UNITY BANCORP INC NJ
For the period ended Sep 30, 2024. Filed Nov 12, 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 12, 2024
UNTY$57.22-1.0%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.
0000920427-24-000065
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-12.
0000920427-24-000083
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 108 previous paragraphs and 107 current paragraphs.
55 unchanged; 49 reworded; 3 added; 1 removed; 3 previous and 0 current paragraphs rearranged.
Tables are not compared: 48 previous and 43 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 (3)
Current report
Third quarter highlights include:
Current report
Noninterest Expense and Other Matters
Current report
Subsequent to quarter end, on November 5, 2024, a contractor (or a subcontractor thereof) working for the Bank damaged certain off-premises utility equipment, causing a power outage that effected the Bank and a number of adjacent businesses. Power was restored to the adjacent businesses within a few hours. The Bank is unaware of the amount of losses, if any, which any effected business may have incurred. No claims have been filed against the Bank, nor against the contractor, to the Bank’s knowledge. Nonetheless, the Bank is in possession of the contractor’s Certificate of Liability Insurance, however the scope of coverage has not yet been determined, and it is unclear whether the contractor will have the financial wherewithal to satisfy any claims arising from this matter. The Bank is continuing to investigate this matter.
Removed paragraphs (1)
Previous report
Second quarter highlights include:
Reworded paragraphs (49)
Previous wording
Unity Bancorp, Inc. (the “Parent Company”) is a bank holding company incorporated in New Jersey and registered under the Bank Holding Company Act of 1956, as amended. Its wholly-owned subsidiary, Unity Bank (the “Bank” or, when consolidated with the Parent Company, the “Company”) is chartered by the New Jersey Department of Banking and Insurance and commenced operations on September 13, 1991. The Bank provides a full range of commercial and retail banking services through online banking platforms and its robust branch network located throughout Bergen, Hunterdon, Middlesex, Morris, Ocean, Somerset, Union and Warren counties in New Jersey and Northampton County in Pennsylvania. These services include the acceptance of demand, savings and time deposits and the extension of consumer, real estate, Small Business Administration ("SBA") and other commercial credits. The Bank has multiple subsidiaries used to hold part of its investment, other real estate owned and loan portfolios.
Current wording
Unity Bancorp, Inc. (the “Parent Company”) is a bank holding company incorporated in New Jersey and registered under the Bank Holding Company Act of 1956, as amended. Its wholly-owned subsidiary, Unity Bank (the “Bank” or, when consolidated with the Parent Company, the “Company”) is chartered by the New Jersey Department of Banking and Insurance and commenced operations on September 13, 1991. The Bank provides a full range of commercial and retail banking services through online banking platforms and its robust branch network located throughout Bergen, Hunterdon, Middlesex, Morris, Ocean, Somerset, Union and Warren counties in New Jersey and Northampton County in Pennsylvania. These services include the acceptance of demand, savings and time deposits and the extension of consumer, real estate, Small Business Administration ("SBA") and other commercial credits. The Bank has multiple subsidiaries used to hold part of its investment and loan portfolios and to hold other rela estate owned if the Bank takes title to property securing loans.
Previous wording
Net income totaled $9.5 million, or $0.93 per diluted share for the quarter ended June 30, 2024, compared to $9.7 million, or $0.95 per diluted share for the same period in 2023. Return on average assets and return on average common equity for the quarter were 1.56 percent and 14.07 percent, respectively, compared to 1.60 percent and 16.19 percent for the same period in 2023.
Current wording
Net income totaled $10.9 million, or $1.07 per diluted share for the quarter ended September 30, 2024, compared to $9.9 million, or $0.97 per diluted share for the same period in 2023. Return on average assets and return on average common equity for the quarter were 1.76 percent and 15.55 percent, respectively, compared to 1.61 percent and 15.84 percent for the same period in 2023.
Previous wording
The primary source of the Company’s operating income is net interest income, which is the difference between interest and dividends earned on interest-earning assets and fees earned on loans, versus interest paid on interest-bearing liabilities. Interest-earning assets include loans to individuals and businesses, investment securities and interest-earning
Current wording
The primary source of the Company’s operating income is net interest income, which is the difference between interest and dividends earned on interest-earning assets and fees earned on loans and interest paid on interest-bearing liabilities. Interest-earning assets include loans to individuals and businesses, investment securities and interest-earning deposits. Interest-bearing liabilities include interest-bearing demand, savings, brokered and time deposits, FHLB advances and other borrowings.
Previous wording
During the quarter ended June 30, 2024, tax-equivalent net interest income amounted to $23.4 million, a decrease of $0.1 million or 0.4 percent when compared to the same period in 2023. The net interest margin decreased 3 basis points to 4.01 percent for the three months ended June 30, 2024, compared to 4.04 percent for the same period in 2023.
Current wording
During the quarter ended September 30, 2024, tax-equivalent net interest income amounted to $24.9 million, an increase of $1.3 million or 5.6 percent when compared to the same period in 2023. The net interest margin increased 20 basis points to 4.16 percent for the three months ended September 30, 2024, compared to 3.96 percent for the same period in 2023.
Previous wording
During the three months ended June 30, 2024, tax-equivalent interest income was $38.0 million, an increase of $2.6 million or 7.3 percent when compared to the same period in 2023. This increase was mainly driven by the increases in the balance of average securities, the balance of average loans and the yield on loans, partially offset by a decrease in the yield on securities and the balance of average FHLB stock.
Current wording
During the three months ended September 30, 2024, tax-equivalent interest income was $39.6 million, an increase of $2.6 million or 6.9 percent when compared to the same period in 2023. This increase was mainly driven by the increases in the yield on loans and the balance of average interest-bearing deposits and securities, partially offset by a decrease in the yield on securities, a decrease in the average volume of loans and the average balance and yield of FHLB stock.
Previous wording
Total interest expense was $14.6 million for the three months ended June 30, 2024, an increase of $2.7 million or 22.7 percent compared to the same period in 2023. This increase was driven by the increased rates and volume of time deposits, increased rates and volume on savings deposits, increased rates and volume for demand deposits and increased rates on brokered deposits, partially offset by a decline in volume of brokered deposits and decreased rates and volume of borrowed funds and subordinated debentures.
Current wording
Total interest expense was $14.7 million for the three months ended September 30, 2024, an increase of $1.2 million or 9.2 percent compared to the same period in 2023. This increase was driven by the increased rates and volume of time deposits, savings deposits and demand deposits and increased rates on brokered deposits, partially offset by a decline in the volume of brokered deposits and decreased rates and volume of borrowed funds and subordinated debentures.
Previous wording
During the six months ended June 30, 2024, tax-equivalent interest income was $75.9 million, an increase of $7.2 million or 10.4 percent when compared to the same period in the prior year. This increase was mainly driven by the increase in the rates on loans, securities, FHLB stock and interest-bearing deposits.
Current wording
During the nine months ended September 30, 2024, tax-equivalent interest income was $115.5 million, an increase of $9.7 million or 9.2 percent when compared to the same period in the prior year. This increase was mainly driven by the increase in the rates on loans, securities, FHLB stock and interest-bearing deposits, partially offset by a decrease in the average balance of FHLB stock.
Previous wording
Total interest expense was $28.7 million for the six months ended June 30, 2024, an increase of $7.3 million or 34.5 percent compared to the same period in 2023. This increase reflects increased volume and rates on interest-bearing deposits, offset by decreased volume and rates on borrowed funds and subordinated debentures compared to a year ago.
Current wording
Total interest expense was $43.4 million for the nine months ended September 30, 2024, an increase of $8.6 million or 24.7 percent compared to the same period in 2023. This increase reflects increased volume and rates on interest-bearing demand deposits and time deposits and the rates of savings and brokered deposits, offset by decreased volume and rates on borrowed funds and subordinated debentures compared to a year ago.
Previous wording
The provision for credit losses for loans was $0.3 million and $0.9 million during the three and six months ended June 30, 2024, respectively, compared to $0.8 million and $0.9 million for the same periods in 2023. The decrease in the quarterly period was primarily driven by decreases in the general and specific reserve calculations.
Current wording
The provision for credit losses for loans was $1.0 million and $1.9 million during the three and nine months ended September 30, 2024, respectively, compared to $0.5 million and $1.4 million for the same periods in 2023. The increase in the quarterly period was primarily driven by increases in the general reserve calculation due to loan growth.
Previous wording
The provision for credit losses for off-balance sheet exposures totaled $13 thousand and $15 thousand for the three and six months ended June 30, 2024, respectively, compared to a release of $84 thousand for the same periods in 2023.
Current wording
The provision for credit losses for off-balance sheet exposures totaled $51 thousand and $66 thousand for the three and nine months ended September 30, 2024, respectively, compared to $22 thousand and a release of $62 thousand for the same periods in 2023.
Previous wording
The provision for credit losses for AFS debt security impairment was $0.6 million for the three and six months ended June 30, 2024, compared to none for the prior year’s periods. The impairment was entirely attributable to one corporate senior debt security in the AFS portfolio. The Company owns $5 million in par value of this position and moved the position into non-accrual status during the three months ended June 30, 2024. This security is currentply paying, and so subsequent to June 30, 2024 the carrying value of this security was $2.9 million, as all payments have been applied to principal.
Current wording
The provision for credit losses for AFS debt security impairment was none and $0.6 million for the three and nine months ended September 30, 2024, compared to none for the prior year’s periods. The impairment was entirely attributable to one senior corporate debt security in the AFS portfolio. The Company owns $5 million in par value of this position and moved the position into non-accrual status during the quarter ended June 30, 2024.
Previous wording
Each period’s credit loss provision is the result of management’s analysis of the loan portfolio and reflects changes in the size and composition of the portfolio, the level of net charge-offs, delinquencies, current and expected economic conditions and other internal and external factors impacting the risk within the loan portfolio. Additional information
Current wording
Each period’s credit loss provision is the result of management’s analysis of the loan portfolio and reflects changes in the size and composition of the portfolio, the level of net charge-offs, delinquencies, current and expected economic conditions and other internal and external factors impacting the risk within the loan portfolio. Additional information may be found under the captions “Financial Condition - Asset Quality” and “Financial Condition - Allowance for Credit
Previous wording
may be found under the captions “Financial Condition - Asset Quality” and “Financial Condition - Allowance for Credit Losses and Reserve for Unfunded Loan Commitments.” The current provision is considered appropriate under management’s assessment of the adequacy of the allowance for credit losses.
Current wording
Losses and Reserve for Unfunded Loan Commitments.” The current provision is considered appropriate under management’s assessment of the adequacy of the allowance for credit losses.
Previous wording
For the quarter ended June 30, 2024, the Company reported income tax expense of $3.1 million for an effective tax rate of 24.7 percent, compared to income tax expense of $3.4 million and an effective tax rate of 26.0 percent for the prior year’s quarter. For the six months ended June 30, 2024, the Company reported income tax expense of $6.3 million for an effective tax rate of 24.9 percent, compared to an income tax expense of $6.9 million and an effective tax rate of 25.7 percent for the six months ended June 30, 2023.
Current wording
For the quarter ended September 30, 2024, the Company reported income tax expense of $3.7 million for an effective tax rate of 25.1 percent, compared to income tax expense of $3.1 million and an effective tax rate of 23.7 percent for the prior year’s quarter. For the nine months ended September 30, 2024, the Company reported income tax expense of $10.0 million for an effective tax rate of 25.0 percent, compared to an income tax expense of $10.0 million and an effective tax rate of 25.1 percent for the nine months ended September 30, 2023.
Previous wording
Total assets increased $19.2 million or 0.7 percent, to $2.6 billion at June 30, 2024, when compared to year end 2023. This increase was primarily due to increases of $2.6 million in cash and cash equivalents, $9.5 million in securities and $12.1 million in prepaid expenses and other assets, partially offset by a decrease of $3.5 million in FHLB stock and $1.8 million in net loans.
Current wording
Total assets increased $56.8 million or 2.2 percent, to $2.6 billion at September 30, 2024, when compared to year end 2023. This increase was primarily due to increases of $45.3 million in gross loans, $8.0 million in securities and $7.8 million in prepaid expenses and other assets and $2.0 million in deferred tax assets, partially offset by a decrease of $3.9 million in FHLB stock.
Previous wording
Total shareholders’ equity increased $12.0 million, when compared to year end 2023, primarily due to earnings and an increase in common stock, partially offset by the repurchase of shares and dividends paid during the six months ended June 30, 2024.
Current wording
Total shareholders’ equity increased $22.8 million, when compared to year end 2023, primarily due to earnings and an increase in common stock, partially offset by the repurchase of shares and dividends paid during the nine months ended September 30, 2024.
Previous wording
AFS debt securities totaled $99.1 million at June 30, 2024, an increase of $7.3 million or 8.0 percent, compared to $91.8 million at December 31, 2023. This net increase was the result of:
Current wording
AFS debt securities totaled $97.7 million at September 30, 2024, an increase of $5.9 million or 6.4 percent, compared to $91.8 million at December 31, 2023. This net increase was the result of:
Previous wording
The weighted average life of AFS debt securities, adjusted for prepayments, amounted to 5.3 years and 5.6 years at June 30, 2024 and December 31, 2023, respectively. The effective duration of AFS debt securities amounted to 1.7 years at June 30, 2024 and December 31, 2023.
Current wording
The weighted average life of AFS debt securities, adjusted for prepayments, amounted to 5.0 years and 5.6 years at September 30, 2024 and December 31, 2023, respectively. The effective duration of AFS debt securities amounted to 1.4 and 1.7 years at September 30, 2024 and December 31, 2023.
Previous wording
HTM debt securities were $36.2 million at June 30, 2024, an increase of $35 thousand or 0.1 percent, compared to $36.1 million at December 31, 2023.
Current wording
HTM debt securities were $36.2 million at September 30, 2024, an increase of $0.1 million or 0.3 percent, compared to $36.1 million at December 31, 2023.
Previous wording
The weighted average life of HTM securities, adjusted for prepayments, amounted to 16.7 years and 17.1 years at June 30, 2024 and December 31, 2023, respectively. As of June 30, 2024 and December 31, 2023, the fair value of HTM securities was $29.0 million and $29.7 million, respectively. The effective duration of HTM securities amounted to 10.5 years and 10.9 years at June 30, 2024 and December 31, 2023, respectively.
Current wording
The weighted average life of HTM securities, adjusted for prepayments, amounted to 16.1 years and 17.1 years at September 30, 2024 and December 31, 2023, respectively. As of September 30, 2024 and December 31, 2023, the fair value of HTM securities was $30.5 million and $29.7 million, respectively. The effective duration of HTM securities amounted to 10.1 years and 10.9 years at September 30, 2024 and December 31, 2023, respectively.
Previous wording
Equity securities totaled $9.9 million at June 30, 2024, an increase of $2.1 million or 27.5 percent, compared to $7.8 million at December 31, 2023. This net increase was the result of:
Current wording
Equity securities totaled $9.8 million at September 30, 2024, an increase of $2.0 million or 26.1 percent, compared to $7.8 million at December 31, 2023.
Previous wording
Securities with a carrying value of $9.6 million and $9.7 million at June 30, 2024 and December 31, 2023, respectively, were held at the FHLB or FRB and were pledged for borrowing purposes; however, all securities were unencumbered by borrowings at June 30, 2024 and December 31, 2023.
Current wording
Securities with a carrying value of $11.8 million and $9.7 million at September 30, 2024 and December 31, 2023, respectively, were held at the FHLB or FRB and were pledged for borrowing purposes; however, all securities were unencumbered by borrowings at September 30, 2024 and December 31, 2023.
Previous wording
Approximately 62 percent of the total debt security investment portfolio had a fixed rate of interest at June 30, 2024.
Current wording
Approximately 61 percent of the total debt security investment portfolio had a fixed rate of interest at September 30, 2024.
Previous wording
Total loans decreased $1.5 million or 0.1 percent to $2.2 billion at June 30, 2024, compared to year end 2023. Commercial loans increased $40.7 million, offset by decreases of $28.1 million, $6.6 million, $3.4 million, $0.6 million and $0.6 million in residential construction, residential mortgage, consumer, SBA held for investment and SBA PPP loans, respectively. Below is a table of the geographic loan allocation of the Bank’s portfolio at June 30, 2024:
Current wording
Total loans increased $45.3 million or 2.1 percent to $2.2 billion at September 30, 2024, compared to year end 2023. Commercial loans increased $91.3 million, offset by decreases of $32.6 million, $8.0 million, $3.6 million, $0.7 million, $0.7 million and $0.4 million in residential construction, residential mortgage, SBA held for sale, SBA PPP, SBA held for investment and consumer loans, respectively. Below is a table of the geographic loan allocation of the Bank’s Commercial loan portfolio at September 30, 2024:
Previous wording
Average loans increased $29.7 million or 1.4 percent to $2.2 billion the six months ended June 30, 2024 from $2.1 billion for the same period in 2023. The increase in average loans was due to increases in average commercial and residential mortgage loans, partially offset by decreases in average SBA, SBA PPP, consumer and residential construction loans. The yield on the overall loan portfolio increased 55 basis points to 6.48 percent for the six months ended June 30, 2024 when compared to the same period in the prior year.
Current wording
Average loans increased $20.6 million or 1.0 percent to $2.2 billion the nine months ended September 30, 2024 from $2.1 billion for the same period in 2023. The increase in average loans was due to increases in average commercial and residential mortgage loans, partially offset by decreases in average residential construction, SBA, consumer and SBA PPP loans. The yield on the overall loan portfolio increased 52 basis points to 6.53 percent for the nine months ended September 30, 2024 when compared to the same period in the prior year.
Previous wording
SBA 7(a) loans held for sale, carried at the lower of cost or market, amounted to $15.2 million at June 30, 2024, a decrease of $3.1 million from $18.2 million at December 31, 2023. SBA 7(a) loans held for investment amounted to $38.0 million at June 30, 2024, a decrease of $0.6 million from $38.6 million at December 31, 2023. The yield on SBA loans, which are generally floating and adjust quarterly to the Prime rate, was 9.15 percent for the six months ended June 30, 2024, compared to 8.75 percent for the same period in the prior year. The Company sold $3.9 million of SBA loans during the three months ended ended June 30, 2024.
Current wording
SBA 7(a) loans held for sale, carried at the lower of cost or market, amounted to $14.6 million at September 30, 2024, a decrease of $3.6 million from $18.2 million at December 31, 2023. SBA 7(a) loans held for investment amounted to $37.9 million at September 30, 2024, a decrease of $0.7 million from $38.6 million at December 31, 2023. The yield on SBA loans, which are generally floating and adjust quarterly to the Prime rate, was 9.05 percent for the nine months ended September 30, 2024, compared to 8.89 percent for the same period in the prior year. The Company sold $0.9 million of SBA loans during the three months ended ended September 30, 2024.
Previous wording
The guarantee rates on SBA 7(a) loans range from 50 percent to 90 percent, with the majority of the portfolio having a guarantee rate of 75 percent at origination. The guarantee rates are determined by the SBA and can vary from year to year depending on government funding and the goals of the SBA program. Approximately $73.5 million and $75.6 million in SBA loans were sold but serviced by the Company at June 30, 2024 and December 31, 2023, respectively, and are not included on the Company’s balance sheet. There is no relationship or correlation between the guarantee percentages and the level of charge-offs and recoveries on the Company’s SBA 7(a) loans. Charge-offs taken on SBA 7(a) loans effect the unguaranteed portion of the loan. SBA loans are underwritten to the same credit standards irrespective of the guarantee percentage.
Current wording
The guarantee rates on SBA 7(a) loans range from 50 percent to 90 percent, with the majority of the portfolio having a guarantee rate of 75 percent at origination. The guarantee rates are determined by the SBA and can vary from year to year depending on government funding and the goals of the SBA program. Approximately $74.2 million and $75.6 million in SBA loans were sold but serviced by the Company at September 30, 2024 and December 31, 2023, respectively, and are not included on the Company’s Balance Sheet. There is no relationship or correlation between the guarantee percentages and the level of charge-offs and recoveries on the Company’s SBA 7(a) loans. Charge-offs taken on SBA 7(a) loans effect the unguaranteed portion of the loan. SBA loans are underwritten to the same credit standards irrespective of the guarantee percentage.
Previous wording
Commercial loans are generally made in the Company’s marketplace for the purpose of providing working capital, financing the purchase of equipment, inventory or commercial real estate and for other business purposes. These loans amounted to $1.3 billion at June 30, 2024, an increase of $40.7 million from year end 2023. The yield on commercial loans was 6.43 percent for the six months ended June 30, 2024, compared to 5.91 percent for the same period in 2023. In most cases, these loans are secured by underlying real estate collateral. SBA 504 program loans, which consist of real estate backed commercial mortgages where the Company has the first mortgage and the SBA has the second mortgage on the property, are included in the Commercial loan portfolio. At June 30, 2024 Commercial Mortgage – Owner Occupied, Commercial Mortgage – Nonowner Occupied, and Commercial Construction represent 24.3 percent, 19.0 percent and 5.8 percent of the Company’s loan portfolio, respectively. The Company will generally not exceed a combined loan-to-value ratio of 75 percent at origination. Unity continually evaluates and monitors its credit risk policies and procedures. Further, Unity continuously monitors loan portfolio concentrations across key credit characteristics (e.g., state and local geographies, industries, etc.). Loans are subject to periodic loan review procedures in accordance with the Company’s Loan Policy. A portion of the loan reviews are performed by an independent and external loan review function.
Current wording
Commercial loans are generally made in the Company’s marketplace for the purpose of providing working capital, financing the purchase of equipment, inventory or commercial real estate and for other business purposes. These loans amounted to $1.4 billion at September 30, 2024, an increase of $91.3 million from year end 2023. The yield on commercial loans was 6.49 percent for the nine months ended September 30, 2024, compared to 6.03 percent for the same period in 2023. In most cases, these loans are secured by underlying real estate collateral. SBA 504 program loans, which consist of real estate backed commercial mortgages where the Company has the first mortgage and the SBA has the second mortgage on the property, are included in the Commercial loan portfolio. At September 30, 2024, Commercial Mortgage – Owner Occupied, Commercial Mortgage – Nonowner Occupied, and Commercial Construction represent 25.2 percent, 18.6 percent and 6.0 percent of the Company’s loan portfolio, respectively. The Company will generally not exceed a combined loan-to-value ratio of 75 percent at origination. Unity continually evaluates and monitors its credit risk policies and procedures. Further, Unity continuously monitors loan portfolio concentrations across key credit characteristics (e.g., state and local geographies, industries, etc.). Loans are subject to periodic loan review procedures in accordance with the Company’s Loan Policy. A portion of the loan reviews are performed by an independent and external loan review function.
Previous wording
Residential mortgage loans consist of loans secured by 1 to 4 family residential properties. These loans amounted to $624.9 million at June 30, 2024, a decrease of $6.6 million from year end 2023. Sales of conforming mortgage loans totaled $24.7 million for the six months ended June 30, 2024, compared to sales of $26.9 million in the prior year period. The yield on residential mortgages was 5.93 percent for the six months ended June 30, 2024, compared to 5.38 percent for the same period in 2023. Residential mortgage loans maintained in portfolio are generally to individuals that do not qualify for conventional financing. In extending credit to this category of borrowers, the Bank considers other mitigating factors such as credit history, equity and liquid reserves of the borrower. As a result, the residential mortgage loan
Current wording
Residential mortgage loans consist of loans secured by 1 to 4 family residential properties. These loans amounted to $623.5 million at September 30, 2024, a decrease of $8.0 million from year end 2023. Sales of conforming mortgage loans totaled $48.7 million for the nine months ended September 30, 2024, compared to sales of $44.8 million in the prior year period. The yield on residential mortgages was 6.00 percent for the nine months ended September 30, 2024, compared to 5.38 percent for the same period in 2023. Residential mortgage loans maintained in portfolio are generally to individuals that do not qualify for conventional financing. In extending credit to this category of borrowers, the Bank considers other mitigating factors such as credit history, equity and liquid reserves of the borrower. As a result, the residential mortgage loan portfolio of the Bank includes adjustable rate mortgages with rates that exceed the rates on conventional fixed-rate mortgage loan products but which are not considered high priced mortgages.
Previous wording
Consumer loans consist of home equity loans and loans for the purpose of financing the purchase of consumer goods, home improvements and other personal needs, and are generally secured by 1 to 4 family residences. These loans amounted to $69.3 million at June 30, 2024, a decrease of $3.4 million from year end 2023. The yield on consumer loans was 7.88 percent for the six months ended June 30, 2024, compared to 7.30 percent for the same period in 2023.
Current wording
Consumer loans consist of home equity loans and loans for the purpose of financing the purchase of consumer goods, home improvements and other personal needs, and are generally secured by 1 to 4 family residences. These loans amounted to $72.3 million at September 30, 2024, a decrease of $0.4 million from year end 2023. The yield on consumer loans was 7.90 percent for the nine months ended September 30, 2024, compared to 7.51 percent for the same period in 2023.
Previous wording
Residential construction loans consist of short-term loans for the purpose of funding the costs of building a home. These loans amounted to $103.2 million at June 30, 2024, a decrease of $28.1 million from year end 2023. The yield on residential construction loans was 8.22 percent for the six months ended June 30, 2024, compared to 6.58 percent for the same period in 2023.
Current wording
Residential construction loans consist of short-term loans for the purpose of funding the costs of building a home. These loans amounted to $98.7 million at September 30, 2024, a decrease of $32.6 million from year end 2023. The yield on residential construction loans was 8.38 percent for the nine months ended September 30, 2024, compared to 6.79 percent for the same period in 2023.
Previous wording
The following table sets forth the classification of loans by loan type, including unearned fees, deferred costs and excluding the allowance for credit losses as of June 30, 2024 and December 31, 2023:
Current wording
The following table sets forth the classification of loans by loan type, including unearned fees and deferred costs and excluding the allowance for credit losses as of September 30, 2024 and December 31, 2023:
Previous wording
Nonperforming loans were $12.1 million at June 30, 2024, a $7.1 million decrease from $19.2 million at December 31, 2023 and a $4.1 million decrease from $16.2 million at June 30, 2023, respectively. Since year end 2023, nonperforming loans in the residential mortgage, consumer and residential construction segments decreased, offset by an increase in nonperforming loans in the SBA and commercial segments. In addition, there were $0.4 million in loans past due 90 days or more and still accruing interest at June 30, 2024, compared to $0.9 million at December 31, 2023 and none at June 30, 2023. Further, there was no other real estate owned at June 30, 2024 or December 31, 2023 and $0.3 million of other real estate owned at June 30, 2023.
Current wording
Nonperforming loans were $13.0 million at September 30, 2024, a $6.2 million decrease from $19.2 million at December 31, 2023 and a $5.1 million decrease from $18.1 million at September 30, 2023, respectively. Since year end 2023, nonperforming loans in the residential mortgage, consumer and residential construction segments decreased, offset by an increase in nonperforming loans in the SBA and commercial segments. In addition, there were no loans past due 90 days or more and still accruing interest at September 30, 2024, compared to $0.9 million of these loans at December 31, 2023 and $0.3 of these loans million at September 30, 2023. Further, there was no other real estate owned at September 30, 2024 and at December 31, 2023, compared to $0.3 million of other real estate owned at September 30, 2023.
Previous wording
The Company also monitors potential problem loans. Potential problem loans are those loans where information about possible credit problems of borrowers causes management to have doubts as to the ability of such borrowers to comply with loan repayment terms. These loans are categorized by their non-passing risk rating and performing loan status. Potential problem loans totaled $14.4 million at June 30, 2024, a decrease of $0.7 million from $15.1 million at December 31, 2023.
Current wording
The Company also monitors potential problem loans. Potential problem loans are those loans where information about possible credit problems of borrowers causes management to have doubts as to the ability of such borrowers to comply with loan repayment terms. These loans are categorized by their non-passing risk rating and performing loan status. Potential problem loans totaled $14.8 million at September 30, 2024, a decrease of $0.3 million from $15.1 million at December 31, 2023.
Previous wording
Nonperforming securities were $3.1 million at June 30, 2024, a $3.1 million increase from none at December 31, 2023 and June 30, 2023. The Company owns $5 million in par of this position and moved the position into non-accrual status during the three months ending June 30, 2024. This security is currentply paying, and so subsequent to June 30, 2024 the carrying value of this security was $2.9 million, as all payments have been applied to principal.
Current wording
Nonperforming securities were $2.9 million at September 30, 2024, a $2.9 million increase from none at December 31, 2023 and September 30, 2023. The Company owns $5 million in par of this position and moved the position into non-accrual status during the three months ending June 30, 2024. This security is currently paying and all payments received since have been applied to principal.
Previous wording
The allowance for credit losses totaled $26.1 million at June 30, 2024, compared to $25.9 million at December 31, 2023 and $26.0 million at June 30, 2023, with a resulting allowance to total loan ratio of 1.20 percent at June 30, 2024, 1.19 percent at December 31, 2023 and 1.20 at June 30, 2023. Net charge-offs amounted to $0.7 million for the six months ended June 30, 2024, compared to net charge-offs of $0.9 million for the same period in 2023.
Current wording
The allowance for credit losses totaled $27.0 million at September 30, 2024, compared to $25.9 million at December 31, 2023 and at September 30, 2023, with a resulting allowance to total loan ratio of 1.22 percent at September 30, 2024 and 1.19 percent at both December 31, 2023 and September 30, 2023. Net charge-offs amounted to $0.8 million for the nine months ended September 30, 2024, compared to net charge-offs of $1.5 million for the same period in 2023.
Previous wording
The Company maintains a reserve for unfunded loan commitments at a level that management believes is adequate to absorb estimated expected losses. Adjustments to the reserve are made through provision for credit losses and applied to the reserve which is classified as Other liabilities. At June 30, 2024 and December 31, 2023, the commitment reserve totaled $0.6 million.
Current wording
The Company maintains a reserve for unfunded loan commitments at a level that management believes is adequate to absorb estimated expected losses. Adjustments to the reserve are made through provision for credit losses and applied to the reserve which is classified in Other liabilities. At September 30, 2024, the commitment reserve totaled $0.7 million, compared to $0.6 million at December 31, 2023.
Previous wording
Total deposits increased $86.7 million to $2.0 billion at June 30, 2024 from year-end 2023. This increase was due to increases of $133.4 million in time deposits, $8.1 million in savings deposits and $2.3 million in noninterest-bearing demand deposits, partially offset by a decrease of $46.4 million in brokered deposits and $10.7 million in interest bearing demand deposits. The change in the composition of the portfolio from December 31, 2023 reflects a 31.3 percent increase in time deposits, 1.6 percent increase in savings deposits and a 0.6 percent increase in noninterest-bearing demand deposits, partially offset by a 17.3 percent decrease in brokered deposits and a 3.4 percent decrease in interest bearing demand deposits.
Current wording
Total deposits increased $122.0 million to $2.0 billion at September 30, 2024 from year-end 2023. This increase was due to increases of $131.2 million in time deposits, $27.1 million in savings deposits, $13.1 million in interest bearing demand deposits and $4.3 million in noninterest-bearing demand deposits, partially offset by a decrease of $53.7 million in brokered deposits. The change in the composition of the portfolio from December 31, 2023 reflects a 30.8 percent increase in time deposits, 5.5 percent increase in savings deposits, 4.2 percent increase in interest bearing demand deposits and a 1.0 percent increase in noninterest-bearing demand deposits, partially offset by a 20.0 percent decrease in brokered deposits.
Previous wording
As of June 30, 2024, 18.3 percent of total deposits were uninsured or uncollateralized. The Company’s deposit composition as of June 30, 2024, consisted of 21.0 percent in noninterest-bearing demand deposits, 15.0 percent in interest-bearing demand deposits, 27.5 percent in savings deposits and 36.5 percent in time deposits.
Current wording
As of September 30, 2024, 19.1 percent of total deposits were uninsured or uncollateralized. The Company’s deposit composition as of September 30, 2024, consisted of 20.7 percent in noninterest-bearing demand deposits, 15.9 percent in interest-bearing demand deposits, 27.4 percent in savings deposits and 36.0 percent in time deposits.
Previous wording
Borrowed funds and subordinated debentures totaled $285.1 million and $366.7 million at June 30, 2024 and December 31, 2023, respectively, and are broken down in the following table:
Current wording
Borrowed funds and subordinated debentures totaled $277.1 million and $366.7 million at September 30, 2024 and December 31, 2023, respectively, and are broken down in the following table:
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deposits. Interest-bearing liabilities include interest-bearing demand, savings, brokered and time deposits, FHLB advances and other borrowings.
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Previous report — wording carried elsewhere
portfolio of the Bank includes adjustable rate mortgages with rates that exceed the rates on conventional fixed-rate mortgage loan products but which are not considered high priced mortgages.