Operating Segments

12 Months Ended

Dec. 31, 2013

Operating Segments [Abstract]

Operating Segments

Note 18:  Operating Segments

We operatefive principal segments:  Oklahoma Banking, Texas Banking, Kansas Banking,  Mortgage Banking, and Other Operations.  The Oklahoma Banking segment, the Texas Banking segment, and the Kansas Banking segment provide deposit and lending services.  The Mortgage Banking segment consists of residential mortgage lending services to customers.Prior to 2013, the Mortgage Banking segment included all loans available for sale in the secondary market. This adjustment had an immaterial impact on interest income for 2012 and 2011.  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 Federal Home Loan Bank 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. 

Capital is assigned to each of the segments using a risk-based capital pricing methodology that assigns capital ratios by asset, deposit, or revenue category based on credit risk, interest rate risk, market risk, operational risk, and liquidity risk factors.   

The following table summarizes financial results by operating segment: 

For the year ended December 31,2013
	Oklahoma		Texas		Kansas		Mortgage		Other		Total
(Dollars in thousands)	Banking		Banking		Banking		Banking		Operations*		Company
Net interest income	$	34,725	$	18,949	$	10,527	$	670	$	(2,221)	$	62,650
Provision for loan losses		(486)		(6,403)		(472)		148		4		(7,209)
Noninterest income		6,943		1,305		1,944		2,701		750		13,643
Noninterest expenses		28,000		9,494		11,898		2,287		3,632		55,311
Income (loss) before taxes		14,154		17,163		1,045		936		(5,107)		28,191
Taxes on income		5,400		6,548		399		357		(1,948)		10,756
Net income (loss)	$	8,754	$	10,615	$	646	$	579	$	(3,159)	$	17,435
* Includes externally generated loss of $1.6 million, primarily from investing services, and an internally generated revenue of $0.1 million from the funds management unit
Fixed asset expenditures	$	85	$	$ 9	$	$ 8	$	-	$	$ 1,753	$	1,855
Total loans at period end		681,991		366,697		198,992		23,215		8		1,270,903
Total assets at period end		686,736		361,058		203,631		26,162		703,836		1,981,423
Total deposits at period end		1,113,715		207,227		247,884		1,895		13,365		1,584,086

For the year ended December 31,2012
	Oklahoma		Texas		Kansas		Mortgage		Other		Total
(Dollars in thousands)	Banking		Banking		Banking		Banking		Operations*		Company
Net interest income	$	37,954	$	25,190	$	9,685	$	1,370	$	2,364	$	76,563
Provision for loan losses		448		5,364		(2,705)		-		-		3,107
Noninterest income		7,697		1,854		2,440		2,771		1,174		15,936
Noninterest expenses		29,406		12,848		13,767		2,430		4,871		63,322
Income (loss) before taxes		15,797		8,832		1,063		1,711		(1,333)		26,070
Taxes on income		5,989		3,348		403		649		(506)		9,883
Net income (loss)	$	9,808	$	5,484	$	660	$	1,062	$	(827)	$	16,187
* Includes externally generated revenue of $0.8 million, primarily from investing services, and an internally generated revenue of $2.8 million from the funds management unit
Fixed asset expenditures	$	178	$	$ 71	$	$ 8	$	-	$	$ 1,362	$	1,619
Total loans at period end		652,121		520,481		174,451		31,682		-		1,378,735
Total assets at period end		664,607		515,675		178,291		34,304		729,378		2,122,255
Total deposits at period end		1,254,348		166,919		270,368		2,420		15,523		1,709,578

For the year ended December 31,2011
	Oklahoma		Texas		Kansas		Mortgage		Other		Total
(Dollars in thousands)	Banking		Banking		Banking		Banking		Operations*		Company
Net interest income	$	43,005	$	29,820	$	12,414	$	1,438	$	9,655	$	96,332
Provision for loan losses		27,087		98,335		6,679		-		-		132,101
Noninterest income		7,781		1,856		2,065		1,297		1,019		14,018
Noninterest expenses		36,402		28,727		19,131		2,121		3,820		90,201
Income (loss) before taxes		(12,703)		(95,386)		(11,331)		614		6,854		(111,952)
Taxes on income		(4,955)		(37,196)		(4,419)		240		2,673		(43,657)
Net income (loss)	$	(7,748)	$	(58,190)	$	(6,912)	$	374	$	4,181	$	(68,295)
* Includes externally generated revenue of $2.8 million, primarily from investing services, and an internally generated revenue of $7.9 million from the funds management unit
Fixed asset expenditures	$	366	$	3	$	193	$	5	$	1,119	$	1,686
Total loans at period end		858,212		653,199		213,382		38,695		-		1,763,488
Total assets at period end		888,839		653,146		219,481		40,876		574,934		2,377,276
Total deposits at period end		1,406,361		156,101		276,757		1,430		80,733		1,921,382