0001157523-22-000885.txt : 20220722 0001157523-22-000885.hdr.sgml : 20220722 20220722080038 ACCESSION NUMBER: 0001157523-22-000885 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 20220722 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20220722 DATE AS OF CHANGE: 20220722 FILER: COMPANY DATA: COMPANY CONFORMED NAME: REPUBLIC BANCORP INC /KY/ CENTRAL INDEX KEY: 0000921557 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 610862051 STATE OF INCORPORATION: KY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-24649 FILM NUMBER: 221098442 BUSINESS ADDRESS: STREET 1: REPUBLIC CORPORATE CENTER STREET 2: 601 WEST MARKET ST CITY: LOUISVILLE STATE: KY ZIP: 40202 BUSINESS PHONE: 5025843600 MAIL ADDRESS: STREET 1: 601 W MARKET ST CITY: LOUISVILLE STATE: KY ZIP: 40202 8-K 1 a52786892.htm REPUBLIC BANCORP, INC. 8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (date of earliest event reported): July 22, 2022

REPUBLIC BANCORP, INC.
(Exact name of registrant as specified in its charter)

Kentucky
0-24649
61-0862051
(State or other jurisdiction (Commission File Number) (I.R.S. Employer Identification No.)
of incorporation)
 
 

601 West Market Street, Louisville, Kentucky
 
40202
(Address of principal executive offices)
 
(zip code)

Registrant’s telephone number, including area code: (502) 584-3600

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading Symbol
Name of each exchange on which registered
Class A Common
RBCAA
The Nasdaq Stock Market

NOT APPLICABLE
(Former Name or former Address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR    240.14d-2(b))
  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


ITEM 2.02.                           RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On July 22, 2022, Republic Bancorp, Inc. announced its results of operations for the quarter ended June 30, 2022. The public announcement was made by means of an earnings release, the text of which is set forth in Exhibit 99.1 hereto. A financial supplement to this earnings release is attached as Exhibit 99.2 hereto.
 
ITEM 9.01.                           FINANCIAL STATEMENTS AND EXHIBITS.

(d)
  Exhibits.
 
 
 
 
 
Exhibit No.

 
99.1
 Republic Bancorp, Inc. Earnings Release dated July 22, 2022.
 
 
 
 
 
 
99.2
 Earnings Release Financial Supplement – Second Quarter 2022
 
 
 
 
 
  104  Cover Page Interactive Data File (embedded within the Inline XBRL document)  


The information in this Form 8-K, including Exhibit 99.1 and Exhibit 99.2 attached hereto, is being furnished under Item 2.02 and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liability of such section, nor shall it be deemed incorporated by reference in any filing of Republic Bancorp, Inc. under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing.
 
 


SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
    Republic Bancorp, Inc.  
    (Registrant)  
       
       
Date: July 22, 2022 
By:
/s/ Kevin Sipes  
    Kevin Sipes  
    Executive Vice President, Chief Financial  
    Officer & Chief Accounting Officer  



EXHIBIT INDEX
 
 Exhibit No.
  Description of Exhibit
 
 
 104
 Cover Page Interactive Data File (embedded within the Inline XBRL document)
                                                                              
 
EX-99.1 2 a52786892ex99_1.htm EXHIBIT 99.1
 
 Exhibit 99.1

Republic Bancorp, Inc. Reports Second Quarter Net Income of $23.9 Million

LOUISVILLE, Ky.--(BUSINESS WIRE)--July 22, 2022--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”) reported second quarter 2022 net income of $23.9 million, equaling its net income for the second quarter of 2021 and resulting in Diluted Earnings per Class A Common Share (“Diluted EPS”) of $1.20. Year-to-date net income was $51.8 million, a $1.9 million, or 4%, increase from the same period in 2021, resulting in return on average assets (“ROA”) and return on average equity (“ROE”) of 1.64% and 12.21% for the first six months of 2022.

Logan Pichel, President and CEO of Republic Bank & Trust Company, commented, “Our second quarter results benefitted from a one-time payment received as a result of concluding our legal issue with Green Dot. That payment helped offset the expected decline in PPP(3) fee income and reductions in mortgage banking and Warehouse Lending revenues resulting from significantly higher interest rates.”

The following chart presents the Company’s second quarter 2022 net income for each operating segment compared to the second quarter of 2021.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME

(dollars in thousands)

 

 

Three Months Ended Jun. 30,

 

 

 

Reportable Segment

 

 

2022

 

2021

 

$ Change

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Traditional Banking - excluding PPP net income impact*

 

 

$

6,657

 

$

4,396

 

$

2,261

 

51

%

 

Traditional Banking - PPP net income impact*

 

 

 

125

 

 

3,437

 

 

(3,312)

 

(96)

 

 

Total Traditional Bank

 

 

 

6,782

 

 

7,833

 

 

(1,051)

 

(13)

 

 

Warehouse Lending

 

 

 

2,405

 

 

4,110

 

 

(1,705)

 

(41)

 

 

Mortgage Banking

 

 

 

(679)

 

 

1,065

 

 

(1,744)

 

(164)

 

 

Total Core Bank

 

 

 

8,508

 

 

13,008

 

 

(4,500)

 

(35)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax Refund Solutions - excluding TRS Transaction items*

 

 

 

2,919

 

 

7,928

 

 

(5,009)

 

(63)

 

 

Tax Refund Solutions - TRS Transaction items*

 

 

 

9,226

 

 

(752)

 

 

9,978

 

NM

 

 

Total Tax Refund Solutions*

 

 

 

12,145

 

 

7,176

 

 

4,969

 

69

 

 

Republic Credit Solutions

 

 

 

3,248

 

 

3,738

 

 

(490)

 

(13)

 

 

Total Republic Processing Group

 

 

 

15,393

 

 

10,914

 

 

4,479

 

41

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Company

 

 

$

23,901

 

$

23,922

 

$

(21)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*See Footnote 1 for a reconciliation of non-GAAP measures to their most comparable GAAP measures.


Pichel continued, “We are encouraged by the continued growth in the fundamentals of our Traditional Bank, as evidenced by:

  • +51% growth in net income, excluding PPP(1)
  • Year-to-date loan growth of $213 million, or 6%, excluding PPP, with notable growth from our Northern Kentucky/Cincinnati market, our Private, CRE, and Commercial Banking division, and our Corporate Banking division
  • 16-basis-point growth in net interest margin from the first to the second quarter of 2022
  • Retention of deposit balances and account relationships
  • Prudent expense control
  • Pristine credit quality

“Given the strength of our current balance sheet, as well as the many opportunities we continue to see across our various business segments, we are pleased overall with how we are positioned for this operating environment and are optimistic for a strong second half of 2022, and beyond,” concluded Pichel.

The following table highlights Republic’s key metrics for the three and six months ended June 30, 2022 and 2021. 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 22, 2022.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 







 





















 

 

 

Total Company Financial Performance Highlights

 

 

 

Three Months Ended Jun. 30,

 

 

 

 

Six Months Ended Jun. 30,

 

 

 

(dollars in thousands, except per share data)

 

 

2022

 

2021

 

$ Change

 

% Change

 

 

2022

 

2021

 

$ Change

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Before Income Tax Expense

 

 

$

30,440

 

 

$

30,561

 

 

$

(121)

 

%

 

 

$

66,254

 

 

$

64,305

 

 

$

1,949

 

3

%

 

Net Income

 

 

 

23,901

 

 

 

23,922

 

 

 

(21)

 

 

 

 

 

51,827

 

 

 

49,975

 

 

 

1,852

 

4

 

 

Diluted EPS

 

 

 

1.20

 

 

 

1.16

 

 

 

0.04

 

3

 

 

 

 

2.59

 

 

 

2.41

 

 

 

0.18

 

7

 

 

Return on Average Assets ("ROA")

 

 

 

1.53

%

 

 

1.49

%

 

 

NA

 

3

 

 

 

 

1.64

%

 

 

1.57

%

 

 

NA

 

4

 

 

Return on Average Equity ("ROE")

 

 

 

11.23

 

 

 

11.27

 

 

 

NA

 

 

 

 

 

12.21

 

 

 

11.86

 

 

 

NA

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NA – Not applicable

Results of Operations for the Second Quarter of 2022 Compared to the Second Quarter of 2021

Core Bank(2)

Net income from Core Banking was $8.5 million for the second quarter of 2022 compared to $13.0 million for the second quarter of 2021. The decrease in net income at the Core Bank was primarily driven by a $4.4 million decrease in pre-tax PPP loan fees and interest, a $2.4 million decline in net interest income from the Warehouse Lending segment (“Warehouse”), and a $2.4 million decrease in Mortgage Banking income, with these decreases partially offset by an increase of $5.3 million in non-PPP-related Traditional Bank net interest income. The decreases in both Warehouse and Mortgage Banking income were driven by a reduction in industry-wide demand for home mortgage refinancing following a dramatic rise in long-term interest rates. The increase in non-PPP Traditional Bank net interest income was driven by strong Traditional Bank loan growth coupled with a recent rise in short-term interest rates.


Net Interest Income Core Bank net interest income was $43.2 million for the second quarter of 2022, a $1.5 million, or 3%, decrease from the second quarter of 2021. This change was driven primarily by the following:

Traditional Bank, Excluding PPP

Excluding PPP fees and interest(3), from the second quarter of 2021 to the second quarter of 2022, the Traditional Bank’s net interest income increased $5.3 million, or 16%, and its net interest margin (“NIM”) expanded 25 basis points to 3.06%. This increase in net interest income and related expansion in NIM resulted primarily from the following:

  • Increases in the Federal Funds Target Rate (“FFTR”) during 2022 have benefitted the Traditional Bank’s high level of interest-earning cash on its balance sheet, as well as its loan and investment portfolio yields, although to a lesser degree. As a result, the Traditional Bank’s yield on interest-earning assets, excluding PPP, increased 20 basis points from the second quarter of 2021 to the second quarter of 2022.
  • Average non-PPP Traditional Bank loans grew from $3.3 billion during the second quarter of 2021 to $3.6 billion during the second quarter of 2022.

Traditional Bank, PPP

The Core Bank recognized $167,000 of fees and interest on its PPP portfolio during the second quarter of 2022 compared to $4.6 million of similar fees and interest during the second quarter of 2021. The $4.4 million decrease in PPP fees and interest primarily highlighted the short-term nature of the PPP, as approximately 97% of all fees and interest eligible to be recognized under the program by the Core Bank were recognized during 2020 and 2021. As of June 30, 2022, total PPP loans of $15 million remained on the Core Bank’s balance sheet out of the original $738 million originated during 2020 and 2021, with less than $350,000 of PPP fee income left to be recognized over the remaining lives of the loans.

Warehouse Lending

Net interest income within the Core Bank’s Warehouse segment decreased $2.4 million, or 39%, from the second quarter of 2021 to the second quarter of 2022. Overall, average outstanding Warehouse balances declined from $727 million during the second quarter of 2021 to $579 million for the second quarter of 2022, with the Warehouse net interest margin decreasing 79 basis points from 3.48% during the second quarter of 2021 to 2.69% during the second quarter of 2022. Committed Warehouse lines of credit remained at $1.4 billion from June 30, 2021 to June 30, 2022, while average usage rates for Warehouse lines were 41% and 51%, respectively, during the second quarters of 2022 and 2021.

In general, the decline in net interest income within Warehouse Lending was driven largely by a sharp rise in long-term interest rates during the first half of 2022, which led to a decrease in mortgage refinancing demand, a sharp drop in Warehouse line usage, and an overall decrease in outstanding Warehouse balances. In addition, Warehouse’s net interest margin was negatively impacted during the second quarter of 2022, as many adjustable rate Warehouse lines remained below their interest rate floors. These interest rate floors, which benefitted Warehouse’s net interest margin significantly during 2020 and 2021 when market rates declined to historical lows, negatively impacted its net interest margin during the first half of 2022, as its cost of funding rose while its loan yield remained relatively stable. The negative impact of these floors is expected to diminish in the near term as interest rates on many Warehouse lines are expected to begin exceeding their floors during the third quarter of 2022, assuming currently projected FFTR increases come to fruition.


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

 

 

2022

 

 

2021

 

Change

 

 

2022

 

2021

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Traditional Banking - excluding PPP

 

 

$

38,991

 

 

$

33,696

 

$

5,295

 

 

3.06

%

 

2.81

%

 

 

0.25

%

 

Traditional Banking - PPP

 

 

 

167

 

 

 

4,582

 

 

(4,415)

 

 

NM

 

 

NM

 

 

 

NM

 

 

Warehouse Lending

 

 

 

3,886

 

 

 

6,324

 

 

(2,438)

 

 

2.69

 

 

3.48

 

 

 

(0.79)

 

 

Mortgage Banking*

 

 

 

153

 

 

 

140

 

 

13

 

 

NM

 

 

NM

 

 

 

NM

 

 

Total Core Bank

 

 

$

43,197

 

 

$

44,742

 

$

(1,545)

 

 

3.02

 

 

3.03

 

 

 

(0.01)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Loan Balances

 

 

Period-End Loan Balances

 

(dollars in thousands)

 

Three Months Ended Jun. 30,

 

 

 

 

Jun. 30,

 

 

 

Reportable Segment

 

2022

 

2021

 

$ Change

 

% Change

 

 

2022

 

2021

 

$ Change

 

% Change

 

 

 

 



 



 





 

 

 



 



 




 

 

Traditional Banking - excluding PPP

 

$

3,603,093

 

$

3,302,374

 

$

300,719

 

9

%

 

 

$

3,658,933

 

$

3,348,161

 

$

310,772

 

9

%

 

Traditional Banking - PPP

 

 

16,668

 

 

349,643

 

 

(332,975)

 

(95)

 

 

 

 

14,657

 

 

250,933

 

 

(236,276)

 

(94)

 

 

Warehouse Lending

 

 

578,676

 

 

727,091

 

 

(148,415)

 

(20)

 

 

 

 

596,678

 

 

840,155

 

 

(243,477)

 

(29)

 

 

Mortgage Banking*

 

 

10,189


 

28,740


 

(18,551)


(65)

 

 

 

 

8,491


 

32,401


 

(23,910)


(74)

 

 

Total Core Bank

 

$

4,208,626


$

4,407,848


$

(199,222)


(5)

 

 

 

$

4,278,759


$

4,471,650


$

(192,891)


(4)

 

 



























 

*Includes loans held for sale
NM – Not meaningful

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for Expected Credit Loss Expense – The Core Bank’s Provision(4) was a net credit of $88,000 for the second quarter of 2022 compared to a net credit of $142,000 for the second quarter of 2021. The net credit during the second quarter of 2022 was primarily driven by the following:

  • The Core Bank recorded a credit to the Provision of $1.4 million during the second quarter of 2022 following the payoff or upgrade of loans previously downgraded during the height of the pandemic.
  • The Core Bank recorded a credit to the Provision of $234,000 during the second quarter of 2022 resulting from formula reserves applied to a decrease in outstanding Warehouse balances from $690 million as of March 31, 2022 to $597 million as of June 30, 2022.
  • Offsetting the above, the Core Bank recorded a net charge to the Provision of $1.5 million during the second quarter of 2022 resulting primarily from formula reserves applied to $106 million of growth in non-PPP Traditional Bank loans from March 31, 2022 to June 30, 2022.

The credit to the Core Bank Provision during the second quarter of 2021 generally reflected an improving economy following the lifting of many pandemic-related restrictions. As of June 30, 2022, while the Core Bank’s credit metrics remained solid, the Company’s Allowance(4) remained generally elevated compared to historical levels due to continued economic uncertainty resulting from inflation not seen in the United States since the early 1980s.


As a percentage of total loans, the Core Bank’s Allowance increased from 1.16% as of June 30, 2021 to 1.20% as of June 30, 2022. The table below provides a view of the Company’s percentage of Allowance-to-total-loans by reportable segment.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of Jun. 30, 2022

 

 

As of Jun. 30, 2021

 

 

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, Less PPP

 

$

3,658,933

 

$

49,727

 

1.36

%

 

 

$

3,348,161

 

$

49,362

 

1.47

%

 

 

(0.11)

%

 

(7)

%

 

Plus: Paycheck Protection Program

 

 

14,657

 

 

 

 

 

 

 

 

250,933

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Traditional Bank

 

$

3,673,590

 

$

49,727


1.35

 

 


 

3,599,094

 

 

49,362


1.37

 

 


(0.02)

 


(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warehouse Lending

 

 

596,678

 

 

1,491

 

0.25

 

 

 

 

840,155

 

 

2,100

 

0.25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Core Bank

 

 

4,270,268

 

 

51,218

 

1.20

 

 

 

 

4,439,249

 

 

51,462

 

1.16

 

 

 

0.04

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax Refund Solutions

 

 

149

 

 

 

 

 

 

 

23

 

 

 

 

 

 

 

 

 

 

Republic Credit Solutions

 

 

91,816

 

 

13,231

 

14.41

 

 

 

 

114,949

 

 

8,829

 

7.68

 

 

 

6.73

 

 

88

 

 

Total Republic Processing Group

 

 

91,965

 

 

13,231

 

14.39

 

 

 

 

114,972

 

 

8,829

 

7.68

 

 

 

6.71

 

 

87

 

 

 

 

 

 

 

 

 






 

 

 

 

 




 







 

Total Company

 

$

4,362,233

 

$

64,449


1.48

 

 


$

4,554,221

 

$

60,291


1.32

 

 


0.16

 


12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The table below presents the Core Bank’s credit quality metrics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarters Ended:

Years Ended:

 

Jun. 30,

 

Mar. 31,

 

Dec. 31,

Dec. 31,

Dec. 31,

Core Banking Credit Quality Ratios

2022

 

2022

 

2021

2020

2019

 

 

 

 

 

 

 

 

 

 

 

Nonperforming loans to total loans

0.38

%

0.40

%

0.47

%

0.50

%

0.54

%

 

 

 

 

 

 

 

 

 

 

 

Nonperforming assets to total loans (including OREO)

0.42

 

0.44

 

0.51

 

0.56

 

0.54

 

 

 

 

 

 

 

 

 

 

 

 

Delinquent loans* to total loans

0.13

 

0.14

 

0.17

 

0.21

 

0.30

 

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs to average loans

 

0.01

 

0.01

 

0.03

 

0.11

 

(Quarterly rates annualized)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OREO = Other Real Estate Owned

 

 

 

 

 

 

 

 

 

 

*Loans 30-days-or-more past due

Noninterest Income – Core Bank noninterest income was $9.5 million during the second quarter of 2022, a decrease of $2.7 million, or 22%, from the second quarter of 2021. The decrease in noninterest income was driven primarily by the following:

  • A significant and rapid rise in long-term interest rates during 2022 led to a significant slowdown in the origination and subsequent sale of mortgage loans into the secondary market for the Core Bank. As of June 30, 2022, the 30-year mortgage rate was hovering near levels not generally seen since 2008. As a result, Mortgage Banking income decreased from $4.2 million during the second quarter of 2021 to $1.8 million for the second quarter of 2022.

    For the second quarter of 2022, the Core Bank sold $68 million in secondary market loans and achieved an average cash-gain-as-a-percent-of-loans-sold during the quarter of 2.85%. During the second quarter of 2021, however, with long-term mortgage interest rates substantially lower, secondary market loan sales were $176 million with comparable cash-gain-as-a-percent-of-loans-sold consistent at 2.85%.
  • Additionally, the Core Bank’s Other Noninterest Income for the second quarter of 2021 included a $399,000 non-recurring gain recognized from the sale of a former banking center property in Hudson, Florida.

Noninterest Expense – Core Bank noninterest expense was $42.2 million for the second quarter of 2022 compared to $41.0 million for the second quarter of 2021, an increase of 3%. The increase in noninterest income was driven primarily by the following:

  • Salaries and Benefits expense increased $817,000, or 3%, to $25.0 million for the second quarter of 2022, driven primarily by higher health-benefits costs and annual merit increases and partially offset by a 52-count reduction in full-time equivalent employees.
  • Other noninterest expense increased $744,000, or 25%, to $3.7 million for the second quarter of 2022, driven primarily by an increase in the following:
    • Meals, Entertainment, and Travel expenses increased $309,000, with in-person community outreach and business related travel increasing toward pre-pandemic levels during 2022.
    • Provision for losses on off-balance sheet commitments increased $141,000, driven primarily by an increase in the Bank’s committed but unused lines of credit during the previous 12 months.

Republic Processing Group(5)

The Republic Processing Group (“RPG”) reported net income of $15.4 million for the second quarter of 2022 compared to $10.9 million for the same period in 2021. RPG adjusted net income(1) for the second quarter of 2022, which excludes a previously disclosed $13.0 million pre-tax legal settlement paid to Republic Bank & Trust Company (“RB&T”), as well as $699,000 in related expenses, was $6.2 million. Notable items impacting net income for each of the RPG reporting segments during the second quarters of 2022 and 2021 were as follows:

Tax Refund Solutions (“TRS”)

The TRS segment derives substantially all of its revenues during the first and second quarters of the year. TRS recorded net income of $12.1 million for the second quarter of 2022 compared to $7.2 million for the same period in 2021. The following primarily drove the increase in TRS’s net income for the quarter:

  • TRS recorded $13.0 million of noninterest income during the second quarter of 2022, partially offset by $699,000 in related expenses, resulting from the previously disclosed legal-settlement payment to RB&T. This second quarter 2022 legal-settlement payment to RB&T was in addition to the related $5.0 million contract termination fee paid to RB&T during the first quarter of 2022. For more information on RB&T’s now-settled lawsuit, see the Company’s Form 8-K filed with the SEC on June 3, 2022.
  • Partially offsetting the above, TRS recorded a $6.1 million negative swing in its Provision expense from the second quarter of 2021 to the second quarter of 2022. While the overall net total Provision is a positive benefit on a year-to-date basis, the later timing of payments received during 2021 versus 2022 resulted in a large credit to the Provision during the second quarter of 2021 versus a minimal additional expense to the Provision during the second quarter of 2022. Easy Advances (“EAs”) are originated only during the first two months of each year, with losses on those originations initially estimated during the same two-month origination period. All unpaid EAs are charged off by June 30th of each year, with first quarter loss estimates trued-up to actual charge-offs incurred through a second quarter Provision charge or credit. EAs collected during the second half of each year are recorded as recoveries of previously charged-off loans.

    During the second quarter of 2022, TRS trued-up its first quarter EA loss estimate with a charge to the Provision of $564,000, increasing its weighted average net EA loss rate from an estimated 2.67% as of March 31, 2022 to 2.85% as of June 30, 2022. During the second quarter of 2021, TRS trued-up its first quarter EA loss estimate with a credit to the Provision of $5.8 million, decreasing its estimated net EA loss rate from 6.41% as of March 31, 2021 to 4.10% as of June 30, 2021. The significant true-up credit to the Provision during the second quarter of 2021 resulted primarily from a higher volume of loan payments received by the Company during the second quarter, exceeding the conservative estimates originally made by the Company during the first quarter of 2021 when the tax season experienced a two-week delay to its start.

For the 2022 and 2021 tax seasons, the following table presents information regarding EA originations, actual charge-offs, first quarter Provision estimates, and second quarter Provision true-ups:


 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 


(dollars in thousands)

 

 

2022 Tax Season

 

2021 Tax Season

 

2022/2021 Change


 

 

 

 

 

 

 

 

 

 

 

 

 


EAs originated during the first two months of the year

(a)

 

$

311,207

 

 

$

250,045

 

 

 

$

61,162

 


 

 

 

 

 

 

 

 

 

 

 

 

 


Actual EA losses incurred compared to loss estimates ($):

 

 

 

 

 

 

 

 

 

 

 

 


Actual losses recognized for the first six months ended June 30,

(b)

 

$

8,879

 

 

$

10,226

 

 

 

$

(1,347

)


First quarter Provision estimate made during three months ended March 31,

(c)

 

 

8,315

 

 

 

16,019

 

 

 

 

(7,704

)


Second quarter Provision true-up for three months ended June 30,

(d)

 

$

564

 

 

$

(5,793

)

 

 

$

6,357

 


 

 

 

 

 

 

 

 

 

 

 

 

 


EA actual losses incurred compared to loss estimates (%):

 

 

 

 

 

 

 

 

 

 

 

 


Actual losses recognized for the first six months ended June 30,

(b)/(a)

 

 

2.85

%

 

 

4.09

 

%

 

 

(1.24

)%


First quarter Provision estimate made during three months ended March 31,

(c)/(a)

 

 

2.67

 

 

 

6.41

 

 

 

 

(3.74

)


Second quarter Provision true-up for three months ended June 30,

(d)/(a)

 

 

0.18

%

 

 

(2.32

)

%

 

 

2.50

%


  • TRS’s Net Refund Transfer (“RT”) fees decreased $2.0 million, or 33%, from $5.9 million for the second quarter of 2021 to $4.0 million for the same period in 2022. The decrease was primarily driven by an 8% overall decrease in RT volume from the 2021 to the 2022 tax season, with 4% of that decrease driven by the loss of one of TRS’s tax providers following the announcement of the now-cancelled May 2021 Asset Purchase Agreement. Also impacting the decrease in net RT fees from the second quarter of 2021 to the second quarter of 2022 was the previously mentioned two-week delay in the 2021 tax season, which pushed a greater percentage of RT volume into the second quarter of 2021.

Republic Credit Solutions (“RCS”)

Net income at RCS decreased to $3.2 million for the second quarter of 2022 from $3.7 million for the second quarter of 2021. The decrease in RCS’s net income primarily resulted from higher Provisions on its line-of-credit products, as the net charge-offs and the required up-front loan loss reserves for the programs have increased as the combined total outstanding balances of the programs approach pre-pandemic levels.

Republic Bancorp, Inc. (the “Company”) is the parent company of Republic Bank & Trust Company (the “Bank”). The Bank currently has 42 full-service banking centers throughout five states: twenty-eight banking centers in eight Kentucky communities – Covington, Crestview Hills, Florence, Georgetown, Lexington, Louisville, Shelbyville, and Shepherdsville; three banking centers in southern Indiana Floyds Knobs, Jeffersonville, and New Albany; seven banking centers in six Florida communities (Tampa MSA) – Largo, New Port Richey, St. Petersburg, Seminole, Tampa, and Temple Terrace; two banking centers in two Tennessee communities (Nashville MSA) – Cool Springs and Green Hills; and two banking centers in two Ohio communities (Cincinnati MSA) – Norwood and West Chester. The Bank offers internet banking at www.republicbank.com. The Company has $6.1 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 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, other future conditions, and the impact of the COVID pandemic. 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, 2021. The Company undertakes no obligation to update any forward-looking statements, except as required by applicable law.

Footnotes:

(1)


The following table provides a reconciliation of financial measures in accordance with GAAP to the Company’s adjusted results, which are non-GAAP measures that exclude significant, unusual items. Management uses these non-GAAP measures to evaluate the on-going performance of the Company. Non-GAAP measures are not formally defined by GAAP or codified in the federal banking regulations, and other entities may use calculation methods that differ from those used by the Company.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NON-GAAP RECONCILIATION BY SEGMENT

(dollars in thousands)

 

 

Three Months Ended Jun. 30,

 

 

 

Reportable Segment

 

 

2022

 

2021

 

$ Change

 

% Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Before Income Tax Expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Traditional Banking - GAAP

 

 

$

8,429

 

$

9,388

 

$

(959

)

 

(10

)%

 

Less: Net interest income from PPP fees and interest

 

 

 

167

 

 

4,582

 

 

(4,415

)

 

(96

)

 

Traditional Banking - Non-GAAP

 

 

$

8,262

 

$

4,806

 

$

3,456

 

 

72

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TRS - GAAP

 

 

$

15,610

 

$

9,502

 

$

6,108

 

 

64

%

 

Less: Noninterest income related to TRS Transaction*

 

 

 

13,000

 

 

 

 

13,000

 

 

NM

 

 

Add: Noninterest expense related to TRS Transaction*

 

 

 

699

 

 

1,000

 

 

(301

)

 

NM

 

 

TRS - Non-GAAP

 

 

$

3,309

 

$

10,502

 

$

(7,193

)

 

(68

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RPG - GAAP

 

 

$

19,784

 

$

14,470

 

$

5,314

 

 

37

%

 

Less: Noninterest income related to TRS Transaction*

 

 

 

13,000

 

 

 

 

13,000

 

 

NM

 

 

Add: Noninterest expense related to TRS Transaction*

 

 

 

699

 

 

1,000

 

 

(301

)

 

NM

 

 

RPG - Non-GAAP

 

 

$

7,483

 

$

15,470

 

$

(7,987

)

 

(52

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Traditional Banking - GAAP

 

 

$

6,782

 

$

7,833

 

$

(1,051

)

 

(13

)%

 

Less: Impact of net interest income from PPP fees and interest

 

 

 

125

 

 

3,437

 

 

(3,312

)

 

(96

)

 

Traditional Banking - Non-GAAP

 

 

$

6,657

 

$

4,396

 

$

2,261

 

 

51

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TRS - GAAP

 

 

$

12,145

 

$

7,176

 

$

4,969

 

 

69

%

 

Less: Noninterest income related to TRS Transaction* (tax effected)

 

 

 

9,750

 

 

 

 

9,750

 

 

NM

 

 

Add: Noninterest expense related to TRS Transaction* (tax effected)

 

 

 

524

 

 

752

 

 

(228

)

 

NM

 

 

TRS - Non-GAAP

 

 

$

2,919

 

$

7,928

 

$

(5,009

)

 

(63

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RPG - GAAP

 

 

$

15,393

 

$

10,914

 

$

4,479

 

 

41

%

 

Less: Noninterest income related to TRS Transaction* (tax effected)

 

 

 

9,750

 

 

 

 

9,750

 

 

NM

 

 

Add: Noninterest expense related to TRS Transaction* (tax effected)

 

 

 

524

 

 

752

 

 

(228

)

 

NM

 

 

RPG - Non-GAAP

 

 

$

6,167

 

$

11,666

 

$

(5,499

)

 

(47

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*The TRS Transaction relates to the now-cancelled May 13, 2021 Asset Purchase Agreement for the sale of substantially all of TRS assets and operations. During the second quarter of 2022, RB&T received a pre-tax $13 million legal settlement payment and incurred $699,000 of related expenses in relation to the TRS Transaction. During the second quarter of 2021, RB&T incurred $1.0 million of expenses related to the TRS Transaction.

 

NM – Not meaningful


(2)


“Core Bank” or “Core Banking” operations consist of the Traditional Banking, Warehouse Lending, and Mortgage Banking segments.

 


 

(3)


PPP – The U.S. Small Business Administration’s Paycheck Protection Program



 


The Company earns lender fees and 1.0% coupon interest on its PPP portfolio. Due to the short-term nature of the PPP, management believes Traditional Bank net interest income excluding PPP fees and interest is a more appropriate measure to analyze the Traditional Bank’s net interest income and net interest margin. The following table reconciles Traditional Bank net interest income and net interest margin to Traditional Bank net interest income and net interest margin excluding PPP fees and interest, a non-GAAP measure.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Interest Income

 

 

Interest-Earning Assets

 

 

Net Interest Margin

 

 

 

 

Three Months Ended Jun. 30,

 

 

 

 

 

 

 

Three Months Ended Jun. 30,

 

 

 

 

 

 

 

Three Months Ended Jun. 30,

 

 

 

(dollars in thousands)

 

 

2022

 

2021

 

$ Change

 

% Change

 

 

2022

 

2021

 

$ Change

 

% Change

 

 

2022

 

2021

 

% Change

 

 

 

 

 



 



 





 

 



 



 











 




Traditional Banking - GAAP

 

 

$

39,158

 

$

38,278

 

$

880

 

 

2

%


 

$

5,121,492

 

$

5,149,602

 

$

(28,110

)

 

(1

)%


 

3.06

%

 

2.97

%

 

 

0.09

%


Less: Impact of PPP fees and interest

 

 

 

167

 

 

4,582

 

 

(4,415

)

 

(96

)

 

 

 

16,668

 

 

349,643

 

 

(332,975

)

 

(95

)

 

 

 

 

0.16

 

 

 

(0.16

)

 

Traditional Banking ex PPP fees and interest - non-GAAP

 

 

$

38,991

 

$

33,696

 

$

5,295

 

 

16

 

 

 

$

5,104,824

 

$

4,799,959

 

$

304,865

 

 

6

 

 

 

3.06

 

 

2.81

 

 

 

0.25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4)


Provision – Provision for Expected Credit Loss Expense

 


Allowance – Allowance for Credit Losses on Loans

 


 

(5)


Republic Processing Group operations consist of the Tax Refund Solutions and Republic Credit Solutions segments.

 


 

NM – Not meaningful

 


 

NA – Not applicable

 

Contacts

Republic Bancorp, Inc.
Kevin Sipes
Executive Vice President & Chief Financial Officer
(502) 560-8628

EX-99.2 3 a52786892ex99_2.htm EXHIBIT 99.2
 
 Exhibit 99.2


EARNINGS RELEASE FINANCIAL SUPPLEMENT

SECOND QUARTER 2022


TABLE OF CONTENTS

BALANCE SHEET DATA
S-2
   
AVERAGE BALANCE SHEET DATA
S-3
   
INCOME STATEMENT DATA
S-4
   
SELECTED DATA AND RATIOS
S-5
   
LOAN COMPOSITION
S-6
   
ALLOWANCE FOR CREDIT LOSSES ON LOANS
S-6
   
CREDIT QUALITY DATA AND RATIOS
S-7
   
SEGMENT DATA
S-8
   
FOOTNOTES
S-11


S-1


Republic Bancorp, Inc.
Earnings Release Financial Supplement
Second Quarter 2022
 (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
                             
   
As of
 
   
Jun. 30, 2022
   
Mar. 31, 2022
   
Dec. 31, 2021
   
Sep. 30, 2021
   
Jun. 30, 2021
 
Assets:
                             
Cash and cash equivalents
 
$
795,143
   
$
1,077,158
   
$
756,971
   
$
1,011,247
   
$
747,007
 
Investment securities, net of allowance for credit losses
   
655,296
     
614,836
     
542,045
     
543,449
     
573,027
 
Loans held for sale
   
39,727
     
28,037
     
52,077
     
40,546
     
56,833
 
Loans
   
4,362,233
     
4,390,243
     
4,496,562
     
4,343,806
     
4,554,221
 
Allowance for credit losses
   
(64,449
)
   
(71,656
)
   
(64,577
)
   
(63,024
)
   
(60,291
)
Loans, net
   
4,297,784
     
4,318,587
     
4,431,985
     
4,280,782
     
4,493,930
 
Federal Home Loan Bank stock, at cost
   
10,311
     
10,311
     
10,311
     
10,311
     
11,670
 
Premises and equipment, net
   
33,886
     
34,358
     
36,073
     
37,499
     
38,682
 
Right-of-use assets
   
41,364
     
42,402
     
38,825
     
39,257
     
40,698
 
Goodwill
   
16,300
     
16,300
     
16,300
     
16,300
     
16,300
 
Other real estate owned ("OREO")
   
1,687
     
1,740
     
1,792
     
1,845
     
1,898
 
Bank owned life insurance ("BOLI")
   
100,396
     
99,773
     
99,161
     
99,634
     
99,008
 
Other assets and accrued interest receivable
   
120,582
     
106,367
     
108,092
     
106,764
     
104,257
 
Total assets
 
$
6,112,476
   
$
6,349,869
   
$
6,093,632
   
$
6,187,634
   
$
6,183,310
 
                                         
Liabilities and Stockholders' Equity:
                                       
Deposits:
                                       
Noninterest-bearing
 
$
2,094,436
   
$
2,226,714
   
$
1,990,781
   
$
2,086,548
   
$
2,062,433
 
Interest-bearing
   
2,733,093
     
2,860,392
     
2,849,637
     
2,861,399
     
2,955,145
 
Total deposits
   
4,827,529
     
5,087,106
     
4,840,418
     
4,947,947
     
5,017,578
 
                                         
Securities sold under agreements to
                                       
   repurchase ("SSUAR") and other short-term borrowings
   
303,315
     
287,818
     
290,967
     
260,583
     
142,895
 
Operating lease liabilities
   
42,163
     
43,204
     
39,672
     
40,151
     
41,621
 
Federal Home Loan Bank advances
   
20,000
     
20,000
     
25,000
     
25,000
     
25,000
 
Subordinated note
   
     
     
     
     
41,240
 
Other liabilities and accrued interest payable
   
77,295
     
71,412
     
63,343
     
75,296
     
69,886
 
Total liabilities
   
5,270,302
     
5,509,540
     
5,259,400
     
5,348,977
     
5,338,220
 
                                         
Stockholders' equity
   
842,174
     
840,329
     
834,232
     
838,657
     
845,090
 
Total liabilities and stockholders' equity
 
$
6,112,476
   
$
6,349,869
   
$
6,093,632
   
$
6,187,634
   
$
6,183,310
 


S-2

Republic Bancorp, Inc.
Earnings Release Financial Supplement
Second Quarter 2022 (continued)
 (all amounts other than per share amounts, number of employees, and number of banking centers are expressed in thousands unless otherwise noted)

    
                                           
Average Balance Sheet Data
                             
   
Three Months Ended
   
Six Months Ended
 
   
Jun. 30, 2022
   
Mar. 31, 2022
   
Dec. 31, 2021
   
Sep. 30, 2021
   
Jun. 30, 2021
   
Jun. 30, 2022
   
Jun. 30, 2021
 
Assets:
                                         
                                           
Interest-earning assets:
                                         
Federal funds sold and other interest-earning deposits
 
$
813,956
   
$
861,822
   
$
848,215
   
$
924,859
   
$
938,728
   
$
837,757
   
$
725,764
 
Investment securities, including FHLB stock
   
691,427
     
606,182
     
540,227
     
555,934
     
562,509
     
649,040
     
563,243
 
Loans, including loans held for sale
   
4,339,432
     
4,355,255
     
4,385,547
     
4,404,270
     
4,546,747
     
4,347,299
     
4,645,662
 
Total interest-earning assets
   
5,844,815
     
5,823,259
     
5,773,989
     
5,885,063