1st Colonial Bancorp, Inc. (FCOB), holding company of 1st Colonial Community Bank, today reported net income of $1.7 million, or $0.33 per diluted share, for the three months ended March 31, 2021 compared to net income of $5 thousand, or $0.00 per diluted share for the three months ended March 31, 2020.
Robert White, President and Chief Executive Officer, commented, “Our results for the first quarter were strong, led by our substantial increase in non-interest income over the same period in 2020. The management changes that were implemented during 2020, coupled with the addition of revenue producing teams throughout the year, had a measurable impact on performance. As economic conditions continue to improve, we believe we are well positioned to capitalize on opportunities.”
“We remain very focused on accomplishing our strategic objectives, while we provide ongoing support for our team members, customers and communities that we serve. Our new full-service branch in Limerick, Pennsylvania opened in March. We are excited to deliver our concierge banking model, 'where we bring the bank to you’ to the Limerick area, as well as expand our reach in Southeastern Pennsylvania.”
“We continue to integrate our technology upgrades and expect to have enhanced mobile and online banking features in place by the fourth quarter. Our goal is to deliver the bank to our customers whenever and wherever they prefer. Along the way we anticipate seeing improved efficiency while modernizing the overall customer experience.”
Operating Results
Net Interest Income
Net interest income for the three months ended March 31, 2021 and 2020 was $4.8 million and $4.6 million, respectively. The increase in net interest income was primarily attributable to a 40.5% decline in interest expense. A shift in our deposit composition to non-interest bearing, and lower cost deposit products coupled with interest rate reductions, led to the improvement in interest expense. For the first quarter of 2021, average certificates of deposit balances (“CD”) declined $41.0 million from the first quarter of 2020.
The net interest margin was 3.12% for the first quarter of 2021 compared to 3.24% for the first quarter of 2020. The decrease in net interest margin was mostly related to lower loan interest income coupled with a reduction in the average yield on interest-earning cash. The lower rate environment, however, did enable us to reduce our total cost of deposits by 57 basis points from 0.98% for the first quarter of 2020 to 0.41% for the first quarter of 2021.
Loan Loss Provision
For the three months ended March 31, 2021, we recorded a provision to the allowance for loan losses (“allowance”) of $240 thousand compared to $1.2 million for the three months ended March 31, 2020. The provision for the first quarter of 2020 was related to an increase in qualitative reserve factors due to the pandemic, and an increase in the historical loss rates. No adjustments were made to the qualitative factors in the first quarter of 2021. Net recoveries were $142 thousand for the first quarter of 2021 compared to net charge-offs of $2.4 million for the first quarter of 2020. The net charge-offs for 2020 included $1.8 million in specific reserves on impaired loans. The allowance as a percentage of total loans was 1.32% as of March 31, 2021 compared to 1.33% as of December 31, 2020 and 1.30% as of March 31, 2020. Mary Kay Shea, Executive Vice President and Chief Financial Officer, stated, “The credit outlook is positive based on our low charge-offs this quarter and the 81% decline in provision expense from the prior year period.”
Non-interest Income
Non-interest income for the first quarter of 2021 was $2.6 million, an increase of $1.7 million, or 195.6%, from $878 thousand for the first quarter of 2020. Income from the origination and sales of residential mortgages was $2.0 million and grew $1.3 million, or 200%, from the first quarter in 2020 due to a $44.8 million increase in the volume of loans sold during the 2021 period. During the first quarter of 2021 we earned $335 thousand in gains on the sale of SBA loans. There were no such gains on the sale of SBA loans in the comparable 2020 period.
Non-interest Expense
Non-interest expense was $4.8 million for the quarter ended March 31, 2021 and rose $611 thousand, or 14.5%, from $4.2 million for the quarter ended March 31, 2020. Throughout 2020, we made key investments in highly experienced revenue producers and operational team members as we executed upon our strategic plan. Additionally, the growth in volume of sold residential mortgages led to a $414 thousand increase in paid commissions to our mortgage lending originators. Reductions in professional fees and impaired loan expenses partially mitigated the increase in salaries and benefits.
Income Taxes
For the first quarter of 2021, income tax expense was $662 thousand compared to $15 thousand for the first quarter of 2020. The significant improvement in pre-tax income led to the increase in income taxes.
Financial Condition
Assets
As of March 31, 2021, total assets were $659.4 million and grew $23.4 million from $636.1 million as of December 31, 2020.
Total loans were $455.8 million as of March 31, 2021, an increase of $32.7 million, or 7.7%, over the balance as of December 31, 2020. During the first quarter, Paycheck Protection Program (“PPP”) loans grew $28.9 million and commercial loans, including commercial real estate and construction, grew $5.3 million. Home equity loans and lines of credit declined slightly by $1.4 million. Residential mortgages held for sale grew $3.7 million from $21.9 million as of December 31, 2020 to $25.6 million as of March 31, 2021.
Liabilities
Total deposits were $587.5 million as of March 31, 2021, and grew $21.7 million, or 3.8%, from $565.8 million as of December 31, 2020. Demand deposits, municipal deposits and interest checking accounts increased $15.0 million, $9.7 million and $2.0 million, respectively. Money market and savings accounts declined $2.7 million and $1.9 million, respectively.
Shareholder’s Equity
Total shareholders’ equity was $54.4 million as of March 31, 2021 compared to $53.7 million as of December 31, 2020. Tangible book value increased $0.22, or 2.0%, from $10.82 as of December 31, 2020 to $11.04 as of March 31, 2021.
Asset Quality
1st Colonial's non-performing assets as of March 31, 2021 were $4.9 million compared to $4.8 million as of December 31, 2020. The ratio of non-performing assets to total assets as of March 31, 2021 was 0.74% compared to 0.75% as of December 31, 2020. As of March 31, 2021, the allowance was $6.0 million, or 1.32% of total loans. The allowance was $5.6 million, or 1.33% of total loans as of December 31, 2020. The recent stimulus payments coupled with expanding access and availability of vaccines should lead to continued economic improvement.
Income Statement and Other Highlights:
Highlights as of March 31, 2021 and December 31, 2020, and a comparison of the three months ended March 31, 2021 to the three months ended March 31, 2020 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, | |||||||||
2021 | 2020 | ||||||||
Interest income | $ | 5,546 | $ | 5,881 | |||||
Interest expense | 773 | 1,300 | |||||||
Net Interest Income | 4,773 | 4,581 | |||||||
Provision for loan losses | 240 | 1,237 | |||||||
Net interest income after provision for loan losses | 4,533 | 3,344 | |||||||
Non-interest income | 2,595 | 878 | |||||||
Non-interest expense | 4,813 | 4,202 | |||||||
Income before taxes | 2,315 | 20 | |||||||
Income tax expense | 662 | 15 | |||||||
Net Income | $ | 1,653 | $ | 5 | |||||
Earnings Per Share – Basic | $ | 0.33 | $ | 0.00 | |||||
Earnings Per Share – Diluted | $ | 0.33 | $ | 0.00 | |||||
SELECTED PERFORMANCE RATIOS: | |||||||
For the three months
| For the three months
| ||||||
Return on Average Assets | 1.04% | 0.00% | |||||
Return on Average Equity | 12.43% | 0.04% | |||||
Book value per share | $ | 11.04 | $ | 9.80 | |||
As of March 31, 2021 | As of December 31, 2020 | ||||||
Capital ratios: | |||||||
Tier 1 Leverage | 9.67% | 9.60% | |||||
Total Risk Based Capital | 17.16% | 17.54% | |||||
Common Equity Tier 1 | 15.91% | 16.29% | |||||
1st COLONIAL BANCORP, INC. CONSOLIDATED BALANCE SHEETS | ||||||||
(Unaudited, in thousands) | As of March 31, 2021 | As of December 31, 2020 | ||||||
Cash and cash equivalents | $ | 28,712 | $ | 37,040 | ||||
Total investments | 132,013 | 137,027 | ||||||
Mortgage loans held for sale | 25,587 | 21,859 | ||||||
Total loans | 455,804 | 423,147 | ||||||
Less allowance for loan losses | (6,006 | ) | (5,624 | ) | ||||
Loans and leases, net | 449,798 | 417,523 | ||||||
Bank owned life insurance | 14,845 | 14,739 | ||||||
Premises and equipment, net | 1,062 | 769 | ||||||
Accrued interest receivable | 1,847 | 1,811 | ||||||
Other assets | 5,563 | 5,288 | ||||||
Total Assets | $ | 659,427 | $ | 636,056 | ||||
Total deposits | $ | 587,546 | $ | 565,820 | ||||
Other borrowings | 2,326 | 2,325 | ||||||
Subordinated debt | 10,413 | 10,404 | ||||||
Other liabilities | 4,722 | 3,821 | ||||||
Total Liabilities | 605,007 | 582,370 | ||||||
Total Shareholders’ Equity | 54,420 | 53,686 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 659,427 | $ | 636,056 | ||||
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, 2021 | March 31, 2020 | ||||||||||||||||||||||||||||||||||
Average
| Interest | Yield |
Average
| Interest | Yield | ||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 27,625 | $ | 7 | 0.10 | % | $ | 54,944 | $ | 188 | 1.38 | % | |||||||||||||||||||||||
Investment securities | 135,255 | 461 | 1.38 | % | 92,755 | 456 | 1.98 | % | |||||||||||||||||||||||||||
Mortgage loans held for sale | 22,255 | 120 | 2.19 | % | 6,396 | 47 | 2.96 | % | |||||||||||||||||||||||||||
Loans | 435,271 | 4,958 | 4.62 | % | 415,088 | 5,190 | 5.03 | % | |||||||||||||||||||||||||||
Total interest-earning assets | 620,406 | 5,546 | 3.63 | % | 569,183 | 5,881 | 4.16 | % | |||||||||||||||||||||||||||
Non-interest earning assets | 21,370 | 17,880 | |||||||||||||||||||||||||||||||||
Total average assets | $ | 641,776 | $ | 587,063 | |||||||||||||||||||||||||||||||
Interest-bearing deposits | |||||||||||||||||||||||||||||||||||
NOW and money markets | $ | 250,347 | $ | 117 | 0.19 | % | $ | 264,309 | $ | 470 | 0.72 | % | |||||||||||||||||||||||
Savings | 117,507 | 84 | 0.29 | % | 51,072 | 52 | 0.41 | % | |||||||||||||||||||||||||||
Certificates of deposit | 114,454 | 375 | 1.33 | % | 155,469 | 771 | 1.99 | % | |||||||||||||||||||||||||||
Total interest-bearing deposits | 482,308 | 576 | 0.48 | % | 470,850 | 1,293 | 1.10 | % | |||||||||||||||||||||||||||
Borrowings | 12,735 | 197 | 6.27 | % | 2,290 | 7 | 1.29 | % | |||||||||||||||||||||||||||
Total interest-bearing liabilities | 495,043 | 773 | 0.63 | % | 473,140 | 1,300 | 1.17 | % | |||||||||||||||||||||||||||
Non-interest bearing deposits | 88,649 | 62,164 | |||||||||||||||||||||||||||||||||
Other liabilities | 4,142 | 3,166 | |||||||||||||||||||||||||||||||||
Total average liabilities | 587,834 | 538,470 | |||||||||||||||||||||||||||||||||
Shareholders' equity | 53,942 | 48,593 | |||||||||||||||||||||||||||||||||
Total average liabilities and equity | $ | 641,776 | $ | 587,063 | |||||||||||||||||||||||||||||||
Net interest income | $ | 4,773 | $ | 4,581 | |||||||||||||||||||||||||||||||
Net interest margin | 3.12 | % | 3.24 | % | |||||||||||||||||||||||||||||||
Net interest spread | 3.00 | % | 3.05 | % | |||||||||||||||||||||||||||||||
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 has branches in Westville, New Jersey and Limerick, Pennsylvania. The bank also has a loan production office in Haddonfield, New Jersey and administrative offices in Cherry Hill, New Jersey. To learn more, call (877) 785-8550 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 or other natural disasters; economic conditions; civil unrest, rioting, acts or threats of terrorism, or actions taken by the local, state and Federal governments in response to such events, which could impact business and economic conditions in our market area; 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.
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