| PART I |
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| Item 1. | | Business. | | 5 | |
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| Item 1A. | | Risk Factors. | | 24 | |
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| Item 1B. | | Unresolved Staff Comments. | | 35 | |
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| Item 1C. | | Cybersecurity | | 35 | |
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| Item 2. | | Properties. | | 37 | |
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| Item 3. | | Legal Proceedings. | | 39 | |
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| Item 4. | | Mine Safety Disclosures. | | 39 | |
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| PART II | | | | | |
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| Item 5. | | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. | | 39 | |
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| Item 6. | | [Reserved] | | 41 | |
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| Item 7. | | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | | 41 | |
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| Item 7A. | | Quantitative and Qualitative Disclosures About Market Risk. | | 85 | |
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| Item 8. | | Financial Statements and Supplementary Data. | | 85 | |
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| Item 9. | | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. | | 173 | |
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| Item 9A. | | Controls and Procedures. | | 173 | |
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| Item 9B. | | Other Information. | | 174 | |
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| Item 9C. | | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. | | 174 | |
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| PART III | | | | | |
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| Item 10. | | Directors, Executive Officers and Corporate Governance. | | 174 | |
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| Item 11. | | Executive Compensation. | | 176 | |
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| Item 12. | | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. | | 177 | |
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| Item 13. | | Certain Relationships and Related Transactions, and Director Independence. | | 177 | |
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| Item 14. | | Principal Accountant Fees and Services. | | 177 | |
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| PART IV | | | | | |
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| Item 15. | | Exhibits, Financial Statement Schedules. | | 178 | |
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| | | Signatures | | 186 | |
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GLOSSARY OF TERMS
The terms identified in alphabetical order below are used throughout this Form 10-K. You may find it helpful to refer to this page as you read this report.
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| Term | | Definition | | Term | | Definition | | Term | | Definition |
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| 2023 Tax Season | | December 2022 through February 2023 | | DTL | | Deferred Tax Liabilities | | NM | | Not Meaningful |
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| 2024 Tax Season | | December 2023 through February 2024 | | EBITDA | | Earnings Before Interest, Taxes, Depreciation and Amortization | | OCI | | Other Comprehensive Income |
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| 2025 Tax Season | | December 2024 through February 2025 | | Economic Aid Act | | Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act | | OREO | | Other Real Estate Owned |
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| ACH | | Automated Clearing House | | EGRRCPA | | Economic Growth, Regulatory Relief and Consumer Protection Act of 2018 | | PATH Act | | Protecting Americans from Tax Hikes Act of 2015 |
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| ACLC | | Allowance for Credit Losses on Off-Balance Sheet Credit Exposures | | ERA | | Early Season Refund Advance | | Patriot Act | | U.S. Patriot Act |
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| ACLL | | Allowance for Credit Losses on Loans | | ESPP | | Employee Stock Purchase Plan | | PCD | | Purchased Credit Deteriorated |
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| ACLS | | Allowance for Credit Losses on Securities | | EVP | | Executive Vice President | | PD | | Probability of Default |
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| AFS | | Available for Sale | | FCA | | Financial Conduct Authority | | POS | | Point of Sale |
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| Allowance | | Allowance for Credit Losses | | FDIA | | Federal Deposit Insurance Act | | Prime | | The Wall Street Journal Prime Interest Rate |
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| AOCI | | Accumulated Other Comprehensive Income | | FDICIA | | Federal Deposit Insurance Corporation Improvement Act | | Provision | | Provision for Expected Credit Loss Expense |
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| ARM | | Adjustable Rate Mortgage | | FFTR | | Federal Funds Target Rate | | PSU | | Performance Stock Unit |
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| ASC | | Accounting Standards Codification | | FHC | | Financial Holding Company | | RA | | Refund Advance |
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| ASU | | Accounting Standards Update | | FHLB | | Federal Home Loan Bank | | R&D | | Research and Development |
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| ATM | | Automated Teller Machine | | FHLMC | | Federal Home Loan Mortgage Corporation or Freddie Mac | | RB&T / the Bank | | Republic Bank & Trust Company |
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| BHC | | Bank Holding Company | | FICO | | Fair Isaac Corporation | | RCS | | Republic Credit Solutions |
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| BHCA | | Bank Holding Company Act | | FNMA | | Federal National Mortgage Association or Fannie Mae | | Republic / Company | | Republic Bancorp, Inc. |
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| Board | | Company’s Board of Directors | | FOMC | | Federal Open Market Committee | | ROA | | Return on Average Assets |
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| BOLI | | Bank Owned Life Insurance | | FRA | | Federal Reserve Act | | ROE | | Return on Average Equity |
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| BPO | | Brokered Price Opinion | | FRB | | Federal Reserve Bank | | RPG | | Republic Processing Group |
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| BSA | | Bank Secrecy Act | | FTE | | Full Time Equivalent | | RPPS | | Remote Payment and Presentment Service |
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| C&D | | Construction and Development | | FTP | | Funds Transfer Pricing | | RPS | | Republic Payment Solutions |
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| C&I | | Commercial and Industrial | | GAAP | | Generally Accepted Accounting Principles in the United States | | RT | | Refund Transfer |
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| CBLR | | Community Bank Leverage Ratio | | GLBA | | Gramm-Leach-Bliley Act | | S&P | | Standard and Poor's |
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| CCAD | | Commercial Credit Administration Department | | Green Dot | | Green Dot Corporation | | SAC | | Special Asset Committee |
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| CDI | | Core Deposit Intangible | | HEAL | | Home Equity Amortizing Loan | | SBA | | Small Business Administration |
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| CECL | | Current Expected Credit Losses | | HELOC | | Home Equity Line of Credit | | SEC | | Securities and Exchange Commission |
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| CEO | | Chief Executive Officer | | HTM | | Held to Maturity | | SERP | | Supplemental Executive Retirement Plan |
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| CFO | | Chief Financial Officer | | IRS | | Internal Revenue Service | | SOFR | | Secured Overnight Financing Rate |
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| CFPB | | Consumer Financial Protection Bureau | | ITM | | Interactive Teller Machine | | SSUAR | | Securities Sold Under Agreements to Repurchase |
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| CMO | | Collateralized Mortgage Obligation | | KDFI | | Kentucky Department of Financial Institutions | | SVP | | Senior Vice President |
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| CODM | | Chief Operating Decision Maker | | LGD | | Loss Given Default | | TBA | | To be Announced |
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| Core Bank | | The Traditional Banking and Warehouse Lending reportable segments | | LOC I | | RCS product introduced in 2014 for which the Bank participates out a 90% interest and holds a 10% interest | | TDR | | Troubled Debt Restructuring |
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| COVID-19 | | Coronavirus Disease of 2019 | | LOC II | | RCS product introduced in 2021 for which the Bank participates out a 95% interest and holds a 5% interest | | Captive | | Republic Insurance Services, Inc. |
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| CRA | | Community Reinvestment Act | | LRA | | Lender Risk Account | | TILA | | Truth in Lending Act |
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| CRE | | Commercial Real Estate | | LTV | | Loan to Value | | TPS | | Trust Preferred Securities |
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| DIF | | Deposit Insurance Fund | | MBS | | Mortgage-Backed Securities | | TRS | | Tax Refund Solutions |
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| Diluted EPS | | Diluted earnings per Class A Common Share | | MSRs | | Mortgage Servicing Rights | | TRUP | | TPS Investment |
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| Dodd-Frank Act | | The Dodd-Frank Wall Street Reform and Consumer Protection Act | | NA | | Not Applicable | | VA | | U.S. Department of Veterans Affairs |
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| DTA | | Deferred Tax Assets | | NASDAQ | | NASDAQ Global Select Market® | | Warehouse | | Warehouse Lending |
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Cautionary Statement Regarding Forward-Looking Statements
This Annual Report on Form 10-K contains statements relating to future results of Republic Bancorp, Inc. that are considered “forward-looking” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements are principally, but not exclusively, contained in Part I Item 1 “Business,” Part I Item 1A “Risk Factors” and Part II Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
As used in this filing, the terms “Republic,” the “Company,” “we,” “our,” and “us” refer to Republic Bancorp, Inc., and, where the context requires, Republic Bancorp, Inc. and its subsidiaries. The term the “Bank” refers to the Company’s subsidiary bank: Republic Bank & Trust Company. The term the “Captive” refers to the Company’s dissolved insurance subsidiary: Republic Insurance Services, Inc.
Forward-looking statements discuss matters that are not historical facts. As forward-looking statements discuss future events or conditions, the statements often include words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “would,” “potential,” or similar expressions. Do not rely on forward-looking statements. Forward-looking statements detail management’s expectations regarding the future and are not guarantees. Forward-looking statements are assumptions based on information known to management only as of the date the statements are made and management undertakes no obligation to update forward-looking statements, except as required by applicable law.
Broadly speaking, forward-looking statements include:
| ● | the potential impact of inflation on Company operations; |
| ● | projections of revenue, income, expenses, losses, earnings per share, capital expenditures, dividends, capital structure, loan volume, loan growth, deposit growth, or other financial items; |
| ● | descriptions of plans or objectives for future operations, products, or services; |
| ● | descriptions and projections related to management strategies for loans, deposits, investments, and borrowings; |
| ● | forecasts of future economic performance; and |
| ● | descriptions of assumptions underlying or relating to any of the foregoing. |
Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements to be materially different from future results, performance, or achievements expressed or implied by the forward-looking statements. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties, including, but not limited to the following:
| ● | the impact of inflation on the Company’s operations and credit losses; |
| ● | litigation liabilities, including related costs, expenses, settlements and judgments, or the outcome of matters before regulatory agencies, whether pending or commencing in the future; |
| ● | natural disasters impacting the Company’s operations; |
| ● | changes in political and economic conditions; |
| ● | the magnitude and frequency of changes to the FFTR implemented by the FOMC of the FRB; |
| ● | long-term and short-term interest rate fluctuations and the overall steepness of the U.S. Treasury yield curve, as well as their impact on the Company’s net interest income and mortgage banking income; |
| ● | competitive product and pricing pressures in each of the Company’s five reportable segments; |
| ● | equity and fixed income market fluctuations; |
| ● | client bankruptcies and loan defaults; |
| ● | integrations of acquired businesses; |
| ● | changes in applicable laws and regulations or the interpretation and enforcement thereof; |
| ● | changes in fiscal, monetary, regulatory, and tax policies; |
| ● | changes in accounting standards; |
| ● | changes to the Company’s overall internal control environment; |
| ● | the Company’s ability to qualify for future R&D federal tax credits; |
| ● | the ability for Tax Providers to successfully market and realize the expected RA and RT volume anticipated by TRS; |
| ● | information security breaches or cybersecurity attacks involving either the Company or one of the Company’s third-party service providers; and |
| ● | other risks and uncertainties reported from time to time in the Company’s filings with the SEC, including Part 1 Item 1A “Risk Factors.” |
