UNIVEST FINANCIAL Corp

Previous wording

Management, in order to prepare the Corporation’s financial statements in conformity with U.S. generally accepted accounting principles, is required to make estimates and assumptions that affect the amounts reported in the Corporation’s financial statements. There are uncertainties inherent in making these estimates and assumptions. Certain critical accounting policies could materially affect the results of operations and financial condition of the Corporation should changes in circumstances require a change in related estimates or assumptions. The Corporation has identified the fair value measurement of investment securities available-for-sale and the calculation of the allowance for credit losses on loans and leases as critical accounting policies. For more information on these critical accounting policies, please refer to the Corporation’s 2023 Annual Report on Form 10-K.

Current wording

In order to prepare the Corporation’s financial statements in conformity with U.S. generally accepted accounting principles, management is required to make estimates and assumptions that affect the amounts reported in the Corporation’s financial statements. There are uncertainties inherent in making these estimates and assumptions. Certain critical accounting policies could materially affect the results of operations and financial condition of the Corporation should changes in circumstances require a change in related estimates or assumptions. The Corporation has identified the fair value measurement of investment securities available-for-sale and the calculation of the allowance for credit losses on loans and leases as critical accounting policies. For more information on these critical accounting policies, please refer to the Corporation’s 2023 Annual Report on Form 10-K.

Previous wording

The Corporation reported net income of $18.1 million, or $0.62 diluted earnings per share, for the three months ended June 30, 2024, compared to $16.8 million, or $0.57 diluted earnings per share, for the three months ended June 30, 2023. The Corporation reported net of $38.4 million, or $1.30 diluted earnings per share, for the six months ended June 30, 2024, compared to $37.8 million, or $1.28 diluted earnings per share, for the six months ended June 30, 2023. The financial results for the three months ended June 30, 2024 included tax-free bank owned life insurance ("BOLI") death benefit claims of $171 thousand, which represented $0.01 diluted earnings per share for the quarter. The financial results for the six months ended June 30, 2024 included a $3.4 million net gain ($2.7 million after-tax), or $0.09 diluted earnings per share, generated from the sale of mortgage servicing rights associated with $591.1 million of serviced loans in the first quarter of 2024. Additionally, the financial results for the second quarter of 2023 included a $1.3 million ($1.1 million after-tax), of $0.04 diluted earnings per share, restructuring change associated with expense management strategies deployed in response to macroeconomic headwinds.

Current wording

The Corporation reported net income of $18.6 million, or $0.63 diluted earnings per share, for the three months ended September 30, 2024, compared to net income of $17.0 million, or $0.58 diluted earnings per share, for the three months ended September 30, 2023. The Corporation reported net income of $57.0 million, or $1.94 diluted earnings per share, for the nine months ended September 30, 2024, compared to net income of $54.9 million, or $1.86 diluted earnings per share, for the nine months ended September 30, 2023. The financial results for the nine months ended September 30, 2024 included a $3.4 million net gain ($2.7 million after-tax), or $0.09 diluted earnings per share, generated from the sale of mortgage servicing rights associated with $591.1 million of serviced loans in the first quarter of 2024 and tax-free bank owned life insurance ("BOLI") death benefit claims of $171 thousand, which represented $0.01 diluted earnings per share for the quarter. Additionally, the financial results for the third quarter of 2023 included a $1.3 million ($1.1 million after-tax), or $0.04 diluted earnings per share, restructuring charge associated with expense management strategies deployed in response to macroeconomic headwinds.

Previous wording

Net interest income is the difference between interest earned primarily on loans, leases and investment securities and interest paid on deposits, borrowings, long-term debt and subordinated notes. Net interest income is the principal source of the Corporation’s revenue. Table 1 presents the Corporation’s average balances, tax-equivalent interest income, interest expense, tax-equivalent yields earned on average assets, cost of average liabilities, and shareholders' equity on a tax-equivalent basis for the three and six months ended June 30, 2024 and 2023. The tax-equivalent net interest margin is tax-equivalent net interest income as a percentage of average interest-earning assets. The tax-equivalent net interest spread represents the weighted average tax-equivalent yield on interest-earning assets less the weighted average cost of interest-bearing liabilities. The effect of net interest-free funding sources represents the effect on the net interest margin of net funding provided by noninterest-earning assets, noninterest-bearing liabilities and shareholders' equity. Table 2 analyzes the changes in the tax-equivalent net interest income for the periods broken down by their rate and volume components.

Current wording

Net interest income is the difference between interest earned primarily on loans, leases and investment securities and interest paid on deposits, borrowings, long-term debt and subordinated notes. Net interest income is the principal source of the Corporation’s revenue. Table 1 presents the Corporation’s average balances, tax-equivalent interest income, interest expense, tax-equivalent yields earned on average assets, cost of average liabilities, and shareholders' equity on a tax-equivalent basis for the three and nine months ended September 30, 2024 and 2023. The tax-equivalent net interest margin is tax-equivalent net interest income as a percentage of average interest-earning assets. The tax-equivalent net interest spread represents the weighted average tax-equivalent yield on interest-earning assets less the weighted average cost of interest-bearing liabilities. The effect of net interest-free funding sources represents the effect on the net interest margin of net funding provided by noninterest-earning assets, noninterest-bearing liabilities and shareholders' equity. Table 2 analyzes the changes in the tax-equivalent net interest income for the periods broken down by their rate and volume components.

Previous wording

Net interest income on a tax-equivalent basis for the three months ended June 30, 2024 was $51.3 million, a decrease of $3.3 million, or 6.1%, compared to $54.6 million for the three months ended June 30, 2023. Net interest income on a tax-equivalent basis for the six months ended June 30, 2024 was $103.1 million, a decrease of $11.3 million, or 9.8%, compared to $114.3 million for the six months ended June 30, 2023. The decreases in tax-equivalent net interest income for the three and six months ended June 30, 2024 compared to the comparable periods in the prior year reflects the continued pressure on the cost of deposits due to the shift of balances from lower to higher cost deposit products which has exceeded the increase in interest income from asset yield expansion and the increase in average interest-earning assets. However, we continue to see indicators of stabilization in the cost of funds and funding mix.

Current wording

Net interest income on a tax-equivalent basis for the three months ended September 30, 2024 was $53.5 million, a decrease of $371 thousand, or 0.7%, compared to $53.9 million for the three months ended September 30, 2023. Net interest income on a tax-equivalent basis for the nine months ended September 30, 2024 was $156.6 million, a decrease of $11.6 million, or 6.9%, compared to $168.2 million for the nine months ended September 30, 2023. The decrease in tax-equivalent net interest income for the three and nine months ended September 30, 2024 compared to the comparable periods in the prior year reflects the continued pressure on the cost of deposits due to the shift of balances from lower to higher cost deposit products, which has exceeded the increase in interest income from asset yield expansion and the increase in average interest-earning assets. However, we continue to see indicators of stabilization in the cost of funds and our funding mix.

Previous wording

The net interest margin, on a tax-equivalent basis, was 2.84% and 2.86% for the three and six months ended June 30, 2024, respectively, compared to 3.14% and 3.35% for the three and six months ended June 30, 2023, respectively. Excess liquidity reduced net interest margin by approximately two basis points for the three and six months ended June 30, 2024. Excess liquidity had no impact on net interest margin for the three and six months ended June 30, 2023.

Current wording

The net interest margin, on a tax-equivalent basis, was 2.82% and 2.85% for the three and nine months ended September 30, 2024, respectively, compared to 2.96% and 3.22% for the three and nine months ended September 30, 2023, respectively. Excess liquidity reduced net interest margin by approximately nine and four basis points for the three and nine months ended September 30, 2024. Excess liquidity reduced net interest margin by approximately four and one basis point for the three and nine months ended September 30, 2023.

Previous wording

*Obligations of states and political subdivisions and municipal loans and leases are tax-exempt earning assets.

Current wording

*Obligations of states and political subdivisions are tax-exempt earning assets.

Previous wording

Net interest income includes net deferred costs amortization of $698 thousand and $668 thousand for the three months ended June 30, 2024 and 2023, respectively.

Current wording

Net interest income includes net deferred costs amortization of $897 thousand and $563 thousand for the three months ended September 30, 2024 and 2023, respectively.

Previous wording

*Obligations of states and political subdivisions and municipal loans and leases are tax-exempt earning assets.

Current wording

*Obligations of states and political subdivisions are tax-exempt earning assets.

Previous wording

Net interest income includes net deferred costs amortization of $1.2 million and $1.1 million for the six months ended June 30, 2024 and 2023, respectively.

Current wording

Net interest income includes net deferred costs amortization of $2.0 million and $1.7 million for the nine months ended September 30, 2024 and 2023, respectively.

Previous wording

Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been included in the average loan balances. Tax-equivalent amounts for the six months ended June 30, 2024 and 2023 have been calculated using the Corporation's federal applicable rate of 21%.

Current wording

Nonaccrual loans and leases have been included in the average loan and lease balances. Loans held for sale have been included in the average loan balances. Tax-equivalent amounts for the nine months ended September 30, 2024 and 2023 have been calculated using the Corporation's federal applicable rate of 21%.

Previous wording

The provision for credit losses for the three months ended June 30, 2024 and 2023 was $707 thousand and $3.4 million, respectively. The provision for credit losses for the six months ended June 30, 2024 and 2023 was $2.1 million and $6.8 million, respectively. The following table details information pertaining to the Corporation’s allowance for credit losses on loans and leases as a percentage of loans and leases held for investment at the dates indicated.

Current wording

The provision for credit losses for the three months ended September 30, 2024 and 2023 was $1.4 million and $2.0 million, respectively. The provision for credit losses for the nine months ended September 30, 2024 and 2023 was $3.6 million and $8.8 million, respectively. The following table details information pertaining to the Corporation’s allowance for credit losses on loans and leases as a percentage of loans and leases held for investment at the dates indicated.

Previous wording

The following table presents noninterest income for the three and six months ended June 30, 2024 and 2023:

Current wording

The following table presents noninterest income for the three and nine months ended September 30, 2024 and 2023:

Previous wording

Noninterest income for the three months ended June 30, 2024 was $21.0 million, an increase of $1.1 million, or 5.8%, from the three months ended June 30, 2023. Noninterest income for the six months ended June 30, 2024 was $46.6 million, an increase of $7.1 million, or 17.9%, from the six months ended June 30, 2023.

Current wording

Noninterest income for the three months ended September 30, 2024 was $20.2 million, an increase of $1.5 million, or 7.8%, from the three months ended September 30, 2023. Noninterest income for the nine months ended September 30, 2024 was $66.7 million, an increase of $8.5 million, or 14.6%, from the nine months ended September 30, 2023.

Previous wording

Investment advisory commission and fee income increased $530 thousand, or 11.3%, for the three months ended June 30, 2024 and $972 thousand, or 10.3%, for the six months ended June 30, 2024 from the comparable periods in the prior year, primarily due to increased assets under management driven by market appreciation and new customer relationships.

Current wording

Investment advisory commission and fee income increased $476 thousand, or 9.8%, for the three months ended September 30, 2024 and $1.4 million, or 10.1%, for the nine months ended September 30, 2024 from the comparable periods in the prior year, primarily due to increased assets under management and supervision driven by new business and market appreciation.

Previous wording

Insurance commission and fee income increased $773 thousand, or 6.7%, for the six months ended June 30, 2024 from the comparable period in the prior year, primarily due to increases in premiums and an increase in contingent commission income of $476 thousand, which was $2.3 million and $1.8 million for the six months ended June 30, 2024 and 2023, respectively. Contingent income is largely recognized in the first quarter of the year.

Current wording

Insurance commission and fee income increased $386 thousand, or 8.0%, for the three months ended September 30, 2024 and $1.2 million, or 7.0%, for the nine months ended September 30, 2024 from the comparable periods in the prior year. The increase for the three months end September 30, 2024 was primarily due to an increase in commercial lines premiums. The increase for the nine months ended September 30, 2024 was primarily due to increases in commercial lines premiums and contingent commission income of $451 thousand, which was $2.3 million and $1.9 million for the nine months ended September 30, 2024 and 2023, respectively. Contingent income is largely recognized in the first quarter of the year.

Previous wording

Other service fee income decreased $274 thousand, or 8.3%, for the three months ended June 30, 2024 and increased $3.1 million, or 47.9%, for the six months ended June 30, 2024 from the comparable periods in the prior year. The decrease for the three months ended June 30, 2024 was primarily due to reduced servicing fees resulting from the sale of mortgage servicing rights associated with $591.1 million of serviced loans in the first quarter. The increase for the six months ended June 30, 2024 was primarily due to the net gain of $3.4 million generated from the sale of mortgage servicing rights associated with these serviced loans.

Current wording

Other service fee income decreased $1.2 million, or 39.9%, for the three months ended September 30, 2024 and increased $1.9 million, or 19.8%, for the nine months ended September 30, 2024 from the comparable periods in the prior year. The decrease for the three months ended September 30, 2024 was primarily due to a $785 thousand valuation allowance recorded on mortgage servicing rights driven by the increase in prepayment speed assumptions as a result of the decrease in interest rates during the quarter. Additionally, net servicing fees on sold mortgage loans decreased by $307 thousand, primarily attributable to the sale of mortgage servicing rights associated with $591.1 million of serviced loans in the first quarter of 2024 and increased amortization driven by prepayments. The increase for the nine months ended September 30, 2024 was primarily due to the net gain of $3.4 million generated from the sale of mortgage servicing rights associated with these serviced loans.

Previous wording

Bank owned life insurance income increased $297 thousand, or 37.6%, for the three months ended June 30, 2024 and $372 thousand, or 23.9%, for the six months ended June 30, 2024 from the comparable periods in the prior year, primarily due to death benefits claims of $171 thousand received during the quarter.

Current wording

Bank owned life insurance income increased $115 thousand, or 14.3%, for the three months ended September 30, 2024 and $487 thousand, or 20.6%, for the nine months ended September 30, 2024 from the comparable periods in the prior year, primarily due to purchases of new policies in the first quarter of the year. Additionally, both periods included death benefits claims of $171 thousand received during the second quarter of the year.

Previous wording

Net gain on mortgage banking activities increased $671 thousand, or 64.6%, for the three months ended June 30, 2024 and $985 thousand, or 59.2%, for the six months ended June 30, 2024 from the comparable periods in the prior year, primarily due to increased salable volume.

Current wording

Net gain on mortgage banking activities increased $1.1 million, or 37.0%, for the nine months ended September 30, 2024 from the comparable period in the prior year, primarily due to increased salable volume. Service charges on deposit accounts $802 thousand, or 15.8%, for the nine months ended September 30, 2024 from the comparable period in the prior year, primarily due to increased treasury management income.

Previous wording

The following table presents noninterest expense for the three and six months ended June 30, 2024 and 2023:

Current wording

The following table presents noninterest expense for the three and nine months ended September 30, 2024 and 2023:

Previous wording

Noninterest expense for the three months ended June 30, 2024 was $48.7 million, a decrease of $1.1 million, or 2.2%, from the three months ended June 30, 2023. Noninterest expense for the six months ended June 30, 2024 was $98.8 million, a decrease of $546 thousand, or 0.5%, from the six months ended June 30, 2023. As previously discussed, the second quarter of 2023 included restructuring charges of $1.3 million.

Current wording

Noninterest expense for the three months ended September 30, 2024 was $48.6 million, a decrease of $436 thousand, or 0.9%, from the three months ended September 30, 2023. Noninterest expense for the nine months ended September 30, 2024 was $147.3 million, a decrease of $982 thousand, or 0.7%, from the nine months ended September 30, 2023. The financial results for the nine months ended September 30, 2023 included restructuring charges of $1.3 million.

Previous wording

2023, respectively, resulting in effective rates of 19.9% and 19.8% for the respective periods. The Corporation recognized a tax expense of $9.7 million and $9.2 million for the six months ended June 30, 2024 and 2023, respectively, resulting in effective tax rates of 20.2% and 19.5% for the respective periods. The effective tax rates for the three and six months ended June 30, 2024 and 2023 reflects the benefits of tax-exempt income from investments in municipal securities and loans and leases. Additionally, the effective income tax rates for the three and six months ended June 30, 2024 were favorably impacted by proceeds from BOLI death benefits.

Current wording

The Corporation recognized a tax expense of $4.8 million and $4.3 million for the three months ended September 30, 2024 and 2023, respectively, resulting in effective rates of 20.6% and 20.0% for the respective periods. The Corporation recognized a tax expense of $14.5 million and $13.4 million for the nine months ended September 30, 2024 and 2023, respectively, resulting in effective tax rates of 20.3% and 19.7% for the respective periods. The effective tax rates for the three and nine months ended September 30, 2024 and 2023 reflects the benefits of tax-exempt income from investments in municipal securities and loans and leases. The increase in the effective tax rate for the 2024 periods was primarily due to increases in the state tax rates. Additionally, the effective income tax rates for the nine months ended September 30, 2024 were favorably impacted by proceeds from BOLI death benefits.

Previous wording

Cash and interest-earning deposits decreased $58.9 million, or 23.6%, from December 31, 2023, primarily due to a decrease in interest earning deposits at the Federal Reserve Bank of $53.9 million and a decrease of $7.1 million in cash letters as excess cash was used to pay-down long-term debt and fund loan growth.

Current wording

Cash and interest-earning deposits increased $254.9 million, or 102.0%, from December 31, 2023, primarily due to an increase in interest-earning deposits at the Federal Reserve Bank of $249.6 million due to seasonal increases in public funds outpacing loan growth, partially offset by the repayment of long-term debt.

Previous wording

Total investment securities at June 30, 2024 decreased $14.7 million, or 2.9%, from December 31, 2023. Maturities and pay-downs of $39.5 million, decreases in the fair value of available-for-sale investment securities of $2.8 million, sales of $2.1 million, net amortization of purchased premiums and discounts of $538 thousand and a provision for credit losses of $50 thousand were partially offset by purchases of $30.3 million, which were primarily residential mortgage-backed securities.

Current wording

Total investment securities at September 30, 2024 decreased $6.4 million, or 1.3%, from December 31, 2023. Maturities and pay-downs of $53.6 million, sales of $3.9 million, net amortization of purchased premiums and discounts of $820 thousand were partially offset by purchases of $42.9 million, which were primarily residential mortgage-backed securities, increases in the fair value of available-for-sale investment securities of $8.8 million and a reversal of provision for credit losses of $89 thousand.

Previous wording

Gross loans and leases held for investment increased $117.6 million, or 1.8%, from December 31, 2023. The growth in gross loans and leases held for investment was primarily due to increases in commercial, commercial real estate and residential mortgage loans, partially offset by a decrease in construction loans. For more information on the composition of the commercial loan portfolio, see "Table 4 - Loan Portfolio Overview."

Current wording

Gross loans and leases held for investment increased $163.5 million, or 2.5%, from December 31, 2023. The growth in gross loans and leases held for investment was primarily due to increases in commercial, commercial real estate and residential mortgage loans, partially offset by a decrease in construction loans. For more information on the composition of the commercial loan portfolio, see "Table 4 - Loan Portfolio Overview."

Previous wording

At June 30, 2024, nonaccrual loans and leases were $16.2 million and had a related allowance for credit losses on loans and leases of $456 thousand. At December 31, 2023, nonaccrual loans and leases were $20.5 million and had a related allowance for credit losses on loans and leases of $1.8 million. During the quarter, pay-downs totaling $2.2 million were received on two nonaccrual construction loans to one borrower. Individual reserves have been established based on current facts and management's judgements about the ultimate outcome of these credits, including the most recent known data available on any related underlying collateral and the borrower's cash flows. The amount of individual reserve needed for these credits could change in future periods subject to changes in facts and judgements related to these credits.

Current wording

At September 30, 2024, nonaccrual loans and leases were $15.3 million and had a related allowance for credit losses on loans and leases of $1.0 million. At December 31, 2023, nonaccrual loans and leases were $20.5 million and had a related allowance for credit losses on loans and leases of $1.8 million. During the nine months ended September 30, 2024, pay-offs totaling $4.6 million were received on nonaccrual loans and leases. Individual reserves have been established based on current facts and management's judgements about the ultimate outcome of these credits, including the most recent known data available on any related underlying collateral and the borrower's cash flows. The amount of individual reserve needed for these credits could change in future periods subject to changes in facts and judgements related to these credits.

Previous wording

Net loan and lease charge-offs for the three months ended June 30, 2024 were $809 thousand compared to $512 thousand for the same period in the prior year. Net loan and lease charge-offs for the six months ended June 30, 2024 were $2.2 million compared to $3.4 million for the same period in the prior year. The decrease in charge-offs for the six months ended June 30, 2024 was primarily due to $2.4 million of charge-offs related to one borrower in the first quarter of 2023.

Current wording

Net loan and lease charge-offs for the three months ended September 30, 2024 were $820 thousand compared to $969 thousand for the same period in the prior year. Net loan and lease charge-offs for the nine months ended September 30, 2024 were $3.0 million compared to $4.3 million for the same period in the prior year. The decrease in charge-offs for the nine months ended September 30, 2024 was primarily due to $2.4 million of charge-offs related to one borrower in the first quarter of 2023.

Previous wording

Other real estate owned ("OREO") was $20.0 million at June 30, 2024, compared to $19.0 million at December 31, 2023, primarily due to capitalized improvements on an existing OREO property and the transfer of a commercial real estate property with a carrying value of $252 thousand. Repossessed assets were $149 thousand at June 30, 2024. The Corporation had no repossessed assets at December 31, 2023.

Current wording

Other real estate owned ("OREO") was $20.9 million at September 30, 2024, compared to $19.0 million at December 31, 2023, primarily due to capitalized costs on an existing OREO property, the transfer of a residential real estate property with a carrying value of $156 thousand during the quarter and the transfer of a commercial real estate property with a carrying value of $252 thousand during the second quarter of 2024. Repossessed assets were $79 thousand at September 30, 2024. The Corporation had no repossessed assets at December 31, 2023.

Previous wording

Goodwill and other intangible assets have been recorded on the books of the Corporation in connection with acquisitions. The Corporation has core deposit and customer-related intangibles, which are not deemed to have an indefinite life and therefore will continue to be amortized over their useful life using the present value of projected cash flows. The amortization of core deposit and customer-related intangibles was $175 thousand and $229 thousand for the three months ended June 30, 2024 and 2023, respectively. The amortization of core deposit and customer-related intangible was $350 thousand and $458 thousand for the six months ended June 30, 2024 and 2023, respectively. See Note 5 to the Condensed Unaudited Consolidated Financial Statements, "Goodwill and Other Intangible Assets," for a summary of intangible assets at June 30, 2024 and December 31, 2023.

Current wording

Goodwill and other intangible assets have been recorded on the books of the Corporation in connection with acquisitions. The Corporation has core deposit and customer-related intangibles, which are not deemed to have an indefinite life and therefore will continue to be amortized over their useful life using the present value of projected cash flows. The amortization of core deposit and customer-related intangibles was $175 thousand and $229 thousand for the three months ended September 30, 2024 and 2023, respectively. The amortization of core deposit and customer-related intangibles was $350 thousand and $458 thousand for the nine months ended September 30, 2024 and 2023, respectively. See Note 5 to the Condensed Unaudited Consolidated Financial Statements, "Goodwill and Other Intangible Assets," for a summary of intangible assets at September 30, 2024 and December 31, 2023.

Previous wording

The Corporation also has goodwill with a net carrying value of $175.5 million at June 30, 2024 and December 31, 2023, which is deemed to be an indefinite intangible asset and is not amortized. The Corporation completes a goodwill impairment analysis on an annual basis, or more often if events and circumstances indicate that there may be impairment. The Corporation also completes an impairment test for other identifiable intangible assets on an annual basis or more often if events and circumstances indicate there may be impairment. There was no impairment of goodwill or identifiable intangibles during the six months ended June 30, 2024 or 2023. There can be no assurance that future impairment assessments or tests will not result in a charge to earnings.

Current wording

The Corporation also has goodwill with a net carrying value of $175.5 million at September 30, 2024 and December 31, 2023, which is deemed to be an indefinite intangible asset and is not amortized. The Corporation completes a goodwill impairment analysis on an annual basis, or more often if events and circumstances indicate that there may be impairment. The Corporation also completes an impairment test for other identifiable intangible assets on an annual basis or more often if events and circumstances indicate there may be impairment. There was no impairment of goodwill or identifiable intangibles during the nine months ended September 30, 2024 or 2023. There can be no assurance that future impairment assessments or tests will not result in a charge to earnings.

Previous wording

The Bank purchases bank owned life insurance to protect itself against the loss of key employees due to death and to offset or finance the Corporation's future costs and obligations to employees under its benefits plans. Bank owned life insurance increased $6.5 million, or 4.9%, from December 31, 2023, primarily due to $5.7 million of policies purchased during the first quarter of 2024.

Current wording

The Bank purchases bank owned life insurance to protect itself against the loss of key employees due to death and to offset or finance the Corporation's future costs and obligations to employees under its benefits plans. Bank owned life insurance increased $7.4 million, or 5.6%, from December 31, 2023, primarily due to $5.7 million of policies purchased during the first quarter of 2024.

Previous wording

Total deposits increased $119.5 million, or 1.9%, from December 31, 2023, primarily due to increases in commercial, consumer and brokered deposits, partially offset by a seasonal decrease in public funds deposits. At June 30, 2024, noninterest bearing deposits represented 21.5% of total deposits, down from 23.0% at December 31, 2023. At June 30, 2024, unprotected deposits, which excludes insured, internal, and collateralized deposit accounts, represented 22.1% of total deposits, down from 23.3% at December 31, 2023.

Current wording

Total deposits increased $478.4 million, or 7.5%, from December 31, 2023, primarily due to increases in commercial, brokered and seasonal public funds deposits. At September 30, 2024, noninterest bearing deposits totaling $1.3 billion represented 19.3% of total deposits compared to $1.5 billion representing 23.0% of total deposits at December 31, 2023. At September 30, 2024, unprotected deposits, which excludes insured, internal, and collateralized deposit accounts, totaled $1.4 billion and represented 20.3% of total deposits compared to $1.5 billion at December 31, 2023 representing 23.3% of total deposits.

Previous wording

Total borrowings decreased $54.3 million, or 11.7%, from December 31, 2023, primarily due to pay-downs of long-term FHLB advances of $60.0 million, partially offset by an increase of $5.5 million in customer repurchase agreements. These borrowings were replaced with $74.8 million of lower cost brokered deposits during the first half of 2024.

Current wording

Total borrowings decreased $82.7 million, or 17.8%, from December 31, 2023, primarily due to pay-downs of long-term FHLB advances of $85.0 million, partially offset by an increase of $2.0 million in customer repurchase agreements. These borrowings were replaced with lower cost deposits during the year.

Previous wording

Total shareholders' equity increased $14.9 million, or 1.8%, from December 31, 2023. Retained earnings at June 30, 2024 increased by $25.8 million primarily due to net income of $38.4 million offset by $12.3 million in cash dividends paid during the six months ended June 30, 2024. Accumulated other comprehensive loss increased by $3.5 million, attributable to decreases in the fair value of available-for-sale investment securities of $2.2 million, net of tax and a decrease in the fair value of derivatives of $1.5 million, net of tax. Treasury stock increased $6.5 million from December 31, 2023, related to repurchases of $10.5 million of stock offset by $4.0 million of stock issued under the dividend reinvestment and employee stock purchase plans and stock-based incentive plan activity.

Current wording

Total shareholders' equity increased $37.9 million, or 4.5%, from December 31, 2023. Retained earnings at September 30, 2024 increased by $38.2 million primarily due to net income of $57.0 million offset by $18.5 million in cash dividends paid during the nine months ended September 30, 2024. Accumulated other comprehensive loss decreased by $9.0 million, which was primarily attributable to increases in the fair value of available-for-sale investment securities of $7.0 million, net of tax. Treasury stock increased $9.6 million from December 31, 2023, related to repurchases of 664,201 shares at a cost of $14.7 million, offset by $5.1 million of stock issued under the dividend reinvestment and employee stock purchase plans and stock-based incentive plan activity.

Previous wording

The Banking segment reported pre-tax income of $23.6 million and $20.6 million for the three months ended June 30, 2024 and 2023, respectively, and pre-tax income of $48.6 million and $45.3 million for the six months ended June 30, 2024 and 2023, respectively. See the section of this Management's Discussion & Analysis under the headings "Results of Operations" and "Financial Condition" for a discussion of key items impacting the Banking Segment.

Current wording

The Banking segment reported pre-tax income of $22.5 million and $21.7 million for the three months ended September 30, 2024 and 2023, respectively, and pre-tax income of $71.1 million and $67.0 million for the nine months ended September 30, 2024 and 2023, respectively. See the section of this Management's Discussion & Analysis under the headings "Results of Operations" and "Financial Condition" for a discussion of key items impacting the Banking Segment.

Previous wording

The Wealth Management segment reported noninterest income of $7.3 million and $6.7 million for the three months ended June 30, 2024 and 2023, respectively, and $14.7 million and $13.4 million for the six months ended June 30, 2024 and 2023, respectively. Noninterest expense was $5.5 million and $4.8 million for the three months ended June 30, 2024 and 2023, respectively, and $11.0 million and $9.7 million for the six months ended June 30, 2024 and 2023, respectively. The increase in noninterest income for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023 was due to new customer relationships and appreciation of assets under management and supervision as a majority of investment advisory fees are billed based on the prior quarter-end assets under management and supervision balance. The increase in noninterest expense for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023 was due to increase in salary and benefits expense as we continue to invest in revenue producing positions. Assets under management and supervision were $5.0 billion as of June 30, 2024 and March 31, 2024, $4.5 billion as of June 30, 2023 and $4.3 billion as of March 31, 2023.

Current wording

The Wealth Management segment reported noninterest income of $7.5 million and $6.8 million for the three months ended September 30, 2024 and 2023, respectively, and $22.1 million and $20.2 million for the nine months ended September 30, 2024 and 2023, respectively. Noninterest expense was $5.6 million and $5.1 million for the three months ended September 30, 2024 and 2023, respectively, and $16.6 million and $14.8 million for the nine months ended September 30, 2024 and 2023, respectively. The increase in noninterest income for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 was due to new customer relationships and appreciation of assets under management and supervision as a majority of investment advisory fees are billed based on the prior quarter-end assets under management and supervision balance. The increase in noninterest expense for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023 was due to increase in salary and benefits expense as we continue to invest in revenue-producing positions. Assets under management and supervision were $5.3 billion as of September 30, 2024, $5.0 billion as of June 30, 2024, $4.3 billion as of September 30, 2023 and $4.5 billion as of June 30, 2023.

Previous wording

The Insurance segment reported noninterest income of $5.2 million for the three months ended June 30, 2024 and 2023, and $12.5 million and $11.9 million for the six months ended June 30, 2024 and 2023, respectively. Noninterest expense was $4.0 million for the three months ended June 30, 2024 and 2023, and $8.0 million and $7.9 million for the six months ended June 30, 2024 and 2023, respectively. The increase for the six months ended June 30, 2024 included an increase in contingent commission income of $476 thousand, which was $2.3 million and $1.8 million for the six months ended June 30, 2024 and 2023, respectively. Contingent income is largely recognized in the first quarter of the year.

Current wording

The Insurance segment reported noninterest income of $5.2 million and $4.9 million for the three months ended September 30, 2024 and 2023, respectively, and $17.7 million and $16.8 million for the nine months ended September 30, 2024 and 2023, respectively. Noninterest expense was $4.0 million for the three months ended September 30, 2024 and 2023, and $12.1 million and $11.9 million for the nine months ended September 30, 2024 and 2023, respectively. The increase for the nine months ended September 30, 2024 included increases in commercial lines premiums of $745 thousand and contingent commission income of $451 thousand, which was $2.3 million and $1.9 million for the nine months ended September 30, 2024 and 2023, respectively. Contingent income is largely recognized in the first quarter of the year.

Previous wording

The Corporation and its subsidiaries maintain ample ability to meet the liquidity needs of its customers. Our most liquid asset, unencumbered cash and cash equivalents, were $182.3 million and $241.5 million at June 30, 2024 and December 31, 2023, respectively. Unencumbered securities classified as available-for-sale, which provide additional sources of liquidity, totaled $22.1 million and $23.3 million at June 30, 2024 and December 31, 2023, respectively. Further, the Corporation and its subsidiaries had committed borrowing capacity from the Federal Home Loan Bank and Federal Reserve Bank of $3.6 billion and $3.4 billion at June 30, 2024 and December 31, 2023, respectively, of which $2.3 billion and $1.9 billion was available as of June 30, 2024 and December 31, 2023, respectively. The Corporation and its subsidiaries also maintained uncommitted funding sources from correspondent banks of $459.0 million at June 30, 2024 and $369.0 million at December 31, 2023. Future availability under these uncommitted funding sources is subject to the prerogatives of the granting banks and may be withdrawn at will.

Current wording

The Corporation and its subsidiaries maintain ample ability to meet the liquidity needs of its customers. Our most liquid asset, unencumbered cash and cash equivalents, were $492.3 million and $241.5 million at September 30, 2024 and December 31, 2023, respectively. Unencumbered securities classified as available-for-sale, which provide additional sources of liquidity, totaled $32.3 million and $23.3 million at September 30, 2024 and December 31, 2023, respectively. Further, the Corporation and its subsidiaries had committed borrowing capacity from the Federal Home Loan Bank and Federal Reserve Bank of $3.6 billion and $3.4 billion at September 30, 2024 and December 31, 2023, respectively, of which $1.8 billion and $1.9 billion was available as of September 30, 2024 and December 31, 2023, respectively. The Corporation and its subsidiaries also maintained uncommitted funding sources from correspondent banks of $468.0 million at September 30, 2024 and $369.0 million at December 31, 2023. Future availability under these uncommitted funding sources is subject to the prerogatives of the granting banks and may be withdrawn at will.

Previous wording

As part of its diversified funding strategy, the Corporation also utilizes a mix of short-term and long-term wholesale funding providers. Wholesale funding includes federal funds purchases from correspondent banks, secured borrowing lines from the Federal Home Loan Bank of Pittsburgh, the Federal Reserve Bank of Philadelphia and brokered deposits and other similar sources.

Current wording

As part of its diversified funding strategy, the Corporation also utilizes a mix of short-term and long-term wholesale funding providers. Wholesale funding includes federal funds purchases from correspondent banks, secured borrowing lines from the Federal Home Loan Bank of Pittsburgh and the Federal Reserve Bank of Philadelphia, and brokered deposits and other similar sources.