Republic Bancorp (RBCAA)

Financial holding company Republic Bancorp (NASDAQGS:RBCA.A) fell short of the market’s revenue expectations in Q3 CY2025, but sales rose 11% year on year to $91.52 million. Its non-GAAP profit of $1.51 per share was 7.2% above analysts’ consensus estimates.

Company Overview

With roots dating back to 1974 and operating across multiple states including Kentucky, Indiana, Florida, Ohio, and Tennessee, Republic Bancorp (NASDAQGS:RBCA.A) is a Kentucky-based financial holding company that operates a bank offering traditional banking, mortgage services, and specialized financial products.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

Republic Bancorp competes with regional banks like Fifth Third Bancorp (NASDAQ: FITB), PNC Financial Services (NYSE: PNC), and Truist Financial (NYSE: TFC) in its traditional banking markets. In its tax refund and payment processing segments, it competes with MetaBank (NASDAQ: CASH), Green Dot Corporation (NYSE: GDOT), and Pathward Financial (NASDAQ: CASH).

From lending activities to service fees, most banks build their revenue model around two income sources. Interest rate spreads between loans and deposits create the first stream, with the second coming from charges on everything from basic bank accounts to complex investment banking transactions. Luckily, Republic Bancorp’s revenue grew at an impressive 9.6% compounded annual growth rate over the last five years. Its growth beat the average banking company and shows its offerings resonate with customers.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Republic Bancorp’s annualized revenue growth of 10.7% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Republic Bancorp’s revenue grew by 11% year on year to $91.52 million but fell short of Wall Street’s estimates.

Net interest income made up 85.6% of the company’s total revenue during the last five years, meaning Republic Bancorp barely relies on non-interest income to drive its overall growth.

Markets consistently prioritize net interest income growth over fee-based revenue, recognizing its superior quality and recurring nature compared to the more unpredictable non-interest income streams.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Republic Bancorp’s astounding 10.7% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Republic Bancorp, its two-year annual EPS growth of 17.2% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q3, Republic Bancorp reported adjusted EPS of $1.51, up from $1.37 in the same quarter last year. This print beat analysts’ estimates by 7.2%. Over the next 12 months, Wall Street expects Republic Bancorp’s full-year EPS of $6.49 to shrink by 5.7%.

The balance sheet drives banking profitability since earnings flow from the spread between borrowing and lending rates. As such, valuations for these companies concentrate on capital strength and sustainable equity accumulation potential.

When analyzing banks, tangible book value per share (TBVPS) takes precedence over many other metrics. This measure isolates genuine per-share value by removing intangible assets of debatable liquidation worth. Traditional metrics like EPS are helpful but face distortion from M&A activity and loan loss accounting rules.

Republic Bancorp’s TBVPS grew at an impressive 7.1% annual clip over the last five years. TBVPS growth has also accelerated recently, growing by 10.4% annually over the last two years from $43.84 to $53.44 per share.

Over the next 12 months, Consensus estimates call for Republic Bancorp’s TBVPS to grow by 7.2% to $57.31, mediocre growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, Republic Bancorp has averaged a Tier 1 capital ratio of 15.7%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity, or ROE, quantifies bank profitability relative to shareholder equity - an essential capital source for these institutions. Over extended periods, superior ROE performance drives faster shareholder wealth compounding through reinvestment, share repurchases, and dividend growth.

Over the last five years, Republic Bancorp has averaged an ROE of 11.3%, impressive for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This is a bright spot for Republic Bancorp.

It was good to see Republic Bancorp narrowly top analysts’ tangible book value per share expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its revenue slightly missed. Overall, this was a softer quarter. The stock remained flat at $68.28 immediately after reporting.

Updated: December 4, 2025 at 11:46 PM EST

Before deciding whether to buy Republic Bancorp or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

Republic Bancorp’s business quality ultimately falls short of our standards. For starters, its revenue growth was uninspiring over the last five years, and analysts don’t see anything changing over the next 12 months. And while its admirable net interest margin a wonderful starting point for the overall profitability of the business, the downside is its projected EPS for the next year is lacking. On top of that, its estimated net interest income for the next 12 months are weak.

Republic Bancorp’s P/B ratio based on the next 12 months is 1.2x. While this valuation is fair, the upside isn’t great compared to the potential downside. We're fairly confident there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $75 on the company (compared to the current share price of $69.58).