CULLEN/FROST BANKERS, INC.
For the period ended Mar 31, 2025. Filed May 1, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 1, 2025
CFR$155.23-0.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-10-31.
0000039263-24-000069
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-01.
0000039263-25-000058
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 169 previous paragraphs and 163 current paragraphs.
83 unchanged; 69 reworded; 9 added; 14 removed; 3 previous and 2 current paragraphs rearranged.
Tables are not compared: 14 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
In addition, financial markets, international relations, and global supply chains have recently been significantly impacted by U.S. trade policies and practices including the implementation of targeted tariffs on imports and the subsequent 90-day pause on certain of those tariffs. Due to the rapidly evolving and changing state of U.S. trade policies, the amount and duration of any tariffs and their ultimate impact on us, our customers, financial markets, and the overall U.S. and global economies is currently uncertain. Nonetheless, prolonged uncertainty, elevated tariff levels or their wide-spread use in U.S. trade policy could weaken economic conditions and adversely impact the ability of borrowers to repay outstanding loans or the value of collateral securing these loans or adversely affect financial markets. To the extent that these risks may have a negative impact on the financial condition of borrowers or financial markets, it could also have a material adverse effect on our business, financial condition and results of operations.
Current report
Net income available to common shareholders increased $15.2 million, or 11.4%, for the three months ended March 31, 2025, compared to the same period in 2024. The increase during the three months ended March 31, 2025 was primarily the result of a $26.2 million increase in net interest income and a $12.6 million increase in non-interest income partly offset by a $21.8 million increase in non-interest expense and a $2.3 million increase in income tax expense.
Current report
The average taxable-equivalent yield on securities was 3.63% during the three months ended March 31, 2025, increasing 31 basis points from 3.32% during the three months ended March 31, 2024. The average yield on taxable securities was 3.29% during the three months ended March 31, 2025, increasing 46 basis points from 2.83% during the same period in 2024. The average taxable-equivalent yield on tax-exempt securities was 4.38% during the three months ended March 31, 2025, increasing 11 basis points from 4.27% during the same period in 2024. Tax-exempt securities made up approximately 33.5% of total average securities during the three months ended March 31, 2025, compared to 35.3% during the same period in 2024. The average volume of total securities during the during the three months ended March 31, 2025 increased $59.5 million, or 0.3%, compared to the same period in 2024. Securities made up approximately 40.9% of average interest-earning assets during the three months ended March 31, 2025, compared to 42.1% during the same period in 2024.
Current report
In December 2024, the Consumer Financial Protection Bureau (“CFPB”) issued a final rule that modified or eliminated several long-standing exclusions from requirements generally applicable to consumer credit that previously exempted certain overdraft practices from such requirements and required banks to restructure many overdraft fees, overdraft lines of credit, and other overdraft practices as separate consumer credit accounts that have become subject to those requirements. This rule applied to banks with over $10 billion in total assets, including Frost Bank, starting in October 2025. Compliance with the new requirements could result in Frost Bank, among other things, facing higher compliance costs in charging overdraft fees, experiencing a decreased ability to recover amounts extended as overdraft protection, reducing the availability of overdraft protection, and/or charging lower overdraft fees. Refer to our 2024 Form 10-K for additional information. In March and April 2025, the U.S. Senate and House of Representatives, respectively, each adopted a resolution that would nullify the CFPB's overdraft rule. The measure is expected to be signed by the President.
Current report
Employee Benefits. Employee benefits expense for the three months ended March 31, 2025 increased $6.2 million, or 17.2%, compared to the same period in 2024. The increase was primarily related to increases in 401(k) plan expense (up $3.0 million), payroll taxes (up $1.8 million), and medical/dental benefits expense (up $1.5 million).
Current report
Other Non-Interest Expense. Other non-interest expense for the three months ended March 31, 2025 increased $3.7 million, or 6.1%, compared to the same period in 2024. The increase included increases in professional services expense (up $1.0 million); donations expense (up $1.0 million), primarily related to a donation to the Frost Charitable Foundation; business development expense (up $556 thousand); foreclosed assets expense (up $451 thousand); and research and platform fees (up $423 thousand); among other things, partly offset by decreases in advertising/promotions expense (down $932 thousand) and check card expenses (down $416 thousand), among other things.
Current report
The allowance allocated to commercial real estate loans totaled $143.2 million, or 1.44% of total commercial real estate loans, at both March 31, 2025 and December 31, 2024 as there was no significant change in modeled expected credit losses; Q-Factor and other qualitative adjustments; or specific allocations for commercial real estate loans that were evaluated for expected credit losses on an individual basis.
Current report
Additional information related to the allowance allocated to commercial real estate loans at March 31, 2025 and December 31, 2024 is included in the following table:
Current report
The allowance allocated to consumer loans totaled $8.8 million, or 2.08% of total consumer loans, at March 31, 2025, decreasing $1.5 million, or 14.2%, compared to $10.3 million, or 2.31% of total consumer loans, at December 31, 2024. The decrease was primarily related to a decrease in modeled expected credit losses, down $1.4 million, in part due to a decrease in the expected loss rate associated with overdrafts.
Removed paragraphs (14)
Previous report
Net income available to common shareholders decreased $9.2 million, or 5.9%, for the three months ended September 30, 2024 and decreased $67.7 million, or 13.8%, for the nine months ended September 30, 2024, compared to the same periods in 2023. The decrease during the three months ended September 30, 2024 was primarily the result of a $30.2 million increase in non-interest expense and an $8.2 million increase in credit loss expense partly offset by an $18.9 million increase in net interest income, a $7.7 million increase in non-interest income, and a $2.6 million decrease in income tax expense. The decrease during the nine months ended September 30, 2024 was primarily the result of a $103.2 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 an $18.6 million increase in credit loss expense partly offset by a $21.5 million increase in non-interest income, a $20.6 million increase in net interest income, and a $12.0 million decrease in income tax expense.
Previous report
The increase in taxable-equivalent net interest income during the nine months ended September 30, 2024 was primarily related to 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, and to a lesser extent, tax-exempt securities, among other things. The impact of these items was partly offset by 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.
Previous report
As a result of the aforementioned fluctuations, the taxable-equivalent net interest margin increased 12 basis points from 3.44% during the three months ended September 30, 2023 to 3.56% during the three months ended September 30, 2024 while the taxable-equivalent net interest margin increased 7 basis points from 3.45% during the nine months ended September 30, 2023 to 3.52% during the nine months ended September 30, 2024.
Previous report
The average volume of interest-earning assets for the three months ended September 30, 2024 increased $734.2 million while the average volume of interest-earning assets for the nine months ended September 30, 2024 decreased $552.8 million compared to the same periods in 2023. The increase in the average volume of interest-earning assets during the three months ended September 30, 2024 was primarily related to a $2.1 billion increase in average loans and a $326.4 million increase in average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) partly offset by a $1.3 billion decrease in average taxable securities and an $375.2 million decrease in average tax-exempt securities. The average taxable-equivalent yield on interest-earning assets increased 34 basis points from 4.92% during the three months ended September 30, 2023 to 5.26% during the three months ended September 30, 2024.
Previous report
The average taxable-equivalent yield on securities was 3.40% during the three months ended September 30, 2024, increasing 16 basis points from 3.24% during the three months ended September 30, 2023 while the average taxable-equivalent yield on securities was 3.36% during the nine months ended September 30, 2024, increasing 12 basis points from 3.24% during the nine months ended September 30, 2023. The average yield on taxable securities was 2.94% during the three months ended September 30, 2024, increasing 18 basis points from 2.76% during the same period in 2023 while the average yield on taxable securities was 2.90% during the nine months ended September 30, 2024, increasing 19 basis points from 2.71% during the same period in 2023. The average taxable-equivalent yield on tax-exempt securities was 4.32% during the three months ended September 30, 2024, increasing 6 basis points from 4.26% during the same period in 2023 while the average taxable-equivalent yield on tax-exempt securities was 4.30% during the nine months ended September 30, 2024, increasing 4 basis points from 4.26% during the same period in 2023.
Previous report
Tax-exempt securities made up approximately 35.0% and 35.2% of total average securities during the three and nine months ended September 30, 2024, compared to 34.0% and 36.0% during the same respective periods in 2023. The average volume of total securities during the three months ended September 30, 2024 decreased $1.7 billion, or 8.1%, compared to the same period in 2023 while the average volume of total securities during the nine months ended September 30, 2024 decreased $2.2 billion, or 10.6%, compared to the same period in 2023. Securities made up approximately 41.0% and 41.3% of average interest-earning assets during the three and nine months ended September 30, 2024, compared to 45.3% and 45.6% during the same respective periods in 2023. The decreases during the three and nine months ended September 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 report
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 report
During the nine months ended September 30, 2023, we sold certain available-for-sale securities with amortized costs totaling $1.9 billion and realized a net gain of $66 thousand. Prevailing market conditions in 2023 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.
Previous report
Employee Benefits. Employee benefits expense for the three and nine months ended September 30, 2024 increased $2.5 million, or 9.5%, and increased $6.6 million, or 7.6%, respectively, compared to the same periods in 2023. The increases were primarily related to medical/dental benefits expense (up $1.3 million and $4.4 million during the three and nine months ended September 30, 2024, respectively) and payroll taxes (up $1.2 million and $3.8 million during the three and nine months ended September 30, 2024, respectively), among other things, partly offset, during the nine months ended September 30, 2024, by a decrease in 401(k)/profit sharing plan expense, primarily related to discretionary profit sharing contributions, (down $1.4 million) and increases in the net periodic benefit related to our defined benefit retirement plan (up $206 thousand and $621 thousand during the three and nine months ended September 30, 2024, respectively), among other things.
Previous report
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 bank failures in 2023 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 report
Other Non-Interest Expense. Other non-interest expense for the three and nine months ended September 30, 2024 increased $3.9 million, or 7.0%, and increased $19.0 million, or 11.7%, respectively, compared to the same periods in 2023. The increase during the three months ended September 30, 2024 included increases in professional services expense (up $1.3 million), which was primarily related to information technology services; sundry and other miscellaneous expense (up $959 thousand); travel, meals and entertainment (up $618 thousand); and business development expense (up $592 thousand), among other things. These increases were partly offset by decreases in fraud losses (down $1.5 million) and advertising/promotions expense (down $951 thousand), among other things. The increase during the nine months ended September 30, 2024 included increases in advertising/promotions expense (up $3.8 million); professional services expense (up $3.4 million), which was primarily related to information technology services; business development expense (up $1.3 million); travel, meals and entertainment (up $1.2 million); stationery/printing expense (up $1.1 million); research and platform fees (up $968 thousand); postage expense (up $796 thousand); and sundry and other miscellaneous expense (up $781 thousand), among other things.
Previous report
Net interest income for the three and nine months ended September 30, 2024 increased $18.8 million, or 4.9%, and increased $23.0 million, or 2.0%, respectively, compared to the same periods in 2023. The increase during the three months ended September 30, 2024 was primarily related to increases in the average volume of and yield on loans; increases in the average yields on taxable and tax-exempt securities; and an increase in the average volume of 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 an increase in the average volume of higher-yielding time deposit accounts; decreases in the average volumes of taxable and tax-exempt securities; increases in the average costs of interest-bearing deposit accounts; and an increase in the average volume of repurchase agreements, among other things. The increase during the nine months ended September 30, 2024 was primarily related to 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, and to a lesser extent, tax-exempt securities, among other things. The impact of these items was partly offset by 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. Net interest income for the first nine 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 report
The allowance allocated to commercial real estate loans totaled $142.8 million, or 1.46% of total commercial real estate loans, at September 30, 2024 increasing $12.2 million, or 9.4%, compared to $130.6 million, or 1.45% of total commercial real estate loans, at December 31, 2023. Q-Factor and other qualitative adjustments related to commercial real estate loans increased $6.4 million while modeled expected credit losses related to commercial real estate loans increased $3.7 million. Specific allocations for commercial real estate loans that were evaluated for expected credit losses on an individual basis increased from $2.7 million at December 31, 2023 to $4.8 million at September 30, 2024. The increase in specific allocations for commercial real estate loans was mostly related to an increased specific allocation for a loan that was previously individually assessed.
Previous report
The allowance allocated to consumer loans totaled $10.0 million, or 2.17% of total consumer loans, at September 30, 2024, compared to $10.0 million, or 2.10% of total consumer loans, at December 31, 2023. Modeled expected credit losses related to consumer loans increased $727 thousand while specific allocations for consumer loans that were evaluated for expected credit losses on an individual basis increased $187 thousand. Q-Factor and other qualitative adjustments decreased $999 thousand, which was primarily due to a decrease in the consumer overlay, which is further discussed below.
Reworded paragraphs (69)
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 and nine months ended September 30, 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, 2024, and the other information included in the 2024 Form 10-K. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results for the year ending December 31, 2025 or any future period.
Previous wording
•The effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board.
Current wording
•The effects of and changes in trade and monetary and fiscal policies and laws, including the interest rate policies of the Federal Reserve Board and the implementation of tariffs and other protectionist trade policies.
Previous wording
Net income available to common shareholders totaled $144.8 million, or $2.24 per diluted common share, and $422.7 million, or $6.51 per diluted common share, for the three and nine months ended September 30, 2024, compared to $154.0 million, or $2.38 per diluted common share, and $490.4 million, or $7.54 per diluted common share for the three and nine months ended September 30, 2023.
Current wording
Net income available to common shareholders totaled $149.3 million, or $2.30 per diluted common share, for the three months ended March 31, 2025, compared to $134.0 million, or $2.06 per diluted common share for the three months ended March 31, 2024.
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 78.0% of total revenue during the first nine 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 77.0% of total revenue during the first three months of 2025. 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 September 30, 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 31.1%); the prime interest rate (approximately 21.0%); or the American Interbank Offered Rate (“AMERIBOR”) (approximately 6.1%). Certain other loans are tied to other indices; however, such loans do not make up a significant portion of our loan portfolio as of September 30, 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 March 31, 2025, approximately 40.9% 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 33.8%); the prime interest rate (approximately 21.0%); or the American Interbank Offered Rate (“AMERIBOR”) (approximately 4.2%). 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, 2025.
Previous wording
As of September 30, 2024, the target range for the federal funds rate was 4.75% to 5.00%. In September 2024, the Federal Reserve released projections whereby the midpoint of the projected appropriate target range for the federal funds rate would fall to 4.4% by the end of 2024 and subsequently decrease to 3.4% 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 50 basis point decrease in the federal funds rate during the remainder of 2024, followed by a 100 basis point decrease in 2025.
Current wording
As of March 31, 2025, the target range for the federal funds rate was 4.25% to 4.50% In March 2025, the Federal Reserve released projections whereby the midpoint of the projected appropriate target range for the federal funds rate would fall to 3.9% by the end of 2025 and subsequently decrease to 3.4% by the end of 2026. While there can be no such assurance that any such decreases in the federal funds rate will occur, these projections imply up to a 50 basis point decrease in the federal funds rate during 2025, followed by a 50 basis point decrease in 2026.
Previous wording
We are primarily funded by core deposits, with non-interest-bearing demand deposits historically being a significant source of funds. This lower-cost funding base is expected to have a positive impact on our net interest income and net interest margin, particularly in rising or high interest rate environments. Nonetheless, our access to and pricing of deposits may be negatively impacted by, among other factors, periods of higher interest rates which could promote increased competition for deposits, including from new financial technology competitors, or provide customers with alternative investment options. During this most recent, higher interest rate cycle, we have seen a decrease in our non-interest-bearing deposits, although as market interest rates for deposits decreased in the latter part of the third quarter of 2024, period-end non-interest bearing deposits increased $468.1 million compared to the end of the second quarter. See Item 3. Quantitative and Qualitative Disclosures About Market Risk elsewhere in this report for information about our sensitivity to increases and decreases in interest rates. Further analysis of the components of our net interest margin is presented below.
Current wording
We are primarily funded by core deposits, with non-interest-bearing demand deposits historically being a significant source of funds. This lower-cost funding base is expected to have a positive impact on our net interest income and net interest margin, particularly in rising or high interest rate environments. Nonetheless, our access to and pricing of deposits may be negatively impacted by, among other factors, periods of higher interest rates which could promote increased competition for deposits, including from new financial technology competitors, or provide customers with alternative investment options. See Item 3. Quantitative and Qualitative Disclosures About Market Risk elsewhere in this report for information about our sensitivity to increases and decreases in interest rates. Further analysis of the components of our net interest margin is presented below.
Previous wording
Taxable-equivalent net interest income for the three months ended September 30, 2024 increased $17.8 million, or 4.4%, while taxable-equivalent net interest income for the nine months ended September 30, 2024 increased $12.4 million, or 1.0%, compared to the same periods in 2023. Taxable-equivalent net interest income for the nine months ended September 30, 2024 included 274 days compared to 273 for the same period in 2023 as a result of the leap year. The additional day added approximately $3.0 million to taxable-equivalent net interest income during the nine months ended September 30, 2024. Excluding the impact of the additional day results in an effective increase in taxable-equivalent net interest income of approximately $9.4 million during the nine months ended September 30, 2024.
Current wording
Taxable-equivalent net interest income for the three months ended March 31, 2025, increased $25.0 million, or 6.1%, compared to the same period in 2024. Taxable-equivalent net interest income for the three months ended March 31, 2025, included 90 days compared to 91 for the same period in 2024 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 increase in taxable-equivalent net interest income of approximately $28.0 million during the three months ended March 31, 2025. The increase in taxable-equivalent net interest income during the three months ended March 31, 2025 was primarily related to decreases in the average costs of interest-bearing deposit accounts and repurchase agreements combined with an increase in the average volume of loans and increases in the average yield on and volume of taxable securities, among other things. The impact of these items was partly offset by decreases in the average yields on loans and interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) combined with increases in the average volumes of interest-bearing deposit accounts and repurchase agreements, among other things. As a result of the aforementioned fluctuations, the taxable-equivalent net interest margin increased 12 basis points from 3.48% during the three months ended March 31, 2024 to 3.60% during the three months ended March 31, 2025.
Previous wording
The decrease in the average volume of interest-earning assets during the nine months ended September 30, 2024 was primarily related to a $1.3 billion decrease in average taxable securities, a $947.0 million decrease in average tax-exempt securities, and a $236.3 million decrease in average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) partly offset by a $2.0 billion increase in average loans. The average taxable-equivalent yield on interest-earning assets increased 46 basis points from 4.75 during the nine months ended September 30, 2023 to 5.21% during the nine months ended September 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.
Current wording
The average volume of interest-earning assets for the three months ended March 31, 2025 increased $1.5 billion compared to the same period in 2024. The increase in the average volume of interest-earning assets during the three months ended March 31, 2025 was primarily related to a $1.7 billion increase in average loans and a $373.9 million increase in average taxable securities, partly offset by a $314.4 million decrease in average tax-exempt securities, a $118.0 million decrease in average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve), and a $75.0 million decrease in average resell agreements. The average taxable-equivalent yield on interest-earning assets decreased 14 basis points from 5.13 during the three months ended March 31, 2024 to 4.99% during the three months ended March 31, 2025. The average taxable-equivalent yield on interest-earning assets 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 29 basis points from 6.83% during the three months ended September 30, 2023 to 7.12% during the three months ended September 30, 2024 while the average taxable-equivalent yield on loans increased 45 basis points from 6.62% during the nine months ended September 30, 2023 to 7.07% during the nine months ended September 30, 2024. The average taxable-equivalent yields on loans during the three and nine months ended September 30, 2024 were partly impacted by changes in market interest rates (as noted in the table above). The average volume of loans for the three months ended September 30, 2024 increased $2.1 billion, or 11.8%, while the average volume of loans for the nine months ended September 30, 2024 increased $2.0 billion, or 11.1%, compared to the same periods in 2023. Loans made up approximately 43.6% and 42.8% of average interest-earning assets during the three and nine months ended September 30, 2024, compared to 39.6% and 38.1% during the same respective periods in 2023. The increases were primarily related to the use of available funds to originate loans.
Current wording
The average taxable-equivalent yield on loans decreased 43 basis points from 7.00% during the three months ended March 31, 2024 to 6.57% during the three months ended March 31, 2025. The average taxable-equivalent yield on loans during the three months ended March 31, 2025 was impacted by decreases in market interest rates (as noted in the table above). The average volume of loans for the three months ended March 31, 2025 increased $1.7 billion, or 8.8%, compared to the same period in 2024. Loans made up approximately 43.8% of average interest-earning assets during the three months ended March 31, 2025, compared to 41.7% during the same respective period in 2024. The increase was primarily related to the use of available funds to originate loans.
Previous wording
Average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) for the three months ended September 30, 2024 increased $326.4 million, or 4.8%, 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 nine months ended September 30, 2024 decreased $236.3 million, or 3.2%, compared to the same period in 2023. The increase during the three months ended September 30, 2024 was partly related to funds provided from maturities of taxable and tax-exempt securities combined with an increase in the funds provided from an increase in the average balance of repurchase agreements. The decrease during the nine months ended September 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 15.3% and 15.7% of average interest-earning assets during the three and nine months ended September 30, 2024, compared to 14.9% and 16.0% 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) were 5.32% and 5.37% during the three and nine months ended September 30, 2024, respectively, compared to 5.33% and 4.95% during the three and nine months ended September 30, 2023, respectively. The average yield on interest-bearing deposits during the nine months ended September 30, 2024 were impacted by a higher average interest rate 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 March 31, 2025 decreased $118.0 million, or 1.6%, compared to the same period in 2024. The decrease during the three months ended March 31, 2025 was primarily related to the reinvestment of amounts held in an interest-bearing account at the Federal Reserve into loans. Interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) made up approximately 15.3% of average interest-earning assets during the three months ended March 31, 2025, compared to 16.0% during the same period in 2024. The average yield on interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) was 4.39% during the three months ended March 31, 2025, compared to 5.40% during the same period in 2024. The average yield on interest-bearing deposits during the three months ended March 31, 2025 was impacted by a lower average interest rate paid on reserves held at the Federal Reserve, compared to the same period in 2024.
Previous wording
The average rate paid on interest-bearing liabilities was 2.60% during the three months ended September 30, 2024, increasing 27 basis points from 2.33% during the same period in 2023 while the average rate paid on interest-bearing liabilities was 2.58% during the nine months ended September 30, 2024, increasing 50 basis points from 2.08% during the same period in 2023. Average deposits decreased $94.7 million, or 0.2%, during the three months ended September 30, 2024, compared to the same period in 2023 and included a $1.2 billion decrease in average non-interest-bearing deposits partly offset by a $1.1 billion increase in average interest-bearing deposits. Average deposits decreased $867.5 million, or 2.1%, during the nine months ended September 30, 2024, compared to the same period in 2023 and included a $1.8 billion decrease in average non-interest-bearing deposits partly offset by a $918.4 million increase in average interest-bearing deposits. The ratio of average interest-bearing deposits to total average deposits was 66.5% and 66.1% during the three and nine months ended September 30, 2024, compared to 63.7% and 62.5% 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 2.41% and 1.60%, respectively, during the three months ended September 30, 2024, compared to 2.12% and 1.35%, respectively, during the same period in 2023. The average cost of interest-bearing deposits and total deposits was 2.38% and 1.57%, respectively, during the nine months ended September 30, 2024, compared to 1.84% and 1.15%, 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 2.12% during the three months ended March 31, 2025, decreasing 42 basis points from 2.54% during the same period in 2024. Average deposits increased $933.4 million, or 2.3%, during the three months ended March 31, 2025, compared to the same period in 2024 and included a $1.1 billion increase in average interest-bearing deposits partly offset by a $178.0 million decrease in average non-interest-bearing deposits. The ratio of average interest-bearing deposits to total average deposits was 66.9% during the three months ended March 31, 2025, compared to 65.7% during the same period in 2024. 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 1.94% and 1.30%, respectively, during the three months ended March 31, 2025, compared to 2.34% and 1.54%, respectively, during the same period in 2024. The average cost of deposits was impacted by decreases in the interest rates we pay on our interest-bearing deposit products as a result of a decrease 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 2.66% and 2.63% during the three and nine months ended September 30, 2024, compared to 2.59% and 2.67% 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.
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 2.87% during the three months ended March 31, 2025, compared to 2.59% during the same period in 2024. 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 and nine months ended September 30, 2024 increased $7.7 million, or 7.3%, and increased $21.5 million, or 6.8%, respectively, compared to the same periods 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 months ended March 31, 2025 increased $12.6 million, or 11.3%, compared to the same period in 2024. 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 $3.4 million, or 9.0%, for the three months ended September 30, 2024 and increased $8.4 million, or 7.4%, for the nine months ended September 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 81.4% and 79.5% of total trust and investment management fees for the first nine months of 2024 and 2023, respectively. The increases in trust and investment management fees during the three and nine months ended September 30, 2024 were primarily related to increases in investment management fees (up $3.4 million and $8.9 million, respectively) and oil and gas fees (up $333 thousand and $1.2 million, respectively), partly offset by decreases in estate fees (down $215 thousand and $1.1 million, respectively), and real estate fees (down $157 thousand and $940 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 nine months ended September 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, which impacted the amount of royalties received, and increases in new lease bonuses. The decreases in estate fees and real estate fees were primarily related to decreased transaction volumes relative to 2023.
Current wording
Trust and Investment Management Fees. Trust and investment management fees increased $3.8 million, or 9.8%, for the three months ended March 31, 2025, compared to the same period in 2024. Investment management fees are the most significant component of trust and investment management fees, making up approximately 81.8% and 82.3% of total trust and investment management fees for the first three months of 2025 and 2024, respectively. The increase in trust and investment management fees during the three months ended March 31, 2025 was primarily related to increases in investment management fees (up $2.9 million) and estate fees (up $429 thousand), among other things. 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, 2025 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 average equity valuations during 2025 relative to 2024 and growth in the number of accounts. The increase in estate fees was primarily related to increased transaction volumes relative to 2024.
Previous wording
At September 30, 2024, trust assets, including both managed assets and custody assets, were primarily composed of equity securities (43.2% of assets), fixed income securities (32.9% of assets), alternative investments (9.5% of assets) and cash equivalents (8.3% of assets). The estimated fair value of these assets was $50.4 billion (including managed assets of $25.6 billion and custody assets of $24.9 billion) at September 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 $44.5 billion (including managed assets of $22.5 billion and custody assets of $22.0 billion) at September 30, 2023.
Current wording
At March 31, 2025, trust assets, including both managed assets and custody assets, were primarily composed of equity securities (42.3% of assets), fixed income securities (34.5% of assets), alternative investments (8.6% of assets) and cash equivalents (8.3% of assets). The estimated fair value of these assets was $50.7 billion (including managed assets of $25.3 billion and custody assets of $25.5 billion) at March 31, 2025, compared to $51.4 billion (including managed assets of $26.2 billion and custody assets of $25.2 billion) at December 31, 2024 and $48.8 billion (including managed assets of $24.6 billion and custody assets of $24.2 billion) at March 31, 2024.
Previous wording
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 $13.8 million ($10.4 million consumer and $3.4 million commercial) during the three months ended September 30, 2024, compared to $11.0 million ($8.3 million consumer and $2.6 million commercial) during the same period in 2023. Overdraft charges totaled $37.8 million ($28.4 million consumer and $9.4 million commercial) during the nine months ended September 30, 2024, compared to $32.5 million ($24.6 million consumer and $7.9 million commercial) during the same period in 2023. The increases in overdraft charges during the three and nine months ended September 30, 2024 were 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 months ended March 31, 2025 increased $3.8 million, or 15.4%, compared to the same period in 2024. The increase was primarily related to increases in overdraft charges on consumer and commercial accounts (up $1.9 million and $474 thousand, respectively) and commercial service charges (up $1.8 million). Overdraft charges totaled $14.2 million ($10.7 million consumer and $3.5 million commercial) during the three months ended March 31, 2025, compared to $11.9 million ($8.8 million consumer and $3.0 million commercial) during the same period in 2024. The increase in overdraft charges during the three months ended March 31, 2025 was impacted by an increase in the volume of fee assessed overdrafts relative to 2024, in part due to growth in the number of accounts. The increase in commercial service charges during the three months ended March 31, 2025 was partly related to increases in billable services related to analyzed treasury management accounts combined with the effect of a lower average earnings credit rate applied to deposits maintained by treasury management customers which resulted in customers paying for more 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.
Previous wording
Insurance Commissions and Fees. Insurance commissions and fees for the three and nine months ended September 30, 2024 increased $1.2 million, or 8.8%, and increased $1.5 million, or 3.4%, respectively, compared to the same periods in 2023. The increase during the three months ended September 30, 2024 was primarily the result of an increase in commercial lines property and casualty commissions (up $944 thousand). The increase during the nine months ended September 30, 2024 was primarily the result of an increases in both commercial lines and personal lines property and casualty commissions (up $2.7 million and $327 thousand, respectively), partly offset by decreases in life insurance commissions (down $1.3 million) and benefit plan commissions (down $321 thousand). The increases in commercial lines property and casualty commissions during the three and nine months ended September 30, 2024 and personal lines property and casualty commissions during the nine months ended September 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 nine months ended September 30, 2024 was primarily due to a decrease in business volumes mostly due to a significant transaction in the first quarter of 2023. The decrease in benefit plan commissions during the nine months ended September 30, 2024 was primarily related to a decrease in business volumes as well as premium and exposure rate decreases within the existing customer base.
Current wording
Insurance Commissions and Fees. Insurance commissions and fees for the three months ended March 31, 2025 increased $2.7 million, or 14.9%, compared to the same period in 2024. The increase during the three months ended March 31, 2025 was primarily the result of increases in benefit plan commissions (up $1.2 million), property and casualty commissions (up $675 thousand), life insurance commissions (up $456 thousand), and contingent income (up $416 thousand). The increase in benefit plan commissions was primarily related to an increase in business volumes as well as premium and exposure rate increases within the existing customer base. The increases in property and casualty commissions and life insurance commissions were primarily related to increases in business volumes.
Previous wording
Contingent income totaled $413 thousand and $4.5 million during the three and nine months ended September 30, 2024, respectively, compared to $210 thousand and $4.5 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 $3.2 million during the nine months ended September 30, 2024 and $3.2 million during the nine months ended September 30, 2023. While total performance related contingent income remained flat during the respective nine month periods in 2024 and 2023, performance related contingent income related to commercial lines insurance policies decreased due 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. This decrease was offset by an increase in performance related contingent income 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 $252 thousand and $1.4 million during the three and nine months ended September 30, 2024, respectively, compared to $135 thousand and $1.2 million during the same respective periods in 2023.
Current wording
Contingent income totaled $4.0 million during the three months ended March 31, 2025 compared to $3.6 million during the same period in 2024. 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 $3.5 million during the three months ended March 31, 2025 and $2.9 million during the three months ended March 31, 2024. Performance related contingent income related to commercial lines insurance policies increased due to improved loss performance of commercial lines insurance policies previously placed and growth within the commercial lines portfolio. 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 $517 thousand during the three months ended March 31, 2025 compared to $733 thousand during the same period in 2024.
Previous wording
Net interchange and card transaction fees for the three and nine months ended September 30, 2024 increased $756 thousand, or 16.2%, and increased $442 thousand, or 3.0%, 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.
Current wording
Net interchange and card transaction fees for the three months ended March 31, 2025 increased $928 thousand, or 20.7%, compared to the same period in 2024. A comparison of gross and net interchange and card transaction fees for the reported periods is presented in the table below.
Previous wording
Other Charges, Commissions, and Fees. Other charges, commissions, and fees for the three months ended September 30, 2024 decreased $68 thousand, or 0.5%, compared to the same period in 2023. The decrease was primarily related to decreases in capital markets advisory fees (down $419 thousand), other service charges (down $284 thousand), and income from the placement of mutual funds (down $187 thousand), among other things, mostly offset by increases in income from the placement of annuities (up $338 thousand) and money market accounts (up $188 thousand); letter of credit fees (up $174); and merchant services rebates/bonuses (up $126 thousand), among other things. Other charges, commissions, and fees for the nine months ended September 30, 2024 increased $1.2 million, or 3.3%, compared to the same period in 2023. The increase was primarily related to increases in income from the placement of money market accounts (up $1.2 million); letter of credit fees (up $711 thousand); merchant services rebates/bonuses (up $657 thousand); and income from the placement of annuities (up $587 thousand); among other things, partly offset by decreases in capital markets advisory fees (down $1.2 million), other service charges (down $853 thousand), and commitment fees on unused lines of credit (down $658 thousand), among other things.
Current wording
Other Charges, Commissions, and Fees. Other charges, commissions, and fees for the three months ended March 31, 2025 increased $1.5 million, or 12.7%, compared to the same period in 2024. The increase was primarily related to increases in income from the placement of annuities (up $857 thousand) and commitment fees on unused lines of credit (up $301 thousand), among other things.
Previous wording
Net Gain/Loss on Securities Transactions. During the nine months ended September 30, 2024, we sold certain available-for-sale securities with amortized costs totaling $145.4 million and realized a net gain of $16 thousand.
Current wording
Net Gain/Loss on Securities Transactions. During the three months ended March 31, 2025, we sold certain available-for-sale securities with amortized costs totaling $38.6 million and realized a net loss of $14 thousand. These sales were primarily made in connection with a municipal tender offer. There were no sales of securities during the three months ended March 31, 2024.
Previous wording
Other Non-Interest Income. Other non-interest income for the three months ended September 30, 2024 decreased $1.4 million, or 10.5%, compared to the same period in 2023. The decrease was primarily related to decreases in sundry and other miscellaneous income (down $1.4 million) and income from customer derivative and foreign exchange transactions (down $1.1 million) partly offset by increases in gains on the sale of foreclosed and other assets (up $449 thousand) and public finance underwriting fees (up $397 thousand), among other things. Other non-interest income for the nine months ended September 30, 2024 increased $642 thousand, or 1.8%, compared to the same period in 2023. The increase was primarily related to increases in public finance underwriting fees (up $4.1 million), income from customer securities trading activities (up $635 thousand), and earnings on the cash surrender value of life insurance (up $622 thousand), among other things, partly offset by a decrease in sundry and other miscellaneous income (down $3.8 million), among other things. The fluctuations in public finance underwriting fees and income from customer derivative, foreign exchange and securities trading transactions were primarily related to variations in transaction volumes. Sundry and other miscellaneous income during the nine months ended September 30, 2024 included, among other things, $535 thousand related to the recovery of prior write-offs; $379 thousand related to a volume bonus received from a clearing broker; $184 thousand related to distributions received from a Small Business Investment Company (“SBIC”) investment; and $162 thousand related to merchant services performance and revenue milestone bonuses. Sundry and other miscellaneous income during the same period in 2023 included, among other things, $1.5 million related to distributions received from a Small Business Investment Company (“SBIC”) investment; $1.3 million related to the recovery of prior write-offs; $950 thousand related to merchant services performance and revenue milestone bonuses; $839 thousand related to a volume bonus received from a clearing broker; and $575 thousand related to a partnership interest.
Current wording
Other Non-Interest Income. Other non-interest income for the three months ended March 31, 2025 decreased $201 thousand, or 1.6%, compared to the same period in 2024. The decrease was primarily related to decreases in public finance underwriting fees (down $2.7 million) and sundry and other miscellaneous income (down $747 thousand), mostly offset by increases in gains on the sale of foreclosed and other assets (up $2.5 million) and income from customer derivatives trading activities (up $576 thousand). The fluctuations in public finance underwriting fees and income from customer derivative, foreign exchange and securities trading transactions were primarily related to variations in transaction volumes. Gains on the sale of foreclosed and other assets during 2025 included a $2.5 million gain related to the sale of a foreclosed real estate property.
Previous wording
Total non-interest expense for the three and nine months ended September 30, 2024 increased $30.2 million, or 10.3%, and increased $103.2 million, or 11.9%, respectively, compared to the same periods in 2023. Changes in the various components of non-interest expense are discussed below.
Current wording
Total non-interest expense for the three months ended March 31, 2025 increased $21.8 million, or 6.7%, compared to the same period in 2024. Changes in the various components of non-interest expense are discussed below.
Previous wording
Salaries and Wages. Salaries and wages for the three and nine months ended September 30, 2024 increased $19.1 million, or 13.9%, and $54.8 million, or 13.7%, respectively, compared to the same periods in 2023. 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. 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 nine months ended September 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.
Current wording
Salaries and Wages. Salaries and wages for the three months ended March 31, 2025 increased $12.9 million, or 8.7%, compared to the same period in 2024. The increase in salaries and wages was primarily related to an increase in salaries due to annual merit and market increases and an increase 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, 2025 were also impacted, to a lesser extent, by an increase in incentive compensation.
Previous wording
Net Occupancy. Net occupancy expense for the three and nine months ended September 30, 2024 increased $916 thousand, or 2.9%, and increased $3.0 million, or 3.2%, respectively, compared to the same periods in 2023. The increases during the three and nine months ended September 30, 2024 were primarily related to increases in depreciation on buildings and leasehold improvements (together up $814 thousand and $2.9 million, respectively), and repairs/maintenance/service contracts expense (up $1.1 million and $2.2 million, respectively), among other things, partly offset by decreases in property taxes (down $444 thousand and $1.2 million, respectively), and, during the nine months ended September 30, 2024, utilities expense (down $634 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 months ended March 31, 2025 increased $1.5 million, or 4.7%, compared to the same period in 2024. The increase was primarily related to increases in depreciation on buildings and leasehold improvements (together up $756 thousand); repairs/maintenance/service contracts expense (up $546 thousand); and lease expense (up $492 thousand), among other things, partly offset by an increase in tenant income (up $554 thousand). 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 and nine months ended September 30, 2024 increased $2.5 million, or 7.1%, and increased $7.9 million, or 7.8%, respectively, compared to the same periods in 2023. The increases during the three and nine months ended September 30, 2024 were primarily related to increases in cloud services expense (up $1.9 million and $6.4 million, respectively), service contracts expense (up $854 thousand and $2.3 million, respectively), software amortization (up $371 thousand and $767 thousand, respectively), and, during the nine months ended September 30, 2024, software maintenance (up $707 thousand), among other things. The increases from these items were partly offset by decreases in depreciation on furniture and equipment (down $612 thousand and $2.3 million, respectively), among other things.
Current wording
Technology, Furniture, and Equipment. Technology, furniture, and equipment expense for the three months ended March 31, 2025 increased $5.1 million, or 14.6%, compared to the same period in 2024. The increase was primarily related to increases in cloud services expense (up $2.5 million), software maintenance (up $1.3 million), and depreciation on furniture and equipment (up $616 thousand), among other things.
Previous wording
Deposit Insurance. Deposit insurance expense totaled $7.2 million and $30.3 million for the three and nine months ended September 30, 2024, respectively, compared to $6.0 million and $18.5 million for the three and nine months ended September 30, 2023, respectively. The increase during the three months ended September 30, 2024 was primarily related to an increase in the assessment rate. The increase during the nine months ended September 30, 2024 was primarily related to additional accruals related to the special deposit insurance assessment discussed below and, to a lesser extent, an increase in the average assessment rate.
Current wording
Deposit Insurance. Deposit insurance expense totaled $7.2 million for the three months ended March 31, 2025 compared to $14.7 million for the three months ended March 31, 2024, respectively. Deposit insurance expense during the three months ended March 31, 2024 included $7.7 million related to additional accruals related to a special deposit insurance assessment. Refer to our 2024 Form 10-K for additional information related to the special deposit insurance assessment. Excluding the assessment from 2024, deposit insurance expense would have increased $259 thousand primarily due to an increase in total assets as well as an increase in the assessment rate.
Previous wording
Net income for the three and nine months ended September 30, 2024 decreased $10.1 million, or 6.6%, and decreased $67.2 million, or 14.0%, respectively, compared to the same periods in 2023. The decrease during the three months ended September 30, 2024 was primarily the result of a $26.9 million increase in non-interest expense and an $8.2 million increase in credit loss expense partly offset by an $18.8 million increase in net interest income, a $3.5 million increase in non-interest income and a $2.7 million decrease in income tax expense. The decrease during the nine months ended September 30, 2024 was primarily the result of a $93.1 million increase in non-interest expense and an $18.6 million increase in credit loss expense partly offset by a $23.0 million increase in net interest income, an $11.0 million decrease in income tax expense, and a $10.6 million increase in non-interest income.
Current wording
Net income for the three months ended March 31, 2025 increased $14.0 million, or 10.6%, compared to the same period in 2024. The increase during the three months ended March 31, 2025 was primarily the result of a $25.7 million increase in net interest income, a $7.4 million increase in non-interest income and a $580 thousand decrease in credit loss expense partly offset by a $17.9 million increase in non-interest expense and a $1.9 million increase in income tax expense.
Previous wording
The increase in taxable-equivalent net interest income during the three months ended September 30, 2024 was primarily related to increases in the average volume of and yield on loans; increases in the average yields on taxable and tax-exempt securities; and an increase in the average volume of 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 an increase in the average volume of higher-yielding time deposit accounts; decreases in the average volumes of taxable and tax-exempt securities; increases in the average costs of interest-bearing deposit accounts; and an increase in the average volume of repurchase agreements, among other things.
Current wording
Net interest income for the three months ended March 31, 2025 increased $25.7 million, or 6.6%, compared to the same period in 2024. The increase during the three months ended March 31, 2025 was primarily related to decreases in the average costs of interest-bearing deposit accounts and repurchase agreements combined with an increase in the average volume of loans and increases in the average yield on and volume of taxable securities, among other things. The impact of these items was partly offset by decreases in the average yields on loans and interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) combined with increases in the average volumes of interest-bearing deposit accounts and repurchase agreements, among other things. Net interest income for the first three months of 2024 included 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 and nine months ended September 30, 2024 totaled $19.4 million and $48.8 million, respectively, compared to $11.2 million and $30.2 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.
Current wording
Credit loss expense for the three months ended March 31, 2025 totaled $13.1 million compared to $13.7 million during the same period in 2024. 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 and nine months ended September 30, 2024 increased $3.5 million, or 5.6%, and increased $10.6 million, or 5.8%, respectively, compared to the same periods in 2023. The increases during the three and nine months ended September 30, 2024 were primarily related to increases in service charges on deposit accounts; insurance commissions and fees; and interchange and card transaction fees partly offset by decreases in other charges, commissions and fees; and, for the three months ended September 30, 2024, a decrease in other non-interest income. 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 commercial lines property and casualty commissions and, to a lesser extent during the nine months ended September 30, 2024, an increase in personal lines property and casualty commissions. The increases in commercial and personal lines property and casualty commissions during the nine months ended September 30, 2024 were partly offset by decreases in life insurance commissions and benefit plan commissions. The decreases in other charges, commissions, and fees were primarily related to decreases in capital markets advisory fees, other service charges, and commitment fees on unused lines of credit, among other things, partly offset by increases in letter of credit fees, and merchant services rebates/bonuses, among other things. The decrease in other non-interest income during the three months ended September 30, 2024 was primarily related to decreases in sundry and other miscellaneous income and income from customer derivative and foreign exchange transactions, among other things, partly offset by increases in public finance underwriting fees, partly offset by increases in gains on the sale of foreclosed and other assets and public finance underwriting fees, 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 months ended March 31, 2025 increased $7.4 million, or 11.2%, compared to the same period in 2024. The increase during the three months ended March 31, 2025 was primarily related to increases in service charges on deposit accounts; insurance commissions and fees; and interchange and card transaction fees. The increase in service charges on deposit accounts was primarily related to increases in overdraft charges on consumer and commercial accounts and commercial service charges. The increase in insurance commissions and fees was primarily the result of increases in benefit plan commissions, commercial lines property and casualty commissions, life insurance commissions, and contingent commissions. The increase in interchange and card transaction fees was primarily related increased income from card transactions. 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 and nine months ended September 30, 2024 increased $26.9 million, or 10.6%, and increased $93.1 million, or 12.4%, respectively, compared to the same periods in 2023. While all categories of non-interest expense increased during the three and the nine months ended September 30, 2024, the largest increases were in salaries and wages; other non-interest expense; deposit insurance expense; technology, furniture, and equipment expense; and employee benefits 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 increase in other non-interest expense during the three months ended September 30, 2024 included increases in professional services expense, which was primarily related to information technology services; sundry and other miscellaneous expense; travel, meals and entertainment; and business development expense, among other things, partly offset by decreases in fraud losses and advertising/promotions expense, among other things. The increase in other non-interest expense during the nine months ended September 30, 2024 included increases in advertising/promotions expense, professional services expense, which was primarily related to information technology services; business development expense; stationery/printing expense; postage expense; and sundry and other miscellaneous expense, among other things. The increase in deposit insurance expense during the three months ended September 30, 2024 was primarily related to an increase in the assessment rate. The increase in deposit insurance expense during the nine months ended September 30, 2024 was primarily related to additional accruals for a special deposit insurance assessment, and, to a lesser extent, an increase in the average assessment rate. The increases in technology, furniture, and equipment expense were primarily related to increases in cloud services expense, service contracts expense, software amortization, and, during the nine months ended September 30, 2024, software maintenance, among other things. The increases from these items were partly offset by decreases in depreciation on furniture and equipment, among other things. The increases in employee benefits expense were primarily related to medical/dental benefits expense and payroll taxes, among other things, partly offset, during the nine months ended September 30, 2024, by a decrease in 401(k)/profit sharing plan expense, primarily related to discretionary profit sharing contributions, and increases in the net periodic benefit related to our defined benefit retirement plan, 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 the three months ended March 31, 2025 increased $17.9 million, or 6.2%, compared to the same period in 2024. The increase was primarily due to increases in salaries and wages; employee benefits expense; technology, furniture, and equipment expense; other non-interest expense; and net occupancy expense. These increases were partly offset by a decrease in deposit insurance expense. The increase in salaries and wages was primarily related to an increase in salaries due to annual merit and market increases and an increase in the number of employees. Salaries and wages were also impacted, to a lesser extent, by an increase in incentive compensation. The increase in employee benefits expense was primarily related increases in 401(k) plan expense, payroll taxes, and medical/dental benefits expense. The increase in technology, furniture, and equipment expense was primarily related to increases in cloud services expense, software maintenance, and depreciation on furniture and equipment, among other things. The increase in other non-interest expense included increases in professional services expense; donations expense; business development expense; sundry and other miscellaneous expense; and foreclosed assets expense; among other things, partly offset by decreases in advertising/promotions expense and check card expenses, among other things. The increase in net occupancy expense was primarily related to increases in depreciation on buildings and leasehold improvements; repairs/maintenance/service contracts expense; and lease expense, among other things, partly offset by an increase in tenant income. The decrease in deposit insurance expense was primarily due to a $7.7 million special deposit insurance assessment accrual during the three months ended March 31, 2024. 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
Net income for the three and nine months ended September 30, 2024 increased $812 thousand, or 11.9%, and increased $987 thousand, or 4.0%, respectively, compared to the same periods in 2023. The increase during the three months ended September 30, 2024 was primarily the result of a $4.2 million increase in non-interest income partly offset by a $3.3 million increase in non-interest expense, among other things. The increase during the nine months ended September 30, 2024 was primarily the result of a $11.0 million increase in non-interest income partly offset by a $9.6 million increase in non-interest expense, among other things.
Current wording
Net income for the three months ended March 31, 2025 increased $1.2 million, or 17.0%, compared to the same period in 2024. The increase during the three months ended March 31, 2025 was primarily the result of a $5.3 million increase in non-interest income partly offset by a $3.9 million increase in non-interest expense, among other things.
Previous wording
Non-interest income for the three and nine months ended September 30, 2024 increased $4.2 million, or 9.7%, and increased $11.0 million, or 8.3%, respectively, compared to the same periods in 2023. The increases during the three and nine months ended September 30, 2024 were primarily due to increases in trust and investment management fees; other charges, commissions, and fees; and other non-interest income. 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 increases in other charges, commissions, and fees during the three and nine months ended September 30, 2024 were primarily related to increases in income from the placement of money market accounts, and annuities, among other things. The increase in other charges, commissions and fees during the three months ended September 30, 2024 was partly offset by a decrease in income from the placement of mutual funds. The increases in other non-interest income were primarily due to increases in income from customer securities trading activities, partly offset during the nine months ended September 30, 2024 by a decrease in the volume bonuses received from a clearing broker. 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 months ended March 31, 2025 increased $5.3 million, or 11.7%, compared to the same period in 2024. The increase during the three months ended March 31, 2025 was primarily due to increases in trust and investment management fees and other charges, commissions, and fees. The increase in trust and investment management fees was primarily related to increases in investment management fees and estate fees, among other things. The increase in investment management fees 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 average equity valuations during the first quarter of 2025 relative to the first quarter of 2024 and growth in the number of accounts. The increase in estate fees was primarily related to increased transaction volumes relative to 2024. The increase in other charges, commissions, and fees during the three months ended March 31, 2025 was primarily related to increases in income from the placement of annuities and mutual funds, and brokerage commission income, 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.
Previous wording
Non-interest expense for the three and nine months ended September 30, 2024 increased $3.3 million, or 8.8%, and increased $9.6 million, or 9.0%, respectively, compared to the same periods in 2023. The increases were primarily related to increases in salaries and wages; other non-interest expense and employee benefits expense partly offset by decreases in net occupancy expense. The increases in salaries and wages were primarily due to increases in salaries, due to annual merit and market increases, as well as increases in commission and incentive expense, among other things. The increases in other non-interest expense were primarily related to increases in research and platform fees; sundry and other miscellaneous expenses; and professional services expense; among other things, partly offset by decreases in the corporate overhead expense allocation, among other things. The increases in employee benefits were primarily related to increases in payroll taxes, medical benefits expense and 401(k)/profit sharing plan expense, among other things. The decreases in net occupancy expense were primarily due to decreases in property taxes.
Current wording
Non-interest expense for the three months ended March 31, 2025 increased $3.9 million, or 10.2%, compared to the same period in 2024. The increase was primarily related to increases in salaries and wages; other non-interest expense and employee benefits expense. The increase in salaries and wages was primarily due to an increase in salaries, due to annual merit and market increases, and an increase in incentive compensation. The increase in other non-interest expense was primarily related to increases in research and platform fees and corporate overhead expense allocations, among other things, partly offset by decreases in sundry and other miscellaneous expense and professional services expense, among other things. The increase in employee benefits was primarily related to increases in 401(k)/profit sharing plan expense, payroll taxes, and medical/dental benefits expense, among other things.
Previous wording
The Non-Banks operating segment had net losses of $3.4 million and $11.8 million during the three and nine months ended September 30, 2024, respectively, compared to net losses of $3.6 million and $10.3 million during the same respective periods in 2023. The decrease in the net loss during the three months ended September 30, 2024 was primarily due to an increase in income tax benefit due to an increase in the effective tax rate. The increase in net loss during the nine months ended September 30, 2024 was primarily due to an increase in net interest expense due to an increase in the average rates paid on our long-term borrowings partly offset by an increase in income tax benefit due to an increase in the effective tax rate.
Current wording
The Non-Banks operating segment had a net loss of $3.5 million during the three months ended March 31, 2025, compared to a net loss of $3.6 million during the same period in 2024. The three months ended March 31, 2025 was positively impacted by a decrease in net interest expense due to a decrease in the average rates paid on our long-term borrowings, and negatively impacted by an increase in non-interest expense and a decrease in the net income tax benefit.
Previous wording
During the three months ended September 30, 2024, we recognized income tax expense of $28.7 million, for an effective tax rate of 16.4%, compared to $31.3 million, for an effective tax rate of 16.8%, for the same period in 2023. During the nine months ended September 30, 2024, we recognized income tax expense of $84.3 million, for an effective tax rate of 16.5%, compared to $96.3 million, for an effective tax rate of 16.3%, for the same period in 2023. The effective income tax rates differed from the U.S. statutory federal income tax rate of 21% during 2024 and 2023 primarily due to the effect of tax-exempt income from securities, loans and life insurance policies and the income tax effects associated with stock-based compensation, among other things, and their relative proportion to total pre-tax net income. The decreases in income tax expense during the three and nine months ended September 30, 2024 were primarily due to decreases in projected pre-tax net income. The decrease in the effective tax rate during the three months ended September 30, 2024 was primarily related to an increase in tax benefits associated with stock compensation while the increase in the effective tax rate during the nine months ended September 30, 2024 was primarily related to a decrease in projected tax-exempt income from securities, among other things.
Current wording
During the three months ended March 31, 2025, we recognized income tax expense of $28.2 million, for an effective tax rate of 15.7%, compared to $25.9 million, for an effective tax rate of 16.0%, for the same period in 2024. The effective income tax rates differed from the U.S. statutory federal income tax rate of 21% during 2025 and 2024 primarily due to the effect of tax-exempt income from securities, loans and life insurance policies and the income tax effects associated with stock-based compensation, among other things, and their relative proportion to total pre-tax net income. The increase in income tax expense during the three months ended March 31, 2025 was primarily due to an increase in projected pre-tax net income. The decrease in the effective tax rate during the three months ended March 31, 2025 was primarily related to a decrease in projected disallowed deposit interest expense combined with an increase in tax benefits associated with stock compensation, among other things.
Previous wording
Average assets totaled $49.2 billion for the nine months ended September 30, 2024 representing a decrease of $608.6 million, or 1.2%, compared to average assets for the same period in 2023. Earning assets decreased $552.8 million, or 1.2%, during the nine months ended September 30, 2024, compared to the same period in 2023. The decrease in earning assets was primarily related to a $1.3 billion decrease in average taxable securities, a $947.0 million decrease in tax-exempt securities, and a $236.3 million decrease in average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) partly offset by a $2.0 billion increase in average loans. Average deposits decreased $867.5 million, or 2.1%, during the nine months ended September 30, 2024, compared to the same period in 2023. The decrease included a $1.8 billion decrease in non-interest-bearing deposits partly offset by a $918.4 million increase in interest-bearing deposits. Average non- interest-bearing deposits made up 33.9% and 37.5% of average total deposits during the nine months ended September 30, 2024 and 2023, respectively.
Current wording
Average assets totaled $50.9 billion for the three months ended March 31, 2025 representing an increase of $1.6 billion, or 3.2%, compared to average assets for the same period in 2024. Earning assets increased $1.5 billion, or 3.4%, during the three months ended March 31, 2025, compared to the same period in 2024. The increase in earning assets was primarily related to a $1.7 billion increase in average loans and a $373.9 million increase in average taxable securities partly offset by a $314.4 million decrease in tax-exempt securities, a $118.0 million decrease in average interest-bearing deposits (primarily amounts held in an interest-bearing account at the Federal Reserve) and a $75.0 million decrease in average resell agreements. Average deposits increased $933.4 million, or 2.3%, during the three months ended March 31, 2025, compared to the same period in 2024. The increase included a $1.1 billion increase in interest-bearing deposits partly offset by a $178.0 million decrease in non-interest-bearing deposits. Average non-interest-bearing deposits made up 33.1% and 34.3% of average total deposits during the three months ended March 31, 2025 and 2024, respectively.
Previous wording
Details of our loan portfolio are presented in Note 3 - Loans in the accompanying notes to consolidated financial statements included elsewhere in this report. Loans increased $1.2 billion, or 6.5%, from $18.8 billion at December 31, 2023 to $20.1 billion at September 30, 2024. The majority of our loan portfolio is comprised of commercial and industrial loans, energy loans, and real estate loans. Real estate loans include both commercial and consumer balances. Selected details related to our loan portfolio segments are presented below. Refer to our 2023 Form 10-K for a more detailed discussion of our loan origination and risk management processes.
Current wording
Details of our loan portfolio are presented in Note 3 - Loans in the accompanying notes to consolidated financial statements included elsewhere in this report. Loans increased $149.1 million, or 0.7%, from $20.8 billion at December 31, 2024 to $20.9 billion at March 31, 2025. The majority of our loan portfolio is comprised of commercial and industrial loans, energy loans, and real estate loans. Real estate loans include both commercial and consumer balances. Selected details related to our loan portfolio segments are presented below. Refer to our 2024 Form 10-K for a more detailed discussion of our loan origination and risk management processes.
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Current report — wording carried from elsewhere
3.99% during 2026; (iv) projected average 10 year Treasury rate of 4.23% during 2025 and 4.12% during 2026; and (v) average oil price of $70.88 per barrel during 2025 and $69.96 per barrel during 2026.
Current report — wording carried from elsewhere
2025, we had approximately $9.7 billion in securities that were available to pledge and could be used to support additional borrowings, as needed, through repurchase agreements or the Federal Reserve discount window.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
In addition, financial markets and global supply chains may continue to be adversely affected by the current or anticipated impact of global wars/military conflicts, terrorism, or other geopolitical events.
Previous report — wording carried elsewhere
Service Charges on Deposit Accounts. Service charges on deposit accounts for the three and nine months ended September 30, 2024 increased $3.8 million, or 16.1%, and increased $9.4 million, or 13.6%, respectively, compared to the same periods in 2023. The increase during the three months ended September 30, 2024 was primarily related to increases in overdraft charges on consumer and commercial accounts (up $2.1 million and $745 thousand, respectively) and commercial service charges (up $1.3 million). The increase during the nine months ended September 30, 2024 was primarily related to increases in commercial service charges (up $4.0 million) and overdraft charges on consumer and commercial accounts (up $3.8 million and $1.5 million, respectively). The increases in commercial service charges during the three and nine months ended September 30,
Previous report — wording carried elsewhere
December 31, 2023. The consumer and other loan portfolio primarily consists of automobile loans, overdrafts, unsecured revolving credit products, personal loans secured by cash and cash equivalents and other similar types of credit facilities.