SEGMENT INFORMATION

12 Months Ended

Dec. 31, 2015

SEGMENT INFORMATION

SEGMENT INFORMATION

23.SEGMENT INFORMATION

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

As of December 31, 2015, the Company was divided into four distinct business operating segments: Traditional Banking, Warehouse, Mortgage Banking and RPG. Management considers the first three segments to collectively constitute “Core Bank” or “Core Banking” activities. Correspondent Lending operations are considered part of Traditional Banking operations. The RPG segment includes the following divisions: TRS, RPS and RCS. TRS generates the majority of RPG’s income, with the relatively smaller divisions of RPG, RPS and RCS, considered immaterial for separate and independent segment reporting. All divisions of the RPG segment operate through the Bank.

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

	Segment:	Nature of Operations:	Primary Drivers of Net Revenues:
	Traditional Banking	Provides traditional banking products to clients primarily in its market footprint via its network of banking centers and primarily to clients outside of its market footprint via its Internet and Correspondent Lending delivery channels.	Loans, investments and deposits
Core Banking	Warehouse Lending	Provides short-term, revolving credit facilities to mortgage bankers across the Nation.	Mortgage warehouse lines of credit
	Mortgage Banking	Primarily originates, sells and services long-term, single family, first lien residential real estate loans primarily to clients in its market footprint.	Gain on sale of loans and servicing fees
	Republic Processing Group	The TRS division facilitates the receipt and payment of federal and state tax refund products.  The RPS division offers general purpose reloadable cards.  The RCS division offers short-term credit products. RPG products are primarily provided to clients outside of the Bank’s market footprint.	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. 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 years ended December 31, 2015, 2014 and 2013 is as follows:

	Year Ended December 31, 2015
	Core Banking
									Total			Republic
	Traditional			Warehouse			Mortgage		Core			Processing		Total
(dollars in thousands)	Banking			Lending			Banking		Banking			Group		Company
Net interest income	$	108,303		$	12,209		$	219	$	120,731		$	3,239	$	123,970
Provision for loan and lease losses		2,897			168			—		3,065			2,331		5,396
Net refund transfer fees		—			—			—		—			17,388		17,388
Mortgage banking income		—			—			4,411		4,411			—		4,411
Gain on call of security available for sale		88			—			—		88			—		88
Other non-interest income		23,670			24			248		23,942			2,165		26,107
Total non-interest income		23,758			24			4,659		28,441			19,553		47,994
Total non-interest expenses		93,740			2,526			4,918		101,184			12,140		113,324
Income (loss) before income tax expense		35,424			9,539			(40)		44,923			8,321		53,244
Income tax expense (benefit)		11,505			3,575			(14)		15,066			3,012		18,078
Net income (loss)	$	23,919		$	5,964		$	(26)	$	29,857		$	5,309	$	35,166
Segment end of year assets	$	3,809,526		$	386,414		$	9,348	$	4,205,288		$	25,001	$	4,230,289
Net interest margin		3.15	%		3.58	%		NM		3.19	%		NM		3.27	%

	Year Ended December 31, 2014
	Core Banking
									Total			Republic
	Traditional			Warehouse			Mortgage		Core			Processing		Total
(dollars in thousands)	Banking			Lending			Banking		Banking			Group		Company
Net interest income	$	104,832		$	7,428		$	183	$	112,443		$	330	$	112,773
Provision for loan and lease losses		3,042			350			—		3,392			(533)		2,859
Net refund transfer fees		—			—			—		—			16,130		16,130
Mortgage banking income		—			—			2,862		2,862			—		2,862
Other non-interest income		21,489			12			244		21,745			1,782		23,527
Total non-interest income		21,489			12			3,106		24,607			17,912		42,519
Total non-interest expenses		90,713			1,857			3,881		96,451			11,667		108,118
Income (loss) before income tax expense		32,566			5,233			(592)		37,207			7,108		44,315
Income tax expense (benefit)		11,251			1,831			(207)		12,875			2,653		15,528
Net income (loss)	$	21,315		$	3,402		$	(385)	$	24,332		$	4,455	$	28,787
Segment end of year assets	$	3,404,323		$	319,153		$	11,593	$	3,735,069		$	11,944	$	3,747,013
Net interest margin		3.32	%		3.77	%		NM		3.35	%		NM		3.33	%

	Year Ended December 31, 2013
	Core Banking
									Total			Republic
	Traditional			Warehouse			Mortgage		Core			Processing		Total
(dollars in thousands)	Banking			Lending			Banking		Banking			Group		Company
Net interest income	$	106,901		$	5,655		$	471	$	113,027		$	148	$	113,175
Provision for loan and lease losses		3,920			(92)			—		3,828			(845)		2,983
Net refund transfer fees		—			—			—		—			13,884		13,884
Mortgage banking income		—			—			7,258		7,258			—		7,258
Bargain purchase gains		1,324			—			—		1,324			—		1,324
Other non-interest income		22,752			6			131		22,889			875		23,764
Total non-interest income		24,076			6			7,389		31,471			14,759		46,230
Total non-interest expenses		94,668			1,657			3,418		99,743			16,181		115,924
Income (loss) before income tax expense		32,389			4,096			4,442		40,927			(429)		40,498
Income tax expense (benefit)		11,124			1,433			1,555		14,112			963		15,075
Net income (loss)	$	21,265		$	2,663		$	2,887	$	26,815		$	(1,392)	$	25,423
Segment end of year assets	$	3,205,499		$	149,351		$	9,307	$	3,364,157		$	7,747	$	3,371,904
Net interest margin		3.47	%		4.28	%		NM		3.50	%		NM		3.48

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

NM — Not Meaningful