Table of Contents
1 min
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2026
or
◻ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission File Number: 0-24649
REPUBLIC BANCORP, INC.
(Exact name of registrant as specified in its charter)
Kentucky
61-0862051
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
601 West Market Street, Louisville, Kentucky
40202
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (502) 584-3600
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Class A Common
RBCAA
The Nasdaq Stock Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ⌧ Yes ◻ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ⌧ Yes ◻ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ◻
Accelerated filer ⌧
Non-accelerated filer ◻
Smaller reporting company ◻
Emerging growth company ◻
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ◻ Yes ☒ No
The number of shares outstanding of the registrant’s Class A Common Stock and Class B Common Stock, as of July 31, 2026, was 17,497,409 and 2,136,742.
TABLE OF CONTENTS
PART I — FINANCIAL INFORMATION
Item 1.
Financial Statements.
4
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
59
Item 3.
Quantitative and Qualitative Disclosures about Market Risk.
115
Item 4.
Controls and Procedures.
PART II — OTHER INFORMATION
Legal Proceedings.
116
Item 1A.
Risk Factors.
Unregistered Sales of Equity Securities and Use of Proceeds.
Item 5.
Other Information.
Item 6.
Exhibits.
117
SIGNATURES
118
2
GLOSSARY OF TERMS
The terms identified in alphabetical order below are used throughout this Form 10-Q. You may find it helpful to refer to this page as you read this report.
Term
Definition
2025 Tax Season
December 2024 through February 2025
2026 Tax Season
December 2025 through February 2026
ACH
Automated Clearing House
ACLC
Allowance for Credit Losses on Off-Balance Sheet Credit Exposures
ACLL
Allowance for Credit Losses on Loans
ACLS
Allowance for Credit Losses on Securities
AFS
Available-for-Sale
AI
Artificial Intelligence
AOCI
Accumulated Other Comprehensive Income
ARM
Adjustable Rate Mortgage
ASC
Accounting Standards Codification
ASU
Accounting Standards Update
ATM/ITM
Automated Teller Machine / Interactive Teller Machine
Basic EPS
Basic earnings per Class A Common Share
Board
Board of Directors
BOLI
Bank Owned Life Insurance
C&LD
Construction & Land Development
C&I
Commercial & Industrial
CCAD
Commercial Credit Administration Department
CDI
Core Deposit Intangible
CECL
Current Expected Credit Losses
CEO
Chief Executive Officer
CFO
Chief Financial Officer
CMO
Collateralized Mortgage Obligation
CODM
Chief Operating Decision Maker
Core Bank
The Traditional Banking and Warehouse Lending reportable segments of the Company
CRA
Community Reinvestment Act
CRE
Commercial Real Estate
DDA
Demand Deposit Account
Diluted EPS
Diluted earnings per Class A Common Share
DTA
Deferred Tax Asset
EPS
Earnings Per Share
ERA
Early Season Refund Advance
ESPP
Employee Stock Purchase Plan
Exchange Act
Securities Exchange Act of 1934, as amended
FDIC
Federal Deposit Insurance Corporation
FFTR
Federal Funds Target Rate
FHC
Financial Holding Company
FHLB
Federal Home Loan Bank
FHLMC
Federal Home Loan Mortgage Corporation
FNMA
Federal National Mortgage Association
FOMC
Federal Open Market Committee
FRB
Federal Reserve Bank
FTP
Funds Transfer Pricing
GAAP
Generally Accepted Accounting Principles in the United States
HELOC
Home Equity Line of Credit
HFS
Held for Sale
HTM
Held-to-Maturity
LOC
Line of Credit
LOC I
RCS product introduced in 2014 for which the Bank participates out 90% interest and holds a 10% interest
LOC II
RCS product introduced in 2021 for which the Bank participates out 95% interest and holds a 5% interest
LTV
Loan-to-value
MBS
Mortgage Backed Security
MSR
Mortgage Servicing Right
NA
Not Applicable
NIM
Net Interest Margin
NM
Not Meaningful
OBS
Off-Balance Sheet
OCI
Other Comprehensive Income
OREO
Other Real Estate Owned
POS
Point-of-Sale
PCD
Purchased Credit Deteriorated
Prime
The Wall Street Journal Prime Interest Rate
Provision
Provision for Expected Credit Loss Expense
RA
Refund Advance
RBF
Republic Bank Finance
RB&T / the Bank
Republic Bank & Trust Company
RCS
Republic Credit Solutions segment
Republic / the Company
Republic Bancorp, Inc.
RPG
Republic Processing Group (operations grouping of the TRS, RCS and RPS segments)
RPS
Republic Payment Solutions segment
RRE
Residential Real Estate
RT
Refund Transfer
SBA
U.S. Small Business Administration
SEC
Securities and Exchange Commission
SOFR
Secured Overnight Financing Rate
SSUAR
Securities Sold Under Agreements to Repurchase
Tax Provider
Third-party tax preparers located throughout the U.S., as well as tax-preparation software providers that offer Republic Bank ERAs, RAs, and RTs
TBA
To Be Announced
TRS
Tax Refund Solutions segment
TRUP
Trust Preferred Security Investment
Warehouse
Warehouse Lending segment
3
Item 1. Financial Statements.
CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except share data)
June 30,
December 31,
2026
2025
ASSETS
Cash and cash equivalents
$
354,091
219,972
Available-for-sale debt securities, at fair value (amortized cost of $897,223 in 2026 and $887,884 in 2025)
886,982
884,693
Held-to-maturity debt securities (fair value of $4,549 in 2026 and $4,929 in 2025)
4,546
4,944
Equity securities with a readily determinable fair value
588
945
Mortgage loans held for sale, at fair value
16,566
7,516
Consumer loans held for sale, at fair value
12,406
10,968
Consumer loans held for sale, at the lower of cost or fair value
29,025
17,027
Other loans held for sale, at the lower of cost or fair value
—
81,839
Loans
5,410,406
5,446,329
Allowance for credit losses
(87,767)
(85,352)
Loans, net
5,322,639
5,360,977
Federal Home Loan Bank stock, at cost
18,149
32,114
Premises and equipment, net
42,253
35,986
Right-of-use assets
29,042
31,330
Goodwill
40,516
Other real estate owned
843
1,277
Bank owned life insurance
112,216
110,721
Other assets and accrued interest receivable
191,967
201,236
TOTAL ASSETS
7,061,829
7,042,061
LIABILITIES
Deposits:
Noninterest-bearing
1,248,704
1,173,461
Interest-bearing
4,303,038
4,029,686
Total deposits
5,551,742
5,203,147
Securities sold under agreements to repurchase and other short-term borrowings
68,615
88,504
Operating lease liabilities
30,077
32,370
Federal Home Loan Bank advances
157,000
506,000
Other liabilities and accrued interest payable
97,598
109,747
Total liabilities
5,905,032
5,939,768
Commitments and contingent liabilities (Footnote 8)
STOCKHOLDERS’ EQUITY
Preferred stock, no par value
Class A Common Stock, no par value, 30,000,000 shares authorized, 17,497,799 shares (2026) and 17,393,095 shares (2025) issued and outstanding; Class B Common Stock, no par value, 5,000,000 shares authorized, 2,136,742 shares (2026) and 2,148,269 shares (2025) issued and outstanding
4,609
4,601
Additional paid in capital
161,411
156,695
Retained earnings
998,978
945,399
Accumulated other comprehensive loss
(8,201)
(4,402)
Total stockholders’ equity
1,156,797
1,102,293
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
See accompanying footnotes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except per share data)
Three Months Ended
Six Months Ended
INTEREST INCOME:
Loans, including fees
90,693
88,940
191,904
207,797
Taxable investment securities
9,073
5,778
17,962
10,335
Federal Home Loan Bank stock and other
2,765
7,485
6,452
13,909
Total interest income
102,531
102,203
216,318
232,041
INTEREST EXPENSE:
Deposits
19,122
21,850
37,954
43,228
89
140
178
277
1,618
4,011
6,032
9,646
Total interest expense
20,829
26,001
44,164
53,151
NET INTEREST INCOME
81,702
76,202
172,154
178,890
Provision for expected credit loss expense on loans
5,157
1,823
14,937
19,495
NET INTEREST INCOME AFTER PROVISION
76,545
74,379
157,217
159,395
NONINTEREST INCOME:
Service charges on deposit accounts
4,068
3,505
7,951
6,965
Net refund transfer fees
3,208
2,567
12,733
16,460
Mortgage banking income
1,799
1,896
3,624
3,717
Interchange fee income
3,623
3,200
6,496
6,277
Program fees
5,058
4,451
9,607
8,273
Increase in cash surrender value of bank owned life insurance
943
821
1,873
1,614
Net losses on other real estate owned
(41)
(53)
(91)
(106)
Gain on sale of Republic Bank Finance loans and leases
5,845
Gain on sale of Visa Class B-1 shares
4,090
Other
911
1,257
1,490
3,508
Total noninterest income
19,569
17,644
49,528
50,798
NONINTEREST EXPENSE:
Salaries and employee benefits
30,943
30,801
63,060
61,870
Technology, equipment, and communication
8,686
8,684
16,632
17,327
Occupancy
3,460
3,391
7,108
6,955
Marketing and development
3,097
1,243
4,875
2,630
FDIC insurance expense
720
731
1,552
1,550
Interchange related expense
1,405
1,488
2,806
3,124
Legal and professional fees
836
666
1,286
1,784
Core conversion and related contract consulting fees
182
5,896
FHLB advances early termination penalties
2,316
4,417
4,447
9,175
8,705
Total noninterest expense
53,564
51,633
108,810
109,841
INCOME BEFORE INCOME TAX EXPENSE
42,550
40,390
97,935
100,352
INCOME TAX EXPENSE
9,684
8,906
22,500
21,600
NET INCOME
32,866
31,484
75,435
78,752
BASIC EARNINGS PER SHARE:
Class A Common Stock
1.69
1.62
3.86
4.04
Class B Common Stock
1.53
1.47
3.51
3.68
DILUTED EARNINGS PER SHARE:
1.68
1.61
3.85
4.03
3.50
3.66
5
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(in thousands)
Net income
OTHER COMPREHENSIVE INCOME
Change in fair value of derivatives
1,026
(733)
1,725
(2,173)
Reclassification amount for net derivative (gains) losses realized in income
137
(45)
257
Unrealized gain (loss) on AFS debt securities
(2,848)
3,583
(7,050)
8,500
Total other comprehensive income (loss) before income tax
(1,685)
2,805
(5,068)
6,236
Income tax benefit (expense) related to items of other comprehensive income
418
(701)
1,269
(1,559)
Total other comprehensive income (loss), net of tax
(1,267)
2,104
(3,799)
4,677
COMPREHENSIVE INCOME
31,599
33,588
71,636
83,429
6
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
Three Months Ended June 30, 2026
Common Stock
Accumulated
Class A
Class B
Additional
Total
Shares
Paid In
Retained
Comprehensive
Stockholders’
Outstanding
Amount
Capital
Earnings
Income (Loss)
Equity
Balance, April 1, 2026
17,467
2,148
4,606
159,457
976,258
(6,934)
1,133,387
Net change in AOCI
Dividends declared on Common Stock:
Class A Shares ($0.495 per share)
(8,609)
Class B Shares ($0.450 per share)
(962)
Stock options exercised, net of shares withheld
1
425
(576)
(150)
Conversion of Class B to Class A Common Shares
11
(11)
Net change in notes receivable on Class A Common Stock
22
Deferred compensation - Class A Common Stock:
Directors
136
Designated key employees
308
Employee stock purchase plan - Class A Common Stock
192
Stock-based awards - Class A Common Stock:
Performance stock units, net of shares tendered back
(79)
Restricted stock, net of shares tendered back
14
812
815
Stock options
138
Balance, June 30, 2026
17,498
2,137
Three Months Ended June 30, 2025
Balance, April 1, 2025
17,368
2,150
4,594
151,473
889,687
(11,665)
1,034,089
Class A Shares ($0.451 per share)
(7,803)
Class B Shares ($0.410 per share)
(881)
10
937
(949)
(10)
(1)
Repurchase of Class A Common Stock
(8)
(64)
(72)
159
191
36
(3)
797
(137)
661
Balance, June 30, 2025
17,378
2,149
4,597
153,733
911,337
(9,561)
1,060,106
7
Six Months Ended June 30, 2026
Balance, January 1, 2026
17,393
Class A Shares ($0.990 per share)
(17,212)
Class B Shares ($0.900 per share)
(1,929)
29
2,157
(2,678)
(515)
24
282
27
510
351
(40)
34
1,167
(37)
1,132
265
Six Months Ended June 30, 2025
Balance, January 1, 2025
17,298
4,587
148,053
853,627
(14,238)
992,029
Class A Shares ($0.902 per share)
(15,602)
Class B Shares ($0.820 per share)
(1,763)
46
3,608
(3,253)
365
(48)
302
18
258
(179)
78
367
368
72
814
(181)
633
315
8
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
OPERATING ACTIVITIES:
Adjustments to reconcile net income to net cash provided by operating activities:
Net amortization on investment securities and low-income housing investments
5,784
4,269
Net accretion and amortization on loans and deposits
(2,213)
(1,947)
Unrealized and realized gains on equity securities with a readily determinable fair value
357
(63)
Depreciation of premises and equipment
3,865
3,540
Amortization of mortgage servicing rights
990
827
Provision for on-balance sheet exposures
Provision for off-balance sheet exposures
120
Net gain on sale of mortgage loans held for sale
(2,950)
(2,894)
Origination of mortgage loans held for sale
(115,324)
(93,021)
Proceeds from sale of mortgage loans held for sale
109,224
95,377
Net gain on sale of consumer loans held for sale
(8,087)
(7,100)
Origination of consumer loans held for sale
(670,707)
(587,778)
Proceeds from sale of consumer loans held for sale
665,358
590,673
Net gain on sale of Republic Bank Finance loans and leases
(5,845)
Net gain realized on sale of other real estate owned
(15)
Writedowns of other real estate owned
106
Deferred compensation expense - Class A Common Stock
792
380
Stock-based awards and ESPP expense - Class A Common Stock
1,410
1,075
Amortization of right-of-use assets
3,168
3,049
Repayment of operating lease liabilities
(3,173)
(2,985)
Increase in cash surrender value of BOLI
(1,873)
(1,614)
Gain from death benefits in excess of cash surrender value of BOLI
(185)
(4,090)
Net change in other assets and liabilities:
Accrued interest receivable
441
(651)
Accrued interest payable
(530)
(676)
Other assets
3,679
(5,085)
Other liabilities
(681)
7,899
Net cash provided by operating activities
74,083
97,548
INVESTING ACTIVITIES:
Purchases of available-for-sale debt securities
(202,199)
(318,782)
Proceeds from calls, maturities and paydowns of equity and available-for-sale debt securities
192,897
205,765
Proceeds from calls, maturities and paydowns of held-to-maturity debt securities
398
5,344
Net change in outstanding warehouse lines of credit
139,394
(121,013)
Net change in other loans, net of allowance
(113,686)
154,886
Net proceeds from sale of consumer loans transferred to held for sale
5,305
Net redemptions (purchases) of Federal Home Loan Bank stock
13,965
(90)
Proceeds from sale of other real estate owned
465
Proceeds from sale of RBF loans and leases transferred to held for sale
87,684
Proceeds from sale of Visa Class B-1 shares
Proceeds of principal and earnings from BOLI
564
Investments in low-income housing tax partnerships
(14,564)
(10,085)
Net purchases of premises and equipment
(6,112)
(4,909)
Net cash provided by (used in) investing activities
98,806
(79,489)
FINANCING ACTIVITIES:
Net change in deposits
348,595
106,693
Net change in securities sold under agreements to repurchase and other short-term borrowings
(19,889)
(31,215)
Payments of Federal Home Loan Bank advances
(905,000)
(503,000)
Proceeds from Federal Home Loan Bank advances
556,000
478,000
Net proceeds from Class A Common Stock purchased through employee stock purchase plan
298
313
Net proceeds from option exercises and equity awards vested - Class A Common Stock
Cash dividends paid
(18,259)
(16,486)
Net cash provided by (used in) financing activities
(38,770)
34,598
NET CHANGE IN CASH AND CASH EQUIVALENTS
134,119
52,657
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
432,151
CASH AND CASH EQUIVALENTS AT END OF PERIOD
484,808
SUPPLEMENTAL DISCLOSURES OF CASHFLOW INFORMATION:
Cash paid during the period for:
Interest
44,694
53,827
Income taxes
14,688
16,128
SUPPLEMENTAL NONCASH DISCLOSURES:
Mortgage servicing rights capitalized
962
693
Transfers from loans to real estate acquired in settlement of loans
122
Net transfers from loans held for investment to loans held for sale
4,977
New unfunded obligations in low-income-housing investments
7,000
Right-of-use assets obtained in exchange for new operating lease liabilities
880
1,194
Premises and equipment obtained through the use of vendor credits
4,020
2,973
9
FOOTNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026 and 2025 AND DECEMBER 31, 2025 (UNAUDITED)
1.
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation — The consolidated financial statements included in this report include the accounts of Republic Bancorp, Inc. and its wholly owned subsidiary, Republic Bank & Trust Company. As used in this report, the terms “Republic,” the “Company,” “we,” “our,” and “us” refer to Republic Bancorp, Inc. and, where the context requires, Republic Bancorp, Inc. and its subsidiary. The term the “Bank” refers to the Company’s subsidiary bank, Republic Bank & Trust Company, as well as its wholly owned subsidiary, RBT Insurance Agency LLC. All significant intercompany balances and transactions are eliminated in consolidation.
Republic is an FHC headquartered in Louisville, Kentucky, which is the most populous city in Kentucky. The Bank is a Kentucky-based, state-chartered non-member financial institution that provides both traditional and non-traditional banking products and services 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.
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, the financial statements do not include all the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the three and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2026. For further information, refer to the consolidated financial statements and footnotes thereto included in Republic’s Form 10-K for the year ended December 31, 2025. Certain amounts presented in prior periods have been reclassified to conform to the current period presentation. These reclassifications had no impact on previously reported prior periods’ net income or shareholders’ equity.
The Company’s Executive Chair/CEO serves as the Company’s CODM. Net income before income tax expense is the reportable measure of segment profit or loss that the CODM regularly reviews and utilizes to allocate resources and evaluate performance.
As of June 30, 2026, the Company was divided into five reportable segments: (I) Traditional Banking, (II) Warehouse Lending, (III) TRS, (IV) RPS, and (V) 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. See additional discussion regarding segment information under the Footnote titled “Segment Information” in this section of the report.
Core Banking Operations
The Core Bank consists of the Traditional Banking and Warehouse Lending segments.
The Traditional Banking segment provides traditional banking products and services primarily to customers in the Company’s market footprint with all products and services generally offered under the Company’s traditional RB&T brand. As of June 30, 2026, Republic had 47 full-service banking centers with locations as follows:
●
Kentucky — 29
Metropolitan Louisville — 19
Central Kentucky — 6
Georgetown — 1
Lexington — 5
Northern Kentucky (Metropolitan Cincinnati) — 4
●Bellevue — 1
Crestview Hills — 1
Florence — 1
Indiana — 3
Southern Indiana (Metropolitan Louisville) — 3
Floyds Knobs — 1
Jeffersonville — 1
New Albany — 1
Florida — 7
Metropolitan Tampa — 7
Ohio — 4
Metropolitan Cincinnati — 4
Tennessee — 4
Metropolitan Nashville — 4
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 used to fund those assets. 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, and short-term and long-term borrowing sources. FHLB advances have traditionally served as a significant borrowing and liquidity source for the Bank. 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.
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.
Traditional Banking operating expenses consist primarily of salaries and employee benefits, technology, equipment and communication costs, occupancy expenses, marketing and development expenses, FDIC insurance, interchange and card processing fees, legal and professional services, and other general and administrative expenses. Traditional Banking results are significantly influenced by general economic and competitive conditions, including changes in market interest rates, governmental laws and policies, and regulatory actions.
The Core Bank provides short-term, revolving credit facilities to mortgage bankers across the U.S. through mortgage warehouse lines of credit. These credit facilities are primarily secured by single-family, first-lien RRE loans. The credit facility enables the mortgage banking clients to close single-family, first-lien RRE loans in their own name and temporarily fund their inventory of these closed loans until the loans are sold to investors approved by the Bank. Individual loans are expected to remain on the warehouse LOC for an average of 15 to 30 days. Advances for reverse mortgage loans and construction loans typically remain on the LOC longer than conventional mortgage loans. Interest income and loan fees are accrued for each individual advance during the time the advance remains on the warehouse LOC and collected when the loan is sold. The Core Bank receives the sale proceeds of each loan directly from the investor and applies the funds to pay off the warehouse advance and related accrued interest and fees. The remaining proceeds are credited to the mortgage banking client.
Republic Processing Group Operations
Republic Processing Group consists of the Tax Refund Solutions, Republic Payment Solutions and Republic Credit Solutions segments.
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 across the U.S., as well as through tax-preparation software providers that offer Republic Bank ERAs, RAs and RTs (collectively, the “Tax Providers”). The substantial majority of TRS’s business activity occurs during the first half of each year, while the second half of the year is characterized by limited revenue and costs associated with preparing for the upcoming tax season.
Refund Advances:
The RA loan 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 2025 and 2026 Tax Seasons:
Early Season Refund Advances:
The ERA loan product is 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, such as Form 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 2025 and 2026 Tax Seasons:
The Company reports fees earned for ERAs/RAs as “Interest income on loans.”
Provisions on ERAs/RAs are estimated when advances are made. Unpaid ERAs/RAs, related to the first quarter tax filing season of a given year are considered delinquent at June 30th of that year and charged-off. In addition, RAs that are subject to Tax Provider loan loss guarantees are charged-off and immediately recorded as recoveries of previously charged-off loans with corresponding receivables recorded in other assets for the Tax Provider guarantees. Corresponding receivables are settled during the third quarter of each year. RAs collected during the second half of each year, not subject to loan loss guarantee arrangements, are recorded as recoveries of previously charged-off loans.
12
Refund Transfers:
RTs are fee-based products whereby a tax refund is issued to the taxpayer after the Bank has received the refund from the federal or state government. There is no credit risk or borrowing cost associated with these products because they are only delivered to the taxpayer upon receipt of the tax refund directly from the governmental paying authority.
The Company executes contracts with individual Tax Providers to offer RTs to their taxpayer customers. RT revenue is recognized by the Bank immediately after the taxpayer’s refund is disbursed in accordance with the RT contract with the taxpayer customer. The fee paid by the taxpayer for the RT is shared between the Bank and the Tax Providers based on contracts executed between the parties.
The Company presents RT revenue net of any amounts shared with the Tax Providers. The Bank’s share of RT revenue is generally based on the responsibilities undertaken by the Tax Provider for each individual RT program, with more responsibilities assumed by the Tax Provider generally corresponding to higher RT revenue share earned by the Tax Provider. The significant majority of net RT revenue is recognized and obligations under RT contracts fulfilled by the Bank during the first half of each year. Incremental expenses associated with the fulfilment of RT contracts are generally expensed during the first half of each year. Fees earned by the Company on RTs, net of revenue share, are reported as noninterest income under the line item “Net refund transfer fees.”
The RPS segment offers a range of payment-related products and services to consumers through third-party service providers. Through the Bank, the RPS segment offers both issuing solutions and money movement capabilities.
Issuing Solutions:
The RPS segment offers prepaid and debit solutions primarily marketed to the consumer industry. Prepaid solutions include the issuing of payroll and general purpose reloadable cards. Characteristics of these cards include the following:
Debit solutions include the issuing of DDAs, savings accounts and/or debit cards. In addition to offering traditional POS purchasing, ATM/ITM withdrawals, and direct deposit options, these accounts may include overdraft protection.
Money Movement Capabilities:
Through RPS, the Bank participates in traditional money movement solutions including ACH transactions, wire transfers, check processing, and the Mastercard Remote Payment and Presentment Service. These capabilities are also complementary products facilitating the movement of money for other RPG divisions.
The Company reports its share of client-related charges and fees for RPS programs as noninterest income under “Program fees.” Additionally, the Company’s portion of interchange revenue generated by prepaid card transactions is reported as noninterest income under “Interchange fee income.”
From time to time, RPS enters into revenue-sharing arrangements with prepaid marketer-servicers under which a portion of the interest income earned on program deposits is shared. Revenue share paid on RPS deposits is reported as “Interest expense on deposits.”
13
Through the RCS segment, the Bank offers consumer credit products. In general, the credit products are unsecured, small dollar consumer loans that are dependent on various factors. RCS loans typically earn a higher yield but also have higher credit risk compared to loans originated through the Traditional Banking segment, with a significant portion of RCS clients considered subprime or near-prime borrowers. Ordinary gains or losses on the sale of RCS products are reported as a component of “Program fees.” Through the Bank, RCS uses third-party service providers for certain services such as marketing and loan servicing for RCS’s LOC products, installment loan product and healthcare receivables products.
LOC Products:
Through the RCS segment, the Bank originates two line of credit products (“LOC I” and “LOC II”) offered generally to subprime or near-prime borrowers across multiple states. These service providers, operating under the Bank’s oversight and supervision, perform certain marketing, servicing, technology, and support functions. In addition, a separate third-party provides customer support, servicing, and other operational services on the Bank’s behalf. The Bank is the lender for both products and is marketed as such. The Bank establishes and controls the loan terms and underwriting guidelines and exercises consumer-compliance oversight over each product. The Bank sells participation interests in these products as follows:
Installment Loan Product:
Through the RCS segment, 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 loan product. 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 intent to sell 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.
Healthcare Receivables Products:
Through the RCS segment, the Bank originates healthcare receivables products across the U.S. through two different third-party service providers. For one of the programs, the Bank retains 100% of the receivables, with recourse in the event of default. For the other 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.
For the RCS LOC and healthcare receivable products, the Company reports interest income and loan origination fees under “Loans, including fees,” while any net gains or losses on sale and mark-to-market adjustments of RCS loans are reported as noninterest income under “Program fees.” The Company has elected fair value accounting for its RCS installment loan product that it sells after an initial holding period. As a result, interest income on loans, loan origination fees, net gains or losses on sale, and mark-to-market adjustments for the RCS installment loan product are reported as noninterest income under “Program fees.”
Critical Accounting Policies and Estimates — To prepare financial statements in conformity with GAAP, management must make estimates and assumptions that require difficult, complex, or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates are susceptible to material changes as a result of changes in facts and circumstances. Facts and circumstances which could affect these judgments include, but are not limited to, changes in interest rates, changes in the performance of the economy and changes in the financial condition of borrowers. The Company’s accounting policies are fundamental to understanding management’s discussion and analysis of the Company’s financial condition and results of operations. At June 30, 2026, the accounting policy considered the most critical in preparing the Company’s consolidated financial statements is the determination of the ACLL.
Recently Adopted Accounting Standards
There were no ASUs adopted by the Company during the six months ended June 30, 2026.
The following not-yet-effective ASUs are considered relevant to the Company’s financial statements. Generally, if an issued-but-not-yet-effective ASU with an expected immaterial impact to the Company has been disclosed in prior Company filings, that ASU will not be subsequently redisclosed.
Date Adoption
Adoption
Expected
ASU. No.
Topic
Nature of Update
Required
Method
Financial Impact
2024-03
Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses
This ASU requires public companies to disclose, in the notes to financial statements, specified information about certain costs and expenses at each interim and annual reporting period.
Annual reporting periods beginning after Dec. 15, 2026, and interim periods within annual reporting periods beginning after Dec. 15, 2027.
Retrospectively
Immaterial
2025-01
Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date
This ASU amends the effective date of ASU No. 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027.
2025-06
Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software.
This ASU modernizes and clarifies the threshold for when an entity is required to start capitalizing software costs and is based on when (i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended.
Annual reporting periods beginning after Dec. 15, 2027, and interim reporting periods within those annual reporting periods.
Prospectively
2025-07
Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract
This ASU refines the scope of Topic 815 to clarify which contracts are subject to derivative accounting. The guidance also provides clarification under Topic 606 for share-based payments from a customer in a revenue contract.
Annual reporting periods beginning after Dec. 15, 2026, and interim reporting periods within those annual reporting periods.
2025-08
Financial Instruments—Credit Losses (Topic 326): Purchased Loans
The ASU expands the population of acquired financial assets accounted for using the gross-up approach. Acquired loans (excluding credit cards) are deemed purchased seasoned loans and accounted for using the gross-up approach upon acquisition if criteria established by the new guidance are met. This change aims to enhance comparability, consistency, and better reflect the economics of acquiring financial assets.
2025-09
Derivatives and Hedging (Topic 815): Hedge Accounting Improvements
The ASU enables entities to apply hedge accounting to a greater number of highly effective economic hedges.
2025-11
Interim Reporting (Topic 270): Narrow-Scope Improvements
This ASU does not change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements. The ASU clarifies that all entities preparing GAAP‑compliant interim financial statements must follow Topic 270. It also creates a complete list of required interim disclosures, adds a principle requiring disclosure of material events occurring after year‑end, and improves guidance on the content and format of interim financial statements.
Interim periods within annual periods beginning after December 15, 2027.
The Company is currently analyzing the impact of this ASU on its financial statements.
2025-12
Codification Improvements
These amendments in this ASU update the FASB Accounting Standards Codification® for a broad range of Topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements.
15
2. INVESTMENT SECURITIES
Available-for-Sale Debt Securities
The following tables summarize the amortized cost and fair value of AFS debt securities, along with the related gross unrealized gains and losses recognized in AOCI:
Gross
Amortized
Unrealized
Fair
June 30, 2026 (in thousands)
Cost
Gains
Losses
Value
U.S. Treasury securities and U.S. Government agencies
269,983
16
(3,632)
266,367
Private label mortgage-backed security
1,360
Mortgage-backed securities - residential
606,710
1,129
(9,483)
598,356
Collateralized mortgage obligations
16,579
(388)
16,215
Corporate bonds
Trust preferred security
3,951
733
4,684
Total available-for-sale debt securities
897,223
3,262
(13,503)
December 31, 2025 (in thousands)
294,940
(1,724)
293,375
1,439
570,491
4,210
(6,792)
567,909
17,528
(648)
16,907
1,001
3,924
4,062
887,884
5,973
(9,164)
Held-to-Maturity Debt Securities
The following tables summarize the amortized cost and fair value of HTM debt securities, together with the related gross unrecognized gains and losses:
Unrecognized
4,534
4,537
Total held-to-maturity debt securities
4,549
4,931
(44)
4,916
4,929
There were no HTM debt securities on nonaccrual or past due 90 days or more as of June 30, 2026, and December 31, 2025.
There were no HTM debt securities considered collateral dependent as of June 30, 2026, and December 31, 2025.
Sales and Calls of Available-for-Sale Debt Securities
During the three and six months ended June 30, 2026, and 2025, there were no material sales of AFS debt securities and no material gains or losses on sales or calls of AFS debt securities. During the six months ended June 30, 2026, AFS debt securities with amortized cost of $90 million were called. During the six months ended June 30, 2025, AFS debt securities with amortized cost of $181 million were called.
Debt Securities by Contractual Maturity
The following table summarizes the amortized cost and fair value of debt securities by contractual maturity. Expected maturities may differ from contractual maturities due to the ability of issuers to call or prepay obligations, with or without call or prepayment penalties. Securities without a single contractual maturity date are presented separately.
Debt Securities
Due in one year or less
94,990
94,079
Due from one year to five years
174,993
172,288
Due from five years to ten years
Due beyond ten years
Total debt securities
Unrealized Loss Analysis on Debt Securities
The following tables summarize AFS debt securities in unrealized loss positions for which no ACLS was recorded, by investment category and duration of the continuous unrealized loss position:
Less than 12 months
12 months or more
Fair Value
Available-for-sale debt securities:
172,289
(2,704)
79,068
(928)
251,357
261,134
(2,617)
74,936
(6,866)
336,070
580
(6)
13,490
(382)
14,070
434,003
(5,327)
167,494
(8,176)
601,497
84,947
78,317
(1,671)
163,264
84,131
(149)
86,744
(6,643)
170,875
14,242
169,078
(202)
179,303
(8,962)
348,381
As of June 30, 2026, the Bank’s security portfolio consisted of 200 securities, 109 of which were in an unrealized loss position. As of December 31, 2025, the Bank’s security portfolio consisted of 198 securities, 86 of which were in an unrealized loss position.
As of June 30, 2026, and December 31, 2025, there were no holdings of debt securities of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of stockholders’ equity.
Accrued interest receivable on AFS debt securities is included in other assets on the Consolidated Balance Sheets and is excluded from the ACLS, when applicable. Accrued interest receivable on AFS debt securities totaled $5 million and $5 million as of June 30, 2026, and December 31, 2025. Accrued interest receivable on HTM debt securities totaled $10,000 as of June 30, 2026, and $12,000 as of December 31, 2025.
17
Mortgage-Backed Securities and Collateralized Mortgage Obligations
As of June 30, 2026, all MBSs and CMOs held by the Bank, other than the private label MBS, were issued by U.S. government-sponsored entities and agencies, primarily the FHLMC and FNMA.
As of June 30, 2026, and December 31, 2025, there were gross unrealized losses of approximately $9 million and $7 million related to AFS MBS’s and CMO’s. Because these unrealized losses are attributable to changes in interest rates and illiquidity, and not credit quality, and because the Bank does not have the intent to sell these securities, and it is likely that it will not be required to sell the securities before their anticipated recovery, management does not consider these securities to have credit-related impairment that would require an adjustment to the ACLS.
Pledged Debt Securities
Debt securities pledged to secure public deposits, SSUAR, and other obligations, or otherwise held for other purposes permitted by law, were as follows:
As of
June 30, 2026
December 31, 2025
Amortized cost
128,191
168,530
Fair value
126,162
166,757
Carrying amount
Equity Securities
The following tables summarize the amortized cost and fair value of equity securities with readily determinable fair values:
Freddie Mac preferred stock
The following table presents the gross realized and unrealized gains and losses recognized in the Company's consolidated statements of income for equity securities with readily determinable fair values:
Gains (Losses) Recognized on Equity Securities
Realized
32
63
3.LOANS HELD FOR SALE
In the ordinary course of business, the Bank originates mortgage and consumer loans for sale. Mortgage loans are primarily originated and sold into the secondary market through the Traditional Banking segment, while consumer loans are originated and sold through the RCS segment.
Mortgage Loans Held for Sale, at Fair Value
Additional information regarding mortgage loans HFS and carried at fair value is included in the “Mortgage Banking Activities” footnote within this section of the report.
Consumer Loans Held for Sale, at Fair Value
Through RCS, the Bank originates installment loans with terms ranging from 12 to 60 months to borrowers in multiple states. Loans originated under this program are classified as HFS and are generally sold within 16 days of origination to a third-party affiliated with the Bank’s service provider. These loans are carried at fair value pursuant to the fair value option and are remeasured to fair value on a monthly basis. The following table presents activity in consumer loans HFS carried at fair value:
Balance, beginning of period
9,430
8,602
5,443
54,234
48,465
99,782
82,812
Proceeds from the sale of consumer loans held for sale
(52,828)
(49,880)
(101,236)
(81,900)
1,570
1,125
2,892
1,957
Balance, end of period
8,312
Consumer Loans Held for Sale, at the Lower of Cost or Fair Value
RCS originates for sale 90% or 95% of the balances from its LOC products and 100% for some of its healthcare receivables products. Ordinary gains or losses on the sale of these RCS products are reported as a component of “Program fees.”
During the first quarter of 2025, management entered into an agreement to sell approximately $5 million of consumer credit card loans. Accordingly, the loans were transferred from held for investment to HFS. The sale was completed during the second quarter of 2025. The following table presents activity in consumer loans HFS carried at the lower of cost or fair value:
19,399
23,523
18,632
325,308
272,662
570,925
504,966
Transferred from held for investment to held for sale
(318,426)
(279,465)
(564,122)
(514,078)
2,744
2,920
5,195
5,143
19,640
Other Loans Held for Sale, at the Lower of Cost or Fair Value
During the fourth quarter of 2025, approximately $82 million of loans and leases were transferred from held for investment to HFS, as the Bank entered into an Asset Purchase Agreement to sell its St. Louis-based RBF operations during December 2025. The following table presents activity in other loans HFS carried at the lower of cost or fair value:
Proceeds from the sale of loans held for sale
(87,684)
Net gain on sale of loans held for sale
19
4.LOANS AND ALLOWANCE FOR CREDIT LOSSES ON LOANS
The following table presents the composition of the Company's loan portfolio by portfolio segment and class:
Traditional Banking:
Residential real estate:
Owner-occupied
1,042,149
1,040,080
Nonowner-occupied
275,983
283,246
Commercial real estate:
704,806
666,948
819,996
799,420
Multi-family
377,392
331,370
Construction & land development
215,341
238,455
Commercial & industrial
547,145
528,873
Lease financing receivables
21,572
20,523
Aircraft*
202,729
203,120
Home equity
429,812
413,638
Consumer:
Credit cards
11,422
10,711
Overdrafts
825
971
Automobile loans
645
738
Other consumer
5,692
8,204
Total Traditional Banking
4,655,509
4,546,297
Warehouse lines of credit*
614,696
754,090
Total Core Banking
5,270,205
5,300,387
Republic Processing Group*:
Tax Refund Solutions:
Refund Advances
12,924
Other TRS commercial & industrial
156
19,473
Republic Credit Solutions
140,045
113,545
Total Republic Processing Group
140,201
145,942
Total loans**
Total loans, net
* Identifies loans to borrowers located primarily outside of the Bank’s market footprint.
** Total loans are presented inclusive of premiums, discounts and net loan origination fees and costs. See the following table for expanded detail.
The following table reconciles the contractual balances and carrying amounts of loans:
Contractually receivable
5,419,880
5,454,833
Unearned income
(3,272)
(3,137)
Unamortized premiums
119
142
Unaccreted discounts
(737)
(1,003)
Other net unamortized deferred origination (fees) and costs
(5,584)
(4,506)
Carrying value of loans
20
Credit Quality Indicators
The following tables present loans by segment, risk category and, for nonrevolving loans, origination year. For purposes of determining origination year, loan extensions and renewals are generally considered to have originated in the year of extension or renewal unless the transaction is accounted for as a loan modification. Extensions and renewals classified as loan modifications generally retain their original origination year.
Revolving Loans
Term Loans Amortized Cost Basis by Origination Year
Converted
As of June 30, 2026
2024
2023
2022
Prior
Cost Basis
to Term
Residential real estate owner-occupied:
Risk Rating
Pass or not rated
120,350
121,742
49,579
177,788
151,938
391,298
6,320
1,019,018
Special Mention
388
1,513
713
2,614
Substandard
604
1,417
3,117
2,993
12,386
20,517
Doubtful
122,346
50,996
181,293
156,444
404,397
YTD Gross Charge-offs
42
65
Residential real estate nonowner-occupied:
23,924
17,414
10,523
39,780
45,221
134,240
4,301
275,403
105
475
24,029
134,715
Commercial real estate owner-occupied:
87,109
98,177
36,563
59,584
94,957
219,788
16,400
81,677
694,255
7,080
90
404
7,574
274
925
1,778
2,977
94,189
98,451
60,509
221,656
82,081
Commercial real estate nonowner-occupied:
110,290
70,486
21,747
92,064
124,827
272,477
22,210
89,460
803,561
16,435
141,262
Commercial real estate multi-family:
46,903
7,358
12,680
71,367
62,192
84,873
5,302
80,934
371,609
4,554
1,229
5,783
11,912
63,421
Construction & land development:
30,731
118,966
34,975
27,000
563
2,565
541
Commercial & industrial:
87,307
121,714
36,193
34,425
31,948
35,656
157,010
22,321
526,574
86
2,745
75
2,906
15,635
259
60
1,329
38
344
17,665
102,942
36,538
34,485
33,277
38,401
157,123
22,665
Lease financing receivables:
4,951
5,147
3,983
6,221
998
37
21,337
52
221
5,003
4,010
6,281
1,022
109
21
Term Loans Amortized Cost Basis by Origination Year (Continued)
Aircraft:
25,834
30,569
20,751
40,501
30,887
54,187
Home equity:
423,639
4,277
497
1,310
3,683
1,446
458
11,144
18,572
1,322
18,584
753
Warehouse:
TRS:
5,665
774
6,439
RCS:
442
2,152
3,111
524
145
133,671
8,180
Grand Total:
538,052
593,325
232,829
553,287
544,089
1,195,724
1,384,616
285,013
5,326,935
7,185
3,548
1,971
31,544
15,687
5,444
1,703
4,162
5,561
14,711
4,315
51,927
Grand Total
560,924
598,769
234,618
557,837
567,612
1,213,983
1,390,902
285,761
5,668
798
8,935
15,460
As of December 31, 2025
2021
153,758
57,359
208,250
162,417
134,290
292,708
9,745
1,018,527
1,610
582
2,192
1,063
2,185
3,130
2,729
10,072
19,361
153,940
58,422
210,435
167,157
137,019
303,362
43
50
128
18,769
13,367
46,289
48,701
62,996
89,968
2,640
282,730
516
90,484
103,994
40,027
64,149
101,727
103,722
162,831
13,894
56,250
646,594
752
1,112
594
9,191
409
12,058
5,448
942
1,906
8,296
110,194
41,139
65,091
104,316
173,928
56,659
77,928
22,179
104,436
134,803
101,477
230,556
19,700
90,983
782,062
676
16,682
17,358
78,604
151,485
11,117
12,841
49,881
66,953
45,347
56,668
4,910
83,653
99,673
47,328
86,555
593
522
3,303
481
139,641
62,991
44,005
41,331
17,176
33,515
153,706
15,935
508,300
569
1,556
64
2,189
88
334
73
11,516
4,411
18,384
139,729
63,894
44,078
42,949
18,732
45,031
158,181
16,279
216
262
5,931
4,909
7,469
1,433
190
83
20,015
69
87
71
508
5,938
4,978
7,556
1,707
261
49
297
31
390
23
31,154
26,092
47,389
35,121
29,828
33,239
202,823
30,125
408,021
3,660
56
3,984
1,840
58
25
566
12,267
20,539
84
85
567
12,351
20,624
1,154
1,197
32,397
15,501
9,557
25,058
862
3,448
4,490
674
310
103,719
19,131
677,023
294,525
664,753
593,811
495,615
903,747
1,470,788
259,206
5,359,468
1,428
1,681
18,292
9,773
2,021
35,754
5,725
1,466
3,287
5,022
24,011
8,155
51,107
684,176
297,672
668,040
617,125
500,862
937,531
1,480,964
259,959
15,532
9,664
67
28
74
20,341
46,222
The following table presents a rollforward of the ACLL portfolio by portfolio segment and class:
ACLL Roll-forward
Three Months Ended June 30,
Beginning
Charge-
Ending
Balance
offs
Recoveries
10,609
10,805
10,756
(142)
10,626
(87)
3,421
4,025
3,883
7,584
271
7,857
7,334
(191)
7,143
11,973
11,985
12,179
(230)
11,952
Multi-Family
2,812
384
3,196
2,807
(56)
2,751
Total commercial real estate
22,369
667
23,038
22,320
(477)
21,846
8,256
(1,015)
7,241
8,027
698
8,725
7,481
(22)
7,486
2,616
(143)
(18)
2,455
624
(189)
459
1,054
39
(127)
983
Aircraft
506
507
554
(24)
530
8,873
53
8,964
7,626
454
26
8,106
957
946
701
272
(317)
794
687
170
(250)
656
(2)
(7)
157
(5)
241
253
64,041
(360)
268
63,806
58,851
517
(470)
59,055
Warehouse lines of credit
1,571
(38)
1,533
1,421
255
1,676
65,612
65,339
60,272
772
60,731
Republic Processing Group:
6,283
(1,056)
(6,367)
1,140
25,819
(3,934)
(24,893)
3,008
61
162
(166)
19,884
6,384
(4,244)
403
22,427
20,050
4,983
(4,384)
21,029
26,228
5,338
(10,683)
1,545
22,428
46,031
1,051
(29,443)
3,390
91,840
(11,043)
1,813
87,767
106,303
(29,913)
3,547
81,760
Six Months Ended June 30,
10,844
(65)
10,849
(257)
(29)
3,542
(121)
4,140
7,207
646
7,319
(176)
11,690
295
12,523
(574)
2,860
336
2,714
21,757
22,556
(713)
8,117
(876)
8,227
498
7,403
30
2,527
(54)
718
(301)
1,117
(138)
565
(35)
8,629
291
66
7,378
1,379
(347)
(92)
(727)
206
724
269
(440)
103
(4)
217
(20)
283
(28)
63,662
562
(841)
423
59,756
(252)
(741)
292
1,882
(349)
1,374
65,544
213
61,130
296
4,262
1,809
9,793
11,401
3,699
68
94
(165)
19,475
10,428
(8,180)
704
20,987
7,950
(8,638)
730
19,808
14,724
(14,619)
2,515
30,848
19,445
(33,696)
4,432
85,352
(15,460)
2,938
91,978
(34,437)
4,724
The cumulative loss rates used in estimating the Company’s ACLL as of June 30, 2026 were primarily derived from static pool analyses for each loan pool based on the Company’s loss experience from 2013 through 2026, supplemented by qualitative factor adjustments reflecting current conditions and reasonable and supportable forecasts. The ACLL model incorporates a one-year forecast period for unemployment and CRE vacancy rates.
The ACLL also includes estimated losses for loans evaluated individually, including collateral dependent loans and loans that do not share similar risk characteristics with pooled loans, such as certain loan modifications. During the second quarter of 2025, the Company implemented, as a practical expedient, a minimum loan balance threshold for individually evaluating loans with risk ratings of Special Mention or worse. The adoption of this threshold resulted in a $518,000 reduction to the Provision during the three and six months ended June 30, 2025.
Nonperforming Loans and Nonperforming Assets
The following table presents information regarding nonperforming loans, nonperforming assets, and select credit quality ratios:
(dollars in thousands)
Loans on nonaccrual status*
30,645
23,806
Loans past due 90-days-or-more and still on accrual**
161
Total nonperforming loans
30,728
23,967
Total nonperforming assets
31,571
25,244
Credit Quality Ratios - Total Company:
Nonperforming loans to total loans
0.57
%
0.44
Nonperforming assets to total loans (including OREO)
0.58
0.46
Nonperforming assets to total assets
0.45
0.36
Credit Quality Ratios - Core Bank:
0.60
0.47
0.49
0.38
*
Loans on nonaccrual status include collateral-dependent loans.
**
Loans past due 90-days-or-more and still accruing consist of smaller balance consumer loans.
The following table presents nonaccrual loans and loans past due 90-days-or-more and still accruing by portfolio segment and class:
Past Due 90-Days-or-More
Nonaccrual
and Still Accruing Interest*
20,053
18,894
722
377
391
171
4,268
3,727
79
* Loans past due 90-days-or-more and still accruing consist of smaller balance consumer loans.
The following tables present nonaccrual loans details by portfolio class:
Interest Income
Loans with
Loans without
Recognized
on Nonaccrual Loans*
353
288
527
108
40
101
47
96
183
Consumer
1,786
28,859
486
875
* Includes interest income for loans on nonaccrual as of the beginning of the period that were paid off during the period.
June 30, 2025
307
675
104
179
721
23,085
499
1,037
Nonaccrual loans and loans past due 90 days or more and still accruing interest include smaller-balance, primarily retail, homogeneous loan portfolios. Nonaccrual loans are generally restored to accrual status when all contractually due principal and interest have been brought current, remain current for six consecutive months, and collection of future contractual payments is reasonably assured. Modified loans classified as nonaccrual are evaluated individually for restoration to accrual status based on performance under the modified terms and other relevant credit factors.
Delinquent Loans
The following tables present the aging of the recorded investment in loans by portfolio segment and class:
30 - 59
60 - 89
90 or More
Days
June 30, 2026 (dollars in thousands)
Delinquent
Delinquent*
Delinquent**
Current
4,526
1,034
2,851
8,411
1,033,738
237
275,746
372,838
397
546,748
577
780
1,502
20,070
1,205
1,048
975
3,228
426,584
11,418
48
81
744
5,670
6,382
7,718
4,336
18,436
4,637,073
5,251,769
8,068
1,907
10,054
129,991
130,147
14,450
9,625
4,415
28,490
5,381,916
Delinquency ratio***
0.27
0.18
0.08
0.53
* All loans past due 90-days-or-more, excluding small balance consumer loans, were on nonaccrual status.
** Delinquent status may be determined by either the number of days past due or number of payments past due.
*** Represents total loans 30-days-or-more past due by aging category divided by total loans.
December 31, 2025 (dollars in thousands)
4,770
2,140
2,118
9,028
1,031,052
355
528,518
20,470
3,082
327
4,346
409,292
123
848
8,184
2,522
3,452
13,925
4,532,372
5,286,462
6,947
1,830
8,938
104,607
137,004
14,898
4,352
3,613
22,863
5,423,466
0.07
0.42
* All loans past due 90-days-or-more, excluding smaller balance consumer loans, were on nonaccrual status.
Collateral-Dependent Loans
The following table presents the amortized cost basis of collateral-dependent loans by Traditional Banking portfolio class:
Secured
by Real
by Personal
Estate
Property
19,343
535
3,387
235
3,659
34,439
246
31,833
806
Collateral-Dependent Loans and Loan Modifications
When management determines that a loan is collateral dependent and foreclosure is probable, expected credit losses are measured using the fair value of the collateral as of the reporting date, adjusted for estimated selling costs, when applicable. Collateral-dependent loans are generally secured by real estate or personal property. If the fair value of the collateral, net of estimated selling costs, is insufficient to cover the recorded investment, the loan is charged down to that amount. Estimated selling costs generally range from 10% to 13% and are based on annual studies performed by the Company.
In accordance with the Bank’s charge-off policy, all or a portion of a collateral-dependent loan is charged off when the Bank concludes that the full amount of contractual principal and interest is not expected to be collected.
A loan modification occurs when, due to a borrower’s financial difficulties, the Bank grants a concession it would not otherwise consider. Most modifications involve changes to the loan’s original terms, including, depending on the borrower’s circumstances, temporary payment reductions requiring only interest and escrow payments (if applicable), reductions in the contractual interest rate, extensions of the maturity date, or a combination thereof.
The ACLL incorporates an estimate of lifetime expected credit losses using historical loss information. The Company utilizes a static pool loss rate methodology to estimate expected losses for pooled loans. From time to time, the Company modifies loans for borrowers experiencing financial difficulty through principal forgiveness, repayment term extensions, interest rate reductions, or other-than-insignificant payment delays. Because expected credit losses associated with these loans are generally captured within the ACLL methodology, loan modifications typically do not result in an immediate adjustment to the ACLL unless the loan is individually evaluated and the modification affects the specific reserve allocation. If principal forgiveness is granted, the forgiven amount is charged off against the ACLL.
Accruing modified loans are evaluated for nonaccrual classification based on the borrower’s financial condition and demonstrated ability to perform under the modified terms. Loans that are modified while on nonaccrual status generally remain on nonaccrual until sustained performance under the modified terms supports a return to accrual status.
As of June 30, 2026, and December 31, 2025, collateral dependent loans totaled $35 million and $33 million.
As of June 30, 2026 outstanding collateral dependent loan modifications to borrowers experiencing financial difficulty totaled $420,000.
Loan Modifications –2026:
During the second quarter of 2026, the Company modified two loans for borrowers experiencing financial difficulty with an aggregate amortized cost basis of $420,000, primarily consisting of a $367,000 RRE owner-occupied loan deferred 10 months and a $52,000 C&I loan extended three months.
During the first quarter of 2026, the Company modified five loans for borrowers experiencing financial difficulty with an aggregate amortized cost basis of $9 million. The modifications primarily consisted of a $7 million CRE owner-occupied loan extended seven months and a $2 million C&I loan extended 40 months. During the second quarter of 2026, the $7 million CRE owner-occupied loan was refinanced by the Bank at market terms and collateralized by additional security.
Loan Modifications –2025:
During the second quarter of 2025, the Company modified two loans for borrowers experiencing financial difficulty with an amortized cost basis of $4 million, primarily consisting of one CRE nonowner-occupied loan, with an amortized cost basis of $4 million extended 12 months.
During the fourth quarter of 2025, the Company modified seven loans for borrowers experiencing financial difficulty with an aggregate amortized cost basis of $13 million, primarily consisting of two CRE owner-occupied loans, with a total amortized cost basis of $5 million, which were extended three months and one CRE owner-occupied loan, with an amortized cost basis of $7 million, was extended six months.
During the six months ended June 30, 2026 and 2025, there were no payment defaults by borrowers experiencing financial difficulty related to loans that were modified in the prior 12 months.
Foreclosures
The following table presents the carrying amount of foreclosed RRE and CRE held by the Bank as a result of obtaining physical possession of the underlying collateral.
Residential real estate
244
Commercial real estate
1,033
Total other real estate owned
The following table presents the recorded investment in consumer mortgage loans secured by RRE that were in the process of formal foreclosure proceedings in accordance with the requirements of the applicable jurisdictions.
Recorded investment in consumer residential real estate mortgage loans in the process of foreclosure
3,148
The Company’s TRS segment offered (i) its RA product during the first two months of 2026, along with its ERA product during December 2025 and the first two weeks of 2026 for the 2026 Tax Season and (ii) its RA product during the first two months of 2025, along with its ERA product during December 2024 and the first two weeks of 2025 for the 2025 Tax Season. The ERA originations during December 2025 and the first two weeks of 2026 were made in relation to estimated tax returns that were anticipated to be filed during the first quarter 2026 Tax Season, while the ERA originations during December 2024 and the first two weeks of 2025 were made in relation to estimated tax returns that were anticipated to be filed during the first quarter 2025 Tax Season. Each year, all unpaid RAs, including ERAs, are charged-off at June 30th, and each quarter thereafter, any credits to the Provision for ERAs/RAs, are recorded as recoveries of previously charged-off accounts.
The following table presents information regarding calendar year ERA/RA activity:
ERAs/RAs originated
246,396
662,556
Net (credit) charge to the Provision for ERAs/RAs
Provision as a percentage of ERAs/RAs originated
1.73
1.72
Net ERA/RA charge-offs
5,227
21,885
4,558
21,194
Net ERA/RA charge-offs to total originations
1.85
3.20
5.DEPOSITS
The following table presents the composition of the deposit portfolio by portfolio segment:
Core Bank:
Demand
1,164,278
1,128,255
Money market
1,532,292
1,497,561
Savings
215,327
217,723
Reciprocal money market
228,226
224,731
Individual retirement accounts (1)
35,256
34,349
Time deposits, $250 and over (1)
184,215
156,283
Other certificates of deposit (1)
300,146
290,087
Reciprocal time deposits (1)
68,814
70,729
Wholesale brokered deposits (1)
87,484
87,420
Total Core Bank interest-bearing deposits
3,816,038
3,707,138
Total Core Bank noninterest-bearing deposits
1,168,030
1,102,041
Total Core Bank deposits
4,984,068
4,809,179
14,164
12,734
Interest-bearing prepaid card deposits
452,897
286,841
19,939
22,973
Total RPG interest-bearing deposits
487,000
322,548
Noninterest-bearing prepaid card deposits
9,403
5,228
Other noninterest-bearing deposits
71,271
66,192
Total RPG noninterest-bearing deposits
80,674
71,420
Total RPG deposits
567,674
393,968
33
6.SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
SSUAR consists of short-term excess funds from correspondent banks, repurchase agreements, and overnight liabilities to deposit clients arising from the Bank's treasury management program. While similar to deposits in their transactional nature, these client liabilities are structured as repurchase agreements. Repurchase agreements collateralized by securities are accounted for as financings; accordingly, the underlying securities remain recorded as assets, while the related repurchase obligations are recorded as liabilities. The pledged securities are held by a safekeeping agent under the Bank's control.
As of June 30, 2026 and December 31, 2025, all SSUAR had overnight maturities.
The following table presents information regarding SSUAR:
Outstanding balance at end of period
Weighted average interest rate at end of period
0.43
0.39
Fair value of securities pledged:
110,235
130,940
Total securities pledged
Average outstanding balance during the period
82,507
87,760
85,888
98,202
Weighted average interest rate during the period
0.64
Maximum outstanding at any month end during the period
90,541
94,775
112,826
7.FEDERAL HOME LOAN BANK ADVANCES
The following table presents information related to FHLB advances outstanding:
Overnight advances
130,000
Fixed interest rate advances
376,000
Total FHLB advances
Each FHLB advance is payable at maturity. Fixed-rate advances are generally subject to prepayment penalties if repaid prior to their contractual maturity date.
FHLB advances are collateralized by a blanket pledge of eligible real estate loans. As of June 30, 2026, and December 31, 2025, Republic had available borrowing capacity of $884 million and $646 million from the FHLB. In addition to its borrowing capacity with the FHLB, Republic also had unsecured lines of credit totaling $100 million with various financial institutions at June 30, 2026, and December 31, 2025.
The following table presents aggregate contractual principal maturities and the weighted-average cost of FHLB advances outstanding:
Weighted
Average
Year (dollars in thousands)
Principal
Rate
30,000
4.82
2027
121,000
3.47
2030
5,000
2031
1,000
3.60
As disclosed in the “Interest Rate Swaps” footnote, the Bank extended $100 million of FHLB advances during the second quarter of 2024 through a third-party interest rate swap transaction. The swap effectively fixed the annualized cost of the related advances at 4.42% over a five-year term. Including the effects of applicable interest rate swaps, the weighted-average cost of all FHLB advances was 3.84%.
Due to their nature, the Bank considers average balance information more meaningful than period-end balances for its overnight borrowings from the FHLB.
The following table presents information related to overnight FHLB advances outstanding:
6,209
36,796
74,972
3.76
4.45
35,000
210,000
428,000
The following table presents real estate loans pledged as collateral for advances and letters of credit from the FHLB:
First-lien, single family residential real estate
1,112,985
1,136,838
Home equity lines of credit
366,653
355,875
Multi-family commercial real estate
86,243
92,167
124,870
260,789
35
8.COMMITMENTS AND CONTINGENT LIABILITIES
Commitments to Extend Credit
The Company is party to financial instruments with OBS credit risk in the normal course of business. These financial instruments primarily consist of commitments to extend credit and standby letters of credit. The contractual or notional amounts of these instruments represent the Company’s potential future obligations. The creditworthiness of counterparties is evaluated on a case-by-case basis in accordance with the Company’s credit policies. Depending on the results of the credit evaluation, collateral may be required and can include business assets of commercial borrowers, as well as personal property and real estate of individual borrowers or guarantors.
The Company also extends binding commitments to current and prospective borrowers. Such commitments generally provide for financing during a specified period of time and may be subject to specified terms and conditions. The Company’s risk under these commitments is limited by the contractual provisions of the agreements. For example, the Company may not be obligated to advance funds if the borrower’s financial condition deteriorates or if the borrower fails to comply with applicable covenants or other contractual requirements.
Approved but unfunded loan commitments expose the Company to credit, liquidity, and interest rate risk. Borrowers may draw on available commitments and require funding, while increases in market interest rates above committed rates may adversely affect the profitability of such commitments. However, because a portion of commitments is expected to expire without being drawn, the total contractual amount outstanding does not necessarily represent the Company's future funding obligations.
The following table presents the Company’s lending-related commitments, excluding Mortgage Banking loan commitments:
Unused warehouse lines of credit
552,804
436,909
Unused home equity lines of credit
502,995
487,822
Unused loan commitments - other
1,194,705
1,203,211
Standby letters of credit
13,040
10,385
Total commitments
2,263,544
2,138,327
Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a borrower to a third party. The credit risk associated with these instruments is substantially the same as that involved in extending loans and other commitments to extend credit. Standby letters of credit also expose the Company to liquidity risk, as funding may be required upon demand by the beneficiary. The Company does not consider this liquidity risk to be material.
The following tables present a roll-forward of the ACLC:
ACLC Roll-forward
Unused Loan Commitments
62
(13)
92
223
256
199
195
Construction lines of credit
679
737
(34)
703
RCS lines of credit
250
300
220
Loan commitments - other
316
(69)
247
279
290
1,530
1,510
1,500
189
585
677
230
70
(80)
373
(126)
251
1,450
9.FAIR VALUE
Fair value represents the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date in the principal, or most advantageous, market. The fair value hierarchy prioritizes the inputs used in measuring fair value into the following three levels:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2: Significant other observable inputs, including quoted prices for similar assets or liabilities; quoted prices in markets that are not active; and other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing an asset or liability.
Authoritative accounting guidance requires maximizing the use of observable inputs and minimizing the use of unobservable inputs when measuring fair value. When limited or no observable market data exists, the Company develops estimates based on available information, including the characteristics of the asset or liability, current economic and market conditions, and other relevant factors. Accordingly, fair value estimates are inherently subjective and may not be realized in an actual sale or immediate settlement of the related asset or liability.
The Bank used the following valuation techniques and significant assumptions to estimate the fair value of its financial instruments:
Available-for-sale debt securities: Except for U.S. Treasury securities and the Bank’s TRUP investment, the fair value of AFS debt securities is generally determined using matrix pricing, a valuation technique that relies on the securities' relationships to benchmark securities with observable market prices rather than quoted prices for the specific securities (Level 2 inputs).
The fair value of U.S. Treasury securities is based on quoted market prices in active markets (Level 1 inputs).
As of June 30, 2026 and December 31, 2025, the Company owned one nominal private-label MBS classified as AFS with an amortized cost of $0 at both dates. At December 31, 2025, the Bank classified this MBS as a Level 3 and utilized an income valuation model (present value model) approach in determining the fair value of this security. Beginning in 2026, due to the insignificance of the position, the Company elected not to obtain Level 3 pricing.
As of June 30, 2026, due to the investment's illiquidity and the limited availability of observable market inputs, the TRUP investment is classified within Level 3 of the fair value hierarchy.
Equity securities with readily determinable fair value: The fair value of the Company’s FHLMC preferred stock is determined based on market prices of similar securities and is classified within Level 2 of the fair value hierarchy.
Mortgage loans held for sale, at fair value: The fair value of mortgage loans HFS is based on quoted secondary market prices and is classified within Level 2 of the fair value hierarchy.
Consumer loans held for sale, at fair value: The fair value of consumer loans HFS is based primarily on contractual sales terms and other unobservable inputs and is therefore classified within Level 3 of the fair value hierarchy.
Mortgage banking derivatives: Mortgage banking derivatives consist primarily of mandatory forward sales contracts and interest rate lock commitments. Fair value is determined using market-based pricing obtained from broker-dealers and other observable market inputs. Because the valuation relies principally on observable inputs, these instruments are classified within Level 2 of the fair value hierarchy.
Interest rate swap agreements: Interest rate swaps are recorded at fair value on a recurring basis. The Company values its interest rate swaps using a third-party valuation service and classifies such valuations as Level 2. Valuations of these interest rate swaps are also received from the relevant dealer counterparty and validated against the Company’s calculations. The Company has considered counterparty credit risk in the valuation of its interest rate swap assets and has considered its own credit risk in the valuation of its interest rate swap liabilities.
Discussion of assets measured at fair value on a non-recurring basis follows:
Collateral-dependent loans: Collateral-dependent loans generally reflect partial charge-downs to fair value, which is typically determined using recent real estate appraisals or BPOs. These valuations may utilize one or more approaches, including comparable sales and income-based methodologies. Significant adjustments may be applied by the independent valuation specialists to account for differences between the subject property and comparable market data. As a result, the valuation of real estate collateral generally relies on significant unobservable inputs and is classified within Level 3 of the fair value hierarchy.
Non-real estate collateral is generally valued using appraisals, net book values reported in borrower financial statements, aging reports, or other relevant information. These values may be adjusted based on management's knowledge of the borrower, changes in market conditions since the valuation date, and other judgmental factors. Accordingly, valuations of non-real estate collateral are generally classified within Level 3 of the fair value hierarchy.
Collateral-dependent loans are evaluated quarterly for impairment, and valuation adjustments are recorded as necessary.
Other real estate owned: Assets acquired through, or in lieu of, foreclosure are initially recorded at fair value less estimated costs to sell, which establishes a new cost basis. Thereafter, OREO is carried at the lower of cost or fair value less estimated costs to sell. Fair value is generally based on recent real estate appraisals or BPOs, which may utilize one or more valuation approaches, including comparable sales and income-based methodologies. Because these valuations often incorporate significant adjustments and unobservable inputs, OREO is generally classified within Level 3 of the fair value hierarchy.
Appraisals for collateral-dependent loans, bank premises, and OREO are performed by qualified independent appraisers whose credentials and licenses are reviewed and approved by the Bank. Upon receipt, appraisals are reviewed by members of the Bank’s CCAD to evaluate the reasonableness of the assumptions, methodologies, and resulting values, including comparisons to available market data and industry information. In addition, the Bank performs periodic back-testing by comparing actual sales proceeds to the most recent appraised values of similar collateral. These analyses are performed by collateral class, such as RRE and CRE, and may result in additional valuation adjustments for similar collateral.
Mortgage servicing rights: MSRs are evaluated for impairment at least quarterly by comparing the fair value of each tranche to its carrying amount. If the carrying amount of a tranche exceeds its fair value, impairment is recognized, and the tranche is carried at fair value. If the fair value of a tranche subsequently exceeds its carrying amount, previously recognized impairment is reversed, and the tranche's carrying amount is adjusted in accordance with the applicable valuation methodology. Fair value is determined using a valuation model that incorporates assumptions market participants would use in estimating future net servicing income. Because these assumptions are generally observable or can be corroborated by market data, MSRs are classified within Level 2 of the fair value hierarchy.
Transfers between levels of the fair value hierarchy are recognized as of the end of the reporting period. During the first quarter of 2026, one nominal AFS private-label MBS transferred from Level 3 to Level 2. Other than this transfer, there were no transfers into or out of Levels 1, 2, or 3 during the three and six month periods ended June 30, 2026 and 2025.
The following tables summarize assets and liabilities measured at fair value on a recurring basis, including financial instruments for which the Bank has elected the fair value option.
Fair Value Measurements at
June 30, 2026 Using:
Quoted Prices in
Significant
Active Markets
for Identical
Observable
Unobservable
Assets
Inputs
(Level 1)
(Level 2)
(Level 3)
Financial assets:
24,937
241,430
856,001
885,622
Equity securities with a readily determinable fair value:
Total equity securities with a readily determinable fair value
Mortgage loans held for sale
Consumer loans held for sale
Rate lock commitments
537
Interest rate swap agreements - Bank clients and institutional swap dealer
4,391
Financial liabilities:
Mandatory forward contracts
112
Interest rate swap agreements on FHLB advances
692
December 31, 2025 Using:
34,854
258,521
844,338
5,501
6,321
2,674
Trust Preferred Security
The following table presents a rollforward of the Company’s TRUP investment, which is measured at fair value on a recurring basis and classified within Level 3 of the fair value category.
4,072
4,073
4,034
Total gains or losses included in earnings:
Discount accretion
Net change in unrealized gain (loss)
598
(14)
4,075
The fair value of the Company’s TRUP investment is based on the most recent bid price available for this instrument, as provided by a third-party broker.
Mortgage Loans Held for Sale
The following table presents the aggregate fair value, contractual balance, and unrealized gain on mortgage loans HFS carried at fair value:
Aggregate fair value
Contractual balance
16,197
7,367
Unrealized gain
369
149
The following table presents the total net gains recognized in earnings from changes in the fair value of mortgage loans HFS carried at fair value:
Interest income
219
317
337
Change in fair value
278
(19)
Total included in earnings
318
Consumer Loans Held for Sale
RCS carries loans originated through its installment loan program at fair value. Interest income is recognized in accordance with the contractual terms of the loans and the Bank's accounting policies. None of these loans were past due 90 days or more or on nonaccrual status as of June 30, 2026, and December 31, 2025.
The significant unobservable inputs used in estimating the fair value of the Bank's short-term installment loans are net contractual premiums and the percentage of loans sold at a discount. Changes in these inputs could have a significant impact on the resulting fair value measurement.
The following table presents quantitative information about recurring Level 3 fair value measurement inputs for installment loans:
Valuation
Technique
Unobservable Inputs
Contract Terms
(1) Net Premium
0.15%
(2) Discounted Sales
10%
The following table presents the aggregate fair value, contractual balance, and unrealized gain on consumer loans HFS carried at fair value:
12,484
11,044
Unrealized loss
(78)
(76)
The following table presents the total net gains recognized in earnings from changes in the fair value of consumer loans HFS carried at fair value:
1,949
1,664
3,635
2,742
(25)
1,927
1,660
3,634
2,717
41
The following tables presents assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy used to determine such fair values:
Collateral-dependent loans:
743
Total collateral-dependent loans
6,526
Other real estate owned:
412
306
1,260
1,978
328
949
The following tables present quantitative information regarding significant unobservable inputs used in Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis:
Range
(Weighted
Average)
Collateral-dependent loans - residential real estate owner-occupied
Appraisal
Appraisal discounts
10% (10%)
Collateral-dependent loans - Multi-Family
13% (13%)
Other real estate owned - commercial real estate nonowner-occupied
69% (69%)
Collateral-dependent loans - residential real estate nonowner occupied
Collateral-dependent loans - commercial real estate owner-occupied
13%-70% (27%)
Other real estate owned - residential real estate
65% (65%)
Collateral Dependent Loans
Collateral-dependent loans are generally measured based on the fair value of the underlying collateral, less estimated costs to sell, when applicable. The Bank typically obtains new or updated appraisals or BPOs as part of its initial impairment assessment and subsequently evaluates the need for updated valuations based on market conditions and other relevant factors. The Bank may adjust collateral values for estimated selling costs, delinquent real estate taxes, and, when appropriate, deterioration in the physical condition of the property, adverse economic factors, or changes in market conditions. If a current appraisal or BPO is not available, management may apply a discount to an existing valuation to estimate current fair value. To the extent the estimated fair value of the collateral, net of selling costs, is less than the carrying value of the loan, a charge-off is recorded. Collateral-dependent loans are classified within Level 3 of the fair value hierarchy.
During the three and six month periods ended June 30, 2026 and 2025, Provision recorded related to collateral-dependent loans was not material.
OREO is carried at the lower of cost or fair value less estimated costs to sell. Fair value is generally based on external appraisals or BPOs. Because these valuations incorporate significant unobservable inputs, OREO is classified within Level 3 of the fair value hierarchy.
The following tables presents information related to OREO, including carrying amounts and valuation write-downs:
Other real estate owned carried at fair value
Other real estate owned write-downs during the period
Financial Instruments
The following tables presents the carrying amounts and estimated exit-price fair values of the Company's financial instruments:
June 30, 2026:
Carrying
Level 1
Level 2
Level 3
Assets:
Available-for-sale debt securities
Held-to-maturity debt securities
29,134
5,300,109
Federal Home Loan Bank stock
Mortgage servicing rights
6,783
18,607
Liabilities:
Noninterest-bearing deposits
Transaction deposits
3,612,959
Time deposits
690,079
691,586
156,546
2,758
44
December 31, 2025:
17,124
82,837
5,332,160
22,291
6,811
17,432
3,378,084
651,602
652,942
508,892
3,288
45
10.MORTGAGE BANKING ACTIVITIES
Mortgage banking activities primarily consist of the origination, sale, and servicing of RRE mortgage loans.
The following table presents activity in mortgage loans HFS carried at fair value:
12,953
9,140
67,334
51,788
115,324
93,021
Proceeds from the sale of mortgage loans held for sale
(65,182)
(53,561)
(109,224)
(95,377)
Net gain on mortgage loans held for sale
1,461
1,483
2,950
2,894
8,850
The following table presents the components of mortgage banking income:
Net gain realized on sale of mortgage loans held for sale
1,516
1,354
2,555
2,637
Net change in fair value recognized on loans held for sale
Net change in fair value recognized on rate lock loan commitments
166
478
Net change in fair value recognized on forward contracts
(512)
(83)
Net gain recognized
Loan servicing income
833
1,650
(495)
(412)
(990)
(827)
Net servicing income recognized
338
413
823
Total mortgage banking income
The following table presents activity for capitalized MSRs:
6,693
6,876
6,975
Additions
Amortized to expense
6,841
There was no valuation allowance recorded for capitalized MSR’s for the three and six months ended June 30, 2026 and 2025.
The following table presents estimated fair value information for capitalized MSRs:
Fair value of mortgage servicing rights portfolio
Monthly weighted average prepayment rate of unpaid principal balance*
125
131
Discount rate
9.60
9.74
Weighted average foreclosure rate
0.13
0.09
Weighted average life in years
7.54
7.35
Rates are applied to individual tranches with similar characteristics.
Mortgage banking derivatives used in the ordinary course of business primarily consist of mandatory forward sales contracts and interest rate lock commitments. Mandatory forward sales contracts represent commitments to deliver mortgage loans at specified prices and dates and are used to manage interest rate risk associated with interest rate lock commitments and mortgage loans HFS. Interest rate lock commitments represent commitments to originate mortgage loans at specified interest rates. These derivative instruments have underlying variables, primarily interest rates, and are designed to manage exposure to market risk. Substantially all of these instruments expire within 90 days of issuance. Notional amounts are used to calculate contractual payments but do not represent credit exposure, which is limited to amounts to be received from or paid to counterparties.
Mandatory forward sales contracts also expose the Bank to counterparty credit risk, as counterparties may fail to perform under the terms of the agreements. If a counterparty is unable to fulfill its obligations, the Bank could incur additional costs to replace the contracts at then-current market rates. To mitigate this risk, the Bank limits its counterparties to financial institutions approved by management and the Board. The Bank does not anticipate nonperformance by any of its counterparties and, therefore, does not expect to incur material losses related to counterparty default.
The Bank is exposed to interest rate risk associated with mortgage loans HFS and interest rate lock commitments. Changes in market interest rates may cause the fair value of these instruments to increase or decrease. To manage this risk, the Bank enters into derivative instruments, including mandatory forward sales contracts and, from time to time, forward purchases of TBA securities. The fair value of these derivatives also fluctuates with changes in market interest rates, and such changes are expected to substantially, although not completely, offset changes in the fair value of mortgage loans HFS and interest rate lock commitments.
The objective of these risk management activities is to reduce the Bank's exposure to losses resulting from changes in market interest rates. The net impact of the derivative instruments on earnings depends on a variety of factors, including interest rate volatility, the volume of interest rate lock commitments that ultimately fund, the Bank's ability to fulfill forward contracts prior to expiration, and the time required to close and sell mortgage loans.
The following table presents the notional amounts and fair values of mortgage loans HFS and mortgage banking derivatives:
Notional
Included in Mortgage loans held for sale:
Included in other assets:
Rate lock loan commitments
23,857
12,617
Included in other liabilities:
30,791
16,280
11.INTEREST RATE SWAPS
Interest rate swap derivatives are recognized at fair value in other assets or other liabilities. The accounting for changes in fair value depends on whether the derivative has been designated and qualifies for hedge accounting. For derivatives designated as cash flow hedges, the effective portion of unrealized gains and losses is recorded in OCI. AOCI are subsequently reclassified into earnings in the same periods during which the hedged transactions affect earnings. If a hedge relationship ceases to qualify for hedge accounting, subsequent changes in fair value are recognized in current-period earnings. Derivatives not designated as hedging instruments are accounted for as economic hedges, with changes in fair value recognized in current-period earnings.
Interest Rate Swaps Used as Cash Flow Hedges
During 2024, the Bank entered into three interest rate swap agreements related to FHLB advances indexed to one-month SOFR. The counterparties to the swaps met the Bank’s credit standards, and management believes the associated counterparty credit risk is not significant. The Bank designated the swaps as cash flow hedges for hedge accounting purposes. The Bank expects the hedges to remain highly effective throughout the remaining terms of the swap agreements.
The following tables present information related to interest rate swaps designated as cash flow hedges:
Bank Position
Interest rate swaps on FHLB advances - Other liabilities and accrued interest payable
Pay fixed/receive variable
100,000
(692)
(2,674)
Pay
Receive
Assets /
Gain (Loss)
(Liabilities)
in AOCI
4.14
1M SOFR
5/2024 - 6/2029
The following table presents the total interest expense recognized on interest rate swaps designated as cash flow hedges:
Total interest (benefit) expense on FHLB swap transactions
The following table presents the net gains (losses) recognized in OCI and earnings related to interest rate swaps designated as cash flow hedges:
Losses recognized in OCI on derivative (effective portion)
Losses reclassified from OCI on derivative (effective portion)
Gains (losses) recognized in income on derivative (ineffective portion)
Non-hedge Interest Rate Swaps
The Bank enters into interest rate swap agreements to accommodate client transactions and meet customer financing needs. To mitigate the interest rate risk associated with these transactions, the Bank simultaneously enters into offsetting swap agreements with third-party counterparties. Although these instruments are derivatives, they are not designated as hedging instruments for accounting purposes. Accordingly, changes in fair value are recognized in current-period earnings.
Interest rate swap agreements expose the Bank to counterparty credit risk, which is the risk that a counterparty will fail to perform in accordance with the terms of the contract. When the fair value of a derivative contract is positive, the Bank is exposed to credit risk because the counterparty or client may be unable to satisfy its contractual obligations. Conversely, when the fair value of a derivative contract is negative, the Bank owes the counterparty or client and, therefore, is not exposed to credit risk on that position.
The following table presents a summary of the Bank's interest rate swaps related to client transactions:
Interest rate swaps with Bank clients - Other assets and accrued interest receivable
Pay variable/receive fixed
141,103
1,216
196,667
3,922
Interest rate swaps with Bank clients - Other liabilities and accrued interest payable
134,028
(3,175)
69,628
(2,399)
Interest rate swaps with Bank clients - Total
275,131
(1,959)
266,295
1,523
Offsetting interest rate swaps with institutional swap dealer - Other assets and accrued interest receivable
3,175
2,399
Offsetting interest rate swaps with institutional swap dealer - Other liabilities and accrued interest payable
(1,216)
(3,922)
Offsetting interest rate swaps with institutional swap dealer - Total
1,959
(1,523)
550,262
532,590
The Bank and its counterparties are required to pledge cash or securities as collateral when either party's net exposure to the other exceeds $250,000. As of June 30, 2026 and December 31, 2025, the Bank held cash collateral of $1 million and $0 pledged by counterparties, which was included in interest-bearing deposits on the Company’s Balance Sheet. Conversely, as of June 30, 2026 and December 31, 2025, the Bank had pledged cash collateral of $350,000 and $5 million to its counterparties, which was included in cash and cash equivalents on the Company’s Balance Sheet.
12.EARNINGS PER SHARE
The Company calculates EPS using the two-class method, under which earnings available to common shareholders are allocated between Class A Common Stock and Class B Common Stock based on dividends declared (or accumulated) and participation rights in undistributed earnings. The difference in EPS between the two classes results from the 10% per-share cash dividend premium paid on Class A Common Stock over that paid on Class B Common Stock.
The following table presents a reconciliation of the combined Class A and Class B Common Stock numerators and denominators used in computing basic and diluted EPS:
Class A Shares
Class B Shares
Undistributed net income for basic earnings per share
23,295
22,800
56,294
61,387
Weighted average potential dividends on Class A Shares upon exercise of dilutive options
(33)
(67)
Undistributed net income for diluted earnings per share
23,281
22,772
56,261
61,320
Weighted average shares outstanding:
17,695
17,571
17,676
2,138
2,143
Effect of dilutive securities on Class A Shares outstanding
Weighted average shares outstanding including dilutive securities
19,864
19,784
19,852
19,795
Basic earnings per share:
Class A Common Stock:
Per share dividends distributed
0.50
0.99
0.90
Undistributed earnings per share*
1.19
1.17
2.87
3.14
Total basic earnings per share - Class A Common Stock
Class B Common Stock:
0.41
0.82
1.08
1.06
2.61
2.86
Total basic earnings per share - Class B Common Stock
Diluted earnings per share:
1.18
1.16
3.13
Total diluted earnings per share - Class A Common Stock
2.60
2.84
Total diluted earnings per share - Class B Common Stock
To arrive at undistributed EPS, undistributed net income is first prorated between Class A and Class B Common Shares, with Class A Common Shares receiving a 10% premium. The resulting pro-rated, undistributed net income for each class is then divided by the weighted-average shares for each class.
The following table presents stock options excluded from the computation of diluted EPS because their effect would have been antidilutive:
Antidilutive stock options
60,230
39,395
62,480
37,145
Average antidilutive stock options
59,134
34,050
13.OTHER COMPREHENSIVE INCOME
The following table presents the components of OCI and the related tax effects:
Available-for-Sale Debt Securities:
Income tax expense related to items of other comprehensive income
709
(896)
1,765
(2,125)
Net of tax
(2,139)
2,687
(5,285)
6,375
Derivatives:
Net losses
1,163
(778)
1,982
(2,264)
Tax effect
(291)
(496)
872
(583)
1,486
(1,698)
Total other comprehensive income components, net of tax
The following table summarizes AOCI balances, net of tax:
Change
(2,397)
(7,682)
Unrealized gain (loss) on derivatives
(2,005)
(519)
Total unrealized gain (loss)
December 31, 2024
(13,753)
(7,378)
(485)
(2,183)
51
14.REVENUE FROM CONTRACTS WITH CUSTOMERS
The following tables present net revenue and net revenue concentration by reportable segment:
Core Banking
Republic Processing Group
Tax
Republic
Traditional
Core
Refund
Payment
Credit
Banking
Lending
Solutions
Company
Net interest income (1)
60,375
3,744
64,119
3,006
14,550
17,583
Noninterest income:
4,044
4,067
Mortgage banking income (1)
3,590
Program fees (1)
Increase in cash surrender value of BOLI (1)
907
11,242
11,265
3,245
8,304
Total net revenue
71,617
3,767
75,384
3,272
3,750
18,865
25,887
101,271
Net-revenue concentration (2)
100
56,380
3,549
59,929
3,563
12,648
16,273
3,482
3,157
735
3,716
1,143
114
10,446
10,469
2,723
736
7,175
66,826
3,572
70,398
2,785
4,299
16,364
23,448
93,846
119,702
7,644
127,346
11,457
6,043
27,308
44,808
7,903
7,948
6,429
1,519
8,088
1,434
1,436
54
27,017
27,064
12,853
1,522
8,089
22,464
146,719
7,691
154,410
24,310
7,565
35,397
67,272
221,682
109,701
6,577
116,278
29,874
7,557
25,181
62,612
6,921
6,964
6,201
76
6,771
Gain on sale of Visa Class B-1 shares (1)
3,373
135
25,810
25,853
16,670
1,503
6,772
24,945
135,511
6,620
142,131
46,544
9,060
31,953
87,557
229,688
The following describes the Company's significant revenue streams within the scope of ASC 606:
Service charges on deposit accounts – The Company earns revenue from account-based and transaction-based services provided to retail and commercial deposit customers. Contracts for these services are generally governed by deposit agreements that disclose applicable fees. Revenue from transaction-based services is recognized when, or as, the related service is performed. Revenue from account-based services is recognized either at a point in time or over the period the service is provided, generally within one month. Examples of deposit service charges include per-item fees, stop-payment fees, paper statement fees, check-cashing fees, low-balance fees, check upcharge fees, and analysis fees.
Net Refund Transfer fees – An RT is a fee-based product offered by the Bank through third-party tax preparers located throughout the U.S., as well as tax-preparation software providers (collectively, the “Tax Providers”), with the Bank acting as an independent contractor of the Tax Providers. An RT allows a taxpayer to pay any applicable tax preparation and filing related fees directly from his federal or state government tax refund, with the remainder of the tax refund disbursed directly to the taxpayer. RT fees and all applicable tax preparation, transmitter, audit, and any other taxpayer authorized amounts are deducted from the tax refund by either the Bank or the Bank’s service provider and automatically forwarded to the appropriate party as authorized by the taxpayer. RT fees generally receive first priority when applying fees against the taxpayer’s refund, with the Bank’s share of RT fees generally superior to the claims of other third-party service providers, including the Tax Providers. The remainder of the refund is disbursed to the taxpayer by a Bank check, direct deposit to the taxpayer’s personal bank account, or loaded to a prepaid card.
The Company presents RT revenue net of any amounts shared with the Tax Providers. The Bank’s share of RT revenue is generally based on the obligations undertaken by the Tax Provider for each individual RT program, with more obligations generally corresponding to higher RT revenue share. The significant majority of net RT revenue is recognized and obligations under RT contracts fulfilled by the Bank during the first half of each year. Incremental expenses associated with the fulfillment of RT contracts are generally expensed during the first half of each year.
Interchange fee income – As an issuing bank, the Company earns interchange fee income on debit and credit card transactions made by its cardholders. Interchange fees are paid by merchants, through payment network intermediaries, for transaction processing, settlement services, and the assumption of certain transaction-related risks. Interchange fee income is recognized upon completion of the related card transaction. Reward costs provided to cardholders under the Company's rewards programs are accrued as qualifying transactions occur and are presented as a reduction of interchange fee income within noninterest income.
Net gains/(losses) on other real estate – The Company routinely sells OREO acquired through foreclosure. Net gains (losses) on OREO reflect gains or losses recognized upon disposition of OREO properties, as well as valuation adjustments recorded to reflect declines in the fair value of OREO HFS.
Other noninterest income – Other noninterest income consists primarily of fees generated from various customer service activities that are within the scope of ASC 606, however, these revenue streams are not separately disclosed as they are not material, individually or in the aggregate.
15. SEGMENT INFORMATION
Reportable segments are determined based on the products and services offered and the level of information provided to the CODM. The CODM uses this information to review the performance of various components of the business, including banking centers and business units, which are aggregated when their operating performance, products and services, and clients are similar. The Company’s Executive Chair and CEO serves as the Company’s CODM. Income before income tax expense is the measure of segment profit or loss regularly reviewed by the CODM and used to allocate resources and evaluate performance.
As of June 30, 2026, the Company was divided into five reportable segments: (I) Traditional Banking, (II) Warehouse Lending, (III) TRS, (IV) RPS, and (V) 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.
The nature of each segment’s operations and the primary drivers of net revenues by reportable segment are described below:
Reportable Segment:
Nature of Operations:
Primary Drivers of Net Revenue:
Core Banking:
Traditional Banking
Provides traditional banking products to clients in its market footprint via its banking center network and to clients outside of its market footprint primarily via its digital delivery channels.
Net interest income
Warehouse Lending
Provides short-term, revolving credit facilities to mortgage bankers across the U.S.
Tax Refund Solutions
Offers tax-related credit products and facilitates the receipt and payment of federal and state tax refunds through Refund Transfer products. TRS products are primarily provided to clients outside of the Bank’s market footprint.
Net interest income and Net refund transfer fees
Republic Payment Solutions
Offers general-purpose reloadable cards. RPS products are primarily provided to clients outside of the Bank’s market footprint.
Net interest income and Program fees
Offers consumer credit products. RCS products are primarily provided to clients outside of the Bank’s market footprint, with a substantial portion of RCS clients considered subprime or near-prime borrowers.
The accounting policies used for Republic’s reportable segments are consistent with those described in the summary of significant accounting policies. Segment performance is evaluated based on operating income before income taxes. Goodwill is allocated to the Traditional Banking segment. Income taxes are generally allocated based on income before income tax expense unless specific segment allocations can be reasonably determined.
Transactions among reportable segments are recorded at carrying value. Net interest income is reflected within each applicable business segment based on the underlying financial instruments assigned to that segment and the impact of the Company’s internal FTP applied to each instrument. FTP is allocated from Traditional Banking to each segment based on the assumed terms of the underlying financial instruments within that segment and applicable market interest rates corresponding to those assumed terms.
55
The following tables present segment information for the three and six month periods ended June 30, 2026 and 2025:
Provision for expected credit loss expense
(1,046)
Other noninterest income (1)
9,443
9,466
9,504
26,000
754
26,754
1,717
1,124
1,348
4,189
7,427
7,473
1,213
3,358
3,388
1,689
1,723
Other noninterest expense (2)
6,719
207
144
151
502
44,878
987
45,865
2,100
1,293
4,306
7,699
Income (loss) before income tax expense
26,882
2,818
29,700
2,218
2,457
8,175
12,850
Income tax expense (benefit)
6,212
6,888
473
1,788
2,796
Net income (loss)
20,670
2,142
22,812
1,745
1,922
6,387
Period-end assets
5,770,433
614,989
6,385,422
20,226
494,952
161,229
676,407
Period-end loans
Period-end deposits
4,940,270
43,798
19,178
494,754
53,742
Net interest margin
4.16
2.59
4.02
4.99
Net-revenue concentration*
(3,932)
8,550
8,573
8,730
25,866
26,601
1,963
1,035
1,202
4,200
7,472
132
1,053
1,212
3,291
3,321
1,150
93
6,717
141
6,858
474
7,332
44,633
951
45,584
2,504
1,179
2,366
6,049
Income before income tax expense
21,676
24,042
4,213
3,120
9,015
16,348
Income tax expense
4,820
533
5,353
901
1,973
3,553
16,856
1,833
18,689
3,312
2,441
7,042
12,795
5,788,697
672,166
6,460,863
32,771
346,586
130,697
510,054
6,970,917
4,582,152
671,773
5,253,925
95
119,000
119,095
5,373,020
4,849,544
37,704
4,887,248
31,374
52,031
429,991
5,317,239
3.84
2.51
3.72
4.61
* Net revenue represents net interest income plus total noninterest income. Net-revenue concentration equals segment-level net revenue divided by total Company net revenue.
(1) Other noninterest income includes service charges on deposit accounts, interchange fee income, increase in cash surrender value of BOLI, net losses on OREO and other noninterest income.
(2) Other noninterest expense includes FDIC insurance expense, interchange related expense, legal and professional fees, and other noninterest expense.
4,296
17,548
17,595
124
17,719
52,639
1,477
54,116
4,242
2,123
2,579
8,944
14,229
14,323
2,099
2,309
6,897
6,958
150
1,964
91
2,820
2,911
13,221
13,512
734
275
1,307
14,819
91,266
1,923
93,189
5,365
2,472
7,784
15,621
54,891
6,117
61,008
14,649
5,093
17,185
36,927
12,969
1,468
14,437
3,193
1,111
3,759
8,063
41,922
4,649
46,571
11,456
3,982
13,426
28,864
4.13
3.99
5.23
11,495
18,003
18,046
210
212
18,258
52,124
53,552
4,161
1,902
2,255
8,318
14,874
80
14,954
2,012
2,373
6,754
6,814
121
1,438
1,014
1,192
13,453
13,708
950
222
1,455
15,163
94,539
96,362
5,727
2,239
5,513
13,479
41,224
4,495
45,719
29,322
6,821
18,490
54,633
8,656
1,013
9,669
6,399
1,485
4,047
11,931
32,568
36,050
22,923
5,336
14,443
42,702
3.81
3.71
5.44
57
16.LOW-INCOME HOUSING TAX CREDIT INVESTMENTS
The Company is a limited partner in several low-income housing partnerships that invest in qualified affordable housing projects. The Company expects to realize substantially all of the benefits from these investments through the tax credits generated by the underlying projects. These investments are included in other assets on the Consolidated Balance Sheets, while any unfunded commitments are included in other liabilities. The investments are amortized as a component of income tax expense.
The following table summarizes information related to the Company’s qualified low-income housing tax credit investments related and obligations:
Unfunded
Investment
Accounting Method
Investments
Obligations (2)
Obligations (1)
Low-income housing tax credit - Gross
Proportional amortization
110,800
28,412
96,236
42,976
Life-to-date amortization
(36,110)
(30,262)
Low-income housing tax credit - Net
74,690
65,974
The following table summarizes amortization expense and tax credits recognized in income tax expense for the Company’s qualified low-income housing investments:
Amortization expense
2,903
2,008
5,848
4,313
Tax credits recognized
(3,601)
(2,803)
(7,233)
(5,978)
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The consolidated financial statements included in this report include the accounts of Republic Bancorp, Inc. and its wholly owned subsidiary, Republic Bank & Trust Company. As used in this report, the terms “Republic,” the “Company,” “we,” “our,” and “us” refer to Republic Bancorp, Inc. and, where the context requires, Republic Bancorp, Inc. and its subsidiary. The term the “Bank” refers to the Company’s subsidiary bank, Republic Bank & Trust Company, as well as its wholly owned subsidiary, RBT Insurance Agency LLC. All significant intercompany balances and transactions are eliminated in consolidation.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Republic should be read in conjunction with Part I Item 1 “Financial Statements.”
FORWARD-LOOKING STATEMENTS
This Form 10-Q (this “report”) contains statements relating to future results of Republic Bancorp, Inc. that are considered “forward-looking” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The forward-looking statements are principally, but not exclusively, contained in this section of the report and Part I Item 1 “Financial Statements.”
Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements to differ materially from those expressed or implied in such statements. These statements are often, but not always, identified by words or phrases such as “anticipate,” “believe,” “can,” “conclude,” “continue,” “could,” “estimate,” “expect,” “forecast,” “foresee,” “goal,” “intend,” “may,” “might,” “outlook,” “possible,” “plan,” “predict,” “project,” “potential,” “seek,” “should,” “target,” “will,” “will likely,” “would,” or similar expressions. Forward-looking statements are not historical facts; rather, they are based on current expectations, estimates, and projections about the Company’s industry, management’s beliefs, and certain assumptions made by management—many of which are inherently uncertain and beyond management’s control.
Forward-looking statements detail management’s expectations regarding the future and are based on information known to management only as of the date the statements are made and management undertakes no obligation to update forward-looking statements to reflect events or circumstances that occur after the date forward-looking statements are made, except as required by applicable law.
There is no assurance that the following list of risks and uncertainties is complete. However, risks and uncertainties that could cause actual results to differ materially from those expressed in forward-looking statements include:
Financial, Economic, and Market Risks
Credit and Liquidity Risks
Operational and Strategic Execution Risks
Technology, Cybersecurity, and Compliance Risks
Environmental, Social, and Geopolitical Risks
Other risks and uncertainties reported from time to time in the Company’s reports with the SEC, including Part 1 Item 1A “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
ACCOUNTING STANDARDS UPDATES
For disclosure regarding the impact to the Company’s financial statements of ASUs, see the Footnote titled, “Basis of Presentation and Summary of Significant Accounting Policies” of Part I Item 1 “Financial Statements.”
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Republic’s consolidated financial statements and accompanying notes have been prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ from those estimates.
A summary of the Company's significant accounting policies is set forth in Part II “Item 8. Financial Statements and Supplementary Data” of its Annual Report on Form 10-K for the year ended December 31, 2025.
Management continually evaluates the accounting policies and estimates used in preparing the consolidated financial statements. Estimates and assumptions are based on historical experience, accounting and regulatory guidance, and information obtained from independent third parties, when applicable. Actual results may differ from those estimates.
Critical accounting policies are those that management believes are most important to the portrayal of the Company's financial condition and results of operations and require the use of difficult, subjective, or complex judgments. In determining whether an accounting policy is critical, management considers several factors, including the significance of the estimates to the financial statements, the degree of judgment involved, the availability of observable or independently verifiable information, the sensitivity of the estimates to changes in economic conditions, and the extent to which alternative accounting methods may be applied under GAAP. Management has discussed its critical accounting policies and the process used to identify them with the Audit Committee.
Management believes the Company’s most critical accounting estimate relates to the ACLL and the related Provision. Estimating the ACLL requires significant judgment regarding historical loss experience, current conditions, qualitative factors, and reasonable and supportable economic forecasts. Accordingly, changes in assumptions, economic conditions, or portfolio characteristics could materially affect the ACLL and the Provision.
As of June 30, 2026, the Bank maintained an ACLL for expected credit losses inherent in the loan portfolio, including overdrawn deposit accounts. Management evaluates the adequacy of the ACLL on a monthly basis and reviews the ACLL with both the Audit Committee and Board quarterly.
The Company estimates the ACLL using a static-pool CECL methodology that analyzes historical loan pools over their expected lives to derive loss rates, which are adjusted for current conditions and reasonable and supportable forecasts before being applied to the outstanding balances of the respective loan pools. Due to its historical correlation with the Company's net charge-off experience, the U.S. unemployment rate serves as the primary economic forecast variable. CRE and C&I vacancy rates are also considered as secondary forecast variables. Following the one-year reasonable and supportable forecast period, loss rates are assumed to revert immediately to long-term historical averages. Historical loss rates are further adjusted for current conditions, including changes in underwriting standards, portfolio composition, loan terms, delinquency trends, property values, and other relevant environmental factors.
The ACLL is significantly influenced by the composition, characteristics, and credit quality of the Company’s loan portfolio, as well as the economic conditions and forecasts incorporated into the CECL model. Changes in these or other relevant factors may result in increased volatility in the ACLL and, consequently, the Company's earnings.
BUSINESS SEGMENTS
Core Banking Operations:
The Traditional Banking segment provides traditional banking products and services primarily to customers in the Company’s market footprint, with all products and services generally offered under the Company’s traditional RB&T brand. As of June 30, 2026, Republic had 47 full-service banking centers with locations as follows:
Traditional Banking lending activities consist of the following:
Retail Mortgage Lending — Through its retail banking centers and its online Consumer Direct channel, the Bank originates single-family RRE loans and HELOCs which are typically indexed to Prime. In addition, the Bank originates HEALs through its retail banking centers. Such loans are generally collateralized by owner-occupied, RRE properties. For those loans originated through the Bank’s retail banking centers, the collateral is predominately located in the Bank’s market footprint, while loans originated through its Consumer Direct channel are generally secured by owner-occupied collateral located within and outside of the Bank’s market footprint.
The Bank offers single-family, first-lien RRE ARMs with interest rate adjustments tied to the SOFR index 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 seven 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 first-lien mortgage loans.
Single-family, first-lien RRE loans with fixed-rate periods of 15, 20, and 30 years are primarily originated and sold into the secondary market. MSR’s attached to the sold portfolio are either sold along with the loan or retained. Loans sold into the secondary market, along with their corresponding MSR’s, are included as a component of the Company’s Traditional Banking segment, as discussed elsewhere in this report. 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.
As part of the sale of loans with servicing retained, the Bank records MSR’s. MSR’s represent an estimate of the present value of future cash servicing income, net of estimated costs, which the Bank expects to receive on loans sold with servicing retained by the Bank. MSR’s are capitalized as separate assets. This transaction is posted to net gain on sale of loans, a component of noninterest income under “mortgage banking income” in the income statement. Management considers all relevant factors, in addition to pricing considerations from other servicers, to estimate the fair value of the MSR’s to be recorded when the loans are initially sold with servicing retained by the Bank. The carrying value of MSR’s is initially amortized in proportion to and over the estimated period of net servicing income. MSR amortization is recorded as a reduction to net servicing income.
With the assistance of an independent third-party, the MSR’s asset is reviewed at least quarterly for impairment based on the fair value of the MSR’s using groupings of the underlying loans based on predominant risk characteristics. Any impairment of a grouping is reported as a valuation allowance. A primary factor influencing the fair value is the estimated remaining life of the underlying loans serviced which is significantly influenced by market interest rates. During a period of declining interest rates, the fair value of the MSR’s is expected to decline due to increased anticipated prepayment speeds within the portfolio. Alternatively, during a period of rising interest rates, the fair value of MSR’s would be expected to increase as prepayment speeds on the underlying loans would be expected to decline.
The Bank does, on occasion, purchase single-family, first-lien RRE 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.
Correspondent Lending — The Bank, on occasion, has purchased select blocks of single family, first-lien mortgage loans for investment from Warehouse Lending clients through its Correspondent Lending channel. These loans were purchased at a premium that is 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.
Commercial Lending — As described in detail below, the Bank conducts commercial lending activities primarily through the following groups/divisions: Corporate Banking, CRE Banking, Commercial Banking, Business Banking, Private Banking, and Retail Banking channels and clients are primarily located within the Bank’s market footprint or in an adjoining market. In general, all commercial lending credit approvals and processing are prepared and underwritten through the Bank’s centralized CCAD.
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, CRE, and multi-family lending.
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 ranging 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 upon the borrower’s capacity to repay these loans from operating cash flows, typically measured by reviewing 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 the Corporate Banking group.
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 CRE use property. The CRE 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 and the underlying collateral is nonowner-occupied. 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.
The Commercial Banking group focuses on small and medium-sized C&I and CRE owner-occupied 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.
The Business Banking group, reporting under Retail Banking in most markets, focuses on locally based small businesses in the Bank’s market footprint with primarily 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.
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 both the SBA “7A Program” and the “504 Program” for CRE owner-occupied opportunities. The Bank utilizes these programs to reduce credit risk exposure.
Lease financing receivables, which are generally direct financing leases, are reported at their principal balance outstanding, including any lease residual amount, net of any unearned income, deferred loan fees and costs, and applicable ACLL. Leasing income is recognized on the basis that achieves a constant periodic rate of return on the outstanding lease financing balances over the lease terms. During December 2025, approximately $82 million of loans and leases were transferred from held for investment to HFS, as the Bank entered into an Asset Purchase Agreement to sell its St. Louis-based RBF operations. The sale was completed during the first quarter of 2026, resulting in a $5.8 million pre-tax gain, net of broker commissions.
Construction & Land Development Lending — The Bank originates business loans for the construction of both single-family, RRE properties and CRE properties (apartment complexes, shopping centers and office buildings) to borrowers primarily located within the Bank’s market footprint or in an adjoining market. While not a major focus for the Bank, the Bank may originate loans for the acquisition and development of RRE or CRE land into buildable lots.
Single-family, RRE-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.
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.
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.
Consumer Lending — Traditional Banking consumer loans include home improvement and home equity loans, other secured and unsecured personal loans, and credit cards originated to borrowers primarily located within the Bank’s market footprint or in an adjoining market. In 2024, the Traditional Banking segment ceased originating new consumer credit cards and sold its $5 million portfolio in the second quarter of 2025, recognizing a $328,000 pre-tax net gain in other noninterest income. With the exception of home equity loans, which are actively marketed in conjunction with single-family, first-lien RRE loans, other Traditional Banking consumer loan products, while available, are not and have not been actively promoted within the Bank’s markets.
Aircraft Lending — Aircraft loans are typically made to purchase or refinance personal aircrafts, along with engine overhauls and avionic upgrades with borrowers across the U.S. Loans typically range between $200,000 and $4 million in size and have terms up to 20 years. The credit characteristics of an aircraft borrower are higher than a typical consumer in that they must demonstrate and indicate a higher degree of creditworthiness for approval.
Other Traditional Banking activities generally consist of the following:
Private Banking — The Bank provides financial products and services to high-net-worth individuals through its Private Banking department. The Bank’s Private Banking officers have extensive banking experience and are trained to meet the unique financial needs of this clientele.
Treasury Management Services — The Bank provides various deposit products designed for commercial business clients located throughout its market footprint. Lockbox processing, remote deposit capture, business on-line banking, account reconciliation, and ACH processing are additional services offered to commercial businesses through the Bank’s Treasury Management department. Treasury Management officers work closely with commercial and retail officers to support the cash management needs of Bank clients.
Internet Banking — The Bank expands its market penetration and service delivery of its RB&T brand by offering clients Internet Banking services and products through its website, www.republicbank.com.
Mobile Banking — The Bank allows clients to securely access and manage their accounts through its mobile banking application.
Other Banking Services — The Bank also provides title insurance and other financial institution related products and services.
Bank Acquisitions — The Bank maintains an acquisition strategy to selectively grow its franchise as a complement to its organic growth strategies.
See additional discussion regarding the Traditional Banking segment under the Footnote titled “Segment Information” of Part I Item 1 “Financial Statements.”
See additional discussion regarding the Warehouse Lending segment under the Footnote titled “Segment Information” of Part I Item 1 “Financial Statements.”
Republic Processing Group Operations:
Related to the overall credit losses on ERAs/RAs, the Bank’s ability to control losses is highly dependent upon its ability to predict the taxpayer’s likelihood of receiving the tax refund as claimed on the taxpayer’s tax return. In addition, the Bank’s ability to control losses for the ERA product is highly dependent upon the taxpayer returning to a Tax Provider for the filing of their final tax return. Each year, the Bank’s ERA/RA approval model is based primarily on the prior-year’s tax refund payment patterns. Because the substantial majority of ERA/RA volume occurs each year before that year’s tax refund payment patterns can be analyzed and subsequent underwriting changes implemented, credit losses during a given year could be higher than management’s predictions if tax refund payment patterns change materially between years.
In response to changes in the legal, regulatory, and competitive environment, management annually reviews and revises the ERA/RA product parameters. Changes in product parameters do not ensure positive results and could have an overall material negative impact on the performance of all ERA/RA product offerings and therefore on the Company’s financial condition and results of operations.
See additional discussion regarding the ERA/RA products under the sections titled: “Loans and Allowance for Credit Losses on Loans” and “Segment Information” of Part I Item 1 “Financial Statements.”
RTs are fee-based products whereby a tax refund is issued to the taxpayer after the Bank has received the refund from the federal or state government. There is no credit risk or borrowing cost associated with these products because they are only delivered to the taxpayer upon receipt of the tax refund directly from the governmental paying authority. An RT allows a taxpayer to pay any applicable tax preparation and filing related fees directly from his federal or state government tax refund, with the remainder of the tax refund disbursed directly to the taxpayer. RT fees and all applicable tax preparation, transmitter, audit, and any other taxpayer authorized amounts are deducted from the tax refund by either the Bank or the Bank’s service provider and automatically forwarded to the appropriate party as authorized by the taxpayer. The remainder of the refund is disbursed to the taxpayer by a Bank check, direct deposit to the taxpayer’s personal bank account, or loaded to a prepaid card.
See additional discussion regarding the RPS segment under the Footnote titled “Segment Information” of Part I Item 1 “Financial Statements.”
See additional discussion regarding the RCS segment under the sections titled: “Loans and Allowance for Credit Losses on Loans” and “Segment Information” of Part I Item 1 “Financial Statements.”
OVERVIEW (Three Months Ended June 30, 2026, Compared to Three Months Ended June 30, 2025)
Total Company second quarter of 2026 net income was $32.9 million, an increase of $1.4 million, or 4%, from the same period in 2025. Diluted EPS was $1.68 for the second quarter of 2026, compared to $1.61 for the same period in 2025, an increase of 4%.
The following were the most significant components comprising the total Company’s net income fluctuation by reportable segment:
As previously disclosed, TRS’ largest Tax Provider contract based on product volume and revenue was not renewed for the 2026 Tax Season (which began in December 2025). In total, this relationship contributed $1.7 million of net income to second quarter 2025 operating results, consisting of: $37,000 of net interest income, $2.3 million of Provision recoveries, $613,000 in net RT fees, $751,000 in noninterest expense, and $471,000 in estimated income tax expense.
RESULTS OF OPERATIONS (Three Months Ended June 30, 2026, Compared to Three Months Ended June 30, 2025)
Net Interest Income
See the section titled “Asset/Liability Management and Market Risk” in this section of the document regarding the Bank’s interest rate sensitivity.
Traditional Banking results of operations are primarily dependent upon net interest income, which represents the spread between interest income and fees on interest-earning assets and interest expense on interest-bearing liabilities used to fund those assets. Interest-earning assets primarily consist of investment securities and commercial and consumer loans secured by real estate and/or personal property, while funding sources include interest-bearing deposit accounts, SSUAR, and short- and long-term borrowings. FHLB advances have historically served as a significant source of wholesale funding and liquidity. Accordingly, net interest income is influenced by changes in the volume and mix of interest-earning assets and liabilities, as well as movements in market interest rates.
On December 10, 2025, the FRB reduced the FFTR by 25 basis points to 3.75%, where it remained through June 30, 2026. Since September 2024, cumulative reductions to the FFTR have totaled 175 basis points. While the FFTR was within a target range of 3.50% to 3.75% as of June 30, 2026, recent FOMC communications indicated that policymakers continued to monitor inflationary pressures and labor market conditions and remained data dependent regarding the future path of monetary policy.
Based on the Company’s overall interest rate risk position, Management believes that increases in interest rates across the yield curve generally would have a favorable impact on the Company's net interest income, while declines in interest rates generally would have a negative impact on the Company’s net interest income. The ultimate impact of future changes in the FFTR will depend on several factors, including continued migration from noninterest-bearing to interest-bearing deposits, the shape and steepness of the yield curve, customer demand for the Company’s lending and deposit products, the Company’s ability to manage deposit costs relative to changes in benchmark rates and yields on interest-earning assets, and the Company’s overall liquidity requirements.
Total Company net interest income was $81.7 million during the second quarter of 2026 compared to $76.2 million during the second quarter of 2025, representing a $5.5 million or 7% increase. Total Company NIM expanded 38 basis points to 4.99% for the second quarter of 2026 compared to 4.61% during the second quarter of 2025.
The most significant drivers of the fluctuation in Total Company net interest income by reportable segment were as follows:
Traditional Banking net interest income was $60.4 million for the second quarter of 2026, a $4.0 million, or 7%, increase from the $56.4 million achieved during the second quarter of 2025. As with the first quarter of 2026, the increase for the second quarter of 2026 over the second quarter of 2025 was driven by a 32 basis point expansion in the Traditional Bank’s NIM to 4.16%, reflecting a favorable 43 basis point decline in funding costs, while the Traditional Bank’s yield on interest earning assets declined only 1 basis point for the same period.
Items of note impacting the Traditional Bank’s change in net interest income and NIM between the second quarter of 2025 and the second quarter of 2026 were as follows:
Traditional Banking average loans increased $59 million, or 1%, from $4.59 billion during the second quarter of 2025 to $4.65 billion during the second quarter of 2026, while the weighted-average yield declined 3 basis points from 5.69% to 5.66%.
Period-over-period comparisons of average loan balances and yields were adversely impacted by the sale of approximately $82 million of loans and lease financing receivables during the first quarter of 2026. These loans were transferred from held for investment to HFS in December 2025 and contributed an estimated 5 basis points to the Traditional Banking loan portfolio yield during the second quarter of 2025.
In addition to strong loan production, the Traditional Banking segment continued to redeploy cash flows from lower-yielding loan runoff into new originations at higher yields over the past year. Combined with a favorable shift toward higher-spread lending categories, these actions more than offset the pressure on asset yields resulting from the 75 basis point decline in the FFTR over the past 12 months.
The Traditional Bank’s average cost of interest-bearing liabilities decreased 43 basis points from 2.12% during the second quarter of 2025 to 1.69% during the second quarter of 2026 driven primarily by the following:
For additional discussion of the factors impacting interest-earning cash and deposit balances as well as deposit betas, see sections titled “Cash and Cash Equivalents” and “Deposits” in the “COMPARISON OF FINANCIAL CONDITION” section of the filing.
Warehouse Lending net interest income increased $195,000, or 5%, from the second quarter of 2025 to the second quarter of 2026.
Average outstanding Warehouse lines of credit increased $13 million, or 2%, from $567 million during the second quarter of 2025 to $580 million for the second quarter of 2026, while the weighted-average yield declined 61 basis points to 6.33%. Average committed Warehouse lines expanded from $995 million to $1.17 billion over the same period, supporting continued growth in customer relationships. Average utilization moderated from 57% to 50%, as commitment growth outpaced growth in outstanding balances.
Net interest income from the Company’s prepaid card division decreased $557,000, or 16%, from the second quarter of 2025 to the second quarter of 2026. The decline in net interest income reflected a lower yield earned on the segment’s funding source. The lower yield primarily resulted from the 75 basis point decline in the FFTR between the second quarters of 2025 and 2026. As a result, RPS earned a yield of 3.67% on average deposit balances of $370 million during the second quarter of 2026, compared with a yield of 4.28% on average deposit balances of $350 million during the second quarter of 2025.
The RPS segment’s largest marketer-servicer did not achieve the minimum contractual thresholds for average deposit balances in order to earn a revenue share for the second quarter of 2025 and 2026. 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.
In mid-June 2026, RPS onboarded a new prepaid card marketer-servicer program that maintained approximately $178 million of deposits outstanding as of June 30, 2026. These balances are subject to a revenue share arrangement.
RCS’s net interest income increased $1.9 million, or 15%, from the second quarter of 2025 to the second quarter of 2026, driven primarily by growth across both RCS LOC programs and the segment’s installment loan product.
The following table presents average balances along with the related calculations of tax-equivalent net interest income, NIM and net interest spread for the related periods.
Table 1 — Total Company Average Balance Sheets and Interest Rates
Interest-earning assets:
Federal funds sold and other interest-earning deposits
256,961
2,396
3.74
622,909
6,917
Investment securities, including FHLB stock (a)
912,466
9,442
4.15
686,223
6,346
TRS Refund Advances (b)
7,048
26,353
RCS LOC products (b)
48,068
14,036
117.12
46,252
12,434
107.83
Other RPG loans (c)
114,847
1,834
6.41
92,012
1,559
6.80
Outstanding Warehouse lines of credit
580,065
9,155
6.33
566,707
9,803
6.94
Traditional Banking loans (c)
4,646,612
65,601
5.66
4,587,342
65,119
5.69
Total loans (d)
5,396,640
6.74
5,318,666
6.71
Total interest-earning assets
6,566,067
6.26
6,627,798
6.19
(92,164)
(105,726)
Noninterest-earning assets:
Noninterest-earning cash and cash equivalents
100,038
125,098
41,741
33,250
111,718
108,416
Other assets (a)
273,948
273,195
Total assets
7,001,348
7,062,031
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Transaction accounts
1,707,743
2,092
1,699,450
2,557
Money market accounts
1,565,003
9,324
2.39
1,406,053
10,183
2.90
518,078
4,612
3.57
445,129
4,168
Reciprocal money market and time deposits
298,577
1,935
318,576
2,622
3.30
Brokered deposits
102,666
1,159
4.53
212,001
2,320
4.39
Total interest-bearing deposits
4,192,067
1.83
4,081,209
2.15
SSUARs and other short-term borrowings
158,654
4.09
370,000
4.35
Total interest-bearing liabilities
4,433,228
1.88
4,538,969
2.30
Noninterest-bearing liabilities and Stockholders’ equity:
1,289,710
1,323,622
123,813
143,941
Stockholders’ equity
1,154,597
1,055,499
Total liabilities and stockholders’ equity
Net interest spread
4.38
3.89
The amount of loan fee income can meaningfully impact total interest income, loan yields, NIM, and net interest spread. The following table illustrates loan fees recorded as interest income on loans by segment:
Table 2 — Loan Fee Income
1,264
1,367
361
Total Core Bank
1,625
1,736
77
14,113
12,459
Total Loan Fees
15,738
14,195
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.
Table 3 — Total Company Volume/Rate Variance Analysis
Compared to
Total Net
Increase / (Decrease) Due to
Volume
Interest income:
(4,521)
(3,552)
(969)
Investment securities, including FHLB stock
3,096
2,275
TRS Refund Advance loans*
(30)
RCS LOC products
1,602
501
1,101
Other RPG loans
(94)
227
(875)
Traditional Bank loans
482
838
(356)
Net change in interest income
628
(300)
Interest expense:
(465)
(859)
1,072
(1,931)
444
657
(213)
(687)
(157)
(1,161)
(1,232)
(51)
(43)
(2,393)
(2,168)
(225)
Net change in interest expense
(5,172)
(1,824)
(3,348)
Net change in net interest income
5,500
2,452
3,048
For additional discussion regarding Provision, see the sections titled “Allowance for Credit Losses on Loans” and “Asset Quality” in this section of the filing.
Total Company Provision was a net charge of $5.2 million for the second quarter of 2026 compared to a net charge of $1.8 million for the same period in 2025.
The most significant drivers of the fluctuation in Total Company Provision by reportable segment were as follows:
Traditional Banking Provision during the second quarter of 2026 was a net credit of $143,000 compared to a net charge of $517,000 for the second quarter of 2025.
The net credit of $143,000 for the second quarter of 2026 was primarily driven by the following:
The net charge of $517,000 for the second quarter of 2025 was primarily driven by the following:
As a percentage of total Traditional Banking loans, the Traditional Banking ACLL was 1.37% as of June 30, 2026, compared to 1.40% as of December 31, 2025, and 1.29% as of June 30, 2025.
Based on information currently available, management believes the ACLL related to Traditional Banking loans was adequate as of June 30, 2026.
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.
Warehouse recorded a net credit to the Provision of $38,000 for the second quarter of 2026 compared to a net charge of $255,000 for the same period in 2025. Provision for both periods reflected changes in general reserves consistent with changes in outstanding period end balances. Outstanding Warehouse period end balances decreased $16 million during the second quarter of 2026 compared to an increase of $102 million during the second quarter of 2025.
As a percentage of total Warehouse outstanding balances, the Warehouse ACLL was 0.25% as of June 30, 2026, December 31, 2025, and June 30, 2025.
Based on information currently available, management believes the ACLL related to Warehouse loans was adequate as of June 30, 2026.
Substantially all TRS Provision in both periods was related to its ERA and RA products.
TRS offered (i) its RA product during the first two months of 2026, along with its ERA product during December 2025 and the first two weeks of 2026 for the 2026 Tax Season and (ii) its RA product during the first two months of 2025, along with its ERA product during December 2024 and the first two weeks of 2025 for the 2025 Tax Season.
As is the case each year as of March 31st, the ACLL related to RAs is an estimate with that estimate finalized during the second quarter when all unpaid RAs, including ERAs, are charged-off as of June 30th. The final charge-offs posted during the second quarter of a calendar year can be different (higher or lower) than the Company’s March 31st Provision estimate based on actual paydowns received during the second quarter. RAs collected during the second half of the year are recorded as recoveries of previously charged-off loans unless they are covered under a Tax Provider 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.
TRS recorded a net credit to the Provision of $1.0 million during the second quarter of 2026 compared to a net credit of $3.9 million for the second quarter of 2025. As previously disclosed, TRS’s largest Tax Provider contract based on product volume was not renewed for the 2026 Tax Season (which began in December 2025). In total, this relationship contributed $2.3 million of Provision recoveries to second quarter 2025 operating results.
During the second quarter of 2026, TRS recorded a net credit to the Provision of $1.0 million to bring its preliminary March 31, 2026, ACLL estimate in-line with its final June 30, 2026, charge-offs. While charge-offs during both the second quarters of 2025 and 2026 were favorably lower than the preliminary loan loss reserves established in the preceding first quarters, the Company’s reserve estimate for the 2026 Tax Season proved more precise. This improved accuracy was largely attributable to the nonrenewal of the largest Tax Provider contract that drove significant RA volume during the 2025 Tax Season and historically contributed greater variability to credit loss estimates.
TRS’s blended incurred loss rate for both guaranteed and unguaranteed RAs and ERAs as of June 30, 2026, was 1.93% of the $259 million in total RAs and ERAs originated during December 2025 and the first two months of 2026. Approximately $1.4 million of these charge-offs as of June 30, 2026 are expected to be recovered under loan-loss guaranty arrangements with Tax Providers. As a result, these charge-offs were also reflected as recoveries as of June 30, 2026 and recorded as receivables in other assets on the Balance Sheet.
During the second quarter of 2025, TRS recorded a net credit to the Provision of $3.9 million to bring its preliminary March 31, 2025, ACLL estimate in-line with its final June 30, 2025, charge-offs. TRS’s incurred loss rate for guaranteed and unguaranteed RAs and ERAs as of June 30, 2025, was 2.81% of the $802 million of total RAs and ERAs originated during December 2024 and the first two months of 2025.
Based on information currently available, management believes the ACLL related to TRS loans was adequate as of June 30, 2026.
See additional detail regarding ERAs/RAs under the Footnote titled “Loans and Allowance for Credit Losses on Loans” of Part I Item 1 “Financial Statements” and “Business Segment Composition” in this section of the filing.
There is no ACLL or Provision associated with the RPS segment, as its products primarily consist of prepaid debit card solutions.
As illustrated in the following table, RCS recorded a net charge to the Provision of $6.4 million during the second quarter of 2026 compared to a net charge of $5.0 million during the same period in 2025. RCS recorded net charge-offs of $3.8 million and $4.0 million during the second quarters of 2026 and 2025. The remainder of the Provision variance was attributable to changes in the general reserve allocations associated with fluctuations in outstanding balances by portfolio type. While period-end balances increased across both RCS LOC programs, growth in the segment’s LOC II product, which carries substantially higher provisioning requirements than the segment’s other lending products, drove the majority of the increase.
Although RCS loan products generally generate higher yields, they also entail greater credit risk than Traditional Banking loan products. As a percentage of total RCS loans, the ACLL was 16.01% at June 30, 2026, compared to 17.15% at December 31, 2025, and 17.67% at June 30, 2025.
Based on information currently available, management believes the ACLL related to RCS loans was adequate as of June 30, 2026.
Table 4 — Republic Credit Solutions Provision by Product Type
$ Change
% Change
Product:
Lines of credit
6,373
4,985
1,388
Healthcare receivables
Total RCS provision
1,401
Table 5 — Summary of Loan and Lease Loss Experience
ACLL at beginning of period
Charge-offs:
(327)
(314)
Other TRS loans
Total charge-offs
Recoveries:
Total recoveries
Net loan recoveries (charge-offs)
(9,230)
(26,366)
Provision - Core Bank Loans
Provision - RPG Loans
Total Provision for All Loans
ACLL at end of period
ACLL to total loans
1.52
ACLL to nonperforming loans
286
378
Net loan charge-offs (recoveries) to average loans
0.69
1.99
Credit Quality Ratios - Core Banking:
1.24
0.01
0.02
Table 6 — Annualized Net Loan Charge-offs (Recoveries) to Average Loans by Loan Category
Net Loan Charge-Offs (Recoveries) to Average Loans
(0.02)
(0.46)
(0.04)
(0.03)
0.85
92.03
100.67
(1.26)
(1.88)
0.04
0.03
Refund Advances*
296.59
332.17
168.27
62.93
10.93
12.86
21.56
63.31
* 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 analyzed by the Company as a percentage of total RA originations, not as a percentage of average outstanding balances.
The Company’s net charge-offs to average total Company loans decreased from 1.99% during the second quarter of 2025 to 0.69% during the same period in 2026, as net charge-offs declined $17.1 million, or 65%, while average total Company loans increased $78 million, or 1%, over the same periods. As discussed above, the decline in net charge-offs was primarily attributable to the nonrenewal of TRS’ largest Tax Provider contract based on product volume, as well as lower ERA and RA funding activity.
Noninterest Income
Total Company noninterest income increased $1.9 million, or 11%, during the second quarter of 2026 compared to the same period in 2025.
The most significant drivers of the fluctuation in Total Company noninterest income by reportable segment were as follows:
Traditional Banking noninterest income increased $796,000, or 8%, from the second quarter of 2025 compared to the second quarter of 2026, primarily driven by the following:
Service charges on deposits increased $562,000, or 16%, primarily driven by higher volumes in activity-based fees, particularly insufficient funds fees. The Traditional Banking segment 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 second quarter of 2026 and 2025 were $2.2 million and $1.7 million. The total daily overdraft charges, net of refunds, included in interest income for the second quarter of 2026, and 2025 were $250,000 and $287,000.
Interchange income represents fees earned from merchants for the acceptance of Republic-branded debit and credit cards and is influenced by transaction volume, average ticket size, card type, transaction channel (card-present versus card-not-present), merchant category, and other factors. Interchange income is reported net of credit card rewards expense, which is accrued over time based on cardholder spending activity. Interchange income increased $433,000, or 14%, compared to the second quarter of 2025, primarily due to a $454,000 favorable adjustment to credit and debit card rewards accruals recorded during the second quarter of 2026.
Other noninterest income was negatively impacted by $328,000 pre-tax net gain on sale of the Bank’s consumer credit card portfolio which was completed during the second quarter of 2025.
As previously disclosed, TRS’ largest Tax Provider contract based on product volume was not renewed for the 2026 Tax Season (which began in December 2025). In total, this relationship contributed $613,000 of net RT fees to second quarter 2025 operating results. During the second quarter of 2026, TRS benefited from revenue share transfer volume shifting from the first quarter to the second quarter compared with the prior year, a favorable second-quarter revenue share estimate adjustments.
RCS noninterest income, primarily consisting of program fees, increased $599,000, or 16%, during the second quarter 2026 compared to the same period in 2025, reflecting higher sales volume from RCS’s installment loan and LOC II products.
82
Noninterest Expense
Total Company noninterest expense increased $1.9 million, or 4%, during the second quarter of 2026 compared to the same period in 2025.
The most significant drivers of the fluctuation in Total Company noninterest expense by reportable segment were as follows:
Traditional Banking noninterest expense increased $245,000, or 1%, for the second quarter of 2026 compared to the same period in 2025, primarily driven by the following:
Noninterest expense at the RCS segment increased $1.9 million, or 82%, during the second quarter of 2026 driven primarily by a $1.7 million, increase in marketing and development expenses, which generally fluctuate in-line with overall origination volume. Under the terms of the Company’s contract with its LOC II marketer-servicer, RCS reimburses the marketer-servicer a certain dollar amount for marketing costs based on each new product originated during the period. In addition, the second quarter of 2025 benefited from a $763,000 reimbursement of marketing and development expense related to a prior-period billing dispute.
OVERVIEW (Six months ended June 30, 2026, Compared to Six months ended June 30, 2025)
Total Company net income for the first six months of 2026 was $75.4 million, a decrease of $3.3 million, or 4%, from the same period in 2025. Diluted EPS was $3.85 for the first six months of 2026, compared to $4.03 for the same period in 2025, a decrease of 4%.
(II)Warehouse Lending segment
(III)Tax Refund Solutions segment
As previously disclosed, TRS’ largest Tax Provider contract based on product volume and revenue was not renewed for the 2026 Tax Season (which began in December 2025). In total, this relationship contributed $10.2 million of net income to the first six months of 2025 operating results, consisting of: $17.7 million of net interest income, $6.7 million of Provision expense, $3.8 million of net RT fees, $1.7 million of noninterest expense, and $2.8 million of estimated income tax expense.
(IV)Republic Payment Solutions segment
(V)Republic Credit Solutions segment
RESULTS OF OPERATIONS (Six months ended June 30, 2026, Compared to Six months ended June 30, 2025)
Total Company net interest income was $172.2 million during the first six months of 2026 compared to $178.9 million during the same period in 2025, representing a $6.7 million, or 4% decrease. Total Company NIM decreased 21 basis points to 5.23% for the first six months 2026 compared to 5.44% for the same period in 2025, primarily reflecting lower net interest income generated by RPG.
Traditional Banking net interest income was $119.7 million for the first six months of 2026, a $10.0 million, or 9%, increase from $109.7 million achieved for the first six months of 2025. The increase in net interest income was primarily driven by a 32 basis point expansion in the Traditional Bank’s NIM to 4.13%.
Items of note impacting the Traditional Bank’s change in net interest income and NIM between the first six months of 2025 and the first six months of 2026 were as follows:
Traditional Banking average loans increased $51 million, or 1%, from $4.58 billion during the first six months of 2025 to $4.63 billion during the first six months of 2026. The weighted-average yield remained unchanged at 5.65% for both periods.
Period-over-period comparisons of average loan balances and yields were adversely impacted by the sale of approximately $82 million of loans and lease financing receivables during the first quarter of 2026. These loans were transferred from held for investment to HFS in December 2025 and contributed an estimated 5 basis points to the Traditional Banking loan portfolio yield during the first six months of 2025.
In addition to strong loan production, the Traditional Banking segment continued to redeploy cash flows from lower-yielding loan runoff into new originations at higher yields during 2026. Combined with a favorable shift toward higher-spread lending categories, these actions more than offset the pressure on asset yields resulting from the 75 basis point decline in the FFTR over the past 12 months.
The Traditional Bank’s average cost of interest-bearing liabilities decreased 42 basis points from 2.09% during the first six months of 2025 to 1.67% during the first six months of 2026 driven primarily by the following:
Warehouse Lending net interest income increased $1.1 million, or 16%, from the first six months of 2025 compared to the first six months of 2026.
Average outstanding Warehouse lines of credit increased $82 million, or 16%, from $513 million during the first six months of 2025 to $595 million for the first six months of 2026, while the weighted-average yield declined 65 basis points to 6.34%. Average committed Warehouse lines expanded from $982 million to $1.17 billion over the same period, supporting continued growth in customer relationships. Average utilization moderated from 52% to 51%, as commitment growth outpaced growth in outstanding balances.
TRS’s net interest income decreased $18.4 million, or 62%, from the first six months of 2025 to the first six months of 2026. Loan-related interest and fees decreased $20.1 million, or 60%, for the first six months of 2026, consistent with the 68% decline in total ERA/RA volume for the 2025 tax filing season.
As previously disclosed, TRS’ largest Tax Provider contract based on product volume and revenue was not renewed for the 2026 Tax Season (which began in December 2025). In total, this relationship contributed $17.7 million in net interest income to the first six months of 2025 operating results.
Net interest income from the Company’s prepaid card division decreased $1.5 million, or 20%, from the first six months of 2025 to the first six months of 2026. The decline in net interest income reflected a lower yield earned on the segment’s funding source. The lower yield primarily resulted from the 75 basis point decline in the FFTR over the past 12 months. As a result, RPS earned a yield of 3.68% on average deposit balances of $359 million during the first six months of 2026, compared with a yield of 4.42% on average deposit balances of $362 million during the first six months of 2025.
The RPS segment’s largest marketer-servicer did not achieve the minimum contractual thresholds for average deposit balances in order to earn a revenue share for the first six months of 2025 and 2026. 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.
RCS’s net interest income increased $2.1 million, or 5% from the first six months of 2025 to the first six months of 2026, driven primarily by growth across both RCS LOC programs and the segment’s installment loan product.
Table 7 — Total Company Average Balance Sheets and Interest Rates
300,416
5,503
3.69
570,140
12,587
909,595
18,911
4.19
653,058
11,657
TRS Refund Advance loans (b)
44,396
12,418
56.41
150,923
33,315
44.51
46,164
26,477
115.66
45,885
24,671
108.43
112,154
4,460
8.02
116,435
6.17
595,170
18,704
6.34
512,980
17,793
6.99
Traditional Bank loans (c)
4,632,498
129,845
5.65
4,581,598
128,455
5,430,382
7.13
5,407,821
7.75
6,640,393
6.57
6,631,019
7.06
Allowance for credit loss
(90,599)
(104,008)
116,152
256,814
39,835
32,883
111,510
108,010
280,353
273,420
7,097,644
7,198,138
1,686,510
3,902
1,717,873
5,224
0.61
1,558,514
18,420
2.38
1,377,543
19,658
2.88
507,899
9,090
3.61
429,194
8,140
3.82
312,743
4,115
2.65
307,536
5,100
3.34
109,274
2,427
4.48
229,563
5,106
4.49
4,174,940
4,061,709
291,983
4.17
444,972
4.37
4,552,811
1.96
4,604,883
2.33
1,273,931
1,406,890
128,619
147,103
1,142,283
1,039,262
Total liabilities and stock-holders’ equity
4.73
The following table illustrates loan fees recorded as interest income on loans by segment:
Table 8 — Loan Fee Income
2,568
2,658
757
3,325
3,337
13,605
33,700
40,082
58,371
43,407
61,708
Table 9 — Total Company Volume/Rate Variance Analysis
(7,084)
(5,209)
(1,875)
7,254
5,111
(20,897)
(28,072)
1,806
1,655
897
(135)
1,032
2,682
(1,771)
Traditional Banking loans
1,390
1,427
(15,723)
(24,045)
8,322
(1,322)
(1,228)
(1,238)
2,390
(3,628)
(478)
(985)
(1,070)
(2,679)
(2,671)
(99)
(32)
(3,614)
(3,180)
(434)
(8,987)
(2,074)
(6,913)
(6,736)
(21,971)
15,235
For additional discussion regarding Provision, see the sections titled “Allowance for Credit Losses on Loans” and “Asset Quality” in the “COMPARISON OF FINANCIAL CONDITION” section of the filing.
Total Company Provision was a net charge of $14.9 million for the first six months of 2026 compared to a net charge of $19.5 million for the same period in 2025.
The Traditional Banking Provision during the first six months of 2026 was a net charge of $562,000 compared to a net credit of $252,000 for the first six months of 2025.
The net charge of $562,000 for the first six months of 2026 was primarily driven by the following:
The net credit of $252,000 for the first six months of 2025 was primarily driven by the following:
As a percentage of total Traditional Banking loans, the Traditional Banking ACLL was 1.37% as of June 30, 2026, compared to 1.40% as of December 31, 2025 and 1.29% as of June 30, 2025.
Warehouse recorded a net credit to the Provision of $349,000 for the first six months of 2026 compared to a net charge of $302,000 for the same period in 2025. Provision for both periods reflected changes in general reserves consistent with changes in outstanding period end balances. Outstanding Warehouse period end balances decreased $139 million during the first six months of 2026 compared to an increase of $121 million during the first six months of 2025.
TRS recorded a net charge to the Provision of $4.3 million during the first six months of 2026 compared to a net charge of $11.5 million for the same period in 2025. As previously disclosed, TRS’ largest Tax Provider contract based on product volume was not renewed for the 2026 Tax Season (which began in December 2025). In total, this relationship contributed $6.7 million of Provision expense to the first six months of 2025 operating results.
As of June 30, 2026, TRS’s blended incurred loss rate for both guaranteed and unguaranteed ERAs/RAs, was 1.93% of the $259 million in total RAs and ERAs originated during December 2025 and the first two months of 2026. Approximately $1.4 million of these charge-offs as of June 30, 2026 are expected to be recovered under loan-loss guaranty arrangements with Tax Providers. As a result, these charge-offs were also reflected as recoveries as of June 30, 2026 and recorded as receivables in other assets on the Balance Sheet.
As of June 30, 2025, TRS’s blended incurred loss rate for both guaranteed and unguaranteed ERAs/RAs, was 2.81% of the $802 million in total RAs and ERAs originated during December 2024 and the first two months of 2025. In June 2025, the Company charged off all unpaid TRS loans which equated to 3.11% of total originations. The final loss rate of unguaranteed RAs/ERAs for the 2025 Tax Season was 2.56% of originations.
The Bank’s ability to control ERA/RA losses is highly dependent upon its ability to predict the taxpayer’s likelihood of receiving the tax refund as claimed on the taxpayer’s tax return. In addition, the Bank’s ability to control losses for the ERA product is highly dependent upon the taxpayer returning to a Tax Provider for the filing of their final tax return. Each year, the Bank’s ERA/RA approval model is based primarily on the prior year’s tax refund payment patterns. Because the substantial majority of ERA/RA volume occurs each year before that year’s tax refund payment patterns can be analyzed and subsequent underwriting changes implemented, credit losses during a given year could be higher than management’s predictions if tax refund payment patterns change materially between years.
As illustrated in the following table, RCS recorded a net charge to the Provision of $10.4 million during the first six months of 2026 compared to a net charge of $8.0 million during the same period in 2025. RCS recorded net charge-offs of $7.5 million during the first six months of 2026 compared to $7.9 million during the first six months of 2025. The remainder of the Provision variance was attributable to a shift toward loan categories with higher reserve requirements, such as the LOC II product.
Table 10 — Republic Credit Solutions Provision by Product Type
10,370
7,975
2,395
2,478
Table 11 — Summary of Loan and Lease Loss Experience
(753)
(556)
177
Net loan charge-offs
(12,522)
(29,713)
Provision - Core Banking
Provision - RPG
Total Provision
Net loan charge-offs to average loans
1.11
Table 12 — Annualized Net Loan Charge-offs (Recoveries) to Average Loans by Loan Category
Owner occupied
(0.01)
Nonowner occupied
(0.41)
0.25
130.63
83.63
(1.19)
(1.41)
0.62
20.07
27.34
1.80
1.34
11.29
12.56
12.04
19.18
The Company’s net charge-offs to average total Company loans decreased from 1.11% during the first six months of 2025 to 0.47% during the first six months of 2026, as net charge-offs declined $17.2 million, or 58%, while average total Company loans increased $23 million, over the same periods. As discussed above, the decline in net charge-offs was primarily attributable to the nonrenewal of TRS’ largest Tax Provider contract based on product volume, as well as lower ERA and RA funding activity.
Total Company noninterest income decreased $1.3 million, or 3%, during the first six months of 2026 compared to the same period in 2025.
Traditional Banking noninterest income increased $1.2 million, or 5%, from the first six months of 2025 to the same period in 2026, as results were impacted by the following notable nonrecurring or infrequent items.
Service charges on deposits, which increased $982,000, or 14%, was the key driver of the change in noninterest income for the first six months of 2026 and resulted primarily from higher volumes in activity-based fees, particularly insufficient funds fees. The Traditional Banking segment 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 six months ended June 30, 2026, and 2025 were $4.4 million and $3.5 million. The total daily overdraft charges, net of refunds, included in interest income for the six months ended June 30, 2026, and 2025 were $633,000 and $582,000.
As previously disclosed, TRS’s largest Tax Provider contract based on product volume was not renewed for the 2026 Tax Season, which began in December 2025. This relationship contributed $3.8 million of net RT fees during the first six months of 2025.
For a discussion of factors affecting the comparison of TRS's results of operations for the first six months of 2026 and 2025, see "OVERVIEW (Six Months Ended June 30, 2026, Compared to Six Months Ended June 30, 2025) – Tax Refund Solutions."
RCS noninterest income, primarily consisting of program fees, increased $1.3 million, or 19%, during the first six months of 2026 compared to the same period in 2025, reflecting higher sales volume from RCS’s installment loan and LOC II products.
97
Total Company noninterest expense decreased $1.0 million, or 1%, during the first six months of 2026 compared to the same period in 2025.
Traditional Banking noninterest expense decreased $3.3 million, or 3%, during the first six months of 2026 compared to the same period in 2025, as results were impacted by the following notable nonrecurring or infrequent items:
Noninterest expense at the RCS segment increased $2.3 million, or 41%, during the first six months of 2026 compared to the same period in 2025, driven primarily by a $1.8 million, increase in marketing and development expenses, which generally fluctuate in-line with overall origination volume. Under the terms of the Company’s contract with its LOC II marketer-servicer, RCS reimburses the marketer-servicer a certain dollar amount for marketing costs based on each new product originated during the period. In addition, the second quarter of 2025 benefited from a $763,000 reimbursement of marketing and development expense related to a prior-period billing dispute.
98
COMPARISON OF FINANCIAL CONDITION AS OF JUNE 30, 2026, AND DECEMBER 31, 2025
Overview
Total assets increased $20 million to $7.06 billion at June 30, 2026, from $7.04 billion at December 31, 2025. The increase was driven primarily by a $134 million increase in cash and cash equivalents, partially offset by an $86 million decline in consumer loans HFS.
Total liabilities decreased $35 million, or 1%, to $5.91 billion at June 30, 2026, from $5.94 billion at December 31, 2025, as $349 million of deposit growth was substantially offset by a $349 million paydown of FHLB advances and a $20 million decline in SSUAR accounts.
Stockholders’ equity increased $55 million, or 5%, to $1.16 billion at June 30, 2026, compared to $1.10 billion at December 31, 2025. This increase reflected net income of $75.4 million, partially offset by a decline in AOCI and cash dividends declared during 2026. The decline in AOCI was attributable to changes in the interest-rate environment and the corresponding impact on the valuation of the AFS debt-securities portfolio and cash-flow-hedging derivatives.
Cash and Cash Equivalents
Cash and cash equivalents include cash, deposits with other financial institutions with original maturities less than 90 days, and federal funds sold. The Company held $354 million in cash and cash equivalents as of June 30, 2026, compared to $220 million as of December 31, 2025, driven primarily by cash received for the onboarding of a new RPS prepaid card marketer-servicer deposit relationship during mid-June 2026.
Average interest-earning cash and cash equivalents totaled $300 million during the first six months of 2026, compared to $570 million during the first six months of 2025, reflecting the Company’s continued deployment of excess liquidity into investment securities. Beginning in the fourth quarter of 2024, the Company strategically purchased longer-duration investment securities to capitalize on a more favorable yield curve and higher relative yields than those available on overnight cash. The yield curve began to steepen during the fourth quarter of 2024, became positively sloped in March 2025, and remained so through June 30, 2026.
Cash held at the FRB earns interest on balances in excess of required reserves and generated a weighted-average yield of 3.69% during the first six months of 2026, compared to 4.45% during the first six months of 2025, reflecting the decline in the FFTR. Cash held within the Bank’s banking centers and ATM/ITM networks does not earn interest.
Investment Securities
Table 13 — Purchases of Investment Securities
Purchase
Yield to
Estimated Weighted
Maturity
Average Life
Purchases by Class for the Three Months Ended March 31, 2026
U.S. Government Agencies
84,901
4.07
1.76
yrs
62,811
4.42
5.72
147,712
4.22
3.44
Purchases by Class for the Three Months Ended June 30, 2026
10,000
4.30
0.35
44,487
4.77
15.56
54,487
4.68
12.77
Total Purchases for the Six Months Ended June 30, 2026
202,199
Republic’s investment portfolio increased approximately $2 million from December 31, 2025, to June 30, 2026, as the Company redeployed proceeds from debt security calls, maturities, and paydowns, including expected MBS prepayments, into higher-yielding, longer-duration securities. Since the fourth quarter of 2024, the Company has strategically shifted a portion of its interest-earning cash balances into investment securities to capitalize on a more favorable yield curve and higher available yields, enhancing the portfolio’s overall yield profile.
99
Management currently expects to maintain this general investment strategy for the foreseeable future. The Company’s investment securities strategy is influenced by economic and market conditions, loan demand, deposit mix, and liquidity needs. Investment positioning for the remainder of 2026 and beyond will depend on a variety of factors, including the Company’s current and projected liquidity position, customer demand for loan and deposit products, the Company’s overall interest-rate risk profile, the shape of the yield curve and prevailing interest-rate environment, and expectations for short-term and long-term interest-rate trends.
Federal Home Loan Bank Stock
FHLB stock holdings declined $14 million, or 43%, from December 31, 2025 to June 30, 2026. FHLB members are required to hold certain levels of FHLB stock in relation to the amount of their borrowings, thus FHLB stock holdings will fluctuate consistently with borrowing activity from period to period.
Table 14 — Loan Portfolio Composition
2,069
0
(7,263)
37,858
20,576
46,022
(23,114)
18,272
1,049
(391)
(0)
16,174
711
(146)
(93)
(2,512)
(31)
109,212
(139,394)
(30,182)
(12,924)
(100)
(19,317)
26,500
(5,741)
(35,923)
(2,415)
(38,338)
*Identifies loans to borrowers located primarily outside of the Bank’s market footprint.
**Total loans are presented inclusive of premiums, discounts and net loan origination fees and costs.
Total Company gross loans decreased by $36 million, or 1%, during the first six months of 2026 to $5.41 billion as of June 30, 2026. The most significant components comprising the change in loans by reportable segment follow:
Traditional Banking period-end loan balances increased $109 million, or 2%, from December 31, 2025 to June 30, 2026, as strong origination volume of CRE loans, C&I loans and HELOCs more than offset contraction within the C&LD portfolio. Growth in the CRE and C&I portfolios was generally driven by reduced internal pricing restrictions across these loan types due to competitive pressures.
On December 31, 2025, the Traditional Banking segment transferred approximately $82 million of loans and lease financing receivables from held for investment to HFS pursuant to a signed agreement to sell substantially all of the assets of the St. Louis-based RBF Division acquired in the 2023 CBank acquisition. The transaction closed in the first quarter of 2026 and the Traditional Banking segment generated a pre-tax gain, net of broker commissions, of approximately $5.8 million.
Outstanding Warehouse period-end balances decreased $139 million, or 18%, from December 31, 2025, to June 30, 2026. Average committed Warehouse lines of credit increased to $1.20 billion during the first six months of 2026 from $981 million during the same period in 2025, while average line utilization decreased to 50% from 52% over the same periods.
Due to mortgage market volatility and seasonality, projecting future outstanding balances for Warehouse lines of credit remains challenging; however, portfolio expansion has historically aligned with broader industry trends. Since entering the business in 2011, the Bank has experienced fluctuations in Warehouse balances consistent with overall mortgage origination activity. Weighted-average quarterly usage rates 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 have ranged from a low of 39% during 2022 to a high of 66% during 2020.
TRS loan balances as of December 31, 2025 included $13 million of ERAs originated during December 2025 and $19 million of short-term, C&I loans to Tax Providers to support seasonal cash-flow needs. These balances paid down to $0 as of June 30, 2026, or were charged off in line with the Company’s charge-off policy.
Outstanding period-end RCS balances increased $27 million, or 23%, to $140 million as of June 30, 2026, consistent with increased origination volume primarily associated with the healthcare receivable products.
There are no outstanding loans associated with the RPS segment, as its products primarily consist of prepaid debit card solutions.
Allowance for Credit Losses
The Bank maintains an ACLL on the Balance Sheet for expected credit losses inherent in the Bank’s loan portfolio, which includes overdrawn DDAs. The Bank also maintains an ACLC for expected OBS credit exposure losses. Management evaluates the adequacy of the ACLL monthly and the adequacy of the ACLC for OBS quarterly. The ACLL calculation is presented to and discussed with the Audit Committee and the Board on a quarterly basis.
The Company’s ACLL increased to $88 million at June 30, 2026, compared to $85 million at December 31, 2025, with the total Company ACLL as a percentage of total loans increasing to 1.62% as of June 30, 2026, compared to 1.57% as of December 31, 2025.
The most significant components comprising the change in ACLL by reportable segment follow:
Traditional Banking loan balances increased $109 million during the first six months of 2026, while the related ACLL increased $144,000 to $64 million at June 30, 2026. As a percentage of total Traditional Banking loans, the ACLL declined slightly to 1.37% at June 30, 2026 from 1.40% at December 31, 2025. During 2026, the Traditional Banking ACLL benefited from a favorable shift in portfolio composition. Specifically, C&LD balances, which carry higher reserve requirements than most other Core Bank lending categories, declined $23 million, as projects progressed and balances primarily migrated into the CRE portfolio.
The Warehouse ACLL decreased $349,000, or 19%, to $1.5 million, while the Warehouse ACLL as a percentage to total Warehouse loans remained at 0.25% when comparing June 30, 2026 to December 31, 2025. Outstanding Warehouse period-end balances decreased $139 million, or 18%, from December 31, 2025 to June 30, 2026. As of June 30, 2026, the Warehouse ACLL remained entirely qualitative in nature, with no adjustments required to the qualitative reserve percentage required for the first six months of 2026.
The TRS ACLL decreased $332,000 from December 31, 2025 to $0 as of June 30, 2026, reflecting the June 2026, charge-off of all unpaid ERAs/RAs and C&I loan balances to Tax Providers originated in December 2025.
The RCS ACLL increased $3.0 million to $22.4 million as of June 30, 2026, driven primarily by the increase in the LOC product spot loan balances.
As of June 30, 2026, RCS maintained ACLL coverage for two distinct credit products: LOC products and healthcare receivables. At period-end, the ACLL-to-total-loans ratio ranged from 0.25% for healthcare receivables to 70.63% for LOC products, with the lower reserve requirement for healthcare receivables reflecting the recourse maintained to third-party service providers.
While RCS loans generally generate higher yields than Traditional Banking products, they also carry higher credit risk. As a result, the RCS ACLL as a percentage of total RCS loans was 16.01% at June 30, 2026, compared to 17.15% at December 31, 2025 and 17.67% at June 30, 2025. Changes in the segment’s loan mix, including growth in products with higher loss expectations, continued to influence reserve levels.
There is no ACLL or Provision for RPS, as the segment offers prepaid and debit solutions to consumers.
102
The following table sets forth management’s allocation of the ACLL by loan class. The allocation reflects management’s assessment of prevailing economic conditions, historical loss experience, forecasts for unemployment and vacancy rates, and various other life-of-loan and forward-looking considerations, as well as qualitative factors.
Table 15 — Management’s Allocation of the Allowance for Credit Losses on Loans
Percent of
Loans to
ACLL to
Loans*
Loan Class
Loan Class*
1.04
1.25
1.46
0.86
1.21
3.36
3.40
1.37
1.40
2.13
2.09
8.28
8.93
96.24
100.00
2.55
2.29
0.19
16.01
17.15
16.00
13.57
1.57
*See the Table titled “Loan Portfolio Composition” in this section of the report for loan portfolio balances. Values of less than 50 bps in the table above are rounded down to zero.
Management believes, based on information presently available, that it has adequately provided for loan and lease credit losses as of June 30, 2026.
Asset Quality
Classified and Special Mention Loans
The Bank applies credit quality indicators, or ratings, to individual loans based on internal Bank policies, which are informed by regulatory standards. Loans rated “Loss,” “Doubtful,” “Substandard,” and PCD-Substandard are considered “Classified.”
See the Footnote titled “Loans and Allowance for Credit Losses on Loans” of Part I Item 1 “Financial Statements” for additional discussion regarding Classified and Special Mention loans.
Table 16 — Classified and Special Mention Loans
Loss
51,208
50,289
919
PCD - Substandard
719
818
(12)
Total Classified Loans
820
(4,210)
PCD - Special Mention
Total Special Mention Loans
Total Classified and Special Mention Loans
83,471
86,861
(3,390)
Nonperforming Loans
Nonperforming loans, which include both nonaccrual loans and loans that are 90 days or more past due while still accruing interest, increased to 0.57% of total loans at June 30, 2026, from 0.44% at December 31, 2025. The increase was driven by a $7 million rise in nonperforming loan balances, coupled with a $36 million decline in total loans. Approximately $5 million of the increase in nonperforming loans since year-end 2025 was attributable to a single multifamily lending relationship.
The ACLL to nonperforming loans ratio declined to 286% at June 30, 2026, from 356% at December 31, 2025. The decrease was primarily the result of a $3 million reduction in the ACLL and a $7 million increase in nonperforming loan balances. Despite the decline, the ACLL continued to provide substantial coverage of nonperforming loans at June 30, 2026.
Table 17 — Nonperforming Loans and Nonperforming Assets Summary
356
Loans on nonaccrual status include collateral-dependent loans. See the Footnote titled “Loans and Allowance for Credit Losses on Loans” of Part I Item 1 “Financial Statements” for the components within the nonaccrual loans to total loans and ACLL to nonaccrual loans ratios, as well as additional discussion regarding nonaccrual loans and collateral-dependent loans.
** Loans past due 90-days-or-more and still accruing consist of smaller balance consumer loans.
Table 18 — Nonperforming Loan Composition
1.92
1.82
0.17
0.10
0.06
0.79
0.24
30,649
0.66
0.52
0.14
0.11
Table 19 — Stratification of Nonperforming Loans
Number of Nonperforming Loans and Recorded Investment
> $100 &
No.
<= $100
<= $500
> $500
152
5,971
12,530
231
2,461
1,807
8,773
15,048
6,828
322
8,852
NM – RCS loans are generally small dollar homogenous consumer loans.
164
5,711
11,478
1,705
239
2,141
1,586
233
8,021
13,703
2,082
321
8,182
NM – RCS loans are small dollar homogenous consumer loans.
Table 20 — Rollforward of Nonperforming Loans
Nonperforming loans at the beginning of the period
31,852
22,850
22,760
Loans added to nonperforming status during the period that remained nonperforming at the end of the period
6,658
1,862
10,012
4,111
Loans removed from nonperforming status during the period that were nonperforming at the beginning of the period (see table below)
(7,735)
(2,518)
(2,698)
(4,191)
Principal balance paydowns of loans nonperforming at both period ends
(233)
(536)
(598)
(946)
Net change in principal balance of other nonperforming loans*
186
(16)
Nonperforming loans at the end of the period
21,642
Includes RCS loans which are small dollar homogeneous consumer loans.
Table 21 — Detail of Loans Removed from Nonperforming Status
Loans charged-off
Loans transferred to OREO
(122)
Loan payoffs and paydowns
(6,036)
(1,727)
(2,157)
(2,571)
Loans returned to accrual status
(1,574)
(791)
(416)
(1,620)
Total loans removed from nonperforming status during the period that were nonperforming at the beginning of the period
Based on the Bank’s review as of June 30, 2026, management believes that its reserves are adequate to absorb expected losses on all nonperforming loans.
107
Total Company delinquent loans as a percentage of total loans increased to 0.53% as of June 30, 2026, from 0.42% as of December 31, 2025. Similarly, Core Bank delinquent loans as a percentage of total Core Bank loans increased to 0.35% from 0.26% over the same period. Except for small-dollar consumer loans, all Traditional Banking loans that were 90 days or more past due at June 30, 2026 and December 31, 2025 were on nonaccrual status.
During the fourth quarter of 2025, the Company downgraded a $16 million C&I participation relationship from Special Mention to Substandard. The loan became 30 days delinquent during the first quarter of 2026 but was refinanced into a new loan during the second quarter of 2026.
Table 22 — Delinquent Loan Composition*
0.81
0.87
6.96
0.26
0.75
1.05
9.82
12.67
0.40
0.31
7.18
7.87
7.17
6.12
Total delinquent loans
* Represents total loans 30-days-or-more past due. Delinquent status may be determined by either the number of days past due or number of payments past due.
Table 23 — Rollforward of Delinquent Loans
Delinquent loans at the beginning of the period
42,742
17,313
20,489
Loans added to delinquency status during the period and remained in delinquency status at the end of the period
10,078
4,283
11,796
5,010
Loans removed from delinquency status during the period that were in delinquency status at the beginning of the period (see table below)
(25,906)
(3,192)
(8,572)
(5,029)
Principal balance paydowns of loans delinquent at both period ends
(82)
(111)
(187)
Net change in principal balance of other delinquent loans*
1,658
793
2,525
(1,197)
Delinquent loans at the end of period
19,086
Table 24 — Detail of Loans Removed from Delinquent Status
(21,405)
(475)
(1,442)
(1,631)
Loans paid current
(4,375)
(2,717)
(7,001)
(3,398)
Total loans removed from delinquency status during the period that were in delinquency status at the beginning of the period
Premises and Equipment
Premises and equipment, net of accumulated depreciation and purchase accounting fair value adjustments, increased $6 million, or 17%, from December 31, 2025 to June 30, 2026. The increase was primarily driven by capitalized costs associated with the Company’s core system conversion. The Company's branch network consisted of 47 locations across Kentucky, Indiana, Florida, Ohio, and Tennessee as of June 30, 2026.
Right-of-Use Assets and Operating Lease Liabilities
The Company records right-of-use assets for the underlying leased property. Operating lease liabilities represent the present value of its required minimum lease payments plus any amounts probable of being owed under a residual value guarantee.
At June 30, 2026, and December 31, 2025, the Company had $41 million in goodwill recorded on its Balance Sheet. Goodwill of $24 million is attributed to the 2023 CBank acquisition. Additionally, goodwill totaling $6 million and $10 million is attributed to the acquisitions of Cornerstone Community Bank and GulfStream Community Bank in 2016 and 2006. The acquisitions of Tennessee Commerce Bank and First Commercial Bank in 2012 resulted in bargain purchase gains.
Events that may trigger goodwill impairment include deterioration in economic conditions, a decline in market-dependent multiples or metrics (i.e., stock price declining below tangible book value), negative trends in overall financial performance and regulatory actions. At September 30, 2025, the Company performed its annual qualitative assessment to determine if it was more-likely-than-not that the fair value of the reporting units exceeded their carrying value, including goodwill. The qualitative assessment indicated that it was not more-likely-than-not that the carrying value of the reporting units exceeded their fair value.
BOLI assets increased $2 million to $112 million at June 30, 2026, with the increase attributed to general appreciation of the cash surrender values within the policy plans experienced during the first six months of 2026.
Core Deposit Intangibles
CDIs arising from business acquisitions are initially measured at fair value and are then amortized on an accelerated method based on their useful lives. As of June 30, 2026, and December 31, 2025, the Company’s CDI assets totaled $1.4 million and $1.5 million.
Table 25 — Deposit Composition
36,023
34,731
(2,396)
3,495
27,932
10,059
(1,915)
108,900
65,989
174,889
1,430
166,056
(3,034)
164,452
4,175
5,079
9,254
173,706
Total Company deposits increased $349 million, or 7%, from December 31, 2025, to $5.55 billion as of June 30, 2026.
Total Core Bank deposits increased by $175 million, or 4%, from December 31, 2025 to June 30, 2026. Within the Core Bank’s deposits, interest-bearing deposits increased $109 million and noninterest-bearing deposits increased $66 million over the respective period.
The growth in Core Bank interest-bearing deposits was primarily driven by a combined $110 million increase in period-end business and consumer money market accounts and time deposits, all of which generally carry higher interest rates. In addition, interest-bearing DDAs increased $36 million, or 3%, from December 31, 2025 to June 30, 2026, further contributing to the overall growth in interest-bearing deposit balances.
Core Bank noninterest-bearing deposits increased $66 million on a period-end basis during the first six months of 2026. However, average noninterest-bearing deposit balances declined $10 million, or 1%, compared with the first six months of 2025. Consistent with broader industry trends following the rapid increase in interest rates beginning in 2022, Core Bank noninterest-bearing deposit balances have generally experienced quarterly declines since the fourth quarter of 2022, as customers have increasingly migrated funds into higher-yielding deposit products.
110
Within RPG, period-end total deposit balances increased $174 million, or 44%, during the first six months of 2026. The increase was driven primarily by a $180 million increase in RPS deposits resulting from the onboarding of a new marketer-servicer relationship.
SSUARs are collateralized by securities and are accounted for as financings. Accordingly, the securities underlying these agreements are recorded as assets and held by a safekeeping agent, while the related obligations to repurchase the securities are recorded as liabilities. All underlying securities remain under the Bank’s control throughout the term of the agreements. SSUARs generally represent large customer deposit relationships that require collateralization in excess of the $250,000 FDIC insurance limit, and the Bank pledges securities to satisfy these collateral requirements.
SSUARs decreased $20 million, or 22%, during 2026 to $69 million as of June 30, 2026. Due to the size of the underlying relationships, large fluctuations in the underlying account balances from period to period are common.
Federal Home Loan Bank Advances
FHLB advances totaled $157 million as of June 30, 2026, compared to $506 million as of December 31, 2025. Overnight borrowings decreased to $0 at June 30, 2026, from $130 million at December 31, 2025. Over the past year, the Company has utilized FHLB advances to partially fund noninterest-bearing deposit outflows and support overall loan growth.
During March 2026, the Traditional Banking segment prepaid $220 million of long-term fixed-rate FHLB advances and incurred $2.3 million of pre-tax early termination penalties, which were recorded in noninterest expense. The prepaid advances carried a weighted-average cost of 4.57% and were prepaid as part of management’s proactive balance sheet optimization and interest rate risk management strategy. Based on interest rates at the time of repayment and assuming short-term interest rates remain at or near current levels, management estimated the prepayment penalty would be recovered through lower funding costs within approximately 1.2 years.
As of June 30, 2026, outstanding long-term fixed-rate FHLB advances totaled $157 million, with a weighted-average maturity of 0.7 years and a weighted-average cost of 3.84%, both inclusive of the impact of related interest rate swaps.
The Company’s use of FHLB advances during any given period is dependent on multiple factors, including asset growth, deposit trends, earnings performance, and expectations regarding future interest rate movements.
Interest Rate Swaps
Interest rate swap derivatives are reported at fair value in other assets or other liabilities. The accounting treatment for changes in the fair value of a derivative depends on whether the instrument has been designated and qualifies for hedge accounting. For derivatives designated as cash flow hedges, the effective portion of unrealized gains and losses is recorded in OCI and AOCI. Amounts recorded in AOCI are subsequently reclassified into earnings in the same periods during which the hedged transaction affects earnings, or earlier if the hedge is no longer considered effective. Derivatives that are not designated as hedging instruments are considered economic hedges, with changes in fair value recognized directly in current-period earnings.
The Bank enters into interest rate swap agreements to facilitate customer financing transactions and meet client risk management needs. To mitigate the associated interest rate risk, the Bank simultaneously enters into offsetting derivative positions with third-party counterparties. Although these transactions serve an economic risk management purpose, they are not designated as accounting hedges; therefore, changes in the fair value of both the customer-facing swaps and the offsetting positions are recognized in current-period earnings.
In addition, as noted in the section above, the Company entered into $100 million of notional Balance Sheet interest rate swaps during the second quarter of 2024 to capitalize on favorable long-term pricing available as a result of the then-inverted yield curve. These swaps were designated as cash flow hedges and are intended to help protect net interest income from future changes in interest rates.
See the Footnote titled “Interest Rate Swaps” of Part I Item 1 “Financial Statements” for additional discussion regarding the Bank’s interest rate swaps.
111
Liquidity
The Bank maintains sufficient liquidity to fund routine loan demand and normal deposit withdrawal activity. Liquidity is managed through a combination of cash, cash equivalents, and unencumbered investment securities, which serve as the primary sources of readily available funds. Additional liquidity can be generated through deposit promotions, sales of AFS debt securities, principal repayments on loans and MBS, and proceeds from loans HFS.
Management actively monitors liquidity needs and available funding sources to ensure the Bank can meet customer obligations, support loan growth, and respond to changes in market conditions in a timely manner.
Table 26 — Liquid Assets and Borrowing Capacity
The Company’s liquid assets and borrowing capacity included the following:
Unencumbered debt securities
760,820
717,936
Total liquid assets
1,114,911
937,908
Available borrowing capacity with the FHLB
883,746
646,148
Available borrowing capacity with the FRB
9,729
9,606
Available borrowing capacity through unsecured credit lines
Total available borrowing capacity
993,475
755,754
Total liquid assets and available borrowing capacity
2,108,386
1,693,662
Republic had a period-end loan-to-deposit ratio (excluding brokered deposits) of 99% as of June 30, 2026 and 107% as of December 31, 2025. Republic’s banking centers and its website, www.republicbank.com, provide access to retail deposit markets. These retail deposit products, if offered at attractive rates, have historically been a source of additional funding when needed. If the Bank were to lose a significant funding source, such as a few major depositors, or if any of its lines of credit were cancelled, or if the Bank cannot obtain brokered deposits, the Bank would be compelled to offer market leading deposit interest rates to meet its funding and liquidity needs.
As of June 30, 2026, the Bank had approximately $1.3 billion in deposits from 218 large non-sweep deposit relationships, including reciprocal deposits, where the individual relationship exceeded $2 million for a depositor’s taxpayer identification number. Total uninsured deposits for the Bank were $2.6 billion, or 46%, of total deposits as of June 30, 2026. The 20 largest non-sweep deposit relationships represented approximately $465 million, or 8%, of the Company’s total deposit balances as of June 30, 2026. These accounts do not require collateral; therefore, cash from these accounts can generally be utilized to fund the loan portfolio. If any of these balances were moved from the Bank, the Bank would likely utilize overnight borrowing lines in the short-term to replace the balances. On a longer-term basis, the Bank would likely utilize wholesale-brokered deposits to replace withdrawn balances, or alternatively, higher-cost internet-sourced deposits. Based on experience utilizing brokered deposits and internet-sourced deposits, the Bank believes it can quickly obtain these types of deposits if needed. The overall cost of gathering these types of deposits, however, could be substantially higher than the Traditional Banking deposits they replace, potentially decreasing the Bank’s earnings.
The Bank’s liquidity is impacted by its ability to sell certain investment securities, which is limited due to the level of investment securities that are needed to secure public deposits, SSUAR, FHLB advances, and for other purposes, as required by law. As of June 30, 2026, and December 31, 2025, these pledged investment securities had a fair value of $110 million and $131 million.
Total stockholders’ equity increased from $1.10 billion as of December 31, 2025, to $1.14 billion as of June 30, 2026. The increase in stockholders’ equity was attributable to net income earned during the first six months of 2026 reduced primarily by cash dividends declared.
Common Stock — The Class A Common shares are entitled to cash dividends equal to 110% of the cash dividend paid per share on Class B Common Stock. Class A Common shares have one vote per share and Class B Common shares have ten votes per share. Class B Common shares may be converted, at the option of the holder, to Class A Common shares on a share for share basis. The Class A Common shares are not convertible into any other class of Republic’s capital stock.
Dividend Restrictions — The Parent Company’s principal source of funds for dividend payments are dividends received from RB&T. Banking regulations limit the amount of dividends that may be paid to the Parent Company by the Bank without prior approval of the respective states’ banking regulators. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s net profits, combined with the retained net profits of the preceding two years. As of July1, 2026, RB&T could, without prior approval, declare dividends of approximately $189 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.
Regulatory Capital Requirements — The Company and the Bank are subject to capital regulations in accordance with Basel III, as administered by banking regulators. Regulatory agencies measure capital adequacy within a framework that makes capital requirements, in part, dependent on the individual risk profiles of financial institutions. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on Republic’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Parent Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities, and certain OBS items, as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators regarding components, risk weightings, and other factors.
Banking regulators have categorized the Bank as well capitalized. For prompt corrective action, the regulations in accordance with Basel III define “well capitalized” as a 10.0% Total Risk-Based Capital ratio, a 6.5% Common Equity Tier 1 Risk-Based Capital ratio, an 8.0% Tier 1 Risk-Based Capital ratio, and a 5.0% Tier 1 Leverage ratio. Additionally, to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers, the Company and Bank must hold a capital conservation buffer of 2.5% composed of Common Equity Tier 1 Risk-Based Capital above their minimum risk-based capital requirements.
Republic continues to exceed the regulatory requirements for Total Risk Based Capital, Common Equity Tier I Risk Based Capital, Tier I Risk Based Capital and Tier I Leverage Capital. Republic and the Bank intend to maintain a capital position that meets or exceeds the “well-capitalized” requirements as defined by the FRB and the FDIC, in addition to the Capital Conservation Buffer. Formal measurements of the capital ratios for Republic and the Bank are performed by the Company at each quarter end.
113
Table 27 — Capital Ratios
Ratio
Total capital to risk-weighted assets
1,202,472
18.87
1,144,661
17.79
1,133,096
17.80
1,079,675
16.80
Common equity tier 1 capital to risk-weighted assets
1,122,691
17.62
1,064,167
16.54
1,053,392
16.55
999,248
15.55
Tier 1 (core) capital to risk-weighted assets
Tier 1 leverage capital to average assets
16.13
15.11
14.82
14.17
Asset/Liability Management and Market Risk
Asset/liability management is designed to ensure safety and soundness, maintain liquidity, meet regulatory capital standards, and achieve acceptable net interest income based on the Bank’s risk tolerance. Interest rate risk is the exposure to adverse changes in net interest income as a result of market fluctuations in interest rates. The Bank, on an ongoing basis, monitors interest rate and liquidity risk to implement appropriate funding and balance sheet strategies. Management considers interest rate risk to be a significant risk to the Bank’s overall earnings and balance sheet.
The interest sensitivity profile of the Bank at any point in time will be impacted by a number of factors. These factors include the mix of interest sensitive assets and liabilities, as well as their relative pricing schedules. It is also influenced by changes in market interest rates, deposit and loan balances, and other factors.
The Bank utilizes earnings simulation models as tools to measure interest rate sensitivity, including both a static and dynamic earnings simulation model. A static simulation model is based on current exposures and assumes a constant balance sheet. In contrast, a dynamic simulation model relies on detailed assumptions regarding changes in existing business lines, new business, and changes in management and customer behavior. While the Bank runs the static simulation model as one measure of interest rate risk, historically, the Bank has utilized its dynamic earnings simulation model as its primary interest rate risk tool to measure the potential changes in market interest rates and their subsequent effects on net interest income for a one-year time period. This dynamic model projects a “Base” case net interest income over the next 12 months and the effect on net interest income of instantaneous movements in interest rates between various basis point increments equally across all points on the yield curve. Many assumptions based on growth expectations and on the historical behavior of the Bank’s deposit and loan rates and their related balances in relation to changes in interest rates are incorporated into this dynamic model. These assumptions are inherently uncertain and, as a result, the dynamic model cannot precisely measure future net interest income or precisely predict the impact of fluctuations in market interest rates on net interest income. Actual results will differ from the model’s simulated results due to the actual timing, magnitude and frequency of interest rate changes, the actual timing and magnitude of changes in loan and deposit balances, as well as the actual changes in market conditions and the application and timing of various management strategies as compared to those projected in the various simulated models. Additionally, actual results could differ materially from the model if interest rates do not move equally across all points on the yield curve.
As of June 30, 2026, a dynamic simulation model was run for interest rate changes from “Down 300” bps to “Up 300” bps. The following table illustrates the Bank’s projected percent change from its Base net interest income over the period beginning July 1, 2026, and ending June 30, 2027, based on instantaneous movements in interest rates from Down 300 to Up 300 bps equally across all points on the yield curve. The Bank’s dynamic earnings simulation model includes secondary market loan fees, which are a component of mortgage banking income within noninterest income and excludes Traditional Banking loan fees.
Table 28 — Bank Interest Rate Sensitivity
-300
-200
-100
+100
+200
+300
Basis Points
% Change from base net interest income as of June 30, 2026
(3.2)
(4.3)
(2.5)
4.2
8.5
12.5
% Change from base net interest income as of December 31, 2025
(1.7)
(3.7)
(2.2)
2.6
5.3
7.6
The results of the interest rate sensitivity analysis performed as of June 30, 2026 and December 31, 2025 were derived from subjective assumptions the Company uses in its earnings simulation model, particularly in relation to deposit betas, which measure how responsive management’s deposit repricing may be to changes in market rates based on historical data. Management uses different betas in the rising and falling rate scenarios to better simulate expected earnings trends.
In both interest rate sensitivity scenarios presented, the Company projects a decrease in net interest income in a declining rate environment as the rates the Company pays for its non-maturity, interest-bearing deposits cannot be lowered sufficiently to offset the decrease in interest income associated with its declining asset yields. Conversely, in both scenarios presented the Company projects an improvement in net interest income as interest rates rise as the yield the Company expects to earn for its interest-earning assets will increase more than the rise in its projected funding costs. These results depict an asset-sensitive interest rate risk profile.
In comparing the Company’s interest rate sensitivity projections as of December 31, 2025 and June 30, 2026, there were notable changes across all illustrated scenarios. Overall, management projects that the Company’s interest rate risk position has become less favorable in declining-rate environments and more favorable in rising-rate environments.
The improved net interest income performance in the illustrated up-rate scenarios was driven primarily by elevated cash balances at June 30, 2026, the yields on which would reprice immediately in a rising-rate environment. In mid-June 2026, RPS onboarded a new prepaid card marketer-servicer program that maintained approximately $178 million of deposits outstanding as of June 30, 2026. Because interest-bearing deposit costs under this program are tied to a contractual rate formula, the relationship is generally expected to enhance net interest income in rising-rate environments and reduce net interest income in declining-rate environments.
These same factors that drove the improvement in the Company’s interest rate sensitivity analysis from December 31, 2025 to June 30, 2026, also drove the deterioration in its interest rate sensitivity analysis for the same periods.
For additional discussion regarding the Bank’s net interest income, see the sections titled “Net Interest Income” in this section of the filing under “Results of Operations (Three Months Ended June 30, 2026 Compared to the Three Months Ended June 30, 2025) and “Results of Operations (Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025).
Item 3.Quantitative and Qualitative Disclosures about Market Risk.
Information required by this item is included under Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Item 4. Controls and Procedures.
As of the end of the period covered by this report, an evaluation was carried out by Republic Bancorp, Inc.’s management, with the participation of its Executive Chair/CEO and CFO, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act. Based upon that evaluation, the Company’s Executive Chair/CEO and CFO concluded that these disclosure controls and procedures were effective as of the end of the period covered by this report. In addition, no change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during the fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Item 1.Legal Proceedings.
In the ordinary course of operations, Republic and the Bank are defendants in various legal proceedings. There is no proceeding, pending, or threatened litigation in which Republic and the Bank are a defendant, to the knowledge of management, in which an adverse decision could result in a material adverse change in the business or consolidated financial position of Republic or the Bank.
Item 1A.Risk Factors.
There have been no material changes in the Company’s risk factors as previously disclosed in Part 1, “Item 1A. Risk Factors” of its Annual Report on Form 10-K for the fiscal year ended December 31, 2025. You should carefully consider the risk factors discussed in Republic’s 2025 Form 10-K, which could materially affect its business, financial condition, or future results.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.
Details of Republic’s Class A Common Stock purchases during the second quarter of 2026 are included in the following table:
Total Number of
Maximum Number
Shares Purchased
of Shares that May
as Part of Publicly
Yet Be Purchased
Average Price
Announced Plans
Under the Plan
Paid Per Share
or Programs
April 1 - April 30
433,395
May 1 - May 31
June 1 - June 30
The Company did not repurchase any of its shares under publicly announced programs during the second quarter of 2026. In addition, in connection with employee stock awards, there were 8,497 shares withheld upon exercise of stock options and vesting of equity awards to satisfy the withholding taxes and, for stock options, the exercise price.
On January 24, 2024, the Board increased the Company’s existing authorization to purchase shares of its Class A Common Stock by 400,000 shares. The repurchase program will remain effective until the total number of shares authorized is repurchased or until Republic’s Board terminates the program. As of June 30, 2026 the Company had 433,395 shares which could be repurchased under its current share repurchase programs.
During the second quarter of 2026, there were approximately 11,000 shares of Class A Common Stock issued upon conversion of shares of Class B Common Stock by stockholders of Republic in accordance with the share-for-share conversion provision option of the Class B Common Stock. The exemption from registration of the newly issued Class A Common Stock relied upon was Section (3)(a)(9) of the Securities Act.
There were no equity securities of the registrant sold without registration during the quarter covered by this report.
Item 5.Other Information.
Rule 10b5-1 Trading Plans
During the quarter ended June 30, 2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) informed us of the adoption or termination of any “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item 408 of Regulation S-K.
Item 6.Exhibits.
The following exhibits are filed or furnished as a part of this report:
Exhibit Number
Description of Exhibit
31.1
Certification of Principal Executive Officer pursuant to the Sarbanes-Oxley Act of 2002
31.2
Certification of Principal Financial Officer pursuant to the Sarbanes-Oxley Act of 2002
32*
Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
The following financial statements from the Company’s quarterly report on Form 10-Q were formatted in iXBRL(Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025, (ii) Consolidated Statements of Income and Comprehensive Income for the Three and Six Months Ended June 30, 2026 and 2025, (iii) Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2026 and 2025, (iv) Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2026 and 2025 and (v) Notes to Consolidated Financial Statements
Cover Page Interactive Data File formatted in iXBRL and contained in Exhibit 101.
This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act or Exchange Act.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
(Registrant)
Principal Executive Officer:
Date: August 7, 2026
/s/ Steven E. Trager
By: Steven E. Trager
Executive Chair and Chief Executive Officer
Principal Financial Officer:
/s/ Kevin Sipes
By: Kevin Sipes
Executive Vice President, Chief Financial
Officer and Chief Accounting Officer