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 third quarter net income of $9.8 million, a $4.2 million,
or 74%, increase from the same period in 2015, resulting in Diluted
Earnings per Class A Common Share of $0.47. Year-to-date net income
was $35.9 million, an $8.2 million, or 29%, increase from the same
period in 2015, resulting in a return on average assets (“ROA”) and
a return on average equity (“ROE”) of 1.08% and 8.04% for the first
nine months of 2016.
Steve Trager, Republic’s Chairman and Chief Executive Officer,
commented: “While we are very pleased with our increase in
quarterly net income, when compared to the third quarter of the
previous year, we are even more pleased to see solid net income
growth spread across all four of our major operating segments. More
specifically,
- Within our Traditional Banking segment,
net income grew 13%, partially due to a full quarter of accretive
benefits from our Cornerstone Bancorp (‘Cornerstone’) acquisition
and partially from meaningful organic growth over the previous 12
months.
- Our Warehouse Lending (‘Warehouse’)
segment had a $178 million increase in quarter over quarter growth
in average outstanding balances, which drove a 47% increase in its
net income.
- The Company’s Mortgage Banking segment
experienced higher origination volume, and in addition, benefited
nicely from a bulk loan sale during the quarter.
- Despite a nominal net loss for the
third quarter of 2016, our Republic Processing Group (‘RPG’)
segment reflected a $1.3 million improvement in its net income for
the quarter, thanks to meaningful growth in its Republic Credit
Solutions (‘RCS’) division.
These achievements, combined with our attractive footprint and
best-in-class team, give me much confidence about the things
happening at Republic.”
The following tables highlight Republic’s financial performance
for the third quarter and first nine months of 2016 compared to the
same periods in 2015:
dollars in thousands, except per-share
data
Highlights of Financial Performance
Three Months Ended
Nine Months Ended
Sept. 30, 2016 Sept. 30,
2015
$ Change
% Change Sept. 30, 2016
Sept. 30, 2015
$ Change
% Change Income before income taxes
$
14,676 $ 8,759 $ 5,917 68 %
$ 54,003 $ 41,982
$ 12,021 29 % Net Income*
9,828 5,640 4,188 74 %
35,903 27,748 8,155 29 % Diluted Earnings per Class A Share
0.47 0.27 0.20 74 %
1.73 1.34 0.39 29 % ROA
0.87 % 0.57 % NA 53 %
1.08 % 0.94 % NA
15 % ROE
6.54 % 3.91 % NA 67 %
8.04 %
6.45 % NA 25 % dollars in thousands Core Banking Net
Income by Origination Channel
Three Months Ended
Nine Months Ended Segment/Origination
Channel Sept. 30, 2016 Sept. 30,
2015
$ Change
% Change Sept. 30, 2016
Sept. 30, 2015
$ Change
% Change Traditional Banking segment*:
Traditional Network
$ 5,584 $ 4,782 $ 802 17 %
$ 16,543 $ 14,261 $ 2,282 16 % Correspondent Lending
301 125 176 141 %
688 221 467 211 % 2016-Cornerstone
Acquisition
353 - 353 NM
(131 ) - (131 ) NM
2012-FDIC-Acquired Loans
200 494 (294 ) -60 %
1,462
2,090 (628 ) -30 % Digital Bank Initiative
(340 )
- (340 ) NM
(754 )
- (754 ) NM
Total Traditional Banking segment
6,098 5,401 697 13 %
17,808 16,572 1,236 7 % Warehouse Lending segment*
2,520 1,717 803 47 %
5,366 4,610 756 16 %
Mortgage Banking segment*
1,320
(23 ) 1,343
NM
1,746
163 1,583 971 %
Total Core Banking*
$ 9,938
$ 7,095 $
2,843 40 %
$
24,920 $
21,345 $ 3,575
17 %
*See Segment Data in the back of this
Earnings Release
NA – Not applicable
NM – Not meaningful
Results of Operations for the Third
Quarter of 2016 Compared to the Third Quarter of
2015
Core Bank(1) – Net income from Core Banking was
$9.9 million for the third quarter of 2016, an increase of $2.8
million, or 40%, from the third quarter of 2015. Strong growth in
net interest income, continued favorably-low loan loss provisions
and solid mortgage banking income were all major contributors to
the Core Bank’s performance for the quarter.
Net interest income at the Core Bank increased to $36.1 million
during the third quarter of 2016, a $5.1 million, or 17%, increase
over the third quarter of 2015. The increase in net interest income
was primarily the result of a $456 million, or 14%, year-over-year
increase in the Core Bank’s quarterly average loans from the third
quarter of 2015 to the third quarter of 2016. The strong growth in
average loans outstanding was supplemented by an increase of nine
basis points to the Core Bank’s net interest margin during the same
periods.
The overall change in the Core Bank’s average loan balances and
net interest income by origination channel is presented below:
Average Average
Net Interest
Net Interest
Loans
Loans
Income Income (in thousands)
3rd Qtr 3rd
Quarter $ %
3rd Qtr 3rd Quarter $ % Origination Channel
2016 2015
Change Change
2016 2015
Change Change Traditional Network
$ 2,753,663 $ 2,587,067 $ 166,596 6 %
$
28,629 $ 26,130 $ 2,499 10 % Warehouse Lending
542,894 365,291 177,603 49 %
4,924 3,308 1,616 49 %
Correspondent Lending
178,385 245,114 (66,729 ) -27 %
395 404 (9 ) -2 % 2016-Cornerstone Acquisition
189,647 - 189,647 NM
1,919 - 1,919 NM 2012-FDIC
Acquired Loans
18,649
29,268 (10,619 ) -36
%
267 1,145
(878 ) -77 % Total
$
3,683,238 $ 3,226,740
$ 456,498 14 %
$ 36,134 $
30,987 $ 5,147 17 %
NM – Not meaningful
The following factors were the primary drivers of the changes in
the Core Bank’s average loan balances and net interest income by
origination channel for the third quarter of 2016 as compared to
the third quarter of 2015:
- The Core Bank’s Traditional Network
experienced solid overall loan growth, with particularly strong
growth in the quarterly average balance from the third quarter of
2015 to the third quarter of 2016 for the following portfolios: $67
million in Commercial Real Estate (“CRE”); $43 million in
Commercial & Industrial (“C&I”); $37 million in Home Equity
Lines of Credit (“HELOCs”); and $35 million in Indirect Auto.
Growth in the commercial-related categories was primarily driven by
the Core Bank’s Commercial and Corporate Banking Department.
Year-over-year growth in HELOCs was driven primarily by a
successful first-year-introductory-rate promotion, while growth in
Indirect Auto loans was driven by reintroduction of the product in
2015.
- Within the Warehouse segment, net
interest income grew 49% from the third quarter of 2015, as client
usage of the Bank’s Warehouse lines of credit increased from 56%
for the third quarter of 2015 to 62% for the third quarter of 2016.
In addition, the Bank also increased its committed Warehouse lines
of credit from $653 million at September 30, 2015 to $915 million
at September 30, 2016. As a result of these factors, average
Warehouse line-of-credit balances for the third quarter of 2016
were $543 million, a $178 million increase from a strong third
quarter in 2015. The yield for Warehouse lines of credit during the
third quarter of 2016 increased 16 basis points from the same
period in 2015, as Warehouse yields were positively impacted by an
increase in short-term interest rates.
- The third quarter of 2016 represented
the first full quarter of earnings impact from the Company’s May
2016 Cornerstone acquisition. As expected, the acquired Cornerstone
franchise provided a solid contribution to the Company’s overall
earnings with an impact of $1.9 million to net interest income for
the third quarter driven by average loans of $190 million.
The Core Bank’s favorably-low provision expense for the quarter
resulted primarily from growth in the overall loan portfolio, while
the Bank’s charge-off trends continued to show general improvement
from its already favorably-low historical charge-off levels.
The table below illustrates the Core Bank’s credit quality
ratios for the most recent quarter ends and the previous three
calendar year ends:
As of and for the: Quarter Ending:
Year Ending:
Sep 30 Jun 30
Mar 31 Dec 31 Dec 31 Dec
31
Core Banking Credit Quality Ratios
2016 2016 2016
2015 2014 2013
Nonperforming loans to total loans
0.47 % 0.54 % 0.60
% 0.66 % 0.78 % 0.81 % Nonperforming assets to total loans
(including OREO)
0.53 % 0.58 % 0.63 % 0.70 % 1.15 %
1.47 % Delinquent loans to total loans
0.21 %
0.28 % 0.25 % 0.35 % 0.52 % 0.63 % Net charge-offs to
average loans
0.03 % 0.05 % 0.04 % 0.05 % 0.08 % 0.18
% (Annualized as of 9/30/16, 6/30/16 and 3/31/16) OREO =
Other Real Estate Owned
Noninterest income for the Core Bank was $10.0 million during
the third quarter of 2016 compared to $7.2 million for the third
quarter of 2015. Impacting the Core Bank’s noninterest income
comparisons between the third quarters of 2016 and 2015 were the
following:
- Mortgage banking income increased $2.1
million from the third quarter of 2015. Approximately $1.1 million
of this increase was attributable to a bulk loan sale of $71
million during the third quarter of 2016, representing a portion of
the Company’s correspondent loan portfolio. The remainder of the
increase in mortgage banking income was primarily due to a rise in
refinance activity resulting from a downturn in long-term interest
rates. As a result, secondary-market loan originations increased
from $32 million during the third quarter of 2015 to $59 million
for the third quarter of 2016.
- Interchange fees increased $499,000,
mainly due to an increase in debit card interchange revenue. The
higher revenue for debit card related transactions was primarily
the result of growth in retail checking accounts and an increase in
customer use of signature-based transactions.
Core Bank noninterest expenses increased $4.9 million, or 19%,
from the third quarter of 2015 to the same period in 2016,
primarily driven by the following:
- Salaries and benefits expense increased
$2.4 million, primarily due to an increase of 118
full-time-equivalent (“FTE”) employees from September 30, 2015 to
September 30, 2016. A total of 36 of these additions was directly
attributable to the Company’s Cornerstone acquisition. The
remaining 82 increase in FTEs was driven by additional staffing
needed to implement the Company’s strategic initiatives.
- Data processing expenses increased
$645,000, with $212,000 of the increase attributable to the
Company’s Cornerstone acquisition. The remainder of the increase
was spread across multiple loan and deposit platforms and was due
to growth in the Company’s overall customer base.
- The Core Bank incurred a prepayment
penalty of $846,000 during the quarter related to the payoff of $50
million in long-term Federal Home Loan Bank advances. The Core Bank
expects to recover the amount of this penalty through a reduction
in interest expense over what would have been the remaining
original term of these advances. These advances carried an interest
rate of 4.39% and had an original maturity of March 9, 2017.
Republic Processing Group (“RPG”)
The overall profitability of the RPG segment has historically
been driven by its largest division, Tax Refund Solutions (“TRS”).
TRS derives substantially all of its revenues during the first and
second quarters of the year and historically operates at a net loss
during the second half of the year, as the Company prepares for the
next tax season. During the second half of 2015, the Company began
to more meaningfully grow the Republic Credit Solutions (“RCS”)
small dollar loan division of RPG. As a result of strong growth in
profitability within the RCS division, the overall profitability of
the RPG segment has continued to improve during 2016.
During the third quarter of 2016, RPG recorded a nominal net
loss of $110,000 compared to a net loss of $1.5 million during the
third quarter of 2015. More specifically within the RCS division,
RCS contributed net income of $1.0 million during the third quarter
of 2016 compared to a net loss of $366,000 during the third quarter
of 2015. The increased profitability within the RCS division
resulted primarily from a $56 million increase in small-dollar
loans originated for sale, which generated a strong increase in fee
income. In addition, the balances for the RCS loans retained on
balance sheet by the Company increased from $5 million at September
30, 2015 to $16 million at September 30, 2016, contributing to a
solid increase in net interest income for the quarter.
Conclusion
“It has been an exciting year thus far at Republic. While the
current environment has headwinds providing constant challenges in
the financial service industry, we are driven to make the Company
more agile in order to meet these challenges. Our on-going
strategic initiatives remain focused on providing the Company’s
shareholders an industry leading return, while responsibly serving
the needs of our clients.
“Going forward, our team will continue to evaluate acquisition
opportunities, both whole-bank and nonbank, that we believe present
the best overall synergies for Republic. Furthermore, our digital
banking team remains excited and continues to work hard on our new
branchless banking platform, which is scheduled to launch by the
end of October. We believe this new digital banking platform will
provide the most cost effective way for the Company to expand its
geographic reach.
“In an ever-evolving banking landscape, our successful results
and our promising initiatives, together with our attractive
footprint and best-in-class team, give me much excitement about
Republic and its long-term future,” concluded Steve Trager.
Republic Bancorp, Inc. (the “Company”) is the parent company of
Republic Bank & Trust Company (the “Bank”). The Bank currently
has 44 banking centers: 32 banking centers in 12 Kentucky
communities - Covington, Crestwood, Elizabethtown, Florence,
Frankfort, Georgetown, Independence, Lexington, Louisville,
Owensboro, Shelbyville and Shepherdsville; three banking centers in
southern Indiana – Floyds Knobs, Jeffersonville and New Albany; six
banking centers in five Florida communities – Largo, Port Richey,
St. Petersburg, Seminole, Temple Terrace; two banking centers in
Tennessee – Cool Springs (Franklin) and Green Hills (Nashville);
and one banking center in Norwood (Cincinnati), Ohio. The Bank
offers internet banking at www.republicbank.com. The Company has
$4.8 billion in assets and is headquartered in Louisville,
Kentucky. The Company’s Class A Common Stock is listed under the
symbol “RBCAA” on the NASDAQ Global Select Market.
Republic Bank. It’s just easier here.®
Forward-Looking Statements
This press release contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. The forward-looking statements in the preceding paragraphs
are based on our current expectations and assumptions regarding our
business, the future impact to our balance sheet and income
statement resulting from changes in interest rates, the ability to
develop products and strategies in order to meet the Company’s
long-term strategic goals, the economy and other future conditions.
Because forward-looking statements relate to the future, they are
subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict. Our actual results may
differ materially from those contemplated by the forward-looking
statements. We caution you therefore against relying on any of
these forward-looking statements. They are neither statements of
historical fact nor guarantees or assurances of future performance.
Important factors that could cause actual results to differ
materially from those in the forward-looking statements include the
actual timing, magnitude and frequency of interest rate changes, as
well as the actual changes in market conditions and the application
and timing of various management strategies as compared to those
projected in our interest rate model. Additionally, actual results
could differ materially 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, 2015. The Company undertakes no obligation to update
any forward-looking statements. These forward-looking statements
are made only as of the date of this release, and the Company
undertakes no obligation to release revisions to these
forward-looking statements to reflect events or conditions after
the date of this release.
Republic Bancorp, Inc. Financial
InformationThird quarter 2016 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
Sept. 30, 2016 Dec. 31, 2015 Sept.
30, 2015 Assets: Cash and cash equivalents $ 302,167 $
210,082 $ 90,731 Investment securities 524,444 555,785 502,599
Loans held for sale 11,226 4,597 12,326 Loans 3,823,031 3,326,610
3,297,874 Allowance for loan and lease losses
(30,436 ) (27,491
) (26,959 ) Loans,
net 3,792,595 3,299,119 3,270,915 Federal Home Loan Bank stock, at
cost 28,208 28,208 28,208 Premises and equipment, net 43,385 31,106
31,095 Goodwill 16,300 10,168 10,168 Other real estate owned
("OREO") 2,435 1,220 2,832 Bank owned life insurance ("BOLI")
61,392 52,817 52,465 Other assets and accrued interest receivable
45,125 37,187
34,638 Total assets
$
4,827,277 $ 4,230,289
$ 4,035,977
Liabilities and Stockholders' Equity: Deposits:
Noninterest-bearing $ 947,602 $ 634,863 $ 637,875 Interest-bearing
2,188,291 1,852,614 1,729,955
Total deposits 3,135,893 2,487,477 2,367,830
Securities sold under agreements to repurchase and other short-term
borrowings 152,458 395,433 309,624 Federal Home Loan Bank advances
862,500 699,500 711,500 Subordinated note 41,240 41,240 41,240
Other liabilities and accrued interest payable 34,626
30,092 31,071 Total liabilities
4,226,717 3,653,742 3,461,265 Stockholders' equity
600,560 576,547
574,712 Total liabilities and
Stockholders' equity
$ 4,827,277
$ 4,230,289 $
4,035,977 Average Balance
Sheet Data Three Months Ended Sept.
30, Nine Months Ended Sept. 30,
2016 2015 2016 2015
Assets: Investment securities, including FHLB stock $
554,508 $ 533,956 $ 571,740 $ 530,114 Federal funds sold and other
interest-earning deposits 58,910 30,633 147,180 67,960 Loans and
fees, including loans held for sale 3,702,093 3,235,057 3,492,997
3,148,838 Total interest-earning assets 4,315,511 3,799,646
4,211,917 3,746,912 Total assets 4,531,958 3,971,501 4,440,881
3,947,210
Liabilities and Stockholders' Equity:
Noninterest-bearing deposits $ 900,432 $ 609,641 $ 874,060 $
643,128 Interest-bearing deposits 2,155,289 1,740,553 2,014,197
1,693,888
Securities sold under agreements to
repurchase and other short-term borrowings
215,343 363,905 296,574 363,518 Federal Home Loan Bank advances
584,946 616,509 588,109 610,571 Subordinated note 44,288 41,240
42,926 41,240 Total interest-bearing liabilities 2,999,866
2,762,207 2,941,806 2,709,217 Stockholders' equity 601,043 577,185
595,236 573,482
Republic Bancorp, Inc. Financial
InformationThird quarter 2016 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 Sept. 30, Nine Months Ended Sept.
30, 2016 2015 2016
2015 Total interest income(2) $ 43,934 $ 36,107 $
128,089 $ 105,590 Total interest expense
4,536
4,683 13,680
14,086 Net interest income 39,398
31,424 114,409 91,504 Provision for loan and lease losses
2,489 2,233 9,489 3,322 Noninterest income: Service charges
on deposit accounts 3,416 3,399 9,838 9,685 Net refund transfer
fees 132 97 19,119 17,339 Mortgage banking income 3,081 972 5,902
3,549 Interchange fee income 2,415 1,967 6,755 6,205 Republic
Processing Group program fees 979 474 1,942 871 Gain on call of
security available for sale - - - 88 Net gains (losses) on OREO
(137 ) (8 ) 191 (282 ) Increase in cash surrender value of BOLI 406
348 1,114 1,050 Other
1,009
557 2,163
1,772 Total noninterest income
11,301 7,806
47,024 40,277
Noninterest expenses: Salaries and employee benefits 18,068 15,297
52,965 44,897 Occupancy and equipment, net 5,631 5,217 16,159
15,560 Communication and transportation 1,029 951 2,974 2,768
Marketing and development 1,076 756 2,773 2,318 FDIC insurance
expense 345 474 1,483 1,622 Bank franchise tax expense 846 846
3,944 4,094 Data processing 1,659 959 4,535 3,017 Interchange
related expense 1,118 909 3,069 2,847 Supplies 280 229 969 809 OREO
expense 159 146 355 485 Legal and professional fees 539 653 1,965
2,796 FHLB advance prepayment penalty 846 - 846 - Other
1,938 1,801
5,904 5,264 Total
noninterest expenses
33,534
28,238 97,941
86,477 Income before income tax expense
14,676 8,759 54,003 41,982 Income tax expense
4,848 3,119
18,100 14,234 Net
income
$ 9,828 $
5,640 $ 35,903
$ 27,748
Republic Bancorp, Inc. Financial
InformationThird quarter 2016 Earnings Release
(continued)(all amounts other than per share amounts, number of
employees and number of banking centers are expressed in thousands
unless otherwise noted)
Selected Data and Statistics
As of and for the As of and for the
Three Months Ended Sept. 30, Nine Months Ended Sept.
30, 2016 2015 2016
2015 Per Share Data: Basic average shares
outstanding 20,925 20,848 20,946 20,856 Diluted average shares
outstanding 20,938 20,934 20,957 20,936 End of period shares
outstanding: Class A Common Stock 18,617 18,603 18,617 18,603 Class
B Common Stock 2,245 2,245 2,245 2,245 Book value per
share(3) $ 28.79 $ 27.57 $ 28.79 $ 27.57 Tangible book value per
share(3) 27.70 26.84 27.70 26.84 Earnings per share: Basic
earnings per Class A Common Stock $ 0.47 $ 0.27 $ 1.73 $ 1.34 Basic
earnings per Class B Common Stock 0.43 0.25 1.58 1.22 Diluted
earnings per Class A Common Stock 0.47 0.27 1.73 1.34 Diluted
earnings per Class B Common Stock 0.43 0.25 1.57 1.22 Cash
dividends declared per share: Class A Common Stock $ 0.209 $ 0.198
$ 0.616 $ 0.583 Class B Common Stock 0.190 0.180 0.560 0.530
Performance Ratios: Return on average assets 0.87 %
0.57 % 1.08 % 0.94 % Return on average equity 6.54 3.91 8.04 6.45
Efficiency ratio(4) 66 72 61 66 Yield on average interest-earning
assets 4.07 3.80 4.05 3.76 Cost of interest-bearing liabilities
0.60 0.68 0.62 0.69 Cost of deposits(5) 0.21 0.18 0.20 0.18 Net
interest spread 3.47 3.12 3.43 3.07 Net interest margin - Total
Company 3.65 3.31 3.62 3.26 Net interest margin - Core Bank(1) 3.38
3.29 3.26 3.26
Other Information: End of
period FTEs(6) - Total Company 899 769 899 769 End of period
FTEs(6) - Core Bank 830 712 830 712 Number of banking centers 44 40
44 40
Republic Bancorp, Inc. Financial
InformationThird quarter 2016 Earnings Release
(continued)(all amounts other than per share amounts, number of
employees and number of banking centers are expressed in thousands
unless otherwise noted)
Credit Quality Data and Statistics
As of and for the As of and for
the Three Months Ended Sept. 30, Nine Months Ended
Sept. 30, 2016 2015 2016
2015 Credit Quality Asset Balances: Loans on
nonaccrual status $ 17,769 $ 23,143 $ 17,769 $ 23,143 Loans past
due 90-days-or-more and still on accrual 34 43
34 43 Total nonperforming loans
17,803 23,186 17,803 23,186 OREO 2,435 2,832
2,435 2,832 Total nonperforming
assets $ 20,238 $ 26,018 $ 20,238 $ 26,018
Total delinquent loans $ 8,714 $ 11,996 $ 8,714 $ 11,996
Credit Quality Ratios - Total Company:
Nonperforming loans to total loans 0.47 % 0.70 % 0.47 % 0.70 %
Nonperforming assets to total loans (including OREO) 0.53 0.79 0.53
0.79 Nonperforming assets to total assets 0.42 0.64 0.42 0.64
Allowance for loan and lease losses to total loans 0.80 0.82 0.80
0.82 Allowance for loan and lease losses to nonperforming loans 171
116 171 116 Delinquent loans to total loans(7) 0.23 0.36 0.23 0.36
Net charge-offs to average loans (annualized) 0.15 0.06 0.25 0.03
Credit Quality Ratios - Core Bank(1):
Nonperforming loans to total loans 0.47 % 0.70 % 0.47 % 0.70 %
Nonperforming assets to total loans (including OREO) 0.53 0.79 0.53
0.79 Nonperforming assets to total assets 0.42 0.65 0.42 0.65
Allowance for loan and lease losses to total loans 0.71 0.78 0.71
0.78 Allowance for loan and lease losses to nonperforming loans 152
111 152 111 Delinquent loans to total loans(7) 0.21 0.36 0.21 0.36
Net charge-offs to average loans (annualized) 0.03 0.05 0.04 0.04
Republic Bancorp, Inc. Financial
InformationThird quarter 2016 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 Sept. 30, 2016 Jun. 30,
2016 Mar. 31, 2016 Dec.
31, 2015 Sept. 30, 2015 Assets:
Cash and cash equivalents $ 302,167 $ 142,979 $ 198,172 $ 210,082 $
90,731 Investment securities 524,444 551,027 556,605 555,785
502,599 Loans held for sale 11,226 94,658 8,129 4,597 12,326 Loans
3,823,031 3,691,323 3,351,969 3,326,610 3,297,874 Allowance for
loan and lease losses
(30,436 )
(29,308 )
(31,475 ) (27,491
) (26,959 ) Loans,
net 3,792,595 3,662,015 3,320,494 3,299,119 3,270,915 Federal Home
Loan Bank stock, at cost 28,208 28,208 28,208 28,208 28,208
Premises and equipment, net 43,385 42,956 30,277 31,106 31,095
Goodwill 16,300 16,313 10,168 10,168 10,168 Other real estate owned
2,435 1,503 1,280 1,220 2,832 Bank owned life insurance 61,392
60,986 53,156 52,817 52,465 Other assets and accrued interest
receivable
45,125
46,277 40,276
37,187 34,638 Total
assets
$ 4,827,277 $
4,646,922 $ 4,246,765
$ 4,230,289 $
4,035,977 Liabilities and
Stockholders' Equity: Deposits: Noninterest-bearing $ 947,602 $
867,095 $ 800,946 $ 634,863 $ 637,875 Interest-bearing
2,188,291 1,988,952 1,935,700
1,852,614 1,729,955 Total deposits
3,135,893 2,856,047 2,736,646 2,487,477 2,367,830
Securities sold under agreements to
repurchase and other short-term borrowings
152,458 126,124 319,893 395,433 309,624 Federal Home Loan Bank
advances 862,500 987,500 517,500 699,500 711,500 Subordinated note
41,240 45,364 41,240 41,240 41,240 Other liabilities and accrued
interest payable 34,626 36,864
39,929 30,092 31,071 Total
liabilities 4,226,717 4,051,899 3,655,208 3,653,742 3,461,265
Stockholders' equity
600,560
595,023 591,557
576,547
574,712 Total liabilities and Stockholders'
equity
$ 4,827,277 $
4,646,922 $ 4,246,765
$ 4,230,289 $
4,035,977 Average Balance
Sheet Data Quarterly Comparison Sept. 30, 2016
Jun. 30, 2016 Mar. 31, 2016 Dec. 31, 2015
Sept. 30, 2015 Assets: Investment securities,
including FHLB stock $ 554,508 $ 579,027 $ 581,869 $ 595,739 $
533,956 Federal funds sold and other interest-earning deposits
58,910 95,204 298,250 71,480 30,633 Loans and fees, including loans
held for sale 3,702,093 3,479,397 3,292,689 3,249,595 3,235,057
Total interest-earning assets 4,315,511 4,153,628 4,172,808
3,916,814 3,799,646 Total assets 4,531,958 4,351,843 4,436,843
4,088,016 3,971,501
Liabilities and Stockholders'
Equity: Noninterest-bearing deposits $ 900,432 $ 805,718 $
916,691 $ 675,500 $ 609,641 Interest-bearing deposits 2,155,289
1,980,310 1,903,721 1,774,526 1,740,553
Securities sold under agreements to
repurchase and other short-term borrowings
215,343 267,574 407,698 426,833 363,905 Federal Home Loan Bank
advances 584,946 627,335 552,082 567,163 616,509 Subordinated note
44,288 43,234 41,240 41,240 41,240 Total interest-bearing
liabilities 2,999,866 2,918,453 2,904,741 2,809,762 2,762,207
Stockholders' equity 601,043 596,795 587,593 578,573 577,185
Republic Bancorp, Inc. Financial
InformationThird quarter 2016 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 Sept. 30, 2016 Jun. 30, 2016
Mar. 31, 2016 Dec. 31, 2015
Sept. 30, 2015 Total interest income(2) $ 43,934 $
40,140 $ 44,015 $ 36,842 $ 36,107 Total interest expense
4,536 4,563
4,581 4,376
4,683 Net interest income 39,398 35,577 39,434
32,466 31,424 Provision for loan and lease losses 2,489
1,814 5,186 2,074 2,233 Noninterest income: Service charges
on deposit accounts 3,416 3,282 3,140 3,330 3,399 Net refund
transfer fees 132 1,909 17,078 49 97 Mortgage banking income 3,081
1,560 1,261 862 972 Interchange fee income 2,415 2,217 2,123 2,148
1,967 Republic Processing Group program fees 979 664 319 329 474
Net gains (losses) on OREO (137 ) 80 248 (19 ) (8 ) Increase in
cash surrender value of BOLI 406 369 339 353 348 Other
1,009 721
413 665
557 Total noninterest income
11,301 10,802
24,921 7,717
7,806 Noninterest expenses: Salaries and
employee benefits 18,068 17,814 17,083 13,194 15,297 Occupancy and
equipment, net 5,631 5,109 5,419 5,129 5,217 Communication and
transportation 1,029 872 1,073 984 951 Marketing and development
1,076 1,190 507 843 756 FDIC insurance expense 345 480 658 462 474
Bank franchise tax expense 846 647 2,451 640 846 Data processing
1,659 1,543 1,333 1,323 959 Interchange related expense 1,118 1,047
904 1,026 909 Supplies 280 240 449 292 229 OREO expense 159 116 80
250 146 Legal and professional fees 539 604 823 510 653 FHLB
advance prepayment penalty 846 - - - - Other
1,938 2,204
1,761 2,194
1,801 Total noninterest expenses
33,534 31,866
32,541 26,847
28,238 Income before income tax expense
14,676 12,699 26,628 11,262 8,759 Income tax expense
4,848 4,359
8,893 3,844
3,119 Net income
$
9,828 $ 8,340
$ 17,735 $
7,418 $ 5,640
Republic Bancorp, Inc. Financial
InformationThird quarter 2016 Earnings Release
(continued)(all amounts other than per share amounts, number of
employees and number of banking centers are expressed in thousands
unless otherwise noted)
Selected Data and Statistics
As of and for the Three Months Ended Sept. 30, 2016
Jun. 30, 2016 Mar. 31,
2016 Dec. 31, 2015 Sept.
30, 2015 Per Share Data: Basic average shares
outstanding 20,925 20,947 20,904 20,876 20,848 Diluted average
shares outstanding 20,938 20,958 21,009 20,953 20,934 End of
period shares outstanding: Class A Common Stock 18,617 18,617
18,659 18,652 18,603 Class B Common Stock 2,245 2,245 2,245 2,245
2,245 Book value per share(3) $ 28.79 $ 28.52 $ 28.30 $
27.59 $ 27.57 Tangible book value per share(3) 27.70 27.44 27.58
26.87 26.84 Earnings per share: Basic earnings per Class A
Common Stock $ 0.47 $ 0.40 $ 0.86 $ 0.36 $ 0.27 Basic earnings per
Class B Common Stock 0.43 0.37 0.78 0.33 0.25 Diluted earnings per
Class A Common Stock 0.47 0.40 0.85 0.36 0.27 Diluted earnings per
Class B Common Stock 0.43 0.37 0.77 0.33 0.25 Cash dividends
declared per share: Class A Common Stock $ 0.209 $ 0.209 $ 0.198 $
0.198 $ 0.198 Class B Common Stock 0.190 0.190 0.180 0.180 0.180
Performance Ratios: Return on average assets
0.87 % 0.77 % 1.60 % 0.73 % 0.57 % Return on average equity 6.54
5.59 12.07 5.13 3.91 Efficiency ratio(4) 66 69 51 67 72 Yield on
average interest-earning assets 4.07 3.87 4.22 3.76 3.80 Cost of
interest-bearing liabilities 0.60 0.63 0.63 0.62 0.68 Cost of
deposits(5) 0.21 0.19 0.20 0.19 0.18 Net interest spread 3.47 3.24
3.59 3.14 3.12 Net interest margin - Total Company 3.65 3.43 3.78
3.32 3.31 Net interest margin - Core Bank(1) 3.38 3.28 3.12 3.17
3.29
Other Information: End of period FTEs(6)
- Total Company 899 883 817 785 769 End of period FTEs(6) - Core
Bank 830 818 756 726 712 Number of banking centers 44 44 40 40 40
Republic Bancorp, Inc. Financial
InformationThird quarter 2016 Earnings Release
(continued)(all amounts other than per share amounts, number of
employees and number of banking centers are expressed in thousands
unless otherwise noted)
Credit Quality Data and Statistics
As of and for the Three Months Ended Sept. 30,
2016 Jun. 30, 2016 Mar. 31, 2016
Dec. 31, 2015 Sept. 30, 2015 Credit
Quality Asset Balances: Loans on nonaccrual status $
17,769 $ 18,778 $ 19,907 $ 21,712 $ 23,143 Loans past due
90-days-or-more and still on accrual 34 1,178
- 224 43 Total
nonperforming loans 17,803 19,956 19,907 21,936 23,186 OREO
2,435 1,503 1,280 1,220
2,832 Total nonperforming assets $ 20,238
$ 21,459 $ 21,187 $ 23,156 $ 26,018
Total delinquent loans $ 8,714 $ 10,607 $ 8,657 $ 11,731 $
11,996
Credit Quality Ratios - Total Company:
Nonperforming loans to total loans 0.47 % 0.54 % 0.59 % 0.66
% 0.70 % Nonperforming assets to total loans (including OREO) 0.53
0.58 0.63 0.70 0.79 Nonperforming assets to total assets 0.42 0.46
0.50 0.55 0.64 Allowance for loan and lease losses to total loans
0.80 0.79 0.94 0.83 0.82 Allowance for loan and lease losses to
nonperforming loans 171 147 158 125 116 Delinquent loans to total
loans(7) 0.23 0.29 0.26 0.35 0.36 Net charge-offs to average loans
(annualized) 0.15 0.46 0.15 0.19 0.06
Credit Quality
Ratios - Core Bank(1): Nonperforming loans to total
loans 0.47 % 0.54 % 0.60 % 0.66 % 0.70 % Nonperforming assets to
total loans (including OREO) 0.53 0.58 0.63 0.70 0.79 Nonperforming
assets to total assets 0.42 0.47 0.51 0.55 0.65 Allowance for loan
and lease losses to total loans 0.71 0.73 0.78 0.78 0.78 Allowance
for loan and lease losses to nonperforming loans 152 135 131 117
111 Delinquent loans to total loans(7) 0.21 0.28 0.25 0.35 0.36 Net
charge-offs to average loans (annualized) 0.03 0.05 0.04 0.10 0.05
Republic Bancorp, Inc. Financial InformationThird
quarter 2016 Earnings Release (continued)
Segment Data:
Reportable segments are determined by the type of products and
services offered and the level of information provided to the chief
operating decision maker, who uses such information to review
performance of various components of the business (such as banking
centers and business units), which are then aggregated if operating
performance, products/services, and customers are similar.
As of September 30, 2016, the Company was divided into four
distinct operating segments: Traditional Banking, Warehouse Lending
(“Warehouse”), Mortgage Banking and Republic Processing Group
(“RPG”). Management considers the first three segments to
collectively constitute “Core Bank” or “Core Banking” activities.
Correspondent Lending operations are considered part of the
Traditional Banking segment. The RPG segment includes the following
divisions: Tax Refund Solutions (“TRS”), Republic Payment Solutions
(“RPS”) and Republic Credit Solutions (“RCS”). TRS generates the
majority of RPG’s income, with the relatively smaller divisions of
RPG, RPS and RCS, considered immaterial for separate and
independent segment reporting. All divisions of the RPG segment
operate through the Bank.
The nature of segment operations and the primary drivers of net
revenues by reportable segment are provided below:
Segment:
Nature of
Operations:
Primary Drivers
of Net Revenues:
Core Banking: Traditional Banking
Provides traditional banking products
to
clients primarily in its market footprint
via
its network of banking centers and
primarily to clients outside of its
market
footprint via its Internet and
Correspondent
Lending delivery channels.
Loans, investments and deposits Warehouse Lending
Provides short-term, revolving credit
facilities to mortgage bankers across
the
Nation.
Mortgage warehouse lines of credit Mortgage Banking
Primarily originates, sells and
services
long-term, single family, first lien
residential real estate loans primarily
to
clients in its market footprint.
Loan sales and
servicing Republic Processing Group
The TRS division facilitates the receipt
and
payment of federal and state tax
refund
products. The RPS division offers
general
purpose reloadable cards. The RCS
division offers short-term credit
products.
RPG products are primarily provided to
clients outside of the Bank’s market
footprint.
Refund transfers and 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 2015 Annual Report on Form
10-K. Segment performance is evaluated using operating income.
Goodwill is not allocated. Income taxes are generally allocated
based on income before income tax expense unless specific segment
allocations can be reasonably made. Transactions among reportable
segments are made at carrying value.
Republic Bancorp, Inc. Financial
InformationThird quarter 2016 Earnings Release
(continued)
Segment information for the three and nine
months ended September 30, 2016 and 2015 follows:
Three Months Ended
September 30,
2016 Core Banking (dollars
in thousands)
Traditional
Banking
Warehouse
Lending
Mortgage
Banking
Total Core
Banking
Republic
Processing Group
Total Company
Net interest income $ 31,134 $ 4,924 $ 76
$
36,134 $ 3,264
$ 39,398 Provision for
loan and lease losses 289 188 -
477 2,012
2,489
Net refund transfer fees - - -
- 132
132
Mortgage banking income - - 3,081
3,081 -
3,081
Republic Processing Group program fees - - -
- 979
979 Other noninterest income
6,899
4 57
6,960 149
7,109 Total noninterest
income 6,899 4 3,138
10,041 1,260
11,301 Total
noninterest expenses
28,939
727 1,184
30,850 2,684
33,534 Income (loss)
before income tax expense 8,805 4,013 2,030
14,848 (172 )
14,676 Income tax expense (benefit)
2,707 1,493
710 4,910
(62 )
4,848 Net income (loss)
$
6,098 $ 2,520
$ 1,320 $
9,938 $ (110
) $ 9,828
Segment end-of-period assets $ 4,109,464 $ 660,410 $
15,003
$ 4,784,877 $ 42,400
$ 4,827,277
Net interest margin 3.35 % 3.63 % NM
3.38 % NM
3.65 % Three Months Ended
September 30, 2015 Core Banking (dollars in
thousands)
Traditional
Banking
Warehouse
Lending
Mortgage
Banking
Total Core
Banking
Republic
Processing Group
Total Company Net interest income $
27,612 $ 3,308 $ 67
$ 30,987 $ 437
$
31,424 Provision for loan and lease losses 1,338 (238
) -
1,100 1,133
2,233 Net refund transfer fees
- - -
- 97
97 Mortgage banking income - - 972
972 -
972 Republic Processing Group program fees - -
-
- 474
474 Other noninterest income
6,115 8
76 6,199
64 6,263
Total noninterest income 6,115 8 1,048
7,171 635
7,806 Total noninterest expenses
24,109 663
1,151 25,923
2,315 28,238
Income (loss) before income tax expense 8,280 2,891
(36 )
11,135 (2,376 )
8,759 Income tax expense
(benefit)
2,879
1,174 (13 )
4,040 (921
) 3,119 Net income
(loss)
$ 5,401 $
1,717 $ (23
) $ 7,095
$ (1,455 )
$ 5,640
Segment end-of-period assets $ 3,600,230 $ 393,110 $ 13,832
$ 4,007,172 $ 28,805
$ 4,035,977
Net interest margin 3.25 % 3.62 % NM
3.29 % NM
3.31 %
Republic Bancorp, Inc. Financial
InformationThird quarter 2016 Earnings Release
(continued)
Nine Months Ended
September 30,
2016 Core Banking (dollars
in thousands)
Traditional
Banking
Warehouse
Lending
Mortgage
Banking
Total Core
Banking
Republic
Processing Group
Total Company
Net interest income $ 89,279 $ 11,369 $ 148
$
100,796 $ 13,613
$ 114,409 Provision
for loan and lease losses 1,567 686 -
2,253 7,236
9,489 Net refund transfer fees - - -
- 19,119
19,119 Mortgage banking income - - 5,902
5,902 -
5,902 Republic Processing Group program fees - - -
-
1,942
1,942 Other noninterest income
19,380 14
212 19,606
455 20,061 Total
noninterest income 19,380 14 6,114
25,508 21,516
47,024 Total noninterest expenses
81,551 2,157
3,576 87,284
10,657 97,941
Income before income tax expense 25,541 8,540 2,686
36,767
17,236
54,003 Income tax expense
7,733
3,174 940
11,847 6,253
18,100 Net income
$
17,808 $ 5,366
$ 1,746 $
24,920 $
10,983 $
35,903 Segment end-of-period
assets $ 4,109,464 $ 660,410 $ 15,003
$ 4,784,877 $
42,400
$ 4,827,277 Net interest margin 3.22 %
3.64 % NM
3.26 % NM
3.62 %
Nine Months Ended
September 30, 2015 Core
Banking (dollars in thousands)
Traditional
Banking
Warehouse
Lending
Mortgage
Banking
Total Core
Banking
Republic
Processing Group
Total Company Net interest income $
80,369 $ 9,354 $ 180
$ 89,903 $ 1,601
$
91,504 Provision for loan and lease losses 2,007 185
-
2,192 1,130
3,322 Net refund transfer fees -
- -
- 17,339
17,339 Mortgage banking income - - 3,549
3,549 -
3,549 Republic Processing Group program fees
- - -
- 871
871 Gain on call of security available
for sale 88 - -
88 -
88 Other noninterest income
17,286 19
231 17,536
894 18,430
Total noninterest income 17,374 19 3,780
21,173 19,104
40,277 Total noninterest expenses
71,351 1,846
3,710 76,907
9,570 86,477
Income before income tax expense 24,385 7,342 250
31,977
10,005
41,982 Income tax expense
7,813
2,732 87
10,632 3,602
14,234 Net income
$
16,572 $ 4,610
$ 163 $
21,345 $ 6,403
$ 27,748
Segment end-of-period assets $ 3,600,230 $ 393,110 $ 13,832
$ 4,007,172 $ 28,805
$ 4,035,977
Net interest margin 3.23 % 3.58 % NM
3.26 % NM
3.26 %
Republic Bancorp, Inc. Financial InformationThird
quarter 2016 Earnings Release (continued)
(1) “Core Bank” or “Core Banking” operations consist of the
Traditional Banking, Warehouse Lending and Mortgage Banking
segments.
(2) The amount of loan fee income included in total interest
income was $4.8 million and $2.5 million for the quarters ended
September 30, 2016 and 2015. The amount of loan fee income included
in total interest income was $18.3 million and $7.2 million for the
nine months ended September 30, 2016 and 2015.
The amount of loan fee income included in total interest income
per quarter was as follows: $4.8 million (quarter ended September
30, 2016); $3.7 million (quarter ended June 30, 2016); $9.8 million
(quarter ended March 31, 2016); $3.1 million (quarter ended
December 31, 2015); and $2.5 million (quarter ended September 30,
2015).
(3) The following table provides a reconciliation of total
stockholders’ equity in accordance with U.S. Generally Accepted
Accounting Principles (“GAAP”) to tangible stockholders’ equity in
accordance with applicable regulatory requirements, a non-GAAP
disclosure. The Company provides the tangible book value per share,
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) Sept. 30, 2016
Jun. 30, 2016 Mar. 31, 2016
Dec. 31, 2015 Sept. 30,
2015 Total stockholders' equity (a) $ 600,560 $ 595,023 $
591,557 $ 576,547 $ 574,712 Less: Goodwill 16,300 16,313 10,168
10,168 10,168 Less: Mortgage servicing rights 5,338 4,998 4,891
4,912 4,968 Less: Core deposit intangible 1,121
1,171 - - -
Tangible stockholders' equity (c) $ 577,801 $ 572,541
$ 576,498 $ 561,467 $ 559,576 Total
assets (b) $ 4,827,277 $ 4,646,922 $ 4,246,765 $ 4,230,289 $
4,035,977 Less: Goodwill 16,300 16,313 10,168 10,168 10,168 Less:
Mortgage servicing rights 5,338 4,998 4,891 4,912 4,968 Less: Core
deposit intangible 1,121 1,171 -
- - Tangible assets (d) $
4,804,518 $ 4,624,440 $ 4,231,706 $ 4,215,209
$ 4,020,841 Total stockholders' equity to
total assets (a/b) 12.44 % 12.80 % 13.93 % 13.63 % 14.24 % Tangible
stockholders' equity to tangible assets (c/d) 12.03 % 12.38 % 13.62
% 13.32 % 13.92 % Number of shares outstanding (e)
20,862 20,862 20,904
20,897 20,848 Book value per share
(a/e) $ 28.79 $ 28.52 $ 28.30 $ 27.59 $ 27.57 Tangible book value
per share (c/e) 27.70 27.44 27.58 26.87 26.84
(4) The efficiency ratio, a non-GAAP measure, 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, if applicable.
(5) The cost of deposits ratio equals annualized total interest
expense on deposits divided by total average interest-bearing
deposits plus total average noninterest-bearing deposits.
(6) FTEs – Full time equivalent employees.
(7) The delinquent loans to total loans ratio equals loans
30-days-or-more past due divided by total loans. Depending on loan
class, loan delinquency is determined by the number of days or the
number of payments past due.
NM – Not meaningful
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161021005021/en/
Republic Bancorp, Inc.Kevin Sipes, 502-560-8628Executive Vice
President & Chief Financial Officer
Republic Bancorp (NASDAQ:RBCAA)
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