First Bank Reports Fourth Quarter 2019 Net Income of $5.2 Million

Full Year 2019 Net Income of $15.2 Million

For the Fourth Quarter 2019: Efficiency Ratio¹of 53.21% Lowest in Last Five Quarters, Pre-Provision Net Revenue² of $8.2 Million, Successful Systems Integration for Grand Bank Acquisition

HAMILTON, N.J., Jan. 29, 2020 (GLOBE NEWSWIRE) -- First Bank (Nasdaq Global Market: FRBA) today announced results for the fourth quarter and full year 2019. Net income for fourth quarter 2019 was $5.2 million, or $0.25 per diluted share, compared to $4.1 million, or $0.22 per diluted share, for the fourth quarter of 2018. Return on average assets and return on average equity for the fourth quarter of 2019 were 1.02% and 9.17%, respectively compared to fourth quarter 2018 return on average assets and return on average equity of 0.94% and 8.42%, respectively. First Bank’s fourth quarter 2019 adjusted diluted earnings per share³ were $0.28, adjusted return on average assets³ was 1.13% and adjusted return on average equity³ was 10.18% compared to fourth quarter 2018 adjusted diluted earnings per share of $0.21, adjusted return on average assets of 0.90% and adjusted return on average equity of 8.00%. Adjusted results for the fourth quarter of 2019 were impacted by a one-time revaluation of deferred tax assets which increased tax expense by approximately $730,000.  Net income for 2019 was $15.2 million, or $0.79 per diluted share, compared to $17.6 million, or $0.95 per diluted share, for 2018.

Fourth Quarter and Full Year 2019 Performance Highlights:

• A 16.8%, or $2.5 million, increase in total net revenue (net interest income plus non-interest income) for the fourth quarter 2019 to $17.7 million, compared to $15.1 million for the prior-year quarter, and total net revenue for 2019 of $62.4 million, an increase of 6.8%, or $4.0 million, compared to 2018 net revenue of $58.4 million
• Total loans of $1.72 billion at December 31, 2019, an increase of $261.1 million, or 17.8%, from $1.46 billion on December 31, 2018
• Total deposits of $1.64 billion at 2019 yearend increased by $247.7 million, or 17.8%, from $1.39 billion at December 31, 2018; non-interest bearing deposits were up $56.7 million or 25.9% in 2019 compared to 2018
• Fourth quarter 2019 non-interest expense of $9.3 million increased $119,000, or 1.3%, compared to $9.2 million for the prior year quarter 
• Efficiency ratio of 53.21% in the fourth quarter of 2019 improved by 5.01% from 58.22% in the linked quarter and improved 8.57% from 61.78% in the fourth quarter of 2018
• Fourth quarter 2019 tax equivalent net interest margin of 3.34% increased by 19 basis points compared to the linked quarter

“Our fourth quarter results provided a nice performance rebound and reflect an ongoing strategic focus on managing our funding costs, controlling non-interest expense, integrating and fully leveraging recently acquired locations and staff and our efforts to resolve a pair of commercial credits that affected our asset quality metrics,” said Patrick L. Ryan, President and Chief Executive Officer. “We realized a solid increase in core profitability for the fourth quarter even with increased tax expense related to the revaluation of our deferred tax assets. We believe that we’re well positioned to drive improved earnings performance during 2020.”

“While total deposits for the full year were up almost 18%, we allowed some price-sensitive time deposits to run off during the fourth quarter, which is reflected in a 14 basis-point drop in the average rate for interest bearing deposits from the linked third quarter. Our average balance for non-interest-bearing deposits was up by nearly $40 million from third quarter 2019, positively impacted by the Grand Bank acquisition and favorable results related to our commercial deposit gathering efforts. Growth in this area remains our focus. These efforts are closely aligned with a primary operating strategy for 2020 of stabilizing our net interest margin.”

“Non-interest expense for the fourth quarter was up by just 1.3% year-over-year, which we consider a solid accomplishment when you factor in a full quarter of expenses related to the staff and facilities acquired in our Grand Bank transaction. Linked quarter expenses, excluding merger-related costs in the third quarter, were up 9.4%, primarily a result of the Grand Bank acquisition. Continued effective management of our expenses will help our efforts to drive more to our bottom line.”

“We completed the successful system integration of the Grand Bank locations and staff in December. We’re pleased by the reaction of the Grand Bank customers as they get to know our expanded menu of products and services, while being served by familiar staff. While not a large transaction, it has made us the second largest community bank by deposit share for Mercer County and enhanced our market presence going into 2020.”      

“Our loan growth of $261 million for 2019 was very strong and reflected an active organic pipeline and the addition of the Grand Bank portfolio at the end of the third quarter. During the fourth quarter we experienced some early paydowns of commercial real estate loans which had the effect of lowering our period end loan balance in relation to the end of third quarter, however, we did benefit from elevated levels of prepayment penalty income in the quarter. Our commercial real estate pipeline remains strong and active and we plan to remain a fully engaged participant in this market. During 2020, we do plan to moderate the pace at which we grow our loan book to be more selective and to provide more flexibility in how we fund this growth.”

“Recently our nonperforming loans to total loans ratio has increased, mainly as a result of two larger commercial relationships. We believe that these credits are adequately collateralized. The largest of these relationships is an $8.2 million commercial and industrial relationship that was added to nonperforming loans in the third quarter of 2019.  The primary collateral for this relationship is under contract to be sold and we anticipate the loan being paid off during the first quarter of 2020.”           

Income Statement

Net interest income for fourth quarter 2019 was $16.2 million, an increase of $2.0 million, or 14.4%, compared to $14.2 million in the fourth quarter of 2018. This increase was driven by a $3.5 million, or 18.1%, increase in interest and dividend income to $23.0 million. This increase was primarily a result of a $291.4 million increase in average loan balances, with growth across all loan portfolios except consumer lending. Interest income for the fourth quarter 2019 included approximately $361,000 in loan prepayment penalty income compared to approximately $73,000 in the fourth quarter of 2018. The increase in interest income was partially offset by increased interest expense of $1.5 million for the comparable quarter. Increased interest expense was primarily a result of higher average balances and interest rates paid for time deposits and money market deposits. Loan and deposit balances for the fourth quarter reflect acquired and organic growth activity.

Net interest income of $58.4 million for 2019 increased by $3.4 million, or 6.2%, compared to $54.9 million for 2018. Interest and dividend income for 2019 was $84.2 million, an increase of $11.4 million, or 15.7%, compared to $72.7 million for 2018, partially offset by interest expense of $25.8 million, which increased $8.0 million or 45.0% from 2018.   The increase in interest and dividend income for 2019 was also primarily driven by significant growth in average loans, which increased by $211.8 million, along with a 2 basis-point increase in the average interest rate on loans compared to the prior year. Increased interest and dividend income was partially offset by higher interest expense on interest-bearing deposits, reflecting higher average balances and rates paid.

The fourth quarter 2019 tax equivalent net interest margin was 3.34%, a decrease of 10 basis points compared to 3.44% for the prior-year quarter and an increase of 19 basis points from the linked third quarter 2019. The decrease in the fourth quarter margin compared to 2018 was primarily the result of higher average balances and rates paid for interest-bearing liabilities, primarily money market and time deposits. The increase in interest-bearing liability costs was partially offset by a volume-related increase in interest income on interest earning assets. The improvement from the linked third quarter was driven by increased loan volume and a higher average rate for interest earning assets, along with a 14 basis-point decrease in the average rate for interest-bearing liabilities. The net interest margin for 2019 was 3.32%, a decrease of 25 basis points compared to 3.57% for the prior year, was primarily driven by increased average balances for money market and time deposits as well as a 40 basis-point increase in the average rate on interest bearing liabilities.   

The provision for loan losses for the fourth quarter 2019 totaled $340,000, a decrease of $686,000 compared to $1.0 million for fourth quarter 2018 and a decrease of $1.2 million compared to $1.6 million in the linked third quarter 2019. The 2019 provision for loan losses was $4.0 million compared to $3.4 million for the prior-year period. The increase in the provision amount for the full year was primarily a result of continued organic growth in the Bank’s commercial loan portfolio and elevated levels of charge-offs in 2019 compared to the prior year.

Fourth quarter 2019 non-interest income increased $509,000 to $1.5 million from $1.0 million in the fourth quarter of 2018. The increase was primarily a result of loan swap referral fees, an increase in service fees on deposit accounts and increased income from bank-owned life insurance. Non-interest income for 2019 totaled $4.0 million, an increase of $543,000 compared to $3.5 million for 2018. The annual increase was primarily a result of the same factors as the quarter over quarter increase.

Non-interest expense for fourth quarter 2019 totaled $9.3 million, an increase of $119,000, or 1.3%, compared to $9.2 million for the prior-year quarter and an increase of $799,000 compared to the third quarter of 2019 after excluding $984,000 in merger-related expenses from the third quarter. The higher non-interest expense compared to fourth quarter 2018 was primarily a result of increased salaries and employee benefits as well as data processing expense as a result of the Grand Bank acquisition on September 30, 2019, partially offset by lower other professional and regulatory fees. Excluding merger related costs in the third quarter of 2019, the increase in the fourth quarter compared to the linked third quarter was mainly the result of increased salaries and employee benefits; higher occupancy and equipment cost; and an increase in other expense. Non-interest expense for 2019 totaled $36.9 million, an increase of $3.6 million or 10.9%, compared to $33.3 million for 2018.  The 2019 increase in non-interest expense over the prior year was also primarily a result of increased salaries and employee benefits expense, an increase in other expense and higher occupancy and equipment costs, which includes the impact of the acquisition of Grand Bank.

The Bank’s efficiency ratio for the fourth quarter of 2019 was 53.21%, a reduction of 8.57% compared to 61.78% in the fourth quarter of 2018, and a reduction of 5.01% compared to 58.22% for the linked third quarter of 2019. The efficiency ratio for the full year 2019 was 58.00% compared to 56.13% in 2018.  

Pre-provision net revenue for fourth quarter 2019 was $8.2 million, an increase of $2.5 million compared to $5.7 million for the fourth quarter 2018.

Income tax expense for the fourth quarter of 2019 was $2.8 million, or an effective tax rate of 34.7%, compared to $823,000, or an effective tax rate of 16.7%, in the fourth quarter of 2018 and $947,000 or an effective tax rate of 24.7% in the linked third quarter 2019. The effective tax rate for the full year was 29.0%, compared to 18.7% for 2018. In December 2019, the State of New Jersey issued a clarifying technical bulletin 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. This technical bulletin provided clarification on the state’s position and accordingly initiated a revaluation of the Bank’s deferred tax assets. This revaluation increased the Bank’s tax expense by approximately $730,000 during the fourth quarter of 2019.

Balance Sheet

Total assets at December 31, 2019, were $2.01 billion, an increase of $302.2 million, or 17.7%, compared to $1.71 billion at December 31, 2018, due primarily to loan growth, both organic and acquired. Total loans were $1.72 billion at December 31, 2019, an increase of $261.1 million, or 17.8%, compared to $1.46 billion at the 2018 year end. Loan growth during 2019 was primarily in commercial loans and included both originated and acquired loans.

Total deposits were $1.64 billion at December 31, 2019, an increase of $247.7 million, or 17.8%, compared to $1.39 billion at December 31, 2018. Non-interest-bearing deposits totaled $275.8 million at December 31, 2019, an increase of $56.7 million, or 25.9%, from December 31, 2018. Deposit growth also includes both organically sourced and acquired balances.

Stockholders’ equity increased to $228.2 million at December 31, 2019, up $33.4 million, or 17.1%, compared to $194.8 million at December 31, 2018. The increase was primarily the result of the Bank’s issuance of additional common shares for the acquisition of Grand Bank, which added $18.4 million to stockholders equity. The increase was also due to a $12.9 million increase in retained earnings which was a result of the Bank’s net income offset somewhat by cash dividends.

Asset Quality

Net charge-offs for the fourth quarter 2019 were $325,000, compared to $7,000 for fourth quarter 2018 and $1.1 million for the linked third quarter of 2019. Net charge-offs as an annualized percentage of average loans were 0.07% in fourth quarter 2019, compared to 0.00% for fourth quarter 2018 and 0.28% for the linked third quarter 2019. Nonperforming loans as a percentage of total loans at December 31, 2019, were 1.32%, compared with 0.44% at December 31, 2018, and 0.91% at September 30, 2019. The allowance for loan losses to nonperforming loans was 75.8% at December 31, 2019, compared with 237.9% at December 31, 2018, and 108.8% at September 30, 2019. The increase in nonperforming loans was primarily due to the aforementioned two commercial loan relationships.

As of December 31, 2019, the Bank exceeded all regulatory capital requirements to be considered well capitalized, with a Tier 1 Leverage ratio of 10.26%, a Tier 1 Risk-Based capital ratio of 10.77%, a Common Equity Tier 1 Capital ratio of 10.77%, and a Total Risk-Based capital ratio of 12.77%.

Cash Dividend Declared

On January 21, 2020, the Board of Directors declared a quarterly cash dividend of $0.03 per share to common stockholders of record at the close of business on February 14, 2020, payable on February 28, 2020.

Grand Bank Acquisition Completed

On October 1, 2019, First Bank announced that it had completed the acquisition of Grand Bank, N.A., effective as of the close of business on September 30, 2019. The merger had previously been unanimously approved by both boards of directors and was then approved by the shareholders of both institutions in September. The merger provided two additional full-service branch locations in Mercer County, New Jersey, approximately $146.3 million in loans and approximately $170.9 million in deposits at the time of acquisition.

Conference Call

First Bank will host an earnings conference call on Thursday, January 30, 2020, at 9:00 a.m. Eastern Time.  The direct dial toll free number for the call is 844-825-9784.  For those unable to participate in the call, a replay will be available by dialing 877-344-7529 (access code 10138057) from one hour after the end of the conference call until April 30, 2020.  Replay information will also be available on our website at www.firstbanknj.com under the “About Us” tab.  Click on “Investor Relations” to access the replay information for 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, Hamilton, Hamilton Square, Lawrence, Mercerville, Pennington, Randolph, Somerset and Williamstown, New Jersey; and Doylestown, Trevose, Warminster and West Chester, Pennsylvania. With over $2.0 billion in assets as of December 31, 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 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; 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; 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. 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 joint 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.

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¹ 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 recovery of acquired 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.

² 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.

³ 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 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. 

CONTACT:  Patrick L. Ryan, President and CEO
[phone], [e-mail] 

FIRST BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except for share data)
				December 31, 2019
				(unaudited)			December 31, 2018
Assets
Cash and due from banks				$	16,751		$	13,547
Federal funds sold					40,000			25,000
Interest bearing deposits with banks					25,041			16,883
		Cash and cash equivalents			81,792			55,430
Interest bearing time deposits with banks					6,087			5,925
Investment securities available for sale					47,462			51,260
Investment securities held to maturity (fair value of $47,100
	at December 31, 2019 and $49,411 at December 31, 2018)				46,612			49,811
Restricted investment in bank stocks					6,652			5,803
Other investments					6,388			6,203
Loans, net of deferred fees and costs					1,723,574			1,462,516
	Less: Allowance for loan losses				17,245			15,135
		Net loans			1,706,329			1,447,381
Premises and equipment, net					11,881			11,003
Other real estate owned, net					1,363			1,455
Accrued interest receivable					4,810			4,258
Bank-owned life insurance					49,580			40,350
Goodwill					18,046			16,074
Other intangible assets, net					2,083			1,475
Deferred income taxes					10,400			10,216
Other assets					13,895			4,515
		Total assets		$	2,013,380		$	1,711,159
Liabilities and Stockholders' Equity
Liabilities:
Non-interest bearing deposits				$	275,778		$	219,034
Interest bearing deposits					1,365,089			1,174,170
		Total deposits			1,640,867			1,393,204
Borrowings					105,476			93,351
Subordinated debentures					21,964			21,856
Accrued interest payable					1,076			1,045
Other liabilities					15,811			6,867
		Total liabilities			1,785,194			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 20,458,665 shares at December 31, 2019
	and 18,676,056 shares at December 31, 2018				101,887			93,132
Additional paid-in capital					78,112			67,417
Retained earnings					48,160			35,222
Accumulated other comprehensive income (loss)					27			(935	)
		Total stockholders' equity			228,186			194,836
		Total liabilities and stockholders' equity		$	2,013,380		$	1,711,159

FIRST BANK AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except for share data, unaudited)
				Three Months Ended							Year Ended
				December 31,							December 31,
					2019				2018			2019			2018
Interest and Dividend Income
Investment securities—taxable				$	586			$	541		$	2,160		$	2,156
Investment securities—tax-exempt					84				107			360			443
Interest bearing deposits with banks,
Federal funds sold and other					516				567			2,181			1,609
Loans, including fees					21,849				18,287			79,469			68,530
	Total interest and dividend income				23,035				19,502			84,170			72,738
Interest Expense
Deposits					5,816				4,441			21,750			14,170
Borrowings					630				511			2,461			2,031
Subordinated debentures					398				398			1,593			1,593
	Total interest expense				6,844				5,350			25,804			17,794
Net interest income					16,191				14,152			58,366			54,944
Provision for loan losses					340				1,026			3,984			3,447
	Net interest income after provision for loan losses				15,851				13,126			54,382			51,497
Non-Interest Income
Service fees on deposit accounts					178				93			515			364
Loan fees					422				34			660			280
Income from bank-owned life insurance					347				289			1,165			1,044
Gains on sale of investment securities					-				-			-			3
Gains on sale of loans					172				143			227			335
Gains on recovery of acquired loans					190				260			776			804
Other non-interest income					184				165			652			622
	Total non-interest income				1,493				984			3,995			3,452
Non-Interest Expense
Salaries and employee benefits					5,306				4,913			20,460			17,583
Occupancy and equipment					1,377				1,466			5,221			4,861
Legal fees					159				133			595			536
Other professional fees					397				559			1,634			1,953
Regulatory fees					26				144			387			580
Directors' fees					199				199			785			700
Data processing					584				445			1,852			1,733
Marketing and advertising					147				197			822			759
Travel and entertainment					147				163			486			450
Insurance					61				94			334			336
Other real estate owned expense, net					(7	)			72			152			221
Merger-related expenses					-				-			1,212			988
Other expense					913				805			2,990			2,614
	Total non-interest expense				9,309				9,190			36,930			33,314
Income Before Income Taxes					8,035				4,920			21,447			21,635
Income tax expense					2,789				823			6,209			4,046
Net Income				$	5,246			$	4,097		$	15,238		$	17,589
Basic earnings per common share				$	0.26			$	0.22		$	0.80		$	0.97
Diluted earnings per common share				$	0.25			$	0.22		$	0.79		$	0.95
Cash dividends per common share				$	0.03			$	0.03		$	0.12		$	0.12
Basic weighted average common shares outstanding					20,377,478				18,621,688			19,098,464			18,212,875
Diluted weighted average common shares outstanding					20,666,729				18,937,468			19,392,429			18,571,537

FIRST BANK AND SUBSIDIARIES
AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES
(dollars in thousands, unaudited)
	Three Months Ended December 31,
	2019											2018
	Average								Average			Average								Average
	Balance				Interest				Rate (5)			Balance				Interest				Rate (5)
Interest earning assets
Investment securities (1) (2)	$	92,875			$	688			2.94	%		$	103,201			$	670			2.58	%
Loans (3)		1,738,847				21,849			4.99	%			1,447,438				18,287			5.01	%
Interest bearing deposits with banks,
Federal funds sold and other		81,247				346			1.69	%			72,061				406			2.24	%
Restricted investment in bank stocks		7,078				122			6.84	%			6,118				120			7.78	%
Other investments		6,374				48			2.99	%			6,190				41			2.63	%
Total interest earning assets (2)		1,926,421				23,053			4.75	%			1,635,008				19,524			4.74	%
Allowance for loan losses		(17,547	)										(14,466	)
Non-interest earning assets		130,680											100,565
Total assets	$	2,039,554										$	1,721,107
Interest bearing liabilities
Interest bearing demand deposits	$	159,936			$	171			0.42	%			165,625			$	257			0.62	%
Money market deposits		397,248				1,488			1.49	%			310,065				1,093			1.40	%
Savings deposits		126,768				338			1.06	%			86,974				141			0.64	%
Time deposits		690,194				3,819			2.20	%			614,299				2,950			1.91	%
Total interest bearing deposits		1,374,146				5,816			1.68	%			1,176,963				4,441			1.50	%
Borrowings		114,965				630			2.17	%			100,334				511			2.02	%
Subordinated debentures		21,946				398			7.25	%			21,841				398			7.29	%
Total interest bearing liabilities		1,511,057				6,844			1.80	%			1,299,138				5,350			1.63	%
Non-interest bearing deposits		283,112											219,844
Other liabilities		18,392											9,051
Stockholders' equity		226,993											193,074
Total liabilities and stockholders' equity	$	2,039,554										$	1,721,107
Net interest income/interest rate spread (2)						16,209			2.95	%							14,174			3.10	%
Net interest margin (2) (4)									3.34	%										3.44	%
Tax equivalent adjustment (2)						(18	)										(22	)
Net interest income					$	16,191										$	14,152
(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)
	Year Ended December 31,
		2019											2018
	Average								Average			Average								Average
	Balance				Interest				Rate			Balance				Interest				Rate
Interest earning assets
Investment securities (1) (2)	$	94,185			$	2,596			2.76	%		$	108,816			$	2,692			2.47	%
Loans (3)		1,578,174				79,469			5.04	%			1,366,385				68,530			5.02	%
Interest bearing deposits with banks,
Federal funds sold and other		73,544				1,575			2.14	%			52,762				1,054			2.00	%
Restricted investment in bank stocks		6,848				421			6.15	%			6,361				406			6.38	%
Other investments		6,303				185			2.94	%			6,130				149			2.43	%
Total interest earning assets (2)		1,759,054				84,246			4.79	%			1,540,454				72,831			4.73	%
Allowance for loan losses		(16,458	)										(13,282	)
Non-interest earning assets		116,314											90,442
Total assets	$	1,858,910										$	1,617,614
Interest bearing liabilities
Interest bearing demand deposits	$	148,234			$	877			0.59	%		$	163,240			$	979			0.60	%
Money market deposits		355,046				5,619			1.58	%			267,965				3,158			1.18	%
Savings deposits		91,293				763			0.84	%			84,336				458			0.54	%
Time deposits		658,741				14,491			2.20	%			572,411				9,575			1.67	%
Total interest bearing deposits		1,253,314				21,750			1.74	%			1,087,952				14,170			1.30	%
Borrowings		113,740				2,461			2.16	%			109,419				2,031			1.86	%
Subordinated debentures		21,906				1,593			7.27	%			21,800				1,593			7.31	%
Total interest bearing liabilities		1,388,960				25,804			1.86	%			1,219,171				17,794			1.46	%
Non-interest bearing deposits		244,820											209,876
Other liabilities		17,335											7,294
Stockholders' equity		207,795											181,273
Total liabilities and stockholders' equity	$	1,858,910										$	1,617,614
Net interest income/interest rate spread (2)						58,442			2.93	%							55,037			3.27	%
Net interest margin (2) (4)									3.32	%										3.57	%
Tax equivalent adjustment (2)						(76	)										(93	)
Net interest income					$	58,366										$	54,944
(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.

FIRST BANK AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(in thousands, except for share and employee data, unaudited)
		As of or For the Quarter Ended
		12/31/19				9/30/2019 (1)				6/30/19				3/31/19				12/31/18
EARNINGS
Net interest income		$	16,191			$	13,976			$	14,164			$	14,035			$	14,152
Provision for loan losses			340				1,558				1,721				365				1,026
Non-interest income			1,493				905				924				673				984
Non-interest expense			9,309				9,494				9,127				9,000				9,190
Income tax expense			2,789				947				1,400				1,073				823
Net income			5,246				2,882				2,840				4,270				4,097
PERFORMANCE RATIOS
Return on average assets (2)			1.02	%			0.61	%			0.64	%			0.99	%			0.94	%
Adjusted return on average assets (2) (3)			1.13	%			0.74	%			0.63	%			0.99	%			0.90	%
Return on average equity (2)			9.17	%			5.58	%			5.64	%			8.79	%			8.42	%
Adjusted return on average equity (2) (3)			10.18	%			6.69	%			5.52	%			8.76	%			8.00	%
Return on average tangible equity (2) (3)			10.10	%			6.10	%			6.11	%			9.64	%			9.26	%
Adjusted return on average tangible equity (2) (3)			11.22	%			7.31	%			7.39	%			7.47	%			7.31	%
Net interest margin (2) (4)			3.34	%			3.15	%			3.37	%			3.45	%			3.44	%
Efficiency ratio (3)			53.21	%			58.22	%			60.51	%			60.95	%			61.78	%
Pre-provision net revenue (3)		$	8,185			$	6,107			$	5,884			$	5,691			$	5,686
SHARE DATA
Common shares outstanding			20,458,665				20,460,078				18,757,965				18,735,291				18,676,056
Basic earnings per share		$	0.26			$	0.15			$	0.15			$	0.23			$	0.22
Diluted earnings per share			0.25				0.15				0.15				0.23				0.22
Adjusted diluted earnings per share (3)			0.28				0.18				0.15				0.22				0.21
Tangible book value per share (3)			10.17				9.88				9.85				9.71				9.50
Book value per share			11.15				10.91				10.78				10.64				10.43
MARKET DATA
Market value per share		$	11.05			$	10.83			$	11.74			$	11.53			$	12.12
Market value / Tangible book value			108.66	%			109.59	%			119.14	%			118.78	%			127.60	%
Market capitalization		$	226,068			$	221,583			$	220,219			$	216,018			$	226,354
CAPITAL & LIQUIDITY
Tangible stockholders' equity / tangible assets (3)			10.44	%			9.98	%			10.19	%			10.33	%			10.47	%
Stockholders' equity / assets			11.33	%			10.91	%			11.05	%			11.22	%			11.39	%
Loans / deposits			105.04	%			105.52	%			107.28	%			103.19	%			104.98	%
ASSET QUALITY
Net charge-offs (recoveries)		$	325			$	1,084			$	481			$	(16	)		$	7
Nonperforming loans			22,745				15,841				14,554				7,501				6,362
Nonperforming assets			24,108				17,705				15,330				8,952				7,817
Net charge offs (recoveries) / average loans (2)			0.07	%			0.28	%			0.13	%			0.00	%			0.00	%
Nonperforming loans / total loans			1.32	%			0.91	%			0.94	%			0.50	%			0.44	%
Nonperforming assets / total assets			1.20	%			0.86	%			0.84	%			0.50	%			0.46	%
Allowance for loan losses / total loans			1.00	%			0.99	%			1.08	%			1.04	%			1.03	%
Allowance for loan losses / nonperforming loans			75.82	%			108.77	%			115.13	%			206.85	%			237.90	%
OTHER DATA
Total assets		$	2,013,380			$	2,047,373			$	1,830,695			$	1,777,301			$	1,711,159
Total loans			1,723,574				1,743,897				1,548,540				1,497,086				1,462,516
Total deposits			1,640,867				1,652,608				1,443,497				1,450,774				1,393,204
Total stockholders' equity			228,186				223,303				202,242				199,337				194,836
Number of full-time equivalent employees (5)			216				216				195				181				186
(1) Includes effects of Grand Bank merger effective September 30, 2019.
(2) Annualized.
(3) 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.
(4) Tax equivalent using a federal income tax rate of 21%.
(5) Includes 15 full-time equivalent seasonal interns as of 6/30/2019.

FIRST BANK AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(dollars in thousands, unaudited)
			As of the Quarter Ended
			12/31/19				9/30/2019 (1)				6/30/19				3/31/19				12/31/18
LOAN COMPOSITION
Commercial and industrial			$	239,095			$	236,932			$	219,930			$	204,159			$	195,786
Commercial real estate:
	Owner-occupied			395,986				405,485				370,498				361,671				355,062
	Investor			673,300				685,006				619,174				583,849				567,407
	Construction and development			105,709				113,281				93,916				99,368				85,064
	Multi-family			119,005				103,858				88,801				87,598				87,930
	Total commercial real estate			1,294,000				1,307,630				1,172,389				1,132,486				1,095,463
Residential real estate:
	Residential mortgage and first lien home equity loans			123,917				127,337				92,760				94,143				101,341
	Home equity–second lien loans and revolving lines of credit			32,555				35,264				26,695				27,486				28,563
	Total residential real estate			156,472				162,601				119,455				121,629				129,904
Consumer and other				35,810				38,584				38,529				40,517				43,070
Net deferred loan fees and costs				(1,803	)			(1,850	)			(1,763	)			(1,705	)			(1,708	)
	Total loans		$	1,723,574			$	1,743,897			$	1,548,540			$	1,497,086			$	1,462,515
LOAN MIX
Commercial and industrial				13.9	%			13.6	%			14.2	%			13.6	%			13.4	%
Commercial real estate:
	Owner-occupied			23.0	%			23.3	%			23.9	%			24.2	%			24.3	%
	Investor			39.1	%			39.3	%			40.0	%			39.0	%			38.8	%
	Construction and development			6.1	%			6.5	%			6.1	%			6.6	%			5.8	%
	Multi-family			6.9	%			6.0	%			5.7	%			5.9	%			6.0	%
	Total commercial real estate			75.1	%			75.0	%			75.7	%			75.7	%			74.9	%
Residential real estate:
	Residential mortgage and first lien home equity loans			7.2	%			7.3	%			6.0	%			6.3	%			6.9	%
	Home equity–second lien loans and revolving lines of credit			1.9	%			2.0	%			1.7	%			1.8	%			2.0	%
	Total residential real estate			9.1	%			9.3	%			7.7	%			8.1	%			8.9	%
Consumer and other				2.0	%			2.2	%			2.5	%			2.7	%			2.9	%
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 Grand Bank merger effective September 30, 2019.

FIRST BANK AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES
(in thousands, except for share data, unaudited)
	As of or For the Quarter Ended
	12/31/19				9/30/2019 (1)				6/30/19				3/31/19				12/31/18
Return on Average Tangible Equity
Net income (numerator)	$	5,246			$	2,882			$	2,840			$	4,270			$	4,097
Average stockholders' equity	$	226,993			$	204,759			$	201,796			$	197,061			$	193,074
Less: Average Goodwill and other intangible assets, net		20,987				17,412				17,450				17,450				17,484
Average Tangible stockholders' equity (denominator)	$	206,006			$	187,347			$	184,346			$	179,611			$	175,590
Return on Average Tangible equity		10.10	%			6.10	%			6.11	%			9.64	%			9.26	%
Tangible Book Value Per Share
Stockholders' equity	$	228,186			$	223,303			$	202,242			$	199,337			$	194,836
Less: Goodwill and other intangible assets, net		20,129				21,104				17,406				17,467				17,549
Tangible stockholders' equity (numerator)	$	208,057			$	202,199			$	184,836			$	181,870			$	177,287
Common shares outstanding (denominator)		20,458,665				20,460,078				18,757,965				18,735,291				18,676,056
Tangible book value per share	$	10.17			$	9.88			$	9.85			$	9.71			$	9.49
Tangible Equity / Assets
Stockholders' equity	$	228,186			$	223,303			$	202,242			$	199,337			$	194,836
Less: Goodwill and other intangible assets, net		20,129				21,104				17,406				17,467				17,549
Tangible equity (numerator)	$	208,057			$	202,199			$	184,836			$	181,870			$	177,287
Total assets	$	2,013,380			$	2,047,373			$	1,830,695			$	1,777,301			$	1,711,159
Less: Goodwill and other intangible assets, net		20,129				21,104				17,406				17,467				17,549
Adjusted total assets (denominator)	$	1,993,251			$	2,026,269			$	1,813,289			$	1,759,834			$	1,693,610
Tangible equity / assets		10.44	%			9.98	%			10.19	%			10.33	%			10.47	%
Efficiency Ratio
Non-interest expense	$	9,309			$	9,494			$	9,127			$	9,000			$	9,190
Less: Merger-related expenses		-				984				110				118				-
Adjusted non-interest expense (numerator)	$	9,309			$	8,510			$	9,017			$	8,882			$	9,190
Net interest income	$	16,191			$	13,976			$	14,164			$	14,035			$	14,152
Non-interest income		1,493				905				924				673				984
Total revenue		17,684				14,881				15,088				14,708				15,136
Less: Gains on recovery of acquired loans		190				264				187				135				260
Adjusted total revenue (denominator)	$	17,494			$	14,617			$	14,901			$	14,573			$	14,876
Efficiency ratio		53.21	%			58.22	%			60.51	%			60.95	%			61.78	%
Pre-Provision Net Revenue
Net interest income	$	16,191			$	13,976			$	14,164			$	14,035			$	14,152
Non-interest income		1,493				905				924				673				984
Less: Gains on sale of investment securities, net		-				-				-				-				-
Less: Gains on recovery of acquired loans		190				264				187				135				260
Less: Non-interest expense		9,309				9,494				9,127				9,000				9,190
Add: Merger-related expenses		-				984				110				118				-
Pre-provision net revenue	$	8,185			$	6,107			$	5,884			$	5,691			$	5,686
(1) Includes effects of Grand Bank merger effective September 30, 2019.

FIRST BANK AND SUBSIDIARIES
NON-U.S. GAAP FINANCIAL MEASURES
(dollars in thousands, except for share data, unaudited)
	For the Quarter Ended
	12/31/19				9/30/2019 (1)				6/30/19				3/31/19				12/31/18
Adjusted diluted earnings per share,
Adjusted return on average assets, and
Adjusted return on average equity
Net income	$	5,246			$	2,882			$	2,840			$	4,270			$	4,097
Add: Merger-related expenses (2)		-				777				87				93				-
Add: Deferred Tax Asset revaluation		730				-				-				-				-
Less: Gains on recovery of acquired loans (2)		150				209				148				107				205
Adjusted net income	$	5,826			$	3,451			$	2,779			$	4,257			$	3,892
Diluted weighted average common shares outstanding		20,666,729				18,976,574				18,954,171				18,955,624				18,937,468
Average assets	$	2,039,554			$	1,859,818			$	1,782,832			$	1,747,414			$	1,721,107
Average equity	$	226,993			$	204,759			$	201,796			$	197,061			$	193,074
Average Tangible Equity	$	206,006			$	187,347			$	184,346			$	179,611			$	175,590
Adjusted diluted earnings per share	$	0.28			$	0.18			$	0.15			$	0.22			$	0.21
Adjusted return on average assets (3)		1.13	%			0.74	%			0.63	%			0.99	%			0.90	%
Adjusted return on average equity (3)		10.18	%			6.69	%			5.52	%			8.76	%			8.00	%
Adjusted return on average tangible equity (3)		11.22	%			7.31	%			7.39	%			7.47	%			7.31	%
(1) Includes effects of Grand Bank merger effective September 30, 2019.
(2) Items are tax-effected using a federal income tax rate of 21%.
(3) Annualized.