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Segment Reporting
 12 Months Ended
Dec. 31, 2015
Segment Reporting

NOTE 19: SEGMENT REPORTING

The Company’s operations are divided into two reportable business segments: Banking Operations and Residential Mortgage Banking. These operating segments have been identified based on the Company’s organizational structure. The segments require unique technology and marketing strategies, and offer different products and services. While the Company is managed as an integrated organization, individual executive managers are held accountable for the operations of these business segments.

The Company measures and presents information for internal reporting purposes in a variety of ways. The internal reporting system presently used by management in the planning and measurement of operating activities, and to which most managers are held accountable, is based on organizational structure.

The management accounting process uses various estimates and allocation methodologies to measure the performance of the operating segments. To determine financial performance for each segment, the Company allocates capital, funding charges and credits, certain non-interest expenses, and income tax provisions to each segment, as applicable. Allocation methodologies are subject to periodic adjustment as the internal management accounting system is revised and/or as business or product lines within the segments change. In addition, because the development and application of these methodologies is a dynamic process, the financial results presented may be periodically revised.

The Company seeks to maximize shareholder value by, among other means, optimizing the return on stockholders’ equity and managing risk. Capital is assigned to each segment, the combination of which is equivalent to the Company’s consolidated total, on an economic basis, using management’s assessment of the inherent risks associated with the segment. Capital allocations are made to cover the following risk categories: credit risk, liquidity risk, interest rate risk, option risk, basis risk, market risk, and operational risk.

The Company allocates expenses to the reportable segments based on various factors, including the volume and number of loans produced and the number of full-time equivalent employees. Income taxes are allocated to the various segments based on taxable income and statutory rates applicable to the segment.

 

Banking Operations Segment

The Banking Operations segment serves consumers and businesses by offering and servicing a variety of loan and deposit products and other financial services.

Residential Mortgage Banking Segment

The Residential Mortgage Banking segment originates, aggregates, sells, and services one-to-four family mortgage loans. Mortgage loan products consist primarily of agency-conforming fixed- and adjustable-rate loans and, to a lesser extent, jumbo loans, for the purpose of purchasing or refinancing one-to-four family homes. The Residential Mortgage Banking segment earns interest on loans held in the warehouse and non-interest income from the origination and servicing of loans. It also recognizes gains or losses on the sale of such loans.

The following tables provide a summary of the Company’s segment results for the years ended December 31, 2015 and 2014, on an internally managed accounting basis:

 

     For the Twelve Months Ended December 31, 2015  
(in thousands)    Banking
Operations		      Residential Mortgage
Banking		      Total
Company		  

Net interest income

    $ 393,074       $ 15,001       $ 408,075   

Recoveries of loan losses

      (15,004 )       —           (15,004 ) 

Non-Interest Income:

         

Third party(1)

      154,847         55,916         210,763   

Inter-segment

      (15,359 )       15,359         —     
  

 

 

     

 

 

     

 

 

  

Total non-interest income

      139,488         71,275         210,763   
  

 

 

     

 

 

     

 

 

  

Non-interest expense(2)

      700,469         65,386         765,855   
  

 

 

     

 

 

     

 

 

  

(Loss) Income before income tax expense

      (152,903 )       20,890         (132,013 ) 

Income tax (benefit) expense

      (93,297 )       8,440         (84,857 ) 
  

 

 

     

 

 

     

 

 

  

Net (loss) income

    $ (59,606 )     $ 12,450       $ (47,156 ) 
  

 

 

     

 

 

     

 

 

  

Identifiable segment assets (period-end)

    $ 49,619,931       $ 697,865       $ 50,317,796   
  

 

 

     

 

 

     

 

 

  

 

(1) Includes ancillary fee income.
(2) Includes both direct and indirect expenses.

 

     For the Twelve Months Ended December 31, 2014  
(in thousands)    Banking
Operations		      Residential Mortgage
Banking		      Total
Company		  

Net interest income

    $ 1,126,162       $ 14,191       $ 1,140,353   

Recoveries of loan losses

      (18,587 )       —           (18,587 ) 

Non-Interest Income:

         

Third party(1)

      135,834         65,759         201,593   

Inter-segment

      (13,521 )       13,521         —     
  

 

 

     

 

 

     

 

 

  

Total non-interest income

      122,313         79,280         201,593   
  

 

 

     

 

 

     

 

 

  

Non-interest expense(2)

      528,436         59,031         587,467   
  

 

 

     

 

 

     

 

 

  

Income before income tax expense

      738,626         34,440         773,066   

Income tax expense

      274,179         13,490         287,669   
  

 

 

     

 

 

     

 

 

  

Net income

    $ 464,447       $ 20,950       $ 485,397   
  

 

 

     

 

 

     

 

 

  

Identifiable segment assets (period-end)

    $ 47,897,672       $ 661,545       $ 48,559,217   
  

 

 

     

 

 

     

 

 

  

 

(1) Includes ancillary fee income.
(2) Includes both direct and indirect expenses.