Republic Bancorp, Inc. - Growth & Income

Here’s something you don’t hear from many banks these days: “We completed the most successful year in our Company’s history in 2010.” But that’s just what Repulic Bancorp, Inc. (RBCAA) CEO Steve Trager said after the company delivered solid fourth quarter results.

Republic is also unique in that it has increased its dividend for 11 consecutive years. It currently yields 3.1%.

Valuation is cheap too, with shares trading at just 5.1x forward earnings. It is a Zacks #1 Rank (Strong Buy) stock.

Fourth Quarter Results

Republic reported fourth quarter earnings per share of 21 cents, in-line with Zacks Consensus Estimate. It was an 11% increase over the same quarter in 2009 as declines in net interest income and non-interest income were more than offset by significantly lower provisions for loan losses.

Net interest income declined 7% year-over-year as the net interest margin fell from 3.52% to 3.23%. Non-interest income fell 11% due in large part to a decrease in service charges on deposits.

Credit quality improved, however, as the number of non-performing loans to total loans fell from 1.9% at the end of 2009 to 1.3% at the end of 2010. This prompted management to lower its provision for loan losses by 66% to $1.7 million.

Estimates Rising

Analysts expect 2011 to be another year of solid growth for Republic. The Zacks Consensus Estimate is $3.82 per share, representing 24% growth over 2010 EPS.

The 2012 consensus estimate is currently $3.81, a penny below 2011 estimates.

Analysts have significantly raised their estimates over the last several months, as seen in the Price & Consensus chart:

It is a Zacks #1 Rank (Strong Buy) stock.

Dividend

Republic Bancorp has raised its dividend in each of the last 11 years at a compound annual growth rate of 15.7%. This is virtually unheard of in the industry as most banks slashed or suspended their dividends during the financial crisis of 2008 and 2009.

It currently yields 3.1%.

Valuation

Shares of Republic trade at just 5.1x forward earnings, a significant discount to the industry average of 15.6x. Its price to book ratio is low at 1.1, but it is higher than the peer group multiple of 0.9.

Company Description

Republic Bancorp, Inc. is a financial holding company with 43 banking centers mostly in Kentucky. It has a market cap of $406 million.

Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.

 
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