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
fourth quarter 2023 net income and Diluted Earnings per Class A
Common Share (“Diluted EPS”) of $19.7 million and $1.01 per share,
representing increases of 6% and 7% over the fourth quarter of
2022.
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the full release here:
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Logan Pichel, President and CEO of the Bank commented, “We are
proud to report the completion of another successful year at
Republic Bank as we continue our mission to enable our clients,
Company, associates, and the communities we serve to thrive.
Included among our accomplishments for the year were:
- Increased Adjusted Net Income(10), a Non-GAAP metric, 21% for
2023 over 2022, adjusting for the Day-1 merger related expenses
associated with the CBank acquisition and the net benefit in 2022
from the termination penalty and legal settlements received from
Green Dot.
- Generated a total return on Republic’s stock of 39% in 2023
versus a decline of 1% by the KBW NASDAQ Bank Index during the same
period.
- Grew Traditional Bank loans 20% overall, or 14% excluding the
acquired operations of CBank for the year.
- Managed expenses prudently with Core Bank non-interest
expenses, excluding the acquired CBank operations, increasing only
1% for the year vs 2022.
- Maintained strong credit quality with Core Bank net charge-offs
for the year of 1 basis point.
- Improved our Net Promoter Score to over 2x Banking industry
average during 2023.
- Recognized by Newsweek as one of America’s Best Online Mortgage
Lenders.
- Recognized by Forbes as one of Kentucky’s Best Banks.
- Recognized for the seventh consecutive year as one of
Kentucky’s Best Places to Work.
- Recognized as one of Louisville’s Top Corporate
Philanthropists.
- Improved our Interactive Teller Machine service levels to the
best in Company history.
- Expanded client connections by making over 12,000 client
relationship calls.
- Enhanced our digital banking capabilities supporting our
industry-leading online banking scores.
- Acquired CBank and added the Republic Bank Finance business
line.
- Opened three (3) new banking centers: one (1) in Northern
Kentucky and two (2) in metropolitan Nashville, TN.
- Introduced a nationwide deposit gathering program to enhance
company liquidity and maintain industry leading capital
metrics.
- Continued our progress in Diversity, Equity, and Inclusion and
introduced our new Community and Multicultural Banking Group.
- Re-located almost 100 associates to our downtown Louisville
offices, supporting downtown economic development.
The diversity of our Bank’s business model continues to drive a
strong overall performance for the Company. Our Core Banking
operations reported net income of $15.8 million for the quarter,
representing a $486,000, or 3%, decrease in net income from the
fourth quarter of 2022. Meanwhile, net income within our Republic
Processing Group (“RPG”) increased $1.6 million, or 74%, from the
fourth quarter of 2022 to the fourth quarter of 2023 driven by the
strong performance of our Republic Payments Solutions prepaid card
division.
As was the case for the first three quarters of 2023, our
industry continued to face the challenges of an inverted yield
curve and tremendous competition for deposits and liquidity during
the fourth quarter. These challenges continued to exert pressure on
the net interest margins of banks across the United States,
including our own Core Banking operations. As we move forward into
2024, we will combat these challenges in net interest income by
seeking to further diversify our revenue streams and fortify our
liquidity, while continuing to become more efficient in our
operations across the Company.
We are proud of the job we have done across the Company of
growing our deposits. As a result of the strong efforts of our
associates, our Core Bank deposits, excluding wholesale brokered
deposits, ended the year at $4.3 billion, an increase of $219
million, or 5%, from December 31, 2022. In addition, we added
capacity at the Federal Home Loan Bank, increasing our borrowing
line by $111 million from December 31, 2022 to December 31, 2023.
The growth in our deposits did come at the cost of higher funding
expenses for our total deposit portfolio, but we believe it was a
cost worth absorbing given the environment in which we currently
operate.
Our dedication to industry leading credit quality and capital
remained staples during 2023. Among our many favorable credit
quality metrics, we ended the fourth quarter of 2023 with a
delinquency ratio of 0.16% within our Core Bank. In addition, our
capital ratios at Republic Bank & Trust Company continued to be
significantly above the minimums to be considered well-capitalized
as of December 31, 2023.
We are proud of our many accomplishments over the past year and
are optimistic about our future. We believe our focus on creating
Best-in-Class client experiences, our strong capital and liquidity
position, and our continued commitment to supporting all parts of
the communities we serve, make us well-positioned to grow our
relationships with existing clients and attract new clients. We are
very proud of the good work of our over 1,000 Republic Bank
associates and are much appreciative of the trust and support that
each of our clients and shareholders place in Republic Bank.”
concluded Pichel.
The following table highlights Republic’s key metrics for the
three and twelve months ended December 31, 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
January 26, 2023.
Total Company Financial
Performance Highlights
Three Months Ended Dec.
31,
Years Ended Dec. 31,
(dollars in thousands, except per share
data)
2023
2022
$ Change
% Change
2023
2022
$ Change
% Change
Income Before Income Tax Expense
$
23,519
$
23,488
$
31
—
%
$
113,213
$
116,845
$
(3,632
)
(3
)%
Net Income
19,659
18,513
1,146
6
90,374
91,106
(732
)
(1
)
Diluted EPS
1.01
0.94
0.07
7
4.62
4.59
0.03
1
Return on Average Assets ("ROA")
1.21
%
1.25
%
NA
(3
)
1.44
%
1.48
%
NA
(3
)
Return on Average Equity ("ROE")
8.68
8.65
NA
—
10.10
10.68
NA
(5
)
NA – Not applicable
Results of Operations for the Fourth Quarter of 2023 Compared
to the Fourth Quarter of 2022
Core Bank(1)
Net income for the Core Bank was $15.8 million for the fourth
quarter of 2023 compared to $16.3 million for the fourth quarter of
2022. As further outlined in the following discussion, an increase
in provision expense and noninterest expense combined with a
decline in net interest income were the primary drivers for the
change in net income from the fourth quarter of 2022 to the fourth
quarter of 2023.
Net Interest Income – Core Bank net interest income was $50.6
million for the fourth quarter of 2023, a $1.4 million, or 3%,
decrease from $52.0 million during the fourth quarter of 2022. In
addition, the Core Bank’s net interest margin (“NIM”) decreased
from 3.82% during the fourth quarter of 2022 to 3.40% during the
fourth quarter of 2023.
The decrease in net interest income for the fourth quarter of
2023 was the first quarter-to-same-quarter-last-year decline for
the Core Bank during 2023. While net interest income was higher for
each of the first three quarters of 2023 compared to the same
quarter in 2022, each quarter experienced a diminishing magnitude
of increase. This diminishing magnitude occurred as the Core Bank’s
cost of funds increased at a faster pace than its yield on interest
earning assets.
The primary driver of this diminishing benefit was a reduction
in interest-earning cash balances combined with an on-going shift
in funding mix away from noninterest-bearing deposit balances to
higher-costing, interest-bearing deposits and FHLB borrowings. As a
result of these factors, the Core Bank’s cost of interest-bearing
liabilities increased 225 basis points from the fourth quarter of
2022 to the fourth quarter of 2023, more than offsetting the 101
basis point increase to its yield on interest earning assets for
the same periods.
Further detailing this change in net interest income and NIM
between the fourth quarter of 2022 and the fourth quarter of 2023
were the following:
- Average outstanding Warehouse balances declined from $407
million during the fourth quarter of 2022 to $370 million for the
fourth quarter of 2023. Committed Warehouse lines of credit
declined from $1.1 billion to $1.0 billion from December 31, 2022
to December 31, 2023, while average usage rates for Warehouse lines
were 35% and 37%, respectively, during the fourth quarters of 2022
and 2023. This decrease in average Warehouse balances was driven by
a continued general decline in mortgage demand across the
nation.
- Traditional Bank average loans grew from $3.8 billion with a
weighted-average yield of 4.44% during the fourth quarter of 2022
to $4.6 billion with a weighted average yield of 5.32% during the
fourth quarter of 2023 as overall loan demand generally remained
strong across the Traditional Bank’s markets throughout 2023. In
addition, the acquisition of CBank added approximately $210 million
to the Traditional Bank’s average loans during the fourth quarter
of 2023.
- Average investments were $769 million with a weighted-average
yield of 3.02% during the fourth quarter of 2023 compared to $694
million with a weighted-average yield of 2.07% for the fourth
quarter of 2022. As part of its overall interest rate risk
management strategy, the Core Bank generally maintains an
investment portfolio with a shorter overall duration. This strategy
was generally favorable to the Core Bank’s net interest income
during the recent rising interest rate environment.
- The Core Bank’s average noninterest-bearing deposits decreased
from $1.6 billion during the fourth quarter of 2022 to $1.3 billion
for the fourth quarter of 2023. Management believes two factors
generally drove, and continue to drive, this overall decline in
noninterest bearing deposits.
- The first is a general decline in liquidity among both
businesses and consumers, nationwide, as the excess liquidity
created during the COVID pandemic continues to wane.
- The second is that the substantial increase in market interest
rates over the past year has caused higher interest-bearing deposit
offerings to become meaningfully more attractive than noninterest
bearing accounts, driving a shift in funding mix toward
interest-bearing accounts for Republic and many banks across the
industry.
- The Core Bank’s weighted-average cost of interest-bearing
liabilities increased from 0.65% during the fourth quarter of 2022
to 2.90% for the fourth quarter of 2023. Further segmenting the
Core Bank’s interest-bearing liabilities:
- The weighted-average cost of total interest-bearing deposits
increased from 0.47% during the fourth quarter of 2022 to 2.36% for
the fourth quarter of 2023. In addition, average interest-bearing
deposits grew $417 million from the fourth quarter of 2022 to the
fourth quarter of 2023.
- The average balance of FHLB borrowings increased from $22
million for the fourth quarter of 2022 to $357 million for the
fourth quarter of 2023. In addition, the weighted-average cost of
these borrowings increased from 2.10% to 4.62% 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 loan balances without a similar corresponding increase in
overall deposit balances.
- Average interest-earning cash was $201 million with a
weighted-average yield of 5.45% during the fourth quarter of 2023
compared to $554 million with a weighted-average yield of 3.70% for
the fourth quarter of 2022. The decline in average cash balances
was driven generally by an increase in average loans for the same
periods without a similar proportional increase in funding
liabilities.
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 Dec.
31,
Three Months Ended Dec.
31,
Reportable Segment
2023
2022
Change
2023
2022
Change
Traditional Banking
$
48,318
$
49,675
$
(1,357
)
3.47
%
3.94
%
(0.47
)%
Warehouse Lending
2,251
2,317
(66
)
2.41
2.28
0.13
Mortgage Banking*
76
50
26
NM
NM
NM
Total Core Bank
$
50,645
$
52,042
$
(1,397
)
3.40
3.82
(0.42
)
Average Loan Balances
Period-End Loan
Balances
(dollars in thousands)
Three Months Ended Dec.
31,
Dec. 31,
Dec. 31,
Reportable Segment
2023
2022
$ Change
% Change
2023
2022
$ Change
% Change
Traditional Banking
$
4,557,099
$
3,799,278
$
757,821
20
%
$
4,618,569
$
3,855,142
$
763,427
20
%
Warehouse Lending
370,169
406,903
(36,734
)
(9
)
339,723
403,560
(63,837
)
(16
)
Mortgage Banking*
3,473
2,092
1,381
66
3,227
1,302
1,925
148
Total Core Bank
$
4,930,741
$
4,208,273
$
722,468
17
$
4,961,519
$
4,260,004
$
701,515
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 $2.0 million during the fourth
quarter of 2023 compared to a net charge of $1.6 million for the
fourth quarter of 2022.
The net charge during the fourth quarter of 2023 was primarily
driven by the following:
- The Core Bank recorded a net charge to the Provision of $2.1
million during the fourth quarter of 2023 related to general
formula reserves applied to $123 million of Traditional Bank loan
growth for the fourth quarter of 2023.
- The Core Bank recorded net charge-offs of $220,000 during the
fourth quarter of 2023.
- The Core Bank recorded a net credit to the Provision of
$296,000 resulting from general formula reserves applied to an $118
million decline in outstanding Warehouse balances for the fourth
quarter of 2023.
The net charge during the fourth quarter of 2022 was primarily
driven by the following:
- The Core Bank recorded a net charge to the Provision of $1.5
million during the fourth quarter of 2022 related to general
formula reserves applied to $106 million of Traditional Bank loan
growth for the fourth quarter of 2022.
- The Core Bank recorded net charge-offs of $238,000 during the
fourth quarter of 2022.
- The Core Bank recorded a net credit to the Provision of $96,000
during the fourth quarter of 2022 resulting from general formula
reserves applied to a decline in outstanding Warehouse balances of
$37 million during the fourth quarter of 2022.
As a percentage of total loans, the Core Bank’s Allowance(2)
remained at 1.21% from December 31, 2022 to December 31, 2023. The
table below provides a view of the Company’s percentage of
Allowance-to-total-loans by reportable segment.
As of Dec. 31, 2023
As of Dec. 31, 2022
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
$
4,618,569
$
58,998
1.28
%
$
3,855,142
$
50,709
1.32
%
(0.04
)%
(3
)%
Warehouse Lending
339,723
847
0.25
403,560
1,009
0.25
—
—
Total Core Bank
4,958,292
59,845
1.21
4,258,702
51,718
1.21
—
—
Tax Refund Solutions
149,207
3,990
2.67
149,272
3,888
2.60
0.07
3
Republic Credit Solutions
132,362
18,295
13.82
107,828
14,807
13.73
0.09
1
Total Republic Processing Group
281,569
22,285
7.91
257,100
18,695
7.27
0.64
9
Total Company
$
5,239,861
$
82,130
1.57
%
$
4,515,802
$
70,413
1.56
%
0.01
%
1
%
ACLL Roll-Forward
Three Months Ended December
31,
2023
2022
(dollars in thousands)
Beginning
Charge-
Ending
Beginning
Charge-
Ending
Reportable Segment
Balance
Provision
offs
Recoveries
Balance
Balance
Provision
offs
Recoveries
Balance
Traditional Bank
$
56,931
$
2,287
$
(449
)
$
229
$
58,998
$
49,231
$
1,716
$
(459
)
$
221
$
50,709
Warehouse Lending
1,143
(296
)
—
—
847
1,105
(96
)
—
—
1,009
Total Core Bank
58,074
1,991
(449
)
229
59,845
50,336
1,620
(459
)
221
51,718
Tax Refund Solutions
1
2,937
—
1,052
3,990
—
2,979
—
909
3,888
Republic Credit Solutions
16,501
6,061
(4,453
)
186
18,295
14,583
3,245
(3,385
)
364
14,807
Total Republic Processing Group
16,502
8,998
(4,453
)
1,238
22,285
14,583
6,224
(3,385
)
1,273
18,695
Total Company
$
74,576
$
10,989
$
(4,902
)
$
1,467
$
82,130
$
64,919
$
7,844
$
(3,844
)
$
1,494
$
70,413
The table below presents the Core Bank’s credit quality
metrics:
As of and for the:
Quarters Ended:
Years Ended:
Dec. 31,
Sep. 30,
Jun. 30,
Mar. 31,
Dec. 31,
Dec. 31,
Dec. 31,
Core Banking Credit Quality
Ratios
2023
2023
2023
2023
2023
2022
2021
Nonperforming loans to total loans
0.39
%
0.37
%
0.34
%
0.34
%
0.39
%
0.37
%
0.47
%
Nonperforming assets to total loans
(including OREO)
0.41
0.39
0.37
0.38
0.41
0.40
0.51
Delinquent loans* to total loans
0.16
0.14
0.12
0.12
0.16
0.14
0.17
Net charge-offs to average loans
0.02
0.02
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 increased
$828,000 to $9.8 million for the fourth quarter of 2023 compared to
the fourth quarter of 2022. The increase was primarily driven by a
$361,000 increase in Mortgage Banking income and a $484,000 net
recapture of loss reserves for Republic’s Nevada-based insurance
captive, which was fully dissolved during the fourth quarter of
2023.
Noninterest Expense – As previously noted, the Core Bank’s
noninterest expense was $39.7 million for the fourth quarter of
2023 compared to $38.5 million for the fourth quarter of 2022, an
increase of $1.2 million, or 3% for the quarter. Noninterest
expenses for the fourth quarter of 2023 included $1.4 million of
expense associated with the former CBank operations, which was
acquired in March 2023.
Core Bank legacy noninterest expenses, which excludes those of
the acquired CBank operations, were flat versus the fourth quarter
of 2022 at $38.3 million for the quarter. While noninterest
expenses were generally higher across most categories during the
fourth quarter of 2023, the fourth quarter of 2023 did benefit from
a $1.3 million positive swing in estimated bonus expenses as the
fourth quarter of 2022 contained a net charge of $796,000 for bonus
expense accruals, while the fourth quarter of 2023 contained a net
credit of $478,000. The net credit of $478,000 recorded for the
fourth quarter of 2023 reduced the liability for accrued bonuses to
be in-line with expected payouts scheduled for the first quarter of
2024.
Republic Processing Group(3)
The Republic Processing Group (“RPG”) reported net income of
$3.8 million for the fourth quarter of 2023 compared to $2.2
million for the same period in 2022. RPG’s performance for the
fourth quarter of 2023 compared to the fourth quarter of 2022, by
operating segment, is as follows:
Republic Payment Solutions
(“RPS”)
The Company began reporting RPS as a separate reportable segment
for its fourth quarter 2023 reporting period. Prior to the fourth
quarter of 2023, RPS was reported as a component of the TRS
segment.
Net income at RPS was $3.2 million for the fourth quarter of
2023, an increase of $1.4 million, or 82%, from the fourth quarter
of 2022. The $1.4 million increase in RPS net income was driven by
a higher interest yield of 5.08% applied to the $342 million
average of prepaid program balances for the fourth quarter of 2023
compared to an applied yield of 2.82% for the $337 million in
average prepaid card balances for the fourth quarter of 2022.
Tax Refund Solutions
(“TRS”)
TRS experienced a net loss of $3.6 million during the fourth
quarter of 2023 compared to a net loss of $3.5 million for the
fourth quarter of 2022. As with the fourth quarter of 2022, the net
loss at TRS for the fourth quarter of 2023 was driven by a large,
estimated Provision expense applied to the Early Season Refund
Advance loans (“ERAs”) originated during the quarter. Altogether,
TRS originated $103 million of
ERAs during the fourth quarter of 2023 compared to $98 million
originated during the fourth quarter of 2022. The Company applied
an estimated loss rate of approximately 3.81% of total ERAs
originated during the fourth quarter of 2023 and an estimated loss
rate of 3.89% during the fourth quarter of 2022.
Republic Credit Solutions
(“RCS”)
Net income at RCS increased $236,000, or 6% from $4.0 million
during the fourth quarter of 2022 to $4.2 million during the fourth
quarter of 2023. The increase was primarily due to a $1.1 million
increase in gain on sale of RCS loans, which was driven by
increased volume in the fourth quarter of 2023. The increase in
gain on sale of loan revenue was partially offset by an $883,000
increase in noninterest expenses resulting from elevated marketing
fees.
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. As of December 31, 2023, the Company had
approximately $6.6 billion in assets and is headquartered in
Louisville, Kentucky. The Company’s Class A Common Stock is listed
under the symbol “RBCAA” on the NASDAQ Global Select Market.
Republic Bank. It’s just easier here. ®
Forward-Looking Statements
This press release contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995. The forward-looking statements in the preceding paragraphs
are based on our current expectations and assumptions regarding our
business, the future impact to our balance sheet and income
statement resulting from changes in interest rates, the yield
curve, the ability to develop products and strategies in order to
meet the Company’s long-term strategic goals, the economy, and
other future conditions. Because forward-looking statements relate
to the future, they are subject to inherent uncertainties, risks
and changes in circumstances that are difficult to predict. Our
actual results may differ materially from those contemplated by
forward-looking statements. We caution you therefore against
relying on any of these forward-looking statements. They are
neither statements of historical fact nor guarantees or assurances
of future performance. Actual results could differ materially based
upon factors disclosed from time to time in the Company’s filings
with the U.S. Securities and Exchange Commission, including those
factors set forth as “Risk Factors” in the Company’s Annual Report
on Form 10-K for the period ended December 31, 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, Republic Payment Solutions (“RPS”), and
Republic Credit Solutions (“RCS”) segments.
NM – Not meaningful
NA – Not applicable
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240126373595/en/
Republic Bancorp, Inc. Kevin Sipes Executive Vice President
& Chief Financial Officer (502) 560-8628
Republic Bancorp (NASDAQ:RBCAA)
過去 株価チャート
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Republic Bancorp (NASDAQ:RBCAA)
過去 株価チャート
から 5 2023 まで 5 2024