FIRST BANCORP NC
For the period ended Sep 30, 2024. Filed Nov 6, 2024.
View on SEC.govAbout this filing
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 6, 2024
FBNC$64.60-0.3%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 2024-08-07.
0000811589-24-000055
Item 2. – Management’s Discussion and Analysis of Consolidated Results of Operations and Financial ConditionCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-06.
0000811589-24-000070
Item 2. – Management’s Discussion and Analysis of Consolidated Results of Operations and Financial ConditionThe 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 132 previous paragraphs and 144 current paragraphs.
58 unchanged; 65 reworded; 15 added; 6 removed; 3 previous and 6 current paragraphs rearranged.
Tables are not compared: 12 previous and 13 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 for the third quarter of 2024 was $14.2 million, driven by an incremental provision of $13.0 million related to the potential exposure from Hurricane Helene and $2.1 million of net charge-off activity, partially offset by generally improving economic forecasts that lead to a reduction in the reserves required for unfunded commitments. See the "Allowance for Credit Losses, Allowance for Unfunded Commitments, and Loan Loss Experience" discussion in the Financial Condition section of Management's Discussion and Analysis.
Current report
•Noninterest income for the three months ended September 30, 2024 totaled $13.6 million which was a decrease of $1.6 million, or 10.5%, from the comparable period of 2023 and was primarily related to an decrease in Other income, net, related to the timing of the recognition of gain and loss from other investment activity, which does not include available for sale or held to maturity securities.
Current report
•These third quarter results include the potential impact of Hurricane Helene of $13.4 million, comprised of $13.0 million of provision for potential credit loss exposure in our footprint hardest hit by Helene, $0.3 million of estimated property damages and an additional $0.1 million of other impacts. After considering the tax effect of these items, our net income was reduced by $10.3 million.
Current report
We earned net income of $72.7 million, or $1.76 diluted EPS, during the nine months ended September 30, 2024 compared to net income of $74.5 million, or $1.81 diluted EPS, for the nine months ended September 30, 2023. Adjusting for the potential impact from Hurricane Helene, our adjusted net income was $83.0 million, or $2.01 per diluted share, for the nine months ended September 30, 2024.
Current report
•These 2024 year to date results include the potential impact of Hurricane Helene of $13.4 million. This comprised of $13.0 million of provision for potential credit loss exposure in our footprint hardest hit by Helene, $0.3 million of estimated property damages and an additional $0.1 million of other impacts. After considering the tax effect of these items, our net income was reduced by $10.3 million.
Current report
•Capital grew during the quarter, keeping us well-capitalized by all regulatory standards. At September 30, 2024, our total common equity Tier 1 ratio was 14.37%, our Tier 1 risk-based capital ratio was 15.19% and our total risk-based capital ratio was 16.65%. All capital ratios grew during the quarter and from September 30, 2023.
Current report
•During 2023, the Federal Reserve increased the fed funds rate four times for a total of 100 basis points, in addition to the substantial increases made during 2022. During 2024, the Federal Reserve did not change rates until mid September at which point the fed funds rate was reduced 50 basis points. These changes resulted in a decrease of 50 basis points in fed funds rates between September 2023 and September 2024, with an average prime rate of 8.43% for three months ended September 30, 2024, a slight decrease from the prior year period. During much of 2024, the market yield curve was inverted.
Current report
•During 2023, the Federal Reserve increased the fed funds rate four times for a total of 100 basis points, in addition to the substantial increases made during 2022. During 2024, the Federal Reserve did not change rates until mid September at which point the fed funds rate was reduced 50 basis points. These changes resulted in a decrease of 50 basis points in fed funds rates between September 2023 and September 2024, with an average prime rate of 8.48% for nine months ended September 30, 2024, compared to 8.09% for the prior year period. During much of 2024, the market yield curve was inverted.
Current report
The provision for credit losses was $14.2 million and zero for the three months ended September 30, 2024 and 2023, respectively, and $15.9 million and $14.9 million for the nine months ended September 30, 2024 and 2023, respectively.
Current report
For the three months ended September 30, 2024 as compared to the same period in 2023, the higher provision was primarily due to the $13.0 million provision specifically attributed to Hurricane Helene. Generally improving economic forecasts that lead to a reduction in the reserves required for unfunded commitments during the three months ended September 30, 2024, but the effect was not as impactful as was the case in the three months ended September 30, 2023 by $0.6 million.
Current report
For the nine months ended September 30, 2024 as compared to the same period in 2023, the higher provision was primarily due to the $13.0 million provision specifically attributed to Hurricane Helene and a $0.4 million increase in net charge off activity for the period, partially offset by generally improving economic forecasts that lead to a reduction in the reserves required for unfunded commitments. The provision for the nine months ended September 30, 2023 was directly related to the GrandSouth acquisition, which consisted of: (1) a one-time provision of $12.2 million for non-credit deteriorated loans; and (2) a one-time initial provision for unfunded commitments of $1.9 million.
Current report
Within the portions of Western North and South Carolina that were significantly impacted by Hurricane Helene, the Company identified borrowers with approximately $755 million of loans outstanding. Given that the storm impacted the area just prior to September 30, 2024 and recovery continues in many communities, the Company performed analyses to identify possible impacts from the storm and has reserved accordingly based upon the information available at this time. The Company applied increased reserve rates based upon severe economic factors to the approximately $755 million of loans in the path of Helene. Additionally, the Company performed an initial evaluation of the largest commercial loans in its impacted markets and applied incremental reserves to those loans that were suspected of having higher potential property damage or economic impact from the storm The incremental provision related to the potential exposure from Hurricane Helene added 0.16% to the ACL as of September 30, 2024.
Current report
Within the portions of Western North and South Carolina that were significantly impacted by Hurricane Helene, the Company identified borrowers with approximately $755 million of loans outstanding. The following is a summary of the categories of those loans outstanding as of September 30, 2024:
Current report
Given that the storm impacted the area just prior to September 30, 2024 and recovery continues in many communities, the Company performed analyses to identify possible impacts from the storm and has reserved accordingly based upon the information available at this time. The Company applied increased reserve rates based upon severe economic factors to the approximately $755 million of loans in the most impacted path of Helene. Additionally, the Company performed an initial evaluation of the largest commercial loans in that area and applied incremental reserves to those loans that were suspected of having higher potential property damage or economic impact from the storm. Due to the impact from from Hurricane Helene, the ACL on these impacted loans increased by $13.0 million, expanding the ACL as a percent of loans in the impacted markets from 1.29% to 3.01% as of September 30, 2024 and adding 0.16% to the overall ACL as a percent of total loans as of September 30, 2024.
Removed paragraphs (6)
Previous report
•The decline in the provision for credit losses in the second quarter of 2024 as compared to the second quarter of 2023 was related to a $593 thousand reduction in net charge off activity as well as generally improving economic forecasts that lead to a reduction in the reserves required for unfunded commitments.
Previous report
•Noninterest income for the three months ended June 30, 2024 totaled $14.6 million which was an increase of $0.4 million, or 2.9%, from the comparable period of 2023 and was primarily related to an increase in SBA loan sale gains.
Previous report
We earned net income of $54.0 million, or $1.31 diluted EPS, during the six months ended June 30, 2024 compared to net income of $44.6 million, or $1.08 diluted EPS, for the six months ended June 30, 2023.
Previous report
•Market interest rates increased 25 basis points between June 2023 and June 2024 to result in an average prime rate of 8.50% for three months ended June 30, 2024 compared to 8.16% for the prior year period.
Previous report
•Market interest rates increased 25 basis points between June 2023 and June 2024 to result in an average prime rate of 8.50% for six months ended June 30, 2024 compared to 7.92% for the prior year period.
Previous report
The provision for credit losses was $0.5 million and $2.4 million for the three months ended June 30, 2024 and 2023, respectively, and $1.7 million and $14.9 million for the six months ended June 30, 2024 and 2023, respectively. The lower provision in the second quarter was primarily due to a $593 thousand reduction in net charge off activity as well as generally improving economic forecasts that lead to a reduction in the reserves required for unfunded commitments.The primary contributor to the higher provision for the six months ended June 30, 2023 was the initial provision required for the loan portfolio acquired from GrandSouth.
Reworded paragraphs (65)
Previous wording
We earned net income of $28.7 million, or $0.70 diluted EPS, during the three months ended June 30, 2024 compared to net income of $29.4 million, or $0.71 diluted EPS, for the three months ended June 30, 2023. The decrease in net income in the the current year period as compared to the prior year period was driven primarily by higher cost of funds, partially offset by a higher yield on interest earning assets and lower noninterest expenses.
Current wording
We earned net income of $18.7 million, or $0.45 diluted EPS, during the three months ended September 30, 2024 compared to net income of $29.9 million, or $0.73 diluted EPS, for the three months ended September 30, 2023. The decrease in net income in the current year period as compared to the prior year period was driven primarily by a $14.2 million increase in provision for credit losses, $13.0 million of which was related to anticipated impact from Hurricane Helene and a higher cost of funds, partially offset by a higher yield on interest earning assets, both of which were driven by the overall interest rate environment for the past year. Adjusting for the impact from Hurricane Helene, our adjusted net income was $29.0 million, or $0.70 per diluted share, for the third quarter.
Previous wording
•Net interest income for the second quarter of 2024 was $81.1 million, a 6.8% decrease from the $87.0 million recorded in the second quarter of 2023. The decrease in net interest income from the prior year period was driven by higher cost of funds, partially offset by higher yield on earning assets.
Current wording
•Net interest income for the third quarter of 2024 was $83.0 million, a 2.0% decrease from the $84.7 million recorded in the third quarter of 2023. The decrease in net interest income from the prior year period was driven by higher cost of funds, partially offset by higher yield on earning assets.
Previous wording
•Net interest margin ("NIM") on a tax-equivalent basis decreased in the second quarter of 2024 to 2.87% from 3.08% for the second quarter of 2023 as a result of the higher cost of funds and decreased loan accretion, partially offset by increases in market interest rates driving higher yields on loans and other earning assets.
Current wording
•Net interest margin ("NIM") on a tax-equivalent basis decreased in the third quarter of 2024 to 2.90% from 2.97% for the third quarter of 2023 as a result of the higher cost of funds and decreased loan accretion, partially offset by increases in market interest rates driving higher yields on loans and other earning assets.
Previous wording
•We remained well-capitalized by all regulatory standards with a total common equity Tier 1 ratio of 13.99% and total risk-based capital ratio of 16.24% at June 30, 2024.
Current wording
•We remained well-capitalized by all regulatory standards. Capital grew during the quarter with a total common equity Tier 1 ratio of 14.37%, Tier 1 risk-based capital ratio of 15.19% and total risk-based capital ratio of 16.65% at September 30, 2024, all growing for the quarter and from September 30, 2023.
Previous wording
•Noninterest expense of $58.3 million for the quarter ended June 30, 2024 decreased $3.3 million, or 5.4%, from the three months ended June 30, 2023. This decrease is attributable to the $1.3 million of merger and acquisition expense resulting from the GrandSouth acquisition during the three months ended June 30, 2023 and a $1.1 million decrease in other operating expenses.
Current wording
•Noninterest expense of $59.9 million for the quarter ended September 30, 2024 decreased $2.4 million, or 3.8%, from the three months ended September 30, 2023. This decrease is attributable to a $2.4 million decrease in other operating expenses.
Previous wording
Overview and Highlights at and for Six Months Ended June 30, 2024
Current wording
Overview and Highlights at and for Nine Months Ended September 30, 2024
Previous wording
•Net interest income for six months ended June 30, 2024 was $160.3 million, a 10.7% decrease from the $179.5 million recorded for the comparable period of 2023. The decrease in net interest income was driven by higher cost of funds, partially offset by higher yields on interest earning assets.
Current wording
•Net interest income for the nine months ended September 30, 2024 was $243.4 million, a 7.9% decrease from the $264.2 million recorded for the comparable period of 2023. The decrease in net interest income was driven by higher cost of funds, partially offset by higher yields on interest earning assets.
Previous wording
•NIM on a tax-equivalent basis decreased to 2.83% for the six months ended June 30, 2024 from 3.19% for the six months ended June 30, 2023 related to higher cost of funds driven by increases in market rates and competition for deposits. Higher rates on interest-bearing liabilities were partially offset by increased loan yields from market rate increases and pricing on new loans, partially offset by lower loan discount accretion.
Current wording
•NIM on a tax-equivalent basis decreased to 2.86% for the nine months ended September 30, 2024 from 3.12% for the nine months ended September 30, 2023 related to higher cost of funds driven by increases in market rates and competition for deposits. Higher rates on interest-bearing liabilities and lower purchase accounting loan discount accretion were partially offset by increased loan yields from market rate increases and pricing on new loans.
Previous wording
•For the six months ended June 30, 2024, the Company recorded $1.7 million in provision for credit losses as compared to $14.9 million for the six months ended June 30, 2023. The higher provision in the 2023 period was directly related to the GrandSouth acquisition as follows: (1) a one-time provision of $12.2 million for non-credit deteriorated loans; and (2) a one-time initial provision for unfunded commitments of $1.9 million.
Current wording
•For the nine months ended September 30, 2024, the Company recorded $15.9 million in provision for credit losses as compared to $14.9 million for the nine months ended September 30, 2023. The higher provision in 2024 was significantly impacted by the $13.0 million provision related to Hurricane Helene. The 2023 provision was primarily driven by the GrandSouth acquisition as follows: (1) a one-time provision of $12.2 million for non-credit deteriorated loans; and (2) a one-time initial provision for unfunded commitments of $1.9 million.
Previous wording
•Noninterest income for the six months ended June 30, 2024 totaled $27.6 million, a decrease of $0.2 million, or 0.7%, from the comparable period of 2023 primarily related to increased securities losses of $1.2 million and a $597 thousand decrease in other service charges and fees, partially offset by an increase in SBA loan sale gains of $1.3 million.
Current wording
•Noninterest income for the nine months ended September 30, 2024 totaled $41.1 million, a decrease of $1.9 million, or 4.4%, from the comparable period of 2023 primarily related to decreased Other income, net of $1.9 million and increased securities losses of $1.2 million, partially offset by an increase in SBA loan sale gains of $1.3 million.
Previous wording
•Noninterest expense decreased $18.3 million, or 13.5%, to $117.5 million for the six months ended June 30, 2024 as compared to the prior year period, primarily driven by a $13.5 million decrease in merger expenses resulting from the GrandSouth acquisition along with a $2.3 million decrease in other noninterest expense and a $2.1 million decrease in personnel expense.
Current wording
•Noninterest expense decreased $20.7 million, or 10.4%, to $177.3 million for the nine months ended September 30, 2024 as compared to the prior year period, primarily driven by a $13.5 million decrease in merger expenses resulting from the GrandSouth acquisition along with a $4.7 million decrease in other operating expenses and a $1.6 million decrease in personnel expense.
Previous wording
Total assets at June 30, 2024 amounted to $12.1 billion, a 0.4% decrease from December 31, 2023, and was driven primarily by intentional reductions in investment securities and loan balances, partially offset by higher interest-bearing cash balances. The primary balance sheet changes are presented below.
Current wording
Total assets at September 30, 2024 amounted to $12.2 billion, a 0.3% increase from December 31, 2023, and was driven primarily by higher interest-bearing cash balances, partially offset by a short term strategy to intentional reduce investment securities and loan balances. The primary balance sheet changes are presented below.
Previous wording
•Total loans amounted to $8.1 billion at June 30, 2024, reflecting a contraction of $80.3 million from December 31, 2023.
Current wording
•Total loans amounted to $8.0 billion at September 30, 2024, reflecting a contraction of $136.6 million from December 31, 2023.
Previous wording
•Total deposits were $10.5 billion at June 30, 2024, an increase of $456.2 million, or 4.55%, from December 31, 2023.
Current wording
•Total deposits were $10.5 billion at September 30, 2024, an increase of $473.3 million, or 4.72%, from December 31, 2023.
Previous wording
•Credit quality continued to be strong at June 30, 2024, with a NPA to total assets ratio of 0.37% as of June 30, 2024, consistent with that of December 31, 2023.
Current wording
•Credit quality continued to be strong at September 30, 2024, with NPAs of 0.38% of total assets as of September 30, 2024, up slightly from 0.37% at December 31, 2023.
Previous wording
•Our on-balance sheet liquidity ratio was 16.3% at June 30, 2024. Available off-balance sheet sources totaled $2.4 billion at quarter end, resulting in a total liquidity ratio of 34.2%.
Current wording
•On-balance sheet liquidity ratio was 17.7% at September 30, 2024. Available off-balance sheet sources totaled $2.4 billion at quarter end, resulting in a total liquidity ratio of 35.2%.
Previous wording
The accounting principles we follow and our methods of applying these principles conform with GAAP and with general practices followed by the banking industry. Certain policies inherently have a greater reliance on the use of estimates, assumptions, or judgments and as such, have a greater possibility of producing results that could be materially different than originally reported. We have identified the determination of our ACL and related Allowance for Unfunded Commitments, as well as business combinations, related fair value measurements and goodwill determination to be the accounting areas that require the most subjective or complex judgments, estimates, and assumptions, and where changes in those judgments, estimates, and assumptions (based on new or additional information, changes in the economic climate and/or market interest rates, etc.) could have a significant effect on our financial statements.
Current wording
The accounting principles we follow and our methods of applying these principles conform with GAAP and with general practices followed by the banking industry. Certain policies inherently have a greater reliance on the use of estimates, assumptions, or judgments and as such, have a greater possibility of producing results that could be materially different than originally reported. We have identified the determination of our ACL and related Allowance for Unfunded Commitments, as well as business combinations, related fair value measurements and goodwill determination to be the accounting areas that require the most subjective or complex judgments, estimates, and assumptions, and where changes in those judgments, estimates, and assumptions (based on new or additional
Previous wording
Net interest income for the three months ended June 30, 2024 amounted to $81.1 million, a decrease of $5.9 million, or 6.8%, from the $87.0 million recorded in the second quarter of 2023. The decrease was primarily driven by higher cost of funds, partially offset by higher yields on earning assets. While average interest-earning assets for the second quarter of 2024 increased 0.3% from the comparable period of the prior year, the mix of assets shifted to higher earning assets, with average loans growing $220.3 million, or 2.81%, and short term investments growing $157.3 million, or 44.90%, while taxable securities decreased $333.4 million, or 11.40%. The increase in the cost of interest bearing deposits of 86 basis points between the second quarter of 2023 and the second quarter of 2024 more than offset improvements from earning asset mix changes and higher yields. This resulted in the reduction in our tax-equivalent NIM (see discussion below) from 3.08% for the second quarter of 2023 to 2.87% for the second quarter of 2024.
Current wording
Net interest income for the three months ended September 30, 2024 amounted to $83.0 million, a decrease of $1.7 million, or 2.0%, from the $84.7 million recorded in the third quarter of 2023. The decrease was primarily driven by higher cost of funds, partially offset by higher yields on earning assets. While average interest-earning assets for the third quarter of 2024 increased $83.9 million, or 0.7%, from the comparable period of the prior year, the mix of assets shifted to higher earning assets, with average loans growing $79.9 million and short term investments growing $400.0 million, while taxable securities decreased $391.5 million. The increase in the cost of interest bearing deposits of 64 basis points between the third quarter of 2023 and the third quarter of 2024 more than offset improvements from earning asset mix changes and higher yields. This resulted in the reduction in our tax-equivalent NIM (see discussion below) from 2.97% for the third quarter of 2023 to 2.90% for the third quarter of 2024.
Previous wording
(1) Average loans include nonaccruing loans, the effect of which is to lower the average rate shown. Interest earned includes recognized net loan fees, including late fees, prepayment fees, and net deferred loan (cost)/fee amortization in the amounts of $(271,000), and $49,000 for three months ended June 30, 2024 and 2023, respectively.
Current wording
(1) Average loans include nonaccruing loans, the effect of which is to lower the average rate shown. Interest earned includes recognized net loan fees, including late fees, prepayment fees, and net deferred loan (cost)/fee amortization in the amounts of $(342,000), and $52,000 for three months ended September 30, 2024 and 2023, respectively.
Previous wording
(2) Includes accretion of discount on acquired loans of $2.3 million and $3.2 million for three months ended June 30, 2024 and 2023, respectively.
Current wording
(2) Includes accretion of discount on acquired loans of $2.0 million and $2.8 million for three months ended September 30, 2024 and 2023, respectively.
Previous wording
(3) Includes tax-equivalent adjustments of $733,000 and $699,000 for three months ended June 30, 2024 and 2023, respectively, to reflect the tax benefit that we receive related to tax-exempt securities and tax-exempt loans, which carry interest rates lower than similar taxable investments/loans due to their tax-exempt status. This amount has been computed assuming a 23% tax rate and is reduced by the related nondeductible portion of interest expense.
Current wording
(3) Includes tax-equivalent adjustments of $722,000 and $740,000 for three months ended September 30, 2024 and 2023, respectively, to reflect the tax benefit that we receive related to tax-exempt securities and tax-exempt loans, which carry interest rates lower than similar taxable investments/loans due to their tax-exempt status. This amount has been computed assuming a 23% tax rate and is reduced by the related nondeductible portion of interest expense.
Previous wording
•Average loan volumes for the three months ended June 30, 2024 were $220.3 million higher than the same period in 2023. In addition, interest rates on loans increased 24 basis points to 5.50% for the second quarter of 2024, resulting in an increase in interest income on loans of $7.5 million.
Current wording
•Average loan volumes for the three months ended September 30, 2024 were $79.9 million higher than the same period in 2023. In addition, interest rates on loans increased 19 basis points to 5.51% for the third quarter of 2024, resulting in an increase in interest income on loans of $4.6 million.
Previous wording
•Due to higher market rates and increased average balances, deposit interest expense for the three months ended June 30, 2024 increased $17.4 million compared to the same period in 2023. Average interest-bearing deposit balances increased $563.2 million while rates on those deposits increased 86 basis points as compared to the same period in the prior year.
Current wording
•Due to the impact of the aforementioned fed funds increases in 2022 and 2023 and the resulting increased market rates along with higher average balances, deposit interest expense for the three months ended September 30, 2024 increased $13.8 million compared to the same period in 2023. Average interest-bearing deposit balances increased $500.6 million while rates on those deposits increased 64 basis points as compared to the same period in the prior year.
Previous wording
•The decrease in volume of borrowings between periods, partially offset by higher rates on those borrowings, up 141 basis points in the second quarter of 2024 from the second quarter of 2023, as a result of increasing market rates, drove the $3.9 million decrease in interest expense on borrowings. Average borrowings were $315.5 million lower in the second quarter of 2024 as compared to the second quarter of 2023 due in large part to the decreased utilization of short-term borrowings to fund loan growth and manage fluctuations in deposit balances.
Current wording
•Average borrowings were $341.7 million lower in the third quarter of 2024 as compared to the third quarter of 2023 due in large part to the decreased utilization of short-term borrowings to fund loan growth and manage fluctuations in deposit balances. This decrease in volume of borrowings between periods was partially offset by higher rates on the remaining borrowings, with overall rates increasing 209 basis points in the third quarter of 2024 from the third quarter of 2023. These changes resulted in the $4.6 million decrease in interest expense on borrowings.
Previous wording
•The decrease in NIM was directly related to higher rates on liabilities driven by current market rates with repricing on our deposits occurring at a more rapid pace that the increase in yields on assets.
Current wording
•The decrease in NIM was directly related to higher rates on interest-bearing liabilities driven by the aforementioned short-term Federal Reserve rate increases in 2022 and 2023, the inverted yield curve in 2024 and the repricing of our deposits during the last year occurring at a more rapid pace than the increase in yields on interest-earning assets.
Previous wording
Net interest income for the six months ended June 30, 2024 amounted to $160.3 million, a decrease of $19.2 million, or 10.7%, from the $179.5 million recorded in the six months ended June 30, 2023. The decrease was driven by higher cost of funds, partially offset by increased yields on interest earning assets. Our tax-equivalent NIM fell to 2.83% for the six months ended June 30, 2024 from 3.19% for the six months ended June 30, 2023 as discussed further below.
Current wording
Net interest income for the nine months ended September 30, 2024 amounted to $243.4 million, a decrease of $20.7 million, or 7.9%, from the $264.2 million recorded in the nine months ended September 30, 2023. As described above, the Federal Reserve actions from 2022 through 2024 affected market rates which had resulting impacts on the rates we paid or received in 2023 and 2024. Similar to the impact during the three months ended September 30, 2024, the decrease for the nine months ended September 30, 2024 was also driven by higher cost of funds, partially offset by increased yields on interest-earning assets. Our tax-equivalent NIM fell to 2.86% for the nine months ended September 30, 2024 from 3.12% for the nine months ended September 30, 2023 as discussed further below.
Previous wording
The following table presents an analysis of net interest income for the six months ended June 30, 2024 and 2023.
Current wording
The following table presents an analysis of net interest income for the nine months ended September 30, 2024 and 2023.
Previous wording
(1) Average loans include nonaccruing loans, the effect of which is to lower the average rate shown. Interest earned includes recognized net loan fees, including late fees, prepayment fees, and deferred loan (cost)/fee amortization (including deferred PPP fees), in the amounts of $(374,000), and $406,000 for six months ended June 30, 2024 and 2023, respectively.
Current wording
(1) Average loans include nonaccruing loans, the effect of which is to lower the average rate shown. Interest earned includes recognized net loan fees, including late fees, prepayment fees, and deferred loan (cost)/fee amortization (including deferred PPP fees), in the amounts of $(716,000), and $458,000 for nine months ended September 30, 2024 and 2023, respectively.
Previous wording
(2) Includes accretion of discount on acquired loans of $4.7 million and $6.3 million for six months ended June 30, 2024 and 2023, respectively.
Current wording
(2) Includes accretion of discount on acquired loans of $6.7 million and $9.0 million for nine months ended September 30, 2024 and 2023, respectively.
Previous wording
(3) Includes tax-equivalent adjustments of $1.5 million and $1.4 million for six months ended June 30, 2024 and 2023, respectively, to reflect the tax benefit that we receive related to tax-exempt securities and tax-exempt loans, which carry interest rates lower than similar taxable investments/loans due to their tax exempt status. This amount has been computed assuming a 23% tax rate and is reduced by the related nondeductible portion of interest expense
Current wording
(3) Includes tax-equivalent adjustments of $2.2 million and $2.1 million for nine months ended September 30, 2024 and 2023, respectively, to reflect the tax benefit that we receive related to tax-exempt securities and tax-exempt loans, which carry interest rates lower than similar taxable investments/loans due to their tax exempt status. This amount has been computed assuming a 23% tax rate and is reduced by the related nondeductible portion of interest expense
Previous wording
•Average loan volumes for the six months ended June 30, 2024 were $297.3 million higher than the same period in 2023 due to organic loan growth. In addition, interest rates on loans increased 24 basis points to 5.48% for the six months ended June 30, 2024, resulting in an increase in loan interest income of $17.8 million.
Current wording
•Average loan volumes for the nine months ended September 30, 2024 were $224.1 million higher than the same period in 2023 due to organic loan growth. In addition, interest rates on loans increased 22 basis points to 5.49% for the nine months ended September 30, 2024, resulting in an increase in loan interest income of $22.5 million.
Previous wording
•Primarily due to higher market rates, deposit interest expense for the six months ended June 30, 2024 increased $37.6 million compared to the same period in 2023. Average interest-bearing deposit balances increased $450.3 million while rates on those deposits increased 100 basis points as compared to the same period in the prior year.
Current wording
•Primarily due to higher market rates as well as the increase in average balances, deposit interest expense for the nine months ended September 30, 2024 increased $51.4 million compared to the same period in 2023. Average interest-bearing deposit balances increased $467.0 million while rates on those deposits increased 87 basis points as compared to the same period in the prior year.
Previous wording
•Interest expense on borrowings decreased $1.5 million for the six months ended June 30, 2024 as compared to the same period in 2023 due to the $88.3 million decrease in the average volume of borrowings between periods, partially offset by a 50 basis point increase in the rates on those borrowings. The lower balances were due in large part to the lower levels of short-term borrowings being utilized to fund loan growth and manage fluctuations in deposit balances.
Current wording
•Interest expense on borrowings decreased $6.0 million for the nine months ended September 30, 2024 as compared to the same period in 2023 due to the $173.3 million decrease in the average volume of borrowings between periods, partially offset by a 61 basis point increase in the rates on those borrowings. The lower balances were due in large part to a decreased reliance on short-term borrowings during 2024 as deposit growth provided additional liquidity. The remaining borrowings are longer term in nature and carry higher interest rates than those that were paid off.
Previous wording
•NIM decreased 36 basis points between the comparable periods as higher loan yields from market rate increases and improved pricing on new loans, combined with increased loan discount accretion were more than offset by the higher cost of funds, also driven by increases in market rates and competition for deposits.
Current wording
•NIM decreased 26 basis points between the comparable periods as higher loan yields and reduced cost of borrowings were more than offset by the higher cost of deposits, also driven by the increases in Fed funds rates during 2022 and 2023 and competition for deposits.
Previous wording
Our NIM for all periods presented benefited from the net accretion income, primarily associated with purchase accounting premiums/discounts associated with acquisitions. Presented in the table below is the amount of accretion which increased net interest income in each time period presented.
Current wording
Our NIM for all periods presented benefited from the net accretion income arising from purchase accounting premiums/discounts associated with acquisitions. Presented in the table below is the amount of accretion which increased net interest income in each time period presented.
Previous wording
The most significant component of the purchase accounting adjustments in each year was loan discount accretion on purchased loans. Generally, the level of loan discount accretion will decline each year due to the natural paydowns in acquired loan portfolios.
Current wording
The most significant component of the purchase accounting adjustments in each year was loan discount accretion on purchased loans. Generally, the level of loan discount accretion will decline each year due to the natural reduction in outstanding balance of acquired loans.
Previous wording
At June 30, 2024 and 2023, unaccreted loan discounts on purchased loans amounted to $19.3 million and $29.2 million, respectively. The GrandSouth acquired portfolio comprised the majority of the remaining unaccreted loan discount at June 30, 2024.
Current wording
At September 30, 2024 and 2023, unaccreted loan discounts on purchased loans amounted to $17.3 million and $26.5 million, respectively. The GrandSouth acquired portfolio comprised the majority of the remaining unaccreted loan discount at September 30, 2024.
Previous wording
In addition to the loan discount accretion recorded on acquired loans, we recorded accretion on the discounts associated with the retained unguaranteed portions of SBA loans sold in the secondary market. The level of SBA loan discount accretion will fluctuate relative to the SBA loan portfolio balances. At June 30, 2024 and 2023, the unaccreted loan discounts on SBA loans amounted to $3.2 million and $3.8 million, respectively.
Current wording
In addition to the loan discount accretion recorded on acquired loans, we recorded accretion on the discounts associated with the retained unguaranteed portions of SBA loans sold in the secondary market. The level of SBA
Previous wording
Our noninterest income amounted to $14.6 million and $14.2 million for the three months ended June 30, 2024 and 2023, respectively and $27.6 million and $27.8 million for the six months ended June 30, 2024 and 2023, respectively. The higher noninterest income in the current quarter as compared to the prior year is primarily the result of higher "SBA loan sale gains," partially offset by decreases in "Other service charges and fees" and "Securities losses, net." The decreased noninterest income for the six months ended June 30, 2024 as compared to the same period in 2023 is a result of "Securities losses, net" in 2024 and lower "Other service charges and fees," partially offset by increased "SBA loan sale gains" and "Bank-owned life insurance income." Details of the more significant components of noninterest income is presented in the table below.
Current wording
Our noninterest income amounted to $13.6 million and $15.2 million for the three months ended September 30, 2024 and 2023, respectively, and $41.1 million and $42.9 million for the nine months ended September 30, 2024 and 2023, respectively. The lower noninterest income in the current quarter as compared to the same prior year period is primarily the result of lower "Other income, net," partially offset by an increase in "Presold mortgage loan fees and gains on sale." The decreased noninterest income for the nine months ended September 30, 2024 as compared to the same period in 2023 is a result of "Securities losses, net" in 2024 and lower "Other income, net," partially offset by increased "SBA loan sale gains." Details of the more significant components of noninterest income are presented in the table below. For the three and nine months ended September 30, 2024, the change in "Other income, net" was related to the timing of the recognition of gain and loss from other investment activity, which does not include available for sale or held to maturity securities.
Previous wording
Total noninterest expenses totaled $58.3 million and $61.6 million for the three months ended June 30, 2024 and 2023, respectively, and $117.5 million and $135.8 million for the six months ended June 30, 2024 and 2023, respectively. The primary contributors to the 5.4% decrease in noninterest expense for the second quarter of 2024 as compared to the same period of 2023 were the Merger and acquisition costs of $1.3 million related to the GrandSouth acquisition, the $0.8 million decrease in Non-credit losses and the $0.5 million decrease in FDIC insurance costs. The decrease for the six months ended June 30, 2024 as compared to the same period in 2023 was primarily the result of a decrease in Merger and acquisition costs of $13.5 million related to the GrandSouth acquisition, a reduction in Total personnel expenses of $2.1 million, a decrease in Other operating expenses of $1.3 million and a decrease in Non-credit losses of $1.1 million. The decline in Other operating expenses was primarily related to a $2.4 million charge in 2023 for the estimated termination costs associated with the Company's pension plan.
Current wording
Total noninterest expenses totaled $59.9 million and $62.2 million for the three months ended September 30, 2024 and 2023, respectively, and $177.3 million and $198.0 million for the nine months ended September 30, 2024 and 2023, respectively. The primary contributors to the $2.4 million, or 3.8%, decrease in noninterest expense for the third quarter of 2024 as compared to the same period of 2023 were the $1.4 million decrease in "Other operating expenses", the $0.6 million decrease in "Non-credit losses," and the $0.5 million decrease in "Equipment related expenses," partially offset by an increase in "Total personnel expense" of $0.5 million. The primary contributors to the $20.7 million decrease for the nine months ended September 30, 2024 as compared to the same period in 2023 were the $13.5 million decrease in "Merger and acquisition expenses," the $2.7 million decrease in "Other operating expenses," the $1.7 million decrease in "Non-credit losses," and the $1.6 million decrease in "Total personnel expenses." The decline in "Other operating expenses" was primarily related to a $2.4 million charge in 2023 for the estimated termination costs associated with the Company's pension plan. For the three and nine months ended September 30, 2024, there was an overall effort my management to cut costs and control expenses.
Showing the first 40 of 65 pairs. Open the source sections for the rest.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
information, changes in the economic climate and/or market interest rates, etc.) could have a significant effect on our financial statements. See the "Allowance for Credit Losses, Allowance for Unfunded Commitments, and Loan Loss Experience" discussion in the Financial Condition section of Management's Discussion and Analysis.
Current report — wording carried from elsewhere
loan discount accretion will fluctuate relative to the SBA loan portfolio balances. At September 30, 2024 and 2023, the unaccreted loan discounts on SBA loans amounted to $3.3 million and $4.0 million, respectively.
Current report — wording carried from elsewhere
Total investment securities were $2.4 billion at September 30, 2024, a decrease of $293.8 million from December 31, 2023. During the three and nine months ended September 30, 2024, the Company made no purchases of investment securities. There were no sales of investment securities during the third quarter of 2024.
Current report — wording carried from elsewhere
loans. Such agencies may require us to recognize adjustments to the ACL based on their judgments about information available at the time of their examinations. Refer also to “Critical Accounting Policies – Allowance for Credit Losses on Loans and Allowance for Unfunded Commitments” in Note 1 to the 2023 Annual Report on Form 10-K filed with the SEC for more information.
Current report — wording carried from elsewhere
sheet arrangements of this kind other than letters of credit and repayment guarantees associated with our trust preferred securities and subordinated debentures.
Current report — wording carried from elsewhere
The following table presents the capital ratios for the Company and the regulatory minimums discussed above for the periods indicated:
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Total loans at June 30, 2024 amounted to $8.1 billion, a decrease of $80.3 million, or 1.0%, from December 31, 2023. The mix of our loan portfolio remained substantially the same at June 30, 2024 as compared to December 31, 2023, with the exception of Construction, development & other land loans, which, as a percentage of the loan
Previous report — wording carried elsewhere
method. When a loan no longer shares similar risk characteristics with its segment, the loan is evaluated on an individual basis applying a DCF or asset approach for collateral-dependent loans.
Previous report — wording carried elsewhere
The Company is regulated by the Federal Reserve and is subject to the securities registration and public reporting regulations of the SEC. Our Bank is also regulated by the Federal Reserve and the North Carolina Office of the Commissioner of Banks ("NCCOB"). We must comply with regulatory capital requirements established by the