1st Colonial Bancorp, Inc. Reports First Quarter 2018 Net Income of $1.1 Million

COLLINGSWOOD, N.J.--(BUSINESS WIRE)--1st Colonial Bancorp, Inc. (FCOB), holding company of 1^st Colonial Community Bank, today reported net income of $1.1 million, or $0.24 per diluted share, for the three months ended March 31, 2018 compared to net income of $977 thousand, or $0.22 per diluted share for the three months ended March 31, 2017. The earnings per diluted share were adjusted to give effect to the 5% stock dividend distributed to shareholders on April 16, 2018.

Gerry Banmiller, President and Chief Executive Officer, commented, “We are very pleased to announce our 11% growth in net income for the first quarter of 2018. Prudent loan growth and pricing similarly contributed to an 11% increase in net interest income, which is the driver of our earnings. Investments in our residential mortgage unit and our commercial lending group have us well positioned for prompt loan decisioning and continued growth in 2018 and beyond.”

Highlights for the three months ended March 31, 2018, included:

Balance Sheet Trends:

• At March 31, 2018, total assets were $526.7 million and grew $23.2 million, or 4.6% from $503.5 million at March 31, 2017.
• Total loans were $383.1 million at March 31, 2018, an increase of $20.8 million, or 5.7%, from $362.3 million at March 31, 2017. Increases were recognized in commercial loans secured by real estate and home equity loans.
• Total deposits were $475.1 million at March 31, 2018 and increased $12.1 million, or 2.6%, from $463.0 million at March 31, 2017. In 2017, we ran a successful certificates of deposit promotion which helped grow such deposits by $56.7 million during the past year. Municipal deposits and brokered deposits declined $13.4 million and $14.0 million, respectively.
• Total shareholders’ equity was $39.4 million at March 31, 2018, an increase of $4.1 million, or 11.6%, from $35.3 million at March 31, 2017.
• 1^st Colonial's non-performing assets at March 31, 2018 were $2.4 million compared to $2.7 million at March 31, 2017. Non-performing assets to total assets at March 31, 2018 were 0.45% compared to 0.53% at March 31, 2017.

Income Statement and Other Highlights:

• Net interest income for the three months ended March 31, 2018 increased $433 thousand, or 10.9%, to $4.4 million from $4.0 million for the three months ended March 31, 2017. The growth in net interest income was primarily related to an increase in interest income on loans and in the average yield earned on average interest-earning assets. During the past twelve months, the 75 basis point increase in the fed funds rate since March 2017 has had a positive impact on our variable rate loans and our interest-earning deposits. The improvement in interest income was partially offset by an increase in the interest paid on certificates of deposit.
• The net interest margin was 3.43% for the first quarter of 2018 compared to 3.32% for the first quarter of 2017. The increase in net interest margin was directly related to an increase in the yield on average interest-earning assets.
• For the three months ended March 31, 2018, we recorded a provision to the allowance for loan losses of $278 thousand compared to $100 thousand for the three months ended March 31, 2017. The increase in the quarter over quarter provision was related to an increase in specific reserves required on impaired loans. The loss allowance as a percentage of total loans was 1.33% at March 31, 2018 compared to 1.28% at March 31, 2017.
• Non-interest income for the first quarter of 2018 was $645 thousand, a decrease of $233 thousand, or 26.5%, from $878 thousand for the first quarter of 2017. Gains on the sale of small business administration (“SBA”) loans and the sale of residential mortgages declined $158 thousand and $50 thousand, respectively, due to a decline in the volume of loans sold. Additionally, in the first quarter of 2017, we sold a property that was a former branch location and recorded a gain of $29 thousand as a result of the sale. There were no such sales in the first quarter of 2018.
• Non-interest expense was $3.3 million for the quarter ended March 31, 2018 and increased $92 thousand, or 2.9%, from $3.2 million for the comparable period in 2017. Contributing to the increase in non-interest expense for the first quarter of 2018 was a $95 thousand increase in salaries and benefits related to an increase in headcount in the lending support and compliance functions.
• For the three months ended March 31, 2018, income tax expense was $388 thousand compared to $570 thousand for the three months ended March 31, 2017, respectively. The $182 thousand decrease in tax expense was related to H.R.1 (originally known as the “Tax Cuts and Jobs Act”) which was enacted on December 22, 2017. H.R. 1 lowered the maximum federal corporate tax rate to 21% from 35%.

Highlights as of March 31, 2018 and 2017, and a comparison of the three months ended March 31, 2018 to the three months ended March 31, 2017 include the following:

1^st COLONIAL BANCORP, INC. CONSOLIDATED INCOME STATEMENTS (Unaudited, dollars in thousands, except per share data)
	For the three months
	ended March 31,
	2018		2017
Interest income	$ 5,207	$	4,511
Interest expense	793		530
Net Interest Income	4,414		3,981
Provision for loan losses	278		100
Net interest income after provision for loan losses	4,136		3,881
Non-interest income	645		878
Non-interest expense	3,304		3,212
Income before taxes	1,477		1,547
Income tax expense	388		570
Net Income	$ 1,089	$	977
Earnings Per Share – Basic ^(1)	$ 0.25	$	0.23
Earnings Per Share – Diluted ^(1)	$ 0.24	$	0.22

SELECTED PERFORMANCE RATIOS:

	For the three months ended March 31,			For the three months ended March 31,
	2018			2017
Return on Average Assets		0.83	%		0.82	%
Return on Average Equity		11.36	%		11.86	%
	At March 31, 2018			At March 31, 2017
Book value per share ^(1)	$	8.97		$	8.17
Capital ratios:
Tier 1 Leverage		7.36	%		6.92	%
Total Risk Based Capital		12.61	%		11.92	%
Common Equity Tier 1		11.36	%		10.67	%

(1)	Adjusted to give effect to the 5% stock dividend distributed to shareholders on April 16, 2018.

1^st COLONIAL BANCORP, INC. CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)	At March 31, 2018			At March 31, 2017
Cash and cash equivalents	$	16,328		$	17,182
Total investments		113,376			109,540
Mortgage loans held for sale		4,356			5,069
Total loans		383,103			362,331
Less Allowance for loan losses		(5,106	)		(4,643	)
Loans and leases, net		377,997			357,688
Bank owned life insurance		8,494			8,251
Premises and equipment, net		963			919
Other real estate owned, net		-			57
Accrued interest receivable		1,596			1,235
Other assets		3,556			3,605
Total Assets	$	526,666		$	503,546
Total deposits	$	475,124		$	463,000
Other borrowings		10,437			3,479
Other liabilities		1,746			1,813
Total Shareholders’ Equity		39,359			35,254
Total Liabilities and Equity	$	526,666		$	503,546

1^st COLONIAL BANCORP, INC. NET INTEREST INCOME AND MARGIN (Unaudited, in thousands, except percentages)
	For the three months ended						For the three months ended
	March 31, 2018						March 31, 2017
	Average Balance		Interest		Yield		Average Balance		Interest		Yield
Cash and cash equivalents	$	22,791	$	76	1.35	%	$	16,325	$	24	0.60	%
Investment securities		116,314		512	1.79	%		112,503		382	1.38	%
Mortgage loans held for sale		5,816		47	3.28	%		5,419		38	2.77	%
Loans		377,313		4,572	4.91	%		352,156		4,067	4.68	%
Total interest-earning assets		522,234		5,207	4.04	%		486,403		4,511	3.76	%
Non-interest earning assets		12,323						12,849
Total average assets	$	534,557					$	499,252
Interest-bearing deposits
NOW and money markets	$	233,099	$	182	0.32	%	$	247,639	$	179	0.29	%
Savings		61,008		67	0.45	%		69,322		77	0.45	%
Certificates of deposit		132,812		540	1.65	%		84,250		269	1.29	%
Total interest-bearing deposits		426,919		789	0.75	%		401,211		525	0.53	%
Borrowings		3,327		4	0.49	%		3,560		5	.57	%
Total interest-bearing liabilities		430,246		793	0.75	%		404,771		530	0.53	%
Non-interest bearing deposits		64,313						58,616
Other liabilities		1,420						1,580
Shareholders' equity		38,578						34,285
Total average liabilities and equity	$	534,557					$	499,252
Net interest income			$	4,414					$	3,981
Net interest margin					3.43	%					3.32	%
Net interest spread					3.30	%					3.23	%

1st Colonial Community Bank, the subsidiary of 1^st Colonial Bancorp, provides a range of business and consumer financial services, placing emphasis on customer service and access to decision makers. Headquartered in Collingswood, New Jersey, the Bank also has a branch in the New Jersey community of Westville and administrative offices in Cherry Hill, New Jersey. To learn more, call [phone] or visit www.1stcolonial.com.

This release contains forward-looking statements that are not historical facts and include statements about management’s strategies and expectations about our business. There are risks and uncertainties that may cause our actual results and performance to be materially different from results indicated by these forward-looking statements. Factors that might cause a difference include economic conditions; unanticipated loan losses, inability to close loans in our pipeline, lack of liquidity; varying and unanticipated costs of collection with respect to nonperforming loans; an inability to dispose of real estate owned; changes in interest rates, changes in FDIC assessments, deposit flows, loan demand, and real estate values; changes in relationships with major customers; operational risks, including the risk of fraud by employees, customers or outsiders; competition; changes in accounting principles, policies or guidelines; changes in laws or regulations and in the manner in which the regulators enforce same; new technology and other factors affecting our operations, pricing, products and services.