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”) reported
first quarter 2024 net income and Diluted Earnings per Class A
Common Share (“Diluted EPS”) of $30.6 million and $1.58 per share,
representing increases of 9% and 11% over the first quarter of
2023.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20240425707368/en/
Logan Pichel, President and CEO of the Bank commented,
“Diversification of revenue streams once again played a meaningful
role in our success as we reported a solid first quarter to start
2024. Altogether, three of our five reportable business segments
generated increases in net income for the first quarter of 2024
compared to the first quarter of 2023. We are certainly proud of
our diversified business model as this strategy has continued to
produce solid results for us over our many years, and we think it
is one of the primary differentiators between us and other banks
our size.
As has been widely publicized in the media, we are now in the
midst of the longest inverted yield curve in U.S. history, which
continues to create notable net interest margin and funding
challenges for banks across the country. With a relative high cost
of incremental interest-bearing deposits and overnight borrowings
to fund new loan growth for all banks, we continued to exercise
strong pricing discipline for new loan opportunities during the
first quarter. While this pricing discipline contributed to rising
yields for the Traditional Bank’s overall loan portfolio, it did
reduce our new loan volume during the quarter, and as a result, the
overall growth in our Traditional Bank’s loan portfolio since
year-end. While this strategy may make growing the Traditional
Bank’s total dollars of net interest income more difficult in the
near term, we always try to make decisions with the long-term
future of the Company in mind and do not believe making new loans
with ultra-thin margins for short-term gain is a sound long-term
strategy for our shareholders.
In addition to the pricing discipline of our new loans, we also
continued to display good expense discipline. On a pure
GAAP-accounting basis, Core Bank noninterest expenses were down
$2.1 million, or 5%, from the first quarter of 2023 to the first
quarter of 2024. The first quarter of 2023, however, did include
$2.1 million of merger-related expenses associated with our CBank
acquisition in March 2023. Excluding the impact of these
merger-related expenses, our Core Bank noninterest expenses were
flat at $42.3 million for both quarters. We are proud of these
results as moderating our noninterest expenses has been a focus for
our Company over the past year, and we continue to make solid
progress in becoming a more efficient overall organization.
As it relates to our nontraditional division, the Republic
Processing Group (“RPG”), the first quarter of each year is the
most impactful quarter for the Tax Refund Solutions (“TRS”) segment
of RPG. While we made several revenue enhancements at TRS for the
current tax season to mitigate the negative impact of higher
funding costs, the level of payments received from the U.S.
Treasury through March 31, 2024 to fund federal tax refunds
declined from the payment levels received through March 31, 2023.
This decrease in the level of payments was a primary driver for the
higher Provision for loan losses at TRS for the first quarter of
2024 compared to the first quarter of 2023, more than offsetting
the expected benefit of the revenue enhancements. We are optimistic
that this decline in payments from the U.S. Treasury represents a
temporary lag compared to last year, and believe we have a good
chance to end the year as good as, if not better than, 2023 related
to our Provision expense as a percentage of loans originated at
TRS.
We are certainly proud of our first quarter accomplishments and
the financial results we continue to produce on a
quarter-after-quarter basis. With industry-leading credit quality,
capital levels and client satisfaction ratings, along with a
well-diversified business model, we look forward to the remainder
of 2024 with optimism. As always, I want to thank our clients for
their business with us and our associates for their tremendous
efforts in serving our clients. Without them, we would not be able
to produce such solid results” concluded Pichel.
The following table highlights Republic’s key metrics for the
three months ended March 31, 2024 and 2023. 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 April 25, 2024.
Three Months Ended Mar.
31,
(dollars in thousands, except per share
data)
2024
2023
$ Change
% Change
Income Before Income Tax Expense
$
38,699
$
36,114
$
2,585
7
%
Net Income
30,606
28,092
2,514
9
Diluted EPS
1.58
1.42
0.16
11
Return on Average Assets ("ROA")
1.70
%
1.81
%
NA
(6
)
Return on Average Equity ("ROE")
13.12
12.78
NA
3
NA – Not applicable
Results of Operations for the First Quarter of 2024 Compared
to the First Quarter of 2023
Core Bank(1)
Net income for the Core Bank was $13.1 million for the first
quarter of 2024 compared to $10.3 million for the first quarter of
2023. As further outlined in the following discussion, a decrease
in provision expense and noninterest expense more than offset the
Core Bank’s decline in net interest income when comparing the first
quarter of 2024 to the first quarter of 2023.
Net Interest Income – Core Bank net interest income was $50.5
million for the first quarter of 2024, a $1.7 million, or 3%,
decrease from the $52.3 million recorded during first quarter of
2023. In addition, the Core Bank’s net interest margin (“NIM”)
decreased from 3.98% during the first quarter of 2023 to 3.30%
during the first quarter of 2024.
The primary driver of this decrease in net interest income and
net interest margin at the Core Bank was an on-going shift in
funding mix away from noninterest-bearing deposit balances into
higher-costing, interest-bearing deposits and Federal Home Loan
Bank borrowings. As a continuance in trend from 2023, the Core
Bank’s average noninterest-bearing deposits decreased from $1.5
billion during the first quarter of 2023 to $1.2 billion for the
first quarter of 2024. In addition to this change in funding mix,
the Core Bank’s cost of interest-bearing liabilities increased 227
basis points from the first quarter of 2023 to the first quarter of
2024, notably more than the 87-basis-point increase to its yield on
interest-earning assets for the same periods.
Further impacting the Core Bank’s change in net interest income
and NIM between the first quarter of 2023 and the first quarter of
2024 were the following:
- Average outstanding Warehouse balances increased from $330
million during the first quarter of 2023 to $340 million for the
first quarter of 2024. Committed Warehouse lines declined from $1.0
billion to $932 million from March 31, 2023 to March 31, 2024,
while a modest up-tick in demand caused average usage rates for
Warehouse lines to increase from 31% during the first quarter of
2023 to 37% for the first quarter of 2024.
- Traditional Bank average loans grew from $3.9 billion with a
weighted-average yield of 4.59% during the first quarter of 2023 to
$4.6 billion with a weighted average yield of 5.45% during the
first quarter of 2024. In general, the growth in average loan
balances was primarily attributable to loan growth achieved during
the last nine months of 2023, as the spot balances for Traditional
Bank loans decreased $45 million, or 1%, from December 31, 2023 to
March 31, 2024.
- Average investments were $733 million with a weighted-average
yield of 2.98% during the first quarter of 2024 compared to $773
million with a weighted-average yield of 2.61% for the first
quarter of 2023. During the first quarter of 2024, the Core Bank
continued to maintain an investment portfolio with a generally
short overall duration, as part of its interest rate risk
management strategy. As a result of this short duration, the Core
Bank has approximately $210 million of investment securities
scheduled to mature over the remaining nine months of 2024 with a
weighted-average yield of 3.11%.
- Further segmenting the Core Bank’s increased cost of
interest-bearing liabilities:
- The weighted-average cost of interest-bearing deposits
increased from 0.74% during the first quarter of 2023 to 2.68% for
the first quarter of 2024, while average interest-bearing deposits
grew $746 million for the same periods. In addition to offsetting
the decrease in its noninterest bearing deposits since 2023, the
Core Bank also strategically raised additional non-retail,
higher-costing interest-bearing deposits since the first quarter of
2023 to maintain strong liquidity.
- The average balance of FHLB borrowings increased from $245
million for the first quarter of 2023 to $536 million for the first
quarter of 2024. In addition, the weighted-average cost of these
borrowings increased from 4.22% to 4.94% for the same time periods.
This increase in the average balance of borrowings was generally
driven by the above noted growth in period-to-period average
loans.
- Average interest-earning cash was $454 million with a
weighted-average yield of 5.57% during the first quarter of 2024
compared to $241 million with a weighted-average yield of 4.48% for
the first quarter of 2023. The increase in average cash balances
was a strategic decision for additional on-balance sheet liquidity
above required minimums in response to the uncertainty of the
economic environment.
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 Mar.
31,
Three Months Ended Mar.
31,
Reportable Segment
2024
2023
Change
2024
2023
Change
Traditional Banking
$
48,259
$
50,168
$
(1,909
)
3.33
%
4.07
%
(0.74
)%
Warehouse Lending
2,257
2,087
170
2.67
2.53
0.14
Total Core Bank
$
50,516
$
52,255
$
(1,739
)
3.30
3.98
(0.68
)
Average Loan Balances
Period-End Loan
Balances
(dollars in thousands)
Three Months Ended Mar.
31,
Mar. 31,
Mar. 31,
Reportable Segment
2024
2023
$ Change
% Change
2024
2023
$ Change
% Change
Traditional Banking
$
4,634,948
$
3,913,388
$
721,560
18
%
$
4,573,650
$
4,165,177
$
408,473
10
%
Warehouse Lending
340,433
329,716
10,717
3
463,249
457,365
5,884
1
Total Core Bank
$
4,975,381
$
4,243,104
$
732,277
17
$
5,036,899
$
4,622,542
$
414,357
9
*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 $667,000 during the first quarter
of 2024 compared to a net charge of $3.1 million for the first
quarter of 2023.
The net charge for the first quarter of 2024 was primarily
driven by the following:
- The Core Bank recorded a net charge to the Provision of
$820,000 during the first quarter of 2024 related to general
formula reserves applied to Traditional Bank loans. While loan
balances at the Traditional Bank decreased in total during the
first quarter, the segment experienced a change in loan mix growing
in loan categories, such as construction and land development, with
higher loan loss reserve requirements.
- The Core Bank recorded a net charge to the Provision of
$309,000 resulting from general formula reserves applied to a $124
million increase in outstanding Warehouse balances during the
quarter.
- Offsetting the above charges to Provision, the Core Bank
recorded a credit to the Provision of $631,000 as a result of a
reclass of $69 million of correspondent mortgage loans from loans
held for investment into loans held for sale.
The net charge during the first quarter of 2023 was primarily
driven by the following:
- The Core Bank recorded a net charge to the Provision of
$430,000 during the first quarter of 2023 related to general
formula reserves applied to $92 million of Traditional Bank loan
growth for the quarter.
- The Core Bank recorded a Day-1 net charge to the Provision of
$2.7 million during the first quarter of 2023 related to its
acquisition of CBank.
As a percentage of total loans, the Core Bank’s Allowance(2)
decreased 2 basis points from December 31, 2023 to March 31, 2024.
The table below provides a view of the Company’s percentage of
Allowance-to-total-loans by reportable segment.
As of Mar. 31, 2024
As of Mar. 31, 2023
Year-over-Year Change
(dollars in thousands)
Allowance
Allowance
Allowance
Reportable Segment
Gross Loans
Allowance
to Loans
Gross Loans
Allowance
to Loans
to Loans
% Change
Traditional Bank
$
4,573,650
$
59,176
1.29
%
$
4,165,177
$
55,216
1.33
%
(0.04
)%
(3
)%
Warehouse Lending
463,249
1,156
0.25
457,365
1,144
0.25
—
—
Total Core Bank
5,036,899
60,332
1.20
4,622,542
56,360
1.22
(0.02
)
(2
)
Tax Refund Solutions
57,497
30,069
52.30
39,992
25,981
64.97
(12.67
)
(20
)
Republic Credit Solutions
129,896
18,301
14.09
111,700
13,780
12.34
1.75
14
Total Republic Processing Group
187,393
48,370
25.81
151,692
39,761
26.21
(0.40
)
(2
)
Total Company
$
5,224,292
$
108,702
2.08
%
$
4,774,234
$
96,121
2.01
%
0.07
%
3
%
ACLL Roll-Forward
Three Months Ended March
31,
2024
2023
(dollars in thousands)
Beginning
Charge-
Ending
Beginning
CBank
Charge-
Ending
Reportable Segment
Balance
Provision
offs
Recoveries
Balance
Balance
Adjustment*
Provision
offs
Recoveries
Balance
Traditional Bank
$
58,998
$
358
$
(382
)
$
202
$
59,176
$
50,709
$
—
$
2,984
$
(331
)
$
254
$
53,616
Warehouse Lending
847
309
—
—
1,156
1,009
1,600
135
—
—
2,744
Total Core Bank
59,845
667
(382
)
202
60,332
51,718
1,600
3,119
(331
)
254
56,360
Tax Refund Solutions
3,990
25,774
—
305
30,069
3,888
—
21,808
—
285
25,981
Republic Credit Solutions
18,295
4,181
(4,545
)
370
18,301
14,807
—
1,839
(3,099
)
233
13,780
Total Republic Processing Group
22,285
29,955
(4,545
)
675
48,370
18,695
—
23,647
(3,099
)
518
39,761
Total Company
$
82,130
$
30,622
$
(4,927
)
$
877
$
108,702
$
70,413
$
1,600
$
26,766
$
(3,430
)
$
772
$
96,121
* 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:
Mar. 31,
Mar. 31,
Dec. 31,
Dec. 31,
Dec. 31,
Core Banking Credit Quality
Ratios
2024
2023
2023
2022
2021
Nonperforming loans to total loans
0.38
%
0.34
%
0.39
%
0.37
%
0.47
%
Nonperforming assets to total loans
(including OREO)
0.41
0.38
0.41
0.40
0.51
Delinquent loans* to total loans
0.15
0.12
0.16
0.14
0.17
Net charge-offs to average loans
0.01
0.01
0.01
0.00
0.01
(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 decreased
$173,000 from the first quarter of 2023 to $8.3 million for the
first quarter of 2024. The decrease was primarily driven by a
$490,000 decline in Mortgage Banking income as the Bank
reclassified $69 million of its correspondent loan portfolio into
loans held-for-sale and recorded a $1.0 million reduction to
mortgage banking income as a result of the mark-to-market
accounting upon the reclassification.
Noninterest Expense – As previously noted, the Core Bank’s
noninterest expense was $42.3 million for the first quarter of 2024
compared to $44.4 million for the first quarter of 2023, a decrease
of $2.1 million, or 5% for the quarter. Noninterest expenses for
the first quarter of 2023 included $2.1 million of Day-1 expenses
associated with the former CBank operations. Without these Day-1
merger related expenses, total noninterest expenses were flat
across the Core Bank.
Republic Processing Group(3)
RPG reported net income of $17.5 million for the first quarter
of 2024 compared to $17.8 million for the same period in 2023.
RPG’s performance for the first quarter of 2024 compared to the
first quarter of 2023, by operating segment, was as follows:
Republic Payment Solutions
(“RPS”)
Net income at RPS was $2.6 million for the first quarter of
2024, a decrease of $8,000, or less than 1%, from the first quarter
of 2023. RPS earned a higher yield of 5.07% applied to the $375
million average of prepaid program balances for the first quarter
of 2024 compared to a yield of 3.84% for the $77 million in average
prepaid card balances for the first quarter of 2023. The increase
in interest income resulting from the higher yield, however, was
substantially offset by a $969,000 charge to interest expense for a
new revenue sharing arrangement with one of the segment’s large
marketer/servicer providers that became effective in January
2024.
Tax Refund Solutions
(“TRS”)
TRS recorded net income of $8.8 million during the first quarter
of 2024 compared to net income of $9.8 million for the first
quarter of 2023. The decrease in net income for the quarter was
driven primarily by a higher Provision for Refund Advances recorded
during 2024 as the level of payments the Company received from the
U.S. Treasury to fund federal tax refunds through March 31, 2024
lagged the level of payments the Company received through March 31,
2023. This lag in payments also negatively impacted the Refund
Transfer revenue as the number of funded RTs were approximately 5%
lower during the first quarter of 2024 compared to the first
quarter of 2023.
Republic Credit Solutions
(“RCS”)
Net income at RCS increased $748,000, or 14% from $5.4 million
during the first quarter of 2023 to $6.1 million during the first
quarter of 2024. The increase was primarily due to growth in the
segment’s small dollar line of credit products, which had a
combined increase in average outstanding balances of $10 million
from the first quarter of 2023 to the first quarter of 2024.
Republic Bancorp, Inc. (the “Company”) is the parent company of
Republic Bank & Trust Company (the “Bank”). The Bank currently
has 47 banking centers in communities within five metropolitan
statistical areas (“MSAs”) across five states: 22 banking centers
located within the Louisville MSA in Louisville, Prospect,
Shelbyville, and Shepherdsville in Kentucky, and Floyds Knobs,
Jeffersonville, and New Albany in Indiana; six banking centers
within the Lexington MSA in Georgetown and Lexington in Kentucky;
eight banking centers within the Cincinnati MSA in Cincinnati and
West Chester in Ohio, and Bellevue, Covington, Crestview Hills, and
Florence in Kentucky; seven banking centers within the Tampa MSA in
Largo, New Port Richey, St. Petersburg, Seminole, and Tampa in
Florida; and four banking centers within the Nashville MSA in
Franklin, Murfreesboro, Nashville and Spring Hill, Tennessee. In
addition, Republic Bank Finance has one loan production office in
St. Louis, Missouri. The Bank offers internet banking at
www.republicbank.com. The Company is headquartered in Louisville,
Kentucky, and as of March 31, 2024, had approximately $6.9 billion
in total assets. 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, 2023. 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 and Warehouse Lending
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, RPS, and RCS segments.
NM – Not meaningful
NA – Not applicable
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240425707368/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