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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended
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Mar. 31, 2026
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
1. | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
​ Basis of Presentation — The consolidated financial statements included in this report include the accounts of Republic Bancorp, Inc. and its wholly owned subsidiary, Republic Bank & Trust Company. As used in this report, the terms “Republic,” the “Company,” “we,” “our,” and “us” refer to Republic Bancorp, Inc. and, where the context requires, Republic Bancorp, Inc. and its subsidiary. The term the “Bank” refers to the Company’s subsidiary bank, Republic Bank & Trust Company, as well as its wholly owned subsidiary, RBT Insurance Agency LLC. All significant intercompany balances and transactions are eliminated in consolidation. ​ Republic is an FHC headquartered in Louisville, Kentucky, which is the most populous city in Kentucky. The Bank is a Kentucky-based, state-chartered non-member financial institution that provides both traditional and non-traditional banking products and services through five reportable segments using a multitude of delivery channels. While the Bank operates primarily in its geographical market footprint where it has physical locations, its non-brick-and-mortar delivery channels allow it to reach clients across the U.S. ​ The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, the financial statements do not include all the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2026. For further information, refer to the consolidated financial statements and footnotes thereto included in Republic’s Form 10-K for the year ended December 31, 2025. Certain amounts presented in prior periods have been reclassified to conform to the current period presentation. These reclassifications had no impact on previously reported prior periods’ net income or shareholders’ equity. ​ The Company’s Executive Chair/CEO serves as the Company’s CODM. Net income before income tax expense is the reportable measure of segment profit or loss that the CODM regularly reviews and utilizes to allocate resources and evaluate performance. ​ As of March 31, 2026, the Company was divided into five reportable segments: (I) Traditional Banking, (II) Warehouse Lending, (III) TRS, (IV) RPS, and (V) RCS. Management considers the first two segments to collectively constitute “Core Bank” or “Core Banking” operations, while the last three segments collectively constitute RPG operations. See additional discussion regarding segment information under the Footnote titled “Segment Information” in this section of the report. ​ Core Banking Operations ​ The Core Bank consists of the Traditional Banking and Warehouse Lending segments. ​
(I) | Traditional Banking segment
​ The Traditional Banking segment provides traditional banking products and services primarily to customers in the Company’s market footprint with all products and services generally offered under the Company’s traditional RB&T brand. As of March 31, 2026, Republic had 47 full-service banking centers with locations as follows: ​
| ● | Kentucky — 29
| ● | Metropolitan Louisville — 19
| ● | Central Kentucky — 6
| ● | Georgetown — 1
| ● | Lexington — 5
| ● | Northern Kentucky (Metropolitan Cincinnati) — 4
●Bellevue— 1
| ● | Covington — 1
| ● | Crestview Hills — 1
| ● | Florence — 1
| ● | Indiana — 3
| ● | Southern Indiana (Metropolitan Louisville) — 3
| ● | Floyds Knobs — 1
| ● | Jeffersonville — 1
| ● | New Albany — 1
| ● | Florida — 7
| ● | Metropolitan Tampa — 7
| ● | Ohio — 4
| ● | Metropolitan Cincinnati — 4
| ● | Tennessee — 4
| ● | Metropolitan Nashville — 4
​ Traditional Banking results of operations are primarily dependent upon net interest income, which represents the difference between the interest income and fees on interest-earning assets and the interest expense on interest-bearing liabilities used to fund those assets. Principal interest-earning Traditional Banking assets represent investment securities and commercial and consumer loans primarily secured by real estate and/or personal property. Interest-bearing liabilities primarily consist of interest-bearing deposit accounts, SSUAR, and short-term and long-term borrowing sources. FHLB advances have traditionally served as a significant borrowing and liquidity source for the Bank. Net interest income is impacted by both changes in the amount and composition of interest-earning assets and interest-bearing liabilities, as well as market interest rates. ​ Other sources of Traditional Banking income include service charges on consumer and commercial deposit accounts, mortgage banking income, debit and credit card interchange fee income, title insurance commissions, swap fee income and increases in the cash surrender value of BOLI. ​ Traditional Banking operating expenses consist primarily of salaries and employee benefits; technology, equipment, and communication; occupancy; interchange related expense; marketing and development; FDIC insurance expense; and various other general and administrative costs. Traditional Banking results of operations are significantly impacted by general economic and competitive conditions, particularly changes in market interest rates, government laws and policies, and actions of regulatory agencies. ​
(II) | Warehouse Lending segment
​ The Core Bank provides short-term, revolving credit facilities to mortgage bankers across the U.S. through mortgage warehouse lines of credit. These credit facilities are primarily secured by single-family, first-lien RRE loans. The credit facility enables the mortgage banking clients to close single-family, first-lien RRE loans in their own name and temporarily fund their inventory of these closed loans until the loans are sold to investors approved by the Bank. Individual loans are expected to remain on the warehouse LOC for an average of 15 to 30 days. Advances for reverse mortgage loans and construction loans typically remain on the LOC longer than conventional mortgage loans. Interest income and loan fees are accrued for each individual advance during the time the advance remains on the warehouse LOC and collected when the loan is sold. The Core Bank receives the sale proceeds of each loan directly from the investor and applies the funds to pay off the warehouse advance and related accrued interest and fees. The remaining proceeds are credited to the mortgage banking client. ​ Republic Processing Group Operations ​ Republic Processing Group consists of the Tax Refund Solutions, Republic Payment Solutions and Republic Credit Solutions segments. ​
(III) | Tax Refund Solutions segment
​ Through the TRS segment, the Bank facilitates the receipt and payment of federal and state tax refund products and offers a credit product through third-party tax preparers across the U.S., as well as through tax-preparation software providers that offer Republic Bank ERAs, RAs and RTs (collectively, the “Tax Providers”). The substantial majority of TRS’s business activity occurs during the first half of each year, while the second half of the year is characterized by limited revenue and costs associated with preparing for the upcoming tax season. ​ Refund Advances: ​ The RA loan product is a loan made in conjunction with the filing of a taxpayer’s federal tax return, which allows the taxpayer to borrow funds as an advance of a portion of their tax refund. The RA product had the following features during the 2025 and 2026 Tax Seasons: ​
| ● | Offered only during the first two months of each year;
| ● | The taxpayer was given the option to choose from multiple loan-amount tiers, subject to underwriting, up to a maximum advance amount of $6,250 for both the 2025 and 2026 Tax Seasons;
| ● | No requirement that the taxpayer pays for another bank product, such as an RT;
| ● | Multiple disbursement methods were available through most Tax Providers, including direct deposit, prepaid card, or check, based on the taxpayer-customer’s election;
| ● | Repayment of the RA to the Bank via deduction from the taxpayer’s tax refund proceeds; and
| ● | If a tax refund is insufficient to repay the RA:
| ● | there is no recourse to the taxpayer,
| ● | no negative credit reporting on the taxpayer, and
| ● | no collection efforts against the taxpayer.
​ Early Season Refund Advances: ​ Since its introduction in December of 2022, the ERA loan product has been structured similarly to the RA, with the primary differences being the timing of when the ERAs are originated and the documentation available to underwrite the ERAs. The ERA is originated prior to the taxpayer receiving their fiscal year taxable income documentation, such as Form W-2, and the filing of the taxpayer’s final federal tax return. As such, the Company generally uses paystub information to underwrite the ERA. The repayment of the ERA is incumbent upon the taxpayer client returning to the Bank’s Tax Provider for the filing of their final federal tax return in order for the tax refund to potentially be received by the Bank from the federal government to pay off the advance. The ERA product had the following features during the 2025 and 2026 Tax Seasons: ​
| ● | Only offered during December and the following January in connection with the upcoming first quarter tax business for each period;
| ● | The taxpayer was given the option to choose from multiple loan-amount tiers, subject to underwriting, up to a maximum advance amount of $2,000 for both the 2025 and 2026 Tax Seasons;
| ● | No requirement that the taxpayer pays for another bank product, such as an RT;
| ● | Multiple disbursement methods available through most Tax Providers, including direct deposit or prepaid card, based on the taxpayer-customer’s election;
| ● | Repayment of the ERA to the Bank via deduction from the taxpayer’s tax refund proceeds; and
| ● | If a tax refund is insufficient to repay the ERA, including but not limited to the failure to file a final federal tax return through a Republic Tax Provider:
| ● | there is no recourse to the taxpayer,
| ● | no negative credit reporting on the taxpayer, and
| ● | no collection efforts against the taxpayer.
​ The Company reports fees earned for ERAs/RAs as “Interest income on loans.” The number of days for delinquency eligibility is based on management’s annual analysis of tax return processing times. RAs, including ERAs that were originated related to the first quarter 2025 Tax Season were repaid, on average, within 32 days after the taxpayer’s tax return was submitted to the applicable taxing authority. Since ERAs/RAs do not have a contractual due date, the Company considered the advance delinquent during 2026 if it remained unpaid 35 days after the taxpayer’s tax return was submitted to the applicable taxing authority. ​ Provisions on ERAs/RAs are estimated when advances are made. Unpaid ERAs/RAs, related to the first quarter tax filing season of a given year are considered delinquent at June 30th of that year and charged-off. In addition, RAs that are subject to Tax Provider loan loss guarantees are charged-off and immediately recorded as recoveries of previously charged-off loans with corresponding receivables recorded in other assets for the Tax Provider guarantees. Corresponding receivables are settled during the third quarter of each year. RAs collected during the second half of each year, not subject to loan loss guarantee arrangements, are recorded as recoveries of previously charged-off loans. ​ Refund Transfers: ​ RTs are fee-based products whereby a tax refund is issued to the taxpayer after the Bank has received the refund from the federal or state government. There is no credit risk or borrowing cost associated with these products because they are only delivered to the taxpayer upon receipt of the tax refund directly from the governmental paying authority. Fees earned by the Company on RTs, net of revenue share, are reported as noninterest income under the line item “Net refund transfer fees.” ​ (IV)Republic Payment Solutions segment ​ The RPS segment offers a range of payment-related products and services to consumers through third-party service providers. Through the Bank, the RPS segment offers both issuing solutions and money movement capabilities. ​ Issuing Solutions: ​ The RPS segment offers prepaid and debit solutions primarily marketed to the consumer industry. Prepaid solutions include the issuing of payroll and general purpose reloadable cards. Characteristics of these cards include the following: ​
| ● | Similar to a traditional debit card with features including traditional POS purchasing, ATM/ITM withdrawals and direct deposit;
| ● | Funds associated with these products are typically held in pooled accounts at the Bank, with the Bank maintaining records of individual balances within these pooled accounts; and
| ● | Payroll cards facilitate the loading of an employer’s payroll onto a card via direct deposit, with payroll and general purpose reloadable cards generally distributed through retail locations and reloadable through participating retail load networks.
​ Debit solutions include the issuing of DDAs, savings accounts and/or debit cards. In addition to offering traditional POS purchasing, ATM/ITM withdrawals, and direct deposit options, these accounts may include overdraft protection. ​ Money Movement Capabilities: ​ Through RPS, the Bank participates in traditional money movement solutions including ACH transactions, wire transfers, check processing, and the Mastercard Remote Payment and Presentment Service. These capabilities are also complementary products facilitating the movement of money for other RPG divisions. ​ The Company reports its share of client-related charges and fees for RPS programs as noninterest income under “Program fees.” Additionally, the Company’s portion of interchange revenue generated by prepaid card transactions is reported as noninterest income under “Interchange fee income.” The Company began sharing interest income revenue with its largest prepaid marketer-servicer during 2024, with the interest shared reported as “Interest expense on deposits.” The Company did not share interest income revenue with its largest prepaid marketer-servicer during 2025 and the first three months of 2026, as minimum deposit balance thresholds were not met. ​ (V)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. Ordinary gains or losses on the sale of RCS products are reported as a component of “Program fees.” Through the Bank, RCS uses third-party service providers for certain services such as marketing and loan servicing for RCS’s LOC products, installment loan product and healthcare receivables products. ​ LOC Products: ​ Through the RCS segment, the Bank uses third-party service providers to originate two line-of-credit products (“LOC I” and “LOC II”) offered generally to subprime or near-prime borrowers across multiple states. These service providers, operating under the Bank’s oversight and supervision, perform certain marketing, servicing, technology, and support functions. In addition, a separate third-party provides customer support, servicing, and other operational services on the Bank’s behalf. The Bank is the lender for both products and is marketed as such. The Bank establishes and controls the loan terms and underwriting guidelines and exercises consumer-compliance oversight over each product. The Bank sells participation interests in these products as follows: ​
| ● | LOC I – The Bank sells a 90% participation interest in advances made to borrowers, generally three business days after funding the associated advances. Although the Bank retains a 10% participation interest in each advance, it retains 100% ownership of the underlying LOC I account with each borrower. Loan balances HFS through this program are carried at the lower of cost or fair value.
​
| ● | LOC II – The Bank sells a 95% participation interest in advances made to borrowers, generally three business days after funding the associated advances. Although the Bank retains a 5% participation interest in each advance, it retains 100% ownership of the underlying LOC II account with each borrower. Loan balances HFS through this program are carried at the lower of cost or fair value.
​ Installment Loan Product: ​ Through the RCS segment, the Bank offers installment loans with terms ranging from 12 to 60 months to borrowers in multiple states. The same third-party service provider for RCS’s LOC II is the third-party provider for the installment loan product. This third-party provider is subject to the Bank’s oversight and supervision and provides the Bank with marketing services and loan servicing for these RCS installment loans. The Bank is the lender for these loans and is marketed as such. Furthermore, the Bank controls the loan terms and underwriting guidelines, and the Bank exercises consumer compliance oversight of this RCS installment loan product. Currently, all loan balances originated under this RCS installment loan program are carried as HFS on the Bank’s balance sheet, with the intent to sell to a third-party, who is an affiliate of the Bank’s third-party service provider, generally within 16 days following the Bank’s origination of the loans. Loans originated under this RCS installment loan program are carried at fair value under a fair-value option, with the portfolio marked to market monthly. ​ Healthcare Receivables Products: ​ Through the RCS segment, the Bank originates healthcare receivables products across the U.S. through three different third-party service providers. For two of the programs, the Bank retains 100% of the receivables, with recourse in the event of default. For the remaining program, in some instances the Bank retains 100% of the receivables originated, with recourse in the event of default, and in other instances, the Bank sells 100% of the receivables generally within one month of origination. Loan balances HFS through this program are carried at the lower of cost or fair value. ​ For the RCS LOC and healthcare receivable products, the Company reports interest income and loan origination fees under “Loans, including fees,” while any net gains or losses on sale and mark-to-market adjustments of RCS loans are reported as noninterest income under “Program fees.” The Company has elected fair value accounting for its RCS installment loan product that it sells after an initial holding period. As a result, interest income on loans, loan origination fees, net gains or losses on sale, and mark-to-market adjustments for the RCS installment loan product are reported as noninterest income under “Program fees.” ​ ​ Critical Accounting Policies and Estimates — To prepare financial statements in conformity with GAAP, management must make estimates and assumptions that require difficult, complex, or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates are susceptible to material changes as a result of changes in facts and circumstances. Facts and circumstances which could affect these judgments include, but are not limited to, changes in interest rates, changes in the performance of the economy and changes in the financial condition of borrowers. The Company’s accounting policies are fundamental to understanding management’s discussion and analysis of the Company’s financial condition and results of operations. At March 31, 2026, the accounting policy considered the most critical in preparing the Company’s consolidated financial statements is the determination of the ACLL. ​ Recently Adopted Accounting Standards ​ There were no ASUs adopted by the Company during the three months ended March 31, 2026. ​ Accounting Standards Update ​ The following not-yet-effective ASUs are considered relevant to the Company’s financial statements. Generally, if an issued-but-not-yet-effective ASU with an expected immaterial impact to the Company has been disclosed in prior Company filings, that ASU will not be subsequently redisclosed. ​ ​
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​ | ​ | ​ | ​ | ​ | ​ | Date Adoption | ​ | Adoption | ​ | Expected
ASU. No. | ​ | Topic | ​ | Nature of Update | ​ | Required | ​ | Method | ​ | Financial Impact
2024-03 | ​ | Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses | ​ | This ASU requires public companies to disclose, in the notes to financial statements, specified information about certain costs and expenses at each interim and annual reporting period. | ​ | Annual reporting periods beginning after Dec. 15, 2026, and interim periods within annual reporting periods beginning after Dec. 15, 2027. | ​ | Retrospectively | ​ | The Company is currently analyzing the impact of this ASU on its financial statements.
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2025-01 | ​ | Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date | ​ | This ASU amends the effective date of ASU No. 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. | ​ | Annual reporting periods beginning after Dec. 15, 2026, and interim periods within annual reporting periods beginning after Dec. 15, 2027. | ​ | Retrospectively | ​ | The Company is currently analyzing the impact of this ASU on its financial statements.
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2025-06 | ​ | Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. | ​ | This ASU modernizes and clarifies the threshold for when an entity is required to start capitalizing software costs and is based on when (i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended. | ​ | Annual reporting periods beginning after Dec. 15, 2027, and interim reporting periods within those annual reporting periods. | ​ | Prospectively | ​ | The Company is currently analyzing the impact of this ASU on its financial statements.
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2025-07 | ​ | Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606): Derivatives Scope Refinements and Scope Clarification for Share-Based Noncash Consideration from a Customer in a Revenue Contract | ​ | This ASU refines the scope of Topic 815 to clarify which contracts are subject to derivative accounting. The guidance also provides clarification under Topic 606 for share-based payments from a customer in a revenue contract. | ​ | Annual reporting periods beginning after Dec. 15, 2026, and interim reporting periods within those annual reporting periods. | ​ | Prospectively | ​ | The Company is currently analyzing the impact of this ASU on its financial statements.
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2025-08 | ​ | Financial Instruments—Credit Losses (Topic 326): Purchased Loans | ​ | The ASU expands the population of acquired financial assets accounted for using the gross-up approach. Acquired loans (excluding credit cards) are deemed purchased seasoned loans and accounted for using the gross-up approach upon acquisition if criteria established by the new guidance are met. This change aims to enhance comparability, consistency, and better reflect the economics of acquiring financial assets. | ​ | Annual reporting periods beginning after Dec. 15, 2026, and interim reporting periods within those annual reporting periods. | ​ | Prospectively | ​ | The Company is currently analyzing the impact of this ASU on its financial statements.
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2025-09 | ​ | Derivatives and Hedging (Topic 815): Hedge Accounting Improvements | ​ | The ASU enables entities to apply hedge accounting to a greater number of highly effective economic hedges. | ​ | Annual reporting periods beginning after Dec. 15, 2026, and interim reporting periods within those annual reporting periods. | ​ | Prospectively | ​ | The Company is currently analyzing the impact of this ASU on its financial statements.
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2025-11 | ​ | Interim Reporting (Topic 270): Narrow-Scope Improvements | ​ | This ASU does not change the fundamental nature of interim reporting or expand or reduce current interim disclosure requirements. The ASU clarifies that all entities preparing GAAP‑compliant interim financial statements must follow Topic 270. It also creates a complete list of required interim disclosures, adds a principle requiring disclosure of material events occurring after year‑end, and improves guidance on the content and format of interim financial statements. | ​ | Interim periods within annual periods beginning after December 15, 2027. | ​ | Prospectively | ​ | The Company is currently analyzing the impact of this ASU on its financial statements.
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2025-12 | ​ | Codification Improvements | ​ | These amendments in this ASU update the FASB Accounting Standards Codification® for a broad range of Topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements. | ​ | Annual reporting periods beginning after Dec. 15, 2026, and interim reporting periods within those annual reporting periods. | ​ | Prospectively | ​ | The Company is currently analyzing the impact of this ASU on its financial statements.
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