First Commerce Bank Earns $2.9 Million and $7.1 Million for the Three and Six months Ended June 30, 2022

LAKEWOOD, N.J., July 29, 2022 /PRNewswire/ -- First Commerce Bank (the "Bank") (OTC: CMRB) today reported net income of $2.9 million and $7.1 million, respectively, for the three and six months ended June 30, 2022, as compared to $4.4 million and $8.7 million, respectively, for the three and six months ended June 30, 2021. Basic earnings per common share for the three and six months ended June 30, 2022, were $0.12 and $0.30 respectively, compared to $0.19 and $0.38 for the three and six months ended June 30, 2021.

The changes in net income for the 2022 periods compared to the 2021 periods primarily reflect greater allowance expense related to growth in the loan portfolio and increases in salary and benefits expense reflecting both increases in employee benefit expense and the impact of a new bonus plan designed to attract and retain employees in a very competitive market.

Regarding the performance of the Bank, President & CEO Donald Mindiak stated, "The Bank has engaged in a concerted effort to deploy the excess liquidity that was on our balance sheet at December 31, 2021 into higher yielding interest earning assets in the form of both loans and investment securities. This initiative has proven successful as we have realized growth in the loan and investment portfolios of $78.3 million and $40.4 million, respectively, year-to-date. As a result of the strong loan growth exhibited during this six-month period, an increase in the allowance for loan losses of approximately $512,000 was recorded. The Bank continues to produce competitive operating results, evidenced by our strong net interest margin, return on equity and efficiency ratios, and remains on track to grow our asset and core deposit base consistent with capital levels and as opportunities present themselves".

Financial Highlights

• Net interest margin increased by fifteen basis points to 4.06% for the second quarter of 2022 as compared to 3.91% for the second quarter of 2021 and increased by thirteen basis points to 4.05% year-to-date for 2022 as compared to 3.92% year-to-date for 2021.
• Total yield on interest earning assets increased by four basis points to 4.24% for the second quarter of 2022 as compared to 4.20% for the second quarter of 2021 and decreased by one basis point to 4.24% year-to-date for 2022 as compared to 4.25% year-to-date for 2021.
• The cost of interest-bearing liabilities decreased by nine basis points to 0.32% for the second quarter of 2022 compared to 0.41% for the second quarter of 2021 and decreased by fourteen basis points to 0.31% year-to-date for 2022 as compared to 0.45% year-to-date for 2021.
• The efficiency ratio was 56.37% year-to-date for 2022 as compared to 47.24% year-to-date for 2021.
• Loans receivable, net increased by $78.3 million or 8.6% to $987.4 million at June 30, 2022, as compared to $909.1 million at December 31, 2021.
• The net loans to deposits ratio increased to 101.34% at June 30, 2022, from 96.87% at June 30, 2021.
• Return on equity was 1.23% at June 30, 2022 compared to 1.60% at June 30, 2021. 

Balance Sheet Review

Total assets increased by $42.3 million or 3.7% to $1.18 billion at June 30, 2022 from $1.13 billion at December 31, 2021. The increase in total assets was mainly related to increases in investment securities and loans receivable, net, partially offset by a decrease in total cash and cash equivalents.

Total cash and cash equivalents decreased by $76.2 million or 67.2% to $37.1 million at June 30, 2022 from $113.3 million at December 31, 2021. This decrease was primarily due to the investment of excess liquidity into investment securities and loans receivable, net, previously discussed.

Loans receivable, net, increased by $78.3 million or 8.6% to $987.4 million at June 30, 2022 from $909.1 million at December 31, 2021. Total loan increases for the six months ended June 30, 2022 occurred primarily as a result of a $79.8 million increase in commercial mortgages and a $22.2 million increase in construction loans, partially offset by a $13.1 million decrease in SBA loans and a $7.2 million decrease in commercial loans. The allowance for loan losses increased by $512,000 to $18.2 million or 1.81% of gross loans at June 30, 2022 as compared to $17.7 million or 1.91% of gross loans at December 31, 2021.

Total investment securities increased by $40.4 million or 87.3% to $86.6 million at June 30, 2022 from $46.2 million at December 31, 2021. The increase in investment securities resulted primarily from investment security purchases totaling $51.1 million, partially offset by $9.2 million in mortgage-backed security amortization and $1.5 million in municipal bond maturities.

Deposit liabilities increased by $32.4 million or 3.4% to $974.3 million at June 30, 2022 from $941.9 million at December 31, 2021. The increase in total deposits occurred primarily as a result of a $12.2 million increase in non-interest-bearing deposits, an $8.8 million increase in money market deposits, a $6.0 million increase in time deposits, a $4.8 million increase savings deposits and a $1.6 million increase in NOW deposits, partially offset by a $983,000 decrease in interest checking deposits.

Stockholders' equity increased by $7.9 million or 4.6% to $180.2 million at June 30, 2022 from $172.3 million at December 31, 2021. The increase in stockholders' equity was primarily attributable to net income of $7.1 million for the six months ended June 30, 2022 and increases of $714,000 and $728,000 in common stock and additional paid in capital, respectively as a result of the exercise of certain stock options, partially offset by a decrease of $706,000 in other comprehensive income.

Three Months of Operations

Net interest income increased by $809,000 or 7.7% to $11.27 million for the three months ended June 30, 2022 from $10.46 million for the three months ended June 30, 2021.

Interest income increased by $634,000 or 5.6% to $12.0 million for the three months ended June 30, 2022 from $11.4 million for the three months ended June 30, 2021. The increase in interest income resulted primarily from an increase in the average balance of loans receivable, net of $62.6 million or 6.9% to $964.7 million for the three months ended June 30, 2022 compared to $902.1 million for the three months ended June 30, 2021 and an increase in the average balance of investment securities of $23.2 million or 42.5% to $77.9 million for the three months ended June 30, 2022 from $54.7 million for the three months ended June 30, 2021, partially offset by a $267,000 or 53.6% decrease in fees from loans to $231,000 for the three months ended June 30, 2022 from $498,000 for the three months ended June 30, 2021. The decrease in loan fees is primarily related to the reduction in fees received from the Paycheck Protection Program - (PPP) as the bulk of the Bank's PPP loans were forgiven, and fees earned, in 2021.

Interest expense decreased by $175,000 or 18.6% to $768,000 for the three months ended June 30, 2022 from $943,000 for the three months ended June 30, 2021. The decrease in interest expense occurred primarily as a result of a decrease in the average cost of interest-bearing liabilities of nine basis points to 0.32% for the three months ended June 30, 2022 from 0.41% for the three months ended June 30, 2021, partially offset by an increase in average balance of deposit liabilities of $49.9 million or 5.4% to $974.6 million for the three months ended June 30, 2022 from $924.7 million for the three months ended June 30, 2021. The decrease in the average cost of interest-bearing liabilities resulted primarily from the persistent lower interest rate environment and the active management of liability pricing.

Net interest margin increased by fifteen basis points to 4.06% for the three months ended June 30, 2022 compared to 3.91% for the three months ended June 30, 2021. The increase in the net interest margin is primarily attributable an increase in the average balance of interest earning assets of $47.5 million or 4.4% to $1.124 billion for the three months ended June 30, 2022 compared to $1.077 billion for the three months ended June 30, 2021 and an increase of four basis points on the yield of average interest earning assets to 4.24% for the three months ended June 30, 2022 from 4.20% for the three months ended June 30, 2021.

Non-interest income increased by $225,000 or 224.1% to $326,000 for the three months ended June 30, 2022 from $101,000 for the three months ended June 30, 2021. The increase in total non-interest income resulted primarily from BOLI income of $165,000 for the three months ended June 30, 2022 from no such income for the three months ended June 30, 2021. The Bank made a $25.0 million BOLI purchase during the fourth quarter of 2021 which accounts for the lack of BOLI income for the three months ended June 30, 2021. This was partially offset by a decrease in service charges and fees of $48,000 or 23.5% to $156,000 for the three months ended June 30, 2022 from $204,000 for the three months ended June 30, 2021.

Non-interest expense increased by $1.1 million or 20.6% to $6.4 million for the three months ended June 30, 2022 compared to $5.3 million for the three months ended June 30, 2021. Salaries and employee benefits increased by $737,000 or 23.4% to $3.9 million for the three months ended June 30, 2022 as compared to $3.2 million for the three months ended June 30, 2021. The increase in salaries and employee benefits resulted primarily from a 27% year-over-year increase in employee benefits costs as well as increased salary expense. In an effort to both retain and attract qualified personnel, the Bank instituted an industry competitive bonus plan which was not in place in 2021. Occupancy and equipment expense increased by $66,000 or 8.8% to $815,000 for the three months ended June 30, 2022 as compared to $749,000 for the three months ended June 30, 2021. The increase in occupancy and equipment expense occurred primarily as a result of the renewal and increase in several service contracts. Other non-interest expense increased by $294,000 or 20.8% to $1.7 million for the three months ended June 30, 2022 from $1.4 million for the three months ended June 30, 2021. Other non-interest expense consists primarily of marketing, professional fees, data processing, FDIC assessments and other expenses. The increase in other non-interest expense occurred primarily as a result of an increase in other expenses of $347,000 or 55.7% to $970,000 for the three months ended June 30, 2022 from $623,000 for the three months ended June 30, 2021, partially offset by a decrease in professional fees of $149,000 or 29.1% to $361,000 for the three months ended June 30, 2022 from $510,000 for the three months ended June 30, 2021. The increase in other expenses resulted primarily from an increase in unfunded loan commitments.

The income tax provision decreased by $407,000 or 28.6% to $1.0 million for the three months ended June 30, 2022 from $1.4 million for the three months ended June 30, 2021. The decrease in the income tax provision resulted primarily from a decrease in earnings before income taxes of $1.9 million or 32.2% to $4.0 million for the three months ended June 30, 2022 from $5.8 million for the three months ended June 30, 2021.  

Six Months of Operations

Net interest income increased by $1.7 million or 8.2% to $22.3 million for the six months ended June 30, 2022 from $20.6 million for the six months ended June 30, 2021.

Interest income increased by $1.1 million or 5.0% to $23.7 million for the six months ended June 30, 2022 from $22.6 million for the six months ended June 30, 2021. The increase in interest income resulted primarily from an increase in the average balance of loans receivable of $60.4 million or 6.8% to $947.4 million for the six months ended June 30, 2022 compared to $887.0 million for the six months ended June 30, 2021 and an increase in the average balance of investment securities of $7.6 million or 13.4% to $64.5 million for the six months ended June 30, 2022 from $56.9 million for the six months ended June 30, 2021 and a $150,000 or 14.2% increase in fees from loans to $1.20 million for the six months ended June 30, 2022 from $1.06 million for the six months ended June 30, 2021.

Interest expense decreased by $554,000 or 27.2% to $1.48 million for the six months ended June 30, 2022 from $2.03 million for the six months ended June 30, 2021. The decrease in interest expense occurred primarily as a result of a decrease in the average cost of interest-bearing liabilities of fourteen basis points to 0.31% for the six months ended June 30, 2022 from 0.45% for the six months ended June 30, 2021, partially offset by an increase in average balance of deposit liabilities of $59.3 million or 6.5% to $965.2 million for the six months ended June 30, 2022 from $905.9 million for the six months ended June 30, 2021. The decrease in the average cost of interest-bearing liabilities resulted primarily from the persistent lower interest rate environment and the active management of liability pricing.

Net interest margin increased by thirteen basis points to 4.05% for the six months ended June 30, 2022 compared to 3.92% for the six months ended June 30, 2021. The increase in the net interest margin is primarily attributable an increase in the average balance of interest earning assets of $55.0 million or 5.2% to $1.11 billion for the six months ended June 30, 2022 compared to $1.06 billion for the six months ended June 30, 2022 partially offset by a decrease of one basis point on the yield of average interest earning assets to 4.24% for the six months ended June 30, 2022 from 4.25% for the six months ended June 30, 2021.

Non-interest income increased by $386,000 or 127.2% to $689,000 for the six months ended June 30, 2022 from $303,000 for the six months ended June 30, 2021. The increase in total non-interest income resulted primarily from BOLI income of $326,000 for the six months ended June 30, 2022 from no such income for the six months ended June 30, 2021. The Bank made a $25.0 million BOLI purchase during the fourth quarter of 2021 which accounts for the lack of BOLI income for the six months ended June 30, 2021. This was partially offset by a decrease in service charges and fees of $59,000 or 15.0% to $332,000 for the six months ended June 30, 2022 from $391,000 for the six months ended June 30, 2021.

Non-interest expense increased by $3.07 million or 31.2% to $12.93 million for the six months ended June 30, 2022 compared to $9.86 million for the six months ended June 30, 2021. Salaries and employee benefits increased by $2.0 million or 33.3% to $8.0 million for the six months ended June 30, 2022 as compared to $6.0 million for the six months ended June 30, 2021. The increase in salaries and employee benefits resulted primarily from a 27% year-over-year increase in employee benefits costs as well increased salary expense. In an effort to both retain and attract qualified personnel, the Bank instituted an industry competitive bonus plan which was not in place in 2021. Occupancy and equipment expense increased by $90,000 or 5.4% to $1.77 million for the six months ended June 30, 2022 as compared to $1.68 million for the six months ended June 30, 2021. The increase in occupancy and equipment expense occurred primarily as a result of the renewal and increase in several service contracts. Other non-interest expense increased by $972,000 or 45.4% to $3.11 million for the six months ended June 30, 2022 from $2.14 million for the six months ended June 30, 2021. Other non-interest expense consists primarily of marketing, professional fees, data processing, FDIC assessments and other expenses. The increase in other non-interest expense occurred primarily as a result of an increase in miscellaneous loan expense of $535,000 related to an increase in unfunded loan commitments due to the growth in the loan portfolio during 2022 from a credit of $146,000 for the six months ended June 30, 2021. FDIC Assessment increased by $201,000 or 152.7%. Marketing expense increased by $27,000 or 40.3% to $94,000 for the six months ended June 30, 2022 from $67,000 for the six months ended June 30, 2021. The increase in marketing expense occurred primarily as a result of a reconstitution of marketing efforts subsequent to a COVID related marketing hiatus.

The income tax provision decreased by $523,000 or 17.7% to $2.44 million for the six months ended June 30, 2022 from $2.96 million for the six months ended June 30, 2021. The decrease in the income tax provision resulted primarily from a decrease in earnings before income taxes of $2.0 million or 17.6% to $9.6 million for the six months ended June 30, 2022 from $11.6 million for the six months ended June 30, 2021.

Asset Quality

The allowance for loan losses increased by $512,000 or 2.9% and $1.2 million or 7.2% from December 31, 2021 and June 30, 2021, respectively to $18.2 million at June 30, 2022 from $17.7 million at December 31, 2021 and $17.0 million at June 30, 2021. The increase in the allowance for loan losses is primarily attributable to an increase in loans receivable, net of $78.3 million or 8.6% to $987.4 million at June 30, 2022 from $909.1 million at December 31, 2021 and $102.8 million or 11.6% from $884.6 million at June 30, 2021. The Bank had non-accrual loans totaling $13.6 million or 1.35% of gross loans at June 30, 2022 as compared to $8.8 million or 0.94% of gross loans at December 31, 2021 and $8.96 million or 0.99% of gross loans at June 30, 2021.

The allowance for loan losses was $18.2 million or 1.81% of gross loans at June 30, 2022 as compared to $17.7 million or 1.91% of gross loans at December 31, 2021 and $17.7 million or 1.96% of gross loans at June 30, 2021. The allowance for loan losses was 134.2% of non-accrual loans at June 30, 2022, 202.5% of non-accrual loans at December 31, 2021 and 197.1% of non-accrual loans at June 30, 2021.  

About First Commerce Bank

Established in 2006 and headquartered in Lakewood, New Jersey, the Bank has offices in Allentown, Bordentown, Closter, Englewood, Fairfield, Freehold, Lakewood, Montvale, Robbinsville and Teaneck, New Jersey. The Bank provides businesses and individuals a wide range of loans, deposit products and retail and commercial banking services. For more information, please go to www.firstcommercebank.com.

Forward-Looking Statements

This release, like many written and oral communications presented by First Commerce Bank, and our authorized officers, may contain certain forward-looking statements regarding our prospective performance and strategies within the meaning of Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of said safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the Bank, are generally identified by use of the words "anticipate," "believe," "estimate," "expect," "intend," "plan," "project," "seek," "strive," "try," or future or conditional verbs such as "could," "may," "should," "will," "would," or similar expressions. Our ability to predict results or the actual effects of our plans or strategies is inherently uncertain. Accordingly, actual results may differ materially from anticipated results.

In addition to the factors previously disclosed in prior Bank communications and those identified elsewhere, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the impact of the COVID-19 pandemic on the Bank, its operations and its customers, changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; inflation; customer acceptance of the Bank's products and services; customer borrowing, repayment, investment and deposit practices; customer disintermediation; the introduction, withdrawal, success and timing of business initiatives; competitive conditions; the inability to realize cost savings or revenues or to implement integration plans and other consequences associated with certain corporate initiatives; economic conditions; and the impact, extent and timing of technological changes, capital management activities, and actions of governmental agencies and legislative and regulatory actions and reforms.  

SOURCE FIRST COMMERCE BANK

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