WASHINGTON TRUST BANCORP INC
For the period ended Sep 30, 2024. Filed Nov 7, 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.
Sep 30, 2024 · Filed Nov 7, 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 2024-06-30; filed 2024-08-06.
0000737468-24-000034
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0000737468-24-000041
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 272 previous paragraphs and 278 current paragraphs.
163 unchanged; 94 reworded; 15 added; 12 removed; 3 previous and 6 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 (15)
Current report
The provision for credit losses in 2024 largely reflected continued, yet subsiding, slowdown of loan prepayment speeds and modest specific reserve allocations on an individually analyzed nonaccrual commercial loan, partially offset by a decline in loan balances and relatively stable to improving forecasted economic conditions.
Current report
The provision for credit losses recognized in 2023 provided for loan growth and largely reflected slowdown of loan prepayment speeds and stable to improving forecasted economic conditions.
Current report
Loan related derivative income from interest rate swap contracts with commercial borrowers for the three and nine months ended September 30, 2024, decreased by $956 thousand and $819 thousand, respectively, from the same periods in 2023, reflecting a decline in volume.
Current report
Total assets amounted to $7.1 billion at September 30, 2024, down by $61.3 million, or 1%, from the end of 2023.
Current report
Total loans decreased by $132.8 million, or 2%, from the end of 2023, with the largest decline in the residential real estate portfolio.
Current report
Shareholders’ equity increased by $29.5 million, or 6%. Net income and an increase in the AOCL component of shareholders' equity were partially offset by dividend declarations.
Current report
Total loans amounted to $5.5 billion at September 30, 2024, down by $132.8 million, or 2.4%, from the end of 2023.
Current report
(1)Includes a $19 thousand negative basis adjustment associated with fair value hedges at September 30, 2024. See Note 6 to the Unaudited Consolidated Financial Statements for additional disclosure.
Current report
From time to time, commercial loans may be reclassified between CRE and C&I categories, reflecting underlying changes in loans to/from owner occupied from/to non-owner occupied. Additionally, certain construction loans may be reclassified to C&I when the construction phase is complete and the loan transitions to permanent financing.
Current report
CRE loans totaled $2.1 billion at September 30, 2024, down by $4.3 million, or 0.2%, from the balance at December 31, 2023.
Current report
(1)The amount reported for pooled loans excludes a $19 thousand negative basis adjustment associated with fair value hedges at September 30, 2024. See Note 6 to the Unaudited Consolidated Financial Statements for additional disclosure.
Current report
-65- subsiding, slowdown of loan prepayment speeds and modest specific reserve allocations on an individually analyzed nonaccrual commercial loan, partially offset by a decline in loan balances and relatively stable to improving forecasted economic conditions.
Current report
In-market deposits, which exclude wholesale brokered time deposits, were up by $97.8 million, or 2%, from the balance at December 31, 2023. Growing deposits continues to be highly competitive in our market area and demand for higher-cost deposit products is strong. Washington Trust has made recent investments in technology to enhance our customers’ experience and we remain focused on maintaining and growing depositor relationships.
Current report
The relative change in interest rate sensitivity from December 31, 2023, as shown in the above table, was attributable to changes in balance sheet composition and market interest rates. The changes in balance sheet composition included a temporary increase in rate-sensitive cash balances on deposit at correspondent banks, reductions in loans, and a lower level of wholesale funding given in-market deposit growth. Furthermore, additional interest rate management derivative contracts were executed to hedge interest rate risk.
Current report
The ALCO estimates that as interest rates change, interest-earning assets would reprice more quickly than interest-bearing liabilities. In-market deposit rate changes are modeled to lag behind other market interest rates in both pace and magnitude. Additionally, prepayments of loans and securities generally increase as market interest rates decline and decrease as market interest rates rise.
Removed paragraphs (12)
Previous 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.
Previous report
-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 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.
Previous report
Total assets amounted to $7.2 billion at June 30, 2024, down modestly by $18.5 million from the end of 2023.
Previous 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.
Previous report
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 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.
Previous report
CRE loans totaled $2.2 billion at June 30, 2024, up by $85.6 million, or 4%, from the balance at December 31, 2023.
Previous report
In-market deposits, which exclude wholesale brokered time deposits, were down by $57.2 million, or 1%, from the balance at December 31, 2023. In-market deposits continue to shift from relatively lower-cost products to higher-cost products, due to elevated market interest rates and increased competition.
Previous report
The relative change in interest rate sensitivity from December 31, 2023, as shown in the above table, was attributable to changes in balance sheet composition and market interest rates. As of June 30, 2024, the ALCO estimates that negative exposure of net interest income in Year 1 to falling rates as compared to an unchanged rate scenario results from a more rapid decline in earning asset yields compared to rates paid on deposits. If market interest rates were to fall and remain lower for a sustained period, certain savings and time deposit rates could decline more slowly and by a lesser amount than other market interest rates. For simulation purposes, deposit rate changes are anticipated to lag behind other market interest rates in both timing and magnitude. Asset yields would likely decline more rapidly than deposit costs as holdings mature or reprice, since cash flow from mortgage-related prepayments and redemption of callable securities would increase as market interest rates fall. The negative exposure in down rate scenarios reflects the insensitivity of certain deposit rates to market interest rate
Previous report
-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.
Previous report
As of June 30, 2024, the positive exposure of net interest income in Year 1 to rising rates as compared to an unchanged rate scenario results from a more rapid projected relative rate of increase in asset yields than funding costs over the near term. As mentioned above, for simulation purposes, deposit rate changes are anticipated to lag behind other market interest rates in both timing and magnitude. The negative exposure to rising rates in Year 2 is due to a higher level of longer-term fixed rate assets, as well as larger proportion of wholesale funds to total sources of funds. Fixed rate assets would not reprice upward in a rising rate environment. Wholesale funds generally would reprice more quickly and by a greater amount than the repricing of in-market deposits in response to changes in market interest rates. Although asset yields would increase in a rising interest rate environment, the cumulative impact of relative growth in rate-sensitive higher-cost deposit categories and wholesale funds suggests that the increase in the Corporation’s cost of funds could result in a relative decline in net interest income in Year 2 compared to an unchanged rate scenario.
Reworded paragraphs (94)
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 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.
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 nine months ended September 30, 2024 are not necessarily indicative of the results for the full-year ended December 31, 2024 or any future period.
Previous 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.
Current wording
-43- 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 in the third quarter of 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, and in September 2024, we opened a new full-service branch in the Olneyville section of Providence.
Previous wording
Compliance risk represents the risk of regulatory sanctions or financial loss resulting from the failure to comply with laws, rules, and regulations and standards of good banking practice. Activities which may expose the Corporation to compliance risk include, but are not limited to, those dealing with the prevention of money laundering, privacy and data protection, adherence to all applicable laws and regulations, and employment and tax matters.
Current wording
Compliance risk represents the risk of regulatory sanctions or financial loss resulting from the failure to comply with laws, rules, and regulations and standards of good banking practice. Activities that may expose the Corporation to compliance risk include, but are not limited to, those dealing with the prevention of money laundering, privacy and data protection, adherence to all applicable laws and regulations, and employment and tax matters.
Previous 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.
Current wording
Net income totaled $11.0 million and $32.7 million, respectively, for the three and nine months ended September 30, 2024, compared to $11.2 million and $35.2 million, respectively, reported for the same periods in 2023. Year-to-date results largely reflected lower net interest income and a modest increase in noninterest expenses, partially offset by higher noninterest income and a relatively lower provision for credit losses.
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, 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.
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 increases in, average interest-earning asset balances. Noninterest income benefited from a $2.1 litigation settlement received in the first quarter of 2024 and a net gain of $988 thousand recognized on the sale of a bank-owned operations facility in the second quarter of 2024. In addition, the increase in noninterest income in 2024 reflected higher mortgage banking and wealth management revenues, partially offset by lower loan related derivative income.
Previous 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.
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, changes in fair value on mortgage loans held for sale, and basis adjustments associated with fair value hedges 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
(1) Interest income includes adjustments for taxable equivalency of $227 and $235, respectively, for the three months ended June 30, 2024 and 2023.
Current wording
(1) Interest income includes adjustments for taxable equivalency of $234 thousand and $241 thousand, respectively, for the three months ended September 30, 2024 and 2023.
Previous wording
(1) Interest income includes adjustments for taxable equivalency of $449 and $463, respectively, for the six months ended June 30, 2024 and 2023.
Current wording
(1) Interest income includes adjustments for taxable equivalency of $683 thousand and $703 thousand, respectively, for the nine months ended September 30, 2024 and 2023.
Previous 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.
Current wording
Net interest income, the primary source of our operating income, totaled $32.3 million and $95.5 million, respectively, for the three and nine months ended September 30, 2024, compared to $33.8 million and $104.4 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
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 $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.
Current wording
Net interest income includes the periodic recognition of prepayment penalty fee income associated with commercial loan payoffs. There was no prepayment penalty fee income recognized in the three months ended September 30, 2024. Prepayment penalty fee income amounted to $66 thousand for the nine months ended September 30, 2024 and had essentially no benefit to NIM. This compared to $71 thousand (or 0 basis point benefit to NIM) and $245 thousand (or 1 basis point benefit to NIM), respectively, for the three and nine months ended in September 30, 2023.
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 $573 thousand for the six months ended June 30, 2024, compared to $707 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 $878 thousand for the nine months ended September 30, 2024, compared to $1.0 million for the same period in 2023.
Previous 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.
Current wording
FTE net interest income for the three and nine months ended September 30, 2024 amounted to $32.5 million and $96.2 million, respectively, down by $1.5 million and $9.0 million, respectively, from the same periods in 2023. For the three and nine months ended September 30, 2024, increases in average interest-bearing liability balances, net of increased average interest-earning assets, reduced net income by $493 thousand, and $4.9 million, respectively. Increases in funding costs outpaced increases in asset yields, reducing net interest income by $1.0 million and $4.1 million, respectively, for the three and nine months ended September 30, 2024.
Previous 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.
Current wording
NIM was 1.85% and 1.84%, respectively, for the three and nine months ended September 30, 2024, compared to 1.97% and 2.11%, 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 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.
Current wording
Total average securities for the three and nine months ended September 30, 2024 decreased by $72.1 million and $64.0 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 nine months ended September 30, 2024 was 2.44% and 2.47%, respectively, compared to 2.44% and 2.45% respectively, for the same periods in 2023.
Previous 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.
Current wording
Total average loan balances for the three and nine months ended September 30, 2024 increased by $88.8 million and $325.3 million, respectively, from the average loan balances for the comparable 2023 periods, largely reflecting growth in average balances of CRE loans. The increase in average loan balances for the year-to-date period also reflected growth in the average balance of residential real estate loans. The yield on total loans for the three and nine months ended September 30, 2024 was 5.44% and 5.41%, respectively, compared to 5.14% and 4.95%, respectively, in the corresponding periods in 2023, reflecting higher market interest rates between periods.
Previous 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.
Current wording
Higher levels of wholesale funding were used to fund balance sheet growth. The average balance of FHLB advances for the three and nine months ended September 30, 2024 increased by $370.4 million and $328.1 million, respectively, compared to the average balances for the same periods in 2023. Due to increases in market interest rates between periods, the average rate paid on such advances for both the three and nine months ended September 30, 2024 was 4.95%, up from 4.71% and 4.66%, respectively, for the same periods in 2023. Included in total average interest-bearing deposits were wholesale brokered deposits, which decreased by $201.5 million and $27.2 million, respectively, from the same periods in 2023. The average rate paid on wholesale brokered deposits for the three and nine months ended September 30, 2024 was 5.27% and 5.24%, respectively, up from 5.02% and 4.59%, 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 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.
Current wording
-49- 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 nine months ended September 30, 2024 was 3.06% and 3.00%, respectively, up from 2.57% and 2.18%, respectively, for the same periods in 2023. The average balance of noninterest-bearing demand deposits for the three and nine months ended September 30, 2024 decreased by $100.3 million and $129.4 million, respectively, from the average balances for the same periods in 2023.
Previous 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.
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
Previous wording
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 wording
Net charge-offs totaled $48 thousand for the three months ended September 30, 2024, compared to net charge-offs of $30 thousand for the same period in 2023. For the nine months ended September 30, 2024, net charge-offs totaled $127 thousand, compared to net charge-offs of $114 thousand for the same period in 2023.
Previous 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.
Current wording
The ACL on loans was $42.6 million, or 0.77% of total loans, at September 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 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.
Current wording
Revenue from wealth management services represented 58% of total noninterest income for the nine months ended September 30, 2024, compared to 62% 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 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.
Current wording
Wealth management revenues for the three and nine months ended September 30, 2024 increased by $1.0 million and $2.3 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 nine months ended September 30, 2024 increased by 9% and 10%, respectively, from the average balance for the same periods in 2023.
Previous 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:
Current wording
The end of period AUA balance amounted to $7.1 billion at September 30, 2024. The following table presents the changes in wealth management AUA balances:
Previous 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:
Current wording
Mortgage banking revenues represented 16% of total noninterest income for nine months ended September 30, 2024, compared to 12% 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 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
Current wording
For the three and nine months ended September 30, 2024, mortgage banking revenues were up by $758 thousand and $3.0 million, respectively, compared to the same periods in 2023. The increase in mortgage banking revenues was mainly attributable to increases in both sales volume and sales yield.
Previous 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.
Current wording
Income from BOLI for the nine months ended September 30, 2024, was down by $492 thousand from the same period in 2023, reflecting the recognition of $658 thousand in non-taxable income in the first six months of 2023 associated with the receipt of life insurance proceeds.
Previous wording
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 wording
Other income for the nine months ended September 30, 2024 was up by $3.0 million from the same period 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 nine months ended September 30, 2024 was down modestly by $83 thousand from the same period in 2023.
Previous 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.
Current wording
Salaries and employee benefits expense, the largest component of noninterest expense, for the three and nine months ended September 30, 2024 decreased by $272 thousand and increased by $391 thousand respectively, compared to the same periods in 2023. The changes included the impact of adjustments to performance-based compensation accruals, merit increases, and lower staffing levels.
Previous 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.
Current wording
Outsourced services expense for the three and nine months ended September 30, 2024 increased by $448 thousand and $1.2 million, respectively, compared to the same periods in the prior year. The increases reflected changes to and expansion of services, including software as a service, that are provided by third-party vendors.
Previous wording
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 wording
Legal, audit and professional fees for the three and nine months ended September 30, 2024 decreased by $222 thousand and $649 thousand, respectively, compared to the same periods in 2023, reflecting lower legal fees.
Previous 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.
Current wording
FDIC deposit insurance costs for the three and nine months ended September 30, 2024 increased by $217 thousand and $819 thousand, respectively, compared to the same periods in 2023, reflecting the impact of increases in average assets from a year ago and a higher FDIC deposit assessment rate.
Previous wording
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 wording
Advertising and promotion expense for the nine months ended September 30, 2024 increased by $442 thousand due to an increase in such activities.
Previous 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.
Current wording
The effective income tax rates in the table above differed from the blended statutory rates, primarily due to tax benefits related to income from BOLI, federal tax credits, and tax-exempt income. The blended statutory rates include the federal income tax rate of 21% and a blended state income tax rate net of a federal tax benefit. The increase in the blended statutory rates in the table above reflect the impact of a fourth quarter 2023 Massachusetts tax law change.
Previous 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.
Current wording
The Corporation’s net deferred tax assets amounted to $46.0 million at September 30, 2024, compared to $53.8 million at December 31, 2023. This decline largely reflected decreases in deferred tax assets associated with increases in fair value of securities available for sale due to changes in market interest rates.
Previous 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.
Current wording
Net interest income for the Commercial Banking segment for the three and nine months ended September 30, 2024 decreased by $1.5 million and $8.9 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 increases in, average interest-earning asset balances.
Previous 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.
Current wording
The provision for credit losses for the three and nine months ended September 30, 2024 decreased by $300 thousand and $600 thousand, respectively from the same periods in 2023. See additional discussion under the caption “Provision for Credit Losses” above.
Previous 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.
Current wording
Noninterest income derived from the Commercial Banking segment for the three and nine months ended September 30, 2024 was up by $72 thousand and $2.7 million, respectively, from the comparable periods in 2023. The year-to-date increase in Commercial Banking noninterest income reflected higher mortgage banking revenues and a net gain recognized in the second quarter of 2024 on the sale of a bank-owned operations facility. These were partially offset by lower income from loan related derivatives and BOLI. See additional discussion under the caption “Noninterest Income” above.
Previous 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.
Current wording
Commercial Banking noninterest expenses for the three and nine months ended September 30, 2024 were up by $790 thousand and $4.0 million, respectively, from the same periods in 2023, largely reflecting increases in salaries and employee benefits expense, outsourced services, and FDIC deposit insurance costs, as well as reductions in legal fees. See additional discussion under the caption “Noninterest Expense” above.
Previous 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.
Current wording
For the three and nine months ended September 30, 2024, noninterest income derived from the Wealth Management Services segment increased by $974 thousand and $4.5 million, respectively, from the same periods in 2023, reflecting an increase in asset-based revenues. The year-to-date increase also included income of $2.1 million associated with a litigation settlement in the first quarter of 2024. See further discussion under the caption “Noninterest Income” above.
Showing the first 40 of 94 pairs. Open the source sections for the rest.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
-48- composition of interest-earning assets and interest-bearing liabilities. Prepayment penalty income associated with loan payoffs is included in net interest income.
Current report — wording carried from elsewhere
As market interest rates rose between periods, 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 nine months ended September 30, 2024 increased by $70.7 million and $128.9 million, respectively, from the average balances for the
Current report — wording carried from elsewhere
-50- conditions. Estimating an appropriate level of ACL necessarily involves a high degree of judgment.
Current report — wording carried from elsewhere
As of September 30, 2024, the balance of nonaccrual residential mortgage loans was predominately secured by properties in Connecticut, Massachusetts, and Rhode Island. Included in total nonaccrual residential real estate loans at September 30,
Current report — wording carried from elsewhere
The ACL on loans is management’s estimate of expected lifetime credit losses on loans carried at amortized cost. The ACL
Current report — wording carried from elsewhere
-69- deposit rates and balances are related to changes in short-term interest rates. The relationship between short-term interest rate changes and deposit rate and balance changes may differ from the ALCO’s estimates used in income simulation.
Rearranged previous paragraphs (3)
Previous report — wording carried 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
Previous report — wording carried elsewhere
$8.2 million and $8.5 million, respectively, as of June 30, 2024 and December 31, 2023. The balance of residential mortgage loans serviced for others, which are not included in the Unaudited Consolidated Balance Sheets, amounted to $1.4 billion and $1.5 billion, respectively, as of June 30, 2024 and December 31, 2023.
Previous report — wording carried elsewhere
Borrowings primarily consist of FHLB advances, which are used as a source of funding for liquidity and interest rate risk management purposes.