(12) Segments

The Bank’s, and thus Bancorp’s, principal activities include commercial banking and investment management and trust. Commercial banking provides a full range of loan and deposit products to individual consumers and businesses. Commercial banking also includes the Bank’s mortgage origination and securities brokerage activity. Investment management and trust provides wealth management services including investment management, trust and estate administration, and retirement plan services.

The financial information for each business segment reflects that which is specifically identifiable or allocated based on an internal allocation method. Income taxes are allocated based on the effective federal income tax rate adjusted for any tax exempt activity. All tax exempt activity and provision for loan losses have been allocated to the commercial banking segment. The measurement of the performance of the business segments is based on the management structure of the Bank and is not necessarily comparable with similar information for any other financial institution. The information presented is also not necessarily indicative of the segments’ operations if they were independent entities.

Selected financial information by business segment for the three and nine month periods ended September 30, 2013 and 2012 follows:

			Investment
	Commercial		management
(in thousands)	banking		and trust		Total
Three months ended September 30, 2013
Net interest income	$	19,978	$	39	$	20,017
Provision for loan losses	1,325		—		1,325
Investment management and trust services	—		4,017		4,017
All other non-interest income	5,621		14		5,635
Non-interest expense	15,215		2,356		17,571
Income before income taxes	9,059		1,714		10,773
Tax expense	2,485		606		3,091
Net income	$	6,574	$	1,108	$	7,682

Three months ended September 30, 2012
Net interest income	$	18,759	$	36	$	18,795
Provision for loan losses	2,475		—		2,475
Investment management and trust services	—		3,515		3,515
All other non-interest income	6,264		16		6,280
Non-interest expense	14,973		2,072		17,045
Income before income taxes	7,575		1,495		9,070
Tax expense	1,865		523		2,388
Net income	$	5,710	$	972	$	6,682

Nine months ended September, 2013
Net interest income	$	57,347	$	108	$	57,455
Provision for loan losses	4,975		—		4,975
Investment management and trust services	—		12,032		12,032
All other non-interest income	17,114		45		17,159
Non-interest expense	45,176		6,796		51,972
Income before income taxes	24,310		5,389		29,699
Tax expense	6,938		1,904		8,842
Net income	$	17,372	$	3,485	$	20,857

Nine months ended September, 2012
Net interest income	$	55,528	$	112	$	55,640
Provision for loan losses	9,025		—		9,025
Investment management and trust services	—		10,675		10,675
All other non-interest income	17,604		51		17,655
Non-interest expense	42,021		6,268		48,289
Income before income taxes	22,086		4,570		26,656
Tax expense	5,769		1,600		7,369
Net income	$	16,317	$	2,970	$	19,287