24.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, 2017, the Company was divided into five reportable segments: Traditional Banking, Warehouse, Mortgage Banking, TRS and RCS. Management considers the first three segments to collectively constitute “Core Bank” or “Core Banking” operations, while the last two segments collectively constitute RPG operations. The Bank’s Correspondent Lending channel and the Company’s national branchless banking platform, MemoryBank, are considered part of the Traditional Banking segment.

Prior to the third quarter of 2017, management reported RPG as a segment consisting of its largest division, TRS, along with its relatively smaller divisions, RPS and RCS. During the third quarter of 2017, due to RCS’s growth in revenues relative to the total Company’s revenues, management identified TRS and RCS as separate reportable segments under the newly classified RPG operations. Also, as part of the updated segmentation, management will report the RPS division, which remained below thresholds to be classified a separate reportable segment, within the newly classified TRS segment. The reportable segments within RPG operations and divisions within those segments operate through the Bank. All prior periods have been reclassified to conform to the current presentation.

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


Reportable Segment:	Nature of Operations:	Primary Drivers of Net Revenues:

Core Banking:

Traditional Banking	Provides traditional banking products to clients primarily in its market footprint via its network of banking centers and to clients outside of its market footprint primarily via its Digital and Correspondent Lending delivery channels.	Loans, investments, and deposits.

Warehouse Lending	Provides short-term, revolving credit facilities to mortgage bankers across the United States.	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 the Bank's market footprint.	Loan sales and servicing.

Republic Processing Group:

Tax Refund Solutions	TRS offers tax-related credit products and facilitates the receipt and payment of federal and state tax refund products. The RPS division of TRS offers general-purpose reloadable cards. TRS and RPS products are primarily provided to clients outside of the Bank’s market footprint.	Loans, refund transfers, and prepaid cards.

Republic Credit Solutions	Offers short-term credit products. RCS products are primarily provided to clients outside of the Bank’s market footprint, with a substantial portion of RCS clients considered subprime or near prime borrowers.	Unsecured small-dollar, consumer loans.

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 allocated to the Traditional Banking segment. 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, 2017, 2016 and 2015 is as follows:


	Year Ended December 31, 2017
	Core Banking												Republic Processing Group ("RPG")
										Total			Tax			Republic
	Traditional			Warehouse			Mortgage			Core			Refund			Credit			Total			Total
(dollars in thousands)	Banking			Lending			Banking			Banking			Solutions			Solutions			RPG			Company

Net interest income	$	142,823		$	17,533		$	346		$	160,702		$	15,197		$	22,621		$	37,818		$	198,520

Provision for loan and lease losses		3,923			(150)			—			3,773			6,535			17,396			23,931			27,704

Net refund transfer fees		—			—			—			—			18,500			—			18,500			18,500
Mortgage banking income		—			—			4,642			4,642			—			—			—			4,642
Program fees		—			—			—			—			176			5,648			5,824			5,824
Net losses on securities available for sale		(136)			—			—			(136)			—			—			—			(136)
Other noninterest income		27,588			37			279			27,904			164			1,516			1,680			29,584
Total noninterest income		27,452			37			4,921			32,410			18,840			7,164			26,004			58,414

Total noninterest expense		124,637			3,392			4,765			132,794			14,491			3,559			18,050			150,844

Income before income tax expense		41,715			14,328			502			56,545			13,011			8,830			21,841			78,386

Income tax expense (benefit) - TCJA		5,115			181			(702)			4,594			—			1,732			1,732			6,326
Income tax expense - Other		13,087			5,240			176			18,503			4,721			3,204			7,925			26,428
Total income tax expense (benefit)		18,202			5,421			(526)			23,097			4,721			4,936			9,657			32,754

Net income	$	23,513		$	8,907		$	1,028		$	33,448		$	8,290		$	3,894		$	12,184		$	45,632

Period-end total assets	$	4,470,932		$	525,246		$	11,115		$	5,007,293		$	12,450		$	65,619		$	78,069		$	5,085,362

Net interest margin		3.55	%		3.53	%		NM			3.55	%		NM			NM			NM			4.32	%

Net-revenue concentration*		66	%		7	%		2	%		75	%		13	%		12	%		25	%		100	%


	Year Ended December 31, 2016
	Core Banking												Republic Processing Group ("RPG")
										Total			Tax			Republic
	Traditional			Warehouse			Mortgage			Core			Refund			Credit			Total			Total
(dollars in thousands)	Banking			Lending			Banking			Banking			Solutions			Solutions			RPG			Company

Net interest income	$	121,692		$	16,529		$	200		$	138,421		$	6,607		$	11,026		$	17,633		$	156,054

Provision for loan and lease losses		3,448			497			—			3,945			2,772			7,776			10,548			14,493

Net refund transfer fees		—			—			—			—			19,240			—			19,240			19,240
Mortgage banking income		—			—			6,882			6,882			—			—			—			6,882
Program fees		—			—			—			—			210			2,834			3,044			3,044
Other noninterest income		26,090			18			360			26,468			189			1,686			1,875			28,343
Total noninterest income		26,090			18			7,242			33,350			19,639			4,520			24,159			57,509

Total noninterest expense		108,360			3,142			4,688			116,190			11,701			2,216			13,917			130,107

Income before income tax expense		35,974			12,908			2,754			51,636			11,773			5,554			17,327			68,963
Income tax expense		11,015			4,798			964			16,777			4,270			2,013			6,283			23,060
Net income	$	24,959		$	8,110		$	1,790		$	34,859		$	7,503		$	3,541		$	11,044		$	45,903

Period-end total assets	$	4,169,557		$	584,916		$	17,453		$	4,771,926		$	13,575		$	30,808		$	44,383		$	4,816,309

Net interest margin		3.26	%		3.59	%		NM			3.30	%		NM			NM			NM			3.65	%

Net-revenue concentration*		69	%		8	%		3	%		80	%		13	%		7	%		20	%		100	%


	Year Ended December 31, 2015
	Core Banking												Republic Processing Group ("RPG")
										Total			Tax			Republic
	Traditional			Warehouse			Mortgage			Core			Refund			Credit			Total			Total
(dollars in thousands)	Banking			Lending			Banking			Banking			Solutions			Solutions			RPG			Company

Net interest income	$	108,303		$	12,209		$	219		$	120,731		$	896		$	2,343		$	3,239		$	123,970

Provision for loan and lease losses		2,897			168			—			3,065			(279)			2,610			2,331			5,396

Net refund transfer fees		—			—			—			—			17,388			—			17,388			17,388
Mortgage banking income		—			—			4,411			4,411			—			—			—			4,411
Program fees		—			—			—			—			254			979			1,233			1,233
Gain on call of security available for sale		88			—			—			88			—			—			—			88
Other noninterest income		23,670			24			248			23,942			932			—			932			24,874
Total noninterest income		23,758			24			4,659			28,441			18,574			979			19,553			47,994

Total noninterest expense		93,740			2,526			4,918			101,184			10,770			1,370			12,140			113,324

Income (loss) before income tax expense		35,424			9,539			(40)			44,923			8,979			(658)			8,321			53,244
Income tax expense (benefit)		11,505			3,575			(14)			15,066			3,250			(238)			3,012			18,078
Net income (loss)	$	23,919		$	5,964		$	(26)		$	29,857		$	5,729		$	(420)		$	5,309		$	35,166

Period-end total assets	$	3,809,526		$	386,414		$	9,348		$	4,205,288		$	18,891		$	6,110		$	25,001		$	4,230,289

Net interest margin		3.20	%		3.58	%		NM			3.24	%		NM			NM			NM			3.27	%

Net-revenue concentration*		77	%		7	%		3	%		87	%		11	%		2	%		13	%		100	%

*Net revenues are equal to net interest income plus noninterest income.

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

NM - Not Meaningful