Company Structure and Operations - The Company dissolved its wholly owned insurance subsidiary, Republic Insurance Services, Inc., during Q4 2023[202]. - As of June 30, 2024, the Company operates 47 banking centers primarily in Kentucky, with a focus on traditional banking products[214]. - The Bank's retail mortgage lending includes single-family residential real estate loans and HELOCs, with collateral predominantly located in its market footprint[214]. - The Bank's commercial lending activities are conducted through various channels, including Corporate Banking and Retail Banking, primarily serving clients within its market footprint[220]. - The Company has an acquisition strategy to selectively grow its franchise alongside organic growth strategies[224]. - The Bank's mortgage banking activities involve originating and selling fixed-term residential real estate loans into the secondary market, primarily to FHLMC and FNMA[215]. - The Bank's consumer lending includes home improvement loans and credit cards, although not actively promoted in its markets[221]. - The Bank's Treasury Management Services offer various deposit products and cash management solutions to commercial clients[222]. - The Bank began acquiring single-family, first-lien mortgage loans through its Correspondent Lending channel in Q1 2023, purchasing loans primarily at a premium[223]. - The Bank's Internet and Mobile Banking services enhance market penetration and client account management capabilities[224]. Financial Performance - Total Company net income for Q2 2024 was $25.2 million, an increase of $4.2 million or 20% compared to Q2 2023[243]. - Diluted EPS increased to $1.30 for Q2 2024, up from $1.07 in Q2 2023, reflecting a growth of 21.5%[243]. - Traditional Banking segment net income rose by $2.6 million, or 24%, from Q2 2023 to Q2 2024[244]. - Warehouse Lending segment net income increased by $262,000, or 23%, from Q2 2023 to Q2 2024[247]. - Tax Refund Solutions segment net income grew by $909,000, or 42%, from Q2 2023 to Q2 2024[248]. - Total Company net interest income was $68.5 million during Q2 2024, an increase of $4.0 million, or 6%, from Q2 2023[256]. - Total Company net income for the first six months of 2024 was $55.8 million, a $6.7 million, or 14%, increase from the same period in 2023[298]. - Diluted EPS increased to $2.87 for the first six months of 2024, up from $2.50 for the same period in 2023[298]. Income and Expense Analysis - Noninterest income in the Traditional Banking segment decreased by $1.2 million, or 11%, from Q2 2023 to Q2 2024[244]. - Noninterest income in the Tax Refund Solutions segment decreased by $720,000, or 16%, from Q2 2023 to Q2 2024[248]. - Noninterest expense in the Tax Refund Solutions segment was $2.0 million for Q2 2024, down from $2.2 million in Q2 2023[248]. - Republic Payment Solutions segment net income decreased by $759,000, and net interest income decreased by $1.0 million from Q2 2023 to Q2 2024[249]. - Republic Credit Solutions segment net income increased by $1.1 million, or 29%, and net interest income increased by $2.8 million, or 31%, from Q2 2023 to Q2 2024[250]. - Total Company noninterest income decreased by $613,000 during the first six months of 2024 compared to the same period in 2023, with Traditional Banking's noninterest income decreasing by $1.4 million, or 7%[353]. - Noninterest expense at the RCS segment increased by $1.0 million, or 36%, in Q2 2024, primarily due to higher servicing costs and marketing expenses[298]. Loan and Credit Quality - The net charge to the Provision for the second quarter of 2024 was $5.1 million, a decrease from $6.1 million in the same period of 2023, indicating improved credit quality[276]. - The Traditional Banking segment recorded a net charge of $915,000 in the second quarter of 2024, compared to a net credit of $1.9 million in the same period of 2023, driven by changes in loan mix[276]. - The Allowance for Credit Losses (ACLL) for Traditional Banking was 1.30% as of June 30, 2024, slightly up from 1.26% as of June 30, 2023, indicating stable asset quality[278]. - Total Company net charge-offs increased from 2.37% in Q2 2023 to 2.52% in Q2 2024, with net charge-offs rising by $4.5 million, or 16%[288]. - The incurred loss rate for RAs as of June 30, 2024, was 3.72% of the $874 million total loans originated during the first quarter 2024 tax filing season[282]. - RCS recorded a net charge to the Provision of $5.2 million in Q2 2024, compared to $4.3 million in Q2 2023, representing a 21% increase[283]. - The ACLL for RCS was 15.44% as of June 30, 2024, up from 12.88% as of June 30, 2023[284]. - The total balance of classified and special mention loans decreased by approximately $1.2 million during the first half of 2024[380]. - The total balance of nonperforming loans remained stable at 0.39% of total loans for both June 30, 2024, and December 31, 2023[383]. Deposits and Funding - Total Traditional Bank deposits increased by $202 million to $4.6 billion as of June 30, 2024[299]. - The weighted-average cost of total interest-bearing deposits increased from 1.17% in the first six months of 2023 to 2.74% in the first six months of 2024, with average interest-bearing deposits rising by $705 million[320]. - Core Bank deposits increased by $203 million, or 5%, from December 31, 2023, totaling $4,397,007 thousand as of June 30, 2024[395]. - Interest-bearing deposits in the Core Bank rose by $273 million, driven by a $133 million increase in money market accounts and a $75 million increase in transaction deposits[396]. - Noninterest-bearing deposits decreased by $70 million, continuing a downward trend due to rising market interest rates[397]. - The Company expects slower overall growth and a potential continuing decline in noninterest-bearing deposits in the foreseeable future[398]. Market and Economic Conditions - Management anticipates potential net interest margin compression in the second half of 2024 due to shifts in deposit types and rising borrowing costs[321]. - The company believes its reserves are adequate to absorb expected losses on all nonperforming loans as of June 30, 2024[388]. - The increase in Core Bank deposits was primarily driven by higher interest rates making interest-bearing accounts more attractive to clients[397].
Republic Bancorp(RBCAA) - 2024 Q2 - Quarterly Report