Republic Bancorp, Inc. Reports 49% Rise in Fourth Quarter Net Income

LOUISVILLE, Ky.--(BUSINESS WIRE)--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 fourth quarter net income of $25.8 million, a 49% increase over the fourth quarter of 2018, resulting in Diluted Earnings per Class A Common Share (“Diluted EPS”) of $1.23. Fiscal year 2019 net income was $91.7 million, an 18% increase from the same period in 2018, resulting in Diluted EPS of $4.39, return on average assets (“ROA”) of 1.64%, and return on average equity (“ROE”) of 12.49%.

Fourth quarter 2019 adjusted net income⁽¹⁾, which excludes one-time benefits from the Company’s November 2019 sale of four branches in Owensboro, Elizabethtown and Frankfort, Kentucky, was $18.8 million, a 9% increase over the same period in 2018, resulting in adjusted Diluted EPS⁽¹⁾ of $0.89. Fiscal year 2019 adjusted net income⁽¹⁾, which excludes the same one-time benefits, was $84.8 million, a 9% increase over 2018, resulting in adjusted Diluted EPS⁽¹⁾ of $4.06, adjusted ROA⁽¹⁾ of 1.51%, and adjusted ROE⁽¹⁾ of 11.55%. These adjusted results, which management believes improve comparability between periods, are considered non-GAAP⁽¹⁾ measures. A reconciliation to comparable GAAP⁽¹⁾ measures is provided in Footnote 1. Also impacting comparability, the income tax expense line item for the fourth quarter and year ended December 31, 2018 contained items that positively impacted the Company’s overall effective tax rate in 2018⁽²⁾.

Steve Trager, Chairman & CEO of Republic commented, “I am very excited to say that we posted another year of solid growth in net income, with continued strong balance sheet growth and on-going favorable asset quality. We are proud to say that these results reflect our focused balance sheet management strategies, which along with our investments in mortgage-banking talent and technology, positioned us to produce our solid results despite a mixed landscape of conditions for growth opportunities.

“Looking ahead to 2020, we are cautiously optimistic. Our balance sheet and capital levels are well-positioned for an uncertain interest rate environment, while our talent level is second to none. As always, we will rise to meet the challenges in the year ahead with our strong management team and over 1,000 dedicated associates, who are always willing to go the extra mile each and every day in our efforts to make Republic one of the best performing banks in the industry,” concluded Steve Trager.

The following table highlights Republic’s financial performance for the fourth quarters and years ended December 31, 2019 and 2018:

	Total Company Financial Performance Highlights
		Three Months Ended Dec. 31,										Year Ended Dec. 31,
(dollars in thousands, except per share data)		2019			2018			$ Change		% Change		2019			2018			$ Change		% Change
Income Before Income Tax Expense*		$	32,301		$	20,328		$	11,973	59	%	$	113,193		$	94,263		$	18,930	20	%
Net Income *			25,768			17,306			8,462	49			91,699			77,852			13,847	18
Diluted Earnings per Class A Common Share			1.23			0.83			0.40	48			4.39			3.74			0.65	17
Return on Average Assets			1.83	%		1.37	%		NA	34			1.64	%		1.52	%		NA	8
Return on Average Equity			13.58			10.07			NA	35			12.49			11.67			NA	7

* Results by reportable segment provided near the end of this earnings release.
NA – Not applicable

Results of Operations for the Fourth Quarter of 2019 Compared to the Fourth Quarter of 2018

Core Bank⁽³⁾ – Core Bank net income for the fourth quarter of 2019 increased $7.1 million, or 44%, over the same period in 2018. After-tax benefits from the Company’s branch divestiture in November 2019 included a net gain on divestiture of $6.3 million and a net credit to Provision expense of $711,000, as the Bank relieved reserves for its divested loans. Excluding these one-time benefits, continued growth in net interest income, a lower provision for loan losses (“Provision”), and strong mortgage banking income primarily drove the overall increase in net income. These positive drivers were partially offset by an increase in noninterest expense.

Core Bank net interest income increased $948,000, or 2%, over the fourth quarter of 2018. Growth in net interest income was driven by strong loan growth, as Core Bank average loans increased $481 million, or 12% over average loans for the fourth quarter of 2018. The impact to net interest income resulting from the solid loan growth overcame a 29-basis-point decline in the Core Bank’s net interest margin for the quarter.

The following tables present the overall changes in the Core Bank’s adjusted⁽¹⁾ and unadjusted net interest income, net interest margin, as well as average and period-end loan balances by reportable segment:

	Net Interest Income							Net Interest Margin
(dollars in thousands)	Three Months Ended Dec. 31,							Three Months Ended Dec. 31,
Reportable Segment	2019		2018		Change			2019		2018		Change
Adjusted Traditional Banking (a)* - Non-GAAP**	$	41,252	$	40,553	$	699		3.79	%	3.92	%	(0.13	)%
Warehouse Lending		4,620		3,557		1,063		2.27		3.13		(0.86	)
Mortgage Banking*		213		94		119		NM		NM		NM
Adjusted Core Bank - Non-GAAP**		46,085		44,204		1,881		3.55		3.85		(0.30	)
Branch Divestiture (b)		721		1,654		(933	)	4.29		3.77		0.52
Total Core Bank - GAAP	$	46,806	$	45,858	$	948		3.56		3.85		(0.29	)
Traditional Banking - (a) + (b) - GAAP	$	41,973	$	42,207	$	(234	)	3.80	%	3.92	%	(0.12	)%

*Includes loans held for sale
** A reconciliation of these non-GAAP measures to comparable GAAP measures is provided in Footnote 1 of this earnings release.
NM – Not meaningful

	Average Loan Balances									Period-End Loan Balances
(dollars in thousands)	Three Months Ended Dec. 31,									Dec. 31,
Reportable Segment		2019		2018	$ Change			% Change			2019		2018	$ Change			% Change
Adjusted Traditional Banking (a)* - Non-GAAP**	$	3,572,918	$	3,403,681	$	169,237		5	%	$	3,595,931	$	3,453,925	$	142,006		4	%
Warehouse Lending		815,776		453,794		361,982		80			717,458		468,695		248,763		53
Mortgage Banking*		19,583		6,536		13,047		200			19,224		8,971		10,253		114
Adjusted Core Bank - Non-GAAP**		4,408,277		3,864,011		544,266		14			4,332,613		3,931,591		401,022		10
Branch Divestiture (b)		63,332		126,503		(63,171	)	(50	)		—		123,119		(123,119	)	(100	)
Total Core Bank - GAAP	$	4,471,609	$	3,990,514	$	481,095		12		$	4,332,613	$	4,054,710	$	277,903		7
Traditional Banking - (a) + (b) - GAAP	$	3,636,250	$	3,530,184	$	106,066		3	%	$	3,595,931	$	3,577,044	$	18,887		1	%

*Includes loans held for sale
** A reconciliation of these non-GAAP measures to comparable GAAP measures is provided in Footnote 1 of this earnings release.
NM – Not meaningful

The primary drivers of the changes in the Core Bank’s net interest income and net interest margin for the fourth quarter of 2019, as compared to similar measures for the fourth quarter of 2018, were as follows:

Traditional Banking

Excluding divested branches, the Traditional Bank’s net interest income increased $699,000 and was positively impacted by growth in average commercial real estate loans of $94 million and average commercial & industrial loans of $66 million. Such loan growth overcame net interest margin compression of 13 basis points.

The quarter-over-quarter margin compression within the Traditional Banking segment was primarily driven by the following factors:

• The net interest margin compressed partially due to decreased value from the Traditional Bank’s noninterest-bearing funding sources. The difference between the Traditional Banking segment’s net interest margin and net interest spread was 10 basis points during the fourth quarter of 2019 compared to 17 basis points during the fourth quarter of 2018, with the differential representing the decreased value to the net interest margin of noninterest-bearing deposits and stockholders’ equity. The decrease in this value resulted from a 12 basis-point decline in the yield on the Traditional Banking segment’s interest-earning assets from period to period.

• In addition to the decline in the yield of Traditional Bank’s interest earning assets, the segment was also negatively impacted by the flat U.S. Treasury yield curve during the period in which short-term and long-term U.S. Treasury yields remained similar to each other. As is generally the case with all banks, the Traditional Bank’s asset yields and liability funding costs are substantially determined by the shape of the U.S. Treasury yield curve. As a result, the Traditional Bank continued to experience market-based pressures during the quarter to reduce its new loan yields, which are generally tied to longer-term rates, more than any decreases it was able to attain from its incremental funding costs. Management expects margin compression challenges to remain in the future as long as the overall U.S. Treasury yield curve remains flat or inverted.

Warehouse Lending

Warehouse Lending (“Warehouse”) loans experienced exponential growth, with outstanding average balances increasing from $454 million during the fourth quarter of 2018 to $816 million during the fourth quarter of 2019 due to increased client line usage. As a result, quarter over quarter net interest income for the segment increased $1.1 million despite compression in the Warehouse segment’s net interest margin.

The Core Bank’s Provision decreased $2.7 million from the fourth quarter of 2018 to a net credit of $1.4 million for the fourth quarter of 2019. The primary difference in the Provision between the two periods was a one-time, pre-tax $900,000 credit to the Provision that the Company recorded with the final settlement of its branch divestiture. Excluding the impact of the branch divestiture, the Core Bank’s Provision decreased from $1.3 million for the fourth quarter of 2018 to a net credit of $481,000 for the fourth quarter of 2019. A decline in Core Bank period-end balances during the fourth quarter of 2019 compared to growth in those balances during the same period in 2018 primarily drove the decrease in the Provision. Core bank spot balances, excluding divested loans, decreased $251 million during the fourth quarter of 2019 primarily due to a $256 million decline in Warehouse period-end balances.

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

	As of and for the:
	Quarters Ended:								Years Ended:
	Dec. 31,		Sep. 30,		Jun. 30,		Mar. 31,		Dec. 31,		Dec. 31,		Dec. 31,
Core Banking Credit Quality Ratios	2019		2019		2019		2019		2019		2018		2017
Nonperforming loans to total loans	0.54	%	0.45	%	0.45	%	0.37	%	0.54	%	0.40	%	0.36	%
Nonperforming assets to total loans (including OREO)	0.54		0.45		0.47		0.37		0.54		0.40		0.36
Delinquent loans to total loans (4)	0.30		0.30		0.29		0.18		0.30		0.22		0.21
Net charge-offs to average loans	0.19		0.15		0.04		0.04		0.11		0.06		0.04
(Quarterly rates annualized)
OREO = Other Real Estate Owned

Core Bank noninterest income was $18.2 million for the fourth quarter of 2019, an increase of $9.4 million from the fourth quarter of 2018. Core Bank noninterest income for the fourth quarter of 2019 included a pre-tax $7.9 million net gain resulting from the final settlement of the Company’s branch divestiture. Driving the remainder of the increase in noninterest income was a $1.4 million rise in mortgage banking income, as the Company’s on-going investment in its Consumer Direct channel and processing capacity enabled it to take advantage of a favorable rate environment. As a result, secondary market loans originated from period to period increased $65 million and the Bank’s pipeline of secondary market loans in process from December 31, 2018 to December 31, 2019 increased $18 million.

Core Bank noninterest expense was $37.1 million for the fourth quarter of 2019 compared to $34.5 million for the fourth quarter of 2018. Comparability of noninterest expense between the two quarters was impacted by adjustments to the Core Bank’s incentive compensation accruals, which were made during both periods to bring accrual balances in line with projected payouts. As a result of these adjustments, net incentive compensation expense was a net charge of $1.2 million for the fourth quarter of 2019 compared to a net credit of $75,000 for the fourth quarter of 2018. The increase in incentive compensation primarily reflected higher mortgage commissions during the fourth quarter of 2019 resulting from increased mortgage banking production. Excluding the impact of the change in incentive compensation expense, noninterest expense increased $964,000, or 3%, for the fourth quarter of 2019, as compared to the fourth quarter of 2018 and was primarily driven by the following:

• Salaries and employee benefits expense increased $340,000, or 2%, with costs for 29 additional Core Bank full-time-equivalent employees from December 31, 2018 to December 31, 2019 partially offset by reductions in equity compensation expense and employee benefits expense.

• The Core Bank’s noninterest expense during the fourth quarter of 2019 was positively impacted by a $265,000 reduction in FDIC insurance costs, as the Bank was able to apply its Small Bank Assessment Credits against its most recent FDIC insurance premium payment. The Bank has just over one quarter’s worth of credits it can apply to future FDIC insurance premiums.

Republic Processing Group⁽⁵⁾

The Republic Processing Group (“RPG”) reported net income of $2.6 million for the fourth quarter of 2019 compared to $1.2 million for the same period in 2018. The positive increase in net income at RPG for the quarter was primarily driven by a $1.2 million increase in net income for its Republic Credit Solutions (“RCS”) segment.

RCS’s increase in net income was primarily driven by a $1.5 million reduction in Provision expense for its line-of-credit product resulting from a decline in the product’s annualized historical loss rate combined with a year-to-year decrease in outstanding balances.

Branch Divestiture⁽¹⁾

In July 2019, the Bank entered into a definitive agreement to sell its four banking centers located in the Kentucky cities of Owensboro, Elizabethtown, and Frankfort to Limestone Bank (“Limestone”), a subsidiary of Limestone Bancorp, Inc. The agreement provided that Limestone acquire loans, with balances of approximately $128 million as of November 15, 2019 (the “Closing Date”), and assume deposits with balances of approximately $132 million as of the Closing Date, associated with the four banking centers.

In addition to the sale of loans and assumption of deposits, Limestone also acquired substantially all of the fixed assets of these locations, which had a book value of $1.3 million as of the Closing Date. Based on the Closing Date deposits, the all-in blended premium for the transaction was 6.1% of the total deposits transferred. The final calculated premium was based on the trailing 10-day average amount of the deposits as of the closing date, as well as the branch location for the deposits.

Republic Bancorp, Inc. (the “Company”) is the parent company of Republic Bank & Trust Company (the “Bank”). The Bank currently has 42 full-service banking centers and two loan production offices throughout five states: 28 banking centers in 8 Kentucky communities – Covington, Crestview Hills, Florence, Georgetown, Lexington, Louisville, 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, New Port Richey, St. Petersburg, Seminole, Tampa, and Temple Terrace, and one loan production office in Oldsmar; two banking centers in two Tennessee communities (Nashville MSA) – Cool Springs and Green Hills, and one loan production office in Brentwood; and two banking centers in two Ohio communities (Cincinnati MSA) – Norwood and West Chester. 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 $5.6 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 yield curve, the ability to develop products and strategies in order to meet the Company’s long-term strategic goals, 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 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, 2018 and Quarterly Report on Form 10-Q for the period ended September 30, 2019. The Company undertakes no obligation to update any forward-looking statements, except as required by applicable law.

Republic Bancorp, Inc. Financial Information
Fourth Quarter 2019 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
	Dec. 31, 2019			Dec. 31, 2018
Assets:
Cash and cash equivalents	$	385,303		$	351,474
Investment securities		537,074			543,771
Loans held for sale		31,468			21,809
Loans		4,433,151			4,148,227
Allowance for loan and lease losses		(43,351	)		(44,675	)
Loans, net		4,389,800			4,103,552
Federal Home Loan Bank stock, at cost		30,831			32,067
Premises and equipment, net		46,196			44,820
Right-of-use assets (6)		35,206			—
Goodwill		16,300			16,300
Other real estate owned ("OREO")		113			160
Bank owned life insurance ("BOLI")		66,433			64,883
Other assets and accrued interest receivable		81,595			61,568
Total assets	$	5,620,319		$	5,240,404
Liabilities and Stockholders' Equity:
Deposits:
Noninterest-bearing	$	1,033,379		$	1,003,969
Interest-bearing		2,752,629			2,452,176
Total deposits		3,786,008			3,456,145
Securities sold under agreements to repurchase and other short-term borrowings		167,617			182,990
Operating lease liabilities (6)		36,530			—
Federal Home Loan Bank advances		750,000			810,000
Subordinated note		41,240			41,240
Other liabilities and accrued interest payable		74,680			60,095
Total liabilities		4,856,075			4,550,470
Stockholders' equity		764,244			689,934
Total liabilities and stockholders' equity	$	5,620,319		$	5,240,404

Average Balance Sheet Data
	Three Months Ended Dec. 31,				Year Ended Dec. 31,
	2019		2018		2019		2018
Assets:
Federal funds sold and other interest-earning deposits	$	152,286	$	199,134	$	260,131	$	255,708
Investment securities, including FHLB stock		632,559		579,429		564,631		542,258
Loans, including loans held for sale		4,588,538		4,092,004		4,470,347		4,094,918
Total interest-earning assets		5,373,383		4,870,567		5,295,109		4,892,884
Total assets		5,638,498		5,070,845		5,577,643		5,130,628
Liabilities and Stockholders' Equity:
Noninterest-bearing deposits, including those held for assumption	$	1,062,010	$	1,050,236	$	1,120,608	$	1,147,432
Interest-bearing deposits, including those held for assumption		2,966,993		2,477,962		2,755,946		2,445,385
Securities sold under agreements to
repurchase and other short-term borrowings		248,558		252,073		236,883		225,145
Federal Home Loan Bank advances		469,130		515,413		595,613		557,090
Subordinated note		41,240		41,240		41,240		41,240
Total interest-bearing liabilities		3,725,921		3,286,688		3,629,682		3,268,860
Stockholders' equity		758,740		687,156		734,281		666,979

Republic Bancorp, Inc. Financial Information
Fourth Quarter 2019 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 Dec. 31,				Year Ended Dec. 31,
	2019		2018		2019		2018
Total interest income (7)	$	64,527	$	62,902	$	280,883	$	256,181
Total interest expense		10,132		8,626		44,757		30,123
Net interest income		54,395		54,276		236,126		226,058
Provision for loan and lease losses		914		5,104		25,758		31,368
Noninterest income:
Service charges on deposit accounts		3,547		3,565		14,197		14,273
Net refund transfer fees		112		55		21,158		20,029
Mortgage banking income		2,480		1,129		9,499		4,825
Interchange fee income		2,814		2,844		11,859		11,159
Program fees		1,284		1,520		4,712		6,225
Increase in cash surrender value of BOLI		397		392		1,550		1,527
Net gains on OREO		53		29		540		729
Net gain on branch divestiture		7,948		—		7,829		—
Other		1,020		585		3,664		4,658
Total noninterest income		19,655		10,119		75,008		63,425
Noninterest expense:
Salaries and employee benefits		23,997		21,743		99,181		91,189
Occupancy and equipment, net		6,497		6,474		26,124		25,365
Communication and transportation		1,198		1,115		4,447		4,785
Marketing and development		1,223		784		5,023		4,432
FDIC insurance expense		—		264		743		1,494
Bank franchise tax expense		927		863		5,293		4,951
Data processing		2,532		2,434		9,189		9,613
Interchange related expense		1,115		1,237		4,870		4,480
Supplies		335		446		1,693		1,444
Other real estate owned and other repossession expense		2		31		326		94
Legal and professional fees		601		753		3,357		3,459
Other		2,408		2,819		11,937		12,546
Total noninterest expense		40,835		38,963		172,183		163,852
Income before income tax expense		32,301		20,328		113,193		94,263
Income tax expense		6,533		3,022		21,494		16,411
Net income	$	25,768	$	17,306	$	91,699	$	77,852

Republic Bancorp, Inc. Financial Information
Fourth Quarter 2019 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 Dec. 31,						Year Ended Dec. 31,
	2019			2018			2019			2018
Per Share Data:
Basic weighted average shares outstanding		21,036			20,975			21,023			20,960
Diluted weighted average shares outstanding		21,133			21,113			21,135			21,065
Period-end shares outstanding:
Class A Common Stock		18,737			18,675			18,737			18,675
Class B Common Stock		2,206			2,213			2,206			2,213
Book value per share (8)	$	36.49		$	33.03		$	36.49		$	33.03
Tangible book value per share (8)		35.41			31.98			35.41			31.98
Earnings per share ("EPS"):
Basic EPS - Class A Common Stock	$	1.23		$	0.83		$	4.41		$	3.76
Basic EPS - Class B Common Stock		1.13			0.76			4.01			3.41
Diluted EPS - Class A Common Stock		1.23			0.83			4.39			3.74
Diluted EPS - Class B Common Stock		1.12			0.75			3.99			3.40
Cash dividends declared per Common share:
Class A Common Stock	$	0.264		$	0.242		$	1.056		$	0.968
Class B Common Stock		0.240			0.220			0.960			0.880
Performance Ratios:
Return on average assets		1.83	%		1.37	%		1.64	%		1.52	%
Return on average equity		13.58			10.07			12.49			11.67
Efficiency ratio (9)		62			61			57			57
Yield on average interest-earning assets (7)		4.80			5.17			5.30			5.24
Cost of average interest-bearing liabilities		1.09			1.05			1.23			0.92
Cost of average deposits (10)		0.74			0.59			0.75			0.47
Net interest spread (7)		3.71			4.12			4.07			4.32
Net interest margin - Total Company (7)		4.05			4.46			4.46			4.62
Net interest margin - Core Bank (3)		3.56			3.85			3.61			3.70
Other Information:
End of period FTEs (11) - Total Company		1,080			1,051			1,080			1,051
End of period FTEs - Core Bank		997			968			997			968
Number of full-service banking centers		41			45			41			45

Republic Bancorp, Inc. Financial Information
Fourth Quarter 2019 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 Dec. 31,						Year Ended Dec. 31,
	2019			2018			2019			2018
Credit Quality Asset Balances:
Nonperforming Assets - Total Company:
Loans on nonaccrual status	$	23,332		$	15,993		$	23,332		$	15,993
Loans past due 90-days-or-more and still on accrual		157			145			157			145
Total nonperforming loans		23,489			16,138			23,489			16,138
OREO		113			160			113			160
Total nonperforming assets	$	23,602		$	16,298		$	23,602		$	16,298
Nonperforming Assets - Core Bank (3):
Loans on nonaccrual status	$	23,332		$	15,993		$	23,332		$	15,993
Loans past due 90-days-or-more and still on accrual		—			13			—			13
Total nonperforming loans		23,332			16,006			23,332			16,006
OREO		113			160			113			160
Total nonperforming assets	$	23,445		$	16,166		$	23,445		$	16,166
Delinquent loans:
Delinquent loans - Core Bank	$	13,042		$	8,875		$	13,042		$	8,875
Delinquent loans - RPG (5)		7,762			7,087			7,762			7,087
Total delinquent loans - Total Company	$	20,804		$	15,962		$	20,804		$	15,962
Credit Quality Ratios - Total Company:
Nonperforming loans to total loans		0.53	%		0.39	%		0.53	%		0.39	%
Nonperforming assets to total loans (including OREO)		0.53			0.39			0.53			0.39
Nonperforming assets to total assets		0.42			0.31			0.42			0.31
Allowance for loan and lease losses to total loans		0.98			1.08			0.98			1.08
Allowance for loan and lease losses to nonperforming loans		185			277			185			277
Delinquent loans to total loans (4)		0.47			0.38			0.47			0.38
Net charge-offs to average loans (annualized)		0.39			0.42			0.61			0.72
Credit Quality Ratios - Core Bank:
Nonperforming loans to total loans		0.54	%		0.40	%		0.54	%		0.40	%
Nonperforming assets to total loans (including OREO)		0.54			0.40			0.54			0.40
Nonperforming assets to total assets		0.43			0.32			0.43			0.32
Allowance for loan and lease losses to total loans		0.70			0.78			0.70			0.78
Allowance for loan and lease losses to nonperforming loans		129			197			129			197
Delinquent loans to total loans		0.30			0.22			0.30			0.22
Net charge-offs to average loans (annualized)		0.19			0.12			0.11			0.06

Republic Bancorp, Inc. Financial Information
Fourth Quarter 2019 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
	Dec. 31, 2019			Sep. 30, 2019			Jun. 30, 2019			Mar. 31, 2019			Dec. 31, 2018
Assets:
Cash and cash equivalents	$	385,303		$	397,072		$	473,779		$	345,512		$	351,474
Investment securities		537,074			638,697			447,512			498,318			543,771
Loans held for sale		31,468			51,243			63,949			24,177			21,809
Loans held for sale upon branch divestiture		—			130,770			131,881			—			—
Loans		4,433,151			4,664,054			4,390,533			4,298,710			4,148,227
Allowance for loan and lease losses		(43,351	)		(46,932	)		(45,983	)		(57,961	)		(44,675	)
Loans, net		4,389,800			4,617,122			4,344,550			4,240,749			4,103,552
Federal Home Loan Bank stock, at cost		30,831			32,242			32,242			29,965			32,067
Premises and equipment, net		46,196			46,735			44,199			43,527			44,820
Right-of-use assets (6)		35,206			36,051			37,450			38,738			—
Goodwill		16,300			16,300			16,300			16,300			16,300
Other real estate owned		113			119			1,095			216			160
Bank owned life insurance		66,433			66,037			65,642			65,265			64,883
Other assets and accrued interest receivable		81,595			71,259			64,535			63,001			61,568
Total assets	$	5,620,319		$	6,103,647		$	5,723,134		$	5,365,768		$	5,240,404
Liabilities and Stockholders' Equity:
Deposits:
Noninterest-bearing	$	1,033,379		$	1,031,553		$	1,003,793		$	1,184,480		$	1,003,969
Interest-bearing		2,752,629			2,703,199			2,557,127			2,589,836			2,452,176
Deposits held for assumption upon branch divestiture		—			142,384			152,954			—			—
Total deposits		3,786,008			3,877,136			3,713,874			3,774,316			3,456,145
Securities sold under agreements to
repurchase and other short-term borrowings		167,617			167,949			226,002			173,168			182,990
Operating lease liabilities (6)		36,530			37,391			38,852			40,203			—
Federal Home Loan Bank advances		750,000			1,170,000			915,000			560,000			810,000
Subordinated note		41,240			41,240			41,240			41,240			41,240
Other liabilities and accrued interest payable		74,680			65,484			56,738			59,750			60,095
Total liabilities		4,856,075			5,359,200			4,991,706			4,648,677			4,550,470
Stockholders' equity		764,244			744,447			731,428			717,091			689,934
Total liabilities and stockholders' equity	$	5,620,319		$	6,103,647		$	5,723,134		$	5,365,768		$	5,240,404

Average Balance Sheet Data
		Quarterly Comparison
	Dec. 31, 2019		Sep. 30, 2019		Jun. 30, 2019		Mar. 31, 2019		Dec. 31, 2018
Assets:
Federal funds sold and other interest-earning deposits	$	152,286	$	302,156	$	297,205	$	289,928	$	199,134
Investment securities, including FHLB stock		632,559		547,281		514,366		563,752		579,429
Loans, including loans held for sale		4,588,538		4,606,139		4,424,905		4,256,673		4,092,004
Total interest-earning assets		5,373,383		5,455,576		5,236,476		5,110,353		4,870,567
Total assets		5,638,498		5,711,636		5,480,525		5,476,671		5,070,845
Liabilities and Stockholders' Equity:
Noninterest-bearing deposits, including those held for assumption	$	1,062,010	$	1,065,904	$	1,098,817	$	1,258,461	$	1,050,236
Interest-bearing deposits, including those held for assumption		2,966,993		2,833,632		2,588,836		2,629,765		2,477,962
Securities sold under agreements to
repurchase and other short-term borrowings		248,558		246,889		220,189		231,602		252,073
Federal Home Loan Bank advances		469,130		690,457		710,879		511,408		515,413
Subordinated note		41,240		41,240		41,240		41,240		41,240
Total interest-bearing liabilities		3,725,921		3,812,218		3,561,144		3,414,015		3,286,688
Stockholders' equity		758,740		742,176		728,723		706,833		687,156

Republic Bancorp, Inc. Financial Information
Fourth Quarter 2019 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
	Dec. 31, 2019			Sep. 30, 2019		Jun. 30, 2019	Mar. 31, 2019		Dec. 31, 2018
Total interest income (7)	$	64,527	$	68,059	$	65,664	$	82,633	$	62,902
Total interest expense		10,132		12,573		11,718		10,334		8,626
Net interest income		54,395		55,486		53,946		72,299		54,276
Provision for loan and lease losses		914		3,153		4,460		17,231		5,104
Noninterest income:
Service charges on deposit accounts		3,547		3,749		3,598		3,303		3,565
Net refund transfer fees		112		317		3,629		17,100		55
Mortgage banking income		2,480		3,064		2,416		1,539		1,129
Interchange fee income		2,814		3,031		3,257		2,757		2,844
Program fees		1,284		1,317		1,037		1,074		1,520
Increase in cash surrender value of BOLI		397		394		377		382		392
Net gains on OREO		53		267		90		130		29
Net gain on branch divestiture		7,948		(119)		—		—		—
Other		1,020		791		721		1,132		585
Total noninterest income		19,655		12,811		15,125		27,417		10,119
Noninterest expense:
Salaries and employee benefits		23,997		24,822		25,286		25,076		21,743
Occupancy and equipment, net		6,497		6,571		6,472		6,584		6,474
Communication and transportation		1,198		1,017		1,071		1,161		1,115
Marketing and development		1,223		1,420		1,278		1,102		784
FDIC insurance expense		—		—		295		448		264
Bank franchise tax expense		927		935		935		2,496		863
Data processing		2,532		2,344		2,217		2,096		2,434
Interchange related expense		1,115		1,138		1,302		1,315		1,237
Supplies		335		292		582		484		446
OREO expense		2		130		148		46		31
Legal and professional fees		601		1,026		844		886		753
Other		2,408		2,716		2,998		3,815		2,819
Total noninterest expense		40,835		42,411		43,428		45,509		38,963
Income before income tax expense		32,301		22,733		21,183		36,976		20,328
Income tax expense		6,533		4,325		3,176		7,460		3,022
Net income	$	25,768	$	18,408	$	18,007	$	29,516	$	17,306

Republic Bancorp, Inc. Financial Information
Fourth Quarter 2019 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
		Dec. 31, 2019			Sep. 30, 2019			Jun. 30, 2019			Mar. 31, 2019			Dec. 31, 2018
Per Share Data:
Basic weighted average shares outstanding		21,036			21,036			21,016			20,973			20,975
Diluted weighted average shares outstanding		21,133			21,137			21,138			21,106			21,113
Period-end shares outstanding:
Class A Common Stock		18,737			18,744			18,740			18,698			18,675
Class B Common Stock		2,206			2,208			2,208			2,213			2,213
Book value per share (8)	$	36.49		$	35.54		$	34.92		$	34.29		$	33.03
Tangible book value per share (8)		35.41			34.47			33.87			33.25			31.98
Earnings per share ("EPS"):
Basic EPS - Class A Common Stock	$	1.23		$	0.88		$	0.86		$	1.42		$	0.83
Basic EPS - Class B Common Stock		1.13			0.80			0.79			1.29			0.76
Diluted EPS - Class A Common Stock		1.23			0.88			0.86			1.41			0.83
Diluted EPS - Class B Common Stock		1.12			0.80			0.78			1.28			0.75
Cash dividends declared per Common share:
Class A Common Stock	$	0.264		$	0.264		$	0.264		$	0.264		$	0.242
Class B Common Stock		0.240			0.240			0.240			0.240			0.220
Performance Ratios:
Return on average assets		1.83	%		1.29	%		1.31	%		2.16	%		1.37	%
Return on average equity		13.58			9.92			9.88			16.70			10.07
Efficiency ratio (9)		62			62			63			46			61
Yield on average interest-earning assets (7)		4.80			4.99			5.02			6.47			5.17
Cost of average interest-bearing liabilities		1.09			1.32			1.32			1.21			1.05
Cost of average deposits (10)		0.74			0.82			0.75			0.69			0.59
Net interest spread (7)		3.71			3.67			3.70			5.26			4.12
Net interest margin - Total Company (7)		4.05			4.07			4.12			5.66			4.46
Net interest margin - Core Bank (3)		3.56			3.56			3.62			3.76			3.85
Other Information:
End of period FTEs (11) - Total Company		1,080			1,093			1,089			1,073			1,051
End of period FTEs - Core Bank		997			1,013			1,012			997			968
Number of full-service banking centers		41			45			45			45			45

Republic Bancorp, Inc. Financial Information
Fourth Quarter 2019 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
	Dec. 31, 2019			Sep. 30, 2019			Jun. 30, 2019			Mar. 31, 2019			Dec. 31, 2018
Credit Quality Asset Balances:
Nonperforming Assets - Total Company:
Loans on nonaccrual status	$	23,332		$	20,574		$	19,238		$	15,361		$	15,993
Loans past due 90-days-or-more and still on accrual		157			175			166			199			145
Total nonperforming loans		23,489			20,749			19,404			15,560			16,138
OREO		113			119			1,095			216			160
Total nonperforming assets	$	23,602		$	20,868		$	20,499		$	15,776		$	16,298
Nonperforming Assets - Core Bank (3):
Loans on nonaccrual status	$	23,332		$	20,574		$	19,238		$	15,361		$	15,993
Loans past due 90-days-or-more and still on accrual		—			—			—			4			13
Total nonperforming loans		23,332			20,574			19,238			15,365			16,006
OREO		113			119			1,095			216			160
Total nonperforming assets	$	23,445		$	20,693		$	20,333		$	15,581		$	16,166
Delinquent Loans:
Delinquent loans - Core Bank	$	13,042		$	13,496		$	12,524		$	7,727		$	8,875
Delinquent loans - RPG (5) (12)		7,762			6,876			6,802			26,460			7,087
Total delinquent loans - Total Company	$	20,804		$	20,372		$	19,326		$	34,187		$	15,962
Credit Quality Ratios - Total Company:
Nonperforming loans to total loans		0.53	%		0.44	%		0.44	%		0.36	%		0.39	%
Nonperforming assets to total loans (including OREO)		0.53			0.45			0.47			0.37			0.39
Nonperforming assets to total assets		0.42			0.34			0.36			0.29			0.31
Allowance for loan and lease losses to total loans		0.98			1.01			1.05			1.35			1.08
Allowance for loan and lease losses to nonperforming loans		185			226			237			373			277
Delinquent loans to total loans (4) (12)		0.47			0.44			0.44			0.80			0.38
Net charge-offs to average loans (annualized)		0.39			0.68			1.49			0.37			0.42
Credit Quality Ratios - Core Bank:
Nonperforming loans to total loans		0.54	%		0.45	%		0.45	%		0.37	%		0.40	%
Nonperforming assets to total loans (including OREO)		0.54			0.45			0.47			0.37			0.40
Nonperforming assets to total assets		0.43			0.35			0.37			0.31			0.32
Allowance for loan and lease losses to total loans		0.70			0.73			0.77			0.75			0.78
Allowance for loan and lease losses to nonperforming loans		129			163			171			205			197
Delinquent loans to total loans		0.30			0.30			0.29			0.18			0.22
Net charge-offs to average loans (annualized)		0.19			0.15			0.04			0.04			0.12

Republic Bancorp, Inc. Financial Information
Fourth Quarter 2019 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 December 31, 2019, 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. MemoryBank^®, the Company’s national branchless banking platform is 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 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 refunds through Refund Transfer 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 2018 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 reasonable and specific segment allocations can be made. The Company makes transactions among reportable segments at carrying value.

Republic Bancorp, Inc. Financial Information
Fourth Quarter 2019 Earnings Release (continued)
Segment information for the quarters and years ended December 31, 2019 and 2018 follows:

		Three Months Ended December 31, 2019
		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	$	41,973		$	4,620		$	213		$	46,806		$	183		$	7,406		$	7,589		$	54,395
Provision for loan and lease losses		(727	)		(640	)		—			(1,367	)		(569	)		2,850			2,281			914
Net refund transfer fees		—			—			—			—			112			—			112			112
Mortgage banking income		—			—			2,480			2,480			—			—			—			2,480
Program fees		—			—			—			—			119			1,165			1,284			1,284
Net gain on branch divestiture		7,948			—			—			7,948			—			—			—			7,948
Other noninterest income		7,754			10			51			7,815			16			—			16			7,831
Total noninterest income		15,702			10			2,531			18,243			247			1,165			1,412			19,655
Total noninterest expense		34,475			832			1,801			37,108			3,529			198			3,727			40,835
Income (loss) before income tax expense		23,927			4,438			943			29,308			(2,530	)		5,523			2,993			32,301
Income tax expense (benefit)		4,898			999			198			6,095			(797	)		1,235			438			6,533
Net income (loss)	$	19,029		$	3,439		$	745		$	23,213		$	(1,733	)	$	4,288		$	2,555		$	25,768
Period-end assets	$	4,684,116		$	717,994		$	26,469		$	5,428,579		$	86,849		$	104,891		$	191,740		$	5,620,319
Net interest margin		3.80	%		2.27	%		NM			3.56	%		NM			NM			NM			4.05	%
Net-revenue concentration*		77	%		6	%		4	%		87	%		1	%		12	%		13	%		100	%

		Three Months Ended December 31, 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	$	42,207		$	3,557		$	94		$	45,858		$	76		$	8,342		$	8,418		$	54,276
Provision for loan and lease losses		1,552			(230	)		—			1,322			(554	)		4,336			3,782			5,104
Net refund transfer fees		—			—			—			—			55			—			55			55
Mortgage banking income		—			—			1,129			1,129			—			—			—			1,129
Program fees		—			—			—			—			19			1,501			1,520			1,520
Other noninterest income		7,374			10			339			7,723			17			(325	)		(308	)		7,415
Total noninterest income		7,374			10			1,468			8,852			91			1,176			1,267			10,119
Total noninterest expense		32,785			844			905			34,534			3,232			1,197			4,429			38,963
Income (loss) before income tax expense		15,244			2,953			657			18,854			(2,511	)		3,985			1,474			20,328
Income tax expense (benefit)		1,913			676			138			2,727			(631	)		926			295			3,022
Net income (loss)	$	13,331		$	2,277		$	519		$	16,127		$	(1,880	)	$	3,059		$	1,179		$	17,306
Period-end assets	$	4,647,037		$	470,126		$	14,246		$	5,131,409		$	20,288		$	88,707		$	108,995		$	5,240,404
Net interest margin		3.92	%		3.14	%		NM			3.85	%		NM			NM			NM			4.46	%
Net-revenue concentration*		77	%		6	%		2	%		85	%		—	%		15	%		15	%		100	%

_________________________________________________________
*Net revenues represent total net interest income plus noninterest income.

Republic Bancorp, Inc. Financial Information
Fourth Quarter 2019 Earnings Release (continued)

		Year Ended December 31, 2019
		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	$	168,076		$	15,801		$	697		$	184,574		$	21,626		$	29,926		$	51,552		$	236,126
Provision for loan and lease losses		2,444			622			—			3,066			11,249			11,443			22,692			25,758
Net refund transfer fees		—			—			—			—			21,158			—			21,158			21,158
Mortgage banking income		—			—			9,499			9,499			—			—			—			9,499
Program fees		—			—			—			—			437			4,275			4,712			4,712
Net gain on branch divestiture		7,829			—			—			7,829			—			—			—			7,829
Other noninterest income		30,724			(46	)		213			30,891			260			659			919			31,810
Total noninterest income		38,553			(46	)		9,712			48,219			21,855			4,934			26,789			75,008
Total noninterest expense		143,671			3,268			6,112			153,051			16,539			2,593			19,132			172,183
Income before income tax expense		60,514			11,865			4,297			76,676			15,693			20,824			36,517			113,193
Income tax expense		9,651			2,670			902			13,223			3,454			4,817			8,271			21,494
Net income	$	50,863		$	9,195		$	3,395		$	63,453		$	12,239		$	16,007		$	28,246		$	91,699
Period-end assets	$	4,684,116		$	717,994		$	26,469		$	5,428,579		$	86,849		$	104,891		$	191,740		$	5,620,319
Net interest margin		3.76	%		2.42	%		NM			3.61	%		NM			NM			NM			4.46	%
Net-revenue concentration*		67	%		5	%		3	%		75	%		14	%		11	%		25	%		100	%

		Year Ended December 31, 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	$	160,398		$	15,726		$	402		$	176,526		$	19,203		$	30,329		$	49,532		$	226,058
Provision for loan and lease losses		3,710			(142	)		—			3,568			10,919			16,881			27,800			31,368
Net refund transfer fees		—			—			—			—			20,029			—			20,029			20,029
Mortgage banking income		—			—			4,825			4,825			—			—			—			4,825
Program fees		—			—			—			—			295			5,930			6,225			6,225
Other noninterest income		29,965			40			550			30,555			1,229			562			1,791			32,346
Total noninterest income		29,965			40			5,375			35,380			21,553			6,492			28,045			63,425
Total noninterest expense		136,439			3,367			4,356			144,162			14,686			5,004			19,690			163,852
Income before income tax expense		50,214			12,541			1,421			64,176			15,151			14,936			30,087			94,263
Income tax expense		6,819			2,869			298			9,986			3,033			3,392			6,425			16,411
Net income	$	43,395		$	9,672		$	1,123		$	54,190		$	12,118		$	11,544		$	23,662		$	77,852
Period-end assets	$	4,647,037		$	470,126		$	14,246		$	5,131,409		$	20,288		$	88,707		$	108,995		$	5,240,404
Net interest margin		3.76	%		3.18	%		NM			3.70	%		NM			NM			NM			4.62	%
Net-revenue concentration*		66	%		5	%		2	%		73	%		14	%		13	%		27	%		100	%

________________________________________________________
*Net revenues represent total net interest income plus noninterest income.

Republic Bancorp, Inc. Financial Information
Fourth Quarter 2019 Earnings Release (continued)

(1) The following tables provide a reconciliation of financial measures in accordance with U.S. generally accepted accounting principles (“GAAP”) to the Company’s adjusted results, which are non-GAAP measures that exclude certain items related to four branches divested by the Company in November 2019. Management uses these non-GAAP measures to evaluate the on-going performance of the Company. Non-GAAP measures are not formally defined by GAAP or codified in the federal banking regulations, and other entities may use calculation methods that differ from those used by the Company.

	Three Months Ended December 31, 2019										Three Months Ended December 31, 2018										$ Change
				Less:				Adjusted						Less:				Adjusted						Less:			Adjusted
(in thousands)	GAAP			Adjustments				Non-GAAP			GAAP			Adjustments				Non-GAAP			GAAP			Adjustments			Non-GAAP
Total Company
Income Before Income Tax Expense	$	32,301		(a)	$	8,848		$	23,453		$	20,328			$	—		$	20,328		$	11,973		$	8,848		$	3,125
Income Tax Expense		6,533		(b)		1,858			4,675			3,022				—			3,022			3,511			1,858			1,653
Net Income	$	25,768		(c)	$	6,990		$	18,778		$	17,306			$	—		$	17,306		$	8,462		$	6,990		$	1,472
Diluted Earnings per Class A Share	$	1.23		(d)	$	0.34		$	0.89		$	0.83			$	—		$	0.83		$	0.40		$	0.34		$	0.06
Return on Average Assets		1.83	%	(e)		0.50	%		1.33	%		1.37	%			—	%		1.37	%		NA			NA			NA
Return on Average Equity		13.58		(f)		3.69			9.89			10.07				—			10.07			NA			NA			NA
Core Bank
Average Loan Balance	$	4,471,609		(g)	$	63,332		$	4,408,277		$	3,990,514		(g)	$	126,503		$	3,864,011		$	481,095		$	(63,171	)	$	544,266
End-of-Period Loan Balance		4,332,613		(g)		—			4,332,613			4,054,710		(g)		123,119			3,931,591			277,903			(123,119	)		401,022
Net Interest Income		46,806		(h)		721			46,085			45,858		(h)		1,654			44,204			948			(933	)		1,881
Net Interest Margin		3.56	%	(i)		0.01	%		3.55	%		3.85	%	(i)		—	%		3.85	%		(0.29	)%		0.01	%		(0.30	)%
Traditional Bank
Average Loan Balance	$	3,636,250		(g)	$	63,332			3,572,918		$	3,530,184		(g)	$	126,503		$	3,403,681		$	106,066		$	(63,171	)	$	169,237
End-of-Period Loan Balance		3,595,931		(g)		—			3,595,931			3,577,044		(g)		123,119			3,453,925			18,887			(123,119	)		142,006
Net Interest Income		41,973		(h)		721			41,252			42,207		(h)		1,654			40,553			(234	)		(933	)		699
Net Interest Margin		3.80	%	(i)		0.01	%		3.79	%		3.92	%	(i)		—	%		3.92	%		(0.12	)%		0.01	%		(0.13	)%

Adjustments:

(a) Includes a net gain on branch divestiture of $7.9 million and a credit to Provision expense of $900,000 associated with divested loans. The net gain is inclusive of $165,000 of expenses associated with the sale.
(b) Reflects (a) multiplied by a 21% effective tax rate.
(c) Reflects (a) less (b).
(d) Reflects contribution of (c) in calculating GAAP Diluted EPS for the period presented.
(e) Reflects annualized (c) divided by GAAP average assets for the period presented.
(f) Reflects annualized (c) divided by GAAP average equity for the period presented.
(g) Includes loan balances associated with divested branches.
(h) Includes net interest income associated with divested branches, including benefits and costs assigned as part of the Company’s funds-transfer-pricing model.
(i) The contribution of divested assets and liabilities to the net interest margin of the segment presented.

	Year Ended December 31, 2019										Year Ended December 31, 2018										$ Change
				Less:				Adjusted						Less:				Adjusted					Less:		Adjusted
(in thousands)	GAAP			Adjustments				Non-GAAP			GAAP			Adjustments				Non-GAAP			GAAP		Adjustments		Non-GAAP
Total Company
Income Before Income Tax Expense	$	113,193		(j)	$	8,729		$	104,464		$	94,263			$	—		$	94,263		$	18,930	$	8,729	$	10,201
Income Tax Expense		21,494		(k)		1,833			19,661			16,411				—			16,411			5,083		1,833		3,250
Net Income	$	91,699		(l)	$	6,896		$	84,803		$	77,852			$	—		$	77,852		$	13,847	$	6,896	$	6,951
Diluted Earnings per Class A Share	$	4.39		(m)	$	0.33		$	4.06		$	3.74			$	—		$	3.74		$	0.65	$	0.33	$	0.32
Return on Average Assets		1.64	%	(n)		0.13	%		1.51	%		1.52	%			—	%		1.52	%		NA		NA		NA
Return on Average Equity		12.49		(o)		0.94			11.55			11.67				—			11.67			NA		NA		NA

Adjustments:

(j) Includes a net gain on branch divestiture of $7.8 million and a credit to Provision expense of $900,000 associated with divested loans. The net gain is inclusive of $284,000 of expenses associated with the sale, with $119,000 of these expenses recorded during the three months ended September 30, 2019 and $165,000 recorded during the three months ended December 31, 2019.
(k) Reflects (j) multiplied by a 21% effective tax rate.
(l) Reflects (j) less (k).
(m) Reflects contribution of (l) in calculating GAAP Diluted EPS for the period presented.
(n) Reflects (l) divided by GAAP average assets for the period presented.
(o) Reflects (l) divided by GAAP average equity for the period presented.

(2) 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. Republic’s relatively low effective tax rate during the fourth quarter and year ended December 31, 2018 was driven by generally nonrecurring federal income tax benefits resulting from the TCJA. The following table presents a reconciliation of the Republic’s effective tax rate to the federal statutory rate for the fourth quarters and years ended December 31, 2019 and 2018:

	Three Months Ended Dec. 31,										Year Ended Dec. 31,
	2019					2018					2019					2018
				Effective					Effective					Effective					Effective
(in thousands)	Amount			Tax Rate			Amount		Tax Rate		Amount			Tax		Amount			Tax Rate
Income before income tax expense	$	32,301				$	20,328				$	113,193				$	94,263
Income tax expense, before adjusting items	$	6,783		21.00	%	$	4,269		21.00	%	$	23,771		21.00	%	$	19,795		21.00	%
Adjustments relating to:
Enactment of the TCJA		—		—			(389	)	(1.91	)		—		—			(2,762	)	(2.93	)
Nontaxable Income		(228	)	(0.71	)		(250	)	(1.23	)		(959	)	(0.85	)		(933	)	(0.99	)
State Taxes, net of federal benefit		560		1.73			422		2.08			606		0.54			1,569		1.66
General business tax credits		(462	)	(1.43	)		(213	)	(1.05	)		(1,296	)	(1.14	)		(1,355	)	(1.44	)
Tax Benefit of Vesting Employee Benefits		(41	)	(0.13	)		(191	)	(0.94	)		(480	)	(0.42	)		(191	)	(0.20	)
Reduction of uncertain tax positions		(47	)	(0.15	)		(210	)	(1.03	)		(47	)	(0.04	)		(210	)	(0.22	)
Other, net		(32	)	(0.10	)		(416	)	(2.05	)		(101	)	(0.09	)		498		0.53
Total Adjustments		(250	)	(0.77	)		(1,247	)	(6.13	)		(2,277	)	(2.01	)		(3,384	)	(3.59	)
Income tax expense, as reported	$	6,533		20.23	%	$	3,022		14.87	%	$	21,494		18.99	%	$	16,411		17.41	%

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

(4) 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.

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

(6) The Company adopted Accounting Standard Update 2016-02, effective January 1, 2019. ASU 2016-02 requires the Company, as lessee, to record the present value of its expected operating lease payments on its balance sheet as operating lease liabilities, with offsetting right-of-use assets for the respective leased property. Prior to January 1, 2019, operating leases were not recorded on a lessee’s balance sheet in this manner.

(7) 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 $8.5 million and $9.4 million for the quarters ended December 31, 2019 and 2018. The amount of loan fee income included in total interest income was $54.5 million and $53.8 million for the years ended December 31, 2019 and 2018.

The amount of loan fee income included in total interest income per quarter was as follows: $8.5 million (quarter ended December 31, 2019); $9.1 million (quarter ended September 30, 2019); $8.4 million (quarter ended June 30, 2019); $28.6 million (quarter ended March 31, 2019); and $9.4 million (quarter ended December 31, 2018).

Interest income for Easy Advances (“EAs”) is composed entirely of loan fees. The loan fees disclosed above included EA fees of $19.1 million and $17.8 million for the years ended December 31, 2019 and 2018. EAs are only offered during the first two months of each year.

(8) The following table provides a reconciliation of total stockholders’ equity in accordance with 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)	Dec. 31, 2019			Sep. 30, 2019				Jun. 30, 2019			Mar. 31, 2019			Dec. 31, 2018
Total stockholders' equity - GAAP (a)	$	764,244		$	744,447		$	731,428		$	717,091		$	689,934
Less: Goodwill		16,300			16,300			16,300			16,300			16,300
Less: Mortgage servicing rights		5,888			5,483			5,158			4,935			4,919
Less: Core deposit intangible		469			516			562			608			654
Tangible stockholders' equity - Non-GAAP (c)	$	741,587		$	722,148		$	709,408		$	695,248		$	668,061
Total assets - GAAP (b)	$	5,620,319		$	6,103,647		$	5,723,134		$	5,365,768		$	5,240,404
Less: Goodwill		16,300			16,300			16,300			16,300			16,300
Less: Mortgage servicing rights		5,888			5,483			5,158			4,935			4,919
Less: Core deposit intangible		469			516			562			608			654
Tangible assets - Non-GAAP (d)	$	5,597,662		$	6,081,348		$	5,701,114		$	5,343,925		$	5,218,531
Total stockholders' equity to total assets - GAAP (a/b)		13.60	%		12.20	%		12.78	%		13.36	%		13.17	%
Tangible stockholders' equity to tangible assets - Non-GAAP (c/d)		13.25	%		11.87	%		12.44	%		13.01	%		12.80	%
Number of shares outstanding (e)		20,943			20,948			20,948			20,911			20,888
Book value per share - GAAP (a/e)	$	36.49		$	35.54		$	34.92		$	34.29		$	33.03
Tangible book value per share - Non-GAAP (c/e)		35.41			34.47			33.87			33.25			31.98

(9) The efficiency ratio, a non-GAAP measure with no GAAP comparable, 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 and the Company’s net gain from its November 2019 branch divestiture.

	Three Months Ended Dec. 31,						Year Ended Dec. 31,
(dollars in thousands)	2019			2018			2019			2018
Net interest income	$	54,395		$	54,276		$	236,126		$	226,058
Noninterest income		19,655			10,119			75,008			63,425
Less: Net gain on branch divestiture		7,948			—			7,829			—
Less: Net gain (loss) on sales, calls, and impairment of securities		—			—			—			—
Total adjusted revenue - Non-GAAP (a)	$	66,102		$	64,395		$	303,305		$	289,483
Noninterest expense (b)	$	40,835		$	38,963		$	172,183		$	163,852
Efficiency Ratio - Non-GAAP (b/a)		62	%		61	%		57	%		57	%

	Three Months Ended
(dollars in thousands)	Dec. 31, 2019				Sep. 30, 2019			Jun. 30, 2019		Mar. 31, 2019			Dec. 31, 2018
Net interest income	$	54,395		$	55,486		$	53,946		$	72,299		$	54,276
Noninterest income		19,655			12,811			15,125			27,417			10,119
Less: Net gain on branch divestiture		7,948			(119)			—			—			—
Less: Net gain (loss) on sales, calls, and impairment of securities		—			—			—			—			—
Total adjusted revenue - Non-GAAP (a)	$	66,102		$	68,416		$	69,071		$	99,716		$	64,395
Noninterest expense (b)	$	40,835		$	42,411		$	43,428		$	45,509		$	38,963
Efficiency Ratio - Non-GAAP (b/a)		62	%		62	%		63	%		46	%		61	%

(10) 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.

(11) FTEs – Full-time-equivalent employees.

(12) Delinquent loans for the RPG segment included $19 million of EAs at March 31, 2019. EAs are only offered during the first two months of each year. 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
NA – Not applicable