# Republic Bancorp Inc: Form 10-Q for the period ended Mar 31, 2023

- Company: [Republic Bancorp Inc](/companies/rbcaa.md) (CIK 921557)
- Form: 10-Q
- Filed: 2023-05-05
- Accepted by EDGAR: May 5, 2023, 09:24 ET
- Period: 2023-03-31
- Accession: 0001558370-23-008211
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/921557/000155837023008211/rbcaa-20230331x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/921557/000155837023008211/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-01-01 to 2023-03-31 | $115.3m | us-gaap:Revenues |
| Interest expense | 3 months, 2023-01-01 to 2023-03-31 | $7.7m | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-01-01 to 2023-03-31 | $8.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-01-01 to 2023-03-31 | $28.1m | us-gaap:NetIncomeLoss |
| Diluted shares (weighted) | 3 months, 2023-01-01 to 2023-03-31 | 19,990,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2023-01-01 to 2023-03-31 | $70.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2023-01-01 to 2023-03-31 | $1.7m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2023-01-01 to 2023-03-31 | $6.6m | us-gaap:PaymentsOfDividends |
| Cash and equivalents | at 2023-03-31 | $249.3m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2023-03-31 | $6.07bn | us-gaap:Assets |
| Total liabilities | at 2023-03-31 | $5.19bn | us-gaap:Liabilities |
| Shareholders' equity | at 2023-03-31 | $882.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 140,954 characters.

The consolidated financial statements include the accounts of Republic Bancorp, Inc. (the “Parent Company”) and its wholly owned subsidiaries, Republic Bank & Trust Company and Republic Insurance Services, Inc. As used in this filing, the terms “Republic,” the “Company,” “we,” “our,” and “us” refer to Republic Bancorp, Inc., and, where the context requires, Republic Bancorp, Inc. and its subsidiaries. The term the “Bank” refers to the Company’s subsidiary bank: Republic Bank & Trust Company. The term the “Captive” refers to the Company’s insurance subsidiary: Republic Insurance Services, Inc. All significant intercompany balances and transactions are eliminated in consolidation.

Republic is a financial holding company headquartered in Louisville, Kentucky. The Bank is a Kentucky-based, state-chartered non-member financial institution that provides both traditional and non-traditional banking products through five reportable segments using a multitude of delivery channels. While the Bank operates primarily in its market footprint, its non-brick-and-mortar delivery channels allow it to reach clients across the U.S. The Captive is a Nevada-based, wholly owned insurance subsidiary of the Company. The Captive provides property and casualty insurance coverage to the Company and the Bank, as well as a group of third-party insurance captives for which insurance may not be available or economically feasible.

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 discuss matters that are not historical facts. As forward-looking statements discuss future events or conditions, the statements often include words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “would,” “potential,” or similar expressions. Do not rely on forward-looking statements. Forward-looking statements detail management’s expectations regarding the future and are not guarantees. Forward-looking statements are assumptions based on information known to management only as of the date the statements are made and management undertakes no obligation to update forward-looking statements, except as required by applicable law.

Broadly speaking, forward-looking statements include:

- the potential impact of inflation on Company operations;
- projections of revenue, income, expenses, losses, earnings per share, capital expenditures, dividends, capital structure, loan volume, loan growth, deposit growth, or other financial items;
- descriptions of plans or objectives for future operations, products, or services;
- descriptions and projections related to management strategies for loans, deposits, investments, and borrowings;
- forecasts of future economic performance; and
- descriptions of assumptions underlying or relating to any of the foregoing.

Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements to be materially different from future results, performance, or achievements expressed or implied by the forward-looking statements. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties, including, but not limited to the following:

- the impact of inflation on the Company’s operations and credit losses;
- litigation liabilities, including related costs, expenses, settlements and judgments, or the outcome of matters before regulatory agencies, whether pending or commencing in the future;
- natural disasters impacting the Company’s operations;
- changes in political and economic conditions;
- the impact of bank failures and potential bank failures to the industry, the Bank’s deposit base and the FDIC’s deposit insurance fund;
- the discontinuation of LIBOR;
- the magnitude and frequency of changes to the FFTR implemented by the FOMC of the FRB;
- long-term and short-term interest rate fluctuations and the overall steepness of the U.S. Treasury yield curve, as well as their impact on the Company’s net interest income and Mortgage Banking operations;
- competitive product and pricing pressures in each of the Company’s five reportable segments;
- equity and fixed income market fluctuations;
- client bankruptcies and loan defaults;
- recession;
- future acquisitions;
- integrations of acquired businesses;
- changes in technology;
- changes in applicable laws and regulations or the interpretation and enforcement thereof;
- changes in fiscal, monetary, regulatory, and tax policies;
- changes in accounting standards;
- monetary fluctuations;
- changes to the Company’s overall internal control environment;
- the ability of the Company to remediate its material weaknesses in its internal control over financial reporting;
- success in gaining regulatory approvals when required;
- the Company’s ability to qualify for future R&D federal tax credits;
- the ability for Tax Providers to successfully market and realize the expected RA and RT volume anticipated by TRS;
- information security breaches or cyber security attacks involving either the Company or one of the Company’s third-party service providers; and
- other risks and uncertainties reported from time to time in the Company’s filings with the SEC, including Part 1 Item 1A “*Risk Factors.” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and Part II Item 1A “Risk Factors” of the current filing.*

### Accounting Standards Update

*For disclosure regarding the impact to the Company’s financial statements of ASUs, see Footnote 1 “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 footnotes have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reported periods.

*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, 2022.*

Management continually evaluates the Company’s accounting policies and estimates that it uses to prepare the consolidated financial statements. In general, management’s estimates and assumptions are based on historical experience, accounting and regulatory guidance, and information obtained from independent third-party professionals. Actual results may differ from those estimates made by management.

Critical accounting policies are those that management believes are the most important to the portrayal of the Company’s financial condition and operating results and require management to make estimates that are difficult, subjective and complex. Most accounting policies are not considered by management to be critical accounting policies. Several factors are considered in determining whether or not a policy is critical in the preparation of the financial statements. These factors include, among other things, whether the estimates have a significant impact on the financial statements, the nature of the estimates, the ability to readily validate the estimates with other information including independent third parties or available pricing, sensitivity of the estimates to changes in economic conditions and whether alternative methods of accounting may be utilized under GAAP. Management has discussed each critical accounting policy and the methodology for the identification and determination of critical accounting policies with the Company’s Audit Committee.

Republic believes its critical accounting policies and estimates relate to its ACLL and Provision.

**ACLL and Provision —** As of March 31, 2023, the Bank maintained an ACLL for expected credit losses inherent in the Bank’s loan portfolio, which includes overdrawn deposit accounts. Management evaluates the adequacy of the ACLL monthly and presents and discusses the ACLL with the Audit Committee and the Board of Directors quarterly.

Management’s evaluation of the appropriateness of the ACLL is often the most critical accounting estimate for a financial institution, as the ACLL requires significant reliance on the use of estimates and significant judgment as to the reliance on historical loss rates, consideration of quantitative and qualitative economic factors, and the reliance on a reasonable and supportable forecast.

Adjustments to the historical loss rate for current conditions include differences in underwriting standards, portfolio mix or term, delinquency level, as well as for changes in environmental conditions, such as changes in property values or other relevant factors. One-year forecast adjustments to the historical loss rate are based on the U.S. national unemployment rate and CRE values. Subsequent to the one-year forecasts, loss rates are assumed to immediately revert back to long-term historical averages.

The ACLL is significantly influenced by the composition, characteristics and quality of the Company’s loan portfolio, as well as the prevailing economic conditions and forecasts utilized. Material changes to these and other relevant factors may result in greater volatility to the ACLL, and therefore, greater volatility to the Company’s reported earnings.

### BUSINESS SEGMENT COMPOSITION

As of March 31, 2023, the Company was divided into five reportable segments: Traditional Banking, Warehouse Lending, Mortgage Banking, TRS, and RCS. Management considers the first three segments to collectively constitute “Core Bank” or “Core Banking” operations, while the last two segments collectively constitute RPG operations.

### (I) Traditional Banking segment

The Traditional Banking segment provides traditional banking products primarily to customers in the Company’s market footprint. As of March 31, 2023, Republic had 45 banking centers with locations as follows:

- Kentucky — 29
- Metropolitan Louisville — 18
- Central Kentucky — 7
- Georgetown — 1
- Lexington — 5
- Shelbyville — 1
- Northern Kentucky — 4
- Bellevue— 1
- Covington — 1
- Crestview Hills — 1
- Florence — 1
- Southern Indiana — 3
- Floyds Knobs — 1
- Jeffersonville — 1
- New Albany — 1
- Metropolitan Tampa, Florida — 7
- Metropolitan Cincinnati, Ohio — 4
- Metropolitan Nashville, Tennessee — 2

Republic’s headquarters are in Louisville, which is the largest city in Kentucky based on population.

The Bank’s principal 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, residential real estate loans and HELOCs. In addition, the Bank originates HEALs through its retail banking centers. Such loans are generally collateralized by owner-occupied, residential real estate 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 outside of the Bank’s market footprint.

**Commercial Lending —** The Bank conducts commercial lending activities primarily through Corporate Banking, Commercial Banking, Business Banking, and Retail Banking channels.

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

**Construction and Land Development Lending —** The Bank originates business loans for the construction of both single-family, residential properties and commercial properties (apartment complexes, shopping centers, office buildings). While not a focus for the Bank, the Bank may originate loans for the acquisition and development of residential or commercial land into buildable lots.

**Consumer Lending —** Traditional Banking consumer loans made by the Bank include home improvement and home equity loans, other secured and unsecured personal loans, and credit cards. Except for home equity loans, which are actively marketed in conjunction with single family, first lien residential real estate loans, other Traditional Banking consumer loan products (not including products offered through RPG), while available, are not and have not been actively promoted in the Bank’s markets.

**Aircraft Lending —** Aircraft loans are typically made to purchase or refinance personal aircrafts, along with engine overhauls and avionic upgrades. Loans range between $200,000 and $4,000,000 in size and have terms up to 20 years. The aircraft loan program is open to all fifty states. The credit characteristics of an aircraft borrower are higher than a typical consumer in that they must demonstrate and indicate a higher degree of credit worthiness for approval.

The Bank’s 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.

**Correspondent Lending —** The Bank began acquiring single family, first lien mortgage loans for investment through its Correspondent Lending channel during the first quarter of 2023. Correspondent Lending generally involves the Bank acquiring, primarily from its Warehouse Lending clients, closed loans that meet the Bank’s specifications. Substantially all loans purchased through the Correspondent Lending channel are purchased at a premium. Premiums on loans held for investment acquired through the Correspondent Lending channel will be amortized into interest income on the level-yield method over the expected life of the loan. Loans acquired through the Correspondent Lending channel are generally made to borrowers outside of the Bank’s historical market footprint.

**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 easily and 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 detail regarding the Traditional Banking segment under Footnote 17 “Segment Information” of Part I Item 1 “Financial Statements.”

### (II) Warehouse Lending segment

The Core Bank provides short-term, revolving credit facilities to mortgage bankers across the United States through mortgage warehouse lines of credit. These credit facilities are primarily secured by single-family, first-lien residential real estate loans. The credit facility enables the mortgage banking clients to close single-family, first-lien residential real estate 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 line for an average of 15 to 30 days. Advances for Reverse mortgage loans and construction loans typically remain on the line 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 line 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.

#### See additional detail regarding the Warehouse Lending segment under Footnote 17 “Segment Information” of Part I Item 1 “Financial Statements.”

### (III) Mortgage Banking segment

Mortgage Banking activities primarily include 15-, 20- and 30-year fixed-term, single-family, first-lien residential real estate loans that are originated and sold into the secondary market, primarily to the FHLMC and the FNMA. The Bank typically retains servicing on loans sold into the secondary market. Administration of loans with servicing retained by the Bank includes collecting principal and interest payments, escrowing funds for property taxes and property insurance, and remitting payments to secondary market investors. The Bank receives fees for performing these standard servicing functions.

As part of the sale of loans with servicing retained, the Bank records MSRs. MSRs 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. MSRs are capitalized as separate assets. This transaction is posted to net gain on sale of loans, a component of “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 MSRs to be recorded when the loans are initially sold with servicing retained by the Bank. The carrying value of MSRs is initially amortized in proportion to and over the estimated period of net servicing income and subsequently adjusted quarterly based on the weighted average remaining life of the underlying loans. The MSR amortization is recorded as a reduction to net servicing income, a component of Mortgage Banking income.

With the assistance of an independent third-party, the MSRs asset is reviewed at least quarterly for impairment based on the fair value of the MSRs 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 life of the underlying loans serviced. The estimated life of the loans serviced is significantly influenced by market interest rates. During a period of declining interest rates, the fair value of the MSRs 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 MSRs would be expected to increase as prepayment speeds on the underlying loans would be expected to decline.

*See additional detail regarding the Mortgage Banking segment under Footnote 12 “Mortgage Banking Activities” and Footnote 17 “Segment Information” of Part I Item 1 “Financial Statements.”*

### (IV) Tax Refund Solutions segment

Through the TRS segment, the Bank is one of a limited number of financial institutions that facilitates the receipt and payment of federal and state tax refund products and offers a credit product through third-party tax preparers located throughout the U.S., as well as tax-preparation software providers (collectively, the “Tax Providers”). The majority of all the business generated by the TRS business occurs during the first half of each year. During the second half of each year, TRS generates limited revenue and incurs costs preparing for the next year’s tax season. TRS also originated $98 million of ERAs during December 2022 related to tax returns that were anticipated to be filed during the first quarter 2023 tax filing season.

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. 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 RA credit product is a loan made in conjunction with the filing of a taxpayer’s federal tax return, which allows the taxpayer to borrow funds as an advance of a portion of their tax refund. The RA product had the following features during the first quarters of 2023 and 2022:

- Offered only during the first two months of each year;
- The taxpayer was given the option to choose from multiple loan-amount tiers, subject to underwriting, up to a maximum advance amount of $6,250;
- No requirement that the taxpayer pays for another bank product, such as an RT;
- Multiple disbursement methods were available with most Tax Providers, including direct deposit, prepaid card, or check, based on the taxpayer-customer’s election;
- Repayment of the RA to the Bank is deducted from the taxpayer’s tax refund proceeds; and
- If an insufficient refund to repay the RA occurs:
- there is no recourse to the taxpayer,
- no negative credit reporting on the taxpayer, and
- no collection efforts against the taxpayer.

The ERA credit product is also a loan that allows a taxpayer to borrow funds as an advance of a portion of their tax refund. Unlike the RA product described immediately above, however, which is originated in conjunction with the filing of the taxpayer’s federal tax return, an ERA is originated prior to the filing of the taxpayer’s federal tax return and prior to the taxpayer receiving their year-end taxable income documentation, *e.g.,* W-2. As such, the Company generally uses paystub information to estimate the tax refund and 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 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 related to the first quarter 2023 tax filing season had the following features:

- Offered only during December 2022 and January 2023;
- The taxpayer had the option to choose from multiple loan-amount tiers, subject to underwriting, up to a maximum advance amount of $1,000;
- No requirement that the taxpayer pays for another bank product, such as an RT;
- Multiple disbursement methods were available with most Tax Providers, including direct deposit or prepaid card, based on the taxpayer-customer’s election;
- Repayment of the ERA to the Bank is deducted from the taxpayer’s tax refund proceeds; and
- If an insufficient refund to repay the ERA occurs, including the failure to file a federal tax return through a Republic Tax Provider:
- there is no recourse to the taxpayer,
- no negative credit reporting on the taxpayer, and
- no collection efforts against the taxpayer.

The Company reports fees paid for the RAs, including ERAs, as interest income on loans. RAs that were originated related to the first quarter 2022 tax season were repaid, on average, within 32 days after the taxpayer’s tax return was submitted to the applicable taxing authority. RAs do not have a contractual due date but the Company considered a RA, related to the first quarter 2022 tax season, delinquent if it remained unpaid 35 days after the taxpayer’s tax return was submitted to the applicable taxing authority. The number of days for delinquency eligibility is based on management’s annual analysis of tax return processing times. Provisions on RAs are estimated when advances are made. Unpaid RAs, including ERAs, related to the first quarter tax season of a given year are charged-off by June 30th of that year, with RAs collected during the second half of that year recorded as recoveries of previously charged-off loans.

Related to the overall credit losses on RAs, including ERAs, the Bank’s ability to control losses is highly dependent upon its ability to predict the taxpayer’s likelihood to receive the tax refund as claimed on the taxpayer’s tax return. Each year, the Bank’s RA approval model is based primarily on the prior-year’s tax refund payment patterns. Because the substantial majority of the RA volume occurs each year before that year’s tax refund payment patterns can be analyzed and subsequent underwriting changes made, credit losses during a current 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 RA, including the ERA, product parameters. Further changes in the RA product parameters do not ensure positive results and could have an overall material negative impact on the performance of all RA product offerings and therefore on the Company’s financial condition and results of operations.

#### See additional detail regarding the RA product under Footnote 5 “Loans and Allowance for Credit Losses” of Part I Item 1 “Financial Statements.”

**Cancelled Sale Transaction -** As previously disclosed, Green Dot Corporation paid RB&T a contract termination fee of $5.0 million during the first quarter of 2022 related to the cancelled Sale Transaction.

### Republic Payment Solutions division

RPS is currently managed and operated within the TRS segment. The RPS division offers general-purpose reloadable prepaid cards, payroll debit cards, and limited-purpose demand deposit accounts with linked debit cards as an issuing bank through third-party service providers. Until the operating results of the RPS division are material to the Company’s overall results of operations, they will be reported as part of the TRS segment. The Company does not expect to report the RPS division as a separate reportable segment until such time, if any, that it meets quantitative reporting thresholds.

The Company reports fees related to RPS programs 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.”

### (V) Republic Credit Solutions segment

**Republic Credit Solutions segment —** 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. The Bank uses third-party service providers for certain services such as marketing and loan servicing of RCS loans. Additional information regarding consumer loan products offered through RCS follows:

- RCS line-of-credit products – Using separate third-party service providers, the Bank originates two line-of-credit products to generally subprime borrowers in multiple states.
- RCS’s LOC I represented the substantial majority of RCS activity during 2022 and 2023. Elastic Marketing, LLC and Elevate Decision Sciences, LLC, are third-party service providers for the product and are subject to the Bank’s oversight and supervision. Together, these companies provide the Bank with certain marketing, servicing, technology, and support services, while a separate third-party provides customer support, servicing, and other services on the Bank’s behalf. The Bank is the lender for this product and is marketed as such. Furthermore, the Bank controls the loan terms and underwriting guidelines, and the Bank exercises consumer compliance oversight of the product.

The Bank sells participation interests in this product. These participation interests are a 90% interest in advances made to borrowers under the borrower’s line-of-credit account, and the participation interests are generally sold three business days following the Bank’s funding of the associated advances. Although the Bank retains a 10% participation interest in each advance, it maintains 100% ownership of the underlying LOC I account with each borrower. Loan balances held for sale through this program are carried at the lower of cost or fair value.

- One of RCS’s existing third-party service providers, subject to the Bank’s oversight and supervision, provides the Bank with marketing services and loan servicing for the LOC II product. The Bank is the lender for this product and is marketed as such. Furthermore, the Bank controls the loan terms and underwriting guidelines, and the Bank exercises consumer compliance oversight of this product.

The Bank sells participation interests in this product. These participation interests are a 95% interest in advances made to borrowers under the borrower’s line-of-credit account, and the participation interests are generally sold three business days following the Bank’s funding of the associated advances. Although the Bank retains a 5% participation interest in each advance, it maintains 100% ownership of the underlying LOC II account with each borrower. Loan balances held for sale through this program are carried at the lower of cost or fair value.

- RCS installment loan product – Through RCS, the Bank offers installment loans with terms ranging from 12 to 60 months to borrowers in multiple states. The same third-party service provider for RCS’s LOC II is the third-party provider for the installment loans. This third-party provider is subject to the Bank’s oversight and supervision and provides the Bank with marketing services and loan servicing for these RCS installment loans. The Bank is the lender for these RCS installment 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 “held for sale” on the Bank’s balance sheet, with the intention to sell these

loans to a third-party, who is an affiliate of the Bank’s third-party service provider, generally within sixteen 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.

- RCS healthcare receivables products – The Bank originates healthcare-receivables products across the U.S. through three different third-party service providers.
- For two of the programs, the Bank retains 100% of the receivables, with recourse in the event of default.
- For the remaining program, in some instances the Bank retains 100% of the receivables originated, with recourse in the event of default, and in other instances, the Bank sells 100% of the receivables generally within one month of origination. Loan balances held for sale through this program are carried at the lower of cost or fair value.

The Company reports interest income and loan origination fees earned on RCS loans under “Loans, including fees,” while any gains or losses on sale and mark-to-market adjustments of RCS loans are reported as noninterest income under “Program fees.”

### OVERVIEW (Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022)

Total Company net income for the first quarter of 2023 was $28.1 million, a $258,000, or 1%, decrease from the same period in 2022. Diluted EPS was $1.42 for first quarters of 2023 and 2022.

The following are general highlights by reportable segment:

### Traditional Banking segment

- Net income increased $6.5 million, or 148%, for the first quarter of 2023 compared to the same period in 2022.
- Net interest income increased $14.0 million, or 39%, for the first quarter of 2023 compared to the same period in 2022.
- Provision was a net charge of $3.0 million for the first quarter of 2023 compared to a net charge of $320,000 for the same period in 2022.
- Noninterest income increased $412,000, or 6%, for the first quarter of 2023 compared to the same period in 2022.
- Noninterest expense increased $2.6 million, or 7%, for the first quarter of 2023 compared to the same period in 2022.
- Total Traditional Bank loans increased $310 million, or 8%, during the first quarter of 2023.
- Total nonperforming loans to total loans for the Traditional Banking segment was 0.34% as of March 31, 2023 compared to 0.37% as of December 31, 2022.
- Delinquent loans to total loans for the Traditional Banking segment was 0.13% as of March 31, 2023 compared to 0.16% as of December 31, 2022.
- Total Traditional Bank deposits increased $158 million, or 3.91%, during the first quarter of 2023.

### Warehouse Lending segment

- Net income decreased $2.3 million, or 75%, for the first quarter of 2023 compared to the same period in 2022.
- Net interest income decreased $2.4 million, or 54%, for the first quarter of 2023 compared to the same period in 2022.
- The Warehouse Provision was a net charge of $135,000 for the first quarter of 2023 compared to a net credit of $401,000 for the same period in 2022.
- Average committed Warehouse lines decreased to $1.0 billion in the first quarter of 2023 compared to $1.4 billion in the first quarter of 2022.
- Average line usage was 31% during the first quarter of 2023 compared to 42% during the same period in 2022.

### Mortgage Banking segment

- Within the Mortgage Banking segment, mortgage banking income decreased $1.9 million, or 70%, during the first quarter of 2023 compared to the same period in 2022 due to a significant decline in volume.

### Tax Refund Solutions segment

- Net income decreased $3.0 million, or 19%, for the first quarter of 2023 compared to the same period in 2022. Net income for the first quarter of 2022 included a contract termination fee related to the cancelled Sale Transaction, which added approximately $3.8 million of after-tax net income to that quarter.
- Net interest income increased $16.4 million, or 106%, for the first quarter of 2023 compared to the same period in 2022.
- Total RA originations were $737 million during the first quarter of 2023 compared to $311 million for the first quarter of 2022.
- Overall, TRS recorded a net charge to the Provision of $21.8 million during the first quarter of 2023 compared to a net charge to the Provision of $7.9 million for the same period in 2022.
- Noninterest income decreased $6.3 million for the first quarter of 2023 compared to the same period in 2022. Noninterest income for the first quarter of 2022 included a pre-tax $5.0 million contract termination fee.
- Net RT revenue decreased $1.2 million for the first quarter of 2023 compared to the same period in 2022.
- Noninterest expense was $5.6 million for the first quarter of 2023 compared to $5.1 million for the same period in 2022.

### Republic Credit Solutions segment

- Net income was flat at $5.4 million for the first quarters of 2023 and 2022.
- Net interest income increased $1.7 million, or 25%, for the first quarter of 2023 compared to the same period in 2022.
- Overall, RCS recorded a net charge to the Provision of $1.8 million during the first quarter of 2023 compared to a net charge of $1.4 million for the same period in 2022.
- Noninterest income decreased $568,000, or 18%, from the first quarter of 2022 to the first quarter of 2023.
- Noninterest expense was $2.4 million for the first quarter of 2023 and $1.6 million for the same period in 2022.
- Total nonperforming loans to total loans for the RCS segment was 0.70% as of March 31, 2023 compared to 0.70% as of December 31, 2022.
- Delinquent loans to total loans for the RCS segment was 10.50% as of March 31, 2023 compared to 8.53% as of December 31, 2022.

### RESULTS OF OPERATIONS (Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022)

### Net Interest Income

Banking operations are significantly dependent upon net interest income. Net interest income is the difference between interest income on interest-earning assets, such as loans and investment securities and the interest expense on interest-bearing liabilities used to fund those assets, such as interest-bearing deposits, securities sold under agreements to repurchase, and FHLB advances. Net interest income is impacted by both changes in the amount and composition of interest-earning assets and interest-bearing liabilities, as well as market interest rates.

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

A large amount of the Company’s financial instruments tracks closely with, or is primarily indexed to, either the FFTR, Prime, or LIBOR. These rates trended lower beginning in the first quarter of 2020 with the onset of the COVID pandemic, as the FOMC reduced the FFTR to approximately 25 basis points. During 2022 inflation rose to levels not seen in approximately 40 years. In response, the FOMC began executing a quantitative tightening program by reducing its balance sheet, selling certain types of bonds in the market, and repeatedly increasing the FFTR. The FOMC’s increases to the FFTR during 2022 and the first three months of 2023 included the following:

### Table 1 — Increases to the Federal Funds Target Rate during 2022 and 2023

| ​ ​ Date ​ | ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Increase to the FFTR ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ FFTR after Increase ​ ​ |
| --- | --- | --- | --- | ---: | --- | --- | ---: |
| March 17, 2022 | ​ | ​ | ​ | 0.25% | ​ | **​** | 0.50% |
| May 5, 2022 | ​ | ​ | ​ | 0.50 ​ | ​ | **​** | 1.00 ​ |
| June 16, 2022 | ​ | ​ | ​ | 0.75 ​ | ​ | **​** | 1.75 ​ |
| July 27, 2022 | ​ | ​ | ​ | 0.75 ​ | ​ | **​** | 2.50 ​ |
| September 21, 2022 | ​ | ​ | ​ | 0.75 ​ | ​ | **​** | 3.25 ​ |
| November 2, 2022 | ​ | ​ | ​ | 0.75 ​ | ​ | **​** | 4.00 ​ |
| December 15, 2022 | ​ | ​ | ​ | 0.50 ​ | ​ | **​** | 4.50 ​ |
| February 2, 2023 | ​ | ​ | ​ | 0.25 ​ | ​ | **​** | 4.75 ​ |
| March 23, 2023 | ​ | ​ | ​ | 0.25 ​ | ​ | **​** | 5.00 ​ |

The FOMC’s actions and signals continued to place upward pressure on short-term market interest rates throughout the second half of 2022 and the first quarter of 2023. While long-term interest rates initially rose in tandem with the increases to the FFTR through the middle part of 2022, they began to generally decline during the second half of 2022 and into 2023 as the market generally began to anticipate a recession to take place in 2023. As a result of the increase in short-term interest rates and the moderation of long-term interest rates, the yield curve has been inverted for several months, with short-term rates generally higher than long-term rates on the yield curve. Further monetary tightening by the FOMC in the future will likely cause short-term interest rates to continue to increase. At this time, the future of long-term market interest rates remains uncertain. Increases in short-term market interest rates are expected to impact the various business segments of the Company differently and will be discussed in further detail in the sections below.

Total Company net interest income was $92.6 million during the first quarter of 2023 and represented an increase of $29.4 million, or 47%, from the first quarter of 2022. Total Company net interest margin increased to 6.52% during the first quarter of 2023 compared to 4.34% for the same period in 2022.

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

### Traditional Banking segment

The Traditional Banking’s net interest income increased $14.0 million, or 39%, for the first quarter of 2023 compared to the same period in 2022. Traditional Banking’s net interest margin was 4.07% for the first quarter of 2023, an increase of 117 basis points from the same period in 2022.

This increase in net interest income and the related expansion in NIM resulted primarily from the benefits of the Traditional Bank’s low-cost core deposit base and strong year-over-year growth in average loan balances. These benefits were partially offset by a decline in the Company’s average interest-earning cash balances, with these balances near more normal, historical levels during the first quarter of 2023 as the excess liquidity from the various government stimulus programs related to COVID continued to wane throughout the industry. The following highlights some of the more impactful items affecting net interest income during the quarter for the Traditional Bank.

- Average Traditional Bank loans grew from $3.5 billion with a weighted-average yield of 3.95% during the first quarter of 2022 to $3.9 billion with a weighted average yield of 4.59% during the first quarter of 2023.
- Average investments grew to $773 million with a weighted-average yield of 2.61% during the first quarter of 2023 from $606 million with a weighted-average yield of 1.39% for the first quarter of 2022.
- Average interest-earning cash was $238 million with a weighted-average yield of 4.55% during the first quarter of 2023 compared to $858 million with a weighted-average yield of 0.20% for the first quarter of 2022.
- The Traditional Bank’s cost of average total deposits, including the positive benefit of its average noninterest-bearing deposits, increased from 0.08% during the first quarter of 2022 to 0.47% for the first quarter of 2023.

As previously disclosed, short-term interest rates have risen dramatically since March of 2022 as a result of FOMC monetary actions. Short-term rates could further increase in the second quarter of 2023 as a result of continued monetary tightening by the FOMC. Over the past year, increases in short-term interest rates were generally favorable to the Traditional Bank’s net interest income and net interest margin primarily as a result of the substantial amount of immediately-repricing, interest-earning cash it maintained on its balance sheet and its ability to sustain a low cost of deposits in relation to the rising FFTR. During the third quarter of 2022, however, the Traditional Bank began to use its excess cash to fund a decline in deposit balances. This trend of declining interest-earning cash to fund decreasing deposit balances continued during the first quarter of 2023. In addition, during the first quarter of 2023, the Traditional Bank’s interest-bearing deposit costs began to increase more significantly during the latter part of the quarter due to customer pricing pressures.

As a result of the declining cash balances and the additional customer pricing pressures, the Bank began to experience a diminishing benefit to its net interest income and net interest margin with additional increases in the FFTR during the first quarter of 2023. Management also believes the Traditional Bank will experience some net interest margin compression on a linked quarter basis during the remainder of 2023 as any positive impacts to the Traditional Bank’s net interest income and net interest margin from any increase in short-term interest rates will likely be more than offset by the negative impact of lower interest-earning cash and deposit balances and the rising cost of interest-bearing deposits. Additional variables which may also impact the Traditional Bank’s net interest income and net interest margin in the future include, but are not limited to, the actual steepness and shape of the yield curve, future demand for the Traditional Bank’s financial products, and the Traditional Bank’s overall future liquidity needs.

*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” of this document.*

### Warehouse Lending segment

Net interest income within the Warehouse segment decreased $2.4 million, or 54%, from the first quarter of 2022 to the first quarter of 2023, driven by decreases in both average outstanding balances and net interest margin. Overall average outstanding Warehouse balances declined from $585 million during the first quarter of 2022 to $330 million for the first quarter of 2023, as home-mortgage refinancing dipped from a significantly higher volume in early 2022. Driving this decrease in average outstanding balances was a decline in committed lines-of-credit to $1.0 billion as of March 31, 2023 from $1.4 billion as of March 31, 2022. Concurrent with the decline in committed lines of credit, the average usage rates for Warehouse lines decreased to 31% during the first quarter of 2023 from 42% for the first quarter of 2022.

The Warehouse net interest margin compressed 56 basis points from 3.09% during the first quarter of 2022 to 2.53% during the first quarter of 2023. The decline in the Warehouse net interest margin occurred as its funding costs, as charged through the Company’s internal FTP methodology, generally rose in tandem with the increase in short-term interest rates since rates began rising in March 2022, while its yield increases were delayed until the adjustable rates on its clients’ lines of credit surpassed their contractual interest rate floors. These interest rate floors benefited Warehouse’s net interest margin substantially during 2020 and 2021 when market rates declined to historical lows but have produced margin compression since the onset of the FFTR increases during the first quarter of 2022.

Additional increases in short-term interest rates and overall market rates are generally believed by management to be favorable to Warehouse’s net interest income and net interest margin in the near term, however, the benefit of an increase in rates could be partially or entirely offset by a reduction in average outstanding balances driven by a decline in demand from Warehouse clients, as higher long-term interest rates generally drive lower demand for Warehouse borrowings. In addition, a lower demand for Warehouse borrowings could cause additional competitive pricing pressures for the industry, driving down the yield Warehouse earns on its lines of credits.

### Tax Refund Solutions segment

Net interest income within the TRS segment was up $16.4 million from the first quarter of 2022 to the first quarter of 2023. Net interest income at TRS includes income from its prepaid card products as well as the income associated with its tax-related credit products.

The prepaid card product component of TRS drove a $3.1 million increase to net interest income for the segment. This increase was generally driven by a higher crediting rate applied through the Company’s internal FTP. The prepaid card FTP credit yield was 3.82% for average prepaid card-related balances of $377 million during the first quarter of 2023 compared to 0.37% for average prepaid card-related balances of $397 million during the first quarter of 2022.

Related to the segment’s tax-related products, net interest income increased $13.3 million for the quarter. Loan-related interest and fees increased $18.0 million for the quarter and was driven primarily by a $426 million increase in RA origination volume, most of which resulted from a new contract with a large national tax preparation provider. This increase in loan revenue was partially offset by a $4.4 million increase to the segment’s net cost of funds as applied through its internal FTP.

#### See additional detail regarding the RA product under Footnote 5 “Loans and Allowance for Credit Losses” of Part I Item 1 “Financial Statements.”

### Republic Credit Solutions segment

RCS’s net interest income increased $1.7 million, or 25%, from the first quarter of 2022 to the first quarter of 2023. The increase was driven primarily by an increase in fee income from RCS’s LOC II product. Loan fees on this product, recorded as interest income on loans, increased $2.0 million from the first quarter of 2022 to the first quarter of 2023.

The impact of higher short-term interest rates to RCS during 2023 is expected to be negative to the segment’s financial results, although the exact amount of the negative impact will depend on the internal FTP cost assigned, as well as the overall volume and mix of loans it generates.

The following table presents the average balance sheets for the three-month periods ended March 31, 2023 and 2022, along with the related calculations of tax-equivalent net interest income, net interest margin and net interest spread for the related periods.

### Table 2 — Total Company Average Balance Sheets and Interest Rates

*(dollars in thousands)*

| ​ ​ ​ ​ ASSETS ​ Interest-earning assets: | ​ ​ ​ ​ ​ ​ ​ ​ | ​ ​ Three Months Ended March 31, 2023 Average Balance ​ ​ ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ Interest ​ ​ ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ Average Rate ​ ​ ​ ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ ​ | ​ ​ Three Months Ended March 31, 2022 Average Balance ​ ​ ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ Interest ​ ​ ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ Average Rate ​ ​ ​ ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ ​ |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Federal funds sold and other interest-earning deposits | ​ | $241,211 | ​ | $2,700 |  | 4.48% |  | ​ | $861,822 | ​ | $429 |  | 0.20% | ​ |
| Investment securities, including FHLB stock (1) | ​ | ​ 773,172 | ​ | ​ 5,047 |  | 2.61 ​ | ​ | ​ | ​ 606,182 | ​ | ​ 2,111 |  | 1.39 ​ | ​ |
| TRS Refund Advance loans (2) | ​ | ​ 249,378 | ​ | ​ 31,405 | ​ | 50.37 ​ | ​ | ​ | ​ 84,557 | ​ | ​ 13,444 | ​ | 63.60 ​ | ​ |
| RCS LOC products (2) | ​ | ​ 31,086 | ​ | ​ 7,962 | ​ | 102.45 ​ | ​ | ​ | ​ 26,279 | ​ | ​ 6,257 | ​ | 95.24 ​ | ​ |
| Other RPG loans (3) (6) | ​ | 141,975 | ​ | ​ 2,625 |  | 7.40 ​ | ​ | ​ | 120,917 | ​ | ​ 1,984 |  | 6.56 ​ | ​ |
| Outstanding Warehouse lines of credit (4) (6) | ​ | ​ 329,716 | ​ | ​ 5,720 | ​ | 6.94 ​ | ​ | ​ | ​ 584,519 | ​ | ​ 4,878 | ​ | 3.34 ​ | ​ |
| All other Core Bank loans (5) (6) | ​ | 3,913,388 | ​ | ​ 44,897 |  | 4.59 ​ | ​ | ​ | 3,538,983 | ​ | ​ 35,007 |  | 3.96 ​ | ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Total interest-earning assets | ​ | 5,679,926 | ​ | 100,356 |  | 7.07 ​ | ​ | ​ | 5,823,259 | ​ | 64,110 |  | 4.40 ​ | ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Allowance for credit loss | ​ | (83,195) | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | (69,287) | ​ | ​ ​ | ​ | ​ ​ | ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| **Noninterest-earning assets:** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Noninterest-earning cash and cash equivalents | ​ | 295,905 | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | 354,165 | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Premises and equipment, net | ​ | 32,232 | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | 35,460 | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Bank owned life insurance | ​ | 102,004 | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | 99,532 | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Other assets (1) | ​ | 186,169 | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | 180,913 | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Total assets | ​ | $6,213,041 | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | $6,424,042 | ​ | ​ ​ | ​ | ​ ​ | ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| **​** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| **Interest-bearing liabilities:** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Transaction accounts | ​ | $1,644,777 | ​ | $1,742 |  | 0.42% | ​ | ​ | $1,692,120 | ​ | $96 |  | 0.02% | ​ |
| Money market accounts | ​ | 748,623 | ​ | ​ 2,106 |  | 1.13 ​ | ​ | ​ | 798,943 | ​ | ​ 94 |  | 0.05 ​ | ​ |
| Time deposits | ​ | 225,847 | ​ | ​ 859 |  | 1.52 ​ | ​ | ​ | 261,703 | ​ | ​ 641 |  | 0.98 ​ | ​ |
| Reciprocal money market and time deposits | ​ | ​ 43,852 | ​ | ​ 171 | ​ | 1.56 ​ | ​ | ​ | ​ 74,730 | ​ | ​ 48 | ​ | 0.26 ​ | ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Total interest-bearing deposits | ​ | 2,663,099 | ​ | 4,878 |  | 0.73 ​ | ​ | ​ | 2,827,496 | ​ | 879 |  | 0.12 ​ | ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| SSUARs and other short-term borrowings | ​ | 202,910 | ​ | 248 |  | 0.49 ​ | ​ | ​ | 300,169 | ​ | 28 |  | 0.04 ​ | ​ |
| Federal Home Loan Bank advances and other long-term borrowings | ​ | 245,344 | ​ | 2,588 |  | 4.22 ​ | ​ | ​ | 23,333 | ​ | 36 |  | 0.62 ​ | ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Total interest-bearing liabilities | ​ | 3,111,353 | ​ | 7,714 |  | 0.99 ​ | ​ | ​ | 3,150,998 | ​ | 943 |  | 0.12 ​ | ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| **Noninterest-bearing liabilities and Stockholders’ equity:** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Noninterest-bearing deposits | ​ | 2,089,162 | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | 2,312,233 | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Other liabilities | ​ | 133,321 | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | 112,699 | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Stockholders’ equity | ​ | 879,205 | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | 848,112 | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Total liabilities and stock-holders’ equity | ​ | $6,213,041 | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | $6,424,042 | ​ | ​ ​ | ​ | ​ ​ | ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Net interest income | ​ | ​ ​ | ​ | $92,642 | ​ | ​ ​ | ​ | ​ | ​ ​ | ​ | $63,167 | ​ | ​ ​ | ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Net interest spread | ​ | ​ ​ | ​ | ​ ​ |  | 6.08% | ​ | ​ | ​ ​ | ​ | ​ ​ |  | 4.28% | ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Net interest margin | ​ | ​ ​ | ​ | ​ ​ |  | 6.52% | ​ | ​ | ​ ​ | ​ | ​ ​ |  | 4.34% | ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |

*(1) For the purpose of this calculation, the fair market value adjustment on debt securities is included as a component of other assets.*

*(2) Interest income for Refund Advances and RCS line-of-credit products is composed entirely of loan fees.*

*(3) Interest income includes loan fees of $933,000 and $662,000 for the three months ended March 31, 2023 and 2022.*

*(4) Interest income includes loan fees of $248,000 and $574,000 for the three months ended March 31, 2023 and 2022.*

*(5) Interest income includes loan fees of $946,000 and $2.3 million for the three months ended March 31, 2023 and 2022.*

*(6) Average balances for loans include the principal balance of nonaccrual loans and loans held for sale, and are inclusive of all loan premiums, discounts, fees and costs.*

Table 3 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

*(in thousands)*

| ​ ​ ​ ​ ​ ​ Interest income: ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ | ​ ​ ​ Three Months Ended March 31, 2023 ​ Compared to ​ Three Months Ended March 31, 2022 Total Net Change ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ Increase / (Decrease) Due to Volume ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Rate ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- |
| Federal funds sold and other interest-earning deposits | **​** | $2,271 | ​ | $(524) | ​ | $2,795 | ​ |
| Investment securities, including FHLB stock | ​ | ​ 2,936 | ​ | ​ 703 | ​ | ​ 2,233 | ​ |
| TRS Refund Advance loans | **​** | ​ 17,961 | ​ | ​ 21,282 | ​ | ​ (3,321) | ​ |
| RCS LOC products | **​** | ​ 1,705 | ​ | ​ 1,206 | ​ | ​ 499 | ​ |
| Other RPG loans | **​** | 641 | ​ | 371 | ​ | 270 | ​ |
| Outstanding Warehouse lines of credit | **​** | ​ 842 | ​ | ​ (2,786) | ​ | ​ 3,628 | ​ |
| All other Core Bank loans | **​** | 9,890 | ​ | 3,940 | ​ | 5,950 | ​ |
| Net change in interest income | **​** | 36,246 | ​ | 24,192 | ​ | 12,054 | ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| **Interest expense:** | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Transaction accounts | **​** | 1,646 | ​ | (2) | ​ | 1,648 | ​ |
| Money market accounts | **​** | 2,011 | ​ | (7) | ​ | 2,018 | ​ |
| Time deposits | **​** | 219 | ​ | (98) | ​ | 317 | ​ |
| Reciprocal money market and time deposits | **​** | ​ 123 | ​ | (27) | ​ | 150 | ​ |
| SSUARs and other short-term borrowings | **​** | 220 | ​ | (12) | ​ | 232 | ​ |
| Federal Home Loan Bank advances | **​** | 2,552 | ​ | 1,581 | ​ | 971 | ​ |
| Net change in interest expense | **​** | 6,771 | ​ | 1,435 | ​ | 5,336 | ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |
| Net change in net interest income | **​** | $29,475 | ​ | $22,757 | ​ | $6,718 | ​ |

### Provision

Total Company Provision was a net charge of $26.8 million for the first quarter of 2023 compared to a net charge of $9.2 million for the same period in 2022.

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

### Traditional Banking segment

The Traditional Banking Provision during the first quarter of 2023 was a net charge of $3.0 million compared to a net charge of $320,000 for the first quarter of 2022. An analysis of the Provision for the first quarter of 2023 compared to the same period in 2022 follows:

- The net charge during the first quarter of 2023 was primarily driven by the Day-1 Provision of $2.7 million for the acquired CBank non-PCD loans.
- The remaining net charge of $295,000 to the Traditional Bank Provision was primarily from general formula reserves applied to $92 million of Traditional Bank legacy loan growth from December 31, 2022, to March 31, 2023, which excludes the loans acquired from the CBank acquisition.

As a percentage of total Traditional Bank loans, the Traditional Banking ACLL was 1.33% as of March 31, 2023 compared to 1.32% as of December 31, 2022 and 1.39% as of March 31, 2022. The Company believes, based on information presently available, that it has adequately provided for Traditional Banking loan losses as of March 31, 2023.

*See the sections titled “Allowance for Credit Losses” and “Asset Quality” in this section of the filing under “Comparison of Financial Condition” for additional discussion regarding the Provision and the Bank’s credit quality.*

### Warehouse Lending segment

Warehouse recorded a net charge to the Provision of $135,000 for the first quarter of 2023 compared to a net credit of $401,000 for the same period in 2022. Provision for both periods reflected changes in general reserves consistent with changes in outstanding period-end balances. Outstanding Warehouse period-end balances increased $54 million during the first quarter of 2023 compared to a decrease of $160 million during the first quarter of 2022.

As a percentage of total Warehouse outstanding balances, the Warehouse ACLL was 0.25% as of March 31, 2023, December 31, 2021, and March 31, 2022. The Company believes, based on information presently available, that it has adequately provided for Warehouse loan losses as of March 31, 2023.

### Tax Refund Solutions segment

TRS recorded a net charge to the Provision of $21.8 million during the first quarter of 2023 compared to a net charge of $7.9 million for the same period in 2022. Substantially all TRS Provision in both periods was related to its RA product.

TRS recorded a charge to the Provision for RAs, including ERAs, of $22.0 million, or 2.98% of its $737 million in RAs originated during the first quarter of 2023 compared to a net charge to the Provision of $8.3 million, or 2.67% of its $311 million of RAs originated during the first quarter of 2022. The $13.7 million increase in Provision for the first quarter of 2023 was primarily due to the increased volume from the previously mentioned new contract with a large national tax preparation provider which generated approximately $462 million in new RA volume during the first quarter of 2023.

RAs related to a first quarter tax filing season are only originated during December of the previous year and the first two months of the current year. As is the case each year as of March 31st, the Allowance related to RAs is an estimate with that estimate finalized during the second quarter when all uncollected RAs are ultimately charged off as of June 30th. The final charge-off figures posted during the second quarter of a calendar year can be meaningfully different (higher or lower) than its March 31st estimate based on actual paydowns received during the second quarter. RAs collected during the second half of each year are recorded as recoveries of previously charged-off loans. TRS’s loss rate as of June 30, 2022 was 2.85% of total originations and it finished 2022 with a RA loss rate of 2.20% of total RAs originated.

For factors affecting the comparison of the TRS results of operations for the first quarter of 2023 and the first quarter of 2022, see section titled “*OVERVIEW (Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022) - Tax Refund Solutions.”*

#### See additional detail regarding the EA product under Footnote 5 “Loans and Allowance for Credit Losses” of Part I Item 1 “Financial Statements.”

### Republic Credit Solutions segment

As illustrated in Table 4 below, RCS recorded a net charge to the Provision of $1.8 million during the first quarter of 2023 compared to a net charge to the Provision of $1.4 million for the same period in 2022. The increase in the Provision was driven primarily by a $450,000 increase in net charge-offs for RCS’s LOC II product. The $450,000, or 63%, increase in net charge-offs within the LOC II product was driven by a $6.3 million, or 126%, increase in average outstanding balances from the first quarter of 2022 to the first quarter of 2023.

While RCS loans generally return higher yields, they also present a greater credit risk than Traditional Banking loan products. As a percentage of total RCS loans, the RCS ACLL was 12.34% as of March 31, 2023, 13.73% as of December 31, 2022, and 13.63% as of March 31, 2022. The Company believes, based on information presently available, that it has adequately provided for RCS loan losses as of March 31, 2023.

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

### Table 4 — RCS Provision by Product

*(dollars in thousands)*

| ​ ​ Product: | ​ ​ ​ ​ | ​ ​ Three Months Ended Mar. 31, 2023 ​ ​ | ​ ​ ​ | ​ ​ 2022 ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ $ Change ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ % Change ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Lines of credit | ​ | $1,825 | ​ | $1,403 | **​** | $422 | ​ | 30% |
| Healthcare receivables | ​ | ​ 14 | ​ | ​ (8) | **​** | ​ 22 | ​ | NM **​** |
| **Total** | ​ | $1,839 | ​ | $1,395 | **​** | $444 | ​ | 32% |

### Table 5 — Summary of Loan and Lease Loss Experience

*(dollars in thousands)*

| ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ Three Months Ended March 31, 2023 ​ ​ ​ | ​ ​ ​ ​ ​ 2022 ​ ​ ​ ​ |
| --- | --- | --- | --- |
| **ACLL at beginning of period** | **​** | $70,413 ​ | $64,577 **​** |
| **​** | **​** | ​ ​ ​ | ​ ​ **​** |
| **CBank Initial Recognition of ACLL** | **​** | ​ 1,600 ​ | ​ — **​** |
| ​ | **​** | ​ ​ ​ | ​ ​ **​** |
| **Charge-offs:** | ​ | ​ ​ ​ | ​ ​ ​ |
| **​** | ​ | ​ ​ ​ | ​ ​ ​ |
| **Traditional Banking:** | ​ | ​ ​ ​ | ​ ​ ​ |
| Residential real estate | ​ | ​ (6) ​ | — ​ |
| Consumer | ​ | ​ (325) ​ | ​ (263) ​ |
| **Total Traditional Banking** | ​ | ​ (331) ​ | ​ (263) ​ |
| Warehouse lines of credit | **​** | — ​ | — **​** |
| **Total Core Banking** | ​ | ​ (331) ​ | ​ (263) **​** |
| ​ | ​ | ​ ​ ​ | ​ ​ **​** |
| **Republic Processing Group:** | ​ | ​ ​ ​ | ​ ​ **​** |
| Tax Refund Solutions: | ​ | ​ ​ ​ | ​ ​ **​** |
| Refund Advances | ​ | ​ — ​ | — **​** |
| Other TRS commercial & industrial loans | ​ | ​ — ​ | — **​** |
| Republic Credit Solutions | ​ | ​ (3,099) ​ | (2,673) **​** |
| **Total Republic Processing Group** | ​ | ​ (3,099) ​ | ​ (2,673) **​** |
| **Total charge-offs** | **​** | (3,430) ​ | (2,936) **​** |
| ​ | **​** | ​ ​ ​ | ​ ​ **​** |
| **Recoveries:** | ​ | ​ ​ ​ | ​ ​ **​** |
| **​** | ​ | ​ ​ ​ | ​ ​ ​ |
| **Traditional Banking:** | ​ | ​ ​ ​ | ​ ​ ​ |
| Residential real estate | ​ | ​ 15 ​ | ​ 43 ​ |
| Commercial real estate | **​** | 47 ​ | 1 ​ |
| Commercial & industrial | **​** | 90 ​ | 9 **​** |
| Home equity | **​** | 1 ​ | 3 **​** |
| Consumer | ​ | ​ 101 ​ | ​ 89 **​** |
| **Total Traditional Banking** | ​ | ​ 254 ​ | ​ 145 **​** |
| Warehouse lines of credit | **​** | — ​ | — **​** |
| **Total Core Banking** | **​** | ​ 254 ​ | ​ 145 **​** |
| ​ | **​** | ​ ​ ​ | ​ ​ **​** |
| **Republic Processing Group:** | **​** | ​ ​ ​ | ​ ​ **​** |
| Tax Refund Solutions: | **​** | ​ ​ ​ | ​ ​ **​** |
| Refund Advances | **​** | ​ 285 ​ | — **​** |
| Other TRS commercial & industrial loans | **​** | ​ — ​ | 362 **​** |
| Republic Credit Solutions | **​** | ​ 233 ​ | 275 **​** |
| **Total Republic Processing Group** | **​** | ​ 518 ​ | ​ 637 **​** |
| **Total recoveries** | **​** | 772 ​ | 782 **​** |
| ​ | **​** | ​ ​ ​ | ​ ​ **​** |
| **Net loan charge-offs** | **​** | (2,658) ​ | (2,154) **​** |
| ​ | **​** | ​ ​ ​ | ​ ​ **​** |
| Provision - Core Banking | **​** | 3,119 ​ | (74) **​** |
| Provision - RPG | **​** | 23,647 ​ | 9,307 **​** |
| **Total Provision** | **​** | 26,766 ​ | 9,233 **​** |
| **ACLL at end of period** | **​** | $96,121 ​ | $71,656 **​** |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ |
| **Credit Quality Ratios - Total Company:** | ​ | ​ ​ ​ | ​ ​ ​ |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ |
| ACLL to total loans | **​** | 2.01% | 1.63% |
| ACLL to nonperforming loans | **​** | 579 ​ | 422 ​ |
| Net loan charge-offs to average loans | **​** | 0.23 ​ | 0.20 ​ |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ |
| **Credit Quality Ratios - Core Banking:** | ​ | ​ ​ ​ | ​ ​ ​ |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ |
| ACLL to total loans | **​** | 1.22% | 1.20% |
| ACLL to nonperforming loans | **​** | 356 ​ | 303 ​ |
| Net loan charge-offs to average loans | ​ | ​ 0.01 ​ | ​ 0.01 ​ |

### Table 6 — Annualized Net Loan Charge-offs (Recoveries) to Average Loans by Loan Category

| ​ ​ ​ ​ ​ ​ Traditional Banking: Residential real estate: | ​ ​ ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ ​ | ​ ​ Net Loan Charge-Offs (Recoveries) to Average Loans Three Months Ended March 31, 2023 ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ 2022 ​ ​ ​ ​ ​ ​ |
| --- | --- | --- | ---: | --- | ---: |
| Owner occupied | ​ | ​ | —% | **​** | —% |
| Nonowner occupied | ​ | ​ | — ​ | **​** | — ​ |
| Commercial real estate | ​ | ​ | (0.01) ​ | **​** | — ​ |
| Construction & land development | ​ | ​ | — ​ | **​** | — ​ |
| Commercial & industrial | ​ | ​ | (0.09) ​ | **​** | — ​ |
| Lease financing receivables | ​ | ​ | — ​ | **​** | — ​ |
| Aircraft | ​ | ​ | — ​ | **​** | — ​ |
| Home equity | ​ | ​ | — ​ | **​** | (0.01) ​ |
| Consumer: | ​ | ​ | ​ ​ | **​** | ​ ​ |
| Credit cards | ​ | ​ | 0.65 ​ | **​** | 0.58 ​ |
| Overdrafts | ​ | ​ | 95.97 ​ | **​** | 90.70 ​ |
| Automobile loans | ​ | ​ | 0.40 ​ | **​** | (0.03) ​ |
| Other consumer | ​ | ​ | 0.84 ​ | **​** | (0.26) ​ |
| **Total Traditional Banking** | **​** | **​** | 0.01 ​ | **​** | 0.01 ​ |
| Warehouse lines of credit | ​ | ​ | — ​ | **​** | — ​ |
| **Total Core Banking** | **​** | **​** | 0.01 ​ | **​** | 0.01 ​ |
| **​** | **​** | **​** | ​ ​ | **​** | ​ ​ |
| **Republic Processing Group:** | **​** | **​** | ​ ​ | **​** | ​ ​ |
| Tax Refund Solutions: | ​ | ​ | ​ ​ | **​** | ​ ​ |
| Refund Advances\* | ​ | ​ | NM ​ | **​** | — ​ |
| Other TRS commercial & industrial loans | ​ | ​ | NM ​ | **​** | (1.16) ​ |
| Republic Credit Solutions | ​ | ​ | 10.14 ​ | **​** | 2.62 ​ |
| **Total Republic Processing Group** | **​** | **​** | 2.45 ​ | **​** | 0.97 ​ |
| **Total** | **​** | **​** | 0.23% | **​** | 0.20% |

*\* Refund Advances are originated during the first two months of each year. In December 2022 and the first two weeks of 2023, ERAs were originated in relation to estimated tax returns that were anticipated to be filed during the first quarter 2023 tax season. All RAs, including ERAs, are charged-off by June 30th of each year.*

The Company’s net charge-offs to average total Company loans increased from 0.20% during the first quarter of 2022 to 0.23% during the first quarter of 2023, with net charge-offs increasing $504,000, or 23%, and average total Company loans increasing $310 million, or 7%. The increase in net charge-offs was primarily driven by a $468,000 increase in net charge-offs within the Company’s RCS operations, which has historically conducted higher-risk lending activities that the Company’s Core Banking operations. As previously noted above, the net charge-offs within the RCS division was primarily driven by an increase in the average outstanding balances for the RCS LOC II product. During the first quarters of 2023 and 2022, the Company’s Core Bank net charge-offs to average Core Bank loans remained near zero.

### Noninterest Income

Total Company noninterest income decreased $8.3 million during the first quarter of 2023 compared to the same period in 2022.

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

### Traditional Banking segment

Traditional Banking’s noninterest income increased $412,000, or 6%, for the first quarter of 2023 compared to the same period in 2022. There were no notable increases within any particular noninterest income category for the Traditional Bank.

The Bank earns a substantial majority of its fee income related to its overdraft service program from the per item fee it assesses its customers for each insufficient-funds check or electronic debit presented for payment. The total per item fees, net of refunds, included in service charges on deposits for the three months ended March 31, 2023 and 2022 were $1.7 million and $1.6 million. The total daily overdraft charges, net of refunds, included in interest income for the three months ended March 31, 2023 and 2022 were $294,000 and $288,000.

### Mortgage Banking segment

A significant rise in long-term interest rates during the first quarter of 2023 led to a significant slowdown in the origination and subsequent sale of mortgage loans into the secondary market. As a result, Mortgage Banking income decreased from $2.7 million during the first quarter of 2022 to $817,000 for the first quarter of 2023. For the first quarter of 2023, the Bank sold $17 million in secondary market loans and achieved an average cash-gain-as-a-percent-of-loans-sold during the quarter of 1.74%. During the first two months of the first quarter of 2022, however, long-term interest rates were notably lower, driving secondary market loan sales of $119 million with comparable cash-gain-as-a-percent-of-loans-sold of 2.29%.

With the FOMC ending its quantitative easing program and continuing to signal a more aggressive and hawkish approach to its monetary policies, Management believes it is likely that the Core Bank’s mortgage origination volume will continue to be negatively impacted by high long-term interest rates and could experience further declines in mortgage banking income on a year-to-year basis.

### Tax Refund Solutions segment

TRS’s noninterest income decreased $6.3 million, or 35%, during the first quarter of 2023 compared to the same period in 2022. The decrease in TRS noninterest income was primarily a result of the following factors:

- As previously disclosed, RB&T received a $5.0 million contract termination fee during the first quarter of 2022 for the cancelled Sale Transaction.
- Regarding TRS’s RT product, net RT revenue decreased 10% from $12.1 million during the first quarter of 2022 to $10.8 million during the same period in 2023. RT revenue for the first quarter of 2023 was negatively impacted by a general decline in overall RT demand across the industry.

For factors affecting the comparison of the TRS results of operations for the first quarter of 2023 and the first quarter of 2022, see section titled “*OVERVIEW (Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022) - Tax Refund Solutions.”*

### Republic Credit Solutions segment

RCS’s noninterest income decreased $568,000, or 18%, during the first quarter of 2023 compared to the same period in 2022, with program fees representing the entirety of RCS’s noninterest income. The decrease in RCS program fees primarily reflected lower sales volume from RCS’s installment loan product. Proceeds from the sale of RCS installment loan products totaled $210 million during the first quarter of 2023, a 18% decrease from the same period in 2022.

The following table presents RCS program fees by product:

### Table 7 — RCS Program Fees by Product

*(dollars in thousands)*

| ​ ​ Product: | ​ ​ ​ ​ | ​ ​ Three Months Ended Mar. 31, 2023 ​ ​ | ​ ​ ​ | ​ ​ 2022 ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ $ Change ​ ​ | ​ ​ ​ ​ | ​ ​ ​ ​ % Change ​ ​ ​ | ​ ​ ​ ​ |
| --- | --- | --- | --- | --- | --- | --- | --- | ---: | --- |
| Lines of credit | ​ | $1,740 | ​ | $1,188 | **​** | $552 | ​ | 46% | ​ |
| Healthcare receivables | ​ | ​ 49 | ​ | ​ 61 | **​** | ​ (12) | ​ | (20) **​** | ​ |
| Installment loans\* | ​ | ​ 745 | ​ | ​ 1,878 | **​** | ​ (1,133) | ​ | (60) **​** | ​ |
| **Total** | ​ | $2,534 | ​ | $3,127 | **​** | $(593) | ​ | (19)% | ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ |

*\* The Company has elected the fair value option for this product, with mark-to-market adjustments recorded as a component of program fees.*

### Noninterest Expense

Total Company noninterest expense increased $3.9 million, or 8%, during the first quarter of 2023 compared to the same period in 2022.

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

### Traditional Banking segment

Traditional Banking noninterest expense increased $2.6 million for the first quarter of 2023 compared to the same period in 2022. The most notable item driving this increase was $2.1 million of merger related expenses for the CBank acquisition.

### COMPARISON OF FINANCIAL CONDITION AS OF MARCH 31, 2023 AND DECEMBER 31, 2022

### 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. Republic had $249 million in period-end cash and cash equivalents as of March 31, 2023 compared to $314 million as of December 31, 2022. Comparing average balances for the first quarters of 2023 and 2022, the Company had average interest-earning cash and cash equivalent balances of $241 million for the first quarter of 2023 compared to $554 million for the first quarter of 2022. The decline in average interest-earning cash balances from period to period was driven by a decrease in average deposits and an increase in average loan balances.

#### See Footnote 6 “Deposits” of Part I Item 1 “Financial Statements” for additional discussion regarding Deposits

For cash held at the FRB, the Bank earns a yield on amounts more than required reserves. This cash earned a weighted-average yield of 4.48% during the first quarter of 2023 with a spot balance yield of 4.90% on March 31, 2023. For cash held within the Bank’s banking center and ATM networks, the Bank does not earn interest.

### Investment Securities

Republic’s investment portfolio increased $34 million from December 31, 2022 to March 31, 2023, driven by $50 million in portfolio purchases, $16 million of securities acquired in the CBank acquisition, and a $17 million increase in FHLB stock. These increases were offset by portfolio declines resulting from $54 million of calls and maturities of debt securities.

### Table 8 — Loan Portfolio Composition

*(dollars in thousands)*

| ​ ​ Traditional Banking: Residential real estate: | ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ March 31, 2023 ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ December 31, 2022 ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ $ Change ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ % Change ​ ​ ​ ​ ​ ​ |
| --- | --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Owner occupied | ​ | ​ | $972,214 | ​ | $911,427 | ​ | $60,787 | ​ | 7% |
| Nonowner occupied | **​** | **​** | 328,529 | ​ | 321,358 | ​ | 7,171 | ​ | 2 ​ |
| Commercial real estate | **​** | **​** | 1,682,573 | ​ | 1,599,510 | ​ | 83,063 | ​ | 5 ​ |
| Construction & land development | **​** | **​** | 167,829 | ​ | 153,875 | ​ | 13,954 | ​ | 9 ​ |
| Commercial & industrial | **​** | **​** | 478,101 | ​ | 413,387 | ​ | 64,714 | ​ | 16 ​ |
| Lease financing receivables | **​** | **​** | 73,270 | ​ | 10,505 | ​ | 62,765 | ​ | 597 ​ |
| Aircraft | **​** | **​** | 184,344 | ​ | 179,785 | ​ | 4,559 | ​ | 3 ​ |
| Home equity | **​** | **​** | 250,050 | ​ | 241,739 | ​ | 8,311 | ​ | 3 ​ |
| Consumer: | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Credit cards | ​ | ​ | ​ 16,775 | ​ | 15,473 | ​ | 1,302 | ​ | 8 ​ |
| Overdrafts | ​ | ​ | ​ 775 | ​ | 726 | ​ | 49 | ​ | 7 ​ |
| Automobile loans | ​ | ​ | ​ 5,267 | ​ | 6,731 | ​ | (1,464) | ​ | (22) ​ |
| Other consumer | **​** | **​** | ​ 5,450 | ​ | 626 | ​ | 4,824 | ​ | 771 ​ |
| **Total Traditional Banking** | **​** | **​** | ​ 4,165,177 | ​ | ​ 3,855,142 | ​ | ​ 310,035 | ​ | 8 ​ |
| Warehouse lines of credit\* | **​** | **​** | 457,365 | ​ | 403,560 | ​ | 53,805 | ​ | 13 ​ |
| **Total Core Banking** | ​ | ​ | ​ 4,622,542 | ​ | ​ 4,258,702 | ​ | ​ 363,840 | ​ | 9 ​ |
| ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| **Republic Processing Group\*:** | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Tax Refund Solutions: | **​** | **​** | ​ | ​ | ​ | ​ | ​ | ​ | ​ ​ |
| Refund Advances | **​** | **​** | 31,665 | ​ | 97,505 | ​ | (65,840) | ​ | (68) ​ |
| Other TRS commercial & industrial loans | ​ | ​ | ​ 8,327 | ​ | ​ 51,767 | ​ | ​ (43,440) | ​ | (84) ​ |
| Republic Credit Solutions | **​** | **​** | 111,700 | ​ | 107,828 | ​ | 3,872 | ​ | 4 ​ |
| **Total Republic Processing Group** | **​** | **​** | 151,692 | ​ | 257,100 | ​ | (105,408) | ​ | (41) ​ |
| ​ | **​** | **​** | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| **Total loans\*\*** | **​** | **​** | ​ 4,774,234 | ​ | ​ 4,515,802 | ​ | ​ 258,432 | ​ | 6 ​ |
| Allowance for credit losses | **​** | **​** | (96,121) | ​ | (70,413) | ​ | (25,708) | ​ | 37 ​ |
| ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| **Total loans, net** | **​** | **​** | $4,678,113 | ​ | $4,445,389 | ​ | $232,724 | ​ | 5 ​ |

*\*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.*

Gross loans increased by $258 million, or 6%, during the first quarter of 2022 to $4.8 billion as of March 31, 2023. The most significant components comprising the change in loans by reportable segment follow:

### Traditional Banking segment

Period-end balances for Traditional Banking loans increased $310 million, or 8%, from December 31, 2022 to March 31, 2023. The following primarily drove the change in loan balances during the first quarter of 2023:

- The Traditional Bank acquired loans and leases with a fair value of $216 million in connection with the CBank acquisition.
- The Traditional Bank’s legacy CRE portfolio, which excludes the CRE loans acquired from CBank, grew $11 million, or 1%, during the first quarter of 2023, as the Traditional Bank experienced strong loan demand within its Corporate Lending, Private Banking and Commercial Real Estate divisions in its Louisville market.
- With mortgage refinance volume at all-time record levels during 2020 and 2021, balances of 1-4 family loans, including HELOCs, generally declined as the vast majority of the volume of refinancings was sold into the secondary market. This trend began to change in mid to late 2022, however, as a significant rise in long-term, fixed-rate mortgages caused portfolio level ARM loans to become generally more attractive than secondary market loans. As a result, the Traditional Bank’s legacy residential real estate portfolio, which excludes the residential real estate loans acquired from CBank, increased $47

million during the first quarter of 2023. By comparison, these two portfolios declined by $3.7 million in total during the first quarter of 2022.

### Warehouse Lending segment

Outstanding Warehouse period-end balances increased $54 million from December 31, 2022 to March 31, 2023. Due to the volatility and seasonality of the mortgage market, it is difficult to project future outstanding balances of Warehouse lines of credit. The growth of the Bank’s Warehouse Lending business greatly depends on the overall mortgage market and typically follows industry trends. Since its entrance into this business during 2011, the Bank has experienced volatility in the Warehouse portfolio consistent with overall demand for mortgage products. Weighted average quarterly usage rates on the Bank’s Warehouse lines have ranged from a low of 31% during the first quarter of 2023 to a high of 71% during the fourth quarter of 2019. On an annual basis, weighted average usage rates on the Bank’s Warehouse lines have ranged from a low of 39% during 2022 to a high of 66% during 2020.

As previously discussed, additional increases in short-term interest rates and overall market rates are generally believed by management to be unfavorable to Warehouse’s client demand, likely leading to a reduction in average outstanding balances as higher long-term interest rates generally drive lower demand for Warehouse borrowings.

### Tax Refund Solutions segment

Outstanding TRS loans decreased $109 million from December 31, 2022 to March 31, 2023 primarily reflecting the substantial paydown of ERAs originated during December 2022. In addition, TRS also received substantial paydowns of commercial loans made during the fourth quarter of 2022 to third-party tax-related businesses for their cash flow needs for the first quarter tax season. RAs, including ERAs, are only made during the December of the previous year and the first two months of each year, with all unpaid RAs charged off by June 30th of each year.

### Republic Credit Solutions segment

Outstanding RCS loans increased $4 million from December 31, 2022 to March 31, 2023 primarily reflecting a $5.5 million increase in outstanding balances for RCS’s healthcare receivable products.

### Allowance for Credit Losses

As of March 31, 2023, the Bank maintained an ACLL for expected credit losses inherent in the Bank’s loan portfolio, which includes overdrawn deposit accounts. The Bank also maintained an ACLS and an ACLC for expected losses in its securities portfolio and its off-balance sheet credit exposures, respectively. Management evaluates the adequacy of the ACLL monthly, and the adequacy of the ACLS and ACLC quarterly. All ACLs are presented and discussed with the Audit Committee and the Board of Directors quarterly.

The Company’s ACLL increased $26 million from $70 million as of December 31, 2022 to $96 million as of March 31, 2023. As a percent of total loans, the total Company’s ACLL increased to 2.01% as of March 31, 2023 compared to 1.56% as of December 31, 2022. An analysis of the ACL by reportable segment follows:

### Traditional Banking segment

The Traditional Banking ACLL increased approximately $5 million to $55 million as of March 31, 2023 driven primarily by formula reserves tied to loan growth during the first quarter of 2023, a $2.7 million Day-1 Provision for the $214 million of non-PCD loans acquired from the CBank acquisition, and a $2 million Allowance for the PCD loans acquired from the CBank acquisition.

### Warehouse Lending segment

The Warehouse ACLL increased to approximately $134,000, and the Warehouse ACLL to total Warehouse loans remained at 0.25% when comparing March 31, 2023 to December 31, 2022. As of March 31, 2023, the Warehouse ACLL was entirely qualitative in nature with no adjustments to the qualitative reserve percentage required for the first quarter of 2023.

### Tax Refund Solutions segment

TRS recorded a charge to the Provision for RA loans of $22.0 million, or 2.98% of its $737 million in RAs originated during the first quarter of 2023. This compares to a net charge to the Provision of $8.3 million, or 2.67% of its $311 million of RAs originated during the first quarter of 2022. The $13.5 million increase in Provision for the first quarter of 2023 was primarily due to the increased volume from the new contract with the large national tax preparer.

Including early season RAs originated during the fourth quarter of 2022, TRS had a total Allowance for RAs of $25.8 million as of March 31, 2023, representing 3.09% of all RAs originated related to the first quarter 2023 tax season. TRS’s loss rate as of June 30, 2022 was 2.85% of total originations and TRS finished 2022 with a final RA loss rate of 2.20% of total RAs originated.

RAs are only originated during December of the previous year and the first two months of the current year related to the first quarter tax season of a year. As is the case each year as of March 31st, the Allowance related to RAs is an estimate with that estimate finalized during the second quarter when all uncollected RAs are ultimately charged off as of June 30th. The final charge-off figures posted during the second quarter of a calendar year can be meaningfully different (higher or lower) than its March 31st estimate based on actual paydowns received during the second quarter. RAs collected during the second half of each year are recorded as recoveries of previously charged-off loans.

### Republic Credit Solutions segment

The RCS ACLL decreased $1 million from $15 million as of December 31, 2022 to $14 million as of March 31, 2023, with this decrease driven by a decrease in the RCS LOC II reserve percentage and a change in the RCS loan mix as the outstanding healthcare receivable spot balance increased and the RCS LOC spot balance decreased.

RCS maintained an ACLL for two distinct credit products offered as of March 31, 2023, including its line-of-credit products and its healthcare-receivables products. As of March 31, 2023, the ACLL to total loans estimated for each RCS product ranged from as low as 0.25% for its healthcare-receivables products to as high as 51.79% for its line-of-credit products. The lower reserve percentage of 0.25% was provided for RCS’s healthcare receivables, as such receivables have recourse back to the third-party providers.

### Asset Quality

### Classified and Special Mention Loans

The Bank applies credit quality indicators, or ratings, to individual loans based on internal Bank policies. Such internal policies are informed by regulatory standards. Loans rated “Loss,” “Doubtful,” “Substandard,” and “PCD-Substandard” are considered “Classified.” Loans rated “Special Mention” or “PCD-Special Mention” are considered Special Mention. The Bank’s Classified and Special Mention loans increased approximately $3 million during the first quarter of 2023, driven primarily by commercial-purpose loans repaid or upgraded to a Pass rating during the first quarter of 2023.

*See Footnote 5 “Loans and Allowance for Credit Losses” of Part I Item 1 “Financial Statements” for additional discussion regarding Classified and Special Mention loans.*

### Table 9 — Classified and Special Mention Loans

*(dollars in thousands)*

| ​ ​ | ​ ​ March 31, 2023 ​ ​ | ​ ​ | ​ ​ December 31, 2022 ​ ​ | ​ ​ ​ | ​ ​ $ Change ​ ​ | ​ ​ ​ | ​ ​ % Change ​ ​ ​ |
| --- | ---: | --- | ---: | --- | --- | --- | ---: |
| Loss | $— | ​ | $— | ​ | $— | ​ | —% |
| Doubtful | — | ​ | — | ​ | ​ — | ​ | — ​ |
| Substandard | 19,011 | ​ | 17,010 | ​ | ​ 2,001 | ​ | 12 ​ |
| PCD - Substandard | 3,650 | ​ | 1,498 | ​ | ​ 2,152 | ​ | 144 ​ |
| **Total Classified Loans** | 22,661 | ​ | 18,508 | ​ | ​ 4,153 | ​ | 22 ​ |
| ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Special Mention | 68,622 | ​ | 69,246 | ​ | ​ (624) | ​ | (1) **​** |
| PCD - Special Mention | 328 | ​ | 718 | ​ | ​ (390) | ​ | (54) **​** |
| **Total Special Mention Loans** | 68,950 | ​ | 69,964 | ​ | ​ (1,014) | ​ | (1) **​** |
| ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| **Total Classified and Special Mention Loans** | $91,611 | ​ | $88,472 | ​ | $3,139 | ​ | 4% |

### Nonperforming Loans

Nonperforming loans include loans on nonaccrual status and loans past due 90-days-or-more and still accruing. The nonperforming loan category includes loan modifications (formerly TDRs) totaling approximately $1 million and $2 million as of March 31, 2023 and December 31, 2022.

Nonperforming loans to total loans decreased to 0.35% at March 31, 2023 from 0.36% at December 31, 2022, as the total balance of nonperforming loans increased by $292,000, or 2%, while total loans increased $258 million, or 6%, during the first quarter of 2023. As presented in Tables 13 and 14 below, the decrease in nonperforming loans during 2023, including the nonaccrual loan component, was primarily driven by the improvement of $1 million of these loans, which returned to accrual status.

The ACLL to total nonperforming loans increased to 607% as of March 31, 2023 from 452% as of December 31, 2022, as the total ACLL increased $26 million, or 37%, and the balance of nonperforming loans increased by $292,000, or 2%. The driver of the increase in ACLL was primarily RAs originated through the Company’s TRS segment and, while the driver of the decrease in nonperforming loans primarily driven by the improvement of $1 million of these loans, which returned to accrual status during the first quarter of 2023.

### Table 10 — Nonperforming Loans and Nonperforming Assets Summary

*(dollars in thousands)*

| ​ ​ | ​ ​ | ​ ​ ​ March 31, 2023 ​ ​ ​ | ​ ​ ​ December 31, 2022 ​ ​ ​ |
| --- | --- | ---: | --- |
| Loans on nonaccrual status\* | **​** | $15,833 ​ | $15,562 ​ |
| Loans past due 90-days-or-more and still on accrual\*\* | **​** | 777 ​ | 756 ​ |
| **Total nonperforming loans** | **​** | 16,610 ​ | 16,318 ​ |
| Other real estate owned | **​** | 1,529 ​ | 1,581 ​ |
| **Total nonperforming assets** | **​** | $18,139 ​ | $17,899 ​ |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ |
| **Credit Quality Ratios - Total Company:** | ​ | ​ ​ ​ | ​ ​ ​ |
| ACLL to total loans | **​** | ​ 2.01% | ​ 1.56% |
| Nonaccrual loans to total loans | **​** | ​ 0.33 ​ | ​ 0.34 ​ |
| ACLL to nonaccrual loans | **​** | ​ 607 ​ | ​ 452 ​ |
| Nonperforming loans to total loans | **​** | 0.35 ​ | 0.36 ​ |
| Nonperforming assets to total loans (including OREO) | **​** | 0.38 ​ | 0.40 ​ |
| Nonperforming assets to total assets | **​** | 0.30 ​ | 0.31 ​ |
| ​ | ​ | ​ ​ ​ | ​ ​ ​ |
| **Credit Quality Ratios - Core Bank:** | ​ | ​ ​ ​ | ​ ​ ​ |
| ACLL to total loans | **​** | 1.22% | ​ 1.21% |
| Nonaccrual loans to total loans | **​** | ​ 0.34 ​ | ​ 0.37 ​ |
| ACLL to nonaccrual loans | **​** | ​ 356 ​ | ​ 332 ​ |
| Nonperforming loans to total loans | **​** | 0.34 ​ | ​ 0.37 ​ |
| Nonperforming assets to total loans (including OREO) | **​** | 0.38 ​ | 0.40 ​ |
| Nonperforming assets to total assets | **​** | 0.32 ​ | 0.32 ​ |

*\* Loans on nonaccrual status include collateral-dependent loans. See Footnote 5 “Loans and Allowance for Credit Losses” of Part I Item 1 “Financial Statements” for additional discussion regarding collateral-dependent loans.*

*\*\* Loans past due 90-days-or-more and still accruing consist of smaller balance consumer loans.*

### Table 11 — Nonperforming Loan Composition

*(dollars in thousands)*

| ​ ​ ​ ​ ​ Traditional Banking: Residential real estate: | ​ ​ ​ ​ ​ ​ ​ ​ | ​ March 31, 2023 ​ Balance ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ | ​ ​ Percent of Total Loan Class ​ ​ ​ ​ ​ ​ | ​ December 31, 2022 ​ ​ Balance ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ | ​ ​ Percent of Total Loan Class ​ ​ ​ ​ ​ ​ |
| --- | --- | --- | --- | --- | ---: | --- | ---: | --- | ---: |
| Owner occupied | ​ |  | $13,046 | ​ | 1.34% |  | $13,388 | ​ | 1.47% |
| Nonowner occupied |  |  | 76 | ​ | 0.02 ​ | ​ | 117 | ​ | 0.04 ​ |
| Commercial real estate |  |  | 1,568 | ​ | 0.09 ​ | ​ | 1,001 | ​ | 0.06 ​ |
| Construction & land development |  |  | — | ​ | — ​ | ​ | — | ​ | — ​ |
| Commercial & industrial |  |  | — | ​ | — ​ | ​ | — | ​ | — ​ |
| Lease financing receivables |  |  | — | ​ | — ​ | ​ | — | ​ | — ​ |
| Aircraft | ​ | ​ | ​ — | ​ | — ​ | ​ | — | ​ | — ​ |
| Home equity |  |  | 904 | ​ | 0.36 ​ |  | 815 | ​ | 0.34 ​ |
| Consumer: | ​ |  | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Credit cards | ​ | ​ | ​ — | ​ | — ​ | ​ | ​ — | ​ | — ​ |
| Overdrafts | ​ | ​ | ​ — | ​ | — ​ | ​ | ​ — | ​ | — ​ |
| Automobile loans | ​ | ​ | ​ 33 | ​ | 0.63 ​ | ​ | ​ 31 | ​ | 0.46 ​ |
| Other consumer | ​ | ​ | ​ 206 | ​ | 3.78 ​ | ​ | ​ 210 | ​ | 33.55 ​ |
| **Total Traditional Banking** | ​ | ​ | ​ 15,833 | ​ | 0.38 ​ | ​ | ​ 15,562 | ​ | 0.40 ​ |
| Warehouse lines of credit |  |  | — | ​ | — ​ | ​ | — | ​ | — ​ |
| **Total Core Banking** | ​ | ​ | ​ 15,833 | ​ | 0.34 ​ | ​ | ​ 15,562 | ​ | 0.37 ​ |
| ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| **Republic Processing Group:** | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Tax Refund Solutions: |  |  | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ ​ |
| Refund Advances |  |  | — | ​ | — ​ | ​ | — | ​ | — ​ |
| Other TRS commercial & industrial loans | ​ | ​ | ​ — | ​ | — ​ | ​ | ​ — | ​ | — ​ |
| Republic Credit Solutions |  |  | 777 | ​ | 0.70 ​ | ​ | 756 | ​ | 0.70 ​ |
| **Total Republic Processing Group** | ​ |  | 777 | ​ | 0.51 ​ | ​ | 756 | ​ | 0.29 ​ |
| ​ | ​ |  | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| **Total nonperforming loans** | ​ |  | $16,610 | ​ | 0.35% | ​ | $16,318 | ​ | 0.36% |
| ​ | ​ |  | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |

### Table 12 — Stratification of Nonperforming Loans

*(dollars in thousands)*

| ​ ​ ​ March 31, 2023 ​ Traditional Banking: Residential real estate: | ​ ​ ​ ​ ​ ​ | ​ Number of Nonperforming Loans and Recorded Investment ​ ​ No. ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ Balance \<= $100 ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ No. ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ Balance \> $100 & \<= $500 ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ No. ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ Balance \> $500 ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ No. ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ Total Balance ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | --- | ---: | --- | ---: | --- | --- | ---: | --- | ---: | --- | --- | ---: | --- | ---: | --- |
| Owner occupied |  | 122 | ​ | $4,146 |  | ​ | 46 | ​ | $7,052 |  | ​ | 2 | ​ | $1,848 |  | ​ | 170 | ​ | $13,046 | **​** |
| Nonowner occupied |  | 3 | ​ | 76 |  | ​ | — | ​ | — |  | ​ | — | ​ | — |  | ​ | 3 | ​ | 76 | **​** |
| Commercial real estate |  | — | ​ | — |  | ​ | 1 | ​ | 223 |  | ​ | 2 | ​ | 1,345 |  | ​ | 3 | ​ | 1,568 | **​** |
| Construction & land development |  | — | ​ | — |  | ​ | — | ​ | — |  | ​ | — | ​ | — |  | ​ | — | ​ | — | **​** |
| Commercial & industrial |  | — | ​ | — |  | ​ | — | ​ | — |  | ​ | — | ​ | — |  | ​ | — | ​ | — | **​** |
| Lease financing receivables |  | — | ​ | — |  | ​ | — | ​ | — |  | ​ | — | ​ | — |  | ​ | — | ​ | — | **​** |
| Aircraft | **​** | — | ​ | — |  | ​ | — | ​ | — |  | ​ | — | ​ | — |  | ​ | — | ​ | — | **​** |
| Home equity |  | 28 | ​ | 802 |  | ​ | 1 | ​ | 102 |  | ​ | — | ​ | — |  | ​ | 29 | ​ | 904 | **​** |
| Consumer: | **​** | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | **​** |
| Credit cards |  | — | ​ | — |  | ​ | — | ​ | — |  | ​ | — | ​ | — |  | ​ | — | ​ | — | **​** |
| Overdrafts | **​** | NM | ​ | — |  | ​ | — | ​ | — |  | ​ | — | ​ | — |  | ​ | NM | ​ | — | **​** |
| Automobile loans | **​** | 5 | ​ | 33 |  | ​ | — | ​ | — |  | ​ | — | ​ | — |  | ​ | 5 | ​ | 33 | **​** |
| Other consumer | **​** | 1 | ​ | ​ 1 | ​ | ​ | 1 | ​ | 205 | ​ | ​ | — | ​ | ​ — | ​ | ​ | 2 | ​ | 206 | **​** |
| **Total Traditional Banking** | **​** | 159 | ​ | ​ 5,058 | ​ | ​ | 49 | ​ | ​ 7,582 | ​ | ​ | 4 | ​ | ​ 3,193 | ​ | ​ | 212 | ​ | ​ 15,833 | **​** |
| Warehouse lines of credit |  | — | ​ | — |  | ​ | — | ​ | — |  | ​ | — | ​ | — |  | ​ | — | ​ | — | **​** |
| **Total Core Banking** | **​** | 159 | ​ | ​ 5,058 | ​ | ​ | 49 | ​ | ​ 7,582 | ​ | ​ | 4 | ​ | ​ 3,193 | ​ | ​ | 212 | ​ | ​ 15,833 | **​** |
| **​** | **​** | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | **​** |
| **Republic Processing Group:** | **​** | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | **​** |
| Tax Refund Solutions: | **​** | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | **​** |
| Refund Advances | **​** | — | ​ | ​ — | ​ | ​ | — | ​ | ​ — | ​ | ​ | — | ​ | ​ — | ​ | ​ | — | ​ | — | **​** |
| Other TRS commercial & industrial loans | **​** | — | ​ | ​ — | ​ | ​ | — | ​ | ​ — | ​ | ​ | — | ​ | ​ — | ​ | ​ | — | ​ | — | **​** |
| Republic Credit Solutions | **​** | NM | ​ | ​ — | ​ | ​ | — | ​ | ​ — | ​ | ​ | — | ​ | ​ 777 | ​ | ​ | NM | ​ | 777 | **​** |
| **Total Republic Processing Group** | **​** | NM | ​ | ​ — | ​ | ​ | — | ​ | ​ — | ​ | ​ | — | ​ | ​ 777 | ​ | ​ | NM | ​ | ​ 777 | **​** |
| **​** | **​** | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | **​** |
| **Total** |  | 159 | ​ | $5,058 |  | ​ | 49 | ​ | $7,582 |  | ​ | 4 | ​ | $3,970 |  | ​ | 212 | ​ | $16,610 | **​** |
| **​** | **​** | **​** | **​** | **​** **​** | **​** | **​** | **​** | **​** | **​** **​** | **​** | **​** | **​** | **​** | **​** **​** | **​** | **​** | **​** | **​** | **​** **​** | **​** |

*(dollars in thousands)*

| ​ ​ ​ December 31, 2022 ​ Traditional Banking: Residential real estate: | ​ ​ ​ ​ ​ ​ ​ | ​ Number of Nonperforming Loans and Recorded Investment ​ ​ No. ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ Balance \<= $100 ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ | ​ ​ ​ No. ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ Balance \> $100 & \<= $500 ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ | ​ ​ ​ No. ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ Balance \> $500 ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ | ​ ​ ​ No. ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ Total Balance ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | --- | ---: | --- | ---: | --- | --- | ---: | --- | ---: | --- | --- | ---: | --- | ---: | --- |
| Owner occupied |  | 134 | ​ | $4,650 |  | ​ | 45 | ​ | $7,353 |  | ​ | 1 | ​ | $1,385 |  | ​ | 180 | ​ | $13,388 | ​ |
| Nonowner occupied |  | 4 | ​ | 117 |  | ​ | — | ​ | — |  | ​ | — | ​ | — |  | ​ | 4 | ​ | 117 | ​ |
| Commercial real estate |  | — | ​ | — |  | ​ | 1 | ​ | 232 |  | ​ | 1 | ​ | 769 |  | ​ | 2 | ​ | 1,001 | ​ |
| Construction & land development |  | — | ​ | — |  | ​ | — | ​ | — |  | ​ | — | ​ | — |  | ​ | — | ​ | — | ​ |
| Commercial & industrial |  | — | ​ | — |  | ​ | — | ​ | — |  | ​ | — | ​ | — |  | ​ | — | ​ | — | ​ |
| Lease financing receivables |  | — | ​ | — |  | ​ | — | ​ | — |  | ​ | — | ​ | — |  | ​ | — | ​ | — | ​ |
| Aircraft | ​ | — | ​ | — |  | ​ | — | ​ | — |  | ​ | — | ​ | — |  | ​ | — | ​ | — | ​ |
| Home equity |  | 28 | ​ | 711 |  | ​ | 1 | ​ | 104 |  | ​ | — | ​ | — |  | ​ | 29 | ​ | 815 | ​ |
| Consumer: | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ |
| Credit cards |  | — | ​ | — |  | ​ | — | ​ | — |  | ​ | — | ​ | — |  | ​ | — | ​ | — | ​ |
| Overdrafts | ​ | NM | ​ | — |  | ​ | — | ​ | — |  | ​ | — | ​ | — |  | ​ | NM | ​ | — | ​ |
| Automobile loans | ​ | 6 | ​ | 31 |  | ​ | — | ​ | — |  | ​ | — | ​ | — |  | ​ | 6 | ​ | 31 | ​ |
| Other consumer | ​ | — | ​ | ​ — | ​ | ​ | 1 | ​ | 210 | ​ | ​ | — | ​ | ​ — | ​ | ​ | 1 | ​ | 210 | ​ |
| **Total Traditional Banking** | ​ | 172 | ​ | ​ 5,509 | ​ | ​ | 48 | ​ | ​ 7,899 | ​ | ​ | 2 | ​ | ​ 2,154 | ​ | ​ | 222 | ​ | ​ 15,562 | ​ |
| Warehouse lines of credit |  | — | ​ | — |  | ​ | — | ​ | — |  | ​ | — | ​ | — |  | ​ | — | ​ | — | ​ |
| **Total Core Banking** | ​ | 172 | ​ | ​ 5,509 | ​ | ​ | 48 | ​ | ​ 7,899 | ​ | ​ | 2 | ​ | ​ 2,154 | ​ | ​ | 222 | ​ | ​ 15,562 | ​ |
| ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ |
| **Republic Processing Group:** | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ |
| Tax Refund Solutions: | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ |
| Refund Advances | ​ | — | ​ | ​ — | ​ | ​ | — | ​ | ​ — | ​ | ​ | — | ​ | ​ — | ​ | ​ | — | ​ | — | ​ |
| Other TRS commercial & industrial loans | ​ | — | ​ | ​ — | ​ | ​ | — | ​ | ​ — | ​ | ​ | — | ​ | ​ — | ​ | ​ | — | ​ | — | ​ |
| Republic Credit Solutions | ​ | NM | ​ | ​ — | ​ | ​ | — | ​ | ​ — | ​ | ​ | — | ​ | ​ 756 | ​ | ​ | NM | ​ | 756 | ​ |
| **Total Republic Processing Group** | ​ | NM | ​ | ​ — | ​ | ​ | — | ​ | ​ — | ​ | ​ | — | ​ | ​ 756 | ​ | ​ | NM | ​ | ​ 756 | ​ |
| ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ |
| **Total** |  | 172 | ​ | $5,509 |  | ​ | 48 | ​ | $7,899 |  | ​ | 2 | ​ | $2,910 |  | ​ | 222 | ​ | $16,318 | ​ |
| ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ |

### Table 13 — Roll-forward of Nonperforming Loans

*(in thousands)*

| ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Three Months Ended March 31, 2023 ​ ​ | ​ ​ ​ | ​ ​ 2022 ​ ​ |
| --- | --- | ---: | --- | ---: |
| Nonperforming loans at the beginning of the period | ​ | $16,318 | ​ | $20,552 |
| Loans added to nonperforming status during the period that remained nonperforming at the end of the period | ​ | 2,669 | ​ | 1,607 |
| Loans removed from nonperforming status during the period that were nonperforming at the beginning of the period (see table below) | ​ | (2,015) | ​ | (4,799) |
| Principal balance paydowns of loans nonperforming at both period ends | ​ | ​ (383) | ​ | ​ (378) |
| Net change in principal balance of other loans nonperforming at both period ends\* | ​ | 21 | ​ | (16) |
| ​ | ​ | ​ ​ | ​ | ​ ​ |
| Nonperforming loans at the end of the period | ​ | $16,610 | ​ | $16,966 |

#### \* Includes relatively small consumer portfolios, e.g., RCS loans.

### Table 14 — Detail of Loans Removed from Nonperforming Status

*(in thousands)*

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended March 31, 2023 ​ ​ | ​ ​ | ​ ​ 2022 ​ ​ |
| --- | --- | ---: | --- | ---: |
| Loans charged off | ​ | $— | ​ | $— |
| Loans transferred to OREO | ​ | — | ​ | — |
| Loan payoffs and paydowns | ​ | (770) | ​ | (4,595) |
| Loans returned to accrual status | ​ | (1,245) | ​ | (204) |
| ​ | ​ | ​ ​ | ​ | ​ ​ |
| **Total loans removed from nonperforming status during the period that were nonperforming at the beginning of the period** | ​ | $(2,015) | ​ | $(4,799) |

Based on the Bank’s review as of March 31, 2023, management believes that its reserves are adequate to absorb expected losses on all nonperforming loans.

### Delinquent Loans

Total Company delinquent loans to total loans increased to 0.76% as of March 31, 2023 from 0.34% as of December 31, 2022. Core Bank delinquent loans to total Core Bank loans decreased to 0.12% as of March 31, 2023 from 0.14% as of December 31, 2022. With the exception of small-dollar consumer loans, all Traditional Bank loans past due 90-days-or-more as of March 31, 2023 and December 31, 2022 were on nonaccrual status.

### Table 15 — Delinquent Loan Composition\*

*(dollars in thousands)*

| ​ ​ ​ ​ ​ Traditional Banking: Residential real estate: | ​ ​ ​ ​ ​ ​ ​ | ​ March 31, 2023 ​ ​ Balance ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ | ​ ​ Percent of Total Loan Class ​ ​ ​ ​ ​ ​ | ​ December 31, 2022 ​ ​ Balance ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ | ​ ​ Percent of Total Loan Class ​ ​ ​ ​ ​ ​ |
| --- | --- | --- | --- | --- | ---: | --- | --- | --- | ---: |
| Owner occupied | **​** |  | $4,711 | **​** | 0.48% |  | $4,834 | ​ | 0.53% |
| Nonowner occupied | **​** |  | — | **​** | — ​ |  | — | ​ | — ​ |
| Commercial real estate | **​** |  | 602 | **​** | 0.04 ​ |  | 604 | ​ | 0.04 ​ |
| Construction & land development | **​** |  | — | **​** | — ​ |  | — | ​ | — ​ |
| Commercial & industrial | **​** |  | — | **​** | — ​ |  | 177 | ​ | 0.04 ​ |
| Lease financing receivables | **​** | **​** | ​ — | **​** | — ​ | **​** | ​ — | ​ | — ​ |
| Aircraft | **​** | **​** | ​ — | **​** | — ​ | **​** | ​ — | ​ | — ​ |
| Home equity | **​** | **​** | ​ 63 | **​** | 0.03 ​ | **​** | ​ 175 | ​ | 0.07 ​ |
| Consumer: | **​** | **​** | ​ ​ | **​** | ​ ​ | **​** | ​ ​ | ​ | ​ ​ |
| Credit cards | **​** | **​** | ​ 30 | **​** | 0.18 ​ | **​** | ​ 55 | ​ | 0.36 ​ |
| Overdrafts | **​** | **​** | ​ 112 | **​** | 14.45 ​ | **​** | ​ 160 | ​ | 22.04 ​ |
| Automobile loans | **​** | **​** | ​ 13 | **​** | 0.25 ​ | **​** | ​ 11 | ​ | 0.16 ​ |
| Other consumer | **​** | **​** | ​ 6 | **​** | 0.11 ​ | **​** | ​ 44 | ​ | 7.03 ​ |
| **Total Traditional Banking** | **​** | **​** | ​ 5,537 | **​** | 0.13 ​ | **​** | ​ 6,060 | ​ | 0.16 ​ |
| Warehouse lines of credit | **​** | **​** | ​ — | **​** | — ​ | **​** | ​ — | ​ | — ​ |
| **Total Core Banking** | **​** | **​** | ​ 5,537 | **​** | 0.12 ​ | **​** | ​ 6,060 | ​ | 0.14 ​ |
| ​ | **​** | **​** | ​ ​ | **​** | ​ ​ | **​** | ​ ​ | ​ | ​ ​ |
| **Republic Processing Group:** | **​** |  | ​ | **​** | ​ ​ | **​** | ​ ​ | ​ | ​ ​ |
| Tax Refund Solutions: | **​** |  | ​ | **​** | ​ ​ | **​** | ​ **​** | **​** | **​** **​** |
| Refund Advances | **​** |  | 18,450 | **​** | 58.27 ​ |  | — | ​ | — ​ |
| Other TRS commercial & industrial loans | **​** |  | 406 | **​** | 4.88 ​ |  | — | ​ | — ​ |
| Republic Credit Solutions | **​** |  | 11,731 | **​** | 10.50 ​ |  | 9,200 | ​ | 8.53 ​ |
| **Total Republic Processing Group** | **​** |  | 30,587 | **​** | 20.16 ​ |  | 9,200 | ​ | 3.58 ​ |
| ​ | ​ |  | ​ ​ | ​ | ​ ​ |  | ​ ​ | ​ | ​ ​ |
| **Total delinquent loans** | **​** |  | $36,124 | **​** | 0.76% |  | $15,260 | ​ | 0.34% |
| ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |

*\* 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 16 — Roll-forward of Delinquent Loans

*(in thousands)*

| ​ ​ ​ ​ | ​ ​ Three Months Ended March 31, 2023 ​ ​ | ​ ​ | ​ ​ 2022 ​ ​ |
| --- | ---: | --- | ---: |
| Delinquent loans at the beginning of the period | $15,260 | ​ | $13,465 |
| Loans that became delinquent during the period - Refund Advances\* | ​ 18,450 | ​ | ​ 4,524 |
| Loans added to delinquency status during the period and remained in delinquency status at the end of the period | 2,675 | ​ | 2,103 |
| Loans removed from delinquency status during the period that were in delinquency status at the beginning of the period (see table below) | (3,094) | ​ | (3,604) |
| Principal balance paydowns of loans delinquent at both period ends | ​ (31) | ​ | ​ (28) |
| Net change in principal balance of other loans delinquent at both period ends\* | 2,864 | ​ | (245) |
| Delinquent loans at the end of period | $36,124 | ​ | $16,215 |

*\* RAs do not have a contractual due date but the Company considered a RA delinquent in 2022 and 2022 if it remained unpaid 35 days after the taxpayer’s tax return was submitted to the applicable taxing authority.*

#### \*\* Includes relatively-small consumer portfolios, e.g., RCS loans.

### Table 17 — Detail of Loans Removed from Delinquent Status

*(in thousands)*

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended March 31, 2023 ​ ​ | ​ ​ | ​ ​ 2022 ​ ​ | ​ ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- |
| Loans charged off | **​** | $(1) | ​ | $(1) | **​** |
| Refund Advances paid off or charged off | **​** | ​ — | ​ | ​ — | **​** |
| Loans transferred to OREO | **​** | — | ​ | — | **​** |
| Loan payoffs and paydowns | **​** | (510) | ​ | (3,418) | **​** |
| Loans paid current | **​** | (2,583) | ​ | (185) | **​** |
| ​ | **​** | ​ ​ | ​ | ​ ​ | **​** |
| **Total loans removed from delinquency status during the period that were in delinquency status at the beginning of the period** | **​** | $(3,094) | ​ | $(3,604) | **​** |

### Collateral-Dependent Loans and Loan Modifications

When management determines that a loan is collateral dependent and foreclosure is probable, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs, if appropriate. The Bank’s policy is to charge-off all or that portion of its recorded investment in collateral-dependent loans upon a determination that it expects the full amount of contractual principal and interest will not be collected.

A loan modification (formerly a TDR prior to the adoption of ASU 2022-02) is a situation where, due to a borrower’s financial difficulties, the Bank grants a concession to the borrower that the Bank would not otherwise have considered. The majority of the Bank’s loan modifications involve a restructuring of loan terms such as a temporary reduction in the payment amount to require only interest and escrow (if required), reducing the loan’s interest rate, and/or extending the maturity date of the debt. Nonaccrual loans modified as loan modifications remain on nonaccrual status and continue to be reported as nonperforming loans. Accruing loans modified as loan modifications are evaluated for nonaccrual status based on a current evaluation of the borrower’s financial condition and ability and willingness to service the modified debt. With the adoption of ASU 2022-02 in 2023, all loan modifications will now be recognized as collateral-dependent. As of March 31, 2023 there were $1 million collateral-dependent loan modifications.

### Table 18 — Collateral-Dependent Loans and Troubled Debt Restructurings

*(dollars in thousands)*

| ​ ​ | ​ ​ | ​ ​ December 31, 2022 ​ ​ |
| --- | --- | ---: |
| Cashflow-dependent TDRs | ​ | $5,761 |
| Collateral-dependent TDRs | ​ | ​ 6,265 |
| **Total TDRs** | ​ | ​ 12,026 |
| Collateral-dependent loans (which are not TDRs) | ​ | 14,186 |
| **Total recorded investment in TDRs and collateral-dependent loans** | ​ | $26,212 |

*See Footnote 5 “Loans and Allowance for Credit Losses” of Part I Item 1 “Financial Statements” for additional discussion regarding collateral-dependent loans and loan modifications and Footnote 1 “Basis of Presentation and Summary of Significant Accounting Policies” for additional discussion regarding ASU 2022-02.*

### Deposits

### Table 19 — Deposit Composition

*(in thousands)*

| ​ ​ Core Bank: | ​ ​ March 31, 2023 ​ ​ ​ ​ | ​ ​ ​ | ​ ​ December 31, 2022 ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ $ Change ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ % Change ​ ​ ​ ​ ​ |
| --- | --- | --- | --- | --- | --- | --- | ---: |
| Demand | $1,272,086 | ​ | $1,336,082 | ​ | $(63,996) | ​ | (5)% |
| Money market accounts | 794,710 | ​ | 707,272 | ​ | ​ 87,438 | ​ | 12 ​ |
| Savings | 316,947 | ​ | 323,015 | ​ | ​ (6,068) | ​ | (2) **​** |
| Reciprocal money market | 123,486 | ​ | 28,635 | ​ | ​ 94,851 | ​ | 331 **​** |
| Individual retirement accounts (1) | 36,334 | ​ | 38,640 | ​ | ​ (2,306) | ​ | (6) **​** |
| Time deposits, $250 and over (1) | 46,687 | ​ | 54,855 | ​ | ​ (8,168) | ​ | (15) **​** |
| Other certificates of deposit (1) | 176,257 | ​ | 129,324 | ​ | ​ 46,933 | ​ | 36 **​** |
| Reciprocal time deposits (1) | ​ 13,273 | ​ | ​ 7,405 | ​ | ​ 5,868 | ​ | 79 **​** |
| Total Core Bank interest-bearing deposits | ​ 2,779,780 | ​ | ​ 2,625,228 | ​ | ​ 154,552 | ​ | 6 **​** |
| Total Core Bank noninterest-bearing deposits | 1,471,180 | ​ | 1,464,493 | ​ | ​ 6,687 | ​ | 0 **​** |
| **Total Core Bank deposits** | 4,250,960 | ​ | 4,089,721 | ​ | ​ 161,239 | ​ | 4 **​** |
| ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ **​** |
| **Republic Processing Group:** | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ **​** |
| Money market accounts | ​ 5,931 | ​ | ​ 3,849 | ​ | ​ 2,082 | ​ | 54 **​** |
| Total RPG interest-bearing deposits | ​ 5,931 | ​ | ​ 3,849 | ​ | ​ 2,082 | ​ | 54 **​** |
| ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ **​** |
| Brokered prepaid card deposits | ​ 390,052 | ​ | ​ 328,655 | ​ | ​ 61,397 | ​ | 19 **​** |
| Other noninterest-bearing deposits | ​ 152,725 | ​ | ​ 115,620 | ​ | ​ 37,105 | ​ | 32 **​** |
| Total RPG noninterest-bearing deposits | ​ 542,777 | ​ | ​ 444,275 | ​ | ​ 98,502 | ​ | 22 **​** |
| **Total RPG deposits** | ​ 548,708 | ​ | ​ 448,124 | ​ | ​ 100,584 | ​ | 22 **​** |
| **​** | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ **​** |
| **Total deposits** | $4,799,668 | ​ | $4,537,845 | ​ | $261,823 | ​ | 6% |

#### (1) Includes time deposit

Total Bank deposits increased $262 million from December 31, 2022 to $4.8 billion as of March 31, 2023. Total Core Bank deposits increased by $161 million with the CBank acquisition resulting in $283 million of this growth. Core Bank legacy deposits, which excludes the deposits assumed from the CBank acquisition, decreased $122 million, or 3%, from December 31, 2022. Within the Core Bank’s legacy deposits, interest-bearing deposits decreased $28 million and noninterest-bearing deposits decreased $94 million.

The decline in Core Bank legacy deposits was a continuing trend from the second half of 2022. Management believes the net decrease in Core Bank interest-bearing deposits was generally due to clients’ responses to the low deposit beta the Bank maintained throughout 2022 and most of the first quarter of 2023. A deposit beta measures the change in the interest rates the Bank pays for its interest-bearing deposit accounts versus the change in the federal funds target rate, which is a public index the Bank generally uses to price its non-maturity, interest-bearing deposits. A low deposit beta would indicate that the Bank has not changed the interest rates it pays on deposit accounts to the same magnitude as the FOMC has changed the FFTR.

For most of the previous 12 months, the Bank has continued a general strategy to maintain a low deposit beta as part of its approach to increase its overall net interest margin and net interest income. In general, the Bank maintained a low deposit beta during this period by not applying across-the-board increases in rates to all its interest-bearing accounts as a result of increases to the FFTR. Instead, the Bank applied a nominal amount of the FFTR’s increases to products on an across-the-board basis and selectively applied larger rate increases for more price-sensitive commercial accounts. This strategy played a significant part in expanding the Core Bank’s net interest margin throughout 2022 and into the first quarter of 2023 as the Bank’s yield on its interest earning assets generally outpaced the cost of its interest-bearing liabilities as the FFTR increased. As a result of this strategy, however, the Bank did experience a decline in both personal and business account balances during the second half of 2022 and the first quarter of 2023 as some clients moved their funds to more attractive offerings outside of the Bank. In response to this deposit outflow, the Bank expects to begin marketing select deposit products during the second quarter of 2023, such as money market accounts and short-term certificates of deposit, with higher offering rates. Management is unsure if these offering rates will reverse the recent trend of deposit outflows. Regardless, Management does believe these higher offering rates will raise the Traditional Bank's overall cost of funds and begin to cause contraction to its net interest margin on a linked-quarter basis. This strategy is subject to change depending upon several factors including, but not limited to, the Bank’s overall current and projected liquidity positions, its clients’ demand for its loans and deposit products, the Bank’s overall interest rate risk position, the interest rate environment at the time, as well as the projected interest rate environment for the near term and the long term.

In addition to the above, the Core Bank also experienced a $160 million decrease in its legacy noninterest-bearing deposits. Management believes two factors generally drove this overall decrease in noninterest-bearing deposits. The first is a general decline in liquidity among both businesses and consumers as the excess liquidity created during the COVID pandemic continued to wane. Second, Management believes that the substantial increase in market interest rates caused the difference between what a client can earn for an interest-bearing deposit versus the client’s lack of a financial return for a noninterest-bearing deposit to become large enough to cause some clients to pursue other opportunities for their cash outside the Bank.

As a result of all the factors noted above, Management believes the Company is more likely to experience slower overall growth and possibly, a continued decline in its deposits over the foreseeable future.

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

SSUARs are collateralized by securities and are treated as financings; accordingly, the securities involved with the agreements are recorded as assets and are held by a safekeeping agent and the obligations to repurchase the securities are reflected as liabilities. All securities underlying the agreements are under the Bank’s control.

SSUARs decreased $82 million, or 39%, during the first three months of 2023 to $131 million as of March 31, 2023. SSUARs generally represent large customer relationships deposited into the Bank that require security collateral above the $250,000 FDIC insurance limit of the Bank. Due to the size of the underlying relationships, large fluctuations in the underlying account balances from period to period are common.

As it did with interest-bearing deposits, the Bank generally maintained a low beta strategy with its SSUARs over the past 12 months. As a result of this strategy, the Bank experienced a decline in SSUAR balances as some clients moved their funds to more attractive offerings outside of the Bank. As was noted with deposits, the Bank expects to market more attractive offering rates to its clients during the second quarter of 2023 and could do the same for its SSUAR clients. This strategy is subject to change depending upon several factors including, but not limited to, the Bank’s overall current and projected liquidity positions, its clients’ demand for its loans and deposit products, the Bank’s overall interest rate risk position, the interest rate environment at the time, as well as the projected interest rate environment for the near term and the long term.

### Federal Home Loan Bank Advances

The Bank’s total FHLB advances were $108 million as of March 31, 2023 compared to $95 million as of December 31, 2022 and $20 million as of March 31, 2022. Approximately $88 million of these borrowings were overnight in nature as of March 31, 2023 compared to $75 million as of December 31, 2022. The Company has utilized FHLB advances over the past year to fund its deposit outflow and overall loan growth. As of March 31, 2023, the Company’s $108 million of FHLB advances had a weighted-average maturity of 0.93 years and a weighted-average cost of 4.31%.

Overall use of FHLB advances during a given year is dependent upon many factors including asset growth, deposit growth, current earnings, and expectations of future interest rates, among others.

### Interest Rate Swaps

The Bank enters into interest rate swaps to facilitate client transactions and meet their financing needs. Upon entering into these instruments, the Bank enters into offsetting positions in order to minimize the Bank’s interest rate risk. These swaps are derivatives, but are not designated as hedging instruments, and therefore changes in fair value are reported in current year earnings.

*See Footnote 13 “Interest Rate Swaps” of Part I Item 1 “Financial Statements” for additional discussion regarding the Bank’s interest rate swaps.*

### Liquidity

The Bank maintains sufficient liquidity to fund routine loan demand and routine deposit withdrawal activity. Liquidity is managed by maintaining sufficient liquid assets, primarily in the form of cash, cash equivalents, and unencumbered investment securities. Funding and cash flows can also be realized through deposit product promotions, the sale of AFS debt securities, principal paydowns on loans and mortgage-backed securities, and proceeds realized from loans held for sale.

### Table 20 — Liquid Assets and Borrowing Capacity

The Company’s liquid assets and borrowing capacity included the following:

*(in thousands)*

| ​ ​ | ​ ​ | ​ ​ March 31, 2023 ​ ​ | ​ ​ | ​ ​ December 31, 2022 ​ ​ | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- |
| Cash and cash equivalents | ​ | $249,289 | ​ | $313,689 | **​** |
| Unencumbered debt securities | ​ | 479,296 | ​ | 438,052 | **​** |
| Total liquid assets | ​ | ​ 728,585 | ​ | ​ 751,741 | **​** |
| ​ | ​ | ​ ​ | ​ | ​ ​ | **​** |
| Available borrowing capacity with the FHLB | ​ | 929,688 | ​ | 899,362 | **​** |
| Available borrowing capacity through unsecured credit lines | ​ | 125,000 | ​ | 125,000 | **​** |
| Total available borrowing capacity | ​ | ​ 1,054,688 | ​ | ​ 1,024,362 | **​** |
| ​ | ​ | ​ ​ | ​ | ​ ​ | **​** |
| Total liquid assets and available borrowing capacity | ​ | $1,783,273 | ​ | $1,776,103 | **​** |

The Bank had a loan to deposit ratio (excluding brokered deposits) of 99% as of March 31, 2023 and 100% as of December 31, 2022. 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 noted in the sections above titled “Deposits” and “Securities Sold Under Agreements to Repurchase and Other Short-term Borrowings”, the Bank implemented a general strategy during the last 12 months to maintain a low beta for its client-related interest-bearing liabilities as part of its overall strategy to increase its net interest margin and net interest income. As a result of this strategy, however, the Bank did experience a decline in both personal and business deposit balances and SSUAR balances as some clients moved their funds to more attractive offerings outside of the Bank. In response to this deposit outflow, the Bank expects to begin marketing select deposit products during the second quarter of 2023, such as money market accounts and short-term certificates of deposit, with higher offering rates. Management is unsure if these offering rates will reverse the recent trend of deposit outflows. Regardless, Management does believe these higher offering rates will raise the Traditional Bank's overall cost of funds and begin to cause contraction to its net interest margin on a linked-quarter basis. This strategy is subject to change depending upon several factors including, but not limited to, the Bank’s overall current and projected liquidity positions, its clients’ demand for its loans and deposit products, the Bank’s overall interest rate risk position, the interest rate environment at the time, as well as the projected interest rate environment for the near term and the long term.

As of March 31, 2023, the Bank had approximately $915 million in deposits from 194 large non-sweep deposit relationships, including reciprocal deposits, where the individual relationship exceeded $2 million. Total uninsured deposits for the Bank were $1.8 billion, or 38%, of total deposits as of March 31, 2023. The 20 largest non-sweep deposit relationships represented approximately $282 million, or 6%, of the Company’s total deposit balances as of as of March 31, 2023. 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 past 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 Bank 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, securities sold under agreements to repurchase, FHLB borrowings, and for other purposes, as required by law. As of March 31, 2023 and December 31, 2022, these pledged investment securities had a fair value of $134 million and $218 million.

### Capital

Total stockholders’ equity increased from $857 million as of December 31, 2022 to $882 million as of March 31, 2023. The increase in stockholders’ equity was primarily attributable to net income earned during 2023 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 April 1, 2023, RB&T could, without prior approval, declare dividends of approximately $107 million. Any payment of dividends in the future will depend, in large part, on the Company’s earnings, capital requirements, financial condition, and other factors considered relevant by the Company’s Board of Directors.

***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 off-balance sheet 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, in order 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. Republic’s average stockholders’ equity to average assets ratio was 14.15% as of March 31, 2023 compared to 13.41% as of December 31, 2022. Formal measurements of the capital ratios for Republic and the Bank are performed by the Company at each quarter end.

### Table 21 — Capital Ratios (1)

*(dollars in thousands)*

| ​ ​ ​ Total capital to risk-weighted assets | ​ ​ ​ ​ | ​ ​ As of March 31, 2023 Amount ​ ​ ​ ​ | ​ ​ ​ | ​ ​ ​ Ratio ​ ​ ​ ​ | ​ ​ As of December 31, 2022 Amount ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Ratio ​ ​ ​ ​ |
| --- | --- | ---: | --- | ---: | ---: | --- | ---: |
| Republic Bancorp, Inc. | **​** | $933,317 |  | 17.18% | $941,865 |  | 17.92% |
| Republic Bank & Trust Company | **​** | 894,843 |  | 16.48 ​ | 904,592 |  | 17.23 ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ |
| **Common equity tier 1 capital to risk-weighted assets** | **​** | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ |
| Republic Bancorp, Inc. | **​** | $869,187 |  | 16.00% | $877,735 |  | 16.70% |
| Republic Bank & Trust Company | **​** | 826,672 |  | 15.23 ​ | 840,462 |  | 16.01 ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ |
| **Tier 1 (core) capital to risk-weighted assets** | **​** | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ |
| Republic Bancorp, Inc. | **​** | $869,187 |  | 16.00% | $877,735 |  | 16.70% |
| Republic Bank & Trust Company | **​** | 826,672 |  | 15.23 ​ | 840,462 |  | 16.01 ​ |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ |
| **Tier 1 leverage capital to average assets** | **​** | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ |
| Republic Bancorp, Inc. | **​** | $869,187 |  | 14.74% | $877,735 |  | 14.81% |
| Republic Bank & Trust Company | **​** | 826,672 |  | 13.30 ​ | 840,462 |  | 14.09 ​ |

*(1) The Company and the Bank elected in 2020 to defer the impact of CECL on regulatory capital. The deferral period is five years, with the total estimated CECL impact 100% deferred for the first two years, then phased in over the next three years. If not for this election, the Company’s regulatory capital ratios would have been approximately 6 basis points and 10 basis points lower than those presented in the table above as of March 31, 2023 and December 31, 2022.*

### 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 in order 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 March 31, 2023, a dynamic simulation model was run for interest rate changes from “Down 200” basis points to “Up 300” basis points. The following table illustrates the Bank’s projected percent change from its Base net interest income over the period beginning April 1, 2023 and ending March 31, 2024 based on instantaneous movements in interest rates from Down 200 to Up 300 basis points equally across all points on the yield curve. The Bank’s dynamic earnings simulation model includes secondary market loan fees and excludes Traditional Bank loan fees.

### Table 22 — Bank Interest Rate Sensitivity

| ​ ​ | ​ ​ Change in Rates | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ ​ |
| --- | ---: | --- | ---: | --- | --- | --- | --- | --- | --- | --- |
| **​** | **-200** |  | **-100** |  | **+100** |  | **+200** |  | **+300** |  |
| **​** | **Basis Points** | **​** | **Basis Points** | **​** | **Basis Points** | **​** | **Basis Points** | **​** | **Basis Points** | **​** |
| **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** |
| % Change from base net interest income as of March 31, 2023 | (2.0)% | ​ | (1.1)% | ​ | 0.7% | ​ | 1.4% | ​ | 2.1% | ​ |
| % Change from base net interest income as of December 31, 2022 | (2.8)% | ​ | (0.6)% | ​ | 1.8% | ​ | 3.7% | ​ | 5.7% | ​ |

The most material changes noted for the Bank’s interest rate sensitivity projections from December 31, 2022 to March 31, 2023 occurred in the up-rate scenarios, while the down-rate scenarios reflected modest changes.

The period-to-period declines in the up-rate scenarios were generally tied to two main factors. First, the Company’s average interest-earning cash balances further declined from December to March. As a result, the benefit the Company expects to receive from rising short-term interest rates, as a result of its immediately repricing interest-earning cash, decreased. Second, the Company increased its assumed deposit betas from December to March in anticipation of a more competitive deposit gathering and retention environment. These higher deposit betas resulted in higher projected costs for the Company’s interest-bearing deposits in a rising rate environment.

*For further discussion of interest-bearing deposit betas, see section titled “Deposits” in this Form 10-Q.*

#### LIBOR Exposure

In July 2017, the Financial Conduct Authority (“FCA”), the authority regulating LIBOR, along with various other regulatory bodies, announced that LIBOR would likely be discontinued at the end of 2021. Subsequent to that announcement, in November 2020, the FCA announced that many tenors of LIBOR would continue to be published through June 2023. In compliance with regulatory guidance, the Bank discontinued referencing LIBOR for new financial instruments during 2021 and chose SOFR to be its primary alternative reference rate for most transaction types upon the discontinuance or unavailability of LIBOR.

Regarding its legacy assets that reference LIBOR, the Bank has previously disclosed that the underlying contracts for these assets may not include adequate “fallback” language to use alternative indexes and margins when LIBOR ceases. However, on March 15, 2022, President Biden signed into law the Adjustable Interest Rate (LIBOR) Act (the “LIBOR Law”), which is designed to accomplish the following:

- Establish a clear and uniform process, on a nationwide basis, for replacing LIBOR in existing contracts, the terms of which do not provide for the use of a clearly defined or practicable replacement benchmark rate, without affecting the ability of parties to use any appropriate benchmark rate in new contracts;
- Preclude litigation related to existing contracts, the terms of which do not provide for the use of a clearly defined or practicable replacement benchmark rate;
- Allow existing contracts that reference LIBOR but provide for the use of a clearly defined and practicable replacement rate to operate according to their terms; and
- Address LIBOR references in federal law.

With limited exception, the LIBOR Law generally covers legacy LIBOR contracts with no or inadequate fallback provisions. Additionally, under the LIBOR Law, the Board of Governors of the Federal Reserve System (the “FRB Board”) issued final regulations in December 2022 that included the selection of an FRB Board-Selected Benchmark Replacement based on SOFR and incorporates an applicable tenor spread adjustment and identification of any related conforming changes.

As of March 31, 2023, the Company had approximately $421 million of legacy assets that reference LIBOR, with short-term Warehouse loans representing $6 million of these assets, investment securities representing $62 million, and commercial and mortgage loans primarily making up the remainder. As of March 31, 2023, of the Bank’s legacy assets that reference LIBOR, approximately $416 million of those assets were scheduled to mature after June 30, 2023. These amounts exclude derivative assets and liabilities on the Company’s consolidated balance sheet. As of March 31, 2023, the notional amount of the Company’s LIBOR-referenced interest rate derivative contracts was approximately $178 million, with $178 million of such notional amount scheduled to mature after June 30, 2023.

*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 March 31, 2023 Compared to Three months ended March 31, 2022.”)*

## Market risk

As filed, 158 characters.

Information required by this item is included under *Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”*

## Controls and procedures

As filed, 2,240 characters.

### Evaluation of Disclosure 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 Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were not effective as of the end of the period covered by this report because of material weaknesses in our internal control over financial reporting, as described in Management’s Report on Internal Control over Financial Reporting in “Item 9A. Controls and Procedures” in its Annual Report on Form 10-K for the year ended December 31, 2022.

In addition, other than the measures described below taken in response to the material weaknesses, no change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) 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.

### Material Weakness Remediation Efforts

The Company has commenced the implementation of some remediation measures with respect to the material weaknesses as outlined in its Annual Report on Form 10-K for the year ended December 31, 2022. As part of its remediation efforts for one of its material weaknesses, Management enhanced its internal monthly financial reporting during the first quarter of 2023 to provide a more detailed yield analysis at the product level for the performance of each RCS product. In addition, the Company has begun the planning process for those remediation measures that have not yet been implemented. Management cannot determine when all its remediation plans will be fully completed, and Management cannot provide any assurance that these remediation efforts will be successful or that our internal control over financial reporting will be effective as a result of these efforts.

## Risk factors

As filed, 4,532 characters.

### FACTORS THAT MAY AFFECT FUTURE RESULTS

Except for the additional risk factor information described below, 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 year ended December 31, 2022. You should carefully consider the risk factors discussed below and in Republic’s 2022 Form 10-K, which could materially affect the Company’s business, financial condition and results of operations in the future.

*Recent negative developments in the banking industry could adversely affect our current and projected business operations and our financial condition and results of operations.* Recent bank failures and their related negative media attention have generated significant market trading volatility among publicly traded bank holding companies and, in particular, bank holding companies for regional, and community banks. These developments have negatively impacted customer confidence in regional and community banks, which could prompt customers to maintain their deposits with larger financial institutions. Further, competition for deposits has increased in recent periods, and the cost of funding has similarly increased, putting pressure on our net interest margin. If we were required to sell a portion of our securities portfolio to address liquidity needs, we may incur losses, including as a result of the negative impact of rising interest rates on the value of our securities portfolio, which could negatively affect our earnings.

*The proportion of our deposit account balances that exceed FDIC insurance limits may expose the Bank to enhanced liquidity risk and earnings risks in times of financial distress.* A significant factor in the two recent bank failures that occurred during the first quarter of 2023 appears to have been the proportion of the deposits held by each institution that exceeded FDIC insurance limits. In these two failures, the estimated percentage of uninsured deposits to total deposits, as previously disclosed, were at, or approaching, 90%. In response to these failures, many large depositors across the industry have withdrawn deposits in excess of applicable deposit insurance limits and deposited these funds in other financial institutions and, in many instances, moved these funds into money market mutual funds or other similar securities accounts in an effort to diversify the risk of further bank failure(s).

Uninsured deposits historically have been less stable than insured deposits. As a result, in the event of financial distress, uninsured depositors historically have been more likely to withdraw their deposits. The Company estimates that 38% of its total deposits as of March 31, 2023, were uninsured as they were above the FDIC’s insurance limit. If a significant portion of these uninsured deposits were to be withdrawn within a short period of time such that additional sources of funding would be required to meet withdrawal demands, RB&T may be unable to obtain funding at favorable terms, which may have an adverse effect on our net interest margin. Moreover, obtaining adequate funding to meet our deposit obligations may be more challenging during periods of elevated prevailing interest rates, such as the present period. Our ability to attract depositors during a time of actual or perceived distress or instability in the marketplace may be limited. Further, interest rates paid for borrowings generally exceed the interest rates paid on deposits. This spread may be exacerbated by higher prevailing interest rates.

*We may experience additional increases in FDIC insurance assessments.* The FDIC deposit insurance fund has recently incurred losses with the resolution of bank failures during the first quarter of 2023. As a result, the FDIC has announced that it intends to publish a notice of proposed rulemaking for a special assessment in May 2023. It is possible that our regular deposit insurance assessment rates, which were already expected to increase significantly during 2023 over 2022, will further increase should the FDIC alter its assessment rate schedule or calculation methodology for financial institutions as a result of these recent bank failures. Although we cannot predict the specific timing and terms of any special assessment or any other increase in our deposit insurance assessment rates, any increase in our assessment fees could have a materially adverse effect on our results of operations and financial condition.

Filed May 5, 2023.
Source: SEC EDGAR, the filing index for accession 0001558370-23-008211. Last ingested by Listed: Nov 5, 2026, 18:31 ET. No prices; not investment advice.