SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2016

SEGMENT INFORMATION

SEGMENT INFORMATION

15.SEGMENT INFORMATION

Reportable segments are determined by the type of products and services offered and the level of information provided to the chief operating decision maker, who uses such information to review performance of various components of the business (such as banking centers and business units), which are then aggregated if operating performance, products/services, and clients are similar.

As of March 31, 2016, the Company was divided into four distinct operating segments: Traditional Banking, Warehouse Lending (“Warehouse”), Mortgage Banking and Republic Processing Group (“RPG”). Management considers the first three segments to collectively constitute “Core Bank” or “Core Banking” activities. Correspondent Lending operations are considered part of the Traditional Banking segment. The RPG segment includes the following divisions: Tax Refund Solutions (“TRS”), Republic Payment Solutions (“RPS”) and Republic Credit Solutions (“RCS”). TRS generates the majority of RPG’s income, with the relatively smaller divisions of RPG, RPS and RCS, considered immaterial for separate and independent segment reporting. All divisions of the RPG segment operate through the Bank.

The nature of segment operations and the primary drivers of net revenues by reportable segment are provided below:

	Segment:	Nature of Operations:	Primary Drivers of Net Revenues:
	Traditional Banking	Provides traditional banking products to clients primarily in its market footprint via its network of banking centers and primarily to clients outside of its market footprint via its Internet and Correspondent Lending delivery channels.	Loans, investments and deposits
Core Banking	Warehouse Lending	Provides short-term, revolving credit facilities to mortgage bankers across the Nation.	Mortgage warehouse lines of credit
	Mortgage Banking	Primarily originates, sells and services long-term, single family, first lien residential real estate loans primarily to clients in its market footprint.	Loan sales and servicing
	Republic Processing Group	The TRS division facilitates the receipt and payment of federal and state tax refund products.  The RPS division offers general-purpose reloadable cards.  The RCS division offers short-term credit products. RPG products are primarily provided to clients outside of the Bank’s market footprint.	Refund transfers and loans

The accounting policies used for Republic’s reportable segments are the same as those described in the summary of significant accounting policies in the Company’s 2015 Annual Report on Form 10-K.  Segment performance is evaluated using operating income. Goodwill is not allocated. Income taxes are generally allocated based on income before income tax expense unless specific segment allocations can be reasonably made. Transactions among reportable segments are made at carrying value.

Segment information for the three months ended March 31, 2016 and 2015 follows:

	Three Months Ended March 31, 2016
	Core Banking
									Total			Republic
	Traditional			Warehouse			Mortgage		Core			Processing		Total
(dollars in thousands)	Banking			Lending			Banking		Banking			Group		Company
Net interest income	$	28,608		$	2,655		$	32	$	31,295		$	8,139	$	39,434
Provision for loan and lease losses		480			18			—		498			4,688		5,186
Net refund transfer fees		—			—			—		—			17,078		17,078
Mortgage banking income		—			—			1,261		1,261			—		1,261
Republic Processing Group program fees		—			—			—		—			319		319
Other noninterest income		6,110			5			92		6,207			56		6,263
Total noninterest income		6,110			5			1,353		7,468			17,453		24,921
Total noninterest expenses		24,875			695			1,240		26,810			5,731		32,541
Income before income tax expense		9,363			1,947			145		11,455			15,173		26,628
Income tax expense		2,613			723			51		3,387			5,506		8,893
Net income	$	6,750		$	1,224		$	94	$	8,068		$	9,667	$	17,735
Segment end of period assets	$	3,711,315		$	393,532		$	12,965	$	4,117,812		$	128,953	$	4,246,765
Net interest margin		3.08	%		3.63	%		NM		3.12	%		NM		3.78	%

	Three Months Ended March 31, 2015
	Core Banking
									Total			Republic
	Traditional			Warehouse			Mortgage		Core			Processing		Total
(dollars in thousands)	Banking			Lending			Banking		Banking			Group		Company
Net interest income	$	25,758		$	2,541		$	56	$	28,355		$	667	$	29,022
Provision for loan and lease losses		116			259			—		375			(190)		185
Net refund transfer fees		—			—			—		—			15,335		15,335
Mortgage banking income		—			—			1,353		1,353			—		1,353
Republic Processing Group program fees		—			—			—		—			228		228
Other noninterest income		5,397			5			84		5,486			584		6,070
Total noninterest income		5,397			5			1,437		6,839			16,147		22,986
Total noninterest expenses		23,407			573			1,285		25,265			5,809		31,074
Income before income tax expense		7,632			1,714			208		9,554			11,195		20,749
Income tax expense		2,286			600			73		2,959			4,002		6,961
Net income	$	5,346		$	1,114		$	135	$	6,595		$	7,193	$	13,788
Segment end of period assets	$	3,380,813		$	422,652		$	18,002	$	3,821,467		$	130,720	$	3,952,187
Net interest margin		3.13	%		3.62	%		NM		3.17	%		NM		3.14	%

Segment assets are reported as of the respective period ends while income and margin data are reported for the respective periods.

NM — Not Meaningful