EX-99.1 2 a51884806ex99_1.htm EXHIBIT 99.1

Exhibit 99.1

Republic Bancorp, Inc. Reports a 63% Year-Over-Year Increase in Third Quarter Net Income

LOUISVILLE, Ky.--(BUSINESS WIRE)--October 19, 2018--Republic Bancorp, Inc. (NASDAQ: RBCAA), headquartered in Louisville, Kentucky, is the holding company of Republic Bank & Trust Company (the “Bank”).

Republic Bancorp, Inc. (“Republic” or the “Company”) is pleased to report third quarter net income of $17.4 million, a 63% increase over the third quarter of 2017, resulting in Diluted Earnings per Class A Common Share (“Diluted EPS”) of $0.83. Year-to-date net income was $60.5 million, a $19.8 million, or 48%, increase from the same period in 2017, resulting in return on average assets (“ROA”) and return on average equity (“ROE”) of 1.57% and 12.23% for the first nine months of 2018.

Pre-tax earnings for the third quarter of 2018 increased 17% over the third quarter of 2017. As with the previous two quarters of 2018, the Company’s performance metrics for the third quarter of 2018 were positively impacted by the 2017 Tax Cuts and Jobs Act (“TCJA”)(1), which, among other things, lowered the federal corporate tax rate from 35% to 21%, effective January 1, 2018. The Company estimates that the lower effective tax rate alone benefitted its third quarter 2018 metrics by increasing net income approximately $1.9 million, Diluted EPS by $0.09, ROA by 0.15%, and ROE by 1.13%. In addition to the income tax benefit received from the TCJA, the Company also recognized an additional $2.8 million in federal income tax benefits during the third quarter of 2018 as discussed later in this release.

Steve Trager, Chairman & CEO of Republic commented, “We remain excited with the continued growth in our pre-tax earnings this quarter and are pleased to optimize the benefits of the changing federal tax regime. While both loan and deposit origination activity remain solid at our Core Bank, the current interest-rate environment has fueled fierce competition for many bank products and will continue to present challenges for all players in the industry to grow in the future. Despite these challenges, we remain optimistic about our ability to grow prudently, while managing both the credit risk in our loan portfolio and the interest rate risk of the organization.”


The following table highlights Republic’s financial performance for the third quarters and nine months ended September 30, 2018 and 2017:

                                                                 
  (dollars in thousands, except per share data)    
Total Company Financial Performance Highlights
Three Months Ended Sep. 30,         Nine Months Ended Sep. 30,  
2018   2017 $ Change   % Change 2018   2017 $ Change   % Change
 
Income Before Income Taxes* $ 19,209 $ 16,434 $ 2,775 17 % $ 73,935 $ 61,774 $ 12,161 20 %
Net Income* 17,411 10,706 6,705 63 60,546 40,794 19,752 48
Diluted Earnings per Class A Common Stock 0.83 0.51 0.32 63 2.90 1.96 0.94 48
Return on Average Assets 1.37 % 0.89 % NA 54 1.57 % 1.14 % NA 38
Return on Average Equity 10.31 6.76 NA 53 12.23 8.71 NA 40
                                                                 

NA – Not applicable

*See segment data at the end of this earnings release

 

Results of Operations for the Third Quarter of 2018 Compared to the Third Quarter of 2017

Core Bank(2) – Net income from Core Banking was $15.4 million for the third quarter of 2018, an increase of $5.1 million, or 50%, over the third quarter of 2017. Benefitting from growth in net interest income and noninterest income, as well as continued strong credit quality, the Core Bank’s pre-tax income for the third quarter of 2018 increased $1.6 million, or 10%, over the same period in 2017. Growth in the Core Bank’s bottom line outpaced growth in pre-tax income due to approximately $4.0 million in total benefits recognized during the quarter resulting from the previously mentioned federal income tax benefits.

Core Bank net interest income increased $3.0 million, or 7%, over the third quarter of 2017 driven by an increase of eight basis points in the Core Bank’s net interest margin and further complemented by growth of $188 million, or 5%, in the Core Bank’s quarterly loan average. The table below presents the overall change in the Core Bank’s net interest income, as well as average and period-end loan balances by origination channel:

                         
  Net Interest Income  
for the
(dollars in thousands) Three Months Ended Sep. 30,
Origination Channel 2018   2017

$ Change

  % Change
 
Traditional Network $ 40,488 $ 35,382 $ 5,106 14 %
Warehouse Lending 4,414 4,737 (323 ) (7 )
Correspondent Lending 236 307 (71 ) (23 )
2012-FDIC Acquired Loans   64   1,809   (1,745 ) (96 )
Total Core Bank $ 45,202 $ 42,235 $ 2,967   7
                         
 
                                                   
                 
Average Loan Balances Period-End Loan Balances
(dollars in thousands) Three Months Ended Sep. 30, Sep. 30,
Origination Channel 2018   2017

$ Change

% Change 2018 2017

$ Change

% Change
 
Traditional Network $ 3,366,569 $ 3,152,032 $ 214,537 7 % $ 3,384,623 $ 3,203,673 $ 180,950 6 %
Warehouse Lending 541,592 535,703 5,889 1 561,813 571,160 (9,347 ) (2 )
Correspondent Lending 101,209 127,905 (26,696 ) (21 ) 99,096 125,643 (26,547 ) (21 )
2012-FDIC Acquired Loans   5,808   11,409   (5,601 ) (49 )   5,697   9,906   (4,209 ) (42 )
Total Core Bank $ 4,015,178 $ 3,827,049 $ 188,129   5 $ 4,051,229 $ 3,910,382 $ 140,847   4
                                                   
 

The primary drivers of the changes in the Core Bank’s average loan balances and net interest income for the third quarter of 2018, as compared to the third quarter of 2017, follow:

  • The Traditional Network experienced solid growth in average loan balances of $215 million, or 7%, from the third quarter of 2017 to the third quarter of 2018. This growth was largely concentrated in the commercial loan sector, with average commercial real estate balances growing $101 million, or 9%, and average commercial and industrial balances growing $55 million, or 20%.
  • The Core Bank’s 2012 FDIC-Acquired loans contributed $1.7 million less in net interest income during the third quarter of 2018 compared to the same period in 2017, as substantially all of the remaining accretable discount on the acquired loans had been recognized by December 31, 2017.
  • The difference between the Core Bank’s net interest margin and net interest spread was 30 basis points during the third quarter of 2018 compared to 23 basis points during the third quarter of 2017. The differential between the net interest margin and net interest spread represents the value of the Core Bank’s noninterest-bearing deposits and stockholders’ equity to its net interest margin. Because of rising short-term interest rates from September 30, 2017 to September 30, 2018, as measured by the increase of 100 basis points in the Federal Funds Target Rate during this period, the contribution of the Core Bank’s noninterest-bearing deposits and stockholders’ equity to the net interest margin increased significantly.
  • An internal change in the way the Company assigns a cost of funds to Warehouse Lending (“Warehouse”) through its Funds Transfer Pricing (“FTP”) methodology resulted in the Warehouse segment’s fluctuation in net interest income. Effective January 1, 2018, the Company changed its Warehouse FTP methodology to be more consistent with the FTP methodology used for other Core Bank loan products with similar pricing and duration characteristics. This change in FTP methodology had a $272,000 negative comparable impact on the Warehouse net interest income for the third quarter of 2018 and a corresponding positive comparable impact of $272,000 to the Traditional Network’s net interest income.

The Core Bank’s provision for loan and lease losses (“Provision”) decreased to $513,000 for the third quarter of 2018 from $609,000 for the same period in 2017, with the Provision for both periods primarily reflecting general loss reserves for loan growth with no significant loan-specific losses recorded during either period. Overall, the Core Bank’s credit quality metrics remained strong from period to period, with the Core Bank’s ratios of nonperforming loans to total loans and delinquent loans to total loans remaining near historically low levels.

The table below presents the Core Bank’s credit quality metrics:

                                     
  As of and for the:
Quarters Ended:   Years Ended:
Sep. 30,   Jun. 30,   Mar. 31,   Dec. 31,   Dec. 31,   Dec. 31,
Core Banking Credit Quality Ratios   2018   2018   2018   2017   2016   2015
 
Nonperforming loans to total loans 0.42 % 0.43 % 0.37 % 0.36 % 0.42 % 0.66 %
 

Nonperforming assets to total loans (including OREO)

0.42 0.43 0.38 0.36 0.46 0.70
 
Delinquent loans to total loans(3) 0.29 0.21 0.21 0.21 0.18 0.35
 
Net charge-offs to average loans 0.04 0.06 0.04 0.05 0.05
(Quarterly rates annualized)
                                     
OREO = Other Real Estate Owned                                    
 

Noninterest income for the Core Bank was $9.4 million during the third quarter of 2018, a $1.1 million, or 13%, increase from the $8.3 million achieved during the third quarter of 2017. The following factors primarily drove this increase:

  • Mortgage banking income increased $258,000, with secondary market loan originations increasing from $43 million during the third quarter of 2017 to $49 million during the third quarter of 2018.
  • Interchange fee income increased $289,000, or 12%, driven primarily by a 10% year-over-year increase in active debit cards.

Core Bank noninterest expenses increased $2.5 million, or 7%, during the third quarter of 2018 compared to the third quarter of 2017. The following primarily drove the increase:

  • Salaries and employee benefits expense increased $2.3 million, or 13%, driven partially by annual merit increases, partially by an increase of approximately 87 Core Bank full-time-equivalent employees (“FTEs”) over the previous 12 months, and partially by a $1.1 million increase in incentive compensation, as the Company remained on pace during the first nine months of 2018 to achieve some of its more aggressive budgeted targets for the year, resulting in expected higher incentive payouts.
  • New and upgraded technology implemented in the previous 12 months to support several key strategic Core Bank initiatives caused data processing expenses to increase $495,000, or 33%. Such initiatives include improving the Company’s client relationship management system, its online banking functionality, and the overall security of client information and assets.
  • Offsetting the increases above, Occupancy expense decreased $493,000. During the third quarter of 2017, the Core Bank recorded a $907,000 impairment charge for a property the Company began marketing for sale. Partially offsetting the impact of this prior-year non-recurring item was an 8% increase in depreciation expense associated with facility expansions and renovations from the previous year.

Republic Processing Group(4)

Republic Processing Group (“RPG”) reported net income of $2.1 million for the third quarter of 2018 compared to $495,000 for the same period in 2017, with the previously mentioned income tax benefits contributing approximately $712,000 to the increase. Strong revenue growth within the Republic Credit Solutions (“RCS”) segment drove the majority of the increase in RPG’s net income for the quarter. RCS profitability remains concentrated in its line-of-credit product, with revenues for this product increasing $1.5 million, or 23%, from the third quarter of 2017.

Partially offsetting revenue growth within the RCS segment, the Tax Refund Solutions (“TRS”) segment of RPG reported an expected net loss of $452,000 for the third quarter of 2018 compared to a net loss of $1.1 million for the third quarter of 2017. The TRS segment of RPG accounts for a significant portion of RPG’s annualized revenues but derives substantially all of its revenues during the first and second quarters of the year and historically operates at a net loss during the second half of the year, as the Company prepares for the next tax season.


Total Company Income Tax Expense

In addition to the income tax benefit received from the TCJA, Republic also recognized additional federal income tax benefits of approximately $2.8 million during the third quarter of 2018 as part of preparing its fiscal-year 2017 federal tax return due October 15, 2018. The Company considers approximately $2.6 million of the $2.8 million in federal income tax benefits to be nonrecurring in nature, with a portion of the remaining benefits to be realizable in the future.

During the third quarter, the Company completed two separate studies and a tax-accounting-method change that positively impacted income taxes for its 2017 federal tax return and amended filings dating back to fiscal year 2014. As it relates to the two separate studies, the Company recorded benefits for both a fixed asset cost-segregation study and a Research and Development (“R&D”) tax-credit study. The R&D tax-credit study resulted in the recognition of R&D credits dating back to 2014. Due to the innovative nature of its business operations, the Company is optimistic that it will continue to qualify for a portion of these federal tax credits annually into the future. The Company also recorded a nonrecurring tax benefit as a result of a cost-segregation study that assigned revised tax lives to select fixed assets based on a detailed engineering-based analysis. The more detailed classification of fixed assets allowed the Company a large one-time recognition of additional depreciation expense for its 2017 federal tax return at a 35% income tax rate, as opposed to the TCJA rate of 21% it previously expected to receive for these deductions in the future.

In addition to the two studies, the Company also filed for an automatic change in accounting method in combination with its 2017 federal tax return related to the immediate recognition of loan origination costs for income tax purposes, as opposed to the amortization of those costs over the life of the loan. The Company estimates that the $2.8 million benefit of all three of these distinct tax-related items also increased its third quarter 2018 Diluted EPS by $0.13, ROA by 0.22%, and ROE by 1.68%.

Republic Bancorp, Inc. (the “Company”) is the parent company of Republic Bank & Trust Company (the “Bank”). The Bank currently has 45 full-service banking centers and one loan-production office throughout five states: 32 banking centers in 11 Kentucky communities - Covington, Crestview Hills, Elizabethtown, Florence, Frankfort, Georgetown, Lexington, Louisville, Owensboro, Shelbyville, and Shepherdsville; three banking centers in southern Indiana – Floyds Knobs, Jeffersonville, and New Albany; seven banking centers in six Florida communities (Tampa MSA) – Largo, Port Richey, St. Petersburg, Seminole, Tampa, and Temple Terrace; two banking centers in Tennessee – Cool Springs (Franklin) and Green Hills (Nashville MSA) and one loan-production office in Brentwood (Nashville MSA); and one banking center in Norwood (Cincinnati), Ohio. The Bank offers internet banking at www.republicbank.com. The Bank also offers separately branded, nation-wide digital banking at www.mymemorybank.com. The Company has $5.2 billion in assets and is headquartered in Louisville, Kentucky. The Company’s Class A Common Stock is listed under the symbol “RBCAA” on the NASDAQ Global Select Market.

Republic Bank. It’s just easier here. ®

Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements in the preceding paragraphs are based on our current expectations and assumptions regarding our business, the future impact to our balance sheet and income statement resulting from changes in interest rates, the ability to develop products and strategies in order to meet the Company’s long-term strategic goals, the economy, the ability for the Company to benefit from future research and development tax credits, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by forward-looking statements. We caution you therefore against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Actual results could differ materially based upon 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 Annual Report on Form 10-K for the period ended December 31, 2017. 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
Third Quarter 2018 Earnings Release

(all amounts other than per share amounts, number of employees, and number of banking centers are expressed in thousands unless otherwise noted)

 
Balance Sheet Data
Sep. 30, 2018 Dec. 31, 2017 Sep. 30, 2017
Assets:
Cash and cash equivalents $ 365,512 $ 299,351 $ 329,862
Investment securities 513,766 591,458 523,896
Loans held for sale 28,899 16,989 13,135
Loans 4,136,195 4,014,034 3,957,512
Allowance for loan and lease losses   (43,824 )   (42,769 )   (40,191 )
Loans, net 4,092,371 3,971,265 3,917,321
Federal Home Loan Bank stock, at cost 32,067 32,067 32,067
Premises and equipment, net 45,945 45,605 44,845
Goodwill 16,300 16,300 16,300
Other real estate owned ("OREO") 70 115 167
Bank owned life insurance ("BOLI") 64,491 63,356 62,972
Other assets and accrued interest receivable   62,933     48,856     52,609  
Total assets $ 5,222,354   $ 5,085,362   $ 4,993,174  
 
Liabilities and Stockholders' Equity:
Deposits:
Noninterest-bearing $ 1,103,461 $ 1,022,042 $ 1,040,414
Interest-bearing   2,463,224     2,411,116     2,309,315  
Total deposits 3,566,685 3,433,158 3,349,729
 
Securities sold under agreements to repurchase and other short-term borrowings 163,768 204,021 173,311
Federal Home Loan Bank advances 715,000 737,500 757,500
Subordinated note 41,240 41,240 41,240
Other liabilities and accrued interest payable   58,851     37,019     38,107  
Total liabilities 4,545,544 4,452,938 4,359,887
 
Stockholders' equity   676,810     632,424     633,287  
Total liabilities and stockholders' equity $ 5,222,354   $ 5,085,362   $ 4,993,174  
 

       
Average Balance Sheet Data
Three Months Ended Sep. 30, Nine Months Ended Sep. 30,
2018 2017 2018 2017
Assets:
Investment securities, including FHLB stock $ 530,468 $ 552,821 $ 529,731 $ 578,963
Federal funds sold and other interest-earning deposits 265,111 208,688 274,773 174,538
Loans, including loans held for sale 4,112,926 3,875,420 4,095,901 3,785,639
Total interest-earning assets 4,908,505 4,636,929 4,900,405 4,539,140
Total assets 5,101,286 4,834,653 5,150,774 4,783,434
 
Liabilities and Stockholders' Equity:
Noninterest-bearing deposits $ 1,076,967 $ 1,052,162 $ 1,180,187 $ 1,082,361
Interest-bearing deposits 2,476,088 2,249,436 2,434,407 2,228,731

Securities sold under agreements to repurchase and other short-term borrowings

213,195 208,160 216,070 202,018
Federal Home Loan Bank advances 574,130 618,750 571,136 572,390
Subordinated note 41,240 41,240 41,240 41,240
Total interest-bearing liabilities 3,304,653 3,117,586 3,262,853 3,044,379
Stockholders' equity 675,470 633,874 660,179 624,164
 

       
Republic Bancorp, Inc. Financial Information
Third Quarter 2018 Earnings Release (continued)

(all amounts other than per share amounts, number of employees, and number of banking centers are expressed in thousands unless otherwise noted)

 
Income Statement Data
Three Months Ended Sep. 30, Nine Months Ended Sep. 30,
2018 2017 2018 2017
 
Total interest income(5) $ 61,090 $ 53,725 $ 193,279 $ 162,429
Total interest expense   8,057   5,418   21,497   14,547
Net interest income 53,033 48,307 171,782 147,882
 
Provision for loan and lease losses 4,077 4,221 26,264 21,633
 
Noninterest income:
Service charges on deposit accounts 3,579 3,395 10,708 10,032
Net refund transfer fees 149 177 19,974 18,329
Mortgage banking income 1,360 1,102 3,696 3,707
Interchange fee income 2,757 2,475 8,315 7,348
Program fees 1,686 1,597 4,705 3,972
Increase in cash surrender value of BOLI 385 394 1,135 1,178
Net gains on OREO 248 31 700 422
Other   1,301   1,203   4,073   3,236
Total noninterest income   11,465   10,374   53,306   48,224
 
Noninterest expense:
Salaries and employee benefits 22,846 20,505 69,446 61,731
Occupancy and equipment, net 6,279 6,806 18,891 18,676
Communication and transportation 1,047 1,239 3,670 3,450
Marketing and development 1,449 1,677 3,648 4,090
FDIC insurance expense 360 300 1,230 1,050
Bank franchise tax expense 710 749 4,088 3,974
Data processing 2,350 1,795 7,179 5,142
Interchange related expense 1,138 928 3,243 3,057
Supplies 314 241 998 1,029
OREO expense 2 55 63 284
Legal and professional fees 935 446 2,706 1,794
Other   3,782   3,285   9,727   8,422
Total noninterest expense   41,212   38,026   124,889   112,699
 
Income before income tax expense 19,209 16,434 73,935 61,774
Income tax expense(1)   1,798   5,728   13,389   20,980
 
Net income $ 17,411 $ 10,706 $ 60,546 $ 40,794
 

       
Republic Bancorp, Inc. Financial Information
Third Quarter 2018 Earnings Release (continued)

(all amounts other than per share amounts, number of employees, and number of banking centers are expressed in thousands unless otherwise noted)

 
Selected Data and Ratios
 
Three Months Ended Sep. 30, Nine Months Ended Sep. 30,
2018 2017 2018 2017
Per Share Data:
 
Basic weighted average shares outstanding 20,962 21,153 20,950 20,921
Diluted weighted average shares outstanding 21,120 21,236 21,093 21,000
 
Period-end shares outstanding:
Class A Common Stock 18,682 18,618 18,682 18,618
Class B Common Stock 2,213 2,243 2,213 2,243
 
Book value per share(6) $ 32.39 $ 30.36 $ 32.39 $ 30.36
Tangible book value per share(6) 31.34 29.29 31.34 29.29
 
Earnings per share ("EPS"):
Basic EPS - Class A Common Stock $ 0.84 $ 0.51 $ 2.92 $ 1.97
Basic EPS - Class B Common Stock 0.76 0.47 2.65 1.79
Diluted EPS - Class A Common Stock 0.83 0.51 2.90 1.96
Diluted EPS - Class B Common Stock 0.76 0.47 2.64 1.78
 
Cash dividends declared per Common share:
Class A Common Stock $ 0.242 $ 0.220 $ 0.726 $ 0.649
Class B Common Stock 0.220 0.200 0.660 0.590
 
Performance Ratios:
 
Return on average assets 1.37 % 0.89 % 1.57 % 1.14 %
Return on average equity 10.31 6.76 12.23 8.71
Efficiency ratio(7) 64 65 55 57
Yield on average interest-earning assets(5) 4.98 4.63 5.26 4.77
Cost of average interest-bearing liabilities 0.98 0.70 0.88 0.64
Cost of average deposits(8) 0.51 0.31 0.44 0.27
Net interest spread(5) 4.00 3.93 4.38 4.13
Net interest margin - Total Company(5) 4.32 4.17 4.67 4.34
Net interest margin - Core Bank(2) 3.76 3.68 3.65 3.49
 
Other Information:
 
End of period FTEs(9) - Total Company 1,034 970 1,034 970
End of period FTEs - Core Bank 983 896 983 896
Number of full-service banking centers 45 45 45 45
 

       
Republic Bancorp, Inc. Financial Information
Third Quarter 2018 Earnings Release (continued)

(all amounts other than per share amounts, number of employees, and number of banking centers are expressed in thousands unless otherwise noted)

 
Credit Quality Data and Ratios As of and for the As of and for the
Three Months Ended Sep. 30, Nine Months Ended Sep. 30,
2018 2017 2018 2017
Credit Quality Asset Balances:
 
Nonperforming Assets - Total Company:
Loans on nonaccrual status $ 17,015 $ 15,475 $ 17,015 $ 15,475
Loans past due 90-days-or-more and still on accrual   271   906   271   906
Total nonperforming loans 17,286 16,381 17,286 16,381
OREO   70   167   70   167
Total nonperforming assets $ 17,356 $ 16,548 $ 17,356 $ 16,548
 
Nonperforming Assets - Core Bank(2):
Loans on nonaccrual status $ 17,015 $ 15,475 $ 17,015 $ 15,475
Loans past due 90-days-or-more and still on accrual   22   55   22   55
Total nonperforming loans 17,037 15,530 17,037 15,530
OREO   70   167   70   167
Total nonperforming assets $ 17,107 $ 15,697 $ 17,107 $ 15,697
 
Delinquent loans:
Delinquent loans - Core Bank $ 11,840 $ 7,756 $ 11,840 $ 7,756
Delinquent loans - RPG(4)   5,986   4,270   5,986   4,270
Total delinquent loans - Total Company $ 17,826 $ 12,026 $ 17,826 $ 12,026
 
 
Credit Quality Ratios - Total Company:
 
Nonperforming loans to total loans 0.42 % 0.41 % 0.42 % 0.41 %
Nonperforming assets to total loans (including OREO) 0.42 0.42 0.42 0.42
Nonperforming assets to total assets 0.33 0.33 0.33 0.33
Allowance for loan and lease losses to total loans 1.06 1.02 1.06 1.02
Allowance for loan and lease losses to nonperforming loans 254 245 254 245
Delinquent loans to total loans(3) 0.43 0.30 0.43 0.30
Net charge-offs to average loans (annualized) 0.52 0.20 0.82 0.51
 
Credit Quality Ratios - Core Bank:
 
Nonperforming loans to total loans 0.42 % 0.40 % 0.42 % 0.40 %
Nonperforming assets to total loans (including OREO) 0.42 0.40 0.42 0.40
Nonperforming assets to total assets 0.33 0.32 0.33 0.32
Allowance for loan and lease losses to total loans 0.78 0.76 0.78 0.76
Allowance for loan and lease losses to nonperforming loans 184 190 184 190
Delinquent loans to total loans 0.29 0.20 0.29 0.20
Net charge-offs to average loans (annualized) 0.04 0.03 0.03 0.03
 

         
Republic Bancorp, Inc. Financial Information
Third Quarter 2018 Earnings Release (continued)

(all amounts other than per share amounts, number of employees, and number of banking centers are expressed in thousands unless otherwise noted)

 
Balance Sheet Data
Quarterly Comparison
Sep. 30, 2018 Jun. 30, 2018 Mar. 31, 2018 Dec. 31, 2017 Sep. 30, 2017
Assets:
Cash and cash equivalents $ 365,512 $ 386,956 $ 362,122 $ 299,351 $ 329,862
Investment securities 513,766 485,622 483,573 591,458 523,896
Loans held for sale 28,899 26,337 14,295 16,989 13,135
Loans 4,136,195 4,195,984 4,052,500 4,014,034 3,957,512
Allowance for loan and lease losses   (43,824 )   (45,047 )   (52,341 )   (42,769 )   (40,191 )
Loans, net 4,092,371 4,150,937 4,000,159 3,971,265 3,917,321
Federal Home Loan Bank stock, at cost 32,067 32,067 32,067 32,067 32,067
Premises and equipment, net 45,945 46,485 46,792 45,605 44,845
Goodwill 16,300 16,300 16,300 16,300 16,300
Other real estate owned 70 160 115 167
Bank owned life insurance 64,491 64,106 63,727 63,356 62,972
Other assets and accrued interest receivable   62,933     57,135     59,139     48,856     52,609  
Total assets $ 5,222,354   $ 5,265,945   $ 5,078,334   $ 5,085,362   $ 4,993,174  
 
Liabilities and Stockholders' Equity:
Deposits:
Noninterest-bearing $ 1,103,461 $ 1,061,182 $ 1,241,127 $ 1,022,042 $ 1,040,414
Interest-bearing   2,463,224     2,412,187     2,476,496     2,411,116     2,309,315  
Total deposits 3,566,685 3,473,369 3,717,623 3,433,158 3,349,729
 

Securities sold under agreements to repurchase and other short-term borrowings

163,768 175,291 175,682 204,021 173,311
Federal Home Loan Bank advances 715,000 860,000 440,000 737,500 757,500
Subordinated note 41,240 41,240 41,240 41,240 41,240
Other liabilities and accrued interest payable   58,851     52,037     50,535     37,019     38,107  
Total liabilities 4,545,544 4,601,937 4,425,080 4,452,938 4,359,887
 
Stockholders' equity   676,810     664,008     653,254     632,424     633,287  
Total liabilities and stockholders' equity $ 5,222,354   $ 5,265,945   $ 5,078,334   $ 5,085,362   $ 4,993,174  
 
 
Average Balance Sheet Data
Quarterly Comparison
Sep. 30, 2018 Jun. 30, 2018 Mar. 31, 2018 Dec. 31, 2017 Sep. 30, 2017
Assets:
Investment securities, including FHLB stock $ 530,468 $ 506,209 $ 552,760 $ 559,381 $ 552,821
Federal funds sold and other interest-earning deposits 265,111 276,246 283,161 229,638 208,688
Loans, including loans held for sale 4,112,926 4,092,388 4,082,050 3,967,211 3,875,420
Total interest-earning assets 4,908,505 4,874,843 4,917,971 4,756,230 4,636,929
Total assets 5,101,286 5,074,781 5,278,204 4,953,134 4,834,653
 
Liabilities and Stockholders' Equity:
Noninterest-bearing deposits $ 1,076,967 $ 1,146,403 $ 1,319,860 $ 1,045,939 $ 1,052,162
Interest-bearing deposits 2,476,088 2,410,330 2,416,142 2,383,196 2,249,436

Securities sold under agreements to repurchase and other short-term borrowings

213,195 178,063 257,439 271,434 208,160
Federal Home Loan Bank advances 574,130 593,187 545,778 537,326 618,750
Subordinated note 41,240 41,240 41,240 41,240 41,240
Total interest-bearing liabilities 3,304,653 3,222,820 3,260,599 3,233,196 3,117,586
Stockholders' equity 675,470 663,077 641,624 640,686 633,874
 

         
Republic Bancorp, Inc. Financial Information
Third Quarter 2018 Earnings Release (continued)

(all amounts other than per share amounts, number of employees, and number of banking centers are expressed in thousands unless otherwise noted)

 
Income Statement Data
Three Months Ended
Sep. 30, 2018   Jun. 30, 2018   Mar. 31, 2018 Dec. 31, 2017 Sep. 30, 2017
 
Total interest income(5) $ 61,090 $ 58,356 $ 73,833 $ 56,349 $ 53,725
Total interest expense   8,057   7,272   6,168   5,711   5,418
Net interest income 53,033 51,084 67,665 50,638 48,307
 
Provision for loan and lease losses 4,077 4,932 17,255 6,071 4,221
 
Noninterest income:
Service charges on deposit accounts 3,579 3,574 3,555 3,325 3,395
Net refund transfer fees 149 3,473 16,352 171 177
Mortgage banking income 1,360 1,316 1,020 935 1,102
Interchange fee income 2,757 2,891 2,667 2,533 2,475
Program fees 1,686 1,323 1,696 1,851 1,597
Increase in cash surrender value of BOLI 385 379 371 384 394
Losses on available-for-sale debt securities (136)
Net gains on OREO 248 320 132 254 31
Other   1,301   1,020   1,752   873   1,203
Total noninterest income   11,465   14,296   27,545   10,190   10,374
 
Noninterest expense:
Salaries and employee benefits 22,846 22,766 23,834 20,502 20,505
Occupancy and equipment, net 6,279 6,391 6,221 6,518 6,806
Communication and transportation 1,047 1,241 1,382 1,261 1,239
Marketing and development 1,449 1,283 916 1,098 1,677
FDIC insurance expense 360 345 525 328 300
Bank franchise tax expense 710 860 2,518 652 749
Data processing 2,350 2,443 2,386 2,606 1,795
Interchange related expense 1,138 1,098 1,007 931 928
Supplies 314 303 381 565 241
OREO expense 2 16 45 104 55
Legal and professional fees 935 728 1,043 616 446
Other   3,782   3,158   2,787   2,964   3,285
Total noninterest expense   41,212   40,632   43,045   38,145   38,026
 
Income before income tax expense 19,209 19,816 34,910 16,612 16,434
Income tax expense(1)   1,798   4,150   7,441   11,774   5,728
 
Net income $ 17,411 $ 15,666 $ 27,469 $ 4,838 $ 10,706
 

         
Republic Bancorp, Inc. Financial Information
Third Quarter 2018 Earnings Release (continued)

(all amounts other than per share amounts, number of employees, and number of banking centers are expressed in thousands unless otherwise noted)

 
Selected Data and Ratios
As of and for the Three Months Ended  
Sep. 30, 2018   Jun. 30, 2018   Mar. 31, 2018   Dec. 31, 2017   Sep. 30, 2017  
Per Share Data:
 
Basic weighted average shares outstanding 20,962 21,187 20,920 21,149 21,153
Diluted weighted average shares outstanding 21,120 21,331 21,018 21,258 21,236
 
Period-end shares outstanding:
Class A Common Stock 18,682 18,677 18,645 18,607 18,618
Class B Common Stock 2,213 2,215 2,243 2,243 2,243
 
Book value per share(6) $ 32.39 $ 31.78 $ 31.27 $ 30.33 $ 30.36
Tangible book value per share(6) 31.34 30.73 30.22 29.27 29.29
 
Earnings per share ("EPS"):
Basic EPS - Class A Common Stock $ 0.84 $ 0.75 $ 1.32 $ 0.23 $ 0.51
Basic EPS - Class B Common Stock 0.76 0.68 1.21 0.21 0.47
Diluted EPS - Class A Common Stock 0.83 0.74 1.32 0.23 0.51
Diluted EPS - Class B Common Stock 0.76 0.68 1.20 0.21 0.47
 
Cash dividends declared per Common share:
Class A Common Stock $ 0.242 $ 0.242 $ 0.242 $ 0.220 $ 0.220
Class B Common Stock 0.220 0.220 0.220 0.200 0.200
 
Performance Ratios:
 
Return on average assets 1.37 % 1.23 % 2.08 % 0.39 % 0.89 %
Return on average equity 10.31 9.45 17.12 3.02 6.76
Efficiency ratio(7) 64 62 45 63 65
Yield on average interest-earning assets(5) 4.98 4.79 6.01 4.74 4.63
Cost of average interest-bearing liabilities 0.98 0.90 0.76 0.71 0.70
Cost of average deposits(8) 0.51 0.44 0.36 0.35 0.31
Net interest spread(5) 4.00 3.89 5.25 4.03 3.93
Net interest margin - Total Company(5) 4.32 4.19 5.50 4.26 4.17
Net interest margin - Core Bank(2) 3.76 3.64 3.55 3.72 3.68
 
Other Information:
 
End of period FTEs(9) - Total Company 1,034 1,013 1,003 997 970
End of period FTEs - Core Bank 983 933 922 915 896
Number of full-service banking centers 45 45 45 45 45
 

         
Republic Bancorp, Inc. Financial Information
Third Quarter 2018 Earnings Release (continued)

(all amounts other than per share amounts, number of employees, and number of banking centers are expressed in thousands unless otherwise noted)

 
Credit Quality Data and Ratios
As of and for the Three Months Ended
Sep. 30, 2018 Jun. 30, 2018 Mar. 31, 2018 Dec. 31, 2017 Sep. 30, 2017
Credit Quality Asset Balances:
 
Nonperforming Assets - Total Company:
Loans on nonaccrual status $ 17,015 $ 17,502 $ 14,849 $ 14,118 $ 15,475
Loans past due 90-days-or-more and still on accrual   271     858     1,279     956     906  
Total nonperforming loans 17,286 18,360 16,128 15,074 16,381
OREO   70         160     115     167  
Total nonperforming assets $ 17,356   $ 18,360   $ 16,288   $ 15,189   $ 16,548  
 
Nonperforming Assets - Core Bank(2):
Loans on nonaccrual status $ 17,015 $ 17,502 $ 14,849 $ 14,118 $ 15,475
Loans past due 90-days-or-more and still on accrual   22     22     27     19     55  
Total nonperforming loans 17,037 17,524 14,876 14,137 15,530
OREO   70         160     115     167  
Total nonperforming assets $ 17,107   $ 17,524   $ 15,036   $ 14,252   $ 15,697  
 
Delinquent Loans:
Delinquent loans - Core Bank $ 11,840 $ 8,703 $ 8,303 $ 8,460 $ 7,756
Delinquent loans - RPG(4)(10)   5,986     4,429     17,530     5,641     4,270  
Total delinquent loans - Total Company $ 17,826   $ 13,132   $ 25,833   $ 14,101   $ 12,026  
 
 
Credit Quality Ratios - Total Company:
 
Nonperforming loans to total loans 0.42 % 0.44 % 0.40 % 0.38 % 0.41 %
Nonperforming assets to total loans (including OREO) 0.42 0.44 0.40 0.38 0.42
Nonperforming assets to total assets 0.33 0.35 0.32 0.30 0.33
Allowance for loan and lease losses to total loans 1.06 1.07 1.29 1.07 1.02
Allowance for loan and lease losses to nonperforming loans 254 245 325 284 245
Delinquent loans to total loans(3)(10) 0.43 0.31 0.64 0.35 0.30
Net charge-offs to average loans (annualized) 0.52 1.19 0.75 0.35 0.20
 
Credit Quality Ratios - Core Bank:
 
Nonperforming loans to total loans 0.42 % 0.43 % 0.37 % 0.36 % 0.40 %
Nonperforming assets to total loans (including OREO) 0.42 0.43 0.38 0.36 0.40
Nonperforming assets to total assets 0.33 0.34 0.31 0.28 0.32
Allowance for loan and lease losses to total loans 0.78 0.76 0.77 0.77 0.76
Allowance for loan and lease losses to nonperforming loans 184 179 205 213 190
Delinquent loans to total loans 0.29 0.21 0.21 0.21 0.20
Net charge-offs to average loans (annualized) 0.04 0.06 0.06 0.03
 

       
Republic Bancorp, Inc. Financial Information
Third Quarter 2018 Earnings Release (continued)
 

Segment Data:

 

Reportable segments are determined by the type of products and services offered and 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 banking centers and business units), which are then aggregated if operating performance, products/services, and clients are similar.

 

As of September 30, 2018, the Company was divided into five reportable segments: Traditional Banking, Warehouse Lending (“Warehouse”), Mortgage Banking, Tax Refund Solutions (“TRS”), and Republic Credit Solutions (“RCS”). Management considers the first three segments to collectively constitute “Core Bank” or “Core Banking” operations, while the last two segments collectively constitute Republic Processing Group (“RPG”) operations. The Bank’s Correspondent Lending channel and the Company’s national branchless banking platform, MemoryBank®, are considered part of the Traditional Banking segment.

 

The nature of segment operations and the primary drivers of net revenues by reportable segment are provided below:

 
Reportable Segment: Nature of Operations: Primary Drivers of Net Revenue:
             
Core Banking:
 
Traditional Banking Provides traditional banking products to clients in its market footprint primarily via its network of banking centers and to clients outside of its market footprint primarily via its Digital and Correspondent Lending delivery channels. Loans, investments, and deposits.
 
Warehouse Lending Provides short-term, revolving credit facilities to mortgage bankers across the United States. Mortgage warehouse lines of credit.
 
Mortgage Banking     Primarily originates, sells and services long-term, single family, first lien residential real estate loans primarily to clients in the Bank's market footprint.     Loan sales and servicing.
 
Republic Processing Group:
 
Tax Refund Solutions TRS offers tax-related credit products and facilitates the receipt and payment of federal and state tax refund products. The RPS division of TRS offers general-purpose reloadable cards. TRS and RPS products are primarily provided to clients outside of the Bank’s market footprint. Loans, refund transfers, and prepaid cards.
 
Republic Credit Solutions Offers consumer credit products. RCS products are primarily provided to clients outside of the Bank’s market footprint, with a substantial portion of RCS clients considered subprime or near-prime borrowers. Unsecured, consumer loans.
 

The accounting policies used for Republic’s reportable segments are the same as those described in the summary of significant accounting policies in the Company’s 2017 Annual Report on Form 10-K. Republic evaluates segment performance using operating income. The Company allocates goodwill to the Traditional Banking segment. Republic generally allocates income taxes based on income before income tax expense unless Republic can reasonably make specific segment allocations. The Company makes transactions among reportable segments at carrying value.

 

           
Republic Bancorp, Inc. Financial Information
Third Quarter 2018 Earnings Release (continued)
 

Segment information for the quarters and nine months ended September 30, 2018 and 2017 follows:

 
Three Months Ended September 30, 2018
Core Banking Republic Processing Group ("RPG")
Total Tax Republic
Traditional Warehouse Mortgage Core Refund Credit Total Total
(dollars in thousands)     Banking       Lending       Banking       Banking       Solutions     Solutions     RPG       Company
 
Net interest income $ 40,655 $ 4,414 $ 133 $ 45,202 $ 113 $ 7,718 $ 7,831 $ 53,033
 
Provision for loan and lease losses 696 (183 ) 513 (1,028 ) 4,592 3,564 4,077
 
Net refund transfer fees 149 149 149
Mortgage banking income 1,360 1,360 1,360
Program fees 93 1,593 1,686 1,686
Other noninterest income   7,864   11     124   7,999   22     249   271     8,270
Total noninterest income 7,864 11 1,484 9,359 264 1,842 2,106 11,465
 
Total noninterest expense   34,847   834     1,071   36,752   2,656     1,804   4,460     41,212
 
Income (loss) before income tax expense 12,976 3,774 546 17,296 (1,251 ) 3,164 1,913 19,209
Income tax expense (benefit)   966   864     114   1,944   (799 )   653   (146 )   1,798
Net income (loss) $ 12,010 $ 2,910   $ 432 $ 15,352 $ (452 ) $ 2,511 $ 2,059   $ 17,411
 
Period-end assets $ 4,537,971 $ 561,625 $ 13,251 $ 5,112,847 $ 15,991 $ 93,516 $ 109,507 $ 5,222,354
 
Net interest margin 3.82 % 3.26 % NM 3.76 % NM NM NM 4.32 %
 
Net-revenue concentration* 74 % 7 % 3 % 84 % 1 % 15 % 16 % 100 %
 
 
Three Months Ended September 30, 2017
Core Banking Republic Processing Group ("RPG")
Total Tax Republic
Traditional Warehouse Mortgage Core Refund Credit Total Total
(dollars in thousands)     Banking       Lending       Banking       Banking       Solutions     Solutions     RPG       Company
 
Net interest income $ 37,396 $ 4,737 $ 102 $ 42,235 $ 60 $ 6,012 $ 6,072 $ 48,307
 
Provision for loan and lease losses 683 (74 ) 609 (840 ) 4,452 3,612 4,221
 
Net refund transfer fees 177 177 177
Mortgage banking income 1,102 1,102 1,102
Program fees 63 1,534 1,597 1,597
Other noninterest income   7,130   11     65   7,206   16     276   292     7,498
Total noninterest income 7,130 11 1,167 8,308 256 1,810 2,066 10,374
 
Total noninterest expense   32,280   848     1,149   34,277   2,851     898   3,749     38,026
 
Income (loss) before income tax expense 11,563 3,974 120 15,657 (1,695 ) 2,472 777 16,434
Income tax expense (benefit)   3,951   1,454     41   5,446   (615 )   897   282     5,728
Net income (loss) $ 7,612 $ 2,520   $ 79 $ 10,211 $ (1,080 ) $ 1,575 $ 495   $ 10,706
 
Period-end assets $ 4,361,591 $ 570,676 $ 9,395 $ 4,941,662 $ 13,090 $ 38,422 $ 51,512 $ 4,993,174
 
Net interest margin 3.70 % 3.54 % NM 3.68 % NM NM NM 4.17 %
 
Net-revenue concentration* 76 % 8 % 2 % 86 % 1 % 13 % 14 % 100 %
 

____________________

*Net revenue represents net interest income plus total noninterest income. Net-revenue concentration equals segment-level net revenue divided by total Company net revenue.

 

           
Republic Bancorp, Inc. Financial Information
Third Quarter 2018 Earnings Release (continued)
 
Nine Months Ended September 30, 2018
Core Banking Republic Processing Group ("RPG")
Total Tax Republic
Traditional Warehouse Mortgage Core Refund Credit Total Total
(dollars in thousands)     Banking       Lending       Banking       Banking       Solutions     Solutions     RPG       Company
 
Net interest income $ 118,191 $ 12,169 $ 308 $ 130,668 $ 19,127 $ 21,987 $ 41,114 $ 171,782
 
Provision for loan and lease losses 2,158 88 2,246 11,473 12,545 24,018 26,264
 
Net refund transfer fees 19,974 19,974 19,974
Mortgage banking income 3,696 3,696 3,696
Program fees 276 4,429 4,705 4,705
Other noninterest income   22,591   30     211   22,832   1,212   887   2,099   24,931
Total noninterest income 22,591 30 3,907 26,528 21,462 5,316 26,778 53,306
 
Total noninterest expense   103,654   2,523     3,451   109,628   11,454   3,807   15,261   124,889
 
Income before income tax expense 34,970 9,588 764 45,322 17,662 10,951 28,613 73,935
Income tax expense   4,906   2,193     160   7,259   3,664   2,466   6,130   13,389
Net income $ 30,064 $ 7,395   $ 604 $ 38,063 $ 13,998 $ 8,485 $ 22,483 $ 60,546
 
Period-end assets $ 4,537,971 $ 561,625 $ 13,251 $ 5,112,847 $ 15,991 $ 93,516 $ 109,507 $ 5,222,354
 
Net interest margin 3.71 % 3.18 % NM 3.65 % NM NM NM 4.67 %
 
Net-revenue concentration* 63 % 5 % 2 % 70 % 18 % 12 % 30 % 100 %
 
 
Nine Months Ended September 30, 2017
Core Banking Republic Processing Group ("RPG")
Total Tax Republic
Traditional Warehouse Mortgage Core Refund Credit Total Total
(dollars in thousands)     Banking       Lending       Banking       Banking       Solutions     Solutions     RPG       Company
 
Net interest income $ 103,490 $ 13,073 $ 255 $ 116,818 $ 15,179 $ 15,885 $ 31,064 $ 147,882
 
Provision for loan and lease losses 2,611 (36 ) 2,575 6,763 12,295 19,058 21,633
 
Net refund transfer fees 18,329 18,329 18,329
Mortgage banking income 3,707 3,707 3,707
Program fees 103 3,869 3,972 3,972
Other noninterest income   20,618   27     192   20,837   152   1,227   1,379   22,216
Total noninterest income 20,618 27 3,899 24,544 18,584 5,096 23,680 48,224
 
Total noninterest expense   93,552   2,448     3,347   99,347   10,891   2,461   13,352   112,699
 
Income before income tax expense 27,945 10,688 807 39,440 16,109 6,225 22,334 61,774
Income tax expense   8,684   3,909     282   12,875   5,846   2,259   8,105   20,980
Net income $ 19,261 $ 6,779   $ 525 $ 26,565 $ 10,263 $ 3,966 $ 14,229 $ 40,794
 
Period-end assets $ 4,361,591 $ 570,676 $ 9,395 $ 4,941,662 $ 13,090 $ 38,422 $ 51,512 $ 4,993,174
 
Net interest margin 3.48 % 3.58 % NM 3.49 % NM NM NM 4.34 %
 
Net-revenue concentration* 63 % 7 % 2 % 72 % 17 % 11 % 28 % 100 %
 

____________________

* Net revenue represents net interest income plus total noninterest income. Net-revenue concentration equals segment-level net revenue divided by total Company net revenue.

 

 

Republic Bancorp, Inc. Financial Information

Third Quarter 2018 Earnings Release (continued)
 

(1)

The 2017 Tax Cuts and Jobs Act (“TCJA”), enacted on December 22, 2017, lowered the federal corporate tax rate from 35% to 21%, effective January 1, 2018. With the TCJA’s meaningful impact during 2018 and the fourth quarter of 2017, the Company’s effective tax rate per quarter was as follows: 9.4% (quarter ended September 30, 2018); 20.9% (quarter ended June 30, 2018); 21.3% (quarter ended March 31, 2018); 70.9% (quarter ended December 31, 2017); and 34.9% (quarter ended September 30, 2017).

 

In addition to the TCJA lowering the Company’s 2018 federal income tax rate, Republic’s relatively low effective tax rate during the third quarter of 2018 was driven by approximately $2.8 million in income tax benefits recognized during the third quarter of 2018 as part of preparing the Company’s fiscal-year 2017 federal tax return due October 15, 2018. The Company considers approximately $2.6 million of the $2.8 million in federal income tax benefits to be nonrecurring in nature, with a portion of the remaining benefits to be realizable in the future.

 

A $6.3 million charge to income tax expense upon remeasurement of the Company’s deferred tax assets and liabilities at a 21% corporate tax rate drove the relatively high effective tax rate for the fourth quarter of 2017.

 

(2)

“Core Bank” or “Core Banking” operations consist of the Traditional Banking, Warehouse Lending, and Mortgage Banking segments.

 

(3)

The delinquent loans to total loans ratio equals loans 30-days-or-more past due divided by total loans. Depending on loan class, loan delinquency is determined by the number of days or the number of payments past due.

 

(4)

Republic Processing Group operations consist of the Tax Refund Solutions and Republic Credit Solutions segments.

 

(5)

The amount of loan fee income can meaningfully impact total interest income, loan yields, net interest margin, and net interest spread. The amount of loan fee income included in total interest income was $9.0 million and $9.1 million for the quarters ended September 30, 2018 and 2017. The amount of loan fee income included in total interest income was $44.4 million and $36.8 million for the nine months ended September 30, 2018 and 2017.

 

The amount of loan fee income included in total interest income per quarter was as follows: $9.0 million (quarter ended September 30, 2018); $8.5 million (quarter ended June 30, 2018); $26.9 million (quarter ended March 31, 2018); $9.4 million (quarter ended December 31, 2017); and $9.1 million (quarter ended September 30, 2017).

 

Interest income for Easy Advances (“EAs”) is composed entirely of loan fees. The loan fees disclosed above included EA fees of $17.8 million and $14.2 million for the nine months ended September 30, 2018 and 2017. EAs are only offered during the first two months of each year.

 

 
Republic Bancorp, Inc. Financial Information
Third Quarter 2018 Earnings Release (continued)
 

(6)

The following table provides a reconciliation of total stockholders’ equity in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) to tangible stockholders’ equity in accordance with applicable regulatory requirements, a non-GAAP disclosure. The Company provides the tangible book value per share, a non-GAAP measure, in addition to those defined by banking regulators, because of its widespread use by investors as a means to evaluate capital adequacy.

 
         
Quarterly Comparison
(dollars in thousands, except per share data) Sep. 30, 2018 Jun. 30, 2018   Mar. 31, 2018     Dec. 31, 2017     Sep. 30, 2017  
 
Total stockholders' equity - GAAP (a) $ 676,810 $ 664,008 $ 653,254 $ 632,424 $ 633,287
Less: Goodwill 16,300 16,300 16,300 16,300 16,300
Less: Mortgage servicing rights 4,925 4,914 4,925 5,044 5,128
Less: Core deposit intangible   705   756   807   858   911
Tangible stockholders' equity - Non-GAAP (c) $ 654,880 $ 642,038 $ 631,222 $ 610,222 $ 610,948
 
Total assets - GAAP (b) $ 5,222,354 $ 5,265,945 $ 5,078,334 $ 5,085,362 $ 4,993,174
Less: Goodwill 16,300 16,300 16,300 16,300 16,300
Less: Mortgage servicing rights 4,925 4,914 4,925 5,044 5,128
Less: Core deposit intangible   705   756   807   858   911
Tangible assets - Non-GAAP (d) $ 5,200,424 $ 5,243,975 $ 5,056,302 $ 5,063,160 $ 4,970,835
 
Total stockholders' equity to total assets - GAAP (a/b) 12.96 % 12.61 % 12.86 % 12.44 % 12.68 %
Tangible stockholders' equity to tangible assets - Non-GAAP (c/d) 12.59 % 12.24 % 12.48 % 12.05 % 12.29 %
 
Number of shares outstanding (e)   20,895   20,892   20,888   20,850   20,861
 
Book value per share - GAAP (a/e) $ 32.39 $ 31.78 $ 31.27 $ 30.33 $ 30.36
Tangible book value per share - Non-GAAP (c/e) 31.34 30.73 30.22 29.27 29.29
 
 

(7)

The efficiency ratio, a non-GAAP measure, equals total noninterest expense divided by the sum of net interest income and noninterest income. The ratio excludes net gains (losses) on sales, calls, and impairment of investment securities, if applicable.

 

(8)

The cost of average deposits ratio equals annualized total interest expense on deposits divided by total average interest-bearing deposits plus total average noninterest-bearing deposits.

 

(9)

FTEs – Full-time-equivalent employees.

 

(10)

Delinquent loans for the RPG segment included $13 million of EAs at March 31, 2018. EAs were only offered during the first two months of 2018. EAs do not have a contractual due date but are eligible for delinquency consideration three weeks after the taxpayer-customer’s tax return is submitted to the applicable tax authority. All unpaid EAs are charged-off by the end of the second quarter of each year.

 

NM – Not meaningful

CONTACT:
Republic Bancorp, Inc.
Kevin Sipes, 502-560-8628
Executive Vice President & Chief Financial Officer