REVENUE FROM CONTRACTS WITH CUSTOMERS

9 Months Ended

Sep. 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 September 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)	$	51,023		$	3,580		$	54,603		$	440		$	2,783		$	13,479		$	16,702		$	71,305
Noninterest income:
Service charges on deposit accounts		3,676			16			3,692			—			—			1			1			3,693
Net refund transfer fees		—			—			—			582			—			—			582			582
Mortgage banking income (1)		2,062			—			2,062			—			—			—			—			2,062
Interchange fee income		3,267			—			3,267			19			—			—			19			3,286
Program fees (1)		—			—			—			—			786			4,176			4,962			4,962
Increase in cash surrender value of BOLI (1)		826			—			826			—			—			—			—			826
Net losses on OREO		(53)			—			(53)			—			—			—			—			(53)
Other		1,300			—			1,300			8			147			—			155			1,455
Total noninterest income		11,078			16			11,094			609			933			4,177			5,719			16,813
Total net revenue	$	62,101		$	3,596		$	65,697		$	1,049		$	3,716		$	17,656		$	22,421		$	88,118
Net-revenue concentration (2)		71	%		4	%		75	%		1	%		4	%		20	%		25	%		100	%

	Three Months Ended September 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)	$	47,493		$	2,467		$	49,960		$	401		$	4,124		$	10,340		$	14,865		$	64,825
Noninterest income:
Service charges on deposit accounts		3,547			11			3,558			—			—			1			1			3,559
Net refund transfer fees		—			—			—			242			—			—			242			242
Mortgage banking income (1)		852			—			852			—			—			—			—			852
Interchange fee income		3,258			—			3,258			22			1			1			24			3,282
Program fees (1)		—			—			—			—			705			3,336			4,041			4,041
Increase in cash surrender value of BOLI (1)		690			—			690			—			—			—			—			690
Net losses on OREO		(53)			—			(53)			—			—			—			—			(53)
Death benefits in excess of cash surrender value of life insurance		—			—			—			—			—			—			—			—
Other		1,647			—			1,647			50			9			26			85			1,732
Total noninterest income		9,941			11			9,952			314			715			3,364			4,393			14,345
Total net revenue	$	57,434		$	2,478		$	59,912		$	715		$	4,839		$	13,704		$	19,258		$	79,170
Net-revenue concentration (2)		73	%		3	%		76	%		1	%		6	%		17	%		24	%		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.

	Nine Months Ended September 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)	$	149,197		$	8,751		$	157,948		$	32,173		$	9,221		$	37,418		$	78,812		$	236,760
Noninterest income:
Service charges on deposit accounts		10,488			42			10,530			—			—			2			2			10,532
Net refund transfer fees		—			—			—			15,213			—			—			15,213			15,213
Mortgage banking income (1)		3,984			—			3,984			—			—			—			—			3,984
Interchange fee income		9,697			—			9,697			94			2			1			97			9,794
Program fees (1)		—			—			—			—			2,319			11,220			13,539			13,539
Increase in cash surrender value of BOLI (1)		2,372			—			2,372			—			—			—			—			2,372
Net losses on OREO		(154)			—			(154)			—			—			—			—			(154)
Other		3,034			—			3,034			71			147			—			218			3,252
Total noninterest income		29,421			42			29,463			15,378			2,468			11,223			29,069			58,532
Total net revenue	$	178,618		$	8,793		$	187,411		$	47,551		$	11,689		$	48,641		$	107,881		$	295,292
Net-revenue concentration (2)		61	%		3	%		64	%		16	%		4	%		16	%		36	%		100	%

	Nine Months Ended September 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)	$	146,404		$	7,196		$	153,600		$	28,778		$	11,522		$	28,096		$	68,396		$	221,996
Noninterest income:
Service charges on deposit accounts		10,351			33			10,384			—			—			1			1			10,385
Net refund transfer fees		—			—			—			15,528			—			—			15,528			15,528
Mortgage banking income (1)		2,559			—			2,559			—			—			—			—			2,559
Interchange fee income		9,639			—			9,639			109			3			1			113			9,752
Program fees (1)		—			—			—			—			2,140			8,881			11,021			11,021
Increase in cash surrender value of BOLI (1)		2,014			—			2,014			—			—			—			—			2,014
Net losses on OREO		(158)			—			(158)			—			—			—			—			(158)
Death benefits in excess of cash surrender value of life insurance		1,728			—			1,728			—			—			—			—			1,728
Other		3,543			—			3,543			205			9			91			305			3,848
Total noninterest income		29,676			33			29,709			15,842			2,152			8,974			26,968			56,677
Total net revenue	$	176,080		$	7,229		$	183,309		$	44,620		$	13,674		$	37,070		$	95,364		$	278,673
Net-revenue concentration (2)		63	%		3	%		66	%		16	%		5	%		13	%		34	%		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.