    Less: Goodwill and other intangible assets, net 19,405   19,599   19,768   19,854   19,971 
    Tangible stockholders' equity (numerator)$270,157  $261,150  $254,934  $251,214  $246,695 
              
    Common shares outstanding (denominator) 19,451,755   19,447,206   19,483,415   19,634,744   19,472,364 
              
    Tangible book value per share$13.89  $13.43  $13.08  $12.79  $12.67 
              
              
    Tangible Equity / Assets         
    Stockholders' equity$289,562  $280,749  $274,702  $271,068  $266,666 
    Less: Goodwill and other intangible assets, net 19,405   19,599   19,768   19,854   19,971 
    Tangible stockholders' equity (numerator)$270,157  $261,150  $254,934  $251,214  $246,695 
              
    Total assets$2,732,940  $2,638,060  $2,581,192  $2,587,038  $2,523,744 
    Less: Goodwill and other intangible assets, net 19,405   19,599   19,768   19,854   19,971 
    Tangible total assets (denominator)$2,713,535  $2,618,461  $2,561,424  $2,567,184  $2,503,773 
              
    Tangible stockholders' equity / tangible assets 9.96%  9.97%  9.95%  9.79%  9.85%
              
              
    Efficiency Ratio         
    Non-interest expense$12,465  $11,737  $11,409  $11,122  $11,825 
    Less: Merger-related expenses 452   -   -   -   498 
    Adjusted non-interest expense (numerator)$12,013  $11,737  $11,409  $11,122  $11,327 
              
    Net interest income$23,751  $24,563  $22,910  $21,149  $20,641 
    Non-interest income 1,446   944   1,463   1,267   2,211 
    Total revenue$25,197  $25,507  $24,373  $22,416  $22,852 
    Less: Gains on sale of investment securities, net -   -   -   -   - 
    Less: Gains on recovery of acquired loans         
    Adjusted total revenue (denominator)$25,197  $25,507  $24,373  $22,416  $22,852 
              
    Efficiency ratio 47.68%  46.01%  46.81%  49.62%  49.57%
              
    (1) Annualized.         
              


    FIRST BANK AND SUBSIDIARIES
    NON-U.S. GAAP FINANCIAL MEASURES
    (dollars in thousands, except for share data, unaudited)
              
              
     For the Quarter Ended
     12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021
              
    Adjusted diluted earnings per share,         
        Adjusted return on average assets, and         
            Adjusted return on average equity         
              
    Net income$9,100  $10,206  $8,823  $8,158  $7,839 
    Add: Merger-related expenses (1) 357   -   -   -   393 
    Adjusted net income$9,457  $10,206  $8,823  $8,158  $8,232 
              
    Diluted weighted average common shares outstanding 19,649,282   19,668,133   19,794,657   19,768,452   19,725,294 
    Average assets$2,680,807  $2,575,742  $2,568,443  $2,522,775  $2,447,399 
    Average equity$286,283  $280,093  $273,829  $270,147  $264,216 
    Average Tangible Equity$266,750  $260,424  $254,006  $250,231  $246,306 
              
    Adjusted diluted earnings per share$0.48  $0.52  $0.45  $0.41  $0.42 
    Adjusted return on average assets (2) 1.40%  1.57%  1.38%  1.31%  1.33%
    Adjusted return on average equity (2) 13.11%  14.46%  12.92%  12.25%  12.36%
    Adjusted return on average tangible equity (2) 14.07%  15.55%  13.93%  13.22%  13.26%
              
    (1) Items are tax-effected using a federal income tax rate of 21%.        
    (2) Annualized.         
              


    FIRST BANK AND SUBSIDIARIES
    NON-U.S. GAAP FINANCIAL MEASURES
    (dollars in thousands, except for share data, unaudited)
        
        
     Year Ended December 31,
      2022   2021 
      
    Adjusted diluted earnings per share,   
        Adjusted return on average assets, and   
            Adjusted return on average equity   
        
    Net income$36,287  $35,429 
    Add: Merger-related expenses (1) 357   508 
    Adjusted net income$36,644  $35,937 
        
    Diluted weighted average common shares outstanding 19,716,661   19,815,747 
    Average assets$2,587,344  $2,420,517 
    Average equity$277,639  $253,732 
    Average Tangible Equity$257,905  $235,764 
        
    Adjusted diluted earnings per share$1.86  $1.81 
    Adjusted return on average assets 1.42%  1.48%
    Adjusted return on average equity 13.20%  14.16%
    Adjusted return on average tangible equity 14.21%  15.24%
        
    (1) Tax-effected using a federal income tax rate of 21%   
        

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