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

Oct 18, 2013, 16:17 ET from Republic First Bancorp, Inc.

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.