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SEGMENT INFORMATION
 6 Months Ended
Jun. 30, 2014
SEGMENT INFORMATION  
SEGMENT INFORMATION

18.   SEGMENT INFORMATION

 

We 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, 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, 2013 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 and assets are provided in the following table for the periods indicated.

 

 

 

Banking

 

 

 

 

 

 

 

 

 

Operations

 

Treasury

 

All Others

 

Total

 

 

 

(Dollars in thousands)

 

Three Months Ended June 30, 2014:

 

 

 

 

 

 

 

 

 

Net interest income

 

$

27,356

 

$

8,550

 

$

—

 

$

35,906

 

Intersegment net interest income (expense)

 

6,149

 

(7,107

)

958

 

—

 

Provision for loan and lease losses

 

(1,995

)

—

 

—

 

(1,995

)

Other operating income

 

6,750

 

1,092

 

4,162

 

12,004

 

Other operating expense

 

(14,372

)

(538

)

(17,978

)

(32,888

)

Administrative and overhead expense allocation

 

(13,734

)

(267

)

14,001

 

—

 

Income taxes

 

(3,076

)

(490

)

(311

)

(3,877

)

Net income

 

$

7,078

 

$

1,240

 

$

832

 

$

9,150

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2013:

 

 

 

 

 

 

 

 

 

Net interest income

 

$

25,746

 

$

7,427

 

$

—

 

$

33,173

 

Intersegment net interest income (expense)

 

3,948

 

(7,078

)

3,130

 

—

 

Credit for loan and lease losses

 

227

 

—

 

—

 

227

 

Other operating income

 

5,802

 

396

 

11,614

 

17,812

 

Other operating expense

 

(15,627

)

(411

)

(18,962

)

(35,000

)

Administrative and overhead expense allocation

 

(9,561

)

(250

)

9,811

 

—

 

Income taxes

 

(994

)

176

 

(1,127

)

(1,945

)

Net income

 

$

9,541

 

$

260

 

$

4,466

 

$

14,267

 

 

 

 

 

 

 

 

 

 

 

Six months ended June 30, 2014:

 

 

 

 

 

 

 

 

 

Net interest income

 

$

53,543

 

$

18,159

 

$

—

 

$

71,702

 

Intersegment net interest income (expense)

 

12,156

 

(13,719

)

1,563

 

—

 

Provision for loan and lease losses

 

(679

)

—

 

—

 

(679

)

Other operating income

 

12,399

 

1,837

 

7,912

 

22,148

 

Other operating expense

 

(29,690

)

(1,089

)

(34,039

)

(64,818

)

Administrative and overhead expense allocation

 

(27,538

)

(539

)

28,077

 

—

 

Income taxes

 

(6,690

)

(1,541

)

(1,164

)

(9,395

)

Net income

 

$

13,501

 

$

3,108

 

$

2,349

 

$

18,958

 

 

 

 

 

 

 

 

 

 

 

Six months ended June 30, 2013:

 

 

 

 

 

 

 

 

 

Net interest income

 

$

49,792

 

$

14,050

 

$

—

 

$

63,842

 

Intersegment net interest income (expense)

 

7,800

 

(13,389

)

5,589

 

—

 

Credit for loan and lease losses

 

6,788

 

—

 

—

 

6,788

 

Other operating income

 

13,741

 

999

 

16,102

 

30,842

 

Other operating expense

 

(29,746

)

(861

)

(37,146

)

(67,753

)

Administrative and overhead expense allocation

 

(25,835

)

(516

)

26,351

 

—

 

Income taxes

 

119,718

 

303

 

(2,164

)

117,857

 

Net income

 

$

142,258

 

$

586

 

$

8,732

 

$

151,576

 

 

 

 

 

 

 

 

 

 

 

At June 30, 2014:

 

 

 

 

 

 

 

 

 

Investment securities

 

$

—

 

$

1,474,141

 

$

—

 

$

1,474,141

 

Loans and leases (including loans held for sale)

 

2,802,647

 

—

 

—

 

2,802,647

 

Other

 

118,480

 

233,438

 

99,060

 

450,978

 

Total assets

 

$

2,921,127

 

$

1,707,579

 

$

99,060

 

$

4,727,766

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2013:

 

 

 

 

 

 

 

 

 

Investment securities

 

$

—

 

$

1,660,046

 

$

—

 

$

1,660,046

 

Loans and leases (including loans held for sale)

 

2,642,971

 

—

 

—

 

2,642,971

 

Other

 

117,655

 

256,807

 

63,719

 

438,181

 

Total assets

 

$

2,760,626

 

$

1,916,853

 

$

63,719

 

$

4,741,198