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): July 27, 2020

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

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

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

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:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

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. ☐

Item 2.02 Results of Operations and Financial Condition.

On July 27, 2020, Republic First Bancorp, Inc. issued a press release announcing its results of operations and financial condition at and for the period ended June 30, 2020. 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.

(d)           Exhibits.

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

Exhibit No.      Description

Exhibit 99.1

REPUBLIC FIRST BANCORP, INC. REPORTS SECOND QUARTER FINANCIAL RESULTS

NAMED AMERICA’S #1 BANK FOR SERVICE BY FORBES MAGAZINE

  Philadelphia, PA, July 27, 2020 (GlobeNewswire) – Republic First Bancorp, Inc. (NASDAQ: FRBK), the holding company for Republic Bank, today announced its financial results for the period ended June 30, 2020.

Q2-2020 Financial Highlights

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

“In the second quarter ‘The Power of Red is Back’ expansion campaign continued to deliver exceptional service during these unprecedented times. Our stores remained operational throughout the quarter serving customers in any way possible in a safe and efficient manner. Through our participation in the PPP loan program authorized by the CARES Act we were able assist thousands of small businesses by providing critical access to funding to support operations in the midst of an economic shutdown.”

“In recognition of our unwavering commitment to extraordinary customer service and convenience our FANS responded to a recent Forbes survey and Republic was ranked as America’s #1 Bank for Service. The goal of our model is to create FANS NOT CUSTOMERS, who join our brand, remain loyal and refer family and friends.  The results of the Forbes survey not only demonstrates the success of our model, but also shows that we deliver on our commitment to service better that every other bank in the country.”

Republic will launch its new brand campaign as America’s #1 Bank for Service during the third quarter of 2020.

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

“Net income during 2019 was negatively impacted by the challenging nature of the interest rate environment and costs required to initiate our expansion into New York City. During the second quarter of 2020 we returned to profitability through the dedication and commitment of every member of the Republic Bank Team to improve earnings. We have consistently stated that 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. We are focused on meeting that goal in the most efficient manner possible.”

Paycheck Protection Program

During the second quarter the Republic Bank Team turned its attention to the needs of small businesses in our community. The Paycheck Protection Program included in the CARES Act authorized financial institutions to make loans to companies that have been impacted by the devastating economic effects of the coronavirus (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 the community as well.

 PPP Loan Program Highlights

 Republic Bank recognized the SBA PPP Loan Program as an opportunity to help existing and new small business customers actively participated in the program by accepting applications.

 As of June 30, 2020 Republic has:

 As a percentage of existing loan balances outstanding as of March 31, 2020, the $682 million in PPP loans originated by Republic amounted to 36% making us one of the top PPP lenders in the entire country.

Loss Mitigation and Loan Portfolio Analysis

Management has taken a proactive approach to analyze and prepare for the potential challenges to be faced as the effects of the economic shutdown begin to unfold. A detailed analysis of loan concentrations and segments that may represent the areas of highest risk has been prepared. Our commercial lending team has initiated 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. We have granted payment deferrals for customers that made a request and had an immediate need for assistance.

Management believes exposure in the loan portfolio to the high risk industries most impacted by the current economic conditions is limited. Loans to customers in the accommodations and food services industry (i.e. hotels and restaurants) amount to 7% of the total loans outstanding as of June 30, 2020. Loans to customers involved in the oil and gas industry (refineries) are less than 1% of outstanding loans and credit card receivables are also less than 1% of total loans as of June 30, 2020.

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.

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 June 30, 2020:

*Note: PPP loans excluded from total loans when calculating % of total loan balances

As of the date of this release more than 75% of the customers that were granted approval for deferral of loan payments have resumed normal principal and interest payments on their outstanding loan balances in the early stages of the third quarter of 2020. During the month of July 2020, the number of customers that have continued with the deferral of loan payments has declined to 103, or 2% of the total loan customers and the related outstanding loan balances have reduced to $124 million, or 7% of the total loan balances outstanding.

Asset Quality

The Company’s asset quality ratios are highlighted below:

The percentage of non-performing assets to total assets decreased to 0.31% at June 30, 2020, compared to 0.53% at June 30, 2019.  The ratio of non-performing assets to capital and reserves decreased to 5% at June 30, 2020 compared to 6% at June 30, 2019 primarily as a result of decreases in non-performing assets over the last 12 months.

Quarterly Trend

Profitability in previous quarters was impacted by the inversion of the yield curve and the Company’s strategic decision to enter a new market during 2019. The Company continues to focus on improvement of its operating leverage. The following table highlights changes to some of the key financial metrics that demonstrate this progress:

Financial Summary for the Period Ended June 30, 2020

The changes in the balance sheet as of June 30, 2020 were significantly impacted by the effect of the PPP loan program. A portion of the increase in cash balances, outstanding loans, demand deposits and short-term 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 June 30, 2020 can be found in the following table:

A summary of the income statement for the period ended June 30, 2020 can be found in the following table:

●    Total assets increased by $1.5 billion, or 51%, to $4.4 billion as of June 30, 2020 compared to $2.9 billion as of June 30, 2019. Excluding the impact of the PPP loan program total assets increased by $655 million, or 22%, as during the twelve month period ended June 30, 2020.

●    We have thirty convenient store locations open today. During the first quarter of 2020 we opened a new store in Northfield, NJ. Construction is ongoing on a site in Bensalem, PA. There are also multiple sites in various stages of development for future store locations.

●    Profitability improved quarter to quarter as we reported net income of $2.5 million, or $0.04 per share, for the three months ended June 30, 2020 compared to a net loss of $0.6 million, or $(0.01) per share for the three months ended March 31, 2020. We reported net income of $0.4 million, or $0.01 per share, for the three months ended June 30, 2019.

●    The net interest margin decreased by 21 basis points to 2.55% for the three months ended June 30, 2020 compared to 2.76% for the three months ended March 31, 2020. The decline in the margin was driven by the impact of the PPP loan program that were added to the balance sheet during the second quarter, along with the lower interest rate environment as a result of rate reductions by the Federal Reserve Bank. Excluding the impact of the PPP loan program the net interest margin would have been 2.70% for the three months ended June 30, 2020.

●    During the first quarter we entered into a branding agreement with Visa to convert all ATM and debit cards to Visa cards which will provide a number of opportunities to enhance revenue growth in the coming years. In the second quarter we entered into another agreement with Visa to handle the processing of all ATM and debit card transactions. This agreement is expected to reduce the cost associated with the processing of these transactions.

●    The Company’s residential mortgage division, Oak Mortgage, is serving the home financing needs of customers throughout its footprint. Loan production during the first half of 2020 was strong despite the impact of the CODID-19 pandemic and the pipeline for the second half of the year looks equally as promising. The Oak Mortgage team has originated more than $500 million in mortgage loans over the last twelve months.

●    The Company’s Total Risk-Based Capital ratio was 12.00% and Tier I Leverage Ratio was 7.58% at June 30, 2020.

●    Book value per common share increased to $4.34 as of June 30, 2020 compared to $4.27 as of June 30, 2019.

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 $2.5 million, or $0.04 per share, for the three month period ended June 30, 2020, compared to net income of $381 thousand, or $0.01 per share, for the three month period ended June 30, 2019. 

Interest income increased by $1.6 million, or 6%, to $27.9 million for the quarter ended June 30, 2020 compared to $26.2 million for the quarter ended June 30, 2019. The increase in interest income is attributable to the growth in interest-earning assets over the last twelve months driven by the Company’s “Power of Red is Back” expansion strategy. We have also begun to amortize the fees associated with the origination of PPP loans during the second quarter which is reported as interest income. $1.5 million in PPP fees were recorded as income during the quarter ended June 30, 2020 with the remaining balance to be recognized over the life of the loans.

Interest expense decreased by $1.4 million, or 21%, to $5.4 million for the quarter ended June 30, 2020 compared to $6.9 million for the quarter ended June 30, 2019. The decrease in interest expense was primarily driven by a reduction in the cost of deposits as a result of the decrease in the Fed Funds rate during the latter part of the first quarter.

The net interest margin for the three month period ended June 30, 2020 decreased by 39 basis points to 2.55% compared to 2.94% for the three month period ended June 30, 2019. We experienced margin compression throughout 2019 as a result of the flattening of the yield curve. The interest rate on the loans originated under the PPP loan program is 1.00% which caused a decline in the yield on interest earning assets in the second quarter of 2020. In addition, the rate cuts enacted by the Federal Reserve Bank during the first quarter of 2020 has created a lower interest rate environment. The net interest margin excluding the impact of the PPP loan program would have been 2.70%.

Non-interest income increased by $1.4 million, or 20%, to $8.4 million for the three month period ended June 30, 2020, compared to $7.0 million for the three month period ended June 30, 2019. The increase is attributable to gains on the sale of investment securities, higher service fees on deposit accounts which is driven by growth in deposit balances and an increase in the number of deposit accounts, and mortgage banking income driven by mortgage loan originations, partially offset by a decrease in gains on the sale of SBA loans.

Non-interest expense increased by 3%, to $26.7 million during the quarter ended June 30, 2020 compared to $25.9 million during the quarter ended June 30, 2019. The growth in expenses were mainly caused by an increase in occupancy and equipment expenses associated with our growth strategy. Cost control initiatives identified by management have begun to take effect as non-interest expense declined for the third consecutive quarter.

On a linked quarter basis, total revenue increased by 13% during the second quarter of 2020 while non-interest expense declined by 2%. Year over year total revenue increased by 17% and non-interest expense increased by 3% during the second quarter of 2020 compared to the second quarter of 2019.

Deposits

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

Deposits increased to $3.6 billion at June 30, 2020 compared to $2.5 billion at June 30, 2019. This increase is partially attributed to our growth strategy to increase the number of stores and expand the reach of our banking model which focuses on high levels of customer service and convenience and 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 101%, year over year as a result of the successful execution of our strategy. The increase in demand deposits during the second quarter is also a result of our participation in the PPP loan program.  When these loans were closed the funds were deposited into Republic Bank checking accounts. These deposits are expected to decline as the borrowers spend the funds on qualified expenses under the program.

Lending

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

Gross loans increased by $1.0 billion, or 69%, to $2.5 billion at June 30, 2020 compared to $1.5 billion at June 30, 2019 primarily related to PPP loan originations in the current quarter. In addition, we continue to see results from the continued success with the relationship banking model which has driven a steady flow in quality loan demand over the last twelve months. Excluding the addition of the PPP loans during the second quarter of 2020, loans still grew $380 million, or 25%, when compared to the balance as of June 30, 2019. We experienced strong growth across all loan categories.

Capital

The Company’s capital ratios at June 30, 2020 were as follows:

Total shareholders’ equity increased to $255 million at June 30, 2020 compared to $251 million at June 30, 2019. Book value per common share increased to $4.34 at June 30, 2020 compared to $4.27 per share at June 30, 2019.

Analyst and Investor Call

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

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 thirty 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, 2019, the Form 10-Q for the quarter ended March 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.