UNIVEST FINANCIAL Corp
For the period ended Mar 31, 2025. Filed Apr 29, 2025.
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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 Apr 29, 2025
UVSP$40.47+0.4%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 2024-10-29.
0000102212-24-000059
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-04-29.
0000102212-25-000019
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 144 previous paragraphs and 132 current paragraphs.
83 unchanged; 38 reworded; 10 added; 19 removed; 4 previous and 1 current paragraphs rearranged.
Tables are not compared: 14 previous and 12 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 (10)
Current report
•The imposition of tariffs or other domestic or international governmental policies;
Current report
•Our ability to attract and retain key employees;
Current report
Net interest income on a tax-equivalent basis for the three months ended March 31, 2025 was $57.2 million, an increase of $5.4 million, or 10.5%, compared to $51.8 million for the three months ended March 31, 2024. The increase in tax-equivalent net interest income for the three months ended March 31, 2025 compared to the comparable period in the prior year was driven by higher average balances of loans and increased yields on interest earning assets, as well as a reduction in our overall cost of funds.
Current report
Noninterest income for the three months ended March 31, 2025 was $22.4 million, a decrease of $3.2 million, or 12.4%, from the three months ended March 31, 2024.
Current report
Net gain on mortgage banking activities decreased $292 thousand, or 31.1%, for the three months ended March 31, 2025 from the comparable period in the prior year, primarily due to decreased salable volume.
Current report
Bank owned life insurance income increased $1.1 million, or 132.7%, for the three months ended March 31, 2025 from the comparable period in the prior year, primarily due to the previously discussed $1.0 million in death benefits claims.
Current report
Noninterest expense for the three months ended March 31, 2025 was $49.3 million, a decrease of $746 thousand, or 1.5%, from the three months ended March 31, 2024.
Current report
The Corporation recognized a tax expense of $5.2 million and $5.3 million for the three months ended March 31, 2025 and 2024, respectively, resulting in effective rates of 18.7% and 20.5% for the respective periods. The discrete tax effect of vested equity compensation awards favorably impacted the first quarter of 2025 by 71 basis points and unfavorably impacted the first quarter of 2024 by 74 basis points. Additionally, the effective tax rate for the three months ended March 31, 2025 was favorably impacted by 76 basis points from the proceeds of BOLI death benefits. Excluding the discrete impact of vested equity compensation awards and BOLI death benefits, the effective tax rate was 20.2% for the three months ended March 31, 2025 compared to 19.8% for the three months ended March 31, 2024.
Current report
Other real estate owned (OREO) was $22.4 million at March 31, 2025, compared to $20.1 million at December 31, 2024. During the three months ended March 31, 2025, one nonaccrual residential real estate loan with a carrying value of $2.5 million was transferred to OREO. Additionally, during the three months ended March 31, 2025, two residential real estate properties with a total carrying value of $226 thousand were sold. Repossessed assets were $79 thousand and $76 thousand at March 31, 2025 and December 31, 2024, respectively. During the three months ended March 31, 2025, repossessed assets of $17 thousand were acquired and repossessed assets totaling $13 thousand were sold.
Current report
Other liabilities decreased $10.2 million, or 15.7%, from December 31, 2024, primarily due to the payment of previously accrued annual incentive compensation.
Removed paragraphs (19)
Previous report
•Our ability to retain key employees;
Previous report
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 report
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 report
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 report
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 report
Other expense decreased $808 thousand, or 11.0%, for the three months ended September 30, 2024 and $1.1 million, or 5.3%, for the nine months ended September 30, 2024 from the comparable periods in the prior year, primarily due to decreases in retirement plan costs, insurance expense and recruiter fees. Additionally, the three months ended September 30, 2024 benefited from a decrease in bank shares tax expense.
Previous report
Professional fees decreased $184 thousand, or 10.4%, for the three months ended September 30, 2024 and $640 thousand, or 11.9%, for the nine months ended September 30, 2024 from the comparable periods in the prior year, primarily driven by a reduction in consultant fees. Deposit insurance premiums decreased $161 thousand, or 12.8%, for the three months ended September 30, 2024 driven by an improvement in the financial ratios that contribute to our assessment rate.
Previous report
Salaries, benefits and commissions increased $724 thousand, or 2.4%, for the three months ended September 30, 2024 and $1.4 million, or 1.5%, from the comparable periods in the prior year. The increase for the three months ended September 30,
Previous report
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 report
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 report
The following table provides additional information on the Corporation’s nonaccrual loans held for investment:
Previous report
Bank Owned Life Insurance
Previous report
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 report
Other Assets
Previous report
Other assets increased $11.5 million, or 12.1%, from December 31, 2023, primarily due to increases of $3.9 million in pension plan assets and $5.2 million in prepaid expenses.
Previous report
Other liabilities decreased $5.8 million, or 8.9%, from December 31, 2023, primarily due to the termination of an interest rate swap.
Previous report
In December 2018, the Federal Reserve announced that a banking organization that experiences a reduction in retained earnings due to the CECL adoption as of the beginning of the fiscal year in which CECL was adopted may elect to phase in the regulatory capital impact of adopting CECL. Transitional amounts are calculated for the following items: retained earnings, temporary difference deferred tax assets and credit loss allowances eligible for inclusion in regulatory capital. When calculating regulatory capital ratios, 25% of the transitional amounts are phased in during the first year. An additional 25% of the transitional amounts are phased in over each of the next two years and at the beginning of the fourth year, the day-one effects of CECL are completely reflected in regulatory capital.
Previous report
Additionally, in March 2020, the Office of the Comptroller of the Currency, the U.S. Department of the Treasury, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation announced the 2020 CECL interim final rule (IFR) designed to allow eligible firms to better focus on supporting lending to creditworthy households and businesses in light of the then-recent strains on the U.S. economy as a result of the coronavirus (COVID-19). The 2020 CECL IFR allows corporations that adopt CECL before December 31, 2020 to defer 100 percent of the day-one transitional amounts described above through December 31, 2021 for regulatory capital purposes. Additionally, the 2020 CECL IFR allows electing firms to defer through December 31, 2021 the approximate portion of the post day-one allowance attributable to CECL relative to the incurred loss methodology. This is calculated by applying a 25% scaling factor to the CECL provision.
Previous report
The Corporation adopted the transition guidance and the 2020 CECL IFR relief and applied these effects to regulatory capital.
Reworded paragraphs (38)
Previous wording
The information contained in this report may contain forward-looking statements. When used or incorporated by reference in disclosure documents, the words "believe," "anticipate," "estimate," "expect," "project," "target," "goal" and similar expressions are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements may include but are not limited to: statements of our goals, intentions and expectations; statements regarding our business plans, prospects, growth and operating strategies; statements regarding the quality, growth and composition of our loan and investment portfolios; and estimates of our risks and future credit provisions, costs and benefits. These forward-looking statements are based on current beliefs and expectations of our management and are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to certain risks, uncertainties and assumptions, including but not limited to those set forth below:
Current wording
The information contained in this report may contain forward-looking statements. When used or incorporated by reference in disclosure documents, the words "believe," "anticipate," "estimate," "expect," "project," "target," "goal" and similar expressions are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements may include but are not limited to: statements of our goals, intentions and expectations; statements regarding our business plans, prospects, growth and operating strategies; statements regarding the quality, growth and composition of our loan, investment and deposit portfolios; statements regarding our financial performance, financial condition and liquidity; and estimates of our risks and future credit provision expenses. These forward-looking statements are based on our current beliefs and expectations and are subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to certain risks, uncertainties and assumptions with respect to future business strategies and decisions that are subject to change, including but not limited to those set forth below:
Previous wording
•General economic conditions, either nationally or in our market areas, that are worse than expected, including as a result of employment levels and labor shortages, and the effect of inflation, a potential recession or slowed economic growth caused by supply chain disruptions or otherwise;
Current wording
•General economic conditions, either nationally or in our market areas, that are worse than expected included as a result of employment levels and labor shortages, and the effect of a potential recession or slowed economic growth caused by supply chain disruptions or otherwise;
Previous wording
•Legislative, regulatory and accounting changes, including increased assessments by the Federal Deposit Insurance Corporation;
Current wording
•Legislative, regulatory and accounting changes, including increased assessments by the Federal Deposit Insurance Corporation and changes in the income tax laws and regulations;
Previous wording
•Changes in the economic and other assumptions utilized to calculate the allowance for credit losses;
Current wording
•Changes in the economic assumptions or methodology utilized to calculate the allowance for credit losses;
Previous wording
These forward-looking statements speak only at the date of the report. The Corporation expressly disclaims any obligation to publicly release any updates or revisions to reflect any change in the Corporation’s expectations with regard to any change in events, conditions or circumstances on which any such statement is based.
Current wording
These forward-looking statements speak only as of the date of the report. The Corporation expressly disclaims any obligation to publicly release any updates or revisions to reflect any change in the Corporation’s expectations with regard to any change in events, conditions or circumstances on which any such statement is based.
Previous wording
The Corporation is a Pennsylvania corporation, organized in 1973, and registered as a bank holding company pursuant to the Bank Holding Company Act of 1956. The Corporation owns all of the capital stock of Univest Bank and Trust Co. The consolidated financial statements include the accounts of the Corporation, the Bank and its subsidiaries.
Current wording
The Corporation is a Pennsylvania corporation, organized in 1973, and registered as a bank holding company pursuant to the Bank Holding Company Act of 1956. The Corporation owns all of the capital stock of Univest Bank and Trust Co. The condensed consolidated financial statements include the accounts of the Corporation, the Bank and its subsidiaries.
Previous wording
The Corporation earns revenue primarily from the margins and fees generated from lending and depository services as well as fee-based income from trust, insurance, mortgage banking and investment services. The Corporation seeks to achieve adequate and reliable earnings through business growth while maintaining adequate levels of capital and liquidity and limiting exposure to credit and interest rate risk.
Current wording
The Corporation earns revenues primarily from the margins and fees generated from lending and depository services as well as fee-based income from trust, insurance, mortgage banking, treasury management and investment services. The Corporation seeks to achieve adequate and reliable earnings through business growth while maintaining adequate levels of capital and liquidity and limiting exposure to credit and interest rate risk.
Previous 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.
Current wording
The Corporation reported net income of $22.4 million, or $0.77 diluted earnings per share, for the three months ended March 31, 2025, compared to net income of $20.3 million, or $0.69 diluted earnings per share, for the three months ended March 31, 2024. The financial results for the three months ended March 31, 2025 included tax-free bank owned life insurance death benefits claims of $1.0 million, which represented $0.04 diluted earnings per share.
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 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.
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 months ended March 31, 2025 and 2024. 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
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.
Current wording
The net interest margin, on a tax-equivalent basis, was 3.09% for the three months ended March 31, 2025 compared to 2.88% for the three months ended March 31, 2024. Excess liquidity reduced net interest margin by approximately three basis points for the three months ended March 31, 2025 and March 31, 2024.
Previous 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.
Current wording
Net interest income includes net deferred costs amortization of $554 thousand and $453 thousand for the three months ended March 31, 2025 and 2024, respectively.
Previous 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.
Current wording
The provision for credit losses for the three months ended March 31, 2025 and 2024 was $2.3 million and $1.4 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 nine months ended September 30, 2024 and 2023:
Current wording
The following table presents noninterest income for the three months ended March 31, 2025 and 2024:
Previous 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.
Current wording
Other service fee income decreased $3.7 million, or 57.8%, for the three months ended March 31, 2025 from the comparable period in the prior year, primarily due to a $3.4 million net gain from the sale of mortgage servicing rights associated with $591.1 million of serviced loans in the first quarter of 2024. Additionally, net servicing fees on sold mortgage loans decreased by $177 thousand, primarily attributable to the previously mentioned sale of mortgage servicing rights.
Previous wording
Other income increased $1.2 million for the three and nine months ended September 30, 2024, or 512.3% and 64.8%, respectively, from the comparable periods in the prior year, primarily due to increases of $705 thousand and $958 thousand in gains on the sale of Small Business Administration loans for the three and nine months ended September 30, 2024, respectively.
Current wording
Other income decreased $780 thousand, or 76.1%, for the three months ended March 31, 2025 from the comparable period in the prior year, primarily due to decreases in other real estate owned, fees on risk participation agreements for interest rate swaps and gains on the sale of Small Business Administration loans.
Previous 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.
Current wording
Insurance commission and fee income decreased $312 thousand, or 4.3%, for the three months ended March 31, 2025 from the comparable period in the prior year, primarily due to a decrease in contingent income of $700 thousand, which was $1.6 million and $2.3 million, for the three months ended March 31, 2025 and March 31, 2024, respectively. Contingent income is largely recognized in the first quarter of the year. The decrease was partially offset by an increase of $404 thousand in revenue for commercial lines.
Previous 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.
Current wording
Investment advisory commission and fee income increased $419 thousand, or 8.1%, for the three months ended March 31, 2025 from the comparable period in the prior year, primarily due to new customer relationships and appreciation of assets under management and supervision.
Previous 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.
Current wording
Service charges on deposit accounts increased $323 thousand, or 17.3%, for the three months ended March 31, 2025 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 nine months ended September 30, 2024 and 2023:
Current wording
The following table presents noninterest expense for the three months ended March 31, 2025 and 2024:
Previous wording
2024 was primarily due to increases in salary expense and incentive compensation due to increased profitability, partially offset by an increase in compensation capitalized driven by higher loan production. The increase for the nine months ended September 30, 2024 was primarily due to increases in incentive compensation due to increased profitability and medical claims.
Current wording
Salaries, benefits and commissions decreased $512 thousand, or 1.6%, for the three months ended March 31, 2025 from the comparable period in the prior year, primarily due to an increase in compensation capitalized and a decrease in medical claims expense, partially offset by an increase in incentive compensation due to increased profitability.
Previous 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.
Current wording
Cash and interest-earning deposits decreased $159.7 million, or 48.6%, from December 31, 2024, primarily due to a decrease in interest-earning deposits at the Federal Reserve Bank of $162.7 million due to seasonal decreases in public funds, reflecting decreases in deposits and long-term debt.
Previous 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.
Current wording
Total investment securities at March 31, 2025 increased $3.1 million, or 0.6%, from December 31, 2024. Purchases of $12.7 million, which were primarily residential mortgage-backed securities, increases in the fair value of available-for-sale investment securities of $7.1 million and a reversal of provision for credit losses of $93 thousand were partially offset by maturities and pay-downs of $14.6 million, sales of $2.0 million and net amortization of purchased premiums and discounts of $236 thousand.
Previous 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."
Current wording
Gross loans and leases held for investment increased $6.5 million, or 0.1%, from December 31, 2024. The growth in gross loans and leases held for investment was primarily due to increases in commercial real estate and construction loans, partially offset by decreases in commercial loans lease financings. For more information on the composition of the commercial loan portfolio, see "Table 4 - Loan Portfolio Overview."
Previous 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.
Current wording
At March 31, 2025, nonaccrual loans and leases were $11.1 million and had a related allowance for credit losses on loans and leases of $2.6 million. At December 31, 2024, nonaccrual loans and leases were $12.7 million and had a related allowance for credit losses on loans and leases of $1.9 million. During the three months ended March 31, 2025, a $2.5 million nonaccrual residential real estate loan was transferred to other real estate owned. In addition, a $1.2 million commercial loan was placed on nonaccrual status. Individual reserves have been established based on current facts and management's judgments 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 judgments related to these credits.
Previous 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.
Current wording
Net loan and lease charge-offs for the three months ended March 31, 2025 were $1.7 million compared to $1.4 million for the same period in the prior year.
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 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.
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 $130 thousand and $175 thousand for the three months ended March 31, 2025 and 2024, respectively. See Note 5 to the Condensed Unaudited Consolidated Financial Statements, "Goodwill and Other Intangible Assets," for a summary of intangible assets at March 31, 2025 and December 31, 2024.
Previous 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.
Current wording
The Corporation also has goodwill with a net carrying value of $175.5 million at March 31, 2025 and December 31, 2024, 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 three months ended March 31, 2025 or 2024. There can be no assurance that future impairment assessments or tests will not result in a charge to earnings.
Previous 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.
Current wording
Total deposits decreased $100.8 million, or 1.5%, from December 31, 2024, primarily due to seasonal declines in public funds deposits and decreases in commercial and consumer deposits, partially offset by an increase in brokered deposits. At March 31, 2025, noninterest bearing deposits totaling $1.4 billion represented 21.5% of total deposits compared to $1.4 billion representing 20.9% of total deposits at December 31, 2024. At March 31, 2025 and December 31, 2024, unprotected deposits, which excludes insured, internal, and collateralized deposit accounts, totaled $1.5 billion, which represented 21.9% and 22.0% of total deposits at the respective periods.
Previous 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.
Current wording
Total borrowings decreased $57.0 million, or 14.8%, from December 31, 2024, primarily due to maturities of long-term FHLB advances totaling $50.0 million. These borrowings were replaced with brokered deposits during the quarter. Additionally, customer repurchase agreements decreased $7.2 million from December 31, 2024.
Previous 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.
Current wording
Total shareholders' equity increased $16.2 million, or 1.8%, from December 31, 2024. Retained earnings at March 31, 2025 increased by $16.0 million primarily due to net income of $22.4 million offset by $6.1 million in cash dividends paid during the three months ended March 31, 2025. Accumulated other comprehensive loss decreased by $6.1 million, which was primarily attributable to increases in the fair value of available-for-sale investment securities of $5.6 million, net of tax. Treasury stock increased $3.7 million from December 31, 2024, related to repurchases of 221,760 shares at a cost of $6.5 million, offset by
Previous 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.
Current wording
The Banking segment reported pre-tax income of $26.1 million and $24.6 million for the three months ended March 31, 2025 and 2024, respectively. See the section of this Management's Discussion and 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 $7.5 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.
Current wording
The Wealth Management segment reported pre-tax income of $2.0 million and $1.9 million for the three months ended March 31, 2025 and 2024, respectively. The pre-tax income increase from 2024 was primarily due to new customer relationships and appreciation of assets under management and supervision. Assets under management and supervision were $5.2 billion as of March 31, 2025 and December 31, 2024, $5.0 billion as of March 31, 2024 and $4.7 billion as of December 31, 2023.
Previous 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.
Current wording
The Insurance segment reported pre-tax income of $2.4 million and $3.1 million for the three months ended March 31, 2025 and 2024, respectively, which included noninterest income of $6.9 million in 2025 and $7.3 million in 2024. The decrease in noninterest income for the three months ended March 31, 2025 was primarily due to a decrease in contingent income of $700 thousand, which was $1.6 million and $2.3 million for the three months ended March 31, 2025 and 2024, respectively. Contingent income is largely recognized in the first quarter of the year. The decrease was partially offset by an increase of $404 thousand in revenue for commercial lines.
Previous wording
The primary functions of Asset/Liability Management are to minimize interest rate risk and to ensure adequate earnings, capital and liquidity while maintaining an appropriate balance between interest-earning assets and interest-bearing liabilities. Management's objective with regard to interest rate risk is to understand the Corporation's sensitivity to changes in interest rates and develop and implement strategies to minimize volatility while maximizing net interest income.
Current wording
The primary functions of Asset/Liability Management are to minimize interest rate risk and to ensure adequate earnings, capital and liquidity while maintaining an appropriate balance of interest-earning assets and interest-bearing liabilities. Management's objective with regard to interest rate risk is to understand the Corporation's sensitivity to changes in interest rates and develop and implement strategies to minimize volatility while maximizing net interest income.
Previous wording
The Corporation uses gap analysis and earnings at risk simulation modeling to quantify exposure to interest rate risk. The Corporation uses the gap analysis to identify and monitor long-term rate exposure and uses a risk simulation model to measure short-term rate exposure. The Corporation runs various earnings simulation scenarios to quantify the impact of declining or rising interest rates on net interest income over a one-year and two-year horizon. The simulations use expected cash flows and repricing characteristics for all financial instruments at a point in time and incorporates company-developed, market-based assumptions regarding growth, pricing, and optionality such as prepayment speeds. As interest rates increase, fixed-rate assets tend to decrease in value; conversely, as interest rates decline, fixed-rate assets tend to increase in value.
Current wording
The Corporation uses gap analysis and earnings at risk simulation modeling to quantify exposure to interest rate risk. The Corporation uses the gap analysis to identify and monitor long-term rate exposure and uses a risk simulation model to measure short-term rate exposure. The Corporation runs various earnings simulation scenarios to quantify the impact of declining or rising interest rates on net interest income over a one-year and two-year horizon. The simulations use expected cash flows and repricing characteristics for all financial instruments at a point in time and incorporate company-developed, market-based assumptions regarding growth, pricing, and optionality such as prepayment speeds. As interest rates increase, fixed-rate assets tend to decrease in value; conversely, as interest rates decline, fixed-rate assets tend to increase in value.
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 $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.
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 $166.7 million and $327.8 million at March 31, 2025 and December 31, 2024, respectively. Unencumbered securities classified as available-for-sale, which provide additional sources of liquidity, totaled $65.1 million and $55.4 million at March 31, 2025 and December 31, 2024, respectively. Further, the Corporation and its subsidiaries had committed borrowing capacity from the Federal Home Loan Bank and Federal Reserve Bank of $3.7 billion at March 31, 2025 and December 31, 2024, of which $2.3 billion and $2.1 billion was available as of March 31, 2025 and December 31, 2024, respectively. The Corporation and its subsidiaries also maintained uncommitted funding sources from correspondent banks of $468.0 million at March 31, 2025 and December 31, 2024. Future availability under these uncommitted funding sources is subject to the prerogatives of the granting banks and may be withdrawn at will.
Previous wording
Core deposits continue to be the largest significant funding source for the Corporation. These deposits are primarily generated from individuals, businesses, public funds and non-profit customers located in our primary service areas. The Corporation faces increased competition for these deposits from a large array of financial market participants, including banks, credit unions, savings institutions, mutual funds, security dealers and others.
Current wording
Non-brokered deposits continue to be the largest significant funding source for the Corporation. These deposits are primarily generated from individuals, businesses, public funds and non-profit customers located in our primary service areas. The Corporation faces increased competition for these deposits from a large array of financial market participants, including banks, credit unions, savings institutions, mutual funds, security dealers and others.
Previous wording
The Corporation has cash requirements for various financial obligations, including contractual obligations and commitments that require cash payments. The most significant contractual obligations, in both the under and over one-year time period, are for the Bank to repay certificates of deposit and short- and long-term borrowings. The Bank anticipates meeting these obligations by utilizing on-balance sheet liquidity and continuing to provide convenient depository and cash management services through its financial center network, thereby replacing these contractual obligations with similar funding sources at rates that are competitive in our market. The Bank will also use borrowings and brokered deposits to meet its obligations.
Current wording
The Corporation has cash requirements for various financial obligations, including contractual obligations and commitments that require cash payments. The most significant contractual obligations, in both the under and over one-year time period, are for the Bank to repay certificates of deposit and short- and long-term borrowings. Certificates of deposit due within one year of March 31, 2025 totaled $1.1 billion. If these deposits do not remain with the Bank, the Bank will be required to seek other sources of funds. The Bank anticipates meeting these obligations by utilizing on-balance sheet liquidity and continuing to provide convenient depository and cash management services through its financial center network, thereby replacing these contractual obligations with similar funding sources at rates that are competitive in our market. The Bank will also use borrowings and brokered deposits to meet its obligations.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
$2.8 million of stock issued under the dividend reinvestment and employee stock purchase plans and stock-based incentive plan activity.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
*Obligations of states and political subdivisions are tax-exempt earning assets.
Previous report — wording carried elsewhere
Notes: For rate calculation purposes, average loan and lease categories include deferred fees and costs and purchase accounting adjustments.
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
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%.