Two Louisville-based financial services companies — Republic Bancorp and Stock Yards Bancorp — reported solid earnings this week, despite industry pressures from stagnating interest rates.
Republic Bancorp said it recorded net income of $29.5 million, up 7.5% from a year earlier, thanks primarily to higher net interest income.
At $72.3 million, net interest income rose $4.6 million, or 6.8%, offsetting rising non-interest expenses, which rose 2.5 million, or 5.7 percent. Non-interest income dipped slightly. Income tax expense, at $7.5 million, was about flat.
Chairman and CEO Steve Trager said the company produced a strong quarter despite some economic uncertainty.
“Despite an inverted yield curve providing strong headwinds to the profits for all in the banking industry, I couldn’t be more proud of the first quarter performance of our Core Bank, as our success continues to be built on a strong net interest margin and the solid credit quality of our loan portfolio,” he said.
Republic Bancorp, parent company of Republic Bank, has assets of about $5.4 billion.
Stock Yards Bancorp said it had record first quarter earnings, thanks to strong loan and deposits growth and a lower income tax bill.
The holding company of Stock Yards Bank & Trust said it recorded a profit of $15.6 million, up $2.2 million or 16.7% from the first quarter of 2018.
Income before income tax expense, at $17.5 million, was up $1 billion, or 6.2%. Net interest income rose 8.6%, while non-interest income climbed 1.4%. Non-interest expense jumped 7.7%.
Income tax expense, at $1.8 million, fell 40%.
CEO James A. (Ja) Hillebrand said in a news release that Stock Yards, which has assets of $3.3 billion, produced record earnings both before and after taxes.
“Key elements supporting the company’s results included near-record loan production during the quarter paired with solid year-over-year growth in average loans and deposits, the continuation of very sound credit quality metrics, and an ongoing improvement in net interest margin,” he said.
Shares of Republic Bancorp (RBCAA) were down about 0.6 percent early Wednesday, while Stock Yards’ shares (SYBT) rose 0.45%. The S&P 500 was about flat.
A Citi analyst told CNBC last week that the Fed’s signaling to not hike interest rates again this year may be limiting the banking industry’s ability to produce bigger profits this year. If the Fed does not raise rates more, banks will have a tougher time increasing the margin between what it costs them to borrow money versus how much they’re charging customers for loans.
For the year, RBCAA is up about 20 percent, while SYBT is up about 6.25%. The S&P 500 has gained about 17%.
After markets closed Wednesday, Louisville-based Limestone Bancorp reported net income of $2.8 million, up 47 percent from a year earlier. Net interest income rose 9.5 percent, pushing earnings before income taxes to nearly $3 million. Income taxes, at $123,000, fell by 63 percent. Limestone has assets of about $1.1 billion.
UPDATE: This story was updated to provide information about Limestone Bancorp’s earnings.