LOUISVILLE, Ky.--(BUSINESS WIRE)--
Republic Bancorp, Inc. (“Republic” or the “Company”) (NASDAQ: RBCAA),
through its subsidiary Republic Bank & Trust Company (the “Bank”), is
pleased to announce its interim results for the Company’s TRS 2011 tax
season. Through the first two months of 2011, net income at TRS totaled
approximately $62 million, an increase of nearly $25 million, or 70%,
compared to the first two months of 2010. The increase in TRS net income
was driven by an increase in Electronic Refund Check/Electronic Refund
Deposit (“ERC/ERD”) product volume, more favorable pricing terms for the
Company’s Refund Anticipation Loan (“RAL”) product and better than
projected loan loss provisions for RALs.
As a result of its strong interim results at TRS, management currently
estimates that its first quarter total Company net income will be in a
range between $68 million and $75 million with a diluted Class A
earnings per share range between $3.25 and $3.57 per share. The actual
results for the quarter will be significantly dependent upon
management’s overall projections, which are based in part on the
following assumed ranges:
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ERC/ERD volume between 350,000 and 450,000 products during March 2011.
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RAL origination volume between 38,000 and 44,000 products during March
2011.
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An estimated RAL loan loss rate as of March 31, 2011, between 1.50%
and 2.00% of total RALs originated.
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A Traditional Banking segment provision for loan losses of $2.2
million to $3.4 million for the quarter.
The Bank’s goal entering the 2011 tax season was to achieve a final RAL
loan loss rate of 2.50% or less. Through the date of this filing, RALs
outstanding past their expected funding date, which represents potential
loan losses, was 2.13% of total RALs originated. Management expects this
percentage rate to improve each week as the Bank continues to receive
payments from the IRS. Based on the Bank’s current RALs outstanding past
their expected funding date and management’s expectations of future
payments from the IRS, management projects Republic’s final loan loss
rate related to RALs for 2011 to be within a range of 1.50% - 2.00% of
total RALs originated. Each 0.10% of loss rate equates to approximately
$1.0 million in pre-tax expense for 2011.
In addition to the Company’s solid RAL underwriting results, the number
of federal ERCs/ERDs processed through the first two months of 2011 was
up 62% compared to the first two months of 2010. As expected, the
Company’s RAL origination volume was down significantly compared to the
first two months of 2010. Overall, the Company has originated $1.0
billion in RALs through the first two months of 2011 compared to $2.8
billion for the same period in 2010. The decrease in the Company’s RAL
origination volume was primarily due to its revised underwriting and
application requirements in combination with its reduced maximum RAL
offering amount of $1,500 per customer.
The Company publishes these results on an interim basis in light of the
Federal Deposit Insurance Corporation’s (the “FDIC”) concerns regarding
the safety and soundness of its RAL program as expressed in the FDIC’s
Notice of Charges for an Order to Cease and Desist and Notice of Hearing
(the “Notice”) previously disclosed. A copy of the Notice is set forth
as Exhibit 10.1 of the Form 8-K filed with the Securities and Exchange
Commission (the “SEC”) on February 10, 2011. On February 28, 2011, the
Bank filed a lawsuit in the United States District Court for the Western
District of Kentucky against the FDIC seeking to protect its right to a
fair administrative hearing and review, free from retaliation, and to
require the FDIC to follow an appropriate rulemaking process.
As described more fully in the periodic filings of Republic with the
Securities and Exchange Commission, the Bank, through its TRS segment,
is one of a limited number of financial institutions that facilitates
the processing of federal and state tax refund products through third
party tax-preparers and tax preparation software companies in the United
States. The Bank’s three primary tax-related products are: ERCs, ERDs
and RALs. The Bank charges its customers $29.95 for its ERC/ERD products
and $61.22 for its RAL product.
The Bank has operated in the tax refund product industry for 15 years.
RB&T is one of the largest providers of these services in the country
providing tax refund-based products to over 3 million taxpayers during
2010. During its peak processing time, the Bank employs over 400 people
in downtown Louisville to deliver its products and respond to customer
questions. Substantially all of the business generated by TRS occurs in
the first quarter of the calendar year.
Forward-Looking Statements
This press release contains 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 economy
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 the
forward-looking statements. We caution 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 consumer demand for the Bank’s tax
refund products, consumer demand for income tax return preparation
services and tax services generally, unanticipated losses on RALs and
within the Traditional Banking segment, regulatory proceedings to
curtail or exit the RAL business, overall tax refund product mix and
overhead cost to the Bank, and other 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” at Part
I, Item 1A in the Company’s Form 10-Q for the quarter ended September
30, 2010. The Company undertakes no obligation to update any
forward-looking statements.
Republic Bancorp, Inc. (Republic) has 43 banking centers and is the
parent company of Republic Bank & Trust Company with 35 banking centers
in 13 Kentucky communities - Bowling Green, Covington, Crestwood,
Elizabethtown, Florence, Frankfort, Georgetown, Independence, Lexington,
Louisville, Owensboro, Shelbyville and Shepherdsville and three banking
centers in southern Indiana – Floyds Knobs, Jeffersonville and New
Albany. Republic Bank has banking centers in Hudson, Palm Harbor, Port
Richey and Temple Terrace, Florida as well as Cincinnati, Ohio. Republic
operates Tax Refund Solutions, a nationwide tax refund loan and check
provider. Republic offers internet banking at www.republicbank.com.
At December 31, 2010, Republic had $3.6 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. ®
Source: Republic Bancorp, Inc.
Contact:
Republic Bancorp, Inc.
Steve Trager, 502-584-3600
President
and Chief Executive Officer