Republic First Bancorp, Inc. Reports Net Income Of $1.0 Million For Second Quarter 2012

Jul 24, 2012, 14:59 ET from Republic First Bancorp, Inc.

PHILADELPHIA, July 24, 2012 /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, 2012.  The Company recorded net income of $1.0 million, or $0.04 per share, for the second quarter of 2012 compared to a net loss of $480,000, or $0.02 per share, for the second quarter of 2011.

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

"We are very pleased with the financial results of the second quarter," said Harry D. Madonna, the Company's Chairman and Chief Executive Officer.  "The substantial improvement in asset quality over the past year enables us to focus on the actions necessary to achieve consistent and sustainable profitability for the bank."

Highlights for the Period Ending June 30, 2012

  • The Company recorded net income of $1.0 million, or $0.04 per share, for the quarter ended June 30, 2012 compared to a net loss of $480,000, or $0.02 per share, for the quarter ended June 30, 2011.
  • Asset quality has improved significantly year over year. Non-performing assets decreased by $35.0 million, or 67%, to $17.0 million as of June 30, 2012 compared to $52.0 million as of June 30, 2011. Non-performing assets as a percentage of total assets decreased to 1.81% as of June 30, 2012 compared to 5.78% as of June 30, 2011.
  • Core deposits increased by $72.6 million, or 10%, to $790.6 million as of June 30, 2012 compared to $718.1 million as of June 30, 2011 driven by the Company's retail strategy focused on relationship banking and gathering low cost core deposits.
  • Total assets increased by $37.5 million to $938.4 million as of June 30, 2012 compared to $900.9 million as of June 30, 2011.
  • Capital levels remain strong with a Total Risk-Based Capital ratio of 12.87% and a Tier I Leverage Ratio of 8.99% at June 30, 2012.
  • Tangible book value per share as of June 30, 2012 was $2.59.
  • SBA lending continued to grow as an important component of the Company's lending strategy. $12.7 million in new SBA loans were originated during the second quarter of 2012. Our team is now ranked as the #1 SBA lender in the New Jersey, #3 in Pennsylvania, and #23 nationally based on the dollar volume of loan originations.

Income Statement

The Company reported net income of $1.0 million or $0.04 per share, for the three months ended June 30, 2012, compared to a net loss of $480,000, or $0.02 per share, for the three months ended June 30, 2011.  Net income for the six month period ended June 30, 2012 was $2.3 million, or $0.09 per share, compared to a net loss of $3.0 million, or $0.12 per share, for the six months ended June 30, 2011.

Earnings continue to improve on a year to year basis as the loan loss provision and other credit costs decrease due to the substantial improvement in asset quality. The Company recorded a loan loss provision in the amount of $0.5 million during the quarter ended June 30, 2012 compared to a $1.5 million provision in the same period one year ago. For the six month period ended June 30, 2012, the Company recorded a negative provision in the amount of $0.3 million compared to a $5.1 million provision during the six months ended June 30, 2011.

The Company continues to lower its cost of funds as evidenced by a decrease of 10 basis points to 0.73% for the three months ended June 30, 2012, compared to 0.83% for the three months ended March 31, 2012. The net interest margin increased to 3.59% for the three month period ended June 30, 2012 compared to 3.35% for the three month period ended March 31, 2012.

Non-interest income increased to $2.5 million for the three months ended June 30, 2012 compared to $2.1 million for the three months ended June 30, 2011, primarily due to gains on sales of investment securities recognized in the current quarter.

Balance Sheet

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

 

Description

June 30,

2012

June 30,

2011

 

% Change

March 31,

2012

 

% Change

Total assets

$ 938,391

$ 900,892

4%

$ 958,288

(2%)

Total loans (net)

595,528

624,280

(5%)

592,506

1%

Total deposits

841,314

783,102

7%

857,374

(2%)

Total core deposits

790,616

718,053

10%

805,911

(2%)

Total assets increased by $37.5 million, or 4%, as of June 30, 2012 when compared to June 30, 2011. The Company experienced strong growth in core deposits year over year as a result of the retail strategy which focuses on relationship banking.  Core deposits grew by $72.6 million, or 10%, to $790.6 million as of June 30, 2012 compared to $718.1 million as of June 30, 2011.

Core Deposits

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

 

 

Description

 

June 30,

2012

 

June 30,

2011

 

% Change

 

March 31,

2012

 

% Change

2nd Qtr 2012 Cost of Funds

Demand noninterest-bearing

$ 130,143

$ 113,641

15%

$ 128,935

1%

0.00%

Demand interest-bearing

144,754

97,149

49%

103,385

40%

0.59%

Money market and savings

420,700

321,971

31%

447,974

(6%)

0.63%

Certificates of deposit

95,019

185,292

(49%)

125,617

(24%)

1.05%

Total core deposits

$ 790,616

$ 718,053

10%

$ 805,911

(2%)

0.58%

Core deposits increased to $790.6 million at June 30, 2012 compared to $718.1 million at June 30, 2011 as the Company continues to focus its effort on the gathering of low-cost core deposits. We experienced strong growth in the demand, savings and money market categories on a year to year basis. At the same time the Company reduced the overall deposit cost of funds to 0.62% for the three month period ending June 30, 2012 compared to 0.92% for the three month period ending June 30, 2011. The retail banking strategy has also enabled the Company to significantly reduce its dependence on wholesale funding sources in the brokered and public fund certificate of deposit market.

Lending

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

 

Description

June 30,

2012

 

% of Total

 

June 30,

2011

 

% of Total

March 31,

2012

 

% of Total

Commercial real estate

$ 333,961

55%

$ 388,081

61%

$343,838

57%

Construction and land development

36,306

6%

67,576

10%

35,424

6%

Commercial and industrial

102,382

17%

81,783

13%

96,586

16%

Owner occupied real estate

112,338

19%

81,799

13%

107,804

18%

Consumer and other

17,707

3%

16,358

2%

16,832

3%

Residential mortgage

2,488

0%

4,221

1%

3,114

0%

Deferred costs (fees)

(269)

(430)

(336)

Gross loans

$604,913

100%

$639,388

100%

$603,262

100%

Gross loans decreased by $34.5 million to $604.9 million at June 30, 2012 compared to $639.4 million at June 30, 2011.  This decrease was primarily driven by a bulk sale of non-performing loans and foreclosed properties during the fourth quarter of 2011 which substantially improved asset quality for the Company.  Gross loans increased by $1.7 million on a linked quarter basis to $604.9 million as of June 30, 2012.

Asset Quality

The Company's non-performing asset balances and asset quality ratios are highlighted below (dollars in thousands):

Quarter Ended

 

Ratio

June 30,

2012

June 30,

2011

March 31,

2012

Non-performing loans

$10,892

$38,929

$10,722

Other real estate owned

6,135

13,109

6,135

Total non-performing assets

$17,027

$52,038

$16,857

Non-performing assets/total assets

1.81%

5.78%

1.76%

Quarterly net loan charge-offs/average loans

1.24%

0.53%

0.37%

Allowance for loan losses/gross loans

1.55%

2.36%

1.78%

Allowance for loan losses/non-performing loans

86%

39%

100%

Non-performing assets/capital and reserves

22%

51%

22%

Non-performing assets decreased by $35.0 million to $17.0 million, or 1.81% of total assets, at June 30, 2012, compared to $52.0 million, or 5.78% of total assets, as of June 30, 2011.  The allowance for loan losses as a percentage of non-performing loans increased to 86% as of June 30, 2012, compared to 39%  as of June 30, 2011.  The ratio of non-performing loans to capital and reserves improved to 22% as of June 30, 2012 compared to 51% one year ago.

Capital

The Company's capital regulatory ratios at June 30, 2012 were as follows:

 

Republic First Bancorp, Inc.

Regulatory Guidelines

"Well Capitalized"

Leverage Ratio

8.99%

5.00%

Tier 1 Risk Based Capital

11.62%

6.00%

Total Risk Based Capital

12.87%

10.00%

Total shareholders' equity was $67.3 million at June 30, 2012 which represented a book value per share of $2.59, 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 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, 2011 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)

June 30,

March 31,

June 30,

(dollars in thousands)

2012

2012

2011

ASSETS

Cash and due from banks

$    8,712

$    8,627

$  10,164

Interest-bearing deposits and federal funds sold

90,410

109,604

13,468

Total cash and cash equivalents

99,122

118,231

23,632

Securities - Available for sale

179,794

182,805

162,222

Securities - Held to maturity

66

140

139

Restricted stock

4,816

5,062

5,881

Total investment securities

184,676

188,007

168,242

Loans held for sale

975

1,875

5,827

Loans receivable

604,913

603,262

639,388

Allowance for loan losses

(9,385)

(10,756)

(15,108)

Net loans

595,528

592,506

624,280

Premises and equipment

22,772

23,131

24,342

Other real estate owned

6,135

6,135

13,109

Other assets

29,183

28,403

41,460

Total Assets

$938,391

$958,288

$900,892

LIABILITIES

Non-interest bearing deposits

$130,143

$128,935

$113,641

Interest bearing deposits

711,171

728,439

669,461

Total deposits

841,314

857,374

783,102

Short-term borrowings

-

4,516

-

Subordinated debt

22,476

22,476

22,476

Other liabilities

7,341

7,519

8,149

Total Liabilities

871,131

891,885

813,727

SHAREHOLDERS' EQUITY

Common stock - $0.01 par value

265

265

265

Additional paid-in capital

106,575

106,472

106,192

Accumulated deficit

(35,530)

(36,537)

(16,128)

Treasury stock at cost

(3,099)

(3,099)

(3,099)

Stock held by deferred compensation plan

(809)

(809)

(809)

Accumulated other comprehensive income (loss)

(142)

111

744

Total Shareholders' Equity

67,260

66,403

87,165

Total Liabilities and Shareholders' Equity

$938,391

$958,288

$900,892

Republic First Bancorp, Inc.

Consolidated Statements of Operations

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,

(dollars in thousands, except per share amounts)

2012

2012

2011

2012

2011

INTEREST INCOME

Interest and fees on loans

$ 8,179

$   8,090

$ 8,387

$16,269

$16,598

Interest and dividends on investment securities

1,386

1,385

1,236

2,771

2,345

Interest on other interest earning assets

84

101

34

185

48

Total interest income

9,649

9,576

9,657

19,225

18,991

INTEREST EXPENSE

Interest on deposits

1,340

1,615

1,853

2,955

3,471

Interest on borrowed funds

284

285

278

569

574

Total interest expense

1,624

1,900

2,131

3,524

4,045

Net interest income

8,025

7,676

7,526

15,701

14,946

Provision (credit) for loan losses

500

(750)

1,500

(250)

5,050

Net interest income after provision for loan losses

7,525

8,426

6,026

15,951

9,896

NON-INTEREST INCOME

Service fees on deposit accounts

226

210

201

436

370

Gain on sale of SBA loans

1,110

1,086

1,657

2,196

2,354

Gain on sale of investment securities

774

-

-

774

-

Other non-interest income

389

350

218

739

479

Total non-interest income

2,499

1,646

2,076

4,145

3,203

NON-INTEREST EXPENSE

Salaries and employee benefits

3,963

4,134

3,807

8,097

7,145

Occupancy and equipment

1,378

1,362

1,322

2,740

2,705

Legal and professional fees

1,196

1,182

1,033

2,378

1,762

Foreclosed real estate

104

98

65

202

1,424

Regulatory assessments and related fees

351

338

560

689

1,043

Other operating expenses

2,018

1,722

2,224

3,740

3,924

Total non-interest expense

9,010

8,836

9,011

17,846

18,003

Income (loss) before provision (benefit) for income taxes

1,014

1,236

(909)

2,250

(4,904)

Provision (benefit) for income taxes

7

(69)

(429)

(62)

(1,916)

Net income (loss)

$ 1,007

$   1,305

$  (480)

$  2,312

$ (2,988)

Net Income (loss) per Common Share

Basic

$  0.04

$     0.05

$ (0.02)

$    0.09

$   (0.12)

Diluted

$  0.04

$     0.05

$ (0.02)

$    0.09

$   (0.12)

Average Common Shares Outstanding

Basic

25,973

25,973

25,973

25,973

25,973

Diluted

25,973

25,973

25,973

25,973

25,973

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, 2012

March 31, 2012

June 30, 2011

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

$119,275

$      84

0.28%

$162,103

$    101

0.25%

$  51,808

$      34

0.26%

Securities

185,091

1,449

3.13%

178,650

1,447

3.24%

160,764

1,297

3.23%

Loans receivable

606,617

8,215

5.45%

592,828

8,127

5.51%

636,128

8,430

5.32%

Total interest-earning assets

910,983

9,748

4.30%

933,581

9,675

4.17%

848,700

9,761

4.61%

Other assets

56,084

55,168

71,967

Total assets

$967,067

$988,749

$920,667

Interest-bearing liabilities:

Demand non interest-bearing

$125,528

$144,855

$101,395

Demand interest-bearing

126,025

185

0.59%

117,794

171

0.58%

98,435

168

0.68%

Money market & savings

461,622

722

0.63%

431,106

863

0.81%

339,603

860

1.02%

Time deposits

157,013

433

1.11%

199,523

581

1.17%

264,070

825

1.25%

Total deposits

870,188

1,340

0.62%

893,278

1,615

0.73%

803,503

1,853

0.92%

Total interest-bearing deposits

744,660

1,340

0.72%

748,423

1,615

0.87%

702,108

1,853

1.06%

Other borrowings

22,526

284

5.07%

22,575

285

5.08%

22,478

278

4.96%

Total interest-bearing liabilities

767,186

1,624

0.85%

770,998

1,900

0.99%

724,586

2,131

1.18%

Total deposits and 

  other borrowings

892,714

1,624

0.73%

915,853

1,900

0.83%

825,981

2,131

1.03%

Non interest-bearing liabilities

7,506

7,518

7,683

Shareholders' equity

66,847

65,378

87,003

Total liabilities and

shareholders' equity

$967,067

$988,749

$920,667

Net interest income

$ 8,124

$ 7,775

$ 7,630

Net interest spread

3.45%

3.18%

3.43%

Net interest margin

3.59%

3.35%

3.61%

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

Six months ended

June 30,

March 31,

June 30,

Dec 31

June 30,

June 30,

(dollars in thousands)

2012

2012

2011

2011

2012

2011

Balance at beginning of period

$  10,756

$  12,050

$  14,450

$  11,444

$  12,050

$  11,444

Provisions (credits) charged to operating

expense

500

(750)

1,500

15,966

(250)

5,050

11,256

11,300

15,950

27,410

11,800

16,494

Recoveries on loans charged-off:

  Commercial

105

-

2

69

105

11

  Consumer

27

1

38

40

28

38

Total recoveries

132

1

40

109

133

49

Loans charged-off:

  Commercial

(1,903)

(544)

(882)

(15,428)

(2,447)

(1,404)

  Consumer

(100)

(1)

-

(41)

(101)

(31)

Total charged-off

(2,003)

(545)

(882)

(15,469)

(2,548)

(1,435)

Net charge-offs

(1,871)

(544)

(842)

(15,360)

(2,415)

(1,386)

Balance at end of period

$    9,385

$  10,756

$  15,108

$  12,050

$    9,385

$  15,108

Net charge-offs as a percentage of

average loans outstanding

1.24%

0.37%

0.53%

2.44%

0.81%

0.44%

Allowance for loan losses as a percentage of

period-end loans

1.55%

1.78%

2.36%

2.04%

1.55%

2.36%

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)

2012

2012

2011

2011

2011

Non-accrual loans:

  Commercial real estate

$10,090

$   9,911

$         9,667

$        31,096

$36,642

  Consumer and other

802

811

897

910

949

Total non-accrual loans

10,892

10,722

10,564

32,006

37,591

Loans past due 90 days or more

  and still accruing

-

-

748

-

1,338

Renegotiated loans

-

-

-

-

-

Total non-performing loans

10,892

10,722

11,312

32,006

38,929

Other real estate owned

6,135

6,135

6,479

13,988

13,109

Total non-performing assets

$17,027

$ 16,857

$       17,791

$        45,994

$52,038

Non-performing loans to total loans

1.80%

1.78%

1.92%

5.05%

6.09%

Non-performing assets to total assets

1.81%

1.76%

1.70%

4.83%

5.78%

Non-performing loan coverage

86.16%

100.32%

106.52%

38.68%

38.81%

Allowance for loan losses as a percentage

  of total period-end loans

1.55%

1.78%

2.04%

1.95%

2.36%

Non-performing assets/capital plus

   allowance for loan losses

22.22%

21.85%

23.13%

45.68%

50.88%

SOURCE Republic First Bancorp, Inc.