Republic Bancorp, Inc. Reports a 15% Increase in Second Quarter 2019 Net Income

Download

Republic Bancorp, Inc. Reports a 15% Increase in Second Quarter 2019 Net Income

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

Republic Bancorp, Inc. (“Republic” or the “Company”) is pleased to report second quarter net income of $18.0 million, a 15% increase over the second quarter of 2018, resulting in Diluted Earnings per Class A Common Share (“Diluted EPS”) of $0.86. Year-to-date net income was $47.5 million, a $4.4 million, or 10%, increase from the same period in 2018, resulting in return on average assets (“ROA”) and return on average equity (“ROE”) of 1.73% and 13.24% for the first six months of 2019.

Steve Trager, Chairman & CEO of Republic commented, “We are pleased to report another solid quarter of net income for the Company, as continued strong net interest income along with notable growth in Mortgage Banking income drove our quarterly results. Within the Republic Processing Group (“RPG”), Republic Credit Solutions (“RCS”) continued to have strong operating results with a 97% increase in net income for the second quarter of 2019 compared to the same period in 2018, thanks in large part to a reduction in provision expense resulting from the discontinuance of the Company’s subprime credit card portfolio in January of this year.”

The following table highlights Republic’s financial performance for the second quarters and six months ended June 30, 2019 and 2018:

 

 

 

Total Company Financial Performance Highlights

 

Three Months Ended Jun. 30,

 

Six Months Ended Jun. 30,

 

(dollars in thousands, except per share data)

2019

2018

$ Change

% Change

2019

2018

$ Change

% Change

 

Income Before Income Taxes*

$

21,183

 

$

19,816

 

$

1,367

7

%

$

58,159

 

$

54,726

 

$

3,433

6

%

Net Income*

 

18,007

 

 

15,666

 

 

2,341

15

 

 

47,523

 

 

43,135

 

 

4,388

10

 

Diluted Earnings per Class A Common Stock

 

0.86

 

 

0.74

 

 

0.12

16

 

 

2.28

 

 

2.06

 

 

0.22

11

 

Return on Average Assets

 

1.31

%

 

1.23

%

NA

7

 

 

1.73

%

 

1.67

%

NA

4

 

Return on Average Equity

 

9.88

 

 

9.45

 

NA

5

 

 

13.24

 

 

13.22

 

NA

0

 

 

NA – Not applicable
*See segment data at the end of this earnings release

Results of Operations for the Second Quarter of 2019 Compared to the Second Quarter of 2018

Core Bank(1)

Net income from Core Banking was $13.0 million for the second quarter of 2019, a $1.4 million, or 12%, increase from the second quarter of 2018. Core Bank pre-tax net income increased 1% over a strong second quarter in 2018, with benefits from continued growth in net interest income and mortgage banking income offset by a higher provision for loan losses (“Provision”) and higher overhead costs. As discussed in the section titled “Total Company Income Tax Expense” later in this release, the Core Bank received the benefit of certain infrequent income tax items during the second quarter of 2019, positively impacting the net income comparability to the second quarter of 2018.

Net Interest Income – Core Bank net interest income and net interest margin were generally impacted in opposite fashion by the performance of its two major net-interest-income producing segments during the second quarter of 2019. Within the Traditional Banking segment, strong year-over-year loan growth primarily drove an overall increase in net interest income and was complemented by further margin expansion. Within the Warehouse Lending (“Warehouse”) segment, however, the benefit of robust average-balance growth was more than offset by net interest margin compression during the quarter.

The following tables present by reportable segment the overall changes in the Core Bank’s net interest income, net interest margin, as well as average and period-end loan balances:

 

 

(dollars in thousands)

Three Months Ended Jun. 30,

 

 

2019

2018

Change

Reportable Segment

Net Interest
Income

Net Interest
Margin

Net Interest
Income

Net Interest
Margin

Net Interest
Income

Net Interest
Margin

 

 

 

 

 

 

 

 

 

 

Traditional Banking

$

 

41,877

3.75

%

$

 

39,348

3.71

%

$

 

2,529

 

0.04

%

Warehouse Lending

 

3,957

2.49

 

 

4,164

3.08

 

 

(207

)

(0.59

)

Mortgage Banking

 

170

NM

 

 

103

NM

 

 

67

 

NM

 

Total Core Bank

$

 

46,004

3.62

 

$

 

43,615

3.64

 

$

 

2,389

 

(0.02

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Loan Balances

 

Period-End Loan Balances

 

(dollars in thousands)

Three Months Ended Jun. 30,

 

Jun. 30,

 

Reportable Segment

2019

2018

$ Change

% Change

2019

2018

$ Change

% Change

 

 

 

 

 

 

Traditional Banking

$

3,651,630

$

3,455,432

$

196,198

6

%

$

3,699,576

$

3,476,426

$

223,150

6

%

Warehouse Lending*

 

634,688

 

541,537

 

93,151

17

 

 

737,794

 

634,841

 

102,953

16

 

Mortgage Banking*

 

12,153

 

6,752

 

5,401

80

 

 

13,883

 

12,653

 

1,230

10

 

Total Core Bank*

$

4,298,471

$

4,003,721

$

294,750

7

 

$

4,451,253

$

4,123,920

$

327,333

8

 

 

 

 

 

 

 

 

 

 

*Includes loans held for sale
NM – Not meaningful

The primary drivers of the changes in the Core Bank’s net interest income for the second quarter of 2019, as compared to the second quarter of 2018, follow:

Traditional Banking

The Traditional Banking segment’s net interest income increased $2.5 million, or 6%, over the second quarter of 2018. The rise in net interest income was generally driven by the following items:

  • Average loans during the second quarter of 2019 were $196 million, or 6%, higher than the comparable period in 2018. The primary contributors for the increase in the quarter-over-quarter average balances were commercial and industrial loans, which grew $80 million, and commercial real estate loans, which grew $56 million.
  • Despite a 31-basis-point increase in the Traditional Banking segment’s cost of interest-bearing liabilities, its net interest margin continued to expand due to the increased value from its noninterest-bearing funding. The difference between the Traditional Banking segment’s net interest margin and net interest spread was 18 basis points during the second quarter of 2019 compared to 14 basis points during the second quarter of 2018, with the differential representing the increased value to the net interest margin of noninterest-bearing deposits and stockholders’ equity. The increase in this value resulted from a 30-basis-point rise in the yield on the Traditional Banking segment’s interest-earning assets from period to period.

Warehouse Lending

Despite a 17% increase in average outstanding Warehouse balances during the second quarter of 2019 compared to the second quarter of 2018, a 59-basis-point compression in its net interest margin during the same period drove a $207,000 decrease in its net interest income. The following factors led to the overall changes in the Warehouse segment’s net interest income and net interest margin:

  • Pricing pressure to the Bank on Warehouse lines of credit resulting from the negative impact of an inverted yield curve on Warehouse clients primarily drove the 59-basis-point compression in the Warehouse segment’s net interest margin.
  • A sharp decline in long-term fixed mortgage rates drove increased client usage of the Bank’s Warehouse lines of credit, driving average outstanding Warehouse balances from $542 million during the second quarter of 2018 to $635 million during the second quarter of 2019.

Provision Expense – The Core Bank’s Provision increased to $1.8 million for the second quarter of 2019 from $773,000 for the same period in 2018. The difference in the Provision between the two periods was primarily related to a $1.2 million estimated specific loan loss reserve for one commercial-related client that defaulted during the second quarter of 2019. Despite personal guarantees associated with this relationship, the Bank recorded a large estimated Provision due to the potential for a prolonged workout horizon and the general uncertainty associated with these types of circumstances.

The table below presents the Core Bank’s credit quality metrics:

 

       

 

As of and for the:

 

Quarters Ended:

Years Ended:

 

Jun. 30,

Mar. 31,

Dec. 31,

Dec. 31,

Dec. 31,

Core Banking Credit Quality Ratios

2019

2019

2018

2017

2016

 

 

 

 

 

 

Nonperforming loans to total loans

0.43

%

0.37

%

0.40

%

0.36

%

0.42

%

 

 

 

 

 

 

Nonperforming assets to total loans (including OREO)

0.46

 

0.37

 

0.40

 

0.36

 

0.46

 

 

 

 

 

 

 

Delinquent loans to total loans(2)

0.28

 

0.18

 

0.22

 

0.21

 

0.18

 

 

 

 

 

 

 

Net charge-offs to average loans

0.04

 

0.04

 

0.06

 

0.04

 

0.05

 

(Quarterly rates annualized)

 

 

 

 

 

 

 

 

 

 

 

OREO = Other Real Estate Owned

 

 

 

 

 

 

Noninterest Income – Core Bank noninterest income was $10.3 million during the second quarter of 2019, a $1.2 million, or 14%, increase from the $9.1 million achieved during the second quarter of 2018. Driving the increase in noninterest income was a $1.1 million rise in mortgage banking income, which resulted from a $27 million increase in secondary market loans originated from period to period combined with a $33 million increase in the Bank’s pipeline of secondary market loans in process from June 30, 2018 to June 30, 2019. Over the previous 12 months, the Bank has continued to invest in staffing and other resources for the mortgage banking function. A sharp decline in long-term mortgage rates during the quarter, combined with the Bank’s continued investments in mortgage resources, contributed to the increased quarter-over-quarter mortgage activity.

Noninterest Expense – Core Bank noninterest expense increased $2.5 million, or 7%, during the second quarter of 2019 compared to the second quarter of 2018 resulting primarily from a $2.1 million, or 10%, increase in salaries and benefits expense. Annual merit increases and the addition of 79 Core Bank full-time-equivalent employees (“FTEs”) from June 30, 2018 to June 30, 2019 primarily drove the increase.

Republic Processing Group(3)

Republic Processing Group (“RPG”) reported net income of $5.1 million for the second quarter of 2019 compared to $4.1 million for the same period in 2018, with a $2.0 million increase in net income at RPG’s Republic Credit Solutions (“RCS”) segment partially offset by a $1.0 million reduction in net income at its Tax Refund Solutions (“TRS”) segment.

Republic Credit Solutions

RCS’s increase in net income primarily reflects a $2.8 million reduction in Provision expense resulting from lower Provisions of $1.2 million and $1.6 million, respectively, for RCS’s line-of-credit product and its discontinued credit card product. The overall improvement in the Provision for the line-of-credit product was driven by a decline in its annualized historical loss rate combined with a year-to-year decrease in average outstanding balances. The decrease in losses within the RCS credit-card portfolio was due to the discontinuance of the program, effective January of this year.

Tax Refund Solutions

Related to the profitability of TRS, a negative change in Provision expense from a net credit of $888,000 during the second quarter of 2018 to a net charge of $392,000 during the second quarter of 2019 drove the segment’s overall change in net income. The net credit during the second quarter of 2018 resulted from better than expected paydowns from the US Treasury on unpaid Easy Advance (“EA”) loans, allowing the Company to reverse a portion of the loan loss provisions it recorded during the first quarter of 2018. Conversely, loan paydowns from the US Treasury during the second quarter of 2019 approximated the Company’s estimate from the first quarter of 2019, causing the Company’s loan loss reserve for EA loans to remain materially the same from the first quarter.

With the second quarter EA paydowns, the percent of unpaid EAs to total EAs originated dropped to 3.45% at June 30, 2019. This compares to 2.88% at June 30, 2018, a gap of 57 basis points. By comparison, the unpaid EA percentage was 5.84% at March 31, 2019, compared to 4.49% at March 31, 2018, representing a gap of 135 basis points. Management remains optimistic that this gap can continue to shrink through the remainder of 2019. With all unpaid EAs having been charged off as of June 30, 2019, any EA payments received throughout the remainder of 2019 will represent recovery credits directly to income.

Total Company - Income Tax Expense

In April 2019, Kentucky enacted HB458, which allows for combined filing for Republic Bancorp and the Bank. Republic Bancorp had previously filed a separate company income tax return for Kentucky and generated net operating losses, for which it had maintained a valuation allowance against the related deferred tax asset. HB458 also allows for certain net operating losses to be utilized on a combined return. Republic Bancorp expects to file a combined return beginning in 2021 and to utilize these previously generated net operating losses. The tax benefit to reverse the valuation allowance on the deferred tax asset for these losses is expected to be approximately $815,000. This benefit was recorded in the second quarter of 2019, with 100% of this benefit attributed to the Core Bank.

In addition to the tax benefit recognized during the quarter associated with passage of HB458, the Company also received $388,000 in income tax benefit during the second quarter of 2019 associated with equity compensation. Substantially all of this benefit was attributed to the Core Bank.

Republic Bancorp, Inc. (the “Company”) is the parent company of Republic Bank & Trust Company (the “Bank”). The Bank currently has 45 full-service banking centers and two loan production offices throughout five states: 32 banking centers in 11 Kentucky communities - Covington, Crestview Hills, Elizabethtown, Florence, Frankfort, Georgetown, Lexington, Louisville, Owensboro, Shelbyville, and Shepherdsville; three banking centers in southern Indiana – Floyds Knobs, Jeffersonville, and New Albany; seven banking centers in six Florida communities (Tampa MSA) – Largo, Port Richey, St. Petersburg, Seminole, Tampa, and Temple Terrace and one loan production office in Oldsmar; two banking centers in Tennessee (Nashville MSA) – Cool Springs (Franklin) and Green Hills (Nashville), and one loan production office in Brentwood; and one banking center in Norwood (Cincinnati), Ohio. The Bank offers internet banking at www.republicbank.com. The Bank also offers separately branded, nation-wide digital banking at www.mymemorybank.com. The Company has $5.7 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. ®

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 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. Actual results could differ materially based upon 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, 2018. 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 2019 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, 2019

Dec. 31, 2018

Jun. 30, 2018

Assets:

 

 

 

Cash and cash equivalents

$

473,779

 

$

351,474

 

$

386,956

 

Investment securities

 

447,512

 

 

543,771

 

 

485,622

 

Loans held for sale

 

63,949

 

 

21,809

 

 

26,337

 

Loans

 

4,522,414

 

 

4,148,227

 

 

4,195,984

 

Allowance for loan and lease losses

 

(45,983

)

 

(44,675

)

 

(45,047

)

Loans, net

 

4,476,431

 

 

4,103,552

 

 

4,150,937

 

Federal Home Loan Bank stock, at cost

 

32,242

 

 

32,067

 

 

32,067

 

Premises and equipment, net

 

44,199

 

 

44,820

 

 

46,485

 

Right-of-use assets(4)

 

37,450

 

Goodwill

 

16,300

 

 

16,300

 

 

16,300

 

Other real estate owned ("OREO")

 

1,095

 

 

160

 

Bank owned life insurance ("BOLI")

 

65,642

 

 

64,883

 

 

64,106

 

Other assets and accrued interest receivable

 

64,535

 

 

61,568

 

 

57,135

 

Total assets

$

5,723,134

 

$

5,240,404

 

$

5,265,945

 

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

 

Deposits:

 

 

 

Noninterest-bearing

$

1,052,177

 

$

1,003,969

 

$

1,061,182

 

Interest-bearing

 

2,661,697

 

 

2,452,176

 

 

2,412,187

 

Total deposits

 

3,713,874

 

 

3,456,145

 

 

3,473,369

 

 

 

 

 

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

 

226,002

 

 

182,990

 

 

175,291

 

Operating lease liabilities(4)

 

38,852

 

Federal Home Loan Bank advances

 

915,000

 

 

810,000

 

 

860,000

 

Subordinated note

 

41,240

 

 

41,240

 

 

41,240

 

Other liabilities and accrued interest payable

 

56,738

 

 

60,095

 

 

52,037

 

Total liabilities

 

4,991,706

 

 

4,550,470

 

 

4,601,937

 

 

 

 

 

Stockholders' equity

 

731,428

 

 

689,934

 

 

664,008

 

Total liabilities and stockholders' equity

$

5,723,134

 

$

5,240,404

 

$

5,265,945

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended Jun. 30,

 

Six Months Ended Jun. 30,

 

 

 

2019

 

2018

 

2019

 

2018

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold and other interest-earning deposits

 

$

297,205

 

$

276,246

 

$

293,587

 

$

279,684

 

Investment securities, including FHLB stock

 

 

514,366

 

 

506,209

 

 

538,923

 

 

529,356

 

Loans, including loans held for sale

 

 

4,424,905

 

 

4,092,388

 

 

4,341,254

 

 

4,087,247

 

Total interest-earning assets

 

 

5,236,476

 

 

4,874,843

 

 

5,173,764

 

 

4,896,287

 

Total assets

 

 

5,480,525

 

 

5,074,781

 

 

5,478,609

 

 

5,175,927

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

1,098,817

 

$

1,146,403

 

$

1,178,198

 

$

1,232,652

 

Interest-bearing deposits

 

 

2,588,836

 

 

2,410,330

 

 

2,609,188

 

 

2,413,220

 

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

 

 

220,189

 

 

178,063

 

 

225,864

 

 

217,532

 

Federal Home Loan Bank advances

 

 

710,879

 

 

593,187

 

 

611,695

 

 

569,613

 

Subordinated note

 

 

41,240

 

 

41,240

 

 

41,240

 

 

41,240

 

Total interest-bearing liabilities

 

 

3,561,144

 

 

3,222,820

 

 

3,487,987

 

 

3,241,605

 

Stockholders' equity

 

 

728,723

 

 

663,077

 

 

717,838

 

 

652,407

 

 

Republic Bancorp, Inc. Financial Information
Second Quarter 2019 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,

 

 

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total interest income(5)

 

$

65,664

 

$

58,356

 

$

148,297

 

$

132,189

 

Total interest expense

 

 

11,718

 

 

7,272

 

 

22,052

 

 

13,440

 

Net interest income

 

 

53,946

 

 

51,084

 

 

126,245

 

 

118,749

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for loan and lease losses

 

 

4,460

 

 

4,932

 

 

21,691

 

 

22,187

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

3,598

 

 

3,574

 

 

6,901

 

 

7,129

 

Net refund transfer fees

 

 

3,629

 

 

3,473

 

 

20,729

 

 

19,825

 

Mortgage banking income

 

 

2,416

 

 

1,316

 

 

3,955

 

 

2,336

 

Interchange fee income

 

 

3,257

 

 

2,891

 

 

6,014

 

 

5,558

 

Program fees

 

 

1,037

 

 

1,323

 

 

2,111

 

 

3,019

 

Increase in cash surrender value of BOLI

 

 

377

 

 

379

 

 

759

 

 

750

 

Net gains on OREO

 

 

90

 

 

320

 

 

220

 

 

452

 

Other

 

 

721

 

 

1,020

 

 

1,853

 

 

2,772

 

Total noninterest income

 

 

15,125

 

 

14,296

 

 

42,542

 

 

41,841

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

25,286

 

 

22,766

 

 

50,362

 

 

46,600

 

Occupancy and equipment, net

 

 

6,472

 

 

6,391

 

 

13,056

 

 

12,612

 

Communication and transportation

 

 

1,071

 

 

1,241

 

 

2,232

 

 

2,623

 

Marketing and development

 

 

1,278

 

 

1,283

 

 

2,380

 

 

2,199

 

FDIC insurance expense

 

 

295

 

 

345

 

 

743

 

 

870

 

Bank franchise tax expense

 

 

935

 

 

860

 

 

3,431

 

 

3,378

 

Data processing

 

 

2,217

 

 

2,443

 

 

4,313

 

 

4,829

 

Interchange related expense

 

 

1,302

 

 

1,098

 

 

2,617

 

 

2,105

 

Supplies

 

 

582

 

 

303

 

 

1,066

 

 

684

 

OREO expense

 

 

148

 

 

16

 

 

194

 

 

61

 

Legal and professional fees

 

 

844

 

 

728

 

 

1,730

 

 

1,771

 

Other

 

 

2,998

 

 

3,158

 

 

6,813

 

 

5,945

 

Total noninterest expense

 

 

43,428

 

 

40,632

 

 

88,937

 

 

83,677

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax expense

 

 

21,183

 

 

19,816

 

 

58,159

 

 

54,726

 

Income tax expense

 

 

3,176

 

 

4,150

 

 

10,636

 

 

11,591

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

18,007

 

$

15,666

 

$

47,523

 

$

43,135

 

 

Republic Bancorp, Inc. Financial Information
Second Quarter 2019 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 Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended Jun. 30,

 

Six Months Ended Jun. 30,

 

 

2019

 

2018

 

2019

 

2018

Per Share Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

 

21,016

 

 

 

21,187

 

 

 

20,997

 

 

 

20,939

 

Diluted weighted average shares outstanding

 

 

21,138

 

 

 

21,331

 

 

 

21,125

 

 

 

21,072

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period-end shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A Common Stock

 

 

18,740

 

 

 

18,677

 

 

 

18,740

 

 

 

18,677

 

Class B Common Stock

 

 

2,208

 

 

 

2,215

 

 

 

2,208

 

 

 

2,215

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share(6)

 

$

34.92

 

 

$

31.78

 

 

$

34.92

 

 

$

31.78

 

Tangible book value per share(6)

 

 

33.87

 

 

 

30.73

 

 

 

33.87

 

 

 

30.73

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share ("EPS"):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic EPS - Class A Common Stock

 

$

0.86

 

 

$

0.75

 

 

$

2.29

 

 

$

2.08

 

Basic EPS - Class B Common Stock

 

 

0.79

 

 

 

0.68

 

 

 

2.08

 

 

 

1.89

 

Diluted EPS - Class A Common Stock

 

 

0.86

 

 

 

0.74

 

 

 

2.28

 

 

 

2.06

 

Diluted EPS - Class B Common Stock

 

 

0.78

 

 

 

0.68

 

 

 

2.07

 

 

 

1.88

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per Common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A Common Stock

 

$

0.264

 

 

$

0.242

 

 

$

0.528

 

 

$

0.484

 

Class B Common Stock

 

 

0.240

 

 

 

0.220

 

 

 

0.480

 

 

 

0.440

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

1.31

%

 

 

1.23

%

 

 

1.73

%

 

 

1.67

%

Return on average equity

 

 

9.88

 

 

 

9.45

 

 

 

13.24

 

 

 

13.22

 

Efficiency ratio(7)

 

 

63

 

 

 

62

 

 

 

53

 

 

 

52

 

Yield on average interest-earning assets(5)

 

 

5.02

 

 

 

4.79

 

 

 

5.73

 

 

 

5.40

 

Cost of average interest-bearing liabilities

 

 

1.32

 

 

 

0.90

 

 

 

1.26

 

 

 

0.83

 

Cost of average deposits(8)

 

 

0.75

 

 

 

0.44

 

 

 

0.72

 

 

 

0.40

 

Net interest spread(5)

 

 

3.70

 

 

 

3.89

 

 

 

4.47

 

 

 

4.57

 

Net interest margin - Total Company(5)

 

 

4.12

 

 

 

4.19

 

 

 

4.88

 

 

 

4.85

 

Net interest margin - Core Bank(1)

 

 

3.62

 

 

 

3.64

 

 

 

3.69

 

 

 

3.60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

End of period FTEs(9) - Total Company

 

 

1,089

 

 

 

1,013

 

 

 

1,089

 

 

 

1,013

 

End of period FTEs - Core Bank

 

 

1,012

 

 

 

933

 

 

 

1,012

 

 

 

933

 

Number of full-service banking centers

 

 

45

 

 

 

45

 

 

 

45

 

 

 

45

 

 

Republic Bancorp, Inc. Financial Information
Second Quarter 2019 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 Ratios

 

As of and for the

 

As of and for the

 

 

Three Months Ended Jun. 30,

 

Six Months Ended Jun. 30,

 

 

2019

 

2018

 

2019

 

2018

Credit Quality Asset Balances:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming Assets - Total Company:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans on nonaccrual status

 

$

19,238

 

 

$

17,502

 

 

$

19,238

 

 

$

17,502

 

Loans past due 90-days-or-more and still on accrual

 

 

166

 

 

 

858

 

 

 

166

 

 

 

858

 

Total nonperforming loans

 

 

19,404

 

 

 

18,360

 

 

 

19,404

 

 

 

18,360

 

OREO

 

 

1,095

 

 

 

 

 

 

1,095

 

 

 

 

Total nonperforming assets

 

$

20,499

 

 

$

18,360

 

 

$

20,499

 

 

$

18,360

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming Assets - Core Bank(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans on nonaccrual status

 

$

19,238

 

 

$

17,502

 

 

$

19,238

 

 

$

17,502

 

Loans past due 90-days-or-more and still on accrual

 

 

 

 

 

22

 

 

 

 

 

 

22

 

Total nonperforming loans

 

 

19,238

 

 

 

17,524

 

 

 

19,238

 

 

 

17,524

 

OREO

 

 

1,095

 

 

 

 

 

 

1,095

 

 

 

 

Total nonperforming assets

 

$

20,333

 

 

$

17,524

 

 

$

20,333

 

 

$

17,524

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Delinquent loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Delinquent loans - Core Bank

 

$

12,524

 

 

$

8,703

 

 

$

12,524

 

 

$

8,703

 

Delinquent loans - RPG(3)

 

 

6,802

 

 

 

4,429

 

 

 

6,802

 

 

 

4,429

 

Total delinquent loans - Total Company

 

$

19,326

 

 

$

13,132

 

 

$

19,326

 

 

$

13,132

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Quality Ratios - Total Company:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans to total loans

 

 

0.43

%

 

 

0.44

%

 

 

0.43

%

 

 

0.44

%

Nonperforming assets to total loans (including OREO)

 

 

0.45

 

 

 

0.44

 

 

 

0.45

 

 

 

0.44

 

Nonperforming assets to total assets

 

 

0.36

 

 

 

0.35

 

 

 

0.36

 

 

 

0.35

 

Allowance for loan and lease losses to total loans

 

 

1.02

 

 

 

1.07

 

 

 

1.02

 

 

 

1.07

 

Allowance for loan and lease losses to nonperforming loans

 

 

237

 

 

 

245

 

 

 

237

 

 

 

245

 

Delinquent loans to total loans(2)

 

 

0.43

 

 

 

0.31

 

 

 

0.43

 

 

 

0.31

 

Net charge-offs to average loans (annualized)

 

 

1.49

 

 

 

1.19

 

 

 

0.94

 

 

 

0.97

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Quality Ratios - Core Bank:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans to total loans

 

 

0.43

%

 

 

0.43

%

 

 

0.43

%

 

 

0.43

%

Nonperforming assets to total loans (including OREO)

 

 

0.46

 

 

 

0.43

 

 

 

0.46

 

 

 

0.43

 

Nonperforming assets to total assets

 

 

0.37

 

 

 

0.34

 

 

 

0.37

 

 

 

0.34

 

Allowance for loan and lease losses to total loans

 

 

0.75

 

 

 

0.76

 

 

 

0.75

 

 

 

0.76

 

Allowance for loan and lease losses to nonperforming loans

 

 

171

 

 

 

179

 

 

 

171

 

 

 

179

 

Delinquent loans to total loans

 

 

0.28

 

 

 

0.21

 

 

 

0.28

 

 

 

0.21

 

Net charge-offs to average loans (annualized)

 

 

0.04

 

 

 

 

 

 

0.04

 

 

 

0.03

 

 

Republic Bancorp, Inc. Financial Information
Second Quarter 2019 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, 2019

 

Mar. 31, 2019

 

Dec. 31, 2018

 

Sep. 30, 2018

 

Jun. 30, 2018

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

473,779

 

$

345,512

 

$

351,474

 

$

365,512

 

$

386,956

 

 

Investment securities

 

 

447,512

 

 

498,318

 

 

543,771

 

 

513,766

 

 

485,622

 

 

Loans held for sale

 

 

63,949

 

 

24,177

 

 

21,809

 

 

28,899

 

 

26,337

 

 

Loans

 

 

4,522,414

 

 

4,298,710

 

 

4,148,227

 

 

4,136,195

 

 

4,195,984

 

 

Allowance for loan and lease losses

 

 

(45,983)

 

 

(57,961)

 

 

(44,675)

 

 

(43,824)

 

 

(45,047)

 

 

Loans, net

 

 

4,476,431

 

 

4,240,749

 

 

4,103,552

 

 

4,092,371

 

 

4,150,937

 

 

Federal Home Loan Bank stock, at cost

 

 

32,242

 

 

29,965

 

 

32,067

 

 

32,067

 

 

32,067

 

 

Premises and equipment, net

 

 

44,199

 

 

43,527

 

 

44,820

 

 

45,945

 

 

46,485

 

 

Right-of-use assets(4)

 

 

37,450

 

 

38,738

 

 

 

 

 

 

 

 

Goodwill

 

 

16,300

 

 

16,300

 

 

16,300

 

 

16,300

 

 

16,300

 

 

Other real estate owned

 

 

1,095

 

 

216

 

 

160

 

 

70

 

 

 

 

Bank owned life insurance

 

 

65,642

 

 

65,265

 

 

64,883

 

 

64,491

 

 

64,106

 

 

Other assets and accrued interest receivable

 

 

64,535

 

 

63,001

 

 

61,568

 

 

62,933

 

 

57,135

 

 

Total assets

 

$

5,723,134

 

$

5,365,768

 

$

5,240,404

 

$

5,222,354

 

$

5,265,945

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

1,052,177

 

$

1,184,480

 

$

1,003,969

 

$

1,103,461

 

$

1,061,182

 

 

Interest-bearing

 

 

2,661,697

 

 

2,589,836

 

 

2,452,176

 

 

2,463,224

 

 

2,412,187

 

 

Total deposits

 

 

3,713,874

 

 

3,774,316

 

 

3,456,145

 

 

3,566,685

 

 

3,473,369

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

226,002

 

 

173,168

 

 

182,990

 

 

163,768

 

 

175,291

 

 

Operating lease liabilities(4)

 

 

38,852

 

 

40,203

 

 

 

 

 

 

 

 

Federal Home Loan Bank advances

 

 

915,000

 

 

560,000

 

 

810,000

 

 

715,000

 

 

860,000

 

 

Subordinated note

 

 

41,240

 

 

41,240

 

 

41,240

 

 

41,240

 

 

41,240

 

 

Other liabilities and accrued interest payable

 

 

56,738

 

 

59,750

 

 

60,095

 

 

58,851

 

 

52,037

 

 

Total liabilities

 

 

4,991,706

 

 

4,648,677

 

 

4,550,470

 

 

4,545,544

 

 

4,601,937

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

731,428

 

 

717,091

 

 

689,934

 

 

676,810

 

 

664,008

 

 

Total liabilities and stockholders' equity

 

$

5,723,134

 

$

5,365,768

 

$

5,240,404

 

$

5,222,354

 

$

5,265,945

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarterly Comparison

 

 

 

Jun. 30, 2019

 

Mar. 31, 2019

 

Dec. 31, 2018

 

Sep. 30, 2018

 

Jun. 30, 2018

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold and other interest-earning deposits

 

$

297,205

 

$

289,928

 

$

199,134

 

$

265,111

 

$

276,246

 

 

Investment securities, including FHLB stock

 

 

514,366

 

 

563,752

 

 

579,429

 

 

530,468

 

 

506,209

 

 

Loans, including loans held for sale

 

 

4,424,905

 

 

4,256,673

 

 

4,092,004

 

 

4,112,926

 

 

4,092,388

 

 

Total interest-earning assets

 

 

5,236,476

 

 

5,110,353

 

 

4,870,567

 

 

4,908,505

 

 

4,874,843

 

 

Total assets

 

 

5,480,525

 

 

5,476,671

 

 

5,070,845

 

 

5,101,286

 

 

5,074,781

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

1,098,817

 

$

1,258,461

 

$

1,050,236

 

$

1,076,967

 

$

1,146,403

 

 

Interest-bearing deposits

 

 

2,588,836

 

 

2,629,765

 

 

2,477,962

 

 

2,476,088

 

 

2,410,330

 

 

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

 

 

220,189

 

 

231,602

 

 

252,073

 

 

213,195

 

 

178,063

 

 

Federal Home Loan Bank advances

 

 

710,879

 

 

511,408

 

 

515,413

 

 

574,130

 

 

593,187

 

 

Subordinated note

 

 

41,240

 

 

41,240

 

 

41,240

 

 

41,240

 

 

41,240

 

 

Total interest-bearing liabilities

 

 

3,561,144

 

 

3,414,015

 

 

3,286,688

 

 

3,304,653

 

 

3,222,820

 

 

Stockholders' equity

 

 

728,723

 

 

706,833

 

 

687,156

 

 

675,470

 

 

663,077

 

 

 

Republic Bancorp, Inc. Financial Information
Second Quarter 2019 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, 2019

 

 

Mar. 31, 2019

 

 

Dec. 31, 2018

 

Sep. 30, 2018

 

Jun. 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total interest income(5)

 

$

65,664

 

$

82,633

 

$

62,902

 

$

61,090

 

$

58,356

 

 

Total interest expense

 

 

11,718

 

 

10,334

 

 

8,626

 

 

8,057

 

 

7,272

 

 

Net interest income

 

 

53,946

 

 

72,299

 

 

54,276

 

 

53,033

 

 

51,084

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for loan and lease losses

 

 

4,460

 

 

17,231

 

 

5,104

 

 

4,077

 

 

4,932

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

3,598

 

 

3,303

 

 

3,565

 

 

3,579

 

 

3,574

 

 

Net refund transfer fees

 

 

3,629

 

 

17,100

 

 

55

 

 

149

 

 

3,473

 

 

Mortgage banking income

 

 

2,416

 

 

1,539

 

 

1,129

 

 

1,360

 

 

1,316

 

 

Interchange fee income

 

 

3,257

 

 

2,757

 

 

2,844

 

 

2,757

 

 

2,891

 

 

Program fees

 

 

1,037

 

 

1,074

 

 

1,520

 

 

1,686

 

 

1,323

 

 

Increase in cash surrender value of BOLI

 

 

377

 

 

382

 

 

392

 

 

385

 

 

379

 

 

Net gains on OREO

 

 

90

 

 

130

 

 

29

 

 

248

 

 

320

 

 

Other

 

 

721

 

 

1,132

 

 

585

 

 

1,301

 

 

1,020

 

 

Total noninterest income

 

 

15,125

 

 

27,417

 

 

10,119

 

 

11,465

 

 

14,296

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

25,286

 

 

25,076

 

 

21,743

 

 

22,846

 

 

22,766

 

 

Occupancy and equipment, net

 

 

6,472

 

 

6,584

 

 

6,474

 

 

6,279

 

 

6,391

 

 

Communication and transportation

 

 

1,071

 

 

1,161

 

 

1,115

 

 

1,047

 

 

1,241

 

 

Marketing and development

 

 

1,278

 

 

1,102

 

 

784

 

 

1,449

 

 

1,283

 

 

FDIC insurance expense

 

 

295

 

 

448

 

 

264

 

 

360

 

 

345

 

 

Bank franchise tax expense

 

 

935

 

 

2,496

 

 

863

 

 

710

 

 

860

 

 

Data processing

 

 

2,217

 

 

2,096

 

 

2,434

 

 

2,350

 

 

2,443

 

 

Interchange related expense

 

 

1,302

 

 

1,315

 

 

1,237

 

 

1,138

 

 

1,098

 

 

Supplies

 

 

582

 

 

484

 

 

446

 

 

314

 

 

303

 

 

OREO expense

 

 

148

 

 

46

 

 

31

 

 

2

 

 

16

 

 

Legal and professional fees

 

 

844

 

 

886

 

 

753

 

 

935

 

 

728

 

 

Other

 

 

2,998

 

 

3,815

 

 

2,819

 

 

3,782

 

 

3,158

 

 

Total noninterest expense

 

 

43,428

 

 

45,509

 

 

38,963

 

 

41,212

 

 

40,632

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax expense

 

 

21,183

 

 

36,976

 

 

20,328

 

 

19,209

 

 

19,816

 

 

Income tax expense

 

 

3,176

 

 

7,460

 

 

3,022

 

 

1,798

 

 

4,150

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

18,007

 

$

29,516

 

$

17,306

 

$

17,411

 

$

15,666

 

 

 

Republic Bancorp, Inc. Financial Information
Second Quarter 2019 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 Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the Three Months Ended

 

 

 

 

 

Jun. 30, 2019

 

 

 

Mar. 31, 2019

 

 

 

Dec. 31, 2018

 

 

 

Sep. 30, 2018

 

 

 

Jun. 30, 2018

 

 

Per Share Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

 

21,016

 

 

 

20,973

 

 

 

20,975

 

 

 

20,962

 

 

 

21,187

 

 

Diluted weighted average shares outstanding

 

 

21,138

 

 

 

21,106

 

 

 

21,113

 

 

 

21,120

 

 

 

21,331

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period-end shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A Common Stock

 

 

18,740

 

 

 

18,698

 

 

 

18,675

 

 

 

18,682

 

 

 

18,677

 

 

Class B Common Stock

 

 

2,208

 

 

 

2,213

 

 

 

2,213

 

 

 

2,213

 

 

 

2,215

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share(6)

 

$

34.92

 

 

$

34.29

 

 

$

33.03

 

 

$

32.39

 

 

$

31.78

 

 

Tangible book value per share(6)

 

 

33.87

 

 

 

33.25

 

 

 

31.98

 

 

 

31.34

 

 

 

30.73

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share ("EPS"):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic EPS - Class A Common Stock

 

$

0.86

 

 

$

1.42

 

 

$

0.83

 

 

$

0.84

 

 

$

0.75

 

 

Basic EPS - Class B Common Stock

 

 

0.79

 

 

 

1.29

 

 

 

0.76

 

 

 

0.76

 

 

 

0.68

 

 

Diluted EPS - Class A Common Stock

 

 

0.86

 

 

 

1.41

 

 

 

0.83

 

 

 

0.83

 

 

 

0.74

 

 

Diluted EPS - Class B Common Stock

 

 

0.78

 

 

 

1.28

 

 

 

0.75

 

 

 

0.76

 

 

 

0.68

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per Common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A Common Stock

 

$

0.264

 

 

$

0.264

 

 

$

0.242

 

 

$

0.242

 

 

$

0.242

 

 

Class B Common Stock

 

 

0.240

 

 

 

0.240

 

 

 

0.220

 

 

 

0.220

 

 

 

0.220

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

1.31

%

 

 

2.16

%

 

 

1.37

%

 

 

1.37

%

 

 

1.23

%

 

Return on average equity

 

 

9.88

 

 

 

16.70

 

 

 

10.07

 

 

 

10.31

 

 

 

9.45

 

 

Efficiency ratio(7)

 

 

63

 

 

 

46

 

 

 

61

 

 

 

64

 

 

 

62

 

 

Yield on average interest-earning assets(5)

 

 

5.02

 

 

 

6.47

 

 

 

5.17

 

 

 

4.98

 

 

 

4.79

 

 

Cost of average interest-bearing liabilities

 

 

1.32

 

 

 

1.21

 

 

 

1.05

 

 

 

0.98

 

 

 

0.90

 

 

Cost of average deposits(8)

 

 

0.75

 

 

 

0.69

 

 

 

0.59

 

 

 

0.51

 

 

 

0.44

 

 

Net interest spread(5)

 

 

3.70

 

 

 

5.26

 

 

 

4.12

 

 

 

4.00

 

 

 

3.89

 

 

Net interest margin - Total Company(5)

 

 

4.12

 

 

 

5.66

 

 

 

4.46

 

 

 

4.32

 

 

 

4.19

 

 

Net interest margin - Core Bank(1)

 

 

3.62

 

 

 

3.76

 

 

 

3.85

 

 

 

3.76

 

 

 

3.64

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

End of period FTEs(9) - Total Company

 

 

1,089

 

 

 

1,073

 

 

 

1,051

 

 

 

1,034

 

 

 

1,013

 

 

End of period FTEs - Core Bank

 

 

1,012

 

 

 

997

 

 

 

968

 

 

 

953

 

 

 

933

 

 

Number of full-service banking centers

 

 

45

 

 

 

45

 

 

 

45

 

 

 

45

 

 

 

45

 

 

 

Republic Bancorp, Inc. Financial Information
Second Quarter 2019 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 Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the Three Months Ended

 

 

Jun. 30, 2019

 

Mar. 31, 2019

 

Dec. 31, 2018

 

Sep. 30, 2018

 

Jun. 30, 2018

Credit Quality Asset Balances:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming Assets - Total Company:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans on nonaccrual status

 

$

19,238

 

 

$

15,361

 

 

$

15,993

 

 

$

17,015

 

 

$

17,502

 

Loans past due 90-days-or-more and still on accrual

 

 

166

 

 

 

199

 

 

 

145

 

 

 

254

 

 

 

858

 

Total nonperforming loans

 

 

19,404

 

 

 

15,560

 

 

 

16,138

 

 

 

17,269

 

 

 

18,360

 

OREO

 

 

1,095

 

 

 

216

 

 

 

160

 

 

 

70

 

 

 

 

Total nonperforming assets

 

$

20,499

 

 

$

15,776

 

 

$

16,298

 

 

$

17,339

 

 

$

18,360

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming Assets - Core Bank(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans on nonaccrual status

 

$

19,238

 

 

$

15,361

 

 

$

15,993

 

 

$

17,015

 

 

$

17,502

 

Loans past due 90-days-or-more and still on accrual

 

 

 

 

 

4

 

 

 

13

 

 

 

5

 

 

 

22

 

Total nonperforming loans

 

 

19,238

 

 

 

15,365

 

 

 

16,006

 

 

 

17,020

 

 

 

17,524

 

OREO

 

 

1,095

 

 

 

216

 

 

 

160

 

 

 

70

 

 

 

 

Total nonperforming assets

 

$

20,333

 

 

$

15,581

 

 

$

16,166

 

 

$

17,090

 

 

$

17,524

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Delinquent Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Delinquent loans - Core Bank

 

$

12,524

 

 

$

7,727

 

 

$

8,875

 

 

$

11,840

 

 

$

8,703

 

Delinquent loans - RPG(3)(10)

 

 

6,802

 

 

 

26,460

 

 

 

7,087

 

 

 

5,986

 

 

 

4,429

 

Total delinquent loans - Total Company

 

$

19,326

 

 

$

34,187

 

 

$

15,962

 

 

$

17,826

 

 

$

13,132

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Quality Ratios - Total Company:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans to total loans

 

 

0.43

%

 

 

0.36

%

 

 

0.39

%

 

 

0.42

%

 

 

0.44

%

Nonperforming assets to total loans (including OREO)

 

 

0.45

 

 

 

0.37

 

 

 

0.39

 

 

 

0.42

 

 

 

0.44

 

Nonperforming assets to total assets

 

 

0.36

 

 

 

0.29

 

 

 

0.31

 

 

 

0.33

 

 

 

0.35

 

Allowance for loan and lease losses to total loans

 

 

1.02

 

 

 

1.35

 

 

 

1.08

 

 

 

1.06

 

 

 

1.07

 

Allowance for loan and lease losses to nonperforming loans

 

 

237

 

 

 

373

 

 

 

277

 

 

 

254

 

 

 

245

 

Delinquent loans to total loans(2)(10)

 

 

0.43

 

 

 

0.80

 

 

 

0.38

 

 

 

0.43

 

 

 

0.31

 

Net charge-offs to average loans (annualized)

 

 

1.49

 

 

 

0.37

 

 

 

0.42

 

 

 

0.52

 

 

 

1.19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Quality Ratios - Core Bank:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans to total loans

 

 

0.43

%

 

 

0.37

%

 

 

0.40

%

 

 

0.42

%

 

 

0.43

%

Nonperforming assets to total loans (including OREO)

 

 

0.46

 

 

 

0.37

 

 

 

0.40

 

 

 

0.42

 

 

 

0.43

 

Nonperforming assets to total assets

 

 

0.37

 

 

 

0.31

 

 

 

0.31

 

 

 

0.33

 

 

 

0.34

 

Allowance for loan and lease losses to total loans

 

 

0.75

 

 

 

0.75

 

 

 

0.78

 

 

 

0.78

 

 

 

0.76

 

Allowance for loan and lease losses to nonperforming loans

 

 

171

 

 

 

205

 

 

 

197

 

 

 

184

 

 

 

179

 

Delinquent loans to total loans

 

 

0.28

 

 

 

0.18

 

 

 

0.22

 

 

 

0.29

 

 

 

0.21

 

Net charge-offs to average loans (annualized)

 

 

0.04

 

 

 

0.04

 

 

 

0.12

 

 

 

0.04

 

 

 

 

 

Republic Bancorp, Inc. Financial Information
Second Quarter 2019 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 clients are similar.

As of June 30, 2019, the Company was divided into five reportable segments: Traditional Banking, Warehouse Lending (“Warehouse”), Mortgage Banking, Tax Refund Solutions (“TRS”), and Republic Credit Solutions (“RCS”). Management considers the first three segments to collectively constitute “Core Bank” or “Core Banking” operations, while the last two segments collectively constitute Republic Processing Group (“RPG”) operations. The Bank’s Correspondent Lending channel and the Company’s national branchless banking platform, MemoryBank®, are considered part of the Traditional Banking segment.

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

 

 

 

 

 

Reportable Segment:

 

Nature of Operations:

 

Primary Drivers of Net Revenue:

 

 

 

 

 

Core Banking:

 

 

 

 

 

 

 

 

 

Traditional Banking

 

Provides traditional banking products to clients in its market footprint primarily via its network of banking centers and to clients outside of its market footprint primarily via its Digital and Correspondent Lending delivery channels.

 

Loans, investments, and deposits.

 

 

 

 

 

Warehouse Lending

 

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

 

Mortgage warehouse lines of credit.

 

 

 

 

 

Mortgage Banking

 

Primarily originates, sells and services long-term, single family, first lien residential real estate loans primarily to clients in the Bank's market footprint.

 

Loan sales and servicing.

 

 

 

 

 

Republic Processing Group:

 

 

 

 

 

 

 

 

 

Tax Refund Solutions

 

TRS offers tax-related credit products and facilitates the receipt and payment of federal and state tax refunds through Refund Transfer products. The RPS division of TRS offers general-purpose reloadable cards. TRS and RPS products are primarily provided to clients outside of the Bank’s market footprint.

 

Loans, refund transfers, and prepaid cards.

 

 

 

 

 

Republic Credit Solutions

 

Offers consumer credit products. RCS products are primarily provided to clients outside of the Bank’s market footprint, with a substantial portion of RCS clients considered subprime or near-prime borrowers.

 

Unsecured, consumer loans.

 

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 2018 Annual Report on Form 10-K. Republic evaluates segment performance using operating income. The Company allocates goodwill to the Traditional Banking segment. Republic generally allocates income taxes based on income before income tax expense unless reasonable and specific segment allocations can be made. The Company makes transactions among reportable segments at carrying value.

Republic Bancorp, Inc. Financial Information
Second Quarter 2019 Earnings Release (continued)

Segment information for the quarters and six months ended June 30, 2019 and 2018 follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2019

 

 

 

Core Banking

 

 

Republic Processing Group ("RPG")

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Tax

 

 

Republic

 

 

 

 

 

 

 

 

 

 

Traditional

 

 

 

Warehouse

 

 

 

Mortgage

 

 

 

Core

 

 

 

Refund

 

 

Credit

 

 

Total

 

 

 

Total

 

(dollars in thousands)

 

Banking

 

 

 

Lending

 

 

 

Banking

 

 

 

Banking

 

 

 

Solutions

 

 

Solutions

 

 

RPG

 

 

 

Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

$

41,877

 

 

$

3,957

 

 

$

170

 

 

$

46,004

 

 

$

710

 

$

7,232

 

$

7,942

 

 

$

53,946

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for loan and lease losses

 

1,427

 

 

 

417

 

 

 

 

 

 

1,844

 

 

 

392

 

 

2,224

 

 

2,616

 

 

 

4,460

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net refund transfer fees

 

 

 

 

 

 

 

 

 

 

 

 

 

3,629

 

 

 

 

3,629

 

 

 

3,629

 

Mortgage banking income

 

 

 

 

 

 

 

2,416

 

 

 

2,416

 

 

 

 

 

 

 

 

 

 

2,416

 

Program fees

 

 

 

 

 

 

 

 

 

 

 

 

 

50

 

 

987

 

 

1,037

 

 

 

1,037

 

Other noninterest income

 

7,853

 

 

 

13

 

 

 

56

 

 

 

7,922

 

 

 

89

 

 

32

 

 

121

 

 

 

8,043

 

Total noninterest income

 

7,853

 

 

 

13

 

 

 

2,472

 

 

 

10,338

 

 

 

3,768

 

 

1,019

 

 

4,787

 

 

 

15,125

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total noninterest expense

 

37,764

 

 

 

792

 

 

 

1,354

 

 

 

39,910

 

 

 

2,849

 

 

669

 

 

3,518

 

 

 

43,428

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax expense

 

10,539

 

 

 

2,761

 

 

 

1,288

 

 

 

14,588

 

 

 

1,237

 

 

5,358

 

 

6,595

 

 

 

21,183

 

Income tax expense

 

744

 

 

 

621

 

 

 

270

 

 

 

1,635

 

 

 

288

 

 

1,253

 

 

1,541

 

 

 

3,176

 

Net income

$

9,795

 

 

$

2,140

 

 

$

1,018

 

 

$

12,953

 

 

$

949

 

$

4,105

 

$

5,054

 

 

$

18,007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period-end assets

$

4,805,449

 

 

$

738,300

 

 

$

20,568

 

 

$

5,564,317

 

 

$

36,834

 

$

121,983

 

$

158,817

 

 

$

5,723,134

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

3.75

%

 

 

2.49

%

 

 

NM

 

 

 

3.62

%

 

 

NM

 

 

NM

 

 

NM

 

 

 

4.12

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net-revenue concentration*

 

72

%

 

 

6

%

 

 

4

%

 

 

82

%

 

 

6

%

 

12

%

 

18

%

 

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2018

 

 

 

Core Banking

 

 

Republic Processing Group ("RPG")

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Tax

 

 

Republic

 

 

 

 

 

 

 

 

 

 

Traditional

 

 

 

Warehouse

 

 

 

Mortgage

 

 

 

Core

 

 

 

Refund

 

 

Credit

 

 

Total

 

 

 

Total

 

(dollars in thousands)

 

Banking

 

 

 

Lending

 

 

 

Banking

 

 

 

Banking

 

 

 

Solutions

 

 

Solutions

 

 

RPG

 

 

 

Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

$

39,348

 

 

$

4,164

 

 

$

103

 

 

$

43,615

 

 

$

328

 

$

7,141

 

$

7,469

 

 

$

51,084

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for loan and lease losses

 

523

 

 

 

250

 

 

 

 

 

 

773

 

 

 

(888)

 

 

5,047

 

 

4,159

 

 

 

4,932

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net refund transfer fees

 

 

 

 

 

 

 

 

 

 

 

 

 

3,473

 

 

 

 

3,473

 

 

 

3,473

 

Mortgage banking income

 

 

 

 

 

 

 

1,316

 

 

 

1,316

 

 

 

 

 

 

 

 

 

 

1,316

 

Program fees

 

 

 

 

 

 

 

 

 

 

 

 

 

124

 

 

1,199

 

 

1,323

 

 

 

1,323

 

Other noninterest income

 

7,725

 

 

 

11

 

 

 

49

 

 

 

7,785

 

 

 

80

 

 

319

 

 

399

 

 

 

8,184

 

Total noninterest income

 

7,725

 

 

 

11

 

 

 

1,365

 

 

 

9,101

 

 

 

3,677

 

 

1,518

 

 

5,195

 

 

 

14,296

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total noninterest expense

 

35,415

 

 

 

850

 

 

 

1,176

 

 

 

37,441

 

 

 

2,273

 

 

918

 

 

3,191

 

 

 

40,632

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax expense

 

11,135

 

 

 

3,075

 

 

 

292

 

 

 

14,502

 

 

 

2,620

 

 

2,694

 

 

5,314

 

 

 

19,816

 

Income tax expense

 

2,168

 

 

 

702

 

 

 

62

 

 

 

2,932

 

 

 

609

 

 

609

 

 

1,218

 

 

 

4,150

 

Net income

$

8,967

 

 

$

2,373

 

 

$

230

 

 

$

11,570

 

 

$

2,011

 

$

2,085

 

$

4,096

 

 

$

15,666

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period-end assets

$

4,501,539

 

 

$

634,452

 

 

$

17,998

 

 

$

5,153,989

 

 

$

27,192

 

$

84,764

 

$

111,956

 

 

$

5,265,945

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

3.71

%

 

 

3.08

%

 

 

NM

 

 

 

3.64

%

 

 

NM

 

 

NM

 

 

NM

 

 

 

4.19

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net-revenue concentration*

 

73

%

 

 

6

%

 

 

2

%

 

 

81

%

 

 

6

%

 

13

%

 

19

%

 

 

100

%

 

*Net revenues represent total net interest income plus noninterest income.

Republic Bancorp, Inc. Financial Information
Second Quarter 2019 Earnings Release (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2019

 

 

 

Core Banking

 

 

Republic Processing Group ("RPG")

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

Tax

 

 

Republic

 

 

 

 

 

 

 

 

 

 

Traditional

 

 

 

Warehouse

 

 

 

Mortgage

 

 

 

Core

 

 

 

Refund

 

 

Credit

 

 

Total

 

 

 

Total

 

(dollars in thousands)

 

Banking

 

 

 

Lending

 

 

 

Banking

 

 

 

Banking

 

 

 

Solutions

 

 

Solutions

 

 

RPG

 

 

 

Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

$

83,224

 

 

$

6,852

 

 

$

272

 

 

$

90,348

 

 

$

21,148

 

$

14,749

 

$

35,897

 

 

$

126,245

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for loan and lease losses

 

1,616

 

 

 

642

 

 

 

 

 

 

2,258

 

 

 

13,826

 

 

5,607

 

 

19,433

 

 

 

21,691

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net refund transfer fees

 

 

 

 

 

 

 

 

 

 

 

 

 

20,729

 

 

 

 

20,729

 

 

 

20,729

 

Mortgage banking income

 

 

 

 

 

 

 

3,955