1st Colonial Bancorp, Inc. Reports First Quarter 2020 Net Income and Announces Annual Meeting Date

CHERRY HILL, N.J.--()--1st Colonial Bancorp, Inc. (FCOB), holding company of 1st Colonial Community Bank, today reported net income of $5 thousand, or $0.00 per diluted share, for the three months ended March 31, 2020 compared to net income of $845 thousand, or $0.17 per diluted share for the three months ended March 31, 2019. The decrease in net income is due to a $745 thousand increase in non-interest expense, mainly due to one-time expenses related to executive transition, a $558 thousand increase in the loan loss provision, and a $111 thousand decrease in net interest income, each for the reasons explained below and which offset a $286 thousand increase in non-interest income. The earnings per diluted share were adjusted to give effect to the 5% stock dividend distributed to shareholders on April 15, 2020.

Robert White, President and Chief Executive Officer, commented, “As we find ourselves deeply entrenched in dealing with the effects of the COVID-19 pandemic, the health and welfare of our team members and customers are of paramount concern. We continue to take all precautions to limit the potential spread of COVID-19 while we continue to provide the products and services expected by our customers. As a result of our strong risk management culture, we launched our business continuity and pandemic plans before the stay-at-home orders were issued. Our ability to operate remotely, as well as balance the need for social distancing while in our offices, has proven to be effective and beneficial. The experience and commitment of our team members proves invaluable at our greatest time of need.”

“We have worked tirelessly with our business customers on their loan applications for the Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”). During the first phase of the SBA program, 91% of the applications we received were approved for approximately $35.4 million. We expect to disburse $40.0 million in total PPP loans to the small businesses in our communities. Additionally, we have implemented loan payment deferral programs for our borrowers who are experiencing financial hardship as a result of the pandemic. Challenges like these will make us stronger, better, and more unified than ever before.”

“During these unprecedented times, we remain very focused on executing upon our strategic initiatives. Since my joining 1st Colonial in February, we have realigned our commercial lending teams and are adding commercial and residential team members with experience, depth, and strong customer following. We continue to focus on originating high quality loans, with more emphasis on building relationships, while diversifying our loan and deposit mix. Organizational changes made during the quarter will position us well as we execute upon our strategy. As we deal with previously identified troubled credits and the uncertainty of any long-term effects of the pandemic through our risk mitigation efforts, we have increased our loan loss reserves based on qualitative factor adjustments as well as a review and segmentation of our loan portfolio based on likely impact of the coronavirus pandemic. Lastly, the increase in non-interest expense during the quarter was expected as we dealt with the leadership transition. We remain very intent on expense management as we navigate the ongoing impact of COVID-19.”

Significant Items of Note:

Results of Operations: First Quarter of 2020 compared to the First Quarter of 2019

  • Net interest income for the three months ended March 31, 2020 decreased $111 thousand, or 2.4%, to $4.6 million from $4.7 million for the three months ended March 31, 2019. The decline in net interest income was primarily related to a $96 thousand reduction in interest income quarter over quarter. The 75-basis point decrease in the fed funds rate in the second half of 2019 had a negative impact on our variable rate loans indexed to the Wall Street Journal Prime Rate. The subsequent 150-basis point decrease in the fed funds rate in March 2020 will impact future quarters. We have lowered rates on our non-maturity deposit accounts. Additionally, maturing CDs will likely re-price at our lower published rates.
  • The net interest margin was 3.24% for the first quarter of 2020 compared to 3.55% for the first quarter of 2019. The decrease in net interest margin was mostly related to an elevated level in the average balance of interest-earning cash, which is a lower yielding asset, in combination with a reduced level of higher yielding investment securities.
  • For the three months ended March 31, 2020, we recorded a provision to the allowance for loan losses (“allowance”) of $1.2 million compared to $679 thousand for the three months ended March 31, 2019. The increase in the quarter over quarter provision was related to an increase in qualitative reserve factors due to the pandemic and an increase in the historical loss rates. Net charge-offs were $2.4 million for the first quarter of 2020 compared to $416 thousand for the first quarter of 2019. The net charge-offs for 2020 included $1.8 million in specific reserves on impaired loans, which were previously recorded in the allowance. The loan loss allowance as a percentage of total loans was 1.30% at March 31, 2020 compared to 1.59% at December 31, 2018 and 1.43% at March 31, 2019.
  • Non-interest income for the first quarter of 2020 was $878 thousand, an increase of $286 thousand, or 48.3%, from $592 thousand for the first quarter of 2019. Income from the origination and sales of residential mortgages was $676 thousand and grew $283 thousand, or 72%, from the first quarter in 2019 due to a $7.4 million increase in the volume of loans sold during the 2020 period.
  • Non-interest expense was $4.2 million for the quarter ended March 31, 2020 and increased $745 thousand, or 21.6%, from $3.5 million for the comparable period in 2019. During the first quarter of 2020, we recorded $550 thousand in one-time expenses related to the executive transition and management of previously identified troubled credits.

Financial Condition: March 31, 2020 compared to December 31, 2019

  • At March 31, 2020, total assets were $579.0 million and grew $3.8 million from $575.2 million at December 31, 2019.
  • Total loans were $421.3 million at March 31, 2020, an increase of $1.5 million, or 0.37%, from $419.8 million at December 31, 2019. Residential mortgages held for sale more than doubled to $9.7 million at March 31, 2020 from $4.4 million at December 31, 2019.
  • Total deposits were $524.1 million at March 31, 2020, a slight increase of $1.8 million, or 0.4%, from $522.3 million at December 31, 2019. Savings, money market accounts, and demand deposits increased $28.0 million, $4.8 million and $1.8 million, respectively. Certificates of deposit, municipal deposits, brokered deposits, and interest checking accounts declined $21.6 million, $5.9 million, $3.2 million and $2.1 million, respectively.
  • Total shareholders’ equity was $48.5 million at March 31, 2020 compared to $47.9 million at December 31, 2019.
  • 1st Colonial's non-performing assets at March 31, 2020 were $6.5 million compared to $5.9 million at December 31, 2019. The ratio of non-performing assets to total assets at March 31, 2020 was 1.12% compared to 1.02% at December 31, 2019. Included in the non-performing assets were $5.2 million in previously identified troubled commercial loans. We are actively managing our criticized and classified assets with the goal of maximizing value and minimizing losses. At March 31, 2020, the allowance was $5.5 million, or 1.30% of total loans. The allowance was $6.7 million, or 1.59% of total loans at December 31, 2019.

Other Matters

The 2020 Annual Meeting of Shareholders will be held on June 17, 2020 at 9:00 a.m. In prior years the Annual Meeting has been held in person in the afternoon. This year due to the uncertainty surrounding COVID-19 and when larger gatherings of people will be permissible, we will hold a virtual Annual Meeting via the Internet. Further information about the 2020 Annual Meeting will be provided in the Annual Proxy Statement, which will be mailed to shareholders together with the Annual Report to Shareholders for 2019.

Highlights as of March 31, 2020 and December 31, 2019, and a comparison of the three months ended March 31, 2020 to the three months ended March 31, 2019 include the following:

1st COLONIAL BANCORP, INC.

CONSOLIDATED INCOME STATEMENTS

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

 

For the three months

ended March 31,

2020

 

2019

Interest income

$

5,881

$

5,977

Interest expense

 

1,300

 

1,285

Net Interest Income

 

4,581

 

4,692

Provision for loan losses

 

1,237

 

679

Net interest income after provision for loan losses

 

3,344

 

4,013

Non-interest income

 

878

 

592

Non-interest expense

 

4,202

 

3,457

Income before taxes

 

20

 

1,148

Income tax expense

 

15

 

303

Net Income

$

5

$

845

Earnings Per Share – Basic (1)

$

0.00

$

0.17

Earnings Per Share – Diluted (1)

$

0.00

$

0.17

(1)

Adjusted to give effect to the 5% stock dividend distributed to shareholders on April 15, 2020.

SELECTED PERFORMANCE RATIOS:

For the three months
ended March 31,

 

For the three months
ended March 31,

 

2020

 

2019

 

Return on Average Assets

 

0.00%

 

 

0.62%

 

Return on Average Equity

 

0.04%

 

 

7.71%

 

Book value per share (1)

$

9.80

 

$

9.18

 

 

 

 

 

 

 

At March 31, 2020

 

At December 31, 2019

 

Capital ratios:

 

 

Tier 1 Leverage

 

8.06%

 

 

8.25%

 

Total Risk Based Capital

 

14.18%

 

 

14.44%

 

Common Equity Tier 1

 

12.92%

 

 

13.19%

 

(1)

Adjusted to give effect to the 5% stock dividend distributed to shareholders on April 15, 2020.

1st COLONIAL BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

 

(Unaudited, in thousands)

At March 31, 2020

At December 31, 2019

 

Cash and cash equivalents

$

43,266

$

46,357

Total investments

 

90,864

 

93,991

Mortgage loans held for sale

 

9,718

 

4,449

Total loans

 

421,346

 

419,798

 

Less Allowance for loan losses

 

(5,493)

 

(6,671)

Loans and leases, net

 

415,853

 

413,127

Bank owned life insurance

 

11,873

 

9,807

Premises and equipment, net

 

713

 

691

Other real estate owned, net

 

119

 

-

Accrued interest receivable

 

1,685

 

1,697

Other assets

 

4,900

 

5,084

Total Assets

$

578,991

$

575,203

 

Total deposits

$

524,102

$

522,252

Other borrowings

 

2,291

 

2,290

Other liabilities

 

4,065

 

2,755

Total Shareholders’ Equity

 

48,533

 

47,906

Total Liabilities and Equity

$

578,991

$

575,203

1st 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, 2020

March 31, 2019

 

Average
Balance

Interest

Yield

Average
Balance

Interest

Yield

Cash and cash equivalents

$

54,944

$

188

1.38%

$

13,177

$

63

1.94%

Investment securities

 

92,755

 

456

1.98%

 

113,876

 

609

2.17%

Mortgage loans held for sale

 

 

6,396

 

 

47

 

2.96%

 

 

4,406

 

 

25

 

2.30%

Loans

 

 

415,088

 

5,190

5.03%

 

404,711

 

5,280

5.29%

Total interest-earning assets

 

 

569,183

 

5,881

4.16%

 

536,170

 

5,977

4.52%

Non-interest earning assets

 

17,880

 

 

12,938

 

Total average assets

$

587,063

$

549,108

 

Interest-bearing deposits

NOW and money markets

$

264,309

$

470

0.72%

$

238,823

$

433

0.74%

Savings

 

51,072

 

52

0.41%

 

52,836

 

57

0.44%

Certificates of deposit

 

155,469

 

771

1.99%

 

147,942

 

781

2.14%

Total interest-bearing deposits

 

470,850

 

1,293

1.10%

 

439,601

 

1,271

1.17%

Borrowings

 

2,290

 

7

1.29%

 

4,408

 

14

1.29%

Total interest-bearing liabilities

 

473,140

 

1,300

1.17%

 

444,009

 

1,285

1.17%

Non-interest bearing deposits

 

62,164

 

59,216

Other liabilities

 

3,166

 

1,443

Shareholders' equity

 

48,593

 

44,440

Total average liabilities and equity

$

587,063

$

549,108

Net interest income

$

4,581

$

4,692

Net interest margin

3.24%

3.55%

Net interest spread

3.05%

3.35%

 

 

 

 

 

 

 

 

 

 

 

 

 

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 the extent of the adverse impact of the current global coronavirus outbreak on our customers, prospects and business, as well as the impact of any future pandemics; 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.

Contacts

Mary Kay Shea at 856‑885‑2391

Contacts

Mary Kay Shea at 856‑885‑2391