REPUBLIC FIRST BANCORP, INC. REPORTS SECOND QUARTER FINANCIAL RESULTS

ANNOUNCES NEW YORK CITY EXPANSION PLAN

Philadelphia, PA, July 26, 2018 (GlobeNewswire) – Republic First Bancorp, Inc. (NASDAQ: FRBK), the holding company for Republic Bank, today announced its financial results for the period ended June 30, 2018.

 

 

"The Power of Red is Back" expansion strategy continues to deliver exceptional results. Assets, loans and deposits are growing more than 20% year over year and profitability continues to improve despite the significant investments being made to execute the growth plan. The momentum can be felt across the Bank's entire footprint.

The success achieved with "The Power of Red is Back" growth campaign in the Metro Philadelphia Market is moving to New York. Republic Bank is planning to expand into New York City beginning in 2019. Sites for several new stores have been identified in Manhattan with four stores expected to open next year.

Vernon W. Hill, II, Chairman of Republic First Bancorp said:

"The Power of Red is Back growth campaign is coming to New York City.  I am excited to announce our intention to bring Republic Bank's unmatched commitment to extraordinary customer service and convenience to Manhattan. Our goal is to turn Customers into FANS. We achieve this goal not only through our unique store locations, but we combine that experience with our relentless pursuit of customer satisfaction through all delivery channels including mobile and internet options. We look forward to the opportunity to bring our exceptional model to the people of New York City."

Harry D. Madonna, President and Chief Executive Officer of Republic First Bancorp added:

"Our second quarter results continue to demonstrate the success our growth strategy is capable of producing. We are excited for the highly anticipated opening of our next store in Gloucester Township, NJ and we've recently broken ground on four new sites in the Metro Philadelphia market which we hope to have complete before year end. This activity combined with the planned expansion into New York City beginning in 2019 sets us up for an incredibly bright future."

A summary of the financial results for the period ended June 30, 2018 can be found in the following table:

* Note:

Net income for the period ended 6/30/18 reflects a provision for federal and state income taxes which did not impact 2017 results due to an adjustment to the DTA valuation allowance recorded by the Company.

 

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Total assets increased by $509 million, or 25%, to $2.6 billion as of June 30, 2018 compared to $2.0 billion as of June 30, 2017.

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Non-interest bearing demand deposits represent the fastest growing segment of the Company's deposit base. These deposits grew by $156 million, or 42%, to $527 million over the last 12 months.

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Net income after tax was $2.4 million, or $0.04 per share, for the three months ended June 30, 2018 compared to $2.1 million for the three months ended June 30, 2017. The Company began recognizing an increased provision for federal and state income taxes during the first quarter of 2018 after reversing its deferred tax asset valuation allowance during the fourth quarter of 2017. The prior year income tax provision was largely offset by an adjustment to the valuation allowance.

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Total revenue grew by 26% during the quarter ended June 30, 2018 while non-interest expense increased by 17% when compared to the second quarter of 2017. The Company continues to open new stores and increase profitability despite the additional costs associated with the expansion strategy.

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There are twenty-three convenient store locations open today. The next store opening is scheduled for July 28, 2018 in Gloucester Township, NJ. Ground has been broken on sites in Evesboro, Lumberton, and Somers Point, NJ and Feasterville, PA. These stores are expected to be completed by year end.

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Expansion into New York City is expected to begin during 2019. The Company is planning to open four new stores in Manhattan in the coming year.

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Asset quality continues to improve. The ratio of non-performing assets to total assets declined to 0.81% as of June 30, 2018 compared to 1.41% as of June 30, 2017.

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The Company converted $10.6 million of outstanding trust preferred securities to 1.6 million shares of common stock during the first quarter of 2018. This conversion will result in a reduction of interest expense of approximately $0.9 million on an annual basis going forward.

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The Company's residential mortgage division, Oak Mortgage, is serving the home financing needs of customers throughout its footprint. Oak originated over $100 million in loans during the three month period ended June 30, 2018.

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Meeting the needs of small business customers continued to be an important part of the Company's lending strategy.  More than $8 million in new SBA loans were originated during the three month period ended June 30, 2018. Republic Bank is currently ranked as the #2 SBA lender in New Jersey based on the dollar volume of loan originations.

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The Company's Total Risk-Based Capital ratio was 15.62% and Tier I Leverage Ratio was 9.88% at June 30, 2018.

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Book value per common share increased to $4.01 as of June 30, 2018 compared to $3.90 as of June 30, 2017.

The major components of the income statement are as follows (dollars in thousands, except per share data):

The Company reported net income of $2.4 million, or $0.04 per share, for the three month period ended  June 30, 2018 compared to $2.1 million for the three month period ended June 30, 2017.  Net income for the six month period ended June 30, 2018 was $4.1 million, or $0.07 per share, compared to net income of $3.8 million, or $0.07 per share, for the six months ended June 30, 2017.

During 2017, the Company recorded a minimal provision for federal and state income taxes due to the deferred tax asset valuation allowance recorded on the balance sheet. Income Before Taxes grew 41% to $2.9 million during the second quarter of 2018 and grew 33% to $5.1 million on a year to date basis in 2018. The significant improvement in pre-tax profitability has been achieved despite the ongoing investments and expenditures required for the growth and expansion strategy.

Total revenue increased by $5.8 million, or 26%, to $28.1 million for the three month period ended June 30, 2018, compared to $22.3 million for the three month period ended June 30, 2017.  Total revenue for the six month period ended June 30, 2018 increased by $10.7 million, or 25%, to $53.5 million. The increase in revenue is primarily attributable to higher interest income as a result of the strong growth in interest-earning assets over the last twelve months driven by the Company's "Power of Red is Back" expansion program.

The increase in total revenue for both the three month period (26%) and six month period (25%) ended June 30, 2018 exceeded the growth in non-interest expense for the three month period (17%) and the six month period (18%) ended June 30, 2018 which demonstrates the effect that our growth strategy will have on the profitability of the Bank.

Non-interest income increased to $5.8 million for the three month period ended June 30, 2018 compared to $5.0 million for the three month period ended June 30, 2017 driven by growth in service fees on deposit accounts and residential mortgage banking income.

Non-interest expenses increased by $3.0 million, or 17%, to $20.7 million during the three month period ended June 30, 2018 compared to $17.7 million during the three months ended June 30, 2017. This increase was mainly caused by the increase in salaries and employee benefits as a result of annual merit increases along with increased staffing levels related to our growth strategy of adding and relocating stores. Occupancy and equipment expenses associated with the growth and relocation strategy also contributed to the increase in non-interest expenses.

The provision for income taxes was $530 thousand for the three month period ended June 30, 2018 compared to a benefit for income taxes in the amount of $8 thousand for the three month period ended June 30, 2017. The Company began recognizing an increased provision for federal and state income taxes during the first quarter of 2018 after reversing its deferred tax asset valuation allowance during the fourth quarter of 2017.

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

Total assets increased by $509.4 million, or 25%, as of June 30, 2018 when compared to June 30, 2017.  Deposits grew by $401.7 million to $2.1 billion as of June 30, 2018 compared to $1.7 billion as of June 30, 2017. The number of deposit accounts has grown by 35% during the past twelve months. The strong growth in assets, loans and deposits has been driven by the addition of new stores and the successful execution of the Company's aggressive growth strategy referred to as "The Power of Red is Back."

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

Deposits increased to $2.1 billion at June 30, 2018 compared to $1.7 billion at June 30, 2017 as the Company moves forward with its growth strategy to increase the number of stores and expand its banking model which focuses on high levels of customer service and convenience and drives the gathering of low-cost, core deposits. The Company recognized strongest growth in demand deposit balances, led by growth in non-interest bearing demand deposits of 42%, on a year to year basis as a result of the successful execution of its strategy.

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

 

 

Gross loans increased by $251 million, or 24%, to $1.3 billion at June 30, 2018 compared to $1.1 billion at June 30, 2017 as a result of the steady flow in quality loan demand over the last twelve months and continued success with the relationship banking model. The Company experienced strong growth across all loan categories.

The Company's asset quality ratios are highlighted below:

The percentage of non-performing assets to total assets decreased to 0.81% at June 30, 2018, compared to 1.41% at June 30, 2017.  The ratio of non-performing assets to capital and reserves decreased to 9% at June 30, 2018 compared to 12% at June 30, 2017 primarily as a result of decreases in non-performing assets over the last 12 months.

The Company's capital ratios at June 30, 2018 were as follows:

Total shareholders' equity increased to $235 million at June 30, 2018 compared to $222 million at June 30, 2017. Book value per common share increased to $4.01 at June 30, 2018 compared to $3.90 per share at June 30, 2017.

 

 

 

An analyst and investor call will be held on the following date and time:

 

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 twenty-three stores located in the Greater Philadelphia and Southern New Jersey market place.  Republic Bank stores are open 7 days a week, 361 days a year, with extended lobby and drive-thru hours providing customers with the most convenient hours compared to any bank in its market.  The Bank offers free checking, free coin counting, ATM/Debit cards issued on the spot and access to more than 55,000 surcharge free ATMs worldwide via the Allpoint Network. The Bank also offers a wide range of residential mortgage products through its mortgage division which does business under the name of Oak Mortgage Company. For more information about Republic Bank, visit www.myrepublicbank.com.

 

 

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, 2017 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

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