RBCAA 10-K & 10-Q changes, risk factors and insider trading

An investment in Republic’s common stock is subject to risks inherent in its business. There are factors, many beyond the Company’s control, which may significantly change the results or expectations of the Company. The following are the material risk factors that impact usthe Company of which weit areis currently aware. Before making an investment decision, you should carefully consider the risks and uncertainties described below together with all the other information included in this filing.report. In addition to the risks and uncertainties described below, other risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially and adversely affect its business, financial condition, and results of operations in the future. The value or market price of the Company’s common stock could decline due to any of these identified or other risks, and an investor could lose all or part of their investment.

Fluctuations in interest rates could reduce profitability. The Bank’s asset/liability management strategy may not be able to prevent changes in interest rates from having a material adverse effect on financial condition and results of operations and financial condition.operations. The Bank’s primary source of income is from the difference between interest earned on loans and investments and the interest paid on deposits and borrowings. The Bank expects to periodically experience “gaps” in the interest rate sensitivities of its assets and liabilities, meaning that either interest-bearing liabilities will be more sensitive to changes in market interest rates than interest-earning assets, or vice versa. In either event, if market interest rates should move contrary to the Bank’s balance sheet position, earnings may be negatively affected.

A continued or further inversionInversion of the interest rate yield curve may reduce profitability. Changes in the slope of the “yield curve,” or the spread between short-term and long-term interest rates, could reduce the Bank’s net interest margin.NIM. Normally, the yield curve is upward sloping, meaning short-term rates are lower than long-term rates. Because the Bank’s interest-bearing liabilities tend to be shorter in duration than its interest-earning assets, when the yield curve flattens or even inverts, the Bank’s net interest marginNIM generally decreasesdecreases, as its cost of funds rises higher and at a faster pace than the yield on its interest-earning assets. A rise in the Bank’s cost of interest-bearing liabilities without a corresponding increase in the yield on its interest-earning assets,assets would have an adverse effect on the Bank’s net interest marginNIM and overall results of operations.

The Bank may be compelled to offer market-leading interest rates to maintain sufficient funding and liquidity levels. The Bank has traditionally relied on client deposits (with approximately 7%8% of deposits concentrated with the Bank’s top 20 depositors as of December 31, 2025), brokered deposits, and advances from the FHLB to fund operations. Such traditional sources may be unavailable, limited, or insufficient in the future. 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 curtailed, such as its borrowing line at the FHLB, or if the Bank cannot obtain brokered deposits, the Bank may be compelled to offer market-leading interest rates to meet its funding and liquidity needs. Obtaining funds at market-leading interest rates would have an adverse impact on the Company’s net interest income and overall results of operations.

The proportion of Republic’s deposit account balances that exceed FDIC insurance limits may expose the Bank to enhanced liquidity risk and earnings risks in times of financial distress. UninsuredHistorically, uninsured deposits historically have been less stable than insured deposits. As a result, in the event of financial distress, uninsured depositors historically have been more likely to withdraw their deposits. The Company estimates that 37%41% of its total deposits as of December 31, 2024,2025, were uninsured as they were above the FDIC’s insurance limit. If a significantsizable portion of these uninsured deposits were to be withdrawn within aan shortabbreviated period of time such that additional sources of funding would be required to meet withdrawal demands, Republicthe Bank may be unable to obtain funding at favorable terms,terms or obtain funding at all, which may have an adverse effect on its net interest margin.NIM. Moreover, obtaining adequate funding to meet Republic’sthe Bank’s deposit obligations may be more challenging during periods of elevated prevailing interest rates, such as the present period.rates. The Bank’s ability to attract depositors during a time of actual or perceived distress or instability in the marketplace may be limited. Further, interest rates paid for borrowings generally exceed the interest rates paid on deposits. ThisIf spreadthe mayBank behad exacerbatedto byrely highermore prevailingon interesthigher-cost rates.wholesale borrowings to fund a loss of deposits, it could materially, negatively impact the Company’s results of operations.

RAs represent a significant credit risk, and if the Bank is unable to collect a significantsizable portion of its RAs, it would materially, negatively impact the Company’s financial condition and results of operations. There is credit risk associated with an RA because the funds are disbursed to the taxpayer customer prior to the Bank receiving the taxpayer customer’s refund as claimed on the return. Management annually reviews and revises theits RAs underwriting criteria. These changes in the RAs underwriting criteria do not ensure positive results and could have an overall material negative impact on the performance of the RA and therefore on the Company’s financial condition and results of operations.

Because there is no recourse to the taxpayer customer if the RA is not paid off by the taxpayer customer’s tax refund, the Bank must collect all of its payments related to RAs through the refund process. Losses will generally occur on RAs when the Bank does not receive payment due to several reasons, such as IRS revenue protection strategies, including audits of returns, errors in the tax return, tax return fraudfraud, and tax debts not previously disclosed to the Bank during its underwriting process. While theThe Bank’s underwriting during the RA approval process takes these factors into consideration based on prior years’ payment patterns, such that if the IRS significantly alters its revenue protection strategies, if refund payment patterns for a given tax season meaningfully change, if the federal government fails to timely deliver refunds, or if the Bank is incorrect in its underwriting assumptions, the Bank could experience higher loan loss provisions above those projected. The provision for loan lossesProvision is a significant determining factor of the RPG operations’division’s overall net earnings.

In addition, the federal government, specifically as a result of the2015 PATH Act, the federal government mandates that tax refunds for tax returns with certain characteristics cannot receive their corresponding refunds before February 15th each year. Substantially all the tax returns driving TRS’s product volume meet the criteria of those subject to this later funding under the PATH Act. These funding delays effectively restrict the Bank’s ability to make in-season modifications to its RA underwriting model based on then-current year tax refund funding patterns, because the substantial majority of all RAs are issued prior to February 15th. As a result, the underwriting criteria that TRS establishes for the RA product at the beginning of the tax season could have a material negative impact on the performance of the RA before mitigating revisions can be made.

Management’s changes to RPG product parameters could have a material negative impact on the performance of the RPG products. In response to changes in the legal, regulatory, and competitive environment, management annually reviews and revises RPG product parameters. Further changes in product parameters do not ensure positive results and could have an overall material negative impact on the performance of the product and therefore on the Company’s financial condition and results of operations.

The ACLL could be insufficient to cover the Bank’s actual loan losses. The Bank makes various assumptions and judgments about the collectability of its loan portfolio, including the creditworthiness of its borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of its loans. In determining the amount of the ACLL, the Bank considers, among other things, the Bank reviewsfactors, its historical loss and delinquency experience,experience and prevailing economic conditions, etc.conditions. If its assumptions are incorrect, the ACLL may not be sufficient to cover losses inherent in its loan portfolio, resulting in additions to its ACLL. In addition, regulatory agencies periodically review the ACLL and may require the Bank to increase its Provision or recognize further loan charge-offs. A material increase in the ACLL or loan charge-offs would have a material adverse effect on the Bank’s financial condition and results of operations.

Deterioration in the quality of the Traditional Banking loan portfolio may result in additional charge-offs, which would adversely impact the Bank’s operatingfinancial condition and results andof financial condition.operations. When borrowers default on their loan obligations, it may result in lost principal and interest income and increased operating expenses associated with the increased allocation of management time and resources associated with the collection efforts. In certain situations where collection efforts are unsuccessful or acceptable “work-out” arrangements cannot be reached or performed, the Bank may charge-off loans, either in part or in whole. Additional charge-offs will adversely affect the Bank’s operatingfinancial condition and results andof financial condition.operations.

The Bank’s financial condition and earningsresults of operations could be negatively impacted to the extent the Bank relies on borrower information that is false, misleading, or inaccurate. The Bank relies on the accuracy and completeness of information provided by vendors, clients, and other parties in deciding whether to extend credit and/or enter into transactions with other parties. If the Bank relies on incomplete and/or inaccurate information, the Bank may incur additional charge-offs that adversely affect its operatingfinancial condition and results andof financial condition.operations.

The Traditional Bank uses appraisals as part of the decision process to make a loan for, or secured by, real property. In addition, appraisals are used to value a loan if it becomes “collateral dependent” as a problem credit. Appraisals do not ensure the value of the real property collateral. As part of the new loan process or in valuing a collateral dependent problem credit, the Bank generally requires an independent third-party appraisal of the real property. An appraisal, however, is only an estimate of the value of the property at the time the appraisal is made. An error in fact or judgment could adversely affect the reliability of the appraisal. In addition, events occurring after the appraisal may cause the value of the real estate to decrease. As a result of any of these factors, the value of collateral securing a loan may be less than supposed, and if a default occurs, the Bank may not recover the outstanding balance of the loan. Approximately 31%38% of the Traditional Bank’s portfolio is secured by residential real estateRRE and 33%40% is secured by commercialCRE realproperties estateas properties.of December 31, 2025. Both of these loan types are heavily dependent upon third-party appraisals in the decision process. Additional charge-offs in either of these portfolios as a result of inaccurate appraisals could adversely affect the Bank’s operatingfinancial condition and results andof financial condition.operations.

The Bank holds a significant amount of BOLI, which creates credit risk relative to the insurers and liquidity risk relative to the product. As of December 31, 2024, theThe Bank heldholds BOLI on certain employees. The eventual repayment of the cash surrender value is subject to the ability of the various insurance companies to pay death benefits or to return the cash surrender value to the Bank if needed for liquidity purposes. The Bank continually monitors the financial strength of the various insurance companies that carry these policies. However, any one of these companies could experience a decline in financial strength, which could impair its ability to pay benefits or return the Bank’s cash surrender value. If the Bank needs to liquidate these policies for liquidity purposes, it would be subject to taxation on the increase in cash surrender value and penalties for early termination, both of which would adversely impact earnings.

RPG products represent a significant operational risk, and RPG relies heavily on the accuracy and timeliness of data received from the Bank’s third-party marketers and service providers. To conduct its RPG businesses, the Bank must implement and test new systems, train associates for new products and changes to existing products, and process information and data received from third-party marketers and service providers. Due to the high volume of transaction activity across all the RPG product lines, the Bank relies heavily on the communications and information systems of the BankBank, as well as the communications and information systems of its third-party providers to operate these products. Any failure, sustained interruption, or breach in security, including the cybersecurity, of these systems could result in failures or disruptions in client relationship management and other systems. If the Bank were unable to properly service this business as a result of inaccurate or untimely data from its third-party marketers and service providers, it could materially impact earnings.

RCS revenues and earnings are highly concentrated in its line-of-creditLOC products. The discontinuation of these line-of-creditLOC products, or a substantial change in the terms under which these products are offered, would have a material adverse effect on the Company’s financial condition and results of operations.

Many of the RCS programs are heavily reliant on the ability of the Bank to sell all or a significantsizable portion of the loans originated to a third party in order to fund the programs. If the Bank were unable to sell these loans to a third-party purchaser for any reason, RCS would likely cease originating new loans under that product line, which would significantly and negatively impact the overall earnings of RCS. RCS originates installment loans and lines of credits through its various product lines. For some of its installment products, RCS sells 100% of the balances after its origination. For its line of creditLOC products, the Bank sells a 90% or 95% participation in the product after origination, depending upon the product. If the Bank were unable to sell these loan balances for any reason, RCS would likely cease originating new loans for that particular product as soon as practical under the terms of its various agreements. The inability of RCS to originate new loans under any of its higher-yield RCS products would cause a material adverse impact to the results of operation of RCS.

In addition, the agreementagreements between the Bank and the consumer for many of its line of creditLOC products do not allow RCS to stop originating new customer draws on that product if RCS chooses to exit the product line. For these products, if the Bank were unable to sell these balances for any reason, RCS would retain 100% of the balances it originates on those products. In those circumstances, the credit risk for the Bank would increase substantiallysubstantially, as it would then be responsible for 100% of any charge-offs for these loans, as opposed to 5% or 10% of the charge-offs10%, when it is able to sell participating balances to a third-party purchaser. While the Bank would also be retaining 100% of the revenue from these balances as well, there is no guarantee the additional revenue would offset the charge-offs in the event of an economic downturn. Such an increase in charge-offs could have a material adverse impact on the results of operations of the RCS segment and the Company, as a whole.

Clients couldmay pursue alternatives to traditional bank deposits, causingwhich could reduce the BankBank’s access to lose a relatively inexpensive and stable source of funding. Checking and savings account balancesbalances, andas well as other forms of client depositsdeposits, couldmay decreasedecline if clients perceive alternative investments, investments—such as theequity stockor market,bond markets, money-market funds, or other higher-yield financial products—as providingoffering superior expected returns. If clients movereallocate moneyfunds outaway offrom bankdeposit depositsaccounts in favor of alternativethese investments,alternatives, the Bank could loseexperience deposit outflows, resulting in a relatively inexpensive sourceloss of funds,low-cost increasingfunding. itsReplacing these deposits with higher-cost funding sources, such as brokered deposits or wholesale borrowings, would increase the Bank’s overall funding costs and could negatively impactingimpact its overallNIM and results of operations.

The Company may be adversely affected by the soundness of other financial institutions. Financial services institutions are interrelated because of trading, clearing, counterparty, or other relationships. The Company has exposure to many different industries and counterparties,counterparties and routinely executes transactions with counterparties in the financial services industry, including commercial banks, brokers and dealers, investment banks, and other institutional clients. Many of these transactions expose the Company to credit risk in the event of a default by a counterparty or client. In addition, the Company’s credit risk may be exacerbated when the collateral held by the Company cannot be realized upon or is liquidated at prices not sufficient to recover the full amount of the credit or derivative exposure due to the Company. Any such losses could have a material adverse effect on the Company’s financial condition and results of operations.

The Company’s information systems may experience an interruption that could adversely impact the Company’s financial condition and results of operations. The Company relies heavily on communications and information systems to conduct its business. Any failure or interruption of these systems could result in failures or disruptions in client relationship management, general ledger, deposit, loanloan, and other systems. While the Company has policies and procedures designed to prevent or limit the impact of the failure or interruption of information systems, there can be no assurance that any such failures or interruptions will not occur or, if they do occur, that they will be adequately addressed. The occurrencesoccurrence of any failures or interruptions of the Company’s information systems could damage the Company’s reputation, result in a loss of client business, subject the Company to additional regulatory scrutiny, or expose the Company to civil litigation and possible financial liability, any of which could have a material adverse effect on the Company’s financial condition and results of operations.

New lines of business or new products and services may subject the Company to additional risks. From time to time, the Company may develop and grow new lines of business or offer new products and services within existing lines of business. There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed. In developing and marketing new lines of business and/or new products and services, the Company may invest significantconsiderable amounts of time and resources. Initial timetables for the introduction and development of new lines of business and/or new products or services may not be achieved, and price and profitability targets may not prove feasible. External factors, such as compliance with regulations, competitive alternatives and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service. Furthermore, any new line of business and/or new product or service could have a significant impact on the effectiveness of the Company’s system of internal control. Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could have a material adverse effect on the Company’s business, financial condition and results of operations, and financial condition.operations. All service offerings, including current offerings and those that may be provided in the future, may become riskier due to changes in economic, competitive, and market conditions beyond the Company’s control.

The Bank’s RPG products represent a significant legal, compliance, and regulatory risk, and if the Bank fails to comply with all statutory and regulatory requirements, it could have a material negative impact on earnings. Federal and state laws and regulations govern numerous matters relating to the offering of consumer loan products and consumer deposit.deposits. Failure to comply with disclosure requirements or with laws relating to the permissibility of interest rates and fees charged could have a material negative impact on earnings. In addition, failure to comply with applicable laws and regulations could also expose the Bank to civil money penalties and litigation risk, including client and shareholder actions. Various states and consumer groups have, from time to time, questioned the fairness of the products offered by RPG. Initiatives at the federal and state level, including by governmental agencies and consumer groups, could result in regulatory, governmental, or legislative action or litigation, which could have a material adverse effect on the Company’s RPG operations. If the Company can no longer offer or must substantially alter its RPG products, it will have a material negative impact on earnings.

The Company is significantly impacted by the regulatory, fiscal, and monetary policies of federal and state governments that could negatively impact the Company’s liquidity position and earnings. These policies can materially affect the value of the Company’s financial instruments and can also adversely affect the Company’s clients and their ability to repay their outstanding loans. In addition, failure to comply with laws, regulations or policies, or adverse examination findings, could result in significant penalties, negatively impact operations, or result in other sanctions against the Company. The Board of Governors of the Federal Reserve System regulates the supply of money and credit in the U.S. Its policies determine, in large part, the Company’s cost of funds for lending and investing and the return the Company earns on these loans and investments, all of which impact net interest margin.NIM.

Federal and state laws and regulations govern numerous mattersaspects of the business of banking, including changes in the ownership or control of banks and bank holding companies,BHC’s, maintenance of adequate capital and the financial condition of a financial institution, permissible types, amounts and terms of extensions of credit and investments, permissible non-banking activities, the level of reserves against deposits and restrictions on dividend payments. Various federal and state regulatory agencies possess cease and desist powers and other authority to prevent or remedy unsafe or unsound practices or violations of law by banks subject to their regulations. The FRB possesses similar powers with respect to bank holding companies.BHC’s. These, and other restrictions, can limit in varying degrees,degrees the way Republic conducts its business.

Federal and state laws and regulations also govern numerous matters relating to the offering of banking products. Failure to comply with these laws and regulations, including those mandating disclosure requirements or with laws, including those relating to the permissibility of interest rates and fees charged, could have a material negative impact on earnings. In addition, failure to comply with applicable laws and regulations could also expose the Bank to civil money penalties and litigation risk, including shareholder actions. Initiatives of the current President and the current Congress, along with actions of the states, governmental agencies, and consumer groups, could result in regulatory, governmental, or legislative action or litigation,litigation whichthat could have a material adverse effect on the Company’s operations.

Federal and state regulatory agencies frequently adopt changes to their regulations or change the manner in which existing regulations are applied. Regulatory or legislative changes to laws applicable to the financial services industry, if enacted or adopted, may impact the profitability of ourthe Company’s business activities, require more oversight or change certain of our business practices, including the ability to offer new products, obtain financing, attract deposits, make loans and achieve satisfactory interest spreadsspreads, and could expose Republic to additional costs, including increased compliance costs. These changes also may require Republic to invest significant management attention and resources to make any necessary changes to operations to comply and could have an adverse effect on its business, financial condition, and results of operations.

The consolidated financial statements included in this report include the accounts of Republic Bancorp, Inc. (the “Parent Company”) and its wholly owned subsidiaries,subsidiary, Republic Bank & Trust Company and Republic Insurance Services, Inc.Company. As used in this filing,report, the terms “Republic,” the “Company,” “we,” “our,” and “us” refer to Republic Bancorp, Inc.,Inc. and, where the context requires, Republic Bancorp, Inc. and its subsidiaries.subsidiary. The term the “Bank” refers to the Company’s subsidiary bank:bank, Republic Bank & Trust Company.Company, as well as its wholly owned subsidiary, RBT Insurance Agency LLC. The termCompany the “Captive” refers to the Company’s insurance subsidiary:dissolved Republic Insurance Services, Inc.Inc., its former insurance captive subsidiary, in 2023. All significant intercompany balances and transactions are eliminated in consolidation.

Republic is aan financial holding companyFHC 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. During the last quarter of 2023, the Company dissolved its Captive, a Nevada-based, wholly owned insurance subsidiary of the Company. The Captive provided property and casualty insurance coverage to the Company and the Bank, as well as a group of third-party insurance captives.

BroadlyForward-looking speaking, forward-looking statements include:Statements

For disclosure regarding the impact to the Company’s financial statements of ASUs, see the Footnote 1titled “Summary of Significant Accounting Policies” of Part II Item 8 “Financial Statements and Supplementary Data.”

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

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

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

See additional detail regarding the Company’s adoption of ASC 326 and the CECL method under the Footnote 4titled “Loans and Allowance for Credit Losses” of Part II Item 8 “Financial Statements and Supplementary Data.”

Management evaluatedevaluates the reasonableness of its Core Bank ACLL by evaluating absorption and exhaustion rates that account for CECL life-of-loan considerations. The absorption rate consideredconsiders a range of total Core Bank net loan losses to the Total Core Bank ACLL using the 2008 to 2013 “Great Recession” timeframe as a baseline. The exhaustion rate consideredconsiders how many years of grosstotal Core Bank gross loan charge-offs the end-of-year Core Bank ACLL could withstand based on a range of average annual net Core Bank loan losses, also using the 2008 to 2013 timeframe as a baseline. The years 2008 to 2013 represent a six-year period during which the U.S. unemployment rate rose above 8% and the Core Bank incurred a historically high period of loan losses relative to an average year of loan losses for the Core Bank. The timeframe of 2008 to 2013 is the most recent period in which the Core Bank incurred notable loan losses, and as such, Management believes is an appropriate baseline starting point in its overall absorption and exhaustion analyses.

Management considered the range of absorption rates and exhaustion rates calculated for the Core Bank as of December 31, 20242025 and 20232024 to be within acceptable ranges under current economic conditions. Based on management’s evaluation, a Core Bank ACLL of $61$66 million, or 1.19%1.24%, of total Core Bank loans, was an adequate estimate of expected losses within the loan portfolio as of December 31, 20242025 and resulted in Core Banking Provision for its loans of a net charge of $3.8$6.0 million during 2024. This compares to an ACLL of $60 million as of December 31, 2023 and $52 million as of December 31, 2022 with Provisions of a net charge of $8.5 million for 2023 and net charge of $312,000 for 2022.2025.

The RPG ACLL as of December 31, 20242025 primarily related to loans originated and held for investment through the RCS segment. RCS generally originates small-dollar, consumer credit products. For its healthcare receivable products, the Bank originates the loans, and in some instances, sells 100% of the balances and in other instances retains 100% of the balances. For its LOC products, the Bank originates these products, sells 90% or 95% of the balances within three business days of loan origination, and retains a 5% or 10% interest. RCS LOC products typically earn a higher yield but also have higher credit risk compared to loans originated through Core Banking operations, with a significantsizable portion of RCS clients considered subprime or near-prime borrowers.

As of December 31, 2024,2025, the ACLL to total loans estimated for each RCS product ranged from as low as 0.25% for its healthcare-receivables portfolios to as high as 70.63% for its line-of-creditLOC portfolios. A lower reserve percentage was provided for RCS’s healthcare receivables as of December 31, 2024,2025, as such receivables have recourse back to the Company’s third-party service providers in the transactions.providers.

Management only evaluatedevaluates the ACLL on its active RCS products that hadhave incurred meaningful losses since their inception, which wereare its line-of-creditLOC products. Due to the general short-term nature of these products, management utilized the current year net charge-offs for 20232024 and 20242025, along with the end-of-the-year ACLL to calculate each years’ absorption rate and exhaustion rate. The absorption and exhaustion rates were both considered to be within acceptable ranges as of December 31, 20242025 and 2023.2024. Based on management’s calculation, an ACLL of $21$19 million, or 16.30%,17.15%, of total RCS loans was an adequate estimate of expected losses within the RCS portfolio as of December 31, 2024.2025.

RPG’s TRS segment offered its RA credit product during the first two months of 2024,2025, 2023,2024 and 2022,2023, and its ERA credit product during the Decembersmonth of 2024,December 2023in 2025, 2024 and 20222023 related to the subsequent first quarter tax filing seasons. An ACLL for losses on ERAs /RAs and ERAs is estimated during the limited, short-term period the product is offered. RAs originated during the first two months of 2024,2025, were repaid, on average, within 32 days of origination. Provisions for RA and ERAERAs/RAs losses are estimated when advances are made and adjusted to actual net charge-offs as of June 30th of each year. The ACLL for ERAs as of December 31, 20242025 was $9.8 million$296,000 for $139$13 million of ERAs originated during Decemberthe 2024. The ACLL asmonth of December 31, 2023 was $3.9 million for $103 million of ERAs originated during December 2023. The ACLL as of December 31, 2022 was $3.8 million for $98 million of ERAs originated during December 2022.2025.

Related to the overall credit losses on RAs and ERAs,ERAs/RAs, the Bank’s ability to control losses is highly dependent upon its ability to predict the taxpayer’s likelihood to receive the tax refund as claimed on the taxpayer’s tax return. Each year, the Bank’s ERA/RA and ERA approval model is based primarily on the prior-year’s tax refund funding patterns. Because much of the loan volume occurs each year before that year’s tax refund funding patterns can be analyzed and subsequent underwriting changes made, credit losses during a current year could be higher than management’s predictions if tax refund funding patterns change materially between years.

See additional discussion regarding the RA productERAs/RAs under the sections titled:

Total Company net income was $131.3 million and Diluted EPS was $6.72 for 2025, compared to net income of $101.4 million and Diluted EPS wasof $5.21 for 2024,2024. comparedThe tofollowing net income of $90.4 million and Diluted EPS of $4.62 for 2023. Table 1 belowtable presents Republic’s financial performance for the years ended December 31, 2025, 2024, 2023, and 20222023:

General highlights by reportable segment for the year ended December 31, 2025 compared to the year ended December 31, 2024 consisted of the following:

Warehouse(I) LendingTraditional Banking segment

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

Total Company net interest income was $312.2$334.7 million during 20242025 and represented a $23.4$22.5 millionmillion, or 7%, increase over 2023. The2024. Total Company netNIM interestincreased marginto declined5.05% during 2025 compared to 4.85% for 2024. In general, notably lower interest-bearing deposit costs combined with a modest decline in interest-earning assets yields during 20242025 comparedled to 4.91%NIM expansion and strong net interest income for 2023.the year.

The following were the most significant components affectingcomprising the total Company’s net interest income and NIM fluctuations by reportable segment:

TheItems increaseof innote impacting the Traditional Bank’s change in net interest income and decreaseNIM to the Traditional Bank’s net interest margin duringbetween 2024 wasand primarily2025 attributable to the following factorsfollows:

Republic’s consolidated financial statements and accompanying footnotesnotes have been prepared in accordance with GAAP. The preparation of these financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities,related thedisclosures. disclosureActual ofresults contingentcould assetsdiffer andfrom liabilitiesthose at the date of the financial statements, and the reported amounts of revenue and expenses during the reported periods.estimates.

Management continually evaluates the Company’s accounting policies and estimates thatused itin uses to preparepreparing the consolidated financial statements. In general, management’s estimatesEstimates and assumptions are based on historical experience, accounting and regulatory guidance, and information obtained from independent third-partythird professionals.parties, when applicable. Actual results may differ from those estimates made by management.estimates.

Critical accounting policies are those that management believes are the most important to the portrayal of the Company’sCompany's financial condition and results of operations and require managementthe touse make estimates that areof difficult, subjective, andor complex.complex Mostjudgments. accounting policies are not considered by management to be critical accounting policies. Several factors are considered inIn determining whether oran not aaccounting policy is criticalcritical, inmanagement considers several factors, including the preparationsignificance of the financial statements. These factors include, among other things, whether the estimates have a significant impact onto the financial statements, the naturedegree of thejudgment estimates,involved, the abilityavailability toof readily validate the estimates with other information including independent third partiesobservable or availableindependently pricing,verifiable information, the sensitivity of the estimates to changes in economic conditionsconditions, and whetherthe extent to which alternative accounting methods of accounting may be utilizedapplied under GAAP. Management has discussed each critical accounting policy and the methodology for the identification and determination ofits critical accounting policies and the process used to identify them with the Company’s Audit Committee.

As of MarchJune 31,30, 2026, the Bank maintained an ACLL for expected credit losses inherent in Company’sthe loan portfolio, which includesincluding overdrawn deposit accounts. Management evaluates the adequacy of the ACLL on a monthly basis and presents and discussesreviews the ACLL with both the Audit Committee and the Board quarterly.

The Company’sCompany estimates the ACLL using a static-pool CECL method is a “static-pool” methodmethodology that analyzes historical closedloan pools of loans over their expected lives to attain aderive loss rate,rates, which is thenare adjusted for current conditions and reasonable,reasonable and supportable forecasts prior tobefore being applied to the currentoutstanding balancebalances of the analyzedrespective loan pools. Due to its reasonably stronghistorical correlation towith the Company's historical net loancharge-off losses, the Company has chosen to useexperience, the U.S. national unemployment rate serves as itsthe primary forecastingeconomic tool.forecast Additionally, the Company reviews and utilizesvariable. CRE and C&I vacancy rates are also considered as a secondary forecastingforecast tool.variables. Subsequent toFollowing the one-year forecasts,reasonable and supportable forecast period, loss rates are assumed to immediately revert backimmediately to long-term historical averages. Adjustments to the historicalHistorical loss raterates are further adjusted for current conditionsconditions, includeincluding differenceschanges in underwriting standards, portfolio mixcomposition, orloan term,terms, delinquency level, as well as for changes in environmental conditions, such as changes intrends, property valuesvalues, orand other relevant environmental factors.

The impact of utilizing the CECL approach to calculate the ACLL is significantly influenced by the composition, characteristics, and credit quality of the Company’s loan portfolio, as well as the prevailing economic conditions and forecasts utilized.incorporated Materialinto changesthe toCECL model. Changes in these andor other relevant factors may result in greaterincreased volatility toin the ACLL,ACLL andand, therefore, greater volatility toconsequently, the Company’s reportedCompany's earnings.

As of MarchJune 31,30, 2026, the Company was divided into five reportable segments: (I) Traditional Banking, (II) Warehouse Lending, (III) TRS, (IV) RPS, and (V) RCS. Management considers the first two segments to collectively constitute “Core Bank” or “Core Banking” operations, while the last three segments collectively constitute RPG operations.

The Traditional BankBanking 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 MarchJune 31,30, 2026, Republic had 47 full-service banking centers with locations as follows:

●Bellevue — 1

Traditional BankBanking 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 BankBanking 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 BankBanking 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 BankBanking operating expenses consist primarily of salaries and employee benefits;benefits, technology, equipment,equipment and communication; costs, occupancy; interchange related expense;expenses, marketing and development; expenses, FDIC insuranceinsurance, expense;interchange and variouscard processing fees, legal and professional services, and other general and administrative costs.expenses. Traditional BankBanking results of operations are significantly impactedinfluenced by general economic and competitive conditions, particularlyincluding changes in market interest rates, governmentgovernmental laws and policies, and actions of regulatory agencies.actions.

Traditional BankBanking lending activities consist of the following:

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 BankBanking 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.

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 commercialCRE 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.

The Business Banking group, reporting under Retail Banking in most markets, focuses on locally based small businesses in the Bank’s market footprint with primaryprimarily 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.

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 the fourth quarter ofDecember 2025, approximately $82 million of loans and leases were reclassifiedtransferred from held for investment to HFS, as the Bank entered into an Asset Purchase Agreement to sell its St. Louis-based RBF operations during December 2025.operations. The transactionsale closedwas in February 2026 and the Traditional Bank recorded a gain, net of broker commissions, of $5.8 millioncompleted during the first quarter of 2026.2026, 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, residentialRRE properties and commercialCRE 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 residentialRRE or commercialCRE land into buildable lots.

Single-family, residential-constructionRRE-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.

Consumer Lending — Traditional BankBanking 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 BankBanking 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.

Since its introduction in December of 2022, theThe ERA loan product has beenis 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:

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 will beare charged-off as of June 30th 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 toof receivereceiving 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 the 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.

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 obligationsresponsibilities undertaken by the Tax Provider for each individual RT program, with more obligationsresponsibilities assumed by the Tax Provider generally corresponding to higher RT revenue share.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 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.” The Company began sharing interest income revenue with its largest prepaid marketer-servicer during 2024, with the interest shared reported as “Interest expense on deposits.” The Company did not share interest income revenue with its largest prepaid marketer-servicer during 2025 and the first three months of 2026, as minimum deposit balance thresholds were not met.

Through the RCS segment, the Bank uses third-party service providers to originateoriginates two line-of-creditline 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:

Through the RCS segment, the Bank originates healthcare receivables products across the U.S. through threetwo different third-party service providers. For twoone of the programs, the Bank retains 100% of the receivables, with recourse in the event of default. For the remainingother 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.

OVERVIEW (Three Months Ended MarchJune 31,30, 2026, Compared to Three Months Ended MarchJune 31,30, 2025)

Total Company net income for the firstsecond quarter of 2026 net income was $42.6$32.9 million, aan decreaseincrease of $4.7$1.4 million, or 10%,4%, from the same period in 2025. Diluted EPS declinedwas 10% to $2.18$1.68 for the firstsecond quarter of 20262026, compared to $2.42$1.61 for the same period in 2025.2025, an increase of 4%.

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 $8.4$1.7 million of net income to firstsecond quarter 2025 operating results, consisting of: $17.7$37,000 million inof net interest income, $9.0$2.3 million inof provisionProvision expense,recoveries, $3.1 million$613,000 in net RT feesfees, and $967,000$751,000 in noninterest expense, and $471,000 in estimated income tax expense.

RESULTS OF OPERATIONS (Three Months Ended MarchJune 31,30, 2026, Compared to Three Months Ended MarchJune 31,30, 2025)

Traditional BankBanking 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 loweredreduced the FFTR by 25 basis points to 3.75%, where it remained asthrough ofJune March 31,30, 2026. ThisSince reductionSeptember follows2024, cumulative ratereductions cutsto totalingthe FFTR have totaled 175 basis points enacted across several FOMC meetings since September 2024.points. While the FFTR is currently maintainedwas within a target range of 3.50% to 3.75%,3.75% as of June 30, 2026, recent FOMC commentarycommunications suggestsindicated additionalthat ratepolicymakers cutscontinued areto possiblemonitor ininflationary 2026.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 additional reductionsincreases in interest rates across the FFTRyield arecurve unlikelygenerally towould positivelyhave a favorable impact on the Traditional Bank’sCompany's net interest incomeincome, orwhile declines in interest rates generally would have a negative impact on the Company’s net interest margin.income. The ultimate impact of recent or future changes in the FFTR decreases will depend on several factors, including the continued shiftmigration 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 lowermanage deposit costs relative to changes in line with benchmark rate declines,rates and yields on interest-earning assets, and the Company’s overall liquidity requirements.