SEGMENT REPORTING

The Corporation manages its operations through two primary business segments: core banking and WMG. The core banking segment provides revenues by attracting deposits from the general public and using such funds to originate consumer, commercial, commercial real estate, and residential mortgage loans, primarily in the Corporation’s local markets and to invest in securities. The WMG services segment provides revenues by providing trust and investment advisory services to clients.

Accounting policies for the segments are the same as those described in Note 1 of the Corporation’s 2016 Annual Report on Form 10-K, which was filed with the SEC on March 8, 2017. Summarized financial information concerning the Corporation’s reportable segments and the reconciliation to the Corporation’s consolidated results are shown in the following table. Income taxes are allocated based on the separate taxable income of each entity and indirect overhead expenses are allocated based on reasonable and equitable allocations applicable to the reportable segment. CFS amounts are the primary differences between segment amounts and consolidated totals, and are reflected in the Holding Company, CFS, and CRM column below, along with amounts to eliminate transactions between those segments (in thousands).



	Three months ended June 30, 2017
	Core Banking		WMG		Holding Company, CFS, and CRM			Consolidated Totals
Interest and dividend income	$	14,680	$	—	$	4		$	14,684
Interest expense	734		—		—			734
Net interest income	13,946		—		4			13,950
Provision for loan losses	421		—		—			421
Net interest income after provision for loan losses	13,525		—		4			13,529
Other non-interest income	2,634		2,269		119			5,022
Legal accruals and settlements	850		—		—			850
Other non-interest expenses	11,700		1,467		315			13,482
Income (loss) before income tax expense (benefit)	3,609		802		(192		)	4,219
Income tax expense (benefit)	1,018		304		(59		)	1,263
Segment net income (loss)	$	2,591	$	498	$	(133	)	$	2,956



	Three months ended June 30, 2016
	Core Banking		WMG		Holding Company, CFS, and CRM			Consolidated Totals
Interest and dividend income	$	13,922	$	—	$	3		$	13,925
Interest expense	957		—		—			957
Net interest income	12,965		—		3			12,968
Provision for loan losses	388		—		—			388
Net interest income after provision for loan losses	12,577		—		3			12,580
Other non-interest income	2,860		2,201		155			5,216
Legal accruals and settlements	1,200		—		—			1,200
Other non-interest expenses	12,465		1,569		336			14,370
Income (loss) before income tax expense (benefit)	1,772		632		(178		)	2,226
Income tax expense (benefit)	447		239		(81		)	605
Segment net income (loss)	$	1,325	$	393	$	(97	)	$	1,621



	Six months ended June 30, 2017
	Core Banking		WMG		Holding Company, CFS, and CRM			Consolidated Totals
Interest and dividend income	$	28,991	$	—	$	7		$	28,998
Interest expense	1,554		—		—			1,554
Net interest income	27,437		—		7			27,444
Provision for loan losses	1,461		—		—			1,461
Net interest income after provision for loan losses	25,976		—		7			25,983
Other non-interest income	5,239		4,378		252			9,869
Legal settlements	850		—		—			850
Other non-interest expenses	23,144		2,772		611			26,527
Income (loss) before income tax expense (benefit)	7,221		1,606		(352		)	8,475
Income tax expense (benefit)	2,066		609		(135		)	2,540
Segment net income (loss)	$	5,155	$	997	$	(217	)	$	5,935

Segment assets	$	1,706,266	$	4,863	$	7,443		$	1,718,572



	Six months ended June 30, 2016
	Core Banking		WMG		Holding Company, CFS, and CRM			Consolidated Totals
Interest and dividend income	$	27,871	$	—	$	3		$	27,874
Interest expense	1,881		—		—			1,881
Net interest income	25,990		—		3			25,993
Provision for loan losses	983		—		—			983
Net interest income after provision for loan losses	25,007		—		3			25,010
Other non-interest income	6,276		4,213		328			10,817
Legal accruals and settlements	1,200		—		—			1,200
Other non-interest expenses	24,717		2,958		703			28,378
Income (loss) before income tax expense (benefit)	5,366		1,255		(372		)	6,249
Income tax expense (benefit)	1,617		474		(170		)	1,921
Segment net income	$	3,749	$	781	$	(202	)	$	4,328

Segment assets	$	1,676,475	$	4,539	$	2,918		$	1,683,932