Annual report pursuant to Section 13 and 15(d)

SEGMENT REPORTING AND REVENUE

v3.24.0.1
SEGMENT REPORTING AND REVENUE
12 Months Ended
Dec. 31, 2023
Revenue from Contract with Customer [Abstract]  
SEGMENT REPORTING AND REVENUE

17. SEGMENT REPORTING AND REVENUE

Operating Segments

Prior to the third quarter of 2022, the Company had one reportable operating segment, the Bank; however, in the third quarter of 2022, the Company completed system conversions that allow its chief operating decision makers to evaluate the business, establish the overall business strategy, allocate resources, and assess business performance within two reportable operating segments—Wholesale Banking and Consumer Banking—while corporate functions such as corporate treasury and others are included in Corporate Other. As a result, the Company restated its segment information for the year ended December 31, 2021 under the new basis with two reportable operating segments.

Effective January 1, 2023, the Company made an organizational change to move certain lines of business in the wealth management division that primarily serve Wholesale Banking customers from the Consumer Banking segment to the Wholesale Banking segment. As a result, the Company reallocated $9.6 million of goodwill from the Consumer Banking segment to the Wholesale Banking segment and restated its prior segment information for the year ended December 31, 2022, based on this organizational change. Goodwill was evaluated for impairment prior to and immediately following the organizational change. Refer to Note 5 “Goodwill and Intangible Assets” in this Form 10-K. In addition, the Company restated its prior segment operating results for the years ended December 31, 2022 and 2021, resulting in a reallocation of noninterest income ($12.5 million and $12.3 million, respectively) and noninterest expense ($16.0 million and $14.3 million, respectively) from the Consumer Banking segment to the Wholesale Banking segment.

As of December 31, 2023, the Company’s operating segments include Wholesale Banking, Consumer Banking, and Corporate Other.

Refer to Note 1 “Summary of Significant Accounting Policies” in this Form 10-K for more information on operating segments, segment reporting methodology, and the accounting practices for revenue from contracts with customers.

Segment Results

The following tables present the Company’s operating segment results for the years ended December 31, (dollars in thousands):

Wholesale
Banking

Consumer
Banking

Corporate
Other (1) (2)

Total

2023

Net interest income

$

270,985

$

253,846

$

86,182

$

611,013

Provision for credit losses

 

34,229

(2,616)

5

31,618

Net interest income after provision for credit losses

 

236,756

256,462

86,177

579,395

Noninterest income

 

36,791

51,347

2,739

90,877

Noninterest expenses

 

165,499

227,158

37,714

430,371

Income before income taxes

$

108,048

$

80,651

$

51,202

$

239,901

2022 (3)

Net interest income

$

301,803

$

222,787

$

59,671

$

584,261

Provision for credit losses

 

11,758

7,231

39

19,028

Net interest income after provision for credit losses

 

290,045

215,556

59,632

565,233

Noninterest income

 

36,557

56,899

25,067

118,523

Noninterest expenses

 

159,033

218,939

25,830

403,802

Income before income taxes

$

167,569

$

53,516

$

58,869

$

279,954

2021 (3)

Net interest income

$

300,440

$

223,140

$

27,680

$

551,260

Provision for credit losses

 

(34,877)

(26,011)

(60,888)

Net interest income after provision for credit losses

 

335,317

249,151

27,680

612,148

Noninterest income

 

26,263

72,747

26,796

125,806

Noninterest expenses

 

144,482

220,357

54,356

419,195

Income before income taxes

$

217,098

$

101,541

$

120

$

318,759

(1) For the years ended December 31, 2021 and 2022, noninterest expenses include $17.4 million and $5.5 million, respectively, in strategic branch closing and facility consolidation costs.

(2) For the year ended December 31, 2023, noninterest expenses include $12.6 million ($9.8 million included within other expenses and $2.8 million included within salaries and benefits), in expenses associated with strategic cost saving initiatives, principally composed of severance costs related to headcount reductions, costs related to modifying certain third-party vendor contracts, and charges for exiting certain leases.

(3) As discussed above, the segment operating results for the years ended December 31, 2022 and 2021 include a reallocation from Consumer Banking to Wholesale Banking.

The following table presents the Company’s operating segment results for key balance sheet metrics as of December 31, (dollars in thousands):

Wholesale
Banking

Consumer
Banking

Corporate
Other

Total

2023

LHFI, net of deferred fees and costs (1)

$

12,688,833

$

2,958,811

$

(12,601)

$

15,635,043

Goodwill

639,180

286,031

925,211

Deposits

6,403,432

9,816,562

598,135

16,818,129

2022

LHFI, net of deferred fees and costs (1)(2)

$

11,476,258

$

2,990,017

$

(17,133)

$

14,449,142

Goodwill(3)

639,180

286,031

925,211

Deposits(4)

6,128,729

9,724,598

78,350

15,931,677

(1) Corporate Other includes acquisition accounting fair value adjustments

(2) Wholesale Banking includes a $136.6 million reallocation from Consumer Banking due to the January 1, 2023 organizational change discussed above.

(3) Wholesale Banking includes a $9.6 million reallocation from Consumer Banking due to the January 1, 2023 organizational change discussed above.

(4) Wholesale Banking includes a $258.7 million reallocation from Consumer Banking due to the January 1, 2023 organizational change discussed above.

Revenue

Noninterest income disaggregated by major source for the years ended December 31, consisted of the following (dollars in thousands):

2023

2022

2021

Noninterest income:

 

  

 

  

 

  

Service charges on deposit accounts (1):

 

  

 

  

 

  

Overdraft fees

$

20,045

$

18,749

$

17,126

Maintenance fees & other

 

13,195

 

11,303

 

9,996

Other service charges, commissions, and fees (1)

 

7,860

 

6,765

 

6,595

Interchange fees (1)

 

9,678

 

9,110

 

8,279

Fiduciary and asset management fees (1):

 

 

 

Trust asset management fees

 

12,396

 

12,720

 

12,571

Registered advisor management fees

 

 

5,088

 

9,856

Brokerage management fees

 

5,299

 

4,606

 

5,135

Mortgage banking income

 

2,743

 

7,085

 

21,022

(Loss) gain on sale of securities

(40,989)

(3)

87

Bank owned life insurance income

 

11,759

 

11,507

 

11,488

Loan-related interest rate swap fees

 

10,037

 

12,174

 

5,620

Other operating income (2)(3)(4)

 

38,854

 

19,419

 

18,031

Total noninterest income

$

90,877

$

118,523

$

125,806

(1) Income within scope of ASC 606, Revenue from Contracts with Customers.

(2) Includes a $5.1 million gain on sale of Visa, Inc. Class B common stock for the year ended December 31, 2021.

(3) Includes a $9.1 million gain related to the sale of DHFB for the year ended December 31, 2022.

(4) Includes a $29.6 million gain related to the sale-leaseback transactions for the year ended December 31, 2023.

The following tables present noninterest income disaggregated by reportable operating segment for the years ended December 31, (dollars in thousands):

Wholesale Banking

Consumer Banking

Corporate Other(1)(2)(3)

Total

2023

Noninterest income:

 

  

 

  

 

  

 

  

Service charges on deposit accounts

$

8,562

$

24,678

$

$

33,240

Other service charges and fees

1,654

6,206

7,860

Fiduciary and asset management fees

12,117

5,578

17,695

Mortgage banking income

2,743

2,743

Other income

14,458

12,142

2,739

29,339

Total noninterest income

$

36,791

$

51,347

$

2,739

$

90,877

2022 (4)

Noninterest income:

 

  

 

  

 

  

 

  

Service charges on deposit accounts

$

6,814

$

23,238

$

$

30,052

Other service charges and fees

1,769

4,996

6,765

Fiduciary and asset management fees

12,424

9,990

22,414

Mortgage banking income

7,085

7,085

Other income

15,550

11,590

25,067

52,207

Total noninterest income

$

36,557

$

56,899

$

25,067

$

118,523

2021 (4)

Noninterest income:

 

  

 

  

 

  

 

  

Service charges on deposit accounts

$

6,009

$

21,113

$

$

27,122

Other service charges and fees

1,684

4,911

6,595

Fiduciary and asset management fees

12,280

15,282

27,562

Mortgage banking income

21,022

21,022

Other income

6,290

10,419

26,796

43,505

Total noninterest income

$

26,263

$

72,747

$

26,796

$

125,806

(1) For the year ended December 31, 2021, other income primarily includes a $5.1 million gain on the sale of Visa Inc. Class B common stock, income from BOLI, and equity method investment income.

(2) For the year ended December 31, 2022, other income primarily includes a $9.1 million gain related to the sale of DHFB, income from BOLI, and equity method investment income.

(3) For the year ended December 31, 2023, other income primarily includes a $29.6 million gain related to the sale-leaseback transactions, a $41.0 million loss incurred on the sale of AFS securities, and income from BOLI.

(4) As discussed above, noninterest income for the years ended December 31, 2022 and 2021 includes a reallocation from Consumer Banking to Wholesale Banking.