First Bank’s Earnings Call Highlights Strong Growth

First Bank ((FRBA)) has held its Q4 earnings call. Read on for the main highlights of the call.

In the recent earnings call, First Bank exuded a positive sentiment, highlighting a strong financial performance marked by growth in loans and deposits, alongside an improved net interest margin. These positive factors overshadowed minor concerns regarding noninterest income and expenses, painting an overall optimistic picture for the bank.

Strong Annual Financial Performance

First Bank reported impressive financial results, earning $42.2 million or $1.67 per diluted share in 2024. This marks a 13% annualized increase in core earnings per share (EPS) over the last decade. Additionally, the tangible book value more than doubled in the same period, underscoring the bank’s robust financial health and long-term growth trajectory.

Loan Portfolio Growth

The bank’s loan portfolio demonstrated substantial growth, increasing over 7% on an annualized basis from the third quarter, resulting in a year-over-year growth of $123 million or 4%. This expansion was primarily driven by commercial and industrial as well as owner-occupied commercial real estate loans, highlighting the bank’s strategic focus on these sectors.

Improved Net Interest Margin

First Bank achieved an improved net interest margin, which rose to 3.54% in the fourth quarter from 3.48% in the previous quarter. This enhancement was aided by a 20 basis point decline in interest-bearing deposit costs, showcasing the bank’s effective management of its interest rate environment.

Successful Deposit Growth

The bank experienced a significant increase in deposits, with total deposits rising by $88.3 million or 3% from the end of 2023. This growth was driven by the establishment of new deposit relationships and the retention of existing balances, indicating a strong customer base and trust in the bank’s services.

High Coverage Ratio for Nonperforming Loans

First Bank maintained a high coverage ratio for nonperforming loans, with an allowance for credit loss standing at 323% of total loans. This ratio is the highest among local peer banks, reflecting the bank’s prudent risk management practices.

Decline in Noninterest Income

There was a decline in noninterest income, which totaled $2.2 million in Q4 2024 compared to $2.5 million in Q3 2024. With no significant increases anticipated as 2025 commences, this area may require strategic adjustments moving forward.

Increased Noninterest Expenses

Noninterest expenses rose to $19.1 million in Q4 2024, up from $18.6 million in the previous quarter. This increase was mainly due to higher salaries, benefits, and occupancy costs, which could impact future profitability if not managed effectively.

Forward-Looking Guidance

Looking ahead, First Bank’s executives provided robust forward-looking guidance. The bank’s strategic initiatives, including its Banking as a Service unit and new fintech partnerships, are expected to drive future growth. Despite a slight decline in noninterest income, the bank’s focus on profitable relationship growth, expense management, and strategic investments remains strong. The bank plans to continue with its share buyback program, emphasizing confidence in its long-term value and growth potential.

In summary, First Bank’s earnings call conveyed a positive outlook, driven by strong financial performance and strategic growth initiatives. While challenges in noninterest income and expenses exist, the bank’s robust loan and deposit growth, alongside an improved net interest margin, provide a solid foundation for future success.