10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2013

or

o Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 0-24649

REPUBLIC BANCORP, INC.

(Exact name of registrant as specified in its charter)

Kentucky	61-0862051
(State of other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

601 West Market Street, Louisville, Kentucky	40202
(Address of principal executive offices)	(Zip Code)

(502) 584-3600

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  x Yes   o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  x Yes  o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer x Non-accelerated filer o Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  o Yes  x No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

The number of shares outstanding of the registrant’s Class A Common Stock and Class B Common Stock, as of October 31, 2013, was 18,533,502 and 2,259,926 respectively.

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements.
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Item 3.	Quantitative and Qualitative Disclosures about Market Risk.
Item 4.	Controls and Procedures.
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings.
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.
Item 6.	Exhibits.
	SIGNATURES

2

PART I — FINANCIAL INFORMATION

Item 1.  Financial Statements.

CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited)

	September 30,			December 31,
	2013			2012
ASSETS
Cash and cash equivalents	$	141,585		$	137,691
Securities available for sale	481,624			438,246
Securities to be held to maturity (fair value of $52,408 in 2013 and $46,416 in 2012)	52,057			46,010
Mortgage loans held for sale	9,803			10,614
Loans	2,553,435			2,650,197
Allowance for loan losses	(23,492		)	(23,729		)
Loans, net	2,529,943			2,626,468
Federal Home Loan Bank stock, at cost	28,342			28,377
Premises and equipment, net	32,626			33,197
Goodwill	10,168			10,168
Other real estate owned	15,247			26,203
Other assets and accrued interest receivable	30,486			37,425
TOTAL ASSETS	$	3,331,881		$	3,394,399
LIABILITIES
Deposits
Non interest-bearing	$	492,126		$	479,046
Interest-bearing	1,527,659			1,503,882
Total deposits	2,019,785			1,982,928
Securities sold under agreements to repurchase and other short-term borrowings	106,373			250,884
Federal Home Loan Bank advances	587,020			542,600
Subordinated note	41,240			41,240
Other liabilities and accrued interest payable	31,953			40,045
Total liabilities	2,786,371			2,857,697
STOCKHOLDERS’ EQUITY
Preferred stock, no par value	—			—
Class A Common Stock and Class B Common Stock, no par value	4,893			4,932
Additional paid in capital	132,728			132,686
Retained earnings	404,060			393,472
Accumulated other comprehensive income	3,829			5,612
Total stockholders’ equity	545,510			536,702
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,331,881		$	3,394,399

See accompanying footnotes to consolidated financial statements.

3

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(in thousands, except per share data)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2013		2012			2013		2012
INTEREST INCOME:
Loans, including fees	$	31,619	$	31,292		$	95,268	$	137,118
Taxable investment securities	1,984		2,483			6,000		8,654
Federal Home Loan Bank stock and other	406		353			1,261		1,757
Total interest income	34,009		34,128			102,529		147,529
INTEREST EXPENSE:
Deposits	1,043		1,197			3,073		3,949
Securities sold under agreements to repurchase and other short-term borrowings	11		110			53		340
Federal Home Loan Bank advances	3,788		3,619			11,081		11,245
Subordinated note	628		630			1,886		1,891
Total interest expense	5,470		5,556			16,093		17,425
NET INTEREST INCOME	28,539		28,572			86,436		130,104
Provision for loan losses	2,200		2,083			2,480		13,719
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	26,339		26,489			83,956		116,385
NON-INTEREST INCOME:
Service charges on deposit accounts	3,676		3,438			10,384		10,027
Net refund transfer fees	152		231			13,849		78,127
Mortgage banking income	1,026		2,274			6,480		5,591
Debit card interchange fee income	1,519		1,390			4,986		4,387
Bargain purchase gain - Tennessee Commerce Bank	—		(189		)	—		27,614
Bargain purchase gain - First Commercial Bank	—		27,112			1,324		27,112
Gain on sale of securities available for sale	—		—			—		56
Other	1,166		589			3,824		2,826
Total non-interest income	7,539		34,845			40,847		155,740
NON-INTEREST EXPENSES:
Salaries and employee benefits	12,226		14,921			43,426		46,205
Occupancy and equipment, net	5,462		5,718			16,354		16,936
Communication and transportation	990		1,045			3,011		4,667
Marketing and development	785		828			2,567		2,670
FDIC insurance expense	419		287			1,234		1,008
Bank franchise tax expense	707		729			3,279		3,363
Data processing	934		1,030			2,442		3,446
Debit card processing expense	655		648			2,216		1,909
Supplies	228		270			800		1,748
Other real estate owned expense	497		1,328			2,331		2,488
Charitable contributions	225		232			688		3,110
Legal expense	1,343		388			3,111		1,283
FHLB advance prepayment expense	—		—			—		2,436
Other	1,854		2,338			5,867		7,097
Total non-interest expenses	26,325		29,762			87,326		98,366
INCOME BEFORE INCOME TAX EXPENSE	7,553		31,572			37,477		173,759
INCOME TAX EXPENSE	2,950		10,904			13,399		61,041
NET INCOME	$	4,603	$	20,668		$	24,078	$	112,718
BASIC EARNINGS PER SHARE:
Class A Common Stock	$	0.22	$	0.99		$	1.16	$	5.38
Class B Common Stock	$	0.21	$	0.97		$	1.12	$	5.34
DILUTED EARNINGS PER SHARE:
Class A Common Stock	$	0.22	$	0.98		$	1.16	$	5.36
Class B Common Stock	$	0.21	$	0.97		$	1.11	$	5.32
DIVIDENDS DECLARED PER COMMON SHARE:
Class A Common Stock	$	0.176	$	0.165		$	0.517	$	0.484
Class B Common Stock	$	0.160	$	0.150		$	0.470	$	0.440

See accompanying footnotes to consolidated financial statements.

4

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(in thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Net income	$	4,603		$	20,668		$	24,078		$	112,718
OTHER COMPREHENSIVE INCOME
Unrealized gain (loss) on securities available for sale	(198		)	649			(3,163		)	2,324
Change in unrealized loss on available for sale security for which a portion of an other-than-temporary impairment has been recognized in earnings	(4		)	374			418			412
Reclassification adjustment for gains recognized in earnings	—			—			—			(56		)
Net unrealized gains (losses)	(202		)	1,023			(2,745		)	2,680
Tax effect	71			(358		)	962			(938		)
Net of tax	(131		)	665			(1,783		)	1,742
COMPREHENSIVE INCOME	$	4,472		$	21,333		$	22,295		$	114,460

See accompanying footnotes to consolidated financial statements.

5

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)

NINE MONTHS ENDED SEPTEMBER 30, 2013

	Common Stock													Accumulated
	Class A		Class B					Additional						Other			Total
	Shares		Shares					Paid In			Retained			Comprehensive			Stockholders’
(in thousands, except per share data)	Outstanding		Outstanding		Amount			Capital			Earnings			Income			Equity
Balance, January 1, 2013	18,694		2,271		$	4,932		$	132,686		$	393,472		$	5,612		$	536,702
Net income	—		—		—			—			24,078			—			24,078
Net change in accumulated other comprehensive income	—		—		—			—			—			(1,783		)	(1,783		)
Dividend declared Common Stock:
Class A ($0.517 per share)	—		—		—			—			(9,459		)	—			(9,459		)
Class B ($0.470 per share)	—		—		—			—			(1,062		)	—			(1,062		)
Stock options exercised, net of shares redeemed	17		—		4			438			(147		)	—			295
Repurchase of Class A Common Stock	(193	)	—		(43		)	(1,230		)	(2,822		)	—			(4,095		)
Conversion of Class B Common Stock to Class A Common Stock	11		(11	)	—			—			—			—			—
Net change in notes receivable on Common Stock	—		—		—			281			—			—			281
Deferred director compensation expense - Company Stock	5		—		—			152			—			—			152
Stock based compensation expense - restricted stock	—		—		—			224			—			—			224
Stock based compensation expense - options	—		—		—			177			—			—			177
Balance, September 30, 2013	18,534		2,260		$	4,893		$	132,728		$	404,060		$	3,829		$	545,510

See accompanying footnotes to consolidated financial statements.

6

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012 (in thousands)

	2013			2012
OPERATING ACTIVITIES:
Net income	$	24,078		$	112,718
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion, net	929			7,348
Provision for loan losses	2,480			13,719
Net gain on sale of mortgage loans held for sale	(6,340		)	(6,541		)
Origination of mortgage loans held for sale	(263,411		)	(172,305		)
Proceeds from sale of mortgage loans held for sale	270,562			179,853
Net realized impairment (recovery) of mortgage servicing rights	(345		)	129
Net realized gain on sales, calls and impairment of securities	—			(56		)
Net gain on sale of other real estate owned	(1,714		)	(381		)
Writedowns of other real estate owned	1,074			1,207
Deferred director compensation expense - Company Stock	152			140
Stock based compensation expense	401			655
Bargain purchase gains on acquisitions	(1,324		)	(54,726		)
Net change in other assets and liabilities:
Accrued interest receivable	1,115			(409		)
Accrued interest payable	32			(228		)
Other assets	4,137			5,864
Other liabilities	(7,447		)	16,347
Net cash provided by operating activities	24,379			103,334
INVESTING ACTIVITIES:
Net cash received in FDIC-assisted transactions	—			921,161
Purchases of securities available for sale	(175,275		)	(61,716		)
Purchases of securities to be held to maturity	(15,000		)	(23,115		)
Proceeds from calls, maturities and paydowns of securities available for sale	129,041			193,403
Proceeds from calls, maturities and paydowns of securities to be held to maturity	8,900			3,354
Proceeds from sales of securities available for sale	—			38,724
Proceeds from sales of Federal Home Loan Bank stock	35			62
Proceeds from sales of other real estate owned	19,642			21,688
Net change in loans	92,881			(184,454		)
Net purchases of premises and equipment	(3,275		)	(2,499		)
Net cash provided by investing activities	56,949			906,608
FINANCING ACTIVITIES:
Net change in deposits	36,857			(822,074		)
Net change in securities sold under agreements to repurchase and other short-term borrowings	(144,511		)	(60,392		)
Payments of Federal Home Loan Bank advances	(25,580		)	(589,208		)
Proceeds from Federal Home Loan Bank advances	70,000			205,000
Repurchase of Common Stock	(4,095		)	(386		)
Net proceeds from Common Stock options exercised	295			147
Cash dividends paid	(10,400		)	(9,813		)
Net cash used in financing activities	(77,434		)	(1,276,726		)
NET CHANGE IN CASH AND CASH EQUIVALENTS	3,894			(266,784		)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	137,691			362,971
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	141,585		$	96,187
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	16,061		$	17,653
Income taxes	26,674			68,603
SUPPLEMENTAL NONCASH DISCLOSURES
Transfers from loans to real estate acquired in settlement of loans	$	8,690		$	16,018
Loans provided for sales of other real estate owned	644			591

See accompanying footnotes to consolidated financial statements.

7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — SEPTEMBER 30, 2013 AND 2012 (UNAUDITED) AND DECEMBER 31, 2012

1.BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation — The consolidated financial statements include the accounts of Republic Bancorp, Inc. (the “Parent Company”) and its wholly-owned subsidiaries: Republic Bank & Trust Company (“RB&T”) and Republic Bank (“RB”) (collectively referred together as the “Bank”). Republic Invest Co., a former subsidiary of RB&T, and its subsidiary, Republic Capital LLC, were dissolved in April 2013 in connection with the full repayment by RB&T of intragroup subordinated debentures issued by Republic Capital LLC in a 2004 intragroup trust preferred transaction. All companies are collectively referred to as “Republic” or the “Company.” All significant intercompany balances and transactions are eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the three and nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. For further information, refer to the consolidated financial statements and footnotes thereto included in Republic’s Form 10-K for the year ended December 31, 2012.

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

Traditional Banking and Mortgage Banking (collectively “Core Banking”)

As of September 30, 2013, in addition to an Internet delivery channel, Republic had 45 full-service banking centers with locations as follows:

·Kentucky — 34

·Metropolitan Louisville — 20

·Central Kentucky — 11

·Elizabethtown — 1

·Frankfort — 1

·Georgetown — 1

·Lexington — 5

·Owensboro — 2

·Shelbyville — 1

·Northern Kentucky — 3

·Covington — 1

·Florence — 1

·Independence — 1

·Southern Indiana — 3

·Floyds Knobs — 1

·Jeffersonville — 1

·New Albany — 1

·Metropolitan Tampa, Florida — 4

·Metropolitan Cincinnati, Ohio — 1

·Metropolitan Nashville, Tennessee — 2

·Metropolitan Minneapolis, Minnesota — 1

8

In October 2013, Republic gave the required 90-day regulatory notice of its intentions to close its sole banking center in Palm Harbor, Florida. This location is expected to close in January 2014 with the lease for the premises expiring in February 2014.

In October 2013, Republic gave the required 90-day regulatory notice of its intentions to close its sole banking center in Minneapolis, Minnesota, which it acquired in connection with the First Commercial Bank (“FCB”) acquisition in September 2012.  The Bank is currently under a lease for this location which is set to expire in April 2015. The Bank intends to repurpose the location as a support office until the expiration of its lease or until such time that it is able to negotiate with the landlord a buy-out of its future lease obligations. The banking center is expected to stop transacting business at the Minnesota location with deposit customers in January 2014.

Core Banking results of operations are primarily dependent upon net interest income, which represents the difference between the interest income and fees on interest-earning assets and the interest expense on interest-bearing liabilities. Principal interest-earning Core Banking assets represent investment securities and real estate, commercial and consumer loans. Interest-bearing liabilities primarily consist of interest-bearing deposit accounts, securities sold under agreements to repurchase, as well as short-term and long-term borrowing sources. The Bank also provides short-term, revolving credit facilities to mortgage bankers across the nation through warehouse lines of credit. These credit facilities are secured by single family, first lien residential real estate loans.

Other sources of Core Banking income include service charges on deposit accounts, debit card interchange fee income, title insurance commissions, fees charged to customers for trust services and revenue generated from Mortgage Banking activities. Mortgage Banking activities represent both the origination and sale of loans in the secondary market and the servicing of loans for others, primarily the Federal Home Loan Mortgage Corporation (“Freddie Mac” or “FHLMC”).

Core Banking operating expenses consist primarily of salaries and employee benefits, occupancy and equipment expenses, communication and transportation costs, data processing, debit card interchange expenses, marketing and development expenses, FDIC insurance expense, and various general and administrative costs. Core Banking results of operations are significantly impacted by general economic and competitive conditions, particularly changes in market interest rates, government laws and policies and actions of regulatory agencies.

Republic Processing Group

Nationally, through RB&T, RPG facilitates the receipt and payment of federal and state tax refunds under the TRS division, primarily through refund transfers (“RT”s). RTs are products whereby a tax refund is issued to the taxpayer after RB&T has received the refund from the federal or state government. There is no credit risk or borrowing costs associated with these products, because they are only delivered to the taxpayer upon receipt of the tax refund directly from the governmental paying authority.  Fees earned on RTs, net of rebates, are the primary source of revenue for the TRS division and the RPG segment, and are reported as non-interest income under the line item “Net refund transfer fees.”

The TRS division historically originated and obtained a significant source of revenue from Refund Anticipation Loans (“RAL”s), but terminated this product effective April 30, 2012. RALs were short-term consumer loans offered to taxpayers that were secured by the customer’s anticipated tax refund, which represented the sole source of repayment. The fees earned on RALs for the applicable reporting period in 2012 were reported as interest income under the line item “Loans, including fees.”

Through RB, the RPS division is an issuing bank offering general purpose reloadable prepaid debit cards through third party program managers. Through RB&T, the RCS division is piloting short-term consumer credit products.

Reclassifications and recasts — Certain amounts presented in prior periods have been reclassified to conform to the current period presentation. These reclassifications had no impact on previously reported prior periods’ net income. Additionally, as discussed in Footnote 2 “2012 FDIC-Assisted Acquisitions of Failed Banks,” during the first quarter of 2013 the Bank posted adjustments to the First Commercial Bank (“FCB”) acquired assets in the determination of acquisition day (“day-one”) fair values, which resulted in a $1.3 million increase to the bargain purchase gain presented.

9

2.2012 FDIC-ASSISTED ACQUISITIONS OF FAILED BANKS

OVERVIEW

During 2012, the Bank acquired two failed institutions in FDIC-assisted transactions. The Bank did not raise capital to complete either of these acquisitions.

The Bank determined that the acquisitions of these failed banks constituted “business acquisitions” as defined by Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. Accordingly, the assets acquired and liabilities assumed have been presented at their estimated fair values, as required. Fair values were determined over a measurement period based on the requirements of ASC Topic 820, Fair Value Measurements and Disclosures. The measurement period for day-one fair values begins on the acquisition date and ends the earlier of: (a) the day management believes it has all the information necessary to determine day-one fair values; or (b) one year following the acquisition date. In many cases, the determination of these day-one fair values requires management to make material estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature and subject to recast adjustments, which are retrospective adjustments to reflect new information existing at the acquisition date affecting day-one fair values. More specifically, recast adjustments for loans and other real estate owned were made as market value data, such as appraisals, were received by the Bank. Increases or decreases to day-one fair values have been reflected with a corresponding increase or decrease to bargain purchase gain.

Tennessee Commerce Bank (“TCB”)

On January 27, 2012, the Bank acquired specific assets and assumed substantially all of the deposits and specific other liabilities of TCB, headquartered in Franklin, Tennessee from the FDIC, as receiver for TCB, pursuant to the terms of a Purchase and Assumption Agreement (“P&A”) — Whole Bank; All Deposits entered into among RB&T, the FDIC as receiver of TCB and the FDIC. On January 30, 2012, TCB’s sole location re-opened as a division of RB&T.

The Bank acquired approximately $221 million in notional assets from the FDIC as receiver for TCB. In addition, the Bank recorded a receivable from the FDIC for approximately $785 million, which represented the net difference between the assets acquired and the liabilities assumed, adjusted for the discount the Bank received for the acquisition. The FDIC paid approximately $771 million of this receivable on January 30, 2012 with the remaining $14 million paid on February 15, 2012.

During the first quarter of 2012, the Bank recorded an initial bargain purchase gain of $27.9 million as a result of the TCB acquisition. The bargain purchase gain was realized because the overall price paid by the Bank was substantially less than the fair value of the TCB assets acquired and liabilities assumed in the acquisition. In the second and third quarters of 2012, the Bank posted adjustments to the acquired assets for its FDIC-assisted acquisition in the determination of day-one fair values and recorded a net decrease to the bargain purchase gain of $285,000, as additional information relative to the day-one fair values became available.

Information obtained subsequent to January 27, 2012 and through September 30, 2012 was considered in forming TCB estimates of cash flows and collateral values as of the January 27, 2012 acquisition date, i.e., TCB’s day-one fair values. Day-one fair values for TCB were considered final as of September 30, 2012, which was the date the Bank believed it had received all the information necessary to determine TCB’s day-one fair values.

10

A summary of the assets acquired and liabilities assumed in the TCB acquisition follows:

Tennessee Commerce Bank

	January 27, 2012
	As Previously Reported						As Recasted
	Contractual			Fair Value			2012 Recast			Fair
(in thousands)	Amount			Adjustments			Adjustments			Value
Assets acquired:
Cash and cash equivalents	$	61,943		$	(89	)	$	(2	)	$	61,852
Securities available for sale	42,646			—			—			42,646
Loans to be repurchased by the FDIC, net of discount	19,800			(2,797		)	—			17,003
Loans	79,112			(22,666		)	830			57,276
Federal Home Loan Bank stock, at cost	2,491			—			—			2,491
Other real estate owned	14,189			(3,359		)	(1,113		)	9,717
Core deposit intangible	—			64			—			64
Discount	(56,970		)	56,970			—			—
FDIC settlement receivable	784,545			—			—			784,545
Other assets and accrued interest receivable	945			(60		)	—			885
Total assets acquired	$	948,701		$	28,063		$	(285	)	$	976,479
Liabilities assumed:
Deposits:
Non interest-bearing	$	19,754		$	—		$	—		$	19,754
Interest-bearing	927,641			54			—			927,695
Total deposits	947,395			54			—			947,449
Accrued income taxes payable	—			9,988			(100		)	9,888
Other liabilities and accrued interest payable	1,306			110			—			1,416
Total liabilities assumed	$	948,701		$	10,152		$	(100	)	$	958,753
Equity:
Bargain purchase gain, net of taxes	—			17,911			(185		)	17,726
Total liabilities assumed and equity	$	948,701		$	28,063		$	(285	)	$	976,479

11

A summary of the net assets acquired from the FDIC and the estimated fair value adjustments as of the TCB acquisition date follows:

Tennessee Commerce Bank

	January 27, 2012
				Second Quarter			Third Quarter
	As Previously			2012 Recast			2012 Recast			As
(in thousands)	Reported			Adjustments			Adjustments			Recasted
Assets acquired, at contractual amount	$	221,126		$	—		$	—		$	221,126
Liabilities assumed, at contractual amount	(948,701		)	—			—			(948,701		)
Net liabilities assumed per the P&A Agreement	(727,575		)	—			—			(727,575		)
Contractual discount	(56,970		)	—			—			(56,970		)
Net receivable from the FDIC	$	(784,545	)	$	—		$	—		$	(784,545	)
Fair value adjustments:
Loans	$	(22,666	)	$	919		$	(89	)	$	(21,836	)
Discount for loans to be repurchased by the FDIC	(2,797		)	—			—			(2,797		)
Other real estate owned	(3,359		)	(1,000		)	(113		)	(4,472		)
Core deposit intangible	64			—			—			64
Deposits	(54		)	—			—			(54		)
Other assets and accrued interest receivable	(60		)	—			—			(60		)
All other	(199		)	(15		)	13			(201		)
Total fair value adjustments	(29,071		)	(96		)	(189		)	(29,356		)
Discount	56,970			—			—			56,970
Bargain purchase gain, pre-tax	$	27,899		$	(96	)	$	(189	)	$	27,614

On January 27, 2012, the Bank did not immediately acquire the TCB banking facility, including outstanding lease agreements and furniture, fixtures and equipment. During the third quarter of 2012, the Bank renegotiated a new lease with the landlord related to the sole banking facility and acquired all related data processing equipment and fixed assets totaling approximately $573,000.

First Commercial Bank

On September 7, 2012, the Bank acquired specific assets and assumed substantially all of the liabilities of FCB, headquartered in Bloomington, Minnesota from the FDIC, as receiver for FCB, pursuant to the terms of a P&A Agreement — Whole Bank; All Deposits, entered into among RB&T, the FDIC as receiver of FCB and the FDIC. On September 10, 2012, FCB’s sole location re-opened as a division of RB&T.

The Bank acquired approximately $215 million in notional assets from the FDIC as receiver for FCB. In addition, the Bank also recorded a receivable from the FDIC for approximately $64 million, which represented the net difference between the assets acquired and the liabilities assumed adjusted for the discount the Bank received for the acquisition. The FDIC paid substantially all of this receivable to the Bank on September 10, 2012.

During the third quarter of 2012, the Bank recorded an initial bargain purchase gain of $27.1 million as a result of the FCB acquisition. The bargain purchase gain was realized because the overall price paid by the Bank was substantially less than the fair value of the FCB assets acquired and liabilities assumed in the acquisition. During the fourth quarter of 2012, the Bank posted adjustments to the acquired assets for its FDIC-assisted acquisition in the determination of day-one fair values and recorded a net increase to the bargain purchase gain of $712,000, as additional information relative to the day-one fair values became available. During the first quarter of 2013, the Bank posted its final recast adjustment which resulted in an increase of $1.3 million to the bargain purchase gain.

12

Information obtained subsequent to September 7, 2012 and through March 31, 2013 was considered in forming FCB estimates of cash flows and collateral values as of the September 7, 2012 acquisition date, i.e., FCB’s day-one fair values. Day-one fair values for FCB were considered final as of March 31, 2013, which was the date the Bank believed it had received all the information necessary to determine FCB’s day-one fair values.

A summary of the assets acquired and liabilities assumed in the FCB acquisition, including recast adjustments, follows:

First Commercial Bank

	September 7, 2012
	As Previously Reported						As Recasted
							2012 & 2013
	Contractual			Fair Value			Recast			Fair
(in thousands)	Amount			Adjustments			Adjustments			Value
Assets acquired :
Cash and cash equivalents	$	10,524		$	—		$	—		$	10,524
Securities available for sale	12,002			—			—			12,002
Loans	171,744			(44,214		)	2,821			130,351
Federal Home Loan Bank stock, at cost	407			—			—			407
Other real estate owned	19,360			(8,389		)	(785		)	10,186
Core deposit intangible	—			559			—			559
Discount	(79,412		)	79,412			—			—
FDIC settlement receivable	64,326			—			—			64,326
Other assets and accrued interest receivable	829			(95		)	—			734
Total assets acquired	$	199,780		$	27,273		$	2,036		$	229,089
Liabilities assumed:
Deposits:
Non interest-bearing	$	7,197		$	—		$	—		$	7,197
Interest-bearing	189,057			(3		)	—			189,054
Total deposits	196,254			(3		)	—			196,251
Federal Home Loan Bank advances	3,002			63			—			3,065
Accrued income taxes payable	—			9,706			712			10,418
Other liabilities and accrued interest payable	524			101			—			625
Total liabilities assumed	$	199,780		$	9,867		$	712		$	210,359
Equity:
Bargain purchase gain, net of taxes	—			17,406			1,324			18,730
Total liabilities assumed and equity	$	199,780		$	27,273		$	2,036		$	229,089

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A summary of the net assets acquired from the FDIC and the estimated fair value adjustments as of the FCB acquisition date follows:

First Commercial Bank

	September 7, 2012
				Fourth Quarter		First Quarter
	As Previously			2012 Recast		2013 Recast			As
(in thousands)	Reported			Adjustments		Adjustments			Recasted
Assets acquired, at contractual amount	$	214,866		$	—	$	—		$	214,866
Liabilities assumed, at contractual amount	(199,780		)	—		—			(199,780		)
Net liabilities assumed per the P&A Agreement	15,086			—		—			15,086
Contractual discount	(79,412		)	—		—			(79,412		)
Net receivable from the FDIC	$	(64,326	)	$	—	$	—		$	(64,326	)
Fair value adjustments:
Loans	$	(44,214	)	$	423	$	2,398		$	(41,393	)
Other real estate owned	(8,389		)	289		(1,074		)	(9,174		)
Core deposit intangible	559			—		—			559
Deposits	3			—		—			3
Federal Home Loan Bank advances	(63		)	—		—			(63		)
Other assets and accrued interest receivable	(95		)	—		—			(95		)
All other	(101		)	—		—			(101		)
Total fair value adjustments	(52,300		)	712		1,324			(50,264		)
Discount	79,412			—		—			79,412
Bargain purchase gain, pre-tax	$	27,112		$	712	$	1,324		$	29,148

On September 7, 2012, the Bank did not immediately acquire the FCB banking facility, including outstanding lease agreements and furniture, fixtures and equipment. The Bank acquired all data processing equipment and fixed assets totaling approximately $328,000 during the fourth quarter of 2012. During the first quarter of 2013, the Bank renegotiated a new lease with the landlord related to the sole banking facility and acquired all related data processing equipment and fixed assets totaling approximately $233,000.

In October 2013, Republic gave the required 90-day regulatory notice of its intentions to close its sole banking center location in Minneapolis, Minnesota, which it acquired in connection with the FCB acquisition in September 2012.  The Bank is currently under a lease for this location which is set to expire in April 2015. The Bank intends to repurpose the location as a support office until the expiration of its lease or until such time that it is able to negotiate with the landlord a buy-out of its future lease obligations. The banking center is expected to stop transacting business at the Minnesota location with deposit customers in January 2014. The core deposit intangible asset associated with the FCB acquisition totaled $289,000 at September 30, 2013. The Bank intends to accelerate the amortization of this asset in connection with its notice to repurpose the former FCB banking center.

FAIR VALUE METHODS ASSOCIATED WITH THE 2012 FDIC-ASSISTED ACQUISITIONS OF FAILED BANKS

The following is a description of the methods used to determine the fair values of significant assets and liabilities at the respective acquisition dates as presented throughout:

Cash and Due from Banks and Interest-bearing Deposits in Banks — The carrying amount of these assets, adjusted for any cash items deemed uncollectible by management, was determined to be a reasonable estimate of fair value based on their short-term nature.

Investment Securities — Investment securities were acquired at fair value from the FDIC. The fair values provided by the FDIC were reviewed and considered reasonable based on management’s understanding of the marketplace. Federal Home

14

Loan Bank (“FHLB”) stock was acquired at cost, as it is not practicable to determine its fair value given restrictions on its marketability.

With the TCB acquisition, the Bank acquired $43 million in securities at fair value. The majority of the securities acquired were subsequently sold or called during the first quarter of 2012, with the Bank realizing a net gain on the corresponding transactions of approximately $56,000. The Bank sold these securities because management determined that the acquired securities did not fit within the Bank’s traditional investment strategies.

With the FCB acquisition, the Bank acquired $12 million in securities at fair value. The nature of these securities acquired was consistent with the Bank’s existing investment portfolio and the Bank elected to retain these securities.

Loans — Fair values for loans were based on a discounted cash flow methodology that considered factors including the type of loan and related collateral, classification status, interest rate, term of loan and whether or not the loan was amortizing, and a discount rate reflecting current market rates for new originations of comparable loans adjusted for the risk inherent in the cash flow estimates.

Certain loans that were deemed to be collateral dependent were valued based on the fair value of the underlying collateral. These estimates were based on the most recently available real estate appraisals with certain adjustments made based on the type of property, age of appraisal, current status of the property and other related factors to estimate the current value of the collateral.

With the TCB acquisition, the Bank purchased approximately $99 million in loans with a recasted fair value of approximately $74 million. During 2012, the FDIC repurchased approximately $20 million of TCB loans at a price of par less the original discount of $3 million that the Bank received when it purchased the loans. Loans repurchased by the FDIC were valued at the contractual amount reduced by the applicable discount.

With the FCB acquisition, the Bank purchased approximately $172 million in loans with a recasted fair value of approximately $130 million.

15

The composition of acquired loans as of the respective acquisition dates follows:

Tennessee Commerce Bank

	January 27, 2012
	As Previously Reported					As Recasted
	Contractual		Fair Value			2012 Recast			Fair
(in thousands)	Amount		Adjustments			Adjustments			Value
Residential real estate	$	22,693	$	(4,076	)	$	243		$	18,860
Commercial real estate	18,646		(6,971		)	1,988			13,663
Construction & Land Development	14,877		(2,681		)	(1,972		)	10,224
Commercial	13,224		(6,939		)	496			6,781
Home equity	6,220		(606		)	24			5,638
Consumer:
Credit cards	608		(22		)	—			586
Overdrafts	672		(621		)	—			51
Other consumer	2,172		(750		)	51			1,473
Total loans	$	79,112	$	(22,666	)	$	830		$	57,276

First Commercial Bank

	September 7, 2012
	As Previously Reported					As Recasted
						2012 & 2013
	Contractual		Fair Value			Recast			Fair
(in thousands)	Amount		Adjustments			Adjustments			Value
Residential real estate	$	48,409	$	(9,634	)	$	180		$	38,955
Commercial real estate	82,161		(12,330		)	(1,746		)	68,085
Construction & Land Development	14,918		(6,182		)	316			9,052
Commercial	25,475		(16,060		)	4,120			13,535
Home equity	404		(3		)	—			401
Consumer:
Credit cards	—		—			—			—
Overdrafts	6		—			—			6
Other consumer	371		(5		)	(49		)	317
Total loans	$	171,744	$	(44,214	)	$	2,821		$	130,351

The following tables present the purchased loans that are included within the scope of ASC Topic 310-30, Accounting for Purchased Loans with Deteriorated Credit Quality, at the respective acquisition dates:

Tennessee Commerce Bank

	January 27, 2012
	As Previously			2012 Recast			As
(in thousands)	Reported			Adjustments			Recasted
Contractually-required principal and interest payments	$	52,278		$	—		$	52,278
Non-accretable difference	(21,308		)	903			(20,405		)
Cash flows expected to be collected	30,970			903			31,873
Accretable difference	(425		)	(73		)	(498		)
Fair value of loans	$	30,545		$	830		$	31,375

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First Commercial Bank

	September 7, 2012
				2012 & 2013
	As Previously			Recast			As
(in thousands)	Reported			Adjustments			Recasted
Contractually-required principal and interest payments	$	116,940		$	4,213		$	121,153
Non-accretable difference	(33,523		)	4,640			(28,883		)
Cash flows expected to be collected	83,417			8,853			92,270
Accretable difference	(2,827		)	(1,819		)	(4,646		)
Fair value of loans	$	80,590		$	7,034		$	87,624

Core Deposit Intangible — In its assumption of the deposit liabilities for the 2012 FDIC-assisted acquisitions, the Bank believed that the customer relationships associated with these deposits had intangible value, although this value was anticipated to be modest given the nature of the deposit accounts and the anticipated rapid account run-off since acquired. The Bank recorded core deposit intangible assets of $64,000 and $559,000 related to the TCB and FCB acquisitions. The fair value of these intangible assets were estimated based on a discounted cash flow methodology that gave appropriate consideration to type of deposit, deposit retention, cost of the deposit base and net maintenance cost attributable to customer deposits.

Other Real Estate Owned (“OREO”) — OREO is presented at fair value, which is the estimated value that management expects to receive when the property is sold, net of related costs to sell. These estimates were based on the most recently available real estate appraisals, with certain adjustments made based on the type of property, age of appraisal, current status of the property and other related factors to estimate the current value of the property.

The Bank acquired $14 million in OREO related to the TCB acquisition, which was initially reduced by a $3 million fair value adjustment as of January 27, 2012. Subsequent to the first quarter, the Bank posted a net negative recast adjustment of $1 million to OREO to mark several properties to market based on appraisals received.

The Bank acquired $19 million in OREO related to the FCB acquisition, which was initially reduced by an $8 million fair value adjustment as of September 7, 2012. During the fourth quarter of 2012 and the first quarter of 2013, the Bank posted  a net negative recast adjustment of $785,000 to OREO to mark several properties to market based on appraisals received.

FHLB Advances — The Bank acquired $3 million in FHLB advances related to the FCB acquisition. The advances were marked to market as of the acquisition date based on early prepayment payoffs (including penalties) received from the FHLB.
The Bank paid off the advances during the third quarter of 2012 at no additional loss beyond the fair value adjustment as of their date of acquisition.

Deposits — The fair values used for the demand and savings deposits that comprise the acquisition accounts acquired, by definition, equal the amount payable on demand at the acquisition date. The fair values for time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered to the interest rates embedded on such time deposits.

The Bank assumed $947 million in deposits at estimated fair value in connection with the TCB acquisition. As permitted by the FDIC, within seven days of the acquisition date, RB&T had the option to disclose to TCB’s deposit customers that it was repricing the acquired deposit portfolios. In addition, depositors had the option to withdraw funds without penalty. The Bank chose to reprice all of the acquired TCB interest-bearing deposits, including transaction, time and brokered deposits with an effective date of January 28, 2012. This re-pricing triggered significant time and brokered deposit run-off consistent with management’s expectations.

17

The Bank assumed $196 million in deposits at estimated fair value in connection with the FCB acquisition. The Bank chose to re-price all of the acquired FCB time deposits with an effective date of October 1, 2012. This re-pricing triggered certificate of deposit run-off consistent with management’s expectations.

The composition of deposits assumed at fair value as of the respective acquisition dates follows:

Tennessee Commerce Bank

	January 27, 2012
	Contractual		Fair Value		Recast		Fair
(in thousands)	Amount		Adjustments		Adjustments		Value
Demand	$	3,190	$	—	$	—	$	3,190
Money market accounts	11,338		—		—		11,338
Savings	91,859		—		—		91,859
Individual retirement accounts*	15,486		—		—		15,486
Time deposits, $100,000 and over*	278,825		—		—		278,825
Other certificates of deposit*	108,003		14		—		108,017
Brokered certificates of deposit*	418,940		40		—		418,980
Total interest-bearing deposits	927,641		54		—		927,695
Total non interest-bearing deposits	19,754		—		—		19,754
Total deposits	$	947,395	$	54	$	—	$	947,449

First Commercial Bank

	September 7, 2012
	Contractual		Fair Value			Recast		Fair
(in thousands)	Amount		Adjustments			Adjustments		Value
Demand	$	4,003	$	—		$	—	$	4,003
Money market accounts	38,187		—			—		38,187
Savings	—		—			—		—
Individual retirement accounts*	16,780		—			—		16,780
Time deposits, $100,000 and over*	14,740		—			—		14,740
Other certificates of deposit*	62,033		—			—		62,033
Brokered certificates of deposit*	53,314		(3		)	—		53,311
Total interest-bearing deposits	189,057		(3		)	—		189,054
Total non interest-bearing deposits	7,197		—			—		7,197
Total deposits	$	196,254	$	(3	)	$	—	$	196,251

* - denotes a time deposit

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3.INVESTMENT SECURITIES

Securities available for sale:

The gross amortized cost and fair value of securities available for sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income were as follows:

	Gross		Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
September 30, 2013 (in thousands)	Cost		Gains		Losses			Value
U.S. Treasury securities and U.S. Government agencies	$	122,401	$	615	$	(83	)	$	122,933
Private label mortgage backed security	5,036		421		—			5,457
Mortgage backed securities - residential	156,656		4,744		(288		)	161,112
Collateralized mortgage obligations	176,625		1,629		(1,036		)	177,218
Corporate bonds	15,016		2		(114		)	14,904
Total securities available for sale	$	475,734	$	7,411	$	(1,521	)	$	481,624

	Gross		Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
December 31, 2012 (in thousands)	Cost		Gains		Losses			Value
U.S. Treasury securities and U.S. Government agencies	$	38,931	$	547	$	(6	)	$	39,472
Private label mortgage backed security	5,684		3		—			5,687
Mortgage backed securities - residential	190,569		6,641		—			197,210
Collateralized mortgage obligations	194,427		1,580		(130		)	195,877
Total securities available for sale	$	429,611	$	8,771	$	(136	)	$	438,246

Securities to be held to maturity:

The carrying value, gross unrecognized gains and losses, and fair value of securities to be held to maturity were as follows:

			Gross		Gross
	Carrying		Unrecognized		Unrecognized			Fair
September 30, 2013 (in thousands)	Value		Gains		Losses			Value
U.S. Treasury securities and U.S. Government agencies	$	2,329	$	9	$	(12	)	$	2,326
Mortgage backed securities - residential	423		42		—			465
Collateralized mortgage obligations	44,305		487		(14		)	44,778
Corporate bonds	5,000		—		(161		)	4,839
Total securities to be held to maturity	$	52,057	$	538	$	(187	)	$	52,408

			Gross		Gross
	Carrying		Unrecognized		Unrecognized		Fair
December 31, 2012 (in thousands)	Value		Gains		Losses		Value
U.S. Treasury securities and U.S. Government agencies	$	4,388	$	27	$	—	$	4,415
Mortgage backed securities - residential	827		63		—		890
Collateralized mortgage obligations	40,795		316		—		41,111
Total securities to be held to maturity	$	46,010	$	406	$	—	$	46,416

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During the three and nine months ended September 30, 2013, there were no sales or calls of securities available for sale. During the nine months ended September 30, 2012, the Bank recognized net securities gains in earnings for securities available for sale as follows:

·The Bank sold six available for sale securities acquired in the TCB acquisition with an amortized cost of $35 million, resulting in a pre-tax gain of $53,000 during the first quarter of 2012.

·The Bank realized $3,000 in pre-tax gains related to unamortized discount accretion on $10 million of callable U.S. Government agencies that were called before their maturity during the first quarter of 2012.

The tax provision related to the Bank’s realized gains totaled $0 and $20,000 for the three and nine months ended September 30, 2012, respectively.

The amortized cost and fair value of the investment securities portfolio by contractual maturity at September 30, 2013 follows. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations whether or not there are associated call or prepayment penalties. Securities not due at a single maturity date are detailed separately.

	Securities				Securities
	available for sale				held to maturity
	Amortized		Fair		Carrying		Fair
September 30, 2013 (in thousands)	Cost		Value		Value		Value
Due in one year or less	$	11,185	$	11,315	$	—	$	—
Due from one year to five years	113,719		114,146		2,329		2,326
Due from five years to ten years	12,513		12,376		5,000		4,839
Due beyond ten years	—		—		—		—
Private label mortgage backed security	5,036		5,457		—		—
Mortgage backed securities - residential	156,656		161,112		423		465
Collateralized mortgage obligations	176,625		177,218		44,305		44,778
Total securities	$	475,734	$	481,624	$	52,057	$	52,408

Corporate Bonds

During the nine months ended September 30, 2013, the Bank purchased $20 million in floating rate corporate bonds with an initial weighted average yield of 1.36%. The bonds, which have a weighted average life of seven years, were rated “investment grade” by accredited rating agencies as of their respective purchase dates. The total fair value of the Bank’s corporate bonds represented 4% of the Bank’s investment portfolio as of September 30, 2013.

Mortgage backed Securities

At September 30, 2013, with the exception of the $6 million private label mortgage backed security, all other mortgage backed securities held by the Bank were issued by U.S. government-sponsored entities and agencies, primarily Freddie Mac (“FHLMC”) and Fannie Mae (“FNMA”), institutions that the government has affirmed its commitment to support. At September 30, 2013 and December 31, 2012, there were gross unrealized/unrecognized losses of $1.3 million and $130,000 related to available for sale mortgage backed securities. Because the decline in fair value of these mortgage backed securities is attributable to changes in interest rates and illiquidity, and not credit quality, and because the Bank does not have the intent to sell these mortgage backed securities, and it is likely that it will not be required to sell the securities before their anticipated recovery, management does not consider these securities to be other-than-temporarily impaired.

At September 30, 2013 and December 31, 2012, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity.

20

Market Loss Analysis

Securities with unrealized losses at September 30, 2013 and December 31, 2012, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows:

	Less than 12 months					12 months or more				Total
September 30, 2013 (in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available for sale
U.S. Treasury securities and U.S. Government agencies	$	11,321	$	(83	)	$	—	$	—	$	11,321	$	(83	)
Mortgage backed securities - residential	19,153		(288		)	—		—		19,153		(288		)
Collateralized mortgage obligations	40,356		(1,036		)	—		—		40,356		(1,036		)
Corporate bonds	9,886		(114		)	—		—		9,886		(114		)
Total available for sale	$	80,716	$	(1,521	)	$	—	$	—	$	80,716	$	(1,521	)

	Less than 12 months					12 months or more				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Held to maturity
U.S. Treasury securities and U.S. Government agencies	$	524	$	(12	)	$	—	$	—	$	524	$	(12	)
Collateralized mortgage obligations	9,741		(14		)	—		—		9,741		(14		)
Corporate bonds	4,839		(161		)	—		—		4,839		(161		)
Total held to maturity	$	15,104	$	(187	)	$	—	$	—	$	15,104	$	(187	)

	Less than 12 months					12 months or more				Total
December 31, 2012 (in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available for sale
U.S. Treasury securities and U.S. Government agencies	$	3,588	$	(6	)	$	—	$	—	$	3,588	$	(6	)
Collateralized mortgage obligations	20,508		(130		)	—		—		20,508		(130		)
Total available for sale	$	24,096	$	(136	)	$	—	$	—	$	24,096	$	(136	)

21

At September 30, 2013, the Bank’s security portfolio consisted of 165 securities, 19 of which were in an unrealized loss position. At December 31, 2012, the Bank’s security portfolio consisted of 153 securities, seven of which were in an unrealized loss position.

Other-than-temporary impairment (“OTTI”)

Unrealized losses for all investment securities are reviewed to determine whether the losses are “other-than-temporary.” Investment securities are evaluated for OTTI on at least a quarterly basis and more frequently when economic or market conditions warrant such an evaluation to determine whether a decline in their value below amortized cost is other-than-temporary. In conducting this assessment, the Bank evaluates a number of factors including, but not limited to:

·The length of time and the extent to which fair value has been less than the amortized cost basis;

·The Bank’s intent to hold until maturity or sell the debt security prior to maturity;

·An analysis of whether it is more likely than not that the Bank will be required to sell the debt security before its anticipated recovery;

·Adverse conditions specifically related to the security, an industry, or a geographic area;

·The historical and implied volatility of the fair value of the security;

·The payment structure of the security and the likelihood of the issuer being able to make payments;

·Failure of the issuer to make scheduled interest or principal payments;

·Any rating changes by a rating agency; and

·Recoveries or additional decline in fair value subsequent to the balance sheet date.

The term “other-than-temporary” is not intended to indicate that the decline in fair value is permanent, but indicates that the prospects for a near-term recovery of value are not necessarily favorable, or that there is a general lack of evidence to support a realizable value equal to or greater than the carrying value of the investment. Once a decline in value is determined to be other-than-temporary, the value of the security is reduced and a corresponding charge to earnings is recognized for the anticipated credit losses.

The Bank owns one private label mortgage backed security with a total carrying value of $6 million at September 30, 2013. This security, with an average remaining life currently estimated at four years, is mostly backed by “Alternative A” first lien mortgage loans, but also has an insurance “wrap” or guarantee as an added layer of protection to the security holder. This asset is illiquid, and as such, the Bank determined it to be a Level 3 security in accordance with ASC Topic 820, Fair Value Measurements and Disclosures. Based on this determination, the Bank utilized an income valuation model (“present value model”) approach, in determining the fair value of the security. This approach is beneficial for positions that are not traded in active markets or are subject to transfer restrictions, and/or where valuations are adjusted to reflect illiquidity and/or non-transferability. Such adjustments are generally based on available market evidence. In the absence of such evidence, management’s best estimate is used. Management’s best estimate consists of both internal and external support for this investment.

See additional discussion regarding the Bank’s private label mortgage backed security under Footnote 7 “Fair Value” in this section of the filing.

Pledged Investment Securities

Investment securities pledged to secure public deposits, securities sold under agreements to repurchase and securities held for other purposes, as required or permitted by law are as follows:

(in thousands)	September 30, 2013		December 31, 2012
Carrying amount	$	177,286	$	334,560
Fair value	177,761		334,843

22

4.LOANS AND ALLOWANCE FOR LOAN AND LOSSES

The composition of the loan portfolio follows:

(in thousands)	September 30, 2013		December 31, 2012
Residential real estate:
Owner occupied	$	1,100,633	$	1,145,495
Non owner occupied	109,641		74,539
Commercial real estate	766,813		714,642
Commercial real estate - purchased whole loans	34,017		33,531
Construction & land development	53,618		68,214
Commercial	114,416		130,681
Warehouse lines of credit	122,810		216,576
Home equity	225,556		241,607
Consumer:
Credit cards	8,948		8,716
Overdrafts	851		955
Other consumer	16,132		15,241
Total loans	2,553,435		2,650,197
Less: Allowance for loan losses	23,492		23,729
Total loans, net	$	2,529,943	$	2,626,468

2012 FDIC- Assisted Acquisitions of Failed Banks

The contractual amount of the loans associated with the TCB transaction decreased from $79 million as of the acquisition date to $35 million as of September 30, 2013. The carrying value of these loans was $57 million as of the acquisition date compared to $29 million as of September 30, 2013.

The contractual amount of the loans associated with the FCB transaction decreased from $172 million as of the acquisition date to $99 million as of September 30, 2013. The carrying value of these loans was $130 million as of the acquisition date compared to $77 million as of September 30, 2013.

The composition of TCB and FCB loans outstanding at September 30, 2013 and December 31, 2012 follows:

	Tennessee		First		Total
	Commerce		Commercial		Acquired
September 30, 2013 (in thousands)	Bank		Bank		Banks
Residential real estate	$	9,502	$	21,110	$	30,612
Commercial real estate	13,484		50,257		63,741
Construction & land development	901		1,886		2,787
Commercial	251		3,678		3,929
Home equity	4,292		400		4,692
Consumer:
Credit cards	213		—		213
Overdrafts	3		3		6
Other consumer	81		159		240
Total loans	$	28,727	$	77,493	$	106,220

The above table is inclusive of loans originated subsequent to the respective acquisition dates.

23

	Tennessee		First		Total
	Commerce		Commercial		Acquired
December 31, 2012 (in thousands)	Bank		Bank		Banks
Residential real estate	$	12,270	$	32,459	$	44,729
Commercial real estate	8,015		61,758		69,773
Construction & land development	4,235		3,301		7,536
Commercial	1,284		9,405		10,689
Home equity	4,183		385		4,568
Consumer:
Credit cards	321		—		321
Overdrafts	1		11		12
Other consumer	655		333		988
Total loans	$	30,964	$	107,652	$	138,616

The tables below reconcile the contractually-required and carrying amounts of acquired TCB and FCB loans at September 30, 2013 and December 31, 2012:

	Tennessee			First			Total
	Commerce			Commercial			Acquired
September 30, 2013 (in thousands)	Bank			Bank			Banks
Contractually-required principal	$	34,890		$	98,648		$	133,538
Non-accretable difference	(5,089		)	(18,433		)	(23,522		)
Accretable difference	(1,074		)	(2,722		)	(3,796		)
Total carrying value of loans	$	28,727		$	77,493		$	106,220

	Tennessee			First			Total
	Commerce			Commercial			Acquired
December 31, 2012 (in thousands)	Bank			Bank			Banks
Contractually-required principal	$	42,188		$	139,156		$	181,344
Non-accretable difference	(10,393		)	(28,870		)	(39,263		)
Accretable difference	(831		)	(2,634		)	(3,465		)
Total carrying value of loans	$	30,964		$	107,652		$	138,616

See additional discussion regarding the TCB and FCB acquisitions under Footnote 2 “2012 FDIC-Assisted Acquisitions of Failed Banks” in this section of the filing.

24

Credit Quality Indicators

Based on the Bank’s internal analysis performed, the risk category of loans by class follows:

									Purchased		Purchased
									Credit		Credit
									Impaired		Impaired		Total
September 30, 2013			Special				Doubtful /		Loans -		Loans -		Rated
(in thousands)	Pass		Mention *		Substandard *		Loss		Group 1**		Substandard***		Loans****
Residential real estate:
Owner occupied	$	—	$	28,758	$	9,348	$	—	$	3,138	$	—	$	41,244
Non owner occupied	—		1,487		1,601		—		8,658		—		11,746
Commercial real estate	697,013		13,130		21,648		—		35,022		—		766,813
Commercial real estate -
Purchased whole loans	34,017		—		—		—		—		—		34,017
Construction & land development	48,688		1,712		1,822		—		1,396		—		53,618
Commercial	109,880		2,262		95		—		1,956		223		114,416
Warehouse lines of credit	122,810		—		—		—		—		—		122,810
Home equity	—		332		1,593		—		—		—		1,925
Consumer:
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Other consumer	—		51		70		—		34		—		155
Total rated loans	$	1,012,408	$	47,732	$	36,177	$	—	$	50,204	$	223	$	1,146,744

									Purchased		Purchased
									Credit		Credit
									Impaired		Impaired		Total
December 31, 2012			Special				Doubtful /		Loans -		Loans -		Rated
(in thousands)	Pass		Mention*		Substandard*		Loss		Group 1**		Substandard***		Loans*****
Residential real estate:
Owner occupied	$	—	$	26,031	$	8,700	$	—	$	2,413	$	—	$	37,144
Non owner occupied	—		2,616		3,350		—		20,190		—		26,156
Commercial real estate	624,630		17,216		28,433		—		44,362		—		714,641
Commercial real estate -
Purchased whole loans	33,531		—		—		—		—		—		33,531
Construction & land development	61,555		1,088		3,878		—		1,692		—		68,213
Commercial	121,169		2,639		2,592		—		4,280		—		130,680
Warehouse lines of credit	216,576		—		—		—		—		—		216,576
Home equity	—		648		2,346		—		—		—		2,994
Consumer:
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Other consumer	—		387		53		—		41		—		481
Total rated loans	$	1,057,461	$	50,625	$	49,352	$	—	$	72,978	$	—	$	1,230,416

* - Special Mention and Substandard loans include $2 million and $6 million at September 30, 2013 and $4 million and $11 million at December 31, 2012, respectively, which were removed from the Purchased Credit Impaired population due to a post-acquisition troubled debt restructuring of the loan.

** - Purchased Credit Impaired loans — Group 1 (“PCI-1”) represent loans whose cash flow expectations reflect no projected additional loss to contractual principal beyond the amount of the loan’s non-accretable yield that was established as part of its initial acquisition value. PCI-1 loans are considered impaired if the timing of the loan’s projected cash flows deteriorate from management’s initial projections.

*** - Purchased Credit Impaired loans - Substandard (“PCI-Sub”) represent former PCI-1 loans downgraded subsequent to day-one due to projected further impairment to contractual principal beyond the loan’s initial non-accretable yield that was established as part of its initial acquisition value. PCI-Sub loans are considered impaired and have required additional loan loss provisions.

**** - The above tables exclude all non-classified residential real estate and consumer loans at the respective period ends. The tables also exclude most non classified small commercial and commercial real estate relationships totaling $100,000 or less. These loans are not rated since they are accruing interest and not past due 80 days or more.

25

Allowance for Loan Losses (“Allowance”)

Activity in the Allowance follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in thousands)	2013			2012			2013			2012
Allowance for loan losses at beginning of period	$	22,491		$	22,510		$	23,729		$	24,063
Charge offs - Traditional Banking	(1,627		)	(1,220		)	(4,744		)	(7,444		)
Charge offs - Refund Anticipation Loans	—			—			—			(11,097		)
Total charge offs	(1,627		)	(1,220		)	(4,744		)	(18,541		)
Recoveries - Traditional Banking	371			267			1,231			976
Recoveries - Refund Anticipation Loans	57			460			796			3,883
Total recoveries	428			727			2,027			4,859
Net loan (charge offs) recoveries - Traditional Banking	(1,256		)	(953		)	(3,513		)	(6,468		)
Net loan (charge offs) recoveries - Refund Anticipation Loans	57			460			796			(7,214		)
Net loan (charge offs) recoveries	(1,199		)	(493		)	(2,717		)	(13,682		)
Provision for loan losses - Traditional Banking	2,257			2,543			3,276			6,505
Provision for loan losses - Refund Anticipation Loans	(57		)	(460		)	(796		)	7,214
Total provision for loan losses	2,200			2,083			2,480			13,719
Allowance for loan losses at end of period	$	23,492		$	24,100		$	23,492		$	24,100

The Allowance calculation includes the following qualitative factors, which are considered in combination with the Bank’s historical loss rates in determining the general loss reserve within the Allowance:

·Changes in nature, volume and seasoning of the loan portfolio;

·Changes in experience, ability and depth of lending management and other relevant staff;

·Changes in the quality of the Bank’s loan review system;

·Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses;

·Changes in the volume and severity of past due, non-accrual and classified loans;

·Changes in the value of underlying collateral for collateral-dependent loans;

·Changes in international, national, regional, and local economic and business conditions and developments that affect the collectibility of the loan portfolio, including the condition of various market segments;

·The existence and effect of any concentrations of credit, and changes in the level of such concentrations; and

·The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the institution’s existing portfolio.

26

The following tables present the activity in the Allowance by portfolio class for the three months ended September 30, 2013 and 2012:

										Commercial
	Residential Real Estate									Real Estate -								Warehouse
Three Months Ended	Owner			Non Owner			Commercial			Purchased		Construction &						Lines of
September 30, 2013 (in thousands)	Occupied			Occupied			Real Estate			Whole Loans		Land Development			Commercial			Credit
Beginning balance	$	7,563		$	642		$	8,763		$	34	$	1,587		$	710		$	462
Provision for loan losses	1,198			157			686			—		16			232			(143		)
Loans charged off	(578		)	(67		)	(307		)	—		(16		)	(102		)	—
Recoveries	20			59			38			—		7			19			—
Ending balance	$	8,203		$	791		$	9,180		$	34	$	1,594		$	859		$	319

(continued)

				Refund			Consumer
	Home			Anticipation			Credit						Other
	Equity			Loans			Cards			Overdrafts			Consumer			Total
Beginning balance	$	1,932		$	—		$	344		$	249		$	205		$	22,491
Provision for loan losses	104			(57		)	(18		)	26			(1		)	2,200
Loans charged off	(218		)	—			(60		)	(169		)	(110		)	(1,627		)
Recoveries	55			57			4			95			74			428
Ending balance	$	1,873		$	—		$	270		$	201		$	168		$	23,492

										Commercial
	Residential Real Estate									Real Estate -								Warehouse
Three Months Ended	Owner			Non Owner			Commercial			Purchased		Construction &						Lines of
September 30, 2012 (in thousands)	Occupied			Occupied			Real Estate			Whole Loans		Land Development			Commercial			Credit
Beginning balance	$	6,190		$	897		$	8,271		$	40	$	3,097		$	603		$	223
Provision for loan losses	571			622			743			—		(192		)	140			194
Loans charged off	(348		)	(20		)	(37		)	—		—			(11		)	—
Recoveries	32			2			24			—		28			3			—
Ending balance	$	6,445		$	1,501		$	9,001		$	40	$	2,933		$	735		$	417

(continued)

				Refund			Consumer
	Home			Anticipation			Credit						Other
	Equity			Loans			Cards			Overdrafts			Consumer			Total
Beginning balance	$	2,691		$	—		$	192		$	125		$	181		$	22,510
Provision for loan losses	341			(460		)	11			26			87			2,083
Loans charged off	(633		)	—			(9		)	(100		)	(62		)	(1,220		)
Recoveries	12			460			9			101			56			727
Ending balance	$	2,411		$	—		$	203		$	152		$	262		$	24,100

27

The following tables present the activity in the Allowance by portfolio class for the nine months ended September 30, 2013 and 2012:

										Commercial
	Residential Real Estate									Real Estate -								Warehouse
Nine Months Ended	Owner			Non Owner			Commercial			Purchased		Construction &						Lines of
September 30, 2013 (in thousands)	Occupied			Occupied			Real Estate			Whole Loans		Land Development			Commercial			Credit
Beginning balance	$	7,006		$	1,049		$	8,843		$	34	$	2,769		$	580		$	541
Provision for loan losses	2,269			(106		)	1,192			—		(604		)	618			(222		)
Loans charged off	(1,291		)	(225		)	(972		)	—		(616		)	(412		)	—
Recoveries	219			73			117			—		45			73			—
Ending balance	$	8,203		$	791		$	9,180		$	34	$	1,594		$	859		$	319

(continued)

				Refund			Consumer
	Home			Anticipation			Credit						Other
	Equity			Loans			Cards			Overdrafts			Consumer			Total
Beginning balance	$	2,348		$	—		$	210		$	198		$	151		$	23,729
Provision for loan losses	(248		)	(796		)	166			153			58			2,480
Loans charged off	(354		)	—			(120		)	(474		)	(280		)	(4,744		)
Recoveries	127			796			14			324			239			2,027
Ending balance	$	1,873		$	—		$	270		$	201		$	168		$	23,492

										Commercial
	Residential Real Estate									Real Estate -								Warehouse
Nine Months Ended	Owner			Non Owner			Commercial			Purchased		Construction &						Lines of
September 30, 2012 (in thousands)	Occupied			Occupied			Real Estate			Whole Loans		Land Development			Commercial			Credit
Beginning balance	$	5,212		$	1,142		$	7,724		$	—	$	3,042		$	1,025		$	104
Allocation of previously unallocated allowance	1,117			146			47			—		—			—			—
Provision for loan losses	2,617			255			1,513			40		1,604			(293		)	313
Loans charged off	(2,422		)	(318		)	(353		)	—		(1,796		)	(18		)	—
Recoveries	183			14			70			—		83			21			—
Ending balance	$	6,707		$	1,239		$	9,001		$	40	$	2,933		$	735		$	417

(continued)

				Refund			Consumer
	Home			Anticipation			Credit						Other
	Equity			Loans			Cards			Overdrafts			Consumer			Unallocated*			Total
Beginning balance	$	2,984		$	—		$	503		$	135		$	227		$	1,965		$	24,063
Allocation of previously unallocated allowance*	536			—			47			17			55			(1,965		)	—
Provision for loan losses	765			7,214			(293		)	(14		)	(2		)	—			13,719
Loans charged off	(1,947		)	(11,097		)	(87		)	(318		)	(185		)	—			(18,541		)
Recoveries	73			3,883			33			332			167			—			4,859
Ending balance	$	2,411		$	—		$	203		$	152		$	262		$	—		$	24,100

* Allocation was made January 1, 2012 based on a methodology change to the Company’s Allowance .

28

Non-performing Loans and Non-performing Assets

Detail of non-performing loans and non-performing assets follows:

(dollars in thousands)	September 30, 2013		December 31, 2012
Loans on non-accrual status(1)	$	18,407	$	18,506
Loans past due 90 days-or-more and still on accrual(2)	1,839		3,173
Total non-performing loans	20,246		21,679
Other real estate owned	15,247		26,203
Total non-performing assets	$	35,493	$	47,882

Credit Quality Ratios:
Non-performing loans to total loans	0.79	%	0.82	%
Non-performing assets to total loans (including OREO)	1.38	%	1.79	%
Non-performing assets to total assets	1.07	%	1.41	%

(1)Loans on non-accrual status include impaired loans.

(2)All loans past due 90 days-or-more and still accruing are PCI loans accounted for under ASC 310-30.

Non-performing loans and non-performing asset balances related to the 2012 FDIC-assisted acquisitions, and included in the tables above at September 30, 2013 and December 31, 2012, are presented in the tables below:

	Tennessee		First		Total
	Commerce		Commercial		Acquired
September 30, 2013 (dollars in thousands)	Bank		Bank		Banks
Loans on non-accrual status(1)	$	21	$	18	$	39
Loans past due 90 days-or-more and still on accrual(2)	414		1,425		1,839
Total non-performing loans	435		1,443		1,878
Other real estate owned	705		4,798		5,503
Total non-performing assets	$	1,140	$	6,241	$	7,381

Credit Quality Ratios - Acquired Banks:
Non-performing loans to total loans	1.77	%
Non-performing assets to total loans (including OREO)	6.61	%
Non-performing assets to total assets	6.57	%

(1)Loans on non-accrual status include impaired loans.

(2)All loans past due 90 days-or-more and still accruing were PCI loans accounted for under ASC 310-30.

29

	Tennessee		First		Total
	Commerce		Commercial		Acquired
December 31, 2012 (dollars in thousands)	Bank		Bank		Banks
Loans on non-accrual status (1)	$	—	$	—	$	—
Loans past due 90-days-or-more and still on accrual (2)	801		2,372		3,173
Total non-performing loans	801		2,372		3,173
Other real estate owned	2,100		12,398		14,498
Total non-performing assets	$	2,901	$	14,770	$	17,671

Credit Quality Ratios - Acquired Banks:
Non-performing loans to total loans	2.29	%
Non-performing assets to total loans (including OREO)	11.54	%
Non-performing assets to total assets	8.73	%

(1)Loans on non-accrual status include impaired loans.

(2)All loans past due 90 days-or-more and still accruing were PCI loans accounted for under ASC 310-30.

See additional discussion regarding the TCB and FCB acquisitions under Footnote 2 “2012 FDIC-Assisted Acquisitions of Failed Banks” in this section of the filing.

The following table presents the recorded investment in non-accrual loans and loans past due 90-days-or-more and still on accrual by class of loans:

					Loans Past Due 90-Days-or-More
	Non-Accrual Loans				and Still Accruing Interest
(in thousands)	September 30, 2013		December 31, 2012		September 30, 2013		December 31, 2012
Residential real estate:
Owner occupied	$	8,708	$	9,298	$	396	$	730
Non owner occupied	1,482		1,376		—		—
Commercial real estate	6,243		3,756		139		712
Commercial real estate - purchased whole loans	—		—		—		—
Construction & land development	803		1,777		96		531
Commercial	329		334		1,208		1,200
Warehouse lines of credit	—		—		—		—
Home equity	722		1,868		—		—
Consumer:
Credit cards	—		—		—		—
Overdrafts	—		—		—		—
Other consumer	120		97		—		—
Total	$	18,407	$	18,506	$	1,839	$	3,173

Non-accrual loans and loans past due 90-days-or-more and still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. Non-accrual loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and held current for six consecutive months and future payments are reasonably assured. Troubled debt restructurings (“TDR”s) on non-accrual status are reviewed for return to accrual status on an individual basis, with additional consideration given to performance under the modified terms. Loans past due 90-days-or-more and still on accrual currently only represent PCI loans accounted for under ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality.

30

Delinquent Loans

The following tables present the aging of the recorded investment in loans by class of loans:

	30 - 59			60 - 89			Greater than			Total			Total
September 30, 2013	Days			Days			90 Days			Loans			Loans Not		Total
(dollars in thousands)	Delinquent			Delinquent			Delinquent*			Delinquent			Delinquent		Loans
Residential real estate:
Owner occupied	$	2,176		$	1,572		$	3,653		$	7,401		$	1,093,232	$	1,100,633
Non owner occupied	342			983			131			1,456			108,185		109,641
Commercial real estate	703			—			2,417			3,120			763,693		766,813
Commercial real estate - purchased whole loans	—			—			—			—			34,017		34,017
Construction & land development	—			97			96			193			53,425		53,618
Commercial	4			129			1,392			1,525			112,891		114,416
Warehouse lines of credit	—			—			—			—			122,810		122,810
Home equity	720			8			355			1,083			224,473		225,556
Consumer:
Credit cards	31			24			—			55			8,893		8,948
Overdrafts	141			2			—			143			708		851
Other consumer	73			17			21			111			16,021		16,132
Total	$	4,190		$	2,832		$	8,065		$	15,087		$	2,538,348	$	2,553,435
Delinquent loans to total loans	0.16		%	0.11		%	0.32		%	0.59		%

	30 - 59			60 - 89			Greater than			Total			Total
December 31, 2012	Days			Days			90 Days			Loans			Loans Not		Total
(dollars in thousands)	Delinquent			Delinquent			Delinquent *			Delinquent			Delinquent		Loans
Residential real estate:
Owner occupied	$	2,210		$	1,978		$	4,712		$	8,900		$	1,136,595	$	1,145,495
Non owner occupied	907			1,128			864			2,899			71,640		74,539
Commercial real estate	103			486			2,051			2,640			712,002		714,642
Commercial real estate - purchased whole loans	—			—			—			—			33,531		33,531
Construction & land development	—			194			1,930			2,124			66,090		68,214
Commercial	222			733			1,307			2,262			128,419		130,681
Warehouse lines of credit	—			—			—			—			216,576		216,576
Home equity	521			251			882			1,654			239,953		241,607
Consumer:
Credit cards	60			5			—			65			8,651		8,716
Overdrafts	167			1			—			168			787		955
Other consumer	102			28			2			132			15,109		15,241
Total	$	4,292		$	4,804		$	11,748		$	20,844		$	2,629,353	$	2,650,197
Delinquent loans to total loans	0.16		%	0.18		%	0.44		%	0.79		%

* - All loans past due 90 days-or-more, excluding PCI loans, as of September 30, 2013 and December 31, 2012 were on non-accrual status.

31

An aging of the recorded investment in past due loans related to the 2012 FDIC-assisted acquisitions and included in the preceding tables at September 30, 2013 and December 31, 2012, are presented below:

	30 - 59			60 - 89			Greater than			Total			Total		Total
September 30, 2013	Days			Days			90 Days			Loans			Loans Not		Acquired Bank
(dollars in thousands)	Delinquent			Delinquent			Delinquent *			Delinquent			Delinquent		Loans
Residential real estate	$	344		$	585		$	397		$	1,326		$	29,286	$	30,612
Commercial real estate	—			—			139			139			63,602		63,741
Construction & land development	—			—			96			96			2,691		2,787
Commercial	—			129			1,207			1,336			2,593		3,929
Home equity	—			—			—			—			4,692		4,692
Consumer:
Credit cards	—			—			—			—			213		213
Overdrafts	—			—			—			—			6		6
Other consumer	3			—			21			24			216		240
Total	$	347		$	714		$	1,860		$	2,921		$	103,299	$	106,220
Delinquent acquired bank loans to total acquired bank loans	0.33		%	0.67		%	1.75		%	2.75		%

	30 - 59			60 - 89			Greater than			Total			Total		Total
December 31, 2012	Days			Days			90 Days			Loans			Loans Not		Acquired Bank
(dollars in thousands)	Delinquent			Delinquent			Delinquent *			Delinquent			Delinquent		Loans
Residential real estate	$	159		$	1,430		$	729		$	2,318		$	42,411	$	44,729
Commercial real estate	—			165			698			863			68,910		69,773
Construction & land development	—			194			531			725			6,811		7,536
Commercial	—			732			1,215			1,947			8,742		10,689
Home equity	83			—			—			83			4,485		4,568
Consumer:
Credit cards	—			—			—			—			321		321
Overdrafts	—			—			—			—			12		12
Other consumer	4			27			—			31			957		988
Total	$	246		$	2,548		$	3,173		$	5,967		$	132,649	$	138,616
Delinquent acquired bank loans to total acquried bank loans	0.18		%	1.84		%	2.29		%	4.30		%

* - All loans past due 90 days-or-more, excluding PCI loans, as of September 30, 2013 and December 31, 2012 were on non-accrual status.

See additional discussion regarding the TCB and FCB acquisitions under Footnote 2 “2012 FDIC-Assisted Acquisitions of Failed Banks” in this section of the filing.

32

Impaired Loans

The Bank defines impaired loans as follows:

·All loans internally rated as “Substandard,” “PCI-Sub,” “Doubtful” or “Loss;”

·All loans on non-accrual status and non-PCI loans past due 90 days-or-more still on accrual;

·All retail and commercial TDRs; and

·Any other situation where the collection of total amount due for a loan is improbable or otherwise meets the definition of impaired.

Information regarding the Bank’s impaired loans follows:

(in thousands)	September 30, 2013		December 31, 2012
Loans with no allocated allowance for loan losses	$	25,835	$	36,325
Loans with allocated allowance for loan losses	78,298		69,382
Total impaired loans	$	104,133	$	105,707
Amount of the allowance for loan losses allocated	$	7,304	$	8,531

Approximately $29 million and $18 million of impaired loans at September 30, 2013 and December 31, 2012 were loans acquired in the Bank’s 2012 FDIC-assisted acquisitions. Approximately $9 million of the loans acquired during 2012 became classified during 2013 as “impaired” through a troubled debt restructuring. See additional discussion regarding the TCB and FCB acquisitions under Footnote 2 “2012 FDIC-Assisted Acquisitions of Failed Banks” in this section of the filing.

33

The following tables present the balance in the Allowance and the recorded investment in loans by portfolio class based on impairment method as of September 30, 2013 and December 31, 2012:

							Commercial
	Residential Real Estate						Real Estate -						Warehouse
	Owner		Non Owner		Commercial		Purchased		Construction &				Lines of
September 30, 2013 (in thousands)	Occupied		Occupied		Real Estate		Whole Loans		Land Development		Commercial		Credit
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment, excluding PCI loans	$	3,788	$	86	$	1,762	$	—	$	268	$	14	$	—
Collectively evaluated for impairment	4,376		489		6,878		34		1,319		501		319
PCI loans with post acquisition impairment	39		216		540		—		7		344		—
PCI loans without post acquisition impairment	—		—		—		—		—		—		—
Total ending allowance for loan losses	$	8,203	$	791	$	9,180	$	34	$	1,594	$	859	$	319
Loans:
Impaired loans individually evaluated, excluding PCI loans	$	39,312	$	2,500	$	31,805	$	—	$	3,514	$	4,576	$	—
Loans collectively evaluated for impairment	1,058,185		98,482		699,986		34,017		48,708		107,660		122,810
PCI loans with post acquisition impairment	1,231		5,875		10,687		—		317		1,890		—
PCI loans without post acquisition impairment	1,905		2,784		24,335		—		1,079		290		—
Total ending loan balance	$	1,100,633	$	109,641	$	766,813	$	34,017	$	53,618	$	114,416	$	122,810

(continued)

			Consumer
	Home		Credit				Other
	Equity		Cards		Overdrafts		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment, excluding PCI loans	$	185	$	—	$	—	$	54	$	6,157
Collectively evaluated for impairment	1,688		270		201		113		16,188
PCI loans with post acquisition impairment	—		—		—		1		1,147
PCI loans without post acquisition impairment	—		—		—		—		—
Total ending allowance for loan losses	$	1,873	$	270	$	201	$	168	$	23,492
Loans:
Impaired loans individually evaluated, excluding PCI loans	$	2,297	$	—	$	—	$	121	$	84,125
Loans collectively evaluated for impairment	223,259		8,948		851		15,977		2,418,883
PCI loans with post acquisition impairment	—		—		—		8		20,008
PCI loans without post acquisition impairment	—		—		—		26		30,419
Total ending loan balance	$	225,556	$	8,948	$	851	$	16,132	$	2,553,435

34

							Commercial
	Residential Real Estate						Real Estate -						Warehouse
	Owner		Non Owner		Commercial		Purchased		Construction &				Lines of
December 31, 2012 (in thousands)	Occupied		Occupied		Real Estate		Whole Loans		Land Development		Commercial		Credit
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment, excluding PCI loans	$	3,032	$	521	$	2,919	$	—	$	1,157	$	348	$	—
Collectively evaluated for impairment	3,972		527		5,924		34		1,612		232		541
PCI loans with post acquisition impairment	2		1		—		—		—		—		—
PCI loans without post acquisition impairment	—		—		—		—		—		—		—
Total ending allowance for loan losses	$	7,006	$	1,049	$	8,843	$	34	$	2,769	$	580	$	541
Loans:
Impaired loans individually evaluated, excluding PCI loans	$	44,429	$	4,235	$	40,593	$	—	$	5,268	$	6,972	$	—
Loans collectively evaluated for impairment	1,080,792		67,974		629,687		33,531		61,254		119,429		216,576
PCI loans with post acquisition impairment	136		184		—		—		—		—		—
PCI loans without post acquisition impairment	20,138		2,146		44,362		—		1,692		4,280		—
Total ending loan balance	$	1,145,495	$	74,539	$	714,642	$	33,531	$	68,214	$	130,681	$	216,576

(continued)

			Consumer
	Home		Credit				Other
	Equity		Cards		Overdrafts		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment, excluding PCI loans	$	496	$	—	$	—	$	55	$	8,528
Collectively evaluated for impairment	1,852		210		198		96		15,198
PCI loans with post acquisition impairment	—		—		—		—		3
PCI loans without post acquisition impairment	—		—		—		—		—
Total ending allowance for loan losses	$	2,348	$	210	$	198	$	151	$	23,729
Loans:
Impaired loans individually evaluated, excluding PCI loans	$	3,420	$	—	$	—	$	470	$	105,387
Loans collectively evaluated for impairment	238,187		8,716		955		14,731		2,471,832
PCI loans with post acquisition impairment	—		—		—		—		320
PCI loans without post acquisition impairment	—		—		—		40		72,658
Total ending loan balance	$	241,607	$	8,716	$	955	$	15,241	$	2,650,197

35

The following tables present loans individually evaluated for impairment by class of loans as of September 30, 2013 and December 31, 2012 and for the three and nine months ended September 30, 2013 and 2012. The difference between the “Unpaid Principal Balance” and “Recorded Investment” columns represents life-to-date partial write downs/charge offs taken on individual impaired credits.

	Ending Balance
	As of						Three Months Ended				Nine Months Ended
	September 30, 2013						September 30, 2013				September 30, 2013
	Unpaid				Allowance for		Average		Interest		Average		Interest
	Principal		Recorded		Loan Losses		Recorded		Income		Recorded		Income
(in thousands)	Balance		Investment		Allocated		Investment		Recognized		Investment		Recognized
Impaired loans with no related allowance recorded:
Residential real estate:
Owner occupied	$	3,152	$	3,147	$	—	$	6,088	$	35	$	9,876	$	89
Non owner occupied	1,508		1,293		—		1,269		—		1,411		18
Commercial real estate	13,953		13,884		—		18,566		451		18,382		809
Commercial real estate - purchased whole loans	—		—		—		—		—		—		—
Construction & land development	1,837		1,837		—		1,930		73		2,126		127
Commercial	4,426		4,378		—		3,460		204		3,770		413
Warehouse lines of credit	—		—		—		—		—		—		—
Home equity	1,342		1,296		—		1,724		34		1,867		64
Consumer:
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Other consumer	—		—		—		37		—		221		—
Impaired loans with an allowance recorded:
Residential real estate:
Owner occupied	38,261		37,396		3,827		36,008		315		33,841		876
Non owner occupied	7,082		7,082		302		5,688		166		4,661		208
Commercial real estate	29,622		28,608		2,302		26,508		549		26,055		998
Commercial real estate - purchased whole loans	—		—		—		—		—		—		—
Construction & land development	2,090		1,994		275		2,000		30		2,674		75
Commercial	2,088		2,088		358		2,641		21		2,702		27
Warehouse lines of credit	—		—		—		—		—		—		—
Home equity	1,027		1,001		185		1,026		21		1,289		41
Consumer:
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Other consumer	129		129		55		116		1		92		3
Total impaired loans	$	106,517	$	104,133	$	7,304	$	107,061	$	1,900	$	108,967	$	3,748

36

	Ending Balance
	As of						Three Months Ended				Nine Months Ended
	December 31, 2012						September 30, 2012				September 30, 2012
	Unpaid				Allowance for		Average		Interest		Average		Interest
	Principal		Recorded		Loan Losses		Recorded		Income		Recorded		Income
(in thousands)	Balance		Investment		Allocated		Investment		Recognized		Investment		Recognized
Impaired loans with no related allowance recorded:
Residential real estate:
Owner occupied	$	13,299	$	13,107	$	—	$	28,249	$	177	$	25,378	$	397
Non owner occupied	955		794		—		2,097		138		1,539		138
Commercial real estate	14,293		14,293		—		10,416		404		8,924		456
Commercial real estate - purchased whole loans	—		—		—		—		—		—		—
Construction & land development	3,090		2,085		—		2,637		35		3,018		54
Commercial	4,206		4,114		—		2,096		28		2,127		68
Warehouse lines of credit	—		—		—		—		—		—		—
Home equity	1,753		1,546		—		782		—		648		—
Consumer:
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Other consumer	386		386		—		214		13		123		13
Impaired loans with an allowance recorded:
Residential real estate:
Owner occupied	31,709		31,458		3,034		6,927		6		5,886		33
Non owner occupied	3,695		3,625		522		2,270		6		2,249		33
Commercial real estate	26,710		26,300		2,919		27,233		236		26,164		738
Commercial real estate - purchased whole loans	—		—		—		—		—		—		108
Construction & land development	3,416		3,183		1,157		5,165		36		6,108		116
Commercial	2,858		2,858		348		2,583		47		2,520		—
Warehouse lines of credit	—		—		—		—		—		—		—
Home equity	1,874		1,874		496		1,297		6		1,675		14
Consumer:
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Other consumer	84		84		55		—		—		—		—
Total impaired loans	$	108,328	$	105,707	$	8,531	$	91,966	$	1,132	$	86,359	$	2,168

37

Troubled Debt Restructurings

A TDR is the situation where, due to a borrower’s financial difficulties, the Bank grants a concession to the borrower that the Bank would not otherwise have considered. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of their debt in the foreseeable future without the modification. This evaluation is performed under the Bank’s internal underwriting policy.

All TDRs are considered “Impaired” loans, including loans acquired in acquisitions of failed banks and subsequently restructured. The majority of the Bank’s commercial related and construction TDRs involve a restructuring of loan terms such as a reduction in the payment amount to require only interest and escrow (if required) and/or extending the maturity date of the loan. The substantial majority of the Bank’s residential real estate TDRs involve reducing the client’s loan payment through a rate reduction for a set period of time based on the borrower’s ability to service the modified loan payment.

Management determines whether to classify a TDR as non-performing based on its accrual status prior to modification. Non-accrual loans modified as TDRs remain on non-accrual status and continue to be reported as non-performing loans for a minimum of six months. Accruing loans modified as TDRs are evaluated for non-accrual status based on a current evaluation of the borrower’s financial condition and ability and willingness to service the modified debt. At September 30, 2013 and December 31, 2012, $12 million and $14 million of TDRs were also non-accrual loans.

Detail of TDRs differentiated by loan type and accrual status follows:

	Troubled Debt		Troubled Debt		Total
	Restructurings on		Restructurings on		Troubled Debt
September 30, 2013 (in thousands)	Non-Accrual Status		Accrual Status		Restructurings
Residential real estate	$	5,487	$	32,248	$	37,735
Commercial real estate	5,869		23,095		28,964
Construction & land development	803		2,707		3,510
Commercial	145		4,431		4,576
Total troubled debt restructurings	$	12,304	$	62,481	$	74,785

	Troubled Debt		Troubled Debt		Total
	Restructurings on		Restructurings on		Troubled Debt
December 31, 2012 (in thousands)	Non-Accrual Status		Accrual Status		Restructurings
Residential real estate	$	6,951	$	36,758	$	43,709
Commercial real estate	5,149		26,174		31,323
Construction & land development	1,595		2,167		3,762
Commercial	269		4,244		4,513
Total troubled debt restructurings	$	13,964	$	69,343	$	83,307

38

The Bank considers a TDR to be performing to its modified terms if the loan is in accrual status and not past due 30 days or more as of the reporting date. A summary of the categories of TDR loan modifications outstanding and respective performance under modified terms at September 30, 2013 and December 31, 2012 follows:

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
	Performing to		Not Performing to		Troubled Debt
September 30, 2013 (in thousands)	Modified Terms		Modified Terms		Restructurings
Residential real estate loans (including home equity loans):
Interest only payments	$	598	$	874	$	1,472
Rate reduction	25,157		3,134		28,291
Principal deferral	2,310		1,782		4,092
Bankruptcies	2,833		1,047		3,880
Total residential TDRs	30,898		6,837		37,735
Commercial related and construction/land development loans:
Interest only payments	4,225		854		5,079
Rate reduction	17,090		1,374		18,464
Principal deferral	8,440		4,675		13,115
Bankruptcies	—		392		392
Total commercial TDRs	29,755		7,295		37,050
Total troubled debt restructurings	$	60,653	$	14,132	$	74,785

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
	Performing to		Not Performing to		Troubled Debt
December 31, 2012 (in thousands)	Modified Terms		Modified Terms		Restructurings
Residential real estate loans (including home equity loans):
Interest only payments	$	957	$	624	$	1,581
Rate reduction	23,250		4,427		27,677
Principal deferral	9,041		2,092		11,133
Bankruptcies	2,225		1,093		3,318
Total residential TDRs	35,473		8,236		43,709
Commercial related and construction/land development loans:
Interest only payments	7,002		342		7,344
Rate reduction	8,573		5,142		13,715
Principal deferral	15,494		3,045		18,539
Total commercial TDRs	31,069		8,529		39,598
Total troubled debt restructurings	$	66,542	$	16,765	$	83,307

As of September 30, 2013 and December 31, 2012, 81% and 80% of the Bank’s TDRs were performing according to their modified terms. The Bank had provided $6 million and $7 million of specific reserve allocations to customers whose loan terms have been modified in TDRs as of September 30, 2013 and December 31, 2012. Specific reserve allocations are generally assessed prior to loans being modified as a TDR, as most of these loans migrate from the Bank’s internal watch list and have been specifically provided for or reserved for as part of the Bank’s normal loan loss provisioning methodology. The Bank had no commitments to lend any additional material amounts to its existing TDR relationships at September 30, 2013 and December 31, 2012.

39

A summary of the categories of TDR loan modifications that occurred during the three months ended September 30, 2013 and 2012 follows:

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
Three Months Ended	Performing to		Not Performing to		Troubled Debt
September 30, 2013 (in thousands)	Modified Terms		Modified Terms		Restructurings
Residential real estate loans (including home equity loans):
Rate reduction	$	1,082	$	—	$	1,082
Bankruptcies	172		272		444
Total residential TDRs	1,254		272		1,526
Commercial related and construction/land development loans:
Interest only	441		145		586
Rate reduction	3,407		189		3,596
Principal deferral	1,456		—		1,456
Bankruptcies	—		167		167
Total commercial TDRs	5,304		501		5,805
Total troubled debt restructurings	$	6,558	$	773	$	7,331

The table above is inclusive of loans which were TDRs at the end of previous periods and were re-modified during the current period.

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
Three Months Ended	Performing to		Not Performing to		Troubled Debt
September 30, 2012 (in thousands)	Modified Terms		Modified Terms		Restructurings
Residential real estate loans (including home equity loans):
Interest only	$	793	$	1,103	$	1,896
Rate reduction	3,244		838		4,082
Principal deferral	3,670		85		3,755
Total residential TDRs	7,707		2,026		9,733
Commercial related and construction/land development loans:
Interest only	120		—		120
Rate reduction	534		—		534
Principal deferral	450		—		450
Total commercial TDRs	1,104		—		1,104
Total troubled debt restructurings	$	8,811	$	2,026	$	10,837

The table above is inclusive of loans which were TDRs at the end of previous periods and were re-modified during the current period.

40

A summary of the categories of TDR loan modifications that occurred during the nine months ended September 30, 2013 and 2012 follows:

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
Nine Months Ended	Performing to		Not Performing to		Troubled Debt
September 30, 2013 (in thousands)	Modified Terms		Modified Terms		Restructurings
Residential real estate loans (including home equity loans):
Interest only	$	165	$	—	$	165
Rate reduction	2,703		689		3,392
Principal deferral	64		160		224
Bankruptcies	1,405		826		2,231
Total residential TDRs	4,337		1,675		6,012
Commercial related and construction/land development loans:
Interest only	719		145		864
Rate reduction	3,407		189		3,596
Principal deferral	1,765		—		1,765
Bankruptcies	—		167		167
Total commercial TDRs	5,891		501		6,392
Total troubled debt restructurings	$	10,228	$	2,176	$	12,404

The table above is inclusive of loans which were TDRs at the end of previous periods and were re-modified during the current period.

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
Nine Months Ended	Performing to		Not Performing to		Troubled Debt
September 30, 2012 (in thousands)	Modified Terms		Modified Terms		Restructurings
Residential real estate loans (including home equity loans):
Interest only	$	511	$	1,727	$	2,238
Rate reduction	7,781		454		8,235
Principal deferral	6,480		1,108		7,588
Total residential TDRs	14,772		3,289		18,061
Commercial related and construction/land development loans:
Interest only	3,690		708		4,398
Rate reduction	3,277		—		3,277
Principal deferral	4,095		455		4,550
Total commercial TDRs	11,062		1,163		12,225
Total troubled debt restructurings	$	25,834	$	4,452	$	30,286

The table above is inclusive of loans which were TDRs at the end of previous periods and were re-modified during the current year.

41

As of September 30, 2013 and 2012, 89% and 81% of the Bank’s TDRs that occurred during the three months ended September 30, 2013 and 2012 were performing according to their modified terms. The Bank provided $294,000 and $576,000 in specific reserve allocations to customers whose loan terms were modified in TDRs during the three months ended September 30, 2013 and 2012.

As of September 30, 2013 and 2012, 82% and 85% of the Bank’s TDRs that occurred during the nine months ended September 30, 2013 and 2012 were performing according to their modified terms. The Bank provided $1 million and $2 million in specific reserve allocations to customers whose loan terms were modified in TDRs during the nine months ended September 30, 2013 and 2012. As stated above, specific reserves are generally assessed prior to loans being modified as a TDR, as most of these loans migrate from the Bank’s internal watch list and have been specifically reserved for as part of the Bank’s normal reserving methodology.

There was no significant change between the pre and post modification loan balances at September 30, 2013 and December 31, 2012.

42

The following tables present loans by class modified as troubled debt restructurings within the previous twelve months of September 30, 2013 and 2012 and for which there was a payment default during the three months ended September 30, 2013 and 2012:

Three Months Ended	Number of	Recorded
September 30, 2013 (dollars in thousands)	Loans	Investment
Residential real estate:
Owner occupied	14	$	979
Non owner occupied	—	—
Commercial real estate	2	357
Commercial real estate - purchased whole loans	—	—
Construction & land development	—	—
Commercial	1	145
Warehouse lines of credit	—	—
Home equity	1	68
Consumer:
Credit cards	—	—
Overdrafts	—	—
Other consumer	—	—
Total	18	$	1,549

Three Months Ended	Number of	Recorded
September 30, 2012 (dollars in thousands)	Loans	Investment
Residential real estate	10	$	2,131
Commercial real estate	—	—
Commercial real estate - purchased whole loans	—	—
Real estate construction	—	—
Commercial	—	—
Warehouse lines of credit	—	—
Home equity	—	—
Consumer:
Credit cards	—	—
Overdrafts	—	—
Other consumer	—	—
Total	10	$	2,131

43

The following tables present loans by class modified as troubled debt restructurings within the previous twelve months of September 30, 2013 and 2012 and for which there was a payment default during the nine months ended September 30, 2013 and 2012:

Nine Months Ended	Number of	Recorded
September 30, 2013 (dollars in thousands)	Loans	Investment
Residential real estate:
Owner occupied	32	$	2,434
Non owner occupied	—	—
Commercial real estate	2	357
Commercial real estate - purchased whole loans	—	—
Construction & land development	—	—
Commercial	1	145
Warehouse lines of credit	—	—
Home equity	2	74
Consumer:
Credit cards	—	—
Overdrafts	—	—
Other consumer	—	—
Total	37	$	3,010

Nine Months Ended	Number of	Recorded
September 30, 2012 (dollars in thousands)	Loans	Investment
Residential real estate	11	$	2,980
Commercial real estate	3	970
Commercial real estate - purchased whole loans	—	—
Real estate construction	4	1,974
Commercial	—	—
Warehouse lines of credit	—	—
Home equity	—	—
Consumer:
Credit cards	—	—
Overdrafts	—	—
Other consumer	—	—
Total	18	$	5,924

44

5.DEPOSITS

Ending deposit balances at September 30, 2013 and December 31, 2012 were as follows:

(in thousands)	September 30, 2013		December 31, 2012
Demand	$	659,192	$	580,900
Money market accounts	495,619		514,698
Brokered money market accounts	33,212		35,596
Savings	71,759		62,145
Individual retirement accounts*	29,219		32,491
Time deposits, $100,000 and over*	69,584		80,906
Other certificates of deposit*	79,494		100,036
Brokered certificates of deposit*(1)	89,580		97,110
Total interest-bearing deposits	1,527,659		1,503,882
Total non interest-bearing deposits	492,126		479,046
Total deposits	$	2,019,785	$	1,982,928

(*) — Represents a time deposit.

(1) — Includes brokered deposits less than, equal to and greater than $100,000.

The composition of deposits related to the acquisitions of failed banks outstanding at September 30, 2013 and December 31, 2012 follows:

	Tennessee		First		Total
	Commerce		Commercial		Acquired
September 30, 2013 (in thousands)	Bank		Bank		Banks
Demand	$	1,053	$	2,123	$	3,176
Money market accounts	2,298		9,222		11,520
Savings	4,834		1		4,835
Individual retirement accounts*	563		1,159		1,722
Time deposits, $100,000 and over*	4,481		2,810		7,291
Other certificates of deposit*	2,373		4,921		7,294
Brokered certificates of deposit*(1)	3,251		3,926		7,177
Total interest-bearing deposits	18,853		24,162		43,015
Total non interest-bearing deposits	3,290		4,419		7,709
Total deposits	$	22,143	$	28,581	$	50,724

(*) — Represents a time deposit.

(1) — Includes brokered deposits less than, equal to and greater than $100,000.

45

	Tennessee		First		Total
	Commerce		Commercial		Acquired
December 31, 2012 (in thousands)	Bank		Bank		Banks
Demand	$	10,024	$	5,871	$	15,895
Money market accounts	1,510		25,762		27,272
Savings	217		—		217
Individual retirement accounts*	1,166		3,269		4,435
Time deposits, $100,000 and over*	10,822		3,267		14,089
Other certificates of deposit*	7,196		12,574		19,770
Brokered certificates of deposit*(1)	6,729		12,247		18,976
Total interest-bearing deposits	37,664		62,990		100,654
Total non interest-bearing deposits	4,240		6,812		11,052
Total deposits	$	41,904	$	69,802	$	111,706

(*) — Represents a time deposit.

(1) — Includes brokered deposits less than, equal to and greater than $100,000.

See additional discussion regarding the TCB and FCB acquisitions under Footnote 2 “2012 FDIC-Assisted Acquisitions of Failed Banks” in this section of the filing.

6.             FEDERAL HOME LOAN BANK (“FHLB”) ADVANCES

At September 30, 2013 and December 31, 2012, FHLB advances were as follows:

(dollars in thousands)	September 30, 2013		December 31, 2012
Fixed interest rate advances with a weighted average interest rate of 2.12% due through 2023	$	487,020	$	442,600
Putable fixed interest rate advances with a weighted average interest rate of 4.39% due through 2017(1)	100,000		100,000
Total FHLB advances	$	587,020	$	542,600

(1) - Represents putable advances with the FHLB. These advances have original fixed rate periods ranging from one to five years with original maturities ranging from three to ten years if not put back to the Bank earlier by the FHLB. At the end of their respective fixed rate periods and on a quarterly basis thereafter, the FHLB has the right to require payoff of the advances by the Bank at no penalty. Based on market conditions at this time, the Bank does not believe that any of its putable advances are likely to be “put back” to the Bank in the short-term by the FHLB.

Each FHLB advance is payable at its maturity date, with a prepayment penalty for fixed rate advances that are paid off earlier than maturity. FHLB advances are collateralized by a blanket pledge of eligible real estate loans. At September 30, 2013, Republic had available collateral to borrow an additional $317 million from the FHLB. In addition to its borrowing line with the FHLB, Republic also had unsecured lines of credit totaling $166 million available through various other financial institutions.

46

Aggregate future principal payments on FHLB advances, based on contractual maturity dates are detailed below:

Year	(in thousands)
2013	$	10,000
2014	178,000
2015	25,000
2016	82,000
2017	135,000
Thereafter	157,020
Total	$	587,020

The following table illustrates real estate loans pledged to collateralize advances and letters of credit with the FHLB:

(in thousands)	September 30, 2013		December 31, 2012
First lien, single family residential real estate	$	1,104,086	$	1,053,946
Home equity lines of credit	105,407		116,043
Multi-family commercial real estate	12,504		11,695

47

7.             FAIR VALUE

Fair value represents the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Bank used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

Securities available for sale: For all securities available for sale, excluding the Bank’s private label mortgage backed security, fair value is typically determined by matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). With the exception of the private label mortgage backed security, all securities available for sale are classified as Level 2 in the fair value hierarchy.

The Bank’s private label mortgage backed security remains extremely illiquid, and as such, the Bank classifies this security as a Level 3 security in accordance with ASC Topic 820, Fair Value Measurements and Disclosures. Based on this determination, the Bank utilized an income valuation model (present value model) approach, in determining the fair value of this security.

Mortgage loans held for sale: The fair value of mortgage loans held for sale is determined using quoted secondary market prices. Mortgage loans held for sale are classified as Level 2 in the fair value hierarchy.

Derivative instruments: Mortgage Banking derivatives used in the ordinary course of business primarily consist of mandatory forward sales contracts (“forward contracts”) and rate lock loan commitments. The fair value of the Bank’s derivative instruments is primarily measured by obtaining pricing from broker-dealers recognized to be market participants. The pricing is derived from market observable inputs that can generally be verified and do not typically involve significant judgment by the Bank. Forward contracts and rate lock loan commitments are classified as Level 2 in the fair value hierarchy.

Impaired Loans: At the time a loan is considered impaired, it is valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive specific allocations of the Allowance for anticipated selling costs of the underlying collateral. For collateral dependent loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

48

Other Real Estate Owned: Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Appraisals for both collateral-dependent impaired loans and other real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Bank. Once the appraisal is received, a member of the Bank’s Credit Administration Department reviews the assumptions and approaches utilized in the appraisal, as well as the overall resulting fair value in comparison with independent data sources, such as recent market data or industry-wide statistics. On an annual basis, the Bank compares the actual selling price of collateral that has been sold to the most recent appraised value to determine what additional adjustment, if any, should be made to the appraisal value to arrive at an estimated fair value.

Mortgage Servicing Rights: On a monthly basis, mortgage servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. If the carrying amount of an individual tranche exceeds fair value, impairment is recorded and the respective individual tranche is carried at fair value. If the carrying amount of an individual tranche does not exceed fair value, impairment is reversed if previously recognized and the carrying value of the individual tranche is based on the amortization method. The valuation model utilizes assumptions that market participants would use in estimating future net servicing income and that can generally be validated against available market data (Level 2).

49

Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities for which the Bank has elected the fair value option, are summarized below:

	Fair Value Measurements at
	September 30, 2013 Using:
	Quoted Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable		Total
	Assets		Inputs		Inputs		Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Financial Assets:
Securities available for sale:
U.S. Treasury securities and U.S. Government agencies	$	—	$	122,933	$	—	$	122,933
Private label mortgage backed security	—		—		5,457		5,457
Mortgage backed securities - residential	—		161,112		—		161,112
Collateralized mortgage obligations			177,218				177,218
Corporate bonds	—		14,904		—		14,904
Total securities available for sale	$	—	$	476,167	$	5,457	$	481,624
Rate lock commitments	$	—	$	401	$	—	$	401
Mortgage loans held for sale	—		9,803		—		9,803
Financial Liabilities:
Mandatory forward contracts	$	—	$	160	$	—	$	160

	Fair Value Measurements at
	December 31, 2012 Using:
	Quoted Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable		Total
	Assets		Inputs		Inputs		Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Financial Assets:
Securities available for sale:
U.S. Treasury securities and U.S. Government agencies	$	—	$	39,472	$	—	$	39,472
Private label mortgage backed security	—		—		5,687		5,687
Mortgage backed securities - residential	—		197,210		—		197,210
Collateralized mortgage obligations	—		195,877		—		195,877
Total securities available for sale	$	—	$	432,559	$	5,687	$	438,246
Mandatory forward contracts	$	—	$	47	$	—	$	47
Rate lock loan commitments	—		833		—		833
Mortgage loans held for sale	—		10,614		—		10,614

There were no transfers between Level 1, 2 or 3 assets during the three and nine months ended September 30, 2013 and 2012. All transfers between levels, if applicable, would be generally recognized at the end of each quarter.

50

The table below presents a reconciliation of the Bank’s private label mortgage backed security. This is the only asset that was measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the periods ended September 30, 2013 and 2012:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(in thousands)	2013			2012		2013			2012
Balance, beginning of period	$	5,641		$	4,579	$	5,687		$	4,542
Total gains or losses included in earnings:
Net change in unrealized gain/(loss)	(4		)	373		418			410
Reversal of actual losses previously recorded	37			—		37			—
Principal paydowns	(217		)	—		(685		)	—
Balance, end of period	$	5,457		$	4,952	$	5,457		$	4,952

The Bank’s single private label mortgage backed security is supported by analysis prepared by an independent third party. The third party’s approach to determining fair value involved the following steps: 1) detailed collateral analysis of the underlying mortgages, including consideration of geographic location, original loan-to-value and the weighted average credit score of the borrowers; 2) collateral performance projections for each pool of mortgages underlying the security (probability of default, severity of default, and prepayment probabilities) and 3) discounted cash flow modeling.

There were no transfers between Level 3 assets during the three and nine months ended September 30, 2013 and 2012.

The following table presents quantitative information about recurring Level 3 fair value measurements at September 30, 2013 and December 31, 2012:

	Fair		Valuation	Unobservable
September 30, 2013 (dollars in thousands)	Value		Technique	Inputs	Range
Private label mortgage backed security	$	5,457	Discounted cash flow	Constant prepayment rate	0.67% - 7%
				Probability of default	3% - 7%
				Loss severity	60% - 81%

	Fair		Valuation	Unobservable Inputs
December 31, 2012 (dollars in thousands)	Value		Technique		Range
Private label mortgage backed security	$	5,687	Discounted cash flow	Constant prepayment rate	1% - 6%
				Probability of default	3.50% - 7%
				Loss severity	60% - 70%

The significant unobservable inputs in the fair value measurement of the Bank’s single private label mortgage backed security are prepayment rates, probability of default and loss severity in the event of default. Significant fluctuations in any of those inputs in isolation would result in a significantly lower/higher fair value measurement.

See Footnote 3 “Investment Securities” for additional detail regarding the private label mortgage backed security in this section of the filing.

51

Assets measured at fair value on a non-recurring basis are summarized below:

	Fair Value Measurements at
	September 30, 2013 Using:
	Quoted Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable		Total
	Assets		Inputs		Inputs		Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Impaired loans:
Residential real estate:
Owner occupied	$	—	$	—	$	1,059	$	1,059
Commercial real estate	—		—		5,415		5,415
Home equity	—		—		275		275
Total impaired loans *	$	—	$	—	$	6,749	$	6,749
Other real estate owned:
Commercial real estate	$	—	$	—	$	536	$	536
Construction & land development	—		—		4,200		4,200
Total other real estate owned	$	—	$	—	$	4,736	$	4,736

	Fair Value Measurements at
	December 31, 2012 Using:
	Quoted Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable		Total
	Assets		Inputs		Inputs		Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Impaired loans:
Residential real estate:
Owner occupied	$	—	$	—	$	782	$	782
Non owner occupied	—		—		1,788		1,788
Commercial real estate	—		—		15,618		15,618
Construction & land development	—		—		1,552		1,552
Commercial	—		—		182		182
Home equity	—		—		303		303
Total impaired loans *	$	—	$	—	$	20,225	$	20,225
Other real estate owned:
Residential real estate:
Owner occupied	$	—	$	—	$	1,195	$	1,195
Non owner occupied	—		—		—		—
Commercial real estate	—		—		1,219		1,219
Construction & land development	—		—		5,161		5,161
Total other real estate owned	$	—	$	—	$	7,575	$	7,575
Mortgage servicing rights**	$	—	$	3,484	$	—	$	3,484

* - Impaired loan balances exclude loans measured for impairment using the present value of future cash flows.

** - Mortgage Servicing Rights at fair value only include those tranches which were considered impaired at the reported period end.

52

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at September 30, 2013 and December 31, 2012:

					Range
	Fair		Valuation	Unobservable	(Weighted
September 30, 2013 (dollars in thousands)	Value		Technique	Inputs	Average)
Impaired loans - commercial real estate	$	5,415	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	0% - 26% (11%)
Impaired loans - residential real estate	$	1,334	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	0% - 25% (8%)
Other real estate owned - commercial real estate	$	536	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	11% - 26 (18%)
Other real estate owned - construction & land development	$	600	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	40% (40%)
	$	3,600	Income approach	Adjustments for differences between net operating income expectations	28% (28%)

					Range
	Fair		Valuation	Unobservable	(Weighted
December 31, 2012 (dollars in thousands)	Value		Technique	Inputs	Average)
Impaired loans - commercial real estate	$	15,230	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	0% - 50% (18%)
	$	1,940	Income approach	Adjustments for differences between net operating income expectations	12% - 12% (12%)
Impaired loans - residential real estate	$	2,873	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	2% - 60% (17%)
Impaired loans - commercial	$	182	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	0% - 50% (44%)
Other real estate owned - residential	$	1,195	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	4% - 71% (14%)
Other real estate owned - commercial real estate	$	1,219	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	1% - 33% (16%)
Other real estate owned - real estate construction	$	663	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	1% - 54% (35%)
	$	4,498	Income approach	Adjustments for differences between net operating income expectations	25% - 25% (25%)

53

The following section details impairment charges recognized during the period:

Impaired Loans

Collateral dependent impaired loans are measured for impairment using the fair value for reasonable disposition of the underlying collateral. The Bank’s practice is to obtain new or updated appraisals on the loans subject to the initial impairment review and then to evaluate the need for an update to this value on an as necessary or possibly annual basis thereafter (depending on the market conditions impacting the value of the collateral). The Bank will discount the appraisal amount, as necessary for selling costs and past due real estate taxes. If a new or updated appraisal is not available at the time of a loan’s impairment review, the Bank may apply a discount to the existing value of an old appraisal to reflect the property’s current estimated value if it is believed to have deteriorated in either: (i) the physical or economic aspects of the subject property or (ii) material changes in market conditions. The review may result in an increase in the Allowance or in a partial charge-off of the loan. Impaired loans that are collateral dependent are classified within Level 3 of the fair value hierarchy when impairment is determined using this fair value method.

Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans are as follows:

(in thousands)	September 30, 2013			December 31, 2012
Carrying amount of loans measured at fair value	$	6,568		$	23,070
Estimated selling costs considered in carrying amount	943			1,839
Valuation allowance	(762		)	(4,684		)
Total fair value	$	6,749		$	20,225

Other Real Estate Owned

Other real estate owned, which is carried at the lower of cost or fair value, is periodically assessed for impairment based on fair value at the reporting date. Fair value is determined from external appraisals using judgments and estimates of external professionals. Many of these inputs are not observable and, accordingly, these measurements are classified as Level 3. The fair value of the Bank’s individual other real estate owned properties exceeded their carrying value at September 30, 2013 and December 31, 2012.

Details of other real estate owned carrying value and write downs follows:

(in thousands)	September 30, 2013		December 31, 2012
Carrying value of other real estate owned	$	15,247	$	26,203

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2013		2012		2013		2012
Other real estate owned write-downs	$	190	$	866	$	1,074	$	1,207

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Mortgage Servicing Rights

MSRs are carried at lower of cost or fair value with fair value determined by MSR tranche. There were no tranches carried at fair value at September 30, 2013, while nine of 21 tranches were carried at fair value at December 31, 2012. Details of the tranches carried at fair value follow:

(in thousands)	September 30, 2013		December 31, 2012
Outstanding balance	$	—	$	3,829
Valuation allowance	—		(345		)
Fair value	$	—	$	3,484

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(in thousands)	2013			2012		2013			2012
Charge (credit) to mortgage banking income due to impairment evaluation	$	(33	)	$	160	$	(345	)	$	129

Mortgage Loans Held for Sale

The Bank has elected the fair value option for mortgage loans held for sale. These loans are intended for sale and the Bank believes that the fair value is the best indicator of the resolution of these loans. Interest income is recorded based on the contractual terms of the loan and in accordance with Bank policy for such instruments. None of these loans were past due 90-days-or- more nor on nonaccrual as of September 30, 2013 and December 31, 2012.

As of September 30, 2013 and December 31, 2012, the aggregate fair value, contractual balance (including accrued interest), and gain or loss was as follows:

(in thousands)	September 30, 2013		December 31, 2012
Aggregate fair value	$	9,803	$	10,614
Contractual balance	9,557		10,037
Gain	246		577

The total amount of gains and losses from changes in fair value included in earnings for the three and nine months ended September 30, 2013 and 2012 for mortgage loans held for sale are presented in the following table:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(in thousands)	2013			2012		2013			2012
Interest income	$	130		$	110	$	388		$	283
Change in fair value	(218		)	82		(331		)	134
Total change in fair value	$	(88	)	$	192	$	57		$	417

55

The carrying amounts and estimated fair values of all financial instruments, at September 30, 2013 and December 31, 2012 follows:

			Fair Value Measurements at
			September 30, 2013:
									Total
	Carrying								Fair
(in thousands)	Value		Level 1		Level 2		Level 3		Value
Assets:
Cash and cash equivalents	$	141,585	$	141,585	$	—	$	—	$	141,585
Securities available for sale	481,624		—		476,167		5,457		481,624
Securities to be held to maturity	52,057		—		52,408		—		52,408
Mortgage loans held for sale	9,803		—		9,803		—		9,803
Loans, net of allowance for loan losses	2,529,943		—		—		2,568,974		2,568,974
Federal Home Loan Bank stock	28,342		—		—		—		N/A
Accrued interest receivable	8,130		—		8,130		—		8,130
Liabilities:
Non interest-bearing deposits	492,126		—		492,126		—		492,126
Transaction and money market deposits	1,259,782		—		1,259,782		—		1,259,782
Time deposits	267,877		—		270,462		—		270,462
Securities sold under agreements to repurchase and other short-term borrowings	106,373		—		106,373		—		106,373
Federal Home Loan Bank advances	587,020		—		602,458		—		602,458
Subordinated note	41,240		—		38,049		—		38,049
Accrued interest payable	1,435		—		1,435		—		1,435

			Fair Value Measurements at
			December 31, 2012:
									Total
	Carrying								Fair
(in thousands)	Value		Level 1		Level 2		Level 3		Value
Assets:
Cash and cash equivalents	$	137,691	$	137,691	$	—	$	—	$	137,691
Securities available for sale	438,246		—		432,559		5,687		438,246
Securities to be held to maturity	46,010		—		46,416		—		46,416
Mortgage loans held for sale	10,614		—		10,614		—		10,614
Loans, net of allowance for loan losses	2,626,468		—		—		2,702,686		2,702,686
Federal Home Loan Bank stock	28,377		—		—		—		N/A
Accrued interest receivable	9,245		—		9,245		—		9,245
Liabilities:
Non interest-bearing deposits	479,046		—		479,046		—		479,046
Transaction and money market deposits	1,193,339		—		1,193,339		—		1,193,339
Time deposits	310,543		—		314,972		—		314,972
Securities sold under agreements to repurchase and other short-term borrowings	250,884		—		250,884		—		250,884
Federal Home Loan Bank advances	542,600		—		576,158		—		576,158
Subordinated note	41,240		—		37,917		—		37,917
Accrued interest payable	1,403		—		1,403		—		1,403

56

Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the Bank’s estimates.

The assumptions used in the estimation of the fair value of the Company’s financial instruments are explained below. Where quoted market prices are not available, fair values are based on estimates using discounted cash flow and other valuation techniques. Discounted cash flows can be significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. The following fair value estimates cannot be substantiated by comparison to independent markets and should not be considered representative of the liquidation value of the Company’s financial instruments, but rather a good-faith estimate of the fair value of financial instruments held by the Company.

The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments:

Cash and cash equivalents — The carrying amounts of cash and short-term instruments approximate fair values and are classified as Level 1.

Mortgage loans held for sale — The fair value of loans held for sale is estimated based upon binding contracts and quotes from third party investors resulting in a Level 2 classification.

Loans, net of Allowance — The fair value of loans is calculated using discounted cash flows by loan type resulting in a Level 3 classification. The discount rate used to determine the present value of the loan portfolio is an estimated market rate that reflects the credit and interest rate risk inherent in the loan portfolio without considering widening credit spreads due to market illiquidity. The estimated maturity is based on the Bank’s historical experience with repayments adjusted to estimate the effect of current market conditions. The Allowance is considered a reasonable discount for credit risk. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

Federal Home Loan Bank stock — It is not practical to determine the fair value of FHLB stock due to restrictions placed on its transferability.

Accrued interest receivable/payable — The carrying amounts of accrued interest, due to their short-term nature, approximates fair value resulting in a Level 2 classification.

Deposits — Fair values for certificates of deposit have been determined using discounted cash flows. The discount rate used is based on estimated market rates for deposits of similar remaining maturities and are classified as Level 2. The carrying amounts of all other deposits, due to their short-term nature, approximate their fair values and are also classified as Level 2.

Securities sold under agreements to repurchase — The carrying amount for securities sold under agreements to repurchase generally maturing within ninety days approximates its fair value resulting in a Level 2 classification.

Federal Home Loan Bank advances — The fair value of the FHLB advances is obtained from the FHLB and is calculated by discounting contractual cash flows using an estimated interest rate based on the current rates available to the Company for debt of similar remaining maturities and collateral terms resulting in a Level 2 classification.

Subordinated note — The fair value for subordinated debentures is calculated using discounted cash flows based upon current market spreads to LIBOR for debt of similar remaining maturities and collateral terms resulting in a Level 2 classification.

The fair value estimates presented herein are based on pertinent information available to management as of the respective period ends. Although management is not aware of any factors that would dramatically affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and, therefore, estimates of fair value may differ significantly from the amounts presented.

57

8.MORTGAGE BANKING ACTIVITIES

Mortgage Banking activities primarily include residential mortgage originations and servicing.

Activity for mortgage loans held for sale was as follows:

September 30, (in thousands)	2013			2012
Balance, January 1	$	10,614		$	4,392
Origination of mortgage loans held for sale	263,411			172,305
Proceeds from the sale of mortgage loans held for sale	(270,562		)	(179,853		)
Net gain on sale of mortgage loans held for sale	6,340			6,541
Balance, September 30	$	9,803		$	3,385

The following table presents the components of Mortgage Banking income:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in thousands)	2013			2012			2013			2012
Net gain realized on sale of mortgage loans held for sale	$	1,633		$	2,705		$	7,310		$	5,890
Net change in fair value recognized on loans held for sale	(218		)	82			(331		)	134
Net change in fair value recognized on rate lock commitments	(44		)	386			(432		)	909
Net change in fair value recognized on forward contracts	(439		)	(354		)	(207		)	(392		)
Net gain recognized	932			2,819			6,340			6,541
Loan servicing income	514			418			1,606			1,653
Amortization of mortgage servicing rights	(453		)	(803		)	(1,811		)	(2,474		)
Change in mortgage servicing rights valuation allowance	33			(160		)	345			(129		)
Net servicing income recognized	94			(545		)	140			(950		)
Total Mortgage Banking income	$	1,026		$	2,274		$	6,480		$	5,591

Activity for capitalized mortgage servicing rights was as follows:

September 30, (in thousands)	2013			2012
Balance, January 1	$	4,777		$	6,087
Additions	2,171			1,496
Amortized to expense	(1,811		)	(2,474		)
Change in valuation allowance	345			(129		)
Balance, September 30	$	5,482		$	4,980

58

Activity for the valuation allowance for capitalized mortgage servicing rights was as follows:

September 30, (in thousands)	2013			2012
Balance, January 1	$	(345	)	$	(203	)
Additions	—			(171		)
Reductions credited to operations	345			42
Balance, September 30	$	—		$	(332	)

Other information relating to mortgage servicing rights follows:

(dollars in thousands)	September 30, 2013		December 31, 2012
Fair value of mortgage servicing rights portfolio	$	7,157	$	5,446
Prepayment speed range	115% - 350%		112% - 550%
Discount rate	10%		9%
Weighted average default rate	1.50%		1.50%
Weighted average life in years	5.90		3.89

Mortgage Banking derivatives used in the ordinary course of business primarily consist of mandatory forward sales contracts and rate lock loan commitments. Mandatory forward contracts represent future commitments to deliver loans at a specified price and date and are used to manage interest rate risk on loan commitments and mortgage loans held for sale. Rate lock loan commitments represent commitments to fund loans at a specific rate. These derivatives involve underlying items, such as interest rates, and are designed to transfer risk. Substantially all of these instruments expire within 90 days from the date of issuance. Notional amounts are amounts on which calculations and payments are based, but which do not represent credit exposure, as credit exposure is limited to the amounts required to be received or paid.

Mandatory forward contracts also contain an element of risk in that the counterparties may be unable to meet the terms of such agreements. In the event the counterparties fail to deliver commitments or are unable to fulfill their obligations, the Bank could potentially incur significant additional costs by replacing the positions at then current market rates. The Bank manages its risk of exposure by limiting counterparties to those banks and institutions deemed appropriate by management and the Board of Directors. The Bank does not expect any counterparty to default on their obligations and therefore, the Bank does not expect to incur any cost related to counterparty default.

The Bank is exposed to interest rate risk on loans held for sale and rate lock loan commitments. As market interest rates fluctuate, the fair value of mortgage loans held for sale and rate lock commitments will decline or increase. To offset this interest rate risk, the Bank enters into derivatives such as mandatory forward contracts to sell loans. The fair value of these mandatory forward contracts will fluctuate as market interest rates fluctuate, and the change in the value of these instruments is expected to largely, though not entirely, offset the change in fair value of loans held for sale and rate lock commitments. The objective of this activity is to minimize the exposure to losses on rate loan lock commitments and loans held for sale due to market interest rate fluctuations. The net effect of derivatives on earnings will depend on risk management activities and a variety of other factors, including market interest rate volatility, the amount of rate lock commitments that close, the ability to fill the forward contracts before expiration, and the time period required to close and sell loans.

59

The following table includes the notional amounts and fair values of mortgage loans held for sale and mortgage banking derivatives as of the period ends presented:

	September 30, 2013				December 31, 2012
(in thousands)	Notional Amount		Fair Value		Notional Amount		Fair Value
Included in Mortgage loans held for sale:
Mortgage loans held for sale	$	9,557	$	9,803	$	10,037	$	10,614
Included in other assets:
Rate lock loan commitments	$	11,781	$	401	$	27,468	$	833
Mandatory forward contracts	—		—		36,675		47
Total included in other assets	$	11,781	$	401	$	64,143	$	880
Included in other liabilities:
Mandatory forward contracts	$	17,791	$	160	$	—	$	—

60

9.OFF BALANCE SHEET RISKS, COMMITMENTS AND CONTINGENT LIABILITIES

The Bank, in the normal course of business, is party to financial instruments with off balance sheet risk. These financial instruments primarily include commitments to extend credit and standby letters of credit. The contract or notional amounts of these instruments reflect the potential future obligations of the Bank pursuant to those financial instruments. Creditworthiness for all instruments is evaluated on a case by case basis in accordance with the Bank’s credit policies. Collateral from the customer may be required based on the Bank’s credit evaluation of the customer and may include business assets of commercial customers, as well as personal property and real estate of individual customers or guarantors.

The Bank also extends binding commitments to customers and prospective customers. Such commitments assure the borrower of financing for a specified period of time at a specified rate. The risk to the Bank under such loan commitments is limited by the terms of the contracts. For example, the Bank may not be obligated to advance funds if the customer’s financial condition deteriorates or if the customer fails to meet specific covenants. An approved but unfunded loan commitment represents a potential credit risk once the funds are advanced to the customer. Unfunded loan commitments also represent liquidity risk since the customer may demand immediate cash that would require funding and interest rate risk as market interest rates may rise above the rate committed. In addition, since a portion of these loan commitments normally expire unused, the total amount of outstanding commitments at any point in time may not require future funding. Loan commitments generally have open-ended maturities and variable rates.

The table below presents the Bank’s commitments, exclusive of Mortgage Banking loan commitments for each period ended:

(in thousands)	September 30, 2013		December 31, 2012
Unused warehouse lines of credit	$	195,190	$	113,924
Unused home equity lines of credit	228,298		232,719
Unused loan commitments - other	185,934		163,523
Standby letters of credit	2,476		16,985
FHLB letters of credit	3,200		11,908
Total commitments	$	615,098	$	539,059

Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. The terms and risk of loss involved in issuing standby letters of credit are similar to those involved in issuing loan commitments and extending credit. In addition to credit risk, the Bank also has liquidity risk associated with standby letters of credit because funding for these obligations could be required immediately. The Bank does not deem this risk to be material.

At September 30, 2013 and December 31, 2012, the Bank had a letter of credit from the FHLB issued on behalf of an RB&T client. This letter of credit was used as a credit enhancement for client bond offerings and reduced RB&T’s available borrowing line at the FHLB. The Bank uses a blanket pledge of eligible real estate loans to secure these letters of credit.

61

Legal Proceedings

On August 1, 2011, a lawsuit was filed in the U.S. District Court for the Western District of Kentucky styled Brenda Webb vs. Republic Bank & Trust Company d/b/a Republic Bank, Civil Action No. 3:11-CV-00423-TBR. The Complaint was brought as a putative class action and seeks monetary damages, restitution and declaratory relief allegedly arising from the manner in which RB&T assessed overdraft fees. In the Complaint, the Plaintiff pleads seven claims against RB&T alleging: breach of contract and breach of the covenant of good faith and fair dealing (Count I), unconscionability (Count II), conversion (Count III), unjust enrichment (Count IV), violation of the Electronic Funds Transfer Act and Regulation E (Count V), and violations of the Kentucky Consumer Protection Act, (Count VI). RB&T filed a Motion to Dismiss the case on January 12, 2012. In response, Plaintiff filed her Motion to Amend the Complaint on February 23, 2012. In Plaintiff’s proposed Amended Complaint, Plaintiff acknowledged disclosure of the Overdraft Honor Policy and did not seek to add any claims to the Amended Complaint. However, Plaintiff divided the breach of contract and breach of the covenant of good faith and fair dealing claims into two counts (Counts One and Two). In the original Complaint, those claims were combined in Count One. RB&T filed its objection to Plaintiff’s Motion to Amend. On June 16, 2012, the District Court denied the Plaintiff’s Motion to Amend concluding that the Plaintiff lacked the ability to automatically amend the complaint as of right. However, the Court held that the Plaintiff could be permitted to amend if the Plaintiff could first demonstrate that her amendment would not be futile and that the Plaintiff had standing to sue despite RB&T’s offer of judgment. The Court declined to rule on that issue at that time and ordered the case stayed pending a decision by the U.S. Court of Appeals for the Sixth Circuit in a case on appeal with the same standing issue. The Sixth Circuit ruled on June 11, 2013 and concluded that the offer of judgment did not moot the matter before it only because the offer of judgment in question did not afford the Plaintiff complete relief. The District Court lifted the stay of this matter on June 14, 2013 and permitted Plaintiff to file her Amended Complaint.  Plaintiff filed her Amended Complaint on June 21, 2013 and brought seven claims: breach of contract and breach of the covenant of good faith and fair dealing (Counts I & II), unconscionability (Count III), conversion (Count IV), unjust enrichment (Count V), violation of the Electronic Funds Transfer Act, (Count VI) and violation of the Kentucky Consumer Protection Act (Count VII).  RB&T filed its Motion to Dismiss the Amended Complaint on July 15, 2013. On September 30, 2013 the Court issued its decision granting the Motion to Dismiss in part and denying it in part.  The Court initially concluded that the offer of judgment did not moot the case and deprive it of subject matter jurisdiction as it did not provide Plaintiff with all of the relief she sought.  The Court dismissed the conversion, unconscionability and Electronic Funds Transfer Act claims in their entirety for failure to state a claim. With respect to the remaining claims, the Court dismissed them to the extent they are premised upon any overdraft charges incurred by the Plaintiff on or after January 6, 2010, the date on which she received the Overdraft Honor Policy.  The Court concluded that Plaintiff could not state any claim for the time period after she received the Policy with respect to the manner in which RB&T assessed overdraft fees. The Answer to the remaining claims was filed on October 14, 2013 and the matter now proceeds into discovery.

62

10.EARNINGS PER SHARE

Class A and Class B shares participate equally in undistributed earnings. The difference in earnings per share between the two classes of common stock results solely from the 10% per share cash dividend premium paid on Class A Common Stock over that paid on Class B Common Stock.

A reconciliation of the combined Class A and Class B Common Stock numerators and denominators of the earnings per share and diluted earnings per share computations is presented below:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands, except per share data)	2013		2012		2013		2012
Net income	$	4,603	$	20,668	$	24,078	$	112,718
Weighted average shares outstanding	20,787		20,948		20,811		20,954
Effect of dilutive securities	140		81		94		78
Average shares outstanding including dilutive securities	20,927		21,029		20,905		21,032
Basic earnings per share:
Class A Common Share	$	0.22	$	0.99	$	1.16	$	5.38
Class B Common Share	0.21		0.97		1.12		5.34
Diluted earnings per share:
Class A Common Share	$	0.22	$	0.98	$	1.16	$	5.36
Class B Common Share	0.21		0.97		1.11		5.32

Stock options excluded from the detailed earnings per share calculation because their impact was antidilutive are as follows:

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2013	2012	2013	2012
Antidilutive stock options	13,500	219,350	113,000	219,350

63

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

As of September 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”) were created to operate as divisions of RPG segment.

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

For the projected near-term, as 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 have provided, and are 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 in the Company’s 2012 Annual Report on Form 10-K. 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.

64

Segment information for the three and nine months ended September 30, 2013 and 2012 follows:

	Three Months Ended September 30, 2013
(dollars in thousands)	Traditional Banking			Mortgage Banking		Republic Processing Group			Total Company
Net interest income	$	28,390		$	130	$	19		$	28,539
Provision for loan losses	2,257			—		(57		)	2,200
Net refund transfer fees	—			—		152			152
Mortgage banking income	—			1,026		—			1,026
Other non interest income	6,243			19		99			6,361
Total non interest income	6,243			1,045		251			7,539
Total non interest expenses	22,237			768		3,320			26,325
Income before income tax expense	10,139			407		(2,993		)	7,553
Income tax expense	3,856			142		(1,048		)	2,950
Net income	$	6,283		$	265	$	(1,945	)	$	4,603
Segment end of period assets	$	3,305,689		$	15,697	$	10,495		$	3,331,881
Net interest margin	3.54		%	NM		NM			3.54		%

	Three Months Ended September 30, 2012
(dollars in thousands)	Traditional Banking			Mortgage Banking		Republic Processing Group			Total Company
Net interest income	$	28,444		$	110	$	18		$	28,572
Provision for loan losses	2,543			—		(460		)	2,083
Net refund transfer fees	—			—		231			231
Mortgage banking income	—			2,274		—			2,274
Total bargain purchase gains	26,923			—		—			26,923
Other non interest income	5,387			11		19			5,417
Total non interest income	32,310			2,285		250			34,845
Total non interest expenses	26,118			851		2,793			29,762
Income before income tax expense	32,093			1,544		(2,065		)	31,572
Income tax expense	11,145			541		(782		)	10,904
Net income	$	20,948		$	1,003	$	(1,283	)	$	20,668
Segment end of period assets	$	3,413,293		$	8,765	$	13,718		$	3,435,776
Net interest margin	3.54		%	NM		NM			3.54		%

65

	Nine Months Ended September 30, 2013
(dollars in thousands)	Traditional Banking			Mortgage Banking		Republic Processing Group			Total Company
Net interest income	$	85,957		$	388	$	91		$	86,436
Provision for loan losses	3,276			—		(796		)	2,480
Net refund transfer fees	—			—		13,849			13,849
Mortgage banking income	—			6,480		—			6,480
Bargain purchase gain - FCB	1,324			—		—			1,324
Other non interest income	18,300			102		792			19,194
Total non interest income	19,624			6,582		14,641			40,847
Total non interest expenses	72,862			2,537		11,927			87,326
Income before income tax expense	29,443			4,433		3,601			37,477
Income tax expense	10,588			1,551		1,260			13,399
Net income	$	18,855		$	2,882	$	2,341		$	24,078
Segment end of period assets	$	3,305,689		$	15,697	$	10,495		$	3,331,881
Net interest margin	3.57		%	NM		NM			3.55		%

	Nine Months Ended September 30, 2012
(dollars in thousands)	Traditional Banking			Mortgage Banking		Republic Processing Group		Total Company
Net interest income	$	84,406		$	283	$	45,415	$	130,104
Provision for loan losses	6,505			—		7,214		13,719
Net refund transfer fees	—			—		78,127		78,127
Mortgage banking income	—			5,591		—		5,591
Net gain on sales, calls and impairment of securities	56			—		—		56
Total bargain purchase gains	54,726			—		—		54,726
Other non interest income	17,005			27		208		17,240
Total non interest income	71,787			5,618		78,335		155,740
Total non interest expenses	76,752			2,928		18,686		98,366
Income before income tax expense	72,936			2,973		97,850		173,759
Income tax expense	25,150			1,041		34,850		61,041
Net income	$	47,786		$	1,932	$	63,000	$	112,718
Segment end of period assets	$	3,413,293		$	8,765	$	13,718	$	3,435,776
Net interest margin	3.51		%	NM		NM		5.11		%

NM — Not Meaningful

66

12.H&R BLOCK AND H&R BLOCK BANK

RB&T entered into a Purchase and Assumption Agreement (the “Agreement”) dated July 11, 2013, with H&R Block Bank (“HRBB”) and its sole shareholder Block Financial LLC (collectively, “H&R Block”). Pursuant to the Agreement, RB&T was to acquire certain assets and assume certain liabilities, including all of the deposits of HRBB (the “P&A Transaction”).

On July 15, 2013, RB&T submitted an application for approval of the P&A Transaction to the Office of the Comptroller of the Currency (“OCC”) for consideration in conjunction with RB&T’s pending application from May 2013 for approval of an internal merger of RB&T and its affiliate, RB, which would include RB&T’s conversion to a national bank.

On October 8, 2013, RB&T notified Block that RB&T was withdrawing its pending applications with the OCC to merge and consolidate its RB&T and RB charters into one national bank charter and to consummate the P&A Transaction. As a result, H&R Block terminated the Agreement with RB&T and the parties terminated discussions regarding the Joint Marketing Master Services Agreement and related Receivables Participation Agreement.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Republic Bancorp, Inc. (“Republic” or the “Company”) analyzes the major elements of Republic’s consolidated balance sheets and statements of income. Republic, a bank holding company headquartered in Louisville, Kentucky, is the parent company of Republic Bank & Trust Company (“RB&T”) and Republic Bank (“RB”), (collectively referred together as the “Bank”). Republic Invest Co., a former subsidiary of RB&T, and its subsidiary, Republic Capital LLC, were dissolved in April 2013 in connection with the full repayment by RB&T of intragroup subordinated debentures issued by Republic Capital LLC in a 2004 intragroup trust preferred transaction. Republic Bancorp Capital Trust is a Delaware statutory business trust that is a 100%-owned unconsolidated finance subsidiary of Republic Bancorp, Inc. Management’s Discussion and Analysis of Financial Condition and Results of Operations of Republic should be read in conjunction with Part I Item 1 “Financial Statements.”

As used in this filing, the terms “Republic,” the “Company,” “we,” “our” and “us” refer to Republic Bancorp, Inc., and, where the context requires, Republic Bancorp, Inc. and its subsidiaries; and the term the “Bank” refers to the Company’s subsidiary banks: RB&T and RB.

Republic and its subsidiaries operate in a heavily regulated industry. These regulatory requirements can and do affect the Company’s results of operations and financial condition.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by the forward-looking statements. Actual results may differ materially from those expressed or implied as a result of certain risks and uncertainties, including, but not limited to: changes in political and economic conditions; interest rate fluctuations; competitive product and pricing pressures; equity and fixed income market fluctuations; personal and corporate customers’ bankruptcies; inflation; recession; acquisitions and integrations of acquired businesses; technological changes; changes in law and regulations or the interpretation and enforcement thereof; changes in fiscal, monetary, regulatory and tax policies; monetary fluctuations; success in gaining regulatory approvals when required; as well as other risks and uncertainties reported from time to time in the Company’s filings with the Securities and Exchange Commission (“SEC”) included under Part 1 Item 1A “Risk Factors” of the Company 2012 Annual Report on Form 10-K.

Broadly speaking, forward-looking statements include:

·projections of revenue, income, expenses, losses, earnings per share, capital expenditures, dividends, capital structure or other financial items;

·descriptions of plans or objectives for future operations, products or services;

·forecasts of future economic performance; and

·descriptions of assumptions underlying or relating to any of the foregoing.

The Company may make forward-looking statements discussing management’s expectations about various matters, including:

·loan delinquencies; non-performing, classified, or impaired loans; and troubled debt restructurings (“TDR”s);

·further developments in the Bank’s ongoing review of and efforts to resolve possible problem credit relationships, which could result in, among other things, additional provision for loan losses;

·deteriorating credit quality, including changes in the interest rate environment and reducing interest margins;

·future credit losses and the overall adequacy of the Allowance for Loan Losses (“Allowance”);

·potential write-downs of other real estate owned (“OREO”);

·future short-term and long-term interest rates and the respective impact on net interest margin, net interest spread, net income, liquidity and capital;

·the future impact of Company strategies to mitigate interest rate risk;

·future long-term interest rates and their impact on the demand for Mortgage Banking products and warehouse lines of credit;

·the future value of mortgage servicing rights;

·the future operating performance of the Tax Refund Solutions (“TRS”) division;

·future Refund Transfers (“RT”s) volume for TRS;

·the future net revenues associated with RTs at TRS;

·the future financial performance of Republic Payment Solutions (“RPS”);

·the future financial performance of Republic Credit Solutions (“RCS”);

·the potential impairment of investment securities;

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·the extent to which regulations written and implemented by the Federal Bureau of Consumer Financial Protection (“CFPB”), and other federal, state and local governmental regulation of consumer lending and related financial products and services may limit or prohibit the operation of the Company’s business;

·financial services reform and other current, pending or future legislation or regulation that could have a negative effect on the Company’s revenue and businesses: including Basel III capital reforms; the Dodd-Frank Act; and legislation and regulation relating to overdraft fees (and changes to the Bank’s overdraft practices as a result thereof), debit card interchange fees, credit cards, and other bank services;

·the impact of new accounting pronouncements;

·legal and regulatory matters including results and consequences of regulatory guidance, litigation, administrative proceedings, rule-making, interpretations, actions and examinations;

·future capital expenditures;

·the strength of the U.S. economy in general and the strength of the local economies in which the Company conducts operations;

·the Bank’s ability to maintain current deposit and loan levels at current interest rates; and

·the Company’s ability to successfully implement strategic plans, including but not limited to those related to the acquisition of two failed banks in 2012.

Forward-looking statements discuss matters that are not historical facts. As forward-looking statements discuss future events or conditions, the statements often include words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “would,” or similar expressions. Do not rely on forward-looking statements. Forward-looking statements detail management’s expectations regarding the future and are not guarantees. Forward-looking statements are assumptions based on information known to management only as of the date the statements are made and management may not update them to reflect changes that occur subsequent to the date the statements are made.

See additional discussion under Part I Item 1 “Business” and Part I Item 1A “Risk Factors” of the Company’s 2012 Annual Report on Form 10-K and under Part II Item 1A “Risk Factors” of the Company’s June 30, 2013 Quarterly Report on Form 10-Q.

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RECENT DEVELOPMENTS

H&R Block & H&R Block Bank

RB&T entered into a Purchase and Assumption Agreement (the “Agreement”) dated July 11, 2013, with H&R Block Bank (“HRBB”) and its sole shareholder Block Financial LLC (collectively, “H&R Block”). Pursuant to the Agreement, RB&T was to acquire certain assets and assume certain liabilities, including all of the deposits of HRBB (the “P&A Transaction”).

On July 15, 2013, RB&T submitted an application for approval of the P&A Transaction to the Office of the Comptroller of the Currency (“OCC”) for consideration in conjunction with RB&T’s pending application from May 2013 for approval of an internal merger of RB&T and its affiliate, RB, which would include RB&T’s conversion to a national bank.

On October 8, 2013, RB&T notified Block that RB&T was withdrawing its pending applications with the OCC to merge and consolidate its RB&T and RB charters into one national bank charter and to consummate the P&A Transaction. As a result, H&R Block terminated the Agreement with RB&T and the parties terminated discussions regarding the Joint Marketing Master Services Agreement and related Receivables Participation Agreement.

Minnesota Banking Center

In October 2013, Republic gave the required 90-day regulatory notice of its intentions to close its sole banking center location in Minneapolis, Minnesota, which it acquired as part of the First Commercial Bank (“FCB”) acquisition in September 2012. The Bank is currently under a lease for this location which is set to expire in April 2015. The Bank intends to repurpose the location as a support office until the expiration of its lease or until such time that it is able to negotiate with the landlord a buy-out of its future lease obligations. The banking center is expected to stop transacting business at the Minnesota location with deposit customers in January 2014.

Florida Banking Center

In October 2013, Republic gave the required 90-day regulatory notice of its intentions to close its sole banking center in Palm Harbor, Florida. This location is expected to close in January 2014 with the lease for the premises expiring in February 2014.

Consumer Mortgage Regulation

On January 10, 2013, the CFPB issued a final rule implementing the ability to repay (“ATR”) requirement in the Dodd-Frank Act. The rule, among other things, requires lenders to consider a consumer’s ability to repay a mortgage loan before extending credit to the consumer and limits prepayment penalties. The rule also establishes certain protections from liability for mortgage lenders with regard to qualified mortgage loans (“QML”s) they originate. For this purpose, the rule defines QMLs to include loans with a borrower debt-to-income ratio of less than or equal to 43% or, alternatively, a loan eligible for purchase by Federal National Mortgage Association (“Fannie Mae”) or the Federal Home Loan Mortgage Corporation (“Freddie Mac”) while they operate under Federal conservatorship or receivership, and loans eligible for insurance or guarantee by the Federal Housing Administration, U.S. Department of Veterans Affairs or U.S. Department of Agriculture. Additionally, QMLs may not: (i) contain excess upfront points and fees; (ii) have a term greater than 30 years; or (iii) include interest-only or negative amortization payments. The rule is effective January 10, 2014, and the Company is currently evaluating its full impact on the Bank’s mortgage operations.

On January 17, 2013, the CFPB issued a series of final rules as part of an ongoing effort to address mortgage servicing reforms and create uniform standards for the mortgage servicing industry. The rules increase requirements for communications with borrowers, address requirements around the maintenance of customer account records, govern procedural requirements for responding to written borrower requests and complaints of errors, and provide guidance around servicing of delinquent loans, foreclosure proceedings and loss mitigation efforts, among other measures. These rules will also be effective January 10, 2014 and will likely lead to increased costs to service loans across the mortgage industry. The Company is continuing to evaluate these rules and their impact on the Bank’s mortgage operations.

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BUSINESS SEGMENT COMPOSITION

As of September 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 TRS segment as a division of the RPG segment. Along with the TRS division, Republic Payment Solutions (“RPS”) and Republic Credit Solutions (“RCS”) operate as divisions of the newly formed RPG segment. The RPS and RCS divisions are considered immaterial for segment reporting. Net income, total assets and net interest margin by segment for the three and nine months ended September 30, 2013 and 2012 are presented below:

	Three Months Ended September 30, 2013
(in thousands)	Traditional Banking			Mortgage Banking		Republic Processing Group			Total Company
Net income	$	6,283		$	265	$	(1,945	)	$	4,603
Segment assets*	3,305,689			15,697		10,495			3,331,881
Net interest margin	3.54		%	NM		NM			3.54		%

	Three Months Ended September 30, 2012
(in thousands)	Traditional Banking			Mortgage Banking		Republic Processing Group			Total Company
Net income	$	20,948		$	1,003	$	(1,283	)	$	20,668
Segment assets*	3,413,293			8,765		13,718			3,435,776
Net interest margin	3.54		%	NM		NM			3.54		%

	Nine Months Ended September 30, 2013
(in thousands)	Traditional Banking			Mortgage Banking		Republic Processing Group		Total Company
Net income	$	18,855		$	2,882	$	2,341	$	24,078
Segment assets*	3,305,689			15,697		10,495		3,331,881
Net interest margin	3.57		%	NM		NM		3.55		%

	Nine Months Ended September 30, 2012
(in thousands)	Traditional Banking			Mortgage Banking		Republic Processing Group		Total Company
Net income	$	47,786		$	1,932	$	63,000	$	112,718
Segment assets*	3,413,293			8,765		13,718		3,435,776
Net interest margin	3.51		%	NM		NM		5.11		%

* — Segment assets are report as of the end of the period.

NM — Not Meaningful

For expanded segment financial data see Footnote 11 “Segment Information” of Part I Item 1 “Financial Statements.”

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(I)  Traditional Banking segment

As of September 30, 2013, in addition to an Internet delivery channel, Republic had 45 full-service banking centers with locations as follows:

·Kentucky — 34

·Metropolitan Louisville — 20

·Central Kentucky — 11

·Elizabethtown — 1

·Frankfort — 1

·Georgetown — 1

·Lexington — 5

·Owensboro — 2

·Shelbyville — 1

·Northern Kentucky — 3

·Covington — 1

·Florence — 1

·Independence — 1

·Southern Indiana — 3

·Floyds Knobs — 1

·Jeffersonville — 1

·New Albany — 1

·Metropolitan Tampa, Florida — 4

·Metropolitan Cincinnati, Ohio — 1

·Metropolitan Nashville, Tennessee — 2

·Metropolitan Minneapolis, Minnesota — 1

Republic’s corporate headquarters are located in Louisville, which is the largest city in Kentucky by population size.

(II)  Mortgage Banking segment

Mortgage Banking activities primarily include 15-, 20- and 30-year fixed-term single family, first lien residential real estate loans that are sold into the secondary market, primarily to the Federal Home Loan Mortgage Corporation (“FHLMC” or “Freddie Mac”). The Bank typically retains servicing on loans sold into the secondary market. Administration of loans with servicing retained by the Bank includes collecting principal and interest payments, escrowing funds for property taxes and insurance and remitting payments to secondary market investors. A fee is received by the Bank for performing these standard servicing functions.

Traditional Banking and Mortgage Banking are collectively referred to as (“Core Banking”).

(III)  Republic Processing Group segment

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

OVERVIEW (Three Months Ended September 30, 2013 Compared to Three Months Ended September 30, 2012)

Net income for the three months ended September 30, 2013 was $4.6 million, representing a decrease of $16.1 million, or 78%, compared to the same period in 2012. Diluted earnings per Class A Common Share decreased to $0.22 for the quarter ended September 30, 2013 compared to $0.98 for the same period in 2012. The decrease is primarily the result of a $27.1 million pre-tax bargain purchase gain the Company recorded during the third quarter of 2012 related to the FDIC-assisted acquisition of specific assets and substantially all of the liabilities of First Commercial Bank (“FCB”), in Bloomington, Minnesota.

For additional discussion of period to period comparability related to the 2012 FDIC-assisted acquisitions of failed banks, see the Overview for the nine months ended September 30, 2013 compared to September 30, 2012 in this section of the filing.

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General highlights by segment for the quarter ended September 30, 2013 consisted of the following:

Traditional Banking segment

·Net income decreased $14.7 million, or 70%, for the third quarter of 2013 compared to the same period in 2012 primarily due to the previously mentioned $27.1 million pre-tax bargain purchase gain in the third quarter of 2012 for an FDIC-assisted acquisition of a failed bank.

·Net interest income decreased $54,000, or less than 1%, for the third quarter of 2013 to $28.4 million. The Traditional Banking segment net interest margin was unchanged at 3.54% for the third quarter of 2013.

·Provision for loan losses was $2.3 million for the third quarter of 2013 compared to $2.5 million for the same period in 2012.

·Total non-interest income decreased $26.1 million, or 81%, for the third quarter of 2013 compared to the same period in 2012, reflecting the effects of the aforementioned 2012 bargain purchase gain.

·Total non-interest expenses decreased $3.9 million, or 15%, during the third quarter of 2013 compared to the third quarter of 2012.

·Total non-performing loans to total loans for the Traditional Banking segment was 0.79% at September 30, 2013, compared to 0.82% at December 31, 2012 and 0.80% at September 30, 2012.

·Total delinquent loans to total loans for the Traditional Banking segment was 0.59% at September 30, 2013, compared to 0.79% at December 31, 2012 and 0.68% at September 30, 2012.

Mortgage Banking segment

·Within the Mortgage Banking segment, mortgage banking income decreased $1.2 million, or 55%, during the third quarter of 2013 compared to the same period in 2012.

·While long-term interest rates at September 30, 2013 were relatively low as compared to historical levels, significant increases in these rates during the latter part of the second quarter of 2013 negatively impacted third quarter loan application volume, with mortgage refinancing activity primarily impacted. This rise in interest rates is expected to continue to negatively impact future loan application volume during the remainder of 2013 and beyond.

Republic Processing Group segment

·Net loss increased $662,000, or 52%, for the third quarter of 2013 compared to the same period in 2012.

·With RB&T’s resolution of its differences with the FDIC through a Stipulation Agreement and Consent Order (collectively, the “FDIC Agreement”), RB&T discontinued RALs effective April 30, 2012. Without the ability to originate RALs, RB&T continues to face increased competition in the RT marketplace.

·Due to recoveries of prior period RAL losses, RPG recorded a credit to the provision for loan losses of $57,000 for the third quarter of 2013, compared to a net credit of $460,000 for the same period in 2012.

·Non-interest income was $251,000 for the third quarter of 2013 compared to $250,000 for the same period in 2012.

·Non-interest expenses were $3.3 million for the third quarter of 2013 compared to $2.8 million for the same period in 2012.

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RESULTS OF OPERATIONS (Three Months Ended September 30, 2013 Compared to Three Months Ended September 30, 2012)

Net Interest Income

Banking results of operations are significantly dependent upon net interest income. Net interest income is the difference between interest income on interest-earning assets, such as loans and investment securities and the interest expense on liabilities used to fund those assets, such as interest-bearing deposits, securities sold under agreements to repurchase and Federal Home Loan Bank (“FHLB”) advances. Net interest income is impacted by both changes in the amount and composition of interest-earning assets and interest-bearing liabilities, as well as market interest rates.

Total Company net interest income decreased $33,000, or less than 1%, for the third quarter of 2013 compared to the same period in 2012. The total Company net interest margin remained at 3.54% from period to period. The most significant components affecting the total Company’s net interest income by business segment were as follows:

Traditional Banking segment

Net interest income within the Traditional Banking segment decreased $54,000, or less than 1%, for the quarter ended September 30, 2013 compared to the same period in 2012. The Traditional Banking net interest margin was 3.54% for both the third quarter of 2012 and 2013. The net interest margin during 2013 was significantly and positively impacted by the following factors:

·The Bank accreted $551,000 to interest income on loans during the third quarter of 2013 from discounts on its acquired TCB portfolio compared to $87,000 for the same period in 2012.

·The Bank accreted $1.5 million to interest income on loans during the third quarter of 2013 from discounts on its acquired FCB portfolio compared to no similar accretion for the same period in 2012 as the acquisition occurred near the end of the third quarter of 2012.

The total discount accretion of $2.0 million during the third quarter of 2013 resulting from the TCB and FCB acquisitions positively impacted the Company’s third quarter net interest margin by 25 basis points, while the overall operations of the acquisitions contributed $3.4 million in net interest income and added 30 basis points to the net interest margin. Management projects accretion of loan discounts related to the 2012 FDIC-assisted acquisitions to be approximately $600,000 for the remainder of 2013. The accretion estimate for the remainder of 2013 could be positively impacted by positive workout arrangements in which RB&T receives final loan payoffs for amounts greater than the carrying values of the loans being paid off.

The Traditional Banking segment continues to experience downward repricing in its loan and investment portfolios resulting from ongoing paydowns and early payoffs. As expected, the yield in both the loan and investment portfolios of the Bank declined from the third quarter of 2012 to the third quarter of 2013.  The impact of this downward repricing to the Traditional Bank’s net interest income during the third quarter of 2013 more than offset the positive benefit in net interest income that resulted from the accretion of discounts for the Bank’s FDIC-assisted acquisitions in Tennessee and Minnesota.

While the overall yield for each of the earning asset classes declined from the third quarter of 2013 compared to the third quarter of 2012, the percentage of average loans to average interest-earning assets increased during those same periods (80% vs. 78%) thereby aiding the Traditional Bank in its ability to maintain its overall yield on interest-earning assets and its related net interest margin.

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The downward repricing of interest-earning assets is expected to continue to cause compression in Republic’s net interest income and net interest margin in the future. Additionally, because the Federal Funds Target Rate (“FFTR”) (the index which many of the Bank’s short-term deposit rates track) has remained at a target range between 0.00% and 0.25%, no future FFTR decreases from the Federal Open Market Committee of the Federal Reserve System (“FRB”) are possible, exacerbating the compression to the Bank’s net interest income and net interest margin caused by its repricing loans and investments. The Bank is unable to determine the ultimate negative impact to the Bank’s net interest spread and margin in the future because several factors remain unknown, such as future demand for its financial products and the overall future need for liquidity, among many other factors.

For additional information on the potential future effect of changes in short-term interest rates on Republic’s net interest income, see the table titled “Traditional Banking Interest Rate Sensitivity for 2013” in this section of the filing.

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Table 1 provides detailed total Company information as to average balances, interest income/expense and rates by major balance sheet category for the three months ended September 30, 2013 and 2012.

Table 1 — Total Company Average Balance Sheets and Interest Rates for the Three Months Ended September 30, 2013 and 2012

	Three Months Ended September 30, 2013						Three Months Ended September 30, 2012
(dollars in thousands)	Average Balance		Interest		Average Rate		Average Balance		Interest		Average Rate
ASSETS
Interest-earning assets:
Taxable investment securities, including FHLB stock(1)	$	530,759	$	2,307	1.74	%	$	629,542	$	2,791	1.77	%
Federal funds sold and other interest-earning cash	113,042		83		0.29	%	82,404		45		0.22	%
Refund Anticipation Loans(2)(3)	—		—		0.00	%	—		9		0.00	%
Traditional Bank loans(2)(4)	2,576,606		31,619		4.91	%	2,520,174		31,283		4.97	%
Total interest-earning assets	3,220,407		34,009		4.22	%	3,232,120		34,128		4.22	%
Less: Allowance for loan losses	22,664						22,560
Non interest-earning assets:
Non interest-earning cash and cash equivalents	65,920						38,086
Premises and equipment, net	32,820						33,035
Other assets(1)	43,113						41,396
Total assets	$	3,339,596					$	3,322,077
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Transaction accounts	$	712,426	$	127	0.07	%	$	617,919	$	56	0.04	%
Money market accounts	497,332		149		0.12	%	488,609		172		0.14	%
Time deposits	180,422		345		0.76	%	240,424		489		0.81	%
Brokered money market and brokered CD’s	123,150		422		1.37	%	115,117		480		1.67	%
Total interest-bearing deposits	1,513,330		1,043		0.28	%	1,462,069		1,197		0.33	%
Securities sold under agreements to repurchase and other short-term borrowings	139,293		11		0.03	%	208,051		110		0.21	%
Federal Home Loan Bank advances	592,735		3,788		2.56	%	523,053		3,619		2.77	%
Subordinated note	41,240		628		6.09	%	41,240		630		6.11	%
Total interest-bearing liabilities	2,286,598		5,470		0.96	%	2,234,413		5,556		0.99	%
Non interest-bearing liabilities and Stockholders’ equity:
Non interest-bearing deposits	488,386						505,127
Other liabilities	17,173						42,674
Stockholders’ equity	547,439						539,863
Total liabilities and stockholders’ equity	$	3,339,596					$	3,322,077
Net interest income			$	28,539					$	28,572
Net interest spread					3.26	%					3.23	%
Net interest margin					3.54	%					3.54	%

(1)For purpose of this calculation, the fair market value adjustment on investment securities resulting from FASB ASC Topic 320, Investments — Debt and Equity Securities, is included as a component of other assets.

(2)The amount of loan fee income included in total interest income was $3.3 million and $1.1 million for the three months ended September 30, 2013 and 2012.

(3)The Refund Anticipation Loan product was discontinued effective April 30, 2012.

(4)Average balances for loans include the principal balance of non-accrual loans and loans held for sale.

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Table 2 illustrates the extent to which changes in interest rates and changes in the volume of total Company interest-earning assets and interest-bearing liabilities impacted Republic’s interest income and interest expense during the periods indicated. Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior rate), (ii) changes attributable to changes in rate (changes in rate multiplied by prior volume) and (iii) net change. The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.

Table 2 — Total Company Volume/Rate Variance Analysis for the Three Months Ended September 30, 2013 and 2012

				Three Months Ended September 30, 2013
				Compared to
				Three Months Ended September 30, 2012
				Increase / (Decrease) Due to
(in thousands)	Total Net Change			Volume			Rate
Interest income:
Taxable investment securities, including FHLB stock	$	(484	)	$	(430	)	$	(54	)
Federal funds sold and other interest-earning deposits	38			20			18
Refund Anticipation Loans	(9		)	(9		)	—
Traditional Bank loans	336			695			(359		)
Net change in interest income	(119		)	276			(395		)
Interest expense:
Transaction accounts	71			10			61
Money market accounts	(23		)	3			(26		)
Time deposits	(144		)	(116		)	(28		)
Brokered money market and brokered CDs	(58		)	32			(90		)
Securities sold under agreements to repurchase and other short-term borrowings	(99		)	(28		)	(71		)
Federal Home Loan Bank advances	169			459			(290		)
Subordinated note	(2		)	—			(2		)
Net change in interest expense	(86		)	360			(446		)
Net change in net interest income	$	(33	)	$	(84	)	$	51

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Provision for Loan Losses (Three Months Ended September 30, 2013 Compared to Three Months Ended September 30, 2012)

The Company recorded a provision for loan losses of $2.2 million for the third quarter 2013, compared to $2.1 million for the same period in 2012. The significant components comprising the Company’s increased provision for loan losses by business segment were as follows:

Traditional Banking segment

The Traditional Banking provision for loan losses during the third quarter of 2013 was $2.3 million, a $286,000, or 11%, decrease from the $2.5 million recorded during the third quarter of 2012. Included in the third quarter 2013 provision for loan losses was $1.2 million for loss provisions related to the Bank’s 2012 FDIC-assisted acquisitions. These provisions primarily reflect probable shortfalls in future estimated cash flows below initial acquisition day (“day-one”) estimates for these loans. No analogous provisions were made during 2012, as the 2012 FDIC-assisted acquisitions were still within their initial day-one measurement periods.

The Bank recorded an additional $975,000 in provision for loan losses for the third quarter of 2013 associated with residential mortgage TDRs, as the Company successfully refinanced retail borrowers displaying weaknesses in their ability to make payments under their previous contractual loan terms. The provision was primarily calculated utilizing discounted cash flow analyses. No significant analogous provisions were made for the same period in 2012.

Approximately $1.9 million of the provision for loan losses from the third quarter of 2012 was attributable to the Bank’s large classified loan portfolio. The Bank increased allocations for relationships that were either downgraded to substandard or displayed further signs of credit deterioration during the quarter. Significant provisions of this nature were not made for the third quarter of 2013.

Approximately $600,000 of the provision for loan losses from the third quarter of 2012 was attributable to increases in the Bank’s general loan loss reserves for its pass-rated credits. This was due to growth in the loan portfolio combined with increases in historical loss percentages.

See the section titled “Asset Quality” in this section of the filing under “Comparison of Financial Condition at September 30, 2013 and December 31, 2012” for additional discussion regarding the Company’s provision for loan losses, classified assets, Allowance, non-performing loans, delinquent loans, impaired loans and TDRs.

Republic Processing Group segment

Historically, the substantial majority of RAL recoveries during the third and fourth quarters of each calendar year related to RALs that were originated during that particular year and were charged-off within 120 days from their dates of origination as required by regulatory guidelines.  RPG ceased offering RALs as of April 30, 2012 and as a result, no RALs were originated during 2013 thereby reducing the opportunity for recoveries during the third and fourth quarters of 2013.  During the third quarter 2013, the Company recorded a credit of $57,000 to provision expense for recoveries of prior period losses. During the third quarter of 2012, the Company recorded a net credit of $460,000 to provision expense due to RAL recoveries.

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An analysis of changes in the Allowance and selected credit quality ratios follows:

Table 3 — Summary of Loan Loss Experience for the Three Months Ended September 30, 2013 and 2012

	Three Months Ended
	September 30,
(dollars in thousands)	2013			2012
Allowance for loan losses at beginning of period	$	22,491		$	22,510
Charge offs:
Residential real estate:
Owner occupied	(578		)	(348		)
Non owner occupied	(67		)	(20		)
Commercial real estate	(307		)	(37		)
Commercial real estate - purchased whole loans	—			—
Construction & land development	(16		)	—
Commercial	(102		)	(11		)
Warehouse lines of credit	—			—
Home equity	(218		)	(633		)
Consumer:
Credit cards	(60		)	(9		)
Overdrafts	(169		)	(100		)
Other consumer	(110		)	(62		)
Refund Anticipation Loans	—			—
Total charge offs	(1,627		)	(1,220		)
Recoveries:
Residential real estate:
Owner occupied	20			32
Non owner occupied	59			2
Commercial real estate	38			24
Commercial real estate - purchased whole loans	—			—
Construction & land development	7			28
Commercial	19			3
Warehouse lines of credit	—			—
Home equity	55			12
Consumer:
Credit cards	4			9
Overdrafts	95			101
Other consumer	74			56
Refund Anticipation Loans	57			460
Total recoveries	428			727
Net loan charge offs	(1,199		)	(493		)
Provision for loan losses - Traditional Banking	2,257			2,543
Provision for loan losses - Refund Anticipation Loans	(57		)	(460		)
Total provision for loan losses	2,200			2,083
Allowance for loan losses at end of period	$	23,492		$	24,100

Credit Quality Ratios:
Allowance for loan losses to total loans - Total Company	0.92	%	0.91	%
Allowance for loan losses to non performing loans - Total Company	116	%	114	%
Annualized net loan charge offs to average loans outstanding - Total Company	0.19	%	0.08	%
Annualized net loan charge offs to average loans outstanding - Traditional Bank	0.19	%	0.15	%

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Non-interest Income (Three Months Ended September 30, 2013 Compared to Three Months Ended September 30, 2012)

Non-interest income decreased $27.3 million, or 78%, for the third quarter of 2013 compared to the same period in 2012. The most significant components comprising the total Company’s change in non-interest income by business segment were as follows:

Traditional Banking segment

Traditional Banking segment non-interest income decreased $26.1 million, or 81%, for the third quarter of 2013 compared to the same period in 2012 primarily driven by the following factors:

During the third quarter of 2012, the Bank recorded an initial bargain purchase gain of $27.1 million as a result of the FDIC-assisted acquisition of FCB. The bargain purchase gain was realized because the overall price paid by the Bank was substantially less than the fair value of the FCB assets acquired and liabilities assumed in the acquisition.

Service charges on deposit accounts increased from $3.4 million for the third quarter of 2012 to $3.7 million for the same period in 2013. The Bank earns a substantial majority of its fee income related to its overdraft service program from the per item fee it assesses its customers for each insufficient funds check or electronic debit presented for payment. The total net per item fees included in service charges on deposits for the third quarter of 2013 and 2012 were $2.2 million and $1.9 million. The total net daily overdraft charges included in interest income for the third quarter of 2013 and 2012 were $438,000 and $426,000.

Net gains on the sale of other real estate owned (“OREO”) was a gain of $403,000 for the sale of 25 properties during the third quarter of 2013, as compared to a loss of $38,000 from the sale of 24 properties during the third quarter of 2012.  Approximately $37,000 of the third quarter 2013 gains related to assets acquired in the 2012 FDIC-assisted acquisitions.

Mortgage Banking segment

Within the Mortgage Banking segment, mortgage banking income decreased $1.2 million, or 55%, during the third quarter of 2013 compared to the same period in 2012.

The decline in mortgage banking income was the result of a decrease in consumer mortgage refinance activity as fixed long-term mortgage interest rates started to rise dramatically during the second quarter of 2013.  As a result of the decrease in consumer refinance activity, the Company’s pipeline of secondary market loan applications, in which the consumer had locked the rate on their loan, declined to $12 million at September 30, 2013 compared to $31 million at June 30, 2013 and $39 million at September 30, 2012. With long-term mortgage interest rates forecasted to remain near or higher than current levels, management believes the Bank’s mortgage banking income will likely remain somewhat below its third quarter 2013 level for the foreseeable future.

Non-interest Expenses (Three Months Ended September 30, 2013 Compared to Three Months Ended September 30, 2012)

Total Company non-interest expenses decreased $3.4 million, or 12%, during the third quarter of 2013 compared to the same period in 2012. The most significant components comprising the decrease in non-interest expense by business segment were as follows:

Traditional Banking segment

For the third quarter of 2013 compared to the same period in 2012, Traditional Banking non-interest expenses decreased $3.9 million, or 15%.

Salaries and benefits during the third quarter of 2013 decreased $2.5 million compared to the same period in 2012 due primarily to a $3.3 million reduction in 2013 incentive compensation accruals based on revised payout estimates. Partially offsetting the incentive compensation accrual reversals was an increase of approximately $800,000 in staffing related payroll costs in-line with an increase in the Traditional Banking segment’s full time equivalent employees (“FTEs”). Overall, the Traditional Bank’s FTEs rose from 707 at September 30, 2012 to 742 at September 30, 2013. The increase in the Traditional Bank’s FTEs was the result of retaining employees at the acquired banks and the hiring of additional employees to support the acquired operations and the Traditional Bank’s long-term strategic growth plans.

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OREO expenses decreased $831,000 as the Bank took large mark-to-market writedowns in the third quarter of 2012 of $375,000 and $110,000 for two individual properties.  In addition, the number of OREO properties being managed by the Bank decreased from 94 properties at September 30, 2012 to 48 properties at September 30, 2013.

See additional discussion regarding the 2012 acquisitions of failed banks under Footnote 2 “2012 FDIC-Assisted Acquisitions of Failed Banks” of Part I Item 1 “Financial Statements.”

Republic Processing Group segment

For the third quarter of 2013 compared to the same period in 2012, RPG non-interest expenses increased $527,000, or 19%.

Legal expense at RPG increased $903,000 for the third quarter of 2013 compared to the same period in 2012. The increase in legal expense was directly related to the Company’s contract termination disputes with JHI and Liberty. In addition, the Company also incurred legal expenses during the third quarter related to the P&A Transaction and the negotiations of the MSA and RPA with H&R Block. Continued elevated legal expenses related to the JHI and Liberty contract disputes are likely for the remainder of 2013 with no projected offsetting revenues. The Bank does not expect to incur additional legal expenses associated with the MSA and RPA, as those negotiations have ceased as a result of H&R Block’s termination of the Agreement.

Salaries and employee benefits during the third quarter of 2013 decreased $321,000 compared to the third quarter of 2012, as RPG reduced staffing levels compared to the prior year due to its overall reduction in revenue from year to year.

OVERVIEW (Nine Months Ended September 30, 2013 Compared to Nine months Ended September 30, 2012)

Net income for the nine months ended September 30, 2013 was $24.1 million, representing a decrease of $88.6 million, or 79%, compared to the same period in 2012. Diluted earnings per Class A Common Share decreased to $1.16 for the nine months ended September 30, 2013 compared to $5.36 for the same period in 2012.

Within the Company’s Traditional Banking segment, comparability of net income for the first nine months of 2013 to the same period in 2012 was significantly impacted by $54.7 million in prior year pre-tax bargain purchase gains recorded from the acquisitions of TCB and FCB in FDIC-assisted transactions. There were no FDIC-assisted acquisitions during the nine months ended September 30, 2013.

Management believes that opportunities for FDIC-assisted transactions that fit within the Company’s strategic plan have declined in 2013 and are expected to decline further in the future. As a result of the decline in FDIC-assisted acquisition opportunities, management also believes that the pricing for the transactions that do become available will be less favorable, as competition increases for these limited opportunities.

In the Company’s RPG segment, net income for the first nine months of 2013 was $2.3 million, a decline of $60.7 million from the same period in 2012. RPG net income was significantly impacted by the previously disclosed elimination of the RAL product and the termination of RB&T’s contracts with Liberty and JHI during the third quarter of 2012. The RAL product, eliminated effective April 30, 2012, generated $45.2 million in revenues during the first nine months of 2012.  In addition, the Company’s ability to offer RALs gave it a competitive advantage in attracting relationships with tax preparation companies that also generated significant RT product volume. With the elimination of RALs and the termination of the Liberty and JHI contracts during the third quarter of 2012, both the volume and the Company’s share of the revenue for the RT product were significantly reduced in 2013. Net RT fees for the first nine months of 2013 were $13.8 million, a decrease of $64.3 million, or 82%, from the same period in 2012.

The TRS segment of RPG derives substantially all of its revenues during the first and second quarters of the year and historically operates at a net loss during the second half of the year, as the Company prepares for the upcoming tax season.

81

General highlights by segment for the nine months ended September 30, 2013 consisted of the following:

Traditional Banking segment

·Net income decreased $28.9 million, or 61%, for the first nine months of 2013 compared to the same period in 2012. The decrease was driven by the previously mentioned pre-tax $54.7 million from bargain purchase gains in 2012 on two FDIC-assisted acquisitions substantially affecting prior year’s comparability.

·Net interest income increased $1.6 million, or 2%, for the first nine months of 2013 to $86.0 million. The Traditional Banking segment net interest margin increased six basis points to 3.57% for the first nine months of 2013 from 3.51% for the same period in 2012.

·Provision for loan losses was $3.3 million for the nine months ended September 30, 2013 compared to $6.5 million for the same period in 2012.

·Total non-interest income decreased $52.2 million, or 73%, for the first nine months of 2013 compared to the same period in 2012 primarily due to the previously discussed $54.7 million in bargain purchase gains recorded during 2012.

·Total non-interest expense decreased $3.9 million, or 5%, during the first nine months of 2013 compared to the same period in 2012.

·Total non-performing loans to total loans for the Traditional Banking segment was 0.79% at September 30, 2013, compared to 0.82% at December 31, 2012 and 0.80% at September 30, 2012.

·Total delinquent loans to total loans for the Traditional Banking segment was 0.59% at September 30, 2013, compared to 0.79% at December 31, 2012 and 0.68% at September 30, 2012.

·The Bank’s Mortgage Warehouse loan portfolio had $123 million in loans outstanding at September 30, 2013 compared to $217 million at December 31, 2012 and $167 million at September 30, 2012.

·Gross Traditional Bank loans declined by $99 million, or 4%, from December 31, 2012 to September 30, 2013.

·Total Traditional Bank deposits increased by $33 million, or 2%, from December 31, 2012 to September 30, 2013.

Mortgage Banking segment

·Within the Mortgage Banking segment, mortgage banking income increased $889,000, or 16%, during the first nine months of 2013 compared to the same period in 2012.

·Mortgage banking income was positively impacted by an increase in secondary market loan volume during the first nine months of 2013 compared to the same period in 2012, as the Bank benefitted from a $0 closing cost promotion initiated at the beginning of 2013.  The majority of the increase in year-to-date secondary market volume occurred during the first five months of the year, as long-term interest rates remained favorable for this period.

·While long-term interest rates at September 30, 2013 were relatively low as compared to historical levels, significant increases in these rates during the second quarter of 2013 negatively impacted new loan application volume. The rise in interest rates is expected to continue to negatively impact future loan application volume during the remainder of 2013 and beyond.

Republic Processing Group segment

·The total dollar volume of tax refunds processed during the first nine months of 2013 decreased $7.0 billion, or 66%, from the same period in 2012.

·Net income decreased $60.7 million for the first nine months of 2013 compared to the same period in 2012.

·With RB&T’s resolution of its differences with the FDIC through the FDIC Agreement, RB&T discontinued RALs effective April 30, 2012. Total RAL dollar volume was $796 million during the 2012 tax season. Total net interest income on the RAL product was $45.4 million during the 2012 tax season.

·RPG recorded a credit to its provision for loan losses of $796,000 for the first nine months of 2013, compared to a $7.2 million charge for the same period in 2012.

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·RPG posted non-interest income of $14.6 million for the first nine months of 2013 compared to $78.3 million for the same period in 2012.

·Liberty and JHI unilaterally terminated their contracts with RPG’s TRS division during the third quarter of 2012 and as a result, Republic processed no business during the first nine months of 2013 from either of these tax service providers. On a combined basis, these contracts represented approximately 53% of the Company’s 2012 RT volume.

·Without the ability to originate RALs, RB&T continues to face increased competition in the RT marketplace.

RESULTS OF OPERATIONS (Nine Months Ended September 30, 2013 Compared to Nine Months Ended September 30, 2012)

Net Interest Income

Banking results of operations are primarily dependent upon net interest income. Net interest income is the difference between interest income on interest-earning assets, such as loans and investment securities and the interest expense on liabilities used to fund those assets, such as interest-bearing deposits, securities sold under agreements to repurchase and FHLB advances. Net interest income is impacted by both changes in the amount and composition of interest-earning assets and interest-bearing liabilities, as well as market interest rates.

Total Company net interest income decreased $43.7 million, or 34%, for the first nine months of 2013 compared to the same period in 2012 with the decrease primarily attributable to the elimination of the RAL product, effective April 30, 2012. The total Company net interest margin decreased 156 basis points to 3.55% for the same period. The most significant components affecting the total Company’s net interest income by business segment were as follows:

Traditional Banking segment

Net interest income within the Traditional Banking segment increased $1.6 million, or 2%, for the first nine months of 2013 compared to 2012. The Traditional Banking net interest margin was 3.57% for the first nine months of 2013, an increase of six basis points over the first nine months of 2012. The increase in the Traditional Bank’s net interest income and net interest margin during the first nine months of 2013 was primarily attributable to the following factors:

·During the nine months ended September 30, 2013, the Mortgage Warehouse Lending portfolio had average loans outstanding of $141 million achieving a weighted-average yield of 4.52% as compared to average loans outstanding of $75 million during the first nine months of 2012 with a weighted-average yield of 4.40%. As a result, interest income on warehouse lines of credit increased $2.2 million during the first nine months of 2013 compared to the same period in 2012. These loans are revolving lines of credit with a term of 364 days, contain interest rate floors and adjust monthly with the one-month LIBOR.

·The Bank accreted $2.1 million to interest income on loans during the first nine months of 2013 from discounts on its acquired TCB portfolio compared to $203,000 for the same period in 2012.

·The Bank accreted $3.2 million to interest income on loans during the first nine months of 2013 from discounts on its acquired FCB portfolio with no similar accretion for the same period in 2012, as the acquisition occurred near the end of the third quarter of 2012.

The total discount accretion of $5.3 million during the first nine months of 2013 that resulted from the TCB and FCB acquisitions positively impacted the Company’s net interest margin by 22 basis points, while the overall operations of the acquisitions contributed $9.9 million in net interest income and added 27 basis points to the net interest margin. Management projects accretion of loan discounts related to the 2012 FDIC-assisted acquisitions to be approximately $600,000 for the remainder of 2013. The accretion estimate for the remainder of 2013 could be positively impacted by positive workout arrangements in which RB&T receives loan payoffs for an amount greater than their respective carrying values.

83

The Traditional Banking segment continues to experience downward repricing in its loan and investment portfolios resulting from ongoing paydowns and early payoffs. As a result, the yield in both the loan and investment portfolios of the Bank declined from the first nine months of 2012 to the first nine months of 2013. The impact of this downward repricing to the Traditional Bank’s net interest income during the first nine months of 2013 partially offset the positive benefit in net interest income that resulted from the accretion of discounts for the Bank’s FDIC-assisted acquisitions in Tennessee and Minnesota.  During the third quarter of 2013, the negative impact to net interest income resulting from the downward repricing of interest-earning assets outpaced the positive benefit in net interest income that resulted from the accretion of discounts for the Bank’s FDIC-assisted acquisitions in Tennessee and Minnesota.

While the overall yield for each of the earning asset classes declined from the first nine months of 2013 compared to the first nine months of 2012, the percentage of average loans to average interest-earning assets increased during those same periods (80% vs. 71%) thereby aiding the Traditional Bank in its ability to increase its overall yield on interest-earning assets and its related net interest margin.

The downward repricing of interest-earning assets is expected to continue to cause compression in Republic’s net interest income and net interest margin in the future. Additionally, because the FFTR (the index which many of the Bank’s short-term deposit rates track) has remained at a target range between 0.00% and 0.25%, no future FFTR decreases from the Federal Open Market Committee of the FRB are possible, exacerbating the compression to the Bank’s net interest income and net interest margin caused by its repricing loans and investments. The Bank is unable to determine the ultimate negative impact to the Bank’s net interest spread and margin in the future because several factors remain unknown, such as future demand for its financial products and the overall future need for liquidity, among many other factors.

For additional information on the potential future effect of changes in short-term interest rates on Republic’s net interest income, see the table titled “Traditional Banking Interest Rate Sensitivity for 2013” in this section of the filing.

Republic Processing Group segment

Net interest income within the RPG segment decreased $45.3 million for the nine months ended September, 30 2013 compared to the same period in 2012. The decrease in net interest income at RPG was the result of the Company’s discontinuation of the RAL product effective April 30, 2012.

84

Table 4 provides detailed total Company information as to average balances, interest income/expense and rates by major balance sheet category for the nine month periods ended September 30, 2013 and 2012.

Table 4 — Total Company Average Balance Sheets and Interest Rates for the Nine months ended September 30, 2013 and 2012

	Nine Months Ended September 30, 2013						Nine Months Ended September 30, 2012
(dollars in thousands)	Average Balance		Interest		Average Rate		Average Balance		Interest		Average Rate
ASSETS
Interest-earning assets:
Taxable investment securities, including FHLB stock(1)	$	517,077	$	6,958	1.79	%	$	666,531	$	9,895	1.98	%
Federal funds sold and other interest-earning cash	142,058		303		0.28	%	277,550		516		0.25	%
Refund Anticipation Loans(2)(3)	—		—		0.00	%	32,305		45,224		186.65	%
Traditional Bank loans(2)(4)	2,583,363		95,268		4.92	%	2,421,008		91,894		5.06	%
Total interest-earning assets	3,242,498		102,529		4.22	%	3,397,394		147,529		5.79	%
Less: Allowance for loan losses	23,274						25,749
Non interest-earning assets:
Non interest-earning cash and cash equivalents	81,853						143,819
Premises and equipment, net	33,218						33,756
Other assets(1)	46,755						44,356
Total assets	$	3,381,050					$	3,593,576
LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Transaction accounts	$	686,488	$	357	0.07	%	$	607,654	$	284	0.06	%
Money market accounts	512,400		465		0.12	%	466,416		567		0.16	%
Time deposits	191,032		1,061		0.74	%	266,054		1,690		0.85	%
Brokered money market and brokered CD’s	123,791		1,190		1.28	%	173,520		1,408		1.08	%
Total interest-bearing deposits	1,513,711		3,073		0.27	%	1,513,644		3,949		0.35	%
Securities sold under agreements to repurchase and other short-term borrowings	163,585		53		0.04	%	243,168		340		0.19	%
Federal Home Loan Bank advances	577,991		11,081		2.56	%	561,072		11,245		2.67	%
Subordinated note	41,240		1,886		6.10	%	41,240		1,891		6.11	%
Total interest-bearing liabilities	2,296,527		16,093		0.93	%	2,359,124		17,425		0.98	%
Non interest-bearing liabilities and Stockholders’ equity:
Non interest-bearing deposits	516,848						652,498
Other liabilities	21,162						53,588
Stockholders’ equity	546,513						528,366
Total liabilities and stockholders’ equity	$	3,381,050					$	3,593,576
Net interest income			$	86,436					$	130,104
Net interest spread					3.29	%					4.81	%
Net interest margin					3.55	%					5.11	%

(1)For purpose of this calculation, the fair market value adjustment on investment securities resulting from FASB ASC Topic 320, Investments — Debt and Equity Securities, is included as a component of other assets.

(2)The amount of loan fee income included in total interest income was $8.8 million and $48.4 million for the nine months ended September 30, 2013 and 2012.

(3)The Refund Anticipation Loan product was discontinued effective April 30, 2012.

(4)Average balances for loans include the principal balance of non-accrual loans and loans held for sale.

85

Table 5 illustrates the extent to which changes in interest rates and changes in the volume of total Company interest-earning assets and interest-bearing liabilities impacted Republic’s interest income and interest expense during the periods indicated. Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior rate), (ii) changes attributable to changes in rate (changes in rate multiplied by prior volume) and (iii) net change. The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.

Table 5 — Total Company Volume/Rate Variance Analysis for the Nine months ended September 30, 2013 and 2012

				Nine Months Ended September 30, 2013
				Compared to
				Nine Months Ended September 30, 2012
	Total Net			Increase / (Decrease) Due to
(in thousands)	Change			Volume			Rate
Interest income:
Taxable investment securities, including FHLB stock	$	(2,937	)	$	(2,072	)	$	(865	)
Federal funds sold and other interest-earning deposits	(213		)	(281		)	68
Refund Anticipation Loans	(45,224		)	(45,224		)	—
Traditional Bank loans	3,374			6,040			(2,666		)
Net change in interest income	(45,000		)	(41,537		)	(3,463		)
Interest expense:
Transaction accounts	73			39			34
Money market accounts	(102		)	53			(155		)
Time deposits	(629		)	(435		)	(194		)
Brokered money market and brokered CDs	(218		)	(449		)	231
Securities sold under agreements to repurchase and other short-term borrowings	(287		)	(85		)	(202		)
Federal Home Loan Bank advances	(164		)	333			(497		)
Subordinated note	(5		)	—			(5		)
Net change in interest expense	(1,332		)	(544		)	(788		)
Net change in net interest income	$	(43,668	)	$	(40,993	)	$	(2,675	)

86

Provision for Loan Losses (Nine Months Ended September 30, 2013 Compared to Nine Months Ended September 30, 2012)

The Company recorded a provision for loan losses of $2.5 million for the first nine months 2013, compared to a provision of $13.7 million for the same period in 2012. The significant components comprising the Company’s decreased provision for loan losses by business segment were as follows:

Traditional Banking segment

The Traditional Banking provision for loan losses during the first nine months of 2013 was $3.3 million, a $3.2 million decline from the $6.5 million recorded during the first nine months of 2012. The significant components comprising the Traditional Bank’s decreased provision for loan losses were as follows:

·The Bank posted loss provisions for loans related to its 2012 FDIC-assisted acquisitions of $1.7 million during the first nine months of 2013. These provisions primarily reflect probable shortfalls in cash flows below initial day-one estimates for these loans. No analogous provisions were made during 2012, as the FDIC-assisted acquisitions were still within their initial day-one measurement periods.

·The Bank recorded a net increase to the provision of $877,000 for the first nine months of 2013 associated with residential mortgage TDRs, as the Company successfully refinanced retail borrowers displaying weaknesses in their ability to make payments under their previous contractual loan terms. The provision was primarily calculated utilizing discounted cash flow analyses. No significant analogous provisions were made for the same period in 2012.

·During the first nine months of 2013 the Bank recorded approximately $1.0 million in provision expense compared to $1.8 million for the same period in 2012 attributable to increases in the Bank’s general loan loss reserves for its pass-rated credits, excluding the 2012 acquired loans. These provisions were generally due to growth in the loan portfolios combined with movements in historical loss percentages and qualitative factors.

·Approximately $4.0 million of the provision for loan losses from the first nine months of 2012 was attributable to the Bank’s Substandard loans. The Bank increased allocations for relationships that were either downgraded to Substandard or displayed further signs of credit deterioration during the year. A net credit to the provision of $298,000 was made for Substandard loans for the first nine months of 2013 due to favorable reevaluations and workouts of Substandard loans.

·Approximately $700,000 of the provision for loan losses for the first nine months of 2012 was attributable to the Bank’s small balance, homogeneous loans which were on non-accrual status. Significant provisions were not needed for similar portfolios for the same period in 2013.

See the section titled “Asset Quality” in this section of the filing under “Comparison of Financial Condition at September 30, 2013 and December 31, 2012” for additional discussion regarding the Company’s provision for loan losses, classified assets, Allowance, non-performing loans, delinquent loans, impaired loans and TDRs.

Republic Processing Group segment

The Company ceased offering the RAL product effective April 30, 2012. As a result, RPG experienced no RAL losses during the nine months ended September 30, 2013. During the nine months ended September 30, 2013, the Company recorded a credit of $796,000 to provision expense for recoveries of prior period RAL losses. During the nine months ended September 30, 2012, the Company recorded a net provision of $7.2 million for probable RAL losses.

87

An analysis of changes in the Allowance and selected ratios follows:

Table 6 — Summary of Loan Loss Experience the Nine months ended September 30, 2013 and 2012

	Nine Months Ended
	September 30,
(dollars in thousands)	2013			2012
Allowance for loan losses at beginning of period	$	23,729		$	24,063
Charge offs:
Residential real estate:
Owner occupied	(1,291		)	(2,422		)
Non owner occupied	(225		)	(318		)
Commercial real estate	(972		)	(353		)
Commercial real estate - purchased whole loans	—			—
Construction & land development	(616		)	(1,796		)
Commercial	(412		)	(18		)
Warehouse lines of credit	—			—
Home equity	(354		)	(1,947		)
Consumer:
Credit cards	(120		)	(87		)
Overdrafts	(474		)	(318		)
Other consumer	(280		)	(185		)
Refund Anticipation Loans	—			(11,097		)
Total charge offs	(4,744		)	(18,541		)
Recoveries:
Residential real estate:
Owner occupied	219			183
Non owner occupied	73			14
Commercial real estate	117			70
Commercial real estate - purchased whole loans	—			—
Construction & land development	45			83
Commercial	73			21
Warehouse lines of credit	—			—
Home equity	127			73
Consumer:
Credit cards	14			33
Overdrafts	324			332
Other consumer	239			167
Refund Anticipation Loans	796			3,883
Total recoveries	2,027			4,859
Net loan charge offs	(2,717		)	(13,682		)
Provision for loan losses - Traditional Banking	3,276			6,505
Provision for loan losses - Refund Anticipation Loans	(796		)	7,214
Total provision for loan losses	2,480			13,719
Allowance for loan losses at end of period	$	23,492		$	24,100

Credit Quality Ratios:
Allowance for loan losses to total loans - Total Company	0.92	%	0.91	%
Allowance for loan losses to non performing loans - Total Company	116	%	114	%
Annualized net loan charge offs to average loans outstanding - Total Company	0.21	%	0.74	%
Annualized net loan charge offs to average loans outstanding - Traditional Bank	0.27	%	0.36	%

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Non-interest Income (Nine months ended September 30, 2013 Compared to Nine months ended September 30, 2012)

Total Company non-interest income decreased $114.9 million, or 74%, for the first nine months of 2013 compared to the same period in 2012. The most significant components comprising the total Company’s change in non-interest income by business segment were as follows:

Traditional Banking segment

Traditional Banking segment non-interest income decreased $52.2 million, or 73%, for the first nine months of 2013 compared to the same period in 2012.

During the first nine months of 2012, the Company recorded bargain purchase gains of $54.7 million as a result of the FDIC-assisted acquisitions of TCB and FCB. The bargain purchase gains were realized because the overall price paid by RB&T was substantially less than the fair value of the TCB and FCB assets acquired and liabilities assumed in the transactions.

See additional discussion regarding the 2012 FDIC-assisted acquisitions of failed banks under Footnote 2 “2012 FDIC-Assisted Acquisitions of Failed Banks” of Part I Item 1 “Financial Statements.”

Service charges on deposit accounts were $10.4 million during the first nine months of 2013 compared to $10.0 million for the same period in 2012. The Bank earns a substantial majority of its fee income related to its overdraft service program from the per item fee it assesses its customers for each insufficient funds check or electronic debit presented for payment. The total net per item fees included in service charges on deposits for the first nine months of 2013 and 2012 were $5.9 million and $5.5 million. The total net daily overdraft charges included in interest income for the first nine months of 2013 and 2012 was $1.2 million for both periods.

Net gain on the sale of OREO was $1.7 million for the sale of 106 properties during the first nine months of 2013, as compared to a net gain of $381,000 from the sale of 69 properties during the first nine months of 2012.  Approximately $921,000 of the 2013 net gain related to assets acquired in the 2012 FDIC-assisted acquisitions.

Mortgage Banking segment

Within the Mortgage Banking segment, mortgage banking income increased $889,000, or 16%, during the first nine months of 2013 compared to the same period in 2012.

Mortgage banking income for the first nine months of 2013 was positively impacted by low long-term interest rates through mid-May 2013 which led to an increase in secondary market loan volume as compared to the same time period in the prior year. Overall, Republic originated secondary market loans totaling $263 million during the first nine months of 2013 compared to $172 million during the same period in 2012, with the majority of the 2013 application volume occurring during the first half of 2013.

While long-term interest rates at September 30, 2013 were relatively low as compared to historical levels, significant increases in these rates during the second quarter of 2013 negatively impacted new loan application volume.  The rise in interest rates is expected to continue to negatively impact future loan application volume during the remainder of 2013 and beyond.

Republic Processing Group segment

RPG non-interest income decreased $63.7 million, or 81%, during the first nine months of 2013 compared to the same period in 2012. The decrease was the result of pricing pressures via revenue sharing driven by increased competition resulting from the elimination of the RAL product and the previously disclosed termination of RB&T’s contracts with Liberty and JHI.

With regard to the TRS business division of the RPG segment, TRS faces direct competition for RT market share from independently-owned processing groups partnered with banks. Independent processing groups that were unable to offer RAL products were, historically, at a competitive disadvantage to banks who could offer RALs. With RB&T’s resolution of its differences through the FDIC Agreement, RB&T discontinued RALs effective April 30, 2012. Without the ability to originate RALs, RB&T continues to face increased competition in the RT marketplace. In addition to the loss of volume resulting from additional competitors, RB&T has incurred substantial pressure on its profit margin for RT products via revenue sharing arrangements with its various partners.

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Furthermore, management believes that the FDIC Agreement also negatively impacts RB&T’s ability to originate RT products. As previously disclosed, the FDIC Agreement contains a provision for an Electronic Return Originator (“ERO”) Plan to be administered by RB&T. The ERO Plan places additional oversight and training requirements on RB&T and its tax preparation partners that may not currently be required by regulators for RB&T’s competitors in the tax business. These additional requirements make attracting new relationships, retaining existing relationships, and maintaining profit margin for RTs more difficult for RB&T. Management estimates net RT revenues could continue to be reduced beyond 2013 if these competitive disadvantages remain in place.

In addition to the reduced profit margin the Company experienced with its RT volume during 2013 as noted above, the Company also experienced a significant decrease in RT volume resulting from the termination of the Company’s contracts with JHI and Liberty. As previously disclosed in a Form 8-K filed on August 29, 2012, JHI unilaterally terminated its contract with RB&T on August 27, 2012. In addition, as previously disclosed in a Form 8-K filed on September 19, 2012, Liberty unilaterally terminated its contract with RB&T on September 18, 2012. On a combined basis, these contracts represented approximately 53% of RB&T’s 2012 RT volume.

Republic believes that JHI and Liberty breached their agreements with RB&T by terminating without cause. RB&T is engaged in binding arbitration with JHI through a final arbitration hearing that occurred on July 26, 2013 with a decision now anticipated in the fourth quarter of 2013. Pursuant to the terms of their agreement, RB&T and Liberty are engaged in mediation in an attempt to settle RB&T’s claim of breach of contract by Liberty. If the parties fail to settle the claim, the agreement requires that, upon demand by one of the parties, they will engage in binding arbitration.

Non-interest Expenses (Nine months ended September 30, 2013 Compared to Nine months ended September 30, 2012)

Total Company non-interest expenses declined $11.0 million, or 11%, during the first nine months of 2013 compared to the same period in 2012. RPG non-interest expenses declined $6.8 million while the Traditional Banking segment and Mortgage Banking segment decreased a total of $4.3 million for the first nine months of 2013 compared to the same period in 2012. The most significant components comprising the decrease in total Company non-interest expense by business segment were as follows:

Traditional Banking segment

Salaries and benefits decreased $194,000 for the first nine months of 2013.  The decrease in salaries and benefits during the first nine months of 2013 was due primarily to a $3.3 million reversal of 2013 incentive compensation accruals based on revised payout estimates. Offsetting the benefit in salary expense for the reversal of the Bank’s incentive compensation accruals was a rise in salaries and benefits resulting from an increase in the Traditional Banking segment’s full time equivalent employees (“FTEs”). The Traditional Bank’s FTEs rose from 707 at September 30, 2012 to 742 at September 30, 2013. The increase in the Traditional Bank’s FTEs was the result of retaining employees at the acquired banks and the hiring of additional employees to support the acquired bank’s operations and the Bank’s long-term growth plans.

Data processing expense decreased $1.0 million during the first nine months of 2013 compared to the same period in 2012 primarily due to $895,000 in data processing costs incurred during the first nine months of 2012 related to the TCB and FCB acquisitions.

Contributions expense decreased $571,000 during the first nine months of 2013 compared to the same period in 2012 due to the first quarter 2012 contribution to the Republic Bank Foundation.

During the first quarter of 2012, the Bank prepaid $81 million in FHLB advances that were originally scheduled to mature between October 2012 and May 2013. These advances had a weighted average cost of 3.56%. The Bank incurred a $2.4 million early termination penalty in connection with this prepayment.

Audit and professional fees decreased $598,000 during the first nine months of 2013 due primarily to additional audit and third party consulting fees in 2012 related to the 2012 FDIC-assisted acquisitions.

See additional discussion regarding the 2012 FDIC-assisted acquisitions of failed banks under Footnote 2 “2012 FDIC-Assisted Acquisitions of Failed Banks” of Part I Item 1 “Financial Statements.”

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Republic Processing Group segment

Salaries and employee benefits decreased $2.6 million, or 33%, for the first nine months of 2013 compared to the same period in 2012. The first nine months of 2013 for RPG reflected lower contract labor staffing costs, reduced bonus payouts tied to TRS’ operating performance as compared to goal, and a reduction in staff at TRS as a result of a decline in overall segment revenues.

Legal expense at RPG was $1.8 million for the first nine months of 2013 compared to $67,000 for the same period in 2012.  The increase in legal expense was directly associated with the Company’s contract termination disputes with JHI and Liberty. In addition, the Company also incurred legal expenses during the first nine months related to the P&A Transaction and the negotiations of the MSA and RPA with H&R Block. Continued elevated legal expenses related to the JHI and Liberty contract disputes are likely for the remainder of 2013 with no projected offsetting revenues. The Bank does not expect to incur additional legal expenses associated with the MSA and RPA as those negotiations have ceased as a result of H&R Block’s termination of the Agreement.

Charitable contributions decreased $1.9 million for the first nine months of 2013 compared to the same period in 2012.  The decrease was the result of the $2.5 million total company contribution made to the Republic Bank Foundation in 2012 with no contribution being made during the first nine months of 2013.  The contribution to the Republic Bank Foundation was allocated to the Company’s business segments using a formula based on the segments’ overall profits.

Bank Franchise expense decreased $365,000 during the first nine months of 2013 compared to the same period in 2012.  Bank Franchise expense primarily represents taxes paid to the state of Kentucky based on RB&T’s average five year stockholder’s equity.  The increase in Bank Franchise expense for RPG was the result of an increase in the five year average stockholder’s equity of RB&T attributable to the RPG segment.

The following expenses and their related decreases were a function of the elimination of the RAL product and the decline in RT volume from the first nine months of 2012 to the first nine months of 2013:

·Occupancy and equipment expense decreased $664,000;

·Communication and transportation expenses decreased $1.6 million;

·Supplies expense decreased $881,000; and

·Other expense decreased $297,000.

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COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2013 AND DECEMBER 31, 2012

Cash and Cash Equivalents

Cash and cash equivalents include cash, deposits with other financial institutions with original maturities less than 90 days and federal funds sold. Republic had $142 million in cash and cash equivalents at September 30, 2013 compared to $138 million at December 31, 2012. The Bank’s restricted cash includes $2 million in a money market account as collateral to secure settlement obligations related to the RPG segment’s prepaid card program as of September 30, 2013. No similar collateral was maintained as of December 31, 2012.

For cash held at the Federal Reserve Bank, the Bank earns a yield of 0.25%. For all other cash held within the Bank’s banking center and ATM networks, the Bank does not earn interest. Due to ongoing contraction within the Bank’s net interest margin, management is anticipating it will maintain a general strategy during 2013 to keep minimal amounts of cash on its balance sheet, within Board approved policies.

Securities Available for Sale

Securities available for sale primarily consists of U.S. Treasury securities and U.S. Government agency obligations, including agency mortgage backed securities (“MBSs”) and agency collateralized mortgage obligations (“CMOs”). The agency MBSs primarily consist of hybrid mortgage investment securities, as well as other adjustable rate mortgage investment securities, underwritten and guaranteed by Ginnie Mae (“GNMA”), Freddie Mac (“FHLMC”) and Fannie Mae (“FNMA”). Agency CMOs held in the investment portfolio are substantially all floating rate securities that adjust monthly. The Bank uses a portion of the investment securities portfolio as collateral to Bank clients for securities sold under agreements to repurchase (“repurchase agreements”). The remaining eligible securities that are not pledged to secure client repurchase agreements may be pledged to the Federal Home Loan Bank as collateral for the Bank’s borrowing line. Strategies for the investment securities portfolio may be influenced by economic and market conditions, loan demand, deposit mix and liquidity needs.

During the first nine months of 2013, part of the Bank’s strategy to mitigate contraction within its net interest margin was to grow its investment securities portfolio.  As a result, the Bank purchased $95 million in U.S. Government Agency securities, $75 million in Agency MBSs, and $20 million in floating rate corporate bonds all during the first nine months of 2013. The securities purchased during 2013 have a weighted average yield of 1.43% and an expected weighted-average life of less than six years. The Company will likely continue to grow its investment securities portfolio during the fourth quarter of 2013 and may purchase as much as $100 million of additional U.S. Government or U.S. Government Agency securities by December 31, 2013.

The $20 million of floating rate corporate bonds that were purchased during the second quarter of 2013 had an initial weighted average yield of 1.36%. In addition, these bonds have a weighted average expected life of seven years, were rated “investment grade” by accredited ratings agencies as of their respective purchase dates, and represented approximately 4% of the Bank’s investment portfolio as of September 30, 2013. While management does not consider these bonds to be material relative to the Bank’s overall balance sheet structure, these purchases do represent a strategic deviation from the Bank’s historical purchase patterns of primarily US Government or US Government Agency backed securities.  Management does not anticipate material future purchases of corporate bonds, however, the future timing and amount of corporate bond purchases, if any, will be based on various factors including, but not limited to, the Bank’s earnings, liquidity, interest rate risk, and capital positions at the time.

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Loan Portfolio

Net loans, primarily consisting of secured real estate loans, decreased by $97 million, or 4%, during the first nine months of 2013 to $2.5 billion at September 30, 2013. Following are the more significant factors contributing to fluctuations in the Bank’s loan portfolio:

Loans Associated with the 2012 FDIC-Assisted Acquisitions of Failed Banks

The contractual amount of the loans associated with the TCB transaction decreased from $42 million as of December 31, 2012 to $35 million as of September 30, 2013 The carrying value of the loans associated with the TCB transaction decreased from $31 million at December 31, 2012 to $29 million as of September 30, 2013 as the Bank has continued efforts to establish itself in this new market and work acquired problem loans out of the Bank.

The contractual amount of the loans associated with the FCB transaction decreased from $139 million as of December 31, 2012 to $99 million as of September 30, 2013. The carrying value of the loans associated with the FCB transaction decreased from $108 million as of December 31, 2012 to $77 million as of September 30, 2013 as the Bank has mainly focused its resources towards working the problem loans out of the Bank and servicing the performing loans from the transaction.

See additional discussion regarding the 2012 FDIC-assisted acquisitions of failed banks under Footnote 2 “2012 FDIC-Assisted Acquisitions of Failed Banks” of Part I Item 1 “Financial Statements.”

Mortgage Warehouse Lines of Credit

RB&T began offering mortgage warehouse lines of credit in June 2011. These lines of credit provide short-term, revolving credit facilities to mortgage bankers across the nation. These credit facilities are secured by single family, first lien residential real estate loans. The credit facility enables mortgage banking customers to close single family, first lien residential real estate loans in their own name and temporarily fund their inventory of these closed loans until the loans are sold to investors approved by RB&T. The individual loans are expected to remain on the warehouse line for an average of 15 to 30 days. Interest income and loan fees are accrued for each individual loan during the time the loan remains on the warehouse line and are collected when the loan is sold to the secondary market investor. RB&T receives the sale proceeds of each loan directly from the investor and applies the funds to pay off the warehouse advance and related accrued interest and fees. The remaining proceeds are credited to the mortgage banking customer.

As of December 31, 2012, RB&T had $217 million of outstanding loans from total committed credit lines of $331 million. As of September 30, 2013 RB&T had $123 million of outstanding loans from total committed credit lines of $318 million. The $94 million decrease in the outstanding balances of mortgage warehouse loans was primarily due to the rise in long-term interest rates during the latter part of the second quarter of 2013, which negatively impacted refinance volume among RB&T’s mortgage warehouse clients.

RB&T’s mortgage warehouse lending business is significantly influenced by the volume and composition of residential mortgage purchase and refinance transactions among RB&T’s mortgage banking clients. For the nine months ended September 30, 2013, RB&T’s warehouse volume consisted of 61% purchase transactions in which the mortgage company’s borrower was purchasing a new residence, and 39% refinance transactions, in which the mortgage company’s client was refinancing an existing mortgage loan. Purchase volume is driven by a number of factors, including but not limited to, the overall economy, the housing market and long-term residential mortgage interest rates; while refinance volume is primarily driven by long-term residential mortgage interest rates.

RB&T’s warehouse lending business did benefit during 2012 and the first five months of 2013 from low or declining long-term residential mortgage rates which incentivized a high volume of borrowers to refinance their mortgages. Long-term interest rates, however, began rising rapidly in May of 2013. These increases in long-term residential mortgage interest rates have and will likely continue to decrease refinance activity and, without an equivalent increase in purchases and/or growth in RB&T’s warehouse client base, will likely have a negative impact on RB&T’s mortgage warehouse loans outstanding for the remainder of 2013.

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Fixed Rate Commercial Real Estate Loan Initiatives

As an additional effort to grow its loan portfolio and further combat net interest margin compression, the Bank began offering a 15-year fixed-rate commercial real estate (“CRE”) loan during the first quarter of 2013. The initial offering rate on these loans was 3.50% when the program was started in January of 2013, but was later adjusted to 3.79% in February 2013 and 3.95% in June 2013, consistent with the market demand and interest rate environment. During the nine months ended September 30, 2013 the Bank closed approximately $82 million of these loans with a weighted average rate of approximately 3.65%. To partially mitigate the risk of rising interest rates related to these longer-term loans, the Bank borrowed $70 million from the Federal Home Loan Bank with a weighted average rate of 1.61% and a weighted average life of approximately 6 years.

With market conditions changing in late second quarter 2013, the Bank ceased accepting new loan applications for its 15-year promotional CRE product and began promoting CRE products of shorter term and therefore lower interest rate risk. The Bank continues to adjust its CRE product offerings to fit customer demand and stay within credit and interest rate risk tolerances.

Asset Quality

The composition of loans classified within the Allowance follows:

Table 7 — Classified and Special Mention Assets

(in thousands)	September 30, 2013		December 31, 2012
Loss	$	—	$	—
Doubtful	—		—
Substandard	36,177		49,352
Purchased Credit Impaired - Substandard	223		—
Total Classified Loans	36,400		49,352
Special Mention	47,732		50,625
Purchased Credit Impaired - Group 1	50,204		72,978
Total Special Mention Loans	97,936		123,603
Total Classified and Special Mention Loans	$	134,336	$	172,955

Purchased loans accounted for under Accounting Standards Codification (“ASC”) Topic 310-20, Nonrefundable Fees and Other Costs, are accounted for as are any other Bank-originated loan, potentially becoming nonaccrual or impaired, as well as being risk rated under the Bank’s standard practices and procedures. In addition, purchased loans accounted for under ASC Topic 310-20 are considered in the determination of the Allowance.

Related to PCI loans accounted for under ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality, management separately monitors this portfolio and on a quarterly basis reviews the loans contained within this portfolio against the factors and assumptions used in determining the day-one fair values. In addition to its quarterly evaluation, a loan is typically reviewed when it is modified or extended, or when material information becomes available to the Bank that provides additional insight regarding the loan’s performance, the status of the borrower, or the quality or value of the underlying collateral.

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To the extent that a PCI loan’s performance does not reflect an increased risk of loss of contractual principal beyond the non-accretable yield established as part of its initial day-one evaluation, such loan would be classified in the Purchased Credit Impaired - Group 1 (“PCI-1”) category; whose credit risk is considered equivalent to a non-PCI “Special Mention” loan within the Bank’s credit rating matrix. PCI-1 loans are considered impaired if the Bank’s periodic evaluation finds that the time needed to recover the Bank’s investment is greater that management’s initial day-one estimate. Provisions for loan losses are made for impaired PCI-1 loans to further discount the loan and allow its yield to conform to at least management’s initial expectations. Any improvement in the expected performance of a PCI-1 loan would result in a reversal of the provision for loan losses to the extent of prior charges and then an adjustment to accretable yield, which would have a positive impact on interest income.

If during the Bank’s periodic evaluations of its PCI loan portfolio, management deems a PCI-1 loan to have an increased risk of loss of contractual principal beyond the non-accretable yield established as part of its initial day-one evaluation, such loan would be classified PCI-Substandard (“PCI-Sub”).  Management deems the risk of default and overall credit risk of a PCI-Sub loan to be greater than a PCI-1 loan and more analogous to a non-PCI “Substandard” loan within the Bank’s credit rating matrix. PCI-Sub loans are considered to be impaired. Any improvement in the expected performance of a PCI-Sub loan would result in a reversal of the provision for loan losses to the extent of prior charges and then an adjustment to accretable yield, which would have a positive impact on interest income.

PCI loans may be contractually past due 90 days-or-more and continue to accrue interest if future cash flows can be reasonably projected to allow continuation of discount accretion. At September 30, 2013 and December 31, 2012, there were approximately $2 million and $3 million in PCI loans that were past due 90 days-or-more and still on accrual status.

If a troubled debt restructuring is performed on a PCI loan, the loan is considered impaired under the applicable TDR accounting standards and transferred out of the PCI population. The loan may require an additional provision for loan losses if its restructured cash flows are less than management’s initial day-one expectations. Special Mention and Substandard loans include $2 million and $6 million at September 30, 2013 and $4 million and $11 million at December 31, 2012, respectively, which were removed from the Purchased Credit Impaired population due to a troubled debt restructuring of the loan.

See additional discussion regarding the 2012 FDIC-assisted acquisitions of failed banks under Footnote 2 “2012 FDIC-Assisted Acquisitions of Failed Banks” of Part I Item 1 “Financial Statements.”

The Bank maintains an allowance for probable incurred credit losses inherent in the Bank’s loan portfolio, which includes overdrawn deposit accounts. Management evaluates the adequacy of the Allowance on a monthly basis and presents and discusses the analysis with the Audit Committee and the Board of Directors on a quarterly basis.

The Allowance consists of specific and general components. The specific component relates to loans that are individually classified as impaired.  The general component is based on historical loss experience with potential adjustments for qualitative factors. For the impact on the Allowance acquired in the acquisitions of failed banks, see additional discussion under Footnote 2 “2012 FDIC-Assisted Acquisitions of Failed Banks” of Part 1 Item 1 “Financial Statements.”

A loan is impaired when, based on current information and events, it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the loan agreement. Loans that meet the following classifications are considered impaired:

·All loans internally rated as “Substandard,” “PCI-Sub,” “Doubtful” or “Loss;”

·All loans on non-accrual status and non-PCI loans past due 90 days-or-more still on accrual;

·All retail and commercial TDRs; and

·Any other situation where the full collection of total amount due for a loan is improbable or otherwise meets the definition of impaired.

The Bank’s classified and special mention loans are generally commercial and commercial real estate loans but also include large single family residential and home equity loans as well as TDRs, whether retail or commercial in nature. The Bank reviews and monitors these loans on a regular basis. Generally, loans are designated as classified or special mention to ensure more frequent monitoring. These loans are reviewed to ensure proper earning status and management strategy. If it is determined that there is serious doubt as to performance in accordance with original or modified contractual terms, then the loan is generally downgraded and often placed on non-accrual status.

Loans, with the exception of PCI loans, are typically placed on non-accrual status when the loans become past due 80 days or more as to principal or interest, unless the loans are adequately secured and in the process of collection. Past due status is

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based on how recent payments have been received. When loans are placed on non-accrual status, all unpaid interest is reversed from interest income and accrued interest receivable. These loans remain on non-accrual status until the borrower demonstrates the ability to become and remain current or the loan or a portion of the loan is deemed uncollectible and is charged off. Consumer loans are reviewed periodically and generally charged off when the loans reach 120 days past due or at any earlier point the loan is deemed uncollectible. PCI loans are separately monitored and reviewed at least quarterly against the factors and assumptions used in determining the day-one fair values. PCI loans would be placed on non-accrual when management determines that based on estimated cash flow, the Bank will be unable to accrete any yield on such loan. PCI loans may also be placed on non-accrual if management cannot reasonably estimate future cash flows on such loans.

Generally accepted accounting principles recognizes three methods to measure specific loan impairment, including:

·Cash Flow Method — The recorded investment in the loan is measured against the present value of expected future cash flows discounted at the loan’s effective interest rate. The Bank employs this method for a significant portion of its impaired loans, particularly TDRs. Impairment amounts under this method are reflected in the Bank’s Allowance as specific reserves on the respective impaired loan. These specific reserves are adjusted quarterly based upon reevaluation of the loan’s expected future cash flows and changes in the recorded investment in such loans.

·Collateral Method — The recorded investment in the loan is measured against the fair value of the loan’s collateral value less selling costs. The Bank employs the fair value of collateral method for its impaired loans when the loan’s repayment is based solely on the sale or operations of the underlying collateral. Collateral fair value is typically based on the most recent real estate appraisal. Impairment shortfalls under this method are divided into an amount which represents the shortfall between the recorded investment in the loan and the fair value of the underlying collateral (“fair value shortfall”) and an amount which represents the costs to sell the underlying collateral (“selling costs shortfall”). The fair value shortfall is recorded via a partial charge-off while the selling costs shortfall is reflected in the Bank’s Allowance as a specific reserve on the respective impaired loan until the loan is liquidated. The Bank’s selling costs for its collateral dependent loans and OREO typically range from 10-13% of the fair value of the underlying collateral.

·Market Value Method — The recorded investment in the loan is measured against the loan’s obtainable market value. The Bank does not currently employ this technique as it is typically found impractical.

In addition to obtaining appraisals at the time of loan origination, the Bank typically updates appraisals and broker price opinions for loans with potential impairment. Updated valuations for commercial related loans exhibiting an increased risk of loss are typically obtained within one year of the last appraisal. Collateral values for past due residential mortgage loans and home equity loans are generally updated prior to a loan becoming 90 days delinquent, but no more than 180 days past due. When determining the amount of reserve, to the extent updated collateral values cannot be obtained due to the lack of recent comparable sales or for other reasons, the Bank discounts the valuation of the collateral primarily based on the age of the appraisal and the real estate market conditions of the location of the underlying collateral.

The general component of the Allowance covers loans collectively evaluated for impairment and is based on historical loss experience with potential adjustments for current relevant qualitative factors. The historical loss experience is determined by loan performance and class and is based on the actual loss history experienced by the Bank. Large groups of smaller balance homogeneous loans, such as consumer and residential real estate loans, are included in the general component unless the loans are classified as TDRs.

For loans not considered impaired, management evaluates the loan portfolio by reviewing the historical loss rate for each respective loan class. Management evaluates the following historical loss rate scenarios:

·Rolling four quarter average

·Rolling eight quarter average

·Rolling twelve quarter average

·Rolling sixteen quarter average

·Current year to date historical loss factor (average)

·Prior annual three year historical loss factors

·Peer group loss factors

Currently, management typically assigns a greater emphasis to the higher of the rolling eight, twelve, or sixteen quarter averages when determining its historical loss factors for its “Pass” rated and nonrated loans.

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Historical loss rates for non-performing loans, which are not individually evaluated for impairment, are analyzed using loss migration analysis by loan class of prior year net charge-off results.

Loan classes are evaluated utilizing subjective factors in addition to the historical loss calculations to determine a loss allocation for each of those classes. Management assigns risk multiples to certain classes to account for qualitative factors such as:

·Changes in nature, volume and seasoning of the loan portfolio;

·Changes in experience, ability, and depth of lending management and other relevant staff;

·Changes in the quality of the Bank’s loan review systems;

·Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses;

·Changes in the volume and severity of past due, nonaccrual and classified loans;

·Changes in the value of underlying collateral for collateral-dependent loans;

·Changes in international, national, regional, and local economic and business conditions and developments that affect the collectibility of the loan portfolio, including the condition of various market segments;

·The existence and effect of any concentrations of credit, and changes in the level of such concentrations; and

·The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the institution’s existing portfolio.

As this analysis, or any similar analysis, is an imprecise measure of loss, the Allowance is subject to ongoing adjustments. Therefore, management will often take into account other significant factors that may be necessary or prudent in order to reflect probable incurred losses in the total loan portfolio.

Allowance for Loan Losses

The Bank’s Allowance decreased $237,000, or 1%, during the first nine months of 2013 to $23 million at September 30, 2013. As a percent of total loans, the traditional banking Allowance increased to 0.92% at September 30, 2013 compared to 0.90% at December 31, 2012.

Total Company net charge-offs exceeded loan loss provisions during the first nine months of 2013 as the Company’s credit quality ratios generally continued their positive trends from the prior year. Annualized Traditional Bank net loan charge-offs to average loans were 0.27% for the first nine months of 2013 compared to 0.36% for the same period in 2012.

Notable fluctuations in the Allowance were as follows:

·The Bank increased its allowance by a net $1.7 million during the first nine months of 2013 related to loans acquired in its 2012 FDIC-assisted acquisitions.  This increase related to required provisions that primarily reflected probable shortfalls in future estimated cash flows below initial acquisition day (“day-one”) estimates for these loans.

·The Bank posted a net $1.4 million increase to its Allowance associated with general loan loss reserves for its pass-rated credits due to growth in the loan portfolio during 2013 combined with increases in historical loss percentages.

·The Bank recorded a net decrease of $607,000 to its Allowance related to improvements with the small dollar non-accrual and past due pools of non-classified/special mention loans.

·The Bank charged off approximately $4.7 million in loan balances during the first nine months of 2013, the majority of which was previously allocated for within the Allowance. The Allowance associated for classified/special mention loans declined by a net $2.0 million during the first nine months of 2013.

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Non-performing Loans

Non-performing loans include loans on non-accrual status and loans past due 90 days or more and still accruing. Impaired loans that are not placed on non-accrual status are not included as non-performing loans. The non-performing loan category includes impaired loans totaling approximately $20 million at September 30, 2013, with approximately $12 million of these loans also reported as TDRs. The non-performing loan category includes impaired loans totaling approximately $22 million at December 31, 2012, with approximately $14 million of these loans also reported as TDRs.

The following table details the Bank’s non-performing loans and non-performing assets and select credit quality ratios:

Table 8 — Non-performing Loans and Non-performing Assets Summary

dollars in thousands)	September 30, 2013			December 31, 2012
Loans on non-accrual status (1)	$	18,407		$	18,506
Loans past due 90 days or more and still on accrual (2)	1,839			3,173
Total non-performing loans	20,246			21,679
Other real estate owned	15,247			26,203
Total non-performing assets	$	35,493		$	47,882
Credit Quality Ratios - Total Company
Non-performing loans to total loans	0.79		%	0.82		%
Non-performing assets to total loans (including OREO)	1.38		%	1.79		%
Non-performing assets to total assets	1.07		%	1.41		%
Credit Quality Ratios - Acquired Banks
Non-performing loans to total loans	1.77		%	2.29		%
Non-performing assets to total loans (including OREO)	6.61		%	11.54		%
Non-performing assets to total assets	6.57		%	8.73		%

(1)Loans on non-accrual status include impaired loans. See Footnote 4 “Loans and Allowance for Loan Losses” of Part I Item 1 “Financial Statements” for additional discussion regarding impaired loans.

(2)All loans past due 90 days or more and still accruing were PCI loans accounted for under ASC 310-30.

Approximately $11 million, or 52%, of the Bank’s total non-performing loans at September 30, 2013 was concentrated in the residential real estate category with the underlying collateral predominantly located in the Bank’s primary market area of Kentucky. The Bank does not consider any of these loans to be “sub-prime.” The Bank’s non-performing residential real estate concentration was $11 million, or 53%, as of December 31, 2012.

Approximately $7 million, or 36%, of the Bank’s total non-performing loans were concentrated in the commercial real estate and construction and land development portfolios as of September 30, 2013. These loans are secured primarily by commercial properties. In addition to the primary collateral, the Bank also obtained in many cases, at the time of origination, personal guarantees from the principal borrowers and secured liens on the guarantors’ primary residences. The Bank’s non-performing commercial and construction and land development concentration was $7 million, or 31%, as of December 31, 2012.

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The composition of the Bank’s non-performing loans follows:

Table 9 — Non-performing Loan Composition

(in thousands)	September 30, 2013		December 31, 2012
Residential real estate:
Owner occupied	$	9,104	$	10,028
Non-owner occupied	1,482		1,376
Commercial real estate	6,382		4,468
Commercial real estate - purchased whole loans	—		—
Construction & land development	899		2,308
Commercial	1,537		1,534
Warehouse lines of credit	—		—
Home equity	722		1,868
Consumer:
Credit cards	—		—
Overdrafts	—		—
Other consumer	120		97
Total non-performing loans	$	20,246	$	21,679

Table 10 — Non-performing Loans to Total Loans by Loan Type

(in thousands)	September 30, 2013		December 31, 2012
Residential real estate:
Owner occupied	0.83	%	0.88	%
Non-owner occupied	1.35	%	1.85	%
Commercial real estate	0.83	%	0.63	%
Commercial real estate - purchased whole loans	0.00	%	0.00	%
Construction & land development	1.68	%	3.38	%
Commercial	1.34	%	1.17	%
Warehouse lines of credit	0.00	%	0.00	%
Home equity	0.32	%	0.77	%
Consumer:
Credit cards	0.00	%	0.00	%
Overdrafts	0.00	%	0.00	%
Other consumer	0.74	%	0.64	%
Total non performing loans to total loans	0.79	%	0.82	%

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The composition of the Bank’s non-performing loans stratified by the number of loans within a specified value range follows:

Table 11 — Stratification of Non-performing Loans

	Number of Loans and Unpaid Principal Balance
September 30, 2013 (dollars in thousands)	No.	Balance <= $100		No.	Balance > $100 <= $500		No.	Balance > $500		No.	Total Balance
Residential real estate:
Owner Occupied	86	$	4,285	21	$	3,356	2	$	1,463	109	$	9,104
Non-owner occupied	9	347		1	152		1	983		11	1,482
Commercial real estate	2	115		9	1,967		3	4,300		14	6,382
Commercial real estate - purchased whole loans	—	—		—	—		—	—		—	—
Construction & land dev	3	193		—	—		1	706		4	899
Commecial	—	—		2	329		1	1,208		3	1,537
Warehouse lines of credit	—	—		—	—		—	—		—	—
Home equity	19	366		2	356		—	—		21	722
Consumer:
Credit cards	—	—		—	—		—	—		—	—
Overdrafts	—	—		—	—		—	—		—	—
Other consumer	17	120		—	—		—	—		17	120
Total	136	$	5,426	35	$	6,160	8	$	8,660	179	$	20,246

	Number of Loans and Unpaid Principal Balance
December 31, 2012 (dollars in thousands)	No.	Balance <= $100		No.	Balance > $100 <= $500		No.	Balance > $500		No.	Total Balance
Residential real estate:
Owner Occupied	82	$	3,993	31	$	5,411	1	$	624	114	$	10,028
Non-owner occupied	15	798		2	578		—	—		17	1,376
Commercial real estate	5	137		7	1,805		3	2,526		15	4,468
Commercial real estate - purchased whole loans	—	—		—	—		—	—		—	—
Construction & land dev	1	76		4	1,205		1	1,027		6	2,308
Commecial	2	97		1	237		1	1,200		4	1,534
Warehouse lines of credit	—	—		—	—		—	—		—	—
Home equity	33	826		6	1,042		—	—		39	1,868
Consumer:
Credit cards	—	—		—	—		—	—		—	—
Overdrafts	—	—		—	—		—	—		—	—
Other consumer	19	97		—	—		—	—		19	97
Total	157	$	6,024	51	$	10,278	6	$	5,377	214	$	21,679

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Approximately $14 million in non-performing loans at December 31, 2012, were removed from the non-performing loan classification during 2013. Approximately $1 million, or 10%, of these loans were removed from the non-performing category because they were charged-off. Approximately $3 million, or 21%, in loan balances were transferred to OREO with $5 million, or 37%, refinanced at other financial institutions.  The remaining $5 million, or 32%, were returned to accrual status for performance reasons, such as six consecutive months of performance. Of the $5 million returned to accrual status, one relationship of approximately $2 million accounted for 42% of the total amount returned to accrual status.

The following tables detail the activity of the Bank’s non-performing loans:

Table 12 — Rollforward of Non-performing Loan Activity

(in thousands)	2013			2012
Non-performing loans at January 1,	$	21,679		$	23,306
Loans added to non-performing status	12,773			12,027
Acquired bank loans added to non-performing status	312			—
Loans removed from non-performing status	(13,866		)	(13,752		)
Principal paydowns	(652		)	(529		)
Non-performing loans at September 30,	$	20,246		$	21,052

Table 13 — Detail of Loans Removed from Non-Performing Status

(in thousands)	2013			2012
Loans charged-off	$	(1,368	)	$	(2,218	)
Loans transferred to OREO	(2,952		)	(5,448		)
Loans refinanced at other institutions	(5,162		)	(3,196		)
Loans returned to accrual status	(4,384		)	(2,890		)
Total loans removed from non-performing status	$	(13,866	)	$	(13,752	)

Based on the Bank’s review of the large individual non-performing commercial credits, as well as its migration analysis for its residential real estate and home equity non-performing portfolio, management believes that its reserves as of September 30, 2013, are adequate to absorb probable losses on non-performing loans.

Delinquent Loans

Delinquent loans to total loans decreased to 0.59% at September 30, 2013, from 0.79% at December 31, 2012, as the total balance of delinquent loans decreased by $6 million, or 28%, for the same period. With the exception of PCI loans, generally all traditional bank loans past due 90 days or more as of September 30, 2013 and December 31, 2012 were on non-accrual status.

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The composition of the Bank’s past due loans follows:

Table 14 — Delinquent Loan Composition (1)

(in thousands)	September 30, 2013		December 31, 2012
Residential real estate:
Owner occupied	$	7,401	$	8,900
Non owner occupied	1,456		2,899
Commercial real estate	3,120		2,640
Commercial real estate - purchased whole loans	—		—
Construction & land development	193		2,124
Commercial	1,525		2,262
Warehouse lines of credit	—		—
Home equity	1,083		1,654
Consumer:
Credit cards	55		65
Overdrafts	143		168
Other consumer	111		132
Total delinquent loans	$	15,087	$	20,844

(1) — Represents loans over 30 days past due.

Table 15 — Delinquent Loans to Total Loans by Loan Type (1)

(in thousands)	September 30, 2013		December 31, 2012
Residential real estate:
Owner occupied	0.67	%	0.78	%
Non owner occupied	1.33	%	3.89	%
Commercial real estate	0.41	%	0.37	%
Commercial real estate - purchased whole loans	0.00	%	0.00	%
Construction & land development	0.36	%	3.11	%
Commercial	1.33	%	1.73	%
Warehouse lines of credit	0.00	%	0.00	%
Home equity	0.48	%	0.68	%
Consumer:
Credit cards	0.61	%	0.75	%
Overdrafts	16.80	%	17.59	%
Other consumer	0.69	%	0.87	%
Total delinquent loans to total loans	0.59	%	0.79	%

(1) — Represents loans over 30 days past due divided by total loans.

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Approximately $15 million in delinquent loans at December 31, 2012, were removed from delinquent status during 2013. Approximately $1 million, or 8%, of these loans were removed from the delinquent category because they were charged-off. Approximately $5 million, or 35%, in loan balances were transferred to OREO with $6 million, or 38%, refinanced at other financial institutions. The remaining $3 million, or 19%, in delinquent loans paid current in 2013.

The Bank had $106 million in loans outstanding related to the 2012 FDIC-Assisted Acquisitions of Failed Banks at September 30, 2013, with approximately $3 million of the purchased loans (accounted for under both ASC Topic 310-20 and ASC Topic 310-30) past due 30 days or more.

See additional discussion regarding the 2012 FDIC-Assisted Acquisitions of Failed Banks under Footnote 2 “2012 FDIC-Assisted Acquisitions of Failed Banks” of Part I Item 1 “Financial Statements.”

Table 16 — Rollforward of Delinquent Loan Activity

(in thousands)	2013			2012
Delinquent loans, January 1,	$	20,844		$	24,433
Traditional bank loans that became delinquent	8,749			12,717
Acquired bank loans that became delinquent	1,243			731
Net change in delinquent credit cards and demand deposit accounts	(21		)	3
Delinquent loans removed from delinquent status (see table below)	(15,292		)	(19,784		)
Principal paydowns of loans delinquent in both periods	(436		)	(208		)
Delinquent loans, September 30,	$	15,087		$	17,892

Table 17 — Detail of Loans Removed From Delinquent Status

(in thousands)	2013			2012
Loans charged-off	$	(1,186	)	$	(1,690	)
Loans transferred to OREO	(5,379		)	(6,428		)
Loans refinanced at other institutions	(5,751		)	(6,658		)
Loans paid current	(2,976		)	(5,008		)
Total loans removed from delinquent status	$	(15,292	)	$	(19,784	)

Impaired Loans and Troubled Debt Restructurings

The Bank’s policy is to charge off all or that portion of its investment in an impaired loan upon a determination that it is probable the full amount will not be collected. Impaired loans totaled $104 million at September 30, 2013 compared to $106 million at December 31, 2012. Impaired loans from the 2012 FDIC-Assisted Acquisitions of Failed Banks totaled $29 million at September 30, 2013 compared to $18 million at December 31, 2012.

A TDR is the situation where, due to a borrower’s financial difficulties, the Bank grants a concession to the borrower that the Bank would not otherwise have considered. The majority of the Bank’s TDRs involve a restructuring of loan terms such as a temporary reduction in the payment amount to require only interest and escrow (if required) and/or extending the maturity date of the loan. Non-accrual loans modified as TDRs remain on non-accrual status and continue to be reported as non-performing loans. Accruing loans modified as TDRs are evaluated for non-accrual status based on a current evaluation of the borrower’s financial condition, and ability and willingness to service the modified debt. As of September 30, 2013, the Bank had $75 million in TDRs, of which $12 million were also on non-accrual status. As of December 31, 2012, the Bank had $83 million in TDRs, of which $14 million were also on non-accrual status.

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The composition of the Bank’s impaired loans follows:

Table 18 — Impaired Loan Composition

(in thousands)	September 30, 2013		December 31, 2012
Troubled debt restructurings	$	74,785	$	83,307
Classifed impaired loans (which are not TDRs)	29,348		22,400
Total impaired loans	$	104,133	$	105,707

See Footnote 4 “Loans and Allowance for Loan Losses” of Part I Item 1 “Financial Statements” for additional discussion regarding impaired loans and TDRs.

Other Real Estate Owned

The composition of the Bank’s OREO follows:

Table 19 — Other Real Estate Owned Composition

(in thousands)	September 30, 2013		December 31, 2012
Residential real estate	$	2,941	$	6,281
Commercial real estate	3,717		7,693
Construction & land development	8,589		12,229
Total other real estate owned	$	15,247	$	26,203

The composition of the Bank’s other real estate stratified by the number of properties within a specific value range follows:

Table 20 — Stratification of Other Real Estate Owned

	Number of Properties and Carrying Value Range
September 30, 2013 (dollars in thousands)	No.	Carrying Value <= $100		No.	Carrying Value > $100 <= $500		No.	Carrying Value > $500		No.	Total Carrying Value
Residential real estate	10	$	436	5	$	943	2	$	1,562	17	$	2,941
Commercial real estate	—	—		8	2,051		1	1,666		9	3,717
Construction & land development	3	142		15	3,431		4	5,016		22	8,589
Total	13	$	578	28	$	6,425	7	$	8,244	48	$	15,247

	Number of Properties and Carrying Value Range
December 31, 2012 (dollars in thousands)	No.	Carrying Value <= $100		No.	Carrying Value > $100 <= $500		No.	Carrying Value > $500		No.	Total Carrying Value
Residential real estate	30	$	1,665	12	$	2,735	3	$	1,881	45	$	6,281
Commercial real estate	—	—		7	1,826		6	5,867		13	7,693
Construction & land development	5	105		14	2,897		6	9,227		25	12,229
Total	35	$	1,770	33	$	7,458	15	$	16,975	83	$	26,203

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Table 21 — Rollforward of Other Real Estate Owned Activity

(in thousands)	2013			2012
Balance, January 1,	$	26,203		$	10,956
OREO acquired from failed bank acquisitions at fair value	—			20,688
Transfer from loans to OREO	8,690			16,018
Proceeds from sale	(20,286		)	(21,688		)
Net gain on sale	1,714			381
Writedowns	(1,074		)	(1,207		)
Balance, September 30,	$	15,247		$	25,148

The fair value of OREO represents the estimated value that management expects to receive when the property is sold, net of related costs to sell. These estimates are based on the most recently available real estate appraisals, with certain adjustments made based on the type of property, age of appraisal, current status of the property and other related factors to estimate the current value of the property.

Approximately $6 million of the OREO balance at September 30, 2013 related to the 2012 FDIC-assisted acquisitions of failed banks and relates predominantly to commercial real estate and real estate construction loans. See additional discussion regarding the 2012 FDIC-assisted acquisitions of failed banks under Footnote 2 “2012 FDIC-Assisted Acquisitions of Failed Banks” of Part I Item 1 “Financial Statements.”

Approximately $9 million of the OREO balance at September 30, 2013 related to loans transferred to OREO in connection with the Banks traditional lending markets. Approximately $2 million of this balance was tied to retail residential real estate properties, $5 million to construction and land development estate, with the remaining $2 million tied to commercial real estate. Approximately 72%, or $3 million, of the construction and land development balance related to one land development property added during the first nine months of 2012 located in the Bank’s greater Louisville, Kentucky market.

Deposits

Total Company deposits increased $37 million, or 2%, from December 31, 2012 to $2 billion at September 30, 2013. Total Company interest-bearing deposits increased $24 million, or 2% and total Company non-interest bearing deposits increased $13 million, or 3%.

Deposits related to the 2012 FDIC-assisted acquisitions totaled $51 million at September 30, 2013 compared to $112 million at December 31, 2012. Former TCB deposits consisted of $19 million in interest-bearing deposits and $3 million in non-interest bearing deposits at September 30, 2013, a decrease of $19 million and $1 million since December 31, 2012. Former FCB deposits consisted of $24 million in interest-bearing deposits and $5 million in non-interest bearing deposits at September 30, 2013, a decrease of $39 million and $2 million since December 31, 2012. In general, the run-off of deposits balances for both TCB-related customers and FCB-related customers is within management’s expectations and the result of lower offering rates by RB&T as compared to those offered by TCB and FCB as of their respective acquisition dates.

Excluding non-interest bearing deposits associated with the 2012 FDIC-assisted acquisitions, non-interest bearing deposits increased $16 million, or 4%, during 2013.  During most of 2012, non-interest bearing accounts, in general, remained an attractive product offering to clients due to the unlimited FDIC insurance feature. This unlimited guaranty by the FDIC expired on December 31, 2012. Management does not believe that the expiration of the unlimited FDIC insurance guaranty has had an immediate negative impact on the Bank’s non-interest bearing deposit balances, however, at this time, management cannot predict the future impact that may yet occur.

Excluding interest-bearing deposits associated with the 2012 FDIC-assisted acquisitions, interest-bearing deposits increased $81 million, or 6%, during 2013. Approximately $32 million of this increase represented an expected transfer by one account out of a repurchase agreement into the NOW category of deposits. At this time, management remains uncertain as to the long-term nature of this large deposit.

See additional discussion regarding the 2012 acquisitions under Footnote 2 “2012 FDIC-Assisted Acquisitions of Failed Banks” in this section of the filing under Part I Item 1 “Financial Statements.”

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Securities Sold Under Agreements to Repurchase and Other Short-term Borrowings

Securities sold under agreements to repurchase and other short-term borrowings decreased $145 million, or 58%, during the first nine months of 2013. Approximately $32 million of this decline was related to the previously discussed expected transfer into deposits by one customer relationship. Approximately $28 million of the decrease in repurchase agreements was due to a change in ownership of the account holder, with the new account owner transferring the funds to another financial institution during the first quarter. The remaining decrease was related to customary account fluctuations, as these balances are subject to large fluctuations on a daily basis.  The substantial majority of these accounts are indexed to immediately repricing indices such as the Fed Funds Target Rate.

Federal Home Loan Bank Advances

FHLB advances increased $44 million, or 8%, from December 31, 2012 to $587 million at September 30, 2013. During the first nine months of 2013, the Bank borrowed $70 million in FHLB advances primarily to fund and partially mitigate the Bank’s interest rate risk for its fixed rate CRE loan initiative. These advances had a weighted average rate of 1.61% and a weighted average life of seven years.

In addition to using FHLB advances as a funding source, the Bank also utilizes longer-term FHLB advances as an interest rate risk management tool. Overall use of these advances during a given year is dependent upon many factors including asset growth, deposit growth, current earnings, and expectations of future interest rates, among others. With many of the Bank’s expected loan originations during 2013 having repricing terms longer than five years, management will likely elect to borrow additional funds during the year to mitigate its risk of future increases in market interest rates. Whether the Bank ultimately does so, and how much in advances it extends out, will be dependent upon circumstances at that time. If the Bank does obtain longer-term FHLB advances for interest rate risk mitigation, it will have a negative impact on then current earnings. The amount of the negative impact will be dependent upon the dollar amount, coupon and final maturity of the advances obtained.

Liquidity

The Bank had a loan to deposit ratio (excluding brokered deposits) of 135% at September 30, 2013 and 143% at December 31, 2012. At September 30, 2013 and December 31, 2012, the Bank had cash and cash equivalents on-hand of $142 million and $138 million. In addition, the Bank had available collateral to borrow an additional $317 million and $472 million from the FHLB at September 30, 2013 and December 31, 2012. In addition to its borrowing line with the FHLB, RB&T also had unsecured lines of credit totaling $166 million available through various other financial institutions as of September, 30 2013.

The Bank maintains sufficient liquidity to fund routine loan demand and routine deposit withdrawal activity. Liquidity is managed by maintaining sufficient liquid assets in the form of investment securities. Funding and cash flows can also be realized by the sale of securities available for sale, principal paydowns on loans and MBSs and proceeds realized from loans held for sale. The Bank’s liquidity is impacted by its ability to sell certain investment securities, which is limited due to the level of investment securities that are needed to secure public deposits, securities sold under agreements to repurchase, FHLB borrowings, and for other purposes, as required by law.

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At September 30, 2013 and December 31, 2012, these pledged investment securities had a fair value of $178 million and $335 million. Republic’s banking centers and its website, www.republicbank.com, provide access to retail deposit markets. These retail deposit products, if offered at attractive rates, have historically been a source of additional funding when needed. If the Bank were to lose a significant funding source, such as a few major depositors, or if any of its lines of credit were cancelled, or if the Bank cannot obtain brokered deposits, the Bank would be forced to offer market leading deposit interest rates to meet its funding and liquidity needs.

At September 30, 2013, the Bank had approximately $319 million from 50 large deposit relationships where the individual relationship individually exceeded $2 million. These accounts do not require collateral; therefore, cash from these accounts can generally be utilized to fund the loan portfolio. The 20 largest deposit relationships represented approximately $221 million of the total balance. If any of these balances are moved from the Bank, the Bank would likely utilize overnight borrowing lines in the short-term to replace the balances. On a longer-term basis, the Bank would likely utilize brokered deposits to replace withdrawn balances. Based on past experience utilizing brokered deposits, the Bank believes it can quickly obtain brokered deposits if needed. The overall cost of gathering brokered deposits, however, could be substantially higher than the Traditional Bank deposits they replace, potentially decreasing the Bank’s earnings.

Capital

Total stockholders’ equity increased from $537 million at December 31, 2012 to $546 million at September 30, 2013. The increase in stockholders’ equity was primarily attributable to net income earned during 2013 reduced by cash dividends declared and common stock repurchases.

See Part II, Item 2. “Unregistered Sales of Equity Securities and Use of Proceeds” for additional detail regarding stock repurchases and stock buyback programs.

Common Stock — The Class A Common shares are entitled to cash dividends equal to 110% of the cash dividend paid per share on Class B Common Stock. Class A Common shares have one vote per share and Class B Common shares have ten votes per share. Class B Common shares may be converted, at the option of the holder, to Class A Common shares on a share for share basis. The Class A Common shares are not convertible into any other class of Republic’s capital stock.

Dividend Restrictions — The Parent Company’s principal source of funds for dividend payments are dividends received from RB&T. Banking regulations limit the amount of dividends that may be paid to the Parent Company by the Bank without prior approval of the respective states’ banking regulators. Under these regulations, the amount of dividends that may be paid in any calendar year is limited to the current year’s net profits, combined with the retained net profits of the preceding two years. At September 30, 2013, RB&T could, without prior approval, declare dividends of approximately $77 million. The Company does not plan to pay dividends from its Florida subsidiary, RB, in the foreseeable future.

Regulatory Capital Requirements — The Parent Company and the Bank are subject to various regulatory capital requirements administered by banking regulators. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on Republic’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Parent Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities and certain off balance sheet items, as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Banking regulators have categorized the Bank as well-capitalized. To be categorized as well-capitalized, the Bank must maintain minimum Total Risk Based, Tier I Capital and Tier I Leverage Capital ratios. Regulatory agencies measure capital adequacy within a framework that makes capital requirements, in part, dependent on the individual risk profiles of financial institutions. Republic continues to exceed the regulatory requirements for Total Risk Based Capital, Tier I Capital and Tier I Leverage Capital. Republic and the Bank intend to maintain a capital position that meets or exceeds the “well-capitalized” requirements as defined by the FRB, FDIC and the OCC. Republic’s average stockholders’ equity to average assets ratio was 16.16% at September 30, 2013 compared to 14.89% at December 31, 2012. Formal measurements of the capital ratios for Republic and the Bank are performed by the Company at each quarter end.

In 2004, the Bank executed an intragroup trust preferred transaction with the purpose of providing RB&T access to additional capital markets, if needed in the future. The subordinated debentures held by RB&T were treated as Tier 2 Capital based on requirements administered by the Bank’s federal banking agency. In April 2013, the Bank received approval from its regulators and unwound the intragroup trust preferred transaction. The cash utilized to pay off the transaction remained at the Parent Company,

107

Republic Bancorp. Unwinding of the transaction had no impact on Republic Bank & Trust Company’s two Tier 1 related capital ratios and only a minimal impact on its Total Risk Based Capital ratio.

In 2005, Republic Bancorp Capital Trust (“RBCT”), an unconsolidated trust subsidiary of Republic Bancorp, Inc., was formed and issued $40 million in Trust Preferred Securities (“TPS”). The TPS pay a fixed interest rate for ten years and adjust with LIBOR + 1.42% thereafter. The TPS mature on September 30, 2035 and are redeemable at the Bank’s option after ten years. The subordinated debentures are treated as Tier I Capital for regulatory purposes. The sole asset of RBCT represents the proceeds of the offering loaned to Republic Bancorp, Inc. in exchange for subordinated debentures which have terms that are similar to the TPS. The subordinated debentures and the related interest expense, which are payable quarterly at the annual rate of 6.015%, are included in the consolidated financial statements. The proceeds obtained from the TPS offering have been utilized to fund loan growth (in prior years), support an existing stock repurchase program and for other general business purposes such as the acquisition of GulfStream Community Bank in 2006.

The following table sets forth the Company’s risk based capital amounts and ratios as of September 30, 2013 and December 31, 2012:

Table 22 — Capital Ratios

	As of September 30, 2013				As of December 31, 2012
	Actual				Actual
(dollars in thousands)	Amount		Ratio		Amount				Ratio
Total Risk Based Capital (to Risk Weighted Assets)
Republic Bancorp, Inc.	$	594,716	27.34	%	$			581,189	25.28	%
Republic Bank & Trust Co.	441,620		21.17		451,898				20.37
Republic Bank	15,735		18.30		14,494				18.02
Tier I Capital (to Risk Weighted Assets)
Republic Bancorp, Inc.	$	571,224	26.26	%	$		558,982		24.31	%
Republic Bank & Trust Co.	420,488		20.16		407,261				18.36
Republic Bank	14,644		17.03		13,474				16.75
Tier I Leverage Capital (to Average Assets)
Republic Bancorp, Inc.	$	571,224	17.16	%	$	558,982			16.36	%
Republic Bank & Trust Co.	420,488		13.01		407,261				12.18
Republic Bank	14,644		13.87		13,474				13.43

Beginning January 1, 2015 the Company and the Bank will be subject to the new capital regulations of Basel III. The new regulations establish higher minimum risk-based capital ratio requirements, a new common equity Tier 1 risk-based capital ratio and a new capital conservation buffer. The new regulations also include revisions to the definition of capital and changes in the risk-weighting of certain assets. The new regulations establish definitions of “well capitalized” including the capital conservation buffer as a 7.0%  common equity Tier 1 risk-based capital ratio, an 8.5% Tier 1 risk-based capital ratio and a 10.5% total risk-based capital ratio. The Tier 1 leverage ratio is unchanged from current regulations. Management has completed a preliminary analysis of the impact of these new regulations to the capital ratios of both the Company and the Bank and estimates that the ratios for both the Company and the Bank will comfortably exceed the new minimum capital ratio requirements for “well-capitalized” including the capital conservation buffer under Basel III when effective.

New Capital Rules — On July 2, 2013, the Federal Reserve approved final rules that substantially amend the regulatory risk-based capital rules applicable to the Bank. The FDIC and the OCC have subsequently approved these rules. The final rules were adopted following the issuance of proposed rules by the Federal Reserve in June 2012, and implement the “Basel III” regulatory capital reforms and changes required by the Dodd-Frank Act.

108

The rules include new risk-based capital and leverage ratios, which will be phased in from 2015 to 2019, and will refine the definition of what constitutes “capital” for purposes of calculating those ratios. The new minimum capital level requirements applicable to the Bank under the final rules are: (i) a new common equity Tier 1 capital ratio of 4.5%; (ii) a Tier 1 capital ratio of 6% (increased from 4%); (iii) a total capital ratio of 8% (unchanged from current rules); and (iv) a Tier 1 leverage ratio of 4% for all institutions. The final rules also establish a “capital conservation buffer” above the new regulatory minimum capital requirements, which must consist entirely of common equity Tier 1 capital. The capital conservation buffer will be phased-in over four years beginning on January 1, 2016, as follows: the maximum buffer will be 0.625% of risk-weighted assets for 2016, 1.25% for 2017, 1.875% for 2018, and 2.5% for 2019 and thereafter. This will result in the following minimum ratios beginning in 2019: (i) a common equity Tier 1 capital ratio of 7.0%, (ii) a Tier 1 capital ratio of 8.5%, and (iii) a total capital ratio of 10.5%. Under the final rules, institutions are subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital level falls below the buffer amount. These limitations establish a maximum percentage of eligible retained income that could be utilized for such actions.

The final rules implement revisions and clarifications consistent with Basel III regarding the various components of Tier 1 capital, including common equity, unrealized gains and losses, as well as certain instruments that will no longer qualify as Tier 1 capital, some of which will be phased out over time. However, the final rules provide that small depository institution holding companies with less than $15 billion in total assets as of December 31, 2009 (which includes the Company) will be able to permanently include non-qualifying instruments that were issued and included in Tier 1 or Tier 2 capital prior to May 19, 2010 in additional Tier 1 or Tier 2 capital until they redeem such instruments or until the instruments mature.

The final rules also contain revisions to the prompt corrective action framework, which is designed to place restrictions on insured depository institutions if their capital levels begin to show signs of weakness. These revisions take effect January 1, 2015. Under the prompt corrective action requirements, which are designed to complement the capital conservation buffer, insured depository institutions will be required to meet the following increased capital level requirements in order to qualify as “well capitalized:” (i) a new common equity Tier 1 capital ratio of 6.5%; (ii) a Tier 1 capital ratio of 8% (increased from 6%); (iii) a total capital ratio of 10% (unchanged from current rules); and (iv) a Tier 1 leverage ratio of 5% (increased from 4%).

The final rules set forth certain changes for the calculation of risk-weighted assets, which the Bank will be required to utilize beginning January 1, 2015. The standardized approach final rule utilizes an increased number of credit risk exposure categories and risk weights, and also addresses: (i) an alternative standard of creditworthiness consistent with Section 939A of the Dodd-Frank Act; (ii) revisions to recognition of credit risk mitigation; (iii) rules for risk weighting of equity exposures and past due loans; (iv) revised capital treatment for derivatives and repo-style transactions; and (v) disclosure requirements for top-tier banking organizations with $50 billion or more in total assets that are not subject to the “advance approach rules” that apply to banks with greater than $250 billion in consolidated assets.

Based on the Bank’s current capital composition and levels, management believes it will be in compliance with the requirements as set forth in the final rules.

Asset/Liability Management and Market Risk

Asset/liability management control is designed to ensure safety and soundness, maintain liquidity and regulatory capital standards and achieve acceptable net interest income. Interest rate risk is the exposure to adverse changes in net interest income as a result of market fluctuations in interest rates. The Bank, on an ongoing basis, monitors interest rate and liquidity risk in order to implement appropriate funding and balance sheet strategies. Management considers interest rate risk to be Bank’s most significant market risk.

The interest sensitivity profile of Republic at any point in time will be impacted by a number of factors. These factors include the mix of interest sensitive assets and liabilities, as well as their relative pricing schedules. It is also influenced by market interest rates, deposit growth, loan growth and other factors.

109

Republic utilized an earnings simulation model to analyze net interest income sensitivity. Potential changes in market interest rates and their subsequent effects on net interest income were evaluated with the model. The model projects the effect of instantaneous movements in interest rates between 100 and 300 basis point increments equally across all points on the yield curve. These projections are computed based on many various assumptions, which are used to determine the range between 100 and 300 basis point increments, as well as the base case (which is a twelve month projected amount) scenario. Assumptions based on growth expectations and on the historical behavior of Republic’s deposit and loan rates and their related balances in relation to changes in interest rates are also incorporated into the model. These assumptions are inherently uncertain and, as a result, the model cannot precisely measure future net interest income or precisely predict the impact of fluctuations in market interest rates on net interest income. Actual results will differ from the model’s simulated results due to timing, magnitude and frequency of interest rate changes, as well as changes in market conditions and the application and timing of various management strategies. Additionally, actual results could differ materially from the model if interest rates do not move equally across all points on the yield curve.

The Company did not run a model simulation for declining interest rates as of September 30, 2013 because the Federal Open Market Committee effectively lowered the Fed Funds Target Rate between 0.00% to 0.25% in December 2008; therefore, no further short-term rate reductions can occur.  Overall, the Company’s interest rate risk position from rising rates has generally remained within a relatively narrow range since December 31, 2012, showing improvements in the “Up 100” and “Up 200” basis points scenarios with deterioration in the “Up 300” scenario.  The Company’s “Base” net interest income projection as of September 30, 2013, however, was substantially lower than the previous 12 months and the “Base” projection as of December 31, 2012.  The “Base” projection represents the Company’s projected net interest income, excluding loan fees, for the next 12-month period.  The deterioration in the Company’s “Base” net interest income projection is primarily due to the expected continued downward repricing of the Company’s interest earning assets.

The following table illustrates Republic’s projected net interest income sensitivity profile based on the asset/liability model as of September 30, 2013. The Company’s interest rate sensitivity model does not include loan fees within interest income. During the 12 months from October 1, 2012 through September 30, 2013, loan fees included in interest income were $11.2 million.

Table 23 — Traditional Banking Interest Rate Sensitivity for 2013

	Previous				Increase in Rates
	Twelve				100			200			300
(dollars in thousands)	Months		Base		Basis Points			Basis Points			Basis Points
Projected interest income:
Short-term investments	$	375	$	6	$	28		$	50		$	73
Investment securities	9,393		10,675		13,225			15,582			17,987
Loans, excluding loan fees	117,459		110,433		115,416			122,524			130,159
Total interest income, excluding loan fees	127,227		121,114		128,669			138,156			148,219
Projected interest expense:
Deposits	4,232		3,937		9,673			18,172			27,080
Securities sold under agreements to repurchase	54		71		635			1,730			2,877
Federal Home Loan Bank advances and other long-term borrowings	17,186		16,576		17,645			18,731			19,896
Total interest expense	21,472		20,584		27,953			38,633			49,853
Net interest income, excluding loan fees	$	105,755	$	100,530	$	100,716		$	99,523		$	98,366
Change from base					$	186		$	(1,007	)	$	(2,164	)
% Change from base					0.19		%	-1.00		%	-2.15		%

110

Item 3.Quantitative and Qualitative Disclosures about Market Risk.

Information required by this item is included under Part I, Item 2., “Management’s Discussion and Analysis of Financial Condition and Results of Operation.”

Item 4.Controls and Procedures.

As of the end of the period covered by this report, an evaluation was carried out by Republic Bancorp, Inc.’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective as of the end of the period covered by this report. In addition, no change in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during the fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1.Legal Proceedings.

In the ordinary course of operations, Republic and the Bank are defendants in various legal proceedings. There is no proceeding pending or threatened litigation, to the knowledge of management, in which an adverse decision could result in a material adverse change in the business or consolidated financial position of Republic or the Bank, except as set forth below.

Overdraft Litigation

On August 1, 2011, a lawsuit was filed in the U.S. District Court for the Western District of Kentucky styled Brenda Webb vs. Republic Bank & Trust Company d/b/a Republic Bank, Civil Action No. 3:11-CV-00423-TBR. The Complaint was brought as a putative class action and seeks monetary damages, restitution and declaratory relief allegedly arising from the manner in which Republic Bank & Trust assessed overdraft fees. In the Complaint, the Plaintiff pleads seven claims against RB&T alleging: breach of contract and breach of the covenant of good faith and fair dealing (Counts I), unconscionability (Count II), conversion (Count III), unjust enrichment (Count IV), violation of the Electronic Funds Transfer Act and Regulation E (Count V), and violations of the Kentucky Consumer Protection Act, (Count VI). RB&T filed a Motion to Dismiss the case on January 12, 2012. In response, Plaintiff filed her Motion to Amend the Complaint on February 23, 2012. In Plaintiff’s proposed Amended Complaint, Plaintiff acknowledged disclosure of the Overdraft Honor Policy and did not seek to add any claims to the Amended Complaint. However, Plaintiff divided the breach of contract and breach of the covenant of good faith and fair dealing claims into two counts (Counts One and Two). In the original Complaint, those claims were combined in Count One. RB&T filed its objection to Plaintiff’s Motion to Amend. On June 16, 2012, the District Court denied the Plaintiff’s Motion to Amend concluding that the Plaintiff lacked the ability to automatically amend the complaint as of right. However, the Court held that the Plaintiff could be permitted to amend if the Plaintiff could first demonstrate that her amendment would not be futile and that the Plaintiff had standing to sue despite RB&T’s offer of judgment. The Court declined to rule on that issue at that time and ordered the case stayed pending a decision by the U.S. Court of Appeals for the Sixth Circuit in a case on appeal with the same standing issue. The Sixth Circuit ruled on June 11, 2013 and concluded that the offer of judgment did not moot the matter before it only because the offer of judgment in question did not afford the Plaintiff complete relief. The District Court lifted the stay of this matter on June 14, 2013 and permitted Plaintiff to file her Amended Complaint.  Plaintiff filed her Amended Complaint on June 21, 2013 and brought seven claims: breach of contract and breach of the covenant of good faith and fair dealing (Counts I & II), unconscionability (Count III), conversion (Count IV), unjust enrichment (Count V), violation of the Electronic Funds Transfer Act, (Count VI) and violation of the Kentucky Consumer Protection Act (Count VII).  RB&T filed its Motion to Dismiss the Amended Complaint on July 15, 2013. On September 30, 2013 the Court issued its decision granting the Motion to Dismiss in part and denying it in part.  The Court initially concluded that the offer of judgment did not moot the case and deprive it of subject matter jurisdiction as it did not provide Plaintiff with all of the relief she sought.  The Court dismissed the conversion, unconscionability and Electronic Funds Transfer Act claims in their entirety for failure to state a claim. With respect to the remaining claims, the Court dismissed them to the extent they are premised upon any overdraft charges incurred by the Plaintiff on or after January 6, 2010, the date on which she received the Overdraft Honor Policy.  The Court concluded that Plaintiff could not state any claim for the time period after she received the Policy with respect to the manner in which RB&T assessed overdraft fees. The Answer to the remaining claims was filed on October 14, 2013 and the matter now proceeds into discovery.

111

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.

Details of Republic’s Class A Common Stock purchases during the third quarter of 2013 are included in the following table:

				Total Number of	Maximum Number
				Shares Purchased	of Shares that May
				as Part of Publicly	Yet Be Purchased
	Total Number of	Average Price		Announced Plans	Under the Plan
Period	Shares Purchased	Paid Per Share		or Programs	or Programs
July 1 - July 31	—	$	—	—
August 1 - August 31	—	—		—
September 1 - September 30	—	—		—
Total	—	$	—	—	330,640

During 2013, the Company repurchased 193,000 shares and there were no shares exchanged for stock option exercises. During November of 2011, the Company’s Board of Directors amended its existing share repurchase program by approving the repurchase of 300,000 additional shares from time to time, as market conditions are deemed attractive to the Company. The repurchase program will remain effective until the total number of shares authorized is repurchased or until Republic’s Board of Directors terminates the program. As of September 30, 2013, the Company had 330,640 shares which could be repurchased under its current share repurchase programs.

During 2013, there were approximately 11,000 shares of Class A Common Stock issued upon conversion of shares of Class B Common Stock by stockholders of Republic in accordance with the share-for-share conversion provision option of the Class B Common Stock. The exemption from registration of the newly issued Class A Common Stock relied upon was Section (3)(a)(9) of the Securities Act of 1933.

There were no equity securities of the registrant sold without registration during the quarter covered by this report.

112

Item 6.Exhibits.

(a)  Exhibits

The following exhibits are filed or furnished as a part of this report:

Exhibit Number	Description of Exhibit
31.1	Certification of Principal Executive Officer pursuant to the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer pursuant to the Sarbanes-Oxley Act of 2002.
32*	Certification of Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Interactive data files: (i) Consolidated Balance Sheets at September 30, 2013 and December 31, 2012, (ii) Consolidated Statements of Income and Comprehensive Income for the three and nine months ended September 30, 2013 and 2012, (iii) Consolidated Statement of Stockholders’ Equity for the nine months ended September 30, 2013, (iv) Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 and 2012 and (v) Notes to Consolidated Financial Statements.

* -    This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

113

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	REPUBLIC BANCORP, INC.
	(Registrant)
	Principal Executive Officer:
November 8, 2013	By:	Steven E. Trager
		Chairman and Chief Executive Officer
	Principal Financial Officer:
November 8, 2013	By:	Kevin Sipes
		Executive Vice President, Chief Financial
		Officer and Chief Accounting Officer

114

EX-31.1

EXHIBIT 31.1

SECTION 302 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, Steven E. Trager, certify that:

1.)I have reviewed this quarterly report on Form 10-Q of Republic Bancorp, Inc.;

2.)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.)The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.)The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2013

Steven E. Trager

Chairman and Chief Executive Officer

1

EX-31.2

EXHIBIT 31.2

SECTION 302 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Kevin Sipes, certify that:

1.)I have reviewed this quarterly report on Form 10-Q of Republic Bancorp, Inc.;

2.)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.)The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.)The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2013

Kevin Sipes

Executive Vice President, Chief Financial Officer and Chief Accounting Officer

1

EX-32

EXHIBIT 32

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

Pursuant to 18 U.S.C. § 1350, each of the undersigned officers of Republic Bancorp, Inc. (the “Company”), hereby certifies that the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 8, 2013
	Steven E. Trager
	Chairman and Chief Executive Officer

Date: November 8, 2013
	Kevin Sipes
	Executive Vice President, Chief Financial Officer and Chief Accounting Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

1

XML

MORTGAGE BANKING ACTIVITIES (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
MORTGAGE BANKING ACTIVITIES
Balance, January 1			$ 4,777	$ 6,087
Additions			2,171	1,496
Amortized to expense	(453)	(803)	(1,811)	(2,474)
Change in valuation allowance			345	(129)
Balance, September 30	$ 5,482	$ 4,980	$ 5,482	$ 4,980

XML

MORTGAGE BANKING ACTIVITIES (Details 5) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Mortgage Servicing Rights
Fair value of mortgage servicing rights portfolio	$ 7,157	$ 5,446
Discount rate (as percent)	10.00%	9.00%
Weighted average default rate (as percent)	1.50%	1.50%
Weighted average life in years	5 years 10 months 24 days	3 years 10 months 20 days
Minimum
Mortgage Servicing Rights
Prepayment speed range (as percent)	115.00%	112.00%
Maximum
Mortgage Servicing Rights
Prepayment speed range (as percent)	350.00%	550.00%

XML

OFF BALANCE SHEET RISKS, COMMITMENTS AND CONTINGENT LIABILITIES

9 Months Ended

Sep. 30, 2013

OFF BALANCE SHEET RISKS, COMMITMENTS AND CONTINGENT LIABILITIES

OFF BALANCE SHEET RISKS, COMMITMENTS AND CONTINGENT LIABILITIES

9. OFF BALANCE SHEET RISKS, COMMITMENTS AND CONTINGENT LIABILITIES

The Bank, in the normal course of business, is party to financial instruments with off balance sheet risk. These financial instruments primarily include commitments to extend credit and standby letters of credit. The contract or notional amounts of these instruments reflect the potential future obligations of the Bank pursuant to those financial instruments. Creditworthiness for all instruments is evaluated on a case by case basis in accordance with the Bank’s credit policies. Collateral from the customer may be required based on the Bank’s credit evaluation of the customer and may include business assets of commercial customers, as well as personal property and real estate of individual customers or guarantors.

The Bank also extends binding commitments to customers and prospective customers. Such commitments assure the borrower of financing for a specified period of time at a specified rate. The risk to the Bank under such loan commitments is limited by the terms of the contracts. For example, the Bank may not be obligated to advance funds if the customer’s financial condition deteriorates or if the customer fails to meet specific covenants. An approved but unfunded loan commitment represents a potential credit risk once the funds are advanced to the customer. Unfunded loan commitments also represent liquidity risk since the customer may demand immediate cash that would require funding and interest rate risk as market interest rates may rise above the rate committed. In addition, since a portion of these loan commitments normally expire unused, the total amount of outstanding commitments at any point in time may not require future funding. Loan commitments generally have open-ended maturities and variable rates.

The table below presents the Bank’s commitments, exclusive of Mortgage Banking loan commitments for each period ended:

(in thousands)	September 30, 2013		December 31, 2012
Unused warehouse lines of credit	$	195,190	$	113,924
Unused home equity lines of credit	228,298		232,719
Unused loan commitments - other	185,934		163,523
Standby letters of credit	2,476		16,985
FHLB letters of credit	3,200		11,908
Total commitments	$	615,098	$	539,059

Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. The terms and risk of loss involved in issuing standby letters of credit are similar to those involved in issuing loan commitments and extending credit. In addition to credit risk, the Bank also has liquidity risk associated with standby letters of credit because funding for these obligations could be required immediately. The Bank does not deem this risk to be material.

At September 30, 2013 and December 31, 2012, the Bank had a letter of credit from the FHLB issued on behalf of an RB&T client. This letter of credit was used as a credit enhancement for client bond offerings and reduced RB&T’s available borrowing line at the FHLB. The Bank uses a blanket pledge of eligible real estate loans to secure these letters of credit.

Legal Proceedings

On August 1, 2011, a lawsuit was filed in the U.S. District Court for the Western District of Kentucky styled Brenda Webb vs. Republic Bank & Trust Company d/b/a Republic Bank, Civil Action No. 3:11-CV-00423-TBR. The Complaint was brought as a putative class action and seeks monetary damages, restitution and declaratory relief allegedly arising from the manner in which RB&T assessed overdraft fees. In the Complaint, the Plaintiff pleads seven claims against RB&T alleging: breach of contract and breach of the covenant of good faith and fair dealing (Count I), unconscionability (Count II), conversion (Count III), unjust enrichment (Count IV), violation of the Electronic Funds Transfer Act and Regulation E (Count V), and violations of the Kentucky Consumer Protection Act, (Count VI). RB&T filed a Motion to Dismiss the case on January 12, 2012. In response, Plaintiff filed her Motion to Amend the Complaint on February 23, 2012. In Plaintiff’s proposed Amended Complaint, Plaintiff acknowledged disclosure of the Overdraft Honor Policy and did not seek to add any claims to the Amended Complaint. However, Plaintiff divided the breach of contract and breach of the covenant of good faith and fair dealing claims into two counts (Counts One and Two). In the original Complaint, those claims were combined in Count One. RB&T filed its objection to Plaintiff’s Motion to Amend. On June 16, 2012, the District Court denied the Plaintiff’s Motion to Amend concluding that the Plaintiff lacked the ability to automatically amend the complaint as of right. However, the Court held that the Plaintiff could be permitted to amend if the Plaintiff could first demonstrate that her amendment would not be futile and that the Plaintiff had standing to sue despite RB&T’s offer of judgment. The Court declined to rule on that issue at that time and ordered the case stayed pending a decision by the U.S. Court of Appeals for the Sixth Circuit in a case on appeal with the same standing issue. The Sixth Circuit ruled on June 11, 2013 and concluded that the offer of judgment did not moot the matter before it only because the offer of judgment in question did not afford the Plaintiff complete relief. The District Court lifted the stay of this matter on June 14, 2013 and permitted Plaintiff to file her Amended Complaint.  Plaintiff filed her Amended Complaint on June 21, 2013 and brought seven claims: breach of contract and breach of the covenant of good faith and fair dealing (Counts I & II), unconscionability (Count III), conversion (Count IV), unjust enrichment (Count V), violation of the Electronic Funds Transfer Act, (Count VI) and violation of the Kentucky Consumer Protection Act (Count VII).  RB&T filed its Motion to Dismiss the Amended Complaint on July 15, 2013. On September 30, 2013 the Court issued its decision granting the Motion to Dismiss in part and denying it in part.  The Court initially concluded that the offer of judgment did not moot the case and deprive it of subject matter jurisdiction as it did not provide Plaintiff with all of the relief she sought.  The Court dismissed the conversion, unconscionability and Electronic Funds Transfer Act claims in their entirety for failure to state a claim. With respect to the remaining claims, the Court dismissed them to the extent they are premised upon any overdraft charges incurred by the Plaintiff on or after January 6, 2010, the date on which she received the Overdraft Honor Policy.  The Court concluded that Plaintiff could not state any claim for the time period after she received the Policy with respect to the manner in which RB&T assessed overdraft fees. The Answer to the remaining claims was filed on October 14, 2013 and the matter now proceeds into discovery.

XML

LOANS AND ALLOWANCE FOR LOAN AND LOSSES (Details 8) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Aging or recorded investments in loans
30 - 59 Days Delinquent	$ 4,190	$ 4,292
60 - 89 Days Delinquent	2,832	4,804
Greater than 90 Days Delinquent	8,065	11,748
Total Loans Delinquent	15,087	20,844
Total Loans Not Delinquent	2,538,348	2,629,353
Total carrying value of loans	2,553,435	2,650,197
30 - 59 days delinquent to total loans (as a percent)	0.16%	0.16%
60 - 89 days delinquent to total loans (as a percent)	0.11%	0.18%
Greater than 90 days delinquent to total loans (as a percent)	0.32%	0.44%
Delinquent loans to total loans (as a percent)	0.59%	0.79%
TCB and FCB acquisitions
Aging or recorded investments in loans
30 - 59 Days Delinquent	347	246
60 - 89 Days Delinquent	714	2,548
Greater than 90 Days Delinquent	1,860	3,173
Total Loans Delinquent	2,921	5,967
Total Loans Not Delinquent	103,299	132,649
Total carrying value of loans	106,220	138,616
30 - 59 days delinquent to total loans (as a percent)	0.33%	0.18%
60 - 89 days delinquent to total loans (as a percent)	0.67%	1.84%
Greater than 90 days delinquent to total loans (as a percent)	1.75%	2.29%
Delinquent loans to total loans (as a percent)	2.75%	4.30%
Residential Real Estate | TCB and FCB acquisitions
Aging or recorded investments in loans
30 - 59 Days Delinquent	344	159
60 - 89 Days Delinquent	585	1,430
Greater than 90 Days Delinquent	397	729
Total Loans Delinquent	1,326	2,318
Total Loans Not Delinquent	29,286	42,411
Total carrying value of loans	30,612	44,729
Residential Real Estate - Owner Occupied
Aging or recorded investments in loans
30 - 59 Days Delinquent	2,176	2,210
60 - 89 Days Delinquent	1,572	1,978
Greater than 90 Days Delinquent	3,653	4,712
Total Loans Delinquent	7,401	8,900
Total Loans Not Delinquent	1,093,232	1,136,595
Total carrying value of loans	1,100,633	1,145,495
Residential Real Estate - Non Owner Occupied
Aging or recorded investments in loans
30 - 59 Days Delinquent	342	907
60 - 89 Days Delinquent	983	1,128
Greater than 90 Days Delinquent	131	864
Total Loans Delinquent	1,456	2,899
Total Loans Not Delinquent	108,185	71,640
Total carrying value of loans	109,641	74,539
Commercial real estate
Aging or recorded investments in loans
30 - 59 Days Delinquent	703	103
60 - 89 Days Delinquent		486
Greater than 90 Days Delinquent	2,417	2,051
Total Loans Delinquent	3,120	2,640
Total Loans Not Delinquent	763,693	712,002
Total carrying value of loans	766,813	714,642
Commercial real estate | TCB and FCB acquisitions
Aging or recorded investments in loans
60 - 89 Days Delinquent		165
Greater than 90 Days Delinquent	139	698
Total Loans Delinquent	139	863
Total Loans Not Delinquent	63,602	68,910
Total carrying value of loans	63,741	69,773
Commercial real estate - purchased whole loans
Aging or recorded investments in loans
Total Loans Not Delinquent	34,017	33,531
Total carrying value of loans	34,017	33,531
Construction & Land Development
Aging or recorded investments in loans
60 - 89 Days Delinquent	97	194
Greater than 90 Days Delinquent	96	1,930
Total Loans Delinquent	193	2,124
Total Loans Not Delinquent	53,425	66,090
Total carrying value of loans	53,618	68,214
Construction & Land Development | TCB and FCB acquisitions
Aging or recorded investments in loans
60 - 89 Days Delinquent		194
Greater than 90 Days Delinquent	96	531
Total Loans Delinquent	96	725
Total Loans Not Delinquent	2,691	6,811
Total carrying value of loans	2,787	7,536
Commercial
Aging or recorded investments in loans
30 - 59 Days Delinquent	4	222
60 - 89 Days Delinquent	129	733
Greater than 90 Days Delinquent	1,392	1,307
Total Loans Delinquent	1,525	2,262
Total Loans Not Delinquent	112,891	128,419
Total carrying value of loans	114,416	130,681
Commercial | TCB and FCB acquisitions
Aging or recorded investments in loans
60 - 89 Days Delinquent	129	732
Greater than 90 Days Delinquent	1,207	1,215
Total Loans Delinquent	1,336	1,947
Total Loans Not Delinquent	2,593	8,742
Total carrying value of loans	3,929	10,689
Warehouse lines of credit
Aging or recorded investments in loans
Total Loans Not Delinquent	122,810	216,576
Total carrying value of loans	122,810	216,576
Home equity
Aging or recorded investments in loans
30 - 59 Days Delinquent	720	521
60 - 89 Days Delinquent	8	251
Greater than 90 Days Delinquent	355	882
Total Loans Delinquent	1,083	1,654
Total Loans Not Delinquent	224,473	239,953
Total carrying value of loans	225,556	241,607
Home equity | TCB and FCB acquisitions
Aging or recorded investments in loans
30 - 59 Days Delinquent		83
Total Loans Delinquent		83
Total Loans Not Delinquent	4,692	4,485
Total carrying value of loans	4,692	4,568
Consumer: Credit cards
Aging or recorded investments in loans
30 - 59 Days Delinquent	31	60
60 - 89 Days Delinquent	24	5
Total Loans Delinquent	55	65
Total Loans Not Delinquent	8,893	8,651
Total carrying value of loans	8,948	8,716
Consumer: Credit cards | TCB and FCB acquisitions
Aging or recorded investments in loans
Total Loans Not Delinquent	213	321
Total carrying value of loans	213	321
Consumer: Overdraft
Aging or recorded investments in loans
30 - 59 Days Delinquent	141	167
60 - 89 Days Delinquent	2	1
Total Loans Delinquent	143	168
Total Loans Not Delinquent	708	787
Total carrying value of loans	851	955
Consumer: Overdraft | TCB and FCB acquisitions
Aging or recorded investments in loans
Total Loans Not Delinquent	6	12
Total carrying value of loans	6	12
Consumer: Other consumer
Aging or recorded investments in loans
30 - 59 Days Delinquent	73	102
60 - 89 Days Delinquent	17	28
Greater than 90 Days Delinquent	21	2
Total Loans Delinquent	111	132
Total Loans Not Delinquent	16,021	15,109
Total carrying value of loans	16,132	15,241
Consumer: Other consumer | TCB and FCB acquisitions
Aging or recorded investments in loans
30 - 59 Days Delinquent	3	4
60 - 89 Days Delinquent		27
Greater than 90 Days Delinquent	21
Total Loans Delinquent	24	31
Total Loans Not Delinquent	216	957
Total carrying value of loans	$ 240	$ 988

XML

CONSOLIDATED STATEMENTS OF INCOME (USD $)	3 Months Ended		9 Months Ended		3 Months Ended	9 Months Ended	3 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2012 Tennessee Commerce Bank	Sep. 30, 2012 Tennessee Commerce Bank	Sep. 30, 2012 First Commercial Bank	Sep. 30, 2013 First Commercial Bank	Sep. 30, 2012 First Commercial Bank
INTEREST INCOME:
Loans, including fees	$ 31,619,000	$ 31,292,000	$ 95,268,000	$ 137,118,000
Taxable investment securities	1,984,000	2,483,000	6,000,000	8,654,000
Federal Home Loan Bank stock and other	406,000	353,000	1,261,000	1,757,000
Total interest income	34,009,000	34,128,000	102,529,000	147,529,000
INTEREST EXPENSE:
Deposits	1,043,000	1,197,000	3,073,000	3,949,000
Securities sold under agreements to repurchase and other short-term borrowings	11,000	110,000	53,000	340,000
Federal Home Loan Bank advances	3,788,000	3,619,000	11,081,000	11,245,000
Subordinated note	628,000	630,000	1,886,000	1,891,000
Total interest expense	5,470,000	5,556,000	16,093,000	17,425,000
NET INTEREST INCOME	28,539,000	28,572,000	86,436,000	130,104,000
Provision for loan losses	2,200,000	2,083,000	2,480,000	13,719,000
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	26,339,000	26,489,000	83,956,000	116,385,000
NON-INTEREST INCOME:
Service charges on deposit accounts	3,676,000	3,438,000	10,384,000	10,027,000
Net refund transfer fees	152,000	231,000	13,849,000	78,127,000
Mortgage banking income	1,026,000	2,274,000	6,480,000	5,591,000
Debit card interchange fee income	1,519,000	1,390,000	4,986,000	4,387,000
Bargain purchase gain			1,324,000	54,726,000	(189,000)	27,614,000	27,112,000	1,324,000	27,112,000
Gain on sale of securities available for sale				56,000
Other	1,166,000	589,000	3,824,000	2,826,000
Total non-interest income	7,539,000	34,845,000	40,847,000	155,740,000
NON-INTEREST EXPENSES:
Salaries and employee benefits	12,226,000	14,921,000	43,426,000	46,205,000
Occupancy and equipment, net	5,462,000	5,718,000	16,354,000	16,936,000
Communication and transportation	990,000	1,045,000	3,011,000	4,667,000
Marketing and development	785,000	828,000	2,567,000	2,670,000
FDIC insurance expense	419,000	287,000	1,234,000	1,008,000
Bank franchise tax expense	707,000	729,000	3,279,000	3,363,000
Data processing	934,000	1,030,000	2,442,000	3,446,000
Debit card processing expense	655,000	648,000	2,216,000	1,909,000
Supplies	228,000	270,000	800,000	1,748,000
Other real estate owned expense	497,000	1,328,000	2,331,000	2,488,000
Charitable contributions	225,000	232,000	688,000	3,110,000
Legal expense	1,343,000	388,000	3,111,000	1,283,000
FHLB advance prepayment expense				2,436,000
Other	1,854,000	2,338,000	5,867,000	7,097,000
Total non-interest expenses	26,325,000	29,762,000	87,326,000	98,366,000
INCOME BEFORE INCOME TAX EXPENSE	7,553,000	31,572,000	37,477,000	173,759,000
INCOME TAX EXPENSE	2,950,000	10,904,000	13,399,000	61,041,000
NET INCOME	$ 4,603,000	$ 20,668,000	$ 24,078,000	$ 112,718,000

XML

2012 FDIC-ASSISTED ACQUISITIONS OF FAILED BANKS

9 Months Ended

Sep. 30, 2013

2012 FDIC-ASSISTED ACQUISITIONS OF FAILED BANKS

2012 FDIC-ASSISTED ACQUISITIONS OF FAILED BANKS

2. 2012 FDIC-ASSISTED ACQUISITIONS OF FAILED BANKS

OVERVIEW

During 2012, the Bank acquired two failed institutions in FDIC-assisted transactions. The Bank did not raise capital to complete either of these acquisitions.

The Bank determined that the acquisitions of these failed banks constituted “business acquisitions” as defined by Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. Accordingly, the assets acquired and liabilities assumed have been presented at their estimated fair values, as required. Fair values were determined over a measurement period based on the requirements of ASC Topic 820, Fair Value Measurements and Disclosures. The measurement period for day-one fair values begins on the acquisition date and ends the earlier of: (a) the day management believes it has all the information necessary to determine day-one fair values; or (b) one year following the acquisition date. In many cases, the determination of these day-one fair values requires management to make material estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature and subject to recast adjustments, which are retrospective adjustments to reflect new information existing at the acquisition date affecting day-one fair values. More specifically, recast adjustments for loans and other real estate owned were made as market value data, such as appraisals, were received by the Bank. Increases or decreases to day-one fair values have been reflected with a corresponding increase or decrease to bargain purchase gain.

Tennessee Commerce Bank (“TCB”)

On January 27, 2012, the Bank acquired specific assets and assumed substantially all of the deposits and specific other liabilities of TCB, headquartered in Franklin, Tennessee from the FDIC, as receiver for TCB, pursuant to the terms of a Purchase and Assumption Agreement (“P&A”) — Whole Bank; All Deposits entered into among RB&T, the FDIC as receiver of TCB and the FDIC. On January 30, 2012, TCB’s sole location re-opened as a division of RB&T.

The Bank acquired approximately $221 million in notional assets from the FDIC as receiver for TCB. In addition, the Bank recorded a receivable from the FDIC for approximately $785 million, which represented the net difference between the assets acquired and the liabilities assumed, adjusted for the discount the Bank received for the acquisition. The FDIC paid approximately $771 million of this receivable on January 30, 2012 with the remaining $14 million paid on February 15, 2012.

During the first quarter of 2012, the Bank recorded an initial bargain purchase gain of $27.9 million as a result of the TCB acquisition. The bargain purchase gain was realized because the overall price paid by the Bank was substantially less than the fair value of the TCB assets acquired and liabilities assumed in the acquisition. In the second and third quarters of 2012, the Bank posted adjustments to the acquired assets for its FDIC-assisted acquisition in the determination of day-one fair values and recorded a net decrease to the bargain purchase gain of $285,000, as additional information relative to the day-one fair values became available.

Information obtained subsequent to January 27, 2012 and through September 30, 2012 was considered in forming TCB estimates of cash flows and collateral values as of the January 27, 2012 acquisition date, i.e., TCB’s day-one fair values. Day-one fair values for TCB were considered final as of September 30, 2012, which was the date the Bank believed it had received all the information necessary to determine TCB’s day-one fair values.

A summary of the assets acquired and liabilities assumed in the TCB acquisition follows:

Tennessee Commerce Bank

	January 27, 2012
	As Previously Reported						As Recasted
	Contractual			Fair Value			2012 Recast			Fair
(in thousands)	Amount			Adjustments			Adjustments			Value
Assets acquired:
Cash and cash equivalents	$	61,943		$	(89	)	$	(2	)	$	61,852
Securities available for sale	42,646			—			—			42,646
Loans to be repurchased by the FDIC, net of discount	19,800			(2,797		)	—			17,003
Loans	79,112			(22,666		)	830			57,276
Federal Home Loan Bank stock, at cost	2,491			—			—			2,491
Other real estate owned	14,189			(3,359		)	(1,113		)	9,717
Core deposit intangible	—			64			—			64
Discount	(56,970		)	56,970			—			—
FDIC settlement receivable	784,545			—			—			784,545
Other assets and accrued interest receivable	945			(60		)	—			885
Total assets acquired	$	948,701		$	28,063		$	(285	)	$	976,479
Liabilities assumed:
Deposits:
Non interest-bearing	$	19,754		$	—		$	—		$	19,754
Interest-bearing	927,641			54			—			927,695
Total deposits	947,395			54			—			947,449
Accrued income taxes payable	—			9,988			(100		)	9,888
Other liabilities and accrued interest payable	1,306			110			—			1,416
Total liabilities assumed	$	948,701		$	10,152		$	(100	)	$	958,753
Equity:
Bargain purchase gain, net of taxes	—			17,911			(185		)	17,726
Total liabilities assumed and equity	$	948,701		$	28,063		$	(285	)	$	976,479

A summary of the net assets acquired from the FDIC and the estimated fair value adjustments as of the TCB acquisition date follows:

Tennessee Commerce Bank

	January 27, 2012
				Second Quarter			Third Quarter
	As Previously			2012 Recast			2012 Recast			As
(in thousands)	Reported			Adjustments			Adjustments			Recasted
Assets acquired, at contractual amount	$	221,126		$	—		$	—		$	221,126
Liabilities assumed, at contractual amount	(948,701		)	—			—			(948,701		)
Net liabilities assumed per the P&A Agreement	(727,575		)	—			—			(727,575		)
Contractual discount	(56,970		)	—			—			(56,970		)
Net receivable from the FDIC	$	(784,545	)	$	—		$	—		$	(784,545	)
Fair value adjustments:
Loans	$	(22,666	)	$	919		$	(89	)	$	(21,836	)
Discount for loans to be repurchased by the FDIC	(2,797		)	—			—			(2,797		)
Other real estate owned	(3,359		)	(1,000		)	(113		)	(4,472		)
Core deposit intangible	64			—			—			64
Deposits	(54		)	—			—			(54		)
Other assets and accrued interest receivable	(60		)	—			—			(60		)
All other	(199		)	(15		)	13			(201		)
Total fair value adjustments	(29,071		)	(96		)	(189		)	(29,356		)
Discount	56,970			—			—			56,970
Bargain purchase gain, pre-tax	$	27,899		$	(96	)	$	(189	)	$	27,614

On January 27, 2012, the Bank did not immediately acquire the TCB banking facility, including outstanding lease agreements and furniture, fixtures and equipment. During the third quarter of 2012, the Bank renegotiated a new lease with the landlord related to the sole banking facility and acquired all related data processing equipment and fixed assets totaling approximately $573,000.

First Commercial Bank

On September 7, 2012, the Bank acquired specific assets and assumed substantially all of the liabilities of FCB, headquartered in Bloomington, Minnesota from the FDIC, as receiver for FCB, pursuant to the terms of a P&A Agreement — Whole Bank; All Deposits, entered into among RB&T, the FDIC as receiver of FCB and the FDIC. On September 10, 2012, FCB’s sole location re-opened as a division of RB&T.

The Bank acquired approximately $215 million in notional assets from the FDIC as receiver for FCB. In addition, the Bank also recorded a receivable from the FDIC for approximately $64 million, which represented the net difference between the assets acquired and the liabilities assumed adjusted for the discount the Bank received for the acquisition. The FDIC paid substantially all of this receivable to the Bank on September 10, 2012.

During the third quarter of 2012, the Bank recorded an initial bargain purchase gain of $27.1 million as a result of the FCB acquisition. The bargain purchase gain was realized because the overall price paid by the Bank was substantially less than the fair value of the FCB assets acquired and liabilities assumed in the acquisition. During the fourth quarter of 2012, the Bank posted adjustments to the acquired assets for its FDIC-assisted acquisition in the determination of day-one fair values and recorded a net increase to the bargain purchase gain of $712,000, as additional information relative to the day-one fair values became available. During the first quarter of 2013, the Bank posted its final recast adjustment which resulted in an increase of $1.3 million to the bargain purchase gain.

Information obtained subsequent to September 7, 2012 and through March 31, 2013 was considered in forming FCB estimates of cash flows and collateral values as of the September 7, 2012 acquisition date, i.e., FCB’s day-one fair values. Day-one fair values for FCB were considered final as of March 31, 2013, which was the date the Bank believed it had received all the information necessary to determine FCB’s day-one fair values.

A summary of the assets acquired and liabilities assumed in the FCB acquisition, including recast adjustments, follows:

First Commercial Bank

	September 7, 2012
	As Previously Reported						As Recasted
							2012 & 2013
	Contractual			Fair Value			Recast			Fair
(in thousands)	Amount			Adjustments			Adjustments			Value
Assets acquired :
Cash and cash equivalents	$	10,524		$	—		$	—		$	10,524
Securities available for sale	12,002			—			—			12,002
Loans	171,744			(44,214		)	2,821			130,351
Federal Home Loan Bank stock, at cost	407			—			—			407
Other real estate owned	19,360			(8,389		)	(785		)	10,186
Core deposit intangible	—			559			—			559
Discount	(79,412		)	79,412			—			—
FDIC settlement receivable	64,326			—			—			64,326
Other assets and accrued interest receivable	829			(95		)	—			734
Total assets acquired	$	199,780		$	27,273		$	2,036		$	229,089
Liabilities assumed:
Deposits:
Non interest-bearing	$	7,197		$	—		$	—		$	7,197
Interest-bearing	189,057			(3		)	—			189,054
Total deposits	196,254			(3		)	—			196,251
Federal Home Loan Bank advances	3,002			63			—			3,065
Accrued income taxes payable	—			9,706			712			10,418
Other liabilities and accrued interest payable	524			101			—			625
Total liabilities assumed	$	199,780		$	9,867		$	712		$	210,359
Equity:
Bargain purchase gain, net of taxes	—			17,406			1,324			18,730
Total liabilities assumed and equity	$	199,780		$	27,273		$	2,036		$	229,089

A summary of the net assets acquired from the FDIC and the estimated fair value adjustments as of the FCB acquisition date follows:

First Commercial Bank

	September 7, 2012
				Fourth Quarter		First Quarter
	As Previously			2012 Recast		2013 Recast			As
(in thousands)	Reported			Adjustments		Adjustments			Recasted
Assets acquired, at contractual amount	$	214,866		$	—	$	—		$	214,866
Liabilities assumed, at contractual amount	(199,780		)	—		—			(199,780		)
Net liabilities assumed per the P&A Agreement	15,086			—		—			15,086
Contractual discount	(79,412		)	—		—			(79,412		)
Net receivable from the FDIC	$	(64,326	)	$	—	$	—		$	(64,326	)
Fair value adjustments:
Loans	$	(44,214	)	$	423	$	2,398		$	(41,393	)
Other real estate owned	(8,389		)	289		(1,074		)	(9,174		)
Core deposit intangible	559			—		—			559
Deposits	3			—		—			3
Federal Home Loan Bank advances	(63		)	—		—			(63		)
Other assets and accrued interest receivable	(95		)	—		—			(95		)
All other	(101		)	—		—			(101		)
Total fair value adjustments	(52,300		)	712		1,324			(50,264		)
Discount	79,412			—		—			79,412
Bargain purchase gain, pre-tax	$	27,112		$	712	$	1,324		$	29,148

On September 7, 2012, the Bank did not immediately acquire the FCB banking facility, including outstanding lease agreements and furniture, fixtures and equipment. The Bank acquired all data processing equipment and fixed assets totaling approximately $328,000 during the fourth quarter of 2012. During the first quarter of 2013, the Bank renegotiated a new lease with the landlord related to the sole banking facility and acquired all related data processing equipment and fixed assets totaling approximately $233,000.

In October 2013, Republic gave the required 90-day regulatory notice of its intentions to close its sole banking center location in Minneapolis, Minnesota, which it acquired in connection with the FCB acquisition in September 2012.  The Bank is currently under a lease for this location which is set to expire in April 2015. The Bank intends to repurpose the location as a support office until the expiration of its lease or until such time that it is able to negotiate with the landlord a buy-out of its future lease obligations. The banking center is expected to stop transacting business at the Minnesota location with deposit customers in January 2014. The core deposit intangible asset associated with the FCB acquisition totaled $289,000 at September 30, 2013. The Bank intends to accelerate the amortization of this asset in connection with its notice to repurpose the former FCB banking center.

FAIR VALUE METHODS ASSOCIATED WITH THE 2012 FDIC-ASSISTED ACQUISITIONS OF FAILED BANKS

The following is a description of the methods used to determine the fair values of significant assets and liabilities at the respective acquisition dates as presented throughout:

Cash and Due from Banks and Interest-bearing Deposits in Banks — The carrying amount of these assets, adjusted for any cash items deemed uncollectible by management, was determined to be a reasonable estimate of fair value based on their short-term nature.

Investment Securities — Investment securities were acquired at fair value from the FDIC. The fair values provided by the FDIC were reviewed and considered reasonable based on management’s understanding of the marketplace. Federal Home Loan Bank (“FHLB”) stock was acquired at cost, as it is not practicable to determine its fair value given restrictions on its marketability.

With the TCB acquisition, the Bank acquired $43 million in securities at fair value. The majority of the securities acquired were subsequently sold or called during the first quarter of 2012, with the Bank realizing a net gain on the corresponding transactions of approximately $56,000. The Bank sold these securities because management determined that the acquired securities did not fit within the Bank’s traditional investment strategies.

With the FCB acquisition, the Bank acquired $12 million in securities at fair value. The nature of these securities acquired was consistent with the Bank’s existing investment portfolio and the Bank elected to retain these securities.

Loans — Fair values for loans were based on a discounted cash flow methodology that considered factors including the type of loan and related collateral, classification status, interest rate, term of loan and whether or not the loan was amortizing, and a discount rate reflecting current market rates for new originations of comparable loans adjusted for the risk inherent in the cash flow estimates.

Certain loans that were deemed to be collateral dependent were valued based on the fair value of the underlying collateral. These estimates were based on the most recently available real estate appraisals with certain adjustments made based on the type of property, age of appraisal, current status of the property and other related factors to estimate the current value of the collateral.

With the TCB acquisition, the Bank purchased approximately $99 million in loans with a recasted fair value of approximately $74 million. During 2012, the FDIC repurchased approximately $20 million of TCB loans at a price of par less the original discount of $3 million that the Bank received when it purchased the loans. Loans repurchased by the FDIC were valued at the contractual amount reduced by the applicable discount.

With the FCB acquisition, the Bank purchased approximately $172 million in loans with a recasted fair value of approximately $130 million.

The composition of acquired loans as of the respective acquisition dates follows:

Tennessee Commerce Bank

	January 27, 2012
	As Previously Reported					As Recasted
	Contractual		Fair Value			2012 Recast			Fair
(in thousands)	Amount		Adjustments			Adjustments			Value
Residential real estate	$	22,693	$	(4,076	)	$	243		$	18,860
Commercial real estate	18,646		(6,971		)	1,988			13,663
Construction & Land Development	14,877		(2,681		)	(1,972		)	10,224
Commercial	13,224		(6,939		)	496			6,781
Home equity	6,220		(606		)	24			5,638
Consumer:
Credit cards	608		(22		)	—			586
Overdrafts	672		(621		)	—			51
Other consumer	2,172		(750		)	51			1,473
Total loans	$	79,112	$	(22,666	)	$	830		$	57,276

First Commercial Bank

	September 7, 2012
	As Previously Reported					As Recasted
						2012 & 2013
	Contractual		Fair Value			Recast			Fair
(in thousands)	Amount		Adjustments			Adjustments			Value
Residential real estate	$	48,409	$	(9,634	)	$	180		$	38,955
Commercial real estate	82,161		(12,330		)	(1,746		)	68,085
Construction & Land Development	14,918		(6,182		)	316			9,052
Commercial	25,475		(16,060		)	4,120			13,535
Home equity	404		(3		)	—			401
Consumer:
Credit cards	—		—			—			—
Overdrafts	6		—			—			6
Other consumer	371		(5		)	(49		)	317
Total loans	$	171,744	$	(44,214	)	$	2,821		$	130,351

The following tables present the purchased loans that are included within the scope of ASC Topic 310-30, Accounting for Purchased Loans with Deteriorated Credit Quality, at the respective acquisition dates:

Tennessee Commerce Bank

	January 27, 2012
	As Previously			2012 Recast			As
(in thousands)	Reported			Adjustments			Recasted
Contractually-required principal and interest payments	$	52,278		$	—		$	52,278
Non-accretable difference	(21,308		)	903			(20,405		)
Cash flows expected to be collected	30,970			903			31,873
Accretable difference	(425		)	(73		)	(498		)
Fair value of loans	$	30,545		$	830		$	31,375

First Commercial Bank

	September 7, 2012
				2012 & 2013
	As Previously			Recast			As
(in thousands)	Reported			Adjustments			Recasted
Contractually-required principal and interest payments	$	116,940		$	4,213		$	121,153
Non-accretable difference	(33,523		)	4,640			(28,883		)
Cash flows expected to be collected	83,417			8,853			92,270
Accretable difference	(2,827		)	(1,819		)	(4,646		)
Fair value of loans	$	80,590		$	7,034		$	87,624

Core Deposit Intangible — In its assumption of the deposit liabilities for the 2012 FDIC-assisted acquisitions, the Bank believed that the customer relationships associated with these deposits had intangible value, although this value was anticipated to be modest given the nature of the deposit accounts and the anticipated rapid account run-off since acquired. The Bank recorded core deposit intangible assets of $64,000 and $559,000 related to the TCB and FCB acquisitions. The fair value of these intangible assets were estimated based on a discounted cash flow methodology that gave appropriate consideration to type of deposit, deposit retention, cost of the deposit base and net maintenance cost attributable to customer deposits.

Other Real Estate Owned (“OREO”) — OREO is presented at fair value, which is the estimated value that management expects to receive when the property is sold, net of related costs to sell. These estimates were based on the most recently available real estate appraisals, with certain adjustments made based on the type of property, age of appraisal, current status of the property and other related factors to estimate the current value of the property.

The Bank acquired $14 million in OREO related to the TCB acquisition, which was initially reduced by a $3 million fair value adjustment as of January 27, 2012. Subsequent to the first quarter, the Bank posted a net negative recast adjustment of $1 million to OREO to mark several properties to market based on appraisals received.

The Bank acquired $19 million in OREO related to the FCB acquisition, which was initially reduced by an $8 million fair value adjustment as of September 7, 2012. During the fourth quarter of 2012 and the first quarter of 2013, the Bank posted  a net negative recast adjustment of $785,000 to OREO to mark several properties to market based on appraisals received.

FHLB Advances — The Bank acquired $3 million in FHLB advances related to the FCB acquisition. The advances were marked to market as of the acquisition date based on early prepayment payoffs (including penalties) received from the FHLB.
The Bank paid off the advances during the third quarter of 2012 at no additional loss beyond the fair value adjustment as of their date of acquisition.

Deposits — The fair values used for the demand and savings deposits that comprise the acquisition accounts acquired, by definition, equal the amount payable on demand at the acquisition date. The fair values for time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered to the interest rates embedded on such time deposits.

The Bank assumed $947 million in deposits at estimated fair value in connection with the TCB acquisition. As permitted by the FDIC, within seven days of the acquisition date, RB&T had the option to disclose to TCB’s deposit customers that it was repricing the acquired deposit portfolios. In addition, depositors had the option to withdraw funds without penalty. The Bank chose to reprice all of the acquired TCB interest-bearing deposits, including transaction, time and brokered deposits with an effective date of January 28, 2012. This re-pricing triggered significant time and brokered deposit run-off consistent with management’s expectations.

The Bank assumed $196 million in deposits at estimated fair value in connection with the FCB acquisition. The Bank chose to re-price all of the acquired FCB time deposits with an effective date of October 1, 2012. This re-pricing triggered certificate of deposit run-off consistent with management’s expectations.

The composition of deposits assumed at fair value as of the respective acquisition dates follows:

Tennessee Commerce Bank

	January 27, 2012
	Contractual		Fair Value		Recast		Fair
(in thousands)	Amount		Adjustments		Adjustments		Value
Demand	$	3,190	$	—	$	—	$	3,190
Money market accounts	11,338		—		—		11,338
Savings	91,859		—		—		91,859
Individual retirement accounts*	15,486		—		—		15,486
Time deposits, $100,000 and over*	278,825		—		—		278,825
Other certificates of deposit*	108,003		14		—		108,017
Brokered certificates of deposit*	418,940		40		—		418,980
Total interest-bearing deposits	927,641		54		—		927,695
Total non interest-bearing deposits	19,754		—		—		19,754
Total deposits	$	947,395	$	54	$	—	$	947,449

First Commercial Bank

	September 7, 2012
	Contractual		Fair Value			Recast		Fair
(in thousands)	Amount		Adjustments			Adjustments		Value
Demand	$	4,003	$	—		$	—	$	4,003
Money market accounts	38,187		—			—		38,187
Savings	—		—			—		—
Individual retirement accounts*	16,780		—			—		16,780
Time deposits, $100,000 and over*	14,740		—			—		14,740
Other certificates of deposit*	62,033		—			—		62,033
Brokered certificates of deposit*	53,314		(3		)	—		53,311
Total interest-bearing deposits	189,057		(3		)	—		189,054
Total non interest-bearing deposits	7,197		—			—		7,197
Total deposits	$	196,254	$	(3	)	$	—	$	196,251

* - denotes a time deposit

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LOANS AND ALLOWANCE FOR LOAN AND LOSSES (Tables)

9 Months Ended

Sep. 30, 2013

Loans and allowance for loan and losses

Schedule of composition of loan portfolio

(in thousands)	September 30, 2013		December 31, 2012
Residential real estate:
Owner occupied	$	1,100,633	$	1,145,495
Non owner occupied	109,641		74,539
Commercial real estate	766,813		714,642
Commercial real estate - purchased whole loans	34,017		33,531
Construction & land development	53,618		68,214
Commercial	114,416		130,681
Warehouse lines of credit	122,810		216,576
Home equity	225,556		241,607
Consumer:
Credit cards	8,948		8,716
Overdrafts	851		955
Other consumer	16,132		15,241
Total loans	2,553,435		2,650,197
Less: Allowance for loan losses	23,492		23,729
Total loans, net	$	2,529,943	$	2,626,468

Schedule of the risk category of loans by class of loans based on the bank's internal analysis performed

									Purchased		Purchased
									Credit		Credit
									Impaired		Impaired		Total
September 30, 2013			Special				Doubtful /		Loans -		Loans -		Rated
(in thousands)	Pass		Mention *		Substandard *		Loss		Group 1**		Substandard***		Loans****
Residential real estate:
Owner occupied	$	—	$	28,758	$	9,348	$	—	$	3,138	$	—	$	41,244
Non owner occupied	—		1,487		1,601		—		8,658		—		11,746
Commercial real estate	697,013		13,130		21,648		—		35,022		—		766,813
Commercial real estate -
Purchased whole loans	34,017		—		—		—		—		—		34,017
Construction & land development	48,688		1,712		1,822		—		1,396		—		53,618
Commercial	109,880		2,262		95		—		1,956		223		114,416
Warehouse lines of credit	122,810		—		—		—		—		—		122,810
Home equity	—		332		1,593		—		—		—		1,925
Consumer:
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Other consumer	—		51		70		—		34		—		155
Total rated loans	$	1,012,408	$	47,732	$	36,177	$	—	$	50,204	$	223	$	1,146,744

									Purchased		Purchased
									Credit		Credit
									Impaired		Impaired		Total
December 31, 2012			Special				Doubtful /		Loans -		Loans -		Rated
(in thousands)	Pass		Mention*		Substandard*		Loss		Group 1**		Substandard***		Loans*****
Residential real estate:
Owner occupied	$	—	$	26,031	$	8,700	$	—	$	2,413	$	—	$	37,144
Non owner occupied	—		2,616		3,350		—		20,190		—		26,156
Commercial real estate	624,630		17,216		28,433		—		44,362		—		714,641
Commercial real estate -
Purchased whole loans	33,531		—		—		—		—		—		33,531
Construction & land development	61,555		1,088		3,878		—		1,692		—		68,213
Commercial	121,169		2,639		2,592		—		4,280		—		130,680
Warehouse lines of credit	216,576		—		—		—		—		—		216,576
Home equity	—		648		2,346		—		—		—		2,994
Consumer:
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Other consumer	—		387		53		—		41		—		481
Total rated loans	$	1,057,461	$	50,625	$	49,352	$	—	$	72,978	$	—	$	1,230,416

* - Special Mention and Substandard loans include $2 million and $6 million at September 30, 2013 and $4 million and $11 million at December 31, 2012, respectively, which were removed from the Purchased Credit Impaired population due to a post-acquisition troubled debt restructuring of the loan.

** - Purchased Credit Impaired loans — Group 1 (“PCI-1”) represent loans whose cash flow expectations reflect no projected additional loss to contractual principal beyond the amount of the loan’s non-accretable yield that was established as part of its initial acquisition value. PCI-1 loans are considered impaired if the timing of the loan’s projected cash flows deteriorate from management’s initial projections.

*** - Purchased Credit Impaired loans - Substandard (“PCI-Sub”) represent former PCI-1 loans downgraded subsequent to day-one due to projected further impairment to contractual principal beyond the loan’s initial non-accretable yield that was established as part of its initial acquisition value. PCI-Sub loans are considered impaired and have required additional loan loss provisions.

**** - The above tables exclude all non-classified residential real estate and consumer loans at the respective period ends. The tables also exclude most non classified small commercial and commercial real estate relationships totaling $100,000 or less. These loans are not rated since they are accruing interest and not past due 80 days or more.

Schedule of activity in the Allowance

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in thousands)	2013			2012			2013			2012
Allowance for loan losses at beginning of period	$	22,491		$	22,510		$	23,729		$	24,063
Charge offs - Traditional Banking	(1,627		)	(1,220		)	(4,744		)	(7,444		)
Charge offs - Refund Anticipation Loans	—			—			—			(11,097		)
Total charge offs	(1,627		)	(1,220		)	(4,744		)	(18,541		)
Recoveries - Traditional Banking	371			267			1,231			976
Recoveries - Refund Anticipation Loans	57			460			796			3,883
Total recoveries	428			727			2,027			4,859
Net loan (charge offs) recoveries - Traditional Banking	(1,256		)	(953		)	(3,513		)	(6,468		)
Net loan (charge offs) recoveries - Refund Anticipation Loans	57			460			796			(7,214		)
Net loan (charge offs) recoveries	(1,199		)	(493		)	(2,717		)	(13,682		)
Provision for loan losses - Traditional Banking	2,257			2,543			3,276			6,505
Provision for loan losses - Refund Anticipation Loans	(57		)	(460		)	(796		)	7,214
Total provision for loan losses	2,200			2,083			2,480			13,719
Allowance for loan losses at end of period	$	23,492		$	24,100		$	23,492		$	24,100

Schedule of activity in the Allowance by portfolio class

										Commercial
	Residential Real Estate									Real Estate -								Warehouse
Three Months Ended	Owner			Non Owner			Commercial			Purchased		Construction &						Lines of
September 30, 2013 (in thousands)	Occupied			Occupied			Real Estate			Whole Loans		Land Development			Commercial			Credit
Beginning balance	$	7,563		$	642		$	8,763		$	34	$	1,587		$	710		$	462
Provision for loan losses	1,198			157			686			—		16			232			(143		)
Loans charged off	(578		)	(67		)	(307		)	—		(16		)	(102		)	—
Recoveries	20			59			38			—		7			19			—
Ending balance	$	8,203		$	791		$	9,180		$	34	$	1,594		$	859		$	319

(continued)

				Refund			Consumer
	Home			Anticipation			Credit						Other
	Equity			Loans			Cards			Overdrafts			Consumer			Total
Beginning balance	$	1,932		$	—		$	344		$	249		$	205		$	22,491
Provision for loan losses	104			(57		)	(18		)	26			(1		)	2,200
Loans charged off	(218		)	—			(60		)	(169		)	(110		)	(1,627		)
Recoveries	55			57			4			95			74			428
Ending balance	$	1,873		$	—		$	270		$	201		$	168		$	23,492

										Commercial
	Residential Real Estate									Real Estate -								Warehouse
Three Months Ended	Owner			Non Owner			Commercial			Purchased		Construction &						Lines of
September 30, 2012 (in thousands)	Occupied			Occupied			Real Estate			Whole Loans		Land Development			Commercial			Credit
Beginning balance	$	6,190		$	897		$	8,271		$	40	$	3,097		$	603		$	223
Provision for loan losses	571			622			743			—		(192		)	140			194
Loans charged off	(348		)	(20		)	(37		)	—		—			(11		)	—
Recoveries	32			2			24			—		28			3			—
Ending balance	$	6,445		$	1,501		$	9,001		$	40	$	2,933		$	735		$	417

(continued)

				Refund			Consumer
	Home			Anticipation			Credit						Other
	Equity			Loans			Cards			Overdrafts			Consumer			Total
Beginning balance	$	2,691		$	—		$	192		$	125		$	181		$	22,510
Provision for loan losses	341			(460		)	11			26			87			2,083
Loans charged off	(633		)	—			(9		)	(100		)	(62		)	(1,220		)
Recoveries	12			460			9			101			56			727
Ending balance	$	2,411		$	—		$	203		$	152		$	262		$	24,100

										Commercial
	Residential Real Estate									Real Estate -								Warehouse
Nine Months Ended	Owner			Non Owner			Commercial			Purchased		Construction &						Lines of
September 30, 2013 (in thousands)	Occupied			Occupied			Real Estate			Whole Loans		Land Development			Commercial			Credit
Beginning balance	$	7,006		$	1,049		$	8,843		$	34	$	2,769		$	580		$	541
Provision for loan losses	2,269			(106		)	1,192			—		(604		)	618			(222		)
Loans charged off	(1,291		)	(225		)	(972		)	—		(616		)	(412		)	—
Recoveries	219			73			117			—		45			73			—
Ending balance	$	8,203		$	791		$	9,180		$	34	$	1,594		$	859		$	319

(continued)

				Refund			Consumer
	Home			Anticipation			Credit						Other
	Equity			Loans			Cards			Overdrafts			Consumer			Total
Beginning balance	$	2,348		$	—		$	210		$	198		$	151		$	23,729
Provision for loan losses	(248		)	(796		)	166			153			58			2,480
Loans charged off	(354		)	—			(120		)	(474		)	(280		)	(4,744		)
Recoveries	127			796			14			324			239			2,027
Ending balance	$	1,873		$	—		$	270		$	201		$	168		$	23,492

										Commercial
	Residential Real Estate									Real Estate -								Warehouse
Nine Months Ended	Owner			Non Owner			Commercial			Purchased		Construction &						Lines of
September 30, 2012 (in thousands)	Occupied			Occupied			Real Estate			Whole Loans		Land Development			Commercial			Credit
Beginning balance	$	5,212		$	1,142		$	7,724		$	—	$	3,042		$	1,025		$	104
Allocation of previously unallocated allowance	1,117			146			47			—		—			—			—
Provision for loan losses	2,617			255			1,513			40		1,604			(293		)	313
Loans charged off	(2,422		)	(318		)	(353		)	—		(1,796		)	(18		)	—
Recoveries	183			14			70			—		83			21			—
Ending balance	$	6,707		$	1,239		$	9,001		$	40	$	2,933		$	735		$	417

(continued)

				Refund			Consumer
	Home			Anticipation			Credit						Other
	Equity			Loans			Cards			Overdrafts			Consumer			Unallocated*			Total
Beginning balance	$	2,984		$	—		$	503		$	135		$	227		$	1,965		$	24,063
Allocation of previously unallocated allowance*	536			—			47			17			55			(1,965		)	—
Provision for loan losses	765			7,214			(293		)	(14		)	(2		)	—			13,719
Loans charged off	(1,947		)	(11,097		)	(87		)	(318		)	(185		)	—			(18,541		)
Recoveries	73			3,883			33			332			167			—			4,859
Ending balance	$	2,411		$	—		$	203		$	152		$	262		$	—		$	24,100

* Allocation was made January 1, 2012 based on a methodology change to the Company’s Allowance .

Schedule of non-performing loans and non-performing assets

(dollars in thousands)	September 30, 2013		December 31, 2012
Loans on non-accrual status(1)	$	18,407	$	18,506
Loans past due 90 days-or-more and still on accrual(2)	1,839		3,173
Total non-performing loans	20,246		21,679
Other real estate owned	15,247		26,203
Total non-performing assets	$	35,493	$	47,882

Credit Quality Ratios:
Non-performing loans to total loans	0.79	%	0.82	%
Non-performing assets to total loans (including OREO)	1.38	%	1.79	%
Non-performing assets to total assets	1.07	%	1.41	%

(1) Loans on non-accrual status include impaired loans.

(2) All loans past due 90 days-or-more and still accruing are PCI loans accounted for under ASC 310-30.

Schedule of recorded investment in non-accrual loans and loans past due over 90-days-or-more and still on accrual by class of loans

					Loans Past Due 90-Days-or-More
	Non-Accrual Loans				and Still Accruing Interest
(in thousands)	September 30, 2013		December 31, 2012		September 30, 2013		December 31, 2012
Residential real estate:
Owner occupied	$	8,708	$	9,298	$	396	$	730
Non owner occupied	1,482		1,376		—		—
Commercial real estate	6,243		3,756		139		712
Commercial real estate - purchased whole loans	—		—		—		—
Construction & land development	803		1,777		96		531
Commercial	329		334		1,208		1,200
Warehouse lines of credit	—		—		—		—
Home equity	722		1,868		—		—
Consumer:
Credit cards	—		—		—		—
Overdrafts	—		—		—		—
Other consumer	120		97		—		—
Total	$	18,407	$	18,506	$	1,839	$	3,173

Schedule of aging of the recorded investment in loans by class of loans

	30 - 59			60 - 89			Greater than			Total			Total
September 30, 2013	Days			Days			90 Days			Loans			Loans Not		Total
(dollars in thousands)	Delinquent			Delinquent			Delinquent*			Delinquent			Delinquent		Loans
Residential real estate:
Owner occupied	$	2,176		$	1,572		$	3,653		$	7,401		$	1,093,232	$	1,100,633
Non owner occupied	342			983			131			1,456			108,185		109,641
Commercial real estate	703			—			2,417			3,120			763,693		766,813
Commercial real estate - purchased whole loans	—			—			—			—			34,017		34,017
Construction & land development	—			97			96			193			53,425		53,618
Commercial	4			129			1,392			1,525			112,891		114,416
Warehouse lines of credit	—			—			—			—			122,810		122,810
Home equity	720			8			355			1,083			224,473		225,556
Consumer:
Credit cards	31			24			—			55			8,893		8,948
Overdrafts	141			2			—			143			708		851
Other consumer	73			17			21			111			16,021		16,132
Total	$	4,190		$	2,832		$	8,065		$	15,087		$	2,538,348	$	2,553,435
Delinquent loans to total loans	0.16		%	0.11		%	0.32		%	0.59		%

	30 - 59			60 - 89			Greater than			Total			Total
December 31, 2012	Days			Days			90 Days			Loans			Loans Not		Total
(dollars in thousands)	Delinquent			Delinquent			Delinquent *			Delinquent			Delinquent		Loans
Residential real estate:
Owner occupied	$	2,210		$	1,978		$	4,712		$	8,900		$	1,136,595	$	1,145,495
Non owner occupied	907			1,128			864			2,899			71,640		74,539
Commercial real estate	103			486			2,051			2,640			712,002		714,642
Commercial real estate - purchased whole loans	—			—			—			—			33,531		33,531
Construction & land development	—			194			1,930			2,124			66,090		68,214
Commercial	222			733			1,307			2,262			128,419		130,681
Warehouse lines of credit	—			—			—			—			216,576		216,576
Home equity	521			251			882			1,654			239,953		241,607
Consumer:
Credit cards	60			5			—			65			8,651		8,716
Overdrafts	167			1			—			168			787		955
Other consumer	102			28			2			132			15,109		15,241
Total	$	4,292		$	4,804		$	11,748		$	20,844		$	2,629,353	$	2,650,197
Delinquent loans to total loans	0.16		%	0.18		%	0.44		%	0.79		%

* - All loans past due 90 days-or-more, excluding PCI loans, as of September 30, 2013 and December 31, 2012 were on non-accrual status.

Schedule of Bank's impaired loans

(in thousands)	September 30, 2013		December 31, 2012
Loans with no allocated allowance for loan losses	$	25,835	$	36,325
Loans with allocated allowance for loan losses	78,298		69,382
Total impaired loans	$	104,133	$	105,707
Amount of the allowance for loan losses allocated	$	7,304	$	8,531

Schedule of balance in the Allowance and the recorded investment in loans by portfolio class based on impairment method

							Commercial
	Residential Real Estate						Real Estate -						Warehouse
	Owner		Non Owner		Commercial		Purchased		Construction &				Lines of
September 30, 2013 (in thousands)	Occupied		Occupied		Real Estate		Whole Loans		Land Development		Commercial		Credit
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment, excluding PCI loans	$	3,788	$	86	$	1,762	$	—	$	268	$	14	$	—
Collectively evaluated for impairment	4,376		489		6,878		34		1,319		501		319
PCI loans with post acquisition impairment	39		216		540		—		7		344		—
PCI loans without post acquisition impairment	—		—		—		—		—		—		—
Total ending allowance for loan losses	$	8,203	$	791	$	9,180	$	34	$	1,594	$	859	$	319
Loans:
Impaired loans individually evaluated, excluding PCI loans	$	39,312	$	2,500	$	31,805	$	—	$	3,514	$	4,576	$	—
Loans collectively evaluated for impairment	1,058,185		98,482		699,986		34,017		48,708		107,660		122,810
PCI loans with post acquisition impairment	1,231		5,875		10,687		—		317		1,890		—
PCI loans without post acquisition impairment	1,905		2,784		24,335		—		1,079		290		—
Total ending loan balance	$	1,100,633	$	109,641	$	766,813	$	34,017	$	53,618	$	114,416	$	122,810

(continued)

			Consumer
	Home		Credit				Other
	Equity		Cards		Overdrafts		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment, excluding PCI loans	$	185	$	—	$	—	$	54	$	6,157
Collectively evaluated for impairment	1,688		270		201		113		16,188
PCI loans with post acquisition impairment	—		—		—		1		1,147
PCI loans without post acquisition impairment	—		—		—		—		—
Total ending allowance for loan losses	$	1,873	$	270	$	201	$	168	$	23,492
Loans:
Impaired loans individually evaluated, excluding PCI loans	$	2,297	$	—	$	—	$	121	$	84,125
Loans collectively evaluated for impairment	223,259		8,948		851		15,977		2,418,883
PCI loans with post acquisition impairment	—		—		—		8		20,008
PCI loans without post acquisition impairment	—		—		—		26		30,419
Total ending loan balance	$	225,556	$	8,948	$	851	$	16,132	$	2,553,435

							Commercial
	Residential Real Estate						Real Estate -						Warehouse
	Owner		Non Owner		Commercial		Purchased		Construction &				Lines of
December 31, 2012 (in thousands)	Occupied		Occupied		Real Estate		Whole Loans		Land Development		Commercial		Credit
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment, excluding PCI loans	$	3,032	$	521	$	2,919	$	—	$	1,157	$	348	$	—
Collectively evaluated for impairment	3,972		527		5,924		34		1,612		232		541
PCI loans with post acquisition impairment	2		1		—		—		—		—		—
PCI loans without post acquisition impairment	—		—		—		—		—		—		—
Total ending allowance for loan losses	$	7,006	$	1,049	$	8,843	$	34	$	2,769	$	580	$	541
Loans:
Impaired loans individually evaluated, excluding PCI loans	$	44,429	$	4,235	$	40,593	$	—	$	5,268	$	6,972	$	—
Loans collectively evaluated for impairment	1,080,792		67,974		629,687		33,531		61,254		119,429		216,576
PCI loans with post acquisition impairment	136		184		—		—		—		—		—
PCI loans without post acquisition impairment	20,138		2,146		44,362		—		1,692		4,280		—
Total ending loan balance	$	1,145,495	$	74,539	$	714,642	$	33,531	$	68,214	$	130,681	$	216,576

(continued)

			Consumer
	Home		Credit				Other
	Equity		Cards		Overdrafts		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment, excluding PCI loans	$	496	$	—	$	—	$	55	$	8,528
Collectively evaluated for impairment	1,852		210		198		96		15,198
PCI loans with post acquisition impairment	—		—		—		—		3
PCI loans without post acquisition impairment	—		—		—		—		—
Total ending allowance for loan losses	$	2,348	$	210	$	198	$	151	$	23,729
Loans:
Impaired loans individually evaluated, excluding PCI loans	$	3,420	$	—	$	—	$	470	$	105,387
Loans collectively evaluated for impairment	238,187		8,716		955		14,731		2,471,832
PCI loans with post acquisition impairment	—		—		—		—		320
PCI loans without post acquisition impairment	—		—		—		40		72,658
Total ending loan balance	$	241,607	$	8,716	$	955	$	15,241	$	2,650,197

Schedule of loans individually evaluated for impairment by class of loans

	Ending Balance
	As of						Three Months Ended				Nine Months Ended
	September 30, 2013						September 30, 2013				September 30, 2013
	Unpaid				Allowance for		Average		Interest		Average		Interest
	Principal		Recorded		Loan Losses		Recorded		Income		Recorded		Income
(in thousands)	Balance		Investment		Allocated		Investment		Recognized		Investment		Recognized
Impaired loans with no related allowance recorded:
Residential real estate:
Owner occupied	$	3,152	$	3,147	$	—	$	6,088	$	35	$	9,876	$	89
Non owner occupied	1,508		1,293		—		1,269		—		1,411		18
Commercial real estate	13,953		13,884		—		18,566		451		18,382		809
Commercial real estate - purchased whole loans	—		—		—		—		—		—		—
Construction & land development	1,837		1,837		—		1,930		73		2,126		127
Commercial	4,426		4,378		—		3,460		204		3,770		413
Warehouse lines of credit	—		—		—		—		—		—		—
Home equity	1,342		1,296		—		1,724		34		1,867		64
Consumer:
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Other consumer	—		—		—		37		—		221		—
Impaired loans with an allowance recorded:
Residential real estate:
Owner occupied	38,261		37,396		3,827		36,008		315		33,841		876
Non owner occupied	7,082		7,082		302		5,688		166		4,661		208
Commercial real estate	29,622		28,608		2,302		26,508		549		26,055		998
Commercial real estate - purchased whole loans	—		—		—		—		—		—		—
Construction & land development	2,090		1,994		275		2,000		30		2,674		75
Commercial	2,088		2,088		358		2,641		21		2,702		27
Warehouse lines of credit	—		—		—		—		—		—		—
Home equity	1,027		1,001		185		1,026		21		1,289		41
Consumer:
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Other consumer	129		129		55		116		1		92		3
Total impaired loans	$	106,517	$	104,133	$	7,304	$	107,061	$	1,900	$	108,967	$	3,748

	Ending Balance
	As of						Three Months Ended				Nine Months Ended
	December 31, 2012						September 30, 2012				September 30, 2012
	Unpaid				Allowance for		Average		Interest		Average		Interest
	Principal		Recorded		Loan Losses		Recorded		Income		Recorded		Income
(in thousands)	Balance		Investment		Allocated		Investment		Recognized		Investment		Recognized
Impaired loans with no related allowance recorded:
Residential real estate:
Owner occupied	$	13,299	$	13,107	$	—	$	28,249	$	177	$	25,378	$	397
Non owner occupied	955		794		—		2,097		138		1,539		138
Commercial real estate	14,293		14,293		—		10,416		404		8,924		456
Commercial real estate - purchased whole loans	—		—		—		—		—		—		—
Construction & land development	3,090		2,085		—		2,637		35		3,018		54
Commercial	4,206		4,114		—		2,096		28		2,127		68
Warehouse lines of credit	—		—		—		—		—		—		—
Home equity	1,753		1,546		—		782		—		648		—
Consumer:
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Other consumer	386		386		—		214		13		123		13
Impaired loans with an allowance recorded:
Residential real estate:
Owner occupied	31,709		31,458		3,034		6,927		6		5,886		33
Non owner occupied	3,695		3,625		522		2,270		6		2,249		33
Commercial real estate	26,710		26,300		2,919		27,233		236		26,164		738
Commercial real estate - purchased whole loans	—		—		—		—		—		—		108
Construction & land development	3,416		3,183		1,157		5,165		36		6,108		116
Commercial	2,858		2,858		348		2,583		47		2,520		—
Warehouse lines of credit	—		—		—		—		—		—		—
Home equity	1,874		1,874		496		1,297		6		1,675		14
Consumer:
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Other consumer	84		84		55		—		—		—		—
Total impaired loans	$	108,328	$	105,707	$	8,531	$	91,966	$	1,132	$	86,359	$	2,168

Schedule of TDRs differentiated by loan type and accrual status

	Troubled Debt		Troubled Debt		Total
	Restructurings on		Restructurings on		Troubled Debt
September 30, 2013 (in thousands)	Non-Accrual Status		Accrual Status		Restructurings
Residential real estate	$	5,487	$	32,248	$	37,735
Commercial real estate	5,869		23,095		28,964
Construction & land development	803		2,707		3,510
Commercial	145		4,431		4,576
Total troubled debt restructurings	$	12,304	$	62,481	$	74,785

	Troubled Debt		Troubled Debt		Total
	Restructurings on		Restructurings on		Troubled Debt
December 31, 2012 (in thousands)	Non-Accrual Status		Accrual Status		Restructurings
Residential real estate	$	6,951	$	36,758	$	43,709
Commercial real estate	5,149		26,174		31,323
Construction & land development	1,595		2,167		3,762
Commercial	269		4,244		4,513
Total troubled debt restructurings	$	13,964	$	69,343	$	83,307

Schedule of categories of TDR loan modifications outstanding and respective performance under modified terms

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
	Performing to		Not Performing to		Troubled Debt
September 30, 2013 (in thousands)	Modified Terms		Modified Terms		Restructurings
Residential real estate loans (including home equity loans):
Interest only payments	$	598	$	874	$	1,472
Rate reduction	25,157		3,134		28,291
Principal deferral	2,310		1,782		4,092
Bankruptcies	2,833		1,047		3,880
Total residential TDRs	30,898		6,837		37,735
Commercial related and construction/land development loans:
Interest only payments	4,225		854		5,079
Rate reduction	17,090		1,374		18,464
Principal deferral	8,440		4,675		13,115
Bankruptcies	—		392		392
Total commercial TDRs	29,755		7,295		37,050
Total troubled debt restructurings	$	60,653	$	14,132	$	74,785

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
	Performing to		Not Performing to		Troubled Debt
December 31, 2012 (in thousands)	Modified Terms		Modified Terms		Restructurings
Residential real estate loans (including home equity loans):
Interest only payments	$	957	$	624	$	1,581
Rate reduction	23,250		4,427		27,677
Principal deferral	9,041		2,092		11,133
Bankruptcies	2,225		1,093		3,318
Total residential TDRs	35,473		8,236		43,709
Commercial related and construction/land development loans:
Interest only payments	7,002		342		7,344
Rate reduction	8,573		5,142		13,715
Principal deferral	15,494		3,045		18,539
Total commercial TDRs	31,069		8,529		39,598
Total troubled debt restructurings	$	66,542	$	16,765	$	83,307

Summary of categories of TDR loan modifications that occurred during the period

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
Three Months Ended	Performing to		Not Performing to		Troubled Debt
September 30, 2013 (in thousands)	Modified Terms		Modified Terms		Restructurings
Residential real estate loans (including home equity loans):
Rate reduction	$	1,082	$	—	$	1,082
Bankruptcies	172		272		444
Total residential TDRs	1,254		272		1,526
Commercial related and construction/land development loans:
Interest only	441		145		586
Rate reduction	3,407		189		3,596
Principal deferral	1,456		—		1,456
Bankruptcies	—		167		167
Total commercial TDRs	5,304		501		5,805
Total troubled debt restructurings	$	6,558	$	773	$	7,331

The table above is inclusive of loans which were TDRs at the end of previous periods and were re-modified during the current period.

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
Three Months Ended	Performing to		Not Performing to		Troubled Debt
September 30, 2012 (in thousands)	Modified Terms		Modified Terms		Restructurings
Residential real estate loans (including home equity loans):
Interest only	$	793	$	1,103	$	1,896
Rate reduction	3,244		838		4,082
Principal deferral	3,670		85		3,755
Total residential TDRs	7,707		2,026		9,733
Commercial related and construction/land development loans:
Interest only	120		—		120
Rate reduction	534		—		534
Principal deferral	450		—		450
Total commercial TDRs	1,104		—		1,104
Total troubled debt restructurings	$	8,811	$	2,026	$	10,837

The table above is inclusive of loans which were TDRs at the end of previous periods and were re-modified during the current period.

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
Nine Months Ended	Performing to		Not Performing to		Troubled Debt
September 30, 2013 (in thousands)	Modified Terms		Modified Terms		Restructurings
Residential real estate loans (including home equity loans):
Interest only	$	165	$	—	$	165
Rate reduction	2,703		689		3,392
Principal deferral	64		160		224
Bankruptcies	1,405		826		2,231
Total residential TDRs	4,337		1,675		6,012
Commercial related and construction/land development loans:
Interest only	719		145		864
Rate reduction	3,407		189		3,596
Principal deferral	1,765		—		1,765
Bankruptcies	—		167		167
Total commercial TDRs	5,891		501		6,392
Total troubled debt restructurings	$	10,228	$	2,176	$	12,404

The table above is inclusive of loans which were TDRs at the end of previous periods and were re-modified during the current period.

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
Nine Months Ended	Performing to		Not Performing to		Troubled Debt
September 30, 2012 (in thousands)	Modified Terms		Modified Terms		Restructurings
Residential real estate loans (including home equity loans):
Interest only	$	511	$	1,727	$	2,238
Rate reduction	7,781		454		8,235
Principal deferral	6,480		1,108		7,588
Total residential TDRs	14,772		3,289		18,061
Commercial related and construction/land development loans:
Interest only	3,690		708		4,398
Rate reduction	3,277		—		3,277
Principal deferral	4,095		455		4,550
Total commercial TDRs	11,062		1,163		12,225
Total troubled debt restructurings	$	25,834	$	4,452	$	30,286

The table above is inclusive of loans which were TDRs at the end of previous periods and were re-modified during the current year.

Schedule of loans by class modified as troubled debt restructurings within the previous twelve months for which there was a payment default

Three Months Ended	Number of	Recorded
September 30, 2013 (dollars in thousands)	Loans	Investment
Residential real estate:
Owner occupied	14	$	979
Non owner occupied	—	—
Commercial real estate	2	357
Commercial real estate - purchased whole loans	—	—
Construction & land development	—	—
Commercial	1	145
Warehouse lines of credit	—	—
Home equity	1	68
Consumer:
Credit cards	—	—
Overdrafts	—	—
Other consumer	—	—
Total	18	$	1,549

Three Months Ended	Number of	Recorded
September 30, 2012 (dollars in thousands)	Loans	Investment
Residential real estate	10	$	2,131
Commercial real estate	—	—
Commercial real estate - purchased whole loans	—	—
Real estate construction	—	—
Commercial	—	—
Warehouse lines of credit	—	—
Home equity	—	—
Consumer:
Credit cards	—	—
Overdrafts	—	—
Other consumer	—	—
Total	10	$	2,131

Nine Months Ended	Number of	Recorded
September 30, 2013 (dollars in thousands)	Loans	Investment
Residential real estate:
Owner occupied	32	$	2,434
Non owner occupied	—	—
Commercial real estate	2	357
Commercial real estate - purchased whole loans	—	—
Construction & land development	—	—
Commercial	1	145
Warehouse lines of credit	—	—
Home equity	2	74
Consumer:
Credit cards	—	—
Overdrafts	—	—
Other consumer	—	—
Total	37	$	3,010

Nine Months Ended	Number of	Recorded
September 30, 2012 (dollars in thousands)	Loans	Investment
Residential real estate	11	$	2,980
Commercial real estate	3	970
Commercial real estate - purchased whole loans	—	—
Real estate construction	4	1,974
Commercial	—	—
Warehouse lines of credit	—	—
Home equity	—	—
Consumer:
Credit cards	—	—
Overdrafts	—	—
Other consumer	—	—
Total	18	$	5,924

TCB and FCB acquisitions

Loans and allowance for loan and losses

Schedule of composition of loan portfolio

	Tennessee		First		Total
	Commerce		Commercial		Acquired
September 30, 2013 (in thousands)	Bank		Bank		Banks
Residential real estate	$	9,502	$	21,110	$	30,612
Commercial real estate	13,484		50,257		63,741
Construction & land development	901		1,886		2,787
Commercial	251		3,678		3,929
Home equity	4,292		400		4,692
Consumer:
Credit cards	213		—		213
Overdrafts	3		3		6
Other consumer	81		159		240
Total loans	$	28,727	$	77,493	$	106,220

	Tennessee		First		Total
	Commerce		Commercial		Acquired
December 31, 2012 (in thousands)	Bank		Bank		Banks
Residential real estate	$	12,270	$	32,459	$	44,729
Commercial real estate	8,015		61,758		69,773
Construction & land development	4,235		3,301		7,536
Commercial	1,284		9,405		10,689
Home equity	4,183		385		4,568
Consumer:
Credit cards	321		—		321
Overdrafts	1		11		12
Other consumer	655		333		988
Total loans	$	30,964	$	107,652	$	138,616

Schedule of reconciliation of contractually-required and carrying amounts of acquired TCB and FCB loans

	Tennessee			First			Total
	Commerce			Commercial			Acquired
September 30, 2013 (in thousands)	Bank			Bank			Banks
Contractually-required principal	$	34,890		$	98,648		$	133,538
Non-accretable difference	(5,089		)	(18,433		)	(23,522		)
Accretable difference	(1,074		)	(2,722		)	(3,796		)
Total carrying value of loans	$	28,727		$	77,493		$	106,220

	Tennessee			First			Total
	Commerce			Commercial			Acquired
December 31, 2012 (in thousands)	Bank			Bank			Banks
Contractually-required principal	$	42,188		$	139,156		$	181,344
Non-accretable difference	(10,393		)	(28,870		)	(39,263		)
Accretable difference	(831		)	(2,634		)	(3,465		)
Total carrying value of loans	$	30,964		$	107,652		$	138,616

Schedule of non-performing loans and non-performing assets

	Tennessee		First		Total
	Commerce		Commercial		Acquired
September 30, 2013 (dollars in thousands)	Bank		Bank		Banks
Loans on non-accrual status(1)	$	21	$	18	$	39
Loans past due 90 days-or-more and still on accrual(2)	414		1,425		1,839
Total non-performing loans	435		1,443		1,878
Other real estate owned	705		4,798		5,503
Total non-performing assets	$	1,140	$	6,241	$	7,381

Credit Quality Ratios - Acquired Banks:
Non-performing loans to total loans	1.77	%
Non-performing assets to total loans (including OREO)	6.61	%
Non-performing assets to total assets	6.57	%

(1) Loans on non-accrual status include impaired loans.

(2) All loans past due 90 days-or-more and still accruing were PCI loans accounted for under ASC 310-30.

	Tennessee		First		Total
	Commerce		Commercial		Acquired
December 31, 2012 (dollars in thousands)	Bank		Bank		Banks
Loans on non-accrual status (1)	$	—	$	—	$	—
Loans past due 90-days-or-more and still on accrual (2)	801		2,372		3,173
Total non-performing loans	801		2,372		3,173
Other real estate owned	2,100		12,398		14,498
Total non-performing assets	$	2,901	$	14,770	$	17,671

Credit Quality Ratios - Acquired Banks:
Non-performing loans to total loans	2.29	%
Non-performing assets to total loans (including OREO)	11.54	%
Non-performing assets to total assets	8.73	%

(1) Loans on non-accrual status include impaired loans.

(2) All loans past due 90 days-or-more and still accruing were PCI loans accounted for under ASC 310-30.

Schedule of aging of the recorded investment in loans by class of loans

	30 - 59			60 - 89			Greater than			Total			Total		Total
September 30, 2013	Days			Days			90 Days			Loans			Loans Not		Acquired Bank
(dollars in thousands)	Delinquent			Delinquent			Delinquent *			Delinquent			Delinquent		Loans
Residential real estate	$	344		$	585		$	397		$	1,326		$	29,286	$	30,612
Commercial real estate	—			—			139			139			63,602		63,741
Construction & land development	—			—			96			96			2,691		2,787
Commercial	—			129			1,207			1,336			2,593		3,929
Home equity	—			—			—			—			4,692		4,692
Consumer:
Credit cards	—			—			—			—			213		213
Overdrafts	—			—			—			—			6		6
Other consumer	3			—			21			24			216		240
Total	$	347		$	714		$	1,860		$	2,921		$	103,299	$	106,220
Delinquent acquired bank loans to total acquired bank loans	0.33		%	0.67		%	1.75		%	2.75		%

	30 - 59			60 - 89			Greater than			Total			Total		Total
December 31, 2012	Days			Days			90 Days			Loans			Loans Not		Acquired Bank
(dollars in thousands)	Delinquent			Delinquent			Delinquent *			Delinquent			Delinquent		Loans
Residential real estate	$	159		$	1,430		$	729		$	2,318		$	42,411	$	44,729
Commercial real estate	—			165			698			863			68,910		69,773
Construction & land development	—			194			531			725			6,811		7,536
Commercial	—			732			1,215			1,947			8,742		10,689
Home equity	83			—			—			83			4,485		4,568
Consumer:
Credit cards	—			—			—			—			321		321
Overdrafts	—			—			—			—			12		12
Other consumer	4			27			—			31			957		988
Total	$	246		$	2,548		$	3,173		$	5,967		$	132,649	$	138,616
Delinquent acquired bank loans to total acquried bank loans	0.18		%	1.84		%	2.29		%	4.30		%

* - All loans past due 90 days-or-more, excluding PCI loans, as of September 30, 2013 and December 31, 2012 were on non-accrual status.

XML

FAIR VALUE (Details 4) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Fair Value Disclosures
Mortgage servicing rights	$ 7,157	$ 5,446
Nonrecurring basis
Fair Value Disclosures
Impaired loan on non-recurring basis	6,749	20,225
Other real estate owned	4,736	7,575
Mortgage servicing rights		3,484
Nonrecurring basis | Residential Real Estate - Owner Occupied
Fair Value Disclosures
Impaired loan on non-recurring basis	1,059	782
Other real estate owned		1,195
Nonrecurring basis | Residential Real Estate - Non Owner Occupied
Fair Value Disclosures
Impaired loan on non-recurring basis		1,788
Nonrecurring basis | Commercial real estate
Fair Value Disclosures
Impaired loan on non-recurring basis	5,415	15,618
Other real estate owned	536	1,219
Nonrecurring basis | Construction & Land Development
Fair Value Disclosures
Impaired loan on non-recurring basis		1,552
Other real estate owned	4,200	5,161
Nonrecurring basis | Commercial
Fair Value Disclosures
Impaired loan on non-recurring basis		182
Nonrecurring basis | Home equity
Fair Value Disclosures
Impaired loan on non-recurring basis	275	303
Fair Value, Inputs, Level 3 | Nonrecurring basis
Fair Value Disclosures
Impaired loan on non-recurring basis	6,749	20,225
Other real estate owned	4,736	7,575
Fair Value, Inputs, Level 3 | Nonrecurring basis | Residential Real Estate - Owner Occupied
Fair Value Disclosures
Impaired loan on non-recurring basis	1,059	782
Other real estate owned		1,195
Fair Value, Inputs, Level 3 | Nonrecurring basis | Residential Real Estate - Non Owner Occupied
Fair Value Disclosures
Impaired loan on non-recurring basis		1,788
Fair Value, Inputs, Level 3 | Nonrecurring basis | Commercial real estate
Fair Value Disclosures
Impaired loan on non-recurring basis	5,415	15,618
Other real estate owned	536	1,219
Fair Value, Inputs, Level 3 | Nonrecurring basis | Construction & Land Development
Fair Value Disclosures
Impaired loan on non-recurring basis		1,552
Other real estate owned	4,200	5,161
Fair Value, Inputs, Level 3 | Nonrecurring basis | Commercial
Fair Value Disclosures
Impaired loan on non-recurring basis		182
Fair Value, Inputs, Level 3 | Nonrecurring basis | Home equity
Fair Value Disclosures
Impaired loan on non-recurring basis	275	303
Fair Value, Inputs, Level 2 | Nonrecurring basis
Fair Value Disclosures
Mortgage servicing rights		$ 3,484

XML

LOANS AND ALLOWANCE FOR LOAN AND LOSSES (Details 11) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Impaired loans with no related allowance recorded:
Recorded Investment	$ 25,835		$ 25,835		$ 36,325
Impaired loans with allowance recorded:
Recorded Investment	78,298		78,298		69,382
Allowance for Loan Losses Allocated	7,304		7,304		8,531
Total impaired loans
Unpaid Principal Balance	106,517		106,517		108,328
Recorded Investment	104,133		104,133		105,707
Allowance for Loan Losses Allocated	7,304		7,304		8,531
Average Recorded Investment	107,061	91,966	108,967	86,359
Interest Income Recognized	1,900	1,132	3,748	2,168
Residential Real Estate - Owner Occupied
Impaired loans with no related allowance recorded:
Unpaid Principal Balance	3,152		3,152		13,299
Recorded Investment	3,147		3,147		13,107
Average Recorded Investment	6,088	28,249	9,876	25,378
Interest Income Recognized	35	177	89	397
Impaired loans with allowance recorded:
Unpaid Principal Balance	38,261		38,261		31,709
Recorded Investment	37,396		37,396		31,458
Allowance for Loan Losses Allocated	3,827		3,827		3,034
Average Recorded Investment	36,008	6,927	33,841	5,886
Interest Income Recognized	315	6	876	33
Total impaired loans
Allowance for Loan Losses Allocated	3,827		3,827		3,034
Residential Real Estate - Non Owner Occupied
Impaired loans with no related allowance recorded:
Unpaid Principal Balance	1,508		1,508		955
Recorded Investment	1,293		1,293		794
Average Recorded Investment	1,269	2,097	1,411	1,539
Interest Income Recognized		138	18	138
Impaired loans with allowance recorded:
Unpaid Principal Balance	7,082		7,082		3,695
Recorded Investment	7,082		7,082		3,625
Allowance for Loan Losses Allocated	302		302		522
Average Recorded Investment	5,688	2,270	4,661	2,249
Interest Income Recognized	166	6	208	33
Total impaired loans
Allowance for Loan Losses Allocated	302		302		522
Commercial real estate
Impaired loans with no related allowance recorded:
Unpaid Principal Balance	13,953		13,953		14,293
Recorded Investment	13,884		13,884		14,293
Average Recorded Investment	18,566	10,416	18,382	8,924
Interest Income Recognized	451	404	809	456
Impaired loans with allowance recorded:
Unpaid Principal Balance	29,622		29,622		26,710
Recorded Investment	28,608		28,608		26,300
Allowance for Loan Losses Allocated	2,302		2,302		2,919
Average Recorded Investment	26,508	27,233	26,055	26,164
Interest Income Recognized	549	236	998	738
Total impaired loans
Allowance for Loan Losses Allocated	2,302		2,302		2,919
Commercial real estate - purchased whole loans
Impaired loans with allowance recorded:
Interest Income Recognized				108
Construction & Land Development
Impaired loans with no related allowance recorded:
Unpaid Principal Balance	1,837		1,837		3,090
Recorded Investment	1,837		1,837		2,085
Average Recorded Investment	1,930	2,637	2,126	3,018
Interest Income Recognized	73	35	127	54
Impaired loans with allowance recorded:
Unpaid Principal Balance	2,090		2,090		3,416
Recorded Investment	1,994		1,994		3,183
Allowance for Loan Losses Allocated	275		275		1,157
Average Recorded Investment	2,000	5,165	2,674	6,108
Interest Income Recognized	30	36	75	116
Total impaired loans
Allowance for Loan Losses Allocated	275		275		1,157
Commercial
Impaired loans with no related allowance recorded:
Unpaid Principal Balance	4,426		4,426		4,206
Recorded Investment	4,378		4,378		4,114
Average Recorded Investment	3,460	2,096	3,770	2,127
Interest Income Recognized	204	28	413	68
Impaired loans with allowance recorded:
Unpaid Principal Balance	2,088		2,088		2,858
Recorded Investment	2,088		2,088		2,858
Allowance for Loan Losses Allocated	358		358		348
Average Recorded Investment	2,641	2,583	2,702	2,520
Interest Income Recognized	21	47	27
Total impaired loans
Allowance for Loan Losses Allocated	358		358		348
Home equity
Impaired loans with no related allowance recorded:
Unpaid Principal Balance	1,342		1,342		1,753
Recorded Investment	1,296		1,296		1,546
Average Recorded Investment	1,724	782	1,867	648
Interest Income Recognized	34		64
Impaired loans with allowance recorded:
Unpaid Principal Balance	1,027		1,027		1,874
Recorded Investment	1,001		1,001		1,874
Allowance for Loan Losses Allocated	185		185		496
Average Recorded Investment	1,026	1,297	1,289	1,675
Interest Income Recognized	21	6	41	14
Total impaired loans
Allowance for Loan Losses Allocated	185		185		496
Consumer: Other consumer
Impaired loans with no related allowance recorded:
Unpaid Principal Balance					386
Recorded Investment					386
Average Recorded Investment	37	214	221	123
Interest Income Recognized		13		13
Impaired loans with allowance recorded:
Unpaid Principal Balance	129		129		84
Recorded Investment	129		129		84
Allowance for Loan Losses Allocated	55		55		55
Average Recorded Investment	116		92
Interest Income Recognized	1		3
Total impaired loans
Allowance for Loan Losses Allocated	$ 55		$ 55		$ 55

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2013

EARNINGS PER SHARE

EARNINGS PER SHARE

10. EARNINGS PER SHARE

Class A and Class B shares participate equally in undistributed earnings. The difference in earnings per share between the two classes of common stock results solely from the 10% per share cash dividend premium paid on Class A Common Stock over that paid on Class B Common Stock.

A reconciliation of the combined Class A and Class B Common Stock numerators and denominators of the earnings per share and diluted earnings per share computations is presented below:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands, except per share data)	2013		2012		2013		2012
Net income	$	4,603	$	20,668	$	24,078	$	112,718
Weighted average shares outstanding	20,787		20,948		20,811		20,954
Effect of dilutive securities	140		81		94		78
Average shares outstanding including dilutive securities	20,927		21,029		20,905		21,032
Basic earnings per share:
Class A Common Share	$	0.22	$	0.99	$	1.16	$	5.38
Class B Common Share	0.21		0.97		1.12		5.34
Diluted earnings per share:
Class A Common Share	$	0.22	$	0.98	$	1.16	$	5.36
Class B Common Share	0.21		0.97		1.11		5.32

Stock options excluded from the detailed earnings per share calculation because their impact was antidilutive are as follows:

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2013	2012	2013	2012
Antidilutive stock options	13,500	219,350	113,000	219,350

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LOANS AND ALLOWANCE FOR LOAN AND LOSSES (Details 3) (USD $)	3 Months Ended		9 Months Ended																																					9 Months Ended	12 Months Ended															9 Months Ended	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012	Sep. 30, 2013 Residential Real Estate - Owner Occupied	Dec. 31, 2012 Residential Real Estate - Owner Occupied	Sep. 30, 2013 Residential Real Estate - Non Owner Occupied	Dec. 31, 2012 Residential Real Estate - Non Owner Occupied	Sep. 30, 2013 Commercial real estate	Dec. 31, 2012 Commercial real estate	Sep. 30, 2013 Commercial real estate - purchased whole loans	Dec. 31, 2012 Commercial real estate - purchased whole loans	Sep. 30, 2013 Construction & Land Development	Dec. 31, 2012 Construction & Land Development	Sep. 30, 2013 Commercial	Dec. 31, 2012 Commercial	Sep. 30, 2013 Warehouse lines of credit	Dec. 31, 2012 Warehouse lines of credit	Sep. 30, 2013 Home equity	Dec. 31, 2012 Home equity	Sep. 30, 2013 Consumer: Credit cards	Dec. 31, 2012 Consumer: Credit cards	Sep. 30, 2013 Consumer: Overdraft	Dec. 31, 2012 Consumer: Overdraft	Sep. 30, 2013 Consumer: Other consumer	Dec. 31, 2012 Consumer: Other consumer	Sep. 30, 2013 Pass	Dec. 31, 2012 Pass	Sep. 30, 2013 Pass Commercial real estate	Dec. 31, 2012 Pass Commercial real estate	Sep. 30, 2013 Pass Commercial real estate - purchased whole loans	Dec. 31, 2012 Pass Commercial real estate - purchased whole loans	Sep. 30, 2013 Pass Construction & Land Development	Dec. 31, 2012 Pass Construction & Land Development	Sep. 30, 2013 Pass Commercial	Dec. 31, 2012 Pass Commercial	Sep. 30, 2013 Pass Warehouse lines of credit	Dec. 31, 2012 Pass Warehouse lines of credit	Sep. 30, 2013 Special Mention	Dec. 31, 2012 Special Mention	Sep. 30, 2013 Special Mention Residential Real Estate - Owner Occupied	Dec. 31, 2012 Special Mention Residential Real Estate - Owner Occupied	Sep. 30, 2013 Special Mention Residential Real Estate - Non Owner Occupied	Dec. 31, 2012 Special Mention Residential Real Estate - Non Owner Occupied	Sep. 30, 2013 Special Mention Commercial real estate	Dec. 31, 2012 Special Mention Commercial real estate	Sep. 30, 2013 Special Mention Construction & Land Development	Dec. 31, 2012 Special Mention Construction & Land Development	Sep. 30, 2013 Special Mention Commercial	Dec. 31, 2012 Special Mention Commercial	Sep. 30, 2013 Special Mention Home equity	Dec. 31, 2012 Special Mention Home equity	Sep. 30, 2013 Special Mention Consumer: Other consumer	Dec. 31, 2012 Special Mention Consumer: Other consumer	Sep. 30, 2013 Substandard	Dec. 31, 2012 Substandard	Sep. 30, 2013 Substandard Residential Real Estate - Owner Occupied	Dec. 31, 2012 Substandard Residential Real Estate - Owner Occupied	Sep. 30, 2013 Substandard Residential Real Estate - Non Owner Occupied	Dec. 31, 2012 Substandard Residential Real Estate - Non Owner Occupied	Sep. 30, 2013 Substandard Commercial real estate	Dec. 31, 2012 Substandard Commercial real estate	Sep. 30, 2013 Substandard Construction & Land Development	Dec. 31, 2012 Substandard Construction & Land Development	Sep. 30, 2013 Substandard Commercial	Dec. 31, 2012 Substandard Commercial	Sep. 30, 2013 Substandard Home equity	Dec. 31, 2012 Substandard Home equity	Sep. 30, 2013 Substandard Consumer: Other consumer	Dec. 31, 2012 Substandard Consumer: Other consumer	Sep. 30, 2013 Purchased Credit Impaired Loans - Group 1	Dec. 31, 2012 Purchased Credit Impaired Loans - Group 1	Sep. 30, 2013 Purchased Credit Impaired Loans - Group 1 Residential Real Estate - Owner Occupied	Dec. 31, 2012 Purchased Credit Impaired Loans - Group 1 Residential Real Estate - Owner Occupied	Sep. 30, 2013 Purchased Credit Impaired Loans - Group 1 Residential Real Estate - Non Owner Occupied	Dec. 31, 2012 Purchased Credit Impaired Loans - Group 1 Residential Real Estate - Non Owner Occupied	Sep. 30, 2013 Purchased Credit Impaired Loans - Group 1 Commercial real estate	Dec. 31, 2012 Purchased Credit Impaired Loans - Group 1 Commercial real estate	Sep. 30, 2013 Purchased Credit Impaired Loans - Group 1 Construction & Land Development	Dec. 31, 2012 Purchased Credit Impaired Loans - Group 1 Construction & Land Development	Sep. 30, 2013 Purchased Credit Impaired Loans - Group 1 Commercial	Dec. 31, 2012 Purchased Credit Impaired Loans - Group 1 Commercial	Sep. 30, 2013 Purchased Credit Impaired Loans - Group 1 Consumer: Other consumer	Dec. 31, 2012 Purchased Credit Impaired Loans - Group 1 Consumer: Other consumer	Sep. 30, 2013 Purchased Credit Impaired Loans - Substandard	Sep. 30, 2013 Purchased Credit Impaired Loans - Substandard Commercial	Sep. 30, 2013 Rated Loans	Dec. 31, 2012 Rated Loans	Sep. 30, 2013 Rated Loans Residential Real Estate - Owner Occupied	Dec. 31, 2012 Rated Loans Residential Real Estate - Owner Occupied	Sep. 30, 2013 Rated Loans Residential Real Estate - Non Owner Occupied	Dec. 31, 2012 Rated Loans Residential Real Estate - Non Owner Occupied	Sep. 30, 2013 Rated Loans Commercial real estate	Dec. 31, 2012 Rated Loans Commercial real estate	Sep. 30, 2013 Rated Loans Commercial real estate - purchased whole loans	Dec. 31, 2012 Rated Loans Commercial real estate - purchased whole loans	Sep. 30, 2013 Rated Loans Construction & Land Development	Dec. 31, 2012 Rated Loans Construction & Land Development	Sep. 30, 2013 Rated Loans Commercial	Dec. 31, 2012 Rated Loans Commercial	Sep. 30, 2013 Rated Loans Warehouse lines of credit	Dec. 31, 2012 Rated Loans Warehouse lines of credit	Sep. 30, 2013 Rated Loans Home equity	Dec. 31, 2012 Rated Loans Home equity	Sep. 30, 2013 Rated Loans Consumer: Other consumer	Dec. 31, 2012 Rated Loans Consumer: Other consumer
Risk category of rated loans
Loans	$ 2,553,435,000		$ 2,553,435,000		$ 2,650,197,000	$ 1,100,633,000	$ 1,145,495,000	$ 109,641,000	$ 74,539,000	$ 766,813,000	$ 714,642,000	$ 34,017,000	$ 33,531,000	$ 53,618,000	$ 68,214,000	$ 114,416,000	$ 130,681,000	$ 122,810,000	$ 216,576,000	$ 225,556,000	$ 241,607,000	$ 8,948,000	$ 8,716,000	$ 851,000	$ 955,000	$ 16,132,000	$ 15,241,000	$ 1,012,408,000	$ 1,057,461,000	$ 697,013,000	$ 624,630,000	$ 34,017,000	$ 33,531,000	$ 48,688,000	$ 61,555,000	$ 109,880,000	$ 121,169,000	$ 122,810,000	$ 216,576,000	$ 47,732,000	$ 50,625,000	$ 28,758,000	$ 26,031,000	$ 1,487,000	$ 2,616,000	$ 13,130,000	$ 17,216,000	$ 1,712,000	$ 1,088,000	$ 2,262,000	$ 2,639,000	$ 332,000	$ 648,000	$ 51,000	$ 387,000	$ 36,177,000	$ 49,352,000	$ 9,348,000	$ 8,700,000	$ 1,601,000	$ 3,350,000	$ 21,648,000	$ 28,433,000	$ 1,822,000	$ 3,878,000	$ 95,000	$ 2,592,000	$ 1,593,000	$ 2,346,000	$ 70,000	$ 53,000	$ 50,204,000	$ 72,978,000	$ 3,138,000	$ 2,413,000	$ 8,658,000	$ 20,190,000	$ 35,022,000	$ 44,362,000	$ 1,396,000	$ 1,692,000	$ 1,956,000	$ 4,280,000	$ 34,000	$ 41,000	$ 223,000	$ 223,000	$ 1,146,744,000	$ 1,230,416,000	$ 41,244,000	$ 37,144,000	$ 11,746,000	$ 26,156,000	$ 766,813,000	$ 714,641,000	$ 34,017,000	$ 33,531,000	$ 53,618,000	$ 68,213,000	$ 114,416,000	$ 130,680,000	$ 122,810,000	$ 216,576,000	$ 1,925,000	$ 2,994,000	$ 155,000	$ 481,000
Maximum loan value for non rated loans	100,000		100,000		100,000
Maximum number of days past due for loans to be non rated	80 days		80 days		80 days
Loans modified by troubled debt restructurings during the period	$ 7,331,000	$ 10,837,000	$ 12,404,000	$ 30,286,000																																				$ 2,000,000	$ 4,000,000															$ 6,000,000	$ 11,000,000

XML

OFF BALANCE SHEET RISKS, COMMITMENTS AND CONTINGENT LIABILITIES (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Commitments and letters of credit
Loan commitment, line credit	$ 615,098	$ 539,059
Unused warehouse lines of credit
Commitments and letters of credit
Loan commitment, line credit	195,190	113,924
Unused home equity lines of credit
Commitments and letters of credit
Loan commitment, line credit	228,298	232,719
Unused loan commitments - other
Commitments and letters of credit
Loan commitment, line credit	185,934	163,523
Standby letters of credit
Commitments and letters of credit
Loan commitment, line credit	2,476	16,985
FHLB letters of credit
Commitments and letters of credit
Loan commitment, line credit	$ 3,200	$ 11,908

XML

LOANS AND ALLOWANCE FOR LOAN AND LOSSES (Details 12) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	$ 74,785	$ 83,307
TCB and FCB acquisitions
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	9,000
Residential Real Estate
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	37,735	43,709
Commercial real estate
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	28,964	31,323
Construction & Land Development
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	3,510	3,762
Commercial
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	4,576	4,513
Loans on non-accrual status
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	12,304	13,964
Minimum period for which TDRs continue to be reported as non-performing loans	6 months
Loans on non-accrual status | Residential Real Estate
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	5,487	6,951
Loans on non-accrual status | Commercial real estate
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	5,869	5,149
Loans on non-accrual status | Construction & Land Development
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	803	1,595
Loans on non-accrual status | Commercial
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	145	269
Accrual Loans
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	62,481	69,343
Accrual Loans | Residential Real Estate
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	32,248	36,758
Accrual Loans | Commercial real estate
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	23,095	26,174
Accrual Loans | Construction & Land Development
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	2,707	2,167
Accrual Loans | Commercial
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	$ 4,431	$ 4,244

XML

2012 FDIC-ASSISTED ACQUISITIONS OF FAILED BANKS (Details 4) (USD $) In Thousands, unless otherwise specified	Jan. 27, 2012 Tennessee Commerce Bank ("TCB")	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") As Previously Reported	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") 2012 Recast Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB")	Sep. 07, 2012 First Commercial Bank ("FCB") As Previously Reported	Sep. 07, 2012 First Commercial Bank ("FCB") 2012 & 2013 Recast Adjustments
Purchased loans that are within the scope of ASC Topic 310-30
Contractually-required principal and interest payments	$ 52,278	$ 52,278		$ 121,153	$ 116,940	$ 4,213
Non-accretable difference	(20,405)	(21,308)	903	(28,883)	(33,523)	4,640
Cash flows expected to be collected	31,873	30,970	903	92,270	83,417	8,853
Accretable difference	(498)	(425)	(73)	(4,646)	(2,827)	(1,819)
Fair value of loans	$ 31,375	$ 30,545	$ 830	$ 87,624	$ 80,590	$ 7,034

XML

FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2013

Fair Value Disclosures

Assets and Liabilities Measured at Fair Value on Recurring Basis

	Fair Value Measurements at
	September 30, 2013 Using:
	Quoted Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable		Total
	Assets		Inputs		Inputs		Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Financial Assets:
Securities available for sale:
U.S. Treasury securities and U.S. Government agencies	$	—	$	122,933	$	—	$	122,933
Private label mortgage backed security	—		—		5,457		5,457
Mortgage backed securities - residential	—		161,112		—		161,112
Collateralized mortgage obligations			177,218				177,218
Corporate bonds	—		14,904		—		14,904
Total securities available for sale	$	—	$	476,167	$	5,457	$	481,624
Rate lock commitments	$	—	$	401	$	—	$	401
Mortgage loans held for sale	—		9,803		—		9,803
Financial Liabilities:
Mandatory forward contracts	$	—	$	160	$	—	$	160

	Fair Value Measurements at
	December 31, 2012 Using:
	Quoted Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable		Total
	Assets		Inputs		Inputs		Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Financial Assets:
Securities available for sale:
U.S. Treasury securities and U.S. Government agencies	$	—	$	39,472	$	—	$	39,472
Private label mortgage backed security	—		—		5,687		5,687
Mortgage backed securities - residential	—		197,210		—		197,210
Collateralized mortgage obligations	—		195,877		—		195,877
Total securities available for sale	$	—	$	432,559	$	5,687	$	438,246
Mandatory forward contracts	$	—	$	47	$	—	$	47
Rate lock loan commitments	—		833		—		833
Mortgage loans held for sale	—		10,614		—		10,614

Reconciliation of the Bank's Private Label Mortgage Backed Security Measured at Fair Value on Recurring Basis

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(in thousands)	2013			2012		2013			2012
Balance, beginning of period	$	5,641		$	4,579	$	5,687		$	4,542
Total gains or losses included in earnings:
Net change in unrealized gain/(loss)	(4		)	373		418			410
Reversal of actual losses previously recorded	37			—		37			—
Principal paydowns	(217		)	—		(685		)	—
Balance, end of period	$	5,457		$	4,952	$	5,457		$	4,952

Assets Measured at Fair Value on a Non-Recurring Basis

	Fair Value Measurements at
	September 30, 2013 Using:
	Quoted Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable		Total
	Assets		Inputs		Inputs		Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Impaired loans:
Residential real estate:
Owner occupied	$	—	$	—	$	1,059	$	1,059
Commercial real estate	—		—		5,415		5,415
Home equity	—		—		275		275
Total impaired loans *	$	—	$	—	$	6,749	$	6,749
Other real estate owned:
Commercial real estate	$	—	$	—	$	536	$	536
Construction & land development	—		—		4,200		4,200
Total other real estate owned	$	—	$	—	$	4,736	$	4,736

	Fair Value Measurements at
	December 31, 2012 Using:
	Quoted Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable		Total
	Assets		Inputs		Inputs		Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Impaired loans:
Residential real estate:
Owner occupied	$	—	$	—	$	782	$	782
Non owner occupied	—		—		1,788		1,788
Commercial real estate	—		—		15,618		15,618
Construction & land development	—		—		1,552		1,552
Commercial	—		—		182		182
Home equity	—		—		303		303
Total impaired loans *	$	—	$	—	$	20,225	$	20,225
Other real estate owned:
Residential real estate:
Owner occupied	$	—	$	—	$	1,195	$	1,195
Non owner occupied	—		—		—		—
Commercial real estate	—		—		1,219		1,219
Construction & land development	—		—		5,161		5,161
Total other real estate owned	$	—	$	—	$	7,575	$	7,575
Mortgage servicing rights**	$	—	$	3,484	$	—	$	3,484

* - Impaired loan balances exclude loans measured for impairment using the present value of future cash flows.

** - Mortgage Servicing Rights at fair value only include those tranches which were considered impaired at the reported period end.

Impaired Loans Carrying Amount and Valuation Allowance

(in thousands)	September 30, 2013			December 31, 2012
Carrying amount of loans measured at fair value	$	6,568		$	23,070
Estimated selling costs considered in carrying amount	943			1,839
Valuation allowance	(762		)	(4,684		)
Total fair value	$	6,749		$	20,225

Other Real Estate Owned

(in thousands)	September 30, 2013		December 31, 2012
Carrying value of other real estate owned	$	15,247	$	26,203

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2013		2012		2013		2012
Other real estate owned write-downs	$	190	$	866	$	1,074	$	1,207

Mortgage Servicing Rights

(in thousands)	September 30, 2013		December 31, 2012
Outstanding balance	$	—	$	3,829
Valuation allowance	—		(345		)
Fair value	$	—	$	3,484

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(in thousands)	2013			2012		2013			2012
Charge (credit) to mortgage banking income due to impairment evaluation	$	(33	)	$	160	$	(345	)	$	129

Schedule of aggregate fair value, contractual balance and gain or loss

(in thousands)	September 30, 2013		December 31, 2012
Aggregate fair value	$	9,803	$	10,614
Contractual balance	9,557		10,037
Gain	246		577

Schedule of gains and losses from changes in fair value included in earnings

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(in thousands)	2013			2012		2013			2012
Interest income	$	130		$	110	$	388		$	283
Change in fair value	(218		)	82		(331		)	134
Total change in fair value	$	(88	)	$	192	$	57		$	417

Carrying Amount and Estimated Fair Values of Financial Instruments

			Fair Value Measurements at
			September 30, 2013:
									Total
	Carrying								Fair
(in thousands)	Value		Level 1		Level 2		Level 3		Value
Assets:
Cash and cash equivalents	$	141,585	$	141,585	$	—	$	—	$	141,585
Securities available for sale	481,624		—		476,167		5,457		481,624
Securities to be held to maturity	52,057		—		52,408		—		52,408
Mortgage loans held for sale	9,803		—		9,803		—		9,803
Loans, net of allowance for loan losses	2,529,943		—		—		2,568,974		2,568,974
Federal Home Loan Bank stock	28,342		—		—		—		N/A
Accrued interest receivable	8,130		—		8,130		—		8,130
Liabilities:
Non interest-bearing deposits	492,126		—		492,126		—		492,126
Transaction and money market deposits	1,259,782		—		1,259,782		—		1,259,782
Time deposits	267,877		—		270,462		—		270,462
Securities sold under agreements to repurchase and other short-term borrowings	106,373		—		106,373		—		106,373
Federal Home Loan Bank advances	587,020		—		602,458		—		602,458
Subordinated note	41,240		—		38,049		—		38,049
Accrued interest payable	1,435		—		1,435		—		1,435

			Fair Value Measurements at
			December 31, 2012:
									Total
	Carrying								Fair
(in thousands)	Value		Level 1		Level 2		Level 3		Value
Assets:
Cash and cash equivalents	$	137,691	$	137,691	$	—	$	—	$	137,691
Securities available for sale	438,246		—		432,559		5,687		438,246
Securities to be held to maturity	46,010		—		46,416		—		46,416
Mortgage loans held for sale	10,614		—		10,614		—		10,614
Loans, net of allowance for loan losses	2,626,468		—		—		2,702,686		2,702,686
Federal Home Loan Bank stock	28,377		—		—		—		N/A
Accrued interest receivable	9,245		—		9,245		—		9,245
Liabilities:
Non interest-bearing deposits	479,046		—		479,046		—		479,046
Transaction and money market deposits	1,193,339		—		1,193,339		—		1,193,339
Time deposits	310,543		—		314,972		—		314,972
Securities sold under agreements to repurchase and other short-term borrowings	250,884		—		250,884		—		250,884
Federal Home Loan Bank advances	542,600		—		576,158		—		576,158
Subordinated note	41,240		—		37,917		—		37,917
Accrued interest payable	1,403		—		1,403		—		1,403

Recurring basis

Fair Value Disclosures

Fair value inputs quantitative information

	Fair		Valuation	Unobservable
September 30, 2013 (dollars in thousands)	Value		Technique	Inputs	Range
Private label mortgage backed security	$	5,457	Discounted cash flow	Constant prepayment rate	0.67% - 7%
				Probability of default	3% - 7%
				Loss severity	60% - 81%

	Fair		Valuation	Unobservable Inputs
December 31, 2012 (dollars in thousands)	Value		Technique		Range
Private label mortgage backed security	$	5,687	Discounted cash flow	Constant prepayment rate	1% - 6%
				Probability of default	3.50% - 7%
				Loss severity	60% - 70%

Nonrecurring basis

Fair Value Disclosures

Fair value inputs quantitative information

					Range
	Fair		Valuation	Unobservable	(Weighted
September 30, 2013 (dollars in thousands)	Value		Technique	Inputs	Average)
Impaired loans - commercial real estate	$	5,415	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	0% - 26% (11%)
Impaired loans - residential real estate	$	1,334	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	0% - 25% (8%)
Other real estate owned - commercial real estate	$	536	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	11% - 26 (18%)
Other real estate owned - construction & land development	$	600	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	40% (40%)
	$	3,600	Income approach	Adjustments for differences between net operating income expectations	28% (28%)

					Range
	Fair		Valuation	Unobservable	(Weighted
December 31, 2012 (dollars in thousands)	Value		Technique	Inputs	Average)
Impaired loans - commercial real estate	$	15,230	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	0% - 50% (18%)
	$	1,940	Income approach	Adjustments for differences between net operating income expectations	12% - 12% (12%)
Impaired loans - residential real estate	$	2,873	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	2% - 60% (17%)
Impaired loans - commercial	$	182	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	0% - 50% (44%)
Other real estate owned - residential	$	1,195	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	4% - 71% (14%)
Other real estate owned - commercial real estate	$	1,219	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	1% - 33% (16%)
Other real estate owned - real estate construction	$	663	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	1% - 54% (35%)
	$	4,498	Income approach	Adjustments for differences between net operating income expectations	25% - 25% (25%)

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FEDERAL HOME LOAN BANK ("FHLB") ADVANCES (Tables)

9 Months Ended

Sep. 30, 2013

FEDERAL HOME LOAN BANK ("FHLB") ADVANCES

Federal Home Loan Bank Advances

(dollars in thousands)	September 30, 2013		December 31, 2012
Fixed interest rate advances with a weighted average interest rate of 2.12% due through 2023	$	487,020	$	442,600
Putable fixed interest rate advances with a weighted average interest rate of 4.39% due through 2017(1)	100,000		100,000
Total FHLB advances	$	587,020	$	542,600

(1) - Represents putable advances with the FHLB. These advances have original fixed rate periods ranging from one to five years with original maturities ranging from three to ten years if not put back to the Bank earlier by the FHLB. At the end of their respective fixed rate periods and on a quarterly basis thereafter, the FHLB has the right to require payoff of the advances by the Bank at no penalty. Based on market conditions at this time, the Bank does not believe that any of its putable advances are likely to be “put back” to the Bank in the short-term by the FHLB.

Aggregate Future Principal Payments on FHLB Advances

Year	(in thousands)
2013	$	10,000
2014	178,000
2015	25,000
2016	82,000
2017	135,000
Thereafter	157,020
Total	$	587,020

Investment Securities Pledged

(in thousands)	September 30, 2013		December 31, 2012
First lien, single family residential real estate	$	1,104,086	$	1,053,946
Home equity lines of credit	105,407		116,043
Multi-family commercial real estate	12,504		11,695

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LOANS AND ALLOWANCE FOR LOAN AND LOSSES (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Jun. 30, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Dec. 31, 2011
Loans disclosures
Total loans	$ 2,553,435		$ 2,650,197
Less: Allowance for loan losses	23,492	22,491	23,729	24,100	22,510	24,063
Loans, net	2,529,943		2,626,468
Tennessee Commerce Bank ("TCB")
Loans disclosures
Total loans	28,727		30,964
First Commercial Bank ("FCB")
Loans disclosures
Total loans	77,493		107,652
TCB and FCB acquisitions
Loans disclosures
Total loans	106,220		138,616
Residential Real Estate | Tennessee Commerce Bank ("TCB")
Loans disclosures
Total loans	9,502		12,270
Residential Real Estate | First Commercial Bank ("FCB")
Loans disclosures
Total loans	21,110		32,459
Residential Real Estate | TCB and FCB acquisitions
Loans disclosures
Total loans	30,612		44,729
Residential Real Estate - Owner Occupied
Loans disclosures
Total loans	1,100,633		1,145,495
Less: Allowance for loan losses	8,203	7,563	7,006	6,707	6,190	5,212
Residential Real Estate - Non Owner Occupied
Loans disclosures
Total loans	109,641		74,539
Less: Allowance for loan losses	791	642	1,049	1,239	897	1,142
Commercial real estate
Loans disclosures
Total loans	766,813		714,642
Less: Allowance for loan losses	9,180	8,763	8,843	9,001	8,271	7,724
Commercial real estate | Tennessee Commerce Bank ("TCB")
Loans disclosures
Total loans	13,484		8,015
Commercial real estate | First Commercial Bank ("FCB")
Loans disclosures
Total loans	50,257		61,758
Commercial real estate | TCB and FCB acquisitions
Loans disclosures
Total loans	63,741		69,773
Commercial real estate - purchased whole loans
Loans disclosures
Total loans	34,017		33,531
Less: Allowance for loan losses	34	34	34	40	40
Construction & Land Development
Loans disclosures
Total loans	53,618		68,214
Less: Allowance for loan losses	1,594	1,587	2,769	2,933	3,097	3,042
Construction & Land Development | Tennessee Commerce Bank ("TCB")
Loans disclosures
Total loans	901		4,235
Construction & Land Development | First Commercial Bank ("FCB")
Loans disclosures
Total loans	1,886		3,301
Construction & Land Development | TCB and FCB acquisitions
Loans disclosures
Total loans	2,787		7,536
Commercial
Loans disclosures
Total loans	114,416		130,681
Less: Allowance for loan losses	859	710	580	735	603	1,025
Commercial | Tennessee Commerce Bank ("TCB")
Loans disclosures
Total loans	251		1,284
Commercial | First Commercial Bank ("FCB")
Loans disclosures
Total loans	3,678		9,405
Commercial | TCB and FCB acquisitions
Loans disclosures
Total loans	3,929		10,689
Warehouse lines of credit
Loans disclosures
Total loans	122,810		216,576
Less: Allowance for loan losses	319	462	541	417	223	104
Home equity
Loans disclosures
Total loans	225,556		241,607
Less: Allowance for loan losses	1,873	1,932	2,348	2,411	2,691	2,984
Home equity | Tennessee Commerce Bank ("TCB")
Loans disclosures
Total loans	4,292		4,183
Home equity | First Commercial Bank ("FCB")
Loans disclosures
Total loans	400		385
Home equity | TCB and FCB acquisitions
Loans disclosures
Total loans	4,692		4,568
Consumer: Credit cards
Loans disclosures
Total loans	8,948		8,716
Less: Allowance for loan losses	270	344	210	203	192	503
Consumer: Credit cards | Tennessee Commerce Bank ("TCB")
Loans disclosures
Total loans	213		321
Consumer: Credit cards | TCB and FCB acquisitions
Loans disclosures
Total loans	213		321
Consumer: Overdraft
Loans disclosures
Total loans	851		955
Less: Allowance for loan losses	201	249	198	152	125	135
Consumer: Overdraft | Tennessee Commerce Bank ("TCB")
Loans disclosures
Total loans	3		1
Consumer: Overdraft | First Commercial Bank ("FCB")
Loans disclosures
Total loans	3		11
Consumer: Overdraft | TCB and FCB acquisitions
Loans disclosures
Total loans	6		12
Consumer: Other consumer
Loans disclosures
Total loans	16,132		15,241
Less: Allowance for loan losses	168	205	151	262	181	227
Consumer: Other consumer | Tennessee Commerce Bank ("TCB")
Loans disclosures
Total loans	81		655
Consumer: Other consumer | First Commercial Bank ("FCB")
Loans disclosures
Total loans	159		333
Consumer: Other consumer | TCB and FCB acquisitions
Loans disclosures
Total loans	$ 240		$ 988

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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3)	1 Months Ended
	Oct. 31, 2013
Sole banking center in Palm Harbor, Florida
Basis of Presentation
Regulatory notice period to close banking center	90 days
Sole banking center in Minneapolis Minnesota
Basis of Presentation
Regulatory notice period to close banking center	90 days

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INVESTMENT SECURITIES (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Securities available for sale:
Gross Amortized Cost	$ 475,734		$ 429,611
Gross Unrealized Gains	7,411		8,771
Gross Unrealized Losses	(1,521)		(136)
Fair Value	481,624		438,246
Amount of floating rate corporate bonds purchased	175,275	61,716
U.S. Treasury securities and U.S. Government agencies
Securities available for sale:
Gross Amortized Cost	122,401		38,931
Gross Unrealized Gains	615		547
Gross Unrealized Losses	(83)		(6)
Fair Value	122,933		39,472
Private label mortgage backed security
Securities available for sale:
Gross Amortized Cost	5,036		5,684
Gross Unrealized Gains	421		3
Fair Value	5,457		5,687
Mortgage backed securities - residential
Securities available for sale:
Gross Amortized Cost	156,656		190,569
Gross Unrealized Gains	4,744		6,641
Gross Unrealized Losses	(288)
Fair Value	161,112		197,210
Collateralized mortgage obligations
Securities available for sale:
Gross Amortized Cost	176,625		194,427
Gross Unrealized Gains	1,629		1,580
Gross Unrealized Losses	(1,036)		(130)
Fair Value	177,218		195,877
Corporate bonds
Securities available for sale:
Gross Amortized Cost	15,016
Gross Unrealized Gains	2
Gross Unrealized Losses	(114)
Fair Value	14,904
Amount of floating rate corporate bonds purchased	$ 20,000
Weighted average yield (as a percent)	1.36%
Weighted average life	7 years
Corporate bonds as a percentage of bank's investment portfolio	4.00%

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LOANS AND ALLOWANCE FOR LOAN AND LOSSES (Details 4) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Allowance for loan losses rollforward
Allowance for loan losses at beginning of period	$ 22,491	$ 22,510	$ 23,729	$ 24,063
Charge offs	(1,627)	(1,220)	(4,744)	(18,541)
Recoveries	428	727	2,027	4,859
Net loan (charge-offs) recoveries	(1,199)	(493)	(2,717)	(13,682)
Provision for loan losses	2,200	2,083	2,480	13,719
Allowance for loan losses at end of period	23,492	24,100	23,492	24,100
Refund Anticipation Loans
Allowance for loan losses rollforward
Charge offs				(11,097)
Recoveries	57	460	796	3,883
Net loan (charge-offs) recoveries	57	460	796	(7,214)
Provision for loan losses	(57)	(460)	(796)	7,214
Traditional Banking
Allowance for loan losses rollforward
Charge offs	(1,627)	(1,220)	(4,744)	(7,444)
Recoveries	371	267	1,231	976
Net loan (charge-offs) recoveries	(1,256)	(953)	(3,513)	(6,468)
Provision for loan losses	$ 2,257	$ 2,543	$ 3,276	$ 6,505

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SEGMENT INFORMATION (Tables)

9 Months Ended

Sep. 30, 2013

SEGMENT INFORMATION

Segment Information

	Three Months Ended September 30, 2013
(dollars in thousands)	Traditional Banking			Mortgage Banking		Republic Processing Group			Total Company
Net interest income	$	28,390		$	130	$	19		$	28,539
Provision for loan losses	2,257			—		(57		)	2,200
Net refund transfer fees	—			—		152			152
Mortgage banking income	—			1,026		—			1,026
Other non interest income	6,243			19		99			6,361
Total non interest income	6,243			1,045		251			7,539
Total non interest expenses	22,237			768		3,320			26,325
Income before income tax expense	10,139			407		(2,993		)	7,553
Income tax expense	3,856			142		(1,048		)	2,950
Net income	$	6,283		$	265	$	(1,945	)	$	4,603
Segment end of period assets	$	3,305,689		$	15,697	$	10,495		$	3,331,881
Net interest margin	3.54		%	NM		NM			3.54		%

	Three Months Ended September 30, 2012
(dollars in thousands)	Traditional Banking			Mortgage Banking		Republic Processing Group			Total Company
Net interest income	$	28,444		$	110	$	18		$	28,572
Provision for loan losses	2,543			—		(460		)	2,083
Net refund transfer fees	—			—		231			231
Mortgage banking income	—			2,274		—			2,274
Total bargain purchase gains	26,923			—		—			26,923
Other non interest income	5,387			11		19			5,417
Total non interest income	32,310			2,285		250			34,845
Total non interest expenses	26,118			851		2,793			29,762
Income before income tax expense	32,093			1,544		(2,065		)	31,572
Income tax expense	11,145			541		(782		)	10,904
Net income	$	20,948		$	1,003	$	(1,283	)	$	20,668
Segment end of period assets	$	3,413,293		$	8,765	$	13,718		$	3,435,776
Net interest margin	3.54		%	NM		NM			3.54		%

	Nine Months Ended September 30, 2013
(dollars in thousands)	Traditional Banking			Mortgage Banking		Republic Processing Group			Total Company
Net interest income	$	85,957		$	388	$	91		$	86,436
Provision for loan losses	3,276			—		(796		)	2,480
Net refund transfer fees	—			—		13,849			13,849
Mortgage banking income	—			6,480		—			6,480
Bargain purchase gain - FCB	1,324			—		—			1,324
Other non interest income	18,300			102		792			19,194
Total non interest income	19,624			6,582		14,641			40,847
Total non interest expenses	72,862			2,537		11,927			87,326
Income before income tax expense	29,443			4,433		3,601			37,477
Income tax expense	10,588			1,551		1,260			13,399
Net income	$	18,855		$	2,882	$	2,341		$	24,078
Segment end of period assets	$	3,305,689		$	15,697	$	10,495		$	3,331,881
Net interest margin	3.57		%	NM		NM			3.55		%

	Nine Months Ended September 30, 2012
(dollars in thousands)	Traditional Banking			Mortgage Banking		Republic Processing Group		Total Company
Net interest income	$	84,406		$	283	$	45,415	$	130,104
Provision for loan losses	6,505			—		7,214		13,719
Net refund transfer fees	—			—		78,127		78,127
Mortgage banking income	—			5,591		—		5,591
Net gain on sales, calls and impairment of securities	56			—		—		56
Total bargain purchase gains	54,726			—		—		54,726
Other non interest income	17,005			27		208		17,240
Total non interest income	71,787			5,618		78,335		155,740
Total non interest expenses	76,752			2,928		18,686		98,366
Income before income tax expense	72,936			2,973		97,850		173,759
Income tax expense	25,150			1,041		34,850		61,041
Net income	$	47,786		$	1,932	$	63,000	$	112,718
Segment end of period assets	$	3,413,293		$	8,765	$	13,718	$	3,435,776
Net interest margin	3.51		%	NM		NM		5.11		%

NM — Not Meaningful

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FAIR VALUE (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Financial Assets:
Securities available for sale	$ 481,624		$ 481,624		$ 438,246
Financial Liabilities:
Transfers between Level 1, 2 or 3	0	0	0	0
U.S. Treasury securities and U.S. Government agencies
Financial Assets:
Securities available for sale	122,933		122,933		39,472
Private label mortgage backed security
Financial Assets:
Securities available for sale	5,457		5,457		5,687
Mortgage backed securities - residential
Financial Assets:
Securities available for sale	161,112		161,112		197,210
Collateralized mortgage obligations
Financial Assets:
Securities available for sale	177,218		177,218		195,877
Corporate bonds
Financial Assets:
Securities available for sale	14,904		14,904
Fair Value, Inputs, Level 2
Financial Assets:
Securities available for sale	476,167		476,167		432,559
Fair Value, Inputs, Level 3
Financial Assets:
Securities available for sale	5,457		5,457		5,687
Recurring basis | Fair Value, Inputs, Level 2
Financial Assets:
Securities available for sale	476,167		476,167		432,559
Mandatory forward contracts					47
Rate lock loan commitments	401		401		833
Mortgage loans held for sale	9,803		9,803		10,614
Financial Liabilities:
Mandatory forward contracts	160		160
Recurring basis | Fair Value, Inputs, Level 2 | U.S. Treasury securities and U.S. Government agencies
Financial Assets:
Securities available for sale	122,933		122,933		39,472
Recurring basis | Fair Value, Inputs, Level 2 | Mortgage backed securities - residential
Financial Assets:
Securities available for sale	161,112		161,112		197,210
Recurring basis | Fair Value, Inputs, Level 2 | Collateralized mortgage obligations
Financial Assets:
Securities available for sale	177,218		177,218		195,877
Recurring basis | Fair Value, Inputs, Level 2 | Corporate bonds
Financial Assets:
Securities available for sale	14,904		14,904
Recurring basis | Fair Value, Inputs, Level 3
Financial Assets:
Securities available for sale	5,457		5,457		5,687
Recurring basis | Fair Value, Inputs, Level 3 | Private label mortgage backed security
Financial Assets:
Securities available for sale	5,457		5,457		5,687
Recurring basis | Total Fair Value
Financial Assets:
Securities available for sale	481,624		481,624		438,246
Mandatory forward contracts					47
Rate lock loan commitments	401		401		833
Mortgage loans held for sale	9,803		9,803		10,614
Financial Liabilities:
Mandatory forward contracts	160		160
Recurring basis | Total Fair Value | U.S. Treasury securities and U.S. Government agencies
Financial Assets:
Securities available for sale	122,933		122,933		39,472
Recurring basis | Total Fair Value | Private label mortgage backed security
Financial Assets:
Securities available for sale	5,457		5,457		5,687
Recurring basis | Total Fair Value | Mortgage backed securities - residential
Financial Assets:
Securities available for sale	161,112		161,112		197,210
Recurring basis | Total Fair Value | Collateralized mortgage obligations
Financial Assets:
Securities available for sale	177,218		177,218		195,877
Recurring basis | Total Fair Value | Corporate bonds
Financial Assets:
Securities available for sale	$ 14,904		$ 14,904

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FAIR VALUE (Details 9) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended				3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012	Dec. 31, 2011	Sep. 30, 2013 Mortgage Loans Held for Sale	Sep. 30, 2012 Mortgage Loans Held for Sale	Sep. 30, 2013 Mortgage Loans Held for Sale	Sep. 30, 2012 Mortgage Loans Held for Sale	Dec. 31, 2012 Mortgage Loans Held for Sale
FAIR VALUE
Loans held as assets, past due 90-days-or- more	$ 0		$ 0		$ 0
Fair value gain loss change in fair value
Aggregate fair value	9,803	3,385	9,803	3,385	10,614	4,392	9,803		9,803		10,614
Contractual balance							9,557		9,557		10,037
Gain			6,340	6,541					246		577
Interest income	28,539	28,572	86,436	130,104			130	110	388	283
Change in fair value							(218)	82	(331)	134
Total change in fair value							$ (88)	$ 192	$ 57	$ 417

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FEDERAL HOME LOAN BANK ("FHLB") ADVANCES (Details 3) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
First Lien, Single Family Residential Real Estate
Real estate loans pledged to collateralize advances and letters of credit with the FHLB
Real estate loans pledged to collateralize advances and letters of credit with FHLB	$ 1,104,086	$ 1,053,946
Home Equity
Real estate loans pledged to collateralize advances and letters of credit with the FHLB
Real estate loans pledged to collateralize advances and letters of credit with FHLB	105,407	116,043
Multi-Family Commercial Real Estate
Real estate loans pledged to collateralize advances and letters of credit with the FHLB
Real estate loans pledged to collateralize advances and letters of credit with FHLB	$ 12,504	$ 11,695

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INVESTMENT SECURITIES (Details 4) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Securities available for Sale - Amortized Cost
Due in one year or less	$ 11,185
Due from one year to five years	113,719
Due from five years to ten years	12,513
Total securities	475,734
Securities available for Sale - Fair Value
Due in one year or less	11,315
Due from one year to five years	114,146
Due from five years to ten years	12,376
Total securities	481,624
Securities held to maturity - Carrying Value
Due from one year to five years	2,329
Due from five years to ten years	5,000
Total securities	52,057	46,010
Securities held to maturity - Fair Value
Due from one year to five years	2,326
Due from five years to ten years	4,839
Fair Value	52,408	46,416
Maximum percentage of holdings of securities of any one issuer, other than the U.S. Government and its agencies	10.00%	10.00%
Private label mortgage backed security
Securities available for Sale - Amortized Cost
Securities not due at a single maturity date	5,036
Securities available for Sale - Fair Value
Securities not due at a single maturity date	5,457
Mortgage backed securities - residential
Securities available for Sale - Amortized Cost
Securities not due at a single maturity date	156,656
Securities available for Sale - Fair Value
Securities not due at a single maturity date	161,112
Securities held to maturity - Carrying Value
Securities not due at a single maturity date	423
Total securities	423	827
Securities held to maturity - Fair Value
Securities not due at a single maturity date	465
Fair Value	465	890
Collateralized mortgage obligations
Securities available for Sale - Amortized Cost
Securities not due at a single maturity date	176,625
Securities available for Sale - Fair Value
Securities not due at a single maturity date	177,218
Securities held to maturity - Carrying Value
Securities not due at a single maturity date	44,305
Total securities	44,305	40,795
Securities held to maturity - Fair Value
Securities not due at a single maturity date	44,778
Fair Value	$ 44,778	$ 41,111

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FAIR VALUE (Details 6) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Impaired loans
Carrying amount of loans measured at fair value	$ 78,298	$ 69,382
Valuation allowance	(7,304)	(8,531)
Nonrecurring basis
Impaired loans
Total fair value	6,749	20,225
Fair Value, Inputs, Level 3 | Nonrecurring basis
Impaired loans
Carrying amount of loans measured at fair value	6,568	23,070
Estimated selling costs considered in carrying amount	943	1,839
Valuation allowance	(762)	(4,684)
Total fair value	$ 6,749	$ 20,225

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DEPOSITS (Tables)

9 Months Ended

Sep. 30, 2013

DEPOSITS

Ending Deposit Balances

(in thousands)	September 30, 2013		December 31, 2012
Demand	$	659,192	$	580,900
Money market accounts	495,619		514,698
Brokered money market accounts	33,212		35,596
Savings	71,759		62,145
Individual retirement accounts*	29,219		32,491
Time deposits, $100,000 and over*	69,584		80,906
Other certificates of deposit*	79,494		100,036
Brokered certificates of deposit*(1)	89,580		97,110
Total interest-bearing deposits	1,527,659		1,503,882
Total non interest-bearing deposits	492,126		479,046
Total deposits	$	2,019,785	$	1,982,928

(*) — Represents a time deposit.

(1) — Includes brokered deposits less than, equal to and greater than $100,000.

Composition of deposits related to the acquisition of failed banks

	Tennessee		First		Total
	Commerce		Commercial		Acquired
September 30, 2013 (in thousands)	Bank		Bank		Banks
Demand	$	1,053	$	2,123	$	3,176
Money market accounts	2,298		9,222		11,520
Savings	4,834		1		4,835
Individual retirement accounts*	563		1,159		1,722
Time deposits, $100,000 and over*	4,481		2,810		7,291
Other certificates of deposit*	2,373		4,921		7,294
Brokered certificates of deposit*(1)	3,251		3,926		7,177
Total interest-bearing deposits	18,853		24,162		43,015
Total non interest-bearing deposits	3,290		4,419		7,709
Total deposits	$	22,143	$	28,581	$	50,724

(*) — Represents a time deposit.

(1) — Includes brokered deposits less than, equal to and greater than $100,000.

	Tennessee		First		Total
	Commerce		Commercial		Acquired
December 31, 2012 (in thousands)	Bank		Bank		Banks
Demand	$	10,024	$	5,871	$	15,895
Money market accounts	1,510		25,762		27,272
Savings	217		—		217
Individual retirement accounts*	1,166		3,269		4,435
Time deposits, $100,000 and over*	10,822		3,267		14,089
Other certificates of deposit*	7,196		12,574		19,770
Brokered certificates of deposit*(1)	6,729		12,247		18,976
Total interest-bearing deposits	37,664		62,990		100,654
Total non interest-bearing deposits	4,240		6,812		11,052
Total deposits	$	41,904	$	69,802	$	111,706

(*) — Represents a time deposit.

(1) — Includes brokered deposits less than, equal to and greater than $100,000.

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CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (USD $) In Thousands, unless otherwise specified	Total USD ($)	Class A Common Stock USD ($)	Class B Common Stock USD ($)	Common Stock USD ($)	Common Stock Class A Common Stock	Common Stock Class B Common Stock	Additional Paid In Capital USD ($)	Retained Earnings USD ($)	Retained Earnings Class A Common Stock USD ($)	Retained Earnings Class B Common Stock USD ($)	Accumulated Other Comprehensive Income USD ($)
Balance at Dec. 31, 2012	$ 536,702			$ 4,932			$ 132,686	$ 393,472			$ 5,612
Balance (in shares) at Dec. 31, 2012					18,694	2,271
Increase (Decrease) in Stockholders' Equity
Net income	24,078							24,078
Net change in accumulated other comprehensive income	(1,783)										(1,783)
Dividend declared Common Stock:
Dividend declared Common Stock		(9,459)	(1,062)						(9,459)	(1,062)
Stock options exercised, net of shares redeemed	295			4			438	(147)
Stock options exercised, net of shares redeemed (in shares)					17
Repurchase of Class A Common Stock	(4,095)			(43)			(1,230)	(2,822)
Repurchase of Class A Common Stock (in shares)					(193)
Conversion of Class B Common Stock to Class A Common Stock					11	(11)
Net change in notes receivable on Common Stock	281						281
Deferred director compensation expense - Company Stock	152						152
Deferred director compensation expense - Company Stock (in shares)					5
Stock based compensation expense - restricted stock	224						224
Stock based compensation expense - options	177						177
Balance at Sep. 30, 2013	$ 545,510			$ 4,893			$ 132,728	$ 404,060			$ 3,829
Balance (in shares) at Sep. 30, 2013					18,534	2,260

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
OPERATING ACTIVITIES:
Net income	$ 24,078	$ 112,718
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion, net	929	7,348
Provision for loan losses	2,480	13,719
Net gain on sale of mortgage loans held for sale	(6,340)	(6,541)
Origination of mortgage loans held for sale	(263,411)	(172,305)
Proceeds from sale of mortgage loans held for sale	270,562	179,853
Net realized impairment (recovery) of mortgage servicing rights	(345)	129
Net realized gain on sales, calls and impairment of securities		(56)
Net gain on sale of other real estate owned	(1,714)	(381)
Writedowns of other real estate owned	1,074	1,207
Deferred director compensation expense - Company Stock	152	140
Stock based compensation expense	401	655
Bargain purchase gains on acquisitions	(1,324)	(54,726)
Net change in other assets and liabilities:
Accrued interest receivable	1,115	(409)
Accrued interest payable	32	(228)
Other assets	4,137	5,864
Other liabilities	(7,447)	16,347
Net cash provided by operating activities	24,379	103,334
INVESTING ACTIVITIES:
Net cash received in FDIC-assisted transactions		921,161
Purchases of securities available for sale	(175,275)	(61,716)
Purchases of securities to be held to maturity	(15,000)	(23,115)
Proceeds from calls, maturities and paydowns of securities available for sale	129,041	193,403
Proceeds from calls, maturities and paydowns of securities to be held to maturity	8,900	3,354
Proceeds from sales of securities available for sale		38,724
Proceeds from sales of Federal Home Loan Bank stock	35	62
Proceeds from sales of other real estate owned	19,642	21,688
Net change in loans	92,881	(184,454)
Net purchases of premises and equipment	(3,275)	(2,499)
Net cash provided by investing activities	56,949	906,608
FINANCING ACTIVITIES:
Net change in deposits	36,857	(822,074)
Net change in securities sold under agreements to repurchase and other short-term borrowings	(144,511)	(60,392)
Payments of Federal Home Loan Bank advances	(25,580)	(589,208)
Proceeds from Federal Home Loan Bank advances	70,000	205,000
Repurchase of Common Stock	(4,095)	(386)
Net proceeds from Common Stock options exercised	295	147
Cash dividends paid	(10,400)	(9,813)
Net cash used in financing activities	(77,434)	(1,276,726)
NET CHANGE IN CASH AND CASH EQUIVALENTS	3,894	(266,784)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	137,691	362,971
CASH AND CASH EQUIVALENTS AT END OF PERIOD	141,585	96,187
Cash paid during the period for:
Interest	16,061	17,653
Income taxes	26,674	68,603
SUPPLEMENTAL NONCASH DISCLOSURES
Transfers from loans to real estate acquired in settlement of loans	8,690	16,018
Loans provided for sales of other real estate owned	$ 644	$ 591

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INVESTMENT SECURITIES

9 Months Ended

Sep. 30, 2013

INVESTMENT SECURITIES

INVESTMENT SECURITIES

3. INVESTMENT SECURITIES

Securities available for sale:

The gross amortized cost and fair value of securities available for sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income were as follows:

	Gross		Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
September 30, 2013 (in thousands)	Cost		Gains		Losses			Value
U.S. Treasury securities and U.S. Government agencies	$	122,401	$	615	$	(83	)	$	122,933
Private label mortgage backed security	5,036		421		—			5,457
Mortgage backed securities - residential	156,656		4,744		(288		)	161,112
Collateralized mortgage obligations	176,625		1,629		(1,036		)	177,218
Corporate bonds	15,016		2		(114		)	14,904
Total securities available for sale	$	475,734	$	7,411	$	(1,521	)	$	481,624

	Gross		Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
December 31, 2012 (in thousands)	Cost		Gains		Losses			Value
U.S. Treasury securities and U.S. Government agencies	$	38,931	$	547	$	(6	)	$	39,472
Private label mortgage backed security	5,684		3		—			5,687
Mortgage backed securities - residential	190,569		6,641		—			197,210
Collateralized mortgage obligations	194,427		1,580		(130		)	195,877
Total securities available for sale	$	429,611	$	8,771	$	(136	)	$	438,246

Securities to be held to maturity:

The carrying value, gross unrecognized gains and losses, and fair value of securities to be held to maturity were as follows:

			Gross		Gross
	Carrying		Unrecognized		Unrecognized			Fair
September 30, 2013 (in thousands)	Value		Gains		Losses			Value
U.S. Treasury securities and U.S. Government agencies	$	2,329	$	9	$	(12	)	$	2,326
Mortgage backed securities - residential	423		42		—			465
Collateralized mortgage obligations	44,305		487		(14		)	44,778
Corporate bonds	5,000		—		(161		)	4,839
Total securities to be held to maturity	$	52,057	$	538	$	(187	)	$	52,408

			Gross		Gross
	Carrying		Unrecognized		Unrecognized		Fair
December 31, 2012 (in thousands)	Value		Gains		Losses		Value
U.S. Treasury securities and U.S. Government agencies	$	4,388	$	27	$	—	$	4,415
Mortgage backed securities - residential	827		63		—		890
Collateralized mortgage obligations	40,795		316		—		41,111
Total securities to be held to maturity	$	46,010	$	406	$	—	$	46,416

During the three and nine months ended September 30, 2013, there were no sales or calls of securities available for sale. During the nine months ended September 30, 2012, the Bank recognized net securities gains in earnings for securities available for sale as follows:

· The Bank sold six available for sale securities acquired in the TCB acquisition with an amortized cost of $35 million, resulting in a pre-tax gain of $53,000 during the first quarter of 2012.

· The Bank realized $3,000 in pre-tax gains related to unamortized discount accretion on $10 million of callable U.S. Government agencies that were called before their maturity during the first quarter of 2012.

The tax provision related to the Bank’s realized gains totaled $0 and $20,000 for the three and nine months ended September 30, 2012, respectively.

The amortized cost and fair value of the investment securities portfolio by contractual maturity at September 30, 2013 follows. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations whether or not there are associated call or prepayment penalties. Securities not due at a single maturity date are detailed separately.

	Securities				Securities
	available for sale				held to maturity
	Amortized		Fair		Carrying		Fair
September 30, 2013 (in thousands)	Cost		Value		Value		Value
Due in one year or less	$	11,185	$	11,315	$	—	$	—
Due from one year to five years	113,719		114,146		2,329		2,326
Due from five years to ten years	12,513		12,376		5,000		4,839
Due beyond ten years	—		—		—		—
Private label mortgage backed security	5,036		5,457		—		—
Mortgage backed securities - residential	156,656		161,112		423		465
Collateralized mortgage obligations	176,625		177,218		44,305		44,778
Total securities	$	475,734	$	481,624	$	52,057	$	52,408

Corporate Bonds

During the nine months ended September 30, 2013, the Bank purchased $20 million in floating rate corporate bonds with an initial weighted average yield of 1.36%. The bonds, which have a weighted average life of seven years, were rated “investment grade” by accredited rating agencies as of their respective purchase dates. The total fair value of the Bank’s corporate bonds represented 4% of the Bank’s investment portfolio as of September 30, 2013.

Mortgage backed Securities

At September 30, 2013, with the exception of the $6 million private label mortgage backed security, all other mortgage backed securities held by the Bank were issued by U.S. government-sponsored entities and agencies, primarily Freddie Mac (“FHLMC”) and Fannie Mae (“FNMA”), institutions that the government has affirmed its commitment to support. At September 30, 2013 and December 31, 2012, there were gross unrealized/unrecognized losses of $1.3 million and $130,000 related to available for sale mortgage backed securities. Because the decline in fair value of these mortgage backed securities is attributable to changes in interest rates and illiquidity, and not credit quality, and because the Bank does not have the intent to sell these mortgage backed securities, and it is likely that it will not be required to sell the securities before their anticipated recovery, management does not consider these securities to be other-than-temporarily impaired.

At September 30, 2013 and December 31, 2012, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity.

Market Loss Analysis

Securities with unrealized losses at September 30, 2013 and December 31, 2012, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows:

	Less than 12 months					12 months or more				Total
September 30, 2013 (in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available for sale
U.S. Treasury securities and U.S. Government agencies	$	11,321	$	(83	)	$	—	$	—	$	11,321	$	(83	)
Mortgage backed securities - residential	19,153		(288		)	—		—		19,153		(288		)
Collateralized mortgage obligations	40,356		(1,036		)	—		—		40,356		(1,036		)
Corporate bonds	9,886		(114		)	—		—		9,886		(114		)
Total available for sale	$	80,716	$	(1,521	)	$	—	$	—	$	80,716	$	(1,521	)

	Less than 12 months					12 months or more				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Held to maturity
U.S. Treasury securities and U.S. Government agencies	$	524	$	(12	)	$	—	$	—	$	524	$	(12	)
Collateralized mortgage obligations	9,741		(14		)	—		—		9,741		(14		)
Corporate bonds	4,839		(161		)	—		—		4,839		(161		)
Total held to maturity	$	15,104	$	(187	)	$	—	$	—	$	15,104	$	(187	)

	Less than 12 months					12 months or more				Total
December 31, 2012 (in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available for sale
U.S. Treasury securities and U.S. Government agencies	$	3,588	$	(6	)	$	—	$	—	$	3,588	$	(6	)
Collateralized mortgage obligations	20,508		(130		)	—		—		20,508		(130		)
Total available for sale	$	24,096	$	(136	)	$	—	$	—	$	24,096	$	(136	)

At September 30, 2013, the Bank’s security portfolio consisted of 165 securities, 19 of which were in an unrealized loss position. At December 31, 2012, the Bank’s security portfolio consisted of 153 securities, seven of which were in an unrealized loss position.

Other-than-temporary impairment (“OTTI”)

Unrealized losses for all investment securities are reviewed to determine whether the losses are “other-than-temporary.” Investment securities are evaluated for OTTI on at least a quarterly basis and more frequently when economic or market conditions warrant such an evaluation to determine whether a decline in their value below amortized cost is other-than-temporary. In conducting this assessment, the Bank evaluates a number of factors including, but not limited to:

· The length of time and the extent to which fair value has been less than the amortized cost basis;

· The Bank’s intent to hold until maturity or sell the debt security prior to maturity;

· An analysis of whether it is more likely than not that the Bank will be required to sell the debt security before its anticipated recovery;

· Adverse conditions specifically related to the security, an industry, or a geographic area;

· The historical and implied volatility of the fair value of the security;

· The payment structure of the security and the likelihood of the issuer being able to make payments;

· Failure of the issuer to make scheduled interest or principal payments;

· Any rating changes by a rating agency; and

· Recoveries or additional decline in fair value subsequent to the balance sheet date.

The term “other-than-temporary” is not intended to indicate that the decline in fair value is permanent, but indicates that the prospects for a near-term recovery of value are not necessarily favorable, or that there is a general lack of evidence to support a realizable value equal to or greater than the carrying value of the investment. Once a decline in value is determined to be other-than-temporary, the value of the security is reduced and a corresponding charge to earnings is recognized for the anticipated credit losses.

The Bank owns one private label mortgage backed security with a total carrying value of $6 million at September 30, 2013. This security, with an average remaining life currently estimated at four years, is mostly backed by “Alternative A” first lien mortgage loans, but also has an insurance “wrap” or guarantee as an added layer of protection to the security holder. This asset is illiquid, and as such, the Bank determined it to be a Level 3 security in accordance with ASC Topic 820, Fair Value Measurements and Disclosures. Based on this determination, the Bank utilized an income valuation model (“present value model”) approach, in determining the fair value of the security. This approach is beneficial for positions that are not traded in active markets or are subject to transfer restrictions, and/or where valuations are adjusted to reflect illiquidity and/or non-transferability. Such adjustments are generally based on available market evidence. In the absence of such evidence, management’s best estimate is used. Management’s best estimate consists of both internal and external support for this investment.

See additional discussion regarding the Bank’s private label mortgage backed security under Footnote 7 “Fair Value” in this section of the filing.

Pledged Investment Securities

Investment securities pledged to secure public deposits, securities sold under agreements to repurchase and securities held for other purposes, as required or permitted by law are as follows:

(in thousands)	September 30, 2013		December 31, 2012
Carrying amount	$	177,286	$	334,560
Fair value	177,761		334,843

XML

FAIR VALUE (Details 10) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Assets:
Securities available for sale	$ 481,624	$ 438,246
Securities to be held to maturity	52,408	46,416
Fair Value, Inputs, Level 1
Assets:
Cash and cash equivalents	141,585	137,691
Fair Value, Inputs, Level 2
Assets:
Securities available for sale	476,167	432,559
Securities to be held to maturity	52,408	46,416
Mortgage loans held for sale	9,803	10,614
Accrued interest receivable	8,130	9,245
Liabilities:
Securities sold under agreements to repurchase and other short-term borrowings	106,373	250,884
Federal Home Loan Bank advances	602,458	576,158
Subordinated note	38,049	37,917
Accrued interest payable	1,435	1,403
Fair Value, Inputs, Level 2 | Non Interest Bearing Deposits
Liabilities:
Deposit liabilities, fair value	492,126	479,046
Fair Value, Inputs, Level 2 | Transaction and money market deposits
Liabilities:
Deposit liabilities, fair value	1,259,782	1,193,339
Fair Value, Inputs, Level 2 | Time deposits
Liabilities:
Deposit liabilities, fair value	270,462	314,972
Fair Value, Inputs, Level 3
Assets:
Securities available for sale	5,457	5,687
Loans, net of allowance for loan losses	2,568,974	2,702,686
Carrying Value
Assets:
Cash and cash equivalents	141,585	137,691
Securities available for sale	481,624	438,246
Securities to be held to maturity	52,057	46,010
Mortgage loans held for sale	9,803	10,614
Loans, net of allowance for loan losses	2,529,943	2,626,468
Federal Home Loan Bank stock	28,342	28,377
Accrued interest receivable	8,130	9,245
Liabilities:
Securities sold under agreements to repurchase and other short-term borrowings	106,373	250,884
Federal Home Loan Bank advances	587,020	542,600
Subordinated note	41,240	41,240
Accrued interest payable	1,435	1,403
Carrying Value | Non Interest Bearing Deposits
Liabilities:
Deposit liabilities, fair value	492,126	479,046
Carrying Value | Transaction and money market deposits
Liabilities:
Deposit liabilities, fair value	1,259,782	1,193,339
Carrying Value | Time deposits
Liabilities:
Deposit liabilities, fair value	267,877	310,543
Total Fair Value
Assets:
Cash and cash equivalents	141,585	137,691
Securities available for sale	481,624	438,246
Securities to be held to maturity	52,408	46,416
Mortgage loans held for sale	9,803	10,614
Loans, net of allowance for loan losses	2,568,974	2,702,686
Accrued interest receivable	8,130	9,245
Liabilities:
Securities sold under agreements to repurchase and other short-term borrowings	106,373	250,884
Federal Home Loan Bank advances	602,458	576,158
Subordinated note	38,049	37,917
Accrued interest payable	1,435	1,403
Total Fair Value | Non Interest Bearing Deposits
Liabilities:
Deposit liabilities, fair value	492,126	479,046
Total Fair Value | Transaction and money market deposits
Liabilities:
Deposit liabilities, fair value	1,259,782	1,193,339
Total Fair Value | Time deposits
Liabilities:
Deposit liabilities, fair value	$ 270,462	$ 314,972

XML

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2013

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation — The consolidated financial statements include the accounts of Republic Bancorp, Inc. (the “Parent Company”) and its wholly-owned subsidiaries: Republic Bank & Trust Company (“RB&T”) and Republic Bank (“RB”) (collectively referred together as the “Bank”). Republic Invest Co., a former subsidiary of RB&T, and its subsidiary, Republic Capital LLC, were dissolved in April 2013 in connection with the full repayment by RB&T of intragroup subordinated debentures issued by Republic Capital LLC in a 2004 intragroup trust preferred transaction. All companies are collectively referred to as “Republic” or the “Company.” All significant intercompany balances and transactions are eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the three and nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. For further information, refer to the consolidated financial statements and footnotes thereto included in Republic’s Form 10-K for the year ended December 31, 2012.

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

Traditional Banking and Mortgage Banking (collectively “Core Banking”)

As of September 30, 2013, in addition to an Internet delivery channel, Republic had 45 full-service banking centers with locations as follows:

· Kentucky — 34

· Metropolitan Louisville — 20

· Central Kentucky — 11

· Elizabethtown — 1

· Frankfort — 1

· Georgetown — 1

· Lexington — 5

· Owensboro — 2

· Shelbyville — 1

· Northern Kentucky — 3

· Covington — 1

· Florence — 1

· Independence — 1

· Southern Indiana — 3

· Floyds Knobs — 1

· Jeffersonville — 1

· New Albany — 1

· Metropolitan Tampa, Florida — 4

· Metropolitan Cincinnati, Ohio — 1

· Metropolitan Nashville, Tennessee — 2

· Metropolitan Minneapolis, Minnesota — 1

In October 2013, Republic gave the required 90-day regulatory notice of its intentions to close its sole banking center in Palm Harbor, Florida. This location is expected to close in January 2014 with the lease for the premises expiring in February 2014.

In October 2013, Republic gave the required 90-day regulatory notice of its intentions to close its sole banking center in Minneapolis, Minnesota, which it acquired in connection with the First Commercial Bank (“FCB”) acquisition in September 2012.  The Bank is currently under a lease for this location which is set to expire in April 2015. The Bank intends to repurpose the location as a support office until the expiration of its lease or until such time that it is able to negotiate with the landlord a buy-out of its future lease obligations. The banking center is expected to stop transacting business at the Minnesota location with deposit customers in January 2014.

Core Banking results of operations are primarily dependent upon net interest income, which represents the difference between the interest income and fees on interest-earning assets and the interest expense on interest-bearing liabilities. Principal interest-earning Core Banking assets represent investment securities and real estate, commercial and consumer loans. Interest-bearing liabilities primarily consist of interest-bearing deposit accounts, securities sold under agreements to repurchase, as well as short-term and long-term borrowing sources. The Bank also provides short-term, revolving credit facilities to mortgage bankers across the nation through warehouse lines of credit. These credit facilities are secured by single family, first lien residential real estate loans.

Other sources of Core Banking income include service charges on deposit accounts, debit card interchange fee income, title insurance commissions, fees charged to customers for trust services and revenue generated from Mortgage Banking activities. Mortgage Banking activities represent both the origination and sale of loans in the secondary market and the servicing of loans for others, primarily the Federal Home Loan Mortgage Corporation (“Freddie Mac” or “FHLMC”).

Core Banking operating expenses consist primarily of salaries and employee benefits, occupancy and equipment expenses, communication and transportation costs, data processing, debit card interchange expenses, marketing and development expenses, FDIC insurance expense, and various general and administrative costs. Core Banking results of operations are significantly impacted by general economic and competitive conditions, particularly changes in market interest rates, government laws and policies and actions of regulatory agencies.

Republic Processing Group

Nationally, through RB&T, RPG facilitates the receipt and payment of federal and state tax refunds under the TRS division, primarily through refund transfers (“RT”s). RTs are products whereby a tax refund is issued to the taxpayer after RB&T has received the refund from the federal or state government. There is no credit risk or borrowing costs associated with these products, because they are only delivered to the taxpayer upon receipt of the tax refund directly from the governmental paying authority.  Fees earned on RTs, net of rebates, are the primary source of revenue for the TRS division and the RPG segment, and are reported as non-interest income under the line item “Net refund transfer fees.”

The TRS division historically originated and obtained a significant source of revenue from Refund Anticipation Loans (“RAL”s), but terminated this product effective April 30, 2012. RALs were short-term consumer loans offered to taxpayers that were secured by the customer’s anticipated tax refund, which represented the sole source of repayment. The fees earned on RALs for the applicable reporting period in 2012 were reported as interest income under the line item “Loans, including fees.”

Through RB, the RPS division is an issuing bank offering general purpose reloadable prepaid debit cards through third party program managers. Through RB&T, the RCS division is piloting short-term consumer credit products.

Reclassifications and recasts — Certain amounts presented in prior periods have been reclassified to conform to the current period presentation. These reclassifications had no impact on previously reported prior periods’ net income. Additionally, as discussed in Footnote 2 “2012 FDIC-Assisted Acquisitions of Failed Banks,” during the first quarter of 2013 the Bank posted adjustments to the First Commercial Bank (“FCB”) acquired assets in the determination of acquisition day (“day-one”) fair values, which resulted in a $1.3 million increase to the bargain purchase gain presented.

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INVESTMENT SECURITIES (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Securities to be held to maturity:
Carrying Value	$ 52,057	$ 46,010
Gross Unrecognized Gains	538	406
Gross Unrecognized Losses	(187)
Fair Value	52,408	46,416
U.S. Treasury securities and U.S. Government agencies
Securities to be held to maturity:
Carrying Value	2,329	4,388
Gross Unrecognized Gains	9	27
Gross Unrecognized Losses	(12)
Fair Value	2,326	4,415
Mortgage backed securities - residential
Securities to be held to maturity:
Carrying Value	423	827
Gross Unrecognized Gains	42	63
Fair Value	465	890
Collateralized mortgage obligations
Securities to be held to maturity:
Carrying Value	44,305	40,795
Gross Unrecognized Gains	487	316
Gross Unrecognized Losses	(14)
Fair Value	44,778	41,111
Corporate bonds
Securities to be held to maturity:
Carrying Value	5,000
Gross Unrecognized Losses	(161)
Fair Value	$ 4,839

XML

MORTGAGE BANKING ACTIVITIES (Tables)

9 Months Ended

Sep. 30, 2013

MORTGAGE BANKING ACTIVITIES

Activity for Mortgage Loans Held for Sale

September 30, (in thousands)	2013			2012
Balance, January 1	$	10,614		$	4,392
Origination of mortgage loans held for sale	263,411			172,305
Proceeds from the sale of mortgage loans held for sale	(270,562		)	(179,853		)
Net gain on sale of mortgage loans held for sale	6,340			6,541
Balance, September 30	$	9,803		$	3,385

Components of Mortgage Banking Income

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in thousands)	2013			2012			2013			2012
Net gain realized on sale of mortgage loans held for sale	$	1,633		$	2,705		$	7,310		$	5,890
Net change in fair value recognized on loans held for sale	(218		)	82			(331		)	134
Net change in fair value recognized on rate lock commitments	(44		)	386			(432		)	909
Net change in fair value recognized on forward contracts	(439		)	(354		)	(207		)	(392		)
Net gain recognized	932			2,819			6,340			6,541
Loan servicing income	514			418			1,606			1,653
Amortization of mortgage servicing rights	(453		)	(803		)	(1,811		)	(2,474		)
Change in mortgage servicing rights valuation allowance	33			(160		)	345			(129		)
Net servicing income recognized	94			(545		)	140			(950		)
Total Mortgage Banking income	$	1,026		$	2,274		$	6,480		$	5,591

Activity for capitalized mortgage servicing rights

September 30, (in thousands)	2013			2012
Balance, January 1	$	4,777		$	6,087
Additions	2,171			1,496
Amortized to expense	(1,811		)	(2,474		)
Change in valuation allowance	345			(129		)
Balance, September 30	$	5,482		$	4,980

Valuation Allowance For Capitalized Mortgage Servicing Rights

September 30, (in thousands)	2013			2012
Balance, January 1	$	(345	)	$	(203	)
Additions	—			(171		)
Reductions credited to operations	345			42
Balance, September 30	$	—		$	(332	)

Mortgage Servicing Rights

(dollars in thousands)	September 30, 2013		December 31, 2012
Fair value of mortgage servicing rights portfolio	$	7,157	$	5,446
Prepayment speed range	115% - 350%		112% - 550%
Discount rate	10%		9%
Weighted average default rate	1.50%		1.50%
Weighted average life in years	5.90		3.89

Schedule of notional amounts and fair values of mortgage banking derivatives

	September 30, 2013				December 31, 2012
(in thousands)	Notional Amount		Fair Value		Notional Amount		Fair Value
Included in Mortgage loans held for sale:
Mortgage loans held for sale	$	9,557	$	9,803	$	10,037	$	10,614
Included in other assets:
Rate lock loan commitments	$	11,781	$	401	$	27,468	$	833
Mandatory forward contracts	—		—		36,675		47
Total included in other assets	$	11,781	$	401	$	64,143	$	880
Included in other liabilities:
Mandatory forward contracts	$	17,791	$	160	$	—	$	—

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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	9 Months Ended
	Sep. 30, 2013 segment item
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Number of operating segments	3
Basis of Presentation
Number of banking centers	45
Kentucky
Basis of Presentation
Number of banking centers	34
Metropolitan Louisville
Basis of Presentation
Number of banking centers	20
Central Kentucky
Basis of Presentation
Number of banking centers	11
Elizabethtown
Basis of Presentation
Number of banking centers	1
Frankfort
Basis of Presentation
Number of banking centers	1
Georgetown
Basis of Presentation
Number of banking centers	1
Lexington
Basis of Presentation
Number of banking centers	5
Owensboro
Basis of Presentation
Number of banking centers	2
Shelbyville
Basis of Presentation
Number of banking centers	1
Northern Kentucky
Basis of Presentation
Number of banking centers	3
Covington
Basis of Presentation
Number of banking centers	1
Florence
Basis of Presentation
Number of banking centers	1
Independence
Basis of Presentation
Number of banking centers	1
Southern Indiana
Basis of Presentation
Number of banking centers	3
Floyds Knobs
Basis of Presentation
Number of banking centers	1
Jeffersonville
Basis of Presentation
Number of banking centers	1
New Albany
Basis of Presentation
Number of banking centers	1
Metropolitan Tampa, Florida
Basis of Presentation
Number of banking centers	4
Metropolitan Cincinnati, Ohio
Basis of Presentation
Number of banking centers	1
Metropolitan Nashville, Tennessee
Basis of Presentation
Number of banking centers	2
Metropolitan Minneapolis, Minnesota
Basis of Presentation
Number of banking centers	1

XML

FAIR VALUE (Details 8) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012	Dec. 31, 2011
Mortgage servicing rights fair value disclosures
Outstanding balance	$ 5,482	$ 4,980	$ 5,482	$ 4,980	$ 4,777	$ 6,087
Valuation allowance		(332)		(332)	(345)	(203)
Fair value	7,157		7,157		5,446
Charge (credit) to mortgage banking income due to impairment evaluation	(33)	160	(345)	129
Nonrecurring basis
Mortgage servicing rights fair value disclosures
Fair value					3,484
Mortgage Servicing Rights
Mortgage servicing rights fair value disclosures
Number of tranches					21
Number of tranches carried at fair value	0		0		9
Mortgage Servicing Rights | Nonrecurring basis
Mortgage servicing rights fair value disclosures
Outstanding balance					3,829
Valuation allowance					(345)
Fair value					3,484
Charge (credit) to mortgage banking income due to impairment evaluation	$ (33)	$ 160	$ (345)	$ 129

XML

2012 FDIC-ASSISTED ACQUISITIONS OF FAILED BANKS (Details 3) (USD $)	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Total purchased loans	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Total purchased loans As Previously Reported - Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans to be repurchased by the FDIC, net of discount	Dec. 31, 2012 Tennessee Commerce Bank ("TCB") Loans to be repurchased by the FDIC, net of discount As Previously Reported - Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans to be repurchased by the FDIC, net of discount As Previously Reported - Contractual Amount	Dec. 31, 2012 Tennessee Commerce Bank ("TCB") Loans to be repurchased by the FDIC, net of discount As Previously Reported - Fair Value Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans to be repurchased by the FDIC, net of discount As Previously Reported - Fair Value Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans As Previously Reported - Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans As Previously Reported - Fair Value Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans 2012 Recast Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Residential real estate	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Residential real estate As Previously Reported - Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Residential real estate As Previously Reported - Fair Value Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Residential real estate 2012 Recast Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Commercial real estate	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Commercial real estate As Previously Reported - Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Commercial real estate As Previously Reported - Fair Value Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Commercial real estate 2012 Recast Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Construction & Land Development	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Construction & Land Development As Previously Reported - Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Construction & Land Development As Previously Reported - Fair Value Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Construction & Land Development 2012 Recast Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Commercial	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Commercial As Previously Reported - Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Commercial As Previously Reported - Fair Value Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Commercial 2012 Recast Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Home equity	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Home equity As Previously Reported - Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Home equity As Previously Reported - Fair Value Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Home equity 2012 Recast Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Consumer: Credit cards	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Consumer: Credit cards As Previously Reported - Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Consumer: Credit cards As Previously Reported - Fair Value Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Consumer: Overdraft	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Consumer: Overdraft As Previously Reported - Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Consumer: Overdraft As Previously Reported - Fair Value Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Consumer: Other consumer	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Consumer: Other consumer As Previously Reported - Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Consumer: Other consumer As Previously Reported - Fair Value Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Consumer: Other consumer 2012 Recast Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Loans	Sep. 07, 2012 First Commercial Bank ("FCB") Loans As Previously Reported - Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") Loans As Previously Reported - Fair Value Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Loans 2012 & 2013 Recast Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Residential real estate	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Residential real estate As Previously Reported - Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Residential real estate As Previously Reported - Fair Value Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Residential real estate 2012 & 2013 Recast Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Commercial real estate	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Commercial real estate As Previously Reported - Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Commercial real estate As Previously Reported - Fair Value Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Commercial real estate 2012 & 2013 Recast Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Construction & Land Development	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Construction & Land Development As Previously Reported - Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Construction & Land Development As Previously Reported - Fair Value Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Construction & Land Development 2012 & 2013 Recast Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Commercial	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Commercial As Previously Reported - Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Commercial As Previously Reported - Fair Value Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Commercial 2012 & 2013 Recast Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Home equity	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Home equity As Previously Reported - Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Home equity As Previously Reported - Fair Value Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Consumer: Overdraft	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Consumer: Overdraft As Previously Reported - Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Consumer: Other consumer	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Consumer: Other consumer As Previously Reported - Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Consumer: Other consumer As Previously Reported - Fair Value Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Consumer: Other consumer 2012 & 2013 Recast Adjustments
Fdic - assisted acquisitions of failed banks
Financial assets	$ 74,000,000	$ 99,000,000	$ 17,003,000		$ 19,800,000		$ (2,797,000)	$ 57,276,000	$ 79,112,000	$ (22,666,000)	$ 830,000	$ 18,860,000	$ 22,693,000	$ (4,076,000)	$ 243,000	$ 13,663,000	$ 18,646,000	$ (6,971,000)	$ 1,988,000	$ 10,224,000	$ 14,877,000	$ (2,681,000)	$ (1,972,000)	$ 6,781,000	$ 13,224,000	$ (6,939,000)	$ 496,000	$ 5,638,000	$ 6,220,000	$ (606,000)	$ 24,000	$ 586,000	$ 608,000	$ (22,000)	$ 51,000	$ 672,000	$ (621,000)	$ 1,473,000	$ 2,172,000	$ (750,000)	$ 51,000	$ 130,351,000	$ 171,744,000	$ (44,214,000)	$ 2,821,000	$ 38,955,000	$ 48,409,000	$ (9,634,000)	$ 180,000	$ 68,085,000	$ 82,161,000	$ (12,330,000)	$ (1,746,000)	$ 9,052,000	$ 14,918,000	$ (6,182,000)	$ 316,000	$ 13,535,000	$ 25,475,000	$ (16,060,000)	$ 4,120,000	$ 401,000	$ 404,000	$ (3,000)	$ 6,000	$ 6,000	$ 317,000	$ 371,000	$ (5,000)	$ (49,000)
Loans repurchased by the FDIC				$ 20,000,000		$ 3,000,000

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FAIR VALUE (Details 7) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Real Estate, Write-down or Reserve
Carrying value of other real estate owned	$ 15,247		$ 15,247		$ 26,203
Other real estate owned write-downs			1,074	1,207
Other Real Estate Owned
Real Estate, Write-down or Reserve
Carrying value of other real estate owned	15,247		15,247		26,203
Other real estate owned write-downs	$ 190	$ 866	$ 1,074	$ 1,207

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LOANS AND ALLOWANCE FOR LOAN AND LOSSES (Details 10) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Jun. 30, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Dec. 31, 2011
Allowance for loans losses
Individually evaluated for impairment, excluding PCI loans	$ 6,157		$ 8,528
Collectively evaluated for impairment	16,188		15,198
PCI loans with post acquisition impairment	1,147		3
Total ending allowance for loan losses	23,492	22,491	23,729	24,100	22,510	24,063
Impaired loans individually evaluated, excluding PCI loans	84,125		105,387
Loans collectively evaluated for impairment	2,418,883		2,471,832
PCI loans with post acquisition impairment	20,008		320
PCI loans without post acquisition impairment	30,419		72,658
Total carrying value of loans	2,553,435		2,650,197
Residential Real Estate - Owner Occupied
Allowance for loans losses
Individually evaluated for impairment, excluding PCI loans	3,788		3,032
Collectively evaluated for impairment	4,376		3,972
PCI loans with post acquisition impairment	39		2
Total ending allowance for loan losses	8,203	7,563	7,006	6,707	6,190	5,212
Impaired loans individually evaluated, excluding PCI loans	39,312		44,429
Loans collectively evaluated for impairment	1,058,185		1,080,792
PCI loans with post acquisition impairment	1,231		136
PCI loans without post acquisition impairment	1,905		20,138
Total carrying value of loans	1,100,633		1,145,495
Residential Real Estate - Non Owner Occupied
Allowance for loans losses
Individually evaluated for impairment, excluding PCI loans	86		521
Collectively evaluated for impairment	489		527
PCI loans with post acquisition impairment	216		1
Total ending allowance for loan losses	791	642	1,049	1,239	897	1,142
Impaired loans individually evaluated, excluding PCI loans	2,500		4,235
Loans collectively evaluated for impairment	98,482		67,974
PCI loans with post acquisition impairment	5,875		184
PCI loans without post acquisition impairment	2,784		2,146
Total carrying value of loans	109,641		74,539
Commercial real estate
Allowance for loans losses
Individually evaluated for impairment, excluding PCI loans	1,762		2,919
Collectively evaluated for impairment	6,878		5,924
PCI loans with post acquisition impairment	540
Total ending allowance for loan losses	9,180	8,763	8,843	9,001	8,271	7,724
Impaired loans individually evaluated, excluding PCI loans	31,805		40,593
Loans collectively evaluated for impairment	699,986		629,687
PCI loans with post acquisition impairment	10,687
PCI loans without post acquisition impairment	24,335		44,362
Total carrying value of loans	766,813		714,642
Commercial real estate - purchased whole loans
Allowance for loans losses
Collectively evaluated for impairment	34		34
Total ending allowance for loan losses	34	34	34	40	40
Loans collectively evaluated for impairment	34,017		33,531
Total carrying value of loans	34,017		33,531
Construction & Land Development
Allowance for loans losses
Individually evaluated for impairment, excluding PCI loans	268		1,157
Collectively evaluated for impairment	1,319		1,612
PCI loans with post acquisition impairment	7
Total ending allowance for loan losses	1,594	1,587	2,769	2,933	3,097	3,042
Impaired loans individually evaluated, excluding PCI loans	3,514		5,268
Loans collectively evaluated for impairment	48,708		61,254
PCI loans with post acquisition impairment	317
PCI loans without post acquisition impairment	1,079		1,692
Total carrying value of loans	53,618		68,214
Commercial
Allowance for loans losses
Individually evaluated for impairment, excluding PCI loans	14		348
Collectively evaluated for impairment	501		232
PCI loans with post acquisition impairment	344
Total ending allowance for loan losses	859	710	580	735	603	1,025
Impaired loans individually evaluated, excluding PCI loans	4,576		6,972
Loans collectively evaluated for impairment	107,660		119,429
PCI loans with post acquisition impairment	1,890
PCI loans without post acquisition impairment	290		4,280
Total carrying value of loans	114,416		130,681
Warehouse lines of credit
Allowance for loans losses
Collectively evaluated for impairment	319		541
Total ending allowance for loan losses	319	462	541	417	223	104
Loans collectively evaluated for impairment	122,810		216,576
Total carrying value of loans	122,810		216,576
Home equity
Allowance for loans losses
Individually evaluated for impairment, excluding PCI loans	185		496
Collectively evaluated for impairment	1,688		1,852
Total ending allowance for loan losses	1,873	1,932	2,348	2,411	2,691	2,984
Impaired loans individually evaluated, excluding PCI loans	2,297		3,420
Loans collectively evaluated for impairment	223,259		238,187
Total carrying value of loans	225,556		241,607
Consumer: Credit cards
Allowance for loans losses
Collectively evaluated for impairment	270		210
Total ending allowance for loan losses	270	344	210	203	192	503
Loans collectively evaluated for impairment	8,948		8,716
Total carrying value of loans	8,948		8,716
Consumer: Overdraft
Allowance for loans losses
Collectively evaluated for impairment	201		198
Total ending allowance for loan losses	201	249	198	152	125	135
Loans collectively evaluated for impairment	851		955
Total carrying value of loans	851		955
Consumer: Other consumer
Allowance for loans losses
Individually evaluated for impairment, excluding PCI loans	54		55
Collectively evaluated for impairment	113		96
PCI loans with post acquisition impairment	1
Total ending allowance for loan losses	168	205	151	262	181	227
Impaired loans individually evaluated, excluding PCI loans	121		470
Loans collectively evaluated for impairment	15,977		14,731
PCI loans with post acquisition impairment	8
PCI loans without post acquisition impairment	26		40
Total carrying value of loans	$ 16,132		$ 15,241

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LOANS AND ALLOWANCE FOR LOAN AND LOSSES (Details 5) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended							3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013 Residential Real Estate - Owner Occupied	Sep. 30, 2012 Residential Real Estate - Owner Occupied	Sep. 30, 2013 Residential Real Estate - Owner Occupied	Sep. 30, 2012 Residential Real Estate - Owner Occupied	Sep. 30, 2013 Residential Real Estate - Non Owner Occupied	Sep. 30, 2012 Residential Real Estate - Non Owner Occupied	Sep. 30, 2013 Residential Real Estate - Non Owner Occupied	Sep. 30, 2012 Residential Real Estate - Non Owner Occupied	Sep. 30, 2013 Commercial Real Estate	Sep. 30, 2012 Commercial Real Estate	Sep. 30, 2013 Commercial Real Estate	Sep. 30, 2012 Commercial Real Estate	Sep. 30, 2012 Commercial real estate - purchased whole loans	Sep. 30, 2013 Commercial real estate - purchased whole loans	Jun. 30, 2013 Commercial real estate - purchased whole loans	Dec. 31, 2012 Commercial real estate - purchased whole loans	Jun. 30, 2012 Commercial real estate - purchased whole loans	Sep. 30, 2013 Construction & Land Development	Sep. 30, 2012 Construction & Land Development	Sep. 30, 2013 Construction & Land Development	Sep. 30, 2012 Construction & Land Development	Sep. 30, 2013 Commercial	Sep. 30, 2012 Commercial	Sep. 30, 2013 Commercial	Sep. 30, 2012 Commercial	Sep. 30, 2013 Warehouse Lines of Credit	Sep. 30, 2012 Warehouse Lines of Credit	Sep. 30, 2013 Warehouse Lines of Credit	Sep. 30, 2012 Warehouse Lines of Credit	Sep. 30, 2013 Home Equity	Sep. 30, 2012 Home Equity	Sep. 30, 2013 Home Equity	Sep. 30, 2012 Home Equity	Sep. 30, 2013 Refund Anticipation Loans	Sep. 30, 2012 Refund Anticipation Loans	Sep. 30, 2013 Refund Anticipation Loans	Sep. 30, 2012 Refund Anticipation Loans	Sep. 30, 2013 Consumer: Credit cards	Sep. 30, 2012 Consumer: Credit cards	Sep. 30, 2013 Consumer: Credit cards	Sep. 30, 2012 Consumer: Credit cards	Sep. 30, 2013 Consumer: Overdraft	Sep. 30, 2012 Consumer: Overdraft	Sep. 30, 2013 Consumer: Overdraft	Sep. 30, 2012 Consumer: Overdraft	Sep. 30, 2013 Consumer: Other consumer	Sep. 30, 2012 Consumer: Other consumer	Sep. 30, 2013 Consumer: Other consumer	Sep. 30, 2012 Consumer: Other consumer	Sep. 30, 2012 Unallocated
Allowance for loan losses rollforward
Allowance for loan losses at beginning of period	$ 22,491	$ 22,510	$ 23,729	$ 24,063	$ 7,563	$ 6,190	$ 7,006	$ 5,212	$ 642	$ 897	$ 1,049	$ 1,142	$ 8,763	$ 8,271	$ 8,843	$ 7,724		$ 34	$ 34	$ 34	$ 40	$ 1,587	$ 3,097	$ 2,769	$ 3,042	$ 710	$ 603	$ 580	$ 1,025	$ 462	$ 223	$ 541	$ 104	$ 1,932	$ 2,691	$ 2,348	$ 2,984					$ 344	$ 192	$ 210	$ 503	$ 249	$ 125	$ 198	$ 135	$ 205	$ 181	$ 151	$ 227	$ 1,965
Allocation of previously unallocated allowance								1,117				146				47																					536								47				17				55	(1,965)
Provision for loan losses	2,200	2,083	2,480	13,719	1,198	571	2,269	2,617	157	622	(106)	255	686	743	1,192	1,513	40					16	(192)	(604)	1,604	232	140	618	(293)	(143)	194	(222)	313	104	341	(248)	765	(57)	(460)	(796)	7,214	(18)	11	166	(293)	26	26	153	(14)	(1)	87	58	(2)
Loans charged off	(1,627)	(1,220)	(4,744)	(18,541)	(578)	(348)	(1,291)	(2,422)	(67)	(20)	(225)	(318)	(307)	(37)	(972)	(353)						(16)		(616)	(1,796)	(102)	(11)	(412)	(18)					(218)	(633)	(354)	(1,947)				(11,097)	(60)	(9)	(120)	(87)	(169)	(100)	(474)	(318)	(110)	(62)	(280)	(185)
Recoveries	428	727	2,027	4,859	20	32	219	183	59	2	73	14	38	24	117	70						7	28	45	83	19	3	73	21					55	12	127	73	57	460	796	3,883	4	9	14	33	95	101	324	332	74	56	239	167
Allowance for loan losses at end of period	$ 23,492	$ 24,100	$ 23,492	$ 24,100	$ 8,203	$ 6,707	$ 8,203	$ 6,707	$ 791	$ 1,239	$ 791	$ 1,239	$ 9,180	$ 9,001	$ 9,180	$ 9,001	$ 40	$ 34	$ 34	$ 34	$ 40	$ 1,594	$ 2,933	$ 1,594	$ 2,933	$ 859	$ 735	$ 859	$ 735	$ 319	$ 417	$ 319	$ 417	$ 1,873	$ 2,411	$ 1,873	$ 2,411					$ 270	$ 203	$ 270	$ 203	$ 201	$ 152	$ 201	$ 152	$ 168	$ 262	$ 168	$ 262

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INVESTMENT SECURITIES (Details 6) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
INVESTMENT SECURITIES
Carrying amount	$ 177,286	$ 334,560
Fair value	$ 177,761	$ 334,843

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Securities to be held to maturity, fair value	$ 52,408	$ 46,416
Preferred stock, no par value	$ 0	$ 0
Class A Common Stock
Common Stock, no par value	$ 0	$ 0
Class B Common Stock
Common Stock, no par value	$ 0	$ 0

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FEDERAL HOME LOAN BANK ("FHLB") ADVANCES

9 Months Ended

Sep. 30, 2013

FEDERAL HOME LOAN BANK ("FHLB") ADVANCES

FEDERAL HOME LOAN BANK ("FHLB") ADVANCES

6.             FEDERAL HOME LOAN BANK (“FHLB”) ADVANCES

At September 30, 2013 and December 31, 2012, FHLB advances were as follows:

(dollars in thousands)	September 30, 2013		December 31, 2012
Fixed interest rate advances with a weighted average interest rate of 2.12% due through 2023	$	487,020	$	442,600
Putable fixed interest rate advances with a weighted average interest rate of 4.39% due through 2017(1)	100,000		100,000
Total FHLB advances	$	587,020	$	542,600

(1) - Represents putable advances with the FHLB. These advances have original fixed rate periods ranging from one to five years with original maturities ranging from three to ten years if not put back to the Bank earlier by the FHLB. At the end of their respective fixed rate periods and on a quarterly basis thereafter, the FHLB has the right to require payoff of the advances by the Bank at no penalty. Based on market conditions at this time, the Bank does not believe that any of its putable advances are likely to be “put back” to the Bank in the short-term by the FHLB.

Each FHLB advance is payable at its maturity date, with a prepayment penalty for fixed rate advances that are paid off earlier than maturity. FHLB advances are collateralized by a blanket pledge of eligible real estate loans. At September 30, 2013, Republic had available collateral to borrow an additional $317 million from the FHLB. In addition to its borrowing line with the FHLB, Republic also had unsecured lines of credit totaling $166 million available through various other financial institutions.

Aggregate future principal payments on FHLB advances, based on contractual maturity dates are detailed below:

Year	(in thousands)
2013	$	10,000
2014	178,000
2015	25,000
2016	82,000
2017	135,000
Thereafter	157,020
Total	$	587,020

The following table illustrates real estate loans pledged to collateralize advances and letters of credit with the FHLB:

(in thousands)	September 30, 2013		December 31, 2012
First lien, single family residential real estate	$	1,104,086	$	1,053,946
Home equity lines of credit	105,407		116,043
Multi-family commercial real estate	12,504		11,695

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income	$ 4,603	$ 20,668	$ 24,078	$ 112,718
OTHER COMPREHENSIVE INCOME
Unrealized gain (loss) on securities available for sale	(198)	649	(3,163)	2,324
Change in unrealized loss on available for sale security for which a portion of an other-than-temporary impairment has been recognized in earnings	(4)	374	418	412
Reclassification adjustment for gains recognized in earnings				(56)
Net unrealized gains (losses)	(202)	1,023	(2,745)	2,680
Tax effect	71	(358)	962	(938)
Net of tax	(131)	665	(1,783)	1,742
COMPREHENSIVE INCOME	$ 4,472	$ 21,333	$ 22,295	$ 114,460

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LOANS AND ALLOWANCE FOR LOAN AND LOSSES (Details 13) (USD $)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	$ 74,785,000		$ 74,785,000		$ 83,307,000
Loans modified by troubled debt restructurings during the period	7,331,000	10,837,000	12,404,000	30,286,000
Specific reserve allocations made to customers	6,000,000		6,000,000		7,000,000
Specific reserve allocations made to customers whose loan terms were modified in TDRs during period	294,000	576,000	1,000,000	2,000,000
Change between the pre and post modification loan			0		0
Residential Real Estate
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	37,735,000		37,735,000		43,709,000
Loans modified by troubled debt restructurings during the period	1,526,000	9,733,000	6,012,000	18,061,000
Residential Real Estate | Interest only payments
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	1,472,000		1,472,000		1,581,000
Loans modified by troubled debt restructurings during the period		1,896,000	165,000	2,238,000
Residential Real Estate | Rate reduction
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	28,291,000		28,291,000		27,677,000
Loans modified by troubled debt restructurings during the period	1,082,000	4,082,000	3,392,000	8,235,000
Residential Real Estate | Principal deferral
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	4,092,000		4,092,000		11,133,000
Loans modified by troubled debt restructurings during the period		3,755,000	224,000	7,588,000
Residential Real Estate | Bankruptcies
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	3,880,000		3,880,000		3,318,000
Loans modified by troubled debt restructurings during the period	444,000		2,231,000
Commercial Real Estate and Commercial Construction
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	37,050,000		37,050,000		39,598,000
Loans modified by troubled debt restructurings during the period	5,805,000	1,104,000	6,392,000	12,225,000
Commercial Real Estate and Commercial Construction | Interest only payments
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	5,079,000		5,079,000		7,344,000
Loans modified by troubled debt restructurings during the period	586,000	120,000	864,000	4,398,000
Commercial Real Estate and Commercial Construction | Rate reduction
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	18,464,000		18,464,000		13,715,000
Loans modified by troubled debt restructurings during the period	3,596,000	534,000	3,596,000	3,277,000
Commercial Real Estate and Commercial Construction | Principal deferral
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	13,115,000		13,115,000		18,539,000
Loans modified by troubled debt restructurings during the period	1,456,000	450,000	1,765,000	4,550,000
Commercial Real Estate and Commercial Construction | Bankruptcies
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	392,000		392,000
Loans modified by troubled debt restructurings during the period	167,000		167,000
Performing Financing Receivable
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	60,653,000		60,653,000		66,542,000
Loans modified by troubled debt restructurings during the period	6,558,000	8,811,000	10,228,000	25,834,000
Percentage of troubled debt restructurings performing as per terms of modifications during the period.	81.00%		81.00%		80.00%
Percentage of Bank's TDRs that occurred during period, which were performing according to their modified terms	89.00%	81.00%	82.00%	85.00%
Performing Financing Receivable | Residential Real Estate
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	30,898,000		30,898,000		35,473,000
Loans modified by troubled debt restructurings during the period	1,254,000	7,707,000	4,337,000	14,772,000
Performing Financing Receivable | Residential Real Estate | Interest only payments
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	598,000		598,000		957,000
Loans modified by troubled debt restructurings during the period		793,000	165,000	511,000
Performing Financing Receivable | Residential Real Estate | Rate reduction
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	25,157,000		25,157,000		23,250,000
Loans modified by troubled debt restructurings during the period	1,082,000	3,244,000	2,703,000	7,781,000
Performing Financing Receivable | Residential Real Estate | Principal deferral
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	2,310,000		2,310,000		9,041,000
Loans modified by troubled debt restructurings during the period		3,670,000	64,000	6,480,000
Performing Financing Receivable | Residential Real Estate | Bankruptcies
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	2,833,000		2,833,000		2,225,000
Loans modified by troubled debt restructurings during the period	172,000		1,405,000
Performing Financing Receivable | Commercial Real Estate and Commercial Construction
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	29,755,000		29,755,000		31,069,000
Loans modified by troubled debt restructurings during the period	5,304,000	1,104,000	5,891,000	11,062,000
Performing Financing Receivable | Commercial Real Estate and Commercial Construction | Interest only payments
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	4,225,000		4,225,000		7,002,000
Loans modified by troubled debt restructurings during the period	441,000	120,000	719,000	3,690,000
Performing Financing Receivable | Commercial Real Estate and Commercial Construction | Rate reduction
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	17,090,000		17,090,000		8,573,000
Loans modified by troubled debt restructurings during the period	3,407,000	534,000	3,407,000	3,277,000
Performing Financing Receivable | Commercial Real Estate and Commercial Construction | Principal deferral
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	8,440,000		8,440,000		15,494,000
Loans modified by troubled debt restructurings during the period	1,456,000	450,000	1,765,000	4,095,000
Nonperforming Financing Receivable
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	14,132,000		14,132,000		16,765,000
Loans modified by troubled debt restructurings during the period	773,000	2,026,000	2,176,000	4,452,000
Nonperforming Financing Receivable | Residential Real Estate
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	6,837,000		6,837,000		8,236,000
Loans modified by troubled debt restructurings during the period	272,000	2,026,000	1,675,000	3,289,000
Nonperforming Financing Receivable | Residential Real Estate | Interest only payments
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	874,000		874,000		624,000
Loans modified by troubled debt restructurings during the period		1,103,000		1,727,000
Nonperforming Financing Receivable | Residential Real Estate | Rate reduction
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	3,134,000		3,134,000		4,427,000
Loans modified by troubled debt restructurings during the period		838,000	689,000	454,000
Nonperforming Financing Receivable | Residential Real Estate | Principal deferral
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	1,782,000		1,782,000		2,092,000
Loans modified by troubled debt restructurings during the period		85,000	160,000	1,108,000
Nonperforming Financing Receivable | Residential Real Estate | Bankruptcies
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	1,047,000		1,047,000		1,093,000
Loans modified by troubled debt restructurings during the period	272,000		826,000
Nonperforming Financing Receivable | Commercial Real Estate and Commercial Construction
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	7,295,000		7,295,000		8,529,000
Loans modified by troubled debt restructurings during the period	501,000		501,000	1,163,000
Nonperforming Financing Receivable | Commercial Real Estate and Commercial Construction | Interest only payments
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	854,000		854,000		342,000
Loans modified by troubled debt restructurings during the period	145,000		145,000	708,000
Nonperforming Financing Receivable | Commercial Real Estate and Commercial Construction | Rate reduction
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	1,374,000		1,374,000		5,142,000
Loans modified by troubled debt restructurings during the period	189,000		189,000
Nonperforming Financing Receivable | Commercial Real Estate and Commercial Construction | Principal deferral
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	4,675,000		4,675,000		3,045,000
Loans modified by troubled debt restructurings during the period				455,000
Nonperforming Financing Receivable | Commercial Real Estate and Commercial Construction | Bankruptcies
Troubled Debt Restructurings disclosures
Troubled Debt Restructurings	392,000		392,000
Loans modified by troubled debt restructurings during the period	$ 167,000		$ 167,000

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
ASSETS
Cash and cash equivalents	$ 141,585	$ 137,691
Securities available for sale	481,624	438,246
Securities to be held to maturity (fair value of $52,408 in 2013 and $46,416 in 2012)	52,057	46,010
Mortgage loans held for sale	9,803	10,614
Loans	2,553,435	2,650,197
Allowance for loan losses	(23,492)	(23,729)
Loans, net	2,529,943	2,626,468
Federal Home Loan Bank stock, at cost	28,342	28,377
Premises and equipment, net	32,626	33,197
Goodwill	10,168	10,168
Other real estate owned	15,247	26,203
Other assets and accrued interest receivable	30,486	37,425
TOTAL ASSETS	3,331,881	3,394,399
Deposits
Non interest-bearing	492,126	479,046
Interest-bearing	1,527,659	1,503,882
Total deposits	2,019,785	1,982,928
Securities sold under agreements to repurchase and other short-term borrowings	106,373	250,884
Federal Home Loan Bank advances	587,020	542,600
Subordinated note	41,240	41,240
Other liabilities and accrued interest payable	31,953	40,045
Total liabilities	2,786,371	2,857,697
STOCKHOLDERS' EQUITY
Preferred stock, no par value
Class A Common Stock and Class B Common Stock, no par value	4,893	4,932
Additional paid in capital	132,728	132,686
Retained earnings	404,060	393,472
Accumulated other comprehensive income	3,829	5,612
Total stockholders' equity	545,510	536,702
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 3,331,881	$ 3,394,399

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LOANS AND ALLOWANCE FOR LOAN AND LOSSES (Details 6) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Non-performing loans and non-performing assets disclosures
Loans on non-accrual status	$ 18,407	$ 18,506
Loans past due 90 days or more and still on accrual	1,839	3,173
Total non-performing loans	20,246	21,679
Other real estate owned	15,247	26,203
Total non-performing assets	35,493	47,882
Credit Quality Ratios
Non-performing loans to total loans (as percent)	0.79%	0.82%
Non-performing assets to total loans (including OREO) (as percent)	1.38%	1.79%
Non-performing assets to total assets (as percent)	1.07%	1.41%
TCB and FCB acquisitions
Non-performing loans and non-performing assets disclosures
Loans on non-accrual status	39
Loans past due 90 days or more and still on accrual	1,839	3,173
Total non-performing loans	1,878	3,173
Other real estate owned	5,503	14,498
Total non-performing assets	7,381	17,671
Credit Quality Ratios
Non-performing loans to total loans (as percent)	1.77%	2.29%
Non-performing assets to total loans (including OREO) (as percent)	6.61%	11.54%
Non-performing assets to total assets (as percent)	6.57%	8.73%
Tennessee Commerce Bank ("TCB")
Non-performing loans and non-performing assets disclosures
Loans on non-accrual status	21
Loans past due 90 days or more and still on accrual	414	801
Total non-performing loans	435	801
Other real estate owned	705	2,100
Total non-performing assets	1,140	2,901
First Commercial Bank ("FCB")
Non-performing loans and non-performing assets disclosures
Loans on non-accrual status	18
Loans past due 90 days or more and still on accrual	1,425	2,372
Total non-performing loans	1,443	2,372
Other real estate owned	4,798	12,398
Total non-performing assets	$ 6,241	$ 14,770

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MORTGAGE BANKING ACTIVITIES (Details 6) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
MORTGAGE BANKING ACTIVITIES
Derivative instruments expiration period	90 days
Notional amounts and fair values of mortgage banking derivatives
Notional Amount, Assets	$ 11,781	$ 64,143
Fair Value, Assets	401	880
Mortgage loans held for sale
Notional amounts and fair values of mortgage banking derivatives
Notional Amount, Assets	9,557	10,037
Fair Value, Assets	9,803	10,614
Rate lock loan commitments
Notional amounts and fair values of mortgage banking derivatives
Notional Amount, Assets	11,781	27,468
Fair Value, Assets	401	833
Mandatory forward contracts
Notional amounts and fair values of mortgage banking derivatives
Notional Amount, Assets		36,675
Fair Value, Assets		47
Notional Amount, Liabilities	17,791
Fair Value, Liabilities	$ 160

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MORTGAGE BANKING ACTIVITIES (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Mortgage servicing rights
Net gain realized on sale of mortgage loans held for sale	$ 1,633	$ 2,705	$ 7,310	$ 5,890
Net gain recognized	932	2,819	6,340	6,541
Loan servicing income	514	418	1,606	1,653
Amortization of mortgage servicing rights	(453)	(803)	(1,811)	(2,474)
Change in mortgage servicing rights valuation allowance	33	(160)	345	(129)
Net servicing income recognized	94	(545)	140	(950)
Total Mortgage Banking income	1,026	2,274	6,480	5,591
Net change in fair value recognized on loans held for sale
Mortgage servicing rights
Net change in fair value	(218)	82	(331)	134
Net change in fair value recognized on rate lock commitments
Mortgage servicing rights
Net change in fair value	(44)	386	(432)	909
Net change in fair value recognized on forward contracts
Mortgage servicing rights
Net change in fair value	$ (439)	$ (354)	$ (207)	$ (392)

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OFF BALANCE SHEET RISKS, COMMITMENTS AND CONTINGENT LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2013

OFF BALANCE SHEET RISKS, COMMITMENTS AND CONTINGENT LIABILITIES

Bank Commitment Exclusive of Mortgage Bank Loan Commitments

(in thousands)	September 30, 2013		December 31, 2012
Unused warehouse lines of credit	$	195,190	$	113,924
Unused home equity lines of credit	228,298		232,719
Unused loan commitments - other	185,934		163,523
Standby letters of credit	2,476		16,985
FHLB letters of credit	3,200		11,908
Total commitments	$	615,098	$	539,059

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INVESTMENT SECURITIES (Tables)

9 Months Ended

Sep. 30, 2013

INVESTMENT SECURITIES

Gross Amortized Cost and Fair Value of Securities Available for Sale and Related Gross Unrealized Gains and Losses Recognized in Accumulated Other Comprehensive Income (Loss)

	Gross		Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
September 30, 2013 (in thousands)	Cost		Gains		Losses			Value
U.S. Treasury securities and U.S. Government agencies	$	122,401	$	615	$	(83	)	$	122,933
Private label mortgage backed security	5,036		421		—			5,457
Mortgage backed securities - residential	156,656		4,744		(288		)	161,112
Collateralized mortgage obligations	176,625		1,629		(1,036		)	177,218
Corporate bonds	15,016		2		(114		)	14,904
Total securities available for sale	$	475,734	$	7,411	$	(1,521	)	$	481,624

	Gross		Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
December 31, 2012 (in thousands)	Cost		Gains		Losses			Value
U.S. Treasury securities and U.S. Government agencies	$	38,931	$	547	$	(6	)	$	39,472
Private label mortgage backed security	5,684		3		—			5,687
Mortgage backed securities - residential	190,569		6,641		—			197,210
Collateralized mortgage obligations	194,427		1,580		(130		)	195,877
Total securities available for sale	$	429,611	$	8,771	$	(136	)	$	438,246

Carrying Value, Gross Unrecognized Gains and Losses, and Fair Value of Securities to be Held to Maturity

			Gross		Gross
	Carrying		Unrecognized		Unrecognized			Fair
September 30, 2013 (in thousands)	Value		Gains		Losses			Value
U.S. Treasury securities and U.S. Government agencies	$	2,329	$	9	$	(12	)	$	2,326
Mortgage backed securities - residential	423		42		—			465
Collateralized mortgage obligations	44,305		487		(14		)	44,778
Corporate bonds	5,000		—		(161		)	4,839
Total securities to be held to maturity	$	52,057	$	538	$	(187	)	$	52,408

			Gross		Gross
	Carrying		Unrecognized		Unrecognized		Fair
December 31, 2012 (in thousands)	Value		Gains		Losses		Value
U.S. Treasury securities and U.S. Government agencies	$	4,388	$	27	$	—	$	4,415
Mortgage backed securities - residential	827		63		—		890
Collateralized mortgage obligations	40,795		316		—		41,111
Total securities to be held to maturity	$	46,010	$	406	$	—	$	46,416

Amortized Cost and Fair Value of Investment Securities Portfolio by Contractual Maturity

	Securities				Securities
	available for sale				held to maturity
	Amortized		Fair		Carrying		Fair
September 30, 2013 (in thousands)	Cost		Value		Value		Value
Due in one year or less	$	11,185	$	11,315	$	—	$	—
Due from one year to five years	113,719		114,146		2,329		2,326
Due from five years to ten years	12,513		12,376		5,000		4,839
Due beyond ten years	—		—		—		—
Private label mortgage backed security	5,036		5,457		—		—
Mortgage backed securities - residential	156,656		161,112		423		465
Collateralized mortgage obligations	176,625		177,218		44,305		44,778
Total securities	$	475,734	$	481,624	$	52,057	$	52,408

Securities with Unrealized Losses, Aggregated by Investment Category with Continuous Unrealized Loss Position

	Less than 12 months					12 months or more				Total
September 30, 2013 (in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available for sale
U.S. Treasury securities and U.S. Government agencies	$	11,321	$	(83	)	$	—	$	—	$	11,321	$	(83	)
Mortgage backed securities - residential	19,153		(288		)	—		—		19,153		(288		)
Collateralized mortgage obligations	40,356		(1,036		)	—		—		40,356		(1,036		)
Corporate bonds	9,886		(114		)	—		—		9,886		(114		)
Total available for sale	$	80,716	$	(1,521	)	$	—	$	—	$	80,716	$	(1,521	)

	Less than 12 months					12 months or more				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Held to maturity
U.S. Treasury securities and U.S. Government agencies	$	524	$	(12	)	$	—	$	—	$	524	$	(12	)
Collateralized mortgage obligations	9,741		(14		)	—		—		9,741		(14		)
Corporate bonds	4,839		(161		)	—		—		4,839		(161		)
Total held to maturity	$	15,104	$	(187	)	$	—	$	—	$	15,104	$	(187	)

	Less than 12 months					12 months or more				Total
December 31, 2012 (in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available for sale
U.S. Treasury securities and U.S. Government agencies	$	3,588	$	(6	)	$	—	$	—	$	3,588	$	(6	)
Collateralized mortgage obligations	20,508		(130		)	—		—		20,508		(130		)
Total available for sale	$	24,096	$	(136	)	$	—	$	—	$	24,096	$	(136	)

Pledged Investment Securities

(in thousands)	September 30, 2013		December 31, 2012
Carrying amount	$	177,286	$	334,560
Fair value	177,761		334,843

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INVESTMENT SECURITIES (Details 5) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Available for sale
Less than 12 months Fair Value	$ 80,716	$ 24,096
Less than 12 months Unrealized Losses	(1,521)	(136)
Total Fair Value	80,716	24,096
Total Unrealized Losses	(1,521)	(136)
Held to maturity
Less than 12 months Fair Value	15,104
Less than 12 months Unrealized Losses	(187)
Total Fair Value	15,104
Total Unrealized Losses	(187)
Number of securities held	165	153
Number of securities held in an unrealized loss position	19	7
Carrying value	481,624	438,246
U.S. Treasury securities and U.S. Government agencies
Available for sale
Less than 12 months Fair Value	11,321	3,588
Less than 12 months Unrealized Losses	(83)	(6)
Total Fair Value	11,321	3,588
Total Unrealized Losses	(83)	(6)
Held to maturity
Less than 12 months Fair Value	524
Less than 12 months Unrealized Losses	(12)
Total Fair Value	524
Total Unrealized Losses	(12)
Carrying value	122,933	39,472
Mortgage backed securities - residential
Available for sale
Less than 12 months Fair Value	19,153
Less than 12 months Unrealized Losses	(288)
Total Fair Value	19,153
Total Unrealized Losses	(288)
Held to maturity
Carrying value	161,112	197,210
Collateralized mortgage obligations
Available for sale
Less than 12 months Fair Value	40,356	20,508
Less than 12 months Unrealized Losses	(1,036)	(130)
Total Fair Value	40,356	20,508
Total Unrealized Losses	(1,036)	(130)
Held to maturity
Less than 12 months Fair Value	9,741
Less than 12 months Unrealized Losses	(14)
Total Fair Value	9,741
Total Unrealized Losses	(14)
Carrying value	177,218	195,877
Corporate bonds
Available for sale
Less than 12 months Fair Value	9,886
Less than 12 months Unrealized Losses	(114)
Total Fair Value	9,886
Total Unrealized Losses	(114)
Held to maturity
Less than 12 months Fair Value	4,839
Less than 12 months Unrealized Losses	(161)
Total Fair Value	4,839
Total Unrealized Losses	(161)
Carrying value	14,904
Private label mortgage backed security
Held to maturity
Carrying value	$ 5,457	$ 5,687
Estimated average life	4 years

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MORTGAGE BANKING ACTIVITIES (Details 4) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Activity for the valuation allowance for capitalized mortgage servicing rights
Balance, January 1	$ (345)	$ (203)
Additions		(171)
Reductions credited to operations	345	42
Balance, September 30		$ (332)

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LOANS AND ALLOWANCE FOR LOAN AND LOSSES (Details 9) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Impaired loans
Loans with no allocated allowance for loan losses	$ 25,835	$ 36,325
Loans with allocated allowance for loan losses	78,298	69,382
Total impaired loans	104,133	105,707
Amount of the allowance for loan losses allocated	7,304	8,531
Impaired loan through troubled debt restructuring	74,785	83,307
TCB and FCB acquisitions
Impaired loans
Total impaired loans	29,000	18,000
Impaired loan through troubled debt restructuring	$ 9,000

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FAIR VALUE (Details 2) (Private label mortgage backed security, USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Private label mortgage backed security
Assets measured on recurring basis, unobservable input reconciliation
Balance, beginning of period	$ 5,641	$ 4,579	$ 5,687	$ 4,542
Net change in unrealized gain/(loss)	(4)	373	418	410
Reversal of actual losses previously recorded	37		37
Principal paydowns	(217)		(685)
Balance, end of period	$ 5,457	$ 4,952	$ 5,457	$ 4,952

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2012 FDIC-ASSISTED ACQUISITIONS OF FAILED BANKS (Details 5) (USD $) In Thousands, unless otherwise specified	3 Months Ended	0 Months Ended
	Sep. 30, 2012	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") RB&T	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Demand	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Demand Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Money market accounts	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Money market accounts Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Savings	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Savings Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Individual retirement accounts	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Individual retirement accounts Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Time deposits, $100,000 and over	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Time deposits, $100,000 and over Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Other certificates of deposit	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Other certificates of deposit Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Other certificates of deposit Fair Value Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Brokered certificates of deposit	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Brokered certificates of deposit Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Brokered certificates of deposit Fair Value Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Total interest-bearing deposits	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Total interest-bearing deposits Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Total interest-bearing deposits Fair Value Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Total non interest-bearing deposits	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Total non interest-bearing deposits Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Total deposits	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Total deposits Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Total deposits Fair Value Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Demand	Sep. 07, 2012 First Commercial Bank ("FCB") Demand Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") Money market accounts	Sep. 07, 2012 First Commercial Bank ("FCB") Money market accounts Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") Individual retirement accounts	Sep. 07, 2012 First Commercial Bank ("FCB") Individual retirement accounts Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") Time deposits, $100,000 and over	Sep. 07, 2012 First Commercial Bank ("FCB") Time deposits, $100,000 and over Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") Other certificates of deposit	Sep. 07, 2012 First Commercial Bank ("FCB") Other certificates of deposit Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") Brokered certificates of deposit	Sep. 07, 2012 First Commercial Bank ("FCB") Brokered certificates of deposit Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") Brokered certificates of deposit Fair Value Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Total interest-bearing deposits	Sep. 07, 2012 First Commercial Bank ("FCB") Total interest-bearing deposits Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") Total interest-bearing deposits Fair Value Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Total non interest-bearing deposits	Sep. 07, 2012 First Commercial Bank ("FCB") Total non interest-bearing deposits Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") Total deposits	Sep. 07, 2012 First Commercial Bank ("FCB") Total deposits Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") Total deposits Fair Value Adjustments
Fdic - assisted acquisitions of failed banks
Period from acquisition date for option to disclose repricing of acquired deposits portfolio		7 days
Composition of deposits assumed
Deposits assumed			$ 3,190	$ 3,190	$ 11,338	$ 11,338	$ 91,859	$ 91,859	$ 15,486	$ 15,486	$ 278,825	$ 278,825	$ 108,017	$ 108,003	$ 14	$ 418,980	$ 418,940	$ 40	$ 927,695	$ 927,641	$ 54	$ 19,754	$ 19,754	$ 947,449	$ 947,395	$ 54	$ 4,003	$ 4,003	$ 38,187	$ 38,187	$ 16,780	$ 16,780	$ 14,740	$ 14,740	$ 62,033	$ 62,033	$ 53,311	$ 53,314	$ (3)	$ 189,054	$ 189,057	$ (3)	$ 7,197	$ 7,197	$ 196,251	$ 196,254	$ (3)
Additional loss in excess of fair value adjustment related to payment of Federal Home Loan Bank (FHLB) advances	$ 0

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2012 FDIC-ASSISTED ACQUISITIONS OF FAILED BANKS (Details) (USD $)	3 Months Ended	9 Months Ended		12 Months Ended	0 Months Ended			3 Months Ended	6 Months Ended		0 Months Ended																			0 Months Ended	3 Months Ended		9 Months Ended		0 Months Ended
	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012 item	Feb. 15, 2012 Tennessee Commerce Bank ("TCB")	Jan. 30, 2012 Tennessee Commerce Bank ("TCB")	Jan. 27, 2012 Tennessee Commerce Bank ("TCB")	Mar. 31, 2012 Tennessee Commerce Bank ("TCB")	Sep. 30, 2012 Tennessee Commerce Bank ("TCB")	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") As Previously Reported - Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") As Previously Reported - Fair Value Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") 2012 Recast Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Deposits: Non interest-bearing	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Deposits: Non interest-bearing As Previously Reported - Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Deposits: Interest-bearing	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Deposits: Interest-bearing As Previously Reported - Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Deposits: Interest-bearing As Previously Reported - Fair Value Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Total deposits	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Total deposits As Previously Reported - Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Total deposits As Previously Reported - Fair Value Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans to be repurchased by the FDIC, net of discount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans to be repurchased by the FDIC, net of discount As Previously Reported - Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans to be repurchased by the FDIC, net of discount As Previously Reported - Fair Value Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans As Previously Reported - Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans As Previously Reported - Fair Value Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans 2012 Recast Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Federal Home Loan Bank stock, at cost	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Federal Home Loan Bank stock, at cost As Previously Reported - Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB")	Dec. 31, 2012 First Commercial Bank ("FCB")	Sep. 30, 2012 First Commercial Bank ("FCB")	Sep. 30, 2013 First Commercial Bank ("FCB")	Sep. 07, 2012 First Commercial Bank ("FCB") As Previously Reported - Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") As Previously Reported - Fair Value Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") 2012 & 2013 Recast Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Deposits: Non interest-bearing	Sep. 07, 2012 First Commercial Bank ("FCB") Deposits: Non interest-bearing As Previously Reported - Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") Deposits: Interest-bearing	Sep. 07, 2012 First Commercial Bank ("FCB") Deposits: Interest-bearing As Previously Reported - Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") Deposits: Interest-bearing As Previously Reported - Fair Value Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Total deposits	Sep. 07, 2012 First Commercial Bank ("FCB") Total deposits As Previously Reported - Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") Total deposits As Previously Reported - Fair Value Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Federal Home Loan Bank advances	Sep. 07, 2012 First Commercial Bank ("FCB") Federal Home Loan Bank advances As Previously Reported - Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") Federal Home Loan Bank advances As Previously Reported - Fair Value Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Loans	Sep. 07, 2012 First Commercial Bank ("FCB") Loans As Previously Reported - Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") Loans As Previously Reported - Fair Value Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Loans 2012 & 2013 Recast Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Federal Home Loan Bank stock, at cost	Sep. 07, 2012 First Commercial Bank ("FCB") Federal Home Loan Bank stock, at cost As Previously Reported - Contractual Amount
2012 FDIC-ASSISTED ACQUISITIONS OF FAILED BANKS
Number of failed institutions acquired in FDIC-assisted transactions				2
Fdic - assisted acquisitions of failed banks
Notional assets acquired										$ 221,126,000																								$ 214,866,000
Payments received from FDIC			921,161,000		14,000,000	771,000,000
Bargain purchase gain	26,923,000	1,324,000	54,726,000					27,900,000	(285,000)		27,899,000																				712,000	27,100,000	1,000		27,112,000
Assets acquired:
Cash and cash equivalents							61,852,000			61,943,000	(89,000)	(2,000)																		10,524,000				10,524,000
Securities available for sale							42,646,000			42,646,000																				12,002,000				12,002,000
Financial assets																					17,003,000	19,800,000	(2,797,000)	57,276,000	79,112,000	(22,666,000)	830,000	2,491,000	2,491,000																			130,351,000	171,744,000	(44,214,000)	2,821,000	407,000	407,000
Other real estate owned							9,717,000			14,189,000	(3,359,000)	(1,113,000)																		10,186,000				19,360,000	(8,389,000)	(785,000)
Core deposit intangible							64,000				64,000																			559,000					559,000
Discount										(56,970,000)	56,970,000																							(79,412,000)	79,412,000
FDIC settlement receivable							784,545,000			784,545,000																				64,326,000				64,326,000
Other assets and accrued interest receivable							885,000			945,000	(60,000)																			734,000				829,000	(95,000)
Total assets acquired							976,479,000			948,701,000	28,063,000	(285,000)																		229,089,000				199,780,000	27,273,000	2,036,000
Liabilities assumed:
Financial liabilities													19,754,000	19,754,000	927,695,000	927,641,000	54,000	947,449,000	947,395,000	54,000																	7,197,000	7,197,000	189,054,000	189,057,000	(3,000)	196,251,000	196,254,000	(3,000)	3,065,000	3,002,000	63,000
Accrued income taxes payable							9,888,000				9,988,000	(100,000)																		10,418,000					9,706,000	712,000
Other liabilities and accrued interest payable							1,416,000			1,306,000	110,000																			625,000				524,000	101,000
Total liabilities assumed							958,753,000			948,701,000	10,152,000	(100,000)																		210,359,000				199,780,000	9,867,000	712,000
Equity:
Bargain purchase gain, net of taxes							17,726,000				17,911,000	(185,000)																		18,730,000					17,406,000	1,324,000
Total liabilities assumed and equity							$ 976,479,000			$ 948,701,000	$ 28,063,000	$ (285,000)																		$ 229,089,000				$ 199,780,000	$ 27,273,000	$ 2,036,000

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2012 FDIC-ASSISTED ACQUISITIONS OF FAILED BANKS (Details 2) (USD $)	3 Months Ended	9 Months Ended		1 Months Ended	3 Months Ended	6 Months Ended			0 Months Ended																		3 Months Ended		9 Months Ended			1 Months Ended		0 Months Ended			3 Months Ended	0 Months Ended
	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Oct. 31, 2013 Sole banking center in Minneapolis Minnesota	Mar. 31, 2012 Tennessee Commerce Bank ("TCB")	Sep. 30, 2012 Tennessee Commerce Bank ("TCB")	Jan. 27, 2012 Tennessee Commerce Bank ("TCB")	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") As Previously Reported - Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") As Previously Reported - Fair Value Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Second Quarter 2012 Recast Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Third Quarter 2012 Recast Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") As Recasted - Fair Value Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Deposits	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Deposits As Previously Reported - Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Deposits As Previously Reported - Fair Value Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Deposits As Recasted - Fair Value Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans As Previously Reported - Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans As Previously Reported - Fair Value Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Second Quarter 2012 Recast Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Third Quarter 2012 Recast Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans As Recasted - Fair Value Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Discount for loans to be repurchased by the FDIC	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Discount for loans to be repurchased by the FDIC As Previously Reported - Contractual Amount	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Discount for loans to be repurchased by the FDIC As Previously Reported - Fair Value Adjustments	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Discount for loans to be repurchased by the FDIC As Recasted - Fair Value Adjustments	Dec. 31, 2012 First Commercial Bank ("FCB")	Sep. 30, 2012 First Commercial Bank ("FCB")	Sep. 30, 2013 First Commercial Bank ("FCB")	Mar. 31, 2013 First Commercial Bank ("FCB")	Sep. 07, 2012 First Commercial Bank ("FCB")	Oct. 31, 2013 First Commercial Bank ("FCB") Sole banking center in Minneapolis Minnesota	Sep. 07, 2012 First Commercial Bank ("FCB") As Previously Reported - Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") As Previously Reported - Fair Value Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Fourth Quarter 2012 Recast Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") First Quarter 2013 Recast Adjustments	Mar. 31, 2013 First Commercial Bank ("FCB") First Quarter 2013 Recast Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") As Recasted - Fair Value Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Deposits	Sep. 07, 2012 First Commercial Bank ("FCB") Deposits As Previously Reported - Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") Deposits As Previously Reported - Fair Value Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Deposits As Recasted - Fair Value Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Federal Home Loan Bank advances	Sep. 07, 2012 First Commercial Bank ("FCB") Federal Home Loan Bank advances As Previously Reported - Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") Federal Home Loan Bank advances As Previously Reported - Fair Value Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Federal Home Loan Bank advances As Recasted - Fair Value Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Loans	Sep. 07, 2012 First Commercial Bank ("FCB") Loans As Previously Reported - Contractual Amount	Sep. 07, 2012 First Commercial Bank ("FCB") Loans As Previously Reported - Fair Value Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Fourth Quarter 2012 Recast Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Loans First Quarter 2013 Recast Adjustments	Sep. 07, 2012 First Commercial Bank ("FCB") Loans As Recasted - Fair Value Adjustments
Fdic - assisted acquisitions of failed banks
Assets acquired, at contractual amount								$ 221,126,000																									$ 214,866,000
Liabilities assumed, at contractual amount								(948,701,000)																									(199,780,000)
Net liabilities assumed per the P&A Agreement								(727,575,000)	(29,071,000)	(96,000)	(189,000)	(29,356,000)																					15,086,000	(52,300,000)	712,000	1,324,000		(50,264,000)
Contractual discount								(56,970,000)	56,970,000			56,970,000																					(79,412,000)	79,412,000				79,412,000
Net receivable from the FDIC							(784,545,000)	(784,545,000)																							(64,326,000)		(64,326,000)
Fair value adjustments:
Financial assets																	57,276,000	79,112,000	(22,666,000)	919,000	(89,000)	(21,836,000)	17,003,000	19,800,000	(2,797,000)	(2,797,000)																					130,351,000	171,744,000	(44,214,000)	423,000	2,398,000	(41,393,000)
Other real estate owned							9,717,000	14,189,000	(3,359,000)	(1,000,000)	(113,000)	(4,472,000)																			10,186,000		19,360,000	(8,389,000)	289,000	(1,074,000)		(9,174,000)
Core deposit intangible							64,000		64,000			64,000																			559,000			559,000				559,000
Financial liabilities													(947,449,000)	(947,395,000)	(54,000)	(54,000)																							(196,251,000)	(196,254,000)	3,000	3,000	(3,065,000)	(3,002,000)	(63,000)	(63,000)
Other assets and accrued interest receivable							885,000	945,000	(60,000)			(60,000)																			734,000		829,000	(95,000)				(95,000)
All other									(199,000)	(15,000)	13,000	(201,000)																						(101,000)				(101,000)
Total fair value adjustments								(727,575,000)	(29,071,000)	(96,000)	(189,000)	(29,356,000)																					15,086,000	(52,300,000)	712,000	1,324,000		(50,264,000)
Discount								(56,970,000)	56,970,000			56,970,000																					(79,412,000)	79,412,000				79,412,000
Bargain purchase gain, pre-tax	26,923,000	1,324,000	54,726,000		27,900,000	(285,000)			27,899,000	(96,000)	(189,000)	27,614,000															712,000	27,100,000	1,000					27,112,000	712,000	1,324,000	1,300,000	29,148,000
Acquisition of processing equipment and fixed assets						573,000																					328,000			233,000
Regulatory notice period to close banking center				90 days																												90 days
Core deposit intangible asset																													289,000
Net gain on securities sold or called			$ 56,000		$ 56,000

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DEPOSITS

9 Months Ended

Sep. 30, 2013

DEPOSITS

DEPOSITS

5. DEPOSITS

Ending deposit balances at September 30, 2013 and December 31, 2012 were as follows:

(in thousands)	September 30, 2013		December 31, 2012
Demand	$	659,192	$	580,900
Money market accounts	495,619		514,698
Brokered money market accounts	33,212		35,596
Savings	71,759		62,145
Individual retirement accounts*	29,219		32,491
Time deposits, $100,000 and over*	69,584		80,906
Other certificates of deposit*	79,494		100,036
Brokered certificates of deposit*(1)	89,580		97,110
Total interest-bearing deposits	1,527,659		1,503,882
Total non interest-bearing deposits	492,126		479,046
Total deposits	$	2,019,785	$	1,982,928

(*) — Represents a time deposit.

(1) — Includes brokered deposits less than, equal to and greater than $100,000.

The composition of deposits related to the acquisitions of failed banks outstanding at September 30, 2013 and December 31, 2012 follows:

	Tennessee		First		Total
	Commerce		Commercial		Acquired
September 30, 2013 (in thousands)	Bank		Bank		Banks
Demand	$	1,053	$	2,123	$	3,176
Money market accounts	2,298		9,222		11,520
Savings	4,834		1		4,835
Individual retirement accounts*	563		1,159		1,722
Time deposits, $100,000 and over*	4,481		2,810		7,291
Other certificates of deposit*	2,373		4,921		7,294
Brokered certificates of deposit*(1)	3,251		3,926		7,177
Total interest-bearing deposits	18,853		24,162		43,015
Total non interest-bearing deposits	3,290		4,419		7,709
Total deposits	$	22,143	$	28,581	$	50,724

(*) — Represents a time deposit.

(1) — Includes brokered deposits less than, equal to and greater than $100,000.

	Tennessee		First		Total
	Commerce		Commercial		Acquired
December 31, 2012 (in thousands)	Bank		Bank		Banks
Demand	$	10,024	$	5,871	$	15,895
Money market accounts	1,510		25,762		27,272
Savings	217		—		217
Individual retirement accounts*	1,166		3,269		4,435
Time deposits, $100,000 and over*	10,822		3,267		14,089
Other certificates of deposit*	7,196		12,574		19,770
Brokered certificates of deposit*(1)	6,729		12,247		18,976
Total interest-bearing deposits	37,664		62,990		100,654
Total non interest-bearing deposits	4,240		6,812		11,052
Total deposits	$	41,904	$	69,802	$	111,706

(*) — Represents a time deposit.

(1) — Includes brokered deposits less than, equal to and greater than $100,000.

See additional discussion regarding the TCB and FCB acquisitions under Footnote 2 “2012 FDIC-Assisted Acquisitions of Failed Banks” in this section of the filing.

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FEDERAL HOME LOAN BANK ("FHLB") ADVANCES (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
FEDERAL HOME LOAN BANK ("FHLB") ADVANCES
2013	$ 10,000
2014	178,000
2015	25,000
2016	82,000
2017	135,000
Thereafter	157,020
Total	$ 587,020	$ 542,600

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2013

EARNINGS PER SHARE

Earning Per Share and Diluted

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands, except per share data)	2013		2012		2013		2012
Net income	$	4,603	$	20,668	$	24,078	$	112,718
Weighted average shares outstanding	20,787		20,948		20,811		20,954
Effect of dilutive securities	140		81		94		78
Average shares outstanding including dilutive securities	20,927		21,029		20,905		21,032
Basic earnings per share:
Class A Common Share	$	0.22	$	0.99	$	1.16	$	5.38
Class B Common Share	0.21		0.97		1.12		5.34
Diluted earnings per share:
Class A Common Share	$	0.22	$	0.98	$	1.16	$	5.36
Class B Common Share	0.21		0.97		1.11		5.32

Stock Option

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2013	2012	2013	2012
Antidilutive stock options	13,500	219,350	113,000	219,350

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INVESTMENT SECURITIES (Details 3) (USD $)	3 Months Ended		9 Months Ended		3 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Mar. 31, 2012 US Government Agencies Debt Securities	Mar. 31, 2012 Tennessee Commerce Bank ("TCB") item
INVESTMENT SECURITIES
Sales of available for sale securities	$ 0		$ 0
Calls of available for sale securities	0		0
Sales of securities available for sale
Number of available for securities sold						6
Amortized cost of available for sale securities sold						35,000,000
Pre-tax gain of available for sale securities						53,000
Pre-tax gain from accretion of unamortized discount on available for sale securities called					3,000
Amortized cost of available for sale securities called					10,000,000
Tax provision related to Bank's realized gains		$ 0		$ 20,000

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MORTGAGE BANKING ACTIVITIES

9 Months Ended

Sep. 30, 2013

MORTGAGE BANKING ACTIVITIES

MORTGAGE BANKING ACTIVITIES

8. MORTGAGE BANKING ACTIVITIES

Mortgage Banking activities primarily include residential mortgage originations and servicing.

Activity for mortgage loans held for sale was as follows:

September 30, (in thousands)	2013			2012
Balance, January 1	$	10,614		$	4,392
Origination of mortgage loans held for sale	263,411			172,305
Proceeds from the sale of mortgage loans held for sale	(270,562		)	(179,853		)
Net gain on sale of mortgage loans held for sale	6,340			6,541
Balance, September 30	$	9,803		$	3,385

The following table presents the components of Mortgage Banking income:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in thousands)	2013			2012			2013			2012
Net gain realized on sale of mortgage loans held for sale	$	1,633		$	2,705		$	7,310		$	5,890
Net change in fair value recognized on loans held for sale	(218		)	82			(331		)	134
Net change in fair value recognized on rate lock commitments	(44		)	386			(432		)	909
Net change in fair value recognized on forward contracts	(439		)	(354		)	(207		)	(392		)
Net gain recognized	932			2,819			6,340			6,541
Loan servicing income	514			418			1,606			1,653
Amortization of mortgage servicing rights	(453		)	(803		)	(1,811		)	(2,474		)
Change in mortgage servicing rights valuation allowance	33			(160		)	345			(129		)
Net servicing income recognized	94			(545		)	140			(950		)
Total Mortgage Banking income	$	1,026		$	2,274		$	6,480		$	5,591

Activity for capitalized mortgage servicing rights was as follows:

September 30, (in thousands)	2013			2012
Balance, January 1	$	4,777		$	6,087
Additions	2,171			1,496
Amortized to expense	(1,811		)	(2,474		)
Change in valuation allowance	345			(129		)
Balance, September 30	$	5,482		$	4,980

Activity for the valuation allowance for capitalized mortgage servicing rights was as follows:

September 30, (in thousands)	2013			2012
Balance, January 1	$	(345	)	$	(203	)
Additions	—			(171		)
Reductions credited to operations	345			42
Balance, September 30	$	—		$	(332	)

Other information relating to mortgage servicing rights follows:

(dollars in thousands)	September 30, 2013		December 31, 2012
Fair value of mortgage servicing rights portfolio	$	7,157	$	5,446
Prepayment speed range	115% - 350%		112% - 550%
Discount rate	10%		9%
Weighted average default rate	1.50%		1.50%
Weighted average life in years	5.90		3.89

Mortgage Banking derivatives used in the ordinary course of business primarily consist of mandatory forward sales contracts and rate lock loan commitments. Mandatory forward contracts represent future commitments to deliver loans at a specified price and date and are used to manage interest rate risk on loan commitments and mortgage loans held for sale. Rate lock loan commitments represent commitments to fund loans at a specific rate. These derivatives involve underlying items, such as interest rates, and are designed to transfer risk. Substantially all of these instruments expire within 90 days from the date of issuance. Notional amounts are amounts on which calculations and payments are based, but which do not represent credit exposure, as credit exposure is limited to the amounts required to be received or paid.

Mandatory forward contracts also contain an element of risk in that the counterparties may be unable to meet the terms of such agreements. In the event the counterparties fail to deliver commitments or are unable to fulfill their obligations, the Bank could potentially incur significant additional costs by replacing the positions at then current market rates. The Bank manages its risk of exposure by limiting counterparties to those banks and institutions deemed appropriate by management and the Board of Directors. The Bank does not expect any counterparty to default on their obligations and therefore, the Bank does not expect to incur any cost related to counterparty default.

The Bank is exposed to interest rate risk on loans held for sale and rate lock loan commitments. As market interest rates fluctuate, the fair value of mortgage loans held for sale and rate lock commitments will decline or increase. To offset this interest rate risk, the Bank enters into derivatives such as mandatory forward contracts to sell loans. The fair value of these mandatory forward contracts will fluctuate as market interest rates fluctuate, and the change in the value of these instruments is expected to largely, though not entirely, offset the change in fair value of loans held for sale and rate lock commitments. The objective of this activity is to minimize the exposure to losses on rate loan lock commitments and loans held for sale due to market interest rate fluctuations. The net effect of derivatives on earnings will depend on risk management activities and a variety of other factors, including market interest rate volatility, the amount of rate lock commitments that close, the ability to fill the forward contracts before expiration, and the time period required to close and sell loans.

The following table includes the notional amounts and fair values of mortgage loans held for sale and mortgage banking derivatives as of the period ends presented:

	September 30, 2013				December 31, 2012
(in thousands)	Notional Amount		Fair Value		Notional Amount		Fair Value
Included in Mortgage loans held for sale:
Mortgage loans held for sale	$	9,557	$	9,803	$	10,037	$	10,614
Included in other assets:
Rate lock loan commitments	$	11,781	$	401	$	27,468	$	833
Mandatory forward contracts	—		—		36,675		47
Total included in other assets	$	11,781	$	401	$	64,143	$	880
Included in other liabilities:
Mandatory forward contracts	$	17,791	$	160	$	—	$	—

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MORTGAGE BANKING ACTIVITIES (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
MORTGAGE BANKING ACTIVITIES
Balance, January 1	$ 10,614	$ 4,392
Origination of mortgage loans held for sale	263,411	172,305
Proceeds from the sale of mortgage loans held for sale	(270,562)	(179,853)
Net gain on sale of mortgage loans held for sale	6,340	6,541
Balance, September 30	$ 9,803	$ 3,385

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LOANS AND ALLOWANCE FOR LOAN AND LOSSES

9 Months Ended

Sep. 30, 2013

LOANS AND ALLOWANCE FOR LOAN AND LOSSES

LOANS AND ALLOWANCE FOR LOAN AND LOSSES

4. LOANS AND ALLOWANCE FOR LOAN AND LOSSES

The composition of the loan portfolio follows:

(in thousands)	September 30, 2013		December 31, 2012
Residential real estate:
Owner occupied	$	1,100,633	$	1,145,495
Non owner occupied	109,641		74,539
Commercial real estate	766,813		714,642
Commercial real estate - purchased whole loans	34,017		33,531
Construction & land development	53,618		68,214
Commercial	114,416		130,681
Warehouse lines of credit	122,810		216,576
Home equity	225,556		241,607
Consumer:
Credit cards	8,948		8,716
Overdrafts	851		955
Other consumer	16,132		15,241
Total loans	2,553,435		2,650,197
Less: Allowance for loan losses	23,492		23,729
Total loans, net	$	2,529,943	$	2,626,468

2012 FDIC- Assisted Acquisitions of Failed Banks

The contractual amount of the loans associated with the TCB transaction decreased from $79 million as of the acquisition date to $35 million as of September 30, 2013. The carrying value of these loans was $57 million as of the acquisition date compared to $29 million as of September 30, 2013.

The contractual amount of the loans associated with the FCB transaction decreased from $172 million as of the acquisition date to $99 million as of September 30, 2013. The carrying value of these loans was $130 million as of the acquisition date compared to $77 million as of September 30, 2013.

The composition of TCB and FCB loans outstanding at September 30, 2013 and December 31, 2012 follows:

	Tennessee		First		Total
	Commerce		Commercial		Acquired
September 30, 2013 (in thousands)	Bank		Bank		Banks
Residential real estate	$	9,502	$	21,110	$	30,612
Commercial real estate	13,484		50,257		63,741
Construction & land development	901		1,886		2,787
Commercial	251		3,678		3,929
Home equity	4,292		400		4,692
Consumer:
Credit cards	213		—		213
Overdrafts	3		3		6
Other consumer	81		159		240
Total loans	$	28,727	$	77,493	$	106,220

The above table is inclusive of loans originated subsequent to the respective acquisition dates.

	Tennessee		First		Total
	Commerce		Commercial		Acquired
December 31, 2012 (in thousands)	Bank		Bank		Banks
Residential real estate	$	12,270	$	32,459	$	44,729
Commercial real estate	8,015		61,758		69,773
Construction & land development	4,235		3,301		7,536
Commercial	1,284		9,405		10,689
Home equity	4,183		385		4,568
Consumer:
Credit cards	321		—		321
Overdrafts	1		11		12
Other consumer	655		333		988
Total loans	$	30,964	$	107,652	$	138,616

The tables below reconcile the contractually-required and carrying amounts of acquired TCB and FCB loans at September 30, 2013 and December 31, 2012:

	Tennessee			First			Total
	Commerce			Commercial			Acquired
September 30, 2013 (in thousands)	Bank			Bank			Banks
Contractually-required principal	$	34,890		$	98,648		$	133,538
Non-accretable difference	(5,089		)	(18,433		)	(23,522		)
Accretable difference	(1,074		)	(2,722		)	(3,796		)
Total carrying value of loans	$	28,727		$	77,493		$	106,220

	Tennessee			First			Total
	Commerce			Commercial			Acquired
December 31, 2012 (in thousands)	Bank			Bank			Banks
Contractually-required principal	$	42,188		$	139,156		$	181,344
Non-accretable difference	(10,393		)	(28,870		)	(39,263		)
Accretable difference	(831		)	(2,634		)	(3,465		)
Total carrying value of loans	$	30,964		$	107,652		$	138,616

See additional discussion regarding the TCB and FCB acquisitions under Footnote 2 “2012 FDIC-Assisted Acquisitions of Failed Banks” in this section of the filing.

Credit Quality Indicators

Based on the Bank’s internal analysis performed, the risk category of loans by class follows:

									Purchased		Purchased
									Credit		Credit
									Impaired		Impaired		Total
September 30, 2013			Special				Doubtful /		Loans -		Loans -		Rated
(in thousands)	Pass		Mention *		Substandard *		Loss		Group 1**		Substandard***		Loans****
Residential real estate:
Owner occupied	$	—	$	28,758	$	9,348	$	—	$	3,138	$	—	$	41,244
Non owner occupied	—		1,487		1,601		—		8,658		—		11,746
Commercial real estate	697,013		13,130		21,648		—		35,022		—		766,813
Commercial real estate -
Purchased whole loans	34,017		—		—		—		—		—		34,017
Construction & land development	48,688		1,712		1,822		—		1,396		—		53,618
Commercial	109,880		2,262		95		—		1,956		223		114,416
Warehouse lines of credit	122,810		—		—		—		—		—		122,810
Home equity	—		332		1,593		—		—		—		1,925
Consumer:
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Other consumer	—		51		70		—		34		—		155
Total rated loans	$	1,012,408	$	47,732	$	36,177	$	—	$	50,204	$	223	$	1,146,744

									Purchased		Purchased
									Credit		Credit
									Impaired		Impaired		Total
December 31, 2012			Special				Doubtful /		Loans -		Loans -		Rated
(in thousands)	Pass		Mention*		Substandard*		Loss		Group 1**		Substandard***		Loans*****
Residential real estate:
Owner occupied	$	—	$	26,031	$	8,700	$	—	$	2,413	$	—	$	37,144
Non owner occupied	—		2,616		3,350		—		20,190		—		26,156
Commercial real estate	624,630		17,216		28,433		—		44,362		—		714,641
Commercial real estate -
Purchased whole loans	33,531		—		—		—		—		—		33,531
Construction & land development	61,555		1,088		3,878		—		1,692		—		68,213
Commercial	121,169		2,639		2,592		—		4,280		—		130,680
Warehouse lines of credit	216,576		—		—		—		—		—		216,576
Home equity	—		648		2,346		—		—		—		2,994
Consumer:
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Other consumer	—		387		53		—		41		—		481
Total rated loans	$	1,057,461	$	50,625	$	49,352	$	—	$	72,978	$	—	$	1,230,416

* - Special Mention and Substandard loans include $2 million and $6 million at September 30, 2013 and $4 million and $11 million at December 31, 2012, respectively, which were removed from the Purchased Credit Impaired population due to a post-acquisition troubled debt restructuring of the loan.

** - Purchased Credit Impaired loans — Group 1 (“PCI-1”) represent loans whose cash flow expectations reflect no projected additional loss to contractual principal beyond the amount of the loan’s non-accretable yield that was established as part of its initial acquisition value. PCI-1 loans are considered impaired if the timing of the loan’s projected cash flows deteriorate from management’s initial projections.

*** - Purchased Credit Impaired loans - Substandard (“PCI-Sub”) represent former PCI-1 loans downgraded subsequent to day-one due to projected further impairment to contractual principal beyond the loan’s initial non-accretable yield that was established as part of its initial acquisition value. PCI-Sub loans are considered impaired and have required additional loan loss provisions.

**** - The above tables exclude all non-classified residential real estate and consumer loans at the respective period ends. The tables also exclude most non classified small commercial and commercial real estate relationships totaling $100,000 or less. These loans are not rated since they are accruing interest and not past due 80 days or more.

Allowance for Loan Losses (“Allowance”)

Activity in the Allowance follows:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in thousands)	2013			2012			2013			2012
Allowance for loan losses at beginning of period	$	22,491		$	22,510		$	23,729		$	24,063
Charge offs - Traditional Banking	(1,627		)	(1,220		)	(4,744		)	(7,444		)
Charge offs - Refund Anticipation Loans	—			—			—			(11,097		)
Total charge offs	(1,627		)	(1,220		)	(4,744		)	(18,541		)
Recoveries - Traditional Banking	371			267			1,231			976
Recoveries - Refund Anticipation Loans	57			460			796			3,883
Total recoveries	428			727			2,027			4,859
Net loan (charge offs) recoveries - Traditional Banking	(1,256		)	(953		)	(3,513		)	(6,468		)
Net loan (charge offs) recoveries - Refund Anticipation Loans	57			460			796			(7,214		)
Net loan (charge offs) recoveries	(1,199		)	(493		)	(2,717		)	(13,682		)
Provision for loan losses - Traditional Banking	2,257			2,543			3,276			6,505
Provision for loan losses - Refund Anticipation Loans	(57		)	(460		)	(796		)	7,214
Total provision for loan losses	2,200			2,083			2,480			13,719
Allowance for loan losses at end of period	$	23,492		$	24,100		$	23,492		$	24,100

The Allowance calculation includes the following qualitative factors, which are considered in combination with the Bank’s historical loss rates in determining the general loss reserve within the Allowance:

· Changes in nature, volume and seasoning of the loan portfolio;

· Changes in experience, ability and depth of lending management and other relevant staff;

· Changes in the quality of the Bank’s loan review system;

· Changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses;

· Changes in the volume and severity of past due, non-accrual and classified loans;

· Changes in the value of underlying collateral for collateral-dependent loans;

· Changes in international, national, regional, and local economic and business conditions and developments that affect the collectibility of the loan portfolio, including the condition of various market segments;

· The existence and effect of any concentrations of credit, and changes in the level of such concentrations; and

· The effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the institution’s existing portfolio.

The following tables present the activity in the Allowance by portfolio class for the three months ended September 30, 2013 and 2012:

										Commercial
	Residential Real Estate									Real Estate -								Warehouse
Three Months Ended	Owner			Non Owner			Commercial			Purchased		Construction &						Lines of
September 30, 2013 (in thousands)	Occupied			Occupied			Real Estate			Whole Loans		Land Development			Commercial			Credit
Beginning balance	$	7,563		$	642		$	8,763		$	34	$	1,587		$	710		$	462
Provision for loan losses	1,198			157			686			—		16			232			(143		)
Loans charged off	(578		)	(67		)	(307		)	—		(16		)	(102		)	—
Recoveries	20			59			38			—		7			19			—
Ending balance	$	8,203		$	791		$	9,180		$	34	$	1,594		$	859		$	319

(continued)

				Refund			Consumer
	Home			Anticipation			Credit						Other
	Equity			Loans			Cards			Overdrafts			Consumer			Total
Beginning balance	$	1,932		$	—		$	344		$	249		$	205		$	22,491
Provision for loan losses	104			(57		)	(18		)	26			(1		)	2,200
Loans charged off	(218		)	—			(60		)	(169		)	(110		)	(1,627		)
Recoveries	55			57			4			95			74			428
Ending balance	$	1,873		$	—		$	270		$	201		$	168		$	23,492

										Commercial
	Residential Real Estate									Real Estate -								Warehouse
Three Months Ended	Owner			Non Owner			Commercial			Purchased		Construction &						Lines of
September 30, 2012 (in thousands)	Occupied			Occupied			Real Estate			Whole Loans		Land Development			Commercial			Credit
Beginning balance	$	6,190		$	897		$	8,271		$	40	$	3,097		$	603		$	223
Provision for loan losses	571			622			743			—		(192		)	140			194
Loans charged off	(348		)	(20		)	(37		)	—		—			(11		)	—
Recoveries	32			2			24			—		28			3			—
Ending balance	$	6,445		$	1,501		$	9,001		$	40	$	2,933		$	735		$	417

(continued)

				Refund			Consumer
	Home			Anticipation			Credit						Other
	Equity			Loans			Cards			Overdrafts			Consumer			Total
Beginning balance	$	2,691		$	—		$	192		$	125		$	181		$	22,510
Provision for loan losses	341			(460		)	11			26			87			2,083
Loans charged off	(633		)	—			(9		)	(100		)	(62		)	(1,220		)
Recoveries	12			460			9			101			56			727
Ending balance	$	2,411		$	—		$	203		$	152		$	262		$	24,100

The following tables present the activity in the Allowance by portfolio class for the nine months ended September 30, 2013 and 2012:

										Commercial
	Residential Real Estate									Real Estate -								Warehouse
Nine Months Ended	Owner			Non Owner			Commercial			Purchased		Construction &						Lines of
September 30, 2013 (in thousands)	Occupied			Occupied			Real Estate			Whole Loans		Land Development			Commercial			Credit
Beginning balance	$	7,006		$	1,049		$	8,843		$	34	$	2,769		$	580		$	541
Provision for loan losses	2,269			(106		)	1,192			—		(604		)	618			(222		)
Loans charged off	(1,291		)	(225		)	(972		)	—		(616		)	(412		)	—
Recoveries	219			73			117			—		45			73			—
Ending balance	$	8,203		$	791		$	9,180		$	34	$	1,594		$	859		$	319

(continued)

				Refund			Consumer
	Home			Anticipation			Credit						Other
	Equity			Loans			Cards			Overdrafts			Consumer			Total
Beginning balance	$	2,348		$	—		$	210		$	198		$	151		$	23,729
Provision for loan losses	(248		)	(796		)	166			153			58			2,480
Loans charged off	(354		)	—			(120		)	(474		)	(280		)	(4,744		)
Recoveries	127			796			14			324			239			2,027
Ending balance	$	1,873		$	—		$	270		$	201		$	168		$	23,492

										Commercial
	Residential Real Estate									Real Estate -								Warehouse
Nine Months Ended	Owner			Non Owner			Commercial			Purchased		Construction &						Lines of
September 30, 2012 (in thousands)	Occupied			Occupied			Real Estate			Whole Loans		Land Development			Commercial			Credit
Beginning balance	$	5,212		$	1,142		$	7,724		$	—	$	3,042		$	1,025		$	104
Allocation of previously unallocated allowance	1,117			146			47			—		—			—			—
Provision for loan losses	2,617			255			1,513			40		1,604			(293		)	313
Loans charged off	(2,422		)	(318		)	(353		)	—		(1,796		)	(18		)	—
Recoveries	183			14			70			—		83			21			—
Ending balance	$	6,707		$	1,239		$	9,001		$	40	$	2,933		$	735		$	417

(continued)

				Refund			Consumer
	Home			Anticipation			Credit						Other
	Equity			Loans			Cards			Overdrafts			Consumer			Unallocated*			Total
Beginning balance	$	2,984		$	—		$	503		$	135		$	227		$	1,965		$	24,063
Allocation of previously unallocated allowance*	536			—			47			17			55			(1,965		)	—
Provision for loan losses	765			7,214			(293		)	(14		)	(2		)	—			13,719
Loans charged off	(1,947		)	(11,097		)	(87		)	(318		)	(185		)	—			(18,541		)
Recoveries	73			3,883			33			332			167			—			4,859
Ending balance	$	2,411		$	—		$	203		$	152		$	262		$	—		$	24,100

* Allocation was made January 1, 2012 based on a methodology change to the Company’s Allowance .

Non-performing Loans and Non-performing Assets

Detail of non-performing loans and non-performing assets follows:

(dollars in thousands)	September 30, 2013		December 31, 2012
Loans on non-accrual status(1)	$	18,407	$	18,506
Loans past due 90 days-or-more and still on accrual(2)	1,839		3,173
Total non-performing loans	20,246		21,679
Other real estate owned	15,247		26,203
Total non-performing assets	$	35,493	$	47,882

Credit Quality Ratios:
Non-performing loans to total loans	0.79	%	0.82	%
Non-performing assets to total loans (including OREO)	1.38	%	1.79	%
Non-performing assets to total assets	1.07	%	1.41	%

(1) Loans on non-accrual status include impaired loans.

(2) All loans past due 90 days-or-more and still accruing are PCI loans accounted for under ASC 310-30.

Non-performing loans and non-performing asset balances related to the 2012 FDIC-assisted acquisitions, and included in the tables above at September 30, 2013 and December 31, 2012, are presented in the tables below:

	Tennessee		First		Total
	Commerce		Commercial		Acquired
September 30, 2013 (dollars in thousands)	Bank		Bank		Banks
Loans on non-accrual status(1)	$	21	$	18	$	39
Loans past due 90 days-or-more and still on accrual(2)	414		1,425		1,839
Total non-performing loans	435		1,443		1,878
Other real estate owned	705		4,798		5,503
Total non-performing assets	$	1,140	$	6,241	$	7,381

Credit Quality Ratios - Acquired Banks:
Non-performing loans to total loans	1.77	%
Non-performing assets to total loans (including OREO)	6.61	%
Non-performing assets to total assets	6.57	%

(1) Loans on non-accrual status include impaired loans.

(2) All loans past due 90 days-or-more and still accruing were PCI loans accounted for under ASC 310-30.

	Tennessee		First		Total
	Commerce		Commercial		Acquired
December 31, 2012 (dollars in thousands)	Bank		Bank		Banks
Loans on non-accrual status (1)	$	—	$	—	$	—
Loans past due 90-days-or-more and still on accrual (2)	801		2,372		3,173
Total non-performing loans	801		2,372		3,173
Other real estate owned	2,100		12,398		14,498
Total non-performing assets	$	2,901	$	14,770	$	17,671

Credit Quality Ratios - Acquired Banks:
Non-performing loans to total loans	2.29	%
Non-performing assets to total loans (including OREO)	11.54	%
Non-performing assets to total assets	8.73	%

(1) Loans on non-accrual status include impaired loans.

(2) All loans past due 90 days-or-more and still accruing were PCI loans accounted for under ASC 310-30.

See additional discussion regarding the TCB and FCB acquisitions under Footnote 2 “2012 FDIC-Assisted Acquisitions of Failed Banks” in this section of the filing.

The following table presents the recorded investment in non-accrual loans and loans past due 90-days-or-more and still on accrual by class of loans:

					Loans Past Due 90-Days-or-More
	Non-Accrual Loans				and Still Accruing Interest
(in thousands)	September 30, 2013		December 31, 2012		September 30, 2013		December 31, 2012
Residential real estate:
Owner occupied	$	8,708	$	9,298	$	396	$	730
Non owner occupied	1,482		1,376		—		—
Commercial real estate	6,243		3,756		139		712
Commercial real estate - purchased whole loans	—		—		—		—
Construction & land development	803		1,777		96		531
Commercial	329		334		1,208		1,200
Warehouse lines of credit	—		—		—		—
Home equity	722		1,868		—		—
Consumer:
Credit cards	—		—		—		—
Overdrafts	—		—		—		—
Other consumer	120		97		—		—
Total	$	18,407	$	18,506	$	1,839	$	3,173

Non-accrual loans and loans past due 90-days-or-more and still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans. Non-accrual loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and held current for six consecutive months and future payments are reasonably assured. Troubled debt restructurings (“TDR”s) on non-accrual status are reviewed for return to accrual status on an individual basis, with additional consideration given to performance under the modified terms. Loans past due 90-days-or-more and still on accrual currently only represent PCI loans accounted for under ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality.

Delinquent Loans

The following tables present the aging of the recorded investment in loans by class of loans:

	30 - 59			60 - 89			Greater than			Total			Total
September 30, 2013	Days			Days			90 Days			Loans			Loans Not		Total
(dollars in thousands)	Delinquent			Delinquent			Delinquent*			Delinquent			Delinquent		Loans
Residential real estate:
Owner occupied	$	2,176		$	1,572		$	3,653		$	7,401		$	1,093,232	$	1,100,633
Non owner occupied	342			983			131			1,456			108,185		109,641
Commercial real estate	703			—			2,417			3,120			763,693		766,813
Commercial real estate - purchased whole loans	—			—			—			—			34,017		34,017
Construction & land development	—			97			96			193			53,425		53,618
Commercial	4			129			1,392			1,525			112,891		114,416
Warehouse lines of credit	—			—			—			—			122,810		122,810
Home equity	720			8			355			1,083			224,473		225,556
Consumer:
Credit cards	31			24			—			55			8,893		8,948
Overdrafts	141			2			—			143			708		851
Other consumer	73			17			21			111			16,021		16,132
Total	$	4,190		$	2,832		$	8,065		$	15,087		$	2,538,348	$	2,553,435
Delinquent loans to total loans	0.16		%	0.11		%	0.32		%	0.59		%

	30 - 59			60 - 89			Greater than			Total			Total
December 31, 2012	Days			Days			90 Days			Loans			Loans Not		Total
(dollars in thousands)	Delinquent			Delinquent			Delinquent *			Delinquent			Delinquent		Loans
Residential real estate:
Owner occupied	$	2,210		$	1,978		$	4,712		$	8,900		$	1,136,595	$	1,145,495
Non owner occupied	907			1,128			864			2,899			71,640		74,539
Commercial real estate	103			486			2,051			2,640			712,002		714,642
Commercial real estate - purchased whole loans	—			—			—			—			33,531		33,531
Construction & land development	—			194			1,930			2,124			66,090		68,214
Commercial	222			733			1,307			2,262			128,419		130,681
Warehouse lines of credit	—			—			—			—			216,576		216,576
Home equity	521			251			882			1,654			239,953		241,607
Consumer:
Credit cards	60			5			—			65			8,651		8,716
Overdrafts	167			1			—			168			787		955
Other consumer	102			28			2			132			15,109		15,241
Total	$	4,292		$	4,804		$	11,748		$	20,844		$	2,629,353	$	2,650,197
Delinquent loans to total loans	0.16		%	0.18		%	0.44		%	0.79		%

* - All loans past due 90 days-or-more, excluding PCI loans, as of September 30, 2013 and December 31, 2012 were on non-accrual status.

An aging of the recorded investment in past due loans related to the 2012 FDIC-assisted acquisitions and included in the preceding tables at September 30, 2013 and December 31, 2012, are presented below:

	30 - 59			60 - 89			Greater than			Total			Total		Total
September 30, 2013	Days			Days			90 Days			Loans			Loans Not		Acquired Bank
(dollars in thousands)	Delinquent			Delinquent			Delinquent *			Delinquent			Delinquent		Loans
Residential real estate	$	344		$	585		$	397		$	1,326		$	29,286	$	30,612
Commercial real estate	—			—			139			139			63,602		63,741
Construction & land development	—			—			96			96			2,691		2,787
Commercial	—			129			1,207			1,336			2,593		3,929
Home equity	—			—			—			—			4,692		4,692
Consumer:
Credit cards	—			—			—			—			213		213
Overdrafts	—			—			—			—			6		6
Other consumer	3			—			21			24			216		240
Total	$	347		$	714		$	1,860		$	2,921		$	103,299	$	106,220
Delinquent acquired bank loans to total acquired bank loans	0.33		%	0.67		%	1.75		%	2.75		%

	30 - 59			60 - 89			Greater than			Total			Total		Total
December 31, 2012	Days			Days			90 Days			Loans			Loans Not		Acquired Bank
(dollars in thousands)	Delinquent			Delinquent			Delinquent *			Delinquent			Delinquent		Loans
Residential real estate	$	159		$	1,430		$	729		$	2,318		$	42,411	$	44,729
Commercial real estate	—			165			698			863			68,910		69,773
Construction & land development	—			194			531			725			6,811		7,536
Commercial	—			732			1,215			1,947			8,742		10,689
Home equity	83			—			—			83			4,485		4,568
Consumer:
Credit cards	—			—			—			—			321		321
Overdrafts	—			—			—			—			12		12
Other consumer	4			27			—			31			957		988
Total	$	246		$	2,548		$	3,173		$	5,967		$	132,649	$	138,616
Delinquent acquired bank loans to total acquried bank loans	0.18		%	1.84		%	2.29		%	4.30		%

* - All loans past due 90 days-or-more, excluding PCI loans, as of September 30, 2013 and December 31, 2012 were on non-accrual status.

See additional discussion regarding the TCB and FCB acquisitions under Footnote 2 “2012 FDIC-Assisted Acquisitions of Failed Banks” in this section of the filing.

Impaired Loans

The Bank defines impaired loans as follows:

· All loans internally rated as “Substandard,” “PCI-Sub,” “Doubtful” or “Loss;”

· All loans on non-accrual status and non-PCI loans past due 90 days-or-more still on accrual;

· All retail and commercial TDRs; and

· Any other situation where the collection of total amount due for a loan is improbable or otherwise meets the definition of impaired.

Information regarding the Bank’s impaired loans follows:

(in thousands)	September 30, 2013		December 31, 2012
Loans with no allocated allowance for loan losses	$	25,835	$	36,325
Loans with allocated allowance for loan losses	78,298		69,382
Total impaired loans	$	104,133	$	105,707
Amount of the allowance for loan losses allocated	$	7,304	$	8,531

Approximately $29 million and $18 million of impaired loans at September 30, 2013 and December 31, 2012 were loans acquired in the Bank’s 2012 FDIC-assisted acquisitions. Approximately $9 million of the loans acquired during 2012 became classified during 2013 as “impaired” through a troubled debt restructuring. See additional discussion regarding the TCB and FCB acquisitions under Footnote 2 “2012 FDIC-Assisted Acquisitions of Failed Banks” in this section of the filing.

The following tables present the balance in the Allowance and the recorded investment in loans by portfolio class based on impairment method as of September 30, 2013 and December 31, 2012:

							Commercial
	Residential Real Estate						Real Estate -						Warehouse
	Owner		Non Owner		Commercial		Purchased		Construction &				Lines of
September 30, 2013 (in thousands)	Occupied		Occupied		Real Estate		Whole Loans		Land Development		Commercial		Credit
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment, excluding PCI loans	$	3,788	$	86	$	1,762	$	—	$	268	$	14	$	—
Collectively evaluated for impairment	4,376		489		6,878		34		1,319		501		319
PCI loans with post acquisition impairment	39		216		540		—		7		344		—
PCI loans without post acquisition impairment	—		—		—		—		—		—		—
Total ending allowance for loan losses	$	8,203	$	791	$	9,180	$	34	$	1,594	$	859	$	319
Loans:
Impaired loans individually evaluated, excluding PCI loans	$	39,312	$	2,500	$	31,805	$	—	$	3,514	$	4,576	$	—
Loans collectively evaluated for impairment	1,058,185		98,482		699,986		34,017		48,708		107,660		122,810
PCI loans with post acquisition impairment	1,231		5,875		10,687		—		317		1,890		—
PCI loans without post acquisition impairment	1,905		2,784		24,335		—		1,079		290		—
Total ending loan balance	$	1,100,633	$	109,641	$	766,813	$	34,017	$	53,618	$	114,416	$	122,810

(continued)

			Consumer
	Home		Credit				Other
	Equity		Cards		Overdrafts		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment, excluding PCI loans	$	185	$	—	$	—	$	54	$	6,157
Collectively evaluated for impairment	1,688		270		201		113		16,188
PCI loans with post acquisition impairment	—		—		—		1		1,147
PCI loans without post acquisition impairment	—		—		—		—		—
Total ending allowance for loan losses	$	1,873	$	270	$	201	$	168	$	23,492
Loans:
Impaired loans individually evaluated, excluding PCI loans	$	2,297	$	—	$	—	$	121	$	84,125
Loans collectively evaluated for impairment	223,259		8,948		851		15,977		2,418,883
PCI loans with post acquisition impairment	—		—		—		8		20,008
PCI loans without post acquisition impairment	—		—		—		26		30,419
Total ending loan balance	$	225,556	$	8,948	$	851	$	16,132	$	2,553,435

							Commercial
	Residential Real Estate						Real Estate -						Warehouse
	Owner		Non Owner		Commercial		Purchased		Construction &				Lines of
December 31, 2012 (in thousands)	Occupied		Occupied		Real Estate		Whole Loans		Land Development		Commercial		Credit
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment, excluding PCI loans	$	3,032	$	521	$	2,919	$	—	$	1,157	$	348	$	—
Collectively evaluated for impairment	3,972		527		5,924		34		1,612		232		541
PCI loans with post acquisition impairment	2		1		—		—		—		—		—
PCI loans without post acquisition impairment	—		—		—		—		—		—		—
Total ending allowance for loan losses	$	7,006	$	1,049	$	8,843	$	34	$	2,769	$	580	$	541
Loans:
Impaired loans individually evaluated, excluding PCI loans	$	44,429	$	4,235	$	40,593	$	—	$	5,268	$	6,972	$	—
Loans collectively evaluated for impairment	1,080,792		67,974		629,687		33,531		61,254		119,429		216,576
PCI loans with post acquisition impairment	136		184		—		—		—		—		—
PCI loans without post acquisition impairment	20,138		2,146		44,362		—		1,692		4,280		—
Total ending loan balance	$	1,145,495	$	74,539	$	714,642	$	33,531	$	68,214	$	130,681	$	216,576

(continued)

			Consumer
	Home		Credit				Other
	Equity		Cards		Overdrafts		Consumer		Total
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment, excluding PCI loans	$	496	$	—	$	—	$	55	$	8,528
Collectively evaluated for impairment	1,852		210		198		96		15,198
PCI loans with post acquisition impairment	—		—		—		—		3
PCI loans without post acquisition impairment	—		—		—		—		—
Total ending allowance for loan losses	$	2,348	$	210	$	198	$	151	$	23,729
Loans:
Impaired loans individually evaluated, excluding PCI loans	$	3,420	$	—	$	—	$	470	$	105,387
Loans collectively evaluated for impairment	238,187		8,716		955		14,731		2,471,832
PCI loans with post acquisition impairment	—		—		—		—		320
PCI loans without post acquisition impairment	—		—		—		40		72,658
Total ending loan balance	$	241,607	$	8,716	$	955	$	15,241	$	2,650,197

The following tables present loans individually evaluated for impairment by class of loans as of September 30, 2013 and December 31, 2012 and for the three and nine months ended September 30, 2013 and 2012. The difference between the “Unpaid Principal Balance” and “Recorded Investment” columns represents life-to-date partial write downs/charge offs taken on individual impaired credits.

	Ending Balance
	As of						Three Months Ended				Nine Months Ended
	September 30, 2013						September 30, 2013				September 30, 2013
	Unpaid				Allowance for		Average		Interest		Average		Interest
	Principal		Recorded		Loan Losses		Recorded		Income		Recorded		Income
(in thousands)	Balance		Investment		Allocated		Investment		Recognized		Investment		Recognized
Impaired loans with no related allowance recorded:
Residential real estate:
Owner occupied	$	3,152	$	3,147	$	—	$	6,088	$	35	$	9,876	$	89
Non owner occupied	1,508		1,293		—		1,269		—		1,411		18
Commercial real estate	13,953		13,884		—		18,566		451		18,382		809
Commercial real estate - purchased whole loans	—		—		—		—		—		—		—
Construction & land development	1,837		1,837		—		1,930		73		2,126		127
Commercial	4,426		4,378		—		3,460		204		3,770		413
Warehouse lines of credit	—		—		—		—		—		—		—
Home equity	1,342		1,296		—		1,724		34		1,867		64
Consumer:
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Other consumer	—		—		—		37		—		221		—
Impaired loans with an allowance recorded:
Residential real estate:
Owner occupied	38,261		37,396		3,827		36,008		315		33,841		876
Non owner occupied	7,082		7,082		302		5,688		166		4,661		208
Commercial real estate	29,622		28,608		2,302		26,508		549		26,055		998
Commercial real estate - purchased whole loans	—		—		—		—		—		—		—
Construction & land development	2,090		1,994		275		2,000		30		2,674		75
Commercial	2,088		2,088		358		2,641		21		2,702		27
Warehouse lines of credit	—		—		—		—		—		—		—
Home equity	1,027		1,001		185		1,026		21		1,289		41
Consumer:
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Other consumer	129		129		55		116		1		92		3
Total impaired loans	$	106,517	$	104,133	$	7,304	$	107,061	$	1,900	$	108,967	$	3,748

	Ending Balance
	As of						Three Months Ended				Nine Months Ended
	December 31, 2012						September 30, 2012				September 30, 2012
	Unpaid				Allowance for		Average		Interest		Average		Interest
	Principal		Recorded		Loan Losses		Recorded		Income		Recorded		Income
(in thousands)	Balance		Investment		Allocated		Investment		Recognized		Investment		Recognized
Impaired loans with no related allowance recorded:
Residential real estate:
Owner occupied	$	13,299	$	13,107	$	—	$	28,249	$	177	$	25,378	$	397
Non owner occupied	955		794		—		2,097		138		1,539		138
Commercial real estate	14,293		14,293		—		10,416		404		8,924		456
Commercial real estate - purchased whole loans	—		—		—		—		—		—		—
Construction & land development	3,090		2,085		—		2,637		35		3,018		54
Commercial	4,206		4,114		—		2,096		28		2,127		68
Warehouse lines of credit	—		—		—		—		—		—		—
Home equity	1,753		1,546		—		782		—		648		—
Consumer:
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Other consumer	386		386		—		214		13		123		13
Impaired loans with an allowance recorded:
Residential real estate:
Owner occupied	31,709		31,458		3,034		6,927		6		5,886		33
Non owner occupied	3,695		3,625		522		2,270		6		2,249		33
Commercial real estate	26,710		26,300		2,919		27,233		236		26,164		738
Commercial real estate - purchased whole loans	—		—		—		—		—		—		108
Construction & land development	3,416		3,183		1,157		5,165		36		6,108		116
Commercial	2,858		2,858		348		2,583		47		2,520		—
Warehouse lines of credit	—		—		—		—		—		—		—
Home equity	1,874		1,874		496		1,297		6		1,675		14
Consumer:
Credit cards	—		—		—		—		—		—		—
Overdrafts	—		—		—		—		—		—		—
Other consumer	84		84		55		—		—		—		—
Total impaired loans	$	108,328	$	105,707	$	8,531	$	91,966	$	1,132	$	86,359	$	2,168

Troubled Debt Restructurings

A TDR is the situation where, due to a borrower’s financial difficulties, the Bank grants a concession to the borrower that the Bank would not otherwise have considered. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of their debt in the foreseeable future without the modification. This evaluation is performed under the Bank’s internal underwriting policy.

All TDRs are considered “Impaired” loans, including loans acquired in acquisitions of failed banks and subsequently restructured. The majority of the Bank’s commercial related and construction TDRs involve a restructuring of loan terms such as a reduction in the payment amount to require only interest and escrow (if required) and/or extending the maturity date of the loan. The substantial majority of the Bank’s residential real estate TDRs involve reducing the client’s loan payment through a rate reduction for a set period of time based on the borrower’s ability to service the modified loan payment.

Management determines whether to classify a TDR as non-performing based on its accrual status prior to modification. Non-accrual loans modified as TDRs remain on non-accrual status and continue to be reported as non-performing loans for a minimum of six months. Accruing loans modified as TDRs are evaluated for non-accrual status based on a current evaluation of the borrower’s financial condition and ability and willingness to service the modified debt. At September 30, 2013 and December 31, 2012, $12 million and $14 million of TDRs were also non-accrual loans.

Detail of TDRs differentiated by loan type and accrual status follows:

	Troubled Debt		Troubled Debt		Total
	Restructurings on		Restructurings on		Troubled Debt
September 30, 2013 (in thousands)	Non-Accrual Status		Accrual Status		Restructurings
Residential real estate	$	5,487	$	32,248	$	37,735
Commercial real estate	5,869		23,095		28,964
Construction & land development	803		2,707		3,510
Commercial	145		4,431		4,576
Total troubled debt restructurings	$	12,304	$	62,481	$	74,785

	Troubled Debt		Troubled Debt		Total
	Restructurings on		Restructurings on		Troubled Debt
December 31, 2012 (in thousands)	Non-Accrual Status		Accrual Status		Restructurings
Residential real estate	$	6,951	$	36,758	$	43,709
Commercial real estate	5,149		26,174		31,323
Construction & land development	1,595		2,167		3,762
Commercial	269		4,244		4,513
Total troubled debt restructurings	$	13,964	$	69,343	$	83,307

The Bank considers a TDR to be performing to its modified terms if the loan is in accrual status and not past due 30 days or more as of the reporting date. A summary of the categories of TDR loan modifications outstanding and respective performance under modified terms at September 30, 2013 and December 31, 2012 follows:

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
	Performing to		Not Performing to		Troubled Debt
September 30, 2013 (in thousands)	Modified Terms		Modified Terms		Restructurings
Residential real estate loans (including home equity loans):
Interest only payments	$	598	$	874	$	1,472
Rate reduction	25,157		3,134		28,291
Principal deferral	2,310		1,782		4,092
Bankruptcies	2,833		1,047		3,880
Total residential TDRs	30,898		6,837		37,735
Commercial related and construction/land development loans:
Interest only payments	4,225		854		5,079
Rate reduction	17,090		1,374		18,464
Principal deferral	8,440		4,675		13,115
Bankruptcies	—		392		392
Total commercial TDRs	29,755		7,295		37,050
Total troubled debt restructurings	$	60,653	$	14,132	$	74,785

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
	Performing to		Not Performing to		Troubled Debt
December 31, 2012 (in thousands)	Modified Terms		Modified Terms		Restructurings
Residential real estate loans (including home equity loans):
Interest only payments	$	957	$	624	$	1,581
Rate reduction	23,250		4,427		27,677
Principal deferral	9,041		2,092		11,133
Bankruptcies	2,225		1,093		3,318
Total residential TDRs	35,473		8,236		43,709
Commercial related and construction/land development loans:
Interest only payments	7,002		342		7,344
Rate reduction	8,573		5,142		13,715
Principal deferral	15,494		3,045		18,539
Total commercial TDRs	31,069		8,529		39,598
Total troubled debt restructurings	$	66,542	$	16,765	$	83,307

As of September 30, 2013 and December 31, 2012, 81% and 80% of the Bank’s TDRs were performing according to their modified terms. The Bank had provided $6 million and $7 million of specific reserve allocations to customers whose loan terms have been modified in TDRs as of September 30, 2013 and December 31, 2012. Specific reserve allocations are generally assessed prior to loans being modified as a TDR, as most of these loans migrate from the Bank’s internal watch list and have been specifically provided for or reserved for as part of the Bank’s normal loan loss provisioning methodology. The Bank had no commitments to lend any additional material amounts to its existing TDR relationships at September 30, 2013 and December 31, 2012.

A summary of the categories of TDR loan modifications that occurred during the three months ended September 30, 2013 and 2012 follows:

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
Three Months Ended	Performing to		Not Performing to		Troubled Debt
September 30, 2013 (in thousands)	Modified Terms		Modified Terms		Restructurings
Residential real estate loans (including home equity loans):
Rate reduction	$	1,082	$	—	$	1,082
Bankruptcies	172		272		444
Total residential TDRs	1,254		272		1,526
Commercial related and construction/land development loans:
Interest only	441		145		586
Rate reduction	3,407		189		3,596
Principal deferral	1,456		—		1,456
Bankruptcies	—		167		167
Total commercial TDRs	5,304		501		5,805
Total troubled debt restructurings	$	6,558	$	773	$	7,331

The table above is inclusive of loans which were TDRs at the end of previous periods and were re-modified during the current period.

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
Three Months Ended	Performing to		Not Performing to		Troubled Debt
September 30, 2012 (in thousands)	Modified Terms		Modified Terms		Restructurings
Residential real estate loans (including home equity loans):
Interest only	$	793	$	1,103	$	1,896
Rate reduction	3,244		838		4,082
Principal deferral	3,670		85		3,755
Total residential TDRs	7,707		2,026		9,733
Commercial related and construction/land development loans:
Interest only	120		—		120
Rate reduction	534		—		534
Principal deferral	450		—		450
Total commercial TDRs	1,104		—		1,104
Total troubled debt restructurings	$	8,811	$	2,026	$	10,837

The table above is inclusive of loans which were TDRs at the end of previous periods and were re-modified during the current period.

A summary of the categories of TDR loan modifications that occurred during the nine months ended September 30, 2013 and 2012 follows:

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
Nine Months Ended	Performing to		Not Performing to		Troubled Debt
September 30, 2013 (in thousands)	Modified Terms		Modified Terms		Restructurings
Residential real estate loans (including home equity loans):
Interest only	$	165	$	—	$	165
Rate reduction	2,703		689		3,392
Principal deferral	64		160		224
Bankruptcies	1,405		826		2,231
Total residential TDRs	4,337		1,675		6,012
Commercial related and construction/land development loans:
Interest only	719		145		864
Rate reduction	3,407		189		3,596
Principal deferral	1,765		—		1,765
Bankruptcies	—		167		167
Total commercial TDRs	5,891		501		6,392
Total troubled debt restructurings	$	10,228	$	2,176	$	12,404

The table above is inclusive of loans which were TDRs at the end of previous periods and were re-modified during the current period.

	Troubled Debt		Troubled Debt
	Restructurings		Restructurings		Total
Nine Months Ended	Performing to		Not Performing to		Troubled Debt
September 30, 2012 (in thousands)	Modified Terms		Modified Terms		Restructurings
Residential real estate loans (including home equity loans):
Interest only	$	511	$	1,727	$	2,238
Rate reduction	7,781		454		8,235
Principal deferral	6,480		1,108		7,588
Total residential TDRs	14,772		3,289		18,061
Commercial related and construction/land development loans:
Interest only	3,690		708		4,398
Rate reduction	3,277		—		3,277
Principal deferral	4,095		455		4,550
Total commercial TDRs	11,062		1,163		12,225
Total troubled debt restructurings	$	25,834	$	4,452	$	30,286

The table above is inclusive of loans which were TDRs at the end of previous periods and were re-modified during the current year.

As of September 30, 2013 and 2012, 89% and 81% of the Bank’s TDRs that occurred during the three months ended September 30, 2013 and 2012 were performing according to their modified terms. The Bank provided $294,000 and $576,000 in specific reserve allocations to customers whose loan terms were modified in TDRs during the three months ended September 30, 2013 and 2012.

As of September 30, 2013 and 2012, 82% and 85% of the Bank’s TDRs that occurred during the nine months ended September 30, 2013 and 2012 were performing according to their modified terms. The Bank provided $1 million and $2 million in specific reserve allocations to customers whose loan terms were modified in TDRs during the nine months ended September 30, 2013 and 2012. As stated above, specific reserves are generally assessed prior to loans being modified as a TDR, as most of these loans migrate from the Bank’s internal watch list and have been specifically reserved for as part of the Bank’s normal reserving methodology.

There was no significant change between the pre and post modification loan balances at September 30, 2013 and December 31, 2012.

The following tables present loans by class modified as troubled debt restructurings within the previous twelve months of September 30, 2013 and 2012 and for which there was a payment default during the three months ended September 30, 2013 and 2012:

Three Months Ended	Number of	Recorded
September 30, 2013 (dollars in thousands)	Loans	Investment
Residential real estate:
Owner occupied	14	$	979
Non owner occupied	—	—
Commercial real estate	2	357
Commercial real estate - purchased whole loans	—	—
Construction & land development	—	—
Commercial	1	145
Warehouse lines of credit	—	—
Home equity	1	68
Consumer:
Credit cards	—	—
Overdrafts	—	—
Other consumer	—	—
Total	18	$	1,549

Three Months Ended	Number of	Recorded
September 30, 2012 (dollars in thousands)	Loans	Investment
Residential real estate	10	$	2,131
Commercial real estate	—	—
Commercial real estate - purchased whole loans	—	—
Real estate construction	—	—
Commercial	—	—
Warehouse lines of credit	—	—
Home equity	—	—
Consumer:
Credit cards	—	—
Overdrafts	—	—
Other consumer	—	—
Total	10	$	2,131

The following tables present loans by class modified as troubled debt restructurings within the previous twelve months of September 30, 2013 and 2012 and for which there was a payment default during the nine months ended September 30, 2013 and 2012:

Nine Months Ended	Number of	Recorded
September 30, 2013 (dollars in thousands)	Loans	Investment
Residential real estate:
Owner occupied	32	$	2,434
Non owner occupied	—	—
Commercial real estate	2	357
Commercial real estate - purchased whole loans	—	—
Construction & land development	—	—
Commercial	1	145
Warehouse lines of credit	—	—
Home equity	2	74
Consumer:
Credit cards	—	—
Overdrafts	—	—
Other consumer	—	—
Total	37	$	3,010

Nine Months Ended	Number of	Recorded
September 30, 2012 (dollars in thousands)	Loans	Investment
Residential real estate	11	$	2,980
Commercial real estate	3	970
Commercial real estate - purchased whole loans	—	—
Real estate construction	4	1,974
Commercial	—	—
Warehouse lines of credit	—	—
Home equity	—	—
Consumer:
Credit cards	—	—
Overdrafts	—	—
Other consumer	—	—
Total	18	$	5,924

XML

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Parenthetical) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Class A Common Stock
Dividend declared common stock, per share (in dollars per share)	$ 0.176	$ 0.165	$ 0.517	$ 0.484
Class B Common Stock
Dividend declared common stock, per share (in dollars per share)	$ 0.160	$ 0.150	$ 0.470	$ 0.440

XML

LOANS AND ALLOWANCE FOR LOAN AND LOSSES (Details 7) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013 item	Dec. 31, 2012
Aging or recorded investments in loans
Non-Accrual Loan	$ 18,407	$ 18,506
Loans Past Due 90 Days or More and Still Accruing Interest	1,839	3,173
Number of consecutive months payments received before non-accrual loans returned to accrual status (in months)	6
Residential Real Estate - Owner Occupied
Aging or recorded investments in loans
Non-Accrual Loan	8,708	9,298
Loans Past Due 90 Days or More and Still Accruing Interest	396	730
Residential Real Estate - Non Owner Occupied
Aging or recorded investments in loans
Non-Accrual Loan	1,482	1,376
Commercial real estate
Aging or recorded investments in loans
Non-Accrual Loan	6,243	3,756
Loans Past Due 90 Days or More and Still Accruing Interest	139	712
Construction & Land Development
Aging or recorded investments in loans
Non-Accrual Loan	803	1,777
Loans Past Due 90 Days or More and Still Accruing Interest	96	531
Commercial
Aging or recorded investments in loans
Non-Accrual Loan	329	334
Loans Past Due 90 Days or More and Still Accruing Interest	1,208	1,200
Home equity
Aging or recorded investments in loans
Non-Accrual Loan	722	1,868
Consumer: Other consumer
Aging or recorded investments in loans
Non-Accrual Loan	$ 120	$ 97

XML

LOANS AND ALLOWANCE FOR LOAN AND LOSSES (Details 2) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2013 Tennessee Commerce Bank ("TCB")	Dec. 31, 2012 Tennessee Commerce Bank ("TCB")	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans	Jan. 27, 2012 Tennessee Commerce Bank ("TCB") Loans Contractual Amount	Sep. 30, 2013 First Commercial Bank ("FCB")	Dec. 31, 2012 First Commercial Bank ("FCB")	Sep. 07, 2012 First Commercial Bank ("FCB") Loans	Sep. 07, 2012 First Commercial Bank ("FCB") Loans Contractual Amount	Sep. 30, 2013 TCB and FCB acquisitions	Dec. 31, 2012 TCB and FCB acquisitions
2012 FDIC- Assisted Acquisitions of Failed Banks
Financial assets					$ 57,276	$ 79,112			$ 130,351	$ 171,744
Contractually-required principal			34,890	42,188			98,648	139,156			133,538	181,344
Non-accretable difference			(5,089)	(10,393)			(18,433)	(28,870)			(23,522)	(39,263)
Accretable difference			(1,074)	(831)			(2,722)	(2,634)			(3,796)	(3,465)
Total carrying value of loans	$ 2,553,435	$ 2,650,197	$ 28,727	$ 30,964			$ 77,493	$ 107,652			$ 106,220	$ 138,616

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EARNINGS PER SHARE (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
EARNINGS PER SHARE
Net income	$ 4,603	$ 20,668	$ 24,078	$ 112,718
Weighted average shares outstanding	20,787	20,948	20,811	20,954
Effect of dilutive securities (in shares)	140	81	94	78
Average shares outstanding including dilutive securities	20,927	21,029	20,905	21,032
DILUTED EARNINGS PER SHARE:
Antidilutive stock options (in shares)	13,500	219,350	113,000	219,350
Class A Common Stock
EARNINGS PER SHARE
Cash dividend premium per share (as a percent)	10.00%
BASIC EARNINGS PER SHARE:
Basic earnings per share	$ 0.22	$ 0.99	$ 1.16	$ 5.38
DILUTED EARNINGS PER SHARE:
Diluted earnings per share	$ 0.22	$ 0.98	$ 1.16	$ 5.36
Class B Common Stock
BASIC EARNINGS PER SHARE:
Basic earnings per share	$ 0.21	$ 0.97	$ 1.12	$ 5.34
DILUTED EARNINGS PER SHARE:
Diluted earnings per share	$ 0.21	$ 0.97	$ 1.11	$ 5.32

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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) (USD $)	3 Months Ended	9 Months Ended		3 Months Ended		9 Months Ended	0 Months Ended	3 Months Ended
	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012 First Commercial Bank ("FCB")	Sep. 30, 2012 First Commercial Bank ("FCB")	Sep. 30, 2013 First Commercial Bank ("FCB")	Sep. 07, 2012 First Commercial Bank ("FCB") First Quarter 2013 Recast Adjustments	Mar. 31, 2013 First Commercial Bank ("FCB") First Quarter 2013 Recast Adjustments
Adjustments to the FCB acquired assets
Bargain purchase gain	$ 26,923,000	$ 1,324,000	$ 54,726,000	$ 712,000	$ 27,100,000	$ 1,000	$ 1,324,000	$ 1,300,000

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OFF BALANCE SHEET RISKS, COMMITMENTS AND CONTINGENT LIABILITIES (Details 2) (Pending, Putative class action)	Sep. 30, 2013 item
Pending | Putative class action
Lawsuit
Number of claims	7
Number of counts divided from Count One in the Amended Complaint	2

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FAIR VALUE (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended				9 Months Ended	12 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013 Private label mortgage backed security Fair Value, Measurements, Recurring Fair Value, Inputs, Level 3	Dec. 31, 2012 Private label mortgage backed security Fair Value, Measurements, Recurring Fair Value, Inputs, Level 3	Sep. 30, 2013 Private label mortgage backed security Discounted cash flow Minimum Fair Value, Measurements, Recurring Fair Value, Inputs, Level 3	Dec. 31, 2012 Private label mortgage backed security Discounted cash flow Minimum Fair Value, Measurements, Recurring Fair Value, Inputs, Level 3	Sep. 30, 2013 Private label mortgage backed security Discounted cash flow Maximum Fair Value, Measurements, Recurring Fair Value, Inputs, Level 3	Dec. 31, 2012 Private label mortgage backed security Discounted cash flow Maximum Fair Value, Measurements, Recurring Fair Value, Inputs, Level 3
Fair value inputs quantitative information
Transfer of assets between level 3	$ 0	$ 0	$ 0	$ 0
Mortgage backed security fair value					$ 5,457	$ 5,687
Constant prepayment rate (as a percent)							0.67%	1.00%	7.00%	6.00%
Probability of default (as a percent)							3.00%	3.50%	7.00%	7.00%
Loss severity (as a percent)							60.00%	60.00%	81.00%	70.00%

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LOANS AND ALLOWANCE FOR LOAN AND LOSSES (Details 14) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013 item	Sep. 30, 2012 item	Sep. 30, 2013 item	Sep. 30, 2012 item
Troubled Debt Restructurings disclosures
Number of Loans	18	10	37	18
Recorded Investment	$ 1,549	$ 2,131	$ 3,010	$ 5,924
Residential Real Estate - Owner Occupied
Troubled Debt Restructurings disclosures
Number of Loans	14	10	32	11
Recorded Investment	979	2,131	2,434	2,980
Commercial real estate
Troubled Debt Restructurings disclosures
Number of Loans	2		2	3
Recorded Investment	357		357	970
Construction & Land Development
Troubled Debt Restructurings disclosures
Number of Loans				4
Recorded Investment				1,974
Commercial
Troubled Debt Restructurings disclosures
Number of Loans	1		1
Recorded Investment	145		145
Home equity
Troubled Debt Restructurings disclosures
Number of Loans	1		2
Recorded Investment	$ 68		$ 74

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SEGMENT INFORMATION (Details) (USD $)	3 Months Ended		9 Months Ended			3 Months Ended		9 Months Ended	3 Months Ended		9 Months Ended			3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013 segment	Sep. 30, 2012	Dec. 31, 2012	Dec. 31, 2012 First Commercial Bank ("FCB")	Sep. 30, 2012 First Commercial Bank ("FCB")	Sep. 30, 2013 First Commercial Bank ("FCB")	Sep. 30, 2013 Traditional Banking	Sep. 30, 2012 Traditional Banking	Sep. 30, 2013 Traditional Banking	Sep. 30, 2012 Traditional Banking	Sep. 30, 2013 Traditional Banking First Commercial Bank ("FCB")	Sep. 30, 2013 Mortgage Banking	Sep. 30, 2012 Mortgage Banking	Sep. 30, 2013 Mortgage Banking	Sep. 30, 2012 Mortgage Banking	Sep. 30, 2013 Republic Processing Group	Sep. 30, 2012 Republic Processing Group	Sep. 30, 2013 Republic Processing Group	Sep. 30, 2012 Republic Processing Group
SEGMENT INFORMATION
Number of operating segments			3
SEGMENT INFORMATION
Net interest income	$ 28,539,000	$ 28,572,000	$ 86,436,000	$ 130,104,000					$ 28,390,000	$ 28,444,000	$ 85,957,000	$ 84,406,000		$ 130,000	$ 110,000	$ 388,000	$ 283,000	$ 19,000	$ 18,000	$ 91,000	$ 45,415,000
Provision for loan losses	2,200,000	2,083,000	2,480,000	13,719,000					2,257,000	2,543,000	3,276,000	6,505,000						(57,000)	(460,000)	(796,000)	7,214,000
Net refund transfer fees	152,000	231,000	13,849,000	78,127,000														152,000	231,000	13,849,000	78,127,000
Mortgage banking income	1,026,000	2,274,000	6,480,000	5,591,000										1,026,000	2,274,000	6,480,000	5,591,000
Net gain on sales, calls and impairment of securities				56,000								56,000
Total bargain purchase gains		26,923,000	1,324,000	54,726,000		712,000	27,100,000	1,000		26,923,000	1,324,000	54,726,000	1,000
Other non interest income	6,361,000	5,417,000	19,194,000	17,240,000					6,243,000	5,387,000	18,300,000	17,005,000		19,000	11,000	102,000	27,000	99,000	19,000	792,000	208,000
Total non-interest income	7,539,000	34,845,000	40,847,000	155,740,000					6,243,000	32,310,000	19,624,000	71,787,000		1,045,000	2,285,000	6,582,000	5,618,000	251,000	250,000	14,641,000	78,335,000
Total non interest expenses	26,325,000	29,762,000	87,326,000	98,366,000					22,237,000	26,118,000	72,862,000	76,752,000		768,000	851,000	2,537,000	2,928,000	3,320,000	2,793,000	11,927,000	18,686,000
INCOME BEFORE INCOME TAX EXPENSE	7,553,000	31,572,000	37,477,000	173,759,000					10,139,000	32,093,000	29,443,000	72,936,000		407,000	1,544,000	4,433,000	2,973,000	(2,993,000)	(2,065,000)	3,601,000	97,850,000
Income tax expense	2,950,000	10,904,000	13,399,000	61,041,000					3,856,000	11,145,000	10,588,000	25,150,000		142,000	541,000	1,551,000	1,041,000	(1,048,000)	(782,000)	1,260,000	34,850,000
NET INCOME	4,603,000	20,668,000	24,078,000	112,718,000					6,283,000	20,948,000	18,855,000	47,786,000		265,000	1,003,000	2,882,000	1,932,000	(1,945,000)	(1,283,000)	2,341,000	63,000,000
Segment end of period assets	$ 3,331,881,000	$ 3,435,776,000	$ 3,331,881,000	$ 3,435,776,000	$ 3,394,399,000				$ 3,305,689,000	$ 3,413,293,000	$ 3,305,689,000	$ 3,413,293,000		$ 15,697,000	$ 8,765,000	$ 15,697,000	$ 8,765,000	$ 10,495,000	$ 13,718,000	$ 10,495,000	$ 13,718,000
Net interest margin (as percent)	3.54%	3.54%	3.55%	5.11%					3.54%	3.54%	3.57%	3.51%

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SEGMENT INFORMATION

9 Months Ended

Sep. 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 banking centers and subsidiary banks), which are then aggregated if operating performance, products/services, and customers are similar.

As of September 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”) were created to operate as divisions of RPG segment.

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

For the projected near-term, as 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 have provided, and are 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 in the Company’s 2012 Annual Report on Form 10-K. 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 nine months ended September 30, 2013 and 2012 follows:

	Three Months Ended September 30, 2013
(dollars in thousands)	Traditional Banking			Mortgage Banking		Republic Processing Group			Total Company
Net interest income	$	28,390		$	130	$	19		$	28,539
Provision for loan losses	2,257			—		(57		)	2,200
Net refund transfer fees	—			—		152			152
Mortgage banking income	—			1,026		—			1,026
Other non interest income	6,243			19		99			6,361
Total non interest income	6,243			1,045		251			7,539
Total non interest expenses	22,237			768		3,320			26,325
Income before income tax expense	10,139			407		(2,993		)	7,553
Income tax expense	3,856			142		(1,048		)	2,950
Net income	$	6,283		$	265	$	(1,945	)	$	4,603
Segment end of period assets	$	3,305,689		$	15,697	$	10,495		$	3,331,881
Net interest margin	3.54		%	NM		NM			3.54		%

	Three Months Ended September 30, 2012
(dollars in thousands)	Traditional Banking			Mortgage Banking		Republic Processing Group			Total Company
Net interest income	$	28,444		$	110	$	18		$	28,572
Provision for loan losses	2,543			—		(460		)	2,083
Net refund transfer fees	—			—		231			231
Mortgage banking income	—			2,274		—			2,274
Total bargain purchase gains	26,923			—		—			26,923
Other non interest income	5,387			11		19			5,417
Total non interest income	32,310			2,285		250			34,845
Total non interest expenses	26,118			851		2,793			29,762
Income before income tax expense	32,093			1,544		(2,065		)	31,572
Income tax expense	11,145			541		(782		)	10,904
Net income	$	20,948		$	1,003	$	(1,283	)	$	20,668
Segment end of period assets	$	3,413,293		$	8,765	$	13,718		$	3,435,776
Net interest margin	3.54		%	NM		NM			3.54		%

	Nine Months Ended September 30, 2013
(dollars in thousands)	Traditional Banking			Mortgage Banking		Republic Processing Group			Total Company
Net interest income	$	85,957		$	388	$	91		$	86,436
Provision for loan losses	3,276			—		(796		)	2,480
Net refund transfer fees	—			—		13,849			13,849
Mortgage banking income	—			6,480		—			6,480
Bargain purchase gain - FCB	1,324			—		—			1,324
Other non interest income	18,300			102		792			19,194
Total non interest income	19,624			6,582		14,641			40,847
Total non interest expenses	72,862			2,537		11,927			87,326
Income before income tax expense	29,443			4,433		3,601			37,477
Income tax expense	10,588			1,551		1,260			13,399
Net income	$	18,855		$	2,882	$	2,341		$	24,078
Segment end of period assets	$	3,305,689		$	15,697	$	10,495		$	3,331,881
Net interest margin	3.57		%	NM		NM			3.55		%

	Nine Months Ended September 30, 2012
(dollars in thousands)	Traditional Banking			Mortgage Banking		Republic Processing Group		Total Company
Net interest income	$	84,406		$	283	$	45,415	$	130,104
Provision for loan losses	6,505			—		7,214		13,719
Net refund transfer fees	—			—		78,127		78,127
Mortgage banking income	—			5,591		—		5,591
Net gain on sales, calls and impairment of securities	56			—		—		56
Total bargain purchase gains	54,726			—		—		54,726
Other non interest income	17,005			27		208		17,240
Total non interest income	71,787			5,618		78,335		155,740
Total non interest expenses	76,752			2,928		18,686		98,366
Income before income tax expense	72,936			2,973		97,850		173,759
Income tax expense	25,150			1,041		34,850		61,041
Net income	$	47,786		$	1,932	$	63,000	$	112,718
Segment end of period assets	$	3,413,293		$	8,765	$	13,718	$	3,435,776
Net interest margin	3.51		%	NM		NM		5.11		%

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FAIR VALUE

9 Months Ended

Sep. 30, 2013

FAIR VALUE

FAIR VALUE

7.             FAIR VALUE

Fair value represents the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Bank used the following methods and significant assumptions to estimate the fair value of each type of financial instrument:

Securities available for sale: For all securities available for sale, excluding the Bank’s private label mortgage backed security, fair value is typically determined by matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). With the exception of the private label mortgage backed security, all securities available for sale are classified as Level 2 in the fair value hierarchy.

The Bank’s private label mortgage backed security remains extremely illiquid, and as such, the Bank classifies this security as a Level 3 security in accordance with ASC Topic 820, Fair Value Measurements and Disclosures. Based on this determination, the Bank utilized an income valuation model (present value model) approach, in determining the fair value of this security.

Mortgage loans held for sale: The fair value of mortgage loans held for sale is determined using quoted secondary market prices. Mortgage loans held for sale are classified as Level 2 in the fair value hierarchy.

Derivative instruments: Mortgage Banking derivatives used in the ordinary course of business primarily consist of mandatory forward sales contracts (“forward contracts”) and rate lock loan commitments. The fair value of the Bank’s derivative instruments is primarily measured by obtaining pricing from broker-dealers recognized to be market participants. The pricing is derived from market observable inputs that can generally be verified and do not typically involve significant judgment by the Bank. Forward contracts and rate lock loan commitments are classified as Level 2 in the fair value hierarchy.

Impaired Loans: At the time a loan is considered impaired, it is valued at the lower of cost or fair value. Impaired loans carried at fair value generally receive specific allocations of the Allowance for anticipated selling costs of the underlying collateral. For collateral dependent loans, fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Other Real Estate Owned: Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Appraisals for both collateral-dependent impaired loans and other real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Bank. Once the appraisal is received, a member of the Bank’s Credit Administration Department reviews the assumptions and approaches utilized in the appraisal, as well as the overall resulting fair value in comparison with independent data sources, such as recent market data or industry-wide statistics. On an annual basis, the Bank compares the actual selling price of collateral that has been sold to the most recent appraised value to determine what additional adjustment, if any, should be made to the appraisal value to arrive at an estimated fair value.

Mortgage Servicing Rights: On a monthly basis, mortgage servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. If the carrying amount of an individual tranche exceeds fair value, impairment is recorded and the respective individual tranche is carried at fair value. If the carrying amount of an individual tranche does not exceed fair value, impairment is reversed if previously recognized and the carrying value of the individual tranche is based on the amortization method. The valuation model utilizes assumptions that market participants would use in estimating future net servicing income and that can generally be validated against available market data (Level 2).

Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities for which the Bank has elected the fair value option, are summarized below:

	Fair Value Measurements at
	September 30, 2013 Using:
	Quoted Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable		Total
	Assets		Inputs		Inputs		Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Financial Assets:
Securities available for sale:
U.S. Treasury securities and U.S. Government agencies	$	—	$	122,933	$	—	$	122,933
Private label mortgage backed security	—		—		5,457		5,457
Mortgage backed securities - residential	—		161,112		—		161,112
Collateralized mortgage obligations			177,218				177,218
Corporate bonds	—		14,904		—		14,904
Total securities available for sale	$	—	$	476,167	$	5,457	$	481,624
Rate lock commitments	$	—	$	401	$	—	$	401
Mortgage loans held for sale	—		9,803		—		9,803
Financial Liabilities:
Mandatory forward contracts	$	—	$	160	$	—	$	160

	Fair Value Measurements at
	December 31, 2012 Using:
	Quoted Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable		Total
	Assets		Inputs		Inputs		Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Financial Assets:
Securities available for sale:
U.S. Treasury securities and U.S. Government agencies	$	—	$	39,472	$	—	$	39,472
Private label mortgage backed security	—		—		5,687		5,687
Mortgage backed securities - residential	—		197,210		—		197,210
Collateralized mortgage obligations	—		195,877		—		195,877
Total securities available for sale	$	—	$	432,559	$	5,687	$	438,246
Mandatory forward contracts	$	—	$	47	$	—	$	47
Rate lock loan commitments	—		833		—		833
Mortgage loans held for sale	—		10,614		—		10,614

There were no transfers between Level 1, 2 or 3 assets during the three and nine months ended September 30, 2013 and 2012. All transfers between levels, if applicable, would be generally recognized at the end of each quarter.

The table below presents a reconciliation of the Bank’s private label mortgage backed security. This is the only asset that was measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the periods ended September 30, 2013 and 2012:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(in thousands)	2013			2012		2013			2012
Balance, beginning of period	$	5,641		$	4,579	$	5,687		$	4,542
Total gains or losses included in earnings:
Net change in unrealized gain/(loss)	(4		)	373		418			410
Reversal of actual losses previously recorded	37			—		37			—
Principal paydowns	(217		)	—		(685		)	—
Balance, end of period	$	5,457		$	4,952	$	5,457		$	4,952

The Bank’s single private label mortgage backed security is supported by analysis prepared by an independent third party. The third party’s approach to determining fair value involved the following steps: 1) detailed collateral analysis of the underlying mortgages, including consideration of geographic location, original loan-to-value and the weighted average credit score of the borrowers; 2) collateral performance projections for each pool of mortgages underlying the security (probability of default, severity of default, and prepayment probabilities) and 3) discounted cash flow modeling.

There were no transfers between Level 3 assets during the three and nine months ended September 30, 2013 and 2012.

The following table presents quantitative information about recurring Level 3 fair value measurements at September 30, 2013 and December 31, 2012:

	Fair		Valuation	Unobservable
September 30, 2013 (dollars in thousands)	Value		Technique	Inputs	Range
Private label mortgage backed security	$	5,457	Discounted cash flow	Constant prepayment rate	0.67% - 7%
				Probability of default	3% - 7%
				Loss severity	60% - 81%

	Fair		Valuation	Unobservable Inputs
December 31, 2012 (dollars in thousands)	Value		Technique		Range
Private label mortgage backed security	$	5,687	Discounted cash flow	Constant prepayment rate	1% - 6%
				Probability of default	3.50% - 7%
				Loss severity	60% - 70%

The significant unobservable inputs in the fair value measurement of the Bank’s single private label mortgage backed security are prepayment rates, probability of default and loss severity in the event of default. Significant fluctuations in any of those inputs in isolation would result in a significantly lower/higher fair value measurement.

See Footnote 3 “Investment Securities” for additional detail regarding the private label mortgage backed security in this section of the filing.

Assets measured at fair value on a non-recurring basis are summarized below:

	Fair Value Measurements at
	September 30, 2013 Using:
	Quoted Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable		Total
	Assets		Inputs		Inputs		Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Impaired loans:
Residential real estate:
Owner occupied	$	—	$	—	$	1,059	$	1,059
Commercial real estate	—		—		5,415		5,415
Home equity	—		—		275		275
Total impaired loans *	$	—	$	—	$	6,749	$	6,749
Other real estate owned:
Commercial real estate	$	—	$	—	$	536	$	536
Construction & land development	—		—		4,200		4,200
Total other real estate owned	$	—	$	—	$	4,736	$	4,736

	Fair Value Measurements at
	December 31, 2012 Using:
	Quoted Prices in		Significant
	Active Markets		Other		Significant
	for Identical		Observable		Unobservable		Total
	Assets		Inputs		Inputs		Fair
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Value
Impaired loans:
Residential real estate:
Owner occupied	$	—	$	—	$	782	$	782
Non owner occupied	—		—		1,788		1,788
Commercial real estate	—		—		15,618		15,618
Construction & land development	—		—		1,552		1,552
Commercial	—		—		182		182
Home equity	—		—		303		303
Total impaired loans *	$	—	$	—	$	20,225	$	20,225
Other real estate owned:
Residential real estate:
Owner occupied	$	—	$	—	$	1,195	$	1,195
Non owner occupied	—		—		—		—
Commercial real estate	—		—		1,219		1,219
Construction & land development	—		—		5,161		5,161
Total other real estate owned	$	—	$	—	$	7,575	$	7,575
Mortgage servicing rights**	$	—	$	3,484	$	—	$	3,484

* - Impaired loan balances exclude loans measured for impairment using the present value of future cash flows.

** - Mortgage Servicing Rights at fair value only include those tranches which were considered impaired at the reported period end.

The following table presents quantitative information about Level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at September 30, 2013 and December 31, 2012:

					Range
	Fair		Valuation	Unobservable	(Weighted
September 30, 2013 (dollars in thousands)	Value		Technique	Inputs	Average)
Impaired loans - commercial real estate	$	5,415	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	0% - 26% (11%)
Impaired loans - residential real estate	$	1,334	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	0% - 25% (8%)
Other real estate owned - commercial real estate	$	536	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	11% - 26 (18%)
Other real estate owned - construction & land development	$	600	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	40% (40%)
	$	3,600	Income approach	Adjustments for differences between net operating income expectations	28% (28%)

					Range
	Fair		Valuation	Unobservable	(Weighted
December 31, 2012 (dollars in thousands)	Value		Technique	Inputs	Average)
Impaired loans - commercial real estate	$	15,230	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	0% - 50% (18%)
	$	1,940	Income approach	Adjustments for differences between net operating income expectations	12% - 12% (12%)
Impaired loans - residential real estate	$	2,873	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	2% - 60% (17%)
Impaired loans - commercial	$	182	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	0% - 50% (44%)
Other real estate owned - residential	$	1,195	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	4% - 71% (14%)
Other real estate owned - commercial real estate	$	1,219	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	1% - 33% (16%)
Other real estate owned - real estate construction	$	663	Sales comparison approach	Adjustments determined by Management for differences between the comparable sales	1% - 54% (35%)
	$	4,498	Income approach	Adjustments for differences between net operating income expectations	25% - 25% (25%)

The following section details impairment charges recognized during the period:

Impaired Loans

Collateral dependent impaired loans are measured for impairment using the fair value for reasonable disposition of the underlying collateral. The Bank’s practice is to obtain new or updated appraisals on the loans subject to the initial impairment review and then to evaluate the need for an update to this value on an as necessary or possibly annual basis thereafter (depending on the market conditions impacting the value of the collateral). The Bank will discount the appraisal amount, as necessary for selling costs and past due real estate taxes. If a new or updated appraisal is not available at the time of a loan’s impairment review, the Bank may apply a discount to the existing value of an old appraisal to reflect the property’s current estimated value if it is believed to have deteriorated in either: (i) the physical or economic aspects of the subject property or (ii) material changes in market conditions. The review may result in an increase in the Allowance or in a partial charge-off of the loan. Impaired loans that are collateral dependent are classified within Level 3 of the fair value hierarchy when impairment is determined using this fair value method.

Impaired loans, which are measured for impairment using the fair value of the collateral for collateral dependent loans are as follows:

(in thousands)	September 30, 2013			December 31, 2012
Carrying amount of loans measured at fair value	$	6,568		$	23,070
Estimated selling costs considered in carrying amount	943			1,839
Valuation allowance	(762		)	(4,684		)
Total fair value	$	6,749		$	20,225

Other Real Estate Owned

Other real estate owned, which is carried at the lower of cost or fair value, is periodically assessed for impairment based on fair value at the reporting date. Fair value is determined from external appraisals using judgments and estimates of external professionals. Many of these inputs are not observable and, accordingly, these measurements are classified as Level 3. The fair value of the Bank’s individual other real estate owned properties exceeded their carrying value at September 30, 2013 and December 31, 2012.

Details of other real estate owned carrying value and write downs follows:

(in thousands)	September 30, 2013		December 31, 2012
Carrying value of other real estate owned	$	15,247	$	26,203

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2013		2012		2013		2012
Other real estate owned write-downs	$	190	$	866	$	1,074	$	1,207

Mortgage Servicing Rights

MSRs are carried at lower of cost or fair value with fair value determined by MSR tranche. There were no tranches carried at fair value at September 30, 2013, while nine of 21 tranches were carried at fair value at December 31, 2012. Details of the tranches carried at fair value follow:

(in thousands)	September 30, 2013		December 31, 2012
Outstanding balance	$	—	$	3,829
Valuation allowance	—		(345		)
Fair value	$	—	$	3,484

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(in thousands)	2013			2012		2013			2012
Charge (credit) to mortgage banking income due to impairment evaluation	$	(33	)	$	160	$	(345	)	$	129

Mortgage Loans Held for Sale

The Bank has elected the fair value option for mortgage loans held for sale. These loans are intended for sale and the Bank believes that the fair value is the best indicator of the resolution of these loans. Interest income is recorded based on the contractual terms of the loan and in accordance with Bank policy for such instruments. None of these loans were past due 90-days-or- more nor on nonaccrual as of September 30, 2013 and December 31, 2012.

As of September 30, 2013 and December 31, 2012, the aggregate fair value, contractual balance (including accrued interest), and gain or loss was as follows:

(in thousands)	September 30, 2013		December 31, 2012
Aggregate fair value	$	9,803	$	10,614
Contractual balance	9,557		10,037
Gain	246		577

The total amount of gains and losses from changes in fair value included in earnings for the three and nine months ended September 30, 2013 and 2012 for mortgage loans held for sale are presented in the following table:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(in thousands)	2013			2012		2013			2012
Interest income	$	130		$	110	$	388		$	283
Change in fair value	(218		)	82		(331		)	134
Total change in fair value	$	(88	)	$	192	$	57		$	417

The carrying amounts and estimated fair values of all financial instruments, at September 30, 2013 and December 31, 2012 follows:

			Fair Value Measurements at
			September 30, 2013:
									Total
	Carrying								Fair
(in thousands)	Value		Level 1		Level 2		Level 3		Value
Assets:
Cash and cash equivalents	$	141,585	$	141,585	$	—	$	—	$	141,585
Securities available for sale	481,624		—		476,167		5,457		481,624
Securities to be held to maturity	52,057		—		52,408		—		52,408
Mortgage loans held for sale	9,803		—		9,803		—		9,803
Loans, net of allowance for loan losses	2,529,943		—		—		2,568,974		2,568,974
Federal Home Loan Bank stock	28,342		—		—		—		N/A
Accrued interest receivable	8,130		—		8,130		—		8,130
Liabilities:
Non interest-bearing deposits	492,126		—		492,126		—		492,126
Transaction and money market deposits	1,259,782		—		1,259,782		—		1,259,782
Time deposits	267,877		—		270,462		—		270,462
Securities sold under agreements to repurchase and other short-term borrowings	106,373		—		106,373		—		106,373
Federal Home Loan Bank advances	587,020		—		602,458		—		602,458
Subordinated note	41,240		—		38,049		—		38,049
Accrued interest payable	1,435		—		1,435		—		1,435

			Fair Value Measurements at
			December 31, 2012:
									Total
	Carrying								Fair
(in thousands)	Value		Level 1		Level 2		Level 3		Value
Assets:
Cash and cash equivalents	$	137,691	$	137,691	$	—	$	—	$	137,691
Securities available for sale	438,246		—		432,559		5,687		438,246
Securities to be held to maturity	46,010		—		46,416		—		46,416
Mortgage loans held for sale	10,614		—		10,614		—		10,614
Loans, net of allowance for loan losses	2,626,468		—		—		2,702,686		2,702,686
Federal Home Loan Bank stock	28,377		—		—		—		N/A
Accrued interest receivable	9,245		—		9,245		—		9,245
Liabilities:
Non interest-bearing deposits	479,046		—		479,046		—		479,046
Transaction and money market deposits	1,193,339		—		1,193,339		—		1,193,339
Time deposits	310,543		—		314,972		—		314,972
Securities sold under agreements to repurchase and other short-term borrowings	250,884		—		250,884		—		250,884
Federal Home Loan Bank advances	542,600		—		576,158		—		576,158
Subordinated note	41,240		—		37,917		—		37,917
Accrued interest payable	1,403		—		1,403		—		1,403

Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the Bank’s estimates.

The assumptions used in the estimation of the fair value of the Company’s financial instruments are explained below. Where quoted market prices are not available, fair values are based on estimates using discounted cash flow and other valuation techniques. Discounted cash flows can be significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. The following fair value estimates cannot be substantiated by comparison to independent markets and should not be considered representative of the liquidation value of the Company’s financial instruments, but rather a good-faith estimate of the fair value of financial instruments held by the Company.

The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments:

Cash and cash equivalents — The carrying amounts of cash and short-term instruments approximate fair values and are classified as Level 1.

Mortgage loans held for sale — The fair value of loans held for sale is estimated based upon binding contracts and quotes from third party investors resulting in a Level 2 classification.

Loans, net of Allowance — The fair value of loans is calculated using discounted cash flows by loan type resulting in a Level 3 classification. The discount rate used to determine the present value of the loan portfolio is an estimated market rate that reflects the credit and interest rate risk inherent in the loan portfolio without considering widening credit spreads due to market illiquidity. The estimated maturity is based on the Bank’s historical experience with repayments adjusted to estimate the effect of current market conditions. The Allowance is considered a reasonable discount for credit risk. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

Federal Home Loan Bank stock — It is not practical to determine the fair value of FHLB stock due to restrictions placed on its transferability.

Accrued interest receivable/payable — The carrying amounts of accrued interest, due to their short-term nature, approximates fair value resulting in a Level 2 classification.

Deposits — Fair values for certificates of deposit have been determined using discounted cash flows. The discount rate used is based on estimated market rates for deposits of similar remaining maturities and are classified as Level 2. The carrying amounts of all other deposits, due to their short-term nature, approximate their fair values and are also classified as Level 2.

Securities sold under agreements to repurchase — The carrying amount for securities sold under agreements to repurchase generally maturing within ninety days approximates its fair value resulting in a Level 2 classification.

Federal Home Loan Bank advances — The fair value of the FHLB advances is obtained from the FHLB and is calculated by discounting contractual cash flows using an estimated interest rate based on the current rates available to the Company for debt of similar remaining maturities and collateral terms resulting in a Level 2 classification.

Subordinated note — The fair value for subordinated debentures is calculated using discounted cash flows based upon current market spreads to LIBOR for debt of similar remaining maturities and collateral terms resulting in a Level 2 classification.

The fair value estimates presented herein are based on pertinent information available to management as of the respective period ends. Although management is not aware of any factors that would dramatically affect the estimated fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and, therefore, estimates of fair value may differ significantly from the amounts presented.

XML

FAIR VALUE (Details 5) (Level 3, Fair Value, Measurements, Nonrecurring, USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Impaired Loans | Commercial Real Estate | Sale comparison approach
Quantitative information about fair value measurements
Fair Value	$ 5,415	$ 15,230
Impaired Loans | Commercial Real Estate | Sale comparison approach | Minimum
Quantitative information about fair value measurements
Adjustments determined by management for differences (as a percent)	0.00%	0.00%
Impaired Loans | Commercial Real Estate | Sale comparison approach | Maximum
Quantitative information about fair value measurements
Adjustments determined by management for differences (as a percent)	26.00%	50.00%
Impaired Loans | Commercial Real Estate | Sale comparison approach | Weighted Average
Quantitative information about fair value measurements
Adjustments determined by management for differences (as a percent)	11.00%	18.00%
Impaired Loans | Commercial Real Estate | Income approach
Quantitative information about fair value measurements
Fair Value		1,940
Impaired Loans | Commercial Real Estate | Income approach | Minimum
Quantitative information about fair value measurements
Adjustments determined by management for differences (as a percent)		12.00%
Impaired Loans | Commercial Real Estate | Income approach | Maximum
Quantitative information about fair value measurements
Adjustments determined by management for differences (as a percent)		12.00%
Impaired Loans | Commercial Real Estate | Income approach | Weighted Average
Quantitative information about fair value measurements
Adjustments determined by management for differences (as a percent)		12.00%
Impaired Loans | Residential Real Estate | Sale comparison approach
Quantitative information about fair value measurements
Fair Value	1,334	2,873
Impaired Loans | Residential Real Estate | Sale comparison approach | Minimum
Quantitative information about fair value measurements
Adjustments determined by management for differences (as a percent)	0.00%	2.00%
Impaired Loans | Residential Real Estate | Sale comparison approach | Maximum
Quantitative information about fair value measurements
Adjustments determined by management for differences (as a percent)	25.00%	60.00%
Impaired Loans | Residential Real Estate | Sale comparison approach | Weighted Average
Quantitative information about fair value measurements
Adjustments determined by management for differences (as a percent)	8.00%	17.00%
Impaired Loans | Commercial | Sale comparison approach
Quantitative information about fair value measurements
Fair Value		182
Impaired Loans | Commercial | Sale comparison approach | Minimum
Quantitative information about fair value measurements
Adjustments determined by management for differences (as a percent)		0.00%
Impaired Loans | Commercial | Sale comparison approach | Maximum
Quantitative information about fair value measurements
Adjustments determined by management for differences (as a percent)		50.00%
Impaired Loans | Commercial | Sale comparison approach | Weighted Average
Quantitative information about fair value measurements
Adjustments determined by management for differences (as a percent)		44.00%
Other Real Estate Owned | Commercial real estate | Sale comparison approach
Quantitative information about fair value measurements
Fair Value	536	1,219
Other Real Estate Owned | Commercial real estate | Sale comparison approach | Minimum
Quantitative information about fair value measurements
Adjustments determined by management for differences (as a percent)	11.00%	1.00%
Other Real Estate Owned | Commercial real estate | Sale comparison approach | Maximum
Quantitative information about fair value measurements
Adjustments determined by management for differences (as a percent)	26.00%	33.00%
Other Real Estate Owned | Commercial real estate | Sale comparison approach | Weighted Average
Quantitative information about fair value measurements
Adjustments determined by management for differences (as a percent)	18.00%	16.00%
Other Real Estate Owned | Construction & Land Development | Sale comparison approach
Quantitative information about fair value measurements
Fair Value	600	663
Adjustments determined by management for differences (as a percent)	40.00%
Other Real Estate Owned | Construction & Land Development | Sale comparison approach | Minimum
Quantitative information about fair value measurements
Adjustments determined by management for differences (as a percent)		1.00%
Other Real Estate Owned | Construction & Land Development | Sale comparison approach | Maximum
Quantitative information about fair value measurements
Adjustments determined by management for differences (as a percent)		54.00%
Other Real Estate Owned | Construction & Land Development | Sale comparison approach | Weighted Average
Quantitative information about fair value measurements
Adjustments determined by management for differences (as a percent)	40.00%	35.00%
Other Real Estate Owned | Construction & Land Development | Income approach
Quantitative information about fair value measurements
Fair Value	3,600	4,498
Adjustments determined by management for differences (as a percent)	28.00%
Other Real Estate Owned | Construction & Land Development | Income approach | Minimum
Quantitative information about fair value measurements
Adjustments determined by management for differences (as a percent)		25.00%
Other Real Estate Owned | Construction & Land Development | Income approach | Maximum
Quantitative information about fair value measurements
Adjustments determined by management for differences (as a percent)		25.00%
Other Real Estate Owned | Construction & Land Development | Income approach | Weighted Average
Quantitative information about fair value measurements
Adjustments determined by management for differences (as a percent)	28.00%	25.00%
Other Real Estate Owned | Residential Real Estate | Sale comparison approach
Quantitative information about fair value measurements
Fair Value		$ 1,195
Other Real Estate Owned | Residential Real Estate | Sale comparison approach | Minimum
Quantitative information about fair value measurements
Adjustments determined by management for differences (as a percent)		4.00%
Other Real Estate Owned | Residential Real Estate | Sale comparison approach | Maximum
Quantitative information about fair value measurements
Adjustments determined by management for differences (as a percent)		71.00%
Other Real Estate Owned | Residential Real Estate | Sale comparison approach | Weighted Average
Quantitative information about fair value measurements
Adjustments determined by management for differences (as a percent)		14.00%

XML

2012 FDIC-ASSISTED ACQUISITIONS OF FAILED BANKS (Tables)

9 Months Ended

Sep. 30, 2013

Tennessee Commerce Bank ("TCB")

2012 Fdic - assisted acquisitions of failed banks

Assets Acquired and Liabilities Assumed Including Recast Adjustments

Tennessee Commerce Bank

	January 27, 2012
	As Previously Reported						As Recasted
	Contractual			Fair Value			2012 Recast			Fair
(in thousands)	Amount			Adjustments			Adjustments			Value
Assets acquired:
Cash and cash equivalents	$	61,943		$	(89	)	$	(2	)	$	61,852
Securities available for sale	42,646			—			—			42,646
Loans to be repurchased by the FDIC, net of discount	19,800			(2,797		)	—			17,003
Loans	79,112			(22,666		)	830			57,276
Federal Home Loan Bank stock, at cost	2,491			—			—			2,491
Other real estate owned	14,189			(3,359		)	(1,113		)	9,717
Core deposit intangible	—			64			—			64
Discount	(56,970		)	56,970			—			—
FDIC settlement receivable	784,545			—			—			784,545
Other assets and accrued interest receivable	945			(60		)	—			885
Total assets acquired	$	948,701		$	28,063		$	(285	)	$	976,479
Liabilities assumed:
Deposits:
Non interest-bearing	$	19,754		$	—		$	—		$	19,754
Interest-bearing	927,641			54			—			927,695
Total deposits	947,395			54			—			947,449
Accrued income taxes payable	—			9,988			(100		)	9,888
Other liabilities and accrued interest payable	1,306			110			—			1,416
Total liabilities assumed	$	948,701		$	10,152		$	(100	)	$	958,753
Equity:
Bargain purchase gain, net of taxes	—			17,911			(185		)	17,726
Total liabilities assumed and equity	$	948,701		$	28,063		$	(285	)	$	976,479

Summary of Net Assets Acquired from FDIC and Estimated Fair Value Adjustments

Tennessee Commerce Bank

	January 27, 2012
				Second Quarter			Third Quarter
	As Previously			2012 Recast			2012 Recast			As
(in thousands)	Reported			Adjustments			Adjustments			Recasted
Assets acquired, at contractual amount	$	221,126		$	—		$	—		$	221,126
Liabilities assumed, at contractual amount	(948,701		)	—			—			(948,701		)
Net liabilities assumed per the P&A Agreement	(727,575		)	—			—			(727,575		)
Contractual discount	(56,970		)	—			—			(56,970		)
Net receivable from the FDIC	$	(784,545	)	$	—		$	—		$	(784,545	)
Fair value adjustments:
Loans	$	(22,666	)	$	919		$	(89	)	$	(21,836	)
Discount for loans to be repurchased by the FDIC	(2,797		)	—			—			(2,797		)
Other real estate owned	(3,359		)	(1,000		)	(113		)	(4,472		)
Core deposit intangible	64			—			—			64
Deposits	(54		)	—			—			(54		)
Other assets and accrued interest receivable	(60		)	—			—			(60		)
All other	(199		)	(15		)	13			(201		)
Total fair value adjustments	(29,071		)	(96		)	(189		)	(29,356		)
Discount	56,970			—			—			56,970
Bargain purchase gain, pre-tax	$	27,899		$	(96	)	$	(189	)	$	27,614

Composition of Acquired Loans

Tennessee Commerce Bank

	January 27, 2012
	As Previously Reported					As Recasted
	Contractual		Fair Value			2012 Recast			Fair
(in thousands)	Amount		Adjustments			Adjustments			Value
Residential real estate	$	22,693	$	(4,076	)	$	243		$	18,860
Commercial real estate	18,646		(6,971		)	1,988			13,663
Construction & Land Development	14,877		(2,681		)	(1,972		)	10,224
Commercial	13,224		(6,939		)	496			6,781
Home equity	6,220		(606		)	24			5,638
Consumer:
Credit cards	608		(22		)	—			586
Overdrafts	672		(621		)	—			51
Other consumer	2,172		(750		)	51			1,473
Total loans	$	79,112	$	(22,666	)	$	830		$	57,276

Purchased Loans

Tennessee Commerce Bank

	January 27, 2012
	As Previously			2012 Recast			As
(in thousands)	Reported			Adjustments			Recasted
Contractually-required principal and interest payments	$	52,278		$	—		$	52,278
Non-accretable difference	(21,308		)	903			(20,405		)
Cash flows expected to be collected	30,970			903			31,873
Accretable difference	(425		)	(73		)	(498		)
Fair value of loans	$	30,545		$	830		$	31,375

Composition of Deposits

Tennessee Commerce Bank

	January 27, 2012
	Contractual		Fair Value		Recast		Fair
(in thousands)	Amount		Adjustments		Adjustments		Value
Demand	$	3,190	$	—	$	—	$	3,190
Money market accounts	11,338		—		—		11,338
Savings	91,859		—		—		91,859
Individual retirement accounts*	15,486		—		—		15,486
Time deposits, $100,000 and over*	278,825		—		—		278,825
Other certificates of deposit*	108,003		14		—		108,017
Brokered certificates of deposit*	418,940		40		—		418,980
Total interest-bearing deposits	927,641		54		—		927,695
Total non interest-bearing deposits	19,754		—		—		19,754
Total deposits	$	947,395	$	54	$	—	$	947,449

* - denotes a time deposit

First Commercial Bank ("FCB")

2012 Fdic - assisted acquisitions of failed banks

Assets Acquired and Liabilities Assumed Including Recast Adjustments

First Commercial Bank

	September 7, 2012
	As Previously Reported						As Recasted
							2012 & 2013
	Contractual			Fair Value			Recast			Fair
(in thousands)	Amount			Adjustments			Adjustments			Value
Assets acquired :
Cash and cash equivalents	$	10,524		$	—		$	—		$	10,524
Securities available for sale	12,002			—			—			12,002
Loans	171,744			(44,214		)	2,821			130,351
Federal Home Loan Bank stock, at cost	407			—			—			407
Other real estate owned	19,360			(8,389		)	(785		)	10,186
Core deposit intangible	—			559			—			559
Discount	(79,412		)	79,412			—			—
FDIC settlement receivable	64,326			—			—			64,326
Other assets and accrued interest receivable	829			(95		)	—			734
Total assets acquired	$	199,780		$	27,273		$	2,036		$	229,089
Liabilities assumed:
Deposits:
Non interest-bearing	$	7,197		$	—		$	—		$	7,197
Interest-bearing	189,057			(3		)	—			189,054
Total deposits	196,254			(3		)	—			196,251
Federal Home Loan Bank advances	3,002			63			—			3,065
Accrued income taxes payable	—			9,706			712			10,418
Other liabilities and accrued interest payable	524			101			—			625
Total liabilities assumed	$	199,780		$	9,867		$	712		$	210,359
Equity:
Bargain purchase gain, net of taxes	—			17,406			1,324			18,730
Total liabilities assumed and equity	$	199,780		$	27,273		$	2,036		$	229,089

Summary of Net Assets Acquired from FDIC and Estimated Fair Value Adjustments

First Commercial Bank

	September 7, 2012
				Fourth Quarter		First Quarter
	As Previously			2012 Recast		2013 Recast			As
(in thousands)	Reported			Adjustments		Adjustments			Recasted
Assets acquired, at contractual amount	$	214,866		$	—	$	—		$	214,866
Liabilities assumed, at contractual amount	(199,780		)	—		—			(199,780		)
Net liabilities assumed per the P&A Agreement	15,086			—		—			15,086
Contractual discount	(79,412		)	—		—			(79,412		)
Net receivable from the FDIC	$	(64,326	)	$	—	$	—		$	(64,326	)
Fair value adjustments:
Loans	$	(44,214	)	$	423	$	2,398		$	(41,393	)
Other real estate owned	(8,389		)	289		(1,074		)	(9,174		)
Core deposit intangible	559			—		—			559
Deposits	3			—		—			3
Federal Home Loan Bank advances	(63		)	—		—			(63		)
Other assets and accrued interest receivable	(95		)	—		—			(95		)
All other	(101		)	—		—			(101		)
Total fair value adjustments	(52,300		)	712		1,324			(50,264		)
Discount	79,412			—		—			79,412
Bargain purchase gain, pre-tax	$	27,112		$	712	$	1,324		$	29,148

Composition of Acquired Loans

First Commercial Bank

	September 7, 2012
	As Previously Reported					As Recasted
						2012 & 2013
	Contractual		Fair Value			Recast			Fair
(in thousands)	Amount		Adjustments			Adjustments			Value
Residential real estate	$	48,409	$	(9,634	)	$	180		$	38,955
Commercial real estate	82,161		(12,330		)	(1,746		)	68,085
Construction & Land Development	14,918		(6,182		)	316			9,052
Commercial	25,475		(16,060		)	4,120			13,535
Home equity	404		(3		)	—			401
Consumer:
Credit cards	—		—			—			—
Overdrafts	6		—			—			6
Other consumer	371		(5		)	(49		)	317
Total loans	$	171,744	$	(44,214	)	$	2,821		$	130,351

Purchased Loans

First Commercial Bank

	September 7, 2012
				2012 & 2013
	As Previously			Recast			As
(in thousands)	Reported			Adjustments			Recasted
Contractually-required principal and interest payments	$	116,940		$	4,213		$	121,153
Non-accretable difference	(33,523		)	4,640			(28,883		)
Cash flows expected to be collected	83,417			8,853			92,270
Accretable difference	(2,827		)	(1,819		)	(4,646		)
Fair value of loans	$	80,590		$	7,034		$	87,624

Composition of Deposits

First Commercial Bank

	September 7, 2012
	Contractual		Fair Value			Recast		Fair
(in thousands)	Amount		Adjustments			Adjustments		Value
Demand	$	4,003	$	—		$	—	$	4,003
Money market accounts	38,187		—			—		38,187
Savings	—		—			—		—
Individual retirement accounts*	16,780		—			—		16,780
Time deposits, $100,000 and over*	14,740		—			—		14,740
Other certificates of deposit*	62,033		—			—		62,033
Brokered certificates of deposit*	53,314		(3		)	—		53,311
Total interest-bearing deposits	189,057		(3		)	—		189,054
Total non interest-bearing deposits	7,197		—			—		7,197
Total deposits	$	196,254	$	(3	)	$	—	$	196,251

* - denotes a time deposit

XML

H&R BLOCK AND H&R BLOCK BANK

9 Months Ended

Sep. 30, 2013

H&R BLOCK AND H&R BLOCK BANK

H&R BLOCK AND H&R BLOCK BANK

12. H&R BLOCK AND H&R BLOCK BANK

RB&T entered into a Purchase and Assumption Agreement (the “Agreement”) dated July 11, 2013, with H&R Block Bank (“HRBB”) and its sole shareholder Block Financial LLC (collectively, “H&R Block”). Pursuant to the Agreement, RB&T was to acquire certain assets and assume certain liabilities, including all of the deposits of HRBB (the “P&A Transaction”).

On July 15, 2013, RB&T submitted an application for approval of the P&A Transaction to the Office of the Comptroller of the Currency (“OCC”) for consideration in conjunction with RB&T’s pending application from May 2013 for approval of an internal merger of RB&T and its affiliate, RB, which would include RB&T’s conversion to a national bank.

On October 8, 2013, RB&T notified Block that RB&T was withdrawing its pending applications with the OCC to merge and consolidate its RB&T and RB charters into one national bank charter and to consummate the P&A Transaction. As a result, H&R Block terminated the Agreement with RB&T and the parties terminated discussions regarding the Joint Marketing Master Services Agreement and related Receivables Participation Agreement.

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2013	Oct. 31, 2013 Class A Common Stock	Oct. 31, 2013 Class B Common Stock
Entity Registrant Name	REPUBLIC BANCORP INC /KY/
Entity Central Index Key	0000921557
Document Type	10-Q
Document Period End Date	Sep. 30, 2013
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		18,533,502	2,259,926
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3

XML

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2013

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Basis of Presentation — The consolidated financial statements include the accounts of Republic Bancorp, Inc. (the “Parent Company”) and its wholly-owned subsidiaries: Republic Bank & Trust Company (“RB&T”) and Republic Bank (“RB”) (collectively referred together as the “Bank”). Republic Invest Co., a former subsidiary of RB&T, and its subsidiary, Republic Capital LLC, were dissolved in April 2013 in connection with the full repayment by RB&T of intragroup subordinated debentures issued by Republic Capital LLC in a 2004 intragroup trust preferred transaction. All companies are collectively referred to as “Republic” or the “Company.” All significant intercompany balances and transactions are eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the three and nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. For further information, refer to the consolidated financial statements and footnotes thereto included in Republic’s Form 10-K for the year ended December 31, 2012.

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

Reclassifications and Recasts

Reclassifications and recasts — Certain amounts presented in prior periods have been reclassified to conform to the current period presentation. These reclassifications had no impact on previously reported prior periods’ net income. Additionally, as discussed in Footnote 2 “2012 FDIC-Assisted Acquisitions of Failed Banks,” during the first quarter of 2013 the Bank posted adjustments to the First Commercial Bank (“FCB”) acquired assets in the determination of acquisition day (“day-one”) fair values, which resulted in a $1.3 million increase to the bargain purchase gain presented.

XML

FEDERAL HOME LOAN BANK ("FHLB") ADVANCES (Details) (USD $)	9 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
FHLB advances
Total FHLB advances	$ 587,020,000	$ 542,600,000
Additional collateralized advances available	317,000,000
Fixed interest rate advances with a weighted average interest rate of 2.12% due through 2023
FHLB advances
Total FHLB advances	487,020,000	442,600,000
Weighted average interest rate (as percent)	2.12%	2.12%
Putable fixed interest rate advances with a weighted average interest rate of 4.39% due through 2017
FHLB advances
Total FHLB advances	100,000,000	100,000,000
Weighted average interest rate (as percent)	4.39%	4.39%
Amount of penalty	0
Putable fixed interest rate advances with a weighted average interest rate of 4.39% due through 2017 | Minimum
FHLB advances
Original fixed rate periods	1 year
Original maturities	3 years
Putable fixed interest rate advances with a weighted average interest rate of 4.39% due through 2017 | Maximum
FHLB advances
Original fixed rate periods	5 years
Original maturities	10 years
Various other unsecured lines of credit
FHLB advances
Unsecured lines of credit	$ 166,000,000

XML

DEPOSITS (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Deposit Liabilities
Demand	$ 659,192	$ 580,900
Savings	71,759	62,145
Individual retirement accounts	29,219	32,491
Total interest-bearing deposits	1,527,659	1,503,882
Total non interest-bearing deposits	492,126	479,046
Total deposits	2,019,785	1,982,928
Tennessee Commerce Bank ("TCB")
Deposit Liabilities
Demand	1,053	10,024
Money market accounts	2,298	1,510
Savings	4,834	217
Individual retirement accounts	563	1,166
Time deposits, $100,000 and over	4,481	10,822
Other certificates of deposit	2,373	7,196
Certificates of deposit	3,251	6,729
Total interest-bearing deposits	18,853	37,664
Total non interest-bearing deposits	3,290	4,240
Total deposits	22,143	41,904
First Commercial Bank ("FCB")
Deposit Liabilities
Demand	2,123	5,871
Money market accounts	9,222	25,762
Savings	1
Individual retirement accounts	1,159	3,269
Time deposits, $100,000 and over	2,810	3,267
Other certificates of deposit	4,921	12,574
Certificates of deposit	3,926	12,247
Total interest-bearing deposits	24,162	62,990
Total non interest-bearing deposits	4,419	6,812
Total deposits	28,581	69,802
TCB and FCB acquisitions
Deposit Liabilities
Demand	3,176	15,895
Money market accounts	11,520	27,272
Savings	4,835	217
Individual retirement accounts	1,722	4,435
Time deposits, $100,000 and over	7,291	14,089
Other certificates of deposit	7,294	19,770
Certificates of deposit	7,177	18,976
Total interest-bearing deposits	43,015	100,654
Total non interest-bearing deposits	7,709	11,052
Total deposits	50,724	111,706
Brokered Deposits
Deposit Liabilities
Money market accounts	33,212	35,596
Certificates of deposit	89,580	97,110
Individual Deposits
Deposit Liabilities
Money market accounts	495,619	514,698
Time deposits, $100,000 and over	69,584	80,906
Other certificates of deposit	$ 79,494	$ 100,036