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8-K - REPUBLIC FIRST BANCORP, INC. FORM 8-K - REPUBLIC FIRST BANCORP INCrfb8k.htm
 
Exhibit 99.1
 

 
News Release
Republic First Bancorp, Inc.
July 24, 2012


REPUBLIC FIRST BANCORP, INC. REPORTS NET INCOME OF $1.0 MILLION FOR SECOND QUARTER 2012

Philadelphia, PA, July 24, 2012 (PR Newswire) – 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.

“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

Ø  
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.

Ø  
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.

Ø  
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.

Ø  
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.

Ø  
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.

Ø  
Tangible book value per share as of June 30, 2012 was $2.59.

Ø  
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.
 
 
 
 
2

 

 
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.
 
 
 
 
 
3

 
 
 
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.
 
 
 
 
4

 
 
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.


Source:

Republic First Bancorp, Inc.

Contact:

Frank A. Cavallaro, CFO
(215) 735-4422
 
 
 
 
5

 
 
 
 
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 %