2014

Republic First Bancorp, Inc. Reports Financial Results For Third Quarter 2013

PHILADELPHIA, Oct. 18, 2013 /PRNewswire/ -- Republic First Bancorp, Inc. (NASDAQ: FRBK), the holding company for Republic Bank, today announced its financial results for the period ended September 30, 2013.  

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

"We are pleased to report that asset quality improved substantially during the third quarter," said Harry D. Madonna, the Company's Chairman and Chief Executive Officer. "Non-performing loan balances were reduced by 44% during the quarter as we continue to work diligently to resolve all outstanding credit quality issues.  We also continue to make significant progress with our expansion plans as announced earlier this year.  Ground has been broken on our new store at a prime location in Cherry Hill, NJ and construction is also under way on the renovation and relocation of three existing stores.  These facility improvements will significantly enhance the customer experience."

The Company has recorded a net loss of $2.2 million, or $0.09 per share, for the third quarter of 2013 compared to net income of $0.4 million, or $0.02 per share, for the third quarter of 2012. 

"Our third quarter earnings were impacted by the settlement of a lawsuit stemming from an issue that arose several years ago," said Madonna. "While we vigorously contested the claims raised during litigation, it was decided that to fully embrace the Company's positive momentum it was time to resolve this matter. We have worked diligently in recent years to position the Bank for strong growth and expansion in our market and with this settlement now behind us we can focus on those goals. We look forward to bringing the Republic Bank model, which is rooted in outstanding customer service, to the many new fans that await us."

Highlights for the Period Ending September 30, 2013

  • Asset quality improved as non-performing loans decreased by $5.8 million, or 44%, to $7.5 million, or 1.15% of total loans, at September 30, 2013 compared to $13.3 million, or 2.09% of total loans as of June 30, 2013.
  • The percentage of non-performing assets to capital and reserves improved to 18% as of September 30, 2013 compared to 30% as of September 30, 2012.
  • Total loans increased by $27.1 million, or 4%, to $650.2 million as of September 30, 2013 compared to $623.2 million at September 30, 2012.
  • SBA lending continued to be a focal point of the Company's lending strategy. $23.9 million in new SBA loans were originated during the quarter ended September 30, 2013. Our team is currently ranked as the #1 SBA lender in the state of New Jersey and #2 in the Philadelphia market based on the dollar volume of loan originations.
  • Core deposits increased by $29.9 million on a linked quarter basis to $835.3 million as of September 30, 2013 compared to $805.4 million as of June 30, 2013.
  • The net interest margin increased to 3.67% for the nine month period ending September 30, 2013 compared to 3.54% for the nine month period ending September 30, 2012 despite the challenging interest rate environment.
  • Capital levels remain strong with a Total Risk-Based Capital ratio of 12.18% and a Tier I Leverage Ratio of 9.31% at September 30, 2013.
  • Tangible book value per share as of September 30, 2013 was $2.58.

Income Statement

The Company reported a net loss of $2.2 million, or $0.09 per share, for the three month period ended September 30, 2013, compared to net income of $0.4 million, or $0.02 per share, for the three month period ended September 30, 2012.  The net loss for the nine month period ended September 30, 2013 was $0.2 million, or $0.01 per share, compared to net income of $2.7 million, or $0.10 per share, for the nine months ended September 30, 2012.

Earnings in the third quarter of 2013 were impacted by a one-time charge of $1.9 million related to a settlement agreement in connection with litigation in which the Company was a defendant.  The Company had been vigorously contesting the claims in the litigation. However, as a result of reversals of certain prior procedural rulings in the case, the Company concluded that it would be in its best interest to avoid further litigation by executing a settlement agreement.  This settlement releases the Company from all claims and actions related to this matter.

The Company continues to lower its cost of funds as evidenced by a decrease of 14 basis points to 0.51% for the three month period ended September 30, 2013, compared to 0.65% for the three month period ended September 30, 2012. The net interest margin decreased slightly to 3.67% for the three month period ended September 30, 2013 compared to 3.69% for the three month period ended September 30, 2012.

The provision for loan losses decreased to $0.3 million in the third quarter of 2013 compared to $0.9 million in the third quarter of 2012 mainly as a result of improved asset quality.

Non-interest expense increased to $12.1 million for the three month period ended September 30, 2013 compared to $8.8 million for the three month period ended September 30, 2012, due to the aforementioned legal settlement. There was also an increase in foreclosed real estate expenses in the amount of $0.5 million over the prior year period primarily driven by a writedown of one property based on the current appraised value.

Balance Sheet

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

 

Description

Sep 30,

2013

Sep 30,

2012

 

% Change

Jun 30,

2013

 

% Change







Total assets

$ 942,868

$ 966,990

(2%)

$ 919,666

3%







Total loans (net)

641,533

613,380

5%

628,401

2%







Total deposits

845,503

868,193

(3%)

820,852

3%







Total core deposits

835,271

820,776

2%

805,361

4%







Net loans increased by $28.2 million, or 5%, as of September 30, 2013 compared to September 30, 2012.  Core deposits grew by $14.5 million to $835.3 million as of September 30, 2013 compared to $820.8 million as of September 30, 2012.

Core Deposits

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

 

 

Description

 

Sep 30,

2013

 

Sep 30,

2012

 

%
Change

 

Jun 30,

2013

 

%
Change

3rd Qtr

2013 Cost

of Funds








Demand noninterest-bearing

$ 159,384

$ 145,493

10%

$ 143,485

11%

0.00%








Demand interest-bearing

188,572

173,010

9%

180,802

4%

0.43%








Money market and savings

413,969

417,506

(1%)

408,355

1%

0.41%








Certificates of deposit

73,346

84,767

(13%)

72,719

1%

0.78%








Total core deposits

$ 835,271

$ 820,776

2%

$ 805,361

4%

0.37%








Core deposits increased to $835.3 million at September 30, 2013 compared to $820.8 million at September 30, 2012 as the Company continues to focus its effort on the gathering of low-cost core deposits. We recognized strong growth in demand account balances on a year to year basis.  At the same time we've reduced the overall deposit cost of funds to 0.39% for the three month period ending September 30, 2013 compared to 0.54% for the three month period ending September 30, 2012. The retail banking strategy has also enabled the Company to significantly reduce its dependence on wholesale funding sources such as brokered and internet-based certificates of deposit.

Lending

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

 

Description

Sep 30,

2013

 

% of

Total

 

Sep 30,

2012

 

% of

Total

Jun 30,

2013

 

% of

Total








Commercial real estate

$ 328,486

51%

$ 344,149

55%

$329,599

52%

Construction and land development

25,238

4%

29,744

5%

31,455

5%

Commercial and industrial

113,302

17%

108,665

18%

108,951

17%

Owner occupied real estate

150,594

23%

117,959

19%

137,219

22%

Consumer and other

30,595

5%

20,370

3%

28,413

4%

Residential mortgage

2,374

0%

2,467

0%

2,400

0%

Deferred costs (fees)

(352)


(176)


(304)









Gross loans

$650,237

100%

$623,178

100%

$637,733

100%








Gross loans increased by $27.1 million to $650.2 million at September 30, 2013 compared to $623.2 million at September 30, 2012 as a result of an increase in quality loan demand over the last twelve months. 

Asset Quality

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


Quarter Ended


Sep 30,

2013

Jun 30,

2013

Sep 30,

2012





Non-performing assets / total assets

1.43%

2.17%

2.43%





Quarterly net loan charge-offs / average loans

0.54%

0.60%

0.28%





Allowance for loan losses / gross loans

1.34%

1.46%

1.57%





Allowance for loan losses / non-performing loans

116%

70%

61%





Non-performing assets / capital and reserves

18%

25%

30%





Non-performing assets decreased by $6.5 million to $13.4 million, or 1.43% of total assets, at September 30, 2013, compared to $19.9 million, or 2.17% of total assets, as of June 30, 2013.  The allowance for loan losses as a percentage of non-performing loans increased to 116% as of September 30, 2013, compared to 70%  as of June 30, 2013.  The ratio of non-performing assets to capital and reserves decreased to 18% as of September 30, 2013 compared to 25% as of June 30, 2013.

Capital

The Company's capital regulatory ratios at September 30, 2013 were as follows:


 

Republic First Bancorp, Inc.

Regulatory Guidelines

"Well Capitalized"




Leverage Ratio

9.31%

5.00%




Tier 1 Risk Based Capital

11.07%

6.00%




Total Risk Based Capital

12.18%

10.00%




Total shareholders' equity was $67.1 million at September 30, 2013 which represented a book value per share of $2.58, 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 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 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, 2012 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)



2013


2013


2012














ASSETS











Cash and due from banks


$         11,468


$           8,934


$           7,750



Interest-bearing deposits and federal funds sold

32,837


47,850


90,108




Total cash and cash equivalents


44,305


56,784


97,858















Securities - Available for sale


199,722


184,371


192,529



Securities - Held to maturity


69


68


66



Restricted stock



1,570


2,326


4,369




Total investment securities


201,361


186,765


196,964















Loans held for sale



7,130


282


1,089















Loans receivable



650,237


637,733


623,178



Allowance for loan losses


(8,704)


(9,332)


(9,798)




Net loans




641,533


628,401


613,380















Premises and equipment


21,181


21,232


22,415



Other real estate owned



5,951


6,584


7,312



Other assets




21,407


19,618


27,972















Total Assets




$       942,868


$       919,666


$       966,990






































LIABILITIES











Non-interest bearing deposits


$       159,384


$       143,485


$       145,493



Interest bearing deposits



686,119


677,367


722,700




Total deposits



845,503


820,852


868,193















Short-term borrowings



-


-


-



Subordinated debt



22,476


22,476


22,476



Other liabilities



7,802


6,970


7,377















Total Liabilities



875,781


850,298


898,046














SHAREHOLDERS' EQUITY










Common stock - $0.01 par value


265


265


265



Additional paid-in capital



106,990


106,908


106,673



Accumulated deficit



(34,447)


(32,225)


(35,132)



Treasury stock at cost



(3,099)


(3,099)


(3,099)



Stock held by deferred compensation plan

(809)


(809)


(809)



Accumulated other comprehensive income (loss)

(1,813)


(1,672)


1,046















Total Shareholders' Equity


67,087


69,368


68,944



























Total Liabilities and Shareholders' Equity

$       942,868


$       919,666


$       966,990














 

 

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)

2013


2013


2012


2013


2012
















INTEREST INCOME













Interest and fees on loans


$          8,146


$          8,080


$          8,194


$        24,154


$        24,463


Interest and dividends on investment securities

1,153


1,091


1,364


3,364


4,135


Interest on other interest earning assets

40


44


54


143


239



Total interest income


9,339


9,215


9,612


27,661


28,837
















INTEREST EXPENSE













Interest on deposits



835


839


1,153


2,650


4,108


Interest on borrowed funds


278


278


283


834


852



Total interest expense


1,113


1,117


1,436


3,484


4,960

















Net interest income



8,226


8,098


8,176


24,177


23,877


Provision for loan losses



250


925


850


1,175


600

















Net interest income after provision for loan losses

7,976


7,173


7,326


23,002


23,277
















NON-INTEREST INCOME













Service fees on deposit accounts


270


265


234


769


670


Gain on sale of SBA loans


1,106


2,107


1,141


3,863


3,337


Gain on sale of investment securities

-


-


-


703


774


Other non-interest income


516


498


456


1,670


1,195



Total non-interest income


1,892


2,870


1,831


7,005


5,976
















NON-INTEREST EXPENSE













Salaries and employee benefits


4,486


4,503


4,008


13,276


12,105


Occupancy and equipment


1,612


1,348


1,367


4,287


4,107


Legal and professional fees


902


862


873


2,451


3,251


Foreclosed real estate



745


109


287


1,771


489


Regulatory assessments and related fees

327


241


343


912


1,032


Other operating expenses


4,036


1,993


1,909


7,597


5,649



Total non-interest expense


12,108


9,056


8,787


30,294


26,633
















Income (loss) before benefit for income taxes

(2,240)


987


370


(287)


2,620
















Benefit for income taxes



(18)


(24)


(28)


(68)


(90)
















Net income (loss)



$         (2,222)


$          1,011


$             398


$            (219)


$          2,710































Net Income (Loss) per Common Share












Basic




$           (0.09)


$            0.04


$            0.02


$           (0.01)


$            0.10


Diluted




$           (0.09)


$            0.04


$            0.02


$           (0.01)


$            0.10
















Average Common Shares Outstanding












Basic




25,973


25,973


25,973


25,973


25,973


Diluted




25,973


26,103


25,996


25,973


25,991

 

 

 

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, 2013


June 30, 2013


September 30, 2012


























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


$   58,532


$      40


0.27%


$   62,419


$      44


0.28%


$   88,996


$      54


0.24%


Securities


197,283


1,183


2.40%


182,025


1,117


2.45%


190,441


1,428


3.00%


Loans receivable


641,698


8,192


5.06%


633,547


8,128


5.15%


613,190


8,228


5.34%


Total interest-earning assets


897,513


9,415


4.16%


877,991


9,289


4.24%


892,627


9,710


4.33%






















Other assets


45,652






50,912






56,814


























Total assets


$ 943,165






$ 928,903






$ 949,441


























Interest-bearing liabilities:








































Demand non interest-bearing


$ 150,915






$ 141,390






$ 134,857






Demand interest-bearing


198,341


213


0.43%


180,824


207


0.46%


162,270


211


0.52%


Money market & savings


410,402


425


0.41%


417,567


428


0.41%


416,038


572


0.55%


Time deposits


85,576


197


0.91%


88,994


204


0.92%


138,148


370


1.07%


Total deposits


845,234


835


0.39%


828,775


839


0.41%


851,313


1,153


0.54%






















Total interest-bearing deposits


694,319


835


0.48%


687,385


839


0.49%


716,456


1,153


0.64%






















Other borrowings


22,476


278


4.91%


22,476


278


4.96%


22,476


283


5.01%










































Total interest-bearing liabilities


716,795


1,113


0.62%


709,861


1,117


0.63%


738,932


1,436


0.77%


Total deposits and 




















  other borrowings


867,710


1,113


0.51%


851,251


1,117


0.53%


873,789


1,436


0.65%










































Non interest-bearing liabilities


7,313






7,379






7,409






Shareholders' equity


68,142






70,273






68,243






Total liabilities and




















shareholders' equity


$ 943,165






$ 928,903






$ 949,441


























Net interest income




$ 8,302






$ 8,172






$ 8,274




Net interest spread






3.54%






3.61%






3.56%






















Net interest margin






3.67%






3.73%






3.69%






























































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, 2013


September 30, 2012




















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


$   69,109


$     143


0.28%


$ 123,332


$     239


0.26%


Securities


187,616


3,459


2.46%


184,748


4,324


3.12%


Loans receivable


632,369


24,297


5.14%


604,245


24,570


5.43%


Total interest-earning assets


889,094


27,899


4.20%


912,325


29,133


4.27%
















Other assets


52,048






56,025




















Total assets


$ 941,142






$ 968,350




















Interest-bearing liabilities:




























Demand non interest-bearing


$ 145,475






$ 135,079






Demand interest-bearing


183,445


615


0.45%


135,461


567


0.56%


Money market & savings


416,867


1,355


0.43%


436,182


2,157


0.66%


Time deposits


96,103


680


0.95%


164,797


1,384


1.12%


Total deposits


841,890


2,650


0.42%


871,519


4,108


0.63%
















Total interest-bearing deposits


696,415


2,650


0.51%


736,440


4,108


0.75%
















Other borrowings


22,476


834


4.96%


22,526


852


5.05%






























Total interest-bearing liabilities


718,891


3,484


0.65%


758,966


4,960


0.87%


Total deposits and 














  other borrowings


864,366


3,484


0.54%


894,045


4,960


0.74%






























Non interest-bearing liabilities


7,439






7,529






Shareholders' equity


69,337






66,776






Total liabilities and














shareholders' equity


$ 941,142






$ 968,350




















Net interest income




$24,415






$24,173




Net interest spread






3.55%






3.40%
















Net interest margin






3.67%






3.54%












































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)

2013


2013


2012


2012


2013


2012

























Balance at beginning of period

$         9,332


$         9,353


$         9,385


$  12,050


$         9,542


$       12,050













Provision charged to operating expense

250


925


850


1,350


1,175


600


9,582


10,278


10,235


13,400


10,717


12,650













Recoveries on loans charged-off:












  Commercial

10


58


-


105


69


105

  Consumer

1


25


-


29


26


28

Total recoveries

11


83


-


134


95


133













Loans charged-off:












  Commercial

(889)


(1,029)


(436)


(3,890)


(2,033)


(2,883)

  Consumer

-


-


(1)


(102)


(75)


(102)













Total charged-off

(889)


(1,029)


(437)


(3,992)


(2,108)


(2,985)













Net charge-offs

(878)


(946)


(437)


(3,858)


(2,013)


(2,852)













Balance at end of period

$         8,704


$         9,332


$         9,798


$    9,542


$         8,704


$         9,798

























Net charge-offs as a percentage of












  average loans outstanding

0.54%


0.60%


0.28%


0.63%


0.43%


0.63%













Allowance for loan losses as a percentage












  of period-end loans

1.34%


1.46%


1.57%


1.54%


1.34%


1.57%

 

 

 

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)

2013


2013


2013


2012


2012











Non-accrual loans:










  Commercial real estate

$          6,833


$        12,673


$        14,415


$        14,850


$        15,156

  Consumer and other

662


667


700


996


996

Total non-accrual loans

7,495


13,340


15,115


15,846


16,152











Loans past due 90 days or more










  and still accruing

-


-


-


202


-











Total non-performing loans

7,495


13,340


15,115


16,048


16,152











Other real estate owned

5,951


6,584


8,268


8,912


7,312











Total non-performing assets

$        13,446


$        19,924


$        23,383


$        24,960


$        23,464





















Non-performing loans to total loans

1.15%


2.09%


2.41%


2.60%


2.59%











Non-performing assets to total assets

1.43%


2.17%


2.52%


2.52%


2.43%











Non-performing loan coverage

116.13%


69.96%


61.88%


59.46%


60.66%











Allowance for loan losses as a percentage










  of total period-end loans

1.34%


1.46%


1.49%


1.54%


1.57%











Non-performing assets / capital plus










   allowance for loan losses

17.74%


25.32%


29.28%


31.42%


29.80%

 

 

 

SOURCE Republic First Bancorp, Inc.



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