First Bank
Annual Report 2022

Plain-text annual report

G R O W T H + P R O G R E S S G R O W T H + P R O G R E S S 2 O 2 2 A N N U A L R E P O R T 2 O 2 2 A N N U A L R E P O R T 2 O 2 2 A N N U A L R E P O R T G R O W T H + P R O G R E S S We are pleased to report our strong performance in 2022, characterized by solid organic loan growth, revenue expansion, and outstanding asset quality metrics. Despite the uncertain economic environment, we are well positioned for 2023, with achievable goals for overall growth and progress in middle market commercial banking, digital loan generation, and small business portfolio expansion. Our initial vision was to create a community and regional bank focused on relationship banking to small and mid-sized businesses, leveraging our existing relationships with customers and bankers in the New York City to Philadelphia markets. Today, we have 19 branches, approximately $2.73 billion in assets, and industry-leading profi tability. We have achieved much success, and we will continue to refi ne and improve our traditional community bank operations while building on our existing strengths to evolve into a middle-market commercial bank. Our goal is to maintain our relationship-based community banking roots while expanding specifi c products and services. Our Private Equity fund banking group has allowed us to extend our service as commercially focused lenders. We plan to expand further into asset-based lending (ABL) and small and micro-business banking services to support our expansion goals. Our strategic evolution involves maintaining our commercial focus, building on our strengths to fi nd new commercial niches, and developing proactive digital banking strategies for effi ciency and relevance in 2023 and beyond. Contents Letter to Shareholders 2 Performance Overview 6 Selected Financial Information 7 Operations Review 8 Board of Directors 12 Market Area and Branch Listing 13 Executive Management 14 Bank Officers 15 Investment Profile 16 Corporate and Shareholder Information 17 FAST FACTS A unique regional bank with branch locations in New Jersey and Pennsylvania with approximately $2.73 billion in assets at the end of 2022 Highly attractive market with highest population density in the country Record diluted earnings per of $1.84% in 2022 Net income of $36.3M in 2022, setting a new record Net Interest Margin improved to 3.75% in 2022 Nonperforming assets to total assets of 0.23% at 12/31/22 19 customer facilities company-wide ROAA of 1.40% for the year ended 12/31/22 241 company employees at 12/31/2022 Total revenue of $112.4M in 2022 Bauer Financial 5-Star rated bank (top ranking) Kroll Bond Rating Agency Investment Grade Rating 1 To our shareholders, stakeholders, employees and friends: Introduction Darwin’s theory of evolution focuses on mutation and natural selection as the drivers of change over time. In essence, in the natural world, what things become depends on what they start with, random changes or mutations that occur, and how those changes either help or hurt survivability over time. I believe evolution in business works in a similar fashion, with one key diff erence — organizations tend to make strategic decisions that drive mutation/change. While random events outside the control of the of the company do impact outcomes, in general, business leaders have a greater ability to aff ect change than species in the natural world. Despite this diff erence, the theory of evolution makes an instructive model to think about how organizations survive and thrive in the long run. Specifi cally, whether change is driven by random events or strategic decisions, the marketplace (much like the natural world) will assess the positive or negative impact of those changes and the organization will either thrive (grow and achieve strong operating results and profi ts), survive (do well enough to stay in business but struggle to perform at a high level), or fail (be forced out of business). Creating the annual report is always a time for refl ection. We look back at the year that has gone by and we look forward and try to predict where we are headed. This year, while still examining recent history, I want to take a broader perspective. That is where this examination of evolution comes in. We (senior leadership and the board of directors) make strategic decisions regularly and then we compete and measure our results. I am proud to say that an examination of our near- and long-term results puts us clearly in the “thrive” category. We are growing at a strong, but manageable rate, and we are generating profi ts at levels well above peer averages. To date, our strong initial “DNA” and the strategic changes we have enacted have led to evolutionary success. But, of course, we also understand and believe the famous quote from the Greek historian and philosopher Heraclitus: “The only constant in life is change.” Said a little diff erently, we need to continue to evolve if we want to continue to thrive. That quest for continued growth, evolution, and progress is what I want to discuss in our letter this year. Historical Context For those of you that have not been with us from the beginning, let me provide some quick historical context. Our “DNA” is traditional, community-bank DNA. We focus on taking deposits, making loans, providing great service, and building true, long-term relationships. While that may be true for many community banks operating today, it is important to note that we understand where we started and where we’re coming from. That DNA is the core of who we are, and it is why I’m focused on the concept of evolution, not revolution or transformation. Many organizations get into business to disrupt or tear-down the status quo. While those stories grab headlines and generate excitement, the models are fraught with risk and many more of them fail than succeed. We understand that the world is changing, but we want to leverage what is good about the current models rather than start over. Hence, we’re focused on evolution — modifying and changing, but building from the base, not starting over. 2 First Bank was formed in 2007, and our team brought in fresh capital through a change-in-control recapitalization in 2008. Since then, the organization has evolved through a few distinct phases. In the early years from 2008 to 2012, we were in “start-up” mode. We had a very basic product set; we were focused on reconnecting with old friends and customers and getting up to profitability. This was the period where we built our base or foundation for future growth and development. Next came our quest to scale up. During 2013 through 2018, using our existing lines of business and operating within our core markets, we looked to create better size and scale to help drive profitability. We did this through a combination of continued organic growth along with opportunistic acquisitions. During that period, we grew from approximately $350 million in assets to $1.71 billion, completing an initial public offering and three, whole-bank acquisitions. While successful in our drive for revenue growth, our strong loan production during that period put pressure on our funding sources. Hence, our next phase of development was focused on generating core, low-cost deposits. From 2019 through 2022, we became laser-focused on improved profitability led by core deposit growth. Our results during this period reached new heights — net income and EPS doubled, ROA increased by 30 basis points and our tangible book value per share grew $4.39, or 46%. Importantly, our cost of deposits declined significantly, and our mix of lower-cost deposits also improved. In 2022, while achieving those super-strong operating results, we also made important strategic investments that will drive our next phase of evolution here at First Bank. Key investments in 2022 include the build-out of a Private Equity fund Banking group, creation of a digital banking focus, and key hires to grow core deposits and help build out a new Small Business (SMB) group. And, in early 2023, we’ve announced the creation of a new Asset-based Lending (ABL) group. Those investments will help propel First Bank on its evolutionary journey from small, traditional community bank, to a true, middle-market commercial bank. It will not happen overnight, and it will not involve losing our roots as relationship-based community bankers. Nevertheless, our strategic path is clear, and we will leverage our strengths to continue to grow, evolve, and thrive. A Quick Look Back at 2022 Results in 2022 mirrored the changing interest rate landscape. Our bank is designed to make good money in a tough interest rate environment and really good money in a favorable interest rate environment. And that’s what happened. In Q1 our net interest margin (NIM) was 3.57% and we made $8.2 million in net income. In Q2, our NIM was 3.76% and we made $8.8 million. In Q3, our NIM got up to 3.97% and we made $10.2 million, and in Q4, our NIM came back down to 3.69% and we made $9.1 million. As the Federal Reserve moved short term rates higher in the first half of the year, we made more money because earning-asset yields moved higher, and deposit costs stayed flat. By the time we reached Q4, those increases in asset yields had tempered and deposit costs finally started moving higher in a meaningful way. We got caught a little bit flat-footed in Q4 as deposit costs moved up faster than anticipated and a nice surge in C&I loan demand forced us to get additional dollars at higher rates. In general, banks do not do as well when the yield earned on long-term assets is lower than the yield on short-term assets (i.e., an inverted yield curve), and that certainly played out 3 in Q4. Despite the more challenging environment toward the end of the year, we still achieved a 1.35% return on average assets (ROA) during the fourth quarter, a very healthy level of profitability by historical industry standards. Another component of First Bank’s financial strength and profitability is our operational efficiency, where we continuously outperform our peers. For eight straight quarters our efficiency ratio has been below 50%, proving our stability and positioning us to continue profitability throughout our evolutionary journey. A Quick Look Ahead to 2023 Results in 2023 will largely be driven by the outcome of the current tug-of-war between bond investors and the Federal Reserve. The Fed is saying the battle with inflation is not over, and more rate hikes are coming. The Bond market is saying the Fed will need to blink, and stop raising rates, and that they will then need to start lowering rates to help out a softening economy. If that battle continues throughout most of 2023, and the yield curve stays significantly inverted, the rate environment for banks will remain challenging and margins will likely continue to move lower. Thankfully, they will be moving lower from historically high levels, so some margin compression can be realized and banks can still generate healthy returns. While margins drive incremental bank profitability, credit quality is always the existential threat. Banks can make decent returns, grow book value and grow capital in a low-margin environment. A level of economic stress that leads to loan charge offs and credit losses can be a different animal all together. Very few economists are predicting that level of economic stress and credit quality deterioration. The conversation or debate is between mild recession or modest growth. Either scenario should be fine from a credit quality perspective. The equation for understanding credit costs is not linear: economic output needs to deteriorate in a significant way and credit markets need to shut down in order for large scale losses to emerge. While anything is possible, most economic signals are not pointing to that type of environment in 2023. Our delinquencies ended the year at an all-time low, criticized and classified assets remained very low and actually declined as a percentage of capital, and charge offs remained very low. With the expectation that full-year margins will be a bit lower in 2023 compared to the 3.75% achieved in for the full year in 2022, the real question is whether or not we will make more money this year compared to last year. We believe the answer to that question depends upon our ability to generate core, low-cost deposits. With our stock trading slightly below our tangible book value on March 3, 2023, clearly the market is skeptical. While the current level of skepticism is frustrating given our historical track record of delivering best-in-class growth and earnings, we accept and embrace the challenge. For most of our existence, we have faced skepticism and we’ve pushed forward and delivered on the plans and goals we set for ourselves. As all good managers and leaders know, “hope is not a strategy.” Our ability to deliver quality deposit growth will be tied to several factors: i) great performance from our existing branches and sales teams, ii) deposit growth from our new SMB business unit, and iii) new business generated from key new hires taken from local banks that are in the process of being acquired. It won’t be easy, but as I have done since I helped get things started here back in 2008, I’ll be betting on our team! 4 The Future Beyond 2023 What gets me most excited (when I think about our future prospects) is this simple fact — most small and medium-sized business prefer to deal with relationship-focused community/commercial banks. It can sometimes be hard to fi nd them, and harder still to fi ght the inertia to get them to switch, but the fact is that we have what they want! It takes time, but “slow and steady” (i.e., evolution) wins the race. We will continue to evolve. Banking ten years from now will be diff erent from how it functions today. Customers will want more and better technology, added convenience, and tighter security. We are making investments in all of these areas. But let me be clear, our secret sauce will not be digital. It will remain relationship-banking. I believe banks that cannot reach point of parity with critical digital solutions will not survive. That is now part of our evolutionary mission. We’re also exploring opportunities to leverage our charter and back offi ce to generate deposits and/or fee income through banking as a service (BaaS) partnership. The jury is still out regarding whether BaaS will be part of our evolutionary path, but we remain committed to exploring all viable options for creating long-term shareholder value. The other certainty in banking is continued consolidation. The overall number of banking institutions in the United States has been cut in half over the past 20 years, from 8,500 to 4,200. That’s a net decline of about 215 per year. If the industry continued to decline at that pace, the number of banks will be cut in half again in ten years. This pace may slow, or accelerate, but the trends that are driving it (regulatory costs, investor pressure, management succession issues) are not going away. Will First Bank be around when the industry is down to 2,000 banks? Time, and natural/market selection will tell. We control our own destiny in the sense that our strategic decisions and our operating results (not random mutation) will dictate our future survival. The other key part of our DNA is a shareholder mindset. If we are still here, it will be because we have earned it through great performance and shareholder value creation. I am proud of what we have accomplished so far, but we hold ourselves to a very high standard. I am excited to see it our evolutionary path will allow us to achieve those elevated standards of success and survival. Patrick L. Ryan President and CEO S A F E - H A R B O R S T A T E M E N T NOTE This document contains forward-looking statements concerning the fi nancial condition, results of operations and business of the Bank. We caution that such statements are subject to a number of uncertainties, including but not limited to those set forth under the caption “Item 1A – Risk Factors” in the accompanying annual report on Form 10-K, as well as the continued eff ects of the COVID-19 pandemic, changes in economic activity in our markets, changes in interest rates and changes in regulation and the regulatory environment. If one or more events related to these or other risks or uncertainties materialize, or if First Bank’s underlying assumptions prove to be incorrect, actual results may diff er materially from what First Bank anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and First Bank does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. All forward-looking statements, expressed or implied, included in this communication are expressly qualifi ed in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that First Bank or persons acting on First Bank’s behalf may issue. 5 Performance Overview Total Stockholders’ Equity AT 12-31, $ IN MILLIONS Average Total Earning Assets FOR YEAR ENDED 12-31, $ IN BILLIONS 2022 2021 2020 2019 2018 2017 289.6 266.7 238.1 226.4 194.8 163.3 2022 2021 2020 2019 2018 2017 5-YEAR CAGR = 12.1% 5-YEAR CAGR = 21.6% Total Loans AT 12-31, $ IN BILLIONS Total Deposits AT 12-31, $ IN BILLIONS 2022 2021 2020 2019 2018 2017 2.34 2.1 3 2.05 1.72 1.46 1.23 2022 2021 2020 2019 2018 2017 5-YEAR CAGR = 13.8% 5-YEAR CAGR = 14.5% Total Net Revenue FOR YEAR ENDED 12-31, $ IN MILLIONS 1 Net Income FOR YEAR ENDED 12-31, $ IN MILLIONS 2022 2021 2020 2019 2018 2017 97.5 89.6 75.9 62.4 58.4 41 .8 2022 2021 2020 2019 2018 2017 5-YEAR CAGR = 18.5% 5-YEAR CAGR = 39.1% 1 Total net revenue is the sum of net interest income and non-interest income 6 2.47 2.30 2. 12 1.76 1.54 0.93 2.29 2. 1 1 1.90 1.64 1.39 1. 17 36.3 35.4 19.4 13.4 17.6 7.0 Selected Financial Information IN THOUSANDS, EXCEPT COMMON SHARE DATA AT OR FOR THE YEAR ENDED DECEMBER 31, 2 02 2 2 01 7 5-YR CAGR S E L EC T E D BA L A N C E S H E E T DATA Total assets Total loans Allowance for loan losses Total deposits Total borrowings Total subordinated debentures Total stockholders’ equity Average total assets Average stockholders’ equity S E L EC T E D I N CO M E S TAT E M E N T DATA Interest and dividend income Interest expense Net interest income Provision for loan losses Net interest income after provision for loan losses Non-interest income Non-interest expense Income before income taxes Income tax expense Net income CO M M O N S H A R E DATA Diluted earnings per share Cash dividends paid Diluted weighted average common shares outstanding Book value per common share Common shares outstanding S E L EC T E D P E R F O R M A N C E R AT I O S Return on average assets Adjusted return on average assets1 Return on average equity Adjusted return on average equity1 Net interest margin, tax equivalent2 Efficiency ratio1 S E L EC T E D A S S E T Q UA L I T Y R AT I O S Nonperforming loans to total loans3 Allowance for loan losses to nonperforming loans Net loan charge offs to average loans C A P I TA L R AT I O S Stockholders’ equity to assets Tier 1 leverage capital Common equity tier 1 capital Tier 1 risk-based capital Total risk-based capital $ $ $ $ 2,732,940 2,337,814 25,474 2,293,952 90,932 29,731 289,562 2,587,344 277,639 107,261 14,888 92,373 2,872 89,501 5,120 46,733 47,888 11,601 $ 36,287 $ 1,452,327 1,227,413 11,697 1,167,098 94,863 21,748 163,250 1,218,699 124,879 51 ,198 11 ,535 39,663 2,675 36,988 2,116 24,684 14,420 7,427 6,993 $ 1.84 0.24 $ 0.48 0.08 19,716,661 14.89 19,451,755 14,577,664 9.36 17,443,173 1.40% 1.42% 13.07% 13.23% 3.75% 47.53% 0.27% 407.58% (0.05%) 10.62% 10.41 % 10.40% 10.40% 12.49% 0.57% 0.72% 5.60% 7.01% 3.39% 55.27% 0.43% 220.78% 0.08% 11 .24% 10.54% 11 .05% 11 .05% 13.49% 1 This measure is not recognized under U.S. GAAP and is therefore a non-U.S. GAAP financial measure. See our annual report on Form 10-K for a reconciliation of the 2022 calculation. 2 The tax equivalent adjustment is calculated using a federal income tax rate of 21% in 2021 and 34% in 2017. 3 Nonperforming loans consist of nonaccrual loans and loans past due 90 days or more and still accruing. 1 3.5% 13.8% 16.8% 14.5% (0.8%) 6.5% 12. 1 % 16.3% 17.3% 15.9% 5.2% 18.4% 1.4% 19.3% 19.3% 13.6% 27. 1 % 9.3% 39.0% 30.8% 24.6% 6.2% 9.7% 2.2% 19.7% 14.6% 7 Strategic Evolution towards Middle-Market Commercial Banking Poised to Expand with New Service Lines Asset Based Lending & Private Equity First Bank is at an exciting inflection point, as we evolve into a true middle-market commercial bank while maintaining our foundations in community banking. With sixteen years of experience and a strong foothold in the community banking sector, we are identifying new opportunities for growth and progress in the middle-market commercial banking market. To achieve our strategic goal, we are adding more complex products and services for larger businesses and gradually changing how we operate to serve small businesses more efficiently and effectively. Led by Ramzi Dagher, Senior Vice President of the Private Equity Group, our Private Equity fund banking group is set to provide innovative lending solutions to businesses in our communities. Our plan for evolving into a middle-market commercial bank includes several key tenants, starting with our focus on commercial lines of business. We will explore products and businesses that are closely connected to the things we already do well, while moving “up market” with our growth and lending limit expansion. Finally, we will focus on becoming more diversified, with new lines of business working to reduce concentration levels in other areas. In 2023, we are expanding our Asset Based Lending (ABL) capabilities, a unique underwriting and monitoring project with immense growth potential. To lead this initiative, we have hired Mike Maiorino as President of Asset Based Lending. With Mike’s expertise and our growing digital capabilities, we plan to validate the ABL model before expanding beyond our current branch coverage area. At First Bank, we are committed to expanding our capabilities and services to customers while staying true to our roots in community banking. By focusing on our key tenants and strategic initiatives, we are well-positioned to provide innovative lending solutions to businesses in our communities and beyond. As we continue to explore new technologies and partnerships that enhance our services and support our growth, we are confident in our ability to evolve into a true middle-market commercial bank. “As a community bank, we are dedicated to supporting businesses in our region and providing convenient and efficient lending solutions. Our strategic initiatives reflect this commitment, and we are excited about the potential for growth and progress in the middle commercial banking market,” said First Bank CEO Patrick Ryan. “Expanding with new service lines — Asset Based Lending and Private Equity Fund Banking.” 8  “As President of Asset Based Lending at First Bank, I am excited to lead the expansion into this unique line of business with immense growth potential. Asset Based Lending provides a fl exible fi nancing option for businesses in need of short-term capital. With the support of First Bank's digital capabilities and expertise, we are well-positioned to grow the ABL business and expand our services beyond our current branch coverage area.” Michael Maiorino Asset Based Lending President at First Bank From left, Ramzi Dagher and Michael Maiorino “Our focus on commercial lines of business and creation of a Private Equity Fund banking group are the fi rst steps in our plan to evolve into a middle-market commercial bank. By exploring new products and businesses and becoming more diversifi ed, we are well-positioned to provide innovative lending solutions to businesses in our communities and beyond.” Ramzi Dagher Senior Vice President of the Private Equity Group at First Bank 9 Enhanced Small Business Lending Growing Our Digital Expertise In late 2022, First Bank announced the implementation and roll-out of its small business initiative, which is set to simplify the borrowing process for small businesses in the region and enhance the Bank’s growth and progress in the community banking sector. The small business initiative is a significant step towards providing innovative and convenient lending solutions to small businesses. Led by Michael Smith, who joined First Bank from Investors Bank, the initiative comprises several key components, starting with the creation of an automated small business portal to receive applications, make credit decisions, and open and fund commercial deposit accounts. This digital portal will leverage First Bank’s growing digital expertise and enhance the borrower experience for small businesses. In addition to the digital portal, the Bank is also targeting the smallest/micro businesses and the underbanked through targeted product offerings and marketing strategies. By expanding its marketing reach and growing its digital expertise, First Bank is well-positioned to become a leader in providing innovative lending solutions to small businesses in the region. “As a community bank, we recognize the importance of supporting small businesses in our region. We are excited to have Michael Smith lead this business unit and enhance our services to small business owners,” said First Bank CEO Patrick Ryan. “With the implementation of the small business initiative, we are well on our way to becoming a true middle-market commercial bank and providing convenient and efficient lending solutions to small businesses in our communities.” First Bank’s commitment to providing innovative lending solutions to small businesses in its communities is reflected in its strategic initiatives. The Bank is exploring new technologies and partnerships that enhance its services and support its growth, prioritizing the needs of its customers. By leveraging its digital capabilities and growing its expertise, the Bank is set to achieve significant growth and progress in the community banking sector. The small business initiative is a testament to First Bank’s dedication to serving businesses in its communities, and the Bank will continue to explore new opportunities that enhance its services and support its growth as it evolves into a true middle-market commercial bank. “The small business initiative is a significant step towards providing innovative and convenient lending solutions to small businesses. We’re excited to invest in next-gen digital technology platforms to enhance the borrower experience for small businesses. We want to be the leader in merging technology with traditional personal banking relationships. We think this is a winning formula for First Bank.” Michael Smith, Director of Small Business Banking 10 Consistent Strategy Driving Enhanced Results Net Interest Income FOR THE YEAR ENDED AT 12-31, $ IN MILLIONS Net Loan Charge Off s/ Average Loans FOR THE YEAR ENDED AT 12-31 2022 2021 2020 2019 2018 2017 5-YEAR CAGR = 18.4% 92.4 81.9 69.6 58.4 54.9 39.7 0.12% 0.15% 0.15 0.10 0.05 0.00 0.00% 0.05% 0.00% 2018 2019 2020 2021 2022 Return on Average Assets FOR THE YEAR ENDED AT 12-31 Return on Average Equity FOR THE YEAR ENDED AT 12-31 2022 2021 2020 2019 2018 2017 1.40% 1.46% 0.87% 0.72% 1.09% 0.57% 2022 2021 2020 2019 2018 201 7 13.1% 14.0% 8.5% 6.5% 9.7% 5.6% 11 Board of Directors Patrick M. Ryan CHAIRMAN Owner of North Buffalo Advisors, LLC; former President and Chief Executive Officer of Yardville National Bank D I R E C T O R S I N C E 2011 BOARD COMMITTEES ASSET/LIABILITY, COMPLIANCE, INFORMATION TECHNOLOGY Leslie E. Goodman VICE CHAIRMAN LEAD INDEPENDENT DIRECTOR Principal of The Eagle Group of Princeton, Inc.; Director of Wawa, Inc. D I R E C T O R S I N C E 2008 BOARD COMMITTEES ASSET/LIABILITY (CHAIR), COMPENSATION AND PERSONNEL Patrick L. Ryan CHIEF EXECUTIVE OFFICER President and Chief Executive Officer of First Bank D I R E C T O R S I N C E 2008 BOARD COMMITTEES ASSET/LIABILITY, COMPLIANCE, INFORMATION TECHNOLOGY Douglas C. Borden Northeast President of CBIZ Borden Perlman D I R E C T O R S I N C E 2017 BOARD COMMITTEES NOMINATING AND GOVERNANCE (CHAIR), COMPENSATION AND PERSONNEL, INFORMATION TECHNOLOGY Scott R. Gamble Principal of Patriot Financial Partners, LP D I R E C T O R S I N C E 2020 BOARD COMMITTEES ASSET/LIABILITY, COMPENSATION AND PERSONNEL, AUDIT AND RISK MANAGEMENT, COMPLIANCE Deborah Paige Hanson Principal, Executive Vice President and Fund Manager of The Hampshire Companies D I R E C T O R S I N C E 2016 BOARD COMMITTEES COMPENSATION AND PERSONNEL (CHAIR), NOMINATING AND GOVERNANCE, INFORMATION TECHNOLOGY Glenn M. Josephs Partner of Friedman, LLP; former Partner, Bagell, Josephs, Levine and Company, LLC D I R E C T O R S I N C E 2008 BOARD COMMITTEES AUDIT AND RISK MANAGEMENT (CHAIR), NOMINATING AND GOVERNANCE, COMPENSATION AND PERSONNEL Peter Pantages Former Chairman, President and Chief Executive Officer of Grand Bank D I R E C T O R S I N C E 2019 BOARD COMMITTEES COMPLIANCE, INFORMATION TECHNOLOGY Michael E. Salz President of Linden Bulk Transportation Co., LLC D I R E C T O R S I N C E 2017 BOARD COMMITTEES INFORMATION TECHNOLOGY (CHAIR), AUDIT AND RISK MANAGEMENT, ASSET/LIABILITY, COMPENSATION AND PERSONNEL John E. Strydesky Certified Public Accountant; Owner of Strydesky & Company, CPAs/Business Consultants D I R E C T O R S I N C E 2010 BOARD COMMITTEES COMPLIANCE (CHAIR), AUDIT AND RISK MANAGEMENT, ASSET/LIABILITY 12 All directors also serve on the Strategic Planning and Board Loan Committees. First Bank Locations ADMINISTRATIVE 2465 Kuser Road Hamilton, NJ 08690 877 821 2265 1395 Yardville-Hamilton Square Rd Hamilton, NJ 08691 877 821 2265 RANDOLPH 1206 Sussex Turnpike Randolph, NJ 07869 973 895 5800 SOMERSET 225 DeMott Lane Somerset, NJ 08873 732 649 1999 WILLIAMSTOWN 1020 North Black Horse Pike Williamstown, NJ 08094 856 728 3400 PENNSYLVANIA DOYLESTOWN 200 South Main Street Doylestown, PA 18901 215 230 7533 TREVOSE 4956-66 Old Street Road Trevose, PA 19053 267 984 4537 WARMINSTER 356 York Road Warminster, PA 18974 215 441 4118 WEST CHESTER 849 Paoli Pike West Chester, PA 19380 484 881 3800 First Bank Market Area First Bank's 19-branch franchise serves highly desirable markets in New Jersey and eastern Pennsylvania, offering a full range of deposit and loan products to individuals and businesses. With total assets of $2.73 billion at year-end 2022 the bank’s unique value proposition includes providing a superior customer experience, access to decision makers, and competitive interest rates and fees. On December 14, 2022, First Bank announced the signing of a defi nitive merger agreement to acquire Malvern Bancorp. Subject to the receipt of regulatory and shareholder approvals, the merger is expected to close in the second quarter of 2023 and will add nine locations, primarily in eastern Pennsylvania with one location in northern New Jersey and one in Palm Beach, Florida. This strategic transaction is another example of what we believe is a high-quality and low-risk transaction that we are using to build size and scale, solidify our market position and expand our service area. SUSSEX WARREN MORRIS ESSEX UNION NYC HUNTERDON HUDSON SOMERSET MIDDLESEX BUCKS MERCER MONMOUTH MONTGOMERY PHILADELPHIA CHESTER DELAWARE OCEAN BURLINGTON GLOUCESTER CAMDEN FIRST BANK REGIONAL STRUCTURE NORTHERN NEW JERSEY REGION CENTRAL NEW JERSEY REGION EASTERN PENNSYLVANIA REGION ★ HEADQUARTERS & FIRST BANK BRANCH FIRST BANK BRANCH FIRST BANK BRANCH & REGIONAL BANKING CENTER MALVERN BANCORP BRANCH 13 NEW JERSEY CINNAMINSON 506 US Route 130 North Suite #1 Cinnaminson, NJ 08077 856 303 8899 CRANBURY 2664 US Route 130 Cranbury, NJ 08512 609 642 1064 DELANCO 615 Burlington Avenue Delanco, NJ 08075 856 461 0611 DENVILLE 530 East Main Street (Route 53) Denville, NJ 07834 973 625 1407 EWING 1340 Parkway Avenue Ewing, NJ 08628 609 643 0470 FAIRFIELD 330 Passaic Avenue Fairfi eld, NJ 07004 973 840 1110 FLEMINGTON 334 Highway 31 North Flemington, NJ 08822 908 751 0318 FLEMINGTON 224 South Main Street Flemington, NJ 08822 908 751 1003 HAMILTON 2465 Kuser Road Hamilton, NJ 08690 609 528 4400 LAWRENCE 590 Lawrence Square Boulevard South Lawrence, NJ 08648 609 587 3111 MONROE 1600 Perrineville Road Concordia Shopping Center Monroe Township, NJ 08831 609 642 1238 PENNINGTON 3 Tree Farm Road Pennington, NJ 08534 609 281 5808 Executive Management Patrick L. Ryan PRESIDENT CHIEF EXECUTIVE OFFICER Peter J. Cahill EXECUTIVE VICE PRESIDENT CHIEF LENDING OFFICER Andrew L. Hibshman EXECUTIVE VICE PRESIDENT CHIEF FINANCIAL OFFICER Maria E. Mayshura EXECUTIVE VICE PRESIDENT CHIEF RISK OFFICER John F. Shepardson EXECUTIVE VICE PRESIDENT CHIEF OPERATING OFFICER 14 Joseph R. Calabro PENNSYLVANIA REGIONAL PRESIDENT Gabriel K. Dragos CHIEF TECHNOLOGY OFFICER Kimberly Cerasi DIRECTOR OF HUMAN RESOURCES Darleen Gillespie CHIEF RETAIL BANKING OFFICER Anthony F. DeSenzo MARKET EXECUTIVE Michael Maiorino ASSET BASED LENDING PRESIDENT Marianne E. DeSimone LENDING GROUP MANAGER David J. DiStefano NEW JERSEY REGIONAL PRESIDENT Arlene S. Pedovitch CHIEF CREDIT OFFICER Parwinder Virk CHIEF ACCOUNTING OFFICER Bank Officers SENIOR VICE PRESIDENTS Scott A. Bachman Team Leader Belinda L. Blazic Loan Administration Manager Joseph F. Browarski Loan Workout Officer Scott W. Civil Market Executive Michael B. Cook Manager Investor Real Estate Tiffany Craddock Credit Officer Ramzi Dagher Team Leader Gregory Dittrich Director of Government Banking Jason Fischer Team Leader/Market Executive Denise Goetting Regional Branch Manager NJ Paula Huergo Strategic Planning and Operations Officer Robert Kim Director of SBA Lending Sriramulu Krishnamurthy SBA Manager Larry F. Lee Loan Workout Manager Lauretta Lucchesi Commercial Lending Relationship Manager David Hill Marx Team Leader Gregorio Perri, Jr. Consumer Lending Manager Frank P. Puleio Business Development Officer/Government Banking Michael Rist Commercial Lending Relationship Manager George Robostello Credit Officer Megan Schlessinger Small Business Banker/Team Leader Stacy L. Schwartz Head of Deposit Operations Michael Smith Director of Small Business & Corporate Development Donald Theobald, Jr. Controller Casi L. Tiernan Head of Cash Management Richard Tocci Manager Investor Real Estate Gregory Weckel Director Information Technology Operations Caryn Wilson Head of Retail Branch Administration FIRST VICE PRESIDENTS Joseph Ball Market Manager Robert Goldzman Commercial Lending Relationship Manager Jose Jurado Construction Lending Manager Christopher M. Kelly Commercial Lending Relationship Manager Elizabeth Scozzari Market Manager VICE PRESIDENTS Rosemarie Abate Portfolio Manager Nadine D. Barron Credit Manager Thomas P. Bay Commercial Lending Relationship Manager Donna Bencivengo Executive Assistant and Corporate Secretary Keysha Berry Branch Manager Stephen Bohmert Business Development Officer Sharon E. Bokma Branch Manager Michael R. Borkowski Branch Manager Linda Bransfield Senior Credit Underwriter Richard L. Burzynski Commercial Lending Relationship Manager Michael P. Cahill Commercial Lending Relationship Manager Marjorie A. Callahan Commercial Lending Relationship Manager Edward Caporellie Commercial Lending Relationship Manager Joseph Cavalchire Commercial Lending Relationship Manager Louis A. Ciarlante Commercial Lending Relationship Manager Joan S. Costa Loan Administration Assistant Manager Cori Cubberley Lending Data Integrity Manager Douglas D’Aulerio Branch Manager Samantha Dayton Loan Accounting Manager Jessica DiRocco Branch Manager Alan Dolnick Portfolio Manager Ryan D. Earley Business Banker Derrick Futch Branch Manager Arnaldo F. Galassi Lending Project Manager Michael Giacobello Market Development Officer Robert C. Gossenberger Branch Manager Michele M. Green SBA Portfolio Manager & Senior Underwriter Philip M. Heberling Commercial Lending Relationship Manager Stephen Helhowski Commercial Real Estate Administrator Joseph Kerr Business Banker Jason M. Koenigsberg Branch Manager Brett Lawrence Commercial Lending Relationship Manager Andrea Lazarus Branch Manager Darcy Lowe Commercial Lending Relationship Manager Christina Maguire Branch Manager Patricio Martins Branch Manager William J. Mellon Senior Credit Underwriter Kahla Miscavage SBA Relationship Manager Carol Monaghan Branch Manager Sarah M. Pearson CRA Officer Ruth Powell Branch Manager Anubha Raj Sales & Training Manager Steven Rash Branch Manager Adam Regnery Commercial Lending Relationship Manager David Roskowsky Branch Manager Katherine M. Rowley Retail Escrow Rent Security Specialist Sandra K. Ryan Branch Manager Terrence Ryan Commercial Lending Relationship Manager Patricia L. Schofield Branch Manager Eugene Slickers Commercial Lending Relationship Manager Diane L. Smith Senior Credit Underwriter Kyle Smith Commercial Lending Relationship Manager Joseph Stefans Business Development Officer Traci L. Sundberg BSA Officer John M. Thompson Treasury Management Sales Officer Andrew Varsallona System Application Administrator Jennifer Wallace-Dressner Assistant Controller 15 Investment Profi le AT 3- 3 -23 L I S T I N G S YM B O L S H A R E P R I C E M A R K E T C A P I TA L I Z AT I O N P R I C E /2022 E A R N I N G S P R I C E / TA N G I B L E B O O K A N N U A L I Z E D D I V I D E N D D I V I D E N D Y I E L D 52- W E E K H I G H 52- W E E K LO W AVERAGE DAILY TRADING VOLUME S H A R E S O U T S TA N D I N G Nasdaq FRBA $13.60 $264.5 M 7.35 X 0.97 X $0.24 1.76% $16.76 $12.93 48,873 19.5 M Investment Highlights Solid and consistent book value per share growth Strong performance metrics refl ect our commitment to sound fi nancial management and eff ective risk management practices Revenue growth and non-interest expense control driving stronger operating leverage Strong balance sheet with very solid asset quality Addition of high-quality banking talent Record of organic and acquired growth with strong profi t metrics 16 Corporate and Shareholder Information CORPORATE HEADQUARTERS FIRST BANK 2465 Kuser Road Hamilton, NJ 08690 877 821 2265 fi rstbanknj.com ANNUAL SHAREHOLDER MEETING INFORMATION The Annual Shareholders’ Meeting will be held at April 28, 2023 at 10:00 a.m. EST The Stone Terrace 2275 Kuser Road Hamilton, New Jersey 08690 INVESTOR RELATIONS Shareholders seeking information about us may obtain press releases and FDIC fi lings by visiting fi rstbanknj.com. Additional inquiries can be directed to: Chief Financial Offi cer 2465 Kuser Road Hamilton, NJ 08690 or by calling 609 643 0058 SHAREHOLDER ACCOUNT INQUIRIES Shareholders who wish to change the name, address or ownership of their stock or replace lost certifi cates or require additional services should contact our Stock Registrar and Transfer Agent. STOCK REGISTRAR AND TRANSFER AGENT FIRST CLASS/REGISTERED/ CERTIFIED MAIL Computershare Investor Services P.O. Box 505000 Louisville, KY 40233-5000 COURIER SERVICES Computershare Investor Services 462 South 4th Street, Suite 1600 Louisville, KY 40202 SHAREHOLDER SERVICES NUMBER 1 800 368 5948 INVESTOR CENTER PORTAL computershare.com/investor STOCK LISTING First Bank’s common stock is traded on the NASDAQ Global Market under the symbol FRBA. ANALYST COVERAGE The following analysts published research on First Bank in 2022: David Jason Bishop Hovde Group, LLC 804 318 0969 dbishop@hovdegroup.com Nicholas Cucharale Piper Sandler 212 466 7922 nick.cucharale@psc.com Manuel Navas D.A. Davidson & Co. 212 223 5405 mnavas@dadco.com First Bank is a member of the FDIC, an Equal Opportunity Employer and an Equal Housing Lender. 17 2 4 6 5 K U S E R R O A D H A M I L T O N , N J 0 8 6 9 0 8 7 7 8 2 1 B A N K 1 3 9 5 YA R D V I L L E - H A M I L T O N S Q U A R E R D H A M I L T O N , N J 0 8 6 9 0 8 7 7 8 2 1 B A N K F I R S T B A N K N J . C O M F I R S T B A N K PA . C O M N A S D A Q : F R B A 

Continue reading text version or see original annual report in PDF format above