Republic Bancorp Inc: Form 10-Q for the period ended Jun 30, 2025

The consolidated financial statements include the accounts of Republic Bancorp, Inc. (the “Parent Company”) and its wholly owned subsidiary, Republic Bank & Trust Company. 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 subsidiary. The term the “Bank” refers to the Company’s subsidiary bank, Republic Bank & Trust Company, as well as, its wholly owned subsidiary, RBT Insurance Agency LLC. All significant intercompany balances and transactions are eliminated in consolidation.

Republic is a financial holding company headquartered in Louisville, Kentucky. The Bank is a Kentucky-based, state-chartered non-member financial institution that provides both traditional and non-traditional banking products through five reportable segments using a multitude of delivery channels. While the Bank operates primarily in its geographical market footprint where it has physical locations, its non-brick-and-mortar delivery channels allow it to reach clients across the U.S.

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 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 statement. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believe,” “can,” “conclude,” “continue,” “could,” “estimate,” “expect,” “forecast,” “foresee,” “goal,” “intend,” “may,” “might,” “outlook,” “possible,” “plan,” “predict,” “project,” “potential,” “seek,” “should,” “target,” “will,” “will likely,” “would,” or other similar expressions. These forward-looking statements are not historical facts and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control.

Forward-looking statements detail management’s expectations regarding the future and are based on information known to management only as of the date the statements are made and management undertakes no obligation to update forward-looking statements to reflect events or circumstances that occur after the date forward-looking statements are made, except as required by applicable law.

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

• litigation liabilities, including related costs, expenses, settlements and judgments, or the outcome of matters before regulatory agencies, whether pending or commencing in the future;
• long-term and short-term interest rate fluctuations and the overall shape of the U.S. Treasury yield curve, as well as the corresponding impact on the Company’s net interest income and mortgage banking operations;
• the magnitude and frequency of changes to the FFTR implemented by the FOMC of the FRB;
• changes in fiscal, monetary, and/or regulatory policies;
• changes in tax policies including, but not limited to, changes in federal and state statutory rates;
• changes in, or forecasts of, future political and economic conditions, inflation or recession and efforts to control related developments;
• ability to effectively navigate an economic slowdown or other economic or market disruptions;
• behavior of securities and capital markets, including changes in interest rates, market volatility and liquidity;
• ability to effectively manage capital and liquidity;
• accuracy of assumptions and estimates used in establishing the ACLL, ACLC, credit exposures and other estimates;
• changes in the credit quality of the Company’s customers and counterparties, deteriorating asset quality and charge-off levels;
• impairment of investment securities, goodwill, MSRs, other intangible assets and/or DTAs;
• competitive product and pricing pressures in each of the Company’s five reportable segments;
• projections of revenue, expenses, capital expenditures, losses, EPS, dividends, capital structure, etc.;
• integration of acquired financial institutions, businesses, or future acquisitions;
• changes in technology instituted by the Company, its counterparties, or competitors;
• changes to or the effectiveness of the Company’s overall internal control environment;
• adequacy of the Company’s risk management framework, disclosure controls and procedures and internal control over financial reporting;
• changes in applicable ASUs, including the introduction of new ASUs;
• changes in investor sentiment or behavior;
• changes in consumer/business spending or savings behavior;
• ability to appropriately address social, environmental and sustainability concerns that may arise from business activities;
• occurrence of natural or human-caused disasters or calamities, including health emergencies, the spread of infectious diseases, pandemics or outbreaks of hostilities, and the Company’s ability to deal effectively with disruptions caused by the foregoing;
• ability to maintain the security of the Company’s financial, accounting, technology, data processing and other operational systems and facilities;
• ability to withstand disruptions that may be caused by any failure of the Company’s operational systems or those of third- parties;
• the Company’s ability to effectively defend itself against cyberattacks or other attempts by unauthorized parties to access information of its vendors, or its customers or to disrupt systems;
• the Company’s ability to qualify for future research and development federal tax credits;
• the ability for Tax Providers to successfully market and realize the expected RA and RT volume anticipated by TRS;
• the impacts of actual or proposed tariffs to the U.S. economy, market interest rates, and the Company’s results of operations;
• the ability of the Company to achieve savings from its new call center management system;
• the ability for the Company to achieve its projected savings from a new core system contract;
• the ability to launch the new core system by the Company’s fourth quarter 2025 target date;
• the ability of RPS’ largest segment marketer-servicer to meet minimum contractual average deposit thresholds to earn revenue share payments;
• the overall future impact of the non-renewal of the Company’s contract with its largest marketer-servicer within TRS;
• the Company’s ability to replace RA and RT volume and revenue related to the above contract non-renewal; 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, 2024, 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, 2024.

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 June 30, 2025, the Bank maintains 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.

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

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 impact of utilizing the CECL approach to calculate 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.

During the first quarter of 2025, the Company further segmented its CRE portfolio into Owner Occupied CRE, Nonowner Occupied CRE, and Multi-family. The Multi-family portfolio consists of properties with five or more dwelling units in structures (including apartment buildings and apartment hotels) used primarily to accommodate households on a more-or-less permanent basis. The Company believes this additional portfolio segmentation will provide better granularity to the ACLL in the future. Given the loss history for each of these portfolio segments over the past several years, this additional segmentation did not have a material impact to the Company’s ACLL. This additional segmentation could have material impacts to the ACLL in the future, however, depending upon the overall credit performance of each of these individual portfolios on a go-forward basis.

BUSINESS SEGMENT COMPOSITION

As of June 30, 2025, the Company was divided into five reportable segments: Traditional Banking, Warehouse Lending, TRS, RPS, and RCS. Management considers the first two segments to collectively constitute “Core Bank” or “Core Banking” operations, while the last three segments collectively constitute RPG operations.

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

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

Core Bank

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

(I) Traditional Banking segment

The Traditional Banking segment, which also includes the results of the former mortgage banking segment, provides traditional banking products primarily to customers in the Company’s market footprint ,with all products and services generally offered under the Company’s traditional RB&T brand. As of June 30, 2025, Republic had 47 full-service banking centers with locations as follows:

• Kentucky — 29
• Metropolitan Louisville — 19
• Central Kentucky — 6
• Georgetown — 1
• Lexington — 5
• Northern Kentucky (Metropolitan Cincinnati) — 4
• Bellevue— 1
• Covington — 1
• Crestview Hills — 1
• Florence — 1
• Indiana — 3
• Southern Indiana (Metropolitan Louisville) — 3
• Floyds Knobs — 1
• Jeffersonville — 1
• New Albany — 1
• Florida — 7
• Metropolitan Tampa — 7
• Ohio — 4
• Metropolitan Cincinnati — 4
• Tennessee — 4
• Metropolitan Nashville — 4

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

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

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

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

Traditional Bank 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.

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

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

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

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.

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

Commercial Lending — As described in detail below, the Bank conducts commercial lending activities primarily through the following groups/divisions: Corporate Banking, CRE Banking, Commercial Banking, Business Banking, Private Banking, and Retail Banking channels and clients are primarily located within the Bank’s market footprint or in an adjoining market. In general, all commercial lending credit approvals and processing are prepared and underwritten through the Bank’s centralized CCAD.

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

C&I loans typically include those secured by general business assets, which consist of equipment, accounts receivable, inventory, and other business assets owned by the borrower/guarantor. Credit facilities include annually renewable LOCs and term loans with maturities typically from three to five years and may also involve financial covenant requirements. These requirements are monitored by the Bank’s CCAD. Underwriting for C&I loans is based on the borrower’s capacity to repay these loans from operating cash flows, typically measured by EBITDA (earnings before interest, taxes, depreciation and amortization), with capital strength, collateral, and management experience also important underwriting considerations. The targeted C&I credit size for client relationships is typically between $1 million and $10 million, with higher targets between $10 million and $35 million targeted by the Corporate Banking group.

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

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

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

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

Construction & 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) to borrowers primarily located within the Bank’s market footprint or in an adjoining market. 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.

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

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

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

Consumer Lending — Traditional Banking consumer loans include home improvement and home equity loans, other secured and unsecured personal loans, and credit cards originated to borrowers primarily located within the Bank’s market footprint or in an adjoining market. In 2024, the Traditional Bank ceased originating new consumer credit cards and sold its $5 million portfolio in the second quarter of 2025. 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 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 with borrowers across the U.S. Loans typically range between $200,000 and $4 million in size and have terms up to 20 years. The credit characteristics of an aircraft borrower are higher than a typical consumer in that they must demonstrate and indicate a higher degree of 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 — During 2023, the Bank purchased a block of single family, first-lien mortgage loans for investment through its Correspondent Lending channel. The Bank had previously purchased Correspondent loans dating back to 2014 and 2015. Correspondent Lending generally involves the Bank purchasing, primarily from its Warehouse Lending clients, closed loans that meet the Bank’s specifications. Substantially all loans purchased through the Correspondent Lending channel are purchased at a premium. Premiums on loans held for investment acquired though the Correspondent Lending channel will be amortized into interest income over the expected life of the loan utilizing the level-yield. Loans acquired through the Correspondent Lending channel are generally made to borrowers outside of the Bank’s historical market footprint. During the first quarter of 2024, Management elected to sell $67 million of these loans and the sale was completed during the second quarter of 2024.

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 (http://www.republicbank.com).

Mobile Banking — The Bank allows clients to securely access and manage their accounts through its mobile banking application.

Other Banking Services — The Bank also provides title insurance and other financial institution related products and services.

Bank Acquisitions — The Bank maintains an acquisition strategy to selectively grow its franchise as a complement to its organic growth strategies.

See additional detail regarding the Traditional Banking segment under Footnote 15 “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 U.S. 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 advances for loans are expected to remain on the warehouse LOC for an average of 15 to 30 days. Advances for reverse mortgage loans and construction loans typically remain on the LOC longer than conventional mortgage loans. Interest income and loan fees are accrued for each individual advance during the time the advance remains on the warehouse LOC and is 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 15 “Segment Information” of Part I Item 1 “Financial Statements.”

Republic Processing Group

(III) Tax Refund Solutions segment

Through the TRS segment, the Bank facilitates the receipt and payment of federal and state tax refund products and offers a credit product through third-party tax preparers located throughout the U.S., as well as tax-preparation software providers that offer Republic Bank ERAs, RAs, and RTs (collectively, the “Tax Providers”). The majority of the business generated by the TRS business occurs during the first half of each year. During the second half of each year, TRS generates limited revenue and incurs costs preparing for the next year’s tax season. During December 2024 and 2003, TRS originated ERAs related to tax returns that were anticipated to be filed during the first quarter of the following tax filing season.

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 product is a loan made in conjunction with the filing of a taxpayer’s federal tax return, which allows the taxpayer to borrow funds as an advance of a portion of their tax refund. The RA product had the following features during the 2024 and 2025 Tax Seasons:

• 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 $6,500 for the 2024 Tax Season and $6,250 for the 2025 Tax Season;
• No requirement that the taxpayer pays for another bank product, such as an RT;
• Multiple disbursement methods were available through 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.

Since its introduction in December of 2022, the ERA loan product has been structured similarly to the RA, with the primary differences being the timing of when the ERAs are originated and the documentation available to underwrite the ERAs. The ERA is originated prior to the taxpayer receiving their fiscal year taxable income documentation, e.g., W-2, and the filing of the taxpayer’s final federal tax return. As such, the Company generally uses paystub information to underwrite the ERA. The repayment of the ERA is incumbent upon the taxpayer client returning to the Bank’s Tax Provider for the filing of their final federal tax return in order for the tax refund to potentially be received by the Bank from the federal government to pay off the advance. The ERA product had the following features during the 2024 and 2025 Tax Seasons:

• Only offered during December and the up-coming January in connection with the upcoming first quarter tax business for each period;
• The taxpayer had the option to choose from multiple loan tiers, subject to underwriting, up to a maximum advance amount of $1,000 for the 2024 Tax Season and $2,000 for the 2025 Tax Season;
• No requirement that the taxpayer pays for another bank product, such as an RT;
• Multiple disbursement methods available through most Tax Providers, including direct deposit or prepaid card, based on the taxpayer-customer’s election;
• Repayment of the ERA to the Bank via deduction from the taxpayer’s tax refund proceeds; and
• If a tax refund is insufficient to repay the ERA, including but not limited to the failure to file a final 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 RAs, including ERAs, as “Interest income on loans.” The number of days for delinquency eligibility is based on management’s annual analysis of tax return processing times. RAs, including ERAs that were originated related to the first quarter 2024 tax filing season were repaid, on average, within 32 days after the taxpayer’s tax return was submitted to the applicable taxing authority. Since RAs do not have a contractual due date, the Company considered an RA delinquent during 2025 if it remained unpaid 35 days after the taxpayer’s tax return was submitted to the applicable taxing authority.

Provisions on RAs are estimated when advances are made. Unpaid RAs, including ERAs, related to the first quarter tax filing season of a given year are considered delinquent at June 30th of that year and charged-off. In addition, as of June 30, 2025, RAs that were subject to Tax Provider loan loss guarantees were charged-off and immediately recorded as recoveries of previously charged-off loans with corresponding receivables recorded in other assets for the Tax Provider guarantees. Those corresponding receivables are expected to be settled during the third quarter of 2025. RAs collected during the second half of the year, not subject to loan loss guarantee arrangements, are 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. In addition, the Bank’s ability to control losses for the ERA product is highly dependent upon the taxpayer returning to a Tax Provider for the filing of their final tax return. Each year, the Bank’s 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 4 “Loans and Allowance for Credit Losses on Loans” of Part I Item 1 “Financial Statements.”

(IV) Republic Payment Solutions segment

The RPS segment offers a range of payment-related products and services to consumers through third-party service providers. Through the Bank, the RPS segment offers both issuing solutions and money movement capabilities.

Issuing Solutions:

The RPS segment offers prepaid and debit solutions primarily marketed to the consumer industry. Prepaid solutions include the issuing of payroll and general purpose reloadable cards. Characteristics of these cards include the following:

• Similar to a traditional debit card with features including traditional point of sale purchasing, automatic teller machine withdrawals and direct deposit;
• Funds associated with these products are typically held in pooled accounts at the Bank, with the Bank maintaining records of individual balances within these pooled accounts; and
• Payroll cards facilitate the loading of an employer’s payroll onto a card via direct deposit, with payroll and general purpose reloadable cards generally distributed through retail locations and reloadable through participating retail load networks.

Debit solutions include the issuing of DDAs, savings accounts and/or debit cards. In addition to offering traditional point of sale purchasing, automated teller machine withdrawals, and direct deposit options, these accounts may include overdraft protection.

Money Movement:

Through the Bank, the RPS segment participates in traditional money movement solutions including ACH transactions, wire transfer, check processing, and the Mastercard Remote Payment and Presentment Service. These capabilities are also complementary products facilitating the movement of money for other RPG divisions.

The Company reports its share of client-related charges and fees for RPS programs under RPS program fees. Additionally, the Company’s portion of interchange revenue generated by prepaid card transactions is reported as noninterest income under “Interchange fee income.” The Company began sharing interest income revenue with its largest prepaid marketer-servicer during 2024, with the interest shared reported as “Interest expense on deposits.” The Company has not shared interest income revenue with its largest prepaid marketer-servicer for the three and six months ended June 30, 2025, as minimum deposit balance thresholds were not met.

(V) Republic Credit Solutions segment

Through the Bank, the RCS segment 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. Through the Bank, RCS uses third-party service providers for certain services such as marketing and loan servicing for (1) RCS’ LOC products, (2) RCS’ installment loan product and (3) RCS’ healthcare receivables products.

LOC Products:

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

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

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

The Bank sells 95% participation interests in the LOC II product. These 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 HFS through this program are carried at the lower of cost or fair value.

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 loans and is marketed as such. Furthermore, the Bank controls the loan terms and underwriting guidelines, and the Bank exercises consumer compliance oversight of this RCS installment loan product. Currently, all loan balances originated under this RCS installment loan program are carried as HFS on the Bank’s balance sheet, with the intention to sell these loans to a third-party, who is an affiliate of the Bank’s third-party service provider, generally within 16 days following the Bank’s origination of the loans. Loans originated under this RCS installment loan program are carried at fair value under a fair-value option, with the portfolio marked to market monthly.

Healthcare Receivables Products:

Through RCS, 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 HFS through this program are carried at the lower of cost or fair value.

For the RCS LOC and healthcare receivable products, the Company reports interest income and loan origination fees earned on RCS loans under “Loans, including fees,” while any net gains or losses on sale and mark-to-market adjustments of RCS loans are reported as noninterest income under “Program fees.” The Company has elected fair value accounting for its RCS installment loan product that it sells after an initial holding period. As a result, interest income on loans, loan origination fees, net gains or losses on sale, and mark-to-market adjustments for the RCS installment product are reported as noninterest income under “Program fees.”

RECENT DEVELOPMENTS

The One Big Beautiful Bill Act

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

Expiration of Largest Tax Provider Contract

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

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

• ERAs and RAs originated through this Tax Provider represented approximately 63% of the total dollars of ERAs and RAs originated through TRS from December 2024 through February 2025. As a result of these originations, RA/ERA fee income reported in interest income on loans related to this Tax Provider represented 63% of total RA/ERA fee income for the first six months of 2025, and 89% for the fourth quarter of 2024. Net RA/ERA fee income during the second quarter of 2025 was immaterial.
• Provision for RAs/ERAs originated through this Tax Provider represented 72% of the TRS Provision for the second quarter of 2025 (the Provision for the second quarter of 2025 was a net credit for both TRS, as a whole, and for RAs/ERAs originated through this Tax Provider). The Provision for this Tax Provider was 56% of the total TRS Provision for the first six months of 2025, and 96% of the total TRS Provision for the fourth quarter of 2024.
• Net RT revenue generated through this Tax Provider during the second quarter and first six months of 2025 represented approximately 6% and 20% of the total net RT revenue generated through TRS for the respective periods. Net RT revenue during the fourth quarter of 2024 was immaterial.

OVERVIEW (Three Months Ended June 30, 2025, Compared to Three Months Ended June 30, 2024)

Total Company net income for the second quarter of 2025 was $31.5 million, an increase of $6.3 million, or 25%, over the same period in 2024. Diluted EPS also increased to $1.61 for the second quarter of 2025 compared to $1.30 for the same period in 2024. The increase in net income primarily reflected the following by reportable segment:

Traditional Banking segment

• Net income increased $3.2 million, or 24%, from the second quarter of 2024 to the second quarter of 2025.
• Net interest income increased $6.5 million, or 13%, from the second quarter of 2024 to the second quarter of 2025.
• Provision was a net charge of $517,000 for the second quarter of 2025 compared to a net charge of $915,000 for the same period in 2024.
• Noninterest income increased $399,000, or 4%, from the second quarter of 2024 to the second quarter of 2025.
• Noninterest expense increased $2.9 million, or 7%, from the second quarter of 2024 to the second quarter of 2025.

Warehouse Lending segment

• Net income increased $450,000, or 33%, from the second quarter of 2024 to the second quarter of 2025.
• Net interest income increased $635,000, or 22%, from the second quarter of 2024 to the second quarter of 2025.
• The Warehouse Provision was a net charge of $255,000 for the second quarter of 2025 compared to a net charge of $214,000 for the same period in 2024.
• Average committed Warehouse lines of credit increased to $995 million for the second quarter of 2025 from $940 million for the second quarter of 2024.
• Average LOC usage was 57% during the second quarter of 2025 compared to 49% during the same period in 2024.

Tax Refund Solutions segment

• Net income increased $241,000, or 8%, from the second quarter of 2024 to the second quarter of 2025.
• Net interest income decreased $761,000 from the second quarter of 2024 to the second quarter of 2025.
• TRS recorded a net credit to the Provision of $3.9 million during the second quarter of 2025 compared to a net credit of $1.2 million for the same period in 2024.
• Noninterest income decreased $1.2 million, or 30%, from the second quarter of 2024 to the second quarter of 2025.
• Within noninterest income, net RT revenue decreased $1.2 million, or 33%, from the second quarter of 2024 to the second quarter of 2025.
• Noninterest expense was $2.5 million for the second quarter of 2025 compared to $2.0 million for the same period in 2024.

Republic Payment Solutions segment

• Net income increased $342,000, or 16%, from the second quarter of 2024 to the second quarter of 2025.
• Net interest income increased $633,000, or 22%, from the second quarter of 2024 to the second quarter of 2025.
• Noninterest income was $736,000 for the second quarter of 2025 compared to $761,000 for the second quarter of 2024.
• Noninterest expense was $1.2 million for the second quarter of 2025 compared to $1.0 million for the second quarter of 2024.

Republic Credit Solutions segment

• Net income increased $2.0 million, or 40%, from the second quarter of 2024 to the second quarter of 2025.
• Net interest income increased $694,000, or 6%, from the second quarter of 2024 to the second quarter of 2025.
• Overall, RCS recorded a net charge to the Provision of $5.0 million during the second quarter of 2025 compared to a net charge of $5.2 million for the same period in 2024.
• Noninterest income increased $77,000, or 2%, from the second quarter of 2024 to the second quarter of 2025.
• Noninterest expense was $2.4 million for the second quarter of 2025 and $4.0 million for the same period in 2024.

RESULTS OF OPERATIONS (Three Months Ended June 30, 2025, Compared to Three Months Ended June 30, 2024)

Net Interest Income

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

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

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

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

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

Traditional Banking segment

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

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

Items of note impacting the Traditional Bank’s change in net interest income and NIM between the second quarter of 2024 and the second quarter of 2025 were as follows:

• Traditional Bank average loans declined from $4.62 billion with a weighted-average yield of 5.57% during the second quarter of 2024 to $4.59 billion with a weighted average yield of 5.69% during the second quarter of 2025. The comparison of average loans for the Traditional Bank was negatively impacted by the sale of $67 million in residential real estate loans during the second quarter of 2024 that were previously held for investment. The increased period-over-period yield on loans was driven by the replacement of lower yielding loans in the portfolio through principal amortization and payoffs with new originations at a higher yield. For additional discussion of the stricter pricing strategy for new loan originations, see section titled “Loan Portfolio” in the “COMPARISON OF FINANCIAL CONDITION” of this document.
• Average interest-earning cash was $623 million with a weighted-average yield of 4.45% during the second quarter of 2025 compared to $393 million with a weighted-average yield of 5.46% for the second quarter of 2024. The lower yield on cash for the quarter was driven by a 100-basis-point decrease in the FFTR from the second quarter of 2024 to the second quarter of 2025. The growth in cash balances was primarily driven by excess funds from interest-bearing deposit growth, including cash from a $131 million short-term brokered CD obtained during April 2025 that matures in July 2025.
• Average investments totaled $686 million with a weighted-average yield of 3.71% during the second quarter of 2025 compared to $670 million with a weighted-average yield of 3.09% for the second quarter of 2024. The increased period-over-period yield on investments was driven by the redeployment of cash from maturing investments into new purchases with longer durations and higher yields. The Company began buying investment securities with longer durations, such MBS’s, during 2025 as a result of a more favorable yield curve and the more attractive yield for these longer-duration securities above the overnight cash yield.
• The weighted-average cost of total interest-bearing deposits decreased from 2.79% during the second quarter of 2024 to 2.34% for the second quarter of 2025, while average interest-bearing deposit balances grew $223 million, or 6%, for the same periods. Included within this growth in interest-bearing deposits was a $280 million net increase in the average balances for business

and consumer money market accounts, which generally pay premium rates. The increase in money market balances was partially offset by an $85 million decrease in the average balance of third-party listing service deposits. In addition, the Company obtained a $131 million brokered CD during April 2025 that added $110 million to average deposit balances during the second quarter of 2025. This CD matures in July 2025.

• Average noninterest-bearing deposits decreased $38 million from the second quarter of 2024 to the second quarter of 2025. The decline in noninterest-bearing deposits is an on-going trend for banks, in general, dating back to the fourth quarter of 2022, as the overall interest rate environment highlighted by the then-inverted yield curve, combined with the competition for deposits, continued to make premium-rate, interest-bearing checking and savings deposits a more attractive alternative for consumer and business clients.

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

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 Warehouse increased $635,000, or 22%, from the second quarter of 2024 to the second quarter of 2025.

The rise in Warehouse net interest income was primarily driven by a $110 million, or 24%, increase in average outstanding Warehouse balances from $457 million during the second quarter of 2024 to $567 million for the second quarter of 2025. Average committed Warehouse LOCs increased from $940 million to $995 million during these same periods, while higher demand caused average usage rates for Warehouse LOC to increase from 49% during the second quarter of 2024 to 57% for the second quarter of 2025.

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

Tax Refund Solutions segment

TRS’s net interest income decreased $761,000 for the second quarter of 2025 compared to the same period in 2024. Loan-related interest and fees decreased $731,000 for the quarter and was driven primarily by a $560,000 payment received during the second quarter of 2024 representing a Tax Provider yield enhancement for the RA program to help offset the Company’s higher funding costs. This yield enhancement was new for the 2024 tax season and eliminated for the 2025 tax season.

Republic Payment Solutions segment

Net interest income from the Company’s prepaid card division increased $633,000 from the second quarter of 2024 to the second quarter of 2025. Driving this increase at RPS was a reduction in the segment’s revenue share component, as the Company’s largest marketer-servicer did not achieve the minimal contractual thresholds for average deposit balances in order to earn a revenue share for the second quarter of 2025. By contrast, this revenue share equated to $1.3 million during the second quarter of 2024 and was recorded as interest expense in the segment’s income statement. At this time, Management is uncertain how much the revenue share component may be in the future, as deposit balances originated through this marketer-servicer are at levels near the thresholds necessary to achieve a revenue share, making a future revenue share possible, but not certain.

Partially offsetting the positive benefit of the decreased revenue share, RPS earned a lower yield of 4.28% for its $350 million average of prepaid program balances for the second quarter of 2025 compared to a yield of 5.03% for the $360 million in average prepaid card balances for the second quarter of 2024. The lower earnings rate was driven by a decrease in the FFTR of 100 basis points from the second quarter of 2024 to the second quarter of 2025.

Overall customer demand for the RPS segment has historically not been interest rate sensitive and therefore management does not believe a changing interest rate environment would impact origination volume for its prepaid card products. A decreasing interest rate environment, however, would likely negatively impact the Company’s internal FTP credit more than it would impact any revenue share the Company pays for the product, decreasing the segment's NIM.

Republic Credit Solutions segment

RCS’s net interest income increased $694,000, or 6%, from the second quarter of 2024 to the second quarter of 2025. The increase was driven primarily by an increase in fee income from RCS’s LOC II product, as net interest income increased $388,000 to $7.1 million from the second quarter of 2024 to the second quarter of 2025. The rise in net interest income for this LOC product was driven primarily by a period-to-period increase in average outstanding loan balances of approximately $3 million.

Overall customer demand for the RCS segment’s products has historically not been interest rate sensitive and therefore management does not believe a changing interest rate environment would materially impact origination volume for its various consumer loan products. A decreasing interest rate environment would positively impact the Company’s internal FTP cost allocated to this segment, which would increase the NIM for the segment. The exact amount of the impact would depend on the final internal FTP cost assigned, as well as the overall volume and mix of loans the segment generates.

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

Table 1 — Total Company Average Balance Sheets and Interest Rates

(dollars in thousands)

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

b) Interest income for TRS Refund Advances and RCS LOC products is composed entirely of loan fees.

c) Average balances for loans include the principal balance of nonaccrual loans and loans HFS, and are inclusive of all loan premiums, discounts, fees and costs.

d) See table 2 for detail of loan fees by reporting segment.

The following table illustrates loan fees recorded as interest income on loans, by segment, for the second quarters ended June 30, 2025, and 2024.

Table 2 — Loan Fee Income

(dollars in thousands)

The following table illustrates the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities impacted Republic’s interest income and interest expense during the periods indicated. Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior rate), (ii) changes attributable to changes in rate (changes in rate multiplied by prior volume), and (iii) net change. The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.

Table 3 — Total Company Volume/Rate Variance Analysis

(in thousands)

* Since interest income for RAs is composed entirely of loan fees and RAs are only offered during the first two months of each year, volume and rate measurements for this product are not a meaningful metric for the periods presented above.

Provision

Total Company Provision was a net charge of $1.8 million for the second quarter of 2025 compared to a net charge of $5.1 million for the same period in 2024.

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

Traditional Banking segment

The Traditional Banking Provision during the second quarter of 2025 was a net charge of $517,000 compared to a net charge of $915,000 for the second quarter of 2024.

The net charge of $517,000 for the second quarter of 2025 was driven by the following:

• The Traditional Bank recorded a net charge to the Provision of $722,000 during the second quarter of 2025 related to a change in loan mix toward loans with higher formula reserve requirements in addition to $313,000 in net charge-offs. While loan balances at the Traditional Bank increased only $16 million during the second quarter, growth occurred in categories such as C&D, with higher loan loss reserve requirements.
• Partially offsetting the above, in the second quarter of 2025, as a practical expedient, the Company established a minimum loan balance threshold in assessing credits for impairment that resulted in a $518,000 credit to Provision.

The net charge of $915,000 for the second quarter of 2024 was primarily driven by the following:

• Traditional Bank provisioning during the second quarter of 2024 substantially related to general formula reserves in addition to $232,000 in net charge-offs. While loan balances at the Traditional Bank increased only $16 million during the second quarter, the segment continued to experience a change in loan mix, growing in categories with higher loan loss reserve requirements.

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

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

Warehouse Lending segment

Warehouse recorded a net charge to the Provision of $255,000 for the second quarter of 2025 compared to a net charge of $214,000 for the same period in 2024. Provision for both periods reflected changes in general reserves consistent with changes in outstanding period-end balances. Outstanding Warehouse period-end balances increased $102 million during the second quarter of 2025 compared to an increase of $86 million during the second quarter of 2024.

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

Tax Refund Solutions segment

TRS recorded a net credit to the Provision of $3.9 million during the second quarter of 2025 compared to a net credit of $1.2 million for the same period in 2024. Substantially all TRS Provision in both periods was related to its RA and ERAs products.

RAs related to the 2025 tax filing season were only originated during December of 2024 and the first two months of 2025, while RAs related to the 2024 tax filing season were only originated during December of 2023 and the first two months of 2024. As is the case each year as of March 31st, the ACLL related to RAs is an estimate with that estimate finalized during the second quarter when all uncollected RAs are ultimately charged off as of June 30th. The final charge-offs posted during the second quarter of a calendar year can be different (higher or lower) than the Company’s March 31st Provision estimate based on actual paydowns received during the second quarter. RAs collected during the second half of the year are recorded as recoveries of previously charged-off loans unless they are covered under a loss guaranty arrangement. Any RAs subject to a loss guaranty arrangement that are recovered during the second half of the year are distributed to the guarantor.

For the second quarter of 2025, TRS recorded a net credit to the Provision of $3.9 million to bring its preliminary March 31, 2025, ACLL estimate in-line with its final June 30, 2025, charge-offs. TRS’s incurred loss rate for unguaranteed RAs as of June 30, 2025, was 2.81% of total of the $801 million of the total loans originated during December 2024 and the first two months of 2025.

During the second quarter of 2024, TRS recorded a net credit to the Provision of $1.2 million. TRS’s incurred loss rate for unguaranteed RAs as of June 30, 2024, was 3.30% of total of the $874 million of the total loans originated during December 2023 and the first two months of 2024.

In-line with its customary June 30th charge-off policy for RA loans, the Company completely charged-off all remaining unpaid RAs as of June 30, 2025, with approximately $2.3 million of the RAs that are expected to be recovered under loan-loss guaranty arrangements with Tax Providers recorded as receivables in other assets on the balance sheet.

For factors affecting the comparison of the TRS results of operations for the second quarter of 2025 and the second quarter of 2024, see section titled “OVERVIEW (Three Months Ended June 30, 2025, Compared to Three Months Ended June 30, 2024) - Tax Refund Solutions.”

See additional detail regarding the RA product under Footnote 4 “Loans and Allowance for Credit Losses on Loans” of Part I Item 1 “Financial Statements.”

Republic Payment Solutions segment

There is no ACLL or Provision for RPS, as the segment offers prepaid and debit solutions to consumers.

Republic Credit Solutions segment

As illustrated in the following table, RCS recorded a net charge to the Provision of $5.0 million during the second quarter of 2025 compared to a net charge to the Provision of $5.2 million for the same period in 2024. RCS recorded net charge-offs of $4.0 million during the second quarters of 2025 of 2024.

RCS ending loan balances decreased by $10 million during the first six months of 2025, driven by declines in the healthcare receivables programs.

While RCS loans generally return higher yields, they also present a greater credit risk than Traditional Banking loan products. As a percentage of total RCS loans, the RCS ACLL was 17.67% as of June 30, 2025, 16.30% as of December 31, 2024, and 15.44% as of June 30, 2024. The segment continued to experience a change in loan mix, growing in categories with higher loan loss reserve requirements thus driving its higher ACLL for the quarter. The Company believes, based on information presently available, that it has adequately provided for RCS loan losses as of June 30, 2025.

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

Table 4 — Republic Credit Solutions Provision by Product

(dollars in thousands)

Table 5 — Summary of Loan and Lease Loss Experience

(dollars in thousands)

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

* All loss rates above are based on net charge-offs as a function of average outstanding portfolio balances. RAs are originated during the first two months of each year, with all RAs charged-off by June 30th of each year. Due to their relatively short life, RA net charge-offs are typically analyzed by the Company as a percentage of total RA originations, not as a percentage of average outstanding balances.

Total Company’s net charge-offs to average total Company loans decreased from 2.52% during the second quarter of 2024 to 1.99% during the second quarter of 2025, with net charge-offs decreasing $6.8 million, or 20%, and average total Company loans increasing $56 million, or 1%. The decrease in net charge-offs was driven by a $6.7 million decline in net charge-offs within the TRS segment related to significantly better payments received from the U.S. Treasury to pay off RAs and ERAs through June 30, 2025, compared to the same period in the prior year.

Noninterest Income

Total Company noninterest income decreased $702,000, or 4%, during the second quarter of 2025 compared to the same period in 2024.

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 $399,000, or 4%, from the second quarter of 2024 compared to the second quarter of 2025. The increase in noninterest income was primarily driven by a $284,000 increase in mortgage banking income, which resulted a modest period-over-period improvement in pricing received on fixed rate loans sold into the secondary market. Other income also increased $280,000 for the second quarter of 2025 compared to the second quarter of 2024 and was driven primarily by a $328,000 net gain on sale of the Bank’s consumer credit card portfolio which was completed during the quarter.

The Traditional Bank earns a substantial majority of its fee income related to its overdraft service program from the per item fee it assesses its customers for each insufficient-funds check or electronic debit presented for payment. The total per item fees, net of refunds, included in service charges on deposits for the three months ended June 30, 2025, and 2024 were $1.7 million and $1.8 million. The total daily overdraft charges, net of refunds, included in interest income for the three months ended June 30, 2025, and 2024 were $287,000 and $298,000.

Tax Refund Solutions segment

TRS’s noninterest income decreased from $3.9 million for the second quarter of 2024 to $2.7 million for the second quarter of 2025, led by a $1.2 million decline in Net RT fees. The lower Net RT Fees collected was attributable to a 17% decline in number tax refunds funded during the second quarter of 2025 versus the second quarter of 2024, with a greater percentage of RT volume received and funded during the first quarter 2025 as compared to 2024.

For factors affecting the comparison of the TRS results of operations for the first quarter of 2024 and the first quarter of 2023, see section titled “OVERVIEW (Three Months Ended June 30, 2025, Compared to Three Months Ended June 30, 2024) - Tax Refund Solutions.”

Noninterest Expense

Total Company noninterest expense increased $2.0 million, or 4%, during the second quarter of 2025 compared to the same period in 2024.

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

Traditional Banking segment

Traditional Banking noninterest expense increased $2.9 million, or 7%, for the second quarter of 2025 compared to the same period in 2024. Notable variances within the noninterest expense category included:

• Salaries and benefits increased $1.2 million, or 5%, driven by a $691,000 increase in estimated bonus-related expenses and a $524,000 increase in health insurance claims. The larger estimated bonus-related expenses for the second quarter of 2025 were due to an increased probability of a larger bonus payout for the year based on the Company’s strong operating results.
• Technology expenses increased $1.0 million, or 16%, over the second quarter of 2024. The increase in Technology expense was driven by enhanced security and new ancillary systems, including additional costs resulting from the transition to a new call center management system. Management expects to incur a net benefit in technology and communication costs in the future as a result of the new call center management system.

Republic Credit Solutions segment

Noninterest expense at the RCS segment decreased $1.6 million, or 40%, during the second quarter of 2025 compared to the same period in 2024, driven by a $1.7 million reduction in marketing expenses. The favorable decline in Marketing expenses included a $763,000 reimbursement for a prior period billing dispute.

OVERVIEW (Six months ended June 30, 2025, Compared to Six months ended June 30, 2024)

Total Company net income for the first six months of 2025 was $78.8 million, and $22.9 million, or 41%, increase from the same period in 2024. Diluted EPS increased to $4.03 for the first six months of 2025 compared to $2.87 for the same period in 2024. The increase in net income primarily reflected the following:

Traditional Banking segment

• Net income increased $6.7 million, or 26%, for the first six months of 2025 compared to the same period in 2024.
• Net interest income increased $11.5 million, or 12%, for the first six months of 2025 compared to the same period in 2024.
• Provision was a net credit of $252,000 for the first six months of 2025 compared to a net charge of $1.3 million for the same period in 2024.
• As a percentage of total Traditional Bank loans, the Traditional Banking ACLL was 1.29% as of June 30, 2025, compared to 1.30% as of June 30, 2024.
• Noninterest income increased $7.5 million, or 41%, for the first six months of 2025 compared to the same period in 2024.
• Noninterest expense increased $11.4 million, or 14%, for the first six months of 2025 compared to the same period in 2024.
• Total Traditional Bank loans outstanding increased $13 million during the first six months of 2025.
• Total nonperforming loans to total loans for the Traditional Banking segment was 0.47% as of June 30, 2025, compared to 0.50% as of December 31, 2024.
• Delinquent loans to total loans for the Traditional Banking segment was 0.22% as of June 30, 2025, unchanged from 0.22% as of December 31, 2024.
• Total Traditional Bank deposits increased $278 million, or 6%, from December 31, 2024, to $4.85 billion as of June 30, 2025.

Warehouse Lending segment

• Net income increased $1.3 million, or 57%, for the first six months of 2025 compared to the same period in 2024.
• Net interest income increased $1.4 million, or 27%, for the first six months of 2025 compared to the same period in 2024.
• The Warehouse Provision was a net charge of $302,000 for the first six months of 2025 compared to a net charge of $523,000 for the same period in 2024.
• Average committed Warehouse lines of credit increased to $981 million for the first six months of 2025 from $935 million for first six months of 2024.
• Average LOC usage increased to 52% during the first six months of 2025 compared to 43% during the same period in 2024.

Tax Refund Solutions segment

• Net income increased $11.1 million, or 93%, for the first six months of 2025 compared to the same period in 2024.
• Net interest income decreased $1.9 million, or 6%, for the first six months of 2025 compared to the same period in 2024.
• Total RA originations were $663 million during the first six months of 2025 compared to $771 million for the first six months of 2024. Originations for both six month periods occurred during the first quarter of the respective periods.
• TRS originated $139 million of ERAs during the fourth quarter of 2024 related to the anticipated filing of tax returns for the upcoming first quarter 2025 tax filing season compared to $103 million during the fourth quarter of 2023 related to the anticipated filing of tax returns for the first quarter of 2024.
• TRS recorded a net charge to the Provision of $11.5 million during the first six months of 2025 compared to a net charge to the Provision of $24.6 million for the same period in 2024.
• Noninterest income increased $1.9 million, or 13%, for the first six months of 2025 compared to the same period in 2024.
• Within noninterest income, net RT revenue increased $1.8 million, or 13% for the first six months of 2025 compared to the same period in 2024.
• Noninterest expense totaled $5.7 million for the first six months of 2025 compared to $6.5 million for the same period in 2024.

Republic Payment Solutions segment

• Net income increased $670,000, or 14%, for the first six months of 2025 compared to the same period in 2024.
• Net interest income increased $1.1 million, or 17%, for the first six months of 2025 compared to the same period in 2024.
• Noninterest income was $1.5 million for the first six months of 2025 unchanged from $1.5 million for the first six months of 2024.
• Noninterest expense totaled $2.2 million for the first six months of 2025 compared to $2.0 million for the first six months of 2024.

Republic Credit Solutions segment

• Net income increased $3.3 million, or 30%, for the first six months of 2025 compared to the same period in 2024.
• Net interest income increased $1.2 million, or 5%, for the first six months of 2025 compared to the same period in 2024.
• RCS recorded a net charge to the Provision of $8.0 million during the first six months of 2025 compared to a net charge of $9.4 million for the same period in 2024.
• Noninterest income decreased $274,000, or 4%, from the first six months of 2024 to the first six months of 2025.
• Noninterest expense totaled $5.5 million for the first six months of 2025 and $7.2 million for the same period in 2024.
• Total nonperforming loans to total loans for the RCS segment was 0.09% as of June 30, 2025, compared to 0.11% as of December 31, 2024.
• Delinquent loans to total loans for the RCS segment was 7.67% as of June 30, 2025, compared to 8.00% as of December 31, 2024.

RESULTS OF OPERATIONS (Six months ended June 30, 2025, Compared to Six months ended June 30, 2024)

Net Interest Income

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

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

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

Total Company net interest income was $178.9 million during the first six months of 2025 and represented an increase of $13.4 million, or 8%, from the first six months of 2024. Total Company NIM increased to 5.44% during the first six months of 2025 from 5.13% for the first six months of 2024.

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

Traditional Banking segment

The Traditional Bank’s net interest income increased $11.5 million, or 12%, for the first six months of 2025 compared to the same period in 2024, benefitted from period-over-period growth in average interest-earning assets and a NIM expansion. Traditional Banking’s NIM was 3.81% for the first six months of 2025, an increase of 38 basis points from the first six months of 2024, as the rise in its interest-earning asset yields outpacing the rise in funding costs.

The increase in the Traditional Bank’s net interest income and NIM during the first six months of 2025 was primarily attributable to the following factors:

• Traditional Bank average loans declined from $4.63 billion with a weighted-average yield of 5.51% during the first six months of 2024 to $4.58 billion with a weighted average yield of 5.65% during the first six months of 2025. While the weighted-average yield earned on Traditional Bank loans increased 14 basis points, the average balance was impacted by the second quarter 2024 sale of $67 million in residential real estate loans that were previously held for investment. For additional discussion of the stricter pricing strategy for new loan originations, see section titled “Loan Portfolio” in the “COMPARISON OF FINANCIAL CONDITION” section of this document.
• Average interest-earning cash, which is managed as a separate but complementary component of the Company’s overall investment portfolio, was $570 million with a weighted-average yield of 4.45% during the first six months of 2025 compared to $424 million with a weighted-average yield of 5.52% for the first six months of 2024. The lower yield on cash for the first six months of 2025 was driven by a 100-basis-point decrease in the FFTR from the second quarter of 2024 to the second quarter of 2025. The growth in cash balances was primarily driven by excess funds from interest-bearing deposit growth, including cash from a $131 million short-term brokered CD obtained during April 2025 that matures in July 2025.
• Average investments decreased to $653 million with a weighted-average yield of 3.60% during the first six months of 2025 from $701 million with a weighted-average yield of 3.03% for the first six months of 2024. The increased period-over-period yield on investments was driven by the redeployment of cash from maturing investments into new purchases with longer durations and higher yields. The Company began buying investment securities with longer durations, such MBS’s, during 2025 as a result of a more favorable yield curve and the more attractive yield for these longer-duration securities above the overnight cash yield.
• The Traditional Bank’s average cost of interest-bearing liabilities decreased from 2.59% during the first six months of 2024 to 2.09% for the first six months of 2025.
• While the weighted-average cost of total interest-bearing deposits decreased from 2.74% during the first six months of 2024 to 2.30% for the first six months of 2025, average interest-bearing deposits expanded $163 million, or 5%, from the first six months of 2024 to the first six months of 2025. Average balance growth of $275 million in business and consumer money market accounts, which generally pay premium rates, was partially offset by $100 million of contraction in lower-costing transaction accounts.
• The average balance of FHLB advances increased from $421 million for the first six months of 2024 to $445 million for the first six months of 2025. The weighted-average cost of these borrowings decreased from 4.70% to 4.37% for the same time periods. The decrease in the overall weighted-average cost of FHLB advances resulted primarily from previous term extension strategies implemented earlier in 2024 to take advantage of the then-inverted yield curve.
• The Traditional Bank’s average noninterest-bearing deposits decreased from $1.21 billion during the first six months of 2024 to $1.14 billion for the first six months of 2025, as the then-inverted yield curve and competition for deposits continued to make interest-bearing deposits a more attractive on-going alternative for consumer and business deposit accounts.

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

Warehouse Lending segment

Net interest income within Warehouse rose $1.4 million, or 27%, from the first six months of 2024 to the first six months of 2025, as total interest income increased $2.1 million and total interest expense increased $699,000. While Warehouse NIM and loan yields declined two basis points and 99 basis points, respectively during the first six months of 2025 compared to the same period in 2024, average outstanding balances expanded $114 million, or 29%, driving the overall increase in net interest income. Average committed Warehouse lines of credit increased from $935 million as June 30, 2024, to $981 million as of June 30, 2025, while average usage rates for Warehouse lines increased from 43% to 52% during the same periods.

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

Tax Refund Solutions segment

TRS’s net interest income decreased $1.9 million, or 6%, from the first six months of 2024 to the first six months of 2025. Loan-related interest and fees decreased $2.9 million for the first six months of 2025, consistent with 8% decline in tax season origination volume. In addition, TRS received a $560,000 payment during the second quarter of 2024 representing a Tax Provider yield enhancement for the RA program to help offset the Company’s higher funding costs. This yield enhancement was new for the 2024 tax season and eliminated for the 2025 tax season.

Republic Payment Solutions

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

Partially offsetting the positive benefit of the decreased revenue share, RPS earned a lower yield of 4.42% applied to the $362 million average of prepaid program balances for the first six months of 2025 compared to a yield of 5.05% for the $368 million in average prepaid card balances for the first six months of 2024. The lower earnings rate was driven by a decrease in the FFTR of 100 basis points from the first six months of 2024 to the first six months of 2025.

Overall customer demand for the RPS segment has historically not been interest rate sensitive and therefore management does not believe a changing interest rate environment would impact origination volume for its prepaid card products. A decreasing interest rate environment, however, would likely negatively impact the Company’s internally assigned net FTP funding credit more than it would impact any revenue share the Company pays for the product, decreasing the segment's NIM.

Republic Credit Solutions segment

RCS’s net interest income increased $1.2 million, or 5%, from the first six months of 2024 to the first six months of 2025. The increase was driven primarily by an increase in fee income from RCS’s LOC II product as net interest income increased $550,000 to $13.9 million from the first six months of 2024 to the same period in 2025. The rise in net interest income for this LOC product was driven primarily by a period-to-period increase in average outstanding loan balances.

Overall customer demand for the RCS segment’s products has historically not been interest rate sensitive and therefore management does not believe a changing interest rate environment would materially impact origination volume for its various consumer loan products. A decreasing interest rate environment would positively impact the Company’s internal FTP cost allocated to this segment, which would increase the NIM for the segment. The exact amount of the impact would depend on the final internal FTP cost assigned, as well as the overall volume and mix of loans the segment generates.

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

Table 7 — Total Company Average Balance Sheets and Interest Rates

(dollars in thousands)

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

b) Interest income for TRS RAs and RCS LOC products is composed entirely of loan fees.

c) Average balances for loans include the principal balance of nonaccrual loans and loans HFS, and are inclusive of all loan premiums, discounts, fees and costs.

d) See table 8 for detail of loan fees by reporting segment.

The following table illustrates loan fees recorded as interest income on loans, by segment, for the six months ended June 30, 2025, and 2024.

Table 8 — Loan Fee Income

(dollars in thousands)

The following table illustrates the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities impacted Republic’s interest income and interest expense during the periods indicated. Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior rate), (ii) changes attributable to changes in rate (changes in rate multiplied by prior volume), and (iii) net change. The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.

Table 9 — Total Company Volume/Rate Variance Analysis

(in thousands)

* Since interest income for RAs is composed entirely of loan fees and RAs are only offered during the first two months of each year, volume and rate measurements for this product are not a meaningful metric for the periods presented above.

Provision

Total Company Provision was a net charge of $19.5 million for the first six months of 2025 compared to a net charge of $35.8 million for the same period in 2024.

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 six months of 2025 was a net credit of $252,000 compared to a net charge of $1.3 million for the first six months of 2024. An analysis of the Provision for the first six months of 2025 compared to the same period in 2024 follows:

For the first six months of 2025, the net credit of $252,000 to the Provision for the Traditional Bank primarily reflected the following:

• In the second quarter of 2025, as a practical expedient, the Company established a minimum loan balance threshold in assessing credits for impairment resulting in a $518,000 credit to Provision.
• During the first quarter of 2025, approximately $5 million of consumer credit cards were reclassified from held for investment into HFS, which generated a credit to Provision of $414,000. The consumer credit card sale was completed during the second quarter of 2025.
• While loan balances at the Traditional Bank increased slightly, or $13 million, during the first six months of 2025, the segment continued to experience a change in loan mix, growing in categories with higher loan loss reserve requirements.
• The Traditional Bank recorded net charge-offs of $449,000 during the first six months of 2025.

For the first six months of 2024, the net charge of $1.3 million to the Provision for the Traditional Bank primarily reflected the following:

• The Traditional Bank recorded a net charge to the Provision of $860,000 during the first six months of 2024 related to general formula reserves applied to Traditional Bank loans. While loan balances at the Traditional Bank decreased by $29 million during the first six months of 2024, the segment continued to experience a change in loan mix, growing in categories with higher loan loss reserve requirements thus driving the Provision fluctuation for the period.
• The Traditional Bank recorded net charge-offs of $412,000 during the first six months of 2024.

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

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

Warehouse Lending segment

Warehouse recorded a net charge to the Provision of $302,000 for the first six months of 2025 compared to a net charge of $523,000 for the same period in 2024. Provision for both periods reflected changes in general reserves consistent with changes in outstanding period-end balances. Outstanding Warehouse period-end balances increased $121 million during the first six months of 2025 compared to an increase of $209 million during the first six months of 2024.

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

Tax Refund Solutions segment

TRS recorded a net charge to the Provision of $11.5 million during the first six months of 2025 compared to a net charge of $24.6 million for the same period in 2024.

ERAs/RAs related to the first quarter 2025 tax filing season were only originated during December of 2024 and the first two months of 2025, while ERAs/RAs related to the first quarter 2024 tax filing season were only originated during December of 2023 and the first two months of 2024. As is the case each year, as of March 31st the ACLL related to ERAs/RAs represented an estimate to be finalized on June 30th when all uncollected ERAs/RAs are ultimately charged-off. ERAs/RAs collected during the second half of each year are recorded as recoveries of previously charged-off loans unless they are covered under a loss guaranty arrangement. Any ERAs subject to a loss guaranty arrangement that are recovered during the second half of the year would be distributed to the guarantor.

During the fourth quarter of 2024, the Company revised its agreement with its largest third-party marketer-servicer for ERAs/RAs for the 2025 Tax Season. In addition to a new loss cap guarantee specific to ERAs for the 2025 Tax Season, the fee specific to ERAs for the 2025 Tax Season was increased with the fee applicable to in-season RAs for the 2025 Tax Season being reduced.

Total ERA/RA volume for the 2025 tax filing season totaled $801 million, representing a $73 million, or 8%, decline from the $874 million originated for the 2024 tax filing season. RA origination volume totaled $663 million during the first six months of 2025 compared to $771 million for the first six months of 2024. ERA origination volume totaled $139 million during the fourth quarter of 2024 related to the anticipated filing of tax returns for the upcoming first quarter 2025 tax filing season compared to $103 million during the fourth quarter of 2023 related to the anticipated filing of tax returns for the first quarter of 2024.

The lower Provision during the first six months of 2025 compared to the same period in 2024 related to the following factors:

• The fee structure changes, and total ERA/RA volume decline detailed above;
• A significant improvement in payments received from the U.S. Treasury to fund federal tax refunds for the first quarter 2025 tax filing season; and
• TRS recorded a larger percentage of its total ERA Provision during the fourth quarter of 2024 than it did for ERAs during the fourth quarter of 2023, effectively leading to a lower Provision during the first six months of 2025 than the first six months of 2024. TRS recorded a larger percentage of its total ERA Provision during the fourth quarter of 2024 versus the fourth quarter of 2023 due to the final loss rate realized from the ERAs originated December 2023, with that final loss rate applied to the ERAs originated during December 2024 in the Company’s fourth quarter 2024 ACLL calculation.

As of June 30, 2025, TRS’s incurred loss rate related to unguaranteed loans associated with the first quarter 2025 tax filing season was 2.81% of the $801 million total originations. In-line with its customary June 30th charge-off policy for TRS loans, the Company completely charged-off all remaining unpaid ERAa/RAs as of June 30, 2025, with approximately $2.3 million of loans expected to be recovered under loan-loss guarantee arrangements with Tax Providers recorded as receivables in other assets on the balance sheet.

As of June 30, 2024, TRS’s incurred loss rate related to unguaranteed loans associated with the first quarter 2024 tax filing season was 3.30% of the $874 million of total originations. In June 2024, the Company charged off all unpaid TRS loans which equated to 3.22% of total originations. The final loss rate of unguaranteed RAs/ERAs for the 2024 Tax Season was 2.81% of originations.

See additional detail regarding the ERA/RA products under Footnote 4 “Loans and Allowance for Credit Losses on Loans” of Part I Item 1 “Financial Statements.”

Republic Credit Solutions segment

As illustrated in the following table, RCS recorded a net charge to the Provision of $8.0 million during the first six months of 2025 compared to a net charge to the Provision of $9.4 million for the same period in 2024. RCS recorded net charge-offs of $7.9 million during the first six months of 2025 compared to net charge-offs of $8.2 million during the first six months of 2024.

RCS ending loan balances decreased by $10 million during the first six months of 2025, entirely related to the healthcare receivables programs. During the first six months of 2024, loan balances decreased by $6 million also led by the healthcare receivables programs.

While RCS loans generally return higher yields, they also present a greater credit risk than Traditional Banking loan products. As a percentage of total RCS loans, the RCS ACLL was 17.67% as of June 30, 2025, 16.30% as of December 31, 2024, and 15.44% as of June 30, 2024. The RCS segment has continued to experience a change in loan mix, growing in categories with higher loan loss reserve requirements thus driving its higher ACLL for the first six months of 2025. The Company believes, based on information presently available, that it has adequately provided for RCS loan losses as of June 30, 2025.

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

Table 10 — Republic Credit Solutions Provision by Product

(dollars in thousands)

Table 11 — Summary of Loan and Lease Loss Experience

(dollars in thousands)

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

* All loss rates above are based on net charge-offs as a function of average outstanding portfolio balances. RAs are originated during the first two months of each year, with all RAs charged-off by June 30th of each year. Due to their relatively short life, RA net charge-offs are typically analyzed by the Company as a percentage of total RA originations, not as a percentage of average outstanding balances.

The Company’s net charge-offs to average total Company loans decreased from 1.40% during the first six months of 2024 to 1.11% during the first six months of 2025, with net charge-offs decreasing $7.5 million, or 20%, and average total Company loans increasing $49 million, or 1% over the same periods. As discussed in more detail above, the decrease in net charge-offs was primarily driven by a $7.3 million decrease in period-over-period net charge-offs within the Company’s TRS segment related to significantly better payments received from the U.S. Treasury to pay off ERAs/RAs during the 2025 tax season.

Noninterest Income

Total Company noninterest income increased $9.1 million, or 22%, during the first six months of 2025 compared to the same period in 2024.

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 $7.5 million, or 41%, for the first six months of 2025 compared to the same period in 2024, driven by the following:

• Mortgage Banking income increased $1.8 million from the first six months of 2024 to the first six months of 2025. Approximately $1.0 million of the increase was the result of a negative fair value adjustment recorded during the first quarter of 2024 related to $67 million of correspondent loans that were re-designated from held for investment to HFS during the period. The remaining $800,000 increase related to a $20 million increase in the volume of fixed rate loans that were sold into the secondary market during the first six months of 2025 compared to the first six months of 2024 in addition to better pricing received on loans sold, especially during the second quarter.
• The Traditional Bank recorded a $4.1 million gain on sale of Visa Class B-1 shares during the first quarter of 2025. The Visa Class B-1 common stock was issued to Visa’s U.S. member banks during 2008 in connection with a reorganization and Initial Public Offering.
• The Traditional Bank recorded a $1.6 million insurance recovery during the first quarter of 2025 related to a $1.9 million charge-off recorded during the third quarter of 2024.
• The Traditional Bank also earns a substantial majority of its fee income related to its overdraft service program from the per item fee it assesses its customers for each insufficient-funds check or electronic debit presented for payment. The total per item fees, net of refunds, included in service charges on deposits for the six months ended June 30, 2025, and 2024 were $3.5 million and $3.5 million. The total daily overdraft charges, net of refunds, included in interest income for the six months ended June 30, 2025, and 2024 were $582,000 and $599,000.

Tax Refund Solutions segment

TRS’s noninterest income increased $1.9 million, or 13%, during the first six months of 2025 compared to the same period in 2024 with RT fees representing the majority of noninterest income for each period. Total RT fees increased $1.8 million during these periods, consistent with a 30% increase in the net revenue earned for each RT product, which more than offset a 5% decline in funded RT volume. The better per-unit profitability was generally brought about by a select increase in prices for the product combined with a minimal change in the revenue being shared.

For factors affecting the comparison of the TRS results of operations for the first six months of 2025 and the first six months of 2024, see section titled “OVERVIEW (Six Months Ended March 31, 2025, Compared to Six Months Ended March 31, 2024) - Tax Refund Solutions.”

Noninterest Expense

Total Company noninterest expense increased $9.2 million, or 9%, during the first six months of 2025 compared to the same period in 2024.

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

Traditional Banking segment

Traditional Bank noninterest expense increased $11.4 million, or 14%, for the first six months of 2025 compared to the same period in 2024. The following drove the change in noninterest expense:

Salaries and employee benefits increased by a combined $2.9 million, or 6%, driven by a $1.7 million increase in estimated bonus-related expenses. The larger estimated bonus-related expenses for the first six months of 2025 were attributable to an increased probability of a larger bonus payout for the year based on the Company’s strong operating results. Additionally, elevated health insurance claims activity during the first six months of 2025 led to a $771,000 increase in employee benefits expense.

Technology, equipment and communication expenses increased $2.0 million, or 16%, over the first six months of 2024. The increase in Technology expense was driven by enhanced security and new ancillary systems, including additional costs resulting from the transition to a new call center management system. Management expects to incur a net benefit in technology and communication costs in the future as a result of the new call center management system.

The Traditional Bank recorded $5.9 million of expense during the six months of 2025 for Core Contract deconversion and consulting fees, with $5.7 million of the expense recorded during the first quarter of 2025. Approximately $1.8 million of this expense was related to data conversion and secondary system migration costs in preparation for the conversion to the new Core. Approximately $4.1 million of the expense related to contract negotiation assistance from a third-party consultant determined based on a percentage of anticipated savings over the five-year term of the new contract. Republic projects total savings in excess of $16 million over the contract’s five-year term. The Company is currently targeting the fourth quarter of 2025 to launch a new core system.

Republic Credit Solutions segment

Noninterest expense at the RCS segment decreased $1.7 million, or 23%, during the first six months of 2025 compared to the same period in 2024. The most notable items driving this increase were in the LOC II product, including a $282,000 increase in third-party servicing costs for growth in the product and a $2.0 million decrease in marketing and development expenses. Approximately $763,000 of the marketing and development expense decline related to reimbursement for a prior period billing dispute.

COMPARISON OF FINANCIAL CONDITION AS OF JUNE 30, 2025, AND DECEMBER 31, 2024

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 $485 million in cash and cash equivalents as of June 30, 2025, compared to $432 million as of December 31, 2024. Comparing average balances for the first six months of 2025 and 2024, the Company had average interest-earning cash and cash equivalent balances of $570 million for the first six months of 2025 compared to $424 million for the first six months of 2024.

For cash held at the FRB, the Bank earns a yield on amounts more than required reserves. This cash earned a weighted-average yield of 4.45% during the first six months of 2025. For cash held within the Bank’s banking center and automated teller machine networks, the Bank does not earn interest.

Investment Securities

Table 13 — Purchases of Investment Securities

(dollars in thousands)

Republic’s total investment portfolio increased $116 million, or 20%, from December 31, 2024, to June 30, 2025. The increase was driven by $319 million of securities purchases, partially offset by $211 million in calls and maturities of debt securities and paydowns on MBS. During 2025, the Company began buying MBS investment securities with longer durations, as a result of a more favorable yield curve and the more attractive yield for these longer-duration securities above the overnight cash yield.

The Company’s overall investment management strategy for the remainder of 2025 and beyond will be dependent upon many factors including, but not limited to, the Company’s overall current and projected liquidity positions, its customers’ demand for its loans and deposit products, the Company’s overall interest rate risk position, the steepness of the yield curve and the overall 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 Stock

FHLB stock holdings were unchanged at $25 million at June 30, 2025, and December 31, 2024. FHLB members are required to hold certain levels of FHLB stock in relation to the amount of their borrowings, thus FHLB stock holdings will fluctuate consistently with borrowing activity from period to period.

Loans

The composition of the loan portfolio follows:

Table 14 — Loan Portfolio Composition

(dollars in thousands)

*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 decreased by $66 million, or 1%, during the first six months of 2025 to $5.37 billion as of June 30, 2025. The most significant components comprising the change in loans by reportable segment follow:

Traditional Banking segment

Period-end Traditional Banking loan balances increased $13 million from December 31, 2024, to June 30, 2025, highlighted by increased LOC usage within the HELOC and C&I portfolios. During March 2025, the Company reached an agreement to sell approximately $5 million of consumer credit cards that were previously classified as held for investment. The sale of these credit cards was completed during the second quarter of 2025.

In addition, Management has continued to generally maintain a stricter pricing strategy across all loan types due to the at times less-favorable yield curve and elevated funding costs in the market. This stricter pricing strategy has continued to lead to slower overall origination volume across most product types. Management believes it will maintain a generally stricter pricing strategy as long as the yield curve remains inverted, or flat, and incremental funding costs remain elevated. It is possible a stricter pricing policy could cause loan payoffs and paydowns to outpace new originations, leading to a possible decline in the Traditional Bank’s loan balances during the remainder of 2025.

Warehouse Lending segment

Outstanding Warehouse period-end balances increased $121 million, or 22%, from December 31, 2024, to June 30, 2025, representing the highest level achieved since March of 2022. Average committed Warehouse lines of credit increased from $938 million for the year ended December 31, 2024, to $981 million during the six months ended June 30, 2025, with higher demand driving average usage rates for Warehouse lines of credit from 50% during to 52% for the respective periods.

Due to mortgage market volatility and seasonality, it is challenging to accurately project future outstanding balances of Warehouse lines of credit, however expansion within the portfolio has historically followed 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 of credit 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 of credit have ranged from a low of 39% during 2022 to a high of 66% during 2020.

Tax Refund Solutions segment

TRS loan balances as of December 31, 2024, included ERAs of $139 million originated during December 2024 and $52 million of Commercial-related loan balances to tax providers during the fourth quarter of 2024 to assist Tax Providers with their short-term cashflow needs. These balances paid down to $0 as of June 30, 2025, or were charged off in line with the Company’s charge-off policy.

Allowance for Credit Losses on Loans

As of June 30, 2025, 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 ACLC for expected OBS credit exposure losses. Management evaluates the adequacy of the ACLL monthly, and the adequacy of the ACLC quarterly. All ACLs are presented and discussed with the Audit Committee and the Board of Directors quarterly.

The Company’s ACLL decreased to $82 million at June 30, 2025, compared to $92 million at December 31, 2024, with the total Company ACLL percent of total loans decreased to 1.52% as of June 30, 2025, compared to 1.69% as of December 31, 2024. An analysis of the ACLL by reportable segment follows:

Traditional Banking segment

While loan balances at the Traditional Bank increased slightly, or $13 million, during the first six months of 2025, the ACLL decreased $701,000 to $59 million as of June 30, 2025. In the second quarter of 2025, as a practical expedient, the Company established a minimum loan balance threshold in assessing credits for impairment that resulted in a $518,000 reduction in both the ACLL and Provision.

Warehouse Lending segment

The Warehouse ACLL increased $302,000, or 22%, to $2 million, while Warehouse ACLL to total Warehouse loans remained at 0.25% when comparing June 30, 2025, to December 31, 2024. Outstanding Warehouse period-end balances increased $121 million, or 22%, from December 31, 2024, to June 30, 2025, representing the highest level achieved since March of 2022. As of June 30, 2025, the Warehouse ACLL was entirely qualitative in nature with no adjustments to the qualitative reserve percentage required for the first six months of 2025.

Tax Refund Solutions segment

The TRS ACLL decreased $10 million from December 31, 2024, to $0 as of June 30, 2025, with this decrease driven by the June 30, 2025, charge-off of all unpaid ERAs and Commercial-related loan balances to tax providers originated in December 2024.

Republic Credit Solutions segment

The RCS ACLL increased $42,000 to $21 million as of June 30, 2025, driven by an increase in the RCS LOC II spot loan balances and a change in the RCS loan mix as the outstanding RCS LOC I and healthcare receivables spot loan balances decreased.

RCS maintained an ACLL for two distinct credit products offered as of June 30, 2025, including its LOC products and its healthcare receivables products. As of March 31, 2025, 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 70.63% for its LOC 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.

The following table sets forth management’s allocation of the ACLL by loan class. The ACLL allocation is based on management’s assessment of economic conditions, historical loss experience, forecasting for unemployment and vacancy rates, and various other life-of-loan and forecast considerations, as well as qualitative factors.

Table 15 — Management’s Allocation of the Allowance for Credit Losses on Loans

(dollars in thousands)

* Values of less than 50 basis points are rounded down to zero.

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.” The Bank’s Classified loans increased by $21 million while Special Mention loans decreased approximately $31 million during the first six months of 2025.

In the second quarter of 2025, the Company downgraded a $22 million hospitality relationship from Special Mention to Substandard based on the overall performance of the underlying operations. Based on the value of the collateral securing the relationship and current exit strategy, no future loss is currently expected. The Company does not have a material concentration of hospitality credits.

See Footnote 4 “Loans and Allowance for Credit Losses on Loans” of Part I Item 1 “Financial Statements” for additional discussion regarding Classified and Special Mention loans.

Table 16 — Classified and Special Mention Loans

(dollars in thousands)

Nonperforming Loans

Nonperforming loans include loans on nonaccrual status and loans past due 90-days-or-more and still accruing. Nonperforming loans to total loans decreased to 0.40% as of June 30, 2025, from 0.42% as of December 31, 2024, as the total balance of nonperforming loans decreased by $1 million, or 5%, while total loans decreased $66 million during the first six months of 2025.

The ACLL to total nonperforming loans decreased to 378% as of June 30, 2025, from 404% as of December 31, 2024, as the total ACLL decreased $10 million and the balance of nonperforming loans decreased by $1 million.

Table 17 — Nonperforming Loans and Nonperforming Assets Summary

(dollars in thousands)

* Loans on nonaccrual status include collateral-dependent loans. See Footnote 4 “Loans and Allowance for Credit Losses on Loans” 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 18 — Nonperforming Loan Composition

(dollars in thousands)

Table 19 — Stratification of Nonperforming Loans

Table 20 — Roll-forward of Nonperforming Loans

(in thousands)

* Includes small consumer portfolios, e.g., RCS loans.

Table 21 — Detail of Loans Removed from Nonperforming Status

(in thousands)

Based on the Bank’s review as of June 30, 2025, management believes that its reserves are adequate to absorb expected losses on all nonperforming loans.

Delinquent Loans

Total Company delinquent loans to total loans decreased to 0.36% as of June 30, 2025, from 0.38% as of December 31, 2024. Core Bank delinquent loans to total Core Bank loans decreased to 0.19% as of June 30, 2025, from 0.20% as of December 31, 2024. Except for small-dollar consumer loans, all Traditional Bank loans past due 90-days-or-more as of June 30, 2025, and December 31, 2024, were on nonaccrual status.

Table 22 — Delinquent Loan Composition*

(dollars in thousands)

* Represents total loans 30-days-or-more past due. Delinquent status may be determined by either the number of days past due or number of payments past due.

Table 23 — Roll-forward of Delinquent Loans

(in thousands)

* Includes small consumer portfolios, e.g., RCS loans.

Table 24 — Detail of Loans Removed from Delinquent Status

(in thousands)

Premises and Equipment

Premises and equipment are presented on the consolidated balance sheets net of related accumulated depreciation on the respective assets, as well as fair value adjustments associated with purchase accounting. Premises and equipment increased $4 million, or 13%, between December 31, 2024, and June 30, 2025. The Company’s branch network currently consists of 47 locations throughout Kentucky, Indiana, Florida, Ohio, and Tennessee.

Right-of-Use Assets and Operating Lease Liabilities

The Company records right-of-use assets for the underlying leased property. Operating lease liabilities represent the present value of its required minimum lease payments plus any amounts probable of being owed under a residual value guarantee.

Goodwill

At June 30, 2025, and December 31, 2024, the Company had $41 million in goodwill recorded on its balance sheet. Goodwill of $24 million is attributed to the 2023 CBank acquisition. Additionally, goodwill totaling $6 million and $10 million is attributed to the acquisitions of Cornerstone Community Bank and GulfStream Community Bank in 2016 and 2006, respectively. The acquisitions of Tennessee Commerce Bank and First Commercial Bank in 2012 resulted in bargain purchase gains.

Events that may trigger goodwill impairment include deterioration in economic conditions, a decline in market-dependent multiples or metrics (i.e., stock price declining below tangible book value), negative trends in overall financial performance and regulatory actions. At September 30, 2024, the Company performed its annual qualitative assessment to determine if it was more-likely-than-not that the fair value of the reporting units exceeded their carrying value, including goodwill. The qualitative assessment indicated that it was not more-likely-than-not that the carrying value of the reporting units exceeded their fair value.

Bank Owned Life Insurance

BOLI assets increased $2 million, or 2%, to $109 million at June 30, 2025, compared to $107 million at December 31, 2024, the increase being attributed to general appreciation of the cash surrender values within the policy plans experienced during the first six months of 2025.

Core Deposit Intangibles

CDIs arising from business acquisitions are initially measured at fair value and are then amortized on an accelerated method based on their useful lives. As of June 30, 2025, and December 31, 2024, the Company’s CDI assets totaled $1.7 million and $2.0 million, respectively.

Other Assets and Other Liabilities

Other assets increased $3.0 million, or 2%, to $200 million between December 31, 2024, and June 30, 2025. Other liabilities increased $7 million, or 7%, to $116 million over the same period. The increase in other assets stems from the largely offsetting impact of recording additional tax credit investment assets. The increase in other liabilities was driven largely by a reduction in various accrued liabilities, such as employee incentive compensation and other benefit-related accruals.

Deposits

Table 25 — Deposit Composition

(dollars in thousands)

(1) Represents time deposits

Total deposits increased $107 million, or 2%, from December 31, 2024, to $5.32 billion as of June 30, 2025.

Total Core Bank deposits increased by $281 million, or 6%, from December 31, 2024. Within the Core Bank’s deposits, interest-bearing deposits increased $253 million and noninterest-bearing deposits increased $28 million.

Total Core Bank time deposits increased $178 million during the first six months of 2025, with $131 million of the increase attributed to a brokered CD with a 4.15% APY and 3-month maturity purchased in April for short-term liquidity purposes. In addition, consumer and money market accounts, which pay premium rates, increased $93 million, or 7% during the first six months of 2025, as the Core Bank continues to experience general migration from low and noninterest-bearing accounts to higher costing accounts.

While the Core Bank period-end noninterest-bearing deposits increased $28 million for the first six months of 2025, the average balances of Core Bank noninterest-bearing deposits for the first six months of 2025 decreased $27 million compared to the fourth quarter of 2024. Overall, the Core Bank’s noninterest-bearing deposits have experienced a general quarterly decline in balances dating back to the fourth quarter of 2022.

RPG Deposits

Within RPG, period-end total deposit balances decreased $174 million, or 29%. Interest-bearing deposits at TRS declined $200 million due to the maturity of short-term brokered deposits used to partially fund RA and ERA loan volume for the 2025 Tax Season, while Prepaid card balances increased by approximately $12 million, or 3%, due primarily to growth in balances from the segment’s largest marketer-servicer.

As previously disclosed, RPS began sharing a sizable portion of the interest revenue it earns on its prepaid card balances with its prepaid card marketer-servicers during the first quarter of 2024. This revenue share is reported as interest expense on deposits. As a result, all prepaid card deposit balances subject to a revenue share arrangement will be reported as interest-bearing deposits on an on-going basis, as long as they remain subject to a revenue share arrangement. Conversely, for any periods reported prior to 2024, these deposits will remain noninterest-bearing as they were not subject to a revenue share arrangement during those periods.

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 $31 million, or 30%, during 2025 to $72 million as of June 30, 2025. SSUARs 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.

Federal Home Loan Bank Advances

FHLB advances totaled $370 million as of June 30, 2025, compared to $395 million as of December 31, 2024. There were no overnight borrowings as of June 30, 2025, compared to $25 million as of December 31, 2024. The Company has utilized FHLB advances over the past year to partially fund its noninterest-bearing deposit outflow and overall loan growth.

As of June 30, 2025, the Company’s $370 million of FHLB advances had a weighted-average maturity of just over 3 years and a weighted-average cost of 4.35%, both including the impact of the related swaps. 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 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’s earnings.

In addition, as noted in the section above, the Company entered into $100 million of notional amount balance sheet related interest rate swaps during the second quarter of 2024 in order to take advantage of the more attractive long-term pricing resulting from the inverted yield.

See Footnote 11 “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 HFS.

Table 26 — Liquid Assets and Borrowing Capacity

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

(in thousands)

The Bank had a period-end loan-to-deposit ratio (excluding brokered deposits) of 106% as of June 30, 2025, and 111% as of December 31, 2024. Republic’s banking centers and its website, www.republicbank.com (http://www.republicbank.com), provide access to retail deposit markets. These retail deposit products, if offered at attractive rates, have historically been a source of additional funding when needed. If the Bank were to lose a significant funding source, such as a few major depositors, or if any of its lines of credit were cancelled, or if the Bank cannot obtain brokered deposits, the Bank would be compelled to offer market leading deposit interest rates to meet its funding and liquidity needs.

As of June 30, 2025, the Bank had approximately $1.1 billion in deposits from 235 large non-sweep deposit relationships, including reciprocal deposits, where the individual relationship exceeded $2 million for a depositor’s taxpayer identification number. Total uninsured deposits for the Bank were $2.0 billion, or 37%, of total deposits as of June 30, 2025. The 20 largest non-sweep deposit relationships represented approximately $321 million, or 6%, of the Company’s total deposit balances as of June 30, 2025. These accounts do not require collateral; therefore, cash from these accounts can generally be utilized to fund the loan portfolio. If any of these balances were moved from the Bank, the Bank would likely utilize overnight borrowing lines in the short-term to replace the balances. On a longer-term basis, the Bank would likely utilize wholesale-brokered deposits to replace withdrawn balances, or alternatively, higher-cost internet-sourced deposits. Based on experience utilizing brokered deposits and internet-sourced deposits, the Bank believes it can quickly obtain these types of deposits if needed. The overall cost of gathering these types of deposits, however, could be substantially higher than the Traditional 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, SSUAR, FHLB advances, and for other purposes, as required by law. As of June 30, 2025, and December 31, 2024, these pledged investment securities had a fair value of $114 million and $152 million.

Capital

Total stockholders’ equity increased from $992 million as of December 31, 2024, to $1.1 billion as of June 30, 2025. The increase in stockholders’ equity was attributable to net income earned during the first six months of 2025 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 July 1, 2025, RB&T could, without prior approval, declare dividends of approximately $151 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 OBS items, as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators regarding components, risk weightings, and other factors.

Banking regulators have categorized the Bank as well capitalized. For prompt corrective action, the regulations in accordance with Basel III define “well capitalized” as a 10.0% Total Risk-Based Capital ratio, a 6.5% Common Equity Tier 1 Risk-Based Capital ratio, an 8.0% Tier 1 Risk-Based Capital ratio, and a 5.0% Tier 1 Leverage ratio. Additionally, to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers, the Company and Bank must hold a capital conservation buffer of 2.5% composed of Common Equity Tier 1 Risk-Based Capital above their minimum risk-based capital requirements.

Republic continues to exceed the regulatory requirements for Total Risk-Based Capital, Common Equity Tier I Risk-Based Capital, Tier I Risk Based-Capital, and Tier I Leverage Capital. Republic and the Bank intend to maintain a capital position that meets or exceeds the “well-capitalized” requirements as defined by the FRB and the FDIC, in addition to the Capital Conservation Buffer. Republic’s average stockholders’ equity to average assets ratio was 14.44% as of June 30, 2025, and 14.02% as of December 31, 2024. Formal measurements of the capital ratios for Republic and the Bank are performed by the Company at each quarter end.

Table 27 — Capital Ratios (1)

(dollars in thousands)

(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 3 basis points lower than those presented in the table above as of December 31, 2024. This five-year transition option is no longer applicable for periods subsequent to December 31, 2024.

Asset/Liability Management and Market Risk

Asset/liability management is designed to ensure safety and soundness, maintain liquidity, meet regulatory capital standards, and achieve acceptable net interest income based on the Bank’s risk tolerance. Interest rate risk is the exposure to adverse changes in net interest income as a result of market fluctuations in interest rates. The Bank, on an ongoing basis, monitors interest rate and liquidity risk to implement appropriate funding and balance sheet strategies. Management considers interest rate risk to be a significant risk to the Bank’s overall earnings and balance sheet.

The interest sensitivity profile of the Bank at any point in time will be impacted by a number of factors. These factors include the mix of interest sensitive assets and liabilities, as well as their relative pricing schedules. It is also influenced by changes in market interest rates, deposit and loan balances, and other factors.

The Bank utilizes earnings simulation models as tools to measure interest rate sensitivity, including both a static and dynamic earnings simulation model. A static simulation model is based on current exposures and assumes a constant balance sheet. In contrast, a dynamic simulation model relies on detailed assumptions regarding changes in existing business lines, new business, and changes in management and customer behavior. While the Bank runs the static simulation model as one measure of interest rate risk, historically, the Bank has utilized its dynamic earnings simulation model as its primary interest rate risk tool to measure the potential changes in market interest rates and their subsequent effects on net interest income for a one-year time period. This dynamic model projects a “Base” case net interest income over the next 12 months and the effect on net interest income of instantaneous movements in interest rates between various basis point increments equally across all points on the yield curve. Many assumptions based on growth expectations and on the historical behavior of the Bank’s deposit and loan rates and their related balances in relation to changes in interest rates are incorporated into this dynamic model. These assumptions are inherently uncertain and, as a result, the dynamic model cannot precisely measure future net interest income or precisely predict the impact of fluctuations in market interest rates on net interest income. Actual results will differ from the model’s simulated results due to the actual timing, magnitude and frequency of interest rate changes, the actual timing and magnitude of changes in loan and deposit balances, as well as the actual changes in market conditions and the application and timing of various management strategies as compared to those projected in the various simulated models. Additionally, actual results could differ materially from the model if interest rates do not move equally across all points on the yield curve.

As of June 30, 2025, a dynamic simulation model was run for interest rate changes from “Down 400” basis points to “Up 400” basis points. The following table illustrates the Bank’s projected percent change from its Base net interest income over the period beginning July 1, 2025, and ending June 30, 2026, based on instantaneous movements in interest rates from Down 400 to Up 400 basis points equally across all points on the yield curve. The Bank’s dynamic earnings simulation model includes secondary market loan fees, which are a component of mortgage banking income within noninterest income and excludes Traditional Bank loan fees.

Table 28 — Bank Interest Rate Sensitivity

The results of the interest rate sensitivity analysis performed as of June 30, 2025, were derived from subjective assumptions the Company uses in its earnings simulation model, particularly in relation to deposit betas, which measure how responsive management’s deposit repricing may be to changes in market rates based on historical data. Management uses different betas in the rising and falling rate scenarios to better simulate expected earnings trends.

The Company’s current interest rate sensitivity analysis projects that increases in market interest rates (in all illustrated scenarios) would have a positive effect on net interest income, while decreases in market interest rates (in all illustrated scenarios) would have a negative impact. These results depict an asset-sensitive interest rate risk profile.

In comparing the Company’s interest rate sensitivity projections from December 31, 2024, to June 30, 2025, there were notable changes in all illustrated scenarios. In declining market interest rate scenarios, the Company projects that the rates the Company pays for its non-maturity, interest-bearing deposits cannot be lowered sufficiently to offset the decrease in interest income associated with its declining asset yields. Conversely, the Company projects a notable improvement in all illustrated scenarios, as the yield the Company projects it will earn for its interest-earning assets is expected to increase more than the increase in its projected funding costs.

More specifically, driving the period-to-period improvement in net interest income in the illustrated up-rate scenarios are the following:

• The Company had higher average interest-earning cash balances as of June 30, 2025, with yields that increase immediately in up-rate scenarios; and
• The Company had higher floating rate loan balances as of June 30, 2025, most notably within the Warehouse lending portfolio, with yields that increase immediately in an up-rate scenario.

More specifically, driving the period-to-period deterioration in net interest income in the illustrated down-rate scenarios are the following:

• The elevated average interest-earning cash balances that are projected to benefit net interest income in the illustrated up-rate scenarios is projected to drive corresponding declines to net interest income in the illustrated down-rate rate scenarios; and
• Management lowered its deposit beta assumptions to assume that, due to greater competition for deposits and liquidity, it will not be able to sufficiently lower the rates the Company pays for its premium rate, non-maturity interest-bearing deposits in order to offset the projected decline in the Company’s interest-earning assets yields.

For additional discussion regarding the Bank’s net interest income, see the sections titled “Net Interest Income” in this section of the filing under “RESULTS OF OPERATIONS (Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024) and “RESULTS OF OPERATIONS (Six months ended June 30, 2025 Compared to Six months ended June 30, 2024).”