22. SEGMENT RESULTS

The financial performance of the Company is also monitored by an internal funds transfer pricing profitability measurement system which produces line of business results and key performance measures. The Company's major business units include retail banking, commercial lending, trust, and investment/parent. The reported results reflect the underlying economics of the business segments. Expenses for centrally provided services are allocated based upon the cost and estimated usage of those services. The businesses are match-funded and interest rate risk is centrally managed and accounted for within the investment/parent business segment. The key performance measure the Company focuses on for each business segment is net income contribution.

Retail banking includes the deposit-gathering branch franchise and lending to both individuals and small businesses. Lending activities include residential mortgage loans, direct consumer loans, and small business commercial loans. Commercial banking to businesses includes commercial loans, and commercial real-estate loans. The trust segment contains our wealth management businesses which include the Trust Company, West Chester Capital Advisors, our registered investment advisory firm and financial services. Wealth management includes personal trust products and services such as personal portfolio investment management, estate planning and administration, custodial services and pre-need trusts. Also, institutional trust products and services such as 401(k) plans, defined benefit and defined contribution employee benefit plans, and individual retirement accounts are included in this segment. Financial services include the sale of mutual funds, annuities, and insurance products. The Wealth management businesses also includes the union collective investment funds, namely the ERECT and BUILD funds which are designed to use union pension dollars in construction projects that utilize union labor. The investment/parent includes the net results of investment securities and borrowing activities, general corporate expenses not allocated to the business segments, interest expense on guaranteed junior subordinated deferrable interest debentures, and centralized interest rate risk management. Inter-segment revenues were not material.

The contribution of the major business segments to the Consolidated Results of Operations were as follows:

YEAR ENDED DECEMBER 31, 2013

RETAIL BANKING

COMMERCIAL BANKING

TRUST

INVESTMENT/ PARENT

TOTAL

(IN THOUSANDS)

Net interest income

20,223

15,687

(3,084)

32,861

Credit provision for loan loss

(92)

(1,008)

(1,100)

Non-interest income

6,512

642

8,391

199

15,744

Non-interest expense

22,870

10,148

6,605

2,600

42,223

Income (loss) before income taxes

3,957

7,189

1,821

(5,485)

7,482

Income tax expense (benefit)

1,165

2,166

619

(1,661)

2,289

Net income (loss)

2,792

5,023

1,202

(3,824)

5,193

Total assets

347,823

545,556

4,722

157,935

1,056,036


	YEAR ENDED DECEMBER 31, 2012
	RETAIL BANKING			COMMERCIAL BANKING			TRUST		INVESTMENT/ PARENT			TOTAL
	(IN THOUSANDS)
Net interest income	$	20,585		$	14,499		$	35	$	(2,916	)	$	32,203
Credit provision for loan loss		(160	)		(615	)		-		-			(775	)
Non-interest income		6,565			585			7,784		9			14,943
Non-interest expense		22,802			8,970			6,387		2,482			40,641
Income (loss) before income taxes		4,508			6,729			1,432		(5,389	)		7,280
Income tax expense (benefit)		1,358			2,044			487		(1,648	)		2,241
Net income (loss)	$	3,150		$	4,685		$	945	$	(3,741	)	$	5,039
Total assets	$	336,241		$	497,331		$	4,429	$	162,990		$	1,000,991


	YEAR ENDED DECEMBER 31, 2011
	RETAIL BANKING			COMMERCIAL BANKING			TRUST		INVESTMENT/ PARENT			TOTAL
	(IN THOUSANDS)
Net interest income	$	20,100		$	13,860		$	41	$	(1,718	)	$	32,283
Credit provision for loan loss		(263	)		(3,312	)		-		-			(3,575	)
Non-interest income		6,055			597			7,282		(365	)		13,569
Non-interest expense		23,470			7,833			6,118		2,616			40,037
Income (loss) before income taxes		2,948			9,936			1,205		(4,699	)		9,390
Income tax expense (benefit)		880			2,995			410		(1,432	)		2,853
Net income (loss)	$	2,068		$	6,941		$	795	$	(3,267	)	$	6,537
Total assets	$	337,869		$	442,087		$	3,917	$	195,203		$	979,076