Annual report pursuant to Section 13 and 15(d)

SEGMENT REPORTING DISCLOSURES

v3.3.1.900
SEGMENT REPORTING DISCLOSURES
 12 Months Ended
Dec. 31, 2015
SEGMENT REPORTING DISCLOSURES [Abstract]  
SEGMENT REPORTING DISCLOSURES

 

17.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 124 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.  For the year ended December 31, 2015, the interest rate on the warehouse line of credit was the three month LIBOR rate plus 0.15% with no floor.  During 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.  For the year ended December 31, 2013, the interest rate on the warehouse line of credit was the three  month LIBOR rate plus 1.5% with a floor of 2.0%.  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, 2015, 2014, and 2013 is as follows (dollars in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

UNION BANKSHARES CORPORATION AND SUBSIDIARIES

 

 

 

 

 

 

 

 

 

SEGMENT FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Community Bank

 

Mortgage

 

Eliminations

 

Consolidated

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 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31, 2013

 

 

 

 

 

 

 

 

 

 

 

Net interest income

$

 149,975 

 

$

 1,651 

 

$

 -

 

$

 151,626 

Provision for credit losses

 

 6,056 

 

 

 -

 

 

 -

 

 

 6,056 

Net interest income after provision for credit losses

 

 143,919 

 

 

 1,651 

 

 

 -

 

 

 145,570 

Noninterest income

 

 27,492 

 

 

 11,906 

 

 

 (670)

 

 

 38,728 

Noninterest expenses

 

 120,014 

 

 

 17,703 

 

 

 (670)

 

 

 137,047 

Income (loss) before income taxes

 

 51,397 

 

 

 (4,146)

 

 

 -

 

 

 47,251 

Income tax expense (benefit)

 

 14,372 

 

 

 (1,487)

 

 

 -

 

 

 12,885 

Net income (loss)

$

 37,025 

 

$

 (2,659)

 

$

 -

 

$

 34,366 

Total assets

$

 4,170,464 

 

$

 63,715 

 

$

 (57,826)

 

$

 4,176,353