SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2015

SEGMENT INFORMATION

SEGMENT INFORMATION

13.SEGMENT INFORMATION

Segment Data:

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

As of March 31, 2015, the Company was divided into four distinct operating segments: Traditional Banking, Warehouse Lending (“Warehouse”), Mortgage Banking and Republic Processing Group (“RPG”). Management considers the first three segments to collectively constitute “Core Bank” or “Core Banking” activities. The RPG segment includes the Tax Refund Solutions (“TRS”) division, Republic Payment Solutions (“RPS”) and Republic Credit Solutions (“RCS”). TRS generates the majority of RPG’s income, with the relatively smaller divisions of RPG, RPS and RCS, considered immaterial for separate and independent segment reporting. All divisions of the RPG segment operate through the Company.

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

	Segment:	Nature of Operations	Primary Drivers of Net Revenues
Core Banking	Traditional Banking	Provides traditional banking products primarily to customers in the Company’s market footprint.	Loans, investments and deposits
	Mortgage Warehouse	Provides short-term, revolving credit facilities to mortgage bankers across the Nation.	Mortgage warehouse lines of credit
	Mortgage Banking	Primarily originates, sells and services long-term, single family, first lien residential real estate loans.	Gain on sale of loans and servicing fees
	Republic Processing Group	TRS division facilitates the receipt and payment of federal and state tax refund products. The RPS division offers general purpose reloadable cards. The RCS division offers short-term credit products.	Net refund transfer fees

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 2014 Annual Report on Form 10-K.  Segment performance is evaluated using operating income. Goodwill is not allocated. Income taxes are generally allocated based on income before income tax expense unless specific segment allocations can be reasonably made. Transactions among reportable segments are made at carrying value.

Segment information for the three months ended March 31, 2015 and 2014 follows:

	Three Months Ended March 31, 2015
	Core Banking
(dollars in thousands)	Traditional Banking			Warehouse Lending			Mortgage Banking		Total Core Banking			Republic Processing Group			Total Company
Net interest income	$	25,758		$	2,541		$	56	$	28,355		$	667		$	29,022
Provision for loan and lease losses	116			259			—		375			(190		)	185
Net refund transfer fees	—			—			—		—			15,335			15,335
Mortgage banking income	—			—			1,353		1,353			—			1,353
Other non interest income	5,397			5			84		5,486			812			6,298
Total non interest income	5,397			5			1,437		6,839			16,147			22,986
Total non interest expenses	23,407			573			1,285		25,265			5,809			31,074
Income before income tax expense	7,632			1,714			208		9,554			11,195			20,749
Income tax expense	2,286			600			73		2,959			4,002			6,961
Net income	$	5,346		$	1,114		$	135	$	6,595		$	7,193		$	13,788
Segment end of period assets	$	3,380,813		$	422,652		$	18,002	$	3,821,467		$	130,720		$	3,952,187
Net interest margin	3.10		%	3.62		%	NM		3.14		%	NM			3.14		%

	Three Months Ended March 31, 2014
	Core Banking
(dollars in thousands)	Traditional Banking			Warehouse Lending			Mortgage Banking			Total Core Banking			Republic Processing Group			Total Company
Net interest income	$	25,954		$	1,159		$	46		$	27,159		$	145		$	27,304
Provision for loan and lease losses	(268		)	28			—			(240		)	(463		)	(703		)
Net refund transfer fees	—			—			—			—			14,388			14,388
Mortgage banking income	—			—			486			486			—			486
Other non interest income	5,072			2			74			5,148			693			5,841
Total non interest income	5,072			2			560			5,634			15,081			20,715
Total non interest expenses	23,482			380			1,210			25,072			5,127			30,199
Income (loss) before income tax expense	7,812			753			(604		)	7,961			10,562			18,523
Income tax expense (benefit)	2,520			264			(211		)	2,573			3,966			6,539
Net income (loss)	$	5,292		$	489		$	(393	)	$	5,388		$	6,596		$	11,984
Segment end of period assets	$	3,305,197		$	135,986		$	8,062		$	3,449,245		$	57,927		$	3,507,172
Net interest margin	3.27		%	3.97		%	NM			3.29		%	NM			3.24		%

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

NM — Not Meaningful