| Segment Reporting |
20. 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 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 $1.8 billion and $1.7 billion at December 31, 2025 and 2024, respectively. Information for the operating segments for the years ended December 31, 2025 and 2024 are presented in the following tables: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | December 31, 2025 | | | | | | | | | | | | | | | Community | | Wealth | | | | (in thousands) | | | Banking | | Management | | Total | Interest income | | | $ | 100,848 | | $ | — | | $ | 100,848 | Interest expense | | | | 32,735 | | | — | | | 32,735 | Net interest income | | | | 68,113 | | | — | | | 68,113 | Credit loss expense | | | | 2,743 | | | — | | | 2,743 | Net interest income after credit loss expense | | | | 65,370 | | | — | | | 65,370 | Other operating income: | | | | | | | | | | | Net gains on investments, available for sale | | | | 97 | | | — | | | 97 | Net gains on sales of residential mortgages | | | | 533 | | | — | | | 533 | Net losses on disposal of fixed assets | | | | (228) | | | — | | | (228) | Service charges on deposit accounts | | | | 2,255 | | | — | | | 2,255 | Other service charges | | | | 845 | | | — | | | 845 | Trust department income | | | | — | | | 9,824 | | | 9,824 | Debit card income | | | | 4,057 | | | — | | | 4,057 | Brokerage commissions | | | | — | | | 1,445 | | | 1,445 | Other segment income (1) | | | | 1,740 | | | — | | | 1,740 | Total other operating income | | | | 9,299 | | | 11,269 | | | 20,568 | Other operating expenses: | | | | | | | | | | | Salaries and employee benefits | | | | 24,761 | | | 4,586 | | | 29,347 | Equipment and occupancy | | | | 4,982 | | | 95 | | | 5,077 | Data processing | | | | 5,890 | | | 353 | | | 6,243 | FDIC premiums | | | | 1,051 | | | — | | | 1,051 | Other segment expenses (2) | | | | 11,217 | | | 470 | | | 11,687 | Total operating expenses | | | | 47,901 | | | 5,504 | | | 53,405 | Income before income taxes and intercompany fees | | | | 26,768 | | | 5,765 | | | 32,533 | Intercompany management fee income (expense) | | | | 12 | | | (12) | | | — | Income before income taxes | | | | 26,780 | | | 5,753 | | | 32,533 | Income tax expense | | | | 6,808 | | | 1,210 | | | 8,018 | Net income | | | $ | 19,972 | | $ | 4,543 | | $ | 24,515 | Significant noncash items | | | | | | | | | | | Credit loss expense | | | $ | 2,743 | | $ | — | | $ | 2,743 | Depreciation | | | | 2,527 | | | 16 | | | 2,543 | Amortization of intangible assets | | | | 119 | | | 210 | | | 329 | | | | | | | | | | | | Intangible assets | | | $ | 11,235 | | $ | 209 | | $ | 11,444 | | | | | | | | | | | | Total assets | | | $ | 2,086,898 | | $ | 555 | | $ | 2,087,453 |
| (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. |
| | | | | | | | | | | | | | December 31, 2024 | | | | | | | | | | | | | | | Community | | Wealth | | | | (in thousands) | | | Banking | | Management | | Total | Interest income | | | $ | 91,993 | | $ | — | | $ | 91,993 | Interest expense | | | | 32,015 | | | — | | | 32,015 | Net interest income | | | | 59,978 | | | — | | | 59,978 | Credit loss expense | | | | 2,933 | | | — | | | 2,933 | Net interest income after credit loss expense | | | | 57,045 | | | — | | | 57,045 | Other operating income: | | | | | | | | | | | Net gains on sales of residential mortgages | | | | 414 | | | — | | | 414 | Service charges on deposit accounts | | | | 2,220 | | | — | | | 2,220 | Other service charges | | | | 887 | | | — | | | 887 | Trust department income | | | | — | | | 9,094 | | | 9,094 | Debit card income | | | | 4,065 | | | — | | | 4,065 | Brokerage commissions | | | | — | | | 1,449 | | | 1,449 | Other segment income (1) | | | | 1,696 | | | — | | | 1,696 | Total other operating income | | | | 9,282 | | | 10,543 | | | 19,825 | Other operating expenses: | | | | | | | | | | | Salaries and employee benefits | | | | 23,767 | | | 4,262 | | | 28,029 | Equipment and occupancy | | | | 5,445 | | | 108 | | | 5,553 | Data processing | | | | 5,418 | | | 343 | | | 5,761 | FDIC premiums | | | | 1,070 | | | — | | | 1,070 | Other segment expenses (2) | | | | 8,766 | | | 461 | | | 9,227 | Total operating expenses | | | | 44,466 | | | 5,174 | | | 49,640 | Income before income taxes and intercompany fees | | | | 21,861 | | | 5,369 | | | 27,230 | Intercompany management fee income (expense) | | | | 12 | | | (12) | | | — | Income before income taxes | | | | 21,873 | | | 5,357 | | | 27,230 | Income tax expense | | | | 5,533 | | | 1,128 | | | 6,661 | Net income | | | $ | 16,340 | | $ | 4,229 | | $ | 20,569 | Significant noncash items | | | | | | | | | | | Credit loss expense | | | $ | 2,933 | | $ | — | | $ | 2,933 | Depreciation | | | | 3,285 | | | 16 | | | 3,301 | Amortization of intangible assets | | | | 120 | | | 210 | | | 330 | | | | | | | | | | | | Intangible assets | | | $ | 11,354 | | $ | 419 | | $ | 11,773 | | | | | | | | | | | | Total assets | | | $ | 1,972,513 | | $ | 509 | | $ | 1,973,022 | | | | | | | | | | | |
| (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. |
|