Northwest Bancshares Inc

Previous wording

• our ability to manage our internal growth and our ability to successfully integrate acquired entities, businesses or branch offices;

Current wording

• our ability to manage our growth internally and our ability to successfully integrate acquired entities, businesses or branch offices;

Previous wording

Total assets at June 30, 2024 were $14.4 billion, a decrease of $34 million from December 31, 2023. This decrease in assets was primarily driven by decreases in personal banking loans receivable and marketable securities, partially offset by increases in cash and cash equivalents and commercial banking loans receivable. A discussion of significant changes follows.

Current wording

Total assets at September 30, 2024 were $14.4 billion, a decrease of $65 million from December 31, 2023. This decrease in assets was primarily driven by decreases in personal banking loans receivable, partially offset by increases in cash and cash equivalents, marketable securities and commercial banking loans receivable. A discussion of significant changes follows.

Previous wording

Total marketable securities decreased to $1.8 billion at June 30, 2024, a decrease of $45 million, or 2%, from December 31, 2023. Available-for-sale securities decreased by $14 million, driven by the securities sale noted above, while held-to-maturity securities decreased $31 million, driven by maturities and regular monthly cash flows.

Current wording

Total marketable securities increased to $1.9 billion at September 30, 2024, an increase of $20 million, or 1%, from December 31, 2023. Available-for-sale securities increased by $69 million, driven by the securities portfolio restructure in the prior quarter, while held-to-maturity securities decreased $48 million, driven by maturities and regular monthly cash flows.

Previous wording

Gross loans receivable decreased by $60 million, or 1%, to $11.4 billion at June 30, 2024. Our personal banking loan portfolio decreased by $197 million, or 3%, to $6.6 billion at June 30, 2024 from $6.8 billion at December 31, 2023. Cash flows from our personal banking portfolio were partially redirected to fund commercial banking growth, which increased by $136 million, or 3%, to $4.8 billion at June 30, 2024, from $4.6 billion at December 31, 2023. This increase represents organic loan growth resulting from the new commercial lending verticals that we implemented during the prior year. Specifically, our commercial and industrial (C&I) loan portfolio increased by $83 million, or 5% compared to December 31, 2023.

Current wording

Gross loans receivable decreased by $110 million, or 1%, to $11.3 billion at September 30, 2024. Our personal banking loan portfolio decreased by $359 million, or 5%, to $6.4 billion at September 30, 2024 from $6.8 billion at December 31, 2023. Cash flows from our personal banking portfolio were partially redirected to fund commercial banking growth, which increased by $248 million, or 5%, to $4.9 billion at September 30, 2024, from $4.6 billion at December 31, 2023. This increase represents organic loan growth resulting from the new commercial lending verticals that we implemented during the prior year. Specifically, our commercial and industrial (C&I) loan portfolio increased by $228 million, or 14% compared to December 31, 2023.

Previous wording

Total deposits increased by $107 million, or 1%, to $12.1 billion at June 30, 2024 from $12.0 billion at December 31, 2023. This increase was driven by a $223 million, or 9%, increase in time deposits as we continued competitively positioning our deposit products, and a $43 million, or 2%, increase in savings deposits. Partially offsetting this increase was a decrease in demand deposit accounts by $156 million, or 3%, as customers shifted balances into higher yielding time deposit accounts.

Current wording

Total deposits increased by $91 million, or 1%, to $12.1 billion at September 30, 2024 from $12.0 billion at December 31, 2023. This increase was driven by a $107 million, or 4%, increase in time deposits as we continued competitively positioning our deposit products, a $42 million, or 2%, increase in interest demand deposit accounts and a $41 million, or 2%, increase in savings deposits. Partially offsetting these increases was a decrease in non-interest bearing deposit accounts by $87 million, or 3%, due to seasonality in customer deposit account balances.

Previous wording

As of June 30, 2024, we had $355 million of brokered deposits, which made up 13% of our time deposits and 3% of our total deposit balance at quarter end. The balance carried an average all-in cost of 5.37% and an average original term of 12 months. These deposits were purchased through a registered broker, as part of an Asset/Liability Committee (“ALCO”) strategy to increase and diversify funding sources.

Current wording

As of September 30, 2024, we had $212 million of brokered deposits, which made up 8% of our time deposits and 2% of our total deposit balance at quarter end. The balance carried an average all-in cost of 5.37% and an average original term of 12 months. These deposits were purchased through a registered broker, as part of an Asset/Liability Committee (“ALCO”) strategy to increase and diversify funding sources.

Previous wording

In addition, at quarter end we had$537 million of deposits through our participation in the Intrafi Network Deposits and FIS Insured Deposit programs. These deposits are part of a reciprocal program that allows our depositors to receive expanded FDIC coverage by placing multiple interest-bearing demand accounts at other member banks and Northwest receives an equal amount of deposits from other member banks. The balance carried an average cost of 3.92%.

Current wording

In addition, at quarter end we had$697 million of deposits through our participation in the Intrafi Network Deposits and FIS Insured Deposit programs. These deposits are part of a reciprocal program that allows our depositors to receive expanded FDIC coverage by placing multiple interest-bearing demand accounts at other member banks and Northwest receives an equal amount of deposits from other member banks. The balance carried an average cost of 3.91%.

Previous wording

Our largest uninsured depositor, excluding intercompany and collateralized deposit accounts, had an aggregate uninsured deposit balance of $19.4 million, or 0.16% of total deposits, as of June 30, 2024. Our top ten largest uninsured depositors, excluding intercompany and collateralized deposit accounts, had an aggregate uninsured deposit balance of $102 million, or 0.84% of total deposits, as of June 30, 2024. The average uninsured deposit account balance, excluding intercompany and collateralized accounts, was $289,000 as of June 30, 2024.

Current wording

Our largest uninsured depositor, excluding intercompany and collateralized deposit accounts, had an aggregate uninsured deposit balance of $19.6 million, or 0.16% of total deposits, as of September 30, 2024. Our top ten largest uninsured depositors, excluding intercompany and collateralized deposit accounts, had an aggregate uninsured deposit balance of $103 million, or 0.85% of total deposits, as of September 30, 2024. The average uninsured deposit account balance, excluding intercompany and collateralized accounts, was $285,000 as of September 30, 2024.

Previous wording

Total shareholders’ equity remained stable at $1.6 billion, or $12.23 per share, at June 30, 2024 compared to $12.20 per share at December 31, 2023, increasing by $5 million in the current quarter. This increase was the result of year-to-date earnings of $34 million as well as a change in accumulated other comprehensive loss of $19 million, or 13%, primarily due to an increase in realized losses on our available-for-sale investment portfolio as a result of the investment sales made during the period, partially offset by $51 million of cash dividend payments for the quarter ended June 30, 2024.

Current wording

Total shareholders’ equity remained stable at $1.6 billion, or $12.49 per share, at September 30, 2024 compared to $12.20 per share at December 31, 2023, increasing by $40 million in the current year. This increase was the result of year-to-date earnings of $68 million as well as an improvement in accumulated other comprehensive loss of $43 million, or 29%, primarily due to an increase in realized losses on our available-for-sale investment portfolio as a result of the investment sales made during the period, partially offset by $76 million of cash dividend payments for the nine months ended September 30, 2024.

Previous wording

We are required to maintain a sufficient level of liquid assets, as determined by management and reviewed for adequacy by the FDIC and the Pennsylvania Department of Banking and Securities during their regular examinations. Northwest frequently monitors its liquidity position primarily using the ratio of unencumbered available-for-sale liquid assets as a percentage of deposits and borrowings (“liquidity ratio”). Northwest Bank’s liquidity ratio at June 30, 2024 was 10.43%. We adjust liquidity levels in order to meet funding needs for deposit outflows, payment of real estate taxes and insurance on mortgage loan escrow accounts, repayment of borrowings and loan commitments. At June 30, 2024, Northwest had $3.4 billion of additional borrowing capacity available with the FHLB, including $250 million on an overnight line of credit, which had no balance as of June 30, 2024, as well as $404 million of borrowing capacity available with the Federal Reserve Bank and $105 million with two correspondent banks.

Current wording

We are required to maintain a sufficient level of liquid assets, as determined by management and reviewed for adequacy by the FDIC and the Pennsylvania Department of Banking and Securities during their regular examinations. Northwest frequently monitors its liquidity position primarily using the ratio of unencumbered available-for-sale liquid assets as a percentage of deposits and borrowings (“liquidity ratio”). Northwest Bank’s liquidity ratio at September 30, 2024 was 11.25%. We adjust liquidity levels in order to meet funding needs for deposit outflows, payment of real estate taxes and insurance on mortgage loan escrow accounts, repayment of borrowings and loan commitments. At September 30, 2024, Northwest had $3.3 billion of additional borrowing capacity available with the FHLB, including $250 million on an overnight line of credit, which had no balance as of September 30, 2024, as well as $500 million of borrowing capacity available with the Federal Reserve Bank and $105 million with two correspondent banks.

Previous wording

We paid $25 million in cash dividends during the quarters ended June 30, 2024 and 2023. The common stock dividend payout ratio (dividends declared per share divided by net income per diluted share) for June 30, 2024 and 2023 was 500.0% and 76.9% on dividends of $0.20 per share. On July 18, 2024, the Board of Directors declared a cash dividend of $0.20 per share payable on August 14, 2024 to shareholders of record as of August 2, 2024. This represents the 119 th consecutive quarter we have paid a cash dividend.

Current wording

We paid $25 million in cash dividends during the quarters ended September 30, 2024 and 2023. The common stock dividend payout ratio (dividends declared per share divided by net income per diluted share) for September 30, 2024 and 2023 was 76.9% and 64.5% on dividends of $0.20 per share. On October 17, 2024, the Board of Directors declared a cash dividend of $0.20 per share payable on November 18, 2024 to shareholders of record as of November 8, 2024. This represents the 120 th consecutive quarter we have paid a cash dividend.

Previous wording

We utilize a structured methodology each period when analyzing the adequacy of the allowance for credit losses and the related provision for credit losses, which the ACL Committee assesses regularly for appropriateness. As part of the analysis as of June 30, 2024, we considered the most recent economic conditions and forecasts available which incorporated the impact of material recent economic events. In addition, we considered the overall trends in asset quality, reserves on individually assessed loans, historical loss rates and collateral valuations. The ACL decreased by $0.2 million to $125 million, or 1.10% of total loans at June 30, 2024. The overall coverage ratio remains consistent from December 31, 2023.

Current wording

We utilize a structured methodology each period when analyzing the adequacy of the allowance for credit losses and the related provision for credit losses, which the ACL Committee assesses regularly for appropriateness. As part of the analysis as of September 30, 2024, we considered the most recent economic conditions and forecasts available which incorporated the impact of material recent economic events. In addition, we considered the overall trends in asset quality, reserves on individually assessed loans, historical loss rates and collateral valuations. The ACL increased by $0.6 million to $126 million, or 1.11% of total loans at September 30, 2024, up slightly from 1.10% at December 31, 2023.

Previous wording

We also consider how the levels of nonaccrual loans and historical charge-offs have influenced the required amount of allowance for credit losses. Nonaccrual loans of $102 million at June 30, 2024 increased by $8 million, or 8%, from $94 million at December 31, 2023, or 0.90% of total loans receivable as of June 30, 2024 and 0.83% of total loans receivable as of December 31, 2023. As a percentage of average loans, annualized net charge-offs remained low at 0.12% for the six months ended June 30, 2024 compared to 0.11% for the year ended December 31, 2023.

Current wording

We also consider how the levels of nonaccrual loans and historical charge-offs have influenced the required amount of allowance for credit losses. Nonaccrual loans of $77 million at September 30, 2024 decreased by $18 million, or 19%, from $94 million at December 31, 2023, or 0.68% of total loans receivable as of September 30, 2024 and 0.83% of total loans receivable as of December 31, 2023. As a percentage of average loans, annualized net charge-offs remained low at 0.14% for the nine months ended September 30, 2024 compared to 0.11% for the year ended December 31, 2023.

Previous wording

Net income for the quarter ended June 30, 2024 was $5 million, or $0.04 per diluted share, a decrease of $28 million, or 86%, from net income of $33 million, or $0.26 per diluted share, for the quarter ended June 30, 2023. This decrease in net income resulted primarily from a $39 million, or 130%, decrease in noninterest income resulting from the investment sale made as part of the previously announced securities portfolio restructure. Additionally contributing to the decrease in net income was a decrease in net interest income of $2 million, or 2%, and an increase in noninterest expense of $7 million, or 8%, offset by a $9 million, or 89%, decrease in income tax expense. Net income for the quarter ended June 30, 2024 represents annualized returns on average equity and average assets of 1.24% and 0.13%, respectively, compared to 8.72% and 0.93% for the same quarter last year. A further discussion of notable changes follows.

Current wording

Net income for the quarter ended September 30, 2024 was $34 million, or $0.26 per diluted share, a decrease of $6 million, or 14%, from net income of $39 million, or $0.31 per diluted share, for the quarter ended September 30, 2023. This decrease in net income resulted primarily from a $4 million increase in the provision for credit losses, a $3 million, or 10%, decrease in noninterest income and an increase in noninterest expense of $3 million, or 4%, partially offset by an increase in net interest income of $3 million, or 3%, and a $2 million, or 14%, decrease in income tax expense. Net income for the quarter ended September 30, 2024 represents annualized returns on average equity and average assets of 8.50% and 0.93%, respectively, compared to 10.27% and 1.08% for the same quarter last year.

Previous wording

To make it easier to compare both the results across several periods and the yields on various types of earning assets (some taxable, some not), we present net interest income in the discussion below on a fully taxable equivalent “FTE basis” (i.e., as if all income were taxable and at the same rate). For example, $100 of tax-exempt income would be presented as $126, an amount that, if taxed at the statutory federal income tax rate of 21%, would yield $100. See the "Average Balance Sheet" for information regarding tax-equivalent adjustments and GAAP results.

Current wording

To make it easier to compare both the results across several periods and the yields on various types of earning assets (some taxable, some not), we present net interest income in the discussion below on a fully taxable equivalent “FTE basis” (i.e., as if all income were taxable and at the same rate). For example, $100 of tax-exempt income would be presented as $126, an amount that, if taxed at the statutory federal income tax rate of 21%, would yield $100. See the "GAAP to Non-GAAP Reconciliations" for information regarding tax-equivalent adjustments and GAAP results.

Previous wording

Net interest income (FTE) was $108 million for the quarter ended June 30, 2024 and net interest margin was 3.20%. Compared to the same quarter of the prior year, net interest income (FTE) decreased $2 million and net interest margin decreased by eight basis points. The decrease in net interest income (FTE) and the net interest margin were driven by an increase in interest expense resulting from higher interest-bearing deposit costs and a shift in funding mix to higher cost deposits due to the higher interest rate environment. Partly offsetting the increase in interest expense was an increase in interest income resulting from higher earning asset balances and yields.

Current wording

Net interest income for the third quarter of 2024 was $111 million which increased $3 million, or 3%, from the third quarter of 2023. Net interest income (FTE) was $112 million for the quarter ended September 30, 2024 and net interest margin (FTE) was 3.33%. Compared to the same quarter of the prior year, net interest income (FTE) increased $3 million and net interest margin (FTE) increased by ten basis points. The increase in net interest income (FTE) and net interest margin (FTE) was driven by an increase in interest income resulting from higher earning asset yields. Partly offsetting this increase was an increase in interest-bearing deposit costs and a shift in funding mix to higher cost deposits due to the higher interest rate environment.

Previous wording

For the six months ended June 30, 2024, net interest income (FTE) was $212 million, a decrease of $11 million, or 5% from the same period last year. Net interest margin decreased by 22 basis points. Similar to the quarterly fluctuations noted above, the decrease in net interest income (FTE) included increases in both interest expense and interest income driven by higher interest-bearing deposit costs and balances, partially offset by higher interest-earning asset yields and balances.

Current wording

For the nine months ended September 30, 2024, net interest income was $321 million which decreased $8 million, or 2%, from the nine months ended September 30, 2023. For the nine months ended September 30, 2024, net interest income (FTE) was $324 million, a decrease of $8 million, or 2% from the same period last year. Net interest margin (FTE) decreased by 11 basis points. Similar to the quarterly fluctuations noted above, the decrease in net interest income (FTE) included increases in both interest income and interest expense driven by higher interest-bearing deposit costs and balances, partially offset by higher interest-earning asset yields and balances.

Previous wording

Average loans receivable increased $303 million, or 3%, from the quarter ended June 30, 2023 driven by commercial loans, which grew by $444 million, as we have continued to build-out our commercial lending verticals, and commercial real estate loans, which grew by $187 million. These increases were offset partially by a $328 million decrease in personal banking loans. Interest income on loans receivable increased by $21 million, or 16%, from the same quarter in the prior year, and by $47 million, or 18%, from the same six-month period in the prior year, the result of increases in both the average yield and the average balance on loans receivable. The average yield on loans receivable increased due to the elevated market interest rates as well as a change in mix to higher yield loan products.

Current wording

Average loans receivable increased $33 million, or 0.3%, from the quarter ended September 30, 2023 and $263 million, or 2.4% for the nine months ended September 30, 2023. This increase was driven by commercial loans, which grew by $372 million from the quarter ended September 30, 2023 and $456 million from the nine months ended September 30, 2023, as we have continued to build-out our commercial lending verticals, and commercial real estate loans, which grew by $84 million and $148 million from the same periods. These increases were offset partially by a $423 million decrease in personal banking loans from the quarter ended September 30, 2023 and $341 million from the nine months ended September 30, 2023. Interest income on loans receivable increased by $16 million, or 11%, from the same quarter in the prior year, and by $63 million, or 16%, from the same nine-month period in the prior year, the result of increases in both the average yield and the average balance on loans receivable. The average yield on loans receivable increased due to the elevated market interest rates as well as a change in mix to higher yield loan products.

Previous wording

Average investments declined 10% from the second quarter of 2023 driven by the sale of investment securities during the current period coupled with regular principal payments and maturities. Interest income on investment securities increased by $1 million, or 8%, from the quarter ended June 30, 2023, and remained relatively flat from the six months ended June 30, 2023 decreasing by 0.4% . The increase in the quarterly results is due to the increase in the average yield on investments to 2.13% for the quarter ended June 30, 2024, while the decrease in the year to date results is due to the decrease in the average balance of investments.

Current wording

Average investments declined 6% from the third quarter of 2023 and 9% from the nine months ended September 30, 2023 driven by the sale of investment securities during the third quarter of 2024 coupled with regular principal payments and maturities. Interest income on investment securities increased by $3 million, or 31%, from the quarter ended September 30, 2023, and increased by $3 million, 9.7%, for the nine months ended September 30, 2023. The increase is due to the increase in the average yield on investments (FTE) to 2.48% for the quarter ended September 30, 2024 and 2.14% for the nine months ended September 30, 2024 which was partially offset by a decline in the average balance of investments for both periods.

Previous wording

Average deposits grew 6% from the quarter ended June 30, 2023 driven by a $1.1 billion increase in our average time deposits due to customer preferences for this fixed maturity product type. This increase was partially offset by a $264 million decrease in money market balances as customers shifted balances into higher yielding time deposit accounts. Interest expense on deposits increased by

Current wording

Average deposits grew 3% from the quarter ended September 30, 2023 and 4% from the nine months ended September 30, 2023 driven by an increase in our average time deposits due to customer preferences for this fixed maturity product type which grew by $666 million from the quarter ended September 30, 2023 and by $1.1 billion from the nine months ended September 30, 2023. This increase was partially offset by a $146 million decrease in money market balances from the quarter ended September 30, 2023 and $284 million from the nine months ended September 30, 2023 as customers shifted balances into higher yielding time deposit accounts. Interest expense on deposits increased by $23 million, or 71%, from the quarter ended September 30, 2023, and by $90 million, or 139% from the nine months ended September 30, 2023, primarily attributable to increases in both the average yield and average balance of deposit accounts as we continued competitively positioning our deposit products.

Previous wording

Compared to the quarter ended June 30, 2023, average borrowings saw a 61% reduction, primarily attributable to the strategic pay-down of wholesale borrowings. This decrease was made possible by a substantial increase in cash reserves, resulting from the sale of investment securities noted above, as well as a notable rise in the average balance of deposits. The decrease in the average balance of borrowings resulted in a decrease in interest expense on borrowings by $6 million from the quarter ended June 30, 2023, and by $8 million from the six months ended June 30, 2023.

Current wording

Compared to the quarter ended September 30, 2023, average borrowings saw a 66% reduction, and compared to the nine months ended September 30, 2023 average borrowings decreased 54% primarily attributable to the strategic pay-down of wholesale borrowings. This decrease was made possible by a substantial increase in cash reserves, resulting from the sale of investment securities during the prior quarter, as well as a notable rise in the average balance of deposits. The decrease in the average balance of borrowings resulted in a decrease in interest expense on borrowings by $6 million from the quarter ended September 30, 2023, and by $14 million from the nine months ended September 30, 2023.

Previous wording

(d)Interest income on tax-free investment securities and tax-free loans are presented on a FTE basis.

Current wording

(d)Interest income on tax-free investment securities and tax-free loans are presented on a FTE basis. We believe this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and non-taxable amounts.

Previous wording

(g)Average cost of deposits were 1.76% and 0.77%, respectively, average cost of interest-bearing deposits were 2.24% and 1.02%, respectively .

Current wording

(g)Average cost of deposits were 1.78% and 1.07%, respectively, average cost of interest-bearing deposits were 2.27% and 1.40%, respectively .

Previous wording

The following table represents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected interest income and interest expense during the periods indicated. Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior rate), (ii) changes attributable to changes in rate (changes in rate multiplied by prior volume), and (iii) net change. Changes that cannot be attributed to either rate or volume have been allocated to both rate and volume.

Current wording

The following table represents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected interest income (FTE) and interest expense during the periods indicated. Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior rate), (ii) changes attributable to changes in rate (changes in rate multiplied by prior volume), and (iii) net change. Changes that cannot be attributed to either rate or volume have been allocated to both rate and volume.

Previous wording

(d)Interest income on tax-free investment securities and tax-free loans are presented on a fully taxable equivalent (“FTE”) basis.

Current wording

(d)Interest income on tax-free investment securities and tax-free loans are presented on a fully taxable equivalent (“FTE”) basis. We believe this measure to be the preferred industry measurement of net interest income and provides relevant comparison between taxable and non-taxable amounts.

Previous wording

(g)Average cost of deposits were 1.69% and 0.58%, respectively and average cost of Interest-bearing deposits were 2.15% and 0.78%, respectively.

Current wording

(g)Average cost of deposits were 1.72% and 0.75%, respectively and average cost of Interest-bearing deposits were 2.19% and 1%, respectively.

Previous wording

The following table represents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected interest income and interest expense during the periods indicated. Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior rate), (ii) changes attributable to changes in rate (changes in rate multiplied by prior volume), and (iii) net change. Changes that cannot be attributed to either rate or volume have been allocated to both rate and volume.

Current wording

The following table represents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected interest income (FTE) and interest expense during the periods indicated. Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior rate), (ii) changes attributable to changes in rate (changes in rate multiplied by prior volume), and (iii) net change. Changes that cannot be attributed to either rate or volume have been allocated to both rate and volume.

Previous wording

Compared to the six months ended June 30, 2023, the provision for credit losses decreased$11 million, or 78%. This decrease included a$4 million decrease in the provision for credit losses - loans, as well as a $6 million decrease in the provision for credit losses - unfunded commitments.

Current wording

Compared to the nine months ended September 30, 2023, the provision for credit losses decreased$7 million, or 47%. This decrease included a$3 million decrease in the provision for credit losses - loans, as well as a $4 million decrease in the provision for credit losses - unfunded commitments.

Previous wording

The decreases in the provision for credit losses - loans noted above were driven by changes in the economic forecasts reflected in our allowance for credit loss models, and the decreases in the provision for credit losses - unfunded commitments were related to the timing of origination and funding of commercial construction loans and lines of credit.

Current wording

The changes in the provision noted above is driven bygrowth within our commercial lending portfolio and changes in the economic forecasts coupled with a decline in our reserves for unfunded commitments in the current period. This decline is based on the timing of origination and funding of commercial construction loans and lines of credit.

Previous wording

Noninterest income from the quarter ended June 30, 2024 showed a loss of $9 million, which was inclusive of a $39 million loss on sale of investment securities; excluding the loss on sale of securities net income grew by $1 million, or 3%, from the quarter ended June 30, 2023 and $5 million, or 9%, from the six months ended June 30, 2023. The increase from the six months ended June 30, 2023 was driven by service charges and fees and the gain on sale of SBA loans. Service charges and fees increased $3 million, or 11%, to $31 million for the six months ended June 30, 2024 from $28 million for the six months ended June 30, 2023 driven by commercial loan fees and deposit related fees based on customer activity in the current year. Additionally, the gain on the sale of SBA loans increased $1 million, or 110%, to $2 million for the six months ended June 30, 2024 from $1 million for the six months ended June 30, 2023 due to increased activity in the current year.

Current wording

Noninterest income for the quarter ended September 30, 2024 was $28 million, a decrease of $3 million, or 10%, from the quarter ended September 30, 2023, which was driven by a $3 million decline in income from bank-owned life insuranceas a result of death benefits received in the prior period. Compared to the nine months ended September 30, 2023, excluding the loss on sale of securities of $39 million, noninterest income increased $2 million, or 2%, in the nine months ended September 30, 2024. The increase from the nine months ended September 30, 2023 was driven by service charges and fees and the gain on sale of SBA loans. Service charges and fees increased $4 million, or 9%, to $47 million for the nine months ended September 30, 2024 driven by commercial loan fees and deposit related fees based on customer activity inthe nine months ended September 30, 2024. Additionally, the gain on the sale of SBA loans increased $2 million, or 112%, to $3 million for the nine months ended September 30, 2024 due to increased loan sale activityin the nine months ended September 30, 2024. Partially offsetting these increases was a decrease in income from bank owned life insurance of $3 million, or 40%, to$4 million due todeath benefits received in the prior period.

Previous wording

Noninterest expense increased by $7 million, or 8%, from the quarter ended June 30, 2023. This increase was primarily attributable to an increase in compensation and employee benefits expense of$6 million, or 12%, to $54 million for the quarter ended June 30, 2024, from $48 million for the quarter ended June 30, 2023 driven primarily by the build out of the commercial business and related credit, risk management, and internal audit support functions over the past year.

Current wording

Noninterest expense increased by $3 million, or 4%, from the quarter ended September 30, 2023. This increase was primarily attributable to an increase in compensation and employee benefits expense of$5 million, or 10%, to $56 million for the quarter ended September 30, 2024, from $51 million for the quarter ended September 30, 2023 driven primarily by the build out of the commercial business and related credit, risk management, and internal audit support functions over the past year coupled with an increase in contracted employees utilized during the quarter and an increase in employee benefits expense.

Previous wording

Noninterest expense increased $9 million, or 5%, to $182 million for the six months ended June 30, 2024 from $173 million for the six months ended June 30, 2023. This increase was primarily attributable to an increase in compensation and employee benefits expense of$11 million, or 11%, to $105 million for the six months ended June 30, 2024, from $94 million for the six months ended June 30, 2023 for the same reasons noted above related to the build-out of staffing over the past year. Partially offsetting this increase was a decrease in non-personnel expense related to a decline in merger, asset disposition and restructuring expense and marketing expenses. Merger, asset disposition and restructuring expense decreased $2 million, or 35%, to $3 million for the six months ended June 30, 2024, from $4 million for the six months ended June 30, 2023 due to the severance and fixed asset charges related to the branch optimization and personnel reductions during the prior year. Marketing expenses decreased by $1 million, or 21%, to $5 million for the six months ended June 30, 2024, from $6 million for the six months ended June 30, 2023 due primarily to the timing of deposit marketing campaigns.

Current wording

Noninterest expense increased $12 million, or 5%, to $273 million for the nine months ended September 30, 2024 from $261 million for the nine months ended September 30, 2023. This increase was primarily attributable to an increase in compensation and employee benefits expense of$16 million, or 11%, for the nine months ended September 30, 2023 for the same reasons noted above. Partially offsetting this increase was a decrease in non-personnel expense related to a decline in merger, asset disposition and restructuring expense and marketing expenses. Marketing expenses decreased by $2 million, or 19%, for the nine months ended September 30, 2024, due primarily to the timing of deposit marketing campaigns. Merger, asset disposition and restructuring expense decreased $1 million, or 34%, due to the severance and fixed asset charges related to the branch optimization and personnel reductions during the prior year.

Previous wording

The provision for income taxes decreased by$9 million from the quarter ended June 30, 2023 and$11 million from the six months ended June 30, 2023 primarily due to lower income before income taxes.

Current wording

The provision for income taxes decreased by$2 million from the quarter ended September 30, 2023 and$13 million from the nine months ended September 30, 2023 primarily due to lower income before income taxes.