Segment Information

6 Months Ended

Jun. 30, 2012

Segment Information

11.      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 branches and subsidiary banks), which are then aggregated if operating performance, products/services, and customers are similar.

As of June 30, 2012, the Company was divided into three distinct segments: Traditional Banking, Mortgage Banking and Republic Processing Group (“RPG”). During the second quarter of 2012, the Company realigned the previously reported Tax Refund Solutions (“TRS”) segment as a division of the newly formed RPG segment. Along with the TRS division, Republic Payment Solutions (“RPS”) was newly created to operate as a second division of the RPG segment.

Nationally, through RB&T, RPG facilitates the receipt and payment of federal and state tax refund products under the TRS division. Nationally, through RB, the RPS division is preparing to become an issuing bank to offer general purpose reloadable prepaid debit, payroll, gift and incentive cards through third party program managers.

For the projected near-term, as the prepaid card program is being established, the operating results of the RPS division are expected to be immaterial to the Company’s overall results of operations and will be reported as part of the RPG business segment. The RPS division will not be reported as a separate business segment until such time, if any, that it becomes material.

Loans, investments and deposits provide the majority of the net revenue from Traditional Banking operations; servicing fees and loan sales provide the majority of revenue from Mortgage Banking operations; RAL fees and ERC/ERD fees provide the majority of the revenue for the TRS division. All Company operations are domestic.

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 which are not segment specific are allocated based on income before income tax expense. Transactions among reportable segments are made at fair value.

For additional discussion regarding TRS, a division of RPG, see the following sections:

●          Part I Item 1 “Financial Statements:”

o          Footnote 1 “Basis of Presentation and Summary of Significant Accounting Policies”

o          Footnote 4 “Loans and Allowance for Loan Losses”

o          Footnote 6 “Federal Home Loan Bank Advances”

Segment information for the three and six months ended June 30, 2012 and 2011 follows:

	Three Months Ended June 30, 2012
(dollars in thousands)	Traditional Banking			Mortgage  Banking		Republic  Processing Group			Total Company
Net interest income	$	28,090		$	53	$	169		$	28,312
Provision for loan losses		831			-		(365	)		466
Electronic refund check fees		-			-		6,147			6,147
Mortgage banking income		-			1,963		-			1,963
Bargain purchase gain		(96	)		-		-			(96	)
Other non interest income		6,036			11		25			6,072
Total non interest income		5,940			1,974		6,172			14,086
Total non interest expenses		23,590			923		2,938			27,451
Gross operating profit		9,609			1,104		3,768			14,481
Income tax expense		3,129			386		1,388			4,903
Net income	$	6,480		$	718	$	2,380		$	9,578
Segment end of period assets	$	3,248,453		$	9,847	$	20,500		$	3,278,800
Net interest margin		3.57	%	NM		NM				3.53	%
	Three Months Ended June 30, 2011
(dollars in thousands)	Traditional  Banking			Mortgage  Banking		Republic  Processing Group			Total Company
Net interest income	$	26,393		$	69	$	367		$	26,829
Provision for loan losses		585			-		(1,024	)		(439	)
Electronic refund check fees		-			-		6,584			6,584
Mortgage banking income		-			924		-			924
Net gain on sales, calls and impairment
of securities		1,907			-		-			1,907
Other non interest income		5,893			23		37			5,953
Total non interest income		7,800			947		6,621			15,368
Total non interest expenses		22,679			947		4,900			28,526
Gross operating profit (loss)		10,929			69		3,112			14,110
Income tax expense (benefit)		3,612			24		1,811			5,447
Net income (loss)	$	7,317		$	45	$	1,301		$	8,663
Segment end of period assets	$	3,067,290		$	14,695	$	22,585		$	3,104,570
Net interest margin		3.50	%	NM		NM				3.50	%

	Six Months Ended June 30, 2012
(dollars in thousands)	Traditional  Banking			Mortgage  Banking			Republic  Processing Group		Total Company
Net interest income	$	55,962		$	173		$	45,397	$	101,532
Provision for loan losses		3,962			-			7,674		11,636
Electronic refund check fees		-			-			77,896		77,896
Mortgage banking income		-			3,317			-		3,317
Net gain on sales, calls and impairment
of securities		56			-			-		56
Bargain purchase gain		27,803			-			-		27,803
Other non interest income		11,618			16			189		11,823
Total non interest income		39,477			3,333			78,085		120,895
Total non interest expenses		50,634			2,077			15,893		68,604
Gross operating profit		40,843			1,429			99,915		142,187
Income tax expense		14,005			500			35,632		50,137
Net income	$	26,838		$	929		$	64,283	$	92,050
Segment end of period assets	$	3,248,453		$	9,847		$	20,500	$	3,278,800
Net interest margin		3.58	%	NM			NM			5.73	%
	Six Months Ended June 30, 2011
(dollars in thousands)	Traditional  Banking			Mortgage  Banking			Republic Processing Group		Total Company
Net interest income	$	51,521		$	191		$	59,088	$	110,800
Provision for loan losses		4,907			-			12,736		17,643
Electronic refund check fees		-			-			87,646		87,646
Mortgage banking income		-			1,740			-		1,740
Net gain on sales, calls and impairment
of securities		1,628			-			-		1,628
Other non interest income		11,296			25			345		11,666
Total non interest income		12,924			1,765			87,991		102,680
Total non interest expenses		45,775			2,050			23,519		71,344
Gross operating profit (loss)		13,763			(94	)		110,824		124,493
Income tax expense (benefit)		3,970			(33	)		40,481		44,418
Net income (loss)	$	9,793		$	(61	)	$	70,343	$	80,075
Segment end of period assets	$	3,067,290		$	14,695		$	22,585	$	3,104,570
Net interest margin		3.42	%	NM			NM			6.48	%

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NM – Not Meaningful