Republic Bancorp, Inc. Maintains Robust Loan Growth as Second Quarter 2015 Net Income Exceeds Second Quarter 2014 Net Income by 32%

LOUISVILLE, Ky.--()--Republic Bancorp, Inc. (NASDAQ: RBCAA), headquartered in Louisville, Kentucky, is the holding company for Republic Bank & Trust Company (the “Bank”).

Republic Bancorp, Inc. (“Republic” or the “Company”) is pleased to report second quarter net income of $8.3 million, a 32% increase over the second quarter of 2014, resulting in Diluted Earnings per Class A Common Share of $0.40. Return on average assets (“ROA”) and return on average equity (“ROE”) were 0.85% and 5.78%, respectively, for the second quarter of 2015.

Steve Trager, Republic’s Chairman and Chief Executive Officer, commented: “We are very proud that we have been able to produce another solid quarter of year-over-year earnings growth. In addition, we are also excited that we have been able to continue our loan growth momentum at our Core Bank, while at the same time our interest rate risk model indicates that we remain in a sound position in the event of rising market interest rates.

“Thanks to continued high usage rates among the Bank’s warehouse clients, our warehouse lines of credit contributed another solid quarter of growth by increasing outstanding balances $66 million, or 16%, from March 31, 2015. Altogether, for the first half of the year, outstanding warehouse lines of credit have grown $169 million, or 53%, over our outstanding balances at December 31, 2014. We have also made good progress in organically growing our Traditional Branch Network loan portfolio during the first half of 2015, with growth of $104 million, or 4%, during the first six months of the year. Although we have experienced a great deal of success thus far during 2015, we realize that we can never rest on our laurels and must maintain our focus in order to produce continued solid results for the remainder of this year and beyond.”

The following table highlights Republic’s financial performance for the second quarter and first six months of 2015 compared to the same periods in 2014:

     
          Three Months Ended         %         Six Months Ended         %
(dollars in thousands, except per share data)     6/30/15           6/30/14     Change     6/30/15         6/30/14     Change  
               
Income before income taxes $ 12,474 $ 9,654 29 % $ 33,223 $ 28,177 18 %
Net Income $ 8,320 $ 6,322 32 % $ 22,108 $ 18,306 21 %
Diluted Earnings per Class A Share $ 0.40 $ 0.30 33 % $ 1.07 $ 0.88 22 %
ROA 0.85 % 0.73 % 16 % 1.12 % 1.04 % 8 %
ROE 5.78 % 4.54 % 27 % 7.74 % 6.60 % 17 %
                                                                 
 

Results of Operations for the Second Quarter of 2015 Compared to the Second Quarter of 2014

Traditional Banking, Warehouse Lending (“Warehouse”) and Mortgage Banking (collectively “Core Bank” or “Core Banking”)

Net income from Core Banking was $7.7 million for the second quarter of 2015, an increase of $1.8 million, or 30%, from the second quarter of 2014. The increase in quarterly net income at the Core Bank continued to be driven by higher net interest income resulting from solid loan growth. The Core Bank’s growth in net interest income was further complemented by a modest provision for loan and lease losses, which remains favorably low due to on-going improvement in the Core Bank’s already-solid credit quality metrics.

Net interest income at the Core Bank increased to $30.6 million during the second quarter of 2015, a $3.1 million, or 11%, increase over the second quarter of 2014. Net interest income benefitted from the previously mentioned robust loan growth during 2015 combined with the Core Bank’s strong loan growth during the second half of 2014. This growth over the previous twelve months led to an increase in the Core Bank’s average loan balances of $546 million, or 21%, when comparing the second quarter of 2015 to the second quarter of 2014. The growth in average loan balances more than offset the negative impact to the Core Bank’s net interest income resulting from a decrease of seven basis points to its net interest margin from the second quarter of 2014 to the second quarter of 2015.

A breakdown of the overall change in the Core Bank’s period-end and average loan balances by origination channel is presented in the table below:

                                                                 
                                  Average         Average        
Ending Ending Quarterly Quarterly
(dollars in thousands) Balance Balance $ Balance Balance $
  Origination Channel     6/30/2015         12/31/14         Change     6/30/2015         6/30/2014         Change  
 
Warehouse Lending $ 488,905 $ 319,431 $ 169,474 $ 396,934 $ 173,428 $ 223,506
Correspondent Lending 243,140 226,628 16,512 234,411 5,087 229,324
2012-FDIC Acquired Loans 31,213 40,188 (8,975 ) 33,247 59,493 (26,246 )
Traditional Branch Network     2,554,252     2,450,167       104,085         2,510,706       2,391,534       119,172    
Total Core Bank Loans   $ 3,317,510     $ 3,036,414     $ 281,096       $ 3,175,298     $ 2,629,542     $ 545,756    
                                                                 
 

Net interest income at the Core Bank for the second quarter of 2015 includes $1.6 million of net interest income contributed from the Company’s 2012 FDIC-assisted transactions compared to $2.3 million contributed during the second quarter of 2014. Accretion income from the 2012 FDIC-assisted transactions contributed 14 and 17 basis points to the Core Bank’s net interest margin during these two periods.

The Core Bank’s provision for loan and lease losses remained favorably low for the second quarter of 2015, as overall credit quality remained strong. Core Bank provision expense was $717,000 for the second quarter of 2015 compared to $710,000 during the second quarter of 2014. Provision expense for the second quarters of 2015 and 2014 primarily represented an increase in general loan loss reserves, driven by the previously mentioned strong growth in the Core Bank’s loan portfolio. The Core Bank’s overall credit metrics in both periods continued to compare favorably to peer.

The table below illustrates the Core Bank’s well-regarded credit quality ratios for 2015 quarter ends and the previous three calendar year ends:

                                             
          As of and for the:  
  Quarter Ending:         Year Ending:  
                             
 
 
  Core Banking Credit Quality Ratios     6/30/15     3/31/15     12/31/14     12/31/13     12/31/12  
 
Non-performing loans to total loans 0.74 % 0.79 % 0.78 % 0.81 % 0.82 %
 
Non-performing assets to total loans (including OREO) 0.83 % 1.00 % 1.15 % 1.47 % 1.79 %
 
Delinquent loans to total loans 0.34 % 0.49 % 0.52 % 0.63 % 0.79 %
 
Net charge-offs to average loans 0.04 % 0.02 % 0.08 % 0.18 % 0.34 %
(Annualized as of 6/30/15 and 3/31/15)
 
  OREO = Other Real Estate Owned
 

Non-interest income for the Core Bank was $7.2 million during the second quarter of 2015 compared to $6.8 million for the second quarter of 2014. Increases of $412,000 and $257,000 in Mortgage banking income and interchange income, respectively, were partially offset by a $316,000 decrease in service charges on deposits. Mortgage banking income for the second quarter of 2015 was driven by increased secondary market loan volume resulting from favorable long-term mortgage rates for much of the quarter. The increase in interchange income was driven primarily by a 39% increase in purchase volume from the Core Bank’s credit card portfolio.

Core Bank non-interest expense increased $1.2 million, or 5%, from the second quarter of 2014 to $25.7 million during the same period in 2015. A large portion of the increase in non-interest expense for the quarter was in the salaries and benefits category as the Core Bank increased its full-time equivalent employees (“FTEs”) from 676 at June 30, 2014 to 699 at June 30, 2015. The increased staffing was generally concentrated in the centralized lending operations area of the Core Bank in order to meet current loan demand and for additional capacity to meet long-term loan demand expectations.

Conclusion

“While we have made well known our desire to make a prudent bank acquisition in the near-term, our ability to grow organically through our various origination channels provides us the opportunity to remain disciplined in seeking the right partner. In the meantime, we will continue to review and enhance our strategic plan, as we seek to heighten our overall organic performance with the goal of managing risk and maximizing return commensurate with the highest performing banks in the Nation,” concluded Trager.

Republic Bancorp, Inc. (the “Company”) is the parent company of Republic Bank & Trust Company (the “Bank”). The Bank currently has 40 banking centers: 32 banking centers in 12 Kentucky communities - Covington, Crestwood, Elizabethtown, Florence, Frankfort, Georgetown, Independence, Lexington, Louisville, Owensboro, Shelbyville and Shepherdsville; three banking centers in southern Indiana – Floyds Knobs, Jeffersonville and New Albany; two banking centers in Florida – Port Richey and Temple Terrace; two banking centers in Tennessee – Cool Springs (Franklin) and Green Hills (Nashville); and one banking center in Blue Ash (Cincinnati), Ohio. The Bank offers internet banking at www.republicbank.com. The Company has $4.1 billion in assets and is headquartered in Louisville, Kentucky. The Company’s Class A Common Stock is listed under the symbol “RBCAA” on the NASDAQ Global Select Market.

Republic Bank. It’s just easier here SM.

Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements in the preceding paragraphs are based on our current expectations and assumptions regarding our business, the future impact to our balance sheet and income statement resulting from changes in interest rates, the ability to develop products and strategies in order to meet the Company’s long-term strategic goals, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the actual timing, magnitude and frequency of interest rate changes, as well as the actual changes in market conditions and the application and timing of various management strategies as compared to those projected in our interest rate model. Additionally, actual results could differ materially from the interest rate model if interest rates do not move equally across all points on the yield curve and based upon other factors disclosed from time to time in the Company’s filings with the U.S. Securities and Exchange Commission, including those factors set forth as “Risk Factors” in the Company’s Annual Report on Form 10-K for the period ended December 31, 2014. The Company undertakes no obligation to update any forward-looking statements. These forward-looking statements are made only as of the date of this release, and the Company undertakes no obligation to release revisions to these forward-looking statements to reflect events or conditions after the date of this release.

 

Republic Bancorp, Inc. Financial Information

Second Quarter 2015 Earnings Release

(all amounts other than per share amounts, number of employees and number of banking centers are expressed in thousands unless otherwise noted)

 
Balance Sheet Data            
Jun. 30, 2015 Dec. 31, 2014 Jun. 30, 2014
Assets:
Cash and cash equivalents $ 92,766 $ 72,878 $ 84,273
Investment securities 499,682 481,348 511,984
Loans held for sale 11,819 6,388 6,809
Loans 3,323,977 3,040,495 2,725,017
Allowance for loan and lease losses   (25,248 )   (24,410 )   (22,772 )
Loans, net 3,298,729 3,016,085 2,702,245
Federal Home Loan Bank stock, at cost 28,208 28,208 28,208
Premises and equipment, net 32,309 32,987 32,481
Premises, held for sale 1,251 1,317 -
Goodwill 10,168 10,168 10,168

Other real estate owned (“OREO”)

2,920 11,243 11,613

Bank owned life insurance (“BOLI”)

52,117 51,415 50,656
Other assets and accrued interest receivable   36,250     34,976     26,887  
Total assets $ 4,066,219   $ 3,747,013   $ 3,465,324  
 

Liabilities and Stockholders’ Equity:

Deposits:
Non interest-bearing $ 598,572 $ 502,569 $ 519,651
Interest-bearing   1,681,038     1,555,613     1,485,332  
Total deposits 2,279,610 2,058,182 2,004,983
 
Securities sold under agreements to repurchase and other short-term borrowings 229,825 356,108 197,439
Federal Home Loan Bank advances 916,500 707,500 640,000
Subordinated note 41,240 41,240 41,240
Other liabilities and accrued interest payable   26,072     25,252     26,371  
Total liabilities 3,493,247 3,188,282 2,910,033
 

Stockholders’ equity

  572,972     558,731     555,291  

Total liabilities and Stockholders’ equity

$ 4,066,219   $ 3,747,013   $ 3,465,324  
 
               
Average Balance Sheet Data
Three Months Ended Jun. 30, Six Months Ended Jun. 30,
2015 2014 2015 2014
Assets:
Investment securities, including FHLB stock $ 531,402 $ 530,472 $ 528,161 $ 515,170
Federal funds sold and other interest-earning deposits 32,300 128,473 86,933 217,228
Loans and fees, including loans held for sale 3,180,127 2,632,190 3,105,014 2,598,376
Total interest-earning assets 3,743,829 3,291,135 3,720,108 3,330,774
Total assets 3,925,312 3,459,171 3,934,868 3,515,181
 

Liabilities and Stockholders’ Equity:

Non interest-bearing deposits $ 601,371 $ 526,599 $ 660,150 $ 583,258
Interest-bearing deposits 1,703,982 1,497,494 1,670,168 1,501,137

Securities sold under agreements to repurchase and other short-term borrowings

335,530 259,132 363,321 241,205
Federal Home Loan Bank advances 646,737 562,209 607,554 578,544
Subordinated note 41,240 41,240 41,240 41,240
Total interest-bearing liabilities 2,727,489 2,360,075 2,682,283 2,362,126

Stockholders’ equity

575,653 557,109 571,600 554,510
 

 
Republic Bancorp, Inc. Financial Information
Second Quarter 2015 Earnings Release (continued)

(all amounts other than per share amounts, number of employees and number of banking centers are expressed in thousands unless otherwise noted)

 
Income Statement Data                
Three Months Ended Jun. 30, Six Months Ended Jun. 30,
2015 2014 2015 2014
 
Total interest income(1) $ 35,722 $ 32,405 $ 69,483 $ 64,902
Total interest expense   4,664     4,855     9,403     10,048  
 
Net interest income 31,058 27,550 60,080 54,854
 
Provision for loan and lease losses 904 693 1,089 (10 )
 
Non-interest income:
Service charges on deposit accounts 3,247 3,563 6,286 6,858
Net refund transfer fees 1,907 1,836 17,242 16,224
Mortgage banking income 1,224 812 2,577 1,298
Interchange fee income 2,044 1,681 4,238 3,725
Gain on call of security available for sale 88 - 88 -
Net loss on OREO (155 ) (69 ) (274 ) (551 )
Increase in cash surrender value of BOLI 353 379 702 570
Other   777     879     1,612     1,672  
Total non-interest income   9,485     9,081     32,471     29,796  
 
Non-interest expenses:
Salaries and employee benefits 14,323 13,965 29,600 28,448
Occupancy and equipment, net 5,142 5,508 10,343 11,330
Communication and transportation 771 856 1,817 1,882
Marketing and development 977 803 1,562 1,331
FDIC insurance expense 474 414 1,148 983
Bank franchise tax expense 847 831 3,248 3,170
Data processing 1,092 874 2,058 1,671
Interchange related expense 931 847 1,938 1,844
Supplies 219 60 580 500
OREO expense 120 308 339 698
Legal and professional fees 528 438 2,143 949
Other   1,741     1,380     3,463     3,677  
Total non-interest expenses   27,165     26,284     58,239     56,483  
 
Income before income tax expense 12,474 9,654 33,223 28,177
Income tax expense   4,154     3,332     11,115     9,871  
 
Net income $ 8,320   $ 6,322   $ 22,108   $ 18,306  
 

 
Republic Bancorp, Inc. Financial Information
Second Quarter 2015 Earnings Release (continued)

(all amounts other than per share amounts, number of employees and number of banking centers are expressed in thousands unless otherwise noted)

 
Selected Data and Statistics                
As of and for the As of and for the
Three Months Ended Jun. 30, Six Months Ended Jun. 30,
2015 2014 2015 2014
Per Share Data:
 
Basic average shares outstanding 20,860 20,793 20,859 20,795
Diluted average shares outstanding 20,941 20,888 20,939 20,891
 
End of period shares outstanding:
Class A Common Stock 18,602 18,548 18,602 18,548
Class B Common Stock 2,245 2,245 2,245 2,245
 
Book value per share(2) $ 27.48 $ 26.71 $ 27.48 $ 26.71
Tangible book value per share(2) 26.76 25.98 $ 26.76 25.98
 
Earnings per share:
Basic earnings per Class A Common Stock $ 0.40 $ 0.31 $ 1.07 $ 0.88
Basic earnings per Class B Common Stock 0.37 0.29 0.97 0.85
Diluted earnings per Class A Common Stock 0.40 0.30 1.07 0.88
Diluted earnings per Class B Common Stock 0.36 0.29 0.97 0.85
 
Cash dividends declared per share:
Class A Common Stock $ 0.198 $ 0.187 $ 0.385 $ 0.363
Class B Common Stock 0.180 0.170 0.350 0.330
 
Performance Ratios:
 
Return on average assets 0.85 % 0.73 % 1.12 % 1.04 %
Return on average equity 5.78 4.54 7.74 6.60
Efficiency ratio(3) 67 72 63 67
Yield on average interest-earning assets 3.82 3.94 3.74 3.90
Cost of interest-bearing liabilities 0.68 0.82 0.70 0.85
Cost of deposits(4) 0.18 0.19 0.19 0.18
Net interest spread 3.14 3.12 3.04 3.05
Net interest margin - Total Company 3.32 3.35 3.23 3.29
Net interest margin - Core Banking(5) 3.28 3.35 3.21 3.32
 
Other Information:
 
End of period full-time equivalent employees 751 726 751 726
Number of banking centers 40 42 40 42
 

 
Republic Bancorp, Inc. Financial Information
Second Quarter 2015 Earnings Release (continued)

(all amounts other than per share amounts, number of employees and number of banking centers are expressed in thousands unless otherwise noted)

 
Credit Quality Data and Statistics     As of and for the     As of and for the
Three Months Ended Jun. 30, Six Months Ended Jun. 30,
2015     2014 2015     2014
Credit Quality Asset Balances:
 
Loans on non-accrual status $ 24,624 $ 19,606 $ 24,624 $ 19,606
Loans past due 90-days-or-more and still on accrual   -     734     -     734  
Total non-performing loans 24,624 20,340 24,624 20,340
OREO   2,920     11,613     2,920     11,613  
Total non-performing assets $ 27,544   $ 31,953   $ 27,544   $ 31,953  
Total delinquent loans $ 11,355 $ 12,062 $ 11,355 $ 12,062
 
 
Credit Quality Ratios:
 
Non-performing loans to total loans 0.74 % 0.75 % 0.74 % 0.75 %
Non-performing assets to total loans (including OREO) 0.83 1.17 0.83 1.17
Non-performing assets to total assets 0.68 0.92 0.68 0.92
Allowance for loan and lease losses to total loans 0.76 0.84 0.76 0.84
Allowance for loan and lease losses to non-performing loans 103 112 103 112
Delinquent loans to total loans(6) 0.34 0.44 0.34 0.44
Net charge-offs to average loans (annualized) - Total Company 0.04 0.04 0.02 0.01
Net charge-offs to average loans (annualized) - Core Banking(5) 0.04 0.05 0.03 0.03
 

 
Republic Bancorp, Inc. Financial Information
Second Quarter 2015 Earnings Release (continued)

(all amounts other than per share amounts, number of employees and number of banking centers are expressed in thousands unless otherwise noted)

 
Balance Sheet Data                    
Quarterly Comparison
Jun. 30, 2015 Mar. 31, 2015 Dec. 31, 2014 Sept. 30, 2014 Jun. 30, 2014
Assets:
Cash and cash equivalents $ 92,766 $ 136,349 $ 72,878 $ 69,682 $ 84,273
Investment securities 499,682 508,719 481,348 500,221 511,984
Loans held for sale 11,819 12,748 6,388 5,890 6,809
Loans 3,323,977 3,155,436 3,040,495 2,908,535 2,725,017
Allowance for loan and lease losses   (25,248 )   (24,631 )   (24,410 )   (23,617 )   (22,772 )
Loans, net 3,298,729 3,130,805 3,016,085 2,884,918 2,702,245
Federal Home Loan Bank stock, at cost 28,208 28,208 28,208 28,208 28,208
Premises and equipment, net 32,309 31,817 32,987 32,395 32,481
Premises, held for sale 1,251 1,284 1,317 - -
Goodwill 10,168 10,168 10,168 10,168 10,168
Other real estate owned 2,920 6,736 11,243 11,937 11,613
Bank owned life insurance 52,117 51,764 51,415 51,037 50,656
Other assets and accrued interest receivable   36,250     33,589     34,976     31,163     26,887  
Total assets $ 4,066,219   $ 3,952,187   $ 3,747,013   $ 3,625,619   $ 3,465,324  
 

Liabilities and Stockholders’ Equity:

Deposits:
Non interest-bearing $ 598,572 $ 666,166 $ 502,569 $ 534,662 $ 519,651
Interest-bearing   1,681,038     1,714,051     1,555,613     1,525,174     1,485,332  
Total deposits 2,279,610 2,380,217 2,058,182 2,059,836 2,004,983
 

Securities sold under agreements to repurchase and other short-term borrowings

229,825 332,534 356,108 275,874 197,439
Federal Home Loan Bank advances 916,500 596,500 707,500 662,000 640,000
Subordinated note 41,240 41,240 41,240 41,240 41,240
Other liabilities and accrued interest payable   26,072     32,225     25,252     29,301     26,371  
Total liabilities 3,493,247 3,382,716 3,188,282 3,068,251 2,910,033
 

Stockholders’ equity

  572,972     569,471     558,731     557,368     555,291  

Total liabilities and Stockholders’ equity

$ 4,066,219   $ 3,952,187   $ 3,747,013   $ 3,625,619   $ 3,465,324  
 
 
 
Average Balance Sheet Data
Quarterly Comparison
Jun. 30, 2015 Mar. 31, 2015 Dec. 31, 2014 Sept. 30, 2014 Jun. 30, 2014
Assets:
Investment securities, including FHLB stock $ 531,402 $ 524,883 $ 533,288 $ 539,020 $ 530,472
Federal funds sold and other interest-earning deposits 32,300 142,172 14,251 29,713 128,473
Loans and fees, including loans held for sale 3,180,127 3,029,067 2,958,458 2,795,788 2,632,190
Total interest-earning assets 3,743,829 3,696,122 3,505,997 3,364,521 3,291,135
Total assets 3,925,312 3,944,527 3,679,296 3,530,013 3,459,171
 

Liabilities and Stockholders’ Equity:

Non interest-bearing deposits $ 601,371 $ 719,581 $ 529,091 $ 521,360 $ 526,599
Interest-bearing deposits 1,703,982 1,635,979 1,540,432 1,497,802 1,497,494

Securities sold under agreements to repurchase and other short-term borrowings

335,530 391,421 383,526 317,053 259,132
Federal Home Loan Bank advances 646,737 567,934 605,018 575,761 562,209
Subordinated note 41,240 41,240 41,240 41,240 41,240
Total interest-bearing liabilities 2,727,489 2,636,574 2,570,216 2,431,856 2,360,075

Stockholders’ equity

575,653 567,499 561,666 558,750 557,109
 

 
Republic Bancorp, Inc. Financial Information
Second Quarter 2015 Earnings Release (continued)

(all amounts other than per share amounts, number of employees and number of banking centers are expressed in thousands unless otherwise noted)

 
Income Statement Data                    
Three Months Ended
Jun. 30, 2015 Mar. 31, 2015 Dec. 31, 2014 Sept. 30, 2014 Jun. 30, 2014
 
Total interest income(1) $ 35,722 $ 33,761 $ 34,331 $ 33,144 $ 32,405
Total interest expense   4,664     4,739     4,854     4,702     4,855  
Net interest income 31,058 29,022 29,477 28,442 27,550
 
Provision for loan and lease losses 904 185 1,359 1,510 693
 
Non-interest income:
Service charges on deposit accounts 3,247 3,039 3,381 3,568 3,563
Net refund transfer fees 1,907 15,335 39 (133 ) 1,836
Mortgage banking income 1,224 1,353 688 876 812
Interchange fee income 2,044 2,194 1,673 1,619 1,681
Gain on call of security available for sale 88 - - - -
Net loss on OREO (155 ) (119 ) (909 ) (758 ) (69 )
Increase in cash surrender value of BOLI 353 349 378 381 379
Other   777     835     946     974     879  
Total non-interest income   9,485     22,986     6,196     6,527     9,081  
 
Non-interest expenses:
Salaries and employee benefits 14,323 15,277 13,761 12,164 13,965
Occupancy and equipment, net 5,142 5,201 5,134 5,544 5,508
Communication and transportation 771 1,046 1,079 905 856
Marketing and development 977 585 798 1,135 803
FDIC insurance expense 474 674 458 424 414
Bank franchise tax expense 847 2,401 715 731 831
Data processing 1,092 966 1,018 824 874
Interchange related expense 931 1,007 818 788 847
Supplies 219 361 304 205 60
OREO expense 120 219 108 218 308
Legal and professional fees 528 1,615 587 730 438
Other   1,741     1,722     1,650     1,537     1,380  
Total non-interest expenses   27,165     31,074     26,430     25,205     26,284  
 
Income before income tax expense 12,474 20,749 7,884 8,254 9,654
Income tax expense   4,154     6,961     2,649     3,008     3,332  
 
Net income $ 8,320   $ 13,788   $ 5,235   $ 5,246   $ 6,322  
 

 
Republic Bancorp, Inc. Financial Information
Second Quarter 2015 Earnings Release (continued)

(all amounts other than per share amounts, number of employees and number of banking centers are expressed in thousands unless otherwise noted)

 
Selected Data and Statistics                    
As of and for the Three Months Ended
Jun. 30, 2015 Mar. 31, 2015 Dec. 31, 2014 Sept. 30, 2014 Jun. 30, 2014
Per Share Data:
 
Basic average shares outstanding 20,860 20,859 20,831 20,797 20,793
Diluted average shares outstanding 20,941 20,936 20,921 20,891 20,888
 
End of period shares outstanding:
Class A Common Stock 18,602 18,616 18,603 18,567 18,548
Class B Common Stock 2,245 2,245 2,245 2,245 2,245
 
Book value per share(2) $ 27.48 $ 27.30 $ 26.80 $ 26.78 $ 26.71
Tangible book value per share(2) 26.76 26.58 26.08 26.06 25.98
 
Earnings per share:
Basic earnings per Class A Common Stock $ 0.40 $ 0.66 $ 0.25 $ 0.25 $ 0.31
Basic earnings per Class B Common Stock 0.37 0.65 0.24 0.24 0.29
Diluted earnings per Class A Common Stock 0.40 0.66 0.25 0.25 0.30
Diluted earnings per Class B Common Stock 0.36 0.64 0.24 0.24 0.29
 
Cash dividends declared per share:
Class A Common Stock $ 0.198 $ 0.187 $ 0.187 $ 0.187 $ 0.187
Class B Common Stock 0.180 0.170 0.170 0.170 0.170
 
Performance Ratios:
 
Return on average assets 0.85 % 1.40 % 0.57 % 0.59 % 0.73 %
Return on average equity 5.78 9.72 3.73 3.76 4.54
Efficiency ratio(3) 67 60 74 72 72
Yield on average interest-earning assets 3.82 3.65 3.92 3.94 3.94
Cost of interest-bearing liabilities 0.68 0.72 0.76 0.77 0.82
Cost of deposits(4) 0.18 0.19 0.20 0.18 0.19
Net interest spread 3.14 2.93 3.16 3.17 3.12
Net interest margin - Total Company 3.32 3.14 3.36 3.38 3.35
Net interest margin - Core Banking(5) 3.28 3.14 3.36 3.38 3.35
 
Other Information:
 
End of period full-time equivalent employees 751 745 723 734 726
Number of banking centers 40 40 41 42 42
 

 
Republic Bancorp, Inc. Financial Information
Second Quarter 2015 Earnings Release (continued)

(all amounts other than per share amounts, number of employees and number of banking centers are expressed in thousands unless otherwise noted)

 
Credit Quality Data and Statistics                    
As of and for the Three Months Ended
Jun. 30, 2015 Mar. 31, 2015 Dec. 31, 2014 Sept. 30, 2014 Jun. 30, 2014
Credit Quality Asset Balances:
Loans on non-accrual status $ 24,624 $ 24,423 $ 23,337 $ 21,447 $ 19,606
Loans past due 90-days-or-more and still on accrual   -     572     322     -     734  
Total non-performing loans 24,624 24,995 23,659 21,447 20,340
OREO   2,920     6,736     11,243     11,937     11,613  
Total non-performing assets $ 27,544   $ 31,731   $ 34,902   $ 33,384   $ 31,953  
Total delinquent loans $ 11,355 $ 15,511 $ 15,851 $ 12,226 $ 12,062
 
 
Credit Quality Ratios:
Non-performing loans to total loans 0.74 % 0.79 % 0.78 % 0.74 % 0.75 %
Non-performing assets to total loans (including OREO) 0.83 1.00 1.14 1.14 1.17
Non-performing assets to total assets 0.68 0.80 0.93 0.92 0.92
Allowance for loan and lease losses to total loans 0.76 0.78 0.80 0.81 0.84
Allowance for loan and lease losses to non-performing loans 103 99 103 110 112
Delinquent loans to total loans(6) 0.34 0.49 0.52 0.42 0.44
Net charge-offs to average loans (annualized) - Total Company 0.04 0.00 0.08 0.10 0.04
Net charge-offs to average loans (annualized) - Core Banking(5) 0.04 0.02 0.08 0.10 0.05
 

 

Republic Bancorp, Inc. Financial Information

Second Quarter 2015 Earnings Release (continued)

 

Segment Data:

Reportable segments are determined by the type of products and services offered and the level of information provided to the chief operating decision maker, who uses such information to review performance of various components of the business (such as banking centers and business units), which are then aggregated if operating performance, products/services, and customers are similar.

As of June 30, 2015, the Company was divided into four distinct operating segments: Traditional Banking, Warehouse Lending (“Warehouse”), Mortgage Banking and Republic Processing Group (“RPG”). Management considers the first three segments to collectively constitute “Core Bank” or “Core Banking” activities. The RPG segment includes the Tax Refund Solutions (“TRS”) division, Republic Payment Solutions (“RPS”) and Republic Credit Solutions (“RCS”). TRS generates the majority of RPG’s income, with the relatively smaller divisions of RPG, RPS and RCS, considered immaterial for separate and independent segment reporting. All divisions of the RPG segment operate through the Company.

The nature of segment operations and the primary drivers of net revenues by reportable segment are provided below:

                 
 

Segment:

 

       

Nature of Operations:

 

       

Primary Drivers of Net Revenues:

 

 
Core Banking:
Traditional Banking

 Provides traditional banking products
primarily to customers in the Company’s
market footprint.

Loans, investments and deposits
Warehouse Lending

 Provides short-term, revolving credit
facilities to mortgage bankers across the
Nation.

Mortgage warehouse lines of credit
  Mortgage Banking        

 Primarily originates, sells and services long-
term, single family, first lien residential real
estate loans.

        Gain on sale of loans and servicing fees  
Republic Processing Group

 The TRS division facilitates the receipt and
payment of federal and state tax refund
products. The RPS division offers general
purpose reloadable cards. The RCS division
offers short-term credit products.

Net refund transfer fees
 

The accounting policies used for Republic’s reportable segments are the same as those described in the summary of significant accounting policies in the Company’s 2014 Annual Report on Form 10-K. Segment performance is evaluated using operating income. Goodwill is not allocated. Income taxes are generally allocated based on income before income tax expense unless specific segment allocations can be reasonably made. Transactions among reportable segments are made at carrying value.

 
Republic Bancorp, Inc. Financial Information
Second Quarter 2015 Earnings Release (continued)
 

Segment information for the three and six months ended June 30, 2015 and 2014 follows:

 
    Three Months Ended June 30, 2015
       
Core Banking
           
(dollars in thousands)    

Traditional
Banking

   

Warehouse
Lending

   

Mortgage
Banking

   

Total Core
Banking

   

Republic
Processing Group

    Total Company
 
Net interest income $ 26,999 $ 3,505 $ 57 $ 30,561 $ 497 $ 31,058
 
Provision for loan and lease losses 553 164 - 717 187 904
 
Net refund transfer fees - - - - 1,907 1,907
Mortgage banking income - - 1,224 1,224 - 1,224
Gain on call of security available for sale 88 - - 88 - 88
Other non-interest income   5,774     6     71     5,851     415     6,266  
Total non-interest income 5,862 6 1,295 7,163 2,322 9,485
 
Total non-interest expenses   23,835     610     1,274     25,719     1,446     27,165  
 
Income before income tax expense 8,473 2,737 78 11,288 1,186 12,474
Income tax expense   2,648     958     27     3,633     521     4,154  
Net income $ 5,825   $ 1,779   $ 51   $ 7,655   $ 665   $ 8,320  
 
Segment end of period assets $ 3,520,996 $ 488,356 $ 15,635 $ 4,024,987 $ 41,232 $ 4,066,219
 
Net interest margin 3.24 % 3.53 % NM 3.28 % NM 3.32 %
 
 
Three Months Ended June 30, 2014
 
Core Banking
 
(dollars in thousands)    

Traditional
Banking

   

Warehouse
Lending

   

Mortgage
Banking

   

Total Core
Banking

   

Republic
Processing Group

    Total Company
 
Net interest income $ 25,752 $ 1,689 $ 49 $ 27,490 $ 60 $ 27,550
 
Provision for loan and lease losses 577 133 - 710 (17 ) 693
 
Net refund transfer fees - - - - 1,836 1,836
Mortgage banking income - - 812 812 - 812
Other non-interest income   5,927     3     71     6,001     432     6,433  
Total non-interest income 5,927 3 883 6,813 2,268 9,081
 
Total non-interest expenses   23,050     448     1,013     24,511     1,773     26,284  
 
Income (loss) before income tax expense 8,052 1,111 (81 ) 9,082 572 9,654
Income tax expense (benefit)   2,821     389     (29 )   3,181     151     3,332  
Net income (loss) $ 5,231   $ 722   $ (52 ) $ 5,901   $ 421   $ 6,322  
 
Segment end of period assets $ 3,190,809 $ 243,907 $ 12,231 $ 3,446,947 $ 18,377 $ 3,465,324
 
Net interest margin 3.32 % 3.89 % NM 3.35 % NM 3.35 %
 

   
Six Months Ended June 30, 2015
       
Core Banking
           
(dollars in thousands)    

Traditional
Banking

   

Warehouse
Lending

   

Mortgage
Banking

   

Total Core
Banking

   

Republic
Processing Group

    Total Company
 
Net interest income $ 52,757 $ 6,046 $ 113 $ 58,916 $ 1,164 $ 60,080
 
Provision for loan and lease losses 669 423 - 1,092 (3 ) 1,089
 
Net refund transfer fees - - - - 17,242 17,242
Mortgage banking income - - 2,577 2,577 - 2,577
Gain on call of security available for sale 88 - - 88 - 88
Other non-interest income   11,171     11     155     11,337     1,227     12,564  
Total non-interest income 11,259 11 2,732 14,002 18,469 32,471
 
Total non-interest expenses   47,242     1,183     2,559     50,984     7,255     58,239  
 
Income before income tax expense 16,105 4,451 286 20,842 12,381 33,223
Income tax expense   4,934     1,558     100     6,592     4,523     11,115  
Net income $ 11,171   $ 2,893   $ 186   $ 14,250   $ 7,858   $ 22,108  
 
Segment end of period assets $ 3,520,996 $ 488,356 $ 15,635 $ 4,024,987 $ 41,232 $ 4,066,219
 
Net interest margin 3.17 % 3.56 % NM 3.21 % NM 3.23 %
 
 
Six Months Ended June 30, 2014
 
Core Banking
 
(dollars in thousands)    

Traditional
Banking

   

Warehouse
Lending

   

Mortgage
Banking

   

Total Core
Banking

   

Republic
Processing Group

    Total Company
 
Net interest income $ 51,706 $ 2,848 $ 95 $ 54,649 $ 205 $ 54,854
 
Provision for loan and lease losses 309 161 - 470 (480 ) (10 )
 
Net refund transfer fees - - - - 16,224 16,224
Mortgage banking income - - 1,298 1,298 - 1,298
Other non-interest income   10,999     5     145     11,149     1,125     12,274  
Total non-interest income 10,999 5 1,443 12,447 17,349 29,796
 
Total non-interest expenses   46,532     828     2,223     49,583     6,900     56,483  
 
Income (loss) before income tax expense 15,864 1,864 (685 ) 17,043 11,134 28,177
Income tax expense (benefit)   5,341     653     (240 )   5,754     4,117     9,871  
Net income (loss) $ 10,523   $ 1,211   $ (445 ) $ 11,289   $ 7,017   $ 18,306  
 
Segment end of period assets $ 3,190,809 $ 243,907 $ 12,231 $ 3,446,947 $ 18,377 $ 3,465,324
 
Net interest margin 3.29 % 3.92 % NM 3.32 % NM 3.29 %
 

 

Republic Bancorp, Inc. Financial Information

Second Quarter 2015 Earnings Release (continued)

 

(1) – The amount of loan fee income included in total interest income was $2.9 million and $2.3 million for the quarters ended June 30, 2015 and 2014. The amount of loan fee income included in total interest income was $4.7 million and $5.4 million for the six months ended June 30, 2015 and 2014.

The amount of loan fee income included in total interest income per quarter was as follows: $2.9 million (quarter ended June 30, 2015); $1.8 million (quarter ended March 31, 2015); $2.2 million (quarter ended December 31, 2014); $1.8 million (quarter ended September 30, 2014); and $2.3 million (quarter ended June 30, 2014).

(2) – The following table provides a reconciliation of total stockholders’ equity in accordance with U.S. Generally Accepted Accounting Principles to tangible stockholders’ equity in accordance with applicable regulatory requirements. The Company provides the tangible book value ratio, in addition to those defined by banking regulators, because of its widespread use by investors as a means to evaluate capital adequacy.

   
Quarterly Comparison
(in thousands, except per share data) Jun. 30, 2015     Mar. 31, 2015     Dec. 31, 2014     Sept. 30, 2014     Jun. 30, 2014

Total stockholders’ equity (a)

$ 572,972 $ 569,471 $ 558,731 $ 557,368 $ 555,291
Less: Goodwill 10,168 10,168 10,168 10,168 10,168
Less: Mortgage servicing rights   4,971     4,864     4,813     4,881     5,009  

Tangible stockholders’ equity (c)

$ 557,833   $ 554,439   $ 543,750   $ 542,319   $ 540,114  
 
Total assets (b) $ 4,066,219 $ 3,952,187 $ 3,747,013 $ 3,625,619 $ 3,465,324
Less: Goodwill 10,168 10,168 10,168 10,168 10,168
Less: Mortgage servicing rights   4,971     4,864     4,813     4,881     5,009  
Tangible assets (d) $ 4,051,080   $ 3,937,155   $ 3,732,032   $ 3,610,570   $ 3,450,147  
 

Total stockholders’ equity to total assets (a/b)

14.09 % 14.41 % 14.91 % 15.37 % 16.02 %

Tangible stockholders’ equity to tangible assets (c/d)

13.77 % 14.08 % 14.57 % 15.02 % 15.65 %
 
Number of shares outstanding (e)   20,847     20,861     20,848     20,812     20,793  
 
Book value per share (a/e) $ 27.48 $ 27.30 $ 26.80 $ 26.78 $ 26.71
Tangible book value per share (c/e) 26.76 26.58 26.08 26.06 25.98
 

(3) – The efficiency ratio equals total non-interest expense divided by the sum of net interest income and non-interest income. The ratio excludes net gain (loss) on sales, calls and impairment of investment securities, if applicable.

(4) – The cost of deposits ratio equals annualized total interest expense on deposits divided by total average interest-bearing deposits plus total average non interest-bearing deposits.

(5) – Ratio relates only to Core Banking operations, which consists of the Traditional Banking, Warehouse Lending and Mortgage Banking segments.

(6) – The delinquent loans to total loans ratio equals loans 30-days-or-more past due divided by total loans.

NM – Not meaningful

Contacts

Republic Bancorp, Inc.
Kevin Sipes, 502-560-8628
Executive Vice President and Chief Financial Officer

Contacts

Republic Bancorp, Inc.
Kevin Sipes, 502-560-8628
Executive Vice President and Chief Financial Officer