Segment Information

3 Months Ended

Mar. 31, 2021

Segment Reporting [Abstract]

Segment Information

16. SEGMENT INFORMATION

The Company reports its activities in one of two business segments, namely Envision Bank (“EB”) and Envision Mortgage (“EM”). Envision Bank operations primarily consist of accepting deposits from customers within the communities surrounding the Bank’s five full-service branch offices and investing those funds in residential and commercial real estate loans, home equity lines of credit, construction loans, commercial and industrial loans, and consumer loans. Envision Mortgage’s operations primarily consist of the origination and sale of residential mortgage loans and the servicing of loans sold to government-sponsored entities. A portion of the loans originated by Envision Mortgage are held in the loan portfolio of Envision Bank.

Segment information as of and for the three months ended March 31, 2021 follows:

	For the Three Months Ended March 31, 2021
	Envision Bank			Envision Mortgage		Consolidated Total
	(in thousands)
Net interest income	$	4,201		$	890	$	5,091
Provision (credit) for loan losses		(213	)		—		(213	)
Net interest income after provision (credit) for loan losses		4,414			890		5,304
Non-interest income:
Customer service fees		340			27		367
Gain on loan origination and sale activities, net (1)		—			11,674		11,674
Mortgage servicing fees, net		(94	)		873		779
Other		151			133		284
Total non-interest income		397			12,707		13,104
Non-interest expenses:
Salaries and employee benefits		1,802			6,635		8,437
Occupancy and equipment		443			301		744
Other non-interest expenses		1,087			1,683		2,770
Total non-interest expenses		3,332			8,619		11,951
Income before income taxes and elimination of inter-segment profit	$	1,479		$	4,978		6,457
Elimination of inter-segment profit							(681	)
Income before income taxes							5,776
Income tax expense							1,664
Net income						$	4,112
Total assets, March 31, 2021	$	581,954		$	156,234	$	738,188

(1) Before elimination of inter-segment profit.   

The information above was derived from the internal management reporting system used by management to measure performance of the segments.

The Company’s internal transfer pricing arrangements determined by management primarily consist of the following:

1. EM’s cost of funds is based on the weighted average rate of overnight advances from the FHLBB for the period.

2. EM is credited with service released premiums and a sales premium totaling 1.50% for new loans transferred to EB’s loans held for investment, and a 1.00% fee for home equity line of credit (“HELOC”) originations. This income for the three months ended March 31, 2021 totaled $681,000.

3. Loan servicing fees are charged to EB by EM based on the number of residential mortgage loans held in portfolio at a rate of 0.14% per annum and amounted to $94,000 for the three months ended March 31, 2021.

4. Certain cost centers provide services to both business segments. The cost centers include Finance, Marketing, IT and Administration. Costs which are common to both business segments are referred to as “indirect costs” and are allocated using relevant benchmarks, e.g. headcount, number of accounts, etc.

Segment information as of and for the three and three months ended March 31, 2020 follows:

	For the Three Months Ended March 31, 2020
	Envision Bank			Envision Mortgage			Consolidated Total
	(in thousands)
Net interest income	$	3,994		$	431		$	4,425
Provision for loan losses		724			—			724
Net interest income after provision for loan losses		3,270			431			3,701
Non-interest income:
Customer service fees		273			33			306
Gain on loan origination and sale activities, net (1)		—			7,472			7,472
Mortgage servicing fees, net		(87	)		(1,167	)		(1,254	)
Other		140			115			255
Total non-interest income		326			6,453			6,779
Non-interest expenses:
Salaries and employee benefits		3,098			5,028			8,126
Occupancy and equipment		404			294			698
Other non-interest expenses		1,146			989			2,135
Total non-interest expenses		4,648			6,311			10,959
Income (loss) before income taxes and elimination of inter-segment profit	$	(1,052	)	$	573			(479	)
Elimination of inter-segment profit								(328	)
Loss before income taxes								(807	)
Income tax benefit								11
Net loss							$	(818	)
Total assets, March 31, 2020	$	543,586		$	109,300		$	652,886

(1) Before elimination of inter-segment profit.

(2) Salaries and benefits include the severance and vested stock acceleration costs related to the retirement of the Chief Executive Officer and Chief Financial Officer of the Bank. The cost of this event was $1.38 million, of which $1.03 million was allocated to the Bank segment and the remainder, $344,000, was allocated to the mortgage segment.

The information above was derived from the internal management reporting system used by management to measure performance of the segments.

The Company’s internal transfer pricing arrangements determined by management primarily consist of the following:

1. EM’s cost of funds is based on the weighted average rate of overnight advances from the FHLBB for the period.

2. EM is credited with service released premiums and a sales premium totaling 1.50% for new loans transferred to EB’s loans held for investment, and a 1.00% fee for HELOC originations. This income for the three months ended March 31, 2020 totaled $328,000.

3. Loan servicing fees are charged to EB by EM based on the number of residential mortgage loans held in portfolio at a rate of 0.14% per annum and amounted to $87,000 for the three months ended March 31, 2020.

4. Certain cost centers provide services to both business segments. The cost centers include Finance, Marketing, IT and Administration. Costs which are common to both business segments are referred to as “indirect costs” and are allocated using relevant benchmarks, e.g. headcount, number of accounts, etc.