Republic Bancorp, Inc. Reports First Quarter Net Income of $26.7 Million Amid COVID-19 Considerations

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Republic Bancorp, Inc. reports first quarter net income of $26.7 million amid COVID-19 considerations.

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”) reports net income of $26.7 million for the first quarter of 2020, resulting in Diluted Earnings per Class A Common Share (“Diluted EPS”) of $1.28, return on average assets (“ROA”) of 1.90%, and return on average equity (“ROE”) of 13.71%. Net income was down 10% from the first quarter of 2019 primarily as a result of an increase in the Company’s estimated Allowance for Credit Losses in response to the potential impact of the COVID-19 pandemic.

Steve Trager, Chairman & CEO of Republic commented, “While we are proud of many of our operating metrics for the quarter, certainly the last month of the quarter was primarily focused on the impact of the COVID-19 pandemic and our corporate response to it. In that regard, our primary focus in response to the pandemic has been:

(1) safeguarding the health of our associates and our clients;

(2) cushioning our clients from the pandemic’s negative economic impact;

(3) mitigating our risk of loss; and

(4) measuring, forecasting and planning for the negative financial impact of the pandemic on a go-forward basis.

“With respect to safeguarding of our associates and our clients, we quickly and successfully enacted a social distancing protocol, which allowed the substantial majority of our back-office operations to work from home. For those personnel not able to work from home, we have physically distanced these associates from each other within our office space. Within our banking centers, we changed our in-person client service hours to be by appointment-only in order to limit the number of people within the banking centers at any point in time. In addition, we diverted much of our client service interaction to our drive-thru operations, with many of our drive-thru transactions facilitated through interactive teller machines (“ITMs”).

“To help cushion the impact of the pandemic on our deposit clients, we suspended certain deposit fees for transaction accounts for a yet-to-be-determined period of time. In addition, we also began waiving early withdrawal penalties for our term certificates of deposits (“CDs”) during the crisis so our clients can access this source of funds at no additional cost. For our consumer and commercial loan clients, we began offering various payment relief options depending on the loan program. Perhaps most importantly, we quickly refocused our salesforce and many of our back-office operations to facilitate the U.S. Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”). We are extremely proud of our Company-wide PPP effort, as we were up and running the first day of the program and accepted over $200 million in applications for our small business clients during the program’s first weekend.

“In order to mitigate future risks and uncertainties, we have increased our communications across the organization. We started with our Business Continuity Planning team, enacting a seven-day-a-week daily call with our sales and operational areas to ensure that everyone is aware of the major issues at hand and that we are protecting the Company’s assets while providing proper service and attention to our clients.

“In addition to our daily operational calls, we have added a second Asset-Liability Committee (“ALCO”) meeting each week to ensure our liquidity monitoring remains diligent and our loan and deposit pricing remains appropriate for the current risk environment. We also took steps during the quarter to fortify our liquidity position over the near term for any possible unanticipated cash-flow needs.

“While our regulatory capital currently remains well above “well capitalized” levels and our asset mix is well diversified and sound as of March 31, 2020, we are certainly not immune from the inherent risk in our loan portfolio. As a result, we have made changes to our overall underwriting matrices, including revisions to many of our minimum credit score requirements as well as our loan-to-value maximums for newly underwritten commercial and residential clients. With the on-going fluidity in the pandemic situation, we will continue to closely monitor our underwriting standards and make appropriate revisions as facts and circumstances warrant.

“Finally, we are very early in the process with respect to measuring, forecasting and planning for the negative financial impact of the pandemic. As we have previously disclosed, we adopted the Current Expected Credit Loss (“CECL”) accounting method on January 1st of this year. Upon adoption, we increased our Allowance for Credit Losses (“Allowance”) by approximately $6.7 million in order to account for the expected life-of-loan credit losses within our portfolio. This increase was offset with a tax-effected decrease to retained earnings. With the onset of the COVID-19 pandemic, Congress provided companies with an option to delay adoption of CECL within the recently enacted Coronavirus Aid, Relief, and Economic Security Act (“CARES” Act). We understand that the financial impact to the banking industry may not be truly known for months; however, we chose to move forward with CECL as previously planned due to the uncertainty around future adoption later this year. As a result, the Company recorded an additional $7.2 million charge to its credit loss expense during the first quarter of 2020 to account for potential losses within the portfolio brought about by the impact of the pandemic. Our credit loss expense could be subject to future fluctuations, up and down, as additional information becomes available about this very uncertain pandemic situation.

“As it relates to the diversification of our overall loan portfolio, the following table exhibits our top 20 loan concentrations by industry as of March 31, 2020,” concluded Steve Trager.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollars in thousands)

 

 

Mar. 31, 2020

 

Industry

 

 

Outstanding

 

 

Available to Draw

 

Total Committed

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real Estate Credit (primarily Warehouse Lines of Credit)

 

 

$

854,191

 

 

$

319,334

 

$

1,173,525

 

Lessors of Nonresidential Buildings (except Miniwarehouses)

 

 

 

588,503

 

 

 

28,404

 

 

616,907

 

Lessors of Residential Buildings and Dwellings

 

 

 

440,979

 

 

 

40,953

 

 

481,932

 

Commercial Banking

 

 

 

52,997

 

 

 

34,753

 

 

87,750

 

Hotels (except Casino Hotels) and Motels

 

 

 

76,665

 

 

 

3,443

 

 

80,108

 

Offices of Physicians (except Mental Health Specialists)

 

 

 

62,823

 

 

 

16,075

 

 

78,898

 

Limited-Service Restaurants

 

 

 

63,004

 

 

 

596

 

 

63,600

 

Full-Service Restaurants

 

 

 

49,384

 

 

 

4,307

 

 

53,691

 

Used Car Dealers

 

 

 

20,731

 

 

 

19,867

 

 

40,598

 

Religious Organizations

 

 

 

30,125

 

 

 

3,789

 

 

33,914

 

Fitness and Recreational Sports Centers

 

 

 

30,954

 

 

 

1,455

 

 

32,409

 

Offices of Lawyers

 

 

 

22,558

 

 

 

6,910

 

 

29,468

 

New Housing For-Sale Builders

 

 

 

17,537

 

 

 

7,403

 

 

24,940

 

Lessors of Other Real Estate Property

 

 

 

22,104

 

 

 

1,219

 

 

23,323

 

Offices of Dentists

 

 

 

21,656

 

 

 

1,411

 

 

23,067

 

Line-Haul Railroads

 

 

 

10,816

 

 

 

10,000

 

 

20,816

 

Commercial and Institutional Building Construction

 

 

 

13,221

 

 

 

7,285

 

 

20,506

 

Elementary and Secondary Schools

 

 

 

16,564

 

 

 

3,454

 

 

20,018

 

Fresh Fruit and Vegetable Merchant Wholesalers

 

 

 

10,372

 

 

 

9,249

 

 

19,621

 

Legislative Bodies

 

 

 

18,704

 

 

 

 

 

18,704

 

Total Top 20 Industry Concentrations

 

 

$

2,423,888

 

 

$

519,907

 

$

2,943,795

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following table highlights Republic’s financial performance for the first quarter of 2020 compared to the first quarter of 2019:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Company Financial Performance Highlights

 

 

 

Three Months Ended Mar. 31,

 

 

 

(dollars in thousands, except per share data)

 

 

2020

 

2019

 

$ Change

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Before Income Tax Expense*

 

 

$

33,578

 

 

$

36,976

 

 

$

(3,398)

 

(9)

%

 

Net Income *

 

 

 

26,697

 

 

 

29,516

 

 

 

(2,819)

 

(10)

 

 

Diluted Earnings per Class A Common Share

 

 

 

1.28

 

 

 

1.41

 

 

 

(0.13)

 

(9)

 

 

Return on Average Assets

 

 

 

1.90

%

 

 

2.16

%

 

 

NA

 

(12)

 

 

Return on Average Equity

 

 

 

13.71

 

 

 

16.70

 

 

 

NA

 

(18)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

Notable first quarter 2020 financial information for the Company by operating segment follows:

Core Bank(1)

  • Traditional Bank net income declined $5.6 million, primarily due to a $5.4 million increase in credit loss expense driven largely by economic concerns of the COVID-19 pandemic. The increase in credit loss expense during the quarter related to the COVID-19 pandemic was partially offset by a large $470,000 loan recovery during the period, as well as the formula impact of a $60 million decrease in Traditional Bank spot balances from December 31, 2019 to March 31, 2020.
  • Warehouse Lending net income was strong during the first quarter of 2020, increasing 66% over the first quarter of 2019. As mortgage rates fell during the first quarter of 2020, a surge in consumer refinance volume for Warehouse clients drove a 58% increase in average Warehouse loans for the quarter, which more than offset a 16-basis point decline in the Warehouse net interest margin.
  • Mortgage banking revenue was $4.8 million for the first quarter of 2020 compared to $1.5 million for the first quarter of 2019. As mortgage rates fell during the first quarter of 2020, the Company experienced strong growth in consumer refinance activity, particularly within the Company’s relatively new Consumer Direct channel. Overall, the Company originated $125 million of secondary market mortgage loans during the first quarter of 2020 compared to $41 million for the first quarter of 2019.

The following table presents the overall changes in the Core Bank’s net interest income and net interest margin by reportable segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Interest Income

 

 

Net Interest Margin

 

(dollars in thousands)

 

 

Three Months Ended Mar. 31,

 

 

 

 

 

Three Months Ended Mar. 31,

 

 

 

 

Reportable Segment

 

 

2020

 

2019

 

Change

 

 

2020

 

2019

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Traditional Banking

 

 

$

40,620

 

$

41,347

 

$

(727)

 

 

3.80

%

 

3.84

%

 

(0.04)

%

 

Warehouse Lending

 

 

 

4,307

 

 

2,895

 

 

1,412

 

 

2.68

 

 

2.84

 

 

(0.16)

 

 

Mortgage Banking*

 

 

 

214

 

 

102

 

 

112

 

 

NM

 

 

NM

 

 

NM

 

 

Core Bank

 

 

$

45,141

 

$

44,344

 

$

797

 

 

3.65

 

 

3.76

 

 

(0.11)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*Includes loans held for sale
NM – Not meaningful

Republic Processing Group(2)

  • Our seasonal tax business continued to provide its traditional first quarter lift, with net income from our Tax Refund Solutions (“TRS”) segment remaining strong at $11.5 million despite a $1.7 million increase in credit loss expense.
  • TRS’s credit loss expense for Easy Advance (“EA”) loans was $15.2 million, or 3.93% of its $387 million in EAs originated during the first quarter of 2020 compared to credit loss expense of $13.4 million, or 3.44% of its $389 million of EAs originated during the first quarter of 2019. The increased credit loss expense for the first quarter of 2020 was due to slower refund payments received from the U.S. Treasury for 2020 as compared to 2019. While the Company is uncertain how much the COVID-19 pandemic contributed to the slower refund payments for 2020, management believes it has adequately adjusted its expected loss rate to absorb EA losses based on information known through the date of this release.

    EAs are only originated during the first two months of each year, with all uncollected EAs charged off by June 30th of each year. EAs collected during the second half of each year are recorded as recoveries of previously charged-off loans. TRS’s loss rate as of June 30, 2019 was 3.45% of total originations and it finished 2019 with an EA loss rate of 2.74% of total EAs originated.
  • Net income for our Republic Credit Solutions (“RCS”) grew 38% over the first quarter of 2019. The increase in net income primarily reflects a decrease in credit loss expense on RCS’s line-of-credit product. Credit loss expense for RCS decreased despite $665,000 of additional reserves during the first quarter of 2020 related to the COVID-19 pandemic, as a decrease in net charge-offs and a decrease in outstanding balances for its line-of-credit product drove down credit loss expense.

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 $5.7 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 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, including, but not limited to, the impact of the COVID-19 pandemic. 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, 2019. The Company undertakes no obligation to update any forward-looking statements, except as required by applicable law.

 

Republic Bancorp, Inc. Financial Information

First Quarter 2020 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

 

 

 

 

 

 

 

 

 

 

 

 

Mar. 31, 2020

 

Dec. 31, 2019

 

Mar. 31, 2019

 

Assets:

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

316,263

 

$

385,303

 

$

345,512

 

Investment securities, net of allowance for credit losses (3)

 

 

608,330

 

 

537,074

 

 

498,318

 

Loans held for sale

 

 

54,904

 

 

31,468

 

 

24,177

 

Loans

 

 

4,515,599

 

 

4,433,151

 

 

4,298,710

 

Allowance for credit losses (3)

 

 

(70,431)

 

 

(43,351)

 

 

(57,961)

 

Loans, net

 

 

4,445,168

 

 

4,389,800

 

 

4,240,749

 

Federal Home Loan Bank stock, at cost

 

 

38,900

 

 

30,831

 

 

29,965

 

Premises and equipment, net

 

 

44,215

 

 

46,196

 

 

43,527

 

Right-of-use assets

 

 

34,349

 

 

35,206

 

 

38,738

 

Goodwill

 

 

16,300

 

 

16,300

 

 

16,300

 

Other real estate owned ("OREO")

 

 

85

 

 

113

 

 

216

 

Bank owned life insurance ("BOLI")

 

 

66,822

 

 

66,433

 

 

65,265

 

Other assets and accrued interest receivable

 

 

96,697

 

 

81,595

 

 

63,001

 

Total assets

 

$

5,722,033

 

$

5,620,319

 

$

5,365,768

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

1,300,891

 

$

1,033,379

 

$

1,184,480

 

Interest-bearing

 

 

2,770,566

 

 

2,752,629

 

 

2,589,836

 

Total deposits

 

 

4,071,457

 

 

3,786,008

 

 

3,774,316

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

126,080

 

 

167,617

 

 

173,168

 

Operating lease liabilities

 

 

35,537

 

 

36,530

 

 

40,203

 

Federal Home Loan Bank advances

 

 

572,500

 

 

750,000

 

 

560,000

 

Subordinated note

 

 

41,240

 

 

41,240

 

 

41,240

 

Other liabilities and accrued interest payable

 

 

91,173

 

 

74,680

 

 

59,750

 

Total liabilities

 

 

4,937,987

 

 

4,856,075

 

 

4,648,677

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

784,046

 

 

764,244

 

 

717,091

 

Total liabilities and stockholders' equity

 

$

5,722,033

 

$

5,620,319

 

$

5,365,768

 

Average Balance Sheet Data

 

 

 

 

 

 

 

 

 

Three Months Ended Mar. 31,

 

 

 

2020

 

2019

 

Assets:

 

 

 

 

 

 

 

Federal funds sold and other interest-earning deposits

 

$

207,335

 

$

289,928

 

Investment securities, including FHLB stock

 

 

519,726

 

 

563,752

 

Loans, including loans held for sale

 

 

4,493,137

 

 

4,256,673

 

Total interest-earning assets

 

 

5,220,198

 

 

5,110,353

 

Total assets

 

 

5,626,946

 

 

5,476,671

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

 

Noninterest-bearing deposits, including those held for assumption

 

$

1,249,025

 

$

1,258,461

 

Interest-bearing deposits, including those held for assumption

 

 

2,855,332

 

 

2,629,765

 

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

 

 

208,969

 

 

231,602

 

Federal Home Loan Bank advances

 

 

371,319

 

 

511,408

 

Subordinated note

 

 

41,240

 

 

41,240

 

Total interest-bearing liabilities

 

 

3,476,860

 

 

3,414,015

 

Stockholders' equity

 

 

778,900

 

 

706,833

 

Republic Bancorp, Inc. Financial Information

First Quarter 2020 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 Mar. 31,

 

 

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Total interest income (4)

 

$

81,159

 

$

82,633

 

Total interest expense

 

 

8,421

 

 

10,334

 

Net interest income

 

 

72,738

 

 

72,299

 

 

 

 

 

 

 

 

 

Credit loss expense (3)

 

 

22,760

 

 

17,231

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

3,136

 

 

3,303

 

Net refund transfer fees

 

 

15,823

 

 

17,100

 

Mortgage banking income

 

 

4,795

 

 

1,539

 

Interchange fee income

 

 

2,552

 

 

2,757

 

Program fees

 

 

2,624

 

 

1,074

 

Increase in cash surrender value of BOLI

 

 

389

 

 

382

 

Net gains on OREO

 

 

3

 

 

130

 

Other

 

 

1,247

 

 

1,132

 

Total noninterest income

 

 

30,569

 

 

27,417

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

26,622

 

 

25,076

 

Occupancy and equipment, net

 

 

6,846

 

 

6,584

 

Communication and transportation

 

 

1,289

 

 

1,161

 

Marketing and development

 

 

833

 

 

1,102

 

FDIC insurance expense

 

 

 

 

448

 

Bank franchise tax expense

 

 

2,506

 

 

2,496

 

Data processing

 

 

2,539

 

 

2,096

 

Interchange related expense

 

 

1,076

 

 

1,315

 

Supplies

 

 

452

 

 

484

 

Other real estate owned and other repossession expense

 

 

18

 

 

46

 

Legal and professional fees

 

 

1,237

 

 

886

 

Other

 

 

3,551

 

 

3,815

 

Total noninterest expense

 

 

46,969

 

 

45,509

 

 

 

 

 

 

 

 

 

Income before income tax expense

 

 

33,578

 

 

36,976

 

Income tax expense

 

 

6,881

 

 

7,460

 

Net income

 

$

26,697

 

$

29,516

 

Republic Bancorp, Inc. Financial Information

First Quarter 2020 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 Mar. 31,

 

 

2020

 

2019

Per Share Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

 

21,035

 

 

 

20,973

 

Diluted weighted average shares outstanding

 

 

21,094

 

 

 

21,106

 

 

 

 

 

 

 

 

 

 

Period-end shares outstanding:

 

 

 

 

 

 

 

 

Class A Common Stock

 

 

18,687

 

 

 

18,698

 

Class B Common Stock

 

 

2,200

 

 

 

2,213

 

 

 

 

 

 

 

 

 

 

Book value per share (5)

 

$

37.54

 

 

$

34.29

 

Tangible book value per share (5)

 

 

36.45

 

 

 

33.25

 

 

 

 

 

 

 

 

 

 

Earnings per share ("EPS"):

 

 

 

 

 

 

 

 

Basic EPS - Class A Common Stock

 

$

1.29

 

 

$

1.42

 

Basic EPS - Class B Common Stock

 

 

1.17

 

 

 

1.29

 

Diluted EPS - Class A Common Stock

 

 

1.28

 

 

 

1.41

 

Diluted EPS - Class B Common Stock

 

 

1.16

 

 

 

1.28

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per Common share:

 

 

 

 

 

 

 

 

Class A Common Stock

 

$

0.286

 

 

$

0.264

 

Class B Common Stock

 

 

0.260

 

 

 

0.240

 

 

 

 

 

 

 

 

 

 

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

1.90

%

 

 

2.16

%

Return on average equity

 

 

13.71

 

 

 

16.70

 

Efficiency ratio (6)

 

 

45

 

 

 

46

 

Yield on average interest-earning assets (4)

 

 

6.22

 

 

 

6.47

 

Cost of average interest-bearing liabilities

 

 

0.97

 

 

 

1.21

 

Cost of average deposits (7)

 

 

0.61

 

 

 

0.69

 

Net interest spread (4)

 

 

5.25

 

 

 

5.26

 

Net interest margin - Total Company (4)

 

 

5.57

 

 

 

5.66

 

Net interest margin - Core Bank (1)

 

 

3.65

 

 

 

3.76

 

 

 

 

 

 

 

 

 

 

Other Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

End of period FTEs (8) - Total Company

 

 

1,077

 

 

 

1,073

 

End of period FTEs - Core Bank

 

 

994

 

 

 

997

 

Number of full-service banking centers

 

 

42

 

 

 

45

 

Republic Bancorp, Inc. Financial Information

First Quarter 2020 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 Mar. 31,

 

 

2020

 

2019

Credit Quality Asset Balances:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming Assets - Total Company:

 

 

 

 

 

 

 

 

Loans on nonaccrual status

 

$

20,358

 

 

$

15,361

 

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

 

 

495

 

 

 

199

 

Total nonperforming loans

 

 

20,853

 

 

 

15,560

 

OREO

 

 

85

 

 

 

216

 

Total nonperforming assets

 

$

20,938

 

 

$

15,776

 

 

 

 

 

 

 

 

 

 

Nonperforming Assets - Core Bank (1):

 

 

 

 

 

 

 

 

Loans on nonaccrual status

 

$

20,358

 

 

$

15,361

 

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

 

 

 

 

 

4

 

Total nonperforming loans

 

 

20,358

 

 

 

15,365

 

OREO

 

 

85

 

 

 

216

 

Total nonperforming assets

 

$

20,443

 

 

$

15,581

 

 

 

 

 

 

 

 

 

 

Delinquent loans:

 

 

 

 

 

 

 

 

Delinquent loans - Core Bank

 

$

11,863

 

 

$

7,727

 

Delinquent loans - RPG (2) (9)

 

 

30,764

 

 

 

26,460

 

Total delinquent loans - Total Company

 

$

42,627

 

 

$

34,187

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Quality Ratios - Total Company:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans to total loans

 

 

0.46

%

 

 

0.36

%

Nonperforming assets to total loans (including OREO)

 

 

0.46

 

 

 

0.37

 

Nonperforming assets to total assets

 

 

0.37

 

 

 

0.29

 

Allowance for credit losses to total loans

 

 

1.56

 

 

 

1.35

 

Allowance for credit losses to nonperforming loans

 

 

338

 

 

 

373

 

Delinquent loans to total loans (9) (10)

 

 

0.94

 

 

 

0.80

 

Net charge-offs to average loans (annualized)

 

 

0.19

 

 

 

0.37

 

 

 

 

 

 

 

 

 

 

Credit Quality Ratios - Core Bank:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans to total loans

 

 

0.46

%

 

 

0.37

%

Nonperforming assets to total loans (including OREO)

 

 

0.47

 

 

 

0.37

 

Nonperforming assets to total assets

 

 

0.38

 

 

 

0.31

 

Allowance for credit losses to total loans

 

 

0.97

 

 

 

0.75

 

Allowance for credit losses to nonperforming loans

 

 

210

 

 

 

205

 

Delinquent loans to total loans

 

 

0.27

 

 

 

0.18

 

Net (recoveries) charge-offs to average loans (annualized)

 

 

(0.03)

 

 

 

0.04

 

Republic Bancorp, Inc. Financial Information

First Quarter 2020 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

 

 

 

Mar. 31, 2020

 

Dec. 31, 2019

 

Sep. 30, 2019

 

Jun. 30, 2019

 

Mar. 31, 2019

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

316,263

 

$

385,303

 

$

397,072

 

$

473,779

 

$

345,512

 

 

Investment securities, net of allowance for credit losses (3)

 

 

608,330

 

 

537,074

 

 

638,697

 

 

447,512

 

 

498,318

 

 

Loans held for sale

 

 

54,904

 

 

31,468

 

 

51,243

 

 

63,949

 

 

24,177

 

 

Loans held for sale upon branch divestiture

 

 

 

 

 

 

130,770

 

 

131,881

 

 

 

 

Loans

 

 

4,515,599

 

 

4,433,151

 

 

4,664,054

 

 

4,390,533

 

 

4,298,710

 

 

Allowance for credit losses (3)

 

 

(70,431)

 

 

(43,351)

 

 

(46,932)

 

 

(45,983)

 

 

(57,961)

 

 

Loans, net

 

 

4,445,168

 

 

4,389,800

 

 

4,617,122

 

 

4,344,550

 

 

4,240,749

 

 

Federal Home Loan Bank stock, at cost

 

 

38,900

 

 

30,831

 

 

32,242

 

 

32,242

 

 

29,965

 

 

Premises and equipment, net

 

 

44,215

 

 

46,196

 

 

46,735

 

 

44,199

 

 

43,527

 

 

Right-of-use assets

 

 

34,349

 

 

35,206

 

 

36,051

 

 

37,450

 

 

38,738

 

 

Goodwill

 

 

16,300

 

 

16,300

 

 

16,300

 

 

16,300

 

 

16,300

 

 

Other real estate owned

 

 

85

 

 

113

 

 

119

 

 

1,095

 

 

216

 

 

Bank owned life insurance

 

 

66,822

 

 

66,433

 

 

66,037

 

 

65,642

 

 

65,265

 

 

Other assets and accrued interest receivable

 

 

96,697

 

 

81,595

 

 

71,259

 

 

64,535

 

 

63,001

 

 

Total assets

 

$

5,722,033

 

$

5,620,319

 

$

6,103,647

 

$

5,723,134

 

$

5,365,768

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing

 

$

1,300,891

 

$

1,033,379

 

$

1,031,553

 

$

1,003,793

 

$

1,184,480

 

 

Interest-bearing

 

 

2,770,566

 

 

2,752,629

 

 

2,703,199

 

 

2,557,127

 

 

2,589,836

 

 

Deposits held for assumption upon branch divestiture

 

 

 

 

 

 

142,384

 

 

152,954

 

 

 

 

Total deposits

 

 

4,071,457

 

 

3,786,008

 

 

3,877,136

 

 

3,713,874

 

 

3,774,316

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

126,080

 

 

167,617

 

 

167,949

 

 

226,002

 

 

173,168

 

 

Operating lease liabilities

 

 

35,537

 

 

36,530

 

 

37,391

 

 

38,852

 

 

40,203

 

 

Federal Home Loan Bank advances

 

 

572,500

 

 

750,000

 

 

1,170,000

 

 

915,000

 

 

560,000

 

 

Subordinated note

 

 

41,240

 

 

41,240

 

 

41,240

 

 

41,240

 

 

41,240

 

 

Other liabilities and accrued interest payable

 

 

91,173

 

 

74,680

 

 

65,484

 

 

56,738

 

 

59,750

 

 

Total liabilities

 

 

4,937,987

 

 

4,856,075

 

 

5,359,200

 

 

4,991,706

 

 

4,648,677

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

784,046

 

 

764,244

 

 

744,447

 

 

731,428

 

 

717,091

 

 

Total liabilities and stockholders' equity

 

$

5,722,033

 

$

5,620,319

 

$

6,103,647

 

$

5,723,134

 

$

5,365,768

 

 

Average Balance Sheet Data

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarterly Comparison

 

 

 

Mar. 31, 2020

 

Dec. 31, 2019

 

Sep. 30, 2019

 

Jun. 30, 2019

 

Mar. 31, 2019

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal funds sold and other interest-earning deposits

 

$

207,335

 

$

152,286

 

$

302,156

 

$

297,205

 

$

289,928

 

 

Investment securities, including FHLB stock

 

 

519,726

 

 

632,559

 

 

547,281

 

 

514,366

 

 

563,752

 

 

Loans, including loans held for sale

 

 

4,493,137

 

 

4,588,538

 

 

4,606,139

 

 

4,424,905

 

 

4,256,673

 

 

Total interest-earning assets

 

 

5,220,198

 

 

5,373,383

 

 

5,455,576

 

 

5,236,476

 

 

5,110,353

 

 

Total assets

 

 

5,626,946

 

 

5,638,498

 

 

5,711,636

 

 

5,480,525

 

 

5,476,671

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits, including those held for assumption

 

$

1,249,025

 

$

1,062,010

 

$

1,065,904

 

$

1,098,817

 

$

1,258,461

 

 

Interest-bearing deposits, including those held for assumption

 

 

2,855,332

 

 

2,966,993

 

 

2,833,632

 

 

2,588,836

 

 

2,629,765

 

 

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

 

 

208,969

 

 

248,558

 

 

246,889

 

 

220,189

 

 

231,602

 

 

Federal Home Loan Bank advances

 

 

371,319

 

 

469,130

 

 

690,457

 

 

710,879

 

 

511,408

 

 

Subordinated note

 

 

41,240

 

 

41,240

 

 

41,240

 

 

41,240

 

 

41,240

 

 

Total interest-bearing liabilities

 

 

3,476,860

 

 

3,725,921

 

 

3,812,218

 

 

3,561,144

 

 

3,414,015

 

 

Stockholders' equity

 

 

778,900

 

 

758,740

 

 

742,176

 

 

728,723

 

 

706,833

 

 

Republic Bancorp, Inc. Financial Information

First Quarter 2020 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

 

 

 

Mar. 31, 2020

 

Dec. 31, 2019

 

Sep. 30, 2019

 

Jun. 30, 2019

 

Mar. 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total interest income (4)

 

$

81,159

 

$

64,527

 

$

68,059

 

$

65,664

 

$

82,633

 

 

Total interest expense

 

 

8,421

 

 

10,132

 

 

12,573

 

 

11,718

 

 

10,334

 

 

Net interest income

 

 

72,738

 

 

54,395

 

 

55,486

 

 

53,946

 

 

72,299

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit loss expense (3)

 

 

22,760

 

 

914

 

 

3,153

 

 

4,460

 

 

17,231

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

3,136

 

 

3,547

 

 

3,749

 

 

3,598

 

 

3,303

 

 

Net refund transfer fees

 

 

15,823

 

 

112

 

 

317

 

 

3,629

 

 

17,100

 

 

Mortgage banking income

 

 

4,795

 

 

2,480

 

 

3,064

 

 

2,416

 

 

1,539

 

 

Interchange fee income

 

 

2,552

 

 

2,814

 

 

3,031

 

 

3,257

 

 

2,757

 

 

Program fees

 

 

2,624

 

 

1,284

 

 

1,317

 

 

1,037

 

 

1,074

 

 

Increase in cash surrender value of BOLI

 

 

389

 

 

397

 

 

394

 

 

377

 

 

382

 

 

Net gains on OREO

 

 

3

 

 

53

 

 

267

 

 

90

 

 

130

 

 

Net gain (loss) on branch divestiture

 

 

 

 

7,948

 

 

(119)

 

 

 

 

 

 

Other

 

 

1,247

 

 

1,020

 

 

791

 

 

721

 

 

1,132

 

 

Total noninterest income

 

 

30,569

 

 

19,655

 

 

12,811

 

 

15,125

 

 

27,417

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

26,622

 

 

23,997

 

 

24,822

 

 

25,286

 

 

25,076

 

 

Occupancy and equipment, net

 

 

6,846

 

 

6,497

 

 

6,571

 

 

6,472

 

 

6,584

 

 

Communication and transportation

 

 

1,289

 

 

1,198

 

 

1,017

 

 

1,071

 

 

1,161

 

 

Marketing and development

 

 

833

 

 

1,223

 

 

1,420

 

 

1,278

 

 

1,102

 

 

FDIC insurance expense

 

 

 

 

 

 

 

 

295

 

 

448

 

 

Bank franchise tax expense

 

 

2,506

 

 

927

 

 

935

 

 

935

 

 

2,496

 

 

Data processing

 

 

2,539

 

 

2,532

 

 

2,344

 

 

2,217

 

 

2,096

 

 

Interchange related expense

 

 

1,076

 

 

1,115

 

 

1,138

 

 

1,302

 

 

1,315

 

 

Supplies

 

 

452

 

 

335

 

 

292

 

 

582

 

 

484

 

 

OREO expense

 

 

18

 

 

2

 

 

130

 

 

148

 

 

46

 

 

Legal and professional fees

 

 

1,237

 

 

601

 

 

1,026

 

 

844

 

 

886

 

 

Other

 

 

3,551

 

 

2,408

 

 

2,716

 

 

2,998

 

 

3,815

 

 

Total noninterest expense

 

 

46,969

 

 

40,835

 

 

42,411

 

 

43,428

 

 

45,509

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax expense

 

 

33,578

 

 

32,301

 

 

22,733

 

 

21,183

 

 

36,976

 

 

Income tax expense

 

 

6,881

 

 

6,533

 

 

4,325

 

 

3,176

 

 

7,460

 

 

Net income

 

$

26,697

 

$

25,768

 

$

18,408

 

$

18,007

 

$

29,516

 

 

Republic Bancorp, Inc. Financial Information

First Quarter 2020 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

 

 

 

 

 

Mar. 31, 2020

 

 

 

Dec. 31, 2019

 

 

 

Sep. 30, 2019

 

 

 

Jun. 30, 2019

 

 

 

Mar. 31, 2019

 

 

Per Share Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

 

21,035

 

 

 

21,036

 

 

 

21,036

 

 

 

21,016

 

 

 

20,973

 

 

Diluted weighted average shares outstanding

 

 

21,094

 

 

 

21,133

 

 

 

21,137

 

 

 

21,138

 

 

 

21,106

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period-end shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A Common Stock

 

 

18,687

 

 

 

18,737

 

 

 

18,744

 

 

 

18,740

 

 

 

18,675

 

 

Class B Common Stock

 

 

2,200

 

 

 

2,206

 

 

 

2,208

 

 

 

2,208

 

 

 

2,213

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share (5)

 

$

37.54

 

 

$

36.49

 

 

$

35.54

 

 

$

34.92

 

 

$

34.29

 

 

Tangible book value per share (5)

 

 

36.45

 

 

 

35.41

 

 

 

34.47

 

 

 

33.87

 

 

 

33.25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share ("EPS"):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic EPS - Class A Common Stock

 

$

1.29

 

 

$

1.23

 

 

$

0.88

 

 

$

0.86

 

 

$

1.42

 

 

Basic EPS - Class B Common Stock

 

 

1.17

 

 

 

1.13

 

 

 

0.80

 

 

 

0.79

 

 

 

1.29

 

 

Diluted EPS - Class A Common Stock

 

 

1.28

 

 

 

1.23

 

 

 

0.88

 

 

 

0.86

 

 

 

1.41

 

 

Diluted EPS - Class B Common Stock

 

 

1.16

 

 

 

1.12

 

 

 

0.80

 

 

 

0.78

 

 

 

1.28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per Common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A Common Stock

 

$

0.286

 

 

$

0.264

 

 

$

0.264

 

 

$

0.264

 

 

$

0.264

 

 

Class B Common Stock

 

 

0.260

 

 

 

0.240

 

 

 

0.240

 

 

 

0.240

 

 

 

0.240

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

1.90

%

 

 

1.83

%

 

 

1.29

%

 

 

1.31

%

 

 

2.16

%

 

Return on average equity

 

 

13.71

 

 

 

13.58

 

 

 

9.92

 

 

 

9.88

 

 

 

16.70

 

 

Efficiency ratio (6)

 

 

45

 

 

 

62

 

 

 

62

 

 

 

63

 

 

 

46

 

 

Yield on average interest-earning assets (4)

 

 

6.22

 

 

 

4.80

 

 

 

4.99

 

 

 

5.02

 

 

 

6.47

 

 

Cost of average interest-bearing liabilities

 

 

0.97

 

 

 

1.09

 

 

 

1.32

 

 

 

1.32

 

 

 

1.21

 

 

Cost of average deposits (7)

 

 

0.61

 

 

 

0.74

 

 

 

0.82

 

 

 

0.75

 

 

 

0.69

 

 

Net interest spread (4)

 

 

5.25

 

 

 

3.71

 

 

 

3.67

 

 

 

3.70

 

 

 

5.26

 

 

Net interest margin - Total Company (4)

 

 

5.57

 

 

 

4.05

 

 

 

4.07

 

 

 

4.12

 

 

 

5.66

 

 

Net interest margin - Core Bank (1)

 

 

3.65

 

 

 

3.56

 

 

 

3.56

 

 

 

3.62

 

 

 

3.76

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

End of period FTEs (8) - Total Company

 

 

1,077

 

 

 

1,080

 

 

 

1,093

 

 

 

1,089

 

 

 

1,073

 

 

End of period FTEs - Core Bank

 

 

994

 

 

 

997

 

 

 

1,013

 

 

 

1,012

 

 

 

997

 

 

Number of full-service banking centers

 

 

42

 

 

 

41

 

 

 

45

 

 

 

45

 

 

 

45

 

 

Republic Bancorp, Inc. Financial Information

First Quarter 2020 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

 

 

Mar. 31, 2020

 

Dec. 31, 2019

 

Sep. 30, 2019

 

Jun. 30, 2019

 

Mar. 31, 2019

Credit Quality Asset Balances:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming Assets - Total Company:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans on nonaccrual status

 

$

20,358

 

 

$

23,332

 

 

$

20,574

 

 

$

19,238

 

 

$

15,361

 

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

 

 

495

 

 

 

157

 

 

 

175

 

 

 

166

 

 

 

199

 

Total nonperforming loans

 

 

20,853

 

 

 

23,489

 

 

 

20,749

 

 

 

19,404

 

 

 

15,560

 

OREO

 

 

85

 

 

 

113

 

 

 

119

 

 

 

1,095

 

 

 

216

 

Total nonperforming assets

 

$

20,938

 

 

$

23,602

 

 

$

20,868

 

 

$

20,499

 

 

$

15,776

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming Assets - Core Bank (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans on nonaccrual status

 

$

20,358

 

 

$

23,332

 

 

$

20,574

 

 

$

19,238

 

 

$

15,361

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

Total nonperforming loans

 

 

20,358

 

 

 

23,332

 

 

 

20,574

 

 

 

19,238

 

 

 

15,365

 

OREO

 

 

85

 

 

 

113

 

 

 

119

 

 

 

1,095

 

 

 

216

 

Total nonperforming assets

 

$

20,443

 

 

$

23,445

 

 

$

20,693

 

 

$

20,333

 

 

$

15,581

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Delinquent Loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Delinquent loans - Core Bank

 

$

11,863

 

 

$

13,042

 

 

$

13,496

 

 

$

12,524

 

 

$

7,727

 

Delinquent loans - RPG (2) (9)

 

 

30,764

 

 

 

7,762

 

 

 

6,876

 

 

 

6,802

 

 

 

26,460

 

Total delinquent loans - Total Company

 

$

42,627

 

 

$

20,804

 

 

$

20,372

 

 

$

19,326

 

 

$

34,187

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Quality Ratios - Total Company:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans to total loans

 

 

0.46

%

 

 

0.53

%

 

 

0.44

%

 

 

0.44

%

 

 

0.36

%

Nonperforming assets to total loans (including OREO)

 

 

0.46

 

 

 

0.53

 

 

 

0.45

 

 

 

0.47

 

 

 

0.37

 

Nonperforming assets to total assets

 

 

0.37

 

 

 

0.42

 

 

 

0.34

 

 

 

0.36

 

 

 

0.29

 

Allowance for credit losses to total loans

 

 

1.56

 

 

 

0.98

 

 

 

1.01

 

 

 

1.05

 

 

 

1.35

 

Allowance for credit losses to nonperforming loans

 

 

338

 

 

 

185

 

 

 

226

 

 

 

237

 

 

 

373

 

Delinquent loans to total loans (9) (10)

 

 

0.94

 

 

 

0.47

 

 

 

0.44

 

 

 

0.44

 

 

 

0.80

 

Net charge-offs to average loans (annualized)

 

 

0.19

 

 

 

0.39

 

 

 

0.68

 

 

 

1.49

 

 

 

0.37

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit Quality Ratios - Core Bank:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans to total loans

 

 

0.46

%

 

 

0.54

%

 

 

0.45

%

 

 

0.45

%

 

 

0.37

%

Nonperforming assets to total loans (including OREO)

 

 

0.47

 

 

 

0.54

 

 

 

0.45

 

 

 

0.47

 

 

 

0.37

 

Nonperforming assets to total assets

 

 

0.38

 

 

 

0.43

 

 

 

0.35

 

 

 

0.37

 

 

 

0.31

 

Allowance for credit losses to total loans

 

 

0.97

 

 

 

0.70

 

 

 

0.73

 

 

 

0.77

 

 

 

0.75

 

Allowance for credit losses to nonperforming loans

 

 

210

 

 

 

129

 

 

 

163

 

 

 

171

 

 

 

205

 

Delinquent loans to total loans

 

 

0.27

 

 

 

0.30

 

 

 

0.30

 

 

 

0.29

 

 

 

0.18

 

Net (recoveries) charge-offs to average loans (annualized)

 

 

(0.03)

 

 

 

0.19

 

 

 

0.15

 

 

 

0.04

 

 

 

0.04

 

Republic Bancorp, Inc. Financial Information
First Quarter 2020 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 March 31, 2020, 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 generally the same as those described in the summary of significant accounting policies in the Company’s 2019 Annual Report on Form 10-K. The Company did update its accounting policies during the first quarter of 2020 upon adoption of the CECL standard. 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
First Quarter 2020 Earnings Release (continued)

Segment information for the quarters ended March 31, 2020 and 2019 follows:

 

 

Three Months Ended March 31, 2020

 

 

 

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

$

40,620

 

 

$

4,307

 

 

$

214

 

 

$

45,141

 

 

$

20,525

 

$

7,072

 

$

27,597

 

 

$

72,738

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit loss expense

 

5,589

 

 

 

332

 

 

 

 

 

 

5,921

 

 

 

15,133

 

 

1,706

 

 

16,839

 

 

 

22,760

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net refund transfer fees

 

 

 

 

 

 

 

 

 

 

 

 

 

15,823

 

 

 

 

15,823

 

 

 

15,823

 

Mortgage banking income

 

 

 

 

 

 

 

4,795

 

 

 

4,795

 

 

 

 

 

 

 

 

 

 

4,795

 

Program fees

 

 

 

 

 

 

 

 

 

 

 

 

 

312

 

 

2,312

 

 

2,624

 

 

 

2,624

 

Other noninterest income

 

7,235

 

 

 

11

 

 

 

24

 

 

 

7,270

 

 

 

57

 

 

 

 

57

 

 

 

7,327

 

Total noninterest income

 

7,235

 

 

 

11

 

 

 

4,819

 

 

 

12,065

 

 

 

16,192

 

 

2,312

 

 

18,504

 

 

 

30,569

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total noninterest expense

 

36,647

 

 

 

803

 

 

 

1,996

 

 

 

39,446

 

 

 

6,629

 

 

894

 

 

7,523

 

 

 

46,969

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax expense

 

5,619

 

 

 

3,183

 

 

 

3,037

 

 

 

11,839

 

 

 

14,955

 

 

6,784

 

 

21,739

 

 

 

33,578

 

Income tax expense

 

460

 

 

 

716

 

 

 

638

 

 

 

1,814

 

 

 

3,497

 

 

1,570

 

 

5,067

 

 

 

6,881

 

Net income

$

5,159

 

 

$

2,467

 

 

$

2,399

 

 

$

10,025

 

 

$

11,458

 

$

5,214

 

$

16,672

 

 

$

26,697

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period-end assets

$

4,471,235

 

 

$

851,405

 

 

$

53,298

 

 

$

5,375,938

 

 

$

240,898

 

$

105,197

 

$

346,095

 

 

$

5,722,033

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

3.80

%

 

 

2.68

%

 

 

NM

 

 

 

3.65

%

 

 

NM

 

 

NM

 

 

NM

 

 

 

5.57

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net-revenue concentration*

 

46

%

 

 

4

%

 

 

5

%

 

 

55

%

 

 

36

%

 

9

%

 

45

%

 

 

100

%

 

 

Three Months Ended March 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

$

41,347

 

 

$

2,895

 

 

$

102

 

 

$

44,344

 

 

$

20,438

 

$

7,517

 

$

27,955

 

 

$

72,299

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Credit loss expense

 

189

 

 

 

225

 

 

 

 

 

 

414

 

 

 

13,434

 

 

3,383

 

 

16,817

 

 

 

17,231

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net refund transfer fees

 

 

 

 

 

 

 

 

 

 

 

 

 

17,100

 

 

 

 

17,100

 

 

 

17,100

 

Mortgage banking income

 

 

 

 

 

 

 

1,539

 

 

 

1,539

 

 

 

 

 

 

 

 

 

 

1,539

 

Program fees

 

 

 

 

 

 

 

 

 

 

 

 

 

146

 

 

928

 

 

1,074

 

 

 

1,074

 

Other noninterest income

 

6,896

 

 

 

10

 

 

 

40

 

 

 

6,946

 

 

 

131

 

 

627

 

 

758

 

 

 

7,704

 

Total noninterest income

 

6,896

 

 

 

10

 

 

 

1,579

 

 

 

8,485

 

 

 

17,377

 

 

1,555

 

 

18,932

 

 

 

27,417

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total noninterest expense

 

35,550

 

 

 

758

 

 

 

1,320

 

 

 

37,628

 

 

 

7,114

 

 

767

 

 

7,881

 

 

 

45,509

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax expense

 

12,504

 

 

 

1,922

 

 

 

361

 

 

 

14,787

 

 

 

17,267

 

 

4,922

 

 

22,189

 

 

 

36,976

 

Income tax expense

 

1,765

 

 

 

433

 

 

 

76

 

 

 

2,274

 

 

 

4,030

 

 

1,156

 

 

5,186

 

 

 

7,460

 

Net income

$

10,739

 

 

$

1,489

 

 

$

285

 

 

$

12,513

 

 

$

13,237

 

$

3,766

 

$

17,003

 

 

$

29,516

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period-end assets

$

4,471,419

 

 

$

559,545

 

 

$

17,087

 

 

$

5,048,051

 

 

$

224,485

 

$

93,232

 

$

317,717

 

 

$

5,365,768

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest margin

 

3.84

%

 

 

2.84

%

 

 

NM

 

 

 

3.76

%

 

 

NM

 

 

NM

 

 

NM

 

 

 

5.66

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net-revenue concentration*

 

48

%

 

 

3

%

 

 

2

%

 

 

53

%

 

 

38

%

 

9

%

 

47

%

 

 

100

%

_________________________

*Net revenues represent total net interest income plus noninterest income. Net-revenue concentration equals segment-level net revenue divided by total Company net revenue.

Republic Bancorp, Inc. Financial Information
First Quarter 2020 Earnings Release (continued)

(1)

“Core Bank” or “Core Banking” operations consist of the Traditional Banking, Warehouse Lending, and Mortgage Banking segments.

 

 

(2)

Republic Processing Group operations consist of the Tax Refund Solutions and Republic Credit Solutions segments.

 

 

(3)

Effective January 1, 2020, the Company adopted Accounting Standards Codification (“ASC”) 326 Financial Instruments – Credit Losses, which replaces the pre-January 1, 2020 “probable-incurred” method for calculating the Company’s Allowance for Credit Losses (“ACL”) with the current expected credit loss (“CECL”) method. CECL is applicable to financial assets measured at amortized cost, including loan and lease receivables and held-to-maturity debt securities. CECL also applies to certain off-balance sheet credit exposures. In addition to CECL, ASC 326 made changes to the accounting for Available-for-Sale (“AFS”) debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on AFS debt securities that the Company does not intend or will likely not be compelled to sell.

 

 

When measuring an ACL, CECL primarily differs from the probable-incurred method by: a) incorporating a lower “expected” threshold for loss recognition versus a higher “probable” threshold; b) requiring life-of-loan considerations; and c) requiring reasonable and supportable forecasts. The Company’s CECL method is a “static-pool” method that analyzes historical closed pools of loans over their expected lives to attain a loss rate, which is then adjusted for current conditions and reasonable and supportable forecasts prior to being applied to the current balance of the analyzed pools. Due to its reasonably strong correlation to the Company's historical net loan losses, the Company has chosen to use the U.S. unemployment rate as its primary forecasting tool.

 

 

In accord with the adoption of ASC 326 and CECL, the Company recorded on January 1, 2020 a $6.7 million, or 16%, increase in the ACL for its loans and leases, a $51,000 ACL for its investment debt securities, and an approximate $456,000 ACL for its off-balance sheet exposures. This adoption also reduced the Company’s retained earnings on a tax-effected basis, with no impact on earnings for the quarter ended March 31, 2020. The adoption date increase in ACL for the Company’s loans and leases primarily reflects additional ACL for longer duration loan portfolios, such as the Company's residential real estate and consumer loan portfolios. No additional segmentation of the Bank's loan portfolios was deemed necessary upon adoption.

 

(4)

The amount of loan fee income can meaningfully impact total interest income, loan yields, net interest margin, and net interest spread. The amount of loan fee income included in total interest income per quarter was as follows: $28.5 million (quarter ended March 31, 2020); $8.5 million (quarter ended December 31, 2019); $9.1 million (quarter ended September 30, 2019); $8.4 million (quarter ended June 30, 2019); and $28.6 million (quarter ended March 31, 2019).

 

 

 

Interest income for Easy Advances (“EAs”) is composed entirely of loan fees. The loan fees disclosed above included EA fees of $19.3 million and $18.9 million for the quarters ended March 31, 2020 and 2019. EAs are only offered during the first two months of each year.

 

 

(5)

The following table provides a reconciliation of total stockholders’ equity in accordance with GAAP to tangible stockholders’ equity in accordance with applicable regulatory requirements, a non-GAAP disclosure. The Company provides the tangible book value per share, a non-GAAP measure, in addition to those defined by banking regulators, because of its widespread use by investors as a means to evaluate capital adequacy.

 

 

Quarterly Comparison

(dollars in thousands, except per share data)

 

Mar. 31, 2020

 

Dec. 31, 2019

 

Sep. 30, 2019

 

Jun. 30, 2019

 

Mar. 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity - GAAP (a)

 

$

784,046

 

 

$

764,244

 

 

$

744,447

 

 

$

731,428

 

 

$

717,091

 

Less: Goodwill

 

 

16,300

 

 

 

16,300

 

 

 

16,300

 

 

 

16,300

 

 

 

16,300

 

Less: Mortgage servicing rights

 

 

5,994

 

 

 

5,888

 

 

 

5,483

 

 

 

5,158

 

 

 

4,935

 

Less: Core deposit intangible

 

 

423

 

 

 

469

 

 

 

516

 

 

 

562

 

 

 

608

 

Tangible stockholders' equity - Non-GAAP (c)

 

$

761,329

 

 

$

741,587

 

 

$

722,148

 

 

$

709,408

 

 

$

695,248

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets - GAAP (b)

 

$

5,722,033

 

 

$

5,620,319

 

 

$

6,103,647

 

 

$

5,723,134

 

 

$

5,365,768

 

Less: Goodwill

 

 

16,300

 

 

 

16,300

 

 

 

16,300

 

 

 

16,300

 

 

 

16,300

 

Less: Mortgage servicing rights

 

 

5,994

 

 

 

5,888

 

 

 

5,483

 

 

 

5,158

 

 

 

4,935

 

Less: Core deposit intangible

 

 

423

 

 

 

469

 

 

 

516

 

 

 

562

 

 

 

608

 

Tangible assets - Non-GAAP (d)

 

$

5,699,316

 

 

$

5,597,662

 

 

$

6,081,348

 

 

$

5,701,114

 

 

$

5,343,925

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' equity to total assets - GAAP (a/b)

 

 

13.70

%

 

 

13.60

%

 

 

12.20

%

 

 

12.78

%

 

 

13.36

%

Tangible stockholders' equity to tangible assets - Non-GAAP (c/d)

 

 

13.36

%

 

 

13.25

%

 

 

11.87

%

 

 

12.44

%

 

 

13.01

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of shares outstanding (e)

 

 

20,887

 

 

 

20,943

 

 

 

20,948

 

 

 

20,948

 

 

 

20,911

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per share - GAAP (a/e)

 

$

37.54

 

 

$

36.49

 

 

$

35.54

 

 

$

34.92

 

 

$

34.29

 

Tangible book value per share - Non-GAAP (c/e)

 

 

36.45

 

 

 

35.41

 

 

 

34.47

 

 

 

33.87

 

 

 

33.25

 

(6)

The efficiency ratio, a non-GAAP measure with no GAAP comparable, equals total noninterest expense divided by the sum of net interest income and noninterest income. The ratio excludes net gains (losses) on sales, calls, and impairment of investment securities and the Company’s net gain from its November 2019 branch divestiture.

 

 

Three Months Ended Mar. 31,

 

(dollars in thousands)

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Net interest income

 

$

72,738

 

$

72,299

 

Noninterest income

 

 

30,569

 

 

27,417

 

Less: Net gain (loss) on sales, calls, and impairment of debt and equity securities

 

 

40

 

 

37

 

Total adjusted revenue - Non-GAAP (a)

 

$

103,267

 

$

99,679

 

 

 

 

 

 

 

 

 

Noninterest expense (b)

 

$

46,969

 

$

45,509

 

 

 

 

 

 

 

 

 

Efficiency Ratio - Non-GAAP (b/a)

 

 

45

%

 

46

%

 

 

Three Months Ended

(dollars in thousands)

 

Mar. 31, 2020

 

Dec. 31, 2019

 

Sep. 30, 2019

 

Jun. 30, 2019

 

Mar. 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

72,738

 

$

54,395

 

$

55,486

 

$

53,946

 

$

72,299

 

Noninterest income

 

 

30,569

 

 

19,655

 

 

12,811

 

 

15,125

 

 

27,417

 

Less: Net gain on branch divestiture

 

 

 

 

7,948

 

 

(119)

 

 

 

 

 

Less: Net gain (loss) on sales, calls, and impairment of debt and equity securities

 

 

40

 

 

(12)

 

 

19

 

 

33

 

 

37

 

Total adjusted revenue - Non-GAAP (a)

 

$

103,267

 

$

66,114

 

$

68,397

 

$

69,038