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SEGMENT INFORMATION
 9 Months Ended
Sep. 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 September 30, 2014:

 

 

 

 

 

 

 

 

 

Net interest income

 

$

27,671

 

$

7,861

 

$

—

 

$

35,532

 

Intersegment net interest income (expense)

 

11,619

 

(11,231

)

(388

)

—

 

Credit for loan and lease losses

 

1,722

 

—

 

—

 

1,722

 

Other operating income

 

6,264

 

1,453

 

3,746

 

11,463

 

Other operating expense

 

(16,104

)

(509

)

(18,633

)

(35,246

)

Administrative and overhead expense allocation

 

(15,823

)

(268

)

16,091

 

—

 

Income taxes

 

(5,749

)

857

 

(349

)

(5,241

)

Net income (loss)

 

$

9,600

 

$

(1,837

)

$

467

 

$

8,230

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2013:

 

 

 

 

 

 

 

 

 

Net interest income

 

$

25,653

 

$

8,118

 

$

—

 

$

33,771

 

Intersegment net interest income (expense)

 

4,059

 

(8,414

)

4,355

 

—

 

Credit for loan and lease losses

 

3,189

 

—

 

—

 

3,189

 

Other operating income

 

6,706

 

720

 

4,504

 

11,930

 

Other operating expense

 

(14,184

)

(2,498

)

(19,830

)

(36,512

)

Administrative and overhead expense allocation

 

(15,394

)

(1,106

)

16,500

 

—

 

Income taxes

 

(1,090

)

28

 

(1,112

)

(2,174

)

Net income (loss)

 

$

8,939

 

$

(3,152

)

$

4,417

 

$

10,204

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30, 2014:

 

 

 

 

 

 

 

 

 

Net interest income

 

$

81,214

 

$

26,020

 

$

—

 

$

107,234

 

Intersegment net interest income (expense)

 

23,775

 

(24,950

)

1,175

 

—

 

Credit for loan and lease losses

 

1,043

 

—

 

—

 

1,043

 

Other operating income

 

18,663

 

3,290

 

11,658

 

33,611

 

Other operating expense

 

(45,794

)

(1,598

)

(52,672

)

(100,064

)

Administrative and overhead expense allocation

 

(43,361

)

(807

)

44,168

 

—

 

Income taxes

 

(12,439

)

(684

)

(1,513

)

(14,636

)

Net income

 

$

23,101

 

$

1,271

 

$

2,816

 

$

27,188

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30, 2013:

 

 

 

 

 

 

 

 

 

Net interest income

 

$

75,445

 

$

22,168

 

$

—

 

$

97,613

 

Intersegment net interest income (expense)

 

11,859

 

(21,803

)

9,944

 

—

 

Credit for loan and lease losses

 

9,977

 

—

 

—

 

9,977

 

Other operating income

 

20,447

 

1,719

 

20,606

 

42,772

 

Other operating expense

 

(43,930

)

(3,359

)

(56,976

)

(104,265

)

Administrative and overhead expense allocation

 

(41,229

)

(1,622

)

42,851

 

—

 

Income taxes

 

118,628

 

331

 

(3,276

)

115,683

 

Net income (loss)

 

$

151,197

 

$

(2,566

)

$

13,149

 

$

161,780

 

 

 

 

 

 

 

 

 

 

 

At September 30, 2014:

 

 

 

 

 

 

 

 

 

Investment securities

 

$

—

 

$

1,426,705

 

$

—

 

$

1,426,705

 

Loans and leases (including loans held for sale)

 

2,880,107

 

—

 

—

 

2,880,107

 

Other

 

107,092

 

232,088

 

104,277

 

443,457

 

Total assets

 

$

2,987,199

 

$

1,658,793

 

$

104,277

 

$

4,750,269

 

 

 

 

 

 

 

 

 

 

 

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