WILSON BANK HOLDING CO
For the period ended Jun 30, 2025. Filed Aug 8, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 8, 2025
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-09.
0000950170-25-067712
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-08.
0000950170-25-105571
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 125 previous paragraphs and 136 current paragraphs.
63 unchanged; 56 reworded; 10 added; 5 removed; 1 previous and 7 current paragraphs rearranged.
Tables are not compared: 15 previous and 18 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 (10)
Current report
Effective April 25, 2025, the Bank consummated its acquisition of certain assets and assumption of certain liabilities related to a branch office of another bank in Cookeville, Tennessee. As part of the acquisition, the bank acquired approximately $14.1 million in loans and assumed approximately $25.3 million in deposits. The credit and interest rate marks related to the loans and deposits were not significant. The Company recorded approximately $1.1 million in goodwill and $429,000 in core deposit intangibles in connection with the transaction. The core deposit intangible will be amortized over 10 years ranging from $35,000 to $49,000 per year and is included in other assets in the Company’s consolidated financial statements. At June 30, 2025, the balance of the core deposit intangible was $395,000. The acquisition did not qualify as significant under the SEC's regulations.
Current report
Notes:
Current report
The provision for credit losses-loans of $2,507,000 for the three months ended June 30, 2025 was primarily driven by our branch acquisition, deterioration in the national and local economic outlook, and loan growth. There was no provision for the three months ended June 30, 2024 primarily due to an improved economic outlook offsetting loan growth reserve requirements.
Current report
The provision for credit losses-loans of $4,740,000 for the six months ended June 30, 2025 was primarily driven by loan growth and deterioration in the national and local economic outlook. There was no provision for the six months ended June 30, 2024 primarily due to an improved national economic outlook offset marginally by increased local property type specific risk.
Current report
The improvement in gain (loss) on sale of securities for the three and six months ended June 30, 2025 was primarily due to the realized loss on a security that was redeemed by the issuer in the second quarter of 2024.
Current report
The increase in service charges on deposit accounts for the three and six months ended June 30, 2025 was primarily due to increases in overdraft and insufficient funds charges, ATM transaction volume, and treasury service charges.
Current report
The decrease in gain on sale of loans for the three and six months ended June 30, 2025 was primarily driven by the Company’s decision to retain servicing rights on loans sold in 2025. In contrast, servicing rights were not retained on loans sold in the first half of 2024. Additionally, the decline was impacted by rising mortgage interest rates experienced in the second quarter of 2025.
Current report
The decrease in net debit and credit card interchange income for the three and six months ended June 30, 2025 was primarily due to an increase in the pricing structure from our core processor.
Current report
The increase in advertising and public relations expense in the three and six months ended June 30, 2025 was primarily due to the opening of new branches in the second half of 2024 and the first six months of 2025, including the branch office we acquired in Cookeville, Tennessee on April 25, 2025, and the associated advertising costs.
Current report
Total past due and nonaccrual loans at June 30, 2025 were $58,299,000, an increase of $41,698,000 from $16,601,000 at December 31, 2024, primarily due to one large land development loan relationship and one large commercial real estate loan relationship in the 30-59 days past due category. The increase in nonaccrual loans was largely due to the credit deterioration experienced in several 1-4 family real estate loans. The increase in past due loans that have been modified within the last 12 months was primarily due to the commercial real estate loan mentioned above.
Removed paragraphs (5)
Previous report
On November 12, 2024, Wilson Bank entered in a purchase and assumption agreement pursuant to which it agreed to acquire certain assets, including certain loans, and assume certain liabilities, including certain deposits, of a branch office in Cookeville, Tennessee that was then being operated by another bank. This transaction was consummated on April 25, 2025. Total assets acquired were approximately $15.9 million, inclusive of approximately $14.1 million in loans, while liabilities assumed were approximately $25.4 million, inclusive of $25.3 million in deposits. The acquisition is not expected to significantly impact the Bank's operations.
Previous report
The provision for credit losses-loans for the three months ended March 31, 2025 was $2,233,000 compared to no provision for the three months ended March 31, 2024. The increase was primarily due to loan growth and the credit deterioration of a single commercial real estate borrower.
Previous report
The increase in income on BOLI and annuity contracts was attributable to the purchase of additional policies since the first quarter of 2024.
Previous report
The loss on sale of fixed assets in the first quarter of 2024 was primarily due to write-offs associated with the closure of a leased branch location.
Previous report
The increase in occupancy expenses for the three months ended March 31, 2025 was primarily due to expenses related to furnishings for new offices and renovations for current offices.
Reworded paragraphs (56)
Previous wording
The purpose of this discussion is to provide insight into the financial condition and results of operations of Wilson Bank Holding Company (the "Company", "our" or "we") and its bank subsidiary, Wilson Bank & Trust (the "Bank") and Encompass Home Lending LLC ("Encompass"), a company offering mortgage banking services that is 51% owned by the Bank and 49% owned by two home builders operating in the Bank's market areas. The results of Encompass are consolidated in the Company's financial statements included elsewhere in this Quarterly Report on Form 10-Q. This discussion should be read in conjunction with the Company's consolidated financial statements appearing elsewhere in this report. Reference should also be made to the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission (the "SEC") on February 28, 2025 (the "2024 Form 10-K") for a more complete discussion of factors that impact the Company's liquidity, capital and results of operations.
Current wording
The purpose of this discussion is to provide insight into the financial condition and results of operations of Wilson Bank Holding Company (the "Company", "our" or "we") and its bank subsidiary, Wilson Bank & Trust (the "Bank"). Encompass Home Lending LLC ("Encompass"), a company offering mortgage banking services, was 51% owned by the Bank. Effective June 1, 2025 the Bank sold its 51% membership interest to Encompass Home Lending Investors, LLC, the other member of Encompass. The results of Encompass through the date of sale are consolidated in the Company's financial statements included elsewhere in this Quarterly Report on Form 10-Q. This discussion should be read in conjunction with the Company's consolidated financial statements appearing elsewhere in this report. Reference should also be made to the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission (the "SEC") on February 28, 2025 (the "2024 Form 10-K") for a more complete discussion of factors that impact the Company's liquidity, capital and results of operations.
Previous wording
The Company cautions investors that future financial and operating results may differ materially from those projected in forward-looking statements made by, or on behalf of, the Company. The words “expect,” “intend,” “should,” “may,” “could,” “believe,” “suspect,” “anticipate,” “seek,” “plan,” “estimate” and similar expressions are intended to identify such forward-looking statements, but other statements not based on historical fact may also be considered forward-looking. Such forward-looking statements involve known and unknown risks and uncertainties, including, but not limited to those described in the 2024 Form 10-K, and also include, without limitation, (i) deterioration in the financial condition of borrowers resulting in significant increases in credit losses and provisions for these losses, (ii) deterioration in the real estate market conditions in the Company’s market areas including demand for residential real estate loans as a result of elevated rates on residential real estate mortgage loans, (iii) the impact of U.S. and global economic conditions, trade policies and tensions, including changes in, or the imposition of, tariffs and/or trade barriers and the economic impacts, volatility and uncertainty resulting therefrom, and geopolitical instability, (iv) the impact of increased competition with other financial institutions, including pricing pressures on loans and deposits, and the resulting impact on the Company's results, including as a result of compression to net interest margin, (v) adverse conditions in local or national economies, including the economy in the Company’s market areas, including as a result of the impact of escalating geopolitical tensions, political uncertainty, inflationary pressures and the elevated rate environment, supply chain disruptions and labor shortages on our customers and on their businesses, (vi) the sale of investment securities in a loss position before their value recovers, including as a result of asset liability management strategies or in response to liquidity needs, (vii) fluctuations or differences in interest rates on earning assets and interest bearing liabilities from those that the Company is modeling or anticipating, including as a result of the Bank's inability to maintain deposit rates or defer increases to those rates in an elevated rate environment or lower rates in a falling rate environment, (viii) the ability to grow and retain low-cost core deposits, (ix) significant downturns in the business of one or more large customers, (x) the inability of the Company to comply with regulatory capital requirements, including those resulting from changes to capital calculation methodologies, required capital maintenance levels, or regulatory requests or directives, (xi) changes in state or Federal regulations, policies, or legislation applicable to banks and other financial service providers, including regulatory or legislative developments arising out of current unsettled conditions in th…
Excerpt shortened here; the source contains the full paragraph.
Current wording
“suspect,” “anticipate,” “seek,” “plan,” “estimate” and similar expressions are intended to identify such forward-looking statements, but other statements not based on historical fact may also be considered forward-looking. Such forward-looking statements involve known and unknown risks and uncertainties, including, but not limited to those described in the 2024 Form 10-K, and also include, without limitation, (i) deterioration in the financial condition of borrowers resulting in significant increases in credit losses and provisions for these losses, (ii) deterioration in the real estate market conditions in the Company’s market areas including demand for residential real estate loans as a result of elevated rates on residential real estate mortgage loans, (iii) the impact of U.S. and global economic conditions, trade policies and tensions, including changes in, or the imposition of, tariffs and/or trade barriers and the economic impacts, volatility and uncertainty resulting therefrom, and geopolitical instability, (iv) the impact of increased competition with other financial institutions, including pricing pressures on loans and deposits, and the resulting impact on the Company's results, including as a result of compression to net interest margin, (v) adverse conditions in local or national economies, including the economy in the Company’s market areas, including as a result of the impact of escalating geopolitical tensions, political uncertainty, inflationary pressures and the elevated rate environment, supply chain disruptions and labor shortages on our customers and on their businesses, (vi) the sale of investment securities in a loss position before their value recovers, including as a result of asset liability management strategies or in response to liquidity needs, (vii) fluctuations or differences in interest rates on earning assets and interest bearing liabilities from those that the Company is modeling or anticipating, including as a result of the Bank's inability to maintain deposit rates or defer increases to those rates in an elevated rate environment or lower rates in a falling rate environment, (viii) the ability to grow and retain low-cost core deposits, (ix) the impact of changes in interest rates on the value of the Company's mortgage servicing rights, (x) significant downturns in the business of one or more large customers, (xi) the inability of the Company to comply with regulatory capital requirements, including those resulting from changes to capital calculation methodologies, required capital maintenance levels, or regulatory requests or directives, (xii) changes in state or Federal regulations, policies, or legislation applicable to banks and other financial service providers, including regulatory or legislative developments arising out of current unsettled conditions in the economy, (xiii) changes in capital levels and loan underwriting, credit review or loss reserve policies associated with economic conditions, examinat…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
Net earnings of the Company increased$3,624,000, or 28.38%, to$16,392,000 for thethree months ended March 31, 2025, from$12,768,000 in thef irst quarter of 2024. The increase in net earnings for the first quarter of 2025 compared to the first quarter of 2024 was primarily due to an increase in net interest income and non-interest income, partially offset by increases in non-interest expense and provision for credit losses.
Current wording
Net earnings of the Company for the three months ended June 30, 2025 were $19,115,000 an increase of $2,978,000, or 18.45%, from net earnings of $16,137,000 for the three months ended June 30, 2024. Net earnings of the Company increased$6,602,000, or 22.84%, to$35,507,000 for thesix months ended June 30, 2025, from$28,905,000 in thef irst half of 2024. The increase in net earnings for the three and six months ended June 30, 2025 was primarily due to an increase in net interest income and non-interest income, partially offset by increases in non-interest expense and provision for credit losses.
Previous wording
The increase in net interest income for the three months ended March 31, 2025 when compared to the comparable period in 2024 was due to an increase in average interest earning asset balances, an increase in the average yield earned on earning assets, and a decrease in the cost of funds, partially offset by an increase in average interest bearing deposit balances.
Current wording
The increase in net interest income for the three and six months ended June 30, 2025 when compared to the comparable periods in 2024 was primarily due to an increase in average interest earning asset balances, an increase in the average yield earned on earning assets, and a decrease in the cost of funds, partially offset by an increase in average interest bearing deposit balances.
Previous wording
Return on average assets ("ROA") and return on average shareholders' equity ("ROE") are common benchmarks for bank profitability and in the case of the Company are calculated by taking our annualized net earnings for the relevant period and dividing that amount by our average assets and average equity for the relevant periods, respectively. ROA and ROE measure a company’s return on investment in a format that is easily comparable to other financial institutions. ROA is particularly important to the Company as it serves as the basis for certain employee bonuses. The ROA for the three months ended March 31, 2025 was 1.23%, while the ROA for the three months ended March 31, 2024 was 1.05%. The ROE for the three months ended March 31, 2025 was 13.35%, while the ROE for the three months ended March 31, 2024 was 11.91%. The increases in ROA and ROE in the first quarter of 2025 was primarily due to an increase in net interest income resulting from an increase in earning assets and an increase in non-interest income, partially offset by increases in non-interest expense and provision for credit losses.
Current wording
Return on average assets ("ROA") and return on average shareholders' equity ("ROE") are common benchmarks for bank profitability and in the case of the Company are calculated by taking our annualized net earnings for the relevant period and dividing that amount by our average assets and average equity for the relevant periods, respectively. ROA and ROE measure a company’s return on investment in a format that is easily comparable to other financial institutions. ROA is particularly important to the Company as it serves as the basis for certain employee bonuses. The ROA for the three and six months ended June 30, 2025 was 1.38% and 1.31%, respectively, while the ROA for the three and six months ended June 30, 2024 was 1.31% and 1.19%, respectively. The ROE for the three and six months ended June 30, 2025 was 14.69% and 14.04%, respectively, while the ROE for the three and six months ended June 30, 2024 was 14.84% and 13.39%, respectively. The increase in ROA for the three and six months ended June 30, 2025 and the increase in ROE for the six months ended June 30, 2025 was primarily due to an increase in net interest income resulting from an increase in earning assets, partially offset by increases in non-interest expense and provision for credit losses. While net earnings and shareholder's equity both increased for the second quarter of 2025 when compared to the same period of 2024, the decrease in ROE is due to the growth in shareholder's equity outpacing the growth in net earnings in such quarter.
Previous wording
In March 2025, the Bank converted its Chattanooga loan production office to a full service branch, and in connection therewith it entered into a lease for the location for the new full service branch. The costs associated with this expansion, including lease expenses, are not expected to be significant.
Current wording
In July 2025, the Bank opened a loan production office in Nolensville, Tennessee. The Bank entered into a lease for the location for the new loan production office. The costs associated with this expansion, including lease expenses, are not expected to be significant.
Previous wording
The average balances, interest, and average rates of our assets and liabilities for thethree months ended March 31, 2025 and 2024 are presented in the following table (dollars in thousands):
Current wording
The average balances, interest, and average rates of our assets and liabilities for thethree and six months ended June 30, 2025 and 2024 are presented in the following table (dollars in thousands):
Previous wording
Loan fees of $3.6 million are included in interest income for the period ended March 31, 2025. Loan fees of $2.6 million are included in interest income for the period ended March 31, 2024.
Current wording
Loan fees of $4,163,000 are included in interest income for the period ended June 30, 2025. Loan fees of $4,309,000 are included in interest income for the period ended June 30, 2024.
Previous wording
The components of our loan yield, a key driver to our net interest margin for thethree months ended March 31, 2025 and 2024, were as follows:
Current wording
The components of our loan yield, a key driver to our net interest margin for thethree and six months ended June 30, 2025 and 2024, were as follows:
Previous wording
Net interest margin for the three months ended March 31, 2025 and 2024 was 3.53% and 3.14%, respectively. The increase in net interest margin for the first quarter of 2025 was primarily due to the increase in average interest earning asset balances and an increase in the yield earned on loans and a decrease in cost of funds. The yield on loans increased during the three months ended March 31, 2025 when compared to the comparable period in 2024 due to the origination of loans at a higher rate than the previous portfolio rate. The net interest spread was 3.13% and 2.73% for the three months ended March 31, 2025 and 2024, respectively.
Current wording
Net interest margin for the three months ended June 30, 2025 and 2024 was 3.73% and 3.34%, respectively. Net interest margin for the six months ended June 30, 2025 and 2024 was 3.63% and 3.24%, respectively. The increase in net interest margin for the first half of 2025 was primarily due to the increase in average interest earning asset balances, an increase in the yield earned on loans and securities, and a decrease in cost of funds, partially offset by increased deposit balances and a decrease in the yield earned on accounts with depository institutions and federal funds sold. The yield on loans increased during the three and six months ended June 30, 2025 when compared to the comparable periods in 2024 due to the origination of loans at a higher rate than the previous portfolio rate. The net interest spread was 3.33% and 2.92% for the three months ended June 30, 2025 and 2024. The net interest spread was 3.24% and 2.82% for the six months ended June 30, 2025 and 2024, respectively.
Previous wording
Net interest income represents the amount by which interest earned on various earning assets exceeds interest paid on deposits and other interest-bearing liabilities and is the most significant component of the Company’s earnings. Net interest income, excluding tax equivalent adjustments relating to tax exempt securities and loans, for the three months ended March 31, 2025 totaled$44,579,000. Net interest income, excluding tax equivalent adjustments relating to tax exempt securities and loans, for the three months ended March 31, 2024 totaled $35,561,000.
Current wording
Net interest income represents the amount by which interest earned on various earning assets exceeds interest paid on deposits and other interest-bearing liabilities and is the most significant component of the Company’s earnings. Net interest income, excluding tax equivalent adjustments relating to tax exempt securities and loans, for the three and six months ended June 30, 2025 totaled$48,938,000 and $93,517,000, respectively. Net interest income, excluding tax equivalent adjustments relating to tax exempt securities and loans, for the three and six months ended June 30, 2024 totaled $38,460,000 and $74,021,000, respectively.
Previous wording
The increase in net interest income for the three months ended March 31, 2025 compared to the comparable period in 2024 was primarily due to an increase in the volume of average interest-earning assets, which along with an increase in the average yield on loans, contributed to an increase in interest, and an increase in interest and dividends earned on securities, partially offset by an increase in interest expense resulting from an increase in the volume of average interest bearing deposits. The increase in origination and other fee income also contributed to the increase in net interest income between the two periods.
Current wording
The increase in net interest income for the three and six months ended June 30, 2025 compared to the comparable periods in 2024 was primarily due to an increase in the volume of average interest-earning assets, which along with an increase in the average yield on loans and securities, contributed to an increase in interest income on loans, and an increase in interest and dividends earned on securities, partially offset by an increase in interest expense resulting from an increase in the volume of average interest-bearing deposits.
Previous wording
The ratio of average interest-earning assets to total average assets for thethree months ended March 31, 2025 was 96.2%, compared to 95.7% for the three months ended March 31, 2024.
Current wording
The ratio of average interest-earning assets to total average assets for thethree and six months ended June 30, 2025 was 96.2%, compared to 95.7% for the three and six months ended June 30, 2024.
Previous wording
Interest expense increased in the three months ended March 31, 2025 when compared to the comparable period in 2024 due to an increase in the volume of average interest-bearing deposits. As the 100 basis points in rate cuts by the Federal Reserve between September 18, 2024 and December 18, 2024 took effect, we began lowering interest rates on some of our deposit products. Though we have been able to lower the rates we pay on deposits as the Federal Reserve began cutting rates, if competitive pressures increase, the Federal Reserve does not cut the federal funds rate any further or loan growth outpaces deposit growth, we may have to once again raise the rates we pay on deposits which would negatively impact our net interest margin. Even if rates remain at current levels or the Federal Reserve begins to cut rates again, we expect interest expense to continue to increase due to an increase in overall deposit balances.
Current wording
Interest expense increased in the three and six months ended June 30, 2025 when compared to the comparable periods in 2024 due to an increase in the volume of average interest-bearing deposits offset in part by a reduction in the average interest rate we are paying on deposit accounts. Though we have been able to lower the rates we pay on deposits as the Federal Reserve began cutting rates in September 2024, if competitive pressures increase, the Federal Reserve does not cut the federal funds rate any further or loan growth outpaces deposit growth, we may have to once again raise the rates we pay on deposits which would negatively impact our net interest margin. Even if rates remain at current levels or the Federal Reserve begins to cut rates again, we expect interest expense to continue to increase due to an increase in overall deposit balances.
Previous wording
The direction and speed with which short-term interest rates move has an impact on our net interest income. The Federal Reserve influences the general market rates of interest, including the deposit and loan rates offered by many financial institutions. Our loan portfolio is significantly affected by changes in the prime interest rate. The prime interest rate has decreased by 100 basis points since September 18, 2024 as the Federal Reserve cut the target rate for the federal funds rate by 100 basis points between September 18, 2024 and December 18, 2024. The Company believes that short-term interest rates will remain at or near their current levels throughout 2025, and in such rate environment, expansion of the Company's net interest margin will be dependent upon, in part, whether the Company is forced to maintain deposit rates at their current levels or further increase them for the reasons noted above. However, if short-term interest rates decline further the Company's net interest margin and earnings could be negatively impacted if the yields on loans decrease faster than the Company is able to lower deposit rates, including as a result of loan growth outpacing our ability to add lower cost core deposits or competitive pressures in our markets limiting our ability to reduce the rates we pay on deposits, particularly given that our loan portfolio primarily consists of variable rate loans. Alternatively, if the Company is able to reprice its deposits more quickly than it reprices the rates it earns on loans in such a falling rate environment, then the Company expects its net interest margin would expand.
Current wording
2024 and December 18, 2024. The Company believes that short-term interest rates will remain at or near their current levels throughout 2025, and in such rate environment, expansion of the Company's net interest margin will be dependent upon, in part, whether the Company is forced to maintain deposit rates at their current levels or further increase them for the reasons noted above. However, if short-term interest rates decline further the Company's net interest margin and earnings could be negatively impacted if the yields on loans decrease faster than the Company is able to lower deposit rates, including as a result of loan growth outpacing our ability to add lower cost core deposits or competitive pressures in our markets limiting our ability to reduce the rates we pay on deposits, particularly given that our loan portfolio primarily consists of variable rate loans. Alternatively, if the Company is able to reprice its deposits more quickly than it reprices the rates it earns on loans in such a falling rate environment, then the Company expects its net interest margin would expand.
Previous wording
As discussed below under Financial Condition-Loans, loan growth was higher for the three months ended March 31, 2025 compared to the same period for 2024. Loan growth for the three months ended March 31, 2025 was $89,574,000, while loan growth for the three months ended March 31, 2024 was $21,534,000.
Current wording
As discussed below under Financial Condition-Loans, loan growth was higher for the six months ended June 30, 2025 compared to the same period for 2024. Loan growth for the six months ended June 30, 2025 was $196,056,000, while loan growth for the six months ended June 30, 2024 was $161,883,000.
Previous wording
There was a benefit to the provision for credit losses-off balance sheet exposures of $393,000 for the three months ended March 31, 2025 while there was no provision or benefit for the credit losses-off balance sheet exposures for the three months ended March 31, 2024. The increase in the benefit for the provision for credit losses-off balance sheet exposures was primarily due to an updated expected line utilization and an increase in our unconditionally cancellable commitments.
Current wording
There was a provision for credit losses-off balance sheet exposures of $123,000 for the three months ended June 30, 2025 related to increased loan commitments. A net benefit to the provision for credit losses-off balance sheet exposures of $270,000 for the six months ended June 30, 2025, was primarily due to an updated expected line utilization and an increase in our unconditionally cancellable commitments. There was no provision or benefit for the credit losses-off balance sheet exposures for the three and six months ended June 30, 2024.
Previous wording
The following detail provides a breakdown of the provision for credit loss-loans expense and net (charge-offs) recoveries as of and for the three months ended March 31, 2025 and 2024:
Current wording
The following detail provides a breakdown of the provision for credit loss-loans expense and net (charge-offs) recoveries as of and for the six months ended June 30, 2025 and 2024:
Previous wording
The provision for credit losses-loans charged to operating expense requires us to estimate all expected credit losses over the remaining life of our loan portfolio. Other factors which, in management’s judgment, deserve current recognition in estimating expected credit losses include growth and composition of the loan portfolio, review of specific problem loans, the relationship of the allowance for credit losses to outstanding loans, adverse situations that may affect our borrowers' ability to repay, the estimated value of any underlying collateral and current economic conditions that may affect our borrowers' ability to pay.
Current wording
The provision for credit losses-loans charged to operating expense requires us to estimate all expected credit losses over the remaining life of our loan portfolio. Other factors which, in management’s judgment, deserve current recognition in estimating expected credit losses include growth and composition of the loan portfolio, review of specific problem loans, the relationship of the allowance for credit losses to outstanding loans, adverse situations and/or current economic conditions that may affect our borrowers' ability to repay and the estimated value of any underlying collateral.
Previous wording
There was no provision for credit losses on available-for-sale securities for the three months ended March 31, 2025 and 2024, respectively.
Current wording
There was no provision for credit losses on available-for-sale securities for the three and six months ended June 30, 2025 and 2024, respectively.
Previous wording
Our non-interest income is composed of several components, some of which vary significantly between quarterly and annual periods. The following is a summary of our non-interest income for the three months ended March 31, 2025 and 2024 (in thousands):
Current wording
Our non-interest income is composed of several components, some of which vary significantly between quarterly and annual periods. The following is a summary of our non-interest income for the three and six months ended June 30, 2025 and 2024 (in thousands):
Previous wording
The increase in non-interest income for the three months ended March 31, 2025 when compared to the comparable period in 2024 is primarily attributable to increases in brokerage income, income on BOLI and annuity contracts, and a decrease in loss on sale of fixed assets.
Current wording
The increase in non-interest income for the three months ended June 30, 2025 when compared to the comparable period in 2024 is primarily attributable to a decrease in loss on sale of securities and increased service charges on deposit accounts, partially offset by decreases in gain on sale of loans and debit and credit card interchange income. The increase in non-interest income for the six months ended June 30, 2025 when compared to the comparable period in 2024 is primarily attributable to increases in brokerage income, gain on sale of securities, and service charges on deposit accounts, partially offset by decreases in gain on sale of loans and debit and credit card interchange income.
Previous wording
The increase in brokerage income was primarily due to multiple client acquisitions resulting in an increase of overall market share, the successful addition of new advisors and these advisors' subsequent new relationships, and the positive performance of financial markets in a variety of diversified areas.
Current wording
The increase in brokerage income for the six months ended June 30, 2025 was primarily due to multiple client acquisitions and estate planning cases resulting in an increase of overall production and market share, the successful addition of new advisor relationships, and the positive performance of financial markets in a variety of diversified areas.
Previous wording
Non-interest expense consists primarily of employee costs, occupancy expenses, furniture and equipment expenses, advertising and public relations expenses, data processing expenses, director’s fees, audit, legal and consulting fees, FDIC insurance and other operating expenses. The following is a summary of our non-interest expense for the three months ended March 31, 2025 and 2024 (in thousands):
Current wording
Non-interest expense consists primarily of employee costs, occupancy expenses, furniture and equipment expenses, advertising and public relations expenses, data processing expenses, director’s fees, audit, legal and consulting fees, FDIC insurance and other operating expenses. The following is a summary of our non-interest expense for the three and six months ended June 30, 2025 and 2024 (in thousands):
Previous wording
The increase in non-interest expense for the three months ended March 31, 2025 when compared to the comparable period in 2024 is primarily attributable to increases in salaries and employee benefits, occupancy expenses, data processing expense, FDIC insurance, audit, legal and consulting expenses, and other operating expenses.
Current wording
The increase in non-interest expense for the three and six months ended June 30, 2025 when compared to the comparable periods in 2024 is primarily attributable to increases in salaries and employee benefits, other operating expenses, data processing expense, audit, legal and consulting expenses, FDIC insurance, and advertising and public relations expense.
Previous wording
The increase in salaries and benefits for the three months ended March 31, 2025 was primarily due to an increase in the number of employees necessary to support the Company's operational growth, an increase in incentives paid due to the increase in loan volumes, and an increase in the accrual for annual bonuses.
Current wording
The increase in salaries and benefits for the three and six months ended June 30, 2025 was primarily driven by several factors tied to the Company’s continued operational expansion, including an increase in the number of employees necessary to support higher business volumes and strategic initiatives reflecting the Company's operational growth. Also contributing to the increase was higher incentive compensation expenses, attributable to increased loan production and a higher accrual for annual bonuses based on performance metrics and projected year-end payouts.
Previous wording
The increase in other operating expenses in the three months ended March 31, 2025 was primarily due to an increase in credit card expense, an increase in expenses related to employee recruitment, and an increase in expenses related to employee education.
Current wording
The increase in other operating expenses in the three and six months ended June 30, 2025 was primarily due to an increase in credit card expense, an increase in expenses related to employee recruitment, and an increase in expenses related to employee education.
Previous wording
Data processing expense increased for the three months ended March 31, 2025 primarily due to implementation of additional information security solutions, mobile banking pricing changes and an increase in the overall number of customers. The Company anticipates that data processing expenses will continue to increase as the Company's operations grow, the demand for digital products and services from customers increases, and the cyber threat environment grows.
Current wording
The increase in data processing expense in the three and six months ended June 30, 2025 primarily due to implementation of additional information security solutions, replacement of technology equipment, and an increase in the overall number of customers. The Company anticipates that data processing expenses will continue to increase as the Company's operations grow, the demand for digital products and services from customers increases, and the cyber threat environment grows.
Previous wording
The increase in audit, legal and consulting expenses in the three months ended March 31, 2025 was primarily due to the timing and payment of invoices related to our annual audit.
Current wording
The increase in audit, legal and consulting expenses in the three and six months ended June 30, 2025 was primarily due to the timing and payment of invoices related to our annual audit. Also contributing to the increase in the second quarter was increased legal costs and consulting costs related to a new loan origination platform and other strategic initiatives.
Previous wording
The increase in FDIC insurance in the three months ended March 31, 2025 was primarily due to the bank's growth throughout 2024.
Current wording
The increase in FDIC insurance in the three and six months ended June 30, 2025 was primarily due to the bank's growth throughout 2024.
Previous wording
The efficiency ratio is a common and comparable KPI used in the banking industry. The Company uses this metric to monitor how effective management is at using our internal resources. It is calculated by dividing our non-interest expense by our net interest income plus non-interest income. The efficiency ratio for the three months ended March 31, 2025 and 2024 was 55.54% and 61.04%, respectively. The improvement in the efficiency ratio for the three months ended March 31, 2025 compared to the comparable period in 2024 was primarily due to increases in non-interest income and net interest income, outpacing the increase in non-interest expense.
Current wording
The efficiency ratio is a common and comparable KPI used in the banking industry. The Company uses this metric to monitor how effective management is at using our internal resources. It is calculated by dividing our non-interest expense by our net interest income plus non-interest income. The efficiency ratio for the six months ended June 30, 2025 and 2024 was 53.89% and 58.45%, respectively. The efficiency ratio for the three months ended June 30, 2025 and 2024 was 52.39% and 56.10%, respectively. The improvement in the efficiency ratio for the three and six months ended June 30, 2025 compared to the comparable periods in 2024 was primarily due to increases in net interest income, outpacing the increases in non-interest expense.
Previous wording
The Company’s income tax expense was $5,181,000 for the three months ended March 31, 2025, an increase of $1,294,000 over the comparable period in 2024. The percentage of income tax expense to net income before taxes was 24.01% and 23.32% for the three months ended March 31, 2025 and 2024, respectively. Our effective tax rate represents our blended federal and state rate of 26.14% affected by the impact of anticipated favorable permanent differences between our book and taxable income such as share-based compensation, bank-owned life insurance, income earned on tax-exempt securities and loans, and certain federal and state tax credits, offset in part by the limitation on deductibility of meals and entertainment expense and non-deductible executive compensation.
Current wording
The Company's income tax expense for the three months ended June 2025 was $5,793,000, an increase of $1,303,000 from $4,490,000 for the three months ended June 2024. The Company’s income tax expense was $10,974,000 for the six months ended June 30, 2025, an increase of $2,597,000 from $8,377,000 for the comparable period in 2024. The percentage of income tax expense to net income before taxes was 23.24% and 21.71% for the three months ended June 30, 2025 and 2024, respectively. The percentage of income tax expense to net income before taxes was 23.60% and 22.43% for the six months ended June 30, 2025 and 2024, respectively. Our effective tax rate represents our blended federal and state rate of 26.14% affected by the impact of anticipated favorable permanent differences between our book and taxable income such as share-based compensation, bank-owned life insurance, income earned on tax-exempt securities and loans, and certain federal and state tax credits, offset in part by the limitation on deductibility of meals and entertainment expense and non-deductible executive compensation.
Previous wording
The Company’s total assets increased $172,809,000, or 3.22%, to $5,531,468,000 at March 31, 2025 from $5,358,659,000 at December 31, 2024. Loans, net of allowance for credit losses, totaled $4,129,983,000 at March 31, 2025, a 2.17% increase compared to $4,042,392,000 at December 31, 2024. In 2025, management is targeting owner-occupied commercial real estate, residential real estate lending and consumer lending as areas of focus. Total liabilities increased by 3.00% to $5,025,113,000 at March 31, 2025 compared to $4,878,956,000 at December 31, 2024.
Current wording
The Company’s total assets increased $273,125,000, or 5.10%, to $5,631,784,000 at June 30, 2025 from $5,358,659,000 at December 31, 2024. Loans, net of allowance for credit losses, totaled $4,234,091,000 at June 30, 2025, a 4.74% increase compared to $4,042,392,000 at December 31, 2024. In 2025, management is targeting owner-occupied commercial real estate, residential real estate lending and consumer lending as areas of focus. Total liabilities increased by 4.55% to $5,100,828,000 at June 30, 2025 compared to $4,878,956,000 at December 31, 2024.
Previous wording
Overall, the Bank's loan demand and related new loan production remained steady throughout the Bank's markets in the first quarter of 2025, yielding a year-to-date total loan growth net of deferred loan fees of 2.19%. Total loan growth net of deferred loan fees for the first three months of 2025 was $89,574,000. Contributing to the Company's loan growth in the first three months of 2025 were the continued population growth and corporate relocations in the Bank's primary market areas and increased marketing efforts. The increase in residential 1-4 family real estate loans is attributable to the Bank successfully growing its residential portfolio through enhanced marketing efforts directed at homebuilders in the Company's market areas, and the increase the Company is seeing in the investor sector of 1-4 family. The increase in commercial and multi-family real estate and 1-4 family equity lines of credit is primarily attributable to continued economic growth and expansion in the Bank's primary market areas. The Company anticipates that loan growth will be steady in 2025.
Current wording
Overall, the Bank's loan demand and related new loan production remained steady throughout the Bank's markets in the first half of 2025, yielding a year-to-date total loan growth net of deferred loan fees of 4.79%. Total loan growth net of deferred loan fees for the first half of 2025 was $196,056,000. Contributing to the Company's loan growth in the first half of 2025 were the continued population growth and corporate relocations in the Bank's primary market areas and increased marketing efforts. The increase in residential 1-4 family real estate loans is attributable to the Bank successfully growing its residential portfolio through enhanced marketing efforts directed at homebuilders in the Bank's market areas, and the increase the Company is seeing in the investor sector of 1-4 family. The increase in commercial and multi-family real estate and 1-4 family equity lines of credit is primarily attributable to continued economic growth and expansion in the Bank's primary market areas. The Company anticipates that loan growth will be steady throughout the rest of 2025.
Previous wording
Our allowance for credit losses for loans at March 31, 2025 reflects an amount deemed appropriate to adequately cover all expected future losses as of the date the allowance is determined based on our allowance for credit losses for loans assessment methodology. The allowance for credit losses for loans (net of charge-offs and recoveries) increased to $51,480,000 at March 31, 2025 from $49,497,000 at December 31, 2024, due to loan growth, credit deterioration of a single commercial real estate borrower, and a worsening economic outlook. The allowance for credit losses for loans was 1.23% of total loans outstanding at March 31, 2025 compared to 1.21% at December 31, 2024. The internally classified loans as a percentage of the allowance for credit losses for loans were 101.5% and 97.0% respectively, at March 31, 2025 and December 31, 2024. This increase was primarily due to the credit downgrades and deterioration in payment performance of a few large borrowers.
Current wording
Our allowance for credit losses for loans at June 30, 2025 reflects an amount deemed appropriate to adequately cover all expected future losses as of the date the allowance is determined based on our allowance for credit losses for loans assessment methodology. The allowance for credit losses for loans (net of charge-offs and recoveries) increased to $53,854,000 at June 30, 2025 from $49,497,000 at December 31, 2024, primarily due to a worsening economic outlook and loan growth. The allowance for credit losses for loans was 1.26% of total loans outstanding at June 30, 2025 compared to 1.21% at December 31, 2024. The internally classified loans as a percentage of the allowance for credit losses for loans were 101.8% and 97.0% respectively, at June 30, 2025 and December 31, 2024. The increase was primarily a result of deteriorating credits in the residential 1-4 family real estate segment.
Previous wording
The allowance for credit losses for loans is an amount that management believes will be adequate to absorb expected losses on existing loans that may become uncollectible as of the measurement date. The allowance for credit losses for loans as a percentage of total loans outstanding at March 31, 2025, net of deferred fees, increased from the year ended December 31, 2024. The increase was primarily due to a deteriorating economic outlook as mentioned above.
Current wording
The allowance for credit losses for loans is an amount that management believes will be adequate to absorb expected losses on existing loans that may become uncollectible as of the measurement date. The allowance for credit losses for loans as a percentage of total loans outstanding at June 30, 2025, net of deferred fees, increased from the year ended December 31, 2024. The increase was primarily driven by a deteriorating economic factor outlook utilized within our allowance models.
Previous wording
In estimating expected credit losses as of March 31, 2025, we utilized then available forecasts of macroeconomic variables over our reasonable and supportable horizon based on the review of a variety of forecasts of the U.S. economy provided by Moody's Analytics. Key economic variables as forecasted and utilized in our models include: (i) U.S. Gross Domestic Product ("GDP") with annualized quarterly growth rates in the range of 1.5% to 2.1%; (ii) a U.S. unemployment rate in the range of approximately 4.0% to 4.4%; (iii) a Home Price Index annualized quarterly growth rates in the range of approximately 0.7% to 2.8%; (iv) a CRE Price Index annualized quarterly growth rates in the range of approximately -8.3% to -2.2%; and (v) Gross Private Investment annualized quarterly growth rates in the range of approximately 0.8% and 3.0%.
Current wording
In estimating expected credit losses as of June 30, 2025, we utilized then available forecasts of macroeconomic variables over our reasonable and supportable horizon based on the review of a variety of forecasts of the U.S. economy provided by Moody's Analytics. Key economic variables as forecasted and utilized in our models include: (i) U.S. Gross Domestic Product ("GDP") with annual growth rates in the range of 0.9% to 1.5%; (ii) a U.S. unemployment rate in the range of approximately 4.3% to 4.8%; (iii) a Home Price Index annual growth rates in the range of approximately 0.7% to 2.4%; (iv) a CRE Price Index annual growth rates in the range of approximately -5.8% to -0.6%; and (v) Gross Private Investment annual growth rates in the range of approximately -4.8% and 2.2%.
Previous wording
Our charge-off policy for collateral dependent loans is similar to our charge-off policy for all loans in that loans are charged-off in the month when a determination is made that the loan is uncollectible. Net charge-offs increased to $250,000 for the three months ended March 31, 2025, compared to net charge-offs of $106,000 for the same period in 2024. The ratio of net charge-offs to average total outstanding loans was 0.01% for the three months ended March 31, 2025 compared to 0.00% for the three months ended March
Current wording
Our charge-off policy for collateral dependent loans is similar to our charge-off policy for all loans in that loans are charged-off in the month when a determination is made that the loan is uncollectible. Net charge-offs for the three months ended June 30, 2025 were $133,000 compared to net charge-offs of $81,000 for the three months ended June 30, 2024, an increase of $52,000. Net charge-offs increased by $196,000 to $383,000 for the six months ended June 30, 2025, compared to net charge-offs of $187,000 for the six months ended June 30, 2024. The ratio of net charge-offs to average total outstanding loans was 0.01% for the six months ended June 30, 2025 and six months ended June 30, 2024. Overall, the Bank experienced minimal charge-offs during the three and six months ended June 30, 2025 and it is expected that charge-offs will continue to be modest for the remainder of 2025; however, a deterioration in local economic conditions may negatively impact charge-offs in the future.
Previous wording
We also maintain an allowance for credit losses on off-balance sheet exposures, which decreased $393,000 from $2,555,000 at December 31, 2024 to $2,162,000 at March 31, 2025 as a result of an updated expected line utilization and an increase in our unconditionally cancellable commitments.
Current wording
We also maintain an allowance for credit losses on off-balance sheet exposures, which decreased $270,000 from $2,555,000 at December 31, 2024 to $2,285,000 at June 30, 2025 as a result of an updated expected line utilization and an increase in our unconditionally cancellable commitments.
Previous wording
Securities increased $4,653,000, or 0.56%, to $832,546,000 at March 31, 2025 from $827,893,000 at December 31, 2024. The increase is primarily due to the decrease in the unrealized loss position of our securities portfolio and the purchase of new securities, partially offset by the sale of securities and the run-off of our declining balance securities. The average yield, excluding tax equivalent adjustment, of the securities portfolio at March 31, 2025 was 2.54% with a weighted average life of 7.15 years, as compared to an average yield of 2.47% and a weighted average life of 7.00 years at December 31, 2024. The weighted average lives on mortgage-backed securities reflect the repayment rate used for book value calculations.
Current wording
Securities increased $65,800,000, or 7.95%, to $893,693,000 at June 30, 2025 from $827,893,000 at December 31, 2024. The increase is primarily due to the purchase of new securities and the decrease in the unrealized loss position of our securities portfolio, partially offset by the sale of securities and the run-off of our declining balance securities. The average yield, excluding tax equivalent adjustment, of the securities portfolio at June 30, 2025 was 2.72% with a weighted average life of 7.05 years, as compared to an average yield of 2.47% and a weighted average life of 7.00 years at December 31, 2024. The weighted average lives on mortgage-backed securities reflect the repayment rate used for book value calculations.
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Current report — wording carried from elsewhere
The Company cautions investors that future financial and operating results may differ materially from those projected in forward-looking statements made by, or on behalf of, the Company. The words “expect,” “intend,” “should,” “may,” “could,” “believe,”
Current report — wording carried from elsewhere
Loan fees of $7,737,000 are included in interest income for the period ended June 30, 2025. Loan fees of $6,901,000 are included in interest income for the period ended June 30, 2024.
Current report — wording carried from elsewhere
State income tax credits related to incentive loans at below market rates and tax exempt loans to municipalities.
Current report — wording carried from elsewhere
The tax equivalent adjustment has been computed using a 21% Federal tax rate.
Current report — wording carried from elsewhere
Annualized net interest income on a tax equivalent basis divided by average interest-earning assets.
Current report — wording carried from elsewhere
Average interest rate on interest-earning assets less average interest rate on interest-bearing liabilities.
Current report — wording carried from elsewhere
The direction and speed with which short-term interest rates move has an impact on our net interest income. The Federal Reserve influences the general market rates of interest, including the deposit and loan rates offered by many financial institutions. Our loan portfolio is significantly affected by changes in the prime interest rate. The prime interest rate has decreased by 100 basis points since September 18, 2024 as the Federal Reserve cut the target rate for the federal funds rate by 100 basis points between September 18,
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
31, 2024. Overall, the Bank experienced minimal charge-offs during the three months ended March 31, 2025 and it is expected that charge-offs will continue to be modest for the remainder of 2025; however, a deterioration in local economic conditions may negatively impact charge-offs in the future.