Segment Reporting

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Segment Reporting

Note (11)—Segment reporting:

The Company and the Bank are engaged in the business of banking and provide a full range of financial services. The Company determines reportable segments based on the significance of the segment’s operating results to the overall Company, the products and services offered, customer characteristics, processes and service delivery of the segments and the regular financial performance review and allocation of resources by the Chief Executive Officer. The Company has identified two distinct reportable segments—Banking and Mortgage. The Company’s primary segment is Banking, which provides a full range of deposit and lending products and services to corporate, commercial and consumer customers. The Company offers full-service conforming residential mortgage products, including conforming residential loans and services through the Mortgage segment utilizing mortgage offices outside of the geographic footprint of the Banking operations as well as internet delivery channels. Additionally, the Mortgage Segment includes the servicing of residential mortgage loans and the packaging and securitization of loans to governmental agencies. The residential mortgage products and services originated in our Banking footprint and related revenues and expenses are included in our Banking segment. The Company’s mortgage division represents a distinct reportable segment which differs from the Company’s primary business of commercial and retail banking.

The financial performance of the Mortgage segment is assessed based on results of operations reflecting direct revenues and expenses and allocated expenses. This approach gives management a better indication of the operating performance of the segment. When assessing the Banking segment’s financial performance the Chief Executive Officer (CEO) utilize reports with indirect revenues and expenses including but not limited to the investment portfolio, electronic delivery channels and areas that primarily support the banking segment operations. Therefore these are included in the results of the Banking segment. Other indirect revenue and expenses related to general administrative areas are also included in the internal financial results reports of the Banking segment utilized by the CEO for analysis and are thus included for Banking segment reporting. The Mortgage segment utilizes funding sources from the Banking segment in order to fund mortgage loans that are ultimately sold on the secondary market. The Mortgage segment uses the proceeds from loan sales to repay obligations due to the Banking segment.

During the three months ended March 31, 2016, the Company realigned its segment reporting structure to reclassify mortgage banking income and related expenses associated with retail mortgage originations within our Banking geographic footprint from the Mortgage segment to the Banking segment. This change was made to capture all of the product and service offerings for our Banking customer base within our banking geographic footprint into the Banking segment while capturing all of the Mortgage Banking activities outside of the banking footprint into the Mortgage segment to allow our chief executive officer to better determine resource allocations and operating performance for each segment. As such, the tables below have been revised to reflect the reclassification for all periods presented.

The following tables provides segment financial information for the three and nine months ended September 30, 2016 and 2015 follows:

Three months ended September 30, 2016	Banking		Mortgage			Consolidated
Net interest income	$	28,158	$	(541	)	$	27,617
Provision for loan loss		71		—			71
Mortgage banking income		8,878		28,060			36,938
Other noninterest income		7,024		—			7,024
Depreciation		927		45			972
Amortization of intangibles		526		—			526
Amortization and impairment of mortgage servicing rights		—		5,198			5,198
Other noninterest expense		30,332		18,501			48,833
Income before income taxes		12,204		3,775			15,979
Income tax expense							14,772
Net income							1,207
Total assets	$	2,661,116	$	526,064		$	3,187,180
Goodwill		46,767		100			46,867

Three months ended September 30, 2015	Banking			Mortgage		Consolidated
Net interest income	$	23,625		$	510	$	24,135
Provision for loan loss		(1,159	)		—		(1,159	)
Mortgage banking income		5,875			13,919		19,794
Other noninterest income		7,254			—		7,254
Depreciation		793			28		821
Amortization of intangibles		415			—		415
Amortization and impairment of mortgage servicing rights		—			764		764
Other noninterest expense		21,573			12,006		33,579
Income before income taxes		15,132			1,631		16,763
Income tax expense							858
Net income							15,905
Total assets	$	2,534,915		$	341,425	$	2,876,340
Goodwill		46,804			100		46,904

Nine months ended September 30, 2016	Banking			Mortgage			Consolidated
Net interest income	$	83,389		$	(1,471	)	$	81,918
Provision for loan loss		(727	)		—			(727	)
Mortgage banking income		22,237			69,337			91,574
Other noninterest income		21,779			—			21,779
Depreciation		2,729			265			2,994
Amortization of intangibles		1,605			—			1,605
Amortization and impairment of mortgage servicing rights		—			14,310			14,310
Other noninterest expense		81,202			47,360			128,562
Income before income taxes		42,596			5,931			48,527
Income tax expense								16,946
Net income								31,581
Total assets	$	2,661,116		$	526,064		$	3,187,180
Goodwill		46,767			100			46,867

Nine months ended September 30, 2015	Banking			Mortgage		Consolidated
Net interest income	$	67,461		$	1,115	$	68,576
Provision for loan loss		(937	)		—		(937	)
Mortgage banking income		14,227			36,854		51,081
Other noninterest income		17,190			—		17,190
Depreciation and amortization		2,207			176		2,383
Amortization of intangibles		1,221			—		1,221
Amortization and impairment of mortgage servicing rights		—			1,543		1,543
Other noninterest expense		60,698			30,767		91,465
Income before income taxes		35,689			5,483		41,172
Income tax expense							2,507
Net income							38,665
Total assets	$	2,534,915		$	341,425	$	2,876,340
Goodwill		46,804			100		46,904

Our Banking segment provides our Mortgage segment with a warehouse line of credit that is used to fund mortgage loans held for sale. The warehouse line of credit had a prime interest rate of 3.50% and 3.25% as of September 30, 2016 and 2015, respectively. The amount of interest paid by our Mortgage segment to our Banking segment under this warehouse line of credit is recorded as interest income to our Banking segment and as interest expense to our Mortgage segment, both of which are included in the calculation of net interest income for each segment. The amount of interest paid by our Mortgage segment to our Banking segment under this warehouse line of credit was $3,472 and $2,277 and $8,555 and $6,356 for the three months and nine months ended September 30, 2016 and 2015, respectively.