Press Release

UPDATE -- Republic First Bancorp, Inc. Reports First Quarter Financial Results - Assets Increase 26% and Deposits Grow 23%

Company Release - 4/23/2018 12:13 PM ET

PHILADELPHIA, April 23, 2018 (GLOBE NEWSWIRE) -- Republic First Bancorp, Inc. (NASDAQ:FRBK), the holding company for Republic Bank, today announced its financial results for the period ended March 31, 2018.

 Three Months Ended
($ in millions, except per share data)03/31/1803/31/17% Change
    
Assets$2,471.5$  1,968.6  26%
Loans    1,250.9    1,026.1          22%
Deposits    2,123.5    1,720.5  23%
Total Revenue$  25.4$   20.5            24%
Income Before Tax   2.1   1.8  23%
Net Income *   1.8    1.8   (1%)
Net Income per Share$  0.03$   0.03   -%


* Note:Net income for the period ended 3/31/18 reflects a normalized provision for federal and state income taxes which
was excluded from 2017 results due to an adjustment to the DTA valuation allowance recorded by the Company.


Vernon W. Hill, II, Chairman of Republic First Bancorp said:

“2018 is off to a tremendous start which can be seen in our first quarter financial results.  Assets, loans and deposits have all grown in excess of 20% year over year. And our revenue growth (24%) outpaced non-interest expense growth (20%) despite the ongoing investment required to execute our growth and expansion strategy. Our relentless commitment to extraordinary customer service and convenience through all delivery channels continues to deliver positive results throughout our footprint.”

Harry D. Madonna, President and Chief Executive Officer of Republic First Bancorp said:

“Momentum continues to build as the ‘Power of Red is Back’ expansion campaign rolls into 2018.  We are thrilled to begin our expansion into Bucks County with the opening of our newest store in Fairless Hills, PA during the first quarter. We are very excited to introduce our unmatched commitment to customer service and convenience to the Fairless Hills community and look forward to the opportunity to win over new FANS throughout this new market. We’ve also broken ground on future store locations in Gloucester Township and Lumberton, NJ which are expected to open by mid-year.”

Highlights for the Period Ended March 31, 2018

  • Total deposits increased by $403 million, or 23%, to $2.1 billion as of March 31, 2018 compared to $1.7 billion as of March 31, 2017. On a linked quarter basis deposits grew $60 million, or 3%, when compared to December 31, 2017.
     
  • Non-interest bearing demand deposits grew by $100 million, or 27%, to $464 million over the last 12 months.
     
  • New stores opened since the beginning of the “Power of Red is Back” expansion campaign are currently growing deposits at an average rate of $27 million per year, while the average deposit growth for all stores over the last twelve months was approximately $19 million per store.
     
  • Income before tax increased by 23% to $2.1 million for the three months ended March 31, 2018 compared to $1.8 million for the three months ended March 31, 2017. Total revenue grew by 24% while non-interest expense increased by 20%. The Company continues to open new stores and increase profitability despite the additional costs associated with the expansion strategy.
     
  • Net income after tax was $1.8 million, or $0.03 per share, for the three month periods ending March 31, 2018 and March 31, 2017. The Company began recognizing a normalized provision for federal and state income taxes during the first quarter of 2018 after reversing its deferred tax asset valuation allowance during the fourth quarter of 2017. Prior year results were not impacted by an income tax provision.
     
  • The Company converted $10.6 million of outstanding trust preferred securities to 1.6 million shares of common stock during the first quarter of 2018. This conversion will result in a reduction of interest expense of approximately $0.9 million on an annual basis going forward.
     
  • There are twenty-three convenient store locations open today. The Company began its expansion into Bucks County, PA by opening its newest store in Fairless Hills during the first quarter. Ground has been broken on sites in Gloucester Township and Lumberton, NJ and are expected to be completed by mid-year. There are also several additional sites in various stages of development for future store locations.
     
  • Total assets increased by $503 million, or 26%, to $2.5 billion as of March 31, 2018 compared to $2.0 billion as of March 31, 2017.
     
  • Total loans grew $225 million, or 22%, to $1.3 billion as of March 31, 2018 compared to $1.0 billion at March 31, 2017.
     
  • Asset quality continues to improve. The ratio of non-performing assets to total assets declined to 0.85% as of March 31, 2018 compared to 1.45% as of March 31, 2017.
     
  • The net interest margin increased to 3.23% for the three months ended March 31, 2018 compared to 3.19% for the three months ended March 31, 2017.
  • The Company’s residential mortgage division, Oak Mortgage, is serving the home financing needs of customers throughout its footprint. Oak originated over $79 million in loans during the three month period ended March 31, 2018.
     
  • Meeting the needs of small business customers continued to be an important part of the Company’s lending strategy.  More than $21 million in new SBA loans were originated during the three month period ended March 31, 2018.
     
  • The Company’s Total Risk-Based Capital ratio was 16.00% and Tier I Leverage Ratio was 10.09% at March 31, 2018.
     
  • Book value per common share increased to $3.99 as of March 31, 2018 compared to $3.84 as of March 31, 2017.

Income Statement

The major components of the income statement are as follows (dollars in thousands, except per share data):

 Three Months Ended
 03/31/18 03/31/17 % Change 
      
Total Revenue$  25,434 $  20,525    24%
Provision for Loan Losses   400    -    100%
Non-interest Expense   20,102    16,804    20%
Income Before Taxes 2,149  1,753  23%
Provision (Benefit) for Taxes 372  (34) n/m 
Net Income   1,777    1,787    (1%)
Net Income per Share$  0.03 $  0.03    -%

The Company reported net income of $1.8 million, or $0.03 per share, for the three month periods ended March 31, 2018 and March 31, 2017.

Total revenue increased by $4.9 million, or 24%, to $25.4 million for the three month period ended March 31, 2018, compared to $20.5 million for the three month period ended March 31, 2017.  This increase is primarily attributable to higher interest income as a result of the strong growth in interest-earning assets over the last twelve months driven by the Company’s “Power of Red is Back” expansion program.

Non-interest income increased to $4.5 million for the three month period ended March 31, 2018 compared to $4.3 million for the three month period ended March 31, 2017. 

Non-interest expenses increased by $3.3 million, or 20%, to $20.1 million during the three month period ended March 31, 2018 compared to $16.8 million during the three months ended March 31, 2017. This increase was mainly caused by the increase in salaries and employee benefits as a result of annual merit increases along with increased staffing levels related to our growth strategy of adding and relocating stores. Occupancy and equipment expenses associated with the growth and relocation strategy also contributed to the increase in non-interest expenses.

The Company recorded a provision for income taxes in the amount of $372 thousand for the three month period ended March 31, 2018 compared to a benefit for income taxes in the amount of $34 thousand for the three month period ended March 31, 2017. The amount recorded during the first quarter of 2018 is a normalized provision reflective of the new corporate tax rate included in the Tax Cuts and Jobs Act of 2017. The benefit for income taxes recognized during the first quarter of 2017 was driven by an adjustment to the deferred tax asset valuation allowance that had been recorded by Company in previous years.  This valuation allowance was reversed during the fourth quarter of 2017.

Balance Sheet

The major components of the balance sheet are as follows (dollars in thousands):

 

Description
 

03/31/18
 

03/31/17
% Change   

12/31/17
% Change 
      
Total assets$2,471,464$1,968,58826%$2,322,3476%
Total loans (net) 1,244,262 1,016,96222% 1,153,6798%
Total deposits 2,123,451 1,720,51223% 2,063,2953%

Total assets increased by $502.9 million, or 26%, as of March 31, 2018 when compared to March 31, 2017.  Deposits grew by $402.9 million to $2.1 billion as of March 31, 2018 compared to $1.7 billion as of March 31, 2017. The number of deposit accounts has grown by 36% during the past twelve months. The strong growth in assets, loans and deposits has been driven by the addition of new stores and the successful execution of the Company’s aggressive growth strategy referred to as “The Power of Red is Back.”

Deposits

Deposits by type of account are as follows (dollars in thousands):

 

 

Description
 

 

03/31/18
 

 

03/31/17
 

%
Change
  

 

12/31/17
 

%
Change
 1st Qtr 2018 Cost of Funds 
       
Demand noninterest-bearing$464,383 $364,278   27%$438,500  6%0.00%
Demand interest-bearing 826,726 629,583 31% 807,736   2%0.57%
Money market and savings 703,263 620,218  13% 700,321   -%0.57%
Certificates of deposit 129,079 106,433 21% 116,738   11%1.15%
Total deposits$2,123,451$1,720,51223%$2,063,295   3%0.49%
       

Deposits increased to $2.1 billion at March 31, 2018 compared to $1.7 billion at March 31, 2017 as the Company moves forward with its growth strategy to increase the number of stores and expand its banking model which focuses on high levels of customer service and convenience and drives the gathering of low-cost, deposits. The Company recognized strongest growth in demand deposit balances, on a year to year basis as a result of the successful execution of its strategy.

Lending

Loans by type are as follows (dollars in thousands):

 

Description
 

03/31/18
% of Total  

03/31/17
% of Total  

12/31/17
% of
Total
 
       
Commercial real estate$467,58537%$394,84039%$433,304 37%
Construction and land development 118,60710% 78,6367% 104,6179%
Commercial and industrial 189,42015% 188,87318% 173,34315%
Owner occupied real estate 315,41825% 273,99627% 309,83827%
Consumer and other 78,8346% 67,1467% 76,4127%
Residential mortgage 81,0487% 22,6522% 64,7645%
Gross loans$1,250,912100%$1,026,143100%$1,162,278100%
       

Gross loans increased by $224.8 million, or 22%, to $1.3 billion at March 31, 2018 compared to $1.0 billion at March 31, 2017 as a result of the steady flow in quality loan demand over the last twelve months and continued success with the relationship banking model. The Company experienced strong growth across all loan categories.

Asset Quality

The Company’s non-performing asset balances and asset quality ratios are highlighted below:

  Three Months Ended
 03/31/1812/31/1703/31/17
    
Non-performing assets / capital and reserves9%9%13%
Non-performing assets / total assets0.85%0.94%1.45%
Quarterly net loan charge-offs / average loans0.77%0.02%(0.01%)
Allowance for loan losses / gross loans0.53%0.74%0.89%
Allowance for loan losses / non-performing loans47%58%50%

The percentage of non-performing assets to total assets decreased to 0.85% at March 31, 2018, compared to 1.45% at March 31, 2017.  The ratio of non-performing assets to capital and reserves decreased to 9% at March 31, 2018 compared to 13% at March 31, 2017 primarily as a result of decreases in non-performing assets over the last 12 months.

Capital

The Company’s capital ratios at March 31, 2018 were as follows:

 Actual
03/31/18
Regulatory Guidelines
“Well Capitalized”
   
Leverage Ratio  10.09%5.00%
Common Equity Ratio  14.87%6.50%
Tier 1 Risk Based Capital  15.58%8.00%
Total Risk Based Capital  16.00%10.00%
Tangible Common Equity   9.29%n/a 

Total shareholders’ equity increased to $234.1 million at March 31, 2018 compared to $218.3 million at March 31, 2017. Book value per common share increased to $3.99 at March 31, 2018 compared to $3.84 per share at March 31, 2017.

About Republic Bank

Republic Bank, a subsidiary of Republic First Bancorp, Inc., is a full-service, state-chartered commercial bank, whose deposits are insured up to the applicable limits by the Federal Deposit Insurance Corporation (FDIC). The Bank provides diversified financial products through its twenty-three stores located in the Greater Philadelphia and Southern New Jersey market place.  Republic Bank stores are open 7 days a week, 361 days a year, with extended lobby and drive-thru hours providing customers with the most convenient hours compared to any bank in its market.  The Bank offers free checking, free coin counting, ATM/Debit cards issued on the spot and access to more than 55,000 surcharge free ATMs worldwide via the Allpoint Network. The Bank also offers a wide range of residential mortgage products through its wholly owned subsidiary, Oak Mortgage Company. For more information about Republic Bank, visit www.myrepublicbank.com.

Forward Looking Statements

The Company may from time to time make written or oral “forward-looking statements”, including statements contained in this release and in the Company's filings with the Securities and Exchange Commission. The forward-looking statements contained herein, including those related to our Five Year Strategic Goals, are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements.  For example, risks and uncertainties can arise with changes in: general economic conditions, including turmoil in the financial markets and related efforts of government agencies to stabilize the financial system; the adequacy of our allowance for loan losses and our methodology for determining such allowance; adverse changes in our loan portfolio and credit risk-related losses and expenses; concentrations within our loan portfolio, including our exposure to commercial real estate loans, and to our primary service area; changes in interest rates; business conditions in the financial services industry, including competitive pressure among financial services companies, new service and product offerings by competitors, price pressures and similar items; deposit flows; loan demand; the regulatory environment, including evolving banking industry standards, changes in legislation or regulation; impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act; our securities portfolio and the valuation of our securities; accounting principles, policies and guidelines as well as estimates and assumptions used in the preparation of our financial statements; rapidly changing technology; litigation liabilities, including costs, expenses, settlements and judgments; and other economic, competitive, governmental, regulatory and technological factors affecting our operations, pricing, products and services.  You should carefully review the risk factors described in the Form 10-K for the year ended December 31, 2017 and other documents the Company files from time to time with the Securities and Exchange Commission. The words “would be,” “could be,” “should be,” “probability,” “risk,” “target,” “objective,” “may,” “will,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect” and similar expressions or variations on such expressions are intended to identify forward-looking statements. All such statements are made in good faith by the Company pursuant to the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. The Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company, except as may be required by applicable law or regulations.


Source:Republic First Bancorp, Inc.
  
Contact: Frank A. Cavallaro, CFO
 (215) 735-4422


Republic First Bancorp, Inc.       
Consolidated Balance Sheets       
(Unaudited)         
            
      March 31, December 31, March 31, 
(dollars in thousands, except per share amounts) 2018   2017   2017  
            
ASSETS         
 Cash and due from banks $  21,927  $  36,073  $  25,119  
 Interest-bearing deposits and federal funds sold   9,142     25,869     11,472  
  Total cash and cash equivalents    31,069     61,942     36,591  
            
 Securities - Available for sale    519,692     464,430     362,328  
 Securities - Held to maturity    519,295     472,213     421,850  
 Restricted stock     5,435     1,918     1,366  
  Total investment securities    1,044,422     938,561     785,544  
            
 Loans held for sale     25,653     45,700     25,098  
            
 Loans receivable     1,250,912     1,162,278     1,026,143  
 Allowance for loan losses    (6,650)    (8,599)    (9,181) 
  Net loans      1,244,262     1,153,679     1,016,962  
            
 Premises and equipment    77,153     74,947     58,926  
 Other real estate owned     6,966     6,966     9,944  
 Other assets      41,939     40,552     35,523  
            
 Total Assets   $  2,471,464  $  2,322,347  $  1,968,588  
            
            
LIABILITIES         
 Non-interest bearing deposits $  464,383  $  438,500  $  364,278  
 Interest bearing deposits     1,659,068     1,624,795     1,356,234  
  Total deposits     2,123,451     2,063,295     1,720,512  
            
 Short-term borrowings     93,915     -      -   
 Subordinated debt     11,254     21,681     21,648  
 Other liabilities     8,770     10,911     8,104  
            
 Total Liabilities     2,237,390     2,095,887     1,750,264  
            
SHAREHOLDERS' EQUITY        
 Common stock - $0.01 par value    592     575     574  
 Additional paid-in capital     267,313     256,285     254,403  
 Accumulated deficit     (15,566)    (18,983)    (26,101) 
 Treasury stock at cost     (3,725)    (3,725)    (3,725) 
 Stock held by deferred compensation plan   (183)    (183)    (183) 
 Accumulated other comprehensive loss   (14,357)    (7,509)    (6,644) 
            
 Total Shareholders' Equity    234,074     226,460     218,324  
            
            
 Total Liabilities and Shareholders' Equity$  2,471,464  $  2,322,347  $  1,968,588  
            

 

Republic First Bancorp, Inc.        
Consolidated Statements of Income        
(Unaudited)          
             
      Three Months Ended  
      March 31, December 31, March 31,  
(in thousands, except per share amounts) 2018  2017   2017   
             
INTEREST INCOME         
 Interest and fees on loans $  14,269 $  13,576  $  11,199   
 Interest and dividends on investment securities   6,458    5,568     4,927   
 Interest on other interest earning assets   172    265     61   
  Total interest income     20,899    19,409     16,187   
             
INTEREST EXPENSE         
 Interest on deposits     2,598    2,222     1,602   
 Interest on borrowed funds    185    320     366   
  Total interest expense    2,783    2,542     1,968   
             
 Net interest income     18,116    16,867     14,219   
 Provision for loan losses     400    400     -    
             
 Net interest income after provision for loan losses   17,716    16,467     14,219   
             
NON-INTEREST INCOME         
 Service fees on deposit accounts    1,175    1,084     846   
 Mortgage banking income    2,186    2,619     2,421   
 Gain on sales of SBA loans    992    1,063     688   
 Loss on sale of investment securities   -     (85)    -    
 Other non-interest income    182    331     383   
  Total non-interest income    4,535    5,012     4,338   
             
NON-INTEREST EXPENSE         
 Salaries and employee benefits    10,645    10,159     8,582   
 Occupancy and equipment    3,470    2,947     2,890   
 Legal and professional fees    759    953     681   
 Foreclosed real estate     311    2,388     346   
 Regulatory assessments and related fees   467    359     329   
 Other operating expenses    4,450    4,816     3,976   
  Total non-interest expense    20,102    21,622     16,804   
             
Income (loss) before provision (benefit) for income taxes   2,149    (143)    1,753   
             
Provision (benefit) for income taxes    372    (2,881)    (34)  
             
Net income   $  1,777 $  2,738  $  1,787   
             
             
Net Income per Common Share        
 Basic   $  0.03 $  0.05  $  0.03   
 Diluted   $  0.03 $  0.05  $  0.03   
             
Average Common Shares Outstanding        
 Basic      57,100    56,988     56,824   
 Diluted      58,370    58,360     58,049   
             

 

Republic First Bancorp, Inc.                  
Average Balances and Net Interest Income               
(unaudited)                  
                   
                   
  For the three months ended For the three months ended For the three months ended
(dollars in thousands) March 31, 2018   December 31, 2017   March 31, 2017
                   
    Interest     Interest     Interest  
  Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
  Balance Expense Rate Balance Expense Rate Balance Expense Rate
Interest-earning assets:                  
                   
Federal funds sold and other                  
  interest-earning assets $  40,425 $  172 1.73% $  82,918 $  265 1.27% $  23,929 $  61 1.03%
Securities    1,015,605    6,487 2.55%    888,862    5,616 2.53%    808,029    5,032 2.49%
Loans receivable    1,235,124    14,365 4.72%    1,171,771    13,743 4.65%    1,008,329    11,338 4.56%
Total interest-earning assets    2,291,154    21,024 3.72%    2,143,551    19,624 3.63%    1,840,287    16,431 3.62%
                   
Other assets    127,001        126,904        101,820    
                   
Total assets $ 2,418,155     $ 2,270,455     $ 1,942,107    
                   
Interest-bearing liabilities:                  
                   
Demand non interest-bearing $  431,234     $  421,841     $  329,015    
Demand interest-bearing    893,530    1,257 0.57%    776,203    945 0.48%    620,090    608 0.40%
Money market & savings    687,818    972 0.57%    693,684    942 0.54%    607,181    698 0.47%
Time deposits    129,897    369 1.15%    120,067    335 1.11%    107,923    296 1.11%
Total deposits    2,142,479    2,598 0.49%    2,011,795    2,222 0.44%    1,664,209    1,602 0.39%
                   
Total interest-bearing deposits    1,711,245    2,598 0.62%    1,589,954    2,222 0.55%    1,335,194    1,602 0.49%
                   
Other borrowings    40,552    185 1.85%    23,621    320 5.37%    53,138    366 2.79%
                   
                   
Total interest-bearing liabilities    1,751,797    2,783 0.64%    1,613,575    2,542 0.63%    1,388,332    1,968 0.57%
Total deposits and                   
  other borrowings    2,183,031    2,783 0.52%    2,035,416    2,542 0.50%    1,717,347    1,968 0.46%
                   
                   
Non interest-bearing liabilities    9,540        9,560        8,295    
Shareholders' equity    225,584        225,479        216,465    
Total liabilities and                  
shareholders' equity $ 2,418,155     $ 2,270,455     $ 1,942,107    
                   
Net interest income   $ 18,241     $ 17,082     $ 14,463  
Net interest spread     3.08%     3.00%     3.05%
                   
Net interest margin     3.23%     3.16%     3.19%
                   
                   
                   
Note: The above tables are presented on a tax equivalent basis.             

 

Republic First Bancorp, Inc.      
Summary of Allowance for Loan Losses and Other Related Data   
(unaudited)      
       
   Three months ended   
 March 31, December 31, March 31, 
(dollars in thousands) 2018   2017   2017  
       
       
Balance at beginning of period$  8,599  $  8,258  $  9,155  
       
Provision charged to operating expense   400     400     -   
    8,999     8,658     9,155  
       
Recoveries on loans charged-off:      
  Commercial   -      1     36  
  Consumer   -      -      -   
Total recoveries   -      1     36  
       
Loans charged-off:      
  Commercial   (2,151)    (19)    (8) 
  Consumer   (198)    (41)    (2) 
       
Total charged-off   (2,349)    (60)    (10) 
       
Net (charge-offs)/recoveries   (2,349)    (59)    26  
       
Balance at end of period$  6,650  $  8,599  $  9,181  
       
       
Net charge-offs as a percentage of      
  average loans outstanding 0.77%   0.02%   (0.01%) 
       
Allowance for loan losses as a percentage      
  of period-end loans 0.53%   0.74%   0.89%  

 

Republic First Bancorp, Inc.          
Summary of Non-Performing Loans and Assets        
(unaudited)         
          
 March 31, December 31, September 30, June 30, March 31,
(dollars in thousands) 2018   2017   2017   2017   2017 
          
Non-accrual loans:         
  Commercial real estate$  13,322  $  13,973  $  10,140  $  17,703  $  17,695 
  Consumer and other   810     872     880     817     834 
Total non-accrual loans   14,132     14,845     11,020     18,520     18,529 
          
Loans past due 90 days or more         
  and still accruing   -      -      2,730     293     -  
          
Total non-performing loans   14,132     14,845     13,750     18,813     18,529 
          
Other real estate owned   6,966     6,966     9,169     9,909     9,944 
          
Total non-performing assets$  21,098  $  21,811  $  22,919  $  28,722  $  28,473 
          
          
Non-performing loans to total loans 1.13%   1.28%   1.26%   1.76%   1.81% 
          
Non-performing assets to total assets 0.85%   0.94%   1.07%   1.41%   1.45% 
          
Non-performing loan coverage 47.06%   57.93%   60.06%   50.25%   49.55% 
          
Allowance for loan losses as a percentage         
  of total period-end loans 0.53%   0.74%   0.75%   0.89%   0.89% 
          
Non-performing assets / capital plus         
  allowance for loan losses 8.76%   9.28%   9.82%   12.39%   12.52% 

 

 

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Source: Republic First Bancorp, Inc.