Business Segment Information

12 Months Ended

Dec. 31, 2023

Segment Reporting [Abstract]

BUSINESS SEGMENT INFORMATION

NOTE 23 — BUSINESS SEGMENT INFORMATION

BancShares’ segments include General Banking, Commercial Banking, Silicon Valley Banking, and Rail. All other financial information not allocated to the segments is included in the “Corporate” component of the segment disclosures.

General Banking

The General Banking segment delivers products and services to consumers and businesses through our extensive network of branches and various digital channels. We offer a full suite of deposit products, loans (primarily residential mortgages and business and commercial loans), cash management, wealth management, payment services, and treasury services. Our wealth management products and services to individuals and institutional clients include brokerage, investment advisory, and trust services. We offer conforming and jumbo residential mortgage loans throughout the United States which are primarily originated through branches and retail referrals, employee referrals, internet leads, direct marketing and a correspondent lending channel. The General Banking segment offers nationwide digital banking, which is largely comprised of our internet banking platform, that delivers deposit products to consumers. The General Banking segment also includes a community association bank channel that supports deposit, cash management, and lending to homeowner associations and property management companies.

Revenue is generated from interest earned on loans and from fees for banking and advisory services. We primarily originate loans by utilizing our branch network and industry referrals, as well as direct digital marketing efforts. We derive our SBA loans through a network of SBA originators. We periodically purchase loans on a whole-loan basis. We also invest in community development that supports the construction of affordable housing in our communities in line with our CRA initiatives.

Commercial Banking

The Commercial Banking segment provides a range of lending, leasing, capital markets, asset management and other financial and advisory services, primarily to small and middle market companies in a wide range of industries including: energy; healthcare; tech media and telecom; asset-backed lending; capital finance; maritime; corporate banking; aerospace and defense; and sponsor finance. Loans offered are primarily senior secured loans collateralized by accounts receivable, inventory, machinery and equipment, transportation equipment and/or intangibles, and are often used for working capital, plant expansion, acquisitions, or recapitalizations. These loans include revolving lines of credit and term loans and, depending on the nature of the collateral, may be referred to as collateral-backed loans, asset-based loans or cash flow loans. We provide senior secured loans to developers and other CRE professionals. Additionally, we provide small business loans and leases, including both capital and operating leases, through a highly automated credit approval, documentation and funding process.

We provide factoring, receivable management, and secured financing to businesses that operate in several industries. These include: apparel, textile, furniture, home furnishings, and consumer electronics. Factoring entails the assumption of credit risk with respect to trade accounts receivable arising from the sale of goods from our factoring clients to their customers that have been factored (i.e., sold or assigned to the factor). Our factoring clients, which are generally manufacturers or importers of goods, are the counterparties on factoring, financing, or receivables purchasing agreements to sell trade receivables to us. Our factoring clients’ customers, which are generally retailers, are the account debtors and obligors on trade accounts receivable that have been factored.

Revenue is generated from: interest and fees on loans; rental income on operating lease equipment; fee income and other revenue from banking services and capital markets transactions; and commissions earned on factoring-related activities. We derive most of our commercial lending business through direct marketing to borrowers, lessees, manufacturers, vendors, and distributors. We also utilize referrals as a source for commercial lending business. We may periodically buy participations or syndications of loans and lines of credit and purchase loans on a whole-loan basis.

Silicon Valley Banking

The SVB segment offers products and services to commercial clients in key innovation markets, such as healthcare and technology industries, as well as to private equity and venture capital firms. The segment provides solutions to the financial needs of commercial clients through credit, treasury management, foreign exchange, trade finance and other services including capital call lines of credit. In addition, the segment offers private banking and wealth management and provides a range of personal financial solutions for consumers. Private banking and wealth management clients consist of private equity and venture capital professionals and executive leaders of the innovation companies they support and premium wine clients. The segment offers a customized suite of private banking services, including mortgages, home equity lines of credit, restricted and private stock loans, other secured and unsecured lending products and vineyard development loans, as well as planning-based financial strategies, wealth management, family office, financial planning, tax planning and trust services.

Revenue is primarily generated from interest earned on loans, and fees and other revenue from lending activities and banking services.

Deposit products include business and analysis checking accounts, money market accounts, multi-currency accounts, bank accounts, sweep accounts and positive pay services. Services are provided through online and mobile banking platforms, as well as branch locations.

Rail

The Rail segment offers customized leasing and financing solutions on a fleet of railcars and locomotives to railroads and shippers throughout North America. Railcar types include covered hopper cars used to ship grain and agricultural products, plastic pellets, sand, and cement; tank cars for energy products and chemicals; gondolas for coal, steel coil and mill service products; open-top hopper cars for coal and aggregates; boxcars for paper and auto parts; and centerbeams and flat cars for lumber. Revenue is generated primarily from rental income on operating lease equipment.

Corporate

Corporate includes all other financial information not allocated to the segments. Corporate includes interest income on investment securities and interest-earning deposits at banks; interest expense for corporate funding, including brokered deposits; funds transfer pricing allocations; gains or losses on sales of investment securities; fair value adjustments on marketable equity securities; income from bank-owned life insurance; portions of salaries and benefits expense; and acquisition-related expenses. Corporate also includes certain items related to accounting for business combinations, such as gains on acquisitions, day 2 provisions for credit losses, discount accretion income for acquired loans, and amortization of certain intangible assets.

Segment Results and Select Period End Balances

The following table presents the condensed income statement by segment:

	Year Ended December 31, 2023
	General Banking		Commercial Banking		Silicon Valley Banking		Rail		Corporate		Total BancShares
Net interest income (expense)	$	2,433	$	1,015	$	1,946	$	(143)	$	1,461	$	6,712
Provision for credit losses	71		517		71		—		716		1,375
Net interest income (expense) after provision for credit losses	2,362		498		1,875		(143)		745		5,337
Noninterest income	490		559		478		746		9,802		12,075
Noninterest expense	1,607		823		1,642		481		782		5,335
Income before income taxes	1,245		234		711		122		9,765		12,077
Income tax expense (benefit)	336		69		181		32		(7)		611
Net income	$	909	$	165	$	530	$	90	$	9,772	$	11,466
Select Period End Balances
Total assets	$	50,179	$	31,826	$	56,190	$	8,199	$	67,364	$	213,758
Loans and leases	47,330		30,936		55,013		23		—		133,302
Operating lease equipment, net	—		780		—		7,966		—		8,746
Deposits	102,647		3,228		38,477		13		1,489		145,854
	Year Ended December 31, 2022
	General Banking		Commercial Banking		Silicon Valley Banking		Rail		Corporate		Total BancShares
Net interest income (expense)	$	1,947	$	884	$	—	$	(80)	$	195	$	2,946
Provision for credit losses	11		121		—		—		513		645
Net interest income (expense) after provision for credit losses	1,936		763		—		(80)		(318)		2,301
Noninterest income	482		517		—		657		480		2,136
Noninterest expense	1,542		744		—		428		361		3,075
Income (loss) before income taxes	876		536		—		149		(199)		1,362
Income tax expense (benefit)	214		128		—		37		(115)		264
Net income (loss)	$	662	$	408	$	—	$	112	$	(84)	$	1,098
Select Period End Balances
Total assets	$	45,802	$	28,235	$	—	$	7,647	$	27,614	$	109,298
Loans and leases	43,212		27,491		—		78		—		70,781
Operating lease equipment, net	—		723		—		7,433		—		8,156
Deposits	84,369		3,219		—		15		1,805		89,408
	Year Ended December 31, 2021
	General Banking		Commercial Banking		Silicon Valley Banking		Rail		Corporate		Total BancShares
Net interest income (expense)	$	1,447	$	17	$	—	$	—	$	(74)	$	1,390
Benefit for credit losses	(37)		—		—		—		—		(37)
Net interest income (expense) after provision for credit losses	1,484		17		—		—		(74)		1,427
Noninterest income	433		—		—		—		75		508
Noninterest expense	1,179		3		—		—		52		1,234
Income (loss) before income taxes	738		14		—		—		(51)		701
Income tax expense (benefit)	162		3		—		—		(11)		154
Net income (loss)	$	576	$	11	$	—	$	—	$	(40)	$	547
Select Period End Balances
Total assets	$	33,848	$	552	$	—	$	—	$	23,909	$	58,309
Loans and leases	31,820		552		—		—		—		32,372
Deposits	51,344		62		—		—		—		51,406