SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2014

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 business units), which are then aggregated if operating performance, products/services, and customers are similar.

As of June 30, 2014, the Company was divided into three distinct business operating segments: Traditional Banking, Mortgage Banking and Republic Processing Group (“RPG”). Along with the Tax Refund Solutions (“TRS”) division, Republic Payment Solutions (“RPS”) and Republic Credit Solutions (“RCS”) operate as divisions of the RPG segment.

All divisions of the RPG segment operate through the Bank. The TRS division facilitates the receipt and payment of federal and state tax refund products. The RPS division is an issuing bank offering general purpose reloadable prepaid debit cards through third party program managers. The RCS division is piloting short-term consumer credit products.

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. Net refund transfer fees provide the majority of revenue for RPG. 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 2013 Annual Report on Form 10-K. Segment performance is evaluated using operating income. Goodwill is not allocated. Income taxes are generally allocated based on income before income tax expense when specific segment allocations cannot be reasonably made. Transactions among reportable segments are made at carrying value.

Segment information for the three months ended June 30, 2014 and 2013 follows:

	Three Months Ended June 30, 2014
(dollars in thousands)	Traditional Banking			Mortgage Banking			Republic Processing Group			Total Company
Net interest income	$	27,441		$	49		$	60		$	27,550
Provision for loan losses	710			—			(17		)	693
Net refund transfer fees	—			—			1,836			1,836
Mortgage banking income	—			812			—			812
Other non-interest income	6,361			71			432			6,864
Total non-interest income	6,361			883			2,268			9,512
Total non-interest expenses	23,929			1,013			1,773			26,715
Income (loss) before income tax expense	9,163			(81		)	572			9,654
Income tax expense (benefit)	3,210			(29		)	151			3,332
Net income (loss)	$	5,953		$	(52	)	$	421		$	6,322
Segment end of period assets	$	3,434,716		$	12,231		$	18,377		$	3,465,324
Net interest margin	3.35		%	NM			NM			3.35		%

	Three Months Ended June 30, 2013
(dollars in thousands)	Traditional Banking			Mortgage Banking		Republic Processing Group			Total Company
Net interest income	$	28,606		$	145	$	16		$	28,767
Provision for loan losses	1,045			—		(140		)	905
Net refund transfer fees	—			—		1,683			1,683
Mortgage banking income	—			2,180		—			2,180
Other non-interest income	6,660			75		185			6,920
Total non-interest income	6,660			2,255		1,868			10,783
Total non-interest expenses	25,443			906		3,350			29,699
Income (loss) before income tax expense	8,778			1,494		(1,326		)	8,946
Income tax expense (benefit)	2,768			523		(464		)	2,827
Net income (loss)	$	6,010		$	971	$	(862	)	$	6,119
Segment end of period assets	$	3,277,181		$	29,891	$	9,993		$	3,317,065
Net interest margin	3.57		%	NM		NM			3.56		%

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

NM — Not Meaningful

Segment information for the six months ended June 30, 2014 and 2013 follows:

	Six Months Ended June 30, 2014
(dollars in thousands)	Traditional Banking			Mortgage Banking			Republic Processing Group			Total Company
Net interest income	$	54,554		$	95		$	205		$	54,854
Provision for loan losses	470			—			(480		)	(10		)
Net refund transfer fees	—			—			16,224			16,224
Mortgage banking income	—			1,298			—			1,298
Other non-interest income	12,180			145			1,125			13,450
Total non-interest income	12,180			1,443			17,349			30,972
Total non-interest expenses	48,536			2,223			6,900			57,659
Income (loss) before income tax expense	17,728			(685		)	11,134			28,177
Income tax expense (benefit)	5,994			(240		)	4,117			9,871
Net income (loss)	$	11,734		$	(445	)	$	7,017		$	18,306
Segment end of period assets	$	3,434,716		$	12,231		$	18,377		$	3,465,324
Net interest margin	3.32		%	NM			NM			3.29		%

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

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

NM — Not Meaningful