1 min

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, ~~2021~~2022

or

◻ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 0-24649

REPUBLIC BANCORP, INC.

(Exact name of registrant as specified in its charter)


Kentucky		61-0862051
(State of other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

601 West Market Street, Louisville, Kentucky		40202
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (502) 584-3600

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Class A Common	RBCAA	The Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ⌧ Yes ◻ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ⌧ Yes ◻ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ◻	Accelerated filer ⌧	Non-accelerated filer ◻	Smaller reporting company ◻
Emerging growth company ◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ◻ Yes ☒ No

The number of shares outstanding of the registrant’s Class A Common Stock and Class B Common Stock, as of October 31, ~~2021,~~2022 was ~~18,042,274~~17,587,340 and ~~2,165,064.~~2,159,495.

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.	7069

Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	~~114~~124

Item 4.	Controls and Procedures.	~~114~~124

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings.	~~114~~124

Item 1A.	Risk Factors.	~~115~~125

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	~~115~~125

Item 6.	Exhibits.	~~116~~126

	SIGNATURES	~~117~~127

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

ACH		Automated Clearing House
ACL		Allowance for Credit Losses
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
AOCI		Accumulated Other Comprehensive Income
ASC		Accounting Standards Codification
ASU		Accounting Standards Update
Basic EPS		Basic earnings per Class A Common Share
BOLI		Bank Owned Life Insurance
BPO		Brokered Price Opinion
C&D		Construction and Development
C&I		Commercial and Industrial
CARES Act		Coronavirus Aid, Relief, and Economic Security Act
CBank Agreement		Agreement and Plan of Merger between Republic Bancorp, Inc., CBank, and RB&T
CECL		Current Expected Credit ~~Loss~~Losses
CMO		Collateralized Mortgage Obligation
Core Bank		The Traditional Banking, Warehouse Lending, and Mortgage Banking reportable segments of the Company
~~COVID-19~~COVID		Coronavirus Disease of 2019
CRE		Commercial Real Estate
DDA		Demand Deposit Account
Diluted EPS		Diluted earnings per Class A Common Share
EA		Easy Advance
Economic Aid Act		~~The~~ Economic Aid to ~~Hard Hit~~Hard-Hit Small ~~Business, Not for Profits~~Businesses, Nonprofits, and Venues Act
ESPP		Employee Stock Purchase Plan
EVP		Executive Vice President
FASB		Financial Accounting Standards Board
FDIC		Federal Deposit Insurance Corporation
FFTR		Federal Funds Target Rate
FHLB		Federal Home Loan Bank
FHLMC		Federal Home Loan Mortgage Corporation
FICO		Fair Isaac Corporation
FNMA		Federal National Mortgage Association
FOMC		Federal Open Market Committee
FRB		Federal Reserve Bank
FTE		Full Time Equivalent
FTP		Funds Transfer Pricing
GAAP		Generally Accepted Accounting Principles in the United States
Green Dot		Green Dot Corporation
HEAL		Home Equity Amortizing Loan
HELOC		Home Equity Line of Credit
HTM		Held to Maturity
IRS		Internal Revenue Service
ITM		Interactive Teller Machine
Lawsuit		The lawsuit the Bank filed against Green Dot in the Delaware Court of Chancery on October 5, 2021
LGD		Loss Given Default
LIBOR		London Interbank Offered Rate
LOC		Line of Credit
LOC I		RCS product introduced in 2014 for which the Bank participates out a 90% interest and holds a 10% interest
LOC II		RCS product introduced in 2021 for which the Bank participates out a 95% interest and holds a 5% interest
LTV		Loan to Value
MBS		Mortgage Backed Securities
MSRs		Mortgage Servicing Rights
NA		Not Applicable
NIM		Net Interest Margin
NM		Not Meaningful
OBS		Off-Balance Sheet
OCI		Other Comprehensive Income
OREO		Other Real Estate Owned
OTTI		Other than Temporary Impairment
PCD		Purchased with Credit Deterioration
PD		Probability of Default
PPP		SBA's Paycheck Protection Program
~~PPPLF~~		~~The FRB's Paycheck Protection Program Liquidity Facility~~
Prime		The Wall Street Journal Prime Interest Rate
Provision		Provision for Expected Credit Loss Expense
PSU		Performance Stock Unit
~~Purchase Agreement~~		~~May 13, 2021 Asset Purchase Agreement for the sale of substantially all of the Bank's TRS assets and operations to Green Dot~~
QF		~~Qualitative Factor~~
~~R&D~~		~~Research and Development~~
RB&T / the Bank		Republic Bank & Trust Company
~~RBCT~~		~~Republic Bancorp Capital Trust~~
RCS		Republic Credit Solutions segment
Republic / the Company		Republic Bancorp, Inc.
RPG		Republic Processing Group
RPS		Republic Payment Solutions
RT		Refund Transfer
Sale Transaction		Sale contemplated in the May 13, 2021 Asset Purchase Agreement between the Bank and Green Dot
SBA		U.S. Small Business Administration
Settlement Agreement		The agreement between the Bank and Green Dot that settled the Lawsuit filed by the Bank against Green Dot
SEC		Securities and Exchange Commission
SSUAR		Securities Sold Under Agreements to Repurchase
~~SVP~~		~~Senior Vice President~~
TDR		Troubled Debt Restructuring
The Captive		Republic Insurance Services, Inc.
~~TPS~~		~~Trust Preferred Securities~~
TRS		Tax Refund Solutions segment
TRS Purchase Agreement		May 13, 2021 Asset Purchase Agreement for the sale of substantially all of the Bank's TRS assets and operations to Green Dot
TRUP		~~TPS~~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)


	September 30,		December 31,		September 30,		December 31,
	2021		2020		2022		2021
ASSETS

Cash and cash equivalents	$	1,011,247	$	485,587	$	754,393	$	756,971
Available-for-sale debt securities, at fair value (amortized cost of $489,015 in 2021 and $512,518 in 2020, allowance for credit losses of $0 in 2021 and $0 in 2020)		495,880		523,863
Held-to-maturity debt securities (fair value of $45,590 in 2021 and $54,190 in 2020, allowance for credit losses of $54 in 2021 and $178 in 2020)		44,991		53,324
Available-for-sale debt securities, at fair value (amortized cost of $674,329 in 2022 and $492,626 in 2021, allowance for credit losses of $0 in 2022 and 2021)						629,947		495,126
Held-to-maturity debt securities (fair value of $32,621 in 2022 and $44,764 in 2021, allowance for credit losses of $10 in 2022 and $47 in 2021)						32,628		44,299
Equity securities with readily determinable fair value		2,578		3,083		175		2,620
Mortgage loans held for sale, at fair value		25,791		46,867		2,912		29,393
Consumer loans held for sale, at fair value		10,779		3,298		8,796		19,747
Consumer loans held for sale, at the lower of cost or fair value		3,976		1,478		12,679		2,937
Loans for discontinued operations, at the lower of cost or fair value		24		23,765
Loans (loans carried at fair value of $254 in 2021 and $497 in 2020)		4,343,782		4,789,338
Loans (loans carried at fair value of $11 in 2022 and $170 in 2021)						4,289,450		4,496,562
Allowance for credit losses		(63,024)		(61,067)		(64,919)		(64,577)
Loans, net		4,280,758		4,728,271		4,224,531		4,431,985
Federal Home Loan Bank stock, at cost		10,311		17,397		8,568		10,311
Premises and equipment, net		37,499		39,512		32,813		36,073
Right-of-use assets		39,257		43,345		41,303		38,825
Goodwill		16,300		16,300		16,300		16,300
Other real estate owned		1,845		2,499		1,634		1,792
Bank owned life insurance		99,634		68,018		101,013		99,161
Other assets and accrued interest receivable		106,764		111,718		131,971		108,092

TOTAL ASSETS	$	6,187,634	$	6,168,325	$	5,999,663	$	6,093,632

LIABILITIES

Deposits:
Noninterest-bearing	$	2,053,485	$	1,871,539	$	2,014,123	$	1,990,781
Interest-bearing		2,861,399		2,842,765		2,786,385		2,849,637
Deposits of discontinued operations		33,063		18,877
Total deposits		4,947,947		4,733,181		4,800,508		4,840,418

Securities sold under agreements to repurchase and other short-term borrowings		260,583		211,026		209,376		290,967
Operating lease liabilities		40,151		44,340		42,109		39,672
Federal Home Loan Bank advances		25,000		235,000		20,000		25,000
Subordinated note		—		41,240
Other liabilities and accrued interest payable		75,296		80,215		86,712		63,343

Total liabilities		5,348,977		5,345,002		5,158,705		5,259,400

Commitments and contingent liabilities (Footnote 9)		—		—		—		—

STOCKHOLDERS’ EQUITY

Preferred stock, 0 par value		—		—
Class A Common Stock and Class B Common Stock, 0 par value		4,752		4,899
Preferred stock, no par value						—		—
Class A Common Stock and Class B Common Stock, no par value						4,649		4,702
Additional paid in capital		140,842		143,637		140,958		139,956
Retained earnings		687,915		666,278		728,639		687,700
Accumulated other comprehensive income		5,148		8,509
Accumulated other comprehensive (loss) income						(33,288)		1,874

Total stockholders’ equity		838,657		823,323		840,958		834,232

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	6,187,634	$	6,168,325	$	5,999,663	$	6,093,632

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				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
	2021		2020		2021		2020		2022		2021		2022		2021
INTEREST INCOME:

Loans, including fees	$	51,409	$	53,447	$	153,433	$	164,302	$	52,606	$	52,182	$	161,537	$	169,294
Taxable investment securities		1,845		2,266		5,655		7,761		3,159		1,845		7,906		5,655
Federal Home Loan Bank stock and other		446		192		1,178		2,379		4,291		442		6,488		978
Total interest income		53,700		55,905		160,266		174,442		60,056		54,469		175,931		175,927

INTEREST EXPENSE:

Deposits		1,148		2,876		4,037		12,298		1,830		1,148		3,654		4,037
Securities sold under agreements to repurchase and other short-term borrowings		71		92		350		1,701		94		20		171		37
Federal Reserve Payment Protection Plan Liquidity Facility		—		48		—		153
Federal Home Loan Bank advances		6		658		47		3,128		96		6		226		47
Subordinated note		166		182		507		829		—		166		—		507
Total interest expense		1,391		3,856		4,941		18,109		2,020		1,340		4,051		4,628

NET INTEREST INCOME		52,309		52,049		155,325		156,333		58,036		53,129		171,880		171,299

Provision for expected credit loss expense		3,553		5,842		4,381		15,555
Provision for expected credit loss expense for on-balance sheet exposures (loans and investment securities)										1,573		1,292		14,504		12,231

NET INTEREST INCOME AFTER PROVISION		48,756		46,207		150,944		140,778		56,463		51,837		157,376		159,068

NONINTEREST INCOME:

Service charges on deposit accounts		3,277		3,017		9,221		8,604		3,409		3,277		9,998		9,221
Net refund transfer fees										593		1,280		16,594		19,924
Mortgage banking income		5,280		10,775		16,655		23,968		1,154		5,280		5,574		16,655
Interchange fee income		3,200		2,874		9,539		8,093		3,322		3,263		9,853		9,771
Program fees		4,530		1,487		10,304		5,249		4,932		4,018		12,671		9,569
Increase in cash surrender value of bank owned life insurance		626		400		1,616		1,184		617		626		1,852		1,616
Net losses on other real estate owned		(52)		(14)		(107)		(10)		(53)		(52)		(158)		(107)
Contract termination fee										—		—		5,000		—
Legal settlement										—		—		13,000		—
Other		1,134		861		2,769		2,673		1,073		1,133		2,230		2,845
Total noninterest income		17,995		19,400		49,997		49,761		15,047		18,825		76,614		69,494

NONINTEREST EXPENSE:

Salaries and employee benefits		25,948		25,207		79,470		75,405		27,269		26,991		85,477		83,738
Technology, equipment, and communication		7,226		7,402		21,479		20,966		7,235		7,498		21,678		22,009
Occupancy		3,195		3,367		10,004		9,885		3,211		3,195		9,875		10,005
Marketing and development		1,234		864		3,085		2,574		1,951		1,233		5,019		3,099
FDIC insurance expense		325		345		1,039		644		423		325		1,241		1,189
Bank franchise tax expense		329		972		1,106		2,665
Interchange related expense		1,275		1,056		3,707		3,305		1,221		1,275		3,602		3,707
Other real estate owned and other repossession expense		—		6		(32)		45
Legal and professional fees		581		1,240		2,182		3,337		904		884		3,073		3,564
Other		2,481		3,319		7,953		10,262		3,891		3,034		12,366		10,719
Total noninterest expense		42,594		43,778		129,993		129,088		46,105		44,435		142,331		138,030

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE		24,157		21,829		70,948		61,451
INCOME BEFORE INCOME TAX EXPENSE										25,405		26,227		91,659		90,532
INCOME TAX EXPENSE		5,745		4,554		15,708		12,107		5,922		6,218		20,349		20,548
INCOME FROM CONTINUING OPERATIONS		18,412		17,275		55,240		49,344
DISCONTINUED OPERATIONS:
Income from discontinued operations before income taxes		2,070		3,997		19,584		17,550
Income tax expense		473		883		4,840		4,004
Income from discontinued operations, net of tax		1,597		3,114		14,744		13,546

NET INCOME	$	20,009	$	20,389	$	69,984	$	62,890	$	19,483	$	20,009	$	71,310	$	69,984

BASIC EARNINGS PER SHARE:
Class A Common Stock - continuing operations	$	0.91	$	0.83	$	2.69	$	2.37
Class A Common Stock - discontinued operations		0.08		0.15		0.71		0.65
Class A Common Stock	$	0.99	$	0.98	$	3.40	$	3.02	$	0.99	$	0.99	$	3.60	$	3.40

Class B Common Stock - continuing operations	$	0.83	$	0.75	$	2.45	$	2.16
Class B Common Stock - discontinued operations		0.07		0.14		0.65		0.59
Class B Common Stock	$	0.90	$	0.89	$	3.10	$	2.75		0.90		0.90		3.27		3.10

DILUTED EARNINGS PER SHARE:
Class A Common Stock - continuing operations	$	0.91	$	0.83	$	2.68	$	2.37
Class A Common Stock - discontinued operations		0.08		0.15		0.71		0.65
Class A Common Stock	$	0.99	$	0.98	$	3.39	$	3.02	$	0.99	$	0.99	$	3.58	$	3.39

Class B Common Stock - continuing operations	$	0.83	$	0.75	$	2.44	$	2.15
Class B Common Stock - discontinued operations		0.07		0.14		0.65		0.59
Class B Common Stock	$	0.90	$	0.89	$	3.09	$	2.74		0.90		0.90		3.26		3.09

See accompanying footnotes to consolidated financial statements.

5

Table of Contents

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(in thousands)


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
	2021		2020		2021		2020		2022		2021		2022		2021

Net income	$	20,009	$	20,389	$	69,984	$	62,890	$	19,483	$	20,009	$	71,310	$	69,984

OTHER COMPREHENSIVE INCOME (LOSS)

Change in fair value of derivatives used for cash flow hedges		—		(1)		—		(173)
Reclassification amount for net derivative losses realized in income		—		103		—		211
Unrealized gains and (losses) on AFS debt securities		(1,899)		(258)		(4,542)		8,618
Unrealized gain (loss) of AFS debt security for which a portion of OTTI has been recognized in earnings		13		61		62		(46)
Total other comprehensive income (loss) before income tax		(1,886)		(95)		(4,480)		8,610
Unrealized losses on AFS debt securities										(15,510)		(1,899)		(46,892)		(4,542)
Unrealized gain on AFS debt security for which a portion of OTTI has been recognized in earnings										1		13		10		62
Total other comprehensive loss before income tax										(15,509)		(1,886)		(46,882)		(4,480)
Tax effect		471		24		1,119		(2,153)		3,875		471		11,720		1,119
Total other comprehensive income (loss), net of tax		(1,415)		(71)		(3,361)		6,457
Total other comprehensive loss, net of tax										(11,634)		(1,415)		(35,162)		(3,361)

COMPREHENSIVE INCOME	$	18,594	$	20,318	$	66,623	$	69,347	$	7,849	$	18,594	$	36,148	$	66,623

See accompanying footnotes to consolidated financial statements.

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Table of Contents

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

Three Months Ended September 30, 2021

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

Equity

Balance, July 1, 2021

18,421

2,166

$
4,841

$
142,884

$
690,802

$
6,563

$
845,090

Net income

—

—

—

—

20,009

—

20,009

Net change in accumulated other comprehensive income

—

—

—

—

—

(1,415)

(1,415)

Dividends declared on Common Stock:

Class A Shares ($0.308 per share)

—

—

—

—

(5,557)

—

(5,557)

Class B Shares ($0.280 per share)

—

—

—

—

(606)

—

(606)

Conversion of Class B to Class A Common Shares

1

(1)

—

—

—

—

—

Repurchase of Class A Common Stock

(387)

—

(90)

(2,855)

(16,733)

—

(19,678)

Net change in notes receivable on Class A Common Stock

—

—

—

100

—

—

100

Deferred compensation - Class A Common Stock:

Directors

—

—

—

121

—

—

121

Designated key employees

—

—

—

175

—

—

175

Employee stock purchase plan - Class A Common Stock

4

—

1

191

—

—

192

Stock-based awards - Class A Common Stock:

Performance stock units

—

—

—

32

—

—

32

Restricted stock

1

—

—

64

—

—

64

Stock options

—

—

—

130

—

—

130

Balance, September 30, 2021

18,040

2,165

$
4,752

$
140,842

$
687,915

$
5,148

$
838,657


	Three Months Ended September 30, 2022

	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, July 1, 2022	17,629	2,161	$	4,663	$	140,516	$	718,649	$	(21,654)	$	842,174

Net income	—	—		—		—		19,483		—		19,483
Net change in AOCI	—	—		—		—		—		(11,634)		(11,634)
Dividends declared on Common Stock:
Class A Shares ($0.341 per share)	—	—		—		—		(5,995)		—		(5,995)
Class B Shares ($0.310 per share)	—	—		—		—		(669)		—		(669)
Stock options exercised, net of shares withheld	—	—		—		(2)		—		—		(2)
Conversion of Class B to Class A Common Shares	1	(1)		—		—		—		—		—
Repurchase of Class A Common Stock	(48)	—		(15)		(484)		(2,829)		—		(3,328)
Net change in notes receivable on Class A Common Stock	—	—		—		43		—		—		43
Deferred compensation - Class A Common Stock:
Directors	—	—		—		192		—		—		192
Designated key employees	—	—		—		184		—		—		184
Employee stock purchase plan - Class A Common Stock	5	—		1		181		—		—		182
Stock-based awards - Class A Common Stock:
Performance stock units	—	—		—		38		—		—		38
Restricted stock	—	—		—		161		—		—		161
Stock options	—	—		—		129		—		—		129

Balance, September 30, 2022	17,587	2,160	$	4,649	$	140,958	$	728,639	$	(33,288)	$	840,958

Three Months Ended September 30, 2020

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

Equity

Balance, July 1, 2020

18,708

2,200

$
4,898

$
142,813

$
638,282

$
9,626

$
795,619

Net income

—

—

—

—

20,389

—

20,389

Net change in accumulated other comprehensive income

—

—

—

—

—

(71)

(71)

Dividends declared on Common Stock:

Class A Shares ($0.286 per share)

—

—

—

—

(5,375)

—

(5,375)

Class B Shares ($0.260 per share)

—

—

—

—

(572)

—

(572)

Stock options exercised, net of shares withheld

1

—

1

(6)

—

—

(5)

Net change in notes receivable on Class A Common Stock

—

—

—

(201)

—

—

(201)

Deferred compensation - Class A Common Stock:

Directors

—

—

—

72

—

—

72

Designated key employees

—

—

—

141

—

—

141

Employee stock purchase plan - Class A Common Stock

6

—

1

169

—

—

170

Stock-based awards - Class A Common Stock:

Performance stock units

—

—

—

—

—

—

—

Restricted stock

—

—

—

69

—

—

69

Stock options

—

—

—

126

—

—

126

Balance, September 30, 2020

18,715

2,200

$
4,900

$
143,183

$
652,724

$
9,555

$
810,362


	Three Months Ended September 30, 2021

	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, July 1, 2021	18,421	2,166	$	4,841	$	142,884	$	690,802	$	6,563	$	845,090

Net income	—	—		—		—		20,009		—		20,009
Net change in AOCI	—	—		—		—		—		(1,415)		(1,415)
Dividends declared on Common Stock:
Class A Shares ($0.308 per share)	—	—		—		—		(5,557)		—		(5,557)
Class B Shares ($0.280 per share)	—	—		—		—		(606)		—		(606)
Stock options exercised, net of shares withheld	—	—		—		—		—		—		—
Conversion of Class B to Class A Common Shares	1	(1)		—		—		—		—		—
Repurchase of Class A Common Stock	(387)	—		(90)		(2,855)		(16,733)		—		(19,678)
Net change in notes receivable on Class A Common Stock	—	—		—		100		—		—		100
Deferred compensation - Class A Common Stock:
Directors	—	—		—		121		—		—		121
Designated key employees	—	—		—		175		—		—		175
Employee stock purchase plan - Class A Common Stock	4	—		1		191		—		—		192
Stock-based awards - Class A Common Stock:
Performance stock units	—	—		—		32		—		—		32
Restricted stock	1	—		—		64		—		—		64
Stock options	—	—		—		130		—		—		130

Balance, September 30, 2021	18,040	2,165	$	4,752	$	140,842	$	687,915	$	5,148	$	838,657

7

Table of Contents

Nine Months Ended September 30, 2021

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

Equity

Balance, January 1, 2021

18,697

2,199

$
4,899

$
143,637

$
666,278

$
8,509

$
823,323

Net income

—

—

—

—

69,984

—

69,984

Net change in accumulated other comprehensive income

—

—

—

—

—

(3,361)

(3,361)

Dividends declared on Common Stock:

Class A Shares ($0.924 per share)

—

—

—

—

(16,980)

—

(16,980)

Class B Shares ($0.840 per share)

—

—

—

—

(1,830)

—

(1,830)

Stock options exercised, net of shares withheld

28

—

13

(155)

—

—

(142)

Conversion of Class B to Class A Common Shares

34

(34)

—

—

—

—

—

Repurchase of Class A Common Stock

(749)

—

(165)

(5,205)

(29,537)

—

(34,907)

Net change in notes receivable on Class A Common Stock

—

—

—

150

—

—

150

Deferred compensation - Class A Common Stock:

Directors

4

—

—

330

—

—

330

Designated key employees

—

—

—

478

—

—

478

Employee stock purchase plan - Class A Common Stock

11

—

3

507

—

—

510

Stock-based awards - Class A Common Stock:

Performance stock units

—

—

—

97

—

—

97

Restricted stock

15

—

2

583

—

—

585

Stock options

—

—

—

420

—

—

420

Balance, September 30, 2021

18,040

2,165

$
4,752

$
140,842

$
687,915

$
5,148

$
838,657


	Nine Months Ended September 30, 2022
	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, 2022	17,816	2,165	$	4,702	$	139,956		$	687,700	$	1,874	$	834,232

Net income	—	—		—		—			71,310		—		71,310
Net change in AOCI	—	—		—		—			—		(35,162)		(35,162)
Dividends declared on Common Stock:
Class A Shares ($1.023 per share)	—	—		—		—			(18,123)		—		(18,123)
Class B Shares ($0.930 per share)	—	—		—		—			(2,010)		—		(2,010)
Stock options exercised, net of shares withheld	3	—		2		38			—		—		40
Conversion of Class B to Class A Common Shares	5	(5)		—		—			—		—		—
Repurchase of Class A Common Stock	(263)	—		(58)		(1,868)	��		(10,238)		—		(12,164)
Net change in notes receivable on Class A Common Stock	—	—		—		61			—		—		61
Deferred compensation - Class A Common Stock:
Directors	6	—		—		403			—		—		403
Designated key employees	—	—		—		541			—		—		541
Employee stock purchase plan - Class A Common Stock	12	—		3		506			—		—		509
Stock-based awards - Class A Common Stock:
Performance stock units	—	—		—		114			—		—		114
Restricted stock	8	—		—		771			—		—		771
Stock options	—	—		—		436			—		—		436

Balance, September 30, 2022	17,587	2,160	$	4,649	$	140,958		$	728,639	$	(33,288)	$	840,958


	Nine Months Ended September 30, 2020												Nine Months Ended September 30, 2021
	Common Stock								Accumulated				Common Stock								Accumulated
	Class A	Class B			Additional				Other		Total		Class A	Class B			Additional				Other		Total
	Shares	Shares			Paid In		Retained		Comprehensive		Stockholders’		Shares	Shares			Paid In		Retained		Comprehensive		Stockholders’
(in thousands, except per share data)	Outstanding	Outstanding	Amount		Capital		Earnings		Income		Equity		Outstanding	Outstanding	Amount		Capital		Earnings		Income (Loss)		Equity

Balance, January 1, 2020	18,737	2,206	$	4,907	$	142,068	$	614,171	$	3,098	$	764,244
Balance, January 1, 2021													18,697	2,199	$	4,899	$	143,637	$	666,278	$	8,509	$	823,323

Adjustment for adoption of ASU 2016-13	—	—		—		—		(4,291)		—		(4,291)
Net income	—	—		—		—		62,890		—		62,890	—	—		—		—		69,984		—		69,984
Net change in accumulated other comprehensive income	—	—		—		—		—		6,457		6,457
Net change in AOCI													—	—		—		—		—		(3,361)		(3,361)
Dividends declared on Common Stock:
Class A Shares ($0.858 per share)	—	—		—		—		(16,080)		—		(16,080)
Class B Shares ($0.780 per share)	—	—		—		—		(1,716)		—		(1,716)
Class A Shares ($0.924 per share)													—	—		—		—		(16,980)		—		(16,980)
Class B Shares ($0.840 per share)													—	—		—		—		(1,830)		—		(1,830)
Stock options exercised, net of shares withheld	20	—		9		242		—		—		251	28	—		13		(155)		—		—		(142)
Conversion of Class B to Class A Common Shares													34	(34)		—		—		—		—		—
Repurchase of Class A Common Stock	6	(6)		—		—		—		—		—	(749)	—		(165)		(5,205)		(29,537)		—		(34,907)
Conversion of Class B to Class A Common Shares	(86)	—		(20)		(582)		(2,250)		—		(2,852)
Net change in notes receivable on Class A Common Stock	—	—		—		(87)		—		—		(87)	—	—		—		150		—		—		150
Deferred compensation - Class A Common Stock:
Directors	4	—		—		222		—		—		222	4	—		—		330		—		—		330
Designated key employees	—	—		—		418		—		—		418	—	—		—		478		—		—		478
Employee stock purchase plan - Class A Common Stock	15	—		3		458		—		—		461	11	—		3		507		—		—		510
Stock-based awards - Class A Common Stock:
Performance stock units	18	—		—		(200)		—		—		(200)	—	—		—		97		—		—		97
Restricted stock	1	—		1		316		—		—		317	15	—		2		583		—		—		585
Stock options	—	—		—		328		—		—		328	—	—		—		420		—		—		420

Balance, September 30, 2020	18,715	2,200	$	4,900	$	143,183	$	652,724	$	9,555	$	810,362
Balance, September 30, 2021													18,040	2,165	$	4,752	$	140,842	$	687,915	$	5,148	$	838,657

See accompanying footnotes to consolidated financial statements.

8

Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)


	Nine Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2022		2021
OPERATING ACTIVITIES:
Net income	$	69,984	$	62,890	$	71,310	$	69,984
Adjustments to reconcile net income to net cash provided by operating activities:
Net amortization on investment securities		805		1,154
Net accretion on loans and amortization of core deposit intangible and operating lease components		(12,650)		(3,261)
Unrealized losses on equity securities with readily determinable fair value		505		118
Net amortization on investment securities and low-income housing investments						3,753		3,678
Net accretion and amortization on loans						(3,026)		(12,650)
Unrealized and realized losses on equity securities with readily determinable fair value						204		505
Depreciation of premises and equipment		6,747		7,420		5,884		6,747
Amortization of mortgage servicing rights		2,617		2,701		1,773		2,617
Impairment of mortgage servicing rights		(500)		500
Provision for on-balance sheet exposures for continuing operations		4,381		15,555
Provision for on-balance sheet exposures for discontinued operations		7,850		15,239
Recovery of mortgage servicing rights						—		(500)
Provision for on-balance sheet exposures						14,504		12,231
Provision for off-balance sheet exposures		(52)		467		128		(52)
Net gain on sale of mortgage loans held for sale		(16,339)		(25,030)		(4,704)		(16,339)
Origination of mortgage loans held for sale		(525,246)		(547,556)		(195,006)		(525,246)
Proceeds from sale of mortgage loans held for sale		562,661		546,950		226,191		562,661
Net gain on sale of consumer loans held for sale		(7,889)		(3,751)		(10,466)		(7,889)
Origination of consumer loans held for sale		(561,062)		(391,688)		(820,127)		(561,062)
Proceeds from sale of consumer loans held for sale		558,972		395,791		831,802		558,972
Net gain realized on sale of other real estate owned		(51)		(43)		—		(51)
Writedowns of other real estate owned		158		53		158		158
Deferred compensation expense - Class A Common Stock		808		640		944		808
Stock-based awards and ESPP expense - Class A Common Stock		1,178		445		1,397		1,178
Net gain on sale of bank premises and equipment		(399)		(353)		—		(399)
Increase in cash surrender value of bank owned life insurance		(1,616)		(1,184)		(1,852)		(1,616)
Net change in other assets and liabilities:
Accrued interest receivable		3,573		810		(1,225)		3,573
Accrued interest payable		(162)		(2,074)		34		(162)
Other assets		(4,743)		(13,126)		1,309		2,384
Other liabilities		(1,381)		(623)		12,117		(3,104)
Net cash provided by operating activities		88,149		62,044		135,102		96,426

INVESTING ACTIVITIES:
Purchases of available-for-sale debt securities		(141,571)		(278,878)		(244,820)		(141,571)
Proceeds from calls, maturities and paydowns of available-for-sale debt securities		164,280		207,397
Proceeds from calls, maturities and paydowns of equity and available-for-sale debt securities						65,269		164,280
Proceeds from calls, maturities and paydowns of held-to-maturity debt securities		8,444		7,952		11,703		8,444
Net change in outstanding warehouse lines of credit		212,114		(311,217)		408,312		212,114
Net change in other loans from continuing operations		235,993		(282,185)
Net change in loans from discontinued operations		23,717		14,132
Net change in other loans						(212,312)		259,710
Proceeds from redemption of Federal Home Loan Bank stock		7,086		20,197		1,743		7,086
Purchase of Federal Home Loan Bank stock		—		(9,000)
Proceeds from sales of other real estate owned		611		156		—		611
Proceeds from sale of bank premises and equipment		637		894		—		637
Purchase of bank owned life insurance		(30,000)		—		—		(30,000)
Investments in low-income housing tax partnerships						(7,258)		(8,277)
Net purchases of premises and equipment		(4,972)		(2,711)		(2,624)		(4,972)
Net cash provided by (used in) investing activities		476,339		(633,263)
Net cash provided by investing activities						20,013		468,062

FINANCING ACTIVITIES:
Net change in deposits from continuing operations		200,580		1,153,770
Net change in deposits from discontinued operations		14,186		52,551
Net change in deposits						(39,910)		214,766
Net change in securities sold under agreements to repurchase and other short-term borrowings		49,557		(41,445)		(81,591)		49,557
Payments of Federal Home Loan Bank advances		(235,000)		(1,067,500)		(25,000)		(235,000)
Proceeds from Federal Home Loan Bank advances		25,000		450,000		20,000		25,000
Payoff of subordinated note, net of common security interest		(40,000)		—		—		(40,000)
Repurchase of Class A Common Stock		(34,907)		(2,852)		(12,164)		(34,907)
Net proceeds from Class A Common Stock purchased through employee stock purchase plan		435		461		433		435
Net proceeds from option exercises and equity awards vested - Class A Common Stock		(142)		251		40		(142)
Cash dividends paid		(18,537)		(17,292)		(19,501)		(18,537)
Net cash (used in) provided by financing activities		(38,828)		527,944
Net cash used in financing activities						(157,693)		(38,828)

NET CHANGE IN CASH AND CASH EQUIVALENTS		525,660		(43,275)		(2,578)		525,660
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		485,587		385,303		756,971		485,587
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	1,011,247	$	342,028	$	754,393	$	1,011,247

SUPPLEMENTAL DISCLOSURES OF CASHFLOW INFORMATION:
Cash paid during the period for:
Interest	$	4,790	$	19,167	$	4,017	$	4,790
Income taxes		16,736		16,204		14,614		16,736

SUPPLEMENTAL NONCASH DISCLOSURES:
Mortgage servicing rights capitalized	$	3,889	$	3,987	$	1,755	$	3,889
Transfers from loans to real estate acquired in settlement of loans		64		2,109		—		64
Transfers from loans held for investment to held for sale		24		—
Unfunded commitments in low-income-housing investments		—		10,000		16,100		24
Right-of-use assets recorded		263		14,144		6,360		263
Allowance for credit losses recorded upon adoption of ASC 326		—		7,241

See accompanying footnotes to consolidated financial statements.

9

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS –SEPTEMBER 30, ~~2021~~2022 and ~~2020~~2021 AND DECEMBER 31, ~~2020~~2021 (UNAUDITED)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Republic is a financial holding company headquartered in Louisville, Kentucky. The Bank is a Kentucky-based, state-chartered non-member financial institution that provides both traditional and non-traditional banking products through 5five reportable segments using a multitude of delivery channels. While the Bank operates primarily in its market footprint, its non-brick-and-mortar delivery channels allow it to reach clients across the U.S. The Captive is a Nevada-based, wholly-owned insurance subsidiary of the Company. The Captive provides property and casualty insurance coverage to the Company and the Bank, as well as a group of third-party insurance captives for which insurance may not be available or economically feasible.

In 2005, Republic Bancorp Capital Trust, an unconsolidated trust subsidiary of Republic, was formed and issued $40 million in TPS. On September 30, 2021, as permitted under the terms of RBCT’s governing documents, Republic redeemed these securities at the par amount of approximately $40 million, without penalty. Although the TPS were treated as part of Republic’s Tier I Capital while outstanding, Republic’s capital ratios remained well above “well capitalized” levels following this redemption.

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 of 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 nine months ended September 30, ~~2021~~2022 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2021.~~2022. 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, ~~2020.~~2021.

As of September 30, ~~2021,~~2022, the Company was divided into 5five reportable segments: Traditional Banking, Warehouse, Mortgage Banking, TRS, and RCS. Management considers the first 3three segments to collectively constitute “Core Bank” or “Core Banking” operations, while the last 2two segments collectively constitute RPG operations.

~~See additional detail regarding the Bank’s agreement to sell TRS under Footnote 17 “Discontinued Operations” in this section of the filing.~~

The Company’s financial condition as of September 30, 2021 and results of operations for the three and nine months ended September 30, 2021 and 2020 were impacted by the COVID-19 pandemic and the public’s response to it.

~~For additional discussion regarding the COVID-19 pandemic and its impact to the Company, see the following Footnotes in this section of the filing:~~

●

~~Footnote 4 “Loans and Allowance for Credit Losses”~~

●

~~Footnote 9 “Off Balance Sheet Risks, Commitments, and Contingent Liabilities”~~

10

Table of Contents

Core Bank

Traditional Banking segment — The Traditional Banking segment provides traditional banking products primarily to customers in the Company’s market footprint. As of September 30, ~~2021,~~2022, Republic had 42 full-service banking centers with locations as follows:

●

Kentucky — 28

●

Metropolitan Louisville — 18

●

Central Kentucky — 7

●

Georgetown — 1

●

Lexington — 5

●

Shelbyville — 1

●

Northern Kentucky — 3

●

Covington — 1

●

Crestview Hills — 1

●

Florence — 1

●

Southern Indiana — 3

●

Floyds Knobs — 1

●

Jeffersonville — 1

●

New Albany — 1

●

Metropolitan Tampa, Florida — 7

●

Metropolitan Cincinnati, Ohio — 2

●

Metropolitan Nashville, Tennessee — 2

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

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

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

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

Warehouse Lending segment — The Core Bank provides short-term, revolving credit facilities to mortgage bankers across the United States through mortgage warehouse lines of credit. These credit facilities are primarily secured by single-family, first-lien residential real estate loans. The credit facility enables the mortgage banking clients to close single-family, first-lien residential real estate loans in their own name and temporarily fund their inventory of these closed loans until the loans are sold to investors approved by the Bank. Individual loans are expected to remain on the warehouse line for an average of 15 to 30 days. Reverse mortgage loans typically remain on the line longer than conventional mortgage loans. Interest income and loan fees are accrued for each individual loan during the time the loan remains on the warehouse line and collected when the loan is sold. The Core Bank receives the sale proceeds of each loan directly from the investor and applies the funds to pay off the warehouse advance and related accrued interest and fees. The remaining proceeds are credited to the mortgage-banking client.

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Table of Contents

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

Republic Processing Group

Tax Refund Solutions segment — ~~On May 13, 2021,~~Through the TRS segment, the Bank is one of a limited number of financial institutions that facilitates the receipt and payment of federal and state tax refund products and offers a credit product through third-party tax preparers located throughout the U.S., as well as tax-preparation software providers (collectively, the “Tax Providers”). Substantially all of the business generated by the TRS segment occurs in the first half of the year. The TRS segment traditionally operates at a loss during the second half of the year, during which time the segment incurs costs preparing for the upcoming year’s tax season.

RTs are fee-based products whereby a tax refund is issued to the taxpayer after the Bank has received the refund from the federal or state government. There is no credit risk or borrowing cost associated with these products because they are only delivered to the taxpayer upon receipt of the tax refund directly from the governmental paying authority. Fees earned by the Company on RTs, net of revenue share, are reported as noninterest income under the line item “Net refund transfer fees.”

The EA tax credit product is a loan that allows a taxpayer to borrow funds as an advance of a portion of their tax refund. The EA product had the following features during 2022 and 2021:

●

Offered only during the first two months of each year;

●

The taxpayer was given the option to choose from multiple loan-amount tiers, subject to underwriting, up to a maximum advance amount of $6,250;

●

No requirement that the taxpayer pays for another bank product, such as an RT;

●

Multiple funds disbursement methods, including a DDA Card, direct deposit, prepaid card, or check, based on the taxpayer-customer’s election;

●

Repayment of the EA to the Bank is deducted from the taxpayer’s tax refund proceeds; and

●

If an insufficient refund to repay the EA occurs:

o

there is no recourse to the taxpayer,

o

no negative credit reporting on the taxpayer, and

o

no collection efforts against the taxpayer.

The Company reports fees paid for the EA product as interest income on loans. During 2021, EAs were repaid, on average, within 32 days after the taxpayer’s tax return was submitted to the applicable taxing authority. EAs do not have a contractual due date but the Company considered an EA delinquent in 2022 and 2021 if it remained unpaid 35 days after the taxpayer’s tax return was submitted to the applicable taxing authority. The number of days for delinquency eligibility is based on management’s annual analysis of tax return processing times. Provisions on EAs are estimated when advances are made. Unpaid EAs are charged-off by June 30^th of each year, with EAs collected during the second half of each year recorded as recoveries of previously charged-off loans, unless such collections are subject to guarantor reimbursement under a loan-loss guaranty.

Related to the overall credit losses on EAs, 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 EA approval model is based primarily on the prior-year’s tax refund payment patterns. Because the substantial majority of the EA volume occurs each year before that year’s tax refund payment patterns can be analyzed and subsequent underwriting changes made, credit losses during a current year could be higher than management’s predictions if tax refund payment patterns change materially between years.

Settlement of Lawsuit Against Green Dot - On June 3, 2022, the Bank and Green Dot entered into ~~an Asset~~the Settlement Agreement to fully resolve the Lawsuit that the Bank filed against Green Dot in the Delaware Court of Chancery on October 5, 2021.

As previously disclosed in the Company’s prior SEC filings, the Lawsuit arose from Green Dot’s inability to consummate the Sale

Transaction contemplated in the TRS Purchase Agreement ~~(the “Purchase Agreement”) with~~through which Green Dot ~~Corporation (“Green Dot”) providing for the~~would purchase ~~by Green Dot, upon the terms and subject to the conditions set forth therein, of substantially~~ all of the assets and operations of the Bank’s Tax Refund Solutions ~~business (the “Sale Transaction”).~~business.

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In accordance with the Settlement Agreement, on June 6, 2022, Green Dot paid $13 million to the Bank, which was in addition to a ~~result~~$5 million termination fee that Green Dot paid to the Bank during the first quarter of 2022 under the terms of the TRS Purchase ~~Agreement~~Agreement. On June 6, 2022, the Bank and the proposed Sale Transaction, the results for the Company, RPG, and its TRS segment are presented within this filing to reflect continuing versus discontinued operations. RPG’s continuing operations include its RCS segment, its RPS division, and certain overhead costs previously allocated to TRS that will remain with RPG. Discontinued operations are those contracted to be sold. These discontinued operations have historically contained the majority of TRS’s revenue and expense. Interest income and expense for continuing and discontinued operations also include intercompany interest charged and earned based on the Company’s funds transfer pricing methodology.

~~On October 4, 2021,~~ Green Dot announced that it had been unable to obtain the Federal Reserve’s approval of or non-objection to the Sale Transaction and that, as a result, Green Dot would not consummate the Sale Transaction. On October 5, 2021, the Bank filed a ~~lawsuit against Green Dot in~~stipulation of dismissal of the Lawsuit with the Delaware Court of Chancery, ~~C.A. No. 2021-0854-SG, alleging breach of contract. In so doing,~~which was effective to dismiss the Bank seeks, among other relief, specific performance to require that Green Dot proceed with the Sale Transaction as the parties had agreed to in the Purchase Agreement. Due to the inherent uncertainties of legal proceedings, at this time, the Company cannot predict the outcome of these proceedings and their impact on the Company’s financial condition and results of operations.

~~See additional detail regarding the Bank’s agreement to sell TRS under Footnote 17 “Discontinued Operations” in this section of the filing.~~Lawsuit when filed.

Republic Payment Solutions division — RPS is currently managed and operated within the TRS ~~segment’s continuing operations.~~segment. The RPS division offers general-purpose reloadable prepaid cards as an issuing bank through third-party service providers. For the projected near-term, as the prepaid card program matures, the operating results of the RPS division are expected to be immaterial to the Company’s overall results of operations and will be reported as part of the TRS ~~segment’s continuing operations.~~segment. The RPS division will not be considered a separate reportable segment until such time, if any, that it meets quantitative reporting thresholds.

The Company reports fees related to RPS programs under Program fees. Additionally, the Company’s portion of interchange revenue generated by prepaid card transactions is reported as noninterest income under “Interchange fee income.”

Republic Credit Solutions segment — Through the RCS segment, the Bank offers consumer credit products. In general, the credit products are unsecured, small dollar consumer loans that are dependent on various factors. RCS loans typically earn a higher yield but also have higher credit risk compared to loans originated through the Traditional Banking segment, with a significant portion of RCS clients considered subprime or near-prime borrowers. The Bank uses third-party service providers for certain services such as marketing and loan servicing of RCS loans. Additional information regarding consumer loan products offered through RCS follows:

●

RCS line-of-credit products – Using separate third-party service providers, the Bank originates 2two line-of-credit products to generally subprime borrowers in multiple states. The first of these 2two products (the “LOC I”) has been originated by the Bank since 2014. The second (the “LOC II”) was introduced in January 2021.

o

RCS’s LOC I ~~represents~~represented the substantial majority of RCS ~~activity.~~activity during 2021 and 2022. Elastic Marketing, LLC and Elevate Decision Sciences, LLC are third-party service providers for the product and are ~~both~~ subject to the Bank’s oversight and supervision. Together, these companies provide the Bank with certain marketing, servicing, technology, and support services, while a separate third party provides customer support, servicing, and other services on the Bank’s behalf. The Bank is the lender for this product and is marketed as such. Further, the Bank controls the loan terms and underwriting guidelines, and the Bank exercises consumer compliance oversight of the product.

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the intention to sell these loans to ~~its~~a third-party, who is an affiliate of the Bank’s third-party service provider, generally within sixteen days following the Bank’s origination of the loans. Loans originated under this RCS installment loan program are carried at fair value under a fair-value option, with the portfolio marked to market monthly.

●

RCS healthcare receivables products – The Bank originates healthcare-receivables products across the U.S. through 2two different third-party service providers. In one program, the Bank retains 100% of the receivables originated. In the other program, the Bank retains 100% of the receivables originated in some instances, and in other instances, sells 100% of the receivables within one month of origination. Loan balances held for sale through this program are carried at the lower of cost or fair value.

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

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Accounting Standards Update

~~There~~The following not-yet-effective ASUs were ~~no not-yet-effective ASUs~~issued since the Company’s most recently filed Form 10-K and are considered relevant to the Company’s financial ~~statements issued since the Company’s last filing on Form 10-Q.~~statements.


			Date Adoption	Adoption	Expected
ASU. No.	Topic	Nature of Update	Required	Method	Financial Impact
2022-02	Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures	This ASU eliminates the TDR recognition and measurement guidance and, instead, requires the Company to evaluate (consistent with the accounting for other loan modifications) whether a modification represents a new loan or a continuation of an existing loan. This ASU also enhances existing disclosure requirements and introduces new requirements related to certain modifications of receivables made to borrowers experiencing financial difficulty. This ASU requires the Company to disclose current-period gross writeoffs by year of origination for financing receivables and net investment in leases within the scope of Subtopic 326-20. Gross writeoff information must be included in the vintage disclosures required for the Company in accordance with ASC 326-20-50-6, which requires that the Company disclose the amortized cost basis of financing receivables by credit quality indicator and class of financing receivable by year of origination. (see Note 4 in this section of the filing)	January 1, 2023	Prospectively	The Company is currently analyzing the impact of this ASU on its financial statements.

2022-03	Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions	This ASU clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.	January 1, 2024	Prospectively	Immaterial

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2. INVESTMENT SECURITIES

Available-for-Sale Debt Securities

The following tables summarize the amortized cost, fair value, and ACLS of AFS debt securities and the corresponding amounts of related gross unrealized gains and losses recognized in AOCI:


			Gross		Gross		Allowance						Gross		Gross		Allowance
	Amortized		Unrealized		Unrealized		for		Fair		Amortized		Unrealized		Unrealized		for		Fair
September 30, 2021 (in thousands)	Cost		Gains		Losses		Credit Losses		Value
September 30, 2022 (in thousands)											Cost		Gains		Losses		Credit Losses		Value

U.S. Treasury securities and U.S. Government agencies	$	234,980	$	747	$	(882)	$	0	$	234,845	$	436,287	$	—	$	(25,852)	$	—	$	410,435
Private label mortgage-backed security		1,468		1,312		—		0		2,780		961		1,323		—		—		2,284
Mortgage-backed securities - residential		204,869		5,059		(123)		0		209,805		199,692		41		(19,329)		—		180,404
Collateralized mortgage obligations		34,027		521		(29)		0		34,519		23,663		39		(786)		—		22,916
Corporate bonds		10,000		81		—		0		10,081		10,000		—		(2)		—		9,998
Trust preferred security		3,671		179		—		0		3,850		3,726		184		—		—		3,910
Total available-for-sale debt securities	$	489,015	$	7,899	$	(1,034)	$	0	$	495,880	$	674,329	$	1,587	$	(45,969)	$	—	$	629,947


			Gross		Gross		Allowance						Gross		Gross		Allowance
	Amortized		Unrealized		Unrealized		for		Fair		Amortized		Unrealized		Unrealized		for		Fair
December 31, 2020 (in thousands)	Cost		Gains		Losses		Credit Losses		Value
December 31, 2021 (in thousands)											Cost		Gains		Losses		Credit Losses		Value

U.S. Treasury securities and U.S. Government agencies	$	245,204	$	1,730	$	(25)	$	0	$	246,909	$	239,880	$	473	$	(2,894)	$	—	$	237,459
Private label mortgage-backed security		1,707		1,250		—		0		2,957		1,418		1,313		—		—		2,731
Mortgage-backed securities - residential		203,786		7,419		(3)		0		211,202		207,697		3,525		(473)		—		210,749
Collateralized mortgage obligations		48,190		772		(10)		0		48,952		29,947		377		(30)		—		30,294
Corporate bonds		10,000		43		—		0		10,043		10,000		46		—		—		10,046
Trust preferred security		3,631		169		—		0		3,800		3,684		163		—		—		3,847
Total available-for-sale debt securities	$	512,518	$	11,383	$	(38)	$	0	$	523,863	$	492,626	$	5,897	$	(3,397)	$	—	$	495,126

Held-to-Maturity Debt Securities

The following tables summarize the amortized cost, fair value, and ACLS of HTM debt securities and the corresponding amounts of related gross unrecognized gains and losses:


			Gross		Gross				Allowance				Gross		Gross				Allowance
	Carrying		Unrecognized		Unrecognized		Fair		for		Amortized		Unrecognized		Unrecognized		Fair		for
September 30, 2021 (in thousands)	Value		Gains		Losses		Value		Credit Losses
September 30, 2022 (in thousands)											Cost		Gains		Losses		Value		Credit Losses

Mortgage-backed securities - residential	$	47	$	—	$	—	$	47	$	—	$	28	$	—	$	—	$	28	$	—
Collateralized mortgage obligations		9,777		150		—		9,927		—		7,514		60		(18)		7,556		—
Corporate bonds		34,976		390		—		35,366		(54)		24,971		1		(58)		24,914		(10)
Obligations of state and political subdivisions		245		5		—		250		—		125		—		(2)		123		—
Total held-to-maturity debt securities	$	45,045	$	545	$	—	$	45,590	$	(54)	$	32,638	$	61	$	(78)	$	32,621	$	(10)


			Gross		Gross				Allowance				Gross		Gross				Allowance
	Carrying		Unrecognized		Unrecognized		Fair		for		Amortized		Unrecognized		Unrecognized		Fair		for
December 31, 2020 (in thousands)	Value		Gains		Losses		Value		Credit Losses
December 31, 2021 (in thousands)											Cost		Gains		Losses		Value		Credit Losses

Mortgage-backed securities - residential	$	99	$	5	$	—	$	104	$	—	$	46	$	—	$	—	$	46	$	—
Collateralized mortgage obligations		13,061		176		—		13,237		—		9,080		158		—		9,238		—
Corporate bonds		39,986		499		—		40,485		(178)		34,975		263		(6)		35,232		(47)
Obligations of state and political subdivisions		356		8		—		364		—		245		3		—		248		—
Total held-to-maturity debt securities	$	53,502	$	688	$	—	$	54,190	$	(178)	$	44,346	$	424	$	(6)	$	44,764	$	(47)

Sales of Available-for-Sale Debt Securities

During the three and nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, there were no material gains or losses on sales or calls of AFS debt securities.

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Debt Securities by Contractual Maturity

The amortized cost and fair value of debt securities by contractual maturity as of September 30, ~~2021~~2022 follow. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are detailed separately.


	Available-for-Sale				Held-to-Maturity				Available-for-Sale				Held-to-Maturity
	Debt Securities				Debt Securities				Debt Securities				Debt Securities
	Amortized		Fair		Carrying		Fair		Amortized		Fair		Amortized		Fair
September 30, 2021 (in thousands)	Cost		Value		Value		Value
September 30, 2022 (in thousands)									Cost		Value		Cost		Value

Due in one year or less	$	25,044	$	25,270	$	121	$	123	$	51,801	$	51,291	$	125	$	124
Due from one year to five years		179,937		179,803		35,100		35,493		394,486		369,142		24,971		24,913
Due from five years to ten years		40,000		39,853		—		—		—		—		—		—
Due beyond ten years		3,670		3,850		—		—		3,726		3,910		—		—
Private label mortgage-backed security		1,468		2,780		—		—		961		2,284		—		—
Mortgage-backed securities - residential		204,869		209,805		47		47		199,692		180,404		28		28
Collateralized mortgage obligations		34,027		34,519		9,777		9,927		23,663		22,916		7,514		7,556
Total debt securities	$	489,015	$	495,880	$	45,045	$	45,590	$	674,329	$	629,947	$	32,638	$	32,621

Unrealized-Loss Analysis on Debt Securities

The following tables summarize AFS debt securities in an unrealized loss position for which an ACLS had not been recorded as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, aggregated by investment category and length of time in a continuous unrealized loss position:


	Less than 12 months				12 months or more				Total				Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized				Unrealized				Unrealized				Unrealized
September 30, 2021 (in thousands)	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
September 30, 2022 (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	$	158,944	$	(882)	$	—	$	—	$	158,944	$	(882)	$	266,165	$	(10,276)	$	144,296	$	(15,576)	$	410,461	$	(25,852)
Mortgage-backed securities - residential		34,432		(123)		—		—		34,432		(123)		162,445		(16,808)		14,420		(2,521)		176,865		(19,329)
Collateralized mortgage obligations		5,164		(29)		—		—		5,164		(29)		18,645		(786)		—		—		18,645		(786)
Corporate bonds														9,998		(2)		—		—		9,998		(2)
Total available-for-sale debt securities	$	198,540	$	(1,034)	$	—	$	—	$	198,540	$	(1,034)	$	457,253	$	(27,872)	$	158,716	$	(18,097)	$	615,969	$	(45,969)


	Less than 12 months				12 months or more				Total				Less than 12 months				12 months or more				Total
			Unrealized				Unrealized				Unrealized				Unrealized				Unrealized				Unrealized
December 31, 2020 (in thousands)	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
December 31, 2021 (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	$	59,971	$	(25)	$	—	$	—	$	59,971	$	(25)	$	177,138	$	(2,622)	$	9,728	$	(272)	$	186,866	$	(2,894)
Mortgage-backed securities - residential		1,068		(3)		—		—		1,068		(3)		84,937		(473)		—		—		84,937		(473)
Collateralized mortgage obligations		2,788		(10)		—		—		2,788		(10)		4,495		(30)		—		—		4,495		(30)
Total available-for-sale debt securities	$	63,827	$	(38)	$	—	$	—	$	63,827	$	(38)	$	266,570	$	(3,125)	$	9,728	$	(272)	$	276,298	$	(3,397)

As of September 30, ~~2021,~~2022, the Bank’s security portfolio consisted of ~~170~~181 securities, 30149 of which were in an unrealized loss position.

As of December 31, ~~2020,~~2021, the Bank’s security portfolio consisted of 173 securities, 1929 of which were in an unrealized loss position.

As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, there were no holdings of debt securities of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of stockholders’ equity.

Private Label Mortgage-Backed ~~Securities and Collateralized Mortgage Obligations~~Security

~~As of September 30, 2021, with the exception of the $2.8 million~~The Bank owns one private label mortgage-backed security ~~all other mortgage-backed securities and CMOs held by the Bank were issued by U.S. government-sponsored entities and agencies, primarily the FHLMC and FNMA. As~~with a total carrying value of $2.3 million as of September 30, ~~2021~~2022. This security is mostly backed by “Alternative A” first-lien mortgage loans, but also has an insurance “wrap” or guarantee as an added layer of protection to the security holder. This asset is illiquid, and December 31, 2020, there were gross unrealized losses of $152,000 and $13,000 related to AFS mortgage-backed securities and CMOs. Because these unrealized losses are attributable to changes in interest rates and illiquidity, and not credit quality, and becauseas such, the Bank ~~does~~determined it to be a Level 3 security in accordance with ASC Topic 820, Fair Value Measurement. Based on this determination, the Bank utilized an income valuation model (“present value model”) approach in determining the fair value of the security. This approach is beneficial for positions that are not ~~have the intent~~traded in active markets or are subject to ~~sell these securities, and it is likely that it will not be required~~transfer restrictions, and/or where valuations are adjusted to ~~sell the securities before their anticipated recovery, management does not consider these securities to have OTTI.~~

reflect illiquidity and/or non-

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transferability. Such adjustments are generally based on available market evidence. In the absence of such evidence, management’s best estimate is used. Management’s best estimate consists of both internal and external support for this investment.

See additional discussion regarding the Bank’s private label mortgage-backed security under Footnote 10 “Fair Value” in this section of the filing.

Mortgage-Backed Securities and Collateralized Mortgage Obligations

As of September 30, 2022, with the exception of the $2.3 million private label mortgage-backed security, all other mortgage-backed securities and CMOs held by the Bank were issued by U.S. government-sponsored entities and agencies, primarily the FHLMC and FNMA. As of September 30, 2022 and December 31, 2021, there were gross unrealized losses of $20.1 million and $503,000 related to AFS mortgage-backed securities and CMOs. Because these unrealized losses are attributable to changes in interest rates and illiquidity, and not credit quality, and because the Bank does not have the intent to sell these securities, and it is likely that it will not be required to sell the securities before their anticipated recovery, management does not consider these securities to have OTTI.

Trust Preferred Security

During 2015, the Parent Company purchased a $3 million floating rate TRUP at a price of 68% of par. The coupon on this security is based on the 3-month LIBOR rate plus 159 basis points. The Company performed an initial analysis prior to acquisition and performs ongoing analysis of the credit risk of the underlying borrower in relation to its TRUP.

~~Private Label Mortgage-Backed Security~~

The Bank owns 1 private label mortgage-backed security with a total carrying value of $2.8 million as of September 30, 2021. This security is mostly backed by “Alternative A” first-lien mortgage loans, but also has an insurance “wrap” or guarantee as an added layer of protection to the security holder. This asset is illiquid, and as such, the Bank determined it to be a Level 3 security in accordance with ASC Topic 820, ~~Fair Value Measurement.~~ Based on this determination, the Bank utilized an income valuation model (“present value model”) approach, in determining the fair value of the security. This approach is beneficial for positions that are not traded in active markets or are subject to transfer restrictions, and/or where valuations are adjusted to reflect illiquidity and/or non-transferability. Such adjustments are generally based on available market evidence. In the absence of such evidence, management’s best estimate is used. Management’s best estimate consists of both internal and external support for this investment.

~~See additional discussion regarding the Bank’s private label mortgage-backed security under Footnote 10 “Fair Value” in this section of the filing.~~

Rollforward of the Allowance for Credit Losses on Debt Securities

The ~~tables~~table below ~~present~~presents a ~~rollforward~~roll-forward for the three ~~and nine~~ months ended September 30, ~~2021~~2022 and ~~2020~~2021 of the ACLS on AFS and HTM debt securities:


	ACLS Rollforward																					ACLS Rollforward
	Three Months Ended September 30,																					Three Months Ended September 30,
	2021										2020											2022										2021
	Beginning				Charge-				Ending			Beginning				Charge-				Ending		Beginning				Charge-				Ending			Beginning				Charge-				Ending
(in thousands)	Balance		Provision		offs		Recoveries		Balance			Balance		Provision		offs		Recoveries		Balance		Balance		Provision		offs		Recoveries		Balance			Balance		Provision		offs		Recoveries		Balance

Available-for-Sale Securities:
Corporate Bonds	$	—	$	—	$	—	$	—	$	—		$	126	$	(74)	$	—	$	—	$	52	$	30	$	(30)	$	—	$	—	$	—		$	—	$	—	$	—	$	—	$	—
Held-to-Maturity Securities:
Corporate Bonds		56		(2)		—		—		54			147		148		—		—		295		50		(40)		—		—		10			56		(2)		—		—		54

Total	$	56	$	(2)	$	—	$	—	$	54		$	273	$	74	$	—	$	—	$	347	$	80	$	(70)	$	—	$	—	$	10		$	56	$	(2)	$	—	$	—	$	54


	ACLS Rollforward
	Nine Months Ended September 30,
	2022										2021
	Beginning				Charge-				Ending		Beginning				Charge-				Ending
(in thousands)	Balance		Provision		offs		Recoveries		Balance		Balance		Provision		offs		Recoveries		Balance

Available-for-Sale Securities:
Corporate Bonds	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Held-to-Maturity Securities:
Corporate Bonds		47		(37)		—		—		10		178		(124)		—		—		54

Total	$	47	$	(37)	$	—	$	—	$	10	$	178	$	(124)	$	—	$	—	$	54

The Company decreased the ACLS on its AFS and HTM corporate bonds during the three and nine months ended September 30, ~~2021~~2022 based on ~~improved~~decreased PD and LGD estimates on these bonds. ~~PD and LGD estimates for these bonds were elevated during 2020 due to pandemic-driven economic concerns.~~

ACLS Rollforward

Nine Months Ended September 30,

2021

2020

Beginning

Charge-

Ending

Beginning

ASC 326

Charge-

Ending
(in thousands)

Balance

Provision

offs

Recoveries

Balance

Balance

Adoption

Provision

offs

Recoveries

Balance

Available-for-Sale Securities:

Corporate Bonds

$
—

$
—

$
—

$
—

$
—

$
—

$
—

$
52

$
—

$
—

$
52
Held-to-Maturity Securities:

Corporate Bonds

178

(124)

—

—

54

—

51

244

—

—

295

Total

$
178

$
(124)

$
—

$
—

$
54

$
—

$
51

$
296

$
—

$
—

$
347

There were no HTM debt securities on nonaccrual or past due over 89 days as of September 30, 2022 and December 31, 2021. All of the Company’s HTM corporate bonds were rated investment grade as of September 30, 2022 and December 31, 2021.

~~The Company decreased the ACLS on its~~There were no HTM ~~corporate bonds during the nine months ended~~debt securities considered collateral dependent as of September 30, ~~2021 based on improved PD~~2022 and ~~LGD estimates on these bonds. PD and LGD estimates for these bonds were elevated during 2020 due to pandemic-driven economic concerns.~~

December 31, 2021.

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There were 0 HTM debt securities on nonaccrual or past due over 89 days as of September 30, 2021 and December 31, 2020. All of the Company’s HTM corporate bonds were rated investment grade as of September 30, 2021 and December 31, 2020.

~~There were 0 HTM debt securities considered collateral dependent as of September 30, 2021 and December 31, 2020.~~

Accrued interest on AFS debt securities is presented as a component of other assets on the Company’s balance sheet and is excluded from the ACLS. Accrued interest on AFS debt securities totaled $1$2 million and $1 million as of September 30, ~~2021~~2022 and December 31, ~~2020.~~2021. Accrued interest receivable on HTM debt securities totaled ~~$88,000~~$187,000 and ~~$110,000~~$89,000 as of September 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

Pledged Debt Securities

Debt securities pledged to secure public deposits, securities sold under agreements to repurchase, and debt securities held for other purposes, as required or permitted by law, ~~are~~were as follows:


(in thousands)	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021

Carrying amount	$	354,275	$	303,535	$	262,392	$	319,650
Fair value		354,341		303,611		262,392		319,808

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3. LOANS HELD FOR SALE

In the ordinary course of business, the Bank originates for sale mortgage loans and consumer loans. Mortgage loans originated for sale are primarily originated and sold into the secondary market through the Bank’s Mortgage Banking segment, while consumer loans originated for sale are originated and sold through the RCS segment.

Mortgage Loans Held for Sale, at Fair Value

See additional detail regarding mortgage loans originated for sale, at fair value under Footnote 11 “Mortgage Banking Activities” of this section of the filing.

Consumer Loans Held for Sale, at Fair Value

In December 2019, the Bank began offering RCS installment loans with terms ranging from 12 to 60 months to borrowers in multiple states. Balances originated under this RCS installment loan program are carried as “held for sale” on the Bank’s balance sheet, with the intent to sell generally within sixteen days following the Bank’s origination of the loans. Loans originated under this RCS installment loan program are carried at fair value under a fair-value option, with the portfolio marked to market monthly.

Activity for consumer loans held for sale and carried at fair value was as follows:


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
(in thousands)	2021		2020		2021		2020		2022		2021		2022		2021

Balance, beginning of period	$	13,020	$	164	$	3,298	$	598	$	17,459	$	13,020	$	19,747	$	3,298
Origination of consumer loans held for sale		67,526		1,559		136,222		49,300		85,172		67,526		280,608		136,222
Proceeds from the sale of consumer loans held for sale		(71,427)		(1,321)		(132,330)		(50,872)		(96,169)		(71,427)		(297,253)		(132,330)
Net gain on sale of consumer loans held for sale		1,660		47		3,589		1,423		2,334		1,660		5,694		3,589
Balance, end of period	$	10,779	$	449	$	10,779	$	449	$	8,796	$	10,779	$	8,796	$	10,779

Consumer Loans Held for Sale, at the Lower of Cost or Fair Value

RCS originates for sale 90% to 95% of the balances from its line-of-credit products and 100% for some of its healthcare receivables products. Ordinary gains or losses on the sale of these RCS products are reported as a component of “Program fees.”

Activity for consumer loans held for sale and carried at the lower of cost or market value was as follows:


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
(in thousands)	2021		2020		2021		2020		2022		2021		2022		2021

Balance, beginning of period	$	11,412	$	12,801	$	1,478	$	11,646	$	13,777	$	11,412	$	2,937	$	1,478
Origination of consumer loans held for sale		189,492		107,518		424,840		342,388		206,959		189,492		539,519		424,840
Proceeds from the sale of consumer loans held for sale		(199,036)		(109,669)		(426,642)		(344,919)		(209,924)		(199,036)		(534,549)		(426,642)
Net gain on sale of consumer loans held for sale		2,108		793		4,300		2,328		1,867		2,108		4,772		4,300
Balance, end of period	$	3,976	$	11,443	$	3,976	$	11,443	$	12,679	$	3,976	$	12,679	$	3,976

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4. LOANS AND ALLOWANCE FOR CREDIT LOSSES

The composition of the loan portfolio follows:


(in thousands)	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021

Traditional Banking:
Residential real estate:
Owner occupied	$	827,898	$	879,800	$	863,899	$	820,731
Nonowner occupied		294,818		264,780		321,037		306,323
Commercial real estate		1,393,241		1,349,085		1,571,593		1,456,009
Construction & land development		105,968		98,674		147,418		129,337
Commercial & industrial		333,795		325,596		404,971		340,363
Paycheck Protection Program		126,271		392,319		7,855		56,014
Lease financing receivables		9,427		10,130		11,333		8,637
Aircraft		130,398		101,375		166,313		142,894
Home equity		215,282		240,640		229,038		210,578
Consumer:
Credit cards		14,781		14,196		14,897		14,510
Overdrafts		753		587		723		683
Automobile loans		17,533		30,300		7,890		14,448
Other consumer		6,223		8,167		973		1,432
Total Traditional Banking		3,476,388		3,715,649		3,747,940		3,501,959
Warehouse lines of credit*		750,682		962,796		442,238		850,550
Total Core Banking		4,227,070		4,678,445		4,190,178		4,352,509

*Republic Processing Group:**
Tax Refund Solutions:
Easy Advances		—		—		—		—
Other TRS loans		1		—		295		50,987
Republic Credit Solutions		116,711		110,893		98,977		93,066
Total Republic Processing Group		116,712		110,893		99,272		144,053

Total loans**		4,343,782		4,789,338		4,289,450		4,496,562
Allowance for credit losses		(63,024)		(61,067)		(64,919)		(64,577)

Total loans, net	$	4,280,758	$	4,728,271	$	4,224,531	$	4,431,985

*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 table directly below for expanded detail.

The following table reconciles the contractually receivable and carrying amounts of loans:


(in thousands)	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021

Contractually receivable	$	4,348,535	$	4,797,297	$	4,292,481	$	4,498,671
Unearned income		(598)		(708)		(782)		(542)
Unamortized premiums		121		216		101		116
Unaccreted discounts		(688)		(988)		(533)		(641)
PPP net unamortized deferred origination fees and costs		(3,986)		(8,564)
Other net unamortized deferred origination fees and costs		398		2,085
PPP net unamortized deferred origination (fees) and costs						(151)		(1,203)
Other net unamortized deferred origination (fees) and costs						(1,666)		161
Carrying value of loans	$	4,343,782	$	4,789,338	$	4,289,450	$	4,496,562

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Paycheck Protection Program

The CARES Act was enacted in March 2020 and provided for the SBA’s PPP, which allowed the Bank to lend to its qualifying small business clients to assist them in their efforts to meet their ~~cash-flow~~cashflow needs during the ~~COVID-19~~COVID pandemic. The Economic Aid Act was enacted in December 2020 and provided for a second round of PPP loans. PPP loans are fully backed by the SBA and may be entirely forgiven if the loan client uses loan funds for qualifying reasons. As of September 30, ~~2021,~~2022, net PPP loans of ~~$126~~$8 million remained on the Traditional Bank’s balance sheet ~~including $19~~compared to $56 million ~~in loan balances originated during 2020, $111 million in loan balances originated during~~as of December 31, 2021 ~~and $4~~ ~~million of unaccreted~~. PPP fees ~~reported as a credit offset to these originated balances. Unaccreted PPP fees will generally be~~ recognized ~~into income over~~by the ~~estimated remaining life~~Company for the first nine months of ~~the PPP portfolio, with fee recognition accelerated if loans are forgiven or repaid earlier than estimated.~~2022 and 2021 were $1.3 million and $16.9 million.

To provide liquidity to banks administering the SBA’s PPP, the FRB created the PPPLF, a lending facility secured by the PPP loans of the participating banks. As of September 30, 2021, the Bank had 0 outstanding borrowings from the FRB under the PPPLF.

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Credit Quality Indicators

The following tables include loans by segment, risk category, and, for non-revolving loans, origination year. Loan segments and risk categories as of September 30, ~~2021~~2022 remain unchanged from those defined in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. Regarding origination year, loan extensions and renewals are generally considered originated in the year extended or renewed unless the loan is classified as a TDR. Loan extensions and renewals classified as TDRs generally receive no change in origination date upon extension or renewal.


											Revolving Loans		Revolving Loans															Revolving Loans		Revolving Loans
(in thousands)	Term Loans Amortized Cost Basis by Origination Year										Amortized		Converted					Term Loans Amortized Cost Basis by Origination Year										Amortized		Converted
As of September 30, 2021	2021		2020		2019		2018		Prior		Cost Basis		to Term		Total
As of September 30, 2022																		2022		2021		2020		2019		Prior		Cost Basis		to Term		Total

Residential real estate owner occupied:																						��
Risk Rating
Pass or not rated	$	170,594	$	229,444	$	96,923	$	56,318	$	251,929	$	—	$	—	$	805,208		$	159,832	$	193,689	$	194,203	$	74,702	$	218,545	$	—	$	—	$	840,971
Special Mention		304		—		—		36		8,509		—		—		8,849			—		288		—		—		7,481		—		—		7,769
Substandard		—		557		685		1,006		11,593		—		—		13,841			760		763		1,378		1,629		10,629		—		—		15,159
Doubtful		—		—		—		—		—		—		—		—			—		—		—		—		—		—		—		—
Total	$	170,898	$	230,001	$	97,608	$	57,360	$	272,031	$	—	$	—	$	827,898		$	160,592	$	194,740	$	195,581	$	76,331	$	236,655	$	—	$	—	$	863,899

Residential real estate nonowner occupied:
Risk Rating
Pass or not rated	$	75,983	$	71,290	$	50,082	$	32,111	$	61,625	$	—	$	3,588	$	294,679		$	65,818	$	95,597	$	56,504	$	34,017	$	63,577	$	—	$	5,364	$	320,877
Special Mention		—		—		—		—		40		—		—		40			—		—		—		—		34		—		—		34
Substandard		—		—		—		—		99		—		—		99			—		34		—		—		92		—		—		126
Doubtful		—		—		—		—		—		—		—		—			—		—		—		—		—		—		—		—
Total	$	75,983	$	71,290	$	50,082	$	32,111	$	61,764	$	—	$	3,588	$	294,818		$	65,818	$	95,631	$	56,504	$	34,017	$	63,703	$	—	$	5,364	$	321,037

Commercial real estate:
Risk Rating
Pass or not rated	$	362,616	$	271,691	$	179,046	$	104,300	$	311,904	$	—	$	79,005	$	1,308,562		$	304,650	$	447,618	$	227,149	$	130,962	$	285,661	$	22,845	$	103,638	$	1,522,523
Special Mention		12,103		2,411		29,879		11,535		19,767		—		—		75,695			1,320		12,721		—		22,784		11,247		151		—		48,223
Substandard		—		2,576		266		—		3,941		—		2,201		8,984			—		—		—		—		847		—		—		847
Doubtful		—		—		—		—		—		—		—		—	��		—		—		—		—		—		—		—		—
Total	$	374,719	$	276,678	$	209,191	$	115,835	$	335,612	$	—	$	81,206	$	1,393,241		$	305,970	$	460,339	$	227,149	$	153,746	$	297,755	$	22,996	$	103,638	$	1,571,593

Construction and land development:
Risk Rating
Pass or not rated	$	59,659	$	37,136	$	4,384	$	1,527	$	593	$	—	$	—	$	103,299		$	68,101	$	75,079	$	1,214	$	653	$	612	$	1,759	$	—	$	147,418
Special Mention		—		310		2,359		—		—		—		—		2,669			—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—			—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—			—		—		—		—		—		—		—		—
Total	$	59,659	$	37,446	$	6,743	$	1,527	$	593	$	—	$	—	$	105,968		$	68,101	$	75,079	$	1,214	$	653	$	612	$	1,759	$	—	$	147,418

Commercial and industrial:
Risk Rating
Pass or not rated	$	117,127	$	55,354	$	66,818	$	21,262	$	48,361	$	—	$	4,112	$	313,034		$	96,129	$	84,119	$	23,230	$	39,763	$	45,104	$	96,756	$	2,713	$	387,814
Special Mention		15,398		2,344		800		43		2,095		—		—		20,680			564		13,572		—		645		1,888		300		—		16,969
Substandard		—		48		—		—		33		—		—		81			—		—		—		91		97		—		—		188
Doubtful		—		—		—		—		—		—		—		—			—		—		—		—		—		—		—		—
Total	$	132,525	$	57,746	$	67,618	$	21,305	$	50,489	$	—	$	4,112	$	333,795		$	96,693	$	97,691	$	23,230	$	40,499	$	47,089	$	97,056	$	2,713	$	404,971

Paycheck Protection Program:
Risk Rating
Pass or not rated	$	107,498	$	18,773	$	—	$	—	$	—	$	—	$	—	$	126,271		$	—	$	5,915	$	1,940	$	—	$	—	$	—	$	—	$	7,855
Special Mention		—		—		—		—		—		—		—		—			—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—			—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—			—		—		—		—		—		—		—		—
Total	$	107,498	$	18,773	$	—	$	—	$	—	$	—	$	—	$	126,271		$	—	$	5,915	$	1,940	$	—	$	—	$	—	$	—	$	7,855

Lease financing receivables:
Risk Rating
Pass or not rated	$	2,068	$	903	$	2,896	$	1,406	$	2,154	$	—	$	—	$	9,427		$	5,343	$	2,201	$	512	$	1,773	$	1,504	$	—	$	—	$	11,333
Special Mention		—		—		—		—		—		—		—		—			—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—			—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—			—		—		—		—		—		—		—		—
Total	$	2,068	$	903	$	2,896	$	1,406	$	2,154	$	—	$	—	$	9,427		$	5,343	$	2,201	$	512	$	1,773	$	1,504	$	—	$	—	$	11,333

Aircraft:
Risk Rating
Pass or not rated	$	47,983	$	46,405	$	24,134	$	10,049	$	1,827	$	—	$	—	$	130,398		$	46,255	$	57,010	$	36,777	$	18,293	$	7,763	$	—	$	—	$	166,098
Special Mention		—		—		—		—		—		—		—		—			—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—			—		—		—		—		215		—		—		215
Doubtful		—		—		—		—		—		—		—		—			—		—		—		—		—		—		—		—
Total	$	47,983	$	46,405	$	24,134	$	10,049	$	1,827	$	—	$	—	$	130,398		$	46,255	$	57,010	$	36,777	$	18,293	$	7,978	$	—	$	—	$	166,313

Home equity:
Risk Rating
Pass or not rated	$	—	$	—	$	—	$	—	$	—	$	213,297	$	—	$	213,297		$	—	$	—	$	—	$	—	$	—	$	227,274	$	—	$	227,274
Special Mention		—		—		—		—		—		125		—		125			—		—		—		—		—		365		—		365
Substandard		—		—		—		—		—		1,860		—		1,860			—		—		—		—		—		1,399		—		1,399
Doubtful		—		—		—		—		—		—		—		—			—		—		—		—		—		—		—		—
Total	$	—	$	—	$	—	$	—	$	—	$	215,282	$	—	$	215,282		$	—	$	—	$	—	$	—	$	—	$	229,038	$	—	$	229,038

23

Table of Contents


											Revolving Loans		Revolving Loans														Revolving Loans		Revolving Loans
(in thousands)	Term Loans Amortized Cost Basis by Origination Year (Continued)										Amortized		Converted				Term Loans Amortized Cost Basis by Origination Year (Continued)										Amortized		Converted
As of September 30, 2021	2021		2020		2019		2018		Prior		Cost Basis		to Term		Total
As of September 30, 2022																	2022		2021		2020		2019		Prior		Cost Basis		to Term		Total

Consumer:
Risk Rating
Pass or not rated	$	844	$	725	$	10,451	$	5,156	$	6,864	$	14,880	$	—	$	38,920	$	505	$	541	$	218	$	2,961	$	5,194	$	14,995	$	—	$	24,414
Special Mention		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Substandard		—		—		25		47		298		—		—		370		—		—		—		19		50		—		—		69
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	844	$	725	$	10,476	$	5,203	$	7,162	$	14,880	$	—	$	39,290	$	505	$	541	$	218	$	2,980	$	5,244	$	14,995	$	—	$	24,483

Warehouse:
Risk Rating
Pass or not rated	$	—	$	—	$	—	$	—	$	—	$	750,682	$	—	$	750,682	$	—	$	—	$	—	$	—	$	—	$	442,238	$	—	$	442,238
Special Mention		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	—	$	—	$	—	$	—	$	—	$	750,682	$	—	$	750,682	$	—	$	—	$	—	$	—	$	—	$	442,238	$	—	$	442,238

TRS:
Risk Rating
Pass or not rated	$	—	$	—	$	—	$	—	$	—	$	1	$	—	$	1	$	—	$	—	$	—	$	—	$	—	$	295	$	—	$	295
Special Mention		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	—	$	—	$	—	$	—	$	—	$	1	$	—	$	1	$	—	$	—	$	—	$	—	$	—	$	295	$	—	$	295

RCS:
Risk Rating
Pass or not rated	$	23,112	$	9,275	$	2,387	$	985	$	3,943	$	76,004	$	—	$	115,706	$	11,116	$	2,870	$	1,558	$	709	$	29,360	$	52,927	$	—	$	98,540
Special Mention		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		1,005		—		1,005		—		—		—		—		—		437		—		437
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	23,112	$	9,275	$	2,387	$	985	$	3,943	$	77,009	$	—	$	116,711	$	11,116	$	2,870	$	1,558	$	709	$	29,360	$	53,364	$	—	$	98,977

Grand Total:
Risk Rating
Pass or not rated	$	967,484	$	740,996	$	437,121	$	233,114	$	689,200	$	1,054,864	$	86,705	$	4,209,484	$	757,749	$	964,639	$	543,305	$	303,833	$	657,320	$	859,089	$	111,715	$	4,197,650
Special Mention		27,805		5,065		33,038		11,614		30,411		125		—		108,058		1,884		26,581		—		23,429		20,650		816		—		73,360
Substandard		—		3,181		976		1,053		15,964		2,865		2,201		26,240		760		797		1,378		1,739		11,930		1,836		—		18,440
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Grand Total	$	995,289	$	749,242	$	471,135	$	245,781	$	735,575	$	1,057,854	$	88,906	$	4,343,782	$	760,393	$	992,017	$	544,683	$	329,001	$	689,900	$	861,741	$	111,715	$	4,289,450


											Revolving Loans		Revolving Loans														Revolving Loans		Revolving Loans
(in thousands)	Term Loans Amortized Cost Basis by Origination Year										Amortized		Converted				Term Loans Amortized Cost Basis by Origination Year										Amortized		Converted
As of December 31, 2020	2020		2019		2018		2017		Prior		Cost Basis		to Term		Total
As of December 31, 2021																	2021		2020		2019		2018		Prior		Cost Basis		to Term		Total

Residential real estate owner occupied:
Risk Rating
Pass or not rated	$	268,313	$	132,018	$	82,754	$	67,430	$	301,366	$	—	$	—	$	851,881	$	218,981	$	213,010	$	89,186	$	50,301	$	226,852	$	—	$	—	$	798,330
Special Mention		—		364		42		1,610		8,730		—		—		10,746		301		—		—		33		8,209		—		—		8,543
Substandard		394		1,423		1,331		614		13,411		—		—		17,173		45		870		679		1,189		11,075		—		—		13,858
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	268,707	$	133,805	$	84,127	$	69,654	$	323,507	$	—	$	—	$	879,800	$	219,327	$	213,880	$	89,865	$	51,523	$	246,136	$	—	$	—	$	820,731

Residential real estate nonowner occupied:
Risk Rating
Pass or not rated	$	73,291	$	63,102	$	43,610	$	45,759	$	38,316	$	—	$	621	$	264,699	$	107,041	$	65,786	$	44,376	$	29,292	$	55,872	$	—	$	3,729	$	306,096
Special Mention		—		—		—		—		—		—		—		—		—		—		—		—		132		—		—		132
Substandard		—		—		—		—		81		—		—		81		—		—		—		—		95		—		—		95
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	73,291	$	63,102	$	43,610	$	45,759	$	38,397	$	—	$	621	$	264,780	$	107,041	$	65,786	$	44,376	$	29,292	$	56,099	$	—	$	3,729	$	306,323

Commercial real estate:
Risk Rating
Pass or not rated	$	315,550	$	258,251	$	166,542	$	171,207	$	315,336	$	—	$	55,949	$	1,282,835	$	472,095	$	256,039	$	153,224	$	94,212	$	286,223	$	25,188	$	80,211	$	1,367,192
Special Mention		3,397		30,969		236		11,355		9,659		—		—		55,616		20,059		2,399		29,639		11,207		18,778		—		—		82,082
Substandard		2,596		349		—		987		3,899		—		2,803		10,634		—		111		266		2,453		3,905		—		—		6,735
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	321,543	$	289,569	$	166,778	$	183,549	$	328,894	$	—	$	58,752	$	1,349,085	$	492,154	$	258,549	$	183,129	$	107,872	$	308,906	$	25,188	$	80,211	$	1,456,009

Construction and land development:
Risk Rating
Pass or not rated	$	53,972	$	31,756	$	7,840	$	701	$	1,964	$	—	$	—	$	96,233	$	88,743	$	30,593	$	2,599	$	1,155	$	128	$	1,925	$	—	$	125,143
Special Mention		—		2,397		—		—		—		—		—		2,397		—		524		3,670		—		—		—		—		4,194
Substandard		—		44		—		—		—		—		—		44		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	53,972	$	34,197	$	7,840	$	701	$	1,964	$	—	$	—	$	98,674	$	88,743	$	31,117	$	6,269	$	1,155	$	128	$	1,925	$	—	$	129,337

Commercial and industrial:
Risk Rating
Pass or not rated	$	105,985	$	84,575	$	33,391	$	32,303	$	46,697	$	—	$	1,040	$	303,991	$	105,148	$	34,361	$	54,524	$	18,110	$	44,972	$	60,454	$	2,541	$	320,110
Special Mention		18,195		800		—		—		2,215		—		—		21,210		15,015		1,921		785		34		1,956		350		—		20,061
Substandard		383		12		—		—		—		—		—		395		—		13		179		—		—		—		—		192
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	124,563	$	85,387	$	33,391	$	32,303	$	48,912	$	—	$	1,040	$	325,596	$	120,163	$	36,295	$	55,488	$	18,144	$	46,928	$	60,804	$	2,541	$	340,363

24

Table of Contents


											Revolving Loans		Revolving Loans														Revolving Loans		Revolving Loans
(in thousands)	Term Loans Amortized Cost Basis by Origination Year (Continued)										Amortized		Converted				Term Loans Amortized Cost Basis by Origination Year (Continued)										Amortized		Converted
As of December 31, 2020	2020		2019		2018		2017		Prior		Cost Basis		to Term		Total
As of December 31, 2021																	2021		2020		2019		2018		Prior		Cost Basis		to Term		Total

Paycheck Protection Program:
Risk Rating
Pass or not rated	$	392,319	$	—	$	—	$	—	$	—	$	—	$	—	$	392,319	$	40,607	$	15,407	$	—	$	—	$	—	$	—	$	—	$	56,014
Special Mention		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	392,319	$	—	$	—	$	—	$	—	$	—	$	—	$	392,319	$	40,607	$	15,407	$	—	$	—	$	—	$	—	$	—	$	56,014

Lease financing receivables:
Risk Rating
Pass or not rated	$	1,117	$	3,663	$	1,814	$	2,847	$	689	$	—	$	—	$	10,130	$	2,638	$	839	$	2,641	$	1,264	$	1,255	$	—	$	—	$	8,637
Special Mention		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	1,117	$	3,663	$	1,814	$	2,847	$	689	$	—	$	—	$	10,130	$	2,638	$	839	$	2,641	$	1,264	$	1,255	$	—	$	—	$	8,637

Aircraft:
Risk Rating
Pass or not rated	$	55,823	$	30,529	$	13,804	$	1,219	$	—	$	—	$	—	$	101,375	$	65,886	$	43,301	$	22,933	$	9,119	$	1,655	$	—	$	—	$	142,894
Special Mention		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	55,823	$	30,529	$	13,804	$	1,219	$	—	$	—	$	—	$	101,375	$	65,886	$	43,301	$	22,933	$	9,119	$	1,655	$	—	$	—	$	142,894

Home equity:
Risk Rating
Pass or not rated	$	—	$	—	$	—	$	—	$	—	$	237,633	$	—	$	237,633	$	—	$	—	$	—	$	—	$	—	$	208,429	$	—	$	208,429
Special Mention		—		—		—		—		—		127		—		127		—		—		—		—		—		279		—		279
Substandard		—		—		—		—		—		2,880		—		2,880		—		—		—		—		—		1,870		—		1,870
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	—	$	—	$	—	$	—	$	—	$	240,640	$	—	$	240,640	$	—	$	—	$	—	$	—	$	—	$	210,578	$	—	$	210,578
Consumer:
Risk Rating
Pass or not rated	$	425	$	13,636	$	8,563	$	7,125	$	8,648	$	14,321	$	—	$	52,718	$	978	$	417	$	4,694	$	4,326	$	5,768	$	14,613	$	—	$	30,796
Special Mention		—		—		—		—		5		—		—		5		—		—		—		—		—		—		—		—
Substandard		—		32		49		229		212		5		—		527		—		—		22		61		194		—		—		277
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	425	$	13,668	$	8,612	$	7,354	$	8,865	$	14,326	$	—	$	53,250	$	978	$	417	$	4,716	$	4,387	$	5,962	$	14,613	$	—	$	31,073

Warehouse:
Risk Rating
Pass or not rated	$	—	$	—	$	—	$	—	$	—	$	962,796	$	—	$	962,796	$	—	$	—	$	—	$	—	$	—	$	850,550	$	—	$	850,550
Special Mention		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	—	$	—	$	—	$	—	$	—	$	962,796	$	—	$	962,796	$	—	$	—	$	—	$	—	$	—	$	850,550	$	—	$	850,550

TRS:
Risk Rating
Pass or not rated	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	50,987	$	—	$	50,987
Special Mention		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	50,987	$	—	$	50,987

RCS:
Risk Rating
Pass or not rated	$	27,683	$	5,704	$	2,485	$	1,232	$	19,095	$	54,348	$	—	$	110,547	$	5,524	$	3,409	$	1,642	$	869	$	3,699	$	77,544	$	—	$	92,687
Special Mention		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		346		—		346		—		—		—		—		—		379		—		379
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Total	$	27,683	$	5,704	$	2,485	$	1,232	$	19,095	$	54,694	$	—	$	110,893	$	5,524	$	3,409	$	1,642	$	869	$	3,699	$	77,923	$	—	$	93,066
						��
Grand Total:
Risk Rating
Pass or not rated	$	1,294,478	$	623,234	$	360,803	$	329,823	$	732,111	$	1,269,098	$	57,610	$	4,667,157	$	1,107,641	$	663,162	$	375,819	$	208,648	$	626,424	$	1,289,690	$	86,481	$	4,357,865
Special Mention		21,592		34,530		278		12,965		20,609		127		—		90,101		35,375		4,844		34,094		11,274		29,075		629		—		115,291
Substandard		3,373		1,860		1,380		1,830		17,603		3,231		2,803		32,080		45		994		1,146		3,703		15,269		2,249		—		23,406
Doubtful		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Grand Total	$	1,319,443	$	659,624	$	362,461	$	344,618	$	770,323	$	1,272,456	$	60,413	$	4,789,338	$	1,143,061	$	669,000	$	411,059	$	223,625	$	670,768	$	1,292,568	$	86,481	$	4,496,562

25

Table of Contents

Allowance for Credit Losses on Loans

The following table presents the activity in the ACLL by portfolio class:

ACLL Rollforward

Three Months Ended September 30,

2021

2020

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

$
8,977

$
(677)

$
—

$
329

$
8,629

$
9,303

$
330

$
(13)

$
21

$
9,641
Nonowner occupied

2,551

47

—

—

2,598

2,274

96

—

7

2,377
Commercial real estate

23,307

286

—

3

23,596

16,300

4,663

—

—

20,963
Construction & land development

3,299

376

—

—

3,675

4,940

(341)

—

—

4,599
Commercial & industrial

4,117

(139)

(35)

16

3,959

2,405

654

(255)

80

2,884
Paycheck Protection Program

—

—

—

—

—

—

—

—

—

—
Lease financing receivables

97

2

—

—

99

125

(8)

—

—

117
Aircraft

303

23

—

—

326

208

11

—

—

219
Home equity

4,305

(63)

—

5

4,247

5,124

(7)

(14)

21

5,124
Consumer:

Credit cards

949

22

(40)

20

951

928

36

(29)

7

942
Overdrafts

717

143

(195)

88

753

488

324

(157)

50

705
Automobile loans

273

(34)

(19)

6

226

473

(67)

—

—

406
Other consumer

467

(28)

(25)

14

428

609

92

(41)

20

680
Total Traditional Banking

49,362

(42)

(314)

481

49,487

43,177

5,783

(509)

206

48,657
Warehouse lines of credit

2,100

(223)

—

—

1,877

2,575

(3)

—

—

2,572
Total Core Banking

51,462

(265)

(314)

481

51,364

45,752

5,780

(509)

206

51,229

Republic Processing Group (includes discontinued operations):

Tax Refund Solutions:

Easy Advances (discontinued operations)

—

(2,242)

—

2,242

—

—

(4,294)

—

4,294

—
Other TRS loans (discontinued operations)

—

(19)

—

19

—

211

(48)

(22)

—

141
Republic Credit Solutions (continuing operations)

8,829

3,820

(1,064)

75

11,660

9,134

(12)

(684)

83

8,521
Total Republic Processing Group

8,829

1,559

(1,064)

2,336

11,660

9,345

(4,354)

(706)

4,377

8,662

Total

$
60,291

$
1,294

$
(1,378)

$
2,817

$
63,024

$
55,097

$
1,426

$
(1,215)

$
4,583

$
59,891


	ACLL Rollforward
	Three Months Ended September 30,
	2022										2021
	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	$	8,445	$	(3)	$	—	$	24	$	8,466	$	8,977	$	(677)	$	—	$	329	$	8,629
Nonowner occupied		2,733		63		—		—		2,796		2,551		47		—		—		2,598
Commercial real estate		24,341		(1,413)		—		275		23,203		23,307		286		—		3		23,596
Construction & land development		3,591		331		—		—		3,922		3,299		376		—		—		3,675
Commercial & industrial		3,768		82		—		124		3,974		4,117		(139)		(35)		16		3,959
Paycheck Protection Program		—		—		—		—		—		—		—		—		—		—
Lease financing receivables		119		—		—		—		119		97		2		—		—		99
Aircraft		400		16		—		—		416		303		23		—		—		326
Home equity		4,113		279		—		7		4,399		4,305		(63)		—		5		4,247
Consumer:
Credit cards		994		(41)		(27)		33		959		949		22		(40)		20		951
Overdrafts		901		57		(288)		53		723		717		143		(195)		88		753
Automobile loans		122		(30)		—		9		101		273		(34)		(19)		6		226
Other consumer		200		(24)		(38)		15		153		467		(28)		(25)		14		428
Total Traditional Banking		49,727		(683)		(353)		540		49,231		49,362		(42)		(314)		481		49,487
Warehouse lines of credit		1,491		(386)		—		—		1,105		2,100		(223)		—		—		1,877
Total Core Banking		51,218		(1,069)		(353)		540		50,336		51,462		(265)		(314)		481		51,364

Republic Processing Group:
Tax Refund Solutions:
Easy Advances		—		(1,296)		—		1,296		—		—		(2,242)		—		2,242		—
Other TRS loans		—		—		—		—		—		—		(19)		—		19		—
Republic Credit Solutions		13,231		4,008		(2,922)		266		14,583		8,829		3,820		(1,064)		75		11,660
Total Republic Processing Group		13,231		2,712		(2,922)		1,562		14,583		8,829		1,559		(1,064)		2,336		11,660

Total	$	64,449	$	1,643	$	(3,275)	$	2,102	$	64,919	$	60,291	$	1,294	$	(1,378)	$	2,817	$	63,024

26

Table of Contents


	ACLL Rollforward																						ACLL Rollforward
	Nine Months Ended September 30,																						Nine Months Ended September 30,
	2021										2020												2022										2021
	Beginning				Charge-				Ending			Beginning	ASC 326				Charge-				Ending		Beginning				Charge-				Ending			Beginning			Charge-				Ending
(in thousands)	Balance		Provision		offs		Recoveries		Balance			Balance	Adoption		Provision		offs		Recoveries		Balance		Balance		Provision		offs		Recoveries		Balance			Balance	Provision		offs		Recoveries		Balance

Traditional Banking:
Residential real estate:
Owner occupied	$	9,715	$	(1,461)	$	—	$	375	$	8,629	$	4,729	$	4,199	$	648	$	(40)	$	105	$	9,641	$	8,647	$	(272)	$	—	$	91	$	8,466	$	9,715	$	(1,461)	$	—	$	375	$	8,629
Nonowner occupied		2,466		131		—		1		2,598		1,737		148		481		—		11		2,377		2,700		94		—		2		2,796		2,466		131		—		1		2,598
Commercial real estate		23,606		336		(428)		82		23,596		10,486		273		10,002		(270)		472		20,963		23,769		(843)		—		277		23,203		23,606		336		(428)		82		23,596
Construction & land development		3,274		401		—		—		3,675		2,152		1,447		1,000		—		—		4,599		4,128		(206)		—		—		3,922		3,274		401		—		—		3,675
Commercial & industrial		2,797		1,170		(35)		27		3,959		2,882		(1,318)		1,643		(447)		124		2,884		3,487		346		—		141		3,974		2,797		1,170		(35)		27		3,959
Paycheck Protection Program		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—		—
Lease financing receivables		106		(7)		—		—		99		147		—		(30)		—		—		117		91		28		—		—		119		106		(7)		—		—		99
Aircraft		253		73		—		—		326		176		—		43		—		—		219		357		59		—		—		416		253		73		—		—		326
Home equity		4,990		(789)		—		46		4,247		2,721		1,652		657		(14)		108		5,124		4,111		169		—		119		4,399		4,990		(789)		—		46		4,247
Consumer:
Credit cards		929		108		(130)		44		951		1,020		33		74		(206)		21		942		934		50		(97)		72		959		929		108		(130)		44		951
Overdrafts		587		351		(444)		259		753		1,169		—		13		(660)		183		705		683		560		(696)		176		723		587		351		(444)		259		753
Automobile loans		399		(178)		(19)		24		226		612		(7)		(220)		(8)		29		406		186		(98)		—		13		101		399		(178)		(19)		24		226
Other consumer		577		(137)		(56)		44		428		374		307		(81)		(86)		166		680		314		(137)		(68)		44		153		577		(137)		(56)		44		428
Total Traditional Banking		49,699		(2)		(1,112)		902		49,487		28,205		6,734		14,230		(1,731)		1,219		48,657		49,407		(250)		(861)		935		49,231		49,699		(2)		(1,112)		902		49,487
Warehouse lines of credit		2,407		(530)		—		—		1,877		1,794		—		778		—		—		2,572		2,126		(1,021)		—		—		1,105		2,407		(530)		—		—		1,877
Total Core Banking		52,106		(532)		(1,112)		902		51,364		29,999		6,734		15,008		(1,731)		1,219		51,229		51,533		(1,271)		(861)		935		50,336		52,106		(532)		(1,112)		902		51,364

Republic Processing Group (includes discontinued operations):
Republic Processing Group:
Tax Refund Solutions:
Easy Advances (discontinued operations)		—		7,984		(10,256)		2,272		—		—		—		15,239		(19,575)		4,336		—
Other TRS loans (discontinued operations)		158		(134)		(51)		27		—		234		—		—		(94)		1		141
Republic Credit Solutions (continuing operations)		8,803		5,037		(2,427)		247		11,660		13,118		—		251		(5,401)		553		8,521
Easy Advances																								—		7,583		(11,505)		3,922		—		—		7,984		(10,226)		2,242		—
Other TRS loans																								96		(607)		(154)		665		—		158		(134)		(21)		(3)		—
Republic Credit Solutions																								12,948		8,836		(8,005)		804		14,583		8,803		5,037		(2,427)		247		11,660
Total Republic Processing Group		8,961		12,887		(12,734)		2,546		11,660		13,352		—		15,490		(25,070)		4,890		8,662		13,044		15,812		(19,664)		5,391		14,583		8,961		12,887		(12,674)		2,486		11,660

Total	$	61,067	$	12,355	$	(13,846)	$	3,448	$	63,024	$	43,351	$	6,734	$	30,498	$	(26,801)	$	6,109	$	59,891	$	64,577	$	14,541	$	(20,525)	$	6,326	$	64,919	$	61,067	$	12,355	$	(13,786)	$	3,388	$	63,024

The cumulative loss rate used as the basis for the estimate of the Company’s ACLL as of September 30, ~~2021~~2022 was primarily based on a static pool analysis of each of the Company’s loan pools using the Company’s loss experience from 2013 through ~~2020,~~2022, supplemented by qualitative factor adjustments for current and forecasted conditions. The Company employs one-year forecasts of unemployment and CRE values within its ACLL model, with reversion to long-term averages following the forecasted period. The cumulative loss rate within the Company’s ACLL also includes estimated losses based on an individual evaluation of loans which are either collateral dependent or which do not share risk characteristics with pooled loans, e.g., TDRs.

For its CRE loan pool, the Company employed a one-year forecast of CRE vacancy rates through March 31, 2021 but discontinued use of this forecast during the second quarter of 2021 in favor of a one-year forecast of general CRE values. This change in forecast method had no material impact on the Company’s ACLL.

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Table of Contents

Nonperforming Loans and Nonperforming Assets

Detail of nonperforming loans, nonperforming assets, and select credit quality ratios follows:


(dollars in thousands)	September 30, 2021			December 31, 2020			September 30, 2022			December 31, 2021

Loans on nonaccrual status*	$	20,252		$	23,548		$	16,322		$	20,504
Loans past due 90-days-or-more and still on accrual**		691			47			37			48
Total nonperforming loans		20,943			23,595			16,359			20,552
Other real estate owned		1,845			2,499			1,634			1,792
Total nonperforming assets	$	22,788		$	26,094		$	17,993		$	22,344

Credit Quality Ratios - Total Company:

Nonperforming loans to total loans		0.48	%		0.49	%		0.38	%		0.46	%
Nonperforming assets to total loans (including OREO)		0.52			0.54			0.42			0.50
Nonperforming assets to total assets		0.37			0.42			0.30			0.37

Credit Quality Ratios - Core Bank:

Nonperforming loans to total loans		0.48	%		0.50	%		0.39	%		0.47	%
Nonperforming assets to total loans (including OREO)		0.52			0.56			0.43			0.51
Nonperforming assets to total assets		0.39			0.45			0.33			0.40

*	Loans on nonaccrual status include collateral-dependent loans.

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

28

Table of Contents

The following tables present the recorded investment in nonaccrual loans and loans past due 90-days-or-more and still on accrual by class of loans:


					Past Due 90-Days-or-More								Past Due 90-Days-or-More
	Nonaccrual				and Still Accruing Interest*				Nonaccrual				and Still Accruing Interest*
(in thousands)	September 30, 2021		December 31, 2020		September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021		September 30, 2022		December 31, 2021

Traditional Banking:
Residential real estate:
Owner occupied	$	11,708	$	14,328	$	—	$	—	$	13,604	$	12,039	$	—	$	—
Nonowner occupied		99		81		—		—		125		95		—		—
Commercial real estate		6,607		6,762		—		—		1,051		6,557		—		—
Construction & land development		—		—		—		—		—		—		—		—
Commercial & industrial		93		55		—		—		—		13		—		—
Paycheck Protection Program		—				—		—		—		—		—		—
Lease financing receivables		—		—		—		—		—		—		—		—
Aircraft		—				—		—		—		—		—		—
Home equity		1,657		2,141		—		—		1,291		1,700		—		—
Consumer:
Credit cards		—		—		—		5		—		—		—		—
Overdrafts		—		—		—		—		—		—		—		1
Automobile loans		84		170		—		—		35		97		—		—
Other consumer		4		11		—		—		216		3		—		—
Total Traditional Banking		20,252		23,548		—		5		16,322		20,504		—		1
Warehouse lines of credit		—		—		—		—		—		—		—		—
Total Core Banking		20,252		23,548		—		5		16,322		20,504		—		1

Republic Processing Group:
Tax Refund Solutions:
Easy Advances		—		—		—		—		—		—		—		—
Other TRS loans		—		—		—		—		—		—		—		—
Republic Credit Solutions		—		—		691		42		—		—		37		47
Total Republic Processing Group		—		—		691		42		—		—		37		47

Total	$	20,252	$	23,548	$	691	$	47	$	16,322	$	20,504	$	37	$	48

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


							Three Months Ended		Nine Months Ended								Three Months Ended		Nine Months Ended
	As of September 30, 2021						September 30, 2021		September 30, 2021		As of September 30, 2022						September 30, 2022		September 30, 2022

	Nonaccrual		Nonaccrual		Total		Interest Income		Interest Income		Nonaccrual		Nonaccrual		Total		Interest Income		Interest Income
	Loans with		Loans without		Nonaccrual		Recognized		Recognized		Loans with		Loans without		Nonaccrual		Recognized		Recognized
(in thousands)	ACLL		ACLL		Loans		on Nonaccrual Loans*		on Nonaccrual Loans*		ACLL		ACLL		Loans		on Nonaccrual Loans*		on Nonaccrual Loans*

Residential real estate:
Owner occupied	$	2,041	$	9,667	$	11,708	$	225	$	672	$	1,738	$	11,866	$	13,604	$	163	$	734
Nonowner occupied		33		66		99		2		5		62		63		125		1		1
Commercial real estate		4,153		2,454		6,607		16		125		1,051		—		1,051		680		1,325
Construction & land development		—		—		—		—		—		—		—		—		—		—
Commercial & industrial		45		48		93		—		2		—		—		—		—		—
Paycheck Protection Program		—		—		—		—		—		—		—		—		—		—
Lease financing receivables		—		—		—		—		—		—		—		—		—		—
Aircraft		—		—		—		—		—		—		—		—		—		—
Home equity		63		1,594		1,657		19		121		8		1,283		1,291		31		185
Consumer		14		74		88		4		8		19		232		251		4		12
Total	$	6,349	$	13,903	$	20,252	$	266	$	933	$	2,878	$	13,444	$	16,322	$	879	$	2,257

* Includes interest income for loans on nonaccrual as of the beginning of the period that were paid off during the period.

29

Table of Contents

Three Months Ended

Nine Months Ended

As of December 31, 2020

September 30, 2020

September 30, 2020


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

$
1,995

$
12,333

$
14,328

$
252

$
649
Nonowner occupied

8

73

81

2

6
Commercial real estate

576

6,186

6,762

17

854
Construction & land development

—

—

—

7

7
Commercial & industrial

—

55

55

7

16
Paycheck Protection Program

—

—

—

—

—
Lease financing receivables

—

—

—

—

—
Aircraft

—

—

—

—

—
Home equity

91

2,050

2,141

29

81
Consumer

69

112

181

3

9

$
2,739

$
20,809

$
23,548

$
317

$
1,622


							Three Months Ended		Nine Months Ended
	As of December 31, 2021						September 30, 2021		September 30, 2021

	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	$	1,944	$	10,095	$	12,039	$	225	$	672
Nonowner occupied		31		64		95		2		5
Commercial real estate		4,105		2,452		6,557		16		125
Construction & land development		—		—		—		—		—
Commercial & industrial		—		13		13		—		2
Paycheck Protection Program		—		—		—		—		—
Lease financing receivables		—		—		—		—		—
Aircraft		—		—		—		—		—
Home equity		—		1,700		1,700		19		121
Consumer		17		83		100		4		8
	$	6,097	$	14,407	$	20,504	$	266	$	933

* 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 on accrual include both smaller balance, primarily retail, homogeneous loans. Nonaccrual loans are typically returned to accrual status when all the principal and interest amounts contractually due are brought current and held current for 6six consecutive months and future contractual payments are reasonably assured. TDRs on nonaccrual status are reviewed for return to accrual status on an individual basis, with additional consideration given to performance under the modified terms.

Delinquent Loans

The following tables present the aging of the recorded investment in loans by class of loans:


	30 - 59			60 - 89			90 or More											30 - 59			60 - 89			90 or More
September 30, 2021	Days			Days			Days			Total			Total
September 30, 2022																	September 30, 2022	Days			Days			Days			Total			Total
(dollars in thousands)	Delinquent			Delinquent			Delinquent*			Delinquent**			Current		Total			Delinquent			Delinquent			Delinquent*			Delinquent**			Current		Total

Traditional Banking:
Residential real estate:
Owner occupied	$	896		$	315		$	917		$	2,128		$	825,770	$	827,898		$	1,373		$	1,512		$	876		$	3,761		$	860,138	$	863,899
Nonowner occupied		—			—			—			—			294,818		294,818			—			—			41			41			320,996		321,037
Commercial real estate		—			—			5,037			5,037			1,388,204		1,393,241			—			—			—			—			1,571,593		1,571,593
Construction & land development		—			—			—			—			105,968		105,968			—			—			—			—			147,418		147,418
Commercial & industrial		8			—			58			66			333,729		333,795			1			—			—			1			404,970		404,971
Paycheck Protection Program		—			—			—			—			126,271		126,271			—			—			—			—			7,855		7,855
Lease financing receivables		—			—			—			—			9,427		9,427			—			—			—			—			11,333		11,333
Aircraft		—			—			—			—			130,398		130,398			—			—			—			—			166,313		166,313
Home equity		50			—			209			259			215,023		215,282			—			—			315			315			228,723		229,038
Consumer:
Credit cards		36			9			—			45			14,736		14,781			23			10			—			33			14,864		14,897
Overdrafts		137			6			2			145			608		753			155			2			—			157			566		723
Automobile loans		—			—			11			11			17,522		17,533			18			31			4			53			7,837		7,890
Other consumer		1			—			—			1			6,222		6,223			5			1			1			7			966		973
Total Traditional Banking		1,128			330			6,234			7,692			3,468,696		3,476,388			1,575			1,556			1,237			4,368			3,743,572		3,747,940
Warehouse lines of credit		—			—			—			—			750,682		750,682			—			—			—			—			442,238		442,238
Total Core Banking		1,128			330			6,234			7,692			4,219,378		4,227,070			1,575			1,556			1,237			4,368			4,185,810		4,190,178

Republic Processing Group:
Tax Refund Solutions:
Easy Advances		—			—			—			—			—		—			—			—			—			—			—		—
Other TRS loans		—			—			—			—			1		1			—			—			—			—			295		295
Republic Credit Solutions		6,828			2,182			691			9,701			107,010		116,711			5,809			1,676			37			7,522			91,455		98,977
Total Republic Processing Group		6,828			2,182			691			9,701			107,011		116,712			5,809			1,676			37			7,522			91,750		99,272

Total	$	7,956		$	2,512		$	6,925		$	17,393		$	4,326,389	$	4,343,782		$	7,384		$	3,232		$	1,274		$	11,890		$	4,277,560	$	4,289,450
Delinquency ratio***		0.18	%		0.06	%		0.16	%		0.40	%							0.17	%		0.08	%		0.03	%		0.28	%

* 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.

30

Table of Contents


	30 - 59			60 - 89			90 or More											30 - 59			60 - 89			90 or More
December 31, 2020	Days			Days			Days			Total			Total
December 31, 2021																	December 31, 2021	Days			Days			Days			Total			Total
(dollars in thousands)	Delinquent			Delinquent			Delinquent*			Delinquent**			Current		Total			Delinquent			Delinquent			Delinquent*			Delinquent**			Current		Total

Traditional Banking:
Residential real estate:
Owner occupied	$	1,038		$	668		$	1,554		$	3,260		$	876,540	$	879,800		$	606		$	383		$	610		$	1,599		$	819,132	$	820,731
Nonowner occupied		—			—			—			—			264,780		264,780			—			—			—			—			306,323		306,323
Commercial real estate		—			348			5,109			5,457			1,343,628		1,349,085			—			—			5,292			5,292			1,450,717		1,456,009
Construction & land development		—			—			—			—			98,674		98,674			—			—			—			—			129,337		129,337
Commercial & industrial		—			—			12			12			325,584		325,596			8			—			13			21			340,342		340,363
Paycheck Protection Program		—			—			—			—			392,319		392,319			—			—			—			—			56,014		56,014
Lease financing receivables		—			—			—			—			10,130		10,130			—			—			—			—			8,637		8,637
Aircraft		—			—			—			—			101,375		101,375			—			—			—			—			142,894		142,894
Home equity		93			14			595			702			239,938		240,640			38			35			241			314			210,264		210,578
Consumer:
Credit cards		33			35			5			73			14,123		14,196			19			11			—			30			14,480		14,510
Overdrafts		140			5			2			147			440		587			160			3			1			164			519		683
Automobile loans		42			—			14			56			30,244		30,300			—			—			9			9			14,439		14,448
Other consumer		6			—			—			6			8,161		8,167			1			—			—			1			1,431		1,432
Total Traditional Banking		1,352			1,070			7,291			9,713			3,705,936		3,715,649			832			432			6,166			7,430			3,494,529		3,501,959
Warehouse lines of credit		—			—			—			—			962,796		962,796			—			—			—			—			850,550		850,550
Total Core Banking		1,352			1,070			7,291			9,713			4,668,732		4,678,445			832			432			6,166			7,430			4,345,079		4,352,509

Republic Processing Group:
Tax Refund Solutions:
Easy Advances		—			—			—			—			—		—			—			—			—			—			—		—
Other TRS loans		—			—			—			—			—		—			—			—			—			—			50,987		50,987
Republic Credit Solutions		6,572			3,620			42			10,234			100,659		110,893			5,010			978			47			6,035			87,031		93,066
Total Republic Processing Group		6,572			3,620			42			10,234			100,659		110,893			5,010			978			47			6,035			138,018		144,053

Total	$	7,924		$	4,690		$	7,333		$	19,947		$	4,769,391	$	4,789,338		$	5,842		$	1,410		$	6,213		$	13,465		$	4,483,097	$	4,496,562
Delinquency ratio***		0.17	%		0.10	%		0.15	%		0.42	%							0.13	%		0.03	%		0.14	%		0.30	%

* 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 class of loans:


	September 30, 2021				December 31, 2020				September 30, 2022				December 31, 2021
	Secured		Secured		Secured		Secured		Secured		Secured		Secured		Secured
	by Real		by Personal		by Real		by Personal		by Real		by Personal		by Real		by Personal
(dollars in thousands)	Estate		Property		Estate		Property
(in thousands)									Estate		Property		Estate		Property

Traditional Banking:
Residential real estate:
Owner occupied	$	13,645	$	—	$	17,212	$	—	$	17,702	$	—	$	14,798	$	—
Nonowner occupied		99		—		81		—		125		—		95		—
Commercial real estate		8,985		—		10,205		—		848		—		6,736		—
Construction & land development		—		—		—		—		—		—		—		—
Commercial & industrial		—		47		—		12		—		188		—		192
Paycheck Protection Program		—		—		—		—		—		—		—		—
Lease financing receivables		—		—		—		—		—		—		—		—
Aircraft		—		—		—		—		—		—		—		—
Home equity		1,860		—		2,899		—		1,505		—		1,976		—
Consumer		—		369		—		237		—		258		—		274
Total Traditional Banking	$	24,589	$	416	$	30,397	$	249	$	20,180	$	446	$	23,605	$	466

Collateral-dependent loans are generally secured by real estate or personal property. If there is insufficient collateral value to secure the Company’s recorded investment in these loans, they are charged down to collateral value less estimated selling ~~cost,~~costs, when selling costs are applicable. Selling costs range from 10%~~-13%~~ to 13%, with those percentages based on annual studies performed by the Company.

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Table of Contents

Troubled Debt Restructurings

A TDR is a situation where, due to a borrower’s financial difficulties, the Bank grants a concession to the borrower that the Bank would not otherwise have considered. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of their debt in the foreseeable future without the modification. This evaluation is performed in accordance with the Bank’s internal underwriting policy.

The majority of the Bank’s commercial-related and construction TDRs involve a restructuring of financing terms, such as a reduction in the payment amount to require only interest and escrow (if required) and/or extending the maturity date of the debt. The substantial majority of the Bank’s residential real estate TDR concessions involve reducing the client’s loan payment through a rate reduction for a set period based on the borrower’s ability to service the modified loan payment. Retail loans may also be classified as TDRs due to legal modifications, such as bankruptcies.

Nonaccrual loans modified as TDRs typically remain on nonaccrual status and continue to be reported as nonperforming loans for a minimum of six consecutive months. Accruing loans modified as TDRs are evaluated for nonaccrual status based on a current evaluation of the borrower’s financial condition and ability and willingness to service the modified debt. As of September 30, ~~2021~~2022 and December 31, ~~2020, $6~~2021, $3 million and $7$6 million of TDRs were on nonaccrual status.

Detail of TDRs differentiated by loan type and accrual status follows:


	Troubled Debt			Troubled Debt			Total			Troubled Debt			Troubled Debt			Total
	Restructurings on			Restructurings on			Troubled Debt			Restructurings on			Restructurings on			Troubled Debt
	Nonaccrual Status			Accrual Status			Restructurings			Nonaccrual Status			Accrual Status			Restructurings
	Number of	Recorded		Number of	Recorded		Number of	Recorded		Number of	Recorded		Number of	Recorded		Number of	Recorded
September 30, 2021 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment
September 30, 2022 (dollars in thousands)										Loans	Investment		Loans	Investment		Loans	Investment
Residential real estate	64	$	3,736	94	$	8,293	158	$	12,029	71	$	3,356	77	$	7,058	148	$	10,414
Commercial real estate	2		2,580	2		1,262	4		3,842	—		—	1		865	1		865
Commercial & industrial	—		—	1		1	1		1	—		—	1		1	1		1
Consumer	1		12	2,306		567	2,307		579	1		10	1,887		418	1,888		428
Total troubled debt restructurings	67	$	6,328	2,403	$	10,123	2,470	$	16,451	72	$	3,366	1,966	$	8,342	2,038	$	11,708


	Troubled Debt			Troubled Debt			Total			Troubled Debt			Troubled Debt			Total
	Restructurings on			Restructurings on			Troubled Debt			Restructurings on			Restructurings on			Troubled Debt
	Nonaccrual Status			Accrual Status			Restructurings			Nonaccrual Status			Accrual Status			Restructurings
	Number of	Recorded		Number of	Recorded		Number of	Recorded		Number of	Recorded		Number of	Recorded		Number of	Recorded
December 31, 2020 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment
December 31, 2021 (dollars in thousands)										Loans	Investment		Loans	Investment		Loans	Investment
Residential real estate	61	$	4,189	123	$	11,041	184	$	15,230	63	$	3,179	89	$	7,856	152	$	11,035
Commercial real estate	2		2,509	5		2,395	7		4,904	2		2,575	2		1,239	4		3,814
Construction & land development	—		—	1		44	1		44
Commercial & industrial	—		—	1		1	1		1	2		45	1		1	3		46
Consumer	1		14	2,194		585	2,195		599	1		12	2,269		479	2,270		491
Total troubled debt restructurings	64	$	6,712	2,324	$	14,066	2,388	$	20,778	68	$	5,811	2,361	$	9,575	2,429	$	15,386

33

Table of Contents

The Bank considers a TDR to be performing to its modified terms if the loan is in accrual status and not past due 30-days-or-more as of the reporting date. A summary of the categories of TDR loan modifications outstanding and respective performance under modified terms as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021 follows:


	Troubled Debt			Troubled Debt						Troubled Debt			Troubled Debt
	Restructurings			Restructurings			Total			Restructurings			Restructurings			Total
	Performing to			Not Performing to			Troubled Debt			Performing to			Not Performing to			Troubled Debt
	Modified Terms			Modified Terms			Restructurings			Modified Terms			Modified Terms			Restructurings
	Number of	Recorded		Number of	Recorded		Number of	Recorded		Number of	Recorded		Number of	Recorded		Number of	Recorded
September 30, 2021 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment
September 30, 2022 (dollars in thousands)										Loans	Investment		Loans	Investment		Loans	Investment

Residential real estate loans (including home equity loans):
Rate reduction	88	$	7,964	2	$	123	90	$	8,087	73	$	6,632	2	$	119	75	$	6,751
Principal deferral	7		605	1		160	8		765	6		552	1		157	7		709
Legal modification	51		2,758	9		419	60		3,177	57		2,639	9		315	66		2,954
Total residential TDRs	146		11,327	12		702	158		12,029	136		9,823	12		591	148		10,414

Commercial related and construction/land development loans:
Rate reduction	1		936	—		—	1		936	1		865	—		—	1		865
Principal deferral	3		444	1		2,463	4		2,907	1		1	—		—	1		1
Total commercial TDRs	4		1,380	1		2,463	5		3,843	2		866	—		—	2		866

Consumer loans:
Principal deferral	2,304		560	—		—	2,304		560	1,885		414	—		—	1,885		414
Legal modification	3		19	—		—	3		19	3		14	—		—	3		14
Total consumer TDRs	2,307		579	—		—	2,307		579	1,888		428	—		—	1,888		428

Total troubled debt restructurings	2,457	$	13,286	13	$	3,165	2,470	$	16,451	2,026	$	11,117	12	$	591	2,038	$	11,708


	Troubled Debt			Troubled Debt						Troubled Debt			Troubled Debt
	Restructurings			Restructurings			Total			Restructurings			Restructurings			Total
	Performing to			Not Performing to			Troubled Debt			Performing to			Not Performing to			Troubled Debt
	Modified Terms			Modified Terms			Restructurings			Modified Terms			Modified Terms			Restructurings
	Number of	Recorded		Number of	Recorded		Number of	Recorded		Number of	Recorded		Number of	Recorded		Number of	Recorded
December 31, 2020 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment
December 31, 2021 (dollars in thousands)										Loans	Investment		Loans	Investment		Loans	Investment

Residential real estate loans (including home equity loans):
Interest only payments	1	$	826	—	$	—	1	$	826	—		—	—		—	—	$	—
Rate reduction	101		9,526	6		370	107		9,896	82	$	7,461	4	$	303	86		7,764
Principal deferral	9		858	2		166	11		1,024	7		729	—		—	7		729
Legal modification	58		3,068	7		416	65		3,484	48		2,100	11		442	59		2,542
Total residential TDRs	169		14,278	15		952	184		15,230	137		10,290	15		745	152		11,035

Commercial related and construction/land development loans:
Interest only payments	1		488	—		—	1		488	—		—	—		—	—		—
Rate reduction	2		1,046	1		45	3		1,091	1		919	—		—	1		919
Principal deferral	4		906	1		2,464	5		3,370	5		477	1		2,464	6		2,941
Total commercial TDRs	7		2,440	2		2,509	9		4,949	6		1,396	1		2,464	7		3,860

Consumer loans:
Principal deferral	2,193		578	—		—	2,193		578	2,266		470	—		—	2,266		470
Legal modification	2		21	—		—	2		21	4		21	—		—	4		21
Total consumer TDRs	2,195		599	—		—	2,195		599	2,270		491	—		—	2,270		491

Total troubled debt restructurings	2,371	$	17,317	17	$	3,461	2,388	$	20,778	2,413	$	12,177	16	$	3,209	2,429	$	15,386

As of September 30, ~~2021~~2022 and December 31, ~~2020, 81%~~2021, 95% and ~~83%~~79% of the Bank’s TDR balances were performing according to their modified terms. The Bank had provided ~~$2 million~~$804,000 and $1$2 million of specific ACLL allocations to clients whose loan terms have been modified in TDRs as of September 30, ~~2021~~2022 and December 31, ~~2020.~~2021. The Bank had 0no commitments to lend any additional material amounts to its existing TDR relationships as of September 30, ~~2021~~2022 or December 31, ~~2020.~~2021.

34

Table of Contents

A summary of the categories of TDR loan modifications by respective performance as of September 30, ~~2021~~2022 and ~~2020~~2021 that were modified during the three months ended September 30, ~~2021~~2022 and ~~2020~~2021 follows:


	Troubled Debt			Troubled Debt						Troubled Debt			Troubled Debt
	Restructurings			Restructurings			Total			Restructurings			Restructurings			Total
	Performing to			Not Performing to			Troubled Debt			Performing to			Not Performing to			Troubled Debt
	Modified Terms			Modified Terms			Restructurings			Modified Terms			Modified Terms			Restructurings
	Number of	Recorded		Number of	Recorded		Number of	Recorded		Number of	Recorded		Number of	Recorded		Number of	Recorded
September 30, 2021 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment
September 30, 2022 (dollars in thousands)										Loans	Investment		Loans	Investment		Loans	Investment

Residential real estate loans (including home equity loans):
Legal modification	3	$	142	1	$	14	4	$	156	10	$	443	1	$	47	11	$	490
Total residential TDRs	3		142	1		14	4		156	10		443	1		47	11		490

Consumer loans:
Principal deferral	124		13	—		—	124		13	332		62	—		—	332		62
Total consumer TDRs	124		13	—		—	124		13	332		62	—		—	332		62

Total troubled debt restructurings	127	$	155	1	$	14	128	$	169	342	$	505	1	$	47	343	$	552


	Troubled Debt			Troubled Debt						Troubled Debt			Troubled Debt
	Restructurings			Restructurings			Total			Restructurings			Restructurings			Total
	Performing to			Not Performing to			Troubled Debt			Performing to			Not Performing to			Troubled Debt
	Modified Terms			Modified Terms			Restructurings			Modified Terms			Modified Terms			Restructurings
	Number of	Recorded		Number of	Recorded		Number of	Recorded		Number of	Recorded		Number of	Recorded		Number of	Recorded
September 30, 2020 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment
September 30, 2021 (dollars in thousands)										Loans	Investment		Loans	Investment		Loans	Investment

Residential real estate loans (including home equity loans):
Principal deferral	2	$	54	1	$	4	3	$	58
Legal modification	4		152	1		20	5		172	3	$	142	1	$	14	4	$	156
Total residential TDRs	6		206	2		24	8		230	3		142	1		14	4		156

Consumer loans:
Principal deferral	221		29	—		—	221		29	124		13	—		—	124		13
Legal modification	1		15	—		—	1		15
Total consumer TDRs	222		44	—		—	222		44	124		13	—		—	124		13

Total troubled debt restructurings	228	$	250	2	$	24	230	$	274	127	$	155	1	$	14	128	$	169

The tables above are inclusive of loans that were TDRs at the end of previous periods and were re-modified, e.g., a maturity date extension during the current period.

As of September 30, 2022 and 2021, 91% and ~~2020,~~ 92% ~~and 91%~~ of the Bank’s TDR balances that occurred during the third quarters of ~~2021~~2022 and ~~2020~~2021 were performing according to their modified terms. The Bank provided approximately ~~$6,000~~$30,000 and ~~$29,000~~$6,000 in specific ACLL allocations to clients whose loan terms were modified in TDRs during the third quarters of ~~2021~~2022 and ~~2020.~~2021.

There was 0no significant change between the pre and post modification loan balances for the three months ending September 30, ~~2021~~2022 and ~~2020.~~2021.

35

Table of Contents

A summary of the categories of TDR loan modifications by respective performance as of September 30, ~~2021~~2022 and ~~2020~~2021 that were modified during the nine months ended September 30, 2022 and 2021 ~~and 2020~~ follows:

Troubled Debt

Troubled Debt




Restructurings

Restructurings

Total

Performing to

Not Performing to

Troubled Debt

Modified Terms

Modified Terms

Restructurings


Number of

Recorded

Number of

Recorded

Number of

Recorded

September 30, 2021 (dollars in thousands)

Loans

Investment

Loans

Investment

Loans

Investment

Residential real estate loans (including home equity loans):

Principal deferral

—

$
—

1

$
160

1

$
160

Legal modification

6

378

5

288

11

666

Total residential TDRs

6

378

6

448

12

826



Consumer loans:

Principal deferral

556

72

—

—

556

72

Legal modification

1

3

—

—

1

3

Total consumer TDRs

557

75

—

—

557

75

Total troubled debt restructurings

563

$
453

6

$
448

569

$
901


	Troubled Debt			Troubled Debt						Troubled Debt			Troubled Debt
	Restructurings			Restructurings			Total			Restructurings			Restructurings			Total
	Performing to			Not Performing to			Troubled Debt			Performing to			Not Performing to			Troubled Debt
	Modified Terms			Modified Terms			Restructurings			Modified Terms			Modified Terms			Restructurings
	Number of	Recorded		Number of	Recorded		Number of	Recorded		Number of	Recorded		Number of	Recorded		Number of	Recorded
September 30, 2020 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment
September 30, 2022 (dollars in thousands)										Loans	Investment		Loans	Investment		Loans	Investment

Residential real estate loans (including home equity loans):
Rate reduction	2	$	54	1	$	4	3	$	58
Legal modification	11		429	2		128	13		557	17	$	954	1	$	47	18	$	1,001
Total residential TDRs	13		483	3		132	16		615	17		954	1		47	18		1,001

Commercial related and construction/land development loans:
Principal deferral	1		21	—		—	1		21
Total commercial TDRs	1		21	—		—	1		21


Consumer loans:
Principal deferral	1,492		183	—		—	1,492		183	605		109	—		—	605		109
Legal modification	1		15	—		—	1		15
Total consumer TDRs	1,493		198	—		—	1,493		198	605		109	—		—	605		109

Total troubled debt restructurings	1,507	$	702	3	$	132	1,510	$	834	622	$	1,063	1	$	47	623	$	1,110


	Troubled Debt			Troubled Debt
	Restructurings			Restructurings			Total
	Performing to			Not Performing to			Troubled Debt
	Modified Terms			Modified Terms			Restructurings
	Number of	Recorded		Number of	Recorded		Number of	Recorded
September 30, 2021 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment

Residential real estate loans (including home equity loans):
Principal deferral	—	$	—	1	$	160	1		160
Legal modification	6		378	5		288	11		666
Total residential TDRs	6		378	6		448	12		826

Consumer loans:
Principal deferral	556		72	—		—	556		72
Legal modification	1		3	—		—	1		3
Total consumer TDRs	557		75	—		—	557		75

Total troubled debt restructurings	563	$	453	6	$	448	569	$	901

The tables above are inclusive of loans that were TDRs at the end of previous periods and were re-modified, e.g., a maturity date extension during the current period.

As of September 30, 2022 and 2021, 96% and ~~2020,~~ 50% ~~and 84%~~ of the Bank’s TDR balances that occurred during the first nine months of ~~2021~~2022 and ~~2020~~2021 were performing according to their modified terms. The Bank provided approximately ~~$38,000~~$53,000 and ~~$121,000~~$38,000 in specific ACLL allocations to clients whose loan terms were modified in TDRs during the first nine months of ~~2021~~2022 and ~~2020.~~2021.

There was 0no significant change between the pre and post modification loan balances for the nine months ending September 30, ~~2021~~2022 and ~~2020.~~2021.

36

Table of Contents

The following table presents loans by class modified as troubled debt restructurings within the previous 12 months of September 30, ~~2021~~2022 and ~~2020~~2021 and for which there was a payment default during the three and/or nine months ended September 30, ~~2021~~2022 and ~~2020.~~2021.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2021

2020

2021

2020




Recorded

Number of

Recorded

Number of

Recorded

Number of

Recorded

(dollars in thousands)

Loans

Investment

Loans

Investment

Loans

Investment

Loans

Investment

Residential real estate:

Owner occupied

2

$
179

3

$
163

6

$
468

5

$
269

Commercial real estate

—

—

2

2,964

1

116

2

2,964

Home equity

1

14

1

20

1

14

2

33

Total

3

$
193

6

$
3,147

8

$
598

9

$
3,266

~~COVID-19 Loan Accommodations~~

The CARES Act provided several forms of economic relief designed to defray the impact of COVID-19. In April 2020, through its own independent relief efforts and CARES Act provisions, the Company began offering loan accommodations through deferrals and forbearances. These accommodations were generally under three-month terms for commercial clients, with residential and consumer accommodations in line with prevailing regulatory and legal parameters. Loans that received an accommodation were generally not considered troubled debt restructurings by the Company if such loans were not greater than 30 days past due as of December 31, 2019.

~~As of September 30, 2021, $3 million, or less than 1% of the Company’s Traditional Bank portfolio remained under a COVID-19 hardship accommodation.~~


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
		Recorded		Number of	Recorded		Number of	Recorded		Number of	Recorded
(dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment		Loans	Investment

Residential real estate:
Owner occupied	1	$	47	2	$	179	3	$	83	6	$	468
Commercial real estate	—		—	—		—	—		—	1		116
Home equity	—		—	1		14	1		10	1		14

Total	1	$	47	3	$	193	4	$	93	8	$	598

Foreclosures

The following table presents the carrying amount of foreclosed properties held as a result of the Bank obtaining physical possession of such properties:


(in thousands)	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021

Residential real estate	$	—	$	496
Commercial real estate		1,845		2,003	$	1,634	$	1,792

Total other real estate owned	$	1,845	$	2,499	$	1,634	$	1,792

The following table presents the recorded investment in consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process according to requirements of the applicable jurisdiction:


(in thousands)	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021

Recorded investment in consumer residential real estate mortgage loans in the process of foreclosure	$	475	$	981	$	762	$	508

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Easy Advances

The Company’s TRS segment offered its EA product during the first two months of ~~2021~~2022 and ~~2020.~~2021. During the first quarter of each year, the Company bases its estimated Provision for EAs on the current year’s EA delinquency information and ~~the~~ prior ~~year’s~~years’ tax refund payment patterns subsequent to the first quarter. ~~Each year, all unpaid~~Unpaid EAs are ~~charged off~~charged-off by June 30^th~~, and~~ of each ~~quarter thereafter, any credits to~~year, with EAs collected during the ~~Provision for EAs matches the recovery~~second half of each year recorded as recoveries of previously charged-off ~~accounts.~~loans, unless such collections are subject to guarantor reimbursement under a loan-loss guaranty.

~~See additional detail regarding the Bank’s agreement to sell TRS under Footnote 17 “Discontinued Operations” in this section of the filing.~~

Information regarding EAs follows:


	Three Months Ended				Nine Months Ended						Three Months Ended				Nine Months Ended
	September 30,				September 30,						September 30,				September 30,
(dollars in thousands)	2021		2020		2021			2020			2022		2021		2022			2021

Easy Advances originated	$	—	$	—	$	250,045		$	387,762		$	—	$	—	$	311,207		$	250,045
Net (credit) charge to the Provision for Easy Advances		(2,242)		(4,294)		7,984			15,239
Net charge (credit) to the Provision for Easy Advances												(1,296)		(2,242)		7,583			7,984
Provision to total Easy Advances originated		NA		NA		3.19	%		3.93	%		NA		NA		2.44	%		3.19	%
Easy Advances net charge-offs (recoveries)	$	(2,242)	$	(4,294)	$	7,984		$	15,239		$	(1,296)	$	(2,242)	$	7,583		$	7,984
Easy Advances net charge-offs to total Easy Advances originated		NA		NA		3.19	%		3.93	%
Easy Advances net charge-offs (recoveries) to total Easy Advances originated												NA		NA		2.44	%		3.19	%

5. DEPOSITS

The composition of the deposit portfolio follows:


(in thousands)	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021

Core Bank:
Demand	$	1,342,395	$	1,217,263	$	1,398,760	$	1,381,522
Money market accounts		793,236		712,824		764,523		789,876
Savings		295,663		236,335		331,300		311,624
Individual retirement accounts (1)		46,196		47,889		40,658		43,724
Time deposits, $250 and over (1)		84,340		83,448		61,579		81,050
Other certificates of deposit (1)		163,345		199,214		135,836		154,174
Reciprocal money market and time deposits (1)		101,109		314,109		44,534		77,950
Brokered deposits (1)		30,001		25,010
Total Core Bank interest-bearing deposits		2,856,285		2,836,092		2,777,190		2,839,920
Total Core Bank noninterest-bearing deposits		1,691,413		1,503,662		1,581,663		1,579,173
Total Core Bank deposits		4,547,698		4,339,754		4,358,853		4,419,093

Republic Processing Group:
Money market accounts		5,114		6,673		9,195		9,717
Total RPG interest-bearing deposits		5,114		6,673		9,195		9,717

Brokered prepaid card deposits		323,250		257,856		332,655		320,907
Other noninterest-bearing deposits		38,822		110,021		99,805		90,701
Total RPG noninterest-bearing deposits		362,072		367,877		432,460		411,608
Total RPG deposits		367,186		374,550		441,655		421,325

Deposits of discontinued operations (2)		33,063		18,877

Total deposits	$	4,947,947	$	4,733,181	$	4,800,508	$	4,840,418

(1)	Includes time deposit

~~(2)~~

~~See additional detail regarding the Bank’s agreement to sell TRS under Footnote 17 “Discontinued Operations” in this section of the filing~~.

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6. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND OTHER SHORT-TERM BORROWINGS

Securities sold under agreements to repurchase consist 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 comparable to deposits in their transactional nature, these overnight liabilities to clients are in the form of repurchase agreements. Repurchase agreements collateralized by securities are treated as financings; accordingly, the securities involved with the agreements are recorded as assets and are held by a safekeeping agent and the obligations to repurchase the securities are reflected as liabilities. Should the fair value of currently pledged securities fall below the associated repurchase agreements, the Bank would be required to pledge additional securities. To mitigate the risk of under collateralization, the Bank typically pledges at least 2two percent more in securities than the associated repurchase agreements. All such securities are under the Bank’s control.

As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, all securities sold under agreements to repurchase had overnight maturities. Additional information regarding securities sold under agreements to repurchase and other short-term borrowings follows:


(dollars in thousands)	September 30, 2021			December 31, 2020			September 30, 2022			December 31, 2021

Outstanding balance at end of period	$	260,583		$	211,026		$	209,376		$	290,967
Weighted average interest rate at end of period		0.04	%		0.04	%		0.33	%		0.04	%

Fair value of securities pledged:
U.S. Treasury securities and U.S. Government agencies	$	114,308		$	60,059		$	230,798		$	108,813
Mortgage backed securities - residential		156,237			140,554			23,208			167,561
Collateralized mortgage obligations		23,457			29,656			—			33,441
Total securities pledged	$	294,002		$	230,269		$	254,006		$	309,815


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
(dollars in thousands)	2021			2020			2021			2020			2022			2021			2022			2021

Average outstanding balance during the period	$	242,867		$	213,010		$	201,992		$	199,556		$	220,149		$	242,867		$	271,276		$	201,992
Average interest rate during the period		0.03	%		0.04	%		0.02	%		0.11	%		0.17	%		0.03	%		0.08	%		0.02	%
Maximum outstanding at any month end during the period	$	307,358		$	195,229		$	307,358		$	195,229		$	209,376		$	307,358		$	303,315		$	307,358

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7. RIGHT-OF-USE ASSETS AND OPERATING LEASE LIABILITIES

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

As of September 30, ~~2021,~~2022, the Company was under 45 separate and distinct operating lease contracts to lease the land and/or buildings for 3637 of its offices, with 1412 such operating leases contracted with a related party of the Company. As of September 30, ~~2021,~~2022, payments on 2422 of the Company’s operating leases were considered variable because such payments were adjustable based on periodic changes in the Consumer Price Index.

The Company ~~executed 0~~recorded two new ~~operating~~third-party office leases, ~~during 2021. The Company~~ renewed ~~a related-party lease on~~ one of its ~~Louisville, Kentucky banking centers~~existing related-party leases, and extended six of its third-party leases during the ~~fourth quarter~~first nine months of ~~2020 that commenced in January 2021~~2022, with a related total right-of-use asset value of ~~$392,000~~$6~~. During the second quarter of 2021, the Company extended one third-party lease for an additional~~ ~~five years, with the extended term beginning during the third quarter of 2021 and valued at approximately $263,000. During the fourth quarter of 2021, the Company recorded an amendment~~ million connected to ~~one related-party lease to add leased space, with~~ this ~~amendment valued at approximately~~ ~~$819,000.~~2022 activity.

The following table presents information concerning the Company’s operating lease expense recorded as a noninterest expense within the “Occupancy” category for the three and nine months ended September 30, ~~2021~~2022 and ~~2020:~~2021:


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
(in thousands)	2021		2020		2021		2020		2022		2021		2022		2021

Operating lease expense:
Related Party:
Variable lease expense	$	1,224	$	1,235	$	3,662	$	3,706	$	1,101	$	1,224	$	3,635	$	3,662
Fixed lease expense		34		23		102		69		57		34		149		102
Third Party:
Variable lease expense		197		180		590		541		222		197		639		590
Fixed lease expense		337		371		1,021		1,109		346		337		1,040		1,021
Short-term lease expense		—		3		—		7
Total operating lease expense	$	1,792	$	1,812	$	5,375	$	5,432	$	1,726	$	1,792	$	5,463	$	5,375

Other information concerning operating leases:
Cash paid for amounts included in the measurement of operating lease liabilities	$	1,793	$	1,817	$	5,390	$	5,448	$	1,709	$	1,793	$	5,121	$	5,390
Cash paid for variable rent payments not included in measurement of operating lease liabilities										151		—		453		—
Short-term lease payments not included in the measurement of lease liabilities		—		3		—		7		—		—		—		—

The following table presents the weighted average remaining term and weighted average discount rate for the Company’s non-short-term operating leases as of September 30, ~~2021~~2022 and December 31, ~~2020:~~2021:


(dollars in thousands)	September 30, 2021			December 31, 2020
							September 30, 2022			December 31, 2021

Weighted average remaining term in years		7.76			8.37			8.28			7.57
Weighted average discount rate		3.08	%		3.10	%		2.66	%		3.05	%

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The following table presents a maturity schedule of the Company’s operating lease liabilities based on undiscounted cash flows, and a reconciliation of those undiscounted cash flows to the operating lease liabilities recognized on the Company’s balance sheet as of September 30, ~~2021:~~2022:


Year (in thousands)	Related Party		Third Party		Total
Year (dollars in thousands)							Related Party		Third Party		Total

2021	$	1,160	$	636	$	1,796
2022		4,639		2,492		7,131	$	1,062	$	664	$	1,726
2023		4,639		2,049		6,688		4,274		2,522		6,796
2024		4,512		1,517		6,029		4,189		2,143		6,332
2025		4,344		979		5,323		4,053		1,609		5,662
2026								4,124		1,310		5,434
Thereafter		15,800		2,729		18,529		16,375		4,593		20,968
Total undiscounted cash flows	$	35,094	$	10,402	$	45,496	$	34,077	$	12,841	$	46,918
Discount applied to cash flows		(4,065)		(1,280)		(5,345)		(3,216)		(1,593)		(4,809)
Total discounted cash flows reported as operating lease liabilities	$	31,029	$	9,122	$	40,151	$	30,861	$	11,248	$	42,109

8. FEDERAL HOME LOAN BANK ADVANCES

FHLB advances were as follows:


(in thousands)	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021

Overnight advances	$	25,000	$	225,000	$	—	$	25,000
Fixed interest rate advances		—		10,000		20,000		—
Total FHLB advances	$	25,000	$	235,000	$	20,000	$	25,000

Each FHLB advance is payable at its maturity date, with a prepayment penalty for fixed rate advances that are paid off earlier than maturity. FHLB advances are collateralized by a blanket pledge of eligible real estate loans. As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, Republic had available borrowing capacity of ~~$898~~$940 million and ~~$683~~$900 million, respectively, from the FHLB. In addition to its borrowing capacity with the FHLB, Republic also had unsecured lines of credit totaling $125 million available through various other financial institutions as of September 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

Aggregate future principal payments on FHLB advances based on contractual maturity and the weighted average cost of such advances are detailed below:


			Weighted				Weighted
			Average				Average
Year (dollars in thousands)	Principal		Rate		Principal		Rate

2021 (Overnight)	$	25,000	0.14	%
2021 (Term)		—	—
2022		—	—		$	—	—	%
2023		—	—			—	—
2024		—	—			—	—
2025		—	—			—	—
Thereafter		—	—
2026						—	—
2027						20,000	1.89
Total	$	25,000	0.14	%	$	20,000	1.89	%

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Due to their nature, the Bank considers average balance information more meaningful than period-end balances for its overnight borrowings from the FHLB. Information regarding overnight FHLB advances follows:


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
(dollars in thousands)	2021			2020			2021			2020			2022			2021			2022			2021

Average outstanding balance during the period	$	25,000		$	272		$	30,037		$	29,106		$	—		$	25,000		$	5,641		$	30,037
Average interest rate during the period		0.10	%		0.17	%		0.15	%		0.92	%		—	%		0.10	%		0.15	%		0.15	%
Maximum outstanding at any month end during the period	$	25,000		$	25,000		$	25,000		$	250,000		$	—		$	25,000		$	25,000		$	25,000

The following table illustrates real estate loans pledged to collateralize advances and letters of credit with the FHLB:


(in thousands)	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021

First lien, single family residential real estate	$	1,034,959	$	1,048,236	$	1,070,626	$	1,041,461
Home equity lines of credit		191,443		208,944		207,824		186,396

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9. OFF BALANCE SHEET RISKS, COMMITMENTS AND CONTINGENT LIABILITIES

~~COVID-19~~COVID Pandemic

~~COVID-19~~COVID was declared a pandemic by the World Health Organization on March 11, 2020. Since March 2020, ~~to slow the spread of COVID-19,~~ jurisdictions within and outside the U.S. have imposed economic and social restrictions on the population, in general, and non-essential businesses ~~in particular.~~to slow the spread of COVID. These restrictions, in combination with the public’s response to them, have disrupted supply chains and effectively suspended or curtailed economic activity for many industries across the U.S.~~, with industries in~~ and the world. Industries within the Company’s market footprint ~~impacted.~~have been impacted by these supply chain disruptions as well as the corresponding inflationary pressures driven by them in combination with on-going governmental stimulus programs.

~~While vaccines for the virus began rolling out during 2021, the~~The future potential financial impact of the ~~COVID-19~~COVID pandemic is still unknown at this time. This pandemic and the public’s response to it could cause the Company to experience a material adverse impact on its business operations, asset valuations, financial condition, and results of operations. Material adverse impacts may include all or a combination of valuation impairments on the Company’s intangible assets, investments, loans, MSRs, deferred tax assets, or counterparty risk derivatives.

Commitments to Extend Credit

The Company, in the normal course of business, is party to financial instruments with off balance sheet risk. These financial instruments primarily include commitments to extend credit and standby letters of credit. The contract or notional amounts of these instruments reflect the potential future obligations of the Company pursuant to those financial instruments. Creditworthiness for all instruments is evaluated on a case-by-case basis in accordance with the Company’s credit policies. Collateral from the client may be required based on the Company’s credit evaluation of the client and may include business assets of commercial clients, as well as personal property and real estate of individual clients or guarantors.

The Company also extends binding commitments to clients and prospective clients. Such commitments assure a borrower of financing for a specified period of time at a specified rate. The risk to the Company under such loan commitments is limited by the terms of the contracts. For example, the Company may not be obligated to advance funds if the client’s financial condition deteriorates or if the client fails to meet specific covenants.

An approved but unfunded loan commitment represents a potential credit risk and a liquidity risk, since the Company’s client(s) may demand immediate cash that would require funding. In addition, unfunded loan commitments represent interest rate risk as market interest rates may rise above the rate committed to the Company’s client. Since a portion of these loan commitments normally expire unused, the total amount of outstanding commitments at any point in time may not require future funding.

The following table presents the Company’s commitments, exclusive of Mortgage Banking loan commitments, for each period ended:


(in thousands)	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021

Unused warehouse lines of credit	$	658,318	$	456,004	$	739,723	$	565,950
Unused home equity lines of credit		350,198		353,322		395,240		348,681
Unused loan commitments - other		787,660		775,128		857,333		828,229
Standby letters of credit		14,130		10,949		10,373		11,305
FHLB letter of credit		643		643		643		643
Total commitments	$	1,810,949	$	1,596,046	$	2,003,312	$	1,754,808

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a client to a third-party. The terms and risk of loss involved in issuing standby letters of credit are similar to those involved in issuing loan commitments and extending credit. In addition to credit risk, the Company also has liquidity risk associated with standby letters of credit because funding for these obligations could be required immediately. The Company does not deem this risk to be material.

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The following tables present a rollforward of the ACLC for the three and nine months ended September 30, ~~2021~~2022 and ~~2020:~~2021:


	ACLC Rollforward																				ACLC Rollforward
	Three Months Ended																				Three Months Ended
	2021										2020										2022										2021
	Beginning				Charge-				Ending		Beginning				Charge-				Ending		Beginning				Charge-				Ending		Beginning				Charge-				Ending
(in thousands)	Balance		Provision		offs		Recoveries		Balance		Balance		Provision		offs		Recoveries		Balance		Balance		Provision		offs		Recoveries		Balance		Balance		Provision		offs		Recoveries		Balance

Loan Commitments
Unused warehouse lines of credit	$	140	$	—	$	—	$	—	$	140	$	58	$	(6)	$	—	$	—	$	52	$	162	$	28	$	—	$	—	$	190	$	140	$	—	$	—	$	—	$	140
Unused home equity lines of credit		213		29		—		—		242		124		22		—		—		146		277		20		—		—		297		213		29		—		—		242
Unused loan commitments - other		581		(26)		—		—		555		454		271		—		—		725		661		32		—		—		693		581		(26)		—		—		555

Total	$	934	$	3	$	—	$	—	$	937	$	636	$	287	$	—	$	—	$	923	$	1,100	$	80	$	—	$	—	$	1,180	$	934	$	3	$	—	$	—	$	937


	ACLC Rollforward
	Nine Months Ended September 30,
	2022										2021
	Beginning				Charge-				Ending		Beginning				Charge-				Ending
(in thousands)	Balance		Provision		offs		Recoveries		Balance		Balance		Provision		offs		Recoveries		Balance

Loan Commitments
Unused warehouse lines of credit	$	154	$	36	$	—	$	—	$	190	$	79	$	61	$	—	$	—	$	140
Unused home equity lines of credit		247		50		—		—		297		173		69		—		—		242
Unused loan commitments - other		651		42		—		—		693		737		(182)		—		—		555

Total	$	1,052	$	128	$	—	$	—	$	1,180	$	989	$	(52)	$	—	$	—	$	937

The Company increased its ACLC during the three ~~months ended September 30, 2021 based on an increase in the expected usage for its home equity lines of credit.~~

ACLC Rollforward

Nine Months Ended

2021

2020

Beginning

Charge-

Ending

Beginning

ASC 326

Charge-

Ending
(in thousands)

Balance

Provision

offs

Recoveries

Balance

Balance

Adoption

Provision

offs

Recoveries

Balance

Loan Commitments

Unused warehouse lines of credit

$
79

$
61

$
—

$
—

$
140

$
—

$
55

$
(3)

$
—

$
—

$
52
Unused home equity lines of credit

173

69

—

—

242

—

89

57

—

—

146
Unused loan commitments - other

737

(182)

—

—

555

—

312

413

—

—

725

Total

$
989

$
(52)

$
—

$
—

$
937

$
—

$
456

$
467

$
—

$
—

$
923

~~The Company decreased its ACLC during the~~and nine months ended September 30, ~~2021~~2022 based primarily on ~~a decrease~~an increase in ~~the expected loss rate for its~~total unused commitments.

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10. FAIR VALUE

Fair value represents the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Bank used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

Available-for-sale debt securities: Except for the Bank’s U.S. Treasury securities, its private label mortgage-backed security, and its TRUP investment, the fair value of AFS debt securities is typically determined by matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

The Bank’s U.S. Treasury securities are based on quoted market prices (Level 1 inputs) and considered highly liquid.

The Bank’s private label mortgage-backed security remains illiquid, and as such, the Bank classifies this security as a Level 3 security in accordance with ASC Topic 820, Fair Value Measurement. Based on this determination, the Bank utilized an income valuation model (present value model) approach in determining the fair value of this security.

See in this section of the filing under Footnote 2 “Investment Securities” for additional discussion regarding the Bank’s private label mortgage-backed security.

For its TRUP investment, the Company considered the most recent bid price for the same instrument to approximate market value as of September 30, ~~2021.~~2022. The Company’s TRUP investment is considered highly illiquid and also valued using Level 3 inputs, as the most recent bid price for this instrument is not always considered generally observable.

Equity securities with readily determinable fair value: Quoted market prices in an active market are available for the Bank’s Community Reinvestment Act mutual fund investment and fall within Level 1 of the fair value hierarchy.

The fair value of the Company’s Freddie Mac preferred stock is determined by matrix pricing, as described above (Level 2 inputs).

Mortgage loans held for sale, at fair value: The fair value of mortgage loans held for sale is determined using quoted secondary market prices. Mortgage loans held for sale are classified as Level 2 in the fair value hierarchy.

Consumer loans held for sale, at fair value: In December 2019, the Bank began offering RCS installment loans with terms ranging from 12 to 60 months to borrowers in multiple states. Balances originated under this RCS installment loan program are carried as “held for sale” on the Bank’s balance sheet, with the intent to sell within sixteen days following the Bank’s origination of the loans. Loans originated under this RCS installment loan program are carried at fair value under a fair-value option, with the portfolio marked to market monthly. Fair value for these loans is based on contractual sales terms, Level 3 inputs.

Consumer loans held for investment, at fair value: The Bank held an immaterial amount of consumer loans at fair value through a consumer loan program the Company is currently unwinding. The fair value of these loans was based on the discounted cash flows of the underlying loans, Level 3 inputs. Further disclosure of these loans is considered immaterial and thus omitted.

45

Table of Contents

Mortgage Banking derivatives: Mortgage Banking derivatives used in the ordinary course of business primarily consist of mandatory forward sales contracts (“forward contracts”) and interest rate lock loan commitments. The fair value of the Bank’s derivative instruments is primarily measured by obtaining pricing from broker-dealers recognized to be market participants. The pricing is derived from market observable inputs that can generally be verified and do not typically involve significant judgment by the Bank. Forward contracts and rate lock loan commitments are classified as Level 2 in 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.

Collateral-dependent loans: Collateral-dependent loans generally reflect partial charge-downs to their respective fair value, which is commonly based on recent real estate appraisals or BPOs. These appraisals or BPOs may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the process by the independent experts to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. Collateral-dependent loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Other Real Estate Owned: Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals or BPOs. These appraisals or BPOs may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the process by the independent experts to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

~~Mortgage servicing rights:~~ On at least a quarterly basis, MSRs are evaluated for impairment based upon the fair value of the MSRs as compared to carrying amount. If the carrying amount of an individual tranche exceeds fair value, impairment is recorded, and the respective individual tranche is carried at fair value. If the carrying amount of an individual tranche does not exceed fair value, impairment is reversed if previously recognized and the carrying value of the individual tranche is based on the amortization method. The valuation model utilizes assumptions that market participants would use in estimating future net servicing income and can generally be validated against available market data (Level 2).

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Table of Contents

Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities for which the Bank has elected the fair value option, are summarized below. Information as of September 30, ~~2021~~2022 is presented net of any applicable ACL.


	Fair Value Measurements at								Fair Value Measurements at
	September 30, 2021 Using:								September 30, 2022 Using:
	Quoted Prices in		Significant						Quoted Prices in		Significant
	Active Markets		Other		Significant				Active Markets		Other		Significant
	for Identical		Observable		Unobservable		Total		for Identical		Observable		Unobservable		Total
	Assets		Inputs		Inputs		Fair		Assets		Inputs		Inputs		Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Value		(Level 1)		(Level 2)		(Level 3)		Value
Financial assets:
Available-for-sale debt securities:
U.S. Treasury securities and U.S. Government agencies	$	—	$	234,845	$	—	$	234,845	$	203,013	$	207,422	$	—	$	410,435
Private label mortgage-backed security		—		—		2,780		2,780		—		—		2,284		2,284
Mortgage-backed securities - residential		—		209,805		—		209,805		—		180,404		—		180,404
Collateralized mortgage obligations		—		34,519		—		34,519		—		22,916		—		22,916
Corporate bonds		—		10,081		—		10,081		—		9,998		—		9,998
Trust preferred security		—		—		3,850		3,850		—		—		3,910		3,910
Total available-for-sale debt securities	$	—	$	489,250	$	6,630	$	495,880	$	203,013	$	420,740	$	6,194	$	629,947

Equity securities with readily determinable fair value:
Freddie Mac preferred stock	$	—	$	102	$	—	$	102	$	—	$	175	$	—	$	175
Community Reinvestment Act mutual fund		2,476		—		—		2,476
Total equity securities with readily determinable fair value	$	2,476	$	102	$	—	$	2,578	$	—	$	175	$	—	$	175

Mortgage loans held for sale	$	—	$	25,791	$	—	$	25,791	$	—	$	2,912	$	—	$	2,912
Consumer loans held for sale		—		—		10,779		10,779		—		—		8,796		8,796
Consumer loans held for investment		—		—		254		254		—		—		11		11
Rate lock loan commitments		—		1,943		—		1,943
Mandatory forward contracts		—		722		—		722		—		639		—		639
Interest rate swap agreements		—		6,707		—		6,707		—		7,121		—		7,121

Financial liabilities:
Rate lock loan commitments									$	—	$	175	$	—	$	175
Interest rate swap agreements	$	—	$	6,707	$	—	$	6,707		—		7,121		—		7,121

47

Table of Contents


	Fair Value Measurements at								Fair Value Measurements at
	December 31, 2020 Using:								December 31, 2021 Using:
	Quoted Prices in		Significant						Quoted Prices in		Significant
	Active Markets		Other		Significant				Active Markets		Other		Significant
	for Identical		Observable		Unobservable		Total		for Identical		Observable		Unobservable		Total
	Assets		Inputs		Inputs		Fair		Assets		Inputs		Inputs		Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Value		(Level 1)		(Level 2)		(Level 3)		Value
Financial assets:
Available-for-sale debt securities:
U.S. Treasury securities and U.S. Government agencies	$	—	$	246,909	$	—	$	246,909	$	70,112	$	167,347	$	—	$	237,459
Private label mortgage-backed security		—		—		2,957		2,957		—		—		2,731		2,731
Mortgage-backed securities - residential		—		211,202		—		211,202		—		210,749		—		210,749
Collateralized mortgage obligations		—		48,952		—		48,952		—		30,294		—		30,294
Corporate bonds		—		10,043		—		10,043		—		10,046		—		10,046
Trust preferred security		—		—		3,800		3,800		—		—		3,847		3,847
Total available-for-sale debt securities	$	—	$	517,106	$	6,757	$	523,863	$	70,112	$	418,436	$	6,578	$	495,126

Equity securities with readily determinable fair value:
Freddie Mac preferred stock	$	—	$	560	$	—	$	560	$	—	$	170	$	—	$	170
Community Reinvestment Act mutual fund		2,523		—		—		2,523		2,450		—		—		2,450
Total equity securities with readily determinable fair value	$	2,523	$	560	$	—	$	3,083	$	2,450	$	170	$	—	$	2,620

Mortgage loans held for sale	$	—	$	46,867	$	—	$	46,867	$	—	$	29,393	$	—	$	29,393
Consumer loans held for sale		—		—		3,298		3,298		—		—		19,747		19,747
Consumer loans held for investment		—		—		497		497		—		—		170		170
Rate lock loan commitments		—		4,540		—		4,540		—		1,404		—		1,404
Mandatory forward contracts										—		66		—		66
Interest rate swap agreements		—		12,545		—		12,545		—		5,786		—		5,786

Financial liabilities:
Mandatory forward contracts	$	—	$	976	$	—	$	976
Interest rate swap agreements		—		12,545		—		12,545		—		5,786		—		5,786

All transfers between levels are generally recognized at the end of each quarter. There were 0no transfers into or out of Level 1, 2, or 3 assets during the three months and nine months ended September 30, ~~2021~~2022 and ~~2020.~~2021.

Private Label Mortgage-Backed Security

The following table presents a reconciliation of the Bank’s private label mortgage-backed security measured at fair value on a recurring basis using significant unobservable inputs (Level 3):


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
(in thousands)	2021		2020		2021		2020		2022		2021		2022		2021

Balance, beginning of period	$	2,824	$	3,023	$	2,957	$	3,495	$	2,478	$	2,824	$	2,731	$	2,957
Total gains or losses included in earnings:
Net change in unrealized gain		13		60		62		(46)		1		13		10		62
Principal paydowns		(57)		(79)		(239)		(445)		(195)		(57)		(457)		(239)
Balance, end of period	$	2,780	$	3,004	$	2,780	$	3,004	$	2,284	$	2,780	$	2,284	$	2,780

The fair value of the Bank’s single private label mortgage-backed security is supported by analysis prepared by an independent third party. The third party’s approach to determining fair value involved several steps: 1) detailed collateral analysis of the underlying mortgages, including consideration of geographic location, original loan-to-value, and the weighted average FICO score of the borrowers; 2) collateral performance projections for each pool of mortgages underlying the security (probability of default, severity of default, and prepayment probabilities) and 3) discounted cash flow modeling.

The significant unobservable inputs in the fair value measurement of the Bank’s single private label mortgage-backed security are prepayment rates, probability of default, and loss severity in the event of default. Significant fluctuations in any of those inputs in isolation would result in a significantly different fair value measurement.

48

Table of Contents

Quantitative information about recurring Level 3 fair value measurement inputs for the Bank’s single private label mortgage-backed security follows:

Fair

Valuation

Fair

Valuation

September 30, 2021 (dollars in thousands)

Value

Technique

Unobservable Inputs

Range

September 30, 2022 (dollars in thousands)

Value

Technique

Unobservable Inputs

Range

Private label mortgage-backed security

$

2,780

Discounted cash flow

(1) Constant prepayment rate

4.5% - 18.0%

$

2,284

Discounted cash flow

(1) Constant prepayment rate

4.5% - 4.7%

(2) Probability of default

1.8% - 9.3%

(2) Probability of default

1.8% - 9.3%

(3) Loss severity

50% - 75%

(3) Loss severity

25% - 35%

Fair

Valuation

Fair

Valuation

December 31, 2020 (dollars in thousands)

Value

Technique

Unobservable Inputs

Range

December 31, 2021 (dollars in thousands)

Value

Technique

Unobservable Inputs

Range

Private label mortgage-backed security

$

2,957

Discounted cash flow

(1) Constant prepayment rate

4.5% - 18.0%

$

2,731

Discounted cash flow

(1) Constant prepayment rate

4.5% - 5.7%

(2) Probability of default

1.8% - 9.0%

(2) Probability of default

1.8% - 9.3%

(3) Loss severity

50% - 75%

(3) Loss severity

50% - 75%

Trust Preferred Security

The following table presents a reconciliation of the Company’s TRUP measured at fair value on a recurring basis using significant unobservable inputs (Level 3):


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
(in thousands)	2021		2020		2021		2020		2022		2021		2022		2021

Balance, beginning of period	$	3,700	$	3,500	$	3,800	$	4,000	$	3,824	$	3,700	$	3,847	$	3,800
Total gains or losses included in earnings:
Discount accretion		14		21		40		43		14		14		42		40
Net change in unrealized gain		136		279		10		(243)		72		136		21		10
Balance, end of period	$	3,850	$	3,800	$	3,850	$	3,800	$	3,910	$	3,850	$	3,910	$	3,850

The fair value of the Company’s TRUP investment is based on the most recent bid price for this instrument, as provided by a third-party broker.

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Table of Contents

~~Mortgage~~Collateral-Dependent Loans ~~Held for Sale~~

The Bank has elected the fair value option for mortgage loans held for sale. These loans are intended for sale and the Bank believes that the fair value is the best indicator of the resolution of these loans. Interest income is recorded based on the contractual terms of the loans and in accordance with Bank policy for such instruments. NaN of these loans were past due 90-days-or-more or on nonaccrual as of September 30, 2021 and December 31, 2020.

~~The aggregate fair value, contractual balance, and unrealized gain were as follows:~~

(in thousands)

September 30, 2021

December 31, 2020

Aggregate fair value

$
25,791

$
46,867

Contractual balance

25,232

44,781

Unrealized gain

559

2,086

The total amount of gains and losses from changes in fair value included in earnings for the three and nine months ended September 30, 2021 and 2020 for mortgage loans held for sale are presented in the following table:

Three Months Ended

Nine Months Ended


September 30,

September 30,

(in thousands)

2021

2020

2021

2020

Interest income

$
253

$
300

$
802

$
932

Change in fair value

(373)

126

(1,527)

1,382

Total included in earnings

$
(120)

$
426

$
(725)

$
2,314

~~Consumer Loans Held for Sale~~

RCS carries loans originated through its installment loan program at fair value. Interest income is recorded based on the contractual terms of the loan and in accordance with Bank policy for such instruments. NaN ~~of these loans were past due 90-days-or-more or on nonaccrual as of September 30, 2021 and December 31, 2020.~~

The significant unobservable inputs in the fair value measurement of the Bank’s short-term installment loans are the net contractual premiums and level of loans sold at a discount price. Significant fluctuations in any of those inputs in isolation would result in a significantly lower/higher fair value measurement.

The following table presents ~~quantitative information about recurring Level 3 fair value measurement inputs for installment~~the amortized cost basis of collateral-dependent loans by class of loans:


	Fair		Valuation			September 30, 2022				December 31, 2021
September 30, 2021 (dollars in thousands)	Value		Technique	Unobservable Inputs	Rate

Consumer loans held for sale	$	10,779	Contract Terms	(1) Net Premium	1.4%
						Secured		Secured		Secured		Secured
				(2) Discounted Sales	5.00%	by Real		by Personal		by Real		by Personal
(in thousands)						Estate		Property		Estate		Property

Traditional Banking:
Residential real estate:
Owner occupied						$	17,702	$	—	$	14,798	$	—
Nonowner occupied							125		—		95		—
Commercial real estate							848		—		6,736		—
Construction & land development							—		—		—		—
Commercial & industrial							—		188		—		192
Paycheck Protection Program							—		—		—		—
Lease financing receivables							—		—		—		—
Aircraft							—		—		—		—
Home equity							1,505		—		1,976		—
Consumer							—		258		—		274
Total Traditional Banking						$	20,180	$	446	$	23,605	$	466

Fair

Valuation




December 31, 2020 (dollars in thousands)

Value

Technique

Unobservable Inputs

Rate

Consumer loans held for sale

$
3,298

Contract Terms

(1) Net Premium

1.4%

(2) Discounted Sales

5.00%

Collateral-dependent loans are generally secured by real estate or personal property. If there is insufficient collateral value to secure the Company’s recorded investment in these loans, they are charged down to collateral value less estimated selling costs, when selling costs are applicable. Selling costs range from 10% to 13%, with those percentages based on annual studies performed by the Company.

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Table of Contents

Troubled Debt Restructurings

A TDR is a situation where, due to a borrower’s financial difficulties, the Bank grants a concession to the borrower that the Bank would not otherwise have considered. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of their debt in the foreseeable future without the modification. This evaluation is performed in accordance with the Bank’s internal underwriting policy.

The ~~aggregate fair value, contractual balance,~~majority of the Bank’s commercial-related and ~~unrealized gain~~construction TDRs involve a restructuring of financing terms, such as a reduction in the payment amount to require only interest and escrow (if required) and/or extending the maturity date of the debt. The substantial majority of the Bank’s residential real estate TDR concessions involve reducing the client’s loan payment through a rate reduction for a set period based on ~~consumer~~the borrower’s ability to service the modified loan payment. Retail loans ~~held~~may also be classified as TDRs due to legal modifications, such as bankruptcies.

Nonaccrual loans modified as TDRs typically remain on nonaccrual status and continue to be reported as nonperforming loans for ~~sale, at fair value,~~a minimum of six consecutive months. Accruing loans modified as TDRs are evaluated for nonaccrual status based on a current evaluation of the borrower’s financial condition and ability and willingness to service the modified debt. As of September 30, 2022 and December 31, 2021, $3 million and $6 million of TDRs were ason nonaccrual status.

Detail of TDRs differentiated by loan type and accrual status follows:

(in thousands)

September 30, 2021

December 31, 2020

Aggregate fair value

$
10,779

$
3,298

Contractual balance

10,703

3,284

Unrealized gain

76

14

~~The total amount of net gains from changes in fair value included in earnings for consumer loans held for sale, at fair value, are presented in the following table:~~


	Three Months Ended				Nine Months Ended				Troubled Debt			Troubled Debt			Total
	September 30,				September 30,				Restructurings on			Restructurings on			Troubled Debt
(in thousands)	2021		2020		2021		2020
									Nonaccrual Status			Accrual Status			Restructurings
Interest income	$	2,102	$	42	$	4,070	$	1,563
Change in fair value		(16)		2		62		(2)
Total included in earnings	$	2,086	$	44	$	4,132	$	1,561
									Number of	Recorded		Number of	Recorded		Number of	Recorded
September 30, 2022 (dollars in thousands)									Loans	Investment		Loans	Investment		Loans	Investment
Residential real estate									71	$	3,356	77	$	7,058	148	$	10,414
Commercial real estate									—		—	1		865	1		865
Commercial & industrial									—		—	1		1	1		1
Consumer									1		10	1,887		418	1,888		428
Total troubled debt restructurings									72	$	3,366	1,966	$	8,342	2,038	$	11,708


	Troubled Debt			Troubled Debt			Total
	Restructurings on			Restructurings on			Troubled Debt
	Nonaccrual Status			Accrual Status			Restructurings
	Number of	Recorded		Number of	Recorded		Number of	Recorded
December 31, 2021 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment
Residential real estate	63	$	3,179	89	$	7,856	152	$	11,035
Commercial real estate	2		2,575	2		1,239	4		3,814
Commercial & industrial	2		45	1		1	3		46
Consumer	1		12	2,269		479	2,270		491
Total troubled debt restructurings	68	$	5,811	2,361	$	9,575	2,429	$	15,386

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Table of Contents

~~Assets measured at fair value on~~The Bank considers a ~~non-recurring basis~~ ~~are summarized below:~~TDR to be performing to its modified terms if the loan is in accrual status and not past due 30-days-or-more as of the reporting date. A summary of the categories of TDR loan modifications outstanding and respective performance under modified terms as of September 30, 2022 and December 31, 2021 follows:

Fair Value Measurements at

September 30, 2021 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

$
—

$
—

$
1,733

$
1,733

Commercial real estate

—

—

3,568

3,568

Commercial & industrial

—

—

60

60

Home equity

—

—

314

314

Total collateral-dependent loans*

$
—

$
—

$
5,675

$
5,675

Other real estate owned:

Commercial real estate

$
—

$
—

$
1,845

$
1,845

Total other real estate owned

$
—

$
—

$
1,845

$
1,845


	Troubled Debt			Troubled Debt
	Restructurings			Restructurings			Total
	Performing to			Not Performing to			Troubled Debt
	Modified Terms			Modified Terms			Restructurings
	Number of	Recorded		Number of	Recorded		Number of	Recorded
September 30, 2022 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment

Residential real estate loans (including home equity loans):
Rate reduction	73	$	6,632	2	$	119	75	$	6,751
Principal deferral	6		552	1		157	7		709
Legal modification	57		2,639	9		315	66		2,954
Total residential TDRs	136		9,823	12		591	148		10,414

Commercial related and construction/land development loans:
Rate reduction	1		865	—		—	1		865
Principal deferral	1		1	—		—	1		1
Total commercial TDRs	2		866	—		—	2		866

Consumer loans:
Principal deferral	1,885		414	—		—	1,885		414
Legal modification	3		14	—		—	3		14
Total consumer TDRs	1,888		428	—		—	1,888		428

Total troubled debt restructurings	2,026	$	11,117	12	$	591	2,038	$	11,708

Fair Value Measurements at

December 31, 2020 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

$
—

$
—

$
3,860

$
3,860
Commercial real estate

—

—

4,107

4,107
Home equity

—

—

395

395
Total collateral-dependent loans*

$
—

$
—

$
8,362

$
8,362

Other real estate owned:

Residential real estate

$
—

$
—

$
2,003

$
2,003
Total other real estate owned

$
—

$
—

$
2,003

$
2,003

Mortgage servicing rights

$
—

$
3,233

$
—

$
3,233

*


Troubled Debt

Troubled Debt




Restructurings

Restructurings

Total

Performing to

Not Performing to

Troubled Debt

Modified Terms

Modified Terms

Restructurings


Number of

Recorded

Number of

Recorded

Number of

Recorded

December 31, 2021 (dollars in thousands)

Loans

Investment

Loans

Investment

Loans

Investment

Residential real estate loans (including home equity loans):

Interest only payments

—

—

—

—

—

$
—

Rate reduction

82

$
7,461

4

$
303

86

7,764

Principal deferral

7

729

—

—

7

729

Legal modification

48

2,100

11

442

59

2,542

Total residential TDRs

137

10,290

15

745

152

11,035



Commercial related and construction/land development loans:

Interest only payments

—

—

—

—

—

—

Rate reduction

1

919

—

—

1

919

Principal deferral

5

477

1

2,464

6

2,941

Total commercial TDRs

6

1,396

1

2,464

7

3,860

Consumer loans:

Principal deferral

2,266

470

—

—

2,266

470

Legal modification

4

21

—

—

4

21

Total consumer TDRs

2,270

491

—

—

2,270

491

Total troubled debt restructurings

2,413

$
12,177

16

$
3,209

2,429

$
15,386

As of September 30, 2022 and December 31, 2021, 95% and 79% of the Bank’s TDR balances were performing according to their modified terms. The Bank had provided $804,000 and $2 million of specific ACLL allocations to clients whose loan terms have been modified in TDRs as of September 30, 2022 and December 31, 2021. The Bank had no commitments to lend any additional material amounts to its existing TDR relationships as of September 30, 2022 or December 31, 2021.

~~The difference between the carrying value and the fair value of collateral-dependent loans measured at fair value is reconciled in a subsequent table of this Footnote.~~

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A summary of the categories of TDR loan modifications by respective performance as of September 30, 2022 and 2021 that were modified during the three months ended September 30, 2022 and 2021 follows:


	Troubled Debt			Troubled Debt
	Restructurings			Restructurings			Total
	Performing to			Not Performing to			Troubled Debt
	Modified Terms			Modified Terms			Restructurings
	Number of	Recorded		Number of	Recorded		Number of	Recorded
September 30, 2022 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment

Residential real estate loans (including home equity loans):
Legal modification	10	$	443	1	$	47	11	$	490
Total residential TDRs	10		443	1		47	11		490

Consumer loans:
Principal deferral	332		62	—		—	332		62
Total consumer TDRs	332		62	—		—	332		62

Total troubled debt restructurings	342	$	505	1	$	47	343	$	552


	Troubled Debt			Troubled Debt
	Restructurings			Restructurings			Total
	Performing to			Not Performing to			Troubled Debt
	Modified Terms			Modified Terms			Restructurings
	Number of	Recorded		Number of	Recorded		Number of	Recorded
September 30, 2021 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment

Residential real estate loans (including home equity loans):
Legal modification	3	$	142	1	$	14	4	$	156
Total residential TDRs	3		142	1		14	4		156

Consumer loans:
Principal deferral	124		13	—		—	124		13
Total consumer TDRs	124		13	—		—	124		13

Total troubled debt restructurings	127	$	155	1	$	14	128	$	169

The tables above are inclusive of loans that were TDRs at the end of previous periods and were re-modified, e.g., a maturity date extension during the current period.

As of September 30, 2022 and 2021, 91% and 92% of the Bank’s TDR balances that occurred during the third quarters of 2022 and 2021 were performing according to their modified terms. The Bank provided approximately $30,000 and $6,000 in specific ACLL allocations to clients whose loan terms were modified in TDRs during the third quarters of 2022 and 2021.

There was no significant change between the pre and post modification loan balances for the three months ending September 30, 2022 and 2021.

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A summary of the categories of TDR loan modifications by respective performance as of September 30, 2022 and 2021 that were modified during the nine months ended September 30, 2022 and 2021 follows:


	Troubled Debt			Troubled Debt
	Restructurings			Restructurings			Total
	Performing to			Not Performing to			Troubled Debt
	Modified Terms			Modified Terms			Restructurings
	Number of	Recorded		Number of	Recorded		Number of	Recorded
September 30, 2022 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment

Residential real estate loans (including home equity loans):
Legal modification	17	$	954	1	$	47	18	$	1,001
Total residential TDRs	17		954	1		47	18		1,001

Consumer loans:
Principal deferral	605		109	—		—	605		109
Total consumer TDRs	605		109	—		—	605		109

Total troubled debt restructurings	622	$	1,063	1	$	47	623	$	1,110


	Troubled Debt			Troubled Debt
	Restructurings			Restructurings			Total
	Performing to			Not Performing to			Troubled Debt
	Modified Terms			Modified Terms			Restructurings
	Number of	Recorded		Number of	Recorded		Number of	Recorded
September 30, 2021 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment

Residential real estate loans (including home equity loans):
Principal deferral	—	$	—	1	$	160	1		160
Legal modification	6		378	5		288	11		666
Total residential TDRs	6		378	6		448	12		826

Consumer loans:
Principal deferral	556		72	—		—	556		72
Legal modification	1		3	—		—	1		3
Total consumer TDRs	557		75	—		—	557		75

Total troubled debt restructurings	563	$	453	6	$	448	569	$	901

The tables above are inclusive of loans that were TDRs at the end of previous periods and were re-modified, e.g., a maturity date extension during the current period.

As of September 30, 2022 and 2021, 96% and 50% of the Bank’s TDR balances that occurred during the first nine months of 2022 and 2021 were performing according to their modified terms. The Bank provided approximately $53,000 and $38,000 in specific ACLL allocations to clients whose loan terms were modified in TDRs during the first nine months of 2022 and 2021.

There was no significant change between the pre and post modification loan balances for the nine months ending September 30, 2022 and 2021.

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The following table presents loans by class modified as troubled debt restructurings within the previous 12 months of September 30, 2022 and 2021 and for which there was a payment default during the three and/or nine months ended September 30, 2022 and 2021.


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
		Recorded		Number of	Recorded		Number of	Recorded		Number of	Recorded
(dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment		Loans	Investment

Residential real estate:
Owner occupied	1	$	47	2	$	179	3	$	83	6	$	468
Commercial real estate	—		—	—		—	—		—	1		116
Home equity	—		—	1		14	1		10	1		14

Total	1	$	47	3	$	193	4	$	93	8	$	598

Foreclosures

The following table presents the carrying amount of foreclosed properties held as a result of the Bank obtaining physical possession of such properties:


(in thousands)	September 30, 2022		December 31, 2021

Commercial real estate	$	1,634	$	1,792

Total other real estate owned	$	1,634	$	1,792

The following table presents the recorded investment in consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process according to requirements of the applicable jurisdiction:


(in thousands)	September 30, 2022		December 31, 2021

Recorded investment in consumer residential real estate mortgage loans in the process of foreclosure	$	762	$	508

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Easy Advances

The Company’s TRS segment offered its EA product during the first two months of 2022 and 2021. During the first quarter of each year, the Company bases its estimated Provision for EAs on the current year’s EA delinquency information and prior years’ tax refund payment patterns subsequent to the first quarter. Unpaid EAs are charged-off by June 30^th of each year, with EAs collected during the second half of each year recorded as recoveries of previously charged-off loans, unless such collections are subject to guarantor reimbursement under a loan-loss guaranty.

Information regarding EAs follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(dollars in thousands)	2022		2021		2022			2021

Easy Advances originated	$	—	$	—	$	311,207		$	250,045
Net charge (credit) to the Provision for Easy Advances		(1,296)		(2,242)		7,583			7,984
Provision to total Easy Advances originated		NA		NA		2.44	%		3.19	%
Easy Advances net charge-offs (recoveries)	$	(1,296)	$	(2,242)	$	7,583		$	7,984
Easy Advances net charge-offs (recoveries) to total Easy Advances originated		NA		NA		2.44	%		3.19	%

5.DEPOSITS

The composition of the deposit portfolio follows:


(in thousands)	September 30, 2022		December 31, 2021

Core Bank:
Demand	$	1,398,760	$	1,381,522
Money market accounts		764,523		789,876
Savings		331,300		311,624
Individual retirement accounts (1)		40,658		43,724
Time deposits, $250 and over (1)		61,579		81,050
Other certificates of deposit (1)		135,836		154,174
Reciprocal money market and time deposits (1)		44,534		77,950
Total Core Bank interest-bearing deposits		2,777,190		2,839,920
Total Core Bank noninterest-bearing deposits		1,581,663		1,579,173
Total Core Bank deposits		4,358,853		4,419,093

Republic Processing Group:
Money market accounts		9,195		9,717
Total RPG interest-bearing deposits		9,195		9,717

Brokered prepaid card deposits		332,655		320,907
Other noninterest-bearing deposits		99,805		90,701
Total RPG noninterest-bearing deposits		432,460		411,608
Total RPG deposits		441,655		421,325

Total deposits	$	4,800,508	$	4,840,418

(1)	Includes time deposit.

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6. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE AND OTHER SHORT-TERM BORROWINGS

Securities sold under agreements to repurchase consist 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 comparable to deposits in their transactional nature, these overnight liabilities to clients are in the form of repurchase agreements. Repurchase agreements collateralized by securities are treated as financings; accordingly, the securities involved with the agreements are recorded as assets and are held by a safekeeping agent and the obligations to repurchase the securities are reflected as liabilities. Should the fair value of currently pledged securities fall below the associated repurchase agreements, the Bank would be required to pledge additional securities. To mitigate the risk of under collateralization, the Bank typically pledges at least two percent more in securities than the associated repurchase agreements. All such securities are under the Bank’s control.

As of September 30, 2022 and December 31, 2021, all securities sold under agreements to repurchase had overnight maturities. Additional information regarding securities sold under agreements to repurchase and other short-term borrowings follows:


(dollars in thousands)	September 30, 2022			December 31, 2021

Outstanding balance at end of period	$	209,376		$	290,967
Weighted average interest rate at end of period		0.33	%		0.04	%

Fair value of securities pledged:
U.S. Treasury securities and U.S. Government agencies	$	230,798		$	108,813
Mortgage backed securities - residential		23,208			167,561
Collateralized mortgage obligations		—			33,441
Total securities pledged	$	254,006		$	309,815


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(dollars in thousands)	2022			2021			2022			2021

Average outstanding balance during the period	$	220,149		$	242,867		$	271,276		$	201,992
Average interest rate during the period		0.17	%		0.03	%		0.08	%		0.02	%
Maximum outstanding at any month end during the period	$	209,376		$	307,358		$	303,315		$	307,358

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7.RIGHT-OF-USE ASSETS AND OPERATING LEASE LIABILITIES

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

As of September 30, 2022, the Company was under 45 separate and distinct operating lease contracts to lease the land and/or buildings for 37 of its offices, with 12 such operating leases contracted with a related party of the Company. As of September 30, 2022, payments on 22 of the Company’s operating leases were considered variable because such payments were adjustable based on periodic changes in the Consumer Price Index.

The Company recorded two new third-party office leases, renewed one of its existing related-party leases, and extended six of its third-party leases during the first nine months of 2022, with a related total right-of-use asset value of $6 million connected to this 2022 activity.

The following table presents information concerning the Company’s operating lease expense recorded as a noninterest expense within the “Occupancy” category for the three and nine months ended September 30, 2022 and 2021:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2022		2021		2022		2021

Operating lease expense:
Related Party:
Variable lease expense	$	1,101	$	1,224	$	3,635	$	3,662
Fixed lease expense		57		34		149		102
Third Party:
Variable lease expense		222		197		639		590
Fixed lease expense		346		337		1,040		1,021
Total operating lease expense	$	1,726	$	1,792	$	5,463	$	5,375

Other information concerning operating leases:
Cash paid for amounts included in the measurement of operating lease liabilities	$	1,709	$	1,793	$	5,121	$	5,390
Cash paid for variable rent payments not included in measurement of operating lease liabilities		151		—		453		—
Short-term lease payments not included in the measurement of lease liabilities		—		—		—		—

The following table presents the weighted average remaining term and weighted average discount rate for the Company’s non-short-term operating leases as of September 30, 2022 and December 31, 2021:


	September 30, 2022			December 31, 2021

Weighted average remaining term in years		8.28			7.57
Weighted average discount rate		2.66	%		3.05	%

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The following table presents a maturity schedule of the Company’s operating lease liabilities based on undiscounted cash flows, and a reconciliation of those undiscounted cash flows to the operating lease liabilities recognized on the Company’s balance sheet as of September 30, 2022:


Year (dollars in thousands)	Related Party		Third Party		Total

2022	$	1,062	$	664	$	1,726
2023		4,274		2,522		6,796
2024		4,189		2,143		6,332
2025		4,053		1,609		5,662
2026		4,124		1,310		5,434
Thereafter		16,375		4,593		20,968
Total undiscounted cash flows	$	34,077	$	12,841	$	46,918
Discount applied to cash flows		(3,216)		(1,593)		(4,809)
Total discounted cash flows reported as operating lease liabilities	$	30,861	$	11,248	$	42,109

8.FEDERAL HOME LOAN BANK ADVANCES

FHLB advances were as follows:


(in thousands)	September 30, 2022		December 31, 2021

Overnight advances	$	—	$	25,000
Fixed interest rate advances		20,000		—
Total FHLB advances	$	20,000	$	25,000

Each FHLB advance is payable at its maturity date, with a prepayment penalty for fixed rate advances that are paid off earlier than maturity. FHLB advances are collateralized by a blanket pledge of eligible real estate loans. As of September 30, 2022 and December 31, 2021, Republic had available borrowing capacity of $940 million and $900 million, respectively, from the FHLB. In addition to its borrowing capacity with the FHLB, Republic also had unsecured lines of credit totaling $125 million available through various other financial institutions as of September 30, 2022 and December 31, 2021.

Aggregate future principal payments on FHLB advances based on contractual maturity and the weighted average cost of such advances are detailed below:


			Weighted
			Average
Year (dollars in thousands)	Principal		Rate

2022	$	—	—	%
2023		—	—
2024		—	—
2025		—	—
2026		—	—
2027		20,000	1.89
Total	$	20,000	1.89	%

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Due to their nature, the Bank considers average balance information more meaningful than period-end balances for its overnight borrowings from the FHLB. Information regarding overnight FHLB advances follows:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(dollars in thousands)	2022			2021			2022			2021

Average outstanding balance during the period	$	—		$	25,000		$	5,641		$	30,037
Average interest rate during the period		—	%		0.10	%		0.15	%		0.15	%
Maximum outstanding at any month end during the period	$	—		$	25,000		$	25,000		$	25,000

The following table illustrates real estate loans pledged to collateralize advances and letters of credit with the FHLB:


(in thousands)	September 30, 2022		December 31, 2021

First lien, single family residential real estate	$	1,070,626	$	1,041,461
Home equity lines of credit		207,824		186,396

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9.OFF BALANCE SHEET RISKS, COMMITMENTS AND CONTINGENT LIABILITIES

COVID Pandemic

COVID was declared a pandemic by the World Health Organization on March 11, 2020. Since March 2020, jurisdictions within and outside the U.S. have imposed economic and social restrictions on the population, in general, and non-essential businesses to slow the spread of COVID. These restrictions, in combination with the public’s response to them, have disrupted supply chains and effectively suspended or curtailed economic activity for many industries across the U.S. and the world. Industries within the Company’s market footprint have been impacted by these supply chain disruptions as well as the corresponding inflationary pressures driven by them in combination with on-going governmental stimulus programs.

The future potential financial impact of the COVID pandemic is still unknown at this time. This pandemic and the public’s response to it could cause the Company to experience a material adverse impact on its business operations, asset valuations, financial condition, and results of operations. Material adverse impacts may include all or a combination of valuation impairments on the Company’s intangible assets, investments, loans, MSRs, deferred tax assets, or counterparty risk derivatives.

Commitments to Extend Credit

The Company, in the normal course of business, is party to financial instruments with off balance sheet risk. These financial instruments primarily include commitments to extend credit and standby letters of credit. The contract or notional amounts of these instruments reflect the potential future obligations of the Company pursuant to those financial instruments. Creditworthiness for all instruments is evaluated on a case-by-case basis in accordance with the Company’s credit policies. Collateral from the client may be required based on the Company’s credit evaluation of the client and may include business assets of commercial clients, as well as personal property and real estate of individual clients or guarantors.

The Company also extends binding commitments to clients and prospective clients. Such commitments assure a borrower of financing for a specified period of time at a specified rate. The risk to the Company under such loan commitments is limited by the terms of the contracts. For example, the Company may not be obligated to advance funds if the client’s financial condition deteriorates or if the client fails to meet specific covenants.

An approved but unfunded loan commitment represents a potential credit risk and a liquidity risk, since the Company’s client(s) may demand immediate cash that would require funding. In addition, unfunded loan commitments represent interest rate risk as market interest rates may rise above the rate committed to the Company’s client. Since a portion of these loan commitments normally expire unused, the total amount of outstanding commitments at any point in time may not require future funding.

The following table presents the Company’s commitments, exclusive of Mortgage Banking loan commitments, for each period ended:


(in thousands)	September 30, 2022		December 31, 2021

Unused warehouse lines of credit	$	739,723	$	565,950
Unused home equity lines of credit		395,240		348,681
Unused loan commitments - other		857,333		828,229
Standby letters of credit		10,373		11,305
FHLB letter of credit		643		643
Total commitments	$	2,003,312	$	1,754,808

Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a client to a third-party. The terms and risk of loss involved in issuing standby letters of credit are similar to those involved in issuing loan commitments and extending credit. In addition to credit risk, the Company also has liquidity risk associated with standby letters of credit because funding for these obligations could be required immediately. The Company does not deem this risk to be material.

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The following tables present ~~quantitative information~~a rollforward of the ACLC for the three and nine months ended September 30, 2022 and 2021:


	ACLC Rollforward
	Three Months Ended
	2022										2021
	Beginning				Charge-				Ending		Beginning				Charge-				Ending
(in thousands)	Balance		Provision		offs		Recoveries		Balance		Balance		Provision		offs		Recoveries		Balance

Loan Commitments
Unused warehouse lines of credit	$	162	$	28	$	—	$	—	$	190	$	140	$	—	$	—	$	—	$	140
Unused home equity lines of credit		277		20		—		—		297		213		29		—		—		242
Unused loan commitments - other		661		32		—		—		693		581		(26)		—		—		555

Total	$	1,100	$	80	$	—	$	—	$	1,180	$	934	$	3	$	—	$	—	$	937


	ACLC Rollforward
	Nine Months Ended September 30,
	2022										2021
	Beginning				Charge-				Ending		Beginning				Charge-				Ending
(in thousands)	Balance		Provision		offs		Recoveries		Balance		Balance		Provision		offs		Recoveries		Balance

Loan Commitments
Unused warehouse lines of credit	$	154	$	36	$	—	$	—	$	190	$	79	$	61	$	—	$	—	$	140
Unused home equity lines of credit		247		50		—		—		297		173		69		—		—		242
Unused loan commitments - other		651		42		—		—		693		737		(182)		—		—		555

Total	$	1,052	$	128	$	—	$	—	$	1,180	$	989	$	(52)	$	—	$	—	$	937

The Company increased its ACLC during the three and nine months ended September 30, 2022 based primarily on an increase in total unused commitments.

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10.FAIR VALUE