Business Segments and Operations - As of September 30, 2023, Republic Bancorp operates through five reportable segments: Traditional Banking, Warehouse, Mortgage Banking, TRS, and RCS[233]. - The Bank has 46 banking centers primarily located in Kentucky, with significant operations in Metropolitan Louisville[234]. - The Bank's principal lending activities include retail mortgage lending, commercial lending, and consumer lending, with loans ranging from $200,000 to $4,000,000 for aircraft loans[235][242]. - The Bank's mortgage banking activities involve originating and selling single-family, first-lien residential real estate loans into the secondary market, primarily to FHLMC and FNMA[250]. - The Bank's acquisition strategy aims to selectively grow its franchise alongside organic growth strategies[247]. - The Company plans to dissolve its insurance subsidiary, Republic Insurance Services, Inc., with the dissolution expected in Q4 2023[218]. Financial Performance - Total net income for Q3 2023 was $21.6 million, an increase of $1.7 million compared to Q3 2022[271]. - Diluted EPS rose to $1.10 in Q3 2023 from $1.01 in Q3 2022[271]. - Net income increased by $2.6 million, or 276%, for Q3 2023 compared to Q3 2022[282]. - Total Company net income for the first nine months of 2023 was $70.7 million, a decrease of $1.9 million, or 3%, from the same period in 2022[351]. - Net income increased by $10.5 million, or 43%, for the first nine months of 2023 compared to the same period in 2022[353]. Income and Expenses - Net interest income increased by $847,000, or 2%, in Q3 2023 compared to Q3 2022[275]. - Noninterest income grew by $427,000, or 5%, in Q3 2023 compared to the same period in 2022[275]. - Mortgage banking income decreased by $302,000, or 26%, in Q3 2023 compared to Q3 2022[276]. - Noninterest income decreased by $19.2 million for the first nine months of 2023 compared to the same period in 2022[357]. - Noninterest expense for the Company increased by $1.9 million, or 4%, in Q3 2023 compared to Q3 2022[345]. Credit Losses and Provisions - The adequacy of the Allowance for Credit Losses (ACLL) is evaluated monthly, with significant reliance on historical loss rates and economic forecasts[228][230]. - The provision for credit losses was a net charge of $1.6 million in Q3 2023 compared to a net credit of $753,000 in Q3 2022[275]. - The total company provision was a net charge of $36.6 million for the first nine months of 2023, compared to a net charge of $14.5 million for the same period in 2022[391]. - The Traditional Banking segment's provision was a net charge of $6.4 million for the first nine months of 2023, with an allowance for credit losses (ACLL) of 1.27% as of September 30, 2023[392]. Loan and Deposit Growth - Total Traditional Bank loans increased by $642 million, or 17%, during the first nine months of 2023[353]. - Total Traditional Bank deposits increased by $254 million to $4.3 billion as of September 30, 2023[353]. - The Traditional Bank's average loans grew from $3.7 billion with a yield of 4.23% in Q3 2022 to $4.4 billion with a yield of 5.23% in Q3 2023[294]. Warehouse and Mortgage Banking - Average committed Warehouse lines decreased to $1.0 billion in Q3 2023 from $1.3 billion in Q3 2022[275]. - The Warehouse segment's net interest income decreased by $544,000, or 18%, from Q3 2022 to Q3 2023[298]. - The Bank's mortgage warehouse lines of credit provide short-term, revolving credit facilities to mortgage bankers, with loans typically remaining on the line for an average of 15 to 30 days[248]. Economic Conditions and Future Outlook - The Company anticipates potential impacts from inflation and economic conditions on its operations and financial performance[221]. - The incurred loss rate for RAs associated with the 2023 tax filing season was 3.79%, up from 2.87% for the same period in 2022[322]. Tax Refund Solutions (TRS) Performance - The Tax Refund Solutions (TRS) segment recorded a net charge to the Provision of $19.6 million in the first nine months of 2023, up from $7.0 million in the same period of 2022[397]. - TRS's charge to the Provision for Refund Advances (RAs) was $21.6 million, or 2.92% of $737 million in RAs originated during the first nine months of 2022[398]. - Net interest income within the Tax Refund Solutions (TRS) segment increased by $21.5 million from the first nine months of 2022 to the first nine months of 2023, driven by higher income from prepaid card products and tax-related credit products[375].

[Form 10-Q Filing Information](index=1&type=section&id=Form%2010-Q%20Filing%20Information) Details Republic Bancorp, Inc.'s Nasdaq listing, Class A and B Common Stock outstanding as of July 31, 2023 - Republic Bancorp, Inc. is a Kentucky-incorporated registrant, with its Class A Common Stock (RBCAA) registered on The Nasdaq Stock Market[2](index=2&type=chunk)[3](index=3&type=chunk) - Class A Common Stock Outstanding (July 31, 2023) | 17,386,257 shares - Class B Common Stock Outstanding (July 31, 2023) | 2,156,662 shares [Table of Contents](index=2&type=section&id=Table%20of%20Contents) Provides an organized listing of all sections and subsections within the Form 10-Q report [Glossary of Terms](index=3&type=section&id=GLOSSARY%20OF%20TERMS) Defines key financial and operational terms used throughout the report for clarity and understanding [PART I — FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) Presents the company's unaudited consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements.) This section presents the unaudited consolidated financial statements, including balance sheets, income statements, comprehensive income, stockholders' equity, and cash flows, along with detailed footnotes explaining accounting policies, acquisitions, investment securities, loans, deposits, and other financial instruments [Consolidated Balance Sheets](index=4&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS%20(UNAUDITED)) Presents the company's financial position, including assets, liabilities, and equity, as of June 30, 2023, and December 31, 2022 | Metric | June 30, 2023 (in thousands) | December 31, 2022 (in thousands) | Change (in thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Assets | $6,369,779 | $5,835,543 | $534,236 | 9.15% | | Total Liabilities | $5,482,808 | $4,978,930 | $503,878 | 10.12% | | Total Stockholders' Equity | $886,971 | $856,613 | $30,358 | 3.54% | [Consolidated Statements of Income](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20INCOME%20(UNAUDITED)) Details the company's revenues, expenses, and net income for the three and six months ended June 30, 2023, and 2022 Three Months Ended June 30 | Metric (in thousands) | 2023 | 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Interest Income | $79,054 | $52,902 | $26,152 | 49.43% | | Total Interest Expense | $14,525 | $1,088 | $13,437 | 1235.02% | | Net Interest Income | $64,529 | $51,814 | $12,715 | 24.54% | | Provision for expected credit loss expense | $6,139 | $3,705 | $2,434 | 65.69% | | Total Noninterest Income | $19,651 | $30,569 | $(10,918) | (35.72)% | | Total Noninterest Expense | $51,533 | $47,656 | $3,877 | 8.14% | | Net Income | $21,052 | $24,347 | $(3,295) | (13.53)% | | Basic EPS Class A Common Stock | $1.07 | $1.23 | $(0.16) | (13.01)% | | Diluted EPS Class A Common Stock | $1.07 | $1.22 | $(0.15) | (12.30)% | Six Months Ended June 30 | Metric (in thousands) | 2023 | 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Interest Income | $179,410 | $117,012 | $62,398 | 53.33% | | Total Interest Expense | $22,239 | $2,031 | $20,208 | 995.08% | | Net Interest Income | $157,171 | $114,981 | $42,190 | 36.69% | | Provision for expected credit loss expense | $32,905 | $12,931 | $19,974 | 154.47% | | Total Noninterest Income | $42,332 | $61,578 | $(19,246) | (31.26)% | | Total Noninterest Expense | $103,976 | $96,237 | $7,739 | 8.04% | | Net Income | $49,144 | $52,697 | $(3,553) | (6.74)% | | Basic EPS Class A Common Stock | $2.50 | $2.65 | $(0.15) | (5.66)% | | Diluted EPS Class A Common Stock | $2.50 | $2.64 | $(0.14) | (5.30)% | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME%20(UNAUDITED)) Reports net income and other comprehensive income components for the three and six months ended June 30, 2023, and 2022 Three Months Ended June 30 | Metric (in thousands) | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Net income | $21,052 | $24,347 | $(3,295) | | Total other comprehensive income (loss), net of tax | $(3,294) | $(7,611) | $4,317 | | Comprehensive income | $17,758 | $16,736 | $1,022 | Six Months Ended June 30 | Metric (in thousands) | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Net income | $49,144 | $52,697 | $(3,553) | | Total other comprehensive income (loss), net of tax | $611 | $(23,528) | $24,139 | | Comprehensive income | $49,755 | $29,169 | $20,586 | [Consolidated Statements of Stockholders' Equity](index=7&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS%27%20EQUITY%20(UNAUDITED)) Outlines changes in stockholders' equity, including retained earnings and other comprehensive income, for the periods presented | Metric (in thousands) | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Stockholders' Equity | $886,971 | $856,613 | | Class A Common Stock Shares Outstanding | 17,449 | 17,585 | | Class B Common Stock Shares Outstanding | 2,157 | 2,160 | | Retained Earnings | $771,260 | $742,250 | | Accumulated Other Comprehensive Income (Loss) | $(31,368) | $(31,979) | - For the six months ended June 30, 2023, the company declared dividends of **$0.748** per Class A share and **$0.680** per Class B share, totaling **$13.118 million** and **$1.467 million**, respectively. The company repurchased **156 thousand** Class A Common Stock shares for **$6.714 million**[18](index=18&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS%20(UNAUDITED)) Summarizes cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2023, and 2022 Six Months Ended June 30 | Activity (in thousands) | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $64,893 | $94,577 | $(29,684) | | Net cash used in investing activities | $(386,026) | $(28,960) | $(357,066) | | Net cash (used in) provided by financing activities | $249,411 | $(27,445) | $276,856 | | Net change in cash and cash equivalents | $(71,722) | $38,172 | $(109,894) | | Cash and cash equivalents at end of period | $241,967 | $795,143 | $(553,176) | [Notes to Consolidated Financial Statements](index=10&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) Provides detailed explanations and disclosures supporting the unaudited consolidated financial statements [1. Basis of Presentation and Summary of Significant Accounting Policies](index=10&type=section&id=1.%20BASIS%20OF%20PRESENTATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Republic Bancorp operates as a financial holding company with five segments, adopting recent ASUs, and plans to dissolve its insurance subsidiary - Republic Bancorp, Inc. is a financial holding company with five reportable segments: Traditional Banking, Warehouse, Mortgage Banking (Core Bank), and Tax Refund Solutions (TRS), Republic Credit Solutions (RCS) (RPG)[22](index=22&type=chunk)[24](index=24&type=chunk) - The Company's Board of Directors voted in May 2023 to dissolve its insurance subsidiary, Republic Insurance Services, Inc. (Captive), with dissolution expected in the second half of 2023[22](index=22&type=chunk) Recently Adopted Accounting Standards Updates (ASUs) | ASU No. | Topic | Nature of Update | Date Adopted | Financial Statement Impact | | :--- | :--- | :--- | :--- | :--- | | 2022-02 | Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures | Eliminates TDR recognition/measurement guidance; enhances disclosures for modifications to borrowers experiencing financial difficulty | January 1, 2023 | Immaterial | | 2022-06 | Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 | Extends period for reference rate reform relief guidance | January 1, 2023 | Immaterial (Company ceased new/renewing LIBOR-indexed loans Jan 1, 2022) | [2. Acquisition of CBank](index=23&type=section&id=2.%20ACQUISITION%20OF%20CBANK) Republic Bancorp acquired CBank for $51 million in cash to expand its Cincinnati presence, resulting in $24 million goodwill - The Company acquired CBank and its wholly owned bank subsidiary Commercial Industrial Finance (CIF) on March 15, 2023, for approximately **$51 million** in cash[58](index=58&type=chunk) - The primary reason for the acquisition was to expand the Company's footprint in the Cincinnati, Ohio metropolitan statistical area[58](index=58&type=chunk) CBank Acquisition Summary (March 15, 2023, in thousands) | Item | As Recorded by Republic | | :--- | :--- | | Total Assets Acquired | $253,317 | | Total Liabilities Assumed | $226,533 | | Net Assets Acquired | $26,784 | | Cash Consideration Paid | $(51,000) | | Goodwill | $24,216 | [3. Investment Securities](index=25&type=section&id=3.%20INVESTMENT%20SECURITIES) The company's investment portfolio includes AFS and HTM debt securities, with AFS having $43.19 million in unrealized losses as of June 30, 2023 Available-for-Sale Debt Securities (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Amortized Cost | $645,968 | $663,003 | | Fair Value | $604,150 | $620,365 | | Gross Unrealized Gains | $1,373 | $1,437 | | Gross Unrealized Losses | $(43,191) | $(44,075) | Held-to-Maturity Debt Securities (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Amortized Cost | $101,976 | $87,396 | | Fair Value | $101,190 | $87,357 | | Gross Unrecognized Gains | $75 | $160 | | Gross Unrecognized Losses | $(861) | $(199) | Pledged Debt Securities (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Amortized Cost | $97,400 | $236,047 | | Fair Value | $92,450 | $217,562 | [4. Loans Held for Sale](index=31&type=section&id=4.%20LOANS%20HELD%20FOR%20SALE) Consumer loans held for sale increased to $5.76 million at fair value and $15.79 million at lower of cost or fair value as of June 30, 2023 Consumer Loans Held for Sale, at Fair Value (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Balance, end of period | $5,757 | $4,706 | | Metric (Six Months Ended June 30) | 2023 | 2022 | | :--- | :--- | :--- | | Origination of consumer loans held for sale | $52,944 | $195,436 | | Proceeds from the sale of consumer loans held for sale | $(53,449) | $(201,083) | | Net gain on sale of consumer loans held for sale | $1,556 | $3,359 | Consumer Loans Held for Sale, at Lower of Cost or Fair Value (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Balance, end of period | $15,787 | $13,169 | | Metric (Six Months Ended June 30) | 2023 | 2022 | | :--- | :--- | :--- | | Origination of consumer loans held for sale | $416,682 | $332,560 | | Proceeds from the sale of consumer loans held for sale | $(418,051) | $(324,626) | | Net gain on sale of consumer loans held for sale | $3,987 | $2,906 | [5. Loans and Allowance for Credit Losses](index=32&type=section&id=5.%20LOANS%20AND%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) Total loans grew to $5.05 billion, ACLL increased to $72.20 million, and nonperforming loans slightly rose to $17.50 million as of June 30, 2023 Loan Portfolio Composition (in thousands) | Segment | June 30, 2023 | December 31, 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Traditional Banking | $4,394,668 | $3,855,142 | $539,526 | 14.00% | | Warehouse lines of credit | $539,560 | $403,560 | $136,000 | 33.70% | | Republic Processing Group | $118,914 | $257,100 | $(138,186) | (53.75)% | | **Total Loans** | **$5,053,142** | **$4,515,802** | **$537,340** | **11.90%** | | Allowance for Credit Losses | $(72,202) | $(70,413) | $(1,789) | 2.54% | | **Total Loans, net** | **$4,980,940** | **$4,445,389** | **$535,551** | **12.05%** | Allowance for Credit Losses on Loans (ACLL) Roll-forward (Six Months Ended June 30, in thousands) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Beginning Balance | $70,413 | $64,577 | | CBank Adjustment | $216 | — | | Provision | $32,905 | $12,898 | | Charge-offs | $(32,638) | $(17,250) | | Recoveries | $1,306 | $4,224 | | Ending Balance | $72,202 | $64,449 | Nonperforming Loans and Assets (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Loans on nonaccrual status | $16,957 | $15,562 | | Loans past due 90-days-or-more and still on accrual | $547 | $756 | | **Total Nonperforming Loans** | **$17,504** | **$16,318** | | Other real estate owned | $1,478 | $1,581 | | **Total Nonperforming Assets** | **$18,982** | **$17,899** | | Nonperforming loans to total loans | 0.35% | 0.36% | | Nonperforming assets to total assets | 0.30% | 0.31% | Delinquent Loans (30-days-or-more past due, in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Delinquent Loans | $15,918 | $15,260 | | Delinquency ratio (Total loans 30-days-or-more past due / Total loans) | 0.32% | 0.34% | Refund Advances (RAs) Performance (Six Months Ended June 30, in thousands) | Metric | 2023 Tax Season | 2022 Tax Season | | :--- | :--- | :--- | | RAs originated during the tax season | $834,552 | $311,207 | | RA net charge-offs recognized | $25,823 | $8,879 | | Provision expense recorded | $25,798 | $8,315 | | RA net losses recognized as % of originations | 3.09% | 2.85% | [6. Deposits](index=50&type=section&id=6.%20DEPOSITS) Total deposits increased to $4.73 billion, driven by the CBank acquisition and growth in interest-bearing deposits, despite a decline in noninterest-bearing deposits Deposit Composition (in thousands) | Segment/Type | June 30, 2023 | December 31, 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Core Bank Total Deposits | $4,269,758 | $4,089,721 | $180,037 | 4.40% | | Core Bank Noninterest-bearing | $1,405,543 | $1,464,493 | $(58,950) | (4.03)% | | Core Bank Interest-bearing | $2,864,215 | $2,625,228 | $238,987 | 9.10% | | RPG Total Deposits | $459,523 | $448,124 | $11,399 | 2.54% | | **Total Deposits** | **$4,729,281** | **$4,537,845** | **$191,436** | **4.22%** | - The CBank acquisition contributed **$191 million** to Core Bank deposit growth[153](index=153&type=chunk) - Core Bank legacy deposits decreased by **$11 million**, with noninterest-bearing deposits declining by **$110 million** and interest-bearing deposits increasing by **$99 million**[153](index=153&type=chunk) - The increase in Core Bank interest-bearing deposits was primarily in CDARs and ICS product types, which grew by **$184 million** in the first six months of 2023 due to significantly increased offering rates (above **4%**)[153](index=153&type=chunk)[155](index=155&type=chunk) [7. Securities Sold Under Agreements to Repurchase and Other Short-term Borrowings](index=52&type=section&id=7.%20SECURITIES%20SOLD%20UNDER%20AGREEMENTS%20TO%20REPURCHASE%20AND%20OTHER%20SHORT-TERM%20BORROWINGS) SSUARs and other short-term borrowings decreased by $125 million to $92.09 million due to customer relationships and unchanged pricing strategy | Metric | June 30, 2023 | December 31, 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Outstanding balance at end of period | $92,093 | $216,956 | $(124,863) | (57.55)% | | Weighted average interest rate at end of period | 0.43% | 0.41% | 0.02% | 4.88% | | Fair value of securities pledged | $92,450 | $254,296 | $(161,846) | (63.60)% | - The decrease in SSUARs is primarily due to large customer relationships and the Bank's unchanged pricing strategy for SSUARs, which has not been adjusted to match higher market rates[155](index=155&type=chunk) [8. Right-of-Use Assets and Operating Lease Liabilities](index=53&type=section&id=8.%20RIGHT-OF-USE%20ASSETS%20AND%20OPERATING%20LEASE%20LIABILITIES) The company's operating lease liabilities and right-of-use assets reflect 45 contracts, with total lease expense increasing to $4.00 million for the six months ended June 30, 2023 Total Operating Lease Expense (Six Months Ended June 30, in thousands) | Metric | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Total operating lease expense | $4,001 | $3,737 | $264 | Operating Lease Metrics | Metric | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Weighted average remaining term in years | 7.96 | 8.44 | | Weighted average discount rate | 2.13% | 2.10% | Operating Lease Liabilities Maturity Schedule (June 30, 2023, in thousands) | Year | Total Undiscounted Cash Flows | | :--- | :--- | | 2023 | $3,245 | | 2024 | $6,173 | | 2025 | $5,412 | | 2026 | $5,131 | | 2027 | $4,840 | | Thereafter | $15,381 | | **Total Undiscounted Cash Flows** | **$40,182** | | Discount applied to cash flows | $(4,461) | | **Total discounted cash flows reported as operating lease liabilities** | **$35,721** | [9. Federal Home Loan Bank Advances](index=55&type=section&id=9.%20FEDERAL%20HOME%20LOAN%20BANK%20ADVANCES) FHLB advances significantly increased to $520 million to fund deposit outflows and loan growth, with available borrowing capacity decreasing to $543 million FHLB Advances (in thousands) | Metric | June 30, 2023 | December 31, 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Overnight advances | $450,000 | $75,000 | $375,000 | 500.00% | | Fixed interest rate advances | $70,000 | $20,000 | $50,000 | 250.00% | | **Total FHLB advances** | **$520,000** | **$95,000** | **$425,000** | **447.37%** | | Weighted Average Rate (Total) | 4.88% | N/A | N/A | N/A | | Weighted Average Maturity (Total) | 0.68 years | N/A | N/A | N/A | Available Borrowing Capacity (in thousands) | Metric | June 30, 2023 | December 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Available borrowing capacity with the FHLB | $543,000 | $900,000 | $(357,000) | | Unsecured lines of credit | $125,000 | $125,000 | $0 | - The Company has utilized FHLB advances over the past year to fund its deposit outflow and overall loan growth[155](index=155&type=chunk) [10. Off Balance Sheet Risks, Commitments and Contingent Liabilities](index=56&type=section&id=10.%20OFF%20BALANCE%20SHEET%20RISKS%2C%20COMMITMENTS%20AND%20CONTINGENT%20LIABILITIES) Off-balance sheet commitments totaled $2.06 billion, with the Allowance for Credit Losses on Off-Balance Sheet Credit Exposures increasing due to loan mix changes Total Commitments (in thousands) | Metric | June 30, 2023 | December 31, 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Unused warehouse lines of credit | $440,940 | $733,940 | $(293,000) | (39.92)% | | Unused home equity lines of credit | $430,954 | $410,057 | $20,897 | 5.10% | | Unused loan commitments - other | $1,175,149 | $951,021 | $224,128 | 23.57% | | Standby letters of credit | $10,232 | $9,735 | $497 | 5.10% | | FHLB letter of credit | $233 | $643 | $(410) | (63.76)% | | **Total Commitments** | **$2,057,508** | **$2,105,396** | **$(47,988)** | **(2.28)%** | ACLC Roll-forward (Six Months Ended June 30, in thousands) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Beginning Balance | $1,250 | $1,052 | | Provision | $280 | $48 | | Ending Balance | $1,530 | $1,100 | - The Company increased its ACLC during the three and six months ended June 30, 2023, primarily due to a change in the loan mix to loans with higher reserve rates[145](index=145&type=chunk) [11. Fair Value](index=58&type=section&id=11.%20FAIR%20VALUE) Financial instruments are measured at fair value using a three-level hierarchy, with AFS debt securities at $604.15 million and consumer loans held for sale at $5.76 million Fair Value Measurements at June 30, 2023 (in thousands) | Financial Asset/Liability | Level 1 | Level 2 | Level 3 | Total Fair Value | | :--- | :--- | :--- | :--- | :--- | | Available-for-sale debt securities | $174,323 | $424,093 | $5,734 | $604,150 | | Equity securities with readily determinable fair value | — | $122 | — | $122 | | Mortgage loans held for sale | — | $4,038 | — | $4,038 | | Consumer loans held for sale | — | — | $5,757 | $5,757 | | Rate lock loan commitments | — | $189 | — | $189 | | Interest rate swap agreements (assets) | — | $7,829 | — | $7,829 | | Mandatory forward contracts (liabilities) | — | $61 | — | $61 | | Interest rate swap agreements (liabilities) | — | $7,829 | — | $7,829 | Non-Recurring Fair Value Measurements at June 30, 2023 (in thousands) | Financial Asset | Level 1 | Level 2 | Level 3 | Total Fair Value | | :--- | :--- | :--- | :--- | :--- | | Collateral-dependent loans | — | — | $2,049 | $2,049 | | Other real estate owned | — | — | $1,478 | $1,478 | - The fair value of the Bank's single private label mortgage-backed security (**$1.988 million**) and Trust Preferred Security (**$3.746 million**) are measured using significant unobservable inputs (Level 3)[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk) [12. Mortgage Banking Activities](index=72&type=section&id=12.%20MORTGAGE%20BANKING%20ACTIVITIES) Mortgage Banking income decreased to $1.71 million due to higher interest rates impacting originations, while MSRs decreased to $7.99 million Mortgage Banking Income (Six Months Ended June 30, in thousands) | Component | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Net gain realized on sale of mortgage loans held for sale | $605 | $5,407 | $(4,802) | | Net change in fair value recognized on loans held for sale | $39 | $(597) | $636 | | Net change in fair value recognized on rate lock loan commitments | $187 | $(1,184) | $1,371 | | Net change in fair value recognized on forward contracts | $128 | $293 | $(165) | | Net servicing income recognized | $748 | $501 | $247 | | **Total Mortgage Banking income** | **$1,707** | **$4,420** | **$(2,713)** | Capitalized Mortgage Servicing Rights (MSRs) Activity (Six Months Ended June 30, in thousands) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Balance, beginning of period | $8,769 | $9,196 | | Additions | $200 | $1,459 | | Amortized to expense | $(974) | $(1,248) | | Balance, end of period | $7,995 | $9,407 | - Mortgage Banking derivatives, including mandatory forward sales contracts and interest rate lock loan commitments, are used to manage interest rate risk on loan commitments and mortgage loans held for sale[186](index=186&type=chunk)[188](index=188&type=chunk) - These instruments typically expire within **90 days**[186](index=186&type=chunk)[188](index=188&type=chunk) [13. Interest Rate Swaps](index=76&type=section&id=13.%20INTEREST%20RATE%20SWAPS) The Bank uses non-hedge interest rate swaps with a total notional amount of $286.12 million to facilitate client transactions and manage its own risk Interest Rate Swaps Summary (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Notional Amount | $286,116 | $263,336 | | Total Fair Value | $0 | $0 | | Fair value of cash or investment securities pledged as collateral | $4,900 | $560 | - The Bank enters into interest rate swaps to facilitate client transactions and minimize its own interest rate risk through offsetting positions, with changes in fair value reported in current year earnings as they are not designated as hedging instruments[191](index=191&type=chunk) [14. Earnings Per Share](index=77&type=section&id=14.%20EARNINGS%20PER%20SHARE) Basic and diluted EPS for Class A Common Stock decreased to $2.50 for the six months ended June 30, 2023, calculated using the two-class method Earnings Per Share (Six Months Ended June 30) | Metric | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Basic EPS Class A Common Stock | $2.50 | $2.65 | $(0.15) | | Basic EPS Class B Common Stock | $2.27 | $2.41 | $(0.14) | | Diluted EPS Class A Common Stock | $2.50 | $2.64 | $(0.14) | | Diluted EPS Class B Common Stock | $2.27 | $2.40 | $(0.13) | - The difference in earnings per share between Class A and Class B Common Stock results from a **10%** per share cash dividend premium paid on Class A Common Stock[195](index=195&type=chunk) [15. Other Comprehensive Income](index=78&type=section&id=15.%20OTHER%20COMPREHENSIVE%20INCOME) Total OCI, net of tax, was a gain of $611 thousand for the six months ended June 30, 2023, a significant improvement from the prior year's loss Other Comprehensive Income (Six Months Ended June 30, in thousands) | Metric | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Unrealized gain (loss) on AFS debt securities | $787 | $(31,382) | $32,169 | | Unrealized gain (loss) on AFS debt security for which a portion of OTTI has been recognized in earnings | $33 | $9 | $24 | | Net gains (losses) | $820 | $(31,373) | $32,193 | | Income tax benefit (expense) related to OCI | $(209) | $7,845 | $(8,054) | | **Total other comprehensive income (loss), net of tax** | **$611** | **$(23,528)** | **$24,139** | Accumulated Other Comprehensive Income (Loss) Balances (net of tax, in thousands) | Metric | June 30, 2023 | December 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Total unrealized gain (loss) | $(31,368) | $(31,979) | $611 | [16. Revenue from Contracts with Customers](index=79&type=section&id=16.%20REVENUE%20FROM%20CONTRACTS%20WITH%20CUSTOMERS) Total net revenue increased to $199.50 million, with Core Banking contributing 62%, but non-recurring legal settlement income impacted prior year comparison Total Net Revenue and Concentration by Segment (Six Months Ended June 30, in thousands) | Segment | 2023 Net Revenue | 2023 % Concentration | 2022 Net Revenue | 2022 % Concentration | | :--- | :--- | :--- | :--- | :--- | | Core Banking | $123,397 | 62% | $103,565 | 59% | | Republic Processing Group | $76,106 | 38% | $72,994 | 41% | | **Total Net Revenue** | **$199,503** | **100%** | **$176,559** | **100%** | Key Noninterest Income Components (Six Months Ended June 30, in thousands) | Component | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Service charges on deposit accounts | $6,826 | $6,589 | $237 | | Net refund transfer fees | $15,286 | $16,001 | $(715) | | Mortgage banking income | $1,707 | $4,420 | $(2,713) | | Interchange fee income | $6,470 | $6,531 | $(61) | | Program fees | $6,980 | $7,739 | $(759) | | Death benefits in excess of cash surrender value of life insurance | $1,728 | — | $1,728 | | Contract termination fee | — | $5,000 | $(5,000) | | Legal settlement | — | $13,000 | $(13,000) | - Net refund transfer fees decreased by **$715 thousand** for the first six months of 2023, negatively impacted by a general decline in overall RT demand across the industry[204](index=204&type=chunk)[208](index=208&type=chunk) [17. Segment Information](index=84&type=section&id=17.%20SEGMENT%20INFORMATION) The company operates five reportable segments, with Traditional Banking and RCS showing increased net income for the six months ended June 30, 2023 Net Income by Segment (Six Months Ended June 30, in thousands) | Segment | 2023 Net Income | 2022 Net Income | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Traditional Banking | $22,901 | $11,152 | $11,749 | 105.35% | | Warehouse Lending | $1,893 | $5,478 | $(3,585) | (65.44)% | | Mortgage Banking | $(2,342) | $(519) | $(1,823) | 351.25% | | Tax Refund Solutions | $17,428 | $27,522 | $(10,094) | (36.68)% | | Republic Credit Solutions | $9,264 | $9,064 | $200 | 2.21% | | **Total Company** | **$49,144** | **$52,697** | **$(3,553)** | **(6.74)%** | Primary Drivers of Net Revenue by Reportable Segment | Reportable Segment | Primary Drivers of Net Revenue | | :--- | :--- | | Traditional Banking | Loans, investments, and deposits | | Warehouse Lending | Mortgage warehouse lines of credit | | Mortgage Banking | Loan sales and servicing | | Tax Refund Solutions | Loans, refund transfers, and prepaid cards | | Republic Credit Solutions | Unsecured, consumer loans | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=87&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses financial performance, critical accounting policies, and financial condition for the periods presented [Overview and Forward-Looking Statements](index=87&type=section&id=Overview%20and%20Forward-Looking%20Statements) Republic Bancorp, a financial holding company, provides an overview of its operations and discusses various forward-looking risks - Republic Bancorp, Inc. is a financial holding company headquartered in Louisville, Kentucky, operating through its subsidiary bank and an insurance subsidiary (Captive), which is expected to dissolve in the second half of 2023[225](index=225&type=chunk)[226](index=226&type=chunk) - Forward-looking statements involve known and unknown risks, including the potential impact of inflation, litigation, natural disasters, changes in political and economic conditions, bank failures, LIBOR discontinuation, interest rate fluctuations, and competitive pressures[228](index=228&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk) [Critical Accounting Policies and Estimates](index=89&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) Management identifies the Allowance for Credit Losses on Loans and Provision for Expected Credit Loss Expense as critical accounting policies - Management considers the Allowance for Credit Losses on Loans (ACLL) and Provision for Expected Credit Loss Expense to be critical accounting policies, requiring significant reliance on estimates and judgment regarding historical loss rates, economic factors, and reasonable forecasts[236](index=236&type=chunk)[238](index=238&type=chunk) - Adjustments to historical loss rates for current conditions include underwriting standards, portfolio mix, delinquency levels, and environmental changes like property values[239](index=239&type=chunk) - One-year forecast adjustments are based on unemployment and Commercial Real Estate (CRE) values, with reversion to long-term averages thereafter[239](index=239&type=chunk) [Business Segment Composition](index=91&type=section&id=BUSINESS%20SEGMENT%20COMPOSITION) The company is structured into five reportable segments: Traditional Banking, Warehouse Lending, Mortgage Banking, Tax Refund Solutions, and Republic Credit Solutions - The Company is organized into five reportable segments: Traditional Banking, Warehouse Lending, Mortgage Banking (collectively 'Core Bank'), and Tax Refund Solutions (TRS), Republic Credit Solutions (RCS) (collectively 'Republic Processing Group' or 'RPG')[241](index=241&type=chunk) - Traditional Banking offers retail mortgage, commercial, construction, consumer, and aircraft lending, along with private banking, treasury management, correspondent lending, and internet/mobile banking services, primarily within its market footprint[243](index=243&type=chunk)[244](index=244&type=chunk)[247](index=247&type=chunk)[248](index=248&type=chunk)[249](index=249&type=chunk)[250](index=250&type=chunk)[251](index=251&type=chunk)[252](index=252&type=chunk)[253](index=253&type=chunk)[254](index=254&type=chunk) - Warehouse Lending provides short-term, revolving credit facilities to mortgage bankers nationwide, secured by single-family residential real estate loans, with individual loans typically on the line for **15-30 days**[256](index=256&type=chunk)[257](index=257&type=chunk) - Mortgage Banking originates and sells **15-, 20-, and 30-year** fixed-term residential real estate loans into the secondary market, primarily to FHLMC and FNMA, typically retaining servicing rights and recording Mortgage Servicing Rights (MSRs)[258](index=258&type=chunk)[259](index=259&type=chunk) - Tax Refund Solutions (TRS) facilitates federal and state tax refund products (Refund Transfers, Refund Advances, Early Season Refund Advances) and operates the Republic Payment Solutions (RPS) division, offering prepaid cards and payroll debit cards[261](index=261&type=chunk)[262](index=262&type=chunk)[264](index=264&type=chunk)[272](index=272&type=chunk) - Republic Credit Solutions (RCS) offers unsecured, small-dollar consumer credit products, including line-of-credit products (LOC I, LOC II), installment loans, and healthcare receivables products, primarily to subprime or near-prime borrowers outside the Bank's market footprint[273](index=273&type=chunk)[275](index=275&type=chunk)[277](index=277&type=chunk)[280](index=280&type=chunk) [Results of Operations (Q2 2023 vs. Q2 2022)](index=101&type=section&id=Results%20of%20Operations%20(Q2%202023%20vs.%20Q2%202022)) Net income decreased by $3.3 million, or 13.5%, driven by lower noninterest income and higher provision for credit losses, despite increased net interest income [Overall Company Performance](index=101&type=section&id=Overall%20Company%20Performance%20(Q2)) Total company net income decreased by $3.3 million, or 13.53%, for the three months ended June 30, 2023 Net Income and Diluted EPS (Three Months Ended June 30) | Metric | 2023 | 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Income (in thousands) | $21,052 | $24,347 | $(3,295) | (13.53)% | | Diluted EPS Class A Common Stock | $1.07 | $1.22 | $(0.15) | (12.30)% | - Traditional Banking net income increased by **$5.3 million** (**78%**), while Warehouse net income decreased by **$1.3 million** (**53%**)[281](index=281&type=chunk)[282](index=282&type=chunk) - Mortgage Banking income decreased by **$856 thousand** (**49%**), and Tax Refund Solutions net income decreased by **$7.1 million** (**59%**)[284](index=284&type=chunk)[285](index=285&type=chunk) - Republic Credit Solutions net income increased by **$189 thousand** (**5%**)[286](index=286&type=chunk) [Net Interest Income](index=103&type=section&id=Net%20Interest%20Income%20(Q2)) Total company net interest income increased by $12.7 million, or 24.54%, with NIM expanding to 4.46% for Q2 2023 Net Interest Income and Margin (Three Months Ended June 30) | Metric | 2023 (in thousands) | 2022 (in thousands) | Change (in thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Company Net Interest Income | $64,529 | $51,814 | $12,715 | 24.54% | | Total Company Net Interest Margin (NIM) | 4.46% | 3.55% | 0.91% | 25.63% | | Traditional Banking Net Interest Income | $48,682 | $39,158 | $9,524 | 24.32% | | Traditional Banking NIM | 3.77% | 3.06% | 0.71% | 23.20% | | Warehouse Net Interest Income | $2,642 | $3,886 | $(1,244) | (32.01)% | | Warehouse NIM | 2.28% | 2.69% | (0.41)% | (15.24)% | | TRS Net Interest Income | $4,010 | $1,638 | $2,372 | 144.81% | | RCS Net Interest Income | $9,134 | $6,979 | $2,155 | 30.88% | - Traditional Banking's net interest income and NIM increased due to higher loan yields outpacing increased cost of interest-bearing liabilities, driven by loan growth and the CBank acquisition[293](index=293&type=chunk)[296](index=296&type=chunk)[297](index=297&type=chunk) - However, declining noninterest-bearing deposits and rising FHLB borrowings are expected to cause future NIM compression[293](index=293&type=chunk)[296](index=296&type=chunk)[297](index=297&type=chunk) - Warehouse net interest income and NIM decreased due to lower average outstanding balances (driven by reduced mortgage refinancing) and funding costs rising faster than yields, as interest rate floors on client lines of credit were surpassed[299](index=299&type=chunk)[302](index=302&type=chunk)[303](index=303&type=chunk) - TRS net interest income increased, primarily from higher FTP crediting rates on prepaid card balances[305](index=305&type=chunk)[306](index=306&type=chunk)[307](index=307&type=chunk) - RCS net interest income increased due to higher fee income from its LOC II product, with customer demand not assumed to be interest rate sensitive[308](index=308&type=chunk)[309](index=309&type=chunk) [Provision for Expected Credit Loss Expense](index=112&type=section&id=Provision%20for%20expected%20credit%20loss%20expense%20(Q2)) Total company provision for expected credit loss expense increased by $2.4 million, or 65.69%, for the three months ended June 30, 2023 Provision for Expected Credit Loss Expense (Three Months Ended June 30, in thousands) | Segment | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Traditional Banking | $1,860 | $146 | $1,714 | | Warehouse | $202 | $(234) | $436 | | Tax Refund Solutions | $(219) | $360 | $(579) | | Republic Credit Solutions | $4,296 | $3,433 | $863 | | **Total Company Provision** | **$6,139** | **$3,705** | **$2,434** | - Traditional Banking's Provision increased due to **$3.9 million** in general formula reserves for loan growth and **$1.0 million** in qualitative factor reserves, partially offset by a **$2.0 million** release of COVID-related reserves[325](index=325&type=chunk) - TRS recorded a net credit to Provision in Q2 2023, compared to a net charge in Q2 2022, primarily related to its Refund Advance (RA) product[323](index=323&type=chunk) - The incurred loss rate for 2023 tax season RAs was **3.09%** of originations, up from **2.85%** in 2022[328](index=328&type=chunk) - RCS's Provision increased due to a **$638 thousand** increase in net charge-offs and a **$221 thousand** increase in general formula reserves for its LOC product, driven by increased origination volume for LOC II[330](index=330&type=chunk) Annualized Net Loan Charge-offs (Recoveries) to Average Loans (Three Months Ended June 30) | Segment | 2023 | 2022 | | :--- | :--- | :--- | | Total Company | 2.37% | 1.00% | | Core Bank | 0.01% | —% | | Republic Processing Group | 18.73% | 10.46% | [Noninterest Income](index=118&type=section&id=Noninterest%20Income%20(Q2)) Total company noninterest income decreased by $10.9 million, or 35.72%, primarily due to a non-recurring legal settlement in Q2 2022 Noninterest Income (Three Months Ended June 30, in thousands) | Segment | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Total Company Noninterest Income | $19,651 | $30,569 | $(10,918) | | Traditional Banking | $10,330 | $7,734 | $2,596 | | Mortgage Banking | $907 | $1,763 | $(856) | | Tax Refund Solutions | $5,325 | $17,865 | $(12,540) | | Republic Credit Solutions | $3,051 | $3,149 | $(98) | - Traditional Banking's noninterest income increased by **$2.6 million**, primarily due to a **$1.7 million** death benefit payment from a Bank Owned Life Insurance (BOLI) policy[340](index=340&type=chunk) - Mortgage Banking income decreased by **$856 thousand** (**49%**) due to substantially higher long-term market interest rates, leading to a significant slowdown in mortgage loan originations and sales[342](index=342&type=chunk) - Tax Refund Solutions' noninterest income decreased by **$12.5 million**, primarily due to a **$13 million** legal settlement received in the second quarter of 2022 that did not recur in 2023[344](index=344&type=chunk) - Republic Credit Solutions' noninterest income decreased by **$98 thousand** (**3%**), reflecting lower sales volume from installment loans (due to a new credit model under testing) partially offset by higher sales volume from LOC II products[346](index=346&type=chunk)[347](index=347&type=chunk) [Noninterest Expense](index=119&type=section&id=Noninterest%20Expense%20(Q2)) Total company noninterest expense increased by $3.9 million, or 8.14%, driven by the CBank acquisition and higher legacy salaries and benefits Noninterest Expense (Three Months Ended June 30, in thousands) | Segment | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Total Company Noninterest Expense | $51,533 | $47,656 | $3,877 | | Traditional Banking | $42,153 | $38,317 | $3,836 | | Mortgage Banking | $2,322 | $2,832 | $(510) | | Republic Credit Solutions | $2,907 | $1,939 | $968 | - Traditional Banking noninterest expense increased by **$3.8 million**, driven by **$2.0 million** from the CBank acquisition, a **$1.2 million** increase in legacy salaries and benefits, higher interchange-related expenses, and increased FDIC insurance expense[350](index=350&type=chunk)[351](index=351&type=chunk)[428](index=428&type=chunk) - Mortgage Banking noninterest expense decreased by **$510 thousand** (**18%**), primarily due to a **$281 thousand** reduction in overhead salaries and a **$146 thousand** reduction in mortgage commissions, both resulting from the slowdown in mortgage origination volume[351](index=351&type=chunk) - Republic Credit Solutions noninterest expense increased by **$968 thousand** (**50%**), with approximately **$745 thousand** concentrated in the LOC II product due to increased marketing activity[352](index=352&type=chunk) [Results of Operations (H1 2023 vs. H1 2022)](index=121&type=section&id=Results%20of%20Operations%20(H1%202023%20vs.%20H1%202022)) Net income decreased by $3.6 million, or 6.7%, due to lower noninterest income from non-recurring payments and increased provision for credit losses [Overall Company Performance](index=121&type=section&id=Overall%20Company%20Performance%20(H1)) Total company net income decreased by $3.6 million, or 6.74%, for the six months ended June 30, 2023 Net Income and Diluted EPS (Six Months Ended June 30) | Metric | 2023 | 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Income (in thousands) | $49,144 | $52,697 | $(3,553) | (6.74)% | | Diluted EPS Class A Common Stock | $2.50 | $2.64 | $(0.14) | (5.30)% | - Traditional Banking net income increased by **$11.7 million** (**105%**), while Warehouse net income decreased by **$3.6 million** (**65%**)[353](index=353&type=chunk)[354](index=354&type=chunk) - Mortgage Banking income decreased by **$2.7 million** (**61%**), and Tax Refund Solutions net income decreased by **$10.1 million** (**37%**)[355](index=355&type=chunk)[359](index=359&type=chunk) - Republic Credit Solutions net income increased by **$200 thousand** (**2%**)[360](index=360&type=chunk) [Net Interest Income](index=123&type=section&id=Net%20Interest%20Income%20(H1)) Total company net interest income increased by $42.2 million, or 36.69%, with NIM expanding to 5.48% for H1 2023 Net Interest Income and Margin (Six Months Ended June 30) | Metric | 2023 (in thousands) | 2022 (in thousands) | Change (in thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Company Net Interest Income | $157,171 | $114,981 | $42,190 | 36.69% | | Total Company Net Interest Margin (NIM) | 5.48% | 3.94% | 1.54% | 39.09% | | Traditional Banking Net Interest Income | $98,789 | $75,306 | $23,483 | 31.18% | | Traditional Banking NIM | 3.92% | 2.98% | 0.94% | 31.54% | | Warehouse Net Interest Income | $4,729 | $8,401 | $(3,672) | (43.71)% | | Warehouse NIM | 2.39% | 2.89% | (0.50)% | (17.30)% | | TRS Net Interest Income | $35,775 | $17,042 | $18,733 | 109.92% | | RCS Net Interest Income | $17,756 | $13,875 | $3,881 | 27.97% | - Traditional Banking's net interest income increased by **$23.5 million** (**31%**), and NIM expanded by **94 basis points**, driven by loan growth (including CBank acquisition and correspondent lending) and higher investment yields[367](index=367&type=chunk)[368](index=368&type=chunk)[371](index=371&type=chunk)[372](index=372&type=chunk) - However, declining cash and noninterest-bearing deposits, coupled with rising FHLB borrowings and deposit costs, are expected to lead to future NIM compression[367](index=367&type=chunk)[368](index=368&type=chunk)[371](index=371&type=chunk)[372](index=372&type=chunk) - Warehouse net interest income decreased by **$3.7 million** (**44%**), and NIM compressed by **50 basis points**, primarily due to lower average outstanding balances (driven by reduced mortgage refinancing demand) and funding costs rising faster than yields[373](index=373&type=chunk)[374](index=374&type=chunk) - TRS net interest income increased by **$18.7 million**, driven by higher FTP crediting rates on prepaid card products and a **$17.0 million** increase in loan-related interest and fees from a **$426 million** increase in Refund Advance (RA) origination volume[377](index=377&type=chunk)[378](index=378&type=chunk)[379](index=379&type=chunk) - RCS net interest income increased by **$3.9 million** (**28%**), primarily due to a **$7.7 million** increase in LOC II loan fees, driven by steadily increasing origination volume since early 2022[381](index=381&type=chunk)[382](index=382&type=chunk) - While customer demand is not interest rate sensitive, rising FTP costs are expected to negatively impact segment financial results[383](index=383&type=chunk) [Provision for Expected Credit Loss Expense](index=132&type=section&id=Provision%20for%20expected%20credit%20loss%20expense%20(H1)) Total company provision for expected credit loss expense increased by $20.0 million, or 154.47%, for the six months ended June 30, 2023 Provision for Expected Credit Loss Expense (Six Months Ended June 30, in thousands) | Segment | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Traditional Banking | $4,844 | $466 | $4,378 | | Warehouse | $337 | $(635) | $972 | | Tax Refund Solutions | $27,724 | $13,100 | $14,624 | | Republic Credit Solutions | $6,135 | $4,828 | $1,307 | | **Total Company Provision** | **$32,905** | **$12,898** | **$20,007** | - Traditional Banking's Provision increased due to a **$2.7 million** charge for CBank non-PCD loans, **$6.9 million** for loan growth (including **$1.0 million** in qualitative factor reserves), partially offset by a **$2.7 million** release of COVID-related reserves[398](index=398&type=chunk) - TRS recorded a **$21.6 million** charge to Provision for Refund Advance (RA) loans, primarily due to a **$426 million** increase in RA origination volume from a new contract[400](index=400&type=chunk)[401](index=401&type=chunk) - The incurred loss rate for 2023 tax season RAs was **2.92%** of originations[401](index=401&type=chunk) - RCS's Provision increased due to a **$1.2 million** increase in net charge-offs and a **$620 thousand** Allowance build for its LOC II product, driven by increased origination volume[402](index=402&type=chunk) Annualized Net Loan Charge-offs (Recoveries) to Average Loans (Six Months Ended June 30) | Segment | 2023 | 2022 | | :--- | :--- | :--- | | Total Company | 1.32% | 0.60% | | Core Bank | 0.01% | 0.01% | | Republic Processing Group | 21.68% | 19.16% | [Noninterest Income](index=137&type=section&id=Noninterest%20Income%20(H1)) Total company noninterest income decreased by $19.2 million, or 31.26%, primarily due to non-recurring payments in H1 2022 Noninterest Income (Six Months Ended June 30, in thousands) | Segment | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Total Company Noninterest Income | $42,332 | $61,578 | $(19,246) | | Traditional Banking | $17,984 | $14,976 | $3,008 | | Mortgage Banking | $1,751 | $4,500 | $(2,749) | | Tax Refund Solutions | $16,965 | $35,801 | $(18,836) | | Republic Credit Solutions | $5,610 | $6,276 | $(666) | - Traditional Banking's noninterest income increased by **$3.0 million** (**20%**), primarily due to a **$1.7 million** death benefit payment from a BOLI policy[412](index=412&type=chunk) - Mortgage Banking income decreased by **$2.7 million** (**61%**) due to substantially higher long-term market interest rates, leading to a significant slowdown in mortgage loan originations and sales[414](index=414&type=chunk) - Tax Refund Solutions' noninterest income decreased by **$18.8 million** (**53%**), primarily due to **$18 million** in nonrecurring payments received in the first six months of 2022 (a **$5.0 million** contract termination fee and a **$13.0 million** legal settlement) that did not recur in 2023[415](index=415&type=chunk) - Republic Credit Solutions' noninterest income decreased by **$666 thousand** (**11%**), reflecting lower sales volume and gains from installment loans (due to a new credit model under testing) partially offset by higher sales volume and gains from LOC II products[416](index=416&type=chunk)[417](index=417&type=chunk) [Noninterest Expense](index=138&type=section&id=Noninterest%20Expense%20(H1)) Total company noninterest expense increased by $7.7 million, or 8.04%, driven by the CBank acquisition and higher legacy salaries and benefits Noninterest Expense (Six Months Ended June 30, in thousands) | Segment | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Total Company Noninterest Expense | $103,976 | $96,237 | $7,739 | | Traditional Banking | $83,005 | $76,544 | $6,461 | | Mortgage Banking | $4,876 | $5,522 | $(646) | | Republic Credit Solutions | $5,328 | $3,506 | $1,822 | - Traditional Banking noninterest expense increased by **$6.5 million**, driven by **$4.4 million** from the CBank acquisition (including **$2.2 million** in non-recurring merger expenses) and a **$1.3 million** increase in legacy salaries and benefits[420](index=420&type=chunk) - Mortgage Banking noninterest expense decreased by **$646 thousand** (**12%**), primarily due to a **$304 thousand** reduction in overhead salaries and a **$149 thousand** reduction in mortgage commissions, both resulting from the slowdown in mortgage origination volume[423](index=423&type=chunk) - Republic Credit Solutions noninterest expense increased by **$1.8 million** (**52%**), with approximately **$867 thousand** concentrated in the LOC II product due to increased marketing activity and **$532 thousand** in salaries and benefits due to annual merit increases[425](index=425&type=chunk) [Comparison of Financial Condition (June 30, 2023 vs. Dec 31, 2022)](index=140&type=section&id=COMPARISON%20OF%20FINANCIAL%20CONDITION%20AS%20OF%20JUNE%2030%2C%202023%20AND%20DECEMBER%2031%2C%202022) Total assets and deposits increased, while cash decreased and FHLB advances rose significantly, with capital ratios exceeding regulatory requirements [Cash and Cash Equivalents](index=140&type=section&id=Cash%20and%20Cash%20Equivalents) Cash and cash equivalents decreased by $71.7 million, or 22.87%, primarily due to lower average deposits and increased loan balances | Metric (in thousands) | June 30, 2023 | December 31, 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $241,967 | $313,689 | $(71,722) | (22.87)% | - The decline in average interest-earning cash balances was generally driven by a decrease in average deposits and an increase in average loan balances[426](index=426&type=chunk) - Cash held at the Federal Reserve Bank earned a weighted-average yield of **4.82%** during the first six months of 2023, with a spot balance yield of **5.15%** on June 30, 2023[427](index=427&type=chunk) [Investment Securities](index=141&type=section&id=Investment%20Securities) The investment portfolio increased by $19 million, driven by purchases and the CBank merger, partially offset by calls and paydowns - Republic's investment portfolio increased by **$19 million** from December 31, 2022, to June 30, 2023[429](index=429&type=chunk) - This was driven by **$40 million** in portfolio purchases, **$16 million** from the CBank merger, and a **$20 million** increase in FHLB stock[429](index=429&type=chunk) - These increases were partially offset by portfolio declines of **$40 million** from calls and maturities of debt securities, **$18 million** in paydowns on mortgage-backed securities, and a **$1 million** increase in the portfolio market value[429](index=429&type=chunk) Purchases of Investment Securities (Six Months Ended June 30, 2023, in thousands) | Class | Purchase Cost | Yield to Maturity | Average Life | | :--- | :--- | :--- | :--- | | Corporate (CBank acquisition) | $2,017 | 6.05% | 2.60 yrs | | U.S. Government Agencies | $65,000 | 5.47% | 2.60 yrs | | Mortgage-backed securities - residential (CBank acquisition) | $14,442 | 4.56% | 9.10 yrs | | **Total Purchases** | **$81,459** | **5.32%** | **3.75 yrs** | [Loans](index=142&type=section&id=Loans) Total loans increased by $537 million, or 12%, primarily from Traditional Banking and Warehouse segments, partially offset by RPG loan paydowns Gross Loan Portfolio Composition (in thousands) | Segment | June 30, 2023 | December 31, 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Traditional Banking | $4,394,668 | $3,855,142 | $539,526 | 14% | | Warehouse lines of credit | $539,560 | $403,560 | $136,000 | 34% | | Republic Processing Group | $118,914 | $257,100 | $(138,186) | (54)% | | **Total Loans** | **$5,053,142** | **$4,515,802** | **$537,340** | **12%** | - Traditional Banking loans increased by **$540 million** (**14%**), driven by **$216 million** from the CBank acquisition, **$54 million** in legacy Commercial Real Estate (CRE), **$89 million** in residential real estate, and **$96 million** from Correspondent Lending[432](index=432&type=chunk)[433](index=433&type=chunk)[434](index=434&type=chunk) - Warehouse outstanding balances increased by **$136 million**, but future balances are difficult to project due to mortgage market volatility[435](index=435&type=chunk) - Tax Refund Solutions (TRS) loans decreased by **$98 million**, primarily due to paydowns of Early Season Refund Advances (ERAs)[437](index=437&type=chunk) [Allowance for Credit Losses](index=144&type=section&id=Allowance%20for%20Credit%20Losses) Total ACLL increased by $1.8 million, or 2.54%, to $72.2 million, with Traditional Banking ACLL rising and TRS ACLL decreasing to $0 Allowance for Credit Losses (ACLL) (in thousands) | Metric | June 30, 2023 | December 31, 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Company ACLL | $72,202 | $70,413 | $1,789 | 2.54% | | ACLL to Total Loans | 1.43% | 1.56% | (0.13)% | (8.33)% | | Traditional Banking ACLL | $55,567 | $50,709 | $4,858 | 9.58% | | Warehouse ACLL | $1,346 | $1,009 | $337 | 33.40% | | Tax Refund Solutions ACLL | $0 | $3,797 | $(3,797) | (100.00)% | | Republic Credit Solutions ACLL | $15,289 | $14,807 | $482 | 3.26% | - Traditional Banking ACLL increased by approximately **$324 thousand**, driven by formula reserves tied to loan growth, partially offset by a **$1.5 million** release of COVID-related reserves[439](index=439&type=chunk) - Tax Refund Solutions ACLL decreased by **$4 million** to **$0**, primarily due to the charge-off of all unpaid Early Season Refund Advances (ERAs) originated in December 2022[441](index=441&type=chunk) - Republic Credit Solutions ACLL increased by **$482 thousand**, driven by an increase in the LOC II spot balance and a change in the loan mix[442](index=442&type=chunk) [Asset Quality](index=147&type=section&id=Asset%20Quality) Asset quality metrics remained stable, with a decrease in total classified and special mention loans and a slight increase in nonperforming loans [Classified and Special Mention Loans](index=147&type=section&id=Classified%20and%20Special%20Mention%20Loans) Total Classified and Special Mention loans decreased by $8.6 million, or 9.68%, primarily due to commercial loan repayments or upgrades Classified and Special Mention Loans (in thousands) | Category | June 30, 2023 | December 31, 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Classified Loans | $18,623 | $18,508 | $115 | 0.62% | | Total Special Mention Loans | $61,287 | $69,964 | $(8,677) | (12.40)% | | **Total Classified and Special Mention Loans** | **$79,910** | **$88,472** | **$(8,562)** | **(9.68)%** | - The Bank's Classified and Special Mention loans decreased by approximately **$9 million** during the first six months of 2023, primarily due to commercial-purpose loans being repaid or upgraded to a Pass rating[445](index=445&type=chunk) [Nonperforming Loans](index=147&type=section&id=Nonperforming%20Loans) Total nonperforming loans increased by $1.2 million, or 7.27%, to $17.5 million, while the ratio to total loans slightly decreased Nonperforming Loans and Assets Summary (in thousands) | Metric | June 30, 2023 | December 31, 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Nonperforming Loans | $17,504 | $16,318 | $1,186 | 7.27% | | Nonperforming loans to total loans | 0.35% | 0.36% | (0.01)% | (2.78)% | | ACLL to nonaccrual loans | 426% | 452% | (26)% | (5.75)% | - The increase in nonperforming loans was primarily driven by the refinancing of **$8 million** of these loans to another financial institution[450](index=450&type=chunk) Roll-forward of Nonperforming Loans (Six Months Ended June 30, in thousands) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Nonperforming loans at beginning of period | $16,318 | $20,552 | | Loans added to nonperforming status | $5,267 | $2,324 | | Loans removed from nonperforming status | $(3,193) | $(5,633) | | Nonperforming loans at end of period | $17,504 | $16,210 | [Delinquent Loans](index=150&type=section&id=Delinquent%20Loans) Total delinquent loans increased by $658 thousand, or 4.31%, to $15.9 million, while the delinquency ratio to total loans slightly decreased Delinquent Loan Composition (in thousands) | Metric | June 30, 2023 | December 31, 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Delinquent Loans | $15,918 | $15,260 | $658 | 4.31% | | Total Company delinquent loans to total loans | 0.32% | 0.34% | (0.02)% | (5.88)% | | Core Bank delinquent loans to total Core Bank loans | 0.12% | 0.14% | (0.02)% | (14.29)% | Roll-forward of Delinquent Loans (Six Months Ended June 30, in thousands) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Delinquent loans at beginning of period | $15,260 | $13,465 | | Loans added to delinquency status | $4,588 | $2,348 | | Loans removed from delinquency status | $(4,684) | $(4,104) | | Delinquent loans at end of period | $15,918 | $11,451 | [Collateral-Dependent Loans and Loan Modifications](index=152&type=section&id=Collateral-Dependent%20Loans%20and%20Loan%20Modifications) Collateral-dependent loan modifications totaled $1.3 million as of June 30, 2023, following the adoption of ASU 2022-02 - As of June 30, 2023, there were **$1.3 million** in collateral-dependent loan modifications, following the adoption of ASU 2022-02, which now recognizes all loan modifications as collateral-dependent[465](index=465&type=chunk) Collateral-Dependent Loans and Troubled Debt Restructurings (December 31, 2022, in thousands) | Category | Balance | | :--- | :--- | | Cashflow-dependent TDRs | $5,761 | | Collateral-dependent TDRs | $6,265 | | Total TDRs | $12,026 | | Collateral-dependent loans (not TDRs) | $14,186 | | **Total recorded investment in TDRs and collateral-dependent loans** | **$26,212** | [Deposits](index=153&type=section&id=Deposits) Total deposits increased by $191 million, or 4%, driven by the CBank acquisition and growth in interest-bearing deposits, despite noninterest-bearing declines Deposit Composition (in thousands) | Segment/Type | June 30, 2023 | December 31, 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Deposits | $4,729,281 | $4,537,845 | $191,436 | 4% | | Core Bank Deposits | $4,269,758 | $4,089,721 | $180,037 | 4% | | Core Bank Noninterest-bearing | $1,405,543 | $1,464,493 | $(58,950) | (4)% | | Core Bank Interest-bearing | $2,864,215 | $2,625,228 | $238,987 | 9% | | RPG Deposits | $459,523 | $448,124 | $11,399 | 3% | - Core Bank legacy noninterest-bearing deposits decreased by **$110 million** due to a general decline in liquidity and customers seeking higher market interest rates[468](index=468&type=chunk) - This was partially offset by a **$99 million** increase in Core Bank legacy interest-bearing deposits, primarily in CDARs and ICS products, driven by higher offering rates[469](index=469&type=chunk) - Management expects the higher offering rates for interest-bearing deposits to continue raising the Traditional Bank's cost of funds and cause further net interest margin contraction in the second half of 2023[471](index=471&type=chunk) [Securities Sold Under Agreements to Repurchase and Other Short-term Borrowings](index=155&type=section&id=Securities%20Sold%20Under%20Agreements%20to%20Repurchase%20and%20Other%20Short-term%20Borrowings) SSUARs decreased by $125 million, or 57.55%, due to large customer relationships and the Bank's unchanged pricing strategy | Metric (in thousands) | June 30, 2023 | December 31, 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | SSUARs outstanding balance | $92,093 | $216,956 | $(124,863) | (57.55)% | - SSUARs decreased by **$125 million** (**58%**) due to large customer relationships and the Bank's unchanged pricing strategy, which has not been adjusted to match higher market rates[473](index=473&type=chunk) - A further decline in outstanding balances is possible if the pricing strategy remains unchanged[474](index=474&type=chunk) [Federal Home Loan Bank Advances](index=155&type=section&id=Federal%20Home%20Loan%20Bank%20Advances) Total FHLB advances significantly increased by $425 million, or 447.37%, to $520 million, used to fund deposit outflows and loan growth | Metric (in thousands) | June 30, 2023 | December 31, 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total FHLB advances | $520,000 | $95,000 | $425,000 | 447.37% | | Weighted-average maturity | 0.68 years | N/A | N/A | N/A | | Weighted-average cost | 4.88% | N/A | N/A | N/A | - The Company has utilized FHLB advances to fund its deposit outflow and overall loan growth[475](index=475&type=chunk) - During Q2 2023, **$50 million** of borrowings were extended to longer maturities due to the inverted yield curve and more attractive costs[475](index=475&type=chunk) [Liquidity](index=157&type=section&id=Liquidity) Total liquid assets and available borrowing capacity decreased by $350.9 million, with the loan to deposit ratio increasing to 107% Liquid Assets and Borrowing Capacity (in thousands) | Metric | June 30, 2023 | December 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $241,967 | $313,689 | $(71,722) | | Unencumbered debt securities | $515,603 | $438,052 | $77,551 | | **Total Liquid Assets** | **$757,570** | **$751,741** | **$5,829** | | Available borrowing capacity with the FHLB | $542,656 | $899,362 | $(356,706) | | Available borrowing capacity through unsecured credit lines | $125,000 | $125,000 | $0 | | **Total Available Borrowing Capacity** | **$667,656** | **$1,024,362** | **$(356,706)** | | **Total Liquid Assets and Available Borrowing Capacity** | **$1,425,226** | **$1,776,103** | **$(350,877)** | - The loan to deposit ratio (excluding wholesale brokered deposits) increased to **107%** as of June 30, 2023, from **99%** at December 31, 2022[481](index=481&type=chunk) - Total uninsured deposits were **$1.7 billion**, representing **36%** of total deposits as of June 30, 2023[483](index=483&type=chunk) - The **20 largest** non-sweep deposit relationships accounted for approximately **$233 million** (**5%**) of total deposits[483](index=483&type=chunk) - In Q2 2023, the Bank began marketing deposit products with higher offering rates to combat deposit outflow, which generally reversed the outflow in late May and June[482](index=482&type=chunk) - However, management is uncertain if these rates will prevent future outflows or if further increases will be needed, potentially impacting earnings[482](index=482&type=chunk) [Capital](index=159&type=section&id=Capital) Total stockholders' equity increased to $887 million, and the company and Bank continue to exceed regulatory 'well-capitalized' requirements - Total stockholders' equity increased from **$857 million** at December 31, 2022, to **$887 million** at June 30, 2023, primarily due to net income, reduced by cash dividends[486](index=486&type=chunk) - The Company and the Bank continue to exceed regulatory 'well-capitalized' requirements, including the Capital Conservation Buffer[488](index=488&type=chunk)[490](index=490&type=chunk)[491](index=491&type=chunk) - As of July 1, 2023, RB&T could declare approximately **$116 million** in dividends without prior regulatory approval[488](index=488&type=chunk)[490](index=490&type=chunk)[491](index=491&type=chunk) Capital Ratios (June 30, 2023) | Metric | Republic Bancorp, Inc. Ratio | Republic Bank & Trust Company Ratio | | :--- | :--- | :--- | | Total capital to risk-weighted assets | 16.39% | 15.69% | | Common equity tier 1 capital to risk-weighted assets | 15.20% | 14.50% | | Tier 1 (core) capital to risk-weighted assets | 15.20% | 14.50% | | Tier 1 leverage capital to average assets | 14.36% | 13.49% | [Asset/Liability Management and Market Risk](index=160&type=section&id

Banking Operations - As of March 31, 2023, Republic Bancorp operates 45 banking centers primarily in Kentucky, with a significant presence in Metropolitan Louisville[255]. - The Bank's principal lending activities include retail mortgage lending, commercial lending, and construction and land development lending, with a focus on single-family residential properties[256][257][259]. - The Bank's Warehouse Lending segment provides short-term credit facilities to mortgage bankers, with loans typically remaining on the warehouse line for an average of 15 to 30 days[269]. - Mortgage Banking activities involve originating and selling fixed-term residential real estate loans, primarily to FHLMC and FNMA, while retaining servicing on these loans[272]. - The Bank records Mortgage Servicing Rights (MSRs) as separate assets, which are capitalized and amortized based on the estimated period of net servicing income[273]. Financial Performance - Total net income for Q1 2023 was $28.1 million, a decrease of $258,000 or 1% compared to Q1 2022[288]. - Net interest income increased by $14.0 million, or 39%, for Q1 2023 compared to Q1 2022[292]. - Total RA originations were $737 million during Q1 2023, up from $311 million in Q1 2022[297]. - Noninterest income decreased by $6.3 million for Q1 2023 compared to Q1 2022, impacted by a prior year contract termination fee[297]. - Total Traditional Bank loans increased by $310 million, or 8%, during Q1 2023[292]. Loan Quality and Allowance for Credit Losses - Nonperforming loans to total loans for the Traditional Banking segment was 0.34% as of March 31, 2023, down from 0.37% as of December 31, 2022[292]. - Delinquent loans to total loans for the RCS segment was 10.50% as of March 31, 2023, compared to 8.53% as of December 31, 2022[297]. - The adequacy of the Allowance for Credit Losses (ACLL) is evaluated monthly, with significant reliance on estimates and historical loss rates[248][249]. - The allowance for credit losses (ACLL) for Traditional Banking was 1.33% as of March 31, 2023, slightly down from 1.39% as of March 31, 2022[330]. - The ACLL for RCS was 12.34% as of March 31, 2023, down from 13.63% as of March 31, 2022[339]. Income and Expense Trends - Total Company net interest income for Q1 2023 was $92.6 million, an increase of $29.4 million, or 47%, from Q1 2022[303]. - The Traditional Banking segment's net interest income increased by $14.0 million, or 39%, for Q1 2023 compared to Q1 2022, with a net interest margin of 4.07%[304]. - Warehouse Lending segment's net interest income decreased by $2.4 million, or 54%, from Q1 2022 to Q1 2023, with average outstanding balances declining from $585 million to $330 million[311]. - Tax Refund Solutions segment's net interest income increased by $16.4 million from Q1 2022 to Q1 2023, driven by a $426 million increase in RA origination volume[317]. - Total Company noninterest expense increased by $3.9 million, or 8%, in Q1 2023 compared to Q1 2022[355]. Asset and Deposit Management - The Bank's cash and cash equivalents decreased from $314 million as of December 31, 2022, to $249 million as of March 31, 2023[358]. - Total deposits rose by $261,823 thousand, or 6%, from $4,537,845 thousand as of December 31, 2022, to $4,799,668 thousand as of March 31, 2023[403]. - The loan to deposit ratio (excluding brokered deposits) was 99% as of March 31, 2023, compared to 100% as of December 31, 2022[418]. - The Bank's total liquid assets decreased to $728,585 thousand as of March 31, 2023, down from $751,741 thousand as of December 31, 2022[418]. - The investment portfolio increased by $34 million from December 31, 2022, to March 31, 2023, driven by $50 million in purchases and $16 million from the CBank acquisition[360]. Capital and Regulatory Compliance - Total stockholders' equity increased from $857 million as of December 31, 2022, to $882 million as of March 31, 2023, primarily due to net income earned during 2023, offset by cash dividends declared[422]. - The Company and the Bank are categorized as well capitalized, exceeding the regulatory requirements for Total Risk-Based Capital, Common Equity Tier 1 Risk-Based Capital, Tier 1 Risk-Based Capital, and Tier 1 Leverage Capital[428]. - The average stockholders' equity to average assets ratio was 14.15% as of March 31, 2023, compared to 13.41% as of December 31, 2022[428]. - The capital conservation buffer required to avoid limitations on capital distributions is 2.5% composed of Common Equity Tier 1 Risk-Based Capital above minimum risk-based capital requirements[427]. - The Bank's liquidity is impacted by the fair value of pledged investment securities, which was $134 million as of March 31, 2023, down from $218 million as of December 31, 2022[421].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 Commission File Number: 0-24649 REPUBLIC BANCORP, INC. (Exact name of registrant as specified in its charter) incorporation or organization) Kentucky 61-0862051 (State or other jurisdiction of (I.R.S. Employer Identification No.) 601 West Market Street, Louisville, Kentucky 40202 (A ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2022 or ◻ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number: 0-24649 REPUBLIC BANCORP, INC. (Exact name of registrant as specified in its charter) Kentucky 61-0862051 (State of other jurisdiction of incorporation or ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2022 or ◻ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number: 0-24649 REPUBLIC BANCORP, INC. (Exact name of registrant as specified in its charter) Kentucky 61-0862051 (State of other jurisdiction of incorporation or orga ...

PART I — FINANCIAL INFORMATION This section presents Republic Bancorp, Inc.'s unaudited consolidated financial statements and management's discussion for the quarter ended March 31, 2022 [Item 1. Financial Statements.](index=4&type=section&id=Item%201.%20Financial%20Statements.) This section presents the unaudited consolidated financial statements of Republic Bancorp, Inc. for the quarter ended March 31, 2022, including balance sheets, income statements, comprehensive income, stockholders' equity, and cash flows, along with detailed notes on accounting policies, investment securities, loans, deposits, and other financial instruments [CONSOLIDATED BALANCE SHEETS (UNAUDITED)](index=4&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS%20(UNAUDITED)) This statement provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity as of March 31, 2022, and December 31, 2021 | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total Assets | $6,349,869 | $6,093,632 | | Cash and cash equivalents | $1,077,158 | $756,971 | | Loans, net | $4,318,587 | $4,431,985 | | Total Deposits | $5,087,106 | $4,840,418 | | Total Liabilities | $5,509,540 | $5,259,400 | | Total Stockholders' Equity | $840,329 | $834,232 | [CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20INCOME%20(UNAUDITED)) This statement outlines the company's revenues, expenses, and net income for the three months ended March 31, 2022, and 2021 | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Net Income | $27,926 | $26,053 | | Total Interest Income | $63,555 | $69,557 | | Net Interest Income | $62,612 | $67,780 | | Provision for expected credit loss expense | $9,226 | $15,262 | | Total Noninterest Income | $31,001 | $29,037 | | Contract termination fee | $5,000 | $0 | | Basic Earnings Per Share (Class A) | $1.40 | $1.26 | | Diluted Earnings Per Share (Class A) | $1.40 | $1.25 | [CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME%20(UNAUDITED)) This statement presents the company's net income and other comprehensive income components, such as unrealized gains/losses on AFS debt securities, for the three months ended March 31, 2022, and 2021 | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Net Income | $27,926 | $26,053 | | Unrealized losses on AFS debt securities | $(21,249) | $(2,029) | | Total other comprehensive income (loss), net of tax | $(15,917) | $(1,511) | | Comprehensive Income | $12,009 | $24,542 | [CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)](index=7&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS%27%20EQUITY%20(UNAUDITED)) This statement details changes in the company's stockholders' equity, including net income, OCI, and dividends, for the three months ended March 31, 2022 | Metric | March 31, 2022 (in thousands) | January 1, 2022 (in thousands) | | :----------------------------------- | :----------------------------- | :----------------------------- | | Total Stockholders' Equity | $840,329 | $834,232 | | Net income | $27,926 | - | | Net change in AOCI | $(15,917) | - | | Dividends declared on Class A Shares | $(6,081) | - | [CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)](index=8&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS%20(UNAUDITED)) This statement categorizes cash flows into operating, investing, and financing activities, showing the net change in cash for the three months ended March 31, 2022, and 2021 | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Net cash provided by operating activities | $80,444 | $16,771 | | Net cash provided by investing activities | $7,188 | $199,969 | | Net cash provided by financing activities | $232,555 | $282,530 | | Net change in cash and cash equivalents | $320,187 | $499,270 | | Cash and cash equivalents at end of period | $1,077,158 | $984,857 | [NOTES TO CONSOLIDATED FINANCIAL STATEMENTS](index=9&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) This section provides detailed explanations and additional information supporting the consolidated financial statements, covering accounting policies, specific financial instruments, and segment data [1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=1.%20BASIS%20OF%20PRESENTATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Republic Bancorp, Inc. operates as a financial holding company through its subsidiary bank and an insurance subsidiary, structured into five reportable segments: Traditional Banking, Warehouse, Mortgage Banking (Core Bank), Tax Refund Solutions (TRS), and Republic Credit Solutions (RCS) (RPG); the company recorded a $5.0 million contract termination fee in Q1 2022 related to the cancelled sale of TRS assets, while recently adopted accounting standards had an immaterial impact, and new ASUs on derivatives and credit losses are being analyzed for future impact - Republic Bancorp, Inc. operates as a financial holding company with Republic Bank & Trust Company and Republic Insurance Services, Inc. (Captive)[18](index=18&type=chunk) - The Company is divided into five reportable segments: Traditional Banking, Warehouse, Mortgage Banking (collectively "Core Bank"), Tax Refund Solutions (TRS), and Republic Credit Solutions (RCS) (collectively "RPG")[21](index=21&type=chunk) - Green Dot Corporation paid RB&T a contract termination fee of **$5.0 million** during the first quarter of 2022 after RB&T terminated the May 2021 Purchase Agreement for the sale of substantially all of RB&T's TRS assets and operations[33](index=33&type=chunk) - Recently adopted ASUs (2020-06 and 2021-04) had an immaterial financial statement impact upon adoption on January 1, 2022[41](index=41&type=chunk) - ASU 2022-02, which eliminates Troubled Debt Restructuring (TDR) recognition and measurement guidance, is effective January 1, 2023, and its impact on financial statements is currently being analyzed[44](index=44&type=chunk) [2. INVESTMENT SECURITIES](index=18&type=section&id=2.%20INVESTMENT%20SECURITIES) The company's available-for-sale (AFS) debt securities increased to $573.5 million as of March 31, 2022, from $495.1 million at December 31, 2021, but experienced a significant increase in gross unrealized losses, primarily due to changes in interest rates; held-to-maturity (HTM) debt securities slightly decreased, and the Allowance for Credit Losses on Securities (ACLS) for HTM corporate bonds decreased due to improved credit estimates Available-for-Sale Debt Securities | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Amortized Cost | $592,264 | $492,626 | | Fair Value | $573,539 | $495,126 | | Gross Unrealized Gains | $2,230 | $5,897 | | Gross Unrealized Losses | $(20,955) | $(3,397) | Held-to-Maturity Debt Securities | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Amortized Cost | $38,835 | $44,346 | | Fair Value | $39,087 | $44,764 | | Gross Unrecognized Gains | $256 | $424 | | Gross Unrecognized Losses | $(4) | $(6) | - As of March 31, 2022, **69 out of 180 securities** were in an unrealized loss position, totaling **$20.96 million**, primarily due to interest rate changes and illiquidity, not credit quality[51](index=51&type=chunk)[56](index=56&type=chunk) - The Allowance for Credit Losses on Securities (ACLS) for HTM corporate bonds decreased during Q1 2022 due to improved Probability of Default (PD) and Loss Given Default (LGD) estimates[58](index=58&type=chunk) Equity Securities with Readily Determinable Fair Values | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Fair Value | $2,502 | $2,620 | | Net Unrealized Gains (Losses) | $(118) | $(262) | [3. LOANS HELD FOR SALE](index=23&type=section&id=3.%20LOANS%20HELD%20FOR%20SALE) Mortgage loans held for sale decreased significantly to $13.3 million as of March 31, 2022, from $29.4 million at December 31, 2021; consumer loans held for sale (at fair value) also decreased to $11.7 million from $19.7 million, while those held at the lower of cost or fair value slightly increased Mortgage Loans Held for Sale, at Fair Value Activity (Q1) | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Balance, end of period | $13,302 | $63,636 | | Origination | $100,661 | $213,587 | | Proceeds from sale | $(119,212) | $(203,815) | | Net gain on sale | $2,460 | $6,997 | Consumer Loans Held for Sale, at Fair Value Activity (Q1) | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Balance, end of period | $11,709 | $3,970 | | Origination | $96,732 | $19,090 | | Proceeds from sale | $(106,648) | $(18,930) | | Net gain on sale | $1,878 | $512 | Consumer Loans Held for Sale, at Lower of Cost or Fair Value Activity (Q1) | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Balance, end of period | $3,026 | $11,701 | | Origination | $148,482 | $98,184 | | Proceeds from sale | $(149,632) | $(88,753) | | Net gain on sale | $1,239 | $792 | [4. LOANS AND ALLOWANCE FOR CREDIT LOSSES](index=24&type=section&id=4.%20LOANS%20AND%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) Total loans decreased by $106.3 million, or 2%, to $4.39 billion as of March 31, 2022, primarily due to decreases in Warehouse lines of credit and PPP loans, partially offset by growth in Commercial Real Estate (CRE) loans; the Allowance for Credit Losses on Loans (ACLL) increased by $7.1 million, or 11%, to $71.7 million, while nonperforming loans and assets decreased, and delinquency ratios improved for Core Bank but increased for RPG Loan Portfolio Composition | Loan Category | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | Change ($) | Change (%) | | :----------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Traditional Banking | $3,570,786 | $3,501,959 | $68,827 | 2% | | Warehouse lines of credit | $690,200 | $850,550 | $(160,350) | (19)% | | Tax Refund Solutions | $41,607 | $50,987 | $(9,380) | (18)% | | Republic Credit Solutions | $87,650 | $93,066 | $(5,416) | (6)% | | **Total Loans** | **$4,390,243** | **$4,496,562** | **$(106,319)** | **(2)%** | - Net Paycheck Protection Program (PPP) loans decreased by **$37.7 million (67%)** to **$18.3 million** as of March 31, 2022; PPP fees recognized were **$879 thousand** in Q1 2022, down from **$5.8 million** in Q1 2021[73](index=73&type=chunk)[331](index=331&type=chunk) Allowance for Credit Losses on Loans (ACLL) Rollforward (Q1) | Metric | March 31, 2022 (in thousands) | March 31, 2021 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Beginning Balance | $64,577 | $61,067 | | Provision | $9,233 | $15,337 | | Charge-offs | $(2,936) | $(1,425) | | Recoveries | $782 | $357 | | **Ending Balance** | **$71,656** | **$75,336** | Credit Quality Ratios - Total Company | Ratio | March 31, 2022 | December 31, 2021 | | :----------------------------- | :------------- | :---------------- | | Nonperforming loans to total loans | 0.39 % | 0.46 % | | Nonperforming assets to total assets | 0.29 % | 0.37 % | | ACLL to total loans | 1.63 % | 1.44 % | | ACLL to nonperforming loans | 423 % | 315 % | - Total nonperforming loans decreased by **$3.6 million (17%)** to **$16.97 million** as of March 31, 2022, primarily due to the refinancing of **$4.6 million** of these loans at other financial institutions[83](index=83&type=chunk)[353](index=353&type=chunk)[361](index=361&type=chunk) - Total delinquent loans increased to **$16.2 million (0.37% of total loans)** as of March 31, 2022, from **$13.5 million (0.30%)** at December 31, 2021; Core Bank delinquent loans decreased, while RPG delinquent loans increased significantly due to Easy Advances[90](index=90&type=chunk)[362](index=362&type=chunk)[364](index=364&type=chunk) - Total Troubled Debt Restructurings (TDRs) were **$15.19 million** as of March 31, 2022, with **80%** performing to modified terms[100](index=100&type=chunk)[101](index=101&type=chunk) Easy Advances (EAs) Originations and Provision (Q1) | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Easy Advances originated | $311,207 | $250,045 | | Net charge to the Provision for Easy Advances | $8,315 | $16,019 | | Provision to total Easy Advances originated | 2.67 % | 6.41 % | [5. DEPOSITS](index=41&type=section&id=5.%20DEPOSITS) Total deposits increased by $246.7 million, or 5%, to $5.09 billion as of March 31, 2022; this growth was primarily driven by a significant increase in Republic Processing Group (RPG) deposits, particularly brokered prepaid card deposits and other noninterest-bearing deposits, while Core Bank deposits saw minimal growth Deposit Composition | Deposit Category | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | Change ($) | Change (%) | | :----------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Core Bank Deposits | $4,480,544 | $4,419,093 | $61,451 | 1% | | Republic Processing Group (RPG) Deposits | $606,562 | $421,325 | $185,237 | 44% | | **Total Deposits** | **$5,087,106** | **$4,840,418** | **$246,688** | **5%** | - RPG noninterest-bearing deposits increased by **$184.2 million**, driven by **$92.3 million** in seasonal short-term tax refund deposits and **$91.8 million** in brokered prepaid card deposits[374](index=374&type=chunk) [6. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND OTHER SHORT-TERM BORROWINGS](index=42&type=section&id=6.%20SECURITIES%20SOLD%20UNDER%20AGREEMENTS%20TO%20REPURCHASE%20AND%20OTHER%20SHORT-TERM%20BORROWINGS) Securities sold under agreements to repurchase and other short-term borrowings slightly decreased to $287.8 million as of March 31, 2022, from $291.0 million at December 31, 2021; all had overnight maturities with a weighted average interest rate of 0.04% Securities Sold Under Agreements to Repurchase | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Outstanding balance at end of period | $287,818 | $290,967 | | Weighted average interest rate at end of period | 0.04 % | 0.04 % | | Average outstanding balance during the period (Q1) | $300,169 | $192,669 | [7. RIGHT-OF-USE ASSETS AND OPERATING LEASE LIABILITIES](index=43&type=section&id=7.%20RIGHT-OF-USE%20ASSETS%20AND%20OPERATING%20LEASE%20LIABILITIES) The company's right-of-use assets increased to $42.4 million as of March 31, 2022, from $38.8 million at December 31, 2021, with operating lease liabilities also increasing to $43.2 million from $39.7 million; this reflects renewals and extensions of lease contracts, including related-party leases Right-of-Use Assets and Operating Lease Liabilities | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Right-of-use assets | $42,402 | $38,825 | | Operating lease liabilities | $43,204 | $39,672 | Operating Lease Expense and Metrics (Q1) | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Total operating lease expense | $1,842 | $1,792 | | Weighted average remaining term (years) | 8.61 | 7.57 | | Weighted average discount rate | 2.64 % | 3.05 % | [8. FEDERAL HOME LOAN BANK ADVANCES](index=44&type=section&id=8.%20FEDERAL%20HOME%20LOAN%20BANK%20ADVANCES) Federal Home Loan Bank (FHLB) advances decreased to $20 million as of March 31, 2022, from $25 million at December 31, 2021; the company extended the term on $20 million of its FHLB advances to fixed-rate, long-term advances in anticipation of rising interest rates FHLB Advances | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total FHLB advances | $20,000 | $25,000 | | Available borrowing capacity | $888,000 | $900,000 | - The company extended **$20 million** of FHLB advances to fixed-rate, long-term advances (5-year maturity, **1.89%** weighted average cost) and repaid **$5 million**, anticipating increasing long-term interest rates[117](index=117&type=chunk)[118](index=118&type=chunk) Overnight FHLB Advances Activity (Q1) | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Average outstanding balance | $1,711 | $40,278 | | Average interest rate | 0.15 % | 0.17 % | [9. OFF BALANCE SHEET RISKS, COMMITMENTS AND CONTINGENT LIABILITIES](index=46&type=section&id=9.%20OFF%20BALANCE%20SHEET%20RISKS,%20COMMITMENTS%20AND%20CONTINGENT%20LIABILITIES) Total off-balance sheet commitments increased to $1.90 billion as of March 31, 2022, from $1.75 billion at December 31, 2021, primarily driven by an increase in unused warehouse lines of credit; the Allowance for Credit Losses on Off-Balance Sheet Credit Exposures (ACLC) slightly decreased, and the company also noted ongoing legal proceedings related to the cancelled TRS sale transaction Total Commitments | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Unused warehouse lines of credit | $713,800 | $565,950 | | Total commitments | $1,900,080 | $1,754,808 | Allowance for Credit Losses on Off-Balance Sheet Credit Exposures (ACLC) Rollforward (Q1) | Metric | March 31, 2022 (in thousands) | March 31, 2021 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Beginning Balance | $1,052 | $989 | | Provision | $(12) | $26 | | **Ending Balance** | **$1,040** | **$1,015** | - The company decreased its ACLC during Q1 2022 based on a decrease in the expected loss rate for its unused commitments[129](index=129&type=chunk) - The company is involved in ongoing legal proceedings, including a lawsuit against Green Dot related to the cancelled TRS sale transaction[33](index=33&type=chunk)[403](index=403&type=chunk) [10. FAIR VALUE](index=49&type=section&id=10.%20FAIR%20VALUE) The company measures various financial instruments at fair value, categorizing them into Level 1, 2, or 3 inputs; available-for-sale debt securities, mortgage loans held for sale, and consumer loans held for sale are among the assets measured at fair value, and the fair value of Level 3 assets, such as the private label mortgage-backed security and trust preferred security, relies on significant unobservable inputs - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (significant other observable inputs), and Level 3 (significant unobservable inputs)[131](index=131&type=chunk)[132](index=132&type=chunk) Assets Measured at Fair Value (March 31, 2022) | Asset Category | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | Total Fair Value (in thousands) | | :----------------------------- | :--------------------- | :--------------------- | :--------------------- | :------------------------------ | | AFS Debt Securities | $153,119 | $414,093 | $6,327 | $573,539 | | Equity Securities | $2,338 | $164 | $0 | $2,502 | | Mortgage Loans Held for Sale | $0 | $13,302 | $0 | $13,302 | | Consumer Loans Held for Sale | $0 | $0 | $11,709 | $11,709 | | Interest Rate Swap Agreements | $0 | $2,537 | $0 | $2,537 | - The private label mortgage-backed security (Level 3) had a fair value of **$2.60 million** (Mar 31, 2022) and relies on unobservable inputs like constant prepayment rate (**4.5%-5.7%**), probability of default (**1.8%-9.3%**), and loss severity (**50%-75%**)[150](index=150&type=chunk)[152](index=152&type=chunk) - The Trust Preferred Security (Level 3) had a fair value of **$3.73 million** (Mar 31, 2022)[153](index=153&type=chunk) - Consumer loans held for sale (Level 3) had a fair value of **$11.71 million** (Mar 31, 2022) and rely on unobservable inputs such as net contractual premiums (**1.4%**) and discounted sales (**5.00%**)[158](index=158&type=chunk) Assets Measured at Fair Value on a Non-Recurring Basis | Asset Category | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Collateral-dependent loans | $4,662 | $4,845 | | Other real estate owned | $1,740 | $1,792 | [11. MORTGAGE BANKING ACTIVITIES](index=62&type=section&id=11.%20MORTGAGE%20BANKING%20ACTIVITIES) Mortgage Banking income significantly decreased to $2.66 million for the three months ended March 31, 2022, from $7.19 million in the prior year, primarily due to a slowdown in mortgage originations and sales driven by rising long-term interest rates; proceeds from secondary market loan sales decreased, and the cash-gain-as-a-percent-of-loans-sold declined Mortgage Banking Income Components (Q1) | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Total Mortgage Banking income | $2,657 | $7,193 | | Net gain realized on sale of mortgage loans held for sale | $2,733 | $8,045 | | Proceeds from the sale of mortgage loans held for sale | $119,212 | $203,815 | | Cash-gain-as-a-percent-of-loans-sold | 2.29 % | 3.95 % | Capitalized Mortgage Servicing Rights (MSRs) | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Balance, end of period | $9,502 | $9,196 | | Fair value of MSRs portfolio | $15,296 | $11,540 | Mortgage Banking Derivatives (Notional Amounts) | Derivative Type | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Rate lock loan commitments | $46,981 | $56,736 | | Mandatory forward contracts | $45,608 | $70,812 | [12. INTEREST RATE SWAPS](index=66&type=section&id=12.%20INTEREST%20RATE%20SWAPS) The Bank uses non-hedge interest rate swaps to facilitate client transactions, entering into offsetting positions to minimize its own interest rate risk; the total notional amount of these swaps was $245.6 million as of March 31, 2022, with a net fair value of zero due to offsetting positions Interest Rate Swaps Summary | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total Notional Amount | $245,612 | $247,850 | | Net Fair Value | $0 | $0 | | Collateral Pledged by Bank | $873 | $6,800 | - The Bank enters into offsetting positions to minimize its interest rate risk from client-related interest rate swaps, which are not designated as hedging instruments[177](index=177&type=chunk) [13. EARNINGS PER SHARE](index=67&type=section&id=13.%20EARNINGS%20PER%20SHARE) Basic earnings per share for Class A Common Stock increased to $1.40 for Q1 2022 from $1.26 for Q1 2021, and diluted EPS for Class A Common Stock increased to $1.40 from $1.25; the calculation uses the two-class method, accounting for the 10% dividend premium on Class A shares Earnings Per Share (Class A Common Stock) (Q1) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :----------------------------- | :-------------------------------- | :-------------------------------- | | Basic EPS | $1.40 | $1.26 | | Diluted EPS | $1.40 | $1.25 | Weighted Average Shares Outstanding (Q1) | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Class A Shares | 17,980 | 18,798 | | Class B Shares | 2,165 | 2,199 | | Antidilutive stock options | 186 | 154 | [14. OTHER COMPREHENSIVE INCOME](index=68&type=section&id=14.%20OTHER%20COMPREHENSIVE%20INCOME) Other Comprehensive Income (OCI) showed a net loss of $(15.9) million for Q1 2022, a significant decline from a net loss of $(1.5) million in Q1 2021, primarily driven by increased unrealized losses on available-for-sale debt securities Other Comprehensive Income (Loss), Net of Tax (Q1) | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Net losses | $(21,225) | $(2,014) | | Tax effect | $5,308 | $503 | | **Net of tax** | **$(15,917)** | **$(1,511)** | Accumulated Other Comprehensive Income (Loss) Balances, Net of Tax | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total unrealized gain (loss) | $(14,043) | $1,874 | [15. REVENUE FROM CONTRACTS WITH CUSTOMERS](index=69&type=section&id=15.%20REVENUE%20FROM%20CONTRACTS%20WITH%20CUSTOMERS) Total net revenue for Q1 2022 was $93.6 million, a decrease from $96.8 million in Q1 2021; Core Banking contributed 54% of net revenue, while Republic Processing Group (RPG) contributed 46%, with key revenue streams including service charges on deposit accounts, net refund transfer fees, interchange fee income, and a significant contract termination fee in Q1 2022 Total Net Revenue and Concentration (Q1) | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Total net revenue | $93,613 | $96,817 | | Net-revenue concentration (Core Banking) | 54 % | 65 % | | Net-revenue concentration (RPG) | 46 % | 35 % | Key Noninterest Income Streams (Q1) | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Service charges on deposit accounts | $3,226 | $2,873 | | Net refund transfer fees | $12,051 | $12,721 | | Interchange fee income | $3,070 | $3,027 | | Contract termination fee | $5,000 | $0 | [16. SEGMENT INFORMATION](index=73&type=section&id=16.%20SEGMENT%20INFORMATION) The company operates through five reportable segments: Traditional Banking, Warehouse Lending, Mortgage Banking (Core Banking), Tax Refund Solutions (TRS), and Republic Credit Solutions (RCS) (Republic Processing Group - RPG); segment performance is evaluated using operating income, with Core Banking contributing 54% and RPG 46% of net revenue in Q1 2022 - The company's reportable segments are Traditional Banking, Warehouse Lending, Mortgage Banking (collectively Core Banking), and Tax Refund Solutions (TRS), Republic Credit Solutions (RCS) (collectively Republic Processing Group - RPG)[201](index=201&type=chunk)[202](index=202&type=chunk) Net Income by Segment (Q1 2022) | Segment | Net Income (in thousands) | | :----------------------------- | :------------------------ | | Traditional Banking | $4,371 | | Warehouse Lending | $3,073 | | Mortgage Banking | $160 | | Tax Refund Solutions | $15,377 | | Republic Credit Solutions | $4,945 | | **Total Company** | **$27,926** | Net-Revenue Concentration by Segment (Q1 2022) | Segment | Net-Revenue Concentration | | :----------------------------- | :------------------------ | | Traditional Banking | 46 % | | Warehouse Lending | 5 % | | Mortgage Banking | 3 % | | Tax Refund Solutions | 36 % | | Republic Credit Solutions | 10 % | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=75&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section provides management's perspective on the company's financial performance and condition for the quarter ended March 31, 2022, compared to the prior year, detailing the drivers behind changes in net income, net interest income, provision for credit losses, noninterest income and expense, and key balance sheet items, including loans, deposits, and capital, while also discussing market risks and the LIBOR transition [OVERVIEW](index=87&type=section&id=OVERVIEW) Net income for Q1 2022 increased by 7% to $27.9 million, with diluted EPS rising to $1.40, primarily due to a $5.0 million contract termination fee and a positive reduction in Provision for Credit Losses, partially offset by decreased net interest income and Mortgage Banking income; the report highlights forward-looking statements and critical accounting policies, particularly the Allowance for Credit Losses on Loans (ACLL) - Total Company net income for Q1 2022 was **$27.9 million**, a **7% increase** from Q1 2021, with diluted EPS increasing to **$1.40** from **$1.25**[251](index=251&type=chunk) - The increase in net income primarily reflected a **$5.0 million** pre-tax contract termination fee and a positive reduction in Provision for Credit Losses, partially offset by a decrease in net interest income and Mortgage Banking income[251](index=251&type=chunk) - Management's evaluation of the Allowance for Credit Losses on Loans (ACLL) and Provision is a critical accounting estimate, requiring significant reliance on historical loss rates, economic factors, and reasonable forecasts[216](index=216&type=chunk)[217](index=217&type=chunk) - Forward-looking statements involve known and unknown risks, including the potential impact of the COVID pandemic, litigation, economic conditions, interest rate fluctuations, and regulatory changes[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk)[218](index=218&type=chunk) [BUSINESS SEGMENT COMPOSITION](index=79&type=section&id=BUSINESS%20SEGMENT%20COMPOSITION) The company's five reportable segments (Traditional Banking, Warehouse Lending, Mortgage Banking, Tax Refund Solutions, and Republic Credit Solutions) are detailed, outlining their primary operations and revenue drivers; key developments include the cancellation of the TRS sale to Green Dot, leading to a $5.0 million termination fee, and the continued expansion of RCS consumer credit products - Traditional Banking provides traditional banking products through **42 full-service banking centers** and digital channels, with principal lending activities including Retail Mortgage, Commercial, Construction and Land Development, Consumer, and Aircraft Lending[223](index=223&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk)[226](index=226&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk) - Warehouse Lending offers short-term, revolving credit facilities to mortgage bankers across the U.S., primarily secured by single-family, first-lien residential real estate loans[235](index=235&type=chunk) - Mortgage Banking activities primarily involve originating and selling 15-, 20-, and 30-year fixed-term residential real estate loans into the secondary market, typically retaining servicing rights for loans within its footprint[237](index=237&type=chunk) - Tax Refund Solutions (TRS) facilitates federal and state tax refund products (Refund Transfers - RTs) and offers Easy Advance (EA) credit products; the May 2021 Purchase Agreement for the sale of TRS assets to Green Dot was terminated, resulting in a **$5.0 million** contract termination fee[238](index=238&type=chunk)[239](index=239&type=chunk)[244](index=244&type=chunk) - Republic Credit Solutions (RCS) offers unsecured, small-dollar consumer credit products, including LOC I, LOC II, installment loans, and healthcare receivables, primarily to subprime or near-prime borrowers, often selling participation interests[246](index=246&type=chunk)[247](index=247&type=chunk)[248](index=248&type=chunk)[253](index=253&type=chunk) [RESULTS OF OPERATIONS (Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021)](index=93&type=section&id=RESULTS%20OF%20OPERATIONS%20(Three%20Months%20Ended%20March%2031,%202022%20Compared%20to%20Three%20Months%20Ended%20March%2031,%202021)) The company's Q1 2022 results showed a decrease in total net interest income and net interest margin, primarily due to lower PPP fees and reduced Warehouse Lending activity; however, the Provision for Credit Losses decreased significantly, driven by TRS, while noninterest income increased due to a contract termination fee, and noninterest expense saw a slight increase, mainly in Traditional Banking [Net Interest Income](index=93&type=section&id=Net%20Interest%20Income) Total Company net interest income decreased by 8% to $62.6 million in Q1 2022, with net interest margin falling to 4.30% from 4.66%; this decline was primarily driven by a significant decrease in PPP fees and interest in Traditional Banking and reduced average outstanding balances and margin compression in Warehouse Lending, while RCS and TRS saw increases in net interest income Total Company Net Interest Income and Margin (Q1) | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Net Interest Income | $62,612 | $67,780 | | Net Interest Margin | 4.30 % | 4.66 % | - Traditional Banking's net interest income decreased by **$5.0 million (12%)** to **$36.1 million**, primarily due to a **$5.7 million (86%)** decrease in PPP fees and interest[275](index=275&type=chunk)[277](index=277&type=chunk) - Warehouse Lending's net interest income decreased by **$2.3 million (33%)** to **$4.5 million**, driven by lower average outstanding balances (**$585 million** vs **$790 million**) and margin compression (**3.09%** vs **3.43%**)[281](index=281&type=chunk) - Tax Refund Solutions (TRS) net interest income increased by **$728 thousand (5%)** to **$15.4 million**, primarily from a **$61 million** increase in Easy Advance (EA) originations[284](index=284&type=chunk) - Republic Credit Solutions (RCS) net interest income increased by **$1.5 million (32%)** to **$6.3 million**, mainly due to higher loan fees on LOC products[285](index=285&type=chunk) - Management anticipates that additional increases in short-term interest rates will generally be favorable to Traditional Banking and Warehouse net interest income in the near term, though potential offsets exist from deposit cost increases or reduced demand[278](index=278&type=chunk)[283](index=283&type=chunk) [Provision](index=100&type=section&id=Provision) Total Company Provision for expected credit loss expense decreased to a net charge of $9.2 million in Q1 2022 from $15.3 million in Q1 2021; this was largely due to a significant reduction in the TRS Provision, partially offset by an increase in the RCS Provision driven by higher net charge-offs Total Company Provision for Expected Credit Loss Expense (Q1) | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Total Provision | $9,226 | $15,262 | - Traditional Banking Provision was a net charge of **$320 thousand** in Q1 2022, compared to a net credit of **$5 thousand** in Q1 2021, reflecting formula reserves tied to general loan growth[295](index=295&type=chunk) - Warehouse recorded a net credit to the Provision of **$401 thousand** in Q1 2022, consistent with changes in outstanding balances[297](index=297&type=chunk) - Tax Refund Solutions (TRS) recorded a net charge to the Provision of **$7.9 million** in Q1 2022, down from **$15.9 million** in Q1 2021, primarily due to a contractual guaranty limiting Easy Advance (EA) losses and more normal tax season timing[299](index=299&type=chunk)[301](index=301&type=chunk) - Republic Credit Solutions (RCS) recorded a net charge to the Provision of **$1.4 million** in Q1 2022, compared to a net credit of **$375 thousand** in Q1 2021, driven by a **$1.7 million** increase in net charge-offs on LOC products[304](index=304&type=chunk) - Net loan charge-offs to average total Company loans increased to **0.20%** in Q1 2022 from **0.09%** in Q1 2021, primarily due to a **$1.4 million** increase in net charge-offs within RPG operations[312](index=312&type=chunk) [Noninterest Income](index=104&type=section&id=Noninterest%20Income) Total Company noninterest income increased by $2.0 million in Q1 2022, primarily due to a $5.0 million contract termination fee from Green Dot; this was partially offset by a significant decrease in Mortgage Banking income due to rising interest rates and a slight decrease in net refund transfer fees, while RCS noninterest income saw a substantial increase from higher sales volume Total Company Noninterest Income (Q1) | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Total noninterest income | $31,001 | $29,037 | - Noninterest income for Q1 2022 included a **$5.0 million** contract termination fee from Green Dot[319](index=319&type=chunk) - Mortgage Banking income decreased by **$4.5 million (63%)** to **$2.7 million**, driven by a significant slowdown in originations and sales due to rising long-term interest rates[317](index=317&type=chunk) - Net Refund Transfer (RT) revenue decreased by **5%** to **$12.1 million**, impacted by the departure of a Tax Provider[320](index=320&type=chunk) - Republic Credit Solutions (RCS) noninterest income (program fees) increased by **$1.8 million (135%)** to **$3.1 million**, reflecting higher sales volume for LOC and installment loan products[322](index=322&type=chunk)[323](index=323&type=chunk) [Noninterest Expense](index=107&type=section&id=Noninterest%20Expense) Total Company noninterest expense increased by $762 thousand, or 2%, in Q1 2022; Traditional Banking saw an increase driven by higher fraud losses, while Mortgage Banking experienced a decrease due to reduced mortgage commissions Total Company Noninterest Expense (Q1) | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :----------------------------- | :----------------------------------------------- | :----------------------------------------------- | | Total noninterest expense | $48,573 | $47,811 | - Traditional Banking noninterest expense increased by **$891 thousand**, primarily due to a **$726 thousand** increase in other expenses, including **$250 thousand** in fraud losses[324](index=324&type=chunk)[325](index=325&type=chunk) - Mortgage Banking noninterest expense decreased by **$431 thousand (14%)**, mainly due to a reduction in mortgage commissions consistent with lower origination volume[325](index=325&type=chunk) [Comparison of Financial Condition As of March 31, 2022 and December 31, 2021](index=108&type=section&id=Comparison%20of%20Financial%20Condition%20As%20of%20March%2031,%202022%20and%20December%2031,%202021) The company's financial condition as of March 31, 2022, showed an increase in cash and cash equivalents and total deposits, primarily driven by RPG; gross loans decreased due to Warehouse and PPP, while CRE loans grew, asset quality improved with decreases in classified and nonperforming loans, and capital ratios remained strong, and the company is actively managing interest rate risk and transitioning from LIBOR [Cash and Cash Equivalents](index=108&type=section&id=Cash%20and%20Cash%20Equivalents) Cash and cash equivalents increased significantly by $320 million to $1.1 billion as of March 31, 2022, driven by continued deposit growth, including seasonal tax refund deposits; management began deploying excess cash into longer-term investment securities Cash and Cash Equivalents | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $1,077,158 | $756,971 | - The growth in cash balances was driven by continued deposit growth, including **$100 million** of short-term tax refund deposits at TRS[326](index=326&type=chunk) - Management began deploying excess cash through the purchase of longer-term investment securities during Q4 2021 and Q1 2022, targeting a maturity of approximately two years due to attractive risk-based returns and a steepening yield curve[328](index=328&type=chunk)[329](index=329&type=chunk) [Investment Securities](index=108&type=section&id=Investment%20Securities) The Bank purchased $116 million in investment debt securities during Q1 2022, including U.S. Treasuries, MBS, and U.S. government agency securities, with an expected weighted-average yield of approximately 1.51% and a weighted average life of 2.5 years for Treasuries - During Q1 2022, the Bank purchased **$116 million** in investment debt securities, comprising **$86 million** in U.S. Treasuries, a **$20 million** MBS, and a **$10 million** U.S. government agency security[328](index=328&type=chunk) - The U.S. Treasuries had an expected weighted-average yield of approximately **1.51%** and a weighted average life at purchase of **2.5 years**[328](index=328&type=chunk) [Loans](index=109&type=section&id=Loans) Gross loans decreased by $106 million, or 2%, to $4.39 billion as of March 31, 2022; this was primarily due to a $160 million decrease in Warehouse lines of credit and a $38 million reduction in PPP loans, partially offset by a $101 million increase in Commercial Real Estate (CRE) loans Gross Loans | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | Change ($) | Change (%) | | :----------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Total loans | $4,390,243 | $4,496,562 | $(106,319) | (2)% | - Commercial Real Estate (CRE) loans grew **$101 million (7%)** during Q1 2022[333](index=333&type=chunk) - The Core Bank's PPP portfolio decreased **$38 million (67%)** during Q1 2022[333](index=333&type=chunk) - Outstanding Warehouse period-end balances decreased **$160 million (19%)** during Q1 2022[331](index=331&type=chunk)[336](index=336&type=chunk) - Outstanding TRS loans decreased **$9 million**, reflecting a **$25 million** reduction in other TRS loans (commercial loans to Tax Providers) partially offset by **$16 million** of Easy Advances[338](index=338&type=chunk) - Outstanding RCS loans decreased **$5 million**, primarily due to decreases in LOC I product and hospital receivables[339](index=339&type=chunk) [Allowance for Credit Losses](index=111&type=section&id=Allowance%20for%20Credit%20Losses) The total Allowance for Credit Losses (ACL) increased by $7 million to $72 million as of March 31, 2022; the ACLL to total loans ratio increased to 1.63% from 1.44%, and this increase was mainly driven by estimated losses on the seasonal Easy Advance (EA) product within TRS, while Warehouse ACLL remained stable Total Allowance for Credit Losses (ACL) | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total ACL | $71,656 | $64,577 | | ACLL to total loans | 1.63 % | 1.44 % | - Traditional Banking ACLL increased approximately **$209 thousand** to **$50 million**, driven primarily by formula reserves tied to loan growth[341](index=341&type=chunk) - Warehouse ACLL decreased to approximately **$1.7 million**, and the ACLL to total Warehouse loans remained at **0.25%**[342](index=342&type=chunk) - Tax Refund Solutions (TRS) ACLL increased to **$8 million** from **$96 thousand**, driven primarily by estimated losses on its Easy Advance (EA) product[343](index=343&type=chunk) - Republic Credit Solutions (RCS) ACLL decreased **$1 million** to **$12 million**, driven by a decrease in RCS loan balances; the ACLL for RCS products ranged from **0.25%** for healthcare receivables to **49%** for line-of-credit products[344](index=344&type=chunk)[345](index=345&type=chunk) [Asset Quality](index=112&type=section&id=Asset%20Quality) The company's asset quality improved, with Classified and Special Mention loans decreasing by $10.4 million (8%) to $128.3 million; nonperforming loans decreased by $3.6 million (17%) to $16.97 million, and the ACLL to nonperforming loans ratio improved to 423%, while delinquent loans increased overall due to RPG, but Core Bank delinquencies decreased - Only **$148 thousand (less than 1%)** of the Traditional Bank portfolio remained under a COVID hardship accommodation as of March 31, 2022[347](index=347&type=chunk) Classified and Special Mention Loans | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | Change ($) | Change (%) | | :----------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Total Classified Loans | $20,325 | $23,406 | $(3,081) | (13)% | | Total Special Mention Loans | $107,962 | $115,291 | $(7,329) | (6)% | | **Total Classified and Special Mention Loans** | **$128,287** | **$138,697** | **$(10,410)** | **(8)%** | Nonperforming Loans and Ratios | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total nonperforming loans | $16,966 | $20,552 | | Nonperforming loans to total loans | 0.39 % | 0.46 % | | ACLL to nonperforming loans | 423 % | 315 % | - Total delinquent loans increased to **0.37%** of total loans as of March 31, 2022, from **0.30%** at December 31, 2021; Core Bank delinquent loans decreased to **0.14%** from **0.17%**[362](index=362&type=chunk)[364](index=364&type=chunk) Troubled Debt Restructurings (TDRs) | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total TDRs | $15,187 | $15,386 | [Deposits](index=121&type=section&id=Deposits) Total deposits increased by $247 million (5%) to $5.09 billion as of March 31, 2022; this growth was primarily driven by a $185 million (44%) increase in Republic Processing Group (RPG) deposits, specifically from seasonal tax refund deposits and prepaid card balances, while Core Bank deposits saw minimal growth Total Deposits | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | Change ($) | Change (%) | | :----------------------------- | :----------------------------- | :----------------------------- | :--------- | :--------- | | Total deposits | $5,087,106 | $4,840,418 | $246,688 | 5% | - Republic Processing Group (RPG) deposits increased **$185 million (44%)**, driven by **$92.3 million** in seasonal short-term tax refund deposits and **$91.8 million** in brokered prepaid card deposits[372](index=372&type=chunk)[374](index=374&type=chunk) - Core Bank deposits increased minimally by **$61 million (1%)**[373](index=373&type=chunk) [Federal Home Loan Bank Advances](index=121&type=section&id=Federal%20Home%20Loan%20Bank%20Advances) FHLB advances decreased to $20 million as of March 31, 2022, from $25 million at December 31, 2021; the Bank extended the term on $20 million of advances to fixed-rate, long-term advances in anticipation of rising interest rates FHLB Advances | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total FHLB advances | $20,000 | $25,000 | - The Bank extended **$20 million** of FHLB advances to fixed-rate, long-term advances (5-year maturity, **1.89%** weighted average cost) and repaid the remaining **$5 million**, anticipating increasing long-term interest rates[373](index=373&type=chunk) [Interest Rate Swaps](index=123&type=section&id=Interest%20Rate%20Swaps) The Bank uses non-hedge interest rate swaps to facilitate client transactions, maintaining offsetting positions to minimize its own interest rate risk; changes in fair value are reported in current year earnings - The Bank enters into non-hedge interest rate swaps to facilitate client transactions and minimize its own interest rate risk through offsetting positions[375](index=375&type=chunk) - Changes in the fair value of these swaps are reported in current year earnings[375](index=375&type=chunk) [Liquidity](index=123&type=section&id=Liquidity) The company maintains strong liquidity, with total liquid assets increasing to $1.36 billion as of March 31, 2022, from $977 million at December 31, 2021; total borrowing capacity remained over $1 billion, and the loan to deposit ratio (excluding brokered deposits) improved to 94% from 99% Liquid Assets and Borrowing Capacity | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total liquid assets | $1,358,679 | $976,746 | | Total borrowing capacity | $1,012,520 | $1,025,424 | | Total liquid assets and borrowing capacity | $2,371,199 | $2,002,170 | - The Bank's loan to deposit ratio (excluding brokered deposits) improved to **94%** as of March 31, 2022, from **99%** as of December 31, 2021[378](index=378&type=chunk) - Pledged investment securities to secure public deposits, repurchase agreements, and FHLB borrowings had a fair value of **$331 million** as of March 31, 2022[380](index=380&type=chunk) [Capital](index=125&type=section&id=Capital) Total stockholders' equity increased to $840 million as of March 31, 2022; the company and its bank subsidiary continue to exceed "well-capitalized" regulatory requirements, with strong capital ratios across all categories, even after deferring the impact of CECL Total Stockholders' Equity | Metric | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Total stockholders' equity | $840,329 | $834,232 | - The Parent Company's principal source of funds for dividend payments are dividends received from RB&T, which could declare approximately **$123 million** without prior approval as of April 1, 2022[384](index=384&type=chunk) Republic Bancorp, Inc. Capital Ratios (March 31, 2022) | Ratio | Amount (in thousands) | Ratio | | :----------------------------- | :-------------------- | :---- | | Total capital to risk-weighted assets | $906,036 | 18.13% | | Common equity tier 1 capital to risk-weighted assets | $843,538 | 16.88% | | Tier 1 (core) capital to risk-weighted assets | $843,538 | 16.88% | | Tier 1 leverage capital to average assets | $843,538 | 13.15% | - Republic and the Bank continue to exceed all "well-capitalized" regulatory requirements, including the **2.5%** Capital Conservation Buffer[386](index=386&type=chunk)[387](index=387&type=chunk) - The company and the Bank elected to defer the impact of CECL on regulatory capital, which would otherwise be approximately **15 basis points** lower[388](index=388&type=chunk) [Asset/Liability Management and Market Risk](index=126&type=section&id=Asset%2FLiability%20Management%20and%20Market%20Risk) The Bank actively manages interest rate and liquidity risk using earnings simulation models; as of March 31, 2022, simulations indicated a positive impact on net intere

(Exact name of registrant as specified in its charter) Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 Commission File Number: 0-24649 REPUBLIC BANCORP, INC. incorporation or organization) Kentucky 61-0862051 (State or other jurisdiction of (I.R.S. Employer Identification No.) 601 West Market Street, Louisville, Kentucky 40202 (A ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2021 or ◻ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number: 0-24649 REPUBLIC BANCORP, INC. (Exact name of registrant as specified in its charter) Kentucky 61-0862051 (State of other jurisdiction of incorporation or ...

Table of Contents For the quarterly period ended June 30, 2021 or ◻ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission File Number: 0-24649 REPUBLIC BANCORP, INC. (Exact name of registrant as specified in its charter) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Kentucky 61-0862051 (State of other jurisdiction of incorporation or orga ...