Republic Bancorp, Inc. (NASDAQ: RBCAA), headquartered in Louisville, Kentucky, is the holding company for Republic Bank & Trust Company (the “Bank”).

Republic Bancorp, Inc. (“Republic” or the “Company”) is pleased to report third quarter net income of $5.6 million, an 8% increase over the third quarter of 2014, resulting in Diluted Earnings per Class A Common Share of $0.27. Year-to-date net income was $27.7 million, a $4.2 million, or 18%, increase from the same period in 2014, resulting in return on average assets (“ROA”) and return on average equity (“ROE”) of 0.94% and 6.45% for the first nine months of 2015.

Steve Trager, Republic’s Chairman and Chief Executive Officer, commented: “We continue to be proud of our growth in earnings. Producing such positive results continues to be challenging in today’s environment, as interest rates remain near historical lows, and the ability for banks to grow and earn positive margins on their products remains difficult. We have been able to overcome these headwinds and produce solid product growth in 2015 through our existing banking center footprint and our correspondent and warehouse lending channels.”

Trager further commented, “For quite some time, we have made it well known of our desire to make prudent bank acquisitions in one of our existing markets or a nearby synergistic market. I am pleased to say that on October 7, 2015, we were able to take a big step in achieving that goal with the announcement of our pending acquisition of Cornerstone Community Bank located in St. Petersburg, Florida. We are optimistic that we can close this acquisition during the first quarter of 2016 once all of the customary closing conditions have been completed. While I am extremely excited about this acquisition and what it means to the future of our Florida operations and our Company overall, I do not see it as the completion of a journey, but instead the beginning of one.”

The following table highlights Republic’s financial performance for the third quarter and first nine months of 2015 compared to the same periods in 2014:

               
Three Months Ended %Nine Months Ended %
(dollars in thousands, except per share data)9/30/15     9/30/14Change9/30/15     9/30/14Change
 
Income before income taxes $ 8,759 $ 8,254 6 % $ 41,982 $ 36,431 15 %
Net Income $ 5,640 $ 5,246 8 % $ 27,748 $ 23,552 18 %
Diluted Earnings per Class A Share $ 0.27 $ 0.25 8 % $ 1.34 $ 1.13 19 %
ROA 0.57 % 0.59 % -3 % 0.94 % 0.89 % 6 %
ROE 3.91 % 3.76 % 4 % 6.45 % 5.65 % 14 %
 

Results of Operations for the Third Quarter of 2015 Compared to the Third Quarter of 2014

Traditional Banking, Warehouse Lending (“Warehouse”) and Mortgage Banking (collectively “Core Bank” or “Core Banking”)

Net income from Core Banking was $7.1 million for the third quarter of 2015, an increase of $679,000, or 11%, from the third quarter of 2014. As with the previous quarters of 2015, the increase in net income for the third quarter of 2015 at the Core Bank continued to be driven primarily by higher net interest income resulting from solid loan growth. The Core Bank’s growth in net interest income was further complemented by a solid increase in the Bank’s debit and credit card-related interchange fee income combined with a continued modest provision for loan and lease losses.

Net interest income at the Core Bank increased to $31.0 million during the third quarter of 2015, a $2.6 million, or 9%, increase over the third quarter of 2014. Net interest income for the third quarter of 2015 benefitted from robust year-over-year loan growth. This growth over the previous twelve months led to an increase in the Core Bank’s average loan balances of $434 million, or 16%, when comparing the third quarter of 2015 to the third quarter of 2014. The growth in average loan balances more than offset the negative impact to the Core Bank’s net interest income resulting from a decrease of 11 basis points to its net interest margin from the third quarter of 2014 to the third quarter of 2015.

The overall change in the Core Bank’s period-end and average loan balances by origination channel is presented below:

                       
Average Average
Ending Ending Quarterly Quarterly
(dollars in thousands) Balance Balance $ Balance Balance $
Origination Channel 9/30/2015 12/31/2014 Change 9/30/2015 9/30/2014 Change
 
Warehouse Lending $ 393,555 $ 319,431 $ 74,124 $ 365,291 $ 243,020 $ 122,271
Correspondent Lending 246,122 226,628 19,494 245,114 69,532 175,582
2012-FDIC Acquired Loans 28,200 40,188 (11,988 ) 29,268 51,845 (22,577 )
Traditional Branch Network 2,624,867 2,450,167 174,700 2,587,067 2,428,092 158,975
 

 

 

 

 

 

   

 

 

 

 

 

 
Total Core Bank Loans $3,292,744 $ 3,036,414 $ 256,330   $3,226,740 $ 2,792,489 $ 434,251  
 

Within the Warehouse Lending channel, net interest income was particularly strong compared to the third quarter of 2014, as Warehouse lines of credit usage continued to be high among the Core Bank’s clients during the quarter. The Core Bank’s Warehouse balances at September 30, 2015 were $74 million higher than balances on December 31, 2014 and $121 million above balances on September 30, 2014.

Net interest income at the Core Bank for the third quarter of 2015 includes $1.1 million of net interest income contributed from the Company’s 2012 FDIC-assisted transactions compared to $1.5 million contributed during the third quarter of 2014. Accretion income from the 2012 FDIC-assisted transactions contributed seven and nine basis points to the Core Bank’s net interest margin during these two periods.

The Core Bank’s provision for loan and lease losses remained modest for the third quarter of 2015, as overall credit quality remained strong and the Core Bank’s credit metrics continued to compare favorably to peer. Core Bank provision expense was $1.1 million for the third quarter of 2015, a favorable decrease of $442,000 compared to the third quarter of 2014. Provision expense for the third quarters of 2015 and 2014 primarily represented an increase in general loan loss reserves, driven by the previously mentioned strong growth in the Core Bank’s loan portfolio.

The table below illustrates the Core Bank’s well-regarded credit quality ratios for 2015 quarter ends and the previous three calendar year ends:

   
As of and for the:
Quarter Ending:         Year Ending:
               
Core Banking Credit Quality Ratios 9/30/15 6/30/15 3/31/15 12/31/14 12/31/13 12/31/12
 
Non-performing loans to total loans 0.70% 0.74% 0.79% 0.78% 0.81% 0.82%
 
Non-performing assets to total loans (including OREO) 0.79% 0.83% 1.00% 1.15% 1.47% 1.79%
 
Delinquent loans to total loans 0.36% 0.34% 0.49% 0.52% 0.63% 0.79%
 
Net charge-offs to average loans 0.05% 0.04% 0.02% 0.08% 0.18% 0.34%
(Annualized as of 9/30/15, 6/30/15 and 3/31/15)
                                         
OREO = Other Real Estate Owned                                        
 

Non-interest income for the Core Bank was $7.2 million during the third quarter of 2015 compared to $6.4 million for the third quarter of 2014. Improvements of $750,000 and $459,000 in net loss on other real estate owned (“OREO”) and interchange fee income, respectively, were partially offset by a $169,000 decrease in service charges on deposits. The improvement in net loss on OREO was driven by a $513,000 reduction in mark-to-market OREO writedowns from the same period in 2014. The increase in interchange fee income was primarily driven by increases in both credit and debit card sales volume of 30% and 5%, respectively. Such sales growth was further complemented by a greater mix of commercial credit and signature debit transactions, which generally generate higher margins than consumer related transactions.

Core Bank non-interest expense increased $2.8 million, or 12%, from the third quarter of 2014 to $25.9 million during the same period in 2015. Comparability of non-interest expense between the two quarters was meaningfully impacted by adjustments to the Core Bank’s incentive compensation accruals, which were made during both periods to bring accrual balances in line with projected payouts for the year. As a result of these adjustments, net incentive compensation expense was $834,000 for the third quarter of 2015 compared to a net credit of $577,000 for the third quarter of 2014.

Excluding the impact of these incentive compensation adjustments, non-interest expense increased $1.4 million, or 6%, for the third quarter of 2015 as compared to the third quarter of 2014. A large portion of the increase in non-interest expense for the quarter, excluding incentive compensation adjustments, was in the salaries and benefits category as the Core Bank increased its full-time equivalent employees (“FTEs”) from 681 at September 30, 2014 to 712 at September 30, 2015. The increased staffing was generally spread throughout the Core Bank in order to meet current loan demand and execute the Company’s overall long-term growth objectives.

Conclusion

“As we move into the final quarter of 2015, we have positive momentum on several fronts. In addition to our recently announced acquisition, we are excited about the traction we have in our non-traditional small dollar loan program as we have another pilot set to launch in the fourth quarter of 2015. We are also in the preliminary stages of developing plans to expand the reach of our Traditional Bank via enhanced mobile capabilities. If implemented, our mobile banking initiative would give us the ability to market products and services to clients in all 50 states beginning in late 2016. In the meantime, we will continue to review and enhance our strategic plan, as we seek to heighten our overall organic performance and meet our goals of managing risk and maximizing our shareholders’ returns commensurate with the highest performing banks in the Nation,” concluded Trager.

Republic Bancorp, Inc. (the “Company”) is the parent company of Republic Bank & Trust Company (the “Bank”). The Bank currently has 40 banking centers: 32 banking centers in 12 Kentucky communities - Covington, Crestwood, Elizabethtown, Florence, Frankfort, Georgetown, Independence, Lexington, Louisville, Owensboro, Shelbyville and Shepherdsville; three banking centers in southern Indiana – Floyds Knobs, Jeffersonville and New Albany; two banking centers in Florida – Port Richey and Temple Terrace; two banking centers in Tennessee – Cool Springs (Franklin) and Green Hills (Nashville); and one banking center in Blue Ash (Cincinnati), Ohio. The Bank offers internet banking at www.republicbank.com. The Company has $4.0 billion in assets and is headquartered in Louisville, Kentucky. The Company’s Class A Common Stock is listed under the symbol “RBCAA” on the NASDAQ Global Select Market.

Republic Bank. It’s just easier here. ®

Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements in the preceding paragraphs are based on our current expectations and assumptions regarding our business, the future impact to our balance sheet and income statement resulting from changes in interest rates, the ability to develop products and strategies in order to meet the Company’s long-term strategic goals, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the actual timing, magnitude and frequency of interest rate changes, as well as the actual changes in market conditions and the application and timing of various management strategies as compared to those projected in our interest rate model. Additionally, actual results could differ materially from the interest rate model if interest rates do not move equally across all points on the yield curve and based upon other 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, 2014. The Company undertakes no obligation to update any forward-looking statements. These forward-looking statements are made only as of the date of this release, and the Company undertakes no obligation to release revisions to these forward-looking statements to reflect events or conditions after the date of this release.

           

Republic Bancorp, Inc. Financial Information

Third Quarter 2015 Earnings Release

(all amounts other than per share amounts, number of employees and number of banking centers are expressed in thousands unless otherwise noted)

 
Balance Sheet Data
Sept. 30, 2015 Dec. 31, 2014 Sept. 30, 2014
Assets:
Cash and cash equivalents $ 90,731 $ 72,878 $ 69,682
Investment securities 502,599 481,348 500,221
Loans held for sale 12,326 6,388 5,890
Loans 3,297,874 3,040,495 2,908,535
Allowance for loan and lease losses   (26,959 )   (24,410 )   (23,617 )
Loans, net 3,270,915 3,016,085 2,884,918
Federal Home Loan Bank stock, at cost 28,208 28,208 28,208
Premises and equipment, net 29,877 32,987 32,395
Premises, held for sale 1,218 1,317 -
Goodwill 10,168 10,168 10,168
Other real estate owned ("OREO") 2,832 11,243 11,937
Bank owned life insurance ("BOLI") 52,465 51,415 51,037
Other assets and accrued interest receivable   34,638     34,976     31,163  
Total assets $ 4,035,977   $ 3,747,013   $ 3,625,619  
 
Liabilities and Stockholders' Equity:
Deposits:
Non interest-bearing $ 637,875 $ 502,569 $ 534,662
Interest-bearing   1,729,955     1,555,613     1,525,174  
Total deposits 2,367,830 2,058,182 2,059,836
 
Securities sold under agreements to repurchase and other short-term borrowings 309,624 356,108 275,874
Federal Home Loan Bank advances 711,500 707,500 662,000
Subordinated note 41,240 41,240 41,240
Other liabilities and accrued interest payable   31,071     25,252     29,301  
Total liabilities 3,461,265 3,188,282 3,068,251
 
Stockholders' equity   574,712     558,731     557,368  
Total liabilities and Stockholders' equity $ 4,035,977   $ 3,747,013   $ 3,625,619  
 
               
Average Balance Sheet Data
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
2015 2014 2015 2014
Assets:
Investment securities, including FHLB stock $ 533,956 $ 539,020 $ 530,114 $ 523,207
Federal funds sold and other interest-earning deposits 30,633 29,713 67,960 154,036
Loans and fees, including loans held for sale 3,235,057 2,795,788 3,148,838 2,664,113
Total interest-earning assets 3,799,646 3,364,521 3,746,912 3,341,356
Total assets 3,971,501 3,530,013 3,947,210 3,519,288
 
Liabilities and Stockholders' Equity:
Non interest-bearing deposits $ 609,641 $ 521,360 $ 643,128 $ 562,300
Interest-bearing deposits 1,740,553 1,497,802 1,693,888 1,500,013

Securities sold under agreements to repurchase and other short-term borrowings

363,905 317,053 363,518 266,765
Federal Home Loan Bank advances 616,509 575,761 610,571 577,606
Subordinated note 41,240 41,240 41,240 41,240
Total interest-bearing liabilities 2,762,207 2,431,856 2,709,217 2,385,624
Stockholders' equity 577,185 558,750 573,482 555,934
 

               

Republic Bancorp, Inc. Financial Information

Third Quarter 2015 Earnings Release (continued)

(all amounts other than per share amounts, number of employees and number of banking centers are expressed in thousands unless otherwise noted)

 
Income Statement Data
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
2015 2014 2015 2014
 
Total interest income(1) $ 36,107 $ 33,144 $ 105,590 $ 98,046
Total interest expense   4,683     4,702     14,086     14,750  
 
Net interest income 31,424 28,442 91,504 83,296
 
Provision for loan and lease losses 2,233 1,510 3,322 1,500
 
Non interest income:
Service charges on deposit accounts 3,399 3,568 9,685 10,426
Net refund transfer fees 97 (133 ) 17,339 16,091
Mortgage banking income 972 876 3,549 2,174
Interchange fee income 1,967 1,619 6,205 5,344
Gain on call of security available for sale - - 88 -
Net loss on OREO (8 ) (758 ) (282 ) (1,309 )
Increase in cash surrender value of BOLI 348 381 1,050 951
Other   1,031     974     2,643     2,646  
Total Non interest income   7,806     6,527     40,277     36,323  
 
Non interest expenses:
Salaries and employee benefits 15,297 12,164 44,897 40,612
Occupancy and equipment, net 5,217 5,544 15,560 16,874
Communication and transportation 951 905 2,768 2,787
Marketing and development 756 1,135 2,318 2,466
FDIC insurance expense 474 424 1,622 1,407
Bank franchise tax expense 846 731 4,094 3,901
Data processing 959 824 3,017 2,495
Interchange related expense 909 788 2,847 2,632
Supplies 229 205 809 705
OREO expense 146 218 485 916
Legal and professional fees 653 730 2,796 2,179
Other   1,801     1,537     5,264     4,714  
Total Non interest expenses   28,238     25,205     86,477     81,688  
 
Income before income tax expense 8,759 8,254 41,982 36,431
Income tax expense   3,119     3,008     14,234     12,879  
 
Net income $ 5,640   $ 5,246   $ 27,748   $ 23,552  
 

               

Republic Bancorp, Inc. Financial Information

Third Quarter 2015 Earnings Release (continued)

(all amounts other than per share amounts, number of employees and number of banking centers are expressed in thousands unless otherwise noted)

 
Selected Data and Statistics
As of and for the As of and for the
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
2015 2014 2015 2014
Per Share Data:
 
Basic average shares outstanding 20,848 20,797 20,856 20,795
Diluted average shares outstanding 20,934 20,891 20,936 20,891
 
End of period shares outstanding:
Class A Common Stock 18,603 18,567 18,603 18,567
Class B Common Stock 2,245 2,245 2,245 2,245
 
Book value per share(2) $ 27.57 $ 26.78 $ 27.57 $ 26.78
Tangible book value per share(2) 26.84 26.06 26.84 26.06
 
Earnings per share:
Basic earnings per Class A Common Stock $ 0.27 $ 0.25 $ 1.34 $ 1.14
Basic earnings per Class B Common Stock 0.25 0.24 1.22 1.09
Diluted earnings per Class A Common Stock 0.27 0.25 1.34 1.13
Diluted earnings per Class B Common Stock 0.25 0.24 1.22 1.08
 
Cash dividends declared per share:
Class A Common Stock $ 0.198 $ 0.187 $ 0.583 $ 0.550
Class B Common Stock 0.180 0.170 0.530 0.500
 
Performance Ratios:
 
Return on average assets 0.57 % 0.59 % 0.94 % 0.89 %
Return on average equity 3.91 3.76 6.45 5.65
Efficiency ratio(3) 72 72 66 69
Yield on average interest-earning assets 3.80 3.94 3.76 3.91
Cost of interest-bearing liabilities 0.68 0.77 0.69 0.82
Cost of deposits(4) 0.18 0.18 0.18 0.18
Net interest spread 3.12 3.17 3.07 3.09
Net interest margin - Total Company 3.31 3.38 3.26 3.32
Net interest margin - Core Banking(5) 3.27 3.38 3.23 3.34
 
Other Information:
 
End of period full-time equivalent employees 769 734 769 734
Number of banking centers 40 42 40 42
 

       

Republic Bancorp, Inc. Financial Information

Third Quarter 2015 Earnings Release (continued)

(all amounts other than per share amounts, number of employees and number of banking centers are expressed in thousands unless otherwise noted)

 
Credit Quality Data and Statistics As of and for the As of and for the
Three Months Ended Sept. 30, Nine Months Ended Sept. 30,
2015     2014 2015     2014
Credit Quality Asset Balances:
 
Loans on non-accrual status $ 23,143 $ 21,447 $ 23,143 $ 21,447
Loans past due 90-days-or-more and still on accrual   43     -     43     -  
Total non-performing loans 23,186 21,447 23,186 21,447
OREO   2,832     11,937     2,832     11,937  
Total non-performing assets $ 26,018   $ 33,384   $ 26,018   $ 33,384  
Total delinquent loans $ 11,996 $ 12,226 $ 11,996 $ 12,226
 

 

Credit Quality Ratios:
 
Non-performing loans to total loans 0.70 % 0.74 % 0.70 % 0.74 %
Non-performing assets to total loans (including OREO) 0.79 1.14 0.79 1.14
Non-performing assets to total assets 0.64 0.92 0.64 0.92
Allowance for loan and lease losses to total loans 0.82 0.81 0.82 0.81
Allowance for loan and lease losses to non-performing loans 116 110 116 110
Delinquent loans to total loans(6) 0.36 0.42 0.36 0.42
Net charge-offs to average loans (annualized) - Total Company 0.06 0.10 0.03 0.05
Net charge-offs to average loans (annualized) - Core Banking(5) 0.05 0.10 0.04 0.07
 
                   

Republic Bancorp, Inc. Financial Information

Third Quarter 2015 Earnings Release (continued)

(all amounts other than per share amounts, number of employees and number of banking centers are expressed in thousands unless otherwise noted)

 
Balance Sheet Data
Quarterly Comparison
Sept. 30, 2015 Jun. 30, 2015 Mar. 31, 2015 Dec. 31, 2014 Sept. 30, 2014
Assets:
Cash and cash equivalents $ 90,731 $ 92,766 $ 136,349 $ 72,878 $ 69,682
Investment securities 502,599 499,682 508,719 481,348 500,221
Loans held for sale 12,326 11,819 12,748 6,388 5,890
Loans 3,297,874 3,323,977 3,155,436 3,040,495 2,908,535
Allowance for loan and lease losses   (26,959 )   (25,248 )   (24,631 )   (24,410 )   (23,617 )
Loans, net 3,270,915 3,298,729 3,130,805 3,016,085 2,884,918
Federal Home Loan Bank stock, at cost 28,208 28,208 28,208 28,208 28,208
Premises and equipment, net 29,877 31,092 31,817 32,987 32,395
Premises, held for sale 1,218 2,468 1,284 1,317 -
Goodwill 10,168 10,168 10,168 10,168 10,168
Other real estate owned 2,832 2,920 6,736 11,243 11,937
Bank owned life insurance 52,465 52,117 51,764 51,415 51,037
Other assets and accrued interest receivable   34,638     36,250     33,589     34,976     31,163  
Total assets $ 4,035,977   $ 4,066,219   $ 3,952,187   $ 3,747,013   $ 3,625,619  
 
Liabilities and Stockholders' Equity:
Deposits:
Non interest-bearing $ 637,875 $ 598,572 $ 666,166 $ 502,569 $ 534,662
Interest-bearing   1,729,955     1,681,038     1,714,051     1,555,613     1,525,174  
Total deposits 2,367,830 2,279,610 2,380,217 2,058,182 2,059,836
 

Securities sold under agreements to repurchase and other short-term borrowings

309,624 229,825 332,534 356,108 275,874
Federal Home Loan Bank advances 711,500 916,500 596,500 707,500 662,000
Subordinated note 41,240 41,240 41,240 41,240 41,240
Other liabilities and accrued interest payable   31,071     26,072     32,225     25,252     29,301  
Total liabilities 3,461,265 3,493,247 3,382,716 3,188,282 3,068,251
 
Stockholders' equity   574,712     572,972     569,471     558,731     557,368  
Total liabilities and Stockholders' equity $ 4,035,977   $ 4,066,219   $ 3,952,187   $ 3,747,013   $ 3,625,619  
 
 
 
Average Balance Sheet Data
Quarterly Comparison
Sept. 30, 2015 Jun. 30, 2015 Mar. 31, 2015 Dec. 31, 2014 Sept. 30, 2014
Assets:
Investment securities, including FHLB stock $ 533,956 $ 531,402 $ 524,883 $ 533,288 $ 539,020
Federal funds sold and other interest-earning deposits 30,633 32,300 142,172 14,251 29,713
Loans and fees, including loans held for sale 3,235,057 3,180,127 3,029,067 2,958,458 2,795,788
Total interest-earning assets 3,799,646 3,743,829 3,696,122 3,505,997 3,364,521
Total assets 3,971,501 3,925,312 3,944,527 3,679,296 3,530,013
 
Liabilities and Stockholders' Equity:
Non interest-bearing deposits $ 609,641 $ 601,371 $ 719,581 $ 529,091 $ 521,360
Interest-bearing deposits 1,740,553 1,703,982 1,635,979 1,540,432 1,497,802

Securities sold under agreements to repurchase and other short-term borrowings

363,905 335,530 391,421 383,526 317,053
Federal Home Loan Bank advances 616,509 646,737 567,934 605,018 575,761
Subordinated note 41,240 41,240 41,240 41,240 41,240
Total interest-bearing liabilities 2,762,207 2,727,489 2,636,574 2,570,216 2,431,856
Stockholders' equity 577,185 575,653 567,499 561,666 558,750
 

                   

Republic Bancorp, Inc. Financial Information

Third Quarter 2015 Earnings Release (continued)

(all amounts other than per share amounts, number of employees and number of banking centers are expressed in thousands unless otherwise noted)

 
Income Statement Data
Three Months Ended
Sept. 30, 2015 Jun. 30, 2015 Mar. 31, 2015 Dec. 31, 2014 Sept. 30, 2014
 
Total interest income(1) $ 36,107 $ 35,722 $ 33,761 $ 34,331 $ 33,144
Total interest expense   4,683     4,664     4,739     4,854     4,702  
Net interest income 31,424 31,058 29,022 29,477 28,442
 
Provision for loan and lease losses 2,233 904 185 1,359 1,510
 
Non interest income:
Service charges on deposit accounts 3,399 3,247 3,039 3,381 3,568
Net refund transfer fees 97 1,907 15,335 39 (133 )
Mortgage banking income 972 1,224 1,353 688 876
Interchange fee income 1,967 2,044 2,194 1,673 1,619
Gain on call of security available for sale - 88 - - -
Net loss on OREO (8 ) (155 ) (119 ) (909 ) (758 )
Increase in cash surrender value of BOLI 348 353 349 378 381
Other   1,031     777     835     946     974  
Total Non interest income   7,806     9,485     22,986     6,196     6,527  
 
Non interest expenses:
Salaries and employee benefits 15,297 14,323 15,277 13,761 12,164
Occupancy and equipment, net 5,217 5,142 5,201 5,134 5,544
Communication and transportation 951 771 1,046 1,079 905
Marketing and development 756 977 585 798 1,135
FDIC insurance expense 474 474 674 458 424
Bank franchise tax expense 846 847 2,401 715 731
Data processing 959 1,092 966 1,018 824
Interchange related expense 909 931 1,007 818 788
Supplies 229 219 361 304 205
OREO expense 146 120 219 108 218
Legal and professional fees 653 528 1,615 587 730
Other   1,801     1,741     1,722     1,650     1,537  
Total Non interest expenses   28,238     27,165     31,074     26,430     25,205  
 
Income before income tax expense 8,759 12,474 20,749 7,884 8,254
Income tax expense   3,119     4,154     6,961     2,649     3,008  
 
Net income $ 5,640   $ 8,320   $ 13,788   $ 5,235   $ 5,246  
 

                   

Republic Bancorp, Inc. Financial Information

Third Quarter 2015 Earnings Release (continued)

(all amounts other than per share amounts, number of employees and number of banking centers are expressed in thousands unless otherwise noted)

 
Selected Data and Statistics
As of and for the Three Months Ended
Sept. 30, 2015 Jun. 30, 2015 Mar. 31, 2015 Dec. 31, 2014 Sept. 30, 2014
Per Share Data:
 
Basic average shares outstanding 20,848 20,860 20,859 20,831 20,797
Diluted average shares outstanding 20,934 20,941 20,936 20,921 20,891
 
End of period shares outstanding:
Class A Common Stock 18,603 18,602 18,616 18,603 18,567
Class B Common Stock 2,245 2,245 2,245 2,245 2,245
 
Book value per share(2) $ 27.57 $ 27.48 $ 27.30 $ 26.80 $ 26.78
Tangible book value per share(2) 26.84 26.76 26.58 26.08 26.06
 
Earnings per share:
Basic earnings per Class A Common Stock $ 0.27 $ 0.40 $ 0.66 $ 0.25 $ 0.25
Basic earnings per Class B Common Stock 0.25 0.37 0.65 0.24 0.24
Diluted earnings per Class A Common Stock 0.27 0.40 0.66 0.25 0.25
Diluted earnings per Class B Common Stock 0.25 0.36 0.64 0.24 0.24
 
Cash dividends declared per share:
Class A Common Stock $ 0.198 $ 0.198 $ 0.187 $ 0.187 $ 0.187
Class B Common Stock 0.180 0.180 0.170 0.170 0.170
 
Performance Ratios:
 
Return on average assets 0.57 % 0.85 % 1.40 % 0.57 % 0.59 %
Return on average equity 3.91 5.78 9.72 3.73 3.76
Efficiency ratio(3) 72 67 60 74 72
Yield on average interest-earning assets 3.80 3.82 3.65 3.92 3.94
Cost of interest-bearing liabilities 0.68 0.68 0.72 0.76 0.77
Cost of deposits(4) 0.18 0.18 0.19 0.20 0.18
Net interest spread 3.12 3.14 2.93 3.16 3.17
Net interest margin - Total Company 3.31 3.32 3.14 3.36 3.38
Net interest margin - Core Banking(5) 3.27 3.28 3.14 3.36 3.38
 
Other Information:
 
End of period full-time equivalent employees 769 751 745 723 734
Number of banking centers 40 40 40 41 42
 

                   

Republic Bancorp, Inc. Financial Information

Third Quarter 2015 Earnings Release (continued)

(all amounts other than per share amounts, number of employees and number of banking centers are expressed in thousands unless otherwise noted)

 
Credit Quality Data and Statistics
As of and for the Three Months Ended
Sept. 30, 2015 Jun. 30, 2015 Mar. 31, 2015 Dec. 31, 2014 Sept. 30, 2014
Credit Quality Asset Balances:
Loans on non-accrual status $ 23,143 $ 24,624 $ 24,423 $ 23,337 $ 21,447
Loans past due 90-days-or-more and still on accrual   43     -     572     322     -  
Total non-performing loans 23,186 24,624 24,995 23,659 21,447
OREO   2,832     2,920     6,736     11,243     11,937  
Total non-performing assets $ 26,018   $ 27,544   $ 31,731   $ 34,902   $ 33,384  
Total delinquent loans $ 11,996 $ 11,355 $ 15,511 $ 15,851 $ 12,226
 
 
Credit Quality Ratios:
Non-performing loans to total loans 0.70 % 0.74 % 0.79 % 0.78 % 0.74 %
Non-performing assets to total loans (including OREO) 0.79 0.83 1.00 1.14 1.14
Non-performing assets to total assets 0.64 0.68 0.80 0.93 0.92
Allowance for loan and lease losses to total loans 0.82 0.76 0.78 0.80 0.81
Allowance for loan and lease losses to non-performing loans 116 103 99 103 110
Delinquent loans to total loans(6) 0.36 0.34 0.49 0.52 0.42
Net charge-offs to average loans (annualized) - Total Company 0.06 0.04 0.00 0.08 0.10
Net charge-offs to average loans (annualized) - Core Banking(5) 0.05 0.04 0.02 0.08 0.10
 

           

Republic Bancorp, Inc. Financial Information
Third Quarter 2015 Earnings Release (continued)

 

Segment Data:

 

Reportable segments are determined by the type of products and services offered and the level of information provided to the chief operating decision maker, who uses such information to review performance of various components of the business (such as banking centers and business units), which are then aggregated if operating performance, products/services, and customers are similar.

 

As of September 30, 2015, the Company was divided into four distinct operating segments: Traditional Banking, Warehouse Lending, Mortgage Banking and Republic Processing Group (“RPG”). Management considers the first three segments to collectively constitute “Core Bank” or “Core Banking” activities. Correspondent Lending operations are considered part of the Traditional Banking segment. The RPG segment includes the following divisions: Tax Refund Solutions (“TRS”), Republic Payment Solutions (“RPS”) and Republic Credit Solutions (“RCS”). TRS generates the majority of RPG’s income, with the relatively smaller divisions of RPG, RPS and RCS, considered immaterial for separate and independent segment reporting. All divisions of the RPG segment operate through the Company.

 

The nature of segment operations and the primary drivers of net revenues by reportable segment are provided below:

 

Segment:

Nature of Operations:

Primary Drivers of Net Revenues:

 

 

   

 

   

 

Core Banking:
Traditional Banking Provides traditional banking products primarily to customers in the Company's market footprint. Loans, investments and deposits
Warehouse Lending Provides short-term, revolving credit facilities to mortgage bankers across the Nation. Mortgage warehouse lines of credit
  Mortgage Banking     Primarily originates, sells and services long-term, single family, first lien residential real estate loans.     Gain on sale of loans and servicing fees
Republic Processing Group The TRS division facilitates the receipt and payment of federal and state tax refund products. The RPS division offers general purpose reloadable cards. The RCS division offers short-term credit products. Net refund transfer fees
 

The accounting policies used for Republic’s reportable segments are the same as those described in the summary of significant accounting policies in the Company’s 2014 Annual Report on Form 10-K. Segment performance is evaluated using operating income. Goodwill is not allocated. Income taxes are generally allocated based on income before income tax expense unless specific segment allocations can be reasonably made. Transactions among reportable segments are made at carrying value.

 

   

Republic Bancorp, Inc. Financial Information

Third Quarter 2015 Earnings Release (continued)

 

Segment information for the three and nine months ended September 30, 2015 and 2014 follows:

 

Three Months Ended September 30, 2015

Core Banking        
(dollars in thousands)    

Traditional
Banking

   

Warehouse
Lending

   

Mortgage
Banking

   

Total Core
Banking

    

Republic
Processing Group

    Total Company
           
Net interest income $ 27,612 $ 3,308 $ 67 $ 30,987 $ 437 $ 31,424
 
Provision for loan and lease losses 1,338 (238 ) - 1,100 1,133 2,233
 
Net refund transfer fees - - - - 97 97
Mortgage banking income - - 972 972 - 972
Other non-interest income   6,115     8     76     6,199     538     6,737  
Total non-interest income 6,115 8 1,048 7,171 635 7,806
 
Total non-interest expenses   24,109     663     1,151     25,923     2,315     28,238  
 
Income (loss) before income tax expense 8,280 2,891 (36 ) 11,135 (2,376 ) 8,759
Income tax expense (benefit)   2,879     1,174     (13 )   4,040     (921 )   3,119  
Net income (loss) $ 5,401   $ 1,717   $ (23 )$7,095   $ (1,455 )$5,640  
 
Segment end of period assets $ 3,600,230 $ 393,110 $ 13,832 $ 4,007,172 $ 28,805 $ 4,035,977
 
Net interest margin 3.23 % 3.62 % NM 3.27 % NM 3.31 %
 
 
Three Months Ended September 30, 2014
Core Banking
(dollars in thousands)    

Traditional
Banking

   

Warehouse
Lending

   

Mortgage
Banking

   

Total Core
Banking

    

Republic
Processing Group

    Total Company
 
Net interest income $ 26,103 $ 2,234 $ 38 $ 28,375 $ 67 $ 28,442
 
Provision for loan and lease losses 1,471 71 - 1,542 (32 ) 1,510
 
Net refund transfer fees - - - - (133 ) (133 )
Mortgage banking income - - 876 876 - 876
Other non-interest income   5,452     4     41     5,497     287     5,784  
Total non-interest income 5,452 4 917 6,373 154 6,527
 
Total non-interest expenses   21,899     466     754     23,119     2,086     25,205  
 
Income (loss) before income tax expense 8,185 1,701 201 10,087 (1,833 ) 8,254
Income tax expense (benefit)   3,005     595     71     3,671     (663 )   3,008  
Net income (loss) $ 5,180   $ 1,106   $ 130   $6,416   $ (1,170 )$5,246  
 
Segment end of period assets $ 3,325,922 $ 272,264 $ 11,150 $ 3,609,336 $ 16,283 $ 3,625,619
 
Net interest margin 3.35 % 3.68 % NM 3.38 % NM 3.38 %
 

   
Nine Months Ended September 30, 2015
Core Banking        
(dollars in thousands)    

Traditional
Banking

   

Warehouse
Lending

   

Mortgage
Banking

   

Total Core
Banking

    

Republic
Processing Group

    Total Company
           
Net interest income $ 80,369 $ 9,354 $ 180 $ 89,903 $ 1,601 $ 91,504
 
Provision for loan and lease losses 2,007 185 - 2,192 1,130 3,322
 
Net refund transfer fees - - - - 17,339 17,339
Mortgage banking income - - 3,549 3,549 - 3,549
Gain on call of security available for sale 88 - - 88 - 88
Other non-interest income   17,286     19     231     17,536     1,765     19,301  
Total non-interest income 17,374 19 3,780 21,173 19,104 40,277
 
Total non-interest expenses   71,351     1,846     3,710     76,907     9,570     86,477  
 
Income before income tax expense 24,385 7,342 250 31,977 10,005 41,982
Income tax expense   7,813     2,732     87     10,632     3,602     14,234  
Net income $ 16,572   $ 4,610   $ 163   $21,345   $ 6,403   $27,748  
 
Segment end of period assets $ 3,600,230 $ 393,110 $ 13,832 $ 4,007,172 $ 28,805 $ 4,035,977
 
Net interest margin 3.19 % 3.58 % NM 3.23 % NM 3.26 %
 
 
Nine Months Ended September 30, 2014
Core Banking
(dollars in thousands)    

Traditional
Banking

   

Warehouse
Lending

   

Mortgage
Banking

   

Total Core
Banking

    

Republic
Processing Group

    Total Company
 
Net interest income $ 77,809 $ 5,082 $ 133 $ 83,024 $ 272 $ 83,296
 
Provision for loan and lease losses 1,780 232 - 2,012 (512 ) 1,500
 
Net refund transfer fees - - - - 16,091 16,091
Mortgage banking income - - 2,174 2,174 - 2,174
Other non-interest income   16,451     9     186     16,646     1,412     18,058  
Total non-interest income 16,451 9 2,360 18,820 17,503 36,323
 
Total non-interest expenses   68,431     1,294     2,977     72,702     8,986     81,688  
 
Income (loss) before income tax expense 24,049 3,565 (484 ) 27,130 9,301 36,431
Income tax expense (benefit)   8,346     1,248     (169 )   9,425     3,454     12,879  
Net income (loss) $ 15,703   $ 2,317   $ (315 )$17,705   $ 5,847   $23,552  
 
Segment end of period assets $ 3,325,922 $ 272,264 $ 11,150 $ 3,609,336 $ 16,283 $ 3,625,619
 
Net interest margin 3.32 % 3.80 % NM 3.34 % NM 3.32 %
 

       

Republic Bancorp, Inc. Financial Information

Third Quarter 2015 Earnings Release (continued)

 

(1) – The amount of loan fee income included in total interest income was $2.5 million and $1.8 million for the quarters ended September 30, 2015 and 2014. The amount of loan fee income included in total interest income was $7.2 million and $7.2 million for the nine months ended September 30, 2015 and 2014.

 

The amount of loan fee income included in total interest income per quarter was as follows: $2.5 million (quarter ended September 30, 2015); $2.9 million (quarter ended June 30, 2015); $1.8 million (quarter ended March 31, 2015); $2.2 million (quarter ended December 31, 2014); and $1.8 million (quarter ended September 30, 2014).

 

(2) – The following table provides a reconciliation of total stockholders’ equity in accordance with U.S. Generally Accepted Accounting Principles to tangible stockholders’ equity in accordance with applicable regulatory requirements. The Company provides the tangible book value ratio, in addition to those defined by banking regulators, because of its widespread use by investors as a means to evaluate capital adequacy.

 
Quarterly Comparison
(in thousands, except per share data) Sept. 30, 2015   Jun. 30, 2015 Mar. 31, 2015 Dec. 31, 2014 Sept. 30, 2014
Total stockholders' equity (a) $ 574,712 $ 572,972 $ 569,471 $ 558,731 $ 557,368
Less: Goodwill 10,168 10,168 10,168 10,168 10,168
Less: Mortgage servicing rights   4,968     4,971     4,864     4,813     4,881  
Tangible stockholders' equity (c) $ 559,576   $ 557,833   $ 554,439   $ 543,750   $ 542,319  
 
Total assets (b) $ 4,035,977 $ 4,066,219 $ 3,952,187 $ 3,747,013 $ 3,625,619
Less: Goodwill 10,168 10,168 10,168 10,168 10,168
Less: Mortgage servicing rights   4,968     4,971     4,864     4,813     4,881  
Tangible assets (d) $ 4,020,841   $ 4,051,080   $ 3,937,155   $ 3,732,032   $ 3,610,570  
 
Total stockholders' equity to total assets (a/b) 14.24 % 14.09 % 14.41 % 14.91 % 15.37 %
Tangible stockholders' equity to tangible assets (c/d) 13.92 % 13.77 % 14.08 % 14.57 % 15.02 %
 
Number of shares outstanding (e)   20,848     20,847     20,861     20,848     20,812  
 
Book value per share (a/e) $ 27.57 $ 27.48 $ 27.30 $ 26.80 $ 26.78
Tangible book value per share (c/e) 26.84 26.76 26.58 26.08 26.06
 

(3) – The efficiency ratio equals total non-interest expense divided by the sum of net interest income and non-interest income. The ratio excludes net gain (loss) on sales, calls and impairment of investment securities, if applicable.

 

(4) – The cost of deposits ratio equals annualized total interest expense on deposits divided by total average interest-bearing deposits plus total average non interest-bearing deposits.

 

(5) – Ratio relates only to Core Banking operations, which consists of the Traditional Banking, Warehouse Lending and Mortgage Banking segments.

 

(6) – The delinquent loans to total loans ratio equals loans 30-days-or-more past due divided by total loans.

 

NM – Not meaningful