FRBK Republic First Bancorp Inc

PHILADELPHIA, Oct. 18, 2013 /PRNewswire/ -- Republic First Bancorp, Inc. (NASDAQ: FRBK), the holding company for Republic Bank, today announced its financial results for the period ended September 30, 2013.  

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"We are pleased to report that asset quality improved substantially during the third quarter," said Harry D. Madonna, the Company's Chairman and Chief Executive Officer. "Non-performing loan balances were reduced by 44% during the quarter as we continue to work diligently to resolve all outstanding credit quality issues.  We also continue to make significant progress with our expansion plans as announced earlier this year.  Ground has been broken on our new store at a prime location in Cherry Hill, NJ and construction is also under way on the renovation and relocation of three existing stores.  These facility improvements will significantly enhance the customer experience."

The Company has recorded a net loss of $2.2 million, or $0.09 per share, for the third quarter of 2013 compared to net income of $0.4 million, or $0.02 per share, for the third quarter of 2012. 

"Our third quarter earnings were impacted by the settlement of a lawsuit stemming from an issue that arose several years ago," said Madonna. "While we vigorously contested the claims raised during litigation, it was decided that to fully embrace the Company's positive momentum it was time to resolve this matter. We have worked diligently in recent years to position the Bank for strong growth and expansion in our market and with this settlement now behind us we can focus on those goals. We look forward to bringing the Republic Bank model, which is rooted in outstanding customer service, to the many new fans that await us."

Highlights for the Period Ending September 30, 2013

• Asset quality improved as non-performing loans decreased by $5.8 million, or 44%, to $7.5 million, or 1.15% of total loans, at September 30, 2013 compared to $13.3 million, or 2.09% of total loans as of June 30, 2013.
• The percentage of non-performing assets to capital and reserves improved to 18% as of September 30, 2013 compared to 30% as of September 30, 2012.
• Total loans increased by $27.1 million, or 4%, to $650.2 million as of September 30, 2013 compared to $623.2 million at September 30, 2012.
• SBA lending continued to be a focal point of the Company's lending strategy. $23.9 million in new SBA loans were originated during the quarter ended September 30, 2013. Our team is currently ranked as the #1 SBA lender in the state of New Jersey and #2 in the Philadelphia market based on the dollar volume of loan originations.
• Core deposits increased by $29.9 million on a linked quarter basis to $835.3 million as of September 30, 2013 compared to $805.4 million as of June 30, 2013.
• The net interest margin increased to 3.67% for the nine month period ending September 30, 2013 compared to 3.54% for the nine month period ending September 30, 2012 despite the challenging interest rate environment.
• Capital levels remain strong with a Total Risk-Based Capital ratio of 12.18% and a Tier I Leverage Ratio of 9.31% at September 30, 2013.
• Tangible book value per share as of September 30, 2013 was $2.58.

Income Statement

The Company reported a net loss of $2.2 million, or $0.09 per share, for the three month period ended September 30, 2013, compared to net income of $0.4 million, or $0.02 per share, for the three month period ended September 30, 2012.  The net loss for the nine month period ended September 30, 2013 was $0.2 million, or $0.01 per share, compared to net income of $2.7 million, or $0.10 per share, for the nine months ended September 30, 2012.

Earnings in the third quarter of 2013 were impacted by a one-time charge of $1.9 million related to a settlement agreement in connection with litigation in which the Company was a defendant.  The Company had been vigorously contesting the claims in the litigation. However, as a result of reversals of certain prior procedural rulings in the case, the Company concluded that it would be in its best interest to avoid further litigation by executing a settlement agreement.  This settlement releases the Company from all claims and actions related to this matter.

The Company continues to lower its cost of funds as evidenced by a decrease of 14 basis points to 0.51% for the three month period ended September 30, 2013, compared to 0.65% for the three month period ended September 30, 2012. The net interest margin decreased slightly to 3.67% for the three month period ended September 30, 2013 compared to 3.69% for the three month period ended September 30, 2012.

The provision for loan losses decreased to $0.3 million in the third quarter of 2013 compared to $0.9 million in the third quarter of 2012 mainly as a result of improved asset quality.

Non-interest expense increased to $12.1 million for the three month period ended September 30, 2013 compared to $8.8 million for the three month period ended September 30, 2012, due to the aforementioned legal settlement. There was also an increase in foreclosed real estate expenses in the amount of $0.5 million over the prior year period primarily driven by a writedown of one property based on the current appraised value.

Balance Sheet

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

Net loans increased by $28.2 million, or 5%, as of September 30, 2013 compared to September 30, 2012.  Core deposits grew by $14.5 million to $835.3 million as of September 30, 2013 compared to $820.8 million as of September 30, 2012.

Core Deposits

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

Core deposits increased to $835.3 million at September 30, 2013 compared to $820.8 million at September 30, 2012 as the Company continues to focus its effort on the gathering of low-cost core deposits. We recognized strong growth in demand account balances on a year to year basis.  At the same time we've reduced the overall deposit cost of funds to 0.39% for the three month period ending September 30, 2013 compared to 0.54% for the three month period ending September 30, 2012. The retail banking strategy has also enabled the Company to significantly reduce its dependence on wholesale funding sources such as brokered and internet-based certificates of deposit.

Lending

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

Gross loans increased by $27.1 million to $650.2 million at September 30, 2013 compared to $623.2 million at September 30, 2012 as a result of an increase in quality loan demand over the last twelve months. 

Asset Quality

The Company's non-performing asset balances and asset quality ratios are highlighted below:

Non-performing assets decreased by $6.5 million to $13.4 million, or 1.43% of total assets, at September 30, 2013, compared to $19.9 million, or 2.17% of total assets, as of June 30, 2013.  The allowance for loan losses as a percentage of non-performing loans increased to 116% as of September 30, 2013, compared to 70%  as of June 30, 2013.  The ratio of non-performing assets to capital and reserves decreased to 18% as of September 30, 2013 compared to 25% as of June 30, 2013.

Capital

The Company's capital regulatory ratios at September 30, 2013 were as follows:

Total shareholders' equity was $67.1 million at September 30, 2013 which represented a book value per share of $2.58, 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.

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 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, 2012 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.