Republic Bancorp, Inc. Reports 49% Rise in Fourth Quarter 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 fourth quarter net income of $25.8 million, a 49% increase over the fourth quarter of 2018, resulting in Diluted Earnings per Class A Common Share (“Diluted EPS”) of $1.23. Fiscal year 2019 net income was $91.7 million, an 18% increase from the same period in 2018, resulting in Diluted EPS of $4.39, return on average assets (“ROA”) of 1.64%, and return on average equity (“ROE”) of 12.49%.

Fourth quarter 2019 adjusted net income(1), which excludes one-time benefits from the Company’s November 2019 sale of four branches in Owensboro, Elizabethtown and Frankfort, Kentucky, was $18.8 million, a 9% increase over the same period in 2018, resulting in adjusted Diluted EPS(1) of $0.89. Fiscal year 2019 adjusted net income(1), which excludes the same one-time benefits, was $84.8 million, a 9% increase over 2018, resulting in adjusted Diluted EPS(1) of $4.06, adjusted ROA(1) of 1.51%, and adjusted ROE(1) of 11.55%. These adjusted results, which management believes improve comparability between periods, are considered non-GAAP(1) measures. A reconciliation to comparable GAAP(1) measures is provided in Footnote 1. Also impacting comparability, the income tax expense line item for the fourth quarter and year ended December 31, 2018 contained items that positively impacted the Company’s overall effective tax rate in 2018(2).

Steve Trager, Chairman & CEO of Republic commented, “I am very excited to say that we posted another year of solid growth in net income, with continued strong balance sheet growth and on-going favorable asset quality. We are proud to say that these results reflect our focused balance sheet management strategies, which along with our investments in mortgage-banking talent and technology, positioned us to produce our solid results despite a mixed landscape of conditions for growth opportunities.

“Looking ahead to 2020, we are cautiously optimistic. Our balance sheet and capital levels are well-positioned for an uncertain interest rate environment, while our talent level is second to none. As always, we will rise to meet the challenges in the year ahead with our strong management team and over 1,000 dedicated associates, who are always willing to go the extra mile each and every day in our efforts to make Republic one of the best performing banks in the industry,” concluded Steve Trager.

The following table highlights Republic’s financial performance for the fourth quarters and years ended December 31, 2019 and 2018:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Company Financial Performance Highlights

 

 

 

Three Months Ended Dec. 31,

 

 

 

 

Year Ended Dec. 31,

 

 

 

(dollars in thousands, except per share data)

 

 

2019

 

2018

 

$ Change

 

% Change

 

 

2019

 

2018

 

$ Change

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Income Before Income Tax Expense*

 

 

$

32,301

 

 

$

20,328

 

 

$

11,973

 

59

%

 

 

$

113,193

 

 

$

94,263

 

 

$

18,930

 

20

%

 

 Net Income *

 

 

 

25,768

 

 

 

17,306

 

 

 

8,462

 

49

 

 

 

 

91,699

 

 

 

77,852

 

 

 

13,847

 

18

 

 

 Diluted Earnings per Class A Common Share

 

 

 

1.23

 

 

 

0.83

 

 

 

0.40

 

48

 

 

 

 

4.39

 

 

 

3.74

 

 

 

0.65

 

17

 

 

 Return on Average Assets

 

 

 

1.83

%

 

 

1.37

%

 

 

NA

 

34

 

 

 

 

1.64

%

 

 

1.52

%

 

 

NA

 

8

 

 

 Return on Average Equity

 

 

 

13.58

 

 

 

10.07

 

 

 

NA

 

35

 

 

 

 

12.49

 

 

 

11.67

 

 

 

NA

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* Results by reportable segment provided near the end of this earnings release.
NA – Not applicable


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

Core Bank(3) – Core Bank net income for the fourth quarter of 2019 increased $7.1 million, or 44%, over the same period in 2018. After-tax benefits from the Company’s branch divestiture in November 2019 included a net gain on divestiture of $6.3 million and a net credit to Provision expense of $711,000, as the Bank relieved reserves for its divested loans. Excluding these one-time benefits, continued growth in net interest income, a lower provision for loan losses (“Provision”), and strong mortgage banking income primarily drove the overall increase in net income. These positive drivers were partially offset by an increase in noninterest expense.

Core Bank net interest income increased $948,000, or 2%, over the fourth quarter of 2018. Growth in net interest income was driven by strong loan growth, as Core Bank average loans increased $481 million, or 12% over average loans for the fourth quarter of 2018. The impact to net interest income resulting from the solid loan growth overcame a 29-basis-point decline in the Core Bank’s net interest margin for the quarter.

The following tables present the overall changes in the Core Bank’s adjusted(1) and unadjusted net interest income, net interest margin, as well as average and period-end loan balances by reportable segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Interest Income

 

 

Net Interest Margin

 

(dollars in thousands)

 

 

Three Months Ended Dec. 31,

 

 

 

 

 

Three Months Ended Dec. 31,

 

 

 

Reportable Segment

 

 

2019

 

 

2018

 

Change

 

 

2019

 

2018

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Traditional Banking (a)* - Non-GAAP**

 

 

$

41,252

 

 

$

40,553

 

$

699

 

 

 

3.79

%

 

3.92

%

 

 

(0.13

)%

 

Warehouse Lending

 

 

 

4,620

 

 

 

3,557

 

 

1,063

 

 

 

2.27

 

 

3.13

 

 

 

(0.86

)

 

Mortgage Banking*

 

 

 

213

 

 

 

94

 

 

119

 

 

 

NM

 

 

NM

 

 

 

NM

 

 

Adjusted Core Bank - Non-GAAP**

 

 

 

46,085

 

 

 

44,204

 

 

1,881

 

 

 

3.55

 

 

3.85

 

 

 

(0.30

)

 

Branch Divestiture (b)

 

 

 

721

 

 

 

1,654

 

 

(933

)

 

 

4.29

 

 

3.77

 

 

 

0.52

 

 

Total Core Bank - GAAP

 

 

$

46,806

 

 

$

45,858

 

$

948

 

 

 

3.56

 

 

3.85

 

 

 

(0.29

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Traditional Banking - (a) + (b) - GAAP

 

 

$

41,973

 

 

$

42,207

 

$

(234

)

 

 

3.80

%

 

3.92

%

 

 

(0.12

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*Includes loans held for sale
** A reconciliation of these non-GAAP measures to comparable GAAP measures is provided in Footnote 1 of this earnings release.
NM – Not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Loan Balances

 

 

Period-End Loan Balances

 

(dollars in thousands)

 

Three Months Ended Dec. 31,

 

 

 

 

Dec. 31,

 

 

 

Reportable Segment

 

 

2019

 

 

2018

 

$ Change

 

% Change

 

 

 

2019

 

 

2018

 

$ Change

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Traditional Banking (a)* - Non-GAAP**

 

$

3,572,918

 

$

3,403,681

 

$

169,237

 

 

5

%

 

 

$

3,595,931

 

$

3,453,925

 

$

142,006

 

 

4

%

 

Warehouse Lending

 

 

815,776

 

 

453,794

 

 

361,982

 

 

80

 

 

 

 

717,458

 

 

468,695

 

 

248,763

 

 

53

 

 

Mortgage Banking*

 

 

19,583

 

 

6,536

 

 

13,047

 

 

200

 

 

 

 

19,224

 

 

8,971

 

 

10,253

 

 

114

 

 

Adjusted Core Bank - Non-GAAP**

 

 

4,408,277

 

 

3,864,011

 

 

544,266

 

 

14

 

 

 

 

4,332,613

 

 

3,931,591

 

 

401,022

 

 

10

 

 

Branch Divestiture (b)

 

 

63,332

 

 

126,503

 

 

(63,171

)

 

(50

)

 

 

 

 

 

123,119

 

 

(123,119

)

 

(100

)

 

Total Core Bank - GAAP

 

$

4,471,609

 

$

3,990,514

 

$

481,095

 

 

12

 

 

 

$

4,332,613

 

$

4,054,710

 

$

277,903

 

 

7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Traditional Banking - (a) + (b) - GAAP

 

$

3,636,250

 

$

3,530,184

 

$

106,066

 

 

3

%

 

 

$

3,595,931

 

$

3,577,044

 

$

18,887

 

 

1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*Includes loans held for sale
** A reconciliation of these non-GAAP measures to comparable GAAP measures is provided in Footnote 1 of this earnings release.
NM – Not meaningful

The primary drivers of the changes in the Core Bank’s net interest income and net interest margin for the fourth quarter of 2019, as compared to similar measures for the fourth quarter of 2018, were as follows:

Traditional Banking

Excluding divested branches, the Traditional Bank’s net interest income increased $699,000 and was positively impacted by growth in average commercial real estate loans of $94 million and average commercial & industrial loans of $66 million. Such loan growth overcame net interest margin compression of 13 basis points.

The quarter-over-quarter margin compression within the Traditional Banking segment was primarily driven by the following factors:

  • The net interest margin compressed partially due to decreased value from the Traditional Bank’s noninterest-bearing funding sources. The difference between the Traditional Banking segment’s net interest margin and net interest spread was 10 basis points during the fourth quarter of 2019 compared to 17 basis points during the fourth quarter of 2018, with the differential representing the decreased value to the net interest margin of noninterest-bearing deposits and stockholders’ equity. The decrease in this value resulted from a 12 basis-point decline in the yield on the Traditional Banking segment’s interest-earning assets from period to period.
  • In addition to the decline in the yield of Traditional Bank’s interest earning assets, the segment was also negatively impacted by the flat U.S. Treasury yield curve during the period in which short-term and long-term U.S. Treasury yields remained similar to each other. As is generally the case with all banks, the Traditional Bank’s asset yields and liability funding costs are substantially determined by the shape of the U.S. Treasury yield curve. As a result, the Traditional Bank continued to experience market-based pressures during the quarter to reduce its new loan yields, which are generally tied to longer-term rates, more than any decreases it was able to attain from its incremental funding costs. Management expects margin compression challenges to remain in the future as long as the overall U.S. Treasury yield curve remains flat or inverted.

Warehouse Lending

Warehouse Lending (“Warehouse”) loans experienced exponential growth, with outstanding average balances increasing from $454 million during the fourth quarter of 2018 to $816 million during the fourth quarter of 2019 due to increased client line usage. As a result, quarter over quarter net interest income for the segment increased $1.1 million despite compression in the Warehouse segment’s net interest margin.

The Core Bank’s Provision decreased $2.7 million from the fourth quarter of 2018 to a net credit of $1.4 million for the fourth quarter of 2019. The primary difference in the Provision between the two periods was a one-time, pre-tax $900,000 credit to the Provision that the Company recorded with the final settlement of its branch divestiture. Excluding the impact of the branch divestiture, the Core Bank’s Provision decreased from $1.3 million for the fourth quarter of 2018 to a net credit of $481,000 for the fourth quarter of 2019. A decline in Core Bank period-end balances during the fourth quarter of 2019 compared to growth in those balances during the same period in 2018 primarily drove the decrease in the Provision. Core bank spot balances, excluding divested loans, decreased $251 million during the fourth quarter of 2019 primarily due to a $256 million decline in Warehouse period-end balances.

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the:

 

Quarters Ended:

Years Ended:

 

Dec. 31,

 

Sep. 30,

 

Jun. 30,

 

Mar. 31,

 

Dec. 31,

Dec. 31,

Dec. 31,

Core Banking Credit Quality Ratios

2019

 

2019

 

2019

 

2019

 

2019

2018

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans to total loans

0.54

%

0.45

%

0.45

%

0.37

%

0.54

%

0.40

%

0.36

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming assets to total loans (including OREO)

0.54

 

0.45

 

0.47

 

0.37

 

0.54

 

0.40

 

0.36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Delinquent loans to total loans (4)

0.30

 

0.30

 

0.29

 

0.18

 

0.30

 

0.22

 

0.21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs to average loans

0.19

 

0.15

 

0.04

 

0.04

 

0.11

 

0.06

 

0.04

 

(Quarterly rates annualized)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OREO = Other Real Estate Owned

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core Bank noninterest income was $18.2 million for the fourth quarter of 2019, an increase of $9.4 million from the fourth quarter of 2018. Core Bank noninterest income for the fourth quarter of 2019 included a pre-tax $7.9 million net gain resulting from the final settlement of the Company’s branch divestiture. Driving the remainder of the increase in noninterest income was a $1.4 million rise in mortgage banking income, as the Company’s on-going investment in its Consumer Direct channel and processing capacity enabled it to take advantage of a favorable rate environment. As a result, secondary market loans originated from period to period increased $65 million and the Bank’s pipeline of secondary market loans in process from December 31, 2018 to December 31, 2019 increased $18 million.

Core Bank noninterest expense was $37.1 million for the fourth quarter of 2019 compared to $34.5 million for the fourth quarter of 2018. Comparability of noninterest expense between the two quarters was impacted by adjustments to the Core Bank’s incentive compensation accruals, which were made during both periods to bring accrual balances in line with projected payouts. As a result of these adjustments, net incentive compensation expense was a net charge of $1.2 million for the fourth quarter of 2019 compared to a net credit of $75,000 for the fourth quarter of 2018. The increase in incentive compensation primarily reflected higher mortgage commissions during the fourth quarter of 2019 resulting from increased mortgage banking production. Excluding the impact of the change in incentive compensation expense, noninterest expense increased $964,000, or 3%, for the fourth quarter of 2019, as compared to the fourth quarter of 2018 and was primarily driven by the following:

  • Salaries and employee benefits expense increased $340,000, or 2%, with costs for 29 additional Core Bank full-time-equivalent employees from December 31, 2018 to December 31, 2019 partially offset by reductions in equity compensation expense and employee benefits expense.
  • The Core Bank’s noninterest expense during the fourth quarter of 2019 was positively impacted by a $265,000 reduction in FDIC insurance costs, as the Bank was able to apply its Small Bank Assessment Credits against its most recent FDIC insurance premium payment. The Bank has just over one quarter’s worth of credits it can apply to future FDIC insurance premiums.

Republic Processing Group(5)

The Republic Processing Group (“RPG”) reported net income of $2.6 million for the fourth quarter of 2019 compared to $1.2 million for the same period in 2018. The positive increase in net income at RPG for the quarter was primarily driven by a $1.2 million increase in net income for its Republic Credit Solutions (“RCS”) segment.

RCS’s increase in net income was primarily driven by a $1.5 million reduction in Provision expense for its line-of-credit product resulting from a decline in the product’s annualized historical loss rate combined with a year-to-year decrease in outstanding balances.

Branch Divestiture(1)

In July 2019, the Bank entered into a definitive agreement to sell its four banking centers located in the Kentucky cities of Owensboro, Elizabethtown, and Frankfort to Limestone Bank (“Limestone”), a subsidiary of Limestone Bancorp, Inc. The agreement provided that Limestone acquire loans, with balances of approximately $128 million as of November 15, 2019 (the “Closing Date”), and assume deposits with balances of approximately $132 million as of the Closing Date, associated with the four banking centers.

In addition to the sale of loans and assumption of deposits, Limestone also acquired substantially all of the fixed assets of these locations, which had a book value of $1.3 million as of the Closing Date. Based on the Closing Date deposits, the all-in blended premium for the transaction was 6.1% of the total deposits transferred. The final calculated premium was based on the trailing 10-day average amount of the deposits as of the closing date, as well as the branch location for the deposits.

Republic Bancorp, Inc. (the “Company”) is the parent company of Republic Bank & Trust Company (the “Bank”). The Bank currently has 42 full-service banking centers and two loan production offices throughout five states: 28 banking centers in 8 Kentucky communities – Covington, Crestview Hills, Florence, Georgetown, Lexington, Louisville, 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, New Port Richey, St. Petersburg, Seminole, Tampa, and Temple Terrace, and one loan production office in Oldsmar; two banking centers in two Tennessee communities (Nashville MSA) – Cool Springs and Green Hills, and one loan production office in Brentwood; and two banking centers in two Ohio communities (Cincinnati MSA) – Norwood and West Chester. 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 $5.6 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 yield curve, 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 and Quarterly Report on Form 10-Q for the period ended September 30, 2019. The Company undertakes no obligation to update any forward-looking statements, except as required by applicable law.

Republic Bancorp, Inc. Financial Information
Fourth 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

 

 

 

 

 

 

 

 

 

Dec. 31, 2019

 

Dec. 31, 2018

 

Assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

385,303

 

 

$

351,474

 

 

Investment securities

 

 

537,074

 

 

 

543,771

 

 

Loans held for sale

 

 

31,468

 

 

 

21,809

 

 

Loans

 

 

4,433,151

 

 

 

4,148,227

 

 

Allowance for loan and lease losses

 

 

(43,351

)

 

 

(44,675

)

 

Loans, net

 

 

4,389,800

 

 

 

4,103,552

 

 

Federal Home Loan Bank stock, at cost

 

 

30,831

 

 

 

32,067

 

 

Premises and equipment, net

 

 

46,196

 

 

 

44,820

 

 

Right-of-use assets (6)

 

 

35,206

 

 

 

 

Goodwill

 

 

16,300

 

 

 

16,300

 

 

Other real estate owned ("OREO")

 

 

113

 

 

 

160

 

 

Bank owned life insurance ("BOLI")

 

 

66,433

 

 

 

64,883

 

 

Other assets and accrued interest receivable

 

 

81,595

 

 

 

61,568

 

 

Total assets

 

$

5,620,319

 

 

$

5,240,404

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

Noninterest-bearing

 

$

1,033,379

 

 

$

1,003,969

 

 

Interest-bearing

 

 

2,752,629

 

 

 

2,452,176

 

 

Total deposits

 

 

3,786,008

 

 

 

3,456,145

 

 

 

 

 

 

 

 

 

 

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

 

 

167,617

 

 

 

182,990

 

 

Operating lease liabilities (6)

 

 

36,530

 

 

 

 

Federal Home Loan Bank advances

 

 

750,000

 

 

 

810,000

 

 

Subordinated note

 

 

41,240

 

 

 

41,240

 

 

Other liabilities and accrued interest payable

 

 

74,680

 

 

 

60,095

 

 

Total liabilities

 

 

4,856,075

 

 

 

4,550,470

 

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

764,244

 

 

 

689,934

 

 

Total liabilities and stockholders' equity

 

$

5,620,319

 

 

$

5,240,404

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended Dec. 31,

 

Year Ended Dec. 31,

 

 

 

2019

 

2018

 

2019

 

2018

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold and other interest-earning deposits

 

$

152,286

 

$

199,134

 

$

260,131

 

$

255,708

 

Investment securities, including FHLB stock

 

 

632,559

 

 

579,429

 

 

564,631

 

 

542,258

 

Loans, including loans held for sale

 

 

4,588,538

 

 

4,092,004

 

 

4,470,347

 

 

4,094,918

 

Total interest-earning assets

 

 

5,373,383

 

 

4,870,567

 

 

5,295,109

 

 

4,892,884

 

Total assets

 

 

5,638,498

 

 

5,070,845

 

 

5,577,643

 

 

5,130,628

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits, including those held for assumption

 

$

1,062,010

 

$

1,050,236

 

$

1,120,608

 

$

1,147,432

 

Interest-bearing deposits, including those held for assumption

 

 

2,966,993

 

 

2,477,962

 

 

2,755,946

 

 

2,445,385

 

Securities sold under agreements to

 

 

 

 

 

 

 

 

 

 

 

 

 

repurchase and other short-term borrowings

 

 

248,558

 

 

252,073

 

 

236,883

 

 

225,145

 

Federal Home Loan Bank advances

 

 

469,130

 

 

515,413

 

 

595,613

 

 

557,090

 

Subordinated note

 

 

41,240

 

 

41,240

 

 

41,240

 

 

41,240

 

Total interest-bearing liabilities

 

 

3,725,921

 

 

3,286,688

 

 

3,629,682

 

 

3,268,860

 

Stockholders' equity

 

 

758,740

 

 

687,156

 

 

734,281

 

 

666,979

 

 

Republic Bancorp, Inc. Financial Information
Fourth 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 Dec. 31,

 

Year Ended Dec. 31,

 

 

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total interest income (7)

 

$

64,527

 

$

62,902

 

$

280,883

 

$

256,181

 

Total interest expense

 

 

10,132

 

 

8,626

 

 

44,757

 

 

30,123

 

Net interest income

 

 

54,395

 

 

54,276

 

 

236,126

 

 

226,058

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for loan and lease losses

 

 

914

 

 

5,104

 

 

25,758

 

 

31,368

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

3,547

 

 

3,565

 

 

14,197

 

 

14,273

 

Net refund transfer fees

 

 

112

 

 

55

 

 

21,158

 

 

20,029

 

Mortgage banking income

 

 

2,480

 

 

1,129

 

 

9,499

 

 

4,825

 

Interchange fee income

 

 

2,814

 

 

2,844

 

 

11,859

 

 

11,159

 

Program fees

 

 

1,284

 

 

1,520

 

 

4,712

 

 

6,225

 

Increase in cash surrender value of BOLI

 

 

397

 

 

392

 

 

1,550

 

 

1,527

 

Net gains on OREO

 

 

53

 

 

29

 

 

540

 

 

729

 

Net gain on branch divestiture

 

 

7,948

 

 

 

 

7,829

 

 

 

Other

 

 

1,020

 

 

585

 

 

3,664

 

 

4,658

 

Total noninterest income

 

 

19,655

 

 

10,119

 

 

75,008

 

 

63,425

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

23,997

 

 

21,743

 

 

99,181

 

 

91,189

 

Occupancy and equipment, net

 

 

6,497

 

 

6,474

 

 

26,124

 

 

25,365

 

Communication and transportation

 

 

1,198

 

 

1,115

 

 

4,447

 

 

4,785

 

Marketing and development

 

 

1,223

 

 

784

 

 

5,023

 

 

4,432

 

FDIC insurance expense

 

 

 

 

264

 

 

743

 

 

1,494

 

Bank franchise tax expense

 

 

927

 

 

863

 

 

5,293

 

 

4,951

 

Data processing

 

 

2,532

 

 

2,434

 

 

9,189

 

 

9,613

 

Interchange related expense

 

 

1,115

 

 

1,237

 

 

4,870

 

 

4,480

 

Supplies

 

 

335

 

 

446

 

 

1,693

 

 

1,444

 

Other real estate owned and other repossession expense

 

 

2

 

 

31

 

 

326

 

 

94

 

Legal and professional fees

 

 

601

 

 

753

 

 

3,357

 

 

3,459

 

Other

 

 

2,408

 

 

2,819

 

 

11,937

 

 

12,546

 

Total noninterest expense

 

 

40,835

 

 

38,963

 

 

172,183

 

 

163,852

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax expense

 

 

32,301

 

 

20,328

 

 

113,193

 

 

94,263

 

Income tax expense

 

 

6,533

 

 

3,022

 

 

21,494

 

 

16,411

 

Net income

 

$

25,768

 

$

17,306

 

$

91,699

 

$

77,852

  

 

Republic Bancorp, Inc. Financial Information
Fourth 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 Dec. 31,

 

Year Ended Dec. 31,

 

 

2019

 

2018

 

2019

 

2018

Per Share Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

 

21,036

 

 

 

20,975

 

 

 

21,023

 

 

 

20,960

 

Diluted weighted average shares outstanding

 

 

21,133

 

 

 

21,113

 

 

 

21,135

 

 

 

21,065

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period-end shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A Common Stock

 

 

18,737

 

 

 

18,675

 

 

 

18,737

 

 

 

18,675

 

Class B Common Stock

 

 

2,206

 

 

 

2,213

 

 

 

2,206

 

 

 

2,213

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share (8)

 

$

36.49

 

 

$

33.03

 

 

$

36.49

 

 

$

33.03

 

Tangible book value per share (8)

 

 

35.41

 

 

 

31.98

 

 

 

35.41

 

 

 

31.98

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share ("EPS"):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic EPS - Class A Common Stock

 

$

1.23

 

 

$

0.83

 

 

$

4.41

 

 

$

3.76

 

Basic EPS - Class B Common Stock

 

 

1.13

 

 

 

0.76

 

 

 

4.01

 

 

 

3.41

 

Diluted EPS - Class A Common Stock

 

 

1.23

 

 

 

0.83

 

 

 

4.39

 

 

 

3.74

 

Diluted EPS - Class B Common Stock

 

 

1.12

 

 

 

0.75

 

 

 

3.99

 

 

 

3.40

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per Common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A Common Stock

 

$

0.264

 

 

$

0.242

 

 

$

1.056

 

 

$

0.968

 

Class B Common Stock

 

 

0.240

 

 

 

0.220

 

 

 

0.960

 

 

 

0.880

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

1.83

%

 

 

1.37

%

 

 

1.64

%

 

 

1.52

%

Return on average equity

 

 

13.58

 

 

 

10.07

 

 

 

12.49

 

 

 

11.67

 

Efficiency ratio (9)

 

 

62

 

 

 

61

 

 

 

57

 

 

 

57

 

Yield on average interest-earning assets (7)

 

 

4.80

 

 

 

5.17

 

 

 

5.30

 

 

 

5.24

 

Cost of average interest-bearing liabilities

 

 

1.09

 

 

 

1.05

 

 

 

1.23

 

 

 

0.92

 

Cost of average deposits (10)

 

 

0.74

 

 

 

0.59

 

 

 

0.75

 

 

 

0.47

 

Net interest spread (7)

 

 

3.71

 

 

 

4.12

 

 

 

4.07

 

 

 

4.32

 

Net interest margin - Total Company (7)

 

 

4.05

 

 

 

4.46

 

 

 

4.46

 

 

 

4.62

 

Net interest margin - Core Bank (3)

 

 

3.56

 

 

 

3.85

 

 

 

3.61

 

 

 

3.70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

End of period FTEs (11) - Total Company

 

 

1,080

 

 

 

1,051

 

 

 

1,080

 

 

 

1,051

 

End of period FTEs - Core Bank

 

 

997

 

 

 

968

 

 

 

997

 

 

 

968

 

Number of full-service banking centers

 

 

41

 

 

 

45

 

 

 

41

 

 

 

45

 

 

Republic Bancorp, Inc. Financial Information
Fourth 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 Dec. 31,

 

Year Ended Dec. 31,

 

 

2019

 

2018

 

2019

 

2018

Credit Quality Asset Balances:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming Assets - Total Company:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans on nonaccrual status

 

$

23,332

 

 

$

15,993

 

 

$

23,332

 

 

$

15,993

 

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

 

 

157

 

 

 

145

 

 

 

157

 

 

 

145

 

Total nonperforming loans

 

 

23,489

 

 

 

16,138

 

 

 

23,489

 

 

 

16,138

 

OREO

 

 

113

 

 

 

160

 

 

 

113

 

 

 

160

 

Total nonperforming assets

 

$

23,602

 

 

$

16,298

 

 

$

23,602

 

 

$

16,298

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming Assets - Core Bank (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans on nonaccrual status

 

$

23,332

 

 

$

15,993

 

 

$

23,332

 

 

$

15,993

 

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

 

 

 

 

 

13

 

 

 

 

 

 

13

 

Total nonperforming loans

 

 

23,332

 

 

 

16,006

 

 

 

23,332

 

 

 

16,006

 

OREO

 

 

113

 

 

 

160

 

 

 

113

 

 

 

160

 

Total nonperforming assets

 

$

23,445

 

 

$

16,166

 

 

$

23,445

 

 

$

16,166

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Delinquent loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Delinquent loans - Core Bank

 

$

13,042

 

 

$

8,875

 

 

$

13,042

 

 

$

8,875

 

Delinquent loans - RPG (5)

 

 

7,762

 

 

 

7,087

 

 

 

7,762

 

 

 

7,087

 

Total delinquent loans - Total Company

 

$

20,804

 

 

$

15,962

 

 

$

20,804

 

 

$

15,962

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Quality Ratios - Total Company:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans to total loans

 

 

0.53

%

 

 

0.39

%

 

 

0.53

%

 

 

0.39

%

Nonperforming assets to total loans (including OREO)

 

 

0.53

 

 

 

0.39

 

 

 

0.53

 

 

 

0.39

 

Nonperforming assets to total assets

 

 

0.42

 

 

 

0.31

 

 

 

0.42

 

 

 

0.31

 

Allowance for loan and lease losses to total loans

 

 

0.98

 

 

 

1.08

 

 

 

0.98

 

 

 

1.08

 

Allowance for loan and lease losses to nonperforming loans

 

 

185

 

 

 

277

 

 

 

185

 

 

 

277

 

Delinquent loans to total loans (4)

 

 

0.47

 

 

 

0.38

 

 

 

0.47

 

 

 

0.38

 

Net charge-offs to average loans (annualized)

 

 

0.39

 

 

 

0.42

 

 

 

0.61

 

 

 

0.72

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Quality Ratios - Core Bank:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans to total loans

 

 

0.54

%

 

 

0.40

%

 

 

0.54

%

 

 

0.40

%

Nonperforming assets to total loans (including OREO)

 

 

0.54

 

 

 

0.40

 

 

 

0.54

 

 

 

0.40

 

Nonperforming assets to total assets

 

 

0.43

 

 

 

0.32

 

 

 

0.43

 

 

 

0.32

 

Allowance for loan and lease losses to total loans

 

 

0.70

 

 

 

0.78

 

 

 

0.70

 

 

 

0.78

 

Allowance for loan and lease losses to nonperforming loans

 

 

129

 

 

 

197

 

 

 

129

 

 

 

197

 

Delinquent loans to total loans

 

 

0.30

 

 

 

0.22

 

 

 

0.30

 

 

 

0.22

 

Net charge-offs to average loans (annualized)

 

 

0.19

 

 

 

0.12

 

 

 

0.11

 

 

 

0.06

  

 

Republic Bancorp, Inc. Financial Information
Fourth 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

 

 

Dec. 31, 2019

 

Sep. 30, 2019

 

Jun. 30, 2019

 

Mar. 31, 2019

 

Dec. 31, 2018

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

385,303

 

 

$

397,072

 

 

$

473,779

 

 

$

345,512

 

 

$

351,474

 

 

Investment securities

 

 

537,074

 

 

 

638,697

 

 

 

447,512

 

 

 

498,318

 

 

 

543,771

 

 

Loans held for sale

 

 

31,468

 

 

 

51,243

 

 

 

63,949

 

 

 

24,177

 

 

 

21,809

 

 

Loans held for sale upon branch divestiture

 

 

 

 

 

130,770

 

 

 

131,881

 

 

 

 

 

 

 

 

Loans

 

 

4,433,151

 

 

 

4,664,054

 

 

 

4,390,533

 

 

 

4,298,710

 

 

 

4,148,227

 

 

Allowance for loan and lease losses

 

 

(43,351

)

 

 

(46,932

)

 

 

(45,983

)

 

 

(57,961

)

 

 

(44,675

)

 

Loans, net

 

 

4,389,800

 

 

 

4,617,122

 

 

 

4,344,550

 

 

 

4,240,749

 

 

 

4,103,552

 

 

Federal Home Loan Bank stock, at cost

 

 

30,831

 

 

 

32,242

 

 

 

32,242

 

 

 

29,965

 

 

 

32,067

 

 

Premises and equipment, net

 

 

46,196

 

 

 

46,735

 

 

 

44,199

 

 

 

43,527

 

 

 

44,820

 

 

Right-of-use assets (6)

 

 

35,206

 

 

 

36,051

 

 

 

37,450

 

 

 

38,738

 

 

 

 

 

Goodwill

 

 

16,300

 

 

 

16,300

 

 

 

16,300

 

 

 

16,300

 

 

 

16,300

 

 

Other real estate owned

 

 

113

 

 

 

119

 

 

 

1,095

 

 

 

216

 

 

 

160

 

 

Bank owned life insurance

 

 

66,433

 

 

 

66,037

 

 

 

65,642

 

 

 

65,265

 

 

 

64,883

 

 

Other assets and accrued interest receivable

 

 

81,595

 

 

 

71,259

 

 

 

64,535

 

 

 

63,001

 

 

 

61,568

 

 

Total assets

 

$

5,620,319

 

 

$

6,103,647

 

 

$

5,723,134

 

 

$

5,365,768

 

 

$

5,240,404

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

1,033,379

 

 

$

1,031,553

 

 

$

1,003,793

 

 

$

1,184,480

 

 

$

1,003,969

 

 

Interest-bearing

 

 

2,752,629

 

 

 

2,703,199

 

 

 

2,557,127

 

 

 

2,589,836

 

 

 

2,452,176

 

 

Deposits held for assumption upon branch divestiture

 

 

 

 

 

142,384

 

 

 

152,954

 

 

 

 

 

 

 

 

Total deposits

 

 

3,786,008

 

 

 

3,877,136

 

 

 

3,713,874

 

 

 

3,774,316

 

 

 

3,456,145

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities sold under agreements to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

repurchase and other short-term borrowings

 

 

167,617

 

 

 

167,949

 

 

 

226,002

 

 

 

173,168

 

 

 

182,990

 

 

Operating lease liabilities (6)

 

 

36,530

 

 

 

37,391

 

 

 

38,852

 

 

 

40,203

 

 

 

 

 

Federal Home Loan Bank advances

 

 

750,000

 

 

 

1,170,000

 

 

 

915,000

 

 

 

560,000

 

 

 

810,000

 

 

Subordinated note

 

 

41,240

 

 

 

41,240

 

 

 

41,240

 

 

 

41,240

 

 

 

41,240

 

 

Other liabilities and accrued interest payable

 

 

74,680

 

 

 

65,484

 

 

 

56,738

 

 

 

59,750

 

 

 

60,095

 

 

Total liabilities

 

 

4,856,075

 

 

 

5,359,200

 

 

 

4,991,706

 

 

 

4,648,677

 

 

 

4,550,470

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

764,244

 

 

 

744,447

 

 

 

731,428

 

 

 

717,091

 

 

 

689,934

 

 

Total liabilities and stockholders' equity

 

$

5,620,319

 

 

$

6,103,647

 

 

$

5,723,134

 

 

$

5,365,768

 

 

$

5,240,404

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarterly Comparison

 

 

 

Dec. 31, 2019

 

Sep. 30, 2019

 

Jun. 30, 2019

 

Mar. 31, 2019

 

Dec. 31, 2018

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold and other interest-earning deposits

 

$

152,286

 

$

302,156

 

$

297,205

 

$

289,928

 

$

199,134

 

 

Investment securities, including FHLB stock

 

 

632,559

 

 

547,281

 

 

514,366

 

 

563,752

 

 

579,429

 

 

Loans, including loans held for sale

 

 

4,588,538

 

 

4,606,139

 

 

4,424,905

 

 

4,256,673

 

 

4,092,004

 

 

Total interest-earning assets

 

 

5,373,383

 

 

5,455,576

 

 

5,236,476

 

 

5,110,353

 

 

4,870,567

 

 

Total assets

 

 

5,638,498

 

 

5,711,636

 

 

5,480,525

 

 

5,476,671

 

 

5,070,845

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits, including those held for assumption

 

$

1,062,010

 

$

1,065,904

 

$

1,098,817

 

$

1,258,461

 

$

1,050,236

 

 

Interest-bearing deposits, including those held for assumption

 

 

2,966,993

 

 

2,833,632

 

 

2,588,836

 

 

2,629,765

 

 

2,477,962

 

 

Securities sold under agreements to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

repurchase and other short-term borrowings

 

 

248,558

 

 

246,889

 

 

220,189

 

 

231,602

 

 

252,073

 

 

Federal Home Loan Bank advances

 

 

469,130

 

 

690,457

 

 

710,879

 

 

511,408

 

 

515,413

 

 

Subordinated note

 

 

41,240

 

 

41,240

 

 

41,240

 

 

41,240

 

 

41,240

 

 

Total interest-bearing liabilities

 

 

3,725,921

 

 

3,812,218

 

 

3,561,144

 

 

3,414,015

 

 

3,286,688

 

 

Stockholders' equity

 

 

758,740

 

 

742,176

 

 

728,723

 

 

706,833

 

 

687,156

 

  

 

Republic Bancorp, Inc. Financial Information
Fourth 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

 

 

 

Dec. 31, 2019

 

 

Sep. 30, 2019

 

 

Jun. 30, 2019

 

Mar. 31, 2019

 

Dec. 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total interest income (7)

 

$

64,527

 

$

68,059

 

$

65,664

 

$

82,633

 

$

62,902

 

 

Total interest expense

 

 

10,132

 

 

12,573

 

 

11,718

 

 

10,334

 

 

8,626

 

 

Net interest income

 

 

54,395

 

 

55,486

 

 

53,946

 

 

72,299

 

 

54,276

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for loan and lease losses

 

 

914

 

 

3,153

 

 

4,460

 

 

17,231

 

 

5,104

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

3,547

 

 

3,749

 

 

3,598

 

 

3,303

 

 

3,565

 

 

Net refund transfer fees

 

 

112

 

 

317

 

 

3,629

 

 

17,100

 

 

55

 

 

Mortgage banking income

 

 

2,480

 

 

3,064

 

 

2,416

 

 

1,539

 

 

1,129

 

 

Interchange fee income

 

 

2,814

 

 

3,031

 

 

3,257

 

 

2,757

 

 

2,844

 

 

Program fees

 

 

1,284

 

 

1,317

 

 

1,037

 

 

1,074

 

 

1,520

 

 

Increase in cash surrender value of BOLI

 

 

397

 

 

394

 

 

377

 

 

382

 

 

392

 

 

Net gains on OREO

 

 

53

 

 

267

 

 

90

 

 

130

 

 

29

 

 

Net gain on branch divestiture

 

 

7,948

 

 

(119)

 

 

 

 

 

 

 

 

Other

 

 

1,020

 

 

791

 

 

721

 

 

1,132

 

 

585

 

 

Total noninterest income

 

 

19,655

 

 

12,811

 

 

15,125

 

 

27,417

 

 

10,119

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

23,997

 

 

24,822

 

 

25,286

 

 

25,076

 

 

21,743

 

 

Occupancy and equipment, net

 

 

6,497

 

 

6,571

 

 

6,472

 

 

6,584

 

 

6,474

 

 

Communication and transportation

 

 

1,198

 

 

1,017

 

 

1,071

 

 

1,161

 

 

1,115

 

 

Marketing and development

 

 

1,223

 

 

1,420

 

 

1,278

 

 

1,102

 

 

784

 

 

FDIC insurance expense

 

 

 

 

 

 

295

 

 

448

 

 

264

 

 

Bank franchise tax expense

 

 

927

 

 

935

 

 

935

 

 

2,496

 

 

863

 

 

Data processing

 

 

2,532

 

 

2,344

 

 

2,217

 

 

2,096

 

 

2,434

 

 

Interchange related expense

 

 

1,115

 

 

1,138

 

 

1,302

 

 

1,315

 

 

1,237

 

 

Supplies

 

 

335

 

 

292

 

 

582

 

 

484

 

 

446

 

 

OREO expense

 

 

2

 

 

130

 

 

148

 

 

46

 

 

31

 

 

Legal and professional fees

 

 

601

 

 

1,026

 

 

844

 

 

886

 

 

753

 

 

Other

 

 

2,408

 

 

2,716

 

 

2,998

 

 

3,815

 

 

2,819

 

 

Total noninterest expense

 

 

40,835

 

 

42,411

 

 

43,428

 

 

45,509

 

 

38,963

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax expense

 

 

32,301

 

 

22,733

 

 

21,183

 

 

36,976

 

 

20,328

 

 

Income tax expense

 

 

6,533

 

 

4,325

 

 

3,176

 

 

7,460

 

 

3,022

 

 

Net income

 

$

25,768

 

$

18,408

 

$

18,007

 

$

29,516

 

$

17,306

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Republic Bancorp, Inc. Financial Information
Fourth 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

 

 

 

 

 

Dec. 31, 2019

 

 

 

Sep. 30, 2019

 

 

 

Jun. 30, 2019

 

 

 

Mar. 31, 2019

 

 

 

Dec. 31, 2018

 

 

Per Share Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

 

21,036

 

 

 

21,036

 

 

 

21,016

 

 

 

20,973

 

 

 

20,975

 

 

Diluted weighted average shares outstanding

 

 

21,133

 

 

 

21,137

 

 

 

21,138

 

 

 

21,106

 

 

 

21,113

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period-end shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A Common Stock

 

 

18,737

 

 

 

18,744

 

 

 

18,740

 

 

 

18,698

 

 

 

18,675

 

 

Class B Common Stock

 

 

2,206

 

 

 

2,208

 

 

 

2,208

 

 

 

2,213

 

 

 

2,213

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share (8)

 

$

36.49

 

 

$

35.54

 

 

$

34.92

 

 

$

34.29

 

 

$

33.03

 

 

Tangible book value per share (8)

 

 

35.41

 

 

 

34.47

 

 

 

33.87

 

 

 

33.25

 

 

 

31.98

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share ("EPS"):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic EPS - Class A Common Stock

 

$

1.23

 

 

$

0.88

 

 

$

0.86

 

 

$

1.42

 

 

$

0.83

 

 

Basic EPS - Class B Common Stock

 

 

1.13

 

 

 

0.80

 

 

 

0.79

 

 

 

1.29

 

 

 

0.76

 

 

Diluted EPS - Class A Common Stock

 

 

1.23

 

 

 

0.88

 

 

 

0.86

 

 

 

1.41

 

 

 

0.83

 

 

Diluted EPS - Class B Common Stock

 

 

1.12

 

 

 

0.80

 

 

 

0.78

 

 

 

1.28

 

 

 

0.75

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per Common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A Common Stock

 

$

0.264

 

 

$

0.264

 

 

$

0.264

 

 

$

0.264

 

 

$

0.242

 

 

Class B Common Stock

 

 

0.240

 

 

 

0.240

 

 

 

0.240

 

 

 

0.240

 

 

 

0.220

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

1.83

%

 

 

1.29

%

 

 

1.31

%

 

 

2.16

%

 

 

1.37

%

 

Return on average equity

 

 

13.58

 

 

 

9.92

 

 

 

9.88

 

 

 

16.70

 

 

 

10.07

 

 

Efficiency ratio (9)

 

 

62

 

 

 

62

 

 

 

63

 

 

 

46

 

 

 

61

 

 

Yield on average interest-earning assets (7)

 

 

4.80

 

 

 

4.99

 

 

 

5.02

 

 

 

6.47

 

 

 

5.17

 

 

Cost of average interest-bearing liabilities

 

 

1.09

 

 

 

1.32

 

 

 

1.32

 

 

 

1.21

 

 

 

1.05

 

 

Cost of average deposits (10)

 

 

0.74

 

 

 

0.82

 

 

 

0.75

 

 

 

0.69

 

 

 

0.59

 

 

Net interest spread (7)

 

 

3.71

 

 

 

3.67

 

 

 

3.70

 

 

 

5.26

 

 

 

4.12

 

 

Net interest margin - Total Company (7)

 

 

4.05

 

 

 

4.07

 

 

 

4.12

 

 

 

5.66

 

 

 

4.46

 

 

Net interest margin - Core Bank (3)

 

 

3.56

 

 

 

3.56

 

 

 

3.62

 

 

 

3.76

 

 

 

3.85

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

End of period FTEs (11) - Total Company

 

 

1,080

 

 

 

1,093

 

 

 

1,089

 

 

 

1,073

 

 

 

1,051

 

 

End of period FTEs - Core Bank

 

 

997

 

 

 

1,013

 

 

 

1,012

 

 

 

997

 

 

 

968

 

 

Number of full-service banking centers

 

 

41

 

 

 

45

 

 

 

45

 

 

 

45

 

 

 

45

 

 

 

Republic Bancorp, Inc. Financial Information
Fourth 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

 

 

Dec. 31, 2019

 

Sep. 30, 2019

 

Jun. 30, 2019

 

Mar. 31, 2019

 

Dec. 31, 2018

Credit Quality Asset Balances:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming Assets - Total Company:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans on nonaccrual status

 

$

23,332

 

 

$

20,574

 

 

$

19,238

 

 

$

15,361

 

 

$

15,993

 

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

 

 

157

 

 

 

175

 

 

 

166

 

 

 

199

 

 

 

145

 

Total nonperforming loans

 

 

23,489

 

 

 

20,749

 

 

 

19,404

 

 

 

15,560

 

 

 

16,138

 

OREO

 

 

113

 

 

 

119

 

 

 

1,095

 

 

 

216

 

 

 

160

 

Total nonperforming assets

 

$

23,602

 

 

$

20,868

 

 

$

20,499

 

 

$

15,776

 

 

$

16,298

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming Assets - Core Bank (3):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans on nonaccrual status

 

$

23,332

 

 

$

20,574

 

 

$

19,238

 

 

$

15,361

 

 

$

15,993

 

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

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

13

 

Total nonperforming loans

 

 

23,332

 

 

 

20,574

 

 

 

19,238

 

 

 

15,365

 

 

 

16,006

 

OREO

 

 

113

 

 

 

119

 

 

 

1,095

 

 

 

216

 

 

 

160

 

Total nonperforming assets

 

$

23,445

 

 

$

20,693

 

 

$

20,333

 

 

$

15,581

 

 

$

16,166

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Delinquent Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Delinquent loans - Core Bank

 

$

13,042

 

 

$

13,496

 

 

$

12,524

 

 

$

7,727

 

 

$

8,875

 

Delinquent loans - RPG (5) (12)

 

 

7,762

 

 

 

6,876

 

 

 

6,802

 

 

 

26,460

 

 

 

7,087

 

Total delinquent loans - Total Company

 

$

20,804

 

 

$

20,372

 

 

$

19,326

 

 

$

34,187

 

 

$

15,962

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Quality Ratios - Total Company:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans to total loans

 

 

0.53

%

 

 

0.44

%

 

 

0.44

%

 

 

0.36

%

 

 

0.39

%

Nonperforming assets to total loans (including OREO)

 

 

0.53

 

 

 

0.45

 

 

 

0.47

 

 

 

0.37

 

 

 

0.39

 

Nonperforming assets to total assets

 

 

0.42

 

 

 

0.34

 

 

 

0.36

 

 

 

0.29

 

 

 

0.31

 

Allowance for loan and lease losses to total loans

 

 

0.98

 

 

 

1.01

 

 

 

1.05

 

 

 

1.35

 

 

 

1.08

 

Allowance for loan and lease losses to nonperforming loans

 

 

185

 

 

 

226

 

 

 

237

 

 

 

373

 

 

 

277

 

Delinquent loans to total loans (4) (12)

 

 

0.47

 

 

 

0.44

 

 

 

0.44

 

 

 

0.80

 

 

 

0.38

 

Net charge-offs to average loans (annualized)

 

 

0.39

 

 

 

0.68

 

 

 

1.49

 

 

 

0.37

 

 

 

0.42

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Quality Ratios - Core Bank:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans to total loans

 

 

0.54

%

 

 

0.45

%

 

 

0.45

%

 

 

0.37

%

 

 

0.40

%

Nonperforming assets to total loans (including OREO)

 

 

0.54

 

 

 

0.45

 

 

 

0.47

 

 

 

0.37

 

 

 

0.40

 

Nonperforming assets to total assets

 

 

0.43

 

 

 

0.35

 

 

 

0.37

 

 

 

0.31

 

 

 

0.32

 

Allowance for loan and lease losses to total loans

 

 

0.70

 

 

 

0.73

 

 

 

0.77

 

 

 

0.75

 

 

 

0.78

 

Allowance for loan and lease losses to nonperforming loans

 

 

129

 

 

 

163

 

 

 

171

 

 

 

205

 

 

 

197

 

Delinquent loans to total loans

 

 

0.30

 

 

 

0.30

 

 

 

0.29

 

 

 

0.18

 

 

 

0.22

 

Net charge-offs to average loans (annualized)

 

 

0.19

 

 

 

0.15

 

 

 

0.04

 

 

 

0.04

 

 

 

0.12

 

 

Republic Bancorp, Inc. Financial Information
Fourth 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 December 31, 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. MemoryBank®, the Company’s national branchless banking platform is 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 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
Fourth Quarter 2019 Earnings Release (continued)
Segment information for the quarters and years ended December 31, 2019 and 2018 follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31, 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

$

41,973

 

 

$

4,620

 

 

$

213

 

 

$

46,806

 

 

$

183

 

$

7,406

 

$

7,589

 

 

$

54,395

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for loan and lease losses

 

(727

)

 

 

(640

)

 

 

 

 

 

(1,367

)

 

 

(569

)

 

2,850

 

 

2,281

 

 

 

914

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net refund transfer fees

 

 

 

 

 

 

 

 

 

 

112

 

 

 

 

112

 

 

 

112

 

Mortgage banking income

 

 

 

 

 

2,480

 

 

 

2,480

 

 

 

 

 

 

 

 

 

2,480

 

Program fees

 

 

 

 

 

 

 

 

 

 

119

 

 

1,165

 

 

1,284

 

 

 

1,284

 

Net gain on branch divestiture

 

7,948

 

 

 

 

 

 

 

 

7,948

 

 

 

 

 

 

 

 

 

7,948

 

Other noninterest income

 

7,754

 

 

 

10

 

 

 

51

 

 

 

7,815

 

 

 

16

 

 

 

 

16

 

 

 

7,831

 

Total noninterest income

 

15,702

 

 

 

10

 

 

 

2,531