Industry Segment Information

9 Months Ended

Sep. 30, 2019

Note 5 – Industry Segment Information

The services provided by the Company are classified into two reportable segments: Information Services and Banking Services. Each of these segments provides distinct services that are marketed through different channels. They are managed separately due to their unique service and processing requirements.

The Information Services segment provides transportation, energy, telecommunication, and environmental invoice processing and payment services to large corporations. The Banking Services segment provides banking services primarily to privately held businesses and faith-based ministries as well as supporting the banking needs of the Information Services segment.

The Company’s accounting policies for segments are the same as those described in the summary of significant accounting policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Management evaluates segment performance based on tax-equivalized (as defined in the footnote to the chart on the following table) pre-tax income after allocations for corporate expenses. Transactions between segments are accounted for at what management believes to be fair value.

Substantially all revenue originates from, and all long-lived assets are located within the United States, and no revenue from any customer of any segment exceeds 10% of the Company’s consolidated revenue.

Funding sources represent average balances and deposits generated by Information Services and Banking Services and there is no allocation methodology used. Segment interest income is a function of the relative share of average funding sources generated by each segment multiplied by the following rates:

•

Information Services – one or more fixed rates depending upon the specific characteristics of the funding source, and

•

Banking Services – a variable rate that is based upon the overall performance of the Company’s earning assets.

Any difference between total segment interest income and overall total Company interest income is included in Corporate, Eliminations, and Other.

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Summarized information about the Company’s operations in each industry segment is as follows:

(In thousands)

Information

Services

Banking

Services

Corporate,

Eliminations

and Other

Total

Three Months Ended September 30, 2019

Fee income from customers

$

28,026

$

257

$

(21)

$

28,262

Interest income*

6,760

7,930

(513)

14,177

Interest expense

—

1,392

—

1,392

Intersegment income (expense)

—

533

(533)

—

Tax-equivalized pre-tax income*

7,619

3,399

(534)

10,484

Goodwill

15,758

136

—

15,894

Other intangible assets, net

3,170

—

—

3,170

Total Assets

908,946

862,142

9,922

1,781,010

Average Funding Sources

704,772

588,226

—

1,292,998

Three Months Ended September 30, 2018

Fee income from customers

$

26,263

$

253

$

(81)

$

26,435

Interest income*

6,446

6,661

(329)

12,778

Interest expense

—

1,029

—

1,029

Intersegment income (expense)

—

467

(467)

—

Tax-equivalized pre-tax income*

7,269

2,796

(411)

9,654

Goodwill

12,433

136

—

12,569

Other intangible assets, net

1,664

—

—

1,664

Total Assets

903,055

847,673

(72,481)

1,678,247

Average Funding Sources

650,267

550,594

—

1,200,861

Nine Months Ended September 30, 2019

Fee income from customers

$

82,049

$

1,040

$

(442)

$ 82,647

Interest income*

19,273

23,082

(883)

41,472

Interest expense

—

3,987

—

3,987

Intersegment income (expense)

—

1,587

(1,587)

—

Tax-equivalized pre-tax income*

21,997

10,214

(1,324)

30,887

Goodwill

15,758

136

—

15,894

Other intangible assets, net

3,170

—

—

3,170

Total Assets

908,946

862,142

9,922

1,781,010

Average Funding Sources

667,741

583,458

—

1,251,199

Nine Months Ended September 30, 2018

Fee income from customers

$

76,397

$

947

$

105

$

77,449

Interest income*

18,621

20,351

(2,081)

36,891

Interest expense

—

2,502

—

2,502

Intersegment income (expense)

—

1,415

(1,415)

—

Tax-equivalized pre-tax income*

21,394

10,245

(1,976)

29,663

Goodwill

12,433

136

—

12,569

Other intangible assets, net

1,664

—

—

1,664

Total Assets

903,055

847,673

(72,481)

1,678,247

Average Funding Sources

637,508

566,390

—

1,203,898

*

Presented on a tax-equivalent basis assuming a tax rate of 21% for both 2019 and 2018. The tax-equivalent adjustment was approximately $511,000 and $564,000 for the Three Months Ended 2019 and 2018, respectively, and $1,583,000 and $1,875,000 for the Nine Months Ended 2019 and 2018, respectively.