SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2013

SEGMENT INFORMATION

SEGMENT INFORMATION

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, marketing strategies and specialized skills.

The Banking Operations segment includes construction and real estate development lending, commercial lending, residential mortgage lending and servicing, 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 to the consolidated financial statements in the Annual Report on Form 10-K for the year ended December 31, 2012 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 (losses) and assets are provided in the following table for the periods indicated.

	Banking
	Operations			Treasury			All Others			Total
	(Dollars in thousands)
Three months ended June 30, 2013:
Net interest income	$	25,746		$	7,427		$	—		$	33,173
Intersegment net interest income (expense)	3,676			(7,077		)	3,401			—
Credit for loan and lease losses	227			—			—			227
Other operating income	17,089			665			58			17,812
Other operating expense	(20,872		)	(450		)	(13,678		)	(35,000		)
Administrative and overhead expense allocation	(13,229		)	(213		)	13,442			—
Income taxes	(994		)	176			(1,127		)	(1,945		)
Net income (loss)	$	11,643		$	528		$	2,096		$	14,267
Three months ended June 30, 2012:
Net interest income	$	22,994		$	7,265		$	—		$	30,259
Intersegment net interest income (expense)	10,059			(5,111		)	(4,948		)	—
Credit for loan and lease losses	6,630			—			—			6,630
Other operating income	12,365			1,452			(203		)	13,614
Other operating expense	(21,677		)	(500		)	(17,514		)	(39,691		)
Administrative and overhead expense allocation	(16,771		)	(266		)	17,037			—
Net income (loss)	$	13,600		$	2,840		$	(5,628	)	$	10,812
Six months ended June 30, 2013:
Net interest income	$	49,792		$	14,050		$	—		$	63,842
Intersegment net interest income (expense)	7,217			(13,388		)	6,171			—
Credit for loan and lease losses	6,788			—			—			6,788
Other operating income	29,184			1,537			121			30,842
Other operating expense	(39,875		)	(939		)	(26,939		)	(67,753		)
Administrative and overhead expense allocation	(26,403		)	(427		)	26,830			—
Income taxes	119,718			303			(2,164		)	117,857
Net income (loss)	$	146,421		$	1,136		$	4,019		$	151,576
Six months ended June 30, 2012:
Net interest income	$	46,231		$	14,530		$	—		$	60,761
Intersegment net interest income (expense)	22,475			(10,968		)	(11,507		)	—
Provision for loan and lease losses	11,620			—			—			11,620
Other operating income	24,701			2,538			(393		)	26,846
Other operating expense	(43,521		)	(898		)	(30,518		)	(74,937		)
Administrative and overhead expense allocation	(29,525		)	(462		)	29,987			—
Net income (loss)	$	31,981		$	4,740		$	(12,431	)	$	24,290
At June 30, 2013:
Investment securities	$	—		$	1,765,842		$	—		$	1,765,842
Loans and leases (including loans held for sale)	2,387,751			—			—			2,387,751
Other	113,691			340,944			98,528			553,163
Total assets	$	2,501,442		$	2,106,786		$	98,528		$	4,706,756
At December 31, 2012:
Investment securities	$	—		$	1,698,593		$	—		$	1,698,593
Loans and leases (including loans held for sale)	2,242,227			—			—			2,242,227
Other	(7,267		)	363,815			73,000			429,548
Total assets	$	2,234,960		$	2,062,408		$	73,000		$	4,370,368