NOTE 14 Segment Reporting

The Company determines reportable segments based on the services offered, the significance of the services offered, the significance of those services to the Company’s financial statements, and management’s regular review of the operating results of those services. The Company operates through four operating segments: Banking, Retirement and Benefit Services, Wealth Management, and Mortgage.

The financial information presented for each segment includes net interest income, provision for loan losses, direct noninterest income, and direct noninterest expense, before indirect allocations. Corporate Administration includes the indirect overhead and is set forth in the table below. The segment net income before taxes represents direct revenue and expense before indirect allocations and income taxes.

The following table presents key metrics related to the Company’s segments for the periods presented:


	Three months ended June 30, 2020
			Retirement and		Wealth				Corporate
(dollars in thousands)	Banking		Benefit Services		Management		Mortgage		Administration		Consolidated
Net interest income	$	20,417	$	—	$	—	$	530	$	(856)	$	20,091
Provision for loan losses		3,500		—		—		—		—		3,500
Noninterest income		2,857		13,710		4,112		17,546		5		38,230
Noninterest expense		11,359		9,193		2,629		8,020		8,533		39,734
Net income before taxes	$	8,415	$	4,517	$	1,483	$	10,056	$	(9,384)	$	15,087


	Six months ended June 30, 2020
			Retirement and		Wealth				Corporate
(dollars in thousands)	Banking		Benefit Services		Management		Mortgage		Administration		Consolidated
Net interest income	$	39,863	$	—	$	—	$	798	$	(1,733)	$	38,928
Provision for loan losses		6,000		—		—		—		—		6,000
Noninterest income		4,731		29,930		8,158		22,591		9		65,419
Noninterest expense		24,011		17,125		4,144		13,459		17,721		76,460
Net income before taxes	$	14,583	$	12,805	$	4,014	$	9,930	$	(19,445)	$	21,887


	Three months ended June 30, 2019
			Retirement and		Wealth				Corporate
(dollars in thousands)	Banking		Benefit Services		Management		Mortgage		Administration		Consolidated
Net interest income	$	18,894	$	—	$	—	$	305	$	(908)	$	18,291
Provision for loan losses		1,797		—		—		—		—		1,797
Noninterest income		1,747		15,776		3,878		7,035		1,548		29,984
Noninterest expense		10,088		8,601		2,177		5,966		8,429		35,261
Net income before taxes	$	8,756	$	7,175	$	1,701	$	1,374	$	(7,789)	$	11,217


	Six months ended June 30, 2019
			Retirement and		Wealth				Corporate
(dollars in thousands)	Banking		Benefit Services		Management		Mortgage		Administration		Consolidated
Net interest income	$	38,794	$	—	$	—	$	434	$	(1,817)	$	37,411
Provision for loan losses		4,017		—		—		—		—		4,017
Noninterest income		3,578		30,835		7,489		11,604		1,552		55,058
Noninterest expense		20,080		17,591		4,101		9,928		17,075		68,775
Net income before taxes	$	18,275	$	13,244	$	3,388	$	2,110	$	(17,340)	$	19,677

Banking

The Banking division offers a complete line of loan, deposit, cash management, and treasury services through fifteen offices in North Dakota, Minnesota, and Arizona. These products and services are supported through web and mobile based applications. The majority of the Company’s assets and liabilities are in the Banking segment’s balance sheet.

Retirement and Benefit Services

Retirement and Benefit Services provides the following services nationally: recordkeeping and administration services to qualified retirement plans; ESOP trustee, recordkeeping, and administration; investment fiduciary services to retirement plans; health savings accounts, flex spending accounts, COBRA recordkeeping and administration services, and payroll to employers; and payroll and HIRS services for employers. In addition, the division operates within each of the banking markets as well as in Albert Lea, Minnesota, Lansing, Michigan, Bedford, New Hampshire, and 13 satellite offices.

Wealth Management

The Wealth Management division provides advisory and planning services, investment management, and trust and fiduciary services to clients across the Company’s footprint.

Mortgage

The Mortgage division offers first and second mortgage loans through a centralized mortgage unit in Minneapolis, Minnesota as well as through the Banking office locations.