Business Segments

12 Months Ended

Dec. 31, 2015

Segment Reporting [Abstract]

OPERATING SEGMENTS

NOTE 19–BUSINESS SEGMENTS:

The Company's business segments are determined based on the products and services provided, as well as the nature of the related business activities, and they reflect the manner in which financial information is currently evaluated by management. The Company organizes the segments into two lines of business: Commercial and Consumer Banking segment and Mortgage Banking segment.

A description of the Company's business segments and the products and services that they provide is as follows.

Commercial and Consumer Banking provides diversified financial products and services to our commercial and consumer customers through bank branches and through ATMs, online, mobile and telephone banking. These products and services include deposit products; residential, consumer, business and agricultural portfolio loans; non-deposit investment products; insurance products and cash management services. We originate construction loans, bridge loans and permanent loans for our portfolio primarily on single family residences, and on office, retail, industrial and multifamily property types. We originate multifamily real estate loans through our Fannie Mae DUS business, whereby loans are sold to or securitized by Fannie Mae, while the Company generally retains the servicing rights. This segment is also responsible for the management of the Company's portfolio of investment securities.

Mortgage Banking originates single family residential mortgage loans for sale in the secondary markets. The majority of our mortgage loans are sold to or securitized by Fannie Mae, Freddie Mac or Ginnie Mae, while we retain the right to service these loans. We have become a rated originator and servicer of jumbo loans, allowing us to sell these loans to other securitizers. Additionally, we purchase loans from WMS Series LLC through a correspondent arrangement with that company. We also sell loans on a servicing-released and servicing-retained basis to securitizers and correspondent lenders. A small percentage of our loans are brokered to other lenders or sold on a servicing-released basis to correspondent lenders. On occasion, we may sell a portion of our MSR portfolio.We manage the loan funding and the interest rate risk associated with the secondary market loan sales and the retained single family mortgage servicing rights within this business segment.

We use various management accounting methodologies to assign certain income statement items to the responsible operating segment, including:

• a funds transfer pricing (“FTP”) system, which allocates interest income credits and funding charges between the segments, assigning to each segment a funding credit for its liabilities, such as deposits, and a charge to fund its assets;

• an allocation of charges for services rendered to the segments by centralized functions, such as corporate overhead, which are generally based on each segment’s consumption patterns; and

• an allocation of the Company's consolidated income taxes which are based on the effective tax rate applied to the segment's pretax income or loss.

The FTP methodology is based on external market factors and aligns the expected weighted-average life of the financial asset or liability to external economic data, such as the U.S. Dollar LIBOR/Swap curve, and provides a consistent basis for determining the cost of funds to be allocated to each operating segment.

Financial highlights by operating segment were as follows.

	Year Ended December 31, 2015
(in thousands)	Mortgage Banking		Commercial and Consumer Banking		Total
Condensed income statement:
Net interest income (1)	$	28,318	$	120,020	$	148,338
Provision for credit losses	—		6,100		6,100
Noninterest income	251,870		29,367		281,237
Noninterest expense	243,970		122,598		366,568
Income before income taxes	36,218		20,689		56,907
Income tax expense	12,916		2,672		15,588
Net income	$	23,302	$	18,017	$	41,319
Total assets	$	848,445	$	4,046,050	$	4,894,495

	Year Ended December 31, 2014
(in thousands)	Mortgage Banking		Commercial and Consumer Banking			Total
Condensed income statement:
Net interest income (1)	$	16,683	$	81,986		$	98,669
Provision for credit losses	—		(1,000		)	(1,000		)
Noninterest income	166,991		18,666			185,657
Noninterest expense	172,199		79,812			252,011
Income before income taxes	11,475		21,840			33,315
Income tax expense	3,964		7,092			11,056
Net income	$	7,511	$	14,748		$	22,259
Total assets	$	788,681	$	2,746,409		$	3,535,090

	Year Ended December 31, 2013
(in thousands)	Mortgage Banking		Commercial and Consumer Banking		Total
Condensed income statement:
Net interest income (1)	$	15,272	$	59,172	$	74,444
Provision for credit losses	—		900		900
Noninterest income	175,654		15,091		190,745
Noninterest expense	163,354		66,141		229,495
Income before income taxes	27,572		7,222		34,794
Income tax expense	9,736		1,249		10,985
Net income	$	17,836	$	5,973	$	23,809
Total assets	$	489,292	$	2,576,762	$	3,066,054

(1) Net interest income is the difference between interest earned on assets and the cost of liabilities to fund those assets. Interest earned includes actual interest earned on segment assets and, if the segment has excess liabilities, interest credits for providing funding to the other segment. The cost of liabilities includes interest expense on segment liabilities and, if the segment does not have enough liabilities to fund its assets, a funding charge based on the cost of excess liabilities from another segment.