25.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, 2019, 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 Company’s national branchless banking platform, MemoryBank, is considered part of the Traditional Banking segment.

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 Revenue:

Core Banking:

Traditional Banking	Provides traditional banking products to clients in its market footprint primarily via its network of banking centers and to clients outside of its market footprint primarily via its digital 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 refunds through Refund Transfer 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 consumer 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, 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, 2019, 2018, and 2017 is as follows:


	Year Ended December 31, 2019
	Core Banking												Republic Processing Group
										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	$	168,076		$	15,801		$	697		$	184,574		$	21,626		$	29,926		$	51,552		$	236,126

Provision for loan and lease losses		2,444			622			—			3,066			11,249			11,443			22,692			25,758

Net refund transfer fees		—			—			—			—			21,158			—			21,158			21,158
Mortgage banking income		—			—			9,499			9,499			—			—			—			9,499
Program fees		—			—			—			—			437			4,275			4,712			4,712
Net gain on branch divestiture		7,829			—			—			7,829			—			—			—			7,829
Other noninterest income		30,724			(46)			213			30,891			260			659			919			31,810
Total noninterest income		38,553			(46)			9,712			48,219			21,855			4,934			26,789			75,008

Total noninterest expense		143,671			3,268			6,112			153,051			16,539			2,593			19,132			172,183

Income before income tax expense		60,514			11,865			4,297			76,676			15,693			20,824			36,517			113,193
Income tax expense		9,651			2,670			902			13,223			3,454			4,817			8,271			21,494
Net income	$	50,863		$	9,195		$	3,395		$	63,453		$	12,239		$	16,007		$	28,246		$	91,699

Period-end assets	$	4,684,116		$	717,994		$	26,469		$	5,428,579		$	86,849		$	104,891		$	191,740		$	5,620,319

Net interest margin		3.76	%		2.42	%		NM			3.61	%		NM			NM			NM			4.46	%

Net-revenue concentration*		67	%		5	%		3	%		75	%		14	%		11	%		25	%		100	%


	Year Ended December 31, 2018
	Core Banking												Republic Processing Group
										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	$	160,398		$	15,726		$	402		$	176,526		$	19,203		$	30,329		$	49,532		$	226,058

Provision for loan and lease losses		3,710			(142)			—			3,568			10,919			16,881			27,800			31,368

Net refund transfer fees		—			—			—			—			20,029			—			20,029			20,029
Mortgage banking income		—			—			4,825			4,825			—			—			—			4,825
Program fees		—			—			—			—			295			5,930			6,225			6,225
Other noninterest income		29,965			40			550			30,555			1,229			562			1,791			32,346
Total noninterest income		29,965			40			5,375			35,380			21,553			6,492			28,045			63,425

Total noninterest expense		136,439			3,367			4,356			144,162			14,686			5,004			19,690			163,852

Income before income tax expense		50,214			12,541			1,421			64,176			15,151			14,936			30,087			94,263
Income tax expense		6,819			2,869			298			9,986			3,033			3,392			6,425			16,411
Net income	$	43,395		$	9,672		$	1,123		$	54,190		$	12,118		$	11,544		$	23,662		$	77,852

Period-end assets	$	4,647,037		$	470,126		$	14,246		$	5,131,409		$	20,288		$	88,707		$	108,995		$	5,240,404

Net interest margin		3.76	%		3.18	%		NM			3.70	%		NM			NM			NM			4.62	%

Net-revenue concentration*		66	%		5	%		2	%		73	%		14	%		13	%		27	%		100	%


	Year Ended December 31, 2017
	Core Banking												Republic Processing Group
										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
Other noninterest income		27,452			37			279			27,768			164			1,516			1,680			29,448
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)		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 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	%

*Net revenue represents net interest income plus total noninterest income. Net-revenue concentration equals segment-level net revenue divided by total Company net revenue.

NM - Not Meaningful