9.	BUSINESS SEGMENTS

The Company has identified two principal reportable segments: Business Financial and Commercial Banking Centers (“Centers”) and the Treasury Department. The Bank has 40 Business Financial Centers and seven Commercial Banking Centers organized in geographic regions, which are the focal points for customer sales and services, and the Bank will have four additional Business Financial Centers if, as expected, the acquisition of County Commerce Bank is consummated. 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. 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 & livestock and agribusiness lending, leasing, CitizensTrust, 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, included in our Annual Report on Form 10-K for the year ended December 31, 2014. 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 condensed 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 presented.


	For the Three Months Ended September 30, 2015
	Centers		Treasury			Other			Eliminations			Total
	(Dollars in thousands)
Interest income, including loan fees	$	36,998	$	18,927		$	11,806		$	-		$	67,731
Credit for funds provided (1)		8,977		-			13,249			(22,226	)		-

Total interest income		45,975		18,927			25,055			(22,226	)		67,731

Interest expense		1,654		58			102			-			1,814
Charge for funds used (1)		1,088		15,983			5,155			(22,226	)		-

Total interest expense		2,742		16,041			5,257			(22,226	)		1,814

Net interest income		43,233		2,886			19,798			-			65,917
Recapture of provision for loan losses		-		-			(2,500	)		-			(2,500	)

Net interest income after recapture of provision for loan losses		43,233		2,886			22,298			-			68,417

Noninterest income		5,276		(22	)		3,159			-			8,413
Noninterest expense		12,496		219			20,027			-			32,742
Debt termination expense		-		-			-			-			-

Segment pre-tax profit	$	36,013	$	2,645		$	5,430		$	-		$	44,088

Segment assets as of September 30, 2015	$	6,419,264	$	3,505,392		$	809,514		$	(3,107,708	)	$	7,626,462

(1)

Credit for funds provided and charges for funds used are eliminated in the condensed consolidated presentation.


	For the Three Months Ended September 30, 2014
	Centers		Treasury		Other			Eliminations			Total
			(Dollars in thousands)
Interest income, including loan fees	$	35,384	$	18,397	$	11,514		$	-		$	65,295
Credit for funds provided (1)		8,190		-		12,037			(20,227	)		-

Total interest income		43,574		18,397		23,551			(20,227	)		65,295

Interest expense		1,637		2,415		5			-			4,057
Charge for funds used (1)		1,061		14,374		4,792			(20,227	)		-

Total interest expense		2,698		16,789		4,797			(20,227	)		4,057

Net interest income		40,876		1,608		18,754			-			61,238
Recapture of provision for loan losses		-		-		(1,000	)		-			(1,000	)

Net interest income after recapture of provision for loan losses		40,876		1,608		19,754			-			62,238

Noninterest income		5,288		-		2,721			-			8,009
Noninterest expense		12,221		186		20,074			-			32,481
Debt termination expense		-		-		-			-			-

Segment pre-tax profit	$	33,943	$	1,422	$	2,401		$	-		$	37,766

Segment assets as of September 30, 2014	$	6,086,641	$	3,431,467	$	792,404		$	(2,887,663	)	$	7,422,849

(1)

Credit for funds provided and charges for funds used are eliminated in the condensed consolidated presentation.


	For the Nine Months Ended September 30, 2015
	Centers		Treasury			Other			Eliminations			Total
			(Dollars in thousands)
Interest income, including loan fees	$	108,179	$	56,792		$	31,455		$	-		$	196,426
Credit for funds provided (1)		25,718		-			38,914			(64,632	)		-

Total interest income		133,897		56,792			70,369			(64,632	)		196,426

Interest expense		4,945		1,520			277			-			6,742
Charge for funds used (1)		3,207		46,230			15,195			(64,632	)		-

Total interest expense		8,152		47,750			15,472			(64,632	)		6,742

Net interest income		125,745		9,042			54,897			-			189,684
Recapture of provision for loan losses		-		-			(4,500	)		-			(4,500	)

Net interest income after recapture of provision for loan losses		125,745		9,042			59,397			-			194,184

Noninterest income		15,662		(22	)		9,129			-			24,769
Noninterest expense		36,604		643			57,630			-			94,877
Debt termination expense		-		13,870			-			-			13,870

Segment pre-tax profit (loss)	$	104,803	$	(5,493	)	$	10,896		$	-		$	110,206

Segment assets as of September 30, 2015	$	6,419,264	$	3,505,392		$	809,514		$	(3,107,708	)	$	7,626,462

(1)

Credit for funds provided and charges for funds used are eliminated in the condensed consolidated presentation.


	For the Nine Months Ended September 30, 2014
	Centers		Treasury		Other			Eliminations			Total
			(Dollars in thousands)
Interest income, including loan fees	$	103,158	$	52,504	$	31,911		$	-		$	187,573
Credit for funds provided (1)		22,924		-		34,914			(57,838	)		-

Total interest income		126,082		52,504		66,825			(57,838	)		187,573

Interest expense		4,835		7,178		221			-			12,234
Charge for funds used (1)		2,978		40,607		14,253			(57,838	)		-

Total interest expense		7,813		47,785		14,474			(57,838	)		12,234

Net interest income		118,269		4,719		52,351			-			175,339
Recapture of provision for loan losses		-		-		(16,100	)		-			(16,100	)

Net interest income after recapture of provision for loan losses		118,269		4,719		68,451			-			191,439

Noninterest income		15,232		-		11,325			-			26,557
Noninterest expense		35,469		564		58,929			-			94,962
Debt termination expense		-		-		-			-			-

Segment pre-tax profit	$	98,032	$	4,155	$	20,847		$	-		$	123,034

Segment assets as of September 30, 2014	$	6,086,641	$	3,431,467	$	792,404		$	(2,887,663	)	$	7,422,849

(1)

Credit for funds provided and charges for funds used are eliminated in the condensed consolidated presentation.