First Northern Community Bancorp Reports First Quarter 2023 Record Net Income of $5.5 Million

First Northern Community Bancorp (the “Company”, OTCQB: FNRN), holding company for First Northern Bank (“First Northern” or the “Bank”), today reported record net income of $5.5 million, or $0.38 per diluted share, for the three months ended March 31, 2023, up 80.5% compared to net income of $3.0 million, or $0.21 per diluted share, for the three months ended March 31, 2022.

The Company adopted and implemented Accounting Standards Update 2016-13, more commonly referred to as the Current Expected Credit Loss (CECL) standard model, on January 1, 2023. The allowance for credit losses (ACL), formerly known as the allowance for loan losses, and the reserve for unfunded commitments totaled $15,492,000 as of December 31, 2022. Upon adoption of CECL on January 1, 2023, the Company recognized an increase in the ACL for loans and reserve for unfunded commitments totaling $1,300,000 as a cumulative effect adjustment from change in accounting policies, with a corresponding decrease in opening retained earnings of $916,000, net of deferred taxes of $384,000.

On January 20, 2023, the Company completed the acquisition of three branches from Columbia State Bank in Colusa, Willows, and Orland, CA. The acquisition resulted in the assumption of $115.9 million of deposits and the acquisition of loans totaling $4.0 million, fixed assets totaling $3.6 million and cash on hand of $1.3 million. The Company also recognized a core deposit intangible of $5.0 million. The Company received cash consideration totaling approximately $103.4 million, resulting in a bargain purchase gain totaling approximately $1.4 million recognized during the three months ended March 31, 2023. On an after-tax basis, the bargain purchase gain contributed $1.0 million to net income for the three months ended March 31, 2023, or $0.07 per diluted share.

Total assets as of March 31, 2023 were $1.90 billion, an increase of $35.6 million, or 1.9%, compared to March 31, 2022. Total deposits as of March 31, 2023 were $1.75 billion, an increase of $35.1 million, or 2.1%, compared to March 31, 2022. Total net loans as of March 31, 2023 were $974.6 million, an increase of $100.2 million, or 11.5%, compared to total net loans of $874.4 million as of March 31, 2022. The increase in net loans was primarily driven by originations of commercial real estate and residential mortgage loans, which was partially offset by payoffs, and the forgiveness and SBA reimbursement on loans made under the SBA’s Paycheck Protection Program.