Republic Posts Net Income of $5.7 Million for the Third Quarter of 2009, a 26% Increase Over the Third Quarter of 2008

• Press Release
• Source: Republic Bancorp
• On 8:30 am EDT, Tuesday October 20, 2009

LOUISVILLE, Ky.--(BUSINESS WIRE)--Republic Bancorp is pleased to report net income of $5.7 million for the third quarter of 2009, a $1.2 million, or 26%, increase over the same period in 2008. Diluted Earnings per Class A Common Share increased 23% for the quarter to $0.27. For the first nine months of 2009, the Company achieved net income of $38.3 million, a $5.2 million, or 16%, increase over the first nine months of 2008. Diluted Earnings per Class A Common Share increased 16% for the first nine months of 2009 to $1.84. “Once again the Company reported strong earnings for the quarter in a turbulent economic environment. Our core banking performance remained solid, as we continued to benefit from strong net interest margin driven by a growing lower-cost deposit base,” Steve Trager, Republic’s President and Chief Executive Officer noted.

Related Quotes

Symbol	Price	Change
RBCAA	19.12	+0.03

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

The following chart highlights Republic’s third quarter and first nine months of 2009 financial performance compared to the same periods in 2008:

Results of Operations for the Third Quarter of 2009 Compared to the Third Quarter of 2008

Traditional Banking and Mortgage Banking (collectively “Core Banking”)

Net income derived from the Company’s Core Banking increased from $5.5 million during the third quarter of 2008 to $6.3 million during the third quarter of 2009. Core Banking achieved this growth in net income despite an $849,000 increase in FDIC insurance expense and a $2.1 million increase in its provision for loan losses during the quarter.

Core Banking net interest income increased $72,000 for the third quarter of 2009 compared to the same period in 2008, as the Company’s net interest margin remained strong at 3.79% for the quarter. “We experienced solid growth of $107 million in our low cost transaction and money market accounts during the first nine months of the year. We grew these all important ‘core’ deposits because we remained an attractive alternative for commercial and consumer banking clients looking for a safe place to hold their funds, while also seeking a locally based financial institution that provides a high level of service. As a result of this growth, our overall cost of deposits, including non interest-bearing deposits, decreased to 0.85% for the third quarter of 2009. As we did earlier in 2009, we will continue to look for opportunities in the coming months within Core Banking to mitigate our risk from future increases in interest rates by extending Federal Home Loan Bank advances and taking advantage of favorable investment options as they arise,” further noted Steve Trager.

Mortgage banking income increased $596,000, or 56%, for the third quarter of 2009 compared to the same period in 2008. The majority of this increase was in the “gain on sale of loan” category, as the Company sold $90 million of fixed rate loans into the secondary market during the third quarter of 2009 compared to $56 million during the third quarter of 2008. As of September 30, 2009, the Company had $9 million in loans held for sale with $23 million in fixed rate loan commitments to its customers and $27 million in mandatory forward sales contracts primarily with the Federal Home Loan Mortgage Corporation (“Freddie Mac”).

Core Banking non interest expenses increased $2.0 million, or 10%, for the third quarter of 2009 to $23.5 million. As previously noted, Core Banking FDIC insurance expense increased $849,000, as the FDIC increased its premiums to all banks nationwide. Occupancy and equipment increased $440,000 during the three months ended September 30, 2009 compared to the same period in 2008 primarily due to growth in the Company’s infrastructure and banking center network, as well as increased leasing costs and service agreements associated with the Company’s technology and operating systems. The overall increase in non interest expense was modest despite the significant increase in FDIC insurance expense.

“As always, credit quality remains our number one focus at Republic. While provision expense was higher during the third quarter, our charge-offs as a percentage of average loans within our Core Banking were an industry-low 0.26% for the first nine months of the year. Looking ahead, we will continue to apply our conservative and disciplined underwriting standards as we strategically grow our client base. In addition, we will continue to proactively and aggressively manage our loan portfolio with the goal of maintaining our industry-strong credit quality during these challenging times,” added Trager.

Core Banking provision for loan losses increased from $191,000 during the third quarter of 2008 to $2.3 million during the third quarter of 2009. Provision expense was higher during the third quarter of 2009 due to an increase in delinquent and non performing loans, as well as an increase in historical charge-off percentages. In addition, the Company also continued to increase its allowance for loan losses to give greater consideration to qualitative factors including current economic conditions in the real estate industry.

Tax Refund Solutions (“TRS”)

TRS, which derives substantially all of its revenues during the first and second quarters of the year, historically operates at a net loss during the third and fourth quarters of the year as the Company prepares for the upcoming tax season. TRS’ net loss was $608,000 for the third quarter of 2009 compared to a net loss of $967,000 for the same period in 2008. The improvement in net loss for the quarter was primarily driven by recoveries of previously charged-off Refund Anticipation Loans (“RALs”) totaling $882,000 for the quarter. As a result of these recoveries, TRS’ RAL loss rate improved to approximately 0.99% of total RALs originated as of September 30, 2009.

Entering the final quarter of 2009, the Company will begin accumulating funds for its first quarter 2010 tax season. Due to the excessive costs associated with securitization, the Company expects to employ a similar on-balance sheet funding strategy as it did during the first quarter 2009 tax season. As a result, Republic expects to experience a decline in its total Company net interest income and net interest margin during the fourth quarter of 2009 compared to the third quarter of 2009, as it begins to accumulate additional cash. The final impact to the Company’s net interest income and net interest margin for the fourth quarter of 2009 cannot yet be determined because the Company has not finalized its strategy regarding the amount and the timing of its funding needs for the 2010 tax season.

CONCLUSION

“As we near the finish line of a successful year, our disciplined approach to a very challenging economic market remains a key factor of our continued success. The message of ‘consistency builds value’ and our ability to generate a positive return for our shareholders in all economic cycles is as relevant today as ever. We enter 2010 well-positioned with a strong capital level, a healthy franchise and a team in place that is ready to take advantage of the opportunities that come with disruption in our industry. In addition, we will continue to respond swiftly and aggressively in managing all troubled asset situations that arise. Meanwhile, Republic’s commitment to its clients and its strong capital base, which remains among the best in the country, give the communities we serve confidence that we will be there for them through the good economic times and the bad. As always, ‘We were here for you yesterday. We are here for you today. We will be here for you tomorrow.^®’”concluded Steve Trager.

Republic Bancorp, Inc. (Republic) has 44 banking centers and is the parent company of: Republic Bank & Trust Company with 35 banking centers in 13 Kentucky communities - Bowling Green, Covington, Crestwood, Elizabethtown, Florence, Frankfort, Georgetown, Independence, Lexington, Louisville, Owensboro, Shelbyville and Shepherdsville and three banking centers in southern Indiana: Floyds Knobs, Jeffersonville and New Albany. Republic Bank has banking centers in Hudson, Palm Harbor, Port Richey, New Port Richey and Temple Terrace, Florida as well as Cincinnati, Ohio. Republic operates Tax Refund Solutions, a nationwide tax refund loan and check provider. Republic offers internet banking at www.republicbank.com. Republic has $3.0 billion in assets and $1 billion in trust assets under custody and management. Republic is headquartered in Louisville, Kentucky, and Republic's Class A Common Stock is listed under the symbol 'RBCAA' on the NASDAQ Global Select Market.

We were here for you yesterday. We are here for you today. We will be here for you tomorrow. ^®

Statements in this press release relating to Republic’s plans, objectives, or future performance are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations. Republic's actual strategies and results in future periods may differ materially from those currently expected due to various risks and uncertainties, including those discussed in Republic’s 2008 Form 10-K and subsequent 10-Qs filed with the Securities and Exchange Commission.

Segment Data:

The reportable segments are determined by the type of products and services offered, distinguished between Traditional Banking, Mortgage Banking and Tax Refund Solutions (“TRS”). Loans, investments and deposits provide the majority of revenue from traditional banking operations; servicing fees and loan sales provide the majority of revenue from mortgage banking operations; Refund Anticipation Loan (“RAL”) fees, Electronic Refund Check (“ERC”)/ Electronic Refund Deposit (“ERD”) fees and Net RAL securitization income provide the majority of the revenue from TRS. All Company segments are domestic. Segment information for the three months and nine months ended September 30, 2009 and 2008 follows:

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(1) – The amount of loan fee income included in total interest income was $763,000 and $1.3 million for the quarters ended September 30, 2009 and 2008. The amount of loan fee income included in total interest income was $59.8 million and $23.0 million for the nine months ended September 30, 2009 and 2008.

(2) – Equals total non-interest expense divided by the sum of net interest income and non interest income. The ratio excludes net loss on sales, calls and impairment of investment securities.

(3) – Equals total loans over 30 days past due divided by total loans.

(4) – The amount of loan fee income included in total interest income per quarter was as follows: $763,000 (quarter ended September 30, 2009), $1.2 million (quarter ended June 30, 2009), $57.8 million (quarter ended March 31, 2009), $1.4 million (quarter ended December 31, 2008 and, $1.3 million (quarter ended September 30, 2008).

NM – Not meaningful

Republic Bancorp
Kevin Sipes, 502-560-8628
Executive Vice President and Chief Financial Officer