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Total cash and cash equivalents increased by $21.1 million or 34.2% to $82.8 million at March 31, 2024 from $61.7 million at December 31, 2023. This increase was primarily due to an increase in wholesale borrowings and total deposits.

Total loans receivable, net of allowance for credit losses totaled $1.23 billion, virtually unchanged from $1.24 billion at December 31, 2023. Construction and commercial loans decreased $8.5 million and $3.8 million, respectively, partially offset by a $7.0 million increase in commercial mortgages. The allowance for credit losses increased by $158,000 to $14.6 million or 1.18% of gross loans at March 31, 2024 as compared to $14.5 million or 1.16% of gross loans at December 31, 2023.

Total investment securities increased by $1.2 million or 1.7% to $70.2 million at March 31, 2024 from $69.1 million at December 31, 2023. The increase in investment securities resulted primarily from $2.0 million in purchases of investment securities, partially offset by $800,000 in total paydowns of investment securities.

Total deposits totaled $1.11 billion at March 31, 2024, compared to $1.10 billion at December 31, 2023. Within the components of total deposits, money market deposits increased $16.9 million and brokered deposits increased $48.2 million, partially offset by a $42.2 million decrease in time deposits, a $12.6 million decrease in non-interest bearing demand deposits and a $2.0 million decrease in savings deposits.

Stockholders' equity decreased by $4.0 million or 2.2% to $180.0 million at March 31, 2024 from $184.0 million at December 31, 2023. The decrease in stockholders' equity was attributable to a $4.3 million reduction as a result of the successful execution of the Company's stock repurchase plan. During the first quarter of 2024, the Company repurchased 693,000 shares for approximately $4.3 million, or a weighted average price of approximately $6.21 per share.

Three Months of Operations

Net interest income decreased by $2.3 million or 21.7% to $8.2 million for the three months ended March 31, 2024 from $10.5 million for the three months ended March 31, 2023. The decrease in net interest income was primarily due to an increase in funding costs as a result of the inverted yield curve where short-term rates continue to outprice medium and long-term maturities.

Total interest income increased by $2.8 million or 17.3% to $19.1 million for the three months ended March 31, 2024 from $16.2 million for the three months ended March 31, 2023. Interest income on loans, including fees, increased $2.5 million or 16.4% to $17.7 million for the three months ended March 31, 2024, compared to $15.2 million for the three months ended March 31, 2023. The increase in interest income on loans, including fees, resulted primarily from an increase in the average balance of loans receivable of $103.2 million or 9.0% to $1.25 billion for the three months ended March 31, 2024 compared to $1.15 billion for the three months ended March 31, 2023 and an increase of thirty-six basis points in the average yield on loans to 5.67% for the three months ended March 31, 2024 compared to 5.31% for the same period in the prior year. Interest income on interest-bearing deposits with other banks increased $204,000 or 45.2% to $655,000 for the three months ended March 31, 2024 as compared to $451,000 for the same period in the prior year. This increase resulted from a higher average yield on interest-bearing deposits with banks of 4.86% for the three months ended March 31, 2024 compared to 3.98% for the same period in the prior year, and an increase of $8.6 million in average balances of interest-bearing deposits with banks year over year.

Total interest expense increased by $5.1 million or 88.7% to $10.8 million for the three months ended March 31, 2024 from $5.7 million for the three months ended March 31, 2023. The increase in interest expense occurred primarily as a result of a 151 basis points increase in the average cost of interest-bearing liabilities to 4.01% for the three months ended March 31, 2024 from 2.50% for the three months ended March 31, 2023 and an increase in average balance of interest-bearing liabilities of $160.6 million or 17.4%, to $1.08 billion for the three months ended March 31, 2024 from $922.5 million for the three months ended March 31, 2023. The increase in average balance of interest-bearing liabilities included a $88.1 million increase in average interest-bearing deposit liabilities and a $72.4 million increase in average wholesale borrowings for the three months ended March 31, 2024. The increase in the average cost of interest-bearing liabilities resulted primarily from continued higher market interest rates over the last twelve months. The increase in interest-bearing liabilities was primarily used to support the loan growth.

During the first quarter of 2024, the Company recorded a net $7,000 provision for credit losses as compared to a net $190,000 provision for credit losses for the same period in the prior year. Based on the results of the CECL model and management's evaluation of both quantitative and qualitative factors for the first quarter of 2024, the Company recorded a provision for credit losses of $124,000, which was offset by a $119,000 reversal of credit losses for unfunded commitments. The loan portfolio remained stable during the first quarter of 2024 when compared to year-end 2023, however, as a result of changes in risk ratings of certain loans, an additional provision for credit losses was recorded. Unfunded commitment balances declined by $24.3 million during the first quarter of 2024 compared to the year-end 2023, which resulted in recording a reversal in provision for credit losses for unfunded commitments. Management believes that the allowance for credit losses on loans was appropriate at March 31, 2024.

Net interest margin decreased by ninety-two basis points to 2.39% for the three months ended March 31, 2024 compared to 3.31% for the three months ended March 31, 2023. The decrease in the net interest margin is primarily attributable to a significant increase in the average cost of interest-bearing liabilities to 4.01% for the three months ended March 31, 2024 from 2.50% for the three months ended March 31, 2023 and an increase in the average balance of interest-bearing liabilities to $1.08 billion for the three months ended March 31, 2024 from $922.5 million for the three months ended March 31, 2023. This increase were partially offset by an increase in average balance of interest earning assets of $74.6 million or 5.8% to $1.39 billion for the three months ended March 31, 2024 compared to $1.28 billion for the three months ended March 31, 2023 and an increase in the average yield of interest earning assets to 5.53% for the three months ended March 31, 2024 from 5.11% for the three months ended March 31, 2023.

Non-interest income decreased by $478,000 or 47.8% to $522,000 for the three months ended March 31, 2024 from $1.0 million for the three months ended March 31, 2023. The decrease in total non-interest income resulted primarily from a decrease in bank owned life insurance of $444,000 as a result of death benefit payout recorded in the first quarter of 2023 and a decrease of $37,000 in other income primarily due to a decrease in rental income of leased office space in offices owned by the Bank during the first quarter of 2024 compared to the same period in the prior year.

Non-interest expense increased by $298,000 or 4.3% to $7.2 million for the three months ended March 31, 2024 compared to $6.9 million for the three months ended March 31, 2023. Salaries and employee benefits increased by $233,000 or 5.5% to $4.5 million for the three months ended March 31, 2024 as compared to $4.3 million for the three months ended March 31, 2023. The increase in salaries and employee benefits resulted primarily from annual merit increases and an increase in health benefit costs year over year. Occupancy and equipment expense decreased by $198,000 or 17.8% to $912,000 for the three months ended March 31, 2024 as compared to $1.1 million for the three months ended March 31, 2023, primarily due to a $114,000 reduction in OREO expenses and a $38,000 reduction in equipment maintenance expenses for the three months ended March 31, 2024 compared to the same period in the prior year. Data processing costs increased by $67,000 or 30.7% to $285,000 for the three months ended March 31, 2024 from $218,000 for the three months ended March 31, 2023. FDIC insurance assessment increased $146,000 to $195,000 for the three months ended March 31, 2024, compared to $49,000 for the same period in the prior year, primarily due to an increase in the insurance assessment rate. Other operating expenses increased by $87,000 or 13.1% to $749,000 for the three months ended March 31, 2024 from $662,000 for the three months ended March 31, 2023. Other expenses are primarily comprised of miscellaneous loan expense, telephone, subscriptions, software maintenance and depreciation, office supplies and computer supplies. These increases were partially offset by a $59,000 or 100.0% decrease in loss on other real estate owned.

The income tax provision decreased by $680,000 or 64.1% to $381,000 for the three months ended March 31, 2024 from $1.1 million for the three months ended March 31, 2023. This decrease in the income tax provision resulted primarily from a decrease in the pre-tax income year over year.

Asset Quality

The allowance for credit losses increased by $158,000 or 1.1% to $14.6 million or 1.18% of gross loans at March 31, 2024 as compared to $14.5 million or 1.16% of gross loans at December 31, 2023 and $18.6 million or 1.56% of gross loans at March 31, 2023. During the first quarter of 2024, the Company added a $124,000 provision to the allowance for credit losses and recovered $34,000 in previously charged-off loans. Changes in the allowance for credit losses are calculated and adjusted quarterly and accordingly, relative to loan growth and quantitatively measured asset quality metrics.

The Bank had non-accrual loans totaling $19.1 million or 1.53% of gross loans at March 31, 2024 as compared to $18.4 million or 1.47% of gross loans at December 31, 2023 and $11.8 million or 0.99% of gross loans at March 31, 2023. Non-accrual loans increased by $696,000 or 3.8% to $11.7 million at March 31, 2024 from $18.4 million at December 31, 2023. The allowance for credit losses was 76.8% of non-accrual loans at March 31, 2024, compared to 78.8% and 158.04% of non-accrual loans at December 31, 2023 and March 31, 2023, respectively.

About First Commerce Bancorp, Inc.

First Commerce Bancorp, Inc, is a financial services organization headquartered in Lakewood, New Jersey. The Bank, the Company's wholly owned subsidiary, provides businesses and individuals a wide range of loans, deposit products and retail and commercial banking services through its branch network located in Allentown, Bordentown, Closter, Englewood, Fairfield, Freehold, Jackson, Lakewood, Montvale, Robbinsville and Teaneck, New Jersey. For more information, please go to www.firstcommercebk.com.

Forward-Looking Statements

This release, like many written and oral communications presented by First Commerce Bancorp Inc., 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 Company, 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 changes in interest rates and in the credit quality and strength of underlying collateral and the effect of such changes on the market value of First Commerce Bank's investment securities portfolio; changes in asset quality and credit risk; the inability to sustain revenue and earnings growth; difficult market conditions and unfavorable economic trends in the United States generally, and particularly in the market areas in which First Commerce Bank operates and in which its loans are concentrated, including the effects of declines in housing market values; the effects of the recent turmoil in the banking industry (including the failures of two financial institutions); 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 and the impact of a potential shutdown of the federal government.

SOURCE: First Commerce Bancorp, Inc.

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