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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Republic Bancorp Inc | NASDAQ:RBCAA | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.89 | 1.43% | 62.99 | 62.70 | 63.29 | 63.76 | 60.86 | 63.76 | 6,892 | 16:47:35 |
Republic Bancorp, Inc. (“Republic” or the “Company”) reported second quarter 2024 net income and Diluted Earnings per Class A Common Share (“Diluted EPS”) of $25.2 million and $1.30 per share, representing increases of 20% and 22% over the second quarter of 2023.
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20240719431470/en/
Logan Pichel, President & CEO of the Republic Bank & Trust Company commented, “We are very pleased with our strong performance in the second quarter, which reflects our continued focus on providing best-in-class service to our clients, the on-going success of our diversified business model, and growing our core banking franchise, while also prudently and effectively managing our risks and expenses,” said Logan Pichel, President and CEO of Republic Bank. “Perhaps as much as anything, I am most proud that we reached an industry strong Net Promoter Score (“NPS”) of 67.2 during the second quarter versus an industry average of 23.9. Our strong NPS Score further affirms our passion for delivering exceptional customer experiences across all channels and all parts of the Bank.
We also had another positive quarter in moderating our operating costs as our Total Company noninterest expenses declined nearly 4% from the second quarter of 2023 to the second quarter of 2024. We are reporting this reduction in our noninterest expenses despite recent investments we’ve made in new banking centers, the hiring of new talent, and the on-going enhancement of our technology and digital capabilities. We are very proud of the progress we’ve made in our efficiency gains and look forward to building on this progress in the future.
Some of our additional highlights for the second quarter of 2024 include:
As it relates to our diversification of revenue streams, our Republic Processing Group (“RPG) continued to produce positive results during the second quarter of 2024. While Republic Payment Solutions (“RPS”) was down slightly for the quarter due to a revenue share arrangement implemented during the first quarter of 2024, both Republic Credit Solutions (“RCS”) and Tax Refund Solutions (“TRS”) had solid increases in net income contributing to a 14% increase in net income for RPG, in total, for the second quarter of 2024 compared to the second quarter of 2023.
As we look ahead to the second half of 2024, achieving moderately priced deposit growth will remain a major focus. With our superior customer service, competitive products, convenient locations, and solid digital capabilities, we believe we are well-armed to effectively and efficiently grow our loyal customer base. I am optimistic about our future and the potential for us to create long-term value for our shareholders, our clients, our associates, and the communities we serve,” Pichel concluded.
The following table highlights Republic’s key metrics for the three months ended June 30, 2024 and 2023. Additional financial details, including segment-level data, are provided in the financial supplement to this release. The attached digital version of this release includes the financial supplement as an appendix. The financial supplement may also be found as Exhibit 99.2 of the Company’s Form 8-K filed with the SEC on July 19, 2024.
Total Company Financial Performance Highlights
Three Months Ended Jun. 30,
Six Months Ended Jun. 30,
(dollars in thousands, except per share data)
2024
2023
$ Change
% Change
2024
2023
$ Change
% Change
Income Before Income Tax Expense
$
32,105
$
26,508
$
5,597
21
%
$
70,804
$
62,622
$
8,182
13
%
Net Income
25,206
21,052
4,154
20
55,812
49,144
6,668
14
Diluted EPS
1.30
1.07
0.23
22
2.87
2.50
0.37
15
Return on Average Assets ("ROA")
1.50
%
1.37
%
NA
10
1.61
%
1.60
%
NA
1
Return on Average Equity ("ROE")
10.57
9.41
NA
12
11.90
11.14
NA
7
NA – Not applicable
Results of Operations for the Second Quarter of 2024 Compared to the Second Quarter of 2023
Core Bank(1)
Net income for the Core Bank was $15.0 million for the second quarter of 2024, a $2.9 million, or 24%, increase over the $12.1 million for the second quarter of 2023. Favorable variances across net interest income, Provision, and noninterest expenses, were all drivers for the increase in net income from the second quarter of 2023 to the second quarter of 2024.
Net Interest Income – Core Bank net interest income was $52.8 million for the second quarter of 2024, a $1.4 million, or 3%, increase from $51.4 million during the second quarter of 2023 and was driven, in general, by period-over-period growth in average interest-earning assets. The quarter-over-same-quarter-last-year increase in net interest income for the Core Bank reversed a negative trend of two consecutive quarterly declines in net interest income for the fourth quarter of 2023 and the first quarter of 2024.
While net interest income did increase in terms of overall dollars, the Core Bank’s net interest margin (“NIM”) decreased from 3.65% during the second quarter of 2023 to 3.46% during the second quarter of 2024. As with the previous quarters over the past year, the primary driver of the decrease in the net interest margin at the Core Bank was a shift in funding mix away from noninterest-bearing deposit balances into higher-costing, interest-bearing deposits and FHLB borrowings. Overall, the Core Bank’s average noninterest-bearing deposits decreased from $1.5 billion during the second quarter of 2023 to $1.2 billion for the second quarter of 2024. In addition to this change in funding mix, the Core Bank’s cost of interest-bearing liabilities also increased 103 basis points from the second quarter of 2023 to the second quarter of 2024, outpacing the 60-basis-point increase to its yield on interest-earning assets over the same periods.
Additional items of note impacting the Core Bank’s change in net interest income and NIM between the second quarter of 2023 and the second quarter of 2024 were as follows:
The following tables present by reportable segment the overall changes in the Core Bank’s net interest income, net interest margin, as well as average and period-end loan balances:
Net Interest Income
Net Interest Margin
(dollars in thousands)
Three Months Ended Jun. 30,
Three Months Ended Jun. 30,
Reportable Segment
2024
2023
Change
2024
2023
Change
Traditional Banking
$
49,915
$
48,743
$
1,172
3.53
%
3.77
%
(0.24)
%
Warehouse Lending
2,914
2,642
272
2.57
2.28
0.29
Total Core Bank
$
52,829
$
51,385
$
1,444
3.46
3.65
(0.19)
Average Loan Balances
Period-End Loan Balances
(dollars in thousands)
Three Months Ended Jun. 30,
Jun. 30,
Jun. 30,
Reportable Segment
2024
2023
$ Change
% Change
2024
2023
$ Change
% Change
Traditional Banking
$
4,622,655
$
4,279,373
$
343,282
8
%
$
4,589,167
$
4,394,668
$
194,499
4
%
Warehouse Lending
456,908
462,755
(5,847
)
(1
)
549,011
539,560
9,451
2
Total Core Bank
$
5,079,563
$
4,742,128
$
337,435
7
$
5,138,178
$
4,934,228
$
203,950
4
*Includes loans held for sale
NM – Not meaningful
Provision for Expected Credit Loss Expense – The Core Bank’s Provision (2) was a net charge of $1.1 million for the second quarter of 2024 compared to a net charge of $2.1 million for the second quarter of 2023.
The net charge of $1.1 million for the second quarter of 2024 was driven, primarily, by the following:
The net charge of $2.1 million during the second quarter of 2023 was driven, primarily, by the following:
As a percentage of total loans, the Core Bank’s Allowance(2) increased 4 basis points from June 30, 2023 to June 30, 2024. The table below provides a view of the Company’s percentage of Allowance-to-total-loans by reportable segment.
As of Jun. 30, 2024
As of Jun. 30, 2023
Year-over-Year Change
(dollars in thousands)
Allowance
Allowance
Allowance
Reportable Segment
Gross Loans
Allowance
to Loans
Gross Loans
Allowance
to Loans
to Loans
% Change
Traditional Bank
$
4,589,167
$
59,865
1.30
%
$
4,394,668
$
55,567
1.26
%
0.04
%
3
%
Warehouse Lending
549,011
1,370
0.25
539,560
1,346
0.25
—
—
Total Core Bank
5,138,178
61,235
1.19
4,934,228
56,913
1.15
0.04
3
Tax Refund Solutions
92
—
—
193
—
—
—
—
Republic Credit Solutions
126,000
19,452
15.44
118,721
15,289
12.88
2.56
20
Total Republic Processing Group
126,092
19,452
15.43
118,914
15,289
12.86
2.57
20
Total Company
$
5,264,270
$
80,687
1.53
%
$
5,053,142
$
72,202
1.43
%
0.10
%
7
%
ACLL Roll-Forward
Three Months Ended June 30,
2024
2023
(dollars in thousands)
Beginning
Charge-
Ending
Beginning
CBank
Charge-
Ending
Reportable Segment
Balance
Provision
offs
Recoveries
Balance
Balance
Adjustment*
Provision
offs
Recoveries
Balance
Traditional Bank
$
59,176
$
921
$
(332
)
$
100
$
59,865
$
55,216
$
(1,384
)
$
1,860
$
(239
)
$
114
$
55,567
Warehouse Lending
1,156
214
—
—
1,370
1,144
—
202
—
—
1,346
Total Core Bank
60,332
1,135
(332
)
100
61,235
56,360
(1,384
)
2,062
(239
)
114
56,913
Tax Refund Solutions
30,069
(1,182
)
(32,693
)
3,806
—
25,981
—
(219
)
(25,950
)
188
—
Republic Credit Solutions
18,301
5,196
(4,315
)
270
19,452
13,780
—
4,296
(3,018
)
231
15,289
Total Republic Processing Group
48,370
4,014
(37,008
)
4,076
19,452
39,761
—
4,077
(28,968
)
419
15,289
Total Company
$
108,702
$
5,149
$
(37,340
)
$
4,176
$
80,687
$
96,121
$
(1,384
)
$
6,139
$
(29,207
)
$
533
$
72,202
* The net fair value adjustment to ACLL includes an estimate of lifetime credit losses for Purchased Credit Deteriorated loans.
The table below presents the Core Bank’s credit quality metrics:
Quarters Ended:
Years Ended:
Jun. 30,
Jun. 30,
Dec. 31,
Dec. 31,
Dec. 31,
Core Banking Credit Quality Ratios
2024
2023
2023
2022
2021
Nonperforming loans to total loans
0.39
%
0.34
%
0.39
%
0.37
%
0.47
%
Nonperforming assets to total loans (including OREO)
0.41
0.37
0.41
0.40
0.51
Delinquent loans* to total loans
0.18
0.12
0.16
0.14
0.17
Net charge-offs to average loans
0.02
0.01
0.01
0.00
0.01
(Quarterly rates annualized)
OREO = Other Real Estate Owned
*Loans 30-days-or-more past due at the time the second contractual payment is past due.
Noninterest Income – Core Bank noninterest income decreased $1.2 million from the second quarter of 2023 to $10.1 million for the second quarter of 2024. The decrease in noninterest income was driven by a $1.7 payment received in June 2023 in the “other” category related to the payout of Bank Owned Life Insurance (“BOLI”). Partially offsetting the decline in noninterest income related to BOLI, mortgage banking income increased $705,000 driven by an up-tick in consumer demand for home purchases.
Noninterest Expense – The Core Bank’s noninterest expenses were $42.6 million for the second quarter of 2024 compared to $45.5 million for the second quarter of 2023, a decrease of $2.8 million, or 6% for the quarter. The primary driver for the lower noninterest expenses for the second quarter of 2024 was lower salaries and associated estimated incentive compensation accruals, which decreased $1.9 million, or 7%, compared to the second quarter of 2023. This overall decline was driven primarily by a 42-count reduction in the number of Core Bank FTEs from June 30, 2023 to June 30, 2024.
Republic Processing Group(3)
RPG reported net income of $10.2 million for the second quarter of 2024, a $1.3 million, or 14% increase over the $8.9 million for the second quarter of 2023. RPG’s performance for the second quarter of 2024 compared to the second quarter of 2023, by operating segment, was as follows:
Tax Refund Solutions
TRS recorded net income of $3.1 million during the second quarter of 2024 compared to net income of $2.2 million for the second quarter of 2023. The overall increase in TRS net income for the quarter was driven primarily by a $963,000 decrease in Provision, as net charge-offs for Refund Advances (“RAs”) during the quarter were favorably lower than the Company’s preliminary estimated loan loss reserves as of March 31, 2024. In addition, the Company also received a $560,000 payment during the second quarter of 2024 representing a Tax Provider yield enhancement for the RA program to help offset the Company’s higher funding costs. This yield enhancement was new for the 2024 tax season.
Republic Payment Solutions
Net income at RPS was $2.1 million for the second quarter of 2024, a $759,000 decrease from the second quarter of 2023. While RPS earned a higher yield of 5.03% applied to the $360 million average of prepaid program balances for the second quarter of 2024 compared to a yield of 4.52% for the $364 million in average prepaid card balances for the second quarter of 2023, the higher yield was substantially offset by a $1.3 million charge to interest expense for a revenue sharing arrangement that was new for 2024.
Republic Credit Solutions
Net income at RCS increased $1.1 million, or 29% from $3.9 million for the second quarter of 2023 to $5.0 million for the second quarter of 2024. The increase in RCS net income was primarily due to growth in profitability of one of its Line-of-Credit (“LOC”) products, which had an increase in net income of $938,000 from the second quarter of 2023 to the second quarter of 2024. The rise in net income for this LOC product was driven primarily by a period-to-period increase in average outstanding loan balances of $8.8 million.
Republic Bancorp, Inc. (the “Company”) is the parent company of Republic Bank & Trust Company (the “Bank”). The Bank currently has 47 banking centers in communities within five metropolitan statistical areas (“MSAs”) across five states: 22 banking centers located within the Louisville MSA in Louisville, Prospect, Shelbyville, and Shepherdsville in Kentucky, and Floyds Knobs, Jeffersonville, and New Albany in Indiana; six banking centers within the Lexington MSA in Georgetown and Lexington in Kentucky; eight banking centers within the Cincinnati MSA in Cincinnati and West Chester in Ohio, and Bellevue, Covington, Crestview Hills, and Florence in Kentucky; seven banking centers within the Tampa MSA in Largo, New Port Richey, St. Petersburg, Seminole, and Tampa in Florida; and four banking centers within the Nashville MSA in Franklin, Murfreesboro, Nashville and Spring Hill, Tennessee. In addition, Republic Bank Finance has one loan production office in St. Louis, Missouri. The Bank offers internet banking at www.republicbank.com. The Company is headquartered in Louisville, Kentucky, and as of June 30, 2024, had approximately $6.6 billion in total assets. The Company’s Class A Common Stock is listed under the symbol “RBCAA” on the NASDAQ Global Select Market.
Republic Bank. It’s just easier here. ®
Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements in the preceding paragraphs are based on our current expectations and assumptions regarding our business, the future impact to our balance sheet and income statement resulting from changes in interest rates, the yield curve, the ability to develop products and strategies in order to meet the Company’s long-term strategic goals, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by forward-looking statements. We caution you therefore against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Actual results could differ materially based upon factors disclosed from time to time in the Company’s filings with the U.S. Securities and Exchange Commission, including those factors set forth as “Risk Factors” in the Company’s Annual Report on Form 10-K for the period ended December 31, 2023. The Company undertakes no obligation to update any forward-looking statements, except as required by applicable law.
Footnotes:
(1) “Core Bank” or “Core Banking” operations consist of the Traditional Banking and Warehouse Lending segments.
(2) Provision – Provision for Expected Credit Loss Expense
Allowance – Allowance for Credit Losses on Loans
(3) Republic Processing Group operations consist of the TRS, RPS, and RCS segments.
NM – Not meaningful
NA – Not applicable
View source version on businesswire.com: https://www.businesswire.com/news/home/20240719431470/en/
Republic Bancorp, Inc. Kevin Sipes Executive Vice President & Chief Financial Officer (502) 560-8628
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