Republic First Bancorp, Inc. Reports Third Quarter Financial Results Net Income Increases 130% And Deposits Grow 28%

PHILADELPHIA, Oct. 24, 2016 /PRNewswire/ -- Republic First Bancorp, Inc. (NASDAQ: FRBK), the holding company for Republic Bank, today announced its financial results for the period ended September 30, 2016.

The "Power of Red is Back" expansion strategy continues to move forward and produce positive results.  "Since the launch of our expansion plan we have been able to demonstrate consistent growth in the balance sheet by increasing loans and deposits," said Harry D. Madonna, Chairman and Chief Executive Officer of Republic First Bancorp, Inc. "We're also seeing significant progress on the income statement as quarterly earnings improved by 130% year over year."

On October 11, 2016 we filed a universal shelf registration statement with the Securities and Exchange Commission. This will allow us to issue various types of securities including common stock, preferred stock, debt securities and warrants up to an aggregate amount of $100 million. "We're anticipating the need to raise additional capital in the near future to support our continued growth and expansion plan," said Madonna. "The shelf registration statement will provide us with the financial flexibility necessary to complete that process when the time comes."  

During the third quarter, the Company completed the acquisition of Oak Mortgage Company, a residential mortgage lending company based in Marlton, NJ.  The acquisition closed on July 28, 2016 and the integration into the Bank's operation has gone exceptionally well.

The Company held a grand opening celebration for its newest store in Moorestown, NJ in September and welcomed new fans throughout the month. Construction also began on a second site in Cherry Hill, NJ which is scheduled to be completed in the first quarter of 2017.  Additional locations planned for Medford, Sicklerville and Gloucester Township, New Jersey and Fairless Hills and Feasterville, Pennsylvania are currently in various stages of development.

Highlights for the Period Ended September 30, 2016

• Net income increased by 130% to $1.3 million, or $0.03 per diluted share, in the third quarter of 2016 compared to $582 thousand, or $0.02 per diluted share, in the third quarter of 2015. The Company continues to open new stores and increase net income despite the additional costs associated with the expansion strategy. The acquisition of Oak Mortgage has also contributed to improved earnings.
• A new store was opened in Moorestown, NJ during the third quarter bringing the total store count to nineteen. Another site now under construction in Cherry Hill, NJ is scheduled to be completed in early 2017. 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 in 2014 are currently growing deposits at an average rate of $41 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 $345 million, or 28%, to $1.6 billion as of September 30, 2016 compared to $1.2 billion as of September 30, 2015.
• Total assets increased by $354 million, or 26%, to $1.7 billion as of September 30, 2016 compared to $1.4 billion as of September 30, 2015.
• Total loans grew $101 million, or 12%, to $946 million as of September 30, 2016 compared to $845 million at September 30, 2015.
• SBA lending continued to be an important part of the Company's lending strategy. More than $19 million in new SBA loans were originated during the three month period ended September 30, 2016. Our team is currently ranked as the #1 SBA lender in the New Jersey and southeastern Pennsylvania market based on the dollar volume of loan originations.
• The Company's Total Risk-Based Capital ratio was 12.00% and Tier I Leverage Ratio was 8.14% at September 30, 2016.
• Tangible book value per share was $3.16 as of September 30, 2016. This amount excludes approximately $0.34 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 $1.3 million, or $0.03 per diluted share, for the three month period ended September 30, 2016, compared to net income of $582 thousand, or $0.02 per diluted share, for the three month period ended September 30, 2015. Net income for the nine month period ended September 30, 2016 was $3.4 million, or $0.09 per diluted share, compared to net income of $1.6 million, or $0.04 per diluted share, for the nine months ended September 30, 2015.

Total revenue increased by $5.6 million, or 48%, to $17.2 million for the three month period ended September 30, 2016 compared to $11.6 million for the three month period ended September 30, 2015.  This increase was primarily driven by the addition of revenue from the recently acquired residential mortgage division along with strong growth in interest-earning assets over the last twelve months driven by the Company's expansion program.

Non-interest income increased to $5.4 million for the three month period ended September 30, 2016 compared to $1.6 million for the three month period ended September 30, 2015.  This increase was primarily due to an increase in gains on the sale of SBA loans, gains on the sale of residential mortgage loans, and an increase in service fees on deposit accounts.

Non-interest expenses increased by $4.3 million, or 39%, to $15.3 million during the three month period ended September 30, 2016 compared to $11.0 million during the three months ended September 30, 2015. This increase was mainly caused by the addition of expenses related to the residential mortgage operations. Salaries and employee benefits were also higher at the Bank 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 $353.6 million, or 26%, as of September 30, 2016 when compared to September 30, 2015.  Deposits grew by $344.7 million to $1.6 billion as of September 30, 2016 compared to $1.2 billion as of September 30, 2015. The number of deposit accounts has grown by 42% during the past twelve months. The strong growth in assets, loans and deposits has been driven by the Company's addition of new stores and the 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 $1.6 billion at September 30, 2016 compared to $1.2 billion at September 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 $100.2 million, or 12%, to $945.5 million at September 30, 2016 compared to $845.4 million at September 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 commercial and industrial, owner occupied real estate, consumer 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 1.72% at September 30, 2016, compared to 2.10% as of September 30, 2015.  The decrease in non-performing assets to total assets on a linked quarter basis was primarily driven by sales of OREO properties recorded in the third quarter of 2016.

Capital

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

Total shareholders' equity increased to $119.7 million at September 30, 2016 compared to $114.5 million at September 30, 2015.  Tangible book value per share increased to $3.16 at September 30, 2016 compared to $3.03 per share at September 30, 2015.

Five Year Strategic Goals

For the first time, the Company has also announced its five year goals extending through the year 2021.

• Increasing store count to 50 +/-
• Average annual deposit growth of $18 million per store
• Net interest margin plus fees above 4.00%

Achieving these goals would result in deposits in excess of $4.5 billion and loans exceeding $2.5 billion by the end of the year in 2021.

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 nineteen stores located in Abington, Bala Cynwyd, Plymouth Meeting, Media, Wynnewood and Philadelphia, Pennsylvania and Haddonfield, Cherry Hill, Voorhees, Glassboro, Marlton, Berlin, Washington Township and Moorestown, 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.

A registration statement relating to the securities listed in the shelf registration statement referred to above has been filed with the SEC, but has not yet become effective.  These securities may not be sold, nor may offers to buy be accepted prior to the time the registration statement becomes effective.  This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state.

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, including those related to our Five Year Strategic Goals, 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.