Segment Reporting |
Note 9. Segment Reporting
Beginning in 2019, the Company has four reportable segments. Each reportable segment is a strategic business unit that offers different products and services. They are managed separately, because each segment appeals to different markets and, accordingly, require different technology and marketing strategies. The accounting policies of the segments are the same as those described in the summary of significant accounting policies provided earlier in this report.
The four reportable segments are:
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• |
Bank - The commercial banking segment involves making loans and generating deposits from individuals, businesses and charitable organizations. Loan fee income, service charges from deposit accounts, and other non-interest-related fees, such as fees for debit cards and ATM usage and fees for treasury management services, generate additional income for the Bank segment. |
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• |
Sturman Wealth Advisors – Sturman Wealth Advisors, formerly known as VNB Investment Services, offers wealth management and investment advisory services. Revenue for this segment is generated primarily from investment advisory and financial planning fees, with a small and decreasing portion attributable to brokerage commissions. |
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• |
VNB Trust & Estate Services – VNB Trust & Estate Services offers corporate trustee services, trust and estate administration, IRA administration and custody services. Revenue for this segment is generated from administration, service and custody fees, as well as management fees that are derived from Assets Under Management and, prior to 2020, incentive income that was based on the investment returns generated on performance-based Assets Under Management. Investment management services currently are offered through in-house and third-party managers. In addition, royalty income, in the form of fixed and incentive fees, from the sale of Swift Run Capital Management, LLC in 2013 is reported as income of VNB Trust & Estate Services. More information on royalty income and the related sale can be found under Summary of Significant Accounting Policies in Note 1 of the notes to consolidated financial statements, which is found in Item 8. Financial Statements and Supplementary Data, in the Company’s Form 10-K Report for December 31, 2019. |
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• |
Masonry Capital - Masonry Capital offers investment management services for separately managed accounts and a private investment fund employing a value-based, catalyst-driven investment strategy. Revenue for this segment is generated from management fees that are derived from Assets Under Management and incentive income that is based on the investment returns generated on performance-based Assets Under Management. |
A management fee for administrative and technology support services provided by the Bank is allocated to the other three lines of business. For both the three months ended September 30, 2020 and 2019, management fees totaling $25 thousand were charged by the Bank and eliminated in consolidated totals. For both the nine months ended September 30, 2020 and 2019, management fees totaling $75 thousand were charged by the Bank and eliminated in consolidated totals.
Segment information for the three and nine months ended September 30, 2020 and 2019 is shown in the following tables (dollars in thousands). Note that asset information is not reported below, as the assets of Sturman Wealth Advisors and VNB Trust & Estate Services are reported at the Bank level; also, assets specifically allocated to the lines of business other than the Bank are insignificant and are no longer provided to the chief operating decision maker.
Three months ended September 30, 2020 |
|
Bank |
|
|
Sturman Wealth Advisors |
|
|
VNB Trust &
Estate
Services |
|
|
Masonry
Capital |
|
|
Consolidated |
|
Net interest income |
|
$ |
6,047 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
6,047 |
|
Provision for loan losses |
|
|
224 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
224 |
|
Noninterest income |
|
|
970 |
|
|
|
176 |
|
|
|
192 |
|
|
|
87 |
|
|
|
1,425 |
|
Noninterest expense |
|
|
4,373 |
|
|
|
155 |
|
|
|
196 |
|
|
|
211 |
|
|
|
4,935 |
|
Income (loss) before income taxes |
|
|
2,420 |
|
|
|
21 |
|
|
|
(4 |
) |
|
|
(124 |
) |
|
|
2,313 |
|
Provision for income taxes |
|
|
466 |
|
|
|
4 |
|
|
|
(1 |
) |
|
|
(26 |
) |
|
|
443 |
|
Net income (loss) |
|
$ |
1,954 |
|
|
$ |
17 |
|
|
$ |
(3 |
) |
|
$ |
(98 |
) |
|
$ |
1,870 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2020 |
|
Bank |
|
|
Sturman Wealth Advisors |
|
|
VNB Trust &
Estate
Services |
|
|
Masonry
Capital |
|
|
Consolidated |
|
Net interest income |
|
$ |
17,177 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
17,177 |
|
Provision for loan losses |
|
|
1,367 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,367 |
|
Noninterest income |
|
|
3,316 |
|
|
|
516 |
|
|
|
625 |
|
|
|
263 |
|
|
|
4,720 |
|
Noninterest expense |
|
|
12,147 |
|
|
|
483 |
|
|
|
668 |
|
|
|
584 |
|
|
|
13,882 |
|
Income (loss) before income taxes |
|
|
6,979 |
|
|
|
33 |
|
|
|
(43 |
) |
|
|
(321 |
) |
|
|
6,648 |
|
Provision for income taxes |
|
|
1,355 |
|
|
|
7 |
|
|
|
(9 |
) |
|
|
(67 |
) |
|
|
1,286 |
|
Net income (loss) |
|
$ |
5,624 |
|
|
$ |
26 |
|
|
$ |
(34 |
) |
|
$ |
(254 |
) |
|
$ |
5,362 |
|
Three months ended September 30, 2019 |
|
Bank |
|
|
Sturman Wealth Advisors |
|
|
VNB Trust &
Estate
Services |
|
|
Masonry
Capital |
|
|
Consolidated |
|
Net interest income |
|
$ |
5,474 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
5,474 |
|
Provision for (recovery of) loan losses |
|
|
(120 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(120 |
) |
Noninterest income |
|
|
786 |
|
|
|
159 |
|
|
|
314 |
|
|
|
68 |
|
|
|
1,327 |
|
Noninterest expense |
|
|
3,905 |
|
|
|
155 |
|
|
|
308 |
|
|
|
193 |
|
|
|
4,561 |
|
Income (loss) before income taxes |
|
|
2,475 |
|
|
|
4 |
|
|
|
6 |
|
|
|
(125 |
) |
|
|
2,360 |
|
Provision for income taxes |
|
|
487 |
|
|
|
1 |
|
|
|
1 |
|
|
|
(26 |
) |
|
|
463 |
|
Net income (loss) |
|
$ |
1,988 |
|
|
$ |
3 |
|
|
$ |
5 |
|
|
$ |
(99 |
) |
|
$ |
1,897 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, 2019 |
|
Bank |
|
|
Sturman Wealth Advisors |
|
|
VNB Trust &
Estate
Services |
|
|
Masonry
Capital |
|
|
Consolidated |
|
Net interest income |
|
$ |
16,503 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
16,503 |
|
Provision for loan losses |
|
|
500 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
500 |
|
Noninterest income |
|
|
2,496 |
|
|
|
451 |
|
|
|
1,008 |
|
|
|
131 |
|
|
|
4,086 |
|
Noninterest expense |
|
|
11,777 |
|
|
|
438 |
|
|
|
918 |
|
|
|
524 |
|
|
|
13,657 |
|
Income (loss) before income taxes |
|
|
6,722 |
|
|
|
13 |
|
|
|
90 |
|
|
|
(393 |
) |
|
|
6,432 |
|
Provision for income taxes |
|
|
1,234 |
|
|
|
3 |
|
|
|
19 |
|
|
|
(82 |
) |
|
|
1,174 |
|
Net income (loss) |
|
$ |
5,488 |
|
|
$ |
10 |
|
|
$ |
71 |
|
|
$ |
(311 |
) |
|
$ |
5,258 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|