CULLENFROST BANKERS INC

Previous wording

The following discussion should be read in conjunction with our consolidated financial statements, and notes thereto, for the year ended December 31, 2023, and the other information included in the 2023 Form 10-K. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results for the year ending December 31, 2024 or any future period.

Current wording

The following discussion should be read in conjunction with our consolidated financial statements, and notes thereto, for the year ended December 31, 2023, and the other information included in the 2023 Form 10-K. Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results for the year ending December 31, 2024 or any future period.

Previous wording

Net income available to common shareholders totaled $134.0 million, or $2.06 per diluted common share, for the three months ended March 31, 2024 compared to $176.0 million, or $2.70 per diluted common share for the three months ended March 31, 2023.

Current wording

Net income available to common shareholders totaled $143.8 million, or $2.21 per diluted common share, and $277.9 million, or $4.27 per diluted common share, for the three and six months ended June 30, 2024 compared to $160.4 million, or $2.47 per diluted common share, and $336.4 million, or $5.17 per diluted common share for the three and six months ended June 30, 2023.

Previous wording

Net income available to common shareholders decreased $42.0 million, or 23.8%, for the three months ended March 31, 2024 compared to the same period in 2023. The decrease during the three months ended March 31, 2024 was primarily the result of a $41.1 million increase in non-interest expense, which included $7.7 million related to a special Federal Deposit Insurance Corporation (“FDIC”) deposit insurance assessment discussed below; a $9.8 million decrease in net interest income and a $4.5 million increase in credit loss expense partly offset by a $7.3 million decrease in income tax expense and a $6.1 million increase in non-interest income.

Current wording

Net income available to common shareholders decreased $16.6 million, or 10.4%, for the three months ended June 30, 2024 and decreased $58.6 million, or 17.4%, for the six months ended June 30, 2024 compared to the same periods in 2023. The decrease during the three months ended June 30, 2024 was primarily the result of a $31.9 million increase in non-interest expense and a $5.9 million increase in credit loss expense partly offset by an $11.4 million increase in net interest income, a $7.7 million increase in non-interest income, and a $2.1 million decrease in income tax expense. The decrease during the six months ended June 30, 2024 was primarily the result of a $73.0 million increase in non-interest expense, which included $9.0 million related to a special Federal Deposit Insurance Corporation (“FDIC”) deposit insurance assessment discussed below, and a $10.4 million increase in credit loss expense partly offset by a $13.8 million increase in non-interest income, a $9.4 million decrease in income tax expense, and a $1.7 million increase in net interest income.

Previous wording

Net interest income is the difference between interest income on earning assets, such as loans and securities, and interest expense on liabilities, such as deposits and borrowings, which are used to fund those assets. Net interest income is our largest source of revenue, representing 77.8% of total revenue during the first three months of 2024. Net interest margin is the ratio of taxable-equivalent net interest income to average earning assets for the period. The level of interest rates and the volume and mix of earning assets and interest-bearing liabilities impact net interest income and net interest margin.

Current wording

Net interest income is the difference between interest income on earning assets, such as loans and securities, and interest expense on liabilities, such as deposits and borrowings, which are used to fund those assets. Net interest income is our largest source of revenue, representing 77.9% of total revenue during the first six months of 2024. Net interest margin is the ratio of taxable-equivalent net interest income to average earning assets for the period. The level of interest rates and the volume and mix of earning assets and interest-bearing liabilities impact net interest income and net interest margin.

Previous wording

The Federal Reserve influences the general market rates of interest, including the deposit and loan rates offered by many financial institutions. As of March 31, 2024, approximately 41.7% of our loans had a fixed interest rate, while the remaining loans had floating interest rates that were primarily tied to a benchmark developed by the American Financial Exchange, the Secured Overnight Financing Rate (“SOFR”) (approximately 27.9%); the prime interest rate (approximately 21.7%); or the American Interbank Offered Rate (“AMERIBOR”) (approximately 8.6%). Certain other loans are tied to other indices, however, such loans do not make up a significant portion of our loan portfolio as of March 31, 2024.

Current wording

The Federal Reserve influences the general market rates of interest, including the deposit and loan rates offered by many financial institutions. As of June 30, 2024, approximately 41.3% of our loans had a fixed interest rate, while the remaining loans had floating interest rates that were primarily tied to a benchmark developed by the American Financial Exchange, the Secured Overnight Financing Rate (“SOFR”) (approximately 29.8%); the prime interest rate (approximately 21.7%); or the American Interbank Offered Rate (“AMERIBOR”) (approximately 7.1%). Certain other loans are tied to other indices; however, such loans do not make up a significant portion of our loan portfolio as of June 30, 2024.

Previous wording

As of March 31, 2024, the target range for the federal funds rate was 5.25% to 5.50%. In March 2024, the Federal Reserve released projections whereby the midpoint of the projected appropriate target range for the federal funds rate would fall to 4.6% by the end of 2024 and subsequently decrease to 3.9% by the end of 2025. While there can be no such assurance that any increases or decreases in the federal funds rate will occur, these projections imply up to a 75 basis point decrease in the federal funds rate during the remainder of 2024, followed by a 75 basis point decrease in 2025.

Current wording

As of June 30, 2024, the target range for the federal funds rate was 5.25% to 5.50%. In June 2024, the Federal Reserve released projections whereby the midpoint of the projected appropriate target range for the federal funds rate would fall to 5.1% by the end of 2024 and subsequently decrease to 4.1% by the end of 2025. While there can be no such assurance that any increases or decreases in the federal funds rate will occur, these projections imply up to a 25 basis point decrease in the federal funds rate during the remainder of 2024, followed by a 100 basis point decrease in 2025.

Previous wording

Taxable-equivalent net interest income for the three months ended March 31, 2024 decreased $14.5 million, or 3.4%, compared to the same period in 2023. Taxable-equivalent net interest income for the three months ended March 31, 2024 included 91 days compared to 90 for the same period in 2023 as a result of the leap year. The additional day added approximately $2.9 million to taxable-equivalent net interest income during the three months ended March 31, 2024. Excluding the impact of the additional day results in an effective decrease in taxable-equivalent net interest income of approximately $17.4 million during the three months ended March 31, 2024. The decrease in taxable-equivalent net interest income during the three months ended March 31, 2024 was primarily related to increases in the average costs of interest-bearing deposit accounts and repurchase agreements combined with an increase in the average volume of higher-yielding time deposit accounts and decreases in the average volumes of tax-exempt securities, interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve), and taxable securities, among other things. The impact of these items was partly offset by increases in the average volume of and yield on loans and increases in the average yields on interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve), taxable securities and, to a lesser extent, tax-exempt securities, among other things. As a result of the aforementioned fluctuations, the taxable-equivalent net interest margin increased 1 basis points from 3.47% during the three months ended March 31, 2023 to 3.48% during the three months ended March 31, 2024.

Current wording

The decrease in taxable-equivalent net interest income during the six months ended June 30, 2024 was primarily related to an increase in the average volume of higher-yielding time deposit accounts combined with increases in the average costs of interest-bearing deposit accounts and repurchase agreements and decreases in the average volumes of tax-exempt securities, taxable securities, and interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve), among other things. The impact of these items was partly offset by increases in the average volume of and yield on loans and increases in the average yields on interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) and taxable securities, among other things.

Previous wording

The average volume of interest-earning assets for the three months ended March 31, 2024 decreased $2.0 billion compared to the same period in 2023. The decrease in the average volume of interest-earning assets during the three months ended March 31, 2024 was primarily related to a $1.6 billion decrease in average tax-exempt securities, a $1.3 billion decrease in average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) and an $829.9 million decrease in average taxable securities partly offset by a $1.8 billion increase in average loans. The average taxable-equivalent yield on interest-earning assets increased 56 basis points from 4.57% during the three months ended March 31, 2023 to 5.13% during the three months ended March 31, 2024. The average taxable-equivalent yield on interest-earning assets during the comparable periods was impacted by changes in market interest rates (as noted in the table above) and changes in the volume and relative mix of interest-earning assets.

Current wording

The decrease in the average volume of interest-earning assets during the six months ended June 30, 2024 was primarily related to a $1.3 billion decrease in average taxable securities, a $1.2 billion decrease in average tax-exempt securities, and a $522.7 million decrease in average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) partly offset by a $1.9 billion increase in average loans. The average taxable-equivalent yield on interest-earning assets increased 51 basis points from 4.67 during the six months ended June 30, 2023 to 5.18% during the six months ended June 30, 2024. The average taxable-equivalent yields on interest-earning assets during the comparable periods was impacted by changes in market interest rates (as noted in the table above) and changes in the volume and relative mix of interest-earning assets.

Previous wording

The average taxable-equivalent yield on loans increased 64 basis points from 6.36% during the three months ended March 31, 2023 to 7.00% during the three months ended March 31, 2024. The average taxable-equivalent yield on loans during the three months ended March 31, 2024 was positively impacted by increases in market interest rates (as noted in the table above). The average volume of loans for the three months ended March 31, 2024 increased $1.8 billion, or 10.4%, compared to the same period in 2023. Loans made up approximately 41.7% of average interest-earning assets during the three months ended March 31, 2024, compared to 36.1% during the same period in 2023. The increase was primarily related to the investment of available funds (primarily from amounts held in an interest-bearing account at the Federal Reserve and securities) into loans.

Current wording

The average taxable-equivalent yield on loans increased 44 basis points from 6.64% during the three months ended June 30, 2023 to 7.08% during the three months ended June 30, 2024 while the average taxable-equivalent yield on loans increased 53 basis points from 6.51% during the six months ended June 30, 2023 to 7.04% during the six months ended June 30, 2024. The average taxable-equivalent yield on loans during the three and six months ended June 30, 2024 was positively impacted by increases in market interest rates (as noted in the table above). The average volume of loans for the three months ended June 30, 2024 increased $2.0 billion, or 11.3%, while the average volume of loans for the six months ended June 30, 2024 increased $1.9 billion, or 10.8%, compared to the same periods in 2023. Loans made up approximately 43.2% and 42.4% of average interest-earning assets during the three and six months ended June 30, 2024, compared to 38.5% and 37.3% during the same respective periods in 2023. The increases were primarily related to the use of available funds to originate loans.

Previous wording

The average taxable-equivalent yield on securities was 3.32% during the three months ended March 31, 2024, increasing 8 basis points from 3.24% during the three months ended March 31, 2023. The average yield on taxable securities was 2.83% during the three months ended March 31, 2024, increasing 16 basis points from 2.67% during the same period in 2023. The average taxable-equivalent yield on tax-exempt securities was 4.27% during the three months ended March 31, 2024, increasing 4 basis points from 4.23% during the three months ended March 31, 2023.

Current wording

The average taxable-equivalent yield on securities was 3.38% during the three months ended June 30, 2024, increasing 14 basis points from 3.24% during the three months ended June 30, 2023 while the average taxable-equivalent yield on securities was 3.35% during the six months ended June 30, 2024, increasing 11 basis points from 3.24% during the six months ended June 30, 2023. The average yield on taxable securities was 2.92% during the three months ended June 30, 2024, increasing 21 basis points from 2.71% during the same period in 2023 while the average yield on taxable securities was 2.88% during the six months ended June 30, 2024, increasing 19 basis points from 2.69% during the same period in 2023. The average taxable-equivalent yield on tax-exempt securities was 4.30% during the three months ended June 30, 2024, increasing 3 basis points from 4.27% during the same period in 2023 while the average taxable-equivalent yield on tax-exempt securities was 4.29% during the six months ended June 30, 2024, increasing 4 basis points from 4.25% during the same period in 2023.

Previous wording

Tax-exempt securities made up approximately 35.3% of total average securities during the three months ended March 31, 2024, compared to 38.6% during the same periods in 2023. The average volume of total securities during the three months ended March 31, 2024 decreased $2.4 billion, or 11.1%, compared to the same period in 2023. Securities made up approximately 42.1% of average interest-earning assets during the three months ended March 31, 2024 compared to 45.4% during the same period in 2023. The decrease during the three months ended March 31, 2024 was primarily related to the utilization of these funds to support loan growth and provide liquidity to offset the decrease in non-interest-bearing deposits.

Current wording

Tax-exempt securities made up approximately 35.5% and 35.4% of total average securities during the three and six months ended June 30, 2024, compared to 35.2% and 36.9% during the same respective periods in 2023. The average volume of total securities during the three months ended June 30, 2024 decreased $2.6 billion, or 12.4%, compared to the same period in 2023 while the average volume of total securities during the six months ended June 30, 2024 decreased $2.5 billion, or 11.8%, compared to the same period in 2023. Securities made up approximately 40.9% and 41.5% of average interest-earning assets during the three and six months ended June 30, 2024 compared to 46.3% and 45.9% during the same respective periods in 2023. The decreases during the three and six months ended June 30, 2024 were primarily related to the use of funds provided by maturities, calls and principal repayments of these securities to support the origination of loans and to provide liquidity to offset the decrease in non-interest-bearing deposits.

Previous wording

Average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) for the three months ended March 31, 2024 decreased $1.3 billion, or 15.3%, compared to the same period in 2023. Interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) made up approximately 16.0% of average interest-earning assets during the three months ended March 31, 2024 compared to 18.1% during the same period in 2023. The decrease during the three months ended March 31, 2024 was partly related to the reinvestment of amounts held in an interest-bearing account at the Federal Reserve into loans. Balances held at the Federal Reserve were also impacted by a decrease in customer deposits (primarily non-interest-bearing). The average yield on interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) was 5.40% during the three months ended March 31, 2024, compared to 4.57% during the same respective period in 2023. The average yield on interest-bearing deposits during the three months ended March 31, 2024 was impacted by higher interest rates paid on reserves held at the Federal Reserve, compared to the same period in 2023.

Current wording

Average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) for the three months ended June 30, 2024 increased $275.5 million, or 4.0%, compared to the same period in 2023 while average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) for the six months ended June 30, 2024 decreased $522.7 million, or 6.7%, compared to the same period in 2023. The increase during the three months ended June 30, 2024 was partly related to funds provided from maturities of taxable and tax-exempt securities. The decrease during the six months ended June 30, 2024 was partly related to the reinvestment of amounts held in an interest-bearing account at the Federal Reserve into loans. Balances held at the Federal Reserve were also impacted by a decrease in customer deposits (primarily non-interest-bearing). Interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) made up approximately 15.7% and 15.9% of average interest-earning assets during the three and six months ended June 30, 2024 compared to 15.0% and 16.6% during the same respective periods in 2023. The average yields on interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) was 5.40% during both the three and six months ended June 30, 2024, compared to 5.05% and 4.78% during the three and six months ended June 30, 2023. The average yields on interest-bearing deposits during the three and six months ended June 30, 2024 were impacted by higher interest rates paid on reserves held at the Federal Reserve, compared to the same respective periods in 2023.

Previous wording

The average rate paid on interest-bearing liabilities was 2.54% during the three months ended March 31, 2024, increasing 75 basis points from 1.79% during the same period in 2023. Average deposits decreased $2.0 billion, or 4.8%, during the three months ended March 31, 2024 compared to the same period in 2023 and included a $2.7 billion decrease in average non-interest-bearing deposits partly offset by a $627.0 million increase in average interest-bearing deposits. The ratio of average interest-bearing deposits to total average deposits was 65.7% during the three months ended March 31, 2024 compared to 61.1% during the same period in 2023. The average cost of deposits is primarily impacted by changes in market interest rates as well as changes in the volume and relative mix of interest-bearing deposits. The average cost of interest-bearing deposits and total deposits was 2.34% and 1.54%, respectively, during the three months ended March 31, 2024 compared to 1.52% and 0.93%, respectively, during the same period in 2023. The average cost of deposits during the comparable periods were impacted by increases in the interest rates we pay on our interest-bearing deposit products as a result of an increase in market interest rates.

Current wording

The average rate paid on interest-bearing liabilities was 2.59% during the three months ended June 30, 2024, increasing 48 basis points from 2.11% during the same period in 2023 while the average rate paid on interest-bearing liabilities was 2.57% during the six months ended June 30, 2024, increasing 62 basis points from 1.95% during the same period in 2023. Average deposits decreased $496.8 million, or 1.2%, during the three months ended June 30, 2024 compared to the same period in 2023 and included a $1.6 billion decrease in average non-interest-bearing deposits partly offset by a $1.1 billion increase in average interest-bearing deposits. Average deposits decreased $1.3 billion, or 3.0%, during the six months ended June 30, 2024 compared to the same period in 2023 and included a $2.1 billion decrease in average non-interest-bearing deposits partly offset by an $842.1 million increase in average interest-bearing deposits. The ratio of average interest-bearing deposits to total average deposits was 66.2% and 66.0% during the three and six months ended June 30, 2024 compared to 62.9% and 62.0% during the same respective periods in 2023. The average cost of deposits is primarily impacted by changes in market interest rates as well as changes in the volume and relative mix of interest-bearing deposits. The average cost of interest-bearing deposits and total deposits was 2.39% and 1.58%, respectively, during the three months ended June 30, 2024 compared to 1.87% and 1.18%, respectively, during the same period in 2023. The average cost of interest-bearing deposits and total deposits was 2.36% and 1.56%, respectively, during the six months ended June 30, 2024 compared to 1.70% and 1.05%, respectively, during the same period in 2023. The average cost of deposits during the comparable periods were impacted by increases in the interest rates we pay on our interest-bearing deposit products as a result of an increase in market interest rates.

Previous wording

Our net interest spread, which represents the difference between the average rate earned on earning assets and the average rate paid on interest-bearing liabilities, was 2.59% during the three months ended March 31, 2024 compared to 2.78% during the same period in 2023. The net interest spread, as well as the net interest margin, will be impacted by future changes in short-term and long-term interest rate levels, as well as the impact from the competitive environment, including from new financial technology competitors, and the availability of alternative investment options. A discussion of the effects of changing interest rates on net interest income is set forth in Item 3. Quantitative and Qualitative Disclosures About Market Risk included elsewhere in this report.

Current wording

Our net interest spread, which represents the difference between the average rate earned on earning assets and the average rate paid on interest-bearing liabilities, was 2.64% and 2.61% during the three and six months ended June 30, 2024 compared to 2.66% and 2.72% during the same respective periods in 2023. The net interest spread, as well as the net interest margin, will be impacted by future changes in short-term and long-term interest rate levels, as well as the impact from the competitive environment, including from new financial technology competitors, and the availability of alternative investment options. A discussion of the effects of changing interest rates on net interest income is set forth in Item 3. Quantitative and Qualitative Disclosures About Market Risk included elsewhere in this report.

Previous wording

Total non-interest income for the three months ended March 31, 2024 increased $6.1 million, or 5.8%, compared to the same period in 2023. Changes in the various components of non-interest income are discussed in more detail below.

Current wording

Total non-interest income for the three and six months ended June 30, 2024 increased $7.7 million, or 7.4%, and increased $13.8 million, or 6.6%, respectively, compared to the same periods in 2023. Changes in the various components of non-interest income are discussed in more detail below.

Previous wording

Trust and Investment Management Fees. Trust and investment management fees increased $2.9 million, or 8.1%, for the three months ended March 31, 2024, compared to the same period in 2023. Investment management fees are the most significant component of trust and investment management fees, making up approximately 82.3% and 81.4% of total trust and investment management fees for the first three months of 2024 and 2023, respectively. The increase in trust and investment management fees during the three months ended March 31, 2024 was primarily related to an increase in investment management fees (up $2.7 million). Investment management fees are generally based on the market value of assets within an account and are thus impacted by volatility in the equity and bond markets. The increase in investment management fees during the three months ended March 31, 2024 was primarily related to an increase in the average value of assets maintained in accounts. The increase in the average value of assets was partly related to higher equity valuations during 2024 relative to 2023.

Current wording

Trust and Investment Management Fees. Trust and investment management fees increased $2.0 million, or 5.1%, for the three months ended June 30, 2024 and increased $5.0 million, or 6.6%, for the six months ended June 30, 2024, compared to the same respective periods in 2023. Investment management fees are the most significant component of trust and investment management fees, making up approximately 80.6% and 78.5% of total trust and investment management fees for the first six months of 2024 and 2023, respectively. The increases in trust and investment management fees during the three and six months ended June 30, 2024 were primarily related to increases in investment management fees (up $2.8 million and $5.5 million, respectively) and oil and gas fees (up $906 thousand and $838 thousand, respectively), partly offset by decreases in estate fees (down $996 thousand and $885 thousand, respectively), and real estate fees (down $753 thousand and $783 thousand, respectively). Investment management fees are generally based on the market value of assets within an account and are thus impacted by volatility in the equity and bond markets. The increases in investment management fees during the three and six months ended June 30, 2024 were primarily related to increases in the average value of assets maintained in accounts. The increases in the average value of assets were partly related to higher equity valuations during 2024 relative to 2023. The increase in oil and gas fees was primarily related to higher average market prices in 2024, particularly in the second quarter, relative to 2023. The decreases in estate fees and real estate fees were primarily related to decreased transaction volumes relative to 2023.

Previous wording

At March 31, 2024, trust assets, including both managed assets and custody assets, were primarily composed of equity securities (42.5% of assets), fixed income securities (33.1% of assets), alternative investments (9.7% of assets) and cash equivalents (8.8% of assets). The estimated fair value of these assets was $48.8 billion (including managed assets of $24.6 billion and custody assets of $24.2 billion) at March 31, 2024, compared to $47.2 billion (including managed assets of $23.8 billion and custody assets of $23.5 billion) at December 31, 2023 and $43.9 billion (including managed assets of $21.9 billion and custody assets of $22.0 billion) at March 31, 2023.

Current wording

At June 30, 2024, trust assets, including both managed assets and custody assets, were primarily composed of equity securities (42.5% of assets), fixed income securities (33.5% of assets), alternative investments (9.7% of assets) and cash equivalents (8.3% of assets). The estimated fair value of these assets was $48.9 billion (including managed assets of $24.7 billion and custody assets of $24.3 billion) at June 30, 2024, compared to $47.2 billion (including managed assets of $23.8 billion and custody assets of $23.5 billion) at December 31, 2023 and $44.9 billion (including managed assets of $22.4 billion and custody assets of $22.5 billion) at June 30, 2023.

Previous wording

Service Charges on Deposit Accounts. Service charges on deposit accounts for the three months ended March 31, 2024 increased $2.9 million, or 13.3%, compared to the same period in 2023. The increase during the three months ended March 31, 2024 was primarily related to increases in commercial service charges (up $1.4 million); overdraft charges on consumer and commercial accounts (up $924 thousand and $359 thousand, respectively), and consumer service charges (up $219 thousand). The increase in commercial service charges during the three months ended March 31, 2024 was primarily related to an increase in billable services partly offset by the effect of a higher average earnings credit rate applied to deposits maintained by treasury management customers which resulted in customers paying for less of their services through fees rather than with earnings credits applied to their deposit balances. Overdraft charges totaled $11.9 million ($8.8 million consumer and $3.0 million commercial) during the three months ended March 31, 2024 compared to $10.6 million ($7.9 million consumer and $2.7 million commercial) during the same period in 2023. The increase in overdraft charges during the three months ended March 31, 2024 was impacted by increases in the volumes of fee assessed overdrafts relative to 2023, in part due to growth in the number of accounts.

Current wording

Service Charges on Deposit Accounts. Service charges on deposit accounts for the three and six months ended June 30, 2024 increased $2.6 million, or 11.2%, and increased $5.5 million, or 12.2%, respectively, compared to the same periods in 2023. The increase during the three months ended June 30, 2024 was primarily related to increases in commercial service charges (up $1.3 million); overdraft charges on consumer and commercial accounts (up $748 thousand and $385 thousand, respectively), and consumer service charges (up $176 thousand). The increase during the six months ended June 30, 2024, was primarily related to increases in commercial service charges (up $2.8 million); overdraft charges on consumer and commercial accounts (up $1.7 million and $744 thousand, respectively), and consumer service charges (up $395 thousand). The increases in commercial service charges during the three and six months ended June 30, 2024 were partly related to increases in billable services related to analyzed treasury management accounts partly offset by the effect of a higher average earnings credit rate applied to deposits maintained by treasury management customers which resulted in customers paying for less of their services through fees rather than with earnings credits applied to their deposit balances. The increases in commercial service charges were also partly related, to a lesser extent, to increases in service fees on non-analyzed accounts. Overdraft charges totaled

Previous wording

In January 2024, the Consumer Financial Protection Bureau (“CFPB”) proposed to update and narrow certain regulatory exceptions for overdraft credit provided by financial institutions with assets in excess of $10 billion. Unless eligible for these narrowed exceptions, extensions of overdraft credit must adhere to certain regulatory requirements that generally apply to consumer credit products, unless the overdraft fee is a small amount, below a to-be-determined benchmark or that only recovers applicable costs and losses. The extent to which any such proposed changes will impact our future overdraft fee revenues is currently uncertain.

Current wording

In January 2024, the Consumer Financial Protection Bureau (“CFPB”) proposed to update and narrow certain regulatory exceptions for overdraft credit provided by financial institutions with assets in excess of $10 billion. Unless eligible for these narrowed exceptions, extensions of overdraft credit must adhere to certain regulatory requirements that generally apply to consumer credit products, unless the overdraft fee is a small amount, below a to-be-determined benchmark or that only recovers applicable costs and losses. The comment period for this proposal ended in April, 2024. The extent to which any such proposed changes will impact our future overdraft fee revenues is currently uncertain.

Previous wording

Insurance Commissions and Fees. Insurance commissions and fees for the three months ended March 31, 2024 decreased $656 thousand, or 3.5%, compared to the same period in 2023. The decrease during the three months ended March 31, 2024 was primarily the result of decreases in both commission income (down $436 thousand) and contingent income (down $219 thousand). The decrease in commission income during the three months ended March 31, 2024 was primarily related to a decrease in life insurance commissions, and to a lesser extent, a decrease in benefit plan commissions, partly offset by an increase in commercial lines property and casualty commissions and, to a lesser extent, an increase in personal lines property and casualty commissions. The decrease in life insurance commissions during the three months ended March 31, 2024 was primarily due to a decrease in business volume, mostly due to a significant transaction in 2023. The decrease in benefit plan commissions during the three months ended March 31, 2024 was related to premium and exposure rate decreases within the existing customer base as well as a decrease in business volumes. The increases in commercial and personal lines property and casualty commissions during the three months ended March 31, 2024 were related to increases in the underlying exposure bases and increases in rates, and, in the case of commercial lines, increased business volumes.

Current wording

Insurance Commissions and Fees. Insurance commissions and fees for the three and six months ended June 30, 2024 increased $979 thousand, or 7.6%, and increased $323 thousand, or 1.0%, respectively, compared to the same periods in 2023. The increase during the three months ended June 30, 2024 was primarily the result of an increase in commission income (up $891 thousand). The increase during the six months ended June 30, 2024 was primarily the result of an increase in commission income (up $455 thousand) partly offset by a decrease in contingent income (down $132 thousand). The increases in commission income during the three and six months ended June 30, 2024 were primarily related to increases in commercial lines property and casualty commissions and, to a lesser extent, increases in personal lines property and casualty commissions, partly offset by decreases in life insurance commissions and benefit plan commissions. The increases in commercial and personal lines property and casualty commissions during the three and six months ended June 30, 2024 were related to increases in the underlying exposure bases and increases in rates, and, in the case of commercial lines, increased business volumes. The decrease in life insurance commissions during the three and six months ended June 30, 2024 was primarily due to a decrease in business volume, mostly due to a significant transaction in the first quarter of 2023. The decreases in benefit plan commissions during the three and six months ended June 30, 2024 were primarily related to premium and exposure rate decreases within the existing customer base.

Previous wording

Contingent income totaled $3.6 million during the three months ended March 31, 2024 compared to $3.8 million during the same period in 2023. Contingent income primarily consists of amounts received from various property and casualty insurance carriers related to portfolio growth and the loss performance of insurance policies previously placed. These performance related contingent payments are seasonal in nature and are mostly received during the first quarter of each year. This performance related contingent income totaled $2.9 million and $3.2 million during the three months ended March 31, 2024 and 2023, respectively. The decrease in performance related contingent income was primarily related to a deterioration of the loss performance of commercial lines insurance policies previously placed and lower growth within the commercial lines portfolio, partly due to a tightening of underwriting standards. The decrease in contingent income related to our commercial lines portfolio was partly offset by an increase in contingent commissions related to our personal lines portfolio due to improved loss performance. Contingent income also includes amounts received from various benefit plan insurance companies related to the volume of business generated and/or the subsequent retention of such business. This benefit plan related contingent income totaled $733 thousand during the three months ended March 31, 2024 compared to $665 thousand during the same period in 2023.

Current wording

Contingent income totaled $532 thousand and $4.1 million during the three and six months ended June 30, 2024, respectively, compared to $445 thousand and $4.3 million during the same respective periods in 2023. Contingent income primarily consists of amounts received from various property and casualty insurance carriers related to portfolio growth and the loss performance of insurance policies previously placed. These performance related contingent payments are seasonal in nature and are mostly received during the first quarter of each year. This performance related contingent income totaled $3.0 million and $3.2 million during the six months ended June 30, 2024 and 2023, respectively. The decrease in performance related contingent income was primarily related to a deterioration of the loss performance of commercial lines insurance policies previously placed and lower growth within the commercial lines portfolio, partly due to a tightening of underwriting standards. The decrease in contingent income related to our commercial lines portfolio was partly offset by an increase in contingent commissions related to our personal lines portfolio due to improved loss performance. Contingent income also includes amounts received from various benefit plan insurance companies related to the volume of business generated and/or the subsequent retention of such business. This benefit plan related contingent income totaled $366 thousand and $1.1 million during the three and six months ended June 30, 2024, respectively, compared to $430 thousand and $1.1 million during the same respective periods in 2023.

Previous wording

Net interchange and card transaction fees for the three months ended March 31, 2024 decreased $415 thousand, or 8.5%, compared to the same period in 2023 primarily due to an increase in network costs. A comparison of gross and net interchange and card transaction fees for the reported periods is presented in the table below.

Current wording

Net interchange and card transaction fees for the three and six months ended June 30, 2024 increased $101 thousand, or 1.9%, and decreased $314 thousand, or 3.1%, respectively, compared to the same periods in 2023. A comparison of gross and net interchange and card transaction fees for the reported periods is presented in the table below.

Previous wording

Federal Reserve rules applicable to financial institutions that have assets of $10 billion or more provide that the maximum permissible interchange fee for an electronic debit transaction is the sum of 21 cents per transaction and 5 basis points multiplied by the value of the transaction. An upward adjustment of no more than 1 cent to an issuer's debit card interchange fee is allowed if the card issuer develops and implements policies and procedures reasonably designed to achieve certain fraud-prevention standards. The Federal Reserve also has rules governing routing and exclusivity that require issuers to offer two unaffiliated networks for routing transactions on each debit or prepaid product. In October 2023, the Federal Reserve issued a proposal under which the maximum permissible interchange fee for an electronic debit transaction would be the sum of 14.4 cents per transaction and 4 basis points multiplied by the value of the transaction. Furthermore, the fraud-prevention adjustment would increase from a maximum of 1 cent to 1.3 cents. The proposal would adopt an approach for future adjustments to the interchange fee cap, which would occur every other year based on issuer cost data gathered by the Federal Reserve from large debit card issuers. Had the proposed maximum interchange fees been in effect during the reported periods, interchange and debit card transaction fees would have been approximately 30% lower. In January 2024, the Federal Reserve extended the comment period for this proposal until May 12, 2024. The extent to which any such proposed changes in permissible interchange fees will impact our future revenues is currently uncertain.

Current wording

Federal Reserve rules applicable to financial institutions that have assets of $10 billion or more provide that the maximum permissible interchange fee for an electronic debit transaction is the sum of 21 cents per transaction and 5 basis points multiplied by the value of the transaction. An upward adjustment of no more than 1 cent to an issuer's debit card interchange fee is allowed if the card issuer develops and implements policies and procedures reasonably designed to achieve certain fraud-prevention standards. The Federal Reserve also has rules governing routing and exclusivity that require issuers to offer two unaffiliated networks for routing transactions on each debit or prepaid product. In October 2023, the Federal Reserve issued a proposal under which the maximum permissible interchange fee for an electronic debit transaction would be the sum of 14.4 cents per transaction and 4 basis points multiplied by the value of the transaction. Furthermore, the fraud-prevention adjustment would increase from a maximum of 1 cent to 1.3 cents. The proposal would adopt an approach for future adjustments to the interchange fee cap, which would occur every other year based on issuer cost data gathered by the Federal Reserve from large debit card issuers. Had the proposed maximum interchange fees been in effect during the reported periods, interchange and debit card transaction fees would have been approximately 30% lower. The comment period for this proposal ended in May, 2024. The extent to which any such proposed changes in permissible interchange fees will impact our future revenues is currently uncertain.

Previous wording

Other Charges, Commissions, and Fees. Other charges, commissions, and fees for the three months ended March 31, 2024 increased $356 thousand, or 3.0%, compared to the same period in 2023. The increase was primarily related to increases in income from the placement of money market accounts (up $460 thousand), merchant services rebates/bonuses (up $273 thousand), and letter of credit fees (up $243 thousand), among other things, partly offset by decreases in commitment fees on unused lines of credit (down $393 thousand) and other service charges (down $254 thousand), among other things.

Current wording

Other Charges, Commissions, and Fees. Other charges, commissions, and fees for the three months ended June 30, 2024 increased $930 thousand, or 7.7%, compared to the same period in 2023. The increase was primarily related to increases in income from the placement of money market accounts (up $584 thousand) and annuities (up $341 thousand); letter of credit fees (up $294); and merchant services rebates/bonuses (up $259 thousand), among other things, partly offset by decreases in capital markets advisory fees (down $596 thousand), and other service charges (down $314 thousand), among other things. Other charges, commissions, and fees for the six months ended June 30, 2024 increased $1.3 million, or 5.4%, compared to the same period in 2023. The increase was primarily related to increases in income from the placement of money market accounts (up $1.0 million); letter of credit fees (up $537 thousand); merchant services rebates/bonuses (up $531 thousand); and income from the placement of annuities (up $249 thousand) and mutual funds (up $226 thousand); among other things, partly offset by decreases in capital markets advisory fees (down $782 thousand), commitment fees on unused lines of credit (down $552 thousand), and other service charges (down $568 thousand), among other things.

Previous wording

Net Gain/Loss on Securities Transactions. During the three months ended March 31, 2023, we sold certain available-for-sale securities with amortized costs totaling $1.2 billion and realized a net gain of $21 thousand. Prevailing market conditions provided us an opportunity to sell certain lower-yielding securities to enhance our liquidity position and provide us the flexibility to be more opportunistic with the subsequent reinvestment of these funds. There were no sales of securities during the three months ended March 31, 2024.

Current wording

Net Gain/Loss on Securities Transactions. During the six months ended June 30, 2023, we sold certain available-for-sale securities with amortized costs totaling $1.5 billion and realized a net gain of $54 thousand. Prevailing market conditions provided us an opportunity to sell certain lower-yielding securities to enhance our liquidity position and provide us the flexibility to be more opportunistic with the subsequent reinvestment of these funds. There were no sales of securities during the six months ended June 30, 2024.

Previous wording

Other Non-Interest Income. Other non-interest income for the three months ended March 31, 2024 increased $991 thousand, or 8.5%, compared to the same period in 2023. The increase was partly related to increases in public finance underwriting fees (up $2.6 million) and income from customer derivative and foreign exchange transactions (up $737 thousand), among other things, partly offset by a decrease in sundry and other miscellaneous income (down $1.9 million), among other things. The increases in public finance underwriting fees and income from customer derivative and securities trading transactions were primarily related to increases in transaction volumes. The decrease in sundry income was related to certain non-recurring items recognized in 2023 including $1.2 million related to a distribution received from a Small Business Investment Company (“SBIC”) fund investment and $575 thousand related to a partnership interest, among other things.

Current wording

Other Non-Interest Income. Other non-interest income for the three and six months ended June 30, 2024 increased $1.0 million, or 10.1%, and $2.0 million, or 9.3%, respectively, compared to the same periods in 2023. The increase during the three months ended June 30, 2024 was primarily related to an increase in public finance underwriting fees (up $1.1 million). The increase during the six months ended June 30, 2024 was primarily related to increases in public finance underwriting fees (up $3.7 million), income from customer derivative and foreign exchange transactions (up $874 thousand), and earnings on the cash surrender value of life insurance (up $454 thousand), among other things, partly offset by a decrease in sundry and other miscellaneous income (down $2.4 million), among other things. The increases in public finance underwriting fees and income from customer derivative and securities trading transactions were primarily related to increases in transaction volumes. The decrease in sundry income was related to certain non-recurring items recognized in 2023 including $1.4 million related to a distribution received from a Small Business Investment Company (“SBIC”) fund investment and $575 thousand related to a partnership interest, among other things.

Previous wording

Total non-interest expense for the three months ended March 31, 2024 increased $41.1 million, or 14.4%, compared to the same period in 2023. Changes in the various components of non-interest expense are discussed below.

Current wording

Total non-interest expense for the three and six months ended June 30, 2024 increased $31.9 million, or 11.2%, and increased $73.0 million, or 12.8%, respectively, compared to the same periods in 2023. Changes in the various components of non-interest expense are discussed below.

Previous wording

Salaries and Wages. Salaries and wages for the three months ended March 31, 2024 increased $17.7 million, or 13.5%, compared to the same period in 2023. The increase in salaries and wages was primarily related to increases in salaries due to annual merit and market increases and increases in the number of employees. The increase in the number of employees was partly related to our investment in organic expansion in various markets. Salaries and wages during the three months ended March 31, 2024 were also impacted, to a lesser extent, by increases in incentive compensation and commissions. We are experiencing a competitive labor market which has resulted in and could continue to result in an increase in our staffing costs.

Current wording

Salaries and Wages. Salaries and wages for the three and six months ended June 30, 2024 increased $18.0 million, or 13.5%, and $35.7 million, or 13.5%, respectively, compared to the same periods in 2023. The increase in salaries and wages was primarily related to increases in salaries due to annual merit and market increases and increases in the number of employees. The increase in the number of employees was partly related to our investment in organic expansion in various markets. Salaries and wages during the three and six months ended June 30, 2024 were also impacted, to a lesser extent, by increases in incentive compensation and commissions. We are continuing to experience a competitive labor market which has resulted in and could continue to result in an increase in our staffing costs.

Previous wording

Employee Benefits. Employee benefits expense for the three months ended March 31, 2024 increased $2.0 million, or 6.0%, compared to the same period in 2023. The increase was primarily related to medical/dental benefits expense (up $1.5 million) and payroll taxes (up $1.4 million), among other things, partly offset by a decrease in 401(k) plan expense (down $753 thousand) and an increase in the net periodic benefit related to our defined benefit retirement plan (up $207 thousand), among other things.

Current wording

Employee Benefits. Employee benefits expense for the three and six months ended June 30, 2024 increased $2.0 million, or 7.5%, and increased $4.1 million, or 6.7%, respectively, compared to the same periods in 2023. The increases were primarily related to medical/dental benefits expense (up $1.5 million and $3.0 million during the three and six months ended June 30, 2024, respectively) and payroll taxes (up $1.3 million and $2.6 million during the three and six months ended June 30, 2024, respectively), among other things, partly offset by decreases in 401(k) plan expense, primarily related to discretionary profit sharing contributions, (down $618 thousand and $1.4 million during the three and six months ended June 30, 2024, respectively) and increases in the net periodic benefit related to our defined benefit retirement plan (up $208 thousand and $415 thousand during the three and six months ended June 30, 2024, respectively), among other things.

Previous wording

Net Occupancy. Net occupancy expense for the three months ended March 31, 2024 increased $1.4 million, or 4.7%, compared to the same period in 2023. The increase during the three months ended March 31, 2024 was primarily related to increases in depreciation on buildings and leasehold improvements (together up $1.1 million), repairs/maintenance/service contracts expense (up $605 thousand), and lease expense (up $270 thousand), among other things, partly offset by decreases in utilities expense (down $347 thousand) and property taxes (down $341 thousand), among other things. The increases in the aforementioned components of net occupancy expense were impacted, in part, by our expansion efforts.

Current wording

Net Occupancy. Net occupancy expense for the three and six months ended June 30, 2024 increased $660 thousand, or 2.1%, and increased $2.1 million, or 3.4%, respectively, compared to the same periods in 2023. The increases during the three and six months ended June 30, 2024 were primarily related to increases in depreciation on buildings and leasehold improvements (together up $910 thousand and $2.0 million, respectively), and repairs/maintenance/service contracts expense (up $528 thousand and $1.1 million, respectively), among other things, partly offset by decreases in property taxes (down $395 thousand and $737 thousand, respectively), and utilities expense (down $306 thousand and $653 thousand, respectively), among other things. The increases in the aforementioned components of net occupancy expense were impacted, in part, by our expansion efforts.

Previous wording

Technology, Furniture, and Equipment. Technology, furniture, and equipment expense for the three months ended March 31, 2024 increased $2.5 million, or 7.7%, compared to the same period in 2023. The increase during the three months ended March 31, 2024 was primarily related to increases in cloud services expense (up $2.2 million), service contracts expense (up $690 thousand) and software maintenance (up $497 thousand), among other things. The increase from these items was partly offset by a decrease in depreciation on furniture and equipment (down $957 thousand), among other things.

Current wording

Technology, Furniture, and Equipment. Technology, furniture, and equipment expense for the three and six months ended June 30, 2024 increased $2.9 million, or 8.8%, and increased $5.4 million, or 8.3%, respectively, compared to the same periods in 2023. The increases during the three and six months ended June 30, 2024 were primarily related to increases in cloud services expense (up $2.4 million and $4.5 million, respectively), service contracts expense (up $720 thousand and $1.4 million, respectively) and software maintenance (up $314 thousand and $811 thousand, respectively), among other things. The increases from these items were partly offset by decreases in depreciation on furniture and equipment (down $773 thousand and $1.7 million, respectively), among other things.

Previous wording

Deposit Insurance. Deposit insurance expense totaled $14.7 million for the three months ended March 31, 2024 compared to $6.2 million for the three months ended March 31, 2023. The increase during the three months ended March 31, 2024 was primarily related to an additional accrual related to the special deposit insurance assessment discussed below.

Current wording

Deposit Insurance. Deposit insurance expense totaled $8.4 million and $23.1 million for the three and six months ended June 30, 2024, respectively, compared to $6.2 million and $12.4 million for the three and six months ended June 30, 2023, respectively. The increases during the three and six months ended June 30, 2024 were primarily related to additional accruals related to the special deposit insurance assessment discussed below.

Previous wording

As more fully discussed in our 2023 Form 10-K, during the fourth quarter of 2023, we accrued $51.5 million ($40.7 million after tax) related to a special deposit insurance assessment to recover losses to the Deposit Insurance Fund ("DIF") incurred as a result of recent bank failures and the FDIC's use of the systemic risk exception to cover certain deposits that were otherwise uninsured. This amount was based on our estimate of the full amount of the assessment at that time. In February 2024, the FDIC notified insured depository institutions that their loss estimate related to the aforementioned bank failures has increased. As a result, we accrued an additional $7.7 million ($6.1 million after tax), related to an expected update of the special assessment which we expect to receive during the second quarter of 2024. This updated assessment is being made under the FDIC's final rule whereby the estimated loss pursuant to the systemic risk determination will be periodically adjusted. The FDIC has also retained the ability to cease collection early, extend the special assessment collection period and impose a final shortfall special assessment. The extent to which any such additional future assessments will impact our future deposit insurance expense is currently uncertain.

Current wording

As more fully discussed in our 2023 Form 10-K, during the fourth quarter of 2023, we accrued $51.5 million ($40.7 million after tax) related to a special deposit insurance assessment to recover losses to the Deposit Insurance Fund ("DIF") incurred as a result of recent bank failures and the FDIC's use of the systemic risk exception to cover certain deposits that were otherwise uninsured. This amount was based on our estimate of the full amount of the assessment at that time. In February 2024, the FDIC notified insured depository institutions that their loss estimate related to the aforementioned bank failures had increased. As a result, we accrued an additional $7.7 million ($6.1 million after tax), related to an expected update of the special assessment during the first quarter of 2024. Upon receipt of the update during the second quarter of 2024, we accrued an additional $1.2 million ($984 thousand after tax) related to the special assessment. This updated assessment was made under the FDIC's final rule whereby the estimated loss pursuant to the systemic risk determination can be periodically adjusted. The FDIC has also retained the ability to cease collection early, extend the special assessment collection period and impose a final shortfall special assessment. The extent to which any such additional future assessments will impact our future deposit insurance expense is currently uncertain.

Previous wording

Other Non-Interest Expense. Other non-interest expense for the three months ended March 31, 2024 increased $9.0 million, or 17.3%, compared to the same period in 2023. The increase during the three months ended March 31, 2024 included increases in advertising/promotions expense (up $4.0 million); professional services expense (up $1.2 million), which was primarily related to information technology services; fraud losses (up $710 thousand); and travel, meals, and entertainment expense (up $443 thousand); among other things.

Current wording

Other Non-Interest Expense. Other non-interest expense for the three and six months ended June 30, 2024 increased $6.1 million, or 11.3%, and increased $15.1 million, or 14.2%, respectively, compared to the same periods in 2023. The increase during the three months ended June 30, 2024 included increases in professional services expense (up $862 thousand), which was primarily related to information technology services; advertising/promotions expense (up $757 thousand); fraud losses (up $500 thousand); research and platform fees (up $486 thousand); and business development expense (up $413 thousand), among other things. The increase during the six months ended June 30, 2024 included increases in advertising/promotions expense (up $4.8 million); professional services expense (up $2.1 million), which was primarily related to information technology services; fraud losses (up $1.2 million); business development expense (up $742 thousand); stationery/printing expense (up $797 thousand); and research and platform fees (up $720 thousand), among other things.

Previous wording

Net income for the three months ended March 31, 2024 decreased $41.6 million, or 23.9%, compared to the same period in 2023. The decrease during the three months ended March 31, 2024 was primarily the result of a $37.0 million increase in non-interest expense, a $9.5 million decrease in net interest income and a $4.5 million increase in credit loss expense partly offset by a $6.7 million decrease in income tax expense and a $2.7 million increase in non-interest income.

Current wording

Net income for the three and six months ended June 30, 2024 decreased $16.4 million, or 10.5%, and decreased $57.0 million, or 17.4%, respectively, compared to the same periods in 2023. The decrease during the three months ended June 30, 2024 was primarily the result of a $29.3 million increase in non-interest expense and a $5.9 million increase in credit loss expense partly offset by a $12.6 million increase in net interest income, a $4.4 million increase in non-interest income and a $1.8 million decrease in income tax expense. The decrease during the six months ended June 30, 2024 was primarily the result of a $66.2 million increase in non-interest expense and a $10.4 million increase in credit loss expense partly offset by an $8.3 million decrease in income tax expense, a $7.1 million increase in non-interest income and a $4.2 million increase in net interest income.

Previous wording

Net interest income for the three months ended March 31, 2024 decreased $9.5 million, or 2.4%, compared to the same period in 2023. The decrease during the three months ended March 31, 2024 was primarily related to increases in the average costs of interest-bearing deposit accounts and repurchase agreements combined with an increase in the average volume of higher-yielding time deposit accounts and decreases in the average volumes of tax-exempt securities, interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve), and taxable securities, among other things. The impact of these items was partly offset by increases in the average volume of and yield on loans and increases in the average yields on interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve), taxable securities and, to a lesser extent, tax-exempt securities, among other things. Net interest income for the first three months of 2024 was also positively impacted by an additional day as a result of leap year. See the analysis of net interest income included in the section captioned “Net Interest Income” included elsewhere in this discussion.

Current wording

Net interest income for the three and six months ended June 30, 2024 increased $12.6 million, or 3.3%, and increased $4.2 million, or 0.5%, respectively, compared to the same periods in 2023. The increases during the three and six months ended June 30, 2024 were primarily related to increases in the average volumes of and yields on loans; increases in the average yields on, and for the three months ended, the average volume of interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve); and increases in the average yields on taxable securities, among other things. The impact of these items was partly offset by increases in the average volume of higher-yielding time deposit accounts combined with increases in the average costs of interest-bearing deposit accounts and repurchase agreements and decreases in the average volumes of taxable and tax-exempt securities, among other things. Net interest income for the first six months of 2024 was also positively impacted by an additional day as a result of leap year. See the analysis of net interest income included in the section captioned “Net Interest Income” included elsewhere in this discussion.

Previous wording

Credit loss expense for the three months ended March 31, 2024 totaled $13.7 million compared to $9.1 million during the three months ended March 31, 2023. See the sections captioned “Credit Loss Expense” and “Allowance for Credit Losses” elsewhere in this discussion for further analysis of credit loss expense related to loans and off-balance-sheet commitments.

Current wording

Credit loss expense for the three and six months ended June 30, 2024 totaled $15.8 million and $29.4 million, respectively, compared to $9.9 million and $19.0 million during the same periods in 2023. See the sections captioned “Credit Loss Expense” and “Allowance for Credit Losses” elsewhere in this discussion for further analysis of credit loss expense related to loans and off-balance-sheet commitments.

Previous wording

Non-interest income for the three months ended March 31, 2024 increased $2.7 million, or 4.3%, compared to the same period in 2023. The increase during the three months ended March 31, 2024 was primarily related to increases in service charges on deposit accounts and other non-interest income partly offset by decreases in insurance commissions and fees; interchange and card transaction fees; and other charges, commissions, and fees. The increase in service charges on deposit accounts was primarily related to increases in commercial service charges and overdraft charges on consumer and commercial accounts. The increase in other non-interest income was partly related to increases in public finance underwriting fees and income from customer derivative and foreign exchange transactions, among other things, partly offset by a decrease in sundry and other miscellaneous income, among other things. The decrease in insurance commissions and fees was primarily related to decreases in life insurance and benefit plan commissions and a decrease performance related contingent income. These items were partly offset by increases in both commercial and personal lines property and casualty commissions and benefit plan related contingent income. The decrease in interchange and card transaction fees was primarily due to an increase in network costs. The increase in the other charges, commissions, and fees was primarily related to increases in merchant services rebates/bonuses and letter of credit fees, among other things, partly offset by decreases in commitment fees on unused lines of credit and other service charges, among other things. See the analysis of these categories of non-interest income included in the section captioned “Non-Interest Income” included elsewhere in this discussion.

Current wording

Non-interest income for the three and six months ended June 30, 2024 increased $4.4 million, or 7.6%, and increased $7.1 million, or 5.9%, respectively, compared to the same periods in 2023. The increases during the three and six months ended June 30, 2024 were primarily related to increases in service charges on deposit accounts; insurance commissions and fees; and other non-interest income, partly offset by decreases in other charges, commissions, and fees, and, for the six months ended June 30, 2024, a decrease in interchange and card transaction fees. The increases in service charges on deposit accounts were primarily related to increases in commercial service charges and overdraft charges on consumer and commercial accounts. The increases in insurance commissions and fees were primarily related to increases in commission income primarily related to increases in commercial lines property and casualty commissions and, to a lesser extent, increases in personal lines property and casualty commissions, partly offset by decreases in life insurance commissions and benefit plan commissions. The increases in other non-interest income were primarily related to increases in public finance underwriting fees and income from customer derivative and foreign exchange transactions, among other things, partly offset by decreases in sundry and other miscellaneous income, among other things. The decreases in other charges, commissions, and fees were decreases in capital markets advisory fees, commitment fees on unused lines of credit and other service charges, among other things, partly offset by increases in letter of credit fees; and merchant services rebates/bonuses, among other things. See the analysis of these categories of non-interest income included in the section captioned “Non-Interest Income” included elsewhere in this discussion.

Previous wording

Non-interest expense for three months ended March 31, 2024 increased $37.0 million, or 14.8%, compared to the same period in 2023. While all categories of non-interest expense increased, the largest increases were in salaries and wages; deposit insurance expense; and other non-interest expense. The increase in salaries and wages was primarily related to increases in salaries due to annual merit and market increases and increases in the number of employees. The increase in the number of employees was partly related to our investment in organic expansion in various markets. Salaries and wages were also impacted, to a lesser extent, by an increase in incentive compensation. The increase in deposit insurance expense was primarily related to an additional accrual for a special deposit insurance assessment. The increase in other non-interest expense included increases in advertising/promotions expense; professional services expense, which was primarily related to information technology services; fraud losses; and travel, meals, and entertainment expense; among other things. See the analysis of these categories of non-interest expense included in the section captioned “Non-Interest Expense” included elsewhere in this discussion.

Current wording

Non-interest expense for three and six months ended June 30, 2024 increased $29.3 million, or 11.9%, and increased $66.2 million, or 13.3%, respectively, compared to the same periods in 2023. While all categories of non-interest expense increased during the three and six months ended June 30, 2024, the largest increases were in salaries and wages; deposit insurance expense; other non-interest expense; and technology, furniture, and equipment expense. The increases in salaries and wages were primarily related to increases in salaries due to annual merit and market increases and increases in the number of employees. Salaries and wages were also impacted, to a lesser extent, by increases in incentive compensation. The increases in deposit insurance expense were primarily related to additional accruals for a special deposit insurance assessment. The increases in other non-interest expense included increases in advertising/promotions expense; professional services expense, which was primarily related to information technology services; fraud losses; and business development expense among other things. See the analysis of these categories of non-interest expense included in the section captioned “Non-Interest Expense” included elsewhere in this discussion.

Previous wording

Non-interest income for the three months ended March 31, 2024 increased $3.4 million, or 8.1% compared to the same period in 2023. The increase during the three months ended March 31, 2024 was primarily due to an increase in trust and investment management fees, and to a much lesser extent, an increase in other charges, commissions, and fees. The increase in trust and investment management fees was primarily related to an increase in investment management fees primarily related to an increase in the average value of assets maintained in accounts. The increase in the average value of assets was partly related to higher equity valuations during 2024 relative to 2023. The increase in other charges, commissions, and fees during the three months ended March 31, 2024 was primarily related to increases in income from the placement of money market accounts, among other things, partly offset by decreases in income from the sale of mutual funds, among other things. See the analysis of trust and investment management fees, other non-interest income and other charges, commissions, and fees included in the section captioned “Non-Interest Income” included elsewhere in this discussion.

Current wording

Non-interest income for the three and six months ended June 30, 2024 increased $3.3 million, or 7.2%, and increased $6.7 million, or 7.6%, respectively, compared to the same periods in 2023. The increases during the three and six months ended June 30, 2024 were primarily due to increases in trust and investment management fees, and other charges, commissions, and fees. The increases in trust and investment management fees were primarily related to increases in investment management fees and oil and gas fees, partly offset by decreases in estate fees and real estate fees. The increases in investment management fees were primarily related to increases in the average value of assets maintained in accounts partly related to higher equity valuations during 2024 relative to 2023. The increase in other charges, commissions, and fees during the three and six months ended June 30, 2024 were primarily related to increases in income from the placement of money market accounts, annuities, and mutual funds, among other things. See the analysis of trust and investment management fees, other non-interest income and other charges, commissions, and fees included in the section captioned “Non-Interest Income” included elsewhere in this discussion.