Quarterly report pursuant to Section 13 or 15(d)

SEGMENT REPORTING DISCLOSURES

v3.5.0.2
SEGMENT REPORTING DISCLOSURES
 9 Months Ended
Sep. 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 115 retail locations in Virginia as of September 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 nine months ended September 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 nine months ended September 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 September 30, 2016
 

 
 

 
 

 
 

Net interest income
$
66,605

 
$
423

 
$
—

 
$
67,028

Provision for credit losses
2,455

 
17

 
—

 
2,472

Net interest income after provision for credit losses
64,150

 
406

 
—

 
64,556

Noninterest income
15,589

 
3,501

 
(140
)
 
18,950

Noninterest expenses
54,353

 
2,700

 
(140
)
 
56,913

Income before income taxes
25,386

 
1,207

 
—

 
26,593

Income tax expense
5,770

 
422

 
—

 
6,192

Net income
$
19,616

 
$
785

 
$
—

 
$
20,401

Total assets
$
8,251,351

 
$
90,692

 
$
(83,813
)
 
$
8,258,230

 
 
 
 
 
 
 
 
Three Months Ended September 30, 2015
 

 
 

 
 

 
 

Net interest income
$
63,075

 
$
369

 
$
—

 
$
63,444

Provision for credit losses
2,000

 
62

 
—

 
2,062

Net interest income after provision for credit losses
61,075

 
307

 
—

 
61,382

Noninterest income
14,287

 
2,608

 
(170
)
 
16,725

Noninterest expenses
50,674

 
2,821

 
(170
)
 
53,325

Income before income taxes
24,688

 
94

 
—

 
24,782

Income tax expense
6,531

 
35

 
—

 
6,566

Net income
$
18,157

 
$
59

 
$
—

 
$
18,216

Total assets
$
7,588,606

 
$
62,127

 
$
(56,420
)
 
$
7,594,313

 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2016
 
 
 
 
 
 
 
Net interest income
$
195,508

 
$
1,027

 
$
—

 
$
196,535

Provision for credit losses
7,215

 
161

 
—

 
7,376

Net interest income after provision for credit losses
188,293

 
866

 
—

 
189,159

Noninterest income
44,137

 
9,185

 
(465
)
 
52,857

Noninterest expenses
158,964

 
7,937

 
(465
)
 
166,436

Income before income taxes
73,466

 
2,114

 
—

 
75,580

Income tax expense
18,145

 
736

 
—

 
18,881

Net income
$
55,321

 
$
1,378

 
$
—

 
$
56,699

Total assets
$
8,251,351

 
$
90,692

 
$
(83,813
)
 
$
8,258,230

 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2015
 
 
 
 
 
 
 
Net interest income
$
188,240

 
$
989

 
$
—

 
$
189,229

Provision for credit losses
7,450

 
111

 
—

 
7,561

Net interest income after provision for credit losses
180,790

 
878

 
—

 
181,668

Noninterest income
40,658

 
7,844

 
(512
)
 
47,990

Noninterest expenses
154,011

 
8,906

 
(512
)
 
162,405

Income (loss) before income taxes
67,437

 
(184
)
 
—

 
67,253

Income tax expense (benefit)
18,060

 
(71
)
 
—

 
17,989

Net income (loss)
$
49,377

 
$
(113
)
 
$
—

 
$
49,264

Total assets
$
7,588,606

 
$
62,127

 
$
(56,420
)
 
$
7,594,313