First Bank's Third Quarter 2024: A Strong Performance Amidst Challenges
October 24, 2024, 9:31 am
Location: United States, Pennsylvania, Bensalem Township
Employees: 51-200
Founded date: 2007
Total raised: $8.2M
First Bank, based in Hamilton, New Jersey, has reported a robust net income of $8.2 million for the third quarter of 2024. This figure translates to $0.32 per diluted share, a significant turnaround from the net loss of $1.3 million recorded in the same quarter last year. The bank's performance is a testament to its strategic focus on loan and deposit growth, asset quality, and balance sheet optimization.
The third quarter of 2024 saw total loans reach $3.09 billion, marking an increase of $89.5 million, or 11.9% annualized, from the previous quarter. This growth was primarily driven by a surge in commercial and industrial loans, alongside owner-occupied commercial real estate loans. The bank's commitment to expanding its lending portfolio is evident, as it seeks to strengthen its position in the competitive banking landscape.
Deposits also saw a healthy increase, rising to $3.05 billion, an $82.4 million jump, or 11.1% annualized. This growth spanned all deposit categories, showcasing the bank's ability to attract and retain customer funds. Non-interest bearing demand deposits, interest-bearing demand deposits, money market accounts, and time deposits all contributed to this positive trend.
The tangible book value per share climbed to $13.84, reflecting an 11.2% annualized increase from the previous quarter. This growth in tangible book value is a key indicator of the bank's financial health and its ability to generate returns for shareholders.
First Bank's management has prioritized balance sheet efficiency, evidenced by the sale of approximately $11.7 million in investment securities during the quarter. While this resulted in a net loss of $555,000 on the sale, it aligns with the bank's strategy to optimize its asset mix. Additionally, the restructuring of its bank-owned life insurance (BOLI) portfolio has led to a $1.1 million enhancement in cash surrender value, further bolstering the bank's financial position.
Asset quality remains a strong point for First Bank. Nonperforming assets decreased to 0.47% of total assets, down from 0.56% in the previous quarter. This decline indicates effective management of credit risk and a focus on maintaining a healthy loan portfolio. The bank recorded a credit loss expense of $1.6 million, a reflection of its robust organic loan growth while still maintaining strong asset quality.
The bank's net interest income rose to $30.1 million, a 5.2% increase compared to the same period last year. This growth is attributed to an expansion in net interest margin, despite a slight decrease from the previous quarter. The tax equivalent net interest margin stood at 3.49%, a 13 basis point increase from the prior year, although it experienced a decline from the linked quarter.
Non-interest income surged to $2.5 million, significantly higher than the $193,000 recorded in the same quarter last year. This increase was largely driven by the aforementioned BOLI restructuring and higher yields from new policies. The bank also reported net gains on loan sales, a positive shift from previous losses.
On the expense side, First Bank managed to reduce non-interest expenses to $18.6 million, a decrease of 20.6% from the prior year. This reduction was primarily due to the absence of merger-related expenses that had impacted the previous year's results. However, excluding these expenses, non-interest expenses grew by 13.3%, reflecting investments in employee compensation and professional services.
The effective tax rate for the quarter was 33.9%, a notable increase from the previous year. This rise was influenced by a $1.2 million tax expense related to the BOLI restructuring. The bank anticipates its effective tax rate will stabilize between 24% and 25% moving forward.
First Bank's balance sheet remains strong, with total assets increasing by $148.3 million, or 4.1%, since the end of 2023. The bank's focus on relationship-based commercial lending is evident, as it continues to manage its exposure to investor real estate lending carefully.
Liquidity has improved, with total cash and cash equivalents rising to $312.3 million. This increase provides a solid foundation for future growth and operational flexibility. The bank's borrowings also increased, reflecting strategic decisions to enhance liquidity in a fluctuating interest rate environment.
In summary, First Bank's third quarter results illustrate a bank on the rise. With strong loan and deposit growth, solid asset quality, and effective balance sheet management, the bank is well-positioned for future success. The strategic initiatives undertaken by management are paying off, and the outlook remains optimistic as the bank continues to navigate the complexities of the financial landscape. As it moves forward, First Bank will likely continue to explore opportunities to enhance shareholder value and expand its market presence.
The third quarter of 2024 saw total loans reach $3.09 billion, marking an increase of $89.5 million, or 11.9% annualized, from the previous quarter. This growth was primarily driven by a surge in commercial and industrial loans, alongside owner-occupied commercial real estate loans. The bank's commitment to expanding its lending portfolio is evident, as it seeks to strengthen its position in the competitive banking landscape.
Deposits also saw a healthy increase, rising to $3.05 billion, an $82.4 million jump, or 11.1% annualized. This growth spanned all deposit categories, showcasing the bank's ability to attract and retain customer funds. Non-interest bearing demand deposits, interest-bearing demand deposits, money market accounts, and time deposits all contributed to this positive trend.
The tangible book value per share climbed to $13.84, reflecting an 11.2% annualized increase from the previous quarter. This growth in tangible book value is a key indicator of the bank's financial health and its ability to generate returns for shareholders.
First Bank's management has prioritized balance sheet efficiency, evidenced by the sale of approximately $11.7 million in investment securities during the quarter. While this resulted in a net loss of $555,000 on the sale, it aligns with the bank's strategy to optimize its asset mix. Additionally, the restructuring of its bank-owned life insurance (BOLI) portfolio has led to a $1.1 million enhancement in cash surrender value, further bolstering the bank's financial position.
Asset quality remains a strong point for First Bank. Nonperforming assets decreased to 0.47% of total assets, down from 0.56% in the previous quarter. This decline indicates effective management of credit risk and a focus on maintaining a healthy loan portfolio. The bank recorded a credit loss expense of $1.6 million, a reflection of its robust organic loan growth while still maintaining strong asset quality.
The bank's net interest income rose to $30.1 million, a 5.2% increase compared to the same period last year. This growth is attributed to an expansion in net interest margin, despite a slight decrease from the previous quarter. The tax equivalent net interest margin stood at 3.49%, a 13 basis point increase from the prior year, although it experienced a decline from the linked quarter.
Non-interest income surged to $2.5 million, significantly higher than the $193,000 recorded in the same quarter last year. This increase was largely driven by the aforementioned BOLI restructuring and higher yields from new policies. The bank also reported net gains on loan sales, a positive shift from previous losses.
On the expense side, First Bank managed to reduce non-interest expenses to $18.6 million, a decrease of 20.6% from the prior year. This reduction was primarily due to the absence of merger-related expenses that had impacted the previous year's results. However, excluding these expenses, non-interest expenses grew by 13.3%, reflecting investments in employee compensation and professional services.
The effective tax rate for the quarter was 33.9%, a notable increase from the previous year. This rise was influenced by a $1.2 million tax expense related to the BOLI restructuring. The bank anticipates its effective tax rate will stabilize between 24% and 25% moving forward.
First Bank's balance sheet remains strong, with total assets increasing by $148.3 million, or 4.1%, since the end of 2023. The bank's focus on relationship-based commercial lending is evident, as it continues to manage its exposure to investor real estate lending carefully.
Liquidity has improved, with total cash and cash equivalents rising to $312.3 million. This increase provides a solid foundation for future growth and operational flexibility. The bank's borrowings also increased, reflecting strategic decisions to enhance liquidity in a fluctuating interest rate environment.
In summary, First Bank's third quarter results illustrate a bank on the rise. With strong loan and deposit growth, solid asset quality, and effective balance sheet management, the bank is well-positioned for future success. The strategic initiatives undertaken by management are paying off, and the outlook remains optimistic as the bank continues to navigate the complexities of the financial landscape. As it moves forward, First Bank will likely continue to explore opportunities to enhance shareholder value and expand its market presence.