REVENUE FROM CONTRACTS WITH CUSTOMERS

6 Months Ended

Jun. 30, 2024

REVENUE FROM CONTRACTS WITH CUSTOMERS

REVENUE FROM CONTRACTS WITH CUSTOMERS

15. REVENUE FROM CONTRACTS WITH CUSTOMERS

The following tables present the Company’s net revenue and net revenue concentration by reportable segment:

	Three Months Ended June 30, 2024
	Core Banking									Republic Processing Group
							Total			Tax			Republic			Republic
	Traditional			Warehouse			Core			Refund			Payment			Credit			Total			Total
(dollars in thousands)	Banking			Lending			Banking			Solutions			Solutions			Solutions			RPG			Company
Net interest income (1)	$	49,915		$	2,914		$	52,829		$	823		$	2,930		$	11,954		$	15,707		$	68,536
Noninterest income:
Service charges on deposit accounts		3,513			13			3,526			—			—			—			—			3,526
Net refund transfer fees		—			—			—			3,811			—			—			3,811			3,811
Mortgage banking income (1)		1,612			—			1,612			—			—			—			—			1,612
Interchange fee income		3,313			—			3,313			36			1			1			38			3,351
Program fees (1)		—			—			—			—			760			3,638			4,398			4,398
Increase in cash surrender value of BOLI (1)		792			—			792			—			—			—			—			792
Net losses on OREO		(48)			—			(48)			—			—			—			—			(48)
Other		865			—			865			39			—			—			39			904
Total noninterest income		10,047			13			10,060			3,886			761			3,639			8,286			18,346
Total net revenue	$	59,962		$	2,927		$	62,889		$	4,709		$	3,691		$	15,593		$	23,993		$	86,882
Net-revenue concentration (2)		70	%		3	%		73	%		5	%		4	%		18	%		27	%		100	%

	Three Months Ended June 30, 2023
	Core Banking									Republic Processing Group
							Total			Tax			Republic			Republic
	Traditional			Warehouse			Core			Refund			Payment			Credit			Total			Total
(dollars in thousands)	Banking			Lending			Banking			Solutions			Solutions			Solutions			RPG			Company
Net interest income (1)	$	48,743		$	2,642		$	51,385		$	70		$	3,940		$	9,134		$	13,144		$	64,529
Noninterest income:
Service charges on deposit accounts		3,516			11			3,527			—			—			—			—			3,527
Net refund transfer fees		—			—			—			4,479			—			—			4,479			4,479
Mortgage banking income (1)		907			—			907			—			—			—			—			907
Interchange fee income		3,375			—			3,375			43			1			—			44			3,419
Program fees (1)		—			—			—			—			728			3,011			3,739			3,739
Increase in cash surrender value of BOLI (1)		689			—			689			—			—			—			—			689
Net losses on OREO		(52)			—			(52)			—			—			—			—			(52)
Death benefits in excess of cash surrender value of life insurance		1,728			—			1,728			—			—			—			—			1,728
Other		1,101			—			1,101			84			(10)			40			114			1,215
Total noninterest income		11,264			11			11,275			4,606			719			3,051			8,376			19,651
Total net revenue	$	60,007		$	2,653		$	62,660		$	4,676		$	4,659		$	12,185		$	21,520		$	84,180
Net-revenue concentration (2)		71	%		3	%		74	%		6	%		6	%		14	%		26	%		100	%

(1) This revenue is not subject to ASC 606.

(2) Net revenue represents net interest income plus total noninterest income. Net-revenue concentration equals segment-level net revenue divided by total Company net revenue.

	Six Months Ended June 30, 2024
	Core Banking									Republic Processing Group
							Total			Tax			Republic			Republic
	Traditional			Warehouse			Core			Refund			Payment			Credit			Total			Total
(dollars in thousands)	Banking			Lending			Banking			Solutions			Solutions			Solutions			RPG			Company
Net interest income (1)	$	98,174		$	5,171		$	103,345		$	31,733		$	6,438		$	23,939		$	62,110		$	165,455
Noninterest income:
Service charges on deposit accounts		6,812			26			6,838			—			—			1			1			6,839
Net refund transfer fees		—			—			—			14,631			—			—			14,631			14,631
Mortgage banking income (1)		1,922			—			1,922			—			—			—			—			1,922
Interchange fee income		6,430			—			6,430			75			2			1			78			6,508
Program fees (1)		—			—			—			—			1,533			7,044			8,577			8,577
Increase in cash surrender value of BOLI (1)		1,546			—			1,546			—			—			—			—			1,546
Net losses on OREO		(101)			—			(101)			—			—			—			—			(101)
Other		1,734			—			1,734			63			—			—			63			1,797
Total noninterest income		18,343			26			18,369			14,769			1,535			7,046			23,350			41,719
Total net revenue	$	116,517		$	5,197		$	121,714		$	46,502		$	7,973		$	30,985		$	85,460		$	207,174
Net-revenue concentration (2)		56	%		3	%		59	%		22	%		4	%		15	%		41	%		100	%

	Six Months Ended June 30, 2023
	Core Banking									Republic Processing Group
							Total			Tax			Republic			Republic
	Traditional			Warehouse			Core			Refund			Payment			Credit			Total			Total
(dollars in thousands)	Banking			Lending			Banking			Solutions			Solutions			Solutions			RPG			Company
Net interest income (1)	$	98,911		$	4,729		$	103,640		$	28,377		$	7,398		$	17,756		$	53,531		$	157,171
Noninterest income:
Service charges on deposit accounts		6,804			22			6,826			—			—			—			—			6,826
Net refund transfer fees		—			—			—			15,286			—			—			15,286			15,286
Mortgage banking income (1)		1,707			—			1,707			—			—			—			—			1,707
Interchange fee income		6,381			—			6,381			87			2			—			89			6,470
Program fees (1)		—			—			—			—			1,435			5,545			6,980			6,980
Increase in cash surrender value of BOLI (1)		1,324			—			1,324			—			—			—			—			1,324
Net losses on OREO		(105)			—			(105)			—			—			—			—			(105)
Death benefits in excess of cash surrender value of life insurance		1,728			—			1,728			—			—			—			—			1,728
Other		1,896			—			1,896			155			—			65			220			2,116
Total noninterest income		19,735			22			19,757			15,528			1,437			5,610			22,575			42,332
Total net revenue	$	118,646		$	4,751		$	123,397		$	43,905		$	8,835		$	23,366		$	76,106		$	199,503
Net-revenue concentration (2)		60	%		2	%		62	%		22	%		4	%		12	%		38	%		100	%

(1) This revenue is not subject to ASC 606.

(2) Net revenue represents net interest income plus total noninterest income. Net-revenue concentration equals segment-level net revenue divided by total Company net revenue.

The following represents information for significant revenue streams subject to ASC 606:

Service charges on deposit accounts – The Company earns revenue for account-based and event-driven services on its retail and commercial deposit accounts. Contracts for these services are generally in the form of deposit agreements, which disclose fees for deposit services. Revenue for event-driven services is recognized in close proximity or simultaneously with service performance. Revenue for certain account-based services may be recognized at a point in time or over the period the service is rendered, typically no longer than a month. Examples of account-based and event-driven service charges on deposits include per item fees, paper-statement fees, check-cashing fees, and analysis fees.

Net refund transfer fees – An RT is a fee-based product offered by the Bank through third-party tax preparers located throughout the United States, as well as tax-preparation software providers (collectively, the “Tax Providers”), with the Bank acting as an independent contractor of the Tax Providers. An RT allows a taxpayer to pay any applicable tax preparation and filing related fees directly from his federal or state government tax refund, with the remainder of the tax refund disbursed directly to the taxpayer. RT fees and all applicable tax preparation, transmitter, audit, and any other taxpayer authorized amounts are deducted from the tax refund by either the Bank or the Bank’s service provider and automatically forwarded to the appropriate party as authorized by the taxpayer. RT fees generally receive first priority when applying fees against the taxpayer’s refund, with the Bank’s share of RT fees generally

superior to the claims of other third-party service providers, including the Tax Providers. The remainder of the refund is disbursed to the taxpayer by a Bank check, direct deposit to the taxpayer’s personal bank account, or loaded to a prepaid card.

The Company executes contracts with individual Tax Providers to offer RTs to their taxpayer customers. RT revenue is recognized by the Bank immediately after the taxpayer’s refund is disbursed in accordance with the RT contract with the taxpayer customer. The fee paid by the taxpayer for the RT is shared between the Bank and the Tax Providers based on contracts executed between the parties.

The Company presents RT revenue net of any amounts shared with the Tax Providers. The Bank’s share of RT revenue is generally based on the obligations undertaken by the Tax Provider for each individual RT program, with more obligations generally corresponding to higher RT revenue share. The significant majority of net RT revenue is recognized and obligations under RT contracts fulfilled by the Bank during the first half of each year. Incremental expenses associated with the fulfilment of RT contracts are generally expensed during the first half of the year.

Interchange fee income – As an “issuing bank” for card transactions, the Company earns interchange fee income on transactions executed by its cardholders with various third-party merchants. Through third-party intermediaries, merchants compensate the Company for each transaction for the ability to efficiently settle the transaction, and for the Company’s willingness to accept certain risks inherent in the transaction. There is no written contract between the merchant and the Company, but a contract is implied between the two parties by customary business practices. Interchange fee income is recognized almost simultaneously by the Company upon the completion of a related card transaction.

The Company compensates its cardholders by way of cash or other “rewards” for generating card transactions. These rewards are disclosed in cardholder agreements between the Company and its cardholders. Reward costs are accrued over time based on card transactions generated by the cardholder. Interchange fee income is presented net of reward costs within noninterest income.

Net gains/(losses) on other real estate – The Company routinely sells OREO it has acquired through loan foreclosure. Net gains/(losses) on OREO reflect both 1) the gain or loss recognized upon an executed deed and 2) mark-to-market write-downs the Company takes on its OREO inventory.

The Company generally recognizes gains or losses on OREO at the time of an executed deed, although gains may be recognized over a financing period if the Company finances the sale. For financed OREO sales, the Company assesses whether the buyer is committed to perform their obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on sale, the Company adjusts the transaction price and related gain/(loss) on sale if a significant financing component is present.

Mark-to-market write-downs taken by the Company during the property’s holding period are generally at least 10% per year but may be higher based on updated real estate appraisals or BPOs. Incremental expenditures to bring OREO to salable condition are generally expensed as-incurred.