# REPUBLIC BANCORP INC /KY/ (RBCAA) FY 2021 MD&A

Verbatim Item 7 Management's Discussion and Analysis from REPUBLIC BANCORP INC /KY/'s 10-K for fiscal year 2021.

SEC filing source: https://www.sec.gov/Archives/edgar/data/921557/000155837022002537/rbcaa-20211231x10k.htm
Accession: 0001558370-22-002537
Filing date: 2022-03-01
Report date: 2021-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/RBCAA/
All MD&A years: /company/RBCAA/mda/
Next year: /company/RBCAA/mda/fy2022/ (FY 2022)

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

​

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

​

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

​

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

​

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.”

​

Forward-looking statements discuss matters that are not historical facts. As forward-looking statements discuss future events or conditions, the statements often include words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “would,” “potential,” or similar expressions. Do not rely on forward-looking statements. Forward-looking statements detail management’s expectations regarding the future and are not guarantees. Forward-looking statements are assumptions 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, except as required by applicable law.

​

Broadly speaking, forward-looking statements include:

​

[[GREPCENT_TABLE]]
[["","\u25cf","the potential impact of the COVID-19 pandemic on Company operations;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","projections of revenue, income, expenses, losses, earnings per share, capital expenditures, dividends, capital structure, or other financial items;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","descriptions of plans or objectives for future operations, products, or services;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","forecasts of future economic performance; and"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","descriptions of assumptions underlying or relating to any of the foregoing."]]
[[/GREPCENT_TABLE]]

​

Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements to be materially different from future results, performance, or achievements expressed or implied by the forward-looking statements. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties, including, but not limited to the following:

​

[[GREPCENT_TABLE]]
[["","\u25cf","the impact of the COVID-19 pandemic on the Company\u2019s operations and credit losses;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","the ability of borrowers who received COVID-19 loan accommodations to resume repaying their loans upon maturity of such accommodations;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","litigation liabilities, including related costs, expenses, settlements and judgments, or the outcome of matters before regulatory agencies, whether pending or commencing in the future;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","natural disasters impacting the Company\u2019s operations;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","changes in political and economic conditions;"]]
[[/GREPCENT_TABLE]]

42

Table of Contents

[[GREPCENT_TABLE]]
[["","\u25cf","the discontinuation of LIBOR;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","the magnitude and frequency of changes to the FFTR implemented by the FOMC of the FRB;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","long-term and short-term interest rate fluctuations and the overall steepness of the U.S. Treasury yield curve, as well as their impact on the Company\u2019s net interest income and Mortgage Banking operations;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","competitive product and pricing pressures in each of the Company\u2019s five reportable segments;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","equity and fixed income market fluctuations;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","client bankruptcies and loan defaults;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","inflation;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","recession;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","future acquisitions;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","integrations of acquired businesses;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","changes in technology;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","changes in applicable laws and regulations or the interpretation and enforcement thereof;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","changes in fiscal, monetary, regulatory, and tax policies;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","changes in accounting standards;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","monetary fluctuations;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","changes to the Company\u2019s overall internal control environment;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","success in gaining regulatory approvals when required;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","the Company\u2019s ability to qualify for future R&D federal tax credits;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","information security breaches or cyber security attacks involving either the Company or one of the Company\u2019s third-party service providers; and"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","other risks and uncertainties reported from time to time in the Company\u2019s filings with the SEC, including Part 1 Item 1A \u201cRisk Factors.\u201d"]]
[[/GREPCENT_TABLE]]

​

Accounting Standards Updates

​

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

​

43

Table of Contents

Selected Financial Data

​

The following table sets forth Republic Bancorp Inc.’s selected financial data from 2019 through 2021. This information should be read in conjunction with Part II Item 8 “Financial Statements and Supplementary Data.” Certain amounts presented in prior periods have been reclassified to conform to the current period presentation.

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","As of and for the Years Ended December 31,","\u200b"],["(in thousands)","","2021","","2020","","2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Balance Sheet Data:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Cash and cash equivalents","\u200b","$","756,971","\u200b","$","485,587","\u200b","$","385,303","\u200b"],["Investment securities","\u200b","","542,045","\u200b","","580,270","\u200b","","537,074","\u200b"],["Loans held for sale","\u200b","","52,077","\u200b","","51,643","\u200b","","31,468","\u200b"],["Gross loans","\u200b","","4,496,562","\u200b","","4,813,103","\u200b","","4,433,151","\u200b"],["Allowance for credit losses","\u200b","","(64,577)","\u200b","","(61,067)","\u200b","","(43,351)","\u200b"],["Right-of-use assets","\u200b","\u200b","38,825","\u200b","\u200b","43,345","\u200b","\u200b","35,206","\u200b"],["Goodwill","\u200b","","16,300","\u200b","","16,300","\u200b","","16,300","\u200b"],["Bank owned life insurance","\u200b","","99,161","\u200b","","68,018","\u200b","","66,433","\u200b"],["Total assets","\u200b","","6,093,632","\u200b","","6,168,325","\u200b","","5,620,319","\u200b"],["Noninterest-bearing deposits","\u200b","","1,990,781","\u200b","","1,890,416","\u200b","","1,033,379","\u200b"],["Interest-bearing deposits","\u200b","","2,849,637","\u200b","","2,842,765","\u200b","","2,752,629","\u200b"],["Total deposits","\u200b","","4,840,418","\u200b","","4,733,181","\u200b","","3,786,008","\u200b"],["Securities sold under agreements to repurchase and other short-term borrowings","\u200b","","290,967","\u200b","","211,026","\u200b","","167,617","\u200b"],["Operating lease liabilities","\u200b","\u200b","39,672","\u200b","\u200b","44,340","\u200b","\u200b","36,530","\u200b"],["Federal Home Loan Bank advances","\u200b","","25,000","\u200b","","235,000","\u200b","","750,000","\u200b"],["Subordinated note","\u200b","","\u2014","\u200b","","41,240","\u200b","","41,240","\u200b"],["Total liabilities","\u200b","","5,259,400","\u200b","","5,345,002","\u200b","","4,856,075","\u200b"],["Total stockholders\u2019 equity","\u200b","","834,232","\u200b","","823,323","\u200b","","764,244","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Average Balance Sheet Data:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Federal funds sold and other interest-earning deposits","\u200b","$","806,811","\u200b","$","283,151","\u200b","$","260,131","\u200b"],["Investment securities, including FHLB stock","\u200b","","555,599","\u200b","","584,300","\u200b","","564,631","\u200b"],["Gross loans, including loans held for sale","\u200b","","4,519,277","\u200b","","4,796,841","\u200b","","4,470,347","\u200b"],["Allowance for credit losses","\u200b","","(66,481)","\u200b","","(60,008)","\u200b","","(50,624)","\u200b"],["Total assets","\u200b","","6,301,905","\u200b","","6,011,865","\u200b","","5,577,643","\u200b"],["Noninterest-bearing deposits","\u200b","","2,129,452","\u200b","","1,672,442","\u200b","","1,120,608","\u200b"],["Interest-bearing deposits","\u200b","","2,923,497","\u200b","","2,913,486","\u200b","","2,755,946","\u200b"],["Total interest-bearing liabilities","\u200b","","3,215,138","\u200b","","3,415,231","\u200b","","3,629,682","\u200b"],["Total stockholders\u2019 equity","\u200b","","844,871","\u200b","","802,726","\u200b","","734,281","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Income Statement Data - Total Company:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Total interest income","\u200b","$","226,260","\u200b","$","252,258","\u200b","$","280,883","\u200b"],["Total interest expense","\u200b","","5,666","\u200b","","19,943","\u200b","","44,757","\u200b"],["Net interest income","\u200b","","220,594","\u200b","","232,315","\u200b","","236,126","\u200b"],["Provision for expected credit loss expense","\u200b","","14,808","\u200b","","31,278","\u200b","","25,758","\u200b"],["Total noninterest income","\u200b","","86,859","\u200b","","87,053","\u200b","","75,008","\u200b"],["Total noninterest expense","\u200b","","182,304","\u200b","","185,457","\u200b","","172,183","\u200b"],["Income before income tax expense","\u200b","","110,341","\u200b","","102,633","\u200b","","113,193","\u200b"],["Income tax expense","\u200b","","23,552","\u200b","","19,387","\u200b","","21,494","\u200b"],["Net income","\u200b","","86,789","\u200b","","83,246","\u200b","","91,699","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Income Statement Data - Core Bank (1):","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Total interest income","\u200b","$","188,489","\u200b","$","203,717","\u200b","$","223,914","\u200b"],["Total interest expense","\u200b","","4,941","\u200b","","17,017","\u200b","","39,340","\u200b"],["Net interest income","\u200b","","183,548","\u200b","","186,700","\u200b","","184,574","\u200b"],["Provision for expected credit loss expense","\u200b","","(319)","\u200b","","16,870","\u200b","","3,066","\u200b"],["Total noninterest income","\u200b","","51,734","\u200b","","59,378","\u200b","","48,219","\u200b"],["Total noninterest expense","\u200b","","161,942","\u200b","","164,208","\u200b","","153,051","\u200b"],["Income before income tax expense","\u200b","","73,659","\u200b","","65,000","\u200b","","76,676","\u200b"],["Income tax expense","\u200b","","14,603","\u200b","","10,852","\u200b","","13,223","\u200b"],["Net income","\u200b","","59,056","\u200b","","54,148","\u200b","","63,453","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["(continued)","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"]]
[[/GREPCENT_TABLE]]

​

44

Table of Contents

Selected Financial Data (continued)

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","As of and for the Years Ended December 31,","\u200b"],["(in thousands, except per share data, FTEs and # of banking centers)","","2021","","2020","","2019","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Per Share Data:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Basic weighted average shares outstanding","\u200b","","20,675","\u200b","","21,039","\u200b","","21,023","\u200b"],["Diluted weighted average shares outstanding","\u200b","","20,757","\u200b","","21,069","\u200b","","21,135","\u200b"],["Period-end shares outstanding:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Class A Common Stock","\u200b","","17,816","\u200b","","18,697","\u200b","","18,737","\u200b"],["Class B Common Stock","\u200b","","2,165","\u200b","","2,199","\u200b","","2,206","\u200b"],["Basic earnings per share:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Class A Common Stock","\u200b","$","4.25","\u200b","$","4.00","\u200b","$","4.41","\u200b"],["Class B Common Stock","\u200b","","3.87","\u200b","","3.64","\u200b","","4.01","\u200b"],["Diluted earnings per share:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Class A Common Stock","\u200b","$","4.24","\u200b","$","3.99","\u200b","$","4.39","\u200b"],["Class B Common Stock","\u200b","","3.85","\u200b","","3.63","\u200b","","3.99","\u200b"],["Cash dividends declared per share:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Class A Common Stock","\u200b","$","1.232","\u200b","$","1.144","\u200b","$","1.056","\u200b"],["Class B Common Stock","\u200b","","1.120","\u200b","","1.040","\u200b","","0.960","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Market value per share at December 31,","\u200b","$","50.84","\u200b","$","36.07","\u200b","$","46.80","\u200b"],["Book value per share at December 31, (2)","\u200b","","41.75","\u200b","","39.40","\u200b","","36.49","\u200b"],["Tangible book value per share at December 31, (2)","\u200b","","40.48","\u200b","","38.27","\u200b","","35.41","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Performance Ratios:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Return on average assets","\u200b","","1.38","%","","1.38","%","","1.64","%"],["Return on average equity","\u200b","","10.27","\u200b","","10.37","\u200b","","12.49","\u200b"],["Efficiency ratio (3)","\u200b","","59","\u200b","","58","\u200b","","57","\u200b"],["Yield on average interest-earning assets","\u200b","","3.85","\u200b","","4.45","\u200b","","5.30","\u200b"],["Cost of average interest-bearing liabilities","\u200b","","0.18","\u200b","","0.58","\u200b","","1.23","\u200b"],["Cost of average deposits (4)","\u200b","","0.10","\u200b","","0.33","\u200b","","0.75","\u200b"],["Net interest spread","\u200b","","3.67","\u200b","","3.87","\u200b","","4.07","\u200b"],["Net interest margin - Total Company","\u200b","","3.75","\u200b","","4.10","\u200b","","4.46","\u200b"],["Net interest margin - Core Bank","\u200b","","3.20","\u200b","","3.39","\u200b","","3.61","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Capital Ratios - Total Company:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Average stockholders\u2019 equity to average total assets","\u200b","","13.41","%","","13.35","%","","13.16","%"],["Total risk-based capital","\u200b","","17.47","\u200b","","18.52","\u200b","","17.01","\u200b"],["Common equity tier 1 capital","\u200b","\u200b","16.37","\u200b","\u200b","16.61","\u200b","\u200b","15.29","\u200b"],["Tier 1 risk-based capital","\u200b","","16.37","\u200b","","17.43","\u200b","","16.11","\u200b"],["Tier 1 leverage capital","\u200b","","13.35","\u200b","","13.70","\u200b","","13.93","\u200b"],["Dividend payout ratio","\u200b","","29","\u200b","","29","\u200b","","24","\u200b"],["Dividend yield","\u200b","","2.42","\u200b","","3.17","\u200b","","2.26","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Other Information:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Period-end FTEs (5) - Total Company","\u200b","","1,045","\u200b","","1,094","\u200b","","1,080","\u200b"],["Period-end FTEs - Core Bank","\u200b","\u200b","958","\u200b","\u200b","997","\u200b","\u200b","997","\u200b"],["Number of banking centers","\u200b","","42","\u200b","","42","\u200b","","41","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["(continued)","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"]]
[[/GREPCENT_TABLE]]

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45

Table of Contents

Selected Financial Data (continued)

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","As of and for the Years Ended December 31,","\u200b"],["(dollars in thousands)","","2021","","2020","","2019","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Credit Quality Data and Ratios:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Credit Quality Asset Balances:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Nonperforming Assets - Total Company:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Loans on nonaccrual status","\u200b","$","20,504","\u200b","$","23,548","\u200b","$","23,332","\u200b"],["Loans past due 90-days-or-more and still on accrual","\u200b","","48","\u200b","","47","\u200b","","157","\u200b"],["Total nonperforming loans","\u200b","","20,552","\u200b","","23,595","\u200b","","23,489","\u200b"],["Other real estate owned","\u200b","","1,792","\u200b","","2,499","\u200b","","113","\u200b"],["Total nonperforming assets","\u200b","$","22,344","\u200b","$","26,094","\u200b","$","23,602","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Nonperforming Assets - Core Bank (1):","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Loans on nonaccrual status","\u200b","$","20,504","\u200b","$","23,548","\u200b","$","23,332","\u200b"],["Loans past due 90-days-or-more and still on accrual","\u200b","","1","\u200b","","5","\u200b","","\u2014","\u200b"],["Total nonperforming loans","\u200b","","20,505","\u200b","","23,553","\u200b","","23,332","\u200b"],["Other real estate owned","\u200b","","1,792","\u200b","","2,499","\u200b","","113","\u200b"],["Total nonperforming assets","\u200b","$","22,297","\u200b","$","26,052","\u200b","$","23,445","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Delinquent loans:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Delinquent loans - Core Bank","\u200b","$","7,430","\u200b","$","9,713","\u200b","$","13,042","\u200b"],["Delinquent loans - RPG (6)","\u200b","\u200b","6,035","\u200b","\u200b","10,234","\u200b","\u200b","7,762","\u200b"],["Total delinquent loans - Total Company","\u200b","$","13,465","\u200b","$","19,947","\u200b","$","20,804","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Credit Quality Ratios - Total Company:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["ACLL to total loans","\u200b","","1.44","%","","1.27","%","","0.98","%"],["Nonaccrual loans to total loans","\u200b","\u200b","0.46","\u200b","\u200b","0.49","\u200b","\u200b","0.53","\u200b"],["ACLL to nonaccrual loans","\u200b","\u200b","315","\u200b","\u200b","259","\u200b","\u200b","186","\u200b"],["Nonperforming loans to total loans","\u200b","","0.46","\u200b","","0.49","\u200b","","0.53","\u200b"],["Nonperforming assets to total loans (including OREO)","\u200b","","0.50","\u200b","","0.54","\u200b","","0.53","\u200b"],["Nonperforming assets to total assets","\u200b","","0.37","\u200b","","0.42","\u200b","","0.42","\u200b"],["ACLL to nonperforming loans","\u200b","","314","\u200b","","259","\u200b","","185","\u200b"],["Delinquent loans to total loans (7)","\u200b","","0.30","\u200b","","0.41","\u200b","","0.47","\u200b"],["Net loan charge-offs to average loans","\u200b","","0.25","\u200b","","0.42","\u200b","","0.61","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Credit Quality Ratios - Core Bank:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["ACLL to total loans","\u200b","\u200b","1.18","%","\u200b","1.11","%","\u200b","0.70","%"],["Nonaccrual loans to total loans","\u200b","\u200b","0.47","\u200b","\u200b","0.50","\u200b","\u200b","0.54","\u200b"],["ACLL to nonaccrual loans","\u200b","\u200b","251","\u200b","\u200b","221","\u200b","\u200b","129","\u200b"],["Nonperforming loans to total loans","\u200b","\u200b","0.47","\u200b","\u200b","0.50","\u200b","\u200b","0.54","\u200b"],["Nonperforming assets to total loans (including OREO)","\u200b","\u200b","0.51","\u200b","\u200b","0.56","\u200b","\u200b","0.54","\u200b"],["Nonperforming assets to total assets","\u200b","\u200b","0.40","\u200b","\u200b","0.45","\u200b","\u200b","0.43","\u200b"],["ACLL to nonperforming loans","\u200b","\u200b","251","\u200b","\u200b","221","\u200b","\u200b","129","\u200b"],["Delinquent loans to total loans","\u200b","\u200b","0.17","\u200b","\u200b","0.21","\u200b","\u200b","0.30","\u200b"],["Net charge-offs to average loans","\u200b","\u200b","0.01","\u200b","\u200b","0.03","\u200b","\u200b","0.11","\u200b"]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["(1)","\u201cCore Bank\u201d or \u201cCore Banking\u201d operations consist of the Traditional Banking, Warehouse Lending, and Mortgage Banking segments."]]
[[/GREPCENT_TABLE]]

See Footnote 25 “Segment Information” under Part II Item 8 “Financial Statements and Supplemental Data” for additional information regarding the segments that constitute the Company’s Core Banking operations.

​

46

Table of Contents

Selected Financial Data (continued)

​

[[GREPCENT_TABLE]]
[["(2)","The following table provides a reconciliation of total stockholders\u2019 equity in accordance with GAAP to tangible stockholders\u2019 equity in accordance with applicable regulatory requirements, a non-GAAP measure. The Company provides the tangible book value per share, another non-GAAP measure, in addition to those defined by banking regulators, because of its widespread use by investors as a means to evaluate capital adequacy."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Years Ended December 31, (dollars in thousands)","","2021","","2020","","2019"],["Total stockholders' equity - GAAP (a)","\u200b","$","834,232","\u200b","$","823,323","\u200b","$","764,244","\u200b"],["Less: Goodwill","\u200b","\u200b","16,300","\u200b","\u200b","16,300","\u200b","\u200b","16,300","\u200b"],["Less: Mortgage servicing rights","\u200b","","9,196","\u200b","","7,095","\u200b","","5,888","\u200b"],["Less: Core deposit intangible","\u200b","","\u2014","\u200b","","189","\u200b","","469","\u200b"],["Tangible stockholders' equity - Non-GAAP (c)","\u200b","$","808,736","\u200b","$","799,739","\u200b","$","741,587","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Total assets - GAAP (b)","\u200b","$","6,093,632","\u200b","$","6,168,325","\u200b","$","5,620,319","\u200b"],["Less: Goodwill","\u200b","","16,300","\u200b","","16,300","\u200b","","16,300","\u200b"],["Less: Mortgage servicing rights","\u200b","","9,196","\u200b","","7,095","\u200b","","5,888","\u200b"],["Less: Core deposit intangible","\u200b","","\u2014","\u200b","","189","\u200b","","469","\u200b"],["Tangible assets - Non-GAAP (d)","\u200b","$","6,068,136","\u200b","$","6,144,741","\u200b","$","5,597,662","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Total stockholders' equity to total assets - GAAP (a/b)","\u200b","","13.69","%","","13.35","%","","13.60","%"],["Tangible stockholders' equity to tangible assets - Non-GAAP (c/d)","\u200b","","13.33","%","","13.02","%","","13.25","%"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Number of shares outstanding (e)","\u200b","","19,981","\u200b","","20,896","\u200b","","20,943","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Book value per share - GAAP (a/e)","\u200b","$","41.75","\u200b","$","39.40","\u200b","$","36.49","\u200b"],["Tangible book value per share - Non-GAAP (c/e)","\u200b","","40.48","\u200b","","38.27","\u200b","","35.41","\u200b"]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["(3)","The efficiency ratio, a non-GAAP measure with no GAAP comparable, equals total noninterest expense divided by the sum of net interest income and noninterest income. The ratio excludes net gains (losses) on sales, calls, and impairment of investment securities, if applicable, and the Company\u2019s net gain from its November 2019 branch divestiture."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Years Ended December 31, (dollars in thousands)","","2021","","2020","","2019"],["Net interest income - GAAP","\u200b","$","220,594","\u200b","$","232,315","\u200b","$","236,126","\u200b"],["Noninterest income - GAAP","\u200b","\u200b","86,859","\u200b","\u200b","87,053","\u200b","\u200b","75,008","\u200b"],["Less: Net gain on branch divestiture","\u200b","","\u2014","\u200b","","\u2014","\u200b","","7,829","\u200b"],["Less: Net gain (loss) on securities","\u200b","","(69)","\u200b","","49","\u200b","","78","\u200b"],["Total adjusted income - Non-GAAP (a)","\u200b","$","307,522","\u200b","$","319,319","\u200b","$","303,227","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Noninterest expense - GAAP (b)","\u200b","$","182,304","\u200b","$","185,457","\u200b","$","172,183","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Efficiency Ratio - Non-GAAP (b/a)","\u200b","","59","%","","58","%","","57","%"]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["(4)","The cost of average deposits ratio equals total interest expense on deposits divided by total average interest-bearing deposits plus total average noninterest-bearing deposits."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["(5)","FTEs \u2013 Full-time-equivalent employees."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["(6)","RPG operations consist of the TRS and RCS segments."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["(7)","The delinquent loans to total loans ratio equals loans 30-days-or-more past due divided by total loans. Depending on loan class, loan delinquency is determined by the number of days or the number of payments past due."]]
[[/GREPCENT_TABLE]]

​

Critical Accounting Estimates

​

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

47

Table of Contents

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.

​

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.

​

Critical accounting policies are those that management believes are the most important to the portrayal of the Company’s financial condition and operating results 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.

​

Republic believes its critical accounting policies and estimates relate to the following:

​

ACLL and Provision — As of December 31, 2021, the Bank maintained an ACLL for expected credit losses inherent in the Bank’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 of Directors quarterly.

​

Effective January 1, 2020, the Company adopted ASC 326 Financial Instruments – Credit Losses, which replaced the pre-January 1, 2020 “probable-incurred” method for calculating the Company’s ACL with the CECL method. CECL is applicable to financial assets measured at amortized cost, including loan and lease receivables and held-to-maturity debt securities. CECL also applies to certain off-balance sheet credit exposures.

​

When measuring an ACL, CECL primarily differs from the probable-incurred method by: a) incorporating a lower “expected” threshold for loss recognition versus a higher “probable” threshold; b) requiring life-of-loan considerations; and c) requiring reasonable and supportable forecasts. 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. For its CRE loan pool, the Company employed a one-year forecast of CRE vacancy rates through March 31, 2021 but discontinued use of this forecast during the second quarter of 2021 in favor of a one-year forecast of general CRE values. This change in forecast method had no material impact on the Company’s ACLL.

​

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.

​

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. One-year forecast adjustments to the historical loss rate are based on the U.S. national unemployment rate and CRE values. Subsequent to the one-year forecasts, loss rates are assumed to immediately revert back to long-term historical averages.

​

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.

​

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

48

Table of Contents

​

Management’s Evaluation of the ACLL

​

Management evaluates the ACLL for its Core Banking operations separately from its non-traditional RPG operations. Core Banking operations consist of the Company’s Traditional Banking, Warehouse, and Mortgage Banking segments. RPG operations consist of the Company’s TRS and RCS segments.

​

Prior to January 1, 2020, under the probable-incurred standard, management conducted two annual calculations to evaluate the reasonableness of its Core Bank ACLL:

​

[[GREPCENT_TABLE]]
[["","\u25cf","an absorption rate, which considered annual net loan losses for the year just ended as a percent of the beginning-of-the-year ACLL; and"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","an exhaustion rate, which calculated how many years of charge-offs the beginning-of-year ACLL could withstand based on gross charge-offs for the year just ended."]]
[[/GREPCENT_TABLE]]

​

Management considered these historic absorption and exhaustion formulas less meaningful as of December 31, 2021 and 2020 because of its January 1, 2020 CECL adoption and because Core Bank loan losses were substantially restrained during 2021 and 2020 by pandemic-related financial relief provided to borrowers.

​

Management evaluated the reasonableness of its Core Bank ACLL as of December 31, 2021 and 2020 by evaluating modified absorption and exhaustion rates that account for CECL life-of-loan considerations and the economic hardship and uncertainty brought about by the COVID-19 pandemic. The modified absorption rate considered total Core Bank net loan losses from 2008 to 2013 as a percent of the end-of-year Core Bank ACLL. The modified exhaustion rate considered how many years of gross Core Bank loan charge-offs the end-of-year Core Bank ACLL could withstand based on average annual net Core Bank loan losses from 2008 to 2013. 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. Management believes Core Bank losses from 2008 to 2013 are more representative of current economic conditions than more recent years just prior to the onset of the COVID-19 pandemic.

​

As of December 31, 2021, the weighted average term of the Core Bank loan portfolio was approximately five years, with this term adjusted to approximately six years after exclusion of the Bank’s short-term/government-guaranteed PPP portfolio and the Bank’s short-term Warehouse portfolio. The Core Bank’s modified absorption rate was 85% and its modified exhaustion rate was approximately 6.0 years as of December 31, 2021. Management considers these rates reasonable under current economic conditions. The table below reflects the Core Bank’s modified and standard exhaustion and absorption rates for each of the last three years:

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Years Ended December 31,","","2021","","2020","","2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Core Bank:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Modified Exhaustion Rate (end-of-year ACLL / median annual charge-offs from 2008 to 2013)","\u200b","6.01","Yrs.","6.07","Yrs.","3.50","Yrs.","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Standard Exhaustion Rate (beginning-of-year ACLL / charge-offs for year)","\u200b","35.69","Yrs.","13.27","Yrs.","5.52","Yrs.","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Modified Absorption Rate (total net charge-offs from 2008 to 2013 / end-of-year ACLL)","\u200b","85","%","84","%","146","%","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Standard Absorption Rate (net charge-offs for the year / beginning-of-year ACLL)","\u200b","1","%","4","%","15","%","\u200b"]]
[[/GREPCENT_TABLE]]

​

Based on management’s evaluation, a Core Bank ACLL of $52 million, or 1.18% of total Core Bank loans, was an adequate estimate of expected losses within the loan portfolio as of December 31, 2021 and resulted in Core Banking Provision for its loans of a net credit of $319,000 during 2021. This compares to an ACLL of $52 million as of December 31, 2020 and a loan Provision of $16.9 million for 2020. 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.

​

49

Table of Contents

The RPG ACLL as of December 31, 2021 primarily related to loans originated and held for investment through the RCS segment. RCS generally originates small-dollar, consumer credit products. In some instances, the Bank originates these products, sells 90%-95% of the balances within three days of loan origination, and retains a 5%-10% interest. RCS loans typically earn a higher yield but also have higher credit risk compared to loans originated through Core Banking operations, with a significant portion of RCS clients considered subprime or near-prime borrowers.

​

As of December 31, 2021, management only evaluated the ACLL on its active RCS products that had incurred meaningful losses since their inception, which were its line-of-credit products. Due to the general short-term nature of these products, management utilized its traditional absorption and exhaustion calculations using 2021 net charge-offs with the beginning-of-the-year ACLL. The absorption and exhaustion rates were 32% and 2.8 years, respectively, both of which were considered reasonable.

​

RPG maintained an ACLL for all the loan products held at amortized cost and offered through its RCS segment as of December 31, 2021, including its line-of-credit products and its healthcare-receivables products. As of December 31, 2021, 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 48.96% for its line-of-credit portfolios. A lower reserve percentage was provided for RCS’s healthcare receivables as of December 31, 2021, as such receivables have recourse back to the Company’s third-party service providers in the transactions. Based on management’s calculation, an ACLL of $13.0 million, or 9.1%, of total RPG loans was an adequate estimate of expected losses within the RPG portfolio as of December 31, 2021.

​

RPG’s TRS segment offered its EA tax-credit product during the first two months of 2021, 2020, and 2019. An ACLL for losses on EAs is estimated during the limited, short-term period the product is offered. EAs were repaid, on average, within 32 days of origination during 2021. Provisions for EA losses are estimated when advances are made during the first quarter of each year and adjusted to actual net charge-offs as of June 30th of each year. No ACLL for EAs existed as of December 31, 2021 and 2020, as all EAs originated during the first two months of each year had either been paid off or charged-off by June 30th of each year.

​

Related to the overall credit losses on EAs, the Bank’s ability to control losses is highly dependent upon its ability to predict the taxpayer’s likelihood to receive the tax refund as claimed on the taxpayer’s tax return. Each year, the Bank’s EA approval model is based primarily on the prior-year’s tax refund 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.

​

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

​

See additional discussion regarding the EA product under the sections titled:

​

[[GREPCENT_TABLE]]
[["","\u25cf","Part I Item 1A \u201cRisk Factors\u201d"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","Part II Item 8 \u201cFinancial Statements and Supplementary Data,\u201d Footnote 4 \u201cLoans and Allowance for Credit Losses\u201d"]]
[[/GREPCENT_TABLE]]

​

RPG recorded a net charge of $15.1 million, $14.4 million, and $22.7 million to the Provision during 2021, 2020, and 2019, with the Provision for each year primarily due to net losses on EAs and growth in short-term, consumer loans originated through the RCS segment. If the number of future charge-offs on EAs 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.

​

Cancelled TRS Sale Transaction

​

See Footnote 1 “Summary of Significant Accounting Policies” of Part II Item 8 “Financial Statements and Supplementary Data” for discussion regarding the cancelled sale of the TRS business and associated litigation.

​

In connection with the litigation the Bank filed in Delaware Chancery court, the Bank concluded that the Sale Transaction would not be consummated, and on January 7, 2022, the Bank served Green Dot with a formal notice of termination of the Purchase Agreement pursuant to Section 7.1(c) of the Purchase Agreement. In response to the formal notice of termination, Green Dot paid the Termination Fee of $5 million to the Bank during the first quarter of 2022 pursuant to Section 7.2(b) of the Purchase Agreement. As

50

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provided by Section 7.2(a) of the Purchase Agreement, the Bank maintains that the Bank’s notice of termination of the Purchase Agreement and corresponding payment of the Termination Fee does not release Green Dot from any liability, in addition to the Termination Fee, related to the Sale Transaction occurring before the Bank’s notice of termination. The Bank believes that Green Dot’s actions have adversely affected the TRS operations, and the Bank is currently determining the extent of its damages. The Bank will continue to seek the additional monetary damages and equitable relief arising from Green Dot’s actions in the litigation before the Court.

​

OVERVIEW

​

Total Company net income was $86.8 million and Diluted EPS was $4.24 for 2021, compared to net income of $83.2 million and Diluted EPS of $3.99 for 2020. Table 1 below presents Republic’s financial performance for the years ended December 31, 2021, 2020, and 2019:

​

Table 1 — Summary

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","Percent Increase/(Decrease)","\u200b"],["Years Ended December 31, (dollars in thousands, except per share data)","","2021","","2020","","2019","","2021/2020","","2020/2019","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Income before income tax expense","\u200b","$","110,341","\u200b","$","102,633","\u200b","$","113,193","\u200b","8","%","(9)","%"],["Net income","\u200b","\u200b","86,789","\u200b","\u200b","83,246","\u200b","\u200b","91,699","\u200b","4","\u200b","(9)","\u200b"],["Diluted EPS of Class A Common Stock","\u200b","\u200b","4.24","\u200b","\u200b","3.99","\u200b","\u200b","4.39","\u200b","6","\u200b","(9)","\u200b"],["ROA","\u200b","\u200b","1.38","%","","1.38","%","","1.64","%","\u2014","\u200b","(16)","\u200b"],["ROE","\u200b","","10.27","\u200b","","10.37","\u200b","","12.49","\u200b","(1)","\u200b","(17)","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"]]
[[/GREPCENT_TABLE]]

​

Additional discussion follows in this section of the filing under “Results of Operations.”

​

General highlights by reportable segment for the year ended December 31, 2021 consisted of the following:

​

Traditional Banking segment

​

[[GREPCENT_TABLE]]
[["","\u25cf","Traditional Banking net income increased $15.7 million or 78%."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Driven primarily by net interest margin compression, which was partially offset by higher PPP loan fee revenue, net interest income decreased $2.1 million, or 1%, to $157.2 million during 2021. The Traditional Banking net interest margin decreased 24 basis points from 2020 to 2021 to 3.18%."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Provision decreased $16.3 million to a credit of $38,000 for 2021 compared to a charge of $16.3 million for 2020."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Noninterest income increased $4.1 million, or 15% during 2021."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Noninterest expense decreased $3.7 million, or 2% during 2021."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Gross Traditional Bank loans decreased by $214 million, or 6% from December 31, 2020 to December 31, 2021, driven primarily by a $336 million decrease in PPP loans."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Traditional Bank period-end deposits grew $58 million, or 1%, from December 31, 2020 to December 31, 2021."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Total nonperforming Traditional Bank loans to total Traditional Bank loans was 0.59% as of December 31, 2021 compared to 0.63% as of December 31, 2020."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Delinquent Traditional Bank loans to total Traditional Bank loans was 0.21% as of December 31, 2021 compared to 0.26% as of December 31, 2020."]]
[[/GREPCENT_TABLE]]

​

51

Table of Contents

Warehouse Lending segment

​

[[GREPCENT_TABLE]]
[["","\u25cf","Warehouse net income increased $124,000, or 1%, over 2020 to $16.4 million during 2021."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Warehouse net interest income decreased $739,000, from 2020 while its net interest margin increased to 3.37%, an 18 basis point rise from 2020 to 2021."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","The Warehouse Provision was a net credit of $281,000 for 2021 compared to net charge of $613,000 for 2020."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Average committed Warehouse lines increased to $1.4 billion during 2021 from $1.2 billion during 2020."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Average line usage was 53% during 2021 and 66% during 2020."]]
[[/GREPCENT_TABLE]]

​

Mortgage Banking segment

​

[[GREPCENT_TABLE]]
[["","\u25cf","Within the Mortgage Banking segment, mortgage banking income decreased $11.9 million, or 37%, from 2020 to 2021."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Overall, Republic\u2019s sales of secondary market loans totaled $718 million during 2021 compared to $788 million during the same period in 2020, with the Company\u2019s net cash gain recognized as a percent of total loans sold decreasing to 3.22% in 2021 from 3.64% in 2020."]]
[[/GREPCENT_TABLE]]

​

Tax Refund Solutions segment

​

[[GREPCENT_TABLE]]
[["","\u25cf","TRS net income increased $902,000, or 8%, from 2020 to 2021."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","TRS net interest income decreased $7.1 million, or 31%, from 2020 to 2021."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Total EA originations were $250 million for 2021 compared to $388 million for 2020."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","The TRS Provision was $6.7 million for 2021, compared to $13.2 million for 2020."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Noninterest income was $23.8 million for 2021 compared to $22.8 million for 2020."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Net RT revenue decreased $49,000, or less than 1%, from 2020 to 2021."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Noninterest expense was $16.3 million for 2021 compared to $17.5 million for 2020."]]
[[/GREPCENT_TABLE]]

​

Republic Credit Solutions segment

​

[[GREPCENT_TABLE]]
[["","\u25cf","RCS net income decreased $2.3 million, or 13%, from 2020 to 2021."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","RCS net interest income decreased $1.4 million, or 6%, from 2020 to 2021."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","The RCS Provision was $8.4 million for 2021 compared to $1.2 million for 2020."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Noninterest income was $11.4 million for 2021 compared to $4.9 million for 2020."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Noninterest expense increased $283,000, or 8%, during 2021."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Total nonperforming RCS loans to total RCS loans was 0.05% as of December 31, 2021 compared to 0.04% as of December 31, 2020."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Delinquent RCS loans to total RCS loans was 6.48% as of December 31, 2021 compared to 9.23% as of December 31, 2020."]]
[[/GREPCENT_TABLE]]

52

Table of Contents

​

RESULTS OF OPERATIONS

​

This section provides a comparative discussion of Republic’s Results of Operations for the two-year period ended December 31, 2021, unless otherwise specified. Refer to Results of Operations on pages 52-61 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”) for a discussion of the 2020 versus 2019 results.

​

Net Interest Income

​

Banking operations are significantly dependent upon net interest income. Net interest income is the difference between interest income on interest-earning assets, such as loans and investment securities and the interest expense on interest-bearing liabilities used to fund those assets, such as interest-bearing deposits, securities sold under agreements to repurchase, and FHLB advances. 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.

​

A large amount of the Company’s financial instruments track closely with, or are primarily indexed to, either the FFTR, Prime, or LIBOR. These market rates trended lower with the onset of the COVID-19 pandemic during 2020, as the FOMC reduced the FFTR to approximately 25 basis points during 2020. With the rise of inflation during the latter half of 2021, the FOMC has signaled a more aggressive and hawkish approach to its monetary policies over the next few years. Included in its expected actions is raising the FFTR multiple times, ending its quantitative easing program of buying certain types of bonds in the open market, and implementing a quantitative tightening program by reducing the size of its balance sheet and selling certain types of bonds in the market.

​

The FOMC’s signaling of these actions caused long-term market interest rates for bonds and loans to begin to rise rapidly during the last quarter of 2021 and the first few weeks of 2022. Further monetary tightening by the Federal Reserve in the future will likely cause both short-term and long-term market interest rates to increase during 2022 and beyond. Increases in market interest rates are expected to impact the various business segments of the Company differently and will be discussed in further detail in the sections below.

​

For additional information on the potential future effect of changes in short-term interest rates on Republic’s net interest income, see the table titled “Bank Interest Rate Sensitivity as of December 31, 2021 and 2020” under “Financial Condition.”

​

Total Company net interest income decreased $11.7 million, or 5%, during 2021 compared to the same period in 2020. Total Company net interest margin decreased to 3.75% during 2021 compared to 4.10% in 2020.

​

The most significant components affecting the total Company’s net interest income and net interest margin by reportable segment follow:

​

Traditional Banking segment

​

The Traditional Banking segment’s net interest income decreased $2.1 million, or 1%, during 2021 compared to 2020. The Traditional Banking net interest margin decreased to 3.18% for 2021 compared to 3.42% for 2020.

​

The following factors primarily impacted the Traditional Bank’s net interest income and net interest margin during 2021:

​

[[GREPCENT_TABLE]]
[["","\u25cf","Traditional Bank net interest income, excluding PPP fees and interest, decreased $10.0 million, or 7%, from 2020, as the Traditional Bank\u2019s net interest margin, excluding PPP loans and related fees and interest, declined from 3.41% for 2020 to 2.92% for 2021. The decline in the net interest margin was substantially driven by a 77-basis point decline in the Traditional Bank\u2019s yield on its average non-PPP interest-earning assets from 2020 to 2021, as the majority of the Traditional Bank\u2019s growth in interest-earning assets during the previous 12 months was in lower-yielding cash or cash equivalents instead of loans."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Partially offsetting the Traditional Bank\u2019s net interest margin compression, the Traditional Bank recognized $20.0 million of fees and interest on its PPP portfolio during 2021 compared to $12.2 million of similar income during 2020. The $7.8 million"]]
[[/GREPCENT_TABLE]]

53

Table of Contents

[[GREPCENT_TABLE]]
[["","","increase in PPP fees and interest was driven significantly by the forgiveness, payoff, and paydown of $553 million of PPP loans during 2021 compared to similar forgiveness, payoff, and paydowns of $127 million in 2020."]]
[[/GREPCENT_TABLE]]

​

As of December 31, 2021, net PPP loans of $56 million remained on the Traditional Bank’s balance sheet, including $15 million in loan balances originated during 2020, $42 million in loan balances originated during 2021, and $1 million of unaccreted PPP fees reported as a credit offset to these originated balances. Unaccreted PPP fees will generally be recognized into income over the estimated remaining life of the PPP portfolio, with fee recognition accelerated if loans are forgiven or repaid earlier than estimated.

​

The Company earns fees and a coupon interest rate of 1.0% on its PPP portfolio. Due to the short-term nature of the PPP, management believes Traditional Bank net interest income, excluding PPP fees and coupon interest, is a more appropriate measure to analyze the challenges within the Traditional Bank’s net interest income and net interest margin. The following table reconciles Traditional Bank net interest income and net interest margin to Traditional Bank net interest income and net interest margin, excluding PPP fees and interest, a non-GAAP measure.

​

Table 2 — Traditional Bank Net Interest Income and Net Interest Margin Excluding PPP (Non-GAAP)

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","Net Interest Income","\u200b","\u200b","Interest-Earning Assets","\u200b","\u200b","Net Interest Margin","\u200b"],["\u200b","\u200b","\u200b","Years Ended Dec. 31,","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","Years Ended Dec. 31,","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","Years Ended Dec. 31,","\u200b","\u200b","\u200b"],["(dollars in thousands)","","","2021","","2020","","$ Change","","% Change","","","2021","","2020","","$ Change","\u200b","% Change","","","2021","","2020","","% Change","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Traditional Banking - GAAP","\u200b","\u200b","$","157,249","\u200b","$","159,381","\u200b","$","(2,132)","\u200b","(1)","%","\u200b","$","4,945,316","\u200b","$","4,654,315","\u200b","$","291,001","\u200b","6","%","\u200b","3.18","%","\u200b","3.42","%","\u200b","\u200b","(0.24)","%"],["Less: Impact of PPP fees and interest","\u200b","\u200b","\u200b","20,029","\u200b","\u200b","12,178","\u200b","\u200b","7,851","\u200b","64","\u200b","\u200b","\u200b","246,451","\u200b","\u200b","341,704","\u200b","\u200b","(95,253)","\u200b","(28)","\u200b","\u200b","0.26","\u200b","\u200b","0.01","\u200b","\u200b","\u200b","0.25","\u200b"],["Traditional Banking ex PPP fees and interest - non-GAAP","\u200b","\u200b","$","137,220","\u200b","$","147,203","\u200b","$","(9,983)","\u200b","(7)","\u200b","\u200b","$","4,698,865","\u200b","$","4,312,611","\u200b","$","386,254","\u200b","9","\u200b","\u200b","2.92","\u200b","\u200b","3.41","\u200b","\u200b","\u200b","(0.49)","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"]]
[[/GREPCENT_TABLE]]

​

As previously disclosed, both short-term and long-term market interest rates are expected to increase during 2022 and beyond as a result of expected monetary tightening by the FOMC. Additional increases in short-term interest rates and overall market rates are generally believed by management to be favorable to the Traditional Bank’s net interest income and net interest margin in the near term, while additional decreases in short-term interest rates and overall market rates are generally believed by management to be unfavorable to the Traditional Bank’s net interest income and net interest margin in the near term.

​

Increases in market interest rates, however, could have a negative impact on net interest income and net interest margin if the Traditional Bank is unable to maintain its deposit balances and the cost of those deposits at the levels assumed in its interest-rate-risk model. In addition, a flattening or inversion of the yield curve, causing the spread between long-term interest rates and short-term interest rates to decrease, could negatively impact the Traditional Bank’s net interest income and net interest margin. Variables which may impact the Traditional Bank’s net interest income and net interest margin in the future include, but are not limited to, the actual steepness of the yield curve, future demand for the Traditional Bank’s financial products and the Traditional Bank’s overall future liquidity needs.

​

Warehouse Lending segment

​

Net interest income decreased $739,000, or 3%, for 2021 compared to 2020. Average outstanding Warehouse balances decreased from $813 million during 2020 to $748 million during 2021, as falling mortgage rates during 2020 drove a surge in consumer refinance volume for Warehouse clients. Overall, committed Warehouse lines-of-credit grew from $1.2 billion in 2020 to $1.4 billion in 2021, while usage rates on those lines were 66% and 53%, respectively, during the same periods. In addition, the Warehouse net interest margin increased to 3.37% for 2021 compared to 3.19% for 2020, as many of the Bank’s Warehouse clients reached contractual interest rate floors on their lines-of-credit during the second quarter of 2021, preventing further declines in the segment’s loan yields, while the segment’s cost of funds continued to decline.

​

Market interest rates for treasury bonds and mortgages began to rise rapidly, however, during the last quarter of 2021 and the first few weeks of 2022. With the rise in mortgage rates, mortgage refinance activity began to slow dramatically late in the fourth quarter of 2021, and as a result, Warehouse usage began to decline, as well. This decline in usage, combined with competitive pricing pressures, caused the Warehouse net interest income and net interest margin to decline meaningfully during the fourth quarter of 2021. Additional monetary tightening by the FOMC in 2022 will likely further decrease mortgage demand and Warehouse line usage and increase competitive pressures to the Warehouse segment. These factors are expected to cause a further decline in net interest income

54

Table of Contents

and the net interest margin for the Warehouse segment during 2022. The exact amount of the decline in net interest income and net interest margin is unable to be predicted at this time.

​

Tax Refund Solutions segment

​

TRS’s net interest income decreased $7.1 million from 2020 to 2021. TRS’s EA product earned $13.2 million in interest income during 2021, a $6.4 million decrease from 2020 resulting primarily from a $138 million decrease in EA originations from period to period. Management believes that economic impact (stimulus) payments, pandemic health risks, and a two-week delay in the start to the 2021 tax season, all, in varying degrees, negatively impacted demand for its EA product during 2021.

​

See additional discussion regarding the EA product under the sections titled:

​

[[GREPCENT_TABLE]]
[["","\u25cf","Part I Item 1A \u201cRisk Factors\u201d"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","Part II Item 8 \u201cFinancial Statements and Supplementary Data,\u201d Footnote 4 \u201cLoans and Allowance for Credit Losses\u201d"]]
[[/GREPCENT_TABLE]]

​

Overall product demand for the TRS segment is not assumed to be interest rate sensitive and therefore management does not believe a rising interest rate environment will impact demand for its Easy Advances. A rising interest rate environment, however, likely will impact the Company’s internal FTP benefit and FTP cost allocated to each of its business segments, which could impact the overall profitability of a business segment. The impact of rising interest rates to TRS could be positive or negative depending on the exact change in the internal FTP benefit and FTP cost assigned, as well as, the overall volume and mix of loans and deposits for the segment.

​

Republic Credit Solutions segment

​

RCS’s net interest income decreased $1.4 million, or 6%, from 2020 to 2021. The decrease was driven primarily by a decline in fee income from RCS’s LOC I product. Loan fees on this product, recorded as interest income on loans, decreased to $16.2 million during 2021 compared to $18.5 million during the same period in 2020 and accounted for 75% and 78% of all RCS interest income on loans during the periods. The decrease in loan fees was the direct result of a decline in balances for RCS’s LOC I product following a reduction of marketing for this product during the second and third quarters of 2020. While the marketing for this product was reinstated during the fourth quarter of 2020, management believes the ongoing impact of government stimulus payments continued to reduce demand for this product during the first six months of 2021. Demand for the product began returning closer to historical norms during the latter half of 2021.

​

Future loan fee income from RCS’s LOC I product will likely continue to be negatively impacted by the on-going COVID-19 pandemic and any related stimulus programs implemented by the federal government.

​

Overall product demand for the RCS segment is not assumed to be interest rate sensitive and therefore management does not believe a rising interest rate environment will impact demand for its various consumer loan products. A rising interest rate environment, however, likely will impact the Company’s internal FTP cost allocated to this segment. As a result, the impact of rising interest rates to RCS during 2022 will be negative to the segment’s financial results, although the exact amount of the negative impact will depend on the internal FTP cost assigned, as well as, the overall volume and mix of loans it generates.

​

55

Table of Contents

Table 3 — Total Company Average Balance Sheets and Interest Rates

​

[[GREPCENT_TABLE]]
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[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["(1)","For the purpose of this calculation, the fair market value adjustment on debt securities is included as a component of other assets."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["(2)","Interest income for Easy Advances and RCS line-of-credit products is composed entirely of loan fees."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["(3)","Interest income includes loan fees of $2.6 million, $1.4 million, and $1.4 million for 2021, 2020, and 2019."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["(4)","Interest income includes loan fees of $3.1 million, $3.4 million, and $2.9 million for 2021, 2020, and 2019."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["(5)","Interest income includes loan fees of $17.5 and $8.6 million for 2021 and 2020."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["(6)","Interest income includes loan fees of $4.1 million, $3.4 million, and $5.4 million for 2021, 2020, and 2019."]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["(7)","Average balances for loans include the principal balance of nonaccrual loans and loans held for sale, and are inclusive of all loan premiums, discounts, fees, and costs."]]
[[/GREPCENT_TABLE]]

​

56

Table of Contents

Table 4 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.

​

Table 4 — Total Company Volume/Rate Variance Analysis

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Year Ended December 31, 2021","\u200b","Year Ended December 31, 2020"],["\u200b","\u200b","Compared to","\u200b","Compared to"],["\u200b","\u200b","Year Ended December 31, 2020","\u200b","Year Ended December 31, 2019"],["\u200b","\u200b","Total Net","\u200b","Increase / (Decrease) Due to","\u200b","Total Net","\u200b","Increase / (Decrease) Due to"],["(in thousands)","","Change","","Volume","","Rate","","Change","","Volume","","Rate"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Interest income:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Federal funds sold and other interest-earning deposits","\u200b","$","197","\u200b","$","947","\u200b","$","(750)","\u200b","$","(4,870)","\u200b","$","471","\u200b","$","(5,341)"],["Investment securities, including FHLB stock","\u200b","\u200b","(2,597)","\u200b","\u200b","(486)","\u200b","\u200b","(2,111)","\u200b","\u200b","(4,735)","\u200b","\u200b","507","\u200b","\u200b","(5,242)"],["TRS Easy Advance loans*","\u200b","\u200b","(6,469)","\u200b","\u200b","(7,242)","\u200b","\u200b","773","\u200b","\u200b","557","\u200b","\u200b","(59)","\u200b","\u200b","616"],["RCS LOC products","\u200b","\u200b","(1,323)","\u200b","\u200b","401","\u200b","\u200b","(1,724)","\u200b","\u200b","(7,069)","\u200b","\u200b","(7,231)","\u200b","\u200b","162"],["Other RPG loans","\u200b","","(110)","\u200b","","89","\u200b","","(199)","\u200b","","(1,377)","\u200b","","939","\u200b","","(2,316)"],["Outstanding Warehouse lines of credit","\u200b","\u200b","(4,030)","\u200b","\u200b","(2,416)","\u200b","\u200b","(1,614)","\u200b","\u200b","384","\u200b","\u200b","6,704","\u200b","\u200b","(6,320)"],["Paycheck Protection Program loans","\u200b","\u200b","7,851","\u200b","\u200b","(4,172)","\u200b","\u200b","12,023","\u200b","\u200b","12,178","\u200b","\u200b","12,178","\u200b","\u200b","\u2014"],["All other Core Bank loans","\u200b","","(19,517)","\u200b","","(4,597)","\u200b","","(14,920)","\u200b","","(23,693)","\u200b","","(8,616)","\u200b","","(15,077)"],["Net change in interest income","\u200b","","(25,998)","\u200b","","(17,476)","\u200b","","(8,522)","\u200b","","(28,625)","\u200b","","4,893","\u200b","","(33,518)"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Interest expense:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Transaction accounts","\u200b","","(840)","\u200b","","222","\u200b","","(1,062)","\u200b","","(4,425)","\u200b","","659","\u200b","","(5,084)"],["Money market accounts","\u200b","","(1,545)","\u200b","","111","\u200b","","(1,656)","\u200b","","(5,547)","\u200b","","(309)","\u200b","","(5,238)"],["Time deposits","\u200b","","(4,243)","\u200b","","(1,665)","\u200b","","(2,578)","\u200b","","(386)","\u200b","","(172)","\u200b","","(214)"],["Reciprocal money market and time deposits","\u200b","\u200b","(1,132)","\u200b","","(270)","\u200b","","(862)","\u200b","\u200b","(963)","\u200b","","716","\u200b","","(1,679)"],["Brokered deposits","\u200b","","(2,290)","\u200b","","(1,093)","\u200b","","(1,197)","\u200b","","(2,725)","\u200b","","(394)","\u200b","","(2,331)"],["SSUARs","\u200b","","(114)","\u200b","","20","\u200b","","(134)","\u200b","","(1,034)","\u200b","","(144)","\u200b","","(890)"],["Federal Reserve PPP Liquidity Facility","\u200b","","(153)","\u200b","","(153)","\u200b","","\u2014","\u200b","","153","\u200b","","153","\u200b","","\u2014"],["Federal Home Loan Bank advances","\u200b","","(3,467)","\u200b","","(1,710)","\u200b","","(1,757)","\u200b","","(9,267)","\u200b","","(6,868)","\u200b","","(2,399)"],["Subordinated note","\u200b","","(493)","\u200b","","(219)","\u200b","","(274)","\u200b","","(620)","\u200b","","\u2014","\u200b","","(620)"],["Net change in interest expense","\u200b","","(14,277)","\u200b","","(4,757)","\u200b","","(9,520)","\u200b","","(24,814)","\u200b","","(6,359)","\u200b","","(18,455)"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Net change in net interest income","\u200b","$","(11,721)","\u200b","$","(12,719)","\u200b","$","998","\u200b","$","(3,811)","\u200b","$","11,252","\u200b","$","(15,063)"]]
[[/GREPCENT_TABLE]]

*Since interest income for Easy Advances is composed entirely of loan fees and EAs are only offered during the first two months of each year, volume and rate measurements for this product are based on total EAs originated instead of average EA balances during the period. EA originations totaled $250 million, $388 million, and $389 million for the years ended December 31, 2021, 2020, and 2019. The unannualized EA yield as a function of total EA originations was 5.28%, 5.07%, and 4.91% for the years ended December 31, 2021, 2020, and 2019.

​

57

Table of Contents

Provision

​

The Company recorded a Provision of $14.8 million during 2021 compared to $31.3 million in 2020. The most significant components comprising the Company’s Provision by reportable segment follow:

​

Traditional Banking segment

​

The Traditional Banking Provision during 2021 was a net credit of $38,000 compared to a net charge of $16.3 million for 2020. An analysis of the Provision for 2021 compared to the same period in 2020 follows:

​

[[GREPCENT_TABLE]]
[["","\u25cf","For 2021, there was a minimal net credit to the Traditional Bank Provision, generally based on an improving economic outlook in conjunction with limited net charge-offs incurred by the Traditional Bank, with significant life-of-loan loss reserves recorded during 2020 following the onset of the pandemic. The net credit recorded during 2021 primarily included ACLL releases for the residential real estate, HELOC, and consumer portfolios offset by additional reserves through December 31, 2021 for certain Special Mention loans with continued signs of pandemic-related hardships."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","During 2020, the Traditional Bank recorded $19.6 million of additional Provision due to the expected economic impact of the COVID-19 pandemic. Offsetting the increase in Provision due to the impact of the COVID-19 pandemic during 2020 was a reduction in Provision of $4.4 million consistent with a $274 million decrease in non-PPP Traditional Bank loan portfolio spot balances from December 31, 2019 to December 31, 2020."]]
[[/GREPCENT_TABLE]]

​

As a percentage of total Traditional Bank loans, the Traditional Bank ACLL was 1.41% as of December 31, 2021 compared to 1.34% as of December 31, 2020. Traditional Bank ACLL to total non-PPP Traditional Bank loans, a non-GAAP measure, was 1.43% as of December 31, 2021 compared to 1.50% as of December 31, 2020. The Company believes, based on information presently available, that it has adequately provided for Traditional Bank loan losses as of December 31, 2021.

​

Due to the near risk-free nature of the Bank’s PPP portfolio, management believes Traditional Bank ACLL to total non-PPP Traditional Bank loans is a more appropriate measure to analyze the Traditional Bank’s ACLL adequacy. The following table reconciles Traditional Bank ACLL to total Traditional Bank loans to Traditional Bank ACLL to total non-PPP Traditional Bank loans, a non-GAAP measure.

​

Table 5 — Traditional Bank ACLL to Non-PPP Traditional Bank Loans (Non-GAAP)

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Years Ended December 31,","\u200b"],["\u200b","\u200b","2021","\u200b","2020","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","Allowance","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","Allowance","\u200b"],["(dollars in thousands)","","Gross Loans","","Allowance","","to Loans","","Gross Loans","","Allowance","","to Loans","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Traditional Bank - GAAP","","$","3,501,959","\u200b","$","49,407","\u200b","1.41","%","$","3,715,649","\u200b","$","49,699","\u200b","1.34","%"],["Less: Paycheck Protection Program","\u200b","\u200b","56,014","\u200b","\u200b","\u2014","\u200b","\u200b","\u200b","\u200b","392,319","\u200b","\u200b","\u2014","\u200b","\u200b","\u200b"],["Traditional Bank, Less PPP - non-GAAP","\u200b","$","3,445,945","\u200b","$","49,407","\u200b","1.43","\u200b","$","3,323,330","\u200b","$","49,699","\u200b","1.50","\u200b"]]
[[/GREPCENT_TABLE]]

​

See the sections titled “Allowance for Credit Losses” and “Asset Quality” in this section of the filing under “Financial Condition” for additional discussion regarding the Provision and the Bank’s delinquent, nonperforming, impaired, and TDR loans.

​

Warehouse Lending segment

​

The Warehouse Provision was a net credit of $281,000 for 2021 compared to a net charge of $613,000 for 2020. Provision expense for both 2021 and 2020 reflected the changes in general reserves for fluctuations in outstanding balances during the periods. Outstanding Warehouse balances decreased $112 million during 2021 and increased $246 million during 2020.

​

As a percentage of total Warehouse outstanding balances, the Warehouse ACLL was 0.25% as of December 31, 2021 and 2020. The Company believes, based on information presently available, that it has adequately provided for Warehouse loan losses as of December 31, 2021.

​

58

Table of Contents

Tax Refund Solutions segment

​

TRS recorded a net charge to the Provision of $6.7 million during 2021 compared to a net charge of $13.2 million in 2020.

​

TRS’s Provision for EA loan losses was $6.7 million, or 2.69% of its $250 million in EAs originated during 2021, compared to a Provision of $13.0 million, or 3.36% of its $388 million in EAs originated during 2020. The lower Provision during 2021 resulted from a $138 million decrease in EAs originated and better repayment rates on EA loans from the U.S. Treasury over those attained during 2020. Management believes that economic impact (stimulus) payments, pandemic health risks, and a two-week delay in the start to the 2021 tax season, all, in varying degrees, negatively impacted demand for its EA product during 2021. Management also believes the better repayment rates in 2021 as compared to 2020 were a result of the negative impact of the COVID-19 pandemic to the 2020 payments’ process. As of December 31, 2021 and 2020, all unpaid EAs originated during each year had been charged-off.

​

See additional detail regarding the EA product under Footnote 4 “Loans and Allowance for Credit Losses” of Part II Item 8 “Financial Statements and Supplemental Data.”

​

Republic Credit Solutions segment

​

RCS recorded a Provision of $8.4 million during 2021, an increase of $7.2 million compared to 2020. The increase in the Provision was driven by an increase in outstanding balances for RCS’s lines of credit during 2021 compared to a decrease in similar balances during 2020. The Company reduced marketing for its LOC I product during the second and third quarters of 2020 and reinstated such marketing during the fourth quarter of 2020. While management believes the ongoing impact of government stimulus payments continued to reduce demand for this product during the first six months of 2021, demand for the product began returning closer to historical norms during the latter half of 2021.

​

The Company began offering its LOC II product during the first quarter of 2021.

​

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 13.91% and 7.94% as of December 31, 2021 and 2020. The Company believes, based on information presently available, that it has adequately provided for RCS loan losses as of December 31, 2021.

​

The following table presents RCS Provision by product:

​

Table 6 — RCS Provision by Product

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","Percent Increase/(Decrease)","\u200b"],["Years Ended December 31, (in thousands)","\u200b","2021","\u200b","2020","\u200b","2019","\u200b","2021/2020","\u200b","2020/2019","\u200b"],["Product:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Line of credit","\u200b","$","8,509","\u200b","$","1,178","\u200b","$","11,388","\u200b","\u200b","622","%","(90)","%"],["Hospital receivables","\u200b","\u200b","(65)","\u200b","\u200b","41","\u200b","\u200b","55","\u200b","\u200b","(259)","\u200b","(25)","\u200b"],["Total","\u200b","$","8,444","\u200b","$","1,219","\u200b","$","11,443","\u200b","\u200b","593","\u200b","(89)","\u200b"]]
[[/GREPCENT_TABLE]]

​

59

Table of Contents

Noninterest Income

​

Table 7 — Analysis of Noninterest Income

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","Percent Increase/(Decrease)"],["Years Ended December 31, (dollars in thousands)","","2021","","2020","","2019","","2021/2020","","2020/2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Service charges on deposit accounts","\u200b","$","12,553","\u200b","$","11,615","\u200b","$","14,197","","8","%","(18)","%"],["Net refund transfer fees","\u200b","","20,248","\u200b","","20,297","\u200b","","21,158","","\u2014","\u200b","(4)","\u200b"],["Mortgage banking income","\u200b","","19,994","\u200b","","31,847","\u200b","","9,499","","(37)","\u200b","235","\u200b"],["Interchange fee income","\u200b","","13,062","\u200b","","11,188","\u200b","","11,859","","17","\u200b","(6)","\u200b"],["Program fees","\u200b","","14,521","\u200b","","7,095","\u200b","","4,712","","105","\u200b","51","\u200b"],["Increase in cash surrender value of bank owned life insurance","\u200b","","2,242","\u200b","","1,585","\u200b","","1,550","","41","\u200b","2","\u200b"],["Death benefits in excess of cash surrender value of life insurance","\u200b","\u200b","979","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","NM","\u200b","NM","\u200b"],["Net (losses) gains on other real estate owned","\u200b","","(160)","\u200b","","(40)","\u200b","","540","","(300)","\u200b","(107)","\u200b"],["Net gain on branch divestiture","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","7,829","\u200b","NM","\u200b","(100)","\u200b"],["Other","\u200b","","3,420","\u200b","","3,466","\u200b","","3,664","","(1)","\u200b","(5)","\u200b"],["Total noninterest income","\u200b","$","86,859","\u200b","$","87,053","\u200b","$","75,008","","\u2014","\u200b","16","\u200b"]]
[[/GREPCENT_TABLE]]

NM - Not meaningful

​

Total Company noninterest income decreased $194,000 for 2021 compared to 2020. The following were the most significant components comprising the total Company’s noninterest income by reportable segment:

​

Traditional Banking segment

​

Traditional Banking noninterest income increased $4.1 million, or 15%, for 2021 compared to 2020. Service Charges on Deposit Accounts increased $935,000 from 2020 to 2021, while Interchange Fee Income increased $1.8 million comparing the same years. Service Charges on Deposit Accounts were below normal levels during 2020, as a pandemic-driven rise in the consumer savings rate drove a reduction in the Bank’s overdraft-related fees. Both Interchange Fee Income and Service Charges on Deposits began to trend upward during the first quarter of 2021, following the removal of pandemic-related restrictions.

​

The Bank earns a substantial majority of its fee income related to its overdraft service program from the per item fee it assesses its customers for each insufficient-funds check or electronic debit presented for payment. The total per item fees, net of refunds, included in service charges on deposits for 2021 and 2020 were $5.6 million and $5.5 million. The total daily overdraft charges, net of refunds, included in interest income in 2021 and 2020 were $1.1 million and $809,000. The Bank suspended its daily overdraft charges during the first eight months of 2020 to help mitigate the economic hardship of the COVID-19 pandemic on its clients. The Bank reinstituted the charging of its daily overdraft fee on September 1, 2020.

​

Mortgage Banking segment

​

Within the Mortgage Banking segment, mortgage banking income for 2021 decreased $11.9 million, or 37%, compared to 2020. For 2021, the Core Bank sold $718 million in secondary market loans and achieved an average gain-as-a-percent-of-loans-sold during the year of 3.22%, with comparable originations of $788 million and comparable gains of 3.64% during 2020. Favorable market conditions drove historically high gain percentages for the Core Bank and the mortgage industry, in general, during the last nine months of 2020 and into January 2021. These favorable conditions began to normalize during February 2021 causing the Core Bank’s gain-as-a-percent-of-loans-sold to trend toward more normal historical levels at or near 2.50%.

​

With the rise of inflation during the latter half of 2021, the FOMC has signaled a more aggressive and hawkish approach to its monetary policies over the next few years. Included in its expected actions is raising the FFTR multiple times, ending its quantitative easing program of buying certain types of bonds in the open market, and implementing a quantitative tightening program by reducing the size of its balance sheet and selling certain types of bonds in the market. The FOMC’s signaling of these actions caused market interest rates for treasury bonds and mortgages to begin to rise rapidly during the last quarter of 2021 and the first few weeks of 2022. With the rise in mortgage rates, mortgage refinance activity began to slow dramatically late in the fourth quarter of 2021, and as a result, mortgage origination volume began to decline significantly. Further monetary tightening by the FOMC in 2022 will likely further decrease mortgage demand. In addition, a decrease in mortgage demand across the mortgage industry could also cause competitive pricing pressure on the Bank to lower its mortgage pricing in order to maintain higher volumes, causing its cash-gains-as-

60

Table of Contents

a-percentage-of-loans-sold to decline. The Bank will likely experience decreased Mortgage Banking revenue during 2022 due to expected rising market interest rates and strong industry competition and pricing pressures.

​

Tax Refund Solutions segment

​

Within the TRS segment, noninterest income increased $1.0 million, or 4%, during 2021 compared to 2020. This increase primarily reflected a $978,000 increase in prepaid card program fees. Prepaid card program fees benefited from government stimulus payments during 2021 and a full year’s benefit of the Company’s May 1, 2020 assumption of approximately $250 million in prepaid card balances.

​

Republic Credit Solutions segment

​

Within the RCS segment, noninterest income increased $6.4 million, with program fees representing the entirety of RCS’s noninterest income. Pandemic-driven restrictions negatively impacted RCS program fees during 2020, with those program fees beginning to normalize during 2021 following the removal of the pandemic-driven restrictions.

​

The following table presents RCS program fees by product:

​

Table 8 — RCS Program Fees by Product

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","Percent Increase/(Decrease)","\u200b"],["Years Ended December 31, (in thousands)","\u200b","2021","\u200b","2020","\u200b","2019","\u200b","2021/2020","\u200b","2020/2019","\u200b"],["Product:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Line of credit","\u200b","$","5,333","\u200b","$","3,119","\u200b","$","4,392","\u200b","\u200b","71","%","(29)","%"],["Hospital receivables","\u200b","\u200b","268","\u200b","\u200b","102","\u200b","\u200b","232","\u200b","\u200b","163","\u200b","(56)","\u200b"],["Installment loans*","\u200b","\u200b","5,749","\u200b","\u200b","1,681","\u200b","\u200b","(349)","\u200b","\u200b","242","\u200b","(582)","\u200b"],["Total","\u200b","$","11,350","\u200b","$","4,902","\u200b","$","4,275","\u200b","\u200b","132","\u200b","15","\u200b"]]
[[/GREPCENT_TABLE]]

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

​

Noninterest Expense

​

Table 9 — Analysis of Noninterest Expense

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","Percent Increase/(Decrease)"],["Years Ended December 31, (dollars in thousands)","","2021","","2020","","2019","","2021/2020","","2020/2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Salaries and employee benefits","\u200b","$","110,088","\u200b","$","106,166","\u200b","$","99,181","","4","%","7","%"],["Technology, equipment, and communication","\u200b","","28,900","\u200b","","29,128","\u200b","","25,048","","(1)","\u200b","16","\u200b"],["Occupancy","\u200b","","13,193","\u200b","","13,438","\u200b","","12,926","","(2)","\u200b","4","\u200b"],["Marketing and development","\u200b","","4,325","\u200b","","4,031","\u200b","","5,023","","7","\u200b","(20)","\u200b"],["FDIC insurance expense","\u200b","","1,591","\u200b","","1,010","\u200b","","743","","58","\u200b","36","\u200b"],["State and local bank franchise tax expense","\u200b","","1,329","\u200b","","5,369","\u200b","","5,293","","(75)","\u200b","1","\u200b"],["Interchange related expense","\u200b","","4,960","\u200b","","4,303","\u200b","","4,870","","15","\u200b","(12)","\u200b"],["Other real estate owned and other repossession expense","\u200b","","(30)","\u200b","","46","\u200b","","326","","(165)","\u200b","(86)","\u200b"],["Legal and professional fees","\u200b","","4,924","\u200b","","4,244","\u200b","","3,357","","16","\u200b","26","\u200b"],["FHLB advances early termination penalties","\u200b","","\u2014","\u200b","","2,108","\u200b","","\u2014","","NM","\u200b","NM","\u200b"],["Other","\u200b","","13,024","\u200b","","15,614","\u200b","","15,416","","(17)","\u200b","1","\u200b"],["Total noninterest expense","\u200b","$","182,304","\u200b","$","185,457","\u200b","$","172,183","","(2)","\u200b","8","\u200b"]]
[[/GREPCENT_TABLE]]

​

Total Company noninterest expense decreased $3.2 million, or 2%, during 2021 compared to 2020. The most significant components comprising the change in noninterest expense by reportable segment follow:

​

61

Table of Contents

Traditional Banking segment

​

For 2021, compared to 2020, Traditional Banking noninterest expense decreased $3.7 million, or 2%. The following were the most significant categories affecting the change in noninterest expense:

​

[[GREPCENT_TABLE]]
[["","\u25cf","Bank Franchise Tax expense decreased $2.4 million. As previously reported, Kentucky enacted HB354 in March 2019 and as a result, the Bank transitioned from a capital-based bank franchise tax to the Kentucky corporate income tax on January 1, 2021."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","The Traditional Bank incurred $2.1 million in early termination penalties upon payoff of $60 million of FHLB term advances during the fourth quarter of 2020."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Other expenses decreased $2.0 million. Within this decrease, Provision for credit losses on off-balance sheet credit exposures decreased $470,000, driven by lower expected usage rates on the Bank\u2019s committed credit lines coupled with a generally improving economic outlook. Additionally, within the other expenses line item, the following expenses experienced decreases: fraud-related expenses, supplies, freight, and ATM promotions, with most of these decreases generally driven by the impact of the ongoing COVID-19 pandemic."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Partially offsetting the decreases above, Salaries and benefits expense increased approximately $1.8 million, or 2%, primarily driven by annual merit increases and increases in contract labor, equity compensation, payroll taxes, and health benefits."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Interchange-related expense increased $688,000, or 16%, as transaction volume began rising to more normalized levels during the first quarter of 2021 following the removal of pandemic-related restrictions."]]
[[/GREPCENT_TABLE]]

​

Tax Refund Solutions segment

​

TRS noninterest expense decreased $1.2 million, or 7%, during 2021 compared to 2020. The decline resulted primarily from a $1.5 million decrease in allocated bank franchise tax expense.

​

See additional detail regarding the Bank’s lawsuit against Green Dot under Footnote 1 “Summary of Significant Accounting Policies” of Part II Item 8 “Financial Statements and Supplemental Data.”

​

Income Tax Expense

​

The Company’s effective tax rate was approximately 21% in 2021 and 19% in 2020.

​

The following items provided $2.4 million in federal income tax benefits during 2021 and drove the Total Company’s federal effective tax rate for that period lower than the federal corporate tax rate of 21%. However, the overall Total Company’s combined federal and state effective tax rate was 21.34%, which was higher than previous years due to the Kentucky corporate income tax filing requirement beginning in 2021.

​

[[GREPCENT_TABLE]]
[["","\u25cf","The Company recognized $2.0 million in income tax benefits for low-income-housing investments and R&D credits during 2021. The low-income-housing investments were attributable to the Company\u2019s Traditional Banking segment, while the R&D credits were allocated among the Traditional Banking, TRS, and RCS segments."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","The Company recognized $226,000 in income tax benefits associated with equity compensation during 2021. Substantially all of this benefit was attributed to the Company\u2019s Traditional Banking segment."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","The Company recognized $206,000 in income tax benefits for non-recurring death benefit revenue related to the Company\u2019s bank owned life insurance policies."]]
[[/GREPCENT_TABLE]]

62

Table of Contents

​

The following items provided $3.1 million in federal income tax benefits during 2020 and drove the Total Company’s effective tax rate for that period lower than the federal corporate tax rate of 21%:

​

[[GREPCENT_TABLE]]
[["","\u25cf","Prior to January 1, 2021, as a financial institution doing business in Kentucky, the Bank was subject to a capital-based Kentucky bank franchise tax and exempt from Kentucky corporate income tax. In March 2019, Kentucky enacted HB354 and transitioned the Bank from the bank franchise tax to a corporate income tax beginning January 1, 2021. In 2020, the Company recorded an additional deferred tax asset, net of the federal benefit, of $1 million due to the enactment of HB354, with the majority of this benefit attributed to the Company\u2019s Traditional Banking segment."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","The Company recognized $2.1 million in income tax benefits for low-income-housing investments and R&D credits during 2020. The low-income-housing investments were attributable to the Company\u2019s Traditional Banking segment, while the R&D credits were allocated among the Traditional Banking, TRS, and RCS segments."]]
[[/GREPCENT_TABLE]]

​

See additional detail regarding the Company’s Income Tax Expense under Footnote 19 “Income Taxes” of Part II Item 8 “Financial Statements and Supplemental Data.”

​

FINANCIAL CONDITION

​

Cash and Cash Equivalents

​

Cash and cash equivalents include cash, deposits with other financial institutions with original maturities less than 90 days, and federal funds sold. Republic had $757 million in cash and cash equivalents as of December 31, 2021 compared to $486 million as of December 31, 2020. For cash held at the FRB, the Bank earns a yield on amounts more than required reserves. This yield increased from 0.10% at January 1, 2021 to 0.15% as of December 31, 2021. For cash held within the Bank’s banking center and ATM networks, the Bank does not earn interest.

​

The growth in cash balances was driven by continued growth in deposit balances along with a continued general decline in loans, particularly within the PPP loan category. Given the near-term risk of inflation and rising market interest rates, combined with the requirement that the term of the investments would have to be extended in order to pick up a meaningful increase in the overall yield, management chose to not redeploy significant excess cash into the investment portfolio through October 31, 2021. During the fourth quarter of 2021, however, management began evaluating potential changes to its existing strategy to redeploy excess cash as a result of a recent steepening of the yield curve. Management believes the Company will likely start deploying some of its excess cash into longer-term, higher yielding securities, as compared to the overnight nature of its cash earning 0.15% at the Federal Reserve during 2021. The overall amount and timing of investments that could be purchased, as well as the term of the investments that could be purchased, will depend on many factors including, but not limited to, the Company’s overall current and projected liquidity positions, its customers’ demand for its loans and deposit products, the interest rate environment at the time, as well as the anticipated interest rate environment in the near and long term.

​

The Company’s Captive maintains cash reserves to cover insurable claims. Captive cash reserves totaled approximately $4 million and $3 million as of December 31, 2021 and 2020.

​

​

63

Table of Contents

Investment Securities

​

Table 10 — Investment Securities Portfolio

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["December 31, (in thousands)","","2021","","2020","","2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Available-for-sale debt securities (fair value):","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["U.S. Treasury securities and U.S. Government agencies","\u200b","$","237,459","\u200b","$","246,909","\u200b","$","134,640","\u200b"],["Private label mortgage-backed security","\u200b","","2,731","\u200b","","2,957","\u200b","","3,495","\u200b"],["Mortgage-backed securities - residential","\u200b","","210,749","\u200b","","211,202","\u200b","","255,847","\u200b"],["Collateralized mortgage obligations","\u200b","","30,294","\u200b","","48,952","\u200b","","63,371","\u200b"],["Corporate bonds","\u200b","","10,046","\u200b","","10,043","\u200b","","10,002","\u200b"],["Trust preferred security","\u200b","","3,847","\u200b","","3,800","\u200b","","4,000","\u200b"],["Total available-for-sale debt securities","\u200b","","495,126","\u200b","","523,863","\u200b","","471,355","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Held-to-maturity debt securities (carrying value):","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["U.S. Treasury securities and U.S. Government agencies","\u200b","","\u2014","\u200b","","\u2014","\u200b","","\u2014","\u200b"],["Mortgage backed securities - residential","\u200b","","46","\u200b","","99","\u200b","","104","\u200b"],["Collateralized mortgage obligations","\u200b","","9,080","\u200b","","13,061","\u200b","","16,970","\u200b"],["Corporate bonds","\u200b","\u200b","34,928","\u200b","\u200b","39,808","\u200b","\u200b","44,995","\u200b"],["Obligations of state and political subdivisions","\u200b","","245","\u200b","","356","\u200b","","462","\u200b"],["Total held-to-maturity debt securities","\u200b","","44,299","\u200b","","53,324","\u200b","","62,531","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Equity securities with a readily determinable fair value (fair value):","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Freddie Mac preferred stock","\u200b","","170","\u200b","","560","\u200b","","714","\u200b"],["Community Reinvestment Act mutual fund","\u200b","","2,450","\u200b","","2,523","\u200b","","2,474","\u200b"],["Total equity securities with a readily determinable fair value","\u200b","\u200b","2,620","\u200b","\u200b","3,083","\u200b","\u200b","3,188","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Total investment securities","\u200b","$","542,045","\u200b","$","580,270","\u200b","$","537,074","\u200b"]]
[[/GREPCENT_TABLE]]

​

AFS debt securities primarily consists of U.S. Treasury securities and U.S. Government agency obligations, including agency MBS and agency CMOs. The agency MBSs primarily consist of hybrid mortgage investment securities, as well as other adjustable rate mortgage investment securities, underwritten and guaranteed by the GNMA, the FHLMC and the FNMA. Agency CMOs held in the investment portfolio are substantially all floating rate securities that adjust monthly. The Bank uses a portion of the investment securities portfolio as collateral to Bank clients for SSUARs. The remaining eligible securities that are not pledged to secure client SSUARs may be pledged to the FHLB as collateral for the Bank’s borrowing line.

​

During 2021, the Bank purchased $212 million in investment debt securities, allocated among $81 million in MBSs, $40 in U.S. Treasuries, and $91 million in U.S. government agencies. The mortgage-backed securities that were purchased had an expected weighted-average yield of approximately 1.30% and a weighted average maturity at purchase of 14.4 years. The U.S. Treasuries had an expected weighted-average yield of approximately 0.43% and a weighted average life at purchase of 2.3 years. The U.S. Government agencies purchased had an expected weighted average yield of approximately 1.16% and a weighted average life of 6.4 years.

​

From 2013 to 2019, the Bank purchased various floating-rate corporate bonds. These bonds were rated “investment grade” by accredited rating agencies as of their respective purchase dates. The total fair value of the Bank’s corporate bonds represented 8% and 10% of the Bank’s investment portfolio as of December 31, 2021 and 2020. During 2019, one of these bonds was downgraded to BBB+ (S&P/Fitch), driving a significant decrease in the bond’s market value. As of December 31, 2021, this bond had recovered its lost value and reflected an unrealized gain of $46,000.

​

64

Table of Contents

Strategies for the investment securities portfolio are influenced by economic and market conditions, loan demand, deposit mix, and liquidity needs. For the past several years, the Bank has continued to utilize a general strategy within the investment portfolio of purchasing securities with shorter-term durations or maintain a large amount cash at the Federal Reserve. The Bank has used this general strategy for liquidity purposes and as an interest rate risk management tool in what has been a long period of historically low interest rates. As discussed in the previous section, however, this strategy could likely change in 2022 with an opportunity to earn higher yields on investments with maturities longer than overnight cash. As previously noted, however, the overall amount and timing of investments that could be purchased, as well as the term of the investments that could be purchased, will depend on many factors including, but not limited to, the Company’s overall current and projected liquidity positions, its customers’ demand for its loans and deposit products, the interest rate environment at the time, as well as the anticipated interest rate environment in the near and long term.

​

Table 11 — Available-for-Sale Debt Securities

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","","\u200b","\u200b","","\u200b","\u200b","","\u200b","","Weighted"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","Weighted","\u200b","Average"],["\u200b","\u200b","Amortized","\u200b","Fair","\u200b","Average","\u200b","Maturity in"],["December 31, 2021 (dollars in thousands)","\u200b","Cost","\u200b","Value","\u200b","Yield","\u200b","Years"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["U.S. Treasury securities and U.S. Government agencies:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Due in one year or less","\u200b","$","30,058","\u200b","$","30,307","","1.53","%","0.64","\u200b"],["Due from one year to five years","\u200b","","189,822","\u200b","","187,570","","0.85","\u200b","3.46","\u200b"],["Due from five years to 10 years","\u200b","","20,000","\u200b","","19,582","","1.00","\u200b","5.16","\u200b"],["Total U.S. Treasury securities and U.S. Government agencies","\u200b","","239,880","\u200b","","237,459","","0.95","\u200b","3.25","\u200b"],["Corporate bonds:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Due from one year to five years","\u200b","","10,000","\u200b","","10,046","","1.12","\u200b","1.29","\u200b"],["Total Corporate bonds","\u200b","","10,000","\u200b","","10,046","","1.12","\u200b","1.29","\u200b"],["Trust preferred security, due beyond ten years","\u200b","\u200b","3,684","\u200b","\u200b","3,847","\u200b","5.48","\u200b","15.43","\u200b"],["Private label mortgage backed security","\u200b","","1,418","\u200b","","2,731","","7.96","\u200b","11.63","\u200b"],["Total mortgage backed securities - residential","\u200b","","207,697","\u200b","","210,749","","1.87","\u200b","12.60","\u200b"],["Total collateralized mortgage obligations","\u200b","","29,947","\u200b","","30,294","","1.37","\u200b","16.35","\u200b"],["Total available-for-sale debt securities","\u200b","$","492,626","\u200b","$","495,126","","1.42","\u200b","8.06","\u200b"]]
[[/GREPCENT_TABLE]]

​

Table 12 — Held-to-Maturity Debt Securities

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","","\u200b","\u200b","","\u200b","\u200b","","\u200b","","Weighted"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","Weighted","\u200b","Average"],["\u200b","\u200b","Carrying","\u200b","Fair","\u200b","Average","\u200b","Maturity in"],["December 31, 2021 (dollars in thousands)","\u200b","Value","\u200b","Value","\u200b","Yield","\u200b","Years"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Corporate bonds:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Due from one year to five years","\u200b","$","34,975","\u200b","$","35,232","\u200b","1.26","%","1.99","\u200b"],["Total corporate bonds","\u200b","","34,975","\u200b","","35,232","","1.26","\u200b","1.99","\u200b"],["Obligations of state and political subdivisions:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Due from one year or less","\u200b","\u200b","120","\u200b","\u200b","121","\u200b","1.80","\u200b","0.58","\u200b"],["Due from one year to five years","\u200b","","125","\u200b","","127","","1.90","\u200b","1.58","\u200b"],["Total obligations of state and political subdivisions","\u200b","","245","\u200b","","248","","1.85","\u200b","1.09","\u200b"],["Total mortgage backed securities - residential","\u200b","","46","\u200b","","46","","2.34","\u200b","8.44","\u200b"],["Total collateralized mortgage obligations","\u200b","","9,080","\u200b","","9,238","","0.88","\u200b","12.74","\u200b"],["Total held-to-maturity debt securities","\u200b","$","44,346","\u200b","$","44,764","","1.18","\u200b","4.19","\u200b"]]
[[/GREPCENT_TABLE]]

​

See Footnote 2 “Investment Securities” of Part II Item 8 “Financial Statements and Supplementary Data” for further information regarding the Bank’s investment securities.

​

65

Table of Contents

Loan Portfolio

​

Table 13 — Loan Portfolio Composition

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["December 31, (in thousands)","","2021","","2020","","2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Traditional Banking:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Residential real estate:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Owner occupied","\u200b","$","820,731","\u200b","$","879,800","\u200b","$","949,568"],["Nonowner occupied","\u200b","","306,323","\u200b","","264,780","\u200b","","258,803"],["Commercial real estate","\u200b","","1,456,009","\u200b","","1,349,085","\u200b","","1,303,000"],["Construction & land development","\u200b","","129,337","\u200b","","98,674","\u200b","","159,702"],["Commercial & industrial","\u200b","","340,363","\u200b","","325,596","\u200b","","465,674"],["Paycheck Protection Program","\u200b","","56,014","\u200b","","392,319","\u200b","","\u2014"],["Lease financing receivables","\u200b","","8,637","\u200b","","10,130","\u200b","","14,040"],["Aircraft","\u200b","","142,894","\u200b","","101,375","\u200b","","70,443"],["Home equity","\u200b","","210,578","\u200b","","240,640","\u200b","","293,186"],["Consumer:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Credit cards","\u200b","\u200b","14,510","\u200b","\u200b","14,196","\u200b","\u200b","17,836"],["Overdrafts","\u200b","\u200b","683","\u200b","\u200b","587","\u200b","\u200b","1,522"],["Automobile loans","\u200b","\u200b","14,448","\u200b","\u200b","30,300","\u200b","\u200b","52,923"],["Other consumer","\u200b","\u200b","1,432","\u200b","\u200b","8,167","\u200b","\u200b","9,234"],["Total Traditional Banking","\u200b","\u200b","3,501,959","\u200b","\u200b","3,715,649","\u200b","\u200b","3,595,931"],["Warehouse lines of credit*","\u200b","","850,550","\u200b","","962,796","\u200b","","717,458"],["Total Core Banking","\u200b","\u200b","4,352,509","\u200b","\u200b","4,678,445","\u200b","\u200b","4,313,389"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Republic Processing Group*:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Tax Refund Solutions:","\u200b","","\u200b","\u200b","","\u200b","\u200b","","\u200b"],["Easy Advances","\u200b","","\u2014","\u200b","","\u2014","\u200b","","\u2014"],["Other TRS loans","\u200b","\u200b","50,987","\u200b","\u200b","23,765","\u200b","\u200b","14,365"],["Republic Credit Solutions","\u200b","","93,066","\u200b","","110,893","\u200b","","105,397"],["Total Republic Processing Group","\u200b","","144,053","\u200b","","134,658","\u200b","","119,762"],["\u200b","\u200b","","\u200b","\u200b","","\u200b","\u200b","","\u200b"],["Total loans**","\u200b","","4,496,562","\u200b","","4,813,103","\u200b","","4,433,151"],["Allowance for credit losses","\u200b","","(64,577)","\u200b","","(61,067)","\u200b","","(43,351)"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Total loans, net","\u200b","$","4,431,985","\u200b","$","4,752,036","\u200b","$","4,389,800"]]
[[/GREPCENT_TABLE]]

*     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.

​

Gross loans decreased by $317 million, or 7%, during 2021 to $4.5 billion as of December 31, 2021. The most significant components comprising the change in loans by reportable segment follow:

​

Traditional Banking segment

​

Period-end balances for Traditional Banking loans decreased $214 million, or 6%, during 2021. The following primarily drove the change in loan balances:

​

[[GREPCENT_TABLE]]
[["","\u25cf","The Traditional Bank\u2019s PPP portfolio decreased $336 million during 2021. To facilitate pandemic relief for the communities it serves, the Traditional Bank originated 3,700 PPP loans totaling $528 million during 2020 and another 1,900 PPP loans totaling $210 million in early 2021. As of December 31, 2021, net PPP loans of $56 million remained on the Traditional Bank\u2019s balance sheet, including $15 million in loan balances originated during 2020, $42 million in loan balances originated during 2021, and $1 million of yet-to-be-earned PPP lender fees reported as a credit offset to these originated balances."]]
[[/GREPCENT_TABLE]]

66

Table of Contents

​

PPP loans have a stated maturity of two to five years, an annualized fixed coupon rate of 1.0% to the client, are 100% guaranteed by the SBA, and 100% forgivable to the client if certain program metrics are met. The Bank earns an origination fee of 1%, 3%, or 5% based on the size of the loan.

​

[[GREPCENT_TABLE]]
[["","\u25cf","The owner-occupied residential real estate and home equity categories decreased $59 million and $30 million during 2021. These decreases largely reflected the impact of a sharp drop in long-term market interest rates during the previous 12 months that drove an increase in refinance volume for residential mortgages, with much of the refinance activity going into fixed-rate products sold on the secondary market."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Offsetting the decreases above, the CRE category increased $106 million and the Aircraft category increased $42 million, as lending activity began normalizing following the removal of pandemic-driven restrictions during 2021."]]
[[/GREPCENT_TABLE]]

​

Warehouse Lending segment

​

Outstanding Warehouse period end balances decreased $112 million during 2021. Due to the volatility and seasonality of the mortgage market, it is difficult to project future outstanding balances of Warehouse lines of credit. The growth of the Bank’s Warehouse Lending business greatly depends on the overall mortgage market and typically follows industry trends. Since its entrance into this business during 2011, the Bank has experienced volatility in the Warehouse portfolio consistent with overall demand for mortgage products. Weighted average quarterly usage rates on the Bank’s Warehouse lines have ranged from a low of 31% during the fourth quarter of 2013 to a high of 71% during the fourth quarter of 2019. On an annual basis, weighted average usage rates on the Bank’s Warehouse lines have ranged from a low of 40% during 2013 to a high of 66% during 2020.

​

As discussed earlier in this document, management believes it is likely Warehouse usage and balances will likely decline in 2022 with an expected rise in market interest rates.

​

Republic Credit Solutions segment

​

Outstanding RCS loans decreased $18 million during 2021 primarily reflecting a $26 million decrease in hospital receivables partially offset by a $9 million increase in outstanding balances for RCS’s line-of-credit products. The increase in balances for RCS’s line-of-credit product was the direct result of incremental increases in marketing for its LOC I product since the third quarter of 2020. Marketing for this product had been limited during the first half of 2020 due to pandemic-related concerns.

​

67

Table of Contents

The table below illustrates the Bank’s fixed and variable rate loan maturities:

​

Table 14 — Selected Loan Distribution

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","","\u200b","\u200b","","\u200b","\u200b","","Over One","","Over Five","","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","One Year","\u200b","Through","\u200b","Through","\u200b","Over"],["December 31, 2021 (in thousands)","\u200b","Total","\u200b","Or Less","\u200b","Five Years","\u200b","15 Years","\u200b","15 Years"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Fixed rate loan maturities:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Residential real estate","\u200b","$","623,689","\u200b","$","17,475","\u200b","$","17,439","\u200b","$","294,434","\u200b","$","294,341","\u200b"],["Commercial real estate","\u200b","","629,600","\u200b","","25,015","\u200b","","82,110","\u200b","","521,981","\u200b","","494","\u200b"],["Construction & land development","\u200b","","48,609","\u200b","","11,988","\u200b","","22,064","\u200b","","14,557","\u200b","","\u2014","\u200b"],["Commercial & industrial","\u200b","","217,665","\u200b","","39,175","\u200b","","99,868","\u200b","","56,316","\u200b","","22,306","\u200b"],["Paycheck Protection Program","\u200b","\u200b","56,014","\u200b","","14,636","\u200b","","41,378","\u200b","","\u2014","\u200b","","\u2014","\u200b"],["Lease financing receivables","\u200b","","6,099","\u200b","","1,284","\u200b","","\u2014","\u200b","","4,815","\u200b","","\u2014","\u200b"],["Aircraft","\u200b","\u200b","142,894","\u200b","","\u2014","\u200b","","\u2014","\u200b","","52,829","\u200b","","90,065","\u200b"],["Warehouse lines of credit","\u200b","","\u2014","\u200b","","\u2014","\u200b","","\u2014","\u200b","","\u2014","\u200b","","\u2014","\u200b"],["Home equity","\u200b","","1,678","\u200b","","795","\u200b","","829","\u200b","","54","\u200b","","\u2014","\u200b"],["Consumer","\u200b","","42,649","\u200b","","28,105","\u200b","","14,134","\u200b","","340","\u200b","","70","\u200b"],["Total fixed rate loans","\u200b","$","1,768,897","\u200b","$","138,473","\u200b","$","277,822","\u200b","$","945,326","\u200b","$","407,276","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Variable rate loan maturities:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Residential real estate","\u200b","$","503,365","\u200b","$","1,190","\u200b","$","22,645","\u200b","$","166,292","\u200b","$","313,238","\u200b"],["Commercial real estate","\u200b","","826,409","\u200b","","55,157","\u200b","","150,281","\u200b","","593,759","\u200b","","27,212","\u200b"],["Construction & land development","\u200b","","80,728","\u200b","","12,048","\u200b","","7,405","\u200b","","60,615","\u200b","","660","\u200b"],["Commercial & industrial","\u200b","","173,685","\u200b","","50,876","\u200b","","78,385","\u200b","","24,424","\u200b","","20,000","\u200b"],["Paycheck Protection Program","\u200b","\u200b","\u2014","\u200b","","\u2014","\u200b","","\u2014","\u200b","","\u2014","\u200b","","\u2014","\u200b"],["Lease financing receivables","\u200b","","2,538","\u200b","","865","\u200b","","\u2014","\u200b","","1,673","\u200b","","\u2014","\u200b"],["Aircraft","\u200b","\u200b","\u2014","\u200b","","\u2014","\u200b","","\u2014","\u200b","","\u2014","\u200b","","\u2014","\u200b"],["Warehouse lines of credit","\u200b","","850,550","\u200b","","850,550","\u200b","","\u2014","\u200b","","\u2014","\u200b","","\u2014","\u200b"],["Home equity","\u200b","","208,900","\u200b","","9,298","\u200b","","60,433","\u200b","","139,169","\u200b","","\u2014","\u200b"],["Consumer","\u200b","","81,490","\u200b","","14,510","\u200b","","\u2014","\u200b","","66,947","\u200b","","33","\u200b"],["Total variable rate loans","\u200b","$","2,727,665","\u200b","$","994,494","\u200b","$","319,149","\u200b","$","1,052,879","\u200b","$","361,143","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Total:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Residential real estate","\u200b","$","1,127,054","\u200b","$","18,665","\u200b","$","40,084","\u200b","$","460,726","\u200b","$","607,579","\u200b"],["Commercial real estate","\u200b","","1,456,009","\u200b","","80,172","\u200b","","232,391","\u200b","","1,115,740","\u200b","","27,706","\u200b"],["Construction & land development","\u200b","","129,337","\u200b","","24,036","\u200b","","29,469","\u200b","","75,172","\u200b","","660","\u200b"],["Commercial & industrial","\u200b","","391,350","\u200b","","90,051","\u200b","","178,253","\u200b","","80,740","\u200b","","42,306","\u200b"],["Paycheck Protection Program","\u200b","\u200b","56,014","\u200b","","14,636","\u200b","","41,378","\u200b","","\u2014","\u200b","","\u2014","\u200b"],["Lease financing receivables","\u200b","","8,637","\u200b","","2,149","\u200b","","\u2014","\u200b","","6,488","\u200b","","\u2014","\u200b"],["Aircraft","\u200b","\u200b","142,894","\u200b","","\u2014","\u200b","","\u2014","\u200b","","52,829","\u200b","","90,065","\u200b"],["Warehouse lines of credit","\u200b","","850,550","\u200b","","850,550","\u200b","","\u2014","\u200b","","\u2014","\u200b","","\u2014","\u200b"],["Home equity","\u200b","","210,578","\u200b","","10,093","\u200b","","61,262","\u200b","","139,223","\u200b","","\u2014","\u200b"],["Consumer","\u200b","","124,139","\u200b","","42,615","\u200b","","14,134","\u200b","","67,287","\u200b","","103","\u200b"],["Total loans","\u200b","$","4,496,562","\u200b","$","1,132,967","\u200b","$","596,971","\u200b","$","1,998,205","\u200b","$","768,419","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Loans at maturity interval to overall total loans","\u200b","\u200b","100","%","\u200b","25","%","\u200b","13","%","\u200b","44","%","\u200b","17","%"]]
[[/GREPCENT_TABLE]]

​

Allowance for Credit Losses

​

As of December 31, 2021, the Bank maintained an ACLL for expected credit losses inherent in the Bank’s loan portfolio, which includes overdrawn deposit accounts. The Bank also maintained an ACLS and an ACLC for expected losses in its securities portfolio and its off-balance sheet credit exposures, respectively. Management evaluates the adequacy of the ACLL monthly, and the adequacy of the ACLS and ACLC quarterly. All ACLs are presented and discussed with the Audit Committee and the Board of Directors quarterly.

​

The Company’s ACLL increased $4 million from $61 million as of December 31, 2020 to $65 million as of December 31, 2021. As a percent of total loans, the total Company’s ACLL increased to 1.44% as of December 31, 2021 compared to 1.27% as of December 31, 2020. An analysis of the ACL by reportable segment follows:

68

Table of Contents

​

Traditional Banking segment

​

[[GREPCENT_TABLE]]
[["","\u25cf","The Traditional Banking ACLL decreased approximately $292,000 from December 31, 2020 to $49 million as of December 31, 2021 driven primarily by net charge-offs during 2021."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","The Traditional Bank decreased its ACLS $131,000 during 2021 to $47,000 as of December 31, 2021 based on improved PD and LGD expectations on its corporate bond portfolios."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","The Traditional Bank increased its ACLC $63,000 during 2021 to $1.1 million as of December 31, 2021 based on an increase in available credit lines."]]
[[/GREPCENT_TABLE]]

​

Warehouse Lending segment

​

The Warehouse ACLL decreased to approximately $2.1 million, and the Warehouse ACLL to total Warehouse loans remained at 0.25% when comparing December 31, 2021 to December 31, 2020. As of December 31, 2021, the Warehouse ACLL was entirely qualitative in nature with no adjustments to the qualitative reserve percentage required for 2021. 

​

Republic Credit Solutions segment

​

The RCS ACLL increased $4 million during 2021 from $9 million as of December 31, 2020 to $13 million as of December 31, 2021, with this increase driven by growth in balances on RCS’s line-of-credit products.

​

RCS maintained an ACLL for two distinct credit products offered as of December 31, 2021, including its line-of-credit products and its healthcare-receivables products. As of December 31, 2021, the ACLL to total loans estimated for each RCS product ranged from as low as 0.25% for its healthcare-receivables products to as high as 49% for its line-of-credit products. The lower reserve percentage of 0.25% was provided for RCS’s healthcare receivables, as such receivables have recourse back to the third-party providers.

​

For additional discussion regarding Republic’s methodology for determining the adequacy of the ACLL, see the section titled “Critical Accounting Policies and Estimates” in this section of the filing.

​

See additional detail regarding Republic Credit Solution’s loan products under Item 1 “Business.”

​

69

Table of Contents

Table 15 — Summary of Loan and Lease Loss Experience

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Years Ended December 31, (dollars in thousands)","","2021","","2020","","2019","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["ACLL at beginning of period","\u200b","$","61,067","\u200b","$","43,351","\u200b","$","44,675","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Adoption of ASC 326","\u200b","\u200b","\u2014","\u200b","\u200b","6,734","\u200b","\u200b","\u2014","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Charge-offs:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Traditional Banking:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Residential real estate","\u200b","","\u2014","\u200b","","(169)","\u200b","","(683)","\u200b"],["Commercial real estate","\u200b","","(428)","\u200b","","(795)","\u200b","","(1,407)","\u200b"],["Commercial & industrial","\u200b","","(86)","\u200b","","(310)","\u200b","","(1,505)","\u200b"],["Home equity","\u200b","","(51)","\u200b","","(14)","\u200b","","(64)","\u200b"],["Consumer","\u200b","\u200b","(895)","\u200b","\u200b","(1,481)","\u200b","\u200b","(2,054)","\u200b"],["Total Traditional Banking","\u200b","\u200b","(1,460)","\u200b","\u200b","(2,769)","\u200b","\u200b","(5,713)","\u200b"],["Warehouse lines of credit","\u200b","","\u2014","\u200b","","\u2014","\u200b","","\u2014","\u200b"],["Total Core Banking","\u200b","\u200b","(1,460)","\u200b","\u200b","(2,769)","\u200b","\u200b","(5,713)","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Republic Processing Group:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Tax Refund Solutions:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Easy Advances","\u200b","\u200b","(10,256)","\u200b","\u200b","(19,575)","\u200b","\u200b","(13,425)","\u200b"],["Other TRS loans","\u200b","\u200b","(51)","\u200b","\u200b","(234)","\u200b","\u200b","(692)","\u200b"],["Republic Credit Solutions","\u200b","\u200b","(4,707)","\u200b","\u200b","(6,163)","\u200b","\u200b","(12,566)","\u200b"],["Total Republic Processing Group","\u200b","\u200b","(15,014)","\u200b","\u200b","(25,972)","\u200b","\u200b","(26,683)","\u200b"],["Total charge-offs","\u200b","","(16,474)","\u200b","","(28,741)","\u200b","","(32,396)","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Recoveries:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Traditional Banking:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Residential real estate","\u200b","\u200b","396","\u200b","\u200b","182","\u200b","\u200b","414","\u200b"],["Commercial real estate","\u200b","","82","\u200b","","472","\u200b","","4","\u200b"],["Commercial & industrial","\u200b","","76","\u200b","","122","\u200b","","9","\u200b"],["Home equity","\u200b","","46","\u200b","","115","\u200b","","72","\u200b"],["Consumer","\u200b","\u200b","475","\u200b","\u200b","508","\u200b","\u200b","628","\u200b"],["Total Traditional Banking","\u200b","\u200b","1,075","\u200b","\u200b","1,399","\u200b","\u200b","1,127","\u200b"],["Warehouse lines of credit","\u200b","","\u2014","\u200b","","\u2014","\u200b","","\u2014","\u200b"],["Total Core Banking","\u200b","\u200b","1,075","\u200b","\u200b","1,399","\u200b","\u200b","1,127","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Republic Processing Group:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Tax Refund Solutions:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Easy Advances","\u200b","\u200b","3,533","\u200b","\u200b","6,542","\u200b","\u200b","2,782","\u200b"],["Other TRS loans","\u200b","\u200b","29","\u200b","\u200b","2","\u200b","\u200b","213","\u200b"],["Republic Credit Solutions","\u200b","\u200b","408","\u200b","\u200b","629","\u200b","\u200b","1,192","\u200b"],["Total Republic Processing Group","\u200b","\u200b","3,970","\u200b","\u200b","7,173","\u200b","\u200b","4,187","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Total recoveries","\u200b","","5,045","\u200b","","8,572","\u200b","","5,314","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Net loan recoveries (charge-offs)","\u200b","","(11,429)","\u200b","","(20,169)","\u200b","","(27,082)","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Provision - Core Banking","\u200b","","(188)","\u200b","","16,743","\u200b","","3,066","\u200b"],["Provision - RPG","\u200b","","15,127","\u200b","","14,408","\u200b","","22,692","\u200b"],["Total Provision","\u200b","","14,939","\u200b","","31,151","\u200b","","25,758","\u200b"],["ACLL at end of period","\u200b","$","64,577","\u200b","$","61,067","\u200b","$","43,351","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Credit Quality Ratios - Total Company:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["ACLL to total loans","\u200b","","1.44","%","","1.27","%","","0.98","%"],["ACLL to nonperforming loans","\u200b","","314","\u200b","","259","\u200b","","185","\u200b"],["Net loan charge-offs (recoveries) to average loans","\u200b","\u200b","0.25","\u200b","\u200b","0.42","\u200b","\u200b","0.61","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Credit Quality Ratios - Core Banking:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["ACLL to total loans","\u200b","","1.18","%","","1.11","%","","0.70","%"],["ACLL to nonperforming loans","\u200b","","251","\u200b","","221","\u200b","","129","\u200b"],["Net loan charge-offs (recoveries) to average loans","\u200b","\u200b","0.01","\u200b","\u200b","0.03","\u200b","\u200b","0.11","\u200b"]]
[[/GREPCENT_TABLE]]

​

​

70

Table of Contents

Table 16 — Net Loan Charge-offs (Recoveries) to Average Loans by Loan Category

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Net Loan Charge-Offs (Recoveries) to Average Loans","\u200b"],["Years ended December 31, (in thousands)","","2021","","2020","","2019","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Traditional Banking:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Residential real estate:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Owner occupied","\u200b","(0.04)","%","\u2014","%","0.02","%"],["Nonowner occupied","\u200b","\u2014","\u200b","\u2014","\u200b","0.02","\u200b"],["Commercial real estate","\u200b","0.03","\u200b","0.02","\u200b","0.11","\u200b"],["Construction & land development","\u200b","\u2014","\u200b","\u2014","\u200b","\u2014","\u200b"],["Commercial & industrial","\u200b","\u2014","\u200b","0.05","\u200b","0.02","\u200b"],["Paycheck Protection Program","\u200b","\u2014","\u200b","\u2014","\u200b","\u2014","\u200b"],["Lease financing receivables","\u200b","\u2014","\u200b","\u2014","\u200b","\u2014","\u200b"],["Aircraft","\u200b","\u2014","\u200b","\u2014","\u200b","\u2014","\u200b"],["Home equity","\u200b","\u2014","\u200b","(0.04)","\u200b","\u2014","\u200b"],["Consumer:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Credit cards","\u200b","0.65","\u200b","1.46","\u200b","1.83","\u200b"],["Overdrafts","\u200b","51.69","\u200b","93.94","\u200b","94.31","\u200b"],["Automobile loans","\u200b","(0.10)","\u200b","0.08","\u200b","0.12","\u200b"],["Other consumer","\u200b","0.27","\u200b","0.58","\u200b","(0.98)","\u200b"],["Total Traditional Banking","\u200b","0.01","\u200b","0.04","\u200b","0.13","\u200b"],["Warehouse lines of credit","\u200b","\u2014","\u200b","\u2014","\u200b","\u2014","\u200b"],["Total Core Banking","\u200b","0.01","\u200b","0.03","\u200b","0.11","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Republic Processing Group:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Tax Refund Solutions:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Easy Advances*","\u200b","26.58","\u200b","33.55","\u200b","31.37","\u200b"],["Other TRS loans","\u200b","0.19","\u200b","2.32","\u200b","5.77","\u200b"],["Republic Credit Solutions","\u200b","3.93","\u200b","5.32","\u200b","11.99","\u200b"],["Total Republic Processing Group","\u200b","7.42","\u200b","12.20","\u200b","16.18","\u200b"],["Total","\u200b","0.25","\u200b","0.42","\u200b","0.61","\u200b"]]
[[/GREPCENT_TABLE]]

*     Easy Advances are originated during the first two months of each year, with all EAs charged-off by June 30th of each year. Due to their relatively short life, EA net charge-offs are typically analyzed by the Company as a percentage of total EA originations, not as a percentage of average outstanding balances. See additional detail regarding the EA product under Footnote 4 “Loans and Allowance for Credit Losses” of Part II Item 8 “Financial Statements and Supplemental Data.”

​

From 2020 to 2021, the Company’s net charge-offs to average total Company loans decreased 17 basis points to 0.25%, with net charge-offs decreasing $8.7 million, or 43%, and average total Company loans decreasing $278 million, or 6%. The decrease in net charge-offs was primarily driven by a $7.8 million decrease in net charge-offs within the Company’s RPG operations, which has historically conducted higher-risk lending activities that the Company’s Core Banking operations.

​

From 2020 to 2021, RPG experienced a $6.3 million decrease in EA net charge-offs at TRS and a $1.2 million decrease in RCS net charge-offs. The decrease in EA net charge-offs partially resulted from a $138 million reduction in EAs originated from 2020 to 2021 and partially from an improvement in the EA repayment rate from the US Treasury during 2021 as compared to 2020. A decrease in RCS net charge-offs resulted primarily from a lower charge-off rate on RCS’s LOC I product during 2021 compared to 2020. Management believes the reduction in net charge-offs within the RCS LOC I product was attributable to the large amount of cash available to consumers from government stimulus payments over the past 18 months.

​

During 2021, the Company’s Core Bank net charge-offs to average Core Bank loans remained near zero.

​

​

71

Table of Contents

The following table sets forth management’s allocation of the ACLL by loan class. The ACLL allocation is based on management’s assessment of economic conditions, historical loss experience, and various other qualitative factors. Additionally, management began including life-of-loan and forecast considerations into its ACLL allocation upon adoption of the CECL method on January 1, 2020. Since these factors and management’s assumptions are subject to change, the allocation is not necessarily indicative of future loan portfolio performance or future ACLL allocation.

​

Table 17 — Management’s Allocation of the Allowance for Credit Losses on Loans

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","2021","2020","2019"],["\u200b","\u200b","\u200b","\u200b","","Percent of","","","Percent of","\u200b","\u200b","\u200b","","Percent of","","","Percent of","\u200b","\u200b","\u200b","","Percent of","","","Percent of"],["\u200b","\u200b","\u200b","\u200b","\u200b","Loans to","\u200b","\u200b","ACLL to","\u200b","\u200b","\u200b","\u200b","Loans to","\u200b","\u200b","ACLL to","\u200b","\u200b","\u200b","\u200b","Loans to","\u200b","\u200b","ACLL to"],["\u200b","\u200b","\u200b","\u200b","\u200b","Total","\u200b","\u200b","Total","\u200b","\u200b","\u200b","\u200b","Total","\u200b","\u200b","Total","\u200b","\u200b","\u200b","\u200b","Total","\u200b","\u200b","Total"],["December 31, (in thousands)","","ACLL","\u200b","Loans*","\u200b","\u200b","Loan Class","","ACLL","\u200b","Loans*","\u200b","\u200b","Loan Class*","","ACLL","\u200b","Loans*","\u200b","\u200b","Loan Class*"],["\u200b","","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Traditional Banking:","","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Residential real estate:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Owner occupied","","$","8,647","","19","%","","1.05","%","\u200b","$","9,715","","19","%","","1.10","%","\u200b","$","4,729","","22","%","","0.50","%"],["Nonowner occupied","","","2,700","","7","\u200b","","0.88","\u200b","\u200b","","2,466","","6","\u200b","","0.93","\u200b","\u200b","","1,737","","6","\u200b","","0.67","\u200b"],["Commercial real estate","","","23,769","","32","\u200b","","1.63","\u200b","\u200b","","23,606","","28","\u200b","","1.75","\u200b","\u200b","","10,486","","29","\u200b","","0.80","\u200b"],["Construction & land development","","","4,128","","3","\u200b","","3.19","\u200b","\u200b","","3,274","","2","\u200b","","3.32","\u200b","\u200b","","2,152","","4","\u200b","","1.35","\u200b"],["Commercial & industrial","\u200b","\u200b","3,487","\u200b","8","\u200b","\u200b","1.02","\u200b","\u200b","\u200b","2,797","\u200b","7","\u200b","\u200b","0.86","\u200b","\u200b","\u200b","2,882","\u200b","11","\u200b","\u200b","0.62","\u200b"],["Paycheck Protection Program","\u200b","\u200b","\u2014","\u200b","1","\u200b","\u200b","\u2014","\u200b","\u200b","\u200b","\u2014","\u200b","8","\u200b","\u200b","\u2014","\u200b","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b"],["Lease financing receivables","\u200b","\u200b","91","\u200b","\u2014","\u200b","\u200b","1.05","\u200b","\u200b","\u200b","106","\u200b","\u2014","\u200b","\u200b","1.05","\u200b","\u200b","\u200b","147","\u200b","\u2014","\u200b","\u200b","1.05","\u200b"],["Aircraft","\u200b","\u200b","357","\u200b","3","\u200b","\u200b","0.25","\u200b","\u200b","\u200b","253","\u200b","2","\u200b","\u200b","0.25","\u200b","\u200b","\u200b","176","\u200b","1","\u200b","\u200b","0.25","\u200b"],["Home equity","\u200b","\u200b","4,111","\u200b","5","\u200b","\u200b","1.95","\u200b","\u200b","\u200b","4,990","\u200b","5","\u200b","\u200b","2.07","\u200b","\u200b","\u200b","2,721","\u200b","7","\u200b","\u200b","0.93","\u200b"],["Consumer:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Credit cards","\u200b","\u200b","934","\u200b","\u2014","\u200b","\u200b","6.44","\u200b","\u200b","\u200b","929","\u200b","\u2014","\u200b","\u200b","6.54","\u200b","\u200b","\u200b","1,020","\u200b","\u2014","\u200b","\u200b","5.72","\u200b"],["Overdrafts","\u200b","\u200b","683","\u200b","\u2014","\u200b","\u200b","100.00","\u200b","\u200b","\u200b","587","\u200b","\u2014","\u200b","\u200b","100.00","\u200b","\u200b","\u200b","1,169","\u200b","\u2014","\u200b","\u200b","76.81","\u200b"],["Automobile loans","\u200b","\u200b","186","\u200b","\u2014","\u200b","\u200b","1.29","\u200b","\u200b","\u200b","399","\u200b","1","\u200b","\u200b","1.32","\u200b","\u200b","\u200b","612","\u200b","1","\u200b","\u200b","1.16","\u200b"],["Other consumer","\u200b","\u200b","314","\u200b","\u2014","\u200b","\u200b","21.93","\u200b","\u200b","\u200b","577","\u200b","\u2014","\u200b","\u200b","7.07","\u200b","\u200b","\u200b","374","\u200b","1","\u200b","\u200b","4.05","\u200b"],["Total Traditional Banking","\u200b","\u200b","49,407","\u200b","78","\u200b","\u200b","1.41","\u200b","\u200b","\u200b","49,699","\u200b","78","\u200b","\u200b","1.34","\u200b","\u200b","\u200b","28,205","\u200b","82","\u200b","\u200b","0.78","\u200b"],["Warehouse lines of credit","\u200b","\u200b","2,126","\u200b","19","\u200b","\u200b","0.25","\u200b","\u200b","\u200b","2,407","\u200b","20","\u200b","\u200b","0.25","\u200b","\u200b","\u200b","1,794","\u200b","16","\u200b","\u200b","0.25","\u200b"],["Total Core Banking","\u200b","\u200b","51,533","\u200b","97","\u200b","\u200b","1.18","\u200b","\u200b","\u200b","52,106","\u200b","98","\u200b","\u200b","1.11","\u200b","\u200b","\u200b","29,999","\u200b","98","\u200b","\u200b","0.70","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Republic Processing Group:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Tax Refund Solutions:","","","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Easy Advances","","","\u2014","","\u2014","\u200b","","\u2014","\u200b","\u200b","","\u2014","","\u2014","\u200b","","\u2014","\u200b","\u200b","","\u2014","","\u2014","\u200b","","\u2014","\u200b"],["Other TRS loans","","","96","","1","\u200b","","0.19","\u200b","\u200b","","158","","\u2014","\u200b","","0.66","\u200b","\u200b","","234","","\u2014","\u200b","","1.63","\u200b"],["Republic Credit Solutions","","\u200b","12,948","\u200b","2","\u200b","\u200b","13.91","\u200b","\u200b","\u200b","8,803","\u200b","2","\u200b","\u200b","7.94","\u200b","\u200b","\u200b","13,118","\u200b","2","\u200b","\u200b","12.45","\u200b"],["Total Republic Processing Group","\u200b","\u200b","13,044","\u200b","3","\u200b","\u200b","9.06","\u200b","\u200b","\u200b","8,961","\u200b","2","\u200b","\u200b","6.65","\u200b","\u200b","\u200b","13,352","\u200b","2","\u200b","\u200b","11.15","\u200b"],["Total","","$","64,577","","100","\u200b","","1.44","\u200b","\u200b","$","61,067","","100","\u200b","","1.27","\u200b","\u200b","$","43,351","","100","\u200b","","0.98","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Total Traditional Banking - GAAP","\u200b","$","49,407","\u200b","78","\u200b","\u200b","1.41","\u200b","\u200b","$","49,699","\u200b","78","\u200b","\u200b","1.34","\u200b","\u200b","$","28,205","\u200b","82","\u200b","\u200b","0.78","\u200b"],["Less: Paycheck Protection Program","\u200b","\u200b","\u2014","\u200b","1","\u200b","\u200b","\u2014","\u200b","\u200b","\u200b","\u2014","\u200b","8","\u200b","\u200b","\u2014","\u200b","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b"],["Total Traditional Banking - Non-GAAP","\u200b","$","49,407","\u200b","77","\u200b","\u200b","1.43","\u200b","\u200b","$","49,699","\u200b","70","\u200b","\u200b","1.50","\u200b","\u200b","$","28,205","\u200b","82","\u200b","\u200b","0.78","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"]]
[[/GREPCENT_TABLE]]

*See Table 13 in this section of the filing for loan portfolio balances. Values of less than 50 basis points are rounded down to zero.

​

Management believes, based on information presently available, that it has adequately provided for loan and lease losses as of December 31, 2021.

​

For additional discussion regarding Republic’s methodology for determining the adequacy of the ACLL, see the section titled “Critical Accounting Policies and Estimates” in this section of the filing.

​

72

Table of Contents

Asset Quality

​

COVID-19 Loan Accommodations

​

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

​

As of December 31, 2021, $2 million, or less than 1% of the Company’s Traditional Bank portfolio remained under a COVID-19 hardship accommodation.

​

The ultimate long-term impact of the above accommodated loan balances on the Company’s Classified, Special Mention, nonperforming, and delinquent loans is currently uncertain. When evaluating its borrowers for further accommodation, the Bank considers prudent options based on the borrower’s credit risk; applicable federal and state laws and regulations, including COVID-related accommodations provided by applicable federal, state, and local laws; and the Bank’s ability to ease cash flow pressures on the affected borrowers while improving the Bank’s likelihood of collection on its loans. If enough borrowers were unable to meet their loan payment obligations at the end of their accommodation periods and were also unable to further extend their accommodation arrangements with the Bank, the Bank’s Classified, Special Mention, nonperforming, and delinquent loans would increase and negatively impact the Company’s overall operating performance.

​

Classified and Special Mention Loans

​

The Bank applies credit quality indicators, or ratings, to individual loans based on internal Bank policies. Such internal policies are informed by regulatory standards. Loans rated “Loss,” “Doubtful,” “Substandard,” and PCD-Substandard are considered “Classified.” Loans rated “Special Mention” or PCD-Special Mention are considered Special Mention. The Bank’s Classified and Special Mention loans increased approximately $17 million during 2021, driven primarily by commercial-purpose loans within the hospitality and leisure industry downgraded to Special Mention during 2021. As previously mentioned, the ultimate long-term impact of loans accommodated due to COVID-19 on the Company’s Classified and Special Mention loans is currently uncertain.

​

See Footnote 4 “Loans and Allowance for Credit Losses” of Part II Item 8 “Financial Statements and Supplementary Data” for additional discussion regarding Classified and Special Mention loans.

​

Table 18 — Classified and Special Mention Loans

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["December 31, (in thousands)","","2021","","2020","","2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Loss","\u200b","$","\u2014","\u200b","$","\u2014","\u200b","$","\u2014"],["Doubtful","\u200b","","\u2014","\u200b","","\u2014","\u200b","","\u2014"],["Substandard","\u200b","","21,714","\u200b","","30,193","\u200b","","33,297"],["PCD* - Substandard","\u200b","","1,692","\u200b","","1,887","\u200b","","1,289"],["Total Classified Loans","\u200b","","23,406","\u200b","","32,080","\u200b","","34,586"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Special Mention","\u200b","","114,496","\u200b","","89,206","\u200b","","21,754"],["PCD* - Special Mention","\u200b","","795","\u200b","","895","\u200b","","797"],["Total Special Mention Loans","\u200b","","115,291","\u200b","","90,101","\u200b","","22,551"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Total Classified and Special Mention Loans","\u200b","$","138,697","\u200b","$","122,181","\u200b","$","57,137"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["*","The Bank\u2019s PCI loans as of December 31, 2019 were reclassified to PCD loans on January 1, 2020 in connection with the Company\u2019s adoption of ASC 326."]]
[[/GREPCENT_TABLE]]

​

73

Table of Contents

Nonperforming Loans

​

Nonperforming loans include loans on nonaccrual status and loans past due 90-days-or-more and still accruing. The nonperforming loan category included TDRs totaling approximately $6 million and $7 million as of December 31, 2021 and 2020.

​

Nonperforming loans to total loans decreased to 0.46% as of December 31, 2021 from 0.49% as of December 31, 2020, as the total balance of nonperforming loans decreased by $3 million, or 13%, while total loans decreased $317 million, or 7%, during 2021. As presented in Tables 22 and 23 below, the decrease in nonperforming loans during 2021, including the nonaccrual loan component, was primarily driven by the refinancing of $5 million of these loans to another financial institution.

​

The ACLL to total nonperforming loans increased to 315% as of December 31, 2021 from 259% as of December 31, 2020, as the total ACLL increased $4 million, or 6%, and the balance of nonperforming loans decreased by $3 million, or 13%. The driver of the increase in ACLL was primarily growth in higher risk loans originated through the RCS segment, while the driver of the decrease in nonperforming loans was primarily the refinancing out of the Bank of a meaningful portion of these loans during 2021.

​

Table 19 — Nonperforming Loans and Nonperforming Assets Summary

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["December 31, (in thousands)","","2021","","2020","","2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Loans on nonaccrual status*","\u200b","$","20,504","\u200b","$","23,548","\u200b","$","23,332","\u200b"],["Loans past due 90-days-or-more and still on accrual**","\u200b","","48","\u200b","","47","\u200b","","157","\u200b"],["Total nonperforming loans","\u200b","","20,552","\u200b","","23,595","\u200b","","23,489","\u200b"],["Other real estate owned","\u200b","","1,792","\u200b","","2,499","\u200b","","113","\u200b"],["Total nonperforming assets","\u200b","$","22,344","\u200b","$","26,094","\u200b","$","23,602","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Credit Quality Ratios - Total Company:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["ACLL to total loans","\u200b","\u200b","1.44","%","\u200b","1.27","%","\u200b","0.98","%"],["Nonaccrual loans to total loans","\u200b","\u200b","0.46","\u200b","\u200b","0.49","\u200b","\u200b","0.53","\u200b"],["ACLL to nonaccrual loans","\u200b","\u200b","315","\u200b","\u200b","259","\u200b","\u200b","186","\u200b"],["Nonperforming loans to total loans","\u200b","","0.46","\u200b","","0.49","\u200b","","0.53","\u200b"],["Nonperforming assets to total loans (including OREO)","\u200b","","0.50","\u200b","","0.54","\u200b","","0.53","\u200b"],["Nonperforming assets to total assets","\u200b","","0.37","\u200b","","0.42","\u200b","","0.42","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Credit Quality Ratios - Core Bank:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["ACLL to total loans","\u200b","","1.18","%","","1.11","%","","0.70","%"],["Nonaccrual loans to total loans","\u200b","\u200b","0.47","\u200b","\u200b","0.50","\u200b","\u200b","0.54","\u200b"],["ACLL to nonaccrual loans","\u200b","\u200b","251","\u200b","\u200b","221","\u200b","\u200b","129","\u200b"],["Nonperforming loans to total loans","\u200b","","0.47","\u200b","","0.50","\u200b","","0.54","\u200b"],["Nonperforming assets to total loans (including OREO)","\u200b","","0.51","\u200b","","0.56","\u200b","","0.54","\u200b"],["Nonperforming assets to total assets","\u200b","","0.40","\u200b","","0.45","\u200b","","0.43","\u200b"]]
[[/GREPCENT_TABLE]]

*  Loans on nonaccrual status include collateral-dependent loans. See Footnote 4 “Loans and Allowance for Credit Losses” of Part II Item 8 “Financial Statements and Supplementary Data” for the components within the nonaccrual loans to total loans and ACLL to nonaccrual loans ratios, as well as additional discussion regarding nonaccrual loans and collateral-dependent loans.

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

​

74

Table of Contents

Table 20 — Nonperforming Loan Composition

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","2021","\u200b","2020","\u200b","2019","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","Percent of","\u200b","\u200b","\u200b","\u200b","\u200b","Percent of","\u200b","\u200b","\u200b","\u200b","\u200b","Percent of","\u200b"],["\u200b","\u200b","","\u200b","\u200b","\u200b","Total","\u200b","\u200b","\u200b","\u200b","\u200b","Total","\u200b","\u200b","\u200b","\u200b","\u200b","Total","\u200b"],["December 31, (in thousands)","","Balance","\u200b","Loan Class","\u200b","Balance","\u200b","Loan Class","\u200b","Balance","\u200b","Loan Class","\u200b"],["\u200b","\u200b","","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Traditional Banking:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Residential real estate:","\u200b","","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Owner occupied","\u200b","","$","12,039","\u200b","1.47","%","\u200b","","$","14,328","\u200b","1.63","%","\u200b","","$","12,220","\u200b","1.29","%","\u200b"],["Nonowner occupied","\u200b","","","95","\u200b","0.03","\u200b","\u200b","\u200b","","81","\u200b","0.03","\u200b","\u200b","\u200b","","623","\u200b","0.24","\u200b","\u200b"],["Commercial real estate","\u200b","","","6,557","\u200b","0.45","\u200b","\u200b","\u200b","","6,762","\u200b","0.50","\u200b","\u200b","\u200b","","6,865","\u200b","0.53","\u200b","\u200b"],["Construction & land development","\u200b","","","\u2014","\u200b","\u2014","\u200b","\u200b","\u200b","","\u2014","\u200b","\u2014","\u200b","\u200b","\u200b","","143","\u200b","0.09","\u200b","\u200b"],["Commercial & industrial","\u200b","","","13","\u200b","0.00","\u200b","\u200b","\u200b","","55","\u200b","0.02","\u200b","\u200b","\u200b","","1,424","\u200b","0.30","\u200b","\u200b"],["Paycheck Protection Program","\u200b","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b","\u200b","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b","\u200b","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b","\u200b"],["Lease financing receivables","\u200b","","","\u2014","\u200b","\u2014","\u200b","\u200b","\u200b","","\u2014","\u200b","\u2014","\u200b","\u200b","\u200b","","\u2014","\u200b","\u2014","\u200b","\u200b"],["Aircraft","\u200b","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b","\u200b","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b","\u200b","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b","\u200b"],["Home equity","\u200b","","","1,700","\u200b","0.81","\u200b","\u200b","","","2,141","\u200b","0.89","\u200b","\u200b","","","1,865","\u200b","0.64","\u200b","\u200b"],["Consumer:","\u200b","","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Credit cards","\u200b","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b","\u200b","\u200b","\u200b","5","\u200b","0.04","\u200b","\u200b","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b","\u200b"],["Overdrafts","\u200b","\u200b","\u200b","1","\u200b","0.15","\u200b","\u200b","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b","\u200b","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b","\u200b"],["Automobile loans","\u200b","\u200b","\u200b","97","\u200b","0.67","\u200b","\u200b","\u200b","\u200b","170","\u200b","0.56","\u200b","\u200b","\u200b","\u200b","179","\u200b","0.34","\u200b","\u200b"],["Other consumer","\u200b","\u200b","\u200b","3","\u200b","0.21","\u200b","\u200b","\u200b","\u200b","11","\u200b","0.13","\u200b","\u200b","\u200b","\u200b","13","\u200b","0.14","\u200b","\u200b"],["Total Traditional Banking","\u200b","\u200b","\u200b","20,505","\u200b","0.59","\u200b","\u200b","\u200b","\u200b","23,553","\u200b","0.63","\u200b","\u200b","\u200b","\u200b","23,332","\u200b","0.65","\u200b","\u200b"],["Warehouse lines of credit","\u200b","","","\u2014","\u200b","\u2014","\u200b","\u200b","\u200b","","\u2014","\u200b","\u2014","\u200b","\u200b","\u200b","","\u2014","\u200b","\u2014","\u200b","\u200b"],["Total Core Banking","\u200b","\u200b","\u200b","20,505","\u200b","0.47","\u200b","\u200b","\u200b","\u200b","23,553","\u200b","0.50","\u200b","\u200b","\u200b","\u200b","23,332","\u200b","0.54","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Republic Processing Group:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Tax Refund Solutions:","\u200b","","","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Easy Advances","\u200b","","","\u2014","\u200b","\u2014","\u200b","\u200b","\u200b","","\u2014","\u200b","\u2014","\u200b","\u200b","\u200b","","\u2014","\u200b","\u2014","\u200b","\u200b"],["Other TRS loans","\u200b","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b","\u200b","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b","\u200b","\u200b","\u200b","53","\u200b","0.37","\u200b","\u200b"],["Republic Credit Solutions","\u200b","","","47","\u200b","0.05","\u200b","\u200b","\u200b","","42","\u200b","0.04","\u200b","\u200b","\u200b","","104","\u200b","0.10","\u200b","\u200b"],["Total Republic Processing Group","\u200b","","","47","\u200b","0.03","\u200b","\u200b","\u200b","","42","\u200b","0.03","\u200b","\u200b","\u200b","","157","\u200b","0.13","\u200b","\u200b"],["\u200b","\u200b","","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Total nonperforming loans","\u200b","","$","20,552","\u200b","0.46","\u200b","\u200b","\u200b","$","23,595","\u200b","0.49","\u200b","\u200b","\u200b","$","23,489","\u200b","0.53","\u200b","\u200b"],["\u200b","\u200b","","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"]]
[[/GREPCENT_TABLE]]

​

75

Table of Contents

Table 21 — Stratification of Nonperforming Loans

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Number of Nonperforming Loans and Recorded Investment"],["\u200b","","\u200b","","\u200b","\u200b","","\u200b","\u200b","","Balance","","\u200b","\u200b","","\u200b","\u200b","","\u200b","\u200b","","\u200b","\u200b"],["December 31, 2021","\u200b","\u200b","\u200b","Balance","\u200b","\u200b","\u200b","\u200b"," $100 &","\u200b","\u200b","\u200b","\u200b","Balance","\u200b","\u200b","\u200b","\u200b","Total"],["(dollars in thousands)","\u200b","No.","\u200b","= $100","\u200b","\u200b","No.","\u200b","= $500","\u200b","\u200b","No.","\u200b"," $500","\u200b","\u200b","No.","\u200b","Balance"],["\u200b","","\u200b","\u200b","\u200b","\u200b","\u200b","","\u200b","\u200b","\u200b","\u200b","\u200b","","\u200b","\u200b","\u200b","\u200b","\u200b","","\u200b","\u200b","\u200b","\u200b","\u200b"],["Traditional Banking:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Residential real estate:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Owner occupied","","146","\u200b","$","5,042","","\u200b","27","\u200b","$","4,857","","\u200b","2","\u200b","$","2,140","","\u200b","175","\u200b","$","12,039","\u200b"],["Nonowner occupied","","3","\u200b","","95","","\u200b","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","","\u200b","3","\u200b","","95","\u200b"],["Commercial real estate","","\u2014","\u200b","","\u2014","","\u200b","4","\u200b","","872","","\u200b","3","\u200b","","5,685","","\u200b","7","\u200b","","6,557","\u200b"],["Construction & land development","","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","\u200b"],["Commercial & industrial","","1","\u200b","","13","","\u200b","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","","\u200b","1","\u200b","","13","\u200b"],["Paycheck Protection Program","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b"],["Lease financing receivables","","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","\u200b"],["Aircraft","\u200b","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","\u200b"],["Home equity","","25","\u200b","","695","","\u200b","5","\u200b","","1,005","","\u200b","\u2014","\u200b","","\u2014","","\u200b","30","\u200b","","1,700","\u200b"],["Consumer:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Credit 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credit","","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","\u200b"],["Total Core Banking","\u200b","192","\u200b","\u200b","5,946","\u200b","\u200b","36","\u200b","\u200b","6,734","\u200b","\u200b","5","\u200b","\u200b","7,825","\u200b","\u200b","233","\u200b","\u200b","20,505","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Republic Processing Group:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Tax Refund Solutions:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Easy Advances","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","","\u2014","\u200b"],["Other TRS loans","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","","\u2014","\u200b"],["Republic Credit Solutions","\u200b","NM","\u200b","\u200b","47","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","NM","\u200b","","47","\u200b"],["Total Republic Processing Group","\u200b","NM","\u200b","\u200b","47","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","NM","\u200b","\u200b","47","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Total","","192","\u200b","$","5,993","","\u200b","36","\u200b","$","6,734","","\u200b","5","\u200b","$","7,825","","\u200b","233","\u200b","$","20,552","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"]]
[[/GREPCENT_TABLE]]

NM – Not meaningful. Loans from Republic Processing Group are generally small dollar homogenous consumer loans.

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Number of Nonperforming Loans and Recorded Investment"],["\u200b","","\u200b","","\u200b","\u200b","","\u200b","\u200b","","Balance","","\u200b","\u200b","","\u200b","\u200b","","\u200b","\u200b","","\u200b","\u200b"],["December 31, 2020","\u200b","\u200b","\u200b","Balance","\u200b","\u200b","\u200b","\u200b"," $100 &","\u200b","\u200b","\u200b","\u200b","Balance","\u200b","\u200b","\u200b","\u200b","Total"],["(dollars in thousands)","\u200b","No.","\u200b","= $100","\u200b","\u200b","No.","\u200b","= $500","\u200b","\u200b","No.","\u200b"," $500","\u200b","\u200b","No.","\u200b","Balance"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Traditional Banking:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Residential real estate:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Owner occupied","","146","\u200b","$","5,110","","\u200b","27","\u200b","$","4,966","","\u200b","5","\u200b","$","4,252","","\u200b","178","\u200b","$","14,328","\u200b"],["Nonowner occupied","","3","\u200b","","81","","\u200b","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","","\u200b","3","\u200b","","81","\u200b"],["Commercial real estate","","2","\u200b","","45","","\u200b","3","\u200b","","925","","\u200b","3","\u200b","","5,792","","\u200b","8","\u200b","","6,762","\u200b"],["Construction & land development","","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","\u200b"],["Commercial & industrial","","2","\u200b","","55","","\u200b","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","","\u200b","2","\u200b","","55","\u200b"],["Paycheck Protection Program","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","","\u2014","\u200b"],["Lease financing 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cards","","NM","\u200b","","5","","\u200b","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","","\u200b","NM","\u200b","","5","\u200b"],["Overdrafts","\u200b","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","\u200b"],["Automobile loans","\u200b","14","\u200b","","170","","\u200b","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","","\u200b","14","\u200b","","170","\u200b"],["Other consumer","\u200b","7","\u200b","\u200b","11","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","7","\u200b","","11","\u200b"],["Total Traditional Banking","\u200b","200","\u200b","\u200b","6,344","\u200b","\u200b","36","\u200b","\u200b","7,165","\u200b","\u200b","8","\u200b","\u200b","10,044","\u200b","\u200b","244","\u200b","\u200b","23,553","\u200b"],["Warehouse lines of credit","","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","","\u200b","\u2014","\u200b","","\u2014","\u200b"],["Total Core Banking","\u200b","200","\u200b","\u200b","6,344","\u200b","\u200b","36","\u200b","\u200b","7,165","\u200b","\u200b","8","\u200b","\u200b","10,044","\u200b","\u200b","244","\u200b","\u200b","23,553","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Republic Processing Group:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Tax Refund Solutions:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Easy Advances","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","","\u2014","\u200b"],["Other TRS loans","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","","\u2014","\u200b"],["Republic Credit Solutions","\u200b","NM","\u200b","\u200b","42","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","NM","\u200b","","42","\u200b"],["Total Republic Processing Group","\u200b","NM","\u200b","\u200b","42","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b","\u200b","NM","\u200b","\u200b","42","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Total","","200","\u200b","$","6,386","","\u200b","36","\u200b","$","7,165","","\u200b","8","\u200b","$","10,044","","\u200b","244","\u200b","$","23,595","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"]]
[[/GREPCENT_TABLE]]

NM – Not meaningful. Loans from Republic Processing Group are generally small dollar homogenous consumer loans.

​

76

Table of Contents

Interest income that would have been recorded if nonaccrual loans were on a current basis in accordance with their original terms was $1.3 million, $1.3 million and $1.5 million in 2021, 2020, and 2019.

​

Based on the Bank’s review as of December 31, 2021, management believes that its reserves are adequate to absorb expected losses on all nonperforming credits.

​

Table 22 — Rollforward of Nonperforming Loan

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Years Ended December 31, (in thousands)","","2021","","2020","","2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Nonperforming loans at the beginning of the period","\u200b","$","23,595","\u200b","$","23,489","\u200b","$","16,138","\u200b"],["Loans added to nonperforming status during the period that remained nonperforming at the end of the period","\u200b","","3,627","\u200b","","8,993","\u200b","","13,806","\u200b"],["Loans removed from nonperforming status during the period that were nonperforming at the beginning of the period (see table below)","\u200b","","(5,221)","\u200b","","(7,959)","\u200b","","(4,242)","\u200b"],["Principal balance paydowns of loans nonperforming at both period ends","\u200b","\u200b","(1,450)","\u200b","\u200b","(817)","\u200b","\u200b","(2,225)","\u200b"],["Net change in principal balance of other loans nonperforming at both period ends*","\u200b","","1","\u200b","","(111)","\u200b","","12","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Nonperforming loans at the end of the period","\u200b","$","20,552","\u200b","$","23,595","\u200b","$","23,489","\u200b"]]
[[/GREPCENT_TABLE]]

*Includes relatively small consumer portfolios, e.g., RCS loans.

​

Table 23 — Detail of Loans Removed from Nonperforming Status

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Years Ended December 31, (in thousands)","","2021","","2020","","2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Loans charged off","\u200b","$","(57)","\u200b","$","(1,142)","\u200b","$","(339)","\u200b"],["Loans transferred to OREO","\u200b","","\u2014","\u200b","","(2,254)","\u200b","","(1,174)","\u200b"],["Loans refinanced at other institutions","\u200b","","(4,884)","\u200b","","(4,420)","\u200b","","(2,610)","\u200b"],["Loans returned to accrual status","\u200b","","(280)","\u200b","","(143)","\u200b","","(119)","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Total loans removed from nonperforming status during the period that were nonperforming at the beginning of the period","\u200b","$","(5,221)","\u200b","$","(7,959)","\u200b","$","(4,242)","\u200b"]]
[[/GREPCENT_TABLE]]

​

Delinquent Loans

​

Delinquent loans to total loans decreased to 0.30% as of December 31, 2021, from 0.41% as of December 31, 2020, primarily due to a $6 million, or 32%, decrease in delinquent loans and a $317 million, or 7%, decrease in total loans during 2021.

​

Core Bank delinquent loans to total Core Bank loans decreased to 0.17% as of December 31, 2021 from 0.21% as of December 31, 2020. With the exception of small-dollar consumer loans, all Traditional Bank loans past due 90-days-or-more as of December 31, 2021 and December 31, 2020 were on nonaccrual status. As previously mentioned, the ultimate impact of loans accommodated due to COVID-19 on the Company’s delinquent loans is currently uncertain.

​

77

Table of Contents

Table 24 — Delinquent Loan Composition*

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","2021","2020","2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","Percent of","\u200b","\u200b","\u200b","\u200b","Percent of","\u200b","\u200b","\u200b","\u200b","Percent of"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","Total","\u200b","\u200b","\u200b","\u200b","Total","\u200b","\u200b","\u200b","\u200b","Total"],["December 31, (dollars in thousands)","","\u200b","Balance","\u200b","Loan Class","Balance","\u200b","Loan Class","Balance","\u200b","Loan Class"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Traditional Banking:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Residential real estate:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Owner occupied","\u200b","\u200b","","$","1,599","\u200b","0.19","%","","$","3,260","\u200b","0.37","%","","$","4,434","\u200b","0.47","%"],["Nonowner occupied","\u200b","\u200b","","","\u2014","\u200b","\u2014","\u200b","","","\u2014","\u200b","\u2014","\u200b","","","539","\u200b","0.21","\u200b"],["Commercial real estate","\u200b","\u200b","","","5,292","\u200b","0.36","\u200b","","","5,457","\u200b","0.40","\u200b","","","3,300","\u200b","0.25","\u200b"],["Construction & land development","\u200b","\u200b","","","\u2014","\u200b","\u2014","\u200b","","","\u2014","\u200b","\u2014","\u200b","","","\u2014","\u200b","\u2014","\u200b"],["Commercial & industrial","\u200b","\u200b","","","21","\u200b","0.01","\u200b","","","12","\u200b","0.00","\u200b","","","1,355","\u200b","0.28","\u200b"],["Paycheck Protection Program","\u200b","\u200b","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b"],["Lease financing receivables","\u200b","\u200b","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b"],["Aircraft","\u200b","\u200b","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b"],["Home equity","\u200b","\u200b","\u200b","\u200b","314","\u200b","0.15","\u200b","\u200b","\u200b","702","\u200b","0.29","\u200b","\u200b","\u200b","2,918","\u200b","1.00","\u200b"],["Consumer:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Credit cards","\u200b","\u200b","\u200b","\u200b","30","\u200b","0.21","\u200b","\u200b","\u200b","73","\u200b","0.51","\u200b","\u200b","\u200b","155","\u200b","0.87","\u200b"],["Overdrafts","\u200b","\u200b","\u200b","\u200b","164","\u200b","24.01","\u200b","\u200b","\u200b","147","\u200b","25.04","\u200b","\u200b","\u200b","283","\u200b","18.59","\u200b"],["Automobile loans","\u200b","\u200b","\u200b","\u200b","9","\u200b","0.06","\u200b","\u200b","\u200b","56","\u200b","0.18","\u200b","\u200b","\u200b","49","\u200b","0.09","\u200b"],["Other consumer","\u200b","\u200b","\u200b","\u200b","1","\u200b","0.07","\u200b","\u200b","\u200b","6","\u200b","0.07","\u200b","\u200b","\u200b","9","\u200b","0.01","\u200b"],["Total Traditional Banking","\u200b","\u200b","\u200b","\u200b","7,430","\u200b","0.21","\u200b","\u200b","\u200b","9,713","\u200b","0.26","\u200b","\u200b","\u200b","13,042","\u200b","0.36","\u200b"],["Warehouse lines of credit","\u200b","\u200b","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b","\u200b","\u200b","\u2014","\u200b","\u2014","\u200b"],["Total Core Banking","\u200b","\u200b","\u200b","\u200b","7,430","\u200b","0.17","\u200b","\u200b","\u200b","9,713","\u200b","0.21","\u200b","\u200b","\u200b","13,042","\u200b","0.30","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Republic Processing Group:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Tax Refund Solutions:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Easy Advances","\u200b","\u200b","","","\u2014","\u200b","\u2014","\u200b","","","\u2014","\u200b","\u2014","\u200b","","","\u2014","\u200b","\u2014","\u200b"],["Other TRS loans","\u200b","\u200b","","","\u2014","\u200b","\u2014","\u200b","","","\u2014","\u200b","\u2014","\u200b","","","119","\u200b","0.83","\u200b"],["Republic Credit Solutions","\u200b","\u200b","","","6,035","\u200b","6.48","\u200b","","","10,234","\u200b","9.23","\u200b","","","7,643","\u200b","7.25","\u200b"],["Total Republic Processing Group","\u200b","\u200b","","","6,035","\u200b","4.19","\u200b","","","10,234","\u200b","7.60","\u200b","","","7,762","\u200b","6.48","\u200b"],["\u200b","\u200b","\u200b","","\u200b","\u200b","\u200b","\u200b","\u200b","","\u200b","\u200b","\u200b","\u200b","\u200b","","\u200b","\u200b","\u200b","\u200b","\u200b"],["Total delinquent loans","\u200b","\u200b","","$","13,465","\u200b","0.30","\u200b","","$","19,947","\u200b","0.41","\u200b","","$","20,804","\u200b","0.47","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"]]
[[/GREPCENT_TABLE]]

*Represents total loans 30-days-or-more past due. Delinquent status may be determined by either the number of days past due or number of payments past due.

​

​

78

Table of Contents

Table 25 — Rollforward of Delinquent Loans

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Years Ended December 31, (in thousands)","","2021","","2020","","2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Delinquent loans at the beginning of the period","\u200b","$","19,947","\u200b","$","20,804","\u200b","$","15,962"],["Loans added to delinquency status during the period and remained in delinquency status at the end of the period","\u200b","","1,459","\u200b","","6,681","\u200b","","9,947"],["Loans removed from delinquency status during the period that were in delinquency status at the beginning of the period (see table below)","\u200b","","(3,559)","\u200b","","(8,617)","\u200b","","(6,747)"],["Principal balance paydowns of loans delinquent at both period ends","\u200b","\u200b","(158)","\u200b","\u200b","(146)","\u200b","\u200b","(120)"],["Net change in principal balance of other loans delinquent at both period ends*","\u200b","","(4,224)","\u200b","","1,225","\u200b","","1,762"],["Delinquent loans at the end of period","\u200b","$","13,465","\u200b","$","19,947","\u200b","$","20,804"]]
[[/GREPCENT_TABLE]]

*Includes relatively small consumer portfolios, e.g., RCS loans.

​

Table 26 — Detail of Loans Removed from Delinquent Status

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Years Ended December 31, (in thousands)","","\u200b","2021","","2020","","2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Loans charged off","\u200b","\u200b","$","(58)","\u200b","$","(115)","\u200b","$","(453)"],["Easy Advances paid off or charged off","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Loans transferred to OREO","\u200b","\u200b","","\u2014","\u200b","","(2,254)","\u200b","","(1,370)"],["Loans refinanced at other institutions","\u200b","\u200b","","(2,016)","\u200b","","(4,052)","\u200b","","(1,988)"],["Loans paid current","\u200b","\u200b","","(1,485)","\u200b","","(2,196)","\u200b","","(2,936)"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Total loans removed from delinquency status during the period that were in delinquency status at the beginning of the period","\u200b","\u200b","$","(3,559)","\u200b","$","(8,617)","\u200b","$","(6,747)"]]
[[/GREPCENT_TABLE]]

​

Collateral-Dependent Loans and Troubled Debt Restructurings

​

When management determines that a loan is collateral dependent and foreclosure is probable, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs if appropriate. The Bank’s policy is to charge-off all or that portion of its recorded investment in collateral-dependent loans upon a determination that it expects the full amount of contractual principal and interest will not be collected.

​

A TDR is a situation where, due to a borrower’s financial difficulties, the Bank grants a concession to the borrower that the Bank would not otherwise have considered. The majority of the Bank’s TDRs involve a restructuring of loan terms such as a temporary reduction in the payment amount to require only interest and escrow (if required), reducing the loan’s interest rate and/or extending the maturity date of the debt. Nonaccrual loans modified as TDRs remain on nonaccrual status and continue to be reported as nonperforming loans. Accruing loans modified as TDRs are evaluated for nonaccrual status based on a current evaluation of the borrower’s financial condition and ability and willingness to service the modified debt.

​

Table 27 — Collateral Dependent Loan Composition

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["December 31, (in thousands)","\u200b","\u200b","2021","","2020","","2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Cashflow-dependent TDRs","\u200b","\u200b","$","5,960","\u200b","$","10,938","\u200b","$","14,348","\u200b"],["Collateral-dependent TDRs","\u200b","\u200b","\u200b","9,426","\u200b","\u200b","9,840","\u200b","\u200b","16,433","\u200b"],["Total TDRs","\u200b","\u200b","\u200b","15,386","\u200b","\u200b","20,778","\u200b","\u200b","30,781","\u200b"],["Collateral-dependent loans (which are not TDRs)","\u200b","\u200b","","14,645","\u200b","","20,806","\u200b","","19,569","\u200b"],["Total recorded investment in TDRs and collateral-dependent loans","\u200b","\u200b","$","30,031","\u200b","$","41,584","\u200b","$","50,350","\u200b"]]
[[/GREPCENT_TABLE]]

See Footnote 4 “Loans and Allowance for Credit Losses” of Part II Item 8 “Financial Statements and Supplementary Data” for additional discussion regarding collateral-dependent loans and TDRs.

​

79

Table of Contents

Other Real Estate Owned

​

Table 28 — Rollforward of Other Real Estate Owned Activity

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Years Ended December 31, (in thousands)","\u200b","2021","","2020","","2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["OREO at beginning of period","\u200b","$","2,499","\u200b","$","113","\u200b","$","160","\u200b"],["Transfer from loans to OREO","\u200b","","64","\u200b","","2,750","\u200b","","1,527","\u200b"],["Proceeds from sale*","\u200b","","(611)","\u200b","","(324)","\u200b","","(2,114)","\u200b"],["Net gain on sale","\u200b","","51","\u200b","","65","\u200b","","540","\u200b"],["Writedowns","\u200b","","(211)","\u200b","","(105)","\u200b","","\u2014","\u200b"],["OREO at end of period","\u200b","$","1,792","\u200b","$","2,499","\u200b","$","113","\u200b"]]
[[/GREPCENT_TABLE]]

*Inclusive of non-cash proceeds where the Bank financed the sale of the property.

​

The fair value of OREO represents the estimated value that management expects to receive when the property is sold, net of related costs to sell. These estimates are based on the most recently available real estate appraisals, with certain adjustments made based on the type of property, age of appraisal, current status of the property and other relevant factors to estimate the current value of the property.

​

Bank Owned Life Insurance

​

BOLI offers tax advantaged noninterest income to help the Bank offset employee benefits expenses. The Company carried $99 million and $68 million of BOLI on its consolidated balance sheet as of December 31, 2021 and 2020.

​

Table 29 — Rollforward of Bank Owned Life Insurance

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Years ended December 31, (in thousands)","","2021","","2020","","2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["BOLI at beginning of period","\u200b","$","68,018","\u200b","$","66,433","\u200b","$","64,883","\u200b"],["BOLI acquired","\u200b","","30,000","\u200b","","\u2014","\u200b","","\u2014","\u200b"],["Death benefits paid","\u200b","\u200b","(1,099)","\u200b","\u200b","\u2014","\u200b","\u200b","\u2014","\u200b"],["Increase in cash surrender value","\u200b","","2,242","\u200b","","1,585","\u200b","","1,550","\u200b"],["BOLI at end of period","\u200b","$","99,161","\u200b","$","68,018","\u200b","$","66,433","\u200b"]]
[[/GREPCENT_TABLE]]

​

80

Table of Contents

Deposits

​

Table 30 — Deposit Composition

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["December 31, (in thousands)","","2021","","2020","","2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Core Bank:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Demand","\u200b","$","1,381,522","\u200b","$","1,217,263","\u200b","$","922,972"],["Money market accounts","\u200b","","789,876","\u200b","","712,824","\u200b","","793,950"],["Savings","\u200b","","311,624","\u200b","","236,335","\u200b","","175,588"],["Individual retirement accounts (1)","\u200b","","43,724","\u200b","","47,889","\u200b","","51,548"],["Time deposits, $250 and over (1)","\u200b","","81,050","\u200b","","83,448","\u200b","","104,412"],["Other certificates of deposit (1)","\u200b","","154,174","\u200b","","199,214","\u200b","","248,161"],["Reciprocal money market and time deposits (1)","\u200b","","77,950","\u200b","","314,109","\u200b","","189,774"],["Brokered deposits (1)","\u200b","","\u2014","\u200b","","25,010","\u200b","","200,072"],["Total Core Bank interest-bearing deposits","\u200b","\u200b","2,839,920","\u200b","\u200b","2,836,092","\u200b","\u200b","2,686,477"],["Total Core Bank noninterest-bearing deposits","\u200b","","1,579,173","\u200b","","1,503,662","\u200b","","981,164"],["Total Core Bank deposits","\u200b","","4,419,093","\u200b","","4,339,754","\u200b","","3,667,641"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Republic Processing Group:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Money market accounts","\u200b","\u200b","9,717","\u200b","\u200b","6,673","\u200b","\u200b","66,152"],["Total RPG interest-bearing deposits","\u200b","\u200b","9,717","\u200b","\u200b","6,673","\u200b","\u200b","66,152"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Brokered prepaid card deposits","\u200b","\u200b","320,907","\u200b","\u200b","257,856","\u200b","\u200b","9,128"],["Other noninterest-bearing deposits","\u200b","\u200b","90,701","\u200b","\u200b","128,898","\u200b","\u200b","43,087"],["Total RPG noninterest-bearing deposits","\u200b","\u200b","411,608","\u200b","\u200b","386,754","\u200b","\u200b","52,215"],["Total RPG deposits","\u200b","\u200b","421,325","\u200b","\u200b","393,427","\u200b","\u200b","118,367"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Total deposits","\u200b","$","4,840,418","\u200b","$","4,733,181","\u200b","$","3,786,008"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["(1)","Includes time deposits."]]
[[/GREPCENT_TABLE]]

​

Total Company deposits increased $107 million, or 2%, from December 31, 2020 to $4.8 billion as of December 31, 2021.

​

Total Core Bank deposits increased $79 million, or 2%, with the following primarily driving growth:

​

[[GREPCENT_TABLE]]
[["","\u25cf","Management believes its deposit balances continue to be the beneficiary of Federal government stimulus brought about by the COVID-19 pandemic. During 2021, the Federal government issued two rounds of economic stimulus payments. At this time, management is uncertain how long these stimulus funds may remain at the Bank."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","The Core Bank originated $210 million of PPP loans during 2021, with PPP borrowers generally retaining their loan proceeds within a deposit account at the Bank."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Management believes that much of the growth in noninterest-bearing and interest-bearing deposits at the Core Bank has been a flight to safety brought about by the COVID-19 pandemic. At this time, management is unable to predict how long these funds might remain at the Bank due to the uncertain economic environment for many of the depositors, including the depositors\u2019 short-term and long-term cash needs."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Offsetting the positive growth mentioned above, deposit balances were negatively impacted by a shift of approximately $140 million in balances from interest-bearing reciprocal money market accounts to SSUARs. This shift occurred as the Bank lowered the interest it paid to certain clients for their reciprocal money market accounts due to the high fees paid by the Bank for the product\u2019s participation in a third-party money market network. This third-party money market network allows clients to fully insure their deposits through FDIC insurance by spreading their funds across multiple banks."]]
[[/GREPCENT_TABLE]]

​

Total RPG deposits increased $28 million, or 7%, during 2021, with the following primarily driving growth:

​

[[GREPCENT_TABLE]]
[["","\u25cf","RPG prepaid card balances within its RPS division, which are noninterest bearing, increased $63 million, driven by government stimulus funds applied to prepaid card deposit balances. At this time, management is uncertain how long these stimulus funds may remain at the Bank."]]
[[/GREPCENT_TABLE]]

81

Table of Contents

[[GREPCENT_TABLE]]
[["","\u25cf","Other noninterest-bearing deposits at RPG decreased $38 million, driven primarily by an outflow of commercial settlement deposits associated with the RCS segment\u2019s line-of-credit products."]]
[[/GREPCENT_TABLE]]

​

Table 31 — Average Deposits

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","2021","\u200b","2020","\u200b","2019","\u200b"],["\u200b","","Average","","Average","","Average","","Average","","Average","","Average"],["Years ended December 31, (dollars in thousands)","\u200b","Balance","\u200b","Rate","\u200b","Balance","\u200b","Rate","\u200b","Balance","\u200b","Rate","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Transaction accounts","\u200b","$","1,580,570","","0.02","%","$","1,291,980","","0.09","%","$","1,141,084","","0.49","%"],["Money market accounts","\u200b","","784,777","","0.05","\u200b","","739,524","","0.26","\u200b","","772,854","","0.97","\u200b"],["Time deposits","\u200b","","300,784","","1.21","\u200b","","400,704","","1.96","\u200b","","409,301","","2.02","\u200b"],["Reciprocal money market accounts","\u200b","","185,922","","0.18","\u200b","","202,112","","0.28","\u200b","","147,821","","1.04","\u200b"],["Reciprocal time deposits","\u200b","\u200b","40,581","\u200b","0.75","\u200b","\u200b","72,613","\u200b","1.66","\u200b","\u200b","59,305","\u200b","2.03","\u200b"],["Brokered money market accounts","\u200b","\u200b","30,863","\u200b","0.08","\u200b","\u200b","104,460","\u200b","0.50","\u200b","\u200b","81,923","\u200b","2.04","\u200b"],["Brokered time deposits","\u200b","","\u2014","","\u2014","\u200b","","102,093","","1.75","\u200b","","143,658","","2.34","\u200b"],["Total average interest-bearing deposits","\u200b","","2,923,497","","0.17","\u200b","","2,913,486","","0.52","\u200b","","2,755,946","","1.06","\u200b"],["Total average noninterest-bearing deposits","\u200b","","2,129,452","","\u2014","\u200b","","1,672,442","","\u2014","\u200b","","1,120,608","","\u2014","\u200b"],["Total average deposits","\u200b","$","5,052,949","","0.10","\u200b","$","4,585,928","","0.33","\u200b","$","3,876,554","","0.75","\u200b"]]
[[/GREPCENT_TABLE]]

​

Table 32 — Maturity Schedule of Time Deposits in Excess of the FDIC Limit and Estimated Time Deposits that are Otherwise Uninsured as of December 31, 2021

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","Individual Instruments","\u200b","Estimated","\u200b","\u200b"],["\u200b","\u200b","that Meet or Exceed the","\u200b","Otherwise Uninsured","\u200b","\u200b"],["Maturity (dollars in thousands)","","FDIC Insurance Limit","\u200b","Time Deposits","\u200b","Total"],["\u200b","","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Three months or less","\u200b","$","5,175","\u200b","$","5,170","\u200b","$","10,345"],["Over three months through six months","\u200b","","17,964","\u200b","","4,145","\u200b","","22,109"],["Over six months through 12 months","\u200b","","15,701","\u200b","","5,383","\u200b","","21,084"],["Over 12 months","\u200b","","42,210","\u200b","","8,634","\u200b","","50,844"],["Total","\u200b","$","81,050","\u200b","$","23,332","\u200b","$","104,382"]]
[[/GREPCENT_TABLE]]

​

The Bank held total estimated uninsured deposits of $1.97 billion as of December 31, 2021.

​

Securities Sold Under Agreements to Repurchase and Other Short-term Borrowings

​

SSUARs are collateralized by securities and are treated as financings; accordingly, the securities involved with the agreements are recorded as assets and are held by a safekeeping agent and the obligations to repurchase the securities are reflected as liabilities. All securities underlying the agreements are under the Bank’s control.

​

SSUARs increased $80 million, or 38%, during 2021 to $291 million as of December 31, 2021. As mentioned above, Bank clients shifted approximately $140 million in balances from interest-bearing reciprocal money market accounts to SSUARs after the Bank lowered the interest rate it paid on certain reciprocal money market accounts. The increase resulting from this shift was partially offset by a $94 million decrease in SSUARs during 2021, driven by the exit of one corporate client following the acquisition of this client by another company. The substantial majority of SSUARs are indexed to immediately repricing indices such as the FFTR.

​

Table 33 — Securities Sold Under Agreements to Repurchase

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["As of and for the Years Ended December 31, (dollars in thousands)","","2021","","2020","","2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Outstanding balance at end of period","\u200b","$","290,967","\u200b","$","211,026","\u200b","$","167,617","\u200b"],["Weighted average interest rate at period end","\u200b","","0.04","%","","0.04","%","","0.32","%"],["Average outstanding balance during the period","\u200b","$","231,430","\u200b","$","204,797","\u200b","$","236,883","\u200b"],["Average interest rate during the period","\u200b","","0.03","%","","0.09","%","","0.51","%"],["Maximum outstanding at any month end","\u200b","$","432,047","\u200b","$","295,698","\u200b","$","276,927","\u200b"]]
[[/GREPCENT_TABLE]]

​

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Federal Home Loan Bank Advances

​

FHLB advances declined by $210 million from December 31, 2020 to December 31, 2021, as the Bank continued to maintain sufficient deposit balances to meet its current liquidity needs. The Bank held $25 million in overnight advances at a rate of 0.14% as of December 31, 2021, compared to $225 million in overnight advances at a rate of 0.16% as of December 31, 2020. Given the overall amount of liquidity on the Company’s balance sheet as of December 31, 2021, management does not anticipate that FHLB term or overnight advances will likely be utilized to any material extent over the near term.

​

Overall use of FHLB advances during a given year is dependent upon many factors including asset growth, deposit growth, current earnings, and expectations of future interest rates, among others.

​

Table 34 — Federal Home Loan Bank Advances

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["As of and for the Years Ended December 31, (dollars in thousands)","","2021","","2020","","2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Outstanding balance at end of period","\u200b","$","25,000","\u200b","$","235,000","\u200b","$","750,000","\u200b"],["Weighted average interest rate at period end","\u200b","","0.14","%","","0.23","%","","1.73","%"],["Average outstanding balance during the period","\u200b","$","29,479","\u200b","$","211,776","\u200b","$","595,613","\u200b"],["Average interest rate during the period","\u200b","","0.19","%","","1.66","%","","2.15","%"],["Maximum outstanding at any month end","\u200b","$","25,000","\u200b","$","590,000","\u200b","$","1,170,000","\u200b"]]
[[/GREPCENT_TABLE]]

​

Interest Rate Swaps

​

Interest Rate Swaps Used as Cash Flow Hedges

​

The Bank entered into two interest rate swap agreements during 2013 as part of its interest rate risk management strategy. The Bank designated the swaps as cash flow hedges intended to reduce the variability in cash flows attributable to either FHLB advances tied to the 3-month LIBOR or the overall changes in cash flows on certain money market deposit accounts tied to 1-month LIBOR. The counterparty for both swaps met the Bank’s credit standards, and the Bank believes that the credit risk inherent in the swap contracts was not significant. Both swaps terminated in December 2020.

​

Non-hedge Interest Rate Swaps

​

During 2015, the Bank began entering into interest rate swaps to facilitate client transactions and meet their financing needs. Upon entering into these instruments, the Bank enters into offsetting positions in order to minimize the Bank’s interest rate risk. These swaps are derivatives, but are not designated as hedging instruments, and therefore changes in fair value are reported in current year earnings.

​

See Footnote 8 “Interest Rate Swaps” of Part II Item 8 “Financial Statements and Supplementary Data” for further information regarding the Bank’s interest rate swaps.

​

​

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Liquidity

​

The Bank maintains sufficient liquidity to fund routine loan demand and routine deposit withdrawal activity. Liquidity is managed by maintaining sufficient liquid assets, primarily in the form of cash, cash equivalents, and unincumbered investment securities. Funding and cash flows can also be realized through deposit product promotions, the sale of AFS debt securities, principal paydowns on loans and mortgage-backed securities, and proceeds realized from loans held for sale.

​

Table 35 — Liquid Assets and Borrowing Capacity

​

The Company’s liquid assets and borrowing capacity included the following:

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["December 31, (in thousands)","","\u200b","2021","","2020","","2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Cash and cash equivalents","\u200b","\u200b","$","756,971","\u200b","$","485,587","\u200b","$","385,303"],["Unincumbered debt securities","\u200b","\u200b","","219,775","\u200b","","273,652","\u200b","","304,186"],["Total liquid assets","\u200b","\u200b","\u200b","976,746","\u200b","\u200b","759,239","\u200b","\u200b","689,489"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Borrowing capacity with the FHLB","\u200b","\u200b","","900,424","\u200b","","682,992","\u200b","","265,551"],["Borrowing capacity through unsecured credit lines","\u200b","\u200b","","125,000","\u200b","","125,000","\u200b","","125,000"],["Total borrowing capacity","\u200b","\u200b","\u200b","1,025,424","\u200b","\u200b","807,992","\u200b","\u200b","390,551"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Total liquid assets and borrowing capacity","\u200b","\u200b","$","2,002,170","\u200b","$","1,567,231","\u200b","$","1,080,040"]]
[[/GREPCENT_TABLE]]

​

The Bank had a loan to deposit ratio (excluding brokered deposits) of 99% as of December 31, 2021 and 108% as of December 31, 2020. Republic’s banking centers and its website, www.republicbank.com, provide access to retail deposit markets. These retail deposit products, if offered at attractive rates, have historically been a source of additional funding when needed. If the Bank were to lose a significant funding source, such as a few major depositors, or if any of its lines of credit were cancelled, or if the Bank cannot obtain brokered deposits, the Bank would be compelled to offer market leading deposit interest rates to meet its funding and liquidity needs.

​

As of December 31, 2021, the Bank had approximately $1.5 billion in deposits from 241 large non-sweep deposit relationships, including reciprocal deposits, where the individual relationship exceeded $2 million. The 20 largest non-sweep deposit relationships represented approximately $528 million, or 11%, of the Company’s total deposit balances as of as of December 31, 2021. These accounts do not require collateral; therefore, cash from these accounts can generally be utilized to fund the loan portfolio. If any of these balances were moved from the Bank, the Bank would likely utilize overnight borrowing lines in the short-term to replace the balances. On a longer-term basis, the Bank would likely utilize wholesale-brokered deposits to replace withdrawn balances, or alternatively, higher-cost internet-sourced deposits. Based on past experience utilizing brokered deposits and internet-sourced deposits, the Bank believes it can quickly obtain these types of deposits if needed. The overall cost of gathering these types of deposits, however, could be substantially higher than the Traditional Bank deposits they replace, potentially decreasing the Bank’s earnings.

​

The Bank’s liquidity is impacted by its ability to sell certain investment securities, which is limited due to the level of investment securities that are needed to secure public deposits, securities sold under agreements to repurchase, FHLB borrowings, and for other purposes, as required by law. As of December 31, 2021 and December 31, 2020, these pledged investment securities had a fair value of $320 million and $304 million.

​

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Capital

​

Table 36 — Capital

​

Information pertaining to the Company’s capital balances and ratios follows:

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["As of and for the Years Ended December 31, (dollars in thousands, except per share data)","","2021","","2020","","2019"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Stockholders\u2019 equity","\u200b","$","834,232","\u200b","$","823,323","\u200b","$","764,244","\u200b"],["Book value per share at December 31,","\u200b","","41.75","\u200b","","39.40","\u200b","","36.49","\u200b"],["Tangible book value per share at December 31,*","\u200b","","40.48","\u200b","","38.27","\u200b","","35.41","\u200b"],["Dividends declared per share - Class A Common Stock","\u200b","","1.232","\u200b","","1.144","\u200b","","1.056","\u200b"],["Dividends declared per share - Class B Common Stock","\u200b","","1.120","\u200b","","1.040","\u200b","","0.960","\u200b"],["Average stockholders\u2019 equity to average total assets","\u200b","","13.41","%","","13.35","%","","13.16","%"],["Total risk-based capital","\u200b","","17.47","\u200b","","18.52","\u200b","","17.01","\u200b"],["Common equity tier 1 capital","\u200b","\u200b","16.37","\u200b","\u200b","16.61","\u200b","\u200b","15.29","\u200b"],["Tier 1 risk-based capital","\u200b","","16.37","\u200b","","17.43","\u200b","","16.11","\u200b"],["Tier 1 leverage capital","\u200b","","13.35","\u200b","","13.70","\u200b","","13.93","\u200b"],["Dividend payout ratio","\u200b","","29","\u200b","","29","\u200b","","24","\u200b"],["Dividend yield","\u200b","","2.42","\u200b","","3.17","\u200b","","2.26","\u200b"]]
[[/GREPCENT_TABLE]]

*For additional detail, see Footnote 2 of “Selected Financial Data” in this section of the filing.

​

Total stockholders’ equity increased from $823 million as of December 31, 2020 to $834 million as of December 31, 2021. The increase in stockholders’ equity was primarily attributable to net income earned during 2021 reduced by cash dividends declared and common stock repurchases.

​

See Part II, Item 5. “Unregistered Sales of Equity Securities and Use of Proceeds” for additional detail regarding stock repurchases and stock buyback programs.

​

Common Stock — The Class A Common shares are entitled to cash dividends equal to 110% of the cash dividend paid per share on Class B Common Stock. Class A Common shares have one vote per share and Class B Common shares have ten votes per share. Class B Common shares may be converted, at the option of the holder, to Class A Common shares on a share for share basis. The Class A Common shares are not convertible into any other class of Republic’s capital stock.

​

Dividend Restrictions — The Parent Company’s principal source of funds for dividend payments are dividends received from the Bank. Banking regulations limit the amount of dividends that may be paid to the Parent Company by the Bank without prior approval of the respective states’ banking regulators. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s net profits, combined with the retained net profits of the preceding two years. As of January 1, 2022, the Bank could, without prior approval, declare dividends of approximately $118 million. Any payment of dividends in the future will depend, in large part, on the Company’s earnings, capital requirements, financial condition, and other factors considered relevant by the Company’s Board of Directors.

​

Regulatory Capital Requirements — The Company and the Bank are subject to capital regulations in accordance with Basel III, as administered by banking regulators. Regulatory agencies measure capital adequacy within a framework that makes capital requirements, in part, dependent on the individual risk profiles of financial institutions. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on Republic’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Parent Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities and certain off-balance sheet items, as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators regarding components, risk weightings and other factors.

​

Banking regulators have categorized the Bank as well-capitalized. For prompt corrective action, the regulations in accordance with Basel III define “well capitalized” as a 10.0% Total Risk-Based Capital ratio, a 6.5% Common Equity Tier 1 Risk-Based Capital ratio, an 8.0% Tier 1 Risk-Based Capital ratio, and a 5.0% Tier 1 Leverage ratio. Additionally, in order to avoid limitations on capital distributions, including dividend payments and certain discretionary bonus payments to executive officers, the Company and Bank

85

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must hold a capital conservation buffer of 2.5% composed of Common Equity Tier 1 Risk-Based Capital above their minimum risk-based capital requirements.

​

Republic continues to exceed the regulatory requirements for Total Risk Based Capital, Common Equity Tier I Risk Based Capital, Tier I Risk Based Capital and Tier I Leverage Capital. Republic and the Bank intend to maintain a capital position that meets or exceeds the “well-capitalized” requirements as defined by the FRB and the FDIC, in addition to the Capital Conservation Buffer. Formal measurements of the capital ratios for Republic and the Bank are performed by the Company at each quarter end.

​

In 2005, Republic Bancorp Capital Trust, an unconsolidated trust subsidiary of Republic, was formed and issued $40 million in TPS. The sole asset of RBCT represented the proceeds of the offering loaned to Republic in exchange for a subordinated note with similar terms to the TPS. On September 30, 2021, as permitted under the terms of RBCT’s governing documents, Republic repaid the subordinated note and redeemed the TPS at par without penalty. Republic’s capital ratios remained well above “well capitalized” levels following this redemption.

​

Contractual Obligations and Commitments

​

The Company or the Bank has required future payments under various contractual obligations and other commitments.

​

See the following footnotes within Part II Item 8 “Financial Statements and Supplementary Data” for additional detail regarding contractual obligations and other commitments of the Company or Bank:

​

[[GREPCENT_TABLE]]
[["","\u25cf","Footnote 6 \u201cRight-of-Use Assets and Operating Lease Liabilities\u201d"]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Footnote 9 \u201cDeposits\u201d"]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Footnote 10 \u201cSecurities Sold Under Agreements to Repurchase\u201d"]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Footnote 13 \u201cOff Balance Sheet Risks, Commitments, and Contingent Liabilities\u201d"]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Footnote 18 \u201cBenefit Plans\u201d"]]
[[/GREPCENT_TABLE]]

​

In addition, the Bank maintains contractual obligations for its technological needs, including its enterprise risk management application, customer relationship management application, internet banking platform, and its core accounting application. The total contractual commitment for these applications is approximately $13 million through May 2025.

​

Asset/Liability Management and Market Risk

​

Asset/liability management is designed to ensure safety and soundness, maintain liquidity, meet regulatory capital standards and achieve acceptable net interest income based on the Bank’s risk tolerance. Interest rate risk is the exposure to adverse changes in net interest income as a result of market fluctuations in interest rates. The Bank, on an ongoing basis, monitors interest rate and liquidity risk in order to implement appropriate funding and balance sheet strategies. Management considers interest rate risk to be a significant risk to the Bank’s overall earnings and balance sheet.

​

The interest sensitivity profile of the Bank at any point in time will be impacted by a number of factors. These factors include the mix of interest sensitive assets and liabilities, as well as their relative pricing schedules. It is also influenced by changes in market interest rates, deposit and loan balances and other factors.

​

The Bank utilizes earnings simulation models as tools to measure interest rate sensitivity, including both a static and dynamic earnings simulation model. A static simulation model is based on current exposures and assumes a constant balance sheet. In contrast, a dynamic simulation model relies on detailed assumptions regarding changes in existing business lines, new business, and changes in management and customer behavior. While the Bank runs the static simulation model as one measure of interest rate risk, historically, the Bank has utilized its dynamic earnings simulation model as its primary interest rate risk tool to measure the potential changes in market interest rates and their subsequent effects on net interest income for a one-year time period. This dynamic model projects a “Base” case net interest income over the next 12 months and the effect on net interest income of instantaneous movements in interest

86

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rates between various basis point increments equally across all points on the yield curve. Many assumptions based on growth expectations and on the historical behavior of the Bank’s deposit and loan rates and their related balances in relation to changes in interest rates are incorporated into this dynamic model. These assumptions are inherently uncertain and, as a result, the dynamic model cannot precisely measure future net interest income or precisely predict the impact of fluctuations in market interest rates on net interest income. Actual results will differ from the model’s simulated results due to the actual timing, magnitude and frequency of interest rate changes, the actual timing and magnitude of changes in loan and deposit balances, as well as the actual changes in market conditions and the application and timing of various management strategies as compared to those projected in the various simulated models. Additionally, actual results could differ materially from the model if interest rates do not move equally across all points on the yield curve.

​

As of December 31, 2021, a dynamic simulation model was run for interest rate changes from “Down 100” basis points to “Up 400” basis points. The following table illustrates the Bank’s projected percent change from its Base net interest income plus secondary market loan fees over the period beginning January 1, 2022 and ending December 31, 2022 based on instantaneous movements in interest rates from Down 100 to Up 400 basis points equally across all points on the yield curve. The Bank’s dynamic earnings simulation model, while including secondary market loan fees, excludes Traditional Bank loan fees.

​

Table 37 — Bank Interest Rate Sensitivity as of December 31, 2021 and 2020

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","Change in Rates","\u200b"],["\u200b","-100","","+100","","+200","","+300","","+400"],["\u200b","Basis Points","\u200b","Basis Points","\u200b","Basis Points","\u200b","Basis Points","\u200b","Basis Points","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["% Change from base net interest income as of December 31, 2021","","1.3","%","","(0.6)","%","","0.7","%","","4.7","%","","9.3","%"],["% Change from base net interest income as of December 31, 2020","","0.4","%","","(4.5)","%","","(7.0)","%","","(5.7)","%","","(4.2)","%"]]
[[/GREPCENT_TABLE]]

​

The Bank’s dynamic simulation model run for December 2021 projected an increase in the Bank’s net interest income plus secondary market loan fees in the “Down-100,” “Up-200,” “Up-300,” and “Up-400” rate scenarios and a decrease in the “Up-100” scenario. The projections as of December 2020 reflected a modest increase in the Down-100 scenario and decreases in all Up-rate scenarios.

​

As compared to December 2020, the improvement in the Up-rate scenarios was primarily due to the following:

​

[[GREPCENT_TABLE]]
[["","\u25cf","Growth in interest-earning cash balances from December 2020 to December 2021; and"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","A smaller projected falloff in secondary market fees for the December 2021 simulation than previously projected for the December 2020 simulation."]]
[[/GREPCENT_TABLE]]

LIBOR Exposure

In July 2017, the FCA, the authority regulating LIBOR, along with various other regulatory bodies, announced that LIBOR would likely be discontinued at the end of 2021. Subsequent to that announcement, in November 2020, the FCA announced that many tenors of LIBOR would continue to be published through June 2023. As instructed by bank regulators, the Bank discontinued new loan originations referencing LIBOR by December 31, 2021. To facilitate the transition process, management has instituted an enterprise-wide program to identify, assess, and monitor risks associated with the expected discontinuance or unavailability of LIBOR.

Management focuses on operational readiness, as well as instituting processes and systems to validate that contract risk is clearly identified and understood. New originations and any modifications or renewals of LIBOR-based contracts contain fallback language to assist in an orderly transition to an alternative reference rate. For Bank contracts that have a duration beyond December 31, 2021, and that reference LIBOR, all fallback provisions and variations are currently being identified and sorted into classifications based upon those provisions. Upon classification, the contracts are monitored and possibly remediated if fallback provisions are not deemed sufficiently robust. The Bank realizes that remediating certain contracts indexed to LIBOR may require consent from the counterparties, which could be difficult and costly to obtain in certain limited circumstances.

As of December 31, 2021, the Company had approximately $1.4 billion of assets that reference LIBOR, with short-term Warehouse balances representing $851 million of these assets and commercial and mortgage loans primarily making up the remainder. These amounts exclude derivative assets and liabilities on the Company’s consolidated balance sheet. As of December 31, 2021, the notional amount of the Company’s LIBOR-referenced interest rate derivative contracts was approximately $250 million. Each of the LIBOR-referenced amounts discussed above will vary in future periods as current contracts expire with potential replacement contracts using

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either LIBOR or an alternative reference rate. In compliance with regulatory guidance, the Bank discontinued referencing LIBOR for new financial instruments during 2021 and chose SOFR to be its primary alternative reference rate for most transaction types upon the discontinuance or unavailability of LIBOR.

​

For additional discussion regarding the Bank’s net interest income, see the sections titled “Net Interest Income” in this section of the filing under “RESULTS OF OPERATIONS (Discussion of 2021 vs. 2020).”

​