REPUBLIC BANCORP INC KY
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
RBCAA$90.91-0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001558370-24-011581
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001558370-24-014810
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 313 previous paragraphs and 302 current paragraphs.
182 unchanged; 91 reworded; 26 added; 34 removed; 6 previous and 3 current paragraphs rearranged.
Tables are not compared: 213 previous and 217 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (26)
Current report
On September 19, 2024, the FOMC lowered the FFTR by 50 basis points bringing the FFTR to 5.00% as of September 30, 2024. The FOMC also issued commentary to lead many in the market to believe additional rate cuts in the near term are forthcoming. Management currently believes the 50-basis-point decrease to the FFTR in September 2024 will be beneficial to the Company’s net interest income and net interest margin in the near term. Management also believes that any future reductions to the FFTR will likely not benefit the Company’s net interest income and net interest margin. The amount of such impact to the Company’s net interest income and net interest margin resulting from the most recent change and any future changes to the FFTR will be dependent upon many factors including, but not limited to, the magnitude of the continuing shift from noninterest-bearing deposits into interest-bearing deposits, the actual steepness and shape of the yield curve, future demand for the Company’s financial products, the Company’s ability to lower its deposit costs in conjunction with, and in line with the magnitude to, the decreases to the FFTR, as well as the Company’s overall future liquidity needs.
Current report
Total Company net interest income was $71.3 million during the third quarter of 2024 compared to $64.8 million during the third quarter of 2023, representing a $6.5 million or 10% increase. The Total Company net interest margin increased 14 basis points to 4.49% during the third quarter of 2024 compared to 4.35% during the third quarter of 2023.
Current report
The Traditional Bank’s NIM increased from 3.52% during the third quarter of 2023 to 3.61% during the third quarter of 2024. This increase represented the first rise in the Traditional Bank’s quarter-over-same-quarter-last-year NIM since the second quarter of 2023. The increase in the Traditional Bank’s NIM occurred as the rise in its interest-earning asset yields outpaced the rise in its funding costs. While the Traditional Bank’s cost of interest bearing liabilities did demonstrate a notable increase of 40 basis points from the third quarter of 2023 to the third quarter of 2024, the pace of the increase on a linked-quarter basis began to slow meaningfully during the second quarter of 2024, growing 117 basis points from the first quarter of 2024 to the second quarter of 2024 and only 73 basis points from the second quarter of 2024 to the third quarter of 2024.
Current report
The increase in average interest-earning cash was a strategic decision primarily resulting from the inverted yield curve as the yield for overnight cash remained a more appealing option throughout the first nine months of 2024 than longer-term investment alternatives. Additionally, management also chose to maintain supplemental on-balance sheet liquidity during the first nine months of the year, above required minimums, in response to the uncertainty of the economic environment.
Current report
Management believes that any future reductions to the FFTR will likely not benefit the Traditional Bank’s net interest income and net interest margin. The amount of such impact to the Traditional Bank’s net interest income and net interest margin resulting from the most recent change and any future changes to the FFTR will be dependent upon many factors including, but not limited to, the magnitude of the continuing shift from noninterest-bearing deposits into interest-bearing deposits, the actual steepness and shape of the yield curve, future demand for the Company’s financial products, the Company’s ability to lower its deposit costs in conjunction with, and in line with the magnitude to, the decreases to the FFTR, as well as the Company’s overall future liquidity needs.
Current report
Because consumer mortgage demand drives the usage of Warehouse lines of credit, overall line usage for the Warehouse segment has been sensitive, historically, to changes in interest rates on the long end of the yield curve. As a result, a decreasing interest rate environment for the long end of the yield curve could positively impact Warehouse demand if the long term interest rate declines are substantial. Alternatively, if interest rates only decline substantially on the short-end of the yield curve, Warehouse demand would not likely be materially impacted.
Current report
The net charge of $1.5 million during the third quarter of 2024 was primarily driven by the following:
Current report
The net charge of $1.6 million during the third quarter of 2023 was primarily driven by the following:
Current report
The Company’s net charge-offs to average total Company loans increased from 0.11% during the third quarter of 2023 to 0.32% during the third quarter of 2024, with net charge-offs increasing $2.8 million, or 209%, and average total Company loans increasing $255 million, or 5%. The increase in net charge-offs was primarily driven by $1.9 million of charge-offs within the Traditional Bank’s broker-related marine product. The net charge-offs within broker-related marine portfolio were isolated to three linked loans. As previously noted, the Company discontinued the origination of this product during the third quarter of 2024 and had $4.9 million broker-related marine loans remaining in its loan portfolio as of September 30, 2024.
Current report
Total Company noninterest income increased $2.5 million during the third quarter of 2024 compared to the same period in 2023.
Current report
Traditional Banking’s noninterest income increased $1.1 million, or 11%, from the third quarter of 2023 compared to the third quarter of 2024. The increase in noninterest income was primarily driven by a $1.2 million increase in mortgage banking income, which resulted from a reduction in long-term interest rates during the third quarter of 2024 leading to an up-tick in consumer loan demand for 15- and 30-year fixed rate mortgage loans. Altogether, the Core Bank experienced a $47.5 million, or 99%, increase in fixed-rate, secondary market loan rate-lock applications from the third quarter of 2023 to the third quarter of 2024.
Current report
Total Company noninterest expense increased $241,000 during the third quarter of 2024 compared to the same period in 2023.
Current report
Traditional Banking noninterest expense decreased $234,000, or 1%, for the third quarter of 2024 compared to the same period in 2023. Notable line-item variances within the noninterest expense category included:
Current report
OVERVIEW** (Nine months ended September 30, 2024 Compared to Nine months ended September 30, 2023)**
Current report
RESULTS OF OPERATIONS**(Nine months ended September 30, 2024 Compared to Nine months ended September 30, 2023)**
Current report
On September 19, 2024, the FOMC lowered the FFTR by 50 basis points bringing the FFTR to 5.00% as of September 30, 2024. The FOMC also issued commentary to lead many in the market to believe additional rate cuts in the near term are forthcoming. Management currently believes the 50-basis-point decrease to the FFTR in September 2024 will be beneficial to the Company’s net interest income and net interest margin in the near term. Management also believes that any future reductions to the FFTR will likely not benefit the Company’s net interest income and net interest margin. The amount of such impact to the Company’s net interest income and net interest margin resulting from the most recent change and any future changes to the FFTR will be dependent upon many factors including, but not limited to, the magnitude of the continuing shift from noninterest-bearing deposits into interest-bearing deposits, the actual steepness and shape of the yield curve, future demand for the Company’s financial products, the Company’s ability to lower its deposit costs in conjunction with, and in line with the magnitude to, the decreases to the FFTR, as well as the Company’s overall future liquidity needs.
Current report
The increase in average interest-earning cash was a strategic decision primarily resulting from the inverted yield curve as the yield for overnight cash remained a more appealing option throughout the first nine months of 2024 than longer-term investment alternatives. Additionally, management also chose to maintain supplemental on-balance sheet liquidity during the first nine months of the year, above required minimums, in response to the uncertainty of the economic environment.
Current report
Management believes the Traditional Bank could experience a benefit to its net interest income and net interest margin during the fourth quarter of 2024 resulting from the decrease to the FFTR The amount of this benefit, if any, will be dependent upon several factors including, but not limited to, the magnitude of the continuing shift from noninterest-bearing deposits into interest-bearing deposits, the actual steepness and shape of the yield curve, future demand for the Company’s financial products, the Company’s ability to lower its deposit costs in conjunction with, and in line with the magnitude to, the decreases to the FFTR, as well as the Company’s overall future liquidity needs.
Current report
Because consumer mortgage demand drives the usage of Warehouse lines of credit, overall line usage for the Warehouse segment has historically been sensitive to changes in interest rates on the long end of the yield curve. As a result, a decreasing interest rate environment for the long end of the yield curve could positively impact Warehouse demand if the long term interest rate declines are substantial. Alternatively, if interest rates only decline substantially on the short-end of the yield curve, Warehouse demand would not likely be materially impacted.
Current report
The Company’s net charge-offs also included a $1.8 million increase in net charge-offs within the Traditional Bank. The increase in net charge-offs within the Traditional Bank was primarily driven by $1.9 million of charge-offs within the Traditional Bank’s broker-related marine product. The net charge-offs within marine lending were isolated to three linked loans. As previously noted, the Company discontinued the origination of this product during the third quarter of 2024 and had $4.9 million broker-related marine loans outstanding as of September 30, 2024.
Current report
Total Company noninterest income increased $1.9 million during the first nine months of 2024 compared to the same period in 2023.
Current report
RCS’s noninterest income increased $2.2 million, or 25%, during the first nine months of 2024 compared to the same period in 2023, with program fees representing the substantial majority of RCS’s noninterest income. The increase in program fees at RCS primarily reflected higher sales volume from RCS’s LOC II and installment products. Proceeds from the sale of RCS’s LOC II product totaled $449 million for the first nine months of 2024, compared to $363 million for the first nine months of 2023. Proceeds from the sale of RCS’s installment product totaled $126 million for the first nine months of 2024 compared to $86 million for the first nine months of 2023. The higher sales volume in both products was driven by an increase in marketing activity for the products.
Current report
Total Company noninterest expense decreased $3.1 million, or 2%, during the first nine months of 2024 compared to the same period in 2023.
Current report
The increase in average interest-earning cash was a strategic decision primarily resulting from the inverted yield curve as the yield for overnight cash remained a more appealing option throughout the first nine months of 2024 than longer-term investment alternatives. Additionally, management also chose to maintain supplemental on-balance sheet liquidity during the first nine months of the year, above required minimums, in response to the uncertainty of the economic environment.
Current report
During the first nine months of 2024, noninterest-bearing deposit balances continued their downward trend, while interest-bearing categories generally increased. This trend was generally the result of the attractive yields available on interest-bearing deposit accounts as compared to noninterest-bearing alternatives, which provide no yield to the depositor.
Current report
simulations, negatively impacting most down rate scenarios as assets begin to reprice more quickly than deposits. The lower net interest income is in the down rate scenarios is partially offset by assumed increases in mortgage banking income as rates fall and more borrowers gain incentive to refinance.
Removed paragraphs (34)
Previous report
As of the date of this filing, the near-term shape of the yield curve remains inverted and uncertain. Various inflation measurements have shown a continuing decrease in inflation over the past year. In addition, some market-based leading indicators have signaled that the economy could be starting to slow. As a result, many market forecasters believe that near-term interest rate cuts by the FOMC are more likely than near-term interest rate increases or no change to the FFTR at all. The Federal Reserve, however, has continued to maintain that its decisions on interest rates will remain data dependent and continues to signal its willingness to implement appropriate monetary policy to maintain inflation at an acceptable level.
Previous report
Any further monetary tightening by the FOMC in the future will likely cause short-term interest rates to increase. It is unknown what impact additional short-term rate increases by the FOMC could have on long-term market interest rates. Alternatively, future rate cuts are likely to decrease interest rates on the shorter end of the yield curve. Similarly, it is unknown how corresponding long-term rates will move, if at all, if the FOMC does cut short-term interest rates in the near-term. Additionally, if the FFTR experiences no changes in the near-term, it is uncertain if long term rates will remain generally below short-term interest rates or if the yield curve could begin to steepen.
Previous report
Total Company net interest income was $68.5 million during the second quarter of 2024 and represented an increase of $4.0 million, or 6%, from the second quarter of 2023. The Total Company net interest margin decreased to 4.36% during the second quarter of 2024 compared to 4.46% for the same period in 2023.
Previous report
While net interest income did increase in terms of overall dollars, the Traditional Bank’s net interest margin (“NIM”) decreased from 3.77% during the second quarter of 2023 to 3.53% during the second quarter of 2024. As with previous quarters over the past year, the primary driver of the decrease in the net interest margin at the Traditional Bank was a shift in funding mix away from noninterest-
Previous report
bearing deposit balances into higher-costing, interest-bearing deposits and FHLB borrowings. Overall, the Traditional Bank’s average noninterest-bearing deposits decreased from $1.4 billion during the second quarter of 2023 to $1.2 billion for the second quarter of 2024. In addition to this change in funding mix, the Traditional Bank’s cost of interest-bearing liabilities also increased 113 basis points from the second quarter of 2023 to the second quarter of 2024, outpacing the 62-basis-point increase to its yield on interest-earning assets over the same periods.
Previous report
Management believes the Traditional Bank could experience net interest margin compression during the second half of 2024 because of the negative impact of 1) a continuing shift from noninterest-bearing deposits into interest-bearing deposits; 2) larger, higher-costing average balances of FHLB borrowings; and 3) a continuing rise in the cost of interest-bearing deposits in order to maintain client balances. Additional variables which may also impact the Traditional Bank’s net interest income and net interest margin in the future include, but are not limited to, the actual steepness and shape of the yield curve, future demand for the Traditional Bank’s financial products, and the Traditional Bank’s overall future liquidity needs.
Previous report
The net charge of $915,000 during the second quarter of 2024 was primarily driven by the following:
Previous report
The net charge of $1.9 million during the second quarter of 2023 was primarily driven by the following:
Previous report
The Company’s net charge-offs to average total Company loans increased from 2.37% during the second quarter of 2023 to 2.52% during the second quarter of 2024, with net charge-offs increasing $4.5 million, or 16%, and average total Company loans increasing $359 million, or 7%. The increase in net charge-offs was primarily driven by a $3.1 million increase in net charge-offs within the TRS segment. While Provision at TRS for the second quarter of 2024 was generally in-line with the second quarter of 2023, net charge-offs were significantly higher than the second quarter of 2023 as payments on a year-to-date basis from the US Treasury to pay off RAs and ERAs continued to significantly lag payments received during the same time period in 2023. At this time, management is uncertain if this lag in payments received from the US Treasury will dissipate over the rest of 2024 or if the final payment performance for the 2024 Tax Season will remain significantly below the 2023 Tax Season.
Previous report
During the second quarters of 2024 and 2023, the Company’s Core Bank net charge-offs to average Core Bank loans remained near zero.
Previous report
Total Company noninterest income decreased $1.3 million during the second quarter of 2024 compared to the same period in 2023.
Previous report
TRS’s noninterest income decreased $720,000 from the second quarter 2023 to the second quarter of 2024. RT fees constituted the substantial majority of all TRS noninterest income for each of these quarters. Total RT fees decreased $668,000 from the second quarter of 2023 to the second quarter of 2024.
Previous report
While the number of RTs processed by TRS during the second quarter of 2024 increased approximately 6% over the second quarter of 2023, the net revenue earned per RT declined by approximately 15% for those same periods as the volume mix shifted toward Tax Providers with revenue sharing arrangements less favorable to Republic. For factors affecting the comparison of the TRS results of operations for the first quarter of 2024 and the first quarter of 2023, see section titled*“OVERVIEW (Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023) - Tax Refund Solutions.”*
Previous report
Total Company noninterest expense decreased $1.9 million, or 4%, during the second quarter of 2024 compared to the same period in 2023.
Previous report
Traditional Banking noninterest expense decreased $2.8 million, or 6%, for the second quarter of 2024 compared to the same period in 2023. The primary driver for the lower noninterest expenses for the second quarter of 2024 was lower salaries and associated incentive compensation accruals, which decreased $1.8 million, or 7%, compared to the second quarter of 2023. This overall decline was driven primarily by a 41-count reduction in the number of Traditional Bank FTEs from June 30, 2023 to June 30, 2024.
Previous report
OVERVIEW** (Six months ended June 30, 2024 Compared to Six Months Ended June 30, 2023)**
Previous report
RESULTS OF OPERATIONS**(Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023)**
Previous report
While long-term interest rates initially rose in tandem with the increases to the FFTR through the middle part of 2022, they generally moved lower than short-term rates during the second half of 2022. Long-term rates have generally maintained this lower level relative to short-term rates throughout 2023 and the first six months of 2024. As a result of the higher short-term interest rates and the lower long-term interest rates, the yield curve has been inverted for over two years. Because banks generally price customer deposits based on the shorter-end of the yield curve and price many loans based on the longer-end of the yield curve, an inverted yield curve is generally negative for banks’ net interest income while a steep yield curve, in which long-term rates exceed short-term rates, is generally more favorable for banks.
Previous report
As of the date of this filing, the near-term shape of the yield curve remains inverted and uncertain. Various inflation measurements have shown a continuing decrease in inflation over the past year. In addition, some market-based leading indicators have signaled that the economy could be starting to slow. As a result, many market forecasters believe that near-term interest rate cuts by the FOMC are more likely than near-term interest rate increases or no change to the FFTR at all. The Federal Reserve, however, has continued to maintain that its decisions on interest rates will remain data dependent and continues to signal its willingness to implement appropriate monetary policy to maintain inflation at an acceptable level.
Previous report
Any further monetary tightening by the FOMC in the future will likely cause short-term interest rates to increase. It is unknown what impact additional short-term rate increases by the FOMC could have on long-term market interest rates. Alternatively, future rate cuts are likely to decrease interest rates on the shorter end of the yield curve. Similarly, it is unknown how corresponding long-term rates will move, if at all, if the FOMC does cut short-term interest rates in the near-term. Additionally, if the FFTR experiences no changes in the near-term, it is uncertain if long term rates will remain generally below short-term interest rates or if the yield curve could begin to steepen.
Previous report
Management believes the Traditional Bank could experience net interest margin compression during the second half of 2024 because of the negative impact of 1) a continuing shift from noninterest-bearing deposits into interest-bearing deposits; 2) larger, higher-costing average balances of FHLB borrowings; and 3) a continuing rise in the cost of interest-bearing deposits in order to maintain client balances. Additional variables which may also impact the Traditional Bank’s net interest income and net interest margin in the future include, but are not limited to, the actual steepness and shape of the yield curve, future demand for the Traditional Bank’s financial products, and the Traditional Bank’s overall future liquidity needs.
Previous report
Additional increases in long-term market interest rates would likely lead to a continued reduction in average outstanding balances driven by a decline in demand from Warehouse clients, as higher long-term interest rates generally drive lower demand for Warehouse borrowings. In addition, because the yield on Warehouse lines of credit are generally tied to short-term interest rates, additional increases in short-term interest rates could cause further competitive pricing pressures for the industry and the Core Bank, driving down the yields Warehouse earns on its lines of credits.
Previous report
TRS recorded a charge to the Provision for RA loans of $24.6 million, or 3.19% of its $771 million in RAs originated during the first six months of 2024 compared to a charge to the Provision of $21.6 million, or 2.92% of its $737 million of RAs originated during the first six months of 2023. TRS’s incurred loss rate for RAs as of June 30, 2023 was 3.09% of total originations and it finished 2023 with a final RA loss rate of 2.84% of total RAs originated. As of June 30, 2024, TRS’s incurred loss rate related to RAs that were associated with the first quarter 2024 tax filing season was 3.72% of the $874 million of the total loans originated during December 2023 and the first two months of 2024. In-line with its customary June 30th charge-off policy for RA loans, the Company completely charged-off all remaining unpaid RAs as of June 30, 2024, with approximately $4 million of the RAs that are expected to be recovered under loan-loss guarantee arrangements with Tax Providers recorded as receivables in other assets on the balance sheet.
Previous report
During the first six months of 2024 and 2023, the Company’s Core Bank net charge-offs to average Core Bank loans remained near zero.
Previous report
Total Company noninterest income decreased $613,000 during the first six months of 2024 compared to the same period in 2023.
Previous report
TRS’s noninterest income decreased $759,000, or 5%, during the first six months of 2024 compared to the same period in 2023.
Previous report
RCS’s noninterest income increased $1.4 million, or 26%, during the first six months of 2024 compared to the same period in 2023, with program fees representing the substantial majority of RCS’s noninterest income. The increase in RCS program fees primarily reflected higher sales volume and corresponding gains from RCS’s installment loan product and LOC II product.
Previous report
Proceeds from the sale of RCS’s loan products totaled $589 million during the first six months of 2024, a 25% increase from the same period in 2023. Proceeds from the sale of RCS's LOC loan products totaled $467 million during the first six months of 2024, a 24% increase from the same period in 2023.
Previous report
Total Company noninterest expense decreased $3.4 million, or 3%, during the first six months of 2024 compared to the same period in 2023.
Previous report
As previously discussed, additional increases in long-term market interest rates could likely lead to a reduction in average outstanding balances driven by a decline in demand from Warehouse clients, as higher long-term interest rates generally drive lower demand for Warehouse borrowings. In addition, because the yield on Warehouse lines of credit are generally tied to short-term interest rates, additional increases in short-term interest rates could cause further competitive pricing pressures for the industry and the Core Bank, driving down the yield Warehouse earns on its lines of credits.
Previous report
and noninterest-bearing deposits decreased $70 million. The increase in Core Bank deposits was primarily driven by an $133 million increase in money market accounts and a $75 million increase in transaction deposits obtained from a third-party listing service.
Previous report
During the first six months of 2024, noninterest-bearing deposit balances continued their downward trend, while interest bearing categories generally increased. This decrease in noninterest-bearing deposits has been driven by a substantial increase in market interest rates caused the difference between what a client can earn for an interest-bearing deposit versus the client’s lack of a financial return for a noninterest-bearing deposit to become large enough to cause some clients to pursue other opportunities for their cash outside the Bank.
Previous report
in the table above as of June 30, 2024 and approximately 6 basis points lower than those presented in the table above as of December 31, 2023.
Previous report
In addition, impacting all scenarios was the execution of $100 million in float to fixed interest rate swaps. Due to the inverted yield curve, this $100 million notional interest rate swap transaction improved earnings in the base case and for all rising rate scenarios, while deteriorating earnings in all falling rate scenarios.
Reworded paragraphs (91)
Previous wording
Through the TRS segment, the Bank facilitates the receipt and payment of federal and state tax refund products and offers a credit product through third-party tax preparers located throughout the U.S., as well as tax-preparation software providers (collectively, the “Tax Providers”). The majority of all the business generated by the TRS business occurs during the first half of each year. During the second half of each year, TRS generates limited revenue and incurs costs preparing for the next year’s tax season. During December 2023, TRS originated $103 million of ERAs related to tax returns that were anticipated to be filed during the first quarter 2024 tax filing season.
Current wording
Through the TRS segment, the Bank facilitates the receipt and payment of federal and state tax refund products and offers a credit product through third-party tax preparers located throughout the U.S., as well as tax-preparation software providers that offer Republic Bank ERAs, RAs, and RTs (collectively, the “Tax Providers”). The majority of all the business generated by the TRS business occurs during the first half of each year. During the second half of each year, TRS generates limited revenue and incurs costs preparing for the next year’s tax season. During December 2023, TRS originated $103 million of ERAs related to tax returns that were anticipated to be filed during the first quarter 2024 tax filing season.
Previous wording
The Company reports fees paid for the RAs, including ERAs, as interest income on loans. The number of days for delinquency eligibility is based on management’s annual analysis of tax return processing times. RAs, including ERAs that were originated related to the first quarter 2023 tax filing season were repaid, on average, within 32 days after the taxpayer’s tax return was submitted to the applicable taxing authority. RAs do not have a contractual due date, but as it did during 2023, the Company considered an RA delinquent during the first six months of 2024 if it remained unpaid 35 days after the taxpayer’s tax return was submitted to the applicable taxing authority.
Current wording
The Company reports fees paid for the RAs, including ERAs, as interest income on loans. The number of days for delinquency eligibility is based on management’s annual analysis of tax return processing times. RAs, including ERAs that were originated related to the first quarter 2023 tax filing season were repaid, on average, within 32 days after the taxpayer’s tax return was submitted to the applicable taxing authority. RAs do not have a contractual due date, but as it did during 2023, the Company considered an RA delinquent during the first nine months of 2024 if it remained unpaid 35 days after the taxpayer’s tax return was submitted to the applicable taxing authority.
Previous wording
Provisions on RAs are estimated when advances are made. Unpaid RAs, including ERAs, related to the first quarter tax filing season of a given year are considered delinquent at June 30 th of that year and charged-off. In addition, as of June 30, 2024, RAs that were subject to Tax Provider loan loss guarantees were charged off and immediately recorded as recoveries of previously charged-off loans with corresponding receivables recorded in other assets for the Tax Provider guarantees. As of June 30, 2024, the Company was carrying $4 million of previously charged-off RAs as receivables from Tax Providers within other assets on its balance sheet. RAs collected during the second half of that year, not subject to loan loss guarantee arrangements, are recorded as recoveries of previously charged-off loans.
Current wording
Provisions on RAs are estimated when advances are made. Unpaid RAs, including ERAs, related to the first quarter tax filing season of a given year are considered delinquent at June 30 th of that year and charged-off. In addition, as of June 30, 2024, RAs that were subject to Tax Provider loan loss guarantees were charged off and immediately recorded as recoveries of previously charged-off loans with corresponding receivables recorded in other assets for the Tax Provider guarantees. Those corresponding receivables were settled during the third quarter of 2024. RAs collected during the second half of that year, not subject to loan loss guarantee arrangements, are recorded as recoveries of previously charged-off loans.
Previous wording
Related to the overall credit losses on RAs, including ERAs, the Bank’s ability to control losses is highly dependent upon its ability to predict the taxpayer’s likelihood to receive the tax refund as claimed on the taxpayer’s tax return. Each year, the Bank’s RA approval model is based primarily on the prior-year’s tax refund payment patterns. Because the substantial majority of the RA volume occurs each year before that year’s tax refund payment patterns can be analyzed and subsequent underwriting changes made, credit losses during a current year could be higher than management’s predictions if tax refund payment patterns change materially between years.
Current wording
Related to the overall credit losses on RAs, including ERAs, the Bank’s ability to control losses is highly dependent upon its ability to predict the taxpayer’s likelihood to receive the tax refund as claimed on the taxpayer’s tax return. In addition, the Bank’s ability to control losses for the ERA product is highly dependent upon the taxpayer returning to a Tax Provider for the filing of their final tax return. Each year, the Bank’s RA approval model is based primarily on the prior-year’s tax refund payment patterns. Because the substantial majority of the RA volume occurs each year before that year’s tax refund payment patterns can be analyzed and subsequent underwriting changes made, credit losses during a current year could be higher than management’s predictions if tax refund payment patterns change materially between years.
Previous wording
Total Company net income for the second quarter of 2024 was $25.2 million, an increase of $4.2 million over the same period in 2023. Diluted EPS also increased to $1.30 for the second quarter of 2024 compared to $1.07 for the same period in 2023. The increase in net income primarily reflected the following by reportable segment:
Current wording
Total Company net income for the third quarter of 2024 was $26.5 million, an increase of $5.0 million over the same period in 2023. Diluted EPS also increased to $1.37 for the third quarter of 2024 compared to $1.10 for the same period in 2023. The increase in net income primarily reflected the following by reportable segment:
Previous wording
While long-term interest rates initially rose in tandem with the increases to the FFTR through the middle part of 2022, they generally moved lower than short-term rates during the second half of 2022. Long-term rates have generally maintained this lower level relative to short-term rates throughout 2023 and the first six months of 2024. As a result of the higher short-term interest rates and the lower long-term interest rates, the yield curve has been inverted for over two years. Because banks generally price customer deposits based on the shorter-end of the yield curve and price many loans based on the longer-end of the yield curve, an inverted yield curve is generally negative for banks’ net interest income while a steep yield curve, in which long-term rates exceed short-term rates, is generally more favorable for banks.
Current wording
While long-term interest rates initially rose in tandem with the increases to the FFTR through the middle part of 2022, they trended lower than short-term rates during the second half of 2022. Long-term rates generally maintained this lower level relative to short-term rates throughout 2023 and the first two quarters of 2024, which was generally negative for banks’ net interest income and net interest margins during that time period.
Previous wording
The Traditional Bank’s net interest income increased $1.2 million, or 2%, from the second quarter of 2023 to the second quarter of 2024. The Traditional Bank’s net interest margin was 3.53% for the second quarter of 2024, a decrease of 24 basis points from the second quarter of 2023. The quarter-over-same-quarter-last-year increase in net interest income for the Traditional Bank reversed a negative trend of two consecutive quarterly declines in net interest income for the fourth quarter of 2023 and the first quarter of 2024.
Current wording
The Traditional Bank’s net interest income was $51.0 million for the third quarter of 2024, a $3.5 million, or 7%, increase from $47.5 million during the third quarter of 2023 and was driven generally by period-over-period growth in average interest-earning assets and a higher net interest margin. The increase in the Traditional Bank’s total dollars of net interest income represented the second consecutive quarter-over-same-quarter-last-year increase following two consecutive quarterly declines in net interest income for the fourth quarter of 2023 and the first quarter of 2024.
Previous wording
Additional items of note impacting the Traditional Bank’s change in net interest income and NIM between the second quarter of 2023 and the second quarter of 2024 were as follows:
Current wording
Additional items of note impacting the Traditional Bank’s change in net interest income and NIM between the third quarter of 2023 and the third quarter of 2024 were as follows:
Previous wording
Net interest income within Warehouse increased $272,000, or 10%, from the second quarter of 2023 to the second quarter of 2024. The rise in Warehouse net interest income was primarily driven by a 29-basis point increase in its net interest margin as its loan yields increased by 62 basis points from period-to-period, while its internally assigned net FTP funding costs rose 33 basis points for the same period. The expansion in Warehouse loan yield over its cost of funds was generally driven by an improvement in pricing with some clients resulting from their annual line of credit renewals.
Current wording
Net interest income within Warehouse increased $1.1 million, or 45%, from the third quarter of 2023 to the third quarter of 2024. The rise in Warehouse net interest income was primarily driven by a 37-basis point increase in its net interest margin as its loan yields increased by 33 basis points from period-to-period, while its internally assigned net FTP funding costs decreased 8 basis points for the same period. The expansion in Warehouse loan yield over its cost of funds was generally driven by an improvement in pricing with some clients resulting from their annual line of credit renewals.
Previous wording
The overall improvement in net interest margin allowed the segment to overcome a decrease in average outstanding balances for the quarter, as average outstanding Warehouse balances decreased from $463 million during the second quarter of 2023 to $457 million for the second quarter of 2024. During these same periods, average committed Warehouse lines declined from $978 million to $940 million from June 30, 2023 to June 30, 2024, while an up-tick in demand caused average usage rates for Warehouse lines to increase from 47% during the second quarter of 2023 to 49% for the second quarter of 2024.
Current wording
In addition to the improvement in net interest margin, Warehouse balances increased from $458 million during the third quarter of 2023 to $595 million for the third quarter of 2024. During these same periods, average committed Warehouse lines declined from $1.0 billion to $940 million from September 30, 2023 to September 30, 2024, while a decline in long-term interest rates during the quarter caused an up-tick in demand and average usage rates for Warehouse lines from 42% for the third quarter of 2023 to 56% for the third quarter of 2024.
Previous wording
Net interest income from the Company’s prepaid card division was down $1.0 million from the second quarter of 2023 to the second quarter of 2024. While RPS earned a higher yield of 5.03% applied to the $360 million average of prepaid program balances for the second quarter of 2024 compared to a yield of 4.52% for the $364 million in average prepaid card balances for the second quarter of 2023, the higher yield was substantially offset by a $1.3 million charge to interest expense for the revenue sharing arrangement with a large marketer/servicer, which became effective in January 2024.
Current wording
Net interest income from the Company’s prepaid card division decreased $1.3 million from the third quarter of 2023 to the third quarter of 2024. During the quarter, RPS earned a slightly lower yield of 4.91% applied to the $351 million average of prepaid program balances for the third quarter of 2024 compared to a yield of 4.97% for the $343 million in average prepaid card balances for the third quarter of 2023. In addition, net interest income at RPS was also negatively impacted by a $1.3 million charge to interest expense for a revenue sharing arrangement that began in January 2024.
Previous wording
Overall customer demand for the RPS segment has historically not been interest rate sensitive and therefore management does not believe a changing interest rate environment would impact origination volume for its prepaid card products. A rising interest rate environment, however, likely would positively impact the Company’s internal FTP credit more than the revenue share the Company pays for the product, improving the segment’s net interest margin. Conversely, a decreasing interest rate environment likely would negatively impact the Company’s internal FTP credit more than the revenue share the Company pays for the product, decreasing the segment's net interest margin. The exact amount of impact for either scenario would depend on the final internal FTP credit assigned, as well as the overall volume of balances, as the revenue share payouts are also based on overall balances tiers.
Current wording
Overall customer demand for the RPS segment has historically not been interest rate sensitive and therefore management does not believe a changing interest rate environment would impact origination volume for its prepaid card products. A decreasing interest rate environment, however, would likely negatively impact the Company’s internal FTP credit more than it would impact the revenue share the Company pays for the product, decreasing the segment's net interest margin. The exact amount of impact for either scenario would depend on the final internal FTP credit assigned, as well as the overall volume of balances, as the revenue share payouts are also based on overall balances tiers.
Previous wording
RCS’s net interest income increased $2.8 million, or 31%, from the second quarter of 2023 to the second quarter of 2024. The increase was driven primarily by an increase in fee income from RCS’s LOC II product. Loan fees on this product, recorded as interest income on loans, increased $2.9 million from the second of 2023 to the second quarter of 2024 primarily the result of a $9 million increase in average outstanding loan balances for the product.
Current wording
RCS’s net interest income increased $3.1 million, or 30%, from the third quarter of 2023 to the third quarter of 2024. The increase was driven primarily by an increase in fee income from RCS’s LOC II product as net interest income increased $2.4 million to $7.7 million from the third quarter of 2023 to the third quarter of 2024. The rise in net interest income for this LOC product was driven primarily by a period-to-period increase in average outstanding loan balances of approximately $8 million.
Previous wording
Overall customer demand for the RCS segment’s products has historically not been interest rate sensitive and therefore management does not believe a changing interest rate environment would materially impact origination volume for its various consumer loan products. A rising interest rate environment, however, likely would negatively impact the Company’s internal FTP cost allocated to this segment, while a decreasing interest rate environment likely would positively impact the Company’s internal FTP cost allocated to this segment. The exact amount of impact for either scenario would depend on the final internal FTP cost assigned, as well as the overall volume and mix of loans it generates.
Current wording
Overall customer demand for the RCS segment’s products has historically not been interest rate sensitive and therefore management does not believe a changing interest rate environment would materially impact origination volume for its various consumer loan products. A decreasing interest rate environment likely would positively impact the Company’s internal FTP cost allocated to this segment, which would increase the NIM for the segment. The exact amount of the impact would depend on the final internal FTP cost assigned, as well as the overall volume and mix of loans the segment generates.
Previous wording
Total Company Provision was a net charge of $5.1 million for the second quarter of 2024 compared to a net charge of $6.1 million for the same period in 2023.
Current wording
Total Company Provision was a net charge of $5.7 million for the third quarter of 2024 compared to a net charge of $3.7 million for the same period in 2023.
Previous wording
The Traditional Banking Provision during the second quarter of 2024 was a net charge of $915,000 compared to a net credit of $1.9 million for the second quarter of 2023.
Current wording
The Traditional Banking Provision during the third quarter of 2024 was a net charge of $1.5 million compared to a net charge of $1.6 million for the third quarter of 2023.
Previous wording
As a percentage of total Traditional Bank loans, the Traditional Banking ACLL was 1.30% as of June 30, 2024 compared to 1.28% as of December 31, 2023 and 1.26% as of June 30, 2023. The Company believes, based on information presently available, that it has adequately provided for Traditional Banking loan losses as of June 30, 2024.
Current wording
As a percentage of total Traditional Bank loans, the Traditional Banking ACLL was 1.30% as of September 30, 2024 compared to 1.28% as of December 31, 2023 and 1.27% as of September 30, 2023. The Company believes, based on information presently available, that it has adequately provided for Traditional Banking loan losses as of September 30, 2024.
Previous wording
Warehouse recorded a net charge to the Provision of $214,000 for the second quarter of 2024 compared to a net charge of $202,000 for the same period in 2023. Provision for both periods reflected changes in general reserves consistent with changes in outstanding period-end balances. Outstanding Warehouse period-end balances increased $86 million during the second quarter of 2024 compared to an increase of $81 million during the second quarter of 2023.
Current wording
Warehouse recorded a net charge to the Provision of $116,000 for the third quarter of 2024 compared to a net credit of $203,000 for the same period in 2023. Provision for both periods reflected changes in general reserves consistent with changes in outstanding period-end balances. Outstanding Warehouse period-end balances increased $46 million during the third quarter of 2024 compared to a decrease of $81 million during the third quarter of 2023.
Previous wording
TRS recorded a net credit to the Provision of $1.2 million during the second quarter of 2024 compared to a net credit of $219,000 for the same period in 2023. Substantially all TRS Provision in both periods was related to its RA product.
Current wording
TRS recorded a net credit to the Provision of $2.3 million during the third quarter of 2024 compared to a net credit of $2.0 million for the same period in 2023. Substantially all TRS Provision in both periods was related to its RA product.
Previous wording
RAs related to the first quarter 2024 tax filing season were only originated during December of 2023 and the first two months of 2024, while RAs related to the first quarter 2023 tax filing season were only originated during December of 2022 and the first two months of 2023. As is the case each year as of March 31 st, the Allowance related to RAs is an estimate with that estimate finalized during the second quarter when all uncollected RAs are ultimately charged off as of June 30th. The final charge-off figures posted during the second quarter of a calendar year can be different (higher or lower) than its March 31 st estimate based on actual paydowns received during the second quarter. RAs collected during the second half of a year are recorded as recoveries of previously charged-off loans, unless they are covered under a loss guaranty arrangement. Any RAs subject to a loss guaranty arrangement that are recovered during the second half of the year are distributed to the guarantor.
Current wording
RAs related to the first quarter 2024 tax filing season were only originated during December of 2023 and the first two months of 2024, while RAs related to the first quarter 2023 tax filing season were only originated during December of 2022 and the first two months of 2023. As is the case each year as of March 31 st, the Allowance related to RAs is an estimate with that estimate finalized during the second quarter when all uncollected RAs are ultimately charged off as of June 30th. RAs collected during the second half of a year are recorded as recoveries of previously charged-off loans, unless they are covered under a loss guaranty arrangement. Any RAs subject to a loss guaranty arrangement that are recovered during the second half of the year are distributed to the guarantor.
Previous wording
For the second quarter of 2024, TRS recorded a net credit to the Provision of $1.2 million to bring its preliminary March 31, 2024 Allowance estimate in-line with its final June 30, 2024 charge-offs. Similarly, during the second quarter of 2023 TRS recorded a net credit to the Provision of $219,000. TRS’s incurred loss rate for RAs as of June 30, 2023 was 3.09% of total originations and it finished 2023 with a final RA loss rate of 2.84% of total RAs originated. As of June 30, 2024, TRS’s incurred loss rate related to RAs that were associated with the first quarter 2024 tax filing season was 3.72% of the $874 million of the total loans originated during December 2023 and the first two months of 2024. In-line with its customary June 30th charge-off policy for RA loans, the Company completely charged-off all remaining unpaid RAs as of June 30, 2024, with approximately $4 million of the RAs that are expected to be recovered under loan-loss guaranty arrangements with Tax Providers recorded as receivables in other assets on the balance sheet.
Current wording
TRS’s incurred loss rate for RAs as of September 30, 2023 was 3.09% of total originations and it finished 2023 with a final RA loss rate of 2.84% of total RAs originated. As of September 30, 2024, TRS’s incurred loss rate related to RAs that were associated with the first quarter 2024 tax filing season was 3.40% of the $874 million of the total loans originated during December 2023 and the first two months of 2024.
Previous wording
For factors affecting the comparison of the TRS results of operations for the second quarter of 2024 and the second quarter of 2023, see section titled*“OVERVIEW (Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023) - Tax Refund Solutions.”*
Current wording
For factors affecting the comparison of the TRS results of operations for the third quarter of 2024 and the third quarter of 2023, see section titled*“OVERVIEW (Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023) - Tax Refund Solutions.”*
Previous wording
As illustrated in Table 3 below, RCS recorded a net charge to the Provision of $5.2 million during the second quarter of 2024 compared to a net charge to the Provision of $4.3 million for the same period in 2023. The increase in the Provision was driven primarily by a $1.2 million increase in net charge-offs for RCS’s LOC II product. The 91% increase in net charge-offs within the LOC II product for the second quarter of 2024 was generally in-line with the 66% increase in average outstanding balances for the same periods.
Current wording
As illustrated in Table 3 below, RCS recorded a net charge to the Provision of $6.4 million during the third quarter of 2024 compared to a net charge to the Provision of $4.3 million for the same period in 2023. The increase in the Provision was driven primarily by a $1.5 million increase in net charge-offs for RCS’s LOC II product. The 83% increase in net charge-offs within the LOC II product for the third quarter of 2024 was generally in-line with the 47% increase in average outstanding balances for the same periods.
Previous wording
While RCS loans generally return higher yields, they also present a greater credit risk than Traditional Banking loan products. As a percentage of total RCS loans, the RCS ACLL was 15.44% as of June 30, 2024, 13.82% as of December 31, 2023, and 12.88% as of June 30, 2023. The segment continued to experience a change in loan mix, growing in categories with higher loan loss reserve requirements thus driving its higher ACLL for the quarter. The Company believes, based on information presently available, that it has adequately provided for RCS loan losses as of June 30, 2024.
Current wording
While RCS loans generally return higher yields, they also present a greater credit risk than Traditional Banking loan products. As a percentage of total RCS loans, the RCS ACLL was 15.70% as of September 30, 2024, 13.82% as of December 31, 2023, and 13.00% as of September 30, 2023. The segment continued to experience a change in loan mix, growing in categories with higher loan loss reserve requirements thus driving its higher ACLL for the quarter. The Company believes, based on information presently available, that it has adequately provided for RCS loan losses as of September 30, 2024.
Previous wording
In addition to the increase in net charge-offs at TRS, the Company also experienced a $1.3 million increase in net charge-offs within the LOC II product of the Company’s RCS operations. As previously noted, the net charge-offs within LOC II product was primarily driven by a similar increase in the average outstanding balances for the product. RCS’s line of credit products generally include significantly higher risk lending activities than the Company’s Core Banking operations.
Current wording
In addition to the increase in net charge-offs within the Traditional Bank, the Company also experienced a $1.5 million increase in net charge-offs within the LOC II product of the Company’s RCS operations. As previously noted, the net charge-offs within LOC II product was primarily driven by a similar increase in the average outstanding balances for the product. RCS’s line of credit products generally include significantly higher risk lending activities than the Company’s Core Banking operations.
Previous wording
The Traditional Bank earns a substantial majority of its fee income related to its overdraft service program from the per item fee it assesses its customers for each insufficient-funds check or electronic debit presented for payment. The total per item fees, net of refunds, included in service charges on deposits for the three months ended June 30, 2024 and 2023 were both $1.8 million. The total daily overdraft charges, net of refunds, included in interest income for the three months ended June 30, 2024 and 2023 were $298,000 and $316,000.
Current wording
The Traditional Bank earns a substantial majority of its fee income related to its overdraft service program from the per item fee it assesses its customers for each insufficient-funds check or electronic debit presented for payment. The total per item fees, net of refunds, included in service charges on deposits for the three months ended September 30, 2024 and 2023 were $2.0 million and $1.9 million. The total daily overdraft charges, net of refunds, included in interest income for the three months ended September 30, 2024 and 2023 were $328,000 and $327,000.
Previous wording
RCS’s noninterest income increased $588,000, or 19%, during the second quarter of 2024 compared to the same period in 2023, with program fees representing the entirety of RCS’s noninterest income. The increase in program fees at RCS primarily reflected higher sales volume from RCS’s LOC products. Proceeds from the sale of RCS products totaled $393 million for the second quarter of 2024, compared to $261 million for the second quarter of 2023. Proceeds from the sale of RCS LOC products totaled $329 million for the second quarter of 2024 compared to $209 million for the second quarter of 2023.
Current wording
RCS’s noninterest income increased $813,000, or 24%, during the third quarter of 2024 compared to the same period in 2023, with program fees representing the entirety of RCS’s noninterest income. The increase in program fees at RCS primarily reflected higher sales volume from RCS’s LOC II and installment products. Proceeds from the sale of RCS’s LOC II product totaled $163 million for the third quarter of 2024, compared to $133 million for the third quarter of 2023. Proceeds from the sale of RCS’s installment product totaled $47 million for the third quarter of 2024, compared to $33 million for the third quarter of 2023.
Previous wording
Noninterest expense at the RCS segment increased $1.0 million, or 36%, during the second quarter of 2024 compared to the same period in 2023. The most notable items driving this increase were in the LOC II product, including a $585,000 increase in third-party servicing costs for the product and a$284,000 increase in marketing and development expenses related to the Company’s share of these expenses based on overall origination volume. Under the terms of the Company’s contract with its LOC II marketer-servicer, Republic reimburses the marketer-servicer a certain dollar amount for marketing costs based on each new line of credit originated during the period.
Current wording
Noninterest expense at the RCS segment increased $144,000, or 5%, during the third quarter of 2024 compared to the same period in 2023. The most notable items driving this increase were in the LOC II product, including a $377,000 increase in third-party servicing costs for growth in the product and an$88,000 increase in marketing and development expenses related to the Company’s share of these expenses based on overall origination volume. Under the terms of the Company’s contract with its LOC II marketer-servicer, Republic reimburses the marketer-servicer a certain dollar amount for marketing costs based on each new line of credit originated during the period.
Previous wording
Total Company net income for the first six months of 2024 was $55.8 million, a $6.7 million, or 14%, increase from the same period in 2023. Diluted EPS increased to $2.87 for the first six months of 2024 compared to $2.50 for the same period in 2023. The increase in net income primarily reflected the following:
Current wording
Total Company net income for the first nine months of 2024 was $82.4 million, an $11.6 million, or 16%, increase from the same period in 2023. Diluted EPS increased to $4.24 for the first nine months of 2024 compared to $3.60 for the same period in 2023. The increase in net income primarily reflected the following:
Previous wording
Total Company net interest income was $165.5 million during the first six months of 2024 and represented an increase of $8.3 million from the first six months of 2023. Total Company net interest margin decreased to 5.13% during the first six months of 2023 from 5.48% for the first six months of 2023.
Current wording
Total Company net interest income was $236.8 million during the first nine months of 2024 and represented an increase of $14.8 million from the first nine months of 2023. Total Company net interest margin decreased to 4.92% during the first nine months of 2024 from 5.09% for the first nine months of 2023.
Previous wording
The Traditional Bank’s net interest income decreased $737,000, or 1%, for the first six months of 2024 compared to the same period in 2023. Traditional Banking’s net interest margin was 3.43% for the first six months of 2024, a decrease of 49 basis points from the first six months of 2023.
Current wording
The Traditional Bank’s net interest income increased $2.8 million, or 2%, for the first nine months of 2024 compared to the same period in 2023. Traditional Banking’s net interest margin was 3.49% for the first nine months of 2024, a decrease of 29 basis points from the first nine months of 2023.
Previous wording
The decrease in the Traditional Bank’s net interest income during the first six months of 2024 was primarily attributable to the following factors:
Current wording
The increase in the Traditional Bank’s net interest income during the first nine months of 2024 was primarily attributable to the following factors:
Previous wording
Net interest income within Warehouse rose $442,000, or 9%, from the first six months of 2023 to the first six months of 2024, driven primarily by an increase in the Warehouse net interest margin, which increased 22 basis points from 2.39% during the first six months of 2023 to 2.61% during the first six months of 2024. The improvement in Warehouse net interest margin occurred as its loan yields increased by 84 basis points from period-to-period, while its internally assigned net FTP funding costs rose 62 basis points for the
Current wording
Net interest income within Warehouse rose $1.6 million, or 22%, from the first nine months of 2023 to the first nine months of 2024, driven primarily by an increase in the Warehouse net interest margin, which increased 27 basis points from 2.37% during the first nine months of 2023 to 2.64% during the first nine months of 2024. The improvement in Warehouse net interest margin occurred as its loan yields increased by 64 basis points from period-to-period, while its internally assigned net FTP funding costs rose 81 basis points for the same period. The expansion in Warehouse loan yield over its cost of funds was generally driven by an improvement in pricing with some clients resulting from their annual line of credit renewals.
Previous wording
Overall average outstanding Warehouse balances also increased from $397 million during the first six months of 2023 to $399 million for the first six months of 2024. Average committed Warehouse lines-of-credit decreased from $1.0 billion as June 30, 2023 to $935 million as of June 30, 2024, while average usage rates for Warehouse lines were 43% and 40% during the first six months of 2024 and 2023.
Current wording
Overall average outstanding Warehouse balances also increased from $406 million during the first nine months of 2023 to $442 million for the first nine months of 2024. Average committed Warehouse lines-of-credit decreased from $1.0 billion as September 30, 2023 to $936 million as of September 30, 2024, while average usage rates for Warehouse lines were 47% and 41% during the first nine months of 2024 and 2023.
Previous wording
Net interest income within the TRS segment was up $3.4 million from the first six months of 2023 to the first six months of 2024. Loan-related interest and fees increased $4.2 million for the period and was generally driven by a 4.75% increase in tax season loan origination volume from period to period. In addition, loan fees includeda $560,000 payment received during the second quarter of 2024 representing a Tax Provider yield enhancement for the RA program to help offset the Company’s higher funding costs. This yield enhancement was new for the 2024 tax season. The increase in loan interest and fees was partially offset by an $870,000 increase to the segment’s net cost of funds.
Current wording
Net interest income within the TRS segment was up $3.4 million from the first nine months of 2023 to the first nine months of 2024. Loan-related interest and fees increased $4.2 million for the period and was generally driven by a 4.75% increase in tax season loan origination volume from period to period. In addition, loan fees includeda $560,000 payment received during the second quarter of 2024 representing a Tax Provider yield enhancement for the RA program to help offset the Company’s higher funding costs. This yield enhancement was new for the 2024 tax season. The increase in loan interest and fees was partially offset by an $841,000 increase to the segment’s cost of funds net of its FTP credit for its deposit accounts.
Previous wording
Net interest income from the Company’s prepaid card division decreased $960,000 for the first six months of 2024 compared to the same period in 2023. Overall, RPS earned a higher yield of 5.05% applied to the $368 million average of prepaid program balances for the second quarter of 2024 compared to a yield of 4.17% for the $371 million in average prepaid card balances for the second quarter of 2023. The increase in this higher yield, however, was substantially offset by a $2.5 million charge to interest expense for a new revenue sharing arrangement for the program which began in January 2024.
Current wording
Net interest income from the Company’s prepaid card division decreased $2.3 million for the first nine months of 2024 compared to the same period in 2023. Overall, RPS earned a higher yield of 5.01% applied to the $362 million average of prepaid program balances for the first nine months of 2024 compared to a yield of 4.43% for the $361 million in average prepaid card balances for the first nine months of 2023. The increase in this higher yield, however, was substantially offset by a $3.1 million charge to interest expense for a new revenue sharing arrangement for the program which began in January 2024.
Previous wording
Overall customer demand for the RPS segment has historically not been interest rate sensitive and therefore management does not believe a changing interest rate environment would impact origination volume for its prepaid card products. A rising interest rate environment, however, likely would positively impact the Company’s internal FTP credit more than the revenue share the Company pays for the product, improving the segment’s net interest margin. Conversely, a decreasing interest rate environment likely would negatively impact the Company’s internal FTP credit more than the revenue share the Company pays for the product, decreasing the segment's net interest margin. The exact amount of impact for either scenario would depend on the final internal FTP credit assigned, as well as the overall volume of balances, as the revenue share payouts are also based on overall balances tiers.
Current wording
Overall customer demand for the RPS segment has historically not been interest rate sensitive and therefore management does not believe a changing interest rate environment would impact origination volume for its prepaid card products. A decreasing interest rate environment, however, would likely negatively impact the Company’s internal FTP credit more than it would impact the revenue share the Company pays for the product, decreasing the segment's net interest margin. The exact amount of impact for either scenario would depend on the final internal FTP credit assigned, as well as the overall volume of balances, as the revenue share payouts are also based on overall balances tiers.
Previous wording
RCS’s net interest income increased $6.2 million, or 35%, from the first six months of 2023 to the first six months of 2024. The increase was driven primarily by an increase in fee income from RCS’s LOC II product.
Current wording
RCS’s net interest income increased $9.3 million, or 33%, from the first nine months of 2023 to the first nine months of 2024. The increase was driven primarily by an increase in fee income from RCS’s LOC II product.
Previous wording
RCS’s LOC II loan fees, which are recorded as interest income on loans, increased to $14.1 million during the first six months of 2024, an 82% increase compared to the $7.7 million recorded during the first six months of 2023. As a result, average loan balances outstanding increased by $9 million or 76% from the first six months of 2023 to the first six months of 2024.
Current wording
RCS’s LOC II loan fees, which are recorded as interest income on loans, increased $9.0 million during the first nine months of 2024 to $22.1 million, an 68% increase compared to the $13.2 million recorded during the first nine months of 2023. As a result, average loan balances outstanding increased by $9.0 million or 64% from the first nine months of 2023 to the first nine months of 2024.
Previous wording
Overall customer demand for the RCS segment’s products has historically not been interest rate sensitive and therefore management does not believe a changing interest rate environment would impact origination volume for its various consumer loan products. A rising interest rate environment, however, likely would negatively impact the Company’s internal FTP cost allocated to this segment, while a decreasing interest rate environment likely would positively impact the Company’s internal FTP cost allocated to this segment. The exact amount of impact for either scenario would depend on the final internal FTP cost assigned, as well as the overall volume and mix of loans it generates.
Current wording
Overall customer demand for the RCS segment’s products has historically not been interest rate sensitive and therefore management does not believe a changing interest rate environment would materially impact origination volume for its various consumer loan products. A decreasing interest rate environment likely would positively impact the Company’s internal FTP cost allocated to this segment, which would increase the NIM for the segment. The exact amount of the impact would depend on the final internal FTP cost assigned, as well as the overall volume and mix of loans the segment generates.
Showing the first 40 of 91 pairs. Open the source sections for the rest.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
While long-term interest rates initially rose in tandem with the increases to the FFTR through the middle part of 2022, they trended lower than short-term rates during the second half of 2022. Long-term rates generally maintained this lower level relative to short-term rates throughout 2023 and the first two quarters of 2024, which was generally negative for banks’ net interest income and net interest margins during that time period.
Current report — wording carried from elsewhere
TRS’s incurred loss rate for RAs as of September 30, 2023 was 2.95% of total originations and it finished 2023 with a final RA loss rate of 2.84% of total RAs originated. As of September 30, 2024, TRS’s incurred loss rate related to RAs that were associated with the first quarter 2024 tax filing season was 3.40% of the $874 million of the total loans originated during December 2023 and the first two months of 2024.
Current report — wording carried from elsewhere
and cash flows can also be realized through deposit product promotions, the sale of AFS debt securities, principal paydowns on loans and mortgage-backed securities, and proceeds realized from loans held for sale.
Rearranged previous paragraphs (6)
Previous report — wording carried elsewhere
TRS’s net interest income increased $753,000 for the second quarter of 2024 compared to the same period in 2023. Loan-related interest and fees increased $691,000 for the quarter and was driven primarily bya $560,000 payment received during the second quarter of 2024 representing a Tax Provider yield enhancement for the RA program to help offset the Company’s higher funding costs. This yield enhancement was new for the 2024 tax season.
Previous report — wording carried elsewhere
second quarter of a calendar year can be different (higher or lower) than its March 31 st estimate based on actual paydowns received during the second quarter. RAs collected during the second half of a year are recorded as recoveries of previously charged-off loans, unless they are covered under a loss guaranty arrangement. Any RAs subject to a loss guaranty arrangement that are recovered during the second half of the year are distributed to the guarantor.
Previous report — wording carried elsewhere
Traditional Banking’s noninterest income decreased $1.2 million, or 11%, from the second quarter of 2023 compared to the second quarter of 2024. The most notable change was within other income and was primarily driven by a $1.7 million payment received during the second quarter of 2023 related to a death benefit payment in excess of the cash surrender value for a BOLI policy.
Previous report — wording carried elsewhere
same period. The expansion in Warehouse loan yield over its cost of funds was generally driven by an improvement in pricing with some clients resulting from their annual line of credit renewals.
Previous report — wording carried elsewhere
Class B Common shares may be converted, at the option of the holder, to Class A Common shares on a share for share basis. The Class A Common shares are not convertible into any other class of Republic’s capital stock.
Previous report — wording carried elsewhere
in the down-rate rate scenarios. In addition, the Company’s projected net interest income in down-rate scenarios was also negatively impacted by revisions to the Bank’s deposit beta assumptions, as these assumptions were lowered, meaning deposit costs would remain higher, due to the Bank’s current competitive environment for deposits. The impact of these beta assumptions carries a greater weight as deposit balances have grown.