UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10Q/A
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended: September 30, 2004
Commission File Number: 000-17007
Republic First Bancorp, Inc.
(Exact name of business issuer as specified in its charter)
Pennsylvania 23-2486815
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(State or other jurisdiction of IRS Employer
incorporation or organization) Identification Number
1608 Walnut Street, Philadelphia, Pennsylvania 19103
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(Address of principal executive offices) (Zip code)
215-735-4422
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(Registrant's telephone number, including area code)
N/A
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(Former name, former address and former fiscal year,
if changed since last report)
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 filing requirements
for the past 90 days.
YES X NO ____
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Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act):
YES NO __X__
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date.
7,435,681 shares of Issuer's Common Stock, par value
$0.01 per share, issued and outstanding as of September 30, 2004
Explanatory Note:
Form 10Q/A for the Quarterly period ended September 30, 2004
The purpose for filing this report on Form 10-Q/A is to correct a typographical
error in other income in the Consolidated Statement of Income for the Nine
Months Ended September 30, 2004 carried through that statement. The correction
is reflected in the attached financial statements. All information for the
quarterly period ended September 30, 2004 is correct as originally filed. All
tables, earnings per share and management discussion and analysis for the
nine-month period ended September 30, 2004 are also correct as originally filed.
The company's press release dated October 25 , 2004 announcing results of
operations for the quarter ended September 30 , 2004 contained the correct
numbers.
PART I - FINANCIAL INFORMATION
------------------------------
Item 1: Financial Statements
--------------------
Page Number
-----------
(1) Consolidated Balance Sheets as of September 30, 2004,
(unaudited) and December 31, 2003 ................................................. 4
(2) Consolidated Statements of Income for the three and nine months ended
September 30, 2004, and 2003 (unaudited)........................................... 5
(3) Consolidated Statements of Cash Flows for the nine months ended
September 30, 2004, and 2003 (unaudited)........................................... 6
(4) Notes to Consolidated Financial Statements......................................... 7
Republic First Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
as of September 30, 2004 and December 31, 2003
(dollars in thousands, except share data)
ASSETS: September 30, 2004 December 31, 2003
------------------ -----------------
(unaudited)
Cash and due from banks $ 19,053 $ 28,103
Interest bearing deposits with banks 1,546 3,547
Federal funds sold and interest-bearing deposits with banks 54,503 38,952
--------- ---------
Total cash and cash equivalents 75,102 70,602
Other interest-earning restricted cash 3,270 3,483
Investment securities available-for-sale, at fair value 47,003 61,686
Investment securities held-to-maturity at amortized cost
(Fair value of $7,102 and $8,300, respectively) 7,077 8,260
Loans receivable (net of allowance for loan losses of
$8,338 and $8,696, respectively) 544,925 479,523
Premises and equipment, net 4,502 4,412
Other real estate owned 207 207
Accrued interest receivable 3,751 3,710
Business owned life insurance 12,085 11,763
Other assets 14,957 11,146
--------- ---------
Total Assets $ 712,879 $ 654,792
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
Deposits:
Demand - non-interest-bearing $ 104,385 $ 82,311
Demand - interest-bearing 50,295 73,315
Money market and savings 190,465 110,389
Time under $100,000 106,447 102,508
Time $100,000 or more 79,401 85,082
--------- ---------
Total Deposits 530,993 453,605
Short-term borrowings -- 2,852
FHLB Advances 100,000 125,000
Subordinated Debt 6,186 --
Accrued interest payable 2,605 2,841
Other liabilities 10,458 8,118
Corporation-obligated-mandatorily redeemable capital
securities of subsidiary trust holding solely junior
obligations of the corporation -- 6,000
--------- ---------
Total Liabilities $ 650,242 $ 598,416
--------- ---------
Shareholders' Equity:
Common stock par value $0.01 per share, 20,000,000 shares authorized; shares
issued 7,435,681 as of September 30, 2004
and 7,367,426 as of December 31, 2003 74 67
Additional paid in capital 41,818 33,396
Retained earnings 21,854 23,674
Treasury stock at cost (175,172 shares) (1,541) (1,541)
Accumulated other comprehensive income 432 780
--------- ---------
Total Shareholders' Equity 62,637 56,376
--------- ---------
Total Liabilities and Shareholders' Equity $ 712,879 $ 654,792
========= =========
(See notes to consolidated financial statements)
Republic First Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income
For the Three and Nine Months Ended September 30, 2004 and 2003
(dollars in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
------- ------- ------- -------
Interest income:
Interest and fees on loans $ 8,714 $ 7,339 $25,057 $31,215
Interest and dividend income on federal
funds sold and other interest-earning balances 161 243 524 735
Interest and dividends on investment securities 502 586 1,629 2,331
------- ------- ------- -------
Total interest income 9,377 8,168 27,210 34,281
------- ------- ------- -------
Interest expense:
Demand interest-bearing 98 108 270 355
Money market and savings 636 403 1,572 1,316
Time under $100,000 742 976 2,354 3,263
Time $100,000 or more 481 521 1,589 1,705
Other borrowed funds 1,906 2,079 5,982 6,168
------- ------- ------- -------
Total interest expense 3,863 4,087 11,767 12,807
------- ------- ------- -------
Net interest income 5,514 4,081 15,443 21,474
Provision (recovery) for loan losses (611) 647 263 6,345
------- ------- ------- -------
Net interest income after provision
for loan losses 6,125 3,434 15,180 15,129
------- ------- ------- -------
Non-interest income:
Loan advisory and servicing fees 100 167 344 462
Service fees on deposit accounts 437 410 1,351 1,062
Tax refund products -- 38 1,173 410
Short-term loan fee income 1,780 2,051 4,628 2,052
Lawsuit damage award 1,337 -- 1,337 --
Other income 188 160 560 232
------- ------- ------- -------
3,842 2,826 9,393 4,218
------- ------- ------- -------
Non-interest expenses:
Salaries and benefits 2,467 2,311 7,612 7,202
Occupancy 437 371 1,206 1,129
Depreciation 299 304 1,023 901
Legal 352 249 902 759
Advertising 31 21 138 140
Other expenses 1,760 1,165 4,272 3,666
------- ------- ------- -------
5,346 4,421 15,153 13,797
------- ------- ------- -------
Income before income taxes 4,621 1,839 9,420 5,550
Provision for income taxes 1,538 606 3,168 1,873
------- ------- ------- -------
Net income $ 3,083 $ 1,233 $ 6,252 $ 3,677
======= ======= ======= =======
Net income per share:
Basic $ 0.43 $ 0.17 $ 0.87 $ 0.52
======= ======= ======= =======
Diluted $ 0.41 $ 0.16 $ 0.83 $ 0.50
======= ======= ======= =======
(See notes to consolidated financial statements)
Republic First Bancorp, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2004 and 2003
Dollars in thousands
(unaudited)
For the nine months
ended September 30,
2004 2003
-------- --------
Cash flows from operating activities:
Net income $ 6,252 $ 3,677
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 263 6,345
Depreciation 1,023 901
Amortization of premium on investment securities 203 327
Increase in value of business owned life insurance (311) (153)
Increase in accrued interest receivable and other assets (3,365) (3,531)
Increase in accrued expenses
and other liabilities 2,104 2,074
-------- --------
Net cash provided by operating activities 6,169 9,640
-------- --------
Cash flows from investing activities:
Purchase of securities:
Held to maturity -- (2,461)
Available for sale (7,500) (5,554)
Proceeds from principal receipts,
calls and maturities of securities:
Held to maturity 1,184 2,739
Available for sale 20,960 49,428
Net increase in loans (65,307) (12,342)
Decrease in other interest earning restricted cash 213 644
Purchase of business owned life insurance -- (11,500)
Premises and equipment expenditures (1,113) (721)
-------- --------
Net cash (used in) provided by investing activities (51,563) 20,233
-------- --------
Cash flows from financing activities:
Net proceeds from exercise of stock options 358 924
Net increase in demand, money market and savings deposits 79,130 33,786
Repayment of overnight borrowing (2,852) --
Repayment of long-term borrowing (25,000) --
Net decrease in time deposits (1,742) (42,474)
-------- --------
Net cash provided by (used in) financing activities 49,894 (7,764)
-------- --------
Increase in cash and cash equivalents 4,500 22,109
Cash and cash equivalents, beginning of period 70,602 72,810
-------- --------
Cash and cash equivalents, end of period $ 75,102 $ 94,919
======== ========
Supplemental disclosure:
Interest paid $ 12,005 $ 13,183
======== ========
Taxes paid $ 1,800 $ 1,950
======== ========
(See notes to consolidated financial statements)
REPUBLIC FIRST BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Organization
Republic First Bancorp, Inc. ("the Company") is a two-bank holding company
organized and incorporated under the laws of the Commonwealth of Pennsylvania.
It includes two wholly owned subsidiaries, Republic First Bank ("PA Bank"), a
Pennsylvania state chartered bank and First Bank of Delaware ("DE Bank), a
Delaware state chartered Bank, (together "the Banks"). The PA Bank offers a
variety of banking services to individuals and businesses throughout the Greater
Philadelphia and South Jersey area through its offices and branches in
Philadelphia and Montgomery Counties. The DE Bank is located at Brandywine
Commons II, Concord Pike and Rocky Run Parkway in Brandywine, New Castle County
Delaware. The DE Bank offers many of the same services and financial products as
the PA Bank, and additionally offers nationally, short-term consumer loans and
other products not offered by the PA Bank.
The Company and the Banks encounter vigorous competition for market share from
bank holding companies, other community banks, thrift institutions and other
non-bank financial organizations, such as mutual fund companies, insurance
companies and brokerage companies.
The Company and the Banks are subject to regulation by certain state and federal
agencies. These regulatory agencies periodically examine the Company and its
subsidiaries for adherence to laws and regulations. As a consequence, the cost
of doing business may be affected.
Note 2: Summary of Significant Accounting Policies:
Basis of Presentation:
The consolidated financial statements include the accounts of Republic First
Bancorp, Inc. and its wholly-owned subsidiaries, the PA Bank and the DE Bank.
Such statements have been presented in accordance with accounting principles
generally accepted in the United States of America or applicable to the banking
industry. All significant inter-company accounts and transactions have been
eliminated in the consolidated financial statements.
Risks and Uncertainties and Certain Significant Estimates:
The earnings of the Company depend on the earnings of the Banks. The Banks are
dependent primarily upon the level of net interest income, which is the
difference between interest earned on its interest-earning assets, such as loans
and investments, and the interest paid on its interest-bearing liabilities, such
as deposits and borrowings. Accordingly, the results of operations of the Banks
are subject to risks and uncertainties surrounding their exposure to change in
the interest rate environment.
Prepayments on residential real estate mortgage and other fixed rate loans and
mortgage-backed securities vary significantly and may cause significant
fluctuations in interest margins.
At September 30, 2004, there were approximately $2.1 million of short-term
consumer loans outstanding, which were originated in Texas, California,
Michigan, Arizona, and Ohio and in other states. Effective in the third quarter
of 2003, the DE Bank began to sell a majority of these loans to independent
third parties while retaining a portion of the interest income, which the DE
Bank classifies as non-interest income. At September 30, 2004, the Company was
servicing $21.2 million of short-term consumer loans it had sold. The Company
evaluated these sales and determined that these transactions qualify as sales
under FAS 140.
These loans generally have principal amounts of $1,500 or less and terms of
approximately two weeks. Legislation eliminating, or limiting interest rates
upon short-term consumer loans has from time to time been proposed.
The DE Bank offers two tax refund products to customers of Liberty Tax Service.
Liberty Tax Service is a nationwide tax service provider which prepares and
electronically files federal and state income tax returns and the DE Bank offers
certain Liberty Tax Service customers accelerated refunds ("Tax Refund
Products"). Prior to the incorporation of the DE Bank, the PA Bank for many
years offered tax refund products. Tax Refund Products consist of accelerated
check refunds ("ACRs") and refund anticipation loans ("RALs"). There can be no
assurance that revenues from these products will continue to grow or be
maintained at current levels in future periods.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
significant estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosures of contingent assets and liabilities at the date
of the consolidated financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from those
estimates.
Significant estimates are made by management in determining the allowance for
loan losses, carrying values of other real estate owned and income taxes.
Consideration is given to a variety of factors in establishing these estimates.
In estimating the allowance for loan losses, management considers current
economic conditions, diversification of the loan portfolio, delinquency
statistics, results of internal loan reviews, borrowers' perceived financial and
managerial strengths, the adequacy of underlying collateral, if collateral
dependent, or present value of future cash flows and other relevant factors.
Since the allowance for loan losses and carrying value of other real estate
owned are dependent, to a great extent, on the general economy and other
conditions that may be beyond the Banks' control, it is at least reasonably
possible that the estimates of the allowance for loan losses and the carrying
values of other real estate owned could differ materially in the near term.
The Company and its subsidiaries are subject to federal and state regulations
governing virtually all aspects of their activities, including but not limited
to, lines of business, liquidity, investments, the payment of dividends, and
others. Such regulations and the cost of adherence to such regulations can have
a significant impact on earnings and financial condition.
Stock Based Compensation
(dollar amounts in thousands) Three months ended Nine months ended
September 30, September 30,
------------------------------------- ------------------------------------
2004 2003 2004 2003
----------------- ----------------- ---------------- ----------------
Net income as reported $3,083 $ 1,233 $6,252 $3,677
Less: Stock based compensation costs determined
under fair value method for all awards -- -- (54) (102)
----------------- ----------------- ---------------- ----------------
Net income, proforma $3,083 $ 1,233 $6,198 $3,575
================= ================= ================ ================
Earnings per common share-basic: As reported $ 0.43 $ 0.17 $ 0.87 $ 0.52
----------------- ----------------- ---------------- ----------------
Pro-forma $ 0.43 $ 0.17 $ 0.86 $ 0.51
----------------- ----------------- ---------------- ----------------
Earnings per common share-diluted: As reported $ 0.41 $ 0.16 $ 0.83 $ 0.50
----------------- ----------------- ---------------- ----------------
Pro-forma $ 0.41 $ 0.16 $ 0.82 $ 0.48
----------------- ----------------- ---------------- ----------------
The Company granted 11,667 and 56,667 options during the nine months ended
September 30, 2004 and 2003, respectively. The proforma compensation expense is
based upon the fair value of the option at grant date. The fair value of each
option is estimated on the date of grant using the Black-Scholes option-pricing
model with the following weighted average assumptions used for grants in 2004
and 2003, respectively: dividend yields of 0% for both periods; expected
volatility of 34% for 2004 and 31% for 2003; risk-free interest rates of 3.15%
and 4.0%, respectively and an expected life of 5.0 years for both periods.
At September 30, 2004, the Company had a stock-based employee compensation plan.
The Company accounts for that plan under the recognition and measurement
principles of APB No. 25, Accounting for Stock Issued to Employees, and related
interpretations. Stock-based employee compensation costs are not reflected in
net income, as all options granted under the plan had an exercise price equal to
the market vale of the underlying common stock on the date of grant. The
following table illustrates the effect on net income and earnings per share if
the company had applied the fair value recognition provisions of SFAS No. 123,
to stock-based employee compensation ( in thousands, except per share amounts).
On March 31, 2004, the Financial Accounting Standards Board (FASB) issued a
proposed Statement, Share-Based Payment an Amendment of FASB Statements No. 123
and APB No. 95, that addresses the accounting for share-based payment
transactions in which an enterprise receives employee services in exchange for
(a) equity instruments of the enterprise or (b) liabilities that are based on
the fair value of the enterprise's equity instruments or that may be settled by
the issuance of such equity instruments. Under the FASB's proposal, all forms of
share-based payments to employees, including employee stock options, would be
treated the same as other forms of compensation by recognizing the related cost
in the income statement. The expense of the award would generally be measured at
fair value at the grant date. Current accounting guidance requires that the
expense relating to so-called fixed plan employee stock options only be
disclosed in the footnotes to the financial statements. The proposed Statement
would eliminate the ability to account for share-based compensation transactions
using APB Opinion No. 25, Accounting for Stock Issued to Employees. On October
13, 2004, FASB voted to delay the adoption of this proposed standard by public
companies until their first fiscal quarter beginning after June 15, 2005. The
Company is currently evaluating this proposed statement and its effects on its
results of operations.
Note 3: Significant Accounting Pronouncements
Loan Commitments
The SEC recently released Staff Accounting Bulletin No. 105, Application of
Accounting Principles to Loan Commitments. SAB 105 provides guidance about the
measurement of loan commitments recognized at fair value under FASB Statement
No. 133, Accounting for Derivative Instruments and Hedging Activities. SAB 105
also requires companies to disclose their accounting policy for those loan
commitments including methods and assumptions used to estimate fair value and
associated hedging strategies. SAB 105 is effective for all loan commitments
accounted for as derivatives that are entered into after September 30, 2004. The
adoption of SAB 105 is not expected to have a material effect on the Company's
financial statements.
Other Than Temporary Impairment
In November 2003, the Emerging Issues Task Force (EITF) of the FASB issued EITF
Abstract 03-1, The Meaning of Other-Than-Temporary Impairment and its
Application to Certain Investments (EITF 03-1). The quantitative and qualitative
disclosure provisions of EITF 03-1 were effective for years ending after
December 15, 2003 and were included in the Company's 2003 Form 10-K. In March
2004, the EITF issued a Consensus on Issue 03-1 requiring that the provisions of
EITF 03-1 be applied for reporting periods beginning after June 15, 2004 to
investments accounted for under SFAS No. 115 and 124. EITF 03-1 establishes a
three-step approach for determining whether an investment is considered
impaired, whether that impairment is other-than-temporary, and the measurement
of an impairment loss. In September 2004, the FASB issued a proposed Staff
Position, EITF Issue 03-1-a, Implementation Guidance for the Application of
Paragraph 16 of EITF 03-1 (EITF 03-1-a). EITF 03-1-a would provide
implementation guidance with respect to debt securities that are impaired solely
due to interest rates and/or sector spreads and analyzed for
other-than-temporary impairment under paragraph 16 of EITF 03-1. In September
2004, the FASB issued a Staff Position, EITF Issue 03-1-1, Effective Date of
Paragraphs 10-20 of EITF Issue No. 03-1 (EITF 03-1-1). FSP EITF Issue No.
03-1-1, Effective Date of Paragraphs 10-20 of EITF Issue No. 03-1, `The Meaning
of Other-Than-Temporary Impairment and Its Application to Certain Investments
delays the effective date of certain provisions of EITF Issue 03-1, including
steps two and three of the Issue's three-step approach for determining whether
an investment is other-than-temporarily impaired. However, step one of that
approach must still be initially applied for impairment evaluations in reporting
periods beginning after June 15, 2004. The delay of the effective date for
paragraphs 10-20 of EITF Issue 03-1 will be superseded with the final issuance
of proposed FSP EITF Issue 03-1-a, Implementation Guidance for the Application
of Paragraph 16 of EITF Issue No. 03-1, `'The Meaning of Other-Than-Temporary
Impairment and Its Application to Certain Investments. The Company is in the
process of determining the impact that this EITF will have on its financial
statements.
Note 4: Variable Interest Entities
Management has determined that Republic First Capital Trust I ("RFCT"), utilized
for the Company's $6,000,000 of pooled preferred securities issuance, qualifies
as a variable interest entity under FIN 46, as revised RFCT issued mandatorily
redeemable preferred stock to investors and loaned the proceeds to the Company.
RFCT is included in the Company's consolidated balance sheet and statements of
income as of and for the year ended December 31, 2003. Subsequent to the
issuance of FIN 46 in January 2003, the FASB issued a revised interpretation,
FIN 46(R) Consolidation of Variable Interest Entities, the provisions of which
were required to be applied to certain variable interest entities by March 31,
2004.
The Company adopted the provisions under the revised interpretation in the first
quarter of 2004. Accordingly, the Company no longer consolidates RFCT as of
September 30, 2004. FIN 46(R) precludes consideration of
the call option embedded in the preferred stock when determining if the Company
has the right to a majority of RFCT's expected residual returns. The
deconsolidation resulted in the investment in the common stock of RFCT to be
included in other assets as of September 30, 2004 and the corresponding increase
in outstanding debt of $186,000. In addition, the income received on the
Company's common stock investment is included in other income. The adoption of
FIN 46R did not have a material impact on the financial position or results of
operations. The Federal Reserve has issued proposed guidance on the regulatory
capital treatment for the trust-preferred securities issued by RFCT as a result
of the adoption of FIN 46(R). The proposed rule would retain the current maximum
percentage of total capital permitted for trust preferred securities at 25%, but
would enact other changes to the rules governing trust preferred securities that
affect their use as part of the collection of entities known as "restricted core
capital elements". The rule would take effect March 31, 2007; however, a
three-year transition period starting March 31, 2004 and leading up to that date
would allow bank holding companies to continue to count trust preferred
securities as Tier 1 Capital after applying FIN-46(R). Management has evaluated
the effects of the proposed rule and does not anticipate a material impact on
its capital ratios when the proposed rule is finalized.
Note 5: Legal Proceedings
The Company and the Banks are from time to time parties (plaintiff or defendant)
to lawsuits in the normal course of business. While any litigation involves an
element of uncertainty, management, after reviewing pending actions with legal
counsel, is of the opinion that the liabilities of the Company and the Banks, if
any, resulting from such actions will not have a material effect on the
financial condition or results of operations of the Company and the Banks.
Note 6: Segment Reporting
The Company's reportable segments represent strategic businesses that offer
different products and services. The segments are managed separately because
each segment has unique operating characteristics, management requirements and
marketing strategies. The Company has four reportable segments: two community
banking segments; tax refund products; and short-term consumer loans. The
community banking segments are primarily comprised of the results of operations
and financial condition of the Banks. Tax refund products are comprised of
accelerated check refunds and refund anticipation loans offered by the DE Bank
on a national basis to customers of Liberty Tax Services, an unaffiliated
national tax preparation firm. Short-term consumer loans are loans made to
customers offered by the DE Bank, with principal amounts of $1,500 or less and
terms of approximately two weeks. These loans typically are made in states that
are outside of the Company's normal market area through a small number of
marketers and involve rates and fees significantly different from other loan
products offered by either of the Banks.
The Company evaluates the performance of the community banking segments based
upon net income, return on equity and return on average assets. Tax refund
products and short-term consumer loans are evaluated based upon net income. Tax
refund products and short-term consumer loans are provided to satisfy consumer
demands while diversifying the Company's earnings stream.
Segment information for the nine and three month period ended September 30, 2004
and 2003, is as follows:
As of and for the nine months ended
September 30, 2004
(dollars in thousands) Short-term
Republic First First Bank of Tax Refund Consumer
Bank Delaware Products loans Total
--------- --------- --------- --------- ---------
Net interest income $ 11,925 $ 1,174 $ 1,026 $ 1,318 $ 15,443
Provision (recovery) for loan losses (1,363) 90 500 1,036 263
Non-interest income 3,422 171 1,173 4,627 9,393
Non-interest expenses 11,384 1,035 763 1,971 15,153
Net income $ 3,340 $ 143 $ 620 $ 2,149 $ 6,252
========= ========= ========= ========= =========
Selected Balance Sheet Accounts:
Total assets 662,707 44,199 -- 5,973 712,879
Total loans 517,532 33,594 -- 2,137 553,263
Total deposits 495,515 35,478 -- -- 530,993
September 30, 2003
(dollars in thousands) Short-term
Republic First First Bank of Tax Refund Consumer
Bank Delaware Products loans Total
--------- --------- --------- --------- ---------
Net interest income $ 11,351 $ 1,146 $ 1,191 $ 7,786 $ 21,474
Provision for loan losses 60 91 1,042 5,152 6,345
Non-interest income 1,559 198 410 2,051 4,218
Non-interest expenses 10,688 1,142 545 1,422 13,797
Net income $ 1,472 $ 73 $ 9 $ 2,123 $ 3,677
========= ========= ========= ========= =========
Selected Balance Sheet Accounts:
Total assets 594,353 42,705 -- 7,709 644,767
Total loans 440,611 30,183 -- 981 471,775
Total deposits 411,686 35,927 -- -- 447,613
As of and for the three months ended
September 30, 2004
(dollars in thousands) Short-term
Republic First First Bank of Tax Refund Consumer
Bank Delaware Products loans Total
--------- --------- --------- --------- ---------
Net interest income $ 4,501 $ 366 $ -- $ 647 $ 5,514
Provision for (recovery) loan losses (1,364) 30 -- 723 (611)
Non-interest income 2,017 46 (1) 1,780 3,842
Non-interest expenses 4,284 332 120 610 5,346
--------- --------- --------- --------- ---------
Net income (loss) $ 2,404 $ 17 $ (78) $ 740 $ 3,083
========= ========= ========= ========= =========
Selected Balance Sheet Accounts:
Total assets 662,707 44,199 -- 5,973 712,879
Total loans 517,532 33,594 -- 2,137 553,263
Total deposits 495,515 35,478 -- -- 530,993
September 30, 2003
(dollars in thousands) Short-term
Republic First First Bank of Tax Refund Consumer
Bank Delaware Products loans Total
--------- --------- --------- --------- ---------
Net interest income $ 3,599 $ 407 -- $ 75 $ 4,081
Provision for loan losses -- 30 -- 617 647
Non-interest income 687 51 37 2,051 2,826
Non-interest expenses 3,470 376 145 430 4,421
--------- --------- --------- --------- ---------
Net income (loss) $ 563 $ 32 $ (68) $ 706 $ 1,233
========= ========= ========= ========= =========
Selected Balance Sheet Accounts:
Total assets 594,353 42,705 -- 7,709 644,767
Total loans 440,611 30,183 -- 981 471,775
Total deposits 411,686 35,927 -- -- 447,613
Note 7: Earnings Per Share:
Earnings per share ("EPS") consists of two separate components; basic EPS and
diluted EPS. Basic EPS is computed by dividing net income by the weighted
average number of common shares outstanding for each period presented. Diluted
EPS is calculated by dividing net income by the weighted average number of
common shares outstanding plus dilutive common stock equivalents ("CSEs"). CSEs
consist of dilutive stock options granted through the Company's stock option
plan. The following table is a reconciliation of the numerator and denominator
used in calculating basic and diluted EPS. CSEs which are anti-dilutive are not
included in the following calculation. At September 30, 2004, and 2003,
respectively, there were no stock options, that were not included in the
calculation of EPS because the option price is greater than the average market
price for the period.
The following table is a comparison of EPS for the three and nine months ended
September 30, 2004, and 2003.
Three months ended September 30, Nine months ended September 30,
2004 2003 2004 2003
Net Income
$3,083,000 $1,233,000 $6,252,000 $3,677,000
Per Per Per Per
Shares Share Shares Share Shares Share Shares Share
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
Weighted average shares
For period 7,242,662 7,141,540 7,207,203 7,043,226
Basic EPS $0.43 $0.17 $0.87 $0.52
---------- 339,526 340,104 307,376
------- ------- -------
Add common stock equivalents 363,928
----------
representing dilutive stock options
Effect on basic EPS of dilutive CSE $(0.02) $(0.01)) $(0.04)
------- ------- -------
$(0.02)
Equals total weighted average
shares and CSE (diluted) 7,606,590 7,481,066 7,547,307 7,350,602
========= ========= ========= =========
Diluted EPS $0.41 $0.16 $0.83 $0.50
===== ===== ===== =====
Note 8: Comprehensive Income
The following table displays net income and the components of other
comprehensive income to arrive at total comprehensive income. For the Company,
the only components of other comprehensive income are those related to the
unrealized gains (losses) on available for sale investment securities.
(dollar amounts in thousands) Three months ended Nine months ended
September 30, September 30,
------------------------------- ------------------------------
2004 2003 2004 2003
--------------- -------------- -------------- --------------
Net income $ 3,083 $ 1,233 $ 6,252 $ 3,677
Other comprehensive income, net of tax:
Unrealized gains/(losses) on securities:
Unrealized holding gains/(losses) during the period 110 (228) (348) (911)
--------------- -------------- -------------- --------------
Comprehensive income $ 3,193 $ 1,005 $ 5,904 $ 2,766
=============== ============== ============== ==============
Note 9: Stock Dividend
On July 13, 2004, the Board of Directors declared a 10% stock dividend with a
record date of August 5, 2004 and a payable date of August 24, 2004. The
financial information and per share information in this report have been
adjusted to reflect the 10% stock dividend.
Note 10: Potential Spin-off
The Board of Directors of the Company is considering a potential spin-off of its
Delaware subsidiary, First Bank of Delaware and, in connection therewith,
requested a private letter ruling from the Internal Revenue Service. On October
27, 2004, the Company received a ruling from the Internal Revenue Service to the
effect that, among other things, the distribution would be tax free for U.S.
federal income tax purposes to the Company and its shareholders, and that
neither the Company nor its shareholders would recognize income, gain or loss as
a result of the distribution.
Following the spin-off, First Bank of Delaware would be an independent public
company. If the spin-off were to occur, it is contemplated that relative to
their share ownership in the Company. Holders of the Company's common stock
would continue to own their proportionate share of the Company. Subject to all
necessary regulatory filings and approvals, satisfaction of customary closing
conditions and approval by the Company's Board of Directors, the proposed
spin-off is expected to be completed during the first quarter of 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Issuer has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Republic First Bancorp, Inc.
Harry D. Madonna
-------------------------------------
President and Chief Executive Officer
Paul Frenkiel
-------------------------------------
Executive Vice President and
Chief Financial Officer
Dated: January 18, 2004