1
June
2010
Filed pursuant
to Rule 433
Registration
Statement No. 333-166286
June 1,
2010
2
Issuer: Republic
First Bancorp, Inc.
Offering: Follow-on
Common Stock
Gross
Amount Offered: $30.0
million
Over-Allotment
Option: 15%
Exchange
/ Symbol: NASDAQ
/ FRBK
Market
Capitalization (as of 5/28/10): $31.3
million
Use
of Proceeds: General
corporate purposes
Book-Running
Managers: Sandler
O’Neill + Partners, L.P.
and RBC
Capital Markets
Offering
Summary
3
History
of Republic Bank
Timeline
of Events
• 1987: Republic
Bank founded by Harry D.
Madonna, current Chairman and CEO
Madonna, current Chairman and CEO
• 1996: Republic
Bank merges with
Executive First Bank and becomes
Republic First Bank
Executive First Bank and becomes
Republic First Bank
• 2008: Engaged
Vernon W. Hill, II as a
consultant and began to hire former
Commerce Bank management team
consultant and began to hire former
Commerce Bank management team
• 2009: Initiated
transformation of bank to
Retail oriented, Customer friendly,
Commerce model
Retail oriented, Customer friendly,
Commerce model
• 2010: Begin
rebranding to Republic Bank
Headquarters:
Philadelphia, PA
Store
Count: 12
Assets:
Approximately $1.0B at
March 31, 2010
March 31, 2010
4
Republic
Bank - Inside Ownership
Total
Shares
Currently Held*
Currently Held*
%
of
Outstanding
Shares
Outstanding
Shares
Harry
D. Madonna
1,196,322
9.8%
Vernon
W. Hill, II
923,077
7.6%
All
Other Directors,
Executive Officers and
Related Parties
Executive Officers and
Related Parties
1,603,040
13.1%
Total
3,722,439
30.5%
* Assumes
full conversion of outstanding Trust Preferred
Securities
5
The
Republic Difference
• Converting
to a Power
Retailer
– Focus
on customer service and convenience
– Create
a strong brand
– Invested
$8.3 million during 2009 in store renovations
• Deposit
Driven
– Focus
on core deposits*
– 37%
core deposit growth from 12/31/08 to 3/31/10
• Manage
loan growth with a focus on asset quality
– Loan
to deposit ratio reduced from 105% to 79% from
12/31/08 to 3/31/10
12/31/08 to 3/31/10
*
Core Deposits are defined as Total Deposits less Public and Brokered
Deposits
6
6
Republic
Store Footprint
*
Prospective stores are subject to regulatory approvals
7
New
Management Team
|
Andrew
Logue
President
and Chief Operating Officer
|
1991
- 2008, Commerce Bancorp, Inc.
Senior
Operations Officer / Enterprise Risk
Management |
|
Rhonda
Costello
Chief
Retail Officer
|
1985
- 2008, Commerce Bancorp, Inc.
Senior
Retail Officer & Dean of Commerce University
|
|
Jay
Neilon
Chief
Credit Officer
|
1991
- 2008, Commerce Bancorp, Inc.
Senior
Philadelphia Credit Officer
|
|
Frank
Cavallaro
Chief Financial
Officer
|
1997
- 2009, Commerce Bancorp, Inc.
Vice
President /
Finance Department
|
|
Steve
McWilliams
Commercial
& Industrial Loans
|
2001
- 2009, Commerce Bancorp, Inc.
Regional
Vice President / Pennsylvania Metro Market
|
|
Rob
Worley
New
Jersey Market Manager
|
1992
- 2009, Commerce Bancorp, Inc.
Market
President / Washington, DC Metro Market
Regional
Vice President / South Jersey Market
|
Current
Position Prior
Experience
• Reuniting
the old Commerce team; 30+
Commerce hires to date
8
9
Rationale
For Offering
• Excellent
opportunity to gain market share
• Unique
timing to capitalize on a proven retail model
– Renovate
& upgrade existing store network
– Relocate
certain existing stores
– Roll-out
Southern NJ growth strategy
• Very
strong capital ratios
|
|
Actual
3/31/10
|
|
As
Adjusted*
|
|
-
Leverage
Ratio
|
8.35%
|
11.64%
|
|
|
-
Tier
I Capital
|
10.43%
|
14.53%
|
|
|
-
Total
Capital
|
11.90%
|
15.79%
|
|
* Giving
effect to the sale of $30 million of common stock
10
Republic
Bank Strategy
• Build
a platform that continues to attract experienced banking talent
– Vernon
Hill is an 7.6% owner and consultant to the Company
– 33
strategic new hires since June 2008
– 12
existing store locations in the metro Philadelphia market
– Additional
stores planned with a
focus on the South Jersey region
• Transform
to a Retail oriented, Customer friendly model
– Renovate
and upgrade existing store network
– Enhance
the customer experience
– Improve
and expand product offerings
• Strengthen
the balance sheet
– Increase
core deposits
– Reduce
loan / deposit ratio
– Maintain
strong liquidity & reserve levels
– Jay
Neilon was hired as Chief Credit Officer in December 2008
– Loan
portfolio thoroughly examined by management in 2009
– Continue
to aggressively manage asset quality
11
Organic
Growth Opportunity
Source:
SNL Financial; Deposit data as of 6/30/2009
(1)
Pennsylvania counties: Delaware,
Montgomery and Philadelphia; New Jersey counties: Atlantic, Burlington, Camden,
Cape May and Salem
• Philadelphia
metro market is experiencing a significant level of disruption
• Republic
First core deposits increased by 37% from 12/31/08 to
3/31/10
13
Capital
Summary
|
|
Actual
3/31/10
|
As
Adjusted*
|
|
|
Capital
Ratios
|
|
|
|
|
|
-
Leverage Ratio
|
8.35%
|
11.64%
|
|
|
-
Tier I Risk-Based
|
10.43%
|
14.53%
|
|
|
-
Total Risk-Based
|
11.90%
|
15.79%
|
|
|
-
Tangible Common Equity
|
6.74%
|
9.54%
|
* Giving
effect to the sale of $30 million of common stock
14
|
|
12/31/07
|
12/31/08
|
12/31/09
|
03/31/10
|
Change
Since
12/31/08 |
|
Assets
|
$ 1,016
|
$ 952
|
$ 1,009
|
$ 968
|
+2%
|
|
Core
Deposits
|
597
|
502
|
719
|
690
|
+37%
|
|
Loans
|
813
|
775
|
681
|
666
|
-14%
|
|
Loan
/ Deposit
Ratio |
104%
|
105%
|
77%
|
79%
|
-25%
|
Assets,
Deposits & Loan Growth
($ in
Millions)
15
Total
Cost of Funds
LTM
Funding Costs (%)
• Republic’s total
funding costs are below the cost incurred by its peers
• In the long term,
net interest margin will be enhanced by a stronger retail customer
base
base
Source:
SNL Financial; Financial data as of the quarter ended March
31, 2010
PA
Peers include publicly traded banks headquartered in Pennsylvania with assets
between $500mm-$2.5 bn
U.S.
Peers include public banks with assets between $500mm-$2.5
bn
16
Investment
Securities Portfolio
March
31, 2010
*
$2.8 million in OTTI charges have been taken since the 4th quarter of
2008
|
|
Book
Value
|
Current
Market
Value |
Unrealized
Gain/(Loss) |
%
of Portfolio
|
|
|
|
|
|
|
|
Agency
MBS
|
38,247
|
40,908
|
2,661
|
23%
|
|
Agency
CMOs
|
99,000
|
97,985
|
(1,015)
|
56%
|
|
Agency
Bonds
|
18,991
|
19,144
|
153
|
11%
|
|
Municipal
Securities
|
10,390
|
9,533
|
(857)
|
5%
|
|
Corporate
Bonds
|
5,990
|
6,214
|
224
|
4%
|
|
Pooled
Trust
Preferred
Securities *
|
6,640
|
2,478
|
(4,162)
|
1%
|
|
Other
Securities
|
181
|
156
|
(25)
|
-%
|
|
|
|
|
|
|
|
Total
AFS Securities
|
179,439
|
176,418
|
(3,021)
|
100%
|
($
in Thousands)
AAA
Rated
17
|
|
YTD
12/31/07
|
YTD
12/31/08
|
YTD
12/31/09
|
QTD
3/31/10
|
|
|
Earnings
per Share - GAAP Reported
|
$0.65
|
($0.04)
|
($1.07)
|
($0.37)
|
|
|
Adjustments
(After Tax):
|
|
|
|
|
|
|
|
Unusual
Credit Costs(1)
|
-
|
0.47
|
0.85
|
0.32
|
|
|
Impairment
Charges(2)
|
-
|
0.09
|
0.12
|
0.01
|
|
|
Merger-Related
Expenses(3)
|
-
|
0.02
|
0.14
|
0.06
|
|
|
FDIC
Assessments(4)
|
-
|
-
|
0.08
|
-
|
|
Pre-Credit,
Core Earnings per Share
|
$0.65
|
$0.54
|
$0.12
|
$0.02
|
|
EPS
- Pre Credit Core Earnings*
*Pre-Credit
Core Earnings per Share in a Non-GAAP financial measure. See Appendix A for
additional detail.
(1)
Extraordinary provision for loan losses and OREO costs
(2)
OTTI impairment charges on securities portfolio
(3)
Charges associated with the abandoned Metro Bank merger
(4)
One-time and increased FDIC assessment costs
18
06/30/08
12/31/08
06/30/09
12/31/09
03/31/10
Commercial
Real Estate
Income
Properties
376,872
375,159
370,448
385,791
380,078
Construction
184,724
177,098
163,288
72,567
73,684
Land
Development
33,552
33,777
31,505
35,099
31,695
Owner
Occupied
87,802
76,792
69,808
87,111
85,126
Total
Commercial Real Estate
682,950
662,826
635,049
580,568
570,583
Commercial
and Industrial
78,932
84,203
84,974
80,053
77,682
Consumer
28,993
36,053
27,995
33,197
31,171
Total
Loans (Gross)
790,875
783,082
748,018
693,818
679,436
Loan/Deposit Ratio
108%
105%
91%
77%
79%
Loan
Trends
($
in Thousands)
19
Asset
Quality
|
|
12/06
|
12/07
|
12/08
|
12/09
|
3/10
|
|
Non-Performing
Assets / Assets |
0.74%
|
2.55%
|
2.72%
|
3.93%
|
4.94%
|
|
Non-Performing
Loans ($mm) |
$
6.9
|
$
22.3
|
$
17.3
|
$
26.0
|
$
36.7
|
|
OREO
($mm)
|
$
0.6
|
$
3.7
|
$
8.6
|
$
13.6
|
$
11.0
|
|
OREO
/ Non-
Performing Assets |
8.0%
|
14.2%
|
33.1%
|
34.3%
|
23.1%
|
|
Loan
Loss Reserve /
Loans |
1.02%
|
1.04%
|
1.07%
|
1.85%
|
2.02%
|
|
Total
Delinquencies(1) |
0.32%
|
0.63%
|
1.62%
|
5.35%
|
4.36%
|
|
Net
Charge-offs /
Avg. Loans |
0.13%
|
0.14%
|
0.96%
|
1.33%
|
2.74%
|
(1)
Includes accruing loans 30 - 89 days past due as a percentage of total
loans
20
• A
significant level of resources continue to monitor and
assess asset quality
assess asset quality
• Criticized
and classified loan migration declined during
the first quarter 2010
the first quarter 2010
• Nearly
23% of the Non-Performing Asset total has been
transferred to the OREO portfolio as of 3/31/10
transferred to the OREO portfolio as of 3/31/10
• The
average write-down on assets classified as OREO
was 40% at 3/31/10
was 40% at 3/31/10
Asset
Quality
21
*
Assumes $30 million capital raise issuing 10.0 million shares @ $3.00 per
share
** PA Peers
include publicly traded banks headquartered in Pennsylvania with assets between
$500mm-$2.5bn
Republic
Bank - Valuation
Snapshot
Price
/ Tangible Book Value Analysis
(using
current price @ $3.00 per share)
Book
Price/Book
PA
Price
Value
Ratio
Peers**
Current
$ 3.00
$ 6.18
49%
131%
Post
Offering *
$ 3.00
$ 4.63
65%
131%
Average
Price/Book
-
-
123%
194%
Ratio
Over Last 5 Years
22
Summary
• New
Model
– Transformation
to Retail Banking model
– Customer
Service & Convenience
– Deposits,
Deposits & Core Deposits
• New
People
– Reunite
Commerce Team to execute Retail strategy
– Commitment
to common goal - Repeat History
• Strong
Capital
– Current
offering will provide capital to execute growth plan
• Price
to Book Value
– Current
valuation is attractive for potential investors
• Substantial
insider participation
23
Forward
Looking Statements
Certain
statements included herein are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, which we refer to as
the
Securities Act. All statements other than statements of historical facts contained herein, including statements regarding our plans, objectives, goals, strategies, future
events, capital expenditures, future results, our competitive strengths, our business strategy and the trends in our industry are forward-looking statements. The words
“believe,” “may,” “could,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “appear,” “future,” “likely,” “probably,” “suggest,” “goal,”
Securities Act. All statements other than statements of historical facts contained herein, including statements regarding our plans, objectives, goals, strategies, future
events, capital expenditures, future results, our competitive strengths, our business strategy and the trends in our industry are forward-looking statements. The words
“believe,” “may,” “could,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “appear,” “future,” “likely,” “probably,” “suggest,” “goal,”
“potential”and
similar expressions, as they relate to us, are intended to identify
forward-looking statements. All statements, other than statements of
historical
fact,
included herein regarding our financial position, business strategy and plans or
objectives for future operations are forward-looking
statements.
Forward-looking
statements 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, and in addition to the “Risk Factors”
discussed in the Registration Statement on Form S-1 (Registration No.
333-166286),
risks
and uncertainties can arise with changes in:
· general
economic conditions, including current turmoil in the financial markets and the
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;
competitors, price pressures, and similar items;
· deposit
flows;
· loan
demand;
· the
regulatory environment, including evolving banking industry standards, changes
in legislation or regulation;
· 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;
and
· other
economic, competitive, governmental, regulatory and technological factors
affecting our operations, pricing, products and services.
Readers
are cautioned not to place undue reliance on any forward-looking statement,
which reflects management’s analysis only as of the date of the
statement.
Except
as required by applicable law or regulation, we do not undertake, and
specifically disclaim any obligation to update or revise any forward-looking
statements
to reflect any changed assumptions, any unanticipated events or any changes in
the future.
In
addition, you should refer to the “Risk Factors” section of the Registration
Statement on Form S-1 (Registration No. 333-166286) for a discussion of factors
that
may
cause our actual results to differ materially from those which may be inferred
from our forward-looking statements. As a result of these factors,
the
forward-looking
statements herein may prove to be inaccurate. Furthermore, if our
forward-looking statements prove to be inaccurate, the inaccuracy may be
material. In
light of the significant uncertainties in these forward-looking statements, you
should not regard these statements as a representation or warranty by
us
or any other person that we will achieve our objectives and plans in any
specified time frame, if at all. Accordingly, you should not place
undue reliance
on
these forward-looking statements. All subsequent written and oral
forward-looking statements attributable to us or the persons acting on our
behalf
are
expressly qualified in their entirety by the applicable cautionary
statements.
24
Appendix
A
Pre-credit,
core earnings per share is a non-GAAP financial measure. The most
directly comparable GAAP financial measure is earnings per share. Republic’s
management calculates pre-credit, core earnings per share to exclude unusual or
extraordinary credit related costs, OTTI impairment charges, merger-related
expenses and extraordinary FDIC assessments. This non-GAAP information should
not be viewed as a substitute for operating performance measures determined in
accordance with GAAP, nor is it necessarily comparable to non-GAAP performance
measures similarly titled that may be presented by other companies. Management
believes this information is meaningful for shareholders to evaluate Republic’s
operating performance because it excludes some of the impact of market volatility
as it relates to investments in the securities portfolio, extraordinary costs
associated with an abandoned merger and FDIC assessment costs and an
extraordinary provision for loan losses and OREO costs. Management believes that
pre-credit, core earnings per share provides a more normalized measure of
operating performance.
directly comparable GAAP financial measure is earnings per share. Republic’s
management calculates pre-credit, core earnings per share to exclude unusual or
extraordinary credit related costs, OTTI impairment charges, merger-related
expenses and extraordinary FDIC assessments. This non-GAAP information should
not be viewed as a substitute for operating performance measures determined in
accordance with GAAP, nor is it necessarily comparable to non-GAAP performance
measures similarly titled that may be presented by other companies. Management
believes this information is meaningful for shareholders to evaluate Republic’s
operating performance because it excludes some of the impact of market volatility
as it relates to investments in the securities portfolio, extraordinary costs
associated with an abandoned merger and FDIC assessment costs and an
extraordinary provision for loan losses and OREO costs. Management believes that
pre-credit, core earnings per share provides a more normalized measure of
operating performance.
25
Read
Registration Statement and Prospectus
The
issuer has filed a registration statement (including a prospectus) with the
SEC
for the offering to which this communication relates. Before you invest, you should
read the prospectus in that registration statement and other documents the issuer
has filed with the SEC for more complete information about the issuer and this
offering. You may obtain these documents for free by visiting EDGAR on the SEC
Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer
participating in the offering will arrange to send you the prospectus if you request it
by calling Sandler O'Neill & Partners, L.P. at (866) 805-4128 or RBC Capital Markets
at (212) 428-6670.
for the offering to which this communication relates. Before you invest, you should
read the prospectus in that registration statement and other documents the issuer
has filed with the SEC for more complete information about the issuer and this
offering. You may obtain these documents for free by visiting EDGAR on the SEC
Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer
participating in the offering will arrange to send you the prospectus if you request it
by calling Sandler O'Neill & Partners, L.P. at (866) 805-4128 or RBC Capital Markets
at (212) 428-6670.