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KBRA Assigns Ratings to First Bank

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Kroll Bond Rating Agency (KBRA) assigns deposit and senior unsecured debt ratings of BBB+, a subordinated debt rating of BBB, and short-term deposit and debt ratings of K2 for Hamilton, NJ based First Bank (NASDAQ:FRBA) ("the bank"). The Outlook for all long-term ratings is Stable.

The ratings are supported by management's successful strategy execution – utilizing M&A and solid organic loan growth to build scale within footprint, which has resulted in improved operating leverage and enhanced profitability. FRBA's ratings also reflect its robust core capital position (+10% TCE ratio), which has been upheld in recent years. To maintain capital strength, management has generally used FRBA stock as consideration for acquisitions and executed transactions at prudent multiples. The ratings also reflect the bank's relatively favorable, yet competitive, Mid-Atlantic footprint, and the management team's deep experience and extensive knowledge of local markets. FRBA's ratings are constrained by its concentration in time deposits, which, along with being situated in competitive markets, has resulted in elevated deposit costs and NIM pressure. The ratings also consider the limited diversification in the loan book with a relatively large concentration of investor CRE, though KBRA recognizes that the properties are located in stable markets with conservative underwriting criteria and minimal historic losses. Portfolio concentration concerns are also largely mitigated by management's conservative capital stance as noted previously. Additionally, the ratings reflect the bank's reliance on spread revenues, though this is in common with similarly sized peers.

To view the rating report, click here.

The ratings are based on KBRA's Global Bank and Bank Holding Company Rating Methodology published on February 19, 2016.

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About KBRA and KBRA Europe

KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

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