Quarterly report pursuant to Section 13 or 15(d)

SEGMENT REPORTING DISCLOSURES

v3.7.0.1
SEGMENT REPORTING DISCLOSURES
 6 Months Ended
Jun. 30, 2017
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, the Bank, which provides loan, deposit, investment, and trust services to retail and commercial customers throughout its 112 retail locations in Virginia as of June 30, 2017. 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 sold primarily 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 community bank segment is driven principally by net interest income. The community 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 for the three and six months ended June 30, 2017 and 2016 was the three month LIBOR rate plus 0.15% with no floor. These transactions are eliminated in the consolidation process.
 
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 the three and six months ended June 30, 2017 and 2016 is as follows (dollars in thousands):

UNION BANKSHARES CORPORATION AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
 
Community Bank
 
Mortgage
 
Eliminations
 
Consolidated
Three Months Ended June 30, 2017
 

 
 

 
 

 
 

Net interest income
$
68,580

 
$
419

 
$
—

 
$
68,999

Provision for credit losses
2,184

 
(11
)
 
—

 
2,173

Net interest income after provision for credit losses
66,396

 
430

 
—

 
66,826

Noninterest income
15,203

 
2,993

 
(140
)
 
18,056

Noninterest expenses
57,496

 
2,574

 
(140
)
 
59,930

Income before income taxes
24,103

 
849

 
—

 
24,952

Income tax expense
6,698

 
298

 
—

 
6,996

Net income
$
17,405

 
$
551

 
$
—

 
$
17,956

Total assets
$
8,904,819

 
$
105,429

 
$
(95,061
)
 
$
8,915,187

 
 
 
 
 
 
 
 
Three Months Ended June 30, 2016
 

 
 

 
 

 
 

Net interest income
$
65,478

 
$
298

 
$
—

 
$
65,776

Provision for credit losses
2,260

 
40

 
—

 
2,300

Net interest income after provision for credit losses
63,218

 
258

 
—

 
63,476

Noninterest income
14,940

 
3,207

 
(154
)
 
17,993

Noninterest expenses
52,766

 
2,639

 
(154
)
 
55,251

Income before income taxes
25,392

 
826

 
—

 
26,218

Income tax expense
6,594

 
287

 
—

 
6,881

Net income
$
18,798

 
$
539

 
$
—

 
$
19,337

Total assets
$
8,094,176

 
$
75,802

 
$
(69,417
)
 
$
8,100,561

 
 
 
 
 
 
 
 
Six Months Ended June 30, 2017
 

 
 

 
 

 
 

Net interest income
$
134,816

 
$
751

 
$
—

 
$
135,567

Provision for credit losses
4,288

 
7

 
—

 
4,295

Net interest income after provision for credit losses
130,528

 
744

 
—

 
131,272

Noninterest income
31,959

 
5,216

 
(281
)
 
36,894

Noninterest expenses
112,510

 
5,096

 
(281
)
 
117,325

Income before income taxes
49,977

 
864

 
—

 
50,841

Income tax expense
13,452

 
309

 
—

 
13,761

Net income
$
36,525

 
$
555

 
$
—

 
$
37,080

Total assets
$
8,904,819

 
$
105,429

 
$
(95,061
)
 
$
8,915,187

 
 
 
 
 
 
 
 
Six Months Ended June 30, 2016
 

 
 

 
 

 
 

Net interest income
$
128,903

 
$
604

 
$
—

 
$
129,507

Provision for credit losses
4,760

 
144

 
—

 
4,904

Net interest income after provision for credit losses
124,143

 
460

 
—

 
124,603

Noninterest income
28,548

 
5,684

 
(325
)
 
33,907

Noninterest expenses
104,610

 
5,238

 
(325
)
 
109,523

Income before income taxes
48,081

 
906

 
—

 
48,987

Income tax expense
12,376

 
313

 
—

 
12,689

Net income
$
35,705

 
$
593

 
$
—

 
$
36,298

Total assets
$
8,094,176

 
$
75,802

 
$
(69,417
)
 
$
8,100,561