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

29 Apr, 2011, 17:06 ET from Republic First Bancorp, Inc.

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.

(Logo: http://photos.prnewswire.com/prnh/20100707/PH31611LOGO )

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.