FRBK - Republic First Bancorp Inc. Reports First Quarter Financial Results

PHILADELPHIA, April 25, 2019 (GLOBE NEWSWIRE) -- 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 14^th & 5^th 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 14^th & 5^th. 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:

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 14^th & 5^th 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):

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):

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):

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):

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:

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:

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:

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