PHILADELPHIA, July 30 PA-Republic-First-ern
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 Change6/30/07 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 Change6/30/07 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 $10,27822%
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 37843% 47513% 917 81313%
Non-
interest
Income $836 $66526%$75511%$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 $5,1615%
Occupancy595 603-1% 604-1%1,198 1,1415%
Depreciation
and
amortization339 326 4% 355-5% 665689 -3%
Legal274 19739% 19540% 471272 73%
Other real
estate 382 1,016 -62% 17 2147%1,398 20nm
Advertising 149 12916% 159-6% 278244 14%
Data
processing 203 203 0% 15530% 406314 29%
Insurance148 10442% 9457% 252187 35%
Professional
fees144 9946% 12417% 243250 -3%
Regulatory
assessments
and costs 178 52 242% 44 305% 230 87 164%
Taxes, other 251 261-4% 21119% 512414 24%
Other operating
expenses695 728-4% 780 -11%1,423 1,499 -5%
Total non-
interest
expense $6,061 $6,448-6% $5,28315% $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) 784,115 787,3450% 828,937 -5%
Total deposits 728,559 749,532 -3% 798,170 -9%
Total core deposits*346,885 322,4338% 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 $466,32859% $462,058 58% $4,270 $485,048 58%
Construction
& land
development 220,10428% 226,317 28% (6,213) 242,602 29%
Non real
estate
secured 75,053 9%75,9499% (896) 76,5339%
Non real
estate
unsecured 2,676 0% 5,8781% (3,202)6,8561%
Total
commercial 764,16196% 770,202 96% (6,041) 811,039 97%
Residential
real estate 5,870 1% 5,9151%(45)6,0501%
Consumer
& other 20,844 3%21,3843% (540) 19,5092%
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 reserves20% 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 30,16732,845 -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 $322,4338% $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 Capital12.41% 10.00%
Three months ended Six months ended
6/30/08 3/31/08 6/30/076/30/08 6/30/07
Return on equity6.12% -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% 75511%
Total revenues 7,840 7,887 -1% 8,265-5%
Noninterest operating
expenses6,061 6,448 -6% 5,28315%
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 10,44510,36410,448
Diluted 10,86210,50410,738
Balance Sheet Data:
Total assets $947,589 $999,163 -5%
Loans (net)784,115 787,345 0%
Allowance for loan losses6,76010,156-33%
Investment securities 84,57286,360 -2%
Total deposits 728,559 749,532 -3%
Core deposits* 346,885 322,433 8%
Trust preferred 22,47611,341 98%
Stockholders' equity78,39977,677 1%
Capital:
Stockholders' equity to
total assets8.27% 7.77%
Leverage ratio 10.69% 9.23%
Risk based capital ratios:
Tier 111.63% 9.96%
Total Capital 12.41%11.10%
Performance Ratios:
Cost of funds2.96% 3.51% 4.42%
Deposit cost of funds2.98% 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' equity6.12% -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 1433994%
Noninterest income 1,501 1,395 8%
Total revenues15,727 16,470 -5%
Noninterest operating expenses12,509 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 ratio10.69% 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 margin3.19% 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 loans0.85% 0.92%
Allowance for loan losses to
nonperforming loans215% 46%
Nonperforming assets to capital
and reserves20% 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 InterestInterest
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%
Securities82,392 1,167 5.67% 87,545 1,313 6.00%
Loans receivable 797,23312,160 6.13%817,702 13,453 6.62%
Total interest-
earning assets 890,24313,385 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 deposits441,069 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 deposits683,586 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 borrowings858,898 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) AverageIncome/Yield/
BalanceExpense Rate
Federal funds sold and other
interest-earning assets$12,785 $169 5.30%
Securities 97,328 1,428 5.87%
Loans receivable821,173 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 spread2.59%
Net interest margin3.26%
For the six months ended For the six months ended
June 30, 2008 June 30, 2007
Interest-earning
assets:
(Dollars inInterest 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% 103,4143,037 5.87%
Loans receivable 807,46825,613 6.38% 810,003 30,957 7.71%
Total interest-
earning assets 903,88128,247 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
& savings209,426 3,038 2.92% 288,3626,554 4.58%
Time deposits 412,554 8,609 4.20% 341,7528,921 5.26%
Total deposits739,30511,862 3.23% 750,027 15,693 4.22%
Total interest-
bearing deposits 658,59511,862 3.62% 672,298 15,693 4.71%
Other borrowings 126,369 2,041 3.25% 127,4583,496 5.53%
Total interest-
bearing
liabilities $784,964 $13,903 3.56% $799,756 $19,189 4.84%
Total deposits and
other borrowings 865,67413,903 3.23% 877,485 19,189 4.41%
Noninterest-bearing
liabilities9,818 14,142
Shareholders' equity 79,496 76,642
Total liabilities
and shareholders'
equity $954,988 $968,269
Net interest income $14,344 $15,209
Net interest spread 2.72% 2.62%
Net interest margin 3.19% 3.30%
The above tables are presented on a tax equivalent basis.
Republic First Bancorp, Inc.
Summary of Allowance for Loan Losses and Other Related Data
(unaudited)
Year
Three months endedendedSix months ended
(dollar amounts
in thousands) 6/30/08 3/31/08 6/30/07 12/31/07 6/30/08 6/30/07
Balance at
beginning of
period$ 10,156 $8,508 $8,355 $8,058 $8,508 $8,058
Provisions
charged to
operating expense 435,812 631,5905,855 143
10,199 14,320 8,4189,648 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 -22 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 $688
Construction- - 6,74710,902 15,369
Consumer and other780 640 776 547 555
Total nonaccrual loans3,146 3,06722,28025,435 16,612
Loans past due 90 days
or more and still
accruing - - - --
Renegotiated loans- - - --
Total nonperforming loans 3,146 3,06722,28025,435 16,612
Other real estate owned 14,24516,378 3,68142 499
Total nonperforming
assets$ 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
loans0.85% 1.27% 1.04% 1.04%0.92%
Nonperforming
assets/capital plus
allowance for loan losses 20% 22% 29% 29% 20%
SOURCE Republic First Bancorp, Inc.
