CFPB Director Chopra Issues Statement On NPRM Regarding Community Reinvestment Act – InsuranceNewsNet
REPUBLIC BANCORP INC /KY/ – 10-Q
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.

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

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:

? the potential impact of the COVID pandemic on Company operations;

? projections of revenue, income, expenses, losses, earnings per share, capital

expenditures, dividends, capital structure, or other financial items;

National Gold 2022-05 Body Leaderboard

? descriptions of plans or objectives for future operations, products, or

services;

? descriptions and projections related to management strategies for loans,

deposits, investments and borrowings;

? forecasts of future economic performance; and

? descriptions of assumptions underlying or relating to any of the foregoing.

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:

? the impact of the COVID pandemic on the Company’s operations and credit losses;

litigation liabilities, including related costs, expenses, settlements and

? judgments, or the outcome of matters before regulatory agencies, whether

pending or commencing in the future;

? natural disasters impacting the Company’s operations;

? changes in political and economic conditions;

? the discontinuation of LIBOR;

? the magnitude and frequency of changes to the FFTR implemented by the FOMC of

the FRB;

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’s net

interest income and Mortgage Banking operations;

? competitive product and pricing pressures in each of the Company’s five

reportable segments;

? equity and fixed income market fluctuations;

? client bankruptcies and loan defaults;

 ? inflation;


 ? recession;


 ? future acquisitions;


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? integrations of acquired businesses;

? changes in technology;

? changes in applicable laws and regulations or the interpretation and

enforcement thereof;

? changes in fiscal, monetary, regulatory, and tax policies;

? changes in accounting standards;

? monetary fluctuations;

? changes to the Company’s overall internal control environment;

? success in gaining regulatory approvals when required;

? the Company’s ability to qualify for future R&D federal tax credits;

? information security breaches or cyber security attacks involving either the

Company or one of the Company’s third-party service providers; and

other risks and uncertainties reported from time to time in the Company’s

? filings with the SEC, including Part I Item 1A “Risk Factors” of the Company’s

Annual Report on Form 10-K for the year ended December 31, 2021 and Part II

Item 1A “Risk Factors” of the current filing.

Accounting Standards Update

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

CRITICAL ACCOUNTING POLICIES AND 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 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.

A summary of the Company's significant accounting policies is set forth in Part
II "Item 8. Financial Statements and Supplementary Data" of its Annual Report on
Form 10-K for the fiscal year ended December 31, 2021.

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 its
ACLL and Provision.

ACLL and Provision - As of March 31, 2022, 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.

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.

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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 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.

BUSINESS SEGMENT COMPOSITION

As of March 31, 2022, the Company was divided into five reportable segments:
Traditional Banking, Warehouse, Mortgage Banking, TRS, and RCS. Management
considers the first three segments to collectively constitute "Core Bank" or
"Core Banking" operations, while the last two segments collectively constitute
RPG operations.

(I) Traditional Banking segment

The Traditional Banking segment provides traditional banking products primarily
to customers in the Company's market footprint. As of March 31, 2022, Republic
had 42 full-service banking centers with locations as follows:

? Kentucky – 28

? Metropolitan Louisville – 18

 ? Central Kentucky - 7


 ? Georgetown - 1


 ? Lexington - 5


 ? Shelbyville - 1


 ? Northern Kentucky - 3


 ? Covington - 1


 ? Crestview Hills - 1


 ? Florence - 1


 ? Southern Indiana - 3


 ? Floyds Knobs - 1


 ? Jeffersonville - 1


 ? New Albany - 1

? Metropolitan Tampa, Florida – 7

? Metropolitan Cincinnati, Ohio – 2

? Metropolitan Nashville, Tennessee – 2

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

The Bank’s principal lending activities consist of the following:

Retail Mortgage Lending - Through its retail banking centers and its online
Consumer Direct channel, the Bank originates single-family, residential real
estate loans and HELOCs. In addition, the Bank originates HEALs through its
retail banking centers. Such loans are generally collateralized by
owner-occupied, residential real estate properties. For those loans originated
through the Bank's retail banking centers, the collateral is predominately
located in the Bank's market footprint, while loans originated through its
Consumer Direct channel are generally secured by owner occupied-collateral
located outside of the Bank's market footprint.

Commercial Lending – The Bank conducts commercial lending activities primarily
through Corporate Banking, Commercial Banking, Business Banking, and Retail
Banking channels.

In general, commercial lending credit approvals and processing are prepared and
underwritten through the Bank's Commercial Credit Administration Department.
Clients are generally located within the Bank's market footprint or in areas
nearby the market footprint.

Construction and Land Development Lending - The Bank originates business loans
for the construction of both single-family, residential properties and
commercial properties (apartment complexes, shopping centers, office buildings).
While not a

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focus for the Bank, the Bank may originate loans for the acquisition and
development of residential or commercial land into buildable lots.

Consumer Lending - Traditional Banking consumer loans made by the Bank include
home improvement and home equity loans, other secured and unsecured personal
loans, and credit cards. Except for home equity loans, which are actively
marketed in conjunction with single family, first lien residential real estate
loans, other Traditional Banking consumer loan products (not including products
offered through RPG), while available, are not and have not been actively
promoted in the Bank's markets.

Aircraft Lending - In October 2017, the Bank created an Aircraft Lending
division. Aircraft loans are typically made to purchase or refinance personal
aircrafts, along with engine overhauls and avionic upgrades. Loans range between
$55,000 and $3,000,000 in size and have terms up to 20 years. The aircraft loan
program is open to all states, except for Alaska and Hawaii.

The credit characteristics of an aircraft borrower are higher than a typical
consumer in that they must demonstrate and indicate a higher degree of credit
worthiness for approval.

The Bank’s other Traditional Banking activities generally consist of the
following:

Private Banking - The Bank provides financial products and services to
high-net-worth individuals through its Private Banking department. The Bank's
Private Banking officers have extensive banking experience and are trained to
meet the unique financial needs of this clientele.

Treasury Management Services - The Bank provides various deposit products
designed for commercial business clients located throughout its market
footprint. Lockbox processing, remote deposit capture, business on-line banking,
account reconciliation, and ACH processing are additional services offered to
commercial businesses through the Bank's Treasury Management department.
Treasury Management officers work closely with commercial and retail officers to
support the cash management needs of Bank clients.

Internet Banking - The Bank expands its market penetration and service delivery
of its RB&T brand by offering clients Internet Banking services and products
through its website, www.republicbank.com.

Mobile Banking – The Bank allows clients to easily and securely access and
manage their accounts through its mobile banking application.

Other Banking Services – The Bank also provides title insurance and other
financial institution related products and services.

Bank Acquisitions – The Bank maintains an acquisition strategy to selectively
grow its franchise as a complement to its organic growth strategies.

See additional detail regarding the Traditional Banking segment under Footnote
16 “Segment Information” of Part I Item 1 “Financial Statements.”

(II) Warehouse Lending segment

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

See additional detail regarding the Warehouse Lending segment under Footnote 16
“Segment Information” of Part I Item 1 “Financial Statements.”

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(III) Mortgage Banking segment

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

See additional detail regarding the Mortgage Banking segment under Footnote 11
"Mortgage Banking Activities" and Footnote 16 "Segment Information" of Part I
Item 1 "Financial Statements."

(IV) Tax Refund Solutions segment

Through the TRS segment, the Bank is one of a limited number of financial
institutions that facilitates the receipt and payment of federal and state tax
refund products and offers a credit product through third-party tax preparers
located throughout the U.S., as well as tax-preparation software providers
(collectively, the "Tax Providers"). Substantially all of the business generated
by the TRS business occurs during the first half of each year. During the second
half of each year, TRS generates limited revenue and incurs costs preparing for
the next year's tax season.

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

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

? Offered only during the first two months of each year;

? The taxpayer was given the option to choose from multiple loan-amount tiers,

subject to underwriting, up to a maximum advance amount of $6,250;

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

? Multiple funds disbursement methods, including direct deposit, prepaid card, or

check, based on the taxpayer-customer’s election;

? Repayment of the EA to the Bank is deducted from the taxpayer’s tax refund

proceeds; and

? If an insufficient refund to repay the EA occurs:

o there is no recourse to the taxpayer,

o no negative credit reporting on the taxpayer, and

o no collection efforts against the taxpayer.


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

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

In response to changes in the legal, regulatory, and competitive environment,
management annually reviews and revises the EAs 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 product
offering and therefore on the Company's financial condition and results of
operations.

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See additional detail regarding the EA product under Footnote 4 “Loans and
Allowance for Credit Losses” of Part I Item 1 “Financial Statements.”

Cancelled TRS Sale Transaction - As previously disclosed, Green Dot Corporation
paid RB&T a contract termination fee of $5.0 million during the first quarter of
2022 after RB&T provided Green Dot a notice of termination of the May 2021
Purchase Agreement for the sale of substantially all of RB&T's TRS assets and
operations to Green Dot. RB&T continues to pursue other legal remedies against
Green Dot related to the Sale Transaction. The Company recorded the contract
termination fee within noninterest income during the first quarter of 2022.

Republic Payment Solutions division

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

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

(V) Republic Credit Solutions segment

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

RCS line-of-credit products – Using separate third-party service providers, the

Bank originates two line-of-credit products to generally subprime borrowers in

? multiple states. The first of these two products (the “LOC I”) has been

originated by the Bank since 2014. The second (the “LOC II”) was introduced in

January 2021.

RCS’s LOC I represented the substantial majority of RCS activity during 2021.

Elastic Marketing, LLC and Elevate Decision Sciences, LLC are third-party

service providers for the product and are subject to the Bank’s oversight and

supervision. Together, these companies provide the Bank with certain marketing,

o servicing, technology, and support services, while a separate third party

provides customer support, servicing, and other services on the Bank’s

behalf. The Bank is the lender for this product and is marketed as such.

Further, the Bank controls the loan terms and underwriting guidelines, and the

Bank exercises consumer compliance oversight of the product.

The Bank sells participation interests in this product. These participation
interests are a 90% interest in advances made to borrowers under the borrower's
line-of-credit account, and the participation interests are generally sold three
business days following the Bank's funding of the associated advances. Although
the Bank retains a 10% participation interest in each advance, it maintains 100%
ownership of the underlying LOC I account with each borrower. Loan balances held
for sale through this program are carried at the lower of cost or fair value.

In January 2021, RCS began originating balances through its LOC II. One of

RCS’s existing third-party service providers, subject to the Bank’s oversight

and supervision, provides the Bank with marketing services and loan servicing

o for the LOC II product. The Bank is the lender for this product and is marketed

   as such. Furthermore, the Bank controls the loan terms and underwriting
   guidelines, and the Bank exercises consumer compliance oversight of this
   product.

The Bank sells participation interests in this product. These participation
interests are a 95% interest in advances made to borrowers under the borrower's
line-of-credit account, and the participation interests are generally sold three
business days following the Bank's funding of the associated advances. Although
the Bank retains a 5% participation interest in each advance, it maintains 100%
ownership of the underlying LOC II account with each borrower. Loan balances
held for sale through this program are carried at the lower of cost or fair
value.

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RCS installment loan product – In December 2019, through RCS, the Bank began

offering installment loans with terms ranging from 12 to 60 months to borrowers

in multiple states. The same third-party service provider for RCS’s LOC II is

the third-party provider for the installment loans. This third-party provider

is subject to the Bank’s oversight and supervision and provides the Bank with

marketing services and loan servicing for these RCS installment loans. The Bank

is the lender for these RCS installment loans and is marketed as such.

? Furthermore, the Bank controls the loan terms and underwriting guidelines, and

the Bank exercises consumer compliance oversight of this RCS installment loan

product. Currently, all loan balances originated under this RCS installment

loan program are carried as “held for sale” on the Bank’s balance sheet, with

the intention to sell these loans to a third-party, who is an affiliate of the

Bank’s third-party service provider, generally within sixteen days following

the Bank’s origination of the loans. Loans originated under this RCS

installment loan program are carried at fair value under a fair-value option,

   with the portfolio marked to market monthly.


   RCS healthcare receivables products - The Bank originates
   healthcare-receivables products across the U.S. through two different

third-party service providers. In one program, the Bank retains 100% of the

? receivables originated. In the other program, the Bank retains 100% of the

receivables originated in some instances, and in other instances, sells 100% of

the receivables within one month of origination. Loan balances held for sale

through this program are carried at the lower of cost or fair value.

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

OVERVIEW (Three Months Ended March 31, 2022 Compared to Three Months Ended March
31, 2021
)

Total Company net income for the first quarter of 2022 was $27.9 million, a $1.9
million, or 7%, increase from the same period in 2021. Diluted EPS increased to
$1.40 for first quarter of 2022 compared to $1.25 for the same period in 2021.
The increase in net income primarily reflected the benefit of a $5.0 million
pre-tax contract termination fee and a positive reduction in Provision,
partially offset by a decrease in net interest income and Mortgage Banking
income. Compared to the first quarter of 2022, the first quarter of 2021 was
significantly and positively impacted by strong fee income from the Paycheck
Protection Program and higher demand for mortgage refinancing, driving strong
mortgage banking income.

The following are general highlights by reportable segment:

Traditional Banking segment

? Net income decreased $4.1 million, or 48%, for the first quarter of 2022

compared to the same period in 2021.

? Net interest income decreased $5.0 million, or 12%, for the first quarter of

2022 compared to the same period in 2021.

? Provision was a net charge of $320,000 for the first quarter of 2022 compared

to a net credit of $5,000 for the same period in 2021.

? Noninterest income increased $450,000, or 7%, for the first quarter of 2022

compared to the same period in 2021.

? Noninterest expense increased $891,000, or 2%, for the first quarter of 2022

compared to the same period in 2021.

? Total Traditional Bank loans increased $69 million, or 2%, during the first

quarter of 2022, driven primarily by strong CRE loan growth.

? Total nonperforming loans to total loans for the Traditional Banking segment

was 0.47% as of March 31, 2022 compared to 0.59% as of December 31, 2021.

? Delinquent loans to total loans for the Traditional Banking segment was 0.16%

as of March 31, 2022 compared to 0.21% as of December 31, 2021.


 ? Total Traditional Bank deposits increased $94 million, or 2%, during the first
   quarter of 2022.


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Warehouse Lending segment

? Net income decreased $1.5 million, or 33%, for the first quarter of 2022

compared to the same period in 2021.

? Net interest income decreased $2.3 million, or 33%, for the first quarter of

2022 compared to the same period in 2021.

? The Warehouse Provision was a net credit of $401,000 for the first quarter of

2022 compared to a net credit of $242,000 for the same period in 2021.

? Average committed Warehouse lines decreased to $1.4 billion in the first

quarter of 2022 compared to $1.5 billion in the first quarter of 2021.

? Average line usage was 42% during the first quarter of 2022 compared to 54%

during the same period in 2021.

Mortgage Banking segment

Within the Mortgage Banking segment, mortgage banking income decreased $4.5

? million, or 63%, during the first quarter of 2022 compared to the same period

in 2021.

Overall, Republic’s proceeds from sale of secondary market loans totaled $119

? million during the first quarter of 2022 compared to $204 million during the

   same period in 2021, with the Company's cash-gain-as-a-percent-of-loans-sold

decreasing to 2.29% from 3.95% from period to period.

Tax Refund Solutions segment

? Net income increased $10.0 million, or 184%, for the first quarter of 2022

compared to the same period in 2021.

? Net interest income increased $728,000, or 5%, for the first quarter of 2022

compared to the same period in 2021.

? Total EA originations were $311 million during the first quarter of 2022

compared to $250 million for the first quarter of 2021.

Overall, TRS recorded a net charge to the Provision of $7.9 million during the

? first quarter of 2022 compared to a net charge to the Provision of $15.9

million for the same period in 2021.

Noninterest income increased $4.2 million for the first quarter of 2022

? compared to the same period in 2021. Noninterest income for the first quarter

of 2022 included a $5.0 million contract termination fee.

? Net RT revenue decreased $670,000 for the first quarter of 2022 compared to the

same period in 2021.

? Noninterest expense was $5.1 million for the first quarter of 2022 compared to

$5.3 million for the same period in 2021.


TRS had multiple factors during 2021 and 2022 that impacted and will continue to
impact its 2022 performance and the comparability of that performance to the
same periods in 2021. By year, these factors discussed below include, but may
not be limited to, the following:

2021

1) The start of the IRS processing season was delayed approximately two weeks

later than a typical tax season; and

The Company believes stimulus programs from the Federal Government and

 2) pandemic-related restrictions during early 2021 negatively impacted demand for
    TRS's RT and EA products.


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2022

TRS amended one of its existing third-party contracts to provide for a small

1) revenue share from Republic to the third party, along with a cap on loan

losses from the third party to Republic for all EA products originated through

this provider;

2) TRS experienced a loss of RT and EA product volume to Green Dot directly

following the execution of the Purchase Agreement;

Although to a lesser degree than in the 2021 tax season, we believe stimulus

3) programs from the Federal Government during the latter half of 2021 negatively

impacted the 2022 tax season; and

4) The Bank received a $5.0 million termination fee in January 2022 following the

cancellation of the Sales Transaction.

As it relates to factors impacting 2021, the processing season with the IRS
started approximately two weeks later than normal. As a result, RT funding
volume and loan repayments from the IRS lagged normal funding patterns in
non-COVID-impacted years and effectively pushed RT revenue and loan recovery
activity later into the 2021 calendar year. In addition, government stimulus
programs during 2021 negatively impacted demand for TRS EA and RT products.

Conversely, the timing of the IRS tax season during the first quarter of 2022
was more in-line with non-COVID seasons than the first quarter of 2021. As a
result, the Company believes that it likely received a greater percentage of its
funded RT volume in the first quarter of 2022 as compared to 2021, and that it
likely received a greater percentage of its EA loan repayments in the first
quarter of 2022 than it did during 2021. This estimated timing, if correct,
generally provided more favorable first quarter 2022 results for TRS as compared
to the first quarter of 2021, but will likely provide for less favorable
quarterly comparisons throughout the remainder of 2022 as compared to 2021.

In addition to the more normal timing of the tax season in 2022 as compared to
2021, the first quarter 2022 tax season was also favorably impacted by a
contractual change with one of the Company's large Tax Providers. As a result of
the amended contract, TRS provides this tax provider a revenue share, while this
tax provider covers certain overhead costs of the program and furnishes to RB&T
a loan loss guaranty for EAs originated through this provider. Through this
specific provider, TRS originated $172 million of EAs during the first quarter
of 2022 as compared to $135 million originated during the first quarter of 2021.
The net cost of the revenue share to the provider from RB&T was approximately
$268,000 for the $172 million of EA volume. Under the amended contract, during
the first quarter of 2022 the net benefit to TRS of the covered overhead costs
and to the Provision from the loan loss guaranty was approximately $3.0 million.

Negatively impacting the first quarter 2022 tax season as compared to the first
quarter of 2021 was a loss of RT and EA volume by RB&T to Green Dot from certain
third-party Tax Providers following the execution of the Purchase Agreement.
While TRS was able to partially offset this lost volume through higher volume
from other existing relationships, the loss of volume to Green Dot will have a
negative impact to the overall results of TRS for 2022 and well into the future
if TRS is unable to win this business back from Green Dot through its normal
solicitation process.

As a net result of all the factors in the preceding paragraphs, TRS experienced
a significant net positive improvement to its first quarter 2022 tax results as
compared to the first quarter of 2021. Because many of these factors may only be
timing in nature, management believes TRS's results of operations, and more
specifically RT revenue and net recoveries for previously charged-off EAs for
the remainder of 2022 will likely be negative as compared to the same periods in
2021.

Republic Credit Solutions segment

? Net income increased $822,000, or 20%, for the first quarter of 2022 compared

to the same period in 2021.

? Net interest income increased $1.5 million, or 32%, for the first quarter of

2022 compared to the same period in 2021.

Overall, RCS recorded a net charge to the Provision of $1.4 million during the

? first quarter of 2022 compared to a net credit of $375,000 for the same period

in 2021.

? Noninterest income increased $1.8 million, or 135%, from the first quarter of

2022 to the first quarter of 2022.

? Noninterest expense was $1.6 million for the first quarter of 2022 and $1.0

million for the same period in 2021.

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? Total nonperforming loans to total loans for the RCS segment was 0.04% as of

March 31, 2022 compared to 0.05% as of December 31, 2021.

? Delinquent loans to total loans for the RCS segment was 6.47% as of March 31,

2022 compared to 6.48% as of December 31, 2021.

RESULTS OF OPERATIONS (Three Months Ended March 31, 2022 Compared to Three
Months Ended March 31, 2021)

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.

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

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 pandemic, as the FOMC reduced the FFTR
to approximately 25 basis points during 2020. With the rise of inflation during
the latter half of 2021 and early 2022, the FOMC increased the FFTR and
announced the end to its quantitative easing program in March 2022. In addition,
the FOMC also signaled a more aggressive and hawkish approach to its monetary
policies, including additional and larger increases to the FFTR, and monetary
tightening through reducing the size of its balance sheet and selling certain
types of bonds in the market.

The FOMC's actions and signals continued to place upward pressure on long-term
market interest rates for bonds and loans during the first quarter 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 the
remainder of 2022. 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.

Total Company net interest income was $62.6 million during the first quarter of
2022 and represented a decrease of $5.2 million, or 8%, from the first quarter
of 2021. Total Company net interest margin decreased to 4.30% during the first
quarter of 2022 compared to 4.66% for the same period in 2021.

The following were the most significant components affecting the Company’s net
interest income by reportable segment:

Traditional Banking segment

The Traditional Banking's net interest income decreased $5.0 million, or 12%,
for the first quarter of 2022 compared to the same period in 2021. Traditional
Banking's net interest margin was 2.90% for the first quarter of 2022, a
decrease of 57 basis points from the same period in 2021.

Table 1 – Traditional Bank Net Interest Income and Net Interest Margin Excluding
PPP (Non-GAAP)

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 performance of 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.

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                                                                                Net Interest Income                                         Interest-Earning Assets                                  Net Interest Margin
                                                               Three Months Ended Mar. 31,                                    Three Months Ended Mar. 31,                                  Three Months Ended Mar. 31,
(dollars in thousands)                                           2022                2021         $ Change     % Change          2022              2021         $ Change    % Change         2022                2021        % 

Change

Traditional Banking - GAAP                                  $       36,148 

$ 41,102 $ (4,954) (12) % $ 4,984,524 $ 4,740,971 $ 243,553 5 % 2.90 %

              3.47 %       (0.57) %
Less: Impact of PPP fees and interest                                  955               6,698      (5,743)        (86)              30,601         364,765      (334,164)      (92)          0.06                0.33        

(0.27)

Traditional Banking ex PPP fees and interest – non-GAAP $ 35,193

    $       34,404    $     789           2     $     4,953,923     $ 4,376,206    $   577,717        13          2.84                3.14         (0.30)

The decrease in the Traditional Bank’s net interest income and net interest
margin during the first quarter of 2022 was primarily attributable to the
following factors:

The Traditional Bank recognized $955,000 of fees and interest on its PPP

portfolio during the first quarter of 2022 compared to $6.7 million of similar

? income during the same period in 2021. The $5.7 million decrease in PPP fees

and interest primarily highlighted the short-term nature of this program, which

was closer to its peak during the first quarter of 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 March 31, 2022, net
PPP loans of $18 million remained on the Traditional Bank's balance sheet,
including $3 million in loan balances originated during 2020 and $15 million in
loan balances originated during 2021.

Traditional Bank net interest income, excluding PPP fees and interest,

increased $789,000, or 2%, from the first quarter of 2021, as average non-PPP

loans at the Traditional Bank grew from $3.3 billion for the first quarter of

2021 to $3.5 billion for the first quarter of 2022. Offsetting the benefit of

? growth in non-PPP Traditional Bank loans was a 30-basis point decrease in the

Traditional Bank’s net interest margin excluding PPP loans and related fees and

interest. The Traditional Bank’s net interest margin, excluding the PPP-related

elements, declined from 3.14% for the first quarter of 2021 to 2.84% for the

first quarter of 2022.


The decline in the net interest margin was substantially driven by the Company's
internal Funds Transfer Pricing methodology in combination with the change in
the timing of cash received for tax refunds at TRS during 2022 as compared to
2021. More specifically, as part of its internal FTP process, the Traditional
Bank purchases the cash from the deposits of the various business segments and
sells cash to the various business segments for loans funded by those segments.
The FTP price (or interest) paid or earned by the Traditional Bank for those
internal FTP transactions may not be indicative of the real interest earned or
paid for the Traditional Bank in the actual market. As a result, the Traditional
Bank often earns a lower, and sometimes negative, spread on this cash,
negatively impacting its net interest margin. With the tax refund season delayed
during 2021, the cash purchased by the Traditional Bank from TRS was
significantly more during the first quarter of 2022 as compared to the first
quarter of 2021, resulting in the Traditional Bank having substantially more
cash during the first quarter of 2022 than 2021 and generating a lower overall
net interest margin.

As previously disclosed, both short-term and long-term market interest rates are
expected to increase during 2022 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
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.

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Warehouse Lending segment
Net interest income within the Warehouse segment decreased $2.3 million, or 33%,
from the first quarter of 2021 to the first quarter of 2022, driven by decreases
in both average outstanding balances and net interest margin. Overall average
outstanding Warehouse balances declined from $790 million during the first
quarter of 2021 to $585 million for the first quarter of 2022, as home-mortgage
refinancing dipped from historically high volume in early 2021. The Warehouse
net interest margin compressed 43 basis points from 3.43% during the first
quarter of 2021 to 3.09% during the first quarter of 2022, as competitive forces
began driving down the contractual interest rates on the Company's Warehouse
lines during the third quarter of 2021.

Committed Warehouse lines-of-credit remained at $1.4 billion from March 31, 2021
to March 31, 2022, while average usage rates for Warehouse lines were 42% and
54%, respectively, during the first quarters of 2022 and 2021.

Additional increases in short-term interest rates and overall market rates are
generally believed by management to be favorable to Warehouse's net interest
income and net interest margin in the near term, however, the benefit of an
increase in rates could be partially or entirely offset by a reduction in
average outstanding balances driven by a decline in demand from Warehouse
clients, as higher long-term interest rates generally drive lower demand for
Warehouse borrowings. In addition, a lower demand for Warehouse borrowings could
cause additional competitive pricing pressures for the industry, driving down
the yield Warehouse earns on its lines of credits.

Tax Refund Solutions segment

TRS's net interest income increased $728,000 for the first quarter of 2022
compared to the same period in 2021. TRS's EA product earned $13.4 million in
interest income during the first quarter of 2022, a $655,000 increase from the
first quarter of 2021 resulting primarily from a $61 million increase in EA
originations from period to period. For factors affecting the comparison of the
TRS results of operations for the first quarter of 2022 and the first quarter of
2021, see section titled "OVERVIEW (Three Months Ended March 31, 2022 Compared
to Three Months Ended March 31, 2021) - Tax Refund Solutions."

See additional detail regarding the EA product under Footnote 4 “Loans and
Allowance for Credit Losses” of Part I Item 1 “Financial Statements.”

Republic Credit Solutions segment

RCS's net interest income increased $1.5 million, or 32%, from the first quarter
of 2021 to the first quarter of 2022. The increase was driven primarily by an
increase in fee income from RCS's LOC products. Loan fees on these products,
recorded as interest income on loans, increased to $5.7 million during the first
quarter of 2022 compared to $3.8 million during the same period in 2021.

Interest income on RCS's LOC I product increased $917,000, driven by a $5
million increase in average outstanding balances for this product from the first
quarter of 2021 to the first quarter of 2022. Interest income on RCS's LOC II
product increased $912,000, as the Company first piloted this product during the
first quarter of 2021 with limited outstanding balances during the pilot phase.

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.

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Table 2 – Total Company Average Balance Sheets and Interest Rates

                                         Three Months Ended March 31, 2022               Three Months Ended March 31, 2021
                                         Average                      Average            Average                      Average
(dollars in thousands)                   Balance         Interest      Rate              Balance         Interest      Rate

ASSETS

Interest-earning assets:
Federal funds sold and other
interest-earning deposits             $      861,822     $     429       0.20 %       $      510,433     $     154       0.12 %
Investment securities, including
FHLB stock (1)                               606,182         2,111       1.39                563,985         2,017       1.43
TRS Easy Advance loans (2)                    84,557        13,444      63.60                 89,732        12,789      57.01
RCS LOC products (2)                          26,279         5,702      86.79                 16,284         3,770      92.61
Other RPG loans (3) (7)                      120,917         1,984       6.56                139,729         2,789       7.98
Outstanding Warehouse lines of
credit (4) (7)                               584,519         4,878       3.34                790,244         7,370       3.73
Paycheck Protection Program loans
(5) (7)                                       30,601           955      12.48                288,115         6,698       9.30

All other Core Bank loans (6) (7) 3,508,382 34,052 3.88

              3,421,552        33,970       3.97

Total interest-earning assets              5,823,259        63,555       4.37              5,820,074        69,557       4.78

Allowance for credit loss                   (69,287)                                        (66,561)

Noninterest-earning assets:
Noninterest-earning cash and cash
equivalents                                  354,165                                         249,842
Premises and equipment, net                   35,460                                          39,185
Bank owned life insurance                     99,532                                          68,257
Other assets (1)                             180,779                                         191,497
Total assets                          $    6,423,908                                  $    6,302,294

LIABILITIES AND STOCKHOLDERS'
EQUITY

Interest-bearing liabilities:
Transaction accounts                  $    1,692,120     $      97       0.02 %       $    1,485,015     $      82       0.02 %
Money market accounts                        798,943            94       0.05                732,328           103       0.06
Time deposits                                261,703           640       0.98                314,904         1,105       1.40
Reciprocal money market and time
deposits                                      74,730            48       0.26                313,445           255       0.33
Brokered deposits                                  -             -          -                 63,325            20       0.13

Total interest-bearing deposits            2,827,496           879       0.12              2,909,017         1,565       0.22

Securities sold under agreements to
repurchase and other short-term
borrowings                                   300,169            28       0.04                192,669             9       0.02
Federal Home Loan Bank advances               23,333            36       0.62                 43,167            31       0.29
Subordinated note                                  -             -          -                 41,240           172       1.67

Total interest-bearing liabilities         3,150,998           943       0.12              3,186,093         1,777       0.22

Noninterest-bearing liabilities and
Stockholders' equity:
Noninterest-bearing deposits               2,313,549                       
               2,146,036
Other liabilities                            112,331                                         133,953
Stockholders' equity                         847,030                                         836,212
Total liabilities and
stock-holders' equity                 $    6,423,908                                  $    6,302,294

Net interest income                                      $  62,612                                       $  67,780

Net interest spread                                                      4.25 %                                          4.56 %

Net interest margin                                                      4.30 %                                          4.66 %

(1) For the purpose of this calculation, the fair market value adjustment on debt

securities is included as a component of other assets.

(2) Interest income for Easy Advances and RCS line-of-credit products is composed

entirely of loan fees.

(3) Interest income includes loan fees of $662,000 and $1.7 million for the three

months ended March 31, 2022 and 2021.

(4) Interest income includes loan fees of $574,000 and $871,000 for the three

months ended March 31, 2022 and 2021.

(5) Interest income includes loan fees of $879,000 and $5.8 million for the three

months ended March 31, 2022 and 2021.

(6) Interest income includes loan fees of $1.5 million and $895,000 for the three

months ended March 31, 2022 and 2021.

Average balances for loans include the principal balance of nonaccrual loans
(7) and loans held for sale, and are inclusive of all loan premiums, discounts,

    fees and costs.


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Table 3 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 3 – Total Company Volume/Rate Variance Analysis

                                                 Three Months Ended March 31, 2022
                                                            Compared to
                                                 Three Months Ended March 31, 2021
                                        Total Net          Increase / (Decrease) Due to
(in thousands)                           Change              Volume               Rate

Interest income:

Federal funds sold and other
interest-earning deposits             $         275     $            141     $          134
Investment securities, including
FHLB stock                                       94                  148               (54)
TRS Easy Advance loans*                         655                2,831            (2,176)
RCS LOC I product                             1,932                1,250                682
Other RPG loans                               (805)                  363            (1,168)
Outstanding Warehouse lines of
credit                                      (2,492)              (1,942)   

(550)

Paycheck Protection Program loans           (5,743)              (8,570)   
          2,827
All other Core Bank loans                        82                  299              (217)
Net change in interest income               (6,002)              (5,480)              (522)

Interest expense:

Transaction accounts                             15                   12                  3
Money market accounts                           (9)                    9               (18)
Time deposits                                 (465)                (166)              (299)
Reciprocal money market and time
deposits                                      (207)                (162)               (45)
Brokered deposits                              (20)                 (20)                  -
Securities sold under agreements to
repurchase and other short-term
borrowings                                       19                    7                 12
Federal Home Loan Bank advances                   5                 (19)                 24
Subordinated note                             (172)                (172)                  -
Net change in interest expense                (834)                (511)   

(323)

Net change in net interest income $ (5,168) $ (4,969)

$ (199)


* *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 $311 million and
$250 million for the quarters ended March 31, 2022 and 2021. The unannualized EA
yield as a function of total EA originations was 4.32% and 5.11% for the
quarters ended March 31, 2022 and 2021.

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Provision

Total Company Provision was a net charge of $9.2 million for the first quarter
of 2022 compared to a net charge of $15.3 million for the same period in 2021.

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

Traditional Banking segment

The Traditional Banking Provision during the first quarter of 2022 was a net
charge of $320,000 compared to a net credit of $5,000 for the first quarter of
2021. An analysis of the Provision for the first quarter of 2022 compared to the
same period in 2021 follows:

For the first quarter of 2022, the Traditional Bank Provision primarily

? reflected formula reserves tied to general loan growth. Non-PPP Traditional

Bank loans grew $107 million from December 31, 2021 to March 31, 2022.

For the first quarter of 2021, there was a minimal net credit to the

? Traditional Bank Provision during the quarter as the Traditional Bank non-PPP

loan balances declined by approximately $51 million from December 31, 2020 to

March 31, 2021.


As a percentage of total Traditional Bank loans, the Traditional Banking ACLL
was 1.39% as of March 31, 2022 compared to 1.41% as of December 31, 2021 and
1.35% as of March 31, 2021. The Company believes, based on information presently
available, that it has adequately provided for Traditional Banking loan losses
as of March 31, 2022.

See the sections titled “Allowance for Credit Losses” and “Asset Quality” in
this section of the filing under “Comparison of Financial Condition” for
additional discussion regarding the Provision and the Bank’s credit quality.

Warehouse Lending segment

Warehouse recorded a net credit to the Provision of $401,000 for the first
quarter of 2022 compared to a net credit of $242,000 for the same period in
2021. Provision for both periods reflected changes in general reserves
consistent with changes in outstanding period-end balances. Outstanding
Warehouse
period-end balances decreased $160 million during the first quarter of
2022 compared to a decrease of $97 million during the first quarter of 2021.

As a percentage of total Warehouse outstanding balances, the Warehouse ACLL was
0.25% as of March 31, 2022, December 31, 2021, and March 31, 2021. The Company
believes, based on information presently available, that it has adequately
provided for Warehouse loan losses as of March 31, 2022.

Tax Refund Solutions segment

TRS recorded a net charge to the Provision of $7.9 million during the first
quarter of 2022 compared to a net charge of $15.9 million for the same period in
2021. Substantially all TRS Provision in both periods was related to its EA
product.

TRS recorded a charge to the Provision for EA loans of $8.3 million, or 2.67% of
its $311 million in EAs originated during the first quarter of 2022 compared to
a charge to the Provision of $16.0 million, or 6.41% of its $250 million of EAs
originated during the first quarter of 2021. The decrease in Provision for the
first quarter of 2022 was primarily due to the following two factors:

TRS received a contractual guaranty during 2022 that limits its EA losses for

EAs originated through one of its largest Tax Providers. Through this

1) particular provider, TRS originated $172 million of EAs during the first

quarter of 2022. The net benefit to the Provision for TRS during the first

quarter of 2022 was approximately $2.6 million.

In addition to its contractual guaranty discussed in the previous bullet (1),

TRS experienced delayed EA paydowns during the first quarter of 2021 with the

2) start of the IRS tax season delayed into mid-February 2021, combined with

federal government stimulus programs during the first quarter of 2021, which

generally utilized resources of the IRS and U.S. Treasury to administer the

programs.

EAs are only originated during the first two months of each year, with all
uncollected EAs charged off by June 30th of each year. EAs collected during the
second half of each year are recorded as recoveries of previously charged-off
loans. TRS's loss rate as of June 30, 2021 was 4.09% of total originations and
it finished 2021 with an EA loss rate of 2.69% of total EAs originated.

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For factors affecting the comparison of the TRS results of operations for the
first quarter of 2022 and the first quarter of 2021, see section titled
“OVERVIEW (Three Months Ended March 31, 2022 Compared to Three Months Ended
March 31, 2021) – Tax Refund Solutions.”

See additional detail regarding the EA product under Footnote 4 “Loans and
Allowance for Credit Losses” of Part I Item 1 “Financial Statements.”

Republic Credit Solutions segment

As illustrated in Table 4 below, RCS recorded a net charge to the Provision of
$1.4 million during the first quarter of 2022 compared to a net credit to the
Provision of $375,000 for the same period in 2021. The increase in the Provision
was driven primarily by a $1.7 million increase in net charge-offs on RCS's
line-of-credit products. Net charge-offs for RCS's LOC I product increased to
$1.7 million for the first quarter of 2022 from $672,000 during the first
quarter of 2021, with government stimulus programs generally driving down usage
of this product during the first quarter of 2021. Net charge-offs for RCS's LOC
II product were $672,000 for the first quarter of 2022, with no charge-offs for
this product during its pilot phase 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 13.63% as of March 31, 2022, 13.91% as of December 31,
2021, and 7.16% as of March 31, 2021. The Company believes, based on information
presently available, that it has adequately provided for RCS loan losses as of
March 31, 2022.

The following table presents net charges to the RCS Provision by product:

Table 4 – RCS Provision by Product

                            Three Months Ended Mar. 31,
(in thousands)              2022                         2021    $ Change   % Change
Product:
Lines of credit       $          1,403                 $ (374)  $    1,777    (475) %
Hospital receivables               (8)                     (1)         (7) 
     NM
Total                 $          1,395                 $ (375)  $    1,770    (472) %


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Table 5 – Summary of Loan and Lease Loss Experience

                                          Three Months Ended
                                              March 31,
(dollars in thousands)                    2022         2021

ACLL at beginning of period             $  64,577    $  61,067

Charge-offs:

Traditional Banking:
Commercial real estate                          -        (428)
Consumer                                    (263)        (209)
Total Traditional Banking                   (263)        (637)
Warehouse lines of credit                       -            -
Total Core Banking                          (263)        (637)

Republic Processing Group:
Tax Refund Solutions:
Easy Advances                                   -            -
Other TRS loans                                 -         (22)
Republic Credit Solutions                 (2,673)        (766)
Total Republic Processing Group           (2,673)        (788)
Total charge-offs                         (2,936)      (1,425)

Recoveries:

Traditional Banking:
Residential real estate                        43           27
Commercial real estate                          1           68
Commercial & industrial                         9            7
Home equity                                     3            7
Consumer                                       89          146
Total Traditional Banking                     145          255
Warehouse lines of credit                       -            -
Total Core Banking                            145          255

Republic Processing Group:
Tax Refund Solutions:
Easy Advances                                   -            -
Other TRS loans                               362            9
Republic Credit Solutions                     275           93
Total Republic Processing Group               637          102
Total recoveries                              782          357

Net loan charge-offs                      (2,154)      (1,068)

Provision - Core Banking                     (74)        (172)
Provision - RPG                             9,307       15,509
Total Provision                             9,233       15,337
ACLL at end of period                   $  71,656    $  75,336

Credit Quality Ratios – Total Company:

ACLL to total loans                          1.63 %       1.61 %
ACLL to nonperforming loans                   422          335

Net loan charge-offs to average loans 0.20 0.09

Credit Quality Ratios – Core Banking:

ACLL to total loans                          1.20 %       1.14 %
ACLL to nonperforming loans                   303          234

Net loan charge-offs to average loans 0.01 0.03

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Table 6 - Annualized Net Loan Charge-offs (Recoveries) to Average Loans by Loan
Category

                                          Net Loan Charge-Offs (Recoveries) to Average Loans
                                                            Three Months Ended
                                                                March 31,
                                                   2022                              2021

Traditional Banking:
Residential real estate:
Owner occupied                                            - %                            (0.01) %
Nonowner occupied                                         -                                   -
Commercial real estate                                    -                                0.11
Construction & land development                           -                
                  -
Commercial & industrial                                   -                              (0.01)
Paycheck Protection Program                               -                                   -
Lease financing receivables                               -                                   -
Aircraft                                                  -                                   -
Home equity                                          (0.01)                              (0.01)
Consumer:
Credit cards                                           0.58                                1.14
Overdrafts                                            90.70                               29.00
Automobile loans                                     (0.03)                                0.09
Other consumer                                       (0.26)                              (0.65)
Total Traditional Banking                              0.01                                0.04
Warehouse lines of credit                                 -                                   -
Total Core Banking                                     0.01                                0.03

Republic Processing Group:
Tax Refund Solutions:
Easy Advances*                                            -                                   -
Other TRS loans                                      (1.16)                                0.17
Republic Credit Solutions                              2.62                                0.62
Total Republic Processing Group                        0.97                
               0.28
Total                                                  0.20 %                              0.09 %

*   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.

The Company's net charge-offs to average total Company loans increased from
0.09% during the first quarter of 2021 to 0.20 % during the first quarter of
2022, with net charge-offs increasing $1.1 million, or 102%, and average total
Company loans decreasing $390 million, or 8%. The increase in net charge-offs
was primarily driven by a $1.4 million increase 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 the first quarter of 2021 to the first quarter of 2022, RPG experienced a
$1.7 million increase in net charge-offs within its RCS segment. Net charge-offs
for RCS's LOC I product increased to $1.7 million for the first quarter of 2022
from $672,000 for the first quarter of 2021, with government stimulus programs
generally driving down usage of this product during the first quarter of 2021.
Net charge-offs for RCS's LOC II product were $672,000 for the first quarter of
2022, with no charge-offs for this product during its pilot phase during the
first quarter of 2021.

During the first quarters of 2022 and 2021, the Company’s Core Bank net
charge-offs to average Core Bank loans remained near zero.

Noninterest Income

Total Company noninterest income increased $2.0 million during the first quarter
of 2022 compared to the same period in 2021.

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

Traditional Banking segment

Traditional Banking’s noninterest income increased $450,000, or 7%, for the
first quarter of 2022 compared to the same period in 2021, driven primarily by a
$354,000 increase in Service Charges on Deposit Accounts.

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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 the
three months ended March 31, 2022 and 2021 were $1.6 million and $1.2 million.
The total daily overdraft charges, net of refunds, included in interest income
for the three months ended March 31, 2022 and 2021 were $288,000 and $249,000.

Mortgage Banking segment

A significant rise in long-term interest rates during the first quarter of 2022
led to a significant slowdown in the origination and subsequent sale of mortgage
loans into the secondary market. As a result, Mortgage Banking income decreased
from $7.2 million during the first quarter of 2021 to $2.7 million for the first
quarter of 2022. For the first quarter of 2022, the Bank sold $119 million in
secondary market loans and achieved an average
cash-gain-as-a-percent-of-loans-sold during the quarter of 2.29%. During the
first quarter of 2021, however, long-term interest rates were still near
historical lows, driving secondary market loan sales of $204 million with
comparable cash-gain-as-a-percent-of-loans-sold of 3.95%.

With the FOMC forecasting an end to its quantitative easing program in March
2022 and a more aggressive and hawkish approach to its monetary policies during
2022, management believes it is likely that the Core Bank's mortgage origination
volume will continue to be negatively impacted by rising interest rates causing
additional declines in mortgage banking income throughout 2022.

Tax Refund Solutions segment

TRS's noninterest income increased $4.2 million, or 31%, during the first
quarter of 2022 compared to the same period in 2021. As previously disclosed,
Green Dot paid RB&T a contract termination fee of $5.0 million during the first
quarter of 2022 after RB&T provided Green Dot a notice of termination of the
Purchase Agreement for the sale of substantially all of RB&T's TRS assets and
operations to Green Dot. RB&T maintains that its notice of termination of the
Purchase Agreement and corresponding payment of the $5.0 million termination fee
does not release Green Dot from any liability, in addition to the termination
fee, related to the Sale Transaction occurring before RB&T's notice of
termination.

Regarding TRS's RT product, net RT revenue decreased 5% from $12.7 million
during the first quarter of 2021 to $12.1 million during the same period in
2022. RT revenue for the first quarter of 2022 was negatively impacted by the
departure of one of TRS's Tax Providers, who ended their relationship with the
Bank following the announcement of the Purchase Agreement. The loss of this
revenue was partially offset during the first quarter of 2022 by higher RT
volume from TRS's remaining Tax Providers. The higher first quarter 2022 RT
volume from the remaining Tax Providers was partially driven by the two-week
delay in the 2021 tax season, with this year-over-year difference in volume
expected to recede as the 2022 tax season winds down and the impact of the 2021
delay diminishes.

For factors affecting the comparison of the TRS results of operations for the
first quarter of 2022 and the first quarter of 2021, see section titled
“OVERVIEW (Three Months Ended March 31, 2022 Compared to Three Months Ended
March 31, 2021) – Tax Refund Solutions.”

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Republic Credit Solutions segment

RCS's noninterest income increased $1.8 million, or 135%, during the first
quarter of 2022 compared to the same period in 2021, with program fees
representing the entirety of RCS's noninterest income. The increase in RCS
program fees primarily reflected higher sales volume from RCS's line of credit
and installment loan products as sales volume was negatively impacted during the
first quarter of 2021 by federal government stimulus programs implemented to
combat the economic impact of the COVID pandemic. Proceeds from the sale of RCS
loan products totaled $256 million during the first quarter of 2022, a 138%
increase from the same period in 2021.

The following table presents RCS program fees by product:

Table 7 – RCS Program Fees by Product

                            Three Months Ended Mar. 31,
(in thousands)              2022                        2021     $ Change   % Change
Product:
Lines of credit       $          1,188                 $   768  $      420      55 %
Hospital receivables                61                      48          13      27
Installment loans*               1,878                     513       1,365      NM
Total                 $          3,127                 $ 1,329  $    1,798     135 %

* 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

Total Company noninterest expense increased $762,000, or 2%, during the first
quarter of 2022 compared to the same period in 2021.

The following were the most significant components comprising the increase in
noninterest expense by reportable segment:

Traditional Banking segment

Traditional Banking noninterest expense increased $891,000 for the first quarter
of 2022 compared to the same period in 2021. The following primarily drove the
change in noninterest expense:

Other expenses increased $726,000. Within this increase the most notable change

was a $250,000 increase in fraud losses, as the Bank’s clients experienced an

? increase in fraudulent check activity during the quarter. As required by

regulation, the Traditional Bank reimburses its clients for these specific

types of check fraud losses as they are incurred.

Salaries and benefits expense decreased approximately $180,000, or 1%,

? primarily driven by a reduction in health benefits costs partially offset by

annual merit increases and a 34-count decrease in FTE’s from period to period.


Mortgage Banking segment

Noninterest expense at the Mortgage Banking segment decreased $431,000, or 14%,
during the first quarter of 2022 compared to the same period in 2021, primarily
due to a reduction in mortgage commissions, which declined consistent with the
previously discussed period-to-period decrease in mortgage origination volume.

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COMPARISON OF FINANCIAL CONDITION AS OF MARCH 31, 2022 AND DECEMBER 31, 2021

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 $1.1 billion in cash and cash equivalents as of March 31, 2022
compared to $757 million as of December 31, 2021. The growth in cash balances
was driven by continued growth in deposit balances, including $100 million of
short-term tax refund deposits at TRS. As described in the "Investment
Securities" section below, management began some deployment of its excess cash
through the purchase of longer-term investment securities during the fourth
quarter of 2021, with additional purchases made during the first quarter of 2022
as a result of a recent steepening of the yield curve.

For cash held at the FRB, the Bank earns a yield on amounts more than required
reserves. This cash earned a weighted-average yield of 0.20% during the first
quarter of 2022 with a spot balance yield of 0.40% on March 31, 2022. For cash
held within the Bank's banking center and ATM networks, the Bank does not earn
interest.

Investment Securities

During the first quarter of 2022, the Bank purchased $116 million in investment
debt securities, allocated among $86 million in U.S. Treasuries, a $20 million
MBS, and a $10 million U.S. government agency security. The U.S. Treasuries had
an expected weighted-average yield of approximately 1.51% and a weighted average
life at purchase of 2.5 years. The MBS had an expected yield of approximately
1.25% and a stated maturity at purchase of 10 years. The U.S. Government agency
had an expected yield of approximately 1.39% and a maturity of 10 years.

Entering the second quarter of 2022, management believes investment securities
with a maturity of approximately two years offer an attractive risk-based return
as compared to overnight cash at the Federal Reserve. As a result, management
anticipates the Company will make additional purchases of investment securities
during the second quarter of 2022 targeting a maturity of approximately two
years. The overall timing of these purchases and the amount of these purchases
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.

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Table 8 – Loan Portfolio Composition

(dollars in thousands)                   March 31, 2022      December 31, 

2021 $ Change Percent Change

Traditional Banking:
Residential real estate:
Owner occupied                          $        808,658    $           820,731   $   (12,073)          (1)    %
Nonowner occupied                                314,933                306,323          8,610            3
Commercial real estate                         1,556,575              1,456,009        100,566            7
Construction & land development                  129,970                129,337            633            0
Commercial & industrial                          342,175                340,363          1,812            1
Paycheck Protection Program                       18,276                 56,014       (37,738)         (67)
Lease financing receivables                       10,396                  8,637          1,759           20
Aircraft                                         151,284                142,894          8,390            6
Home equity                                      210,364                210,578          (214)          (0)
Consumer:
Credit cards                                      14,654                 14,510            144            1
Overdrafts                                           716                    683             33            5
Automobile loans                                  11,846                 14,448        (2,602)         (18)
Other consumer                                       939                  1,432          (493)         (34)
Total Traditional Banking                      3,570,786              3,501,959         68,827            2
Warehouse lines of credit*                       690,200                850,550      (160,350)         (19)
Total Core Banking                             4,260,986              4,352,509       (91,523)          (2)

Republic Processing Group*:
Tax Refund Solutions:
Easy Advances                                     16,475                      -         16,475           NM
Other TRS loans                                   25,132                 50,987       (25,855)         (51)
Republic Credit Solutions                         87,650                 93,066        (5,416)          (6)
Total Republic Processing Group                  129,257                144,053       (14,796)         (10)

Total loans**                                  4,390,243              4,496,562      (106,319)          (2)
Allowance for credit losses                     (71,656)               (64,577)        (7,079)           11

Total loans, net                        $      4,318,587    $         4,431,985   $  (113,398)          (3)

*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 $106 million, or 2%, during the first quarter of 2022
to $4.4 billion as of March 31, 2022. The most significant components comprising
the change in loans by reportable segment follow:

Traditional Banking segment

Period-end balances for Traditional Banking loans increased $69 million, or 2%,
from December 31, 2021 to March 31, 2022. The following primarily drove the
change in loan balances during the first quarter of 2022:

CRE loans grew $101 million, or 7%, during the first quarter of 2022, as the

? Traditional Bank experienced strong loan demand within its Corporate Lending

division and its Northern Kentucky/Cincinnati market.

Offsetting the growth above, during the first quarter of 2022, the Core Bank’s

? PPP portfolio decreased $38 million, as this temporary government program

continued to wind down.


The CARES Act was enacted in March 2020 and provided for the SBA's PPP, which
allowed the Bank to lend to its qualifying small business clients to assist them
in their efforts to meet their cash-flow needs during the COVID pandemic. The
Economic Aid Act was enacted in December 2020 and provided for a second round of
PPP loans. PPP loans are fully backed by the SBA and may be entirely forgiven if
the loan client uses loan funds for qualifying reasons. As of March 31,

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2022, net PPP loans of $18 million remained on the Traditional Bank’s balance
sheet, including $3 million in loan balances originated during 2020 and $15
million
in loan balances originated during 2022.

Warehouse Lending segment

Outstanding Warehouse period-end balances decreased $160 million from December
31, 2021 to March 31, 2022. 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 previously discussed, additional increases in short-term interest rates and
overall market rates are generally believed by management to be unfavorable to
Warehouse's client demand, likely leading to a reduction in average outstanding
balances as higher long-term interest rates generally drive lower demand for
Warehouse borrowings.

Tax Refund Solutions segment
Outstanding TRS loans decreased $9 million from December 31, 2021 to March 31,
2022 primarily reflecting $16 million of unpaid EAs partially offset by a $25
million reduction in other TRS loans. EAs are only made during the first two
months of each year, with all unpaid EAs charged off by June 30th of each year.
Other TRS loans as of December 31, 2021 were primarily commercial loans to Tax
Providers. These loans are typically made in the fourth quarter of each year and
fully repaid by the end of the first quarter of the following year.

Republic Credit Solutions segment

Outstanding RCS loans decreased $5 million from December 31, 2021 to March 31,
2022
primarily reflecting a $2 million decrease in outstanding balances for
RCS’s LOC I product and a $2 million decrease in hospital receivables.

Allowance for Credit Losses

As of March 31, 2022, 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 $7 million from $65 million as of December 31, 2021
to $72 million as of March 31, 2022. As a percent of total loans, the total
Company's ACLL increased to 1.63% as of March 31, 2022 compared to 1.44% as of
December 31, 2021. An analysis of the ACL by reportable segment follows:

Traditional Banking segment

The Traditional Banking ACLL increased approximately $209,000 to $50 million as
of March 31, 2022 driven primarily by formula reserves tied to loan growth
during the first quarter of 2022.

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Warehouse Lending segment

The Warehouse ACLL decreased to approximately $1.7 million, and the Warehouse
ACLL to total Warehouse loans remained at 0.25% when comparing March 31, 2022 to
December 31, 2021. As of March 31, 2022, the Warehouse ACLL was entirely
qualitative in nature with no adjustments to the qualitative reserve percentage
required for the first quarter of 2022.

Tax Refund Solutions segment

The TRS ACLL increased to $8 million as of March 31, 2022 from $96,000 as of
December 31, 2021, driven primarily by estimated losses on TRS's EA product. Due
to the seasonal nature of the EA, estimated reserves are generally made during
the first two months of the year when the product is offered, with losses
charged against those reserves in the second quarter of each year. Based on the
timing of EA reserves versus charge-offs, the ACLL for EAs to total remaining
outstanding EAs is relatively substantial at the end of the first quarter, or
50% and 52% as of March 31, 2022 and March 31, 2021. The Company provided an
ACLL for expected losses equal to 2.67% of total originations during the first
quarter of 2022 as compared to 6.41% during the first quarter of 2021 because a
lower percentage of EAs remained outstanding as of March 31, 2022 compared to
March 31, 2021.  Management believes it has adequately adjusted its expected
loss rate to absorb EA losses based on information known through the date of
this filing.

Republic Credit Solutions segment

The RCS ACLL decreased $1 million from $13 million as of December 31, 2021 to
$12 million as of March 31, 2022, with this decrease driven by a decrease in RCS
loan balances.

RCS maintained an ACLL for two distinct credit products offered as of March 31,
2022, including its line-of-credit products and its healthcare-receivables
products. As of March 31, 2022, 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.

Asset Quality

COVID Loan Accommodations

The CARES Act provided several forms of economic relief designed to defray the
impact of COVID. 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 March 31, 2022, $148,000, or less than 1% of the Company’s Traditional
Bank
portfolio remained under a COVID hardship accommodation.

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 decreased approximately $10 million during the first
quarter of 2022, driven primarily by commercial-purpose loans repaid or upgraded
to a Pass rating during the first quarter of 2022.

See Footnote 4 “Loans and Allowance for Credit Losses” of Part I Item 1
“Financial Statements” for additional discussion regarding Classified and
Special Mention loans.

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Table 9 – Classified and Special Mention Loans

(dollars in thousands)                March 31, 2022      December 31, 2021     $ Change    % Change

Loss                                 $              -    $                 -   $        -          - %
Doubtful                                            -                      -            -          -
Substandard                                    18,681                 21,714      (3,033)       (14)
PCD* - Substandard                              1,644                  1,692         (48)        (3)
Total Classified Loans                         20,325                 23,406      (3,081)       (13)

Special Mention                               107,186                114,496      (7,310)        (6)
PCD* - Special Mention                            776                    795         (19)        (2)
Total Special Mention Loans                   107,962                

115,291 (7,329) (6)

Total Classified and Special
Mention Loans                        $        128,287    $           138,697   $ (10,410)        (8) %


Nonperforming Loans

Nonperforming loans include loans on nonaccrual status and loans past due
90-days-or-more and still accruing. The nonperforming loan category includes
TDRs totaling approximately $6 million and $6 million as of March 31, 2022 and
December 31, 2021.

Nonperforming loans to total loans decreased to 0.39% at March 31, 2022 from
0.46% at December 31, 2021, as the total balance of nonperforming loans
decreased by $4 million, or 17%, while total loans decreased $106 million, or
2%, during the first quarter of 2022. As presented in Tables 13 and 14 below,
the decrease in nonperforming loans during 2022, 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 423% as of March 31, 2022
from 315% as of December 31, 2021, as the total ACLL increased $7 million, or
11%, and the balance of nonperforming loans decreased by $4 million, or 17%. The
driver of the increase in ACLL was primarily EAs originated through the
Company's TRS segment, while the driver of the decrease in nonperforming loans
was primarily the refinancing out of the Bank of $5 million of these loans
during the first quarter of 2022.

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Table 10 – Nonperforming Loans and Nonperforming Assets Summary

(dollars in thousands)                         March 31, 2022         December 31, 2021

Loans on nonaccrual status*                   $          16,935      $            20,504
Loans past due 90-days-or-more and still
on accrual**                                                 31                       48
Total nonperforming loans                                16,966                   20,552
Other real estate owned                                   1,740                    1,792
Total nonperforming assets                    $          18,706      $            22,344

Credit Quality Ratios - Total Company:
ACLL to total loans                                        1.63 %                   1.44 %
Nonaccrual loans to total loans                            0.39            

0.46

ACLL to nonaccrual loans                                    423            

315

Nonperforming loans to total loans                         0.39            

0.46

Nonperforming assets to total loans
(including OREO)                                           0.43            

0.50

Nonperforming assets to total assets                       0.29            

0.37

Credit Quality Ratios - Core Bank:
ACLL to total loans                                        1.20 %                   1.18 %
Nonaccrual loans to total loans                            0.40            

0.47

ACLL to nonaccrual loans                                    303            

251

Nonperforming loans to total loans                         0.40            

0.47

Nonperforming assets to total loans
(including OREO)                                           0.44            

0.51

Nonperforming assets to total assets                       0.33            

0.40

Loans on nonaccrual status include collateral-dependent loans. See Footnote 4
* “Loans and Allowance for Credit Losses” of Part I Item 1 “Financial Statements”

for additional discussion regarding collateral-dependent loans.

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

consumer loans.

Table 11 – Nonperforming Loan Composition

                                       March 31, 2022            December 31, 2021
                                                Percent of                   Percent of
                                                  Total                        Total
(dollars in thousands)              Balance     Loan Class     Balance       Loan Class

Traditional Banking:
Residential real estate:
Owner occupied                       $ 11,728     1.45 %       $    12,039     1.47 %
Nonowner occupied                         132     0.04                  95     0.03
Commercial real estate                  3,581     0.23               6,557     0.45
Construction & land development             -        -                   - 
      -
Commercial & industrial                     -        -                  13     0.00
Paycheck Protection Program                 -        -                   -        -
Lease financing receivables                 -        -                   -        -
Aircraft                                    -        -                   -        -
Home equity                             1,431     0.68               1,700     0.81
Consumer:
Credit cards                                -        -                   -        -
Overdrafts                                  -        -                   1     0.15
Automobile loans                           60     0.51                  97     0.67
Other consumer                              3     0.32                   3     0.21
Total Traditional Banking              16,935     0.47              20,505     0.59
Warehouse lines of credit                   -        -                   -        -
Total Core Banking                     16,935     0.40              20,505     0.47

Republic Processing Group:
Tax Refund Solutions:
Easy Advances                               -        -                   -        -
Other TRS loans                             -        -                   -        -
Republic Credit Solutions                  31     0.04                  47     0.05
Total Republic Processing Group            31     0.02                  47 
   0.03

Total nonperforming loans            $ 16,966     0.39 %       $    20,552     0.46 %



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Table 12 – Stratification of Nonperforming Loans

                                                  Number of Nonperforming 

Loans and Recorded Investment

                                                                  Balance
March 31, 2022                              Balance              > $100 &               Balance                 Total
(dollars in thousands)              No.     <= $100       No.     <= $500       No.      > $500        No.     Balance

Traditional Banking:
Residential real estate:
Owner occupied                       148    $  4,853       31    $   5,370        1    $    1,505       180    $ 11,728
Nonowner occupied                      4         132        -            -        -             -         4         132
Commercial real estate                 -           -        1          264        2         3,317         3       3,581
Construction & land development        -           -        -            -        -             -         -           -
Commercial & industrial                -           -        -            -        -             -         -           -
Paycheck Protection Program            -           -        -            -        -             -         -           -
Lease financing receivables            -           -        -            - 
      -             -         -           -
Aircraft                               -           -        -            -        -             -         -           -
Home equity                           25         643        5          788        -             -        30       1,431
Consumer:
Credit cards                           -           -        -            -        -             -         -           -
Overdrafts                            NM           -        -            -        -             -        NM           -
Automobile loans                       7          60        -            -        -             -         7          60
Other consumer                         3           3        -            -        -             -         3           3
Total Traditional Banking            187       5,691       37        6,422        3         4,822       227      16,935
Warehouse lines of credit              -           -        -            -        -             -         -           -
Total Core Banking                   187       5,691       37        6,422 

3 4,822 227 16,935

Republic Processing Group:
Tax Refund Solutions:
Easy Advances                          -           -        -            -        -             -         -           -
Other TRS loans                        -           -        -            -        -             -         -           -
Republic Credit Solutions             NM          31        -            -        -             -        NM          31
Total Republic Processing Group       NM          31        -            -        -             -        NM          31

Total                                187    $  5,722       37    $   6,422        3    $    4,822       227    $ 16,966


                                                   Number of Nonperforming Loans and Recorded Investment
                                                                   Balance
December 31, 2021                            Balance              > $100 &               Balance                 Total
(dollars in thousands)              No.      <= $100       No.     <= $500       No.      > $500        No.     Balance

Traditional Banking:
Residential real estate:
Owner occupied                       146     $  5,042       27    $   4,857        2    $    2,140       175    $ 12,039
Nonowner occupied                      3           95        -            -        -             -         3          95
Commercial real estate                 -            -        4          872        3         5,685         7       6,557
Construction & land development        -            -        -            -
       -             -         -           -
Commercial & industrial                1           13        -            -        -             -         1          13
Paycheck Protection Program            -            -        -            -        -             -         -           -
Lease financing receivables            -            -        -            -        -             -         -           -
Aircraft                               -            -        -            -        -             -         -           -
Home equity                           25          695        5        1,005        -             -        30       1,700
Consumer:
Credit cards                           -            -        -            -        -             -        NM           -
Overdrafts                            NM            1        -            -        -             -        NM           1
Automobile loans                      13           97        -            -        -             -        13          97
Other consumer                         4            3        -            -        -             -         4           3
Total Traditional Banking            192        5,946       36        6,734        5         7,825       233      20,505
Warehouse lines of credit              -            -        -            -        -             -         -           -
Total Core Banking                   192        5,946       36        6,734        5         7,825       233      20,505

Republic Processing Group:
Tax Refund Solutions:
Easy Advances                          -            -        -            -        -             -         -           -
Other TRS loans                        -            -        -            -        -             -         -           -
Republic Credit Solutions             NM           47        -            -        -             -        NM          47
Total Republic Processing Group       NM           47        -            -
       -             -        NM          47

Total                                192     $  5,993       36    $   6,734        5    $    7,825       233    $ 20,552


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Table 13 – Rollforward of Nonperforming Loans

                                                              Three Months Ended
                                                                  March 31,
(in thousands)                                                2022           2021

Nonperforming loans at the beginning of the period $ 20,552 $

23,595

Loans added to nonperforming status during the
period that remained nonperforming at the end of
the period                                                       1,607     

846

Loans removed from nonperforming status during the
period that were nonperforming at the beginning of
the period (see table below)

                                   (4,799)      

(1,891)

Principal balance paydowns of loans nonperforming
at both period ends                                              (378)     

(499)

Net change in principal balance of other loans
nonperforming at both period ends*                                (16)     

470

Nonperforming loans at the end of the period              $     16,966    $

22,521

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

Table 14 – Detail of Loans Removed from Nonperforming Status

                                                              Three Months Ended
                                                                  March 31,
(in thousands)                                               2022           2021

Loans charged off                                         $         -    $         -
Loans transferred to OREO                                           -              -
Loans refinanced at other institutions                        (4,595)      

(1,891)

Loans returned to accrual status                                (204)      

Total loans removed from nonperforming status
during the period that were nonperforming at the
beginning of the period                                   $   (4,799)    $ 

(1,891)

Based on the Bank’s review as of March 31, 2022, management believes that its
reserves are adequate to absorb expected losses on all nonperforming loans.

Delinquent Loans

Total Company delinquent loans to total loans increased to 0.37% as of
March 31, 2022 from 0.30% as of December 31, 2021. Core Bank delinquent loans to
total Core Bank loans decreased to 0.14% as of March 31, 2022 from 0.17% as of
December 31, 2021. With the exception of small-dollar consumer loans, all
Traditional Bank loans past due 90-days-or-more as of March 31, 2022 and
December 31, 2021 were on nonaccrual status.

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Table 15 – Delinquent Loan Composition*

                                        March 31, 2022          December 31, 2021
                                                Percent of                Percent of
                                                   Total                     Total
(dollars in thousands)               Balance    Loan Class    Balance     Loan Class

Traditional Banking:
Residential real estate:
Owner occupied                        $  2,628      0.32 %      $  1,599      0.19 %
Nonowner occupied                           41      0.01               -         -
Commercial real estate                   2,464      0.16           5,292      0.36
Construction & land development              -         -               -   
     -
Commercial & industrial                      -         -              21      0.01
Paycheck Protection Program                  -         -               -         -
Lease financing receivables                  -         -               -         -
Aircraft                                     -         -               -         -
Home equity                                555      0.26             314      0.15
Consumer:
Credit cards                                39      0.27              30      0.21
Overdrafts                                 119     16.62             164     24.01
Automobile loans                            17      0.14               9      0.06
Other consumer                               -         -               1      0.07
Total Traditional Banking                5,863      0.16           7,430      0.21
Warehouse lines of credit                    -         -               -         -
Total Core Banking                       5,863      0.14           7,430      0.17

Republic Processing Group:
Tax Refund Solutions:
Easy Advances                            4,524     27.46               -         -
Other TRS loans                            160      0.64               -         -
Republic Credit Solutions                5,668      6.47           6,035      6.48
Total Republic Processing Group         10,352      8.01           6,035   
  4.19

Total delinquent loans                $ 16,215      0.37 %      $ 13,465      0.30 %

* 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.

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Table 16 – Rollforward of Delinquent Loans

                                                            Three Months Ended
                                                                March 31,
(in thousands)                                              2022          2021
Delinquent loans at the beginning of the period          $   13,465    $   19,947
Loans that became delinquent during the period -
Easy Advances*                                                4,524        

Loans added to delinquency status during the
period and remained in delinquency status at the
end of the period                                             2,103        

992

Loans removed from delinquency status during the
period that were in delinquency status at the
beginning of the period (see table below)                   (3,604)       

(2,017)

Principal balance paydowns of loans delinquent at
both period ends                                               (28)        

(29)

Net change in principal balance of other loans
delinquent at both period ends**                              (245)       

(3,907)

Delinquent loans at the end of period                    $   16,215    $  

14,986

EAs do not have a contractual due date but the Company considered an EA
* delinquent in 2022 and 2021 if it remained unpaid 35 days after the taxpayer’s

tax return was submitted to the applicable taxing authority.

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

Table 17 – Detail of Loans Removed from Delinquent Status

                                                            Three Months Ended
                                                                March 31,
(in thousands)                                              2022          2021

Loans charged off                                        $      (1)    $         -
Easy Advances paid off or charged off                             -        

Loans transferred to OREO                                         -        

Loans refinanced at other institutions                      (3,418)       

(1,270)

Loans paid current                                            (185)        

(747)

Total loans removed from delinquency status during
the period that were in delinquency status at the
beginning of the period

                                  $  (3,604)    $   

(2,017)

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 18 – Collateral-Dependent Loans and Troubled Debt Restructurings

(dollars in thousands)                March 31, 2022      December 31, 2021

$ Change % Change

Cashflow-dependent TDRs               $         4,963    $             5,960   $      (997)      (17)  %
Collateral-dependent TDRs                      10,224                  9,426            798         8
Total TDRs                                     15,187                 15,386          (199)       (1)
Collateral-dependent loans (which
are not TDRs)                                  10,935                 14,645        (3,710)      (25)
Total recorded investment in TDRs
and collateral-dependent loans        $        26,122    $            

30,031 $ (3,909) (13) %

See Footnote 4 “Loans and Allowance for Credit Losses” of Part I Item 1
“Financial Statements” for additional discussion regarding collateral-dependent
loans and TDRs.

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Deposits

Table 19 – Deposit Composition

(dollars in thousands)               March 31, 2022      December 31, 2021     $ Change    % Change

Core Bank:
Demand                              $      1,415,655    $         1,381,522   $   34,133          2 %
Money market accounts                        793,953                789,876        4,077          1
Savings                                      327,358                311,624       15,734          5
Individual retirement accounts
(1)                                           42,149                 43,724      (1,575)        (4)
Time deposits, $250 and over (1)              60,738                 81,050     (20,312)       (25)
Other certificates of deposit
(1)                                          139,735                154,174     (14,439)        (9)
Reciprocal money market and time
deposits (1)                                  70,030                 77,950      (7,920)       (10)
Brokered deposits (1)                              -                      -            -          -
Total Core Bank interest-bearing
deposits                                   2,849,618              2,839,920        9,698          0
Total Core Bank
noninterest-bearing deposits               1,630,926              1,579,173       51,753          3
Total Core Bank deposits                   4,480,544              4,419,093       61,451          1

Republic Processing Group:
Money market accounts                         10,774                  9,717        1,057         11
Total RPG interest-bearing
deposits                                      10,774                  9,717        1,057         11
Brokered prepaid card deposits               412,746                320,907       91,839         29
Other noninterest-bearing
deposits                                     183,042                 90,701       92,341        102
Total RPG noninterest-bearing
deposits                                     595,788                411,608      184,180         45
Total RPG deposits                           606,562                421,325      185,237         44

Total deposits                      $      5,087,106    $         4,840,418   $  246,688          5 %


(1) Includes time deposit

Total Company deposits increased $247 million, or 5%, from December 31, 2021 to
$5.1 billion as of March 31, 2022.

Total Core Bank deposits increased minimally by $61 million, or 1%, with no
notable changes during the quarter.

Total RPG deposits increased $185 million, or 44%, for the first quarter of
2022, with the following primarily driving growth:

? RPG noninterest-bearing deposits growth was primarily driven by the following:

RPG’s other noninterest-bearing deposits increased approximately $92 million

? due to seasonal short-term RT deposits generated within the TRS segment. These

deposits are expected to exit the Bank during the next quarter.

RPS’s prepaid card balances within its RPS division of TRS increased $92

? million, driven primarily by tax-refund related deposits loaded onto prepaid

cards during the first quarter of 2022.

Federal Home Loan Bank Advances

The Bank held $20 million of long-term FHLB advances at March 31, 2022 compared
to $25 million of overnight FHLB advances as of December 31, 2021. During the
first quarter of 2022, the Bank extended the term on $20 million of its FHLB
advances in anticipation of increasing long-term interest rates and repaid the
remaining $5 million. As of March 31, 2022, the Company's $20 million of FHLB
advances had a weighted average maturity of five years and a weighted average
cost of 1.89%.

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.

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Interest Rate Swaps
The Bank enters 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 12 “Interest Rate Swaps” of Part I Item 1 “Financial Statements”
for additional discussion regarding the Bank’s interest rate swaps.

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 20 – Liquid Assets and Borrowing Capacity

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

(in thousands)                                        March 31, 2022      December 31, 2021

Cash and cash equivalents                            $      1,077,158    $           756,971
Unincumbered debt securities                                  281,521                219,775
Total liquid assets                                         1,358,679                976,746
Borrowing capacity with the FHLB                              887,520      

900,424

Borrowing capacity through unsecured credit lines             125,000      

125,000

Total borrowing capacity                                    1,012,520      

1,025,424

Total liquid assets and borrowing capacity           $      2,371,199    $ 

2,002,170


The Bank had a loan to deposit ratio (excluding brokered deposits) of 94% as of
March 31, 2022 and 99% as of December 31, 2021. 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 March 31, 2022, the Bank had approximately $1.5 billion in deposits from
244 large non-sweep deposit relationships, including reciprocal deposits, where
the individual relationship exceeded $2 million. The 20 largest non-sweep
deposit relationships represented approximately $520 million, or 10%, of the
Company's total deposit balances as of as of March 31, 2022. 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
March 31, 2022 and December 31, 2021, these pledged investment securities had a
fair value of $331 million and $320 million.

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Capital

Total stockholders' equity increased from $834 million as of December 31, 2021
to $840 million as of March 31, 2022. The increase in stockholders' equity was
primarily attributable to net income earned during 2022 reduced primarily by
cash dividends declared.

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 RB&T. 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 April 1, 2022, RB&T could, without
prior approval, declare dividends of approximately $123 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 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. Republic's
average stockholders' equity to average assets ratio was 13.19% as of
March 31, 2022 compared to 13.41% as of December 31, 2021. Formal measurements
of the capital ratios for Republic and the Bank are performed by the Company at
each quarter end.

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Table 21 – Capital Ratios (1)

                                           As of March 31, 2022         As of December 31, 2021
(dollars in thousands)                       Amount         Ratio         Amount           Ratio

Total capital to risk-weighted assets
Republic Bancorp, Inc.                    $     906,036     18.13 %   $      878,488         17.47 %
Republic Bank & Trust Company                   873,513     17.49          

861,815 17.14

Common equity tier 1 capital to
risk-weighted assets
Republic Bancorp, Inc.                    $     843,538     16.88 %   $      823,504         16.37 %
Republic Bank & Trust Company                   811,075     16.24            806,831         16.05

Tier 1 (core) capital to risk-weighted
assets
Republic Bancorp, Inc.                    $     843,538     16.88 %   $      823,504         16.37 %
Republic Bank & Trust Company                   811,075     16.24            806,831         16.05

Tier 1 leverage capital to average
assets
Republic Bancorp, Inc.                    $     843,538     13.15 %   $      823,504         13.35 %
Republic Bank & Trust Company                   811,075     12.65            806,831         13.10

The Company and the Bank elected in 2020 to defer the impact of CECL on

regulatory capital. The deferral period is five years, with the total
(1) estimated CECL impact 100% deferred for the first two years, then phased in

over the next three years. If not for this election, the Company’s regulatory

capital ratios would have been approximately 15 basis points lower than those

presented in the table above as of March 31, 2022 and December 31, 2021.

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
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.

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As of March 31, 2022, 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 over the period beginning April 1, 2022 and ending March 31, 2023 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 includes secondary market loan fees and excludes Traditional
Bank loan fees.

Table 22 – Bank Interest Rate Sensitivity

                                                                       Change in Rates
                                          -100             +100             +200             +300             +400
                                      Basis Points     Basis Points    

Basis Points Basis Points Basis Points

% Change from base net interest
income as of March 31, 2022                     2.0 %            0.2 %            2.5 %            4.9 %            7.7 %
% Change from base net interest
income as of December 31, 2021                  1.3 %          (0.6) %            0.7 %            4.7 %            9.3 %


For the Down-100, Up-100, Up-200, and Up-300 scenarios, the March 31, 2022
simulation reflected a more positive outcome for the Bank's net interest income
than the comparable December 31, 2021 simulation. For the Up-400 scenario, the
December 2021 simulation reflected a more positive outcome than the March 2022
simulation. The changes in simulation outcomes from December 2021 to March 2022
was primarily due to the following:

? The positive impact from the growth in interest-earning cash balances from

December 2021 to March 2022;

The negative impact from a larger projected decline in secondary market fees

? for the March 2022 Up-400 simulation than previously projected for the December

   2021 simulation.


LIBOR Exposure

In July 2017, the Financial Conduct Authority ("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. 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.

Regarding its legacy assets that reference LIBOR, the Bank has previously
disclosed that the underlying contracts for these assets may not include
adequate "fallback" language to use alternative indexes and margins when LIBOR
ceases. However, on March 15, 2022, President Biden signed into law the
Adjustable Interest Rate (LIBOR) Act (the "LIBOR Law"), which is designed to
accomplish the following:

Establish a clear and uniform process, on a nationwide basis, for replacing

? LIBOR in existing contracts the terms of which do not provide for the use of a

clearly defined or practicable replacement benchmark rate, without affecting

the ability of parties to use any appropriate benchmark rate in new contracts;

Preclude litigation related to existing contracts, the terms of which do not

? provide for the use of a clearly defined or practicable replacement benchmark

rate;

Allow existing contracts that reference LIBOR but provide for the use of a

? clearly defined and practicable replacement rate to operate according to their

terms; and

? Address LIBOR references in federal law.


With limited exception, the LIBOR Law generally covers legacy LIBOR contracts
with no or inadequate fallback provisions. Additionally, under the LIBOR Law, by
September 11, 2022, the Board of Governors of the Federal Reserve System (the
"Board") must issue regulations to give effect to the law, including the
selection of a Board-Selected Benchmark Replacement that is based on SOFR and
incorporates an applicable tenor spread adjustment and the identification of any
related conforming changes.

As of March 31, 2022, the Company had approximately $1.1 billion of legacy
assets that reference LIBOR, with short-term Warehouse loans representing $631
million of these assets and commercial and mortgage loans primarily making up
the remainder. As of March 31, 2021, of the Bank's legacy assets that reference
LIBOR, approximately $434 million of those assets were scheduled to mature after
June 30, 2023. These amounts exclude derivative assets and liabilities on the
Company's consolidated balance sheet.

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As of March 31, 2022, the notional amount of the Company’s LIBOR-referenced
interest rate derivative contracts was approximately $246 million, with $230
million
of such notional scheduled to mature after June 30, 2023.

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 (Three months ended March 31, 2022 Compared to Three
months ended March 31, 2021.”)

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