Note 22 - Segment Reporting

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

NOTE 22 Segment Reporting

Beginning with the annual period ended December 31, 2024, the Company adopted the guidance within ASU 2023-07, Segment Reporting (Topic 280), which expanded disclosure requirements for significant segment expenses and other segment items. In connection with this guidance, compensation, employee taxes and benefits, business services, software and technology expense, and merger and acquisition expense are presented separately as these expenses were previously included within total noninterest expense. Financial information for prior periods were recast to conform to the current presentation.

Operating segments are components of an enterprise, which are evaluated regularly by the “chief operating decision maker” in deciding how to allocate resources and assess performance. The Company’s chief operating decision maker is the President and Chief Executive Officer of the Company, and assesses overall segment performance based on net income (loss) before taxes and uses this metric to allocate resources for each segment, focusing on budgeting and forecasting.

Reportable segments are determined based on the services offered, the significance of the services offered, the significance of those services to the Company’s financial statements, and management’s regular review of the operating results of those services. The Company operates through three operating segments: banking, retirement and benefit services, and wealth. In prior periods, the Company had a fourth operating segment, mortgage. As of  January 1, 2024, the mortgage division was fully integrated into the banking division to reflect the way the Company currently manages and views the business. The Company has restated all historical periods presented within these financial statements, and has not included the mortgage operating segment.

The Company’s reportable segments include the following:

● Banking: Offers a complete line of loan, deposit, cash management, and treasury services through fourteen offices in North Dakota, Minnesota, and Arizona. After the closing of the HMNF acquisition, the Company added 15 banking offices in Minnesota, Wisconsin, and Iowa. These products and services are supported through web and mobile based applications. The majority of the Company’s assets and liabilities are in the Banking segments’ balance sheet.

● Retirement and Benefit Services: Provides the following services nationally: record-keeping and administration services to qualified and other types of retirement plans, investment fiduciary services to retirement plans, health savings accounts, flexible spending accounts, and COBRA recordkeeping and administration services. The division operates within each of the banking markets, as well as in East Lansing, Michigan and Lakewood, Colorado.

● Wealth: Provides advisory and planning services, investment management, and trust and fiduciary services to clients across the Company’s footprint.

The Company’s segment reporting process begins with the assignment of income and expenses directly to the applicable segments based on different cost centers withing the Company. The net income (loss) before taxes for each reportable segment is further derived by the use of expense allocations. Certain expenses not directly attributable to a specific segment are allocated across all segments based on key metrics, such as number of employees and time spent working in each segment. These types of expenses include business services, software and technology expense, human resources, accounting and finance, risk management, legal, and marketing. 

The financial information presented for each segment includes net interest income, provision for credit losses, noninterest income, and direct and indirect noninterest expense. As discussed above, noninterest expense is broken out between significant noninterest expenses and other noninterest expense. Other noninterest expense consists of occupancy and equipment expense, intangible amortization expense, professional fees and assessments (less merger and acquisition expenses which are included within this expense item on the consolidated statements of income), marketing and business development, supplies and postage, travel, mortgage and lending expenses, and other noninterest expenses. Corporate administration includes all remaining income and expenses not allocated to the three operating segments, including all merger and acquisition expenses.

The assignment and allocation methodologies used in the segment reporting process discussed above change from time to time as systems are enhanced, methods for evaluating segment performance or product lines change or as business segments are realigned.

The following table presents key metrics related to the Company’s segments as of and for the periods presented:

	As of and for the year ended December 31, 2024
			Retirement and				Corporate
(dollars in thousands)	Banking		Benefit Services		Wealth		Administration			Consolidated
Net interest income (loss)	$	109,752	$	—	$	—	$	(2,707	)	$	107,045
Provision for credit losses		18,141		—		—		—			18,141
Noninterest income (loss)		20,859		64,365		26,171		3,535			114,930
Noninterest expense
Compensation		43,169		28,389		10,065		5,688			87,311
Employee taxes and benefits		10,819		7,745		2,366		2,037			22,967
Business services, software and technology expense		10,949		7,574		2,506		729			21,758
Merger and acquisition expense		—		—		—		9,974			9,974
Other noninterest expense		23,565		12,837		701		1,562			38,665
Total noninterest expense		88,502		56,545		15,638		19,990			180,675
Net income (loss) before taxes	$	23,968	$	7,820	$	10,533	$	(19,162	)	$	23,159
Total assets	$	5,182,147	$	32,144	$	5,449	$	41,933		$	5,261,673

	As of and for the year ended December 31, 2023
				Retirement and				Corporate
(dollars in thousands)	Banking			Benefit Services		Wealth		Administration			Consolidated
Net interest income (loss)	$	90,520		$	—	$	—	$	(2,681	)	$	87,839
Provision for credit losses		2,057			—		—		—			2,057
Noninterest income		(7,017	)		65,294		21,855		97			80,229
Noninterest expense
Compensation		37,951			26,087		8,049		4,203			76,290
Employee taxes and benefits		9,295			7,144		1,850		1,762			20,051
Business services, software and technology expense		10,185			7,898		2,372		598			21,053
Merger and acquisition expense		—			—		—		—			—
Other noninterest expense		18,427			12,232		1,217		887			32,763
Total noninterest expense		75,858			53,361		13,488		7,450			150,157
Net income (loss) before taxes	$	5,588		$	11,933	$	8,367	$	(10,034	)	$	15,854
Total assets	$	3,833,725		$	34,352	$	4,757	$	34,879		$	3,907,713

	As of and for the year ended December 31, 2022
			Retirement and				Corporate
(dollars in thousands)	Banking		Benefit Services		Wealth		Administration			Consolidated
Net interest income	$	102,069	$	—	$	—	$	(2,340	)	$	99,729
Provision for loan losses		—		—		—		—			—
Noninterest income		23,120		67,135		20,870		98			111,223
Noninterest expense
Compensation		42,767		27,001		6,836		4,052			80,656
Employee taxes and benefits		10,781		7,428		1,718		1,988			21,915
Business services, software and technology expense		9,359		7,443		2,154		531			19,487
Merger and acquisition expense		—		—		—		2,540			2,540
Other noninterest expense		18,777		13,186		1,147		1,062			34,172
Total noninterest expense		81,684		55,058		11,855		10,173			158,770
Net income before taxes	$	43,505	$	12,077	$	9,015	$	(12,415	)	$	52,182
Total assets	$	3,707,296	$	40,821	$	4,032	$	27,488		$	3,779,637