FIRST UNITED CORP/MD/ Segments Disclosure
22. Segment Reporting
Currently, the Corporation conducts business in two operating segments: (i) Community Banking and (ii) Trust and Investment Services. The accounting policies of the segments are the same as those described in the summary of significant accounting policies provided earlier in this report.
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 personnel, occupancy, marketing, equipment, and other expenses. Non-cash charges other than depreciation of fixed assets were immaterial for the years ended December 31, 2023 and 2022.
Trust and Investment Services: The Trust and Investment Services 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, as well as management fees that are derived from Assets Under Management. Expenses include personnel, occupancy, marketing, equipment, and other expenses. Non-cash charges associated with amortization of intangibles were approximately $208,000 for the years ending December 31, 2023 and 2022.
Information for the operating segments for the years ended December 31, 2023 and 2022 are presented in the following tables:
December 31, 2023 | ||||||||||
Trust and | ||||||||||
Community | Investment | |||||||||
(in thousands) | Banking |
| Services |
| Total | |||||
Interest income | $ | 81,156 | $ | — | $ | 81,156 | ||||
Interest expense | 24,286 | — | 24,286 | |||||||
Credit loss expense | 1,620 | — | 1,620 | |||||||
Non-interest income | 5,027 | 9,442 | 14,469 | |||||||
Non-interest expense | 45,098 | 5,145 | 50,243 | |||||||
Income before income taxes and intercompany fees | 15,179 | 4,297 | 19,476 | |||||||
Intercompany management fee income (expense) | 12 | (12) | — | |||||||
Income before income taxes | 15,191 | 4,285 | 19,476 | |||||||
Income tax expense | 3,514 | 902 | 4,416 | |||||||
Net income | $ | 11,677 | $ | 3,383 | $ | 15,060 | ||||
December 31, 2022 | ||||||||||
Trust and | ||||||||||
Community | Investment | |||||||||
(in thousands) | Banking |
| Services |
| Total | |||||
Interest income | $ | 62,422 | $ | — | $ | 62,422 | ||||
Interest expense | 4,789 | — | 4,789 | |||||||
Loan loss credit | (627) | — | (627) | |||||||
Non-interest income | 8,757 | 9,293 | 18,050 | |||||||
Non-interest expense | 38,435 | 4,694 | 43,129 | |||||||
Income before income taxes and intercompany fees | 28,582 | 4,599 | 33,181 | |||||||
Intercompany management fee income (expense) | 12 | (12) | — | |||||||
Income before income taxes | 28,594 | 4,587 | 33,181 | |||||||
Income tax expense | 7,168 | 965 | 8,133 | |||||||
Net income | $ | 21,426 | $ | 3,622 | $ | 25,048 | ||||
Total non-fiduciary assets of the trust and investment services segment were $0.7 million (including $0.6 million in intangible assets) at December 31, 2023 and $0.9 million (including $0.8 million in intangible assets) at December 31, 2022. All other assets (including goodwill of $11.0 million as of December 31 2023 and 2022 and other intangible assets of $0.5 million and $0.6 million as of December 31, 2023 and 2022, respectively) were held by the community banking segment.
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.