SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2013

SEGMENT INFORMATION

SEGMENT INFORMATION

11. 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 branches and subsidiary banks), which are then aggregated if operating performance, products/services, and customers are similar.

As of June 30, 2013, the Company was divided into three distinct business operating segments: Traditional Banking, Mortgage Banking and Republic Processing Group (“RPG”). During 2012, the Company realigned the previously reported Tax Refund Solutions (“TRS”) segment as a division of the newly formed RPG segment. Along with the TRS division, Republic Payment Solutions (“RPS”) and Republic Credit Solutions (“RCS”) also operate as divisions of the newly formed RPG segment.

Nationally, through RB&T, RPG facilitates the receipt and payment of federal and state tax refund products under the TRS division. Nationally, through RB, the RPS division is an issuing bank offering general purpose reloadable prepaid debit cards through third party program managers. Nationally, through RB&T, the RCS division is preparing to pilot short-term consumer credit products on-line.

For the projected near-term, as the prepaid card and consumer credit programs are being established, the operating results of these divisions are expected to be immaterial to the Company’s overall results of operations and will be reported as part of the RPG business operating segment. The RPS and RCS divisions will not be reported as separate business operating segments until such time, if any, that they become material to the Company’s overall results of operations.

Loans, investments and deposits provide the majority of the net revenue from Traditional Banking operations, while servicing fees and loan sales provide the majority of revenue from Mortgage Banking operations.  Prior to 2013, RAL fees and net RT fees provided the majority of the revenue for RPG.  In 2013, net RT fees has provided, and is expected to continue to provide going forward, the majority of revenues for RPG as the Company no longer offers RALs. All Company operations are domestic.

The accounting policies used for Republic’s reportable segments are the same as those described in the summary of significant accounting policies. Segment performance is evaluated using operating income. Goodwill is not allocated. Income taxes which are not segment specific are allocated based on income before income tax expense. Transactions among reportable segments are made at fair value.

Segment information for the three and six months ended June 30, 2013 and 2012 follows:

	Three Months Ended June 30, 2013
(dollars in thousands)	Traditional Banking			Mortgage Banking		Republic Processing Group			Total Company
Net interest income	$	28,606		$	145	$	16		$	28,767
Provision for loan losses	1,045			—		(140		)	905
Net refund transfer fees	—			—		1,683			1,683
Mortgage banking income	—			2,180		—			2,180
Other non interest income	6,660			75		185			6,920
Total non interest income	6,660			2,255		1,868			10,783
Total non interest expenses	25,443			906		3,350			29,699
Income before income tax expense	8,778			1,494		(1,326		)	8,946
Income tax expense	2,768			523		(464		)	2,827
Net income	$	6,010		$	971	$	(862	)	$	6,119
Segment end of period assets	$	3,277,181		$	29,891	$	9,993		$	3,317,065
Net interest margin	3.57		%	NM		NM			3.56		%
	Three Months Ended June 30, 2012
(dollars in thousands)	Traditional Banking			Mortgage Banking		Republic Processing Group			Total Company
Net interest income	$	28,090		$	53	$	169		$	28,312
Provision for loan losses	831			—		(365		)	466
Net refund transfer fees	—			—		6,147			6,147
Mortgage banking income	—			1,963		—			1,963
Bargain purchase gain - TCB	(96		)	—		—			(96		)
Other non interest income	6,036			11		25			6,072
Total non interest income	5,940			1,974		6,172			14,086
Total non interest expenses	23,590			923		2,938			27,451
Income before income tax expense	9,609			1,104		3,768			14,481
Income tax expense	3,129			386		1,388			4,903
Net income	$	6,480		$	718	$	2,380		$	9,578
Segment end of period assets	$	3,248,453		$	9,847	$	20,500		$	3,278,800
Net interest margin	3.57		%	NM		NM			3.53		%

	Six Months Ended June 30, 2013
(dollars in thousands)	Traditional Banking			Mortgage Banking		Republic Processing Group			Total Company
Net interest income	$	57,567		$	258	$	72		$	57,897
Provision for loan losses	1,019			—		(739		)	280
Net refund transfer fees	—			—		13,697			13,697
Mortgage banking income	—			5,454		—			5,454
Bargain purchase gain - FCB	1,324			—		—			1,324
Other non interest income	12,057			83		693			12,833
Total non interest income	13,381			5,537		14,390			33,308
Total non interest expenses	50,625			1,769		8,607			61,001
Income before income tax expense	19,304			4,026		6,594			29,924
Income tax expense	6,732			1,409		2,308			10,449
Net income	$	12,572		$	2,617	$	4,286		$	19,475
Segment end of period assets	$	3,277,181		$	29,891	$	9,993		$	3,317,065
Net interest margin	3.58		%	NM		NM			3.56		%

	Six Months Ended June 30, 2012
(dollars in thousands)	Traditional Banking			Mortgage Banking		Republic Processing Group		Total Company
Net interest income	$	55,962		$	173	$	45,397	$	101,532
Provision for loan losses	3,962			—		7,674		11,636
Net refund transfer fees	—			—		77,896		77,896
Mortgage banking income	—			3,317		—		3,317
Net gain on sales, calls and impairment of securities	56			—		—		56
Bargain purchase gain - TCB	27,803			—		—		27,803
Other non interest income	11,618			16		189		11,823
Total non interest income	39,477			3,333		78,085		120,895
Total non interest expenses	50,634			2,077		15,893		68,604
Income before income tax expense	40,843			1,429		99,915		142,187
Income tax expense	14,005			500		35,632		50,137
Net income	$	26,838		$	929	$	64,283	$	92,050
Segment end of period assets	$	3,248,453		$	9,847	$	20,500	$	3,278,800
Net interest margin	3.58		%	NM		NM		5.73		%

NM — Not Meaningful