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

29 Jul, 2011, 15:23 ET from Republic First Bancorp, Inc.

PHILADELPHIA, July 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 June 30, 2011.

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

During the second quarter of 2011, the Company recorded a net loss of $0.5 million, or $0.02 per share, compared to a net loss of $7.1 million, or $0.60 per share, for the second quarter of 2010.

"We continue to make strides in a positive direction related to the resolution of credit quality concerns on our balance sheet today," said Harry D. Madonna, the Company's Chairman and Chief Executive Officer. "Non-performing assets are lower for a fourth consecutive quarter as of June 30, 2011 and other credit quality indicators continue to steadily improve."

"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 prior to 2008. 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 June 30, 2011

  • Capital levels remain strong with a Total Risk-Based Capital ratio of 14.07% and a Tier I Leverage Ratio of 10.67% at June 30, 2011
  • Tangible book value per share as of June 30, 2011 was $3.36
  • Core deposits increased by $46.4 million, or 7%, on a linked quarter basis as of June 30, 2011  
  • Increased the allowance for loan losses to $15.1 million, or 2.36% of total loans, as of June 30, 2011
  • Increased outstanding loan balances on a linked quarter basis by $8.6 million to $639.4 million at June 30, 2011, compared to $630.8 million at March 31, 2011
  • Reduced non-performing asset balances for a fourth consecutive quarter
  • The net interest margin improved to 3.61% for the three months ended June 30, 2011 compared to 3.42% for the three months ended June 30, 2010

Income Statement

The Company reported a net loss of $0.5 million or $0.02 per share, for the three months ended June 30, 2011, compared to a net loss of $7.1 million, or $0.60 per share, for the three months ended June 30, 2010.

The loan loss provision decreased to $1.5 million for the quarter ended June 30, 2011 compared to $10.8 million for the quarter ended June 30, 2010 as credit quality indicators continue to stabilize. The loan loss provision recorded during the second quarter of 2011  primarily relates to updated appraisals of collateral for troubled loans originated prior to 2008.

The Company continues to lower its cost of funds as evidenced by a decrease of 21 basis points to 1.03% for the three months ended June 30, 2011, compared to 1.24% for the three months ended June 30, 2010. The net interest margin improved to 3.61% for the quarter ended June 30, 2011 compared to 3.42% for the quarter ended June 30, 2010.

Non-interest income increased to $2.1 million for the three months ended June 30, 2011 compared to $0.3 million for the three months ended June 30, 2010, as the Company continued to recognize gains on the sale of SBA loans during the second quarter 2011. The experienced SBA lending team hired by the Company earlier in the year is now ranked as the #1 SBA lender in New Jersey and the #36 lender in the nation based on the dollar volume of loan originations.

Balance Sheet

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

Description

June 30,

2011

March 31,

2011

%

Change

June 30,

2010

%

Change

Total assets

$ 900,892

$ 877,081

3%

$ 934,303

(4%)

Total loans (net)

624,280

616,360

1%

658,812

(5%)

Total deposits

783,102

761,077

3%

805,211

(3%)

Total core deposits

718,053

671,605

7%

681,765

5%

Net loans increased by $7.9 million to $624.3 million as of June 30, 2011, compared to $616.4 million as of March 31, 2011. Core deposits increased by $46.4 million, or 7%, as of June 30, 2011 compared to March 31, 2011 as a result of the Company's retail strategy which focuses on relationship banking.

Total deposits decreased by $22.1 million, or 3%, as of June 30, 2011 when compared to June 30, 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 continues to improve 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

June 30,

2011

March 31,

2011

%

Change

June 30,

2010

%

Change

2nd Qtr

2011

Cost of

Funds

Demand noninterest-bearing

$ 113,641

$ 78,221

45%

$ 117,169

(3%)

0.00%

Demand interest-bearing

97,149

76,349

27%

64,636

50%

0.68%

Money market and savings

321,971

333,457

(3%)

311,790

3%

1.02%

Certificates of deposit

185,292

183,578

1%

188,170

(2%)

1.38%

Total core deposits

$ 718,053

$ 671,605

7%

$ 681,765

5%

0.92%

Core deposits increased to $718.1 million at June 30, 2011 compared to $681.8 million at June 30, 2010 as the Company 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 0.92% for the three month period ending June 30, 2011 compared to 1.10% for the three month period ending June 30, 2010.

Lending

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

Description

June 30,

2011

% of

Total

March 31,

2011

% of

Total

June 30,

2010

% of

Total

Commercial

$ 81,783

13%

$78,735

12%

$92,500

14%

Owner occupied

81,799

13%

79,412

13%

84,507

13%

Total commercial

163,582

26%

158,147

25%

177,007

27%

Consumer & residential

20,149

3%

20,884

3%

21,756

3%

Commercial real estate

455,657

71%

451,779

72%

470,325

70%

Gross loans

$639,388

100%

$630,810

100%

$669,088

100%

Gross loans increased for a second consecutive quarter to $639.4 million as of June 30, 2011 as the Company continues to realize a steady return to quality loan demand.

Asset Quality

The Company's asset quality ratios are highlighted below:

Quarter Ended

Ratio

June 30,

2011

March 31,

2011

June 30,

2010

Non-performing assets/total assets

5.78%

6.07%

6.69%

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

0.53%

0.35%

8.38%

Allowance for loan losses/gross loans

2.36%

2.29%

1.54%

Allowance for loan losses/non-performing loans

39%

37%

20%

Non-performing assets/capital and reserves

51%

53%

63%

Non-performing assets trended lower for a fourth consecutive quarter to $52.0 million, or 5.78% of total assets, at June 30, 2011, compared to $62.5 million, or 6.69% of total assets, as of June 30, 2010. The allowance for loan losses as a percentage of total loans increased to 2.36% as of June 30, 2011, compared to 1.54%  as of June 30, 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 June 30, 2011 were as follows:

Republic First Bancorp, Inc.

Regulatory Guidelines

"Well Capitalized"

Leverage Ratio

10.67%

5.00%

Tier 1 Risk Based Capital

12.83%

6.00%

Total Risk Based Capital

14.07%

10.00%

Total shareholders' equity was $87.2 million at June 30, 2011 which represented a book value per share of $3.36, 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 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

Six months ended

(dollars in thousands, except per share amounts)

6/30/11

3/31/11

%

Change

6/30/10

%

Change

6/30/11

6/30/10

%

Change

Income Statement Data:

Net interest income

$     7,526

$     7,420

1%

$     7,511

0%

$   14,946

$   14,920

0%

Provision for loan losses

1,500

3,550

58%

10,750

(86%)

5,050

16,250

(69%)

Non-interest income

2,076

1,127

84%

254

717%

3,203

729

339%

Total revenues

9,602

8,547

12%

7,765

24%

18,149

15,649

16%

Non-interest expenses

9,011

8,992

0%

7,953

13%

18,003

16,358

10%

Provision (benefit) for income taxes

(429)

(1,487)

(71%)

(3,883)

89%

(1,916)

(6,042)

68%

Net income (loss)

(480)

(2,508)

(81%)

(7,055)

93%

(2,988)

(10,917)

73%

Per Common Share Data:

Net income (loss): Basic

$     (0.02)

$     (0.10)

(80%)

$     (0.60)

97%

$     (0.12)

$     (0.98)

88%

Net income (loss): Diluted

(0.02)

(0.10)

(80%)

(0.60)

97%

(0.12)

(0.98)

88%

Book Value

$       3.36

$       3.33

$       3.47

$       3.36

$       3.47

Weighted average shares outstanding:

Basic

25,973

25,973

11,707

25,973

11,142

Diluted

25,973

25,973

11,707

25,973

11,142

Balance Sheet Data:

Total assets

$ 900,892

$ 877,081

3%

$ 934,303

(4%)

$ 900,892

$ 934,303

(4%)

Loans (net)

624,280

616,360

1%

658,812

(5%)

624,280

658,812

(5%)

Allowance for loan losses

15,108

14,450

5%

10,276

47%

15,108

10,276

47%

Investment securities

168,242

145,969

15%

180,489

(7%)

168,242

180,489

(7%)

Total deposits

783,102

761,077

3%

805,211

(3%)

783,102

805,211

(3%)

Core deposits*

718,053

671,605

7%

681,765

5%

718,053

681,765

5%

Public and brokered certificates of deposit

65,049

89,472

(27%)

123,446

(47%)

65,049

123,446

(47%)

Other borrowed money

-

-

           -

9,149

(100%)

-

9,149

(100%)

Subordinated debt

22,476

22,476

-

22,476

-

22,476

22,476

-

Stockholders' equity

87,165

86,384

1%

88,761

(2%)

87,165

88,761

(2%)

Capital:

Stockholders' equity to total assets

9.68%

9.85%

9.50%

9.68%

9.50%

Leverage ratio

10.67%

11.25%

10.59%

10.67%

10.59%

Risk based capital ratios:

Tier 1

12.83%

13.02%

12.82%

12.83%

12.82%

Total Capital

14.07%

14.28%

14.07%

14.07%

14.07%

Performance Ratios:

Cost of funds

1.03%

1.00%

1.24%

1.02%

1.31%

Deposit cost of funds

0.92%

0.88%

1.10%

0.91%

1.16%

Net interest margin

3.61%

3.84%

3.42%

3.72%

3.40%

Return on average assets

(0.21%)

(1.17%)

(2.96%)

(0.67%)

(2.28%)

Return on average total stockholders' equity

(2.21%)

(11.59%)

(39.55%)

(6.88%)

(30.61%)

Asset Quality

Net charge-offs to average loans outstanding

0.53%

0.35%

8.38%

0.44%

5.56%

Nonperforming assets to total period-end assets

5.78%

6.07%

6.69%

5.78%

6.69%

Allowance for loan losses to total period-end loans

2.36%

2.29%

1.54%

2.36%

1.54%

Allowance for loan losses to nonperforming loans

38.81%

36.90%

19.83%

38.81%

19.83%

Nonperforming assets to capital and reserves

50.88%

52.80%

63.07%

50.88%

63.07%

 * 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)

June 30, 2011

March 31, 2011

June 30, 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

$   51,808

$      34

0.26%

$   14,675

$      14

0.39%

$   23,751

$      16

0.27%

Securities

160,764

1,297

3.23%

149,485

1,170

3.13%

183,421

1,602

3.49%

Loans receivable

636,128

8,430

5.32%

629,825

8,248

5.31%

679,889

8,675

5.12%

Total interest-earning assets

848,700

9,761

4.61%

793,985

9,432

4.81%

887,061

10,293

4.65%

Other assets

71,967

76,454

69,564

Total assets

$ 920,667

$ 870,439

$ 956,625

Interest-bearing liabilities:

Demand non interest-bearing

$ 101,395

$ 127,055

$ 118,223

Demand interest-bearing

98,435

$    168

0.68%

63,870

$      98

0.62%

63,277

$    125

0.79%

Money market & savings

339,603

860

1.02%

309,805

799

1.05%

321,689

912

1.14%

Time deposits

264,070

825

1.25%

241,191

721

1.21%

329,699

1,239

1.51%

Total deposits

803,503

1,853

0.92%

741,921

1,618

0.88%

832,888

2,276

1.10%

Total interest-bearing deposits

702,108

1,853

1.06%

614,866

1,618

1.07%

714,665

2,276

1.28%

Other borrowings

22,478

278

4.96%

31,946

296

3.76%

46,507

447

3.86%

Total interest-bearing liabilities

$ 724,586

$ 2,131

1.18%

$ 646,812

$ 1,914

1.20%

$ 761,172

$ 2,723

1.43%

Total deposits and

 other borrowings

825,981

2,131

1.03%

773,867

1,914

1.00%

879,395

2,723

1.24%

Non interest-bearing liabilities

7,683

8,781

5,681

Shareholders' equity

87,003

87,791

71,549

Total liabilities and

shareholders' equity

$ 920,667

$ 870,439

$ 956,625

Net interest income

$ 7,630

$ 7,518

$ 7,570

Net interest spread

3.43%

3.61%

3.22%

Net interest margin

3.61%

3.84%

3.42%

The above tables are presented on a tax equivalent basis.

Republic First Bancorp, Inc.  Average Balances and Net Interest Income

(unaudited)

For the six months ended

For the six months ended

(dollars in thousands)

June 30, 2011

June 30, 2010

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

$   33,344

$        48

0.29%

$   23,298

$        36

0.31%

Securities

155,156

2,467

3.18%

187,060

3,318

3.55%

Loans receivable

632,994

16,678

5.31%

681,857

17,434

5.16%

Total interest-earning assets

821,494

19,193

4.71%

892,215

20,788

4.70%

Other assets

74,198

71,528

Total assets

$ 895,692

$ 963,743

Interest-bearing liabilities:

Demand non interest-bearing

$ 114,154

$ 121,791

Demand interest-bearing

81,248

$      266

0.66%

56,429

$      207

0.74%

Money market & savings

324,786

1,659

1.03%

314,814

1,962

1.26%

Time deposits

252,694

1,546

1.23%

345,162

2,644

1.54%

Total deposits

772,882

3,471

0.91%

838,196

4,813

1.16%

Total interest-bearing deposits

658,728

3,471

1.06%

716,405

4,813

1.35%

Other borrowings

27,186

574

4.26%

47,541

936

3.97%

Total interest-bearing liabilities

685,914

4,045

1.19%

763,946

5,749

1.52%

Total deposits and

 other borrowings

800,068

4,045

1.02%

885,737

5,749

1.31%

Non interest-bearing liabilities

8,082

6,083

Shareholders' equity

87,542

71,923

Total liabilities and

shareholders' equity

$ 895,692

$ 963,743

Net interest income

$ 15,148

$ 15,039

Net interest spread

3.52%

3.18%

Net interest margin

3.72%

3.40%

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

Six months ended

(dollars in thousands)

6/30/11

3/31/11

6/30/10

12/31/10

6/30/11

6/30/10

Balance at beginning of period

$ 14,450

$ 11,444

$ 13,725

$ 12,841

$ 11,444

$ 12,841

Provisions charged to operating

expense

1,500

3,550

10,750

16,600

5,050

16,250

15,950

14,994

24,475

29,441

16,494

29,091

Recoveries on loans charged-off:

 Commercial

2

9

113

1,168

11

263

 Consumer

38

-

-

3

38

-

Total recoveries

40

9

113

1,171

49

263

Loans charged-off:

 Commercial

(882)

(522)

(14,270)

(19,126)

(1,404)

(19,036)

 Consumer

-

(31)

(42)

(42)

(31)

(42)

Total charged-off

(882)

(553)

(14,312)

(19,168)

(1,435)

(19,078)

Net charge-offs

(842)

(544)

(14,199)

(17,997)

(1,386)

(18,815)

Balance at end of period

$ 15,108

$ 14,450

$ 10,276

$ 11,444

$ 15,108

$ 10,276

Net charge-offs as a percentage of

average loans outstanding

0.53%

0.35%

8.38%

2.73%

0.44%

5.56%

Allowance for loan losses as a percentage of

period-end loans

2.36%

2.29%

1.54%

1.84%

2.36%

1.54%

Republic First Bancorp, Inc.

Summary of Non-Performing Loans and Assets

(unaudited)

June 30,

March 31,

December 31,

September 30,

June 30,

(dollars in thousands)

2011

2011

2010

2010

2010

Non-accrual loans:

 Commercial real estate

$ 36,642

$ 38,187

$        39,302

$         45,958

$ 51,213

 Consumer and other

949

974

690

574

599

Total non-accrual loans

37,591

39,161

39,992

46,532

51,812

Loans past due 90 days or more

 and still accruing

1,338

-

-

1,795

-

Renegotiated loans

-

-

-

-

-

Total non-performing loans

38,929

39,161

39,992

48,327

51,812

Other real estate owned

13,109

14,077

15,237

10,647

10,647

Total non-performing assets

$ 52,038

$ 53,238

$        55,229

$         58,974

$ 62,459

Non-performing loans to total loans

6.09%

6.21%

6.45%

7.60%

7.74%

Non-performing assets to total assets

5.78%

6.07%

6.30%

6.23%

6.69%

Non-performing loan coverage

38.81%

36.90%

28.62%

22.53%

19.83%

Allowance for loan losses as a percentage

 of total period-end loans

2.36%

2.29%

1.84%

1.71%

1.54%

Non-performing assets/capital plus

  allowance for loan losses

50.88%

52.80%

55.46%

58.36%

63.07%

SOURCE Republic First Bancorp, Inc.