COLLINGSWOOD, N.J.--(BUSINESS WIRE)--Aug 1, 2018--1st Colonial Bancorp, Inc. (FCOB), holding company of 1 st Colonial Community Bank, today reported net income of $1.3 million, or $0.29 per diluted share, for the three months ended June 30, 2018 compared to net income of $1.0 million, or $0.22 per diluted share, for the three months ended June 30, 2017. For the six months ended June 30, 2018, net income was $2.4 million, or $0.55 per diluted share, compared to $2.0 million, or $0.47 per diluted share for the same period in 2017. The 2017 earnings per diluted share were adjusted to give effect to the 5% stock dividend distributed to shareholders on April 16, 2018.

Gerry Banmiller, President and Chief Executive Officer, commented, “With the increase in short-term interest rates, we have been able to prudently manage our loan growth and overall product pricing.This sensible approach resulted in a 9% increase in net interest income, which is a fundamental component of our earnings.”

Highlights for the three and six months ended June 30, 2018, included:

Balance Sheet Trends:

At June 30, 2018, total assets were $553.4 million and grew $13.3 million, or 2.5% from $540.1 million at December 31, 2017. Total loans were $397.0 million at June 30, 2018, an increase of $20.5 million, or 5.4%, from $376.5 million at December 31, 2017. During the first six months of 2018, commercial mortgage loans and construction loans grew $11.3 million and $3.9 million, respectively. Total deposits were $508.1 million at June 30, 2018, an increase of $11.3 million, or 2.3%, from $496.8 million at December 31, 2017. During the second quarter of 2018, we ran a successful certificates of deposit promotion which helped grow such deposits by $23.9 million, or 23.1%. Municipal deposits and brokered deposits declined $17.5 million and $5.7 million, respectively. Total shareholders’ equity was $40.6 million at June 30, 2018, an increase of $2.2 million, or 5.8%, from $38.4 million at December 31, 2017. 1 st Colonial's non-performing assets at June 30, 2018 were $2.5 million compared to $2.3 million at December 31, 2017. Non-performing assets to total assets at June 30, 2018 were 0.45% compared to 0.43% at December 31, 2017.

Income Statement and Other Highlights:

Net interest income for the three months ended June 30, 2018 increased $307 thousand, or 7.3%, to $4.5 million from $4.2 million for the three months ended June 30, 2017. For the first six months of 2018, net interest income grew $741 thousand, or 9.0%, to $8.9 million from $8.2 million for the same period in 2017. The growth in net interest income was primarily related to an increase in interest income on loans and in the average yield earned on average interest-earning assets. The 75 basis point increase in the fed funds rate since June 2017 has had a positive impact on our variable rate loans and our interest-earning deposits. The improvement in interest income was partially offset by an increase in the interest paid on certificates of deposit, NOW accounts and money market accounts. The net interest margin was 3.45% for the second quarter of 2018 compared to 3.38% for the second quarter of 2017, and was 3.44% for the six months ended June 30, 2018 compared to 3.35% for the six months ended June 30, 2017. The increase in net interest margin was directly related to an increase in the yield on average interest-earning assets. For the three and six months ended June 30, 2018, we recorded a provision to the allowance for loan losses of $311 thousand and $589 thousand, respectively, compared to $279 thousand and $379 thousand for the three and six months ended June 30, 2017. The increase in the 2018 provision was related to an increase in specific reserves required on impaired loans. The allowance for loan losses as a percentage of total loans was 1.32% at June 30, 2018 compared to 1.29% at December 31, 2017. Non-interest income for the second quarter of 2018 was $1.0 million, a decrease of $59 thousand, or 5.5%, from $1.1 million for the second quarter of 2017. Gains on the sale of small business administration (“SBA”) loans increased $118 thousand while the gains on the sale of residential mortgages declined $182 thousand, due to a decline in the volume of mortgage loans sold. Additionally, in the second quarter of 2017, we sold an investment security and recorded a gain of $25 thousand as a result of the sale. There were no such sales in the second quarter of 2018. Non-interest income for the first two quarters of 2018 was $1.7 million, a decrease of $292 thousand, or 14.9%, from $2.0 million for the first two quarters of 2017. Gains on the sale of residential mortgages and the sale of SBA loans and declined $245 thousand and $41 thousand, respectively, due to a decline in the volume of loans sold. As interest rates have started to increase, residential mortgage originations have become increasingly competitive. Non-interest expense was $3.5 million for the three months ended June 30, 2018 and increased $127 thousand, or 3.8%, from $3.4 million for the comparable period in 2017. Contributing to the increase in non-interest expense for the second quarter of 2018 was a $98 thousand increase in salaries and benefits related to an increase in headcount in the lending support and compliance functions. Data processing and occupancy and equipment expenses increased $72 thousand and $45 thousand, respectively. During the fourth quarter of 2017 we leased additional office space at our operations and administration center in Cherry Hill, New Jersey. Non-interest expense was $6.8 million for the six months ended June 30, 2018 and increased $220 thousand, or 3.3%, from $6.6 million for the comparable period in 2017. Contributing to the increase in non-interest expense for 2018 was a $193 thousand increase in salaries and benefits related to the planned increase in headcount in the lending support and compliance functions. Data processing and occupancy and equipment expenses increased $142 thousand and $74 thousand respectively. Partially offsetting these increases in non-interest expense was a decline in professional fees and advertising expenses of $47 thousand and $44 thousand, respectively. For the three and six months ended June 30, 2018, income tax expense was $412 thousand and $800 thousand, respectively, compared to $613 thousand and $1.2 million for the three and six months ended June 30, 2017, respectively. The $383 thousand decrease in tax expense year-over-year was related to H.R.1 (originally known as the “Tax Cuts and Jobs Act”) which was enacted on December 22, 2017. H.R.1 lowered the maximum federal corporate tax rate to 21% from 35%.

Highlights as of June 30, 2018 and 2017, and a comparison of the three and six months ended June 30, 2018 to the three and six months ended June 30, 2017 include the following:

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