19. 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, as amended by our Form 10-K/A for the year ended December 31, 2017 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, 2018
Net interest income	$	37,281		$	5,391		$	—		$	42,672
Inter-segment net interest income (expense)	6,915			(4,941		)	(1,974		)	—
Credit (provision) for loan and lease losses	(532		)	—			—			(532		)
Other operating income:
Mortgage banking income	923			—			852			1,775
Service charges on deposit accounts	1,977			—			—			1,977
Other service charges and fees	1,287			8			2,082			3,377
Income from fiduciary activities	1,017			—			—			1,017
Equity in earnings of unconsolidated subsidiaries	37			—			—			37
Fees on foreign exchange	29			248			—			277
Income from bank-owned life insurance	—			501			—			501
Loan placement fees	220			—			—			220
Other	200			2			247			449
Other operating income	5,690			759			3,181			9,630
Other operating expense	(15,777		)	(358		)	(17,589		)	(33,724		)
Administrative and overhead expense allocation	(15,167		)	(223		)	15,390			—
Income before taxes	18,410			628			(992		)	18,046
Income tax (expense) benefit	(3,898		)	(133		)	209			(3,822		)
Net income (loss)	$	14,512		$	495		$	(783	)	$	14,224



(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 (provision) for loan and lease losses	2,282			—			—			2,282
Other operating income:
Mortgage banking income	1,149			—			808			1,957
Service charges on deposit accounts	2,121			(1		)	—			2,120
Other service charges and fees	1,147			—			1,906			3,053
Income from fiduciary activities	964			—			—			964
Equity in earnings of unconsolidated subsidiaries	151			—			—			151
Fees on foreign exchange	24			122			(16		)	130
Investments securities gains (losses)	—			(1,640		)	—			(1,640		)
Income from bank-owned life insurance	—			583			—			583
Loan placement fees	146			—			—			146
Net gain (loss) sale of foreclosed assets	—			—			84			84
Other	142			3			177			322
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
Six Months Ended June 30, 2018
Net interest income	$	73,423		$	11,571		$	—		$	84,994
Inter-segment net interest income (expense)	13,836			(10,390		)	(3,446		)	—
Credit (provision) for loan and lease losses	(321		)	—			—			(321		)
Other operating income:
Mortgage banking income	1,916			—			1,706			3,622
Service charges on deposit accounts	3,980			—			—			3,980
Other service charges and fees	2,430			14			3,967			6,411
Income from fiduciary activities	1,973			—			—			1,973
Equity in earnings of unconsolidated subsidiaries	80			—			—			80
Fees on foreign exchange	53			435			—			488
Investments securities gains (losses)	—			—			—			—
Income from bank-owned life insurance	—			819			—			819
Loan placement fees	417			—			—			417
Net gain (loss) sale of foreclosed assets	—			—			—			—
Other	355			2			437			794
Other operating income	11,204			1,270			6,110			18,584
Other operating expense	(31,702		)	(743		)	(34,797		)	(67,242		)
Administrative and overhead expense allocation	(30,113		)	(446		)	30,559			—
Income before taxes	36,327			1,262			(1,574		)	36,015
Income tax (expense) benefit	(7,579		)	(263		)	328			(7,514		)
Net income (loss)	$	28,748		$	999		$	(1,246	)	$	28,501



(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 (provision) for loan and lease losses	2,362			—			—			2,362
Other operating income:
Mortgage banking income	2,269			—			1,631			3,900
Service charges on deposit accounts	4,156			—			—			4,156
Other service charges and fees	1,985			—			3,816			5,801
Income from fiduciary activities	1,828			—			—			1,828
Equity in earnings of unconsolidated subsidiaries	212			—			—			212
Fees on foreign exchange	42			251			—			293
Investments securities gains (losses)	—			(1,640		)	—			(1,640		)
Income from bank-owned life insurance	—			1,700			—			1,700
Loan placement fees	280			—			—			280
Net gain (loss) sale of foreclosed assets	—			—			186			186
Other	796			17			355			1,168
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	$	25,584		$	571		$	(1,051	)	$	25,104



(dollars in thousands)	Banking Operations		Treasury		All Others		Total
June 30, 2018
Investment securities	$	—	$	1,438,969	$	—	$	1,438,969
Loans and leases (including loans held for sale)	3,890,677		—		—		3,890,677
Other	41,612		238,123		72,138		351,873
Total assets	$	3,932,289	$	1,677,092	$	72,138	$	5,681,519



(dollars in thousands)	Banking Operations		Treasury		All Others		Total
December 31, 2017
Investment securities	$	—	$	1,496,644	$	—	$	1,496,644
Loans and leases (including loans held for sale)	3,786,951		—		—		3,786,951
Other	42,243		228,608		69,262		340,113
Total assets	$	3,829,194	$	1,725,252	$	69,262	$	5,623,708