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New President and Board Member The RBAz Board of Directors Cammi Bailey Chris Beams Chad Cline Bette DeGraw Regina Edwards Ralph Tapscott Judy Lynn Alan Sparks Scarlett Spring RBAz Newsletter Ralph E. Tapscott, President and CEO has now been on board since the end of March 2014. “Ralph was chosen from a group of approximately 10 candidates. He possesses the skill set we deem most important to propel the Bank to the next level.” stated Chad Cline, Chairman of the Board. Mr. Tapscott has experience with both very small and very large corporate banks preferring the community bank model and atmosphere. He indicated his keys to success were, among other things, 1) surrounding himself with and appreciating great talent, 2) getting involved with and giving back to the community, and 3) putting in the time necessary to get the job done well. Mr. Tapscott is a graduate of Texas Tech University and Pacific Coast Banking School’s graduate program. Ralph and his wife, Koena, are happy to be back in Arizona. Please take a moment and welcome Ralph to RepublicBankAz. 2014 August This issue Semi-Annual Update P. 1 Summary of RBAz Annual Meeting of Shareholders P. 2 & 3 Scarlett Spring was officially welcomed to the Board of Directors in January of 2014. “Scarlett was recruited for our Board because of her skills in marketing, strategic leadership, and business prowess” commented Chad Cline. In her role as President of VisionGate, a biomedical company pioneering early detection diagnostics specifically focused on lung cancer, she has developed and implemented a visionary strategic plan and raised significant capital. Scarlett has held past roles as the Chief Operating Officer of the Greater Phoenix Economic Council and as a National Sales Director for AstraZenica. Scarlett is a graduate of the University of Texas and received her MBA from Pepperdine University. She was recently recognized by “AZBusiness Magazine” as one of the 50 Most Influential Women in Arizona Business. New President & Board Member P.4 Contact RBAz Management Ralph Tapscott President & CEO 602-280-9403 Joel Gallon, CFO 602-280-9439 Jeff Crabb, CCO 602-280-9402 909 E. Missouri Ave Phoenix, AZ 85014 This newsletter may include forward-looking statements. Forwardlooking statements are typically identified by words such as “believe,” “expect,” “anticipate,” “intend,” “estimate,” “plan,” “goal,” “strategy,” and similar expressions or conditional verbs such as “may,” “will,” “should,” “would,” and “could.” All forward-looking statements are based on information available at this time. (602) 277-2500 Semi-Annual Update from President Tapscott It has been a fast and furious five months since I have been a part of the RepublicBankAz family. A few of the items completed in the first 150 days include – Completing an Office of the Comptroller of the Currency full scope examination Formalizing our Strategic and Capital Plans Completing two, third-party portfolio loan reviews Hosting the Eighth Annual Meeting of Shareholders Joining four new civic, community and service organizations Revamping numerous policies and procedures Spending no less than 65 hours in meetings with the Board of Directors To-date, I have had the pleasure of meeting roughly 40 of our nearly 300 shareholders. We have delivered a half dozen personal presentations of the Eighth Annual Meeting of Shareholders. The first half of 2014 continues to shape up as forecasted. Some highlights of our unaudited June 30, 2014 financial position is as follows: Year-to-date net income of $319,413 Year-to-date return on average assets of 0.72%, twice the Arizona peer average Total assets of $89,977,575 Loan to deposit ratio, a primary liquidity measure, reduced to 105% from 115% with a year-end goal of 100%. The target is 85% by year-end 2015. Tier one capital of 11.57% We continue to execute our strategic plan with a focus on, in order of importance: 1) safety and soundness, 2) sound and consistent profitability, 3) growth, primarily in core deposits, and 4) developing and retaining a competent and engaged staff and board. We are forecasting 2014 full year net income of roughly $600,000 and total assets of $93 million. www.RepublicBankAz.com Shareholders, have you moved recently? If you have moved, please inform Computershare, the Bank’s transfer agent, by calling (800) 962-4284. Help stay in touch by informing us of changes in your contact information by emailing Ann at : [email protected] Be the first to receive the RBAz Newsletter If you would like to receive this newsletter by email please contact Ann at: [email protected] How can I best help RepublicBankAz assure a successful future? Please bank with your Bank. We need local deposits to fund business growth in our community and we offer some of the best rates in town! Summary of the 8th Annual Meeting of Shareholders We have some of the best rates in town! 8th Annual Meeting Slides RepublicBankAz hosted the Eighth Annual Meeting of Shareholders on June 10, 2014. Shares voted, in person or by proxy, represented 56.1% of ownership. This year, options of voting via phone or internet were offered and shareholders commented positively on the ease of voting. Shareholders were assured that future Annual Meetings will take place on or before the end of May and that notice will be provided a minimum of 30 days prior to the annual meeting. Do you Kasasa? Open a personal Kasasa checking account to receive up to 2.5% APY* on balances up to $15,000 when qualifiers are met. Nationwide ATM fees refunded up to $25 per cycle. Chairman Cline conducted the business session of the meeting. The two items requiring a vote included election of Class III Directors, Chad Cline, Judy Lynn, and Bette DeGraw, and election of Ralph Tapscott as a new Class II Director. Both items passed with a majority vote. President Tapscott shared his view of changes in the banking landscape from 2007, when the Bank first opened its doors, to-date. He reviewed a number of industry variables which are now looking more economically favorable and how many industry professionals are forecasting favorable metrics in future years. It’s easy to earn the higher APY. Just be sure to do the following transactions & activities within your Kasasa Cash account during each monthly qualification cycle: Have at least 15 debit card purchases post and settle Have at least 1 automatic payment (ACH) or bill pay transaction post and settle Be enrolled and receive e-statement notice Joel Gallon, Chief Financial Officer, and Jeff Crabb, Chief Credit Officer, both gave presentations on their respective areas of the Bank. Many of the performance graphs used in the presentation can be found on the following page, but some of the key highlights are as follows: The Bank held $91 million in total assets as of March 31, 2014. Bank leadership has made a conscious effort to slow asset growth in order to align capital and liquidity ratios. The Bank is focused on growing core deposits and is forecasting year-end deposits of $80 million. The Bank’s December 31, 2013 net loss of $391,897 was discussed as well as the March 31, 2014 net profit of $185,530 and the full year projected net income of approximately $600,000. The diversification of the loan portfolio was discussed as was the reasons supporting a strategic slowing of loan growth. Total loan balances are forecast to be nearly $77 million at year-end. Check out Kasasa cash for even more ways to save! President Tapscott addressed the status of the Bank’s efforts in complying with the Formal Agreement issued by the Office of the Comptroller of the Currency in May of 2013. The Bank continues to strive for compliance and leadership expects to operate under the Formal Agreement for an additional 18 months. Partial compliance is expected with each mid-year regulatory visitation. Related compliance costs are expected to lessen with each milestone of compliance. President Tapscott then addressed the preliminary intent of the Bank to raise additional capital. Leadership believes it is prudent to raise an additional $3 - $5 million in capital to support the Bank’s current risk profile and support future growth. Shareholders in attendance requested additional details on the method of capital raise and possible pricing. President Tapscott indicated this was a preliminary discussion, but leadership wanted to make our shareholders aware of the Bank’s intentions as early as possible. Several shareholders indicated a preference to make the capital raise available to existing shareholders first before extending it to new, external investors. It is too preliminary to determine a potential offer price at this time, but information will be forthcoming. President Tapscott elaborated on the Bank’s strategic plan. An improvement is expected in the regional economy as well as the banking industry and leadership is focused on growing key valuation variables to improve shareholder’s current value. Additional growth capital will assist the Bank in balance sheet and earnings growth which should support higher valuations in the next several years. Shareholders asked several questions regarding bank operations and leadership recognized the Bank must do a better job in communicating with shareholders. Additionally, a question was posed as to any immediate expectation for dividends. It was pointed out that this would be counter productive to our objective in raising additional capital at this time and that under the current Formal Agreement, such dividends would be precluded. SPECIAL PROMOTION Over the Counter Bulletin Board RepublicBankAz began trading on the Over the Counter Bulletin Board exchange, under the ticker symbol RBAZ, approximately 18 months ago. This provides some added liquidity for shareholders; however, most community banks under $1 billion trade thinly. RepublicBankAz has 1,308,820 issued and outstanding shares. These shares are owned by roughly 306 individuals or entities. The June 30, 2014 book value per share was $8.19. Our most recent trade was at 56% of book value. Leadership is focused on a number of initiatives to have the investor public value our stock more favorably. These initiatives have been incorporated into our strategic plan. The pricing and volume of stock transactions over the past 12 months is illustrated in the graph. Open a Money Market account by 9/30/14 to Receive 1.01% APY* Put your money to work for you! Call us today at (602)277-2500 for details. *APY - Annual Percentage Yield is accurate as of 7/31/14. Rates are subject to change without notice.