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Republic First Bancorp Inc (NASDAQ:FRBK)
Q3 2019 Earnings Call
Oct 28, 2019, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Welcome to the third Quarter 2019 Earnings Conference Call. My name is Daryl 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.

I would now like to turn the call over to Vernon Hill. Mr. Hill you may begin.

Vernon W. Hill -- Chairman of the Board

Thank you, Daryl. Good morning and thank you for joining the Q3 call, pardon my throat. With me today, our Chief Executive Republic Harry Madonna, Andrew Logue, the Chief Operating Officer, excuse me and Frank Cavallaro, the Chief Financial officer. I assume you all had the quarter three press release, and I'll hand it over to Frank now I guess. Go ahead, Frank.

Frank Cavallaro -- Executive Vice President and Chief Financial Officer

So we're pleased to report our results for the third quarter, we've had deposit growth of over $340 million year-over-year and grown at $14.7 billion or 14% during that period. The new stores that we've opened our prototype buildings are growing deposits at an average of $24 million this year, while our overall average per new store is $14 million. We've opened our first store in New York City during third quarter, located at 14th & 5th and we expect to open our next store in New York in the fourth quarter located at 51st and 3rd.

Our loans grew $190 million year-over-year or 14% to $1.6 billion and that growth has been despite challenging environment where we see significant pay-offs in refinancings. So we continue to see strong pipeline and are pleased with loan growth.Total assets reached $3.1 billion as of September 30th that's growth is over $400 million since a year ago. We've got 28 total stores opened today. We recorded net loss in the quarter, year-to-date our net loss was $1 million or $0.02 a share, compared to $6.5 million a year ago at this time.

We continue to see compression in the margins as a result of the flat or inverted yield curve, and in addition, we're incurring the cost to build out the New York market. We anticipate that the margin will continue -- will now continue to compress as a result of the decline in fed funds rates and a increase [Phonetic] on cost of some of our higher cost deposits.

Vernon W. Hill -- Chairman of the Board

And our New York business, we will be getting to -- go ahead Frank.

Frank Cavallaro -- Executive Vice President and Chief Financial Officer

Yeah, the New York, now, during the first half of the year, we are only occurring expenses. Now that we're starting to open new stores, we're seeing revenue production as a result of loan growth and deposits growth.

Vernon W. Hill -- Chairman of the Board

Harry, you want to add? Anybody else. All right, let's open up the floor please.

Questions and Answers:

Operator

[Operator Instructions] Well, we do have a question from Frank Schiraldi, Mr. Schiraldi, you may ask your question.

Frank Schiraldi -- Sandler O'Neill -- Analyst

Thank you. Good morning. Just wanted to ask about the growth in deposits. I'm wondering if you guys could share the -- does not to be. In terms of the Manhattan branch that opened, specifically. What sort of growth you saw in deposits in that branch, or where those are currently total deposits in our branch as of the end of the quarter?

Vernon W. Hill -- Chairman of the Board

Yeah, hi Frank, Vernon. We don't release deposits per branch certainly in between the year-end numbers, but we've been very pleased with our growth in deposits in our first New York store. And that you heard me say years ago before, the more stores you have the better they all do. So we are definitely seeing more growth in New York than we would see in our stores down here. So, so far I think we're off to a good start, but as I did when we expanded in New York in 2001 more stores means -- any market means more growth in each store.

Frank Schiraldi -- Sandler O'Neill -- Analyst

Okay. And then just wondered if you could just in terms of modeling. I mean, in terms of the percent of costs related to the Second Manhattan store, what sort of costs are already embedded in this quarter's result?

Vernon W. Hill -- Chairman of the Board

Well, I'm not sure we can give you that exact number, Frank, but remember the rules have changed when you're building new stores and that of which market they are in, you have to expense the rent before -- before the store open. So we had a cost in all new stores, particularly where we rent. We have to expense the rent months before we open. And then as you have the normal expenses of hiring people, recruiting people, training people, but also what's happened with our market up there, we've hired a commercial loan team model that we have four or five commercial loan people, which support. So it's not just one branch, it's the support on the loan side, that goes with it.

Frank Schiraldi -- Sandler O'Neill -- Analyst

Okay. And then just finally, if -- you guys could just talk a little bit about -- your thoughts on. I realize you're investing a lot into the model, but your thoughts on timing for a return to profitability here?

Frank Cavallaro -- Executive Vice President and Chief Financial Officer

Yeah, hi Frank. We don't predict and we don't give guidance, but we would say in a different way, Frank. We were making money even when some of -- the new expenses in 2019 that the first time unusual start-up expenses for the New York market should begin to be offset by the income from lending.

Frank Schiraldi -- Sandler O'Neill -- Analyst

Okay. So there is no -- is there any change to your thoughts on how quickly you guys are growing. How fast you want to grow in terms of store openings or I'm just wondering if the near-term contraction in profitability has -- how did you guys change your thinking at all in terms of growth rate?

Vernon W. Hill -- Chairman of the Board

Well, we haven't announced, but I guess we're ready to say it now that our current plans are to reduce our store -- new store openings in 2020, and that will be two stores at our metropolitan markets here in Philadelphia [Phonetic], and those are already being built and will open early next year. Our plan is to have at least two stores in the New York market. We haven't begun to work on those sites yet.

Frank Schiraldi -- Sandler O'Neill -- Analyst

Okay. Great, thank you. Thank you.

Vernon W. Hill -- Chairman of the Board

Thank you, Frank.

Operator

And our next question comes from Michael Perito, Mr. Perito, you may ask your question.

Michael Perito -- KBW -- Analyst

Thank you. Good morning. I was wondering if you could maybe just talk about kind of the deposit and lending pricing performance thus far in the New York City region, and if it's kind of performed as expected, or has it been more or less costly to kind of get customers both loans and deposits through the door in the New York region?

Vernon W. Hill -- Chairman of the Board

All right. Yeah, we've only been there for a couple of months with one store. As Frank is just telling me right now our cost of deposits are less in Manhattan, than they are in Metro Philly. I found that same thing when commerce expanded, and generally, we found on limited time yields on loans are somewhat better in that market. So, over time, I'm hopeful that the margin will be better in the Metro New York market.

Michael Perito -- KBW -- Analyst

Okay. So it's fair to say that, the balance sheet growth, which was obviously driven by a couple months of -- partly driven by a couple months of the New York City expansion getting under way, you guys are optimistic that the margin on that growth, there's room for that to be pretty solid over time?

Vernon W. Hill -- Chairman of the Board

Yeah, and that's what I found we were building in New York, and we went through multiple years. So generally, I found -- I felt that was true for one when we built beginning in 2001, and that's what we're seeing in the few months we have here.

Michael Perito -- KBW -- Analyst

Helpful, thanks. And then, you obviously with strong growth, and you guys levered capital a little bit, I know that the environment has toughened and in the margin is a little bit of a tough story right now, hopefully at some point that kind of abates or flips, but just any updated thoughts given the environment we're in and kind of where profitability is and the growth pipelines you're seeing about capital, as we move toward the end of this year and into 2020?

Vernon W. Hill -- Chairman of the Board

We're sure don't need to raise any capital this year. We have to look at our rates of growth for next year. We have lots of ways to raise capital. We have no debt to speak up, Mike. So we're not saying, we're all going to raise capital, and we're not saying we're not going to raise capital, and we haven't determined if we have to raise capital in what form.

Michael Perito -- KBW -- Analyst

And is it fair to say that it -- where the stock -- where it is today that your preference would be on the debt or preferred type instrument as opposed to comment, or is that not necessarily true, depending on kind of the market outlook and your growth outlook, et cetera?

Vernon W. Hill -- Chairman of the Board

Yeah, it depends on the timing at the time, but shareholder value is number one on our list. So we're going to explore lots of ways to do it, and when we need to do it, including the timing. You might remember, Mike, when I was running commerce, we did converts, twice I think, and that's another option we might put in the list of what we might bring.

Michael Perito -- KBW -- Analyst

Helpful. And then just one last quick one for me, just on the mortgage banking side with -- I was a little surprised that you guys had the strong quarter last quarter and with the rate environment kind of moving down, I thought maybe you would see a step-up there, but it came down modestly. Just any general thoughts on the mortgage pipeline and outlook as rates could potentially continue to move down here?

Vernon W. Hill -- Chairman of the Board

Go ahead, Andy.

Andrew J. Logue -- President and Chief Operating Officer

Mike, the pipeline in our residential portfolio was strong. Actually it's the highest -- it's been even more both [Indecipherable] pipeline.

Vernon W. Hill -- Chairman of the Board

Okay? Anything else?

Michael Perito -- KBW -- Analyst

Yeah, got it. Nope, that's it. Thank you, guys. Appreciate it.

Vernon W. Hill -- Chairman of the Board

Thank you, Michael. And Daryl?

Operator

And we do have another question. It's Bryan Misener [Phonetic]. Go ahead, Brian.

Bryan Misener -- Analyst

Hi, yeah, sorry, it was actually answered by Mike. It was about our future capital needs with the rate of expansion and the environment, but I think you kind of talked about that pretty well. Thank you.

Vernon W. Hill -- Chairman of the Board

Sure. Thank you.

Operator

[Operator Instructions].

Vernon W. Hill -- Chairman of the Board

Thank you all. Cheers. Hopefully I can hear anything probably in our next quarter.

Operator

All right. Then, we do have no more questions. You want to end the call?

Vernon W. Hill -- Chairman of the Board

Yeah, that'd be fine. Thank you. Thanks for your time.

Operator

[Operator Closing Remarks]

Duration: 12 minutes

Call participants:

Vernon W. Hill -- Chairman of the Board

Frank Cavallaro -- Executive Vice President and Chief Financial Officer

Andrew J. Logue -- President and Chief Operating Officer

Frank Schiraldi -- Sandler O'Neill -- Analyst

Michael Perito -- KBW -- Analyst

Bryan Misener -- Analyst

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