Republic Bancorp Reports Strong Third-Quarter 2026 Results as Core Banking Net Interest Income Rises 8%
Republic Bancorp, Inc. reported solid financial results for the third quarter of 2026, supported by continued growth in its core banking operations, expanding net interest income, disciplined expense management and stable credit quality. The company recorded net income of $31.1 million and diluted earnings of $1.59 per Class A common share for the quarter ended September 30, 2026, representing year-over-year increases of 4% and 5%, respectively.
The results compare with net income of $29.7 million and diluted earnings per share of $1.52 in the third quarter of 2025. Republic Bancorp achieved a return on average assets of 1.74% and a return on average equity of 10.48% during the latest quarter, reflecting the company’s ability to generate earnings while continuing to invest in its banking franchise.
The company’s Core Banking segment was a key contributor to the quarterly performance. Core Banking net income increased 15% year over year to $22.8 million, while net interest income grew 8% to $66.1 million. The segment also expanded its net interest margin by 25 basis points to 4.03%, benefiting from lower funding costs, favorable changes in earning assets and disciplined pricing strategies.
Republic Bancorp also began realizing benefits from a new Republic Payment Solutions (RPS) program launched late in the second quarter of 2026. The program generated approximately $180 million in lower-cost average deposits during the third quarter, helping improve liquidity, diversify funding sources and contribute additional fee income.
Republic Bancorp Delivers Higher Quarterly Earnings
Republic Bancorp’s third-quarter financial results demonstrated year-over-year improvement in profitability, with net income rising to $31.1 million from $29.7 million in the corresponding period of 2025.
Diluted earnings per Class A common share increased to $1.59 from $1.52, representing a 5% improvement. Income before income tax expense reached $39.6 million, compared with $37.8 million a year earlier, an increase of approximately 5%.
The company’s return on average assets was 1.74%, up from 1.69% in the third quarter of 2025. Return on average equity, however, declined to 10.48% from 10.91% over the same period.
These measures provide different perspectives on financial performance. Return on average assets indicates how effectively a bank generates earnings from its assets, while return on average equity measures profitability relative to shareholders’ equity.
For the first nine months of 2026, Republic Bancorp reported net income of $106.5 million, compared with $108.5 million in the first nine months of 2025. Diluted earnings per share for the nine-month period were $5.44, down from $5.55 a year earlier.
Income before income tax expense totaled approximately $137.6 million for the first nine months of 2026, compared with $138.1 million in the prior-year period.
The nine-month results indicate that, although the company delivered stronger quarterly earnings, its cumulative earnings remained below the level recorded during the first three quarters of 2025. The third-quarter improvement was therefore an important component of the company’s performance as it approached the final quarter of the year.
Core Banking Segment Drives Profitability
Republic Bancorp’s Core Banking segment generated net income of $22.8 million during the third quarter of 2026, an increase of $3.0 million, or 15%, compared with $19.8 million in the third quarter of 2025.
The improvement was supported by stronger net interest income, expanding noninterest income streams and continued expense discipline. The segment benefited from growth in traditional lending, improved deposit costs and strategic adjustments to the company’s balance sheet.
Core Banking net interest income increased by approximately $4.8 million to $66.1 million from $61.2 million in the year-ago quarter.
The segment’s net interest margin expanded to 4.03% from 3.78%, reflecting a 25-basis-point improvement. The expansion was primarily driven by a 35-basis-point reduction in funding costs, together with changes in the composition of earning assets and disciplined pricing decisions.
Net interest income represents the difference between interest earned on loans, investments and other interest-earning assets and interest paid on deposits and borrowings. Net interest margin measures net interest income relative to average earning assets and is an important indicator of a bank’s core lending and funding performance.
For Republic Bancorp, the latest results demonstrate how lower funding expenses and continued loan growth can support earnings even when market interest rates and competitive conditions create challenges for financial institutions.
Traditional Banking Benefits From Loan Growth
The Traditional Banking segment remained a major contributor to the company’s Core Banking performance.
Average traditional banking loan balances increased by approximately $125.1 million, or 3%, to $4.70 billion in the third quarter of 2026, compared with $4.57 billion in the same quarter of 2025.
Period-end traditional banking loan balances reached approximately $4.69 billion as of September 30, 2026, compared with $4.56 billion a year earlier. This represented an increase of approximately $135.6 million, or 3%.
Growth was primarily driven by demand across commercial lending categories. The company also continued to reinvest cash flows from lower-yielding loan repayments and runoff into higher-yielding new loan originations.
The weighted-average yield on the Traditional Banking loan portfolio increased to 5.77% in the third quarter of 2026 from 5.71% in the corresponding quarter of 2025, an improvement of 6 basis points.
The increase in yield reflected both loan pricing and a favorable shift toward lending categories offering higher spreads. These developments helped strengthen the contribution of traditional lending to the company’s overall net interest income.
Republic Bancorp noted that year-over-year comparisons were affected by the sale of approximately $82 million in loans and lease financing receivables during the first quarter of 2026. Those loans had been transferred from held-for-investment to held-for-sale in December 2025 and had contributed an estimated 5 basis points to the portfolio yield in the third quarter of 2025.
Despite this comparison effect, the Traditional Banking segment recorded higher average loan balances and an improved weighted-average loan yield, supporting the segment’s overall financial performance.
Investment Portfolio Repositioning Supports Earnings Growth
Republic Bancorp continued to adjust the composition of its interest-earning assets during the third quarter, shifting excess liquidity toward investments and loans that offered more attractive risk-adjusted returns.
Average interest-earning cash balances in the Core Banking segment declined to $302 million in the third quarter of 2026 from $477 million in the third quarter of 2025.
The weighted-average yield on these cash balances also declined to 3.69% from 4.40%.
The reduction in average cash balances reflected the company’s decision to deploy excess liquidity into loan growth and investment securities rather than maintain larger balances in overnight liquid alternatives.
At the same time, average investment balances increased to $919 million from $806 million a year earlier. The weighted-average yield on investments rose slightly to 4.11% from 4.07%.
The increase in average investment balances reflected the strategic allocation of liquidity into higher-yielding securities. This repositioning supported net interest income growth while allowing the company to maintain its overall liquidity position.
The changes in cash and investment balances illustrate the importance of asset allocation in banking. Maintaining adequate liquidity is essential for meeting customer needs and managing financial risks, but holding excess cash can limit earning potential when other assets provide more attractive returns.
Republic Bancorp’s approach sought to balance these considerations by reallocating some liquidity toward loans and investments while maintaining appropriate funding flexibility.
Warehouse Lending Maintains a Significant Role
Warehouse Lending remained another important component of Republic Bancorp’s Core Banking operations.
Average outstanding Warehouse lines of credit increased by approximately $10.2 million, or 2%, to $585.5 million during the third quarter of 2026, compared with $575.3 million in the third quarter of 2025.
However, the weighted-average yield on the Warehouse Lending portfolio declined by 69 basis points to 6.33%. The company attributed the reduction primarily to the lower short-term interest rate environment that prevailed during the third quarter of 2026 compared with the prior-year period.
Warehouse lending generally provides short-term credit facilities to mortgage originators, allowing them to finance newly originated mortgage loans before selling those loans in the secondary market.
Republic Bancorp also expanded its average committed Warehouse lines of credit to approximately $1.19 billion in the third quarter of 2026, compared with $1.06 billion a year earlier.
The increase reflected continued progress in expanding customer relationships and available lending capacity.
Average utilization declined to 49% from 54%, as committed credit capacity grew faster than outstanding balances. Nevertheless, outstanding Warehouse balances remained substantial and continued to contribute to net interest income.
Period-end Warehouse Lending balances were approximately $537.6 million as of September 30, 2026, down from $609.8 million at the end of the third quarter of 2025. The decrease of approximately $72.2 million, or 12%, indicates that the quarter-end balance was lower even though average outstanding balances increased modestly year over year.
The difference between average and period-end balances highlights the importance of examining multiple measures when evaluating lending activity. Average balances help explain interest income generated throughout the quarter, while period-end balances provide a snapshot of the portfolio at a specific date.
Lower Deposit Costs Improve Net Interest Margin
Funding costs played a central role in Republic Bancorp’s third-quarter improvement in net interest income.
The weighted-average cost of interest-bearing deposits in the Core Banking segment declined to 1.99% in the third quarter of 2026 from 2.32% in the same quarter of 2025, a reduction of 33 basis points.
Average interest-bearing deposit balances increased by a net $127 million, or 3%, during the period.
The increase was primarily driven by a combined $167 million rise in money market and time deposit balances, partially offset by a $59 million decline in brokered and reciprocal deposits.
Although the deposit mix shifted toward certain categories that can carry higher funding costs, generally lower market rates and disciplined deposit pricing initiatives reduced the overall cost of deposits.
The reduction in deposit costs helped support the expansion of net interest margin and improved the relationship between interest income and funding expenses.
Deposits are a critical source of funding for banks because they provide the resources needed to support lending and other earning assets. The cost of maintaining those deposits can significantly influence profitability, particularly when interest rates change or competition for customer funds intensifies.
Republic Bancorp’s lower deposit costs demonstrate the benefit of actively managing deposit pricing and funding composition as market conditions evolve.
Reduction in Federal Home Loan Bank Advances
Republic Bancorp also reduced its reliance on Federal Home Loan Bank (FHLB) advances during the third quarter of 2026.
Average FHLB advances declined by approximately $235 million, or 63%, compared with the third quarter of 2025. The weighted-average cost of these advances fell by 49 basis points to 3.84%.
The reduction in average borrowing balances reflected the company’s prepayment of $220 million in higher-cost FHLB advances in March 2026. Those advances carried a weighted-average interest rate of 4.57%.
By paying down these higher-cost borrowings, Republic Bancorp reduced its funding expenses during the second and third quarters of 2026.
FHLB advances are a source of wholesale funding available to eligible financial institutions. Banks may use these borrowings to support lending, manage liquidity and meet funding requirements. However, the interest expense associated with wholesale funding can affect profitability, making borrowing costs and repayment decisions important components of balance sheet management.
Republic Bancorp’s reduction in FHLB advances, together with lower deposit costs, contributed to the improved net interest margin recorded by the Core Banking segment.
Credit Quality and Provision for Expected Credit Losses
Republic Bancorp recorded a net provision expense for expected credit losses of $2.0 million in the Core Banking segment during the third quarter of 2026. This compared with a net provision credit of $479,000 in the third quarter of 2025.
The change reflected differences in loan balances, portfolio composition and the reserve requirements associated with the company’s lending activities.
Traditional Banking recorded a net provision charge of approximately $2.2 million during the third quarter of 2026. The company attributed the charge primarily to a $38 million increase in period-end loan balances and a shift in the portfolio toward categories with higher formula-driven reserve requirements.
Construction and Land Development loans were the principal driver of quarterly loan growth, increasing by $43 million. This category also represented the largest contributor to the increase in formula-based required reserves.
Expected credit loss provisions help banks account for anticipated losses on loans and other financial assets. Reserve requirements can change as loan balances grow, portfolio composition shifts or assessments of potential credit losses are updated.
Warehouse Lending, meanwhile, recorded a net provision credit of $192,000 in the third quarter of 2026. This resulted from general formula-based reserves applied to a $77 million, or 13%, decline in period-end outstanding Warehouse balances.
In the third quarter of 2025, Traditional Banking recorded a net provision credit of $325,000, primarily reflecting minimal net charge-offs and a $24 million reduction in net loan balances. Warehouse Lending recorded a net provision credit of $154,000, associated with a $62 million, or 9%, decrease in period-end outstanding balances.
The movement from a net provision credit in the prior-year quarter to a net provision expense in the third quarter of 2026 reflects the effects of loan growth and portfolio mix on reserve calculations. The provision figures alone do not establish a deterioration in overall credit quality, and a fuller assessment requires consideration of delinquency trends, charge-offs, nonperforming loans and other credit indicators.
Republic Payment Solutions Program Adds Lower-Cost Deposits
Republic Bancorp began realizing benefits from its new Republic Payment Solutions program during the third quarter of 2026.
Launched late in the second quarter following several years of strategic planning and cross-functional execution, the program generated approximately $180 million in lower-cost average deposits during the latest quarter.
The company said the program enhanced liquidity, diversified its funding base, favorably reduced its loan-to-deposit ratio and contributed incremental fee income.
The loan-to-deposit ratio compares a bank’s outstanding loans with its deposit base and is commonly used to assess how much of its deposit funding is deployed into lending. A change in the ratio can affect the assessment of liquidity and funding flexibility, although it should be interpreted alongside other balance sheet indicators.
The RPS program represents an additional source of deposits for Republic Bancorp, supporting its broader efforts to manage funding costs and diversify funding sources.
The contribution from the program also demonstrates how new business initiatives can affect multiple areas of bank performance, including liquidity, funding structure and noninterest income.
Recognition for Financial Performance and Risk Management
During the third quarter, Republic Bancorp was recognized as one of Bank Director’s Top 25 publicly traded banks for the second consecutive year.
According to the company, the ranking evaluated approximately 300 publicly traded U.S. banks with assets exceeding $2 billion using year-end 2025 financial data. The assessment considered profitability, capital adequacy and credit quality.
The recognition highlights the importance of several factors in evaluating banking performance beyond quarterly earnings alone. Profitability measures a bank’s ability to generate returns, capital adequacy indicates its capacity to absorb potential losses, and credit quality provides insight into the performance and risk profile of its lending portfolio.
Republic Bancorp’s management credited the company’s associates, customers and commitment to disciplined execution and risk management for its performance.
President and Chief Executive Officer Logan Pichel said the company remains focused on organic loan growth, expanding net interest income, deepening customer relationships and pursuing opportunities to strengthen its franchise.
Management also indicated that, based on the company’s current interest rate risk position, the higher-rate environment following the Federal Reserve’s September 2026 policy move is expected to provide incremental growth to Core Banking net interest income in the near term. This represents management’s outlook and remains subject to changes in interest rates, deposit pricing, asset yields and other market conditions.
Republic Bancorp enters the final quarter of 2026 with stronger third-quarter earnings, higher Core Banking net interest income and continued growth in traditional lending.
The company’s performance has been supported by lower deposit costs, a reduction in higher-cost FHLB advances, strategic deployment of excess liquidity and the launch of the RPS program. These factors have helped improve the Core Banking segment’s net interest margin while supporting growth in earnings.
At the same time, the company’s first-nine-month net income and diluted earnings per share remained below their respective levels in the same period of 2025. This highlights the importance of assessing the latest quarterly improvement within the broader year-to-date performance.
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