First Bank (Hamilton, New Jersey) Q4 FY2024 earnings call

• Full year 2024: Earned $42.2 million or $1.67 per diluted share, 13% annualized core EPS increase over 10 years. Tangible book value doubled with 7.5% annualized growth. ROAA 1.15%, return on average tangible common equity 12.5%.
• Fourth quarter: Net income $10.5 million, $0.41 per diluted share. Loan portfolio up over 7% annualized from third quarter. Deposit balances up $5.8 million. Net interest income up $1.5 million due to higher loan volume and margin expansion. Credit quality strong with muted credit expense.
• New business units: Private equity sponsor banking, asset-based lending, and small business loan portfolios up over $250 million since start. Banking-as-a-Service unit to commence first fintech partnership in Q1 2025.
• Branch strategy: Completed relocation of Glen Mills, PA location and opened de novo branch in Trenton, NJ; consolidated Flemington, NJ locations.

For the three months ended December 31, 2024, net income was $10.5 million or $0.41 per diluted share. Loans were up over 7% annualized from the third quarter, with commercial and industrial and owner-occupied commercial real estate loans driving growth. Deposits showed a modest $5.8 million increase. Net interest income increased $1.5 million due to higher average loan volume and margin expansion. Loan portfolio growth was 7% annualized, with commercial and industrial and owner-occupied real estate loans leading, offsetting a small decline in investor real estate loans. Deposit balances had a $5.8 million increase, with focus on profitable relationships.

• Margin: Further expansion possible if yield curve steepens. Purchase accounting accretion to continue trickling down over next year and a half, dropping more significantly after three years.
• Loan growth: Bullish on loan volume as pipeline builds and gets funded. Expect loan growth rates in 2025 to approximate recent quarter's growth.
• Banking-as-a-Service: Excited about tech investments and starting slow with lower risk fintech partnerships to generate revenue and deposits.

• General risks associated with financial performance, including uncertainties in interest rate movements, regulatory changes, and potential impact of economic conditions on loan quality and deposit flows. The Safe Harbor statement notes forward-looking statements are subject to uncertainties that could materially affect actual results.

Q: Justin Crowley asked about margin and deposit cost progression, purchase accounting trend, loan growth focus on C&I and owner-occupied CRE, and Banking-as-a-Service investment.

A: Patrick Ryan said margin improvement tied to yield curve steepening; Andrew Hibshman noted purchase accounting accretion to trickle down; Peter Cahill and Patrick Ryan discussed loan growth pipeline and continued focus on C&I; Patrick Ryan elaborated on Banking-as-a-Service investment in tech and risk management.

Q: John on for Dave Bishop asked about CD maturities and share repurchase authorization.

A: Patrick Ryan and Andrew Hibshman discussed ~$130-140 million of CDs maturing in Q1 with expected 50 basis point cost reduction; Andrew Hibshman said ~1 million shares authorized for repurchase, with ~900,000 left after fourth quarter purchases