Republic Bancorp, Inc. (NASDAQ: RBCAA), headquartered
in Louisville, Kentucky, is the holding company of Republic Bank
& Trust Company (the “Bank”).
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20230721204384/en/
Republic Bancorp, Inc. (“Republic” or the “Company”) reported
second quarter 2023 net income and Diluted Earnings per Class A
Common Share (“Diluted EPS”) of $21.1 million and $1.07 per share
compared to $24.3 million and $1.22 per share for the second
quarter of 2022. Adjusting for the infrequent items noted in the
table below that are not considered to be part of the Company’s
normal recurring operations, the most notable of which being a
substantial legal settlement that positively impacted net income
for the second quarter of 2022, Republic’s Total Company Operating
net income (a non-GAAP metric) was $19.8 million for the second
quarter of 2023, an increase of $5.0 million, or 34%, over its
Total Company Operating net income for the second quarter of
2022.
The following table reconciles Republic’s Total Company GAAP and
non-GAAP net incomes as described in the paragraph above.
Diluted Earnings Per Class A
Common Share
Three Months Ended
Three Months Ended
(dollars in thousands, except per share
data)
Jun. 30,
2023
Jun. 30, 2022
$
Change
%
Change
Jun. 30,
2023
Jun. 30,
2022
$
Change
%
Change
Total Company Net Income, As Reported
(GAAP)
$
21,052
$
24,347
$
(3,295
)
(14)
%
$
1.07
$
1.22
$
(0.15
)
(12)
%
Adjustments:
Add Back the Impact of CBank Merger
Expenses, Net of Taxes
99
—
99
—
—
—
—
—
Reduce for the Impact of the Bank Owned
Life Insurance ("BOLI") Benefit Payment Received, Net of Taxes
(1,347
)
—
(1,347
)
—
(0.07
)
—
(0.07
)
—
Reduce for the Impact of the Legal
Settlement Received, Net of Taxes
—
(9,523
)
9,523
—
—
(0.47
)
0.47
—
Total Company Operating Net Income -
non-GAAP
$
19,804
$
14,824
$
4,980
34
$
1.00
$
0.75
$
0.25
34
Republic’s Core Bank net income was $12.1 million for the second
quarter of 2023 compared to net income of $8.5 million for the
second quarter of 2022. Adjusting for the infrequent items noted in
the table below that are not considered to be part of the Core
Bank’s normal recurring operations, Republic’s Core Bank Operating
net income (a non-GAAP metric) was $10.9 million for the second
quarter of 2023, an increase of $2.4 million, or 28%, over its
Total Company Operating net income for the second quarter of
2022.
Core Bank
Three Months Ended Jun.
30,
$
%
(dollars in thousands)
2023
2022
Change
Change
Core Bank, Net Income, as reported
(GAAP)
$
12,143
$
8,503
$
3,640
43
%
Adjustments:
Add Back the Impact of CBank Merger
Expenses, Net of Taxes
99
-
99
-
Reduce for the Impact of the BOLI Benefit
Payment Received, Net of Taxes
(1,347
)
-
(1,347
)
-
Core Bank Adjusted Operating Net Income -
Non GAAP
$
10,895
$
8,503
$
2,392
28
Logan Pichel, President and CEO of the Bank commented, “Despite
the uncertainty and headwinds in the current economic environment,
we were able to produce solid operating results during the second
quarter and first six months of 2023. Adjusting our 2022 and 2023
second quarter net incomes for the infrequent items we previously
noted, our Operating net incomes for Total Company and the Core
Bank during the second quarter of 2023 were significantly better
than the comparable Operating net incomes for the same period in
the prior year.
A contributing factor to our year-over-year earnings growth is
the prudent loan growth within our Traditional Banking segment.
Loan growth within this segment has maintained a positive trend
since the fourth quarter of 2021. In addition to the $217 million
of loans obtained as part of the first quarter 2023 CBank
acquisition, legacy Traditional Bank loans increased $323 million
for the first six months of 2023 with $226 million of this growth
occurring in the second quarter. The breadth and diversification of
our legacy loan growth across our various loan types and our
geographic markets was also notable for the first six months of
this year, with residential and commercial real estate being the
primary growth categories.
In addition to the loan growth within our Traditional Bank, our
average loan yield in this segment has also risen steadily since
market interest rates generally began to rise in March of 2022.
Overall, the Traditional Bank’s weighted-average loan yield was
4.98% for the second quarter of 2023, a 106-basis point increase
over the 3.92% recorded during the second quarter of 2022.
We also continued to have disciplined expense control. Overall,
Core Bank noninterest expense for the second quarter of 2023
increased $3.3 million, or 8%, over the second quarter of 2022.
This increase, however, includes $2.0 million of noninterest
expense associated with the newly acquired CBank operations, which
was not part of the Company’s operations during the second quarter
of 2022. When comparing our legacy Core Bank noninterest expenses
for the quarter, which excludes those of the newly acquired CBank
operations, expenses are up a modest $1.3 million, or 3%, over the
second quarter of 2022. Noninterest expense control continues to be
a primary focus across the organization and one that we expect to
make on-going progress toward.
The biggest challenge that the banking industry has faced this
year has been the competition for customer deposits, and even more
specifically, low-cost deposits. Republic has not been immune from
this challenge, as we also experienced a decline in deposit
balances from mid-2022 into the second quarter of this year. This
decline stabilized during the second quarter of 2023 as our Core
Bank legacy deposits grew again in June. To achieve this, we did
meaningfully raise the rates we pay on our deposits. As a result,
our Core Bank’s net interest income and net interest margin, on
linked-quarter basis, trended lower from the first quarter of 2023
to the second quarter of 2023, as our Core Bank’s overall funding
costs rose more than the yields on our interest earning assets.
These increased funding costs for deposits will likely continue to
negatively impact our net interest margin and net interest income
into the future.
Despite the headwinds in our industry, we are excited about our
Company’s long-term outlook as we enter the second half of 2023.
The credit quality of our Core Bank loan portfolio remains
pristine, and each of our regulatory capital ratios place us well
above those required to be considered “well capitalized”. While
there remain hurdles ahead for financial institutions across the
country, these safety and soundness measures continue to place us
among the industry’s best and give us great optimism for whatever
challenges the future might bring,” concluded Pichel.
The following table highlights Republic’s key metrics for the
three and six months ended June 30, 2023 and 2022. Additional
financial details, including segment-level data, are provided in
the financial supplement to this release. The attached digital
version of this release includes the financial supplement as an
appendix. The financial supplement may also be found as Exhibit
99.2 of the Company’s Form 8-K filed with the SEC on July 21,
2023.
Total Company Financial
Performance Highlights
Three Months Ended Jun.
30,
Six Months Ended Jun.
30,
(dollars in thousands, except per share
data)
2023
2022
$ Change
% Change
2023
2022
$ Change
% Change
Income Before Income Tax Expense
$
26,508
$
31,022
$
(4,514
)
(15
)%
$
62,622
$
67,391
$
(4,769
)
(7
)%
Net Income
21,052
24,347
(3,295
)
(14
)
49,144
52,697
(3,553
)
(7
)
Diluted EPS
1.07
1.22
(0.15
)
(12
)
1.07
1.22
(0.15
)
(12
)
Return on Average Assets ("ROA")
1.37
%
1.56
%
NA
(12
)
1.59
%
1.66
%
NA
(4
)
Return on Average Equity ("ROE")
9.41
11.42
NA
(18
)
11.08
12.39
NA
(11
)
NA – Not applicable
Results of Operations for the Second Quarter of 2023 Compared
to the Second Quarter of 2022
Core Bank(1)
Net income for the Core Bank was $12.1 million for the second
quarter of 2023 compared to $8.5 million for the second quarter of
2022. An increase in Traditional Bank net interest income was the
primary driver to the Core Bank’s earnings growth for the quarter
and helped to offset declines in Mortgage Banking income and net
interest income within the Warehouse Lending (“Warehouse”)
segment.
Net Interest Income – Core Bank net interest income was $51.4
million for the second quarter of 2023, an $8.2 million, or 19%,
increase over the second quarter of 2022. In addition, the Core
Bank’s net interest margin (“NIM”) increased from 3.02% during the
second quarter of 2022 to 3.65% during the second quarter of 2023.
This increase was driven primarily by the following in each Core
Bank segment:
Traditional Bank
Net interest income and NIM within the Traditional Bank were
substantially higher from the second quarter of 2022 to the second
quarter of 2023 as the increase in yield for its interest-earning
assets substantially outpaced the increased cost of its
interest-bearing liabilities on a year-over-year basis. Overall,
the Traditional Bank’s net interest income increased $9.5 million,
or 24%, and its NIM expanded 71 basis points from the second
quarter of 2022 to 3.77% for the second quarter of 2023. Driving
this change in net interest income and NIM between the second
quarter of 2022 and the second quarter of 2023 were the
following:
- Traditional Bank average loans grew from $3.6 billion with a
weighted-average yield of 3.92% during the second quarter of 2022
to $4.3 billion with a weighted average yield of 4.98% during the
second quarter of 2023. As previously noted, loan growth remained
particularly strong within the Traditional Bank during the first
six months of 2023, while the acquisition of CBank added
approximately $217 million to the Traditional Bank’s average loans
during the second quarter of 2023.
- Average investments grew to $775 million with a
weighted-average yield of 2.73% during the second quarter of 2023
from $691 million with a weighted-average yield of 1.60% for the
second quarter of 2022. As part of its overall interest rate risk
management strategy, the Traditional Bank generally maintains an
investment portfolio with a shorter overall duration as compared to
its peers. This strategy is generally favorable to net interest
income in a rising interest rate environment.
- The Traditional Bank’s average noninterest-bearing deposits
decreased from $1.6 billion during the second quarter of 2022 to
$1.4 billion for the second quarter of 2023. This decrease in
average noninterest-bearing deposits was funded through a decrease
in interest-earning cash balances and an increase in FHLB
borrowings.
- The Traditional Bank’s weighted-average cost of
interest-bearing liabilities increased from 0.09% during the second
quarter of 2022 to 1.43% for the second quarter of 2023. Further
segmenting the Traditional Bank’s interest-bearing liabilities:
- The weighted-average cost of total interest-bearing deposits
increased from 0.14% during the second quarter of 2022 to 1.59% for
the second quarter of 2023. In addition, average interest-bearing
deposits grew $53 million from the second quarter of 2022 to the
second quarter of 2023.
- The average balance of FHLB borrowings increased from $20
million for the second quarter of 2022 to $256 million for the
second quarter of 2023. In addition, the weighted-average cost of
these borrowings increased from 1.88% to 4.90% for the same time
periods. As noted above, this increase in the average balance of
borrowings was generally driven by a period-to-period decline in
average deposit balances.
- Average interest-earning cash was $111 million with a
weighted-average yield of 5.63% during the second quarter of 2023
compared to $810 million with a weighted-average yield of 0.81% for
the second quarter of 2022. The decline in average cash balances
was driven generally by an increase in average loans for the same
periods.
Warehouse Lending
Net interest income within the Warehouse segment decreased $1.2
million, or 32%, from the second quarter of 2022 to the second
quarter of 2023, driven by decreases in average outstanding
balances and net interest margin. Overall, average outstanding
Warehouse balances declined from $579 million during the second
quarter of 2022 to $462 million for the second quarter of 2023.
Committed Warehouse lines of credit declined from $1.4 billion to
$1.0 billion from June 30, 2022 to June 30, 2023 and average usage
rates for Warehouse lines were 47% and 41%, respectively, during
the second quarters of 2023 and 2022.
In addition, the Warehouse net interest margin decreased 41
basis points from 2.69% during the second quarter of 2022 to 2.28%
during the second quarter of 2023. The decline in the Warehouse net
interest margin generally occurred as the rise in its internal
funding costs outpaced the increase in its loan yield since rates
began rising in March of 2022.
The following tables present by reportable segment the overall
changes in the Core Bank’s net interest income, net interest
margin, as well as average and period-end loan balances:
Net Interest Income
Net Interest Margin
(dollars in thousands)
Three Months Ended Jun.
30,
Three Months Ended Jun.
30,
Reportable Segment
2023
2022
Change
2023
2022
Change
Traditional Banking
$
48,682
$
39,158
$
9,524
3.77
%
3.06
%
0.71
%
Warehouse Lending
2,642
3,886
(1,244
)
2.28
2.69
(0.41
)
Mortgage Banking*
61
153
(92
)
NM
NM
NM
Total Core Bank
$
51,385
$
43,197
$
8,188
3.65
3.02
0.63
Average Loan Balances
Period-End Loan
Balances
(dollars in thousands)
Three Months Ended Jun.
30,
Jun. 30,
Jun. 30,
Reportable Segment
2023
2022
$ Change
% Change
2023
2022
$ Change
% Change
Traditional Banking
$
4,277,004
$
3,619,761
$
657,243
18
%
$
4,394,668
$
3,665,099
$
729,569
20
%
Warehouse Lending
462,755
578,676
(115,921
)
(20
)
539,560
596,678
(57,118
)
(10
)
Mortgage Banking*
2,369
10,189
(7,820
)
(77
)
4,038
8,491
(4,453
)
(52
)
Total Core Bank
$
4,742,128
$
4,208,626
$
533,502
13
$
4,938,266
$
4,270,268
$
667,998
16
*Includes loans held for sale
NM – Not meaningful
Provision for Expected Credit Loss Expense – The Core Bank’s
Provision(2) was a net charge of $2.1 million during the second
quarter of 2023 compared to a net credit of $88,000 for the second
quarter of 2022.
The net charge during the second quarter of 2023 was primarily
driven by general formula reserves applied to $229 million of
Traditional Bank loan growth from March 31, 2023 to June 30, 2023,
as well as $82 million of spot balance warehouse loan growth during
the same period. The net credit during the second quarter of 2022
was primarily driven by a $1.4 million credit to the provision for
the payoff or upgrade of large commercial loans that were
downgraded during the height of the pandemic and was partially
offset by provision expense driven by formula reserve applied to
$106 million of growth Traditional Bank loans. Overall, the Core
Bank’s credit quality metrics remained strong as of June 30,
2023.
As a percentage of total loans, the Core Bank’s Allowance(2)
decreased to 1.15% as of June 30, 2023. The table below provides a
view of the Company’s percentage of Allowance-to-total-loans by
reportable segment.
As of Jun. 30, 2023
As of Jun. 30, 2022
Quarterly Change
(dollars in thousands)
Allowance
Allowance
Allowance
Reportable Segment
Gross Loans
Allowance
to Loans
Gross Loans
Allowance
to Loans
to Loans
% Change
Traditional Bank
$
4,394,668
$
55,567
1.26
%
$
3,673,590
$
49,727
1.35
%
(0.09
)%
(7
)%
Warehouse Lending
539,560
1,346
0.25
596,678
1,491
0.25
—
—
Total Core Bank
4,934,228
56,913
1.15
4,270,268
51,218
1.20
(0.05
)
(4
)
Tax Refund Solutions
193
—
—
149
—
—
—
—
Republic Credit Solutions
118,721
15,289
12.88
91,816
13,231
14.41
(1.53
)
(11
)
Total Republic Processing Group
118,914
15,289
12.86
91,965
13,231
14.39
(1.53
)
(11
)
Total Company
$
5,053,142
$
72,202
1.43
%
$
4,362,233
$
64,449
1.48
%
(0.05
)%
(3
)%
ACLL Roll-Forward
Three Months Ended June
30,
2023
2022
(dollars in thousands)
Beginning
CBank
Charge-
Ending
Beginning
Charge-
Ending
Reportable Segment
Balance
Adjustment*
Provision
offs
Recoveries
Balance
Balance
Provision
offs
Recoveries
Balance
Traditional Bank
$
55,216
$
(1,384
)
$
1,860
$
(239
)
$
114
$
55,567
$
49,616
$
106
$
(245
)
$
250
$
49,727
Warehouse Lending
1,144
—
202
—
—
1,346
1,725
(234
)
—
—
1,491
Total Core Bank
56,360
(1,384
)
2,062
(239
)
114
56,913
51,341
(128
)
(245
)
250
51,218
Tax Refund Solutions
25,981
—
(219
)
(25,950
)
188
—
8,370
360
(11,658
)
2,928
—
Republic Credit Solutions
13,780
—
4,296
(3,018
)
231
15,289
11,945
3,433
(2,411
)
264
13,231
Total Republic Processing Group
39,761
—
4,077
(28,968
)
419
15,289
20,315
3,793
(14,069
)
3,192
13,231
Total Company
$
96,121
$
(1,384
)
$
6,139
$
(29,207
)
$
533
$
72,202
$
71,656
$
3,665
$
(14,314
)
$
3,442
$
64,449
* The net fair value adjustment to ACLL
includes an estimate of lifetime credit losses for Purchased Credit
Deteriorated loans.
The table below presents the Core Bank’s credit quality
metrics:
Quarters Ended:
Years Ended:
Jun. 30,
Jun. 30,
Dec. 31,
Dec. 31,
Dec. 31,
Core Banking Credit Quality
Ratios
2023
2022
2022
2021
2020
Nonperforming loans to total loans
0.34
%
0.38
%
0.37
%
0.47
%
0.50
%
Nonperforming assets to total loans
(including OREO)
0.37
0.42
0.40
0.51
0.56
Delinquent loans* to total loans
0.12
0.13
0.14
0.17
0.21
Net charge-offs to average loans
0.01
—
0.00
0.01
0.03
(Quarterly rates annualized)
OREO = Other Real Estate Owned
*Loans 30-days-or-more past due at the
time the second contractual payment is past due.
Noninterest Income – Core Bank noninterest income was $11.3
million during the second quarter of 2023, an increase of $1.7
million, or 18%, from the second quarter of 2022. The increase in
noninterest income was primarily driven by $1.7 million of
non-recurring revenue related to the BOLI.
Noninterest Expense – As previously noted, the Core Bank’s
noninterest expense was $45.5 million for the second quarter of
2023 compared to $42.2 million for the second quarter of 2022, an
increase of $3.3 million, or 8% for the quarter. Noninterest
expenses for the second quarter of 2023 included $2.0 million of
expense associated with the former CBank operations, which was
acquired in March 2023. Noninterest expense for the Core Bank’s
legacy operations, increased a modest $1.3 million, or 3%, from the
second quarter of 2022 to the second quarter of 2023.
Republic Processing Group(3)
The Republic Processing Group (“RPG”) reported net income of
$8.9 million for the second quarter of 2023 compared to $15.8
million for the same period in 2022 and adjusted net income of $6.2
million for the second quarter of 2022. RPG adjusted net income for
the second quarter of 2022 excludes the previously disclosed $13.0
million pre-tax legal settlement received by Republic Bank &
Trust Company (“RB&T”), net of $699,000 in related pre-tax
expenses. The prepaid card business within the TRS segment was the
primary driver for the quarter-over-quarter growth in adjusted net
income at RPG.
Net interest income within the TRS segment was up $2.4 million
from the second quarter of 2022 to the second quarter of 2023. The
prepaid card product component of TRS drove a $3.3 million increase
to net interest income for the segment, with an increase in the
product’s applied yield to its noninterest-bearing funds driving
the growth. Overall, a yield of 4.52% was applied to average
prepaid card-related balances of $362 million during the second
quarter of 2023 compared to yield of 0.83% applied to average
prepaid card-related balances of $377 million during the second
quarter of 2022.
Republic Bancorp, Inc. (the “Company”) is the parent company of
Republic Bank & Trust Company (the “Bank”). The Bank currently
has 46 banking centers in communities in four metropolitan
statistical areas (“MSAs”) across five states: 22 banking centers
located in the Louisville MSA in Louisville, Prospect, Shelbyville,
and Shepherdsville in Kentucky, and Floyds Knobs, Jeffersonville,
and New Albany in Indiana; six centers in the Lexington MSA in
Georgetown and Lexington in Kentucky; eight banking centers in the
Cincinnati MSA in Kenwood, Norwood and West Chester in Ohio, and
Bellevue, Covington, Crestview Hills, and Florence in Kentucky;
seven centers in the Tampa MSA in Largo, New Port Richey, St.
Petersburg, Seminole, Tampa, and Temple Terrace in Florida; and
three banking centers in the Nashville MSA in Cool Springs, Green
Hills, and Spring Hill, Tennessee. In addition, the Bank has one
loan production office in St. Louis, Missouri. The Bank offers
internet banking at www.republicbank.com. As of June 30, 2023, the
Company had approximately $6.4 billion in assets and is
headquartered in Louisville, Kentucky. The Company’s Class A Common
Stock is listed under the symbol “RBCAA” on the NASDAQ Global
Select Market.
Republic Bank. It’s just easier here. ®
Forward-Looking Statements
This press release contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. The forward-looking statements in the preceding paragraphs
are based on our current expectations and assumptions regarding our
business, the future impact to our balance sheet and income
statement resulting from changes in interest rates, the yield
curve, the ability to develop products and strategies in order to
meet the Company’s long-term strategic goals, the economy, and
other future conditions. Because forward-looking statements relate
to the future, they are subject to inherent uncertainties, risks
and changes in circumstances that are difficult to predict. Our
actual results may differ materially from those contemplated by
forward-looking statements. We caution you therefore against
relying on any of these forward-looking statements. They are
neither statements of historical fact nor guarantees or assurances
of future performance. Actual results could differ materially based
upon factors disclosed from time to time in the Company’s filings
with the U.S. Securities and Exchange Commission, including those
factors set forth as “Risk Factors” in the Company’s Annual Report
on Form 10-K for the period ended December 31, 2022. The Company
undertakes no obligation to update any forward-looking statements,
except as required by applicable law.
Footnotes:
(1)
“Core Bank” or “Core Banking” operations
consist of the Traditional Banking, Warehouse Lending, and Mortgage
Banking segments.
(2)
Provision – Provision for Expected Credit
Loss Expense
Allowance – Allowance for Credit Losses on
Loans
(3)
Republic Processing Group operations
consist of the TRS and Republic Credit Solutions (“RCS”)
segments.
NM – Not meaningful
NA – Not applicable
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230721204384/en/
Republic Bancorp, Inc. Kevin Sipes Executive Vice President
& Chief Financial Officer (502) 560-8628
Republic Bancorp (NASDAQ:RBCAA)
Gráfico Histórico do Ativo
De Abr 2024 até Mai 2024
Republic Bancorp (NASDAQ:RBCAA)
Gráfico Histórico do Ativo
De Mai 2023 até Mai 2024