OPERATING SEGMENTS |
NOTE 12. OPERATING SEGMENTS
The Company has two reportable operating segments, Banking and Insurance, which are delineated by the consolidated subsidiaries of Berkshire Hills Bancorp, Inc. Banking includes the activities of the Bank and its subsidiaries, which provide retail and commercial banking, along with wealth management and investment services. Insurance includes the activities of Berkshire Insurance Group, Inc. (“BIG”), which provides retail and commercial insurance services. The only other consolidated financial activity of the Company is the Parent, which consists of the transactions of Berkshire Hills Bancorp, Inc. Management fees for corporate services provided by the Bank to BIG and the Parent are eliminated.
The accounting policies of each reportable segment are the same as those of the Company. The Insurance segment and the Parent reimburse the Bank for administrative services provided to them. Income tax expense for the individual segments is calculated based on the activity of the segments, and the Parent records the tax expense or benefit necessary to reconcile to the consolidated total. The Parent does not allocate capital costs. Average assets include securities available-for-sale based on amortized cost.
A summary of the Company’s operating segments was as follows:
(In thousands) |
|
Banking |
|
Insurance |
|
Parent |
|
Eliminations |
|
Total Consolidated |
|
Three months ended June 30, 2014 |
|
|
|
|
|
|
|
|
|
|
|
Net interest income (expense) |
|
$ |
45,244 |
|
$ |
— |
|
$ |
(915 |
) |
$ |
— |
|
$ |
44,329 |
|
Provision for loan losses |
|
3,989 |
|
— |
|
— |
|
— |
|
3,989 |
|
Non-interest income |
|
12,046 |
|
2,460 |
|
12,272 |
|
(12,272 |
) |
14,506 |
|
Non-interest expense |
|
36,970 |
|
1,887 |
|
406 |
|
— |
|
39,263 |
|
Income before income taxes |
|
16,331 |
|
573 |
|
10,951 |
|
(12,272 |
) |
15,583 |
|
Income tax expense (benefit) |
|
4,409 |
|
223 |
|
(513 |
) |
— |
|
4,119 |
|
Net income |
|
$ |
11,922 |
|
$ |
350 |
|
$ |
11,464 |
|
$ |
(12,272 |
) |
$ |
11,464 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets (in millions) |
|
$ |
6,111 |
|
$ |
27 |
|
$ |
744 |
|
$ |
(736 |
) |
$ |
6,146 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, 2013 |
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
42,086 |
|
$ |
— |
|
$ |
7,018 |
|
$ |
(8,000 |
) |
$ |
41,104 |
|
Provision for loan losses |
|
2,700 |
|
— |
|
— |
|
— |
|
2,700 |
|
Non-interest income |
|
13,204 |
|
2,402 |
|
5,026 |
|
(5,026 |
) |
15,606 |
|
Non-interest expense |
|
35,267 |
|
2,038 |
|
630 |
|
— |
|
37,935 |
|
Income before income taxes |
|
17,323 |
|
364 |
|
11,414 |
|
(13,026 |
) |
16,075 |
|
Income tax expense (benefit) |
|
4,503 |
|
158 |
|
(623 |
) |
— |
|
4,038 |
|
Net income |
|
$ |
12,820 |
|
$ |
206 |
|
$ |
12,037 |
|
$ |
(13,026 |
) |
$ |
12,037 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets (in millions) |
|
$ |
5,175 |
|
$ |
27 |
|
$ |
746 |
|
$ |
(749 |
) |
$ |
5,199 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2014 |
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
$ |
88,954 |
|
$ |
— |
|
$ |
(1,859 |
) |
$ |
— |
|
$ |
87,095 |
|
Provision for loan losses |
|
7,385 |
|
— |
|
— |
|
— |
|
7,385 |
|
Non-interest income |
|
13,420 |
|
5,509 |
|
12,020 |
|
(12,020 |
) |
18,929 |
|
Non-interest expense |
|
79,543 |
|
4,209 |
|
871 |
|
— |
|
84,623 |
|
Income before income taxes |
|
15,446 |
|
1,300 |
|
9,290 |
|
(12,020 |
) |
14,016 |
|
Income tax expense (benefit) |
|
4,217 |
|
509 |
|
(1,068 |
) |
— |
|
3,658 |
|
Net income |
|
$ |
11,229 |
|
$ |
791 |
|
$ |
10,358 |
|
$ |
(12,020 |
) |
$ |
10,358 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets (in millions) |
|
$ |
5,971 |
|
$ |
26 |
|
$ |
733 |
|
$ |
(732 |
) |
$ |
5,998 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2013 |
|
|
|
|
|
|
|
|
|
|
|
Net interest income (expense) |
|
$ |
84,989 |
|
$ |
— |
|
$ |
13,052 |
|
$ |
(15,000 |
) |
$ |
83,041 |
|
Provision for loan losses |
|
5,100 |
|
— |
|
— |
|
— |
|
5,100 |
|
Non-interest income |
|
25,022 |
|
5,382 |
|
9,490 |
|
(9,490 |
) |
30,404 |
|
Non-interest expense |
|
71,956 |
|
4,171 |
|
1,291 |
|
— |
|
77,418 |
|
Income before income taxes |
|
32,955 |
|
1,211 |
|
21,251 |
|
(24,490 |
) |
30,927 |
|
Income tax expense (benefit) |
|
9,208 |
|
468 |
|
(1,251 |
) |
— |
|
8,425 |
|
Net income |
|
$ |
23,747 |
|
$ |
743 |
|
$ |
22,502 |
|
$ |
(24,490 |
) |
$ |
22,502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets (in millions) |
|
$ |
5,189 |
|
$ |
27 |
|
$ |
751 |
|
$ |
(758 |
) |
$ |
5,208 |
|
|