Republic First Bancorp, Inc. Reports Second Quarter 2010 Financial Results

Jul 20, 2010, 17:03 ET from Republic First Bancorp, Inc.

PHILADELPHIA, July 20 /PRNewswire-FirstCall/ -- Republic First Bancorp, Inc. (Nasdaq: FRBK), the holding company for Republic First Bank, today announced its financial results for the period ending June 30, 2010.

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During the second quarter of 2010, the Company recorded a net loss of $7.1 million, or $0.60 per share, compared to a net loss of $5.4 million, or $0.51 per share, for the second quarter 2009.

“Our second quarter was negatively impacted by increases in reserves and charge-offs related to the restructuring of our loan portfolio necessary to strengthen the Company’s future operations, along with increases in personnel cost required to execute our strategic plan,” said Harry D. Madonna, the Company’s Chairman and Chief Executive Officer.  “We believe we have appropriately addressed all significant credit quality issues that exist in our loan portfolio and look forward to moving ahead with the deployment of our new retail focused strategy.”

During the second quarter of 2010, the Company successfully completed a $30 million common stock offering and has initiated the process of rebranding to the name Republic Bank.  “We will continue with our efforts to put the organization in a position to take advantage of the growth opportunities that will arise from the consolidation and disruption of service in the banking industry in our geographic area of operation. With a strong management team in place, we have already made great strides in this direction,” said Madonna.

Highlights

  • A $30 million common stock offering was completed during the second quarter 2010.
  • Successfully opened a new store in Haddonfield, New Jersey on July 19, 2010.
  • The second quarter results included a $10.8 million provision for loan losses which bolsters reserves and facilitates the restructuring of our loan portfolio.
  • Total loans outstanding decreased by 10% to $658.8 million at June 30, 2010 compared to $732.0 million at June 30, 2009 as a result of the continuing effort to reduce exposure to commercial real estate and strengthen the loan portfolio.
  • The Company continues to reposition its balance sheet and focus on low cost deposit growth.
  • Core deposits increased by $54.4 million, or 9%, during the twelve month period ended June 30, 2010.
  • The cost of funds decreased to 1.24% for the second quarter 2010 compared to 1.98% for the second quarter 2009.
  • Capital levels remain strong with a Total Risk-Based Capital ratio of 14.07% and a Tier I Leverage Ratio of 10.59% at June 30, 2010.
  • With the addition of new talent, products, and services the Company continues to strengthen itself for competitive growth and performance.

Income Statement

The Company reported a net loss of $7.1 million, or $0.60 per share, for the three months ended June 30, 2010, compared to a net loss of $5.4 million, or $0.51 per share, for the three months ended June 30, 2009. The second quarter 2010 loss was attributable to a provision for loan losses in the amount of $10.8 million.  

Net interest income increased to $7.5 million for the second quarter 2010 compared to $6.8 million for the second quarter 2009 due to a reduction in the cost of funds. The net interest margin increased to 3.42% for the second quarter 2010 compared to 3.18% for the second quarter of 2009. The Company continues to make strong progress in the growth of low cost core deposits.

Balance Sheet

(dollars in thousands)

%

%

6/30/10

6/30/09

Change

3/31/10

Change

Total assets

$ 934,303

$937,116

(0%)

$  967,507

(3%)

Total loans (net)

658,812

731,981

(10%)

665,711

(1%)

Total deposits

805,211

808,636

(0%)

846,232

(5%)

Total core deposits*

681,765

627,350

9%

689,996

(1%)

* Core deposits equal total deposits less public and brokered certificates of deposit

The Company's ongoing effort to remix and strengthen its balance sheet continues to show progress. Net loans decreased to $658.8 million as of June 30, 2010, as the Company continues to reduce exposure to concentrations in the commercial real estate portfolio.  Core deposits grew by 9% to $681.8 million as of June 30, 2010 compared to $627.4 million at June 30, 2009 as a direct result of the retail-focused model that the Company has begun to deploy.  Liquidity remained strong as the Company continues to decrease its dependence on outside borrowings, while increasing cash and investment securities balances by $57.7  million as of June 30, 2010 when compared to June 30, 2009. These changes are attributable to the strong growth in core deposits over that period of time.

Core Deposits

Core deposits by type of account are as follows:

(dollars in thousands)

2nd Qtr 2010

%

%

Cost of

6/30/10

6/30/09

Change

3/31/10

Change

Funds

Demand noninterest-bearing

$117,169

$  91,642

28%

$138,842

(16%)

0.00%

Demand interest-bearing

64,636

42,675

51%

45,587

42%

0.79%

Money market and savings

311,790

304,879

2%

311,792

0%

1.14%

Certificates of deposit

188,170

188,154

0%

193,775

(3%)

2.02%

Total core deposits

$681,765

$627,350

9%

$689,996

(1%)

1.16%

Core deposits, which exclude all public and brokered certificates of deposit, increased to $681.8 million at June 30, 2010, an increase of $54.4 million, or 9%, from June 30, 2009.  We believe core deposits are the appropriate measure of deposits gathered through our store network.

Lending

The following table sets forth the composition of the Company's loan portfolio at the dates indicated.

(dollars in thousands)

% of

% of

% of

6/30/10

Total

6/30/09

Total

3/31/10

Total

Commercial

$  92,500

14%

$ 94,989

13%

$ 86,326

13%

Owner Occupied

84,507

13%

64,887

8%

83,500

12%

Total Commercial

177,007

27%

159,876

21%

169,826

25%

Consumer & Residential

21,756

3%

22,184

3%

21,518

3%

Commercial Real Estate

470,325

70%

565,958

76%

488,092

72%

Gross loans

$669,088

100%

$748,018

100%

$679,436

100%

Asset Quality

The Company's asset quality ratios are highlighted below:

Quarter Ended

6/30/10

6/30/09

3/31/10

Nonperforming assets / total assets

6.69%

2.76%

4.94%

Net loan charge-offs / average total loans

8.38%

0.35%

2.74%

Allowance for loan losses / gross loans

1.54%

2.14%

2.02%

Allowance for loan losses / non-performing loans

19.83%

101.10%

37.37%

Nonperforming assets / capital and reserves

63.07%

29.63%

60.54%

Non-performing assets were $62.5 million, or 6.69% of total assets, as of June 30, 2010 compared to $47.8 million, or 4.94%, of total assets at March 31, 2010 and $25.9 million, or 2.76%, of total assets at June 30, 2009. The Company recorded a provision for loan losses of $10.8 million during the three months ended June 30, 2010, compared to a provision of $8.3 million for the quarter ended June 30, 2009. The allowance for loan losses as a percentage of total loans was 1.54% as of June 30, 2010, compared to 2.14% one year ago.

Capital

The Company's capital regulatory ratios at June 30, 2010 were as follows:

Republic First

Regulatory Guidelines

Bancorp, Inc.

"Well Capitalized"

Leverage Ratio

10.59%

5.00%

Tier I Risk Based Capital

12.82%

6.00%

Total Risk Based Capital

14.07%

10.00%

Total shareholders' equity was $88.8 million at June 30, 2010 which represented a book value per share of $3.47, based on common shares outstanding of approximately 25.6 million.  

About Republic First Bank

Republic First 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 twelve offices located in Abington, Ardmore, Bala Cynwyd, Plymouth Meeting, Media and Philadelphia, Pennsylvania and Voorhees, 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.  These forward-looking statements include statements with respect to the Company's beliefs, plans, objectives, goals, expectations, anticipations, estimates, and intentions that are subject to significant risks and uncertainties and are subject to change based on various factors, many of which are beyond the Company's control. These factors include competition, timing, credit risks of lending activities, changes in general economic conditions, price pressures on loan and deposit products, and other factors detailed from time to time in the Company's filings with the Securities and Exchange Commission. The words "may", "could", "should", "would", "believe", "anticipate", "estimate", "expect", "intend", "plan", and similar 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 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)

6/30/10

3/31/10

Change

6/30/09

Change

6/30/10

6/30/09

Change

Income Statement Data:

Net interest income

$     7,511

$     7,409

1%

$    6,792

11%

$   14,920

$          13,650

9%

Provision for loan losses

10,750

5,500

95%

8,250

30%

16,250

13,050

25%

Non-interest income

254

475

(47%)

382

34%

729

1,034

(29%)

Total revenues

7,765

7,884

(2%)

7,174

8%

15,649

14,684

7%

Non-interest expenses

7,953

8,405

(5%)

7,219

10%

16,358

15,704

4%

Provision (benefit) for income taxes

(3,883)

(2,159)

80%

(2,860)

(36%)

(6,042)

(4,875)

(24%)

Net income (loss)

(7,055)

(3,862)

83%

(5,435)

(30%)

(10,917)

(9,195)

(19%)

Per Common Share Data:

Net income (loss): Basic

$     (0.60)

$     (0.37)

62%

$    (0.51)

(18%)

$     (0.98)

$             (0.86)

(14%)

Net income (loss): Diluted

(0.60)

(0.37)

62%

(0.51)

(18%)

(0.98)

(0.86)

(14%)

Book Value

$       3.47

$       6.18

$      6.69

$       3.47

$              6.69

Weighted average shares outstanding:

Basic

11,707

10,578

10,656

11,142

10,644

Diluted

11,707

10,578

10,656

11,142

10,644

Balance Sheet Data:

Total assets

$ 934,303

$ 967,507

(3%)

$ 934,303

$        937,116

(0%)

Loans (net)

658,812

665,711

(1%)

658,812

731,981

(10%)

Allowance for loan losses

10,276

13,725

(25%)

10,276

16,037

(36%)

Investment securities

180,489

183,400

(2%)

180,489

80,927

123%

Total deposits

805,211

846,232

(5%)

805,211

808,636

(0%)

Core deposits*

681,765

689,996

(1%)

681,765

627,350

9%

Public and brokered certificates of deposit

123,446

156,236

(21%)

123,446

181,286

(32%)

Other borrowed money

9,149

25,000

(63%)

9,149

25,000

(63%)

Subordinated debt

22,476

22,476

-

22,476

22,476

-

Stockholders' equity

88,761

65,182

36%

88,761

71,307

24%

Capital:

Stockholders' equity to total assets

9.50%

6.74%

9.50%

7.61%

Leverage ratio

10.59%

8.94%

10.59%

9.75%

Risk based capital ratios:

Tier 1

12.82%

11.21%

12.82%

10.83%

Total Capital

14.07%

12.49%

14.07%

12.09%

Performance Ratios:

Cost of funds

1.24%

1.38%

1.98%

1.31%

2.04%

Deposit cost of funds

1.10%

1.22%

1.84%

1.16%

1.92%

Net interest margin

3.42%

3.38%

3.18%

3.40%

3.20%

Return on average assets

(2.96%)

(1.61%)

(2.36%)

(2.28%)

(2.02%)

Return on average total stockholders' equity

(39.55%)

(22.68%)

(28.88%)

(30.99%)

(24.05%)

Asset Quality

Net charge-offs to average loans outstanding

8.38%

2.74%

5.56%

1.44%

Nonperforming assets to total period-end assets

6.69%

4.94%

6.69%

2.76%

Allowance for loan losses to total period-end loans

1.54%

2.02%

1.54%

2.14%

Allowance for loan losses to nonperforming loans

19.83%

37.37%

19.83%

101.10%

Nonperforming assets to capital and reserves

63.07%

60.54%

63.07%

29.63%

 * 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, 2010

March 31, 2010

June 30, 2009

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

$   23,751

$      16

0.27%

$   22,840

$      20

0.36%

$   31,005

$      19

0.25%

Securities

183,421

1,602

3.49%

190,738

1,716

3.60%

86,230

1,109

5.14%

Loans receivable

679,889

8,675

5.12%

683,846

8,759

5.19%

747,725

9,863

5.29%

Total interest-earning assets

887,061

10,293

4.65%

897,424

10,495

4.74%

864,960

10,991

5.10%

Other assets

69,564

73,516

58,404

Total assets

$ 956,625

$ 970,940

$ 923,364

Interest-bearing liabilities:

Demand non interest-bearing

$ 118,223

$ 125,400

$   81,046

Demand interest-bearing

63,277

$    125

0.79%

49,506

$      82

0.67%

44,487

$      75

0.68%

Money market & savings

321,689

912

1.14%

307,862

1,050

1.38%

281,368

1,374

1.96%

Time deposits

329,699

1,245

1.51%

360,796

1,405

1.58%

383,161

2,180

2.28%

Total deposits

832,888

2,282

1.10%

843,564

2,537

1.22%

790,062

3,629

1.84%

Total interest-bearing deposits

714,665

2,282

1.28%

718,164

2,537

1.43%

709,016

3,629

2.05%

Other borrowings

46,507

441

3.80%

48,586

489

4.08%

47,690

514

4.32%

Total interest-bearing liabilities

761,172

2,723

1.43%

766,750

3,026

1.60%

756,706

4,143

2.20%

Total deposits and other borrowings

879,395

2,723

1.24%

892,150

3,026

1.38%

837,752

4,143

1.98%

Non interest-bearing liabilities

5,681

9,716

10,127

Shareholders' equity

71,549

69,074

75,485

Total liabilities and

shareholders' equity

$ 956,625

$ 970,940

$ 923,364

Net interest income

$ 7,570

$ 7,469

$ 6,848

Net interest spread

3.22%

3.14%

2.90%

Net interest margin

3.42%

3.38%

3.18%

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, 2010

June 30, 2009

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

$   23,298

$        36

0.31%

$   18,264

$        22

0.24%

Securities

187,060

3,318

3.55%

88,585

2,299

5.19%

Loans receivable

681,857

17,434

5.16%

759,080

19,853

5.27%

Total interest-earning assets

892,215

20,788

4.70%

865,929

22,174

5.16%

Other assets

71,528

54,013

Total assets

$ 963,743

$ 919,942

Interest-bearing liabilities:

Demand non interest-bearing

$ 121,792

$   79,296

Demand interest-bearing

56,429

$      207

0.74%

43,294

$      140

0.65%

Money market & savings

314,814

1,962

1.26%

254,167

2,475

1.96%

Time deposits

345,162

2,650

1.55%

388,919

4,681

2.43%

Total deposits

838,197

4,819

1.16%

765,676

7,296

1.92%

Total interest-bearing deposits

716,405

4,819

1.36%

686,380

7,296

2.14%

Other borrowings

47,541

930

3.94%

67,597

1,117

3.33%

Total interest-bearing liabilities

763,946

5,749

1.52%

753,977

8,413

2.25%

Total deposits and

 other borrowings

885,738

5,749

1.31%

833,273

8,413

2.04%

Non interest-bearing liabilities

6,961

9,573

Shareholders' equity

71,044

77,096

Total liabilities and

shareholders' equity

$ 963,743

$ 919,942

Net interest income

$ 15,039

$ 13,761

Net interest spread

3.18%

2.91%

Net interest margin

3.40%

3.20%

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

Year

ended

Six months ended

(dollars in thousands)

6/30/10

3/31/10

6/30/09

12/31/09

6/30/10

6/30/09

Balance at beginning of period

$ 13,725

$ 12,841

$   8,434

$   8,409

$ 12,841

$   8,409

Provisions charged to operating expense

10,750

5,500

8,250

14,200

16,250

13,050

24,475

18,341

16,684

22,609

29,091

21,459

Recoveries on loans charged-off:

 Commercial

113

150

-

-

263

-

 Tax refund loans

-

-

-

-

-

-

 Consumer

-

-

1

2

-

1

Total recoveries

113

150

1

2

263

1

Loans charged-off:

 Commercial

(14,270)

(4,766)

(642)

(9,764)

(19,036)

(5,417)

 Tax refund loans

-

-

-

-

-

-

 Consumer

(42)

-

(6)

(6)

(42)

(6)

Total charged-off

(14,312)

(4,766)

(648)

(9,770)

(19,078)

(5,423)

Net charge-offs

(14,199)

(4,616)

(647)

(9,768)

(18,815)

(5,422)

Balance at end of period

$ 10,276

$ 13,725

$ 16,037

$ 12,841

$ 10,276

$ 16,037

Net charge-offs as a percentage of average loans outstanding

8.38%

2.74%

0.35%

1.33%

5.56%

1.44%

Allowance for loan losses as a percentage of period-end loans

1.54%

2.02%

2.14%

1.85%

1.54%

2.14%

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)

2010

2010

2009

2009

2009

Non-accrual loans:

 Commercial real estate

$ 51,213

$ 36,144

$        25,449

$         17,997

$ 15,262

 Consumer and other

599

582

585

588

600

Total non-accrual loans

51,812

36,726

26,034

18,585

15,862

Loans past due 90 days or more

 and still accruing

-

-

-

-

-

Renegotiated loans

-

-

-

-

-

Total non-performing loans

51,812

36,726

26,034

18,585

15,862

Other real estate owned

10,647

11,044

13,611

10,847

10,016

Total non-performing assets

$ 62,459

$ 47,770

$        39,645

$         29,432

$ 25,878

Non-performing loans to total loans

7.74%

5.41%

3.75%

2.62%

2.12%

Non-performing assets to total assets

6.69%

4.94%

3.93%

3.09%

2.76%

Non-performing loan coverage

19.83%

37.37%

49.32%

68.03%

101.10%

 Allowance for loan losses as a percentage of total period-end loans

1.54%

2.02%

1.85%

1.78%

2.14%

  Non-performing assets/capital plus allowance for loan losses

63.07%

60.54%

47.70%

34.45%

29.63%

SOURCE Republic First Bancorp, Inc.