YTD Net Income Increases by 398% to $25 Million and Deposits Grow 29%

PHILADELPHIA, Jan. 20, 2022 (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, 2021.

Q4-2021 Financial Highlights

• Net income for the twelve-month period ended December 31, 2021 increased by 398% to $25.2 million, or $0.33 per diluted share, compared to net income of $5.1 million, or $0.07 per diluted share, for the twelve-month period ended December 31, 2020.
• Net income for the quarter ended December 31, 2021 increased to $6.1 million, or $0.08 per diluted share, compared to net income of $4.1 million, or $0.05 per diluted share, for the quarter ended December 31, 2020.
• The improvement in earnings was driven by strong growth in revenue while our focus on cost control initiatives continues to limit expense growth. During the twelve-month period ended December 31, 2021 total revenue increased 26% and non-interest expense increased by only 4%.
• Total deposits increased by $1.2 billion, or 29%, to $5.2 billion as of December 31, 2021 compared to $4.0 billion as of December 31, 2020. New stores opened since the beginning of the “Power of Redis Back” expansion campaign 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 $37 million per store.
• We have achieved this significant growth in deposits while driving down the overall cost of funds for the Bank. The cost of funds decreased to 0.35% during the fourth quarter of 2021 compared to 0.54% in the fourth quarter of 2020.
• Excluding the impact of PPP loans, total loans grew $372 million, or 18%, to $2.4 billion as of December 31, 2021 compared to $2.0 billion at December 31, 2020.
• Asset quality remains strong as the ratio of non-performing assets to total assets declined to 0.24% as of December 31, 2021 compared to 0.28% as of December 31, 2020. No loan customers were deferring loan payments at the end of the fourth quarter. All customers that were granted deferrals to assist during the height of the COVID pandemic have resumed contractual payments.

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

“I am pleased to report Republic Bank’s fourth quarter financial results, which brings to a close a very successful year for ‘The Power of Redis Back’ expansion campaign. We not only achieved asset, loan and deposit growth far above industry standards, but we also saw a dramatic improvement in profitability during the current year. Earnings improved by nearly 400% year over year as a result of our efforts to drive revenue growth at a greater rate than expense growth.”

“As we look forward to the year ahead, we are very excited about the opportunities that we see unfolding in 2022 that will enable us to continue our successful growth strategy. We also plan to deliver significant enhancements to our digital and technology platforms in 2022. We remain committed to delivering the best experience to our customers across all delivery channels which includes in-store, online, mobile and by phone.”

“On our previous earnings call we mentioned the possibility of completing a capital raise during the fourth quarter of 2021 to support our growth and expansion strategy. As the quarter progressed, we made the determination that it would be in the best interest of the Company and our shareholders to execute a capital raise at a time that would be most optimal from a stock price perspective. We will continue to monitor market conditions and alternative strategies as we enter 2022.”

Financial Summary for the Period Ended December 31, 2021

The changes in the balance sheet as of December 31, 2021 were impacted by the effect of the PPP loan program. A portion of the changes in cash balances, outstanding loans, and outside borrowings were short-term in nature and declined as the borrowers that received PPP loans submitted applications for forgiveness to the SBA. A summary of the balance sheet presented with and without the impact of the PPP loan program for the period ended December 31, 2021 can be found in the following table:

*Note: See disclosure related to non-GAAP financial measures at the end of this release.

A summary of the income statement for the period ended December 31, 2021 can be found in the following table:

Additional Financial Highlights

• Total assets increased by $561 million, or 11%, to $5.6 billion as of December 31, 2021 compared to $5.1 billion as of December 31, 2020. Excluding the short-term impact of the PPP loan program total assets increased by $1.1 billion, or 24%, year over year.
• The net interest margin increased by 17 basis points to 2.68% for the twelve months ended December 31, 2021 compared to 2.51% for the twelve months ended December 31, 2020. This increase was primarily driven by a decline in the cost of funds during 2021.
• The cost of funds declined to 0.40% for the twelve-month period ended December 31, 2021 compared to 0.64% for the twelve month period ended December 31, 2020. This decrease was driven by the lower cost of deposits which has occurred while deposit balances have grown by $1.2 billion year over year.
• We have thirty-three convenient store locations open today. We recently opened our newest store in Ocean City, NJ on January 15, 2022. Construction is also ongoing on sites in Wayne, PA and Broomall, PA which we expect will also open during 2022.
• Our residential mortgage division, Oak Mortgage, is serving the home financing needs of customers throughout its footprint. The Oak Mortgage team originated more than $579.8 million in mortgage loans over the last twelve months which continues to be near record highs for the Oak Mortgage Team.
• Total Risk-Based Capital ratio was 11.76% and Tier I Leverage Ratio was 6.06% at December 31, 2021.
• Book value per common share increased to $4.67 as of December 31, 2021 compared to $4.41 as of December 31, 2020.

Income Statement

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

Net income increased to $6.1 million, or $0.08 per share, for the three-month period ended December 31, 2021, compared to net income of $4.1 million, or $0.05 per share, for the three-month period ended December 31, 2020.

We continue to demonstrate progress with operating leverage, which drives improved earnings. Total revenue increased by 17% while non-interest expense increased by 10% during the fourth quarter of 2021, compared to the fourth quarter of 2020.

Net interest income increased to $35.7 million during the fourth quarter of 2021 compared to $25.7 million during the fourth quarter of 2020. The increase in interest income is attributable to the growth in interest-earning assets over the last twelve months driven by the “Power of Redis Back” expansion strategy. We also continue to amortize the fees associated with the origination of PPP loans which is reported as interest income and is recognized over the life of those loans. Approximately $5.2 million in origination fees related to the PPP loan program were recognized as income during the fourth quarter of 2021 compared to $3.0 million recognized during the fourth quarter of 2020.

The net interest margin for the three-month period ended December 31, 2021 increased by 20 basis points to 2.63% compared to 2.43% for the three month period ended December 31, 2020. The net interest margin increased by 6 basis points on a linked quarter basis primarily as a result of an increase in the yield on interest earning assets during the fourth quarter of 2021.

The provision for loan losses increased to $1.9 million during the fourth quarter of 2021 compared to $1.4 million during the fourth quarter of 2020. The increase was primarily driven by a specific reserve required for a single loan relationship which we received updated information on during the current period.

Non-interest income declined to $7.5 million during the quarter ended December 31, 2021, compared to $11.2 million during the quarter ended December 31, 2020. The decrease is primarily attributable to the decrease in mortgage banking income year over year as a result of a decline in residential mortgage loan originations driven by lower refinancing activity in the current period.

Non-interest expense increased by 10%, to $32.9 million during the quarter ended December 31, 2021, compared to $29.9 million during the quarter ended December 31, 2020. The year over year growth was primarily driven by an increase in salary and benefit costs and data processing expense as a result of the overall growth of the Bank.

A dividend on the outstanding shares of preferred stock in the amount of $0.9 million was declared and paid during the fourth quarter of 2021. The preferred stock was initially issued in August 2020 and pays a dividend at an annual rate of 7.00%.

Net income increased by 398% to $25.2 million, or $0.33 per share, for the twelve-month period ended December 31, 2021, compared to net income of $5.1 million, or $0.07 per share, for the twelve-month period ended December 31, 2020. Improved operating leverage also drove better earnings during the twelve-month period ended December 31, 2021, as total revenue increased by 26% while non-interest expense increased by only 4%, during the full year in 2021 compared to 2020.

Net interest income increased to $129.2 million during the twelve-month period ended December 31, 2021 compared to $91.8 million during the twelve-month period ended December 31, 2020. The increase in interest income is attributable to the growth in interest-earning assets over the last twelve months driven by the “Power of Redis Back” expansion strategy. We also continue to amortize the fees associated with the origination of PPP loans which is reported as interest income and is recognized over the life of the loans. The net interest margin for the twelve-month period ended December 31, 2021 increased by 17 basis points to 2.68% compared to 2.51% for the twelve-month period ended December 31, 2020. The improvement in the margin was primarily a result of a decline in the cost of funds to 0.40% during 2021 compared to 0.64% during 2020.

Non-interest income decreased by $3.5 million, or 10%, to $32.7 million for the twelve-month period ended December 31, 2021, compared to $36.2 million for the twelve-month period ended December 31, 2020. Growth in service fees and ATM/debit card revenue was offset by decreases in mortgage banking income and gains on the sale of investment securities during 2021.

Non-interest expense increased by 4%, to $122.5 million during the twelve months ended December 31, 2021, compared to $117.4 million during the twelve months ended December 31, 2020. The year over year growth was driven by increases in salary and benefit costs, occupancy and equipment and data processing expense as a result of the growth and expansion of the Bank.

Deposits

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

Deposits increased by $1.2 billion, or 29%, to $5.2 billion at December 31, 2021 compared to $4.0 billion at December 31, 2020. This increase can be attributed to our strategy to expand the reach of our banking model which focuses on enhancing the total customer experience including in-store, on-line and mobile banking options. High levels of customer service and convenience across all delivery channels drives the gathering of low-cost, core deposits. We recognized strong growth in demand deposit balances, including an increase in non-interest bearing demand deposits of 39%, year over year as a result of the successful execution of our strategy. The increase in demand deposits over the last twelve months is also a result of our participation in the PPP loan program. Many of the PPP loans originated were for small businesses that were previously not customers of Republic Bank. Many of these small businesses have chosen to move their primary banking relationship to Republic as a result of the outstanding level of service and cooperation they experienced during the PPP loan process. Commercial deposits were 44% of total deposits as of December 31, 2021.

Lending

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

Total loans decreased by $138 million, or 5%, at December 31, 2021 when compared to December 31, 2020. Loans originated through the PPP loan program continue to be repaid or forgiven by the SBA which offsets the growth experienced in other categories in the portfolio. Excluding the impact of the PPP loans, gross loans increased by $371 million, or 18%, to $2.4 billion at December 31, 2021 compared to $2.0 billion at December 31, 2020. We continue to see results from the continued success with our relationship banking model which has driven a steady flow in quality loan demand. We experienced strongest growth in the commercial and industrial, owner-occupied real estate, commercial real estate and residential mortgage categories over the last twelve months.

Asset Quality

The Company’s asset quality ratios are highlighted below:

*Note: PPP loans excluded when calculating % of total loan balances. See disclosure related to non-GAAP financial measures at the end of this release.

The percentage of non-performing assets to total assets decreased to 0.24% at December 31, 2021, compared to 0.28% at December 31, 2020. The allowance for loan losses as a percentage of total loans excluding PPP loans increased to 0.79% as of December 31, 2021 compared to 0.64% as of December 31, 2020. The allowance for loan losses as a percentage of non-performing loans increased to 147% at December 31, 2021 compared to 101% at December 31, 2020 as a result of the increase in the allowance for loan losses over the last 12 months.

Capital

The Company’s capital ratios at December 31, 2021 were as follows:

*Note: Assumes conversion of all outstanding shares of convertible preferred stock

Total shareholders’ equity increased to $323 million at December 31, 2021 compared to $308 million at December 31, 2020. The increase was primarily due to growth in retained earnings driven by net income over the last twelve months. Book value per common share increased to $4.67 at December 31, 2021 compared to $4.41 per share at December 31, 2020.

Non-GAAP Financial Measures

In addition to evaluating the Company’s financial results of operations in accordance with accounting principles generally accepted in the U.S. (“GAAP”), management periodically supplements its evaluation with an analysis of certain non-GAAP financial measures that are intended to provide the reader with additional perspectives on operating results, financial conditions, and performance trends, while facilitating comparisons with the performance of other financial institutions. Non-GAAP financial measures are not a substitute for GAAP measures, rather, they should be read and used in conjunction with the Company’s GAAP financial information.

The Company believes that disclosing non-GAAP financial measures is both useful internally and is expected by our investors and analysts in order to better understand the overall performance of the Company. Other companies may calculate and define their non-GAAP financial measures and supplemental data differently.

Analyst and Investor Call

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

About Republic First Bancorp, Inc.

Republic First Bancorp, Inc. is the holding company for Republic First Bank which does business under the name Republic Bank. Republic Bank 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 thirty-three stores located in Greater Philadelphia, Southern New Jersey, and New York City. Republic Bank stores are open 7 days a week, 361 days a year, with extended lobby and drive-thru hours providing customers with some of 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; the effects of health emergencies, including the spread of infectious diseases and pandemics; 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, 2020 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.