Republic Bank & Trust

LOUISVILLE, Ky.--(BUSINESS WIRE)-- Republic Bancorp, Inc. is pleased to announce its fourth consecutive year of increased earnings by completing 2011 with net income of $94.1 million, a $29.4 million, or 45%, increase over 2010. Diluted Earnings per Class A Common Share increased 45% for the year ended December 31, 2011 to $4.49. For the fourth quarter of 2011, Republic earned net income of $6.2 million, a 40% increase over the fourth quarter of 2010. Diluted Earnings per Class A Common Share increased 43% to $0.30 for the quarter.

Steve Trager, Republic’s President and CEO, commented: “It gives me great pleasure to report another solid quarter of operating results, capping off a good year of earnings in 2011. In addition, I’m proud that our associates were able to generate core deposit and loan growth of 9% and 5% during the year, while maintaining good credit quality and high capital standards. With core capital and credit quality among the very best in the banking industry, we remain well-positioned to take advantage of unique opportunities that often arise in an uncertain economy.”

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

The following table highlights Republic’s fourth quarter and annual financial performance for 2011 compared to the same periods in 2010:

Year in Review

The year 2011 represented another successful year for Republic. In addition to strong earnings results for the year, the Company also achieved many other successes while positioning itself well for the future. Following are a few brief highlights from 2011:

Resolution with the Federal Deposit Insurance Corporation (“FDIC”) regarding Tax Refund Solutions (“TRS”) – RB&T settled its disagreement with the FDIC regarding the offering of Refund Anticipation Loans (“RALs”) through the TRS business segment. As a result of the resolution, RB&T is immediately positioned to resume traditional banking expansionary activities and will no longer offer RALs after April 30, 2012. For additional information regarding RB&T’s resolution with the FDIC, see the Company’s Form 8-K filed with the Securities and Exchange Commission on December 9, 2011.

Improved Credit Quality – As it has throughout the Company’s history, credit quality remains a primary focus at Republic. The Company continued to dedicate many resources and high level associates to improving its already industry solid credit metrics in 2011. As a result of the efforts of all Republic associates, the Traditional Banking credit metrics continued to improve significantly from peak levels reached in 2009 as illustrated below:

Traditional Bank Deposit Growth – As it was during 2010, the year 2011 represented another solid year of core deposit growth. Despite historically low interest rates, the Traditional Bank was able to grow its low cost core deposit account base by $110 million during the year. The Company was able to attract these low cost deposit accounts by capitalizing on its attractive technology offerings, such as business on-site deposit and business on-line banking, in combination with superior customer service and the safety and soundness of a high performing institution.

Mortgage Warehouse Lending Division - In June 2011, the Bank commenced business in its newly established warehouse lending division. As of December 31, 2011, warehouse lines of credit outstanding were $41 million from total credit commitments of $80 million. Through this division, the Bank provides short-term, revolving credit facilities to mortgage banking companies secured by single family first lien residential real estate loans.

Increased Cash Dividends – Despite continued uncertainty in the economic environment, Republic once again increased its cash dividend by 8% in the second quarter of 2011 thanks to its strong earnings and strong capital position. This represents the 12th consecutive year that the Company has increased its quarterly cash dividend.

National Recognition – In July 2011, Sandler O'Neil & Partners released its annual rankings of the top 150 financial institutions in Bank Director Magazine, and for the second consecutive year, ranked Republic as the 5^th best performing bank in the country based on total assets, profitability, capital adequacy and asset quality.

Republic Bank Foundation– In March 2010, the Company created the Republic Bank Foundation with a $5 million initial contribution. The Republic Bank Foundation was created to ensure the on-going legacy of giving that Republic has displayed throughout its 30-year history. Thanks to another strong year in 2011, Republic was able to further its support of the Foundation with another $5 million contribution during the year.

Sale of Bowling Green Banking Center – During the third quarter of 2011, the Bank completed the sale of its Bowling Green, Kentucky, banking center. As a result of the sale, the Company recorded a pre-tax gain of $2.9 million. Republic sold its Bowling Green banking center to enable the Company to more efficiently deploy its capital.

Tax Refund Solutions (“TRS”) – TRS completed another record year in 2011 generating net income of $67.3 million, as it processed over $15 billion in tax refunds for 3.9 million clients across the United States.

Results of Operations for the Fourth Quarter of 2011 Compared to the Fourth Quarter of 2010

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

Net income from Core Banking rose from $6.8 million during the fourth quarter of 2010 to $7.8 million during the fourth quarter of 2011, an increase of 14%. As it did during the third quarter of 2011, the Core Bank continued to achieve positive operating results by increasing net interest income and reducing its provision for loan losses.

Net interest income within the Core Bank rose to $26.9 million for the fourth quarter of 2011, an increase of $1.4 million, or 5%, from the fourth quarter of 2010. The increase in net interest income for the quarter was attributable to continued positive results from strategies implemented by the Bank during 2011, which reversed a previously negative trend for net interest income, and contributed to a second consecutive quarterly increase in net interest income over prior year same quarter.

More specifically contributing to the increase in the Core Bank’s net interest income for the quarter was year-over-year growth in the loan portfolio combined with the continued redeployment of excess cash into higher-yielding investment securities. Overall, total loans increased $110 million, or 5%, for 2011, despite the loss of $13 million in loans associated with the sale of the Bank’s Bowling Green banking center. Supplementing the Bank’s internally-originated loan growth for the year was the purchase of $33 million in commercial real estate loans during the second quarter of 2011. The growth in the loan portfolio during the year was further complemented by Republic’s continued deployment of its excess cash into higher-yielding investment alternatives, such as 5/1 agency hybrid mortgage-backed securities and callable agency securities. As a result of the loan growth and strategic investment decisions, the Core Bank’s net interest margin increased from 3.40% for the fourth quarter of 2010 to 3.56% for the fourth quarter of 2011.

The Core Bank’s provision for loan losses decreased $1.1 million during the fourth quarter of 2011 compared to the fourth quarter of 2010. In general, the Core Bank’s provision continued to benefit from improvement in its credit quality metrics. Improvements continued to be recognized in the Core Bank’s ratio of delinquent loans to total loans, which was 1.07% at December 31, 2011 compared to 1.24% at December 31, 2010. In addition, the Core Bank’s ratio of nonperforming loans to total loans was 1.02% at December 31, 2011 compared to 1.30% at December 31, 2010.

Non-interest income, while lower compared to a strong fourth quarter 2010, contributed $6.3 million to the Core Banking segment for the fourth quarter of 2011. Notable activity within non-interest income during the quarter included mortgage banking income and service charges on deposits. Mortgage banking income, while contributing $807,000 during the fourth quarter of 2011, was negatively impacted by a slowdown in consumer refinance activity as compared to the fourth quarter of 2010. Overall, the Bank originated $41 million of secondary market loans during the fourth quarter of 2011 compared to $92 million during the fourth quarter of 2010.

Deposit fee income continued to be a significant contributor to the Core Bank’s bottom line. While lower compared to the fourth quarter of 2010 due to recently enacted regulatory constraints on consumer checking accounts, deposit fees generated $3.5 million in revenue for the quarter. Included in the figure for the quarter was approximately $488,000 in additional deposit fee income resulting from the Core Bank’s retail deposit account restructuring, which implemented new fees for many accounts based on transaction activity and account balances. These new fees were primarily implemented on August 1, 2011 and helped partially offset a reduction in the Bank’s other deposit fee categories as compared to the fourth quarter of 2010.

Core Banking non-interest expenses decreased $251,000 for the fourth quarter of 2011 to $20.6 million. Non-interest expenses benefited during the fourth quarter of 2011 from a $1.9 million credit to salary expense as the Company finalized its incentive compensation payouts for the year. By comparison, the Company recorded a $2.2 million credit to salary expense for reduced incentive compensation accruals during the fourth quarter of 2010.

TRS

TRS, which derives substantially all of its revenues during the first and second quarters of the year, historically operates at a net loss during the third and fourth quarters, as the Company prepares for the upcoming tax season. The net loss for TRS was $1.5 million for the fourth quarter of 2011 compared to a net loss of $2.4 million for the same period in 2010. TRS’ net loss during the fourth quarter of 2011 benefited from a $1.1 million credit to non–interest expense related to a previously disclosed Civil Money Penalty (“CMP”) assessed by the FDIC. The Company accrued $2.0 million for the full amount of the CMP during the second quarter of 2011 and reached a final settlement with the FDIC for $900,000 during the fourth quarter of 2011. Other items impacting the comparability of financial results for TRS during the fourth quarter of 2011 included higher legal fees for the Company’s now-settled disagreement with the FDIC regarding RALs and higher salary costs for TRS staff.

Conclusion

“As we look to the promise of a new year, I am more excited than ever about the prospects for Republic. The landscape for growth combined with Republic’s strong capital levels is reason for great optimism, as we seek to expand the Company through strategic acquisition opportunities and new business lines such as Mortgage Warehouse Lending. As always, we will be assertive as we embark on new opportunities, but cautious as well, keeping the long-term success of the Company and the long-term interests of the shareholder in mind. It’s this long standing and proven approach to business that allows us 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 42 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 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. Republic has $3.4 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 press release contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements are based on the Company’s current expectations and assumptions regarding its 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. 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-Q for the quarter ended September 30, 2011. The Company undertakes no obligation to update any forward-looking statements.

Republic Bancorp, Inc. Financial InformationFourth Quarter 2011 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 and years ended December 31, 2011 and 2010 follows:

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

Source: Republic Bancorp, Inc.