REPUBLIC BANCORP INC /KY/ (RBCAA)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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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.

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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.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations of Republic should be read in conjunction with Part I Item 1 “Financial Statements.”

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FORWARD-LOOKING STATEMENTS

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This Form 10-Q (this “report”) contains statements relating to future results of Republic Bancorp, Inc. that are considered “forward-looking” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The forward-looking statements are principally, but not exclusively, contained in this section of the report and Part I Item 1 “Financial Statements.”

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Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements to differ materially from those expressed or implied in such statements. These statements are often, but not always, identified by words or phrases such as “anticipate,” “believe,” “can,” “conclude,” “continue,” “could,” “estimate,” “expect,” “forecast,” “foresee,” “goal,” “intend,” “may,” “might,” “outlook,” “possible,” “plan,” “predict,” “project,” “potential,” “seek,” “should,” “target,” “will,” “will likely,” “would,” or similar expressions. Forward-looking statements are not historical facts; rather, they are based on current expectations, estimates, and projections about the Company’s industry, management’s beliefs, and certain assumptions made by management—many of which are inherently uncertain and beyond management’s control.

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Forward-looking statements detail management’s expectations regarding the future and are based on information known to management only as of the date the statements are made and management undertakes no obligation to update forward-looking statements to reflect events or circumstances that occur after the date forward-looking statements are made, except as required by applicable law.

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There is no assurance that the following list of risks and uncertainties is complete. However, risks and uncertainties that could cause actual results to differ materially from those expressed in forward-looking statements include:

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Financial, Economic, and Market Risks

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Credit and Liquidity Risks

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Operational and Strategic Execution Risks

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Technology, Cybersecurity, and Compliance Risks

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Environmental, Social, and Geopolitical Risks

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Other Risks

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ACCOUNTING STANDARDS UPDATES

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

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CRITICAL ACCOUNTING

[Excerpt truncated for page length; source filing is linked above.]

Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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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. The Company dissolved Republic Insurance Services, Inc., its former insurance captive subsidiary, in 2023. All significant intercompany balances and transactions are eliminated in consolidation.

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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.

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General Business Overview

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The Company’s Executive Chair/CEO serves as the Company’s CODM. 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.

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As of December 31, 2025, 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. Prior to the first quarter of 2024, Republic had reported mortgage banking as a separate reportable segment.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations of Republic should be read in conjunction with Part II Item 8 “Financial Statements and Supplementary Data.”

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Forward-looking Statements

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Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements to differ materially from those expressed or implied in such statements. These statements are often, but not always, identified by words or phrases such as “anticipate,” “believe,” “can,” “conclude,” “continue,” “could,” “estimate,” “expect,” “forecast,” “foresee,” “goal,” “intend,” “may,” “might,” “outlook,” “possible,” “plan,” “predict,” “project,” “potential,” “seek,” “should,” “target,” “will,” “will likely,” “would,” or similar expressions. Forward-looking statements are not historical facts; rather, they are based on current expectations, estimates, and projections about the Company’s industry, management’s beliefs, and certain assumptions made by management—many of which are inherently uncertain and beyond management’s control. For additional information regarding forward-looking statements, see the section titled “Cautionary Statement Regarding Forward-Looking Statements.”

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Accounting Standards Updates

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

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Critical Accounting Estimates

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Republic’s consolidated financial statements and accompanying footnotes have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reported periods.

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Management continually evaluates the Company’s accounting policies and estimates that it uses to prepare the consolidated financial statements. In general, management’s estimates and assumptions are based on historical experience, accounting and regulatory guidance, and information obtained from independent third-party professionals. Actual results may differ from those estimates made by management.

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

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

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As of December 31, 2025, the Bank maintained an ACLL for expected credit losses inherent in Company’s loan portfolio, which includes overdrawn deposit accounts. Management evaluates the adequacy of the ACLL monthly and presents and discusses the ACLL with the Audit Committee and the Board quarterly.

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The Company’s CECL method is a “static-pool” method that analyzes historical closed pools of loans over their expected lives to attain a loss rate, which is then adjusted for current conditions and reasonable, supportable forecasts prior to being applied to the current balance of the analyzed pools. Due to its reasonably strong correlation to the Company's historical net loan losses, the Company has chosen to use the U.S. national unemployment rate as its primary forecasting tool. Additionally, the Company reviews and utilizes CRE and C&I vacancy rates as a secondary forecasting tool. Subsequent to the one-year forecasts, loss rates are assumed to immediately revert back to long-term historical averages. Adjustments to the historical loss rate for current conditions include differences in underwriting standards, portfolio mix or term, delinquency level, as well as for changes in environmental conditions, such as changes in property values or other relevant factors.

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

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

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

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Management considered the range of absorption rates and exhaustion rates calculated for the Core Bank as of December 31, 2025 and 2024 to be within acceptable ranges under current economic conditions. Based on management’s evaluation, a Core Bank ACLL of $66 million, or 1.24%, of total Core Bank loans, was an adequate estimate of expected losses within the loan portfolio as of December 31, 2025 and resulted in Core Banking Provision for its loans of a net charge of $6.0 million during 2025.

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If the mix and amount of future charge-off percentages differ significantly from those assumptions used by management in making its determination, an adjustment to the Core Bank ACLL and the resulting effect on the income statement could be material.

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The RPG ACLL as of December 31, 2025 primarily related to loans originated and held for investment through the RCS segment. RCS generally originates small-dollar, consumer credit products. For its healthcare receivable products, the Bank originates the loans, and in some instances, sells 100% of the balances and in other instances retains 100% of the balances. For its LOC products, the Bank originates these products, sells 90% or 95% of the balances within three business days of loan origination, and retains a 5% or 10% interest. RCS LOC products typically earn a higher yield but also have higher credit risk compared to loans originated through Core Banking operations, with a sizable portion of RCS clients considered subprime or near-prime borrowers.

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

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Management only evaluates the ACLL on its active RCS products that have incurred meaningful losses since their inception, which are its LOC products. Due to the general short-term nature of these products, management utilized the current year net charge-offs for 2024 and 2025, along with the end-of-the-year ACLL to calculate each years’ absorption rate and exhaustion rate. The absorption and exhaustion rates were both considered to be within acceptable ranges as of December 31, 2025 and 2024. Based on management’s calculation, an ACLL of $19 million, or 17.15%, of total RCS loans was an adequate estimate of expected losses within the RCS portfolio as of December 31, 2025.

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

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

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See additional discussion regarding ERAs/RAs under the sections titled:

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RPG recorded a net charge of $25.6 million, $50.6 million, and $39.1 million to the Provision during 2025, 2024, and 2023, with the Provision for each year primarily due to net losses on RAs and growth in short-term, consumer loans originated through the RCS segment. If the number of future charge-offs on RAs and RCS loans differ significantly from assumptions used by management in making its determination, an adjustment to the RPG ACLL and the resulting effect on the income statement could be material.

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RECENT DEVELOPMENTS

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Republic Bank Finance Division Divestiture

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On December 22, 2025, the Bank entered into an Asset Purchase Agreement with CAN Capital Merchant Services, Inc. (“CAN”) pursuant to which CAN is expected to purchase substantially all of the assets of RBF, a division of the Bank, consisting of approximately $82 million of loans and leases, and to assume approximately $3 million of related liabilities. CAN will also assume all on-going operations of RBF upon the closing of the transaction. Located in Marietta, Georgia, CAN is engaged in the business of alternative small business finance. Republic acquired RBF as part of its March 2023 acquisition of CBank

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Per the Asset Purchase Agreement the aggregate purchase price is equal to the net book value of RBF’s assets and liabilities at Closing, plus a fixed premium. In connection with the transaction the Bank recorded a gain, net of broker commissions, of approximately $6 million during the first quarter of 2026.

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OVERVIEW

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Total Company net income was $131.3 million and Diluted EPS was $6.72 for 2025, compared to net income of $101.4 million and Diluted EPS of $5.21 for 2024. The following table presents Republic’s financial performance for the years ended December 31, 2025, 2024, and 2023:

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Table 1 — Summary

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

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(I) Traditional Banking segment

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(II) Warehouse Lending segment

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(III)Tax Refund Solutions segment

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(IV)Republic Payment Solutions segment

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RESULTS OF OPERATIONS

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This section of this Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 6, 2025.

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Net Interest Income

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

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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, as well as short-term and long-term borrowing sources. FHLB advances have traditionally served as a significant borrowing and liquidity source for the Bank. Net interest income is impacted by both changes in the amount and composition of interest-earning assets and interest-bearing liabilities, as well as market interest rates.

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Over the past 15 months, the FRB has reduced the FFTR by 175 bps. The most recent cut occurred on December 10, 2025, when the FRB lowered the FFTR by 25 bps to 3.75%, marking the third consecutive monthly reduction. Earlier adjustments included a 50-bp cut in September 2024 and two 25-bp cuts in November and December 2024. The FOMC has indicated the potential for further rate reductions in 2026.

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Total Company net interest income was $334.7 million during 2025 and represented a $22.5 million, or 7%, increase over 2024. Total Company NIM increased to 5.05% during 2025 compared to 4.85% for 2024. In general, notably lower interest-bearing deposit costs combined with a modest decline in interest-earning assets yields during 2025 led to NIM expansion and strong net interest income for the year.

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

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Traditional Banking net interest income increased $23.5 million, or 12%, for 2025 compared to 2024. The increase in net interest income was primarily driven by year-over-year growth in average interest-earning assets and NIM expansion. Overall, the Traditional Bank’s NIM increased from 3.55% for 2024 to 3.88% for 2025, driven by primarily by lower interest-bearing deposit costs as well as improved loan and investment yields.

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Items of note impacting the Traditional Bank’s change in net interest income and NIM between 2024 and 2025 follows:

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Traditional Bank average loans decreased $18 million, from $4.60 billion in 2024 to $4.58 billion in 2025, while the weighted-average yield increased from 5.56% to 5.68%, resulting in a $4.8 million year-over-year increase in interest income. The higher yield was driven primarily by the runoff of lower-yielding loans through amortization and payoffs combined with the origination of new loans at higher rates.

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The modest decline in average loan balances reflected the second-quarter 2024 sale of $67 million in RRE loans previously held for investment. In addition, on December 19, 2025, management agreed to sell $82 million of lease financing receivables, which were reclassified from held for investment to HFS as of December 31, 2025. While this reclassification did not materially impact 2025 average balances, it will affect period-to-period comparability going forward.

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From 2024 through the first nine months of 2025, management maintained a more conservative pricing strategy across its lending function. As expected, this approach resulted in slower origination volume across most product categories during that timeframe. Management shifted this strategy in the fourth quarter of 2025, contributing to a $32 million increase in average Traditional Bank loans when comparing the fourth quarter of 2025 to the fourth quarter of 2024. Given the current positively sloped shape of the yield curve, management expects to continue this pricing approach into 2026, provided market conditions remain favorable and funding costs remain stable.

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Average interest-earning cash—managed as a separate but complementary component of the Company’s investment portfolio—rose $33 million, or 7%, to $505 million in 2025, compared to $473 million in 2024. This increase was driven primarily by excess liquidity generated from growth in average interest-bearing deposits. The weighted-average yield on interest-earning cash declined from 5.26% in 2024 to 4.32% in 2025, reflecting the 175-basis-point decrease in the FFTR over the past 15 months.

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Beginning in 2020, the Company pursued an investment strategy focused on shorter-term securities while maintaining a significant level of excess cash at the FRB. As market conditions improved, the Company shifted its strategy in the fourth quarter of 2024 and throughout 2025, purchasing longer-duration investment securities, primarily MBSs, to take advantage of higher yields relative to overnight cash. The yield curve, which began to steepen in the fourth quarter of 2024, became positively sloped in late March 2025 and generally remained so through year-end 2025.

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Average investments increased $107 million, or 16%, to $754 million in 2025 from $647 million in 2024, while the weighted-average yield rose from 3.10% to 3.88%, driving a $6.1 million, or 14%, increase in interest income. The higher year-over-year yield was driven primarily by a more favorable yield curve and the strategic redeployment of cash from maturing investments into longer-term securities that offered yields superior to overnight interest-earning cash alternatives.

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The Traditional Bank’s average cost of interest-bearing liabilities decreased from 2.45% during 2024 to 2.03% for 2025 driven primarily by the following:

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Average noninterest-bearing deposits declined $48 million, or 4%, in 2025 compared to 2024. This decline reflects an industry-wide trend that began in late 2022, as the interest rate environment—particularly during periods of an inverted yield curve—combined with heightened deposit competition, has continued to make premium-rate interest-bearing checking and savings products more attractive to both consumer and business clients.

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Management believes that further reductions to the FFTR are unlikely to benefit the Traditional Bank’s net interest income or NIM in 2026. The extent of any impact from the most recent or future FFTR decreases will depend on several factors, including the ongoing shift from noninterest-bearing to interest-bearing deposits, the steepness and shape of the yield curve, demand for the Company’s lending and deposit products, the Company’s ability to reduce deposit costs in line with rate cuts, and overall liquidity needs.

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Warehouse Lending net interest income increased $2.2 million, or 17%, from 2024 to 2025, driven by a $1.9 million, or 5%, increase in total interest income and a $287,000 reduction in interest expense. Although Warehouse NIM and loan yields declined by 2 bps and 91 bps, respectively, the segment benefited from higher average outstanding balances, which grew $87 million, or 18%, year-over-year.

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Average committed Warehouse lines of credit increased from $938 million in 2024 to $1.05 billion in 2025, and average LOC usage rose from 50% to 53% over the same periods.

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Because consumer mortgage activity drives utilization of Warehouse LOCs, overall usage has historically been sensitive to movements in long-term interest rates. A meaningful decline in long-end rates could increase Warehouse demand by stimulating mortgage origination volume. Conversely, declines limited to the short-end of the yield curve would not be expected to materially affect Warehouse demand.

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TRS’s net interest income decreased $3.9 million, or 11%, from 2024 to 2025. Loan-related interest and fees decreased $5.3 million, or 13%, during 2025, consistent with the $72 million, or 8% decline in total ERA/RA volume for the 2025 Tax Season. In addition, TRS received a $560,000 payment during the 2024 representing a Tax Provider yield enhancement for the RA program to offset the Company’s higher funding costs. This yield enhancement was new for the 2024 Tax Season and was eliminated for the 2025 Tax Season.

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As previously disclosed, the Company’s largest Tax Provider contract within TRS based on product volume expired in October 2025 and the Company did not enter into a new contract with this Tax Provider for the 2026 Tax Season (which began in December 2025).

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ERAs/RAs originated through this Tax Provider represented approximately 67% of total ERA/RA dollars originated through TRS from December 2024 through February 2025. As a result, ERA/RA fee income attributable to this Tax Provider accounted for 61% of TRS’s total ERA/RA fee income for the 2025 calendar year, 88% for the fourth quarter of 2024 and 0% during the fourth quarter of 2025.

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Management does not believe that the net revenue from this Tax Provider will be replaced during the 2026 calendar year.

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See additional detail regarding the ERA/RA product under the Footnote titled “Loans and Allowance for Credit Losses” of Part II Item 8 “Financial Statements and Supplemental Data.”

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Net interest income from the Company’s prepaid card division increased $2.0 million, or 17%, in 2025 compared to 2024. This increase was driven primarily by a reduction in the segment’s revenue share component, as its largest marketer-servicer did not meet the minimum contractual deposit balance thresholds required to earn revenue share for 2025. By comparison, revenue share payments totaled $4.8 million in 2024 and were recorded as interest expense. Management is currently unable to predict the level of future revenue share expense as future revenue-share payments are possible but not certain.

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Partially offsetting the benefit of the reduced revenue share, RPS earned a lower yield on an average balance of $340 million in prepaid program deposits during 2025, driven primarily by the 175 bp decrease in the FFTR over the past 15 months.

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Historically, customer demand for prepaid card products has not been sensitive to interest rate movements, and management therefore does not expect changes in the rate environment to materially affect origination volumes. However, a declining interest rate environment would likely reduce the internal FTP credit allocated to this segment more than it would reduce any revenue-share expense, resulting in lower NIM for the segment. The magnitude of this impact will depend on the final FTP rate applied as well as the overall volume of balances generated.

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(V)Republic Credit Solutions segment

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RCS’s net interest income decreased $1.2 million, or 2%, from 2024 to 2025, driven primarily by a decrease in fee income from RCS’s LOC II product. RCS’s LOC II loan fees, which are recorded as interest income on loans, decreased $1.5 million during 2025 to $27.9 million, a 5% decrease compared to the $29.4 million recorded during 2024. The decrease in fee income for the LOC II product was generally driven by a decline in new loan origination volume.

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Historically, customer demand for RCS consumer loan products has not been sensitive to changes in interest rates, and management therefore does not expect rate movements to materially affect origination volumes. However, a declining interest rate environment would likely reduce the internal FTP cost allocated to this segment, which in turn would be favorable to the segment’s NIM. The magnitude of this benefit would depend on the final FTP rate applied, as well as the overall volume and mix of loans the segment originates.

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The following table presents average balances, along with the related calculations of tax-equivalent net interest income, NIM and net interest spread for the related periods.

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Table 2 — Total Company Average Balance Sheets and Interest Rates

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Table 3 — Loan Fee Income

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The amount of loan fee income can meaningfully impact total interest income, loan yields, NIM, and net interest spread. The following table illustrates loan fees recorded as interest income on loans by segment:

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The following table illustrates the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities impacted Republic’s interest income and interest expense during the periods indicated. Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior rate), (ii) changes attributable to changes in rate (changes in rate multiplied by prior volume), and (iii) net change. The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.

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Table 4 — Total Company Volume/Rate Variance Analysis

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Provision

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Total Company Provision was a net charge of $31.6 million for 2025 compared to a net charge of $54.4 million for 2024.

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The following were the most significant components comprising the total Company’s Provision by reportable segment:

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(I)Traditional Banking segment

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The Traditional Banking Provision during 2025 was a net charge of $5.5 million compared to a net charge of $3.2 million for 2024.

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The net charge for 2025 was primarily driven by the following:

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The net charge for 2024 was primarily driven by the following:

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As a percentage of total Traditional Bank loans, the Traditional Banking ACLL was 1.40% as of December 31, 2025, compared to 1.31% as of December 31, 2024.

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The Company believes, based on information presently available, that it has adequately provided for Traditional Banking loan losses as of December 31, 2025.

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(II)Warehouse Lending segment

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Warehouse recorded a net charge to the Provision of $508,000 during 2025 compared to a net charge of $527,000 for 2024. Provision for both periods reflected changes in general reserves consistent with changes in outstanding period-end balances. Outstanding Warehouse period-end balances increased $203 million, or 37%, during 2025 compared to an increase of $211 million, or 62%, during 2024.

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As a percentage of total Warehouse outstanding balances, the Warehouse ACLL was 0.25% as of both December 31, 2025 and December 31, 2024.

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The Company believes, based on information presently available, that it has adequately provided for Warehouse loan losses as of December 31, 2025.

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TRS recorded a net charge to the Provision of $9.5 million during 2025 compared to a net charge of $30.0 million during 2024. Substantially all TRS Provision in both periods was related to its ERA/RA products.

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The Bank’s ability to control ERA/RA 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. In addition, the Bank’s ability to control losses for the ERA product is highly dependent upon the taxpayer returning to a Tax Provider for the filing of their final tax return. Each year, the Bank’s ERA/RA approval model is based primarily on the prior-year’s tax refund payment patterns. Because the substantial majority of the ERA/RA volume occurs each year before that year’s tax refund payment patterns can be analyzed and subsequent underwriting changes implemented, credit losses during a given year could be higher than management’s predictions if tax refund payment patterns change materially between years.

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2025 Tax Season Fee Structure Changes and Corresponding Shift and Decline in Total Origination Volume:

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During the fourth quarter of 2024, the Company revised its agreement with its largest Tax Provider based on product volume for the 2025 Tax Season. Under the revised structure, the ERA fee was increased and a new ERA-specific loss-cap guarantee was added, while the fee applicable to RAs was reduced. Consistent with these changes, TRS experienced a shift in product mix and an overall decline in total ERA/RA volume for the 2025 Tax Season compared to the 2024 Tax Season.

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Total ERA/RA volume for the 2025 Tax Season declined $72 million, or 9%, from $874 million originated for the 2024 Tax Season to $802 million for the 2025 Tax Season. Total RA origination volume was $663 million during 2025 compared to $771 million during 2024, with originations for both periods occurring during the first quarter. Total ERA origination volume was $139 million during the 2025 Tax Season compared to $103 million during the 2024 Tax Season, with originations occurring in December 2024 and December 2023, respectively.

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2026 Tax Season Contract Expiration:

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As previously disclosed, the Company’s largest Tax Provider contract within TRS based on product volume, expired in October 2025, and the Company did not enter into a new contract with this Tax Provider for the 2026 Tax Season (which began in December 2025). Provision for ERAs/RAs originated through this Tax Provider represented 58% of TRS’s total ERA/RA Provision for the 2025 calendar year, 96% for the fourth quarter of 2024 and 0% for the fourth quarter of 2025. Management does not believe that the net revenue from this Tax Provider will be replaced during the 2026 calendar year.

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The lower Provision during 2025 compared to 2024 related to the following factors:

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The Company believes, based on information presently available, that it has adequately provided for TRS loan losses as of December 31, 2025.

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See additional detail regarding the ERA/RA products under the Footnote titled “Loans and Allowance for Credit Losses” of Part II Item 8 “Financial Statements and Supplemental Data.”

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There is no ACLL or Provision for RPS, as the segment offers prepaid and debit solutions to consumers.

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As illustrated in the following table, RCS recorded a net charge to the Provision of $16.1 million during 2025 compared to a net charge of $20.6 million for 2024. RCS recorded net charge-offs of $17.7 million during 2025 compared to $17.9 million during 2024. In addition, the RCS Provision fluctuation from 2024 to 2025 was meaningfully impacted by calculated reserve requirements tied to period-to-period balance fluctuations in the higher risk LOC II product, whose period-end balances grew nearly $4.6 million during 2024 and declined $1.6 million during 2025.

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RCS recorded a net charge to the Provision of $20.6 million during 2024 compared to a net charge to the Provision of $16.5 million for 2023. The increase in the Provision during 2024 was substantially within the LOC II product and was generally in-line with its calculated required requirements tied to the increase in its period-end loan balances from 2023 to 2024.

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While RCS loans generally return higher yields, they also present a greater credit risk than Traditional Banking loan products. As a percentage of total RCS loans, the RCS ACLL was 17.30% as of December 31, 2025 compared to 16.30% as of December 31, 2024.

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The Company believes, based on information presently available, that it has adequately provided for RCS loan losses as of December 31, 2025.

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Table 5 — Republic Credit Solutions Provision by Product Type

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Noninterest Income

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Table 6 — Analysis of Noninterest Income

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Total Company noninterest income increased $10.2 million, or 14%, from 2024 to 2025.

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The following were the most significant components comprising the total Company’s noninterest income fluctuation by reportable segment:

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Noninterest income increased $8.0 million, or 20%, from 2024 to 2025, primarily driven by the following:

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(II)Warehouse Lending segment

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Warehouse noninterest income, which consists entirely of service charges on deposit accounts, increased $21,000 from $62,000 in 2024 to $83,000 in 2025.

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TRS’s noninterest income increased $2.4 million, or 16%, during 2025 compared to 2024, with RT fees representing the majority of noninterest income for each period. Despite a 5.6% decrease in overall volume, RT income expanded $2.3 million, or 15%, in 2025 attributable to a 22.8% increase in the per-unit net fee earned. The better per-unit profitability was led by select product price increases combined with a minimal change in revenue share.

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As previously disclosed, the Company’s largest Tax Provider contract within TRS based on product volume expired in October 2025 and the Company did not enter into a new contract with this Tax Provider for the 2026 Tax Season (which began in December 2025).

Net RT revenue generated from this Tax Provider accounted for approximately 20% of TRS’s total net RT revenue for the 2025 calendar year. The RT product is primarily earned and recognized during the first half of the year. Management does not believe that the net revenue from this Tax Provider will be replaced during the 2026 calendar year.

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RPS’s noninterest income decreased $172,000, or 5%, for 2025 compared to 2024. RPS program fees, which are volume based and represent a portion of the net interchange revenue earned for cardholder activity, drove the noninterest income decline.

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RCS’s noninterest income decreased $41,000, during 2025 compared to 2024, with program fees representing the substantial majority of RCS’s noninterest income. As noted in the following table, lower sales volume from RCS’s LOC products from 2024 to 2025 was offset by expansion within the installment products.

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The following table presents program fees by RPG Segment:

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Table 7 — Program Fees by Republic Processing Group Segment

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The following table presents RCS program fees by product type:

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Table 8 — Program Fees by Republic Credit Solutions Product

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*The Company has elected the fair value option for this product, with mark-to-market adjustments recorded as a component of Program Fees.

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Noninterest Expense

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Table 9 — Analysis of Noninterest Expense

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Total Company noninterest expense increased $17.5 million, or 9%, during 2025 compared to 2024.

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The following were the most significant components comprising the total Company’s noninterest expense fluctuation by reportable segment:

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Traditional Bank noninterest expense increased $19.8 million, or 12%, for 2025 compared to the same period in 2024, driven primarily by the following:

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Noninterest expense at the Warehouse Lending segment increased $157,000, or 4%, during 2024 to 2025.

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(III)Tax Refund Solutions segment

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Noninterest expense at the TRS segment decreased $740,000, or 6%, during 2025 compared to 2024, as various underwriting and administrative related expenses declined consistent with ERA/RA volume.

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Noninterest expense at the RPS segment increased $536,000, or 13%, during 2025 compared to 2024, primarily due to a $657,000 increase in salary and employee benefits resulting from an increase in allocated staff.

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(V)Republic Credit Solutions segment

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Noninterest expense at the RCS segment decreased $2.3 million, or 16%, during 2025 compared 2024, driven primarily by a $2.5 million, or 47%, reduction in marketing and development expenses, which generally fluctuate in-line with overall origination volume. Under the terms of the Company’s contract with its LOC II marketer-servicer, RCS reimburses the marketer-servicer a certain dollar amount for marketing costs based on each new product originated during the period.

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FINANCIAL CONDITION

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Overview

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Total assets increased $195 million, or 3%, to $7.04 billion at December 31, 2025 from $6.85 billion at December 31, 2024, driven primarily by expansion within the investment portfolio.

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Total liabilities increased $85 million, or 1%, to $5.94 billion at December 31, 2025 from $5.85 billion at December 31, 2024, due mainly to a $111 million, or 28%, increase in total FHLB advances outstanding.

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Stockholders’ equity increased $110 million, or 11%, to $1.10 billion at December 31, 2025, compared to $992 million at December 31, 2024. This increase reflected net income of $131.3 million and an improvement in AOCI, partially offset by $35 million of cash dividends declared during 2025. The improvement in AOCI was attributable to changes in the interest-rate environment and the corresponding impact on the valuation of the AFS debt-securities portfolio and cash-flow-hedging derivatives.

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Cash and Cash Equivalents

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Cash and cash equivalents include cash, deposits with other financial institutions with original maturities of less than 90 days, and federal funds sold. The Company had $220 million in cash and cash equivalents as of December 31, 2025, compared to $432 million as of December 31, 2024. Average interest-earning cash and cash equivalents totaled $671 million for 2025, compared to $612 million for 2024. For cash held at the FRB, the Bank earns a yield on balances in excess of required reserves, with these funds earning a weighted-average yield of 4.33% during 2025 compared to 5.26% during 2024. Cash held within the Bank’s banking centers and ATM/ITM networks does not earn interest. Despite the year-over-year increase in average interest-earning cash balances, the Company has, over the past several months, deployed a higher percentage of its excess cash into investment securities resulting in a decrease in period-end cash balances.

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In prior years, the Company maintained elevated cash balances during the fourth quarter due to near-term funding requirements for ERAs/RAs related to the upcoming Tax Season. As previously disclosed, the Company’s largest Tax Provider contract within TRS, based on product volume, expired in October 2025, and the Company did not enter into a replacement agreement. Consistent with the non-renewal of this contract, the Company did not acquire any short-term brokered deposits at year-end 2025, compared to $200 million acquired at year-end 2024.

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Beginning in 2020, the Company employed an investment strategy focused on purchasing securities with shorter-term durations while maintaining significant excess cash at the FRB. Beginning in the fourth quarter of 2024 and continuing throughout 2025, the Company shifted to purchasing longer-duration investment securities in response to a more favorable yield curve and the relatively higher yields available compared to overnight cash. The yield curve, which began to steepen during the fourth quarter of 2024, became positively sloped in late March 2025 and remained so through year-end 2025.

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Investment Securities

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Table 10 — Investment Securities Portfolio

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The primary purpose of the Company’s investment securities portfolio is to provide a stable source of interest income and serve as an important liquidity management tool. In managing overall balance-sheet composition, the Company seeks to balance earnings generation with credit quality and liquidity considerations.

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At December 31, 2025, the Company’s AFS debt securities primarily consisted of U.S. Treasury securities and U.S. Government agency obligations, including agency MBSs and agency CMOs. The agency MBSs consist mainly of hybrid mortgage securities and other ARM-based securities underwritten and guaranteed by GNMA, FHLMC, or FNMA. The agency CMOs held in the portfolio are predominantly floating-rate securities that reset monthly. A portion of the investment portfolio is pledged to support client SSUAR balances, while remaining eligible securities not pledged for SSUARs may be pledged to the FHLB as collateral for the Bank’s borrowing capacity.

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Beginning in 2020, the Company employed an investment strategy focused on purchasing securities with shorter-term durations while maintaining significant excess cash at the FRB. Beginning in the fourth quarter of 2024 and continuing throughout 2025, the Company shifted to purchasing longer-duration investment securities in response to a more favorable yield curve and the relatively higher yields available compared to overnight cash. The yield curve, which began to steepen during the fourth quarter of 2024, became positively sloped in late March 2025 and remained so through year-end 2025. As a result of this strategy, Republic’s investment portfolio increased $295 million, or 50%, from December 31, 2024, to December 31, 2025. This growth was driven by $771 million of securities purchases, partially offset by $492 million in calls and maturities of debt securities and paydowns on MBS’s.

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Strategies for the investment securities portfolio are influenced by economic and market conditions, loan demand, deposit mix, and liquidity needs. The Company’s investment management strategy for 2026 and beyond will depend on a variety of factors, including the Company’s current and projected liquidity position, customer demand for loan and deposit products, the Company’s overall interest-rate-risk profile, the shape of the yield curve and prevailing interest-rate environment, as well as expectations for short-term and long-term interest-rate trends.

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Table 11 — Available-for-Sale Debt Securities

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Table 12 — Held-to-Maturity Debt Securities

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Actual maturities for MBS may differ from contractual maturities due to prepayments on underlying collateral.

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See the Footnote titled “Investment Securities” of Part II Item 8 “Financial Statements and Supplementary Data” for further information regarding the Bank’s investment securities.

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Loan Portfolio

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Table 13 — Loan Portfolio Composition

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Note: Loan segments as of December 31, 2024 changed from those defined in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, as the CRE loan pool was further segmented into Owner-occupied CRE, Nonowner-occupied CRE, and Multi-family beginning in 2025.

*Identifies loans to borrowers located primarily outside of the Bank’s market footprint.

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**Total loans are presented inclusive of premiums, discounts and net loan origination fees and costs.

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The Company’s credit exposure is diversified across both commercial and consumer borrowers, with no single industry representing more than 10% of total loans outstanding. Although the loan portfolio is broadly diversified, a borrower’s ability to meet contractual obligations remains influenced by the economic conditions and industry dynamics affecting that borrower. Loans outstanding and related unfunded commitments are primarily concentrated within the Company’s core market footprint, which includes Kentucky, Indiana, Florida, Ohio, and Tennessee.

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Total Company gross loans increased $7 million during 2025, reaching $5.45 billion outstanding as of December 31, 2025. The most significant components comprising the change in loans by reportable segment follow:

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(I)Traditional Banking segment

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Traditional Banking period-end loan balances decreased $23 million, or 1%, from December 31, 2024 to December 31, 2025. Excluding the $82 million of RBF lease-financing receivables that were reclassified from held for investment to HFS, the Traditional Bank would have generated $59 million of year-over-year loan growth. The primary drivers of the decline in Traditional Banking loan balances are as follows:

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(II)Warehouse Lending segment

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Outstanding Warehouse period-end balances increased $203 million, or 37%, from December 31, 2024, to December, 2025. Average committed Warehouse lines of credit increased from $938 million for the year ended December 31, 2024, to $1.05 billion during 2025, with higher demand driving average usage rates for Warehouse lines of credit from 50% to 53% for the same periods.

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Due to mortgage-market volatility and seasonality, projecting future outstanding balances for Warehouse lines of credit remains challenging; however, portfolio expansion has historically aligned with broader industry trends. Since entering the business in 2011, the Bank has experienced fluctuations in Warehouse balances consistent with overall mortgage-origination activity. Weighted-average quarterly usage rates have ranged from a low of 31% during the first quarter of 2023 to a high of 71% during the fourth quarter of 2019. On an annual basis, weighted-average usage rates have ranged from a low of 39% during 2022 to a high of 66% during 2020.

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As previously disclosed, the Company’s largest Tax Provider contract within TRS based on product volume expired in October 2025 and the Company did not enter into a new contract with this Tax Provider for the 2026 Tax Season (which began in December 2025).

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ERAs/RAs originated through this Tax Provider represented approximately 67% of total ERA/RA dollars originated through TRS from December 2024 through February 2025. As a result, ERA/RA fee income attributable to this Tax Provider accounted for 61% of TRS’s total ERA/RA fee income for the 2025 calendar year, 88% for the fourth quarter of 2024 and 0% during the fourth quarter of 2025.

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During December 2024, $139 million of ERAs were originated and outstanding at period end related to tax returns that were anticipated to be filed during the first quarter 2025 Tax Season. ERA originations related to the largest Tax Provider contract totaled $123 million, during 2025. During December 2025, $13 million of ERAs were originated and outstanding at period end related to tax returns that anticipated to be filed during the first quarter 2026 Tax Season.

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Outstanding period-end RCS balances decreased $15 million, or 12%, to $114 million as of December 31, 2025, consistent with pay off activity and decreased origination volume primarily associated with the healthcare receivable and LOC products.

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There are no outstanding loans at RPS, as the segment offers prepaid and debit solutions to consumers.

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The following table presents the maturity distribution and rate sensitivity of the loan portfolio:

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Table 14 — Selected Loan Distribution

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