×

Republic First Bancorp, Inc. Reports Third Quarter Financial Results - Net Income Increases 73% - Assets Grow 24%

PHILADELPHIA, Oct. 23, 2017 (GLOBE NEWSWIRE) -- Republic First Bancorp, Inc. (NASDAQ:FRBK), the holding company for Republic Bank, today announced its financial results for the period ended September 30, 2017.

Three Months Ended
($ in millions, except per share data) 09/30/17
09/30/16
% Change
Assets $2,141.6 $1,733.9 24%
Loans 1,095.4 945.5 16%
Deposits 1,885.4 1,582.2 19%
Total Revenue $23.7 $18.8 26%
Net Income 2.3 1.3 73%
Net Income per Diluted Share $0.04 $0.03 33%

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

“I am pleased to report another quarter of strong financial results for Republic Bank. Our FANS continue to spread the word to family, friends and business partners which contributes to the growing momentum of ‘The Power of Red is Back’ growth campaign. As we watch our competition shutter the doors on their branch network, we see endless opportunities to welcome new FANS into our stores. We are building something very special here and I am extremely excited about the future of our organization.”

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

“Our FAN base continues to rapidly expand with each new store opening. During the third quarter we opened new locations in Sicklerville and Medford, NJ. Both openings were met with overwhelming acceptance in those communities. In the fourth quarter we are set to begin our expansion in Bucks County, PA with the completion of our store in Fairless Hills. Our commitment to convenience and extraordinary customer service through all delivery channels is creating new FANS throughout our footprint.”

Highlights for the Period Ended September 30, 2017

  • Net income increased by 73% to $2.3 million, or $0.04 per diluted share, for the three months ended September 30, 2017 compared to $1.3 million, or $0.03 per diluted share, for the three months ended September 30, 2016. The Company continues to open new stores and increase net income despite the additional costs associated with the expansion strategy.
  • Total assets increased by $408 million, or 24%, to $2.1 billion as of September 30, 2017 compared to $1.7 billion as of September 30, 2016.
  • Total deposits increased by $303 million, or 19%, to $1.9 billion as of September 30, 2017 compared to $1.6 billion as of September 30, 2016.
  • New stores opened since the beginning of the “Power of Red is Back” expansion campaign are currently growing deposits at an average rate of $24 million per year. The average deposit growth for all stores over the last twelve months was approximately $17 million per store.
  • New stores were recently opened in Sicklerville and Medford, NJ bringing the total store count to twenty-two. Another store in Fairless Hills, PA is currently under construction and scheduled to open during the fourth quarter. There are also several additional sites in various stages of development for future store locations.
  • Total loans grew $150 million, or 16%, to $1.1 billion as of September 30, 2017 compared to $946 million at September 30, 2016.
  • Asset quality continues to improve on a consistent basis. The ratio of non-performing assets to total assets declined to 1.07% as of September 30, 2017 compared to 1.72% as of September 30, 2016.
  • The Company’s residential mortgage division, Oak Mortgage, is serving the home financing needs of customers throughout its footprint. Oak originated over $109 million in loans during the third quarter of 2017.
  • SBA lending continued to be an important part of the Company’s lending strategy. More than $7 million in new SBA loans were originated during the three month period ended September 30, 2017.
  • The Company’s Total Risk-Based Capital ratio was 17.64% and Tier I Leverage Ratio was 11.80% at September 30, 2017.
  • Book value per common share increased to $3.95 as of September 30, 2017 compared to $3.16 as of September 30, 2016.

Income Statement

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

Three Months Ended Nine Months Ended
09/30/1709/30/16% Change 09/30/1709/30/16% Change
Total Revenue $ 23,700 $ 18,762 26% $ 66,525 $ 50,176 33%
Provision for Loan Losses - 607 (100%) 500 1,557 (68%)
Non-interest Expense 19,165 15,013 28 % 53,654 40,323 33 %
Net Income 2,321 1,340 73% 6,167 3,448 79%
Net Income per Diluted Share $ 0.04$ 0.03 33% $ 0.11$ 0.09 22%

The Company reported net income of $2.3 million, or $0.04 per diluted share, for the three month period ended September 30, 2017, compared to net income of $1.3 million, or $0.03 per diluted share, for the three month period ended September 30, 2016. Net income for the nine month period ended September 30, 2017 was $6.2 million, or $0.11 per diluted share, compared to net income of $3.4 million, or $0.09 per diluted share, for the nine months ended September 30, 2016.

Total revenue increased by $4.9 million, or 26%, to $23.7 million for the three month period ended September 30, 2017, compared to $18.8 million for the three month period ended September 30, 2016. 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. Revenue also increased due to mortgage banking income from the residential mortgage division which was acquired in July 2016.

Non-interest income increased to $5.8 million for the three month period ended September 30, 2017 compared to $5.1 million for the three month period ended September 30, 2016. This increase was due to $3.2 million in mortgage banking income, driven primarily by loan sales.

Non-interest expenses increased by $4.2 million, or 28%, to $19.2 million during the three month period ended September 30, 2017 compared to $15.0 million during the three months ended September 30, 2016. This increase was primarily driven by the addition of expenses related to the residential mortgage division. Salary and employee benefit costs were also higher at the Bank as a result of annual merit increases along with increased staffing levels related to our growth strategy. Two new stores were opened during the third quarter of 2017. The Company now has twenty-two stores store locations. Occupancy and equipment expenses associated with the growth strategy also contributed to the increase in non-interest expenses.

Balance Sheet

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



Description


09/30/17


09/30/16
% Change

06/30/17
% Change
Total assets $2,141,563 $1,733,86024% $2,043,4875%
Total loans (net) 1,087,147 936,08816% 1,057,0563%
Total deposits 1,885,405 1,582,23219% 1,732,4319%
Total core deposits 1,879,840 1,581,96719% 1,731,8669%

Total assets increased by $407.7 million, or 24%, as of September 30, 2017 when compared to September 30, 2016. Deposits grew by $303.2 million to $1.9 billion as of September 30, 2017 compared to $1.6 billion as of September 30, 2016. The number of deposit accounts has grown by 35% 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.”

Core Deposits

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





Description




09/30/17




09/30/16


% Change




06/30/17


% Change
3rd Qtr 2017
Cost of Funds
Demand noninterest-bearing $398,794 $302,372 32 % $370,270 8%0.00%
Demand interest-bearing 745,878 587,197 32% 647,501 15%0.44%
Money market and savings 619,265 583,536 6% 607,859 2%0.51%
Certificates of deposit 115,903 108,862 6% 106,236 9% 1.13 %
Total core deposits $1,879,840$1,581,96719%$1,731,866 9%0.41%

Core deposits increased to $1.9 billion at September 30, 2017 compared to $1.6 billion at September 30, 2016 as the Company moves forward with its growth strategy to increase the number of stores and expand its customer-centric banking model which drives the gathering of low-cost, core deposits. The Company recognized strongest growth in demand deposit accounts 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


09/30/17
% of Total 09/30/16 % of Total

06/30/17
% of
Total
Commercial real estate $415,53238%$376,46640%$412,695 39%
Construction and land development 93,6578% 48,9835% 83,571 8%
Commercial and industrial 163,08515% 186,12620% 176,949 16%
Owner occupied real estate 297,88027% 268,43528% 285,479 27%
Consumer and other 71,8677% 58,6226% 68,530 6%
Residential mortgage 53,3845% 6,9091% 39,286 4%
Gross loans $1,095,405100%$945,541100%$1,066,510 100%

Gross loans increased by $149.9 million, or 16%, to $1.1 billion at September 30, 2017 compared to $945.5 million at September 30, 2016 as a result of the steady growth in quality loan demand over the last twelve months and continued success with the relationship banking model. The Company experienced strong growth across almost every loan category.

Asset Quality

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

Three Months Ended
09/30/17 06/30/17 09/30/16
Non-performing assets / capital and reserves 10%12%23%
Non-performing assets / total assets 1.07%1.41%1.72%
Quarterly net loan charge-offs / average loans 0.43%0.09%(0.04%)
Allowance for loan losses / gross loans 0.75%0.89%1.00%
Allowance for loan losses / non-performing loans 60%50%49%

The percentage of non-performing assets to total assets decreased to 1.07% at September 30, 2017, compared to 1.72% at September 30, 2016. One of the Company’s largest non-performing loan relationships has been restructured and returned to performing status during 2017. The ratio of non-performing assets to capital and reserves decreased to 10% at September 30, 2017 compared to 23% at September 30, 2016 primarily as a result of the completion of the common stock offering during the fourth quarter of 2016.

Capital

The Company’s capital ratios at September 30, 2017 were as follows:

Actual
09/30/17
Regulatory Guidelines
“Well Capitalized”
Leverage Ratio 11.80%5.00%
Common Equity Ratio 15.55%6.50%
Tier 1 Risk Based Capital 17.06%8.00%
Total Risk Based Capital 17.64%10.00%
Tangible Common Equity 10.31%n/a

Total shareholders’ equity increased to $225.2 million at September 30, 2017 compared to $119.7 million at September 30, 2016. Book value per common share increased to $3.95 at September 30, 2017 compared to $3.16 per share at September 30, 2016. The Company completed a common stock offering in the amount of $100 million during the fourth quarter of 2016.

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 two store locations 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, 2016 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)
September 30, June 30, September 30,
(dollars in thousands, except per share amounts) 2017 2017 2016
ASSETS
Cash and due from banks $27,181 $28,247 $23,061
Interest-bearing deposits and federal funds sold 71,601 59,750 126,980
Total cash and cash equivalents 98,782 87,997 150,041
Securities - Available for sale 377,757 345,182 299,385
Securities - Held to maturity 416,987 409,373 220,470
Restricted stock 1,678 3,878 1,366
Total investment securities 796,422 758,433 521,221
Loans held for sale 41,711 29,547 29,715
Loans receivable 1,095,405 1,066,510 945,541
Allowance for loan losses (8,258) (9,454) (9,453)
Net loans 1,087,147 1,057,056 936,088
Premises and equipment 71,715 65,471 55,573
Other real estate owned 9,169 9,909 10,271
Other assets 36,617 35,074 30,951
Total Assets $2,141,563 $2,043,487 $1,733,860
LIABILITIES
Non-interest bearing deposits $398,794 $370,270 $302,372
Interest bearing deposits 1,486,611 1,362,161 1,279,860
Total deposits 1,885,405 1,732,431 1,582,232
Short-term borrowings - 55,000 -
Subordinated debt 21,663 21,656 21,874
Other liabilities 9,293 12,079 10,102
Total Liabilities 1,916,361 1,821,166 1,614,208
SHAREHOLDERS' EQUITY
Common stock - $0.01 par value 575 575 384
Additional paid-in capital 255,752 255,215 153,887
Accumulated deficit (21,721) (24,042) (29,385)
Treasury stock at cost (3,725) (3,725) (3,725)
Stock held by deferred compensation plan (183) (183) (183)
Accumulated other comprehensive loss (5,496) (5,519) (1,326)
Total Shareholders' Equity 225,202 222,321 119,652
Total Liabilities and Shareholders' Equity $2,141,563 $2,043,487 $1,733,860

Republic First Bancorp, Inc.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
(in thousands, except per share amounts) 2017 2017 2016 2017 2016
INTEREST INCOME
Interest and fees on loans $12,989 $12,330 $10,707 $36,518 $30,961
Interest and dividends on investment securities 4,752 4,931 2,764 14,610 8,331
Interest on other interest earning assets 181 70 149 312 299
Total interest income 17,922 17,331 13,620 51,440 39,591
INTEREST EXPENSE
Interest on deposits 1,872 1,722 1,531 5,196 4,019
Interest on borrowed funds 338 342 303 1,046 898
Total interest expense 2,210 2,064 1,834 6,242 4,917
Net interest income 15,712 15,267 11,786 45,198 34,674
Provision for loan losses - 500 607 500 1,557
Net interest income after provision for loan losses 15,712 14,767 11,179 44,698 33,117
NON-INTEREST INCOME
Service fees on deposit accounts 1,067 907 686 2,820 1,910
Mortgage banking income 3,159 2,971 2,405 8,551 2,405
Gain on sale of SBA loans 831 796 1,630 2,315 4,212
Gain (loss) on sale of investment securities - (61) 2 (61) 656
Other non-interest income 721 356 419 1,460 1,402
Total non-interest income 5,778 4,969 5,142 15,085 10,585
NON-INTEREST EXPENSE
Salaries and employee benefits 9,829 9,389 7,731 27,800 20,334
Occupancy and equipment 3,064 2,873 2,586 8,827 7,203
Legal and professional fees 610 633 510 1,924 1,479
Foreclosed real estate 746 612 702 1,704 1,610
Regulatory assessments and related fees 355 324 296 1,008 1,011
Other operating expenses 4,561 3,854 3,188 12,391 8,686
Total non-interest expense 19,165 17,685 15,013 53,654 40,323
Income before benefit for income taxes 2,325 2,051 1,308 6,129 3,379
Provision (benefit) for income taxes 4 (8) (32) (38) (69)
Net income $2,321 $2,059 $1,340 $6,167 $3,448
Net Income per Common Share
Basic $0.04 $0.04 $0.04 $0.11 $0.09
Diluted $0.04 $0.04 $0.03 $0.11 $0.09
Average Common Shares Outstanding
Basic 56,974 56,945 37,916 56,915 37,879
Diluted 58,314 58,301 38,375 58,213 38,355

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) September 30, 2017 June 30, 2017 September 30, 2016
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 $56,316 $181 1.28% $28,691 $70 0.98% $114,260 $149 0.52%
Securities 765,678 4,805 2.51% 782,121 5,013 2.56% 477,601 2,858 2.39%
Loans receivable 1,115,920 13,136 4.67% 1,065,313 12,470 4.70% 966,106 10,848 4.47%
Total interest-earning assets 1,937,914 18,122 3.71% 1,876,125 17,553 3.75% 1,557,967 13,855 3.54%
Other assets 122,513 111,493 103,826
Total assets $2,060,427 $1,987,618 $1,661,793
Interest-bearing liabilities:
Demand non interest-bearing $381,380 $355,325 $282,571
Demand interest-bearing 692,423 772 0.44% 659,859 695 0.42% 533,222 553 0.41%
Money market & savings 613,506 788 0.51% 602,710 732 0.49% 583,256 677 0.46%
Time deposits 109,878 312 1.13% 105,820 295 1.12% 104,701 301 1.14%
Total deposits 1,797,187 1,872 0.41% 1,723,714 1,722 0.40% 1,503,750 1,531 0.41%
Total interest-bearing deposits 1,415,807 1,872 0.52% 1,368,389 1,722 0.50% 1,221,179 1,531 0.50%
Other borrowings 30,220 338 4.44% 35,119 342 3.91% 29,938 303 4.03%
Total interest-bearing liabilities 1,446,027 2,210 0.61% 1,403,508 2,064 0.59% 1,251,117 1,834 0.58%
Total deposits and
other borrowings 1,827,407 2,210 0.48% 1,758,833 2,064 0.47% 1,533,688 1,834 0.48%
Non interest-bearing liabilities 9,179 8,345 9,247
Shareholders' equity 223,841 220,440 118,858
Total liabilities and
shareholders' equity $2,060,427 $1,987,618 $1,661,793
Net interest income $15,912 $15,489 $12,021
Net interest spread 3.10% 3.16% 2.96%
Net interest margin 3.26% 3.31% 3.07%
Note: The above tables are presented on a tax equivalent basis.

Republic First Bancorp, Inc.
Average Balances and Net Interest Income
(unaudited)
For the nine months ended For the nine months ended
(dollars in thousands) September 30, 2017 September 30, 2016
Interest Interest
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
Interest-earning assets:
Federal funds sold and other
interest-earning assets $36,431 $312 1.15% $78,094 $299 0.51%
Securities 785,121 14,850 2.52% 458,496 8,615 2.51%
Loans receivable 1,063,581 36,944 4.64% 925,110 31,339 4.53%
Total interest-earning assets 1,885,133 52,106 3.70% 1,461,700 40,253 3.68%
Other assets 112,018 95,054
Total assets $1,997,151 $1,556,754
Interest-bearing liabilities:
Demand non interest-bearing $355,432 $270,503
Demand interest-bearing 657,722 2,075 0.42% 476,134 1,471 0.41%
Money market & savings 607,822 2,218 0.49% 572,347 1,923 0.45%
Time deposits 107,881 903 1.12% 82,738 625 1.01%
Total deposits 1,728,857 5,196 0.40% 1,401,722 4,019 0.38%
Total interest-bearing deposits 1,373,425 5,196 0.51% 1,131,219 4,019 0.47%
Other borrowings 39,408 1,046 3.55% 29,947 898 4.01%
Total interest-bearing liabilities 1,412,833 6,242 0.59% 1,161,166 4,917 0.57%
Total deposits and
other borrowings 1,768,265 6,242 0.47% 1,431,669 4,917 0.46%
Non interest-bearing liabilities 8,628 7,957
Shareholders' equity 220,258 117,128
Total liabilities and
shareholders' equity $1,997,151 $1,556,754
Net interest income $45,864 $35,336
Net interest spread 3.11% 3.11%
Net interest margin 3.25% 3.23%
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)
Year
Three months ended ended Nine months ended
September 30, June 30, September 30, Dec 31, September 30, September 30,
(dollars in thousands)2017 2017 2016 2016 2017 2016
Balance at beginning of period$9,454 $9,181 $8,761 $8,703 $9,155 $8,703
Provision charged to operating expense - 500 607 1,557 500 1,557
9,454 9,681 9,368 10,260 9,655 10,260
Recoveries on loans charged-off:
Commercial 52 30 88 169 118 168
Consumer - 1 - 2 1 -
Total recoveries 52 31 88 171 119 168
Loans charged-off:
Commercial (1,243) (253) (3) (1,265) (1,504) (975)
Consumer (5) (5) - (11) (12) -
Total charged-off (1,248) (258) (3) (1,276) (1,516) (975)
Net charge-offs (1,196) (227) 85 (1,105) (1,397) (807)
Balance at end of period$8,258 $9,454 $9,453 $9,155 $8,258 $9,453
Net charge-offs as a percentage of
average loans outstanding 0.43% 0.09% (0.04%) 0.12% 0.18% 0.12%
Allowance for loan losses as a percentage
of period-end loans 0.75% 0.89% 1.00% 0.95% 0.75% 1.00%

Republic First Bancorp, Inc.
Summary of Non-Performing Loans and Assets
(unaudited)
September 30, June 30, March 31, December 31, September 30,
(dollars in thousands) 2017 2017 2017 2016 2016
Non-accrual loans:
Commercial real estate $10,140 $17,703 $17,695 $17,758 $18,331
Consumer and other 880 817 834 836 1,007
Total non-accrual loans 11,020 18,520 18,529 18,594 19,338
Loans past due 90 days or more
and still accruing 2,730 293 - 302 153
Total non-performing loans 13,750 18,813 18,529 18,896 19,491
Other real estate owned 9,169 9,909 9,944 10,174 10,271
Total non-performing assets $22,919 $28,722 $28,473 $29,070 $29,762
Non-performing loans to total loans 1.26% 1.76% 1.81% 1.96% 2.06%
Non-performing assets to total assets 1.07% 1.41% 1.45% 1.51% 1.72%
Non-performing loan coverage 60.06% 50.25% 49.55% 48.45% 48.50%
Allowance for loan losses as a percentage
of total period-end loans 0.75% 0.89% 0.89% 0.95% 1.00%
Non-performing assets / capital plus
allowance for loan losses 9.82% 12.39% 12.52% 12.97% 23.05%

Source:Republic First Bancorp, Inc.