Note 27 - Segments

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

(27) Segments

Bancorp’s principal activities are divided into two reportable segments, Commercial Banking and WM&T, which are delineated based on the products and services that each segment offers:

Commercial Banking provides a full range of loan and deposit products to individual consumers and businesses through retail lending, mortgage banking, deposit services, online banking, mobile banking, private banking, commercial lending, commercial real estate lending, leasing, treasury management services, merchant services, international banking, correspondent banking, credit card services, and other banking services. Bancorp also offers securities brokerage services via its banking center network through an arrangement with a third party broker-dealer in the Commercial Banking segment. 

WM&T provides investment management, financial & retirement planning and trust & estate services, as well as retirement plan management for businesses and corporations in all markets in which Bancorp operates. The magnitude of WM&T revenue distinguishes Bancorp from other community banks of similar asset size.

Bancorp’s Commercial Banking and WM&T segments overlap a regional reporting structure. These regions are based on the primary geographic markets in which Bancorp operates, specifically Louisville, central, eastern and northern Kentucky, and the Indianapolis, Indiana and Cincinnati, Ohio MSAs. All regions share the same lines of business, including the same products, services and delivery methods, as well as similar customer bases and pricing guidelines.

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 have been allocated fully to the commercial banking segment. Measurement of performance of business segments is based on the management structure of Bancorp and is not necessarily comparable with similar information for any other financial institution. Information presented is also not necessarily indicative of the segments’ operations if they were independent entities.

Bancorp’s chief executive officer is the chief operating decision maker. The financial results by operating segment, including significant expense categories provided to the chief operating decision maker, help measure the profitability of a particular segment and identify trends, evaluate each segment and its impact on consolidated earnings, and enhance decision making processes related to the allocation of Bancorp’s resources.

The majority of the net assets of Bancorp are associated with in the Commercial Banking segment. As of December 31, 2024, goodwill totaling $194 million was recorded on Bancorp’s consolidated balance sheets, of which $172 million is attributed to the commercial banking segment and $22 million is attributed to WM&T. The portion of total goodwill attributed to WM&T relates entirely to the CB acquisition, which generated $67 million in total goodwill, $8.5 million of which was subsequently written off as a result of Bancorp selling its interest in LFA effective December 31, 2022. With the exception of goodwill attributed to WM&T through the CB acquisition, assets assigned to WM&T consist primarily of a CLI asset associated with the WM&T business added through the CB acquisition, net premises and equipment and a receivable related to fees earned that have not been collected.

WM&T AUM, which the primary driver of WM&T revenue, are not included on the consolidated balance sheets of Bancorp. WM&T AUM totaled $7.07 billion, $7.16 billion and $6.59 billion as of December 31, 2024, 2023 and 2022, respectively.

Financial results by operating segment, including significant expense categories provided to the chief operating decision maker, are detailed below:

	Commercial
As of and for the Year Ended December 31, 2024 (in thousands)	Banking		WM&T		Total
Net interest income	$	255,990	$	1,050	$	257,040
Provision for credit losses		9,725		—		9,725
Net interest income after provision expense		246,265		1,050		247,315
Non-interest income:
Wealth management and trust services		—		42,843		42,843
All other non-interest income		52,387		—		52,387
Total non-interest income		52,387		42,843		95,230
Non-interest expenses:
Compensation and employee benefits		103,933		17,177		121,110
Net occupancy and equipment		14,396		797		15,193
Technology and communication		16,914		2,293		19,207
Intangible amortization		2,965		1,520		4,485
Other direct and indirect/allocated expenses		36,104		2,080		38,184
Total Non-interest expenses		174,312		23,867		198,179
Income before income tax expense		124,340		20,026		144,366
Income tax expense		25,481		4,346		29,827
Net income	$	98,859	$	15,680	$	114,539
Total assets	$	8,829,602	$	33,817	$	8,863,419

	Commercial
As of and for the Year Ended December 31, 2023 (in thousands)	Banking		WM&T		Total
Net interest income	$	246,624	$	708	$	247,332
Provision for credit losses		13,796		—		13,796
Net interest income after provision expense		232,828		708		233,536
Non-interest income:
Wealth management and trust services		—		39,802		39,802
All other non-interest income		52,418		—		52,418
Total non-interest income		52,418		39,802		92,220
Non-interest expenses:
Compensation and employee benefits		93,680		16,647		110,327
Net occupancy and equipment		13,917		2,467		16,384
Technology and communication		15,476		1,842		17,318
Intangible amortization		3,014		1,672		4,686
Other direct and indirect/allocated expenses		37,229		1,885		39,114
Total Non-interest expenses		163,316		24,513		187,829
Income before income tax expense		121,930		15,997		137,927
Income tax expense		26,708		3,471		30,179
Net income	$	95,222	$	12,526	$	107,748
Total assets	$	8,134,923	$	35,179	$	8,170,102

	Commercial
As of and for the Year Ended December 31, 2022 (in thousands)	Banking		WM&T		Total
Net interest income	$	232,971	$	412	$	233,383
Provision for credit losses		10,257		—		10,257
Net interest income after provision expense		222,714		412		223,126
Non-interest income:
Wealth management and trust services		—		36,111		36,111
All other non-interest income		53,038		—		53,038
Total non-interest income		53,038		36,111		89,149
Non-interest expenses:
Compensation and employee benefits		87,565		15,643		103,208
Net occupancy and equipment		13,631		667		14,298
Technology and communication		13,449		1,448		14,897
Intangible amortization		3,720		1,824		5,544
Other direct and indirect/allocated expenses		52,172		1,672		53,844
Total Non-interest expenses		170,537		21,254		191,791
Income before income tax expense		105,215		15,269		120,484
Income tax expense		23,917		3,273		27,190
Net income		81,298		11,996		93,294
Less net income attributed to non-controlling interest		322		—		322
Net income available to stockholders	$	80,976	$	11,996	$	92,972
Total assets	$	7,459,312	$	36,949	$	7,496,261