| PART I · · |
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| Item 1. | | Business. | | 6 | |
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| Item 1A. | | Risk Factors. | | 28 | |
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| Item 1B. | | Unresolved Staff Comments. | | 39 | |
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| Item 1C. | | Cybersecurity | | 39 | |
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| Item 2. | | Properties. | | 41 | |
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| Item 3. | | Legal Proceedings. | | 42 | |
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| Item 4. | | Mine Safety Disclosures. | | 42 | |
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| PART II | | | | | |
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| Item 5. | | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. | | 43 | |
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| Item 6. | | [Reserved] | | 44 | |
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| Item 7. | | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | | 45 | |
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| Item 7A. | | Quantitative and Qualitative Disclosures About Market Risk. | | 93 | |
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| Item 8. | | Financial Statements and Supplementary Data. | | 94 | |
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| Item 9. | | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. | | 180 | |
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| Item 9A. | | Controls and Procedures. | | 180 | |
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| Item 9B. | | Other Information. | | 181 | |
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| Item 9C. | | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. | | 181 | |
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| PART III | | | | | |
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| Item 10. | | Directors, Executive Officers and Corporate Governance. | | 181 | |
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| Item 11. | | Executive Compensation. | | 182 | |
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| Item 12. | | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. | | 183 | |
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| Item 13. | | Certain Relationships and Related Transactions, and Director Independence. | | 183 | |
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| Item 14. | | Principal Accountant Fees and Services. | | 183 | |
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| PART IV | | | | | |
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| Item 15. | | Exhibits and Financial Statement Schedules. | | 184 | |
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| | | Signatures | | 191 | |
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GLOSSARY OF TERMS
The terms identified in alphabetical order below are used throughout this Form 10-K. You may find it helpful to refer to this page as you read this report.
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| Term | | Definition | | Term | | Definition | | Term | | Definition |
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| 2024 Tax Season | | December 2023 through February 2024 | | Diluted EPS | | Diluted earnings per Class A Common Share | | NA | | Not Applicable |
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| 2025 Tax Season | | December 2024 through February 2025 | | Dodd-Frank Act | | The Dodd-Frank Wall Street Reform and Consumer Protection Act | | NASDAQ | | The NASDAQ Stock Market LLC |
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| 2026 Tax Season | | December 2025 through February 2026 | | DTA | | Deferred Tax Assets | | NIM | | Net Interest Margin |
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| ACH | | Automated Clearing House | | DTL | | Deferred Tax Liabilities | | NM | | Not Meaningful |
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| ACLC | | Allowance for Credit Losses on Off-Balance Sheet Credit Exposures | | EBITDA | | Earnings Before Interest, Taxes, Depreciation and Amortization | | NOW | | Negotiable Order of Withdrawal account |
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| ACLL | | Allowance for Credit Losses on Loans | | EGRRCPA | | Economic Growth, Regulatory Relief and Consumer Protection Act of 2018 | | OBS | | Off-Balance Sheet |
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| ACLS | | Allowance for Credit Losses on Securities | | ELC | | Executive Loan Committee | | OCI | | Other Comprehensive Income |
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| AFS | | Available-for-Sale | | ERA | | Early Season Refund Advance | | OFAC | | Office of Foreign Asset Control |
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| AI | | Artificial Intelligence | | ESPP | | Employee Stock Purchase Plan | | OREO | | Other Real Estate Owned |
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| Allowance | | Allowance for Losses | | EVP | | Executive Vice President | | PCD | | Purchased Credit Deteriorated |
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| AML | | Anti-Money Laundering | | Exchange Act | | Securities Exchange Act of 1934, as amended | | PD | | Probability of Default |
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| AOCI | | Accumulated Other Comprehensive Income | | FD | | Regulation Fair Disclosure | | PATH Act | | Protecting Americans from Tax Hikes of 2015 |
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| ARM | | Adjustable Rate Mortgage | | FDIA | | Federal Deposit Insurance Act | | POS | | Point of Sale |
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| ASC | | Accounting Standards Codification | | FDIC | | Federal Deposit Insurance Corporation | | Prime | | The Wall Street Journal Prime Interest Rate |
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| ASU | | Accounting Standards Update | | FDICIA | | Federal Deposit Insurance Corporation Improvement Act | | Provision | | Provision for Expected Credit Loss Expense |
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| ATM | | Automated Teller Machine | | FFTR | | Federal Funds Target Rate | | PSU | | Performance Stock Unit |
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| Basic EPS | | Basic earnings per Class A Common Share | | FHC | | Financial Holding Company | | R&D | | Research and Development |
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| BHC | | Bank Holding Company | | FinTech | | Financial Technology | | RA | | Refund Advance |
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| BHCA | | Bank Holding Company Act | | FHLB | | Federal Home Loan Bank | | RB&T / the Bank | | Republic Bank & Trust Company |
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| Board | | Board of Directors | | FHLMC | | Federal Home Loan Mortgage Corporation or Freddie Mac | | RBF | | Republic Bank Finance |
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| BOLI | | Bank Owned Life Insurance | | FICO | | Fair Isaac Corporation | | RCS | | Republic Credit Solutions segment |
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| BPO | | Broker Price Opinion | | FNMA | | Federal National Mortgage Association or Fannie Mae | | Republic / Company | | Republic Bancorp, Inc. |
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| BSA | | Bank Secrecy Act | | FOMC | | Federal Open Market Committee | | ROA | | Return on Average Assets |
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| C&I | | Commercial & Industrial | | FRB | | Federal Reserve Bank | | ROE | | Return on Average Equity |
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| C&LD | | Construction & Land Development | | FTE | | Full Time Equivalent | | RPG | | Republic Processing Group division |
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| CAMELS | | Capital adequacy, Asset quality, Management quality, Earnings, Liquidity, and Sensitivity to market risk. | | FTP | | Funds Transfer Pricing | | RPS | | Republic Payment Solutions segment |
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| CBLR | | Community Bank Leverage Ratio | | GAAP | | Generally Accepted Accounting Principles in the United States | | RT | | Refund Transfer |
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| CCAD | | Commercial Credit Administration Department | | GLBA | | Gramm-Leach-Bliley Act | | RRE | | Residential Real Estate |
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| CCPA | | California Consumer Privacy Act | | GNMA | | Ginnie Mae | | S&P | | Standard and Poor's |
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| CDI | | Core Deposit Intangible | | HEAL | | Home Equity Amortizing Loan | | SAC | | Special Asset Committee |
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| CECL | | Current Expected Credit Losses | | HELOC | | Home Equity Line of Credit | | SBA | | Small Business Administration |
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| CEO | | Chief Executive Officer | | HFS | | Held for Sale | | Securities Act | | Securities Act of 1933, as amended |
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| CFO | | Chief Financial Officer | | HTM | | Held-to-Maturity | | SEC | | Securities and Exchange Commission |
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| CISO | | Chief Information Security Officer | | IRS | | Internal Revenue Service | | SERP | | Supplemental Executive Retirement Plan |
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| CLO | | Chief Lending Officer | | ITM | | Interactive Teller Machine | | SOFR | | Secured Overnight Financing Rate |
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| CFPB | | Consumer Financial Protection Bureau | | KDFI | | Kentucky Department of Financial Institutions | | SSUAR | | Securities Sold Under Agreements to Repurchase |
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| CMO | | Collateralized Mortgage Obligation | | LOC | | Line of Credit | | SVP | | Senior Vice President |
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| CODM | | Chief Operating Decision Maker | | LOC I | | RCS product introduced in 2014 for which the Bank participates out a 90% interest and holds a 10% interest | | TBA | | To be Announced |
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| Core Bank | | The Traditional Bank and Warehouse Lending reportable segments | | LOC II | | RCS product introduced in 2021 for which the Bank participates out a 95% interest and holds a 5% interest | | TDR | | Troubled Debt Restructuring |
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| CPRA | | California Privacy Rights and Enforcement Act | | LRA | | Lender Risk Account | | TRS | | Tax Refund Solutions segment |
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| CRA | | Community Reinvestment Act | | LTV | | Loan to Value | | TRUP | | Trust Preferred Security |
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| CRE | | Commercial Real Estate | | MBS | | Mortgage-Backed Security | | U.S. | | United States |
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| DDA | | Demand Deposit Account | | MSR | | Mortgage Servicing Right | | Warehouse | | Warehouse Lending segment |
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| DIF | | Deposit Insurance Fund | | | | | | | | |
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Cautionary Statement Regarding Forward-Looking Statements
This Annual Report on Form 10-K (this “report”) contains statements relating to future results of Republic Bancorp, Inc. that are considered “forward-looking” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The forward-looking statements are principally, but not exclusively, contained in Part I Item 1 “Business,” Part I Item 1A “Risk Factors,” and Part II Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements to differ materially from those expressed or implied in such statements. These statements are often, but not always, identified by words or phrases such as “anticipate,” “believe,” “can,” “conclude,” “continue,” “could,” “estimate,” “expect,” “forecast,” “foresee,” “goal,” “intend,” “may,” “might,” “outlook,” “possible,” “plan,” “predict,” “project,” “potential,” “seek,” “should,” “target,” “will,” “will likely,” “would,” or similar expressions. Forward-looking statements are not historical facts; rather, they are based on current expectations, estimates, and projections about the Company’s industry, management’s beliefs, and certain assumptions made by management—many of which are inherently uncertain and beyond management’s control.
Forward-looking statements detail management’s expectations regarding the future and are based on information known to management only as of the date the statements are made and management undertakes no obligation to update forward-looking statements to reflect events or circumstances that occur after the date forward-looking statements are made, except as required by applicable law.
There is no assurance that the following list of risks and uncertainties is complete. However, risks and uncertainties that could cause actual results to differ materially from those expressed in forward-looking statements include:
Financial, Economic, and Market Risks
| ● | Litigation and regulatory outcomes, including liabilities, costs, expenses, settlements, judgments, or adverse decisions in litigation or regulatory proceedings. |
| ● | Interest rate fluctuations and U.S. Treasury yield curve shifts, which may affect the Company’s net interest income, NIM, mortgage banking operations, warehouse lending operations and overall interest rate risk profile. |
| ● | Magnitude and frequency of changes to the FFTR implemented by the FOMC. |
| ● | Changes in fiscal, monetary, tax, or regulatory policies, including federal and/or statutory tax rates, regulatory rules or standards, which may impact the Company’s operations and compliance requirements. |
| ● | Changes in ASUs, including the introduction of new accounting standards that may affect financial reporting and disclosures. |
| ● | Economic and political conditions, including inflation, recession, geopolitical developments, risk of further government shutdowns, and U.S government efforts to control related trends, which could disrupt financial markets, consumer confidence, or spending behaviors. |
| ● | Market volatility and capital market disruptions, including liquidity pressures and pricing shifts that may affect investment securities, funding sources, and investor sentiment. |
| ● | Disruption of the U.S. and global financial system, including volatility in the capital and bond markets, inflationary pressures, tariffs, threats to the FRB’s independence and potential global economic downturns. |
| ● | Changes in investor sentiment or behavior, which may affect the Company’s stock price, funding costs, and strategic flexibility. |
| ● | Changes in consumer/business spending or savings behavior, which may impact loan demand, deposit levels, and overall economic activity. |
Credit and Liquidity Risks
| ● | Ability to effectively manage capital and liquidity, particularly during periods of economic stress or market disruption. |
| ● | Credit quality deterioration, including changes in customer and counterparty creditworthiness, the ACLL, the ACLC, charge-offs, or impairments in investment securities, goodwill, MSR’s, or DTA’s. |
| ● | Accuracy of assumptions and estimates, including those used in establishing the ACLL, ACLC, and other financial models. |
| ● | Model risk, including reliance on complex financial models for CECL, fair value, and stress testing, and the potential for material error or miscalibration. |
Operational and Strategic Execution Risks
| ● | Competitive product and pricing pressures across the Company’s five reportable segments, which may impact volume, market share, margins, and profitability. |
| ● | Projections of financial performance, including incorrect assumptions by management of future financial performance regarding revenue, expenses, cost saving opportunities, capital expenditures, EPS, dividends, and capital structure, which may differ materially from actual results. |
| ● | Operational changes and integration risk, including: |
| o | Financial and operational impact thresholds that trigger enhanced governance reviews; |
| o | Integration challenges from acquired institutions, new systems and related savings realization; |
| o | AI, particularly generative AI, adoption risks including performance failures, bias, or reliance on third-party AI vendors, and more effective adoption by industry competitors; |
| o | Third-party/vendor dependencies, including contractual, data security, and operational integrity risks; and |
| o | Cross-departmental impact, which introduces complexity and coordination risk, potentially requiring multiple governance body reviews. |
| ● | Dependence on key contracts and partners, including: |
| o | Non-renewal of major contracts (e.g., with marketer-servicers in TRS); |
| o | Ability to qualify for or realize tax-credit incentives; |
| o | Achievement of cost savings from system implementations; and |
| o | Replacement of lost revenue from expiring or terminated arrangements. |
| ● | ERA/RA and RT volume realization risk, including the ability of Tax Providers to successfully market and deliver expected volumes. |
| ● | RPS’ largest segment marketer-servicer’s ability to meet minimum contractual average deposit thresholds to earn revenue share payments. |
| ● | Qualification for future R&D federal tax credits. |
Technology, Cybersecurity, and Compliance Risks
| ● | Technology and cybersecurity risk, including internal control deficiencies, system failures, cyberattacks, data breaches, business continuity issues, and third-party service disruptions. |
| ● | Ability to maintain the security of financial, accounting, technology, data processing, and operational systems, including resilience against unauthorized access or system failures. |
| ● | Ability to withstand disruptions caused by failures of third-party systems or vendors. |
| ● | Effectiveness of the Company’s risk management and governance framework, including internal control environment, disclosure controls, AML/OFAC compliance, third-party risk management and Board and audit committee of the Board oversight. |
| ● | Data privacy and regulatory compliance risk, including evolving federal and state privacy laws (such as GLBA, CCPA, CPRA) and potential for regulatory penalties or reputational harm. |
Environmental, Social, and Geopolitical Risks
| ● | Operational disruptions from natural disasters, pandemics, climate-related physical risks, and sustainability-related reputation or regulatory concerns. |
| ● | Exposure to climate-related transition risks, including regulatory shifts, carbon pricing, and potential stranded asset exposures. |
| ● | Geopolitical and supply chain risk, including trade tensions, regional conflicts, and disruptions to vendor or operational continuity. |
Other Risks
| ● | Other risks and uncertainties reported from time to time in the Company’s reports with the SEC, including in Part I Item 1A “Risk Factors.” |
