17. SUBSEQUENT EVENTS

COVID-19 was declared a pandemic by the World Health Organization on March 11, 2020. During March 2020, to slow the spread of COVID-19, jurisdictions within the U.S. began to impose increasingly tighter economic and social restrictions on the population in general and non-essential businesses in particular. These restrictions effectively suspended or curtailed economic activity for many industries across the U.S., with industries in the Company’s market footprint impacted.

The potential financial impact of the COVID-19 pandemic is unknown at this time; however, this pandemic and the public’s response to it could cause the Company to experience a material adverse impact on its business operations, asset valuations, financial condition, and results of operations. Material adverse impacts may include all or a combination of valuation impairments on the Company’s intangible assets, investments, loans, MSRs, deferred tax assets, or counter-party risk derivatives.

On March 27, 2020, the U.S. Congress passed the CARES Act, which provided several forms of economic relief designed to defray the impact of COVID-19. In April 2020, through its own independent relief efforts and CARES Act provisions, the Company began deferring and forbearing on loan principal and/or interest payments for many of its loan clients. The deferral and forbearance periods were generally three months. Loans deferred or in forbearance as a result of the pandemic are generally not considered TDRs by the Company if, prior to the pandemic, the borrower was performing in accordance with loan terms. The following table illustrates the loans for which COVID-19 related deferral and forbearance agreements were executed subsequent to March 31, 2020 and through April 30, 2020.


	Loans Deferred			Loans in Forbearance
April 30, 2020 (dollars in thousands)	# of Loans (1)	Balance(1)		# of Loans (1)	Balance(1)

Traditional Banking:
Residential real estate:
Owner occupied	166	$	33,756	22	$	6,611
Nonowner occupied	191		43,422	—		—
Commercial real estate	468		373,235	—		—
Construction & land development	15		9,660	—		—
Commercial & industrial	310		98,373	—		—
Lease financing receivables	5		159	—		—
Home equity	73		11,316	1		44
Consumer:
Credit cards(2)	—		—	—		—
Overdrafts	—		—	—		—
Automobile loans	49		923	—		—
Other consumer	14		2,981	—		—
Total Traditional Banking	1,291		573,825	23		6,655
Warehouse lines of credit	—		—	—		—
Total Core Banking	1,291		573,825	23		6,655

Republic Processing Group:
Tax Refund Solutions:	—		—	—		—
Easy Advances	—		—	—		—
Other TRS loans	—		—	—		—
Republic Credit Solutions	—		—	—		—
Total Republic Processing Group	—		—	—		—

Total loans	1,291	$	573,825	23	$	6,655

(1)

– Reflects loans modified and recorded on the Bank’s core loan systems. Excludes loans in process of modification.

(2)

– The Bank offered skip-a-pay options to its credit card clients during April 2020.

In addition to the on-balance sheet portfolio identified in the table above, the Bank serviced for others $11 million in loans at April 30, 2020 whose borrowers entered into COVID-19 related forbearance agreements subsequent to March 31, 2020. The Bank is required to forward up to four months of contractual payments to its investors for serviced loans even if the underlying borrower has not made these payments to the Bank.

The CARES Act provided for the SBA PPP. The PPP allows the Bank to lend to its qualifying small business clients to assist them in their efforts to meet their cash-flow needs during the pandemic. PPP loans are fully backed by the SBA and may be entirely forgiven if the loan client uses loan funds for qualifying reasons. The following table presents the number and amount of SBA PPP loans recorded on the Bank’s core loan applications subsequent to March 31, 2020 and as of April 30, 2020. Loans in process of origination are excluded from the table below.

To provide liquidity to banks administering the SBA’s PPP, the FRB created the PPPLF, a lending facility secured by the PPP loans of the participating banks. The FRB charges the banks a rate of 0.35% for the amounts borrowed through the PPPLF. As of April 30, 2020, the Bank had borrowed $175 million from the FRB under its PPPLF.

April 30, 2020 (dollars in thousands)

Investment

Traditional Banking:

Commercial & industrial