Republic Bank & Trust

LOUISVILLE, Ky.--(BUSINESS WIRE)-- 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:

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:

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 (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.
Kevin Sipes, 502-560-8628
Executive Vice President and Chief Financial Officer

Source: Republic Bancorp, Inc.