SEGMENT REPORTING

12 Months Ended

Dec. 31, 2014

SEGMENT REPORTING

SEGMENT REPORTING

NOTE 21. SEGMENT REPORTING

During 2013, the Company identified three reportable segments: commercial and retail banking; mortgage banking; and insurance services. Revenue from commercial and retail banking activities consists primarily of interest earned on loans and investment securities and service charges on deposit accounts.

Revenue from the mortgage banking activities is comprised of interest earned on loans and fees received as a result of the mortgage origination process. The mortgage banking services are conducted by MVB Mortgage. Revenue from insurance services is comprised mainly of commissions on the sale of insurance products.

Information about the reportable segments and reconciliation to the consolidated financial statements for the years end December 31, 2014 and 2013 are as follows:

	Commercial
	&
	Retail		Mortgage				Intercompany
(in thousands)	Banking		Banking		Insurance		Eliminations		Consolidated
Revenues:
Interest income	$	32,258	$	2,891	$	—	$	1,265	$	36,414
Gain on loans held for sale		900		18,691		—		(1,199)		18,392
Insurance income		—		—		3,523		—		3,523
Other income		4,930		325		—		(1,239)		4,016
Total operating income		38,088		21,907		3,523		(1,173)		62,345
Expenses:
Interest expense		7,366		1,635		—		(918)		8,083
Salaries and employee benefits		13,287		14,487		3,417		—		31,191
Provision for loan losses		2,582		—		—		—		2,582
Other expense		12,094		5,640		1,027		(255)		18,506
Total operating expenses		35,329		21,762		4,444		(1,173)		60,362
Income (loss) before income taxes		2,759		145		(921)		—		1,983
Income tax expense (benefit)		208		40		(344)		—		(96)
Net income (loss)		2,551		105		(577)		—		2,079
Preferred stock dividends		332		—		—		—		332
Net income (loss) available to common shareholders	$	2,219	$	105	$	(577)	$	—	$	1,747
Capital expenditures for the year ended December 31, 2014	$	9,112	$	333	$	353	$	—	$	9,798
Total assets as of December 31, 2014		1,189,746		101,791		4,031		(185,109)		1,110,459
Goodwill as of December 31, 2014		897		16,882		—		—		17,779

	Commercial
	&
	Retail		Mortgage				Intercompany
(in thousands)	Banking		Banking		Insurance		Eliminations		Consolidated
Revenues:
Interest income	$	25,088	$	2,103	$	—	$	(231)	$	26,960
Gain on loans held for sale		2,853		19,042		—		(415)		21,480
Insurance income		—		—		1,722		—		1,722
Other income		3,843		1,400		—		—		5,243
Total operating income		31,784		22,545		1,722		(646)		55,405
Expenses:
Interest expense		5,014		1,181		—		(646)		5,549
Salaries and employee benefits		12,441		13,017		1,609		—		27,067
Provision for loan losses		2,260		—		—		—		2,260
Other expense		9,811		5,081		634		—		15,526
Total operating expenses		29,526		19,279		2,243		(646)		50,402
Income (loss) before income taxes		2,258		3,266		(521)		—		5,003
Income tax expense (benefit)		5		1,240		(262)		—		983
Net income (loss)		2,253		2,026		(259)		—		4,020
Preferred stock dividends		85		—		—		—		85
Net income (loss) available to common shareholders	$	2,168	$	2,026	$	(259)	$	—	$	3,935
Capital expenditures for the year ended December 31, 2013	$	5,613	$	489	$	399	$	—	$	6,501
Total assets as of December 31, 2013		1,021,097		92,290		3,012		(129,339)		987,060
Goodwill as of December 31, 2013		897		16,882		—		—		17,779

Commercial & Retail Banking

For the year ended December 31, 2014, the Commercial & Retail Banking segment earned $2.2 million compared to $2.2 million in 2013. Net interest income increased by $4.8 million, mostly the result of average loan balances increasing by $219.7 million. Noninterest income decreased by $866, largely the result of decreased income from portfolio loans held for sale of $1.9 million. This was the result of integrating the mortgage company in mid-2013, as the bank mortgage volume was transferred to the mortgage company. Noninterest expense increased by $3.1 million, mainly the result of the following: $846 increase in salaries expense, $733 increase in occupancy and equipment expense, $340 increase in data processing expense, $330 increase in FDIC expense, $274 increase in consulting expense and $230 increase in legal expense. Loan loss provision also increased by $322 as a result of loan growth.

Mortgage Banking

For the year ended December 31, 2014, the Mortgage Banking segment earned $105 compared to earning $2.0 million in 2013. Net interest income increased $334, noninterest income decreased by $1.4 million and noninterest expense increased by $2.0 million. The $1.8 million earnings decrease is mainly due to a 17.1% decrease in origination volume, an increase in personnel expense of $1.5 million due to the addition of seven additional offices and employees to expand the base of operations as the mortgage business becomes more focused on purchase loans and less on the refinance business and the impact of a refinement in accounting estimate of $706 related to interest rate lock commitments.

Insurance

For the year ended December 31, 2014, the Insurance segment lost $577 compared to $259 in 2013. Noninterest income increased by $1.8 million and noninterest expense increased by $2.2 million.  Income tax benefit for 2014 increased by $82.