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Jan. 28, 2022, 8:00 a.m. EST

Republic Bancorp, Inc. Finishes 2021 with Fourth Quarter Net Income of $16.8 Million and Full Year Net Income of $86.8 Million

LOUISVILLE, Ky., (BUSINESS WIRE) -- Republic Bancorp, Inc. , headquartered in Louisville, Kentucky, is the holding company of Republic Bank & Trust Company (the “Bank”). /zigman2/quotes/200886150/composite RBCAA +1.05%

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20220128005005/en/

Republic Bancorp, Inc. (“Republic” or the “Company”) is pleased to report fourth quarter 2021 net income of $16.8 million, resulting in Diluted Earnings per Class A Common Share (“Diluted EPS”) of $0.84. Full year 2021 net income was $86.8 million, a $3.5 million, or 4%, increase from the same period in 2020, resulting in return on average assets (“ROA”) and return on average equity (“ROE”) of 1.38% and 10.27%.

Logan Pichel , President and CEO of Republic Bank & Trust Company, commented, “I am very proud of what we accomplished during 2021, as we continue on our mission to enable our clients, Company, associates, and the communities we serve to thrive. Included among our accomplishments for the year were:

  • A solid year of earnings in 2021, finishing the year with a 4% increase in net income over 2020;

  • A successful CEO transition due to the continued leadership of our current Executive Chair Steve Trager;

  • Pristine credit quality metrics at our Core Bank [(1)] that continue to place us among the very best banks in the country;

  • Continued support for our communities by providing $210 million of COVID relief loans and over 5,500 volunteer hours from our associates;

  • Enhanced focus on diversity and inclusion;

  • Promoted technology and innovation through the expanded use of Interactive Teller Machines to increase hours of service for clients and improve efficiency;

  • Generated record earnings in our Warehouse Lending segment;

  • Produced the second best year of mortgage banking revenue in our Company’s history;

  • Grew our noninterest-bearing deposits by another $100 million, or 5%;

  • Prudently managed our noninterest expense, with a 2% year-over-year decrease;

  • Effectively transitioned to a flexible work environment that has benefitted our associate recruiting and retention efforts; and

  • Positioned our balance sheet for the emerging change in the interest rate environment by paying off our Trust Preferred debt, while maintaining large cash balances on the balance sheet.

“Certainly all of these positive accomplishments during 2021 would not have been possible without our dedicated team members. With that, I’d like to thank all of our associates who continue to deliver best-in-class service, while dealing with the challenges of an unrelenting pandemic. I could not be more proud of the work we do each and every day and look forward to our bright future in 2022 and beyond,” concluded Pichel.

The following table highlights Republic’s key metrics for the three months and years ended December 31, 2021 and 2020. Additional financial details, including segment-level data, are provided in the financial supplement to this release. The financial supplement may be found as Exhibit 99.2 of the Company’s Form 8-K filed with the SEC on January 28, 2022 and may also be found within the digital attachment to this release.

                                                               
                                                               
    Total Company Financial Performance Highlights
      Three Months Ended Dec. 31,         Years Ended Dec. 31,      
(dollars in thousands, except per share data)     2021   2020   $ Change   % Change     2021   2020   $ Change   % Change  
                                                               
                                                               
Income Before Income Tax Expense     $ 19,809     $ 23,632     $ (3,823 )   (16 ) %     $ 110,341     $ 102,633     $ 7,708   8 %  
Net Income       16,805       20,356       (3,551 )   (17 )         86,789       83,246       3,543   4      
Diluted EPS       0.84       0.98       (0.14 )   (14 )         4.24       3.99       0.25   6      
Return on Average Assets ("ROA")       1.09 %     1.32 %     NA     (17 )         1.38 %     1.38 %     NA        
Return on Average Equity ("ROE")       7.96       9.89       NA     (20 )         10.27       10.37       NA   (1 )    
                                                               
NA – Not applicable

Results of Operations for the Fourth Quarter of 2021 Compared to the Fourth Quarter of 2020

Core Bank(1)

Net income from Core Banking was $14.0 million for the fourth quarter of 2021, a $3.1 million decrease from the same period in 2020. This decrease primarily reflected an $8.8 million decrease in total revenue, with the fourth quarter of 2020 offering a more favorable environment for the Core Bank’s net interest income, Paycheck Protection Program (“PPP”) fee income, and more significantly, Mortgage Banking income. Partially offsetting the decrease in revenue from the fourth quarter of 2020 to the fourth quarter of 2021 was a $4.2 million decrease in noninterest expense and a favorable decline in Provision [(2)] .

Net Interest Income– Core Bank net interest income was $43.7 million for the fourth quarter of 2021, a $6.0 million, or 12%, decrease from the fourth quarter of 2020. This decrease was driven primarily by the following:

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 Dec. 31,           Three Months Ended Dec. 31,        
Reportable Segment     2021     2020   Change     2021   2020   Change  
                                               
Traditional Banking     $ 37,572     $ 40,972   $ (3,400 )     3.08 %   3.46 %     (0.38 ) %  
Warehouse Lending       5,831       8,242     (2,411 )     3.08     3.51       (0.43 )    
Mortgage Banking*       279       430     (151 )     NM     NM       NM      
Total Core Bank     $ 43,682     $ 49,644   $ (5,962 )     3.08     3.48       (0.40 )    
                                               
                                                     
                                                     
    Average Loan Balances     Period-End Loan Balances  
(dollars in thousands)   Three Months Ended Dec. 31,         Dec. 31,      
Reportable Segment     2021     2020   $ Change   % Change       2021     2020   $ Change   % Change  
                                                     
Traditional Banking   $ 3,497,478   $ 3,816,403   $ (318,925 )   (8 ) %     $ 3,501,959   $ 3,715,649   $ (213,690 )   (6 ) %  
Warehouse Lending     757,688     939,164     (181,476 )   (19 )         850,550     962,796     (112,246 )   (12 )    
Mortgage Banking*     25,227     32,075     (6,848 )   (21 )         29,393     46,867     (17,474 )   (37 )    
Total Core Bank   $ 4,280,393   $ 4,787,642   $ (507,249 )   (11 )       $ 4,381,902   $ 4,725,312   $ (343,410 )   (7 )    
                                                     
* Includes loans held for sale

Provision for Expected Credit Loss Expense – The Core Bank’s Provision was a net charge of $337,000 for the fourth quarter of 2021 compared to a net charge of $1.6 million for the fourth quarter of 2020. The net charge during the fourth quarter of 2021 was primarily driven by growth in outstanding Warehouse balances from September 30, 2021 to December 31, 2021. The charge to the Provision during the fourth quarter of 2020 primarily reflected pandemic-related concerns over commercial real estate values in the Core Bank’s market footprint. As of December 31, 2021, while the Core Bank’s credit metrics remained solid, the Company’s Allowance [(2)] remained generally elevated compared to historical levels due to the continued uncertainty caused by the pandemic and the public response to it.

As a percentage of total loans, the Core Bank’s Allowance increased from 1.11% as of December 31, 2020 to 1.18% as of December 31, 2021. The table below provides a view of the Company’s percentage of Allowance-to-total-loans by reportable segment.

                                                       
                                                       
                                                       
    As of Dec. 31, 2021     As of Dec. 31, 2020     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   $ 3,445,945   $ 49,407   1.43 %     $ 3,323,330   $ 49,699   1.50 %     (0.07 ) %   (5 ) %  
Plus: Paycheck Protection Program     56,014                 392,319                          
                                                       
Traditional Bank   $ 3,501,959   $ 49,407   1.41         3,715,649     49,699   1.34       0.07       5      
                                                       
Warehouse Lending     850,550     2,126   0.25         962,796     2,407   0.25                  
                                                       
Total Core Bank     4,352,509     51,533   1.18         4,678,445     52,106   1.11       0.07       6      
                                                       
Tax Refund Solutions     50,987     96   0.19         23,765     158   0.66       (0.47 )     (71 )    
Republic Credit Solutions     93,066     12,948   13.91         110,893     8,803   7.94       5.97       75      
Total Republic Processing Group     144,053     13,044   9.06         134,658     8,961   6.65       2.41       36      
                                                       
Total Company   $ 4,496,562   $ 64,577   1.44       $ 4,813,103   $ 61,067   1.27       0.17       13      
                                                       

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

                             
  As of and for the:
  Quarters Ended: Years Ended:
  Dec. 31,   Sep. 30,   Jun. 30,   Mar. 31,   Dec. 31, Dec. 31, Dec. 31,
Core Banking Credit Quality Ratios 2021   2021   2021   2021   2021 2020 2019
                             
Nonperforming loans to total loans 0.47 % 0.48 % 0.49 % 0.49 % 0.47 % 0.50 % 0.54 %
                             
Nonperforming assets to total loans (including OREO) 0.51   0.52   0.53   0.53   0.51   0.56   0.54  
                             
Delinquent loans* to total loans 0.17   0.18   0.22   0.19   0.17   0.21   0.30  
                             
Net charge-offs (recoveries) to average loans 0.02   (0.02)     0.03   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 $12.0 million during the fourth quarter of 2021, a decrease of $2.8 million, or 19%, from the fourth quarter of 2020. The decrease in noninterest income was driven primarily by the following:

  • Mortgage Banking income decreased from $7.9 million for the fourth quarter of 2020 to $3.3 million for the fourth quarter of 2021. For the fourth quarter of 2021, the Core Bank sold $155 million in secondary market loans and achieved an average cash-gain-as-a-percent-of-loans-sold during the quarter of 2.80%. During the fourth quarter of 2020, however, secondary market loan sales were $242 million with comparable cash-gain-as-a-percent-of-loans-sold of 4.32%. Favorable market conditions during the fourth quarter of 2020 brought on by the pandemic drove gains-as-a-percent-of-loans-sold to unprecedented record highs for the entire mortgage industry.

  • Offsetting the decrease in Mortgage Banking income were increases in Service Charges on Deposits of $320,000 and Interchange Income of $354,000. These increases largely reflect a rise in consumer spending activity at substantially higher levels than the period of pandemic-driven restricted spending during the fourth quarter of 2020.

  • Additionally, Other Income during the fourth quarter of 2021 included $979,000 of non-recurring revenue related to the Company’s bank owned life insurance.

Noninterest Expense – Core Bank noninterest expense was $39.2 million for the fourth quarter of 2021 compared to $43.5 million for the fourth quarter of 2020. The decrease in noninterest expense was driven primarily by the following:

  • The Core Bank incurred $2.1 million in non-recurring early termination penalties upon payoff of $60 million of FHLB term advances during the fourth quarter of 2020.

  • Bank Franchise Tax expense decreased $840,000. As previously reported, Kentucky enacted HB354 in March 2019 and as a result, the Bank transitioned from a capital-based bank franchise tax to corporate income tax on January 1, 2021 for Kentucky state taxes.

  • Salaries and Benefits decreased $649,000, primarily driven by a $1.7 million decrease in incentive compensation expense partially offset by annual merit increases.

Republic Processing Group(4)

The Republic Processing Group (“RPG”) reported net income of $2.8 million for the fourth quarter of 2021 compared to $3.3 million for the same period in 2020, with a $1.1 million negative swing in net loss at RPG’s Tax Refund Solutions (“TRS”) segment partially offset by a $631,000 increase in net income at its Republic Credit Solutions (“RCS”) segment.

Tax Refund Solutions

The TRS segment derives substantially all of its revenues during the first and second quarters of the year and historically operates at a net loss during the second half of the year. TRS recorded a net loss of $1.3 million for the fourth quarter of 2021 compared to a net loss of $164,000 for the same period in 2020. The following primarily drove the negative swing in TRS’s net loss:

  • TRS recorded a net credit to the Provision of $1.2 million during the fourth quarter of 2021 compared to a net credit of $2.1 million for the same period in 2020. These credits primarily reflected recoveries on Easy Advance (“EA”) loans charged off during the first six months of the year. While TRS experienced a lower rate of EAs charged-off during the first six months of 2021 than the comparable six months in 2020, it also experienced a lower rate of EA recoveries during the fourth quarter of 2021 than the comparable quarter of 2020. Management believes the higher rate of EAs charged-off through the first six months of 2020 and recovered during the fourth quarter of 2020 was directly related to the impact of the pandemic. TRS ended 2021 with an overall EA loss rate of 2.69% of total originations compared to 3.36% for 2020.

  • TRS Legal & Professional expenses increased $620,000 from the fourth quarter of 2020 to the same period in 2021 due to its ongoing legal matters associated with the canceled sale of its TRS business.

Republic Credit Solutions

Net income at RCS increased to $4.1 million for the fourth quarter of 2021 from $3.5 million for the fourth quarter of 2020. The increase in RCS’s net income primarily reflected a $3.6 million increase in RCS’s revenues partially offset by a $2.4 million increase in Provision. Both increases resulted primarily from a $9 million rise in outstanding balances for RCS’s line-of-credit products from December 31, 2020 to December 31, 2021.

Total Company Income Taxes

The Company’s effective tax rate increased to 15.2% for the fourth quarter of 2021 compared to 13.9% for the same period in 2020. The higher effective rate during the fourth quarter of 2021 reflected the Bank’s transition from a capital-based bank franchise tax to a Kentucky corporate income tax on January 1, 2021. However, the Company’s effective tax rate of 15.2% for the fourth quarter of 2021 is lower than the effective tax rate for each of the previous quarters of 2021 primarily due to a one-time state specific tax credit recognized in the fourth quarter of 2021.

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, and other future conditions, the timing of PPP loan forgiveness, 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, 2020. 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, Warehouse Lending, and Mortgage Banking segments.
   
(2) Provision – Provision for Expected Credit Loss Expense
  Allowance – Allowance for Credit Losses on Loans
   
(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 Dec. 31,                 Three Months Ended Dec. 31,                 Three Months Ended Dec. 31,        
(dollars in thousands)     2021   2020   $ Change   % Change       2021   2020   $ Change   % Change       2021   2020   % Change  
                                                                             
Traditional Banking - GAAP     $ 37,572   $ 40,972   $ (3,400 )   (8 ) %     $ 4,882,268   $ 4,734,622   $ 147,646     3   %     3.08 %   3.46 %     (0.38 ) %  
Less: Impact of PPP fees and interest       3,080     6,030     (2,950 )   (49 )         89,156     463,725     (374,569 )   (81 )       0.20     0.19       0.01      
Traditional Banking ex PPP fees and interest - non-GAAP     $ 34,492   $ 34,942   $ (450 )   (1 )       $ 4,793,112   $ 4,270,897   $ 522,215     12         2.88     3.27       (0.39 )    
                                                                             
(4) Republic Processing Group operations consist of the Tax Refund Solutions and Republic Credit Solutions segments.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220128005005/en/

SOURCE: Republic Bancorp, Inc.

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

COMTEX_401350207/2456/2022-01-28T08:00:07

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/zigman2/quotes/200886150/composite
US : U.S.: Nasdaq
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+0.45 +1.05%
Volume: 225.00
May 17, 2022 9:30a
P/E Ratio
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