Republic Bancorp(RBCAA) - 2023 Q3 - Quarterly Report

Business Segments and Operations - As of September 30, 2023, Republic Bancorp operates through five reportable segments: Traditional Banking, Warehouse, Mortgage Banking, TRS, and RCS[233]. - The Bank has 46 banking centers primarily located in Kentucky, with significant operations in Metropolitan Louisville[234]. - The Bank's principal lending activities include retail mortgage lending, commercial lending, and consumer lending, with loans ranging from $200,000 to $4,000,000 for aircraft loans[235][242]. - The Bank's mortgage banking activities involve originating and selling single-family, first-lien residential real estate loans into the secondary market, primarily to FHLMC and FNMA[250]. - The Bank's acquisition strategy aims to selectively grow its franchise alongside organic growth strategies[247]. - The Company plans to dissolve its insurance subsidiary, Republic Insurance Services, Inc., with the dissolution expected in Q4 2023[218]. Financial Performance - Total net income for Q3 2023 was $21.6 million, an increase of $1.7 million compared to Q3 2022[271]. - Diluted EPS rose to $1.10 in Q3 2023 from $1.01 in Q3 2022[271]. - Net income increased by $2.6 million, or 276%, for Q3 2023 compared to Q3 2022[282]. - Total Company net income for the first nine months of 2023 was $70.7 million, a decrease of $1.9 million, or 3%, from the same period in 2022[351]. - Net income increased by $10.5 million, or 43%, for the first nine months of 2023 compared to the same period in 2022[353]. Income and Expenses - Net interest income increased by $847,000, or 2%, in Q3 2023 compared to Q3 2022[275]. - Noninterest income grew by $427,000, or 5%, in Q3 2023 compared to the same period in 2022[275]. - Mortgage banking income decreased by $302,000, or 26%, in Q3 2023 compared to Q3 2022[276]. - Noninterest income decreased by $19.2 million for the first nine months of 2023 compared to the same period in 2022[357]. - Noninterest expense for the Company increased by $1.9 million, or 4%, in Q3 2023 compared to Q3 2022[345]. Credit Losses and Provisions - The adequacy of the Allowance for Credit Losses (ACLL) is evaluated monthly, with significant reliance on historical loss rates and economic forecasts[228][230]. - The provision for credit losses was a net charge of $1.6 million in Q3 2023 compared to a net credit of $753,000 in Q3 2022[275]. - The total company provision was a net charge of $36.6 million for the first nine months of 2023, compared to a net charge of $14.5 million for the same period in 2022[391]. - The Traditional Banking segment's provision was a net charge of $6.4 million for the first nine months of 2023, with an allowance for credit losses (ACLL) of 1.27% as of September 30, 2023[392]. Loan and Deposit Growth - Total Traditional Bank loans increased by $642 million, or 17%, during the first nine months of 2023[353]. - Total Traditional Bank deposits increased by $254 million to $4.3 billion as of September 30, 2023[353]. - The Traditional Bank's average loans grew from $3.7 billion with a yield of 4.23% in Q3 2022 to $4.4 billion with a yield of 5.23% in Q3 2023[294]. Warehouse and Mortgage Banking - Average committed Warehouse lines decreased to $1.0 billion in Q3 2023 from $1.3 billion in Q3 2022[275]. - The Warehouse segment's net interest income decreased by $544,000, or 18%, from Q3 2022 to Q3 2023[298]. - The Bank's mortgage warehouse lines of credit provide short-term, revolving credit facilities to mortgage bankers, with loans typically remaining on the line for an average of 15 to 30 days[248]. Economic Conditions and Future Outlook - The Company anticipates potential impacts from inflation and economic conditions on its operations and financial performance[221]. - The incurred loss rate for RAs associated with the 2023 tax filing season was 3.79%, up from 2.87% for the same period in 2022[322]. Tax Refund Solutions (TRS) Performance - The Tax Refund Solutions (TRS) segment recorded a net charge to the Provision of $19.6 million in the first nine months of 2023, up from $7.0 million in the same period of 2022[397]. - TRS's charge to the Provision for Refund Advances (RAs) was $21.6 million, or 2.92% of $737 million in RAs originated during the first nine months of 2022[398]. - Net interest income within the Tax Refund Solutions (TRS) segment increased by $21.5 million from the first nine months of 2022 to the first nine months of 2023, driven by higher income from prepaid card products and tax-related credit products[375].