SEGMENT INFORMATION

12 Months Ended

Dec. 31, 2019

26. SEGMENT INFORMATION

We have the following three reportable segments: Banking Operations, Treasury and All Others. The 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, consumer 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 includes 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 those described in Note 1 - Summary of Significant Accounting Policies. 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 net income (loss) and total assets are provided in the following table for the periods indicated:



	Banking Operations			Treasury			All Others			Total
	(Dollars in thousands)
Year ended December 31, 2019
Net interest income	$	171,716		$	12,358		$	—		$	184,074
Intersegment net interest income (expense)	22,907			(11,448		)	(11,459		)	—
Credit (provision) for loan and lease losses	(6,317		)	—			—			(6,317		)
Other Operating income:
Mortgage banking income	4,191			—			1,792			5,983
Service charges on deposit accounts	8,406			—			—			8,406
Other service charges and fees	5,685			—			8,673			14,358
Income from fiduciary activities	4,395			—			—			4,395
Equity in earnings of unconsolidated subsidiaries	257			—			—			257
Fees on foreign exchange	91			664			—			755
Investments securities gains (losses)	—			36			—			36
Income from bank-owned life insurance	—			3,105			—			3,105
Loan placement fees	702			—			—			702
Net gain (loss) sale of foreclosed assets	—			—			(145		)	(145		)
Other	632			2,585			732			3,949
Total other operating income	24,359			6,390			11,052			41,801
Total other operating expense	(64,940		)	(1,487		)	(75,204		)	(141,631		)
Administrative and overhead expense allocation	(69,039		)	(841		)	69,880			—
Income before taxes	78,686			4,972			(5,731		)	77,927
Income tax (expense) benefit	(19,796		)	(1,251		)	1,442			(19,605		)
Net income (loss)	$	58,890		$	3,721		$	(4,289	)	$	58,322



	Banking Operations		Treasury		All Others		Total
	(Dollars in thousands)
Balance as of December 31, 2019
Investment securities	$	—	$	1,128,110	$	—	$	1,128,110
Loans and leases (including loans held for sale)	4,458,623		—		—		4,458,623
Other	24,813		251,151		149,975		425,939
Total assets	$	4,483,436	$	1,379,261	$	149,975	$	6,012,672



	Banking Operations			Treasury			All Others			Total
	(Dollars in thousands)
Year ended December 31, 2018
Net interest income	$	153,314		$	19,684		$	—		$	172,998
Intersegment net interest income (expense)	28,691			(18,284		)	(10,407		)	—
Credit (provision) for loan and lease losses	1,124			—			—			1,124
Other operating income:
Mortgage banking income	4,015			—			3,300			7,315
Service charges on deposit accounts	8,406			—			—			8,406
Other service charges and fees	5,154			23			7,946			13,123
Income from fiduciary activities	4,245			—			—			4,245
Equity in earnings of unconsolidated subsidiaries	233			—			—			233
Fees on foreign exchange	98			807			—			905
Investments securities gains (losses)	—			(279		)	—			(279		)
Income from bank-owned life insurance	—			2,117			—			2,117
Loan placement fees	747			—			—			747
Other	981			65			946			1,992
Total other operating income	23,879			2,733			12,192			38,804
Total other operating expense	(63,649		)	(1,472		)	(69,561		)	(134,682		)
Administrative and overhead expense allocation	(60,636		)	(874		)	61,510			—
Income before taxes	82,723			1,787			(6,266		)	78,244
Income tax (expense) benefit	(19,832		)	(428		)	1,502			(18,758		)
Net income (loss)	$	62,891		$	1,359		$	(4,764	)	$	59,486



	Banking Operations		Treasury		All Others		Total
	(Dollars in thousands)
Balance as of December 31, 2018
Investment securities	$	—	$	1,354,812	$	—	$	1,354,812
Loans and leases (including loans held for sale)	4,085,013		—		—		4,085,013
Other	36,905		256,652		73,644		367,201
Total assets	$	4,121,918	$	1,611,464	$	73,644	$	5,807,026



	Banking Operations			Treasury			All Others			Total
	(Dollars in thousands)
Year ended December 31, 2017
Net interest income	$	140,077		$	27,626		$	—		$	167,703
Intersegment net interest income (expense)	32,977			(25,000		)	(7,977		)	—
Credit (provision) for loan and lease losses	2,674			—			—			2,674
Total other operating income	22,511			2,448			11,537			36,496
Total other operating expense	(60,939		)	(1,433		)	(68,701		)	(131,073		)
Administrative and overhead expense allocation	(61,082		)	(972		)	62,054			—
Income before taxes	76,218			2,669			(3,087		)	75,800
Income taxes	(34,376		)	(1,204		)	984			(34,596		)
Net income (loss)	$	41,842		$	1,465		$	(2,103	)	$	41,204