NOTE 18: Business Segments

The Corporation operates in a decentralized fashion in three principal business segments: retail banking, mortgage banking and consumer finance. Revenues from retail banking operations consist primarily of interest earned on loans and investment securities and service charges on deposit accounts. Mortgage banking operating revenues consist principally of gains on sales of loans in the secondary market, loan origination fee income and interest earned on mortgage loans held for sale. Revenues from consumer finance consist primarily of interest earned on purchased retail installment sales contracts.

The Corporation’s other segment includes a full-service brokerage firm that derives revenues from offering wealth management services and insurance products through third-party service providers and an insurance company that derives revenues from owning an equity interest in an insurance agency that offers insurance products and services. The results of the other segment are not significant to the Corporation as a whole and have been included in “Other.” Revenue and expenses of the Corporation are also included in “Other,” and consist primarily of interest expense associated with the Corporation’s trust preferred capital notes and other general corporate expenses.


	Year Ended December 31, 2018
	Retail		Mortgage		Consumer
(Dollars in thousands)	Banking		Banking		Finance		Other		Eliminations		Consolidated
Revenues:
Interest income	$	55,019	$	2,018	$	42,789	$	6	$	(7,284)	$	92,548
Gains on sales of loans		—		7,841		—		—		—		7,841
Other noninterest income		11,029		4,015		738		2,135		—		17,917
Total operating income		66,048		13,874		43,527		2,141		(7,284)		118,306
Expenses:
Provision for loan losses		100		—		10,906		—		—		11,006
Interest expense		6,842		904		9,413		1,152		(7,284)		11,027
Salaries and employee benefits		26,355		5,007		8,500		2,141		—		42,003
Other noninterest expenses		20,160		5,363		5,556		650		—		31,729
Total operating expenses		53,457		11,274		34,375		3,943		(7,284)		95,765
Income (loss) before income taxes		12,591		2,600		9,152		(1,802)		—		22,541
Income tax expense (benefit)		1,958		697		2,460		(594)		—		4,521
Net income (loss)	$	10,633	$	1,903	$	6,692	$	(1,208)	$	—	$	18,020
Total assets	$	1,357,788	$	56,101	$	297,552	$	5,055	$	(195,085)	$	1,521,411
Goodwill	$	3,702	$	—	$	10,723	$	—	$	—	$	14,425
Capital expenditures	$	3,178	$	133	$	59	$	4	$	—	$	3,374


	Year Ended December 31, 2017
	Retail		Mortgage		Consumer
(Dollars in thousands)	Banking		Banking		Finance		Other		Eliminations		Consolidated
Revenues:
Interest income	$	49,564	$	1,660	$	44,745	$	1	$	(6,377)	$	89,593
Gains on sales of loans		—		8,553		—		—		—		8,553
Other noninterest income		11,126		4,653		995		1,905		—		18,679
Total operating income		60,690		14,866		45,740		1,906		(6,377)		116,825
Expenses:
Provision for loan losses		200		—		16,235		—		—		16,435
Interest expense		6,076		587		8,164		1,151		(6,377)		9,601
Salaries and employee benefits		25,757		6,503		9,389		1,948		—		43,597
Other noninterest expenses		17,951		5,185		5,421		669		—		29,226
Total operating expenses		49,984		12,275		39,209		3,768		(6,377)		98,859
Income (loss) before income taxes		10,706		2,591		6,531		(1,862)		—		17,966
Income tax expense (benefit)		5,727		1,606		4,198		(137)		—		11,394
Net income (loss)	$	4,979	$	985	$	2,333	$	(1,725)	$	—	$	6,572
Total assets	$	1,341,879	$	69,537	$	292,438	$	(604)	$	(194,194)	$	1,509,056
Goodwill	$	3,702	$	—	$	10,723	$	—	$	—	$	14,425
Capital expenditures	$	3,524	$	410	$	232	$	14	$	—	$	4,180


	Year Ended December 31, 2016
	Retail		Mortgage		Consumer
(Dollars in thousands)	Banking		Banking		Finance		Other		Eliminations		Consolidated
Revenues:
Interest income	$	46,071	$	1,689	$	47,150	$	2	$	(5,473)	$	89,439
Gains on sales of loans		—		8,120		—		—		—		8,120
Other noninterest income		11,820		3,913		921		1,273		—		17,927
Total operating income		57,891		13,722		48,071		1,275		(5,473)		115,486
Expenses:
Provision for loan losses		—		—		18,040		—		—		18,040
Interest expense		5,790		435		7,073		1,143		(5,473)		8,968
Salaries and employee benefits		25,033		5,664		10,102		1,546		—		42,345
Other noninterest expenses		17,433		4,815		5,437		530		—		28,215
Total operating expenses		48,256		10,914		40,652		3,219		(5,473)		97,568
Income (loss) before income taxes		9,635		2,808		7,419		(1,944)		—		17,918
Income tax expense (benefit)		1,425		1,121		2,882		(969)		—		4,459
Net income (loss)	$	8,210	$	1,687	$	4,537	$	(975)	$	—	$	13,459
Total assets	$	1,290,733	$	65,351	$	306,012	$	6,005	$	(216,109)	$	1,451,992
Goodwill	$	3,702	$	—	$	10,723	$	—	$	—	$	14,425
Capital expenditures	$	1,992	$	314	$	360	$	42	$	—	$	2,708

The retail banking segment extends a warehouse line of credit to the mortgage banking segment, providing a portion of the funds needed to originate mortgage loans. The retail banking segment charges the mortgage banking segment interest at the daily FHLB advance rate plus 50 basis points. The retail banking segment also provides the consumer finance segment with a portion of the funds needed to purchase loan contracts by means of variable rate notes that carry interest at one-month LIBOR plus 200 basis points and fixed rate notes that carry interest at rates ranging from 2.0 percent to 8.0 percent. The retail banking segment acquires certain residential real estate loans from the mortgage banking segment at prices similar to those paid by third-party investors. These transactions are eliminated to reach consolidated totals. Certain corporate overhead costs incurred by the retail banking segment are not allocated to the mortgage banking, consumer finance and other segments.