10-Q 1 frbk20221222_10q.htm FORM 10-Q frbk20221222_10q.htm
0000834285 REPUBLIC FIRST BANCORP INC false --12-31 Q3 2022 1,267,546 1,647,360 25,255 18,964 - - 0.01 0.01 25.00 25.00 10,000,000 10,000,000 1,471,000 2,000,000 1,471,000 2,000,000 0.01 0.01 100,000,000 100,000,000 64,315,909 59,471,998 63,787,064 58,943,153 503,408 503,408 25,437 25,437 25,245 60,669 4,158 191,991 5,717 46 2 46 2 178 499 644 1,998 104 31,000 529,000 4,408,324 176,579 259,008 28,000 54,375 2 2 1,322 842 1,039 1,382 190 1,109 642 11.25 0.02 11.23 11.61 0.02 11.59 10.54 0.04 10.50 10.90 0.04 10.86 10.54 0.04 10.50 9.45 0.04 9.41 5.83 0.02 5.81 6.04 0.02 6.02 10.81 0.00 10.81 10.97 0.00 10.97 10.24 0.06 10.18 10.40 0.05 10.35 10.24 0.06 10.18 9.03 0.05 8.98 5.83 0.03 5.80 5.94 0.03 5.91 1 4 6,627 9,173 0 0 0 0 0 0 0 0 0 0 0 0 0 17 12,000 0 0 0 0 0 0 0 0 no 0 0 1 0 9.35 14.85 12.25 13 16 14 12 34 24 17 3.42 13.93 10.00 11 27 16 12 19 13 0 0 10 10 20 0 0 5 10 44 17 44 5 10 7 Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. Provision to roll forward the allowance for credit losses excludes a provision of $99,000 for off-balance sheet commitments. The ACL on off-balance sheet commitments as of September 30, 2022 was $604,000. Provision to roll forward the allowance for credit losses excludes a provision of $7,000 for off-balance sheet commitments. The ACL on off-balance sheet commitments as of September 30, 2022 was $604,000. The valuation technique is determined based on estimated insurance proceeds and litigation. Dividends per share of $0.44 and $0.44 were declared and paid on preferred stock for the three months ended June 30, 2022 and June 30, 2021 All amounts are net of tax. Amounts in parentheses indicate reductions to other comprehensive income. Fair value is generally determined through independent appraisals of the underlying collateral, which include Level 3 inputs that are not identifiable. The range and weighted average of qualitative factors such as economic conditions and estimated liquidation expenses are presented as a percent of the appraised value. Dividends per share of $0.88 and $0.88 were declared and paid on preferred stock for the six months ended June 30, 2022 and June 30, 2021 Equity securities consist of investments in non-cumulative preferred stock. 00008342852022-01-012022-09-30 xbrli:shares 00008342852023-03-13 thunderdome:item iso4217:USD 00008342852022-09-30 00008342852021-12-31 iso4217:USDxbrli:shares 00008342852022-07-012022-09-30 00008342852021-07-012021-09-30 00008342852021-01-012021-09-30 0000834285frbk:LoanAndServicingFeesMember2022-07-012022-09-30 0000834285frbk:LoanAndServicingFeesMember2021-07-012021-09-30 0000834285frbk:LoanAndServicingFeesMember2022-01-012022-09-30 0000834285frbk:LoanAndServicingFeesMember2021-01-012021-09-30 0000834285us-gaap:MortgageBankingMember2022-07-012022-09-30 0000834285us-gaap:MortgageBankingMember2021-07-012021-09-30 0000834285us-gaap:MortgageBankingMember2022-01-012022-09-30 0000834285us-gaap:MortgageBankingMember2021-01-012021-09-30 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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended September 30, 2022.

 

or

 

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

 

For the transition period from ____ to ____.

 

Commission File Number: 000-17007

Republic First Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Pennsylvania

23-2486815

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

  

50 South 16th Street, Philadelphia, Pennsylvania

19102

(Address of principal executive offices)

(Zip code)

215-735-4422

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock

   

FRBK

 

Nasdaq Global Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐

Accelerated filer

Non-Accelerated filer ☐Smaller reporting company

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes No ☒

 

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date.

Common Stock, $0.01 per share

63,863,592

Title of Class

Number of Shares Outstanding as of March 13, 2023

 

 

 

 

 

REPUBLIC FIRST BANCORP, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

     

Part I: Financial Information

Page

     

Item 1.

Financial Statements

 
 

Consolidated balance sheets as of September 30, 2022 (unaudited) and December 31, 2021

3

 

Consolidated statements of income for the three and nine months ended September 30, 2022 and 2021 (unaudited)

4

  Consolidated statements of comprehensive (loss) income for the three and nine months ended September 30, 2022 and 2021 (unaudited) 5
 

Consolidated statements of cash flows for the nine months ended September 30, 2022 and 2021 (unaudited)

6

 

Consolidated statements of changes in shareholders’ equity for the three and nine months ended September 30, 2022 and 2021 (unaudited)

7

 

Notes to consolidated financial statements (unaudited)

8

     

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

54

     

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

74

     

Item 4.

Controls and Procedures

74

     

Part II: Other Information

 
     

Item 1.

Legal Proceedings

75

     

Item 1A.

Risk Factors

76

     

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

77

     

Item 3.

Defaults Upon Senior Securities

78

     

Item 4.

Mine Safety Disclosures

78

     

Item 5.

Other Information

78

     

Item 6.

Exhibits

79

     

Signatures

81

 

 

 
 

Republic First Bancorp, Inc. and Subsidiaries

Consolidated Balance Sheets

September 30, 2022 and December 31, 2021

(Dollars in thousands, except per share data)

 

  

September 30,

2022

(unaudited)

  

December 31,

2021

 

 

ASSETS

        

Cash and due from banks

 $15,670  $14,072 

Interest bearing deposits with banks

  36,782   104,812 

Cash and cash equivalents

  52,452   118,884 

Investment securities available for sale, at fair value

  999,521   1,075,366 

Investment securities held to maturity, at amortized cost (fair value of $1,267,546 and $1,647,360, respectively)

  1,562,376   1,660,292 

Equity securities

  6,627   9,173 

Restricted stock, at cost

  21,907   3,510 

Mortgage loans held for sale, at fair value

  6,038   8,538 

Other loans held for sale

  4,785   5,224 

Loans receivable (net of allowance for credit losses of $25,255 and $18,964, respectively)

  3,035,597   2,488,401 

Premises and equipment, net

  130,902   127,440 

Other real estate owned, net

  876   360 

Accrued interest receivable

  18,783   15,073 

Operating lease right-of-use asset

  73,135   75,627 

Other assets

  86,255   38,768 

Total Assets

 $5,999,254  $5,626,656 

LIABILITIES AND SHAREHOLDERS EQUITY

        

Liabilities

        

Deposits

        

Demand – non-interest bearing

 $1,418,060  $1,404,360 

Demand – interest bearing

  2,497,761   2,283,779 

Money market and savings

  1,217,580   1,305,096 

Time deposits

  118,183   197,945 

Total Deposits

  5,251,584   5,191,180 

Other borrowings

  442,500   - 

Accrued interest payable

  401   550 

Other liabilities

  24,409   17,636 

Operating lease liability

  79,620   81,770 

Subordinated debt

  11,282   11,278 

Total Liabilities

  5,809,796   5,302,414 
         

Commitments and contingencies (see note 4)

  -   - 
         

Shareholders Equity

        

Preferred stock, par value $0.01 per share; liquidation preference $25.00 per share; 10,000,000 shares authorized; shares issued 1,471,000 as of September 30, 2022 and 2,000,000 as of December 31, 2021; shares outstanding 1,471,000 as of September 30, 2022 and 2,000,000 as of December 31, 2021

  15   20 

Common stock, par value $0.01 per share: 100,000,000 shares authorized; shares issued 64,315,909 as of September 30, 2022 and 59,471,998 as of December 31, 2021; shares outstanding 63,787,064 as of September 30, 2022 and 58,943,153 as of December 31, 2021

  643   595 

Additional paid in capital

  326,549   324,618 

Retained earnings

  19,601   13,591 

Treasury stock at cost (503,408 shares as of September 30, 2022 and December 31, 2021)

  (3,725)  (3,725)

Stock held by deferred compensation plan (25,437 shares as of September 30, 2022 and December 31, 2021)

  (183)  (183)

Accumulated other comprehensive loss

  (153,442)  (10,674)

Total Shareholders’ Equity

  189,458   324,242 

Total Liabilities and Shareholders’ Equity

 $5,999,254  $5,626,656 

 

(See notes to consolidated financial statements)

 

3

 

 

Republic First Bancorp, Inc. and Subsidiaries

Consolidated Statements of Income

For the Three and Nine Months Ended September 30, 2022 and 2021

(Dollars in thousands, except per share data)

(unaudited)

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2022

   

2021

   

2022

   

2021

 

Interest income:

                               

Interest and fees on taxable loans

  $ 30,653     $ 26,954     $ 83,304     $ 84,453  

Interest and fees on tax-exempt loans

    605       426       1,573       1,290  

Interest and dividends on taxable investment securities

    14,304       8,128       41,749       21,273  

Interest and dividends on tax-exempt investment securities

    392       89       875       242  

Interest on federal funds sold and other interest-earning assets

    54       181       179       294  

Total interest income

    46,008       35,778       127,680       107,552  

Interest expense:

                               

Demand- interest bearing

    4,798       3,165       9,536       9,706  

Money market and savings

    845       837       2,419       2,888  

Time deposits

    139       281       607       1,245  

Other borrowings

    2,227       53       2,579       200  

Total interest expense

    8,009       4,336       15,141       14,039  

Net interest income

    37,999       31,442       112,539       93,513  

Provision for credit losses

    3,998       900       4,756       3,900  

Net interest income after provision for credit losses

    34,001       30,542       107,783       89,613  

Non-interest income:

                               

Loan and servicing fees

    311       946       1,500       2,239  

Mortgage banking income

    844       2,397       2,847       9,869  

Gain on sales of SBA loans

    502       641       1,713       2,035  

Service fees on deposit accounts

    3,668       3,283       10,243       10,503  

Net (loss) gain on sale or call of investment securities

    (46 )     -       (46 )     2  

Other non-interest income

    463       50       (1,295 )     624  

Total non-interest income

    5,742       7,317       14,962       25,272  

Non-interest expenses:

                               

Salaries and employee benefits

    16,276       14,640       47,157       44,216  

Occupancy

    3,982       3,630       11,382       11,238  

Depreciation and amortization

    2,193       2,059       6,455       6,368  

Legal

    3,617       265       10,943       776  

Other real estate owned

    317       119       409       710  

Appraisal and other loan expenses

    428       410       815       1,669  

Advertising

    231       192       675       482  

Data processing

    1,574       2,472       5,609       5,991  

Insurance

    179       304       660       938  

Professional fees

    1,875       800       3,895       2,371  

Debit card processing

    991       743       2,723       2,527  

Regulatory assessments and costs

    1,101       904       3,290       2,511  

Taxes, other

    757       978       2,071       2,083  

Other operating expenses

    4,193       2,259       11,075       7,760  

Total non-interest expense

    37,714       29,775       107,159       89,640  

Income before provision for income taxes

    2,029       8,084       15,586       25,245 25,245  

Provision for income taxes

    476       1,988       3,805       6,147  

Net income

  $ 1,553     $ 6,096     $ 11,781     $ 19,098  

Preferred stock dividends

    644       875       2,154       2,625  

Net income available to common shareholders

  $ 909     $ 5,221     $ 9,627     $ 16,473  

Net income per share

                               

Basic earnings per common share

  $ 0.01     $ 0.09     $ 0.15     $ 0.28  

Diluted earnings per common share

  $ 0.01     $ 0.08     $ 0.14     $ 0.25  

 

(See notes to consolidated financial statements)

 

4

 

 

Republic First Bancorp, Inc. and Subsidiaries

Consolidated Statements of Comprehensive (Loss) Income

For the Three and Nine Months Ended September 30, 2022 and 2021

(Dollars in thousands)

(unaudited)

 

  

Three Months Ended September 30,

  

Nine Months Ended September 30,

 
  

2022

  

2021

  

2022

  

2021

 
                 

Net income (loss)

 $1,553  $6,096  $11,781  $19,098 
                 

Other comprehensive income (loss), net of tax

                

Unrealized (losses) on securities (pre-tax ($60,669), ($4,158), ($191,991), and ($5,717), respectively)

  (45,277)  (3,102)  (143,283)  (4,265)

Reclassification adjustment for securities losses (gains) (pre-tax $46, ($2), $46, and ($2), respectively)

  34   (1)  34   (1)

Net unrealized gains (losses) on securities

  (45,243)  (3,103)  (143,249)  (4,266)

Amortization of net unrealized holding losses to income during the period (pre-tax $178, $499, $644, and $1,998 respectively)

  133   373   481   1,491 
                 

Total other comprehensive (loss) income

  (45,110)  (2,730)  (142,768)  (2,775)
                 

Total comprehensive (loss) income

 $(43,557) $3,366  $(130,987) $16,323 

 

(See notes to consolidated financial statements)

 

5

 

 

Republic First Bancorp, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2022 and 2021

(Dollars in thousands)

(unaudited)

 

   

Nine Months Ended September 30,

 
   

2022

   

2021

 

Cash flows from operating activities

               

Net income

  $ 11,781     $ 19,098  

Adjustments to reconcile net income to net cash provided by operating activities:

               

Provision for credit losses

    4,756       3,900  

Write down of other real estate owned

    328       670  

Depreciation and amortization

    6,455       6,368  

Stock based compensation

    1,255       1,562  

Loss (gain) on sale or call of investment securities

    46       (2 )

Fair value adjustments on equity securities

    2,546       (192 )

Amortization of premiums on investment securities

    3,973       6,394  

Accretion of discounts on retained SBA loans

    (971 )     (709 )

Fair value adjustments on SBA servicing assets

    1,004       545  

Proceeds from sales of SBA loans originated for sale

    21,535       22,489  

SBA loans originated for sale

    (19,383 )     (22,380 )

Gains on sales of SBA loans originated for sale

    (1,713 )     (2,035 )

Proceeds from sales of mortgage loans originated for sale

    84,904       344,087  

Mortgage loans originated for sale

    (81,056 )     (298,521 )

Fair value adjustment for mortgage loans originated for sale

    311       1,920  

Gains on sales of mortgage loans originated for sale

    (2,062 )     (9,572 )

Amortization of debt issuance costs

    5       5  

Non-cash expense related to leases

    344       249  

Repayment of operating lease liabilities

    (4,216 )     (4,179 )

Net (increase) decrease in accrued interest receivable and other assets

    (3,821 )     1,392  

Net increase (decrease) in accrued interest payable and other liabilities

    10,909       (384 )

Net cash provided by operating activities

    36,930       70,705  
                 

Cash flows from investing activities

               

Purchase of investment securities available for sale

    (251,859 )     (464,868 )

Purchase of investment securities held to maturity

    (51,145 )     (764,947 )

Proceeds from the sale of securities available for sale

    34,073       -  

Proceeds from the paydown, maturity, or call of securities available for sale

    99,986       104,147  

Proceeds from the paydown, maturity, or call of securities held to maturity

    147,394       201,255  

Net purchase of restricted stock

    (18,397 )     (471 )

Net (increase) decrease in loans

    (555,295 )     149,212  

Net proceeds from sale of other real estate owned

    329       155  

Premises and equipment expenditures

    (9,917 )     (8,499 )

Net cash used in investing activities

    (604,831 )     (784,016 )
                 

Cash flows from financing activities

               

Net proceeds from exercise of stock options

    719       140  

Net increase in demand, money market and savings deposits

    140,166       947,213  

Net (decrease) increase in time deposits

    (79,762 )     11,117  

Net increase (repayment) in other borrowings

    442,500       (633,866 )

Preferred stock dividends paid

    (2,154 )     (2,625 )

Net cash provided by financing activities

    501,469       321,979  
                 

Net decrease in cash and cash equivalents

    (66,432 )     (391,332 )

Cash and cash equivalents, beginning of year

    118,884       775,300  

Cash and cash equivalents, end of period

  $ 52,452     $ 383,968  
                 

Supplemental disclosures

               

Interest paid

  $ 15,290     $ 13,595  

Income taxes paid

  $ 3,486     $ 8,540  

Non-cash transfers from loans receivable to other real estate owned

  $ 1,173     $ 168  

Non-cash transfers from loans held for sale to loans receivable

  $ 476     $ -  

Lease liabilities arising from obtaining right-of-use assets

  $ 3,272     $ 8,175  

 

(See notes to consolidated financial statements)

 

6

 

 

Republic First Bancorp, Inc. and Subsidiaries

Consolidated Statements of Changes in Shareholders Equity

For the Three and Nine Months Ended September 30, 2022 and 2021

(Dollars in thousands)

(unaudited)

 

  

Preferred Stock

  

Common Stock

  

Additional Paid in Capital

  

Retained

Earnings /

Accumulated Deficit

  

Treasury Stock

  

Stock Held by Deferred Compensation Plan

  

Accumulated Other Comprehensive Loss

  

Total Shareholders Equity

 
                                 

Balance July 1, 2022

 $15  $643