Republic Bancorp, Inc. Reports Record First Quarter 2012 Net Income Of $82.5 Million, A 15% Increase Over First Quarter 2011

Republic Bancorp, Inc. (“Republic” or the “Company”) is pleased to report record net income of $82.5 million for the first quarter of 2012, an $11.1 million, or 15%, increase over the first quarter of 2011. Diluted Earnings per Class A Common Share increased to $3.92 for the quarter. Return on average assets (“ROA”) and return on average equity (“ROE”) were both strong, ending the quarter at 7.94% and 64.47%, respectively.

During the first quarter of 2012, Republic was named the best performing bank in the country by Bank Director magazine. In addition, Republic entered the Nashville, Tennessee market by acquiring selected assets and substantially all deposits of Tennessee Commerce Bank (“TCB”) from the FDIC on January 27 th.

Steve Trager, Republic’s President and CEO, commented: “The TCB acquisition has been an excellent experience for our associates and a solid long-term growth opportunity for our shareholders. In the near-term the Company hopes to continue growing through, to the extent available, FDIC-assisted acquisitions. We plan to focus primarily on opportunities in the southeast and south central portions of the United States and secondarily on opportunities in other geographic areas. The Company is seeking acquisitions that are immediately accretive to net income and diluted earnings per share, or strategic in location, or both.”

Republic Bancorp, Inc. (NASDAQ: RBCAA), headquartered in Louisville, Kentucky, is the holding company for Republic Bank & Trust Company and Republic Bank.

The following table highlights Republic’s first quarter financial performance for 2012 compared to the same period in 2011:
         
  Three Months Ended   %
(dollars in thousands, except per share data) 3/31/12   3/31/11 Change
 
Pre-Tax Net Income $ 127,706 $ 110,383 16%
Net Income $ 82,472 $ 71,412 15%
Diluted Earnings per Class A Share $ 3.92 $ 3.40 15%
ROA 7.94% 7.01% 13%
ROE 64.47% 69.96% -8%
             
 

Results of Operations for the First Quarter of 2012 Compared to the First Quarter of 2011

Traditional Banking and Mortgage Banking (collectively “Core Banking”)

Net income from Core Banking increased $18.2 million from $2.4 million during the first quarter of 2011 to $20.6 million during the first quarter of 2012. As it did during the latter half of 2011, the Core Bank continued to achieve positive operating results compared to the same period in the prior year thanks to increasing net interest income in combination with declining provision for loan losses. In addition, the Core Bank benefitted from a pre-tax bargain purchase gain of $27.9 million associated with the TCB acquisition.

Net interest income within the Core Bank rose to $28.0 million for the first quarter of 2012, an increase of $2.7 million, or 11%, from the first quarter of 2011. The increase in net interest income for the quarter was attributable primarily to year-over-year growth in interest-earning assets, with particularly strong growth in loans during the first quarter 2012 of $75 million from Republic’s existing franchise and $50 million related to the TCB acquisition. The strong first quarter 2012 loan growth combined with the loan growth from the last three quarters of 2011 boosted average loans for the first quarter of 2012 to $2.3 billion, an increase of $160 million over the first quarter of 2011. The growth in the loan portfolio served to bolster a strong increase in the Core Bank’s net interest margin, which rose from 3.33% during the first quarter of 2011 to 3.58% during the first quarter of 2012.

The Core Bank’s provision for loan losses decreased from $4.3 million during the first quarter of 2011 to $3.1 million during the first quarter of 2012. Included in provision expense for the first quarter of 2012 was $1.2 million for two large classified real estate secured credits, while the first quarter of 2011 experienced $2.2 million in provision expense for two different large classified real estate secured credits. The Bank’s annualized net loan charge-offs for the first quarter of 2012 includes $3.3 million for three relationships of which $2.8 million was previously reserved for in prior periods.

The TCB acquisition impacted the Company’s March 31, 2012 consolidated credit metrics by adding non-performing loans of $1.5 million, other real estate owned of $6.2 million and delinquent loans of $997,000. Overall, the Core Bank continues to see industry-solid credit quality metrics.

The table below illustrates the Core Bank’s continuing solid credit quality ratios for the most recent quarter-end and the previous three calendar year-ends. The table also illustrates the impact of the TCB acquisition to the Core Bank’s selected credit quality ratios for the quarter ended March 31, 2012:
     
  As of and for the:
Quarter Ending   Year Ending
Core Bank        
Excluding
TCB TCB Impact Core Bank
Core Banking Credit Quality Ratios 3/31/12 3/31/12 3/31/12 12/31/11 12/31/10 12/31/09
 
Non-performing loans / Total loans 0.99% 0.04% 1.03% 1.02% 1.30% 1.90%
 
Non-performing assets / Total loans plus OREO 1.75% 0.27% 2.02% 1.49% 1.84% 2.11%
 
Delinquent loans / Total loans 1.12% 0.02% 1.14% 1.07% 1.24% 1.98%
 
Net loan charge-offs / Average loans 0.65% 0.00% 0.65% 0.24% 0.51% 0.34%
(Annualized as of 3/31/12)
                         
OREO = Other Real Estate Owned                        
 

Non-interest income for the Core Bank was $34.9 million for the first quarter of 2012 compared to $5.9 million for the first quarter of 2011. As previously noted, non-interest income benefitted from a $27.9 million pre-tax bargain purchase gain realized from the TCB acquisition, as the fair value of the net assets acquired and liabilities assumed were greater than the price paid by the Core Bank in the transaction. In addition to the bargain purchase gain from the TCB acquisition, non-interest income also benefitted from a solid quarter of mortgage banking income. Overall, mortgage banking income increased from $816,000 during the first quarter of 2011 to $1.4 million during the first quarter of 2012, as application volume for long-term fixed rate mortgages increased from $81 million during the first quarter of 2011 to $132 million during the first quarter of 2012.

The Core Bank’s non-interest expenses increased $4.0 million for the first quarter of 2012 to $28.2 million. Included in the salaries and benefits category was $321,000 for short-term retention bonuses for TCB personnel, incentive compensation bonuses for Republic associates which are connected to a successful core system conversion of TCB and a two-year profit goal specific to the performance of TCB. Also related to TCB in the other non-interest expense category was $235,000 in expenses for third party valuation fees and a required audit of the TCB transaction. Additionally, the Core Bank recorded a $2.4 million early prepayment penalty during the quarter, as it prepaid $81 million in Federal Home Loan Bank advances that were scheduled to mature at various times over the next 14 months.

Tax Refund Solutions (“TRS”)

Republic’s TRS segment recorded net income of $61.9 million for the first quarter of 2012, a 10% decrease from the first quarter of 2011. The decrease in TRS net income was the result of a decline in Refund Anticipation Loan (“RAL”) volume and a net decline in Electronic Refund Check (“ERC”)/ Electronic Refund Deposit (“ERD”) volume. More specifically, within the ERC/ERD category, ERC volume through retail locations decreased while the lower margin on-line ERD product increased. The decrease in RAL and ERC volume, which is generated through retail locations, is believed to be the result of a shift in consumer demand toward lower priced on-line tax preparation services and increased competition within the retail market based on free products and services from competitors.

Partially offsetting the decline in revenue from the lower overall volume was an improvement in the estimated loss rate on RALs, which decreased from an estimated 1.58% of total RALs originated as of March 31, 2011 to 1.40% of total RALs originated as of March 31, 2012. The improved loss rate percentage was the result of changes made to the RAL underwriting model based on actual results of RALs originated during 2011, which was the first year of RAL originations without the benefit of the debt indicator from the Internal Revenue Service.

In addition to the improved loss rate on RALs, TRS also experienced a $5.7 million reduction in non-interest expenses. The largest contributor to the decline was a $3.1 million decline in charitable contribution expense. Charitable contribution expense totaled $1.8 million at TRS for the first quarter of 2012, as Republic made a $2.5 million contribution to the Republic Bank Foundation, with the contribution allocated between the Company’s business operating segments using a formula based on pre-tax profits for the quarter. Charitable contribution expense totaled $4.9 million at TRS for the first quarter of 2011, as Republic made a $5 million contribution to the Republic Bank Foundation.

Conclusion

“I could not be more excited about the long-term growth prospects for our Company. Our Core Banking business continues to grow, our asset quality and capital ratios remain among the very best in the industry, and we have entered a great new market in Tennessee with plenty of growth potential. In addition, our recently created Mortgage Warehouse Lending division continues to show great promise with committed lines of credit totaling $108 million after just nine months in operation. While our Company is performing well, we have no plans to sit still in the future. As always, we will continue to aggressively seek new opportunities with the long-term horizon of the Company in mind. It is our long-standing approach to opportunities that allows me to continue to say: ‘We were here for you yesterday. We are here for you today. We will be here for you tomorrow,’ concluded Trager.

Republic Bancorp, Inc. (Republic) has 43 banking centers and is the parent company of Republic Bank & Trust Company and Republic Bank. Republic Bank & Trust Company has 34 banking centers in 12 Kentucky communities - Covington, Crestwood, Elizabethtown, Florence, Frankfort, Georgetown, Independence, Lexington, Louisville, Owensboro, Shelbyville and Shepherdsville, three banking centers in southern Indiana – Floyds Knobs, Jeffersonville and New Albany and one banking center in Franklin (Nashville), Tennessee. Republic Bank has banking centers in Hudson, Palm Harbor, Port Richey and Temple Terrace, Florida as well as Blue Ash (Cincinnati), Ohio. Republic operates Tax Refund Solutions, a nationwide tax refund loan and check provider. Republic offers internet banking at www.republicbank.com . Republic has $3.3 billion in assets and $1 billion in trust assets under custody and management. Republic is headquartered in Louisville, Kentucky and Republic's Class A Common Stock is listed under the symbol “RBCAA” on the NASDAQ Global Select Market.

We were here for you yesterday. We are here for you today. We will be here for you tomorrow. ®

Forward-Looking Statements

This release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, future acquisitions, current expectations and assumptions regarding its business, the economy and other future conditions. Forward-looking statements can be identified by the use of the words “expect,” “anticipate,” “believe,” “intend,” “could” and “should,” and other words of similar meaning. These forward-looking statements express management’s current expectations or forecasts of future events and, by their nature, are subject to risks and uncertainties and there are a number of factors that could cause actual results to differ materially from those in such statements.

Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual results may differ materially from those contemplated by the forward-looking statements. The Company cautions you therefore against relying on any of these forward-looking statements, which speak only as of the date on which they are made. They are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include factors disclosed from time to time in the Company’s filings with the U.S. Securities and Exchange Commission, including those factors set forth as “Risk Factors” in the Company’s Form 10-K for the year ended December 31, 2011. The Company undertakes no obligation to update any forward-looking statements. These forward-looking statements are made only as of the date of this release, and the Company undertakes no obligation to release revisions to these forward-looking statements to reflect events or conditions after the date of this release.
     
Republic Bancorp, Inc. Financial Information
First Quarter 2012 Earnings Release

(all amounts other than per share amounts and number of employees and number of banking centers are expressed in thousands unless otherwise noted)
 
Balance Sheet Data
March 31, 2012 Dec. 31, 2011 March 31, 2011
Assets:
Cash and cash equivalents $ 186,504 $ 362,971 $ 472,315
Investment securities 630,298 674,022 645,636
Mortgage loans held for sale 4,459 4,392 1,381
Loans held for sale 17,028 - -
Loans 2,394,787 2,285,295 2,178,886
Allowance for loan losses (23,732 ) (24,063 ) (29,144 )
Federal Home Loan Bank stock, at cost 28,439 25,980 26,213
Premises and equipment, net 34,321 34,681 36,734
Goodwill 10,168 10,168 10,168
Other assets and accrued interest receivable   62,562     46,545     53,555  
Total assets $ 3,344,834   $ 3,419,991   $ 3,395,744  
 
Liabilities and Stockholders' Equity:
Deposits:
Non interest-bearing $ 595,498 $ 408,483 $ 561,095
Interest-bearing   1,453,301     1,325,495     1,463,616  
Total deposits 2,048,799 1,733,978 2,024,711
 
Securities sold under agreements to repurchase and other short-term borrowings 225,719 230,231 259,722
Federal Home Loan Bank advances 413,593 934,630 554,837
Subordinated note 41,240 41,240 41,240
Other liabilities and accrued interest payable   81,990     27,545     74,799  
Total liabilities 2,811,341 2,967,624 2,955,309
 
Stockholders' equity   533,493     452,367     440,435  
Total liabilities and Stockholders' equity $ 3,344,834   $ 3,419,991   $ 3,395,744  
 
 
 
Average Balance Sheet Data
Three Months Ended March 31,
2012 2011
Assets:
Investment securities, including FHLB stock $ 690,328 $ 614,454
Federal funds sold and other interest-earning deposits 590,863 856,579
Loans and fees, including loans held for sale 2,439,331 2,299,479
Total earning assets 3,720,522 3,770,512
Total assets 4,153,256 4,077,318
 
Liabilities and Stockholders' Equity:
Non interest-bearing deposits $ 922,628 $ 806,532
Interest-bearing deposits 1,670,167 1,890,993

Securities sold under agreements to repurchase and other short-term borrowings
271,322 318,083
Federal Home Loan Bank advances 681,518 562,294
Subordinated note 41,240 41,240
Total interest-bearing liabilities 2,664,247 2,812,610
Stockholders' equity 511,694 408,328
 

         
Republic Bancorp, Inc. Financial Information

First Quarter 2012 Earnings Release (continued)
 
Income Statement Data
Three Months Ended March 31,
2012 2011
 
Total interest income (1) $ 79,587 $ 92,623
Total interest expense   6,367   8,652  
 
Net interest income 73,220 83,971
 
Provision for loan losses 11,170 18,082
 
Non interest income:
Service charges on deposit accounts 3,303 3,424
Electronic refund check fees 71,749 81,062
Mortgage banking income 1,354 816
Debit card interchange fee income 1,556 1,484
Bargain purchase gain 27,899 -
Net gain (loss) on sales, calls and impairment of securities 56 (279 )
Other   892   805  
Total non interest income   106,809   87,312  
 
Non interest expenses:
Salaries and employee benefits 16,971 17,239
Occupancy and equipment, net 6,074 6,297
Communication and transportation 2,661 2,509
Marketing and development 938 904
FDIC insurance expense 430 1,635
Bank franchise tax expense 1,931 1,565
Data processing 1,221 748
Debit card interchange expense 601 523
Supplies 949 894
Other real estate owned expense 605 481
Charitable contributions 2,678 5,298
Legal expense 368 1,360
FHLB advance prepayment penalty 2,436 -
Other   3,290   3,365  
Total non interest expenses   41,153   42,818  
 
Income before income tax expense 127,706 110,383
Income tax expense   45,234   38,971  
 
Net income $ 82,472 $ 71,412  
 

         
Republic Bancorp, Inc. Financial Information

First Quarter 2012 Earnings Release (continued)
 
As of and for the
Three Months Ended March 31,
2012 2011
Per Share Data:
Basic average shares outstanding 20,956 20,938
Diluted average shares outstanding 21,059 20,991
 
End of period shares outstanding:
Class A Common Stock 18,662 18,633
Class B Common Stock 2,299 2,304
 
Book value per share $ 25.45 $ 21.04
Tangible book value per share (2) 24.69 20.18
 
Earnings per share:
Basic earnings per Class A Common Stock 3.94 3.41
Basic earnings per Class B Common Stock 3.92 3.40
Diluted earnings per Class A Common Stock 3.92 3.40
Diluted earnings per Class B Common Stock 3.90 3.39
 
Cash dividends declared per share:
Class A Common Stock 0.154 0.143
Class B Common Stock 0.140 0.130
 
Performance Ratios:
Return on average assets 7.94 % 7.01 %
Return on average equity 64.47 69.96
Efficiency ratio (3) 23 25
Yield on average interest-earning assets 8.56 9.83
Cost of interest-bearing liabilities 0.96 1.23
Net interest spread 7.60 8.60
Net interest margin - Total Company 7.87 8.91
Net interest margin - Traditional Banking 3.58 3.33
 
Asset Quality Ratios:
Loans on non-accrual status $ 24,312 $ 26,668
Loans past due 90 days or more and still on accrual 398 -
Total non-performing loans 24,710 26,668
Other real estate owned 24,149 14,761
Total non-performing assets 48,859 41,429
 
Total Company Credit Quality Ratios:
Non-performing loans to total loans 1.03 % 1.22 %
Non-performing assets to total loans (including OREO) 2.02 1.89
Non-performing assets to total assets 1.46 1.22
Allowance for loan losses to total loans 0.99 1.34
Allowance for loan losses to non-performing loans 96 109
Delinquent loans to total loans (4) 1.14 1.04
Net loan charge-offs to average loans (annualized) 1.89 2.09
 
Traditional Banking Credit Quality Ratios:
Non-performing loans to total loans 1.03 1.23
Non-performing assets to total loans (including OREO) 2.02 1.89
Non-performing assets to total assets 1.51 1.31
Allowance for loan losses to total loans 0.98 1.21
Allowance for loan losses to non-performing loans 95 99
Delinquent loans to total loans (4) 1.14 1.04
Net loan charge-offs to average loans (annualized) 0.65 0.21
 
Other Information:
End of period full-time equivalent employees 723 758
Number of banking centers 43 43
 

         
Republic Bancorp, Inc. Financial Information

First Quarter 2012 Earnings Release (continued)
 
Balance Sheet Data
Quarterly Comparison
March 31, 2012 Dec. 31, 2011 Sept. 30, 2011 June 30, 2011 March 31, 2011
Assets:
Cash and cash equivalents $ 186,504 $ 362,971 $ 75,573 $ 130,262 $ 472,315
Investment securities 630,298 674,022 702,142 633,959 645,636
Mortgage loans held for sale 4,459 4,392 4,721 7,167 1,381
Loans held for sale 17,028 - - 14,289 -
Loans 2,394,787 2,285,295 2,219,916 2,222,697 2,178,886
Allowance for loan losses (23,732 ) (24,063 ) (23,945 ) (25,931 ) (29,144 )
Federal Home Loan Bank stock, at cost 28,439 25,980 26,153 26,153 26,213
Premises and Equipment, net 34,321 34,681 34,044 36,183 36,734
Goodwill 10,168 10,168 10,168 10,168 10,168
Other assets and interest receivable   62,562     46,545     46,369     49,623     53,555  
Total assets $ 3,344,834   $ 3,419,991   $ 3,095,141   $ 3,104,570   $ 3,395,744  
 
Liabilities and Stockholders' Equity:
Deposits:
Non interest-bearing $ 595,498 $ 408,483 $ 385,511 $ 380,970 $ 561,095
Interest-bearing   1,453,301     1,325,495     1,416,887     1,409,691     1,463,616  
Total deposits 2,048,799 1,733,978 1,802,398 1,790,661 2,024,711
 
Deposits held for sale - - - 35,383 -

Securities sold under agreements to repurchase and other short-term borrowings
225,719 230,231 227,504 218,227 259,722
Federal Home Loan Bank advances 413,593 934,630 524,731 519,799 554,837
Subordinated note 41,240 41,240 41,240 41,240 41,240
Other liabilities and accrued interest payable   81,990     27,545     46,197     53,517     74,799  
Total liabilities 2,811,341 2,967,624 2,642,070 2,658,827 2,955,309
 
Stockholders' equity   533,493     452,367     453,071     445,743     440,435  
Total liabilities and Stockholders' equity $ 3,344,834   $ 3,419,991   $ 3,095,141   $ 3,104,570   $ 3,395,744  
 
 
 
Average Balance Sheet Data
Quarterly Comparison
March 31, 2012 Dec. 31, 2011 Sept. 30, 2011 June 30, 2011 March 31, 2011
Assets:
Investment securities, including FHLB stock $ 690,328 $ 735,336 $ 711,050 $ 652,693 $ 614,454
Federal funds sold and other interest-earning deposits 590,863 126,045 68,108 221,695 856,579
Loans and fees, including loans held for sale 2,439,331 2,255,757 2,237,559 2,192,819 2,299,479
Total earning assets 3,720,522 3,117,138 3,016,717 3,067,207 3,770,512
Total assets 4,153,256 3,246,296 3,147,230 3,208,936 4,077,318
 
Liabilities and Stockholders' Equity:
Non interest-bearing deposits $ 922,628 $ 430,705 $ 396,568 $ 409,391 $ 806,532
Interest-bearing deposits 1,670,167 1,379,159 1,444,577 1,454,006 1,890,993

Securities sold under agreements to repurchase and other short-term borrowings
271,322 275,085 249,002 274,074 318,083
Federal Home Loan Bank advances 681,518 625,047 517,739 527,669 562,294
Subordinated note 41,240 41,240 41,240 41,240 41,240
Total interest-bearing liabilities 2,664,247 2,320,531 2,252,558 2,296,989 2,812,610
Stockholders' equity 511,694 454,343 449,177 446,132 408,328
 

         
Republic Bancorp, Inc. Financial Information

First Quarter 2012 Earnings Release (continued)
 
Income Statement Data
Three Months Ended
March 31, 2012 Dec. 31, 2011 Sept. 30, 2011 June 30, 2011 March 31, 2011
 
Total interest income (5) $ 79,587 $ 33,607 $ 34,426 $ 34,459 $ 92,623
Total interest expense   6,367   6,710     7,263     7,630     8,652  
Net interest income 73,220 26,897 27,163 26,829 83,971
 
Provision for loan losses 11,170 463 (140 ) (439 ) 18,082
 
Non interest income:
Service charges on deposit accounts 3,303 3,524 3,421 3,736 3,424
Electronic refund check fees 71,749 124 425 6,584 81,062
Mortgage banking income 1,354 807 1,352 924 816
Debit card interchange fee income 1,556 1,399 1,415 1,493 1,484
Bargain purchase gain 27,899 - - - -
Gain on sale of banking center - - 2,856 - -

Net gain (loss) on sales, calls and impairment of securities
56 77 301 1,907 (279 )
Other   892   537     706     724     805  
Total non interest income   106,809   6,468     10,476     15,368     87,312  
 
Non interest expenses:
Salaries and employee benefits 16,971 11,332 13,145 13,250 17,239
Occupancy and equipment, net 6,074 5,277 5,138 5,001 6,297
Communication and transportation 2,661 1,227 1,081 878 2,509
Marketing and development 938 729 736 868 904
FDIC insurance expense 430 707 918 1,165 1,635
Bank franchise tax expense 1,931 653 713 714 1,565
Data processing 1,221 855 787 817 748
Debit card interchange expense 601 549 566 601 523
Supplies 949 736 409 314 894
Other real estate owned expense 605 889 608 378 481
Charitable contributions 2,678 223 178 234 5,298
Legal expense 368 846 784 979 1,360
FHLB advance prepayment penalty 2,436 - - - -
FDIC civil money penalty - (1,100 ) - 2,000 -
Other   3,290   1,616     1,375     1,327     3,365  
Total non interest expenses   41,153   24,539     26,438     28,526     42,818  
 
Income before income tax expense 127,706 8,363 11,341 14,110 110,383
Income tax expense   45,234   2,159     3,471     5,447     38,971  
 
Net income $ 82,472 $ 6,204   $ 7,870   $ 8,663   $ 71,412  
 

       
Republic Bancorp, Inc. Financial Information

First Quarter 2012 Earnings Release (continued)
 
As of and for the Three Months Ended
March 31, 2012   Dec. 31, 2011 Sept. 30, 2011 June 30, 2011 March 31, 2011
Per Share Data:
Basic average shares outstanding 20,956 20,954 20,953 20,936 20,938
Diluted average shares outstanding 21,059 20,996 20,994 20,994 20,991
 
End of period shares outstanding:
Class A Common Stock 18,662 18,652 18,655 18,635 18,633
Class B Common Stock 2,299 2,300 2,300 2,300 2,304
 
Book value per share $ 25.45 $ 21.59 $ 21.62 $ 21.29 $ 21.04
Tangible book value per share (2) 24.69 20.81 20.81 20.46 20.18
 
Earnings per share:
Basic earnings per Class A Common Stock 3.94 0.30 0.38 0.42 3.41
Basic earnings per Class B Common Stock 3.92 0.28 0.36 0.40 3.40
Diluted earnings per Class A Common Stock 3.92 0.30 0.38 0.41 3.40
Diluted earnings per Class B Common Stock 3.90 0.28 0.36 0.40 3.39
 
Cash dividends declared per share:
Class A Common Stock 0.154 0.154 0.154 0.154 0.143
Class B Common Stock 0.140 0.140 0.140 0.140 0.130
 
Performance Ratios:
Return on average assets 7.94 % 0.76 % 1.00 % 1.08 % 7.01 %
Return on average equity 64.47 5.46 7.01 7.77 69.96
Efficiency ratio (3) 23 74 71 71 25
Yield on average interest-earning assets 8.56 4.31 4.56 4.49 9.83
Cost of interest-bearing liabilities 0.96 1.16 1.29 1.33 1.23
Net interest spread 7.60 3.15 3.27 3.16 8.60
Net interest margin - Total Company 7.87 3.45 3.60 3.50 8.91
Net interest margin - Traditional Banking 3.58 3.56 3.61 3.50 3.33
 
Asset Quality Data:
Loans on non-accrual status $ 24,312 $ 23,306 $ 23,822 $ 28,499 $ 26,668
Loans past due 90 days or more and still on accrual 398 - - - -
Total non-performing loans 24,710 23,306 23,822 28,499 26,668
Other real estate owned 24,149 10,956 11,185 12,012 14,761
Total non-performing assets 48,859 34,262 35,007 40,511 41,429
 
Total Company Credit Quality Ratios:
Non-performing loans to total loans 1.03 % 1.02 % 1.07 % 1.28 % 1.22 %
Non-performing assets to total loans (including OREO) 2.02 1.49 1.57 1.81 1.89
Non-performing assets to total assets 1.46 1.00 1.13 1.30 1.22
Allowance for loan losses to total loans 0.99 1.05 1.08 1.17 1.34
Allowance for loan losses to non-performing loans 96 103 101 91 109
Delinquent loans to total loans (4) 1.14 1.07 0.90 1.28 1.04
Net loan charge-offs to average loans (annualized) 1.89 0.06 0.33 0.51 2.09
 
Traditional Banking Credit Quality Ratios:
Non-performing loans to total loans 1.03 1.02 1.07 1.28 1.23
Non-performing assets to total loans (including OREO) 2.02 1.49 1.57 1.81 1.89
Non-performing assets to total assets 1.51 1.10 1.14 1.31 1.31
Allowance for loan losses to total loans 0.98 1.05 1.08 1.17 1.21
Allowance for loan losses to non-performing loans 95 103 101 91 99
Delinquent loans to total loans (4) 1.14 1.07 0.90 1.28 1.04
Net loan charge-offs to average loans (annualized) 0.65 0.15 0.45 0.17 0.21
 
Other Information:
End of period full-time equivalent employees 723 710 705 733 758
Number of banking centers 43 42 42 43 43
 

Republic Bancorp, Inc. Financial Information First Quarter 2012 Earnings Release (continued)

Segment Data:

The reportable segments are determined by the type of products and services offered, distinguished among Traditional Banking, Mortgage Banking and Tax Refund Solutions (“TRS”). They are also distinguished by the level of information provided to the chief operating decision maker, who uses such information to review performance of various components of the business (such as branches and subsidiary banks), which are then aggregated if operating performance, products/services, and customers are similar. Loans, investments and deposits provide the majority of the net revenue from Traditional Banking operations; servicing fees and loan sales provide the majority of revenue from Mortgage Banking operations; RAL fees and ERC/ERD fees provide the majority of the revenue from TRS. All Company operations are domestic.

Segment information for the three months ended March 31, 2012 and 2011 follows:
   
Republic Bancorp, Inc. Financial Information

First Quarter 2012 Earnings Release (continued)
 
Three Months Ended March 31, 2012
(dollars in thousands)  

TraditionalBanking
 

MortgageBanking
 

Tax RefundSolutions
  Total Company
   
Net interest income $ 27,872 $ 120 $ 45,228 $ 73,220
 
Provision for loan losses 3,131 - 8,039 11,170
 
Electronic refund check fees - - 71,749 71,749
Mortgage banking income - 1,354 - 1,354

Net gain on sales, calls and impairment of securities
56 - - 56
Other non interest income   33,481       5       164     33,650  
Total non interest income 33,537 1,359 71,913 106,809
 
Total non interest expenses   27,044       1,154       12,955     41,153  
 
Gross operating profit 31,234 325 96,147 127,706
Income tax expense   10,876     114     34,244   45,234  
Net income $ 20,358     $ 211     $ 61,903   $ 82,472  
 
Segment end of period assets $ 3,227,652 $ 10,498 $ 106,684 $ 3,344,834
 
Net interest margin 3.58 % NM NM 7.87 %
 
Three Months Ended March 31, 2011
(dollars in thousands)  

TraditionalBanking
 

MortgageBanking
 

Tax RefundSolutions
  Total Company
 
Net interest income $ 25,128 $ 122 $ 58,721 $ 83,971
 
Provision for loan losses 4,322 - 13,760 18,082
 
Electronic refund check fees - - 81,062 81,062
Mortgage banking income - 816 - 816

Net gain on sales, calls and impairment of securities
(279 ) - - (279 )
Other non interest income   5,403       2       308     5,713  
Total non interest income 5,124 818 81,370 87,312
 
Total non interest expenses   23,096       1,103       18,619     42,818  
 
Gross operating profit (loss) 2,834 (163 ) 107,712 110,383
Income tax expense (benefit)   351       (50 )     38,670     38,971  
Net income (loss) $ 2,483     $ (113 )   $ 69,042   $ 71,412  
 
Segment end of period assets $ 3,147,697 $ 9,340 $ 238,707 $ 3,395,744
 
Net interest margin 3.33 % NM NM 8.91 %
 

       
Republic Bancorp, Inc. Financial Information

First Quarter 2012 Earnings Release (continued)
 

(1) – The amount of loan fee income included in total interest income was $46.0 million and $59.3 million for the quarters ended March 31, 2012 and 2011.
 

(2) – The following table provides a reconciliation of total stockholders’ equity in accordance with GAAP to tangible stockholders’ equity in accordance with applicable regulatory requirements. The Company provides the tangible common equity ratio, in addition to those defined by banking regulators, because of its widespread use by investors as a means to evaluate capital adequacy.
 
 
Quarterly Comparison
(in thousands, except per share data) March 31, 2012   Dec. 31, 2011 Sept. 30, 2011 June 30, 2011 March 31, 2011
Total stockholders' equity (a) $ 533,493 $ 452,367 $ 453,071 $ 445,743 $ 440,435
Less: Goodwill 10,168 10,168 10,168 10,168 10,168
Less: Core deposit intangible 113 58 73 87 102
Less: Mortgage servicing rights   5,606   6,087   6,688   7,169   7,573

Tangible stockholders' equity (c)
$ 517,606 $ 436,054 $ 436,142 $ 428,319 $ 422,592
 
Total assets (b) $ 3,335,142 $ 3,419,991 $ 3,095,141 $ 3,104,570 $ 3,395,744
Less: Goodwill 10,168 10,168 10,168 10,168 10,168
Less: Core deposit intangible 113 58 73 87 102
Less: Mortgage servicing rights   5,606   6,087   6,688   7,169   7,573
Tangible assets (d) $ 3,319,255 $ 3,403,678 $ 3,078,212 $ 3,087,146 $ 3,377,901
 
Total stockholders' equity to total assets (a/b) 16.00% 13.23% 14.64% 14.36% 12.97%
Tangible stockholders' equity to tangible assets (c/d) 15.59% 12.81% 14.17% 13.87% 12.51%
 
Number of shares outstanding (e)   20,961   20,952   20,955   20,935   20,937
 
Book value per share (a/e) $ 25.45 $ 21.59 $ 21.62 $ 21.29 $ 21.04
Tangible book value per share (c/e) 24.69 20.81 20.81 20.46 20.18
 
 

(3) – Equals total non-interest expense divided by the sum of net interest income and non interest income. The ratio excludes net gain (loss) on sales, calls and impairment of investment securities.
 

(4) – Equals total loans over 30 days past due divided by total loans.
 

(5) – The amount of loan fee income included in total interest income per quarter was as follows: $46.0 million (quarter ended March 31, 2012), $788,000 (quarter ended December 31, 2011), $1.1 million (quarter ended September 30, 2011), $1.1 million (quarter ended June 30, 2011) and $59.3 million (quarter ended March 31, 2011).
 

NM – Not meaningful

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