Republic Bancorp, Inc. Reports Second Quarter Net Income of $6.1 Million and Year to Date Net Income of $19.5 million

Business Wire

LOUISVILLE, Ky.--(BUSINESS WIRE)--

Republic Bancorp, Inc. (Republic or the Company) is pleased to report net income of $6.1 million for the second quarter of 2013 resulting in Diluted Earnings per Class A Common Share of $0.30. Return on average assets (ROA) and return on average equity (ROE) were 0.73% and 4.46%, respectively, for the quarter. Net income for the first six months of 2013 was $19.5 million, with diluted Earnings per Class A Common share of $0.94. ROA and ROE for the first six months of 2013 were 1.14% and 7.13%, respectively.

Net income for the second quarter and first six months of 2013 continued to benefit from growth in net interest income and low loan loss provisions as credit quality remained sound. Comparability between the first six months of 2013 and the first six months of 2012 were negatively impacted by the fact that we havent been able to repeat our overwhelming successes from 2012, which included a near-record tax season within our Republic Processing Group (RPG) business segment and a large bargain purchase gain earned from the acquisition of a failed bank in Tennessee, commented Steve Trager, Chairman & CEO of Republic.

In line with Republics non-traditional banking growth objectives, the Company announced on July 11, 2013, that its wholly-owned subsidiary, Republic Bank & Trust Company (RB&T), has entered into a Purchase and Assumption Agreement (the Agreement) to acquire certain assets and substantially all of the deposits of H&R Block Bank. As part of that announcement, the Company also disclosed that RB&T and H&R Block, Inc. and its affiliates are currently in separate contract negotiations to enter into a Joint Marketing Master Services Agreement (MSA), pursuant to which RB&T would offer H&R Block-branded financial services products to H&R Blocks clients. For additional information on the Agreement and the on-going contract negotiations for the MSA, see Republics Form 8-K filed with the Securities and Exchange Commission on July 11, 2013.

Republic Bancorp, Inc. ( RBCAA ), headquartered in Louisville, Kentucky, is the holding company for RB&T and Republic Bank.

The following chart highlights Republics second quarter and year-to-date 2013 financial performance compared to the same period in 2012:

 
  Three Months Ended   %   Six Months Ended   %
(dollars in thousands, except per share data) 6/30/13   6/30/12 Change 6/30/13   6/30/12 Change
 
Income before income taxes $ 8,946 $ 14,481 -38 % $ 29,924 $ 142,187 -79 %
Net Income $ 6,119 $ 9,578 -36 % $ 19,475 $ 92,050 -79 %
Diluted Earnings per Class A Share $ 0.30 $ 0.46 -35 % $ 0.94 $ 4.38 -79 %
ROA 0.73 % 1.16 % -37 % 1.14 % 4.94 % -77 %
ROE 4.46 % 7.17 % -38 % 7.13 % 35.19 % -80 %
 
 

Results of Operations for the Second Quarter of 2013 Compared to the Second Quarter of 2012

Traditional Banking and Mortgage Banking (collectively Core Banking)

Net income from Core Banking was $7.0 million for the second quarter of 2013, a decrease of 3% from a solid second quarter of 2012. The Companys second quarter 2013 operating results were negatively impacted compared to the second quarter of 2012 by higher overhead costs, which were partially offset by an increase in net interest income, along with growth in mortgage banking income and service charges on deposits.

Net interest income within the Core Bank was $28.8 million for the second quarter of 2013, an increase of $608,000 over the second quarter of 2012. The increase in net interest income for the quarter was primarily attributable to growth in the loan portfolio and the on-going impact of the Companys 2012 acquisitions. Comparing June 30, 2013 to June 30, 2012, total loans grew $178 million, with the Companys outstanding warehouse lines-of-credit contributing $88 million of that growth. In addition, net interest income from the Companys Minnesota and Tennessee banking centers acquired in 2012 was $3.3 million for the second quarter of 2013 compared to $1.1 million for the second quarter of 2012. The increase in loan balances and the contribution from the Companys 2012 acquisitions assisted in overcoming industry-wide margin challenges as the Core Banks net interest margin remained solid at 3.57% for the quarter.

The Core Banks provision for loan losses increased from $831,000 during the second quarter of 2012 to $1.0 million during the second quarter of 2013. While nominally higher than the second quarter of 2012, overall provision expense for the second quarter of 2013 remained favorably low and benefitted from continued strong asset quality with no new significant classified loans identified during the quarter. The Company ended the quarter with a solid non-performing loans to total loans ratio of 0.67%, its best such measure since the fourth quarter ended December 31, 2008. In addition, the Companys strong delinquent loans to total loans ratio ended the second quarter of 2013 at 0.63%, its best mark since March 31, 2007.

The table below illustrates the Core Banks continuing solid credit quality ratios for the most recent quarter-ends and the previous three calendar year-ends.

 
  As of and for the:
Quarter Ending:   Year Ending:
     
 
Core Banking Credit Quality Ratios 6/30/13 3/31/13 12/31/12 12/31/11 12/31/10
 
Non-performing loans to total loans 0.67 % 0.80 % 0.82 % 1.02 % 1.30 %
 
Non-performing assets to total loans (including OREO) 1.24 % 1.51 % 1.79 % 1.49 % 1.84 %
 
Delinquent loans to total loans 0.63 % 0.76 % 0.79 % 1.07 % 1.24 %
 
Net loan charge-offs to average loans 0.21 % 0.02 % 0.34 % 0.24 % 0.51 %
(Annualized as of 6/30/13 and 3/31/13)
 
OREO = Other Real Estate Owned
 

Non-interest income for the Core Bank was $8.9 million for the second quarter of 2013 compared to $7.9 million for the second quarter of 2012. Republic experienced a solid performance for mortgage banking income during the second quarter of 2013, as the Core Bank continued to capitalize on a favorably low interest rate environment at the beginning of the quarter combined with its $0 closing cost promotion. These factors drove strong consumer demand for secondary market loans during the first half of the second quarter. As long term interest rates began to rise dramatically during May 2013, consumer demand for fixed rate secondary market loan products began to meaningfully slow. At June 30, 2013, the Companys pipeline of secondary market loan applications, in which the consumer had locked his or her loan, was $31 million compared to $70 million at the beginning of the second quarter. The dramatic increase in long-term rates will present challenges for the Company to maintain the same level of mortgage banking income during the second half of 2013 as it achieved during the first and second quarters of the year.

The Core Banks non-interest expenses increased $1.8 million for the second quarter of 2013 to $26.3 million. The increase was primarily due to increased staffing added during 2012 in connection with the Companys acquisition of two failed banks and its on-going acquisition strategies, which require additional support staff to be available to respond to immediate opportunities. In addition, the Company continues to add experienced, high-level sales staff as Republic remains an attractive employment option throughout its markets.

Republic Processing Group

During the second quarter of 2013, RPG generated a net loss of $862,000 compared to net income of $2.4 million during the second quarter of 2012. As discussed in previous reports, the decrease in net income at RPG is consistent with the Companys decline in product volume resulting from the cancelation during the second half of 2012 of two of the Companys large third party processing contracts. In addition, the Company continues to maintain considerable staffing levels at RPG as it is seeks to grow its product lines within the non-traditional banking space, most notably with prepaid cards.

Conclusion

While the performance of our Core Bank remains sound, we are eager to leverage our strong capital base and grow the Company through strategic acquisition opportunities. While unsuccessful in our attempts to acquire a failed bank through the first six months of 2013, we remain diligent in our efforts and faithful to our acquisition strategies, which have produced worthwhile results for the Company over the past 18 months. While we reflect on our past with great pride, we also look forward to our future with great optimism. With this pride and optimism, I once again remind our clients, our associates and our shareholders, 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. ( RBCAA ), headquartered in Louisville, Kentucky, is the holding company for Republic Bank & Trust Company (RB&T) and Republic Bank (RB). Republic Bancorp, Inc. (Republic) has 44 banking centers and is the parent company of Republic Bank & Trust Company and Republic Bank. Republic Bank & Trust Company has 34 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, one banking center in Franklin (Nashville), Tennessee, and one banking center in Bloomington (Minneapolis), Minnesota. Republic Bank has banking centers in Hudson, Palm Harbor, Port Richey and Temple Terrace, Florida as well as Blue Ash (Cincinnati), Ohio. Republic offers internet banking at www.republicbank.com . Republic has $3.3 billion in assets and is headquartered in Louisville, Kentucky. Republics Class A Common Stock is listed under the symbol RBCAA on the NASDAQ Global Select Market.

Forward-Looking Statements

This release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, future acquisitions, future challenges of growing or maintaining non interest income, net interest income and net interest margin in the Companys Core Bank operations, the future growth and performance of Republic Processing Group, current expectations and assumptions regarding its business, the economy and other future conditions. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the ability for all parties to receive regulatory approvals as provided for in the Agreement with H&R Block Bank, the ability of the parties to successfully negotiate the MSA and previously disclosed Receivables Purchase Agreement as anticipated, and the ability of the parties to successfully consummate the transaction as contemplated in the Agreement. Forward-looking statements can be identified by the use of the words expect, anticipate, believe, intend, could and should, and other words of similar meaning. These forward-looking statements express managements current expectations or forecasts of future events and, by their nature, are subject to risks and uncertainties and there are a number of factors that could cause actual results to differ materially from those in such statements.

Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual results may differ materially from those contemplated by the forward-looking statements. The Company cautions you therefore against relying on any of these forward-looking statements, which speak only as of the date on which they are made. 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 factors disclosed from time to time in the Companys filings with the U.S. Securities and Exchange Commission, including those factors set forth as Risk Factors in the Companys Annual Report on Form 10-K for the period ended December 31, 2012. 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
Second Quarter 2013 Earnings Release
(all amounts other than per share amount, number of employees and number of banking centers are expressed in thousands unless otherwise noted)

 
Balance Sheet Data      
June 30, 2013 Dec. 31, 2012 June 30, 2012
Assets:
Cash and cash equivalents $ 97,690 $ 137,691 $ 124,357
Investment securities 475,500 484,256 608,090
Mortgage loans held for sale 24,174 10,614 4,093
Loans 2,618,764 2,650,197 2,440,394
Allowance for loan losses (23,226 ) (23,729 ) (22,510 )
Federal Home Loan Bank stock, at cost 28,342 28,377 28,391
Premises and equipment, net 32,629 33,197 32,962
Goodwill 10,168 10,168 10,168
Other real estate owned ("OREO") 15,248 26,203 18,345
Other assets and accrued interest receivable   37,776     37,425     34,510  
Total assets $ 3,317,065   $ 3,394,399   $ 3,278,800  
 
Liabilities and Stockholders' Equity:
Deposits:
Non interest-bearing $ 487,787 $ 479,046 $ 513,136
Interest-bearing   1,483,260     1,503,882     1,392,155  
Total deposits 1,971,047 1,982,928 1,905,291
 
Securities sold under agreements to repurchase and other short-term borrowings 128,532 250,884 194,412
Federal Home Loan Bank advances 592,044 542,600 538,555
Subordinated note 41,240 41,240 41,240
Other liabilities and accrued interest payable   40,135     40,045     59,589  
Total liabilities 2,772,998 2,857,697 2,739,087
 
Stockholders' equity   544,067     536,702     539,713  
Total liabilities and Stockholders' equity $ 3,317,065   $ 3,394,399   $ 3,278,800  
 
 
Average Balance Sheet Data
  Three Months Ended June 30,   Six Months Ended June 30,
2013   2012 2013   2012
Assets:
Investment securities, including FHLB stock $ 511,225 $ 680,134 $ 510,122 $ 685,230
Federal funds sold and other interest-earning deposits 127,696 117,497 156,805 434,542
Loans and fees, including loans held for sale 2,590,643 2,406,180 2,586,809 2,422,756
Total earning assets 3,229,564 3,203,811 3,253,736 3,542,528
Total assets 3,355,109 3,302,987 3,402,133 3,727,091
 
Liabilities and Stockholders' Equity:
Non interest-bearing deposits $ 492,442 $ 533,649 $ 531,314 $ 727,546
Interest-bearing deposits 1,515,878 1,414,427 1,513,903 1,542,296

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

149,237 250,515 175,932 260,919
Federal Home Loan Bank advances 588,712 479,064 570,497 580,291
Subordinated note 41,240 41,240 41,240 41,240
Total interest-bearing liabilities 2,295,067 2,185,246 2,301,572 2,424,746
Stockholders' equity 548,644 534,576 546,089 523,135
 
 
 

Republic Bancorp, Inc. Financial Information
Second Quarter 2013 Earnings Release (continued)
(all amounts other than per share amount, number of employees and number of banking centers are expressed in thousands unless otherwise noted)

 
Income Statement Data        
Three Months Ended June 30, Six Months Ended June 30,
2013 2012 2013 2012
 
Total interest income(1) $ 34,119 $ 33,814 $ 68,520 $ 113,401
Total interest expense   5,352   5,502     10,623   11,869
 
Net interest income 28,767 28,312 57,897 101,532
 
Provision for loan losses 905 466 280 11,636
 
Non interest income:
Service charges on deposit accounts 3,498 3,286 6,708 6,589
Net refund transfer fees 1,683 6,147 13,697 77,896
Mortgage banking income 2,180 1,963 5,454 3,317
Debit card interchange fee income 1,656 1,441 3,467 2,997
Bargain purchase gain - Tennessee Commerce Bank - (96 ) - 27,803
Bargain purchase gain - First Commercial Bank - - 1,324 -
Net gain on sales of securities - - - 56
Other   1,766   1,345     2,658   2,237
Total non interest income   10,783   14,086     33,308   120,895
 
Non interest expenses:
Salaries and employee benefits 15,086 14,313 31,200 31,284
Occupancy and equipment, net 5,315 5,144 10,892 11,218
Communication and transportation 991 961 2,021 3,622
Marketing and development 880 904 1,782 1,842
FDIC insurance expense 402 291 815 721
Bank franchise tax expense 857 703 2,572 2,634
Data processing 792 1,195 1,508 2,416
Debit card interchange expense 718 660 1,561 1,261
Supplies 218 529 572 1,478
OREO expense 945 555 1,834 1,160
Charitable contributions 227 200 463 2,878
Legal expense 1,338 527 1,768 895
FHLB advance prepayment expense - - - 2,436
Other   1,930   1,469     4,013   4,759
Total non interest expenses   29,699   27,451     61,001   68,604
 
Income before income tax expense 8,946 14,481 29,924 142,187
Income tax expense   2,827   4,903     10,449   50,137
 
Net income $ 6,119 $ 9,578   $ 19,475 $ 92,050
 
 
 

Republic Bancorp, Inc. Financial Information
Second Quarter 2013 Earnings Release (continued)
(all amounts other than per share amount, 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 June 30, Six Months Ended June 30,
2013   2012 2013   2012
Per Share Data:
 
Basic average shares outstanding 20,782 20,958 20,823 20,957
Diluted average shares outstanding 20,858 21,017 20,895 21,034
 
End of period shares outstanding:
Class A Common Stock 18,522 18,658 18,522 18,658
Class B Common Stock 2,260 2,299 2,260 2,299
 
Book value per share(2) $ 26.18 $ 25.75 $ 26.18 $ 25.75
Tangible book value per share(2) 25.42 25.01 25.42 25.01
 
Earnings per share:
Basic earnings per Class A Common Stock $ 0.30 $ 0.46 $ 0.94 $ 4.40
Basic earnings per Class B Common Stock 0.28 0.44 0.91 4.37
Diluted earnings per Class A Common Stock 0.30 0.46 0.94 4.38
Diluted earnings per Class B Common Stock 0.28 0.44 0.90 4.35
 
Cash dividends declared per share:
Class A Common Stock $ 0.176 $ 0.165 $ 0.341 $ 0.319
Class B Common Stock 0.160 0.150 0.310 0.290
 
Performance Ratios:
 
Return on average assets 0.73 % 1.16 % 1.14 % 4.94 %
Return on average equity 4.46 7.17 7.13 35.19
Efficiency ratio(3) 75 65 67 31
Yield on average interest-earning assets 4.23 4.22 4.21 6.40
Cost of interest-bearing liabilities 0.93 1.01 0.92 0.98
Net interest spread 3.30 3.21 3.29 5.42
Net interest margin - Total Company 3.56 3.53 3.56 5.73
Net interest margin - Traditional Bank 3.57 3.57 3.58 3.58
 
Other Information:
 
End of period full-time equivalent employees 791 749 791 749
Number of banking centers 44 43 44 43
 
 
 

Republic Bancorp, Inc. Financial Information
Second Quarter 2013 Earnings Release (continued)
(all amounts other than per share amount, 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 June 31, Six Months Ended June 31,
2013   2012 2013   2012
Credit Quality Asset Balances - Total Company:
 
Loans on non-accrual status $ 15,323 $ 21,819 $ 15,323 $ 21,819
Loans past due 90 days or more and still on accrual   2,159     50     2,159     50  
Total non-performing loans 17,482 21,869 17,482 21,869
OREO   15,248     18,345     15,248     18,345  
Total non-performing assets $ 32,730   $ 40,214   $ 32,730   $ 40,214  
Total delinquent loans $ 16,374 $ 18,120 $ 16,374 $ 18,120
 
Credit Quality Asset Balances - Acquired Banks:
 
Loans on non-accrual status $ 21 $ 177 $ 21 $ 177
Loans past due 90 days or more and still on accrual   2,159     50     2,159     50  
Total non-performing loans 2,180 227 2,180 227
OREO   6,113     3,272     6,113     3,272  
Total non-performing assets $ 8,293   $ 3,499   $ 8,293   $ 3,499  
Total delinquent loans $ 3,466 $ 672 $ 3,466 $ 672
 
Credit Quality Ratios - Total Company:
 
Non-performing loans to total loans 0.67 % 0.90 % 0.67 % 0.90 %
Non-performing assets to total loans (including OREO) 1.24 1.64 1.24 1.64
Non-performing assets to total assets 0.99 1.23 0.99 1.23
Allowance for loan losses to total loans 0.89 0.92 0.89 0.92
Allowance and non-accretable yield to total GCLPR(4) 1.99 1.42 1.99 1.42
Allowance for loan losses to non-performing loans 133 103 133 103
Delinquent loans to total loans(5) 0.63 0.74 0.63 0.74
Net loan charge-offs to average loans (annualized) 0.19 0.28 0.06 1.09
 
Credit Quality Ratios - Core Bank:
 
Non-performing loans to total loans 0.67 % 0.90 % 0.67 % 0.90 %
Non-performing assets to total loans (including OREO) 1.24 1.64 1.24 1.64
Non-performing assets to total assets 0.99 1.23 0.99 1.23
Allowance for loan losses to total loans 0.89 0.92 0.89 0.92
Allowance and non-accretable yield to total GCLPR(4) 1.99 1.42 1.99 1.42
Allowance for loan losses to non-performing loans 133 104 133 104
Delinquent loans to total loans(5) 0.63 0.74 0.63 0.74
Net loan charge-offs to average loans (annualized) 0.21 0.28 0.12 0.46
 
Credit Quality Ratios - Core Bank Excluding Acquired Banks:
 
Non-performing loans to total loans 0.61 % 0.90 % 0.61 % 0.90 %
Non-performing assets to total loans (including OREO) 0.97 1.52 0.97 1.52
Non-performing assets to total assets 0.76 1.16 0.76 1.16
Allowance for loan losses to total loans 0.88 0.94 0.88 0.94
Allowance for loan losses to non-performing loans 145 104 145 104
Delinquent loans to total loans(5) 0.51 0.73 0.51 0.73
Net loan charge-offs to average loans (annualized) 0.23 0.29 0.13 0.47

 

 

Credit Quality Ratios - Acquired Banks:
 
Non-performing loans to total loans 1.95 % 0.59 % 1.95 % 0.59 %
Non-performing assets to total loans (including OREO) 7.04 8.38 7.04 8.38
Non-performing assets to total assets 7.04 3.20 7.04 3.20
Allowance for loan losses to total loans 0.95 - 0.95 -
Allowance and non-accretable yield to total GCLPR(4) 21.34 24.03 21.34 24.03
Allowance for loan losses to non-performing loans 49 - 49 -
Delinquent loans to total loans(5) 3.10 1.75 3.10 1.75
Net loan charge-offs to average loans (annualized) (0.11 ) - (0.07 ) -
 
 
 

Republic Bancorp, Inc. Financial Information
Second Quarter 2013 Earnings Release (continued)
(all amounts other than per share amount, number of employees and number of banking centers are expressed in thousands unless otherwise noted)

 
Balance Sheet Data          
Quarterly Comparison
June 30, 2013 March 31, 2013 Dec. 31, 2012 Sept. 30, 2012 June 30, 2012
Assets:
Cash and cash equivalents $ 97,690 $ 207,451 $ 137,691 $ 96,187 $ 124,357
Investment securities 475,500 473,726 484,256 581,262 608,090
Mortgage loans held for sale 24,174 20,726 10,614 3,385 4,093
Loans 2,618,764 2,598,642 2,650,197 2,642,357 2,440,394
Allowance for loan losses (23,226 ) (23,563 ) (23,729 ) (24,100 ) (22,510 )
Federal Home Loan Bank stock, at cost 28,342 28,342 28,377 28,784 28,391
Premises and Equipment, net 32,629 33,535 33,197 32,984 32,962
Goodwill 10,168 10,168 10,168 10,168 10,168
OREO 15,248 18,689 26,203 25,148 18,345
Other assets and interest receivable   37,776     33,642     37,425     39,601     34,510  
Total assets $ 3,317,065   $ 3,401,358   $ 3,394,399   $ 3,435,776   $ 3,278,800  
 
Liabilities and Stockholders' Equity:
Deposits:
Non interest-bearing $ 487,787 $ 524,149 $ 479,046 $ 514,893 $ 513,136
Interest-bearing   1,483,260     1,547,647     1,503,882     1,540,717     1,392,155  
Total deposits 1,971,047 2,071,796 1,982,928 2,055,610 1,905,291
 

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

128,532 120,217 250,884 169,839 194,412
Federal Home Loan Bank advances 592,044 572,570 542,600 553,487 538,555
Subordinated note 41,240 41,240 41,240 41,240 41,240
Other liabilities and accrued interest payable   40,135     52,800     40,045     57,844     59,589  
Total liabilities 2,772,998 2,858,623 2,857,697 2,878,020 2,739,087
 
Stockholders' equity   544,067     542,735     536,702     557,756     539,713  
Total liabilities and Stockholders' equity $ 3,317,065   $ 3,401,358   $ 3,394,399   $ 3,435,776   $ 3,278,800  
 
 
 
Average Balance Sheet Data
Quarterly Comparison
June 30, 2013 March 31, 2013 Dec. 31, 2012 Sept. 30, 2012 June 30, 2012
Assets:
Investment securities, including FHLB stock $ 511,225 $ 509,006 $ 564,272 $ 629,542 $ 680,134
Federal funds sold and other interest-earning deposits 127,696 186,237 106,359 82,404 117,497
Loans and fees, including loans held for sale 2,590,643 2,582,932 2,650,267 2,520,174 2,406,180
Total earning assets 3,229,564 3,278,175 3,320,898 3,232,120 3,203,811
Total assets 3,355,109 3,449,641 3,448,191 3,322,077 3,302,987
 
Liabilities and Stockholders' Equity:
Non interest-bearing deposits $ 492,442 $ 570,619 $ 542,973 $ 505,127 $ 533,649
Interest-bearing deposits 1,515,878 1,511,906 1,505,108 1,462,069 1,414,427

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

149,237 202,924 220,279 208,051 250,515
Federal Home Loan Bank advances 588,712 552,080 570,147 523,053 479,064
Subordinated note 41,240 41,240 41,240 41,240 41,240
Total interest-bearing liabilities 2,295,067 2,308,150 2,336,774 2,234,413 2,185,246
Stockholders' equity 548,644 543,506 534,724 539,863 534,576
...
 
 
 

Republic Bancorp, Inc. Financial Information
Second Quarter 2013 Earnings Release (continued)
(all amounts other than per share amount, number of employees and number of banking centers are expressed in thousands unless otherwise noted)

 
Income Statement Data          
Three Months Ended
June 30, 2013 March 31, 2013 Dec. 31, 2012 Sept. 30, 2012 June 30, 2012
 
Total interest income(1) $ 34,119 $ 34,401 $ 35,930 $ 34,128 $ 33,814
Total interest expense   5,352   5,271     5,379   5,556     5,502  
Net interest income 28,767 29,130 30,551 28,572 28,312
 
Provision for loan losses 905 (625 ) 1,324 2,083 466
 
Non interest income:
Service charges on deposit accounts 3,498 3,210 3,469 3,438 3,286
Net refund transfer fees 1,683 12,014 177 231 6,147
Mortgage banking income 2,180 3,274 2,856 2,274 1,963
Debit card interchange fee income 1,656 1,811 1,430 1,390 1,441
Bargain purchase gain - TCB - - - (189 ) (96 )
Bargain purchase gain - FCB - 1,324 712 27,112 -
Other   1,766   892     694   589     1,345  
Total non interest income   10,783   22,525  
  9,338   34,845     14,086     Non interest expenses: Salaries and employee benefits 15,086 16,114 14,428 14,921 14,313 Occupancy and equipment, net 5,315 5,577 5,538 5,718 5,144 Communication and transportation 991 1,030 1,139 1,045 961 Marketing and development 880 902 759 828 904 FDIC insurance expense 402 413 395 287 291 Bank franchise tax expense 857 1,715 553 729 703 Data processing 792 716 863 1,030 1,195 Debit card interchange expense 718 843 553 648 660 Supplies 218 354 366 270 529 OREO expense 945 889 1,049 1,328 555 Charitable contributions 227 236 231 232 200 Legal expense 1,338 430 583 388 527 Other   1,930   2,083     1,922   2,338     1,469   Total non interest expenses   29,699   31,302     28,379   29,762     27,451     Income before income tax expense 8,946 20,978 10,186 31,572 14,481 Income tax expense   2,827   7,622     3,565   10,904     4,903     Net income $ 6,119 $ 13,356   $ 6,621 $ 20,668   $ 9,578  
 
 
 

Republic Bancorp, Inc. Financial Information
Second Quarter 2013 Earnings Release (continued)
(all amounts other than per share amount, 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
June 30, 2013 March 31, 2013 Dec. 31, 2012 Sept. 30, 2012 June 30, 2012
Per Share Data:
 
Basic average shares outstanding 20,782 20,864 20,971 20,948 20,958
Diluted average shares outstanding 20,858 20,933 21,020 21,029 21,017
 
End of period shares outstanding:
Class A Common Stock 18,522 18,513 18,694 18,673 18,658
Class B Common Stock 2,260 2,264 2,271 2,271 2,299
 
Book value per share(2) $ 26.18 $ 26.12 $ 25.60 $ 26.63 $ 25.75
Tangible book value per share(2) 25.42 25.38 24.86 25.88 25.01
 
Earnings per share:
Basic earnings per Class A Common Stock $ 0.30 $ 0.64 $ 0.33 $ 0.99 $ 0.46
Basic earnings per Class B Common Stock 0.28 0.63 0.21 0.97 0.44
Diluted earnings per Class A Common Stock 0.30 0.64 0.33 0.98 0.46
Diluted earnings per Class B Common Stock 0.28 0.62 0.21 0.97 0.44
 
Cash dividends declared per share:
Class A Common Stock $ 0.176 $ 0.165 $ 1.265 $ 0.165 $ 0.165
Class B Common Stock 0.160 0.150 1.150 0.150 0.150
 
Performance Ratios:
 
Return on average assets 0.73 % 1.55 % 0.77 % 2.49 % 1.16 %
Return on average equity 4.46 9.83 4.95 15.31 7.17
Efficiency ratio(3) 75 61 71 47 65
Yield on average interest-earning assets 4.23 4.20 4.33 4.22 4.22
Cost of interest-bearing liabilities 0.93 0.91 0.92 0.99 1.01
Net interest spread 3.30 3.29 3.41 3.23 3.21
Net interest margin - Total Company 3.56 3.55 3.68 3.54 3.53
Net interest margin - Traditional Bank 3.57 3.60 3.69 3.54 3.57
 
Other Information:
 
End of period full-time equivalent employees 791 797 797 772 749
Number of banking centers 44 44 44 44 43
 
 
 

Republic Bancorp, Inc. Financial Information
Second Quarter 2013 Earnings Release (continued)
(all amounts other than per share amount, 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
June 30, 2013 March 31, 2013 Dec. 31, 2012 Sept. 30, 2012 June 30, 2012
Credit Quality Asset Balances - Total Company:
Loans on non-accrual status $ 15,323 $ 18,161 $ 18,506 $ 20,436 $ 21,819
Loans past due 90 days or more and still on accrual   2,159     2,752     3,173     616     50  
Total non-performing loans 17,482 20,913 21,679 21,052 21,869
OREO   15,248     18,689     26,203     25,148     18,345  
Total non-performing assets $ 32,730   $ 39,602   $ 47,882   $ 46,200   $ 40,214  
Total delinquent loans $ 16,374 $ 19,813 $ 20,844 $ 17,892 $ 18,120
 
Credit Quality Asset Balances - Acquired Banks:
Loans on non-accrual status $ 21 $ 24 $ - $ 22 $ 177
Loans past due 90 days or more and still on accrual   2,159     2,752     3,173     616     50  
Total non-performing loans 2,180 2,776 3,173 638 227
OREO   6,113     10,346     14,498     12,398     3,272  
Total non-performing assets $ 8,293   $ 13,122   $ 17,671   $ 13,036   $ 3,499  
Total delinquent loans $ 3,466 $ 3,846 $ 5,967 $ 711 $ 672
 
Credit Quality Ratios - Total Company:
Non-performing loans to total loans 0.67 % 0.80 % 0.82 % 0.80 % 0.90 %
Non-performing assets to total loans (including OREO) 1.24 1.51 1.79 1.73 1.64
Non-performing assets to total assets 0.99 1.16 1.41 1.34 1.23
Allowance for loan losses to total loans 0.89 0.91 0.90 0.91 0.92
Allowance and non-accretable yield to total GCLPR(4) 1.99 2.12 2.34 2.56 1.42
Allowance for loan losses to non-performing loans 133 113 109 114 103
Delinquent loans to total loans(5) 0.63 0.76 0.79 0.68 0.74
Net loan charge-offs to average loans (annualized) 0.19 (0.07 ) 0.26 0.08 0.28
 
Credit Quality Ratios - Core Bank:
Non-performing loans to total loans 0.67 % 0.80 % 0.82 % 0.80 % 0.90 %
Non-performing assets to total loans (including OREO) 1.24 1.51 1.79 1.73 1.64
Non-performing assets to total assets 0.99 1.16 1.41 1.34 1.23
Allowance for loan losses to total loans 0.89 0.91 0.90 0.91 0.92
Allowance and non-accretable yield to total GCLPR(4) 1.99 2.12 2.34 2.56 1.42
Allowance for loan losses to non-performing loans 133 113 109 114 104
Delinquent loans to total loans(5) 0.63 0.76 0.79 0.68 0.74
Net loan charge-offs to average loans (annualized) 0.21 0.02 0.31 0.15 0.28
 
Credit Quality Ratios - Core Bank Excluding Acquired Banks:
Non-performing loans to total loans 0.61 % 0.73 % 0.74 % 0.82 % 0.90 %
Non-performing assets to total loans (including OREO) 0.97 1.07 1.20 1.33 1.52
Non-performing assets to total assets 0.76 1.81 0.95 1.04 1.16
Allowance for loan losses to total loans 0.88 0.94 0.94 0.97 0.94
Allowance for loan losses to non-performing loans 145 129 127 118 104
Delinquent loans to total loans(5) 0.51 0.64 0.59 0.69 0.73
Net loan charge-offs to average loans (annualized) 0.23 0.02 0.33 0.16 0.29
 
Credit Quality Ratios - Acquired Banks:
Non-performing loans to total loans 1.95 % 2.26 % 2.29 % 0.38 % 0.59 %
Non-performing assets to total loans (including OREO) 7.04 9.85 11.54 7.53 8.38
Non-performing assets to total assets 7.04 8.87 8.73 5.40 3.20
Allowance for loan losses to total loans 0.95 0.17 0.15 - -
Allowance and non-accretable yield to total GCLPR(4) 21.34 20.60 21.77 21.43 24.03
Allowance for loan losses to non-performing loans 49 8 7 - -
Delinquent loans to total loans(5) 3.10 3.13 4.30 0.44 1.75
Net loan charge-offs to average loans (annualized) (0.11 ) - - - -
 
 

Republic Bancorp, Inc. Financial Information
Second Quarter 2013 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 branches and subsidiary banks), which are then aggregated if operating performance, products/services, and customers are similar.

As of June 30, 2013, the Company was divided into three distinct business operating segments: Traditional Banking, Mortgage Banking and Republic Processing Group (“RPG”). During 2012, the Company realigned the previously reported Tax Refund Solutions (“TRS”) segment as a division of the newly formed RPG segment. Along with the TRS division, Republic Payment Solutions (“RPS”) and Republic Credit Solutions (“RCS”) were created to operate as divisions of the RPG segment.

Nationally, through Republic Bank & Trust Company (“RB&T”), RPG facilitates the receipt and payment of federal and state tax refund products under the TRS division. Nationally, through Republic Bank, the RPS division is an issuing bank offering general purpose reloadable prepaid debit cards through third party program managers. Nationally, through RB&T, the RCS division is preparing to pilot short-term consumer credit products through multiple channels, including the internet and retail locations. For the projected near-term, as the programs are established, the operating results of the RPS and RCS divisions are expected to be immaterial to the Company’s overall results of operations and will therefore not be reported as a separate business operating segment until such time, if any, that they become material to the Company’s overall results of operations.

Loans, investments and deposits provide the majority of the net revenue from Traditional Banking operations; servicing fees and loan sales provide the majority of revenue from Mortgage Banking operations; Refund Transfer fees provide the majority of the revenue from TRS. All Company operations are domestic.

The accounting policies used for Republic’s reportable segments are the same as those described in the summary of significant accounting policies. Segment performance is evaluated using operating income. Goodwill is not allocated. Income taxes which are not segment specific are allocated based on income before income tax expense. Transactions among reportable segments are made at fair value.

Segment information for the three and six months ended June 30, 2013 and 2012 follows:

 
 
 

Republic Bancorp, Inc. Financial Information
Second Quarter 2013 Earnings Release (continued)

 
  Three Months Ended June 30, 2013
(dollars in thousands)  

Traditional

Banking

 

Mortgage

Banking

 

Republic

Processing

Group

 

Total Company

     
Net interest income $ 28,606 $ 145 $ 16 $ 28,767
 
Provision for loan losses 1,045 - (140 ) 905
 
Net refund transfer fees - - 1,683 1,683
Mortgage banking income - 2,180 - 2,180
Other non interest income   6,660       75     185       6,920  
Total non interest income 6,660 2,255 1,868 10,783
 
Total non interest expenses   25,443       906     3,350       29,699  
 
Income before income tax expense 8,778 1,494 (1,326 ) 8,946
Income tax expense   2,768       523     (464 )     2,827  
Net income $ 6,010     $ 971   $ (862 )   $ 6,119  
 
Segment end of period assets $ 3,277,181 $ 29,891 $ 9,993 $ 3,317,065
 
Net interest margin 3.57 % NM NM 3.56 %
 
 
Three Months Ended June 30, 2012
(dollars in thousands)  

Traditional

Banking

 

Mortgage

Banking

 

Republic

Processing

Group

  Total Company
 
Net interest income $ 28,090 $ 53 $ 169 $ 28,312
 
Provision for loan losses 831 - (365 ) 466
 
Net refund transfer fees - - 6,147 6,147
Mortgage banking income - 1,963 - 1,963
Bargain purchase gain - TCB (96 ) - - (96 )
Other non interest income   6,036       11     25       6,072  
Total non interest income 5,940 1,974 6,172 14,086
 
Total non interest expenses   23,590       923     2,938       27,451  
 
Income before income tax expense 9,609 1,104 3,768 14,481
Income tax expense   3,129       386     1,388       4,903  
Net income $ 6,480     $ 718   $ 2,380     $ 9,578  
 
Segment end of period assets $ 3,248,453 $ 9,847 $ 20,500 $ 3,278,800
 
Net interest margin 3.57 % NM NM 3.53 %
 
 
 

Republic Bancorp, Inc. Financial Information
Second Quarter 2013 Earnings Release (continued)

 
  Six Months Ended June 30, 2013
(dollars in thousands)  

Traditional

Banking

 

Mortgage

Banking

 

Republic

Processing

Group

  Total Company
     
Net interest income $ 57,567 $ 258 $ 72 $ 57,897
 
Provision for loan losses 1,019 - (739 ) 280
 
Net refund transfer fees - - 13,697 13,697
Mortgage banking income - 5,454 - 5,454
Bargain purchase gain - FCB 1,324 - - 1,324
Other non interest income   12,057       83     693       12,833  
Total non interest income 13,381 5,537 14,390 33,308
 
Total non interest expenses   50,625       1,769     8,607       61,001  
 
Income before income tax expense 19,304 4,026 6,594 29,924
Income tax expense   6,732       1,409     2,308       10,449  
Net income $ 12,572     $ 2,617   $ 4,286     $ 19,475  
 
Segment end of period assets $ 3,277,181 $ 29,891 $ 9,993 $ 3,317,065
 
Net interest margin 3.58 % NM NM 3.56 %
 
 
 
Six Months Ended June 30, 2012
(dollars in thousands)  

Traditional

Banking

 

Mortgage

Banking

 

Republic

Processing

Group

  Total Company
 
Net interest income $ 55,962 $ 173 $ 45,397 $ 101,532
 
Provision for loan losses 3,962 - 7,674 11,636
 
Net refund transfer fees - - 77,896 77,896
Mortgage banking income - 3,317 - 3,317

Net gain on sales, calls and impairment of securities

56 - - 56
Bargain purchase gain - TCB 27,803 - - 27,803
Other non interest income   11,618       16     189       11,823  
Total non interest income 39,477 3,333 78,085 120,895
 
Total non interest expenses   50,634       2,077     15,893       68,604  
 
Income before income tax expense 40,843 1,429 99,915 142,187
Income tax expense   14,005       500     35,632       50,137  
Net income $ 26,838     $ 929   $ 64,283     $ 92,050  
 
Segment end of period assets $ 3,248,453 $ 9,847 $ 20,500 $ 3,278,800
 
Net interest margin 3.58 % NM NM 5.73 %
 
 

Republic Bancorp, Inc. Financial Information
Second Quarter 2013 Earnings Release (continued)

_____________________________________
(1) – The amount of loan fee income included in total interest income was $3.0 million and $1.3 million for the quarters ended June 30, 2013 and 2012. The amount of loan fee income included in total interest income was $5.6 million and $47.3 million for the six months ended June 30, 2013 and 2012.

The amount of loan fee income included in total interest income per quarter was as follows: $3.0 million (quarter ended June 30, 2013), $2.6 million (quarter ended March 31, 2013), $2.4 million (quarter ended December 31, 2012), $1.1 million (quarter ended September 30, 2012), and $1.3 million (quarter ended June 30, 2012).

(2) – The following table provides a reconciliation of total stockholders’ equity in accordance with U.S. generally accepted accounting principles (“GAAP”) to tangible stockholders’ equity in accordance with applicable regulatory requirements. The Company provides the tangible common equity 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) June 30, 2013   March 31, 2013   Dec. 31, 2012   Sept. 30, 2012   June 30, 2012
Total stockholders' equity (a) $ 544,067 $ 542,735 $ 536,702 $ 557,756 $ 539,713
Less: Goodwill 10,168 10,168 10,168 10,168 10,168
Less: Core deposit intangible 388 454 510 589 104
Less: Mortgage servicing rights   5,305     4,858     4,777     4,980     5,351  

Tangible stockholders' equity (c)

$ 528,206   $ 527,255   $ 521,247   $ 542,019   $ 524,090  
 
Total assets (b) $ 3,317,065 $ 3,401,358 $ 3,394,399 $ 3,435,776 $ 3,278,800
Less: Goodwill 10,168 10,168 10,168 10,168 10,168
Less: Core deposit intangible 388 454 510 589 104
Less: Mortgage servicing rights   5,305     4,858     4,777     4,980     5,351  
Tangible assets (d) $ 3,301,204   $ 3,385,878   $ 3,378,944   $ 3,420,039   $ 3,263,177  
 
Total stockholders' equity to total assets (a/b) 16.40 % 15.96 % 15.81 % 16.23 % 16.46 %
Tangible stockholders' equity to tangible assets (c/d) 16.00 % 15.57 % 15.43 % 15.85 % 16.06 %
 
Number of shares outstanding (e)   20,782     20,777     20,965     20,944     20,957  
 
Book value per share (a/e) $ 26.18 $ 26.12 $ 25.60 $ 26.63 $ 25.75
Tangible book value per share (c/e) 25.42 25.38 24.86 25.88 25.01
 

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

(4) – The following tables reflect the calculation of the allowance for loan losses plus non-accretable yield on purchased, credit impaired loans as a percentage of total gross contractual loan principal receivable (“GCLPR”). While this ratio is not considered in accordance with GAAP, it provides additional insight regarding the Bank’s ability to absorb impairment of contractual loan principal receivable.

 
Quarterly Comparison - Total Company

(dollars in thousands)

June 30, 2013   March 31, 2013   Dec. 31, 2012   Sept. 30, 2012   June 30, 2012
Allowance for loan losses $ 23,226 $ 23,563 $ 23,729 $ 24,100 $ 22,510
Non-accretable yield   29,478     32,339     39,264     44,660     12,404  
Total (f) $ 52,704   $ 55,902   $ 62,993   $ 68,760   $ 34,914  
 
Total loans $ 2,618,764 $ 2,598,642 $ 2,650,197 $ 2,642,357 $ 2,440,394
Non-accretable yield 29,478 32,339 39,264 44,660 12,404
Accretable yield   1,986     2,742     3,465     3,419     700  
Total GCLPR (g) $ 2,650,228   $ 2,633,723   $ 2,692,926   $ 2,690,436   $ 2,453,498  
 

Allowance and non-accretable yield to total GCLPR (f/g)

1.99 % 2.12 % 2.34 % 2.56 % 1.42 %
 
Quarterly Comparison - Acquired Banks Only
(dollars in thousands) June 30, 2013   March 31, 2013   Dec. 31, 2012   Sept. 30, 2012   June 30, 2012
Allowance for loan losses $ 1,063 $ 214 $ 214 $ - $ -
Non-accretable yield   29,478     32,339     39,264     44,660     12,404  
Total (h) $ 30,541   $ 32,553   $ 39,478   $ 44,660   $ 12,404  
 
Total loans $ 111,632 $ 122,921 $ 138,616 $ 160,341 $ 38,506
Non-accretable yield 29,478 32,339 39,264 44,660 12,404
Accretable yield   1,986     2,742     3,465     3,419     700  
Total GCLPR (i) $ 143,096   $ 158,002   $ 181,345   $ 208,420   $ 51,610  
 

Allowance and non-accretable yield to total GCLPR (h/i)

21.34 % 20.60 % 21.77 % 21.43 % 24.03 %
 
 

(5) – Equals total loans exceeding 30 days past due divided by total loans.

NA – Not applicable

NM – Not meaningful

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