Republic First Bancorp, Inc. Reports Second Quarter Results And Announces Expansion Into Residential Mortgage Lending Through Acquisition Of Oak Mortgage Company

PHILADELPHIA, July 28, 2016 /PRNewswire/ -- Republic First Bancorp, Inc. (NASDAQ: FRBK), the holding company for Republic Bank, today announced today announced its financial results for the period ended June 30, 2016.

Momentum continued in the second quarter of 2016 as the "Power of Red is Back" expansion strategy pushes forward. "I am pleased to report on another great quarter of strong financial results for Republic Bank," said Harry D. Madonna, Chairman and Chief Executive Officer of Republic First Bancorp, Inc.  "Deposits and loans are growing at rates far above our competition and income statement results also continue to improve with net income nearly doubling year over year."

The new stores opened since the beginning of the "Power of Red is Back" expansion campaign are growing deposits at an average rate of $39 million per year. "These results clearly demonstrate the ongoing success we are having with the build out of our store network," added Madonna.

Earlier this week Republic also announced that it will acquire Oak Mortgage Company, LLC, a residential mortgage lending company headquartered in Marlton, NJ. Oak Mortgage was founded in 1997 and has established an outstanding reputation as one of the premier residential mortgage lenders in the Philadelphia region. "I am very excited to welcome the Oak Mortgage Team to the Republic Bank family," said Madonna. "Oak has developed an outstanding business model based upon the same fanatical approach to customer service that we utilize throughout our Store network. We see this acquisition as a perfect fit as we move forward with our growth and expansion strategy."

Highlights for the Period Ended June 30, 2016

• Net income per share increased by 200% to $0.03 per share in the second quarter of 2016 compared to $0.01 per share in the second quarter of 2015. Net income grew to $1.0 million in the second quarter of 2016 compared to $533 thousand a year ago. The Company continues to open new stores and increase net income despite the additional costs associated with the expansion strategy.
• New stores were opened in Washington Township, NJ and Wynnewood, PA during the second quarter of 2016 bringing the total store count to eighteen. Another site now under construction in Moorestown, NJ is scheduled to be completed in the third quarter. There are also several additional sites in various stages of development for future store locations.
• New stores opened since the beginning of the "Power of Red is Back" expansion campaign are currently growing deposits at an average rate of $39 million per year, while the average deposit growth for all stores over the last twelve months was approximately $18 million per store.
• Total deposits increased by $304 million, or 27%, to $1.4 billion as of June 30, 2016 compared to $1.1 billion as of June 30, 2015. 
• The net interest margin increased to 3.27% for the quarter ended June 30, 2016 compared to 3.25% in the quarter ended June 30, 2015.
• Total assets increased by $310 million, or 24%, to $1.6 billion as of June 30, 2016 compared to $1.3 billion as of June 30, 2015.
• Total loans grew $107 million, or 13%, to $930 million as of June 30, 2016 compared to $823 million at June 30, 2015.
• SBA lending continued to be an important part of the Company's lending strategy. More than $28 million in new SBA loans were originated during the three month period ended June 30, 2016. Our team is currently ranked as the #1 SBA lender in the tri-state market of New Jersey, Pennsylvania and Delaware based on the dollar volume of loan originations.
• The Company's Total Risk-Based Capital ratio was 12.62% and Tier I Leverage Ratio was 8.93% at June 30, 2016.
• Tangible book value per share was $3.13 as of June 30, 2016. This amount excludes approximately $0.35 per share attributable to the deferred tax asset valuation allowance.

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 $1.0 million, or $0.03 per share, for the three month period ended June 30, 2016, compared to net income of $533 thousand, or $0.01 per share, for the three month period ended June 30, 2015. Net income for the six month period ended June 30, 2016 was $2.1 million, or $0.05 per share, compared to net income of $1.1 million, or $0.03 per share, for the six months ended June 30, 2015.

Total revenue increased by $3.0 million, or 26%, to $14.6 million for the three month period ended June 30, 2016 compared to $11.6 million for the three month period ended June 30, 2015. This increase was primarily driven by strong growth in interest-earning assets over the last twelve months.

Non-interest income increased to $3.0 million for the three month period ended June 30, 2016 compared to $2.0 million for the three month period ended June 30, 2015.  This increase was primarily due to an increase in gains on the sale of SBA loans, gains on sale of investment securities, and an increase in service fees on deposit accounts. 

Non-interest expenses increased by $1.9 million, or 17%, to $13.0 million during the three month period ended June 30, 2016 compared to $11.1 million during the three months ended June 30, 2015. This increase was mainly caused by higher salaries and employee benefits as a result of annual merit increases along with increased staffing levels related to our growth strategy of adding and relocating stores. Occupancy and equipment expenses associated with the growth and relocation strategy also contributed to the increase in non-interest expenses.

Balance Sheet

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

Total assets increased by $309.8 million, or 24%, as of June 30, 2016 when compared to June 30, 2015. Deposits grew by $304.5 million to $1.4 billion as of June 30, 2016 compared to $1.1 billion as of June 30, 2015. The number of deposit accounts has grown by 46% during the past twelve months. The strong growth in assets, loans and deposits has been driven by the Company's successful execution of its aggressive growth strategy referred to as "The Power of Red is Back."

Core Deposits

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

Core deposits increased to $1.4 billion at June 30, 2016 compared to $1.1 billion at June 30, 2015 as the Company moves forward with its expansion strategy to increase the number of brick and mortar stores which drives the gathering of low-cost core deposits. The Company recognized strong growth in all deposit account categories on a year to year basis.

Lending

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

Gross loans increased by $106.9 million, or 13%, to $929.8 million at June 30, 2016 compared to $822.9 million at June 30, 2015 as a result of an increase in quality loan demand over the last twelve months and continued success with the relationship banking model. The Company experienced strongest growth in the owner occupied real estate and commercial and industrial categories.

Asset Quality

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

The percentage of non-performing assets to total assets decreased to 1.95% at June 30, 2016, compared to 2.31% as of June 30, 2015. The decrease in non-performing assets to total assets on a linked quarter basis was primarily driven by resolution of non-performing loans and charge-offs recorded in the second quarter of 2016.

Capital

The Company's capital ratios at June 30, 2016 were as follows:

Total shareholders' equity increased to $118.6 million at June 30, 2016 compared to $113.4 million at June 30, 2015. Tangible book value per share increased to $3.13 at June 30, 2016 compared to $3.00 per share at June 30, 2015. 

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 eighteen stores located in Abington, Bala Cynwyd, Plymouth Meeting, Media, Wynnewood and Philadelphia, Pennsylvania and Haddonfield, Cherry Hill, Voorhees, Glassboro, Marlton, Berlin and Washington Township, New Jersey.  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 also 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. 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, 2015 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.