Republic Bancorp, Inc. (“Republic” or the “Company”) reported
second quarter 2024 net income and Diluted Earnings per Class A
Common Share (“Diluted EPS”) of $25.2 million and $1.30 per share,
representing increases of 20% and 22% over the second quarter of
2023.
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Logan Pichel, President & CEO of the Republic Bank &
Trust Company commented, “We are very pleased with our strong
performance in the second quarter, which reflects our continued
focus on providing best-in-class service to our clients, the
on-going success of our diversified business model, and growing our
core banking franchise, while also prudently and effectively
managing our risks and expenses,” said Logan Pichel, President and
CEO of Republic Bank. “Perhaps as much as anything, I am most proud
that we reached an industry strong Net Promoter Score (“NPS”) of
67.2 during the second quarter versus an industry average of 23.9.
Our strong NPS Score further affirms our passion for delivering
exceptional customer experiences across all channels and all parts
of the Bank.
We also had another positive quarter in moderating our operating
costs as our Total Company noninterest expenses declined nearly 4%
from the second quarter of 2023 to the second quarter of 2024. We
are reporting this reduction in our noninterest expenses despite
recent investments we’ve made in new banking centers, the hiring of
new talent, and the on-going enhancement of our technology and
digital capabilities. We are very proud of the progress we’ve made
in our efficiency gains and look forward to building on this
progress in the future.
Some of our additional highlights for the second quarter of 2024
include:
- Core Bank asset quality remained excellent, with net
charge-offs to average loans of only 0.02% for the quarter and
nonperforming loans to total loans of 0.39% as of June 30,
2024.
- We completed the sale of $67 million of lower-yielding mortgage
loans during the quarter. We executed this sale as we see
opportunities to increase our future earnings through recycling the
proceeds from this transaction into other higher yielding loan
opportunities.
- Our Traditional Bank loan portfolio grew by $16 million during
the second quarter. As expected, our new loan production at the
Traditional Bank has been slower during the first six months of
2024 compared to previous periods as we continued to exercise
strong pricing discipline for new loan opportunities. While this
pricing discipline contributed to the rising yields for the
Traditional Bank’s overall loan portfolio, it also reduced the
Traditional Bank’s new loan volume, and as a result, the overall
opportunity for growth in the Traditional Bank’s loan portfolio
since year-end. While this strategy will likely make growing the
Traditional Bank’s overall loan portfolio more difficult in the
near term, we will continue to make pricing decisions with the
long-term future of the Company in mind.
- To take advantage of the currently inverted yield curve and
lower our overall borrowing costs during the second quarter of
2024, we borrowed $100 million from the Federal Home Loan Bank
(“FHLB”) on a five-year basis. As a result of this strategy, the
Company was able to lock in an annualized cost of 4.42% for these
borrowings over the five-year term compared to an annualized cost
of 5.55% for overnight borrowings.
As it relates to our diversification of revenue streams, our
Republic Processing Group (“RPG) continued to produce positive
results during the second quarter of 2024. While Republic Payment
Solutions (“RPS”) was down slightly for the quarter due to a
revenue share arrangement implemented during the first quarter of
2024, both Republic Credit Solutions (“RCS”) and Tax Refund
Solutions (“TRS”) had solid increases in net income contributing to
a 14% increase in net income for RPG, in total, for the second
quarter of 2024 compared to the second quarter of 2023.
As we look ahead to the second half of 2024, achieving
moderately priced deposit growth will remain a major focus. With
our superior customer service, competitive products, convenient
locations, and solid digital capabilities, we believe we are
well-armed to effectively and efficiently grow our loyal customer
base. I am optimistic about our future and the potential for us to
create long-term value for our shareholders, our clients, our
associates, and the communities we serve,” Pichel concluded.
The following table highlights Republic’s key metrics for the
three months ended June 30, 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 July 19, 2024.
Total Company Financial
Performance Highlights
Three Months Ended Jun.
30,
Six Months Ended Jun.
30,
(dollars in thousands, except per share
data)
2024
2023
$ Change
% Change
2024
2023
$ Change
% Change
Income Before Income Tax Expense
$
32,105
$
26,508
$
5,597
21
%
$
70,804
$
62,622
$
8,182
13
%
Net Income
25,206
21,052
4,154
20
55,812
49,144
6,668
14
Diluted EPS
1.30
1.07
0.23
22
2.87
2.50
0.37
15
Return on Average Assets ("ROA")
1.50
%
1.37
%
NA
10
1.61
%
1.60
%
NA
1
Return on Average Equity ("ROE")
10.57
9.41
NA
12
11.90
11.14
NA
7
NA – Not applicable
Results of Operations for the Second Quarter of 2024 Compared
to the Second Quarter of 2023
Core Bank(1)
Net income for the Core Bank was $15.0 million for the second
quarter of 2024, a $2.9 million, or 24%, increase over the $12.1
million for the second quarter of 2023. Favorable variances across
net interest income, Provision, and noninterest expenses, were all
drivers for the increase in net income from the second quarter of
2023 to the second quarter of 2024.
Net Interest Income – Core Bank net interest income was $52.8
million for the second quarter of 2024, a $1.4 million, or 3%,
increase from $51.4 million during the second quarter of 2023 and
was driven, in general, by period-over-period growth in average
interest-earning assets. The quarter-over-same-quarter-last-year
increase in net interest income for the Core Bank reversed a
negative trend of two consecutive quarterly declines in net
interest income for the fourth quarter of 2023 and the first
quarter of 2024.
While net interest income did increase in terms of overall
dollars, the Core Bank’s net interest margin (“NIM”) decreased from
3.65% during the second quarter of 2023 to 3.46% during the second
quarter of 2024. As with the previous quarters over the past year,
the primary driver of the decrease in the net interest margin at
the Core Bank was a shift in funding mix away from
noninterest-bearing deposit balances into higher-costing,
interest-bearing deposits and FHLB borrowings. Overall, the Core
Bank’s average noninterest-bearing deposits decreased from $1.5
billion during the second quarter of 2023 to $1.2 billion for the
second quarter of 2024. In addition to this change in funding mix,
the Core Bank’s cost of interest-bearing liabilities also increased
103 basis points from the second quarter of 2023 to the second
quarter of 2024, outpacing the 60-basis-point increase to its yield
on interest-earning assets over the same periods.
Additional items of note impacting the Core Bank’s change in net
interest income and NIM between the second quarter of 2023 and the
second quarter of 2024 were as follows:
- Average outstanding Warehouse balances decreased from $462
million during the second quarter of 2023 to $457 million for the
second quarter of 2024. Committed Warehouse lines declined from
$980 million to $957 million during these same periods, while an
up-tick in demand caused average usage rates for Warehouse lines to
increase from 47% during the second quarter of 2023 to 49% for the
second quarter of 2024.
- Traditional Bank average loans grew from $4.3 billion with a
weighted-average yield of 4.98% during the second quarter of 2023
to $4.6 billion with a weighted average yield of 5.57% during the
second quarter of 2024. In general, the growth in average loan
balances was primarily attributable to loan growth achieved during
the last six months of 2023, as the spot balances for Traditional
Bank loans decreased $29 million, or 1%, from December 31, 2023 to
June 30, 2024.
- Average interest-earning cash, which is managed as a separate
but complementary component of the Company’s overall investment
portfolio, was $393 million with a weighted-average yield of 5.46%
during the second quarter of 2024 compared to $115 million with a
weighted-average yield of 5.43% for the second quarter of 2023. The
increase in average interest-earning cash balances was the
continuance of a strategic decision over the past year for
additional on-balance sheet liquidity above required minimums in
response to the uncertainty of the economic environment.
- Average investments were $670 million with a weighted-average
yield of 3.09% during the second quarter of 2024 compared to $775
million with a weighted-average yield of 2.73% for the second
quarter of 2023. The Core Bank continued to maintain an investment
portfolio during the second quarter of 2024 with a short overall
duration as part of its interest rate risk management strategy. As
a result of this short duration, the Core Bank has approximately
$111 million of investment securities as of June 30, 2024 that are
scheduled to mature over the remaining six months of 2024 with a
weighted-average yield of 3.69%.
- Further segmenting the Core Bank’s increased cost of
interest-bearing liabilities:
- The weighted-average cost of total interest-bearing deposits
increased from 1.59% during the second quarter of 2023 to 2.79% for
the second quarter of 2024, while average interest-bearing deposits
grew $668 million over the same periods. Included within this $668
million of growth in interest-bearing deposits was a $251 million
increase in the average balances for higher-costing, short-term
brokered deposits and third-party listing service deposits, which
the Company utilized for excess liquidity purposes.
- The average balance of FHLB borrowings increased from $256
million for the second quarter of 2023 to $306 million for the
second quarter of 2024. Conversely, the weighted-average cost of
these borrowings decreased from 4.90% to 4.29% for the same time
periods. The increase in the average balance of borrowings was
driven, in general, by the above noted growth in period-to-period
average loans, while the decrease in the overall weighted-average
cost of FHLB borrowings resulted from term-extension strategies to
take advantage of the currently inverted yield curve.
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
2024
2023
Change
2024
2023
Change
Traditional Banking
$
49,915
$
48,743
$
1,172
3.53
%
3.77
%
(0.24)
%
Warehouse Lending
2,914
2,642
272
2.57
2.28
0.29
Total Core Bank
$
52,829
$
51,385
$
1,444
3.46
3.65
(0.19)
Average Loan Balances
Period-End Loan
Balances
(dollars in thousands)
Three Months Ended Jun.
30,
Jun. 30,
Jun. 30,
Reportable Segment
2024
2023
$ Change
% Change
2024
2023
$ Change
% Change
Traditional Banking
$
4,622,655
$
4,279,373
$
343,282
8
%
$
4,589,167
$
4,394,668
$
194,499
4
%
Warehouse Lending
456,908
462,755
(5,847
)
(1
)
549,011
539,560
9,451
2
Total Core Bank
$
5,079,563
$
4,742,128
$
337,435
7
$
5,138,178
$
4,934,228
$
203,950
4
*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 $1.1 million for the second
quarter of 2024 compared to a net charge of $2.1 million for the
second quarter of 2023.
The net charge of $1.1 million for the second quarter of 2024 was driven, primarily, by
the following:
- The Core Bank recorded a net charge to the Provision of
$681,000 during the second quarter of 2024 substantially related to
general formula reserves applied to Traditional Bank loans. While
loan balances at the Traditional Bank only slightly increased by
$16 million during the second quarter, the segment continued to
experience a change in loan mix, growing in categories such as
construction and land development, with higher loan loss reserve
requirements thus driving its higher Provision for the
quarter.
- The Core Bank recorded a net charge to the Provision of
$214,000 resulting from general formula reserves applied to an $86
million increase in outstanding Warehouse balances during the
quarter.
The net charge of $2.1 million during the second quarter of 2023 was driven, primarily, by
the following:
- The Core Bank recorded a net charge to the Provision of $3.9
million during the second quarter of 2023 substantially related to
general formula reserves applied to $229 million of Traditional
Bank loan growth for the quarter.
- Offsetting the above, the Core Bank recognized a $2.0 million
credit to the Provision during the second quarter of 2023 driven
primarily by the release of $1.5 million in COVID-related reserves
as the federal government declared an official end to the COVID
pandemic effective May 2023.
- The Core Bank recorded a net charge to the Provision of
$202,000 resulting from general formula reserves applied to an $81
million increase in outstanding Warehouse balances during the
quarter.
As a percentage of total loans, the Core Bank’s Allowance(2)
increased 4 basis points from June 30, 2023 to June 30, 2024. The
table below provides a view of the Company’s percentage of
Allowance-to-total-loans by reportable segment.
As of Jun. 30, 2024
As of Jun. 30, 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
$
4,589,167
$
59,865
1.30
%
$
4,394,668
$
55,567
1.26
%
0.04
%
3
%
Warehouse Lending
549,011
1,370
0.25
539,560
1,346
0.25
—
—
Total Core Bank
5,138,178
61,235
1.19
4,934,228
56,913
1.15
0.04
3
Tax Refund Solutions
92
—
—
193
—
—
—
—
Republic Credit Solutions
126,000
19,452
15.44
118,721
15,289
12.88
2.56
20
Total Republic Processing Group
126,092
19,452
15.43
118,914
15,289
12.86
2.57
20
Total Company
$
5,264,270
$
80,687
1.53
%
$
5,053,142
$
72,202
1.43
%
0.10
%
7
%
ACLL Roll-Forward
Three Months Ended June
30,
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
$
59,176
$
921
$
(332
)
$
100
$
59,865
$
55,216
$
(1,384
)
$
1,860
$
(239
)
$
114
$
55,567
Warehouse Lending
1,156
214
—
—
1,370
1,144
—
202
—
—
1,346
Total Core Bank
60,332
1,135
(332
)
100
61,235
56,360
(1,384
)
2,062
(239
)
114
56,913
Tax Refund Solutions
30,069
(1,182
)
(32,693
)
3,806
—
25,981
—
(219
)
(25,950
)
188
—
Republic Credit Solutions
18,301
5,196
(4,315
)
270
19,452
13,780
—
4,296
(3,018
)
231
15,289
Total Republic Processing Group
48,370
4,014
(37,008
)
4,076
19,452
39,761
—
4,077
(28,968
)
419
15,289
Total Company
$
108,702
$
5,149
$
(37,340
)
$
4,176
$
80,687
$
96,121
$
(1,384
)
$
6,139
$
(29,207
)
$
533
$
72,202
* 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
2024
2023
2023
2022
2021
Nonperforming loans to total loans
0.39
%
0.34
%
0.39
%
0.37
%
0.47
%
Nonperforming assets to total loans
(including OREO)
0.41
0.37
0.41
0.40
0.51
Delinquent loans* to total loans
0.18
0.12
0.16
0.14
0.17
Net charge-offs to average loans
0.02
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 $1.2
million from the second quarter of 2023 to $10.1 million for the
second quarter of 2024. The decrease in noninterest income was
driven by a $1.7 payment received in June 2023 in the “other”
category related to the payout of Bank Owned Life Insurance
(“BOLI”). Partially offsetting the decline in noninterest income
related to BOLI, mortgage banking income increased $705,000 driven
by an up-tick in consumer demand for home purchases.
Noninterest Expense – The Core Bank’s noninterest expenses were
$42.6 million for the second quarter of 2024 compared to $45.5
million for the second quarter of 2023, a decrease of $2.8 million,
or 6% for the quarter. The primary driver for the lower noninterest
expenses for the second quarter of 2024 was lower salaries and
associated estimated incentive compensation accruals, which
decreased $1.9 million, or 7%, compared to the second quarter of
2023. This overall decline was driven primarily by a 42-count
reduction in the number of Core Bank FTEs from June 30, 2023 to
June 30, 2024.
Republic Processing Group(3)
RPG reported net income of $10.2 million for the second quarter
of 2024, a $1.3 million, or 14% increase over the $8.9 million for
the second quarter of 2023. RPG’s performance for the second
quarter of 2024 compared to the second quarter of 2023, by
operating segment, was as follows:
Tax Refund Solutions
TRS recorded net income of $3.1 million during the second
quarter of 2024 compared to net income of $2.2 million for the
second quarter of 2023. The overall increase in TRS net income for
the quarter was driven primarily by a $963,000 decrease in
Provision, as net charge-offs for Refund Advances (“RAs”) during
the quarter were favorably lower than the Company’s preliminary
estimated loan loss reserves as of March 31, 2024. In addition, the
Company also received a $560,000 payment during the second quarter
of 2024 representing a Tax Provider yield enhancement for the RA
program to help offset the Company’s higher funding costs. This
yield enhancement was new for the 2024 tax season.
Republic Payment
Solutions
Net income at RPS was $2.1 million for the second quarter of
2024, a $759,000 decrease from the second quarter of 2023. While
RPS earned a higher yield of 5.03% applied to the $360 million
average of prepaid program balances for the second quarter of 2024
compared to a yield of 4.52% for the $364 million in average
prepaid card balances for the second quarter of 2023, the higher
yield was substantially offset by a $1.3 million charge to interest
expense for a revenue sharing arrangement that was new for
2024.
Republic Credit
Solutions
Net income at RCS increased $1.1 million, or 29% from $3.9
million for the second quarter of 2023 to $5.0 million for the
second quarter of 2024. The increase in RCS net income was
primarily due to growth in profitability of one of its
Line-of-Credit (“LOC”) products, which had an increase in net
income of $938,000 from the second quarter of 2023 to the second
quarter of 2024. The rise in net income for this LOC product was
driven primarily by a period-to-period increase in average
outstanding loan balances of $8.8 million.
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 June 30, 2024, had approximately $6.6 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/20240719431470/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
から 9 2024 まで 10 2024
Republic Bancorp (NASDAQ:RBCAA)
過去 株価チャート
から 10 2023 まで 10 2024