Republic First Bancorp, Inc. Reports Fourth Quarter Financial Results

Loans Increase By 24% and Deposits Grow 16%

PHILADELPHIA, Jan. 28, 2019 (GLOBE NEWSWIRE) — Republic First Bancorp, Inc. (NASDAQ: FRBK), the holding company for Republic Bank, today announced its financial results for the period ended December 31, 2018.

Q4-2018 Highlights

• Income before tax increased by 70% to $10.2 million for the twelve months ended December 31, 2018 compared to $6.0 million for the twelve months ended December 31, 2017. We continue to open new stores and increase profitability despite the additional costs associated with the expansion strategy.
   
• Total deposits increased by $330 million, or 16%, to $2.4 billion as of December 31, 2018 compared to $2.1 billion as of December 31, 2017.
   
• 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 $274 million, or 24%, to $1.4 billion as of December 31, 2018 compared to $1.2 billion at December 31, 2017.
   
• Total revenue grew by 24% during the year ended December 31, 2018 while non-interest expense increased by 11% when compared to the year ended December 31, 2017.

“The Power of Red is Back” expansion strategy continues to build momentum. As recently announced, Republic Bank is moving forward with plans to expand into New York City. Sites for several new stores have been identified in Manhattan with two to four stores projected to open during 2019.

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

“2018 was another exceptional year for ‘The Power of Red is Back’ growth campaign. Four new stores were opened during 2018 using our distinctive glass prototype building. Despite the significant investments required to execute our growth and expansion strategy, we were able to demonstrate significant improvement in profitability as net income before taxes increased by 70% year over year.  Loans increased by 24% and deposits grew by 16%. Customer accounts increased 29% as we continue to welcome new Fans every day.   With the momentum we have generated in the Metro Philadelphia market combined with our expansion in to New York City during 2019 we believe the best is yet to come.”

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

“To support our growth and expansion efforts, we continue to add top talent to our team.  We’ve recently announced the addition of Joe Tredinnick as the Market President of Pennsylvania. In addition, we continue to invest in technology and enhance our product offerings. It is our goal to deliver the best banking experience through every channel…..in-store, online, and mobile options.”

A summary of the financial results for the period ended December 31, 2018 can be found in the following table:

Financial Highlights for the Period Ended December 31, 2018

• Total assets increased by $431 million, or 19%, to $2.8 billion as of December 31, 2018 compared to $2.3 billion as of December 31, 2017.
   
• Demand deposits represent the fastest growing segment of the Company’s deposit base. These deposits grew by $315 million to $1.6 billion over the last 12 months, including growth of 18% in non-interest bearing demand deposit balances.
   
• Net income before tax grew by 70% to $10.2 million for the twelve months ended December 31, 2018 compared to $6.0 million for the twelve months ended December 31, 2017.
   
• We have twenty-five convenient store locations open today. During the fourth quarter of 2018 we opened new stores in Evesboro and Somers Point, NJ. Construction is underway on sites in Lumberton, NJ and Feasterville, PA. There are also multiple sites in various stages of development for future store locations.
   
• Expansion into New York City is scheduled to begin in 2019. The Company is planning to open two to four new stores in Manhattan in the coming year.
   
• Asset quality continues to improve. The ratio of non-performing assets to total assets declined to 0.60% as of December 31, 2018 compared to 0.94% as of December 31, 2017.
   
• The Company converted $10.6 million of outstanding trust preferred securities to 1.6 million shares of common stock during the first quarter of 2018. This conversion will result in a reduction of interest expense of approximately $0.9 million on an annual basis going forward.
   
• The Company’s residential mortgage division, Oak Mortgage, is serving the home financing needs of customers throughout its footprint. Oak has originated more than $360 million in loans during the twelve month period ended December 31, 2018.
   
• Meeting the needs of small business customers continued to be an important part of the Company’s lending strategy.  More than $10 million in new SBA loans were originated during the three month period ended December 31, 2018. Republic Bank is currently ranked as the #1 SBA lender in New Jersey based on the dollar volume of loan originations.
   
• The Company’s Total Risk-Based Capital ratio was 15.03% and Tier I Leverage Ratio was 9.35% at December 31, 2018.
   
• Book value per common share increased to $4.17 as of December 31, 2018 compared to $3.97 as of December 31, 2017.

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 $2.2 million, or $0.04 per share, for the three month period ended December 31, 2018, compared to $2.7 million, or $0.05 per share, for the three month period ended December 31, 2017.  Net income for the twelve month period ended December 31, 2018 was $8.6 million, or $0.15 per share, compared to net income of $8.9 million, or $0.15 per share, for the twelve months ended December 31, 2017.

During 2017, the Company recorded a benefit for federal and state income taxes due to the reversal of the deferred tax asset valuation allowance recorded on the balance sheet in the fourth quarter of last year. Income Before Taxes grew by 70% to $10.2 million during the year ended December 31, 2018, compared to $6.0 million for the year ended December 31, 2017. The significant improvement in pre-tax profitability has been achieved despite the ongoing investments and expenditures required for the growth and expansion strategy.

Total revenue increased by $5.8 million, or 24%, to $30.2 million for the three month period ended December 31, 2018, compared to $24.4 million for the three month period ended December 31, 2017.  Total revenue for the twelve month period ended December 31, 2018 increased by $21.5 million, or 24%, to $112.4 million. The increase in revenue is primarily attributable to higher interest income as a result of the strong growth in interest-earning assets over the last twelve months driven by the Company’s “Power of Red is Back” expansion program.

The increase in total revenue for both the three month period (24%) and twelve month period (24%) ended December 31, 2018 exceeded the growth in non-interest expense for the three month period (2%) and the twelve month period (11%) ended December 31, 2018 which demonstrates the effect that our growth strategy will have on the profitability of the Bank.

Non-interest expenses increased by 2%, to $22.1 million during the quarter ended December 31, 2018 compared to $21.6 million during the quarter ended December 31, 2017. Non-interest expenses increased by 11%, to $83.7 million during the twelve month period ended December 31, 2018 compared to $75.3 million during the twelve months ended December 31, 2017. 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 provision for income taxes was $54 thousand for the three month period ended December 31, 2018 compared to a benefit for income taxes in the amount of $2.9 million for the three month period ended December 31, 2017. The Company began recognizing an increased provision for federal and state income taxes during 2018 after reversing its deferred tax asset valuation allowance during the fourth quarter of 2017.

Balance Sheet

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

Total assets increased by $431.0 million, or 19%, as of December 31, 2018 when compared to December 31, 2017.  Deposits grew by $329.6 million to $2.4 billion as of December 31, 2018 compared to $2.1 billion as of December 31, 2017. The number of deposit accounts has grown by 29% 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 $2.4 billion at December 31, 2018 compared to $2.1 billion at December 31, 2017 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 18%, 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 $274 million, or 24%, to $1.4 billion at December 31, 2018 compared to $1.2 billion at December 31, 2017 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 December 31, 2018, compared to 0.94% at December 31, 2017.  The ratio of non-performing assets to capital and reserves decreased to 7% at December 31, 2018 compared to 9% at December 31, 2017 primarily as a result of decreases in non-performing assets over the last 12 months.

Capital

The Company’s capital ratios at December 31, 2018 were as follows:

Total shareholders’ equity increased to $245 million at December 31, 2018 compared to $226 million at December 31, 2017. Book value per common share increased to $4.17 at December 31, 2018 compared to $3.97 per share at December 31, 2017.

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-five 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, 2017 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