Segment Reporting

12 Months Ended

Dec. 31, 2024

Segment Reporting

Segment Reporting

20. Segment Reporting

The Corporation is managed under an organizational structure that conducts business in two primary operating segments:  (i) Community Banking and (ii) Wealth Management.  The Corporation is primarily managed based on the line of business structure.  In that regard, the Corporation provides the same lines of business, which have the same product and service offerings, have similar types and classes of customers and utilize similar service delivery methods across our entire geographic footprint.  Pricing guidelines for products and services are across all regions.  Community Banking and Trust and Investment Services are delineated by the products and services that each segment offers.  

Business activity for the operating segments are as follows:

Community Banking:  The Community Banking segment is conducted through the Bank and involves delivering a broad range of financial products and services, including various loan and deposit products, to consumer, business, and not-for-profit customers.  Parent company income and assets are included in the Community Banking segment, as the majority of parent company functions are related to this segment.  Major revenue sources include net interest income, gains on sales of mortgage loans, and service charges on deposit accounts.  Expenses include salaries and employee benefits, occupancy, data processing, FDIC premiums, marketing, equipment, and other expenses.  

Wealth Management:  The Wealth Management segment is conducted through the Bank and offers corporate trustee services, trust and estate administration, IRA administration and custody services.  Revenues for this segment is generated from administration, service and custody fees, brokerage commissions, and management fees that are derived from Assets Under Management.  Expenses include personnel, occupancy, data processing, marketing, equipment, and other expenses.  

The accounting policies of each reportable segment are the same as those of our consolidated entity except that expenses for consolidated back-office operations and general overhead-type expenses such as executive administration, accounting, information technology and human resources are recorded in the Community Banking segment and reimbursed by the Wealth Management segment through a monthly management fee based on estimated uses of those services.

An internal team of the Corporation’s executive directors including the Chief Executive Officer, Chief Financial Officer, and Chief Wealth Officer serve as the Corporation’s CODM.  The CODM reviews actual net income verses budgeted net income to assess segment performance on a monthly basis and to make decisions about allocating capital and personnel to the segments.

Financial results by operating segment, including significant expense categories provided to the CODM are detailed below.  Certain prior period amounts have been reclassified to conform to the current presentation.  The Trust and Investment Services segment excludes off-balance-sheet assets under management with a total fair value of $1.7 billion and $1.5 billion at December 31, 2024 and 2023, respectively.

Information for the operating segments for the years ended December 31, 2024 and 2023 are presented in the following tables:

	December 31, 2024
	Community		Wealth
(in thousands)	Banking		Management		Total
Interest income	$	91,993	$	—	$	91,993
Interest expense		32,015		—		32,015
Net interest income		59,978		—		59,978
Credit loss expense		2,933		—		2,933
Net interest income after credit loss expense		57,045		—		57,045
Other operating income:
Net gains on sales of residential mortgages		414		—		414
Service charges on deposit accounts		2,220		—		2,220
Other service charges		887		—		887
Trust department income		—		9,094		9,094
Debit card income		4,065		—		4,065
Brokerage commissions		—		1,449		1,449
Other segment income (1)		1,696		—		1,696
Total other operating income		9,282		10,543		19,825
Other operating expenses:
Salaries and employee benefits		23,767		4,262		28,029
Equipment and occupancy		5,445		108		5,553
Data processing		5,418		343		5,761
FDIC premiums		1,070		—		1,070
Other segment expenses (2)		8,766		461		9,227
Total operating expenses		44,466		5,174		49,640
Income before income taxes and intercompany fees		21,861		5,369		27,230
Intercompany management fee income (expense)		12		(12)		—
Income before income taxes		21,873		5,357		27,230
Income tax expense		5,533		1,128		6,661
Net income	$	16,340	$	4,229	$	20,569
Significant noncash items
Credit loss expense	$	2,933	$	—	$	2,933
Depreciation		3,285		16		3,301
Amortization of intangible assets		120		210		330
Total assets	$	1,972,513	$	509	$	1,973,022

(1) Other segment income includes net gains/(losses) on disposals of fixed assets, bank owned life insurance income, and miscellaneous income.

(2) Other segment expenses include professional services, contract labor, line rentals, investor relations, contributions, net OREO expense/(income), and miscellaneous expenses.

	December 31, 2023
	Community		Wealth
(in thousands)	Banking		Management		Total
Interest income	$	81,156	$	—	$	81,156
Interest expense		24,286		—		24,286
Net interest income		56,870		—		56,870
Credit loss expense		1,620		—		1,620
Net interest income after credit loss expense		55,250		—		55,250
Other operating income:
Net losses on investments, available for sale		(4,214)		—		(4,214)
Net gains on sales of residential mortgages		381		—		381
Service charges on deposit accounts		2,198		—		2,198
Other service charges		929		—		929
Trust department income		—		8,282		8,282
Debit card income		4,101		—		4,101
Brokerage commissions		—		1,160		1,160
Other		1,632		—		1,632
Total other operating income		5,027		9,442		14,469
Other operating expenses:
Salaries and employee benefits		23,364		4,156		27,520
Equipment and occupancy		6,479		119		6,598
Data processing		4,961		423		5,384
FDIC premiums		992		—		992
Other		9,309		440		9,749
Total operating expenses		45,105		5,138		50,243
Income before income taxes and intercompany fees		15,172		4,304		19,476
Intercompany management fee income (expense)		12		(12)		—
Income before income taxes		15,184		4,292		19,476
Income tax expense		3,514		902		4,416
Net income	$	11,670	$	3,390	$	15,060
Significant noncash items
Credit loss expense	$	1,620	$	—	$	1,620
Depreciation		3,782		17		3,799
Amortization of intangible assets		120		210		330
Total assets	$	1,905,231	$	629	$	1,905,860

(1) Other segment income includes net gains/(losses) on disposals of fixed assets, bank owned life insurance income, and miscellaneous income.

(2) Other segment expenses include professional services, contract labor, line rentals, investor relations, contributions, net OREO expense/(income), and miscellaneous expenses.