REPUBLIC BANCORP INC /KY/

Current report

There is no assurance that any list of risks and uncertainties or risk factors is complete. Factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements include, among other things:

Current report

Within the ACLL model, the Company utilizes the “static-pool” method. This method analyzes historical closed pools of loans over their expected lives to attain a loss rate, which is then adjusted for current conditions and reasonable, supportable forecasts prior to being applied to the current balance of the analyzed pools. Due to its reasonably strong correlation to the Company's historical net loan losses, the Company has chosen to use the U.S. national unemployment rate as its primary forecasting tool. For its CRE loan pool, the Company employs a one-year forecast of general CRE values.

Current report

The Company’s Executive Chair and Chief Executive Officer serve as the Company’s CODM’s. Income (loss) before income tax expense is the reportable measure of segment profit or loss that the CODM’s regularly review and utilize to allocate resources and assess performance.

Current report

Prior to the first quarter of 2024, Republic had reported mortgage banking as a separate reportable segment under Core Banking. Due to the quantitative and qualitative immateriality of this division, Management concluded its mortgage banking operations no longer constituted a separate reportable segment for SEC reporting purposes and now includes these results in the Traditional Banking segment. All prior period mortgage banking results of operations have been reclassified into the Traditional Banking segment.

Current report

Core Bank

Current report

The Core Bank consists of the Traditional Banking and Warehouse Lending segments.

Current report

Traditional Banking results of operations are primarily dependent upon net interest income, which represents the difference between the interest income and fees on interest-earning assets and the interest expense on interest-bearing liabilities. Principal interest-earning Traditional Banking assets represent investment securities and commercial and consumer loans primarily secured by real estate and/or personal property. Interest-bearing liabilities primarily consist of interest-bearing deposit accounts, SSUAR, as well as short-term and long-term borrowing sources. FHLB advances have traditionally served as a significant borrowing and liquidity source for the Bank.

Current report

Other sources of Traditional Banking income include service charges on consumer and commercial deposit accounts, mortgage banking income, debit and credit card interchange fee income, title insurance commissions, swap fee income and increases in the cash surrender value of BOLI.

Current report

Traditional Banking operating expenses consist primarily of salaries and employee benefits; technology, equipment, and communication; occupancy; interchange related expense; marketing and development; FDIC insurance expense, and various other general and administrative costs. Traditional Banking results of operations are significantly impacted by general economic and competitive conditions, particularly changes in market interest rates, government laws and policies, and actions of regulatory agencies.

Current report

The Bank offers single-family, first-lien residential real estate ARMs with interest rate adjustments tied to various market indices with specified minimum and maximum adjustments. The Bank generally charges a premium interest rate for its ARMs if the property is nonowner-occupied. The interest rates on the majority of ARMs are adjusted after their fixed rate periods on an annual or semi-annual basis, with most having annual and lifetime limitations on upward rate adjustments to the loan. These loans typically feature amortization periods of up to 30 years and have fixed interest-rate periods generally ranging from five to ten years, with demand dependent upon market conditions. While there is no requirement for clients to refinance their loans at the end of the fixed-rate period, clients have historically done so the majority of the time, as most clients are interest-rate-risk averse on their first mortgage loans.

Current report

Single-family, first-lien residential real estate loans with fixed-rate periods of 15, 20, and 30 years are primarily originated and sold into the secondary market. MSRs attached to the sold portfolio are either sold along with the loan or retained. Loans sold into the secondary market, along with their corresponding MSRs, are included as a component of the Company’s Traditional Banking segment, as discussed elsewhere in this filing. The Bank, as it has in the past, may retain such longer-term, fixed-rate loans from time to time in the future to help combat NIM compression. Any such loans retained on the Company’s balance sheet would be reported as a component of the Traditional Banking segment.

Current report

The Bank does, on occasion, purchase single-family, first-lien residential real estate loans made to low-to-moderate income borrowers and/or secured by property located in low-to-moderate income areas, which assists the Bank in meeting its obligations under the CRA. In connection with loan purchases, the Bank receives various representations and warranties from the sellers regarding the quality and characteristics of the loans.

Current report

Credit opportunities are generally driven by the following: companies expanding their businesses; companies acquiring new businesses; and/or companies refinancing existing debt from other institutions. The Bank has a primary focus on C&I lending, CRE, and multi-family lending.

Current report

C&I loans typically include those secured by general business assets, which consist of equipment, accounts receivable, inventory, and other business assets owned by the borrower/guarantor. Credit facilities include annually renewable LOCs and term loans with maturities typically from three to five years and may also involve financial covenant requirements. These requirements are monitored by the Bank’s CCAD. Underwriting for C&I loans is based on the borrower’s capacity to repay

Current report

these loans from operating cash flows, typically measured by EBITDA (earnings before interest, taxes, depreciation and amortization), with capital strength, collateral, and management experience also important underwriting considerations. The targeted C&I credit size for client relationships is typically between $1 million and $10 million, with higher targets between $10 million and $35 million targeted by theCorporate Banking group.

Current report

CRE and multi-family loans are typically secured by improved property such as office buildings, medical facilities, retail centers, warehouses, apartment buildings, condominiums, schools, religious institutions, and other types of commercial use property. TheCRE Banking group, which launched in 2022, focuses on large CRE projects, typically in amounts from $5 million to $25 million. Borrowers are generally single-asset entities, mostly nonowner-occupied CRE. Primary underwriting considerations are cash flow projections (current and historical), financial capacity of sponsors, and collateral value financed. Fixed rate financing and reciprocal interest rate swaps are used as well. Given the size of these credits, the Bank generally seeks established, well-known borrowers and projects with low credit risk.

Current report

The** **Commercial Banking group focuses on small and medium sized C&I and owner-occupied CRE opportunities. Borrowers are generally single-asset entities and loan sizes typically range from $1 million to $5 million. As with Corporate Banking, the primary underwriting considerations are cash flow projections (current and historical), quality of leases, financial capacity of sponsors, and collateral value of property financed. Interest rates offered are based on both fixed and variable interest-rate formulas.

Current report

TheBusiness Banking group, reporting under Retail Banking in most markets, focuses on locally based small businesses in the Bank’s market footprint with primary annual revenues up to $10 million and borrowings between $350,000 and $1 million. The needs of these clients range from expansion or acquisition financing, equipment financing, owner-occupied real estate financing, and smaller operating lines of credit.

Current report

The Bank is an SBA Preferred Lending Partner, which allows the Bank to underwrite and approve its own SBA loans in an expedited manner. The Bank makes loans to borrowers generally up to $3 million under the SBA “7A Program,” as well as utilize the “504 Program” for owner-occupied CRE opportunities. The Bank’s lenders utilize programs of the SBA to reduce credit risk exposure.

Current report

Single-family, residential-construction loans are made in the Bank’s market area to established homebuilders with solid financial records. The majority of these loans are made for “contract” homes that the builder has already pre-sold to a homebuyer.

Current report

Commercial-construction loans are made in the Bank’s market to established commercial builders/developers with solid financial records. Typically, these loans are made for investment properties and have tenants pre-committed for some or all of the space. Generally, commercial-construction loans are made for the duration of the construction period and slightly beyond and will either convert to permanent financing with the Bank or with another lender at or before maturity.

Current report

Construction-to-permanent loans are another type of construction-related financing that the Bank offers. These loans are made to borrowers who are going to build a property and retain it for ownership after construction completion. These loans are offered on both owner-occupied and nonowner-occupied CRE.

Current report

Republic Processing Group

Current report

LOC Products:

Current report

Through the Bank, RCS uses third-party service providers, to originate two LOC products to generally subprimeor near-prime borrowers. borrowers in multiple states. Elastic Marketing, LLC and Elevate Decision Sciences, LLC are third-party service providers for the LOC I product and are subject to the Bank’s oversight and supervision. Together, these companies provide certain marketing, servicing, technology, and support services, while a separate third-party provides customer support, servicing, and other services on the Bank’s behalf. The Bank is the lender for this product and is marketed as such. Furthermore, the Bank controls the loan terms and underwriting guidelines, and the Bank exercises consumer compliance oversight of the product.

Current report

Similar to its LOC I product, the Bank provides oversight and supervision to a third-party for its LOC II product. In return, this third-party provides the Bank with marketing services and loan servicing for the LOC II product. The Bank is the lender for this product and is marketed as such. Furthermore, the Bank controls the loan terms and underwriting guidelines, and the Bank exercises consumer compliance oversight of this product.

Current report

Installment Loan Product:

Current report

Through RCS, the Bank offers installment loans with terms ranging from 12 to 60 months to borrowers in multiple states. The same third-party service provider for RCS’s LOC II is the third-party provider for the installment loans. This third-party provider is subject to the Bank’s oversight and supervision and provides the Bank with marketing services and loan servicing for these RCS installment loans. The Bank is the lender for these loans and is marketed as such. Furthermore, the Bank controls the loan terms and underwriting guidelines, and the Bank exercises consumer compliance oversight of this RCS installment loan product. Currently, all loan balances originated under this RCS installment loan program are carried as HFS on the Bank’s balance sheet, with the intention to sell these loans to a third-party, who is an affiliate of the Bank’s third-party service provider, generally within 16 days following the Bank’s origination of the loans. Loans originated under this RCS installment loan program are carried at fair value under a fair-value option, with the portfolio marked to market monthly.

Current report

Healthcare Receivables Products:

Current report

Through RCS, Bank originates healthcare receivables products across the U.S. through three different third-party service providers.

Current report

For two of the programs, the Bank retains 100% of the receivables, with recourse in the event of default.

Current report

For the remaining program, in some instances the Bank retains 100% of the receivables originated, with recourse in the event of default, and in other instances, the Bank sells 100% of the receivables generally within one month of origination. Loan balances HFS through this program are carried at the lower of cost or fair value.

Current report

The One Big Beautiful Bill Act

Current report

On July 4, 2025, the President signed H.R. 1, the “One Big Beautiful Bill Act,” into law. The legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025, including the restoration of immediate expensing of domestic research and development expenditures, reinstatement of 100% bonus depreciation, and more favorable rules for determining the limitation on business interest expense. These changes were not reflected in the income tax provision for the period ended June 30, 2025, as enactment occurred after the balance sheet date. The Company is currently evaluating the impact on future periods.

Current report

All ERAs and RAs originated through TRS are done during the three-month period of December through February each year. As previously disclosed, the Company’s largest Tax Provider contract within TRS in terms of product volume expires in October 2025 and the Company does not expect to enter into a new contract with this Tax Provider to replace its existing contract. For the 2025 calendar year, Management estimates that this existing large Tax Provider contract will contribute pre-tax net income equating to approximately 27% of the total TRS pre-tax net income for the previous 12 months as of June 30, 2025.

Current report

Other notable items in the Company’s financial statements impacted by this contract not being renewed include the following:

Current report

Since April 2025, when the President proposed the implementation of broad-based sweeping tariffs against many of the U.S.’s global trading partners, there have been numerous policy changes that have triggered ongoing financial volatility. While the FRB has maintained its FFTR at a range of 4.25% to 4.50%, recent FOMC commentary has indicated possible rate cuts in the second half of 2025.

Current report

Total Company net interest income was $76.2 million during the second quarter of 2025 compared to $68.5 million during the second quarter of 2024, representing a $7.7 million or 11% increase. The Total Company NIM increased 25 basis points to 4.61% during the second quarter of 2025 compared to 4.36% during the second quarter of 2024.

Current report

The Traditional Bank’s net interest income was $56.4 million for the second quarter of 2025, a $6.5 million, or 13%, increase from $49.9 million during the second quarter of 2024 and was driven primarily by NIM expansion.

Current report

The Traditional Bank’s NIM increased from 3.53% during the second quarter of 2024 to 3.84% during the second quarter of 2025, the rise in its interest-earning asset yields outpacing the rise in funding costs.

Previous report

Broadly speaking, forward-looking statements include:

Previous report

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 report

In general, commercial lending credit approvals and processing are prepared and underwritten through the Bank’s Commercial Credit Administration Department. Clients are generally located within the Bank’s market footprint or in areas nearby the market footprint.

Previous 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.

Previous 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.

Previous 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.

Previous report

Republic Payment Solutions segment

Previous report

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

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

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.

Previous 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.

Previous report

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 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.

Previous report

Warehouse Lending

Previous report

The net credit of $769,000 for the first quarter of 2025 was driven, primarily, by the following:

Previous report

The net charge of $358,000 during the first quarter of 2024 was primarily driven by the following:

Previous 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:

Previous 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.

Previous report

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.

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Table 3 — RCS Provision by Product

Previous report

Total Company noninterest income increased $9.8 million during the first quarter of 2025 compared to the same period in 2024.

Previous 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.

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 quarter of 2025 than longer-term investment alternatives.

Previous report

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 report

Loan Portfolio

Previous report

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 report

Allowance for Credit Losses

Previous report

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.

Previous report

Tax Refund Solutions

Previous 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.

Previous 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.

Previous 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.

Previous report

Within RPG, the $20 million increase in period-end deposit balances was the net result of the following notable fluctuations:

Previous report

The Company generally carried higher average interest-earning cash balances during the first three months of 2025 as the result of a strategic decision to maintain additional on-balance sheet liquidity above required minimums in response to the uncertainty of the economic environment.

Previous report

Notable changes for the Bank’s interest rate sensitivity projections from December 31, 2024 to March 31, 2025 occurred in all scenarios. In general, the period-to-period improvements in the up-rate scenarios were generally tied to the Company’s average interest-earning cash balances, which increased from December 2024 to March 2025. As a result, the Bank’s earnings are more sensitive to fluctuations in short-term interest rates. Additionally, a reduction in short-term variable rate borrowings also contributed to the improvement. The benefit from the higher interest-earning cash balances was partially offset by lower projected interest income on loans as loan growth assumptions were lowered based on recent trends.

Previous report

In the down-rate scenarios, the Company’s interest rate risk position notably deteriorated as the higher interest-earning cash balances that benefited net interest income in the up-rate scenarios are projected to cause similar corresponding declines to net interest income in the down-rate rate scenarios. In addition, the Company’s projected net interest income in down-rate scenarios for March 31, 2025 was also negatively impacted by revisions to the Bank’s deposit beta assumptions, as the Bank assumed a lower beta for deposit costs associated with its premium rate products. The Bank assumed this lower beta for its premium rate deposit products in anticipation of greater competition for deposits and liquidity in a declining interest rate environment. The lower net interest income in the down-rate

Previous report

scenarios is partially offset by assumed increases in mortgage banking income as rates fall and more borrowers gain incentive to refinance.

Current report — wording carried from elsewhere

During 2023, the Bank purchased a block of single-family, first-lien mortgage loans for investment through its Correspondent Lending Channel, with these loans secured by owner-occupied collateral generally located outside of the Bank’s market footprint. During the first quarter of 2024, Management elected to sell $67 million of these loans and the sale was completed during the second quarter of 2024.

Current report — wording carried from elsewhere

next year’s tax season. During December 2024 and 2003, TRS originated ERAs related to tax returns that were anticipated to be filed during the first quarter of the following tax filing season.

Current report — wording carried from elsewhere

to loans originated through the Traditional Banking segment, with a significant portion of RCS clients considered subprime or near-prime borrowers. Through the Bank, RCS uses third-party service providers for certain services such as marketing and loan servicing for (1) RCS’ LOC products, (2) RCS’ installment loan product and (3) RCS’ healthcare receivables products.

Current report — wording carried from 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 LOC 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 HFS through this program are carried at the lower of cost or fair value.

Current report — wording carried from elsewhere

See the section titled “Asset/Liability Management and Market Risk” in this section of the filing regarding the Bank’s interest rate sensitivity.

Current report — wording carried from 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, SSUAR 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.

Current report — wording carried from elsewhere

The following were the most significant components affecting the Company’s net interest income by reportable segment:

Current report — wording carried from elsewhere

Management believes that any future reductions to the FFTR will likely not benefit the Traditional Bank’s net interest income and NIM. The amount of such impact to the Traditional Bank’s net interest income and NIM resulting from the most recent change and any future changes to the FFTR will be dependent upon many factors including, but not limited to, the magnitude of the continuing shift from noninterest-bearing deposits into interest-bearing deposits, the actual steepness and shape of the yield curve, future demand for the Company’s financial products, the Company’s ability to lower its deposit costs in conjunction with, and in line with the magnitude to, the decreases to the FFTR, as well as the Company’s overall future liquidity needs.

Current report — wording carried from elsewhere

Consumer mortgage demand drives Warehouse LOC usage and the Warehouse segment has historically been sensitive to changes in interest rates on the long-end of the yield curve. As a result, a decreasing interest rate environment for the long-end of the yield curve could positively impact Warehouse demand if the long-term interest rate declines are substantial. Alternatively, if interest rates only decline substantially on the short-end of the yield curve, Warehouse demand would not likely be materially impacted.

Current report — wording carried from elsewhere

Net interest income from the Company’s prepaid card division increased $1.1 million for the first six months of 2025 compared to the same period in 2024. Driving this increase at RPS was a reduction in the segment’s revenue share component for the first six months of 2025, as the RPS’s largest marketer-servicer did not achieve the minimal contractual thresholds for average deposit balances in order to earn a revenue share for the current year. By contrast, this revenue share totaled $2.3 million during the first six months 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 this marketer-servicer are at levels near the thresholds necessary to achieve a revenue share, making a future revenue share possible, but not certain.

Current report — wording carried from elsewhere

Partially offsetting the positive benefit of the decreased revenue share, RPS earned a lower yield of 4.42% applied to the $362 million average of prepaid program balances for the first six months of 2025 compared to a yield of 5.05% for the $368 million in average

Current report — wording carried from elsewhere

prepaid card balances for the first six months of 2024. The lower earnings rate was driven by a decrease in the FFTR of 100 basis points from the first six months of 2024 to the first six months of 2025.

Current report — wording carried from 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 internally assigned net FTP funding credit more than it would impact any revenue share the Company pays for the product, decreasing the segment's NIM.

Current report — wording carried from elsewhere

The following table presents the average balance sheets for the six-month periods ended June 30, 2025, and 2024, along with the related calculations of net interest income, NIM and net interest spread for the related periods.

Current report — wording carried from elsewhere

Table 7 — Total Company Average Balance Sheets and Interest Rates

Current report — wording carried from elsewhere

The following table 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.

Current report — wording carried from elsewhere

Table 9 — Total Company Volume/Rate Variance Analysis

Current report — wording carried from elsewhere

The following were the most significant components comprising the Company’s Provision by reportable segment:

Current report — wording carried from elsewhere

As a percentage of total Traditional Bank loans, the Traditional Banking ACLL was 1.29% as of June 30, 2025, compared to 1.31% as of December 31, 2024, and 1.30% as of June 30, 2024. The Company believes, based on information presently available, that it has adequately provided for Traditional Banking loan losses as of June 30, 2025.

Current report — wording carried from elsewhere

See the sections titled “Allowance for Credit Losses on Loans” 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.

Current report — wording carried from elsewhere

Warehouse recorded a net charge to the Provision of $302,000 for the first six months of 2025 compared to a net charge of $523,000 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 $121 million during the first six months of 2025 compared to an increase of $209 million during the first six months of 2024.

Current report — wording carried from elsewhere

As a percentage of total Warehouse outstanding balances, the Warehouse ACLL was 0.25% as of June 30, 2025, December 31, 2024, and June 30, 2024. The Company believes, based on information presently available, that it has adequately provided for Warehouse loan losses as of June 30, 2025.

Current report — wording carried from elsewhere

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 17.67% as of June 30, 2025, 16.30% as of December 31, 2024, and 15.44% as of June 30, 2024. The RCS segment has continued to experience a change in loan mix, growing in categories with higher loan loss reserve requirements thus driving its higher ACLL for the first six months of 2025. The Company believes, based on information presently available, that it has adequately provided for RCS loan losses as of June 30, 2025.

Current report — wording carried from elsewhere

The following table presents net charges to the RCS Provision by product:

Current report — wording carried from elsewhere

Table 11 — Summary of Loan and Lease Loss Experience

Current report — wording carried from elsewhere

Table 12 — Annualized Net Loan Charge-offs (Recoveries) to Average Loans by Loan Category

Current report — wording carried from elsewhere

** All loss rates above are based on net charge-offs as a function of average outstanding portfolio balances. RAs 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.*

Current report — wording carried from elsewhere

The following were the most significant components comprising the total Company’s noninterest income by reportable segment:

Current report — wording carried from elsewhere

The following were the most significant components comprising the increase in noninterest expense by reportable segment:

Current report — wording carried from elsewhere

Allowance for Credit Losses on Loans

Current report — wording carried from elsewhere

Securities Sold Under Agreements to Repurchase and Other Short-term Borrowings

Previous report — wording carried elsewhere

The RPS segment offers prepaid and debit solutions primarily marketed to consumers through third-party marketer-servicers.

Previous report — wording carried elsewhere

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

Previous report — wording carried 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.