FRBK Republic First Bancorp Inc

Republic First Bancorp, Inc. (NASDAQ: FRBK), the holding company for Republic Bank, today announced its financial results for the period ended March 31, 2019.

Q1-2019 Highlights

• Total deposits increased by $356 million, or 17%, to $2.5 billion as of March 31, 2019 compared to $2.1 billion as of March 31, 2018. 
• New stores opened since the beginning of the “Power of Red is Back” expansion campaign are currently growing deposits at an average rate of $27 million per year, while the average deposit growth for all stores over the last twelve months was approximately $14 million per store. 
• Total loans grew $226 million, or 18%, to $1.5 billion as of March 31, 2019 compared to $1.3 billion at March 31, 2018. 
• Expansion into New York City is moving forward. Construction began on our first store located on the corner of 14th & 5th in Manhattan and is expected to open early this summer. 
• Net income declined to $0.4 million, or $0.01 per share, for the quarter ended March 31, 2019 compared to $1.8 million, or $0.03 per share for the quarter ended March 31, 2018.                                                                     

“The Power of Red is Back” expansion strategy continues to build momentum throughout our footprint. Our newest store in Lumberton, NJ, which opened during the first quarter, has welcomed hundreds of new FANS since its grand opening weekend. As recently announced, Republic Bank is also moving forward with plans to expand into New York City. Sites for several new stores have been identified in Manhattan with two or more stores projected to open during 2019.

Net income before tax has consistently improved over the past five years despite the significant investments required to execute our growth and expansion strategy. However, net income in the first quarter of 2019 was impacted by a combination of factors including compression in the net interest margin as a result of a flattening yield curve and the opening of three new stores within a three month period. In addition, we’ve begun to incur costs related to the expansion into New York City for new store locations, along with the hiring of a management and lending team for this new market. Regardless of the challenges effecting profitability, deposits and loans continue to grow at levels significantly above industry standards.

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

“The Power of Red is Back growth campaign continues to deliver strong growth in assets, loans and deposits as we move into 2019. Our highly anticipated expansion into New York City is set to begin by mid-year with the opening of our first store location at 14th & 5th. Net income declined during the first quarter as we struggle with the impact of a challenging interest rate environment and a flattening yield curve. In addition, we’re now absorbing the up-front costs necessary to initiate our expansion into New York City.  However, this will not affect our commitment to deliver best in class service across all delivery channels…..in-store, by phone, online and mobile options....as we strive to create new FANS each and every day.”

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

“We continue to add top talent to successfully execute our growth and expansion strategy. Building a strong team is a vital factor in delivering on our commitment to outstanding customer service. We’ve had tremendous success attracting strong leaders in our Metro Philadelphia footprint. We are extremely pleased with the team we’ve been able to recruit as we embark on our expansion effort in New York City.”

A summary of the financial results for the period ended March 31, 2019 can be found in the following table:

		Three Months Ended
($ in millions, except per share data)		03/31/19		03/31/18		% Change
Assets		$	2,805.1	$	2,471.5	13	%
Loans			1,477.1		1,250.9	18	%
Deposits			2,479.0		2,123.5	17	%
Total Revenue		$	24.2	$	22.7	7	%
Income Before Tax			0.5		2.1	(76	%)
Net Income			0.4		1.8	(76	%)
Net Income per Share		$	0.01	$	0.03	(67	%)

Financial Highlights for the Period Ended March 31, 2019

• Total assets increased by $334 million, or 13%, to $2.8 billion as of March 31, 2019 compared to $2.5 billion as of March 31, 2018. 
• Demand deposits represent the fastest growing segment of the Company’s deposit base. These deposits grew by $336 million to $1.6 billion over the last 12 months, including growth of 13% in non-interest bearing demand deposit balances.
• We have twenty-six convenient store locations open today. During the first quarter of 2019 we opened a new store in Lumberton, NJ. Construction is ongoing on a site in Feasterville, PA. There are also multiple sites in various stages of development for future store locations. 
• Expansion into New York City is set to begin in 2019. Construction has begun on the first store location at 14th & 5th in Manhattan. We plan to open two or more new stores in Manhattan during 2019. 
• Net income declined to $0.4 million, or $0.01 per share, for the three months ended March 31, 2019 compared to $2.2 million, or $0.04 per share for the three months ended December 31, 2018 and $1.8 million, or $0.03 per share, for the three months ended March 31, 2018.  
• The net interest margin decreased by 23 basis points to 3.00% for the three months ended March 31, 2019 compared to 3.23% for the three months ended March 31, 2018. 
• Asset quality continues to improve. The ratio of non-performing assets to total assets declined to 0.60% as of March 31, 2019 compared to 0.85% as of March 31, 2018. 
• The Company’s residential mortgage division, Oak Mortgage, is serving the home financing needs of customers throughout its footprint. The Oak Mortgage team has originated more than $350 million in mortgage loans over the last twelve months. 
• Meeting the needs of small business customers continued to be an important part of the Company’s lending strategy.  More than $7 million in new SBA loans were originated during the three month period ended March 31, 2019. Republic Bank continues to be a top SBA lender in our market area based on the dollar volume of loan originations. 
• The Company’s Total Risk-Based Capital ratio was 14.40% and Tier I Leverage Ratio was 9.18% at March 31, 2019. 
• Book value per common share increased to $4.22 as of March 31, 2019 compared to $3.99 as of March 31, 2018.

Income Statement

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

		Three Months Ended
		03/31/19		03/31/18		% Change
Total Revenue		$	24,166	$	22,651	7	%
Provision for Loan Losses			300		400	(25	%)
Non-interest Expense			23,348		20,102	16	%
Income Before Taxes			518		2,149	(76	%)
Provision for Taxes			92		372	(75	%)
Net Income			426		1,777	(76	%)
Net Income per Share		$	0.01	$	0.03	(67	%)

The Company reported net income of $426 thousand, or $0.01 per share, for the three month period ended March 31, 2019, compared to $1.8 million, or $0.03 per share, for the three month period ended March 31, 2018. 

Interest income increased by $4.6 million, or 22%, to $25.5 million for the quarter ended March 31, 2019 compared to $20.9 million for the quarter ended March 31, 2018. The increase in interest income is attributable to the growth in interest-earning assets over the last twelve months driven by the Company’s “Power of Red is Back” expansion strategy. However, interest expense increased by $3.6 million, or 129%, to $6.4 million for the quarter ended March 31, 2019 compared to $2.8 million for the quarter ended March 31, 2018. The increase in interest expense was driven by increases in the fed funds rate during 2018 which resulted in a higher cost of funds on deposit balances and led to compression in the net interest margin. The net interest margin for the three month period ended March 31, 2019 decreased by 23 basis points to 3.00% compared to 3.23% for the three month period ended March 31, 2018.

Non-interest income increased by $0.5 million, or 11%, to $5.0 million for the three month period ended March 31, 2019, compared to $4.5 million for the three month period ended March 31, 2018. The increase is primarily attributable to higher service fees on deposit accounts which is driven by growth in deposit balances and an increase in the number of deposit accounts.

Non-interest expenses increased by 16%, to $23.3 million during the quarter ended March 31, 2019 compared to $20.1 million during the quarter ended March 31, 2018. The growth in expenses were mainly caused by an increase in salaries and employee benefits driven by annual merit increases along with increased staffing levels related to our growth and expansion strategy. Occupancy and equipment expenses associated with the growth strategy also contributed to the increase in non-interest expenses. The Company has started to incur costs related to the expansion into the New York market as we begin to hire a management and lending team and commence rent payments for the build out of our store locations.

The provision for income taxes was $92 thousand for the three month period ended March 31, 2019 compared to a provision for income taxes in the amount of $372 thousand for the three month period ended March 31, 2018.

Balance Sheet

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

Description	03/31/19		03/31/18		% Change		12/31/18		% Change
Total assets	$	2,805,060	$	2,471,464	13	%	$	2,753,279	2	%
Total loans (net)		1,469,186		1,244,262	18	%		1,427,983	3	%
Total deposits		2,478,953		2,123,451	17	%		2,392,867	4	%

Total assets increased by $333.6 million, or 13%, as of March 31, 2019 when compared to March 31, 2018.  Deposits grew by $355.5 million to $2.5 billion as of March 31, 2019 compared to $2.1 billion as of March 31, 2018. The number of deposit accounts has grown by 27% 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

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

Description	03/31/19		03/31/18		% Change		12/31/18		%Change		1st Qtr 2019 Cost of Funds
Demand noninterest-bearing	$	525,645	$	464,383	13	%	$	519,056	1	%	0.00	%
Demand interest-bearing		1,101,129		826,726	33	%		1,042,561	6	%	1.43	%
Money market and savings		691,351		703,263	(2	%)		676,993	2	%	0.87	%
Certificates of deposit		160,828		129,079	25	%		154,257	4	%	1.65	%
Total deposits	$	2,478,953	$	2,123,451	17	%	$	2,392,867	4	%	0.99	%

Deposits increased to $2.5 billion at March 31, 2019 compared to $2.1 billion at March 31, 2018 as the Company moves forward with its growth strategy to increase the number of stores and expand the reach of 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 strong growth in demand deposit balances, including an increase in non-interest bearing demand deposits of 13%, year over year as a result of the successful execution of its strategy.

Lending

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

Description	03/31/19		% of Total		03/31/18		% of Total		12/31/18		% ofTotal
Commercial real estate	$	527,004	36	%	$	467,585	37	%	$	515,738	36	%
Construction and land development		124,124	8	%		118,607	10	%		121,042	8	%
Commercial and industrial		204,637	14	%		189,420	15	%		200,423	14	%
Owner occupied real estate		376,845	26	%		315,418	25	%		367,895	26	%
Consumer and other		92,728	6	%		78,834	6	%		91,136	6	%
Residential mortgage		151,748	10	%		81,048	7	%		140,364	10	%
Gross loans	$	1,477,086	100	%	$	1,250,912	100	%	$	1,436,958	100	%

Gross loans increased by $226 million, or 18%, to $1.5 billion at March 31, 2019 compared to $1.3 billion at March 31, 2018 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.

Asset Quality

The Company’s asset quality ratios are highlighted below:

	Three Months Ended
	03/31/19		12/31/18		03/31/18
Non-performing assets / capital and reserves	7	%	7	%	9	%
Non-performing assets / total assets	0.60	%	0.60	%	0.85	%
Quarterly net loan charge-offs / average loans	0.28	%	0.02	%	0.77	%
Allowance for loan losses / gross loans	0.53	%	0.60	%	0.53	%
Allowance for loan losses / non-performing loans	74	%	83	%	47	%

The percentage of non-performing assets to total assets decreased to 0.60% at March 31, 2019, compared to 0.85% at March 31, 2018.  The ratio of non-performing assets to capital and reserves decreased to 7% at March 31, 2019 compared to 9% at March 31, 2018 primarily as a result of decreases in non-performing assets over the last 12 months.

Capital

The Company’s capital ratios at March 31, 2019 were as follows:

	Actual03/31/19Bancorp		Actual03/31/19Bank		Regulatory Guidelines“Well Capitalized”
Leverage Ratio	9.18	%	8.05	%	5.00	%
Common Equity Ratio	13.37	%	12.25	%	6.50	%
Tier 1 Risk Based Capital	13.97	%	12.25	%	8.00	%
Total Risk Based Capital	14.40	%	12.69	%	10.00	%
Tangible Common Equity	8.69	%	7.84	%	n/a

Total shareholders’ equity increased to $248 million at March 31, 2019 compared to $234 million at March 31, 2018. Book value per common share increased to $4.22 at March 31, 2019 compared to $3.99 per share at March 31, 2018.

Analyst and Investor Call

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

Date:		April 25, 2019
Time:		10:00am (EDT)
From the U.S. dial:		(888) 771-4371 [Toll Free] or (847) 585-4405
Participant Pin:		48571782#
An operator will assist you in joining the call.

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 twenty-six 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.

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, 2018 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

Republic First Bancorp, Inc.
Consolidated Balance Sheets
(Unaudited)
						March 31,				December 31,				March 31,
(dollars in thousands, except per share amounts)							2019				2018				2018
ASSETS
	Cash and due from banks					$	31,511			$	35,685			$	21,927
	Interest-bearing deposits and federal funds sold						54,394				36,788				9,142
		Total cash and cash equivalents					85,905				72,473				31,069
	Securities - Available for sale						287,694				321,014				519,692
	Securities - Held to maturity						742,435				761,563				519,295
	Restricted stock						2,097				5,754				5,435
		Total investment securities					1,032,226				1,088,331				1,044,422
	Loans held for sale						15,742				26,291				25,653
	Loans receivable						1,477,086				1,436,598				1,250,912
	Allowance for loan losses						(7,900	)			(8,615	)			(6,650	)
		Net loans					1,469,186				1,427,983				1,244,262
	Premises and equipment						94,390				87,661				77,153
	Other real estate owned						6,088				6,223				6,966
	Other assets						101,523				44,335				41,939
	Total Assets					$	2,805,060			$	2,753,297			$	2,471,464
LIABILITIES
	Non-interest bearing deposits					$	525,645			$	519,056			$	464,383
	Interest bearing deposits						1,953,308				1,873,811				1,659,068
		Total deposits					2,478,953				2,392,867				2,123,451
	Short-term borrowings						-				91,422				93,915
	Subordinated debt						11,260				11,259				11,254
	Other liabilities						66,462				12,560				8,770
	Total Liabilities						2,556,675				2,508,108				2,237,390
SHAREHOLDERS' EQUITY
	Common stock - $0.01 par value						593				593				592
	Additional paid-in capital						270,155				269,147				267,313
	Accumulated deficit						(8,290	)			(8,716	)			(15,566	)
	Treasury stock at cost						(3,725	)			(3,725	)			(3,725	)
	Stock held by deferred compensation plan						(183	)			(183	)			(183	)
	Accumulated other comprehensive loss						(10,165	)			(11,927	)			(14,357	)
	Total Shareholders' Equity						248,385				245,189				234,074
	Total Liabilities and Shareholders' Equity					$	2,805,060			$	2,753,297			$	2,471,464

 

Republic First Bancorp, Inc.
Consolidated Statements of Income
(Unaudited)
						Three Months Ended
						March 31,			December 31,				March 31,
(in thousands, except per share amounts)							2019			2018				2018
INTEREST INCOME
	Interest and fees on loans					$	17,800		$	17,555			$	14,269
	Interest and dividends on investment securities						7,383			7,279				6,458
	Interest on other interest earning assets						336			459				172
		Total interest income					25,519			25,293				20,899
INTEREST EXPENSE
	Interest on deposits						6,014			5,103				2,598
	Interest on borrowed funds						365			210				185
		Total interest expense					6,379			5,313				2,783
	Net interest income						19,140			19,980				18,116
	Provision for loan losses						300			600				400
	Net interest income after provision for loan losses						18,840			19,380				17,716
NON-INTEREST INCOME
	Service fees on deposit accounts						1,612			1,589				1,175
	Mortgage banking income						2,220			2,285				2,186
	Gain on sale of SBA loans						502			451				992
	Gain (loss) on sale of investment securities						322			(66	)			-
	Other non-interest income						370			629				182
		Total non-interest income					5,026			4,888				4,535
NON-INTEREST EXPENSE
	Salaries and employee benefits						12,359			11,351				10,645
	Occupancy and equipment						4,096			3,410				3,470
	Legal and professional fees						707			642				759
	Foreclosed real estate						337			707				311
	Regulatory assessments and related fees						421			417				467
	Other operating expenses						5,428			5,530				4,450
		Total non-interest expense					23,348			22,057				20,102
Income before benefit for income taxes							518			2,211				2,149
Provision for income taxes							92			54				372
Net income						$	426		$	2,157			$	1,777
Net Income per Common Share
	Basic					$	0.01		$	0.04			$	0.03
	Diluted					$	0.01		$	0.04			$	0.03
Average Common Shares Outstanding
	Basic						58,805			58,789				57,100
	Diluted						59,587			59,672				58,370

 

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)		March 31, 2019									December 31, 2018									March 31, 2018
					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		$	55,369		$	336		2.46	%		$	80,416		$	459		2.26	%		$	40,425		$	172		1.73	%
Securities			1,085,910			7,420		2.73	%			1,068,065			7,315		2.74	%			1,015,605			6,487		2.55	%
Loans receivable			1,468,640			17,911		4.95	%			1,427,260			17,660		4.91	%			1,235,124			14,365		4.72	%
Total interest-earning assets			2,609,919			25,667		3.99	%			2,575,741			25,434		3.92	%			2,291,154			21,024		3.72	%
Other assets			190,855									134,411									127,001
Total assets		$	2,800,774								$	2,710,152								$	2,418,155
Interest-bearing liabilities:
Demand non interest-bearing		$	512,172								$	528,568								$	431,234
Demand interest-bearing			1,113,758			3,938		1.43	%			1,073,140			3,192		1.18	%			893,530			1,257		0.57	%
Money market & savings			675,506			1,452		0.87	%			702,322			1,444		0.82	%			687,818			972		0.57	%
Time deposits			153,832			624		1.65	%			133,675			467		1.39	%			129,897			369		1.15	%
Total deposits			2,455,268			6,014		0.99	%			2,437,705			5,103		0.83	%			2,142,479			2,598		0.49	%
Total interest-bearing deposits			1,943,096			6,014		1.26	%			1,909,137			5,103		1.06	%			1,711,245			2,598		0.62	%
Other borrowings			46,969			365		3.15	%			24,354			210		3.42	%			40,552			185		1.85	%
								.
Total interest-bearing liabilities			1,990,065			6,379		1.30	%			1,933,491			5,313		1.09	%			1,751,797			2,783		0.64	%
Total deposits and
other borrowings			2,502,237			6,379		1.03	%			2,462,059			5,313		0.86	%			2,183,031			2,783		0.52	%
Non interest-bearing liabilities			52,037									9,690									9,540
Shareholders' equity			246,500									238,403									225,584
Total liabilities and
shareholders' equity		$	2,800,774								$	2,710,152								$	2,418,155
Net interest income					$	19,288								$	20,121								$	18,241
Net interest spread								2.69	%								2.83	%								3.08	%
Net interest margin								3.00	%								3.10	%								3.23	%
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)
					Three months ended
	March 31,				December 31,				March 31,
(dollars in thousands)		2019				2018				2018
Balance at beginning of period	$	8,615			$	8,084			$	8,599
Provision charged to operating expense		300				600				400
		8,915				8,684				8,999
Recoveries on loans charged-off:
Commercial		1				5				-
Consumer		1				-				-
Total recoveries		2				5				-
Loans charged-off:
Commercial		(929	)			(68	)			(2,151	)
Consumer		(88	)			(6	)			(198	)
Total charged-off		(1,017	)			(74	)			(2,349	)
Net charge-offs		(1,015	)			(69	)			(2,349	)
Balance at end of period	$	7,900			$	8,615			$	6,650
Net charge-offs as a percentage
of average loans outstanding		0.28	%			0.02	%			0.77	%
Allowance for loan losses as a percentage
of period-end loans		0.53	%			0.60	%			0.53	%

 

Republic First Bancorp, Inc.
Summary of Non-Performing Loans and Assets
(unaudited)
	March 31,				December 31,				September 30,				June 30,				March 31,
(dollars in thousands)		2019				2018				2018				2018				2018
Non-accrual loans:
Commercial real estate	$	8,096			$	9,463			$	12,661			$	13,297			$	13,322
Consumer and other		836				878				818				809				810
Total non-accrual loans		8,932				10,341				13,479				14,106				14,132
Loans past due 90 days or more
and still accruing		1,744				-				-				-				-
Total non-performing loans		10,676				10,341				13,479				14,106				14,132
Other real estate owned		6,088				6,223				6,768				6,559				6,966
Total non-performing assets	$	16,764			$	16,564			$	20,247			$	20,665			$	21,098
Non-performing loans to total loans		0.72	%			0.72	%			0.98	%			1.07	%			1.13	%
Non-performing assets to total assets		0.60	%			0.60	%			0.76	%			0.81	%			0.85	%
Non-performing loan coverage		74.00	%			83.31	%			59.97	%			53.64	%			47.06	%
Allowance for loan losses as a percentage
of total period-end loans		0.53	%			0.60	%			0.59	%			0.57	%			0.53	%
Non-performing assets / capital plus
allowance for loan losses		6.54	%			6.53	%			8.30	%			8.51	%			8.76	%