SEGMENT INFORMATION

9 Months Ended

Sep. 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 September 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 September 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	$	46,562		$	3,011		$	112		$	49,685		$	1,709		$	6,642		$	8,351		$	58,036
Provision for expected credit loss expense		(753)			(386)			—			(1,139)			(1,296)			4,008			2,712			1,573
Net refund transfer fees		—			—			—			—			593			—			593			593
Mortgage banking income		—			—			1,154			1,154			—			—			—			1,154
Program fees		—			—			—			—			724			4,208			4,932			4,932
Other noninterest income		8,260			13			33			8,306			62			—			62			8,368
Total noninterest income		8,260			13			1,187			9,460			1,379			4,208			5,587			15,047
Total noninterest expense		37,777			851			2,005			40,633			3,248			2,224			5,472			46,105
Income (loss) before income tax expense		17,798			2,559			(706)			19,651			1,136			4,618			5,754			25,405
Income tax expense (benefit)		4,278			572			(156)			4,694			202			1,026			1,228			5,922
Net income (loss)	$	13,520		$	1,987		$	(550)		$	14,957		$	934		$	3,592		$	4,526		$	19,483
Period-end assets	$	5,036,343		$	441,885		$	16,418		$	5,494,646		$	395,873		$	109,144		$	505,017		$	5,999,663
Net interest margin		3.63	%		2.54	%		NM			3.54	%		NM			NM			NM			4.05	%
Net-revenue concentration*		75	%		4	%		2	%		81	%		4	%		15	%		19	%		100	%

	Three Months Ended September 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	$	40,297		$	6,291		$	253		$	46,841		$	294		$	5,994		$	6,288		$	53,129
Provision for expected credit loss expense		(44)			(223)			—			(267)			(2,261)			3,820			1,559			1,292
Net refund transfer fees		—			—			—			—			1,280			—			1,280			1,280
Mortgage banking income		—			—			5,280			5,280			—			—			—			5,280
Program fees		—			—			—			—			762			3,256			4,018			4,018
Other noninterest income		8,105			15			62			8,182			65			—			65			8,247
Total noninterest income		8,105			15			5,342			13,462			2,107			3,256			5,363			18,825
Total noninterest expense		35,924			1,056			3,257			40,237			2,966			1,232			4,198			44,435
Income before income tax expense		12,522			5,473			2,338			20,333			1,696			4,198			5,894			26,227
Income tax expense		3,038			1,258			514			4,810			371			1,037			1,408			6,218
Net income	$	9,484		$	4,215		$	1,824		$	15,523		$	1,325		$	3,161		$	4,486		$	20,009
Period-end assets	$	4,907,503		$	750,266		$	41,196		$	5,698,965		$	365,552		$	123,117		$	488,669		$	6,187,634
Net interest margin		3.22	%		3.51	%		NM			3.25	%		NM			NM			NM			3.61	%
Net-revenue concentration*		67	%		9	%		8	%		84	%		3	%		13	%		16	%		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.

	Nine Months Ended September 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	$	121,868		$	11,412		$	469		$	133,749		$	18,751		$	19,380		$	38,131		$	171,880
Provision for expected credit loss expense		(287)			(1,021)			—			(1,308)			6,976			8,836			15,812			14,504
Net refund transfer fees		—			—			—			—			16,594			—			16,594			16,594
Mortgage banking income		—			—			5,574			5,574			—			—			—			5,574
Program fees		—			—			—			—			2,187			10,484			12,671			12,671
Contract termination fee		—			—			—			—			5,000			—			5,000			5,000
Legal settlement		—			—			—			—			13,000			—			13,000			13,000
Other noninterest income		23,225			38			113			23,376			399			—			399			23,775
Total noninterest income		23,225			38			5,687			28,950			37,180			10,484			47,664			76,614
Total noninterest expense		114,310			2,838			7,527			124,675			11,926			5,730			17,656			142,331
Income (loss) before income tax expense		31,070			9,633			(1,371)			39,332			37,029			15,298			52,327			91,659
Income tax expense (benefit)		6,397			2,168			(302)			8,263			8,573			3,513			12,086			20,349
Net income (loss)	$	24,673		$	7,465		$	(1,069)		$	31,069		$	28,456		$	11,785		$	40,241		$	71,310
Period-end assets	$	5,036,343		$	441,885		$	16,418		$	5,494,646		$	395,873		$	109,144		$	505,017		$	5,999,663
Net interest margin		3.20	%		2.79	%		NM			3.16	%		NM			NM			NM			3.95	%
Net-revenue concentration*		58	%		5	%		2	%		65	%		23	%		12	%		35	%		100	%

	Nine Months Ended September 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	$	119,677		$	19,387		$	802		$	139,866		$	15,593		$	15,840		$	31,433		$	171,299
Provision for expected credit loss expense		(126)			(530)			—			(656)			7,850			5,037			12,887			12,231
Net refund transfer fees		2			—			—			2			19,922			—			19,922			19,924
Mortgage banking income		—			—			16,655			16,655			—			—			—			16,655
Program fees		—			—			—			—			2,373			7,196			9,569			9,569
Other noninterest income		22,859			43			140			23,042			304			—			304			23,346
Total noninterest income		22,861			43			16,795			39,699			22,599			7,196			29,795			69,494
Total noninterest expense		110,191			3,150			9,384			122,725			11,965			3,340			15,305			138,030
Income before income tax expense		32,473			16,810			8,213			57,496			18,377			14,659			33,036			90,532
Income tax expense		6,718			3,919			1,807			12,444			4,467			3,637			8,104			20,548
Net income	$	25,755		$	12,891		$	6,406		$	45,052		$	13,910		$	11,022		$	24,932		$	69,984
Period-end assets	$	4,907,503		$	750,266		$	41,196		$	5,698,965		$	365,552		$	123,117		$	488,669		$	6,187,634
Net interest margin		3.21	%		3.47	%		NM			3.24	%		NM			NM			NM			3.86	%
Net-revenue concentration*		59	%		8	%		7	%		74	%		16	%		10	%		26	%		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.