Business Segments

12 Months Ended

Dec. 31, 2014

Business Segments

Business Segments

NOTE 18: Business Segments

The Corporation operates in a decentralized fashion in three principal business segments: Retail Banking, Mortgage Banking and Consumer Finance. Revenues from Retail Banking operations consist primarily of interest earned on loans and investment securities and service charges on deposit accounts. Mortgage Banking operating revenues consist principally of gains on sales of loans in the secondary market, loan origination fee income and interest earned on mortgage loans held for sale. Revenues from Consumer Finance consist primarily of interest earned on purchased automobile retail installment sales contracts.

The Corporation’s other segment includes an investment company that derives revenues from brokerage services, an insurance company that derives revenues from insurance services, and a title company that derives revenues from title insurance services. The results of the other segment are not significant to the Corporation as a whole and have been included in “Other.” Revenue and expenses of the Corporation are also included in “Other,” and consist primarily of interest expense associated with the Corporation’s trust preferred capital notes and other general corporate expenses.

	Year Ended December 31, 2014
	Retail		Mortgage		Consumer
(Dollars in thousands)	Banking		Banking		Finance		Other		Eliminations		Consolidated
Revenues:
Interest income	$	43,616	$	1,304	$	46,569	$	—	$	(4,994)	$	86,495
Gains on sales of loans		—		5,108		—		—		—		5,108
Other noninterest income		9,170		2,708		1,227		1,358		—		14,463
Total operating income		52,786		9,120		47,796		1,358		(4,994)		106,066
Expenses:
Provision for loan losses		—		60		16,270		—		—		16,330
Interest expense		5,915		199		6,445		960		(4,994)		8,525
Salaries and employee benefits		22,944		3,568		8,962		836		—		36,310
Other noninterest expenses		17,970		4,608		4,739		508		—		27,825
Total operating expenses		46,829		8,435		36,416		2,304		(4,994)		88,990
Income (loss) before income taxes		5,957		685		11,380		(946)		—		17,076
Income tax (benefit) expense		377		274		4,438		(359)		—		4,730
Net income (loss)	$	5,580	$	411	$	6,942	$	(587)	$	—	$	12,346
Total assets	$	1,178,270	$	42,143	$	283,984	$	4,208	$	(175,282)	$	1,333,323
Goodwill	$	3,702	$	—	$	10,723	$	—	$	—	$	14,425
Capital expenditures	$	1,657	$	92	$	177	$	1	$	—	$	1,927

	Year Ended December 31, 2013
	Retail		Mortgage		Consumer
(Dollars in thousands)	Banking		Banking		Finance		Other		Eliminations		Consolidated
Revenues:
Interest income	$	34,777	$	1,865	$	48,735	$	2	$	(5,167)	$	80,212
Gains on sales of loans		—		7,510		—		—		—		7,510
Other noninterest income		7,672		4,308		1,190		1,540		—		14,710
Total operating income		42,449		13,683		49,925		1,542		(5,167)		102,432
Expenses:
Provision for loan losses		1,030		90		13,965		—		—		15,085
Interest expense		6,135		343		6,501		811		(5,167)		8,623
Salaries and employee benefits		18,361		4,118		7,877		811		—		31,167
Other noninterest expenses		14,500		5,881		4,300		1,764		—		26,445
Total operating expenses		40,026		10,432		32,643		3,386		(5,167)		81,320
Income (loss) before income taxes		2,423		3,251		17,282		(1,844)		—		21,112
Income tax (benefit) expense		(884)		1,300		6,740		(446)		—		6,710
Net income (loss)	$	3,307	$	1,951	$	10,542	$	(1,398)	$	—	$	14,402
Total assets	$	1,157,228	$	50,803	$	278,855	$	4,017	$	(178,606)	$	1,312,297
Goodwill	$	3,702	$	—	$	10,723	$	—	$	—	$	14,425
Capital expenditures	$	3,294	$	535	$	53	$	2	$	—	$	3,884

	Year Ended December 31, 2012
	Retail		Mortgage		Consumer
(Dollars in thousands)	Banking		Banking		Finance		Other		Eliminations		Consolidated
Revenues:
Interest income	$	32,301	$	2,358	$	47,403	$	—	$	(5,098)	$	76,964
Gains on sales of loans		—		7,692		—		—		—		7,692
Other noninterest income		6,124		4,315		1,149		1,322		20		12,930
Total operating income		38,425		14,365		48,552		1,322		(5,078)		97,586
Expenses:
Provision for loan losses		2,400		165		9,840		—		—		12,405
Interest expense		7,404		483		6,334		988		(5,098)		10,111
Salaries and employee benefits		15,562		3,795		7,591		865		—		27,813
Other noninterest expenses		12,385		6,265		4,100		479		—		23,229
Total operating expenses		37,751		10,708		27,865		2,332		(5,098)		73,558
Income (loss) before income taxes		674		3,657		20,687		(1,010)		20		24,028
Income tax (benefit) expense		(1,479)		1,466		8,042		(383)		—		7,646
Net income (loss)	$	2,153	$	2,191	$	12,645	$	(627)	$	20	$	16,382
Total assets	$	813,817	$	86,978	$	280,205	$	3,570	$	(207,552)	$	977,018
Goodwill	$	—	$	—	$	10,723	$	—	$	—	$	10,723
Capital expenditures	$	739	$	272	$	179	$	—	$	—	$	1,190

The Retail Banking segment extends a warehouse line of credit to the Mortgage Banking segment, providing a portion of the funds needed to originate mortgage loans. The Retail Banking segment charges the Mortgage Banking segment interest at the daily FHLB advance rate plus 50 basis points. The Retail Banking segment also provides the Consumer Finance segment with a portion of the funds needed to originate loans by means of variable rate notes that carry interest at one-month LIBOR plus 200 basis points and fixed rate notes that carry interest rates ranging from 3.8 percent to 8.0 percent. The Retail Banking segment acquires certain residential real estate loans from the Mortgage Banking segment at prices similar to those paid by third-party investors. These transactions are eliminated to reach consolidated totals. Certain corporate overhead costs incurred by the Retail Banking segment are not allocated to the Mortgage Banking, Consumer Finance and Other segments.