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LOANS AND ALLOWANCE FOR CREDIT LOSSES

6 Months Ended

Jun. 30, 2023

LOANS AND ALLOWANCE FOR CREDIT LOSSES

5. LOANS AND ALLOWANCE FOR CREDIT LOSSES

The composition of the loan portfolio follows:


(in thousands)	June 30, 2023		December 31, 2022

Traditional Banking:
Residential real estate:
Owner occupied	$	1,086,751	$	911,427
Nonowner occupied		350,390		321,358
Commercial real estate		1,727,092		1,599,510
Construction & land development		179,479		153,875
Commercial & industrial		478,759		413,387
Lease financing receivables		79,804		10,505
Aircraft		208,512		179,785
Home equity		255,755		241,739
Consumer:
Credit cards		17,134		15,473
Overdrafts		706		726
Automobile loans		4,177		6,731
Other consumer		6,109		626
Total Traditional Banking		4,394,668		3,855,142
Warehouse lines of credit*		539,560		403,560
Total Core Banking		4,934,228		4,258,702

*Republic Processing Group:**
Tax Refund Solutions:
Refund Advances		—		97,505
Other TRS commercial & industrial loans		193		51,767
Republic Credit Solutions		118,721		107,828
Total Republic Processing Group		118,914		257,100

Total loans**		5,053,142		4,515,802
Allowance for credit losses		(72,202)		(70,413)

Total loans, net	$	4,980,940	$	4,445,389

*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)	June 30, 2023		December 31, 2022

Contractually receivable	$	5,059,937	$	4,519,136
Unearned income		(1,303)		(835)
Unamortized premiums		1,313		99
Unaccreted discounts		(3,721)		(479)
PPP net unamortized deferred origination (fees) and costs		(67)		(91)
Other net unamortized deferred origination (fees) and costs		(3,017)		(2,028)
Carrying value of loans	$	5,053,142	$	4,515,802

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 June 30, 2023 remain unchanged from those defined in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Regarding origination year, loan extensions and renewals are generally considered originated in the year extended or renewed unless the loan is classified as a loan modification (formerly TDR.) Loan extensions and renewals classified as loan modifications (formerly TDRs) generally receive no change in origination date upon extension or renewal.


											Revolving Loans		Revolving Loans
(in thousands)	Term Loans Amortized Cost Basis by Origination Year										Amortized		Converted
As of June 30, 2023	2023		2022		2021		2020		Prior		Cost Basis		to Term		Total

Residential real estate owner occupied:
Risk Rating
Pass or not rated	$	228,708	$	212,810	$	185,875	$	179,237	$	257,247	$	—	$	1,025	$	1,064,902
Special Mention		—		—		—		—		6,710		—		—		6,710
Substandard		—		1,729		1,460		1,161		10,789		—		—		15,139
Doubtful		—		—		—		—		—		—		—		—
Total	$	228,708	$	214,539	$	187,335	$	180,398	$	274,746	$	—	$	1,025	$	1,086,751
YTD Gross Charge-offs	$	—	$	8	$	7	$	—	$	—	$	—	$	—	$	15

Residential real estate nonowner occupied:
Risk Rating
Pass or not rated	$	50,814	$	72,662	$	84,995	$	50,396	$	83,144	$	—	$	8,277	$	350,288
Special Mention		—		—		—		—		29		—		—		29
Substandard		—		—		—		—		73		—		—		73
Doubtful		—		—		—		—		—		—		—		—
Total	$	50,814	$	72,662	$	84,995	$	50,396	$	83,246	$	—	$	8,277	$	350,390
YTD Gross Charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial real estate:
Risk Rating
Pass or not rated	$	129,293	$	466,364	$	385,492	$	202,957	$	368,264	$	22,465	$	112,808	$	1,687,643
Special Mention		579		1,758		4,696		—		30,629		831		—		38,493
Substandard		—		—		—		—		956		—		—		956
Doubtful		—		—		—		—		—		—		—		—
Total	$	129,872	$	468,122	$	390,188	$	202,957	$	399,849	$	23,296	$	112,808	$	1,727,092
YTD Gross Charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Construction and land development:
Risk Rating
Pass or not rated	$	38,394	$	114,290	$	25,561	$	531	$	429	$	274	$	—	$	179,479
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total	$	38,394	$	114,290	$	25,561	$	531	$	429	$	274	$	—	$	179,479
YTD Gross Charge-offs		—		—		—		—		—		—		—		—

Commercial and industrial:
Risk Rating
Pass or not rated	$	70,111	$	104,044	$	83,637	$	17,742	$	69,772	$	114,103	$	3,563	$	462,972
Special Mention		—		480		12,467		665		1,920		255		—		15,787
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total	$	70,111	$	104,524	$	96,104	$	18,407	$	71,692	$	114,358	$	3,563	$	478,759
YTD Gross Charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Lease financing receivables:
Risk Rating
Pass or not rated	$	26,163	$	28,658	$	13,197	$	6,296	$	5,195	$	—	$	—	$	79,509
Special Mention		—		—		—		—		162		—		—		162
Substandard		—		—		—		—		133		—		—		133
Doubtful		—		—		—		—		—		—		—		—
Total	$	26,163	$	28,658	$	13,197	$	6,296	$	5,490	$	—	$	—	$	79,804
YTD Gross Charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Aircraft:
Risk Rating
Pass or not rated	$	43,840	$	60,247	$	49,496	$	32,309	$	22,620	$	—	$	—	$	208,512
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total	$	43,840	$	60,247	$	49,496	$	32,309	$	22,620	$	—	$	—	$	208,512
YTD Gross Charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Home equity:
Risk Rating
Pass or not rated	$	—	$	—	$	—	$	—	$	—	$	254,090	$	—	$	254,090
Special Mention		—		—		—		—		—		106		—		106
Substandard		—		—		—		—		—		1,559		—		1,559
Doubtful		—		—		—		—		—		—		—		—
Total	$	—	$	—	$	—	$	—	$	—	$	255,755	$	—	$	255,755
YTD Gross Charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—


											Revolving Loans		Revolving Loans
(in thousands)	Term Loans Amortized Cost Basis by Origination Year (Continued)										Amortized		Converted
As of June 30, 2023	2023		2022		2021		2020		Prior		Cost Basis		to Term		Total

Consumer:
Risk Rating
Pass or not rated	$	1,278	$	1,474	$	690	$	107	$	5,104	$	19,444	$	—	$	28,097
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		7		—		22		—		—		29
Doubtful		—		—		—		—		—		—		—		—
Total	$	1,278	$	1,474	$	697	$	107	$	5,126	$	19,444	$	—	$	28,126
YTD Gross Charge-offs	$	—	$	11	$	8	$	—	$	5	$	531	$	—	$	555

Warehouse:
Risk Rating
Pass or not rated	$	—	$	—	$	—	$	—	$	—	$	539,560	$	—	$	539,560
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total	$	—	$	—	$	—	$	—	$	—	$	539,560	$	—	$	539,560
YTD Gross Charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

TRS:
Risk Rating
Pass or not rated	$	193	$	—	$	—	$	—	$	—	$	—	$	—	$	193
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total	$	193	$	—	$	—	$	—	$	—	$	—	$	—	$	193
YTD Gross Charge-offs	$	126	$	—	$	—	$	—	$	—	$	25,824	$	—	$	25,950

RCS:
Risk Rating
Pass or not rated	$	30,079	$	13,643	$	1,304	$	919	$	22,113	$	49,929	$	—	$	117,987
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		734		—		734
Doubtful		—		—		—		—		—		—		—		—
Total	$	30,079	$	13,643	$	1,304	$	919	$	22,113	$	50,663	$	—	$	118,721
YTD Gross Charge-offs	$	—	$	—	$	—	$	—	$	—	$	6,118	$	—	$	6,118

Grand Total:
Risk Rating
Pass or not rated	$	618,873	$	1,074,192	$	830,247	$	490,494	$	833,888	$	999,865	$	125,673	$	4,973,232
Special Mention		579		2,238		17,163		665		39,450		1,192		—		61,287
Substandard		—		1,729		1,467		1,161		11,973		2,293		—		18,623
Doubtful		—		—		—		—		—		—		—		—
Grand Total	$	619,452	$	1,078,159	$	848,877	$	492,320	$	885,311	$	1,003,350	$	125,673	$	5,053,142
YTD Gross Charge-offs	$	126	$	19	$	15	$	—	$	5	$	32,473	$	—	$	32,638


											Revolving Loans		Revolving Loans
(in thousands)	Term Loans Amortized Cost Basis by Origination Year										Amortized		Converted
As of December 31, 2022	2022		2021		2020		2019		Prior		Cost Basis		to Term		Total

Residential real estate owner occupied:
Risk Rating
Pass or not rated	$	231,638	$	189,495	$	188,004	$	71,306	$	208,296	$	—	$	—	$	888,739
Special Mention		—		160		—		—		7,240		—		—		7,400
Substandard		1,230		1,103		1,501		1,460		9,994		—		—		15,288
Doubtful		—		—		—		—		—		—		—		—
Total	$	232,868	$	190,758	$	189,505	$	72,766	$	225,530	$	—	$	—	$	911,427
YTD Gross Charge-offs	$	21	$	—	$	—	$	—	$	—	$	—	$	i	$	21

Residential real estate nonowner occupied:
Risk Rating
Pass or not rated	$	78,337	$	91,778	$	55,058	$	32,803	$	57,053	$	—	$	6,147	$	321,176
Special Mention		—		—		—		—		32		—		—		32
Substandard		—		30		—		—		120		—		—		150
Doubtful		—		—		—		—		—		—		—		—
Total	$	78,337	$	91,808	$	55,058	$	32,803	$	57,205	$	—	$	6,147	$	321,358
YTD Gross Charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial real estate:
Risk Rating
Pass or not rated	$	451,327	$	394,317	$	210,055	$	117,928	$	253,213	$	25,499	$	99,791	$	1,552,130
Special Mention		3,124		11,870		—		21,296		9,967		318		—		46,575
Substandard		—		—		—		—		805		—		—		805
Doubtful		—		—		—		—		—		—		—		—
Total	$	454,451	$	406,187	$	210,055	$	139,224	$	263,985	$	25,817	$	99,791	$	1,599,510
YTD Gross Charge-offs	$	—	$	9	$	—	$	—	$	—	$	—	$	—	$	9

Construction and land development:
Risk Rating
Pass or not rated	$	107,153	$	43,289	$	638	$	641	$	373	$	1,781	$	—	$	153,875
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total	$	107,153	$	43,289	$	638	$	641	$	373	$	1,781	$	—	$	153,875
YTD Gross Charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—


											Revolving Loans		Revolving Loans
(in thousands)	Term Loans Amortized Cost Basis by Origination Year (Continued)										Amortized		Converted
As of December 31, 2022	2022		2021		2020		2019		Prior		Cost Basis		to Term		Total

Commercial and industrial:
Risk Rating
Pass or not rated	$	116,483	$	82,431	$	17,944	$	36,254	$	36,367	$	103,257	$	4,865	$	397,601
Special Mention		536		13,239		—		—		1,756		255		—		15,786
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total	$	117,019	$	95,670	$	17,944	$	36,254	$	38,123	$	103,512	$	4,865	$	413,387
YTD Gross Charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Lease financing receivables:
Risk Rating
Pass or not rated	$	5,469	$	1,964	$	542	$	1,548	$	982	$	—	$	—	$	10,505
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total	$	5,469	$	1,964	$	542	$	1,548	$	982	$	—	$	—	$	10,505
YTD Gross Charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Aircraft:
Risk Rating
Pass or not rated	$	65,399	$	54,749	$	35,085	$	16,888	$	7,454	$	—	$	—	$	179,575
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		210		—		—		210
Doubtful		—		—		—		—		—		—		—		—
Total	$	65,399	$	54,749	$	35,085	$	16,888	$	7,664	$	—	$	—	$	179,785
YTD Gross Charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Home equity:
Risk Rating
Pass or not rated	$	—	$	—	$	—	$	—	$	—	$	240,704	$	—	$	240,704
Special Mention		—		—		—		—		—		171		—		171
Substandard		—		—		—		—		—		864		—		864
Doubtful		—		—		—		—		—		—		—		—
Total	$	—	$	—	$	—	$	—	$	—	$	241,739	$	—	$	241,739
YTD Gross Charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Consumer:
Risk Rating
Pass or not rated	$	415	$	499	$	168	$	2,531	$	4,328	$	15,573	$	—	$	23,514
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		9		33		—		—		42
Doubtful		—		—		—		—		—		—		—		—
Total	$	415	$	499	$	168	$	2,540	$	4,361	$	15,573	$	—	$	23,556
YTD Gross Charge-offs	$	—	$	5	$	—	$	11	$	—	$	1,274	$	—	$	1,290

Warehouse:
Risk Rating
Pass or not rated	$	—	$	—	$	—	$	—	$	—	$	403,560	$	—	$	403,560
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total	$	—	$	—	$	—	$	—	$	—	$	403,560	$	—	$	403,560
YTD Gross Charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

TRS:
Risk Rating
Pass or not rated	$	—	$	—	$	—	$	—	$	—	$	149,272	$	—	$	149,272
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—
Total	$	—	$	—	$	—	$	—	$	—	$	149,272	$	—	$	149,272
YTD Gross Charge-offs	$	—	$	—	$	—	$	—	$	—	$	11,659	$	—	$	11,659

RCS:
Risk Rating
Pass or not rated	$	22,357	$	2,273	$	1,264	$	602	$	29,594	$	50,589	$	—	$	106,679
Special Mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		1,149		—		1,149
Doubtful		—		—		—		—		—		—		—		—
Total	$	22,357	$	2,273	$	1,264	$	602	$	29,594	$	51,738	$	—	$	107,828
YTD Gross Charge-offs	$	—	$	—	$	—	$	—	$	—	$	11,390	$	—	$	11,390

Grand Total:
Risk Rating
Pass or not rated	$	1,078,578	$	860,795	$	508,758	$	280,501	$	597,660	$	990,235	$	110,803	$	4,427,330
Special Mention		3,660		25,269		—		21,296		18,995		744		—		69,964
Substandard		1,230		1,133		1,501		1,469		11,162		2,013		—		18,508
Doubtful		—		—		—		—		—		—		—		—
Grand Total	$	1,083,468	$	887,197	$	510,259	$	303,266	$	627,817	$	992,992	$	110,803	$	4,515,802
YTD Gross Charge-offs	$	21	$	14	$	—	$	11	$	—	$	24,323	$	—	$	24,369

Allowance for Credit Losses on Loans

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


	ACLL Roll-forward
	Three Months Ended June 30,
	2023												2022
	Beginning		CBank				Charge-				Ending		Beginning				Charge-				Ending
(in thousands)	Balance		Adjustment*		Provision		offs		Recoveries		Balance		Balance		Provision		offs		Recoveries		Balance

Traditional Banking:
Residential real estate:
Owner occupied	$	8,798	$	—	$	1,100	$	(9)	$	10	$	9,899	$	8,358	$	62	$	—	$	25	$	8,445
Nonowner occupied		2,895		—		190		—		1		3,086		2,746		(14)		—		1		2,733
Commercial real estate		24,827		—		250		—		12		25,089		24,624		(284)		—		1		24,341
Construction & land development		4,452		—		359		—		—		4,811		3,893		(302)		—		—		3,591
Commercial & industrial		5,676		(1,008)		(365)		—		19		4,322		3,412		348		—		8		3,768
Lease financing receivables		1,350		(376)		(149)		—		—		825		109		10		—		—		119
Aircraft		461		—		60		—		—		521		378		22		—		—		400
Home equity		4,660		—		110		—		—		4,770		4,044		(40)		—		109		4,113
Consumer:
Credit cards		1,080		—		43		(33)		13		1,103		944		59		(31)		22		994
Overdrafts		595		—		257		(186)		40		706		716		315		(194)		64		901
Automobile loans		66		—		(16)		—		3		53		151		(32)		—		3		122
Other consumer		356		—		21		(11)		16		382		241		(38)		(20)		17		200
Total Traditional Banking		55,216		(1,384)		1,860		(239)		114		55,567		49,616		106		(245)		250		49,727
Warehouse lines of credit		1,144		—		202		—		—		1,346		1,725		(234)		—		—		1,491
Total Core Banking		56,360		(1,384)		2,062		(239)		114		56,913		51,341		(128)		(245)		250		51,218

Republic Processing Group:
Tax Refund Solutions:
Refund Advances		25,797		—		(161)		(25,824)		188		—		8,315		564		(11,505)		2,626		—
Other TRS commercial & industrial loans		184		—		(58)		(126)		—		—		55		(204)		(153)		302		—
Republic Credit Solutions		13,780		—		4,296		(3,018)		231		15,289		11,945		3,433		(2,411)		264		13,231
Total Republic Processing Group		39,761		—		4,077		(28,968)		419		15,289		20,315		3,793		(14,069)		3,192		13,231

Total	$	96,121	$	(1,384)	$	6,139	$	(29,207)	$	533	$	72,202	$	71,656	$	3,665	$	(14,314)	$	3,442	$	64,449


	ACLL Roll-forward
	Six Months Ended June 30,
	2023												2022
	Beginning			CBank			Charge-				Ending				Beginning			Charge-				Ending
(in thousands)	Balance			Adjustment*	Provision		offs		Recoveries		Balance				Balance	Provision		offs		Recoveries		Balance

Traditional Banking:
Residential real estate:
Owner occupied	$	8,909	$	—	$	980	$	(15)	$	25	$	9,899		$	8,647	$	(269)	$	—	$	67	$	8,445
Nonowner occupied		2,831		—		254		—		1		3,086			2,700		31		—		2		2,733
Commercial real estate		23,739		—		1,291		—		59		25,089			23,769		570		—		2		24,341
Construction & land development		4,123		—		688		—		—		4,811			4,128		(537)		—		—		3,591
Commercial & industrial		3,976		—		237		—		109		4,322			3,487		264		—		17		3,768
Lease financing receivables		110		216		499		—		—		825			91		28		—		—		119
Aircraft		449		—		72		—		—		521			357		43		—		—		400
Home equity		4,628		—		141		—		1		4,770			4,111		(110)		—		112		4,113
Consumer:
Credit cards		996		—		155		(73)		25		1,103			934		91		(70)		39		994
Overdrafts		726		—		309		(433)		104		706			683		503		(408)		123		901
Automobile loans		87		—		(32)		(7)		5		53			186		(68)		—		4		122
Other consumer		135		—		250		(42)		39		382			314		(113)		(30)		29		200
Total Traditional Banking		50,709		216		4,844		(570)		368		55,567			49,407		433		(508)		395		49,727
Warehouse lines of credit		1,009		—		337		—		—		1,346			2,126		(635)		—		—		1,491
Total Core Banking		51,718		216		5,181		(570)		368		56,913			51,533		(202)		(508)		395		51,218

Republic Processing Group:
Tax Refund Solutions:
Refund Advances		3,797		—		21,554		(25,824)		473		—			—		8,879		(11,505)		2,626		—
Other TRS commercial & industrial loans		91		—		35		(126)		—		—			96		(607)		(153)		664		—
Republic Credit Solutions		14,807		—		6,135		(6,118)		465		15,289			12,948		4,828		(5,084)		539		13,231
Total Republic Processing Group		18,695		—		27,724		(32,068)		938		15,289			13,044		13,100		(16,742)		3,829		13,231

Total	$	70,413	$	216	$	32,905	$	(32,638)	$	1,306	$	72,202		$	64,577	$	12,898	$	(17,250)	$	4,224	$	64,449

The cumulative loss rate used as the basis for the estimate of the Company’s ACLL as of June 30, 2023 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 2023, 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., Loan Modifications.

For its CRE loan pool, the Company employed a one-year forecast of CRE vacancy rates through March 31, 2022 but discontinued use of this forecast during the second quarter of 2022 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.

Nonperforming Loans and Nonperforming Assets

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


(dollars in thousands)	June 30, 2023			December 31, 2022

Loans on nonaccrual status*	$	16,957		$	15,562
Loans past due 90-days-or-more and still on accrual**		547			756
Total nonperforming loans		17,504			16,318
Other real estate owned		1,478			1,581
Total nonperforming assets	$	18,982		$	17,899

Credit Quality Ratios - Total Company:

Nonperforming loans to total loans		0.35	%		0.36	%
Nonperforming assets to total loans (including OREO)		0.38			0.40
Nonperforming assets to total assets		0.30			0.31

Credit Quality Ratios - Core Bank:

Nonperforming loans to total loans		0.34	%		0.37	%
Nonperforming assets to total loans (including OREO)		0.37			0.40
Nonperforming assets to total assets		0.32			0.32

*	Loans on nonaccrual status include collateral-dependent loans.

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

The following 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
	Nonaccrual				and Still Accruing Interest*
(in thousands)	June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022

Traditional Banking:
Residential real estate:
Owner occupied	$	14,432	$	13,388	$	—	$	—
Nonowner occupied		72		117		—		—
Commercial real estate		927		1,001		—		—
Construction & land development		—		—		—		—
Commercial & industrial		—		—		—		—
Lease financing receivables		—		—		—		—
Aircraft		—				—		—
Home equity		1,498		815		—		—
Consumer:
Credit cards		—		—		—		—
Overdrafts		—		—		—		—
Automobile loans		27		31		—		—
Other consumer		1		210		—		—
Total Traditional Banking		16,957		15,562		—		—
Warehouse lines of credit		—		—		—		—
Total Core Banking		16,957		15,562		—		—

Republic Processing Group:
Tax Refund Solutions:
Refund Advances		—		—		—		—
Other TRS commercial & industrial loans		—		—		—		—
Republic Credit Solutions		—		—		547		756
Total Republic Processing Group		—		—		547		756

Total	$	16,957	$	15,562	$	547	$	756

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


							Three Months Ended		Six Months Ended
	As of June 30, 2023						June 30, 2023		June 30, 2023
	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	$	256	$	14,176	$	14,432	$	232	$	438
Nonowner occupied		23		49		72		1		1
Commercial real estate		927		—		927		87		110
Construction & land development		—		—		—		—		—
Commercial & industrial		—		—		—		—		—
Lease financing receivables		—		—		—		—		—
Aircraft		—		—		—		—		—
Home equity		—		1,498		1,498		28		64
Consumer		1		27		28		3		6
Total	$	1,207	$	15,750	$	16,957	$	351	$	619

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


							Three Months Ended		Six Months Ended
	As of December 31, 2022						June 30, 2022		June 30, 2022
	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	$	2,252	$	11,136	$	13,388	$	154	$	257
Nonowner occupied		56		61		117		1		1
Commercial real estate		1,001		—		1,001		14		644
Construction & land development		—		—		—		—		—
Commercial & industrial		—		—		—		—		—
Lease financing receivables		—		—		—		—		—
Aircraft		—		—		—		—		—
Home equity		—		815		815		84		146
Consumer		15		226		241		48		52
Total	$	3,324	$	12,238	$	15,562	$	301	$	1,100

* 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 both include 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 six consecutive months and future contractual payments are reasonably assured. Loan Modifications (formerly TDRs prior to the adoption of ASU 2022-02) 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
June 30, 2023	Days			Days			Days			Total			Total
(dollars in thousands)	Delinquent			Delinquent			Delinquent*			Delinquent**			Current		Total

Traditional Banking:
Residential real estate:
Owner occupied	$	3,453		$	841		$	873		$	5,167		$	1,081,584	$	1,086,751
Nonowner occupied		—			—			—			—			350,390		350,390
Commercial real estate		—			—			—			—			1,727,092		1,727,092
Construction & land development		—			—			—			—			179,479		179,479
Commercial & industrial		—			—			—			—			478,759		478,759
Lease financing receivables		—			—			—			—			79,804		79,804
Aircraft		—			—			—			—			208,512		208,512
Home equity		343			106			23			472			255,283		255,755
Consumer:
Credit cards		24			9			—			33			17,101		17,134
Overdrafts		139			—			2			141			565		706
Automobile loans		—			7			3			10			4,167		4,177
Other consumer		44			8			—			52			6,057		6,109
Total Traditional Banking		4,003			971			901			5,875			4,388,793		4,394,668
Warehouse lines of credit		—			—			—			—			539,560		539,560
Total Core Banking		4,003			971			901			5,875			4,928,353		4,934,228

Republic Processing Group:
Tax Refund Solutions:
Refund Advances		—			—			—			—			—		—
Other TRS commercial & industrial loans		—			—			—			—			193		193
Republic Credit Solutions		7,058			2,438			547			10,043			108,678		118,721
Total Republic Processing Group		7,058			2,438			547			10,043			108,871		118,914

Total	$	11,061		$	3,409		$	1,448		$	15,918		$	5,037,224	$	5,053,142
Delinquency ratio***		0.22	%		0.07	%		0.03	%		0.32	%

* 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 - 59			60 - 89			90 or More
December 31, 2022	Days			Days			Days			Total			Total
(dollars in thousands)	Delinquent			Delinquent			Delinquent*			Delinquent**			Current		Total

Traditional Banking:
Residential real estate:
Owner occupied	$	2,382		$	1,185		$	1,267		$	4,834		$	906,593	$	911,427
Nonowner occupied		—			—			—			—			321,358		321,358
Commercial real estate		604			—			—			604			1,598,906		1,599,510
Construction & land development		—			—			—			—			153,875		153,875
Commercial & industrial		177			—			—			177			413,210		413,387
Lease financing receivables		—			—			—			—			10,505		10,505
Aircraft		—			—			—			—			179,785		179,785
Home equity		56			93			26			175			241,564		241,739
Consumer:
Credit cards		50			5			—			55			15,418		15,473
Overdrafts		158			1			1			160			566		726
Automobile loans		8			—			3			11			6,720		6,731
Other consumer		43			1			—			44			582		626
Total Traditional Banking		3,478			1,285			1,297			6,060			3,849,082		3,855,142
Warehouse lines of credit		—			—			—			—			403,560		403,560
Total Core Banking		3,478			1,285			1,297			6,060			4,252,642		4,258,702

Republic Processing Group:
Tax Refund Solutions:
Refund Advances		—			—			—			—			97,505		97,505
Other TRS commercial & industrial loans		—			—			—			—			51,767		51,767
Republic Credit Solutions		6,488			1,956			756			9,200			98,628		107,828
Total Republic Processing Group		6,488			1,956			756			9,200			247,900		257,100

Total	$	9,966		$	3,241		$	2,053		$	15,260		$	4,500,542	$	4,515,802
Delinquency ratio***		0.22	%		0.07	%		0.05	%		0.34	%

* 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.

Collateral-Dependent Loans

The following table presents the amortized cost basis of collateral-dependent loans by class of loans:


	June 30, 2023				December 31, 2022
	Secured		Secured		Secured		Secured
	by Real		by Personal		by Real		by Personal
(in thousands)	Estate		Property		Estate		Property

Traditional Banking:
Residential real estate:
Owner occupied	$	17,178	$	—	$	18,057	$	—
Nonowner occupied		72		—		150		—
Commercial real estate		959		—		1,041		—
Construction & land development		—		—		—		—
Commercial & industrial		—		—		—		—
Lease financing receivables		—		—		—		—
Aircraft		—		—		—		210
Home equity		1,130		—		967		—
Consumer		—		30		—		26
Total Traditional Banking	$	19,339	$	30	$	20,215	$	236

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.

Loan Modification Disclosures Pursuant to ASU 2022-02

The following table shows the amortized cost of loans and leases as of June 30, 2023 that were both experiencing financial difficulty and modified during the three months ended June 30, 2023, segregated by portfolio segment and type of modification. The following tables shows the amortized cost of loans and leases modified by type.


	Amortized Cost Basis of Modified Financing Receivables
June 30, 2023 (dollars in thousands)	Loans (#)	Rate Reduction ($)		Loans (#)	Term Extension ($)		Loans (#)	Principal Deferral ($)

Residential real estate:
Owner occupied	—	$	—	—	$	—	6	$	547
Nonowner occupied	—		—	—		—	—		—
Home equity	—		—	—		—	4		143
Republic Processing Group	—		—	—		—	423		91
Total Loan Modifications	—	$	—	—	$	—	433	$	781


	Total Loan Modification by Type
	Accruing			Nonaccruing
June 30, 2023 (dollars in thousands)	Loans (#)	Recorded investment ($)		Loans (#)	Recorded investment ($)

Term extension	—	$	—	—	$	—
Principal deferral	423		91	10		690
Total Loan Modifications	423	$	91	10	$	690

The following table shows the amortized cost of loans and leases as of June 30, 2023 that were both experiencing financial difficulty and modified during the six months ended June 30, 2023, segregated by portfolio segment and type of modification. The following tables shows the amortized cost of loans and leases modified by type.


	Amortized Cost Basis of Modified Financing Receivables
June 30, 2023 (dollars in thousands)	Loans (#)	Rate Reduction ($)		Loans (#)	Term Extension ($)		Loans (#)	Principal Deferral ($)

Residential real estate:
Owner occupied	—	$	—	2	$	261	10	$	852
Nonowner occupied	—		—	—		—	—		—
Home equity	—		—	—		—	5		214
Republic Processing Group	—		—	—		—	424		93
Total Loan Modifications	—	$	—	2	$	261	439	$	1,159


	Total Loan Modification by Type
	Accruing			Nonaccruing
June 30, 2023 (dollars in thousands)	Loans (#)	Recorded investment ($)		Loans (#)	Recorded investment ($)

Term extension	—	$	—	2	$	261
Principal deferral	424		93	15		1,066
Total Loan Modifications	424	$	93	17	$	1,327

The following tables show the percentage of the amortized cost of loans and leases that were modified to borrowers in financial distress as compared to the amortized cost of each segment of financing receivable.


	Accruing Loan Modifications
	Three Months Ended June 30, 2023					Six Months Ended June 30, 2023
				% of Total					% of Total
		Amortized		of Financing			Amortized		of Financing
(dollars in thousands)	Loans (#)	Cost Basis ($)		Receivable		Loans	Cost Basis		Receivable

Republic Processing Group	423	$	91	0.08	%	424		93	0.08
Total Accruing Loan Modifications	423	$	91	NM		424	$	93	0.00


	Nonaccruing Loan Modifications
	Three Months Ended June 30, 2023					Six Months Ended June 30, 2023
				% of Total					% of Total
		Amortized		of Financing			Amortized		of Financing
(dollars in thousands)	Loans (#)	Cost Basis ($)		Receivable		Loans	Cost Basis		Receivable

Residential real estate:
Owner occupied	6	$	547	0.05	%	12	$	1,113	0.10	%
Home equity	4		143	0.06		5		214	0.08
Total Nonaccruing Loan Modifications	10	$	690	0.01	%	17	$	1,327	0.03

There were no commitments to lend additional amounts to the borrowers included in the previous table.

The Company closely monitors the performance of loans and leases that have been modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table shows the performance of such loans and leases that have been modified during the three and six months ended June 30, 2023.


	Accruing Loan Modifications
	Three Months Ended June 30, 2023						Six Months Ended June 30, 2023
			30-89 Days		90+ Days				30-89 Days		90+ Days
(in thousands)	Current		Past Due		Past Due		Current		Past Due		Past Due

Republic Processing Group	$	91	$	—	$	—		93		—		—
Total Accruing Loan Modifications	$	91	$	—	$	—	$	93	$	—	$	—


	Nonaccruing Loan Modifications
	Three Months Ended June 30, 2023						Six Months Ended June 30, 2023
			30-89 Days		90+ Days				30-89 Days		90+ Days
(in thousands)	Current		Past Due		Past Due		Current		Past Due		Past Due

Residential real estate:
Owner occupied	$	379	$	—	$	168	$	945	$	—	$	168
Nonowner occupied		—		—		—		—		—		—
Home equity		143		—		—		214		—		—
Total Nonaccruing Loan Modifications	$	522	$	—	$	168	$	1,159	$	—	$	168

There were two loans and leases with a total balance of $168,000 that had a payment default during the three months and six months ended June 30, 2023 and were modified in the twelve months prior to that default to borrowers experiencing financial difficulty.

Upon the Company’s determination that a modified loan or lease has subsequently been deemed uncollectible, the loan or lease is written off. Therefore, the amortized cost of the loan is reduced by the uncollectible amount and the allowance for loan and lease losses is adjusted by the same amount.

Troubled Debt Restructuring (TDR) Disclosures Prior to the Adoption of ASU 2022-02

A summary of the categories of TDR loan modifications by respective performance as of June 30, 2022 that were modified during the three months ended June 30, 2022 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
June 30, 2022 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment

Residential real estate loans (including home equity loans):
Legal modification	3	$	35	2	$	24	5	$	59
Total residential TDRs	3		35	2		24	5		59

Consumer loans:
Principal deferral	489		77	—		—	489		77
Total consumer TDRs	489		77	—		—	489		77

Total troubled debt restructurings	492	$	112	2	$	24	494	$	136

A summary of the categories of TDR loan modifications by respective performance as of June 30, 2022 that were modified during the six months ended June 30, 2022 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
June 30, 2022 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment

Residential real estate loans (including home equity loans):
Legal modification	5	$	477	3	$	51	8	$	528
Total residential TDRs	5		477	3		51	8		528

Consumer loans:
Principal deferral	489		77	—		—	489		77
Total consumer TDRs	489		77	—		—	489		77

Total troubled debt restructurings	494	$	554	3	$	51	497	$	605

The classification between nonperforming and performing was determined at the time of modification. Modification programs focus on extending maturity dates or modifying payment patterns with most TDRs experiencing a combination of concessions. Modifications do not result in the contractual forgiveness of principal or interest. There were no modifications during the three months or six months ended June 30, 2022 that resulted in an interest rate below market rate.

There were two TDRs with a recorded investment of $24,000 which had a payment default within the twelve months following modification during the three months ended June 30, 2022. There were three TDRs with a recorded investment of $51,000 which had a payment default within the twelve months following modification during the six months ended June 30, 2022. Default occurs when a loan or lease is 90 days or more past due under the modified terms or transferred to nonaccrual.

The following table shows the recorded investment of loans and leases classified as troubled debt restructurings as of December 31, 2022.


	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, 2022 (dollars in thousands)	Loans	Investment		Loans	Investment		Loans	Investment

Residential real estate loans (including home equity loans):
Rate reduction	67	$	6,305	3	$	242	70	$	6,547
Principal deferral	7		699	—		—	7		699
Legal modification	67		3,149	6		377	73		3,526
Total residential TDRs	141		10,153	9		619	150		10,772

Commercial related and construction/land development loans:
Rate reduction	1		847	—		—	1		847
Principal deferral	1		1	—		—	1		1
Total commercial TDRs	2		848	—		—	2		848

Consumer loans:
Principal deferral	2,320		393	—		—	2,320		393
Legal modification	3		13	—		—	3		13
Total consumer TDRs	2,323		406	—		—	2,323		406

Total troubled debt restructurings	2,466	$	11,407	9	$	619	2,475	$	12,026

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

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)	June 30, 2023		December 31, 2022

Commercial real estate	$	1,478	$	1,581

Total other real estate owned	$	1,478	$	1,581

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:

Refund Advances

The Company’s TRS segment offered its RA product during the first two months of 2023 and 2022, along with its ERA product which was offered during December 2022 and the first two weeks of 2023. The ERA originations during December 2022 and the first two weeks of 2023 were made in relation to estimated tax returns that were anticipated to be filed during the first quarter 2023 tax season. The Company originated $98 million of ERAs during December 2022 that were made in anticipation of the first quarter 2023 tax season. Each year, all unpaid RAs, including ERAs, are charged off by June 30^th, and each quarter thereafter, any credits to the Provision for RAs, including ERAs, match the recovery of previously charged-off accounts.

Information regarding RAs follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
(dollars in thousands)	2023		2022		2023			2022

Refund Advances originated during the period	$	—	$	—	$	737,047		$	311,207
Net charge to the Provision for RAs, including ERAs		(161)		564		21,554			8,879
Provision as a percentage of RAs, including ERAs, originated during the period		NA		NA		2.92	%		2.85	%
Refund Advances net charge-offs (recoveries)	$	25,636	$	8,879	$	25,351		$	8,879
Refund Advances net charge-offs (recoveries) to total Refund Advances originated during the period		NA		NA		3.44	%		2.85	%

(in thousands)

June 30, 2023

December 31, 2022

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