Operating Segments

9 Months Ended

Sep. 30, 2013

Operating Segments [Abstract]

Operating Segments

NOTE 8: OPERATING SEGMENTS  

We operate five principal segments:  Oklahoma Banking, Texas Banking, Kansas Banking, Secondary Market, and Other Operations.  The Oklahoma Banking segment, the Texas Banking segment, and the Kansas Banking segment provide deposit and lending services.  The Secondary Market segment consists of residential mortgage lending services to customers.  Other Operations includes our funds management unit and corporate investments.

The primary purpose of the funds management unit is to manage our overall internal liquidity needs and interest rate risk.  Each segment borrows funds from or provides funds to the funds management unit as needed to support its operations.  The value of funds provided to and the cost of funds borrowed from the funds management unit by each segment are internally priced at rates that approximate market rates for funds with similar duration.  The yield used in the funds transfer pricing curve is a blend of rates based on the volume usage of retail and brokered certificates of deposit and FHLB advances. 

Effective January 1, 2013, and as a result of new management, we began to identify reportable segments by geographic location of relationship manager.  Operating results are adjusted for allocated service and management costs.  In addition to this realignment, management decided to eliminate a capital credit allocation between the reportable segments.  The prior year information has been realigned and reallocated for consistency with current identified reportable segments.   

The accounting policies of each reportable segment are the same as ours.  Expenses for consolidated back-office operations are allocated to operating segments based on estimated uses of those services.  General overhead expenses such as executive administration, accounting, and audit are allocated based on the direct expense and/or deposit and loan volumes of the operating segment.  Income tax expense for the operating segments is calculated at statutory rates.  The Other Operations segment records the tax expense or benefit necessary to reconcile to the consolidated financial statements.

The following table summarizes financial results by operating segment:

For the three months ended September 30, 2013
	Oklahoma		Texas		Kansas		Secondary		Other		Total
(Dollars in thousands)	Banking		Banking		Banking		Market		Operations		Company
Net interest income (loss)	$	9,008	$	4,489	$	2,736	$	166	$	(1,126)	$	15,273
Provision for loan losses		1,012		(1,387)		39		7		-		(329)
Noninterest income		1,731		310		470		662		374		3,547
Noninterest expenses		6,570		2,524		2,579		575		771		13,019
Income (loss) before taxes		3,157		3,662		588		246		(1,523)		6,130
Taxes on income		1,200		1,395		222		94		(581)		2,330
Net income (loss)	$	1,957	$	2,267	$	366	$	152	$	(942)	$	3,800

For the three months ended September 30, 2012
	Oklahoma		Texas		Kansas		Secondary		Other		Total
(Dollars in thousands)	Banking		Banking		Banking		Market		Operations		Company
Net interest income	$	9,201	$	5,994	$	2,415	$	369	$	703	$	18,682
Provision for loan losses		278		(333)		(1,671)		-		-		(1,726)
Noninterest income		1,822		382		629		855		262		3,950
Noninterest expenses		6,429		3,320		3,196		683		963		14,591
Income before taxes		4,316		3,389		1,519		541		2		9,767
Taxes on income		1,744		1,344		586		213		(7)		3,880
Net income	$	2,572	$	2,045	$	933	$	328	$	9	$	5,887

For the nine months ended September 30, 2013
	Oklahoma		Texas		Kansas		Secondary		Other		Total
(Dollars in thousands)	Banking		Banking		Banking		Market		Operations*		Company
Net interest income (loss)	$	25,699	$	14,097	$	7,782	$	467	$	(2,032)	$	46,013
Provision for loan losses		1,168		(2,950)		69		(6)		1,012		(707)
Noninterest income		5,285		1,004		1,420		2,223		643		10,575
Noninterest expenses		20,817		6,211		8,653		1,749		2,816		40,246
Income (loss) before taxes		8,999		11,840		480		947		(5,217)		17,049
Taxes on income		3,403		4,477		182		358		(1,974)		6,446
Net income (loss)	$	5,596	$	7,363	$	298	$	589	$	(3,243)	$	10,603
* Includes externally generated loss of $1.4 million, primarily from investing services, and an internally generated loss of $36,000 from the funds management unit
Total loans at period end	$	681,745	$	414,433	$	206,802	$	3,641	$	4	$	1,306,625
Total assets at period end		684,529		407,532		211,237		6,591		662,478		1,972,367
Total deposits at period end		1,128,753		188,391		250,597		5,666		10,384		1,583,791

For the nine months ended September 30, 2012
	Oklahoma		Texas		Kansas		Secondary		Other		Total
(Dollars in thousands)	Banking		Banking		Banking		Market		Operations*		Company
Net interest income	$	29,457	$	19,594	$	7,180	$	1,038	$	2,009	$	59,278
Provision for loan losses		523		2,661		(3,162)		-		-		22
Noninterest income		5,490		1,271		1,649		1,880		775		11,065
Noninterest expenses		20,421		9,909		10,021		1,730		3,588		45,669
Income (loss) before taxes		14,003		8,295		1,970		1,188		(804)		24,652
Taxes on income		5,361		3,175		754		455		(308)		9,437
Net income (loss)	$	8,642	$	5,120	$	1,216	$	733	$	(496)	$	15,215
* Includes externally generated revenue of $0.8 million, primarily from investing services, and an internally generated revenue of $2.0 million from the funds management unit
Total loans at period end	$	704,916	$	560,197	$	192,249	$	34,749	$	-	$	1,492,111
Total assets at period end		740,883		554,554		197,249		37,216		621,251		2,151,153
Total deposits at period end		1,303,024		162,404		264,894		5,375		7,977		1,743,674