PHILADELPHIA, July 27, 2020 (GLOBE NEWSWIRE) — Republic First Bancorp, Inc. (NASDAQ: FRBK), the holding company for Republic Bank, today announced its financial results for the period ended June 30, 2020.
Q2-2020 Financial HighlightsDuring the second quarter of 2020 Republic Bank was named as America’s # 1 Bank for Service in a recent national Forbes survey to identify which financial institutions have the most satisfied customers.
 We originated $682 million in loans under the Paycheck Protection Program (PPP) administered by the SBA providing crucial funding for small business throughout our footprint. Gross origination fees of $22 million were earned through this program which will be recognized as income over the life of the loans.
 Profitability improved as the Company reported net income of $2.5 million, or $0.04 per share, during the second quarter of 2020 compared to a net loss of $0.6 million, or ($0.01) per share during the first quarter of 2020.
 Pre-tax pre-provision earnings (PTPP) increased to $4.2 million during the second quarter of 2020 compared to $27 thousand in the first quarter of 2020 and $0.5 million in the second quarter of 2019.
 On a linked quarter basis, total revenue increased 13% during the second quarter of 2020 while non-interest expense decreased by 2% compared to the first quarter of 2020. Year over year total revenue increased 17% and non-interest expense increased 3% during the quarter ended June 30, 2020 compared to the quarter ended June 30, 2019.
 Asset quality continues to improve as the ratio of non-performing assets to total assets declined to 0.31% as of June 30, 2020. Only 2% of our loan customers were deferring loan payments as of July 24, 2020. These deferrals relate to approximately 7% of outstanding loan balances excluding PPP loans.
 Total loans grew $1.0 billion, or 69%, to $2.5 billion as of June 30, 2020 compared to $1.5 billion at June 30, 2019. Excluding the impact of the PPP loan program loans grew $380 million, or 25%, year over year.
 Total deposits increased by $1.1 billion, or 44%, to $3.6 billion as of June 30, 2020 compared to $2.5 billion as of June 30, 2019. Excluding the impact of the PPP loan program deposits grew $716 million, or 28%, year over year.Vernon W. Hill, II, Chairman of Republic First Bancorp said:“In the second quarter ‘The Power of Red is Back’ expansion campaign continued to deliver exceptional service during these unprecedented times. Our stores remained operational throughout the quarter serving customers in any way possible in a safe and efficient manner. Through our participation in the PPP loan program authorized by the CARES Act we were able assist thousands of small businesses by providing critical access to funding to support operations in the midst of an economic shutdown.”“In recognition of our unwavering commitment to extraordinary customer service and convenience our FANS responded to a recent Forbes survey and Republic was ranked as America’s #1 Bank for Service. The goal of our model is to create FANS NOT CUSTOMERS, who join our brand, remain loyal and refer family and friends.  The results of the Forbes survey not only demonstrates the success of our model, but also shows that we deliver on our commitment to service better that every other bank in the country.”Republic will launch its new brand campaign as America’s #1 Bank for Service during the third quarter of 2020.Harry D. Madonna, President and Chief Executive Officer of Republic First Bancorp added:“Net income during 2019 was negatively impacted by the challenging nature of the interest rate environment and costs required to initiate our expansion into New York City. During the second quarter of 2020 we returned to profitability through the dedication and commitment of every member of the Republic Bank Team to improve earnings. We have consistently stated that it is our goal 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. We are focused on meeting that goal in the most efficient manner possible.”Paycheck Protection ProgramDuring the second quarter the Republic Bank Team turned its attention to the needs of small businesses in our community. The Paycheck Protection Program included in the CARES Act authorized financial institutions to make loans to companies that have been impacted by the devastating economic effects of the coronavirus (COVID-19) pandemic. We responded by quickly developing a process to accept applications for the program not only from our valued small business customers, but from non-customers throughout the community as well.PPP Loan Program HighlightsRepublic Bank recognized the SBA PPP Loan Program as an opportunity to help existing and new small business customers actively participated in the program by accepting applications.As of June 30, 2020 Republic has:Originated $682 million in PPP loans
 Related to more than 4,800 PPP loan applications
 More than 50% of the applications received were from small businesses that were not existing customers of Republic Bank, many of which have already switched their primary banking relationship to Republic Bank
 The average loan size of all PPP loans approved was $140 thousand
 Gross origination fees of $22 million were earned by Republic which will be recognized as income over the life of the loans
 Funding for this program was provided through the Federal Reserve PPP Lending Facility, which has resulted in exclusion of the PPP asset balances from the leverage ratio calculation.As a percentage of existing loan balances outstanding as of March 31, 2020, the $682 million in PPP loans originated by Republic amounted to 36% making us one of the top PPP lenders in the entire country.Loss Mitigation and Loan Portfolio AnalysisManagement has taken a proactive approach to analyze and prepare for the potential challenges to be faced as the effects of the economic shutdown begin to unfold. A detailed analysis of loan concentrations and segments that may represent the areas of highest risk has been prepared. Our commercial lending team has initiated contact with many of our loan customers to discuss the impact that the pandemic has had on their businesses to date and the expected ramifications that may be felt in the future. We have granted payment deferrals for customers that made a request and had an immediate need for assistance.Management believes exposure in the loan portfolio to the high risk industries most impacted by the current economic conditions is limited. Loans to customers in the accommodations and food services industry (i.e. hotels and restaurants) amount to 7% of the total loans outstanding as of June 30, 2020. Loans to customers involved in the oil and gas industry (refineries) are less than 1% of outstanding loans and credit card receivables are also less than 1% of total loans as of June 30, 2020.We believe the combination of ongoing communication with our customers, loan payment deferrals, increased focus on risk management practices, and access to government programs such as the PPP Loan Program should help mitigate potential future period losses.The following table summarizes the number of loan customers that have been granted payment deferrals along with the related loan outstanding balances through the period ended June 30, 2020:*Note: PPP loans excluded from total loans when calculating % of total loan balancesAs of the date of this release more than 75% of the customers that were granted approval for deferral of loan payments have resumed normal principal and interest payments on their outstanding loan balances in the early stages of the third quarter of 2020. During the month of July 2020, the number of customers that have continued with the deferral of loan payments has declined to 103, or 2% of the total loan customers and the related outstanding loan balances have reduced to $124 million, or 7% of the total loan balances outstanding.Asset QualityThe Company’s asset quality ratios are highlighted below:The percentage of non-performing assets to total assets decreased to 0.31% at June 30, 2020, compared to 0.53% at June 30, 2019.  The ratio of non-performing assets to capital and reserves decreased to 5% at June 30, 2020 compared to 6% at June 30, 2019 primarily as a result of decreases in non-performing assets over the last 12 months.Quarterly TrendProfitability in previous quarters was impacted by the inversion of the yield curve and the Company’s strategic decision to enter a new market during 2019. The Company continues to focus on improvement of its operating leverage. The following table highlights changes to some of the key financial metrics that demonstrate this progress:Financial Summary for the Period Ended June 30, 2020The changes in the balance sheet as of June 30, 2020 were significantly impacted by the effect of the PPP loan program. A portion of the increase in cash balances, outstanding loans, demand deposits and short-term borrowings will be short-term in nature and will change as the borrowers that received PPP loans submit applications for forgiveness to the SBA in the coming months. A summary of the balance sheet presented with and without the impact of the PPP loan program for the period ended June 30, 2020 can be found in the following table:A summary of the income statement for the period ended June 30, 2020 can be found in the following table:Total assets increased by $1.5 billion, or 51%, to $4.4 billion as of June 30, 2020 compared to $2.9 billion as of June 30, 2019. Excluding the impact of the PPP loan program total assets increased by $655 million, or 22%, as during the twelve month period ended June 30, 2020.
 We have thirty convenient store locations open today. During the first quarter of 2020 we opened a new store in Northfield, NJ. Construction is ongoing on a site in Bensalem, PA. There are also multiple sites in various stages of development for future store locations.
 Profitability improved quarter to quarter as we reported net income of $2.5 million, or $0.04 per share, for the three months ended June 30, 2020 compared to a net loss of $0.6 million, or $(0.01) per share for the three months ended March 31, 2020.  We reported net income of $0.4 million, or $0.01 per share, for the three months ended June 30, 2019.
 The net interest margin decreased by 21 basis points to 2.55% for the three months ended June 30, 2020 compared to 2.76% for the three months ended March 31, 2020. The decline in the margin was driven by the impact of the PPP loan program that were added to the balance sheet during the second quarter, along with the lower interest rate environment as a result of rate reductions by the Federal Reserve Bank. Excluding the impact of the PPP loan program the net interest margin would have been 2.70% for the three months ended June 30, 2020.
 During the first quarter we entered into a branding agreement with Visa to convert all ATM and debit cards to Visa cards which will provide a number of opportunities to enhance revenue growth in the coming years. In the second quarter we entered into another agreement with Visa to handle the processing of all ATM and debit card transactions. This agreement is expected to reduce the cost associated with the processing of these transactions.
 The Company’s residential mortgage division, Oak Mortgage, is serving the home financing needs of customers throughout its footprint. Loan production during the first half of 2020 was strong despite the impact of the CODID-19 pandemic and the pipeline for the second half of the year looks equally as promising. The Oak Mortgage team has originated more than $500 million in mortgage loans over the last twelve months.
 The Company’s Total Risk-Based Capital ratio was 12.00% and Tier I Leverage Ratio was 7.58% at June 30, 2020.
 Book value per common share increased to $4.34 as of June 30, 2020 compared to $4.27 as of June 30, 2019.Income StatementThe major components of the income statement are as follows (dollars in thousands, except per share data):
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