First Bank releases earnings report

Bank of America acquisition helped spark good quarter

First Bank made gains in several categories for the quarter ending June 30, according to the company’s most recent earnings report.

Scott Harvard, CEO and president of First Bank, said their 2015 acquisition of six Bank of America branches and roughly $186 million in deposits from Bank of America played a role in the positive trends referenced in the report.

“Back in the first quarter of last year, we actually acquired $186 million in deposits,” Harvard said. “When you make an acquisition like that, it kind of immediately puts a drain on you and then you start lending that money out and we had a plan to do it and it included retaining 94 percent of the customers we acquired and then lending the money out in the community. Since we’ve closed on that transaction, we’ve lent out 30 percent of that money.”

According to the bank’s report, return on investment for the second quarter of 2016 rose 2.5 percent from 9.4 percent the previous quarter, and was up substantially from 2.97 percent from 2015’s second quarter. Net income available to common shareholders increased $334,000 to $1.4 million. Non-interest expense was down 4 percent and non-interest income was up 9 percent. The bank’s efficiency ratio was lower at 71.6 percent.

“That’s a good thing,” Harvard said. “The efficiency ratio is really kind of a function of how much does it cost us to make a dollar. The less that costs us, the more profitable our company is. That efficiency ratio was high right on the heels of our acquisition, was higher as we took on higher expenses. It peaked there and we really tried to keep our expenses down and increase our revenue.”

In addition to acquiring deposits from the Bank of America acquisition, First Bank was also able to obtain 94 percent of those branches’ customers as well as several employees, said Harvard.

“It (the acquisition) enabled us to make loans in new markets, which probably wouldn’t have happened without that loan acquisition,” Harvard said. “We got some great employees as well as some great customers out of it as well. I think it was 35 employees that came with us in the transaction.”

In addition to the customers and employees, Harvard said the acquisition enabled First Bank’s exposure to new customer bases that may not have necessarily been aware of the bank prior.

“I think the bank of America transaction was a significant one because it not only increased our balance sheet by over 30 percent, but also allowed (us) to expand our footprint into the Waynesboro- Augusta market and further down the Shenandoah Valley,” Harvard said. “It also provided funding for us in the near term so that we could make loans to the customers.”

Moreover, the acquisition enabled First Bank to do what it was created to do – serve the local community, said Harvard.

“That’s really what a community bank does, and does best – is to provide loan funds and act as a catalyst for the local environment.”

Contact staff writer Nathan Budryk at 540-465-5137 ext. 155, or nbudryk@nvdaily.com

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