SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2022

SEGMENT INFORMATION

SEGMENT INFORMATION

16. 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 June 30, 2022, 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 nature of segment operations and the primary drivers of net revenue 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 generally the same as those described in the summary of significant accounting policies in the Company’s 2021 Annual Report on Form 10-K. Republic evaluates segment performance using operating income. The Company allocates goodwill to the Traditional Banking segment. Republic generally allocates income taxes based on income before income tax expense unless reasonable and specific segment allocations can be made. The Company makes transactions among reportable segments at carrying value.

Segment information follows:

	Three Months Ended June 30, 2022
	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	$	39,158		$	3,886		$	153		$	43,197		$	1,638		$	6,397		$	8,035		$	51,232
Provision for expected credit loss expense		146			(234)			—			(88)			360			3,433			3,793			3,705
Net refund transfer fees		—			—			—			—			3,950			—			3,950			3,950
Mortgage banking income		—			—			1,763			1,763			—			—			—			1,763
Program fees		—			—			—			—			736			3,149			3,885			3,885
Legal settlement		—			—			—			—			13,000			—			13,000			13,000
Other noninterest income		7,731			12			46			7,789			179			—			179			7,968
Total noninterest income		7,731			12			1,809			9,552			17,865			3,149			21,014			30,566
Total noninterest expense		38,314			1,035			2,832			42,181			3,533			1,939			5,472			47,653
Income (loss) before income tax expense		8,429			3,097			(870)			10,656			15,610			4,174			19,784			30,440
Income tax expense (benefit)		1,647			692			(191)			2,148			3,465			926			4,391			6,539
Net income (loss)	$	6,782		$	2,405		$	(679)		$	8,508		$	12,145		$	3,248		$	15,393		$	23,901
Period-end assets	$	4,997,734		$	596,031		$	22,342		$	5,616,107		$	382,156		$	114,213		$	496,369		$	6,112,476
Net interest margin		3.06	%		2.69	%		NM			3.02	%		NM			NM			NM			3.51	%
Net-revenue concentration*		57	%		5	%		2	%		64	%		24	%		12	%		36	%		100	%

	Three Months Ended June 30, 2021
	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	$	38,278		$	6,324		$	140		$	44,742		$	623		$	4,939		$	5,562		$	50,304
Provision for expected credit loss expense		(77)			(65)			—			(142)			(5,773)			1,592			(4,181)			(4,323)
Net refund transfer fees		2			—			—			2			5,921			—			5,921			5,923
Mortgage banking income		—			—			4,182			4,182			—			—			—			4,182
Program fees		—			—			—			—			715			2,627			3,342			3,342
Other noninterest income		7,970			14			50			8,034			167			—			167			8,201
Total noninterest income		7,972			14			4,232			12,218			6,803			2,627			9,430			21,648
Total noninterest expense		36,939			1,066			3,006			41,011			3,697			1,006			4,703			45,714
Income before income tax expense		9,388			5,337			1,366			16,091			9,502			4,968			14,470			30,561
Income tax expense		1,555			1,227			301			3,083			2,326			1,230			3,556			6,639
Net income	$	7,833		$	4,110		$	1,065		$	13,008		$	7,176		$	3,738		$	10,914		$	23,922
Period-end assets	$	4,774,765		$	840,083		$	46,816		$	5,661,664		$	389,999		$	131,647		$	521,646		$	6,183,310
Net interest margin		2.97	%		3.48	%		NM			3.03	%		NM			NM			NM			3.33	%
Net-revenue concentration*		64	%		9	%		6	%		79	%		10	%		11	%		21	%		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.

	Six Months Ended June 30, 2022
	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	$	75,306		$	8,401		$	357		$	84,064		$	17,042		$	12,738		$	29,780		$	113,844
Provision for expected credit loss expense		466			(635)			—			(169)			8,272			4,828			13,100			12,931
Net refund transfer fees		—			—			—			—			16,001			—			16,001			16,001
Mortgage banking income		—			—			4,420			4,420			—			—			—			4,420
Program fees		—			—			—			—			1,463			6,276			7,739			7,739
Contract termination fee		—			—			—			—			5,000			—			5,000			5,000
Legal settlement		—			—			—			—			13,000			—			13,000			13,000
Other noninterest income		14,965			25			80			15,070			337			—			337			15,407
Total noninterest income		14,965			25			4,500			19,490			35,801			6,276			42,077			61,567
Total noninterest expense		76,533			1,987			5,522			84,042			8,678			3,506			12,184			96,226
Income (loss) before income tax expense		13,272			7,074			(665)			19,681			35,893			10,680			46,573			66,254
Income tax expense (benefit)		2,119			1,596			(146)			3,569			8,371			2,487			10,858			14,427
Net income (loss)	$	11,153		$	5,478		$	(519)		$	16,112		$	27,522		$	8,193		$	35,715		$	51,827
Period-end assets	$	4,997,734		$	596,031		$	22,342		$	5,616,107		$	382,156		$	114,213		$	496,369		$	6,112,476
Net interest margin		2.98	%		2.89	%		NM			2.97	%		NM			NM			NM			3.90	%
Net-revenue concentration*		51	%		5	%		3	%		59	%		30	%		11	%		41	%		100	%

	Six Months Ended June 30, 2021
	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	$	79,380		$	13,096		$	549		$	93,025		$	15,299		$	9,846		$	25,145		$	118,170
Provision for expected credit loss expense		(82)			(307)			—			(389)			10,111			1,217			11,328			10,939
Net refund transfer fees		2			—			—			2			18,642			—			18,642			18,644
Mortgage banking income		—			—			11,375			11,375			—			—			—			11,375
Program fees		—			—			—			—			1,611			3,940			5,551			5,551
Other noninterest income		14,754			28			78			14,860			239			—			239			15,099
Total noninterest income		14,756			28			11,453			26,237			20,492			3,940			24,432			50,669
Total noninterest expense		74,267			2,094			6,127			82,488			8,999			2,108			11,107			93,595
Income before income tax expense		19,951			11,337			5,875			37,163			16,681			10,461			27,142			64,305
Income tax expense		3,680			2,661			1,293			7,634			4,096			2,600			6,696			14,330
Net income	$	16,271		$	8,676		$	4,582		$	29,529		$	12,585		$	7,861		$	20,446		$	49,975
Period-end assets	$	4,774,765		$	840,083		$	46,816		$	5,661,664		$	389,999		$	131,647		$	521,646		$	6,183,310
Net interest margin		3.21	%		3.45	%		NM			3.24	%		NM			NM			NM			3.98	%
Net-revenue concentration*		56	%		8	%		7	%		71	%		21	%		8	%		29	%		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.