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Republic First Bancorp, Inc. Reports First Quarter Financial Results; Improvement In Earnings Continues And Deposits Grow 48%

Published: 2021-04-22 12:00:00 ET
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PHILADELPHIA, April 22, 2021 (GLOBE NEWSWIRE) -- Republic First Bancorp, Inc. (NASDAQ: FRBK), the holding company for Republic Bank, today announced its financial results for the period ended March 31, 2021.

Q1-2021 Financial Highlights

  • Net income for the quarter ended March 31, 2021 increased by 72% to $7.1 million, or $0.09 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 dramatic growth in revenue while the Company’s focus on cost control initiatives limited expense growth. During the first quarter of 2021 total revenue increased 53% and non-interest expense increased by only 8% compared to the first quarter of 2020. Core earnings improved for the fifth consecutive quarter as positive momentum continues to build.
  • Total deposits increased by $1.4 billion, or 48%, to $4.4 billion as of March 31, 2021 compared to $2.9 billion as of March 31, 2020. Non-interest bearing demand deposits represent the fastest growing segment of deposits on a percentage basis, increasing by $568 million, or 84%, as of March 31, 2021.
  • New stores opened since the beginning of the “Power of Red is Back” expansion campaign are currently growing deposits at an average rate of $47 million per year, while the average deposit growth for all stores over the last twelve months was approximately $45 million per store.
  • Total loans grew $824 million, or 44%, to $2.7 billion as of March 31, 2021 compared to $1.9 billion at March 31, 2020. This growth includes more than $600 million in PPP loans. Excluding the impact of the PPP loan program loans grew $184 million, or 10%, year over year.
  • Asset quality remains strong as the ratio of non-performing assets to total assets declined to 0.27% as of March 31, 2021. Only three loan customers were deferring loan payments at the end of the first quarter. These deferrals relate to approximately $2.7 million of outstanding loan balances which is approximately 0.1% of total loans.

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

“Momentum continues to build as we enter into 2021. Earnings improved both quarter to quarter and year over year as we maintain our focus on cost control initiatives while increasing revenue. Deposits continue to increase at exceptional levels. Our stores are currently growing deposits at an average rate of $45 million per year which is far beyond industry standards. During the first quarter of 2021 we also maintained our relentless commitment to support the needs of small businesses throughout our footprint by processing applications for the second round of the Paycheck Protection Program.”

“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. In recognition of our commitment to FANatical customer service we were named America’s #1 Bank for Service as a result of a survey conducted by Forbes during 2020. Every day we work to demonstrate to our current and future FANS that that title has been truly earned.”

Financial Summary for the Period Ended March 31, 2021

The changes in the balance sheet as of March 31, 2021 were significantly impacted by the effect of the PPP loan program. A portion of the increase in cash balances, outstanding loans, and outside 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 March 31, 2021 can be found in the following table:

            
   Excluding        
   PPP Loan   YOY Growth YOY Growth
($ in millions)Actual Program Actual (Including PPP) (Excluding PPP)
 03/31/21 03/31/21 03/31/20 ($) (%) ($) (%)
Assets$5,396 $4,785 $3,300 $2,096 64% $1,485 45%
Loans 2,706  2,066  1,882  824 44%  184 10%
Deposits 4,363  4,363  2,944  1,419 48%  1,419 48%
PPPLF Borrowings 611 – –  611 100% – –%

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

         
($ in millions, except per QTD QTD   QTD  
share data) 03/31/21 12/31/20 Change 03/31/20 Change
Total Revenue $41.7 $37.0 13% $27.3  53%
Non-Interest Expense  29.3  29.9 (2%)  27.3  8%
Income (Loss) Before Tax  9.4  5.7 66%  (0.9) 1,114%
Net Income (Loss)  7.1  4.1 72%  (0.6) 1,282%
Earnings per share (diluted) $0.09 $0.05 80% $(0.01) 1,000%

Quarterly Earnings Trend

Core earnings improved for a fifth consecutive quarter. Earnings in the prior year were impacted by a one-time goodwill impairment charge which was recorded in the third quarter of 2020. A summary of core earnings over the previous five quarters excluding the goodwill impairment charge can be found in the following table:

           
($ in millions) 1Q20 2Q20 3Q20 4Q20 1Q21
Total Revenue $27.3  $30.9 $33.0 $36.9 $41.7
Provision for Loan Losses  0.9   1.0  0.9  1.4  3.0
Non-Interest Expense*  27.3   26.7  28.6  29.9  29.3
Core Earnings Before Tax*  (0.9)  3.2  3.5  5.6  9.4
Core Earnings After Tax*  (0.6)  2.5  2.8  4.1  7.1

*Note: Results for 2020 exclude a one-time goodwill impairment charge recorded in Q3-2020. See disclosure related to non-GAAP financial measures at the end of this release.

PPP Loan Program

The Paycheck Protection Program (“PPP”) included in the CARES Act approved during the first quarter of 2020 authorized financial institutions to make loans to companies that have been impacted by the devastating economic effects of the 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 our community as well. The Economic Aid Act approved by Congress during the fourth quarter of 2020 provided additional funding for a second round of PPP loans.

  • During 2020 we originated more than $680 million in the first round of the PPP loan program related to nearly 5,000 small businesses.
  • In the first quarter of 2021 we have originated nearly $240 million in new PPP loans under the second round of funding that was approved in December 2020. We have received approval from the SBA on more than 2,100 applications in this second round.
  • As of the date of this release we will have assisted small businesses throughout our footprint in obtaining nearly $1 billion in PPP loans which has provided crucial funding required to continue operations during this incredibly challenging economic environment brought on by the COVID-19 pandemic.
  • Origination fees paid by the SBA to Republic are being recognized as income over the life of the loans. Approximately $16 million in fees have been deferred and will recognized in future periods.
  • More than 50% of the applications received during the first round of PPP were from businesses that were not existing customers of Republic Bank, many of which have switched their primary banking relationship to Republic.
  • As a percentage of existing loan balances as of March 31, 2020, the $680 million in PPP loans originated amounted to 36% making Republic one of the top PPP lenders in the entire country.
  • We are now assisting all of our PPP loan customers with the application process for forgiveness through the SBA for loans received in the first round of the program.

Loss Mitigation and Loan Portfolio Analysis

Our emphasis on asset quality with every loan that we underwrite has demonstrated positive results in this challenging economic environment. Our commercial lending team has maintained regular 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. During 2020 we granted payment deferrals for customers that made a request and had an immediate need for assistance.

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.

Loan balances with deferred payments have declined to $2.7 million, which represents approximately 0.1% of total loans, as of March 31, 2021. Loan deferrals peaked at $444 million, or 24% of total loans during the second quarter of 2020. Only three loan customers were deferring loan payments as of March 31, 2021.

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 March 31, 2021:

  03/31/21 05/31/20
($ in millions) Deferred Balances % of Total Loans* Deferred Balances % of Total Loans*
         
Deferral of Principal Only $3  -% $176  9%
Deferral of Principal and Interest  -  -%  268  14%
         
Total Deferral Balances $3