Note 7.  Segment Information

The Company’s segment information provided below focuses on its three primary lines of business (Segment(s)): Retail Banking, Commercial Banking and Treasury.  The financial information presented was derived from the Company’s internal profitability reporting system that is used by management to monitor and manage the financial performance of the Company. This information is based on internal management accounting policies which have been developed to reflect the underlying economics of the Segments and, to

Note 7.  Segment Information (Continued)

the extent practicable, to portray each Segment as if it operated on a stand-alone basis.  Thus, each Segment, in addition to its direct revenues, expenses, assets and liabilities, includes an allocation of shared support function expenses and corporate overhead. All Segments also include funds transfer adjustments to appropriately reflect the cost of funds on loans made, funding credits on deposits generated, and the cost of maintaining adequate liquidity.  Apart from these adjustments, the accounting policies used are similar to those described in Note 1 of our financial statements from the December 31, 2011 10-K.

Since there are no comprehensive standards for management accounting that are equivalent to accounting principles generally accepted in the United States of America, the information presented may not necessarily be comparable with similar information from other financial institutions.  In addition, methodologies used to measure, assign, and allocate certain items may change from time-to-time to reflect, among other things, accounting estimate refinements, changes in risk profiles, changes in customers or product lines, and changes in management structure.

The Retail Banking Segment provides retail banking services including direct and indirect lending, checking, savings, money market and certificate of deposit (“CD”) accounts, safe deposit rental, automated teller machines and other traditional and electronic commerce retail banking services to individual customers through the Bank’s branch locations.  The Retail Banking Segment also provides a variety of mortgage lending products to meet customer needs. The majority of the mortgage loans it originates are sold to a third party mortgage services company, which provides private label loan processing and servicing support for both loans sold and loans retained by the Bank.

The Commercial Banking Segment provides commercial banking services including lending, business checking and deposits, treasury management and other traditional as well as electronic commerce commercial banking services to middle market and small business customers through the Bank’s branch locations.

 

The Treasury segment is responsible for managing the investment portfolio, acquiring wholesale funding for loan activity and assisting in the management of the Company’s liquidity and interest rate risk.  Information reported internally for performance assessment follows:

 

 

 

Note 7.  Segment Information (Continued)

 

 

	Six Months Ended
	June 30, 2012
		Retail			Commercial			Treasury			Other			Total
		Segment			Segment			Segment			Operations			Company
Net interest income (loss)	$	3,699		$	9,598		$	(867)		$	(165)		$	12,265
Other revenue		3,990			1,435			714			725			6,864
Other expense		5,013			2,559			88			7,920			15,580
Noncash items
Depreciation		473			-			-			293			766
Provision for loan losses		859			1,866			-			-			2,725
Other intangibles		475			-			-			-			475
Net allocations		2,154			4,970			529			(7,653)			-
Income tax benefit		-			-			-			-			-
Segment profit (loss)	$	(1,285)		$	1,638		$	(770)		$	-		$	(417)
Segment assets	$	152,644		$	468,471		$	263,106		$	42,353		$	926,574