☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2025
or
- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
FDIC Certificate Number: 58481 FIRST BANK(Exact Name of Registrant as Specified in its Charter)
New Jersey 20-8164471(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification No.)
2465 Kuser Road, Hamilton, New Jersey 08690(Address of Principal Executive Offices) (Zip Code)
(877) 821-2265(Registrant's Telephone Number, Including Area Code)
Not Applicable(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each class | Trading Symbol | Name of each exchange on which registered |
Common Stock, par value $5.00 per share | FRBA | NASDAQ Global Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☒
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of May 8, 2025, there were 25,005,834 shares of the registrant's Common Stock, par value $5.00 per share, outstanding.
TABLE OF CONTENTSPage
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (unaudited)
Consolidated Statements of Financial Condition3
Consolidated Statements of Income4
Consolidated Statements of Comprehensive Income5
Consolidated Statements of Changes in Stockholders' Equity6
Consolidated Statements of Cash Flows7
Notes to Condensed Consolidated Financial Statements (unaudited)9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 36
Item 3. Quantitative and Qualitative Disclosures about Market Risk 56
Item 4. Controls and Procedures 57
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 57
Item 1A. Risk Factors 57
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities 57
Item 3. Defaults Upon Senior Securities 58
Item 4. Mine Safety Disclosures 58
Item 5. Other Information 58
Item 6. Exhibits 58
Exhibit Index 58
Signatures 58
PART I - FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (unaudited)FIRST BANK CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | |||
(in thousands, except for share data, unaudited) | |||
March 31, 2025 | December 31, 2024 | ||
Assets | |||
Cash and due from banks $ | 32,396 | $ | 18,252 |
Restricted cash | 11,910 | 14,270 | |
Interest bearing deposits with banks | 243,778 | 239,392 | |
Cash and cash equivalents | 288,084 | 271,914 | |
Interest bearing time deposits with banks | 743 | 743 | |
Investment securities available for sale, at fair value (amortized cost of $90,393 and $84,083, respectively) | 85,059 | 77,413 | |
Equity securities, at fair value | 1,898 | 1,870 | |
Investment securities held to maturity, net of allowance for credit losses of $209 and $206, respectively (fair value of $42,565 and $42,770, respectively) | 46,387 | 47,123 | |
Restricted investment in bank stocks | 15,933 | 14,333 | |
Other investments | 13,350 | 11,612 | |
Loans held for sale | 618 | - | |
Loans, net of deferred fees and costs | 3,236,039 | 3,144,266 | |
Less: Allowance for credit losses | (39,223) | (37,773) | |
Net loans | 3,196,816 | 3,106,493 | |
Premises and equipment, net | 21,267 | 21,351 | |
Other real estate owned, net | 4,822 | 5,637 | |
Accrued interest receivable | 14,889 | 14,267 | |
Bank-owned life insurance | 86,258 | 85,553 | |
Goodwill | 44,166 | 44,166 | |
Other intangible assets, net | 8,341 | 8,827 | |
Deferred income taxes, net | 25,178 | 25,528 | |
Other assets | 26,950 | 43,516 | |
Total assets $ | 3,880,759 | $ | 3,780,346 |
Liabilities and Stockholders' Equity | |||
Liabilities: | |||
Non-interest bearing deposits $ | 535,584 | $ | 519,320 |
Interest bearing deposits | 2,584,210 | 2,536,576 | |
Total deposits | 3,119,794 | 3,055,896 | |
Borrowings | 281,867 | 246,933 | |
Subordinated debentures | 29,981 | 29,954 | |
Accrued interest payable | 4,887 | 3,820 | |
Other liabilities | 29,315 | 34,587 | |
Total liabilities | 3,465,844 | 3,371,190 | |
Stockholders' Equity: | |||
Preferred stock, par value $2 per share; 10,000,000 shares authorized; no shares issued and outstanding | - | - | |
Common stock, par value $5 per share; 40,000,000 shares authorized; 27,576,676 shares issued and 25,045,612 shares outstanding and 27,375,439 shares issued and 25,100,829 shares outstanding, respectively | 136,220 | 135,495 | |
Additional paid-in capital | 124,555 | 124,524 | |
Retained earnings | 184,657 | 176,779 | |
Accumulated other comprehensive loss | (3,938) | (4,925) | |
Treasury stock, 2,531,064 and 2,274,610 shares, respectively | (26,579) | (22,717) | |
Total stockholders' equity | 414,915 | 409,156 | |
Total liabilities and stockholders' equity $ | 3,880,759 | $ | 3,780,346 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
FIRST BANK CONSOLIDATED STATEMENTS OF INCOME (in thousands, except for share data, unaudited) Three Months Ended March 31,2025 | 2024 | ||||||
Interest and Dividend Income | |||||||
Investment securities-taxable | $ | 1,188 | $ | 1,182 | |||
Investment securities-tax-exempt | 51 | 38 | |||||
Interest bearing deposits with banks, Federal funds sold and other | 2,997 | 3,025 | |||||
Loans, including fees | 51,552 | 49,319 | |||||
Total interest and dividend income | 55,788 | 53,564 | |||||
Interest Expense | ||
Deposits | 20,844 | 20,786 |
Borrowings | 2,412 | 2,116 |
Subordinated debentures | 440 | 344 |
Total interest expense | 23,696 | 23,246 |
Net interest income | 32,092 | 30,318 |
Credit loss expense (benefit) | 1,544 | (698) |
Net interest income after credit loss expense (benefit) | 30,548 | 31,016 |
Non-Interest Income | ||
Service fees on deposit accounts | 356 | 344 |
Loan fees | 326 | 102 |
Income from bank-owned life insurance | 793 | 785 |
Gains on sale of loans, net | 29 | 229 |
Gains on recovery of acquired loans | 24 | 118 |
Other non-interest income | 443 | 386 |
Total non-interest income | 1,971 | 1,964 |
Non-Interest Expense | ||
Salaries and employee benefits | 11,118 | 10,038 |
Occupancy and equipment | 2,464 | 2,026 |
Legal fees | 368 | 316 |
Other professional fees | 726 | 756 |
Regulatory fees | 684 | 602 |
Directors' fees | 282 | 242 |
Data processing | 805 | 806 |
Marketing and advertising | 399 | 296 |
Travel and entertainment | 236 | 244 |
Insurance | 214 | 244 |
Other real estate owned expense, net | 920 | 88 |
Other expense | 2,168 | 2,152 |
Total non-interest expense | 20,384 | 17,810 |
Income Before Income Taxes | 12,135 | 15,170 |
Income tax expense | 2,754 | 2,658 |
Net Income | $ 9,381 | $ 12,512 |
Basic earnings per common share | $ 0.37 | $ 0.50 |
Diluted earnings per common share | $ 0.37 | $ 0.50 |
Basic weighted average common shares outstanding | 25,118,062 | 25,039,949 |
Diluted weighted average common shares outstanding | 25,269,002 | 25,199,381 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
FIRST BANK CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands, unaudited) Three Months Ended March 31,2025 | 2024 | ||||
Net income | $ | 9,381 | $ | 12,512 | |
Other comprehensive income (loss): | |||||
Unrealized holding gains (losses) on investments arising during the period | 1,336 | (299) | |||
Income tax effect | (349) | 157 | |||
Total other comprehensive income (loss), net of tax | 987 | (142) | |||
Total comprehensive income | $ | 10,368 | $ | 12,370 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
FIRST BANK CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (in thousands, except share data, unaudited)Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Treasury Stock | Total Stockholders' Equity | |
Balance-December 31, 2024 | $ 135,495 | $ 124,524 | $ 176,779 | $ (4,925) | $ (22,717) | $ 409,156 |
Net income | - | - | 9,381 | - | - | 9,381 |
Other comprehensive income, net of tax | - | - | - | 987 | - | 987 |
Vesting of restricted stock, 114,104 shares | 570 | (570) | - | - | - | - |
Exercise of stock options, 30,950 shares | 155 | 47 | - | - | - | 202 |
Stock-based compensation expense | - | 554 | - | - | - | 554 |
Cash dividends - common, $0.06 per share | - | - | (1,503) | - | - | (1,503) |
Purchase of 256,454 shares of common stock | - | - | - | - | (3,862) | (3,862) |
Balance-March 31, 2025 | $ 136,220 | $ 124,555 | $ 184,657 | $ (3,938) | $ (26,579) | $ 414,915 |
Balance-December 31, 2023 | $ 134,552 | $ 122,881 | $ 140,563 | $ (5,718) | $ (21,378) | $ 370,900 |
Net income | - | - | 12,512 | - | - | 12,512 |
Other comprehensive loss, net of tax | - | - | - | (142) | - | (142) |
Vesting of restricted stock, 90,306 shares | 452 | (452) | - | - | - | - |
Stock-based compensation expense | - | 484 | - | - | - | 484 |
Cash dividends - common, $0.06 per share | - | - | (1,500) | - | - | (1,500) |
Balance-March 31, 2024 | $ 135,004 | $ 122,913 | $ 151,575 | $ (5,860) | $ (21,378) | $ 382,254 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
FIRST BANK CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, unaudited)Three Months Ended March 31,
2025 | 2024 | |||
Cash flows from operating activities: | ||||
Net income | $ | 9,381 | $ | 12,512 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||||
Credit loss expense (benefit) | 1,544 | (698) | ||
Depreciation and amortization of premises and equipment | 626 | 508 | ||
Accretion and amortization of discounts/premiums on investment securities, net | (7) | 64 | ||
Accretion and amortization of fair value adjustments, net | (2,771) | (4,478) | ||
Accretion and amortization of deferred loan fees and costs, net | (771) | (676) | ||
Amortization of core deposit intangible assets and loan servicing rights | 494 | 556 | ||
Amortization of subordinated debentures issuance cost | 27 | 28 | ||
Noncash operating lease expense | 653 | 581 | ||
Stock-based compensation | 554 | 484 | ||
Net (gain) loss on equity securities | (27) | 19 | ||
Originations of loans held for sale | (618) | (3,171) | ||
Proceeds from sale of loans held for sale | - | 3,803 | ||
Gains on sale of loans | (29) | (229) | ||
Loss on sale of premises and equipment | 22 | - | ||
Increase in other real estate owned valuation allowance | 815 | - | ||
Income from bank-owned life insurance | (793) | (785) | ||
Changes in assets and liabilities: | ||||
Increase in accrued interest receivable | (622) | (430) | ||
Decrease (increase) in intangible and other assets | 18,427 | (480) | ||
Increase in accrued interest payable | 1,068 | 1,200 | ||
(Decrease) increase in other liabilities | (7,814) | 1,289 | ||
Net cash provided by operating activities | 20,159 | 10,097 |
Cash flows from investing activities:
Net (increase) decrease in loans | (88,653) | 22,138 | ||
Proceeds from sale of loans not originated for sale | 517 | - | ||
Purchases of investment securities available for sale | (12,547) | (8,540) | ||
Purchases of investment securities held to maturity | (157) | (669) | ||
Proceeds from maturities, calls and paydowns of investment securities available for sale | 6,253 | 7,468 | ||
Proceeds from maturities, calls and paydowns of investment securities held to maturity | 880 | 1,591 | ||
Purchase of restricted stocks | (3,850) | (5,400) | ||
Redemption of restricted stocks | 2,250 | 5,739 | ||
Purchases of other investments | (1,738) | (256) | ||
Proceeds from other investments | - | 57 | ||
Purchases of premises and equipment | (545) | (350) | ||
Redemption of bank-owned life insurance | - | 323 | ||
Benefit proceeds on bank-owned life insurance | - | 187 | ||
Net cash (used in) provided by investing activities | (97,590) | 22,288 | ||
Cash flows from financing activities: | ||||
Net increase in deposits | 63,815 | 2,654 | ||
Proceeds from borrowings | 85,000 | 120,000 | ||
Repayments of borrowings | (50,051) | (127,526) | ||
Redemption of subordinated debentures | - | (25,000) | ||
Proceeds from stock option exercises | 202 | - | ||
Cash dividends paid on common stock | (1,503) | (1,500) | ||
Purchase of treasury stock | (3,862) | - | ||
Net cash provided by (used in) financing activities | 93,601 | (31,372) | ||
Net increase in cash and cash equivalents | 16,170 | 1,013 | ||
Cash and cash equivalents at beginning of year | 271,914 | 227,951 | ||
Cash and cash equivalents at end of period | $ 288,084 | $ 228,964 | ||
7 | ||||
Three Months Ended March 31, | |||||
2025 | 2024 | ||||
Supplemental disclosures of cash flow information: | |||||
Cash paid for interest on deposits and borrowings | $ | 22,519 $ | 21,980 | ||
Cash paid for income taxes | $ | 705 $ | 80 | ||
Supplemental schedule of non-cash activities: | |||||
Vesting of restricted stock | $ | 570 $ | 452 | ||
Transfer of loans to other real estate owned | $ | - $ | 5,999 | ||
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 1 - Summary of Significant Accounting PoliciesBasis of Financial Statement Presentation
The condensed consolidated financial statements of First Bank have been prepared in conformity with generally accepted accounting principles in the United States of America ("GAAP"). The condensed consolidated financial statements are prepared on an accrual basis and include the accounts of First Bank's wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated from the accompanying condensed consolidated financial statements. As used in this Quarterly Report on Form 10-Q, "the Bank" and "the Company" refer to First Bank and its consolidated subsidiaries unless otherwise noted.
The Consolidated Statement of Financial Condition as of March 31, 2025, the Consolidated Statements of Income, the Consolidated Statements of Comprehensive Income and the Consolidated Statements of Changes in Stockholders' Equity for the three months ended March 31, 2025 and 2024, and the Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 2024 are unaudited. The Consolidated Statement of Financial Condition as of December 31, 2024 was derived from the audited Consolidated Statement of Financial Condition as of that date.
In the opinion of management, all adjustments and disclosures which are generally routine and recurring in nature and necessary for a fair statement of interim results have been made. In preparing the unaudited condensed consolidated financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the Consolidated Statements of Financial Condition and results of operations for the periods indicated. Material estimates that are particularly susceptible to change are: the determination of the fair value of acquired loans; the allowance for credit losses and the evaluation of goodwill for impairment. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the consolidated financial statements in the period they are deemed necessary. While management uses its best judgment, actual results could differ from those estimates.
The interim unaudited condensed consolidated financial statements included herein have been prepared in accordance with instructions for the Quarterly Report on Form 10-Q and the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP and industry practice have been condensed or omitted from interim reporting pursuant to SEC rules. The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results which may be expected for the entire year. The Company has evaluated subsequent events for potential recognition and/or disclosure through the date the condensed consolidated financial statements in this Quarterly Report on Form 10-Q were available to be issued. Interim financial statements should be read in conjunction with the condensed consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as filed with the FDIC.
Segment Reporting
The Company's operations are solely in the financial services industry and provides a range of regional community banking services to retail and commercial customers. The Company operates throughout New Jersey, Pennsylvania and in Florida. Operating segments are defined as components of an entity for which separate financial information is available and is regularly reviewed by the chief operating decision maker ("CODM"). The Company's CODM is the Chief Executive Officer. The CODM makes operating decisions and manages the activities of the business on a consolidated basis. Therefore, management concluded the Company has a single operating segment, and therefore one reportable segment.
Further, the CODM allocates resources and assesses performance based on an ongoing review of the Company's consolidated financial results. Specifically, the CODM reviews net income, reported within the consolidated statements of income, along with information in consolidated statement of financial condition to decide whether to reinvest profits into the Company or other strategic investments. Refer to the Consolidated Statements of Financial Condition and Consolidated Statements of Income for net income and all significant expenses regularly provided to and reviewed by the CODM.
9
Note 1 - Summary of Significant Accounting Policies (continued)Recent Accounting Standards Not Yet Adopted
In December 2023, the "Financial Accounting Standards Board (FASB)" issued "Accounting Standard Update (ASU)" 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("ASU 2023-09"). The amendments in this ASU require public entities to disclose in their rate reconciliation table additional categories of information about federal, state and foreign income taxes and to provide more details about the reconciling items in some categories if items meet a quantitative threshold. ASU 2023-09 also requires all entities to disclose income taxes paid, net of refunds, disaggregated by federal, state and foreign taxes for annual periods and to disaggregate the information by jurisdiction based on a quantitative threshold, among other things. ASU 2023-09 is effective for the Company for annual periods beginning after December 15, 2024. The Company will update additional income tax disclosures in its Form 10-K for the year ended December 31, 2025. In November 2024, the FASB issued ASU 2024-03, "Disaggregation of Income Statement Expenses (DISE)." ("ASU 2024-03") requires additional disclosure of the nature of expenses included in the income statement to be presented in a tabular format in the footnotes to the financial statements. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The amendments in ASU 2024-03 should be applied on a prospective basis, although retrospective application is permitted. ASU 2024-03 is not expected to have a material impact on the Company's financial statements. Note 2 - Accumulated Other Comprehensive LossThe components of accumulated other comprehensive loss included in stockholders' equity are as follows:
March 31, 2025 December 31, 2024(in thou | sands) | ||||
Net unrealized losses on investment securities available for sale | $ | (5,334) | $ | (6,670) | |
Income tax effect | 1,396 | 1,745 | |||
Accumulated other comprehensive loss | $ | (3,938) | $ | (4,925) | |
Note 3 - Earnings Per Share | |||||
Basic earnings per share represent the effect of earnings upon the weighted average number of shares and participating securities outstanding for the period. Diluted earnings per share reflects the effect of earnings upon weighted average shares including the potential dilution that could occur if securities or contracts to issue common stock were converted or exercised, utilizing the treasury stock method. Unvested stock awards, which contain non-forfeitable rights to dividends whether paid or unpaid (i.e., participating securities), are included in the number of shares outstanding for both basic and diluted earnings per share. There are no securities that could potentially dilute basic earnings per share that were not included in the computation of diluted earnings per share.
10
Note 3 - Earnings Per Share- (Continued)The following table presents a reconciliation of the calculation of basic and diluted earnings per share for the periods indicated:
Three Months Ended March 31,2025 | 2024 | ||||
(in thousands, exce | pt per | share data) | |||
Net income available to common stockholders | $ | 9,381 | $ | 12,512 | |
Basic weighted average common shares outstanding | 25,118 | 25,040 | |||
Effect of dilutive common stock equivalents | 151 | 159 | |||
Diluted weighted average common shares outstanding | 25,269 | 25,199 | |||
Basic earnings per common share | $ | 0.37 | $ | 0.50 | |
Diluted earnings per common share | $ | 0.37 | $ | 0.50 | |
Number of common stock equivalents excluded from the calculation of diluted earnings per share as the exercise prices were greater than the average price of the common stock | 505 | 576 | |||
Note 4 - Stock-Based Compensation | |||||
On April 24, 2024, the Company's shareholders approved the First Bank 2024 Equity Incentive Plan. Consistent with prior equity plans, the 2024 Equity Incentive Plan allows for the grant of incentive options, non-qualified options and restricted stock to officers, employees and members of the Board of Directors. The 2024 Equity Incentive Plan increased the number of awards available for grant to 1,300,000, at which time all awards available for grant under predecessor plans were cancelled.
The following table presents the number of awards authorized, cumulative granted awards, net of cancellations, and awards available for grant at March 31, 2025:
Awards authorized | 3,483,683 |
Cumulative granted awards, net of cancellations | 2,391,085 |
Awards available for grant | 1,092,598 |
The Company issues shares from its authorized but unissued common stock to satisfy stock option exercises and restricted stock grants. Stock-based compensation expense recognized in earnings for the three months ended March 31, 2025 and 2024 was $554,000 and $484,000, respectively. |
11
The Company's stock option activity for the three months ended March 31, 2025 and 2024 is summarized in the following tables:
Weighted | Weighted Average Remaining | Aggregate | |||||||
Shares | Average Exercise Price | Contractual Life (years) | Intrinsic Value | ||||||
Outstanding-December 31, 2024 | 678,366 | $ | 11.02 | ||||||
Exercised | (30,950) | 6.54 | |||||||
Expired | (199) | 11.57 | |||||||
Outstanding - March 31, 2025 | 647,217 | $ | 11.23 | 4.4 | $ 2,316,693 | ||||
Exercisable- March 31, 2025 | 609,466 | $ | 11.08 | 4.1 | $ 2,276,314 | ||||
Weighted | Weighted Average Remaining | Aggregate | |||||||
Shares | Average Exercise Price | Contractual Life (years) | Intrinsic Value | ||||||
Outstanding-December 31, 2023 | 722,017 | $ | 10.61 | ||||||
Granted | 29,432 | 13.75 | |||||||
Expired | (91) | 14.25 | |||||||
Outstanding - March 31, 2024 | 751,358 | $ | 10.73 | 5.0 | $ 2,363,915 | ||||
Exercisable-March 31, 2024 | 639,422 | $ | 10.33 | 4.3 | $ 2,268,610 | ||||
No options were granted in the first quarter of 2025. All options granted in 2024 and previous years have a term that shall not exceed ten years and a vesting period of one to three years. The exercise price of the options granted under the Plan and previous plans must be at least 100% of the fair market value of the Company's common stock on the date of grant. Terms and conditions of restricted stock awards are determined by the Board of Directors at the time of grant.
The aggregate intrinsic values in the preceding tables represents the pre-tax intrinsic values calculated by multiplying the number of in-the-money shares by the difference between the Company's closing stock price on the last trading day of the current reporting period and the exercise price.
Unrecognized compensation expense related to unvested stock options was $162,000 as of March 31, 2025 which is expected to be recognized over a weighted average period of 1.4 years.
12
Restricted stock activity under the Company's stock-based compensation plans for the three months ended March 31, 2025 and 2024 is summarized in the following tables:
Weighted | Weighted Average | ||||
Restricted | Average Grant Date | Remaining Contractual | |||
Shares | Fair Value | Life (years) | |||
Outstanding-December 31, 2024 | 276,378 | $ | 12.29 | ||
Granted | 170,766 | 13.86 | |||
Vested | (114,104) | 12.39 | |||
Forfeited | (479) | 12.37 | |||
Outstanding - March 31, 2025 | 332,561 | $ | 13.06 | 2.1 | |
Weighted | Weighted Average | ||||
Restricted | Average Grant Date | Remaining Contractual | |||
Shares | Fair Value | Life (years) | |||
Outstanding-December 31, 2023 | 238,751 | $ | 12.17 | ||
Granted | 133,844 | 12.13 | |||
Vested | (90,306) | 12.30 | |||
Forfeited | (5,517) | 12.42 | |||
Outstanding - March 31, 2024 | 276,772 | $ | 12.10 | 2.1 | |
All restricted stock awards granted have a vesting period of one to three years. Unrecognized compensation expense related to restricted stock was $3.7 million as of March 31, 2025 which is expected to be recognized over a weighted average period of 2.4 years.
Note 5 - Investment Securities Available-for-Sale ("AFS") SecuritiesThe amortized cost and estimated fair value of investment securities available for sale are as follows as of the dates indicated, with gross unrealized gains and losses therein:
March 31, 2025Gross | Gross | ||
Amortized | Unrealized | Unrealized | Fair |
Cost | Gains | Losses | Value |
U.S. Government-sponsored agency securities $ 2,500 $ - $ (1) $ 2,499
Residential mortgage-backed securities:
Issued by FNMA and FHLMC | 57,046 | 236 | (4,333) | 52,949 | ||||
Issued by GNMA | 20,686 | 36 | (1,272) | 19,450 | ||||
U.S. Treasury securities | 5,937 | 26 | - | 5,963 | ||||
SBA pools | 2,816 | 5 | (18) | 2,803 | ||||
Asset-backed securities | 408 | - | (4) | 404 | ||||
Corporate obligations | 1,000 | - | (9) | 991 | ||||
Total | $ | 90,393 | $ | 303 | $ (5,637) | $ 85,059 | ||
13 |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||
Investment securities available for sale | (in thousands) | |||||
U.S. Government-sponsored agency securities | $ 2,500 | $ | - $ (2) | $ 2,498 | ||
Residential mortgage-backed securities: | ||||||
Issued by FNMA and FHLMC | 53,876 | 45 (5,178) | 48,743 | |||
Issued by GNMA | 20,437 | 7 (1,506) | 18,938 | |||
SBA Pools | 2,832 | - (20) | 2,812 | |||
Asset-backed securities | 437 | - (8) | 429 | |||
Corporate obligations | 4,001 | 2 (10) | 3,993 | |||
Total | $ 84,083 | $ | 54 $ (6,724) | $ 77,413 | ||
The Company did not record an Allowance for Credit Losses ("ACL") on the AFS securities at March 31, 2025 and December 31, 2024. The Company considers the unrealized losses on the AFS securities to be related to fluctuations in market conditions, primarily interest rates, and not reflective of deterioration in credit. In addition, the Company has the intent and ability to hold these AFS securities until the amortized cost is recovered and it is more likely than not that any of AFS securities in an unrealized loss position would not be required to be sold.
The Company does not estimate an allowance for credit losses on accrued interest receivable from AFS securities as the Company has a policy to charge off accrued interest deemed uncollectible in a timely manner. A debt security is placed on nonaccrual status at the time any principal or interest payments become 90 days delinquent. Interest accrued but not received for a security placed on nonaccrual is reversed against interest income. Accrued interest receivable totaled $336,000 and
$277,000 at March 31, 2025 and December 31, 2024, respectively, for AFS securities and was reported in accrued interest receivable on the accompanying Consolidated Statements of Financial Condition.
HTM SecuritiesThe amortized cost, estimated fair value and allowance for credit losses of investment securities held to maturity are as follows as of the dates indicated, with gross unrealized gains and losses therein:
March 31, 2025 | |||||||||||
Amortized | Gross Unrealized | Gross Unrealized | Fair | Allowance for | |||||||
Cost | Gains | Losses | Value | Credit Losses | |||||||
Investment securities held to maturity | (in thousands) | ||||||||||
Residential mortgage-backed securities: | |||||||||||
Issued by FNMA and FHLMC | $ 9,754 | $ | - $ (1,667) | $ 8,087 | $ | - | |||||
Issued by GNMA | 2,144 | - (74) | 2,070 | - | |||||||
Obligations of state and political subdivisions | 8,198 | 10 | (262) | 7,946 | (5) | ||||||
Corporate obligations | 26,500 | 37 | (2,075) | 24,462 | (204) | ||||||
Total | $ 46,596 | $ | 47 | $ (4,078) | $ 42,565 | $ | (209) | ||||
14 | |||||||||||
December 31, 2024 | ||||||||
Amortized | Gross Unrealized | Gross Unrealized | Fair | Allowance for | ||||
Cost | Gains | Losses | Value | Credit Losses | ||||
Investment securities held to maturity | (in thousands) | |||||||
Residential mortgage-backed securities: | ||||||||
Issued by FNMA and FHLMC | $ 9,882 | $ | - $ (1,830) | $ 8,052 | $ | - | ||
Issued by GNMA | 2,153 | - (106) | 2,047 | - | ||||
Obligations of state and political subdivisions | 8,794 | 15 | (293) | 8,516 | (4) | |||
Corporate obligations | 26,500 | 37 | (2,382) | 24,155 | (202) | |||
Total | $ 47,329 | $ | 52 | $ (4,611) | $ 42,770 | $ | (206) | |
The following table presents the activity in the ACL for the held to maturity debt securities:
Obligations of state and political subdivisions Corporate obligations ACL TotalThree Months Ended March 31, 2025
Balance-beginning of period $ 4 $ 202 $ 206
Credit loss expense 1 2 $ 3
Balance-end of period $ 5 $ 204 $ 209
Obligations of state and political subdivisions Corporate obligations ACL TotalThree Months Ended March 31, 2024
Balance-beginning of period $ 4 $ 196 $ 200
Credit loss benefit - (6) (6)
Balance-end of period $ 4 $ 190 $ 194
The Company segments its HTM portfolio into agency residential mortgage-backed securities, obligations of state and political subdivisions and corporate obligations to determine the ACL. The ACL is determined based on the Company's historical losses, adjusted for qualitative factors including economic forecasts over a two-year reasonable and supportable forecast period. The Company has determined that for agency residential mortgage-backed securities it would be appropriate to assume the expected credit loss to be zero because these securities are guaranteed by enterprises that have credit ratings on par with the U.S. government or are guaranteed by the
U.S. government. This assumption is reviewed and attested quarterly.
The Company does not estimate an allowance for credit losses on accrued interest receivable from HTM securities as the Company has a policy to charge off accrued interest deemed uncollectible in a timely manner. A debt security is placed on nonaccrual status at the time any principal or interest payments become 90 days delinquent. Interest accrued but not received for a security placed on nonaccrual is reversed against interest income. Accrued interest receivable totaled $341,000 and
$260,000 at March 31, 2025 and December 31, 2024, respectively, for HTM securities and was reported in accrued interest receivable on the accompanying Consolidated Statements of Financial Condition.
At March 31, 2025, the Company had no HTM securities that were past due 30 days or more as to principal or interest payments. The Company had no HTM securities classified as nonaccrual at March 31, 2025.
15
The amortized cost, fair value and contractual maturities of investment securities available for sale and held to maturity are shown in the tables below. Certain of these securities have call features which allow the issuer to redeem the security prior to maturity at the issuer's discretion. Expected maturities may differ from contractual maturities because the underlying mortgages supporting mortgage-backed securities may be prepaid without penalties. Consequently, residential mortgage-backed securities are not presented by maturity category.
March 31, 2025 Available for Sale Held to MaturityAmortized Cost | Fair Value | Amortized Cost | Fair Value | ||||
(in thousands) | |||||||
Due within one year | $ 1,935 | $ 1,935 | $ 2,776 | $ 2,774 | |||
Due after one year through five years | 7,910 | 7,921 | 5,991 | 5,873 | |||
Due after five years through ten years | - | - | 25,931 | 23,761 | |||
Due after ten years | 2,816 | 2,804 | - | - | |||
Residential mortgage-backed securities: | |||||||
Issued by FNMA and FHLMC | 57,046 | 52,949 | 9,754 | 8,087 | |||
Issued by GNMA | 20,686 | 19,450 | 2,144 | 2,070 | |||
Total investment securities | $ 90,393 | $ 85,059 | $ 46,596 | $ 42,565 | |||
(1) Tax equivalent using federal income tax rate of 21%. | |||||||
The unrealized losses, categorized by the length of time of continuous loss position, and the fair value of related investment securities available for sale are as follows, as of the dates indicated:
March 31, 2025
Less than 12 months 12 months or longer Total Number Fair Unrealized Number Fair Unrealized Number Fair Unrealized
of Issues Value Losses of Issues Value Losses of Issues Value Losses
Investment securities available for sale (dollars in thousands)
U.S. Government-sponsored agency securities 1 $ 2,499 $ (1) - $ - $ - 1 $ 2,499 $ (1)
Residential mortgage-backed securities:
Issued by FNMA and FHLMC | 2 | 4,196 | (11) | 24 | 24,575 | (4,322) | 26 | 28,771 | (4,333) | ||||||||
Issued by GNMA | - | - | - | 11 | 11,675 | (1,272) | 11 | 11,675 | (1,272) | ||||||||
SBA pools | - | - | - | 1 | 1,332 | (18) | 1 | 1,332 | (18) | ||||||||
Asset-backed securities | - | - | - | 1 | 404 | (4) | 1 | 404 | (4) | ||||||||
Corporate obligations | - | - | - | 1 | 991 | (9) | 1 | 991 | (9) | ||||||||
Total | 3 | $ 6,695 | $ (12) | 38 | $ 38,977 | $ (5,625) | 41 | $ 45,672 | $ (5,637) |
16
December 31, 2024
Less than 12 months 12 months or longer Total Number Fair Unrealized Number Fair Unrealized Number Fair Unrealized
of Issues Value Losses of Issues Value Losses of Issues Value Losses
Investment securities available for sale (dollars in thousands)
U.S. Government-sponsored agency securities 1 $ 2,498 $ (2) - $ - $ - 1 $ 2,498 $ (2)
Residential mortgage-backed securities:
Issued by FNMA and FHLMC | 6 | 13,561 | (134) | 24 | 24,649 | (5,044) | 30 | 38,210 | (5,178) | ||||||||
Issued by GNMA | 3 | 5,636 | (18) | 11 | 12,269 | (1,488) | 14 | 17,905 | (1,506) | ||||||||
SBA pools | 1 | 1,471 | (3) | 1 | 1,341 | (17) | 2 | 2,812 | (20) | ||||||||
Asset-backed securities | - | - | - | 1 | 429 | (8) | 1 | 429 | (8) | ||||||||
Corporate obligations | - | - | - | 1 | 990 | (10) | 1 | 990 | (10) | ||||||||
Total | 11 | $ 23,166 | $ (157) | 38 | $ 39,678 | $ (6,567) | 49 | $ 62,844 | $ (6,724) |
The unrealized losses, categorized by the length of time of continuous loss position, and the fair value of related investment securities held to maturity are as follows, as of the dates indicated.
March 31, 2025
Less than 12 months 12 months or longer Total Number Fair Unrealized Number Fair Unrealized Number Fair Unrealized
of Issues Value Losses of Issues Value Losses of Issues Value Losses
Investment securities held to maturity (dollars in thousands)
Residential mortgage-backed securities:
Issued by FNMA and FHLMC - $ - $ - 15 $ 8,087 $ (1,667) 15 $ 8,087 $ (1,667) Issued by GNMA 1 1,663 (28) 1 407 (46) 2 2,070 (74)
Obligations of state and political subdivisions 4 1,664 (28) 8 2,896 (234) 12 4,560 (262)
Corporate obligations - - - 22 22,925 (2,075) 22 22,925 (2,075)
Total 5 $ 3,327 $ (56) 46 $ 34,315 $ (4,022) 51 $ 37,642 $ (4,078)
December 31, 2024
Less than 12 months 12 months or longer Total Number Fair Unrealized Number Fair Unrealized Number Fair Unrealized
of Issues Value Losses of Issues Value Losses of Issues Value Losses
Investment securities held to maturity (dollars in thousands)
Residential mortgage-backed securities: | |||||||||||||||||
Issued by FNMA and FHLMC | - | $ - | $ - | 15 | $ 8,052 | $ (1,830) | 15 | $ 8,052 | $ (1,830) | ||||||||
Issued by GNMA | 1 | 1,646 | (51) | 1 | 401 | (55) | 2 | 2,047 | (106) | ||||||||
Obligations of state and political subdivisions | 3 | 1,132 | (32) | 10 | 3,723 | (261) | 13 | 4,855 | (293) | ||||||||
Corporate obligations | - | - | - | 22 | 22,618 | (2,382) | 22 | 22,618 | (2,382) | ||||||||
Total | 4 | $ 2,778 | $ (83) | 48 | $ 34,794 | $ (4,528) | 52 | $ 37,572 | $ (4,611) | ||||||||
During the three months ended March 31, 2025 and 2024, there were no securities sold.
Investment securities with a market value of $6.7 million, $603,000 and $47.4 million, respectively, were pledged as collateral for municipal deposits, Federal Home Loan Bank ("FHLB") and Federal Reserve Bank ("FRB") borrowings at March 31, 2025. Investment securities with a market value of $1.3 million, $622,000 and $49.9 million, respectively, were pledged as collateral for municipal deposits, FHLB and FRB borrowings at December 31, 2024.
17
The composition of loans is as follows as of the dates indicated:
March 31, 2025 December 31, 2024(in thou | sands) | ||||
Commercial and industrial | $ | 651,690 | $ | 576,625 | |
Commercial real estate: | |||||
Owner-occupied | 694,113 | 671,357 | |||
Investor | 1,160,549 | 1,181,684 | |||
Construction and development | 200,262 | 205,096 | |||
Multi-family | 308,217 | 287,843 | |||
Residential real estate: | |||||
Residential mortgage and first lien home equity loans | 142,298 | 142,769 | |||
Home equity-second lien loans and revolving lines of credit | 52,438 | 51,020 | |||
Consumer and other | 29,760 | 31,324 | |||
3,239,327 | 3,147,718 | ||||
Net deferred loan fees and costs | (3,288) | (3,452) | |||
Total loans | $ | 3,236,039 | $ | 3,144,266 | |
As of March 31, 2025 loans held for sale were $618,000. There were no loans held for sale as of December 31, 2024. Mortgage and Small Business Administration ("SBA") loans originated and intended for sale in the secondary market are included in loans held for sale and are reported at the lower of cost or fair value, as determined by the aggregate commitments from investors or current investor yield requirements.
Accrued interest receivable is not included in the amortized cost basis of the Company's loans. Additionally, the Company does not estimate an allowance for credit losses on accrued interest receivable as the Company has a policy to charge off accrued interest deemed uncollectible in a timely manner. When a loan is placed on nonaccrual status, which occurs when a borrower becomes delinquent by 90 days, interest previously accrued but not collected is reversed against current period interest income. Accrued interest receivable for loans totaled $13.9 million and $13.4 million at March 31, 2025 and December 31, 2024, respectively, with no related ACL and was reported in accrued interest receivable on the accompanying Consolidated Statements of Financial Condition.
The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt, such as current financial information, historical payment experience, credit documentation, public information and current economic trends, among other factors. The following tables summarizes the Company's loans by year of origination and internally assigned credit risk rating at March 31, 2025 and December 31, 2024. See the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as filed with the FDIC for additional information about asset classifications. There were no loans classified as "doubtful" or "loss" as of March 31, 2025 and December 31, 2024.
18
Loans by Year of Origination at March 31, 2025
2025 2024 2023 2022 2021 Prior Revolving Total
Commercial and industrial (in thousands)
Pass $ 22,356 $ 95,359 $ 59,312 $ 54,086 $ 30,016 $ 45,620 $ 324,395 $ 631,144
Special Mention - - 4,768 - 1,956 3,315 2,900 12,939
7,607
-
7,015
-
206
244
142
Substandard -
Total Commercial and industrial $ 22,356 $ 95,501 $ 64,324 $ 54,292 $ 31,972 $ 55,950 $ 327,295 $ 651,690
Owner-occupied
Pass $ 31,945 $ 120,925 $ 62,656 $ 81,771 $ 83,712 $ 245,635 $ 14,086 $ 640,730
Special Mention - - - 30,519 322 1,177 4,750 36,768
84,034
113,132
62,926
694,113
18,836
262,315
Substandard - - 270 842 - 15,503 - 16,615
120,925
Total Owner-occupied $ 31,945 $ $ Investor
$ $ $ $ $
Pass $ 4,458 $ 76,983 $ 64,577 $ 204,291 $ 179,982 $ 619,525 $ 8,194 $ 1,158,010
179,982
204,291
64,577
1,160,549
8,194
622,064
Substandard - - - - - 2,539 - 2,539
76,983
Total Investor $ 4,458 $ $
Construction and development
$ $ $ $ $
200,262
15,845
17,415
10,776
50,836
44,636
54,269
Pass $ 6,485
$ $ $ $ $ $ $
Total Construction and development $ 6,485 $ 54,269 $ 44,636 $ 50,836 $ 10,776 $ 17,415 $ 15,845 $ 200,262
Multi-family
58,544
75,451
28,284
308,217
507
112,563
Pass $ 2,981 $ 29,887 $ 28,284 $ 75,451 $ 58,544 $ 112,563 $ 507 $ 308,217
29,887
Total Multi-family $ 2,981 $ $
Residential mortgage and first lien home equity loans
$ $ $ $ $
Pass $ 6,242 $ 7,178 $ 7,289 $ 15,396 $ 13,499 $ 89,377 $ 243 $ 139,224
13,499
15,396
7,289
142,298
243
92,451
Substandard - - - - - 3,074 - 3,074
7,178
Pass $ 675 $ 1,770 $ 1,970 $ 1,333 $ 152 $ 6,081 $ 40,034 $ 52,015
Total Residential mortgage and first lien home equity loans $ 6,242 $ $ Home equity-second lien loans and revolving lines of credit
$ $ $ $ $
152
1,333
1,970
52,438
40,034
6,504
Substandard - - - - - 423 - 423
1,770
Pass $ 22 $ 3,179 $ 3,162 $ 1,992 $ 3,102 $ 2,745 $ 15,555 $ 29,757
Total Home equity-second lien loans and revolving lines of credit $ 675 $ $ Consumer and other
$ $ $ $ $
Total Consumer and other
$
22 $
$
$
$
$
$
$
3,102
1,992
3,162
3,179
29,760
15,555
2,748
Substandard - - - - - 3 - 3
Special Mention - - 4,768 30,519 2,278 4,492 7,650 49,707
Total Loans
Pass $ 75,164 $ 389,550 $ 271,886 $ 485,156 $ 379,783 $ 1,138,961 $ 418,859 $ 3,159,359
Total Loans
$ 75,164 $
$
$
$
$
$
$
382,061
516,723
277,168
389,692
3,239,327
426,509
1,172,010
Substandard - 142 514 1,048 - 28,557 - 30,261
19
Loans by Year of Origination at December 31, 2024
2024 2023 2022 2021 2020 Prior Revolving Total
Commercial and industrial (in thousands)
Pass $ 97,820 $ 60,531 $ 57,446 $ 32,131 $ 9,916 $ 31,096 $ 270,571 $ 559,511
Special Mention - 4,707 - 1,965 680 2,655 - 10,007
7,107
-
7,042
-
-
65
-
Substandard -
Total Commercial and industrial $ 97,820 $ 65,238 $ 57,511 $ 34,096 $ 10,596 $ 40,793 $ 270,571 $ 576,625
Owner-occupied
Pass $ 121,187 $ 62,690 $ 94,752 $ 84,726 $ 61,417 $ 191,739 $ 11,576 $ 628,087
Special Mention - - 21,385 324 - - 4,750 26,459
204,235
64,617
85,050
116,979
671,357
16,326
Substandard - 273 842 - 3,200 12,496 - 16,811
62,963
Total Owner-occupied $ 121,187 $ $ Investor
$ $ $ $ $
1,178,880
6,719
523,539
121,946
181,136
205,247
64,733
Pass $ 75,560
$ $ $ $ $ $ $
526,343
121,946
181,136
205,247
1,181,684
6,719
Substandard - - - - - 2,804 - 2,804
64,733
Total Investor $ 75,560 $ $
Construction and development
$ $ $ $ $
204,984
18,228
17,675
-
11,879
71,928
42,880
Pass $ 42,394
$ $ $ $ $ $ $
17,787
-
11,879
71,928
205,096
18,228
Substandard - - - - - 112 - 112
42,880
Pass $ 29,879 $ 28,323 $ 56,032 $ 58,799 $ 49,949 $ 64,320 $ 347 $ 287,649
Total Construction and development $ 42,394 $ $ Multi-family
$ $ $ $ $
64,514
49,949
58,799
56,032
287,843
347
Substandard - - - - - 194 - 194
28,323
Total Multi-family $ 29,879 $ $
Pass $ 7,776 $ 7,398 $ 16,489 $ 16,476 $ 23,699 $ 67,660 $ 97 $ 139,595
Residential mortgage and first lien home equity loans
$ $ $ $ $
70,834
23,699
16,476
16,489
142,769
97
Substandard - - - - - 3,174 - 3,174
7,398
Pass $ 1,579 $ 2,124 $ 1,242 $ 155 $ 153 $ 4,474 $ 40,882 $ 50,609
Total Residential mortgage and first lien home equity loans $ 7,776 $ $ Home equity-second lien loans and revolving lines of credit
$ $ $ $ $
4,885
153
155
1,242
51,020
40,882
Substandard - - - - - 411 - 411
2,124
Pass $ 3,186 $ 3,197 $ 2,049 $ 3,125 $ 1,920 $ 1,062 $ 16,782 $ 31,321
Total Home equity-second lien loans and revolving lines of credit $ 1,579 $ $ Consumer and other
$ $ $ $ $
Total Consumer and other
$ 3,186 $
$
$
$
$
$
$
1,065
1,920
3,125
2,049
3,197
31,324
16,782
Substandard - - - - - 3 - 3
Special Mention - 4,707 21,385 2,289 680 2,655 4,750 36,466
Total Loans
Pass $ 379,381 $ 271,876 $ 505,185 $ 388,427 $ 269,000 $ 901,565 $ 365,202 $ 3,080,636
Total Loans
$ 379,381 $
$
$
$
$
$
$
930,456
272,880
390,716
527,477
276,856
3,147,718
369,952
Substandard - 273 907 - 3,200 26,236 - 30,616
20
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