First Bank's Q4 2024: Navigating Contradictions in Deposit Costs, Capital Strategy, and Loan Growth

Strong Financial Performance in 2024:
- First Bank reported earnings of $42.2 million or $1.67 per diluted share for 2024, reflecting a 13% annualized increase in core EPS over the past 10 years.
- The bank's tangible book value more than doubled over the same time period, with a 7.5% annualized growth rate.
- The strong performance was driven by focus on organic growth, investment in new lines of business, and prudent balance sheet management.

Loan Growth and Portfolio Diversification:
- Loans were up over 7% annualized from the third quarter, with total loan growth of $123 million or 4% year-over-year.
- Growth was primarily in commercial and industrial and owner-occupied commercial real estate loans.
- The focus on C&I lending and owner-occupied real estate loans helped to diversify the loan portfolio and reduce dependence on investor real estate loans.

Deposit Stability and Cost Management:
- Total deposits remained stable during the fourth quarter, with a modest $5.8 million increase.
- The bank successfully managed deposit pricing, reducing costs by 20 basis points in Q4.
- Efforts to manage deposit costs effectively helped maintain a stable net interest margin and supported the bank's overall financial health.

Asset Quality and Risk Management:
- Nonperforming assets to total assets declined to 0.46%, with a net recovery of $234,000 in credit loss expense during the quarter.
- The allowance for credit losses to loans declined slightly to 1.20%, maintaining a strong coverage ratio.
- Conservative underwriting and strong credit standards, combined with effective risk management, contributed to the bank's strong asset quality.