FRBK - Earnings call transcript Q2 2020 | Republic First Bancorp Inc

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Operator

Good morning, and welcome to the Second Quarter 2020 Earnings Conference Call. My name is [Sinera] [ph], and I will be the operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note this conference is being recorded. the to turn now will call Mr. over I Hill. Vernon Mr. Hill, you begin. may

Vernon Hill

Madonna, call. and quarter. to Harry the CFO; high welcome be go morning, then to President. We're Andy With Frank Logue, and to is points second Good through strong open the pleased up I'll calls. Cavallaro; a report me we'll and CEO; happy on for

the We quarter with out momentum. of second coming are strong very

national things that Bank you happened in by quarter, Republic second named hope doing. this is for what One the the all our meant I as saw that believe model we've of We reflects survey That Number been that Forbes is Some America's be. what to Service.

quarter, tremendous them statement us, left or into it's income are and more PPP good in clients, of and number when a not quarter, percentage in but America's first that all in as of current Commerce third, for overall $XX I've in loan bank ever Bank. Also the highest Just have percentage KBW the than seen we brought over. of PPP new fourth, of with were million It's banks, been PPP we to see Convenient produce was remember, move about chance, fees $XX million in by of [ph] we a you our Most of of the the some active did fees accounts not customers a number mentioned may and and my Program. loans only in very very the were served] [I XX% PPP life. us, loans the book. we raising moving strong also

to accept two, $XXX were Many not is very to. of on banks new of bottom happy this in X,XXX were in new the were customers we the we clients, PPP, loans, in did the While XX% loans, market I'm us. originated that million which page and

million or $XX as new are which, are repaid million, rules those fees $XX PPP or gross that forgiven. less. we of approximately are Our fees loans recognize The the

they'll that these quarters expect numbers; I and it in we the using sure Frank, is get one. profit? make hit right, statement PTPP income pre-tax four, So, three, KBW

Frank Cavallaro

pre-provision Pre-tax earnings.

Vernon Hill

for the used quarter $X.X If we we that had last million. number loss, in right, is Frank? number a that was us small So that

Frank Cavallaro

Breakeven in the quarter the two last and in losses prior.

Vernon Hill

X%, a numbers is on Talking jobs, than XX%, the in quarter-to-quarter, about grew up way pretty top and line. same In see quarter, down only line second grows expense top earnings. That's up higher the creating line line expenses year-to-year increase that to top the and where three. we our went X%, chart the the went expenses percentage went page XX%,

us. quality continues to strong be Asset very for

loans loans, at went our and loan it was outstanding balances. of to is our down now our loans, loan bottom page XX% Our which our accounts of X% three X.XX%. non-performing deferred to shows On reduced height X% of of

was was NIM down why explain Frank, XX a that Our one-timer? bps.

Frank Cavallaro

the fees the drove of quarter, quarter. balance recognize origination high we margin down only on X% recognition associated the begun just with yield so our the on In for have fees that, PPP plus and a sheet, those a level loans had the it at second we loans a limited to on

Vernon Hill

accounting the rules And that's this because changed middle. the for in

which as or into recognizing We the basis, the the is else. controller, the repaid. the revenue or or revenue, fees are XX-month income on amortizing are forgiven loans a everything So, on currently origination

housing sales. of homes tell seeing -- would business been are this won't a residential of it Residential loans. We in keep strong, that good mortgage the good being long momentum we're The So, mortgages is has me last most certainly market very first-half. for had they us. even for a that here most a on bought lot and

PPP last growth XX% loans. You without effect happy in we our and the was and points the the quarter right it shown, growth thing on without make. that believe We'd the wanted balance the were PPP please. see months deposits XX is, shows with loans and far questions different our growth I sheet without those can have let's is we to the PPP One was the in -- to the five be in XX%. the have and this page £, that's on

Operator

Absolutely. Thank you.

question Schiavone. first We will Please [Operator ahead. question-and-answer And now the Michael go Instructions] begin session. comes the from

is open. line Your

Michael Schiavone

Hi, question. good morning. my taking for Thanks

Vernon Hill

from? you're Michael,

Michael Schiavone

a So, high here. sort of question level

Vernon Hill

Michael, you're from what firm? from firm? what you're Michael,

Michael Schiavone

Keefe, Bruyette Woods; from & I'm sorry. I'm KBW. Oh,

Vernon Hill

Go thought. I what That's great. ahead. Right,

Michael Schiavone

Okay.

question, of your for So, a level high yes, sort a lot momentum business. QX had of good fundamental

So, levers going this just forward? what have discuss you keep moving can you to

Vernon Hill

We Michael. that things look you, to us. very future the clear three see Thank Yes. in

We to to it get expect XX% go from the is number a Frank, our -- -- reasonable loan current ratio see we and way to deposit XX%?

Frank Cavallaro

the next years, Over of couple yes.

Vernon Hill

bps that how many right? and our by XX So, raises bps, Frank, margin

Frank Cavallaro

basis at it XX would increase points. now right Looking to it

Vernon Hill

a actually today, bottom It's it a jaws get top PPP in positive our the line. done a should for one been lever. X%, get line time. so than about percentage It's to tremendously our trying expenses. That Which growing long higher at impact on we've up that's have our been we're where would something

a grew expenses top As grew -- grew line said and year-over-year line I X%. earlier, top XX% on

at our third clients. Thank say expect a For has market really to not it growing from to tremendous pack, big The handle had X%, we us growth We that clients, make but company, down impact leaving] attract and with might PPP the XX% been the are [ph] a else? a current tremendous growing but done also excluding and it's deposits new our and it this the have strong Anything loans very is our opportunity this on lever XX%. are I you, only XX% job this momentum and poor Mike. grew [Wells quarter, PPP brand. see in banks this. of

Michael Schiavone

and deferral positive you had how it in trends do pretty build guys How environment this much compared to Yes. you expect reserve, have to the And comfortable going forward? are current peers. then you with

Vernon Hill

are we comfortable reserve. Yes, with the

low. our As see, number you non-performing is very

quarters. PPP available the in of next three loans We have million $XX left

we might we loss where So the reserve. do can that as loan boost an opportunity use

Michael Schiavone

Okay, And now are gain expecting that you bounce one thanks. in slowed quick down? PPP of just type SBA the has program on any back sale one, last

Vernon Hill

Are we expecting what?

Michael Schiavone

A bounce has in sale since the now? of down back kind SBA gain PPP on slowed program

Vernon Hill

and sure slowed me -- I Yes, of question. SBA I'm a that thing. of ask different say loans kind way. not understand the The production your during Try PPP has

Michael Schiavone

remainder. the down, that in if Well, I in was release guess, that I you would was SBA so wondering back on up the sale mentioned gain your pick

Vernon Hill

see down to the would from we've move number Yes, been just seen mean. what doing. Yes, Oh, it's to historic normally. what we back you we've I expect that

the it's just PPP, COVID-XX by I think that's a less thing. that's whole affected

Michael Schiavone

helpful. thank right, that's all Okay, that's I you, have. All question. for Thanks my taking

Vernon Hill

Thank you.

Operator

you. Thank

Frank Please go question Schiraldi from from Our next ahead. Piper Sandler. comes

open. is line Your

Frank Schiraldi

were just some deposit operating I in growth accounts income with Vernon, the but of and reflects you us Hi, guys provided the the in then, was -- growth what us with guys tremendous bank. these that that good customers even excluding morning. of good customers become bigger not who of of -- can you for share picture terms can assume of quarter, PPP, share PPP in program, some

what the quarter? income a Thanks. talk growth provided you as deposit about of well little can in that bit as the So, sort generated

Vernon Hill

serving over some turn banks PPP but guess because give it clients but their I Yes, bit of a it's what's numbers, job you're sure Frank little here, to and an market, what's awful you the happened in worst. did big he'll Wells not was the a what, and before the

only do clients. So, current we would and PPP banks for of a lot their

it's middle to couldn't say a ask chance done their the bank market of it them, we in when gave up they to XX% ahead lots So, get us for PPP I lower-middle and loans have. the tremendous in and their a Frank. ways, and market been to even us switch, think Go with them plus current of and would

Let's talk about fees.

Frank Cavallaro

fees. the fee of we origination recognized million about On side, the $X.X

Vernon Hill

Of $XX million

Frank Cavallaro

million Of growth. $XX

rate $X the $XXX,XXX loans. addition there earned was another yield million on on In those to X% or

Vernon Hill

SBA. But to things because hard it's the X% they're you predict yield by don't These going be about how know forgiven should lifetime. fast or to repaid over

Is is For forgiveness instance, apps. Andy? the right, SBA not that accepting yet

Andy Logue

Correct.

Vernon Hill

to the hit one. four, should So, and fees in three, primarily hard guess, think it's but we little quarter a

Frank Schiraldi

Okay. how And as leverage, the here for quarter-to-quarter it sort jaws on say guide modeling XX% expectations to any on revenues grow you versus tough of on be but to one? operating the about should can would this timetable? Is fell, the the a expenses up then we be term, going sort great. fast your actually know, longer momentum, there think versus obviously, basis, it it's help Any two quarter revenue if give you to longer on of expenses

Vernon Hill

middle but the can in And projection numerical least that -- Frank, stuff on clear three. a fees you give all to make which can PPP the XX confident little you try on really we'll and you PPP basis, not the to with see We're back. this third has year-to-year quarter, very a we'll of them at look but,

Frank Schiraldi

Okay, right.

but remind could assuming of open. if bit, just about talk environment, could I'm us expect here. just you just if stores and you the you maybe from Okay those number growth expectations? given of A that's to a slowed

Vernon Hill

were that of because become and about digital more Number important experience the online, deliver Right. has we business in through but love America's Number where a We'll was -- Forbes channel. every the about We One I stores, one the company stores delivered One of FinTech wants talk and in-store, -- for click-and-bricks this much mobile, Service. customer what a unified stuff things we this the

So channel. we're to win continuing every in

this third opening our more year. This is year. business one have We this

FinTechs the Manhattan number in the management loan see online, every time and stopped the we but mobile, for is on see focusing you building stores -- debt delivery is channel what quarter when grant we're what's Frank? from cash take sure and side, York, our includes but -- which too New stores but the going six for The number nobody growth takes you But can months all growing now, us you'll on deposit to side. the being PPP even stores for the us for the like the all debt. -- and look quarter, the

Frank Cavallaro

it's approximately Number per -- still is per store excluding $XX store. PPP million

Frank Schiraldi

Okay.

you're that? model just wanted could reserve some back then looking in think that to you and I that go you you there half CECL, -- you about, for still as the just year do delayed offset Okay, of as profitability builds will that or fully ask obviously comfortable go to are the be finally,

Vernon Hill

Well, route. let's one some to or put free combined this routes we it of are those way, take either

Frank Schiraldi

sure I'm understand. not I Okay.

to you're saying So might switch you year? this not to CECL have

Vernon Hill

You ahead, CECL. asked Frank. about Go

Frank Cavallaro

occur to is national requirement the the adopt when will lifted. So CECL emergency of state

QX, year, could into be will requirement into it the QX, could go when it play. next So that's but come

Frank Schiraldi

of that P&L, right, outside mark? some capture Okay. to you'll through of And day one be able through the the

Frank Cavallaro

this XXst would P&L, through XX/XX/XX of in as prior the there -- can so quarter-to-quarter just so of -- the will anything are. As goes parallel not result it December year that an model understand through so that where increase year a year and through run running of any the the P&L, we're equity in track the we current adjustment changes

Vernon Hill

in with model the And is our line parallel current? less

Frank Cavallaro

was The would will year stabilizes higher significant line. but forecast as parallel as well. that the model evaluate continue now economy economic with the have as right the model new of we of The effect CECL of to end future the a margin, in

Frank Schiraldi

It's reserve share you're to right, of All your working you guess. that with number loan a all just can of the have so uncertainty through still don't I in Okay. expectation CECL. you post terms

Frank Cavallaro

accurate. exactly Yes,

Frank Schiraldi

thank Okay. All you. right. Great,

Vernon Hill

But Frank, the down. at our non-performance numbers, quarter-to-quarter keep down -- going remember looking going

Frank Schiraldi

quarters. deferral and at weightings. some I some it's probably I know fair. the at point those the would rates migrate but deferrals are that's not strong, couple deferrals lower next of risk No, will imagine for really some point, to of I mean,

Frank Cavallaro

Yes, okay.

Frank Schiraldi

Okay. Thank you.

Operator

Thank you.

at further this We have time. questions no

Vernon Hill

you all. Cheers. your for you support. Thank Thank

Operator

you. Thank gentlemen, participating. and you, today's for thank Thank this conference. And ladies you concludes

disconnect. You may now

Republic First Bancorp (FRBKQ) 27 Jul 202020 Q2 Earnings call transcript