REPUBLIC BANCORP INC /KY/ (RBCAA)·Q1 2025 Earnings Summary

Executive Summary

• RBCAA delivered a record-like Q1 with net income of $47.3M and diluted EPS of $2.42, up 54% and 53% y/y, driven by strong TRS performance, Core Bank NIM expansion, and noninterest income items; ROA/ROE reached 2.61%/18.74% .
• Core Bank NIM rose to 3.70% (from 3.30% y/y) and Total Company NIM jumped to 6.28%, aided by lower deposit costs and mix, while credit quality remained strong; efficiency improved meaningfully versus Q4 .
• TRS net income more than doubled y/y on better Treasury refund payment activity (lower losses) and improved RT unit economics; noninterest income also benefited from a $4.1M gain on sale of Visa Class B‑1 shares and $1.6M insurance recovery .
• Estimates context: EPS beat consensus, while S&P Global “revenue” definition shows a miss; the mix of one-time items (Visa gain, insurance) and seasonal TRS strength are key stock narrative drivers this quarter (see Estimates Context) .

What Went Well and What Went Wrong

• What Went Well

  • “One of the best all-around performances in our Company’s history” with net income up 54% y/y; all five reporting segments increased net income y/y .
  • Core Bank NIM expansion (3.70% vs 3.30% y/y) and lower cost of funds (weighted‑avg cost of interest‑bearing deposits 2.26% vs 2.68% y/y) supported higher NII; credit quality metrics remained strong (NCOs 0.01%, NPLs/loans 0.44%) .
  • TRS delivered a 123% y/y net income increase on better refund payment activity (RAs/ERAs outstanding 3.8% vs 6.0% y/y) and 30% higher RT per‑unit profitability .

• What Went Wrong

  • Elevated one‑time core conversion and consulting costs ($5.7M) weighed on expenses; equipment and technology expenses also rose due to write‑downs and enhanced security/call center systems .
  • Noninterest‑bearing deposits remained under pressure y/y (industry‑wide trend since Q4’22), reflecting competitive deposit environment and yield curve dynamics .
  • Warehouse provisioning modestly increased within the Core Bank (net charge $47K) on higher spot balances; mix shifts and seasonality continue to add some variability across segments .

Financial Results

Segment net income (y/y comparison):

Key KPIs and balance sheet:

Notable Q1 noninterest income drivers: $4.1M Visa Class B‑1 gain and $1.6M insurance recovery .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We are pleased to report one of the best all‑around performances in our Company’s history with a 54% increase in our first quarter 2025 net income… all five of our SEC reporting segments are reporting an increase in net income…” — Logan Pichel, President & CEO .
• “The Core Bank’s NIM rose from 3.30%… to 3.70%… driven by a notable decrease in the Core Bank’s cost of deposits, while the yield on… interest‑earning assets slightly increased.” .
• “TRS had a very successful first quarter of 2025… a significant, positive reduction in… Provision… combined with revenue enhancements made to its Refund Transfer product.” .
• “We… recorded $5.7 million during the first quarter of 2025 for Core Contract deconversion and consulting fees… Republic projects a savings in excess of $16 million over the contract’s five-year term… targeting the third quarter of 2025 to launch the new core system.” .
• “The threat of global tariff uncertainty gives us some level of concern for the future of the US economy.” .

Q&A Highlights

• No earnings call transcript was included with the Q1 2025 8‑K (Exhibits were the earnings release and financial supplement only), so Q&A details were not available in company filings .

Estimates Context

• Q1 2025 vs S&P Global consensus: EPS $2.42 actual vs $1.86 est; Revenue $118.17M actual vs $126.90M est (S&P revenue definition may differ from the company’s “total net revenue”) .
• By metric:
  • EPS: Beat (driven by TRS provision tailwind, Core Bank NIM expansion, and noninterest income items including Visa gain and insurance recovery) .
  • Revenue: Miss on S&P definition; note the company’s total net revenue (NII+noninterest) was $135.8M .

Estimates table (S&P Global):

Values retrieved from S&P Global.*

Key Takeaways for Investors

• Core earnings power is improving: consistent NIM expansion, lower deposit costs, and steady credit metrics underpin stronger pre‑provision profitability .
• Seasonal upside from TRS was amplified by improved refund payment timing and pricing, but normalization is likely post‑tax season; monitor sustainability of RT unit economics and ERA loss rates into Q2 .
• Expense trajectory should moderate after one‑time core conversion costs; management targets >$16M five‑year savings from new core, with Q3’25 launch—potential medium‑term positive operating leverage .
• Balance sheet resilience: strong liquidity and capital, improving deposit mix, and controlled credit costs; allowance/loans rose to 2.01% with seasonality in RPG reserves .
• Warehouse Lending volumes remain constructive despite seasonal usage shifts; monitor mortgage market activity and spot balance growth versus provisioning .
• Dividend momentum: quarterly cash dividend increased (Class A to $0.451; Class B to $0.410), reinforcing capital return confidence .
• Stock narrative: EPS beat quality includes some nonrecurring items (Visa gain, insurance recovery), but underlying Core Bank NIM and credit quality are key positives; focus on sustainability of NIM gains and post‑season TRS earnings cadence .