Breaking Down First Bank (FRBA) Financial Health: Key Insights for Investors

You're looking at First Bank (FRBA) and wondering if the recent performance is a durable trend or just a blip, and honestly, that's the right question to ask in this market. The headline numbers from the third quarter of 2025 are defintely strong: the bank delivered $11.7 million in net income, a 43% jump year-over-year, driven by a Net Interest Margin (NIM) that expanded to 3.71%. That's a powerful engine. But a closer look at the balance sheet, now sitting at $4.03 billion in total assets, shows a slight crack in the foundation-specifically, the $1.7 million in net charge-offs recorded in Q3, mostly tied to the small business loan segment, which is a clear credit quality risk you can't ignore. We need to map that risk against the opportunity of their loan portfolio growth, which hit $3.37 billion by September 30, 2025. The bank is growing, but where are they taking on risk? Let's break down the real story behind those numbers and figure out what your next move should be.

Revenue Analysis

You need a clear picture of where First Bank (FRBA) actually makes its money, especially with the market's focus on interest rate sensitivity. The direct takeaway is that First Bank's revenue engine is overwhelmingly driven by its core lending business-Net Interest Income (NII)-which is growing, but its overall revenue growth is slowing from previous highs.

For the trailing twelve months (TTM) ending September 30, 2025, First Bank reported total revenue of approximately $135.18 million. This represents a year-over-year revenue growth of 9.51%, which is solid, but notably lower than the 34.24% growth seen in the full 2024 fiscal year. Honestly, a slowdown from that kind of explosive growth is expected, but we need to watch the pace.

The primary revenue streams for First Bank are clearly delineated between Net Interest Income (NII)-the difference between interest earned on loans and interest paid on deposits-and Non-Interest Income (fees, service charges, etc.). The breakdown for the third quarter of 2025 (Q3 2025) shows just how dominant NII is:

• Net Interest Income was $35.5 million.
• Non-Interest Income was $2.4 million.

Here's the quick math: Out of the calculated total quarterly revenue of $37.9 million, NII contributed approximately 93.67%. That's a bank, defintely. Non-Interest Income, while important for diversification, made up only about 6.33%.

The year-over-year growth in Net Interest Income is a key opportunity. In Q3 2025, NII increased by a strong 18.1% compared to the same period in 2024, reaching $35.5 million. This growth is directly tied to two factors: higher average loan balances and a significant 42 basis point reduction in the cost of interest-bearing deposits, which helped expand the net interest margin (NIM). This is the kind of effective interest rate spread management you want to see.

The bank's strategic shift is also impacting the composition of its lending portfolio, which is the engine for NII. First Bank is transitioning from a traditional community bank to a middle-market commercial bank, and this is showing up in the loan book. New business units, particularly in Commercial & Industrial (C&I) and owner-occupied commercial real estate, represented 75% of the recent loan growth. This diversification away from just Investor Commercial Real Estate (CRE) is a deliberate move to mitigate concentration risk and capture higher-yielding commercial relationships. You can dive deeper into this strategic pivot in Breaking Down First Bank (FRBA) Financial Health: Key Insights for Investors.

What this estimate hides is the volatility in Non-Interest Income, which declined to $2.4 million in Q3 2025 from $2.7 million in the prior quarter, primarily due to lower loan fee income earlier in the year. Still, the overall trend in the main revenue driver, NII, remains positive and is the most important factor for investors to track.

Profitability Metrics

You want to know if First Bank (FRBA) is truly profitable, not just growing its balance sheet. The short answer is yes, and its operational efficiency is a key differentiator. The bank's profitability metrics for the 2025 fiscal year show a strong performance, particularly in its core lending business and cost management, which is defintely the lever to watch in a tightening credit environment.

The core engine of any bank's profitability is its Net Interest Margin (NIM), which is the difference between the interest it earns on loans and the interest it pays on deposits. For the third quarter of 2025, First Bank (FRBA) reported a NIM of 3.71%. This is a solid figure, notably higher than the community bank average NIM of 3.62% reported in the second quarter of 2025. This spread is your 'Gross Profit' proxy, and it's expanding, which is what we want to see.

Margin Analysis: Gross, Operating, and Net

When analyzing a bank, we look at three key margins to understand how effectively revenue flows to the bottom line. The trend in these margins over 2025 shows a clear, positive trajectory driven by cost control and strategic loan growth.

• Gross Profit Margin (NIM): At 3.71% in Q3 2025, it's outpacing the community bank peer average.
• Operating Profit Margin (Efficiency): The bank's Efficiency Ratio, which is non-interest expense divided by net revenue, dropped to 51.81% in Q3 2025. This is a huge improvement from the Q1 2025 ratio of 57.65%, and significantly better than the overall industry aggregate of 56.2% in Q1 2025. Simply put, they are spending less to make a dollar of revenue.
• Net Profit Margin: The most recent annualized Net Profit Margin stands at 29.2%, an increase from 26.8% in the prior year. Based on the full-year 2025 revenue consensus of $135.92 million, this margin translates to an estimated net profit of approximately $39.7 million for the fiscal year.

Here's the quick math on operational efficiency: an efficiency ratio of 51.81% means First Bank (FRBA) spends only 51.81 cents to generate a dollar of revenue, while the average bank spends over 56 cents. That's a powerful competitive edge in a rising rate environment.

Trends and Peer Comparison

The trend in profitability is one of sustained improvement throughout 2025. The Q3 2025 Return on Average Assets (ROAA), a key measure of management's ability to generate earnings from the bank's assets, was 1.16%. This matches the industry aggregate ROAA reported in Q1 2025, indicating that First Bank (FRBA) is generating profits from its balance sheet on par with the broader, more diversified banking sector, even as the industry aggregate ROAA dipped to 1.13% in Q2 2025.

The improvement is not accidental; it's driven by two clear actions: disciplined cost management and a strategic shift in funding. The drop in the cost of deposits to 2.69% in Q3 2025 helped widen the NIM. Also, the continuous improvement in the efficiency ratio from 57.65% to 51.81% in just three quarters shows their investments in technology and expense controls are paying off. This focus on operational efficiency is the main reason First Bank (FRBA) is able to deliver a higher net profit margin than its peers. What this estimate hides, however, is the potential pressure on NIM if the Federal Reserve were to resume rate cuts, forcing loan yields down faster than deposit costs. Investors should track that spread closely.

For a deeper dive into the bank's capital structure and risk profile, you can check out the full analysis at Breaking Down First Bank (FRBA) Financial Health: Key Insights for Investors.

Next step: Dig into the asset quality metrics, specifically nonperforming loans and commercial real estate exposure, to ensure this profitability is sustainable.

Debt vs. Equity Structure

When you look at First Bank (FRBA), you need to remember it's a bank, so its balance sheet structure is different from a typical manufacturer or tech company. Most of its liabilities are customer deposits, not traditional debt. Still, the way they manage their borrowings and capital is a clear indicator of financial discipline and their growth strategy.

As of the third quarter of 2025, First Bank's primary funding source outside of equity is its total interest-bearing liabilities, which stood at approximately $2.910 Billion (as of September 30, 2025). This figure includes interest-bearing deposits and other borrowings. For comparison, their stockholders' equity was $420.878 Million at the same time. That's a lot of funding coming from non-equity sources, which is normal for a bank. Their core strategy is to use deposits and borrowings to fund their loan growth.

Here's the quick math on their leverage, which tells you how much debt they use to finance assets:

A Debt-to-Equity (D/E) ratio of 8.52 (as of June 30, 2025) is standard in the banking sector because deposits are classified as liabilities, which inflates the debt side of the ratio. What matters more for a bank is its regulatory capital. First Bank is defintely well-capitalized, with a Total Risk-Based capital ratio of 12.25% as of September 30, 2025, comfortably exceeding regulatory minimums.

On the debt side, First Bank is actively managing its capital stack. In June 2025, they completed a $35.0 Million private placement of fixed-to-floating rate subordinated notes. This was a smart move because they used the proceeds to redeem $30.0 Million of existing subordinated notes, effectively refinancing to enhance their capital base without diluting shareholders. The new notes, which mature in 2035, carry a fixed interest rate of 7.125% for the first five years and qualify as Tier 2 capital for regulatory purposes.

This refinancing shows a preference for debt (specifically, subordinated debt that counts as capital) over issuing new common stock to fund growth. They want to avoid shareholder dilution. The credit rating agency KBRA affirmed their senior unsecured debt rating at BBB+ and subordinated debt rating at BBB in December 2024, with a Stable Outlook, which speaks to their consistent, effective management.

Here's how they balance debt and equity funding:

• Debt Financing: Used for strategic capital enhancement and growth funding, as seen with the 2025 subordinated debt offering, which also provides tax-deductible benefits.
• Equity Funding: Primarily generated through retained net income. Stockholders' equity increased by $22.7 Million in the first nine months of 2025, driven by net income.
• Capital Return: This is the key. They offset the equity growth with dividends and share repurchases, indicating a commitment to returning capital to shareholders rather than hoarding it.

The next step is to dig into the quality of those loans funded by this capital. You can start by Exploring First Bank (FRBA) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You want to know if First Bank (FRBA) has the cash on hand to cover its short-term obligations, and honestly, the answer is nuanced, as it is with most banks. The key takeaway is that while traditional liquidity ratios look low, the bank's core funding-deposits-is growing, which is a major strength.

Current and Quick Ratios: A Bank's Different Math

For a manufacturing company, a Current Ratio of 2.0x is great, but for a bank, the math is defintely different. The Current Ratio, which compares current assets to current liabilities, was around 1.15x in the second quarter of 2025, a slight increase from 1.12x in Q1 2025. This ratio is primarily driven by the bank's cash, short-term investments, and deposits from other banks versus its customer deposits and short-term borrowings.

The Quick Ratio (or Acid-Test Ratio), which excludes less liquid assets like inventory (not a big factor for a bank) and prepaid expenses, is a consistently low 0.1x as of September 2025. This looks alarming on its face, but it's typical for a bank where the largest asset, loans, is not considered a quick asset, and the largest liability, customer deposits, is technically a short-term obligation. You must look at the funding mix instead.

Analysis of Working Capital and Funding Trends

The real working capital story for a bank is in its funding mix, specifically the Loan-to-Deposit (LTD) Ratio. In an ideal world, you want this ratio below 100% to show that all loans are funded by stable customer deposits, not wholesale borrowing. First Bank (FRBA) has been running hot, with the LTD ratio at about 105% in Q2 2025. By the end of Q3 2025, Total Loans hit $3.37 billion and Total Deposits were $3.22 billion, keeping the ratio near that 105% mark.

Here's the quick math: The difference means the bank is relying on other, potentially more expensive or less stable, sources of funding for that extra 5% of its loan book. Still, the bank grew its Total Deposits by $167.7 million during the first nine months of 2025, which is a strong organic funding source.

• Loans are outpacing deposits, creating a funding gap.
• Deposit growth of $167.7 million is a positive trend.
• Time deposits increased, which is more expensive but more stable.

Cash Flow Statements Overview (Operating, Investing, and Financing)

The overall cash position is healthy, with Cash and Cash Equivalents increasing by $47.0 million over the nine months ended September 30, 2025. We can map the cash flow trends by looking at the bank's activities:

The bank is effectively funding its aggressive loan growth (Investing, a use of cash) with a combination of solid operating profits and new deposits (Financing, a source of cash). That's a sustainable model, provided credit quality holds up.

Potential Liquidity Concerns and Strengths

The primary concern is the elevated Loan-to-Deposit Ratio of approximately 105%. This signals a reliance on non-deposit funding, which could become a risk if market liquidity tightens or interest rates rise unexpectedly, increasing the cost of funds. The strength, however, is the consistent growth in core deposits and the fact that the bank's capital ratios remain well above regulatory minimums. For instance, the Tier 1 Leverage ratio was 9.54% as of September 30, 2025, comfortably exceeding the well-capitalized threshold. This strong capital position acts as a significant buffer against any short-term liquidity stress. You can dive deeper into the credit side of the equation in the full post: Breaking Down First Bank (FRBA) Financial Health: Key Insights for Investors.

Valuation Analysis

You are looking at First Bank (FRBA) and asking the right question: is the market pricing this regional bank accurately? Based on the latest fiscal year 2025 data, the stock appears to be undervalued relative to its tangible assets, but its forward Price-to-Earnings (P/E) ratio suggests a fair, though not deeply discounted, earnings multiple.

Here's the quick math on how First Bank stacks up against its core valuation metrics as of November 2025. We focus on Price-to-Book (P/B) for banks because tangible equity is their real engine. Right now, First Bank's Price-to-Book (P/B) ratio is 0.93, based on a June 2025 book value per share of $16.96. A P/B below 1.0 means the market values the company at less than the value of its net assets, suggesting a potential discount. The current stock price of approximately $15.09 (as of November 20, 2025) is defintely below that book value.

The Price-to-Earnings (P/E) ratio tells a slightly different story. The trailing twelve months (TTM) P/E is 9.13x. For the full 2025 fiscal year, analysts forecast an even lower forward P/E of around 8.71x. This is a reasonable multiple for a regional bank, especially compared to the broader market, but it doesn't scream deep value the way the P/B ratio does. What this estimate hides is the potential for interest rate changes to impact the net interest margin (NIM), which could shift the earnings picture fast.

• Current P/E (TTM): 9.13x
• 2025 Forecast P/E: 8.71x
• Current P/B Ratio: 0.93x

Stock Price Trend and Dividend Health

Looking at the last 12 months, First Bank (FRBA) has traded in a wide range, from a 52-week low of $12.74 to a high of $17.40. The stock is currently sitting in the middle of that range, which is a neutral position, but the long-term trend is still positive. The dividend picture is healthy, which is a key factor for bank investors. The current dividend yield is 1.59%. More importantly, the payout ratio-the percentage of earnings paid out as dividends-is a very conservative 14.4%. A low payout ratio like this suggests the dividend is safe and there is ample room for future growth or capital retention for loan growth.

Analyst Consensus and Target Price

Wall Street's professional view on First Bank is generally bullish. The consensus rating among analysts is a Buy/Strong Buy. This is a strong signal. The average 12-month price target is $18.25, which implies a potential upside of approximately 16.54% from the recent price. That's a solid return profile for a regional bank with a conservative dividend. For a deeper dive into who is buying and why, you should check out Exploring First Bank (FRBA) Investor Profile: Who's Buying and Why?

Next step: Portfolio Manager: Model a scenario where the P/B ratio moves to 1.0x to quantify the required stock price increase by the end of Q1 2026.

Risk Factors

You need a clear-eyed view of where First Bank (FRBA) is exposed, and honestly, the near-term risk profile is a classic regional bank story: strong growth but with pockets of credit quality strain and the perpetual battle for cheap deposits. The key risks are less about systemic failure-their capital ratios are strong-and more about margin compression and asset quality management in a tight economy.

The biggest internal financial risk is the noticeable uptick in nonperforming loans (NPLs) and charge-offs. Total NPLs climbed from $11.7 million at the end of 2024 to $14.4 million by September 30, 2025. That's a 23% increase. Here's the quick math on where the stress is showing up:

• Small Business Credit: Net charge-offs hit $1.7 million in Q3 2025, primarily reflecting losses in the small business portfolio.
• Credit Loss Expense: The bank's provision for credit losses rose to $3.0 million in Q3 2025, up from $2.6 million in the prior quarter, which directly cuts into profitability.
• Real Estate Impairment: They also took an $815,000 write-down on an Other Real Estate Owned (OREO) asset in New York City during Q1 2025, a clear sign of commercial real estate pressure.

This is a defintely a watch-item; strong loan growth is great, but not if it outpaces prudent risk management.

External Risks and Mitigation Strategy

Externally, First Bank (FRBA) faces the same headwinds as all regional banks: intense competition for deposits and an evolving regulatory landscape. The cost of funding is a constant threat to the Net Interest Margin (NIM). They are actively managing this, but deposit growth lagged loan growth in Q1 2025, forcing them to use higher-cost brokered deposits. The refinancing of subordinated debt in June 2025, where they replaced a $30.0 million note with a new $35.0 million note at a fixed rate of 7.125%, underscores the current high-rate environment for institutional funding.

On the operational side, the broader financial sector is grappling with cybersecurity threats, with global cybercrime expected to surpass $10.5 trillion by the end of 2025. Regional banks are prime targets. Also, expect continued regulatory scrutiny, especially around interest rate risk in the banking book (IRRBB) and capital adequacy (ICAAP) under the Basel framework.

The good news is that management is not sitting still. Their mitigation strategies are clear and actionable:

They are well-capitalized, with a Tier 1 Leverage ratio of 9.54% as of September 30, 2025, which gives them a cushion against credit shocks. They are also strategically growing their Commercial and Industrial (C&I) portfolio, which generally carries a lower risk profile than pure real estate, but the small business losses need to be contained. For a deeper dive into the bank's overall performance, you should read the full post: Breaking Down First Bank (FRBA) Financial Health: Key Insights for Investors.

Growth Opportunities

You're looking for a clear path forward with First Bank (FRBA), and the near-term picture is one of focused, profitable expansion. The bank is defintely executing a strategic pivot from a community bank to a middle-market commercial bank, and the numbers from the 2025 fiscal year show this strategy is working.

Analysts are projecting 2025 annual revenues of approximately $141.1 million, which marks a robust 9.9% improvement over the last twelve months. That projected annual growth rate of 13% for 2025 is nearly double the wider industry's estimated 7.1% growth, so First Bank is outpacing its peers. The consensus earnings per share (EPS) forecast for the full 2025 fiscal year sits at a solid $1.75.

Here's the quick math: faster-than-average revenue growth plus a strong focus on efficiency translates directly to better shareholder returns.

Key Growth Drivers and Strategic Focus

The bank isn't just relying on general economic tailwinds; their growth is being driven by specific, high-margin lending segments and geographic expansion. This is a deliberate, targeted strategy.

• Specialized Lending: They are aggressively growing their commercial and industrial (C&I) portfolio, particularly in higher-yield areas like asset-based lending and private equity fund banking. Management is targeting a significant expansion of asset-based lending to between $150 million and $200 million, with a similar range for private equity fund banking.
• Geographic Expansion: First Bank is physically expanding its footprint, which helps capture core deposits (the cheapest form of funding). This includes new branch openings in key New Jersey markets like Summit and Oceanport, plus planned expansions in Trenton, New Jersey, and Media, Pennsylvania.
• Technology and Efficiency: They are rolling out a new Salesforce Customer Relationship Management (CRM) tool. This isn't a cutting-edge solution, but it's a necessary step to aggregate customer data and improve sales team effectiveness, which is crucial for a bank transitioning to a middle-market focus.

Competitive Advantages and Financial Health

What positions First Bank (FRBA) to capture this growth? It comes down to a few key financial and operational advantages that provide a cushion against market volatility. The bank's efficiency ratio-a measure of operational cost-was a strong 51.81% in Q3 2025, keeping it below the 60% benchmark for 25 consecutive quarters. This means they are managing expenses better than many competitors.

Plus, their credit quality is exceptional. Their allowance for non-performing loans coverage is high at 255%, which is well above the industry average and shows strong risk management. The net interest margin (NIM)-the profit margin on their lending-expanded to 3.71% in the third quarter of 2025, driven by successfully managing down the cost of deposits.

The bank's solid capital position is also a major strength, exceeding all regulatory requirements to be considered well-capitalized, with a Tier 1 Leverage ratio of 9.54% as of September 30, 2025. This financial discipline is the foundation for their growth strategy. You can review the bank's long-term philosophy here: Mission Statement, Vision, & Core Values of First Bank (FRBA).

Here is a snapshot of the key financial metrics driving the growth narrative:

What this estimate hides is the potential impact of sustained higher interest rates on commercial real estate (CRE) loans, which still makes up a portion of their portfolio, but their focus on C&I lending is mitigating that risk.