Republic Bancorp(US:RBCAA)2023-05-05 13:24Banking Operations - As of March 31, 2023, Republic Bancorp operates 45 banking centers primarily in Kentucky, with a significant presence in Metropolitan Louisville[255]. - The Bank's principal lending activities include retail mortgage lending, commercial lending, and construction and land development lending, with a focus on single-family residential properties[256][257][259]. - The Bank's Warehouse Lending segment provides short-term credit facilities to mortgage bankers, with loans typically remaining on the warehouse line for an average of 15 to 30 days[269]. - Mortgage Banking activities involve originating and selling fixed-term residential real estate loans, primarily to FHLMC and FNMA, while retaining servicing on these loans[272]. - The Bank records Mortgage Servicing Rights (MSRs) as separate assets, which are capitalized and amortized based on the estimated period of net servicing income[273]. Financial Performance - Total net income for Q1 2023 was $28.1 million, a decrease of $258,000 or 1% compared to Q1 2022[288]. - Net interest income increased by $14.0 million, or 39%, for Q1 2023 compared to Q1 2022[292]. - Total RA originations were $737 million during Q1 2023, up from $311 million in Q1 2022[297]. - Noninterest income decreased by $6.3 million for Q1 2023 compared to Q1 2022, impacted by a prior year contract termination fee[297]. - Total Traditional Bank loans increased by $310 million, or 8%, during Q1 2023[292]. Loan Quality and Allowance for Credit Losses - Nonperforming loans to total loans for the Traditional Banking segment was 0.34% as of March 31, 2023, down from 0.37% as of December 31, 2022[292]. - Delinquent loans to total loans for the RCS segment was 10.50% as of March 31, 2023, compared to 8.53% as of December 31, 2022[297]. - The adequacy of the Allowance for Credit Losses (ACLL) is evaluated monthly, with significant reliance on estimates and historical loss rates[248][249]. - The allowance for credit losses (ACLL) for Traditional Banking was 1.33% as of March 31, 2023, slightly down from 1.39% as of March 31, 2022[330]. - The ACLL for RCS was 12.34% as of March 31, 2023, down from 13.63% as of March 31, 2022[339]. Income and Expense Trends - Total Company net interest income for Q1 2023 was $92.6 million, an increase of $29.4 million, or 47%, from Q1 2022[303]. - The Traditional Banking segment's net interest income increased by $14.0 million, or 39%, for Q1 2023 compared to Q1 2022, with a net interest margin of 4.07%[304]. - Warehouse Lending segment's net interest income decreased by $2.4 million, or 54%, from Q1 2022 to Q1 2023, with average outstanding balances declining from $585 million to $330 million[311]. - Tax Refund Solutions segment's net interest income increased by $16.4 million from Q1 2022 to Q1 2023, driven by a $426 million increase in RA origination volume[317]. - Total Company noninterest expense increased by $3.9 million, or 8%, in Q1 2023 compared to Q1 2022[355]. Asset and Deposit Management - The Bank's cash and cash equivalents decreased from $314 million as of December 31, 2022, to $249 million as of March 31, 2023[358]. - Total deposits rose by $261,823 thousand, or 6%, from $4,537,845 thousand as of December 31, 2022, to $4,799,668 thousand as of March 31, 2023[403]. - The loan to deposit ratio (excluding brokered deposits) was 99% as of March 31, 2023, compared to 100% as of December 31, 2022[418]. - The Bank's total liquid assets decreased to $728,585 thousand as of March 31, 2023, down from $751,741 thousand as of December 31, 2022[418]. - The investment portfolio increased by $34 million from December 31, 2022, to March 31, 2023, driven by $50 million in purchases and $16 million from the CBank acquisition[360]. Capital and Regulatory Compliance - Total stockholders' equity increased from $857 million as of December 31, 2022, to $882 million as of March 31, 2023, primarily due to net income earned during 2023, offset by cash dividends declared[422]. - The Company and the Bank are categorized as well capitalized, exceeding the regulatory requirements for Total Risk-Based Capital, Common Equity Tier 1 Risk-Based Capital, Tier 1 Risk-Based Capital, and Tier 1 Leverage Capital[428]. - The average stockholders' equity to average assets ratio was 14.15% as of March 31, 2023, compared to 13.41% as of December 31, 2022[428]. - The capital conservation buffer required to avoid limitations on capital distributions is 2.5% composed of Common Equity Tier 1 Risk-Based Capital above minimum risk-based capital requirements[427]. - The Bank's liquidity is impacted by the fair value of pledged investment securities, which was $134 million as of March 31, 2023, down from $218 million as of December 31, 2022[421].