REPUBLIC BANCORP INC KY
For the period ended Dec 31, 2024. Filed Mar 6, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 6, 2025
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-K
Period ended 2023-12-31; filed 2024-03-14.
0001558370-24-003170
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-06.
0001558370-25-002370
Item 7. 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 263 previous paragraphs and 265 current paragraphs.
150 unchanged; 67 reworded; 44 added; 46 removed; 0 previous and 4 current paragraphs rearranged.
Tables are not compared: 150 previous and 142 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 (44)
Current report
As a result of the final performance of the December 2023 ERAs within TRS, the Company recorded a larger Allowance of $9.8 million for its ERAs during the fourth quarter of 2024 compared to $3.9 million during the fourth quarter of 2023. Approximately $2.3 million of the increase over the fourth quarter 2023 Allowance amount was due to increased volume, with the remaining difference predominately due to an increased loss estimate due to the Company’s experience from the 2024 Tax Season.
Current report
Based on the 2024 Tax Season economics, during the fourth quarter of 2024 the Company revised its agreement with its largest third-party marketer-servicer for RAs and ERAs for the 2025 Tax Season. Under this revised agreement, the Company received a loss cap guarantee specific to ERAs for the 2025 Tax Season. As a result of this new loss cap guarantee, the Company does not anticipate recording any additional loss estimates for the December 2024 ERA originations through this marketer-servicer.
Current report
The FOMC lowered the FFTR by 50 basis points on September 19, 2024, 25 basis points on November 8, 2024, and 25 more basis points on December 19, 2024 bringing the FFTR to 4.50% as of December 31, 2024. Management currently believes the 50-basis-point decrease to the FFTR in September 2024 was beneficial to the Company’s net interest income and net interest margin in the near term. Management also believes that the two 25-basis-point decreases to the FFTR during the fourth quarter of 2024 were not beneficial to the Company’s net interest income and net interest margin. In addition, Management believes that, based on the Company’s current balance sheet structure, any future reductions to the FFTR will likely have a negative impact to 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 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
Management believes the Traditional Bank could experience a negative impact to its net interest income and net interest margin during 2025 if there are additional decreases to the FFTR. The amount of this negative impact, 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
Net interest income within Warehouse rose $3.0 million, or 32%, from 2023 to 2024, driven primarily by an increase in the Warehouse net interest margin, which increased 27 basis points from 2.38% during 2023 to 2.65% during 2024. The improvement in Warehouse net interest margin occurred as its loan yields increased by 34 basis points from 2023 to 2024, while its internally assigned
Current report
net FTP funding costs rose 4 basis points for the same periods. 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 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. In addition, if long-term rates were to increase in 2025, Warehouse demand would likely be negatively impacted.
Current report
Net interest income within the TRS segment was up $4.9 million from 2023 to 2024. Loan-related interest and fees increased $5.7 million for the period and was generally driven by a 5% 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 $882,000 increase to the segment’s cost of funds net of its FTP credit for its deposit accounts.
Current report
During the fourth quarter of 2024, the Company revised its agreement with its largest third-party marketer-servicer for RAs and ERAs for the 2025 Tax Season. In addition to a new loss cap guarantee specific to ERAs for the 2025 Tax Season that was received under the revised agreement, the Company will also receive an increased fee specific to ERAs for the 2025 Tax Season and a reduced fee applicable to in-season RAs for the 2025 Tax Season. The Company estimates the revised contract will provide approximately $2.8 million of additional fee income for the 2025 Tax Season compared to the 2024 Tax Season. The Company earned approximately $1.4 million of this increased fee income during the fourth quarter of 2024.
Current report
Net interest income from the Company’s prepaid card division decreased $3.9 million for 2024 compared to 2023. Overall, RPS earned a lower yield of 3.28% applied to the $361 million average of prepaid program balances for 2024 compared to a yield of 4.59% for the $356 million in average prepaid card balances for 2023. In addition to the lower yield earned its average deposits, the segment also incurred a $4.8 million charge to interest expense for a new revenue sharing arrangement for the program which began in January 2024.
Current report
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.
Current report
RCS’s LOC II loan fees, which are recorded as interest income on loans, increased $10.1 million during 2024 to $29.4 million, an 52% increase compared to the $19.3 million recorded during 2023. The growth in interest income on loans generally resulted from a $7.9 million, or 51%, increase in average loan balances from 2023 to 2024.
Current report
Included in the Provision for 2024, was a $9.8 million charge related to $139 million of ERAs originated during the fourth quarter of 2024 for tax returns anticipated to be filed during the first quarter of 2025. Included in the Provision for 2023, was a $3.9 million charge related to $103 million of ERAs originated during the fourth quarter of 2023 for tax returns anticipated to be filed during the first quarter of 2024. As a result of the final performance of the December 2023 ERAs within TRS, the Company recorded a larger Allowance for its early season tax loans of $9.8 million during the fourth quarter of 2024 compared to $3.9 million during the fourth quarter of 2023. Approximately $2.3 million of the increase over the fourth quarter 2023 Allowance amount was due to increased volume, with the remaining difference predominately due to an increased loss estimate due to the Company’s experience from the 2024 Tax Season.
Current report
In addition to the Provision increase noted above for ERAs, net charge-offs and net Provision were significantly higher for TRS during 2024 compared to 2023 as payments received from the US Treasury during 2024 to pay off RAs and ERAs were lower than the payments received during 2023.
Current report
Based on the 2024 Tax Season economics, during the fourth quarter of 2024 the Company revised its agreement with its largest third-party marketer-servicer for RAs and ERAs for the 2025 Tax Season. Under this revised agreement, the Company received a loss cap guarantee specific to ERAs for the 2025 Tax Season. As a result of this new loss cap guarantee, the Company does not anticipate recording any additional loss estimates for the December 2024 ERA originations through this marketer-servicer.
Current report
As illustrated in Table 4 below, RCS recorded a net charge to the Provision of $20.6 million during 2024 compared to a net charge to the Provision of $16.5 million for 2023. The increase in the Provision was driven primarily by a $5.0 million increase in net charge-offs within the LOC II product, which resulted in a higher reserve percentage being applied to the outstanding balances, and a $2.0 increase in formula reserves applied to the LOC II product. The increase in Provision within the LOC II product was generally in line with the increase in average outstanding loan balances for the same periods.
Current report
Traditional Banking’s noninterest income decreased $422,000, or 1%, for 2024 compared to 2023 and was primarily driven by the following:
Current report
The $576,000 decrease in swap fee income during 2024 was substantially driven by the Company’s pricing strategy during the year in response to the inverted yield curve. As a result, overall origination volume during 2024 across all Traditional Bank loan products was down meaningfully from 2023.
Current report
The $394,000 decrease in fee income related to one-way sales of off-balance sheet deposits through the Promontory network was driven by the Company’s strategy to increase on-balance sheet liquidity throughout 2023 and 2024.
Current report
The decrease in noninterest income resulting from the above items was substantially offset by a $1.9 million increase in mortgage banking income, which resulted from a brief reduction in long-term interest rates during mid-2024 leading to an up-tick in consumer loan demand for 15- and 30-year fixed rate mortgage loans. Altogether, the Bank sold $253 million in secondary market loans and
Current report
TRS’s noninterest income decreased $553,000, or 3%, during 2024 compared in 2023, driven by a 2%, or $392,000, decrease net RT revenue. Net RT revenue for 2024 was negatively impacted by a year-to year decline in payment volume received from the US Treasury, as the number of RTs processed during the 2024 declined approximately 3% from 2023. In addition, net RT revenue was also negatively impacted as the volume mix during 2024 shifted toward Tax Providers with revenue sharing arrangements that were less favorable to Republic.
Current report
RCS’s noninterest income increased $1.9 million, or 15%, during 2024 compared to 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. The total dollar volume of loans sold for these two products in 2024 was $846 million, which was a $171 million, or 25%, increase over their 2023 volume of loans sold. Program fees from the sale of RCS's loan products totaled $14.7 million during 2024, a 15% increase from 2023. Program fees from the sale of RCS’s LOC II product totaled $5.9 million for 2024, compared to $4.7 million for 2023.
Current report
Noninterest expense at the RCS segment increased $2.1 million, or 18%, during 2024 compared to 2023. The most notable items driving this increase were in the LOC II product, including a $1.5 million increase in third-party servicing costs for growth in the product and a $848,000 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 report
During the first nine months of 2024, the Company maintained higher cash balances due to the inverted yield curve and the more attractive pricing for interest-earning cash as compared to longer-term securities. While the yield curve began to steepen during the fourth quarter of 2024, the Company continued to maintain higher cash balances during the quarter, in general, due to near-term funding requirements for tax loans related to the 2025 Tax Season.
Current report
Republic’s investment portfolio decreased $72 million from December 31, 2023 to December 31, 2024. The decrease was driven by $346 million in calls and maturities of debt securities and $35 million in paydowns on mortgage-backed securities, which were partially offset by the purchase of $300 million in securities. The Company elected to generally maintain the excess cash it received from the decline in its investment portfolio in interest-earning cash due to its more attractive yield as compared to longer-term investment options.
Current report
Period-end balances for Traditional Banking loans decreased $49 million, or 1%, from December 31, 2023 to December 31, 2024. Primarily driving this change, during the last half of March 2024, Management made the decision to sell $69 million of correspondent loans that were previously classified as held for investment. The sale of these loans was completed duringthe second quarter of 2024 with the final dollar amount of loans sold being $67 million.
Current report
In addition to the loan sale, management has generally implemented a stricter pricing strategy across all loan types due to the inverted yield curve and elevated funding costs in the market. This stricter pricing strategy has led to a general slowdown in overall origination volume across most product types. Management believes it will continue to maintain this stricter pricing strategy into 2025, as long as
Current report
the yield curve remains inverted or generally flat and incremental funding costs remain elevated This stricter loan pricing strategy will likely cause new loan origination volume to remain muted while it remains in effect. In addition, loan payoffs and paydowns could outpace new originations leading to a decline in the Traditional Bank’s loan balances during periods in the future.
Current report
The Traditional Banking ACLL increased approximately $758,000 to $60 million as of December 31, 2024 driven primarily by general formula reserves applied to Traditional Bank loans. While loan balances at the Traditional Bank decreased in total during 2024, the segment experienced a change in loan mix growing in loan categories, such as construction and land development, with higher loan loss reserve requirements. Partially offsetting the change in loan mix, the Traditional Bank reclassed $69 million of correspondent mortgage loans from held for investment into held for sale.
Current report
The Company’s net charge-offs also included a $1.9 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 $5 million broker-related marine loans outstanding as of December 31, 2024.
Current report
The ratio of delinquent loans to total loans decreased to 0.38% as of December 31, 2024, from 0.42% as of December 31, 2023, driven by a $1.6 million decrease in delinquent loans along with a $200 million increase in total loans outstanding.
Current report
The increase in Core Bank interest-bearing deposits was driven by $288 million of growth in money market deposits and, a $24 million increase in reciprocal money market deposits, and a $30 million increase in all time deposits. The growth in money market and reciprocal money market deposits was primarily in exception-priced accounts as well as those products marketed with standard higher offering rates.
Current report
During 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
Management believes the Company is more likely to experience slower overall growth, and possibly, a continuing decline in its noninterest-bearing deposits over the foreseeable future.
Current report
RPG Deposits
Current report
As previously noted in the Company’s 2023 Report on Form 10-K filed on March 14, 2024, RPS began sharing a significant portion of the interest revenue it earns on its prepaid card balances with its prepaid card marketer-servicers during the first quarter of 2024. This revenue share is being reported as interest expense on deposits. As a result, all prepaid card deposit balances subject to a revenue share arrangement will be reported as interest-bearing deposits on an on-going basis, as long as they remain subject to a revenue share arrangement. Conversely, for any periods reported prior to 2024, these deposits will remain noninterest-bearing as they were not subject to a revenue share arrangement during those periods.
Current report
The Bank’s total FHLB advances were $395 million as of December 31, 2024 compared to $380 million as of December 31, 2023. There were $25 million of overnight borrowings as of December 31, 2024 compared to $110 million as of December 31, 2023. The Company has utilized FHLB advances over the past year to partially fund its noninterest-bearing deposit outflow and overall loan growth.
Current report
During the second quarter of 2024, the Bank elected to extend $100 million of FHLB borrowings during May and June through a third-party, fixed rate swap to take advantage of the inverted yield curve and lower its overall borrowing costs. As a result of this swap, the Bank was able to lock in an annualized cost of 4.42% for this $100 million over a five-year term.
Current report
Interest rate swap derivatives are reported at fair value in other assets or other liabilities. The accounting for changes in the fair value of a derivative depends on whether it has been designated and qualifies for hedge accounting as part of a cash flow hedging relationship. For a derivative designated as a cash flow hedge, the effective portion of the derivative’s unrealized gain or loss is recorded as a component of other comprehensive income (“OCI”). The amount included in AOCI would be reclassified to current earnings should the hedge no longer be considered effective. Derivatives not designated as hedges are economic derivatives with the gain or loss recognized in current period earnings.
Current report
Interest Rate Swaps Used as Cash Flow Hedges
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Removed paragraphs (46)
Previous report
Cancelled TRS Sale Transaction
Previous report
On June 3, 2022, the Bank and Green Dot entered into a settlement agreement (“Settlement Agreement”) to fully resolve the lawsuit that the Bank filed against Green Dot in the Delaware Court of Chancery on October 5, 2021 (the “Lawsuit”).
Previous report
As previously disclosed in the Company’s prior SEC filings, the Lawsuit arose from Green Dot’s inability to consummate a sale
Previous report
transaction contemplated in a purchase agreement through which Green Dot would purchase all of the assets and operations of the Bank’s TRS business (“TRS Purchase Agreement”).
Previous report
In accordance with the Settlement Agreement, on June 6, 2022, Green Dot paid $13 million to the Bank, which was in addition to a $5 million termination fee that Green Dot paid to the Bank during the first quarter of 2022 under the terms of the TRS Purchase Agreement. On June 6, 2022, the Bank and Green Dot filed a stipulation of dismissal of the Lawsuit with the Delaware Court of Chancery, which was effective to dismiss the Lawsuit when filed.
Previous report
The decrease in net income during 2023 for the Total Company primarily resulted from the nonrecurrence of the following income items recorded during 2022:
Previous report
Table 2 — Increases to the Federal Funds Target Rate since January 1, 2022
Previous report
As of the date of this filing, the near-term shape of the yield curve is uncertain. The Federal Reserve continues to signal its willingness to implement appropriate monetary policy to reduce inflation and to maintain it at an acceptable level. Many market forecasters, however, 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. 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
While net interest income was higher at the Traditional Bank for the year, it was notably lower during the fourth quarter of 2023 as compared to the fourth quarter of 2022. The decrease in net interest income for the fourth quarter of 2023 was the first quarter-to-same-quarter-last-year decline for the Traditional Bank during 2023. While net interest income was higher for each of the first three quarters of 2023 compared to the same quarter in 2022, each quarter experienced a diminishing magnitude of increase. This diminishing magnitude occurred as the Traditional Bank’s cost of funds increased at a faster pace than its yield on interest earning assets.
Previous report
The primary driver of this diminishing benefit was a reduction in interest-earning cash balances combined with an on-going shift in funding mix away from noninterest-bearing deposit balances to higher-costing, interest-bearing deposits and FHLB borrowings. As a result of these factors, the Traditional Bank’s yield on its interest earning assets increased 97 basis points from the fourth quarter of 2022 to the fourth quarter of 2023, while its cost of interest-bearing liabilities increased 218 basis points for the same periods.
Previous report
Management believes the Traditional Bank could likely continue to experience net interest margin compression during 2024 as a result of the negative impact of 1) lower interest-earning cash and low-cost deposit balances; 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
Net interest income within Warehouse decreased $4.3 million, or 31%, from 2022 to 2023, driven by decreases in both average outstanding balances and net interest margin. Overall average outstanding Warehouse balances declined from $510 million during 2022 to $397 million for 2023, driven largely by the sharp rise in long-term interest rates during 2022, which depressed mortgage-refinancing demand and resulted in a sharp drop in Warehouse line usage.
Previous report
In addition, the Warehouse net interest margin decreased 31 basis points from 2.69% during 2022 to 2.38% during 2023. The decline in the Warehouse net interest margin occurred as its funding costs, as charged through the Company’s internal FTP methodology, generally rose in tandem with the increase in short-term interest rates since rates began rising in March 2022, while its yield increases were delayed until the adjustable rates on its clients’ lines of credit surpassed their contractual interest rate floors. These interest rate floors benefited the Warehouse net interest margin substantially during 2020 and 2021 when market rates declined to historical lows
Previous report
but have produced margin compression since the onset of the FFTR increases during the first quarter of 2022. In addition, the warehouse industry came under competitive pricing pressures during 2023 as a declining market demand caused the banks that lend to Warehouse clients to lower their margins in order to maintain higher levels of balances on their existing warehouse lines.
Previous report
A continuing period of elevated long-term market interest rates or additional increases in long-term market interest rates will likely lead to a continued reduction in average outstanding balances driven by a decline in demand from Warehouse clients. 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, further driving down the yield Warehouse earns on its lines of credits.
Previous report
Net interest income within the TRS segment was up $12.7 million from 2022 to 2023. Loan-related interest and fees increased $17.2 million for the period and was driven primarily by a $426 million increase in RA origination volume, most of which resulted from a new contract with a large national tax preparation provider. This increase in loan revenue was partially offset by a $3.5 million increase to the segment’s net cost of funds as applied through the Company’s internal net FTP charge.
Previous report
The Company’s prepaid card program drove a $10.9 million increase to net interest income for the segment. This increase was generally driven by a higher crediting rate applied through the Company’s internal FTP. The prepaid card FTP credit yield was 4.59% for average prepaid card-related balances of $356 million during 2023 compared to 1.37% for average prepaid card-related balances of $362 million during 2022.
Previous report
RCS’s LOC II loan fees, which are recorded as interest income on loans, increased to $19.3 million during 2023 compared to $8.5 million during 2022. The Company first piloted this product during the first quarter of 2021 with limited outstanding balances during the pilot phase. It began to ramp up origination volume for the product during early 2022 and has steadily increased its volume since then, leading to corresponding higher year-over-year revenue.
Previous report
TRS recorded a charge to the Provision for RA loans of $22.5 million, or 2.68% of its $840 million in total RAs and ERAs originated during 2023 compared to a charge to the Provision of $10.5 million, or 2.56 % of its $409 million of RAs originated during 2022. The
Previous report
increase in Provision for 2023 was primarily due to the increased volume from the previously mentioned new contract with a large national tax preparation provider, which generated approximately $462 million in new RA volume related to the first quarter 2023 tax filing season.
Previous report
As illustrated in Table 5 below, RCS recorded a net charge to the Provision of $16.5 million during 2023 compared to a net charge to the Provision of $12.1 million for 2022. The increase in the Provision was driven primarily by a $2.8 million increase in net charge-offs and a $1.6 million increase in the Allowance based on general formula reserves applied to the growth for RCS’s LOC outstanding balances. Net charge-offs for RCS’s LOC II product were $6.8 million for 2023 compared to $3.2 million of net charge-offs during 2022. As previously disclosed, this product was first piloted during the first quarter of 2021. RCS began to ramp up origination volume for the RCS LOC II product during early 2022 and has steadily increased its volume since then leading to corresponding higher year-over-year net charge-offs in the product.
Previous report
Traditional Banking’s noninterest income increased $4.2 million, or 13%, over 2022, driven primarily by a $1.7 million death benefit payment received during the second quarter of 2023 that was in excess of the cash surrender value of the BOLI policy.
Previous report
TRS’s noninterest income decreased $19.4 million, or 55%, during 2023 compared to the same period in 2022. Green Dot paid RB&T a total of $18 million in nonrecurring payments during 2022 related to the now-cancelled TRS Purchase Agreement. These nonrecurring payments included the following:
Previous report
Regarding the noninterest income from TRS’s RT product, net RT revenue decreased $1.3 million from $17.0 million during 2022 to $15.7 million during 2023. RT revenue for 2023 was negatively impacted by a general decline in overall RT demand across the industry.
Previous report
RCS’s noninterest income decreased $462,000, or 3%, during 2023 compared to 2022, with program fees representing the substantial majority of RCS’s noninterest income. The decrease in RCS program fees primarily reflected lower sales volume and corresponding gains from RCS’s installment loan product which were substantially offset by higher sales volume and gains from RCS’s LOC II product.
Previous report
Proceeds from the sale of RCS's loan products totaled $12.8 million during 2023, a 3% decrease from 2022. Partially offsetting the decrease, RCS sold approximately $460 million of balances for the LOC II product during 2023, an increase of 123% over 2022. This increase in sales volume for the LOC II product contributed to a $2.5 million increase in RCS program fee revenue, which partially
Previous report
offset the decline in revenue from the installment product. RCS began to ramp up origination volume for the LOC II product during early 2022 and has steadily increased its volume since then, leading to corresponding higher year-over-year net program revenue.
Previous report
Noninterest expense at the Mortgage Banking segment decreased $1.9 million, or 19%, during 2023 compared to the same period in 2022, primarily due to a $916,000 decrease in salary and employee benefits expense and a $303,000 decrease in marketing expense. A reduction in shared overhead expense primarily drove the decrease in salary and employee benefits.
Previous report
The Company records a credit offset to salary expense for each loan it originates and recognizes the cost of that credit as an adjustment to the loan’s yield over its estimated life. The amount of credit benefit to salary expense during a given period is determined by the overall loan origination volume during that period.
Previous report
Noninterest expense at the RCS segment increased $3.6 million, or 43%, during 2023 compared to 2022. Approximately $2.7 million of this increase was concentrated within the LOC II product and was a result of a year-over-year increase in marketing activity for the product. Approximately $1.8 of the increase was within Salaries and Benefits and was primarily the result of annual merit increases and an increase in headcount.
Previous report
Republic’s total investment portfolio decreased $40 million from December 31, 2022 to December 31, 2023, driven by $105 million in calls and maturities of debt securities and $37 million in paydowns on mortgage-backed securities. These decreases were partially offset by the purchase of $70 million in debt-securities, $15 million in FHLB stock, $17 million of investments acquired as part of the CBank merger, and a $15 million increase in market value following a general decline in longer-term market interest rates.
Previous report
Period-end balances for Traditional Banking loans increased $763 million, or 20%, from December 31, 2022 to December 31, 2023. The following primarily drove the change in loan balances during 2023:
Previous report
As previously discussed, a continuing period of elevated long-term market interest rates or additional increases in long-term market interest rates will likely lead to a continued reduction in average outstanding balances driven by a decline in demand from Warehouse clients. In addition, because the yield on Warehouse lines of credit is 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
The Traditional Banking ACLL increased approximately $8 million to $59 million as of December 31, 2023, generally driven primarily by formula reserves tied to loan growth during 2023 partially offset by the $1.5 million release of COVID-related reserves. The release of these reserves coincided with the federal government’s declaration of the official end to the COVID pandemic in May of 2023.
Previous report
During 2023 and 2022, the Company’s Core Bank net charge-offs to average Core Bank loans remained near zero.
Previous report
Delinquent loans to total loans increased to 0.42% as of December 31, 2023, from 0.34% as of December 31, 2022, primarily due to a $5 million increase in delinquent RPG loans and a $2 million increase in Core Bank loans.
Previous report
The table below presents the composition of the Company’s TDRs and collateral-dependent loans on its consolidated balance sheet as of December 31, 2022 and 2021.
Previous report
Table 27 — Collateral Dependent Loan Composition
Previous report
See Footnote 4 “Loans and Allowance for Credit Losses” of Part II Item 8 “Financial Statements and Supplementary Data” for additional discussion regarding collateral-dependent loans and TDRs.
Previous report
As previously noted, Management believes the following two factors generally drove the $266 million decrease in Core Bank legacy noninterest-bearing deposits.
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Reworded paragraphs (67)
Previous wording
Republic is a financial holding company headquartered in Louisville, Kentucky. The Bank is a Kentucky-based, state-chartered non-member financial institution that provides both traditional and non-traditional banking products through six reportable segments using a multitude of delivery channels. While the Bank operates primarily in its market footprint, its non-brick-and-mortar delivery channels allow it to reach clients across the U.S. During the last quarter of 2023, the Company dissolved its Captive, a Nevada-based, wholly owned insurance subsidiary of the Company. The Captive provided property and casualty insurance coverage to the Company and the Bank, as well as a group of third-party insurance captives.
Current wording
Republic is a financial holding company headquartered in Louisville, Kentucky. The Bank is a Kentucky-based, state-chartered non-member financial institution that provides both traditional and non-traditional banking products through five reportable segments using a multitude of delivery channels. While the Bank operates primarily in its geographical market footprint where it has physical locations, its non-brick-and-mortar delivery channels allow it to reach clients across the U.S. During the last quarter of 2023, the Company dissolved its Captive, a Nevada-based, wholly owned insurance subsidiary of the Company. The Captive provided property and casualty insurance coverage to the Company and the Bank, as well as a group of third-party insurance captives.
Previous wording
Republic believes its critical accounting policies and estimates relate to the following:
Current wording
Republic believes its critical accounting policies and estimates relate to the ACLL and Provision.** **
Previous wording
ACLL and Provision** —**As of December 31, 2023, the Bank maintained an ACLL for expected credit losses inherent in the Bank’s loan portfolio, which includes overdrawn deposit accounts. Management evaluates the adequacy of the ACLL monthly and presents and discusses the ACLL with the Audit Committee and the Board of Directors quarterly.
Current wording
As of December 31, 2024, the Bank maintained an ACLL for expected credit losses inherent in the Bank’s loan portfolio, which includes overdrawn deposit accounts. Management evaluates the adequacy of the ACLL monthly and presents and discusses the ACLL with the Audit Committee and the Board of Directors quarterly.
Previous wording
Management evaluated the reasonableness of its Core Bank ACLL by evaluating absorption and exhaustion rates that account for CECL life-of-loan considerations. The absorption rate considered total Core Bank net loan losses from 2008 to 2013 as a percent of the end-of-year Core Bank ACLL. The exhaustion rate considered how many years of gross Core Bank loan charge-offs the end-of-year Core Bank ACLL could withstand based on average annual net Core Bank loan losses from 2008 to 2013. The years 2008 to 2013 represent a six-year period during which the U.S. unemployment rate rose above 8% and the Core Bank incurred a historically high period of loan losses relative to an average year of loan losses for the Core Bank. Management believes Core Bank losses from 2008 to 2013 are more representative of current economic conditions than more recent years just prior to the onset of the COVID-19 pandemic.
Current wording
Management evaluated the reasonableness of its Core Bank ACLL by evaluating absorption and exhaustion rates that account for CECL life-of-loan considerations. The absorption rate considered a range of total Core Bank net loan losses to the Total Core Bank ACLL using the 2008 to 2013 “Great Recession” timeframe as a baseline. The exhaustion rate considered how many years of gross Core Bank loan charge-offs the end-of-year Core Bank ACLL could withstand based on a range of average annual net Core Bank loan losses, also using the 2008 to 2013 timeframe as a baseline. The years 2008 to 2013 represent a six-year period during which the U.S. unemployment rate rose above 8% and the Core Bank incurred a historically high period of loan losses relative to an average year of loan losses for the Core Bank. The timeframe of 2008 to 2013 is the most recent period in which the Core Bank incurred notable loan losses, and as such, Management believes is an appropriate baseline starting point in its overall absorption and exhaustion analyses.
Previous wording
Management considered the absorption rates and exhaustion rates calculated for the Core Bank as of December 31, 2023 and 2022 to be within acceptable ranges under current economic conditions. Based on management’s evaluation, a Core Bank ACLL of $60 million, or 1.21% of total Core Bank loans, was an adequate estimate of expected losses within the loan portfolio as of December 31, 2023 and resulted in Core Banking Provision for its loans of a net charge of $8.5 million during 2023. This compares to an ACLL of $52 million as of both December 31, 2022 and December 31, 2021 with Provisions of a net charge of $312,000 for 2022 and net credit of $319,000 for 2021.
Current wording
Management considered the range of absorption rates and exhaustion rates calculated for the Core Bank as of December 31, 2024 and 2023 to be within acceptable ranges under current economic conditions. Based on management’s evaluation, a Core Bank ACLL of $61 million, or 1.19% of total Core Bank loans, was an adequate estimate of expected losses within the loan portfolio as of December 31, 2024 and resulted in Core Banking Provision for its loans of a net charge of $3.8 million during 2024. This compares to an ACLL of $60 million as of December 31, 2023 and $52 million as of December 31, 2022 with Provisions of a net charge of $8.5 million for 2023 and net charge of $312,000 for 2022.
Previous wording
As of December 31, 2023, the ACLL to total loans estimated for each RCS product ranged from as low as 0.25% for its healthcare-receivables portfolios to as high as 50.89% for its line-of-credit portfolios. A lower reserve percentage was provided for RCS’s healthcare receivables as of December 31, 2023, as such receivables have recourse back to the Company’s third-party service providers in the transactions.
Current wording
As of December 31, 2024, the ACLL to total loans estimated for each RCS product ranged from as low as 0.25% for its healthcare-receivables portfolios to as high as 70.63% for its line-of-credit portfolios. A lower reserve percentage was provided for RCS’s healthcare receivables as of December 31, 2024, as such receivables have recourse back to the Company’s third-party service providers in the transactions.
Previous wording
Management only evaluated the ACLL on its active RCS products that had incurred meaningful losses since their inception, which were its line-of-credit products. Due to the general short-term nature of these products, management utilized the current year net charge-offs for 2022 and 2023 along with the end-of-the-year ACLL to calculate each years’ absorption rate and exhaustion rate. The absorption and exhaustion rates were both considered to be within acceptable ranges as of December 31, 2023 and 2022. Based on management’s calculation, an ACLL of $22 million, or 7.91%, of total RPG loans was an adequate estimate of expected losses within the RPG portfolio as of December 31, 2023.
Current wording
Management only evaluated the ACLL on its active RCS products that had incurred meaningful losses since their inception, which were its line-of-credit products. Due to the general short-term nature of these products, management utilized the current year net charge-offs for 2023 and 2024 along with the end-of-the-year ACLL to calculate each years’ absorption rate and exhaustion rate. The absorption and exhaustion rates were both considered to be within acceptable ranges as of December 31, 2024 and 2023. Based on management’s calculation, an ACLL of $21 million, or 16.30%, of total RCS loans was an adequate estimate of expected losses within the RCS portfolio as of December 31, 2024.
Previous wording
RPG’s TRS segment offered its RA credit product during the first two months of 2023, 2022, and 2021, and its ERA credit product during December 2023 and 2022 related to the subsequent first quarter tax filing seasons. An ACLL for losses on RAs and ERAs is estimated during the limited, short-term period the product is offered. RAs originated during the first two months of 2023, were repaid, on average, within 32 days of origination. Provisions for RA and ERA losses are estimated when advances are made and adjusted to actual net charge-offs as of June 30 th of each year. The ACLL for ERAs as of December 31, 2023 was $3.9 million for $103 million of ERAs originated during December 2023. The ACLL as of December 31, 2022 was $3.8 million for $98 million of ERAs originated during December 2022. There were no ERAs originated during 2021, and as a result there was no ACLL and corresponding Provision for ERAs as of December 31, 2021.
Current wording
RPG’s TRS segment offered its RA credit product during the first two months of 2024, 2023, and 2022, and its ERA credit product during the Decembers of 2024, 2023 and 2022 related to the subsequent first quarter tax filing seasons. An ACLL for losses on RAs and ERAs is estimated during the limited, short-term period the product is offered. RAs originated during the first two months of 2024, were repaid, on average, within 32 days of origination. Provisions for RA and ERA losses are estimated when advances are made and adjusted to actual net charge-offs as of June 30 th of each year. The ACLL for ERAs as of December 31, 2024 was $9.8 million for $139 million of ERAs originated during December 2024. The ACLL as of December 31, 2023 was $3.9 million for $103 million of ERAs originated during December 2023. The ACLL as of December 31, 2022 was $3.8 million for $98 million of ERAs originated during December 2022.
Previous wording
RPG recorded a net charge of $39.1 million, $22.0 million, and $15.1 million to the Provision during 2023, 2022, and 2021, with the Provision for each year primarily due to net losses on RAs and growth in short-term, consumer loans originated through the RCS segment. If the number of future charge-offs on RAs and RCS loans differ significantly from assumptions used by management in making its determination, an adjustment to the RPG ACLL and the resulting effect on the income statement could be material.
Current wording
RPG recorded a net charge of $50.6 million, $39.1 million, and $22.0 million to the Provision during 2024, 2023, and 2022, with the Provision for each year primarily due to net losses on RAs and growth in short-term, consumer loans originated through the RCS segment. If the number of future charge-offs on RAs and RCS loans differ significantly from assumptions used by management in making its determination, an adjustment to the RPG ACLL and the resulting effect on the income statement could be material.
Previous wording
Total Company net income was $90.4 million and Diluted EPS was $4.62 for 2023, compared to net income of $91.1 million and Diluted EPS of $4.59 for 2022. Table 1 below presents Republic’s financial performance for the years ended December 31, 2023, 2022, and 2021:
Current wording
Total Company net income was $101.4 million and Diluted EPS was $5.21 for 2024, compared to net income of $90.4 million and Diluted EPS of $4.62 for 2023. Table 1 below presents Republic’s financial performance for the years ended December 31, 2024, 2023, and 2022:
Previous wording
A large amount of the Company’s financial instruments tracks closely with, or are primarily indexed to, either the FFTR, Prime, or SOFR. These indices trended lower beginning in the first quarter of 2020 with the onset of the COVID pandemic, as the FOMC reduced the FFTR to approximately 25 basis points. During 2022 inflation rose to levels not seen in approximately 40 years. In response, the FOMC began executing a quantitative tightening program by reducing its balance sheet, selling certain types of bonds in the market, and repeatedly increasing the FFTR. The FOMC’s increases to the FFTR since January 1, 2022 included the following:
Current wording
A large amount of the Company’s financial instruments track closely with, or are primarily indexed to, either the FFTR, Prime, or SOFR. These indices trended lower beginning in the first quarter of 2020 with the onset of the COVID pandemic, as the FOMC reduced the FFTR to approximately 25 basis points. During 2022 inflation rose to levels not seen in approximately 40 years. In response, the FOMC began executing a quantitative tightening program by reducing its balance sheet, selling certain types of bonds in the market, and beginning in March 2022 repeatedly increasing the FFTR until it reached its peak of 5.50% in July 2023.
Previous wording
The FOMC’s actions and signals continued to place upward pressure on short-term market interest rates throughout 2022 and 2023. 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 generally maintained this lower level relative to short-term rates throughout 2023 as the market generally began anticipating a recession to take place in the near-term future. As a result of the higher short-term interest rates and the lower long-term interest rates, the yield curve has been inverted for several months, with short-term rates generally higher than long-term rates on the yield curve. 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
Total Company net interest income was $288.8 million during 2023 and represented a $52.1 million increase over 2022. Total Company net interest margin expanded to 4.91% during 2023 compared to 4.12% for 2022.
Current wording
Total Company net interest income was $312.2 million during 2024 and represented a $23.4 million increase over 2023. The Total Company net interest margin declined to 4.85% during 2024 compared to 4.91% for 2023.
Previous wording
The Traditional Banking’s net interest income increased $23.0 million, or 13%, for 2023 compared to 2022. Traditional Banking’s net interest margin was 3.69% for 2023, an increase of 31 basis points from 2022.
Current wording
The Traditional Banking’s net interest income increased $8.3 million, or 4%, for 2024 compared to 2023. The Traditional Banking’s net interest margin was 3.55% for 2024, an decrease of 15 basis points from 2023.
Previous wording
The increase in the Traditional Bank’s net interest income during 2023 was primarily attributable to the following factors:
Current wording
The increase in the Traditional Bank’s net interest income and decrease to the Traditional Bank’s net interest margin during 2024 was primarily attributable to the following factors:
Previous wording
Committed Warehouse lines-of-credit decreased from $1.1 billion as of December 31, 2022 to $1.0 billion as of December 31, 2023, while average usage rates for Warehouse lines were 42% and 44%, respectively, during 2023 and 2022.
Current wording
Overall average outstanding Warehouse balances also increased from $397 million during 2023 to $470 million for 2024. Average committed Warehouse lines-of-credit decreased from $1.0 billion for 2023 to $938 million for 2024, while average usage rates for Warehouse lines were approximately 50% and 42% during 2024 and 2023.
Previous wording
RCS’s net interest income increased $10.1 million, or 34%, from 2022 to 2023. 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 $11.1 million, or 28%, from 2023 to 2024. The increase was driven primarily by an increase in fee income from RCS’s LOC II product.
Previous wording
Overall customer demand for the RCS segment’s products is not assumed to be interest rate sensitive and therefore management does not believe a rising interest rate environment will impact origination volume for its various consumer loan products. A rising interest rate environment, however, would negatively impact the Company’s internal FTP cost allocated to this segment. As a result, the impact of rising interest rates to RCS would be negative to the segment’s financial results, although the exact amount of the negative impact would depend on 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 $47.6 million for 2023 compared to a net charge of $22.3 million for 2022.
Current wording
Total Company Provision was a net charge of $54.4 million for 2024 compared to a net charge of $47.6 million for 2023.
Previous wording
The Traditional Banking Provision during 2023 was a net charge of $8.7 million compared to a net charge of $1.4 million for 2022. An analysis of the Provision for 2023 compared 2022 follows:
Current wording
The Traditional Banking Provision during 2024 was a net charge of $3.2 million compared to a net charge of $8.7 million for 2023. An analysis of the Provision for 2024 compared 2023 follows:
Previous wording
As a percentage of total Traditional Bank loans, the Traditional Banking ACLL was 1.28% as of December 31, 2023 compared to 1.32% as of December 31, 2022. The Company believes, based on information presently available, that it has adequately provided for Traditional Banking loan losses as of December 31, 2023.
Current wording
As a percentage of total Traditional Bank loans, the Traditional Banking ACLL was 1.31% as of December 31, 2024 compared to 1.28% as of December 31, 2023. The Company believes, based on information presently available, that it has adequately provided for Traditional Banking loan losses as of December 31, 2024.
Previous wording
Warehouse recorded a net credit of $162,000 for 2023 compared to a net credit of $1.1 million for 2022. Provision for both periods reflected changes in general reserves consistent with changes in outstanding period-end balances. Outstanding Warehouse period-end balances decreased $64 million during 2023 compared to a decrease of $447 million during 2022.
Current wording
Warehouse recorded a net charge of $527,000 for 2024 compared to a net credit of $162,000 for 2023. Provision for both periods reflected changes in general reserves consistent with changes in outstanding period-end balances. Outstanding Warehouse period-end balances increased $211 million during 2024 compared to a decrease of $64 million during 2023.
Previous wording
TRS recorded a net charge to the Provision of $22.6 million during 2023 compared to a net charge of $10.0 million for in 2022. Substantially all TRS Provision in both periods was related to its RA product, including the ERA product.
Current wording
TRS recorded a net charge to the Provision of $30.0 million during 2024 compared to a net charge of $22.6 million for 2023. Substantially all TRS Provision in both periods was related to its RA product.
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 13.82% as of December 31, 2023 and 13.73% as of December 31, 2022. The Company believes, based on information presently available, that it has adequately provided for RCS loan losses as of December 31, 2023.
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 16.30% as of December 31, 2024 and 13.82% as of December 31, 2023. The Company believes, based on information presently available, that it has adequately provided for RCS loan losses as of December 31, 2024.
Previous wording
Total Company noninterest income decreased $18.4 million from 2022.
Current wording
Total Company noninterest income increased $1.2 million from 2023.
Previous wording
A decrease in Mortgage banking income for 2023 was generally caused by substantially higher long-term market interest rates, which led to a significant slowdown in the origination of mortgage loans to be sold into the secondary market. For 2023, the 30-year mortgage rate fluctuated in a range between 6.00% and 7.50% for most of the period. As a result, the Bank sold $78 million in secondary market loans and achieved an average cash-gain-as-a-percent-of-loans-sold of 2.25% during 2023. During the first two months of 2022, however, long-term interest rates were closer to historical lows, driving total 2022 secondary market loan sales of $238 million with comparable cash-gain-as-a-percent-of-loans-sold of 3.01%.
Current wording
achieved an average cash-gain-as-a-percent-of-loans-sold of 1.22% during 2024 compared to secondary market loan sales of $78 million with comparable cash-gain-as-a-percent-of-loans-sold of 2.25% for 2023.
Previous wording
The Traditional Bank also 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 2023 and 2022 were $7.2 million and $6.8 million. The total daily overdraft charges, net of refunds, included in interest income for 2023 and 2022 were $1.2 million and $1.3 million.
Current wording
The Traditional Bank also 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 2024 and 2023 were $7.4 million and $7.2 million. The total daily overdraft charges, net of refunds, included in interest income for 2024 and 2023 were both $1.2 million.
Previous wording
RPS’s noninterest income was flat from 2022 to 2023 at $3.0 million. RPS program fees constituted the substantial majority of noninterest income at RPS. RPS program fees for RPS primarily represents a portion of the net interchange revenue earned for cardholder activity.
Current wording
RPS’s noninterest income increased $287,000, or 10%, for 2024 compared to 2023. RPS program fees constituted the substantial majority of noninterest income at RPS. RPS program fees for RPS primarily represents a portion of the net interchange revenue earned for cardholder activity.
Previous wording
Total Company noninterest expense increased $12.1 million, or 6%, during 2023 compared to 2022.
Current wording
Total Company noninterest expense increased $3.3 million, or 2%, during 2024 compared to 2023.
Previous wording
Traditional Banking noninterest expense increased $10.4 million for 2023 compared to 2022. The following primarily drove the change in noninterest expense:
Current wording
Traditional Bank noninterest expense increased $1.2 million from 2023 to 2024. The following primarily drove the change in noninterest expense:
Previous wording
Noninterest expense at the RPS segment increased $370,000, or 11%, during 2023 compared to 2022, primarily due to a $292,000 increase in salary and employee benefits resulting from an increase in staff.
Current wording
Noninterest expense at the RPS segment increased $391,000, or 11%, during 2024 compared to 2023, primarily due to a $197,000 increase in salary and employee benefits resulting from an increase in staff.
Previous wording
The Company’s effective tax rate was approximately 20% in 2023 compared to 22% in 2022. The effective tax rate decreased primarily due to the following:
Current wording
The Company’s effective tax rate was approximately 20.6% in 2024 compared to 20.2% in 2023. The effective tax rate increased primarily due to the following:
Previous wording
Cash and cash equivalents include cash, deposits with other financial institutions with original maturities less than 90 days, and federal funds sold. Republic had $317 million in cash and cash equivalents as of December 31, 2023 compared to $314 million as of December 31, 2022. Comparing average balances for 2023 and 2022, the Company had average interest-earning cash and cash equivalent balances of $184 million for 2023 compared to $739 million for 2022. The decline in average interest-earning cash balances from period to period was driven generally by an increase in average loan balances without a similar corresponding increase in funding liabilities.
Current wording
Cash and cash equivalents include cash, deposits with other financial institutions with original maturities less than 90 days, and federal funds sold. Republic had $432 million in cash and cash equivalents as of December 31, 2024 compared to $317 million as of December 31, 2023. Comparing average balances for 2024 and 2023, the Company had average interest-earning cash and cash equivalent balances of $473 million for 2024 compared to $184 million for 2023.
Previous wording
For cash held at the FRB, the Bank earns a yield on amounts more than required reserves. This cash earned a weighted-average yield of 5.13% during 2023 with a spot balance yield of approximately 5.40% on December 31, 2023. For cash held within the Bank’s banking center and ATM networks, the Bank does not earn interest.
Current wording
For cash held at the FRB, the Bank earns a yield on amounts more than required reserves. This cash earned a weighted-average yield of 5.26% during 2024 with a spot balance annualized yield of approximately 4.45% as of December 31, 2024. For cash held within the Bank’s banking center and ATM networks, the Bank does not earn interest.
Previous wording
Strategies for the investment securities portfolio are influenced by economic and market conditions, loan demand, deposit mix, and liquidity needs. Since early 2020, the Bank has utilized a general investing strategy of purchasing securities with shorter-term durations or maintaining a large amount cash at the Federal Reserve. The Bank utilized this general strategy due to liquidity reasons and as an interest rate risk management tool. This strategy could change in 2024 depending upon several factors including, but not limited to, the Company’s overall current and projected liquidity positions, its customers’ demand for its loans and deposit products, the Company’s overall interest rate risk position, the interest rate environment at the time, as well as the projected interest rate environment for the near term and the long term.
Current wording
Strategies for the investment securities portfolio are influenced by economic and market conditions, loan demand, deposit mix, and liquidity needs. Since early 2020, the Bank has utilized a general investing strategy of purchasing securities with shorter-term durations or maintaining a large amount cash at the Federal Reserve. The Bank utilized this general strategy due to liquidity reasons and as an interest rate risk management tool. The Company’s overall strategy for 2025 and beyond will be dependent upon many factors including, but not limited to, the Company’s overall current and projected liquidity positions, its customers’ demand for its loans and deposit products, the Company’s overall interest rate risk position, the steepness of the yield curve and the overall interest rate environment at the time, as well as the projected interest rate environment for the near term and the long term.
Previous wording
Gross loans increased by $724 million, or 16%, during 2023 to $5.2 billion as of December 31, 2023. The most significant components comprising the change in loans by reportable segment follow:
Current wording
Gross loans increased by $200 million, or 4%, during 2024 to $5.4 billion as of December 31, 2024. The most significant components comprising the change in loans by reportable segment follow:
Previous wording
Outstanding Warehouse period-end balances decreased $64 million from December 31, 2022 to December 31, 2023. Due to the volatility and seasonality of the mortgage market, it is difficult to project future outstanding balances of Warehouse lines of credit. The growth of the Bank’s Warehouse business greatly depends on the overall mortgage market and typically follows industry trends. Since its entrance into this business during 2011, the Bank has experienced volatility in the Warehouse portfolio consistent with overall demand for mortgage products. Weighted average quarterly usage rates on the Bank’s Warehouse lines have ranged from a low of 31% during the first quarter of 2023 to a high of 71% during the fourth quarter of 2019. On an annual basis, weighted-average usage rates on the Bank’s Warehouse lines have ranged from a low of 39% during 2022 to a high of 66% during 2020.
Current wording
Outstanding Warehouse period-end balances increased $211 million from December 31, 2023 to December 31, 2024. Due to the volatility and seasonality of the mortgage market, it is difficult to project future outstanding balances of Warehouse lines of credit. The growth of the Bank’s Warehouse Lending business greatly depends on the overall mortgage market and typically follows industry trends. Since its entrance into this business during 2011, the Bank has experienced volatility in the Warehouse portfolio consistent with overall demand for mortgage products. Weighted average quarterly usage rates on the Bank’s Warehouse lines have ranged from a low of 31% during the first quarter of 2023 to a high of 71% during the fourth quarter of 2019. On an annual basis, weighted-average usage rates on the Bank’s Warehouse lines have ranged from a low of 39% during 2022 to a high of 66% during 2020.
Previous wording
Outstanding TRS loans decreased $65,000 from December 31, 2022 to December 31, 2023. TRS loan balances as of December 31, 2022 included ERAs of $98 million originated during December 2022 and $52 million of Commercial-related loan balances originated during the fourth quarter of 2022. These balances were substantially all paid down to $0, or alternatively, charged off during 2023.
Current wording
Outstanding TRS loans increased $42 million from December 31, 2023 to December 31, 2024. TRS loan balances as of December 31, 2023 included ERAs of $103 million originated during December 2023 and $46 million of Commercial-related loan balances to tax providers originated during the fourth quarter of 2023. These balances were substantially all paid down to $0, or alternatively, charged off during 2024.
Previous wording
TRS loan balances as of December 31, 2023 included ERAs of $103 million originated during December 2023 and $46 million of Commercial-related loan balances originated during the fourth quarter of 2023. These balances are all expected to pay down to $0 during 2024, or alternatively, be charged off if they are deemed to be uncollectible under the Company’s charge-off policy.
Current wording
TRS loan balances as of December 31, 2024 included ERAs of $139 million originated during December 2024 and $52 million of Commercial-related loan balances to tax providers originated during the fourth quarter of 2024. These balances are all expected to pay down to $0 during 2024, or alternatively, be charged off in line with the Company’s charge-off policy.
Previous wording
The Company’s ACLL increased from $70 million as of December 31, 2022 to $82 million as of December 31, 2023. As a percent of total loans, the total Company’s ACLL increased to 1.57% as of December 31, 2023 compared to 1.56% as of December 31, 2022. An analysis of the ACLL by reportable segment follows:
Current wording
The Company’s ACLL increased from $82 million as of December 31, 2023 to $92 million as of December 31, 2024. As a percent of total loans, the total Company’s ACLL increased to 1.69% as of December 31, 2024 compared to 1.57% as of December 31, 2023. An analysis of the ACLL by reportable segment follows:
Showing the first 40 of 67 pairs. Open the source sections for the rest.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
As of December 31, 2024, the Company’s $395 million of FHLB advances had a weighted-average maturity of 2.13 years and a weighted-average cost of 4.36%, both including the impact of the related swaps. Overall use of FHLB advances during a given year is dependent upon many factors including asset growth, deposit growth, current earnings, and expectations of future interest rates, among others.
Current report — wording carried from elsewhere
Table 33 — Non-hedge Interest Rate Swaps
Current report — wording carried from elsewhere
In response to this deposit outflow, during the second quarter of 2023 the Bank began marketing certain deposit products, such as money market accounts and short-term certificates of deposit, with higher offering rates. In addition, the Company also made select rate exceptions for existing clients based on their overall banking relationship. This higher-rate strategy generally reversed the outflow of deposits during late May and June of 2023 and interest-bearing deposits began to grow, once again. These higher offering rates also raised the Traditional Bank's overall cost of funds meaningfully during 2023 and into 2024 and caused contraction to its net interest margin on a linked-quarter basis through the fourth quarter of 2023.
Current report — wording carried from elsewhere
interest income. Actual results will differ from the model’s simulated results due to the timing, magnitude and frequency of interest rate changes, the timing and magnitude of changes in loan and deposit balances, as well as the changes in market conditions and the application and timing of various management strategies as compared to those projected in the various simulated models. Additionally, actual results could differ materially from the model if interest rates do not move equally across all points on the yield curve.