First Bank Reports First Quarter 2017 Net Income of $1.9 Million, an Increase of 43% Over 2016

HAMILTON, N.J., April 24, 2017 -- First Bank (NASDAQ:FRBA) today announced higher earnings for the fifth consecutive quarter. Net income for first quarter 2017 was $1.94 million or $0.17 per diluted share, compared to $1.36 million or $0.14 per diluted share for the first quarter of 2016. Net income increased by 43.3% and diluted earnings per share increased by $0.03, or 21%, despite a 2.2 million share increase in weighted average diluted shares outstanding from March 2016. The increase in first quarter net income was primarily a result of net interest income growth of 19.7%, which resulted from a 19.7% increase in average interest-earning assets.

First Quarter 2017 Performance Highlights:

Total net revenue (net interest income + non-interest income) for first quarter 2017 increased by 20.1%, or $1.4 million, to $8.6 million, compared to the prior year quarter.
First quarter 2017 average loans of $900.8 million were up $168.5 million, or 23.0%, from first quarter 2016, and were up $51.0 million, or 6.0% from fourth quarter 2016.
Total deposits of $934.3 million at March 31, 2017 were up $135.3 million, or 16.9%, compared to March 31, 2016, and were up $39.4 million, or 4.4%, compared to December 31, 2016.
Asset quality metrics remained favorable, with net loan charge-offs to average loans of just 0.06% for first quarter 2017 compared to 0.16% in first quarter 2016. Nonperforming loans to total loans of 0.57% at March 31, 2017, were up slightly in comparison to 0.54% at March 31, 2016, and down compared to 0.66% at December 31, 2016.
The Bank's efficiency ratio improved to 61.32% for the first quarter, down from 62.48% for first quarter 2016.

“We continued our positive trend with a solid performance in the first quarter characterized by loan and deposit growth and profit improvement, which was reflective of our team’s continued hard work and dedication to meeting the needs of our customers,” said Patrick L. Ryan, President and Chief Executive Officer. “During the quarter we focused on rebuilding the loan pipeline that fueled our very strong loan growth during the second half of 2016. In addition, we announced a definitive agreement to acquire Bucks County Bank, a transaction that will strengthen our market presence in the attractive Bucks County, Pennsylvania market. We consider this merger a great fit of two organizations that share a similar customer-centric culture along with a focus on commercial and industrial and owner occupied commercial real estate lending. Furthermore, on April 18, our Board declared a $0.02 per share cash dividend, reflective of our directors’ desire to provide cash to shareholders, while at the same time retaining an appropriate level of capital to fund the Bank’s ongoing growth activities. I’m confident that we will continue to perform throughout 2017, based on our reasoned and consistent approach to business and dedication to effective risk management. We remain excited about the near-term business opportunities within our market area, as well as the steps we’ve taken to raise our competitive profile.”

Income Statement

The Bank's net interest income for first quarter 2017 was $8.1 million, an increase of $1.3 million, or 19.7%, compared to $6.8 million in the first quarter of 2016. Our growth was driven by a 17.9% increase in interest and dividend income primarily a result of a $168.5 million increase in average loan balances compared with the first quarter of 2016. This was somewhat offset by increased interest expense of $286,000 for the comparative quarter, which reflected average balance increases for time deposits, transaction accounts and borrowings.

The first quarter 2017 tax equivalent net interest margin was 3.16%, an increase of two basis points compared to the prior year quarter, and an increase of four basis points compared to the linked fourth quarter of 2016. The net interest margin increase compared to first quarter 2016 was primarily the result of higher average interest-earning assets and a six basis point drop in the average rate paid on interest-bearing liabilities.

The provision for loan losses for the first quarter of 2017 totaled $438,000, a decrease of $375,000 compared to the first quarter of 2016, and a decrease of $516,000 compared to the linked fourth quarter of 2016. The decrease in the first quarter 2017 provision reflected a continuation of favorable asset quality metrics, as well as slower loan growth than in the comparable periods.

First quarter 2017 non-interest income increased $99,000, to $459,000, compared to $360,000 in first quarter 2016, primarily a result of gains on the sale of SBA loans of $136,000 and increased income from bank owned life insurance of $50,000, partially offset by lower gains on recovery of acquired loans.

First quarter 2017 non-interest expense of $5.3 million was up $923,000 compared to first quarter 2016. The increase in non-interest expense, compared to first quarter 2016, was primarily a result of increased salaries and employee benefits, $150,000 of costs associated with the agreement to acquire Bucks County Bank and slight increases in other expenses associated with our growth. The increase in salaries and employee benefits was due to several factors, including an increase in base salaries related to additional employees hired during 2016, higher bonus related costs, including FICA taxes, and higher health insurance costs.

Pre-provision net revenue^[1] for the first quarter of 2017 was $3.2 million, an increase of $620,000, or 23.6%, compared to the first quarter of 2016, and declined $139,000 compared to the linked fourth quarter of 2016. The decline in the first quarter of 2017 compared to the fourth quarter of 2016 was due to an increase in non-interest expense. The largest increase in non-interest expense was due to a $137,000 increase in FICA taxes, a component of salaries and employee benefit expenses. The FICA increase related to the payment of employee bonuses in March 2017.

^[1] A non-U.S. GAAP metric defined by SNL Financial as net interest income before provision for loan losses plus non-interest income excluding non-ordinary items (e.g. gains on sale of investment securities, gains on recovery of acquired loans, and bargain purchase gains) minus non-interest expense excluding non-ordinary items (e.g. merger related expenses and other one-time, non-ordinary costs).

Income tax expense for the first quarter of 2017 was $886,000, an increase of $295,000 compared to the first quarter of 2016, reflecting higher pre-tax income and a slightly higher effective tax rate. First quarter income tax expense decreased $5,000 compared to $891,000 for fourth quarter 2016. The first quarter effective income tax rate was 31.3%, compared to 30.4% for first quarter 2016 and 33.0% for fourth quarter 2016.

Balance Sheet

Total assets at March 31, 2017 were $1.1 billion, an increase of $179.0 million, or 19.5%, compared to the end of first quarter 2016, and an increase of $23.1 million, or 2.2%, compared to December 31, 2016. Total loans were $915.3 million at quarter end, an increase of $157.1 million or 20.7% compared to March 31, 2016, and an increase of $16.9 million compared to the linked fourth quarter of 2016.

Total deposits were $934.3 million at March 31, 2017, an increase of $135.3 million, or 16.9%, compared to March 31, 2016, and an increase of $39.4 million, or 4.4% compared to December 31, 2016. Non-interest bearing deposits totaled $127.8 million at March 31, 2017, an increase of $26.2 million, or 25.8% from March 31, 2016, reflective of the Bank’s expanding commercial lending relationships. Non-interest bearing deposits at March 31, 2017 were up $9.2 million, or 7.7%, compared to December 31, 2016.

Stockholders' equity increased to $91.0 million at March 31, 2017, up $20.6 million or 29.2% compared to March 31, 2016, primarily a result of the capital offering completed in June 2016, which raised $13.4 million in net new capital, and $6.8 million of additional retained earnings. First quarter 2017 stockholders’ equity increased by $2.2 million from year end 2016 primarily due to first quarter net income.

Asset Quality

The Bank's asset quality metrics remained stable during the first quarter of 2017, reflective of disciplined risk management and underwriting standards. Net charge-offs were $146,000 for the first quarter of 2017, compared to $294,000 for first quarter 2016 and $424,000 for the fourth quarter of 2016. Net charge-offs as an annualized percentage of average loans were 0.06% in first quarter 2017, compared to 0.16% in first quarter 2016 and 0.20% in the linked fourth quarter of 2016. Nonperforming loans as a percentage of total loans at March 31, 2017 were 0.57%, compared with 0.54% at March 31, 2016 and 0.66% on December 31, 2016. The allowance for loan losses to nonperforming loans was 193.35% at March 31, 2017, compared with 206.62% at March 31, 2016, and 164.67% at the end of fourth quarter 2016.

As of March 31, 2017, the Bank exceeded all regulatory capital requirements to be considered well capitalized with a Tier 1 Leverage ratio of 8.41%, a Tier 1 Risk-Based capital ratio of 8.82%, a Common Equity Tier 1 Capital ("CET1") ratio of 8.82%, and a Total Risk-Based capital ratio of 11.93%.

Quarterly Cash Dividend Declared

On April 18, 2017, the Bank’s Board of Directors declared and approved a $0.02 per share quarterly cash dividend on the Bank’s common stock, payable on May 30, 2017, to shareholders of record as of May 10, 2017. In approving the dividend, the Bank’s Board stated that this dividend provides shareholders an added tangible benefit which it believes is appropriate given the Bank’s current financial performance, momentum and near-term prospects.

Merger Agreement with Bucks County Bank

First Bank announced on March 29, 2017, that it had entered into a definitive agreement to acquire Bucks County Bank (OTC Pink:BKCS) of Doylestown, Pennsylvania, subject to shareholder and regulatory approvals. Bucks County Bank shareholders are to receive 0.98 shares of First Bank common stock in an all-stock exchange. First Bank expects to issue approximately 2.4 million new shares of First Bank common stock to consummate this transaction, which is expected to be completed in the third quarter of 2017.

Bucks County Bank serves small and mid-size businesses through four full-service locations in Doylestown, Warminster, Bensalem and Levittown, Pennsylvania. On December 31, 2016, it had assets of approximately $198 million, loans of $179 million and deposits of $145 million. Following the merger, First Bank will have approximately $1.3 billion in assets with 14 branches located throughout New Jersey and Eastern Pennsylvania.

Conference Call Scheduled

First Bank will host its first quarter 2017 earnings conference call on Tuesday, April 25, 2017 at 3:00 PM eastern time. The direct dial toll free number for the call is 1-844-825-9784. For those unable to participate in the call, a replay will be available by dialing 1-877-344-7529 (replay access code: 10104945) from approximately one hour after the end of the conference call until July 26, 2017. Replay information will also be available on our website at www.firstbanknj.com under the "About Us" tab. Click on "Investor Relations" to access replay information for the conference call.

About First Bank

First Bank (www.firstbanknj.com) is a New Jersey state-chartered bank with ten full-service branches in Cranbury, Denville, Ewing, Flemington, Hamilton, Lawrence, Randolph, Somerset and Williamstown, New Jersey, and Trevose, Pennsylvania. With $1.1 billion in assets as of March 31, 2017, First Bank offers a traditional 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".

This news release contains certain forward-looking statements, either expressed or implied, which are provided to assist the reader in understanding anticipated future financial performance. These statements involve certain risks, uncertainties, estimates and assumptions made by management, which are subject to factors beyond First Bank's control and could impede its ability to achieve these goals. These factors include those listed in our Annual Report on Form 10-K for the year ended December 31, 2016 under the caption "Item 1A-Risk Factors", and general economic conditions, trends in interest rates, the ability of our borrowers to repay their loans, changes in laws and regulations and results of regulatory exams, among other factors.

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


		March 31,				December 31,
		2017				2016
Assets
Cash and due from banks			$	6,343		$	6,078
Federal funds sold				-			5,000
Interest bearing deposits in other banks				35,606			19,211
	Cash and cash equivalents			41,949			30,289
Interest bearing time deposits in other banks				4,951			7,440
Investment securities available for sale				45,829			47,077
Investment securities held to maturity (fair value of $53,191
at March 31, 2017 and $53,358 at December 31, 2016)				53,027			53,473
Restricted investment in bank stocks				3,024			3,890
Other investments				5,000			5,000
Loans, net of deferred fees and costs				915,280			898,429
Less: Allowance for loan losses				10,118			9,826
	Net loans			905,162			888,603
Premises and equipment, net				3,245			3,338
Other real estate owned, net				1,138			1,292
Accrued interest receivable				2,267			2,573
Bank-owned life insurance				21,220			21,067
Intangible assets, net				209			224
Deferred income taxes				8,656			8,350
Other assets				718			678
	Total assets		$	1,096,395		$	1,073,294

Liabilities and Stockholders' Equity
Deposits:
Non-interest bearing			$	127,755		$	118,569
Interest bearing				806,571			776,365
	Total deposits			934,326			894,934
Borrowings				45,267			64,510
Subordinated debentures				21,668			21,641
Accrued interest payable				987			636
Other liabilities				3,102			2,767
	Total liabilities			1,005,350			984,488
Stockholders' Equity:
Preferred stock, par value $2 per share; 5,000,000 shares authorized;
no shares issued and outstanding				-			-
Common stock, par value $5 per share; 20,000,000 shares authorized;
issued and outstanding 11,446,759 shares at March 31, 2017
and 11,410,274 shares at December 31, 2016				57,021			56,885
Additional paid-in capital				18,867			18,779
Retained earnings				15,554			13,611
Accumulated other comprehensive loss				(397	)		(469	)
	Total stockholders' equity			91,045			88,806
	Total liabilities and stockholders' equity		$	1,096,395		$	1,073,294

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


	Three Months Ended
	March 31,
	2017		2016
Interest and Dividend Income
Investment securities—taxable	$	376	$	356
Investment securities—tax-exempt		123		126
Interest bearing deposits in other banks,
Fed funds sold, and other		125		82
Loans, including fees		10,029		8,472
Total interest and dividend income		10,653		9,036

Interest Expense
Deposits		1,996		1,788
Borrowings		159		81
Subordinated debentures		398		398
Total interest expense		2,553		2,267
Net interest income		8,100		6,769
Provision for loan losses		438		813
Net interest income after provision for loan losses		7,662		5,956

Non-Interest Income
Service fees on deposit accounts		41		35
Loan fees		12		15
Income from bank-owned life insurance		153		103
Gains on sale of investment securities, net		-		25
Gains on sale of loans		136		-
Gains on recovery of acquired loans		37		111
Other non-interest income		80		71
Total non-interest income		459		360

Non-Interest Expense
Salaries and employee benefits		2,750		2,214
Occupancy and equipment		685		687
Legal fees		100		74
Other professional fees		350		274
Regulatory fees		219		172
Directors' fees		118		113
Data processing		255		227
Marketing and advertising		125		125
Travel and entertainment		59		48
Insurance		67		57
Other real estate owned expense, net		123		119
Merger-related expenses		150		-
Other expense		291		259
Total non-interest expense		5,292		4,369
Income Before Income Taxes		2,829		1,947
Income tax expense		886		591
Net Income	$	1,943	$	1,356

Basic earnings per share	$	0.17	$	0.14
Diluted earnings per share	$	0.17	$	0.14

Basic weighted average common shares outstanding		11,386,536		9,448,426
Diluted weighted average common shares outstanding		11,748,946		9,540,773

FIRST BANK AND SUBSIDIARIES
AVERAGE BALANCE SHEETS WITH INTEREST AND AVERAGE RATES
(unaudited)


	Three Months Ended March 31,
	2017					2016
	Average				Average	Average				Average
	Balance		Interest		Rate (5)	Balance		Interest		Rate (5)

	(dollars in thousands)
Interest earning assets
Investment securities (1) (2)	$	100,247	$	541	2.19%	$	94,294	$	525	2.24%
Loans (3)		900,822		10,029	4.52%		732,347		8,472	4.65%
Interest bearing deposits in other banks and
Federal funds sold		34,950		74	0.86%		38,682		50	0.52%
Restricted investment in bank stocks		3,490		32	3.72%		2,158		16	2.98%
Other investments		5,000		19	1.54%		5,000		16	1.29%
Total interest earning assets (2)		1,044,509		10,695	4.15%		872,481		9,079	4.19%
Allowance for loan losses		(10,104)					(8,154)
Non-interest earning assets		43,184					37,717
Total assets	$	1,077,589				$	902,044

Interest bearing liabilities
Interest bearing demand deposits	$	116,572	$	168	0.58%	$	77,156	$	135	0.70%
Money market deposits		156,126		253	0.66%		124,773		229	0.74%
Savings deposits		69,482		84	0.49%		77,721		96	0.50%
Time deposits		443,119		1,491	1.36%		394,223		1,328	1.35%
Total interest bearing deposits		785,299		1,996	1.03%		673,873		1,788	1.07%
Borrowings		55,827		159	1.16%		30,593		81	1.06%
Subordinated debentures		21,650		398	7.35%		21,544		398	7.39%
Total interest bearing liabilities		862,776		2,553	1.20%		726,010		2,267	1.26%
Non-interest bearing deposits		120,903					104,018
Other liabilities		3,695					2,324
Stockholders' equity		90,215					69,692
Total liabilities and stockholders' equity	$	1,077,589				$	902,044
Net interest income/interest rate spread (2)				8,142	2.95%				6,812	2.93%
Net interest margin (2) (4)					3.16%					3.14%
Tax-equivalent adjustment (2)				(42)					(43)
Net interest income			$	8,100				$	6,769



(1) Average balances of investment securities available for sale are based on amortized cost.
(2) Interest and average rates are tax equivalent using a federal income tax rate of 34 percent.
(3) Average balances of loans include loans on nonaccrual status.
(4) Net interest income divided by average total interest earning assets.
(5) Average rates are annualized.

FIRST BANK AND SUBSIDIARIES
QUARTERLY FINANCIAL HIGHLIGHTS
(in thousands, except share and employee data, unaudited)

	1Q2017		4Q2016		3Q2016		2Q2016		1Q2016
EARNINGS
Net interest income	$	8,100	$	7,798	$	7,456	$	6,880	$	6,769
Provision for loan losses		438		954		291		639		813
Non-interest income		459		570		384		316		360
Non-interest expense		5,292		4,717		4,793		4,453		4,369
Income tax expense		886		891		955		661		591
Net income		1,943		1,806		1,801		1,443		1,356

PER SHARE DATA
Basic earnings per share	$	0.17	$	0.16	$	0.16	$	0.15	$	0.14
Diluted earnings per share		0.17		0.16		0.16		0.15		0.14
Tangible book value (1)		7.94		7.76		7.66		7.49		7.39
Book value		7.95		7.78		7.68		7.51		7.42

PERFORMANCE RATIOS
Return on average assets (2)		0.73%		0.70%		0.74%		0.62%		0.60%
Return on average equity (2)		8.73%		8.10%		8.25%		8.09%		7.83%
Net interest margin, tax equivalent basis (2)		3.16%		3.12%		3.16%		3.04%		3.14%
Efficiency ratio (1)		61.32%		58.23%		62.04%		62.43%		62.48%
Pre-provision net revenue (1)	$	3,244	$	3,383	$	2,933	$	2,680	$	2,624

MARKET DATA (period-end)
Market value per share	$	11.95	$	11.60	$	8.38	$	6.94	$	6.94
Market value / book value		150.24%		149.04%		109.16%		92.43%		93.53%
Common shares outstanding		11,446,759		11,410,274		11,393,609		11,392,776		9,497,776
Market capitalization	$	136,789	$	132,359	$	95,478	$	79,066	$	65,805

CAPITAL & LIQUIDITY
Tangible equity / assets (1)		8.28%		8.25%		8.66%		8.79%		7.65%
Equity / assets		8.30%		8.27%		8.68%		8.81%		7.68%
Loans / deposits		97.96%		100.39%		94.62%		94.04%		94.89%

ASSET QUALITY
Net charge offs (recoveries)	$	146	$	424	$	30	$	63	$	294
Nonperforming loans		5,233		5,967		3,683		5,595		4,094
Nonperforming assets		6,371		7,289		4,895		7,270		5,793
Net charge offs / average loans (2)		0.06%		0.20%		0.01%		0.03%		0.16%
Nonperforming loans / total loans		0.57%		0.66%		0.45%		0.70%		0.54%
Nonperforming assets / total assets		0.58%		0.68%		0.49%		0.75%		0.63%
Allowance for loan losses / total loans		1.11%		1.09%		1.12%		1.13%		1.12%
Allowance for loan losses / nonperforming loans		193.35%		164.67%		252.40%		161.48%		206.62%

PERIOD-END DATA
Total assets	$	1,096,395	$	1,073,294	$	1,007,685	$	970,689	$	917,441
Total loans		915,280		898,429		827,161		801,421		758,131
Total deposits		934,326		894,934		874,149		852,230		798,985
Total stockholders' equity		91,045		88,806		87,463		85,540		70,474
Full-time equivalent employees		104		108		104		107		102
___________________________

(1) 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.
(2) Annualized.

Contact:

Patrick L. Ryan
President and CEO
First Bank
(609) 643-0168
[email protected]

First Bank Reports First Quarter 2017 Net Income of $1.9 Million, an Increase of 43% Over 2016

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