Republic Bancorp(US:RBCAA)2025-08-07 15:01Business Segments - As of June 30, 2025, Republic Bancorp operates five reportable segments: Traditional Banking, Warehouse Lending, TRS, RPS, and RCS[236]. - The Traditional Banking segment includes 47 full-service banking centers located primarily in Kentucky, with significant reliance on net interest income from investment securities and loans[240][241]. - Management has integrated mortgage banking results into the Traditional Banking segment due to its immateriality as a separate reportable segment[238]. - The Bank focuses on C&I lending, CRE, and multi-family lending, with targeted C&I credit sizes typically between $1 million and $10 million, and higher targets between $10 million and $35 million for Corporate Banking[255]. - The CRE Banking group, launched in 2022, targets large CRE projects typically ranging from $5 million to $25 million, focusing on established borrowers with low credit risk[256]. - The Business Banking group targets small businesses with annual revenues up to $10 million, offering loans between $350,000 and $1 million for various financing needs[258]. - The Bank is an SBA Preferred Lending Partner, allowing it to expedite the underwriting and approval of SBA loans, generally up to $3 million under the SBA "7A Program"[259]. Financial Performance - Total Company net income for Q2 2025 was $31.5 million, an increase of $6.3 million, or 25%, compared to Q2 2024[301]. - Diluted EPS increased to $1.61 for Q2 2025 from $1.30 in Q2 2024[301]. - Net interest income rose by $6.5 million, or 13%, from Q2 2024 to Q2 2025[304]. - Noninterest income decreased by $1.2 million, or 30%, from Q2 2024 to Q2 2025[310]. - Total Company net interest income increased by $7.7 million, or 11%, to $76.2 million in Q2 2025 from $68.5 million in Q2 2024[315]. - The Total Company net interest margin (NIM) rose by 25 basis points to 4.61% in Q2 2025 compared to 4.36% in Q2 2024[315]. - Total Company net income for the first six months of 2025 was $78.8 million, a $22.9 million, or 41% increase from the same period in 2024, with diluted EPS rising to $4.03 from $2.87[367]. - Net interest income for the Company was $178.9 million during the first six months of 2025, representing an increase of $13.4 million, or 8%, from the first six months of 2024[377]. Credit Losses and Provisions - The Bank's ACLL for expected credit losses is evaluated monthly, with significant reliance on historical loss rates and economic forecasts[230][231]. - The Company utilizes the U.S. national unemployment rate as a primary forecasting tool for its ACLL model, reflecting current economic conditions[232]. - The total company provision was a net charge of $1.8 million for Q2 2025, a decrease from $5.1 million in Q2 2024[337]. - The Traditional Banking segment's provision was a net charge of $517,000 in Q2 2025, down from $915,000 in Q2 2024, reflecting a change in loan mix[338]. - The Tax Refund Solutions segment recorded a net credit to the provision of $3.9 million in Q2 2025, up from $1.2 million in Q2 2024, primarily related to its RA and ERAs products[343]. - The ACLL (Allowance for Credit Losses) at the end of the period was $81.76 million, compared to $80.69 million at the end of Q2 2024[355]. - The company's ACLL to total loans ratio was 1.52% as of June 30, 2025, compared to 1.53% as of June 30, 2024[355]. - The total Provision for the first six months of 2025 was $19.5 million, compared to $35.8 million for the same period in 2024[416]. Tax Refund Solutions - The Tax Refund Solutions segment generates most of its business in the first half of the year, with limited revenue in the second half as it prepares for the next tax season[272]. - The RA product allows taxpayers to borrow funds as an advance of their tax refund, with maximum advance amounts of $6,500 for the 2024 Tax Season and $6,250 for the 2025 Tax Season[277]. - The ERA loan product, introduced in December 2022, allows advances up to $1,000 for the 2024 Tax Season and $2,000 for the 2025 Tax Season, with no recourse to the taxpayer if the refund is insufficient[278]. - Noninterest income for the Tax Refund Solutions segment decreased from $3.9 million in Q2 2024 to $2.7 million in Q2 2025, driven by a 17% decline in the number of tax refunds funded[363]. - Tax Refund Solutions segment net interest income decreased by $1.9 million, or 6%, due to an 8% decline in tax season origination volume[383]. - The incurred loss rate for TRS related to unguaranteed loans for the first quarter 2025 tax filing season was 2.81% of the $801 million total originations[410]. - Total ERA/RA volume for the 2025 tax filing season was $801 million, an 8% decline from $874 million in the 2024 tax filing season[409]. Asset and Liability Management - The Bank's interest-bearing liabilities primarily consist of interest-bearing deposit accounts and short-term and long-term borrowings, with FHLB advances serving as a significant liquidity source[241][243]. - Average interest-earning cash increased to $623 million with a yield of 4.45% in Q2 2025, compared to $393 million and 5.46% in Q2 2024[316]. - Average committed Warehouse lines of credit increased to $995 million in Q2 2025 from $940 million in Q2 2024[310]. - Average committed Warehouse lines of credit increased to $981 million for the first six months of 2025 from $935 million for the same period in 2024[370]. - Outstanding Warehouse period-end balances increased by $121 million in the first six months of 2025, compared to an increase of $209 million in the same period of 2024[403].