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Business Segments
 6 Months Ended
Jun. 30, 2013
Segment Reporting [Abstract]  
Business Segments
9. BUSINESS SEGMENTS

The Company has identified two principal reportable segments: Business Financial and Commercial Banking Centers (“Centers”) and the Treasury Department. The Company’s subsidiary bank has 40 Business Financial Centers and five Commercial Banking Centers organized in geographic regions, which are the focal points for customer sales and services. The Company utilizes an internal reporting system to measure the performance of various operating segments within the Bank which is the basis for determining the Bank’s reportable segments. The chief operating decision maker (currently our CEO) regularly reviews the financial information of these segments in deciding how to allocate resources and to assess performance. Business Financial and Commercial Banking Centers are considered one operating segment as their products and services are similar and are sold to similar types of customers, have similar production and distribution processes, have similar economic characteristics, and have similar reporting and organizational structures. The Treasury Department’s primary focus is managing the Bank’s investments, liquidity, and interest rate risk. Information related to the Company’s remaining operating segments, which include construction lending, dairy and livestock lending, SBA lending, leasing, and centralized functions have been aggregated and included in “Other.” In addition, the Company allocates internal funds transfer pricing to the segments using a methodology that charges users of funds interest expense and credits providers of funds interest income with the net effect of this allocation being recorded in administration.

The following table represents the selected financial information for these two business segments. GAAP does not have an authoritative body of knowledge regarding the management accounting used in presenting segment financial information. The accounting policies for each of the business units is the same as those policies identified for the consolidated Company and disclosed in Note 3 - Summary of Significant Accounting Policies. The income numbers represent the actual income and expenses of each business unit. In addition, each segment has allocated income and expenses based on management’s internal reporting system, which allows management to determine the performance of each of its business units. Loan fees included in the Centers category are the actual loan fees paid to the Company by its customers. These fees are eliminated and deferred in the “Other” category, resulting in deferred loan fees for the consolidated financial statements. All income and expense items not directly associated with the two business segments are grouped in the “Other” category. Future changes in the Company’s management structure or reporting methodologies may result in changes in the measurement of operating segment results

 

The following tables present the operating results and other key financial measures for the individual operating segments for the periods indicated:

 

     For the Three Months Ended June 30, 2013  
     Centers      Treasury     Other     Eliminations     Total  
     (Dollars in thousands)  

Interest income, including loan fees

    $ 35,201       $ 11,641      $ 9,751      $ —        $ 56,593   

Credit for funds provided (1)

      6,509         —          2,309        (8,818 )      —     
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Total interest income

      41,710         11,641        12,060        (8,818 )      56,593   
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Interest expense

      1,445         2,418        135        —          3,998   

Charge for funds used (1)

      1,033         10,864        (3,079 )      (8,818 )      —     
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Total interest expense

      2,478         13,282        (2,944 )      (8,818 )      3,998   
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Net interest income

      39,232         (1,641 )      15,004        —          52,595   
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Provision for loan losses

      —           —          (6,200 )      —          (6,200 ) 
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Net interest income after provision for loan losses

      39,232         (1,641 )      21,204        —          58,795   
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Noninterest income

      5,477         —          2,218        —          7,695   

Noninterest expense

      11,319         177        16,752        —          28,248   

Debt termination

      —           —          —          —          —     
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Segment pre-tax profit (loss)

    $ 33,390       $ (1,818 )    $ 6,670      $ —        $ 38,242   
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Segment assets as of June 30, 2013

    $ 5,146,329       $ 2,826,947      $ 746,429      $ (2,294,149 )    $ 6,425,556   
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

 

(1) Credit for funds provided and charge for funds used is eliminated in the consolidated presentation.

 

     For the Three Months Ended June 30, 2012  
     Centers      Treasury      Other     Eliminations     Total  
     (Dollars in thousands)  

Interest income, including loan fees

    $ 37,573       $ 14,983      $ 17,623      $ —        $ 70,179   

Credit for funds provided (1)

      6,277         —           2,550        (8,827 )     —     
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

  

Total interest income

      43,850         14,983        20,173        (8,827 )     70,179   
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

  

Interest expense

      1,865         4,569        785        —          7,219   

Charge for funds used (1)

      1,044         10,098        (2,315 )      (8,827 )     —     
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

  

Total interest expense

      2,909         14,667        (1,530 )      (8,827 )     7,219   
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

  

Net interest income

      40,941         316        21,703        —          62,960   
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

  

Provision for loan losses

      —           —           —          —          —     
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

  

Net interest income after provision for loan losses

      40,941         316        21,703        —          62,960   
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

  

Noninterest income

      5,807         —           (3,515 )      —          2,292   

Noninterest expense

      11,297         186        17,466        —          28,949   

Debt termination

      —           —           —          —          —     
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

  

Segment pre-tax profit (loss)

    $ 35,451       $ 130      $ 722      $ —        $ 36,303   
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

  

Segment assets as of June 30, 2012

    $ 4,869,845       $ 2,832,792      $ 895,925      $ (2,074,599 )   $ 6,523,963   
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

  

 

(1) Credit for funds provided and charge for funds used is eliminated in the consolidated presentation.

 

     For the Six Months Ended June 30, 2013  
     Centers      Treasury     Other     Eliminations     Total  
     (Dollars in thousands)  

Interest income, including loan fees

    $ 70,636       $ 24,429      $ 20,341      $ —        $ 115,406   

Credit for funds provided (1)

      12,821         —          4,868        (17,689 )      —     
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Total interest income

      83,457         24,429        25,209        (17,689 )      115,406   
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Interest expense

      2,944         4,835        443        —          8,222   

Charge for funds used (1)

      2,106         21,378        (5,795 )      (17,689 )      —     
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Total interest expense

      5,050         26,213        (5,352 )      (17,689 )      8,222   
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Net interest income

      78,407         (1,784 )      30,561        —          107,184   

Provision for loan losses

      —           —          (6,200 )      —          (6,200 ) 
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Net interest income after provision for loan losses

      78,407         (1,784 )      36,761        —          113,384   
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Noninterest income

      10,583         2,094        1,763        —          14,440   

Noninterest expense

      22,896         361        35,789        —          59,046   

Debt termination

      —           —          —          —          —     
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Segment pre-tax profit (loss)

    $ 66,094       $ (51 )    $ 2,735      $ —        $ 68,778   
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

Segment assets as of June 30, 2013

    $ 5,146,329       $ 2,826,947      $ 746,429      $ (2,294,149 )    $ 6,425,556   
  

 

 

     

 

 

    

 

 

    

 

 

    

 

 

  

 

(1) Credit for funds provided and charge for funds used is eliminated in the consolidated presentation.

 

     For the Six Months Ended June 30, 2012  
     Centers      Treasury      Other     Eliminations     Total  
     (Dollars in thousands)  

Interest income, including loan fees

    $ 75,244       $ 30,346      $ 30,654      $ —        $ 136,244   

Credit for funds provided (1)

      12,624         —           5,150        (17,774 )     —     
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

  

Total interest income

      87,868         30,346        35,804        (17,774 )     136,244   
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

  

Interest expense

      3,916         9,117        1,649        —          14,682   

Charge for funds used (1)

      2,141         20,126        (4,493 )      (17,774 )     —     
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

  

Total interest expense

      6,057         29,243        (2,844 )      (17,774 )     14,682   
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

  

Net interest income

      81,811         1,103        38,648        —          121,562   
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

  

Provision for loan losses

      —           —           —          —          —     
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

  

Net interest income after provision for loan losses

      81,811         1,103        38,648        —          121,562   
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

  

Noninterest income

      11,790         —           (4,242 )      —          7,548   

Noninterest expense

      23,195         381        35,585        —          59,161   

Debt termination

      —           —           —          —          —     
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

  

Segment pre-tax profit (loss)

    $ 70,406       $ 722      $ (1,179 )    $ —        $ 69,949   
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

  

Segment assets as of June 30, 2012

    $ 4,869,845       $ 2,832,792      $ 895,925      $ (2,074,599 )   $ 6,523,963   
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

  

 

(1) Credit for funds provided and charge for funds used is eliminated in the consolidated presentation.