1st Colonial Bancorp, Inc. Reports Second Quarter 2019 Net Income of $1.1 Million

COLLINGSWOOD, N.J.--()--1st Colonial Bancorp, Inc. (FCOB), holding company of 1st Colonial Community Bank, today reported net income of $1.1 million, or $0.23 per diluted share, for the three months ended June 30, 2019 compared to net income of $1.3 million, or $0.28 per diluted share, for the three months ended June 30, 2018. For the six months ended June 30, 2019, net income was $1.9 million, or $0.40 per diluted share, compared to $2.4 million, or $0.51 per diluted share for the same period in 2018. The 2018 earnings per diluted share were adjusted to give effect to the 5% stock dividend distributed to shareholders on April 15, 2019.

Gerry Banmiller, President and Chief Executive Officer, commented, “The first half of 2019 has been challenging due to an increase in non-performing assets. We are taking a proactive, conservative approach as we work through these credits. As we look to grow our franchise, we recently hired two experienced commercial lending officers who will work closely with our Business Development Manager to grow our customer base.”

Highlights for the three and six months ended June 30, 2019, included:

Balance Sheet Trends:

  • At June 30, 2019, total assets were $543.7 million compared to $543.9 million at December 31, 2018.
  • Total loans were $409.9 million at June 30, 2019, an increase of $5.4 million, or 1.3%, from $404.5 million at December 31, 2018. During the first six months of 2019, commercial mortgage loans and residential mortgages grew $6.0 million and $4.5 million, respectively, while commercial and construction loans declined $2.7 million and $2.4 million respectively. At June 30, 2019, commercial commitments to extend credit were $31.4 million and included $16.5 million in construction commitments.
  • Total deposits were $486.8 million at June 30, 2019, a decrease of $3.3 million, or 0.7%, from $490.1 million at December 31, 2018. Brokered deposits, demand deposits and CDs increased $9.3 million, $8.4 million and $7.4 million, respectively, as municipal NOWs, money markets, and NOW accounts decreased $20.4 million, $4.3 million, and $2.2 million, respectively.
  • Total shareholders’ equity was $46.4 million at June 30, 2019, an increase of $2.7 million, or 6.1%, from $43.7 million at December 31, 2018.
  • 1st Colonial's non-performing assets at June 30, 2019 were $4.7 million and included $3.9 million in non-accrual loans and $826 thousand in other real estate owned (OREO). Non-performing assets were $2.7 million at December 31, 2018. Non-performing assets to total assets at June 30, 2019 were 0.87% compared to 0.50% at December 31, 2018. We are conservative in actively managing our criticized and classified assets with the goal of maximizing value and minimizing losses. During June we accepted deeds in lieu of foreclosure on seven residential rental properties. We have retained a management company to manage these properties while we work on their disposal.

Income Statement and Other Highlights:

  • Net interest income for the three months ended June 30, 2019 increased $140 thousand, or 3.1%, to $4.7 million from $4.5 million for the three months ended June 30, 2018. For the first six months of 2019, net interest income grew $418 thousand, or 4.5%, to $9.4 million from $8.9 million for the same period in 2018. 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. The 50 basis point increase in the fed funds rate since June 2018 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 and NOW accounts.
  • The net interest margin was 3.45% for the second quarter of 2019 compared to 3.45% for the second quarter of 2018, and was 3.52% for the six months ended June 30, 2019 compared to 3.44% for the six months ended June 30, 2018. The increase in net interest margin for the six month period was directly related to an increase in the yield on average interest-earning assets.
  • For the three and six months ended June 30, 2019, we recorded a provision to the allowance for loan losses of $300 thousand and $979 thousand, respectively, compared to $311 thousand and $589 thousand for the three and six months ended June 30, 2018. The increase in the 2019 provision was related to an increase in specific reserves required on impaired loans and, to a smaller extent, an increase in qualitative factors. During the first half of 2019, we recorded net charge-offs of $1.4 million compared to $199 thousand for the first half of 2018. The majority of the charge-offs were related to specific reserves. The allowance for loan losses as a percentage of total loans was 1.26% at June 30, 2019 compared to 1.39% at December 31, 2018.
  • Non-interest income for the second quarter of 2019 was $774 thousand, a decrease of $247 thousand, or 24.2%, from $1.0 million for the second quarter of 2018. Gains on the sale of small business administration (“SBA”) loans decreased $118 thousand while the gains on the sale of residential mortgages declined $113 thousand, the latter due to a decline in the volume of mortgage loans sold.
  • For the six months ended June 30, 2019, non-interest income was $1.4 million, a decrease of $300 thousand, or 18.1%, from $1.7 million for the same period in 2018. Gains on the sale of residential mortgages and the sale of SBA loans declined $153 thousand and $133 thousand, respectively, due to a decline in the volume of loans sold. During the first two quarters of 2019, the residential mortgage loan originations retained in the bank’s portfolio increased $5.5 million from the same period in 2018. This strategy will positively impact interest income over time, but it has an immediate negative effect on non-interest revenue.
  • Non-interest expense was $3.7 million for the three months ended June 30, 2019 an increase of $236 thousand, or 6.8%, from $3.5 million for the comparable period in 2018. Contributing to the increase in non-interest expense for the second quarter of 2019 was a $190 thousand increase in expenses associated with non-performing assets.
  • Non-interest expense was $7.2 million for the six months ended June 30, 2019 an increase of $389 thousand, or 5.7%, from $6.8 million for the comparable period in 2018. Contributing to the increase in non-interest expense for 2019 were increases of $166 thousand, $99 thousand and $66 thousand in non-performing asset expenses, salaries and benefits, and data processing expenses, respectively. During 2018 we added personnel in commercial lending and in the lending support functions creating increased salaries and benefits for 2019.
  • For the three and six months ended June 30, 2019, income tax expense was $332 thousand and $665 thousand, respectively, compared to $412 thousand and $800 thousand for the three and six months ended June 30, 2018, respectively.

Highlights as of June 30, 2019 and 2018, and a comparison of the three and six months ended June 30, 2019 to the three and six months ended June 30, 2018 include the following:

1st COLONIAL BANCORP, INC.

CONSOLIDATED INCOME STATEMENTS

(Unaudited, dollars in thousands, except per share data)

 

For the three months

 

For the six months

ended June 30,

 

ended June 30,

2019

 

2018

 

2019

 

2018

Interest income

$

6,014

$

5,521

$

11,991

$

10,728

Interest expense

 

1,342

 

989

 

2,627

 

1,782

Net Interest Income

 

4,672

 

4,532

 

9,364

 

8,946

Provision for loan losses

 

300

 

311

 

979

 

589

Net interest income after provision for loan losses

 

4,372

 

4,221

 

8,385

 

8,357

Non-interest income

 

774

 

1,021

 

1,366

 

1,666

Non-interest expense

 

3,729

 

3,493

 

7,186

 

6,797

Income before taxes

 

1,417

 

1,749

 

2,565

 

3,226

Income tax expense

 

332

 

412

 

635

 

800

Net Income

$

1,085

$

1,337

$

1,930

$

2,426

Earnings Per Share – Basic (1)

$

0.23

$

0.29

$

0.41

$

0.53

Earnings Per Share – Diluted (1)

$

0.23

$

0.28

$

0.40

$

0.51

SELECTED PERFORMANCE RATIOS:

 

For the three months
ended June 30,

 

For the six months
ended June 30,

2019

 

2018

 

2019

 

2018

Return on Average Assets

 

0.79%

 

0.99%

 

0.71%

 

0.91%

Return on Average Equity

 

9.56%

 

13.42%

 

8.65%

 

12.39%

Book value per share (1)

$

9.94

$

8.81

$

9.94

$

8.81

 

At June 30, 2019

At December 31, 2018

Capital ratios:

Tier 1 Leverage

8.28%

7.98%

Total Risk Based Capital

13.68%

13.42%

Common Equity Tier 1

12.43%

12.16%

(1)

Adjusted to give effect to the 5% stock dividend distributed to shareholders on April 15, 2019.

1st COLONIAL BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

 

(Unaudited, in thousands)

At June 30, 2019

At December 31, 2018

Cash and cash equivalents

$

5,556

$

12,114

Total investments

 

110,089

 

115,093

Mortgage loans held for sale

 

6,824

 

2,989

Total loans

 

409,899

 

404,535

Less Allowance for loan losses

 

(5,167)

 

(5,627)

Loans and leases, net

 

404,732

 

398,908

Bank owned life insurance

 

8,484

 

8,368

Premises and equipment, net

 

715

 

798

Other real estate owned, net

 

826

 

-

Accrued interest receivable

 

2,177

 

1,737

Other assets

 

4,282

 

3,931

Total Assets

$

543,685

$

543,938

 

Total deposits

$

486,814

$

490,096

Other borrowings

 

8,174

 

8,157

Other liabilities

 

2,322

 

1,989

Total Shareholders’ Equity

 

46,375

 

43,696

Total Liabilities and Equity

$

543,685

$

543,938

1st COLONIAL BANCORP, INC.

NET INTEREST INCOME AND MARGIN TABLES

(Unaudited, in thousands, except percentages)

 

For the three months ended

 

For the three months ended

June 30, 2019

 

June 30, 2018

Average
Balance

 

Interest

 

Yield

 

Average
Balance

 

Interest

 

Yield

Cash and cash equivalents

$

12,410

$

57

1.84%

$

16,544

$

50

1.21%

Investment securities

 

110,676

 

592

2.15%

 

111,732

 

499

1.79%

Mortgage loans held for sale

 

6,442

 

45

2.80%

 

8,258

 

69

3.35%

Loans

 

407,504

 

5,320

5.24%

 

390,716

 

4,903

5.03%

Total interest-earning assets

 

537,032

 

6,014

4.49%

 

527,250

 

5,521

4.20%

Non-interest earning assets

 

13,750

 

12,583

Total average assets

$

550,782

$

539,833

 

Interest-bearing deposits

Checking accounts

$

217,359

$

411

0.76%

$

214,023

$

260

0.49%

Money markets and Savings

 

64,624

 

71

0.44%

 

71,061

 

80

0.45%

Certificates of deposit

 

151,073

 

832

2.21%

 

149,181

 

644

1.73%

Total interest-bearing deposits

 

433,056

 

1,314

1.22%

 

434,265

 

984

0.91%

Borrowings

 

6,315

 

28

1.78%

 

3,279

 

5

0.61%

Total interest-bearing liabilities

 

439,371

 

1,342

1.23%

 

437,544

 

989

0.91%

Non-interest bearing deposits

 

63,850

 

61,142

Other liabilities

 

2,016

 

1,213

Shareholders' equity

 

45,545

 

39,934

Total average liabilities and equity

$

550,782

$

539,833

Net interest income

$

4,672

$

4,532

Net interest margin

3.49%

3.45%

Net interest spread

3.27%

3.29%

 

For the six months ended

 

For the six months ended

 

June 30, 2019

 

June 30, 2018

 

Average
Balance

 

Interest

 

Yield

 

Average
Balance

 

Interest

 

Yield

Cash and cash equivalents

 

$

12,792

 

$

120

 

1.89%

 

$

19,560

 

$

126

 

1.29%

Investment securities

 

 

112,267

 

 

1,201

 

2.16%

 

 

114,010

 

 

1,011

 

1.79%

Mortgage loans held for sale

 

 

5,429

 

 

69

 

2.56%

 

 

7,044

 

 

116

 

3.32%

Loans

 

 

406,116

 

 

10,601

 

5.26%

 

 

384,051

 

 

9,475

 

4.98%

Total interest-earning assets

 

 

536,604

 

 

11,991

 

4.51%

 

 

524,755

 

 

10,728

 

4.12%

Non-interest earning assets

 

 

13,346

 

 

 

 

 

 

12,530

 

 

 

 

Total average assets

 

$

549,950

 

 

 

 

 

$

537,285

 

 

 

 

 

Interest-bearing deposits

 

 

 

 

 

 

 

 

 

 

 

 

Checking accounts

 

$

221,324

 

$

828

 

0.75%

 

$

215,483

 

$

423

 

0.40%

Money markets and Savings

 

 

65,471

 

 

144

 

0.44%

 

 

74,088

 

 

166

 

0.45%

Certificates of deposit

 

 

149,516

 

 

1,613

 

2.18%

 

 

141,041

 

 

1,184

 

1.69%

Total interest-bearing deposits

 

 

436,311

 

 

2,585

 

1.19%

 

 

430,612

 

 

1,773

 

0.83%

Borrowings

 

 

5,366

 

 

42

 

1.58%

 

 

3,303

 

 

9

 

0.55%

Total interest-bearing liabilities

 

 

441,677

 

 

2,627

 

1.20%

 

 

433,915

 

 

1,782

 

0.83%

Non-interest bearing deposits

 

 

61,546

 

 

 

 

 

 

62,719

 

 

 

 

Other liabilities

 

 

1,731

 

 

 

 

 

 

1,169

 

 

 

 

Shareholders' equity

 

 

44,996

 

 

 

 

 

 

39,482

 

 

 

 

Total average liabilities and equity

 

$

549,950

 

 

 

 

 

$

537,285

 

 

 

 

Net interest income

 

 

 

$

9,364

 

 

 

 

 

$

8,946

 

 

Net interest margin

 

 

 

 

 

3.52%

 

 

 

 

 

3.44%

Net interest spread

 

 

 

 

 

3.31%

 

 

 

 

 

3.29%

1st Colonial Community Bank, the subsidiary of 1st 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 (856) 858-8402 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; changes in or additions to management and/or key employees; 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 or theft by employees, customers or outsiders, and the risk of interruptions in and breaches in security of our information systems; 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.

Contacts

Gerry Banmiller, 856‑858‑8402

Contacts

Gerry Banmiller, 856‑858‑8402