EXHIBIT 99.1
[REPUBLIC BANCORP, INC. LOGO]
NEWS
WWW.REPUBLICBANCORP.COM NASDAQ: RBNC
FOR FURTHER INFORMATION:
Thomas F. Menacher Kristine D. Brenner
Exec.V.P., Treasurer & CFO Director of Investor Relations
tmenacher@republicbancorp.com kbrenner@republicbancorp.com
(989) 725-7337 (989) 725-7337
REPUBLIC BANCORP REPORTS FOURTH QUARTER RESULTS AND RECORD EARNINGS IN 2003
------------------------
2003 HIGHLIGHTS INCLUDE:
- Earnings per share of $.95, up 8%
- Record net income of $60.7 million, up 7%
- Return on equity of 17.33%
- Total assets of $5.4 billion
- Strong loan portfolio growth of 14%
ANN ARBOR, MICHIGAN-JANUARY 13, 2004-REPUBLIC BANCORP INC., (NASDAQ: RBNC),
today announced record net income for the year ended December 31, 2003 of
$60,726,000, an increase of 7% over net income of $56,677,000 earned in 2002.
Diluted earnings per share were $.95, up 8% from $.87 earned in 2002. Net income
generated annualized returns of 1.23% on average assets and 17.33% on average
shareholders' equity for the year ended December 31, 2003.
"The Company had an outstanding year," commented Dana M. Cluckey, President and
Chief Executive Officer. "The Company's three business lines all contributed to
our strong growth in assets, which were up 12% for the year. This growth was
driven by the increase in our loan portfolio of almost 14%. We believe our asset
growth in 2003 and strong capital position will provide the momentum necessary
for a very successful 2004," added Mr. Cluckey.
Net income for the fourth quarter was $14,625,000, an increase of 6% over the
$13,742,000 earned for the same period in 2002. Diluted earnings per share were
$.23, an increase of 6% over the $.21 earned in 2002.
Page 2
Results for 2003 reflect strong performance for the Company's three business
lines:
- The commercial loan portfolio grew $52 million, or 4% over 2002. SBA
closings for the year were $47 million, up 12% from 2002.
- The Company had an outstanding year in mortgage banking. During 2003,
the Company originated $4.0 billion in single-family residential
mortgages. In addition, the residential mortgage portfolio grew $421
million, or 26% over 2002. At December 31, 2003, the Company's mortgage
loan pipeline of applications in process was $312 million.
- Retail banking results were also strong during the year. The direct
consumer loan portfolio grew $52 million, or 9% over 2002. The Company
also had excellent growth in core deposits, which increased $97
million, or 7% for the year.
Net interest income increased $645,000 for the year ended December 31, 2003
compared to 2002 primarily due to an increase in interest earning assets. For
the year ended December 31, 2003, the Company's net interest margin was 3.07%,
compared to 3.31% for 2002.
Effective December 31, 2003, the Company adopted FASB Interpretation No. 46,
"Consolidation of Variable Interest Entities" (FIN 46). FIN 46 requires the
Company to reclassify its trust preferred securities balance of $50 million as
long-term debt and the dividends paid on its trust preferred securities as
interest expense. In prior periods, dividends on trust preferred securities were
classified as a component of noninterest expense.
The requirements of FIN 46 did not impact the Company's net income or earnings
per share. All prior periods have been restated to reflect the adoption of FIN
46. For comparison purposes only, if the dividends paid on trust preferred
securities would not have been reclassified as interest expense, the Company's
net interest margin for the quarter and year ended December 31, 2003 would have
been 3.04% and 3.16%, respectively.
Total noninterest income, excluding gain on sale of securities, increased $8.4
million, or 17% for the year ended December 31, 2003. The increase was primarily
due to higher levels of service charges, mortgage banking income and income from
bank owned life insurance.
The Company's asset quality remains very sound. Total non-performing assets were
unchanged at December 31, 2003, compared to the prior year end. Net charge-offs
to total average loans were only 18 basis points for 2003 and remain below the
Company's peer group. The Company's allowance for loan losses to loans,
excluding residential real estate mortgages, was 1.88% at December 31, 2003.
Effective January 1, 2003, the Company adopted the fair value method of
recording stock options under SFAS 123. In accordance with the transitional
guidance of SFAS 148, the fair value method of accounting for stock options will
be applied prospectively to awards granted subsequent to January 1, 2003. In
2003, the Company issued restricted stock in lieu of stock option grants.
(Expenses related to restricted stock are included in salaries and employee
benefits on the income statement.) As a result, the income statement impact
associated with expensing stock options was immaterial in 2003.
Page 3
During the fourth quarter of 2003, the Company repurchased 168,000 shares at an
average price of $13.02 per share under the 2001 Stock Repurchase Program. For
the year ended December 31, 2003, the Company repurchased 1,160,000 shares at an
average of $11.87 under the 2001 Stock Repurchase Program. The 2001 Stock
Repurchase Program allows for the repurchase of up to 4,300,000 shares, of which
8,000 shares are available for repurchase at December 31, 2003. In July 2003,
the Board of Directors also approved a 2003 Stock Repurchase Program authorizing
the repurchase of up to 2,200,000 additional shares. All of the shares under
this program are available for repurchase at December 31, 2003.
The Company's capital ratios continue to be in excess of the requirements for a
well-capitalized bank. At December 31, 2003, the Company's total risk-based
capital ratio was a strong 12.85% and Tier 1 leverage ratio was 8.04%.
During the fourth quarter of 2003, the Company completed the sale of its
Menominee, Michigan branch office, located in the Upper Peninsula. The sale did
not have a significant impact on the results of operations for the Company.
As recently announced, in January 2004, Republic Bancorp was named to FORTUNE's
"100 Best Places to Work in America" for the fourth year. The Company ranked as
the 5th Best Place to Work in the country.
ABOUT THE COMPANY
Republic Bancorp Inc., with $5.4 billion in assets, is the third largest bank
holding company headquartered in Michigan and the 82nd largest bank holding
company in the country. Its subsidiary, Republic Bank, serves customers in
Michigan, Ohio and Indiana with 93 retail, commercial and mortgage banking
offices and 93 ATMs. The Company is the #1 Small Business Administration bank
lender based in Michigan for the 10th consecutive year and one of the Midwest's
top ten retail mortgage lenders. Republic was recently named as the 5th Best
Place to Work in America by FORTUNE magazine (fourth year ranked on FORTUNE's
"100 Best Places to Work in America") and was named to Working Mother magazine's
list of "100 Best Companies for Working Mothers" three years in a row.
Information about Republic Bancorp's financial results and its products and
services, including on-line mortgage applications and its Internet banking
system, ExpressNet, can be accessed at WWW.REPUBLICBANCORP.COM.
CASH DIVIDEND
The Company currently pays an annual cash dividend of $.38 per common share,
which represents a yield of approximately 2.7% based on the Company's current
stock price.
SAFE HARBOR STATEMENT
As with any statements other than those reflecting historical facts,
forward-looking statements contained in this announcement involve risk, and, as
such, future financial performance may differ from current expectations due to a
variety of marketplace factors. These factors include, without limitation, those
disclosed in Republic Bancorp's most recent filings on Form 10-K and Form 10-Q
with the Securities and Exchange Commission.
Page 4
REPUBLIC BANCORP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
DEC. 31, SEPT. 30, JUNE 30, DEC. 31,
2003 2003 2003 2002
---- ---- ---- ----
(Unaudited) (Unaudited)
ASSETS
Cash and cash equivalents.................................... $ 63,858 $ 76,566 $ 89,976 $ 75,625
Mortgage loans held for sale................................. 135,360 391,369 479,753 660,999
Securities available for sale ............................... 607,450 459,933 292,722 170,456
Securities held to maturity (at cost)........................ 156,555 - - -
Loans........................................................ 4,157,514 3,999,974 3,954,998 3,656,543
Less allowance for loan losses............................. (40,271) (39,212) (38,269) (36,077)
------------ ------------ ------------ ------------
Net loans.................................................... 4,117,243 3,960,762 3,916,729 3,620,466
------------ ------------ ------------ ------------
Federal Home Loan Bank stock (at cost)....................... 80,500 80,502 79,510 78,475
Premises and equipment....................................... 26,928 26,564 27,084 27,790
Bank owned life insurance.................................... 108,330 106,858 89,192 87,192
Other assets................................................. 57,464 57,771 55,989 57,192
------------ ------------ ------------ ------------
Total assets............................................ $ 5,353,688 $ 5,160,325 $ 5,030,955 $4,778,195
============ ============ ============ ============
LIABILITIES
Noninterest-bearing deposits................................. $ 256,265 $ 287,640 $ 298,832 $ 260,634
Interest-bearing deposits:
NOW accounts............................................ 184,217 183,195 179,855 176,366
Savings and money market accounts....................... 1,054,857 1,110,161 972,034 910,863
Certificates of deposit................................. 1,319,930 1,340,925 1,365,833 1,440,409
------------ ------------ ------------ ------------
Total interest-bearing deposits......................... 2,559,004 2,634,281 2,517,722 2,527,638
------------ ------------ ------------ ------------
Total deposits............................................ 2,815,269 2,921,921 2,816,554 2,788,272
------------ ------------ ------------ ------------
Federal funds purchased and other
short-term borrowings...................................... 491,245 483,136 266,499 209,070
Short-term FHLB advances..................................... 280,000 250,000 405,000 305,000
Long-term FHLB advances and reverse..........................
repurchase agreements................................... 1,286,726 1,026,529 1,042,804 1,002,943
Accrued expenses and other liabilities....................... 61,028 73,437 98,836 76,682
Long-term debt............................................... 50,000 50,000 50,000 63,500
------------ ------------ ------------ ------------
Total liabilities....................................... 4,984,268 4,805,023 4,679,693 4,445,467
SHAREHOLDERS' EQUITY
Preferred stock, $25 stated value: $2.25 cumulative
and convertible; 5,000,000 shares authorized,
none issued and outstanding................................ - - - -
Common stock, $5 par value, 75,000,000 shares
authorized; 63,527,000, 63,170,000, 63,115,000, and
63,185,000 issued and outstanding, respectively............ 317,633 287,133 286,883 287,207
Capital surplus.............................................. 50,358 37,953 38,081 40,633
Unearned compensation - restricted stock..................... (1,666) (2,058) (2,357) (368)
Retained earnings............................................ 3,893 35,274 24,952 4,373
Accumulated other comprehensive (loss) income................ (798) (3,000) 3,703 883
------------ ------------ ------------ ------------
Total shareholders' equity.............................. 369,420 355,302 351,262 332,728
------------ ------------ ------------ ------------
Total liabilities and shareholders' equity............. $ 5,353,688 $ 5,160,325 $ 5,030,955 $ 4,778,195
============ ============ ============ ============
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REPUBLIC BANCORP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2003 2002 2003 2002
---- ---- ---- ----
INTEREST INCOME
Loans, including fees........................................ $ 59,241 $ 67,997 $ 247,125 $ 266,432
Investment securities........................................ 7,287 2,846 18,555 18,272
----------- ----------- ----------- -----------
Total interest income................................... 66,528 70,843 265,680 284,704
----------- ----------- ----------- -----------
INTEREST EXPENSE
Deposits..................................................... 13,207 17,259 56,305 75,172
Short-term borrowings ....................................... 1,817 2,278 7,689 10,022
Long-term FHLB advances and
reverse repurchase agreements........................... 14,732 13,619 54,850 50,865
Long-term debt............................................... 1,075 1,316 4,339 6,793
----------- ----------- ----------- -----------
Total interest expense.................................. 30,831 34,472 123,183 142,852
----------- ----------- ----------- -----------
Net interest income.......................................... 35,697 36,371 142,497 141,852
Provision for loan losses.................................... 3,000 5,000 12,000 16,000
----------- ----------- ----------- -----------
Net interest income after provision for loan losses.......... 32,697 31,371 130,497 125,852
----------- ----------- ----------- -----------
NONINTEREST INCOME
Service charges.............................................. 2,738 2,716 11,097 9,206
Mortgage banking income...................................... 8,218 11,031 38,976 34,132
Gain on sale of securities................................... 691 3,108 2,190 5,859
Income from bank owned life insurance........................ 1,472 1,318 5,519 2,192
Other noninterest income..................................... 1,152 1,139 2,997 4,638
----------- ----------- ----------- -----------
Total noninterest income................................ 14,271 19,312 60,779 56,027
----------- ----------- ----------- -----------
NONINTEREST EXPENSE
Salaries and employee benefits............................... 14,152 18,722 60,454 59,134
Occupancy expense of premises................................ 2,615 2,487 10,296 9,926
Equipment expense............................................ 1,590 1,808 6,768 6,903
Other noninterest expense ................................... 7,967 7,802 27,136 24,552
----------- ----------- ----------- -----------
Total noninterest expense............................... 26,324 30,819 104,654 100,515
----------- ----------- ----------- -----------
Income before income taxes .................................. 20,644 19,864 86,622 81,364
Provision for income taxes................................... 6,019 6,122 25,896 24,687
----------- ----------- ----------- -----------
NET INCOME .................................................. $ 14,625 $ 13,742 $ 60,726 $ 56,677
=========== =========== =========== ===========
Basic earnings per share..................................... $ .23 $ .22 $ .96 $ .89
=========== =========== =========== ===========
Diluted earnings per share................................... $ .23 $ .21 $ .95 $ .87
=========== =========== =========== ===========
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REPUBLIC BANCORP INC.
SUMMARY OF SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT OPERATING DATA)
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2003 2002 2003 2002
------- ------- ------- -------
OPERATING DATA (IN MILLIONS):
Residential mortgage loan closings:
Fixed rate ................................. $ 309 $ 1,196 $ 3,175 $ 3,017
Adjustable rate ............................ 217 211 866 911
------- ------- ------- -------
Total residential mortgage loan closings $ 526 $ 1,407 $ 4,041 $ 3,928
======= ======= ======= =======
Conventional loans ......................... $ 372 $ 1,121 $ 3,273 $ 3,001
Government loans ........................... 65 85 306 388
Jumbo and other loans ...................... 89 201 462 539
------- ------- ------- -------
Total residential mortgage loan closings . $ 526 $ 1,407 $ 4,041 $ 3,928
======= ======= ======= =======
Refinances (percent of total) .............. 38% 76% 66% 63%
PERFORMANCE RATIOS (ANNUALIZED FOR THE QUARTER):
Return on average assets ....................... 1.13% 1.14% 1.23% 1.24%
Return on average equity ....................... 16.10% 16.54% 17.33% 17.52%
Net interest margin ............................ 2.95% 3.18% 3.07% 3.31%
Efficiency ratio (1) ........................... 53.42% 58.62% 52.04% 52.35%
PER COMMON SHARE DATA:
Average common shares outstanding - diluted .... 64,352 64,191 64,172 64,928
Cash dividends declared ........................ $ .095 $ .077 $ .336 $ .288
Book value ..................................... $ 5.82 $ 5.27 $ 5.82 5.27
Tangible book value ............................ $ 5.72 $ 5.16 $ 5.72 $ 5.16
DEC. 31, SEPT. 30, JUNE 30, DEC. 31,
2003 2003 2003 2002
-------- --------- --------- --------
CAPITAL RATIOS:
Shareholders' equity to assets.................. 6.90% 6.89% 6.98% 6.96%
Tier 1 risk-based capital ...................... 11.72% 11.57% 11.38% 11.18%
Total risk-based capital ....................... 12.85% 12.70% 12.50% 12.26%
Tier 1 leverage ................................ 8.04% 7.90% 8.09% 7.81%
(1) Includes total noninterest expense, divided by total revenue, excluding gain
on sale of securities.
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REPUBLIC BANCORP INC.
SUMMARY OF SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT OPERATING DATA)
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2003 2002 2003 2002
---- ---- ---- ----
AVERAGE BALANCES:
Total assets.................................................. $ 5,161,645 $ 4,805,484 $ 4,938,955 $ 4,558,868
Short-term investments........................................ 574 589 322 1,818
Mortgage loans held for sale.................................. 156,944 625,977 359,486 429,381
Total securities ............................................. 614,198 195,826 364,167 295,610
Portfolio loans............................................... 4,106,918 3,702,903 3,935,699 3,589,949
Federal Home Loan Bank stock.................................. 80,750 78,793 79,700 79,005
Total earning assets.......................................... 4,959,384 4,604,088 4,739,374 4,395,763
Interest-bearing deposits..................................... 2,590,139 2,559,217 2,558,855 2,496,403
Short-term borrowings......................................... 641,710 544,460 603,847 450,943
Long-term FHLB advances and
reverse repurchase agreements............................ 1,200,748 1,006,084 1,063,695 928,228
Long-term debt................................................ 50,000 63,500 50,563 79,356
Total interest bearing liabilities............................ 4,482,597 4,173,261 4,276,960 3,954,930
Shareholders' equity.......................................... 363,347 332,384 350,323 323,560
INTEREST MARGIN:
Assets:
Short-term investments........................................ 0.37% 1.13% 0.68% 2.03%
Mortgage loans held for sale.................................. 5.83% 6.18% 5.66% 6.45%
Total securities ............................................. 4.70% 4.74% 4.88% 5.93%
Portfolio loans:
Commercial loans......................................... 5.54% 6.48% 5.93% 6.79%
Residential real estate mortgage loans................... 5.47% 5.89% 5.53% 6.35%
Installment loans........................................ 5.47% 6.56% 5.87% 6.89%
----- ----- ----- -----
Total loans, net of unearned income...................... 5.50% 6.23% 5.73% 6.61%
----- ----- ----- -----
Federal Home Loan Bank stock.................................. 5.03% 5.79% 4.99% 6.05%
Total interest-earning assets................................. 5.40% 6.14% 5.65% 6.54%
----- ----- ----- -----
Liabilities:
Interest-bearing demand deposits.............................. 0.27% 0.54% 0.33% 0.62%
Savings and money market accounts............................. 1.28% 1.70% 1.37% 1.78%
Time deposits................................................. 2.88% 3.51% 3.04% 4.00%
----- ----- ----- -----
Total interest-bearing deposits.......................... 2.02% 2.68% 2.20% 3.01%
Short-term borrowings......................................... 1.11% 1.64% 1.26% 2.19%
Long-term FHLB advances and
reverse repurchase agreements ........................... 4.80% 5.30% 5.16% 5.40%
Long-term debt................................................ 8.60% 8.29% 8.58% 8.56%
----- ----- ----- -----
Total interest bearing liabilities............................ 2.71% 3.26% 2.86% 3.59%
----- ----- ----- -----
Net interest income/rate spread (FTE)......................... 2.69% 2.88% 2.79% 2.95%
Impact of noninterest bearing sources of funds................ 0.26% 0.30% 0.28% 0.36%
----- ----- ----- -----
Net interest margin (FTE)..................................... 2.95% 3.18% 3.07% 3.31%
===== ===== ===== =====
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REPUBLIC BANCORP INC.
SUMMARY OF SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS)
DEC. 31, SEPT. 30, JUNE 30, DEC. 31,
2003 2003 2003 2002
---- ---- ---- ----
PORTFOLIO LOAN SUMMARY:
Commercial loans:
Commercial and industrial.................. $ 38,319 $ 41,668 $ 44,352 $ 48,509
Commercial real estate mortgage............ 1,482,814 1,432,260 1,432,456 1,420,758
------------- ------------- ------------- -------------
Total commercial loans................ 1,521,133 1,473,928 1,476,808 1,469,267
Residential real estate mortgages............... 2,014,809 1,929,312 1,894,246 1,593,929
Installment loans (1)........................... 621,572 596,734 583,944 593,347
------------- ------------- ------------- -------------
Total portfolio loans...................... $ 4,157,514 $ 3,999,974 $ 3,954,998 $ 3,656,543
============= ============= ============= =============
NON-PERFORMING ASSETS:
Non-accrual loans:
Commercial................................. $ 27,666 $ 23,699 $ 16,696 $ 19,167
Residential real estate mortgage........... 11,181 11,456 10,534 15,215
Installment................................ 873 1,241 1,523 2,876
------------- ------------- ------------- -------------
Total non-accrual loans................ 39,720 36,396 28,753 37,258
Restructured loans.............................. - - - 2,309
Other real estate owned......................... 2,718 3,219 3,456 2,904
------------- ------------- ------------- -------------
Total non-performing assets................ $ 42,438 $ 39,615 $ 32,209 $ 42,471
============= ============= ============= =============
ALLOWANCE FOR LOAN LOSSES (FOR THE QUARTER):
Balance at beginning of period....................... $ 39,212 $ 38,269 $ 37,185 $ 33,124
Loans charged off:
Commercial.................................... 1,618 1,816 1,542 1,246
Residential real estate mortgage.............. 54 169 189 232
Installment - direct.......................... 541 315 502 400
Installment - indirect........................ 128 201 170 430
------------- ------------- ------------- -------------
Total charge-offs......................... 2,341 2,501 2,403 2,308
------------- ------------- ------------- -------------
Recoveries:
Commercial.................................... 263 250 259 16
Residential real estate mortgage.............. - - - -
Installment - direct.......................... 40 88 93 50
Installment - indirect........................ 97 106 135 195
------------- ------------- ------------- -------------
Total recoveries........................... 400 444 487 261
------------- ------------- ------------- -------------
Net charge-offs................................. 1,941 2,057 1,916 2,047
Provision charged to expense.................... 3,000 3,000 3,000 5,000
------------- ------------- ------------- -------------
Balance at end of period............................. $ 40,271 $ 39,212 $ 38,269 $ 36,077
============= ============= ============= =============
(1) Includes indirect installment loan balances at December 31, 2003, September
30, 2003, June 30, 2003 and December 31, 2002, of $13.4 million, $17.1
million, $22.2 million and $36.8 million, respectively.
Page 9
REPUBLIC BANCORP INC.
SUMMARY OF SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS)
DEC. 31, SEPT. 30, JUNE 30, DEC. 31,
2003 2003 2003 2002
---- ---- ---- ----
ASSET QUALITY RATIOS:
Non-performing assets to loans and
other real estate owned (1)....................... .99% .90% .73% .98%
Non-performing assets to total assets ................ .79% .77% .64% .89%
Allowance for loan losses
to non-performing loans........................... 101.39% 107.74% 133.10% 91.18%
Allowance for loan losses to loans (2)................ .97% .98% .97% .99%
Allowance for loan losses to loans (excluding
residential real estate mortgages) (2)............ 1.88% 1.89% 1.86% 1.75%
Net charge-offs to average loans: (1,3)
Commercial loans ................................. .36% .43% .35% .33%
Residential real estate mortgage loans............ .01% .03% .03% .04%
Installment loans:
Direct installment loans .................... .34% .16% .29% .25%
Indirect installment loans................... .82% 1.94% .55% 2.30%
-------- --------- ---------- ----------
Total loans....................................... .18% .19% .18% .19%
======== ========= ========== ==========
Earnings coverage of net charge-offs (3,4)........ 11.83x 12.00x 12.65x 10.63x
(1) Includes mortgage loans held for sale.
(2) Excludes mortgage loans held for sale.
(3) Quarter-to-date, annualized.
(4) Operating earnings before taxes plus the provision for loan losses divided
by net charge-offs.