Republic First Bancorp Inc. (NASDAQ:FRBK) Q3 2018 Earnings Conference Call Transcript

Oct 25, 2018 • 10:00 am ET

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Republic First Bancorp Inc. (NASDAQ:FRBK) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Welcome to the Third Quarter Earnings Call. My name is James. 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) Also note this conference is being recorded.

I'd now like to turn the call over to Vernon Hill. Mr. Hill, you may begin.

Executive
Vernon Hill

Thank you. Good morning to whoever's on the call today. You're welcome to the third quarter release for Republic First Bancorp. With me is the Chief Executive, Harry Madonna; with COO, Andy Logue; and CFO, Frank, Cavallaro. We'll run through the highlights of the press release and then we'll open the floor. We ended the third quarter in great shape. We had another great quarter in growth in the top-up of deposits. It grew $500 million in the quarter three and deposits at the end of the third quarter was 27%, above the third quarter of last year. Is that right, Frank?

Executive
Frank Cavallaro

Correct.

Executive
Vernon Hill

Correct me if I'm wrong here. We continue to build new stores on our Power of Red campaign. I'll talk about it in New York. So we're building new stores. Our stores -- the newer stores are growing at the average rate of $29 million in deposit growth per year and when you average those with the older Republic stores, even then, our stores were growing at $22 million a year with a very low cost of money. The magic of this model is very high deposit growth with relatively low cost of money gathered by service and some with agents. Commercial deposits constitute, Frank, what percentage?

Executive
Frank Cavallaro

Commercial deposits of approximately 70%. I'm sorry, commercial deposits of approximately 45% of the overall deposit base.

Executive
Vernon Hill

So it's important that the growth is coming in commercial first. Loans also had a great quarter. We grew $283 million for the quarter and we're up 26% in outstanding loans over September of last year. And you could see deposit grew and loan growth are tacking together. Unlike some calls you hear, we're having great success in growing our loan book at loans that -- we have loans that meet our pricing and risk criteria. We'd like to point out that our top line for the nine-month period grew 24%, and our cost only grew 15%, as we could -- and as we expect to see top line grow at a higher percentage rate than cost. We're reporting before and after tax, but to compare the two because we didn't have any tax liability in the third quarter of last year. Income before tax, which is on an apples-to-apples basis grew 30% for the nine months of 2018 compared to 2017.

With that, I'll turn it -- Harry, do you want to say anything.

Executive
Harry Madonna

No.

Executive
Vernon Hill

Frank? I turn it over to Frank Cavallaro.

Executive
Frank Cavallaro

Well done. So the deposit and loan growth has driven overall asset growth. Assets have grown to $2.7 billion as of September 30th. In addition, I'd like to mention that