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 September 30, 2017
Net interest income	$	35,191		$	6,804		$	—		$	41,995
Inter-segment net interest income (expense)	8,530			(6,299		)	(2,231		)	—
Credit for loan and lease losses	126			—			—			126
Other operating income	5,505			1,159			2,905			9,569
Other operating expense	(15,242		)	(338		)	(17,931		)	(33,511		)
Administrative and overhead expense allocation	(15,635		)	(311		)	15,946			—
Income before taxes	18,475			1,015			(1,311		)	18,179
Income tax (expense) benefit	(6,470		)	(360		)	463			(6,367		)
Net income (loss)	$	12,005		$	655		$	(848	)	$	11,812



(dollars in thousands)	Banking Operations			Treasury			All Others			Total
Three Months Ended September 30, 2016
Net interest income	$	32,583		$	6,843		$	—		$	39,426
Inter-segment net interest income (expense)	8,588			(6,398		)	(2,190		)	—
Credit for loan and lease losses	743			—			—			743
Other operating income	6,833			652			2,469			9,954
Other operating expense	(15,875		)	(410		)	(15,980		)	(32,265		)
Administrative and overhead expense allocation	(14,873		)	(253		)	15,126			—
Income before taxes	17,999			434			(575		)	17,858
Income tax (expense) benefit	(6,452		)	(162		)	222			(6,392		)
Net income (loss)	$	11,547		$	272		$	(353	)	$	11,466



(dollars in thousands)	Banking Operations			Treasury			All Others			Total
Nine Months Ended September 30, 2017
Net interest income	$	103,839		$	21,040		$	—		$	124,879
Inter-segment net interest income (expense)	24,618			(18,828		)	(5,790		)	—
Credit for loan and lease losses	2,488			—			—			2,488
Other operating income	17,073			1,487			8,893			27,453
Other operating expense	(45,095		)	(1,048		)	(51,163		)	(97,306		)
Administrative and overhead expense allocation	(44,360		)	(741		)	45,101			—
Income before taxes	58,563			1,910			(2,959		)	57,514
Income tax (expense) benefit	(20,974		)	(684		)	1,060			(20,598		)
Net income (loss)	$	37,589		$	1,226		$	(1,899	)	$	36,916



(dollars in thousands)	Banking Operations			Treasury			All Others			Total
Nine Months Ended September 30, 2016
Net interest income	$	95,519		$	22,727		$	—		$	118,246
Inter-segment net interest income (expense)	28,581			(20,315		)	(8,266		)	—
Credit for loan and lease losses	2,872			—			—			2,872
Other operating income	18,860			2,794			6,893			28,547
Other operating expense	(45,522		)	(1,237		)	(49,332		)	(96,091		)
Administrative and overhead expense allocation	(43,014		)	(643		)	43,657			—
Income before taxes	57,296			3,326			(7,048		)	53,574
Income tax (expense) benefit	(20,095		)	(1,167		)	2,472			(18,790		)
Net income	$	37,201		$	2,159		$	(4,576	)	$	34,784



(dollars in thousands)	Banking Operations		Treasury		All Others		Total
At September 30, 2017:
Investment securities	$	—	$	1,547,777	$	—	$	1,547,777
Loans and leases (including loans held for sale)	3,647,198		—		—		3,647,198
Other	44,369		249,635		80,251		374,255
Total assets	$	3,691,567	$	1,797,412	$	80,251	$	5,569,230



(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