XML 31 R21.htm IDEA: XBRL DOCUMENT v3.5.0.2
Segment Reporting
 6 Months Ended
Jun. 30, 2016
Segment Reporting

Note 13. 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 table provides a summary of the Company’s segment results for the three months ended June 30, 2016, on an internally managed accounting basis:

 

     For the Three Months Ended June 30, 2016  
(in thousands)    Banking
Operations		      Residential
Mortgage Banking		      Total Company  

Net interest income

    $ 321,663       $ 3,910       $ 325,573   

Provision for loan losses

      895         —           895   

Non-interest income:

         

Third party (1)

      29,899         7,467         37,366   

Inter-segment

      (4,317 )       4,317         —     
  

 

 

     

 

 

     

 

 

  

Total non-interest income

      25,582         11,784         37,366   

Non-interest expense (2)

      144,152         16,759         160,911   
  

 

 

     

 

 

     

 

 

  

Income before income tax expense

      202,198         (1,065 )       201,133   

Income tax expense (benefit)

      75,097         (424 )       74,673   
  

 

 

     

 

 

     

 

 

  

Net income (loss)

    $ 127,101       $ (641 )     $ 126,460   
  

 

 

     

 

 

     

 

 

  

Identifiable segment assets (period-end)

    $ 48,137,359       $ 898,388       $ 49,035,747   
  

 

 

     

 

 

     

 

 

  

 

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

The following table provides a summary of the Company’s segment results for the six months ended June 30, 2016, on an internally managed accounting basis:

 

     For the Six Months Ended June 30, 2016  
(in thousands)    Banking
Operations		      Residential
Mortgage Banking		      Total Company  

Net interest income

    $ 646,580       $ 6,859       $ 653,439   

Provision for loan losses

      719         —           719   

Non-Interest Income:

         

Third party(1)

      60,485         12,118         72,603   

Inter-segment

      (8,429 )       8,429         —     
  

 

 

     

 

 

     

 

 

  

Total non-interest income

      52,056         20,547         72,603   
  

 

 

     

 

 

     

 

 

  

Non-interest expense(2)

      286,202         33,157         319,359   
  

 

 

     

 

 

     

 

 

  

Income before income tax expense

      411,715         (5,751 )       405,964   

Income tax expense (benefit)

      151,912         (2,317 )       149,595   
  

 

 

     

 

 

     

 

 

  

Net income (loss)

    $ 259,803       $ (3,434 )     $ 256,369   
  

 

 

     

 

 

     

 

 

  

Identifiable segment assets (period-end)

    $ 48,137,359       $ 898,388       $ 49,035,747   
  

 

 

     

 

 

     

 

 

  

 

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

 

The following table provides a summary of the Company’s segment results for the three months ended June 30, 2015, on an internally managed accounting basis:

 

     For the Three Months Ended June 30, 2015  
(in thousands)    Banking
Operations		      Residential
Mortgage Banking		      Total Company  

Net interest income

    $ 280,006       $ 5,091       $ 285,097   

Provision for loan losses

      334         —           334   

Non-interest income:

         

Third party (1)

      45,355         16,546         61,901   

Inter-segment

      (4,061 )       4,061         —     
  

 

 

     

 

 

     

 

 

  

Total non-interest income

      41,294         20,607         61,901   

Non-interest expense (2)

      135,476         16,454         151,930   
  

 

 

     

 

 

     

 

 

  

Income before income tax expense

      185,490         9,244         194,734   

Income tax expense

      67,246         3,784         71,030   
  

 

 

     

 

 

     

 

 

  

Net income

    $ 118,244       $ 5,460       $ 123,704   
  

 

 

     

 

 

     

 

 

  

Identifiable segment assets (period-end)

    $ 48,011,913       $ 636,619       $ 48,648,532   
  

 

 

     

 

 

     

 

 

  

 

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

The following table provides a summary of the Company’s segment results for the six months ended June 30, 2015, on an internally managed accounting basis:

 

     For the Six Months Ended June 30, 2015  
(in thousands)    Banking
Operations		      Residential
Mortgage Banking		      Total Company  

Net interest income

    $ 569,291       $ 8,574       $ 577,865   

Recovery of loan losses

      341         —           341   

Non-interest income:

         

Third party (1)

      78,509         35,626         114,135   

Inter-segment

      (8,231 )       8,231         —     
  

 

 

     

 

 

     

 

 

  

Total non-interest income

      70,278         43,857         114,135   

Non-interest expense (2)

      275,627         33,139         308,766   
  

 

 

     

 

 

     

 

 

  

Income before income tax expense

      363,601         19,292         382,893   

Income tax expense

      132,136         7,794         139,930   
  

 

 

     

 

 

     

 

 

  

Net income

    $ 231,465       $ 11,498       $ 242,963   
  

 

 

     

 

 

     

 

 

  

Identifiable segment assets (period-end)

    $ 48,011,913       $ 636,619       $ 48,648,532   
  

 

 

     

 

 

     

 

 

  

 

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