First Bank provides update on COVID-19 related financial hardship payment deferrals

Rhea-AI Summary

First Bank (FRBA) reported positive trends in its COVID-19 financial hardship payment deferrals as of August 31, 2020. The Bank granted a total of 613 loans worth approximately $433.7 million in deferrals, with 86.03% of loans due making full payments. Key sectors affected include hospitality (79% of loans deferred) and restaurants (48.4% of loans deferred), where payment resumption expectations are strong. Total deferred loans have decreased significantly from a peak of $434.2 million to $72.0 million, indicating a recovery as economic conditions improve.

Positive

• 86.03% of deferred loans (590 loans totaling $420.5 million) have started making payments.
• Significant decrease in the deferred loan portfolio, reducing from $434.2 million to $72.0 million.
• Proactive borrower support in severely impacted sectors, with high payment resumption rates expected.

Negative

• None.

HAMILTON, N.J., Sept. 15, 2020 (GLOBE NEWSWIRE) -- First Bank (Nasdaq Global Market: FRBA) today announced updated information on their COVID-19 related financial hardship payment deferrals (COVID-19 deferrals).

“We continue to monitor and analyze our COVID-19 deferrals based on asset class and borrower type,” said Patrick L. Ryan, President and Chief Executive Officer. Through August 31, 2020, the Bank has granted COVID-19 deferrals, primarily for 90 days, for a total of 613 loans representing approximately $433.7 million of existing loan balances. This excludes loans that requested deferrals but were subsequently paid off. As of August 31, 2020, 590 loans totaling $420.5 million of these deferred loans have already come due for their first payment since their 90 day deferral was put in place.  Out of the 590 loans, 530 loans or $361.7 million have made a payment in full and the Bank anticipates regular payments will continue on these loans. The Bank is working with the remainder of these customers and expect the majority will also get back on track with normal payments or will take an additional 90 day deferral. Results are positive with 86.03% of COVID-19 deferrals that came due by August 31, 2020 now making payments.

Mr. Ryan added, “we have focused on proactively working with our borrowers in the industries hardest hit by the COVID-19 pandemic.” The Bank’s hospitality and restaurant loan portfolio totaled $160.9 million at June 30, 2020 or 8.23% of total loans. Hospitality loans totaling $59.0 million have received a COVID-19 related deferral out of a total of $74.9 million total loans, or 79%. Of these COVID-19 deferred loans, as of August 31, 2020, loans totaling $58.2 million have already come due for their first payment since their 90 day deferral was put in place.  Of the $58.2 million in loans, $40.9 million have made a payment and the Bank anticipates regular payments will continue on these loans. The Bank is in discussions with the remainder of these early deferrals about either additional deferral time, return to partial payment, or return to full repayment. The total remaining deferred portfolio in the hospitality industry is $18.1 million.

Restaurant loans totaling $41.6 million have received a COVID-19 related deferral out of a total of $86.0 million total loans or 48.4%. Of these COVID-19 deferred loans, as of August 31, 2020, loans totaling $41.4 million have already come due for their first payment since their 90 day deferral was put in place.  Of the $41.4 million, $36.8 million have made a payment and the Bank anticipates regular payments will continue on these loans. The total remaining deferred portfolio in the restaurant industry is $4.8 million.

The total remaining deferred portfolio for these two industries is $22.9 million or 1.17 % of the total loans as of June 30, 2020.

Retail loans totaling $118.9 million have received a COVID-19 related deferral. Of these deferred loans, as of August 31, 2020, loans totaling $116.1 million have already come due for their first payment since their 90 day deferral was put in place. Of the $116.1 million, $104.9 million resumed payments. The total remaining deferred portfolio in the retail industry is $14.0 million or 0.71% of the total loans as of June 30, 2020.

Requests for deferrals have significantly decreased.  As of the August 31, 2020 date, the portfolio of deferred loans was $72.0 million or 3.67% of the total loans as of June 30, 2020, a reduction of $362.2 million, or 83%, compared to the peak deferral portfolio of $434.2 million. The remaining deferred loan portfolio consists mainly of retail loans (19.4%), hospitality loans (25.1%), restaurant loans (6.7%), industrial & warehouse loans (8.6%), consumer real estate secured loans (6.8%) and arts, entertainment and recreation loans (13.6%).

Consistent with industry regulatory guidance, borrowers that were otherwise current on loan payments that were granted COVID-19 related financial hardship payment deferrals will continue to be reported as current loans throughout the agreed upon deferral period, will continue to accrue interest and will not be required to be accounted for as a troubled debt restructuring. This will also apply to borrowers that request a second 90 day deferral request.

Mr. Ryan concluded, “while we are very pleased with these positive trends, future results will be dependent on the pandemic and its impact on the local business conditions in New Jersey and Pennsylvania.”

See additional details of the Bank’s COVID-19 deferrals in the attached presentation. 

About First Bank

First Bank is a New Jersey state-chartered bank with 18 full-service branches in Cinnaminson, Cranbury, Delanco, Denville, Ewing, Flemington, Hamilton, Hamilton Square, Lawrence, Mercerville, Pennington, Randolph, Somerset and Williamstown, New Jersey; and Doylestown, Trevose, Warminster and West Chester, Pennsylvania. With $2.3 billion in assets as of June 30, 2020, First Bank offers a full range of deposit and loan products to individuals and businesses throughout the New York City to Philadelphia corridor. First Bank's common stock is listed on the Nasdaq Global Market under the symbol “FRBA”. 

Forward Looking Statements

This press release contains certain forward-looking statements, either express or implied, within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements include information regarding First Bank’s future financial performance, business and growth strategy, projected plans and objectives, and related transactions, integration of acquired businesses, ability to recognize anticipated operational efficiencies, and other projections based on macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material.  Such forward-looking statements are based on various facts and derived utilizing important assumptions, current expectations, estimates and projections about First Bank, any of which may change over time and some of which may be beyond First Bank’s control. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing. Further, certain factors that could affect our future results and cause actual results to differ materially from those expressed in the forward-looking statements include, but are not limited to: whether First Bank can: successfully implement its growth strategy, including identifying acquisition targets and consummating suitable acquisitions; continue to sustain its internal growth rate; provide competitive products and services that appeal to its customers and target markets; difficult market conditions and unfavorable economic trends in the United States generally, and particularly in the market areas in which First Bank operates and in which its loans are concentrated, including the effects of declines in housing markets; the impact of disease pandemics, such as the novel strain of coronavirus disease (COVID-19), on First Bank, its operations and its customers and employees; an increase in unemployment levels and slowdowns in economic growth; First Bank's level of nonperforming assets and the costs associated with resolving any problem loans including litigation and other costs; changes in market interest rates may increase funding costs and reduce earning asset yields thus reducing margin; the impact of changes in interest rates and the credit quality and strength of underlying collateral and the effect of such changes on the market value of First Bank's investment securities portfolio; the extensive federal and state regulation, supervision and examination governing almost every aspect of First Bank's operations including changes in regulations affecting financial institutions, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations being issued in accordance with this statute and potential expenses associated with complying with such regulations; uncertainties in tax estimates and valuations, including due to changes in state and federal tax law; First Bank's ability to comply with applicable capital and liquidity requirements, including First Bank’s ability to generate liquidity internally or raise capital on favorable terms, including continued access to the debt and equity capital markets; possible changes in trade, monetary and fiscal policies, laws and regulations and other activities of governments, agencies, and similar organizations. For discussion of these and other risks that may cause actual results to differ from expectations, please refer to “Forward-Looking Statements” and “Risk Factors” in First Bank’s Annual Report on Form 10-K and any updates to those risk factors set forth in First Bank’s joint proxy statement, subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. 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 differ 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 qualified 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. 

CONTACT:  Patrick L. Ryan, President and CEO
(609) 643-0168, patrick.ryan@firstbanknj.com

A PDF accompanying this announcement is available at http://ml.globenewswire.com/Resource/Download/0ec6e704-0d69-4d75-9554-394312226807

FAQ

What is the current status of First Bank's COVID-19 loan deferrals as of August 31, 2020?

As of August 31, 2020, First Bank has $72.0 million in deferred loans, down from a peak of $434.2 million.

How many loans have resumed payments after COVID-19 deferrals?

Out of 590 loans that came due, 530 loans totaling $361.7 million have made payments in full.

What percentage of hospitality loans granted COVID-19 deferrals are resuming payments?

In the hospitality sector, 79% of loans received deferrals, with an expectation for many to resume regular payments.

What impact does the COVID-19 pandemic have on First Bank's loan portfolio?

The pandemic led to a significant number of payment deferrals, but the situation is improving as many loans return to payment status.