Republic First Bancorp, Inc. Reports Financial Results for First Quarter 2011

PHILADELPHIA, April 29, 2011 /PRNewswire/ -- Republic First Bancorp, Inc. (NASDAQ: FRBK), the holding company for Republic Bank, today announced its financial results for the three month period ended March 31, 2011.

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During the first quarter of 2011, the Company recorded a net loss of $2.5 million, or $0.10 per share, compared to a net loss of $3.9 million, or $0.37 per share, for the first quarter of 2010.

"The first quarter loss was driven by provisions and write-downs related to non-performing assets necessary as a result of updated appraisals and financial data obtained during the period," said Harry D. Madonna, the Company's Chairman and Chief Executive Officer. "Non-performing assets have trended lower for a third consecutive quarter. While we are pleased by the reduction in non-performing assets, we remain committed to executing our diligent credit review procedures and pursuing appropriate resolutions to all problem assets as quickly as possible."

"Over the past two years we have transformed Republic into a new bank with a new brand, new management team, renovated store locations and a retail model focused on fanatical customer service," said Madonna.  "During this time we have strengthened our capital position and brought stabilization to the balance sheet in an incredibly challenging economic environment. Unfortunately our earnings continue to be negatively impacted by some of the remaining asset quality issues originated under the old bank model. We firmly believe that our current strategy, along with our overall financial strength, will carry us through any challenges that may lie ahead and also puts us in a position to expand and take advantage of future opportunities."

Highlights for the Three Months Ended March 31, 2011

  • Capital levels remain strong with a Total Risk-Based Capital ratio of 14.28% and a Tier I Leverage Ratio of 11.25% at March 31, 2011

  • Tangible book value per share as of March 31, 2011 was $3.33

  • Completed the successful launch of an experienced SBA Lending team

  • Increased the allowance for loan losses to $14.5 million, or 2.27% of total loans, as of March 31, 2011

  • Increased outstanding loan balances on a linked quarter basis by $16.6 million to $637.0 million at March 31, 2011, compared to $620.4 million at December 31, 2010

  • Reduced non-performing asset balances for a third consecutive quarter after reaching a peak during the second quarter of 2010

  • The net interest margin improved to 3.82% for the three months ended March 31, 2011 compared to 3.38% for the three months ended March 31, 2010

Income Statement

The Company reported a net loss of $2.5 million or $0.10 per share, for the three months ended March 31, 2011, compared to a net loss of $3.9 million, or $0.37 per share, for the three months ended March 31, 2010.

Net interest income remained at $7.4 million during the quarter ended March 31, 2011, compared to $7.4 million for the quarter ended March 31, 2010.  The Company continues to lower its cost of funds as evidenced by a decrease of 38 basis points to 1.00% for the three months ended March 31, 2011, compared to 1.38% for the three months ended March 31, 2010. The net interest margin improved to 3.82% for the quarter ended March 31, 2011 compared to 3.38% for the quarter ended March 31, 2010. Non-interest income increased to $1.1 million for the three months ended March 31, 2011 compared to $0.5 million for the three months ended March 31, 2010, as the Company began to recognize gains on the sale of SBA loans during the first quarter 2011.

Earnings for the quarter were negatively impacted by costs associated asset quality issues that remain from the old bank model. Every impaired loan currently carried by the Company was originated prior to December 31, 2007. During the first quarter of 2011 provisions and charge-offs for these impaired loans and costs associated with the workout of problem assets amounted to $5.0 million.  Excluding these extraordinary costs, the Company would have recorded net income of approximately $0.7 million, or $0.03 per share for the three months ended March 31, 2011.

Balance Sheet

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



Description

March 31,

2011

March 31,

2010


% Change

December 31,

2010


% Change







Total assets

$ 877,081

$ 967,507

(9%)

$ 876,097

(0%)







Total loans (net)

622,516

665,711

(6%)

608,911

2%







Total deposits

761,077

846,232

(10%)

757,730

(0%)







Total core deposits

671,605

689,996

(3%)

701,779

(4%)










Net loans decreased by 6% to $622.5 million as of March 31, 2011, compared to $665.7 million as of March 31, 2010, as the Company continues to reduce exposure in the commercial real estate loan portfolio. However, net loans increased by $13.6 million on a linked quarter basis mainly due to an increased level of activity in the commercial and industrial category.

Total deposits decreased by $85.2 million, or 10%, as of March 31, 2011 when compared to March 31, 2010, primarily as a result of the Company's intentional effort to reduce its dependence on wholesale funding sources in the brokered and public fund certificate of deposit market.

Liquidity remained strong as the Company has currently eliminated the need for outside borrowings and has significantly reduced its dependence on wholesale funding sources.

Core Deposits

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


Description

March 31, 2011

March 31, 2010

% Change

December 31,

2010

%

Change

1st Qtr 2011

Cost of Funds








Demand noninterest-bearing

$ 78,221

$ 138,842

(44%)

$ 128,578

(39%)

0.00%








Demand interest-bearing

76,349

45,587

67%

66,283

15%

0.62%








Money market and savings

333,457

311,792

7%

329,742

1%

1.05%








Certificates of deposit

183,578

193,775

(5%)

177,176

4%

1.40%








Total core deposits

$ 671,605

$ 689,996

(3%)

$ 701,779

(4%)

0.90%











Core deposits decreased to $671.6 million at March 31, 2011 compared to $690.0 million at March 31, 2010 mainly due to one significant deposit relationship that left the bank as a result of its bankruptcy proceedings.  However, the Company recognized solid growth in the demand interest-bearing, money market and savings categories as it continues to focus its effort on the gathering of low-cost core deposits. At the same time, the Company reduced the overall deposit cost of funds to 0.88% for the three month period ending March 31, 2011 compared to 1.22% for the three month period ending March 31, 2010.

Lending

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


Description

March 31,

2011

% of Total

March 31,

2010

% of Total

December 31,

2010

% of

Total








Commercial

$ 80,940

13%

$  86,326

13%

$  78,428

13%

Owner-occupied

83,363

13%

83,500

12%

70,833

11%

Total commercial

164,303

26%

169,826

25%

149,261

24%








Consumer & residential

20,884

3%

21,518

3%

22,364

4%








Commercial real estate

451,779

71%

488,092

72%

448,730

72%








Total loans

$636,966

100%

$679,436

100%

$620,355

100%











Asset Quality

The Company's asset quality ratios are highlighted below:



Quarter Ended

Ratio

March 31,

2011

March 31,

2010

December 31,

2010





Non-performing assets/total assets

6.07%

4.94%

6.30%





Quarterly net loan charge-offs (recoveries)/average loans

0.35%

2.74%

(0.58%)





Allowance for loan losses/gross loans

2.27%

2.02%

1.84%





Allowance for loan losses/non-performing loans

37%

37%

29%





Non-performing assets/capital and reserves

53%

61%

55%








Non-performing loans trended lower for a third consecutive quarter to $39.2 million, or 6.15% of total loans, at March 31, 2011, compared to $40.0 million, or 6.45% of total loans, at December 31, 2010, and $48.3 million, or 7.60% of total loans at September 30, 2010. The allowance for loan losses as a percentage of total loans increased to 2.27% as of March 31, 2011, compared to 1.84% as of December 31, 2010, and 2.02%  as of March 31, 2010.

Every non-performing asset currently on the books was originated under the old bank model prior to December 31, 2007. The Company will continue to aggressively pursue resolutions for each non-performing asset.

Capital

The Company's capital regulatory ratios at March 31, 2011 were as follows:



Republic First Bancorp, Inc.

Regulatory Guidelines

"Well Capitalized"




Leverage Ratio

11.25%

5.00%




Tier 1 Risk Based Capital

13.02%

6.00%




Total Risk Based Capital

14.28%

10.00%







Total shareholders' equity was $86.4 million at March 31, 2011 which represented a book value per share of $3.33, 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 required by federal banking agencies.

About Republic Bank

Republic Bank 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.

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 their impact on capital expenditures; new service and product offerings by competitors and price pressures; and similar items.  You should carefully review the risk factors described in the Form 10-K for the year ended December 31, 2010 and other documents the Company files from time to time with the Securities and Exchange Commission. The words "may", "believes," "expect," "estimate," "project," "anticipate," "should," "intend," "probability," "risk," "target," "objective," 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.

Selected Consolidated Financial Data

(Unaudited)















Three months ended









%




%

(dollars in thousands, except per share amounts)


3/31/11


12/31/10


Change


3/31/10


Change














Income Statement Data:












Net interest income


$           7,420


$           7,223


3%


$          7,409


0%


Provision (recovery) for loan losses


3,550


(350)


1,114%


5,500


(35%)


Non-interest income


1,127


1,589


(29%)


475


137%


Total revenues


8,547


8,812


(3%)


7,884


8%


Non-interest expenses


8,992


8,991


0%


8,405


7%


Provision (benefit) for income taxes


(1,487)


12


(12,492%)


(2,159)


31%


Net income (loss)


(2,508)


159


(1,677%)


(3,862)


35%














Per Common Share Data:












Net income (loss): Basic


$            (0.10)


$             0.01


(1,100%)


$          (0.37)


73%


Net income (loss): Diluted


(0.10)


0.01


(1,100%)


(0.37)


73%


Book Value


$             3.33


$             3.39




$            6.18




Weighted average shares outstanding:













Basic


25,973


25,967




10,578





Diluted


25,973


25,967




10,578
















Balance Sheet Data:












Total assets


$       877,081


$       876,097


0%


$      967,507


(9%)


Loans (net)


622,516


608,911


2%


665,711


(6%)


Allowance for loan losses


14,450


11,444


26%


13,725


5%


Investment securities


145,969


150,087


(3%)


183,400


(20%)


Total deposits


761,077


757,730


0%


846,232


(10%)


Core deposits*


671,605


701,779


(4%)


689,996


(3%)


Public and brokered certificates of deposit


89,472


55,951


60%


156,236


(43%)


Other borrowed money


-


-




25,000


(100%)


Subordinated debt


22,476


22,476


-


22,476


-


Stockholders' equity


86,384


88,146


(2%)


65,182


33%














Capital:












Stockholders' equity to total assets


9.85%


10.06%




6.74%




Leverage ratio


11.25%


11.01%




8.35%




Risk based capital ratios:













Tier 1


13.02%


13.68%




10.13%





Total Capital


14.28%


14.93%




11.59%
















Performance Ratios:












Cost of funds


1.00%


1.05%




1.38%




Deposit cost of funds


0.88%


0.94%




1.22%




Net interest margin


3.82%


3.45%




3.38%




Return on average assets


(1.17%)


0.07%




(1.61%)




Return on average total stockholders' equity


(11.59%)


0.71%




(22.68%)
















Asset Quality












Net charge-offs to average loans outstanding


0.35%


(0.58%)




2.74%




Nonperforming assets to total period-end assets


6.07%


6.30%




4.94%




Allowance for loan losses to total period-end loans


2.27%


1.84%




2.02%




Allowance for loan losses to nonperforming loans


36.90%


28.62%




37.37%




Nonperforming assets to capital and reserves


52.80%


55.46%




60.54%






























* Core deposits equal total deposits less public and brokered certificates of deposit



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, 2011


December 31, 2010


March 31, 2010
























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


$   14,675


$      14


0.39%


$   62,508


$      40


0.25%


$   22,840


$      20


0.36%

Securities


149,485


1,170


3.13%


151,510


1,296


3.42%


190,738


1,716


3.60%

Loans receivable


629,825


8,211


5.29%


622,913


8,093


5.15%


683,846


8,759


5.19%

Total interest-earning assets


793,985


9,395


4.80%


836,931


9,429


4.47%


897,424


10,495


4.74%




















Other assets


76,454






75,300






73,516
























Total assets


$ 870,439






$ 912,231






$ 970,940
























Interest-bearing liabilities:






































Demand non interest-bearing


$ 127,055






$ 114,540






$ 125,400





Demand interest-bearing


63,870


$      98


0.62%


61,010


$    101


0.66%


49,506


$      82


0.67%

Money market & savings


309,805


799


1.05%


336,752


888


1.05%


307,862


1,050


1.38%

Time deposits


241,191


721


1.21%


278,900


878


1.25%


360,796


1,405


1.58%

Total deposits


741,921


1,618


0.88%


791,202


1,867


0.94%


843,564


2,537


1.22%




















Total interest-bearing deposits


614,866


1,618


1.07%


676,662


1,867


1.09%


718,164


2,537


1.43%




















Other borrowings


31,946


296


3.76%


22,508


279


4.92%


48,586


489


4.08%







































Total interest-bearing liabilities


$ 646,812


$ 1,914


1.20%


$ 699,170


$ 2,146


1.22%


$ 766,750


$ 3,026


1.60%

Total deposits and



















 other borrowings


773,867


1,914


1.00%


813,710


2,146


1.05%


892,150


3,026


1.38%







































Non interest-bearing liabilities


8,781






9,052






9,716





Shareholders' equity


87,791






89,469






69,074





Total liabilities and



















shareholders' equity


$ 870,439






$ 912,231






$ 970,940
























Net interest income




$ 7,481






$ 7,283






$ 7,469



Net interest spread






3.60%






3.25%






3.14%




















Net interest margin






3.82%






3.45%






3.38%







































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 

(dollars in thousands)

3/31/11


12/31/10


3/31/10







Balance at beginning of period

$ 11,444


$      10,889


$ 12,841

Provisions/(recoveries) charged to operating






expense

3,550


(350)


5,500


14,994


10,539


18,341







Recoveries on loans charged-off:






 Commercial

9


905


150

 Consumer

-


-


-

Total recoveries

9


905


150







Loans charged-off:






 Commercial

(522)


-


(4,766)

 Consumer

(31)


-


-







Total charged-off

(553)


-


(4,766)







Net charge-offs

(544)


905


(4,616)







Balance at end of period

$ 14,450


$      11,444


$ 13,725







Net charge-offs as a percentage of






average loans outstanding

0.35%


(0.58%)


2.74%







Allowance for loan losses as a percentage of






period-end loans

2.27%


1.84%


2.02%



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)

2011


2010


2010


2010


2010











Non-accrual loans:










 Commercial real estate

$ 38,187


$        39,302


$         45,958


$ 51,213


$ 36,144

 Consumer and other

974


690


574


599


582

Total non-accrual loans

39,161


39,992


46,532


51,812


36,726











Loans past due 90 days or more










 and still accruing

-


-


1,795


-


-

Renegotiated loans

-


-


-


-


-











Total non-performing loans

39,161


39,992


48,327


51,812


36,726











Other real estate owned

14,077


15,237


10,647


10,647


11,044











Total non-performing assets

$ 53,238


$        55,229


$         58,974


$ 62,459


$ 47,770











Non-performing loans to total loans

6.15%


6.45%


7.60%


7.74%


5.41%











Non-performing assets to total assets

6.07%


6.30%


6.23%


6.69%


4.94%











Non-performing loan coverage

36.90%


28.62%


22.53%


19.83%


37.37%











Allowance for loan losses as a percentage










 of total period-end loans

2.27%


1.84%


1.71%


1.54%


2.02%











Non-performing assets/capital plus










  allowance for loan losses

52.80%


55.46%


58.36%


63.07%


60.54%



SOURCE Republic First Bancorp, Inc.



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