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, 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 September 30, 2018
Net interest income	$	38,872		$	4,453		$	—		$	43,325
Inter-segment net interest income (expense)	7,524			(4,327		)	(3,197		)	—
Credit (provision) for loan and lease losses	59			—			—			59
Other operating income:
Mortgage banking income	1,173			—			750			1,923
Service charges on deposit accounts	2,189			—			—			2,189
Other service charges and fees	1,318			8			1,960			3,286
Income from fiduciary activities	1,159			—			—			1,159
Equity in earnings of unconsolidated subsidiaries	71			—			—			71
Fees on foreign exchange	22			198			—			220
Income from bank-owned life insurance	—			1,055			—			1,055
Loan placement fees	115			—			—			115
Other	448			58			296			802
Other operating income	6,495			1,319			3,006			10,820
Other operating expense	(16,265		)	(335		)	(17,539		)	(34,139		)
Administrative and overhead expense allocation	(15,481		)	(206		)	15,687			—
Income before taxes	21,204			904			(2,043		)	20,065
Income tax (expense) benefit	(5,128		)	(215		)	471			(4,872		)
Net income (loss)	$	16,076		$	689		$	(1,572	)	$	15,193



(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 (provision) for loan and lease losses	126			—			—			126
Other operating income:
Mortgage banking income	684			—			847			1,531
Service charges on deposit accounts	2,182			—			—			2,182
Other service charges and fees	1,303			—			1,882			3,185
Income from fiduciary activities	911			—			—			911
Equity in earnings of unconsolidated subsidiaries	176			—			—			176
Fees on foreign exchange	23			78						101
Income from bank-owned life insurance	—			1,074			—			1,074
Loan placement fees	86			—			—			86
Net gain (loss) sale of foreclosed assets	—			—			19			19
Other	140			7			157			304
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
Nine Months Ended September 30, 2018
Net interest income	$	112,295		$	16,024		$	—		$	128,319
Inter-segment net interest income (expense)	21,360			(14,717		)	(6,643		)	—
Credit (provision) for loan and lease losses	(262		)	—			—			(262		)
Other operating income:
Mortgage banking income	3,089			—			2,456			5,545
Service charges on deposit accounts	6,169			—			—			6,169
Other service charges and fees	3,748			22			5,927			9,697
Income from fiduciary activities	3,132			—			—			3,132
Equity in earnings of unconsolidated subsidiaries	151			—			—			151
Fees on foreign exchange	75			633			—			708
Income from bank-owned life insurance	—			1,874			—			1,874
Loan placement fees	532			—			—			532
Other	803			60			733			1,596
Other operating income	17,699			2,589			9,116			29,404
Other operating expense	(47,967		)	(1,078		)	(52,336		)	(101,381		)
Administrative and overhead expense allocation	(45,594		)	(652		)	46,246			—
Income before taxes	57,531			2,166			(3,617		)	56,080
Income tax (expense) benefit	(12,707		)	(478		)	799			(12,386		)
Net income (loss)	$	44,824		$	1,688		$	(2,818	)	$	43,694



(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 (provision) for loan and lease losses	2,488			—			—			2,488
Other operating income:
Mortgage banking income	2,953			—			2,478			5,431
Service charges on deposit accounts	6,338			—			—			6,338
Other service charges and fees	3,288			—			5,698			8,986
Income from fiduciary activities	2,739			—			—			2,739
Equity in earnings of unconsolidated subsidiaries	388			—			—			388
Fees on foreign exchange	65			329			—			394
Investments securities gains (losses)	—			(1,640		)	—			(1,640		)
Income from bank-owned life insurance	—			2,774			—			2,774
Loan placement fees	366			—			—			366
Net gain (loss) sale of foreclosed assets	—			—			205			205
Other	936			24			512			1,472
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	$	37,589		$	1,226		$	(1,899	)	$	36,916



(dollars in thousands)	Banking Operations		Treasury		All Others		Total
September 30, 2018
Investment securities	$	—	$	1,386,739	$	—	$	1,386,739
Loans and leases (including loans held for sale)	3,982,487		—		—		3,982,487
Other	40,814		237,043		81,557		359,414
Total assets	$	4,023,301	$	1,623,782	$	81,557	$	5,728,640



(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