Republic Bancorp(US:RBCAA)2025-04-24 12:00markdown [Balance Sheet Data](index=2&type=section&id=BALANCE%20SHEET%20DATA) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific points in time [Balance Sheet Overview](index=2&type=section&id=Balance%20Sheet%20Overview) Republic Bancorp, Inc.'s balance sheet as of March 31, 2025, shows an increase in total assets and stockholders' equity compared to December 31, 2024, primarily driven by higher cash and cash equivalents and an increase in total deposits. Loans, net, experienced a slight decrease **Key Balance Sheet Data (in thousands):** | Metric | Mar. 31, 2025 | Dec. 31, 2024 | QoQ Change ($) | QoQ Change (%) | | :-------------------------------- | :------------ | :------------ | :------------- | :------------- | | Total assets | $7,075,555 | $6,846,667 | $228,888 | 3.34% | | Total deposits | $5,405,892 | $5,210,546 | $195,346 | 3.75% | | Stockholders' equity | $1,034,089 | $992,029 | $42,060 | 4.24% | | Loans, net | $5,183,490 | $5,347,488 | $(163,998) | -3.07% | | Cash and cash equivalents | $793,020 | $432,151 | $360,869 | 83.50% | [Average Balance Sheet Data](index=3&type=section&id=AVERAGE%20BALANCE%20SHEET%20DATA) This section presents average balances for assets and liabilities over specific periods, offering insights into balance sheet structure and trends [Average Balance Sheet Trends](index=3&type=section&id=Average%20Balance%20Sheet%20Trends) For the three months ended March 31, 2025, average total assets increased compared to the previous quarter and year-ago period, primarily due to higher noninterest-earning cash and cash equivalents. Average interest-earning assets remained relatively stable year-over-year, while average interest-bearing liabilities saw a slight increase **Average Balance Sheet Data (in thousands):** | Metric | Three Months Ended Mar. 31, 2025 | Three Months Ended Dec. 31, 2024 | QoQ Change (%) | Three Months Ended Mar. 31, 2024 | YoY Change (%) | | :----------------------------------- | :------------------------------- | :------------------------------- | :------------- | :------------------------------- | :------------- | | Total interest-earning assets | $6,634,278 | $6,491,473 | 2.19% | $6,641,448 | -0.11% | | Total interest-bearing liabilities | $4,671,529 | $4,434,078 | 5.36% | $4,643,647 | 0.60% | | Total assets | $7,335,756 | $6,900,626 | 6.30% | $7,219,572 | 1.61% | | Stockholders' equity | $1,022,844 | $997,435 | 2.55% | $933,042 | 9.62% | | Noninterest-earning cash and cash equivalents | $389,994 | $93,927 | 315.20% | $280,618 | 38.98% | [Total Company Average Balance Sheets and Interest Rates](index=4&type=section&id=TOTAL%20COMPANY%20AVERAGE%20BALANCE%20SHEETS%20AND%20INTEREST%20RATES) This section analyzes the company's net interest income, spread, and margin, detailing the impact of average balances and interest rates on profitability [Net Interest Income and Margin Analysis](index=4&type=section&id=Net%20Interest%20Income%20and%20Margin%20Analysis) The company reported an increase in net interest income and significant improvements in net interest spread and net interest margin for the three months ended March 31, 2025, compared to the same period last year. This was driven by a higher yield on interest-earning assets and a lower cost of interest-bearing liabilities **Net Interest Performance (Q1 2025 vs Q1 2024):** | Metric | Three Months Ended Mar. 31, 2025 | Three Months Ended Mar. 31, 2024 | YoY Change ($) | YoY Change (bps) | | :----------------------------------- | :------------------------------- | :------------------------------- | :------------- | :--------------- | | Net interest income | $102,688 | $96,919 | $5,769 | - | | Net interest spread | 5.58% | 4.99% | - | 59 bps | | Net interest margin | 6.28% | 5.87% | - | 41 bps | | Yield on average interest-earning assets | 7.94% | 7.91% | - | 3 bps | | Cost of average interest-bearing liabilities | 2.36% | 2.92% | - | -56 bps | **Average Balances and Rates for Key Items (Q1 2025 vs Q1 2024, in thousands):** | Item | Q1 2025 Average Balance | Q1 2025 Rate | Q1 2024 Average Balance | Q1 2024 Rate | YoY Balance Change ($) | | :----------------------------------- | :---------------------- | :----------- | :---------------------- | :----------- | :--------------------- | | Federal funds sold and other interest-earning deposits | $516,785 | 4.45% | $454,426 | 5.57% | $62,359 | | Investment securities, including FHLB stock | $619,525 | 3.48% | $732,678 | 2.98% | $(113,153) | | Outstanding Warehouse lines of credit | $458,657 | 7.07% | $340,433 | 7.98% | $118,224 | | Money market accounts | $1,348,717 | 2.85% | $1,066,046 | 3.32% | $282,671 | | Brokered deposits | $247,319 | 4.57% | $421,096 | 5.39% | $(173,777) | | Federal Home Loan Bank advances and other long-term borrowings | $520,778 | 4.39% | $536,209 | 4.94% | $(15,431) | [Income Statement Data](index=5&type=section&id=INCOME%20STATEMENT%20DATA) This section outlines the company's financial performance over specific periods, highlighting key revenue, expense, and net income figures [Quarterly Income Statement Performance](index=5&type=section&id=Quarterly%20Income%20Statement%20Performance) The company experienced a substantial increase in net income for Q1 2025 compared to both the previous quarter and the prior year, primarily driven by higher net interest income and a significant increase in noninterest income, including a gain on the sale of Visa Class B-1 Shares. Provision for credit losses decreased year-over-year **Income Statement Highlights (in thousands):** | Metric | Mar. 31, 2025 | Dec. 31, 2024 | QoQ Change (%) | Mar. 31, 2024 | YoY Change (%) | | :-------------------------------- | :------------ | :------------ | :------------- | :------------ | :------------- | | Net interest income | $102,688 | $75,394 | 36.21% | $96,919 | 5.95% | | Provision for expected credit loss expense | $17,672 | $12,951 | 36.46% | $30,622 | -42.29% | | Total noninterest income | $33,154 | $14,118 | 134.84% | $23,373 | 41.85% | | Total noninterest expense | $58,208 | $53,511 | 8.78% | $50,971 | 14.20% | | Income before income tax expense | $59,962 | $23,050 | 160.14% | $38,699 | 54.99% | | Net income | $47,268 | $19,016 | 148.57% | $30,606 | 54.47% | - Total noninterest income for Q1 2025 includes a **$4.090 million gain** on the sale of Visa Class B-1 Shares, which was not present in previous quarters. Core conversion & contract consulting fees of **$5.714 million** were recorded in Q1 2025, contributing to the increase in noninterest expense[10](index=10&type=chunk) [Selected Data and Ratios](index=6&type=section&id=SELECTED%20DATA%20AND%20RATIOS) This section presents key financial ratios and per-share data, providing insights into the company's profitability, efficiency, and shareholder value [Per Share Data and Performance Ratios](index=6&type=section&id=Per%20Share%20Data%20and%20Performance%20Ratios) The company demonstrated strong financial performance in Q1 2025 with significant improvements in profitability ratios such as Return on Average Assets and Return on Average Equity, and a notable decrease in the Efficiency Ratio. Earnings per share for Class A Common Stock increased substantially year-over-year **Per Share Data:** | Metric | Mar. 31, 2025 | Dec. 31, 2024 | QoQ Change (%) | Mar. 31, 2024 | YoY Change (%) | | :-------------------------------- | :------------ | :------------ | :------------- | :------------ | :------------- | | Basic EPS - Class A Common Stock | $2.43 | $0.99 | 145.45% | $1.59 | 52.83% | | Diluted EPS - Class A Common Stock | $2.42 | $0.98 | 146.94% | $1.58 | 53.16% | | Book value per share | $52.98 | $51.01 | 3.86% | $48.20 | 9.92% | | Tangible book value per share | $50.46 | $48.47 | 4.10% | $45.63 | 10.58% | | Cash dividends declared per Class A Common share | $0.451 | $0.407 | 10.81% | $0.407 | 10.81% | **Performance Ratios:** | Metric | Mar. 31, 2025 | Dec. 31, 2024 | QoQ Change (bps) | Mar. 31, 2024 | YoY Change (bps) | | :-------------------------------- | :------------ | :------------ | :--------------- | :------------ | :--------------- | | Return on average assets | 2.61% | 1.10% | 151 bps | 1.70% | 91 bps | | Return on average equity | 18.74% | 7.63% | 1111 bps | 13.12% | 562 bps | | Efficiency ratio | 40.3% | 59.8% | -1950 bps | 42.3% | -200 bps | | Net interest margin - Total Company | 6.28% | 4.62% | 166 bps | 5.87% | 41 bps | | Net interest margin - Core Bank | 3.70% | 3.64% | 6 bps | 3.30% | 40 bps | | Cost of average deposits | 1.57% | 1.79% | -22 bps | 1.97% | -40 bps | [Loan Composition](index=7&type=section&id=LOAN%20COMPOSITION) This section details the breakdown of the company's loan portfolio by category, illustrating the distribution and changes in loan types [Loan Portfolio Breakdown](index=7&type=section&id=Loan%20Portfolio%20Breakdown) As of March 31, 2025, total loans decreased slightly quarter-over-quarter, with a notable decrease in Republic Processing Group (RPG) loans, particularly Tax Refund Solutions (TRS) Refund Advances, while Core Banking loans remained relatively stable **Loan Composition (in thousands):** | Loan Category | Mar. 31, 2025 | Dec. 31, 2024 | QoQ Change ($) | QoQ Change (%) | | :-------------------------------- | :------------ | :------------ | :------------- | :------------- | | Total Traditional Banking | $4,566,359 | $4,569,179 | $(2,820) | -0.06% | | Warehouse lines of credit | $569,502 | $550,760 | $18,742 | 3.40% | | **Total Core Banking** | **$5,135,861** | **$5,119,939** | **$15,922** | **0.31%** | | Tax Refund Solutions: Refund Advances | $30,344 | $138,614 | $(108,270) | -78.11% | | Total Republic Processing Group | $153,932 | $319,527 | $(165,595) | -51.82% | | **Total loans - Total Company** | **$5,289,793** | **$5,439,466** | **$(149,673)** | **-2.75%** | [Allowance for Credit Losses on Loans](index=7&type=section&id=ALLOWANCE%20FOR%20CREDIT%20LOSSES%20ON%20LOANS) This section analyzes the allowance for credit losses across different loan categories, reflecting the company's assessment of potential loan defaults [Allowance for Credit Losses Analysis](index=7&type=section&id=Allowance%20for%20Credit%20Losses%20Analysis) The total allowance for credit losses increased significantly quarter-over-quarter, primarily driven by a substantial rise in the allowance for Tax Refund Solutions within the Republic Processing Group, reflecting a higher allowance to total loans ratio for this segment **Allowance for Credit Losses (in thousands):** | Category | Mar. 31, 2025 | Dec. 31, 2024 | QoQ Change ($) | QoQ Change (%) | | :-------------------------------- | :------------ | :------------ | :------------- | :------------- | | Traditional Banking | $58,851 | $59,756 | $(905) | -1.51% | | Warehouse Lending | $1,421 | $1,374 | $47 | 3.42% | | **Total Core Banking** | **$60,272** | **$61,130** | **$(858)** | **-1.40%** | | Tax Refund Solutions | $25,981 | $9,861 | $16,120 | 163.47% | | Republic Credit Solutions | $20,050 | $20,987 | $(937) | -4.46% | | **Total Republic Processing Group** | **$46,031** | **$30,848** | **$15,183** | **49.22%** | | **Total Allowance - Total Company** | **$106,303** | **$91,978** | **$14,325** | **15.57%** | **Allowance to Total Loans Ratios:** | Category | Mar. 31, 2025 | Dec. 31, 2024 | QoQ Change (bps) | | :-------------------------------- | :------------ | :------------ | :--------------- | | Traditional Banking | 1.29% | 1.31% | -2 bps | | Warehouse Lending | 0.25% | 0.25% | 0 bps | | Total Core Banking | 1.17% | 1.19% | -2 bps | | Tax Refund Solutions | 71.80% | 5.17% | 6663 bps | | Republic Credit Solutions | 17.03% | 16.30% | 73 bps | | Total Republic Processing Group | 29.90% | 9.65% | 2025 bps | | Total Company | 2.01% | 1.69% | 32 bps | [Credit Quality Data and Ratios](index=8&type=section&id=CREDIT%20QUALITY%20DATA%20AND%20RATIOS) This section provides key metrics and ratios related to the company's asset quality, including nonperforming assets, delinquent loans, and net charge-offs [Credit Quality Performance](index=8&type=section&id=Credit%20Quality%20Performance) The company's overall credit quality remained stable to improving in Q1 2025. Total nonperforming assets showed a slight increase QoQ but a decrease YoY, while total delinquent loans decreased QoQ. Net charge-offs for the total company remained relatively low, with Tax Refund Solutions showing net recoveries **Credit Quality Asset Balances (in thousands):** | Metric | Mar. 31, 2025 | Dec. 31, 2024 | QoQ Change (%) | Mar. 31, 2024 | YoY Change (%) | | :-------------------------------- | :------------ | :------------ | :------------- | :------------ | :------------- | | Total nonperforming assets - Total Company | $23,957 | $23,920 | 0.15% | $22,860 | 4.80% | | Total delinquent loans - Total Company | $17,313 | $20,489 | -15.49% | $21,412 | -19.14% | | Total NCOs (recoveries) - Total Company | $3,347 | $3,136 | 6.73% | $4,050 | -17.36% | | Tax Refund Solutions NCOs (recoveries) | $(693) | $(2,159) | -67.99% | $(305) | 127.21% | **Credit Quality Ratios - Total Company:** | Ratio | Mar. 31, 2025 | Dec. 31, 2024 | QoQ Change (bps) | Mar. 31, 2024 | YoY Change (bps) | | :-------------------------------- | :------------ | :------------ | :--------------- | :------------ | :--------------- | | Nonperforming loans to total loans | 0.43% | 0.42% | 1 bps | 0.41% | 2 bps | | Nonperforming assets to total assets | 0.34% | 0.35% | -1 bps | 0.33% | 1 bps | | Allowance for credit losses to total loans | 2.01% | 1.69% | 32 bps | 2.08% | -7 bps | | Allowance for credit losses to nonperforming loans | 465% | 404% | 6100 bps | 509% | -4400 bps | | Delinquent loans to total loans | 0.33% | 0.38% | -5 bps | 0.41% | -8 bps | | NCOs (recoveries) to average loans (annualized) | 0.24% | 0.24% | 0 bps | 0.30% | -6 bps | [Segment Data](index=9&type=section&id=SEGMENT%20DATA) This section presents financial information broken down by the company's distinct business segments, offering insights into their individual contributions to overall performance [Reportable Segments Overview](index=9&type=section&id=Reportable%20Segments%20Overview) Republic Bancorp, Inc. is structured into five reportable segments: Traditional Banking, Warehouse Lending (together forming "Core Bank"), Tax Refund Solutions (TRS), Republic Payment Solutions (RPS), and Republic Credit Solutions (RCS) (together forming "Republic Processing Group" or "RPG"). Each segment offers distinct products and services, with primary revenue drivers varying from net interest income to program fees and net refund transfer fees - The Company's five reportable segments are: - **Traditional Banking:** Provides traditional banking products to clients in its market footprint, primarily via banking centers and digital channels. Primary driver of net revenue is net interest income - **Warehouse Lending:** Provides short-term, revolving credit facilities to mortgage bankers across the United States. Primary driver of net revenue is net interest income - **Tax Refund Solutions (TRS):** Offers tax-related credit products and facilitates the receipt and payment of federal and state tax refunds. Primary drivers are net interest income and net refund transfer fees - **Republic Payment Solutions (RPS):** Offers general-purpose reloadable cards. Primary drivers are net interest income and program fees - **Republic Credit Solutions (RCS):** Offers consumer credit products, with a substantial portion of clients considered subprime or near-prime borrowers. Primary drivers are net interest income and program fees[15](index=15&type=chunk)[16](index=16&type=chunk) [Segment Financial Performance](index=10&type=section&id=Segment%20Financial%20Performance) For Q1 2025, Core Banking reported a net income of $17.361 million, while Republic Processing Group (RPG) reported a net income of $29.907 million, significantly higher than the prior year. TRS was a major contributor to RPG's net income, driven by net interest income and net refund transfer fees **Net Income by Segment (in thousands):** | Segment | Three Months Ended Mar. 31, 2025 | Three Months Ended Mar. 31, 2024 | YoY Change ($) | YoY Change (%) | | :-------------------------- | :------------------------------- | :------------------------------- | :------------- | :------------- | | Traditional Banking | $15,712 | $12,283 | $3,429 | 27.91% | | Warehouse Lending | $1,649 | $839 | $810 | 96.54% | | **Total Core Banking** | **$17,361** | **$13,122** | **$4,239** | **32.31%** | | Tax Refund Solutions | $19,611 | $8,793 | $10,818 | 123.03% | | Republic Payment Solutions | $2,895 | $2,567 | $328 | 12.78% | | Republic Credit Solutions | $7,401 | $6,124 | $1,277 | 20.85% | | **Total RPG** | **$29,907** | **$17,484** | **$12,423** | **71.05%** | | **Total Company** | **$47,268** | **$30,606** | **$16,662** | **54.47%** | **Net Interest Income by Segment (in thousands):** | Segment | Three Months Ended Mar. 31, 2025 | Three Months Ended Mar. 31, 2024 | YoY Change ($) | YoY Change (%) | | :-------------------------- | :------------------------------- | :------------------------------- | :------------- | :------------- | | Traditional Banking | $53,321 | $48,259 | $5,062 | 10.49% | | Warehouse Lending | $3,028 | $2,257 | $771 | 34.16% | | Tax Refund Solutions | $29,812 | $30,910 | $(1,098) | -3.55% | | Republic Payment Solutions | $3,994 | $3,508 | $486 | 13.86% | | Republic Credit Solutions | $12,533 | $11,985 | $548 | 4.57% | - Net refund transfer fees for Tax Refund Solutions increased by **28.40% YoY** to **$13.893 million** in Q1 2025 from **$10.820 million** in Q1 2024[17](index=17&type=chunk) [Footnotes](index=11&type=section&id=FOOTNOTES) This section provides supplementary details and definitions for various financial metrics and accounting treatments used throughout the report [Loan Fee Income Impact](index=11&type=section&id=Loan%20Fee%20Income%20Impact) Loan fee income significantly influences total interest income, loan yields, net interest margin, and net interest spread. For Q1 2025, total loan fees were $47.513 million, primarily driven by the Republic Processing Group, particularly Tax Refund Solutions **Total Loan Fees by Segment (in thousands):** | Segment | Mar. 31, 2025 | Dec. 31, 2024 | QoQ Change (%) | Mar. 31, 2024 | YoY Change (%) | | :---------------- | :------------ | :------------ | :------------- | :------------ | :------------- | | Traditional Banking | $1,291 | $1,161 | 11.20% | $1,366 | -5.50% | | Warehouse Lending | $310 | $308 | 0.65% | $263 | 17.87% | | **Total Core Bank** | **$1,601** | **$1,469** | **8.98%** | **$1,629** | **-1.72%** | | TRS | $33,675 | $2,605 | 1192.71% | $35,871 | -6.12% | | RCS | $12,237 | $12,569 | -2.64% | $11,372 | 7.61% | | **Total RPG** | **$45,912** | **$15,174** | **202.57%** | **$47,243** | **-2.82%** | | **Total loan fees - Total Company** | **$47,513** | **$16,643** | **185.48%** | **$48,872** | **-2.78%** | [Provision for Expected Credit Loss Expense](index=11&type=section&id=Provision%20for%20Expected%20Credit%20Loss%20Expense) The provision for expected credit loss expense covers losses on both on-balance sheet loans and investment securities. Separately, provision expense for off-balance sheet credit exposures is categorized under "Other" noninterest expense - Provision for expected credit loss expense includes provisions for losses on on-balance sheet loans and investment securities. Provision expense for off-balance sheet credit exposures is a component of "Other" noninterest expense[19](index=19&type=chunk) [Mortgage and Consumer Loans Held for Sale](index=11&type=section&id=Mortgage%20and%20Consumer%20Loans%20Held%20for%20Sale) The Bank originates mortgage loans for sale primarily through its Traditional Banking segment and consumer loans for sale through the RCS segment. In Q1 2025, the Traditional Banking segment agreed to sell $5.0 million of consumer credit cards, transferring them from held for investment to held for sale **Mortgage Loans Held for Sale (in thousands):** | Metric | Mar. 31, 2025 | Mar. 31, 2024 | YoY Change (%) | | :-------------------------------- | :------------ | :------------ | :------------- | | Originations | $41,233 | $27,046 | 52.46% | | Proceeds from sales | $(41,816) | $(18,773) | 122.74% | | Net gain on sale | $1,411 | $917 | 53.87% | | Balance, end of period | $9,140 | $80,884 | -88.73% | **Consumer Loans Held for Sale (in thousands):** | Metric | Mar. 31, 2025 | Mar. 31, 2024 | YoY Change (%) | | :-------------------------------- | :------------ | :------------ | :------------- | | Originations | $266,651 | $188,347 | 41.58% | | Transferred from held for investment to held for sale | $4,977 | $0 | NA | | Proceeds from sales | $(266,633) | $(196,584) | 35.64% | | Net gain on sale | $3,055 | $3,405 | -10.28% | | Balance, end of period | $32,125 | $19,176 | 67.53% | [Non-GAAP Reconciliations](index=12&type=section&id=Non-GAAP%20Reconciliations) The company provides non-GAAP measures like tangible book value per share and adjusted efficiency ratio to offer additional insights into capital adequacy and operational efficiency. Tangible stockholders' equity excludes goodwill, mortgage servicing rights, and core deposit intangible. The adjusted efficiency ratio excludes nonrecurring items such as the gain on Visa Class B-1 shares, core system conversion fees, and merger expenses **Tangible Stockholders' Equity Reconciliation (in thousands):** | Metric | Mar. 31, 2025 | Mar. 31, 2024 | YoY Change (%) | | :-------------------------------- | :------------ | :------------ | :------------- | | Total stockholders' equity - GAAP | $1,034,089 | $935,583 | 10.53% | | Less: Goodwill | $40,516 | $40,516 | 0.00% | | Less: Mortgage servicing rights | $6,875 | $7,102 | -3.19% | | Less: Core deposit intangible | $1,841 | $2,302 | -20.03% | | **Tangible stockholders' equity - Non-GAAP** | **$984,857** | **$885,663** | **11.20%** | | Tangible stockholders' equity to tangible assets - Non-GAAP | 14.02% | 12.98% | 104 bps | | Tangible book value per share - Non-GAAP | $50.46 | $45.63 | 10.58% | **Adjusted Efficiency Ratio Reconciliation (in thousands):** | Metric | Mar. 31, 2025 | Mar. 31, 2024 | YoY Change (bps) | | :-------------------------------- | :------------ | :------------ | :--------------- | | Efficiency Ratio - GAAP-derived | 42.8% | 42.4% | 4 bps | | **Adjusted Efficiency Ratio - Non-GAAP** | **40.3%** | **42.3%** | **-200 bps** | | Adjustments to Total Net Revenue (Q1 2025): | | | | | Less: Gain on sale of Visa Class B-1 shares | $4,090 | $0 | NA | | Less: Insurance proceeds | $1,571 | $0 | NA | | Adjustments to Noninterest Expense (Q1 2025): | | | | | Less: Core conversion & contract consulting fees | $5,714 | $0 | NA | | Less: Expenses related to CBank acquisition (Q1 2024) | $0 | $41 | NA | [Other Definitions](index=12&type=section&id=Other%20Definitions) This section defines key terms and calculation methodologies used throughout the financial supplement, including the cost of average deposits, full-time-equivalent employees (FTEs), and the definition of delinquent loans for ratio calculations - **Cost of average deposits:** Equals annualized total interest expense on deposits divided by total average interest-bearing deposits plus total average noninterest-bearing deposits[24](index=24&type=chunk) - **FTEs:** Refers to Full-time-equivalent employees[25](index=25&type=chunk) - **Delinquent loans to total loans ratio:** Equals loans 30-days-or-more past due divided by total loans. For Refund Advances, a loan is considered delinquent if unpaid 35 days after the taxpayer's tax return was submitted to the applicable taxing authority[26](index=26&type=chunk)