ConnectOne Bancorp Inc

Previous wording

Net income available to common stockholders for the three months ended June 30, 2024 was $17.5 million compared to $19.9 million for the comparable three-month period ended June 30, 2023. The Company’s diluted earnings per share were $0.46 for the three months ended June 30, 2024 as compared with diluted earnings per share of $0.51 for the comparable three-month period ended June 30, 2023. The $2.3 million decrease in net income available to common stockholders and the $0.05 decrease in diluted earnings per share versus the second quarter of 2023 were due to a $2.4 million decrease in net interest income and a $2.1 million increase in noninterest expenses, partially offset by a $1.0 million increase in noninterest income, a $0.7 million decrease in income tax expense and a $0.5 million decrease in provision for credit losses.

Current wording

Net income available to common stockholders for the three months ended September 30, 2024 was $15.7 million compared to $19.9 million for the comparable three-month period ended September 30, 2023. The Company’s diluted earnings per share were $0.41 for the three months ended September 30, 2024 as compared with diluted earnings per share of $0.51 for the comparable three-month period ended September 30, 2023. The $4.2 million decrease in net income available to common stockholders and the $0.10 decrease in diluted earnings per share were due to a $2.9 million increase in noninterest expenses, a $2.3 million increase in provision for credit losses and a $1.5 million decrease in net interest income, partially offset by a $1.2 million increase in noninterest income and a $1.2 million decrease in income tax expense. Included in noninterest expenses for the three months ended September 30, 2024 were $0.7 million in merger expenses related to the previously announced, merger with The First of Long Island Corporation. There were no such charges for the three months ended September 30, 2023.

Previous wording

Net income available to common stockholders for the six months ended June 30, 2024 was $33.2 million compared to $43.3 million for the comparable six-month period ended June 30, 2023. The Company’s diluted earnings per share were $0.86 for the six months ended June 30, 2024 as compared with diluted earnings per share of $1.10 for the comparable six-month period ended June 30, 2023. The $10.1 million decrease in net income available to common stockholders and the $0.24 decrease in diluted earnings per share versus the comparable six-month period ended June 30, 2023 were due to a $9.2 million decrease in net interest income, a $4.3 million increase in noninterest expenses, and a $2.5 million increase in provision for credit losses, partially offset by a $3.9 million decrease in income tax expense and a $2.0 increase in noninterest income.

Current wording

Net income available to common stockholders for the nine months ended September 30, 2024 was $48.9 million compared to $63.2 million for the comparable nine-month period ended September 30, 2023. The Company’s diluted earnings per share were $1.27 for the nine months ended September 30, 2024 as compared with diluted earnings per share of $1.61 for the comparable nine-month period ended September 30, 2023. The $14.3 million decrease in net income available to common stockholders and the $0.34 decrease in diluted earnings per share versus the comparable nine-month period ended September 30, 2023 were due to a $10.7 million decrease in net interest income, a $7.2 million increase in noninterest expenses and a $4.8 million increase in provision for credit losses, partially offset by a $3.2 million increase in noninterest income and a $5.2 million decrease in income tax expense. Included in noninterest expenses for the nine months ended September 30, 2024 were $0.7 million in merger expenses related to the previously announced, merger with The First of Long Island Corporation. There were no such charges for the nine months ended September 30, 2023.

Previous wording

Fully taxable equivalent net interest income for the three months ended June 30, 2024 decreased by $2.4 million, or 3.7%, from the three months ended June 30, 2023. The decrease primarily resulted from a nine basis-point decrease in the net interest margin to 2.72% from 2.81%, partially offset by a $63.5 million, or 0.8%, increase in average total loans. The contraction of the net interest margin was primarily attributable to a 73 basis-point increase in the average costs of deposits, partially offset by a 42 basis-point increase in the loan portfolio yield.

Current wording

Fully taxable equivalent net interest income for the three months ended September 30, 2024 decreased by $1.5 million, or 2.4%, from the three months ended September 30, 2023. The decrease primarily resulted from a nine basis-point decrease in the net interest margin to 2.67% from 2.76%, partially offset by a $13.5 million, or 1.9%, increase in average investment securities. The contraction of the net interest margin was primarily attributable to a 40 basis-point increase in the average cost of deposits, including noninterest-bearing deposits, partially offset by a 24 basis-point increase in the loan portfolio yield.

Previous wording

Fully taxable equivalent net interest income for the six months ended June 30, 2024 decreased by $9.1 million, or 6.9%, from the six months ended June 30, 2023. The decrease primarily resulted from a 21 basis-point decrease in the net interest margin to 2.68% from 2.89%, partially offset by a $132.6 million, or 1.6%, increase in average total loans. The contraction of the net interest margin was primarily attributable to a 94 basis-point increase in the average costs of deposits, partially offset by a 47 basis-point increase in the loan portfolio yield.

Current wording

Fully taxable equivalent net interest income for the nine months ended September 30, 2024 decreased by $10.6 million, or 5.4%, from the nine months ended September 30, 2023. The decrease primarily resulted from an 18 basis-point decrease in the net interest margin to 2.67% from 2.85%, partially offset by a $72.6 million, or 0.9%, increase in average total loans. The contraction of the net interest margin was primarily attributable to a 69 basis-point increase in the average costs of deposits including noninterest-bearing deposits, partially offset by a 38 basis-point increase in the loan portfolio yield.

Previous wording

The following table, “Average Statements of Condition with Interest and Average Rates”, present for the three months ended June 30, 2024 and 2023, the Company’s average assets, liabilities and stockholders’ equity. The Company’s net interest income, net interest spread and net interest margin are also reflected.

Current wording

The following tables present for the three and nine months ended September 30, 2024 and 2023, the Company’s average assets, liabilities and stockholders’ equity. The Company’s net interest income, net interest spread and net interest margin are also reflected.

Previous wording

Noninterest income totaled $4.4 million for the three months ended June 30, 2024, compared with $3.4 million for the three months ended June 30, 2023. Included in noninterest income for both the three months ended June 30, 2024 and June 30, 2023 were net losses on equity securities of $0.2 million. Noninterest income increased $1.0 million when compared to the three months ended June 30, 2023. The increase was primarily attributable to an increase in net gains on sale of loans held-for-sale of $0.7 million, an increase in deposit, loan, and other income of $0.1 million and an increase in bank owned life insurance ("BOLI") income of $0.1 million.

Current wording

Noninterest income totaled $4.7 million for the three months ended September 30, 2024, compared with $3.6 million for the three months ended September 30, 2023. The $1.2 million increase was due to a $0.7 million increase in net gains on equity securities, a $0.4 million increase in BOLI death benefits received, a $0.2 million increase in BOLI income, a $0.1 million increase in BoeFly income, and a $0.1 million increase in other deposit, loan and other income, partially offset by a decrease in net gains on sale of loans held-for-sale of $0.3 million.

Previous wording

Noninterest expenses totaled $37.6 million for the three months ended June 30, 2024, compared with $35.5 million for the three months ended June 30, 2023. Noninterest expenses increased by $2.1 million when compared to the three months ended June 30, 2023. The increase was primarily attributable to increases in salaries and employee benefits of $1.0 million, due to increases in incentive-based compensation accruals, information technology and communications of $0.6 million, due to additional investments in technology, equipment, and software, other expenses of $0.3 million, occupancy and equipment of $0.2 million, marketing and advertising $0.1 million and FDIC insurance of $0.1 million.

Current wording

Noninterest expenses totaled $38.6 million for the three months ended September 30, 2024, compared with $35.8 million for the three months ended September 30, 2023. The $2.9 million increase was primarily attributable to an increase in information technology and communications of $1.0 million, due to additional investments in technology, equipment, and software, a $0.7 million increase in merger expenses related to the previously announced, merger with The First of Long Island Corporation, a $0.7 million increase in salaries and employee benefits, due to increases in incentive-based compensation accruals and other employee benefit expenses, a $0.3 million increase in professional and consulting expenses, a $0.2 million increase in occupancy and equipment expenses and a $0.1 million increase in marketing and advertising expenses, partially offset by a $0.1 million decrease in other expenses.

Previous wording

Income tax expense was $6.7 million for the three months ended June 30, 2024, compared to $7.4 million for the three months ended June 30, 2023. The decrease in income tax expense was the result of lower income before income tax expense. The effective tax rate for the three months ended June 30, 2024 and June 30, 2023 was 26.0% and 25.8%, respectively.

Current wording

Income tax expense was $6.0 million for the three months ended September 30, 2024, compared to $7.2 million for the three months ended September 30, 2023. The decrease in income tax expense was the result of lower income before income tax expense. The effective tax rate for the three months ended September 30, 2024 and September 30, 2023 was 26.0% and 25.2%, respectively.

Previous wording

Income tax expense was $12.6 million for the six months ended June 30, 2024, compared to $16.5 million for the six months ended June 30, 2023. The decrease in income tax expense was the result of lower income before income tax expense. The effective tax rate for the six months ended June 30, 2024 and June 30, 2023 was 25.7% and 26.3%, respectively. The decrease in the effective tax rate when compared to the six months ended June 30, 2023 is largely attributable to lower taxable income.

Current wording

Income tax expense was $18.6 million for the nine months ended September 30, 2024, compared to $23.7 million for the nine months ended September 30, 2023. The decrease in income tax expense was the result of lower income before income tax expense. The effective tax rate for the nine months ended September 30, 2024 and September 30, 2023 was 25.8% and 26.0%, respectively.

Previous wording

As of June 30, 2024, gross loans totaled $8.2 billion, a decrease of $189.3 million or 2.3%, compared to December 31, 2023.

Current wording

As of September 30, 2024, gross loans totaled $8.1 billion, a decrease of $235.5 million or 2.8%, compared to December 31, 2023.

Previous wording

While the previous table reflects the classification of our loans by loan portfolio segment, the following tables present further disaggregation of our commercial real estate portfolio along with loan-to-value ("LTV") percentages.

Current wording

While the previous table reflects the classification of our loans by loan portfolio segment, the following tables present further disaggregation of our commercial real estate portfolio along with applicable weighted average loan-to-value ratios, typically determined at loan origination.

Previous wording

As of June 30, 2024, the Company’s allowance for credit losses for loans was $82.1 million, an increase of $0.1 million from $82.0 million as of December 31, 2023.

Current wording

As of September 30, 2024, the Company’s allowance for credit losses for loans was $82.5 million, an increase of $0.5 million from $82.0 million as of December 31, 2023.

Previous wording

The provision for credit losses, which includes a provision for unfunded commitments, for the three and six months ended June 30, 2024 was $2.5 million and $6.5 million, respectively, compared to $3.0 million and $4.0 million, for the three and six months ended June 30, 2023, respectively. The decrease in the provision for credit losses during the three months ended June 30, 2024, when compared to the comparable period in 2023 reflected decreases to the general reserve and specific reserves. The increase in the provision for credit losses during the six months ended June 30, 2024, when compared to the comparable period in 2023 reflected an increase to specific reserves and a decrease to the general reserve.

Current wording

The provision for credit losses, which includes a provision for unfunded commitments, for the three and nine months ended September 30, 2024 was $3.8 million and $10.3 million, respectively, compared to $1.5 million and $5.5 million, for the three and nine months ended September 30, 2023, respectively. The increase in the provision for credit losses during the three months and nine months ended September 30, 2024, when compared to the comparable periods in 2023 reflects increases to the specific reserves, partially offset by a decrease in general reserves.

Previous wording

There were $3.3 million and $6.4 million in net charge-offs for the three and six months ended June 30, 2024 compared with $1.0 million and $5.5 million in net charge-offs for the three and six months ended June 30, 2023 respectively. Net charge-offs during the six months ended June 30, 2024 consisted of charges related to a group of multifamily loans, while the net charge-offs during the six months ended June 30, 2023 were primarily the result of the resolution of certain nonaccrual taxi loans and one owner-occupied commercial real estate loan that was previously reserved for.

Current wording

There were $3.5 million and $9.9 million in net charge-offs for the three and nine months ended September 30, 2024 compared with $2.5 million and $8.0 million in net charge-offs for the three and nine months ended September 30, 2023 respectively. Net charge-offs during the nine months ended September 30, 2024 consisted of charges related to five multifamily loans totaling $7.8 million, four commercial loans of $2.2 million and one owner-occupied commercial real estate loan of $0.3 million, while the net charge-offs during the nine months ended September 30, 2023 were primarily the result of the resolution of certain nonaccrual taxi loans and one owner-occupied commercial real estate loan that was previously reserved for.

Previous wording

As of June 30, 2024, the principal components of the securities portfolio were federal agency obligations, mortgage-backed securities, obligations of U.S. states and political subdivisions, corporate bonds and notes, asset-backed securities and equity securities. For the three months ended June 30, 2024, average securities, on an amortized cost basis, increased by $13.3 million to approximately $739.6 million, or 8.0% of average total interest-earning assets, from approximately $726.3 million, or 7.9% of average interest-earning assets, for the three months ended June 30, 2023. For the six months ended June 30, 2024, average securities, on an amortized cost basis increased by $0.3 million to approximately $729.9 million, or 7.9% of average total interest-earning assets, from approximately $729.6 million, or 7.9% of average interest-earning assets, for the six months ended June 30, 2023.

Current wording

As of September 30, 2024, the principal components of the securities portfolio were federal agency obligations, mortgage-backed securities, obligations of U.S. states and political subdivisions, corporate bonds and notes, asset-backed securities and equity securities. For the three months ended September 30, 2024, average securities, on an amortized cost basis, increased by $13.5 million to approximately $736.9 million, or 8.0% of average total interest-earning assets, from approximately $723.4 million, or 8.0% of average interest-earning assets, for the three months ended September 30, 2023. For the nine months ended September 30, 2024, average securities, on an amortized cost basis increased by $4.8 million to approximately $732.3 million, or 7.9% of average total interest-earning assets, from approximately $727.5 million, or 7.9% of average interest-earning assets, for the nine months ended September 30, 2023.

Previous wording

As of June 30, 2024, net unrealized losses on securities available-for-sale, which are carried as a component of accumulated other comprehensive loss and included in stockholders’ equity, net of tax, amounted to $70.0 million as compared with net unrealized losses of $57.8 million as of December 31, 2023. The increase in unrealized losses is predominately attributable to changes in market conditions and interest rates. Unrealized losses have not been recognized into income because the issuers are of high credit quality, we do not intend to sell, and it is likely that we will not be required to sell the securities prior to their anticipated recovery. The decline in fair value is largely due to changes in interest rates and other market conditions. The issuers continue to make timely principal and interest payments on the securities. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of applicable taxes. The Company did not record an allowance for credit losses for available-for-sale securities as of June 30, 2024.

Current wording

As of September 30, 2024, net unrealized losses on securities available-for-sale, which are carried as a component of accumulated other comprehensive loss and included in stockholders’ equity, net of tax, amounted to $51.1 million as compared with net unrealized losses of $57.8 million as of December 31, 2023. The increase in unrealized losses is predominately attributable to changes in market conditions and interest rates. Unrealized losses have not been recognized into income because the issuers are of high credit quality, we do not intend to sell, and it is likely that we will not be required to sell the securities prior to their anticipated recovery. The decline in fair value is largely due to changes in interest rates and other market conditions. The issuers continue to make timely principal and interest payments on the securities. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of applicable taxes. The Company did not record an allowance for credit losses for available-for-sale securities as of September 30, 2024.

Previous wording

Based on our model, which was run as of June 30, 2024, we estimated that over the next one-year period a 200 basis-point instantaneous and parallel increase in the general level of interest rates would decrease our net interest income by 6.65%, while a 100 basis-point instantaneous and parallel decrease in interest rates would increase net interest income by 1.56%. As of December 31, 2023, we estimated that over the next one-year period a 200 basis-point instantaneous and parallel increase in the general level of interest rates would decrease our net interest income by 9.25%, while a 100 basis-point instantaneous and parallel decrease in interest rates would increase net interest income by 5.34%.

Current wording

Based on our model, which was run as of September 30, 2024, we estimated that over the next one-year period a 200 basis-point instantaneous and parallel increase in the general level of interest rates would decrease our net interest income by 3.95%, while a 100 basis-point instantaneous and parallel decrease in interest rates would increase net interest income by 1.32%. As of December 31, 2023, we estimated that over the next one-year period a 200 basis-point instantaneous and parallel increase in the general level of interest rates would decrease our net interest income by 9.25%, while a 100 basis-point instantaneous and parallel decrease in interest rates would increase net interest income by 5.34%.

Previous wording

Based on our model, which was run as of June 30, 2024, we estimated that over the next three years, on a cumulative basis, a 200 basis-point instantaneous and parallel increase in the general level of interest rates would decrease our net interest income by 2.86%, while a 100 basis-point instantaneous and parallel decrease in interest rates would decrease net interest income by 0.25%. As of December 31, 2023, we estimated that over the next three years, on a cumulative basis, a 200 basis-point instantaneous and parallel increase in the general level of interest rates would decrease our net interest income by 5.68%, while a 100 basis-point instantaneous and parallel decrease in interest rates would increase net interest income by 4.29%.

Current wording

Based on our model, which was run as of September 30, 2024, we estimated that over the next three years, on a cumulative basis, a 200 basis-point instantaneous and parallel increase in the general level of interest rates would decrease our net interest income by 1.23%, while a 100 basis-point instantaneous and parallel decrease in interest rates would decrease net interest income by 0.07%. As of December 31, 2023, we estimated that over the next three years, on a cumulative basis, a 200 basis-point instantaneous and parallel increase in the general level of interest rates would decrease our net interest income by 5.68%, while a 100 basis-point instantaneous and parallel decrease in interest rates would increase net interest income by 4.29%.

Previous wording

An economic value of equity ("EVE") analysis is also used to dynamically model the present value of asset and liability cash flows with instantaneous and parallel rate shocks of up 200 basis points and down 100 basis points. The EVE is likely to be different as interest rates change. Our EVE as of June 30, 2024, would decrease by 12.33% with an instantaneous and parallel rate shock of up 200 basis points, and increase by 2.44% with an instantaneous and parallel rate shock of down 100 basis points. Our EVE as of December 31, 2023, would decrease by 15.09% with an instantaneous and parallel rate shock of up 200 basis points, and increase by 5.75% with an instantaneous and parallel rate shock of down 100 basis-points.

Current wording

An economic value of equity ("EVE") analysis is also used to dynamically model the present value of asset and liability cash flows with instantaneous and parallel rate shocks of up 200 basis points and down 100 basis points. The EVE is likely to be different as interest rates change. Our EVE as of September 30, 2024, would decrease by 9.81% with an instantaneous and parallel rate shock of up 200 basis points, and increase by 2.23% with an instantaneous and parallel rate shock of down 100 basis points. Our EVE as of December 31, 2023, would decrease by 15.09% with an instantaneous and parallel rate shock of up 200 basis points, and increase by 5.75% with an instantaneous and parallel rate shock of down 100 basis-points.

Previous wording

As of June 30, 2024, the amount of liquid assets remained at a level management deemed adequate to ensure that, on a short and long-term basis, contractual liabilities, depositors’ withdrawal requirements, and other operational and client credit needs could be satisfied. As of June 30, 2024, liquid assets (cash and due from banks, interest-bearing deposits with banks and unencumbered investment securities) were $731.2 million, which represented 7.5% of total assets and 8.8% of total deposits and borrowings, compared to $516.3 million as of December 31, 2023, which represented 5.2% of total assets and 6.1% of total deposits and borrowings. As of June 30, 2024, not included in the above liquid assets were securities with a market value of $107.2 million which were pledged to the Federal Home Loan Bank, which support aggregate unutilized borrowing capacity of $102.2 million as of June 30, 2024. As of December 31, 2023, not included in the above liquid assets were securities with a market value of $276.0 million which were pledged to either the Federal Reserve Bank’s Bank Term Funding Program (“BTFP”), or the Federal Home Loan Bank, which support aggregate unutilized borrowing capacity of $300.5 million as of December 31, 2023.

Current wording

As of September 30, 2024, the amount of liquid assets remained at a level management deemed adequate to ensure that, on a short and long-term basis, contractual liabilities, depositors’ withdrawal requirements, and other operational and client credit needs could be satisfied. As of September 30, 2024, liquid assets (cash and due from banks, interest-bearing deposits with banks and unencumbered investment securities) were $705.9 million, which represented 7.3% of total assets and 8.5% of total deposits and borrowings, compared to $516.3 million as of December 31, 2023, which represented 5.2% of total assets and 6.1% of total deposits and borrowings. As of September 30, 2024, not included in the above liquid assets were securities with a market value of $109.6 million which were pledged to the Federal Home Loan Bank, which support aggregate unutilized borrowing capacity of $102.2 million as of September 30, 2024. As of December 31, 2023, not included in the above liquid assets were securities with a market value of $276.0 million which were pledged to either the Federal Reserve Bank’s Bank Term Funding Program (“BTFP”), or the Federal Home Loan Bank, which supported aggregate unutilized borrowing capacity of $300.5 million as of December 31, 2023.

Previous wording

The Bank is a member of the Federal Home Loan Bank of New York and, based on available qualified collateral as of June 30, 2024, had the ability to borrow $2.8 billion. The Bank also has a credit facility established with the Federal Reserve Bank of New York for direct discount window borrowings based on pledged collateral and had the ability to borrow $1.4 billion as of June 30, 2024. In addition, as of June 30, 2024, the Bank had in place borrowing capacity of $305 million through correspondent banks and other unsecured borrowing lines. As of June 30, 2024, the Bank had aggregate available and unused credit of approximately $3.2 billion, which represents the aforementioned facilities totaling $4.5 billion net of $1.3 billion in outstanding borrowings and letters of credit. As of June 30, 2024, outstanding commitments for the Bank to extend credit were approximately $1.1 billion.

Current wording

The Bank is a member of the Federal Home Loan Bank of New York and, based on available qualified collateral as of September 30, 2024, had the ability to borrow $2.5 billion. The Bank also has a credit facility established with the Federal Reserve Bank of New York for direct discount window borrowings based on pledged collateral and had the ability to borrow $1.6 billion as of September 30, 2024. In addition, as of September 30, 2024, the Bank had in place borrowing capacity of $305 million through correspondent banks and other unsecured borrowing lines. As of September 30, 2024, the Bank had aggregate available and unused credit of approximately $2.9 billion, which represents the aforementioned facilities totaling $4.4 billion net of $1.4 billion in outstanding borrowings and letters of credit. As of September 30, 2024, outstanding commitments for the Bank to extend credit were approximately $1.1 billion.

Previous wording

Cash and cash equivalents totaled $293.5 million as of June 30, 2024, increasing by $50.8 million from $242.7 million as of December 31, 2023. Operating activities provided $42.8 million in net cash. Investing activities provided $169.2 million in net cash, primarily reflecting an increase in loans. Financing activities used $161.2 million in net cash, primarily reflecting $177.4 million in net repayments of FHLB borrowings and partially offset by an increase of $39.9 million in deposits.

Current wording

Cash and cash equivalents totaled $247.2 million as of September 30, 2024, decreasing by $4.5 million from $242.7 million as of December 31, 2023. Operating activities provided $28.5 million in net cash. Investing activities provided $211.7 million in net cash, primarily reflecting a decrease in loans. Financing activities used $235.6 million in net cash, primarily reflecting $191.5 million in net repayments of FHLB borrowings and a $12.0 million decrease in deposits.

Previous wording

Deposits are our primary source of funds. Noninterest bearing demand deposit products include “Totally Free Checking” and “Simply Better Checking” for consumer clients and “Small Business Checking” and “Analysis Checking” for commercial clients. Interest-bearing checking accounts require minimum balances for both consumer and commercial clients and include “Consumer Interest Checking” and “Business Interest Checking”. Money market accounts consist of products that provide a market rate of interest to depositors. Our savings accounts offer paper and/or electronic statements. Time deposits ("TD") are for non-retirement and IRA accounts, generally with initial maturities ranging from 31 days to 60 months, and brokered TDs, which we use for asset liability management purposes and to supplement other sources of funding. Many of our deposit products can be accessed through both our branches and online to provide ease of access to our clients and communities. CDARS/ICS reciprocal deposits are offered based on the Bank’s participation in the IntraFi Network LLC ("the network"). Clients, who are Federal Deposit Insurance Corporation (“FDIC”) insurance sensitive, are able to place large dollar deposits with the Company and the Company utilizes CDARS to place those funds into certificates of deposit issued by other banks in the Network. This occurs in increments of less than the FDIC insurance limits so that both the principal and interest are eligible for FDIC insurance coverage in amounts larger than the insured dollar amount. Unless certain conditions are satisfied, the FDIC considers these funds as brokered deposits. The Bank also utilizes internet listing services deposits which are obtained through the use of websites such as Rateline or QwickRate.

Current wording

Deposits are our primary source of funds. Noninterest bearing demand deposit products include “Totally Free Checking” and “Simply Better Checking” for consumer clients and “Small Business Checking” and “Analysis Checking” for commercial clients. Interest-bearing checking accounts require minimum balances for both consumer and commercial clients and include “Consumer Interest Checking” and “Business Interest Checking”. Money market accounts consist of products that provide a market rate of interest to depositors. Our savings accounts offer paper and/or electronic statements. Time deposits ("TD") are for non-retirement and IRA accounts, generally with initial maturities ranging from 31 days to 60 months, and brokered TDs, which we use for asset liability management purposes and to supplement other sources of funding. Many of our deposit products can be accessed through both our branches and online to provide ease of access to our clients and communities. CDARS/ICS reciprocal deposits are offered based on the Bank’s participation in the IntraFi Network LLC ("the Network"). Clients, who are Federal Deposit Insurance Corporation (“FDIC”) insurance sensitive, are able to place large dollar deposits with the Company and the Company utilizes CDARS to place those funds into certificates of deposit issued by other banks in the Network. This occurs in increments of less than the FDIC insurance limits so that both the principal and interest are eligible for FDIC insurance coverage in amounts larger than the insured dollar amount. Unless certain conditions are satisfied, the FDIC considers these funds as brokered deposits for certain reporting requirements. The Bank also utilizes internet listing services deposits which are obtained through the use of websites such as Rateline or QwickRate.

Previous wording

The decrease in average time deposits of $71.0 million during the second quarter of 2024 was primarily attributed to decreases in CDARs of $124 million, nonreciprocal brokered time deposits of $94 million and internet listing services of $16 million, partially offset by an increase in retail time deposits of $163 million. The Bank continues its utilization of nonreciprocal brokered time deposits to enhance balance sheet liquidity as it remains a favorable alternative to other borrowings.

Current wording

The increase in average time deposits of $19.2 million during the third quarter of 2024 was attributed to increases in retail time deposits of $162.7 million, partially offset by decreases in nonreciprocal brokered time deposits of $70.1 million, CDARs of $63.9 million and internet listing services of $9.5 million. The Bank continues its utilization of nonreciprocal brokered time deposits to enhance balance sheet liquidity as it remains a favorable alternative to other borrowings.

Previous wording

Average demand deposits (including interest-bearing and noninterest-bearing) for the second quarter of 2024 included $1.2 billion in ICS reciprocal deposits, compared to $1.1 billion for the second quarter of 2023. Average time deposits for the second quarter of 2024 included $61 million in CDARS, compared to $184 million for the second quarter of 2023. The decrease in CDARS was attributed to maturities that did not renew.

Current wording

Average demand deposits (including interest-bearing and noninterest-bearing) for both the third quarter of 2024 and the third quarter of 2023 included $1.2 billion in ICS reciprocal deposits. Average time deposits for the third quarter of 2024 included $66.6 million in CDARS, compared to $130.5 million for the third quarter of 2023. The decrease in CDARS was attributed to maturities that did not renew.

Previous wording

Average total deposits increased by $30 million, or 0.4%, during the six months ended June 30, 2024 when compared to the six months ended June 30, 2023. The increase in total average deposits was primarily attributed to increases in savings deposits of $92 million, time deposits of $69 million, and interest-bearing and NOW deposits of $17 million, partially offset by decreases in noninterest-bearing demand deposits of $148 million.

Current wording

Average total deposits increased by $29.2 million, or 0.4%, during the nine months ended September 30, 2024 when compared to the nine months ended September 30, 2023. The increase in total average deposits was primarily attributed to increases in savings deposits of $109.5 million and time deposits of $52.1 million, partially offset by decreases in noninterest-bearing demand deposits of $103.3 million and interest-bearing demand deposits of $29.1 million.

Previous wording

The increase in average time deposits of $69 million during the six months ended June 30, 2024 was primarily attributed to increases in retail time deposits of $101 million and internet listing services of $5 million, partially offset by decreases in CDARs of $35 million and nonreciprocal brokered time deposits of $2 million.

Current wording

The increase in average time deposits of $52.1 million during the nine months ended September 30, 2024 was attributed to increases in retail time deposits of $121.8 million and internet listing services of $0.3 million, partially offset by decreases in CDARs of $44.9 million and nonreciprocal brokered time deposits of $25.2 million.

Previous wording

The decrease in average noninterest-bearing demand deposits was consistent with industry trends reflecting higher levels of interest rates which resulted in migration of noninterest-bearing deposits to interest-bearing transaction deposits.

Current wording

The decrease in year-to-date average noninterest-bearing demand deposits was consistent with industry trends reflecting higher levels of interest rates which resulted in migration of noninterest-bearing deposits to interest-bearing transaction deposits.

Previous wording

Average demand deposits (including interest-bearing and noninterest-bearing) during the six months ended June 30, 2024 included $1.1 billion in ICS reciprocal deposits, compared to $0.7 billion during the six months ended June 30, 2023. Average time deposits during the six months ended June 30, 2024 included $76 million in CDARS, compared to $111 million during the six months ended June 30, 2023. The decrease in CDARS was attributed to maturities that did not renew.

Current wording

Average demand deposits (including interest-bearing and noninterest-bearing) during the nine months ended September 30, 2024 included $1.2 billion in ICS reciprocal deposits, compared to $0.9 billion during the nine months ended September 30, 2023. Average time deposits during the nine months ended September 30, 2024 included $73.0 million in CDARS, compared to $117.8 million during the nine months ended September 30, 2023. The decrease in CDARS was attributed to maturities that did not renew.

Previous wording

Total demand, interest-bearing & NOW deposits as of June 30, 2024 include $1.2 billion in ICS reciprocal deposits, compared to $1.1 billion as of December 31, 2023. Total time deposits as of June 30, 2024 include $61 million in CDARS, compared to $96 million as of December 31, 2023.

Current wording

Total interest-bearing demand deposits as of both September 30, 2024 and December 31, 2023 include $1.1 billion in ICS reciprocal deposits. Total time deposits as of September 30, 2024 include $66.2 million in CDARS, compared to $96.0 million as of December 31, 2023.

Previous wording

Included in time deposits were nonreciprocal brokered deposits of $890 million as of June 30, 2024, which were relatively flat when compared to $917 million as of December 31, 2023.

Current wording

Included in time deposits were nonreciprocal brokered deposits of $824.9 million as of September 30, 2024, which decreased from $915.5 million as of December 31, 2023.

Previous wording

As of June 30, 2024, we held $730 million of time deposits with balances in excess of $250,000. The following table provides information on the maturity distribution of the time deposits with balances in excess of $250,000 as of June 30, 2024:

Current wording

As of September 30, 2024, we held $797.4 million of time deposits balances greater than $250,000. The following table provides information on the maturity distribution of the time deposits with balances greater than $250,000 as of September 30, 2024:

Previous wording

During December 2003, Center Bancorp Statutory Trust II, a statutory business trust and wholly owned subsidiary of the Parent Corporation issued $5.0 million of MMCapS capital securities to investors due on January 23, 2034. The trust loaned the proceeds of this offering to the Company and received in exchange $5.2 million of the Parent Corporation’s subordinated debentures. The subordinated debentures are redeemable in whole or part prior to maturity. Upon the cessation of publication of LIBOR rates and pursuant to the Federal LIBOR Act and Federal Reserve regulations implementing the Act, the MMCapS capital securities converted as of June 30, 2023 to a new index based on CME Term SOFR, as defined in the LIBOR Act, plus a tenor spread adjustment, which is referred to as the Benchmark Replacement. Effective for quarterly interest rate resets after July 3, 2023 the subordinated debentures' floating rate will be three-month CME Term SOFR plus 2.85% plus a tenor spread adjustment of 0.26161%. The rate as of June 30, 2024 was 8.44%.

Current wording

During December 2003, Center Bancorp Statutory Trust II, a statutory business trust and wholly owned subsidiary of the Parent Corporation issued $5.0 million of MMCapS capital securities to investors due on January 23, 2034. The trust loaned the proceeds of this offering to the Parent Corporation and received in exchange $5.2 million of the Parent Corporation’s subordinated debentures. The subordinated debentures are redeemable in whole or part prior to maturity. Upon the cessation of publication of LIBOR rates and pursuant to the Federal LIBOR Act and Federal Reserve regulations implementing the Act, the MMCapS capital securities converted as of June 30, 2023 to a new index based on CME Term SOFR, as defined in the LIBOR Act, plus a tenor spread adjustment, which is referred to as the Benchmark Replacement. Effective for quarterly interest rate resets after July 3, 2023 the subordinated debentures' floating rate will be three-month CME Term SOFR plus 2.85% plus a tenor spread adjustment of 0.26161%. The rate as of September 30, 2024 was 8.37%.

Previous wording

The Company’s stockholders’ equity remained relatively flat at approximately $1.2 billion at both June 30, 2024, and December 31, 2023. Retained earnings increased by $20 million and was offset by increases in treasury stock of $6 million and accumulated other comprehensive losses of $7 million. As of June 30, 2024, the Company’s tangible common equity ratio and tangible book value per share were 9.46% and $23.45, respectively, compared to 9.25% and $23.14, respectively, as of December 31, 2023. Total goodwill and other intangible assets were $213.6 million as of June 30, 2024, and $214.2 million as of December 31, 2023.

Current wording

The Company’s stockholders’ equity remained relatively flat at approximately $1.2 billion at both September 30, 2024, and December 31, 2023. Retained earnings increased by $29 million and was offset by increases in treasury stock of $6 million and accumulated other comprehensive losses of $2 million. As of September 30, 2024, the Company’s tangible common equity ratio and tangible book value per share were 9.71% and $23.85, respectively, compared to 9.25% and $23.14, respectively, as of December 31, 2023. Total goodwill and other intangible assets were $213.3 million as of September 30, 2024, and $214.2 million as of December 31, 2023.

Previous wording

As of June 30, 2024, both the Company and Bank satisfy the capital conservation buffer requirements applicable to them. The lowest ratio at the Company is the Total Risk Based Capital Ratio which was 3.60% above the minimum buffer ratio and, at the Bank, the lowest ratio was the Total Risk Based Capital Ratio which was 3.08% above the minimum buffer ratio.

Current wording

As of September 30, 2024, both the Company and Bank satisfy the capital conservation buffer requirements applicable to them. The lowest ratio at the Company is the Total Risk Based Capital Ratio which was 3.79% above the minimum buffer ratio and, at the Bank, the lowest ratio was the Total Risk Based Capital Ratio which was 3.27% above the minimum buffer ratio.