FRBK Republic First Bancorp Inc

PHILADELPHIA, July 30 /PRNewswire-FirstCall/ -- Republic First Bancorp, Inc. (NASDAQ:FRBK), (the "Company") the holding company for Republic First Bank (PA), today reported second quarter 2008 earnings of $1.2 million or $.11 per diluted share. Income Statement (dollars in thousands, except per share data) Three months ended % % 6/30/08 3/31/08 Change 6/30/07 Change Total revenues* $7,840 $7,887 -1% $8,265 -5% Net income $1,189 $(2,778) 143% $1,968 -40% Diluted net income per share $0.11 $(0.27) 141% $0.18 -39% * Net interest income plus noninterest income Balance Sheet (dollars in millions) % % 6/30/08 3/31/08 Change 6/30/07 Change Total assets $948 $999 -5% $1,025 -8% Total deposits $729 $750 -3% $798 -9% Total loans (net) $784 $787 - $829 -5% Chief Executive Officer's Statement In commenting on the Company's financial results, Harry D. Madonna, Chief Executive Officer noted the following highlights: -- Core deposits grew 8% on a linked quarter basis. -- Credit quality stabilized as nonperforming assets were reduced to $17.4 million at June 30, 2008, down from $26.0 million at December 31, 2008. -- The net interest margin stabilized in the quarter to 3.19%, which was flat compared to the first quarter. As a result of significant maturities of higher cost certificates of deposit, margins should begin to show meaningful improvement in the remaining quarters of 2008. -- Noninterest expenses were reduced to $6.1 million in the quarter from $6.5 million in the prior quarter, primarily as a result of reduced expenses related to other real estate owned. Salary expense was also modestly reduced. -- A successful $10.8 million trust preferred offering generated significant capital for growth, resulting in a 10%+ tier one leverage ratio. As a result of higher long-term investment rates, the Company was able to offset the future interest cost with investments in full faith and credit government securities. -- Tier one leverage capital amounted to 10.7% at June 30, 2008. Harry D. Madonna, Chief Executive Officer, stated, "We believe that the second quarter marked a significant milestone in the Company's primary goal of increasing shareholder value. The Company's issuance of $10.8 million of trust preferred securities included a significant investment by Mr. Vernon Hill. That additional capital is available to fund future growth, and results in a tier one leverage ratio which now exceeds 10%. More notably, Mr. Hill became a consultant to the Company with the goal of significantly expanding the Bank's lower cost deposits and thereby increasing earnings. Mr. Hill's consultancy encompasses various strategies by which he built his previously affiliated institution's distribution systems into one of the largest and most noteworthy in the country. His branch banking and related strategies are arguably the most successful in the history of modern banking. Previously the Company had emphasized banking for small businesses and professionals, with minor emphasis on individuals. Now, we are committed to driving forward on a fast track to implement these retail strategies. "Additionally, nonperforming assets declined to $17.4 million from $26.0 million at December 31, 2007 and $19.5 million at March 31, 2008." Income Statement (dollars in thousands, except per share data) Three months ended Six months ended % % % 6/30/08 3/31/08 Change 6/30/07 Change 6/30/08 6/30/07 Change Total revenues* $7,840 $7,887 -1% $8,265 -5% $15,727 $16,470 -5% Total operating expenses $6,061 $6,448 -6% $5,283 15% $12,509 $10,278 22% Net income $1,189 $(2,778) 143% $1,968 -40% $(1,589) $4,072 -139% Diluted earnings per share $0.11 $(0.27) 141% $0.18 -39% $(0.16) $0.38 -142% * Net interest income plus noninterest income Total revenues of $7.8 million for the second quarter approximated the first quarter amount. The lower revenues in 2008 compared to the prior year, reflected lower loan balances which also contributed to a lower net interest margin. Operating expenses were reduced 6% to $6.1 million from $6.5 million in the prior quarter primarily as a result of reduced other real estate owned expenses. Expenses were higher in 2008 compared to the prior year, primarily as a result of such expenses. Net Interest Income and Net Interest Margin Net interest income (on a tax equivalent basis) of $7.1 million in the second quarter, compared to $7.3 million in the first quarter and $7.6 million for the prior year period. The lower current year amounts reflected lower balances of loans and securities, and a lower net interest margin. As a result of higher rate certificate of deposit maturities, management believes that margins should improve going forward. The net interest margin was 3.19% in both linked quarters, compared to 3.26% for the prior year quarter. We expect net interest margin to improve. Noninterest Income: Three months ended Six months ended % % % 6/30/08 3/31/08 Change 6/30/07 Change 6/30/08 6/30/07 Change Deposit charges, service fees $297 $287 3% $280 6% $584 $582 - Other income 539 378 43% 475 13% 917 813 13% Non- interest Income $836 $665 26% $755 11% $1,501 $1,395 8% Noninterest Expenses: Three months ended Six months ended % % % 6/30/08 3/31/08 Change 6/30/07 Change 6/30/08 6/30/07 Change Salaries and employee benefits $2,703 $2,730 -1% $2,545 6% $5,433 $5,161 5% Occupancy 595 603 -1% 604 -1% 1,198 1,141 5% Depreciation and amortization 339 326 4% 355 -5% 665 689 -3% Legal 274 197 39% 195 40% 471 272 73% Other real estate 382 1,016 -62% 17 2147% 1,398 20 nm Advertising 149 129 16% 159 -6% 278 244 14% Data processing 203 203 0% 155 30% 406 314 29% Insurance 148 104 42% 94 57% 252 187 35% Professional fees 144 99 46% 124 17% 243 250 -3% Regulatory assessments and costs 178 52 242% 44 305% 230 87 164% Taxes, other 251 261 -4% 211 19% 512 414 24% Other operating expenses 695 728 -4% 780 -11% 1,423 1,499 -5% Total non- interest expense $6,061 $6,448 -6% $5,283 15% $12,509 $10,278 22% Noninterest expenses were reduced to $6.1 million from $6.5 million in the prior quarter, or 6%, primarily as a result of reduced other real estate owned expenses. Expenses were higher in 2008 compared to the prior year, primarily as a result of such expenses. Salaries and employee benefits expenses amounted to $2.7 million in each quarter of 2008. Such expenses increased $158,000, or 6%, in the current quarter compared to the prior year period. Additionally, regulatory assessments increased to $178,000 in the current quarter, primarily as a result of increases in statutory FDIC insurance rates. Balance Sheet Highlights (dollars in thousands) % % 6/30/08 3/31/08 Change 6/30/07 Change Total assets $947,589 $999,163 -5% $1,024,580 -8% Total loans (net) 784,115 787,345 0% 828,937 -5% Total deposits 728,559 749,532 -3% 798,170 -9% Total core deposits* 346,885 322,433 8% 396,937 -13% * Core deposits exclude all certificates of deposit. The Company adopted a defensive balance sheet strategy as a result of the economic downturn, with a resulting 5% decrease in loans between June 30, 2008 and the prior year. Net loans were relatively constant on a linked quarter basis, amounting to $784 million at period end. Management believes that there will be meaningful loan growth by year end 2008, subject to stringent underwriting requirements. Core deposits, which exclude all certificates of deposit, increased to $347 million at June 30, 2008, an increase of $24.5 million, or 8% from March 31, 2008. A decrease compared to the prior year reflected intentional reductions of higher cost deposits. Lending Gross loans amounted to $791 million, a decrease of $7 million or 1% compared to March 31, 2008. The composition of the Company's loan portfolio is as follows: % of % of $ % of 6/30/08 Total 3/31/08 Total Incr/(Decr) 6/30/07 Total Commercial: Real estate secured $466,328 59% $462,058 58% $4,270 $485,048 58% Construction & land development 220,104 28% 226,317 28% (6,213) 242,602 29% Non real estate secured 75,053 9% 75,949 9% (896) 76,533 9% Non real estate unsecured 2,676 0% 5,878 1% (3,202) 6,856 1% Total commercial 764,161 96% 770,202 96% (6,041) 811,039 97% Residential real estate 5,870 1% 5,915 1% (45) 6,050 1% Consumer & other 20,844 3% 21,384 3% (540) 19,509 2% Gross loans $790,875 100% $797,501 100% $(6,626) $836,598 100% Asset Quality The Company's asset quality ratios are highlighted below: Quarter Ended 6/30/08 3/31/08 6/30/07 Nonperforming assets/total assets 1.84% 1.95% 1.67% Net loan charge-offs/average total loans 1.73% 2.05% 0.37% Loan loss reserve/gross loans 0.85% 1.27% 0.92% Nonperforming loan coverage 215% 331% 46% Nonperforming assets/capital and reserves 20% 22% 20% Nonperforming assets at June 30, 2008 totaled $17.4 million, or 1.84% of total assets compared to $19.5 million or 1.95% of total assets at March 31, 2008 and $17.1 million or 1.67% of total assets a year ago. The reduction at June 30, 2008 compared to the prior quarter, reflected the sale of several OREO properties. Core Deposits Core deposits by type of account are as follows: 2nd Qtr 2008 % % Cost of 6/30/08 3/31/08 Change 6/30/07 Change Funds Demand noninterest- bearing $77,404 $80,440 -4% $83,049 -7% 0.00% Demand interest-bearing 30,167 32,845 -8% 38,942 -23% 0.89% Money market and savings 239,314 209,148 14% 274,946 -13% 2.61% Total core deposits $346,885 $322,433 8% $396,937 -13% 1.83% Core deposits, which exclude all certificates of deposit, increased to $347 million at June 30, 2008, an increase of $24.5 million or 8% from March 31, 2008. A decrease compared to the prior year reflected intentional reductions of higher cost deposits. Capital The Company's capital ratios at June 30, 2008 were: Republic Regulatory Guidelines First "Well Capitalized" Leverage Ratio 10.69% 5.00% Tier I 11.63% 6.00% Total Capital 12.41% 10.00% Three months ended Six months ended 6/30/08 3/31/08 6/30/07 6/30/08 6/30/07 Return on equity 6.12% -13.90% 10.18% -4.02% 10.71% Total shareholders' equity stood at $78.4 million with a book value per share of $7.43 at June 30, 2008, based on common shares of approximately 10.6 million. Republic First Bank (PA) is a full-service, state-chartered commercial bank, whose deposits are insured 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. 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. 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. Republic First Bancorp, Inc. Selected Consolidated Financial Data (unaudited) At or for the Three months ended (in thousands, except % % per share amounts) 6/30/08 3/31/08 Change 6/30/07 Change Income Statement Data: Net interest income $7,004 $7,222 -3% $7,510 -7% Provision for loan losses 43 5,812 -99% 63 -32% Noninterest income 836 665 26% 755 11% Total revenues 7,840 7,887 -1% 8,265 -5% Noninterest operating expenses 6,061 6,448 -6% 5,283 15% Net income 1,189 (2,778) -143% 1,968 -40% Per Common Share Data: Net income: Basic $0.11 $(0.27) -141% $0.19 -42% Net income: Diluted 0.11 (0.27) -141% 0.18 -39% Book Value Weighted average shares outstanding: Basic 10,445 10,364 10,448 Diluted 10,862 10,504 10,738 Balance Sheet Data: Total assets $947,589 $999,163 -5% Loans (net) 784,115 787,345 0% Allowance for loan losses 6,760 10,156 -33% Investment securities 84,572 86,360 -2% Total deposits 728,559 749,532 -3% Core deposits* 346,885 322,433 8% Trust preferred 22,476 11,341 98% Stockholders' equity 78,399 77,677 1% Capital: Stockholders' equity to total assets 8.27% 7.77% Leverage ratio 10.69% 9.23% Risk based capital ratios: Tier 1 11.63% 9.96% Total Capital 12.41% 11.10% Performance Ratios: Cost of funds 2.96% 3.51% 4.42% Deposit cost of funds 2.98% 3.51% 4.27% Net interest margin 3.19% 3.19% 3.26% Return on average assets 0.51% -1.16% 0.81% Return on average total stockholders' equity 6.12% -13.90% 10.18% Asset Quality Net charge-offs to average loans outstanding 1.73% 2.05% Nonperforming assets to total period-end assets 1.84% 1.95% Allowance for loan losses to total period-end loans 0.85% 1.27% Allowance for loan losses to nonperforming loans 215% 331% Nonperforming assets to capital and reserves 20% 22% At or for the Six months ended % (in thousands, except per share amounts) 6/30/08 6/30/07 Change Income Statement Data: Net interest income $14,226 $15,075 -6% Provision for loan losses 5,855 143 3994% Noninterest income 1,501 1,395 8% Total revenues 15,727 16,470 -5% Noninterest operating expenses 12,509 10,278 22% Net income (1,589) 4,072 -139% Per Common Share Data: Net income: Basic $(0.16) $ 0.39 -141% Net income: Diluted (0.16) 0.38 -142% Book Value Weighted average shares outstanding: Basic 10,404 10,447 Diluted 10,693 10,749 Balance Sheet Data: Total assets $947,589 $1,024,580 -8% Loans (net) 784,115 828,937 -5% Allowance for loan losses 6,760 7,661 -12% Investment securities 84,572 86,882 -3% Total deposits 728,559 798,170 -9% Core deposits* 346,885 396,937 -13% Trust preferred 22,746 11,341 98% Stockholders' equity 78,399 77,469 1% Capital: Stockholders' equity to total assets 8.27% 7.56% Leverage ratio 10.69% 9.18% Risk based capital ratios: Tier 1 11.63% 9.91% Total Capital 12.41% 10.76% Performance Ratios: Cost of funds 3.23% 4.41% Deposit cost of funds 3.23% 4.22% Net interest margin 3.19% 3.30% Return on average assets -0.33% 0.85% Return on average total stockholders' equity -4.02% 10.71% Asset Quality Net charge-offs to average loans outstanding 1.89% 0.13% Nonperforming assets to total period-end assets 1.84% 1.67% Allowance for loan losses to total period-end loans 0.85% 0.92% Allowance for loan losses to nonperforming loans 215% 46% Nonperforming assets to capital and reserves 20% 20% * Core deposits exclude certificates of deposit Republic First Bancorp, Inc. Average Balances and Net Interest Income (unaudited) For the three months ended For the three months ended June 30, 2008 March 31, 2008 Interest-earning assets: (Dollars in Interest Interest thousands) Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate Balance Expense Rate Federal funds sold and other interest- earning assets $10,618 $58 2.20% $12,271 $96 3.15% Securities 82,392 1,167 5.67% 87,545 1,313 6.00% Loans receivable 797,233 12,160 6.13% 817,702 13,453 6.62% Total interest- earning assets 890,243 13,385 6.05% 917,518 14,862 6.51% Other assets 55,336 42,977 Total assets $945,579 $960,495 Interest-bearing liabilities: Demand-non interest bearing $74,126 $83,393 Demand interest- bearing 31,236 $69 0.89% 41,993 $146 1.40% Money market & savings 211,281 1,371 2.61% 207,571 1,667 3.23% Time deposits 441,069 4,169 3.80% 384,040 4,440 4.65% Total deposits 757,712 5,609 2.98% 716,997 6,253 3.51% Total interest- bearing deposits 683,586 5,609 3.30% 633,604 6,253 3.97% Other borrowings 101,186 715 2.84% 151,552 1,326 3.52% Total interest- bearing liabilities $784,772 $6,324 3.24% $785,156 $7,579 3.88% Total deposits and other borrowings 858,898 6,324 2.96% 868,549 7,579 3.51% Noninterest- bearing liabilities 8,532 11,558 Shareholders' equity 78,149 80,388 Total liabilities and shareholders' equity $945,579 $960,495 Net interest income $7,061 $7,283 Net interest spread 2.81% 2.63% Net interest margin 3.19% 3.19% For the three months ended June 30, 2007 Interest-earning assets: Interest (Dollars in thousands) Average Income/ Yield/ Balance Expense Rate Federal funds sold and other interest-earning assets $12,785 $169 5.30% Securities 97,328 1,428 5.87% Loans receivable 821,173 15,657 7.65% Total interest-earning assets 931,286 17,254 7.43% Other assets 39,124 Total assets $970,410 Interest-bearing liabilities: Demand-noninterest bearing $77,010 Demand interest-bearing 40,577 $118 1.17% Money market & savings 307,512 3,532 4.61% Time deposits 353,792 4,650 5.27% Total deposits 778,891 8,300 4.27% Total interest-bearing deposits 701,881 8,300 4.74% Other borrowings 99,873 1,377 5.53% Total interest-bearing liabilities $801,754 $9,677 4.84% Total deposits and other borrowings 878,764 9,677 4.42% Noninterest-bearing liabilities 14,086 Shareholders' equity 77,560 Total liabilities and shareholders' equity $970,410 Net interest income $7,577 Net interest spread 2.59% Net interest margin 3.26% For the six months ended For the six months ended June 30, 2008 June 30, 2007 Interest-earning assets: (Dollars in Interest Interest thousands) Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate Balance Expense Rate Federal funds sold and other interest- earning assets $11,444 $154 2.71% $16,257 $404 5.01% Securities 84,969 2,480 5.84% 103,414 3,037 5.87% Loans receivable 807,468 25,613 6.38% 810,003 30,957 7.71% Total interest- earning assets 903,881 28,247 6.28% 929,674 34,398 7.46% Other assets 51,107 38,595 Total assets $954,988 $968,269 Interest-bearing liabilities: Demand-noninterest bearing $80,710 $77,729 Demand interest- bearing 36,615 $215 1.18% 42,184 $218 1.04% Money market & savings 209,426 3,038 2.92% 288,362 6,554 4.58% Time deposits 412,554 8,609 4.20% 341,752 8,921 5.26% Total deposits 739,305 11,862 3.23% 750,027 15,693 4.22% Total interest- bearing deposits 658,595 11,862 3.62% 672,298 15,693 4.71% Other borrowings 126,369 2,041 3.25% 127,458 3,496 5.53% Total interest- bearing liabilities $784,964 $13,903 3.56% $799,756 $19,189 4.84% Total deposits and other borrowings 865,674 13,903 3.23% 877,485 19,189 4.41% Noninterest-bearing liabilities 9,818 14,142 Shareholders' equity 79,496 76,642 Total liabilities and shareholders' equity $954,988 $968,269 Net interest income $14,344 $15,209 Net interest spread 2.72% 2.62% Net interest margin 3.19% 3.30% 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 (dollar amounts in thousands) 6/30/08 3/31/08 6/30/07 12/31/07 6/30/08 6/30/07 Balance at beginning of period $ 10,156 $8,508 $8,355 $8,058 $8,508 $8,058 Provisions charged to operating expense 43 5,812 63 1,590 5,855 143 10,199 14,320 8,418 9,648 14,363 8,201 Recoveries on loans charged-off: Commercial - 117 72 81 117 81 Tax refund loans - 69 49 283 69 256 Consumer - 2 - 2 2 1 Total recoveries - 188 121 366 188 338 Loans charged-off: Commercial (3,434) (4,344) (876) (1,503) (7,778) (876) Tax refund loans - - - - - - Consumer (5) (8) (2) (3) (13) (2) Total charged-off (3,439) (4,352) (878) (1,506) (7,791) (878) Net charge-offs (3,439) (4,164) (757) (1,140) (7,603) (540) Balance at end of period $6,760 $ 10,156 $7,661 $8,508 $6,760 $7,661 Net charge-offs as a percentage of average loans outstanding 1.73% 2.05% 0.37% 0.14% 1.89% 0.13% Allowance for loan losses as a percentage of period-end loans 0.85% 1.27% 0.92% 1.04% 0.85% 0.92% Republic First Bancorp, Inc. Summary of Nonperforming Loans and Assets (unaudited) June 30, March 31, Dec. 31, Sept. 30, June 30, 2008 2008 2007 2007 2007 Nonaccrual loans: Commercial real estate $2,366 $2,427 $14,757 $ 13,986 $688 Construction - - 6,747 10,902 15,369 Consumer and other 780 640 776 547 555 Total nonaccrual loans 3,146 3,067 22,280 25,435 16,612 Loans past due 90 days or more and still accruing - - - - - Renegotiated loans - - - - - Total nonperforming loans 3,146 3,067 22,280 25,435 16,612 Other real estate owned 14,245 16,378 3,681 42 499 Total nonperforming assets $ 17,391 $ 19,445 $25,961 $ 25,477 $ 17,111 Nonperforming loans to total loans 0.40% 0.38% 2.71% 3.02% 1.99% Nonperforming assets to total assets 1.84% 1.95% 2.55% 2.45% 1.67% Nonperforming loan coverage 215% 331% 38% 35% 46% Allowance for loan losses as a percentage of total period-end loans 0.85% 1.27% 1.04% 1.04% 0.92% Nonperforming assets/capital plus allowance for loan losses 20% 22% 29% 29% 20% DATASOURCE: Republic First Bancorp, Inc. CONTACT: Paul Frenkiel, CFO of Republic First Bancorp, Inc., +1-215-735-4422 ext. 5255

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