Quarterly report pursuant to Section 13 or 15(d)

SEGMENT REPORTING DISCLOSURES

v3.5.0.2
SEGMENT REPORTING DISCLOSURES
 6 Months Ended
Jun. 30, 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, the Bank, which provides loan, deposit, investment, and trust services to retail and commercial customers throughout its 120 retail locations in Virginia as of June 30, 2016. 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 business is a primarily 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.
 
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 each of the three and six months ended June 30, 2016 and 2015 was the three month LIBOR rate plus 0.15% 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 each of the three and six months ended June 30, 2016 and 2015 is as follows (dollars in thousands):
 
UNION BANKSHARES CORPORATION AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION

 
Community Bank
 
Mortgage
 
Eliminations
 
Consolidated
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

 
 
 
 
 
 
 
 
Three Months Ended June 30, 2015
 

 
 

 
 

 
 

Net interest income
$
63,441

 
$
375

 
$
—

 
$
63,816

Provision for credit losses
3,700

 
49

 
—

 
3,749

Net interest income after provision for credit losses
59,741

 
326

 
—

 
60,067

Noninterest income
13,523

 
2,860

 
(171
)
 
16,212

Noninterest expenses
52,365

 
3,047

 
(171
)
 
55,241

Income before income taxes
20,899

 
139

 
—

 
21,038

Income tax expense
5,646

 
44

 
—

 
5,690

Net income
$
15,253

 
$
95

 
$
—

 
$
15,348

Total assets
$
7,495,564

 
$
55,563

 
$
(53,421
)
 
$
7,497,706

 
 
 
 
 
 
 
 
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

 
 
 
 
 
 
 
 
Six Months Ended June 30, 2015
 
 
 
 
 
 
 
Net interest income
$
125,164

 
$
621

 
$
—

 
$
125,785

Provision for credit losses
5,450

 
49

 
—

 
5,499

Net interest income after provision for credit losses
119,714

 
572

 
—

 
120,286

Noninterest income
26,371

 
5,236

 
(341
)
 
31,266

Noninterest expenses
103,337

 
6,085

 
(341
)
 
109,081

Income (loss) before income taxes
42,748

 
(277
)
 
—

 
42,471

Income tax expense (benefit)
11,527

 
(105
)
 
—

 
11,422

Net income (loss)
$
31,221

 
$
(172
)
 
$
—

 
$
31,049

Total assets
$
7,495,564

 
$
55,563

 
$
(53,421
)
 
$
7,497,706