REPUBLIC BANCORP INC /KY/
For the period ended Mar 31, 2025. Filed May 8, 2025.
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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.
Mar 31, 2025 · Filed May 8, 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-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 OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-08.
0001558370-25-006869
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 302 previous paragraphs and 229 current paragraphs.
134 unchanged; 64 reworded; 27 added; 75 removed; 29 previous and 4 current paragraphs rearranged.
Tables are not compared: 217 previous and 168 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 (27)
Current report
During the first quarter of 2025, the Company further segmented its Commercial Real Estate portfolio into Owner Occupied Commercial Real Estate, Nonowner Occupied Commercial Real Estate, and Multi-family. The Company believes this additional portfolio segmentation will provide better granularity to the ACLL in the future. Given the loss history for each of these portfolio segments over the past several years, this additional segmentation did not have a material impact to the Company’s ACLL as of March 31, 2025. This additional segmentation could have material impacts to the ACLL in the future, however, depending upon the overall credit performance of each of these individual portfolios on a go-forward basis.
Current report
RBMAX— RBMAX is a separately branded, national branchless banking platform offered by the Bank. RBMAX focuses on technologically savvy clients that prefer to bank virtually as well as those that prefer to carry larger balances in high yield savings accounts.
Current report
Recent Developments
Current report
The Company’s largest Tax Provider contract within TRS in terms of product volume expires in October 2025. The Company does not expect to enter into a new contract with this Tax Provider to replace its existing contract.
Current report
The ERAs and RAs originated through this Tax Provider represented approximately 67% of the total dollars of ERAs and RAs originated through TRS from December 2024 through March 2025. In addition, the net RT revenue generated through this Tax Provider during the first quarter of 2025 represented approximately 22% of the total net RT revenue generated through TRS for the first quarter of 2025.
Current report
In total, Management estimates that the TRS segment earned approximately 26% of its pre-tax net income from this existing contract for the 12-month period ended March 31, 2025.
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 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 during the fourth quarter of 2024. 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 as the Company began to reach pricing floors on certain deposit products.
Current report
Subsequent to the end of the first quarter of 2025, the President announced the implementation of tariffs against many of the US’s global trading partners. In response, the value of equity markets fell, bond markets rallied and market interest rates declined out of recession fears resulting from these tariffs and the retaliatory actions from the US’s global trading partners. In addition, many market pundits began projecting a high probability of multiple reductions to the FFTR by the FOMC throughout the remainder of 2025, as a result of the potential negative impact of the tariffs to the US economy. At this time Management is unable to project the future interest rate environment including the future shape of the yield curve, which became more inverted subsequent to quarter-end as a result of these tariffs. 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
The Traditional Bank’s net interest income was $53.3 million for the first quarter of 2025, a $5.1 million, or 10%, increase from $48.3 million during the first quarter of 2024 and was driven generally by a higher period-over-period net interest margin, and to a lesser degree, growth in average interest-earning assets. The Traditional Bank’s NIM increased from 3.33% during the first quarter of 2024 to 3.79% during the first quarter of 2025.
Current report
Warehouse Lending
Current report
Net interest income within Warehouse increased $771,000, or 34%, from the first quarter of 2024 to the first quarter of 2025. The rise in Warehouse net interest income was primarily driven by a $118 million increase in average outstanding Warehouse balances, while the Warehouse NIM remained relatively stable increasing 1 basis point from the first quarter of 2024 to the first quarter of 2025. Overall, Average outstanding Warehouse balances increased 35% from $340 million during the first quarter of 2024 to $458 million for the first quarter of 2025. Period-end committed Warehouse lines increased from $932 million to $975 million from March 31, 2024 to March 31 2025, while higher demand caused average usage rates for Warehouse lines to increase from 37% during the first quarter of 2024 to 47% for the first quarter of 2025.
Current report
Net interest income from the Company’s prepaid card division increased $486,000 from the first quarter of 2024 to the first quarter of 2025. Driving this increase at RPS was a reduction in the segment’s revenue share component for the first quarter of 2025, as the
Current report
Company’s largest marketer-servicer did not achieve the minimal contractual thresholds in order to earn a revenue share for the quarter. By contrast, this revenue share was $969,000 during the first quarter of 2024 and was recorded as interest expense in the segment’s income statement. At this time, Management is uncertain how much the revenue share component may be in the future as deposit balances originated through the segment’s largest marketer-servicer are at levels near the thresholds necessary to achieve a revenue share, making a future revenue share probable, but not certain.
Current report
Partially offsetting the positive benefit of the decreased revenue share, RPS earned alower yield of 4.55% for its $373 million average of prepaid program balances for the first quarter of 2025 compared to a yield of 5.07% for the $375 million in average prepaid card balances for the first quarter of 2024. The lower earnings rate was driven by a decrease in the Federal Funds target rate of 100 basis points from the first quarter of 2024 to the first quarter of 2025.
Current report
The net credit of $769,000 for the first quarter of 2025 was driven, primarily, by the following:
Current report
The net charge of $358,000 during the first quarter of 2024 was primarily driven by the following:
Current report
TRS recorded a net charge to the Provision of $15.4 million during the 2025 Tax Season compared to a net charge of $25.8 million for the 2024 Tax Season. Substantially all TRS Provisions in both periods were related to its RA, including ERAs, product. In addition to a decrease in total RA volume driving lower estimated loan losses during the quarter, the decrease in Provision from the first quarter of 2024 to the first quarter of 2025 primarily occurred because of the following two factors:
Current report
RAs related to the 2025 Tax Season were only originated during December of 2024 and the first two months of 2025, while RAs related to the 2024 Tax Season were only originated during December of 2023 and the first two months of 2024. As of March 31, 2025 and March 31, 2024, the Company estimated Allowance for RAs was 3.22% and 3.37% of total RAs/ERAs originated for the respective tax seasons. In June 2024, the Company charged off all unpaid RAs/ERAs for the 2024 Tax Season, which equated to 3.22% of those originated. The final loss rate of RAs/ERAs for the 2024 Tax Season was 3.11% of originations.
Current report
The Company’s net charge-offs to average total Company loans decreased from 0.30% during the first quarter of 2024 to 0.24% during the first quarter of 2025, with net charge-offs decreasing $703,000, or 17%, and average total Company loans increasing $44 million, or 1%. The $703,000 decrease in net charge-offs was driven by a $659,000 decrease in RPG net charge-offs.** **
Current report
Total Company noninterest income increased $9.8 million during the first quarter of 2025 compared to the same period in 2024.
Current report
TRS’s noninterest income increased from $10.9 million for the first quarter of 2024 to $13.9 million for the first quarter of 2025. RT fees constituted the substantial majority of all TRS noninterest income for each of these quarters. Total RT fees increased $3.1 million during these time periods due to a 30% increase in the net revenue earned for each RT product. The better per-unit profitability was generally brought about by a select increase in prices for the product combined with a minimal change in the revenue being shared.
Current report
Total Company noninterest expense increased to $58.2 million for the first quarter of 2025 compared to $51.0 million for first quarter of 2024.
Current report
TRS recorded an increase to its ACLL primarily for estimated RAs originated during the first quarter of 2025. Including ERAs originated during the fourth quarter of 2024, TRS had a total Allowance for RAs of $26.0 million as of March 31, 2025 representing 3.22% of all RAs originated related to the first quarter 2025 tax season.
Current report
Total period-end deposits increased $195 million from December 31, 2024 to $5.4 billion as of March 31, 2025, with Core Bank period-end deposits increasing $175 million and RPG period-end deposits increasing $20 million.
Current report
Within the Core Bank noninterest-bearing deposits increased by $26 million for the quarter with interest-bearing deposits increasing by $149 million during the same period. The increase in Core Bank interest-bearing deposits was driven by $124 million of growth in interest-bearing IOLTA, business and consumer money market accounts, which generally pay premium rates above sheet pricing.
Current report
While the Core Bank period-end noninterest-bearing deposits increased $26 million for the quarter, the average balances of Core Bank noninterest-bearing deposits decreased $81 million from the fourth quarter of 2024 to the first quarter of 2025. Overall, the Core Bank’s noninterest-bearing deposits have experienced a general quarterly decline in balances dating back to the fourth quarter of 2022. At this time, Management is unsure whether the increase in Core Bank period-end noninterest-bearing deposits represents a temporary reversal of this long-term decline in balances or a possible change in momentum going forward.
Current report
Within RPG, the $20 million increase in period-end deposit balances was the net result of the following notable fluctuations:
Removed paragraphs (75)
Previous report
As of September 30, 2024, the Company was divided into five reportable segments: Traditional Banking, Warehouse Lending, TRS, RPS, and RCS. Republic had previously reported mortgage banking as a separate reportable segment prior to the first quarter of 2024. Due to the quantitative and qualitative immateriality of this division, Management concluded its mortgage banking operations no longer constitutes a separate reportable segment for SEC reporting purposes and now includes these results in the Traditional Banking segment. In addition, all prior period mortgage banking results of operations have been reclassified into the Traditional Banking segment, as well.
Previous 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.
Previous report
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 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.
Previous 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.
Previous report
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 report
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 report
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 report
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 report
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 report
The net charge of $1.5 million during the third quarter of 2024 was primarily driven by the following:
Previous report
The net charge of $1.6 million during the third quarter of 2023 was primarily driven by the following:
Previous report
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 report
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 report
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 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.
Previous report
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 report
Total Company noninterest income increased $2.5 million during the third quarter of 2024 compared to the same period in 2023.
Previous report
Republic Credit Solutions segment
Previous report
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 report
The following table presents RCS program fees by product:
Previous report
Table 6 — RCS Program Fees by Product
Previous report
Total Company noninterest expense increased $241,000 during the third quarter of 2024 compared to the same period in 2023.
Previous report
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 report
OVERVIEW** (Nine months ended September 30, 2024 Compared to Nine months ended September 30, 2023)**
Previous report
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 report
Republic Payment Solutions segment
Previous report
RESULTS OF OPERATIONS**(Nine months ended September 30, 2024 Compared to Nine months ended September 30, 2023)**
Previous report
Net Interest Income
Previous 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.
Previous report
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 report
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 report
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 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.
Previous 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.
Previous report
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 report
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 report
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 report
Republic Payment Solutions
Previous report
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.
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Reworded paragraphs (64)
Previous wording
The consolidated financial statements include the accounts of Republic Bancorp, Inc. (the “Parent Company”) and its wholly owned subsidiaries, Republic Bank & Trust Company and Republic Insurance Services, Inc. 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 insurance subsidiary: Republic Insurance Services, Inc. All significant intercompany balances and transactions are eliminated in consolidation.
Current wording
The consolidated financial statements include the accounts of Republic Bancorp, Inc. (the “Parent Company”) and its wholly owned subsidiaries, Republic Bank & Trust Company and Republic Insurance Services, Inc. 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. All significant intercompany balances and transactions are eliminated in consolidation.
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 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.
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.
Previous wording
Management considers the first two segments to collectively constitute “Core Bank” or “Core Banking” operations, while the last three segments collectively constitute RPG operations.
Current wording
As of March 31, 2025, the Company was divided into five reportable segments: Traditional Banking, Warehouse Lending, TRS, RPS, and RCS. Management considers the first two segments to collectively constitute “Core Bank” or “Core Banking” operations, while the last three segments collectively constitute RPG operations.
Previous wording
Mortgage banking — Mortgage banking activities primarily include 15-, 20- and 30-year fixed-term single-family, first-lien residential real estate loans that are originated and sold into the secondary market, primarily to the FHLMC and the FNMA. The Bank typically retains servicing on loans sold into the secondary market. Administration of loans with servicing retained by the
Current wording
Mortgage banking — Mortgage banking activities primarily include 15-, 20- and 30-year fixed-term single-family, first-lien residential real estate loans that are originated and sold into the secondary market, primarily to the FHLMC and the FNMA. The Bank typically retains servicing on loans sold into the secondary market. Administration of loans with servicing retained by the Bank includes collecting principal and interest payments, escrowing funds for property taxes and property insurance, and remitting payments to secondary market investors. The Bank receives fees for performing these standard servicing functions.
Previous wording
Aircraft Lending —Aircraft loans are typically made to purchase or refinance personal aircrafts, along with engine overhauls and avionic upgrades. Loans range between $200,000 and $4,000,000 in size and have terms up to 20 years. The aircraft loan program is open to all fifty states. The credit characteristics of an aircraft borrower are higher than a typical consumer in that they must demonstrate and indicate a higher degree of credit worthiness for approval.
Current wording
Aircraft Lending —Aircraft loans are typically made to purchase or refinance personal aircrafts, along with engine overhauls and avionic upgrades. Loans range between $200,000 and $2,000,000 in size and have terms up to 20 years. The aircraft loan program is open to all fifty states. The credit characteristics of an aircraft borrower are higher than a typical consumer in that they must demonstrate and indicate a higher degree of credit worthiness for approval.
Previous wording
**Correspondent Lending —**The Bank began acquiring single family, first lien mortgage loans for investment through its Correspondent Lending channel during the first quarter of 2023. Correspondent Lending generally involves the Bank acquiring, primarily from its Warehouse Lending clients, closed loans that meet the Bank’s specifications. Substantially all loans purchased through the Correspondent Lending channel are purchased at a premium. Premiums on loans held for investment acquired through
Current wording
**Correspondent Lending —**During 2023, the Bank purchased a block of single family, first-lien mortgage loans for investment through its Correspondent Lending channel. The Bank had previously purchased correspondent loans during 2014 and 2015. Correspondent Lending generally involves the Bank purchasing, primarily from its Warehouse Lending clients, closed loans that meet the Bank’s specifications. Substantially all loans purchased through the Correspondent Lending channel are purchased at a premium. Premiums on loans held for investment acquired though the Correspondent Lending channel will be amortized into interest income over the expected life of the loan utilizing the level-yield. Loans acquired through the Correspondent Lending channel are generally made to borrowers outside of the Bank’s historical market footprint. 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 during the second quarter of 2024 with the final dollar amount of loans sold being $67 million.
Previous wording
See additional detail regarding the Traditional Banking segment under Footnote 16 “Segment Information” of Part I Item 1 “Financial Statements.”
Current wording
See additional detail regarding the Traditional Banking segment under Footnote 15 “Segment Information” of Part I Item 1 “Financial Statements.”
Previous wording
See additional detail regarding the Warehouse Lending segment under Footnote 16 “Segment Information” of Part I Item 1 “Financial Statements.”
Current wording
See additional detail regarding the Warehouse Lending segment under Footnote 15 “Segment Information” of Part I Item 1 “Financial Statements.”
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 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.
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 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 2024, TRS originated $139 million of ERAs related to tax returns that were anticipated to be filed during the first quarter 2025 tax filing season.
Previous wording
The RA product is a loan made in conjunction with the filing of a taxpayer’s federal tax return, which allows the taxpayer to borrow funds as an advance of a portion of their tax refund. The RA product had the following features during the first quarters of 2024 and 2023:
Current wording
The RA product is a loan made in conjunction with the filing of a taxpayer’s federal tax return, which allows the taxpayer to borrow funds as an advance of a portion of their tax refund. The RA product had the following features during the 2024 and 2025 Tax Seasons:
Previous wording
Since its introduction in December of 2022, the ERA loan product has been structured similarly to the RA with the primary differences being the timing of when the ERAs are originated and the documentation available to underwrite the ERAs. The ERA is originated prior to the taxpayer receiving their fiscal year taxable income documentation,e.g., W-2, and the filing of the taxpayer’s final federal tax return. As such, the Company generally uses paystub information to underwrite the ERA. The repayment of the ERA is incumbent upon the taxpayer client returning to the Bank’s Tax Provider for the filing of their final federal tax return in order for the tax refund to potentially be received by the Bank from the federal government to pay off the advance. The ERA product had the following features during the 2023 and 2024 tax filing seasons:
Current wording
Since its introduction in December of 2022, the ERA loan product has been structured similarly to the RA with the primary differences being the timing of when the ERAs are originated and the documentation available to underwrite the ERAs. The ERA is originated prior to the taxpayer receiving their fiscal year taxable income documentation,e.g., W-2, and the filing of the taxpayer’s final federal tax return. As such, the Company generally uses paystub information to underwrite the ERA. The repayment of the ERA is incumbent upon the taxpayer client returning to the Bank’s Tax Provider for the filing of their final federal tax return in order for the tax refund to potentially be received by the Bank from the federal government to pay off the advance. The ERA product had the following features during the 2024 and 2025 Tax Seasons:
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 nine 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 2024 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 2024, the Company considered an RA delinquent during the first three months of 2025 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. 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.
Current wording
Provisions on RAs are estimated when advances are made. Unpaid RAs, including ERAs related to the 2025 Tax Season, of a given year are considered delinquent at June 30 th of that year and charged-off.
Previous wording
See additional detail regarding the RA product under Footnote 5“Loans and Allowance for Credit Losses” of Part I Item 1 “Financial Statements.”
Current wording
See additional detail regarding the RA product under Footnote 4 “Loans and Allowance for Credit Losses” of Part I Item 1 “Financial Statements.”
Previous 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:
Current wording
Total Company net income for the first quarter of 2025 was $47.3 million, an increase of $16.7 million over the same period in 2024. Diluted EPS also increased to $2.42 for the first quarter of 2025 compared to $1.58 for the same period in 2024. The increase in net income primarily reflected the following by reportable segment:
Previous wording
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 wording
Total Company net interest income was $102.7 million during the first quarter of 2025 compared to $96.9 million during the first quarter of 2024, representing a $5.8 million or 6% increase. The Total Company net interest margin increased 41 basis points to 6.28% during the first quarter of 2025 compared to 5.87% during 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 third quarter of 2023 and the third quarter of 2024 were as follows:
Current wording
Items of note impacting the Traditional Bank’s change in net interest income and NIM between the first quarter of 2024 and the first quarter of 2025 were as follows:
Previous wording
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 wording
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 on the short-end of the yield curve, Warehouse demand would not likely be materially impacted.
Previous 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.
Current wording
Total Company Provision was a net charge of $17.7 million for the first quarter of 2025 compared to a net charge of $30.6 million for the same period in 2024.
Previous 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.
Current wording
The Traditional Banking Provision during the first quarter of 2025 was a net credit of $769,000 compared to a net charge of $358,000 for the first quarter of 2024.
Previous 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.
Current wording
As a percentage of total Traditional Bank loans, the Traditional Banking ACLL was 1.29% as of March 31, 2025 compared to 1.31% as of December 31, 2024 and 1.29% as of March 31, 2024. The Company believes, based on information presently available, that it has adequately provided for Traditional Banking loan losses as of March 31, 2025.
Previous wording
Warehouse recorded a net charge to the Provision of $639,000 for the first nine months of 2024 compared to a net charge of $134,000 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 $255 million during the first nine months of 2024 compared to an increase of $53 million during the first nine months of 2023.
Current wording
Warehouse recorded a net charge to the Provision of $47,000 for the first quarter of 2025 compared to a net charge of $309,000 for the same period in 2024. Provision for both periods reflected changes in general reserves consistent with changes in outstanding period-end balances. Outstanding Warehouse period-end balances increased $19 million during the first quarter of 2025 compared to an increase of $124 million during the first quarter of 2024.
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. 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
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 meaningfully different (higher or lower) than its March 31st estimate based on actual paydowns received from the U.S. Treasury during the second quarter. 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
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.”*
Current wording
For factors affecting the comparison of the TRS results of operations for the first quarter of 2025 and the first quarter of 2024, see section titled*“OVERVIEW (Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024) - Tax Refund Solutions.”*
Previous wording
As illustrated in Table 9 below, RCS recorded a net charge to the Provision of $15.7 million during the first nine months of 2024 compared to a net charge to the Provision of $10.5 million for the same period in 2023. The increase in the Provision was driven primarily by a $4.1 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 $419,000 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 64% increase in average outstanding loan balances for the same periods.
Current wording
As illustrated in Table 3 below, RCS recorded a net charge to the Provision of $3.0 million during the first quarter of 2025 compared to a net charge to the Provision of $4.2 million for the same period in 2024. The decrease in the Provision was driven primarily by a $1.1 million decrease in Provision for the LOC II product. The reduction in the Provision for the LOC II product was primarily the result of a $218,000 decrease in its Allowance for the first quarter of 2025 driven by a decline in period-end loan balances during the quarter. Conversely, the LOC II Allowance increased $856,000 during the first quarter of 2024 and was driven by an increase in period-end loan balances during the quarter combined with an increase in reserve requirements based an increase in historical charge-offs at that time.
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 15.70% 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.
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 17.03% as of March 31, 2025, 16.30% as of December 31, 2024, and 14.09% as of March 31, 2024. 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 March 31, 2025.
Previous wording
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 wording
Traditional Banking’s noninterest income increased $7.1 million, or 85%, from the first quarter of 2024 compared to the first quarter of 2025. The increase in noninterest income was primarily driven by the following:
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 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.
Current wording
In addition to the previously noted items, 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 March 31, 2025 and 2024 were $1.8 million and $1.7 million. The total daily overdraft charges, net of refunds, included in interest income for the three months ended March 31, 2025 and 2024 were $295,000 and $301,000.
Previous wording
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 wording
Traditional Banking noninterest expense increased $8.5 million, or 21%, for the first quarter of 2025 compared to the same period in 2024. Notable line-item variances within the noninterest expense category included:
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 $531 million in cash and cash equivalents as of September 30, 2024 compared to $317 million as of December 31, 2023. Comparing average balances for the first nine months of 2024 and 2023, the Company had average interest-earning cash and cash equivalent balances of $458 million for the first nine months of 2024 compared to $177 million for the first nine months of 2023.
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 $793 million in cash and cash equivalents as of March 31, 2025 compared to $432 million as of December 31, 2024. Comparing average balances for the first three months of 2025 and 2024, the Company had average interest-earning cash and cash equivalent balances of $517 million for the first three months of 2025 compared to $454 million for the first three months of 2024.
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 5.47% during the first nine months of 2024 with a spot balance yield of approximately 5.00% on September 30, 2024. 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 4.45% during the first three months of 2025. For cash held within the Bank’s banking center and ATM networks, the Bank does not earn interest.
Previous wording
Republic’s investment portfolio decreased $192 million from December 31, 2023 to September 30, 2024. The decrease was driven by $276 million in calls and maturities of debt securities and $26 million in paydowns on mortgage-backed securities, which were partially offset by the purchase of $110 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 wording
Republic’s total investment portfolio increased $22 million from December 31, 2024 to March 31, 2025. The increase was driven by the purchases of $135 million in securities and $2 million of FHLB stock, which were partially offset by $105 million in calls and maturities of debt securities and $10 million in paydowns on mortgage-backed 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.
Previous wording
Gross loans increased by $57 million, or 1%, during the first nine months of 2023 to $5.3 billion as of September 30, 2024. The most significant components comprising the change in loans by reportable segment follow:
Current wording
Gross loans decreased by $150 million, or 3%, during the first three months of 2025 to $5.3 billion as of March 31, 2025. The most significant components comprising the change in loans by reportable segment follow:
Previous wording
Period-end balances for Traditional Banking loans decreased $52 million, or 1%, from December 31, 2023 to September 30, 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 during the third quarter of 2024 with the final dollar amount of loans sold being $67 million.
Current wording
Period-end balances for Traditional Banking loans decreased $3 million, or less than 1%, from December 31, 2024 to March 31, 2025. During March 2025, Management reached an agreement to sell $5 million of consumer credit cards that were previously classified as held for investment. The sale of these credit cards is expected to be completed during the second quarter of 2025.
Previous wording
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 maintain this stricter pricing strategy as long as the yield curve
Current wording
In addition, Management has continued to generally maintain 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 continued to lead to slower overall origination volume across most product types. Management believes it will maintain this stricter pricing strategy as long as the yield curve
Previous wording
remains inverted and incremental funding costs remain elevated, most likely causing new loan production to remain well below 2023 levels for the remainder of 2024. It is also possible this stricter pricing policy could cause loan payoffs and paydowns to outpace new originations leading to a decline in the Traditional Bank’s loan balances for the fourth quarter of 2024 and potentially 2025 as well.
Current wording
remains inverted, or flat, and incremental funding costs remain elevated. It is possible this stricter pricing policy could cause loan payoffs and paydowns to outpace new originations, leading to a decline in the Traditional Bank’s loan balances during 2025.
Previous wording
Outstanding Warehouse period-end balances increased $255 million from December 31, 2023 to September 30, 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.
Current wording
Outstanding Warehouse period-end balances increased $19 million from December 31, 2024 to March 31, 2025. 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 $149 million from December 31, 2023 to September 30, 2024 primarily reflecting the substantial paydown and charge-offs of ERAs originated during December 2023. In addition, TRS also received substantial paydowns of commercial loans made during the fourth quarter of 2023 to third-party tax-related businesses for their cash flow needs for the first quarter tax season. RAs, including ERAs, are only made during the December of the previous year and the first two months of each year, with all unpaid RAs charged off by June 30 th of each year.
Current wording
Outstanding TRS loans decreased $155 million from December 31, 2024 to March 31, 2025 primarily reflecting the substantial paydown of ERAs originated during December 2024. In addition, TRS also received substantial paydowns of commercial loans made during the fourth quarter of 2024 to third-party tax-related businesses for their cash flow needs for the first quarter tax season. RAs, including ERAs, are only made during December of the previous year and the first two months of each year, with all unpaid RAs charged off by June 30th of each year.
Previous wording
The Company’s ACLL remained at $82 million from December 31, 2023 to September 30, 2024. As a percent of total loans, the total Company’s ACLL decreased to 1.55% as of September 30, 2024 compared to 1.57% as of December 31, 2023. An analysis of the ACL by reportable segment follows:
Current wording
The Company’s ACLL increased to $106 million at March 31, 2025 compared to $92 million at December 31, 2024. As a percent of total loans, the total Company’s ACLL increased to 2.01% as of March 31, 2025 compared to 1.69% as of December 31, 2024. An analysis of the ACL by reportable segment follows:
Previous wording
The Traditional Banking ACLL increased approximately $550,000 to $60 million as of September 30, 2024 driven primarily by general formula reserves applied to Traditional Bank loans. While loan balances at the Traditional Bank decreased in total during the first nine months of 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 wording
The Traditional Banking ACLL decreased approximately $905,000 to $59 million as of March 31, 2025 driven primarily by general formula reserves applied to Traditional Bank loans. While loan balances at the Traditional Bank slightly decreased in total during the first three months of 2025, the segment experienced a decrease in its Allowance as a percentage of total loans primarily due to a reduction in reserve requirements brought about by a decrease in life-of-loan historical loss rates within the portfolio.
Showing the first 40 of 64 pairs. Open the source sections for the rest.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
See additional detail regarding the RA product under Footnote 4 “Loans and Allowance for Credit Losses” of Part I Item 1 “Financial Statements.”
Current report — wording carried from elsewhere
For factors affecting the comparison of the TRS results of operations for the first quarter of 2025 and the first quarter of 2024, see section titled*“OVERVIEW (Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024) - Tax Refund Solutions.”*
Current report — wording carried from elsewhere
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 quarter of 2025 than longer-term investment alternatives.
Current report — wording carried from elsewhere
to the current year’s net profits, combined with the retained net profits of the preceding two years. As of April 1, 2025, RB&T could, without prior approval, declare dividends of approximately $131 million. Any payment of dividends in the future will depend, in large part, on the Company’s earnings, capital requirements, financial condition, and other factors considered relevant by the Company’s Board of Directors.
Rearranged previous paragraphs (29)
Previous report — wording carried elsewhere
Bank includes collecting principal and interest payments, escrowing funds for property taxes and property insurance, and remitting payments to secondary market investors. The Bank receives fees for performing these standard servicing functions.
Previous report — wording carried elsewhere
the Correspondent Lending channel are amortized into interest income on the level-yield method over the expected life of the loan. Loans acquired through the Correspondent Lending channel are generally made to borrowers outside of the Bank’s historical market footprint.
Previous report — wording carried elsewhere
The Bank sells participation interests in this product. These participation interests are a 90% interest in advances made to borrowers under the borrower’s line-of-credit account, and the participation interests are generally sold three business days following the Bank’s funding of the associated advances. Although the Bank retains a 10% participation interest in each advance, it maintains 100% ownership of the underlying LOC I account with each borrower. Loan balances held for sale through this program are carried at the lower of cost or fair value.
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
Banking operations are significantly dependent upon net interest income. Net interest income is the difference between interest income on interest-earning assets, such as loans and investment securities and the interest expense on interest-bearing liabilities used to fund those assets, such as interest-bearing deposits, securities sold under agreements to repurchase, and FHLB advances. Net interest income is impacted by both changes in the amount and composition of interest-earning assets and interest-bearing liabilities, as well as market interest rates.
Previous report — wording carried elsewhere
See the section titled “Asset/Liability Management and Market Risk” in this section of the filing regarding the Bank’s interest rate sensitivity.
Previous report — wording carried elsewhere
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 report — wording carried 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.
Previous report — wording carried elsewhere
The following were the most significant components affecting the Company’s net interest income by reportable segment:
Previous report — wording carried elsewhere
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.
Previous report — wording carried elsewhere
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.
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The following table presents the average balance sheets for the nine-month periods ended September 30, 2024 and 2023, along with the related calculations of tax-equivalent net interest income, net interest margin and net interest spread for the related periods.
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Table 7 — Total Company Average Balance Sheets and Interest Rates
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Table 8 illustrates the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities impacted Republic’s interest income and interest expense during the periods indicated. Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior rate), (ii) changes attributable to changes in rate (changes in rate multiplied by prior volume), and (iii) net change. The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.
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Table 8 — Total Company Volume/Rate Variance Analysis
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The following were the most significant components comprising the Company’s Provision by reportable segment:
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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.
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See the sections titled “Allowance for Credit Losses” and “Asset Quality” in this section of the filing under “Comparison of Financial Condition” for additional discussion regarding the Provision and the Bank’s credit quality.
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As a percentage of total Warehouse outstanding balances, the Warehouse ACLL was 0.25% as of September 30, 2024, December 31, 2023, and September 30, 2023. The Company believes, based on information presently available, that it has adequately provided for Warehouse loan losses as of September 30, 2024.
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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.
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The following table presents net charges to the RCS Provision by product:
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Table 10 — Summary of Loan and Lease Loss Experience
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Table 11 — Annualized Net Loan Charge-offs (Recoveries) to Average Loans by Loan Category
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** All loss rates above are based on net charge-offs as a function of average outstanding portfolio balances. Refund Advances are originated during the first two months of each year, with all RAs charged-off by June 30th of each year. Due to their relatively short life, RA net charge-offs are typically analyzed by the Company as a percentage of total RA originations, not as a percentage of average outstanding balances.*
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The following were the most significant components comprising the total Company’s noninterest income by reportable segment:
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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 the nine months ended September 30, 2024 and 2023 were $5.5 million and $5.3 million. The total daily overdraft charges, net of refunds, included in interest income for the nine months ended September 30, 2024 and 2023 were $928,000 and $937,000.
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The following were the most significant components comprising the increase in noninterest expense by reportable segment:
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Nonperforming loans include loans on nonaccrual status and loans past due 90-days-or-more and still accruing. The nonperforming loan category includes loan modifications totaling approximately $152,000 and $2 million as of September 30, 2024 and December 31, 2023.
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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.