First Resource Bank Announces Second Quarter 2008 Results

EXTON, Pa., July 23 /PRNewswire-FirstCall/ -- First Resource Bank
(OTC Bulletin Board: FRSB) announced that it returned to profitability in the
second quarter with net income of $23,672 for the three months ended June 30,
2008. Pre-tax income for the quarter ended June 30, 2008 was $37,497, which
compares to pre-tax loss of $94,136 for the quarter ended March 31, 2008 and
pre-tax income of $25,177 for the quarter ended June 30, 2007.
Net interest income was $720,504 for the quarter ended June 30, 2008 as
compared to $725,539 for the previous quarter. This modest decline was due to
the net interest margin decline from 3.23% for the first quarter to 3.06% for
the second quarter of 2008. This decline in the net interest margin is a
direct result of the rapid decline in the yield on prime rate based loans due
to the precipitous rate cuts announced by the Federal Reserve's Federal Open
Market Committee in the first three months of 2008, the full impact of which
was experienced during the second quarter. President & Chief Executive
Officer, Glenn B. Marshall, stated, "We believe that our net interest margin
may have bottomed out in the second quarter. We expect the majority of our
certificate of deposit portfolio to re-price downward during the remainder of
2008, which will positively impact the net interest margin going forward."
The loan portfolio grew $2.3 million, or 2.6%, during the second quarter
to $90.2 million at June 30, 2008 as follows:

June 30, March 31, June 30,
2008 2008 2007

Commercial real estate $ 45,224,825 $ 45,756,858 $ 39,611,522
Commercial construction 15,740,019 14,288,686 11,380,661
Commercial business 9,578,888 9,086,959 5,678,403
Consumer 19,626,732 18,758,857 17,495,239

Total loans $ 90,170,464 $ 87,891,360 $ 74,165,825

The loan portfolio grew $2.3 million during the second quarter which was
less than historical growth on a linked quarter basis. This slower growth can
be attributed to tighter underwriting standards as well as an increased level
of loan payoffs during the quarter.
Mr. Marshall stated, "Our approach will be to continue to focus on
long-term lending relationships. We continue to build these relationships
within our local Chester County, Pennsylvania market, which has remained
relatively stable compared to the nationwide real estate issues that have
affected many banks around the country. We are focused on the long-term growth
of the Bank's portfolio and achieving an improved net interest margin, which
will result in more consistent profitability."
The allowance for loan losses is calculated with two distinct components,
a general reserve for pass rated loans which increases as loans are closed and
a reserve for problem loans. The provision for loan losses of $38,489 for the
three months ended June 30, 2008 was significantly lower than previous
quarters due to lower new loan production during the quarter. The allowance
for loan losses to total loans was 1.07% at June 30, 2008 as compared to 1.08%
at March 31, 2008 and 1.11% at December 31, 2007. There was one $20,000 loan
charge-off during the three months ended June 30, 2008, bringing year to date
total loan charge-offs to $143,000. All charge-offs to date have been home
equity lines of credit. Non-performing loans at June 30, 2008 totaled
$827,029, comprised of one $637,098 commercial construction loan relationship
and two unrelated home equity lines of credit totaling $189,931. There were no
additions to the non-performing loan portfolio during the three months ended
June 30, 2008, and there were no other loans more than 90 days past due at
June 30, 2008.
Deposits decreased $1.8 million, or 2.3%, during the second quarter to a
total of $78.1 million at June 30, 2008. The majority of this decline was in
money market accounts and certificates of deposit. Although deposits were down
in the second quarter, when combined with the strong deposit growth in the
first quarter, total deposits increased $8.4 million, or 12.1% during the
first half of 2008.

Selected Financial Data:

Balance Sheets (unaudited)
June 30, Dec. 31, June 30,
2008 2007 2007
Cash and due from banks $1,406,724 $ 1,506,236 $581,653
Federal funds sold 25,000 26,000 -
Cash & cash equivalents 1,431,724 1,532,236 581,653
Investments 14,154,863 13,285,659 8,572,083
Loans 90,170,464 81,494,923 74,165,825
Allowance for loan losses (969,285) (908,342) (866,778)
Premises & equipment 407,210 381,200 390,132
Other assets 1,556,929 1,516,360 559,688

Total assets $106,751,905 $97,302,036 $83,402,603

Non-interest bearing
deposits $3,814,056 $ 2,500,698 $ 4,926,397
Interest-bearing checking 1,153,387 1,368,086 1,164,687
Money market 18,838,545 16,656,631 17,771,884
Time deposits 54,301,893 49,151,653 48,485,727
Total deposits 78,107,881 69,677,068 72,348,695
Borrowings 19,136,000 18,120,700 2,268,000
Other liabilities 362,875 355,671 341,155

Total liabilities 97,606,756 88,153,439 74,957,850

Common stock 1,198,825 1,197,994 1,140,517
Surplus 9,061,515 9,012,240 9,022,172
Accumulated other
comprehensive income
(loss) (13,974) 478 (38,078)
Accumulated deficit (1,101,217) (1,062,115) (1,679,858)
Total stockholders' equity 9,145,149 9,148,597 8,444,753

Total Liabilities &
Stockholders' Equity $106,751,905 $97,302,036 $83,402,603

Performance Statistics
(unaudited)
Qtr Qtr Qtr Qtr Qtr
Ended Ended Ended Ended Ended
June 30, Mar. 31, Dec. 31, Sept 30, June 30,
2008 2008 2007 2007 2007
Net interest margin 3.06% 3.23% 3.59% 3.60% 3.71%
Nonperforming loans/total loans 0.92% 1.03% 0.48% 1.16% 0.79%
Allowance for loan losses/
Total loans 1.07% 1.08% 1.11% 1.19% 1.17%
Average loans/Average assets 92.7% 93.4% 93.6% 90.9% 88.9%
Non interest expenses/
Average assets 0.71% 0.74% 0.80% 0.77% 0.79%

Income Statements (unaudited)

Qtr Ended Qtr Ended Qtr Ended Qtr Ended Qtr Ended
June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
2008 2008 2007 2007 2007
INTEREST INCOME
Loans $1,491,209 $1,533,961 $1,606,329 $1,559,217 $1,439,434
Investments 43,536 37,506 51,293 71,010 69,034
Federal funds
sold 5,568 6,616 368 14,335 48,869
Other 66 140 145 204 1,214
Total interest
income 1,540,379 1,578,223 1,658,135 1,644,766 1,558,551

INTEREST EXPENSE
Borrowings 77,493 65,691 51,502 6,291 1,441
Checking 2,144 2,631 2,447 2,766 2,735
Money Market 124,712 152,605 183,065 214,885 203,405
Time deposits 615,526 631,757 648,941 666,135 621,352
Total interest
expense 819,875 852,684 885,955 890,077 828,933

Net interest
income 720,504 725,539 772,180 754,689 729,618

Provision for
loan losses 38,489 165,738 68,980 72,825 94,676

NON INTEREST INCOME
Mortgage fee income 2,214 11,129 7,022 7,818 9,713
Other income 32,887 16,929 18,106 15,436 10,046
Total non
interest income 35,101 28,058 25,128 23,254 19,759

NON INTEREST EXPENSE
Salaries &
benefits 339,595 357,128 342,404 330,995 320,053
Occupancy &
equipment 98,922 88,143 89,325 86,212 79,554
Data processing 49,689 49,787 50,184 44,064 41,588
Professional fees 55,617 53,479 54,380 62,836 61,092
Advertising 23,590 19,223 31,023 26,273 27,421
Other non
interest expenses 112,206 114,235 125,684 100,733 99,816
Total non
interest expense 679,619 681,995 693,000 651,113 629,524

Pre-tax income
(loss) 37,497 (94,136) 35,328 54,005 25,177

Tax benefit
(expense) (13,825) 31,362 (13,642) 542,053 -

Net income
(loss) $23,672 $(62,774) $21,686 $596,058 $25,177

Income Statements (unaudited)

Six Months Ended Six Months Ended
June 30, 2008 June 30, 2007
INTEREST INCOME
Loans $3,025,170 $2,756,794
Investments 81,042 114,356
Federal funds sold 12,184 166,607
Other 206 1,681
Total interest income 3,118,602 3,039,438

INTEREST EXPENSE
Borrowings 143,184 1,441
Checking 4,775 4,680
Money Market 277,317 399,048
Time deposits 1,247,283 1,231,434
Total interest expense 1,672,559 1,636,603

Net interest income 1,446,043 1,402,835

Provision for loan losses 204,227 188,886

NON INTEREST INCOME
Mortgage fee income 13,343 22,486
Other income 49,816 17,526
Total non interest income 63,159 40,012

NON INTEREST EXPENSE
Salaries & benefits 696,723 649,633
Occupancy & equipment 187,065 168,357
Data processing 99,476 85,081
Professional fees 109,096 102,466
Advertising 42,813 41,246
Other non interest expense 226,441 173,948
Total non interest expense 1,361,614 1,220,731

Pre-tax income (loss) (56,639) 33,230

Tax benefit (expense) 17,537 -

Net income (loss) $(39,102) $33,230

About First Resource Bank
First Resource Bank is a locally owned and operated Pennsylvania
state-chartered bank, serving the banking needs of businesses, professionals
and individuals in Chester County, Pennsylvania. The Bank offers a full range
of deposit and credit services with a high level of personalized service.
First Resource Bank also offers a broad range of traditional financial
services and products, competitively priced and delivered in a responsive
manner to small businesses, professionals and residents in the local market.
For additional information visit our website at www.firstresourcebank.com.
Member FDIC.
This press release contains statements that are not of historical facts
and may pertain to future operating results or events or management's
expectations regarding those results or events. These are "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities and Exchange Act of 1934. These forward-
looking statements may include, but are not limited to, statements about our
plans, objectives, expectations and intentions and other statements contained
in this press release that are not historical facts. When used in this press
release, the words "expects", "anticipates", "intends", "plans", "believes",
"seeks", "estimates", or words of similar meaning, or future or conditional
verbs, such as "will", "would", "should", "could", or "may" are generally
intended to identify forward-looking statements. These forward-looking
statements are inherently subject to significant business, economic and
competitive uncertainties and contingencies, many of which are either beyond
our control or not reasonably capable of predicting at this time. In
addition, these forward-looking statements are subject to assumptions with
respect to future business strategies and decisions that are subject to
change. Actual results may differ materially from the results discussed in
these forward-looking statements. Readers of this press release are
accordingly cautioned not to place undue reliance on forward-looking
statements. First Resource Bank disclaims any intent or obligation to update
publicly any of the forward-looking statements herein, whether in response to
new information, future events or otherwise.
SOURCE First Resource Bank

Glenn Marshall, President & CEO, First Resource Bank, +1-610-561-6013