1
June 2010
Filed pursuant to Rule 433
Registration Statement No. 333-166286
June 2, 2010
 
 

 
2
Issuer:           Republic First Bancorp, Inc.
Offering:           Follow-on Common Stock
Gross Amount Offered:       $30.0 million
Over-Allotment Option:       15%
Exchange / Symbol:       NASDAQ / FRBK
Market Capitalization (as of 5/28/10):     $31.3 million
Use of Proceeds:         General corporate purposes
Book-Running Managers:       Sandler O’Neill + Partners, L.P.
            and   RBC Capital Markets
         
Offering Summary
 
 

 
3
History of Republic Bank
Timeline of Events
  1987:   Republic Bank founded by Harry D.
  Madonna, current Chairman and CEO
  1996:   Republic Bank merges with
  Executive First Bank and becomes
  Republic First Bank
  2008:   Engaged Vernon W. Hill, II as a
  consultant and began to hire former
  Commerce Bank management team
  2009:   Initiated transformation of bank to
  Retail oriented, Customer friendly,
  Commerce model
  2010:   Begin rebranding to Republic Bank
Headquarters: Philadelphia, PA
Store Count:   12
Assets: Approximately $1.0B at
March 31, 2010
 
 

 
4
Republic Bank - Inside Ownership
Total Shares
Currently Held*
% of
Outstanding
Shares
Harry D. Madonna
1,196,322
9.8%
Vernon W. Hill, II
923,077
7.6%
All Other Directors,
Executive Officers and
Related Parties
1,603,040
13.1%
Total
3,722,439
30.5%
  Insiders, including Mr. Hill and Mr. Madonna, have expressed an interest in maintaining their pro rata
    interests through the offering
 
*   Assumes full conversion of outstanding Trust Preferred Securities
 
 

 
5
The Republic Difference
  Converting to a Power Retailer
    Focus on customer service and convenience
    Create a strong brand
    Invested $8.3 million during 2009 in store renovations
  Deposit Driven
    Focus on core deposits*
    37% core deposit growth from 12/31/08 to 3/31/10
  Manage loan growth with a focus on asset quality
    Loan to deposit ratio reduced from 105% to 79% from
  12/31/08 to 3/31/10
* Core Deposits are defined as Total Deposits less Public and Brokered Deposits
 
 

 
6
6
Republic Store Footprint
* Prospective stores are subject to regulatory approvals
 
 

 
7
New Management Team
Andrew Logue
President and Chief Operating Officer
1991 - 2008, Commerce Bancorp, Inc.
Senior Operations Officer / Enterprise Risk
Management
 
Rhonda Costello
Chief Retail Officer
1985 - 2008, Commerce Bancorp, Inc.
Senior Retail Officer & Dean of Commerce University
 
Jay Neilon
Chief Credit Officer
1991 - 2008, Commerce Bancorp, Inc.
Senior Philadelphia Credit Officer
 
Frank Cavallaro
Chief   Financial Officer
1997 - 2009, Commerce Bancorp, Inc.
Vice President   / Finance Department
Steve McWilliams
Commercial & Industrial Loans
2001 - 2009, Commerce Bancorp, Inc.
Regional Vice President / Pennsylvania Metro Market
Rob Worley
New Jersey Market Manager
1992 - 2009, Commerce Bancorp, Inc.
Market President / Washington, DC Metro Market
Regional Vice President / South Jersey Market
Current Position       Prior Experience
  Reuniting the old Commerce team;   30+ Commerce hires to date
 
 

 
8
 
 

 
9
Rationale For Offering
  Excellent opportunity to gain market share
  Unique timing to capitalize on a proven retail model
    Renovate & upgrade existing store network
    Relocate certain existing stores
    Roll-out Southern NJ growth strategy
  Very strong capital ratios
 
Actual
3/31/10
 
As
Adjusted*
- Leverage Ratio
8.35%
11.64%
- Tier I Capital
10.43%
14.53%
- Total Capital
11.90%
15.79%
*   Giving effect to the sale of $30 million of common stock
 
 

 
10
Republic Bank Strategy
  Build a platform that continues to attract experienced banking talent
    Vernon Hill is an 7.6% owner and consultant to the Company
    33 strategic new hires since June 2008
    12 existing store locations in the metro Philadelphia market
    Additional stores planned   with a focus on the South Jersey region
  Transform to a Retail oriented, Customer friendly model
    Renovate and upgrade existing store network
    Enhance the customer experience
    Improve and expand product offerings
  Strengthen the balance sheet
    Increase core deposits
    Reduce loan / deposit ratio
    Maintain strong liquidity & reserve levels
    Jay Neilon was hired as Chief Credit Officer in December 2008
    Loan portfolio thoroughly examined by management in 2009
    Continue to aggressively manage asset quality
 
 

 
11
Organic Growth Opportunity
Source: SNL Financial; Deposit data as of 6/30/2009
(1) Pennsylvania counties:   Delaware, Montgomery and Philadelphia; New Jersey counties: Atlantic, Burlington, Camden, Cape May and Salem
  Philadelphia metro market is experiencing a significant level of disruption
  Republic First core deposits increased by 37% from 12/31/08 to 3/31/10
 
 

 
 
 
 
 
 
 
 

 
13
Capital Summary
 
Actual
3/31/10
 
As Adjusted*
Capital Ratios
 
 
 
- Leverage Ratio
 
8.35%
11.64%
 
- Tier I Risk-Based
 
10.43%
14.53%
 
- Total Risk-Based
 
11.90%
15.79%
 
- Tangible Common Equity
 
6.74%
9.54%
*   Giving effect to the sale of $30 million of common stock
 
 

 
14
 
12/31/07
12/31/08
12/31/09
03/31/10
Change Since
12/31/08
Assets
$   1,016
$   952
$   1,009
$   968
+2%
Core Deposits
597
502
719
690
+37%
Loans
813
775
681
666
-14%
Loan / Deposit
Ratio
104%
105%
77%
79%
-25%
Assets, Deposits & Loan Growth
($ in Millions)
 
 

 
15
Total Cost of Funds
LTM Funding Costs (%)
  Republic’s total funding costs are below the cost incurred by its peers
  In the long term, net interest margin will be enhanced by a stronger retail customer
  base
Source: SNL Financial; Financial data as of the quarter ended   March 31, 2010
PA Peers include publicly traded banks headquartered in Pennsylvania with assets between $500mm-$2.5 bn
U.S. Peers include public banks with assets between $500mm-$2.5 bn
 
 

 
16
Investment Securities Portfolio
March 31, 2010
* $2.8 million in OTTI charges have been taken since the 4 th quarter of 2008
 
Book Value
Current Market
Value
Unrealized
Gain/(Loss)
% of Portfolio
 
 
 
 
 
Agency MBS
38,247
  40,908
2,661
23%
Agency CMOs
99,000
  97,985
(1,015)
56%
Agency Bonds
18,991
  19,144
153
11%
Municipal Securities
10,390
  9,533
(857)
5%
Corporate Bonds
5,990
  6,214
224
4%
Pooled Trust
  Preferred Securities *
6,640
  2,478
(4,162)
1%
Other Securities
181
156
(25)
-%
 
 
 
 
 
Total AFS Securities
179,439
  176,418
(3,021)
100%
($ in Thousands)
AAA Rated
 
 

 
17
 
YTD
12/31/07
YTD
12/31/08
YTD
12/31/09
QTD
3/31/10
Earnings per Share - GAAP Reported
$0.65
($0.04)
($1.07)
($0.37)
Adjustments (After Tax):
 
 
 
 
 
Unusual Credit Costs (1)
-
0.47
0.85
0.32
 
Impairment Charges (2)
-
0.09
0.12
0.01
 
Merger-Related Expenses (3)
-
0.02
0.14
0.06
 
FDIC Assessments (4)
-
-
0.08
-
Pre-Credit, Core Earnings per Share
$0.65
$0.54
$0.12
$0.02
EPS - Pre Credit Core Earnings*
*Pre-Credit Core Earnings per Share in a Non-GAAP financial measure. See Appendix A for additional detail.
(1)   Extraordinary provision for loan losses and OREO costs
(2)   OTTI impairment charges on securities portfolio
(3)   Charges associated with the abandoned Metro Bank merger
(4)   One-time and increased FDIC assessment costs
 
 

 
18
06/30/08
12/31/08
06/30/09
12/31/09
03/31/10
Commercial Real Estate
Income Properties
  376,872
  375,159
  370,448
  385,791
  380,078
Construction
  184,724
  177,098
  163,288
  72,567
  73,684
Land Development
  33,552
  33,777
  31,505
  35,099
  31,695
Owner Occupied
  87,802
  76,792
  69,808
  87,111
  85,126
Total Commercial Real Estate
  682,950
  662,826
  635,049
  580,568
  570,583
Commercial and Industrial
  78,932
  84,203
  84,974
  80,053
  77,682
Consumer
  28,993
  36,053
  27,995
  33,197
  31,171
Total Loans (Gross)
790,875
  783,082
  748,018
  693,818
  679,436

Loan/Deposit Ratio
108%
105%
91%
77%
79%
Loan Trends
($ in Thousands)
 
 

 
19
Asset Quality
 
12/06
12/07
12/08
12/09
3/10
Non-Performing
Assets / Assets
0.74%
2.55%
2.72%
3.93%
4.94%
  Non-Performing
  Loans ($mm)
$ 6.9
$ 22.3
$ 17.3
$ 26.0
$ 36.7
  OREO ($mm)
$ 0.6
$ 3.7
$ 8.6
$ 13.6
$ 11.0
OREO / Non-
Performing Assets
8.0%
14.2%
33.1%
34.3%
23.1%
Loan Loss Reserve /
Loans
1.02%
1.04%
1.07%
1.85%
2.02%
Total
Delinquencies (1)
0.32%
0.63%
1.62%
5.35%
4.36%
Net Charge-offs /
Avg. Loans
0.13%
0.14%
0.96%
1.33%
2.74%
(1) Includes accruing loans 30 - 89 days past due as a percentage of total loans
 
 

 
20
  A significant level of resources continue to monitor and
  assess asset quality
  Criticized and classified loan migration declined during
  the first quarter 2010
  Nearly 23% of the Non-Performing Asset total has been
  transferred to the OREO portfolio as of 3/31/10
  The average write-down on assets classified as OREO
  was   40% at 3/31/10
Asset Quality
 
 

 
21
* Assumes $30 million capital raise issuing 10.0 million shares @ $3.00 per share
**   PA Peers include publicly traded banks headquartered in Pennsylvania with assets between $500mm-$2.5bn
Republic Bank - Valuation Snapshot
Price / Tangible Book Value Analysis
(using current price @ $3.00 per share)
Book
Price/Book
  PA
Price
Value
Ratio
Peers**
Current
$   3.00
$   6.18
49%
131%
Post Offering *
$   3.00
$   4.63
65%
131%
Average Price/Book
-
-
123%
194%
  Ratio Over Last 5 Years
 
 

 
22
Summary
  New Model
    Transformation to Retail Banking model
    Customer Service & Convenience
    Deposits, Deposits & Core Deposits
  New People
    Reunite Commerce Team to execute Retail strategy
    Commitment to common goal - Repeat History
  Strong Capital
    Current offering will provide capital to execute growth plan
  Price to Book Value
    Current valuation is attractive for potential investors
  Substantial insider participation
 
 

 
23
Forward Looking Statements
Certain statements included herein are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, which we refer to as the
Securities Act.  All statements other than statements of historical facts contained herein, including statements regarding our plans, objectives, goals, strategies, future
events, capital expenditures, future results, our competitive strengths, our business strategy and the trends in our industry are forward-looking statements.  The words
“believe,” “may,” “could,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “appear,” “future,” “likely,” “probably,” “suggest,” “goal,”
“potential”and similar expressions, as they relate to us, are intended to identify forward-looking statements.  All statements, other than statements of historical
fact, included herein regarding our financial position, business strategy and plans or objectives for future operations are forward-looking statements.
 
Forward-looking statements 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, and in addition to the “Risk Factors” discussed in the Registration Statement on Form S-1 (Registration No. 333-166286),
risks and uncertainties can arise with changes in:
 
·  general economic conditions, including current turmoil in the financial markets and the 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;
·  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.
Readers are cautioned not to place undue reliance on any forward-looking statement, which reflects management’s analysis only as of the date of the statement.  
Except as required by applicable law or regulation, we do not undertake, and specifically disclaim any obligation to update or revise any forward-looking
statements to reflect any changed assumptions, any unanticipated events or any changes in the future.
 
In addition, you should refer to the “Risk Factors” section of the Registration Statement on Form S-1 (Registration No. 333-166286) for a discussion of factors that
may cause our actual results to differ materially from those which may be inferred from our forward-looking statements.  As a result of these factors, the
forward-looking statements herein may prove to be inaccurate.  Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be
material.  In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by
us or any other person that we will achieve our objectives and plans in any specified time frame, if at all.  Accordingly, you should not place undue reliance
on these forward-looking statements.  All subsequent written and oral forward-looking statements attributable to us or the persons acting on our behalf
are expressly qualified in their entirety by the applicable cautionary statements.
 
 

 
24
Appendix A
Pre-credit, core earnings per share is a non-GAAP financial measure. The most
directly comparable GAAP financial measure is earnings per share. Republic’s
management calculates pre-credit, core earnings per share to exclude unusual or
extraordinary credit related costs, OTTI impairment charges, merger-related
expenses and extraordinary FDIC assessments.   This non-GAAP information should
not be viewed as a substitute for operating performance measures determined in
accordance with GAAP, nor is it necessarily comparable to non-GAAP performance
measures similarly titled that may be presented by other companies. Management
believes this information is meaningful for shareholders to evaluate Republic’s
operating performance because it excludes some of the impact of market volatility
as it relates to investments in the securities portfolio, extraordinary costs
associated with an abandoned merger and FDIC assessment costs and an
extraordinary provision for loan losses and OREO costs. Management believes that
pre-credit, core earnings per share provides a more normalized measure of
operating performance.
 
 

 
25
Read Registration Statement and Prospectus
The issuer has filed a registration statement (including a prospectus) with the SEC
for the offering to which this communication relates. Before you invest, you should
read the prospectus in that registration statement and other documents the issuer
has filed with the SEC for more complete information about the issuer and this
offering. You may obtain these documents for free by visiting EDGAR on the SEC
Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer
participating in the offering will arrange to send you the prospectus if you request it
by calling Sandler O'Neill & Partners, L.P. at (866) 805-4128 or RBC Capital Markets
at (212) 428-6670.
 
 

 
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