(10) Segments

ASC Topic 280 – Segment Reporting identifies operating segments as components of an enterprise which are evaluated regularly by the Corporation’s Chief Operating Decision Maker, our Chief Executive Officer, in deciding how to allocate resources and assess performance. The Corporation has applied the aggregation criterion set forth in this codification to the results of its operations.

Our Banking segment consists of commercial and retail banking. The Banking segment generates interest income from its lending (including leasing) and investing activities and is dependent on the gathering of lower cost deposits from its branch network or borrowed funds from other sources for funding its loans, resulting in the generation of net interest income. The Banking segment also derives revenues from other sources including gains on the sale of available for sale investment securities, gains on the sale of residential mortgage loans, service charges on deposit accounts, cash sweep fees, overdraft fees, BOLI income.

Meridian Wealth, a registered investment advisor and wholly-owned subsidiary of the Corporation, provides a comprehensive array of wealth management services and products and the trusted guidance to help its clients and our banking customers prepare for the future. The unit generates non-interest income through advisory fees.

Meridian’s mortgage banking segment (“Mortgage”) consists of one central loan production facility and several retail and profit sharing loan production offices located throughout the Delaware Valley. The Mortgage segment originates 1 – 4 family residential mortgages and sells all of its production, including servicing to third party investors. The unit generates net interest income on the loans it originates and earns fee income (primarily gain on sales) at the time of the sale.

The table below summarizes income and expenses, directly attributable to each business line, which has been included in the statement of operations.


	Three Months Ended March 31, 2019					Three Months Ended March 31, 2018
(dollars in thousands)	Bank		Wealth	Mortgage	Total	Bank		Wealth	Mortgage	Total
Net interest income	$	8,381	38	58	8,477	$	7,527	84	81	7,692
Provision for loan losses		(219)	—	—	(219)		(554)	—	—	(554)
Net interest income after provision		8,162	38	58	8,258		6,973	84	81	7,138

Non-interest Income
Mortgage banking income		39	—	4,869	4,908		30	—	4,791	4,821
Wealth management income		46	818	—	864		29	1,049	—	1,078
Net change in fair values		—	—	430	430		—	—	33	33
Other		378	—	(133)	245		313	—	811	1,124
Total non-interest income		463	818	5,166	6,447		372	1,049	5,635	7,056

Non-interest Expense
Salaries and employee benefits		3,673	566	3,488	7,727		3,492	489	4,455	8,436
Occupancy and equipment		523	30	410	963		534	33	393	960
Professional fees		315	1	156	472		431	8	40	479
Advertising and promotion		256	76	133	465		254	98	229	581
Other		1,296	147	1,047	2,490		1,225	142	739	2,106
Total non-interest expense		6,063	820	5,234	12,117		5,936	770	5,856	12,562

Operating Margin	$	2,562	36	(10)	2,588	$	1,409	363	(140)	1,632