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

PHILADELPHIA, April 23, 2018 (GLOBE NEWSWIRE) -- Republic First Bancorp, Inc. (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) 03/31/18 03/31/17 % 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 $ 1,968,588 26 % $ 2,322,347 6 %
Total loans (net)   1,244,262   1,016,962 22 %   1,153,679 8 %
Total deposits   2,123,451   1,720,512 23 %   2,063,295 3 %

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 $ 1,720,512 23 % $ 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 $ 467,585 37 % $ 394,840 39 % $ 433,304  37 %
Construction and land development   118,607 10 %   78,636 7 %   104,617 9 %
Commercial and industrial   189,420 15 %   188,873 18 %   173,343 15 %
Owner occupied real estate   315,418 25 %   273,996 27 %   309,838 27 %
Consumer and other   78,834 6 %   67,146 7 %   76,412 7 %
Residential mortgage   81,048 7 %   22,652 2 %   64,764 5 %
Gross loans $ 1,250,912 100 % $ 1,026,143 100 % $ 1,162,278 100 %
             

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
  03/31/18 12/31/17 03/31/17
       
Non-performing assets / capital and reserves 9 % 9 % 13 %
Non-performing assets / total assets 0.85 % 0.94 % 1.45 %
Quarterly net loan charge-offs / average loans 0.77 % 0.02 % (0.01 %)
Allowance for loan losses / gross loans 0.53 % 0.74 % 0.89 %
Allowance for loan losses / non-performing loans 47 % 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%