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SEGMENT INFORMATION
 9 Months Ended
Sep. 30, 2012
SEGMENT INFORMATION  
SEGMENT INFORMATION

18.  SEGMENT INFORMATION

 

Due to recent changes in our organizational structure, in the first quarter of 2012, we changed our reportable segments to better align our segments with how management reviews and monitors the performance of the Company’s financial results. We now have the following three reportable segments: Banking Operations, Treasury and All Others. These segments are consistent with our internal functional reporting lines and are managed separately because each unit has different target markets, technological requirements, marketing strategies and specialized skills.

 

The Banking Operations segment includes construction and real estate development lending, commercial lending, residential mortgage lending and servicing, indirect auto lending, trust services, retail brokerage services and our retail branch offices, which provide a full range of deposit and loan products, as well as various other banking services. The Treasury segment is responsible for managing the Company’s investment securities portfolio and wholesale funding activities. The All Others segment consists of all activities not captured by the Banking Operations or Treasury segments described above and includes activities such as electronic banking, data processing and management of bank owned properties.

 

The accounting policies of the segments are consistent with the Company’s accounting policies that are described in Note 1 to the consolidated financial statements in the Annual Report on Form 10-K for the year ended December 31, 2011 filed with the SEC. The majority of the Company’s net income is derived from net interest income. Accordingly, management focuses primarily on net interest income, rather than gross interest income and expense amounts, in evaluating segment profitability.

 

Intersegment net interest income (expense) was allocated to each segment based upon a funds transfer pricing process that assigns costs of funds to assets and earnings credits to liabilities based on market interest rates that reflect interest rate sensitivity and maturity characteristics. All administrative and overhead expenses are allocated to the segments at cost. Cash, investment securities, loans and leases and their related balances are allocated to the segment responsible for acquisition and maintenance of those assets. Segment assets also include all premises and equipment used directly in segment operations.

 

Segment profits (losses) and assets are provided in the following table for the periods indicated.

 

 

 

Banking

 

 

 

 

 

 

 

 

 

Operations

 

Treasury

 

All Others

 

Total

 

 

 

(Dollars in thousands)

 

Three months ended September 30, 2012:

 

 

 

 

 

 

 

 

 

Net interest income

 

$

23,296

 

$

6,264

 

$

—

 

$

29,560

 

Intersegment net interest income (expense)

 

5,222

 

(6,801

)

1,579

 

—

 

Credit for loan and lease losses

 

4,982

 

—

 

—

 

4,982

 

Other operating income

 

14,071

 

1,719

 

139

 

15,929

 

Other operating expense

 

(25,801

)

(494

)

(13,455

)

(39,750

)

Administrative and overhead expense allocation

 

(13,425

)

(202

)

13,627

 

—

 

Net income

 

$

8,345

 

$

486

 

$

1,890

 

$

10,721

 

 

 

 

 

 

 

 

 

 

 

Three months ended September 30, 2011:

 

 

 

 

 

 

 

 

 

Net interest income

 

$

23,472

 

$

6,357

 

$

—

 

$

29,829

 

Intersegment net interest income (expense)

 

11,807

 

(7,409

)

(4,398

)

—

 

Credit for loan and lease losses

 

19,116

 

—

 

—

 

19,116

 

Other operating income

 

9,924

 

1,365

 

220

 

11,509

 

Other operating expense

 

(27,266

)

(6,536

)

(15,026

)

(48,828

)

Administrative and overhead expense allocation

 

(15,066

)

(165

)

15,231

 

—

 

Net income (loss)

 

$

21,987

 

$

(6,388

)

$

(3,973

)

$

11,626

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30, 2012:

 

 

 

 

 

 

 

 

 

Net interest income

 

$

69,527

 

$

20,794

 

$

—

 

$

90,321

 

Intersegment net interest income (expense)

 

27,697

 

(17,769

)

(9,928

)

—

 

Credit for loan and lease losses

 

16,602

 

—

 

—

 

16,602

 

Other operating income

 

38,772

 

4,257

 

(254

)

42,775

 

Other operating expense

 

(69,322

)

(1,392

)

(43,973

)

(114,687

)

Administrative and overhead expense allocation

 

(42,950

)

(664

)

43,614

 

—

 

Net income (loss)

 

$

40,326

 

$

5,226

 

$

(10,541

)

$

35,011

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30, 2011:

 

 

 

 

 

 

 

 

 

Net interest income

 

$

71,201

 

$

15,808

 

$

—

 

$

87,009

 

Intersegment net interest income (expense)

 

33,317

 

(13,706

)

(19,611

)

—

 

Credit for loan and lease losses

 

29,475

 

—

 

—

 

29,475

 

Other operating income

 

29,191

 

4,708

 

1,047

 

34,946

 

Other operating expense

 

(79,172

)

(6,763

)

(41,019

)

(126,954

)

Administrative and overhead expense allocation

 

(39,818

)

(417

)

40,235

 

—

 

Net income (loss)

 

$

44,194

 

$

(370

)

$

(19,348

)

$

24,476

 

 

 

 

 

 

 

 

 

 

 

At September 30, 2012:

 

 

 

 

 

 

 

 

 

Investment securities

 

$

—

 

$

1,663,279

 

$

—

 

$

1,663,279

 

Loans and leases (including loans held for sale)

 

2,134,243

 

—

 

—

 

2,134,243

 

Other

 

27,560

 

410,964

 

73,572

 

512,096

 

Total assets

 

$

2,161,803

 

$

2,074,243

 

$

73,572

 

$

4,309,618

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2011:

 

 

 

 

 

 

 

 

 

Investment securities

 

$

—

 

$

1,493,925

 

$

—

 

$

1,493,925

 

Loans and leases (including loans held for sale)

 

2,114,737

 

—

 

—

 

2,114,737

 

Other

 

23,858

 

429,141

 

71,204

 

524,203

 

Total assets

 

$

2,138,595

 

$

1,923,066

 

$

71,204

 

$

4,132,865