9.	Segment Disclosures

The following disclosure includes four homebuilding reportable segments that aggregate geographically the Company’s homebuilding operating segments, and the mortgage banking operations presented as a single reportable segment. The homebuilding reportable segments are comprised of operating divisions in the following geographic areas:

Mid Atlantic:		Maryland, Virginia, West Virginia, Delaware and Washington, D.C.
North East:		New Jersey and Eastern Pennsylvania
Mid East:		New York, Ohio, Western Pennsylvania, Indiana and Illinois
South East:		North Carolina, South Carolina, Florida and Tennessee

Homebuilding profit before tax includes all revenues and income generated from the sale of homes, less the cost of homes sold, selling, general and administrative expenses and a corporate capital allocation charge. The corporate capital allocation charge is eliminated in consolidation and is based on the segment’s average net assets employed. The corporate capital allocation charged to the operating segment allows the Chief Operating Decision Maker (“CODM”) to determine whether the operating segment’s results are providing the desired rate of return after covering the Company’s cost of capital. In addition, certain assets, including goodwill and intangible assets and consolidation adjustments as discussed further below, are not allocated to the operating segments as those assets are neither included in the operating segment’s corporate capital allocation charge, nor in the CODM’s evaluation of the operating segment’s performance. The Company records charges on contract land deposits when it is determined that it is probable that recovery of the deposit is impaired. For segment reporting purposes, impairments on contract land deposits are charged to the operating segment upon the determination to terminate a Lot Purchase Agreement with the developer, or to restructure a Lot Purchase Agreement resulting in the forfeiture of the deposit. Mortgage banking profit before tax consists of revenues generated from mortgage financing, title insurance and closing services, less the costs of such services and general and administrative costs. Mortgage banking operations are not charged a corporate capital allocation charge.

In addition to the corporate capital allocation and contract land deposit impairments discussed above, the other reconciling items between segment profit and consolidated profit before tax include unallocated corporate overhead (including all management incentive compensation), equity-based compensation expense, consolidation adjustments and external corporate interest expense. NVR’s overhead functions, such as accounting, treasury and human resources, are centrally performed and the costs are not allocated to the Company’s operating segments. Consolidation adjustments consist of such items necessary to convert the reportable segments’ results, which are predominantly maintained on a cash basis, to a full accrual basis for external financial statement presentation purposes, and are not allocated to the Company’s operating segments. External corporate interest expense primarily consists of interest charges on the Company’s 3.95% Senior Notes due 2022 (the “Senior Notes”) and is not charged to the operating segments because the charges are included in the corporate capital allocation discussed above.

The following tables present segment revenues, profit and assets, with reconciliations to the amounts reported for the consolidated enterprise, where applicable:

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Revenues:
Homebuilding Mid Atlantic	$	872,148	$	772,147	$	1,594,416	$	1,405,718
Homebuilding North East		127,541		108,766		233,771		205,919
Homebuilding Mid East		313,237		306,257		556,268		550,534
Homebuilding South East		199,788		174,571		375,846		321,074
Mortgage Banking		31,778		26,442		61,283		48,964
Total consolidated revenues	$	1,544,492	$	1,388,183	$	2,821,584	$	2,532,209

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Profit before taxes:
Homebuilding Mid Atlantic	$	100,621		$	63,730		$	165,109		$	110,339
Homebuilding North East		14,112			5,578			23,218			9,643
Homebuilding Mid East		35,986			30,056			58,145			52,789
Homebuilding South East		22,911			15,825			37,481			28,611
Mortgage Banking		18,004			13,973			33,957			24,348
Total segment profit before taxes		191,634			129,162			317,910			225,730
Reconciling items:
Contract land deposit reserve adjustment (1)		(2,064	)		1,307			(2,792	)		2,636
Equity-based compensation expense		(10,878	)		(10,829	)		(21,467	)		(21,378	)
Corporate capital allocation (2)		49,646			46,259			95,833			90,574
Unallocated corporate overhead		(23,360	)		(26,517	)		(50,594	)		(56,026	)
Consolidation adjustments and other		9,614			9,877			13,427			15,862
Corporate interest expense		(5,624	)		(4,539	)		(11,188	)		(9,366	)
Reconciling items sub-total		17,334			15,558			23,219			22,302
Consolidated profit before taxes	$	208,968		$	144,720		$	341,129		$	248,032

	June 30, 2017			December 31, 2016
Assets:
Homebuilding Mid Atlantic	$	1,177,147		$	1,054,779
Homebuilding North East		148,272			126,720
Homebuilding Mid East		274,846			222,736
Homebuilding South East		263,780			214,225
Mortgage Banking		276,564			403,250
Total segment assets		2,140,609			2,021,710
Reconciling items:
Consolidated variable interest entity		1,243			1,251
Cash and cash equivalents		518,482			375,748
Deferred taxes		176,401			170,652
Intangible assets and goodwill		50,835			51,526
Contract land deposit reserve		(34,098	)		(31,306	)
Consolidation adjustments and other		64,615			54,362
Reconciling items sub-total		777,478			622,233
Consolidated assets	$	2,918,087		$	2,643,943

(1)

This item represents changes to the contract land deposit impairment reserve, which are not allocated to the reportable segments.

(2)

This item represents the elimination of the corporate capital allocation charge included in the respective homebuilding reportable segments. The corporate capital allocation charge is based on the segment’s monthly average asset balance, and was as follows for the periods presented:

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Corporate capital allocation charge:
Homebuilding Mid Atlantic	$	31,005	$	28,766	$	60,130	$	55,951
Homebuilding North East		4,133		4,447		7,947		9,400
Homebuilding Mid East		7,535		7,458		14,277		14,157
Homebuilding South East		6,973		5,588		13,479		11,066
Total	$	49,646	$	46,259	$	95,833	$	90,574