Republic Bancorp, Inc. (NASDAQ: RBCAA), headquartered
in Louisville, Kentucky, is the holding company of Republic Bank
& Trust Company (the “Bank”).
Republic Bancorp, Inc. (“Republic” or the “Company”) is pleased
to report pre-tax earnings of $16.6 million for the fourth quarter
of 2017, an 11% increase from the same period in 2016. The
Company’s fourth quarter 2017 net income and Diluted Earnings per
Class A Common Share both decreased 52% to $4.8 million and $0.23,
with comparability to the prior period of both key metrics
significantly impacted by a $6.3 million charge to income tax
expense upon remeasurement of the Company’s net deferred tax assets
(“DTAs”)(1) precipitated by tax reform and common among financial
institutions. Without this charge, net income and Diluted Earnings
per Class A Common Share for the fourth quarter of 2017 would have
been $11.2 million and $0.53, with these non-GAAP(2) metrics
representing increases of 12% and 10% over the fourth quarter of
2016.
As it relates to the Company’s charge to income tax expense upon
remeasurement of its net DTAs during the quarter, on December 22,
2017, President Donald Trump signed into law the “Tax Cuts and Jobs
Act” (the “TCJA”). The TCJA, among other things, reduces the
federal corporate tax rate from 35% to 21%, effective January 1,
2018. As a result of the reduced tax rate, Republic and many other
financial institutions incurred charges to income tax expense
representing the decrease in the value of their net DTAs. In
general, net DTAs represent the future benefits of tax deductions
that the Company has recognized in a current or prior period for
its GAAP-based financial statements, as compared to what it expects
to record in the future for its income tax returns when those
deductions can be realized for tax purposes.
Fiscal year 2017 net income was $45.6 million, a less than 1%
decrease from fiscal 2016, resulting in Diluted Earnings per Class
A Common Share of $2.20. As with the comparability between the
fourth quarters of 2017 and 2016, comparability between the fiscal
years of 2017 and 2016 was also significantly impacted by the
TCJA-driven charge to income tax expense of $6.3 million as
mentioned above. Excluding the impact of this charge, net income
for 2017 would have been $52.0 million with Diluted Earnings per
Class A Common Share of $2.50, with both of these non-GAAP metrics
representing an increase of 13% over 2016.
Steve Trager, Chairman & Chief Executive Officer of
Republic, commented, “Before addressing tax reform, let me say that
I am very excited to see solid growth in our pre-tax earnings from
the same quarter a year ago. Largely driven by loan growth and
complemented by expansion in our net interest margin, our top-line
revenue for the fourth quarter of 2017 increased a strong $9.0
million, or 22%, over the same period in 2016. Furthermore, credit
quality metrics within our Core Banking(3) operations continue to
remain quite strong from period to period. On the other side of the
ledger, I am thrilled about our $272 million, or 9%, growth in
deposits during 2017, with $195 million of that growth representing
‘core deposits’(4). We set deposit growth as one of our main goals
for 2017, and I would like to acknowledge the entire Republic team
for their efforts in this growth.
“Regarding tax reform, while the new law had a negative impact
on the net income and the carrying value of the net DTAs of most
financial institutions during the fourth quarter, including
Republic, we embrace the benefits of the reduced federal tax rate
in the years to come. While there remains a level of uncertainty
regarding how this new law will impact consumer behavior and the
many products and services that we offer, we are optimistic that
over the long term it will provide us more flexibility in
attracting new clients and new associates, while at the same time
providing a greater return to our shareholders,” concluded Steve
Trager.
The following table presents Republic’s financial performance in
accordance with GAAP for the fourth quarters and years ended
December 31, 2017 and 2016, along with adjusted non-GAAP
performance and a reconciliation to GAAP for the impact of the
previously mentioned charge to income tax expense during the fourth
quarter of 2017. The non-GAAP presentation and the reconciliation
to GAAP are presented to allow appropriate comparability between
the reported periods and to illustrate the impact of the
TCJA-driven charge to income tax expense on the Company’s financial
performance.
(dollars in
thousands, except per share data)
Financial
Performance Highlights
Three Months Ended Dec. 31, $ %
Years Ended Dec. 31, $ % 2017
2016 Change Change 2017 2016
Change Change TOTAL COMPANY: Income before
income tax expense - GAAP* $ 16,612 $ 14,960 $ 1,652 11 % $
78,386 $ 68,963 $ 9,423 14 %
Net income: Net income -
GAAP* $ 4,838 $ 10,000 $ (5,162 ) (52 )% $ 45,632 $ 45,903 $ (271 )
(1 )% Impact of TCJA(1)* 6,326 —
6,326 NM 6,326 — 6,326
NM Adjusted net income - Non-GAAP $ 11,164 $ 10,000
$ 1,164 12 $ 51,958 $ 45,903 $ 6,055
13
Diluted earnings per share (“EPS”) of
Class A Common Stock:
Diluted EPS of Class A Common Stock - GAAP $ 0.23 $ 0.48 $ (0.25 )
(52 )% $ 2.20 $ 2.22 $ (0.02 ) (1 )% Impact of TCJA 0.30
— 0.30 NM 0.30
— 0.30 NM Adjusted diluted EPS of Class
A Common Stock - Non-GAAP $ 0.53 $ 0.48 $ 0.05
10 $ 2.50 $ 2.22 $ 0.28 13
Return on average assets
(“ROA”):
ROA - GAAP 0.39 % 0.87 % NA (55 )% 0.95 % 1.02 % NA (7 )% Impact of
TCJA 0.51 — NA NM 0.13
— NA NM Adjusted ROA - Non-GAAP 0.90
0.87 NA 3 1.08 1.02 NA 6
Return on average equity
(“ROE”):
ROE - GAAP 3.02 % 6.62 % NA (54 )% 7.26 % 7.68 % NA (5 )% Impact of
TCJA 3.95 — NA NM 1.01
— NA NM Adjusted ROE - Non-GAAP 6.97
6.62 NA 5 8.27 7.68 NA 8
CORE
BANK(3): Income before income tax expense $
17,105 $ 14,869 $ 2,236 15 % $ 56,545 $ 51,636 $ 4,909 10 %
Net income: Net income - GAAP $ 6,883 $ 9,939 $ (3,056 ) (31
)% $ 33,448 $ 34,859 $ (1,411 ) (4 )% Impact of TCJA 4,594
— 4,594 NM 4,594
— 4,594 NM Adjusted net income -
Non-GAAP $ 11,477 $ 9,939 $ 1,538 15 $ 38,042
$ 34,859 $ 3,183 9
REPUBLIC PROCESSING GROUP(5):
Income (loss) before income tax expense $ (493 ) $ 91 $ (584
) NM $ 21,841 $ 17,327 $ 4,514 26 %
Net income
(loss): Net income (loss) - GAAP $ (2,045 ) $ 61 $ (2,106 ) NM
$ 12,184 $ 11,044 $ 1,140 10 % Impact of TCJA 1,732
— 1,732 NM 1,732 —
1,732 NM Adjusted net income (loss) - Non-GAAP
$ (313 ) $ 61 $ (374 ) NM $ 13,916 $ 11,044 $
2,872 26
NA – Not applicable
NM – Not meaningful
*See Segment Data at the end of this
Earnings Release
Results of Operations for the Fourth
Quarter of 2017 Compared to the Fourth Quarter of
2016
Core Bank(3) – Net income from Core Banking was
$6.9 million for the fourth quarter of 2017, a decrease of $3.1
million from the fourth quarter of 2016. Approximately $4.6 million
of the Company’s TCJA-driven charge to income tax expense was tied
to the Core Bank. Excluding the previously mentioned charge to
income tax expense, Core Bank non-GAAP net income (as adjusted) for
the fourth quarter of 2017 would have increased $1.5 million, or
15%, from the fourth quarter of 2016.
Core Bank net interest income increased $6.3 million, or 17%,
over the fourth quarter of 2016. The growth in net interest income
was propelled by a 30-basis-point rise in the Core Bank’s net
interest margin for the fourth quarter of 2017 to 3.72% and further
complemented by a $137 million, or 4%, increase in the Core Bank’s
quarterly average loans.
The overall change in the Core Bank’s net
interest income, as well as average and period-end loan balances by
origination channel, is presented below:
Net Interest
Income for the (dollars in thousands)
Three Months Ended Dec. 31, Origination Channel
2017 2016
$ Change
% Change Traditional Network $ 37,529 $
31,604 $ 5,925 19 % Warehouse Lending 4,460 5,160 (700 ) (14 )
Correspondent Lending 247 336 (89 ) (26 ) 2012-FDIC Acquired Loans
1,648 525 1,123 214 Total Core Bank $
43,884 $ 37,625 $ 6,259 17
Average Loan
Balances Period-End Loan Balances (dollars in thousands)
Three Months Ended Dec. 31, Dec. 31, Origination
Channel 2017 2016
$ Change
% Change 2017 2016
$ Change
% Change Traditional Network $ 3,247,472 $ 3,003,553
$ 243,919 8 % $ 3,286,582 $ 3,022,305 $ 264,277 9 % Warehouse
Lending 523,725 590,196 (66,471 ) (11 ) 525,573 585,439 (59,866 )
(10 ) Correspondent Lending 120,734 152,481 (31,747 ) (21 ) 116,792
149,028 (32,236 ) (22 ) 2012-FDIC Acquired Loans 6,836
15,672 (8,836 ) (56 ) 6,551 15,059
(8,508 ) (57 ) Total Core Bank $ 3,898,767 $ 3,761,902 $
136,865 4 $ 3,935,498 $ 3,771,831 $ 163,667 4
The following factors were the primary drivers of the changes in
the Core Bank’s net interest income and average loan balances by
origination channel for the fourth quarter of 2017, as compared to
the fourth quarter of 2016:
- The Core Bank’s Traditional Network
experienced solid average loan growth of $244 million from the
fourth quarter of 2016 to the fourth quarter of 2017. The overall
mix of this growth was well diversified, with average balance
increases of $149 million in commercial real estate; $79 million in
commercial and industrial; and $35 million in the construction and
development category.
- The Core Bank’s Traditional Network
received a favorable payoff of a purchased credit-impaired loan
acquired in the Company’s 2016 acquisition of Cornerstone Bancorp,
Inc. This favorable payoff contributed approximately $670,000 of
non-recurring interest income and approximately six basis points of
net interest margin to the Core Bank for the fourth quarter of
2017.
- The Core Bank’s 2012 FDIC-Acquired
loans contributed $1.1 million more in net interest income during
the fourth quarter of 2017 compared to the same period in 2016,
resulting from the payoff of one large loan and a credit to income
of $1.6 million of discount associated with this loan. Overall,
accretion income from the 2012 FDIC-Acquired loans contributed 13
basis points to the Core Bank’s net interest margin during the
fourth quarter of 2017 compared to a one-basis-point contribution
for the same period in 2016. Prospective accretion income related
to these loans is expected to be nominal, as the substantial
majority of discount accretion from these loans has now been
recognized.
- Within the Warehouse segment, net
interest income decreased $700,000, or 14%, from the fourth quarter
of 2016, as an increase in mortgage interest rates during the
quarter contributed to a decline in client usage of the Bank’s
Warehouse lines of credit. Overall, usage rates decreased from 58%
during the fourth quarter of 2016 to 50% for the fourth quarter of
2017. Primarily as a result of this factor, average outstanding
Warehouse line-of-credit balances for the fourth quarter of 2017
were $524 million, a $66 million, or 11%, decrease from a robust
fourth quarter in 2016.
The Core Bank’s provision expense for the fourth quarters of
2017 and 2016 primarily represented general loss reserves driven by
growth in the loan portfolio during the two periods. The Core
Bank’s credit quality metrics remained favorable, as indicated by
the table below:
As of and for the:
Quarters Ended: Years Ended: Dec.
31, Sep. 30, Jun. 30,
Mar. 31,
Dec. 31, Dec. 31, Dec.
31, Core Banking Credit Quality Ratios
2017
2017 2017 2017
2017 2016 2015
Nonperforming loans to total loans
0.36 % 0.40 % 0.40
% 0.46 %
0.36 % 0.42 % 0.66 % Nonperforming
assets to total loans (including OREO)
0.36 0.40 0.41 0.50
0.36 0.46 0.70 Delinquent loans to total loans(6)
0.21 0.20 0.18 0.16
0.21 0.18 0.35 Net
charge-offs to average loans
0.06 0.03 0.05 0.02
0.04
0.05 0.05 (Quarterly rates annualized)
OREO
= Other Real Estate Owned
Noninterest income for the Core Bank was $7.9 million during the
fourth quarter of 2017, a $24,000 increase from the fourth quarter
of 2016. Notable fluctuations in noninterest income for the quarter
included the following items:
- Interchange fees increased $247,000
primarily due to an 11% year-over-year growth in active debit
cards.
- Partially offsetting the increase
above, the Core Bank recorded $136,000 in losses on the sale of two
securities during the fourth quarter of 2017, with no similar sales
during the fourth quarter of 2016.
Core Bank noninterest expenses increased $4.5 million, or 16%,
from the fourth quarter of 2016 to the same period in 2017.
Comparability of noninterest expense between the two quarters was
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. As a result of these
adjustments, net incentive compensation expense was a net charge of
$457,000 for the fourth quarter of 2017 compared to a net credit of
$393,000 for the fourth quarter of 2016. Excluding the impact of
the change in incentive compensation expense, noninterest expense
increased $3.9 million, or 13%, for the fourth quarter of 2017, as
compared to the fourth quarter of 2016 and was primarily driven by
the following:
- Salaries and employee benefits expense
increased $2.2 million, or 13%, as the Core Bank’s
full-time-equivalent employees increased by 46 employees during
2017 to support the Core Bank’s strategic initiatives.
- Occupancy expense increased $919,000,
primarily due to increases in rent, depreciation, and equipment
service expense resulting from new locations, existing banking
center renovations and the cost of technology to support the Core
Bank’s strategic initiatives.
- Data processing expense increased
$823,000, with a large portion of this increase due to estimated
conversion-related expenses for an upcoming change to the Company’s
digital-banking vendor for its commercial clients.
Republic Processing Group(5)
Republic Processing Group (“RPG”) reported a net loss of $2.0
million for the fourth quarter of 2017 compared to net income of
$61,000 for the same period in 2016. Approximately $1.7 million of
the Company’s TCJA-driven charge to income tax expense was tied to
RPG. Excluding the previously mentioned charge to income tax
expense, RPG would have reflected a $313,000 non-GAAP loss (as
adjusted) for the fourth quarter of 2017.
Within the Republic Credit Solutions (“RCS”) segment of RPG, net
income decreased $1.6 million primarily due to RCS’s $1.7 million
portion of the TCJA-driven charge to income tax expense. Pre-tax
earnings for RCS increased to $2.6 million for the fourth quarter
of 2017 compared to $2.4 million for the same period in 2016. The
nominal increase in pre-tax earnings at RCS was primarily driven by
growth in net interest income and largely offset by greater
provisions for loan losses, with the change in both income
statement categories resulting from a higher volume of RCS’s
line-of-credit product during the fourth quarter of 2017 as
compared to the fourth quarter of 2016.
The Tax Refund Solutions (“TRS”) segment of RPG reported an
expected net loss of $2.0 million for the fourth quarter of 2017
compared to a net loss of $1.5 million during the fourth quarter of
2016. The higher net loss for the fourth quarter of 2017 was
primarily driven by a $673,000 increase in salaries and employee
benefits expense resulting from additional contract labor retained
to prepare for the 2018 tax season. The TRS segment derives
substantially all of its revenues during the first and second
quarters of the year and historically operates at a net loss during
the second half of the year, as the Company prepares for the next
tax season.
Republic Bancorp, Inc. (the “Company”) is the parent company of
Republic Bank & Trust Company (the “Bank”). The Bank currently
has 44 full-service banking centers and one loan production office
throughout five states: 32 banking centers in 11 Kentucky
communities - Covington, Elizabethtown, Florence, Frankfort,
Georgetown, Independence, Lexington, Louisville, Owensboro,
Shelbyville and Shepherdsville; three banking centers in southern
Indiana – Floyds Knobs, Jeffersonville and New Albany; six banking
centers in five Florida communities (Tampa MSA) – Largo, Port
Richey, St. Petersburg, Seminole, and Temple Terrace; two banking
centers in two Tennessee communities (Nashville MSA) – Cool Springs
(Franklin) and Green Hills (Nashville) and one loan production
office in Brentwood (Nashville); and one banking center in Norwood
(Cincinnati), Ohio. The Bank offers internet banking at
www.republicbank.com. The Bank also offers separately-branded,
nation-wide digital banking at www.mymemorybank.com. The Company
has $5.1 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 StatementsThis 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, information concerning the impact of
the TCJA, and other future conditions. Because forward-looking
statements relate to the future, they are subject to inherent
uncertainties, risks and changes in circumstances that are
difficult to predict. Our actual results may differ materially from
those contemplated by forward-looking statements. We caution you
therefore against relying on any of these forward-looking
statements. They are neither statements of historical fact nor
guarantees or assurances of future performance. Actual results
could differ materially based upon factors disclosed from time to
time in the Company’s filings with the U.S. Securities and Exchange
Commission, including those factors set forth as “Risk Factors” in
the Company’s Annual Report on Form 10-K for the period ended
December 31, 2016. 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
Fourth Quarter 2017 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
Dec. 31, 2017 Dec. 31, 2016 Assets: Cash and
cash equivalents $ 299,351 $ 289,309 Investment securities 591,458
534,139 Loans held for sale 16,989 15,170 Loans 4,014,034 3,810,778
Allowance for loan and lease losses (42,769 ) (32,920
) Loans, net 3,971,265 3,777,858 Federal Home Loan Bank stock, at
cost 32,067 28,208 Premises and equipment, net 45,605 42,869
Goodwill 16,300 16,300
Other real estate owned (“OREO”)
115 1,391
Bank owned life insurance (“BOLI”)
63,356 61,794 Other assets and accrued interest receivable
48,856 49,271 Total assets $ 5,085,362
$ 4,816,309
Liabilities and Stockholders’
Equity:
Deposits: Noninterest-bearing $ 1,022,042 $ 971,952
Interest-bearing 2,411,116 2,188,740
Total deposits 3,433,158 3,160,692 Securities sold under
agreements to repurchase and other short-term borrowings 204,021
173,473 Federal Home Loan Bank advances 737,500 802,500
Subordinated note 41,240 41,240 Other liabilities and accrued
interest payable 37,019 33,998 Total
liabilities 4,452,938 4,211,903
Stockholders’ equity
632,424 604,406
Total liabilities and Stockholders’
equity
$ 5,085,362 $ 4,816,309
Average Balance Sheet
Data Three Months Ended Dec. 31, Years Ended Dec.
31, 2017 2016 2017 2016
Assets: Investment securities, including FHLB stock $
559,381 $ 571,158 $ 574,027 $ 572,599 Federal funds sold and other
interest-earning deposits 229,638 57,950 188,427 130,889 Loans and
fees, including loans held for sale 3,967,211 3,792,902 3,831,406
3,568,383 Total interest-earning assets 4,756,230 4,422,010
4,593,860 4,271,871 Total assets 4,953,134 4,622,760 4,826,208
4,485,829
Liabilities and Stockholders’
Equity:
Noninterest-bearing deposits $ 1,045,939 $ 950,020 $ 1,073,181 $
894,049 Interest-bearing deposits 2,383,196 2,197,411 2,267,663
2,058,592
Securities sold under agreements to
repurchase and other short-term borrowings
271,434 231,817 219,515 280,296 Federal Home Loan Bank advances
537,326 570,135 563,552 583,591 Subordinated note 41,240 41,240
41,240 42,502 Total interest-bearing liabilities 3,233,196
3,040,603 3,091,970 2,964,981
Stockholders’ equity
640,686 604,095 628,329 597,463
Republic Bancorp, Inc. Financial
Information
Fourth Quarter 2017 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 Dec.
31, Years Ended Dec. 31, 2017 2016
2017 2016 Total interest income(7) $ 56,349 $
45,903 $ 218,778 $ 173,992 Total interest expense 5,711
4,258 20,258 17,938 Net interest
income 50,638 41,645 198,520 156,054 Provision for loan and
lease losses 6,071 5,004 27,704 14,493 Noninterest income:
Service charges on deposit accounts 3,325 3,338 13,357 13,176 Net
refund transfer fees 171 121 18,500 19,240 Mortgage banking income
935 980 4,642 6,882 Interchange fee income 2,533 2,254 9,881 9,009
Program fees 1,851 1,102 5,824 3,044 Increase in cash surrender
value of BOLI 384 402 1,562 1,516 Losses on securities available
for sale (136 ) — (136 ) — Net gains on OREO 254 53 676 244 Other
873 2,235 4,108 4,398
Total noninterest income 10,190 10,485
58,414 57,509 Noninterest expenses: Salaries
and employee benefits 20,502 16,917 82,233 69,882 Occupancy and
equipment, net 6,518 5,618 25,194 21,777 Communication and
transportation 1,261 1,282 4,711 4,256 Marketing and development
1,098 1,005 5,188 3,778 FDIC insurance expense 328 297 1,378 1,780
Bank franchise tax expense 652 813 4,626 4,757 Data processing
2,606 1,586 7,748 6,121 Interchange related expense 931 1,071 3,988
4,140 Supplies 565 437 1,594 1,406 OREO expense 104 148 388 503
Legal and professional fees 616 591 2,410 2,556 FHLB advance
prepayment penalty — — — 846 Other 2,964 2,401
11,386 8,305 Total noninterest expenses
38,145 32,166 150,844 130,107
Income before income tax expense 16,612 14,960 78,386 68,963
Income tax expense: Income tax expense - TCJA(1) 6,326 —
6,326 — Income tax expense - Other 5,448 4,960
26,428 23,060 Total income tax expense
11,774 4,960 32,754 23,060
Net income $ 4,838 $ 10,000 $ 45,632 $ 45,903
Republic Bancorp, Inc. Financial Information
Fourth Quarter 2017 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 Ratios
Three Months Ended Dec.
31, Years Ended Dec. 31, 2017 2016
2017 2016 Per Share Data: Basic
weighted average shares outstanding 21,149 20,926 20,921 20,942
Diluted weighted average shares outstanding 21,258 20,941 21,007
20,954 Period-end shares outstanding: Class A Common Stock
18,607 18,615 18,607 18,615 Class B Common Stock 2,243 2,245 2,243
2,245 Book value per share(8) $ 30.33 $ 28.97 $ 30.33 $
28.97 Tangible book value per share(8) 29.27 27.89 29.27 27.89
Earnings per share (“EPS”):
Basic EPS - Class A Common Stock $ 0.23 $ 0.48 $ 2.21 $ 2.22 Basic
EPS - Class B Common Stock 0.21 0.44 2.01 2.02 Diluted EPS - Class
A Common Stock 0.23 0.48 2.20 2.22 Diluted EPS - Class B Common
Stock 0.21 0.44 2.00 2.01 Cash dividends declared per Common
share: Class A Common Stock $ 0.220 $ 0.209 $ 0.869 $ 0.825 Class B
Common Stock 0.200 0.190 0.790 0.750
Performance
Ratios: Return on average assets 0.39 % 0.87 % 0.95 %
1.02 % Return on average equity 3.02 6.62 7.26 7.68 Efficiency
ratio(9) 63 62 59 61 Yield on average interest-earning assets(7)
4.74 4.15 4.76 4.07 Cost of average interest-bearing liabilities
0.71 0.56 0.66 0.60 Cost of average deposits(10) 0.35 0.22 0.29
0.21 Net interest spread(7) 4.03 3.59 4.10 3.47 Net interest margin
- Total Company(7) 4.26 3.77 4.32 3.65 Net interest margin - Core
Bank(3) 3.72 3.42 3.55 3.30
Other Information:
End of period FTEs(11) - Total Company 997 938 997 938 End of
period FTEs - Core Bank 915 869 915 869 Number of full-service
banking centers 44 44 44 44
Republic Bancorp, Inc.
Financial Information
Fourth Quarter 2017 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 Ratios As of
and for the As of and for the Three
Months Ended Dec. 31, Years Ended Dec. 31, 2017
2016 2017 2016
Credit Quality Asset Balances: Nonperforming
Assets - Total Company: Loans on nonaccrual status $ 14,118 $
15,892 $ 14,118 $ 15,892 Loans past due 90-days-or-more and still
on accrual 956 167 956
167 Total nonperforming loans 15,074 16,059 15,074
16,059 OREO 115 1,391 115
1,391 Total nonperforming assets - Total Company $
15,189 $ 17,450 $ 15,189 $ 17,450
Nonperforming Assets - Core Bank(3): Loans on
nonaccrual status $ 14,118 $ 15,892 $ 14,118 $ 15,892 Loans past
due 90-days-or-more and still on accrual 19 85
19 85 Total nonperforming loans
14,137 15,977 14,137 15,977 OREO 115 1,391
115 1,391 Total nonperforming
assets - Core Bank $ 14,252 $ 17,368 $ 14,252
$ 17,368
Delinquent loans: Delinquent loans -
Core Bank $ 8,460 $ 6,821 $ 8,460 $ 6,821 Delinquent loans - RPG(5)
5,641 2,137 5,641
2,137 Total delinquent loans - Total Company $ 14,101
$ 8,958 $ 14,101 $ 8,958
Credit Quality Ratios - Total Company: Nonperforming
loans to total loans 0.38 % 0.42 % 0.38 % 0.42 % Nonperforming
assets to total loans (including OREO) 0.38 0.46 0.38 0.46
Nonperforming assets to total assets 0.30 0.36 0.30 0.36 Allowance
for loan and lease losses to total loans 1.07 0.86 1.07 0.86
Allowance for loan and lease losses to nonperforming loans 284 205
284 205 Delinquent loans to total loans(6) 0.35 0.24 0.35 0.24 Net
charge-offs to average loans (annualized) 0.35 0.27 0.47 0.25
Credit Quality Ratios - Core Bank:
Nonperforming loans to total loans 0.36 % 0.42 % 0.36 % 0.42 %
Nonperforming assets to total loans (including OREO) 0.36 0.46 0.36
0.46 Nonperforming assets to total assets 0.28 0.36 0.28 0.36
Allowance for loan and lease losses to total loans 0.77 0.74 0.77
0.74 Allowance for loan and lease losses to nonperforming loans 213
175 213 175 Delinquent loans to total loans 0.21 0.18 0.21 0.18 Net
charge-offs to average loans (annualized) 0.06 0.09 0.04 0.05
Republic Bancorp, Inc. Financial Information
Fourth Quarter 2017 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
Dec. 31, 2017 Sep. 30, 2017 Jun. 30, 2017
Mar. 31, 2017 Dec. 31, 2016 Assets: Cash and
cash equivalents $ 299,351 $ 329,862 $ 332,695 $ 206,187 $ 289,309
Investment securities 591,458 523,896 525,684 578,130 534,139 Loans
held for sale 16,989 13,135 11,756 10,292 15,170 Loans 4,014,034
3,957,512 3,916,320 3,710,376 3,810,778 Allowance for loan and
lease losses (42,769 ) (40,191 ) (37,898 )
(42,362 ) (32,920 ) Loans, net 3,971,265 3,917,321
3,878,422 3,668,014 3,777,858 Federal Home Loan Bank stock, at cost
32,067 32,067 32,067 28,208 28,208 Premises and equipment, net
45,605 44,845 44,255 43,962 42,869 Goodwill 16,300 16,300 16,300
16,300 16,300 Other real estate owned 115 167 300 1,362 1,391 Bank
owned life insurance 63,356 62,972 62,578 62,185 61,794 Other
assets and accrued interest receivable 48,856
52,609 51,604 50,152
49,271 Total assets $ 5,085,362 $ 4,993,174 $
4,955,661 $ 4,664,792 $ 4,816,309
Liabilities and Stockholders’
Equity:
Deposits: Noninterest-bearing $ 1,022,042 $ 1,040,414 $ 1,061,637 $
1,070,237 $ 971,952 Interest-bearing 2,411,116
2,309,315 2,072,301 2,278,547
2,188,740 Total deposits 3,433,158 3,349,729
3,133,938 3,348,784 3,160,692
Securities sold under agreements to
repurchase and other short-term borrowings
204,021 173,311 113,334 144,375 173,473 Federal Home Loan Bank
advances 737,500 757,500 1,002,500 467,500 802,500 Subordinated
note 41,240 41,240 41,240 41,240 41,240 Other liabilities and
accrued interest payable 37,019 38,107
37,758 42,229 33,998
Total liabilities 4,452,938 4,359,887 4,328,770 4,044,128 4,211,903
Stockholders’ equity
632,424 633,287 626,891
620,664 604,406
Total liabilities and Stockholders’
equity
$ 5,085,362 $ 4,993,174 $ 4,955,661 $
4,664,792 $ 4,816,309
Average Balance
Sheet Data Quarterly Comparison Dec. 31, 2017
Sep. 30, 2017 Jun. 30, 2017 Mar. 31, 2017
Dec. 31, 2016 Assets: Investment securities,
including FHLB stock $ 559,381 $ 552,821 $ 597,818 $ 586,621 $
571,158 Federal funds sold and other interest-earning deposits
229,638 208,688 130,650 184,007 57,950 Loans and fees, including
loans held for sale 3,967,211 3,875,420 3,730,379 3,749,738
3,792,902 Total interest-earning assets 4,756,230 4,636,929
4,458,847 4,520,366 4,422,010 Total assets 4,953,134 4,834,653
4,668,048 4,847,700 4,622,760
Liabilities and Stockholders’
Equity:
Noninterest-bearing deposits $ 1,045,939 $ 1,052,162 $ 1,063,215 $
1,132,591 $ 950,020 Interest-bearing deposits 2,383,196 2,249,436
2,224,127 2,212,219 2,197,411
Securities sold under agreements to
repurchase and other short-term borrowings
271,434 208,160 179,594 218,412 231,817 Federal Home Loan Bank
advances 537,326 618,750 500,027 598,167 570,135 Subordinated note
41,240 41,240 41,240 41,240 41,240 Total interest-bearing
liabilities 3,233,196 3,117,586 2,944,988 3,070,038 3,040,603
Stockholders’ equity
640,686 633,874 627,940 610,429 604,095
Republic
Bancorp, Inc. Financial Information
Fourth Quarter 2017 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
Dec. 31, 2017 Sep. 30, 2017 Jun. 30, 2017
Mar. 31, 2017 Dec. 31, 2016 Total interest
income(7) $ 56,349 $ 53,725 $ 47,821 $ 60,883 $ 45,903 Total
interest expense 5,711 5,418 4,684
4,445 4,258 Net interest income 50,638 48,307 43,137
56,438 41,645 Provision for loan and lease losses 6,071
4,221 5,061 12,351 5,004 Noninterest income: Service charges
on deposit accounts 3,325 3,395 3,390 3,247 3,338 Net refund
transfer fees 171 177 2,770 15,382 121 Mortgage banking income 935
1,102 1,445 1,160 980 Interchange fee income 2,533 2,475 2,547
2,326 2,254 Program fees 1,851 1,597 1,284 1,091 1,102 Increase in
cash surrender value of BOLI 384 394 393 391 402 Losses on
securities available for sale (136 ) — — — — Net gains on OREO 254
31 249 142 53 Other 873 1,203 849
1,184 2,235 Total noninterest income 10,190
10,374 12,927 24,923 10,485
Noninterest expenses: Salaries and employee benefits 20,502
20,505 20,015 21,211 16,917 Occupancy and equipment, net 6,518
6,806 5,903 5,967 5,618 Communication and transportation 1,261
1,239 939 1,272 1,282 Marketing and development 1,098 1,677 1,409
1,004 1,005 FDIC insurance expense 328 300 300 450 297 Bank
franchise tax expense 652 749 790 2,435 813 Data processing 2,606
1,795 1,695 1,652 1,586 Interchange related expense 931 928 1,071
1,058 1,071 Supplies 565 241 261 527 437 OREO expense 104 55 132 97
148 Legal and professional fees 616 446 596 752 591 FHLB advance
prepayment penalty — — — — — Other 2,964 3,285
2,623 2,514 2,401 Total noninterest expenses
38,145 38,026 35,734 38,939
32,166 Income before income tax expense 16,612 16,434
15,269 30,071 14,960 Income tax expense: Income tax expense
- TCJA(1) 6,326 — — — — Income tax expense - Other 5,448
5,728 5,198 10,054 4,960 Total
income tax expense 11,774 5,728 5,198
10,054 4,960 Net income $ 4,838 $
10,706 $ 10,071 $ 20,017 $ 10,000
Republic
Bancorp, Inc. Financial Information
Fourth Quarter 2017 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 Ratios
As of and for the
Three Months Ended Dec. 31, 2017 Sep. 30, 2017
Jun. 30, 2017 Mar. 31, 2017 Dec. 31, 2016
Per Share Data: Basic weighted average shares
outstanding 21,149 21,153 21,151 20,915 20,926 Diluted weighted
average shares outstanding 21,258 21,236 21,230 20,996 20,941
Period-end shares outstanding: Class A Common Stock 18,607
18,618 18,618 18,615 18,615 Class B Common Stock 2,243 2,243 2,243
2,243 2,245 Book value per share(8) $ 30.33 $ 30.36 $ 30.05
$ 29.76 $ 28.97 Tangible book value per share(8) 29.27 29.29 28.98
28.68 27.89
Earnings per share (“EPS”):
Basic EPS - Class A Common Stock $ 0.23 $ 0.51 $ 0.48 $ 0.97 $ 0.48
Basic EPS - Class B Common Stock 0.21 0.47 0.44 0.88 0.44 Diluted
EPS - Class A Common Stock 0.23 0.51 0.48 0.96 0.48 Diluted EPS -
Class B Common Stock 0.21 0.47 0.44 0.88 0.44 Cash dividends
declared per Common share: Class A Common Stock $ 0.220 $ 0.220 $
0.220 $ 0.209 $ 0.209 Class B Common Stock 0.200 0.200 0.200 0.190
0.190
Performance Ratios: Return on average
assets 0.39 % 0.89 % 0.86 % 1.65 % 0.87 % Return on average equity
3.02 6.76 6.42 13.12 6.62 Efficiency ratio(9) 63 65 64 48 62 Yield
on average interest-earning assets(7) 4.74 4.63 4.29 5.39 4.15 Cost
of average interest-bearing liabilities 0.71 0.70 0.64 0.58 0.56
Cost of average deposits(10) 0.35 0.31 0.28 0.22 0.22 Net interest
spread(7) 4.03 3.93 3.65 4.81 3.59 Net interest margin - Total
Company(7) 4.26 4.17 3.87 4.99 3.77 Net interest margin - Core
Bank(3) 3.72 3.68 3.46 3.33 3.42
Other Information:
End of period FTEs(11) - Total Company 997 970 976 973 938
End of period FTEs - Core Bank 915 896 904 901 869 Number of
full-service banking centers 44 45 45 45 44
Republic Bancorp, Inc. Financial Information
Fourth Quarter 2017 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 Ratios
As of and for
the Three Months Ended Dec. 31, 2017 Sep. 30,
2017 Jun. 30, 2017 Mar. 31, 2017 Dec. 31,
2016 Credit Quality Asset Balances:
Nonperforming Assets - Total Company: Loans on nonaccrual
status $ 14,118 $ 15,475 $ 15,467 $ 16,793 $ 15,892 Loans past due
90-days-or-more and still on accrual 956 906
335 203 167 Total
nonperforming loans 15,074 16,381 15,802 16,996 16,059 OREO
115 167 300 1,362
1,391 Total nonperforming assets - Total Company $
15,189 $ 16,548 $ 16,102 $ 18,358 $
17,450
Nonperforming Assets - Core Bank(3):
Loans on nonaccrual status $ 14,118 $ 15,475 $ 15,467 $ 16,793 $
15,892 Loans past due 90-days-or-more and still on accrual
19 55 33 81
85 Total nonperforming loans 14,137 15,530 15,500 16,874
15,977 OREO 115 167 300
1,362 1,391 Total nonperforming assets
- Core Bank $ 14,252 $ 15,697 $ 15,800 $
18,236 $ 17,368
Delinquent Loans:
Delinquent loans - Core Bank $ 8,460 $ 7,756 $ 6,844 $ 5,952 $
6,821 Delinquent loans - RPG(5) 5,641 4,270
2,169 10,211 2,137
Total delinquent loans - Total Company $ 14,101 $ 12,026
$ 9,013 $ 16,163 $ 8,958
Credit Quality Ratios - Total Company: Nonperforming
loans to total loans 0.38 % 0.41 % 0.40 % 0.46 % 0.42 %
Nonperforming assets to total loans (including OREO) 0.38 0.42 0.41
0.49 0.46 Nonperforming assets to total assets 0.30 0.33 0.32 0.39
0.36 Allowance for loan and lease losses to total loans 1.07 1.02
0.97 1.14 0.86 Allowance for loan and lease losses to nonperforming
loans 284 245 240 249 205 Delinquent loans to total loans(6)(12)
0.35 0.30 0.23 0.44 0.24 Net charge-offs to average loans
(annualized) 0.35 0.20 1.02 0.31 0.27
Credit Quality
Ratios - Core Bank: Nonperforming loans to total loans
0.36 % 0.40 % 0.40 % 0.46 % 0.42 % Nonperforming assets to total
loans (including OREO) 0.36 0.40 0.41 0.50 0.46 Nonperforming
assets to total assets 0.28 0.32 0.32 0.40 0.36 Allowance for loan
and lease losses to total loans 0.77 0.76 0.76 0.76 0.74 Allowance
for loan and lease losses to nonperforming loans 213 190 189 166
175 Delinquent loans to total loans 0.21 0.20 0.18 0.16 0.18 Net
charge-offs to average loans (annualized) 0.06 0.03 0.05 0.02 0.09
Republic Bancorp, Inc. Financial InformationFourth
Quarter 2017 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 clients are similar.
As of December 31, 2017, the Company was divided into five
distinct reportable segments: Traditional Banking, Warehouse
Lending (“Warehouse”), Mortgage Banking, Tax Refund Solutions
(“TRS”) and Republic Credit Solutions (“RCS”). Management considers
the first three segments to collectively constitute the “Core Bank”
or “Core Banking” operations, while the last two segments
collectively constitute the Republic Processing Group (“RPG”)
operations. The Bank’s Correspondent Lending channel and the
Company’s national branchless banking platform, MemoryBank®, are
considered part of the Traditional Banking segment.
Prior to the third quarter of 2017, management reported RPG as a
segment consisting of its largest division, TRS, along with its
relatively smaller divisions, Republic Payment Solutions (“RPS”)
and RCS. During the third quarter of 2017, due to RCS’s growth in
revenues relative to the total Company’s revenues, management
identified TRS and RCS as separate reportable segments under the
newly classified RPG operations. Also, as part of the updated
segmentation, management will report the RPS division, which
remained below thresholds to be classified a separate reportable
segment, within the newly classified TRS segment. The reportable
segments within RPG operations and divisions within those segments
operate through the Bank. All prior periods have been reclassified
to conform to the current presentation.
The nature of segment operations and the primary drivers of net
revenues by reportable segment are provided below:
Reportable Segment: Nature of
Operations: Primary Drivers of Net Revenues:
Core Banking:
Traditional Banking Provides traditional banking products to
clients primarily in its market footprint via its network of
banking centers and to clients outside of its market footprint
primarily via its Digital and Correspondent Lending delivery
channels. Loans, investments, and deposits. Warehouse
Lending Provides short-term, revolving credit facilities to
mortgage bankers across the United States. Mortgage warehouse lines
of credit. Mortgage Banking
Primarily originates, sells and services
long-term, single family, first lien residential real estate loans
primarily to clients in the Bank’s market footprint.
Loan sales and servicing.
Republic
Processing Group: Tax Refund Solutions TRS offers
tax-related credit products and facilitates the receipt and payment
of federal and state tax refund products. The RPS division of TRS
offers general-purpose reloadable cards. TRS and RPS products are
primarily provided to clients outside of the Bank’s market
footprint. Loans, refund transfers, and prepaid cards.
Republic Credit Solutions Offers short-term credit products. RCS
products are primarily provided to clients outside of the Bank’s
market footprint, with a substantial portion of RCS clients
considered subprime or near prime borrowers. Unsecured
small-dollar, consumer loans.
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 2016 Annual Report on Form
10-K. Segment performance is evaluated using operating income.
Goodwill is allocated to the Traditional Banking segment. 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
Fourth Quarter 2017 Earnings Release
(continued)
Segment information for the three months
and years ended December 31, 2017 and 2016 follows:
Three Months Ended December 31, 2017
Core Banking
Republic Processing Group
(“RPG”)
Total Tax Republic Traditional
Warehouse Mortgage
Core Refund Credit
Total
Total (dollars in thousands) Banking
Lending Banking
Banking
Solutions Solutions
RPG Company Net interest income
$ 39,333 $ 4,460 $ 91
$ 43,884 $ 18 $ 6,736 $
6,754 $ 50,638 Provision for loan and
lease losses 1,312 (114 ) —
1,198 (228 ) 5,101
4,873
6,071 Net refund transfer fees — — —
— 171 —
171 171 Mortgage banking income — — 935
935 —
—
— 935 Program fees — — —
— 73 1,778
1,851 1,851 Losses on securities available for sale
(136 ) — —
(136 ) — —
— (136 )
Other noninterest income 6,970 10
87
7,067 12
290
302 7,369
Total noninterest income 6,834 10 1,022
7,866 256 2,068
2,324 10,190 Total noninterest expenses
31,085 944 1,418
33,447 3,600 1,098
4,698 38,145 Income
(loss) before income tax expense 13,770 3,640 (305 )
17,105
(3,098 ) 2,605
(493 ) 16,612 Income tax
expense (benefit) - TCJA(1) 5,115 181 (702 )
4,594 — 1,732
1,732 6,326 Income tax expense (benefit) - Other
4,403 1,331 (106 )
5,628 (1,125 ) 945
(180 ) 5,448 Total income tax
expense (benefit) 9,518 1,512
(808 )
10,222 (1,125 ) 2,677
1,552 11,774
Net income (loss) $ 4,252 $ 2,128 $ 503
$ 6,883 $ (1,973 ) $ (72 ) $
(2,045
) $ 4,838 Segment period-end
assets $ 4,470,932 $ 525,246 $ 11,115 $
5,007,293 $ 12,450 $
65,619 $
78,069 $
5,085,362 Net interest
margin 3.76 % 3.41 % NM
3.72 % NM NM
NM
4.26 % Three Months Ended December
31, 2016 Core Banking
Republic Processing Group
(“RPG”)
Total Tax Republic Traditional Warehouse Mortgage
Core Refund Credit
Total Total (dollars in
thousands) Banking Lending
Banking
Banking Solutions
Solutions
RPG
Company Net interest income $ 32,413 $ 5,160 $ 52 $
37,625 $ 18 $ 4,002 $
4,020 $
41,645
Provision for loan and lease losses 1,881 (189 ) —
1,692
(133 ) 3,445
3,312 5,004 Net refund transfer
fees — — —
— 121 —
121 121 Mortgage banking
income — — 980
980 — —
— 980 Program fees — —
—
— 36 1,066
1,102 1,102 Other noninterest
income 6,710 4 148
6,862 13 1,407
1,420 8,282 Total noninterest
income 6,710 4 1,128
7,842 170 2,473
2,643
10,485 Total noninterest expenses 26,809
985 1,112
28,906
2,672 588
3,260
32,166 Income (loss) before
income tax expense 10,433 4,368 68
14,869 (2,351 ) 2,442
91 14,960 Income tax expense (benefit) 3,282
1,624 24
4,930
(855 ) 885
30
4,960 Net income (loss) $ 7,151 $ 2,744
$ 44
$ 9,939 $ (1,496 ) $ 1,557
$
61 $ 10,000
Segment period-end assets $ 4,169,557 $ 584,916 $ 17,453
$
4,771,926 $ 13,575 $ 30,808 $
44,383 $
4,816,309 Net interest margin 3.41 % 3.50 % NM
3.42 % NM NM
NM 3.77 %
Republic Bancorp, Inc. Financial
Information
Fourth Quarter 2017 Earnings Release
(continued)
Year Ended December 31, 2017 Core Banking
Republic Processing Group
(“RPG”)
Total Tax Republic Traditional Warehouse Mortgage
Core Refund Credit
Total Total (dollars in
thousands) Banking Lending
Banking
Banking Solutions
Solutions
RPG
Company Net interest income $ 142,823 $ 17,533 $ 346
$ 160,702 $ 15,197 $ 22,621 $
37,818 $
198,520 Provision for loan and lease losses 3,923
(150 ) —
3,773 6,535 17,396
23,931 27,704
Net refund transfer fees — — —
— 18,500 —
18,500 18,500 Mortgage banking income — — 4,642
4,642 — —
— 4,642 Program fees — — —
—
176 5,648
5,824 5,824 Losses on securities available
for sale (136 ) — —
(136 ) — —
— (136
) Other noninterest income 27,588 37
279
27,904 164
1,516
1,680 29,584 Total
noninterest income 27,452 37 4,921
32,410 18,840 7,164
26,004 58,414 Total noninterest expenses
124,637 3,392 4,765
132,794 14,491 3,559
18,050 150,844 Income before
income tax expense 41,715 14,328 502
56,545 13,011 8,830
21,841 78,386 Income tax expense (benefit) -
TCJA(1) 5,115 181 (702 )
4,594 — 1,732
1,732
6,326 Income tax expense - Other 13,087
5,240 176
18,503
4,721 3,204
7,925 26,428
Total income tax expense (benefit) 18,202
5,421 (526 )
23,097 4,721
4,936
9,657 32,754
Net income $ 23,513 $ 8,907 $ 1,028
$
33,448 $ 8,290 $ 3,894 $
12,184 $
45,632 Segment period-end assets $ 4,470,932 $
525,246 $ 11,115
$ 5,007,293 $ 12,450 $ 65,619 $
78,069 $ 5,085,362 Net interest margin
3.55 % 3.53 % NM
3.55 % NM NM
NM 4.32
% Year Ended December 31, 2016 Core
Banking
Republic Processing Group
(“RPG”)
Total Tax Republic Traditional Warehouse Mortgage
Core Refund Credit
Total Total (dollars in
thousands) Banking Lending
Banking
Banking Solutions
Solutions
RPG
Company Net interest income $ 121,692 $ 16,529 $ 200
$ 138,421 $ 6,607 $ 11,026 $
17,633 $
156,054 Provision for loan and lease losses 3,448 497
—
3,945 2,772 7,776
10,548 14,493 Net
refund transfer fees — — —
— 19,240 —
19,240
19,240 Mortgage banking income — — 6,882
6,882 — —
— 6,882 Program fees — — —
— 210 2,834
3,044 3,044 Other noninterest income 26,090
18 360
26,468
189 1,686
1,875
28,343 Total noninterest income 26,090 18 7,242
33,350 19,639 4,520
24,159 57,509 Total
noninterest expenses 108,360 3,142
4,688
116,190 11,701
2,216
13,917 130,107
Income before income tax expense 35,974 12,908 2,754
51,636 11,773 5,554
17,327 68,963 Income tax
expense 11,015 4,798 964
16,777 4,270 2,013
6,283 23,060 Net income $ 24,959
$ 8,110 $ 1,790
$ 34,859 $ 7,503
$ 3,541 $
11,044 $ 45,903
Segment period-end assets $ 4,169,557 $ 584,916 $ 17,453
$
4,771,926 $ 13,575 $ 30,808 $
44,383 $
4,816,309 Net interest margin 3.26 % 3.59 % NM
3.30 % NM NM
NM 3.65 %
Republic Bancorp, Inc. Financial
Information
Fourth Quarter 2017 Earnings Release
(continued)
(1)
Upon enactment of the Tax Cuts and Jobs
Act (“TCJA”) on December 22, 2017, the Company recorded a charge to
income tax expense of $6.3 million due to the remeasurement of its
deferred tax assets and liabilities at a 21% corporate tax rate.
The amount recorded is based on a reasonable estimate using
currently available information. The Company has up to one year to
adjust this amount for new information received.
(2)
GAAP – U.S. Generally Accepted Accounting
Principles.
(3)
“Core Bank” or “Core Banking” operations
consist of the Traditional Banking, Warehouse Lending and Mortgage
Banking segments.
(4)
Core deposits, a non-GAAP measure, are
total deposits excluding time deposits greater than or equal to
$250,000, all brokered deposits and all RPG deposits. Core deposits
are intended to include those deposits that are more stable and
lower cost and that reprice more slowly than other deposits when
interest rates rise. The following table reconciles
noninterest-bearing and interest-bearing deposits in accordance
with GAAP to core deposits:
(dollars in thousands)
Dec. 31, 2017 Dec. 31, 2016
$ Change
% Change Noninterest-bearing deposits - GAAP $
1,022,042 $ 971,952 $ 50,090 5 % Less: Noninterest-bearing deposits
- RPG 33,505 28,493 5,012 18 Core
noninterest-bearing deposits - Non-GAAP (a) $ 988,537 $ 943,459 $
45,078 5 Interest-bearing deposits - GAAP $ 2,411,116 $
2,188,740 $ 222,376 10 % Less: Time deposits, $250,000 and over
77,891 37,200 40,691 109 Less: Brokered money market accounts
373,242 360,597 12,645 4 Less: Brokered certificates of deposit
46,089 28,666 17,423 61 Less: Interest-bearing deposits - RPG
1,641 — 1,641 NM Core interest-bearing
deposits - Non-GAAP (b) $ 1,912,253 $ 1,762,277 $ 149,976 9 %
Total core deposits - Non-GAAP (a+b) $ 2,900,790 $ 2,705,736
$ 195,054 7
(5)
Republic Processing Group operations
consist of the Tax Refund Solutions and Republic Credit Solutions
segments.
(6)
The delinquent loans to total loans ratio
equals loans 30-days-or-more past due divided by total loans.
Depending on loan class, loan delinquency is determined by the
number of days or the number of payments past due.
(7)
The amount of loan fee income can
meaningfully impact total interest income, loan yields, net
interest margin and net interest spread. The amount of loan fee
income included in total interest income was $9.4 million and $5.9
million for the quarters ended December 31, 2017 and 2016. The
amount of loan fee income included in total interest income was
$46.2 million and $24.2 million for the years ended December 31,
2017 and 2016.
The amount of loan fee income included in
total interest income per quarter was as follows: $9.4 million
(quarter ended December 31, 2017); $9.1 million (quarter ended
September 30, 2017); $6.4 million (quarter ended June 30, 2017);
$21.3 million (quarter ended March 31, 2017); and $5.9 million
(quarter ended December 31, 2016).
Interest income for Easy Advances (“EAs”)
is composed entirely of loan fees. The loan fees disclosed above
included EA fees of $14.2 million and $5.2 million for the years
ended December 31, 2017 and 2016. EAs are only offered during the
first two months of each year.
(8)
The following table provides a
reconciliation of total stockholders’ equity in accordance with
GAAP to tangible stockholders’ equity in accordance with applicable
regulatory requirements, a non-GAAP measure. The Company provides
the tangible book value per share, another non-GAAP measure, in
addition to those defined by banking regulators, because of its
widespread use by investors as a means to evaluate capital
adequacy.
Quarterly Comparison (dollars in thousands, except
per share data)
Dec. 31, 2017 Sep. 30, 2017 Jun.
30, 2017 Mar. 31, 2017 Dec. 31, 2016
Total stockholders’ equity - GAAP (a)
$ 632,424 $ 633,287 $ 626,891 $ 620,664 $ 604,406 Less: Goodwill
16,300 16,300 16,300 16,300 16,300 Less: Mortgage servicing rights
5,044 5,128 5,159 5,158 5,180 Less: Core deposit intangible
858 911 964 1,017
1,070
Tangible stockholders’ equity - Non-GAAP
(c)
$ 610,222 $ 610,948 $ 604,468 $ 598,189
$ 581,856 Total assets - GAAP (b) $ 5,085,362 $
4,993,174 $ 4,955,661 $ 4,664,792 $ 4,816,309 Less: Goodwill 16,300
16,300 16,300 16,300 16,300 Less: Mortgage servicing rights 5,044
5,128 5,159 5,158 5,180 Less: Core deposit intangible 858
911 964 1,017
1,070 Tangible assets - Non-GAAP (d) $ 5,063,160
$ 4,970,835 $ 4,933,238 $ 4,642,317 $
4,793,759
Total stockholders’ equity to total assets
- GAAP (a/b)
12.44 % 12.68 % 12.65 % 13.31 % 12.55 %
Tangible stockholders’ equity to tangible
assets - Non-GAAP (c/d)
12.05 % 12.29 % 12.25 % 12.89 % 12.14 % Number of shares
outstanding (e) 20,850 20,861
20,861 20,858 20,860 Book
value per share - GAAP (a/e) $ 30.33 $ 30.36 $ 30.05 $ 29.76 $
28.97 Tangible book value per share - Non-GAAP (c/e) 29.27 29.29
28.98 28.68 27.89
(9)
The efficiency ratio, a non-GAAP measure,
equals total noninterest expense divided by the sum of net interest
income and noninterest income. The ratio excludes net gains
(losses) on sales, calls and impairment of investment securities,
if applicable.
(10)
The cost of average deposits ratio equals
annualized total interest expense on deposits divided by total
average interest-bearing deposits plus total average
noninterest-bearing deposits.
(11)
FTEs – Full-time-equivalent employees.
(12)
Delinquent loans for the RPG segment
included $8.4 million of EAs at March 31, 2017. EAs were only
offered during the first two months of 2017 and 2016. EAs do not
have a contractual due date but are eligible for delinquency
consideration three weeks after the taxpayer-customer’s tax return
is submitted to the applicable tax authority. All unpaid EAs are
charged-off by the end of the second quarter of each year.
NM – Not meaningful
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180126005018/en/
Republic Bancorp, Inc.Kevin Sipes, 502-560-8628Executive Vice
President & Chief Financial Officer
Republic Bancorp (NASDAQ:RBCAA)
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