Republic Bancorp (NASDAQ: RBCAA) earns $75M in first half of 2026
Rhea-AI Filing Summary
Republic Bancorp, Inc. reported Q2 2026 net income of $32.9 million, up from $31.5 million a year earlier, with basic Class A EPS of $1.69. Net interest income rose to $81.7 million from $76.2 million as interest expense declined to $20.8 million despite essentially flat total interest income.
Noninterest income was $19.6 million, led by service charges, net refund transfer fees, mortgage banking income and program fees, while noninterest expense totaled $53.6 million. For the first half of 2026, net income was $75.4 million versus $78.8 million in 2025. At June 30, 2026, total assets were $7.06 billion, net loans were $5.32 billion, and deposits were $5.55 billion. Federal Home Loan Bank advances declined to $157 million, cash and cash equivalents increased to $354.1 million, and stockholders’ equity rose to $1.16 billion, including accumulated other comprehensive loss of $8.2 million largely related to unrealized losses on the securities portfolio.
Positive
- None.
Negative
- None.
Filing Explained
At June 30, 2026, $13,503 thousand of available-for-sale losses were unrealized and recorded in accumulated other comprehensive loss, not from reported sales.
As an unaudited quarterly report for the period ended
As of
At
Key Figures
Key Terms
Allowance for Credit Losses on Loans financial
Net interest income financial
Refund Transfers financial
Mortgage-backed securities financial
Core Bank financial
Accumulated Other Comprehensive Income financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
What were Republic Bancorp (RBCAA)’s Q2 2026 earnings and EPS?
How did net interest income for RBCAA change in Q2 2026?
What were Republic Bancorp (RBCAA)’s assets, loans, and deposits at June 30, 2026?
How strong was Republic Bancorp (RBCAA)’s capital position at June 30, 2026?
What unrealized losses does RBCAA report on its securities portfolio?
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Table of Contents
1 min
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
or
Commission File Number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol | Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ⌧
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ⌧
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ◻ | Non-accelerated filer ◻ | Smaller reporting company | ||||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
The number of shares outstanding of the registrant’s Class A Common Stock and Class B Common Stock, as of July 31, 2026, was
Table of Contents
TABLE OF CONTENTS
PART I — FINANCIAL INFORMATION | ||
Item 1. | Financial Statements. | 4 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 59 |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk. | 115 |
Item 4. | Controls and Procedures. | 115 |
PART II — OTHER INFORMATION | ||
Item 1. | Legal Proceedings. | 116 |
Item 1A. | Risk Factors. | 116 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. | 116 |
Item 5. | Other Information. | 116 |
Item 6. | Exhibits. | 117 |
SIGNATURES | 118 | |
2
Table of Contents
GLOSSARY OF TERMS
The terms identified in alphabetical order below are used throughout this Form 10-Q. You may find it helpful to refer to this page as you read this report.
Term | | Definition |
2025 Tax Season | December 2024 through February 2025 | |
2026 Tax Season | December 2025 through February 2026 | |
ACH | Automated Clearing House | |
ACLC | Allowance for Credit Losses on Off-Balance Sheet Credit Exposures | |
ACLL | Allowance for Credit Losses on Loans | |
ACLS | Allowance for Credit Losses on Securities | |
AFS | Available-for-Sale | |
AI | Artificial Intelligence | |
AOCI | Accumulated Other Comprehensive Income | |
ARM | Adjustable Rate Mortgage | |
ASC | Accounting Standards Codification | |
ASU | Accounting Standards Update | |
ATM/ITM | Automated Teller Machine / Interactive Teller Machine | |
Basic EPS | Basic earnings per Class A Common Share | |
Board | Board of Directors | |
BOLI | Bank Owned Life Insurance | |
C&LD | Construction & Land Development | |
C&I | Commercial & Industrial | |
CCAD | Commercial Credit Administration Department | |
CDI | Core Deposit Intangible | |
CECL | Current Expected Credit Losses | |
CEO | Chief Executive Officer | |
CFO | Chief Financial Officer | |
CMO | Collateralized Mortgage Obligation | |
CODM | Chief Operating Decision Maker | |
Core Bank | The Traditional Banking and Warehouse Lending reportable segments of the Company | |
CRA | Community Reinvestment Act | |
CRE | Commercial Real Estate | |
DDA | Demand Deposit Account | |
Diluted EPS | Diluted earnings per Class A Common Share | |
DTA | Deferred Tax Asset | |
EPS | Earnings Per Share | |
ERA | Early Season Refund Advance | |
ESPP | Employee Stock Purchase Plan | |
Exchange Act | Securities Exchange Act of 1934, as amended | |
FDIC | Federal Deposit Insurance Corporation | |
FFTR | Federal Funds Target Rate | |
FHC | Financial Holding Company | |
FHLB | Federal Home Loan Bank | |
FHLMC | Federal Home Loan Mortgage Corporation | |
FNMA | Federal National Mortgage Association | |
FOMC | Federal Open Market Committee | |
FRB | Federal Reserve Bank | |
FTP | Funds Transfer Pricing | |
GAAP | Generally Accepted Accounting Principles in the United States | |
HELOC | Home Equity Line of Credit | |
HFS | Held for Sale | |
HTM | Held-to-Maturity | |
LOC | Line of Credit | |
LOC I | RCS product introduced in 2014 for which the Bank participates out 90% interest and holds a 10% interest | |
LOC II | RCS product introduced in 2021 for which the Bank participates out 95% interest and holds a 5% interest | |
LTV | Loan-to-value | |
MBS | Mortgage Backed Security | |
MSR | Mortgage Servicing Right | |
NA | Not Applicable | |
NIM | Net Interest Margin | |
NM | Not Meaningful | |
OBS | Off-Balance Sheet | |
OCI | Other Comprehensive Income | |
OREO | Other Real Estate Owned | |
POS | Point-of-Sale | |
PCD | Purchased Credit Deteriorated | |
Prime | The Wall Street Journal Prime Interest Rate | |
Provision | Provision for Expected Credit Loss Expense | |
RA | Refund Advance | |
RBF | Republic Bank Finance | |
RB&T / the Bank | Republic Bank & Trust Company | |
RCS | Republic Credit Solutions segment | |
Republic / the Company | Republic Bancorp, Inc. | |
RPG | Republic Processing Group (operations grouping of the TRS, RCS and RPS segments) | |
RPS | Republic Payment Solutions segment | |
RRE | Residential Real Estate | |
RT | Refund Transfer | |
SBA | U.S. Small Business Administration | |
SEC | Securities and Exchange Commission | |
SOFR | Secured Overnight Financing Rate | |
SSUAR | Securities Sold Under Agreements to Repurchase | |
Tax Provider | Third-party tax preparers located throughout the U.S., as well as tax-preparation software providers that offer Republic Bank ERAs, RAs, and RTs | |
TBA | To Be Announced | |
TRS | Tax Refund Solutions segment | |
TRUP | Trust Preferred Security Investment | |
Warehouse | Warehouse Lending segment |
3
Table of Contents
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements.
CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except share data)
| June 30, | | December 31, | |||
2026 | 2025 | |||||
ASSETS | ||||||
Cash and cash equivalents | $ | | $ | | ||
Available-for-sale debt securities, at fair value (amortized cost of $ |
| |
| | ||
Held-to-maturity debt securities (fair value of $ |
| |
| | ||
Equity securities with a readily determinable fair value | | | ||||
Mortgage loans held for sale, at fair value |
| |
| | ||
Consumer loans held for sale, at fair value | | | ||||
Consumer loans held for sale, at the lower of cost or fair value | | | ||||
Other loans held for sale, at the lower of cost or fair value | — | | ||||
Loans |
| |
| | ||
Allowance for credit losses |
| ( |
| ( | ||
Loans, net |
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Federal Home Loan Bank stock, at cost |
| |
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Premises and equipment, net |
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Right-of-use assets | | | ||||
Goodwill |
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Other real estate owned |
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Bank owned life insurance |
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Other assets and accrued interest receivable |
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TOTAL ASSETS | $ | | $ | | ||
LIABILITIES | ||||||
Deposits: | ||||||
Noninterest-bearing | $ | | $ | | ||
Interest-bearing |
| |
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Total deposits |
| |
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Securities sold under agreements to repurchase and other short-term borrowings |
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Operating lease liabilities | | | ||||
Federal Home Loan Bank advances |
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Other liabilities and accrued interest payable |
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Total liabilities |
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Commitments and contingent liabilities (Footnote 8) |
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STOCKHOLDERS’ EQUITY | ||||||
Preferred stock, |
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| ||||
Class A Common Stock, |
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Additional paid in capital |
| |
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Retained earnings |
| |
| | ||
Accumulated other comprehensive loss |
| ( |
| ( | ||
Total stockholders’ equity |
| |
| | ||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | | $ | | ||
See accompanying footnotes to consolidated financial statements.
4
Table of Contents
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except per share data)
Three Months Ended | | Six Months Ended | |||||||||
June 30, | June 30, | ||||||||||
2026 | 2025 | 2026 | 2025 | ||||||||
INTEREST INCOME: | |||||||||||
Loans, including fees | $ | | $ | | $ | | $ | | |||
Taxable investment securities |
| |
| |
| |
| | |||
Federal Home Loan Bank stock and other |
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| |
| |
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Total interest income |
| |
| |
| |
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INTEREST EXPENSE: | |||||||||||
Deposits |
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Securities sold under agreements to repurchase and other short-term borrowings |
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| |
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Federal Home Loan Bank advances |
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| |
| |
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Total interest expense |
| |
| |
| |
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NET INTEREST INCOME |
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Provision for expected credit loss expense on loans |
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NET INTEREST INCOME AFTER PROVISION |
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NONINTEREST INCOME: | |||||||||||
Service charges on deposit accounts |
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Net refund transfer fees |
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Mortgage banking income |
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Interchange fee income |
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Program fees |
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Increase in cash surrender value of bank owned life insurance |
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| |
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Net losses on other real estate owned |
| ( |
| ( |
| ( |
| ( | |||
Gain on sale of Republic Bank Finance loans and leases | — | — | | — | |||||||
Gain on sale of Visa Class B-1 shares | — | — | — | | |||||||
Other |
| |
| |
| |
| | |||
Total noninterest income |
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| |
| |
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NONINTEREST EXPENSE: | |||||||||||
Salaries and employee benefits |
| |
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| | |||
Technology, equipment, and communication |
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Occupancy |
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Marketing and development |
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FDIC insurance expense |
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Interchange related expense |
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Legal and professional fees | | | | | |||||||
Core conversion and related contract consulting fees | — | | — | | |||||||
FHLB advances early termination penalties | — | — | | — | |||||||
Other |
| |
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| |
| | |||
Total noninterest expense |
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INCOME BEFORE INCOME TAX EXPENSE |
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INCOME TAX EXPENSE |
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NET INCOME | $ | | $ | | $ | | $ | | |||
BASIC EARNINGS PER SHARE: | |||||||||||
Class A Common Stock | $ | | $ | | $ | | $ | | |||
Class B Common Stock | | | | | |||||||
DILUTED EARNINGS PER SHARE: | |||||||||||
Class A Common Stock | $ | | $ | | $ | | $ | | |||
Class B Common Stock | | | | | |||||||
See accompanying footnotes to consolidated financial statements.
5
Table of Contents
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(in thousands)
Three Months Ended | | Six Months Ended | |||||||||
June 30, | June 30, | ||||||||||
2026 | | 2025 | 2026 | | 2025 | ||||||
Net income | $ | | $ | | $ | | $ | | |||
OTHER COMPREHENSIVE INCOME | |||||||||||
Change in fair value of derivatives |
| |
| ( |
| |
| ( | |||
Reclassification amount for net derivative (gains) losses realized in income |
| |
| ( |
| |
| ( | |||
Unrealized gain (loss) on AFS debt securities |
| ( |
| |
| ( |
| | |||
Total other comprehensive income (loss) before income tax |
| ( |
| |
| ( |
| | |||
Income tax benefit (expense) related to items of other comprehensive income |
| |
| ( |
| |
| ( | |||
Total other comprehensive income (loss), net of tax |
| ( |
| |
| ( |
| | |||
COMPREHENSIVE INCOME | $ | | $ | | $ | | $ | | |||
See accompanying footnotes to consolidated financial statements.
6
Table of Contents
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
Three Months Ended June 30, 2026 | |||||||||||||||||||
Common Stock | Accumulated | ||||||||||||||||||
| Class A | | Class B | | | | Additional | | | | Other | | Total | ||||||
Shares | Shares | Paid In | Retained | Comprehensive | Stockholders’ | ||||||||||||||
(in thousands, except per share data) | Outstanding | Outstanding | Amount | Capital | Earnings | Income (Loss) | Equity | ||||||||||||
Balance, April 1, 2026 |
| | | $ | | $ | | $ | | $ | ( | $ | | ||||||
Net income |
| — |
| — |
| — |
| — |
| |
| — |
| | |||||
Net change in AOCI |
| — |
| — |
| — |
| — |
| — |
| ( |
| ( | |||||
Dividends declared on Common Stock: | |||||||||||||||||||
Class A Shares ($ |
| — |
| — |
| — |
| — |
| ( |
| — |
| ( | |||||
Class B Shares ($ |
| — |
| — |
| — |
| — |
| ( |
| — |
| ( | |||||
Stock options exercised, net of shares withheld |
| |
| — |
| |
| |
| ( |
| — |
| ( | |||||
Conversion of Class B to Class A Common Shares | |
| ( |
| — |
| — |
| — |
| — |
| — | ||||||
Net change in notes receivable on Class A Common Stock |
| — |
| — |
| — |
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| — |
| — |
| | |||||
Deferred compensation - Class A Common Stock: |
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Directors | — |
| — |
| — |
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| — |
| — |
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Designated key employees | — |
| — |
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| — |
| — |
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Employee stock purchase plan - Class A Common Stock | |
| — |
| — |
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| — |
| — |
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Stock-based awards - Class A Common Stock: | |||||||||||||||||||
Performance stock units, net of shares tendered back |
| — |
| — |
| — |
| ( |
| — |
| — |
| ( | |||||
Restricted stock, net of shares tendered back |
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| — |
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| — |
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Stock options |
| — |
| — |
| — |
| |
| — |
| — |
| | |||||
Balance, June 30, 2026 | | | $ | | $ | | $ | | $ | ( | $ | | |||||||
Three Months Ended June 30, 2025 | |||||||||||||||||||
Common Stock | Accumulated | ||||||||||||||||||
| Class A | | Class B | | | | Additional | | | | Other | | Total | ||||||
Shares | Shares | Paid In | Retained | Comprehensive | Stockholders’ | ||||||||||||||
(in thousands, except per share data) | Outstanding | Outstanding | Amount | Capital | Earnings | Income (Loss) | Equity | ||||||||||||
Balance, April 1, 2025 |
| | | $ | | $ | | $ | | $ | ( | $ | | ||||||
Net income |
| — |
| — |
| — |
| — |
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| — |
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Net change in AOCI |
| — |
| — |
| — |
| — |
| — |
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Dividends declared on Common Stock: | |||||||||||||||||||
Class A Shares ($ |
| — |
| — |
| — |
| — |
| ( |
| — |
| ( | |||||
Class B Shares ($ |
| — |
| — |
| — |
| — |
| ( |
| — |
| ( | |||||
Stock options exercised, net of shares withheld |
| |
| — |
| |
| |
| ( |
| — |
| ( | |||||
Conversion of Class B to Class A Common Shares |
| |
| ( |
| — |
| — |
| — |
| — |
| — | |||||
Repurchase of Class A Common Stock |
| ( |
| — |
| — |
| ( |
| ( |
| — |
| ( | |||||
Deferred compensation - Class A Common Stock: |
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Directors | — |
| — |
| — |
| |
| — |
| — |
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Designated key employees | — |
| — |
| — |
| ( |
| — |
| — |
| ( | ||||||
Employee stock purchase plan - Class A Common Stock | |
| — |
| — |
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| — |
| — |
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Stock-based awards - Class A Common Stock: | |||||||||||||||||||
Performance stock units, net of shares tendered back |
| — |
| — |
| — |
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| — |
| — |
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Restricted stock, net of shares tendered back |
| ( |
| — |
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| ( |
| — |
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Stock options |
| — |
| — |
| — |
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| — |
| — |
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Balance, June 30, 2025 |
| |
| | $ | | $ | | $ | | $ | ( | $ | | |||||
See accompanying footnotes to consolidated financial statements.
7
Table of Contents
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)
Six Months Ended June 30, 2026 | |||||||||||||||||||
Common Stock | Accumulated | ||||||||||||||||||
| Class A | | Class B | | | | Additional | | | | Other | | Total | ||||||
Shares | Shares | Paid In | Retained | Comprehensive | Stockholders’ | ||||||||||||||
(in thousands, except per share data) | Outstanding | Outstanding | Amount | Capital | Earnings | Income (Loss) | Equity | ||||||||||||
Balance, January 1, 2026 |
| | | $ | | $ | | $ | | $ | ( | $ | | ||||||
Net income |
| — |
| — |
| — |
| — |
| |
| — |
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Net change in AOCI |
| — |
| — |
| — |
| — |
| — |
| ( |
| ( | |||||
Dividends declared on Common Stock: | |||||||||||||||||||
Class A Shares ($ |
| — |
| — |
| — |
| — |
| ( |
| — |
| ( | |||||
Class B Shares ($ |
| — |
| — |
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| — |
| ( |
| — |
| ( | |||||
Stock options exercised, net of shares withheld |
| |
| — |
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| ( |
| — |
| ( | |||||
Conversion of Class B to Class A Common Shares | |
| ( |
| — |
| — |
| — |
| — |
| — | ||||||
Net change in notes receivable on Class A Common Stock |
| — |
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Deferred compensation - Class A Common Stock: |
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Directors | — |
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| — |
| — |
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Designated key employees | |
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Employee stock purchase plan - Class A Common Stock | |
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Stock-based awards - Class A Common Stock: | |||||||||||||||||||
Performance stock units, net of shares tendered back |
| — |
| — |
| — |
| ( |
| — |
| — |
| ( | |||||
Restricted stock, net of shares tendered back |
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| — |
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| ( |
| — |
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Stock options |
| — |
| — |
| — |
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| — |
| — |
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Balance, June 30, 2026 | | | $ | | $ | | $ | | $ | ( | $ | | |||||||
Six Months Ended June 30, 2025 | |||||||||||||||||||
Common Stock | Accumulated | ||||||||||||||||||
| Class A | | Class B | | | | Additional | | | | Other | | Total | ||||||
Shares | Shares | Paid In | Retained | Comprehensive | Stockholders’ | ||||||||||||||
(in thousands, except per share data) | Outstanding | Outstanding | Amount | Capital | Earnings | Income (Loss) | Equity | ||||||||||||
Balance, January 1, 2025 |
| | | $ | | $ | | $ | | $ | ( | $ | | ||||||
Net income |
| — |
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Net change in AOCI |
| — |
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Dividends declared on Common Stock: | |||||||||||||||||||
Class A Shares ($ |
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| ( |
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Class B Shares ($ |
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| ( |
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Stock options exercised, net of shares withheld |
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| — |
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| ( |
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Conversion of Class B to Class A Common Shares |
| |
| ( |
| — |
| — |
| — |
| — |
| — | |||||
Repurchase of Class A Common Stock |
| ( |
| — |
| — |
| ( |
| ( |
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Net change in notes receivable on Class A Common Stock |
| — |
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| ( |
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Deferred compensation - Class A Common Stock: |
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Directors | — |
| — |
| — |
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| — |
| — |
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Designated key employees | |
| — |
| ( |
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| ( |
| — |
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Employee stock purchase plan - Class A Common Stock | |
| — |
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| — |
| — |
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Stock-based awards - Class A Common Stock: | |||||||||||||||||||
Performance stock units, net of shares tendered back |
| — |
| — |
| — |
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| — |
| — |
| | |||||
Restricted stock, net of shares tendered back |
| |
| — |
| — |
| |
| ( |
| — |
| | |||||
Stock options |
| — |
| — |
| — |
| |
| — |
| — |
| | |||||
Balance, June 30, 2025 |
| |
| | $ | | $ | | $ | | $ | ( | $ | | |||||
See accompanying footnotes to consolidated financial statements.
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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
| Six Months Ended | |||||
June 30, | ||||||
| 2026 | | 2025 | |||
OPERATING ACTIVITIES: | ||||||
Net income | $ | | $ | | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Net amortization on investment securities and low-income housing investments |
| |
| | ||
Net accretion and amortization on loans and deposits |
| ( |
| ( | ||
Unrealized and realized gains on equity securities with a readily determinable fair value | | ( | ||||
Depreciation of premises and equipment |
| |
| | ||
Amortization of mortgage servicing rights |
| |
| | ||
Provision for on-balance sheet exposures |
| |
| | ||
Provision for off-balance sheet exposures | | | ||||
Net gain on sale of mortgage loans held for sale |
| ( |
| ( | ||
Origination of mortgage loans held for sale |
| ( |
| ( | ||
Proceeds from sale of mortgage loans held for sale |
| |
| | ||
Net gain on sale of consumer loans held for sale | ( | ( | ||||
Origination of consumer loans held for sale | ( | ( | ||||
Proceeds from sale of consumer loans held for sale | | | ||||
Net gain on sale of Republic Bank Finance loans and leases | ( | — | ||||
Net gain realized on sale of other real estate owned |
| ( |
| — | ||
Writedowns of other real estate owned |
| |
| | ||
Deferred compensation expense - Class A Common Stock |
| |
| | ||
Stock-based awards and ESPP expense - Class A Common Stock |
| |
| | ||
Amortization of right-of-use assets |
| | | |||
Repayment of operating lease liabilities | ( |
| ( | |||
Increase in cash surrender value of BOLI |
| ( |
| ( | ||
Gain from death benefits in excess of cash surrender value of BOLI | ( | — | ||||
Gain on sale of Visa Class B-1 shares | — | ( | ||||
Net change in other assets and liabilities: | ||||||
Accrued interest receivable |
| |
| ( | ||
Accrued interest payable |
| ( |
| ( | ||
Other assets |
| |
| ( | ||
Other liabilities |
| ( |
| | ||
Net cash provided by operating activities |
| |
| | ||
INVESTING ACTIVITIES: | ||||||
Purchases of available-for-sale debt securities |
| ( |
| ( | ||
Proceeds from calls, maturities and paydowns of equity and available-for-sale debt securities |
| |
| | ||
Proceeds from calls, maturities and paydowns of held-to-maturity debt securities |
| |
| | ||
Net change in outstanding warehouse lines of credit |
| |
| ( | ||
Net change in other loans, net of allowance |
| ( |
| | ||
Net proceeds from sale of consumer loans transferred to held for sale |
| — |
| | ||
Net redemptions (purchases) of Federal Home Loan Bank stock | | ( | ||||
Proceeds from sale of other real estate owned |
| |
| — | ||
Proceeds from sale of RBF loans and leases transferred to held for sale | | — | ||||
Proceeds from sale of Visa Class B-1 shares | — | | ||||
Proceeds of principal and earnings from BOLI | | — | ||||
Investments in low-income housing tax partnerships | ( | ( | ||||
Net purchases of premises and equipment |
| ( |
| ( | ||
Net cash provided by (used in) investing activities |
| |
| ( | ||
FINANCING ACTIVITIES: | ||||||
Net change in deposits |
| |
| | ||
Net change in securities sold under agreements to repurchase and other short-term borrowings |
| ( |
| ( | ||
Payments of Federal Home Loan Bank advances |
| ( |
| ( | ||
Proceeds from Federal Home Loan Bank advances |
| |
| | ||
Repurchase of Class A Common Stock |
| — |
| ( | ||
Net proceeds from Class A Common Stock purchased through employee stock purchase plan | | | ||||
Net proceeds from option exercises and equity awards vested - Class A Common Stock |
| ( |
| | ||
Cash dividends paid |
| ( |
| ( | ||
Net cash provided by (used in) financing activities |
| ( |
| | ||
NET CHANGE IN CASH AND CASH EQUIVALENTS |
| |
| | ||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
| |
| | ||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | | $ | | ||
SUPPLEMENTAL DISCLOSURES OF CASHFLOW INFORMATION: | ||||||
Cash paid during the period for: | ||||||
Interest | $ | | $ | | ||
Income taxes |
| |
| | ||
SUPPLEMENTAL NONCASH DISCLOSURES: | ||||||
Mortgage servicing rights capitalized | $ | | $ | | ||
Transfers from loans to real estate acquired in settlement of loans | | — | ||||
Net transfers from loans held for investment to loans held for sale | — | | ||||
New unfunded obligations in low-income-housing investments | — | | ||||
Right-of-use assets obtained in exchange for new operating lease liabilities | | | ||||
Premises and equipment obtained through the use of vendor credits | | | ||||
See accompanying footnotes to consolidated financial statements.
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FOOTNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2026 and 2025 AND DECEMBER 31, 2025 (UNAUDITED)
1. | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation — The consolidated financial statements included in this report include the accounts of Republic Bancorp, Inc. and its wholly owned subsidiary, Republic Bank & Trust Company. As used in this report, the terms “Republic,” the “Company,” “we,” “our,” and “us” refer to Republic Bancorp, Inc. and, where the context requires, Republic Bancorp, Inc. and its subsidiary. The term the “Bank” refers to the Company’s subsidiary bank, Republic Bank & Trust Company, as well as its wholly owned subsidiary, RBT Insurance Agency LLC. All significant intercompany balances and transactions are eliminated in consolidation.
Republic is an FHC headquartered in Louisville, Kentucky, which is the most populous city in Kentucky. The Bank is a Kentucky-based, state-chartered non-member financial institution that provides both traditional and non-traditional banking products and services through
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, the financial statements do not include all the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the three and six months ended June 30, 2026 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2026. For further information, refer to the consolidated financial statements and footnotes thereto included in Republic’s Form 10-K for the year ended December 31, 2025. Certain amounts presented in prior periods have been reclassified to conform to the current period presentation. These reclassifications had no impact on previously reported prior periods’ net income or shareholders’ equity.
The Company’s Executive Chair/CEO serves as the Company’s CODM. Net income before income tax expense is the reportable measure of segment profit or loss that the CODM regularly reviews and utilizes to allocate resources and evaluate performance.
As of June 30, 2026, the Company was divided into
Core Banking Operations
The Core Bank consists of the Traditional Banking and Warehouse Lending segments.
| (I) | Traditional Banking segment |
The Traditional Banking segment provides traditional banking products and services primarily to customers in the Company’s market footprint with all products and services generally offered under the Company’s traditional RB&T brand. As of June 30, 2026, Republic had
● | Kentucky — |
● | Metropolitan Louisville — |
● | Central Kentucky — |
● | Georgetown — |
● | Lexington — |
● | Northern Kentucky (Metropolitan Cincinnati) — |
●Bellevue —
| ● | Covington — |
● | Crestview Hills — |
● | Florence — |
● | Indiana — |
● | Southern Indiana (Metropolitan Louisville) — |
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● | Floyds Knobs — |
● | Jeffersonville — |
● | New Albany — |
● | Florida — |
● | Metropolitan Tampa — |
● | Ohio — |
● | Metropolitan Cincinnati — |
● | Tennessee — |
● | Metropolitan Nashville — |
Traditional Banking results of operations are primarily dependent upon net interest income, which represents the difference between the interest income and fees on interest-earning assets and the interest expense on interest-bearing liabilities used to fund those assets. Principal interest-earning Traditional Banking assets represent investment securities and commercial and consumer loans primarily secured by real estate and/or personal property. Interest-bearing liabilities primarily consist of interest-bearing deposit accounts, SSUAR, and short-term and long-term borrowing sources. FHLB advances have traditionally served as a significant borrowing and liquidity source for the Bank. Net interest income is impacted by both changes in the amount and composition of interest-earning assets and interest-bearing liabilities, as well as market interest rates.
Other sources of Traditional Banking income include service charges on consumer and commercial deposit accounts, mortgage banking income, debit and credit card interchange fee income, title insurance commissions, swap fee income and increases in the cash surrender value of BOLI.
Traditional Banking operating expenses consist primarily of salaries and employee benefits, technology, equipment and communication costs, occupancy expenses, marketing and development expenses, FDIC insurance, interchange and card processing fees, legal and professional services, and other general and administrative expenses. Traditional Banking results are significantly influenced by general economic and competitive conditions, including changes in market interest rates, governmental laws and policies, and regulatory actions.
| (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 RRE loans. The credit facility enables the mortgage banking clients to close single-family, first-lien RRE loans in their own name and temporarily fund their inventory of these closed loans until the loans are sold to investors approved by the Bank. Individual loans are expected to remain on the warehouse LOC for an average of
Republic Processing Group Operations
Republic Processing Group consists of the Tax Refund Solutions, Republic Payment Solutions and Republic Credit Solutions segments.
| (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 across the U.S., as well as through tax-preparation software providers that offer Republic Bank ERAs, RAs and RTs (collectively, the “Tax Providers”). The substantial majority of TRS’s business activity occurs during the first half of each year, while the second half of the year is characterized by limited revenue and costs associated with preparing for the upcoming tax season.
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Refund Advances:
The RA loan product is a loan made in conjunction with the filing of a taxpayer’s federal tax return, which allows the taxpayer to borrow funds as an advance of a portion of their tax refund. The RA product had the following features during the 2025 and 2026 Tax Seasons:
| ● | Offered only during the first |
| ● | The taxpayer was given the option to choose from multiple loan-amount tiers, subject to underwriting, up to a maximum advance amount of $ |
| ● | 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 via deduction from the taxpayer’s tax refund proceeds; and |
| ● | If a tax refund is insufficient to repay the RA: |
| ● | there is no recourse to the taxpayer, |
| ● | no negative credit reporting on the taxpayer, and |
| ● | no collection efforts against the taxpayer. |
Early Season Refund Advances:
The ERA loan product is structured similarly to the RA, with the primary differences being the timing of when the ERAs are originated and the documentation available to underwrite the ERAs. The ERA is originated prior to the taxpayer receiving their fiscal year taxable income documentation, such as Form W-2, and the filing of the taxpayer’s final federal tax return. As such, the Company generally uses paystub information to underwrite the ERA. The repayment of the ERA is incumbent upon the taxpayer client returning to the Bank’s Tax Provider for the filing of their final federal tax return in order for the tax refund to potentially be received by the Bank from the federal government to pay off the advance. The ERA product had the following features during the 2025 and 2026 Tax Seasons:
| ● | Only offered during December and the following January in connection with the upcoming first quarter tax business for each period; |
| ● | The taxpayer was given the option to choose from multiple loan-amount tiers, subject to underwriting, up to a maximum advance amount of $ |
| ● | 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 earned for ERAs/RAs as “Interest income on loans.”
Provisions on ERAs/RAs are estimated when advances are made. Unpaid ERAs/RAs, related to the first quarter tax filing season of a given year are considered delinquent at June 30th of that year and charged-off. In addition, RAs that are subject to Tax Provider loan loss guarantees are charged-off and immediately recorded as recoveries of previously charged-off loans with corresponding receivables recorded in other assets for the Tax Provider guarantees. Corresponding receivables are settled during the third quarter of each year. RAs collected during the second half of each year, not subject to loan loss guarantee arrangements, are recorded as recoveries of previously charged-off loans.
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Refund Transfers:
RTs are fee-based products whereby a tax refund is issued to the taxpayer after the Bank has received the refund from the federal or state government. There is
The Company executes contracts with individual Tax Providers to offer RTs to their taxpayer customers. RT revenue is recognized by the Bank immediately after the taxpayer’s refund is disbursed in accordance with the RT contract with the taxpayer customer. The fee paid by the taxpayer for the RT is shared between the Bank and the Tax Providers based on contracts executed between the parties.
The Company presents RT revenue net of any amounts shared with the Tax Providers. The Bank’s share of RT revenue is generally based on the responsibilities undertaken by the Tax Provider for each individual RT program, with more responsibilities assumed by the Tax Provider generally corresponding to higher RT revenue share earned by the Tax Provider. The significant majority of net RT revenue is recognized and obligations under RT contracts fulfilled by the Bank during the first half of each year. Incremental expenses associated with the fulfilment of RT contracts are generally expensed during the first half of each year. Fees earned by the Company on RTs, net of revenue share, are reported as noninterest income under the line item “Net refund transfer fees.”
The RPS segment offers a range of payment-related products and services to consumers through third-party service providers. Through the Bank, the RPS segment offers both issuing solutions and money movement capabilities.
Issuing Solutions:
The RPS segment offers prepaid and debit solutions primarily marketed to the consumer industry. Prepaid solutions include the issuing of payroll and general purpose reloadable cards. Characteristics of these cards include the following:
| ● | Similar to a traditional debit card with features including traditional POS purchasing, ATM/ITM 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 POS purchasing, ATM/ITM withdrawals, and direct deposit options, these accounts may include overdraft protection.
Money Movement Capabilities:
Through RPS, the Bank participates in traditional money movement solutions including ACH transactions, wire transfers, check processing, and the Mastercard Remote Payment and Presentment Service. These capabilities are also complementary products facilitating the movement of money for other RPG divisions.
The Company reports its share of client-related charges and fees for RPS programs as noninterest income under “Program fees.” Additionally, the Company’s portion of interchange revenue generated by prepaid card transactions is reported as noninterest income under “Interchange fee income.”
From time to time, RPS enters into revenue-sharing arrangements with prepaid marketer-servicers under which a portion of the interest income earned on program deposits is shared. Revenue share paid on RPS deposits is reported as “Interest expense on deposits.”
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Through the RCS segment, the Bank offers consumer credit products. In general, the credit products are unsecured, small dollar consumer loans that are dependent on various factors. RCS loans typically earn a higher yield but also have higher credit risk compared to loans originated through the Traditional Banking segment, with a significant portion of RCS clients considered subprime or near-prime borrowers. Ordinary gains or losses on the sale of RCS products are reported as a component of “Program fees.” Through the Bank, RCS uses third-party service providers for certain services such as marketing and loan servicing for RCS’s LOC products, installment loan product and healthcare receivables products.
LOC Products:
Through the RCS segment, the Bank originates
| ● | LOC I – The Bank sells a |
| ● | LOC II – The Bank sells a |
Installment Loan Product:
Through the RCS segment, the Bank offers installment loans with terms ranging from
Healthcare Receivables Products:
Through the RCS segment, the Bank originates healthcare receivables products across the U.S. through
For the RCS LOC and healthcare receivable products, the Company reports interest income and loan origination fees under “Loans, including fees,” while any net gains or losses on sale and mark-to-market adjustments of RCS loans are reported as noninterest income under “Program fees.” The Company has elected fair value accounting for its RCS installment loan product that it sells after an initial holding period. As a result, interest income on loans, loan origination fees, net gains or losses on sale, and mark-to-market adjustments for the RCS installment loan product are reported as noninterest income under “Program fees.”
Critical Accounting Policies and Estimates — To prepare financial statements in conformity with GAAP, management must make estimates and assumptions that require difficult, complex, or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates are susceptible to material changes as a result of changes in facts and circumstances. Facts and circumstances which could affect these judgments include, but are not limited to, changes in interest rates, changes in the performance of the economy and changes in the financial condition of borrowers. The Company’s accounting policies are fundamental to understanding management’s discussion and analysis of the Company’s financial condition and results of operations. At June 30, 2026, the accounting policy considered the most critical in preparing the Company’s consolidated financial statements is the determination of the ACLL.
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Recently Adopted Accounting Standards
There were no ASUs adopted by the Company during the six months ended June 30, 2026.
Accounting Standards Update
The following not-yet-effective ASUs are considered relevant to the Company’s financial statements. Generally, if an issued-but-not-yet-effective ASU with an expected immaterial impact to the Company has been disclosed in prior Company filings, that ASU will not be subsequently redisclosed.
Date Adoption | Adoption | Expected | ||||||||
ASU. No. | Topic | Nature of Update | Required | Method | Financial Impact | |||||
2024-03 | Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses | This ASU requires public companies to disclose, in the notes to financial statements, specified information about certain costs and expenses at each interim and annual reporting period. | Annual reporting periods beginning after Dec. 15, 2026, and interim periods within annual reporting periods beginning after Dec. 15, 2027. | Retrospectively | Immaterial | |||||
2025-01 | Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date | This ASU amends the effective date of ASU No. 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. | Annual reporting periods beginning after Dec. 15, 2026, and interim periods within annual reporting periods beginning after Dec. 15, 2027. | Retrospectively | Immaterial | |||||
2025-06 | Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. | This ASU modernizes and clarifies the threshold for when an entity is required to start capitalizing software costs and is based on when (i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended. | Annual reporting periods beginning after Dec. 15, 2027, and interim reporting periods within those annual reporting periods. | Prospectively | Immaterial | |||||
2025-07 | Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract | This ASU refines the scope of Topic 815 to clarify which contracts are subject to derivative accounting. The guidance also provides clarification under Topic 606 for share-based payments from a customer in a revenue contract. | Annual reporting periods beginning after Dec. 15, 2026, and interim reporting periods within those annual reporting periods. | Prospectively | Immaterial | |||||
2025-08 | Financial Instruments—Credit Losses (Topic 326): Purchased Loans | The ASU expands the population of acquired financial assets accounted for using the gross-up approach. Acquired loans (excluding credit cards) are deemed purchased seasoned loans and accounted for using the gross-up approach upon acquisition if criteria established by the new guidance are met. This change aims to enhance comparability, consistency, and better reflect the economics of acquiring financial assets. | Annual reporting periods beginning after Dec. 15, 2026, and interim reporting periods within those annual reporting periods. | Prospectively | Immaterial | |||||
2025-09 | Derivatives and Hedging (Topic 815): Hedge Accounting Improvements | The ASU enables entities to apply hedge accounting to a greater number of highly effective economic hedges. | Annual reporting periods beginning after Dec. 15, 2026, and interim reporting periods within those annual reporting periods. | Prospectively | Immaterial | |||||
2025-11 | Interim Reporting (Topic 270): Narrow-Scope Improvements | This ASU does not change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements. The ASU clarifies that all entities preparing GAAP‑compliant interim financial statements must follow Topic 270. It also creates a complete list of required interim disclosures, adds a principle requiring disclosure of material events occurring after year‑end, and improves guidance on the content and format of interim financial statements. | Interim periods within annual periods beginning after December 15, 2027. | Prospectively | The Company is currently analyzing the impact of this ASU on its financial statements. | |||||
2025-12 | Codification Improvements | These amendments in this ASU update the FASB Accounting Standards Codification® for a broad range of Topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements. | Annual reporting periods beginning after Dec. 15, 2026, and interim reporting periods within those annual reporting periods. | Prospectively | Immaterial | |||||
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2. INVESTMENT SECURITIES
Available-for-Sale Debt Securities
The following tables summarize the amortized cost and fair value of AFS debt securities, along with the related gross unrealized gains and losses recognized in AOCI:
| | Gross | | Gross |
| | ||||||
Amortized | Unrealized | Unrealized |
| Fair | ||||||||
June 30, 2026 (in thousands) | Cost | Gains | Losses |
| Value | |||||||
U.S. Treasury securities and U.S. Government agencies | $ | | $ | | $ | ( | $ | | ||||
Private label mortgage-backed security |
| — |
| |
| — |
| | ||||
Mortgage-backed securities - residential |
| |
| |
| ( |
| | ||||
Collateralized mortgage obligations |
| |
| |
| ( |
| | ||||
Corporate bonds |
| — |
| — |
| — |
| — | ||||
Trust preferred security |
| |
| |
| — |
| | ||||
Total available-for-sale debt securities | $ | | $ | | $ | ( | $ | | ||||
| | Gross | | Gross |
| | ||||||
Amortized | Unrealized | Unrealized |
| Fair | ||||||||
December 31, 2025 (in thousands) | Cost | Gains | Losses |
| Value | |||||||
U.S. Treasury securities and U.S. Government agencies | $ | | $ | | $ | ( | $ | | ||||
Private label mortgage-backed security |
| — |
| |
| — |
| | ||||
Mortgage-backed securities - residential |
| |
| |
| ( |
| | ||||
Collateralized mortgage obligations |
| |
| |
| ( |
| | ||||
Corporate bonds |
| |
| — |
| — |
| | ||||
Trust preferred security |
| |
| |
| — |
| | ||||
Total available-for-sale debt securities | $ | | $ | | $ | ( | $ | | ||||
Held-to-Maturity Debt Securities
The following tables summarize the amortized cost and fair value of HTM debt securities, together with the related gross unrecognized gains and losses:
| | | Gross | | Gross | | | |||||
Amortized | Unrecognized | Unrecognized | Fair | |||||||||
June 30, 2026 (in thousands) | Cost | Gains | Losses | Value | ||||||||
Mortgage-backed securities - residential | $ | | $ | — | $ | — | $ | | ||||
Collateralized mortgage obligations |
| |
| |
| — |
| | ||||
Total held-to-maturity debt securities | $ | | $ | | $ | — | $ | | ||||
| | | Gross | | Gross | | | |||||
Amortized | Unrecognized | Unrecognized | Fair | |||||||||
December 31, 2025 (in thousands) | Cost | Gains | Losses | Value | ||||||||
Mortgage-backed securities - residential | $ | | $ | — | $ | — | $ | | ||||
Collateralized mortgage obligations |
| |
| |
| ( |
| | ||||
Total held-to-maturity debt securities | $ | | $ | | $ | ( | $ | | ||||
There were
There were
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Sales and Calls of Available-for-Sale Debt Securities
During the three and six months ended June 30, 2026, and 2025, there were no material sales of AFS debt securities and no material gains or losses on sales or calls of AFS debt securities. During the six months ended June 30, 2026, AFS debt securities with amortized cost of $
Debt Securities by Contractual Maturity
The following table summarizes the amortized cost and fair value of debt securities by contractual maturity. Expected maturities may differ from contractual maturities due to the ability of issuers to call or prepay obligations, with or without call or prepayment penalties. Securities without a single contractual maturity date are presented separately.
Available-for-Sale | Held-to-Maturity | |||||||||||
Debt Securities | Debt Securities | |||||||||||
| Amortized | | Fair | | Amortized | | Fair | |||||
June 30, 2026 (in thousands) | Cost | Value | Cost | Value | ||||||||
Due in one year or less | $ | | $ | | $ | — | $ | — | ||||
Due from one year to five years |
| |
| |
| — |
| — | ||||
Due from five years to ten years |
| — |
| — |
| — |
| — | ||||
Due beyond ten years |
| |
| |
| — |
| — | ||||
Private label mortgage-backed security |
| — |
| |
| — |
| — | ||||
Mortgage-backed securities - residential |
| |
| |
| |
| | ||||
Collateralized mortgage obligations |
| |
| |
| |
| | ||||
Total debt securities | $ | | $ | | $ | | $ | | ||||
Unrealized Loss Analysis on Debt Securities
The following tables summarize AFS debt securities in unrealized loss positions for which no ACLS was recorded, by investment category and duration of the continuous unrealized loss position:
Less than 12 months | 12 months or more | Total | ||||||||||||||||
| | Unrealized | | | Unrealized | | | Unrealized | ||||||||||
June 30, 2026 (in thousands) | Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | ||||||||||||
Available-for-sale debt securities: | ||||||||||||||||||
U.S. Treasury securities and U.S. Government agencies | $ | | $ | ( | $ | | $ | ( | $ | | $ | ( | ||||||
Mortgage-backed securities - residential | | ( | | ( | | ( | ||||||||||||
Collateralized mortgage obligations | | ( | | ( | | ( | ||||||||||||
Total available-for-sale debt securities | $ | | $ | ( | $ | | $ | ( | $ | | $ | ( | ||||||
Less than 12 months | 12 months or more | Total | ||||||||||||||||
| | Unrealized | | | Unrealized | | | Unrealized | ||||||||||
December 31, 2025 (in thousands) | Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | ||||||||||||
Available-for-sale debt securities: | ||||||||||||||||||
U.S. Treasury securities and U.S. Government agencies | $ | | $ | ( | $ | | $ | ( | $ | | $ | ( | ||||||
Mortgage-backed securities - residential | | ( | | ( | | ( | ||||||||||||
Collateralized mortgage obligations | — | — | | ( | | ( | ||||||||||||
Total available-for-sale debt securities | $ | | $ | ( | $ | | $ | ( | $ | | $ | ( | ||||||
As of June 30, 2026, the Bank’s security portfolio consisted of
As of June 30, 2026, and December 31, 2025, there were no holdings of debt securities of any one issuer, other than the U.S. government and its agencies, in an amount greater than
Accrued interest receivable on AFS debt securities is included in other assets on the Consolidated Balance Sheets and is excluded from the ACLS, when applicable. Accrued interest receivable on AFS debt securities totaled $
17
Table of Contents
Mortgage-Backed Securities and Collateralized Mortgage Obligations
As of June 30, 2026, all MBSs and CMOs held by the Bank, other than the private label MBS, were issued by U.S. government-sponsored entities and agencies, primarily the FHLMC and FNMA.
As of June 30, 2026, and December 31, 2025, there were gross unrealized losses of approximately $
Pledged Debt Securities
Debt securities pledged to secure public deposits, SSUAR, and other obligations, or otherwise held for other purposes permitted by law, were as follows:
As of | |||||||
(in thousands) | | June 30, 2026 | | December 31, 2025 |
| ||
Amortized cost | $ | | $ | | |||
Fair value |
| |
| | |||
Carrying amount | | | |||||
Equity Securities
The following tables summarize the amortized cost and fair value of equity securities with readily determinable fair values:
| | Gross | | Gross | | | ||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||
June 30, 2026 (in thousands) | Cost | Gains | Losses | Value | ||||||||
Freddie Mac preferred stock | $ | — | $ | | $ | — | $ | | ||||
| | Gross | | Gross | | | ||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||
December 31, 2025 (in thousands) | Cost | Gains | Losses | Value | ||||||||
Freddie Mac preferred stock | $ | — | $ | | $ | — | $ | | ||||
The following table presents the gross realized and unrealized gains and losses recognized in the Company's consolidated statements of income for equity securities with readily determinable fair values:
Gains (Losses) Recognized on Equity Securities | |||||||||||||||||||
Three Months Ended June 30, 2026 | | Three Months Ended June 30, 2025 | | ||||||||||||||||
(in thousands) | | Realized | | Unrealized | | Total | | Realized | | Unrealized | | Total | |||||||
Freddie Mac preferred stock | $ | — | $ | | $ | | $ | — | $ | | $ | | |||||||
Gains (Losses) Recognized on Equity Securities | |||||||||||||||||||
Six Months Ended June 30, 2026 | | Six Months Ended June 30, 2025 | |||||||||||||||||
(in thousands) | Realized | Unrealized | Total | Realized | Unrealized | Total | |||||||||||||
Freddie Mac preferred stock | $ | — | $ | | $ | | $ | — | $ | | $ | | |||||||
18
Table of Contents
3.LOANS HELD FOR SALE
In the ordinary course of business, the Bank originates mortgage and consumer loans for sale. Mortgage loans are primarily originated and sold into the secondary market through the Traditional Banking segment, while consumer loans are originated and sold through the RCS segment.
Mortgage Loans Held for Sale, at Fair Value
Additional information regarding mortgage loans HFS and carried at fair value is included in the “Mortgage Banking Activities” footnote within this section of the report.
Consumer Loans Held for Sale, at Fair Value
Through RCS, the Bank originates installment loans with terms ranging from
| Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | ||||||||||||
(in thousands) | 2026 | | 2025 | | 2026 | | 2025 | ||||||
Balance, beginning of period | $ | | $ | | $ | | $ | | |||||
Origination of consumer loans held for sale |
| |
| |
| |
| | |||||
Proceeds from the sale of consumer loans held for sale |
| ( |
| ( |
| ( |
| ( | |||||
Net gain on sale of consumer loans held for sale |
| |
| |
| |
| | |||||
Balance, end of period | $ | | $ | | $ | | $ | | |||||
Consumer Loans Held for Sale, at the Lower of Cost or Fair Value
RCS originates for sale
During the first quarter of 2025, management entered into an agreement to sell approximately $
| Three Months Ended |
| Six Months Ended | | |||||||||
June 30, | June 30, | ||||||||||||
(in thousands) | 2026 | | 2025 | | 2026 | | 2025 | ||||||
Balance, beginning of period | $ | | $ | | $ | | $ | | |||||
Origination of consumer loans held for sale |
| |
| |
| |
| | |||||
Transferred from held for investment to held for sale | — | — | — | | |||||||||
Proceeds from the sale of consumer loans held for sale |
| ( |
| ( |
| ( |
| ( | |||||
Net gain on sale of consumer loans held for sale |
| |
| |
| |
| | |||||
Balance, end of period | $ | | $ | | $ | | $ | | |||||
Other Loans Held for Sale, at the Lower of Cost or Fair Value
During the fourth quarter of 2025, approximately $
| Three Months Ended |
| Six Months Ended | | |||||||||
June 30, | June 30, | ||||||||||||
(in thousands) | 2026 | | 2025 | | 2026 | | 2025 | ||||||
Balance, beginning of period | $ | — | $ | — | $ | | $ | — | |||||
Transferred from held for investment to held for sale | — | — | | — | |||||||||
Proceeds from the sale of loans held for sale | — | — | ( | — | |||||||||
Net gain on sale of loans held for sale | — | — | | — | |||||||||
Balance, end of period | $ | — | $ | — | $ | | $ | — | |||||
19
Table of Contents
4.LOANS AND ALLOWANCE FOR CREDIT LOSSES ON LOANS
The following table presents the composition of the Company's loan portfolio by portfolio segment and class:
(in thousands) | | June 30, 2026 | | December 31, 2025 |
| ||
Traditional Banking: | |||||||
Residential real estate: | |||||||
Owner-occupied | $ | | $ | | |||
Nonowner-occupied |
| |
| | |||
Commercial real estate: |
|
| |||||
Owner-occupied | | | |||||
Nonowner-occupied | | | |||||
Multi-family | | | |||||
Construction & land development |
| |
| | |||
Commercial & industrial |
| |
| | |||
Lease financing receivables |
| |
| | |||
Aircraft* | | | |||||
Home equity |
| |
| | |||
Consumer: | |||||||
Credit cards |
| |
| | |||
Overdrafts |
| |
| | |||
Automobile loans |
| |
| | |||
Other consumer |
| |
| | |||
Total Traditional Banking | | | |||||
Warehouse lines of credit* |
| |
| | |||
Total Core Banking | | | |||||
Republic Processing Group*: |
| ||||||
Tax Refund Solutions: | |||||||
Refund Advances | — | | |||||
Other TRS commercial & industrial | | | |||||
Republic Credit Solutions | |
| | ||||
Total Republic Processing Group | | | |||||
Total loans** |
| |
| | |||
Allowance for credit losses |
| ( |
| ( | |||
Total loans, net | $ | | $ | | |||
* Identifies loans to borrowers located primarily outside of the Bank’s market footprint.
** Total loans are presented inclusive of premiums, discounts and net loan origination fees and costs. See the following table for expanded detail.
The following table reconciles the contractual balances and carrying amounts of loans:
(in thousands) | | June 30, 2026 | | December 31, 2025 |
| ||
Contractually receivable | $ | | $ | | |||
Unearned income |
| ( |
| ( | |||
Unamortized premiums |
| |
| | |||
Unaccreted discounts |
| ( |
| ( | |||
Other net unamortized deferred origination (fees) and costs |
| ( |
| ( | |||
Carrying value of loans | $ | | $ | | |||
20
Table of Contents
Credit Quality Indicators
The following tables present loans by segment, risk category and, for nonrevolving loans, origination year. For purposes of determining origination year, loan extensions and renewals are generally considered to have originated in the year of extension or renewal unless the transaction is accounted for as a loan modification. Extensions and renewals classified as loan modifications generally retain their original origination year.
Revolving Loans | Revolving Loans | ||||||||||||||||||||||||||
(in thousands) | Term Loans Amortized Cost Basis by Origination Year | Amortized | Converted | ||||||||||||||||||||||||
As of June 30, 2026 | 2026 | 2025 | 2024 | 2023 | 2022 | Prior | Cost Basis | to Term | Total | ||||||||||||||||||
Residential real estate owner-occupied: | |||||||||||||||||||||||||||
Risk Rating | |||||||||||||||||||||||||||
Pass or not rated | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||
Special Mention | — | — | — | | | | — | — | | ||||||||||||||||||
Substandard | — | | | | | | — | — | | ||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||
YTD Gross Charge-offs | $ | — | $ | | $ | — | $ | | $ | | $ | | $ | — | $ | — | $ | | |||||||||
Residential real estate nonowner-occupied: | |||||||||||||||||||||||||||
Risk Rating | |||||||||||||||||||||||||||
Pass or not rated | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | | $ | | |||||||||
Special Mention | | — | — | — | — | — | — | — | | ||||||||||||||||||
Substandard | — | — | — | — | — | | — | — | | ||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | | $ | | |||||||||
YTD Gross Charge-offs | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Commercial real estate owner-occupied: | |||||||||||||||||||||||||||
Risk Rating | |||||||||||||||||||||||||||
Pass or not rated | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||
Special Mention | | — | — | — | — | | — | | | ||||||||||||||||||
Substandard | — | | — | | — | | — | — | | ||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||
YTD Gross Charge-offs | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Commercial real estate nonowner-occupied: | |||||||||||||||||||||||||||
Risk Rating | |||||||||||||||||||||||||||
Pass or not rated | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||
Special Mention | — | — | — | — | | — | — | — | | ||||||||||||||||||
Substandard | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||
YTD Gross Charge-offs | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Commercial real estate multi-family: | |||||||||||||||||||||||||||
Risk Rating | |||||||||||||||||||||||||||
Pass or not rated | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||
Special Mention | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Substandard | — | | — | — | | — | — | — | | ||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||
YTD Gross Charge-offs | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Construction & land development: | |||||||||||||||||||||||||||
Risk Rating | |||||||||||||||||||||||||||
Pass or not rated | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | | |||||||||
Special Mention | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Substandard | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | | |||||||||
YTD Gross Charge-offs | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | — | ||||||||||
Commercial & industrial: | |||||||||||||||||||||||||||
Risk Rating | |||||||||||||||||||||||||||
Pass or not rated | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||
Special Mention | — | | — | — | | | — | | |||||||||||||||||||
Substandard | | — | | | | — | | | | ||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||
YTD Gross Charge-offs | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Lease financing receivables: | |||||||||||||||||||||||||||
Risk Rating | |||||||||||||||||||||||||||
Pass or not rated | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | — | $ | | |||||||||
Special Mention | — | — | — | — | | — | — | — | | ||||||||||||||||||
Substandard | | — | | | | | — | — | | ||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | — | $ | | |||||||||
YTD Gross Charge-offs | $ | — | $ | — | $ | — | $ | — | $ | | $ | — | $ | — | $ | — | $ | | |||||||||
21
Table of Contents
Revolving Loans | Revolving Loans | |||||||||||||||||||||||||||
(in thousands) | Term Loans Amortized Cost Basis by Origination Year (Continued) | Amortized | Converted | |||||||||||||||||||||||||
As of June 30, 2026 | 2026 | 2025 | 2024 | 2023 | 2022 | Prior | Cost Basis | to Term | Total | |||||||||||||||||||
Aircraft: | ||||||||||||||||||||||||||||
Risk Rating | ||||||||||||||||||||||||||||
Pass or not rated | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | — | $ | | ||||||||||
Special Mention | — | — | — | — | — | — | — | — | — | |||||||||||||||||||
Substandard | — | — | — | — | — | — | — | — | — | |||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | |||||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | — | $ | | ||||||||||
YTD Gross Charge-offs | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Home equity: | ||||||||||||||||||||||||||||
Risk Rating | ||||||||||||||||||||||||||||
Pass or not rated | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | | $ | — | $ | | ||||||||||
Special Mention | — | — | — | — | — | — | | — | | |||||||||||||||||||
Substandard | — | — | — | — | — | — | | — | | |||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | |||||||||||||||||||
Total | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | | $ | — | $ | | ||||||||||
YTD Gross Charge-offs | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | | $ | — | $ | | ||||||||||
Consumer: | ||||||||||||||||||||||||||||
Risk Rating | ||||||||||||||||||||||||||||
Pass or not rated | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | | ||||||||||
Special Mention | — | — | — | — | — | — | — | — | — | |||||||||||||||||||
Substandard | — | | — | — | — | — | — | — | | |||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | |||||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | | ||||||||||
YTD Gross Charge-offs | $ | | $ | | $ | | $ | — | $ | — | $ | | $ | | $ | — | $ | | ||||||||||
Warehouse: | ||||||||||||||||||||||||||||
Risk Rating | ||||||||||||||||||||||||||||
Pass or not rated | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | | $ | — | $ | | ||||||||||
Special Mention | — | — | — | — | — | — | — | — | — | |||||||||||||||||||
Substandard | — | — | — | — | — | — | — | — | — | |||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | |||||||||||||||||||
Total | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | | $ | — | $ | | ||||||||||
YTD Gross Charge-offs | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
TRS: | ||||||||||||||||||||||||||||
Risk Rating | ||||||||||||||||||||||||||||
Pass or not rated | $ | | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | | ||||||||||
Special Mention | — | — | — | — | — | — | — | — | — | |||||||||||||||||||
Substandard | — | — | — | — | — | — | — | — | — | |||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | |||||||||||||||||||
Total | $ | | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | | ||||||||||
YTD Gross Charge-offs | $ | | $ | | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | | ||||||||||
RCS: | ||||||||||||||||||||||||||||
Risk Rating | ||||||||||||||||||||||||||||
Pass or not rated | $ | — | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | | ||||||||||
Special Mention | — | — | — | — | — | — | — | — | — | |||||||||||||||||||
Substandard | — | — | — | — | — | — | — | — | — | |||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | |||||||||||||||||||
Total | $ | — | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | | ||||||||||
YTD Gross Charge-offs | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | | $ | — | $ | | ||||||||||
Grand Total: | ||||||||||||||||||||||||||||
Risk Rating | ||||||||||||||||||||||||||||
Pass or not rated | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||
Special Mention | | — | | | | | | | | |||||||||||||||||||
Substandard | | | | | | | | | | |||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | |||||||||||||||||||
Grand Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||
YTD Gross Charge-offs | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | | ||||||||||
22
Table of Contents
Revolving Loans | Revolving Loans | ||||||||||||||||||||||||||
(in thousands) | Term Loans Amortized Cost Basis by Origination Year | Amortized | Converted | ||||||||||||||||||||||||
As of December 31, 2025 | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Cost Basis | to Term | Total | ||||||||||||||||||
Residential real estate owner-occupied: | |||||||||||||||||||||||||||
Risk Rating | |||||||||||||||||||||||||||
Pass or not rated | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | | $ | | |||||||||
Special Mention | — | — | — | | — | | — | — | | ||||||||||||||||||
Substandard | | | | | | | — | — | | ||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | | $ | | |||||||||
YTD Gross Charge-offs | $ | — | $ | | $ | — | $ | | $ | | $ | | $ | — | $ | — | $ | | |||||||||
Residential real estate nonowner-occupied: | |||||||||||||||||||||||||||
Risk Rating | |||||||||||||||||||||||||||
Pass or not rated | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | | $ | | |||||||||
Special Mention | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Substandard | — | — | — | — | — | | — | — | | ||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | | $ | | |||||||||
YTD Gross Charge-offs | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Commercial real estate owner-occupied: | |||||||||||||||||||||||||||
Risk Rating | |||||||||||||||||||||||||||
Pass or not rated | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||
Special Mention | | | — | — | | | — | | | ||||||||||||||||||
Substandard | | — | | — | — | | — | — | | ||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||
YTD Gross Charge-offs | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Commercial real estate nonowner-occupied: | |||||||||||||||||||||||||||
Risk Rating | |||||||||||||||||||||||||||
Pass or not rated | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||
Special Mention | | — | — | | — | — | — | — | | ||||||||||||||||||
Substandard | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||
YTD Gross Charge-offs | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Commercial real estate multi-family: | |||||||||||||||||||||||||||
Risk Rating | |||||||||||||||||||||||||||
Pass or not rated | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||
Special Mention | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Substandard | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||
YTD Gross Charge-offs | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Construction & land development: | |||||||||||||||||||||||||||
Risk Rating | |||||||||||||||||||||||||||
Pass or not rated | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | | |||||||||
Special Mention | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Substandard | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | | |||||||||
YTD Gross Charge-offs | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Commercial & industrial: | |||||||||||||||||||||||||||
Risk Rating | |||||||||||||||||||||||||||
Pass or not rated | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||
Special Mention | — | | — | — | | — | | — | | ||||||||||||||||||
Substandard | | | | | — | | | | | ||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||
YTD Gross Charge-offs | — | $ | | $ | | $ | | $ | — | $ | | $ | — | $ | — | | |||||||||||
Lease financing receivables: | |||||||||||||||||||||||||||
Risk Rating | |||||||||||||||||||||||||||
Pass or not rated | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | — | $ | | |||||||||
Special Mention | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Substandard | | | | | | — | — | — | | ||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | — | $ | | |||||||||
YTD Gross Charge-offs | — | $ | | $ | | $ | | $ | | $ | | $ | — | $ | — | | |||||||||||
23
Table of Contents
Revolving Loans | Revolving Loans | ||||||||||||||||||||||||||
(in thousands) | Term Loans Amortized Cost Basis by Origination Year | Amortized | Converted | ||||||||||||||||||||||||
As of December 31, 2025 | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Cost Basis | to Term | Total | ||||||||||||||||||
Aircraft: | |||||||||||||||||||||||||||
Risk Rating | |||||||||||||||||||||||||||
Pass or not rated | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | — | $ | | |||||||||
Special Mention | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Substandard | — | — | — | — | | — | — | — | | ||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | — | $ | | |||||||||
YTD Gross Charge-offs | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Home equity: | |||||||||||||||||||||||||||
Risk Rating | |||||||||||||||||||||||||||
Pass or not rated | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | | $ | — | $ | | |||||||||
Special Mention | — | — | — | — | — | — | | — | | ||||||||||||||||||
Substandard | — | — | — | — | — | — | | — | | ||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | | $ | — | $ | | |||||||||
YTD Gross Charge-offs | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | | $ | — | $ | | |||||||||
Consumer: | |||||||||||||||||||||||||||
Risk Rating | |||||||||||||||||||||||||||
Pass or not rated | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | | |||||||||
Special Mention | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Substandard | — | — | — | — | — | | | — | | ||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | | |||||||||
YTD Gross Charge-offs | $ | | $ | | $ | | $ | — | $ | | $ | | $ | | $ | — | $ | | |||||||||
Warehouse: | |||||||||||||||||||||||||||
Risk Rating | |||||||||||||||||||||||||||
Pass or not rated | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | | $ | — | $ | | |||||||||
Special Mention | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Substandard | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | | $ | — | $ | | |||||||||
YTD Gross Charge-offs | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
TRS: | |||||||||||||||||||||||||||
Risk Rating | |||||||||||||||||||||||||||
Pass or not rated | $ | | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | | |||||||||
Special Mention | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Substandard | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | | |||||||||
YTD Gross Charge-offs | $ | | $ | | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | | |||||||||
RCS: | |||||||||||||||||||||||||||
Risk Rating | |||||||||||||||||||||||||||
Pass or not rated | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | | |||||||||
Special Mention | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Substandard | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | | |||||||||
YTD Gross Charge-offs | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | | $ | — | $ | | |||||||||
Grand Total: | |||||||||||||||||||||||||||
Risk Rating | |||||||||||||||||||||||||||
Pass or not rated | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||
Special Mention | | | — | | | | | | | ||||||||||||||||||
Substandard | | | | | | | | | | ||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Grand Total | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||
YTD Gross Charge-offs | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | — | $ | | |||||||||
24
Table of Contents
Allowance for Credit Losses on Loans
The following table presents a rollforward of the ACLL portfolio by portfolio segment and class:
ACLL Roll-forward | |||||||||||||||||||||||||||||||
Three Months Ended June 30, | |||||||||||||||||||||||||||||||
2026 | 2025 | ||||||||||||||||||||||||||||||
Beginning | Charge- | Ending | Beginning | Charge- | Ending | ||||||||||||||||||||||||||
(in thousands) | Balance | Provision | offs | Recoveries | Balance | Balance | Provision | offs | Recoveries | Balance | |||||||||||||||||||||
Traditional Banking: | |||||||||||||||||||||||||||||||
Residential real estate: | |||||||||||||||||||||||||||||||
Owner-occupied | $ | | $ | | $ | ( | $ | | $ | | $ | | $ | ( | $ | ( | $ | | $ | | |||||||||||
Nonowner-occupied | | ( | — | — | | | ( | — | — | | |||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||
Owner-occupied | | | — | | | | ( | — | — | | |||||||||||||||||||||
Nonowner-occupied | | | — | — | | | ( | — | | | |||||||||||||||||||||
Multi-Family | | | — | — | | | ( | — | — | | |||||||||||||||||||||
Total commercial real estate | | | — | | | | ( | — | | | |||||||||||||||||||||
Construction & land development | | ( | — | — | | | | — | — | | |||||||||||||||||||||
Commercial & industrial | | ( | — | | | | ( | ( | — | | |||||||||||||||||||||
Lease financing receivables | | ( | — | | | | | ( | | | |||||||||||||||||||||
Aircraft | | | — | — | | | ( | — | — | | |||||||||||||||||||||
Home equity | | | ( | | | | | — | | | |||||||||||||||||||||
Consumer: | |||||||||||||||||||||||||||||||
Credit cards | | ( | ( | — | | | | ( | | | |||||||||||||||||||||
Overdrafts | | | ( | | | | | ( | | | |||||||||||||||||||||
Automobile loans | — | ( | — | | — | | ( | — | | | |||||||||||||||||||||
Other consumer | | ( | ( | — | | | | ( | | | |||||||||||||||||||||
Total Traditional Banking | | ( | ( | | | | | ( | | | |||||||||||||||||||||
Warehouse lines of credit | | ( | — | — | | | | — | — | | |||||||||||||||||||||
Total Core Banking | | ( | ( | | | | | ( | | | |||||||||||||||||||||
Republic Processing Group: | |||||||||||||||||||||||||||||||
Tax Refund Solutions: | |||||||||||||||||||||||||||||||
Refund Advances | | ( | ( | | — | | ( | ( | | — | |||||||||||||||||||||
Other TRS commercial & industrial | | | ( | | | | | ( | | — | |||||||||||||||||||||
Republic Credit Solutions | | | ( | | | | | ( | | | |||||||||||||||||||||
Total Republic Processing Group | | | ( | | | | | ( | | | |||||||||||||||||||||
Total | $ | | $ | | $ | ( | $ | | $ | | $ | | $ | | $ | ( | $ | | $ | | |||||||||||
25
Table of Contents
ACLL Roll-forward | |||||||||||||||||||||||||||||||
Six Months Ended June 30, | |||||||||||||||||||||||||||||||
2026 | 2025 | ||||||||||||||||||||||||||||||
Beginning | Charge- | Ending | Beginning | Charge- | Ending | ||||||||||||||||||||||||||
(in thousands) | Balance | Provision | offs | Recoveries | Balance | Balance | Provision | offs | Recoveries | Balance | |||||||||||||||||||||
Traditional Banking: | |||||||||||||||||||||||||||||||
Residential real estate: | |||||||||||||||||||||||||||||||
Owner-occupied | $ | | $ | ( | $ | ( | $ | | $ | | $ | | $ | ( | $ | ( | $ | | $ | | |||||||||||
Nonowner-occupied | | ( | — | — | | | ( | — | — | | |||||||||||||||||||||
Commercial real estate: | |||||||||||||||||||||||||||||||
Owner-occupied | | | — | | | | ( | — | — | | |||||||||||||||||||||
Nonowner-occupied | | | — | — | | | ( | — | | | |||||||||||||||||||||
Multi-Family | | | — | — | | | | — | — | | |||||||||||||||||||||
Total commercial real estate | | | — | | | | ( | — | | | |||||||||||||||||||||
Construction & land development | | ( | — | — | | | | — | — | | |||||||||||||||||||||
Commercial & industrial | | | — | | | | ( | ( | — | | |||||||||||||||||||||
Lease financing receivables | | ( | ( | | | | ( | ( | | | |||||||||||||||||||||
Aircraft | | — | — | — | | | ( | — | — | | |||||||||||||||||||||
Home equity | | | ( | | | | | — | | | |||||||||||||||||||||
Consumer: | |||||||||||||||||||||||||||||||
Credit cards | | ( | ( | | | | ( | ( | | | |||||||||||||||||||||
Overdrafts | | | ( | | | | | ( | | | |||||||||||||||||||||
Automobile loans | — | ( | — | | — | | ( | — | | | |||||||||||||||||||||
Other consumer | | ( | ( | | | | ( | ( | | | |||||||||||||||||||||
Total Traditional Banking | | | ( | | | | ( | ( | | | |||||||||||||||||||||
Warehouse lines of credit | | ( | — | — | | | | — | — | | |||||||||||||||||||||
Total Core Banking | | | ( | | | | | ( | | | |||||||||||||||||||||
Republic Processing Group: | |||||||||||||||||||||||||||||||
Tax Refund Solutions: | |||||||||||||||||||||||||||||||
Refund Advances | | | ( | | — | | | ( | | — | |||||||||||||||||||||
Other TRS commercial & industrial | | | ( | | | | | ( | | — | |||||||||||||||||||||
Republic Credit Solutions | | | ( | | | | | ( | | | |||||||||||||||||||||
Total Republic Processing Group | | | ( | | | | | ( | | | |||||||||||||||||||||
Total | $ | | $ | | $ | ( | $ | | $ | | $ | | $ | | $ | ( | $ | | $ | | |||||||||||
The cumulative loss rates used in estimating the Company’s ACLL as of June 30, 2026 were primarily derived from static pool analyses for each loan pool based on the Company’s loss experience from 2013 through 2026, supplemented by qualitative factor adjustments reflecting current conditions and reasonable and supportable forecasts. The ACLL model incorporates a forecast period for unemployment and CRE vacancy rates.
The ACLL also includes estimated losses for loans evaluated individually, including collateral dependent loans and loans that do not share similar risk characteristics with pooled loans, such as certain loan modifications. During the second quarter of 2025, the Company implemented, as a practical expedient, a minimum loan balance threshold for individually evaluating loans with risk ratings of Special Mention or worse. The adoption of this threshold resulted in a $
26
Table of Contents
Nonperforming Loans and Nonperforming Assets
The following table presents information regarding nonperforming loans, nonperforming assets, and select credit quality ratios:
(dollars in thousands) | | June 30, 2026 | December 31, 2025 | | ||||
Loans on nonaccrual status* | $ | | $ | | ||||
Loans past due 90-days-or-more and still on accrual** |
| |
| | ||||
Total nonperforming loans |
| |
| | ||||
Other real estate owned |
| |
| | ||||
Total nonperforming assets | $ | | $ | | ||||
Credit Quality Ratios - Total Company: | ||||||||
Nonperforming loans to total loans |
| | % |
| | % | ||
Nonperforming assets to total loans (including OREO) |
| |
| | ||||
Nonperforming assets to total assets |
| |
| | ||||
Credit Quality Ratios - Core Bank: | ||||||||
Nonperforming loans to total loans |
| | % |
| | % | ||
Nonperforming assets to total loans (including OREO) |
| |
| | ||||
Nonperforming assets to total assets |
| |
| | ||||
* | Loans on nonaccrual status include collateral-dependent loans. |
** | Loans past due 90-days-or-more and still accruing consist of smaller balance consumer loans. |
The following table presents nonaccrual loans and loans past due 90-days-or-more and still accruing by portfolio segment and class:
Past Due 90-Days-or-More | |||||||||||||
Nonaccrual | and Still Accruing Interest* | ||||||||||||
(in thousands) | | June 30, 2026 | | December 31, 2025 | | | June 30, 2026 | | December 31, 2025 | ||||
Traditional Banking: | |||||||||||||
Residential real estate: | |||||||||||||
Owner-occupied | $ | | $ | | $ | — | $ | — | |||||
Nonowner-occupied |
| |
| |
| — |
| — | |||||
Commercial real estate: |
|
|
|
| |||||||||
Owner-occupied | |
| |
| — |
| — | ||||||
Nonowner-occupied | — |
| — |
| — |
| — | ||||||
Multi-family | | — | — | — | |||||||||
Construction & land development |
| — |
| — |
| — |
| — | |||||
Commercial & industrial |
| |
| |
| — |
| — | |||||
Lease financing receivables |
| |
| |
| — |
| — | |||||
Aircraft | — | — | — | — | |||||||||
Home equity |
| |
| |
| — |
| — | |||||
Consumer: | |||||||||||||
Credit cards |
| — |
| — |
| |
| — | |||||
Overdrafts |
| — |
| — |
| — |
| — | |||||
Automobile loans |
| — |
| — |
| — |
| — | |||||
Other consumer |
| |
| |
| — |
| — | |||||
Total Traditional Banking | | | | — | |||||||||
Warehouse lines of credit |
| — |
| — |
| — |
| — | |||||
Total Core Banking | | | | — | |||||||||
Republic Processing Group: | |||||||||||||
Tax Refund Solutions: | |||||||||||||
Refund Advances | — | — | — | — | |||||||||
Other TRS commercial & industrial |
| — |
| — |
| — |
| — | |||||
Republic Credit Solutions | — | — | | | |||||||||
Total Republic Processing Group | — | — | | | |||||||||
Total | $ | | $ | | $ | | $ | | |||||
* Loans past due 90-days-or-more and still accruing consist of smaller balance consumer loans.
27
Table of Contents
The following tables present nonaccrual loans details by portfolio class:
Three Months Ended | Six Months Ended | ||||||||||||||
As of June 30, 2026 | June 30, 2026 | June 30, 2026 | |||||||||||||
| Nonaccrual | | Nonaccrual | | Total | Interest Income | | Interest Income | |||||||
Loans with | Loans without | Nonaccrual | Recognized | Recognized | |||||||||||
(in thousands) | ACLL | ACLL | Loans | on Nonaccrual Loans* | on Nonaccrual Loans* | ||||||||||
Residential real estate: | |||||||||||||||
Owner-occupied | $ | | $ | | $ | | $ | | $ | | |||||
Nonowner-occupied |
| | | | | | |||||||||
Commercial real estate: |
| ||||||||||||||
Owner-occupied | | — | | | | ||||||||||
Nonowner-occupied | — | — | — | — | — | ||||||||||
Multi-family | — | | | | | ||||||||||
Construction & land development |
| — | — | — | — | — | |||||||||
Commercial & industrial |
| | | | | | |||||||||
Lease financing receivables |
| — | | | — | — | |||||||||
Aircraft | — | — | — | — | — | ||||||||||
Home equity |
| — | | | | | |||||||||
Consumer | — | | | | | ||||||||||
Total | $ | | $ | | $ | | $ | | $ | | |||||
* Includes interest income for loans on nonaccrual as of the beginning of the period that were paid off during the period.
Three Months Ended | Six Months Ended | ||||||||||||||
As of December 31, 2025 | June 30, 2025 | June 30, 2025 | |||||||||||||
| Nonaccrual | | Nonaccrual | | Total | Interest Income | | Interest Income | |||||||
Loans with | Loans without | Nonaccrual | Recognized | Recognized | |||||||||||
(in thousands) | ACLL | ACLL | Loans | on Nonaccrual Loans* | on Nonaccrual Loans* | ||||||||||
Residential real estate: | |||||||||||||||
Owner-occupied | $ | — | $ | | $ | | $ | | $ | | |||||
Nonowner-occupied |
| — | | | | | |||||||||
Commercial real estate: |
| ||||||||||||||
Owner-occupied | | — | | | | ||||||||||
Nonowner-occupied | — | — | — | | | ||||||||||
Multi-family | — | — | — | | | ||||||||||
Construction & land development |
| — | — | — | — | — | |||||||||
Commercial & industrial |
| | — | | | | |||||||||
Lease financing receivables |
| — | | | — | — | |||||||||
Aircraft | — | — | — | — | — | ||||||||||
Home equity |
| — | | | | | |||||||||
Consumer | — | | | | | ||||||||||
Total | $ | | $ | | $ | | $ | | $ | | |||||
* Includes interest income for loans on nonaccrual as of the beginning of the period that were paid off during the period.
Nonaccrual loans and loans past due 90 days or more and still accruing interest include smaller-balance, primarily retail, homogeneous loan portfolios. Nonaccrual loans are generally restored to accrual status when all contractually due principal and interest have been brought current, remain current for
28
Table of Contents
Delinquent Loans
The following tables present the aging of the recorded investment in loans by portfolio segment and class:
| 30 - 59 | | 60 - 89 | | 90 or More | | | | | | | |||||||
Days | Days | Days | Total | Total | ||||||||||||||
June 30, 2026 (dollars in thousands) | Delinquent | Delinquent | Delinquent* | Delinquent** | Current | Total | ||||||||||||
Traditional Banking: | ||||||||||||||||||
Residential real estate: | ||||||||||||||||||
Owner-occupied | $ | | $ | | $ | | $ | | $ | | $ | | ||||||
Nonowner-occupied |
| — |
| |
| — |
| |
| |
| | ||||||
Commercial real estate: |
|
| ||||||||||||||||
Owner-occupied | — | — | — | — | | | ||||||||||||
Nonowner-occupied | — | — | — | — | | | ||||||||||||
Multi-family | — | | — | | | | ||||||||||||
Construction & land development |
| — |
| — |
| — |
| — |
| |
| | ||||||
Commercial & industrial |
| |
| |
| |
| |
| |
| | ||||||
Lease financing receivables |
| |
| |
| |
| |
| |
| | ||||||
Aircraft | — | — | — | — | | | ||||||||||||
Home equity |
| |
| |
| |
| |
| |
| | ||||||
Consumer: | ||||||||||||||||||
Credit cards |
| — |
| — |
| |
| |
| |
| | ||||||
Overdrafts |
| |
| |
| |
| |
| |
| | ||||||
Automobile loans |
| — |
| — |
| — |
| — |
| |
| | ||||||
Other consumer |
| |
| |
| — |
| |
| |
| | ||||||
Total Traditional Banking | | | | | | | ||||||||||||
Warehouse lines of credit |
| — |
| — |
| — |
| — |
| |
| | ||||||
Total Core Banking | | | | | | | ||||||||||||
Republic Processing Group: | ||||||||||||||||||
Tax Refund Solutions: | ||||||||||||||||||
Refund Advances | — |
| — |
| — |
| — |
| — |
| — | |||||||
Other TRS commercial & industrial |
| — |
| — |
| — |
| — |
| |
| | ||||||
Republic Credit Solutions | |
| |
| |
| |
| |
| | |||||||
Total Republic Processing Group | | | | | | | ||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | ||||||
Delinquency ratio*** |
| | % |
| | % |
| | % |
| | % | ||||||
* All loans past due 90-days-or-more, excluding small balance consumer loans, were on nonaccrual status.
** Delinquent status may be determined by either the number of days past due or number of payments past due.
*** Represents total loans 30-days-or-more past due by aging category divided by total loans.
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| 30 - 59 | | 60 - 89 | | 90 or More | | | | | | | |||||||
Days | Days | Days | Total | Total | ||||||||||||||
December 31, 2025 (dollars in thousands) | Delinquent | Delinquent | Delinquent* | Delinquent** | Current | Total | ||||||||||||
Traditional Banking: | ||||||||||||||||||
Residential real estate: | ||||||||||||||||||
Owner-occupied | $ | | $ | | $ | | $ | | $ | | $ | | ||||||
Nonowner-occupied |
| — |
| — |
| — |
| — |
| |
| | ||||||
Commercial real estate: |
|
|
| |||||||||||||||
Owner-occupied | — | — | — | — | | | ||||||||||||
Nonowner-occupied | — | — | — | — | | | ||||||||||||
Multi-family | — | — | — | — | | | ||||||||||||
Construction & land development |
| — |
| — |
| — |
| — |
| |
| | ||||||
Commercial & industrial |
| |
| — |
| |
| |
| |
| | ||||||
Lease financing receivables |
| |
| — |
| |
| |
| |
| | ||||||
Aircraft | — | — | — | — | | | ||||||||||||
Home equity |
| |
| |
| |
| |
| |
| | ||||||
Consumer: | ||||||||||||||||||
Credit cards |
| — |
| — |
| — |
| — |
| |
| | ||||||
Overdrafts |
| |
| |
| |
| |
| |
| | ||||||
Automobile loans |
| — |
| — |
| — |
| — |
| |
| | ||||||
Other consumer |
| |
| |
| — |
| |
| |
| | ||||||
Total Traditional Banking | | | | | | | ||||||||||||
Warehouse lines of credit |
| — |
| — |
| — |
| — |
| |
| | ||||||
Total Core Banking | | | | | | | ||||||||||||
Republic Processing Group: | ||||||||||||||||||
Tax Refund Solutions: | ||||||||||||||||||
Refund Advances | — |
| — |
| — |
| — |
| |
| | |||||||
Other TRS commercial & industrial |
| — |
| — |
| — |
| — |
| |
| | ||||||
Republic Credit Solutions | |
| |
| |
| |
| |
| | |||||||
Total Republic Processing Group | | | | | | | ||||||||||||
Total | $ | | $ | | $ | | $ | | $ | | $ | | ||||||
Delinquency ratio*** |
| | % |
| | % |
| | % |
| | % | ||||||
* All loans past due 90-days-or-more, excluding smaller balance consumer loans, were on nonaccrual status.
** Delinquent status may be determined by either the number of days past due or number of payments past due.
*** Represents total loans 30-days-or-more past due by aging category divided by total loans.
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Table of Contents
Collateral-Dependent Loans
The following table presents the amortized cost basis of collateral-dependent loans by Traditional Banking portfolio class:
June 30, 2026 | December 31, 2025 | |||||||||||
Secured | | Secured | Secured | | Secured | |||||||
by Real | by Personal | by Real | by Personal | |||||||||
(in thousands) | Estate | Property | Estate | Property | ||||||||
Traditional Banking: | ||||||||||||
Residential real estate: | ||||||||||||
Owner-occupied | $ | | $ | — | $ | | $ | — | ||||
Nonowner-occupied |
| |
| — |
| |
| — | ||||
Commercial real estate: |
|
|
|
| ||||||||
Owner-occupied | | — | | — | ||||||||
Nonowner-occupied | — | — | — | — | ||||||||
Multi-family | | — | — | — | ||||||||
Construction & land development |
| — |
| — |
| — |
| — | ||||
Commercial & industrial |
| — |
| — |
| — |
| — | ||||
Lease financing receivables |
| — |
| |
| — |
| | ||||
Aircraft | — |
| — | — |
| | ||||||
Home equity |
| |
| — |
| |
| — | ||||
Consumer | — |
| | — |
| | ||||||
Total Traditional Banking | $ | | $ | | $ | | $ | | ||||
Collateral-Dependent Loans and Loan Modifications
When management determines that a loan is collateral dependent and foreclosure is probable, expected credit losses are measured using the fair value of the collateral as of the reporting date, adjusted for estimated selling costs, when applicable. Collateral-dependent loans are generally secured by real estate or personal property. If the fair value of the collateral, net of estimated selling costs, is insufficient to cover the recorded investment, the loan is charged down to that amount. Estimated selling costs generally range from
In accordance with the Bank’s charge-off policy, all or a portion of a collateral-dependent loan is charged off when the Bank concludes that the full amount of contractual principal and interest is not expected to be collected.
A loan modification occurs when, due to a borrower’s financial difficulties, the Bank grants a concession it would not otherwise consider. Most modifications involve changes to the loan’s original terms, including, depending on the borrower’s circumstances, temporary payment reductions requiring only interest and escrow payments (if applicable), reductions in the contractual interest rate, extensions of the maturity date, or a combination thereof.
The ACLL incorporates an estimate of lifetime expected credit losses using historical loss information. The Company utilizes a static pool loss rate methodology to estimate expected losses for pooled loans. From time to time, the Company modifies loans for borrowers experiencing financial difficulty through principal forgiveness, repayment term extensions, interest rate reductions, or other-than-insignificant payment delays. Because expected credit losses associated with these loans are generally captured within the ACLL methodology, loan modifications typically do not result in an immediate adjustment to the ACLL unless the loan is individually evaluated and the modification affects the specific reserve allocation. If principal forgiveness is granted, the forgiven amount is charged off against the ACLL.
Accruing modified loans are evaluated for nonaccrual classification based on the borrower’s financial condition and demonstrated ability to perform under the modified terms. Loans that are modified while on nonaccrual status generally remain on nonaccrual until sustained performance under the modified terms supports a return to accrual status.
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As of June 30, 2026, and December 31, 2025, collateral dependent loans totaled $
As of June 30, 2026 outstanding collateral dependent loan modifications to borrowers experiencing financial difficulty totaled $
Loan Modifications –2026:
During the second quarter of 2026, the Company modified
During the first quarter of 2026, the Company modified
Loan Modifications –2025:
During the second quarter of 2025, the Company modified
During the fourth quarter of 2025, the Company modified
During the six months ended June 30, 2026 and 2025, there were
Foreclosures
The following table presents the carrying amount of foreclosed RRE and CRE held by the Bank as a result of obtaining physical possession of the underlying collateral.
(in thousands) | June 30, 2026 | December 31, 2025 |
| ||||
Residential real estate |
| $ | — |
| $ | | |
Commercial real estate | | | |||||
Total other real estate owned | $ | |
| $ | | ||
The following table presents the recorded investment in consumer mortgage loans secured by RRE that were in the process of formal foreclosure proceedings in accordance with the requirements of the applicable jurisdictions.
(in thousands) | | June 30, 2026 | | December 31, 2025 | ||
Recorded investment in consumer residential real estate mortgage loans in the process of foreclosure |
| $ | |
| $ | |
Refund Advances
The Company’s TRS segment offered (i) its RA product during the first
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The following table presents information regarding calendar year ERA/RA activity:
Three Months Ended | Six Months Ended | ||||||||||||||||
| June 30, | | June 30, | ||||||||||||||
(dollars in thousands) | | 2026 | 2025 | | 2026 | | 2025 | ||||||||||
ERAs/RAs originated |
| $ | — | $ | — |
| $ | | $ | | |||||||
Net (credit) charge to the Provision for ERAs/RAs |
| ( | ( |
| | | |||||||||||
Provision as a percentage of ERAs/RAs originated | NA | NA | | % | | % | |||||||||||
Net ERA/RA charge-offs |
| $ | | $ | |
| $ | | $ | | |||||||
Net ERA/RA charge-offs to total originations | NA | NA | | % | | % | |||||||||||
5.DEPOSITS
The following table presents the composition of the deposit portfolio by portfolio segment:
(in thousands) | | June 30, 2026 | | December 31, 2025 |
| ||
Core Bank: | |||||||
Demand | $ | | $ | | |||
Money market |
| |
| | |||
Savings |
| |
| | |||
Reciprocal money market |
| |
| | |||
Individual retirement accounts (1) |
| |
| | |||
Time deposits, $250 and over (1) |
| |
| | |||
Other certificates of deposit (1) |
| |
| | |||
Reciprocal time deposits (1) |
| |
| | |||
Wholesale brokered deposits (1) | | | |||||
Total Core Bank interest-bearing deposits |
| |
| | |||
Total Core Bank noninterest-bearing deposits | | | |||||
Total Core Bank deposits | | | |||||
Republic Processing Group: | |||||||
Wholesale brokered deposits (1) | | | |||||
Interest-bearing prepaid card deposits | | | |||||
Money market | | | |||||
Total RPG interest-bearing deposits | | | |||||
Noninterest-bearing prepaid card deposits | | | |||||
Other noninterest-bearing deposits | | | |||||
Total RPG noninterest-bearing deposits | | | |||||
Total RPG deposits | | | |||||
Total deposits | $ | | $ | | |||
| (1) | Represents time deposits. |
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Table of Contents
6.SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
SSUAR consists of short-term excess funds from correspondent banks, repurchase agreements, and overnight liabilities to deposit clients arising from the Bank's treasury management program. While similar to deposits in their transactional nature, these client liabilities are structured as repurchase agreements. Repurchase agreements collateralized by securities are accounted for as financings; accordingly, the underlying securities remain recorded as assets, while the related repurchase obligations are recorded as liabilities. The pledged securities are held by a safekeeping agent under the Bank's control.
As of June 30, 2026 and December 31, 2025, all SSUAR had overnight maturities.
The following table presents information regarding SSUAR:
(dollars in thousands) | | June 30, 2026 | | | December 31, 2025 | | |||
Outstanding balance at end of period | $ | | $ | | |||||
Weighted average interest rate at end of period |
| | % |
| | % | |||
Fair value of securities pledged: | |||||||||
U.S. Treasury securities and U.S. Government agencies | $ | | $ | | |||||
Total securities pledged | $ | | $ | | |||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(dollars in thousands) | 2026 | | 2025 | | | 2026 | | | 2025 | |||||||
Average outstanding balance during the period | $ | |
| $ | | $ | |
| $ | | ||||||
Weighted average interest rate during the period | % | | % | % | | % | ||||||||||
Maximum outstanding at any month end during the period | $ | |
| $ | | $ | |
| $ | | ||||||
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Table of Contents
7.FEDERAL HOME LOAN BANK ADVANCES
The following table presents information related to FHLB advances outstanding:
(in thousands) | | June 30, 2026 | | December 31, 2025 | ||
Overnight advances | $ | — | $ | | ||
Fixed interest rate advances |
| |
| | ||
Total FHLB advances | $ | | $ | | ||
Each FHLB advance is payable at maturity. Fixed-rate advances are generally subject to prepayment penalties if repaid prior to their contractual maturity date.
FHLB advances are collateralized by a blanket pledge of eligible real estate loans. As of June 30, 2026, and December 31, 2025, Republic had available borrowing capacity of $
The following table presents aggregate contractual principal maturities and the weighted-average cost of FHLB advances outstanding:
| | | Weighted |
| ||
Average |
| |||||
Year (dollars in thousands) | Principal | Rate |
| |||
2026 |
| $ | |
| | % |
2027 |
| | | |||
2030 | | — | ||||
2031 |
| |
| — | ||
Total | $ | |
| | % | |
As disclosed in the “Interest Rate Swaps” footnote, the Bank extended $
Due to their nature, the Bank considers average balance information more meaningful than period-end balances for its overnight borrowings from the FHLB.
The following table presents information related to overnight FHLB advances outstanding:
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(dollars in thousands) | | 2026 | 2025 | 2026 | | 2025 | ||||||||||
Average outstanding balance during the period |
| $ | |
| $ | — |
| $ | |
| $ | | ||||
Weighted average interest rate during the period | | % | — | % | | % | | % | ||||||||
Maximum outstanding at any month end during the period |
| $ | |
| $ | — |
| $ | |
| $ | | ||||
The following table presents real estate loans pledged as collateral for advances and letters of credit from the FHLB:
(in thousands) | | June 30, 2026 | | December 31, 2025 |
| ||
First-lien, single family residential real estate | $ | | $ | | |||
Home equity lines of credit |
| |
| | |||
Multi-family commercial real estate |
| |
| | |||
Commercial real estate | | | |||||
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Table of Contents
8.COMMITMENTS AND CONTINGENT LIABILITIES
Commitments to Extend Credit
The Company is party to financial instruments with OBS credit risk in the normal course of business. These financial instruments primarily consist of commitments to extend credit and standby letters of credit. The contractual or notional amounts of these instruments represent the Company’s potential future obligations. The creditworthiness of counterparties is evaluated on a case-by-case basis in accordance with the Company’s credit policies. Depending on the results of the credit evaluation, collateral may be required and can include business assets of commercial borrowers, as well as personal property and real estate of individual borrowers or guarantors.
The Company also extends binding commitments to current and prospective borrowers. Such commitments generally provide for financing during a specified period of time and may be subject to specified terms and conditions. The Company’s risk under these commitments is limited by the contractual provisions of the agreements. For example, the Company may not be obligated to advance funds if the borrower’s financial condition deteriorates or if the borrower fails to comply with applicable covenants or other contractual requirements.
Approved but unfunded loan commitments expose the Company to credit, liquidity, and interest rate risk. Borrowers may draw on available commitments and require funding, while increases in market interest rates above committed rates may adversely affect the profitability of such commitments. However, because a portion of commitments is expected to expire without being drawn, the total contractual amount outstanding does not necessarily represent the Company's future funding obligations.
The following table presents the Company’s lending-related commitments, excluding Mortgage Banking loan commitments:
(in thousands) | | June 30, 2026 | | December 31, 2025 | |||
Unused warehouse lines of credit | $ | | $ | | |||
Unused home equity lines of credit |
| |
| | |||
Unused loan commitments - other |
| |
| | |||
Standby letters of credit |
| |
| | |||
Total commitments | $ | | $ | | |||
Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a borrower to a third party. The credit risk associated with these instruments is substantially the same as that involved in extending loans and other commitments to extend credit. Standby letters of credit also expose the Company to liquidity risk, as funding may be required upon demand by the beneficiary. The Company does not consider this liquidity risk to be material.
The following tables present a roll-forward of the ACLC:
ACLC Roll-forward | |||||||||||||||||||||||||||||||
Three Months Ended June 30, | |||||||||||||||||||||||||||||||
2026 | 2025 | ||||||||||||||||||||||||||||||
Beginning | Charge- | Ending | Beginning | Charge- | Ending | ||||||||||||||||||||||||||
(in thousands) | Balance | Provision | offs | Recoveries | Balance | Balance | Provision | offs | Recoveries | Balance | |||||||||||||||||||||
Unused Loan Commitments | |||||||||||||||||||||||||||||||
Warehouse lines of credit | $ | | $ | | $ | — | $ | — | $ | | $ | | $ | ( | $ | — | $ | — | $ | | |||||||||||
Home equity lines of credit | | | — | — | | | ( | — | — | | |||||||||||||||||||||
Construction lines of credit | | — | — | — | | | ( | — | — | | |||||||||||||||||||||
RCS lines of credit | | | — | — | | | | — | — | | |||||||||||||||||||||
Loan commitments - other | | ( | — | — | | | | — | — | | |||||||||||||||||||||
Total | $ | | $ | | $ | — | $ | — | $ | | $ | | $ | ( | $ | — | $ | — | $ | | |||||||||||
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Table of Contents
ACLC Roll-forward | |||||||||||||||||||||||||||||||
Six Months Ended June 30, | |||||||||||||||||||||||||||||||
2026 | 2025 | ||||||||||||||||||||||||||||||
Beginning | Charge- | Ending | Beginning | Charge- | Ending | ||||||||||||||||||||||||||
(in thousands) | Balance | Provision | offs | Recoveries | Balance | Balance | Provision | offs | Recoveries | Balance | |||||||||||||||||||||
Unused Loan Commitments | |||||||||||||||||||||||||||||||
Warehouse lines of credit | $ | | $ | | $ | — | $ | — | $ | | $ | | $ | | $ | — | $ | — | $ | | |||||||||||
Home equity lines of credit | | | — | — | | | | — | — | | |||||||||||||||||||||
Construction lines of credit | | | — | — | | | | — | — | | |||||||||||||||||||||
RCS lines of credit | | | — | — | | | ( | — | — | | |||||||||||||||||||||
Loan commitments - other | | ( | — | — | | | | — | — | | |||||||||||||||||||||
Total | $ | | $ | | $ | — | $ | — | $ | | $ | | $ | | $ | — | $ | — | $ | | |||||||||||
9.FAIR VALUE
Fair value represents the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date in the principal, or most advantageous, market. The fair value hierarchy prioritizes the inputs used in measuring fair value into the following three levels:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2: Significant other observable inputs, including quoted prices for similar assets or liabilities; quoted prices in markets that are not active; and other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing an asset or liability.
Authoritative accounting guidance requires maximizing the use of observable inputs and minimizing the use of unobservable inputs when measuring fair value. When limited or no observable market data exists, the Company develops estimates based on available information, including the characteristics of the asset or liability, current economic and market conditions, and other relevant factors. Accordingly, fair value estimates are inherently subjective and may not be realized in an actual sale or immediate settlement of the related asset or liability.
The Bank used the following valuation techniques and significant assumptions to estimate the fair value of its financial instruments:
Available-for-sale debt securities: Except for U.S. Treasury securities and the Bank’s TRUP investment, the fair value of AFS debt securities is generally determined using matrix pricing, a valuation technique that relies on the securities' relationships to benchmark securities with observable market prices rather than quoted prices for the specific securities (Level 2 inputs).
The fair value of U.S. Treasury securities is based on quoted market prices in active markets (Level 1 inputs).
As of June 30, 2026 and December 31, 2025, the Company owned
As of June 30, 2026, due to the investment's illiquidity and the limited availability of observable market inputs, the TRUP investment is classified within Level 3 of the fair value hierarchy.
Equity securities with readily determinable fair value: The fair value of the Company’s FHLMC preferred stock is determined based on market prices of similar securities and is classified within Level 2 of the fair value hierarchy.
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Table of Contents
Mortgage loans held for sale, at fair value: The fair value of mortgage loans HFS is based on quoted secondary market prices and is classified within Level 2 of the fair value hierarchy.
Consumer loans held for sale, at fair value: The fair value of consumer loans HFS is based primarily on contractual sales terms and other unobservable inputs and is therefore classified within Level 3 of the fair value hierarchy.
Mortgage banking derivatives: Mortgage banking derivatives consist primarily of mandatory forward sales contracts and interest rate lock commitments. Fair value is determined using market-based pricing obtained from broker-dealers and other observable market inputs. Because the valuation relies principally on observable inputs, these instruments are classified within Level 2 of the fair value hierarchy.
Interest rate swap agreements: Interest rate swaps are recorded at fair value on a recurring basis. The Company values its interest rate swaps using a third-party valuation service and classifies such valuations as Level 2. Valuations of these interest rate swaps are also received from the relevant dealer counterparty and validated against the Company’s calculations. The Company has considered counterparty credit risk in the valuation of its interest rate swap assets and has considered its own credit risk in the valuation of its interest rate swap liabilities.
Discussion of assets measured at fair value on a non-recurring basis follows:
Collateral-dependent loans: Collateral-dependent loans generally reflect partial charge-downs to fair value, which is typically determined using recent real estate appraisals or BPOs. These valuations may utilize one or more approaches, including comparable sales and income-based methodologies. Significant adjustments may be applied by the independent valuation specialists to account for differences between the subject property and comparable market data. As a result, the valuation of real estate collateral generally relies on significant unobservable inputs and is classified within Level 3 of the fair value hierarchy.
Non-real estate collateral is generally valued using appraisals, net book values reported in borrower financial statements, aging reports, or other relevant information. These values may be adjusted based on management's knowledge of the borrower, changes in market conditions since the valuation date, and other judgmental factors. Accordingly, valuations of non-real estate collateral are generally classified within Level 3 of the fair value hierarchy.
Collateral-dependent loans are evaluated quarterly for impairment, and valuation adjustments are recorded as necessary.
Other real estate owned: Assets acquired through, or in lieu of, foreclosure are initially recorded at fair value less estimated costs to sell, which establishes a new cost basis. Thereafter, OREO is carried at the lower of cost or fair value less estimated costs to sell. Fair value is generally based on recent real estate appraisals or BPOs, which may utilize one or more valuation approaches, including comparable sales and income-based methodologies. Because these valuations often incorporate significant adjustments and unobservable inputs, OREO is generally classified within Level 3 of the fair value hierarchy.
Appraisals for collateral-dependent loans, bank premises, and OREO are performed by qualified independent appraisers whose credentials and licenses are reviewed and approved by the Bank. Upon receipt, appraisals are reviewed by members of the Bank’s CCAD to evaluate the reasonableness of the assumptions, methodologies, and resulting values, including comparisons to available market data and industry information. In addition, the Bank performs periodic back-testing by comparing actual sales proceeds to the most recent appraised values of similar collateral. These analyses are performed by collateral class, such as RRE and CRE, and may result in additional valuation adjustments for similar collateral.
Mortgage servicing rights: MSRs are evaluated for impairment at least quarterly by comparing the fair value of each tranche to its carrying amount. If the carrying amount of a tranche exceeds its fair value, impairment is recognized, and the tranche is carried at fair value. If the fair value of a tranche subsequently exceeds its carrying amount, previously recognized impairment is reversed, and the tranche's carrying amount is adjusted in accordance with the applicable valuation methodology. Fair value is determined using a valuation model that incorporates assumptions market participants would use in estimating future net servicing income. Because these assumptions are generally observable or can be corroborated by market data, MSRs are classified within Level 2 of the fair value hierarchy.
Transfers between levels of the fair value hierarchy are recognized as of the end of the reporting period. During the first quarter of 2026,
38
Table of Contents
The following tables summarize assets and liabilities measured at fair value on a recurring basis, including financial instruments for which the Bank has elected the fair value option.
Fair Value Measurements at | ||||||||||||
June 30, 2026 Using: | ||||||||||||
| Quoted Prices in | | Significant | | | | | |||||
Active Markets | Other | Significant | ||||||||||
for Identical | Observable | Unobservable | Total | |||||||||
Assets | Inputs | Inputs | Fair | |||||||||
(in thousands) | (Level 1) | (Level 2) | (Level 3) | Value | ||||||||
Financial assets: | ||||||||||||
Available-for-sale debt securities: | ||||||||||||
U.S. Treasury securities and U.S. Government agencies | $ | | $ | | $ | — | $ | | ||||
Mortgage-backed securities - residential |
| — |
| |
| — |
| | ||||
Collateralized mortgage obligations |
| — |
| |
| — |
| | ||||
Trust preferred security |
| — |
| — |
| |
| | ||||
Total available-for-sale debt securities | $ | | $ | | $ | | $ | | ||||
Equity securities with a readily determinable fair value: | ||||||||||||
Freddie Mac preferred stock | $ | — | $ | | $ | — | $ | | ||||
Total equity securities with a readily determinable fair value | $ | — | $ | | $ | — | $ | | ||||
Mortgage loans held for sale | $ | — | $ | | $ | — | $ | | ||||
Consumer loans held for sale | — | — | | | ||||||||
Rate lock commitments |
| — |
| |
| — |
| | ||||
Interest rate swap agreements - Bank clients and institutional swap dealer | — | | — | | ||||||||
Financial liabilities: | ||||||||||||
Mandatory forward contracts | $ | — | $ | | $ | — | $ | | ||||
Interest rate swap agreements - Bank clients and institutional swap dealer | — | | — | | ||||||||
Interest rate swap agreements on FHLB advances | — | | — | | ||||||||
Fair Value Measurements at | ||||||||||||
December 31, 2025 Using: | ||||||||||||
| Quoted Prices in | | Significant | | | | | |||||
Active Markets | Other | Significant | ||||||||||
for Identical | Observable | Unobservable | Total | |||||||||
Assets | Inputs | Inputs | Fair | |||||||||
(in thousands) | (Level 1) | (Level 2) | (Level 3) | Value | ||||||||
Financial assets: | ||||||||||||
Available-for-sale debt securities: | ||||||||||||
U.S. Treasury securities and U.S. Government agencies | $ | | $ | | $ | — | $ | | ||||
Private label mortgage-backed security |
| — |
| — |
| |
| | ||||
Mortgage-backed securities - residential |
| — |
| |
| — |
| | ||||
Collateralized mortgage obligations |
| — |
| |
| — |
| | ||||
Corporate bonds | — | | — | | ||||||||
Trust preferred security |
| — |
| — |
| |
| | ||||
Total available-for-sale debt securities | $ | | $ | | $ | | $ | | ||||
Equity securities with a readily determinable fair value: | ||||||||||||
Freddie Mac preferred stock | $ | — | $ | | $ | — | $ | | ||||
Total equity securities with a readily determinable fair value | $ | — | $ | | $ | — | $ | | ||||
Mortgage loans held for sale | $ | — | $ | | $ | — | $ | | ||||
Consumer loans held for sale | — | — | | | ||||||||
Rate lock commitments |
| — |
| |
| — |
| | ||||
Interest rate swap agreements - Bank clients and institutional swap dealer | — | | — | | ||||||||
Financial liabilities: | ||||||||||||
Mandatory forward contracts | $ | — | $ | | $ | — | $ | | ||||
Interest rate swap agreements - Bank clients and institutional swap dealer | — | | — | | ||||||||
Interest rate swap agreements on FHLB advances | — | | — |
| | |||||||
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Trust Preferred Security
The following table presents a rollforward of the Company’s TRUP investment, which is measured at fair value on a recurring basis and classified within Level 3 of the fair value category.
| Three Months Ended | | Six Months Ended | ||||||||||
June 30, | June 30, | ||||||||||||
(dollars in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||
Balance, beginning of period | $ | | $ | | $ | | $ | | |||||
Total gains or losses included in earnings: | |||||||||||||
Discount accretion | | | | | |||||||||
Net change in unrealized gain (loss) |
| |
| ( |
| |
| | |||||
Balance, end of period | $ | | $ | | $ | | $ | | |||||
The fair value of the Company’s TRUP investment is based on the most recent bid price available for this instrument, as provided by a third-party broker.
Mortgage Loans Held for Sale
The following table presents the aggregate fair value, contractual balance, and unrealized gain on mortgage loans HFS carried at fair value:
(in thousands) | | June 30, 2026 | | December 31, 2025 |
| ||
Aggregate fair value | $ | | $ | | |||
Contractual balance |
| |
| | |||
Unrealized gain |
| |
| | |||
The following table presents the total net gains recognized in earnings from changes in the fair value of mortgage loans HFS carried at fair value:
| Three Months Ended | Six Months Ended | | ||||||||||
June 30, | June 30, | ||||||||||||
(dollars in thousands) | 2026 | | 2025 | | 2026 | | 2025 | ||||||
Interest income | $ | | $ | | $ | | $ | | |||||
Change in fair value |
| |
| |
| |
| ( | |||||
Total included in earnings | $ | | $ | | $ | | $ | | |||||
Consumer Loans Held for Sale
RCS carries loans originated through its installment loan program at fair value. Interest income is recognized in accordance with the contractual terms of the loans and the Bank's accounting policies.
40
Table of Contents
The significant unobservable inputs used in estimating the fair value of the Bank's short-term installment loans are net contractual premiums and the percentage of loans sold at a discount. Changes in these inputs could have a significant impact on the resulting fair value measurement.
The following table presents quantitative information about recurring Level 3 fair value measurement inputs for installment loans:
| Fair | | Valuation | | | | |||
June 30, 2026 (dollars in thousands) | Value | Technique | Unobservable Inputs | Rate | |||||
Consumer loans held for sale | $ | |
| Contract Terms |
| (1) Net Premium |
| | |
| (2) Discounted Sales |
| | ||||||
| Fair | | Valuation | | | | |||
December 31, 2025 (dollars in thousands) | Value | Technique | Unobservable Inputs | Rate | |||||
Consumer loans held for sale | $ | |
| Contract Terms |
| (1) Net Premium |
| | |
| (2) Discounted Sales |
| | ||||||
The following table presents the aggregate fair value, contractual balance, and unrealized gain on consumer loans HFS carried at fair value:
(in thousands) | | June 30, 2026 | | December 31, 2025 | |||
Aggregate fair value | $ | | $ | | |||
Contractual balance |
| |
| | |||
Unrealized loss |
| ( |
| ( | |||
The following table presents the total net gains recognized in earnings from changes in the fair value of consumer loans HFS carried at fair value:
| Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | ||||||||||||
(dollars in thousands) | 2026 | | 2025 | | 2026 | | 2025 | ||||||
Interest income | $ | | $ | | $ | | $ | | |||||
Change in fair value |
| ( |
| ( |
| ( |
| ( | |||||
Total included in earnings | $ | | $ | | $ | | $ | | |||||
41
Table of Contents
The following tables presents assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy used to determine such fair values:
Fair Value Measurements at | ||||||||||||
June 30, 2026 Using: | ||||||||||||
| Quoted Prices in | | Significant | | | | ||||||
Active Markets | Other | Significant | ||||||||||
for Identical | Observable | Unobservable | Total | |||||||||
Assets | Inputs | Inputs | Fair | |||||||||
(in thousands) | (Level 1) | (Level 2) | (Level 3) | Value | ||||||||
Collateral-dependent loans: | ||||||||||||
Residential real estate: | ||||||||||||
Owner-occupied | $ | — | $ | — | $ | | $ | | ||||
Commercial real estate: |
| |||||||||||
Multi-Family | — |
| — |
| |
| | |||||
Total collateral-dependent loans | $ | — | $ | — | $ | | $ | | ||||
Other real estate owned: | ||||||||||||
Commercial real estate: | ||||||||||||
Nonowner-occupied | $ | — | $ | — | $ | | $ | | ||||
Total other real estate owned | $ | — | $ | — | $ | | $ | | ||||
Fair Value Measurements at | ||||||||||||
December 31, 2025 Using: | ||||||||||||
| Quoted Prices in | | Significant | | | | ||||||
Active Markets | Other | Significant | ||||||||||
for Identical | Observable | Unobservable | Total | |||||||||
Assets | Inputs | Inputs | Fair | |||||||||
(in thousands) | (Level 1) | (Level 2) | (Level 3) | Value | ||||||||
Collateral-dependent loans: | ||||||||||||
Residential real estate: | ||||||||||||
Owner-occupied | $ | — | $ | — | $ | | $ | | ||||
Nonowner-occupied | — | — | | | ||||||||
Commercial real estate: |
| |||||||||||
Owner-occupied | — | — | | | ||||||||
Total collateral-dependent loans | $ | — | $ | — | $ | | $ | | ||||
Other real estate owned: | ||||||||||||
Residential real estate | ||||||||||||
Owner-occupied | $ | — | $ | — | $ | | $ | | ||||
Commercial real estate: | ||||||||||||
Nonowner-occupied | — | — | | $ | | |||||||
Total other real estate owned | $ | — | $ | — | $ | | $ | | ||||
42
Table of Contents
The following tables present quantitative information regarding significant unobservable inputs used in Level 3 fair value measurements for financial instruments measured at fair value on a nonrecurring basis:
| | | | | | | Range | ||
Fair | Valuation | Unobservable | (Weighted | ||||||
June 30, 2026 (dollars in thousands) | Value | Technique | Inputs | Average) | |||||
Collateral-dependent loans - residential real estate owner-occupied | $ | |
| Appraisal |
| Appraisal discounts |
| ||
Collateral-dependent loans - Multi-Family | $ | |
| Appraisal |
| Appraisal discounts |
| ||
Other real estate owned - commercial real estate nonowner-occupied | $ | |
| Appraisal |
| Appraisal discounts |
| ||
| | | | | | | Range | ||
Fair | Valuation | Unobservable | (Weighted | ||||||
December 31, 2025 (dollars in thousands) | Value | Technique | Inputs | Average) | |||||
Collateral-dependent loans - residential real estate owner-occupied | $ | |
| Appraisal |
| Appraisal discounts |
| ||
Collateral-dependent loans - residential real estate nonowner occupied | $ | |
| Appraisal |
| Appraisal discounts |
| ||
Collateral-dependent loans - commercial real estate owner-occupied | $ | |
| Appraisal |
| Appraisal discounts |
| ||
Other real estate owned - residential real estate | $ | |
| Appraisal |
| Appraisal discounts |
| ||
Other real estate owned - commercial real estate nonowner-occupied | $ | |
| Appraisal |
| Appraisal discounts |
| ||
Collateral Dependent Loans
Collateral-dependent loans are generally measured based on the fair value of the underlying collateral, less estimated costs to sell, when applicable. The Bank typically obtains new or updated appraisals or BPOs as part of its initial impairment assessment and subsequently evaluates the need for updated valuations based on market conditions and other relevant factors. The Bank may adjust collateral values for estimated selling costs, delinquent real estate taxes, and, when appropriate, deterioration in the physical condition of the property, adverse economic factors, or changes in market conditions. If a current appraisal or BPO is not available, management may apply a discount to an existing valuation to estimate current fair value. To the extent the estimated fair value of the collateral, net of selling costs, is less than the carrying value of the loan, a charge-off is recorded. Collateral-dependent loans are classified within Level 3 of the fair value hierarchy.
During the three and six month periods ended June 30, 2026 and 2025, Provision recorded related to collateral-dependent loans was not material.
43
Table of Contents
Other Real Estate Owned
OREO is carried at the lower of cost or fair value less estimated costs to sell. Fair value is generally based on external appraisals or BPOs. Because these valuations incorporate significant unobservable inputs, OREO is classified within Level 3 of the fair value hierarchy.
The following tables presents information related to OREO, including carrying amounts and valuation write-downs:
| |||||||
(in thousands) | June 30, 2026 | | December 31, 2025 | | |||
Other real estate owned carried at fair value | $ | | $ | | |||
| Three Months Ended | Six Months Ended | | ||||||||||
June 30, | June 30, | ||||||||||||
(in thousands) | 2026 | | 2025 | | 2026 | | 2025 | ||||||
Other real estate owned write-downs during the period | $ | | $ | | $ | | $ | | |||||
Financial Instruments
The following tables presents the carrying amounts and estimated exit-price fair values of the Company's financial instruments:
Fair Value Measurements at | |||||||||||||||
June 30, 2026: | |||||||||||||||
| | | | | | | | Total | |||||||
Carrying | Fair | ||||||||||||||
(in thousands) | Value | Level 1 | Level 2 | Level 3 | Value | ||||||||||
Assets: | |||||||||||||||
Cash and cash equivalents | $ | | $ | | $ | — | $ | — | $ | | |||||
Available-for-sale debt securities |
| |
| |
| |
| |
| | |||||
Held-to-maturity debt securities |
| |
| — |
| |
| — |
| | |||||
Equity securities with a readily determinable fair value | | — | | — | | ||||||||||
Mortgage loans held for sale, at fair value |
| |
| — |
| |
| — |
| | |||||
Consumer loans held for sale, at fair value | | — | — | | | ||||||||||
Consumer loans held for sale, at the lower of cost or fair value | | — | — | | | ||||||||||
Loans, net |
| |
| — |
| — |
| |
| | |||||
Federal Home Loan Bank stock |
| |
| — |
| — |
| — |
| NA | |||||
Accrued interest receivable |
| |
| — |
| |
| — |
| | |||||
Mortgage servicing rights | | — | | — | | ||||||||||
Rate lock commitments | | — | | — | | ||||||||||
Interest rate swap agreements - Bank clients and institutional swap dealer | | — | | — | | ||||||||||
Liabilities: | |||||||||||||||
Noninterest-bearing deposits | $ | | $ | — | $ | | $ | — | $ | | |||||
Transaction deposits |
| |
| — |
| |
| — |
| | |||||
Time deposits |
| |
| — |
| |
| — |
| | |||||
Securities sold under agreements to repurchase and other short-term borrowings |
| |
| — |
| |
| — |
| | |||||
Federal Home Loan Bank advances |
| |
| — |
| |
| — |
| | |||||
Accrued interest payable |
| |
| — |
| |
| — |
| | |||||
Mandatory forward contracts | | — | | — | | ||||||||||
Interest rate swap agreements - Bank clients and institutional swap dealer | | — | | — | | ||||||||||
Interest rate swap agreements on FHLB advances | | — | | — | | ||||||||||
44
Table of Contents
Fair Value Measurements at | |||||||||||||||
December 31, 2025: | |||||||||||||||
| | | | | | | | | Total | ||||||
Carrying | Fair | ||||||||||||||
(in thousands) | Value | Level 1 | Level 2 | Level 3 | Value | ||||||||||
Assets: | |||||||||||||||
Cash and cash equivalents | $ | | $ | | $ | — | $ | — | $ | | |||||
Available-for-sale debt securities |
| |
| |
| |
| |
| | |||||
Held-to-maturity debt securities |
| |
| — |
| |
| — |
| | |||||
Equity securities with a readily determinable fair value | | — | | — | | ||||||||||
Mortgage loans held for sale, at fair value |
| |
| — |
| |
| — |
| | |||||
Consumer loans held for sale, at fair value | | — | — | | | ||||||||||
Consumer loans held for sale, at the lower of cost or fair value | | — | — | | | ||||||||||
Other loans held for sale, at the lower of cost or fair value | | — | — | | | ||||||||||
Loans, net |
| |
| — |
| — |
| |
| | |||||
Federal Home Loan Bank stock |
| |
| — |
| — |
| — |
| NA | |||||
Accrued interest receivable |
| |
| — |
| |
| — |
| | |||||
Mortgage servicing rights | | — | | — | | ||||||||||
Rate lock commitments | | — | | — | | ||||||||||
Interest rate swap agreements - Bank clients and institutional swap dealer | | — | | — | | ||||||||||
Liabilities: | |||||||||||||||
Noninterest-bearing deposits | $ | | $ | — | $ | | $ | — | $ | | |||||
Transaction deposits |
| |
| — |
| |
| — |
| | |||||
Time deposits |
| |
| — |
| |
| — |
| | |||||
Securities sold under agreements to repurchase and other short-term borrowings |
| |
| — |
| |
| — |
| | |||||
Federal Home Loan Bank advances |
| |
| — |
| |
| — |
| | |||||
Accrued interest payable |
| |
| — |
| |
| — |
| | |||||
Mandatory forward contracts | | — | | — | | ||||||||||
Interest rate swap agreements - Bank clients and institutional swap dealer | | — | | — | | ||||||||||
Interest rate swap agreements on FHLB advances | | — | | — | | ||||||||||
45
Table of Contents
10.MORTGAGE BANKING ACTIVITIES
Mortgage banking activities primarily consist of the origination, sale, and servicing of RRE mortgage loans.
The following table presents activity in mortgage loans HFS carried at fair value:
| Three Months Ended | Six Months Ended | | ||||||||||
June 30, | June 30, | ||||||||||||
(in thousands) | 2026 | | 2025 | | 2026 | | 2025 | ||||||
Balance, beginning of period | $ | | $ | | $ | | $ | | |||||
Origination of mortgage loans held for sale |
| |
| |
| |
| | |||||
Transferred from held for investment to held for sale | — | — | — | — | |||||||||
Proceeds from the sale of mortgage loans held for sale |
| ( |
| ( |
| ( |
| ( | |||||
Net gain on mortgage loans held for sale |
| |
| |
| |
| | |||||
Balance, end of period | $ | | $ | | $ | | $ | | |||||
The following table presents the components of mortgage banking income:
Three Months Ended | | Six Months Ended | ||||||||||
June 30, | June 30, | |||||||||||
(in thousands) | 2026 | | 2025 | 2026 | | 2025 | ||||||
Net gain realized on sale of mortgage loans held for sale | $ | | $ | | $ | | $ | | ||||
Net change in fair value recognized on loans held for sale |
| |
| |
| |
| ( | ||||
Net change in fair value recognized on rate lock loan commitments |
| |
| |
| |
| | ||||
Net change in fair value recognized on forward contracts |
| ( |
| ( |
| ( |
| ( | ||||
Net gain recognized |
| |
| |
| |
| | ||||
Loan servicing income |
| |
| |
| |
| | ||||
Amortization of mortgage servicing rights |
| ( |
| ( |
| ( |
| ( | ||||
Net servicing income recognized |
| |
| |
| |
| | ||||
Total mortgage banking income | $ | | $ | | $ | | $ | | ||||
The following table presents activity for capitalized MSRs:
| Three Months Ended | Six Months Ended | ||||||||||
June 30, | June 30, | |||||||||||
(in thousands) | 2026 | | 2025 | | 2026 | | 2025 | |||||
Balance, beginning of period | $ | | $ | | $ | | $ | | ||||
Additions |
| |
| |
| |
| | ||||
Amortized to expense |
| ( |
| ( |
| ( |
| ( | ||||
Balance, end of period | $ | | $ | | $ | | $ | | ||||
There was
46
Table of Contents
The following table presents estimated fair value information for capitalized MSRs:
(dollars in thousands) | | June 30, 2026 | | | December 31, 2025 |
| |||
Fair value of mortgage servicing rights portfolio | $ | | $ | | |||||
Monthly weighted average prepayment rate of unpaid principal balance* |
| | % |
| | % | |||
Discount rate | | % | | % | |||||
Weighted average foreclosure rate | | % | | % | |||||
Weighted average life in years |
|
| |||||||
* | Rates are applied to individual tranches with similar characteristics. |
Mortgage banking derivatives used in the ordinary course of business primarily consist of mandatory forward sales contracts and interest rate lock commitments. Mandatory forward sales contracts represent commitments to deliver mortgage loans at specified prices and dates and are used to manage interest rate risk associated with interest rate lock commitments and mortgage loans HFS. Interest rate lock commitments represent commitments to originate mortgage loans at specified interest rates. These derivative instruments have underlying variables, primarily interest rates, and are designed to manage exposure to market risk. Substantially all of these instruments expire within
Mandatory forward sales contracts also expose the Bank to counterparty credit risk, as counterparties may fail to perform under the terms of the agreements. If a counterparty is unable to fulfill its obligations, the Bank could incur additional costs to replace the contracts at then-current market rates. To mitigate this risk, the Bank limits its counterparties to financial institutions approved by management and the Board. The Bank does not anticipate nonperformance by any of its counterparties and, therefore, does not expect to incur material losses related to counterparty default.
The Bank is exposed to interest rate risk associated with mortgage loans HFS and interest rate lock commitments. Changes in market interest rates may cause the fair value of these instruments to increase or decrease. To manage this risk, the Bank enters into derivative instruments, including mandatory forward sales contracts and, from time to time, forward purchases of TBA securities. The fair value of these derivatives also fluctuates with changes in market interest rates, and such changes are expected to substantially, although not completely, offset changes in the fair value of mortgage loans HFS and interest rate lock commitments.
The objective of these risk management activities is to reduce the Bank's exposure to losses resulting from changes in market interest rates. The net impact of the derivative instruments on earnings depends on a variety of factors, including interest rate volatility, the volume of interest rate lock commitments that ultimately fund, the Bank's ability to fulfill forward contracts prior to expiration, and the time required to close and sell mortgage loans.
The following table presents the notional amounts and fair values of mortgage loans HFS and mortgage banking derivatives:
June 30, 2026 | | December 31, 2025 | |||||||||||
Notional | Notional | ||||||||||||
(in thousands) | Amount | | Fair Value | Amount | | Fair Value | |||||||
Included in Mortgage loans held for sale: | |||||||||||||
Mortgage loans held for sale, at fair value | $ | | $ | | $ | | $ | | |||||
Included in other assets: | |||||||||||||
Rate lock loan commitments | $ | | $ | | $ | | $ | | |||||
Mandatory forward contracts | — | — | — | — | |||||||||
Included in other liabilities: | |||||||||||||
Mandatory forward contracts | $ | | $ | | $ | | $ | | |||||
47
Table of Contents
11.INTEREST RATE SWAPS
Interest rate swap derivatives are recognized at fair value in other assets or other liabilities. The accounting for changes in fair value depends on whether the derivative has been designated and qualifies for hedge accounting. For derivatives designated as cash flow hedges, the effective portion of unrealized gains and losses is recorded in OCI. AOCI are subsequently reclassified into earnings in the same periods during which the hedged transactions affect earnings. If a hedge relationship ceases to qualify for hedge accounting, subsequent changes in fair value are recognized in current-period earnings. Derivatives not designated as hedging instruments are accounted for as economic hedges, with changes in fair value recognized in current-period earnings.
Interest Rate Swaps Used as Cash Flow Hedges
During 2024, the Bank entered into
The following tables present information related to interest rate swaps designated as cash flow hedges:
June 30, 2026 | December 31, 2025 | |||||||||||||
Notional | Notional | |||||||||||||
(in thousands) | | Bank Position | | Amount | | Fair Value | | Amount | | Fair Value | ||||
Interest rate swaps on FHLB advances - Other liabilities and accrued interest payable |
| Pay fixed/receive variable |
| $ | |
| $ | ( |
| $ | |
| $ | ( |
June 30, 2026 | December 31, 2025 | |||||||||||||||||||||||
Unrealized | Unrealized | |||||||||||||||||||||||
Notional | Pay | Receive | Assets / | Gain (Loss) | Assets / | Gain (Loss) | ||||||||||||||||||
(dollars in thousands) | | Amount | | Rate | | Rate | | Term | Bank Position | | (Liabilities) | | in AOCI | | (Liabilities) | | in AOCI | |||||||
Interest rate swaps on FHLB advances - Other liabilities and accrued interest payable |
| $ | |
| | % |
| 1M SOFR |
| 5/2024 - 6/2029 | Pay fixed/receive variable |
| $ | |
| $ | ( |
| $ | |
| $ | ( | |
The following table presents the total interest expense recognized on interest rate swaps designated as cash flow hedges:
| Three Months Ended | Six Months Ended | | ||||||||||
June 30, | June 30, | ||||||||||||
(in thousands) | 2026 | | 2025 | | 2026 | | 2025 | ||||||
Total interest (benefit) expense on FHLB swap transactions | $ | | $ | ( | $ | | $ | ( | |||||
The following table presents the net gains (losses) recognized in OCI and earnings related to interest rate swaps designated as cash flow hedges:
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
(in thousands) | 2026 | | 2025 | | 2026 | | 2025 | ||||||
Losses recognized in OCI on derivative (effective portion) | $ | |
| $ | ( |
| $ | |
| $ | ( | ||
Losses reclassified from OCI on derivative (effective portion) | |
| ( |
| |
| ( | ||||||
Gains (losses) recognized in income on derivative (ineffective portion) | — |
| — |
| — |
| — | ||||||
48
Table of Contents
Non-hedge Interest Rate Swaps
The Bank enters into interest rate swap agreements to accommodate client transactions and meet customer financing needs. To mitigate the interest rate risk associated with these transactions, the Bank simultaneously enters into offsetting swap agreements with third-party counterparties. Although these instruments are derivatives, they are not designated as hedging instruments for accounting purposes. Accordingly, changes in fair value are recognized in current-period earnings.
Interest rate swap agreements expose the Bank to counterparty credit risk, which is the risk that a counterparty will fail to perform in accordance with the terms of the contract. When the fair value of a derivative contract is positive, the Bank is exposed to credit risk because the counterparty or client may be unable to satisfy its contractual obligations. Conversely, when the fair value of a derivative contract is negative, the Bank owes the counterparty or client and, therefore, is not exposed to credit risk on that position.
The following table presents a summary of the Bank's interest rate swaps related to client transactions:
| June 30, 2026 | December 31, 2025 | |||||||||||||
Notional | Notional | ||||||||||||||
(in thousands) | | Bank Position | Amount | | Fair Value | | Amount | | Fair Value | ||||||
Interest rate swaps with Bank clients - Other assets and accrued interest receivable |
| Pay variable/receive fixed |
| $ | | $ | |
| $ | | $ | | |||
Interest rate swaps with Bank clients - Other liabilities and accrued interest payable |
| Pay variable/receive fixed |
| |
| ( |
| |
| ( | |||||
Interest rate swaps with Bank clients - Total |
| Pay variable/receive fixed |
| $ | |
| $ | ( |
| $ | |
| $ | | |
Offsetting interest rate swaps with institutional swap dealer - Other assets and accrued interest receivable | Pay fixed/receive variable | | | | | ||||||||||
Offsetting interest rate swaps with institutional swap dealer - Other liabilities and accrued interest payable | Pay fixed/receive variable | | ( | | ( | ||||||||||
Offsetting interest rate swaps with institutional swap dealer - Total | Pay fixed/receive variable | $ | |
| $ | |
| $ | |
| $ | ( | |||
Total |
| $ | | $ | — |
| $ | | $ | — | |||||
The Bank and its counterparties are required to pledge cash or securities as collateral when either party's net exposure to the other exceeds $
49
Table of Contents
12.EARNINGS PER SHARE
The Company calculates EPS using the two-class method, under which earnings available to common shareholders are allocated between Class A Common Stock and Class B Common Stock based on dividends declared (or accumulated) and participation rights in undistributed earnings. The difference in EPS between the two classes results from the
The following table presents a reconciliation of the combined Class A and Class B Common Stock numerators and denominators used in computing basic and diluted EPS:
Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
(in thousands, except per share data) | | 2026 | | 2025 | | 2026 | | 2025 | ||||
Net income | $ | | $ | | $ | | $ | | ||||
Dividends declared on Common Stock: | ||||||||||||
Class A Shares | ( | ( | ( | ( | ||||||||
Class B Shares | ( | ( | ( | ( | ||||||||
Undistributed net income for basic earnings per share | | | | | ||||||||
Weighted average potential dividends on Class A Shares upon exercise of dilutive options | ( | ( | ( | ( | ||||||||
Undistributed net income for diluted earnings per share | $ | | $ | | $ | | $ | | ||||
Weighted average shares outstanding: | ||||||||||||
Class A Shares |
| |
| |
| |
| | ||||
Class B Shares | | | | | ||||||||
Effect of dilutive securities on Class A Shares outstanding |
| |
| |
| |
| | ||||
Weighted average shares outstanding including dilutive securities |
| |
| |
| |
| | ||||
Basic earnings per share: | ||||||||||||
Class A Common Stock: | ||||||||||||
Per share dividends distributed | $ | | $ | | $ | | $ | | ||||
Undistributed earnings per share* | | | | | ||||||||
Total basic earnings per share - Class A Common Stock | $ | | $ | | $ | | $ | | ||||
Class B Common Stock: | ||||||||||||
Per share dividends distributed | $ | | $ | | $ | | $ | | ||||
Undistributed earnings per share* | | | | | ||||||||
Total basic earnings per share - Class B Common Stock | $ | | $ | | $ | | $ | | ||||
Diluted earnings per share: | ||||||||||||
Class A Common Stock: | ||||||||||||
Per share dividends distributed | $ | | $ | | $ | | $ | | ||||
Undistributed earnings per share* | | | | | ||||||||
Total diluted earnings per share - Class A Common Stock | $ | | $ | | $ | | $ | | ||||
Class B Common Stock: | ||||||||||||
Per share dividends distributed | $ | | $ | | $ | | $ | | ||||
Undistributed earnings per share* | | | | | ||||||||
Total diluted earnings per share - Class B Common Stock | $ | | $ | | $ | | $ | | ||||
* | To arrive at undistributed EPS, undistributed net income is first prorated between Class A and Class B Common Shares, with Class A Common Shares receiving a |
The following table presents stock options excluded from the computation of diluted EPS because their effect would have been antidilutive:
Three Months Ended | Six Months Ended | |||||||
June 30, | June 30, | |||||||
2026 | | 2025 | | 2026 | | 2025 | ||
Antidilutive stock options | |
| |
| | | ||
Average antidilutive stock options | |
| |
| | | ||
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Table of Contents
13.OTHER COMPREHENSIVE INCOME
The following table presents the components of OCI and the related tax effects:
| Three Months Ended | | Six Months Ended | | ||||||||||
June 30, | June 30, | |||||||||||||
(in thousands) | 2026 | | 2025 | | 2026 | | 2025 | |||||||
Available-for-Sale Debt Securities: | ||||||||||||||
Unrealized gain (loss) on AFS debt securities | $ | ( | $ | | $ | ( | $ | | ||||||
Income tax expense related to items of other comprehensive income |
| |
| ( |
| |
| ( | ||||||
Net of tax |
| ( |
| | $ | ( | $ | | ||||||
Derivatives: | ||||||||||||||
Change in fair value of derivatives |
| |
| ( |
| |
| ( | ||||||
Reclassification amount for net derivative (gains) losses realized in income |
| |
| ( |
| |
| ( | ||||||
Net losses |
| |
| ( |
| |
| ( | ||||||
Tax effect |
| ( |
| |
| ( |
| | ||||||
Net of tax |
| |
| ( |
| |
| ( | ||||||
Total other comprehensive income components, net of tax | $ | ( | $ | | $ | ( | $ | | ||||||
The following table summarizes AOCI balances, net of tax:
| | 2026 | | ||||||
(in thousands) | December 31, 2025 | Change | June 30, 2026 | ||||||
Unrealized gain (loss) on AFS debt securities | $ | ( | $ | ( | $ | ( | |||
Unrealized gain (loss) on derivatives |
| ( |
| |
| ( | |||
Total unrealized gain (loss) | $ | ( | $ | ( | $ | ( | |||
| | 2025 | | ||||||
(in thousands) | December 31, 2024 | Change | June 30, 2025 | ||||||
Unrealized gain (loss) on AFS debt securities | $ | ( | $ | | $ | ( | |||
Unrealized gain (loss) on derivatives | ( |
| ( |
| ( | ||||
Total unrealized gain (loss) | $ | ( | $ | | $ | ( | |||
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14.REVENUE FROM CONTRACTS WITH CUSTOMERS
The following tables present net revenue and net revenue concentration by reportable segment:
Three Months Ended June 30, 2026 |
| |||||||||||||||||||||||||||||
Core Banking | Republic Processing Group |
| ||||||||||||||||||||||||||||
Total | Tax | Republic | Republic | |||||||||||||||||||||||||||
Traditional | Warehouse | Core | Refund | Payment | Credit | Total | Total |
| ||||||||||||||||||||||
(dollars in thousands) | Banking | Lending | Banking | Solutions | Solutions | Solutions | RPG | Company |
| |||||||||||||||||||||
Net interest income (1) | $ | | $ | | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||||||
Noninterest income: | ||||||||||||||||||||||||||||||
Service charges on deposit accounts | | | | — | | — | | | ||||||||||||||||||||||
Net refund transfer fees |
| — |
| — |
| — |
| |
| — |
| — |
| |
| | ||||||||||||||
Mortgage banking income (1) |
| |
| — |
| |
| — |
| — |
| — |
| — |
| | ||||||||||||||
Interchange fee income | | — | | | — | — | | | ||||||||||||||||||||||
Program fees (1) | — | — | — | — | | | | | ||||||||||||||||||||||
Increase in cash surrender value of BOLI (1) | | — | | — | — | — | — | | ||||||||||||||||||||||
Net losses on other real estate owned | ( | — | ( | — | — | — | — | ( | ||||||||||||||||||||||
Other |
| |
| — |
| |
| |
| — |
| — |
| |
| | ||||||||||||||
Total noninterest income |
| |
| |
| |
| |
| |
| |
| |
| | ||||||||||||||
Total net revenue | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||
Net-revenue concentration (2) | | % | | % | | % | | % | | % | | % | | % | | % | ||||||||||||||
Three Months Ended June 30, 2025 |
| |||||||||||||||||||||||||||||
Core Banking | Republic Processing Group |
| ||||||||||||||||||||||||||||
Total | Tax | Republic | Republic | |||||||||||||||||||||||||||
Traditional | Warehouse | Core | Refund | Payment | Credit | Total | Total |
| ||||||||||||||||||||||
(dollars in thousands) | Banking | Lending | Banking | Solutions | Solutions | Solutions | RPG | Company |
| |||||||||||||||||||||
Net interest income (1) | $ | | $ | | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||||||
Noninterest income: | ||||||||||||||||||||||||||||||
Service charges on deposit accounts | | | | — | — | — | — | | ||||||||||||||||||||||
Net refund transfer fees |
| — |
| — |
| — |
| |
| — |
| — |
| |
| | ||||||||||||||
Mortgage banking income (1) |
| |
| — |
| |
| — |
| — |
| — |
| — |
| | ||||||||||||||
Interchange fee income | | — | | | | — | | | ||||||||||||||||||||||
Program fees (1) | — | — | — | — | | | | | ||||||||||||||||||||||
Increase in cash surrender value of BOLI (1) | | — | | — | — | — | — | | ||||||||||||||||||||||
Net losses on other real estate owned | ( | — | ( | — | — | — | — | ( | ||||||||||||||||||||||
Other |
| |
| — |
| |
| |
| — |
| — |
| |
| | ||||||||||||||
Total noninterest income |
| |
| |
| |
| |
| |
| |
| |
| | ||||||||||||||
Total net revenue | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||
Net-revenue concentration (2) | | % | | % | | % | | % | | % | | % | | % | | % | ||||||||||||||
| (1) | Revenue component is not subject to ASC 606. |
| (2) | Net revenue represents net interest income plus total noninterest income. Net-revenue concentration equals segment-level net revenue divided by total Company net revenue. |
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Table of Contents
Six Months Ended June 30, 2026 |
| |||||||||||||||||||||||||||||
Core Banking | Republic Processing Group |
| ||||||||||||||||||||||||||||
Total | Tax | Republic | Republic | |||||||||||||||||||||||||||
Traditional | Warehouse | Core | Refund | Payment | Credit | Total | Total |
| ||||||||||||||||||||||
(dollars in thousands) | Banking | Lending | Banking | Solutions | Solutions | Solutions | RPG | Company |
| |||||||||||||||||||||
Net interest income (1) | $ | | $ | | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||||||
Noninterest income: | ||||||||||||||||||||||||||||||
Service charges on deposit accounts | | | | — | | | | | ||||||||||||||||||||||
Net refund transfer fees |
| — |
| — |
| — |
| |
| — |
| — |
| |
| | ||||||||||||||
Mortgage banking income (1) |
| |
| — |
| |
| — |
| — |
| — |
| — |
| | ||||||||||||||
Interchange fee income | | — | | | | — | | | ||||||||||||||||||||||
Program fees (1) | — | — | — | — | | | | | ||||||||||||||||||||||
Increase in cash surrender value of BOLI (1) | | — | | — | — | — | — | | ||||||||||||||||||||||
Net losses on other real estate owned | ( | — | ( | — | — | — | — | ( | ||||||||||||||||||||||
Gain on sale of Republic Bank Finance loans and leases | | — | | — | — | — | — | | ||||||||||||||||||||||
Other |
| |
| |
| |
| |
| — |
| — |
| |
| | ||||||||||||||
Total noninterest income |
| |
| |
| |
| |
| |
| |
| |
| | ||||||||||||||
Total net revenue | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||
Net-revenue concentration (2) | | % | | % | | % | | % | | % | | % | | % | | % | ||||||||||||||
Six Months Ended June 30, 2025 |
| |||||||||||||||||||||||||||||
Core Banking | Republic Processing Group |
| ||||||||||||||||||||||||||||
Total | Tax | Republic | Republic | |||||||||||||||||||||||||||
Traditional | Warehouse | Core | Refund | Payment | Credit | Total | Total |
| ||||||||||||||||||||||
(dollars in thousands) | Banking | Lending | Banking | Solutions | Solutions | Solutions | RPG | Company |
| |||||||||||||||||||||
Net interest income (1) | $ | | $ | | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||||||
Noninterest income: | ||||||||||||||||||||||||||||||
Service charges on deposit accounts | | | | — | — | | | | ||||||||||||||||||||||
Net refund transfer fees |
| — |
| — |
| — |
| |
| — |
| — |
| |
| | ||||||||||||||
Mortgage banking income (1) |
| |
| — |
| |
| — |
| — |
| — |
| — |
| | ||||||||||||||
Interchange fee income | | — | | | | — | | | ||||||||||||||||||||||
Program fees (1) | — | — | — | — | | | | | ||||||||||||||||||||||
Increase in cash surrender value of BOLI (1) | | — | | — | — | — | — | | ||||||||||||||||||||||
Net losses on other real estate owned | ( | — | ( | — | — | — | — | ( | ||||||||||||||||||||||
Gain on sale of Visa Class B-1 shares (1) | | — | | — | — | — | — | | ||||||||||||||||||||||
Other |
| |
| — |
| |
| |
| — |
| — |
| |
| | ||||||||||||||
Total noninterest income |
| |
| |
| |
| |
| |
| |
| |
| | ||||||||||||||
Total net revenue | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||
Net-revenue concentration (2) | | % | | % | | % | | % | | % | | % | | % | | % | ||||||||||||||
| (1) | Revenue component is not subject to ASC 606. |
| (2) | Net revenue represents net interest income plus total noninterest income. Net-revenue concentration equals segment-level net revenue divided by total Company net revenue. |
53
Table of Contents
The following describes the Company's significant revenue streams within the scope of ASC 606:
Service charges on deposit accounts – The Company earns revenue from account-based and transaction-based services provided to retail and commercial deposit customers. Contracts for these services are generally governed by deposit agreements that disclose applicable fees. Revenue from transaction-based services is recognized when, or as, the related service is performed. Revenue from account-based services is recognized either at a point in time or over the period the service is provided, generally within one month. Examples of deposit service charges include per-item fees, stop-payment fees, paper statement fees, check-cashing fees, low-balance fees, check upcharge fees, and analysis fees.
Net Refund Transfer fees – An RT is a fee-based product offered by the Bank through third-party tax preparers located throughout the U.S., as well as tax-preparation software providers (collectively, the “Tax Providers”), with the Bank acting as an independent contractor of the Tax Providers. An RT allows a taxpayer to pay any applicable tax preparation and filing related fees directly from his federal or state government tax refund, with the remainder of the tax refund disbursed directly to the taxpayer. RT fees and all applicable tax preparation, transmitter, audit, and any other taxpayer authorized amounts are deducted from the tax refund by either the Bank or the Bank’s service provider and automatically forwarded to the appropriate party as authorized by the taxpayer. RT fees generally receive first priority when applying fees against the taxpayer’s refund, with the Bank’s share of RT fees generally superior to the claims of other third-party service providers, including the Tax Providers. The remainder of the refund is disbursed to the taxpayer by a Bank check, direct deposit to the taxpayer’s personal bank account, or loaded to a prepaid card.
The Company presents RT revenue net of any amounts shared with the Tax Providers. The Bank’s share of RT revenue is generally based on the obligations undertaken by the Tax Provider for each individual RT program, with more obligations generally corresponding to higher RT revenue share. The significant majority of net RT revenue is recognized and obligations under RT contracts fulfilled by the Bank during the first half of each year. Incremental expenses associated with the fulfillment of RT contracts are generally expensed during the first half of each year.
Interchange fee income – As an issuing bank, the Company earns interchange fee income on debit and credit card transactions made by its cardholders. Interchange fees are paid by merchants, through payment network intermediaries, for transaction processing, settlement services, and the assumption of certain transaction-related risks. Interchange fee income is recognized upon completion of the related card transaction. Reward costs provided to cardholders under the Company's rewards programs are accrued as qualifying transactions occur and are presented as a reduction of interchange fee income within noninterest income.
Net gains/(losses) on other real estate – The Company routinely sells OREO acquired through foreclosure. Net gains (losses) on OREO reflect gains or losses recognized upon disposition of OREO properties, as well as valuation adjustments recorded to reflect declines in the fair value of OREO HFS.
Other noninterest income – Other noninterest income consists primarily of fees generated from various customer service activities that are within the scope of ASC 606, however, these revenue streams are not separately disclosed as they are not material, individually or in the aggregate.
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Table of Contents
15. SEGMENT INFORMATION
Reportable segments are determined based on the products and services offered and the level of information provided to the CODM. The CODM uses this information to review the performance of various components of the business, including banking centers and business units, which are aggregated when their operating performance, products and services, and clients are similar. The Company’s Executive Chair and CEO serves as the Company’s CODM. Income before income tax expense is the measure of segment profit or loss regularly reviewed by the CODM and used to allocate resources and evaluate performance.
As of June 30, 2026, the Company was divided into
The nature of each segment’s operations and the primary drivers of net revenues by reportable segment are described below:
Reportable Segment: | Nature of Operations: | Primary Drivers of Net Revenue: | ||
Core Banking: | ||||
Traditional Banking | Provides traditional banking products to clients in its market footprint via its banking center network and to clients outside of its market footprint primarily via its digital delivery channels. | Net interest income | ||
Warehouse Lending | Provides short-term, revolving credit facilities to mortgage bankers across the U.S. | Net interest income | ||
Republic Processing Group: | ||||
Tax Refund Solutions | Offers tax-related credit products and facilitates the receipt and payment of federal and state tax refunds through Refund Transfer products. TRS products are primarily provided to clients outside of the Bank’s market footprint. | Net interest income and Net refund transfer fees | ||
Republic Payment Solutions | Offers general-purpose reloadable cards. RPS products are primarily provided to clients outside of the Bank’s market footprint. | Net interest income and Program fees | ||
Republic Credit Solutions | Offers consumer credit products. RCS products are primarily provided to clients outside of the Bank’s market footprint, with a substantial portion of RCS clients considered subprime or near-prime borrowers. | Net interest income and Program fees |
The accounting policies used for Republic’s reportable segments are consistent with those described in the summary of significant accounting policies. Segment performance is evaluated based on operating income before income taxes. Goodwill is allocated to the Traditional Banking segment. Income taxes are generally allocated based on income before income tax expense unless specific segment allocations can be reasonably determined.
Transactions among reportable segments are recorded at carrying value. Net interest income is reflected within each applicable business segment based on the underlying financial instruments assigned to that segment and the impact of the Company’s internal FTP applied to each instrument. FTP is allocated from Traditional Banking to each segment based on the assumed terms of the underlying financial instruments within that segment and applicable market interest rates corresponding to those assumed terms.
55
Table of Contents
The following tables present segment information for the three and six month periods ended June 30, 2026 and 2025:
Three Months Ended June 30, 2026 |
| |||||||||||||||||||||||||||||
Core Banking | Republic Processing Group |
| ||||||||||||||||||||||||||||
Total | Tax | Republic | Republic | |||||||||||||||||||||||||||
Traditional | Warehouse | Core | Refund | Payment | Credit | Total | Total |
| ||||||||||||||||||||||
(dollars in thousands) | Banking | Lending | Banking | Solutions | Solutions | Solutions | RPG | Company |
| |||||||||||||||||||||
Net interest income | $ | | $ | | | $ | | $ | | $ | | $ | | $ | | $ | | |||||||||||||
Provision for expected credit loss expense |
| ( |
| ( |
| ( |
| ( |
| — |
| |
| |
| | ||||||||||||||
Net refund transfer fees |
| — |
| — |
| — |
| |
| — |
| — |
| |
| | ||||||||||||||
Mortgage banking income |
| |
| — |
| |
| — |
| — |
| — |
| — |
| | ||||||||||||||
Program fees | — | — | — | — | | | | | ||||||||||||||||||||||
Other noninterest income (1) |
| |
| |
| |
| |
| |
| — |
| |
| | ||||||||||||||
Total noninterest income |
| |
| |
| |
| |
| |
| |
| |
| | ||||||||||||||
Salaries and employee benefits | | | | | | | | | ||||||||||||||||||||||
Technology, equipment, and communication | | | | | | | | | ||||||||||||||||||||||
Occupancy | | | | | | | | | ||||||||||||||||||||||
Marketing and development | | — | | | — | | | | ||||||||||||||||||||||
Other noninterest expense (2) | | | | | | | | | ||||||||||||||||||||||
Total noninterest expense |
| |
| |
| |
| |
| |
| |
| |
| | ||||||||||||||
Income (loss) before income tax expense |
| |
| |
| |
| |
| |
| |
| |
| | ||||||||||||||
Income tax expense (benefit) | | | | | | | | | ||||||||||||||||||||||
Net income (loss) | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||
Period-end assets | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||
Period-end loans | $ | | $ | | | $ | | $ | — | $ | | $ | | $ | | |||||||||||||||
Period-end deposits | $ | | $ | | | $ | | $ | | $ | | $ | | $ | | |||||||||||||||
Net interest margin |
| | % |
| | % |
| | % |
| NM |
| NM |
| NM |
| NM |
| | % | ||||||||||
Net-revenue concentration* | | % | | % | | % | | % | | % | | % | | % | | % | ||||||||||||||
Three Months Ended June 30, 2025 |
| |||||||||||||||||||||||||||||
Core Banking | Republic Processing Group |
| ||||||||||||||||||||||||||||
| | | | Total | | | Tax | Republic | Republic | | |
| ||||||||||||||||||
Traditional | Warehouse | Core | Refund | Payment | Credit | Total | Total |
| ||||||||||||||||||||||
(dollars in thousands) | Banking | Lending | Banking | Solutions | Solutions | Solutions | RPG | Company |
| |||||||||||||||||||||
Net interest income | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||
Provision for expected credit loss expense |
| |
| |
| |
| ( |
| — |
| |
| |
| | ||||||||||||||
Net refund transfer fees |
| — |
| — |
| — |
| |
| — |
| — |
| |
| | ||||||||||||||
Mortgage banking income |
| |
| — |
| |
| — |
| — |
| — |
| — |
| | ||||||||||||||
Program fees | — | — | — | — | | | | | ||||||||||||||||||||||
Other noninterest income (1) |
| |
| |
| |
| |
| |
| — |
| |
| | ||||||||||||||
Total noninterest income |
| |
| |
| |
| |
| |
| |
| |
| | ||||||||||||||
Salaries and employee benefits | | | | | | | | | ||||||||||||||||||||||
Technology, equipment, and communication | | | | | | | | | ||||||||||||||||||||||
Occupancy | | | | | | | | | ||||||||||||||||||||||
Marketing and development | | — | | | — | ( | | | ||||||||||||||||||||||
Core conversion and related contract consulting fees | | — | | — | — | — | — | | ||||||||||||||||||||||
Other noninterest expense (2) | | | | | | | | | ||||||||||||||||||||||
Total noninterest expense |
| |
| |
| |
| |
| |
| |
| |
| | ||||||||||||||
Income before income tax expense |
| |
| |
| |
| |
| |
| |
| |
| | ||||||||||||||
Income tax expense |
| |
| |
| |
| |
| |
| |
| |
| | ||||||||||||||
Net income | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||
Period-end assets | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||
Period-end loans | $ | | $ | | $ | | $ | | $ | — | $ | | $ | | $ | | ||||||||||||||
Period-end deposits | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||
Net interest margin |
| | % |
| | % |
| | % |
| NM |
| NM | % |
| NM |
| NM |
| | % | |||||||||
Net-revenue concentration* | | % | | % | | % | | % | | % | | % | | % | | % | ||||||||||||||
* Net revenue represents net interest income plus total noninterest income. Net-revenue concentration equals segment-level net revenue divided by total Company net revenue.
(1) Other noninterest income includes service charges on deposit accounts, interchange fee income, increase in cash surrender value of BOLI, net losses on OREO and other noninterest income.
(2) Other noninterest expense includes FDIC insurance expense, interchange related expense, legal and professional fees, and other noninterest expense.
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Table of Contents
Six Months Ended June 30, 2026 |
| |||||||||||||||||||||||||||||
Core Banking | Republic Processing Group |
| ||||||||||||||||||||||||||||
| | | | Total | | | Tax | Republic | Republic | | |
| ||||||||||||||||||
Traditional | Warehouse | Core | Refund | Payment | Credit | Total | Total |
| ||||||||||||||||||||||
(dollars in thousands) | Banking | Lending | Banking | Solutions | Solutions | Solutions | RPG | Company |
| |||||||||||||||||||||
Net interest income | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||
Provision for expected credit loss expense |
| |
| ( |
| |
| |
| — |
| |
| |
| | ||||||||||||||
Net refund transfer fees |
| — |
| — |
| — |
| |
| — |
| — |
| |
| | ||||||||||||||
Mortgage banking income |
| |
| — |
| |
| — |
| — |
| — |
| — |
| | ||||||||||||||
Program fees | — | — | — | — | | | | | ||||||||||||||||||||||
Gain on sale of Republic Bank Finance loans and leases | | — | | — | — | — | — | | ||||||||||||||||||||||
Other noninterest income (1) |
| |
| |
| |
| |
| |
| |
| |
| | ||||||||||||||
Total noninterest income |
| |
| |
| |
| |
| |
| |
| |
| | ||||||||||||||
Salaries and employee benefits | | | | | | | | | ||||||||||||||||||||||
Technology, equipment, and communication | | | | | | | | | ||||||||||||||||||||||
Occupancy | | | | | | | | | ||||||||||||||||||||||
Marketing and development | | — | | | — | | | | ||||||||||||||||||||||
FHLB advances early termination penalties | | — | | — | — | — | — | | ||||||||||||||||||||||
Other noninterest expense (2) | | | | | | | | | ||||||||||||||||||||||
Total noninterest expense |
| |
| |
| |
| |
| |
| |
| |
| | ||||||||||||||
Income (loss) before income tax expense |
| |
| |
| |
| |
| |
| |
| |
| | ||||||||||||||
Income tax expense (benefit) | | | | | | | | | ||||||||||||||||||||||
Net income (loss) | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||
Period-end assets | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||
Period-end loans | $ | | $ | | $ | | $ | | $ | — | $ | | $ | | $ | | ||||||||||||||
Period-end deposits | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||
Net interest margin |
| | % |
| | % |
| | % |
| NM |
| NM |
| NM |
| NM |
| | % | ||||||||||
Net-revenue concentration* | | % | | % | | % | | % | | % | | % | | % | | % | ||||||||||||||
Six Months Ended June 30, 2025 |
| |||||||||||||||||||||||||||||
Core Banking | Republic Processing Group |
| ||||||||||||||||||||||||||||
| | | | Total | | | Tax | Republic | Republic | | |
| ||||||||||||||||||
Traditional | Warehouse | Core | Refund | Payment | Credit | Total | Total |
| ||||||||||||||||||||||
(dollars in thousands) | Banking | Lending | Banking | Solutions | Solutions | Solutions | RPG | Company |
| |||||||||||||||||||||
Net interest income | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||
Provision for expected credit loss expense |
| ( |
| |
| |
| |
| — |
| |
| |
| | ||||||||||||||
Net refund transfer fees |
| — |
| — |
| — |
| |
| — |
| — |
| |
| | ||||||||||||||
Mortgage banking income |
| |
| — |
| |
| — |
| — |
| — |
| — |
| | ||||||||||||||
Program fees | — | — | — | — | | | | | ||||||||||||||||||||||
Gain on sale of Visa Class B-1 shares (1) | | — | | — | — | — | — | | ||||||||||||||||||||||
Other noninterest income (1) |
| |
| |
| |
| |
| |
| |
| |
| | ||||||||||||||
Total noninterest income |
| |
| |
| |
| |
| |
| |
| |
| | ||||||||||||||
Salaries and employee benefits | | | | | | | | | ||||||||||||||||||||||
Technology, equipment, and communication | | | | | | | | | ||||||||||||||||||||||
Occupancy | | | | | | | | | ||||||||||||||||||||||
Marketing and development | | — | | | — | | | | ||||||||||||||||||||||
Core conversion and related contract consulting fees | | — | | — | — | — | — | | ||||||||||||||||||||||
Other noninterest expense (2) | | | | | | | | | ||||||||||||||||||||||
Total noninterest expense |
| |
| |
| |
| |
| |
| |
| |
| | ||||||||||||||
Income before income tax expense |
| |
| |
| |
| |
| |
| |
| |
| | ||||||||||||||
Income tax expense |
| |
| |
| |
| |
| |
| |
| |
| | ||||||||||||||
Net income | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||
Period-end assets | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||
Period-end loans | $ | | $ | | $ | | $ | | $ | — | $ | | $ | | $ | | ||||||||||||||
Period-end deposits | $ | | $ | | $ | | $ | | $ | | $ | | $ | | $ | | ||||||||||||||
Net interest margin |
| | % |
| | % |
| | % |
| NM |
| NM | % |
| NM |
| NM |
| | % | |||||||||
Net-revenue concentration* | | % | | % | | % | | % | | % | | % | | % | | % | ||||||||||||||
* Net revenue represents net interest income plus total noninterest income. Net-revenue concentration equals segment-level net revenue divided by total Company net revenue.
(1) Other noninterest income includes service charges on deposit accounts, interchange fee income, increase in cash surrender value of BOLI, net losses on OREO and other noninterest income.
(2) Other noninterest expense includes FDIC insurance expense, interchange related expense, legal and professional fees, and other noninterest expense.
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16.LOW-INCOME HOUSING TAX CREDIT INVESTMENTS
The Company is a limited partner in several low-income housing partnerships that invest in qualified affordable housing projects. The Company expects to realize substantially all of the benefits from these investments through the tax credits generated by the underlying projects. These investments are included in other assets on the Consolidated Balance Sheets, while any unfunded commitments are included in other liabilities. The investments are amortized as a component of income tax expense.
The following table summarizes information related to the Company’s qualified low-income housing tax credit investments related and obligations:
(in thousands) | | June 30, 2026 | | December 31, 2025 | |||||||||
Unfunded | Unfunded | ||||||||||||
Investment | Accounting Method | Investments | Obligations (2) | Investments | Obligations (1) | ||||||||
Low-income housing tax credit - Gross | Proportional amortization | $ | | $ | | $ | | $ | | ||||
Life-to-date amortization | ( | NA | ( | NA | |||||||||
Low-income housing tax credit - Net | $ | | $ | | $ | | $ | | |||||
| (1) | All obligations will be paid by the Company by December 31, 2039. |
| (2) | All obligations will be paid by the Company by December 31, 2040. |
The following table summarizes amortization expense and tax credits recognized in income tax expense for the Company’s qualified low-income housing investments:
| Three Months Ended June 30, | | Six Months Ended June 30, | ||||||||||
(in thousands) | 2026 | 2025 | 2026 | 2025 | |||||||||
| $ | | $ | | $ | | |||||||
Tax credits recognized | ( | ( | ( | ( | |||||||||
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The consolidated financial statements included in this report include the accounts of Republic Bancorp, Inc. and its wholly owned subsidiary, Republic Bank & Trust Company. As used in this report, the terms “Republic,” the “Company,” “we,” “our,” and “us” refer to Republic Bancorp, Inc. and, where the context requires, Republic Bancorp, Inc. and its subsidiary. The term the “Bank” refers to the Company’s subsidiary bank, Republic Bank & Trust Company, as well as its wholly owned subsidiary, RBT Insurance Agency LLC. All significant intercompany balances and transactions are eliminated in consolidation.
Republic is an FHC headquartered in Louisville, Kentucky, which is the most populous city in Kentucky. The Bank is a Kentucky-based, state-chartered non-member financial institution that provides both traditional and non-traditional banking products and services through five reportable segments using a multitude of delivery channels. While the Bank operates primarily in its geographical market footprint where it has physical locations, its non-brick-and-mortar delivery channels allow it to reach clients across the U.S.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Republic should be read in conjunction with Part I Item 1 “Financial Statements.”
FORWARD-LOOKING STATEMENTS
This Form 10-Q (this “report”) contains statements relating to future results of Republic Bancorp, Inc. that are considered “forward-looking” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The forward-looking statements are principally, but not exclusively, contained in this section of the report and Part I Item 1 “Financial Statements.”
Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements to differ materially from those expressed or implied in such statements. These statements are often, but not always, identified by words or phrases such as “anticipate,” “believe,” “can,” “conclude,” “continue,” “could,” “estimate,” “expect,” “forecast,” “foresee,” “goal,” “intend,” “may,” “might,” “outlook,” “possible,” “plan,” “predict,” “project,” “potential,” “seek,” “should,” “target,” “will,” “will likely,” “would,” or similar expressions. Forward-looking statements are not historical facts; rather, they are based on current expectations, estimates, and projections about the Company’s industry, management’s beliefs, and certain assumptions made by management—many of which are inherently uncertain and beyond management’s control.
Forward-looking statements detail management’s expectations regarding the future and are based on information known to management only as of the date the statements are made and management undertakes no obligation to update forward-looking statements to reflect events or circumstances that occur after the date forward-looking statements are made, except as required by applicable law.
There is no assurance that the following list of risks and uncertainties is complete. However, risks and uncertainties that could cause actual results to differ materially from those expressed in forward-looking statements include:
Financial, Economic, and Market Risks
| ● | Litigation and regulatory outcomes, including liabilities, costs, expenses, settlements, judgments, or adverse decisions in litigation or regulatory proceedings. |
| ● | Interest rate fluctuations and U.S. Treasury yield curve shifts, which may affect the Company’s net interest income, NIM, mortgage banking operations, warehouse lending operations and overall interest rate risk profile. |
| ● | Magnitude and frequency of changes to the FFTR implemented by the FOMC. |
| ● | Changes in fiscal, monetary, tax, or regulatory policies, including federal and/or statutory tax rates, regulatory rules or standards, which may impact the Company’s operations and compliance requirements. |
| ● | Changes in ASUs, including the introduction of new ASUs that may affect financial reporting and disclosures. |
| ● | Economic and political conditions, including inflation, recession, geopolitical developments, risk of further government shutdowns, and U.S government efforts to control related trends, which could disrupt financial markets, consumer confidence, or spending behaviors. |
| ● | Market volatility and capital market disruptions, including liquidity pressures and pricing shifts that may affect investment securities, funding sources, and investor sentiment. |
| ● | Disruption of the U.S. and global financial system, including volatility in the capital and bond markets, inflationary pressures, tariffs, threats to the FRB’s independence and potential global economic downturns. |
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| ● | Changes in investor sentiment or behavior, which may affect the Company’s stock price, funding costs, and strategic flexibility. |
| ● | Changes in consumer/business spending or savings behavior, which may impact loan demand, deposit levels, and overall economic activity. |
Credit and Liquidity Risks
| ● | Ability to effectively manage capital and liquidity, particularly during periods of economic stress or market disruption. |
| ● | Credit quality deterioration, including changes in customer and counterparty creditworthiness, the ACLL, the ACLC, charge-offs, or impairments in investment securities, goodwill, MSR’s, or DTA’s. |
| ● | Accuracy of assumptions and estimates, including those used in establishing the ACLL, ACLC, and other financial models. |
| ● | Model risk, including reliance on complex financial models for CECL, fair value, and stress testing, and the potential for material error or miscalibration. |
Operational and Strategic Execution Risks
| ● | Competitive product and pricing pressures across the Company’s five reportable segments, which may impact volume, market share, margins, and profitability. |
| ● | Projections of financial performance, including incorrect assumptions by management of future financial performance regarding revenue, expenses, cost saving opportunities, capital expenditures, EPS, dividends, and capital structure, which may differ materially from actual results. |
| ● | Operational changes and integration risk, including: |
| o | Financial and operational impact thresholds that trigger enhanced governance reviews; |
| o | Integration challenges from acquired institutions, new systems and related savings realization; |
| o | AI, particularly generative AI, adoption risks including performance failures, bias, or reliance on third-party AI vendors, and more effective adoption by industry competitors; |
| o | Third-party/vendor dependencies, including contractual, data security, and operational integrity risks; and |
| o | Cross-departmental impact, which introduces complexity and coordination risk, potentially requiring multiple governance body reviews. |
| ● | Dependence on key contracts and partners, including: |
| o | Nonrenewal of major contracts (e.g., with marketer-servicers in TRS); |
| o | Ability to qualify for or realize tax-credit incentives including future R&D federal tax credits; |
| o | Achievement of cost savings from system implementations; and |
| o | Replacement of lost revenue from expiring or terminated arrangements. |
| ● | ERA/RA and RT volume realization risk, including the ability of Tax Providers to successfully market and deliver expected product volumes. |
| ● | The ability of RPS marketer-servicers to establish and maintain average deposit balances in line with Company expectations. |
| ● | The ability of RPS marketer-servicers to meet minimum contractual balance thresholds necessary to qualify for revenue sharing payments. |
Technology, Cybersecurity, and Compliance Risks
| ● | Technology and cybersecurity risk, including internal control deficiencies, system failures, cyberattacks, data breaches, business continuity issues, and third-party service disruptions. |
| ● | Ability to maintain the security of financial, accounting, technology, data processing, and operational systems, including resilience against unauthorized access or system failures. |
| ● | Ability to withstand disruptions caused by failures of third-party systems or vendors. |
| ● | Effectiveness of the Company’s risk management and governance framework, including internal control environment, disclosure controls, Anti-Money Laundering/Office of Foreign Assets Control compliance, third-party risk management and Board and audit committee of the Board oversight. |
| ● | Data privacy and regulatory compliance risk, including evolving federal and state privacy laws (such as Gramm-Leach-Bliley Act, California Consumer Privacy Act, California Privacy Rights and Enforcement Act) and potential for regulatory penalties or reputational harm. |
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Environmental, Social, and Geopolitical Risks
| ● | Operational disruptions from natural disasters, pandemics, climate-related physical risks, and sustainability-related reputation or regulatory concerns. |
| ● | Exposure to climate-related transition risks, including regulatory shifts, carbon pricing, and potential stranded asset exposures. |
| ● | Geopolitical and supply chain risk, including trade tensions, regional conflicts, and disruptions to vendor or operational continuity. |
Other risks and uncertainties reported from time to time in the Company’s reports with the SEC, including Part 1 Item 1A “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
ACCOUNTING STANDARDS UPDATES
For disclosure regarding the impact to the Company’s financial statements of ASUs, see the Footnote titled, “Basis of Presentation and Summary of Significant Accounting Policies” of Part I Item 1 “Financial Statements.”
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Republic’s consolidated financial statements and accompanying notes have been prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ from those estimates.
A summary of the Company's significant accounting policies is set forth in Part II “Item 8. Financial Statements and Supplementary Data” of its Annual Report on Form 10-K for the year ended December 31, 2025.
Management continually evaluates the accounting policies and estimates used in preparing the consolidated financial statements. Estimates and assumptions are based on historical experience, accounting and regulatory guidance, and information obtained from independent third parties, when applicable. Actual results may differ from those estimates.
Critical accounting policies are those that management believes are most important to the portrayal of the Company's financial condition and results of operations and require the use of difficult, subjective, or complex judgments. In determining whether an accounting policy is critical, management considers several factors, including the significance of the estimates to the financial statements, the degree of judgment involved, the availability of observable or independently verifiable information, the sensitivity of the estimates to changes in economic conditions, and the extent to which alternative accounting methods may be applied under GAAP. Management has discussed its critical accounting policies and the process used to identify them with the Audit Committee.
Management believes the Company’s most critical accounting estimate relates to the ACLL and the related Provision. Estimating the ACLL requires significant judgment regarding historical loss experience, current conditions, qualitative factors, and reasonable and supportable economic forecasts. Accordingly, changes in assumptions, economic conditions, or portfolio characteristics could materially affect the ACLL and the Provision.
As of June 30, 2026, the Bank maintained an ACLL for expected credit losses inherent in the loan portfolio, including overdrawn deposit accounts. Management evaluates the adequacy of the ACLL on a monthly basis and reviews the ACLL with both the Audit Committee and Board quarterly.
The Company estimates the ACLL using a static-pool CECL methodology that analyzes historical loan pools over their expected lives to derive loss rates, which are adjusted for current conditions and reasonable and supportable forecasts before being applied to the outstanding balances of the respective loan pools. Due to its historical correlation with the Company's net charge-off experience, the U.S. unemployment rate serves as the primary economic forecast variable. CRE and C&I vacancy rates are also considered as secondary forecast variables. Following the one-year reasonable and supportable forecast period, loss rates are assumed to revert immediately to long-term historical averages. Historical loss rates are further adjusted for current conditions, including changes in underwriting standards, portfolio composition, loan terms, delinquency trends, property values, and other relevant environmental factors.
The ACLL is significantly influenced by the composition, characteristics, and credit quality of the Company’s loan portfolio, as well as the economic conditions and forecasts incorporated into the CECL model. Changes in these or other relevant factors may result in increased volatility in the ACLL and, consequently, the Company's earnings.
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BUSINESS SEGMENTS
Reportable segments are determined based on the products and services offered and the level of information provided to the CODM. The CODM uses this information to review the performance of various components of the business, including banking centers and business units, which are aggregated when their operating performance, products and services, and clients are similar. The Company’s Executive Chair and CEO serves as the Company’s CODM. Income before income tax expense is the measure of segment profit or loss regularly reviewed by the CODM and used to allocate resources and evaluate performance.
As of June 30, 2026, the Company was divided into five reportable segments: (I) Traditional Banking, (II) Warehouse Lending, (III) TRS, (IV) RPS, and (V) RCS. Management considers the first two segments to collectively constitute “Core Bank” or “Core Banking” operations, while the last three segments collectively constitute RPG operations.
Core Banking Operations:
The Core Bank consists of the Traditional Banking and Warehouse Lending segments.
| (I) | Traditional Banking segment |
The Traditional Banking segment provides traditional banking products and services primarily to customers in the Company’s market footprint, with all products and services generally offered under the Company’s traditional RB&T brand. As of June 30, 2026, Republic had 47 full-service banking centers with locations as follows:
● | Kentucky — 29 |
● | Metropolitan Louisville — 19 |
● | Central Kentucky — 6 |
● | Georgetown — 1 |
● | Lexington — 5 |
● | Northern Kentucky (Metropolitan Cincinnati) — 4 |
●Bellevue — 1
| ● | 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 |
Traditional Banking results of operations are primarily dependent upon net interest income, which represents the difference between the interest income and fees on interest-earning assets and the interest expense on interest-bearing liabilities used to fund those assets. Principal interest-earning Traditional Banking assets represent investment securities and commercial and consumer loans primarily secured by real estate and/or personal property. Interest-bearing liabilities primarily consist of interest-bearing deposit accounts, SSUAR, and short-term and long-term borrowing sources. FHLB advances have traditionally served as a significant borrowing and liquidity source for the Bank. Net interest income is impacted by both changes in the amount and composition of interest-earning assets and interest-bearing liabilities, as well as market interest rates.
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Other sources of Traditional Banking income include service charges on consumer and commercial deposit accounts, mortgage banking income, debit and credit card interchange fee income, title insurance commissions, swap fee income and increases in the cash surrender value of BOLI.
Traditional Banking operating expenses consist primarily of salaries and employee benefits, technology, equipment and communication costs, occupancy expenses, marketing and development expenses, FDIC insurance, interchange and card processing fees, legal and professional services, and other general and administrative expenses. Traditional Banking results are significantly influenced by general economic and competitive conditions, including changes in market interest rates, governmental laws and policies, and regulatory actions.
Traditional Banking lending activities consist of the following:
Retail Mortgage Lending — Through its retail banking centers and its online Consumer Direct channel, the Bank originates single-family RRE loans and HELOCs which are typically indexed to Prime. In addition, the Bank originates HEALs through its retail banking centers. Such loans are generally collateralized by owner-occupied, RRE properties. For those loans originated through the Bank’s retail banking centers, the collateral is predominately located in the Bank’s market footprint, while loans originated through its Consumer Direct channel are generally secured by owner-occupied collateral located within and outside of the Bank’s market footprint.
The Bank offers single-family, first-lien RRE ARMs with interest rate adjustments tied to the SOFR index with specified minimum and maximum adjustments. The Bank generally charges a premium interest rate for its ARMs if the property is nonowner-occupied. The interest rates on the majority of ARMs are adjusted after their fixed rate periods on an annual or semi-annual basis, with most having annual and lifetime limitations on upward rate adjustments to the loan. These loans typically feature amortization periods of up to 30 years and have fixed interest-rate periods generally ranging from five to seven years, with demand dependent upon market conditions. While there is no requirement for clients to refinance their loans at the end of the fixed-rate period, clients have historically done so the majority of the time, as most clients are interest-rate-risk averse on first-lien mortgage loans.
Single-family, first-lien RRE loans with fixed-rate periods of 15, 20, and 30 years are primarily originated and sold into the secondary market. MSR’s attached to the sold portfolio are either sold along with the loan or retained. Loans sold into the secondary market, along with their corresponding MSR’s, are included as a component of the Company’s Traditional Banking segment, as discussed elsewhere in this report. The Bank, as it has in the past, may retain such longer-term, fixed-rate loans from time to time in the future to help combat NIM compression.
As part of the sale of loans with servicing retained, the Bank records MSR’s. MSR’s represent an estimate of the present value of future cash servicing income, net of estimated costs, which the Bank expects to receive on loans sold with servicing retained by the Bank. MSR’s are capitalized as separate assets. This transaction is posted to net gain on sale of loans, a component of noninterest income under “mortgage banking income” in the income statement. Management considers all relevant factors, in addition to pricing considerations from other servicers, to estimate the fair value of the MSR’s to be recorded when the loans are initially sold with servicing retained by the Bank. The carrying value of MSR’s is initially amortized in proportion to and over the estimated period of net servicing income. MSR amortization is recorded as a reduction to net servicing income.
With the assistance of an independent third-party, the MSR’s asset is reviewed at least quarterly for impairment based on the fair value of the MSR’s using groupings of the underlying loans based on predominant risk characteristics. Any impairment of a grouping is reported as a valuation allowance. A primary factor influencing the fair value is the estimated remaining life of the underlying loans serviced which is significantly influenced by market interest rates. During a period of declining interest rates, the fair value of the MSR’s is expected to decline due to increased anticipated prepayment speeds within the portfolio. Alternatively, during a period of rising interest rates, the fair value of MSR’s would be expected to increase as prepayment speeds on the underlying loans would be expected to decline.
The Bank does, on occasion, purchase single-family, first-lien RRE loans made to low-to-moderate income borrowers and/or secured by property located in low-to-moderate income areas, which assists the Bank in meeting its obligations under the CRA. In connection with loan purchases, the Bank receives various representations and warranties from the sellers regarding the quality and characteristics of the loans.
Correspondent Lending — The Bank, on occasion, has purchased select blocks of single family, first-lien mortgage loans for investment from Warehouse Lending clients through its Correspondent Lending channel. These loans were purchased at a premium that is amortized into interest income over the expected life of the loan utilizing the level-yield. Loans acquired through the Correspondent Lending channel are generally made to borrowers outside of the Bank’s historical market footprint.
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Commercial Lending — As described in detail below, the Bank conducts commercial lending activities primarily through the following groups/divisions: Corporate Banking, CRE Banking, Commercial Banking, Business Banking, Private Banking, and Retail Banking channels and clients are primarily located within the Bank’s market footprint or in an adjoining market. In general, all commercial lending credit approvals and processing are prepared and underwritten through the Bank’s centralized CCAD.
Credit opportunities are generally driven by the following: companies expanding their businesses; companies acquiring new businesses; and/or companies refinancing existing debt from other institutions. The Bank has a primary focus on C&I, CRE, and multi-family lending.
C&I loans typically include those secured by general business assets, which consist of equipment, accounts receivable, inventory, and other business assets owned by the borrower/guarantor. Credit facilities include annually renewable LOCs and term loans with maturities typically ranging from three to five years and may also involve financial covenant requirements. These requirements are monitored by the Bank’s CCAD. Underwriting for C&I loans is based upon the borrower’s capacity to repay these loans from operating cash flows, typically measured by reviewing earnings before interest, taxes, depreciation and amortization, with capital strength, collateral, and management experience also important underwriting considerations. The targeted C&I credit size for client relationships is typically between $1 million and $10 million, with higher targets between $10 million and $35 million targeted by the Corporate Banking group.
CRE and multi-family loans are typically secured by improved property such as office buildings, medical facilities, retail centers, warehouses, apartment buildings, condominiums, schools, religious institutions, and other types of CRE use property. The CRE Banking group, which launched in 2022, focuses on large CRE projects, typically in amounts from $5 million to $25 million. Borrowers are generally single-asset entities and the underlying collateral is nonowner-occupied. Primary underwriting considerations are cash flow projections (current and historical), financial capacity of sponsors, and collateral value financed.
Fixed rate financing and reciprocal interest rate swaps are used as well. Given the size of these credits, the Bank generally seeks established, well-known borrowers and projects with low credit risk.
The Commercial Banking group focuses on small and medium-sized C&I and CRE owner-occupied opportunities. Borrowers are generally single-asset entities and loan sizes typically range from $1 million to $5 million. As with Corporate Banking, the primary underwriting considerations are cash flow projections (current and historical), quality of leases, financial capacity of sponsors, and collateral value of property financed. Interest rates offered are based on both fixed and variable interest-rate formulas.
The Business Banking group, reporting under Retail Banking in most markets, focuses on locally based small businesses in the Bank’s market footprint with primarily annual revenues up to $10 million and borrowings between $350,000 and $1 million. The needs of these clients range from expansion or acquisition financing, equipment financing, owner-occupied real estate financing, and smaller operating lines of credit.
The Bank is an SBA Preferred Lending Partner, which allows the Bank to underwrite and approve its own SBA loans in an expedited manner. The Bank makes loans to borrowers generally up to $3 million under both the SBA “7A Program” and the “504 Program” for CRE owner-occupied opportunities. The Bank utilizes these programs to reduce credit risk exposure.
Lease financing receivables, which are generally direct financing leases, are reported at their principal balance outstanding, including any lease residual amount, net of any unearned income, deferred loan fees and costs, and applicable ACLL. Leasing income is recognized on the basis that achieves a constant periodic rate of return on the outstanding lease financing balances over the lease terms. During December 2025, approximately $82 million of loans and leases were transferred from held for investment to HFS, as the Bank entered into an Asset Purchase Agreement to sell its St. Louis-based RBF operations. The sale was completed during the first quarter of 2026, resulting in a $5.8 million pre-tax gain, net of broker commissions.
Construction & Land Development Lending — The Bank originates business loans for the construction of both single-family, RRE properties and CRE properties (apartment complexes, shopping centers and office buildings) to borrowers primarily located within the Bank’s market footprint or in an adjoining market. While not a major focus for the Bank, the Bank may originate loans for the acquisition and development of RRE or CRE land into buildable lots.
Single-family, RRE-construction loans are made in the Bank’s market area to established homebuilders with solid financial records. The majority of these loans are made for “contract” homes that the builder has already pre-sold to a homebuyer.
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Commercial-construction loans are made in the Bank’s market to established commercial builders/developers with solid financial records. Typically, these loans are made for investment properties and have tenants pre-committed for some or all of the space. Generally, commercial-construction loans are made for the duration of the construction period and slightly beyond and will either convert to permanent financing with the Bank or with another lender at or before maturity.
Construction-to-permanent loans are another type of construction-related financing that the Bank offers. These loans are made to borrowers who are going to build a property and retain it for ownership after construction completion. These loans are offered on both owner-occupied and nonowner-occupied CRE.
Consumer Lending — Traditional Banking consumer loans include home improvement and home equity loans, other secured and unsecured personal loans, and credit cards originated to borrowers primarily located within the Bank’s market footprint or in an adjoining market. In 2024, the Traditional Banking segment ceased originating new consumer credit cards and sold its $5 million portfolio in the second quarter of 2025, recognizing a $328,000 pre-tax net gain in other noninterest income. With the exception of home equity loans, which are actively marketed in conjunction with single-family, first-lien RRE loans, other Traditional Banking consumer loan products, while available, are not and have not been actively promoted within the Bank’s markets.
Aircraft Lending — Aircraft loans are typically made to purchase or refinance personal aircrafts, along with engine overhauls and avionic upgrades with borrowers across the U.S. Loans typically range between $200,000 and $4 million in size and have terms up to 20 years. The credit characteristics of an aircraft borrower are higher than a typical consumer in that they must demonstrate and indicate a higher degree of creditworthiness for approval.
Other Traditional Banking activities generally consist of the following:
Private Banking — The Bank provides financial products and services to high-net-worth individuals through its Private Banking department. The Bank’s Private Banking officers have extensive banking experience and are trained to meet the unique financial needs of this clientele.
Treasury Management Services — The Bank provides various deposit products designed for commercial business clients located throughout its market footprint. Lockbox processing, remote deposit capture, business on-line banking, account reconciliation, and ACH processing are additional services offered to commercial businesses through the Bank’s Treasury Management department. Treasury Management officers work closely with commercial and retail officers to support the cash management needs of Bank clients.
Internet Banking — The Bank expands its market penetration and service delivery of its RB&T brand by offering clients Internet Banking services and products through its website, www.republicbank.com.
Mobile Banking — The Bank allows clients to securely access and manage their accounts through its mobile banking application.
Other Banking Services — The Bank also provides title insurance and other financial institution related products and services.
Bank Acquisitions — The Bank maintains an acquisition strategy to selectively grow its franchise as a complement to its organic growth strategies.
See additional discussion regarding the Traditional Banking segment under the Footnote titled “Segment Information” of Part I Item 1 “Financial Statements.”
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| (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 RRE loans. The credit facility enables the mortgage banking clients to close single-family, first-lien RRE loans in their own name and temporarily fund their inventory of these closed loans until the loans are sold to investors approved by the Bank. Individual loans are expected to remain on the warehouse LOC for an average of 15 to 30 days. Advances for reverse mortgage loans and construction loans typically remain on the LOC longer than conventional mortgage loans. Interest income and loan fees are accrued for each individual advance during the time the advance remains on the warehouse LOC and collected when the loan is sold. The Core Bank receives the sale proceeds of each loan directly from the investor and applies the funds to pay off the warehouse advance and related accrued interest and fees. The remaining proceeds are credited to the mortgage banking client.
See additional discussion regarding the Warehouse Lending segment under the Footnote titled “Segment Information” of Part I Item 1 “Financial Statements.”
Republic Processing Group Operations:
Republic Processing Group consists of the Tax Refund Solutions, Republic Payment Solutions and Republic Credit Solutions segments.
| (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 across the U.S., as well as through tax-preparation software providers that offer Republic Bank ERAs, RAs and RTs (collectively, the “Tax Providers”). The substantial majority of TRS’s business activity occurs during the first half of each year, while the second half of the year is characterized by limited revenue and costs associated with preparing for the upcoming tax season.
Refund Advances:
The RA loan product is a loan made in conjunction with the filing of a taxpayer’s federal tax return, which allows the taxpayer to borrow funds as an advance of a portion of their tax refund. The RA product had the following features during the 2025 and 2026 Tax Seasons:
| ● | Offered only during the first two months of each year; |
| ● | The taxpayer was given the option to choose from multiple loan-amount tiers, subject to underwriting, up to a maximum advance amount of $6,250 for both the 2025 and 2026 Tax Seasons; |
| ● | 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 via deduction from the taxpayer’s tax refund proceeds; and |
| ● | If a tax refund is insufficient to repay the RA: |
| ● | there is no recourse to the taxpayer, |
| ● | no negative credit reporting on the taxpayer, and |
| ● | no collection efforts against the taxpayer. |
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Early Season Refund Advances:
The ERA loan product is structured similarly to the RA, with the primary differences being the timing of when the ERAs are originated and the documentation available to underwrite the ERAs. The ERA is originated prior to the taxpayer receiving their fiscal year taxable income documentation, such as Form W-2, and the filing of the taxpayer’s final federal tax return. As such, the Company generally uses paystub information to underwrite the ERA. The repayment of the ERA is incumbent upon the taxpayer client returning to the Bank’s Tax Provider for the filing of their final federal tax return in order for the tax refund to potentially be received by the Bank from the federal government to pay off the advance. The ERA product had the following features during the 2025 and 2026 Tax Seasons:
| ● | Only offered during December and the following January in connection with the upcoming first quarter tax business for each period; |
| ● | The taxpayer was given the option to choose from multiple loan-amount tiers, subject to underwriting, up to a maximum advance amount of $2,000 for both the 2025 and 2026 Tax Seasons; |
| ● | 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 earned for ERAs/RAs as “Interest income on loans.”
Provisions on ERAs/RAs are estimated when advances are made. Unpaid ERAs/RAs, related to the first quarter tax filing season of a given year are considered delinquent at June 30th of that year and charged-off. In addition, RAs that are subject to Tax Provider loan loss guarantees are charged-off and immediately recorded as recoveries of previously charged-off loans with corresponding receivables recorded in other assets for the Tax Provider guarantees. Corresponding receivables are settled during the third quarter of each year. RAs collected during the second half of each year, not subject to loan loss guarantee arrangements, are recorded as recoveries of previously charged-off loans.
Related to the overall credit losses on ERAs/RAs, the Bank’s ability to control losses is highly dependent upon its ability to predict the taxpayer’s likelihood of receiving the tax refund as claimed on the taxpayer’s tax return. In addition, the Bank’s ability to control losses for the ERA product is highly dependent upon the taxpayer returning to a Tax Provider for the filing of their final tax return. Each year, the Bank’s ERA/RA approval model is based primarily on the prior-year’s tax refund payment patterns. Because the substantial majority of ERA/RA volume occurs each year before that year’s tax refund payment patterns can be analyzed and subsequent underwriting changes implemented, credit losses during a given year could be higher than management’s predictions if tax refund payment patterns change materially between years.
In response to changes in the legal, regulatory, and competitive environment, management annually reviews and revises the ERA/RA product parameters. Changes in product parameters do not ensure positive results and could have an overall material negative impact on the performance of all ERA/RA product offerings and therefore on the Company’s financial condition and results of operations.
See additional discussion regarding the ERA/RA products under the sections titled: “Loans and Allowance for Credit Losses on Loans” and “Segment Information” of Part I Item 1 “Financial Statements.”
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Refund Transfers:
RTs are fee-based products whereby a tax refund is issued to the taxpayer after the Bank has received the refund from the federal or state government. There is no credit risk or borrowing cost associated with these products because they are only delivered to the taxpayer upon receipt of the tax refund directly from the governmental paying authority. An RT allows a taxpayer to pay any applicable tax preparation and filing related fees directly from his federal or state government tax refund, with the remainder of the tax refund disbursed directly to the taxpayer. RT fees and all applicable tax preparation, transmitter, audit, and any other taxpayer authorized amounts are deducted from the tax refund by either the Bank or the Bank’s service provider and automatically forwarded to the appropriate party as authorized by the taxpayer. The remainder of the refund is disbursed to the taxpayer by a Bank check, direct deposit to the taxpayer’s personal bank account, or loaded to a prepaid card.
The Company executes contracts with individual Tax Providers to offer RTs to their taxpayer customers. RT revenue is recognized by the Bank immediately after the taxpayer’s refund is disbursed in accordance with the RT contract with the taxpayer customer. The fee paid by the taxpayer for the RT is shared between the Bank and the Tax Providers based on contracts executed between the parties.
The Company presents RT revenue net of any amounts shared with the Tax Providers. The Bank’s share of RT revenue is generally based on the responsibilities undertaken by the Tax Provider for each individual RT program, with more responsibilities assumed by the Tax Provider generally corresponding to higher RT revenue share earned by the Tax Provider. The significant majority of net RT revenue is recognized and obligations under RT contracts fulfilled by the Bank during the first half of each year. Incremental expenses associated with the fulfilment of RT contracts are generally expensed during the first half of each year. Fees earned by the Company on RTs, net of revenue share, are reported as noninterest income under the line item “Net refund transfer fees.”
The RPS segment offers a range of payment-related products and services to consumers through third-party service providers. Through the Bank, the RPS segment offers both issuing solutions and money movement capabilities.
Issuing Solutions:
The RPS segment offers prepaid and debit solutions primarily marketed to the consumer industry. Prepaid solutions include the issuing of payroll and general purpose reloadable cards. Characteristics of these cards include the following:
| ● | Similar to a traditional debit card with features including traditional POS purchasing, ATM/ITM 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 POS purchasing, ATM/ITM withdrawals, and direct deposit options, these accounts may include overdraft protection.
Money Movement Capabilities:
Through RPS, the Bank participates in traditional money movement solutions including ACH transactions, wire transfers, check processing, and the Mastercard Remote Payment and Presentment Service. These capabilities are also complementary products facilitating the movement of money for other RPG divisions.
The Company reports its share of client-related charges and fees for RPS programs as noninterest income under “Program fees.” Additionally, the Company’s portion of interchange revenue generated by prepaid card transactions is reported as noninterest income under “Interchange fee income.”
From time to time, RPS enters into revenue-sharing arrangements with prepaid marketer-servicers under which a portion of the interest income earned on program deposits is shared. Revenue share paid on RPS deposits is reported as “Interest expense on deposits.”
See additional discussion regarding the RPS segment under the Footnote titled “Segment Information” of Part I Item 1 “Financial Statements.”
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Through the RCS segment, the Bank offers consumer credit products. In general, the credit products are unsecured, small dollar consumer loans that are dependent on various factors. RCS loans typically earn a higher yield but also have higher credit risk compared to loans originated through the Traditional Banking segment, with a significant portion of RCS clients considered subprime or near-prime borrowers. Ordinary gains or losses on the sale of RCS products are reported as a component of “Program fees.” Through the Bank, RCS uses third-party service providers for certain services such as marketing and loan servicing for RCS’s LOC products, installment loan product and healthcare receivables products.
LOC Products:
Through the RCS segment, the Bank originates two line of credit products (“LOC I” and “LOC II”) offered generally to subprime or near-prime borrowers across multiple states. These service providers, operating under the Bank’s oversight and supervision, perform certain marketing, servicing, technology, and support functions. In addition, a separate third-party provides customer support, servicing, and other operational services on the Bank’s behalf. The Bank is the lender for both products and is marketed as such. The Bank establishes and controls the loan terms and underwriting guidelines and exercises consumer-compliance oversight over each product. The Bank sells participation interests in these products as follows:
| ● | LOC I – The Bank sells a 90% participation interest in advances made to borrowers, generally three business days after funding the associated advances. Although the Bank retains a 10% participation interest in each advance, it retains 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. |
| ● | LOC II – The Bank sells a 95% participation interest in advances made to borrowers, generally three business days after funding the associated advances. Although the Bank retains a 5% participation interest in each advance, it retains 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 the RCS segment, the Bank offers installment loans with terms ranging from 12 to 60 months to borrowers in multiple states. The same third-party service provider for RCS’s LOC II is the third-party provider for the installment loan product. This third-party provider is subject to the Bank’s oversight and supervision and provides the Bank with marketing services and loan servicing for these RCS installment loans. The Bank is the lender for these loans and is marketed as such. Furthermore, the Bank controls the loan terms and underwriting guidelines, and the Bank exercises consumer compliance oversight of this RCS installment loan product. Currently, all loan balances originated under this RCS installment loan program are carried as HFS on the Bank’s Balance Sheet, with the intent to sell to a third-party, who is an affiliate of the Bank’s third-party service provider, generally within 16 days following the Bank’s origination of the loans. Loans originated under this RCS installment loan program are carried at fair value under a fair-value option, with the portfolio marked to market monthly.
Healthcare Receivables Products:
Through the RCS segment, the Bank originates healthcare receivables products across the U.S. through two different third-party service providers. For one of the programs, the Bank retains 100% of the receivables, with recourse in the event of default. For the other program, in some instances the Bank retains 100% of the receivables originated, with recourse in the event of default, and in other instances, the Bank sells 100% of the receivables generally within one month of origination. Loan balances HFS through this program are carried at the lower of cost or fair value.
For the RCS LOC and healthcare receivable products, the Company reports interest income and loan origination fees under “Loans, including fees,” while any net gains or losses on sale and mark-to-market adjustments of RCS loans are reported as noninterest income under “Program fees.” The Company has elected fair value accounting for its RCS installment loan product that it sells after an initial holding period. As a result, interest income on loans, loan origination fees, net gains or losses on sale, and mark-to-market adjustments for the RCS installment loan product are reported as noninterest income under “Program fees.”
See additional discussion regarding the RCS segment under the sections titled: “Loans and Allowance for Credit Losses on Loans” and “Segment Information” of Part I Item 1 “Financial Statements.”
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OVERVIEW (Three Months Ended June 30, 2026, Compared to Three Months Ended June 30, 2025)
Total Company second quarter of 2026 net income was $32.9 million, an increase of $1.4 million, or 4%, from the same period in 2025. Diluted EPS was $1.68 for the second quarter of 2026, compared to $1.61 for the same period in 2025, an increase of 4%.
The following were the most significant components comprising the total Company’s net income fluctuation by reportable segment:
| (I) | Traditional Banking segment |
| ● | Net income increased $3.8 million, or 23%, from the second quarter of 2025 to the second quarter of 2026. |
| ● | Net interest income increased $4.0 million, or 7%, from the second quarter of 2025 to the second quarter of 2026. |
| ● | Provision was a net credit of $143,000 for the second quarter of 2026 compared to a net charge of $517,000 for the same period in 2025. |
| ● | As a percentage of total Traditional Banking loans, the Traditional Banking ACLL was 1.37% as of June 30, 2026, compared to 1.40% as of December 31, 2025, and 1.29% as of June 30, 2025. |
| ● | Noninterest income increased $796,000, or 8%, from the second quarter of 2025 to the second quarter of 2026. |
| ● | Noninterest expense increased $245,000, or 1%, from the second quarter of 2025 to the second quarter of 2026. |
| ● | Total Traditional Banking loans outstanding increased $59 million, or 1%, from March 31, 2026 to $4.66 billion as of June 30, 2026. |
| ● | Nonperforming loans to total loans for the Traditional Banking segment was 0.66% as of June 30, 2026 compared to 0.52% as of December 31, 2025 and 0.47% as of June 30, 2025. |
| ● | Delinquent loans to total loans for the Traditional Banking segment was 0.40% as of June 30, 2026 compared to 0.31% as of December 31, 2025 and 0.22% as of June 30, 2025. |
| ● | Total Traditional Banking deposits decreased $56 million, or 1%, from March 31, 2026 to $4.94 billion as of June 30, 2026. |
| (II) | Warehouse Lending segment |
| ● | Net income increased $309,000, or 17%, from the second quarter of 2025 to the second quarter of 2026. |
| ● | Net interest income increased $195,000, or 5%, from the second quarter of 2025 to the second quarter of 2026. |
| ● | Provision was a net credit of $38,000 for the second quarter of 2026 compared to a net charge of $255,000 for the same period in 2025. |
| ● | As a percentage of total Warehouse outstanding balances, the Warehouse ACLL was 0.25% as of June 30, 2026, December 31, 2025, and June 30, 2025. |
| ● | Total Warehouse loans outstanding decreased $15 million, or 2%, from March 31, 2026 to $615 million as of June 30, 2026. |
| ● | Average committed Warehouse lines of credit increased to $1.17 billion during the second quarter of 2026 from $995 million during the second quarter of 2025, while average line utilization decreased to 50% from 57% over the same period. |
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| (III) | Tax Refund Solutions segment |
| ● | Net income decreased $1.6 million, or 47%, from the second quarter of 2025 to the second quarter of 2026. |
As previously disclosed, TRS’ largest Tax Provider contract based on product volume and revenue was not renewed for the 2026 Tax Season (which began in December 2025). In total, this relationship contributed $1.7 million of net income to second quarter 2025 operating results, consisting of: $37,000 of net interest income, $2.3 million of Provision recoveries, $613,000 in net RT fees, $751,000 in noninterest expense, and $471,000 in estimated income tax expense.
| ● | Net interest income decreased $35,000 from the second quarter of 2025 to the second quarter of 2026. |
| ● | Provision was a net credit of $1.0 million during the second quarter of 2026 compared to a net credit of $3.9 million for the same period in 2025. |
| ● | Noninterest income increased $522,000, or 19%, from the second quarter of 2025 to the second quarter of 2026. |
| ● | Noninterest expense decreased $404,000, or 16%, from the second quarter of 2025 to the second quarter of 2026. |
| ● | Net income decreased $519,000, or 21%, from the second quarter of 2025 to the second quarter of 2026. |
| ● | Net interest income decreased $557,000, or 16%, from the second quarter of 2025 to the second quarter of 2026. |
| ● | Noninterest income was $744,000 for the second quarter of 2026 compared to $736,000 for the second quarter of 2025. |
| ● | Noninterest expense totaled $1.3 million for the second quarter of 2026 compared to $1.2 million for the second quarter of 2025. |
| ● | Total RPS deposits increased $145 million, or 41%, from March 31, 2026 to $495 million as of June 30, 2026, driven primarily by the onboarding of a new prepaid card marketer-servicer relationship. |
| (V) | Republic Credit Solutions segment |
| ● | Net income decreased $655,000, or 9%, from the second quarter of 2025 to the second quarter of 2026. |
| ● | Net interest income increased $1.9 million, or 15%, from the second quarter of 2025 to the second quarter of 2026. |
| ● | Provision was a net charge of $6.4 million during the second quarter of 2026 compared to a net charge of $5.0 million for the same period in 2025. |
| ● | As a percentage of total RCS loans, the RCS ACLL was 16.01% as of June 30, 2026, compared to 17.15% as of December 31, 2025 and 17.67% as of June 30, 2025. |
| ● | Noninterest income increased $599,000, or 16%, from the second quarter of 2025 to the second quarter of 2026. |
| ● | Noninterest expense totaled $4.3 million for the second quarter of 2026 compared to $2.4 million for the same period in 2025. |
| ● | Total RCS loans outstanding increased $8 million, or 6%, from March 31, 2026 to $140 million as of June 30, 2026. |
| ● | Nonperforming loans to total loans for the RCS segment was 0.06% as of June 30, 2026 compared to 0.14% as of December 31, 2025 and 0.09% as of June 30, 2025. Delinquent loans to total loans for the RCS segment was 7.18% as of June 30, 2026 compared to 7.87% as of December 31, 2025 and 7.67% as of June 30, 2025. |
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RESULTS OF OPERATIONS (Three Months Ended June 30, 2026, Compared to Three Months Ended June 30, 2025)
Net Interest Income
See the section titled “Asset/Liability Management and Market Risk” in this section of the document regarding the Bank’s interest rate sensitivity.
Traditional Banking results of operations are primarily dependent upon net interest income, which represents the spread between interest income and fees on interest-earning assets and interest expense on interest-bearing liabilities used to fund those assets. Interest-earning assets primarily consist of investment securities and commercial and consumer loans secured by real estate and/or personal property, while funding sources include interest-bearing deposit accounts, SSUAR, and short- and long-term borrowings. FHLB advances have historically served as a significant source of wholesale funding and liquidity. Accordingly, net interest income is influenced by changes in the volume and mix of interest-earning assets and liabilities, as well as movements in market interest rates.
On December 10, 2025, the FRB reduced the FFTR by 25 basis points to 3.75%, where it remained through June 30, 2026. Since September 2024, cumulative reductions to the FFTR have totaled 175 basis points. While the FFTR was within a target range of 3.50% to 3.75% as of June 30, 2026, recent FOMC communications indicated that policymakers continued to monitor inflationary pressures and labor market conditions and remained data dependent regarding the future path of monetary policy.
Based on the Company’s overall interest rate risk position, Management believes that increases in interest rates across the yield curve generally would have a favorable impact on the Company's net interest income, while declines in interest rates generally would have a negative impact on the Company’s net interest income. The ultimate impact of future changes in the FFTR will depend on several factors, including continued migration from noninterest-bearing to interest-bearing deposits, the shape and steepness of the yield curve, customer demand for the Company’s lending and deposit products, the Company’s ability to manage deposit costs relative to changes in benchmark rates and yields on interest-earning assets, and the Company’s overall liquidity requirements.
Total Company net interest income was $81.7 million during the second quarter of 2026 compared to $76.2 million during the second quarter of 2025, representing a $5.5 million or 7% increase. Total Company NIM expanded 38 basis points to 4.99% for the second quarter of 2026 compared to 4.61% during the second quarter of 2025.
The most significant drivers of the fluctuation in Total Company net interest income by reportable segment were as follows:
| (I) | Traditional Banking segment |
Traditional Banking net interest income was $60.4 million for the second quarter of 2026, a $4.0 million, or 7%, increase from the $56.4 million achieved during the second quarter of 2025. As with the first quarter of 2026, the increase for the second quarter of 2026 over the second quarter of 2025 was driven by a 32 basis point expansion in the Traditional Bank’s NIM to 4.16%, reflecting a favorable 43 basis point decline in funding costs, while the Traditional Bank’s yield on interest earning assets declined only 1 basis point for the same period.
Items of note impacting the Traditional Bank’s change in net interest income and NIM between the second quarter of 2025 and the second quarter of 2026 were as follows:
| ● | Traditional Banking average interest-earning cash declined to $257 million with a weighted-average yield of 3.74% during the second quarter of 2026, compared to $623 million with a yield of 4.45% during the second quarter of 2025. The decline in average interest-earning cash balances reflected the strategic deployment of excess liquidity into loan growth and longer-duration investment securities, which provided more attractive yields than overnight liquidity alternatives tied to the FFTR. |
| ● | Traditional Banking average investments increased to $912 million with a weighted-average yield of 4.15% during the second quarter of 2026, compared to $686 million with a yield of 3.71% during the second quarter of 2025. The increase in average balances and yield reflected the Company’s redeployment of excess liquidity into longer-term investment securities. |
| ● | From 2024 through the first nine months of 2025, management maintained a more conservative loan pricing strategy, which contributed to lower origination volumes across most product categories. Beginning in the fourth quarter of 2025, management adopted a more competitive pricing approach, driving growth in average Traditional Banking loan balances during the fourth quarter of 2025 and first half of 2026. Given the current positively sloped yield curve, management expects to continue this strategy, subject to market conditions and funding costs remaining favorable. |
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Traditional Banking average loans increased $59 million, or 1%, from $4.59 billion during the second quarter of 2025 to $4.65 billion during the second quarter of 2026, while the weighted-average yield declined 3 basis points from 5.69% to 5.66%.
Period-over-period comparisons of average loan balances and yields were adversely impacted by the sale of approximately $82 million of loans and lease financing receivables during the first quarter of 2026. These loans were transferred from held for investment to HFS in December 2025 and contributed an estimated 5 basis points to the Traditional Banking loan portfolio yield during the second quarter of 2025.
In addition to strong loan production, the Traditional Banking segment continued to redeploy cash flows from lower-yielding loan runoff into new originations at higher yields over the past year. Combined with a favorable shift toward higher-spread lending categories, these actions more than offset the pressure on asset yields resulting from the 75 basis point decline in the FFTR over the past 12 months.
The Traditional Bank’s average cost of interest-bearing liabilities decreased 43 basis points from 2.12% during the second quarter of 2025 to 1.69% during the second quarter of 2026 driven primarily by the following:
| ● | The weighted-average cost of total interest-bearing deposits decreased 36 basis points, from 2.34% during the second quarter of 2025 to 1.98% during the second quarter of 2026, while total average interest-bearing deposit balances increased $92 million, or 2%. Average balances benefited from a $231 million combined increase in money market and time deposit accounts, partially offset by a $139 million decline in brokered deposits, reciprocal deposits, and interest-bearing transaction accounts. Disciplined deposit pricing initiatives and a favorable shift in funding mix drove a meaningful reduction in the overall cost of interest-bearing deposits. |
| ● | Average FHLB advances declined $211 million from the second quarter of 2025 to the second quarter of 2026, while the weighted-average cost decreased 26 basis points to 4.09%. During the second quarter of 2026, the Traditional Banking segment began realizing the benefit of the March 2026 prepayment of $220 million of higher-cost FHLB advances, which carried a weighted-average rate of 4.57%. The prepayment contributed to lower net funding costs and further supported NIM expansion during the quarter. |
| ● | Average noninterest-bearing deposits declined $7 million, or less than 1%, from the second quarter of 2025 to the second quarter of 2026. The decline reflects the continued migration of client balances from noninterest-bearing accounts into interest-bearing deposit products, a trend that began in late 2022 amid elevated interest rates, periods of an inverted yield curve, and increased competition for deposits. Premium-rate checking and savings products have remained particularly attractive to both consumer and business clients in this environment. |
For additional discussion of the factors impacting interest-earning cash and deposit balances as well as deposit betas, see sections titled “Cash and Cash Equivalents” and “Deposits” in the “COMPARISON OF FINANCIAL CONDITION” section of the filing.
| (II) | Warehouse Lending segment |
Warehouse Lending net interest income increased $195,000, or 5%, from the second quarter of 2025 to the second quarter of 2026.
Average outstanding Warehouse lines of credit increased $13 million, or 2%, from $567 million during the second quarter of 2025 to $580 million for the second quarter of 2026, while the weighted-average yield declined 61 basis points to 6.33%. Average committed Warehouse lines expanded from $995 million to $1.17 billion over the same period, supporting continued growth in customer relationships. Average utilization moderated from 57% to 50%, as commitment growth outpaced growth in outstanding balances.
| (III) | Republic Payment Solutions segment |
Net interest income from the Company’s prepaid card division decreased $557,000, or 16%, from the second quarter of 2025 to the second quarter of 2026. The decline in net interest income reflected a lower yield earned on the segment’s funding source. The lower yield primarily resulted from the 75 basis point decline in the FFTR between the second quarters of 2025 and 2026. As a result, RPS earned a yield of 3.67% on average deposit balances of $370 million during the second quarter of 2026, compared with a yield of 4.28% on average deposit balances of $350 million during the second quarter of 2025.
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The RPS segment’s largest marketer-servicer did not achieve the minimum contractual thresholds for average deposit balances in order to earn a revenue share for the second quarter of 2025 and 2026. At this time, Management is uncertain how much the revenue share component may be in the future, as deposit balances originated through this marketer-servicer are at levels near the thresholds necessary to achieve a revenue share, making a future revenue share possible, but not certain.
In mid-June 2026, RPS onboarded a new prepaid card marketer-servicer program that maintained approximately $178 million of deposits outstanding as of June 30, 2026. These balances are subject to a revenue share arrangement.
| (IV) | Republic Credit Solutions segment |
RCS’s net interest income increased $1.9 million, or 15%, from the second quarter of 2025 to the second quarter of 2026, driven primarily by growth across both RCS LOC programs and the segment’s installment loan product.
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The following table presents average balances along with the related calculations of tax-equivalent net interest income, NIM and net interest spread for the related periods.
Table 1 — Total Company Average Balance Sheets and Interest Rates
Three Months Ended June 30, 2026 | Three Months Ended June 30, 2025 | |||||||||||||||||||
| Average | | | Average | Average | | | Average | ||||||||||||
(in thousands) | | Balance | | Interest | | Rate | Balance | | Interest | | Rate | |||||||||
ASSETS | ||||||||||||||||||||
Interest-earning assets: |
| |||||||||||||||||||
Federal funds sold and other interest-earning deposits | $ | 256,961 | $ | 2,396 |
| 3.74 | % | | | $ | 622,909 | $ | 6,917 |
| 4.45 | % | ||||
Investment securities, including FHLB stock (a) | 912,466 | 9,442 |
| 4.15 | 686,223 | 6,346 |
| 3.71 | ||||||||||||
TRS Refund Advances (b) | 7,048 | 67 | 3.81 | 26,353 | 25 | 0.38 | ||||||||||||||
RCS LOC products (b) | 48,068 | 14,036 | 117.12 | 46,252 | 12,434 | 107.83 | ||||||||||||||
Other RPG loans (c) |
| 114,847 |
| 1,834 |
| 6.41 |
| 92,012 |
| 1,559 |
| 6.80 | ||||||||
Outstanding Warehouse lines of credit | 580,065 | 9,155 | 6.33 | 566,707 | 9,803 | 6.94 | ||||||||||||||
Traditional Banking loans (c) |
| 4,646,612 |
| 65,601 |
| 5.66 |
| 4,587,342 |
| 65,119 |
| 5.69 | ||||||||
Total loans (d) | 5,396,640 | 90,693 | 6.74 | 5,318,666 | 88,940 | 6.71 | ||||||||||||||
Total interest-earning assets |
| 6,566,067 |
| 102,531 |
| 6.26 |
| 6,627,798 |
| 102,203 |
| 6.19 | ||||||||
Allowance for credit losses |
| (92,164) |
| (105,726) | ||||||||||||||||
Noninterest-earning assets: | ||||||||||||||||||||
Noninterest-earning cash and cash equivalents |
| 100,038 |
| 125,098 | ||||||||||||||||
Premises and equipment, net |
| 41,741 |
| 33,250 | ||||||||||||||||
Bank owned life insurance |
| 111,718 |
| 108,416 | ||||||||||||||||
Other assets (a) |
| 273,948 |
| 273,195 | ||||||||||||||||
Total assets | $ | 7,001,348 | $ | 7,062,031 | ||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||
Transaction accounts | $ | 1,707,743 | $ | 2,092 |
| 0.49 | % | $ | 1,699,450 | $ | 2,557 |
| 0.60 | % | ||||||
Money market accounts |
| 1,565,003 | 9,324 |
| 2.39 |
| 1,406,053 | 10,183 |
| 2.90 | ||||||||||
Time deposits |
| 518,078 | 4,612 |
| 3.57 |
| 445,129 | 4,168 |
| 3.76 | ||||||||||
Reciprocal money market and time deposits | 298,577 |
| 1,935 |
| 2.60 |
| 318,576 |
| 2,622 |
| 3.30 | |||||||||
Brokered deposits |
| 102,666 |
| 1,159 |
| 4.53 |
| 212,001 |
| 2,320 |
| 4.39 | ||||||||
Total interest-bearing deposits |
| 4,192,067 |
| 19,122 |
| 1.83 |
| 4,081,209 | 21,850 |
| 2.15 | |||||||||
SSUARs and other short-term borrowings |
| 82,507 | 89 |
| 0.43 |
| 87,760 | 140 |
| 0.64 | ||||||||||
Federal Home Loan Bank advances |
| 158,654 | 1,618 |
| 4.09 |
| 370,000 | 4,011 |
| 4.35 | ||||||||||
Total interest-bearing liabilities |
| 4,433,228 |
| 20,829 |
| 1.88 |
| 4,538,969 | 26,001 |
| 2.30 | |||||||||
Noninterest-bearing liabilities and Stockholders’ equity: | ||||||||||||||||||||
Noninterest-bearing deposits |
| 1,289,710 |
| 1,323,622 | ||||||||||||||||
Other liabilities |
| 123,813 |
| 143,941 | ||||||||||||||||
Stockholders’ equity |
| 1,154,597 |
| 1,055,499 | ||||||||||||||||
Total liabilities and stockholders’ equity | $ | 7,001,348 | $ | 7,062,031 | ||||||||||||||||
Net interest income | $ | 81,702 | $ | 76,202 | ||||||||||||||||
Net interest spread |
| 4.38 | % |
| 3.89 | % | ||||||||||||||
Net interest margin |
| 4.99 | % |
| 4.61 | % | ||||||||||||||
| a) | For the purpose of this calculation, the fair value adjustment on debt securities is included as a component of other assets. |
| b) | Interest income is composed either entirely or predominantly of loan fees. See the following table titled “Loan Fee Income.” |
| c) | Average balance includes the principal balance of nonaccrual loans and loans HFS that are not carried at fair value and are inclusive of all loan premiums, discounts, fees and costs. |
| d) | See the following table titled “Loan Fee Income” for detail of loan fees by reporting segment. |
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The amount of loan fee income can meaningfully impact total interest income, loan yields, NIM, and net interest spread. The following table illustrates loan fees recorded as interest income on loans by segment:
Table 2 — Loan Fee Income
Three Months Ended June 30, | ||||||
(in thousands) | 2026 | 2025 | ||||
Traditional Banking | $ | 1,264 | $ | 1,367 | ||
Warehouse Lending | 361 | 369 | ||||
Total Core Bank | 1,625 | 1,736 | ||||
Tax Refund Solutions | 77 | 25 | ||||
Republic Credit Solutions | 14,036 | 12,434 | ||||
Total Republic Processing Group | 14,113 | 12,459 | ||||
Total Loan Fees | $ | 15,738 | $ | 14,195 | ||
The following table illustrates the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities impacted Republic’s interest income and interest expense during the periods indicated. Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior rate), (ii) changes attributable to changes in rate (changes in rate multiplied by prior volume), and (iii) net change. The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.
Table 3 — Total Company Volume/Rate Variance Analysis
Three Months Ended June 30, 2026 | ||||||||||
Compared to | ||||||||||
Three Months Ended June 30, 2025 | ||||||||||
Total Net | Increase / (Decrease) Due to | |||||||||
(in thousands) | | Change | | Volume | | Rate | | |||
Interest income: | ||||||||||
Federal funds sold and other interest-earning deposits | $ | (4,521) | $ | (3,552) | $ | (969) | ||||
Investment securities, including FHLB stock | 3,096 | 2,275 | 821 | |||||||
TRS Refund Advance loans* | 42 | (30) | 72 | |||||||
RCS LOC products | 1,602 | 501 | 1,101 | |||||||
Other RPG loans |
| 275 |
| 369 |
| (94) | ||||
Outstanding Warehouse lines of credit | (648) | 227 | (875) | |||||||
Traditional Bank loans |
| 482 |
| 838 | (356) | |||||
Net change in interest income |
| 328 |
| 628 |
| (300) | ||||
Interest expense: | ||||||||||
Transaction accounts |
| (465) |
| 12 | (477) | |||||
Money market accounts |
| (859) |
| 1,072 | (1,931) | |||||
Time deposits |
| 444 |
| 657 | (213) | |||||
Reciprocal money market and time deposits | (687) |
| (157) | (530) | ||||||
Brokered deposits | (1,161) | (1,232) |
| 71 | ||||||
SSUARs and other short-term borrowings |
| (51) |
| (8) | (43) | |||||
Federal Home Loan Bank advances |
| (2,393) |
| (2,168) |
| (225) | ||||
Net change in interest expense |
| (5,172) |
| (1,824) |
| (3,348) | ||||
Net change in net interest income | $ | 5,500 | $ | 2,452 | $ | 3,048 | ||||
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Provision
For additional discussion regarding Provision, see the sections titled “Allowance for Credit Losses on Loans” and “Asset Quality” in this section of the filing.
Total Company Provision was a net charge of $5.2 million for the second quarter of 2026 compared to a net charge of $1.8 million for the same period in 2025.
The most significant drivers of the fluctuation in Total Company Provision by reportable segment were as follows:
| (I) | Traditional Banking segment |
Traditional Banking Provision during the second quarter of 2026 was a net credit of $143,000 compared to a net charge of $517,000 for the second quarter of 2025.
The net credit of $143,000 for the second quarter of 2026 was primarily driven by the following:
| ● | The Traditional Banking segment recorded net charge offs of $92,000, concentrated in small dollar overdrawn DDAs. |
| ● | While Traditional Banking period end loan balances grew $59 million during the quarter, Provision expense benefited from a favorable shift in portfolio composition. Specifically, C&LD balances, which carry higher reserve requirements than most other lending categories, declined $30 million, as projects progressed and balances primarily migrated into the CRE portfolio. This shift reduced reserve requirements and contributed meaningfully to the quarter’s Provision benefit. |
The net charge of $517,000 for the second quarter of 2025 was primarily driven by the following:
| ● | The Traditional Banking segment recorded net charge-offs of $313,000, concentrated in small-dollar overdrawn DDAs. In addition, while Traditional Banking loan balances increased only $16 million during the second quarter of 2025, the portfolio continued to shift toward loan categories with higher reserve requirements such as CL&D. |
| ● | 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. |
As a percentage of total Traditional Banking loans, the Traditional Banking ACLL was 1.37% as of June 30, 2026, compared to 1.40% as of December 31, 2025, and 1.29% as of June 30, 2025.
Based on information currently available, management believes the ACLL related to Traditional Banking loans was adequate as of June 30, 2026.
See the sections titled “Allowance for Credit Losses on Loans” and “Asset Quality” in this section of the filing under “Comparison of Financial Condition” for additional discussion regarding the Provision and the Bank’s credit quality.
| (II) | Warehouse Lending segment |
Warehouse recorded a net credit to the Provision of $38,000 for the second quarter of 2026 compared to a net charge of $255,000 for the same period in 2025. Provision for both periods reflected changes in general reserves consistent with changes in outstanding period end balances. Outstanding Warehouse period end balances decreased $16 million during the second quarter of 2026 compared to an increase of $102 million during the second quarter of 2025.
As a percentage of total Warehouse outstanding balances, the Warehouse ACLL was 0.25% as of June 30, 2026, December 31, 2025, and June 30, 2025.
Based on information currently available, management believes the ACLL related to Warehouse loans was adequate as of June 30, 2026.
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| (III) | Tax Refund Solutions segment |
Substantially all TRS Provision in both periods was related to its ERA and RA products.
TRS offered (i) its RA product during the first two months of 2026, along with its ERA product during December 2025 and the first two weeks of 2026 for the 2026 Tax Season and (ii) its RA product during the first two months of 2025, along with its ERA product during December 2024 and the first two weeks of 2025 for the 2025 Tax Season.
As is the case each year as of March 31st, the ACLL related to RAs is an estimate with that estimate finalized during the second quarter when all unpaid RAs, including ERAs, are charged-off as of June 30th. The final charge-offs posted during the second quarter of a calendar year can be different (higher or lower) than the Company’s March 31st Provision estimate based on actual paydowns received during the second quarter. RAs collected during the second half of the year are recorded as recoveries of previously charged-off loans unless they are covered under a Tax Provider loss guaranty arrangement. Any RAs subject to a loss guaranty arrangement that are recovered during the second half of the year are distributed to the guarantor.
TRS recorded a net credit to the Provision of $1.0 million during the second quarter of 2026 compared to a net credit of $3.9 million for the second quarter of 2025. As previously disclosed, TRS’s largest Tax Provider contract based on product volume was not renewed for the 2026 Tax Season (which began in December 2025). In total, this relationship contributed $2.3 million of Provision recoveries to second quarter 2025 operating results.
During the second quarter of 2026, TRS recorded a net credit to the Provision of $1.0 million to bring its preliminary March 31, 2026, ACLL estimate in-line with its final June 30, 2026, charge-offs. While charge-offs during both the second quarters of 2025 and 2026 were favorably lower than the preliminary loan loss reserves established in the preceding first quarters, the Company’s reserve estimate for the 2026 Tax Season proved more precise. This improved accuracy was largely attributable to the nonrenewal of the largest Tax Provider contract that drove significant RA volume during the 2025 Tax Season and historically contributed greater variability to credit loss estimates.
TRS’s blended incurred loss rate for both guaranteed and unguaranteed RAs and ERAs as of June 30, 2026, was 1.93% of the $259 million in total RAs and ERAs originated during December 2025 and the first two months of 2026. Approximately $1.4 million of these charge-offs as of June 30, 2026 are expected to be recovered under loan-loss guaranty arrangements with Tax Providers. As a result, these charge-offs were also reflected as recoveries as of June 30, 2026 and recorded as receivables in other assets on the Balance Sheet.
During the second quarter of 2025, TRS recorded a net credit to the Provision of $3.9 million to bring its preliminary March 31, 2025, ACLL estimate in-line with its final June 30, 2025, charge-offs. TRS’s incurred loss rate for guaranteed and unguaranteed RAs and ERAs as of June 30, 2025, was 2.81% of the $802 million of total RAs and ERAs originated during December 2024 and the first two months of 2025.
Based on information currently available, management believes the ACLL related to TRS loans was adequate as of June 30, 2026.
See additional detail regarding ERAs/RAs under the Footnote titled “Loans and Allowance for Credit Losses on Loans” of Part I Item 1 “Financial Statements” and “Business Segment Composition” in this section of the filing.
| (IV) | Republic Payment Solutions segment |
There is no ACLL or Provision associated with the RPS segment, as its products primarily consist of prepaid debit card solutions.
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| (V) | Republic Credit Solutions segment |
As illustrated in the following table, RCS recorded a net charge to the Provision of $6.4 million during the second quarter of 2026 compared to a net charge of $5.0 million during the same period in 2025. RCS recorded net charge-offs of $3.8 million and $4.0 million during the second quarters of 2026 and 2025. The remainder of the Provision variance was attributable to changes in the general reserve allocations associated with fluctuations in outstanding balances by portfolio type. While period-end balances increased across both RCS LOC programs, growth in the segment’s LOC II product, which carries substantially higher provisioning requirements than the segment’s other lending products, drove the majority of the increase.
Although RCS loan products generally generate higher yields, they also entail greater credit risk than Traditional Banking loan products. As a percentage of total RCS loans, the ACLL was 16.01% at June 30, 2026, compared to 17.15% at December 31, 2025, and 17.67% at June 30, 2025.
Based on information currently available, management believes the ACLL related to RCS loans was adequate as of June 30, 2026.
Table 4 — Republic Credit Solutions Provision by Product Type
Three Months Ended June 30, | |||||||||||||
(dollars in thousands) | 2026 | 2025 | $ Change | % Change | |||||||||
Product: | |||||||||||||
Lines of credit | $ | 6,373 | $ | 4,985 | $ | 1,388 | 28 | % | |||||
Healthcare receivables | 11 | (2) | 13 | NM | |||||||||
Total RCS provision | $ | 6,384 | $ | 4,983 | $ | 1,401 | 28 | % | |||||
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Table 5 — Summary of Loan and Lease Loss Experience
| Three Months Ended | ||||||
June 30, | |||||||
(dollars in thousands) | | 2026 | 2025 | ||||
ACLL at beginning of period | $ | 91,840 | $ | 106,303 | |||
Charge-offs: | |||||||
Traditional Banking: | |||||||
Residential real estate | (11) |
| (11) | ||||
Commercial real estate |
| — |
| — | |||
Construction & land development |
| — |
| — | |||
Commercial & industrial |
| — |
| (18) | |||
Lease financing receivables |
| — |
| (127) | |||
Home equity |
| (22) |
| — | |||
Consumer | (327) | (314) | |||||
Total Traditional Banking | (360) | (470) | |||||
Warehouse lines of credit |
| — |
| — | |||
Total Core Banking | (360) | (470) | |||||
Republic Processing Group: | |||||||
Tax Refund Solutions: | |||||||
Refund Advances | (6,367) |
| (24,893) | ||||
Other TRS loans | (72) |
| (166) | ||||
Republic Credit Solutions | (4,244) |
| (4,384) | ||||
Total Republic Processing Group | (10,683) | (29,443) | |||||
Total charge-offs |
| (11,043) |
| (29,913) | |||
Recoveries: | |||||||
Traditional Banking: | |||||||
Residential real estate | 15 | 23 | |||||
Commercial real estate |
| 2 |
| 3 | |||
Commercial & industrial |
| 27 |
| — | |||
Lease financing receivables |
| 24 |
| 17 | |||
Home equity |
| 60 |
| 26 | |||
Consumer | 140 | 88 | |||||
Total Traditional Banking | 268 | 157 | |||||
Warehouse lines of credit |
| — |
| — | |||
Total Core Banking | 268 | 157 | |||||
Republic Processing Group: | |||||||
Tax Refund Solutions: | |||||||
Refund Advances | 1,140 |
| 3,008 | ||||
Other TRS commercial & industrial | 2 |
| 2 | ||||
Republic Credit Solutions | 403 |
| 380 | ||||
Total Republic Processing Group | 1,545 | 3,390 | |||||
Total recoveries |
| 1,813 |
| 3,547 | |||
Net loan recoveries (charge-offs) |
| (9,230) |
| (26,366) | |||
Provision - Core Bank Loans |
| (181) |
| 772 | |||
Provision - RPG Loans |
| 5,338 |
| 1,051 | |||
Total Provision for All Loans |
| 5,157 |
| 1,823 | |||
ACLL at end of period | $ | 87,767 | $ | 81,760 | |||
Credit Quality Ratios - Total Company: | |||||||
ACLL to total loans |
| 1.62 | % |
| 1.52 | ||
ACLL to nonperforming loans |
| 286 |
| 378 | |||
Net loan charge-offs (recoveries) to average loans | 0.69 |
| 1.99 | ||||
Credit Quality Ratios - Core Banking: | |||||||
ACLL to total loans |
| 1.24 | % |
| 1.16 | ||
ACLL to nonperforming loans |
| 213 |
| 282 | |||
Net loan charge-offs (recoveries) to average loans | 0.01 | 0.02 | |||||
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Table 6 — Annualized Net Loan Charge-offs (Recoveries) to Average Loans by Loan Category
Net Loan Charge-Offs (Recoveries) to Average Loans | ||||||
Three Months Ended | ||||||
2026 | 2025 | |||||
Traditional Banking: | ||||||
Residential real estate: | ||||||
Owner-occupied | — | % | — | % | ||
Nonowner-occupied | — | — | ||||
Commercial real estate: | ||||||
Owner-occupied | — | — | ||||
Nonowner-occupied | — | — | ||||
Multi-Family | — | — | ||||
Total commercial real estate | — | — | ||||
Construction & land development | — | — | ||||
Commercial & industrial | (0.02) | 0.01 | ||||
Lease financing receivables | (0.46) | 0.47 | ||||
Aircraft | — | |||||
Home equity | (0.04) | (0.03) | ||||
Consumer: | ||||||
Credit cards | 0.09 | 0.85 | ||||
Overdrafts | 92.03 | 100.67 | ||||
Automobile loans | (1.26) | (1.88) | ||||
Other consumer | 0.57 | 0.04 | ||||
Total Traditional Banking | 0.01 | 0.03 | ||||
Warehouse lines of credit | — | — | ||||
Total Core Banking | 0.01 | 0.02 | ||||
Republic Processing Group: | ||||||
Tax Refund Solutions: | ||||||
Refund Advances* | 296.59 | 332.17 | ||||
Other TRS commercial & industrial | 168.27 | 62.93 | ||||
Republic Credit Solutions | 10.93 | 12.86 | ||||
Total Republic Processing Group | 21.56 | 63.31 | ||||
Total | 0.69 | % | 1.99 | % | ||
* All loss rates above are based on net charge-offs as a function of average outstanding portfolio balances. RAs are originated during the first two months of each year, with all RAs charged-off by June 30th of each year. Due to their relatively short life, RA net charge-offs are analyzed by the Company as a percentage of total RA originations, not as a percentage of average outstanding balances.
The Company’s net charge-offs to average total Company loans decreased from 1.99% during the second quarter of 2025 to 0.69% during the same period in 2026, as net charge-offs declined $17.1 million, or 65%, while average total Company loans increased $78 million, or 1%, over the same periods. As discussed above, the decline in net charge-offs was primarily attributable to the nonrenewal of TRS’ largest Tax Provider contract based on product volume, as well as lower ERA and RA funding activity.
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Noninterest Income
Total Company noninterest income increased $1.9 million, or 11%, during the second quarter of 2026 compared to the same period in 2025.
The most significant drivers of the fluctuation in Total Company noninterest income by reportable segment were as follows:
| (I) | Traditional Banking segment |
Traditional Banking noninterest income increased $796,000, or 8%, from the second quarter of 2025 compared to the second quarter of 2026, primarily driven by the following:
Service charges on deposits increased $562,000, or 16%, primarily driven by higher volumes in activity-based fees, particularly insufficient funds fees. The Traditional Banking segment earns a substantial majority of its fee income related to its overdraft service program from the per item fee it assesses its customers for each insufficient-funds check or electronic debit presented for payment. The total per item fees, net of refunds, included in service charges on deposits for the second quarter of 2026 and 2025 were $2.2 million and $1.7 million. The total daily overdraft charges, net of refunds, included in interest income for the second quarter of 2026, and 2025 were $250,000 and $287,000.
Interchange income represents fees earned from merchants for the acceptance of Republic-branded debit and credit cards and is influenced by transaction volume, average ticket size, card type, transaction channel (card-present versus card-not-present), merchant category, and other factors. Interchange income is reported net of credit card rewards expense, which is accrued over time based on cardholder spending activity. Interchange income increased $433,000, or 14%, compared to the second quarter of 2025, primarily due to a $454,000 favorable adjustment to credit and debit card rewards accruals recorded during the second quarter of 2026.
Other noninterest income was negatively impacted by $328,000 pre-tax net gain on sale of the Bank’s consumer credit card portfolio which was completed during the second quarter of 2025.
| (II) | Tax Refund Solutions segment |
As previously disclosed, TRS’ largest Tax Provider contract based on product volume was not renewed for the 2026 Tax Season (which began in December 2025). In total, this relationship contributed $613,000 of net RT fees to second quarter 2025 operating results. During the second quarter of 2026, TRS benefited from revenue share transfer volume shifting from the first quarter to the second quarter compared with the prior year, a favorable second-quarter revenue share estimate adjustments.
| (III) | Republic Credit Solutions segment |
RCS noninterest income, primarily consisting of program fees, increased $599,000, or 16%, during the second quarter 2026 compared to the same period in 2025, reflecting higher sales volume from RCS’s installment loan and LOC II products.
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Noninterest Expense
Total Company noninterest expense increased $1.9 million, or 4%, during the second quarter of 2026 compared to the same period in 2025.
The most significant drivers of the fluctuation in Total Company noninterest expense by reportable segment were as follows:
| (I) | Traditional Banking segment |
Traditional Banking noninterest expense increased $245,000, or 1%, for the second quarter of 2026 compared to the same period in 2025, primarily driven by the following:
| ● | Salaries and benefits increased by a combined $134,000, or 1%, driven by a modest increase in health insurance claims. |
| ● | Marketing and development expenses increased $224,000, or 19%, primarily driven by the Bank's new branding initiative. Management expects marketing expense to remain near current levels for the foreseeable future. |
| ● | The Traditional Banking segment recorded $182,000 of nonrecurring core data conversion and secondary system migration costs during the second quarter of 2025. |
| (II) | Republic Credit Solutions segment |
Noninterest expense at the RCS segment increased $1.9 million, or 82%, during the second quarter of 2026 driven primarily by a $1.7 million, increase in marketing and development expenses, which generally fluctuate in-line with overall origination volume. Under the terms of the Company’s contract with its LOC II marketer-servicer, RCS reimburses the marketer-servicer a certain dollar amount for marketing costs based on each new product originated during the period. In addition, the second quarter of 2025 benefited from a $763,000 reimbursement of marketing and development expense related to a prior-period billing dispute.
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OVERVIEW (Six months ended June 30, 2026, Compared to Six months ended June 30, 2025)
Total Company net income for the first six months of 2026 was $75.4 million, a decrease of $3.3 million, or 4%, from the same period in 2025. Diluted EPS was $3.85 for the first six months of 2026, compared to $4.03 for the same period in 2025, a decrease of 4%.
The most significant drivers of the fluctuation in Total Company net interest income by reportable segment were as follows:
| (1) | Traditional Banking segment |
| ● | Net income increased $9.4 million, or 29%, from the first six months of 2025 to the same period in 2026. |
| ● | Net interest income increased $10.0 million, or 9%, from the first six months of 2025 to the same period in 2026. |
| ● | Provision was a net charge of $562,000 for the first six months of 2026 compared to a net credit of $252,000 for the same period in 2025. |
| ● | As a percentage of total Traditional Banking loans, the Traditional Banking ACLL was 1.37% as of June 30, 2026, compared to 1.40% as of December 31, 2025 and 1.29% as of June 30, 2025. |
| ● | Noninterest income increased $1.2 million, or 5%, from the first six months of 2025 to the first six months of 2026, as results were impacted by the following notable nonrecurring or infrequent items. |
| o | During December 2025, approximately $82 million of loans and leases were transferred from held for investment to HFS, as the Bank entered into an Asset Purchase Agreement to sell its St. Louis-based RBF operations. The sale was completed during the first quarter of 2026, resulting in a $5.8 million pre-tax gain, net of broker commissions. |
| o | During the first quarter of 2025, the Traditional Banking segment recorded a $4.1 million pre-tax gain on sale of Visa Class B-1 shares that had been carried at a zero book value since received in the 2008 Visa initial public offering. |
| o | During the first quarter of 2025, the Traditional Banking segment recorded a $1.6 million pre-tax insurance recovery related to a Marine Lending charge-off originally recognized in the third quarter of 2024. |
| ● | Noninterest expense decreased $3.3 million, or 3%, from the first six months of 2025 to the same period in 2026, as results were impacted by the following notable nonrecurring or infrequent items. |
| o | During the first quarter of 2026, the Traditional Banking segment prepaid $220 million of long-term fixed-rate FHLB advances and incurred $2.3 million of pre-tax early termination penalties |
| o | During the first six months of 2025, primarily during the first quarter, the Traditional Banking segment recorded $5.9 million of pre-tax core system deconversion and consulting expenses. |
| ● | Total Traditional Banking loans outstanding increased $109 million, or 2%, from December 31, 2025 to $4.66 billion as of June 30, 2026. |
| ● | Nonperforming loans to total loans for the Traditional Banking segment was 0.66% as of June 30, 2026 compared to 0.52% as of December 31, 2025 and 0.47% as of June 30, 2025. Delinquent loans to total loans for the Traditional Banking segment was 0.40% as of June 30, 2026 compared to 0.31% as of December 31, 2025 and 0.22% as of June 30, 2025. |
| ● | Total Traditional Banking deposits increased $176 million, or 4%, from December 31, 2025 to $4.94 billion as of June 30, 2026. |
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(II)Warehouse Lending segment
| ● | Net income increased $1.2 million, or 34%, from the first six months of 2025 to the same period in 2026. |
| ● | Net interest income increased $1.1 million, or 16%, for the first six months of 2025 to the same period in 2026. |
| ● | Provision was a net credit of $349,000 for the first six months of 2026 compared to a net charge of $302,000 for the same period in 2025. |
| ● | As a percentage of total Warehouse outstanding balances, the Warehouse ACLL was 0.25% as of June 30, 2026, December 31, 2025, and June 30, 2025. |
| ● | Total Warehouse loans outstanding decreased $139 million, or 18%, from December 31, 2025 to $615 million as of June 30, 2026. |
| ● | Average committed Warehouse lines of credit increased to $1.17 billion for the first six months of 2026 from $981 million for the first six months of 2025. |
| ● | Average LOC usage decreased to 51% during the first six months of 2026 compared to 52% during the same period in 2025. |
(III)Tax Refund Solutions segment
| ● | Net income decreased $11.5 million, or 50%, from the first six months of 2025 to the same period in 2026. |
As previously disclosed, TRS’ largest Tax Provider contract based on product volume and revenue was not renewed for the 2026 Tax Season (which began in December 2025). In total, this relationship contributed $10.2 million of net income to the first six months of 2025 operating results, consisting of: $17.7 million of net interest income, $6.7 million of Provision expense, $3.8 million of net RT fees, $1.7 million of noninterest expense, and $2.8 million of estimated income tax expense.
| ● | Net interest income decreased $18.4 million, or 62%, from the first six months of 2025 to the same period in 2026. |
| ● | Total ERA/RA volume declined $543 million, or 68%, from $802 million originated for the 2025 Tax Season to $259 million for the 2026 Tax Season. Total RA origination volume was $246 million during 2026 compared to $663 million during 2025, with originations for both periods occurring during the first quarter. Total ERA origination volume was $13 million during the 2026 Tax Season compared to $139 million during the 2025 Tax Season, with the majority of the originations occurring in December 2025 and December 2024. |
| ● | Provision was a net charge of $4.3 million during the first six months of 2026 compared to a net charge of $11.5 million for the same period in 2025. |
| ● | Noninterest income decreased $3.8 million, or 23%, from the first six months of 2025 to the same period in 2026. |
| ● | Noninterest expense totaled $5.4 million for the first six months of 2026 compared to $5.7 million for the same period in 2025. |
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(IV)Republic Payment Solutions segment
| ● | Net income decreased $1.4 million, or 25%, for the first six months of 2026 compared to the same period in 2025. |
| ● | Net interest income decreased $1.5 million or 20%, for the first six months of 2026 compared to the same period in 2025. |
| ● | Noninterest income was $1.5 million for the first six months of 2026 unchanged from $1.5 million for the first six months of 2025. |
| ● | Noninterest expense totaled $2.5 million for the first six months of 2026 compared to $2.2 million for the first six months of 2025. |
| ● | Total RPS deposits increased $180 million, or 57%, from December 31, 2025 to $495 million as of June 30, 2026, driven primarily by the onboarding of a new prepaid card marketer-servicer relationship. |
(V)Republic Credit Solutions segment
| ● | Net income decreased $1.0 million, or 7%, for the first six months of 2026 compared to the same period in 2025. |
| ● | Net interest income increased $2.1 million, or 8%, for the first six months of 2026 compared to the same period in 2025. |
| ● | Provision was a net charge of $10.4 million during the first six months of 2026 compared to a net charge of $8.0 million for the same period in 2025. |
| ● | As a percentage of total RCS loans, the RCS ACLL was 16.01% as of June 30, 2026, compared to 17.15% as of December 31, 2025 and 17.67% as of June 30, 2025. |
| ● | Noninterest income increased $1.3 million, or 19%, from the first six months of 2025 to the first six months of 2026. |
| ● | Noninterest expense totaled $7.8 million for the first six months of 2026 compared to $5.5 million for the same period in 2025. |
| ● | Nonperforming loans to total loans for the RCS segment was 0.06% as of June 30, 2026 compared to 0.14% as of December 31, 2025 and 0.09% as of June 30, 2025. Delinquent loans to total loans for the RCS segment was 7.18% as of June 30, 2026 compared to 7.87% as of December 31, 2025 and 7.67% as of June 30, 2025. |
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RESULTS OF OPERATIONS (Six months ended June 30, 2026, Compared to Six months ended June 30, 2025)
Net Interest Income
See the section titled “Asset/Liability Management and Market Risk” in this section of the document regarding the Bank’s interest rate sensitivity.
Traditional Banking results of operations are primarily dependent upon net interest income, which represents the spread between interest income and fees on interest-earning assets and interest expense on interest-bearing liabilities used to fund those assets. Interest-earning assets primarily consist of investment securities and commercial and consumer loans secured by real estate and/or personal property, while funding sources include interest-bearing deposit accounts, SSUAR, and short- and long-term borrowings. FHLB advances have historically served as a significant source of wholesale funding and liquidity. Accordingly, net interest income is influenced by changes in the volume and mix of interest-earning assets and liabilities, as well as movements in market interest rates.
On December 10, 2025, the FRB reduced the FFTR by 25 basis points to 3.75%, where it remained through June 30, 2026. Since September 2024, cumulative reductions to the FFTR have totaled 175 basis points. While the FFTR was within a target range of 3.50% to 3.75% as of June 30, 2026, recent FOMC communications indicated that policymakers continued to monitor inflationary pressures and labor market conditions and remained data dependent regarding the future path of monetary policy.
Based on the Company’s overall interest rate risk position, Management believes that increases in interest rates across the yield curve generally would have a favorable impact on the Company's net interest income, while declines in interest rates generally would have a negative impact on the Company’s net interest income. The ultimate impact of future changes in the FFTR will depend on several factors, including continued migration from noninterest-bearing to interest-bearing deposits, the shape and steepness of the yield curve, customer demand for the Company’s lending and deposit products, the Company’s ability to manage deposit costs relative to changes in benchmark rates and yields on interest-earning assets, and the Company’s overall liquidity requirements.
Total Company net interest income was $172.2 million during the first six months of 2026 compared to $178.9 million during the same period in 2025, representing a $6.7 million, or 4% decrease. Total Company NIM decreased 21 basis points to 5.23% for the first six months 2026 compared to 5.44% for the same period in 2025, primarily reflecting lower net interest income generated by RPG.
The most significant drivers of the fluctuation in Total Company net interest income by reportable segment were as follows:
| (I) | Traditional Banking segment |
Traditional Banking net interest income was $119.7 million for the first six months of 2026, a $10.0 million, or 9%, increase from $109.7 million achieved for the first six months of 2025. The increase in net interest income was primarily driven by a 32 basis point expansion in the Traditional Bank’s NIM to 4.13%.
Items of note impacting the Traditional Bank’s change in net interest income and NIM between the first six months of 2025 and the first six months of 2026 were as follows:
| ● | Traditional Banking average interest-earning cash declined to $300 million with a weighted-average yield of 3.69% during the first six months of 2026, compared to $570 million with a yield of 4.45% during the first six months of 2025. The decline in average interest-earning cash balances reflected the strategic deployment of excess liquidity into loan growth and longer-duration investment securities, which provided more attractive yields than overnight liquidity alternatives tied to the FFTR. |
| ● | Traditional Banking average investments increased to $910 million with a weighted-average yield of 4.19% during the first six months of 2026, compared to $653 million with a yield of 3.60% during the first six months of 2025. The increase in average balances and yield reflected the Company’s redeployment of excess liquidity into longer-term investment securities. |
| ● | From 2024 through the first nine months of 2025, management maintained a more conservative loan pricing strategy, which contributed to lower origination volumes across most product categories. Beginning in the fourth quarter of 2025, management adopted a more competitive pricing approach, driving growth in average Traditional Banking loan balances during the fourth quarter of 2025 and first half of 2026. Given the current positively sloped yield curve, management expects to continue this strategy, subject to market conditions and funding costs remaining favorable. |
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Traditional Banking average loans increased $51 million, or 1%, from $4.58 billion during the first six months of 2025 to $4.63 billion during the first six months of 2026. The weighted-average yield remained unchanged at 5.65% for both periods.
Period-over-period comparisons of average loan balances and yields were adversely impacted by the sale of approximately $82 million of loans and lease financing receivables during the first quarter of 2026. These loans were transferred from held for investment to HFS in December 2025 and contributed an estimated 5 basis points to the Traditional Banking loan portfolio yield during the first six months of 2025.
In addition to strong loan production, the Traditional Banking segment continued to redeploy cash flows from lower-yielding loan runoff into new originations at higher yields during 2026. Combined with a favorable shift toward higher-spread lending categories, these actions more than offset the pressure on asset yields resulting from the 75 basis point decline in the FFTR over the past 12 months.
The Traditional Bank’s average cost of interest-bearing liabilities decreased 42 basis points from 2.09% during the first six months of 2025 to 1.67% during the first six months of 2026 driven primarily by the following:
| ● | The weighted-average cost of total interest-bearing deposits decreased 32 basis points, from 2.30% during the first six months of 2025 to 1.98% during the first six months of 2026, while total average interest-bearing deposit balances increased $184 million, or 5%. Average balances benefited from a $256 million combined increase in money market and time deposit accounts, partially offset by a $77 million decline in brokered deposits and interest-bearing transaction accounts. Disciplined deposit pricing initiatives and a favorable shift in funding mix drove a meaningful reduction in the overall cost of interest-bearing deposits. |
| ● | Average FHLB advances declined $153 million from the first six months of 2025 to the first six months of 2026, while the weighted-average cost decreased 26 basis points to 4.09%. During the second quarter of 2026, the Traditional Banking segment began realizing the benefit of the March 2026 prepayment of $220 million of higher-cost FHLB advances, which carried a weighted-average rate of 4.57%. The prepayment contributed to lower net funding costs and further supported NIM expansion during the first six months of 2026. |
| ● | Average noninterest-bearing deposits declined $10 million, or less than 1%, from the first six months of 2025 to the first six months of 2026. The decline reflects the continued migration of client balances from noninterest-bearing accounts into interest-bearing deposit products, a trend that began in late 2022 amid elevated interest rates, periods of an inverted yield curve, and increased competition for deposits. Premium-rate checking and savings products have remained particularly attractive to both consumer and business clients in this environment. |
For additional discussion of the factors impacting interest-earning cash and deposit balances as well as deposit betas, see sections titled “Cash and Cash Equivalents” and “Deposits” in the “COMPARISON OF FINANCIAL CONDITION” section of the filing.
| (II) | Warehouse Lending segment |
Warehouse Lending net interest income increased $1.1 million, or 16%, from the first six months of 2025 compared to the first six months of 2026.
Average outstanding Warehouse lines of credit increased $82 million, or 16%, from $513 million during the first six months of 2025 to $595 million for the first six months of 2026, while the weighted-average yield declined 65 basis points to 6.34%. Average committed Warehouse lines expanded from $982 million to $1.17 billion over the same period, supporting continued growth in customer relationships. Average utilization moderated from 52% to 51%, as commitment growth outpaced growth in outstanding balances.
| (III) | Tax Refund Solutions segment |
TRS’s net interest income decreased $18.4 million, or 62%, from the first six months of 2025 to the first six months of 2026. Loan-related interest and fees decreased $20.1 million, or 60%, for the first six months of 2026, consistent with the 68% decline in total ERA/RA volume for the 2025 tax filing season.
As previously disclosed, TRS’ largest Tax Provider contract based on product volume and revenue was not renewed for the 2026 Tax Season (which began in December 2025). In total, this relationship contributed $17.7 million in net interest income to the first six months of 2025 operating results.
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| (IV) | Republic Payment Solutions segment |
Net interest income from the Company’s prepaid card division decreased $1.5 million, or 20%, from the first six months of 2025 to the first six months of 2026. The decline in net interest income reflected a lower yield earned on the segment’s funding source. The lower yield primarily resulted from the 75 basis point decline in the FFTR over the past 12 months. As a result, RPS earned a yield of 3.68% on average deposit balances of $359 million during the first six months of 2026, compared with a yield of 4.42% on average deposit balances of $362 million during the first six months of 2025.
The RPS segment’s largest marketer-servicer did not achieve the minimum contractual thresholds for average deposit balances in order to earn a revenue share for the first six months of 2025 and 2026. At this time, Management is uncertain how much the revenue share component may be in the future, as deposit balances originated through this marketer-servicer are at levels near the thresholds necessary to achieve a revenue share, making a future revenue share possible, but not certain.
In mid-June 2026, RPS onboarded a new prepaid card marketer-servicer program that maintained approximately $178 million of deposits outstanding as of June 30, 2026. These balances are subject to a revenue share arrangement.
| (V) | Republic Credit Solutions segment |
RCS’s net interest income increased $2.1 million, or 5% from the first six months of 2025 to the first six months of 2026, driven primarily by growth across both RCS LOC programs and the segment’s installment loan product.
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The following table presents average balances along with the related calculations of tax-equivalent net interest income, NIM and net interest spread for the related periods.
Table 7 — Total Company Average Balance Sheets and Interest Rates
Six Months Ended June 30, 2026 | Six Months Ended June 30, 2025 | |||||||||||||||||||
Average | | | Average | Average | | | Average | |||||||||||||
(in thousands) | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||
ASSETS | ||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||
Federal funds sold and other interest-earning deposits | $ | 300,416 | $ | 5,503 |
| 3.69 | % | | $ | 570,140 | $ | 12,587 |
| 4.45 | % | |||||
Investment securities, including FHLB stock (a) | 909,595 | 18,911 |
| 4.19 | 653,058 | 11,657 |
| 3.60 | ||||||||||||
TRS Refund Advance loans (b) | 44,396 | 12,418 | 56.41 | 150,923 | 33,315 | 44.51 | ||||||||||||||
RCS LOC products (b) | 46,164 | 26,477 | 115.66 | 45,885 | 24,671 | 108.43 | ||||||||||||||
Other RPG loans |
| 112,154 | 4,460 |
| 8.02 |
| 116,435 | 3,563 |
| 6.17 | ||||||||||
Outstanding Warehouse lines of credit | 595,170 | 18,704 | 6.34 | 512,980 | 17,793 | 6.99 | ||||||||||||||
Traditional Bank loans (c) |
| 4,632,498 | 129,845 |
| 5.65 |
| 4,581,598 | 128,455 |
| 5.65 | ||||||||||
Total loans (d) | 5,430,382 | 191,904 | 7.13 | 5,407,821 | 207,797 | 7.75 | ||||||||||||||
Total interest-earning assets |
| 6,640,393 |
| 216,318 |
| 6.57 |
| 6,631,019 |
| 232,041 |
| 7.06 | ||||||||
Allowance for credit loss |
| (90,599) |
| (104,008) | ||||||||||||||||
Noninterest-earning assets: | ||||||||||||||||||||
Noninterest-earning cash and cash equivalents |
| 116,152 |
| 256,814 | ||||||||||||||||
Premises and equipment, net |
| 39,835 |
| 32,883 | ||||||||||||||||
Bank owned life insurance |
| 111,510 |
| 108,010 | ||||||||||||||||
Other assets (a) |
| 280,353 |
| 273,420 | ||||||||||||||||
Total assets | $ | 7,097,644 | $ | 7,198,138 | ||||||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||
Transaction accounts | $ | 1,686,510 | $ | 3,902 |
| 0.47 | % | $ | 1,717,873 | $ | 5,224 |
| 0.61 | % | ||||||
Money market accounts |
| 1,558,514 | 18,420 |
| 2.38 |
| 1,377,543 | 19,658 |
| 2.88 | ||||||||||
Time deposits |
| 507,899 | 9,090 |
| 3.61 |
| 429,194 | 8,140 |
| 3.82 | ||||||||||
Reciprocal money market and time deposits | 312,743 | 4,115 | 2.65 | 307,536 | 5,100 | 3.34 | ||||||||||||||
Brokered deposits |
| 109,274 | 2,427 |
| 4.48 |
| 229,563 | 5,106 |
| 4.49 | ||||||||||
Total interest-bearing deposits |
| 4,174,940 |
| 37,954 |
| 1.83 |
| 4,061,709 |
| 43,228 |
| 2.15 | ||||||||
SSUARs and other short-term borrowings |
| 85,888 |
| 178 |
| 0.42 |
| 98,202 |
| 277 |
| 0.57 | ||||||||
Federal Home Loan Bank advances |
| 291,983 |
| 6,032 |
| 4.17 |
| 444,972 |
| 9,646 |
| 4.37 | ||||||||
Total interest-bearing liabilities |
| 4,552,811 |
| 44,164 |
| 1.96 |
| 4,604,883 |
| 53,151 |
| 2.33 | ||||||||
Noninterest-bearing liabilities and Stockholders’ equity: | ||||||||||||||||||||
Noninterest-bearing deposits |
| 1,273,931 |
| 1,406,890 | ||||||||||||||||
Other liabilities |
| 128,619 |
| 147,103 | ||||||||||||||||
Stockholders’ equity |
| 1,142,283 |
| 1,039,262 | ||||||||||||||||
Total liabilities and stock-holders’ equity | $ | 7,097,644 | $ | 7,198,138 | ||||||||||||||||
Net interest income | $ | 172,154 | $ | 178,890 | ||||||||||||||||
Net interest spread |
| 4.61 | % |
| 4.73 | % | ||||||||||||||
Net interest margin |
| 5.23 | % |
| 5.44 | % | ||||||||||||||
| a) | For the purpose of this calculation, the fair value adjustment on debt securities is included as a component of other assets. |
| b) | Interest income is composed either entirely or predominantly of loan fees. See the following table titled “Loan Fee Income.” |
| c) | Average balance includes the principal balance of nonaccrual loans and loans HFS that are not carried at fair value and are inclusive of all loan premiums, discounts, fees and costs. |
| d) | See the following table titled “Loan Fee Income” for detail of loan fees by reporting segment. |
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The following table illustrates loan fees recorded as interest income on loans by segment:
Table 8 — Loan Fee Income
Six Months Ended June 30, | ||||||
(in thousands) | 2026 | 2025 | ||||
Traditional Banking | $ | 2,568 | $ | 2,658 | ||
Warehouse Lending | 757 | 679 | ||||
Total Core Bank | 3,325 | 3,337 | ||||
Tax Refund Solutions | 13,605 | 33,700 | ||||
Republic Credit Solutions | 26,477 | 24,671 | ||||
Total Republic Processing Group | 40,082 | 58,371 | ||||
Total Loan Fees | $ | 43,407 | $ | 61,708 | ||
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
Six Months Ended June 30, 2026 | ||||||||||
Compared to | ||||||||||
Six Months Ended June 30, 2025 | ||||||||||
Total Net | Increase / (Decrease) Due to | |||||||||
(in thousands) | Change | | Volume | | Rate | |||||
Interest income: | ||||||||||
Federal funds sold and other interest-earning deposits | $ | (7,084) | $ | (5,209) | $ | (1,875) | ||||
Investment securities, including FHLB stock | 7,254 | 5,111 | 2,143 | |||||||
TRS Refund Advance loans* | (20,897) | (28,072) | 7,175 | |||||||
RCS LOC products | 1,806 | 151 | 1,655 | |||||||
Other RPG loans |
| 897 |
| (135) |
| 1,032 | ||||
Outstanding Warehouse lines of credit | 911 | 2,682 | (1,771) | |||||||
Traditional Banking loans |
| 1,390 |
| 1,427 | (37) | |||||
Net change in interest income |
| (15,723) |
| (24,045) |
| 8,322 | ||||
Interest expense: | ||||||||||
Transaction accounts |
| (1,322) |
| (94) | (1,228) | |||||
Money market accounts |
| (1,238) |
| 2,390 | (3,628) | |||||
Time deposits |
| 950 |
| 1,428 | (478) | |||||
Reciprocal money market and time deposits | (985) |
| 85 | (1,070) | ||||||
Brokered deposits | (2,679) | (2,671) |
| (8) | ||||||
SSUARs and other short-term borrowings |
| (99) |
| (32) | (67) | |||||
Federal Home Loan Bank advances |
| (3,614) |
| (3,180) |
| (434) | ||||
Net change in interest expense |
| (8,987) |
| (2,074) |
| (6,913) | ||||
Net change in net interest income | $ | (6,736) | $ | (21,971) | $ | 15,235 | ||||
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Provision
For additional discussion regarding Provision, see the sections titled “Allowance for Credit Losses on Loans” and “Asset Quality” in the “COMPARISON OF FINANCIAL CONDITION” section of the filing.
Total Company Provision was a net charge of $14.9 million for the first six months of 2026 compared to a net charge of $19.5 million for the same period in 2025.
The most significant drivers of the fluctuation in Total Company Provision by reportable segment were as follows:
The Traditional Banking Provision during the first six months of 2026 was a net charge of $562,000 compared to a net credit of $252,000 for the first six months of 2025.
The net charge of $562,000 for the first six months of 2026 was primarily driven by the following:
| ● | The Traditional Banking segment recorded net charge offs of $418,000 concentrated in small dollar overdrawn DDAs. |
| ● | While Traditional Banking period end loan balances grew $109 million during the first six months of 2026, Provision expense benefited from a favorable shift in portfolio composition. Specifically, C&LD balances, which carry higher reserve requirements than most other lending categories, declined $23 million, as projects progressed and balances primarily migrated into the CRE portfolio. This shift reduced reserve requirements and contributed meaningfully to Provision expense for the first six months of 2026. |
The net credit of $252,000 for the first six months of 2025 was primarily driven by the following:
| ● | The Traditional Banking segment recorded net charge-offs of $449,000, concentrated in small dollar overdrawn DDAs. |
| ● | Traditional Banking period end loan balances increased a modest $13 million during the first six months of 2025, as the portfolio continued to shift toward loan categories with higher reserve requirements. |
| ● | During the second quarter of 2025, as a practical expedient, the Company established a minimum loan balance threshold for assessing credit impairment, resulting in a $518,000 credit to Provision. |
| ● | During the first quarter of 2025, approximately $5 million of consumer credit card loans were transferred from held for investment to HFS, resulting in a $414,000 credit to Provision. The sale was completed during the second quarter of 2025. |
As a percentage of total Traditional Banking loans, the Traditional Banking ACLL was 1.37% as of June 30, 2026, compared to 1.40% as of December 31, 2025 and 1.29% as of June 30, 2025.
Based on information currently available, management believes the ACLL related to Traditional Banking loans was adequate as of June 30, 2026.
Warehouse recorded a net credit to the Provision of $349,000 for the first six months of 2026 compared to a net charge of $302,000 for the same period in 2025. Provision for both periods reflected changes in general reserves consistent with changes in outstanding period end balances. Outstanding Warehouse period end balances decreased $139 million during the first six months of 2026 compared to an increase of $121 million during the first six months of 2025.
As a percentage of total Warehouse outstanding balances, the Warehouse ACLL was 0.25% as of June 30, 2026, December 31, 2025, and June 30, 2025.
Based on information currently available, management believes the ACLL related to Warehouse loans was adequate as of June 30, 2026.
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| (III) | Tax Refund Solutions segment |
Substantially all TRS Provision in both periods was related to its ERA and RA products.
TRS offered (i) its RA product during the first two months of 2026, along with its ERA product during December 2025 and the first two weeks of 2026 for the 2026 Tax Season and (ii) its RA product during the first two months of 2025, along with its ERA product during December 2024 and the first two weeks of 2025 for the 2025 Tax Season.
As is the case each year as of March 31st, the ACLL related to RAs is an estimate with that estimate finalized during the second quarter when all unpaid RAs, including ERAs, are charged-off as of June 30th. The final charge-offs posted during the second quarter of a calendar year can be different (higher or lower) than the Company’s March 31st Provision estimate based on actual paydowns received during the second quarter. RAs collected during the second half of the year are recorded as recoveries of previously charged-off loans unless they are covered under a Tax Provider loss guaranty arrangement. Any RAs subject to a loss guaranty arrangement that are recovered during the second half of the year are distributed to the guarantor.
TRS recorded a net charge to the Provision of $4.3 million during the first six months of 2026 compared to a net charge of $11.5 million for the same period in 2025. As previously disclosed, TRS’ largest Tax Provider contract based on product volume was not renewed for the 2026 Tax Season (which began in December 2025). In total, this relationship contributed $6.7 million of Provision expense to the first six months of 2025 operating results.
As of June 30, 2026, TRS’s blended incurred loss rate for both guaranteed and unguaranteed ERAs/RAs, was 1.93% of the $259 million in total RAs and ERAs originated during December 2025 and the first two months of 2026. Approximately $1.4 million of these charge-offs as of June 30, 2026 are expected to be recovered under loan-loss guaranty arrangements with Tax Providers. As a result, these charge-offs were also reflected as recoveries as of June 30, 2026 and recorded as receivables in other assets on the Balance Sheet.
As of June 30, 2025, TRS’s blended incurred loss rate for both guaranteed and unguaranteed ERAs/RAs, was 2.81% of the $802 million in total RAs and ERAs originated during December 2024 and the first two months of 2025. In June 2025, the Company charged off all unpaid TRS loans which equated to 3.11% of total originations. The final loss rate of unguaranteed RAs/ERAs for the 2025 Tax Season was 2.56% of originations.
The Bank’s ability to control ERA/RA losses is highly dependent upon its ability to predict the taxpayer’s likelihood of receiving the tax refund as claimed on the taxpayer’s tax return. In addition, the Bank’s ability to control losses for the ERA product is highly dependent upon the taxpayer returning to a Tax Provider for the filing of their final tax return. Each year, the Bank’s ERA/RA approval model is based primarily on the prior year’s tax refund payment patterns. Because the substantial majority of ERA/RA volume occurs each year before that year’s tax refund payment patterns can be analyzed and subsequent underwriting changes implemented, credit losses during a given year could be higher than management’s predictions if tax refund payment patterns change materially between years.
Based on information currently available, management believes the ACLL related to TRS loans was adequate as of June 30, 2026.
See additional detail regarding ERAs/RAs under the Footnote titled “Loans and Allowance for Credit Losses on Loans” of Part I Item 1 “Financial Statements” and “Business Segment Composition” in this section of the filing.
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| (IV) | Republic Payment Solutions segment |
There is no ACLL or Provision associated with the RPS segment, as its products primarily consist of prepaid debit card solutions.
As illustrated in the following table, RCS recorded a net charge to the Provision of $10.4 million during the first six months of 2026 compared to a net charge of $8.0 million during the same period in 2025. RCS recorded net charge-offs of $7.5 million during the first six months of 2026 compared to $7.9 million during the first six months of 2025. The remainder of the Provision variance was attributable to a shift toward loan categories with higher reserve requirements, such as the LOC II product.
Although RCS loan products generally generate higher yields, they also entail greater credit risk than Traditional Banking loan products. As a percentage of total RCS loans, the ACLL was 16.01% at June 30, 2026, compared to 17.15% at December 31, 2025, and 17.67% at June 30, 2025.
Based on information currently available, management believes the ACLL related to RCS loans was adequate as of June 30, 2026.
Table 10 — Republic Credit Solutions Provision by Product Type
Six Months Ended June 30, | ||||||||||||
(in thousands) | 2026 | 2025 | $ Change | % Change | ||||||||
Product: | ||||||||||||
Lines of credit | $ | 10,370 | $ | 7,975 | $ | 2,395 | 30 | |||||
Healthcare receivables | 58 | (25) | 83 | NM | ||||||||
Total RCS provision | $ | 10,428 | $ | 7,950 | $ | 2,478 | 31 | |||||
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Table 11 — Summary of Loan and Lease Loss Experience
Six Months Ended | |||||||
June 30, | |||||||
(dollars in thousands) | 2026 | 2025 | |||||
ACLL at beginning of period | $ | 85,352 | $ | 91,978 | |||
Charge-offs: | |||||||
Traditional Banking: | |||||||
Residential real estate | (65) |
| (29) | ||||
Commercial & industrial |
| — |
| (18) | |||
Lease financing receivables |
| (1) |
| (138) | |||
Home equity |
| (22) |
| — | |||
Consumer | (753) | (556) | |||||
Total Traditional Banking | (841) | (741) | |||||
Warehouse lines of credit |
| — |
| — | |||
Total Core Banking | (841) | (741) | |||||
Republic Processing Group: | |||||||
Tax Refund Solutions: | |||||||
Refund Advances | (6,367) |
| (24,893) | ||||
Other TRS commercial & industrial | (72) |
| (165) | ||||
Republic Credit Solutions | (8,180) |
| (8,638) | ||||
Total Republic Processing Group | (14,619) | (33,696) | |||||
Total charge-offs |
| (15,460) |
| (34,437) | |||
Recoveries: | |||||||
Traditional Banking: | |||||||
Residential real estate | 67 | 63 | |||||
Commercial real estate |
| 4 |
| 3 | |||
Commercial & industrial |
| 30 |
| — | |||
Lease financing receivables |
| 43 |
| 22 | |||
Home equity |
| 66 |
| 27 | |||
Consumer | 213 | 177 | |||||
Total Traditional Banking | 423 | 292 | |||||
Warehouse lines of credit |
| — |
| — | |||
Total Core Banking | 423 | 292 | |||||
Republic Processing Group: | |||||||
Tax Refund Solutions: | |||||||
Refund Advances | 1,809 |
| 3,699 | ||||
Other TRS commercial & industrial | 2 |
| 3 | ||||
Republic Credit Solutions | 704 |
| 730 | ||||
Total Republic Processing Group | 2,515 | 4,432 | |||||
Total recoveries |
| 2,938 |
| 4,724 | |||
Net loan charge-offs |
| (12,522) |
| (29,713) | |||
Provision - Core Banking |
| 213 |
| 50 | |||
Provision - RPG |
| 14,724 |
| 19,445 | |||
Total Provision |
| 14,937 |
| 19,495 | |||
ACLL at end of period | $ | 87,767 | $ | 81,760 | |||
Credit Quality Ratios - Total Company: | |||||||
ACLL to total loans |
| 1.62 | % |
| 1.52 | ||
ACLL to nonperforming loans |
| 286 |
| 378 | |||
Net loan charge-offs to average loans |
| 0.47 |
| 1.11 | |||
Credit Quality Ratios - Core Banking: | |||||||
ACLL to total loans |
| 1.24 | % |
| 1.16 | ||
ACLL to nonperforming loans |
| 213 |
| 282 | |||
Net loan charge-offs to average loans | 0.02 | 0.02 | |||||
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Table 12 — Annualized Net Loan Charge-offs (Recoveries) to Average Loans by Loan Category
Net Loan Charge-Offs (Recoveries) to Average Loans | ||||||
Six Months Ended | ||||||
June 30, | ||||||
2026 | 2025 | |||||
Traditional Banking: | ||||||
Residential real estate: | ||||||
Owner occupied | — | % | (0.01) | % | ||
Nonowner occupied | — | — | ||||
Commercial real estate: | ||||||
Owner-occupied | — | — | ||||
Nonowner-occupied | — | — | ||||
Multi-Family | — | — | ||||
Construction & land development | — | — | ||||
Commercial & industrial | (0.01) | 0.01 | ||||
Lease financing receivables | (0.41) | 0.25 | ||||
Aircraft | — | — | ||||
Home equity | (0.02) | — | ||||
Consumer: | ||||||
Credit cards | 0.08 | 0.58 | ||||
Overdrafts | 130.63 | 83.63 | ||||
Automobile loans | (1.19) | (1.41) | ||||
Other consumer | 0.62 | 0.07 | ||||
Total Traditional Banking | 0.02 | 0.02 | ||||
Warehouse lines of credit | — | — | ||||
Total Core Banking | 0.02 | 0.02 | ||||
Republic Processing Group: | ||||||
Tax Refund Solutions: | ||||||
Refund Advances* | 20.07 | 27.34 | ||||
Other TRS commercial & industrial | 1.80 | 1.34 | ||||
Republic Credit Solutions | 11.29 | 12.56 | ||||
Total Republic Processing Group | 12.04 | 19.18 | ||||
Total | 0.47 | % | 1.11 | % | ||
* All loss rates above are based on net charge-offs as a function of average outstanding portfolio balances. RAs are originated during the first two months of each year, with all RAs charged-off by June 30th of each year. Due to their relatively short life, RA net charge-offs are analyzed by the Company as a percentage of total RA originations, not as a percentage of average outstanding balances.
The Company’s net charge-offs to average total Company loans decreased from 1.11% during the first six months of 2025 to 0.47% during the first six months of 2026, as net charge-offs declined $17.2 million, or 58%, while average total Company loans increased $23 million, over the same periods. As discussed above, the decline in net charge-offs was primarily attributable to the nonrenewal of TRS’ largest Tax Provider contract based on product volume, as well as lower ERA and RA funding activity.
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Noninterest Income
Total Company noninterest income decreased $1.3 million, or 3%, during the first six months of 2026 compared to the same period in 2025.
The most significant drivers of the fluctuation in Total Company noninterest income by reportable segment were as follows:
| (I) | Traditional Banking segment |
Traditional Banking noninterest income increased $1.2 million, or 5%, from the first six months of 2025 to the same period in 2026, as results were impacted by the following notable nonrecurring or infrequent items.
| ● | During December 2025, approximately $82 million of loans and leases were transferred from held for investment to HFS, as the Bank entered into an Asset Purchase Agreement to sell its St. Louis-based RBF operations. The sale was completed during the first quarter of 2026, resulting in a $5.8 million pre-tax gain, net of broker commissions. |
| ● | During the first quarter of 2025, the Traditional Banking segment recorded a $4.1 million pre-tax gain on sale of Visa Class B-1 shares that had been carried at a zero book value since received in the 2008 Visa initial public offering. |
| ● | During the first quarter of 2025, the Traditional Banking segment recorded a $1.6 million pre-tax insurance recovery related to a Marine Lending charge-off originally recognized in the third quarter of 2024. |
Service charges on deposits, which increased $982,000, or 14%, was the key driver of the change in noninterest income for the first six months of 2026 and resulted primarily from higher volumes in activity-based fees, particularly insufficient funds fees. The Traditional Banking segment earns a substantial majority of its fee income related to its overdraft service program from the per item fee it assesses its customers for each insufficient-funds check or electronic debit presented for payment. The total per item fees, net of refunds, included in service charges on deposits for the six months ended June 30, 2026, and 2025 were $4.4 million and $3.5 million. The total daily overdraft charges, net of refunds, included in interest income for the six months ended June 30, 2026, and 2025 were $633,000 and $582,000.
| (II) | Tax Refund Solutions segment |
As previously disclosed, TRS’s largest Tax Provider contract based on product volume was not renewed for the 2026 Tax Season, which began in December 2025. This relationship contributed $3.8 million of net RT fees during the first six months of 2025.
For a discussion of factors affecting the comparison of TRS's results of operations for the first six months of 2026 and 2025, see "OVERVIEW (Six Months Ended June 30, 2026, Compared to Six Months Ended June 30, 2025) – Tax Refund Solutions."
| (III) | Republic Credit Solutions segment |
RCS noninterest income, primarily consisting of program fees, increased $1.3 million, or 19%, during the first six months of 2026 compared to the same period in 2025, reflecting higher sales volume from RCS’s installment loan and LOC II products.
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Noninterest Expense
Total Company noninterest expense decreased $1.0 million, or 1%, during the first six months of 2026 compared to the same period in 2025.
The most significant drivers of the fluctuation in Total Company noninterest expense by reportable segment were as follows:
| (I) | Traditional Banking segment |
Traditional Banking noninterest expense decreased $3.3 million, or 3%, during the first six months of 2026 compared to the same period in 2025, as results were impacted by the following notable nonrecurring or infrequent items:
| ● | During March 2026, the Traditional Banking segment prepaid $220 million of long-term fixed-rate FHLB advances and incurred $2.3 million of pre-tax early termination penalties, which were recorded in noninterest expense. The prepaid advances carried a weighted-average cost of 4.57% and were prepaid as part of management’s proactive balance sheet optimization and interest rate risk management strategy. Based on interest rates at the time of repayment and assuming short-term interest rates remain at or near current levels, management estimated the prepayment penalty would be recovered through lower funding costs within approximately 1.2 years. |
| ● | During the first six months of 2025, primarily during the first quarter, the Traditional Banking segment recorded $5.9 million of pre-tax core system deconversion and consulting expenses. Approximately $4.1 million related to contract negotiation assistance from a third-party consultant and was based on a percentage of anticipated savings over the five-year term of the new contract. The remaining $1.8 million of expense related to data conversion from the legacy core system and the integration of multiple secondary systems into the new core platform, which went live in mid-October. |
| ● | Salaries and employee benefits increased by a combined $515,000, or 1%, primarily due to a $783,000 increase in estimated bonus-related expenses and partially offset by a decline in healthcare claims. |
| ● | Technology, equipment, and communication expenses decreased $645,000 or 4%, driven by cost savings realized following the core system conversion completed in mid-October 2025. |
| ● | Marketing and development expenses increased $526,000, or 37%, primarily driven by the Bank's new branding initiative. Management expects marketing expense to remain near current levels for the foreseeable future. |
| (II) | Republic Credit Solutions segment |
Noninterest expense at the RCS segment increased $2.3 million, or 41%, during the first six months of 2026 compared to the same period in 2025, driven primarily by a $1.8 million, increase in marketing and development expenses, which generally fluctuate in-line with overall origination volume. Under the terms of the Company’s contract with its LOC II marketer-servicer, RCS reimburses the marketer-servicer a certain dollar amount for marketing costs based on each new product originated during the period. In addition, the second quarter of 2025 benefited from a $763,000 reimbursement of marketing and development expense related to a prior-period billing dispute.
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COMPARISON OF FINANCIAL CONDITION AS OF JUNE 30, 2026, AND DECEMBER 31, 2025
Overview
Total assets increased $20 million to $7.06 billion at June 30, 2026, from $7.04 billion at December 31, 2025. The increase was driven primarily by a $134 million increase in cash and cash equivalents, partially offset by an $86 million decline in consumer loans HFS.
Total liabilities decreased $35 million, or 1%, to $5.91 billion at June 30, 2026, from $5.94 billion at December 31, 2025, as $349 million of deposit growth was substantially offset by a $349 million paydown of FHLB advances and a $20 million decline in SSUAR accounts.
Stockholders’ equity increased $55 million, or 5%, to $1.16 billion at June 30, 2026, compared to $1.10 billion at December 31, 2025. This increase reflected net income of $75.4 million, partially offset by a decline in AOCI and cash dividends declared during 2026. The decline in AOCI was attributable to changes in the interest-rate environment and the corresponding impact on the valuation of the AFS debt-securities portfolio and cash-flow-hedging derivatives.
Cash and Cash Equivalents
Cash and cash equivalents include cash, deposits with other financial institutions with original maturities less than 90 days, and federal funds sold. The Company held $354 million in cash and cash equivalents as of June 30, 2026, compared to $220 million as of December 31, 2025, driven primarily by cash received for the onboarding of a new RPS prepaid card marketer-servicer deposit relationship during mid-June 2026.
Average interest-earning cash and cash equivalents totaled $300 million during the first six months of 2026, compared to $570 million during the first six months of 2025, reflecting the Company’s continued deployment of excess liquidity into investment securities. Beginning in the fourth quarter of 2024, the Company strategically purchased longer-duration investment securities to capitalize on a more favorable yield curve and higher relative yields than those available on overnight cash. The yield curve began to steepen during the fourth quarter of 2024, became positively sloped in March 2025, and remained so through June 30, 2026.
Cash held at the FRB earns interest on balances in excess of required reserves and generated a weighted-average yield of 3.69% during the first six months of 2026, compared to 4.45% during the first six months of 2025, reflecting the decline in the FFTR. Cash held within the Bank’s banking centers and ATM/ITM networks does not earn interest.
Investment Securities
Table 13 — Purchases of Investment Securities
| Six Months Ended June 30, 2026 | |||||||||
Purchase | Yield to | Estimated Weighted | ||||||||
(dollars in thousands) | Cost | Maturity | Average Life | |||||||
Purchases by Class for the Three Months Ended March 31, 2026 | ||||||||||
U.S. Government Agencies | $ | 84,901 | 4.07 | % | 1.76 | yrs | ||||
Mortgage-backed securities - residential | 62,811 | 4.42 | 5.72 | |||||||
Total | $ | 147,712 | 4.22 | 3.44 | yrs | |||||
Purchases by Class for the Three Months Ended June 30, 2026 | ||||||||||
U.S. Government Agencies | $ | 10,000 | 4.30 | % | 0.35 | yrs | ||||
Mortgage-backed securities - residential | 44,487 | 4.77 | 15.56 | |||||||
Total | $ | 54,487 | 4.68 | 12.77 | yrs | |||||
Total Purchases for the Six Months Ended June 30, 2026 | $ | 202,199 | 4.16 | % | 5.23 | yrs | ||||
Republic’s investment portfolio increased approximately $2 million from December 31, 2025, to June 30, 2026, as the Company redeployed proceeds from debt security calls, maturities, and paydowns, including expected MBS prepayments, into higher-yielding, longer-duration securities. Since the fourth quarter of 2024, the Company has strategically shifted a portion of its interest-earning cash balances into investment securities to capitalize on a more favorable yield curve and higher available yields, enhancing the portfolio’s overall yield profile.
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Management currently expects to maintain this general investment strategy for the foreseeable future. The Company’s investment securities strategy is influenced by economic and market conditions, loan demand, deposit mix, and liquidity needs. Investment positioning for the remainder of 2026 and beyond will depend on a variety of factors, including the Company’s current and projected liquidity position, customer demand for loan and deposit products, the Company’s overall interest-rate risk profile, the shape of the yield curve and prevailing interest-rate environment, and expectations for short-term and long-term interest-rate trends.
Federal Home Loan Bank Stock
FHLB stock holdings declined $14 million, or 43%, from December 31, 2025 to June 30, 2026. FHLB members are required to hold certain levels of FHLB stock in relation to the amount of their borrowings, thus FHLB stock holdings will fluctuate consistently with borrowing activity from period to period.
Loans
Table 14 — Loan Portfolio Composition
(dollars in thousands) | | | June 30, 2026 | | December 31, 2025 | $ Change | % Change | ||||||
Traditional Banking: | |||||||||||||
Residential real estate: | |||||||||||||
Owner-occupied | $ | 1,042,149 | $ | 1,040,080 | $ | 2,069 | 0 | % | |||||
Nonowner-occupied |
| 275,983 |
| 283,246 |
| (7,263) | (3) | ||||||
Commercial real estate: |
| ||||||||||||
Owner-occupied | 704,806 |
| 666,948 |
| 37,858 | 6 | |||||||
Nonowner-occupied | 819,996 |
| 799,420 |
| 20,576 | 3 | |||||||
Multi-family | 377,392 |
| 331,370 |
| 46,022 | 14 | |||||||
Construction & land development |
| 215,341 |
| 238,455 |
| (23,114) | (10) | ||||||
Commercial & industrial |
| 547,145 |
| 528,873 |
| 18,272 | 3 | ||||||
Lease financing receivables |
| 21,572 |
| 20,523 |
| 1,049 | 5 | ||||||
Aircraft* |
| 202,729 |
| 203,120 |
| (391) | (0) | ||||||
Home equity |
| 429,812 |
| 413,638 |
| 16,174 | 4 | ||||||
Consumer: | |||||||||||||
Credit cards | 11,422 |
| 10,711 |
| 711 | 7 | |||||||
Overdrafts | 825 |
| 971 |
| (146) | (15) | |||||||
Automobile loans | 645 |
| 738 |
| (93) | (13) | |||||||
Other consumer | 5,692 |
| 8,204 |
| (2,512) | (31) | |||||||
Total Traditional Banking | 4,655,509 | 4,546,297 | 109,212 | 2 | |||||||||
Warehouse lines of credit* |
| 614,696 |
| 754,090 |
| (139,394) | (18) | ||||||
Total Core Banking | 5,270,205 | 5,300,387 | (30,182) | (1) | |||||||||
Republic Processing Group*: | |||||||||||||
Tax Refund Solutions: |
|
|
| ||||||||||
Refund Advances |
| — |
| 12,924 |
| (12,924) | (100) | ||||||
Other TRS commercial & industrial | 156 | 19,473 | (19,317) | (99) | |||||||||
Republic Credit Solutions |
| 140,045 |
| 113,545 |
| 26,500 | 23 | ||||||
Total Republic Processing Group |
| 140,201 |
| 145,942 |
| (5,741) | (4) | ||||||
Total loans** | 5,410,406 | 5,446,329 | (35,923) | (1) | |||||||||
Allowance for credit losses |
| (87,767) |
| (85,352) |
| (2,415) | 3 | ||||||
Total loans, net | $ | 5,322,639 | $ | 5,360,977 | $ | (38,338) | (1) | % | |||||
*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.
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Total Company gross loans decreased by $36 million, or 1%, during the first six months of 2026 to $5.41 billion as of June 30, 2026. The most significant components comprising the change in loans by reportable segment follow:
| (I) | Traditional Banking segment |
Traditional Banking period-end loan balances increased $109 million, or 2%, from December 31, 2025 to June 30, 2026, as strong origination volume of CRE loans, C&I loans and HELOCs more than offset contraction within the C&LD portfolio. Growth in the CRE and C&I portfolios was generally driven by reduced internal pricing restrictions across these loan types due to competitive pressures.
On December 31, 2025, the Traditional Banking segment transferred approximately $82 million of loans and lease financing receivables from held for investment to HFS pursuant to a signed agreement to sell substantially all of the assets of the St. Louis-based RBF Division acquired in the 2023 CBank acquisition. The transaction closed in the first quarter of 2026 and the Traditional Banking segment generated a pre-tax gain, net of broker commissions, of approximately $5.8 million.
| (II) | Warehouse Lending segment |
Outstanding Warehouse period-end balances decreased $139 million, or 18%, from December 31, 2025, to June 30, 2026. Average committed Warehouse lines of credit increased to $1.20 billion during the first six months of 2026 from $981 million during the same period in 2025, while average line utilization decreased to 50% from 52% over the same periods.
Due to mortgage market volatility and seasonality, projecting future outstanding balances for Warehouse lines of credit remains challenging; however, portfolio expansion has historically aligned with broader industry trends. Since entering the business in 2011, the Bank has experienced fluctuations in Warehouse balances consistent with overall mortgage origination activity. Weighted-average quarterly usage rates have ranged from a low of 31% during the first quarter of 2023 to a high of 71% during the fourth quarter of 2019. On an annual basis, weighted-average usage rates have ranged from a low of 39% during 2022 to a high of 66% during 2020.
| (III) | Tax Refund Solutions segment |
TRS loan balances as of December 31, 2025 included $13 million of ERAs originated during December 2025 and $19 million of short-term, C&I loans to Tax Providers to support seasonal cash-flow needs. These balances paid down to $0 as of June 30, 2026, or were charged off in line with the Company’s charge-off policy.
| (IV) | Republic Credit Solutions segment |
Outstanding period-end RCS balances increased $27 million, or 23%, to $140 million as of June 30, 2026, consistent with increased origination volume primarily associated with the healthcare receivable products.
| (V) | Republic Payment Solutions segment |
There are no outstanding loans associated with the RPS segment, as its products primarily consist of prepaid debit card solutions.
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Allowance for Credit Losses
The Bank maintains an ACLL on the Balance Sheet for expected credit losses inherent in the Bank’s loan portfolio, which includes overdrawn DDAs. The Bank also maintains an ACLC for expected OBS credit exposure losses. Management evaluates the adequacy of the ACLL monthly and the adequacy of the ACLC for OBS quarterly. The ACLL calculation is presented to and discussed with the Audit Committee and the Board on a quarterly basis.
The Company’s ACLL increased to $88 million at June 30, 2026, compared to $85 million at December 31, 2025, with the total Company ACLL as a percentage of total loans increasing to 1.62% as of June 30, 2026, compared to 1.57% as of December 31, 2025.
The most significant components comprising the change in ACLL by reportable segment follow:
| (I) | Traditional Banking segment |
Traditional Banking loan balances increased $109 million during the first six months of 2026, while the related ACLL increased $144,000 to $64 million at June 30, 2026. As a percentage of total Traditional Banking loans, the ACLL declined slightly to 1.37% at June 30, 2026 from 1.40% at December 31, 2025. During 2026, the Traditional Banking ACLL benefited from a favorable shift in portfolio composition. Specifically, C&LD balances, which carry higher reserve requirements than most other Core Bank lending categories, declined $23 million, as projects progressed and balances primarily migrated into the CRE portfolio.
| (II) | Warehouse Lending segment |
The Warehouse ACLL decreased $349,000, or 19%, to $1.5 million, while the Warehouse ACLL as a percentage to total Warehouse loans remained at 0.25% when comparing June 30, 2026 to December 31, 2025. Outstanding Warehouse period-end balances decreased $139 million, or 18%, from December 31, 2025 to June 30, 2026. As of June 30, 2026, the Warehouse ACLL remained entirely qualitative in nature, with no adjustments required to the qualitative reserve percentage required for the first six months of 2026.
The TRS ACLL decreased $332,000 from December 31, 2025 to $0 as of June 30, 2026, reflecting the June 2026, charge-off of all unpaid ERAs/RAs and C&I loan balances to Tax Providers originated in December 2025.
| (IV) | Republic Credit Solutions segment |
The RCS ACLL increased $3.0 million to $22.4 million as of June 30, 2026, driven primarily by the increase in the LOC product spot loan balances.
As of June 30, 2026, RCS maintained ACLL coverage for two distinct credit products: LOC products and healthcare receivables. At period-end, the ACLL-to-total-loans ratio ranged from 0.25% for healthcare receivables to 70.63% for LOC products, with the lower reserve requirement for healthcare receivables reflecting the recourse maintained to third-party service providers.
While RCS loans generally generate higher yields than Traditional Banking products, they also carry higher credit risk. As a result, the RCS ACLL as a percentage of total RCS loans was 16.01% at June 30, 2026, compared to 17.15% at December 31, 2025 and 17.67% at June 30, 2025. Changes in the segment’s loan mix, including growth in products with higher loss expectations, continued to influence reserve levels.
| (V) | Republic Payment Solutions segment |
There is no ACLL or Provision for RPS, as the segment offers prepaid and debit solutions to consumers.
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The following table sets forth management’s allocation of the ACLL by loan class. The allocation reflects management’s assessment of prevailing economic conditions, historical loss experience, forecasts for unemployment and vacancy rates, and various other life-of-loan and forward-looking considerations, as well as qualitative factors.
Table 15 — Management’s Allocation of the Allowance for Credit Losses on Loans
June 30, 2026 | December 31, 2025 | |||||||||||||||||
| Percent of | | | Percent of | | Percent of | | | Percent of | |||||||||
Loans to | ACLL to | Loans to | ACLL to | |||||||||||||||
Total | Total | Total | Total | |||||||||||||||
(dollars in thousands) | | ACLL | Loans* | Loan Class | | ACLL | Loans* | Loan Class* | ||||||||||
Traditional Banking: | ||||||||||||||||||
Residential real estate: | ||||||||||||||||||
Owner-occupied | $ | 10,805 | 20 | % | 1.04 | % | $ | 10,844 |
| 20 | % |
| 1.04 | % | ||||
Nonowner-occupied |
| 3,421 | 5 | 1.24 |
| 3,542 |
| 5 |
| 1.25 | ||||||||
Commercial real estate |
| |||||||||||||||||
Owner-occupied | 7,857 | 13 | 1.11 | 7,207 | 12 | 1.08 | ||||||||||||
Nonowner-occupied | 11,985 | 15 | 1.46 | 11,690 | 15 | 1.46 | ||||||||||||
Multi-Family | 3,196 | 7 | 0.85 | 2,860 | 6 | 0.86 | ||||||||||||
Total commercial real estate | 23,038 | 35 | 1.21 | 21,757 |
| 33 |
| 1.21 | ||||||||||
Construction & land development |
| 7,241 | 4 | 3.36 |
| 8,117 |
| 4 |
| 3.40 | ||||||||
Commercial & industrial | 7,486 | 10 | 1.37 | 7,403 | 10 | 1.40 | ||||||||||||
Lease financing receivables | 459 | — | 2.13 | 718 | — | 3.50 | ||||||||||||
Aircraft | 507 | 4 | 0.25 | 507 | 4 | 0.25 | ||||||||||||
Home equity | 8,964 | 8 | 2.09 | 8,629 | 8 | 2.09 | ||||||||||||
Consumer: | ||||||||||||||||||
Credit cards | 946 | — | 8.28 | 957 | — | 8.93 | ||||||||||||
Overdrafts | 794 | — | 96.24 | 971 | — | 100.00 | ||||||||||||
Automobile loans | — | — | — | — | — | — | ||||||||||||
Other consumer | 145 | — | 2.55 | 217 | — | 2.65 | ||||||||||||
Total Traditional Banking | 63,806 | 86 | 1.37 | 63,662 | 84 | 1.40 | ||||||||||||
Warehouse lines of credit | 1,533 | 11 | 0.25 | 1,882 | 14 | 0.25 | ||||||||||||
Total Core Banking | 65,339 | 97 | 1.24 | 65,544 | 98 | 1.24 | ||||||||||||
Republic Processing Group: | ||||||||||||||||||
Tax Refund Solutions: |
|
| ||||||||||||||||
Refund Advances |
| — | — | — |
| 296 |
| — |
| 2.29 | ||||||||
Other TRS commercial & industrial |
| 1 | — | 0.64 |
| 37 |
| — |
| 0.19 | ||||||||
Republic Credit Solutions | 22,427 | 3 | 16.01 | 19,475 | 2 | 17.15 | ||||||||||||
Total Republic Processing Group | 22,428 | 3 | 16.00 | 19,808 | 2 | 13.57 | ||||||||||||
Total | $ | 87,767 | 100 | 1.62 | $ | 85,352 |
| 100 |
| 1.57 | % | |||||||
*See the Table titled “Loan Portfolio Composition” in this section of the report for loan portfolio balances. Values of less than 50 bps in the table above are rounded down to zero.
Management believes, based on information presently available, that it has adequately provided for loan and lease credit losses as of June 30, 2026.
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Asset Quality
Classified and Special Mention Loans
The Bank applies credit quality indicators, or ratings, to individual loans based on internal Bank policies, which are informed by regulatory standards. Loans rated “Loss,” “Doubtful,” “Substandard,” and PCD-Substandard are considered “Classified.”
See the Footnote titled “Loans and Allowance for Credit Losses on Loans” of Part I Item 1 “Financial Statements” for additional discussion regarding Classified and Special Mention loans.
Table 16 — Classified and Special Mention Loans
(dollars in thousands) | | June 30, 2026 | | December 31, 2025 | $ Change | % Change | ||||||
Loss | $ | — | $ | — | $ | — | — | % | ||||
Doubtful |
| — |
| — | — | — | ||||||
Substandard |
| 51,208 |
| 50,289 | 919 | 2 | ||||||
PCD - Substandard |
| 719 |
| 818 | (99) | (12) | ||||||
Total Classified Loans |
| 51,927 |
| 51,107 | 820 | 2 | ||||||
Special Mention |
| 31,544 |
| 35,754 | (4,210) | (12) | ||||||
PCD - Special Mention |
| — |
| — | — | — | ||||||
Total Special Mention Loans |
| 31,544 |
| 35,754 | (4,210) | (12) | ||||||
Total Classified and Special Mention Loans | $ | 83,471 | $ | 86,861 | $ | (3,390) | (4) | % | ||||
Nonperforming Loans
Nonperforming loans, which include both nonaccrual loans and loans that are 90 days or more past due while still accruing interest, increased to 0.57% of total loans at June 30, 2026, from 0.44% at December 31, 2025. The increase was driven by a $7 million rise in nonperforming loan balances, coupled with a $36 million decline in total loans. Approximately $5 million of the increase in nonperforming loans since year-end 2025 was attributable to a single multifamily lending relationship.
The ACLL to nonperforming loans ratio declined to 286% at June 30, 2026, from 356% at December 31, 2025. The decrease was primarily the result of a $3 million reduction in the ACLL and a $7 million increase in nonperforming loan balances. Despite the decline, the ACLL continued to provide substantial coverage of nonperforming loans at June 30, 2026.
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Table 17 — Nonperforming Loans and Nonperforming Assets Summary
(dollars in thousands) | | June 30, 2026 | December 31, 2025 | | ||||
Loans on nonaccrual status* | $ | 30,645 | $ | 23,806 | ||||
Loans past due 90-days-or-more and still on accrual** |
| 83 |
| 161 | ||||
Total nonperforming loans |
| 30,728 |
| 23,967 | ||||
Other real estate owned |
| 843 |
| 1,277 | ||||
Total nonperforming assets | $ | 31,571 | $ | 25,244 | ||||
Credit Quality Ratios - Total Company: | ||||||||
ACLL to total loans | 1.62 | % | 1.57 | % | ||||
ACLL to nonperforming loans | 286 | 356 | ||||||
Nonperforming loans to total loans |
| 0.57 |
| 0.44 | ||||
Nonperforming assets to total loans (including OREO) |
| 0.58 |
| 0.46 | ||||
Nonperforming assets to total assets |
| 0.45 |
| 0.36 | ||||
Credit Quality Ratios - Core Bank: | ||||||||
ACLL to total loans |
| 1.24 | % | 1.24 | % | |||
ACLL to nonperforming loans | 213 | 275 | ||||||
Nonperforming loans to total loans |
| 0.58 | 0.45 | |||||
Nonperforming assets to total loans (including OREO) |
| 0.60 |
| 0.47 | ||||
Nonperforming assets to total assets |
| 0.49 |
| 0.38 | ||||
* | Loans on nonaccrual status include collateral-dependent loans. See the Footnote titled “Loans and Allowance for Credit Losses on Loans” of Part I Item 1 “Financial Statements” for the components within the nonaccrual loans to total loans and ACLL to nonaccrual loans ratios, as well as additional discussion regarding nonaccrual loans and collateral-dependent loans. |
** Loans past due 90-days-or-more and still accruing consist of smaller balance consumer loans.
Table 18 — Nonperforming Loan Composition
June 30, 2026 | December 31, 2025 | ||||||||||||
(dollars in thousands) | Balance | Loan Class | Balance | Loan Class | |||||||||
| |||||||||||||
Traditional Banking: | |||||||||||||
Residential real estate: | | ||||||||||||
Owner-occupied | | $ | 20,053 | 1.92 | % | | $ | 18,894 | 1.82 | % | |||
Nonowner-occupied |
| |
| 475 | 0.17 |
| 119 | 0.04 | |||||
Commercial real estate: |
| |
|
| |||||||||
Owner-occupied | 722 | 0.10 | 377 | 0.06 | |||||||||
Nonowner-occupied | — | — | — | — | |||||||||
Multi-Family | 4,554 | 1.21 | — | — | |||||||||
Construction & land development |
| |
| — | — |
| — | — | |||||
Commercial & industrial |
| |
| 391 | 0.07 |
| 344 | 0.07 | |||||
Lease financing receivables |
| |
| 171 | 0.79 |
| 49 | 0.24 | |||||
Aircraft | — | — |
| — | — | ||||||||
Home equity |
| |
| 4,268 | 0.99 | |
| 3,727 | 0.90 | ||||
Consumer: | | ||||||||||||
Credit cards | 4 | 0.04 | — | — | |||||||||
Overdrafts | — | — | — | — | |||||||||
Automobile loans | — | — | — | — | |||||||||
Other consumer | 11 | 0.19 | 296 | 3.61 | |||||||||
Total Traditional Banking | 30,649 | 0.66 | 23,806 | 0.52 | |||||||||
Warehouse lines of credit |
| |
| — | — |
| — | — | |||||
Total Core Banking | 30,649 | 0.58 | 23,806 | 0.45 | |||||||||
Republic Processing Group: | |||||||||||||
Tax Refund Solutions: |
| |
|
| |||||||||
Refund Advances |
| |
| — | — |
| — | — | |||||
Other TRS commercial & industrial | — | — | — | — | |||||||||
Republic Credit Solutions |
| |
| 79 | 0.06 |
| 161 | 0.14 | |||||
Total Republic Processing Group | |
| 79 | 0.06 |
| 161 | 0.11 | ||||||
| |||||||||||||
Total nonperforming loans | | $ | 30,728 | 0.57 | % | $ | 23,967 | 0.44 | % | ||||
| |||||||||||||
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Table 19 — Stratification of Nonperforming Loans
Number of Nonperforming Loans and Recorded Investment |
| |||||||||||||||||||||||
| | | | Balance | | | | |
| |||||||||||||||
Balance | > $100 & | Balance | Total |
| ||||||||||||||||||||
June 30, 2026 (dollars in thousands) | No. | <= $100 | No. | <= $500 | No. | > $500 | No. | Balance |
| |||||||||||||||
|
|
|
| |||||||||||||||||||||
Traditional Banking: | ||||||||||||||||||||||||
Residential real estate: | ||||||||||||||||||||||||
Owner-occupied |
| 152 | $ | 5,971 |
| 77 | $ | 12,530 |
| 2 | $ | 1,552 |
| 231 | $ | 20,053 | ||||||||
Nonowner-occupied |
| 3 |
| 108 |
| 1 |
| 367 |
| — |
| — |
| 4 |
| 475 | ||||||||
Commercial real estate: |
|
|
|
|
|
|
|
| ||||||||||||||||
Owner-occupied | — | — | — | — | 1 |
| 722 | 1 |
| 722 | ||||||||||||||
Nonowner-occupied | — | — | — | — | — |
| — | — |
| — | ||||||||||||||
Multi-Family | — | — | — | — | 1 |
| 4,554 | 1 |
| 4,554 | ||||||||||||||
Construction & land development |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — | ||||||||
Commercial & industrial |
| 2 |
| 47 |
| 1 |
| 344 |
| — |
| — |
| 3 |
| 391 | ||||||||
Lease financing receivables |
| 4 |
| 171 |
| — |
| — |
| — |
| — |
| 4 |
| 171 | ||||||||
Aircraft | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — | |||||||||
Home equity |
| 63 |
| 2,461 |
| 12 |
| 1,807 |
| — |
| — |
| 75 |
| 4,268 | ||||||||
Consumer: | ||||||||||||||||||||||||
Credit cards |
| NM |
| 4 |
| — |
| — |
| — |
| — |
| NM |
| 4 | ||||||||
Overdrafts | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — | |||||||||
Automobile loans | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — | |||||||||
Other consumer | 3 | 11 | — |
| — | — | — | 3 |
| 11 | ||||||||||||||
Total Traditional Banking | 227 | 8,773 | 91 | 15,048 | 4 | 6,828 | 322 | 30,649 | ||||||||||||||||
Warehouse lines of credit |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — | ||||||||
Total Core Banking | 227 | 8,773 | 91 | 15,048 | 4 | 6,828 | 322 | 30,649 | ||||||||||||||||
Republic Processing Group: | ||||||||||||||||||||||||
Tax Refund Solutions: | ||||||||||||||||||||||||
Refund Advances | — | — | — | — | — | — | — |
| — | |||||||||||||||
Other TRS commercial & industrial | — | — | — | — | — | — | — |
| — | |||||||||||||||
Republic Credit Solutions | NM | 79 | — | — | — | — | NM |
| 79 | |||||||||||||||
Total Republic Processing Group | NM | 79 | — | — | — | — | NM | 79 | ||||||||||||||||
Total |
| 227 | $ | 8,852 |
| 91 | $ | 15,048 |
| 4 | $ | 6,828 |
| 322 | $ | 30,728 | ||||||||
NM – RCS loans are generally small dollar homogenous consumer loans.
Number of Nonperforming Loans and Recorded Investment |
| |||||||||||||||||||||||
| | | | Balance | | | | |
| |||||||||||||||
Balance | > $100 & | Balance | Total |
| ||||||||||||||||||||
December 31, 2025 (dollars in thousands) | No. | <= $100 | No. | <= $500 | No. | > $500 | No. | Balance |
| |||||||||||||||
Traditional Banking: | ||||||||||||||||||||||||
Residential real estate: | ||||||||||||||||||||||||
Owner-occupied |
| 164 | $ | 5,711 |
| 73 | $ | 11,478 |
| 2 | $ | 1,705 |
| 239 | $ | 18,894 | ||||||||
Nonowner-occupied |
| 5 |
| 119 |
| — |
| — |
| — |
| — |
| 5 |
| 119 | ||||||||
Commercial real estate: |
|
|
|
|
|
|
|
| ||||||||||||||||
Owner-occupied | — | — | — | — | 1 |
| 377 | 1 | 377 | |||||||||||||||
Nonowner-occupied | — | — | — | — | — |
| — | — | — | |||||||||||||||
Multi-Family | — | — | — | — | — |
| — | — | — | |||||||||||||||
Construction & land development |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — | ||||||||
Commercial & industrial |
| — |
| — |
| 1 |
| 344 |
| — |
| — |
| 1 |
| 344 | ||||||||
Lease financing receivables |
| 3 |
| 49 |
| — |
| — |
| — |
| — |
| 3 |
| 49 | ||||||||
Aircraft | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — | |||||||||
Home equity |
| 56 |
| 2,141 |
| 10 |
| 1,586 |
| — |
| — |
| 66 |
| 3,727 | ||||||||
Consumer: | ||||||||||||||||||||||||
Credit cards |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — | ||||||||
Overdrafts | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — | |||||||||
Automobile loans | 2 |
| — |
| — |
| — |
| — |
| — |
| 2 |
| — | |||||||||
Other consumer | 3 | 1 | 1 |
| 295 | — | — | 4 |
| 296 | ||||||||||||||
Total Traditional Banking | 233 | 8,021 | 85 | 13,703 | 3 | 2,082 | 321 | 23,806 | ||||||||||||||||
Warehouse lines of credit |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — | ||||||||
Total Core Banking | 233 | 8,021 | 85 | 13,703 | 3 | 2,082 | 321 | 23,806 | ||||||||||||||||
Republic Processing Group: | ||||||||||||||||||||||||
Tax Refund Solutions: | ||||||||||||||||||||||||
Refund Advances | — | — | — | — | — | — | — |
| — | |||||||||||||||
Other TRS commercial & industrial | — | — | — | — | — | — | — |
| — | |||||||||||||||
Republic Credit Solutions | NM | 161 | — | — | — | — | NM |
| 161 | |||||||||||||||
Total Republic Processing Group | NM | 161 | — | — | — | — | NM | 161 | ||||||||||||||||
Total |
| 233 | $ | 8,182 |
| 85 | $ | 13,703 |
| 3 | $ | 2,082 |
| 321 | $ | 23,967 | ||||||||
NM – RCS loans are small dollar homogenous consumer loans.
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Table 20 — Rollforward of Nonperforming Loans
| Three Months Ended | | Six Months Ended | |||||||||
June 30, | June 30, | |||||||||||
(in thousands) | 2026 | 2025 | 2026 | 2025 | ||||||||
Nonperforming loans at the beginning of the period | $ | 31,852 | $ | 22,850 | $ | 23,967 | $ | 22,760 | ||||
Loans added to nonperforming status during the period that remained nonperforming at the end of the period |
| 6,658 | 1,862 |
| 10,012 |
| 4,111 | |||||
Loans removed from nonperforming status during the period that were nonperforming at the beginning of the period (see table below) |
| (7,735) |
| (2,518) |
| (2,698) |
| (4,191) | ||||
Principal balance paydowns of loans nonperforming at both period ends | (233) | (536) | (598) | (946) | ||||||||
Net change in principal balance of other nonperforming loans* |
| 186 |
| (16) |
| 45 |
| (92) | ||||
Nonperforming loans at the end of the period | $ | 30,728 | $ | 21,642 | $ | 30,728 | $ | 21,642 | ||||
* | Includes RCS loans which are small dollar homogeneous consumer loans. |
Table 21 — Detail of Loans Removed from Nonperforming Status
Three Months Ended | | Six Months Ended | |||||||||
June 30, | June 30, | ||||||||||
(in thousands) | 2026 | | 2025 | | 2026 | | 2025 | ||||
Loans charged-off | $ | (3) | $ | — | $ | (3) | $ | — | |||
Loans transferred to OREO |
| (122) |
| — |
| (122) |
| — | |||
Loan payoffs and paydowns |
| (6,036) |
| (1,727) |
| (2,157) |
| (2,571) | |||
Loans returned to accrual status |
| (1,574) |
| (791) |
| (416) |
| (1,620) | |||
Total loans removed from nonperforming status during the period that were nonperforming at the beginning of the period | $ | (7,735) | $ | (2,518) | $ | (2,698) | $ | (4,191) | |||
Based on the Bank’s review as of June 30, 2026, management believes that its reserves are adequate to absorb expected losses on all nonperforming loans.
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Delinquent Loans
Total Company delinquent loans as a percentage of total loans increased to 0.53% as of June 30, 2026, from 0.42% as of December 31, 2025. Similarly, Core Bank delinquent loans as a percentage of total Core Bank loans increased to 0.35% from 0.26% over the same period. Except for small-dollar consumer loans, all Traditional Banking loans that were 90 days or more past due at June 30, 2026 and December 31, 2025 were on nonaccrual status.
During the fourth quarter of 2025, the Company downgraded a $16 million C&I participation relationship from Special Mention to Substandard. The loan became 30 days delinquent during the first quarter of 2026 but was refinanced into a new loan during the second quarter of 2026.
Table 22 — Delinquent Loan Composition*
June 30, 2026 | December 31, 2025 | ||||||||||||
Percent of | Percent of | ||||||||||||
Total | Total | ||||||||||||
(dollars in thousands) | | Balance | Loan Class | Balance | Loan Class | ||||||||
Traditional Banking: | |||||||||||||
Residential real estate: | |||||||||||||
Owner-occupied | | $ | 8,411 | 0.81 | % | | $ | 9,028 | 0.87 | % | |||
Nonowner-occupied | |
| 237 | 0.09 | |
| — | — | |||||
Commercial real estate: | |
| |
| |||||||||
Owner-occupied | — | — | — | — | |||||||||
Nonowner-occupied | — | — | — | — | |||||||||
Multi-Family | 4,554 | 1.21 | — | — | |||||||||
Construction & land development | |
| — | — | |
| — | — | |||||
Commercial & industrial | |
| 397 | 0.07 | |
| 355 | 0.07 | |||||
Lease financing receivables | 1,502 | 6.96 | 53 | 0.26 | |||||||||
Aircraft | — | — | — | — | |||||||||
Home equity | 3,228 | 0.75 | 4,346 | 1.05 | |||||||||
Consumer: | |||||||||||||
Credit cards | 4 | 0.04 | — | — | |||||||||
Overdrafts | 81 | 9.82 | 123 | 12.67 | |||||||||
Automobile loans | — | — | — | — | |||||||||
Other consumer | 22 | 0.39 | 20 | 0.24 | |||||||||
Total Traditional Banking | 18,436 | 0.40 | 13,925 | 0.31 | |||||||||
Warehouse lines of credit | — | — | — | — | |||||||||
Total Core Banking | 18,436 | 0.35 | 13,925 | 0.26 | |||||||||
Republic Processing Group: | |
| |||||||||||
Tax Refund Solutions: | |
| |||||||||||
Refund Advances | |
| — | — | |
| — | — | |||||
Other TRS commercial & industrial | |
| — | — | |
| — | — | |||||
Republic Credit Solutions | |
| 10,054 | 7.18 | |
| 8,938 | 7.87 | |||||
Total Republic Processing Group | |
| 10,054 | 7.17 | |
| 8,938 | 6.12 | |||||
| | ||||||||||||
Total delinquent loans | | $ | 28,490 | 0.53 | % | | $ | 22,863 | 0.42 | % | |||
* 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.
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Table 23 — Rollforward of Delinquent Loans
Three Months Ended | Six Months Ended | ||||||||||
June 30, | June 30, | ||||||||||
(in thousands) | 2026 | | 2025 | | 2026 | | 2025 | ||||
Delinquent loans at the beginning of the period | $ | 42,742 | $ | 17,313 | $ | 22,863 | $ | 20,489 | |||
Loans added to delinquency status during the period and remained in delinquency status at the end of the period |
| 10,078 |
| 4,283 |
| 11,796 |
| 5,010 | |||
Loans removed from delinquency status during the period that were in delinquency status at the beginning of the period (see table below) |
| (25,906) |
| (3,192) |
| (8,572) |
| (5,029) | |||
Principal balance paydowns of loans delinquent at both period ends | (82) | (111) | (122) | (187) | |||||||
Net change in principal balance of other delinquent loans* |
| 1,658 |
| 793 |
| 2,525 |
| (1,197) | |||
Delinquent loans at the end of period | $ | 28,490 | $ | 19,086 | $ | 28,490 | $ | 19,086 | |||
* | Includes RCS loans which are small dollar homogeneous consumer loans. |
Table 24 — Detail of Loans Removed from Delinquent Status
| Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | ||||||||||||
(in thousands) | | 2026 | | 2025 | | 2026 | | 2025 | |||||
| |||||||||||||
Loans charged-off | $ | (4) | $ | — | $ | (7) | $ | — | |||||
Loans transferred to OREO |
| (122) |
| — |
| (122) |
| — | |||||
Loan payoffs and paydowns |
| (21,405) |
| (475) |
| (1,442) |
| (1,631) | |||||
Loans paid current |
| (4,375) |
| (2,717) |
| (7,001) |
| (3,398) | |||||
Total loans removed from delinquency status during the period that were in delinquency status at the beginning of the period | $ | (25,906) | $ | (3,192) | $ | (8,572) | $ | (5,029) | |||||
Premises and Equipment
Premises and equipment, net of accumulated depreciation and purchase accounting fair value adjustments, increased $6 million, or 17%, from December 31, 2025 to June 30, 2026. The increase was primarily driven by capitalized costs associated with the Company’s core system conversion. The Company's branch network consisted of 47 locations across Kentucky, Indiana, Florida, Ohio, and Tennessee as of June 30, 2026.
Right-of-Use Assets and Operating Lease Liabilities
The Company records right-of-use assets for the underlying leased property. Operating lease liabilities represent the present value of its required minimum lease payments plus any amounts probable of being owed under a residual value guarantee.
Goodwill
At June 30, 2026, and December 31, 2025, the Company had $41 million in goodwill recorded on its Balance Sheet. Goodwill of $24 million is attributed to the 2023 CBank acquisition. Additionally, goodwill totaling $6 million and $10 million is attributed to the acquisitions of Cornerstone Community Bank and GulfStream Community Bank in 2016 and 2006. The acquisitions of Tennessee Commerce Bank and First Commercial Bank in 2012 resulted in bargain purchase gains.
Events that may trigger goodwill impairment include deterioration in economic conditions, a decline in market-dependent multiples or metrics (i.e., stock price declining below tangible book value), negative trends in overall financial performance and regulatory actions. At September 30, 2025, the Company performed its annual qualitative assessment to determine if it was more-likely-than-not that the fair value of the reporting units exceeded their carrying value, including goodwill. The qualitative assessment indicated that it was not more-likely-than-not that the carrying value of the reporting units exceeded their fair value.
Bank Owned Life Insurance
BOLI assets increased $2 million to $112 million at June 30, 2026, with the increase attributed to general appreciation of the cash surrender values within the policy plans experienced during the first six months of 2026.
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Table of Contents
Core Deposit Intangibles
CDIs arising from business acquisitions are initially measured at fair value and are then amortized on an accelerated method based on their useful lives. As of June 30, 2026, and December 31, 2025, the Company’s CDI assets totaled $1.4 million and $1.5 million.
Deposits
Table 25 — Deposit Composition
(dollars in thousands) | | June 30, 2026 | | December 31, 2025 | $ Change | % Change | ||||||
Core Bank: | ||||||||||||
Demand | $ | 1,164,278 | $ | 1,128,255 | $ | 36,023 | 3 | % | ||||
Money market |
| 1,532,292 |
| 1,497,561 | 34,731 | 2 | ||||||
Savings |
| 215,327 |
| 217,723 | (2,396) | (1) | ||||||
Reciprocal money market |
| 228,226 |
| 224,731 | 3,495 | 2 | ||||||
Individual retirement accounts (1) |
| 35,256 |
| 34,349 | 907 | 3 | ||||||
Time deposits, $250 and over (1) |
| 184,215 |
| 156,283 | 27,932 | 18 | ||||||
Other certificates of deposit (1) |
| 300,146 |
| 290,087 | 10,059 | 3 | ||||||
Reciprocal time deposits (1) | 68,814 | 70,729 | (1,915) | (3) | ||||||||
Wholesale brokered deposits (1) |
| 87,484 |
| 87,420 | 64 | 0 | ||||||
Total Core Bank interest-bearing deposits | 3,816,038 | 3,707,138 | 108,900 | 3 | ||||||||
Total Core Bank noninterest-bearing deposits |
| 1,168,030 |
| 1,102,041 | 65,989 | 6 | ||||||
Total Core Bank deposits |
| 4,984,068 |
| 4,809,179 | 174,889 | 4 | ||||||
Republic Processing Group: | ||||||||||||
Wholesale brokered deposits (1) | 14,164 | 12,734 | 1,430 | 11 | ||||||||
Interest-bearing prepaid card deposits | 452,897 | 286,841 | 166,056 | 58 | ||||||||
Money market accounts | 19,939 | 22,973 | (3,034) | (13) | ||||||||
Total RPG interest-bearing deposits | 487,000 | 322,548 | 164,452 | 51 | ||||||||
Noninterest-bearing prepaid card deposits | 9,403 | 5,228 | 4,175 | 80 | ||||||||
Other noninterest-bearing deposits | 71,271 | 66,192 | 5,079 | 8 | ||||||||
Total RPG noninterest-bearing deposits | 80,674 | 71,420 | 9,254 | 13 | ||||||||
Total RPG deposits | 567,674 | 393,968 | 173,706 | 44 | ||||||||
Total deposits | $ | 5,551,742 | $ | 5,203,147 | $ | 348,595 | 7 | % | ||||
| (1) | Represents time deposits |
Total Company deposits increased $349 million, or 7%, from December 31, 2025, to $5.55 billion as of June 30, 2026.
Core Bank
Total Core Bank deposits increased by $175 million, or 4%, from December 31, 2025 to June 30, 2026. Within the Core Bank’s deposits, interest-bearing deposits increased $109 million and noninterest-bearing deposits increased $66 million over the respective period.
The growth in Core Bank interest-bearing deposits was primarily driven by a combined $110 million increase in period-end business and consumer money market accounts and time deposits, all of which generally carry higher interest rates. In addition, interest-bearing DDAs increased $36 million, or 3%, from December 31, 2025 to June 30, 2026, further contributing to the overall growth in interest-bearing deposit balances.
Core Bank noninterest-bearing deposits increased $66 million on a period-end basis during the first six months of 2026. However, average noninterest-bearing deposit balances declined $10 million, or 1%, compared with the first six months of 2025. Consistent with broader industry trends following the rapid increase in interest rates beginning in 2022, Core Bank noninterest-bearing deposit balances have generally experienced quarterly declines since the fourth quarter of 2022, as customers have increasingly migrated funds into higher-yielding deposit products.
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Republic Processing Group
Within RPG, period-end total deposit balances increased $174 million, or 44%, during the first six months of 2026. The increase was driven primarily by a $180 million increase in RPS deposits resulting from the onboarding of a new marketer-servicer relationship.
Securities Sold Under Agreements to Repurchase
SSUARs are collateralized by securities and are accounted for as financings. Accordingly, the securities underlying these agreements are recorded as assets and held by a safekeeping agent, while the related obligations to repurchase the securities are recorded as liabilities. All underlying securities remain under the Bank’s control throughout the term of the agreements. SSUARs generally represent large customer deposit relationships that require collateralization in excess of the $250,000 FDIC insurance limit, and the Bank pledges securities to satisfy these collateral requirements.
SSUARs decreased $20 million, or 22%, during 2026 to $69 million as of June 30, 2026. Due to the size of the underlying relationships, large fluctuations in the underlying account balances from period to period are common.
Federal Home Loan Bank Advances
FHLB advances totaled $157 million as of June 30, 2026, compared to $506 million as of December 31, 2025. Overnight borrowings decreased to $0 at June 30, 2026, from $130 million at December 31, 2025. Over the past year, the Company has utilized FHLB advances to partially fund noninterest-bearing deposit outflows and support overall loan growth.
During March 2026, the Traditional Banking segment prepaid $220 million of long-term fixed-rate FHLB advances and incurred $2.3 million of pre-tax early termination penalties, which were recorded in noninterest expense. The prepaid advances carried a weighted-average cost of 4.57% and were prepaid as part of management’s proactive balance sheet optimization and interest rate risk management strategy. Based on interest rates at the time of repayment and assuming short-term interest rates remain at or near current levels, management estimated the prepayment penalty would be recovered through lower funding costs within approximately 1.2 years.
As of June 30, 2026, outstanding long-term fixed-rate FHLB advances totaled $157 million, with a weighted-average maturity of 0.7 years and a weighted-average cost of 3.84%, both inclusive of the impact of related interest rate swaps.
The Company’s use of FHLB advances during any given period is dependent on multiple factors, including asset growth, deposit trends, earnings performance, and expectations regarding future interest rate movements.
Interest Rate Swaps
Interest rate swap derivatives are reported at fair value in other assets or other liabilities. The accounting treatment for changes in the fair value of a derivative depends on whether the instrument has been designated and qualifies for hedge accounting. For derivatives designated as cash flow hedges, the effective portion of unrealized gains and losses is recorded in OCI and AOCI. Amounts recorded in AOCI are subsequently reclassified into earnings in the same periods during which the hedged transaction affects earnings, or earlier if the hedge is no longer considered effective. Derivatives that are not designated as hedging instruments are considered economic hedges, with changes in fair value recognized directly in current-period earnings.
The Bank enters into interest rate swap agreements to facilitate customer financing transactions and meet client risk management needs. To mitigate the associated interest rate risk, the Bank simultaneously enters into offsetting derivative positions with third-party counterparties. Although these transactions serve an economic risk management purpose, they are not designated as accounting hedges; therefore, changes in the fair value of both the customer-facing swaps and the offsetting positions are recognized in current-period earnings.
In addition, as noted in the section above, the Company entered into $100 million of notional Balance Sheet interest rate swaps during the second quarter of 2024 to capitalize on favorable long-term pricing available as a result of the then-inverted yield curve. These swaps were designated as cash flow hedges and are intended to help protect net interest income from future changes in interest rates.
See the Footnote titled “Interest Rate Swaps” of Part I Item 1 “Financial Statements” for additional discussion regarding the Bank’s interest rate swaps.
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Liquidity
The Bank maintains sufficient liquidity to fund routine loan demand and normal deposit withdrawal activity. Liquidity is managed through a combination of cash, cash equivalents, and unencumbered investment securities, which serve as the primary sources of readily available funds. Additional liquidity can be generated through deposit promotions, sales of AFS debt securities, principal repayments on loans and MBS, and proceeds from loans HFS.
Management actively monitors liquidity needs and available funding sources to ensure the Bank can meet customer obligations, support loan growth, and respond to changes in market conditions in a timely manner.
Table 26 — Liquid Assets and Borrowing Capacity
The Company’s liquid assets and borrowing capacity included the following:
(in thousands) | | June 30, 2026 | | December 31, 2025 | |||
Cash and cash equivalents | $ | 354,091 | $ | 219,972 | |||
Unencumbered debt securities |
| 760,820 |
| 717,936 | |||
Total liquid assets | 1,114,911 | 937,908 | |||||
Available borrowing capacity with the FHLB |
| 883,746 |
| 646,148 | |||
Available borrowing capacity with the FRB |
| 9,729 |
| 9,606 | |||
Available borrowing capacity through unsecured credit lines |
| 100,000 |
| 100,000 | |||
Total available borrowing capacity | 993,475 | 755,754 | |||||
Total liquid assets and available borrowing capacity | $ | 2,108,386 | $ | 1,693,662 | |||
Republic had a period-end loan-to-deposit ratio (excluding brokered deposits) of 99% as of June 30, 2026 and 107% as of December 31, 2025. Republic’s banking centers and its website, www.republicbank.com, provide access to retail deposit markets. These retail deposit products, if offered at attractive rates, have historically been a source of additional funding when needed. If the Bank were to lose a significant funding source, such as a few major depositors, or if any of its lines of credit were cancelled, or if the Bank cannot obtain brokered deposits, the Bank would be compelled to offer market leading deposit interest rates to meet its funding and liquidity needs.
As of June 30, 2026, the Bank had approximately $1.3 billion in deposits from 218 large non-sweep deposit relationships, including reciprocal deposits, where the individual relationship exceeded $2 million for a depositor’s taxpayer identification number. Total uninsured deposits for the Bank were $2.6 billion, or 46%, of total deposits as of June 30, 2026. The 20 largest non-sweep deposit relationships represented approximately $465 million, or 8%, of the Company’s total deposit balances as of June 30, 2026. These accounts do not require collateral; therefore, cash from these accounts can generally be utilized to fund the loan portfolio. If any of these balances were moved from the Bank, the Bank would likely utilize overnight borrowing lines in the short-term to replace the balances. On a longer-term basis, the Bank would likely utilize wholesale-brokered deposits to replace withdrawn balances, or alternatively, higher-cost internet-sourced deposits. Based on experience utilizing brokered deposits and internet-sourced deposits, the Bank believes it can quickly obtain these types of deposits if needed. The overall cost of gathering these types of deposits, however, could be substantially higher than the Traditional Banking deposits they replace, potentially decreasing the Bank’s earnings.
The Bank’s liquidity is impacted by its ability to sell certain investment securities, which is limited due to the level of investment securities that are needed to secure public deposits, SSUAR, FHLB advances, and for other purposes, as required by law. As of June 30, 2026, and December 31, 2025, these pledged investment securities had a fair value of $110 million and $131 million.
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Capital
Total stockholders’ equity increased from $1.10 billion as of December 31, 2025, to $1.14 billion as of June 30, 2026. The increase in stockholders’ equity was attributable to net income earned during the first six months of 2026 reduced primarily by cash dividends declared.
Common Stock — The Class A Common shares are entitled to cash dividends equal to 110% of the cash dividend paid per share on Class B Common Stock. Class A Common shares have one vote per share and Class B Common shares have ten votes per share. Class B Common shares may be converted, at the option of the holder, to Class A Common shares on a share for share basis. The Class A Common shares are not convertible into any other class of Republic’s capital stock.
Dividend Restrictions — The Parent Company’s principal source of funds for dividend payments are dividends received from RB&T. Banking regulations limit the amount of dividends that may be paid to the Parent Company by the Bank without prior approval of the respective states’ banking regulators. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s net profits, combined with the retained net profits of the preceding two years. As of July1, 2026, RB&T could, without prior approval, declare dividends of approximately $189 million. Any payment of dividends in the future will depend, in large part, on the Company’s earnings, capital requirements, financial condition, and other factors considered relevant by the Company’s Board.
Regulatory Capital Requirements — The Company and the Bank are subject to capital regulations in accordance with Basel III, as administered by banking regulators. Regulatory agencies measure capital adequacy within a framework that makes capital requirements, in part, dependent on the individual risk profiles of financial institutions. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on Republic’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Parent Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities, and certain OBS items, as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators regarding components, risk weightings, and other factors.
Banking regulators have categorized the Bank as well capitalized. For prompt corrective action, the regulations in accordance with Basel III define “well capitalized” as a 10.0% Total Risk-Based Capital ratio, a 6.5% Common Equity Tier 1 Risk-Based Capital ratio, an 8.0% Tier 1 Risk-Based Capital ratio, and a 5.0% Tier 1 Leverage ratio. Additionally, to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers, the Company and Bank must hold a capital conservation buffer of 2.5% composed of Common Equity Tier 1 Risk-Based Capital above their minimum risk-based capital requirements.
Republic continues to exceed the regulatory requirements for Total Risk Based Capital, Common Equity Tier I Risk Based Capital, Tier I Risk Based Capital and Tier I Leverage Capital. Republic and the Bank intend to maintain a capital position that meets or exceeds the “well-capitalized” requirements as defined by the FRB and the FDIC, in addition to the Capital Conservation Buffer. Formal measurements of the capital ratios for Republic and the Bank are performed by the Company at each quarter end.
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Table 27 — Capital Ratios
As of June 30, 2026 | As of December 31, 2025 | |||||||||||
(dollars in thousands) | | Amount | | Ratio | Amount | | Ratio | |||||
Total capital to risk-weighted assets | ||||||||||||
Republic Bancorp, Inc. | $ | 1,202,472 |
| 18.87 | % | $ | 1,144,661 |
| 17.79 | % | ||
Republic Bank & Trust Company |
| 1,133,096 |
| 17.80 |
| 1,079,675 |
| 16.80 | ||||
Common equity tier 1 capital to risk-weighted assets | ||||||||||||
Republic Bancorp, Inc. | $ | 1,122,691 |
| 17.62 | % | $ | 1,064,167 |
| 16.54 | % | ||
Republic Bank & Trust Company |
| 1,053,392 |
| 16.55 |
| 999,248 |
| 15.55 | ||||
Tier 1 (core) capital to risk-weighted assets | ||||||||||||
Republic Bancorp, Inc. | $ | 1,122,691 |
| 17.62 | % | $ | 1,064,167 |
| 16.54 | % | ||
Republic Bank & Trust Company |
| 1,053,392 |
| 16.55 |
| 999,248 |
| 15.55 | ||||
Tier 1 leverage capital to average assets | ||||||||||||
Republic Bancorp, Inc. | $ | 1,122,691 |
| 16.13 | % | $ | 1,064,167 |
| 15.11 | % | ||
Republic Bank & Trust Company |
| 1,053,392 |
| 14.82 |
| 999,248 |
| 14.17 | ||||
Asset/Liability Management and Market Risk
Asset/liability management is designed to ensure safety and soundness, maintain liquidity, meet regulatory capital standards, and achieve acceptable net interest income based on the Bank’s risk tolerance. Interest rate risk is the exposure to adverse changes in net interest income as a result of market fluctuations in interest rates. The Bank, on an ongoing basis, monitors interest rate and liquidity risk to implement appropriate funding and balance sheet strategies. Management considers interest rate risk to be a significant risk to the Bank’s overall earnings and balance sheet.
The interest sensitivity profile of the Bank at any point in time will be impacted by a number of factors. These factors include the mix of interest sensitive assets and liabilities, as well as their relative pricing schedules. It is also influenced by changes in market interest rates, deposit and loan balances, and other factors.
The Bank utilizes earnings simulation models as tools to measure interest rate sensitivity, including both a static and dynamic earnings simulation model. A static simulation model is based on current exposures and assumes a constant balance sheet. In contrast, a dynamic simulation model relies on detailed assumptions regarding changes in existing business lines, new business, and changes in management and customer behavior. While the Bank runs the static simulation model as one measure of interest rate risk, historically, the Bank has utilized its dynamic earnings simulation model as its primary interest rate risk tool to measure the potential changes in market interest rates and their subsequent effects on net interest income for a one-year time period. This dynamic model projects a “Base” case net interest income over the next 12 months and the effect on net interest income of instantaneous movements in interest rates between various basis point increments equally across all points on the yield curve. Many assumptions based on growth expectations and on the historical behavior of the Bank’s deposit and loan rates and their related balances in relation to changes in interest rates are incorporated into this dynamic model. These assumptions are inherently uncertain and, as a result, the dynamic model cannot precisely measure future net interest income or precisely predict the impact of fluctuations in market interest rates on net interest income. Actual results will differ from the model’s simulated results due to the actual timing, magnitude and frequency of interest rate changes, the actual timing and magnitude of changes in loan and deposit balances, as well as the actual changes in market conditions and the application and timing of various management strategies as compared to those projected in the various simulated models. Additionally, actual results could differ materially from the model if interest rates do not move equally across all points on the yield curve.
As of June 30, 2026, a dynamic simulation model was run for interest rate changes from “Down 300” bps to “Up 300” bps. The following table illustrates the Bank’s projected percent change from its Base net interest income over the period beginning July 1, 2026, and ending June 30, 2027, based on instantaneous movements in interest rates from Down 300 to Up 300 bps equally across all points on the yield curve. The Bank’s dynamic earnings simulation model includes secondary market loan fees, which are a component of mortgage banking income within noninterest income and excludes Traditional Banking loan fees.
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Table 28 — Bank Interest Rate Sensitivity
-300 | | -200 | | -100 | | +100 | | +200 | | +300 | |||||||
Basis Points | Basis Points | Basis Points | Basis Points | Basis Points | Basis Points | ||||||||||||
% Change from base net interest income as of June 30, 2026 | (3.2) | % | (4.3) | % | (2.5) | % | 4.2 | % | 8.5 | % | 12.5 | % | |||||
% Change from base net interest income as of December 31, 2025 | (1.7) | % | (3.7) | % | (2.2) | % | 2.6 | % | 5.3 | % | 7.6 | % | |||||
The results of the interest rate sensitivity analysis performed as of June 30, 2026 and December 31, 2025 were derived from subjective assumptions the Company uses in its earnings simulation model, particularly in relation to deposit betas, which measure how responsive management’s deposit repricing may be to changes in market rates based on historical data. Management uses different betas in the rising and falling rate scenarios to better simulate expected earnings trends.
In both interest rate sensitivity scenarios presented, the Company projects a decrease in net interest income in a declining rate environment as the rates the Company pays for its non-maturity, interest-bearing deposits cannot be lowered sufficiently to offset the decrease in interest income associated with its declining asset yields. Conversely, in both scenarios presented the Company projects an improvement in net interest income as interest rates rise as the yield the Company expects to earn for its interest-earning assets will increase more than the rise in its projected funding costs. These results depict an asset-sensitive interest rate risk profile.
In comparing the Company’s interest rate sensitivity projections as of December 31, 2025 and June 30, 2026, there were notable changes across all illustrated scenarios. Overall, management projects that the Company’s interest rate risk position has become less favorable in declining-rate environments and more favorable in rising-rate environments.
The improved net interest income performance in the illustrated up-rate scenarios was driven primarily by elevated cash balances at June 30, 2026, the yields on which would reprice immediately in a rising-rate environment. In mid-June 2026, RPS onboarded a new prepaid card marketer-servicer program that maintained approximately $178 million of deposits outstanding as of June 30, 2026. Because interest-bearing deposit costs under this program are tied to a contractual rate formula, the relationship is generally expected to enhance net interest income in rising-rate environments and reduce net interest income in declining-rate environments.
These same factors that drove the improvement in the Company’s interest rate sensitivity analysis from December 31, 2025 to June 30, 2026, also drove the deterioration in its interest rate sensitivity analysis for the same periods.
For additional discussion regarding the Bank’s net interest income, see the sections titled “Net Interest Income” in this section of the filing under “Results of Operations (Three Months Ended June 30, 2026 Compared to the Three Months Ended June 30, 2025) and “Results of Operations (Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025).
Item 3.Quantitative and Qualitative Disclosures about Market Risk.
Information required by this item is included under Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Item 4. Controls and Procedures.
As of the end of the period covered by this report, an evaluation was carried out by Republic Bancorp, Inc.’s management, with the participation of its Executive Chair/CEO and CFO, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act. Based upon that evaluation, the Company’s Executive Chair/CEO and CFO concluded that these disclosure controls and procedures were effective as of the end of the period covered by this report. In addition, no change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during the fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1.Legal Proceedings.
In the ordinary course of operations, Republic and the Bank are defendants in various legal proceedings. There is no proceeding, pending, or threatened litigation in which Republic and the Bank are a defendant, to the knowledge of management, in which an adverse decision could result in a material adverse change in the business or consolidated financial position of Republic or the Bank.
Item 1A.Risk Factors.
There have been no material changes in the Company’s risk factors as previously disclosed in Part 1, “Item 1A. Risk Factors” of its Annual Report on Form 10-K for the fiscal year ended December 31, 2025. You should carefully consider the risk factors discussed in Republic’s 2025 Form 10-K, which could materially affect its business, financial condition, or future results.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.
Details of Republic’s Class A Common Stock purchases during the second quarter of 2026 are included in the following table:
Total Number of | Maximum Number | ||||||||
Shares Purchased | of Shares that May | ||||||||
as Part of Publicly | Yet Be Purchased | ||||||||
Total Number of | Average Price | Announced Plans | Under the Plan | ||||||
Three Months Ended June 30, 2026 | | Shares Purchased | | Paid Per Share | | or Programs | | or Programs | |
April 1 - April 30 |
| — |
| $ | — |
| — | 433,395 | |
May 1 - May 31 |
| — |
| — |
| — | 433,395 | ||
June 1 - June 30 |
| — |
| — |
| — | 433,395 | ||
Total |
| — |
| $ | — |
| — |
| 433,395 |
The Company did not repurchase any of its shares under publicly announced programs during the second quarter of 2026. In addition, in connection with employee stock awards, there were 8,497 shares withheld upon exercise of stock options and vesting of equity awards to satisfy the withholding taxes and, for stock options, the exercise price.
On January 24, 2024, the Board increased the Company’s existing authorization to purchase shares of its Class A Common Stock by 400,000 shares. The repurchase program will remain effective until the total number of shares authorized is repurchased or until Republic’s Board terminates the program. As of June 30, 2026 the Company had 433,395 shares which could be repurchased under its current share repurchase programs.
During the second quarter of 2026, there were approximately 11,000 shares of Class A Common Stock issued upon conversion of shares of Class B Common Stock by stockholders of Republic in accordance with the share-for-share conversion provision option of the Class B Common Stock. The exemption from registration of the newly issued Class A Common Stock relied upon was Section (3)(a)(9) of the Securities Act.
There were no equity securities of the registrant sold without registration during the quarter covered by this report.
Item 5.Other Information.
Rule 10b5-1 Trading Plans
During the quarter ended June 30, 2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) informed us of the
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Item 6.Exhibits.
The following exhibits are filed or furnished as a part of this report:
Exhibit Number | Description of Exhibit | |
31.1 | Certification of Principal Executive Officer pursuant to the Sarbanes-Oxley Act of 2002 | |
31.2 | Certification of Principal Financial Officer pursuant to the Sarbanes-Oxley Act of 2002 | |
32* | Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101 | The following financial statements from the Company’s quarterly report on Form 10-Q were formatted in iXBRL(Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025, (ii) Consolidated Statements of Income and Comprehensive Income for the Three and Six Months Ended June 30, 2026 and 2025, (iii) Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2026 and 2025, (iv) Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2026 and 2025 and (v) Notes to Consolidated Financial Statements | |
104 | Cover Page Interactive Data File formatted in iXBRL and contained in Exhibit 101. |
* | This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act or Exchange Act. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
REPUBLIC BANCORP, INC. | ||||
(Registrant) | ||||
Principal Executive Officer: | ||||
Date: August 7, 2026 | | | /s/ Steven E. Trager | |
By: Steven E. Trager | ||||
Executive Chair and Chief Executive Officer | ||||
Principal Financial Officer: | ||||
Date: August 7, 2026 | /s/ Kevin Sipes | |||
By: Kevin Sipes | ||||
Executive Vice President, Chief Financial | ||||
Officer and Chief Accounting Officer | ||||
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