Upward estimate revisions on the back of strong second quarter
results - including a 300% earnings surprise - have helped
Republic First Bancorp Inc.
) achieve a Zacks #1 Rank (Strong Buy) on September 4. Moreover,
this commercial and retail banking service provider has delivered
positive earnings surprises in three of the last four quarters.
With a solid year-to-date return of 31.1%, this stock offers an
attractive investment opportunity.
The Rank Driver
Better-than-expected second quarter earnings, solid loan growth and
fundamental strength - including strong credit quality and capital
ratios - are the primary rank drivers for this stock.
Republic First Bancorp reported its second quarter results on July
24 with earnings per share of 4 cents, beating the Zacks Consensus
Estimate of a penny significantly by 300%. It also compared
favorably with the year-ago loss of 2 cents. Robust results for the
reported quarter were primarily aided by higher non-interest
income, elevated net interest income and reduced provision for loan
Net interest margin, which contracted 2 basis points on a year-over
year basis to 3.59%, was the downside for the quarter.
Net interest income increased 6.7% to $8.0 million from $7.5
million in the year-ago quarter. The rise was primarily due to
lower cost of funds. Non-interest income jumped 19.0% year over
year to $2.5 million. Provision for loan losses skidded 66.7% from
the year-ago quarter to $0.5 million. Non-interest expense remained
almost in line with the prior-year quarter at $9.0 million.
Credit quality continued to exhibit improvement. Non-performing
loans were $10.9 million, sliding down from $38.9 million as of
June 30, 2011. Non-performing assets for the quarter were $17.0
million, plummeting significantly from $52.0 million in the
year-ago quarter. Allowance for loan losses as a percentage of
period-end loans declined to 1.55% from 2.36% in the prior-year
As of June 30, 2012, Republic First Bancorp's total risk-based
capital ratio was 12.87%, Tier 1 risk-based capital ratio was
11.62% and Tier 1 leverage ratio was 8.99%. Tangible book value per
share came in at $2.59.
Earnings Estimate Revisions
One of two estimates has moved higher over the last 30 days for
2012 and 2013 each.
The Zacks Consensus Estimate for this year is up 50.0% to 12
cents per share, while the Zacks Consensus Estimate for the next
year gained 25.0% to reach 10 cents. The Zacks Consensus Estimate
for 2012 reflects a year-over-year improvement of about 112.6%.
REPUBLIC FST BC (FRBK): Free Stock Analysis
OLD SECOND BCP (OSBC): Free Stock Analysis
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Republic First Bancorp currently trades at a forward P/E of 17.6x,
in line with the peer group average. On a price-to-book basis, the
shares are trading at 0.8x, a 20.0% discount to the peer group
average of 1.0x. Given the company's strong fundamentals, the
valuation looks reasonable.
About the Company
Headquartered in Philadelphia, Pennsylvania, Republic First Bancorp
is a bank holding company. It operates through 13 offices located
in Abington, Ardmore, Bala Cynwyd, Plymouth Meeting, Media, and
Philadelphia in Pennsylvania and Voorhees and Haddonfield in New
Jersey through its subsidiary - Republic First Bank, which offers
an array of credit and depository banking services. The company,
which was founded in 1987, has a market capitalization of roughly
Old Second Bancorp Inc.
) is also a Zacks #1 Rank bank stock.