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, 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 - Summary of Significant Accounting Policies to the consolidated financial statements in the Annual Report on Form 10-K for the year ended December 31, 2016 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.



(dollars in thousands)	Banking Operations			Treasury			All Others			Total
Three Months Ended June 30, 2017
Net interest income	$	34,558		$	7,071		$	—		$	41,629
Inter-segment net interest income (expense)	8,161			(6,339		)	(1,822		)	—
Credit for loan and lease losses	2,282			—			—			2,282
Other operating income	5,844			(933		)	2,959			7,870
Other operating expense	(14,835		)	(322		)	(17,178		)	(32,335		)
Administrative and overhead expense allocation	(15,021		)	(228		)	15,249			—
Income before taxes	20,989			(751		)	(792		)	19,446
Income tax (expense) benefit	(7,964		)	240			303			(7,421		)
Net income (loss)	$	13,025		$	(511	)	$	(489	)	$	12,025



(dollars in thousands)	Banking Operations			Treasury			All Others			Total
Three Months Ended June 30, 2016
Net interest income	$	31,985		$	7,624		$	—		$	39,609
Inter-segment net interest income (expense)	9,435			(6,900		)	(2,535		)	—
Credit for loan and lease losses	1,382			—			—			1,382
Other operating income	6,493			1,397			2,047			9,937
Other operating expense	(14,904		)	(439		)	(17,117		)	(32,460		)
Administrative and overhead expense allocation	(16,709		)	(194		)	16,903			—
Income before taxes	17,682			1,488			(702		)	18,468
Income tax (expense) benefit	(6,078		)	(513		)	260			(6,331		)
Net income (loss)	$	11,604		$	975		$	(442	)	$	12,137



(dollars in thousands)	Banking Operations			Treasury			All Others			Total
Six Months Ended June 30, 2017
Net interest income	$	68,648		$	14,236		$	—		$	82,884
Inter-segment net interest income (expense)	16,088			(12,529		)	(3,559		)	—
Credit for loan and lease losses	2,362			—			—			2,362
Other operating income	11,568			328			5,988			17,884
Other operating expense	(29,853		)	(710		)	(33,232		)	(63,795		)
Administrative and overhead expense allocation	(28,725		)	(430		)	29,155			—
Income before taxes	40,088			895			(1,648		)	39,335
Income tax (expense) benefit	(14,504		)	(324		)	597			(14,231		)
Net income (loss)	$	25,584		$	571		$	(1,051	)	$	25,104



(dollars in thousands)	Banking Operations			Treasury			All Others			Total
Six Months Ended June 30, 2016
Net interest income	$	62,936		$	15,884		$	—		$	78,820
Inter-segment net interest income (expense)	19,993			(13,917		)	(6,076		)	—
Credit for loan and lease losses	2,129			—			—			2,129
Other operating income	12,027			2,142			4,424			18,593
Other operating expense	(29,647		)	(827		)	(33,352		)	(63,826		)
Administrative and overhead expense allocation	(28,141		)	(390		)	28,531			—
Income before taxes	39,297			2,892			(6,473		)	35,716
Income tax (expense) benefit	(13,644		)	(1,004		)	2,250			(12,398		)
Net income	$	25,653		$	1,888		$	(4,223	)	$	23,318



(dollars in thousands)	Banking Operations		Treasury		All Others		Total
At June 30, 2017:
Investment securities	$	—	$	1,520,483	$	—	$	1,520,483
Loans and leases (including loans held for sale)	3,605,023		—		—		3,605,023
Other	40,235		284,343		83,051		407,629
Total assets	$	3,645,258	$	1,804,826	$	83,051	$	5,533,135



(dollars in thousands)	Banking Operations		Treasury		All Others		Total
At December 31, 2016:
Investment securities	$	—	$	1,461,515	$	—	$	1,461,515
Loans and leases (including loans held for sale)	3,556,771		—		—		3,556,771
Other	56,482		241,387		68,081		365,950
Total assets	$	3,613,253	$	1,702,902	$	68,081	$	5,384,236