UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of Earliest Event Reported): October 25, 2018

 

REPUBLIC FIRST BANCORP, INC.
(Exact name of registrant as specified in its charter)

 

 

Registrant's telephone number, including area code:  (215) 735-4422

 

N/A
Former name, former address, and former fiscal year, if changed since last report

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

[ ]	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

[ ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

[ ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

[ ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Item 2.02 Results of Operations and Financial Condition.

 

On October 25, 2018, Republic First Bancorp, Inc. issued a press release announcing its results of operations and financial condition at and for the period ended September 30, 2018.  The full text of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

The information in this report, including the exhibit attached hereto, is furnished solely pursuant to Item 2.02 of this Form 8-K.  Consequently, it is not deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that section.  It may only be incorporated by reference in another filing under the Exchange Act or Securities Act of 1933 if such subsequent filing specifically references this Form 8-K.

 

Item 9.01

Financial Statements and Exhibits.

 

 

99.1

Press Release issued on October 25, 2018 regarding financial results for the period ended September 30, 2018.

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

EXHIBIT INDEX

REPUBLIC FIRST BANCORP, INC. REPORTS THIRD QUARTER FINANCIAL RESULTS

DEPOSITS GROW 27% AND LOANS GROW 26%

Philadelphia, PA, October 25, 2018 (GlobeNewswire) – Republic First Bancorp, Inc. (NASDAQ: FRBK), the holding company for Republic Bank, today announced its financial results for the period ended September 30, 2018.

·

Total deposits increased by $515 million, or 27%, to $2.4 billion as of September 30, 2018 compared to $1.9 billion as of September 30, 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 $29 million per year, while the average deposit growth for all stores over the last twelve months was approximately $22 million per store.

·

Total loans grew $283 million, or 26%, to $1.4 billion as of September 30, 2018 compared to $1.1 billion at September 30, 2017.

·

Total revenue grew by 24% during the nine month period ended September 30, 2018 while non-interest expense increased by 15% when compared to the first nine months of 2017. We continue to open new stores and increase profitability despite the additional costs associated with the expansion strategy.

·

Income before tax increased by 30% to $8.0 million for the nine months ended September 30, 2018 compared to $6.1 million for the nine months ended September 30, 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:

"Since the launch of the 'Power of Red is Back' growth campaign in 2014 we've opened thirteen new store locations using our distinctive glass prototype building and total assets have nearly tripled in size. Deposits have grown at an average annual rate of 25% and loans have grown at an average rate of 17% during this time. We have also demonstrated the ability to steadily improve profitability despite the significant investments being made to execute the growth plan. It is our goal to deliver the best banking experience through every channel…..in-store, online, and mobile options…..turning Customers into FANS. Our results to this point have demonstrated the success we are capable of achieving."

 

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

"During the third quarter we opened our newest store in Gloucester Township, NJ which is off to a tremendous start. We also have four additional stores now under construction in Evesboro, Lumberton and Somers Point, NJ and Feasterville, PA. These sites combined with the planned expansion into New York City beginning in 2019 put us in a perfect position to capitalize on opportunities that arise as our competition continues to alienate customers with declining levels of service, higher fees and fewer locations."

A summary of the financial results for the period ended September 30, 2018 can be found in the following table:

* Note:

Net income for the period ended 9/30/18 reflects an increased provision for federal and state income taxes which did not have the same impact on 2017 results due to an adjustment to the DTA valuation allowance recorded by the Company.

·

Total assets increased by $516 million, or 24%, to $2.7 billion as of September 30, 2018 compared to $2.1 billion as of September 30, 2017.

·

Demand deposits represent the fastest growing segment of the Company's deposit base. These deposits grew by $423 million to $1.6 billion over the last 12 months which includes growth of 28% in non-interest bearing demand deposit balances.

·

Net income before tax grew by 30% to $8.0 million for the nine months ended September 30, 2018 compared to $6.1 million for the nine months ended September 30, 2017.

 

·

We have twenty-three convenient store locations open today. During the third quarter of 2018 we opened a new store in Gloucester Township, NJ. Construction is underway on sites in Evesboro, Lumberton, and Somers Point, NJ and Feasterville, PA. There are also multiple sites in various stages of development for future store locations.

·

Expansion into New York City is expected to begin during 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 0.76% as of September 30, 2018 compared to 1.07% as of September 30, 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 $280 million in loans during the nine month period ended September 30, 2018.

·

Meeting the needs of small business customers continued to be an important part of the Company's lending strategy.  More than $15 million in new SBA loans were originated during the three month period ended September 30, 2018. Republic Bank is currently ranked as the #2 SBA lender in New Jersey based on the dollar volume of loan originations.

·

The Company's Total Risk-Based Capital ratio was 15.39% and Tier I Leverage Ratio was 9.75% at September 30, 2018.

·

Book value per common share increased to $4.01 as of September 30, 2018 compared to $3.95 as of September 30, 2017.

The major components of the income statement are as follows (dollars in thousands, except per share data):

The Company reported net income of $2.3 million, or $0.04 per share, for both three month periods ended September 30, 2018 and September 30, 2017.  Net income for the nine month period ended September 30, 2018 was $6.5 million, or $0.11 per share, compared to net income of $6.2 million, or $0.11 per share, for the nine months ended September 30, 2017.

During 2017, the Company recorded a minimal provision for federal and state income taxes due to the deferred tax asset valuation allowance recorded on the balance sheet. Income Before Taxes grew 27% to $2.9 million during the third quarter of 2018 and grew 30% to $8.0 million on a year to date basis in 2018. 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 $5.0 million, or 21%, to $28.7 million for the three month period ended September 30, 2018, compared to $23.7 million for the three month period ended September 30, 2017.  Total revenue for the nine month period ended September 30, 2018 increased by $15.7 million, or 24%, to $82.2 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 (21%) and nine month period (24%) ended September 30, 2018 exceeded the growth in non-interest expense for the three month period (9%) and the nine month period (15%) ended September 30, 2018 which demonstrates the effect that our growth strategy will have on the profitability of the Bank.

Non-interest expenses increased by 9%, to $20.8 million during the quarter ended September 30, 2018 compared to $19.2 million during the quarter ended September 30, 2017. Non-interest expenses increased by 15%, to $61.7 million during the nine month period ended September 30, 2018 compared to $53.7 million during the nine months ended September 30, 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 $622 thousand for the three month period ended September 30, 2018 compared to a provision for income taxes in the amount of $4 thousand for the three month period ended September 30, 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.

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

Total assets increased by $515.6 million, or 24%, as of September 30, 2018 when compared to September 30, 2017.  Deposits grew by $515.0 million to $2.4 billion as of September 30, 2018 compared to $1.9 billion as of September 30, 2017. The number of deposit accounts has grown by 32% 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 by type of account are as follows (dollars in thousands):

Deposits increased to $2.4 billion at September 30, 2018 compared to $1.9 billion at September 30, 2017 as the Company moves forward with its growth strategy to increase the number of stores and expand 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 strongest growth in demand deposit balances, including an increase in non-interest bearing demand deposits of 28%, year over year as a result of the successful execution of its strategy.

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

Gross loans increased by $283 million, or 26%, to $1.4 billion at September 30, 2018 compared to $1.1 billion at September 30, 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.

The Company's asset quality ratios are highlighted below:

The percentage of non-performing assets to total assets decreased to 0.76% at September 30, 2018, compared to 1.07% at September 30, 2017.  The ratio of non-performing assets to capital and reserves decreased to 8% at September 30, 2018 compared to 10% at September 30, 2017 primarily as a result of decreases in non-performing assets over the last 12 months.

 

 

 

 

The Company's capital ratios at September 30, 2018 were as follows:

Total shareholders' equity increased to $236 million at September 30, 2018 compared to $225 million at September 30, 2017. Book value per common share increased to $4.01 at September 30, 2018 compared to $3.95 per share at September 30, 2017.

An analyst and investor call will be held on the following date and time:

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-three 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.

 

 

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

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