"Republic First Bancorp said Wednesday that it has completed the sale of $59 million of commercial real estate loans and foreclosed properties to a single investor.
The company, parent to Republic Bank, said the transaction will dramatically reduce non-performing asset balances and significantly improve credit quality metrics while still leaving it with strong capital ratios.
The loans and foreclosed properties to be sold had a book balance of $45.1 million and included $28.4 million of non-accrual loans and other real estate owned. Net proceeds amounted to $30.6 million and Republic First said it expects to incur a loss of approximately $14.5 million in the fourth quarter as a result of the sale. Excluding the completion of the loan transaction, Republic First said it was projecting an estimated profit of approximately $1.1 million for the quarter.
Republic First of Philadelphia has struggled in recent years with elevated nonperforming loans. The bank has become more retail-friendly in recent years since Commerce Bank founder Vernon W. Hill II came aboard as an investor and adviser a few years ago. It has also attempted restructuring its loan portfolio away from commercial real estate into more commercial and industrial loans.
Republic First and Harrisburg-based Metro Bancorp terminated a 2008 merger agreement in April 2010 after not receiving regulatory approval. Since that time, the bank has turned its attention toward strengthening its balance sheet.
“During that time period we have transformed Republic into a new bank with a new brand, new management team, renovated store locations and a retail model focused on fanatical customer service,” Republic First Chairman and CEO Harry D. Madonna said. “We have strengthened our capital position and brought stabilization to the balance sheet in an incredibly challenging economic environment. We believe this transaction represents the final step in completing the transformation and we anxiously look forward to building out our model to serve the customers in our market.”
Republic First said the loan sale will improve its percentage of non-performing assets to 1.8 percent in the fourth quarter compared to 4.83 percent in the third quarter. The bank also said its capital ratios are strong enough for it to pursue its growth and expansion plans. Republic First currently has 13 branches located in Abington, Ardmore, Bala Cynwyd, Plymouth Meeting, Media, Philadelphia, Voorhees and Haddonfield."
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