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First Commerce Bancorp, Inc., Reports the Fourth Quarter and Year-to-Date 2024 Results

LAKEWOOD, NJ / / January 31, 2025 / First Commerce Bancorp, Inc. (the "Company"), (OTC PINK:CMRB), the holding company for First Commerce Bank (the "Bank"), today reported net income of $1.1 million and $4.5 million for the three months and the year ended December 31, 2024, respectively, as compared to net income of $5.8 million and $13.8 million for the three months and the year ended December 31, 2023, respectively. Basic earnings per common share were $0.06 and $0.21 for the three months and the year ended December 31, 2024, respectively, as compared to $0.25 and $0.58 for the three months and the year ended December 31, 2023, respectively.

President & CEO Donald Mindiak commented, "Despite the challenging economic environment for financial institutions for the majority of 2024, the Company successfully engaged in several initiatives that provided enhanced shareholder value and positive quantitative metrics. Regarding the on-going Stock Repurchase Plan, through year-end 2024, the Company has repurchased over 3.4 million shares of its common stock at an average price of $6.37 per common share which is slightly over $2.00 per share less than our book value at December 31, 2024. Since shares repurchased at a discount to book value are accretive to book value, additional shareholder value has been created through this initiative. Additionally, diligent efforts by our credit team have reduced non-accrual loan balances year-over-year resulting in improving asset quality metrics. Lastly, the deposit portfolio was restructured in 2024 to place less reliance on volatile time deposit funding and more reliance on core deposit relationships. These efforts have been aided by the Federal Reserve easing short-term interest rates by one-hundred basis points in the second half of 2024 coupled with our strategic acquisition of several key business development officers. We remain confident in our ability to prudently grow our core business in the markets we serve while striving for the successful enhancement of franchise and shareholder value."

Continuing, Mr. Mindiak remarked that, "We have completed the first 50% of the second 10% Stock Repurchase Plan and have immediately begun the process of implementing the second 50% of that plan. This effort continues to provide enhanced value to our shareholder base which remains a driving force in our commitment to enhance value while prudently managing risk."

Financial Highlights

• Total interest income increased by $708,000 or 3.7% for the fourth quarter of 2024 compared to the fourth quarter of 2023 and increased $6.6 million or 9.1% for the year 2024 as compared to the same period in 2023 as a result of the growth in average interest-earning assets year over year.

• Total interest expense increased by $1.5 million or 15.0% for the fourth quarter of 2024 compared to the fourth quarter of 2023 and increased $13.1 million or 40.0% for the year 2024 as compared to the same period in 2023 as a result of both the cost of and the growth in interest-bearing liabilities.

• Total cost of interest-bearing liabilities increased by thirty basis points to 4.08% for the fourth quarter of 2024 compared to 3.78% for the fourth quarter of 2023 and increased by eighty-four points to 4.10% at year-end 2024 as compared to 3.25% at year-end 2023.

• Net interest margin decreased by thirty-one basis points to 2.20% for the fourth quarter of 2024 as compared to 2.51% for the fourth quarter of 2023. and decreased fifty-nine basis points to 2.33% at year-end 2024 as compared to 2.92% at year-end 2023.

• Total assets increased by $115.0 million or 8.0% to $1.55 billion at December 31, 2024 compared to $1.44 billion at December 31, 2023.

• Total deposits increased by $77.1 million or 7.0% to $1.17 billion at December 31, 2024 compared to $1.10 billion at December 31, 2023.

• The annualized return on average total assets was 0.31% at December 31, 2024 compared to 0.99% at December 31, 2023.

• The annualized return on average shareholders' equity was 2.55% at December 31, 2024 compared to 7.51% at December 31, 2023.

• The book value per common share was $8.39 at December 31, 2024 compared to $8.06 at December 31, 2023.

Balance Sheet Review

Total assets increased by $115.0 million or 8.0% to $1.55 billion at December 31, 2024 from $1.44 billion at December 31, 2023. The increase in total assets was primarily related to increases in total cash and cash equivalents and total investment securities during the year ended December 31, 2024.

Total cash and cash equivalents increased by $72.9 million or 118.1% to $134.6 million at December 31, 2024 from $61.7 million at December 31, 2023. This increase was primarily due to increases in total deposits and wholesale borrowings.

Total loans receivable, net of allowance for credit losses decreased by $12.5 million or 1.0% to $1.22 billion at December 31, 2024 from $1.24 billion at December 31, 2023. Construction loans, Small Business Administration ("SBA") loans and residential mortgage loans decreased $16.1 million, $6.2 million and $2.6 million, respectively, primarily due to payoffs and maturities of such loans. These decreases were partially offset by a $7.6 million increase in commercial loans and a $5.1 million increase in commercial real estate loans. The allowance for credit losses increased by $286,000 to $14.8 million or 1.19% of gross loans at December 31, 2024 as compared to $14.5 million or 1.16% of gross loans at December 31, 2023.

Total investment securities increased by $43.1 million or 62.5% to $112.2 million at December 31, 2024 from $69.1 million at December 31, 2023. The increase in investment securities resulted primarily from $60.8 million in purchases of investment securities, partially offset by $6.4 million in sales of available-for-sale investment securities, $1.1 million in maturities and $10.3 million in total paydowns. The Company liquidated $6.4 million in available-for-sale investment securities in an effort to purchase higher yielding held-to-maturity investment securities. As a result of this sale, the Company recorded a loss of $237,000 from the sale of available-for-sale investment securities. The Company's decision to restructure its investment portfolio into higher yielding securities resulted in an increase of approximately 2.5% in average yield and an earn-back period of approximately two years for the loss recorded on the sale of investment securities.

Total deposits increased $77.1 million or 7.0% to $1.17 billion at December 31, 2024 from $1.10 billion at December 31, 2023. Within the components of total deposits, brokered deposits increased $93.0 million, money market deposits increased $60.7 million, savings deposits increased $5.3 million and non-interest-bearing demand deposits increased $3.2 million, partially offset by decreases of $82.7 million in time deposits and $2.4 million in NOW and interest checking account deposits.

Stockholders' equity decreased by $11.7 million or 6.4% to $172.3 million at December 31, 2024 from $184.0 million at December 31, 2023. The decrease in stockholders' equity was primarily due to $15.1 million in repurchases of common stock, offset by increases of $2.7 million in retained earnings and an increase of $616,000 in additional paid-in-capital. During 2024, the Company repurchased 2.4 million shares for approximately $15.1 million, or a weighted average price of approximately $6.20 per share. As a result of the repurchase of these shares at a discount to the book value, the Company's book value increased by $0.33 per share or 4.1% to $8.39 per share at December 31, 2024, from $8.06 per share at December 31, 2023.

Three Months of Operations

Net interest income decreased by $815,000 or 9.3% to $8.0 million for the three months ended December 31, 2024 from $8.8 million for the three months ended December 31, 2023. The decrease in net interest income was primarily due to an increase in funding costs and an increase in average interest-bearing liabilities.

Total interest income increased by $708,000 or 3.7% to $19.7 million for the three months ended December 31, 2024 from $19.0 million for the three months ended December 31, 2023. Interest income on loans, including fees, decreased $189,000 or 1.1% to $17.5 million for the three months ended December 31, 2024, compared to $17.7 million for the three months ended December 31, 2023. The decrease in interest income on loans, including fees, resulted primarily from a decline in the average balance of loans receivable of $11.4 million or 0.9% to $1.25 billion for the three months ended December 31, 2024 compared to $1.26 billion for the three months ended December 31, 2023. Interest income on interest-bearing deposits with other banks increased $491,000 or 82.1% to $1.1 million for the three months ended December 31, 2024 as compared to $598,000 for the same period in the prior year. This increase resulted from a higher average balance of interest-bearing deposits with banks of $48.4 million or 98.5% to $97.6 million for the three months ended December 31, 2024 compared to $49.2 million for the same period in the prior year. Interest income on investment securities increased $345,000 or 61.6% to $905,000 for the three months ended December 31, 2024 as compared to $560,000 for the same period in the prior year, as a result of purchasing and replacing paydowns of investment securities with higher yielding investment securities. The average yield on investment securities increased by 100 basis points to 4.16% for the three months ended December 31, 2024 compared to 3.16% for the same period in the prior year. Dividend income on restricted stock, primarily composed of Federal Home Loan Bank ("FHLB") stock, increased by $61,000 or 41.5% to $208,000 for the three months ended December 31, 2024 as compared to $147,000 for the same period in the prior year, primarily as a result of an increase of $3.1 million in average balance of restricted stock outstanding year over year.

Total interest expense increased by $1.5 million or 15.0% to $11.7 million for the three months ended December 31, 2024 from $10.2 million for the three months ended December 31, 2023. The increase in interest expense occurred primarily as a result of an increase in average balance of interest-bearing liabilities of $71.8 million or 6.7%, to $1.14 billion for the three months ended December 31, 2024 from $1.07 billion for the three months ended December 31, 2023 and a thirty basis points increase in the average cost of interest-bearing liabilities to 4.08% for the three months ended December 31, 2024 from 3.78% for the three months ended December 31, 2023. The increase in average balance of interest-bearing liabilities included a $65.5 million increase in average wholesale borrowings and a $6.3 million increase in average interest-bearing deposit liabilities for the three months ended December 31, 2024. The increase in the average cost of interest-bearing liabilities resulted primarily from the continued higher interest rate environment through most of the year 2024. The increase in interest-bearing liabilities was primarily used to maintain an increased level of liquidity consistent with regulatory guidance.

During the fourth quarter of 2024, the Company recorded a net benefit of $55,000 for credit losses as compared to a net $5.7 million benefit 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 fourth quarter of 2024, the Company recorded a provision for credit losses of $91,000 on corporate securities held-to-maturity, which was offset by a $146,000 reversal of provision for credit losses for loans and unfunded commitments. Management believes that the allowance for credit losses on loans and investment securities was appropriate at December 31, 2024 and 2023.

Net interest margin decreased by thirty-one basis points to 2.20% for the three months ended December 31, 2024 compared to 2.51% for the three months ended December 31, 2023. The decrease in the net interest margin is primarily due to an increase in the average cost of interest-bearing liabilities to 4.08% for the three months ended December 31, 2024 from 3.78% for the three months ended December 31, 2023 and an increase in the average balance of interest-bearing liabilities to $1.14 billion for the three months ended December 31, 2024 from $1.07 billion for the three months ended December 31, 2023. This increase was partially offset by an increase in average balance of interest earning assets of $56.2 million or 4.1% to $1.44 billion for the three months ended December 31, 2024 compared to $1.39 billion for the three months ended December 31, 2023.

Non-interest income decreased by $171,000 or 29.3% to $412,000 for the three months ended December 31, 2024 from $583,000 for the three months ended December 31, 2023. The decrease in total non-interest income resulted primarily from a decrease in other income of $198,000 as a result of a non-recurring loss on sale of available-for-sale investment securities of $237,000 recorded in the fourth quarter of 2024. Excluding this non-recurring loss, other income would have increased $40,000 when compared to the same period in the prior year. Income on bank owned life insurance increased $21,000 or 9.5% for the three months ended December 31, 2024 compared to the same period in the prior year as a result of an increase in interest yield.

Non-interest expense increased by $35,000 or 0.5% to $7.11 million for the three months ended December 31, 2024 compared to $7.08 million for the three months ended December 31, 2023. Salaries and employee benefits increased by $122,000 or 2.9% to $4.4 million for the three months ended December 31, 2024 as compared to $4.2 million for the three months ended December 31, 2023. The increase in salaries and employee benefits resulted primarily from an annual increase in health benefit costs and an increase in employee incentive expense year over year. Advertising and marketing expense decreased by $135,000 or 210.9% as a result of reduction in marketing consultant services. Professional fees decreased by $146,000 or 33.6% to $289,000 for the three months ended December 31, 2024 as compared to $435,000 for the three months ended December 31, 2023, primarily due to a reduction in legal services related to the formation of the holding company and a reduction in audit fees compared to the same period in the prior year period. Data processing costs increased by $120,000 or 30.1% to $519,000 for the three months ended December 31, 2024 from $399,000 for the three months ended December 31, 2023, as a result of annual fee increase, and additional cost related to new products and services. Other operating expenses increased by $134,000 or 18.9% to $844,000 for the three months ended December 31, 2024 from $710,000 for the three months ended December 31, 2023, primarily as a result of a $120,000 increase in loan related expenses, most of it related to the purchase of forced-place insurance policy. Other operating expenses are primarily comprised of loan related expenses, dues and subscriptions, digital banking expenses, sponsorships, training and education, software maintenance and depreciation, and miscellaneous expenses. Management will continue to manage its operating expenses prudently in an effort to enhance shareholder value.

The income tax provision decreased by $2.0 million or 92.2% to $167,000 for the three months ended December 31, 2024 from $2.1 million for the three months ended December 31, 2023. This decrease in the income tax provision resulted primarily from a decrease in the pre-tax income year over year. In addition, the effective tax yield declined year over year as a result of a reduction in New York state tax apportionment.

Full Year of Operations

Net interest income decreased by $6.5 million or 16.4% to $32.9 million for the year ended December 31, 2024 from $39.4 million for the year ended December 31, 2023. The decrease in net interest income was primarily due to an increase in funding costs and an increase in average interest-bearing liabilities, partially offset by an increase in average interest-earning assets year over year.

Total interest income increased by $6.6 million or 9.1% to $78.7 million for the year ended December 31, 2024 from $72.1 million for the year ended December 31, 2023. Interest income on loans, including fees, increased $4.2 million or 6.2% to $71.4 million for the year ended December 31, 2024, compared to $67.2 million for the year ended December 31, 2023. The increase in interest income on loans, including fees, resulted primarily from an increase in the average balance of loans receivable of $34.3 million or 2.8% to $1.25 billion for the year ended December 31, 2024 compared to $1.22 billion for the year ended December 31, 2023 and an increase of eighteen basis points in the average yield on loans to 5.70% for the year ended December 31, 2024 compared to 5.52% for the same period in the prior year. In addition, the increase in interest income on loans includes the recovery of approximately $200,000 in pre-payment penalties. Interest income on interest-bearing deposits with other banks increased $1.3 million or 56.3% to $3.5 million for the year ended December 31, 2024 as compared to $2.2 million for the same period in the prior year. This increase resulted from a higher average yield on interest-bearing deposits with banks of 4.78% for the year ended December 31, 2024 compared to 4.58% for the same period in the prior year, and an increase of $24.6 million in average balances of interest-bearing deposits with banks year over year. Interest income on investment securities increased $827,000 or 38.0% to $3.0 million for the year ended December 31, 2024 as compared to $2.2 million for the same period in the prior year, as a result of purchasing and replacing paydowns of investment securities with higher yielding investment securities. Average yield on investment securities increased by ninety-three basis points to 3.81% for the year ended December 31, 2024 compared to 2.88% for the same period in the prior year. Dividend income on restricted stock, primarily composed of FHLB stock, increased by $304,000 or 68.8% to $746,000 for the year ended December 31, 2024 as compared to $442,000 for the same period in the prior year, primarily as a result of a higher average yield on restricted stock of 8.58% for the year ended December 31, 2024 compared to 7.19% for the same period in the prior year, and an increase of $2.6 million in average restricted stock balance year over year.

Total interest expense increased by $13.1 million or 40.0% to $45.8 million for the year ended December 31, 2024 from $32.7 million for the year ended December 31, 2023. The increase in interest expense occurred primarily as a result of a eighty-five basis points increase in the average cost of interest-bearing liabilities to 4.10% for the year ended December 31, 2024 from 3.25% for the year ended December 31, 2023 and an increase in average balance of interest-bearing liabilities of $108.9 million or 10.8%, to $1.12 billion for the year ended December 31, 2024 from $1.01 billion for the year ended December 31, 2023. The increase in average balance of interest-bearing liabilities included a $54.4 million increase in average interest-bearing deposit liabilities and a $54.5 million increase in average wholesale borrowings for the year ended December 31, 2024. The increase in the average cost of interest-bearing liabilities resulted primarily from the continued higher interest rate environment. The increase in interest-bearing liabilities was used to maintain an increased level of liquidity consistent with regulatory guidance.

During the year 2024 the Company recorded a net $308,000 provision for credit losses as compared to a net benefit of $4.7 million 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 during the year 2024, the Company recorded a provision for credit losses on loans and corporate securities held-to-maturity totaling $465,000, which was offset by a $157,000 reversal of credit losses for unfunded commitments. Unfunded commitment balances declined by $57.0 million during the year 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 and investment securities was appropriate at December 31, 2024 and 2023.

Net interest margin decreased by fifty-nine basis points to 2.33% for the year ended December 31, 2024 compared to 2.92% for the year ended December 31, 2023. The decrease in the net interest margin is primarily attributable to an increase in the cost of interest-bearing liabilities to 4.10% for the year ended December 31, 2024 from 3.25% for the year ended December 31, 2023 and increase in the average balance of interest-bearing liabilities of $108.9 million or 10.8% to $1.12 billion for the year ended December 31, 2024 from $1.01 billion for the year ended December 31, 2023, partially offset by an increase in the average balance of interest earning assets of $65.8 million or 4.9% to $1.41 billion for the year ended December 31, 2024 compared to $1.35 billion for the year ended December 31, 2023, as well as an increase of twenty-two basis points in the yield of average interest earning assets to 5.57% for the year ended December 31, 2024 from 5.35% for the year ended December 31, 2023.

Non-interest income decreased by $440,000 or 17.5% to $2.1 million for the year ended December 31, 2024 from $2.5 million for the year ended December 31, 2023. The decrease in total non-interest income resulted primarily from a decrease in BOLI income of $292,000 or 23.4% to $954,000 for the year ended December 31, 2024 from $1.2 million for the year ended December 31, 2023. The decrease in BOLI income resulted from a one-time benefit received on the Bank's investment in BOLI in 2023. Services charges and fees increased $137,000 or 16.8% to $953,000 for the year ended December 31, 2024 from $816,000 for the year ended December 31, 2023, as a result of an increase in deposit accounts service charges. Other income decreased $285,000 during the year ended December 31, 2024 compared to the same period in the prior year as a result of a non-recurring loss on sale of available-for-sale investment securities of $237,000 and a reduction of $95,000 in rental income, offset by a $46,000 gain recorded on sale of assets. Excluding this non-recurring loss, other income would have decreased $47,000 when compared to the same period in the prior year.

Non-interest expense increased by $885,000 or 3.1% to $29.1 million for the year ended December 31, 2024 compared to $28.2 million for the year ended December 31, 2023. Salaries and employee benefits increased by $690,000 or 4.0% to $17.9 million for the year ended December 31, 2024 as compared to $17.2 million for the year ended December 31, 2023. The increase in salaries and employee benefits resulted primarily from an annual increase in health benefit costs year over year. Occupancy and equipment expense decreased by $272,000 or 6.8% to $3.7 million for the year ended December 31, 2024 as compared to $4.0 million for the year ended December 31, 2023 primarily due to a decrease in other real estate owned expenses ("OREO"), and equipment service contract costs. Advertising and marketing expenses decreased $135,000 or 38.6% to $215,000 for the year ended December 31, 2024, as compared to $350,000 for the year ended December 31, 2023 primarily due to a reduction in marketing consulting services. Professional fees decreased by $369,000 or 17.7% to $1.7 million for the year ended December 31, 2024 from $2.1 million for the year ended December 31, 2023 as a result of reduction in legal services related to the formation of the Holding Company and audit fees. Data processing costs increased by $380,000 or 36.1% to $1.4 million for the year ended December 31, 2024 from $1.1 million for the year ended December 31, 2023 as a result of annual fee increase and additional cost related to new products and services. Other expenses increased by $616,000 or 22.1% to $3.4 million for the year ended December 31, 2024 from $2.8 million for the year ended December 31, 2023. Other operating expenses are primarily comprised of loan related expenses which increased $57,000, dues and subscriptions which increased $142,000, sponsorships which increased $59,000, digital banking expenses, training and education which increased $56,000, software maintenance and depreciation which increased $93,000, miscellaneous expenses which increased $70,000, and small variances in other components of other operating expenses. There was no loss on sale of OREO for the year ended December 31, 2024 compared to a loss on sale of OREO of $59,000 recorded during the year ended December 31, 2023.

The income tax provision decreased by $3.6 million or 76.9% to $1.1 million for the year ended December 31, 2024 from $4.7 million for the year ended December 31, 2023. The decrease in the income tax provision resulted primarily from a decrease in earnings before income taxes of $12.8 million or 69.6%, to $5.6 million for the year ended December 31, 2024 from $18.4 million for the year ended December 31, 2023. The effective tax rate for the year ended December 31, 2024 was 19.2% as compared to 25.3% for the year ended December 31, 2023. In addition, the effective tax yield declined year over year as a result of a reduction in New York state tax apportionment.

Asset Quality

The allowance for credit losses increased by $286,000 or 2.0% to $14.8 million or 1.19% of gross loans at December 31, 2024 as compared to $14.5 million or 1.16% of gross loans at December 31, 2023. During the year 2024, the Company added a $292,000 provision to the allowance for credit losses and had net charge-offs of $7,000. 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 $16.6 million or 1.34% of gross loans at December 31, 2024 as compared to $18.4 million or 1.47% of gross loans at December 31, 2023. Non-accrual loans decreased by $1.8 million or 9.8% from December 31, 2023. The allowance for credit losses was 88.7% of non-accrual loans at December 31, 2024, compared to 78.8%, at December 31, 2023.

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, Robbinsville and Teaneck, New Jersey. For more information, please go to .

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.