First Bank Announces Third Quarter of 2023 Net Loss of $1.3 Million driven by one-time costs associated with Malvern Bancorp acquisition

ソース: Nasdaq GlobeNewswire / 25 10 2023 16:35:01 America/New_York

HAMILTON, N.J., Oct. 25, 2023 (GLOBE NEWSWIRE) -- First Bank (Nasdaq Global Market: FRBA) (the Bank) today announced its third quarter 2023 financial results with a net loss of $1.3 million, or a loss of $0.05 per diluted share, and losses on average assets, equity, and tangible equityⁱ of 0.14%, 1.43%, and 1.66%, respectively. Excluding merger-related expenses and other one-time expenses, First Bank’s third quarter 2023 adjusted diluted earnings per shareⁱⁱ were $0.42, adjusted return on average assetsⁱⁱ was 1.13% and adjusted return on average tangible equityⁱⁱ was 13.23%.

Compared to the same period of last year, the Bank's adjusted net income and adjusted returns on assets, equity, and tangible equity were lower, reflecting broader industry headwinds, primarily due to increased funding costs. However, the Malvern Bank acquisition will provide opportunities for stronger earnings and profitability metrics going forward.

Third Quarter 2023 Performance Highlights:

Completion of the Malvern Bancorp (Malvern) acquisition on July 17, 2023. At the acquisition date, Malvern contributed approximately $953.8 million in total assets, $727.7 million in loans and $671.9 million in deposits, after acquisition accounting adjustments.
Total loans were $3.02 billion at September 30, 2023, marking a 24.0% increase from the end of the linked quarter at June 30, 2023.
Total deposits ended the quarter at $2.97 billion at September 30, 2023, a 23.6% increase from the end of the linked quarter at June 30, 2023.
Improvement in net interest margin and adjusted profitability metrics, primarily due to the benefits of the Malvern acquisition.
Sales of certain loans and investments acquired from Malvern during the current quarter with net proceeds of approximately $165.5 million allowed for the reduction of $130.0 million in higher cost FHLB advances.

Patrick L. Ryan, President and CEO of First Bank, reflected on the quarterly results, stating, “We are excited about the successful closing of the Malvern acquisition. The transaction has expanded our presence in Southeastern Pennsylvania, creating critical mass in one of the most attractive markets in the Northeast. The acquisition also provided an opportunity to reshape the combined balance sheet and should drive significant earnings growth heading into 2024. We continue to operate in a difficult rate environment which continues to impact our margin. The combination of the rate environment, merger-related costs and the continued ramp up of new business units and information technology investments led to a net loss during the third quarter. Those strategic investments, combined with the Malvern acquisition, position us for strong financial results despite this difficult operating environment. During the third quarter our adjusted return on average assets improved 14 basis points from the second quarter to 1.13% and we believe our earnings performance can continue to improve as we realize the full impact of cost savings from the acquisition.”

Mr. Ryan added that, “I am pleased that we were able to reshape our balance sheet by executing some strategic asset sales during the third quarter that allowed us to reduce our reliance on higher cost deposits and borrowings which should positively impact our margin, efficiency ratio, and return on capital in the fourth quarter and beyond.”

Mr. Ryan concluded that, “I continue to be excited about the opportunities that lie ahead of us. The completion of the Malvern acquisition and the reshaping of our balance sheet during the quarter has allowed us to optimize our liquidity and interest rate risk positions while also enhancing future earnings potential. The current rate environment will continue to be a challenge but the Malvern acquisition, coupled with our strong team of bankers, should lead to a leaner and highly efficient company.”

Malvern Acquisition

First Bank acquired Malvern Bancorp, Inc. and its wholly owned subsidiary Malvern Bank, National Association on July 17, 2023. The combined stock and cash transaction was valued at approximately $129.7 million and expanded First Bank’s footprint in the highly affluent and desirable Mainline Philadelphia market. After acquisition accounting adjustments, at the time of the acquisition, First Bank added $953.8 million in assets, $92.0 million in investments, $727.7 million in loans, $671.9 million in deposits, $130.0 million in Federal Home Loan Bank advances, and $25.5 million in subordinated debt, and the acquisition resulted in $26.3 million in goodwill. The Malvern acquisition led to a 15% dilution in our tangible book value per shareⁱⁱⁱ from June 30, 2023 to September 30, 2023, however, the primary cause of the dilution was interest rate-related fair value adjustments. These fair value adjustments will accrete back through income and should lead to earnings per share accretion moving forward. Because the dilution was driven by interest rate adjustments, First Bank anticipates that the dilution will be earned back as loans and securities come to maturity.

Income Statement

In the third quarter of 2023, the Bank’s net interest income increased to $28.6 million, representing an increase of $4.0 million, or 16.4%, compared to the same period in 2022. The increase was primarily driven by an increase of $19.4 million in interest income on loans which outpaced the $15.7 million increase in interest expense on deposits in the third quarter of 2023 compared to the same quarter in 2022.

The Bank’s tax equivalent net interest margin in the third quarter of 2023 decreased by 61 basis points to 3.36% compared to the prior year quarter but increased by 8 basis points from the second quarter of 2023. The decrease from the prior year quarter was primarily driven by the increase in deposit costs, which was partially offset by an increase in average loan yields. The increase in the margin from the second quarter of 2023 was primarily due to the impact of the Malvern acquisition. The repositioning of the balance sheet, primarily through the aforementioned asset sales, coupled with a full quarter of accretion income from the Malvern fair value adjustments will have a positive impact on the margin moving forward, however, the inverted yield curve and deposit pricing pressures may negate some of the positive impact.

The Bank's provision for credit losses was $6.7 million in the third quarter of 2023, compared to $216,000 in the same period of the previous year and $496,000 in the preceding quarter of 2023. The increase in provision for credit losses during the current quarter was primarily due to a $5.5 million credit loss recorded to establish the allowance for credit losses on the acquired Malvern loan portfolio.

In the third quarter of 2023, non-interest income was $193,000, compared to $944,000 during the same period in 2022 and $1.1 million during the second quarter of 2023. The decrease was primarily due to losses on the sale of investments and loans of $527,000 and $704,000, respectively, which are net against non-interest income on the income statement. The losses were primarily related to the aforementioned sale of Malvern investments and residential loans.

Non-interest expense for the third quarter of 2023 was $23.5 million, an increase of $11.7 million, or 100.1%, compared to $11.7 million for the prior year quarter. The higher non-interest expense was largely due to the $7.0 million in merger-related expenses recorded during the third quarter of 2023. Merger-related expenses primarily included severance costs, data processing system termination and conversion costs, investment banker fees and legal and other professional fees. The increase was also due to salaries and employee benefits increasing $2.4 million, or 35.6%, and to a lesser extent, a $438,000 increase in occupancy and equipment expense, a $343,000 increase in regulatory fees, a $233,000 increase in data processing costs, and an increase of $997,000 in other expense. The increases were primarily due to the new employees and locations from the Malvern acquisition.

On a linked quarter basis, third quarter 2023 non-interest expense of $23.5 million increased $9.7 million, or 70.5%, compared to $13.8 million for the second quarter of 2023. The increase was also primarily attributable to an increase in merger-related expenses and, to a lesser extent, increased salaries and employee benefits, occupancy and equipment costs, data processing and other expense. These increases were also primarily due to the Malvern acquisition.

The Bank recorded an income tax benefit of $78,000 for the third quarter of 2023 compared to a $2.2 million tax expense for the second quarter of 2023. The year to date effective tax rate for the nine months ended September 30, 2023 was 25.50% compared to 24.21% for the first nine months of 2022. Income tax expense in 2023 was impacted by a $506,000 tax expense recorded due to the revaluation of the Bank’s deferred tax assets, primarily due to the impact on state taxes from the Malvern acquisition. Excluding this expense, the effective tax rate for the first nine months of 2023 would have been 22.49%. The lower adjusted effective tax rate is primarily due to the impact of the Malvern acquisition on state income tax expense.

Balance Sheet

The Bank reported total assets of $3.56 billion as of September 30, 2023, an increase of $684.0 million, or 23.8%, from $2.87 billion at June 30, 2023. The Bank’s assets grew $825.5 million, or 30.2%, for the nine months ended September 30, 2023.

The Bank's increase in loans during the three and nine month periods ended September 30, 2023 were $584.1 million and $683.0 million, respectively. Excluding the $626.3 million in loans acquired from Malvern at September 30, 2023, which is net of loan sales and pay-downs since the acquisition, net loan growth was $56.7 million during the nine months ended September 30, 2023 compared to a decline of $42.2 million during the quarter ended September 30, 2023. The decline during the current quarter was primarily due to the Bank being more selective as it relates to new relationships, as well as more active loan repayments on the part of a few existing customers due to increasing interest rates.

As of September 30, 2023, the Bank's total deposits were $2.97 billion, an increase of $673.5 million, or 29.4%, from $2.29 billion at December 31, 2022. Excluding the $671.9 million in deposits acquired from Malvern, deposit balances increased $1.6 million for the first nine months of 2023 but declined by $104.3 million during the three months ended September 30, 2023. The decline during the quarter ended September 30, 2023 was primarily due to the Bank allowing some higher cost brokered and non-core funding to leave the Bank, but the overall industry wide deposit declines and competitive pricing pressures are also impacting our total deposit levels.

As of September 30, 2023, the Bank's stockholders' equity totaled $361.0 million, an increase of $71.5 million, or 24.7%, compared to $289.6 million at December 31, 2022 and an increase of $66.9 million compared to June 30, 2023 primarily due to the equity issued in the Malvern acquisition.

As of September 30, 2023, the Bank continued to exceed all regulatory capital requirements to be considered well-capitalized with a Tier 1 Leverage ratio of 8.92%, a Tier 1 Risk-Based capital ratio of 9.00%, a Common Equity Tier 1 Capital ratio of 9.00%, and a Total Risk-Based capital ratio of 11.54%. The tangible stockholders' equity to tangible assets ratio^iv was 8.72% as of September 30, 2023. All of the Bank’s capital ratios declined during the quarter due to the Malvern acquisition, however, all capital ratios remain above well-capitalized minimums. In addition, the Bank anticipates that the earnings accretion from the Malvern acquisition will contribute to enhanced capital ratios in future periods.

Asset Quality

First Bank's asset quality metrics for the third quarter of 2023 remained favorable with nonperforming loans, excluding $17.2 million of purchase credit deteriorated (PCD) loans, decreasing slightly from $8.0 million at June 30, 2023, to $7.0 million at September 30, 2023. Nonperforming loans, excluding PCD loans, as a percentage of total loans were 0.23% at September 30, 2023, compared to 0.33% at June 30, 2023. The Bank recorded net charge-offs of $1.1 million during the third quarter of 2023 compared to net recoveries of $109,000 in the second quarter of 2023 and net charge-offs of $705,000 in the in the third quarter of 2022. The allowance for credit losses on loans as a percentage of total loans increased to 1.42% at September 30, 2023 compared to 1.25% at June 30, 2023, primarily due to the impact of the allowance for credit losses on the acquired Malvern loan portfolio. The allowance for credit losses at September 30, 2023 included $6.0 million in reserves on the Bank’s PCD loans.

Liquidity and Borrowings

The Bank maintained a strong liquidity position in the third quarter of 2023. Total cash and cash equivalents declined slightly by $2.1 million during the third quarter to $180.2 million at September 30, 2023. The Bank utilized asset sales to allow some higher cost deposits to run-off and paid off a significant amount of borrowings during the third quarter of 2023. The reduction in outstanding borrowings has also increased the Bank’s available borrowing capacity. The Bank’s current liquidity position coupled with the balance sheet flexibility gained after the Malvern Bancorp acquisition provides the Bank with a strong liquidity base and a diverse source of funding options.

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

Cash Dividend Declared

On October 17, 2023, the 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 November 10, 2023, payable on November 24, 2023.

Conference Call and Earnings Release Supplement

Additional details on the quarterly results and the Bank are included in the attached earnings release supplement: http://ml.globenewswire.com/Resource/Download/3e846bda-0f73-493b-bc6c-c5c63f65f218

First Bank will host its earnings call on Thursday, October 26, 2023 at 9:00 AM Eastern Time. The direct dial toll free number for the live call is 1-888-330-3273 and the access code is 7660423. For those unable to participate in the call, a replay will be available by dialing 1-800-770-2030 (access code 7660423) from one hour after the end of the conference call until January 25, 2024. Replay information will also be available on First Bank’s website at www.firstbanknj.com under the “About Us” tab. Click on “Investor Relations” to access the replay of the conference call.

About First Bank

First Bank is a New Jersey state-chartered bank with 26 full-service branches in Cinnaminson, Delanco, Denville, Ewing, Fairfield, Flemington (2), Hamilton, Lawrence, Monroe, Morristown, Pennington, Randolph, Somerset and Williamstown, New Jersey; and Coventry, Devon, Doylestown, Glenn Mills, Lionville, Malvern, Paoli, Trevose, Warminster and West Chester, Pennsylvania; and Palm Beach, Florida. With $3.56 billion in assets as of September 30, 2023, First Bank offers a full range of deposit and loan products to individuals and businesses throughout the New York City to Philadelphia corridor. First Bank's common stock is listed on the Nasdaq Global Market under the symbol “FRBA.”

Forward-Looking Statements

This press release contains certain forward-looking statements, either express or implied, within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information regarding First Bank’s future financial performance, business and growth strategy, projected plans and objectives, and related transactions, integration of acquired businesses, ability to recognize anticipated operational efficiencies, and other projections based on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material. Such forward-looking statements are based on various facts and derived utilizing important assumptions, current expectations, estimates and projections about First Bank, any of which may change over time and some of which may be beyond First Bank’s control. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing. Further, certain factors that could affect our future results and cause actual results to differ materially from those expressed in the forward-looking statements include, but are not limited to: whether First Bank can: successfully implement its growth strategy, including identifying acquisition targets and consummating suitable acquisitions, integrate acquired entities and realize anticipated efficiencies, sustain its internal growth rate, and provide competitive products and services that appeal to its customers and target markets; difficult market conditions and unfavorable economic trends in the United States generally, and particularly in the market areas in which First Bank operates and in which its loans are concentrated, including the effects of declines in housing market values; the effects of the recent turmoil in the banking industry (including the failures of two financial institutions in early 2023); the impact of disease pandemics, including COVID-19, on First Bank, its operations and its customers and employees; an increase in unemployment levels and slowdowns in economic growth; First Bank's level of nonperforming assets and the costs associated with resolving any problem loans including litigation and other costs; changes in market interest rates may increase funding costs and reduce earning asset yields thus reducing margin; the impact of changes in interest rates and the credit quality and strength of underlying collateral and the effect of such changes on the market value of First Bank's investment securities portfolio; the extensive federal and state regulation, supervision and examination governing almost every aspect of First Bank's operations, including changes in regulations affecting financial institutions and expenses associated with complying with such regulations; uncertainties in tax estimates and valuations, including due to changes in state and federal tax law; First Bank's ability to comply with applicable capital and liquidity requirements, including First Bank’s ability to generate liquidity internally or raise capital on favorable terms, including continued access to the debt and equity capital markets; and possible changes in trade, monetary and fiscal policies, laws and regulations and other activities of governments, agencies, and similar organizations. For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Forward-Looking Statements” and “Risk Factors” in First Bank’s Annual Report on Form 10-K and any updates to those risk factors set forth in First Bank’s proxy statement, subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. If one or more events related to these or other risks or uncertainties materialize, or if First Bank’s underlying assumptions prove to be incorrect, actual results may differ materially from what First Bank anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and First Bank does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. All forward-looking statements, expressed or implied, included in this communication are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that First Bank or persons acting on First Bank’s behalf may issue.

________________________________

ⁱ Return on average tangible equity is a non-U.S. GAAP financial measure and is calculated by dividing net income by average tangible equity (average equity minus average goodwill and other intangible assets). For a reconciliation of this non-U.S. GAAP financial measure, along with the other non-U.S. GAAP financial measures in this press release, to their comparable U.S. GAAP measures, see the financial reconciliations at the end of this press release.

ⁱⁱ Adjusted diluted earnings per share, adjusted return on average assets and adjusted return on average tangible equity are non-U.S. GAAP financial measures and are calculated by dividing net income adjusted for certain merger-related expenses and other one-time gains or expenses by diluted weighted average shares, average assets and average tangible equity, respectively. For a reconciliation of these non-U.S. GAAP financial measures, along with the other non-U.S. GAAP financial measures in this press release, to their comparable U.S. GAAP measures, see the financial reconciliations at the end of this press release.

ⁱⁱⁱ Tangible book value per share is a non-U.S. GAAP financial measure and is calculated by dividing tangible equity (equity minus goodwill and other intangible assets) by common shares outstanding. For a reconciliation of this non-U.S. GAAP financial measure, along with the other non-U.S. GAAP financial measures in this press release, to their comparable U.S. GAAP measures, see the financial reconciliations at the end of this press release.

^iv Tangible stockholders' equity to tangible assets ratio is a non-U.S. GAAP financial measure and is calculated by dividing tangible equity (equity minus goodwill and other intangible assets) by tangible assets (total assets minus goodwill and other intangible assets). For a reconciliation of this non-U.S. GAAP financial measure, along with the other non-U.S. GAAP financial measures in this press release, to their comparable U.S. GAAP measures, see the financial reconciliations at the end of this press release.

CONTACT: Andrew Hibshman, Chief Financial Officer
(609) 643-0058, andrew.hibshman@firstbanknj.com


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

	September 30, 2023			December 31, 2022
Assets
Cash and due from banks	$	23,440		$	17,577
Restricted cash		20,460			13,580
Interest bearing deposits with banks		136,310			94,759
Cash and cash equivalents		180,210			125,916
Interest bearing time deposits with banks		498			1,293
Investment securities available for sale, at fair value		87,728			98,956
Investment securities held to maturity, net of allowance for
credit losses of $227 at September 30, 2023 (fair value of $38,548 at
September 30, 2023 and $42,465 at December 31, 2022)		45,198			47,193
Restricted investment in bank stocks		8,106			6,214
Other investments		10,346			8,372
Loans, net of deferred fees and costs		3,020,778			2,337,814
Less: Allowance for credit losses		42,880			25,474
Net loans		2,977,898			2,312,340
Premises and equipment, net		21,414			10,550
Other real estate owned, net		-			-
Accrued interest receivable		14,778			8,164
Bank-owned life insurance		85,845			58,107
Goodwill		44,166			17,826
Other intangible assets, net		11,388			1,579
Deferred income taxes, net		23,861			13,155
Other assets		46,990			23,275
Total assets	$	3,558,426		$	2,732,940

Liabilities and Stockholders' Equity
Liabilities:
Non-interest bearing deposits	$	493,703		$	503,856
Interest bearing deposits		2,473,752			1,790,096
Total deposits		2,967,455			2,293,952
Borrowings		133,142			90,932
Subordinated debentures		55,263			29,731
Accrued interest payable		3,223			1,218
Other liabilities		38,306			27,545
Total liabilities		3,197,389			2,443,378
Stockholders' Equity:
Preferred stock, par value $2 per share; 10,000,000 shares authorized;
no shares issued and outstanding		-			-
Common stock, par value $5 per share; 40,000,000 shares authorized; 27,107,983
shares issued and 24,926,919 shares outstanding at September 30, 2023 and
21,082,819 shares issued and 19,451,755 shares outstanding at December 31, 2022		134,362			104,512
Additional paid-in capital		122,416			80,695
Retained earnings		133,680			127,532
Accumulated other comprehensive loss		(8,043	)		(7,334	)
Treasury stock, 2,181,064 shares at September 30, 2023 and 1,631,064 shares at
December 31, 2022		(21,378	)		(15,843	)
Total stockholders' equity		361,037			289,562
Total liabilities and stockholders' equity	$	3,558,426		$	2,732,940

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

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
		2023			2022			2023			2022
Interest and Dividend Income
Investment securities—taxable	$	1,151		$	788		$	3,128		$	2,053
Investment securities—tax-exempt		86			39			158			109
Interest bearing deposits with banks,
Federal funds sold and other		2,593			498			6,029			888
Loans, including fees		46,088			26,673			111,536			72,697
Total interest and dividend income		49,918			27,998			120,851			75,747

Interest Expense
Deposits		18,470			2,737			40,574			5,008
Borrowings		1,914			258			4,939			796
Subordinated debentures		940			440			1,821			1,321
Total interest expense		21,324			3,435			47,334			7,125
Net interest income		28,594			24,563			73,517			68,622
Credit loss expense		6,650			216			8,237			2,156
Net interest income after credit loss expense		21,944			24,347			65,280			66,466

Non-Interest Income
Service fees on deposit accounts		280			236			741			731
Loan fees		152			(33	)		259			314
Income from bank-owned life insurance		544			369			1,291			1,112
Losses on sale of investment securities, net		(527	)		-			(734	)		-
Losses on sale of loans, net		(704	)		2			(393	)		292
Gains on recovery of acquired loans		24			122			95			456
Other non-interest income		424			248			1,026			769
Total non-interest income		193			944			2,285			3,674

Non-Interest Expense
Salaries and employee benefits		9,326			6,880			25,320			20,122
Occupancy and equipment		1,915			1,477			5,107			4,282
Legal fees		270			188			671			502
Other professional fees		631			619			1,880			1,998
Regulatory fees		595			252			1,345			678
Directors' fees		224			172			631			570
Data processing		907			674			2,206			1,859
Marketing and advertising		220			164			693			505
Travel and entertainment		140			91			519			290
Insurance		272			187			624			538
Other real estate owned expense, net		-			72			38			269
Merger-related expenses		7,028			-			7,710			-
Other expense		1,958			961			4,020			2,655
Total non-interest expense		23,486			11,737			50,764			34,268
Income Before Income Taxes		(1,349	)		13,554			16,801			35,872
Income tax expense		(78	)		3,348			4,284			8,685
Net Income	$	(1,271	)	$	10,206		$	12,517		$	27,187

Basic earnings per common share	$	(0.05	)	$	0.52		$	0.60		$	1.39
Diluted earnings per common share	$	(0.05	)	$	0.52		$	0.59		$	1.38
Cash dividends per common share	$	0.06		$	0.06		$	0.18		$	0.18

Basic weighted average common shares outstanding		23,902,478			19,451,189			20,928,847			19,523,069
Diluted weighted average common shares outstanding		23,902,478			19,668,133			21,057,655			19,742,399

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

	Three Months Ended Sepember 30,
		2023								2022
	Average						Average		Average						Average
	Balance			Interest			Rate (5)		Balance			Interest			Rate (5)
Interest earning assets
Investment securities (1) (2)	$	169,244		$	1,255		2.94	%	$	145,783		$	835		2.27	%
Loans (3)		3,003,703			46,088		6.09	%		2,224,829			26,673		4.76	%
Interest bearing deposits with banks,
Federal funds sold and other		182,128			2,395		5.22	%		74,493			406		2.16	%
Restricted investment in bank stocks		10,284			196		7.56	%		5,248			72		5.44	%
Other investments		9,162			2		0.09	%		8,223			20		0.96	%
Total interest earning assets (2)		3,374,521			49,936		5.87	%		2,458,576			28,006		4.52	%
Allowance for loan losses		(41,216	)							(25,283	)
Non-interest earning assets		232,045								142,449
Total assets	$	3,565,350							$	2,575,742

Interest bearing liabilities
Interest bearing demand deposits	$	674,417		$	4,038		2.38	%	$	338,639		$	397		0.47	%
Money market deposits		952,042			8,386		3.49	%		713,594			1,458		0.81	%
Savings deposits		174,412			490		1.11	%		182,771			228		0.49	%
Time deposits		655,288			5,556		3.36	%		350,859			654		0.74	%
Total interest bearing deposits		2,456,159			18,470		2.98	%		1,585,863			2,737		0.68	%
Borrowings		163,746			1,914		4.64	%		64,330			258		1.59	%
Subordinated debentures		51,101			940		7.36	%		29,685			440		5.93	%
Total interest bearing liabilities		2,671,006			21,324		3.17	%		1,679,878			3,435		0.81	%
Non-interest bearing deposits		507,866								590,421
Other liabilities		33,106								25,350
Stockholders' equity		353,372								280,093
Total liabilities and stockholders' equity	$	3,565,350							$	2,575,742
Net interest income/interest rate spread (2)					28,612		2.70	%					24,571		3.71	%
Net interest margin (2) (4)							3.36	%							3.97	%
Tax equivalent adjustment (2)					(18	)							(8	)
Net interest income				$	28,594							$	24,563

(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)

	Nine Months Ended September 30,
		2023								2022
	Average						Average		Average						Average
	Balance			Interest			Rate (5)		Balance			Interest			Rate (5)
Interest earning assets
Investment securities (1) (2)	$	155,128		$	3,319		2.86	%	$	140,452		$	2,185		2.08	%
Loans (3)		2,590,409			111,536		5.76	%		2,179,357			72,697		4.46	%
Interest bearing deposits with banks,
Federal funds sold and other		143,922			5,403		5.02	%		101,101			627		0.83	%
Restricted investment in bank stocks		9,327			454		6.51	%		5,428			200		4.93	%
Other investments		8,902			172		2.58	%		8,129			61		1.00	%
Total interest earning assets (2)		2,907,688			120,884		5.56	%		2,434,467			75,770		4.16	%
Allowance for loan losses		(33,664	)							(24,608	)
Non-interest earning assets		174,246								145,989
Total assets	$	3,048,270							$	2,555,848

Interest bearing liabilities
Interest bearing demand deposits	$	445,318		$	6,492		1.95	%	$	322,353		$	595		0.25	%
Money market deposits		840,688			20,177		3.21	%		719,028			2,548		0.47	%
Savings deposits		155,370			1,202		1.03	%		184,767			572		0.41	%
Time deposits		586,827			12,703		2.89	%		340,822			1,293		0.51	%
Total interest bearing deposits		2,028,203			40,574		0.21	%		1,566,970			5,008		0.43	%
Borrowings		149,042			4,939		4.43	%		69,571			796		1.53	%
Subordinated debentures		36,949			1,821		6.57	%		29,659			1,321		5.94	%
Total interest bearing liabilities		2,214,194			47,334		2.86	%		1,666,200			7,125		0.57	%
Non-interest bearing deposits		490,211								593,638
Other liabilities		29,939								21,284
Stockholders' equity		313,926								274,726
Total liabilities and stockholders' equity	$	3,048,270							$	2,555,848
Net interest income/interest rate spread (2)					73,550		2.70	%					68,645		3.59	%
Net interest margin (2) (4)							3.38	%							3.77	%
Tax equivalent adjustment (2)					(33	)							(23	)
Net interest income				$	73,517							$	68,622

(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
QUARTERLY FINANCIAL HIGHLIGHTS
(in thousands, except for share and employee data, unaudited)

		As of or For the Quarter Ended
		9/30/2023			6/30/2023			3/31/2023			12/31/2022			9/30/2022
EARNINGS
	Net interest income	$	28,594		$	22,128		$	22,795		$	23,751		$	24,563
	Credit loss expense / Provision for loan losses		6,650			496			1,091			716			216
	Non-interest income		193			1,128			964			1,446			944
	Non-interest expense		23,486			13,775			13,503			12,465			11,737
	Income tax expense		(78	)		2,186			2,176			2,916			3,348
	Net income		(1,271	)		6,799			6,989			9,100			10,206

PERFORMANCE RATIOS
	Return on average assets (1)		(0.14	%)		0.97	%		1.03	%		1.35	%		1.57	%
	Adjusted return on average assets (1) (2)		1.13	%		0.99	%		1.11	%		1.40	%		1.57	%
	Return on average equity (1)		(1.43	%)		9.23	%		9.70	%		12.61	%		14.46	%
	Adjusted return on average equity (1) (2)		11.38	%		9.46	%		10.43	%		13.11	%		14.46	%
	Return on average tangible equity (1) (2)		(1.66	%)		9.87	%		10.39	%		13.53	%		15.55	%
	Adjusted return on average tangible equity (1) (2)		13.23	%		10.13	%		11.17	%		14.07	%		15.55	%
	Net interest margin (1) (3)		3.36	%		3.28	%		3.52	%		3.69	%		3.97	%
	Total cost of deposits (1)		2.47	%		2.19	%		1.69	%		1.21	%		0.50	%
	Efficiency ratio (2)		54.71	%		58.28	%		54.42	%		47.68	%		46.01	%

SHARE DATA
	Common shares outstanding		24,926,919			19,041,343			19,569,334			19,451,755			19,447,206
	Basic earnings per share	$	(0.05	)	$	0.35		$	0.36		$	0.47		$	0.52
	Diluted earnings per share		(0.05	)		0.35			0.36			0.46			0.52
	Adjusted diluted earnings per share (2)		0.42			0.36			0.38			0.48			0.52
	Book value per share		14.48			15.45			15.03			14.89			14.44
	Tangible book value per share (2)		12.26			14.44			14.05			13.89			13.43

MARKET DATA
	Market value per share	$	10.78		$	10.38		$	10.10		$	13.76		$	13.67
	Market value / Tangible book value		87.96	%		71.91	%		71.90	%		99.07	%		101.80	%
	Market capitalization	$	268,712		$	197,649		$	197,650		$	267,656		$	265,843

CAPITAL & LIQUIDITY
	Stockholders' equity / assets		10.15	%		10.23	%		10.44	%		10.60	%		10.64	%
	Tangible stockholders' equity / tangible assets (2)		8.72	%		9.63	%		9.83	%		9.96	%		9.97	%
	Loans / deposits		101.80	%		101.53	%		106.73	%		101.91	%		103.34	%

ASSET QUALITY
	Net charge-offs (recoveries)	$	1,122		$	(109	)	$	315		$	(213	)	$	705
	Nonperforming loans		24,158			8,023			7,820			6,250			5,107
	Nonperforming assets		24,158			8,023			7,820			6,250			5,400
	Net charge offs (recoveries) / average loans (1)		0.15	%		(0.02	%)		0.05	%		(0.04	%)		0.13	%
	Nonperforming loans / total loans		0.80	%		0.33	%		0.33	%		0.27	%		0.23	%
	Nonperforming assets / total assets		0.68	%		0.28	%		0.28	%		0.23	%		0.20	%
	Allowance for credit losses on loans / total loans		1.42	%		1.25	%		1.25	%		1.09	%		1.08	%
	Allowance for credit losses on loans / nonperforming loans		177.50	%		379.55	%		382.26	%		407.58	%		480.61	%

OTHER DATA
	Total assets	$	3,558,426		$	2,874,425		$	2,816,897		$	2,732,940		$	2,638,060
	Total loans		3,020,778			2,436,708			2,392,583			2,337,814			2,263,377
	Total deposits		2,967,455			2,399,900			2,241,804			2,293,952			2,190,192
	Total stockholders' equity		361,037			294,161			294,221			289,562			280,749
	Number of full-time equivalent employees (4)		286			261			252			238			228

(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 5 and 8 full-time equivalent seasonal interns as of June 30, 2023 and 2022, respectively.


	Average assets		3,565,350			2,825,213			2,745,235			2,680,807			2,575,742
	Average loans		3,003,703			2,397,121			2,363,365			2,277,238			2,224,829
	Average stockholders' equity		353,372			295,560			292,174			286,283			280,093

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

	As of the Quarter Ended
	9/30/2023			6/30/2023			3/31/2023			12/31/2022			9/30/2022
LOAN COMPOSITION
Commercial and industrial	$	478,120		$	419,836		$	394,734		$	354,203		$	323,984
Commercial real estate:
Owner-occupied		607,888			560,878			539,112			533,426			517,448
Investor		1,269,134			965,339			958,574			951,115			942,151
Construction and development		168,192			136,615			143,955			142,876			126,206
Multi-family		275,825			223,784			220,101			215,990			214,819
Total commercial real estate		2,321,039			1,886,616			1,861,742			1,843,407			1,800,624
Residential real estate:
Residential mortgage and first lien home equity loans		158,487			91,260			94,060			93,847			96,194
Home equity–second lien loans and revolving lines of credit		46,239			29,983			29,316			33,551			31,670
Total residential real estate		204,726			121,243			123,376			127,398			127,864
Consumer and other		20,208			12,514			16,413			16,318			14,654
Total loans prior to deferred loan fees and costs		3,024,093			2,440,209			2,396,265			2,341,326			2,267,126
Net deferred loan fees and costs		(3,315	)		(3,501	)		(3,682	)		(3,512	)		(3,749	)
Total loans	$	3,020,778		$	2,436,708		$	2,392,583		$	2,337,814		$	2,263,377

LOAN MIX
Commercial and industrial		15.8	%		17.2	%		16.5	%		15.2	%		14.3	%
Commercial real estate:
Owner-occupied		20.1	%		23.0	%		22.5	%		22.8	%		22.9	%
Investor		42.0	%		39.6	%		40.1	%		40.7	%		41.6	%
Construction and development		5.6	%		5.6	%		6.0	%		6.1	%		5.6	%
Multi-family		9.1	%		9.2	%		9.2	%		9.2	%		9.5	%
Total commercial real estate		76.8	%		77.4	%		77.8	%		78.8	%		79.6	%
Residential real estate:
Residential mortgage and first lien home equity loans		5.3	%		3.8	%		3.9	%		4.0	%		4.3	%
Home equity–second lien loans and revolving lines of credit		1.5	%		1.2	%		1.2	%		1.4	%		1.4	%
Total residential real estate		6.8	%		5.0	%		5.1	%		5.4	%		5.7	%
Consumer and other		0.7	%		0.5	%		0.7	%		0.7	%		0.6	%
Net deferred loan fees and costs		(0.1	%)		(0.1	%)		(0.1	%)		(0.1	%)		(0.2	%)
Total loans		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

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

	As of the Quarter Ended
	9/30/2023			6/30/2023			3/31/2023			12/31/2022			9/30/2022
DEPOSIT COMPOSITION
Non-interest bearing demand deposits	$	493,703		$	476,733		$	463,926		$	503,856		$	584,025
Interest bearing demand deposits		623,338			376,948			310,140			322,944			343,042
Money market and savings deposits		1,228,832			979,524			914,063			935,311			860,577
Time deposits		621,582			566,695			553,675			531,841			402,549
Total Deposits	$	2,967,455		$	2,399,900		$	2,241,804		$	2,293,952		$	2,190,193

DEPOSIT MIX
Non-interest bearing demand deposits		16.6	%		19.9	%		20.7	%		22.0	%		26.7	%
Interest bearing demand deposits		24.5	%		15.7	%		13.8	%		14.1	%		15.7	%
Money market and savings deposits		37.9	%		40.8	%		40.8	%		40.8	%		39.3	%
Time deposits		21.0	%		23.6	%		24.7	%		23.1	%		18.3	%
Total Deposits		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

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

	As of or For the Quarter Ended
	9/30/2023			6/30/2023			3/31/2023			12/31/2022			9/30/2022
Return on Average Tangible Equity
Net income (numerator)	$	(1,271	)	$	6,799		$	6,989		$	9,100		$	10,206

Average stockholders' equity	$	353,372		$	295,560		$	292,174		$	286,283		$	280,093
Less: Average Goodwill and other intangible assets, net		49,491			19,324			19,379			19,533			19,669
Average Tangible stockholders' equity (denominator)	$	303,881		$	276,236		$	272,795		$	266,750		$	260,424

Return on Average Tangible equity (1)		-1.66	%		9.87	%		10.39	%		13.53	%		15.55	%

Tangible Book Value Per Share
Stockholders' equity	$	361,037		$	294,161		$	294,221		$	289,562		$	280,749
Less: Goodwill and other intangible assets, net		55,554			19,289			19,322			19,405			19,599
Tangible stockholders' equity (numerator)	$	305,483		$	274,872		$	274,899		$	270,157		$	261,150

Common shares outstanding (denominator)		24,926,919			19,041,343			19,569,334			19,451,755			19,447,206

Tangible book value per share	$	12.26		$	14.44		$	14.05		$	13.89		$	13.43

Tangible Equity / Assets
Stockholders' equity	$	361,037		$	294,161		$	294,221		$	289,562		$	280,749
Less: Goodwill and other intangible assets, net		55,554			19,289			19,322			19,405			19,599
Tangible stockholders' equity (numerator)	$	305,483		$	274,872		$	274,899		$	270,157		$	261,150

Total assets	$	3,558,426		$	2,874,425		$	2,816,897		$	2,732,940		$	2,638,060
Less: Goodwill and other intangible assets, net		55,554			19,289			19,322			19,405			19,599
Tangible total assets (denominator)	$	3,502,872		$	2,855,136		$	2,797,575		$	2,713,535		$	2,618,461

Tangible stockholders' equity / tangible assets		8.72	%		9.63	%		9.83	%		9.96	%		9.97	%

Efficiency Ratio
Non-interest expense	$	23,486		$	13,775		$	13,503		$	12,465		$	11,737
Less: Merger-related expenses		7,028			221			461			452			-
Adjusted non-interest expense (numerator)	$	16,458		$	13,554		$	13,042		$	12,013		$	11,737

Net interest income	$	28,594		$	22,128		$	22,795		$	23,751		$	24,563
Non-interest income		193			1,128			964			1,446			944
Total revenue		28,787			23,256			23,759			25,197			25,507
Add: Losses on sale of investment securities, net		527			-			207			-			-
Add: Losses on sale of acquired loans		771
Adjusted total revenue (denominator)	$	30,085		$	23,256		$	23,966		$	25,197		$	25,507

Efficiency ratio		54.71	%		58.28	%		54.42	%		47.68	%		46.01	%

(1) Annualized.

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

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

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

Net income	$	(1,271	)	$	6,799		$	6,989		$	9,100		$	10,206
Add: Merger-related expenses ⁽¹⁾		5,552			175			364			357			-
Add: Credit loss expense on acquired loan portfolio ⁽¹⁾		4,323			-			-			-			-
Add: Losses on sale of acquired loans, net ⁽¹⁾		609			-			-			-			-
Add: Losses on sale of investment securities, net ⁽¹⁾		416			-			164			-			-
Add: Impact of tax rate change		506			-			-			-			-
Adjusted net income	$	10,135		$	6,974		$	7,517		$	9,457		$	10,206

Diluted weighted average common shares outstanding		24,029,910			19,434,522			19,667,194			19,649,282			19,668,133
Average assets	$	3,565,350		$	2,825,213		$	2,745,235		$	2,680,807		$	2,575,742
Average equity	$	353,372		$	295,560		$	292,174		$	286,283		$	280,093
Average Tangible Equity	$	303,881		$	276,236		$	272,795		$	266,750		$	260,424

Adjusted diluted earnings per share	$	0.42		$	0.36		$	0.38		$	0.48		$	0.52
Adjusted return on average assets ⁽²⁾		1.13	%		0.99	%		1.11	%		1.40	%		1.57	%
Adjusted return on average equity ⁽²⁾		11.38	%		9.46	%		10.43	%		13.11	%		14.46	%
Adjusted return on average tangible equity ⁽²⁾		13.23	%		10.13	%		11.17	%		14.07	%		15.55	%

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

First Bank Announces Third Quarter of 2023 Net Loss of $1.3 Million driven by one-time costs associated with Malvern Bancorp acquisition

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