Ameris Bancorp

Previous wording

The following is management’s discussion and analysis of certain significant factors which have affected the financial condition and results of operations of the Company as reflected in the unaudited consolidated balance sheet as of June 30, 2024, as compared with December 31, 2023, and operating results for the three- and six-month periods ended June 30, 2024 and 2023. These comments should be read in conjunction with the Company’s unaudited consolidated financial statements and accompanying notes appearing elsewhere herein.

Current wording

The following is management’s discussion and analysis of certain significant factors which have affected the financial condition and results of operations of the Company as reflected in the unaudited consolidated balance sheet as of September 30, 2024, as compared with December 31, 2023, and operating results for the three and nine month periods ended September 30, 2024 and 2023. These comments should be read in conjunction with the Company’s unaudited consolidated financial statements and accompanying notes appearing elsewhere herein.

Previous wording

Ameris reported net income available to common shareholders of $90.8 million, or $1.32 per diluted share, for the quarter ended June 30, 2024, compared with $62.6 million, or $0.91 per diluted share, for the same period in 2023. The Company’s return on average assets and average shareholders’ equity were 1.41% and 10.34%, respectively, in the second quarter of 2024, compared with 0.98% and 7.63%, respectively, in the second quarter of 2023. During the second quarter of 2024, the Company a recorded pre-tax gain on sale of mortgage servicing rights (MSR) of $4.7 million, a pre-tax gain on conversion of Visa Class B-1 stock of $12.6 million, a pre-tax gain on bank owned life insurance (BOLI) proceeds of $466,000 and an adjustment related to FDIC special assessment of $895,000. Additionally, the Company recorded $4.8 million of tax expense related to BOLI restructuring during the period. Excluding these adjustment items, the Company’s net income would have been $80.8 million, or $1.17 per diluted share, for the second quarter of 2024 and $62.6 million, or $0.91 per diluted share, for the second quarter of 2023.

Current wording

Ameris reported net income available to common shareholders of $99.2 million, or $1.44 per diluted share, for the quarter ended September 30, 2024, compared with $80.1 million, or $1.16 per diluted share, for the same period in 2023. The Company’s return on average assets and average shareholders’ equity were 1.49% and 10.91%, respectively, in the third quarter of 2024, compared with 1.25% and 9.56%, respectively, in the third quarter of 2023. During the third quarter of 2024, the Company a recorded pre-tax gain on sale of mortgage servicing rights of $5.2 million and an expense related to natural disasters of $150,000. Excluding these adjustment items, the Company’s net income would have been $95.2 million, or $1.38 per diluted share, for the third quarter of 2024 and $80.1 million, or $1.16 per diluted share, for the third quarter of 2023.

Previous wording

Below is additional information regarding the retail banking activities, mortgage banking activities, warehouse lending activities and premium finance activities of the Company during the second quarter of 2024 and 2023, respectively:

Current wording

Below is additional information regarding the retail banking activities, mortgage banking activities, warehouse lending activities and premium finance activities of the Company during the third quarter of 2024 and 2023, respectively:

Previous wording

On a tax-equivalent basis, net interest income for the second quarter of 2024 was $212.9 million, an increase of$2.4 million, or 1.14%, compared with $210.5 million reported in the same quarter in 2023. The increase in net interest income is primarily a result of increased yield on loans and investment securities in addition to growth in average earning assets, partially offset by increased cost of funds as market interest rates have risen. Average interest-earning assets increased $433.6 million, or 1.85%, from $23.48 billion in the second quarter of 2023 to $23.92 billion for the second quarter of 2024. This growth in interest-earning assets resulted primarily from organic loan growth. The Company’s net interest margin during the second quarter of 2024 was 3.58%, down two basis points from 3.60% reported in the second quarter of 2023. Loan production amounted to $5.1 billion during the second quarter of 2024, with weighted average yields of 7.45%, compared with $5.3 billion and 7.09%, respectively, during the second quarter of 2023.

Current wording

On a tax-equivalent basis, net interest income for the third quarter of 2024 was $215.0 million, an increase of$6.3 million, or 3.03%, compared with $208.7 million reported in the same quarter in 2023. The increase in net interest income is primarily a result of increased yield on loans and interest-bearing deposits in other banks in addition to growth in average earning assets, partially offset by increased cost of funds as market interest rates have risen. Average interest-earning assets increased $980.1 million, or 4.19%, from $23.39 billion in the third quarter of 2023 to $24.37 billion for the third quarter of 2024. This growth in interest-earning assets resulted primarily from organic loan growth. The Company’s net interest margin during the third quarter of 2024 was 3.51%, down three basis points from 3.54% reported in the third quarter of 2023. Loan production amounted to $5.1 billion during the third quarter of 2024, with weighted average yields of 7.52%, compared with $4.8 billion and 7.56%, respectively, during the third quarter of 2023.

Previous wording

Total interest income, on a tax-equivalent basis, increased to $348.3 million during the second quarter of 2024, compared with $322.9 million in the same quarter of 2023. Yields on earning assets increased to 5.86% during the second quarter of 2024, compared with 5.52% reported in the second quarter of 2023. During the second quarter of 2024, loans comprised 89.1% of average earning assets, compared with 88.3% in the same quarter of 2023. Yields on loans increased to 6.00% in the second quarter of 2024, compared with 5.66% in the same period of 2023.

Current wording

Total interest income, on a tax-equivalent basis, increased to $356.1 million during the third quarter of 2024, compared with $331.5 million in the same quarter of 2023. Yields on earning assets increased to 5.81% during the third quarter of 2024, compared with 5.62% reported in the third quarter of 2023. During the third quarter of 2024, loans comprised 88.6% of average earning assets, compared with 89.1% in the same quarter of 2023. Yields on loans increased to 6.01% in the third quarter of 2024, compared with 5.81% in the same period of 2023.

Previous wording

The yield on interest-bearing deposits increased from 2.64% in the second quarter of 2023 to 3.37% in the second quarter of 2024. The yield on total interest-bearing liabilities increased from 2.96% in the second quarter of 2023 to 3.53% in the second quarter of 2024. Total funding costs, inclusive of noninterest-bearing demand deposits, increased to 2.48% in the second quarter of 2024, compared with 2.05% during the second quarter of 2023. Deposit costs increased from 1.76% in the second quarter of 2023 to 2.32% in the second quarter of 2024. Non-deposit funding costs increased from 5.26% in the second quarter of 2023 to 5.77% in the second quarter of 2024.

Current wording

The yield on interest-bearing deposits increased from 2.97% in the third quarter of 2023 to 3.44% in the third quarter of 2024. The yield on total interest-bearing liabilities increased from 3.22% in the third quarter of 2023 to 3.55% in the third quarter of 2024. Total funding costs, inclusive of noninterest-bearing demand deposits, increased to 2.50% in the third quarter of 2024, compared with 2.24% during the third quarter of 2023. Deposit costs increased from 2.00% in the third quarter of 2023 to 2.39% in the third quarter of 2024. Non-deposit funding costs increased from 5.67% in the third quarter of 2023 to 5.75% in the third quarter of 2024.

Previous wording

The Company’s provision for credit losses during the second quarter of 2024 amounted to $18.8 million, compared with $45.5 million in the second quarter of 2023. This decrease was attributable to the updated economic forecast, partially offset by organic loan growth. The provision for credit losses for the second quarter of 2024 was comprised of $25.3 million related to loans, negative $6.6 million related to unfunded commitments and negative $5,000 related to other credit losses, compared with $43.6 million related to loans, $1.9 million related to unfunded commitments and no provision related to other credit losses for the second quarter of 2023. Non-performing assets as a percentage of total assets increased five basis points to 0.74% at June 30, 2024, compared with 0.69% at December 31, 2023. The increase in non-performing assets is primarily attributable to an increase in nonaccrual loans of $28.3 million, partially offset by decreases in other real estate owned and accruing loans delinquent 90 days or more of $4.0 million and $1.1 million, respectively. The Company recognized net charge-offs on loans during the second quarter of 2024 of approximately $9.2 million, or 0.18% of average loans on an annualized basis, compared with net charge-offs of approximately $14.2 million, or 0.28%, in the second quarter of 2023. The Company’s total allowance for credit losses on loans at June 30, 2024 was $336.2 million, or 1.60% of total loans, compared with $307.1 million, or 1.52% of total loans, at December 31, 2023. This increase is primarily attributable to updated forecast economic conditions and organic growth in loans.

Current wording

The Company’s provision for credit losses during the third quarter of 2024 amounted to $6.1 million, compared with $24.5 million in the third quarter of 2023. This decrease was attributable to the updated economic forecast, partially offset by loan mix changes. The provision for credit losses for the third quarter of 2024 was comprised of $6.3 million related to loans, negative $204,000 related to unfunded commitments and negative $2,000 related to other credit losses, compared with $30.1 million related to loans, negative $5.6 million related to unfunded commitments and negative $2,000 provision related to other credit losses for the third quarter of 2023. Non-performing assets as a percentage of total assets decreased 25 basis points to 0.44% at September 30, 2024, compared with 0.69% at December 31, 2023. The decrease in non-performing assets is primarily attributable to decreases in nonaccrual loans of $55.6 million and accruing loans delinquent 90 days or more of $4.8 million, partially offset by an increase in other real estate owned of $3.3 million. The decrease in nonaccrual loans primarily resulted from a sale of MSRs which reduced exposure to GNMA nonaccrual loans from $90.2 million at December 31, 2023 to $8.2 million at September 30, 2024, partially offset by portfolio loans moved to nonaccrual during the year-to-date period. The Company recognized net charge-offs on loans during the third quarter of 2024 of approximately $8.1 million, or 0.15% of average loans on an annualized basis, compared with net charge-offs of approximately $12.1 million, or 0.23%, in the third quarter of 2023. The Company’s total allowance for credit losses on loans at September 30, 2024 was $334.5 million, or 1.60% of total loans, compared with $307.1 million, or 1.52% of total loans, at December 31, 2023. This increase is primarily attributable to organic growth in loans and the updated economic forecast.

Previous wording

Total noninterest income for the second quarter of 2024 was $88.7 million, an increase of $21.4 million, or 31.7%, from the $67.3 million reported in the second quarter of 2023. Income from mortgage banking activities was $46.4 million in the second quarter of 2024, an increase of $5.7 million, or 13.9%, from $40.7 million in the second quarter of 2023. Total production in the second quarter of 2024 amounted to $1.33 billion, unchanged from the same quarter of 2023, while gain on sale spread increased to 2.45% in the current quarter, compared with 2.18% in the same quarter of 2023. The retail mortgage open pipeline finished the second quarter of 2024 at $802.2 million, compared with $606.7 million at March 31, 2024 and $652.1 million at the end of the second quarter of 2023.

Current wording

Total noninterest income for the third quarter of 2024 was $69.7 million, an increase of $6.5 million, or 10.3%, from the $63.2 million reported in the third quarter of 2023. Income from mortgage banking activities was $37.9 million in the third quarter of 2024, an increase of $1.7 million, or 4.6%, from $36.3 million in the third quarter of 2023. Total production in the third quarter of 2024 amounted to $1.16 billion, compared with $1.18 billion in the same quarter of 2023, while gain on sale spread increased to 2.17% in the current quarter, compared with 2.15% in the same quarter of 2023. The retail mortgage open pipeline finished the third quarter of 2024 at $813.7 million, compared with $802.2 million at June 30, 2024 and $623.9 million at the end of the third quarter of 2023.

Previous wording

Service charges on deposit accounts increased $1.4 million, or 12.2%, to $12.7 million in the second quarter of 2024, compared with $11.3 million in the second quarter of 2023. Net gain (loss) on securities increased to $12.3 million in the second quarter of 2024, compared with negative $6,000 in the second quarter of 2023. This increase was primarily due to the conversion of Visa Class B-1 stock resulting in a gain of $12.6 million and related realized gain (loss) on subsequent sales and mark-to-market adjustments post-conversion. Other noninterest income increased $1.8 million, or 12.2%, to $16.1 million for the second quarter of 2024, compared with $14.3 million during the second quarter of 2023. The increase in other noninterest income was primarily attributable to a gain on sale of mortgage servicing rights of $4.7 million, partially offset by a decline in the gain on sale of SBA loans and fee income in our equipment finance division of $843,000 and $414,000, respectively.

Current wording

Service charges on deposit accounts increased $826,000, or 6.8%, to $12.9 million in the third quarter of 2024, compared with $12.1 million in the third quarter of 2023. Net loss on securities improved to $8,000 in the third quarter of 2024, compared with $16,000 in the third quarter of 2023. Other noninterest income increased $4.1 million, or 30.1%, to $17.7 million for the third quarter of 2024, compared with $13.6 million during the third quarter of 2023. The increase in other noninterest income was primarily attributable to a gain on sale of mortgage servicing rights of $5.2 million and an increase in BOLI income of $1.5 million, partially offset by a decline infee income in our equipment finance division and derivative income of $1.6 million and $718,000, respectively.

Previous wording

Total noninterest expense for the second quarter of 2024 increased $7.0 million, or 4.7%, to $155.4 million, compared with $148.4 million in the same quarter 2023. Salaries and employee benefits increased $6.9 million, or 8.4%, from $81.3 million in the second quarter of 2023 to $88.2 million in the second quarter of 2024, due primarily to increases invariable compensation related to mortgage production of $1.8 million andhealth insurance costs of $1.2 million and a decrease in deferred origination costs of $1.0 million. Data processing and communications expenses increased $1.7 million, or 13.0%, to $15.2 million in the second quarter of 2024, compared with $13.5 million in the second quarter of 2023. Advertising and marketing expense was $3.6 million in the second quarter of 2024, compared with $2.6 million in the second quarter of 2023, with the increase primarily due to a new deposit marketing campaign initiated in the second quarter of 2024. Amortization of intangible assets decreased $281,000, or 6.0%, from $4.7 million in the second quarter of 2023 to $4.4 million in the second quarter of 2024. This decrease was primarily related to a reduction in core deposit intangible amortization. Loan servicing expenses increased

Current wording

Total noninterest expense for the third quarter of 2024 increased $10.3 million, or 7.3%, to $151.8 million, compared with $141.4 million in the same quarter 2023. Salaries and employee benefits increased $6.8 million, or 8.3%, from $81.9 million in the third quarter of 2023 to $88.7 million in the third quarter of 2024, due primarily to increases in health insurance cost, annual merit increases andvariable compensation related to mortgage production. Data processing and communications expenses increased $2.2 million, or 17.3%, to $15.2 million in the third quarter of 2024, compared with $13.0 million in the third quarter of 2023. Advertising and marketing expense was $4.1 million in the third quarter of 2024, compared with $2.7 million in the third quarter of 2023, with the increase primarily due to a new deposit marketing campaign initiated in the second quarter of 2024. Amortization of intangible assets decreased $245,000, or 5.5%, from $4.4 million in the third quarter of 2023 to $4.2 million in the third quarter of 2024. This decrease was primarily related to a reduction in core deposit intangible amortization. Loan servicing expenses decreased $664,000, or 7.1%, from $9.3 million in the third quarter of 2023 to $8.6 million in the third quarter of 2024, primarily attributable to the sale of mortgage servicing rights in the second and third quarters of 2024 partially offset by additional mortgage loans serviced added from mortgage production over the previous year. Other noninterest expenses increased $603,000, or 3.2%, from $18.8 million in the third quarter of 2023 to $19.4 million in the third quarter of 2024, due primarily to an increase in legal and other professional fees of $601,000.

Previous wording

Income tax expense is influenced by the statutory rate, the amount of taxable income, the amount of tax-exempt income and the amount of nondeductible expenses. For the second quarter of 2024, the Company reported income tax expense of $35.7 million, compared with $20.3 million in the same period of 2023. The Company’s effective tax rate for the three months ended June 30, 2024 and 2023 was 28.2% and 24.5%, respectively. The increase in the effective tax rate is primarily a result of a $4.8 million tax expense related to BOLI surrender during the period.

Current wording

Income tax expense is influenced by the statutory rate, the amount of taxable income, the amount of tax-exempt income and the amount of nondeductible expenses. For the third quarter of 2024, the Company reported income tax expense of $26.7 million, compared with $24.9 million in the same period of 2023. The Company’s effective tax rate for the three months ended September 30, 2024 and 2023 was 21.2% and 23.7%, respectively. The decrease in the effective rate for the three months ended September 30, 2024 is primarily related to a favorable return-to-provision adjustment resulting from reduced state apportionment.

Previous wording

Results of Operations for the Six Months Ended June 30, 2024 and 2023

Current wording

Results of Operations for the Nine Months Ended September 30, 2024 and 2023

Previous wording

Ameris reported net income available to common shareholders of $165.1 million, or $2.39 per diluted share, for the six months ended June 30, 2024, compared with $123.1 million, or $1.78 per diluted share, for the same period in 2023. The Company’s return on average assets and average shareholders’ equity were 1.30% and 9.49%, respectively, in the six months ended June 30, 2024, compared with 0.98% and 7.58%, respectively, in the same period in 2023. During the first six months of 2024, the Company recorded a pre-tax gain on conversion of its Visa Class B-1 stock of $12.6 million, a pre-tax gain on sale of mortgage servicing rights of $4.7 million, a pre-tax FDIC special assessment of $2.0 million and a pre-tax gain on BOLI proceeds of $1.5 million. Additionally, the Company recorded $4.8 million in tax expense attributable to BOLI restructuring. During the first six months of 2023, the Company recorded pre-tax gain on BOLI proceeds of $486,000. Excluding these adjustment items, the Company’s net income would have been $156.4 million, or $2.27 per diluted share, for the six months ended June 30, 2024 and $122.6 million, or $1.77 per diluted share, for the same period in 2023.

Current wording

Ameris reported net income available to common shareholders of $264.3 million, or $3.83 per diluted share, for the nine months ended September 30, 2024, compared with $203.2 million, or $2.94 per diluted share, for the same period in 2023. The Company’s return on average assets and average shareholders’ equity were 1.36% and 9.98%, respectively, in the nine months ended September 30, 2024, compared with 1.07% and 8.26%, respectively, in the same period in 2023. During the first nine months of 2024, the Company recorded a pre-tax gain on conversion of its Visa Class B-1 stock of $12.6 million, a pre-tax gain on sale of mortgage servicing rights of $10.0 million, a pre-tax FDIC special assessment of $2.0 million, a pre-tax gain on BOLI proceeds of $1.5 million, a pre-tax natural disaster expense of $150,000 and a $4.8 million expense related to the termination of certain BOLI policies during the quarter, the proceeds of which the Company will reinvest in higher yielding policies. During the first nine months of 2023, the Company recorded pre-tax gain on BOLI proceeds of $486,000. Excluding these adjustment items, the Company’s net income would have been $251.6 million, or $3.64 per diluted share, for the nine months ended September 30, 2024 and $202.7 million, or $2.93 per diluted share, for the same period in 2023.

Previous wording

Below is additional information regarding the retail banking activities, mortgage banking activities, warehouse lending activities and premium finance activities of the Company during the six months ended June 30, 2024 and 2023, respectively:

Current wording

Below is additional information regarding the retail banking activities, mortgage banking activities, warehouse lending activities and premium finance activities of the Company during the nine months ended September 30, 2024 and 2023, respectively:

Previous wording

The following table sets forth the average balance, interest income or interest expense, and average yield/rate paid for each category of interest-earning assets and interest-bearing liabilities, net interest spread, and net interest margin on average interest-earning assets for the six months ended June 30, 2024 and 2023. Federally tax-exempt income is presented on a taxable-equivalent basis assuming a 21% federal tax rate.

Current wording

The following table sets forth the average balance, interest income or interest expense, and average yield/rate paid for each category of interest-earning assets and interest-bearing liabilities, net interest spread, and net interest margin on average interest-earning assets for the nine months ended September 30, 2024 and 2023. Federally tax-exempt income is presented on a taxable-equivalent basis assuming a 21% federal tax rate.

Previous wording

On a tax-equivalent basis, net interest income for the six months ended June 30, 2024 was $415.2 million, a decrease of $7.9 million, or 1.86%, compared with $423.1 million reported in the same period of 2023. The lower net interest income is a result of increased yield on interest-bearing deposits, a shift in deposit mix as interest rates have risen and increased non-deposit funding costs, partially offset bygrowth in average earning assets and increased associated market rates. Average interest earning assets increased $354.1 million, or 1.53%, from $23.21 billion in the first six months of 2023 to $23.56 billion for the first six months of 2024. This growth in interest earning assets resulted primarily from organic growth in average loans, partially offset by paydowns on the securities portfolio and average loans held for sale. The Company’s net interest margin during the first six months of 2024 was 3.54%, down 14 basis points from 3.68% reported for the first six months of 2023. Loan production amounted to $8.9 billion during the first six months of 2024, with weighted average yields of 7.56%, compared with $9.2 billion and 7.00%, respectively, during the first six months of 2023.

Current wording

On a tax-equivalent basis, net interest income for the nine months ended September 30, 2024 was $630.2 million, a decrease of $1.5 million, or 0.24%, compared with $631.8 million reported in the same period of 2023. The lower net interest income is a result of increased yield on interest-bearing deposits and a shift in deposit mix as interest rates have risen, partially offset bygrowth in average earning assets and increased associated market rates. Average interest earning assets increased $564.1 million, or 2.42%, from $23.27 billion in the first nine months of 2023 to $23.83 billion for the first nine months of 2024. This growth in interest earning assets resulted primarily from organic growth in average loans, partially offset by paydowns on the securities portfolio and average loans held for sale. The Company’s net interest margin during the first nine months of 2024 was 3.53%, down 10 basis points from 3.63% reported for the first nine months of 2023. Loan production amounted to $14.1 billion during the first nine months of 2024, with weighted average yields of 7.54%, compared with $14.0 billion and 7.19%, respectively, during the first nine months of 2023.

Previous wording

Total interest income, on a tax-equivalent basis, increased to $678.7 million during the six months ended June 30, 2024, compared with $619.6 million in the same period of 2023. Yields on earning assets increased to 5.79% during the first six months of 2024, compared with 5.38% reported in the same period of 2023. During the first six months of 2024, loans comprised 89.0% of average earning assets, compared with 88.5% in the same period of 2023. Yields on loans increased to 5.96% during the six months ended June 30, 2024, compared with 5.55% in the same period of 2023.

Current wording

Total interest income, on a tax-equivalent basis, increased to $1.03 billion during the nine months ended September 30, 2024, compared with $951.1 million in the same period of 2023. Yields on earning assets increased to 5.80% during the first nine months of 2024, compared with 5.46% reported in the same period of 2023. During the first nine months of 2024, loans comprised 88.9% of average earning assets, compared with 88.7% in the same period of 2023. Yields on loans increased to 5.97% during the nine months ended September 30, 2024, compared with 5.64% in the same period of 2023.

Previous wording

The yield on total interest-bearing liabilities increased from 2.68% during the six months ended June 30, 2023 to 3.48% in the same period of 2024. Total funding costs, inclusive of noninterest-bearing demand deposits, increased to 2.44% in the first six months of 2024, compared with 1.82% during the same period of 2023. Deposit costs increased from 1.46% in the first six months of 2023 to 2.31% in the same period of 2024. Non-deposit funding costs increased from 5.17% in the first six months of 2023 to 5.88% in the same period of 2024.

Current wording

The yield on total interest-bearing liabilities increased from 2.86% during the nine months ended September 30, 2023 to 3.51% in the same period of 2024. Total funding costs, inclusive of noninterest-bearing demand deposits, increased to 2.46% in the first nine months of 2024, compared with 1.96% during the same period of 2023. Deposit costs increased from 1.65% in the first nine months of 2023 to 2.33% in the same period of 2024. Non-deposit funding costs increased from 5.29% in the first nine months of 2023 to 5.84% in the same period of 2024.

Previous wording

The Company’s provision for credit losses during the six months ended June 30, 2024 amounted to $39.9 million, compared with $95.2 million in the six months ended June 30, 2023. This decrease was primarily attributable to the updated economic forecast during the first six months of 2024. The provision for credit losses for the first six months of 2024 was comprised of $50.9 million related to loans, negative $11.0 million related to unfunded commitments and negative $1,000 related to other credit losses, compared with $93.0 million related to loans, $2.2 million related to unfunded commitments and $7,000 related to other credit losses for the same period in 2023. Non-performing assets as a percentage of total assets increased from 0.69% at December 31, 2023 to 0.74% at June 30, 2024. The increase in non-performing assets is primarily attributable to an increase in nonaccrual loans of $28.3 million, partially offset by decreases in other real estate owned and accruing loans delinquent 90 days or more of $4.0 million and $1.1 million, respectively. Net charge-offs on loans during the first six months of 2024 were $21.8 million, or 0.21% of average loans on an annualized basis, compared with approximately $24.9 million, or 0.25%, in the first six months of 2023. The Company’s total allowance for credit losses on loans at June 30, 2024 was $336.2 million, or 1.60% of total loans, compared with $307.1 million, or 1.52% of total loans, at December 31, 2023. This increase is primarily attributable to organic growth in loans and the updated economic forecast.

Current wording

The Company’s provision for credit losses during the nine months ended September 30, 2024 amounted to $46.0 million, compared with $119.7 million in the nine months ended September 30, 2023. This decrease was primarily attributable to the updated economic forecast during the first nine months of 2024, partially offset by organic loan growth. The provision for credit losses for the first nine months of 2024 was comprised of $57.2 million related to loans, negative $11.2 million related to unfunded commitments and negative $3,000 related to other credit losses, compared with $123.1 million related to loans, negative $3.4 million related to unfunded commitments and $5,000 related to other credit losses for the same period in 2023. Non-performing assets as a percentage of total assets decreased from 0.69% at December 31, 2023 to 0.44% at September 30, 2024. The decrease in non-performing assets is primarily attributable to a decrease in nonaccrual loans of $55.6 million and a decrease in accruing loans delinquent 90 days or more of $4.8 million, partially offset by an increase in other real estate owned of $3.3 million. The decrease in nonaccrual loans primarily resulted from a sale of MSRs which reduced exposure to GNMA nonaccrual loans from $90.2 million at December 31, 2023 to $8.2 million at September 30, 2024, partially offset by portfolio loans moved to nonaccrual during the year-to-date period. Net charge-offs on loans during the first nine months of 2024 were $29.8 million, or 0.19% of average loans on an annualized basis, compared with approximately $37.0 million, or 0.25%, in the first nine months of 2023. The Company’s total allowance for credit losses on loans at September 30, 2024 was $334.5 million, or 1.60% of total loans, compared with $307.1 million, or 1.52% of total loans, at December 31, 2023. This increase is primarily attributable to organic growth in loans and the updated economic forecast.

Previous wording

Total noninterest income for the six months ended June 30, 2024 was $154.6 million, an increase of $31.2 million, or 25.3%, from the $123.4 million reported for the six months ended June 30, 2023. Income from mortgage banking activities increased $13.7 million, or 19.0%, from $72.1 million in the first six months of 2023 to $85.8 million in the same period of 2024. Total production in the first six months of 2024 amounted to $2.24 billion, compared with $2.28 billion in the same period of 2023, while gain on sale spread increased to 2.47% during the six months ended June 30, 2024, compared with 2.09% in the same period of 2023. The retail mortgage open pipeline was $802.2 million at June 30, 2024, compared with $400.1 million at December 31, 2023 and $652.1 million at June 30, 2023.

Current wording

Total noninterest income for the nine months ended September 30, 2024 was $224.3 million, an increase of $37.7 million, or 20.2%, from the $186.6 million reported for the nine months ended September 30, 2023. Income from mortgage banking activities increased $15.4 million, or 14.2%, from $108.4 million in the first nine months of 2023 to $123.8 million in the same period of 2024. Total production in the first nine months of 2024 amounted to $3.39 billion, compared with $3.45 billion in the same period of 2023, while gain on sale spread increased to 2.37% during the nine months ended September 30, 2024, compared with 2.11% in the same period of 2023. The retail mortgage open pipeline was $813.7 million at September 30, 2024, compared with $400.1 million at December 31, 2023 and $623.9 million at September 30, 2023.

Previous wording

Net gain (loss) on securities increased to $12.3 million for the six months ended June 30, 2024, compared with no such gain or loss for the six months ended June 30, 2023. This increase was primarily due to the conversion of Visa Class B-1 stock resulting in a gain of $12.6 million and related realized gain (loss) on subsequent sales and mark-to-market adjustments post-conversion. Other noninterest income increased $2.5 million, or 9.2%, to $29.6 million for the first six months of 2024, compared with $27.1 million during the same period of 2023. The increase in other noninterest income was primarily attributable to a gain on sale of mortgage servicing rights of $4.7 million, partially offset by a decline in derivative fee income of $1.7 million and a decline in the gain on sale of SBA loans of $795,000.

Current wording

Net gain on securities increased to $12.3 million for the nine months ended September 30, 2024, compared with a loss of $16,000 for the nine months ended September 30, 2023. This increase was primarily due to the conversion of Visa Class B-1 stock resulting in a gain of $12.6 million and related realized gain (loss) on subsequent sales and mark-to-market adjustments post-conversion. Other noninterest income increased $6.6 million, or 16.2%, to $47.3 million for the first nine months of 2024, compared with $40.7 million during the same period of 2023. The increase in other noninterest income was primarily attributable to a gain on sale of mortgage servicing rights of $10.0 million and an increase in BOLI income of $1.7 million, partially offset by declines in derivative fee income, fee income in our equipment finance division andgain on sale of SBA loans of $2.4 million,$1.9 million and $914,000, respectively.

Previous wording

Total noninterest expenses for the six months ended June 30, 2024 increased $16.2 million, or 5.6%, to $304.1 million, compared with $287.8 million in the same period of 2023. Salaries and employee benefits increased $8.9 million, or 5.5%, from $162.2 million in the first six months of 2023 to $171.1 million in the same period of 2024, due primarily to increases in variable compensation related to mortgage production of$1.7 million, health insurance costs of $1.7 million and stock-based compensation of $1.2 million in addition to a reduction in deferred origination costs of $2.0 million. Data processing and communications expenses increased $3.4 million, or 12.7%, to $29.8 million in the first six months of 2024, from $26.5 million reported in the same period of 2023. Amortization of intangible assets decreased $565,000, or 6.0%, from $9.4 million in the first six months of 2023 to $8.8 million in the first six months of 2024. This decrease was primarily related to a reduction in core deposit intangible amortization. Loan servicing expenses increased $2.1 million, or 12.4%, from $17.1 million in the first six months of 2023 to $19.2 million in the same period of 2024, primarily attributable to additional mortgage loans serviced added from mortgage production over the previous year. Other noninterest expenses increased $2.5 million, or 6.3%, from $39.6 million in the first six months of 2023 to $42.1 million in the same period of 2024, due primarily to $2.0 million in FDIC special assessment expenses as well as a $3.5 million increase in business license expense. These increases in other noninterest expenses were partially offset by decreases from the first six months of 2023 in legal and other professional fees of $1.4 million, fraud/forgery losses of $530,000 and other losses of $2.7 million.

Current wording

Total noninterest expenses for the nine months ended September 30, 2024 increased $26.6 million, or 6.2%, to $455.8 million, compared with $429.3 million in the same period of 2023. Salaries and employee benefits increased $15.7 million, or 6.4%, from $244.1 million in the first nine months of 2023 to $259.8 million in the same period of 2024, due primarily to increases in health insurance costs, variable compensation related to mortgage production, and stock-based compensation related to performance awards, in addition to a reduction in deferred origination costs. Data processing and communications expenses increased $5.6 million, or 14.2%, to $45.1 million in the first nine months of 2024, from $39.5 million reported in the same period of 2023. Amortization of intangible assets decreased $810,000, or 5.9%, from $13.8 million in the first nine months of 2023 to $13.0 million in the first nine months of 2024. This decrease was primarily related to a reduction in core deposit intangible amortization. Loan servicing expenses increased $1.5 million, or 5.6%, from $26.4 million in the first nine months of 2023 to $27.9 million in the same period of 2024, primarily attributable to additional mortgage loans serviced added from mortgage production over the previous year, partially offset by reductions from sales of MSRs. Other noninterest expenses increased $3.1 million, or 5.3%, from $58.4 million in the first nine months of 2023 to $61.5 million in the same period of 2024, due primarily to $2.0 million in FDIC special assessment expenses as well as a $4.1 million increase in business license expense. These increases in other noninterest expenses were partially offset by decreases from the first nine months of 2023 in fraud/forgery and other losses of $4.6 million and legal and other professional fees of $792,000.

Previous wording

Income tax expense is influenced by the statutory rate, the amount of taxable income, the amount of tax-exempt income and the amount of nondeductible expenses. For the six months ended June 30, 2024, the Company reported income tax expense of $58.9 million, compared with $38.5 million in the same period of 2023. The Company’s effective tax rate for the six months ended June 30, 2024 and 2023 was 26.3% and 23.8%, respectively. The increase in the effective tax rate is primarily a result of a $4.8 million tax expense related to BOLI restructuring during the period.

Current wording

Income tax expense is influenced by the statutory rate, the amount of taxable income, the amount of tax-exempt income and the amount of nondeductible expenses. For the nine months ended September 30, 2024, the Company reported income tax expense of $85.5 million, compared with $63.4 million in the same period of 2023. The Company’s effective tax rate for the nine months ended September 30, 2024 and 2023 was 24.4% and 23.8%, respectively. The increase in the effective tax rate is primarily a result of a $4.8 million tax expense related to BOLI surrender during the period, partially offset by a favorable return-to-provision adjustment resulting from reduced state apportionment.

Previous wording

Management and the Company’s ALCO Committee evaluate available-for-sale securities in an unrealized loss position on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation, to determine if credit-related impairment exists. Management first evaluates whether they intend to sell or more likely than not will be required to sell an impaired security before recovering its amortized cost basis. If either criteria is met, the entire amount of unrealized loss is recognized in earnings with a corresponding adjustment to the security's amortized cost basis. If neither of the above criteria is met, management evaluates whether the decline in fair value is attributable to credit or resulted from other factors. If credit-related impairment exists, the Company recognizes an allowance for credit losses, limited to the amount by which the fair value is less than the amortized cost basis of the security. Any impairment not recognized through an allowance for credit losses is recognized in other comprehensive income, net of tax, as a non credit-related impairment. The Company does not intend to sell these available-for-sale investment securities at an unrealized loss position at June 30, 2024, and it is more likely than not that the Company will not be required to sell these securities prior to recovery or maturity. Based on the results of management's review, at June 30, 2024, management determined that $68,000 was attributable to credit impairment and, accordingly, an allowance for credit losses was established. The remaining $48.2 million in unrealized loss was determined to be from factors other than credit.

Current wording

Management and the Company’s ALCO Committee evaluate available-for-sale securities in an unrealized loss position on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation, to determine if credit-related impairment exists. Management first evaluates whether they intend to sell or more likely than not will be required to sell an impaired security before recovering its amortized cost basis. If either criteria is met, the entire amount of unrealized loss is recognized in earnings with a corresponding adjustment to the security's amortized cost basis. If neither of the above criteria is met, management evaluates whether the decline in fair value is attributable to credit or resulted from other factors. If credit-related impairment exists, the Company recognizes an allowance for credit losses, limited to the amount by which the fair value is less than the amortized cost basis of the security. Any impairment not recognized through an allowance for credit losses is recognized in other comprehensive income, net of tax, as a non credit-related impairment. The Company does not intend to sell these available-for-sale investment securities at an unrealized loss position at September 30, 2024, and it is more likely than not that the Company will not be required to sell these securities prior to recovery or maturity. Based on the results of management's review, at September 30, 2024, management determined that $66,000 was attributable to credit impairment and, accordingly, an allowance for credit losses was established. The remaining $24.4 million in unrealized loss was determined to be from factors other than credit.

Previous wording

At June 30, 2024, gross loans outstanding (including loans and loans held for sale) were $21.56 billion, up $1.01 billion from $20.55 billion reported at December 31, 2023. Loans increased $723.3 million, or 3.6%, from $20.27 billion at December 31, 2023 to $20.99 billion at June 30, 2024, driven by organic growth. Loans held for sale increased from $281.3 million at December 31, 2023 to $570.2 million at June 30, 2024 primarily in our mortgage division.

Current wording

At September 30, 2024, gross loans outstanding (including loans and loans held for sale) were $21.52 billion, up $967.7 million from $20.55 billion reported at December 31, 2023. Loans increased $695.7 million, or 3.4%, from $20.27 billion at December 31, 2023 to $20.96 billion at September 30, 2024, driven by organic growth. Loans held for sale increased from $281.3 million at December 31, 2023 to $553.4 million at September 30, 2024 primarily in our mortgage division.

Previous wording

At the end of the second quarter of 2024, the ACL on loans totaled $336.2 million, or 1.60% of loans, compared with $307.1 million, or 1.52% of loans, at December 31, 2023. Our nonaccrual loans increased from $151.1 million at December 31, 2023 to $179.4 million at June 30, 2024. For the first six months of 2024, our net charge off ratio as a percentage of average loans decreased to 0.21%, compared with 0.25% for the first six months of 2023. The total provision for credit losses for the first six months of 2024 was $39.9 million, decreasing from a provision of $95.2 million recorded for the first six months of 2023. Our ratio of total nonperforming assets to total assets was up five basis points from 0.69% at December 31, 2023 to 0.74% at June 30, 2024.

Current wording

At the end of the third quarter of 2024, the ACL on loans totaled $334.5 million, or 1.60% of loans, compared with $307.1 million, or 1.52% of loans, at December 31, 2023. Our nonaccrual loans decreased from $151.1 million at December 31, 2023 to $95.5 million at September 30, 2024. For the first nine months of 2024, our net charge off ratio as a percentage of average loans decreased to 0.19%, compared with 0.25% for the first nine months of 2023. The total provision for credit losses for the first nine months of 2024 was $46.0 million, decreasing from a provision of $119.7 million recorded for the first nine months of 2023. Our ratio of total nonperforming assets to total assets was down 25 basis points from 0.69% at December 31, 2023 to 0.44% at September 30, 2024.

Previous wording

The following table presents an analysis of the allowance for credit losses on loans, provision for credit losses on loans and net charge-offs as of and for the six months ended June 30, 2024 and 2023:

Current wording

The following table presents an analysis of the allowance for credit losses on loans, provision for credit losses on loans and net charge-offs as of and for the nine months ended September 30, 2024 and 2023:

Previous wording

Nonaccrual loans totaled $179.4 million at June 30, 2024, an increase of $28.3 million, or 18.7%, from $151.1 million at December 31, 2023. Accruing loans delinquent 90 days or more totaled $15.9 million at June 30, 2024, a decrease of $1.1 million, or 6.4%, compared with $17.0 million at December 31, 2023. At June 30, 2024, OREO totaled $2.2 million, a decrease of $4.0 million, or 64.3%, compared with $6.2 million at December 31, 2023. Management regularly assesses the valuation of OREO through periodic reappraisal and through inquiries received in the marketing process. At the end of the second quarter of 2024, total non-performing assets as a percent of total assets was up five basis points from 0.69% at December 31, 2023 to 0.74% at June 30, 2024.

Current wording

Nonaccrual loans totaled $95.5 million at September 30, 2024, a decrease of $55.6 million, or 36.8%, from $151.1 million at December 31, 2023. Accruing loans delinquent 90 days or more totaled $12.2 million at September 30, 2024, a decrease of $4.8 million, or 28.0%, compared with $17.0 million at December 31, 2023. At September 30, 2024, OREO totaled $9.5 million, an increase of $3.3 million, or 53.0%, compared with $6.2 million at December 31, 2023. Management regularly assesses the valuation of OREO through periodic reappraisal and through inquiries received in the marketing process. At the end of the third quarter of 2024, total non-performing assets as a percent of total assets was down 25.00 basis points from 0.69% at December 31, 2023 to 0.44% at September 30, 2024.

Previous wording

(1)Included in nonaccrual loans were $93.5 million and $90.2 million of serviced GNMA-guaranteed nonaccrual loans at June 30, 2024 and December 31, 2023, respectively.

Current wording

(1)Included in nonaccrual loans were $8.2 million and $90.2 million of serviced GNMA-guaranteed nonaccrual loans at September 30, 2024 and December 31, 2023, respectively.

Previous wording

The Company has forward contracts and IRLCs to economically hedge changes in the value of the mortgage inventory due to changes in market interest rates. The fair value of these instruments amounted to an asset of $5.3 million and $3.6 million at June 30, 2024 and December 31, 2023, respectively. At June 30, 2024 there was no liability balance recorded. At December 31, 2023 a liability balance of $5.8 million was recorded. The Company also enters into interest rate derivative agreements to facilitate the risk management strategies of certain clients. The Company mitigates this risk by entering into equal and offsetting interest rate derivative agreements with highly rated third-party financial institutions. The fair value of these instruments amounted to an asset of $10.3 million and $5.9 million at June 30, 2024 and December 31, 2023, respectively, and a liability of $10.4 million and $6.2 million at June 30, 2024 and December 31, 2023, respectively.

Current wording

The Company has forward contracts and IRLCs to economically hedge changes in the value of the mortgage inventory due to changes in market interest rates. The fair value of IRLC instruments amounted to an asset of $5.1 million and $3.6 million at September 30, 2024 and December 31, 2023, respectively. At September 30, 2024 and December 31, 2023 forward contracts were recorded with a liability balance of $2.0 million and $5.8 million, respectively. The Company also enters into interest rate derivative agreements to facilitate the risk management strategies of certain clients. The Company mitigates this risk by entering into equal and offsetting interest rate derivative agreements with highly rated third-party financial institutions. The fair value of these instruments amounted to an asset of $6.6 million and $5.9 million at September 30, 2024 and December 31, 2023, respectively, and a liability of $7.0 million and $6.2 million at September 30, 2024 and December 31, 2023, respectively.

Previous wording

Total deposits at the Company increased $735.6 million, or 3.6%, to $21.44 billion at June 30, 2024, compared with $20.71 billion at December 31, 2023. Noninterest-bearing deposits increased $157.6 million, or 2.4%, and interest-bearing deposits increased $578.1 million, or 4.1%, during the first six months of 2024. At June 30, 2024, the Company had approximately $1.23 billion in short-term brokered CDs, compared with $1.14 billion at December 31, 2023. As of June 30, 2024 and December 31, 2023, the Company had estimated uninsured deposits of $9.46 billion and $9.13 billion, respectively. These estimates were derived using the same methodologies and assumptions used for the Bank's regulatory reporting. Approximately $2.89 billion, or 30.5%, of the uninsured deposits at June 30, 2024 were for municipalities which are collateralized with investment securities or letters of credit.

Current wording

Total deposits at the Company increased $1.17 billion, or 5.7%, to $21.88 billion at September 30, 2024, compared with $20.71 billion at December 31, 2023. Noninterest-bearing deposits increased $178.7 million, or 2.8%, and interest-bearing deposits increased $992.1 million, or 7.0%, during the first nine months of 2024. At September 30, 2024, the Company had approximately $1.64 billion in short-term brokered CDs, compared with $1.14 billion at December 31, 2023. As of September 30, 2024 and December 31, 2023, the Company had estimated uninsured deposits of $9.47 billion and $9.13 billion, respectively. These estimates were derived using the same methodologies and assumptions used for the Bank's regulatory reporting. Approximately $2.64 billion, or 27.9%, of the uninsured deposits at September 30, 2024 were for municipalities which are collateralized with investment securities or letters of credit.

Previous wording

Company’s other borrowings was $946.4 million and $509.6 million, respectively. At June 30, 2024, the Company had availability with the FHLB and FRB Discount Window of $3.88 billion and $2.61 billion, respectively.

Current wording

Company’s other borrowings was $346.4 million and $509.6 million, respectively. At September 30, 2024, the Company had availability with the FHLB and FRB Discount Window of $3.94 billion and $2.49 billion, respectively.