Republic First Bancorp, Inc. Reports Earnings for the Third Quarter 2012

PHILADELPHIA, Oct. 23, 2012 /PRNewswire/ -- Republic First Bancorp, Inc. (NASDAQ: FRBK), the holding company for Republic Bank, today announced its financial results for the period ended September 30, 2012.  The Company recorded net income of $0.4 million, or $0.02 per share, for the third quarter of 2012. On a year to date basis the Company has recorded net income of $2.7 million, or $0.10 per share, for the nine month period ended September 30, 2012 compared to a net loss of $1.6 million, or $0.06 per share, for the nine month period ended September 30, 2011.

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"In spite of the ongoing challenges we face from a slow and unpredictable economic recovery, we are pleased to report a third consecutive quarter of profitable results which has resulted in a substantial improvement in earnings year over year," said Harry D. Madonna, the Company's Chairman and Chief Executive Officer.  "Republic Bank continues to make progress in strengthening its financial results.  In addition to improved earnings, low cost, core deposit growth continues to be a strength for our organization," said Madonna.  "We've also seen a positive trend in quality loan demand during 2012."

Highlights for the Period Ending September 30, 2012

  • Net income improved to $2.7 million, or $0.10 per share, for the nine months ended September 30, 2012 compared to a net loss of $1.6 million, or $0.06 per share, for the nine months ended September 30, 2011.  The Company recorded net income of $0.4 million, or $0.02 per share, for the quarter ended September 30, 2012 compared to net income of $1.4 million, or $0.05 per share, for the quarter ended September 30, 2011.
  • Asset quality has improved significantly year over year. Non-performing assets decreased by $22.5 million, or 49%, to $23.5 million as of September 30, 2012 compared to $46.0 million as of September 30, 2011. Non-performing assets as a percentage of total assets decreased to 2.43% as of September 30, 2012 compared to 4.83% as of September 30, 2011.
  • Core deposits increased by $58.5 million, or 8%, to $820.8 million as of September 30, 2012 compared to $762.3 million as of September 30, 2011 driven by the Company's retail strategy focused on relationship banking and gathering low cost core deposits.
  • Total loans increased by $18.3 million, or 3%, on a linked quarter basis to $623.2 million as of September 30, 2012.  On a year to date basis total loans have increased by $33.7 million, or 6%, when compared to December 31, 2011.
  • The net interest margin improved to 3.69% in the third quarter 2012 compared to 3.59% for the second quarter 2012 and 3.57% for the third quarter 2011.
  • SBA lending continued to grow as an important component of the Company's lending strategy. $16.7 million in new SBA loans were originated during the third quarter of 2012. Our team is now ranked as the #1 SBA lender in New Jersey, #3 in Pennsylvania, and #19 nationally based on the dollar volume of loan originations.
  • Capital levels remain strong with a Total Risk-Based Capital ratio of 12.58% and a Tier I Leverage Ratio of 9.21% at September 30, 2012.
  • Tangible book value per share as of September 30, 2012 was $2.65.

Income Statement

The Company reported net income of $0.4 million or $0.02 per share, for the three months ended September 30, 2012, compared to net income of $1.4 million, or $0.05 per share, for the three months ended September 30, 2011.  Net income for the nine month period ended September 30, 2012 was $2.7 million, or $0.10 per share, compared to a net loss of $1.6 million, or $0.06 per share, for the nine months ended September 30, 2011.

Earnings continue to improve on a year to year basis as the loan loss provision and other credit costs decrease due to the substantial improvement in asset quality. For the nine month period ended September 30, 2012, the Company recorded a loan loss provision in the amount of $0.6 million compared to a $5.7 million provision during the nine months ended September 30, 2011.

The Company continues to lower its cost of funds as evidenced by a decrease of 8 basis points to 0.65% for the three months ended September 30, 2012, compared to 0.73% for the three months ended June 30, 2012. The net interest margin increased to 3.69% for the three month period ended September 30, 2012 compared to 3.59% for the three month period ended June 30, 2012.

Non-interest income decreased to $1.8 million for the three months ended September 30, 2012 compared to $4.0 million for the three months ended September 30, 2011, primarily due to gains on sales of investment securities and legal settlement income recognized in the prior year quarter as well as lower gains on sales of SBA loans in the current quarter.

Balance Sheet

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

 

Description

Sep. 30,

2012

Sep. 30,

2011

 

% Change

June 30,

2012

 

% Change







Total assets

$ 966,990

$ 952,801

1%

$ 938,391

3%







Total loans (net)

613,380

621,256

(1%)

595,528

3%







Total deposits

868,193

833,289

4%

841,314

3%







Total core deposits

820,776

762,275

8%

790,616

4%







Total assets increased by $14.2 million, or 1%, as of September 30, 2012 when compared to September 30, 2011. The Company experienced strong growth in core deposits year over year as a result of the retail strategy which focuses on relationship banking.  Core deposits grew by $58.5 million, or 8%, to $820.8 million as of September 30, 2012 compared to $762.3 million as of September 30, 2011.

Core Deposits

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

 

 

Description

 

Sept 30,

2012

 

Sept 30,

2011

%

 Change

 

June 30,

2012

 

%

Change

3nd Qtr

 2012 Cost

 of Funds








Demand noninterest-bearing

$ 145,493

$ 126,310

15%

$ 130,143

12%

0.00%








Demand interest-bearing

173,010

98,293

76%

144,754

20%

0.52%








Money market and savings

417,506

371,293

12%

420,700

(1%)

0.55%








Certificates of deposit

84,767

166,379

(49%)

95,019

(11%)

0.94%








Total core deposits

$ 820,776

$ 762,275

8%

$ 790,616

4%

0.49%








Core deposits increased to $820.8 million at September 30, 2012 compared to $762.3 million at September 30, 2011 as the Company continues to focus its effort on the gathering of low-cost core deposits. We experienced strong growth in the demand, savings and money market categories on a year to year basis.  At the same time the Company reduced the overall deposit cost of funds to 0.54% for the three month period ending September 30, 2012 compared to 0.88% for the three month period ending September 30, 2011. The retail banking strategy has also enabled the Company to significantly reduce its dependence on wholesale funding sources in the brokered and public fund certificate of deposit market.

Lending

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

 

Description

Sept 30,

2012

 

% of

 Total

 

Sept 30,

2011

 

% of

Total

June 30,

2012

 

% of

Total








Commercial real estate

$ 344,149

55%

$ 393,652

62%

$333,961

55%

Construction and land development

29,744

5%

52,681

8%

36,306

6%

Commercial and industrial

108,665

18%

79,162

12%

102,382

17%

Owner occupied real estate

117,959

19%

88,677

14%

112,338

19%

Consumer and other

20,370

3%

16,636

3%

17,707

3%

Residential mortgage

2,467

0%

3,175

1%

2,488

0%

Deferred costs (fees)

(176)


(347)


(269)









Gross loans

$623,178

100%

$633,636

100%

$604,913

100%








Gross loans decreased by $10.5 million to $623.2 million at September 30, 2012 compared to $633.6 million at September 30, 2011.  This decrease was primarily driven by a bulk sale of non-performing loans and foreclosed properties during the fourth quarter of 2011 which substantially improved asset quality for the Company.  Gross loans increased by $18.3 million on a linked quarter basis to $623.2 million as of September 30, 2012.

Asset Quality

The Company's non-performing asset balances and asset quality ratios are highlighted below (dollars in thousands):


Quarter Ended

 

Ratio

Sept 30,

2012

Sept 30,

2011

June 30,

2012





Non-performing loans

$16,152

$32,006

$10,892





Other real estate owned

7,312

13,988

6,135





Total non-performing assets

$23,464

$45,994

$17,027





Non-performing assets/total assets

2.43%

4.83%

1.81%





Quarterly net loan charge-offs/average loans

0.28%

2.08%

1.24%





Allowance for loan losses/gross loans

1.57%

1.95%

1.55%





Allowance for loan losses/non-performing loans

61%

39%

86%





Non-performing assets/capital and reserves

30%

46%

22%





Non-performing assets decreased by $22.5 million to $23.5 million, or 2.43% of total assets, at September 30, 2012, compared to $46.0 million, or 4.83% of total assets, as of September 30, 2011.  Non-performing assets increased by $6.4 million on a linked quarter basis primarily as a result of one significant loan relationship that transferred to non-accrual status during the third quarter. The allowance for loan losses as a percentage of non-performing loans increased to 61% as of September 30, 2012, compared to 39%  as of September 30, 2011.  The ratio of non-performing assets to capital and reserves improved to 30% as of September 30, 2012 compared to 46% one year ago.

Capital

The Company's capital regulatory ratios at September 30, 2012 were as follows:

 


 

Republic First Bancorp, Inc.

Regulatory Guidelines

"Well Capitalized"




Leverage Ratio

9.21%

5.00%




Tier 1 Risk Based Capital

11.33%

6.00%




Total Risk Based Capital

12.58%

10.00%




Total shareholders' equity was $68.9 million at September 30, 2012 which represented a book value per share of $2.65, based on common shares outstanding of approximately 26.0 million. 

The Company, along with its banking subsidiary, continue to maintain strong capital ratios and are considered well capitalized under the regulatory guidelines as established by federal banking agencies.

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 thirteen offices located in Abington, Ardmore, Bala Cynwyd, Plymouth Meeting, Media and Philadelphia, Pennsylvania and Voorhees and Haddonfield, New Jersey. For more information about Republic Bank, visit 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 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, 2011 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.

 

  

Republic First Bancorp, Inc.

Consolidated Balance Sheets

(Unaudited)


















September 30,


June 30,


September 30,

(dollars in thousands)



2012


2012


2011












ASSETS










Cash and due from banks


$           7,750


$           8,712


$         12,832


Interest-bearing deposits and federal funds sold

90,108


90,410


78,374



Total cash and cash equivalents


97,858


99,122


91,206













Securities - Available for sale


192,529


179,794


154,259


Securities - Held to maturity


66


66


139


Restricted stock



4,369


4,816


5,594



Total investment securities


196,964


184,676


159,992













Loans held for sale



1,089


975


1,390













Loans receivable



623,178


604,913


633,636


Allowance for loan losses


(9,798)


(9,385)


(12,380)



Net loans




613,380


595,528


621,256













Premises and equipment


22,415


22,772


23,906


Other real estate owned



7,312


6,135


13,988


Other assets




27,972


29,183


41,063













Total Assets




$       966,990


$       938,391


$       952,801


































LIABILITIES










Non-interest bearing deposits


$       145,493


$       130,143


$       126,310


Interest bearing deposits



722,700


711,171


706,979



Total deposits



868,193


841,314


833,289













Short-term borrowings



-


-


-


Subordinated debt



22,476


22,476


22,476


Other liabilities



7,377


7,341


8,732













Total Liabilities



898,046


871,131


864,497












SHAREHOLDERS' EQUITY









Common stock - $0.01 par value


265


265


265


Additional paid-in capital



106,673


106,575


106,277


Accumulated deficit



(35,132)


(35,530)


(14,764)


Treasury stock at cost



(3,099)


(3,099)


(3,099)


Stock held by deferred compensation plan

(809)


(809)


(809)


Accumulated other comprehensive income (loss)

1,046


(142)


434













Total Shareholders' Equity


68,944


67,260


88,304
























Total Liabilities and Shareholders' Equity

$       966,990


$       938,391


$       952,801

 

  

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,

(dollars in thousands, except per share amounts)

2012


2012


2011


2012


2011
















INTEREST INCOME













Interest and fees on loans


$          8,194


$       8,179


$          8,486


$        24,463


$        25,084


Interest and dividends on investment securities

1,364


1,386


1,206


4,135


3,551


Interest on other interest earning assets

54


84


34


239


82



Total interest income



9,612


9,649


9,726


28,837


28,717
















INTEREST EXPENSE













Interest on deposits



1,153


1,340


1,808


4,108


5,279


Interest on borrowed funds


283


284


279


852


853



Total interest expense


1,436


1,624


2,087


4,960


6,132

















Net interest income



8,176


8,025


7,639


23,877


22,585


Provision (credit) for loan losses


850


500


616


600


5,666

















Net interest income after provision for loan losses

7,326


7,525


7,023


23,277


16,919
















NON-INTEREST INCOME













Service fees on deposit accounts


234


226


216


670


586


Gain on sale of SBA loans


1,141


1,110


1,983


3,337


4,337


Gain on sale of investment securities

-


774


640


774


640


Other non-interest income


456


389


1,116


1,195


1,595



Total non-interest income


1,831


2,499


3,955


5,976


7,158
















NON-INTEREST EXPENSE













Salaries and employee benefits


4,008


3,963


4,135


12,105


11,280


Occupancy and equipment


1,367


1,378


1,377


4,107


4,082


Legal and professional fees


873


1,196


783


3,251


2,545


Foreclosed real estate



287


104


315


489


1,739


Regulatory assessments and related fees

343


351


507


1,032


1,550


Other operating expenses


1,909


2,018


1,988


5,649


5,912



Total non-interest expense


8,787


9,010


9,105


26,633


27,108
















Income (loss) before provision (benefit) for income taxes

370


1,014


1,873


2,620


(3,031)
















Provision (benefit) for income taxes


(28)


7


509


(90)


(1,407)
















Net income (loss)



$             398


$       1,007


$          1,364


$          2,710


$         (1,624)































Net Income (loss) per Common Share












Basic




$            0.02


$         0.05


$            0.05


$            0.10


$           (0.06)


Diluted




$            0.02


$         0.05


$            0.05


$            0.10


$           (0.06)
















Average Common Shares Outstanding












Basic




25,973


25,973


25,973


25,973


25,973


Diluted




25,973


25,973


25,973


25,973


25,973

 

  

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, 2012


June 30, 2012


September 30, 2011
























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


$   88,996


$      54


0.24%


$ 119,275


$      84


0.28%


$   72,214


$      34


0.19%

Securities


190,441


1,428


3.00%


185,091


1,449


3.13%


151,120


1,268


3.36%

Loans receivable


613,190


8,228


5.34%


606,617


8,215


5.45%


637,477


8,528


5.31%

Total interest-earning assets


892,627


9,710


4.33%


910,983


9,748


4.30%


860,811


9,830


4.53%




















Other assets


56,814






56,084






71,649
























Total assets


$ 949,441






$ 967,067






$ 932,460
























Interest-bearing liabilities:






































Demand non interest-bearing


$ 134,857






$ 125,528






$ 120,443





Demand interest-bearing


162,270


211


0.52%


126,025


185


0.59%


100,516


159


0.63%

Money market & savings


416,038


572


0.55%


461,622


722


0.63%


347,727


868


0.99%

Time deposits


138,148


370


1.07%


157,013


433


1.11%


245,083


781


1.26%

Total deposits


851,313


1,153


0.54%


870,188


1,340


0.62%


813,769


1,808


0.88%




















Total interest-bearing deposits


716,456


1,153


0.64%


744,660


1,340


0.72%


693,326


1,808


1.03%




















Other borrowings


22,476


283


5.01%


22,526


284


5.07%


22,552


279


4.91%







































Total interest-bearing liabilities


738,932


1,436


0.77%


767,186


1,624


0.85%


715,878


2,087


1.16%

Total deposits and 



















  other borrowings


873,789


1,436


0.65%


892,714


1,624


0.73%


836,321


2,087


0.99%







































Non interest-bearing liabilities


7,409






7,506






8,468





Shareholders' equity


68,243






66,847






87,671





Total liabilities and



















shareholders' equity


$ 949,441






$ 967,067






$ 932,460
























Net interest income




$ 8,274






$ 8,124






$ 7,743



Net interest spread






3.56%






3.45%






3.37%




















Net interest margin






3.69%






3.59%






3.57%


























































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




Year

ended


 

Nine months ended


Sept 30,


June 30,


Sept 30,


Dec 31,


Sept 30,


Sept 30,

(dollars in thousands)

2012


2012


2011


2011


2012


2011













Balance at beginning of period

$    9,385


$  10,756


$  15,108


$  11,444


$  12,050


$  11,444

Provisions (credits) charged to operating












expense

850


500


616


15,966


600


5,666


10,235


11,256


15,724


27,410


12,650


17,110













Recoveries on loans charged-off:












  Commercial

-


105


-


69


105


11

  Consumer

-


27


1


40


28


39

Total recoveries

-


132


1


109


133


50













Loans charged-off:












  Commercial

(436)


(1,903)


(3,342)


(15,428)


(2,883)


(4,746)

  Consumer

(1)


(100)


(3)


(41)


(102)


(34)













Total charged-off

(437)


(2,003)


(3,345)


(15,469)


(2,985)


(4,780)













Net charge-offs

(437)


(1,871)


(3,344)


(15,360)


(2,852)


(4,730)













Balance at end of period

$    9,798


$    9,385


$  12,380


$  12,050


$    9,798


$  12,380













Net charge-offs as a percentage of












average loans outstanding

0.28%


1.24%


2.08%


2.44%


0.63%


1.00%













Allowance for loan losses as a percentage of












period-end loans

1.57%


1.55%


1.95%


2.04%


1.57%


1.95%

 

 

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)

2012


2012


2012


2011


2011











Non-accrual loans:










  Commercial real estate

$        15,156


$        10,090


$          9,911


$          9,667


$        31,096

  Consumer and other

996


802


811


897


910

Total non-accrual loans

16,152


10,892


10,722


10,564


32,006











Loans past due 90 days or more










  and still accruing

-


-


-


748


-

Renegotiated loans

-


-


-


-


-











Total non-performing loans

16,152


10,892


10,722


11,312


32,006











Other real estate owned

7,312


6,135


6,135


6,479


13,988











Total non-performing assets

$        23,464


$        17,027


$        16,857


$        17,791


$        45,994











Non-performing loans to total loans

2.59%


1.80%


1.78%


1.92%


5.05%











Non-performing assets to total assets

2.43%


1.81%


1.76%


1.70%


4.83%











Non-performing loan coverage

60.66%


86.16%


100.32%


106.52%


38.68%











Allowance for loan losses as a percentage










  of total period-end loans

1.57%


1.55%


1.78%


2.04%


1.95%











Non-performing assets/capital plus










   allowance for loan losses

29.80%


22.22%


21.85%


23.13%


45.68%

 

SOURCE Republic First Bancorp, Inc.



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