21.

BUSINESS SEGMENTS

The Company has identified two principal reportable segments: Banking Centers (“Centers”) and Dairy & Livestock and Agribusiness. All other operations have been aggregated in “Other”. The Bank has 50 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 departments 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 two segments in deciding how to allocate resources and to assess performance. Our two principal reporting segments, Centers and Dairy & Livestock and Agribusiness, are aggregated into separate operating segments 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. All other operating departments have been aggregated and included in “Other” for reporting purposes. Recapture of provision for loan losses was allocated by segment based on loan type. In addition, the Company allocates internal funds 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 the ”Other” category.

The following tables present 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 herein. 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 Centers’ business segment 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 Year Ended December 31, 2017
	Centers		Dairy & livestock and agribusiness		Other (1)		Total
	(Dollars in thousands)
Net interest income	$	195,377	$	10,798	$	72,755	$	278,930
(Recapture of) provision for loan losses		1,712		(3,913)		(6,299)		(8,500)

Net interest income after (recapture of) provision for loan losses		193,665		14,711		79,054		287,430

Noninterest income		21,674		232		20,212		42,118
Noninterest expense		51,337		1,963		87,453		140,753

Segment pre-tax profit	$	164,002	$	12,980	$	11,813	$	188,795

Goodwill	$	116,564	$	-	$	-	$	116,564

Segment assets as of December 31, 2017	$	7,235,549	$	474,292	$	560,745	$	8,270,586

(1)

Includes the elimination of certain items that are included in more than one department, most of which represents products and services for Centers’ customers.


	For the Year Ended December 31, 2016
	Centers		Dairy & livestock and agribusiness		Other (1)		Total
	(Dollars in thousands)
Net interest income	$	178,183	$	7,973	$	70,918	$	257,074
(Recapture of) provision for loan losses		(172)		2,296		(8,524)		(6,400)

Net interest income after (recapture of) provision for loan losses		178,355		5,677		79,442		263,474

Noninterest income		20,179		223		15,150		35,552
Noninterest expense		50,110		1,958		84,656		136,724
Debt termination expense		-		-		16		16

Segment pre-tax profit	$	148,424	$	3,942	$	9,920	$	162,286

Goodwill	$	89,533	$	-	$	-	$	89,533

Segment assets as of December 31, 2016	$	7,024,986	$	473,670	$	575,051	$	8,073,707

(1)

Includes the elimination of certain items that are included in more than one department, most of which represents products and services for Centers’ customers.


	For the Year Ended December 31, 2015
	Centers		Dairy & livestock and agribusiness		Other (1)		Total
	(Dollars in thousands)
Net interest income	$	167,633	$	7,558	$	77,751	$	252,942
(Recapture of) provision for loan losses		(6,711)		143		968		(5,600)

Net interest income after (recapture of) provision for loan losses		174,344		7,415		76,783		258,542

Noninterest income		20,677		261		12,545		33,483
Noninterest expense		48,568		1,844		76,377		126,789
Debt termination expense		-		-		13,870		13,870

Segment pre-tax profit (loss)	$	146,453	$	5,832	$	(919)	$	151,366

Goodwill	$	74,244	$	-	$	-	$	74,244

Segment assets as of December 31, 2015	$	6,441,751	$	458,214	$	771,235	$	7,671,200

(1)

Includes the elimination of certain items that are included in more than one department, most of which represents products and services for Centers’ customers.