WASHINGTON TRUST BANCORP INC
For the period ended Jun 30, 2024. Filed Aug 6, 2024.
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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.
Jun 30, 2024 · Filed Aug 6, 2024
WASH$38.62-0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-07.
0000737468-24-000028
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0000737468-24-000034
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 269 previous paragraphs and 272 current paragraphs.
155 unchanged; 95 reworded; 19 added; 14 removed; 5 previous and 3 current paragraphs rearranged.
Tables are not compared: 34 previous and 34 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 (19)
Current report
(1) Interest income includes adjustments for taxable equivalency of $227 and $235, respectively, for the three months ended June 30, 2024 and 2023.
Current report
(1) Interest income includes adjustments for taxable equivalency of $449 and $463, respectively, for the six months ended June 30, 2024 and 2023.
Current report
The provision for credit losses recognized in 2024 reflected continued, yet subsiding, slowdown of loan prepayment speeds, modest commercial loan growth and was partially offset by improvements in our estimate of forecasted economic conditions. Additionally, as discussed further in the section labeled “Financial Condition,” the modest commercial loan growth was offset by reductions in residential real estate and consumer loans. The reduction in the provision for credit losses in 2024 includes a decline in the provision for credit losses on unfunded commitments reflecting lower unfunded commitments to extend credit.
Current report
Net charge-offs totaled $27 thousand for the three months ended June 30, 2024, compared to net charge-offs of $37 thousand for the same period in 2023. For the six months ended June 30, 2024, net charge-offs totaled $79 thousand, compared to net charge-offs of $84 thousand for the same period in 2023.
Current report
Other income for the three and six months ended June 30, 2024 was up by $912 thousand and $3.0 million, respectively, from the same periods in 2023. Included in other income in 2024 was a net gain of $988 thousand recognized on the sale of a bank-owned operations facility in the second quarter and $2.1 million associated with a litigation settlement in the first quarter. Excluding the impact of these items, other income for the three and six months ended June 30, 2024 was down modestly by $76 thousand and $62 thousand, respectively, from the same periods in 2023.
Current report
Legal, audit and professional fees for the three and six months ended June 30, 2024 decreased by $237 thousand and $427 thousand, respectively, compared to the same periods in 2023, reflecting lower legal fees.
Current report
Advertising and promotion expense for the three and six months ended June 30, 2024 increased by $234 thousand and $374 thousand, respectively, due to timing of such activities.
Current report
The effective income tax rates for the three and six months ended June 30, 2024 were higher as compared to the same periods in 2023, primarily due to discrete tax items associated with the settlement of equity compensation awards and BOLI.
Current report
Total loans decreased by $18.6 million, or 0.3%, from the end of 2023. Residential real estate and consumer loan balances declined, while total commercial loans increased modestly.
Current report
Total deposit balances decreased by $372.0 million from the end of 2023 with the decrease concentrated in wholesale brokered time deposits. FHLB advances increased by $360.0 million, or 30%, from December 31, 2023.
Current report
Total loans amounted to $5.6 billion at June 30, 2024, down by $18.6 million, or 0.3%, from the end of 2023.
Current report
In the first six months of 2024, CRE advances and originations amounted to $137.3 million and were partially offset by payments. The net increase in CRE also included reclassifications of $15.5 million from C&I, largely reflecting an underlying change from owner occupied to non-owner occupied on a loan secured by a medical office building.
Current report
Multi-family totaled $592.8 million as of June 30, 2024, and is our largest single CRE segment, representing 27% of the total CRE portfolio. This segment includes non-owner occupied residential properties consisting of four or more units that are rented to tenants. At June 30, 2024, the credit quality of the multi-family segment was 100% pass-rated. Also, there were no nonaccrual loans and all loans were current with respect to payment terms at June 30, 2024.
Current report
C&I loans amounted to $558.1 million at June 30, 2024, down by $47.0 million, or 8%, from the balance at December 31, 2023.
Current report
In the first six months of 2024, C&I originations, advances and line utilization amounted to $26.3 million and were more than offset by payments. The net decrease in C&I also reflected reclassifications of $15.5 million to CRE, as noted above.
Current report
Healthcare and social assistance totaled $139.9 million as of June 30, 2024, and is our largest single C&I segment, representing 25% of the total C&I portfolio. This segment includes specialty medical practices, elder services and community and mental health centers. At June 30, 2024, the credit quality of the healthcare and social assistance segment was 100% pass-rated. Also, there were no nonaccrual loans and all loans were current with respect to payment terms at June 30, 2024.
Current report
Total past due loans increased by $535 thousand from the end of 2023.
Current report
Wholesale brokered time deposits decreased by $314.8 million, or 48%, from December 31, 2023, reflecting a shift in wholesale funding mix based on pricing. See disclosure regarding FHLB advances under the caption “Borrowings” below.
Current report
FHLB advances totaled $1.6 billion at June 30, 2024, up by $360.0 million, or 30%, from the balance at the end of 2023, reflecting a shift to utilize higher levels of FHLB advances and lower levels of wholesale brokered time certificates as a wholesale funding source.
Removed paragraphs (14)
Previous report
Interest income amounts presented in the preceding table include the following adjustments for taxable equivalency:
Previous report
The provisions recognized provided for loan growth and were reflective of continued slowdown of loan prepayment speeds and estimated forecasted economic conditions. The provision recognized in 2023 also included modest additional reserve allocation for commercial loans migrating to nonaccrual status.
Previous report
For the three months ended March 31, 2024, loan related derivative income increased by $335 thousand, or 657%, from the same period in 2023, reflecting an increase in volume.
Previous report
Other income for the three months ended March 31, 2024 was up by $2.1 million, or 601%, from the same period in 2023, due to the receipt of $2.1 million in the first quarter of 2024 associated with a litigation settlement.
Previous report
Total loans increased by $37.5 million, or 1%, from the end of 2023, with the increase concentrated in commercial loans.
Previous report
Total deposit balances were comparable to the end of 2023 and reflective of a competitive rate environment. FHLB advances increased by $50.0 million, or 4%, from December 31, 2023, as higher levels of wholesale funding were utilized.
Previous report
Total loans amounted to $5.7 billion at March 31, 2024, up by $37.5 million, or 1%, from the end of 2023.
Previous report
In 2024, CRE loan advances and originations of $87.3 million were partially offset by payments of approximately $29.1 million and reclassifications of $6.0 million to C&I.
Previous report
C&I loans amounted to $613.4 million at March 31, 2024, up by $8.3 million, or 1%, from the balance at December 31, 2023. C&I originations and advances of $21.2 million were partially offset by payments of $18.9 million. The net increase in C&I also reflected reclassifications of $6.0 million from CRE.
Previous report
Total past due loans decreased by $1.3 million from the end of 2023.
Previous report
Net charge-offs were modest, totaling $52 thousand for the three months ended March 31, 2024 and $47 thousand for the same period in 2023.
Previous report
Wholesale brokered time deposits increased by $19.7 million, or 3%, from December 31, 2023, as higher levels were utilized to fund balance sheet growth.
Previous report
-61- both net interest income and NIM over a 60-month horizon to ensure the stability and adequacy of this source of earnings in different interest rate scenarios.
Previous report
-62- modeling assumes a static balance sheet, with the exception of certain modeled deposit mix shifts from low cost savings deposits to higher cost time deposits in rising rate scenarios as noted above.
Reworded paragraphs (95)
Previous wording
The following discussion should be read in conjunction with the Corporation’s Audited Consolidated Financial Statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2023, and in conjunction with the condensed Unaudited Consolidated Financial Statements and notes thereto included in Item 1 of this report. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results for the full-year ended December 31, 2024 or any future period.
Current wording
The following discussion should be read in conjunction with the Corporation’s Audited Consolidated Financial Statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2023, and in conjunction with the condensed Unaudited Consolidated Financial Statements and notes thereto included in Item 1 of this report. Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results for the full-year ended December 31, 2024 or any future period.
Previous wording
-37- sources, including wealth management services, mortgage banking activities, and deposit services. Our principal noninterest expenses include salaries and employee benefit costs, outsourced services provided by third-party vendors, occupancy and facility-related costs, and other administrative expenses.
Current wording
-42- sources, including wealth management services, mortgage banking activities, and deposit services. Our principal noninterest expenses include salaries and employee benefit costs, outsourced services provided by third-party vendors, occupancy and facility-related costs, and other administrative expenses.
Previous wording
We continue to leverage our strong regional brand to build market share and remain steadfast in our commitment to provide superior service. We believe the key to future growth is providing customers with convenient in-person service and digital banking solutions. In January 2024, we opened a new full-service branch in Smithfield, Rhode Island. In addition, we plan to open another branch in the Olneyville section of Providence later in 2024.
Current wording
We continue to leverage our strong regional brand to build market share and remain steadfast in our commitment to provide superior service. We believe the key to future growth is providing customers with convenient in-person service and digital banking solutions. In January 2024, we opened a new full-service branch in Smithfield, Rhode Island. In addition, we plan to open another branch in the Olneyville section of Providence in the third quarter of 2024.
Previous wording
Net income totaled $10.9 million for the three months ended March 31, 2024, down by 15%, from the $12.8 million reported for the same period in 2023. Results in 2024 largely reflected lower net interest income, partially offset by higher noninterest income.
Current wording
Net income totaled $10.8 million and $21.8 million, respectively, for the three and six months ended June 30, 2024, compared to $11.3 million and $24.1 million, respectively, reported for the same periods in 2023. Results in 2024 largely reflected lower net interest income, higher noninterest income, stable asset and credit quality metrics, and modestly higher total noninterest expenses.
Previous wording
The decline in net interest income in 2024 was driven by higher rates paid on, and increases in, average interest-bearing liability balances, which offset the benefit of higher yields on, and growth in, average interest-earning asset balances. Noninterest income benefited from a $2.1 litigation settlement received in the first quarter of 2024, as well as higher mortgage banking revenues and wealth management revenues. There was a modest decline in the provision for credit losses in 2024 as compared to the same period in 2023. The increase in noninterest expenses largely reflected an increase in FDIC deposit insurance costs.
Current wording
The decline in net interest income in 2024 was driven by higher rates paid on, and increases in, average interest-bearing liability balances, which offset the benefit of higher yields on, and growth in, average interest-earning asset balances. Noninterest income benefited from a $2.1 litigation settlement received in the first quarter of 2024, a net gain of $988 thousand recognized on the sale of a bank-owned operations facility in the second quarter of 2024, as well as higher mortgage banking revenues and wealth management revenues.
Previous wording
The following table presents average balance and interest rate information. Tax-exempt income is converted to an FTE basis using the statutory federal income tax rate adjusted for applicable state income taxes net of the related federal tax benefit. Unrealized gains (losses) on available for sale securities and changes in fair value on mortgage loans held for sale are excluded from the average balance and yield calculations. Nonaccrual loans, as well as interest recognized on these loans, are included in amounts presented for loans.
Current wording
The following tables present daily average balance, interest, and yield/rate information, as well as net interest margin on an FTE basis. Tax-exempt income is converted to an FTE basis using the statutory federal income tax rate adjusted for applicable state income taxes net of the related federal tax benefit. Unrealized gains (losses) on available for sale securities and changes in fair value on mortgage loans held for sale are excluded from the average balance and yield calculations. Nonaccrual loans, as well as interest recognized on these loans, are included in amounts presented for loans.
Previous wording
Net interest income, the primary source of our operating income, totaled $31.7 million for the three months ended March 31, 2024, compared to $37.2 million for the same period in 2023. Net interest income is affected by the level of and changes in interest rates, and changes in the amount and composition of interest-earning assets and interest-bearing liabilities. Prepayment penalty income associated with loan payoffs is included in net interest income.
Current wording
Net interest income, the primary source of our operating income, totaled $31.6 million and $63.3 million, respectively, for the three and six months ended June 30, 2024, compared to $33.5 million and $70.7 million, respectively, for the same periods in 2023. Net interest income is affected by the level of and changes in interest rates, and changes in the amount and composition of interest-earning assets and interest-bearing liabilities. Prepayment penalty income associated with loan payoffs is included in net interest income.
Previous wording
Net interest income includes the periodic recognition of prepayment penalty fee income associated with commercial loan payoffs. Prepayment penalty fee income amounted to $20 thousand and $124 thousand, respectively, for the three months ended March 31, 2024 and 2023, and had no basis point benefit to NIM in either period.
Current wording
Net interest income includes the periodic recognition of prepayment penalty fee income associated with commercial loan payoffs. Prepayment penalty fee income amounted to $46 thousand and $66 thousand, respectively, for the three and six months ended June 30, 2024, and had essentially no benefit to NIM in either period. This compared to $50 thousand and $174 thousand, respectively, for the same periods in 2023, which had a 1 basis point benefit to NIM in each of those periods.
Previous wording
The analysis of net interest income, NIM, and the yield on loans is also impacted by changes in the level of net amortization of premiums and discounts on securities and loans, which is included in interest income. Changes in market interest rates affect the level of loan prepayments and the receipt of payments on mortgage-backed securities. Prepayment speeds generally increase as market interest rates decline and decrease as market interest rates rise. Changes in prepayment speeds could increase or decrease the level of net amortization of premiums and discounts, thereby affecting interest income. As noted in the Unaudited Consolidated Statements of Cash Flows, net amortization of premiums and discounts on securities and loans (a net reduction to net interest income) amounted to $265 thousand for the three months ended March 31, 2024, compared to $324 thousand for the same period in 2023.
Current wording
The analysis of net interest income, NIM, and the yield on loans is also impacted by changes in the level of net amortization of premiums and discounts on securities and loans, which is included in interest income. Changes in market interest rates affect the level of loan prepayments and the receipt of payments on mortgage-backed securities. Prepayment speeds generally increase as market interest rates decline and decrease as market interest rates rise. Changes in prepayment speeds could increase or decrease the level of net amortization of premiums and discounts, thereby affecting interest income. As noted in the Unaudited Consolidated Statements of Cash Flows, net amortization of premiums and discounts on securities and loans (a net reduction to net interest income) amounted to $573 thousand for the six months ended June 30, 2024, compared to $707 thousand for the same period in 2023.
Previous wording
FTE net interest income for the three months ended March 31, 2024 amounted to $31.9 million, down by $5.5 million, or 15%, from the same period in 2023. For the three months ended March 31, 2024, increases in average interest-bearing liability balances, net of increased average interest-earning assets, reduced net income by $2.7 million. Increases in funding costs outpaced increases in asset yields, reducing net interest income by $2.8 million for the three months ended March 31, 2024.
Current wording
FTE net interest income for the three and six months ended June 30, 2024 amounted to $31.8 million and $63.7 million, respectively, down by $1.9 million and $7.5 million, respectively, from the same periods in 2023. For the three and six months ended June 30, 2024, increases in average interest-bearing liability balances, net of increased average interest-earning assets, reduced net income by $1.0 million, and $3.9 million, respectively. Increases in funding costs outpaced increases in asset yields, reducing net interest income by $916 thousand and $3.6 million, respectively, for the three and six months ended June 30, 2024.
Previous wording
NIM was 1.84% for the three months ended March 31, 2024, compared to 2.33% for the same period in 2023. While NIM benefited from higher market interest rates on loans, it was adversely impacted by a higher cost of funds.
Current wording
NIM was 1.83% and 1.84%, respectively, for the three and six months ended June 30, 2024, compared to 2.03% and 2.18%, respectively, for the same periods in 2023. While NIM benefited from higher market interest rates on loans, it was adversely impacted by a higher cost of funds.
Previous wording
Total average securities for the three months ended March 31, 2024 decreased by $47.4 million, or 4%, from the average balances for the same period a year earlier primarily due to routine pay-downs. The FTE rate of return on the securities portfolio for the three months ended March 31, 2024 was 2.49%, compared to 2.44% for the same period in 2023.
Current wording
Total average securities for the three and six months ended June 30, 2024 decreased by $72.4 million and $59.9 million, respectively, from the average balances for the same periods a year earlier primarily due to routine pay-downs. The FTE rate of return on the securities portfolio for the three and six months ended June 30, 2024 was 2.47% and 2.48%, respectively, compared to 2.47% and 2.46% respectively, for the same periods in 2023.
Previous wording
Total average loan balances for the three months ended March 31, 2024 increased by $527.6 million, or 10%, from the average loan balances for the comparable 2023 period, largely reflecting growth in average balances of CRE and residential real estate loans. The yield on total loans for the three months ended March 31, 2024 was 5.38%, compared to 4.73% in the corresponding period in 2023.
Current wording
Total average loan balances for the three and six months ended June 30, 2024 increased by $363.8 million and $445.3 million, respectively, from the average loan balances for the comparable 2023 periods, largely reflecting growth in average balances of CRE and residential real estate loans. The yield on total loans for the three and six months ended June 30, 2024 was 5.43% and 5.40%, respectively, compared to 4.97% and 4.85%, respectively, in the corresponding periods in 2023, reflecting higher market interest rates.
Previous wording
Higher levels of wholesale funding were used to fund balance sheet growth. The average balance of FHLB advances for the three months ended March 31, 2024 increased by $195.9 million, or 19%, compared to the average balance for the same period in 2023. Due to increases in market interest rates, the average rate paid on such advances for the three months ended March 31, 2024 was 4.91%, up 39 basis points from 4.52% for the same period in 2023. Included in total average interest-bearing deposits were wholesale brokered deposits, which increased by $256.3 million, or 58%, from the same period in 2023. The average rate paid on wholesale brokered deposits for the three months ended March 31, 2024 was 5.22%, up by 145 basis points from 3.77% for the same period in 2023.
Current wording
Higher levels of wholesale funding were used to fund balance sheet growth. The average balance of FHLB advances for the three and six months ended June 30, 2024 increased by $417.3 million and $306.8 million, respectively, compared to the average balances for the same periods in 2023. Due to increases in market interest rates, the average rate paid on such advances for the three and six months ended June 30, 2024 was 4.98% and 4.95%, respectively, up from 4.77% and 4.64%, respectively, for the same periods in 2023. Included in total average interest-bearing deposits were wholesale brokered deposits, which decreased by $133.0 million and increased by $61.1 million, respectively, from the same periods in 2023. The average rate paid on wholesale brokered deposits for the three and six months ended June 30, 2024 was 5.23% and 5.22%, respectively, up from 4.71% and 4.33%, respectively, for the same periods in 2023.
Previous wording
As market interest rates rose, deposit balances shifted from lower cost deposits to higher cost deposits. Average in-market interest-bearing deposits, which excludes wholesale brokered deposits, for the three months ended March 31, 2024 increased by $204.7 million, or 5%, from the average balances for the same period in 2023, with increases in time deposits and interest-bearing demand deposits. The average rate paid on in-market interest-bearing deposits for the three months ended March 31, 2024 was 2.93%, up by 127 basis points from 1.66% for the same period in 2023. The average balance of noninterest-bearing demand deposits for the three months ended March 31, 2024 decreased by $170.6 million from the average balances for the same period in 2023.
Current wording
As market interest rates rose, deposit balances shifted from lower-cost deposits to higher-cost deposits. Average in-market interest-bearing deposits, which excludes wholesale brokered deposits, for the three and six months ended June 30, 2024 increased by $113.2 million and $158.6 million, respectively, from the average balances for the same periods in 2023, with increases in time deposits and interest-bearing demand deposits. The average rate paid on in-market interest-bearing deposits for the three and six months ended June 30, 2024 was 3.01% and 2.97%, respectively, up from 2.27% and 1.97%, respectively, for the same periods in 2023. The average balance of noninterest-bearing demand deposits for the three and six months ended June 30, 2024 decreased by $117.9 million and $144.1 million, respectively, from the average balances for the same periods in 2023.
Previous wording
-43- estimate, at the reporting date, of expected lifetime credit losses and includes consideration of current forecasted economic conditions. Estimating an appropriate level of ACL necessarily involves a high degree of judgment.
Current wording
The provision for credit losses results from management’s review of the adequacy of the ACL. The ACL is management’s estimate, at the reporting date, of expected lifetime credit losses and includes consideration of current forecasted economic conditions. Estimating an appropriate level of ACL necessarily involves a high degree of judgment.
Previous wording
The ACL on loans was $41.9 million, or 0.74% of total loans, at March 31, 2024, compared to $41.1 million, or 0.73% of total loans, at December 31, 2023. See additional discussion under the caption “Asset Quality” for further information on asset quality metrics and the ACL on loans.
Current wording
The ACL on loans was $42.4 million, or 0.75% of total loans, at June 30, 2024, compared to $41.1 million, or 0.73% of total loans, at December 31, 2023.
Previous wording
Revenue from wealth management services represented 54% of total noninterest income for the three months ended March 31, 2024, compared to 65% for the same period in 2023. A substantial portion of wealth management revenues is dependent on the value of wealth management AUA and is closely tied to the performance of the financial markets. This portion of wealth management revenues is referred to as “asset-based” and includes trust and investment management fees. Wealth management revenues also include “transaction-based” revenues that are not primarily derived from the value of assets.
Current wording
Revenue from wealth management services represented 56% of total noninterest income for the six months ended June 30, 2024, compared to 64% for the same period in 2023. A substantial portion of wealth management revenues is dependent on the value of wealth management AUA and is closely tied to the performance of the financial markets. This portion of wealth management revenues is referred to as “asset-based” and includes trust and investment management fees. Wealth management revenues also include “transaction-based” revenues that are not primarily derived from the value of assets.
Previous wording
Wealth management revenues for the three months ended March 31, 2024 increased by $675 thousand, or 8%, from the same period in 2023, reflecting an increase in asset-based revenues. The change in asset-based revenues correlated with the change in average AUA balances. The average balance of AUA for the three months ended March 31, 2024 increased by 10% from the average balance for the same period in 2023.
Current wording
Wealth management revenues for the three and six months ended June 30, 2024 increased by $630 thousand and $1.3 million, respectively, from the same periods in 2023, reflecting an increase in asset-based revenues. The change in asset-based revenues correlated with the change in average AUA balances. The average balance of AUA for the three and six months ended June 30, 2024 increased by 9%, from the average balance for both the same periods in 2023.
Previous wording
The end of period AUA balance amounted to $6.9 billion at March 31, 2024, up by $269.9 million, or 4%, from the end of 2023, reflecting net investment appreciation and income. The following table presents the changes in wealth management AUA balances:
Current wording
The end of period AUA balance amounted to $6.8 billion at June 30, 2024. The following table presents the changes in wealth management AUA balances:
Previous wording
Mortgage banking revenues represented 15% of total noninterest income for three months ended March 31, 2024, compared to 9% for the same period in 2023. These revenues are dependent on mortgage origination volume and are sensitive to interest rates and the condition of housing markets. While loan origination and refinancing activities decreased in response to increases in market interest rates, a larger proportion of loans were originated for sale in 2024. The composition of mortgage banking revenues and the volume of loans sold to the secondary market are shown in the following table:
Current wording
Mortgage banking revenues represented 16% of total noninterest income for six months ended June 30, 2024, compared to 11% for the same period in 2023. These revenues are dependent on mortgage origination volume and are sensitive to interest rates and the condition of housing markets. While loan origination and refinancing activities decreased in response to increases in market interest rates, a larger proportion of loans were originated for sale in 2024. The composition of mortgage banking revenues and the volume of loans sold to the secondary market are shown in the following table:
Previous wording
For the three months ended March 31, 2024, mortgage banking revenues were up by $1.3 million, or 101%, compared to the same period in 2023. The increase in mortgage banking revenues was mainly attributable to increases in both sales volume
Current wording
For the three and six months ended June 30, 2024, mortgage banking revenues were up by $1.0 million and $2.3 million, respectively, compared to the same periods in 2023. The increase in mortgage banking revenues was mainly attributable to
Previous wording
-45- and sales yield. Mortgage banking revenues are also impacted by changes in the fair value of mortgage loans held for sale and forward loan commitments, which are primarily based on current market prices in the secondary market and correlate to changes in the size of the mortgage pipeline.
Current wording
-51- increases in both sales volume and sales yield. Mortgage banking revenues are also impacted by changes in the fair value of mortgage loans held for sale and forward loan commitments, which are primarily based on current market prices in the secondary market and correlate to changes in the size of the mortgage pipeline.
Previous wording
Income from BOLI for the three months ended March 31, 2024, was down by $426 thousand, or 37%, from the same period in 2023, reflecting the recognition of $476 thousand in non-taxable income in the first quarter of 2023 associated with the receipt of life insurance proceeds.
Current wording
Income from BOLI for the six months ended June 30, 2024, was down by $552 thousand, from the same period in 2023, reflecting the recognition of $658 thousand in non-taxable income in 2023 associated with the receipt of life insurance proceeds.
Previous wording
Salaries and employee benefits expense, the largest component of noninterest expense, for the three months ended March 31, 2024 was essentially unchanged compared to the same period in 2023.
Current wording
Salaries and employee benefits expense, the largest component of noninterest expense, for the three and six months ended June 30, 2024 increased by $672 thousand and $663 thousand, respectively, compared to the same periods in 2023. This largely reflected timing of adjustments to performance-based compensation accruals. The year-to-date increase also includes merit increases, partially offset by lower staffing levels.
Previous wording
Outsourced services expense for the three months ended March 31, 2024, increased by $284 thousand, or 8%, compared to the same period in the prior year, largely reflecting higher third-party costs and volume-related increases.
Current wording
Outsourced services expense for the three and six months ended June 30, 2024 increased by $475 thousand and $759 thousand, respectively, compared to the same periods in the prior year, reflecting changes to and expansion of services provided by third-party vendors.
Previous wording
FDIC deposit insurance costs for the three months ended March 31, 2024 increased by $569 thousand, or 65%, compared to the same period in 2023, reflecting the impact of growth in assets and a higher FDIC deposit assessment rate.
Current wording
FDIC deposit insurance costs for the six months ended June 30, 2024 increased by $602 thousand compared to the same period in 2023, reflecting the impact of growth in assets from a year ago and a higher FDIC deposit assessment rate.
Previous wording
The effective income tax rates for the three months ended March 31, 2024 and 2023 differed from the federal rate of 21%, primarily due to the benefits of tax-exempt income, income from BOLI, and federal tax credits, partially offset by state income tax expense.
Current wording
The effective income tax rates in the table above differed from the federal rate of 21%, primarily due to state income tax expense and tax benefits related to income from BOLI, federal tax credits, and tax-exempt income.
Previous wording
The Corporation’s net deferred tax assets amounted to $56.6 million at March 31, 2024, compared to $53.8 million at December 31, 2023. Net deferred tax assets increased in 2024, largely reflecting increases in deferred tax assets associated with a decline in fair value of securities available for sale due to changes in market interest rates.
Current wording
The Corporation’s net deferred tax assets amounted to $55.9 million at June 30, 2024, compared to $53.8 million at December 31, 2023.
Previous wording
Net interest income for the Commercial Banking segment for the three months ended March 31, 2024 decreased by $5.5 million, or 15%, from the same period in 2023. Net interest income was adversely impacted by higher rates paid on, and increases in, average interest-bearing liability balances, which offset the benefit of higher yields on, and growth in, average interest-earning asset balances.
Current wording
Net interest income for the Commercial Banking segment for the three and six months ended June 30, 2024 decreased by $1.9 million and $7.4 million, respectively, from the same periods in 2023. Net interest income was adversely impacted by higher rates paid on, and increases in, average interest-bearing liability balances, which offset the benefit of higher yields on, and growth in, average interest-earning asset balances.
Previous wording
The provision for credit losses for the three months ended March 31, 2024 decreased by $100 thousand from the same period in 2023.
Current wording
The provision for credit losses for the three and six months ended June 30, 2024 decreased by $200 thousand and $300 thousand, respectively from the same periods in 2023.
Previous wording
Noninterest income derived from the Commercial Banking segment for the three months ended March 31, 2024 was up by $1.1 million, or 26%, from the comparable period in 2023. The increase in Commercial Banking noninterest income reflected higher mortgage banking revenues and loan related derivative income, partially offset by lower BOLI income. See additional discussion under the caption “Noninterest Income” above.
Current wording
Noninterest income derived from the Commercial Banking segment for the three and six months ended June 30, 2024 was up by $1.5 million and $2.7 million, respectively, from the comparable periods in 2023. The increase in Commercial Banking noninterest income reflected higher mortgage banking revenues and a net gain recognized on the sale of a bank-owned operations facility. The year-to-date increase was partially offset by lower BOLI income. See additional discussion under the caption “Noninterest Income” above.
Previous wording
Commercial Banking noninterest expenses for the three months ended March 31, 2024 were up by $1.6 million, or 6%, from the same period in 2023, with increases in FDIC deposit insurance costs, salaries and employee benefits, and outsourced services. See additional discussion under the caption “Noninterest Expense” above.
Current wording
Commercial Banking noninterest expenses for the three and six months ended June 30, 2024 were up by $1.6 million and $3.2 million, respectively, from the same periods in 2023, with increases in salaries and employee benefits expense, outsourced services, and advertising and promotion, partially offset by lower legal fees. The year-to-date increase also reflected an increase in FDIC deposit insurance costs. See additional discussion under the caption “Noninterest Expense” above.
Previous wording
For the three months ended March 31, 2024, noninterest income derived from the Wealth Management Services segment increased by $2.7 million, or 31%, from the same period in 2023, reflecting income of $2.1 million associated with a litigation settlement, as well as an increase in asset-based revenues. See further discussion under the caption “Noninterest Income” above.
Current wording
For the three and six months ended June 30, 2024, noninterest income derived from the Wealth Management Services segment increased by $826 thousand and $3.6 million, respectively, from the same periods in 2023, reflecting income of $2.1 million associated with a litigation settlement in the first quarter of 2024, as well as an increase in asset-based revenues. See further discussion under the caption “Noninterest Income” above.
Previous wording
For the three months ended March 31, 2024, noninterest expenses for the Wealth Management Services segment decreased by $768 thousand, or 9%, from the comparable period in 2023, largely reflecting a decrease in salaries and employee benefits expense.
Current wording
For the three and six months ended June 30, 2024, noninterest expenses for the Wealth Management Services segment decreased by $718 thousand and $1.5 million, respectively, from the comparable periods in 2023, with decreases in salaries and employee benefits expense and legal fees.
Previous wording
Total assets amounted to $7.2 billion at March 31, 2024, up by $46.3 million, or 1%, from the end of 2023.
Current wording
Total assets amounted to $7.2 billion at June 30, 2024, down modestly by $18.5 million from the end of 2023.
Previous wording
Cash and due from banks increased by 15.3 million. or 18%, from December 31, 2023, reflecting higher cash balances on deposit at correspondent banks.
Current wording
Cash and due from banks increased by $17.1 million, or 20%, from December 31, 2023, reflecting higher cash balances on deposit at correspondent banks.
Previous wording
The securities portfolio decreased by $30.3 million, or 3%, from the end of 2023, reflecting routine pay-downs on mortgage-backed securities and a decrease in fair value of available for sale securities due to changes in market interest rates.
Current wording
The securities portfolio decreased by $48.6 million, or 5%, from the end of 2023, reflecting routine pay-downs on mortgage-backed securities and a decrease in fair value of available for sale securities due to changes in market interest rates.
Previous wording
Shareholders’ equity decreased by $5.8 million, or 1%. Net income was offset by dividend declarations and a decrease in the AOCL component of shareholders' equity that reflected a decline in the fair value of available for sale securities as noted above.
Current wording
Shareholders’ equity decreased by $1.7 million, or 0.4%. Net income was offset by dividend declarations and a decrease in the AOCL component of shareholders' equity that reflected a decline in the fair value of available for sale securities as noted above.
Previous wording
The securities portfolio decreased by $30.3 million, or 3%, from the end of 2023. This decrease included $15.3 million of routine pay-downs on mortgage-backed securities and a decrease of $14.7 million (pre-tax) in the fair value of available for sale securities.
Current wording
The securities portfolio decreased by $48.6 million, or 5%, from the end of 2023. This decrease included $34.6 million of routine pay-downs on mortgage-backed securities and a decrease of $13.7 million (pre-tax) in the fair value of available for sale securities.
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Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
See additional discussion under the caption “Asset Quality” for further information on asset quality metrics and the ACL on loans.
Current report — wording carried from elsewhere
In making commercial loans, we may occasionally solicit the participation of other banks. The Bank also participates in commercial loans originated by other banks. In such cases, these loans are individually underwritten by us using standards
Current report — wording carried from elsewhere
-69- declines as they approach their floors. The positive exposure to falling rates in Year 2 is attributable to continued downward repricing of liabilities as time deposits and wholesale funding are replaced with lower rates as they mature.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
The provision for credit losses results from management’s review of the adequacy of the ACL. The ACL is management’s
Previous report — wording carried elsewhere
-50- subdivisions, as well as industrial development or revenue bonds issued through quasi-public corporations for the benefit of a private or non-profit entity where that entity rather than the governmental entity is obligated to pay the debt service.
Previous report — wording carried elsewhere
In 2024, there continues to be heightened focus in the banking industry on the CRE office sector, given the continuation of
Previous report — wording carried elsewhere
It should also be noted that the static balance sheet assumption does not necessarily reflect the Corporation’s expectation for future balance sheet growth, which is a function of the business environment and customer behavior.
Previous report — wording carried elsewhere
Mortgage-backed securities and residential real estate loans involve a level of risk that unforeseen changes in prepayment speeds may cause related cash flows to vary significantly in differing rate environments. Such changes could affect the level of reinvestment risk associated with cash flow from these instruments, as well as their market value. Changes in prepayment speeds could also increase or decrease the amortization of premium or accretion of discounts related to such instruments, thereby affecting interest income.