Annual report pursuant to Section 13 and 15(d)

Segment Reporting

v2.4.0.6
Segment Reporting
 12 Months Ended
Dec. 31, 2011
Segment Reporting [Abstract]  
Segment Reporting

18. SEGMENT REPORTING

The Company has two reportable segments: a traditional full service community bank and a mortgage loan origination business. The community bank business for 2011 includes one subsidiary bank, which provides loan, deposit, investment, and trust services to retail and commercial customers throughout its 99 retail locations in Virginia. The mortgage segment provides a variety of mortgage loan products principally in Virginia, North Carolina, South 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 subject the Company to only de minimus 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 business is a fee-based business while the bank 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, due largely to the minimal degree of overlapping geographic markets.

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 at the three month LIBOR rate plus 1.5% basis points, floor of 2%. 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 years ended December 31, 2011, 2010 and 2009 are as follows (dollars in thousands):

 

     Community Bank     Mortgage      Eliminations     Consolidated
Totals		  

For the Year Ended December 31, 2011

          

Net interest income

    $ 155,045      $ 1,315       $ —        $ 156,360   

Provision for loan losses

      16,800        —           —          16,800   
  

 

 

    

 

 

     

 

 

    

 

 

  

Net interest income after provision for loan losses

      138,245        1,315         —          139,560   

Noninterest income

      24,407        19,838         (468 )      43,777   

Noninterest expenses

      123,515        18,581         (468 )      141,628   
  

 

 

    

 

 

     

 

 

    

 

 

  

Income before income taxes

      39,137        2,572         —          41,709   

Income tax expense

      10,304        960         —          11,264   
  

 

 

    

 

 

     

 

 

    

 

 

  

Net income

    $ 28,833      $ 1,612       $ —        $ 30,445   
  

 

 

    

 

 

     

 

 

    

 

 

  

Total assets

    $ 3,904,013      $ 84,445       $ (81,371 )    $ 3,907,087   
  

 

 

    

 

 

     

 

 

    

 

 

  

Capital expenditures (1)

    $ 6,339      $ 243       $ —        $ 6,582   
  

 

 

    

 

 

     

 

 

    

 

 

  

For the Year Ended December 31, 2010

          

Net interest income

    $ 149,353      $ 2,223       $ —        $ 151,576   

Provision for loan losses

      24,368        —           —          24,368   
  

 

 

    

 

 

     

 

 

    

 

 

  

Net interest income after provision for loan losses

      124,985        2,223         —          127,208   

Noninterest income

      25,611        22,156         (469 )      47,298   

Noninterest expenses

      124,110        19,360         (469 )      143,001   
  

 

 

    

 

 

     

 

 

    

 

 

  

Income before income taxes

      26,486        5,019         —          31,505   

Income tax expense

      6,692        1,891         —          8,583   
  

 

 

    

 

 

     

 

 

    

 

 

  

Net income

    $ 19,794      $ 3,128       $ —        $ 22,922   
  

 

 

    

 

 

     

 

 

    

 

 

  

Total assets

    $ 3,828,954      $ 82,255       $ (73,962 )    $ 3,837,247   
  

 

 

    

 

 

     

 

 

    

 

 

  

Capital expenditures (1)

    $ 6,882      $ 403       $ —        $ 7,285   
  

 

 

    

 

 

     

 

 

    

 

 

  

For the Year Ended December 31, 2009

          

Net interest income

    $ 78,308      $ 1,508       $ —        $ 79,816   

Provision for loan losses

      18,246        —           —          18,246   
  

 

 

    

 

 

     

 

 

    

 

 

  

Net interest income after provision for loan losses

      60,062        1,508         —          61,570   

Noninterest income

      16,647        16,644         (322 )      32,967   

Noninterest expenses

      71,219        14,390         (322 )      85,287   
  

 

 

    

 

 

     

 

 

    

 

 

  

Income before income taxes

      5,490        3,762         —          9,250   

Income tax expense (benefit)

      (431 )      1,321         —          890   
  

 

 

    

 

 

     

 

 

    

 

 

  

Net income

    $ 5,921      $ 2,441       $ —        $ 8,360   
  

 

 

    

 

 

     

 

 

    

 

 

  

Total assets

    $ 2,577,394      $ 60,051       $ (50,173 )    $ 2,587,272   
  

 

 

    

 

 

     

 

 

    

 

 

  

Capital expenditures (1)

    $ 7,511      $ 366       $ —        $ 7,877   
  

 

 

    

 

 

     

 

 

    

 

 

  

 

(1) Capital expenditures include purchase of property, furniture and equipment.