Republic Bancorp, Inc. Reports First Quarter 2024 Net Income of $30.6 Million
- None.
- None.
Insights
Examining Republic Bancorp's announced first-quarter net income of $30.6 million offers a clear view into the company's current profitability. This figure is a direct indicator of the bank's financial health and provides investors with important data regarding its operational efficiency. By analyzing this income against historical performance and industry benchmarks, one can infer trends such as growth trajectory or potential red flags that could affect future performance. It's also essential to dissect the sources of revenue that contributed to this result, such as interest income, fees, or loan growth and the cost controls in place that enabled this profitability.
Furthermore, evaluating the company's net interest margin (NIM), a key metric for banking institutions that measures the difference between the income generated by interest-bearing assets and the cost of servicing liabilities, can give insights into the efficiency of the bank's lending operations. Additionally, loan quality metrics such as non-performing loans and write-offs can provide information on the risk profile of the bank's lending activities.
Understanding the broader market implications of Republic Bancorp's earnings, it's imperative to consider the current economic environment and interest rate landscape. With the Federal Reserve's monetary policy potentially influencing interest rates, the bank's margin can be significantly affected. Investors should be attuned to how Republic Bancorp manages its interest rate risk and the strategies it employs to mitigate potential negative impacts from rate fluctuations.
Additionally, investor sentiment can be swayed by the bank's performance relative to its peers. A comparative analysis with competitors can highlight Republic's market positioning and whether it is gaining or losing market share. This, in turn, can influence the bank's stock valuation. It's also beneficial to investigate the company's forward-looking statements or guidance, which can provide a sense of management's confidence in maintaining or improving performance in subsequent quarters.
Republic Bancorp, Inc. (NASDAQ: RBCAA), headquartered in
Logan Pichel, President and CEO of the Bank commented, “Diversification of revenue streams once again played a meaningful role in our success as we reported a solid first quarter to start 2024. Altogether, three of our five reportable business segments generated increases in net income for the first quarter of 2024 compared to the first quarter of 2023. We are certainly proud of our diversified business model as this strategy has continued to produce solid results for us over our many years, and we think it is one of the primary differentiators between us and other banks our size.
As has been widely publicized in the media, we are now in the midst of the longest inverted yield curve in
In addition to the pricing discipline of our new loans, we also continued to display good expense discipline. On a pure GAAP-accounting basis, Core Bank noninterest expenses were down
As it relates to our nontraditional division, the Republic Processing Group (“RPG”), the first quarter of each year is the most impactful quarter for the Tax Refund Solutions (“TRS”) segment of RPG. While we made several revenue enhancements at TRS for the current tax season to mitigate the negative impact of higher funding costs, the level of payments received from the
We are certainly proud of our first quarter accomplishments and the financial results we continue to produce on a quarter-after-quarter basis. With industry-leading credit quality, capital levels and client satisfaction ratings, along with a well-diversified business model, we look forward to the remainder of 2024 with optimism. As always, I want to thank our clients for their business with us and our associates for their tremendous efforts in serving our clients. Without them, we would not be able to produce such solid results” concluded Pichel.
The following table highlights Republic’s key metrics for the three months ended March 31, 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 April 25, 2024.
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Three Months Ended Mar. 31, |
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(dollars in thousands, except per share data) |
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2024 |
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2023 |
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$ Change |
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% Change |
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Income Before Income Tax Expense |
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$ |
38,699 |
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$ |
36,114 |
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$ |
2,585 |
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7 |
% |
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Net Income |
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30,606 |
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28,092 |
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2,514 |
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9 |
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Diluted EPS |
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1.58 |
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1.42 |
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0.16 |
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11 |
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Return on Average Assets ("ROA") |
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1.70 |
% |
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1.81 |
% |
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NA |
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(6 |
) |
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Return on Average Equity ("ROE") |
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13.12 |
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12.78 |
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NA |
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3 |
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| NA – Not applicable | |||||||||||||||
Results of Operations for the First Quarter of 2024 Compared to the First Quarter of 2023
Core Bank(1)
Net income for the Core Bank was
Net Interest Income – Core Bank net interest income was
The primary driver of this decrease in net interest income and net interest margin at the Core Bank was an on-going shift in funding mix away from noninterest-bearing deposit balances into higher-costing, interest-bearing deposits and Federal Home Loan Bank borrowings. As a continuance in trend from 2023, the Core Bank’s average noninterest-bearing deposits decreased from
Further impacting the Core Bank’s change in net interest income and NIM between the first quarter of 2023 and the first quarter of 2024 were the following:
-
Average outstanding Warehouse balances increased from
$330 million $340 million $1.0 billion $932 million 31% during the first quarter of 2023 to37% for the first quarter of 2024. -
Traditional Bank average loans grew from
$3.9 billion 4.59% during the first quarter of 2023 to$4.6 billion 5.45% during the first quarter of 2024. In general, the growth in average loan balances was primarily attributable to loan growth achieved during the last nine months of 2023, as the spot balances for Traditional Bank loans decreased$45 million 1% , from December 31, 2023 to March 31, 2024. -
Average investments were
$733 million 2.98% during the first quarter of 2024 compared to$773 million 2.61% for the first quarter of 2023. During the first quarter of 2024, the Core Bank continued to maintain an investment portfolio with a generally short overall duration, as part of its interest rate risk management strategy. As a result of this short duration, the Core Bank has approximately$210 million 3.11% . -
Further segmenting the Core Bank’s increased cost of interest-bearing liabilities:
-
The weighted-average cost of interest-bearing deposits increased from
0.74% during the first quarter of 2023 to2.68% for the first quarter of 2024, while average interest-bearing deposits grew$746 million -
The average balance of FHLB borrowings increased from
$245 million $536 million 4.22% to4.94% for the same time periods. This increase in the average balance of borrowings was generally driven by the above noted growth in period-to-period average loans.
-
The weighted-average cost of interest-bearing deposits increased from
-
Average interest-earning cash was
$454 million 5.57% during the first quarter of 2024 compared to$241 million 4.48% for the first quarter of 2023. The increase in average cash balances was a strategic decision for additional on-balance sheet liquidity above required minimums in response to the uncertainty of the economic environment.
The following tables present by reportable segment the overall changes in the Core Bank’s net interest income, net interest margin, as well as average and period-end loan balances:
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Net Interest Income |
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Net Interest Margin |
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(dollars in thousands) |
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Three Months Ended Mar. 31, |
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Three Months Ended Mar. 31, |
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Reportable Segment |
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2024 |
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2023 |
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Change |
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2024 |
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2023 |
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Change |
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Traditional Banking |
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$ |
48,259 |
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$ |
50,168 |
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$ |
(1,909 |
) |
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3.33 |
% |
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4.07 |
% |
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(0.74 |
)% |
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Warehouse Lending |
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2,257 |
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2,087 |
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170 |
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2.67 |
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2.53 |
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0.14 |
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Total Core Bank |
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$ |
50,516 |
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$ |
52,255 |
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$ |
(1,739 |
) |
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3.30 |
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3.98 |
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(0.68 |
) |
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Average Loan Balances |
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Period-End Loan Balances |
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(dollars in thousands) |
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Three Months Ended Mar. 31, |
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Mar. 31, |
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Mar. 31, |
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Reportable Segment |
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2024 |
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2023 |
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$ Change |
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% Change |
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2024 |
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2023 |
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$ Change |
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% Change |
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Traditional Banking |
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$ |
4,634,948 |
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$ |
3,913,388 |
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$ |
721,560 |
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18 |
% |
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$ |
4,573,650 |
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$ |
4,165,177 |
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$ |
408,473 |
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10 |
% |
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Warehouse Lending |
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340,433 |
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329,716 |
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10,717 |
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3 |
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463,249 |
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457,365 |
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5,884 |
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1 |
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Total Core Bank |
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$ |
4,975,381 |
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$ |
4,243,104 |
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$ |
732,277 |
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17 |
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$ |
5,036,899 |
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$ |
4,622,542 |
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$ |
414,357 |
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9 |
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*Includes loans held for sale |
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NM – Not meaningful |
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Provision for Expected Credit Loss Expense – The Core Bank’s Provision (2) was a net charge of
The net charge for the first quarter of 2024 was primarily driven by the following:
-
The Core Bank recorded a net charge to the Provision of
$820,000 -
The Core Bank recorded a net charge to the Provision of
$309,000 $124 million -
Offsetting the above charges to Provision, the Core Bank recorded a credit to the Provision of
$631,000 $69 million
The net charge during the first quarter of 2023 was primarily driven by the following:
-
The Core Bank recorded a net charge to the Provision of
$430,000 $92 million -
The Core Bank recorded a Day-1 net charge to the Provision of
$2.7 million
As a percentage of total loans, the Core Bank’s Allowance(2) decreased 2 basis points from December 31, 2023 to March 31, 2024. The table below provides a view of the Company’s percentage of Allowance-to-total-loans by reportable segment.
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As of Mar. 31, 2024 |
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As of Mar. 31, 2023 |
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Year-over-Year Change |
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(dollars in thousands) |
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Allowance |
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Allowance |
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Allowance |
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Reportable Segment |
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Gross Loans |
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Allowance |
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to Loans |
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Gross Loans |
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Allowance |
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to Loans |
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to Loans |
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% Change |
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Traditional Bank |
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$ |
4,573,650 |
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$ |
59,176 |
1.29 |
% |
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$ |
4,165,177 |
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$ |
55,216 |
1.33 |
% |
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(0.04 |
)% |
(3 |
)% |
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Warehouse Lending |
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463,249 |
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1,156 |
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0.25 |
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457,365 |
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1,144 |
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0.25 |
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— |
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— |
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Total Core Bank |
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5,036,899 |
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60,332 |
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1.20 |
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4,622,542 |
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56,360 |
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1.22 |
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(0.02 |
) |
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(2 |
) |
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Tax Refund Solutions |
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57,497 |
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30,069 |
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52.30 |
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39,992 |
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25,981 |
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64.97 |
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(12.67 |
) |
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(20 |
) |
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Republic Credit Solutions |
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129,896 |
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18,301 |
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14.09 |
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111,700 |
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13,780 |
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12.34 |
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1.75 |
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14 |
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Total Republic Processing Group |
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187,393 |
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48,370 |
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25.81 |
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151,692 |
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39,761 |
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26.21 |
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(0.40 |
) |
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(2 |
) |
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Total Company |
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$ |
5,224,292 |
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$ |
108,702 |
2.08 |
% |
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$ |
4,774,234 |
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$ |
96,121 |
2.01 |
% |
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0.07 |
% |
3 |
% |
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ACLL Roll-Forward |
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Three Months Ended March 31, |
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2024 |
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2023 |
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(dollars in thousands) |
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Beginning |
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Charge- |
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Ending |
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Beginning |
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CBank |
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Charge- |
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Ending |
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Reportable Segment |
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Balance |
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Provision |
|
offs |
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Recoveries |
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Balance |
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Balance |
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Adjustment* |
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Provision |
|
offs |
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Recoveries |
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Balance |
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Traditional Bank |
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$ |
58,998 |
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$ |
358 |
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$ |
(382 |
) |
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$ |
202 |
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$ |
59,176 |
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$ |
50,709 |
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$ |
— |
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$ |
2,984 |
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$ |
(331 |
) |
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$ |
254 |
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$ |
53,616 |
Warehouse Lending |
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|
847 |
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|
309 |
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— |
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— |
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1,156 |
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|
1,009 |
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|
1,600 |
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|
135 |
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— |
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— |
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|
2,744 |
Total Core Bank |
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59,845 |
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|
667 |
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(382 |
) |
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202 |
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60,332 |
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|
51,718 |
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1,600 |
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3,119 |
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(331 |
) |
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254 |
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56,360 |
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Tax Refund Solutions |
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3,990 |
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|
25,774 |
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— |
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|
305 |
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|
30,069 |
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|
3,888 |
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— |
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21,808 |
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— |
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|
285 |
|
|
25,981 |
Republic Credit Solutions |
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18,295 |
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4,181 |
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(4,545 |
) |
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|
370 |
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|
18,301 |
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|
14,807 |
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— |
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1,839 |
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(3,099 |
) |
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233 |
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|
13,780 |
Total Republic Processing Group |
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|
22,285 |
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|
29,955 |
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(4,545 |
) |
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|
675 |
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48,370 |
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|
18,695 |
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— |
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23,647 |
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(3,099 |
) |
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|
518 |
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39,761 |
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Total Company |
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$ |
82,130 |
|
$ |
30,622 |
|
$ |
(4,927 |
) |
|
$ |
877 |
|
$ |
108,702 |
|
$ |
70,413 |
|
$ |
1,600 |
|
$ |
26,766 |
|
$ |
(3,430 |
) |
|
$ |
772 |
|
$ |
96,121 |
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* The net fair value adjustment to ACLL includes an estimate of lifetime credit losses for Purchased Credit Deteriorated loans. |
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The table below presents the Core Bank’s credit quality metrics:
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Quarters Ended: |
Years Ended: |
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Mar. 31, |
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Mar. 31, |
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Dec. 31, |
Dec. 31, |
Dec. 31, |
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Core Banking Credit Quality Ratios |
2024 |
|
2023 |
|
2023 |
2022 |
2021 |
|||
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Nonperforming loans to total loans |
0.38 |
% |
0.34 |
% |
0.39 |
% |
0.37 |
% |
0.47 |
% |
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Nonperforming assets to total loans (including OREO) |
0.41 |
|
0.38 |
|
0.41 |
|
0.40 |
|
0.51 |
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Delinquent loans* to total loans |
0.15 |
|
0.12 |
|
0.16 |
|
0.14 |
|
0.17 |
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Net charge-offs to average loans |
0.01 |
|
0.01 |
|
0.01 |
|
0.00 |
|
0.01 |
|
(Quarterly rates annualized) |
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OREO = Other Real Estate Owned |
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*Loans 30-days-or-more past due at the time the second contractual payment is past due. |
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Noninterest Income – Core Bank noninterest income decreased
Noninterest Expense – As previously noted, the Core Bank’s noninterest expense was
Republic Processing Group(3)
RPG reported net income of
Republic Payment Solutions (“RPS”)
Net income at RPS was
Tax Refund Solutions (“TRS”)
TRS recorded net income of
Republic Credit Solutions (“RCS”)
Net income at RCS increased
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
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
Footnotes:
(1) |
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“Core Bank” or “Core Banking” operations consist of the Traditional Banking and Warehouse Lending segments. |
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(2) |
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Provision – Provision for Expected Credit Loss Expense
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(3) |
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Republic Processing Group operations consist of the TRS, RPS, and RCS segments. |
NM – Not meaningful |
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NA – Not applicable |
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View source version on businesswire.com: https://www.businesswire.com/news/home/20240425707368/en/
Republic Bancorp, Inc.
Kevin Sipes
Executive Vice President & Chief Financial Officer
(502) 560-8628
Source: Republic Bancorp, Inc.
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