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Segment Information
12 Months Ended
Dec. 31, 2012
Segment Information
21.   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 December 31, 2012, the Company was divided into three distinct business operating segments: Traditional Banking, Mortgage Banking and Republic Processing Group (“RPG”). During 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”) and Republic Credit Solutions (“RCS”) also operate as divisions of the newly formed 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. Nationally, through RB&T, the RCS division is preparing to pilot short-term consumer credit products on-line.

For the projected near-term, as the prepaid card and consumer credit programs are being established, the operating results of these divisions are expected to be immaterial to the Company’s overall results of operations and will be reported as part of the RPG business operating segment. The RPS and RCS divisions will not be reported as separate business operating segments until such time, if any, that they become material to the Company’s overall results of operations.

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 RT 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 Republic Processing Group, see the following sections:
 
Part I Item 1A “Risk Factors”
 
Republic Processing Group
 
“Financial Condition”
 
Part II Item 8 “Financial Statements and Supplementary Data”
 
Footnote 1 “Summary of Significant Accounting Policies”
 
Footnote 4 “Loans and Allowance for Loan Losses”
 
Footnote 8 “Deposits”
 
Segment information for the years ended December 31, 2012, 2011 and 2010 is as follows:
 
   
Year Ended December 31, 2012
 
               
Republic
       
   
Traditional
   
Mortgage
   
Processing
   
Total
 
(dollars in thousands)
 
Banking
   
Banking
   
Group
   
Company
 
                         
Net interest income
  $ 114,831     $ 400     $ 45,424     $ 160,655  
Provision for loan losses
    8,167       -       6,876       15,043  
                                 
Refund transfer fees
    -       -       78,304       78,304  
Mortgage banking income
    -       8,447       -       8,447  
Net gain on sales, calls and
                    -       -  
    impairment of securities
    56       -               56  
Bargain purchase gain
    55,438       -       -       55,438  
Other non interest income
    22,574       39       220       22,833  
Total non interest income
    78,068       8,486       78,524       165,078  
                                 
Total non interest expenses
    100,380       3,842       22,523       126,745  
                                 
Income before income tax expense
    84,352       5,044       94,549       183,945  
Income tax expense
    29,178       1,765       33,663       64,606  
Net income
  $ 55,174     $ 3,279     $ 60,886     $ 119,339  
                                 
Segment end of period total assets
  $ 3,371,934     $ 15,752     $ 6,713     $ 3,394,399  
Net interest margin
    3.64 %  
NM
   
NM
      4.82 %
 
   
Year Ended December 31, 2011
 
               
Republic
       
   
Traditional
   
Mortgage
   
Processing
   
Total
 
(dollars in thousands)
 
Banking
   
Banking
   
Group
   
Company
 
                         
Net interest income
  $ 105,346     $ 401     $ 59,113     $ 164,860  
Provision for loan losses
    6,406       -       11,560       17,966  
                                 
Refund transfer fees
    -       -       88,195       88,195  
Mortgage banking income
    -       3,899       -       3,899  
Net gain on sales, calls and
                               
    impairment of securities
    2,006       -       -       2,006  
Bargain purchase gain
    -       -       -       -  
Other non interest income
    25,089       78       357       25,524  
Total non interest income
    27,095       3,977       88,552       119,624  
                                 
Total non interest expenses
    87,389       3,849       31,083       122,321  
                                 
Income before income tax expense
    38,646       529       105,022       144,197  
Income tax expense
    12,183       185       37,680       50,048  
Net income
  $ 26,463     $ 344     $ 67,342     $ 94,149  
                                 
Segment end of period total assets
  $ 3,099,426     $ 10,880     $ 309,685     $ 3,419,991  
Net interest margin
    3.55 %  
NM
   
NM
      5.09 %
 
   
Year Ended December 31, 2010
 
               
Republic
       
   
Traditional
   
Mortgage
   
Processing
   
Total
 
(dollars in thousands)
 
Banking
   
Banking
   
Group
   
Company
 
                         
Net interest income
  $ 105,685     $ 468     $ 50,659     $ 156,812  
Provision for loan losses
    11,571       -       8,143       19,714  
                                 
Refund transfer fees
    -       -       58,789       58,789  
Mortgage banking income
    -       5,797       -       5,797  
Net loss on sales, calls and
                            -  
    impairment of securities
    (221 )     -       -       (221 )
Bargain purchase gain
    -       -       -       -  
Other non interest income
    22,899       73       321       23,293  
Total non interest income
    22,678       5,870       59,110       87,658  
                                 
Total non interest expenses
    90,968       2,559       32,796       126,323  
                                 
Income before income tax expense
    25,824       3,779       68,830       98,433  
Income tax expense
    7,929       1,161       24,590       33,680  
Net income
  $ 17,895     $ 2,618     $ 44,240     $ 64,753  
                                 
Segment end of period total assets
  $ 3,026,628     $ 23,359     $ 572,716     $ 3,622,703  
Net interest margin
    3.57 %  
NM
   
NM
      4.65 %
 
_______________________
NM – Not Meaningful