Segment Reporting

3 Months Ended

Mar. 31, 2025

Segment Reporting

Segment Reporting

Note 13 – 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 Chief Operating Decision Maker (“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 at both March 31, 2025 and December 31 2024.

Total assets of each operating segment at March 31, 2025 and December 31, 2024 were as follows:

	Community		Wealth
	Banking		Management		Total
Total assets as of March 31, 2025	$	1,979,296	$	457	$	1,979,753
Total assets as of December 31, 2024	$	1,972,513	$	509	$	1,973,022

Information for the operating segments for the three-month periods ended March 31, 2025 and 2024 are presented in the following tables:

		Three Months Ended
		March 31, 2025
	Community		Wealth
(in thousands)	Banking		Management		Total
Interest income	$	24,062	$	—	$	24,062
Interest expense		8,046		—		8,046
Net interest income		16,016		—		16,016
Credit loss expense		656		—		656
Net interest income after credit loss expense		15,360		—		15,360
Other operating income:
Net gains on sales of residential mortgages		92		—		92
Service charges on deposit accounts		547		—		547
Other service charges		206		—		206
Trust department income		—		2,323		2,323
Debit card income		921		—		921
Brokerage commissions		—		421		421
Other segment income (1)		404		—		404
Total other operating income		2,170		2,744		4,914
Other operating expenses:
Salaries and employee benefits		6,247		1,084		7,331
Equipment and occupancy		1,242		25		1,267
Data processing		1,408		95		1,503
FDIC premiums		245		—		245
Other segment expenses (2)		2,103		127		2,230
Total operating expenses		11,245		1,331		12,576
Income before income taxes and intercompany fees		6,285		1,413		7,698
Intercompany management fee income (expense)		3		(3)		—
Income before income taxes		6,288		1,410		7,698
Income tax expense		1,595		297		1,892
Net income	$	4,693	$	1,113	$	5,806
Significant noncash items
Credit loss expense	$	656	$	—	$	656
Depreciation		652		4		656
Amortization of intangible assets		30		52		82

(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.

		Three Months Ended
		March 31, 2024
	Community		Wealth
(in thousands)	Banking		Management		Total
Interest income	$	21,898	$	—	$	21,898
Interest expense		8,086		—		8,086
Net interest income		13,812		—		13,812
Credit loss expense		946		—		946
Net interest income after credit loss expense		12,866		—		12,866
Other operating income:
Net gains on sales of residential mortgages		82		—		82
Service charges on deposit accounts		556		—		556
Other service charges		215		—		215
Trust department income		—		2,188		2,188
Debit card income		932		—		932
Brokerage commissions		—		495		495
Other		407		—		407
Total other operating income		2,192		2,683		4,875
Other operating expenses:
Salaries and employee benefits		6,114		1,043		7,157
Equipment and occupancy		1,845		32		1,877
Data processing		1,220		98		1,318
FDIC premiums		269		—		269
Other		2,147		113		2,260
Total operating expenses		11,595		1,286		12,881
Income before income taxes and intercompany fees		3,463		1,397		4,860
Intercompany management fee income (expense)		3		(3)		—
Income before income taxes		3,466		1,394		4,860
Income tax expense		869		293		1,162
Net income	$	2,597	$	1,101	$	3,698
Significant noncash items
Credit loss expense	$	946	$	—	$	946
Depreciation		1,246		10		1,256
Amortization of intangible assets		30		52		82

(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.