Note 12. Segment Reporting

The Company operates in a decentralized fashion in three principal business segments: The Old Point National Bank of Phoebus (the Bank), Old Point Trust & Financial Services, N. A. (Trust), and the Company as a separate segment (for purposes of this Note, the Parent). Revenues from the Bank’s operations consist primarily of interest earned on loans and investment securities and service charges on deposit accounts. Trust’s operating revenues consist principally of income from fiduciary activities. The Parent’s revenues are mainly fees and dividends received from the Bank and Trust companies. The Company has no other segments.

The Company’s reportable segments are strategic business units that offer different products and services. They are managed separately because each segment appeals to different markets and, accordingly, requires different technologies and marketing strategies.

Information about reportable segments, and reconciliation of such information to the consolidated financial statements as of and for the three months ended March 31, 2019 and 2018 follows:

	Three Months Ended March 31, 2019
	Bank		Trust		Parent			Eliminations			Consolidated
	(in thousands)
Revenues
Interest and dividend income	$	9,847	$	29	$	725		$	(725	)	$	9,876
Income from fiduciary activities		-		959		-			-			959
Other income		2,188		284		50			(65	)		2,457
Total operating income		12,035		1,272		775			(790	)		13,292

Expenses
Interest expense		1,486		-		31			-			1,517
Provision for loan losses		226		-		-			-			226
Salaries and employee benefits		4,818		767		114			-			5,699
Other expenses		3,348		249		60			(65	)		3,592
Total operating expenses		9,878		1,016		205			(65	)		11,034

Income before taxes		2,157		256		570			(725	)		2,258

Income tax expense (benefit)		209		55		(33	)		-			231

Net income	$	1,948	$	201	$	603		$	(725	)	$	2,027

Capital expenditures	$	498	$	-	$	-		$	-		$	498

Total assets	$	1,021,007	$	6,310	$	107,427		$	(107,864	)	$	1,026,880

	Three Months Ended March 31, 2018
	Bank			Trust		Parent			Eliminations			Consolidated
	(in thousands)
Revenues
Interest and dividend income	$	8,778		$	21	$	1,288		$	(1,288	)	$	8,799
Income from fiduciary activities		-			983		-			-			983
Other income		1,914			260		50			(65	)		2,159
Total operating income		10,692			1,264		1,338			(1,353	)		11,941

Expenses
Interest expense		1,054			-		-			-			1,054
Provision for loan losses		525			-		-			-			525
Salaries and employee benefits		4,625			745		107			-			5,477
Other expenses		3,426			264		314			(65	)		3,939
Total operating expenses		9,630			1,009		421			(65	)		10,995

Income before taxes		1,062			255		917			(1,288	)		946

Income tax expense (benefit)		(25	)		54		(25	)		-			4

Net income	$	1,087		$	201	$	942		$	(1,288	)	$	942

Capital expenditures	$	189		$	-	$	-		$	-		$	189

Total assets	$	987,507		$	6,098	$	94,998		$	(94,830	)	$	993,773

The accounting policies of the segments are the same as those described in the summary of significant accounting policies reported in the Company’s 2018 annual report on Form 10-K. The Company evaluates performance based on profit or loss from operations before income taxes, not including nonrecurring gains or losses.

Both the Parent and the Trust companies maintain deposit accounts with the Bank, on terms substantially similar to those available to other customers. These transactions are eliminated to reach consolidated totals.

The Company operates in one geographical area and does not have a single external customer from which it derives 10 percent or more of its revenues.