Annual report pursuant to Section 13 and 15(d)

SEGMENT REPORTING DISCLOSURES

v3.6.0.2
SEGMENT REPORTING DISCLOSURES
 12 Months Ended
Dec. 31, 2016
Segment Reporting [Abstract]  
SEGMENT REPORTING DISCLOSURES
SEGMENT REPORTING DISCLOSURES
 
The Company has two reportable segments: a traditional full service community bank segment and a mortgage loan origination business segment. The community bank segment includes one subsidiary bank, which provides loan, deposit, investment, and trust services to retail and commercial customers throughout its 114 retail locations in Virginia. The mortgage segment includes UMG, which provides a variety of mortgage loan products principally in Virginia, North Carolina, Maryland, and the Washington D.C. metro area. These loans are originated and primarily sold in the secondary market through purchase commitments from investors, which serves to mitigate the Company’s exposure to interest rate risk.
 
Profit and loss is measured by net income after taxes including realized gains and losses on the Company’s investment portfolio. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. Inter-segment transactions are recorded at cost and eliminated as part of the consolidation process.
 
Both of the Company’s reportable segments are service-based. The mortgage segment’s business is a primarily fee-based business while the bank segment’s is driven principally by net interest income. The bank segment provides a distribution and referral network through its customers for the mortgage loan origination business. The mortgage segment offers a more limited referral network for the bank segment.
 
The community bank segment provides the mortgage segment with the short-term funds needed to originate mortgage loans through a warehouse line of credit and charges the mortgage banking segment interest. The interest rate on the warehouse line of credit was the three month LIBOR rate plus 0.15% with no floor for the years ended December 31, 2016 and December 31, 2015. During the year ended December 31, 2014, the interest rate on the warehouse line of credit was the three month LIBOR rate plus 1.5% with a floor of 2.0% through May 31, 2014; beginning June 1, 2014, the interest rate was the one month LIBOR rate plus 1.5% with no floor. These transactions are eliminated in the consolidation process.
 
During 2015, the mortgage segment began originating loans with the intent that they be held for investment purposes. The community bank segment provides the mortgage segment with the long-term funds needed to originate these loans through a long-term funding facility and charges the mortgage segment interest. The interest charged is determined by the community bank segment based on the cost of funds available to the community bank segment for similar durations of the loans being funded by the mortgage segment.
 
A management fee for operations and administrative support services is charged to all subsidiaries and eliminated in the consolidated totals.

Information about reportable segments and reconciliation of such information to the consolidated financial statements for years ended December 31, 2016, 2015, and 2014 is as follows (dollars in thousands):
 
UNION BANKSHARES CORPORATION AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
 
 
Community Bank
 
Mortgage
 
Eliminations
 
Consolidated
Year Ended December 31, 2016
 

 
 

 
 

 
 

Net interest income
$
263,714

 
$
1,436

 
$
—

 
$
265,150

Provision for credit losses
8,883

 
217

 
—

 
9,100

Net interest income after provision for credit losses
254,831

 
1,219

 
—

 
256,050

Noninterest income
59,505

 
12,008

 
(606
)
 
70,907

Noninterest expenses
212,774

 
10,535

 
(606
)
 
222,703

Income before income taxes
101,562

 
2,692

 
—

 
104,254

Income tax expense
25,846

 
932

 
—

 
26,778

Net income
$
75,716

 
$
1,760

 
$
—

 
$
77,476

Total assets
$
8,419,625

 
$
93,581

 
$
(86,413
)
 
$
8,426,793

Year Ended December 31, 2015
 

 
 

 
 

 
 

Net interest income
$
250,510

 
$
1,324

 
$
—

 
$
251,834

Provision for credit losses
9,450

 
121

 
—

 
9,571

Net interest income after provision for credit losses
241,060

 
1,203

 
—

 
242,263

Noninterest income
55,645

 
10,044

 
(682
)
 
65,007

Noninterest expenses
205,993

 
11,571

 
(682
)
 
216,882

Income (loss) before income taxes
90,712

 
(324
)
 
—

 
90,388

Income tax expense (benefit)
23,431

 
(122
)
 
—

 
23,309

Net income (loss)
$
67,281

 
$
(202
)
 
$
—

 
$
67,079

Total assets
$
7,690,132

 
$
57,900

 
$
(54,741
)
 
$
7,693,291

Year Ended December 31, 2014
 

 
 

 
 

 
 

Net interest income
$
253,956

 
$
1,062

 
$
—

 
$
255,018

Provision for credit losses
7,800

 
—

 
—

 
7,800

Net interest income after provision for credit losses
246,156

 
1,062

 
—

 
247,218

Noninterest income
51,878

 
10,091

 
(682
)
 
61,287

Noninterest expenses
222,311

 
16,587

 
(682
)
 
238,216

Income (loss) before income taxes
75,723

 
(5,434
)
 
—

 
70,289

Income tax expense (benefit)
20,061

 
(1,936
)
 
—

 
18,125

Net income (loss)
$
55,662

 
$
(3,498
)
 
$
—

 
$
52,164

Total assets
$
7,354,058

 
$
51,485

 
$
(46,900
)
 
$
7,358,643