Business Segments

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Business Segments

10. BUSINESS SEGMENTS

The Company has identified two principal reportable segments: Business Financial and Commercial Banking Centers (“Centers”) and Dairy & Livestock and Agribusiness. All other operations have been aggregated in “Other”. The Bank has 51 Banking Centers organized in geographic regions, which are the focal points for customer sales and services. The Company utilizes an internal reporting system to measure the performance of various operating departments within the Bank which is the basis for determining the Bank’s reportable segments. The chief operating decision maker (currently our CEO) regularly reviews the financial information of these two segments in deciding how to allocate resources and to assess performance. Our two principal reporting segments, Centers and Dairy & Livestock and Agribusiness, are aggregated into separate operating segments as their products and services are similar and are sold to similar types of customers, have similar production and distribution processes, have similar economic characteristics, and have similar reporting and organizational structures. In 2016, Dairy & Livestock and Agribusiness was reflected as our second reportable segment. All other operating departments have been aggregated and included in “Other” for reporting purposes. Recapture of provision for loan losses was allocated by segment based on loan type in 2016. Prior period information has been conformed to the current presentation. In addition, the Company allocates internal funds to the segments using a methodology that charges users of funds interest expense and credits providers of funds interest income with the net effect of this allocation being recorded in the ”Other” category.

The following tables represent the selected financial information for these two business segments. GAAP does not have an authoritative body of knowledge regarding the management accounting used in presenting segment financial information. The accounting policies for each of the business units is the same as those policies identified for the consolidated Company and disclosed in Note 3 — Summary of Significant Accounting Policies, included in our Annual Report on Form 10-K for the year ended December 31, 2016. The income numbers represent the actual income and expenses of each business unit. In addition, each segment has allocated income and expenses based on management’s internal reporting system, which allows management to determine the performance of each of its business units. Loan fees included in the Centers category are the actual loan fees paid to the Company by its customers. These fees are eliminated and deferred in the “Other” category, resulting in deferred loan fees for the condensed consolidated financial statements. All income and expense items not directly associated with the Centers’ business segment are grouped in the “Other” category. Future changes in the Company’s management structure or reporting methodologies may result in changes in the measurement of operating segment results.

The following tables present the operating results and other key financial measures for the individual operating segments for the periods presented.

	For the Three Months Ended September 30, 2017
	Centers		Dairy & livestock and agribusiness			Other (1)			Total
	(Dollars in thousands)
Net interest income	$	50,539	$	2,728		$	18,472		$	71,739
(Recapture of) provision for loan losses		772		(66	)		(2,206	)		(1,500	)
Net interest income after (recapture of) provision for loan losses		49,767		2,794			20,678			73,239
Noninterest income		5,764		84			4,190			10,038
Noninterest expense		12,963		479			21,264			34,706
Segment pre-tax profit	$	42,568	$	2,399		$	3,604		$	48,571
Goodwill	$	116,564	$	-		$	-		$	116,564
Segment assets as of September 30, 2017	$	7,166,356	$	377,670		$	759,986		$	8,304,012

(1) Includes the elimination of certain items that are included in more than one department, most of which represents products and services for Centers’ customers.

	For the Three Months Ended September 30, 2016
	Centers			Dairy & livestock and agribusiness		Other (1)			Total
	(Dollars in thousands)
Net interest income	$	45,499		$	2,008	$	15,654		$	63,161
(Recapture of) provision for loan losses		(1,164	)		1,089		(1,925	)		(2,000	)
Net interest income after (recapture of) provision for loan losses		46,663			919		17,579			65,161
Noninterest income		5,182			73		3,928			9,183
Noninterest expense		12,423			474		20,109			33,006
Segment pre-tax profit	$	39,422		$	518	$	1,398		$	41,338
Goodwill	$	88,174		$	-	$	-		$	88,174
Segment assets as of September 30, 2016	$	6,945,214		$	376,862	$	722,917		$	8,044,993

(1) Includes the elimination of certain items that are included in more than one department, most of which represents products and services for Centers’ customers.

	For the Nine Months Ended September 30, 2017
	Centers		Dairy & livestock and agribusiness			Other (1)			Total
	(Dollars in thousands)
Net interest income	$	144,879	$	7,241		$	55,535		$	207,655
(Recapture of) provision for loan losses		2,158		(3,186	)		(5,972	)		(7,000	)
Net interest income after (recapture of) provision for loan losses		142,721		10,427			61,507			214,655
Noninterest income		16,274		188			13,074			29,536
Noninterest expense		38,607		1,484			65,605			105,696
Segment pre-tax profit	$	120,388	$	9,131		$	8,976		$	138,495
Goodwill	$	116,564	$	-		$	-		$	116,564
Segment assets as of September 30, 2017	$	7,166,356	$	377,670		$	759,986		$	8,304,012

(1) Includes the elimination of certain items that are included in more than one department, most of which represents products and services for Centers’ customers.

	For the Nine Months Ended September 30, 2016
	Centers		Dairy & livestock and agribusiness			Other (1)			Total
	(Dollars in thousands)
Net interest income	$	132,316	$	5,927		$	53,390		$	191,633
(Recapture of) provision for loan losses		2,251		(264	)		(3,987	)		(2,000	)
Net interest income after (recapture of) provision for loan losses		130,065		6,191			57,377			193,633
Noninterest income		15,335		180			11,625			27,140
Noninterest expense		37,924		1,452			62,432			101,808
Segment pre-tax profit	$	107,476	$	4,919		$	6,570		$	118,965
Goodwill	$	88,174	$	-		$	-		$	88,174
Segment assets as of September 30, 2016	$	6,945,214	$	376,862		$	722,917		$	8,044,993

(1) Includes the elimination of certain items that are included in more than one department, most of which represents products and services for Centers’ customers.