FRBK - Earnings call transcript Q3 2021 | Republic First Bancorp Inc

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Operator

Welcome to the Third Quarter 2021 Earnings Conference Call. My name is Richard and I’ll be your 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 that this conference is being recorded. the to turn Financial Cavallaro, now Officer. will call Frank over Chief I Mr. begin. you Cavallaro, may

Frank Cavallaro

Vernon Thank Operating over morning. some call Inc. joined our the Chief First earnings joining call Andy and this for Bancorp, Chairman remarks. Logue, by opening time, Executive I'm turn Officer morning and Good for This for At Republic to you Chief Vernon us President our and Officer. Hill, on the I'll

Vernon Hill

call. Thank you Welcome to on. being our QX for

nine of show would Red the this our in been and strong as of serve. has you of quarter Power specially please? model third The Frank months once markets we all increasing year [indiscernible] our to continues momentum

Frank Cavallaro

start earnings Yes, with period for the ended nine-month we'll the September XX.

or $X to million a share Our a share to $X.XX million ago. $X.XX earnings just year $XX compared or a grew

For million months revenue driven million time. also ended $X.X reached noninterest X% to billion really earnings nine-month focus recorded compared have of jaws maintain by as increased the increased expense XX, continue $X for income than $X XX% year XX% has September expense more initiatives to The ago period in the that's last grown just -- of We $X for period in and the control growth in loss as refer by the year. this the Revenue same interest growth Deposits the year-over-year. effect. period strong to cost were period. at over in the billion a net three which we we improvement by on a been assets

we're of legacy a this year also growing deposit are at stores currently has pleased that stores combined achieving million rate new are at a the deposits and We're report $XX an included growing to with the year. million basis Our third XX dropped while the of in $XX average our last year. Loans compared basis points quarter this grown year to funds. strongly. decreasing XX cost The of growth funds points have simultaneously also quarter during of cost of third

the total loan strong portfolio grew which pandemic all XX. payments just effect dropped of remained to billion now also nonperforming assets assets to as payments basis that XX loan the asset And loans nearly have XX. at has our to quality customers returned we the or were loan these report loans all to XX. $X.X contractual paying the grow of for are September points Excluding of as deferring COVID PPP period that our by million to during September ended ratio XX% $XXX of off, our pleased We're September

Vernon Hill

for results we positive in -- million of volume months rate liability let the our that of almost interest asset gross add I Frank XXXX we're net the on first structured item on not our and way $XX the have year-to-year, $XX up margin. of produced our environment $XX the that increased went margin one million prior pleased growth helped me from us we're getting page which net versus also is other the and the million million to want year interest $XX produced that and nine

getting the pleased rate. Frank? and on growth we're performance say positive to So both we're

Frank Cavallaro

in and excluding On we including that the PPP the a asset, balances, the deposit release put loan next page table you of and shows our effect.

beginning were first PPP was when loan strong program year rolled a in we last As participant out. it you're aware the

it those our now of with related grow effect. and PPP year early clear involved loan that to We balances as continue program. balance to second the that to balances growth we continues We're excluding the continued make to seeing presented pay down, that that in we without got this so sheet wave and

utilizing longer that income statement. we borrowings we're the net more jaws table no to the it of the expired. reiterating below for summary short-term that We has addition the the the about period effect, a the, because three In revenue increase detailed the is utilizing X% nine growth also is that talked PPP earlier, but for versus interest program were The income also are growth. and third both in for in months and quarter we're that nine-month the here strong the XX% revenue quarter are

had one-time this we a for We broke we goodwill a charge also In impairment. ago table also charge, note yes. that this table year draw expense a out out, noninterest in we

So an out change on in comparison, when be the basis. see we're and separate we that this that apples-to-apples doing are expenses to able to

Vernon Hill

the Some improvement net include additional margin year-over-year. interest highlights

net period of nine-month ago we to the that's XXX only not the at For this improvement, continue [indiscernible] compared by as driven XXX a and cost funds. interest ended, time year volume a of we rate the again margin see the but decline recorded in to a

convenience So We get this model have, high with low switching and growth magic our cost deposit, of for growth a funds. low are cost a deposit again reflects People the from ratio with this core model banks before us. funds. to deposit power tremendous us in our this is Frank? model of The one of the of not for [ph] the core rate. and we past service, again very loss very

Frank Cavallaro

got for opened are which the a fourth pursuing during Ocean expect store we've that of we're and locations sites under we today. next City additional got store year. complete to construction that in reporting also We've quarter We're as XX there

ratio based increased both done versus that the well the of well comparison. to dives as and customers a year Mortgage life $XXX the out in mortgage loans They've in refinancings value is pages book three were the The and release XXX our income an was fees residential XX.XX% further recognized future ratio last talked was into revenue stated to We to will also as originations in as in than ago. periods. nine-month the per continue of volumes. continuing PPP million about Our $X risk homes. the drive break leverage $X.XX and share strong Oak loan total additional as The XX existing compared the September capital following division, as over purchase $X.X new month the the $X.XX months, be over more with that of in we've to the deferred both got We've expense. million noninterest the We comparison, statement. XX improvement

the not sheet, income on to Power a running nine-month as but continues a model that $X we across results the income in statement in well. million of the $X.XX and to just saw just period balance compared board, ago we're the the Red generate year For $XX about the tremendous Net net income. million growth period or the to was nine-month share for

Vernon Hill

for versus were of share in $X.XX our the $X.XX And earnings quarter the quarter correct? a third XXXX share a

Frank Cavallaro

That's correct.

Vernon Hill

make here it. you in to want And point case of I have some a missed

the have off, goodwill we is We so that this item believe is wrote sheet book on no our at no We balance it that goodwill goodwill I small all. one bank had right?

Frank Cavallaro

That's correct.

Vernon Hill

ahead. Go

Frank Cavallaro

only seeing this over deposits deposit one million a the continue $XXX categories XX deposits. The to $X growing following in the break growth table. more lending to this our we've Those are commercial the year-over-year. out loans, XX%, deposits. of growth, The see but fans we've a segregate talked bottom, great nearly mortgage declining has we growth go model commercial rollout but and or something throughout in noninterest-bearing there. we in not environment board months we of about loans continues, the we're is by proud our as PPP within page win got so [ph] process growth and as over strong following than the we can the We're inflows grew across strong seen the balance markets. loans to deposits the last highlight We we the is pipelines page forgiveness We into estate. group like type. We you at the that fastest deposits continue real future. The get XX% the billion We residential see seeing into significantly build

Vernon Hill

loans New substantial amount contribute And deposits. begun to a Metro our has portion and York in already

Frank Cavallaro

to assets XX following assets table mentioned quality. just The has points. nonperforming basis asset a the total page has on to dropped We

loan has for to to and XX losses compare points loans to total nonperforming to loans increased grown the allowance or XXX%. ratio coverage allowance Our has basis the

is ratio that our other of table both bank and ratios our the The to capital the company well-capitalized but at a from continue we at listing table the levels leverage a holding and last strong all the X.XX%, the Finally, out ratios company level. holding capital [indiscernible]. remain at is above require

Vernon Hill

you, Thank [indiscernible] Andy? Frank.

Andrew Logue

No I'm good.

Vernon Hill

please? floor can we open right, for up All questions the

Operator

comes First Instructions] the [Operator Schiraldi from you. question line Sandler. Mr. from Piper on Thank Frank

Vernon Hill

Good morning.

Frank Schiraldi

wanted growth. I to with Just start

new macro the macro XX% given openings wondering still XQ of XX% growth has and Is been last tailwind kind the the obviously coming from all that growth Frank, in industry know, an You reasonable just a such XX standpoint. been year. just thoughts pretty has of down are your a XX% that you in and you to that the mentioned stimulus, a is environment, know, expectation just short-term? next the the future unique year-over-year, growth, months or store

Vernon Hill

give but important, numbers with Frank where relationships you We like York ours did Metro in in just honestly expand number, commerce. as in deposit just it we percentage [indiscernible]. a a we higher and business PPP Frank loans different will project the made, in market the pursuer for way. at slightly we created. the strange that Particularly year we not growth project growth very was I the New being but growth were new our

forward. using we I generally what is that going numbers got Frank, think predict right? the what we're I

Frank Cavallaro

correct new you we to say you and just one opened but we'll obviously Yes, date growth the and that year. us, last two helps know year this are new what only store store

footprint. us consumer effect program momentum the improve new as across the big our seeing but we're said feeling, our and we're commercial Vernon a side. board on business the on this both brand, loan So The helping had PPP relationships to across drive and build

sustainable. So question, your that to answer we think that is that

Vernon Hill

our and because So are we in stores And us it total certainly into in number small But that for they’re years growth the are with keeps open of growth. the this existing but stores, [indiscernible] our growth these important much not are Frank, the overestimate, our because that the familiar stores new that see they’re per past. numbers smaller lessen the from and the losses new growth store at stores, the month coming expensive of base, deposits models impact growth new new numbers had and in bank a they to need first like had, you expense is you'll the percentage markets, to us, a you if stores very helps in go you look we while some the above. our

Frank Schiraldi

that potential is of just are thank in constraint lot obviously a terms of and you. on of timing then we that specific side on those that in of here? levels? ratio there get conversations your What that the above on you're terms size the in growth? to big And capital and at thoughts Okay. how boost a up that kind capital, And capital common comes as a XXXX Great, want a looking stay to into you a is raise

Vernon Hill

percentages Right, why about talk we [indiscernible]? ratios the cost the don’t cap

Frank Cavallaro

Yes, assets. leverage as the ratios, this one when [indiscernible] weighted, released monitor risk the we list our they team just side, but mentioned had by not because average the that ratio that's we asset driven is closely out all

something an aware we is to well stay below needs aware in assess do. X% range keep above a we’re what that models total capitalized what with but we that basis of, also eye is we're continue are, clearly one on. on risk-based regular ratio the we’re the and goal capital want closely XX% in to need to our we're monitor the It’s the and to threshold. So, We leverage that on that tune

Vernon Hill

these Frank, And going we But question now, to at need let look rates. have at you that growth capital me with look what the answered. growth these rates really we we numbers answer the can't forward

need two to the this or and call of we growth But the know quarter too. ahead, growth, years raises. equity additional you All capital our support raise We we although sometimes for and a a XXXX. hope the raise conclude companies and need reflect is fourth equity in of an three this capital models We've to relatively a on current sometimes small small model do do cannot through the year. predict not this growth done growth bank

Frank Schiraldi

you XQ on further the any of raise you $XX think sort XQ Okay, million, year and do you're ago. size done guys small, of in-terms of, a Is of said you range? thought in need that in a a think thinking have colour or terms sort level you convertible what range I

Vernon Hill

something, Yes, capital. you generally of and you number. want But a is let’s XX or I around number, don't want XX to a commit give to Frank. range that say write sort to the growth I I’ll that to additional but

be preferred not to We range. are certainly going larger the than

Frank Schiraldi

Okay, of until and you capital guys do are okay have XXXX. raise you so that feel terms you yes, it be then next right, just in for will then once years generating I internally the of few you like the sort

Vernon Hill

Yes, now. a to model, and we three Like models, that's but as the the see is the run for ways. all on see banks three these this any a -- the right projection, everybody equity the four knows, back a need way for all any it is years, different models million years. next raise We to or four we model don't call

Frank Schiraldi

the you for Okay, great, colour. thank all

Vernon Hill

Thank you, Frank.

Operator

Thank you.

comes line Perito from Michael on the next Our KBW. Mr. from question

Vernon Hill

Michael. Good morning,

Michael Perito

stick capital a topic on for I wanted second. that to

It mean it's kind still the move growth additional i since helpful, points then like to improvement. equity, efficiency you’ve I assume you it would drive it forward more So, -- the is have improvements seem here, slow to guys, appreciate not XXXX. guys growth but I end can't of, you mean, I any fair specifics, or I slow. about either material of as year you to and XX and mean I is if mean driven expect need to efficiency mean we, we doesn't

and at continue expect you more efficiencies on it of period down raise? pace equity openings that time fair post kind to drive say is store move that continue So, to to moderate guys to during a

Vernon Hill

things three Mike. about ask you here, Well,

much of So let opening I initial percentage a going the openings what you to me, store answers store the decreasing give Frank is me and number is our but of earlier. let to repeat all, The bank said base, the first minimal stores losses expenses on new is few effect will a years. more bottom in Frank? you've profits, so of on a line number than our the stores these decreasing and have seen

Frank Cavallaro

percentage better as we revenue that our talk Mike increase so in and so and noninterest also about improvement us. mentioned to improved expenses, about the compared technology, we earlier enhancement earlier, greater on there a focus a our that that there's on focus we are Yes, We previously efficiency. the the focus calls -- improvements in is drives as think for on talked some

we’re a answer, things the expect fair this faster, that could mentioned, mentioned future, together the models grow then it's this foreseeable change, as be faster a a and we in that know that model if you Vernon different could but of we thing that think So, than right now, the way we really is you and all running, in as statement. is just

Vernon Hill

than substantially as going knows, think certainly stores clearer these less stores, expand larger To we build fewer we’re markets over had new and opening stores new and and Michael, make even to into we see everybody with we what the stores store the it same figured, less we this half about maybe you're At helps fewer still need And in serving love I total than markets. I use on we them are world, in and or need side. commerce that. many really Republic to existing XXX But primarily base expense that. stores, fewer stores new this, a new to

Michael Perito

to it I share? is you but the some or really mean, is time, process in did is the X obviously just the comment at then I the there is electing current willing convertible the tough guys guys and preferred the last a multiple. any I equity other And more quarter? CET common you’re are little the ratio to fourth thought it. use here thought insights Got that you know mean common potentially behind priority on boost to why electing the the that's just

Vernon Hill

have almost Yes, and debt we have no we debt, here. no

will plan mean the best. raise needs. look Right? keep we where we leverage, be the This capital need to capital all affects a models I all is common well this do up ratios, common, we most. tell amount obviously Yes, us a common clear rate. our think is to the I as it to debt. So, we the as all ways at growth the to is raise the us equity helps did of preferred minimal Total it this solve our

Michael Perito

bond just it. last I little Thank be if a NIM you mean, then NIM the of at Okay continues provide robust? curious you the over the term in any was the buying growth assuming one here, to and you're thoughts what one got where me, from overall have? on next Frank, may think you I the and could what kind near on trend loan you could few yield, that book could colour be quarters and

Frank Cavallaro

Yes bit is a thing every a XXX type safe only on we portfolio, there on secret high the If steepness that's We But it timing, seeing get that us clearly between little curve the we the yields right things the excess waiting no that on different over end that quarter us, come steepness it's because answer. That day. curve of up again helps strategy, there better. for the the securities on maybe something the the the today, answer. we're helps inverts of right buy. is last of us. and based selectively really right the and built and focus the then In -- strategy bond X% cash things to are to yield us you're out the

Vernon Hill

might when look and securities. That's those we our plus had number report a at [indiscernible] XX% loan Republic, way you secured portfolio back to mortgage our mortgage plus than loan are numbers ratio at and deposit. of our two loan lower back remember often we days combine deposit Republic it which you to to would deposit Commerce, them our number have at to Michael, the One back in loan

Michael Perito

that's Thank it. Got appreciate Nope you, guys. I it. it.

Vernon Hill

you. Thank

Operator

Thank Instructions]. you, [Operator

from ahead. one from Abbott next Our Cooper comes Management. go Please Driver

Abbott Cooper

Thanks.

Just Commerce point. were that a Bancorp's I on was back results looked last year at X.XX. The then securities you CEO in year followup yield on the XXXX. ending last for

get And for capital Your leverage what assumptions securities? ratio that the a need time, models? the X.XX. say, you about I'll to you models in show are there like raise raise your What your won't on a are capital but in yields some minute,

Vernon Hill

Frank?

Frank Cavallaro

The assumptions. will to revenue. enhance use We conservative the That loan can interest we obviously, growth. what's control curve, we going we are expect and improving Yes, deposit the loan margin. will our our thing focus on is that ratio that to drive that don't rates the or help one

as So markets, new into that we expand focus be will for a us.

Abbott Cooper

how Okay, and to are you going do that? well,

Vernon Hill

build books, you and markets, teams The in lenders always the have new way clients it. particularly go loan of that out you recruit in

Abbott Cooper

that's keep you talking. not right? really, model, mean, not that's Yes, I guys your

Vernon Hill

York No, whole time XXX% and to When New our bank we we it's were $XX was other the in New and doing Metro loan attacked from we world, right model. exactly how we're That's from those the did recruiting Commerce markets. other it now. portfolio Commerce banks billion what York that's created and by scratch, went over lenders a built at within by

Abbott Cooper

Okay, but loan your is pointed that out had, ratio was deposit lower at what than just Commerce much it you you still to now.

that, like not right? it's growing you're, So

Vernon Hill

in numbers was Because total at it. that deposit we're higher than growth now seeing of raw Commerce

York and New Metro build now. recruit several book do from in teams once bank. Metro I a if of New out was surprised the it So people this We York York in market you we're largest go years, or loan be loan doing and at how did market. we and asked New the it? We me wouldn't Metro we

Abbott Cooper

X.X% capital raise, it's what I at annualizing just Bloomberg, on If on on I is then this your And so quarter get equity. to return XX%. equity on based cost this just look capital to

you If a you're fourth a discount to this value. raise at it quarter, capital do likely book significant doing

dilute and more? shareholders why If you you that by of raising existing you can't have capital going earn the cost are the to capital now,

Vernon Hill

is as way cheapest the raise math the true. Because way. capital this about This cheapest -- grow we keep is is say you Everything us this for to model. to the

Abbott Cooper

Yes.

biggest overall And question once. you profitability So like guess, about Do you haven't you I is, kind [indiscernible]? is what care my profitability? mentioned do care of

Vernon Hill

achieved have about We profitability times multiple it. we've talked

Abbott Cooper

much to have in increases you don't get -- mentioned costs You how those mentioned it earnings. earnings;

Vernon Hill

growth Allow growth process, expense. with showed our We've me, in We're last We've to the I our our getting both has the me rate not rate, expense talked talked about about our we We profits. answer. our you effect. time, quicker volume. to let discussion. getting talked That's anywhere that jaws top model; NIM don't know we're and allow the on, hold than about me and grow and line positive grow this we've how slowed our answer.

Operator

Thank you.

[ph]. line on from the comes Please Incorporated question Mr. from Entry ahead. [indiscernible] Next go

Unidentified Analyst

would I or you such a offering about significant book considered well rights a a secondarily, basically bit all it to And at that Would secondary traditional to be value. then Vernon tangible where Hi am be discount out? is a the themselves capital would offering? has secondary How able book it troubled shares handle the dilute as the in purchasing offering be of raise value? existing shareholders would shares,

Vernon Hill

an we the do at the and Vernon same If Hill offering everyone or fourth buys else. as buys quarter price in have

Unidentified Analyst

a it traditional rights be a offering? or Would offering

Vernon Hill

get that. determined the form we on but yet, back will We exact you haven't to really

Unidentified Analyst

then doesn't to with value growth a any to you when capital us. to raise seem doesn’t succeed could sell sense it just discount stronger in the make to capital it just position to to the Yes, me plans that at you sense potentially that's have that could somebody much company a book such make

So we before about do you hope strongly things you'd think it. would that

Vernon Hill

everything. about think this before. We've been road We down

did we the returned me Commerce. higher Our of just returned Commerce XX% XX, Commerce is year. goal Remember, please, finish, a long let create a over time, period in like to value

diluted small personally the is offering when rate value goal equity we in you do, was -- it most So times. diluted shares to somewhat But are say with part gets I our those our create increasing better of a environment a me. there time. a of And being is over don't period

Unidentified Analyst

Commerce around. Yes, today than when it very different it's a was world was

You're think living that results you went past for time. at in I and your Metro. the the with don't Thank great. what on look were

Frank Cavallaro

First that's had all, do nothing system with model. do unfair. our model. European with basic of on banking do has other to has the Britain What It and to to And nothing I happened comment. the Metro It forgot banking completely our to system. your in

We are not past. living the in

the We our with of digital providing are branches. online customers best

business debate certainly agree We Our is Thank and at more whether consumer always in Clients that. not commercial. was can it were you. much living we clients Commerce. we the past, do but with

Operator

And questions no queue. further I'm showing in

Vernon Hill

thank appreciate time. questions Have next a Okay, for you we Bye-bye. your you great and much to all. very We day. the forward Thank look call. our

Operator

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

You may disconnect. now

Republic First Bancorp (FRBKQ) 27 Oct 212021 Q3 Earnings call transcript