Origin Bancorp Inc

Previous wording

•Total loans held for investment (“LHFI”) were $7.90 billion at March 31, 2024, reflecting an increase of $239.1 million, or 3.1%, compared to December 31, 2023. LHFI, excluding mortgage warehouse lines of credit, were $7.50 billion at March 31, 2024, reflecting an increase of $168.1 million, or 2.3%, compared to December 31, 2023.

Current wording

•Total loans held for investment (“LHFI”) were $7.96 billion at June 30, 2024, reflecting an increase of $298.2 million, or 3.9%, compared to December 31, 2023. LHFI, excluding mortgage warehouse lines of credit, were $7.45 billion at June 30, 2024, reflecting an increase of $121.7 million, or 1.7%, compared to December 31, 2023.

Previous wording

•Total deposits were $8.51 billion at March 31, 2024, reflecting an increase of $254.3 million, or 3.1%, compared to December 31, 2023. Deposits, excluding brokered deposits, were $7.91 billion reflecting an increase of $102.2 million, or 1.3%, compared to December 31, 2023.

Current wording

•Total deposits were $8.51 billion at June 30, 2024, reflecting an increase of $259.7 million, or 3.1%, compared to December 31, 2023. Deposits, excluding brokered deposits, were $7.87 billion reflecting an increase of $67.9 million, or 0.9%, compared to December 31, 2023.

Previous wording

•Book value per common share was $34.79 at March 31, 2024, reflecting an increase of $0.49, or 1.4%, compared to December 31, 2023.

Current wording

•Book value per common share was $35.23 at June 30, 2024, reflecting an increase of $0.93, or 2.7%, compared to December 31, 2023.

Previous wording

•At March 31, 2024, and December 31, 2023, Company level common equity Tier 1 capital to risk-weighted assets was 11.97%, and 11.83%, respectively, the Tier 1 leverage ratio was 10.66% and 10.50%, respectively, and the total capital ratio was 14.98% and 15.02%, respectively.

Current wording

•At June 30, 2024, and December 31, 2023, Company level common equity Tier 1 capital to risk-weighted assets was 12.15%, and 11.83%, respectively, the Tier 1 leverage ratio was 10.70% and 10.50%, respectively, and the total capital ratio was 15.16% and 15.02%, respectively.

Previous wording

Our net income decreased $1.7 million, or 6.9%, to $22.6 million for the three months ended March 31, 2024, from $24.3 million for the three months ended March 31, 2023. On a diluted EPS basis, we reported $0.73 per share for the three months ended March 31, 2024, compared to $0.79 per share for the three months ended March 31, 2023.

Current wording

Our net income decreased $771,000, or 3.5%, to $21.0 million for the three months ended June 30, 2024, from $21.8 million for the three months ended June 30, 2023. On a diluted EPS basis, we reported $0.67 per share for the three months ended June 30, 2024, compared to $0.70 per share for the three months ended June 30, 2023. For the six months ended June 30, 2024, we reported $1.40 diluted EPS per share compared to $1.49 for the six months ended June 30, 2023.

Previous wording

Net interest income for the three months ended March 31, 2024, was $73.3 million, a decrease of $3.8 million, or 5.0%, compared to the three months ended March 31, 2023. The decrease was primarily due to an increase in our total interest expense of $22.4 million, while total interest income increased by $18.6 million during the three months ended March 31, 2024, compared to three months ended March 31, 2023. Interest expense on interest-bearing deposits increased by $28.3 million, with $22.4 million of the increase driven by higher interest rates during the three months ended March 31, 2024, compared to the three months ended March 31, 2023. Interest income from LHFI increased by $20.8 million during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, with $12.2 million of the increase attributed to higher yields and $8.6 million due to higher average LHFI balances. Additionally, lower average FHLB advances and other borrowings during the three months ended March 31, 2024, compared to the three months ended March 31, 2023, led to a decrease of $5.4 million in interest expense as a result of a strategic decision to sell available for sale securities to pay down borrowings and fund loan growth during the intervening period.

Current wording

Interest expense on interest-bearing deposits increased by $18.9 million, with $14.7 million of the increase driven by higher interest rates during the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase in interest expense was partially offset by a decrease of $7.4 million due to lower average FHLB advances and other borrowings during the three months ended June 30, 2024, compared to the three months ended June 30, 2023, as a result of a strategic decision to sell available for sale securities to pay down borrowings and fund loan growth during the intervening periods.

Previous wording

The Federal Reserve Board sets various benchmark rates, including the Federal Funds rate, and thereby influences the general market rates of interest, including the loan and deposit rates offered by financial institutions. The Federal Funds target rate range has increased 525 basis points since the first rate increase in March 2022, with the most recent and current target rate range being set on July 26, 2023, at 5.25% to 5.50%. In March 2024, the Federal Reserve left the current fed funds rate unchanged at a 23-year high for a fifth consecutive meeting, in line with market expectations. As we navigate through stabilizing rate conditions, our strategic focus continues to align with offering attractive returns to our depositors while closely monitoring economic indicators and Federal Funds rate projections for informed decision-making.

Current wording

The Federal Reserve Board sets various benchmark rates, including the federal funds rate, and thereby influences the general market rates of interest, including the loan and deposit rates offered by financial institutions. The federal funds target rate range was last changed on July 26, 2023, to 5.25% to 5.50%. In July 2024, the Federal Reserve left the current fed funds rate unchanged at a 23-year high for the eighth consecutive meeting. As we navigate through stabilizing rate conditions, our strategic focus continues to align with offering attractive returns to our depositors while closely monitoring economic indicators and federal funds rate projections for informed decision-making.

Previous wording

The net interest margin-fully tax equivalent (“NIM-FTE”) was 3.19% for the three months ended March 31, 2024, a 25 basis point decrease from 3.44% for the three months ended March 31, 2023. There was no impact to the NIM-FTE as a result of purchase accounting accretion income due to the BT Holdings, Inc. (“BTH”) merger for the three months ended March 31, 2024, compared to eight basis points for the three months ended March 31, 2023. The primary driver of this margin compression was an 111 basis point increase in the rate paid on interest-bearing liabilities to 3.88% from 2.77% over the same period, compared to just a 68 basis point increase in the yield earned on interest-earning assets to 5.99% from 5.31%. Notably, on a five quarter historical sequential basis we have seen the rate of NIM-FTE compression stabilize recently with a current quarter margin change of flat; the quarter ending December 31, 2023, up five basis points; the quarter ending September 30, 2023, down two basis points; the quarter ending June 30, 2023, down 28 basis points; and the quarter ending March 31, 2023, down 37 basis points.

Current wording

The NIM-FTE was 3.17% for the three months ended June 30, 2024, a one basis point increase from 3.16% for the three months ended June 30, 2023. There was no impact to the NIM-FTE as a result of purchase accounting accretion income due to the BT Holdings, Inc. (“BTH”) merger for the three months ended June 30, 2024, compared to two basis points for the three months ended June 30, 2023. The primary driver of this margin compression was a 68 basis point increase in the rate paid on interest-bearing liabilities to 3.98% from 3.30% over the same period, compared to just a 54 basis point increase in the yield earned on interest-earning assets to 6.04% from 5.50%. However, as discussed above, had we not experienced the reversal of the $1.2 million of accrued interest during the current quarter, our NIM-FTE would have been 3.22%, reflecting a six basis point increase compared to the three months ended June 30, 2023.

Previous wording

Net charge-offs increased to $2.6 million for the three months ended March 31, 2024, from $1.3 million for the three months ended March 31, 2023, primarily due to increases of $860,000 and $443,000 in net charge-offs on commercial and industrial loans and commercial real estate loans, respectively. The allowance for loan credit losses (“ALCL”) to nonperforming LHFI was 243.27% at March 31, 2024, compared to 538.75% at March 31, 2023, primarily driven by an increase of $23.4 million in our nonperforming LHFI compared to March 31, 2023. The increase in nonperforming loans for the comparative periods was driven by increases of $15.8 million and $5.9 million in nonperforming commercial and industrial loans and residential real estate loans, respectively. Net charge-offs to total average LHFI (annualized) increased to 0.13% for the three months ended March 31, 2024, from 0.07% for the three months ended March 31, 2023.

Current wording

Net charge-offs increased to $2.9 million for the three months ended June 30, 2024, from $1.9 million for the three months ended June 30, 2023, primarily due to an increase of $1.3 million in net charge-offs on commercial and industrial loans. The allowance for loan credit losses (“ALCL”) to nonperforming LHFI was 133.05% at June 30, 2024, compared to 280.74% at June 30, 2023, primarily driven by an increase of $42.2 million in our nonperforming LHFI compared to June 30, 2023, with $33.0 million of the increase primarily driven by five loan relationships, related to or impacted by, the questioned loan activity described above. Net charge-offs to total average LHFI (annualized) increased to 0.15% for the three months ended June 30, 2024, from 0.10% for the three months ended June 30, 2023.

Previous wording

For the three months ended March 31, 2024, we recognized income tax expense of $6.2 million, compared to $6.3 million for the three months ended March 31, 2023. The effective tax rate for the three months ended March 31, 2024, was 21.6%, compared to 20.5% for the three months ended March 31, 2023. The increase was primarily due to higher state income taxes as a result of higher state income during the three months ended March 31, 2024, and, additionally, the proportion of our assets that provide a tax benefit relative to our total assets has decreased, diminishing their impact on reducing our overall tax rate.

Current wording

For the three months ended June 30, 2024, we recognized income tax expense of $5.7 million, compared to $6.0 million for the three months ended June 30, 2023. The effective tax rate for both the three months ended June 30, 2024 and the three months ended June 30, 2023 was 21.5%.

Previous wording

Interest income earned on LHFI during the three months ended March 31, 2024, increased in substantially all loan categories when compared to the three months ended March 31, 2023. Interest income earned on real estate loans, commercial and industrial loans and mortgage warehouse lines of credit contributed $14.3 million, $3.8 million and $2.8 million, respectively, of the $20.8 million total increase in interest income earned on LHFI when compared to the three months ended March 31, 2023. Increases in interest rates drove $7.9 million, $2.8 million and $1.5 million of the increase in interest income earned on real estate loans, commercial and industrial loans and mortgage warehouse lines of credit, and increases in average loan balances drove $6.4 million of the increase in interest income earned on real estate loans for the comparable periods.

Current wording

Interest income earned on LHFI during the six months ended June 30, 2024, increased in substantially all loan categories when compared to the six months ended June 30, 2023. Interest income earned on real estate loans, commercial and industrial loans and mortgage warehouse lines of credit contributed $24.3 million, $6.5 million and $4.5 million, respectively, of the $35.2 million total increase in interest income earned on LHFI when compared to the six months ended June 30, 2023. Increases in interest rates and average balances drove $13.1 million and $11.2 million, respectively, of the total increase in interest income earned on real estate loans and increases in interest rates drove $4.2 million and $2.5 million of the increase in interest income earned on commercial and industrial loans and mortgage warehouse lines of credit for the comparable periods, respectively.

Previous wording

Total provision expense decreased by $3.2 million, to $3.0 million for the three months ended March 31, 2024, from $6.2 million for the three months ended March 31, 2023, with $2.1 million of the decrease attributed to a reduction in provision expense for loan credit losses and $1.1 million due to a combined reduction in the provisions for off-balance sheet items and held to maturity securities. The decline in the provision expense for loan credit losses for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, was primarily due to a $4.4 million decrease in the provision for loans collectively evaluated, partially offset by an increase of $1.3 million in the provision due to higher net charge-offs and an increase of $1.0 million in the provision for loans individually evaluated.

Current wording

We recorded a provision expense of $8.2 million for the six months ended June 30, 2024, a $2.3 million decrease from $10.5 million for the six months ended June 30, 2023. The decrease was primarily due to decreases of $1.3 million and $897,000 in provision for off-balance sheet items and provision for loan credit losses, respectively. The decrease in the provision for off-balance sheet items was mainly due to lower funding commitment balances at June 30, 2024, compared to June 30, 2023. The decrease in provision for loan credit losses was primarily due to a $4.8 million decrease in provision for loans collectively evaluated, partially offset by an increase of $2.3 million in the provision due to higher net charge-offs and an increase of $1.6 million in the provision for loans individually evaluated.

Previous wording

Insurance commission and fee income. The $714,000 increase in insurance commission and fee income was mainly due to increases in new commercial accounts combined with higher contingency income earned due to lower claims for catastrophic events experienced by our insurance agency counterparties during the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

Current wording

Insurance commission and fee income. The $1.2 million increase in insurance commission and fee income was mainly due to increases in both direct bill commission and contingency income. The increase in direct bill commission was mainly driven by higher commissions from property and casualty insurance. The increase in contingency income was mainly due to new commercial accounts combined with lower claims for catastrophic events experienced by our insurance agency counterparties during the six months ended June 30, 2024, compared to the six months ended June 30, 2023.

Previous wording

Mortgage banking revenue. The $617,000 increase in mortgage banking revenue during the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to a $410,000 gain on sale of MSR recorded during the current period. During December 2023 and January 2024, we solicited non-binding indications of interest with respect to the proposed sale of substantially all of our MSR asset. We subsequently sold our MSR asset and recorded a gain on the sale.

Current wording

Mortgage banking revenue. The $1.1 million increase in mortgage banking revenue compared to the six months ended June 30, 2023, was primarily due to changes in the mix of our mortgage banking revenue due to the sale of substantially all our MSR assets, combined with the $410,000 gain on sale of MSR, during the six months ended June 30, 2024.

Previous wording

Salaries and employee benefits. The $2.1 million increase in salaries and employee benefits expenses was primarily driven by increases of $1.4 million and $656,000 in salary and stock incentive compensation expenses, respectively. The increase in salary expense was mainly attributed to raises given as a result of our annual salary reviews in March 2023, combined with an increase of 26 in the full-time equivalent employees to 1,048 at March 31, 2024, from 1,022 at March 31, 2023. The increase in stock incentive compensation expense was primarily attributed to an update in performance assumptions during the current quarter.

Current wording

Salaries and employee benefits. The $5.7 million increase in salaries and employee benefits expenses was primarily driven by increases of $3.8 million and $1.2 million, and $576,000 in salary, stock incentive compensation, and medical self-insurance expenses, respectively. The increase in salary expense was mainly attributed to raises given as a result of our annual salary reviews in March 2024 and March 2023, combined with an increase of 36 full-time equivalent employees to 1,053 at June 30, 2024, from 1,017 at June 30, 2023. The increase in stock incentive compensation expense was primarily attributed to an update in performance assumptions and new awards granted during the six months ended June 30, 2024.

Previous wording

Total assets increased by $169.8 million, or 1.7%, to $9.89 billion at March 31, 2024, from $9.72 billion at December 31, 2023. The increase in total assets is primarily due to an increase of $239.1 million, or 3.1%, in our loans held for investment (“LHFI”). LHFI was $7.90 billion at March 31, 2024, compared to $7.66 billion at December 31, 2023. Also contributing to the increase was an $11.1 million increase, or 3.9%, in cash and cash equivalents. These increases were partially offset by decreases of $62.7 million and $15.6 million in available for sale securities and mortgage servicing rights, respectively. Available for sale securities and mortgage servicing rights were $1.19 billion and zero at March 31, 2024, respectively, compared to $1.25 billion and $15.6 million at December 31, 2023, respectively.

Current wording

Total assets increased by $224.6 million, or 2.3%, to $9.95 billion at June 30, 2024, from $9.72 billion at December 31, 2023. The increase in total assets is primarily due to an increase of $298.2 million, or 3.9%, in our loans held for investment (“LHFI”). LHFI were $7.96 billion at June 30, 2024, compared to $7.66 billion at December 31, 2023. Also contributing to the increase was a $23.3 million increase, or 12.6%, in accrued interest receivable and other assets reflecting a balance of $208.6 million at June 30, 2024, compared to $185.3 million at December 31, 2023. These increases were partially offset by decreases of $93.6 million and $15.6 million in available for sale securities and mortgage servicing rights, respectively. Available for sale securities and mortgage servicing rights were $1.16 billion and zero at June 30, 2024, respectively, compared to $1.25 billion and $15.6 million at December 31, 2023, respectively.

Previous wording

Total deposits increased by $254.3 million, or 3.1%, to $8.51 billion at March 31, 2024, from $8.25 billion at December 31, 2023, primarily due to increases of $152.1 million, $114.6 million and $62.8 million in brokered time deposits, money market deposits and time deposits, respectively. This was partially offset by decreases in Federal Home Loan Bank advances, repurchase obligations and other borrowings of $70.4 million, or 84.3%, to $13.2 million at March 31, 2024, from $83.6 million at December 31, 2023.

Current wording

Total deposits increased by $259.7 million, or 3.1%, to $8.51 billion at June 30, 2024, from $8.25 billion at December 31, 2023, primarily due to increases of $191.8 million and $114.6 million in brokered deposits and money market deposits, respectively. These increases were partially offset by a decrease of $67.2 million in interest-bearing demand deposits. The increase in total deposits was partially offset by decreases in Federal Home Loan Bank advances, repurchase obligations and other borrowings of $42.9 million, or 51.3%, to $40.7 million at June 30, 2024, from $83.6 million at December 31, 2023.

Previous wording

Our loan portfolio is our largest category of interest-earning assets, and interest income earned on our loan portfolio is our primary source of income. At March 31, 2024, 77.8% of the loan portfolio held for investment was comprised of commercial and industrial loans, including mortgage warehouse lines of credit, commercial real estate and construction/land/land development loans, which were primarily originated within our legacy market areas of Texas, North Louisiana, and Mississippi, compared to 77.1% at December 31, 2023.

Current wording

Our loan portfolio is our largest category of interest-earning assets, and interest income earned on our loan portfolio is our primary source of income. At June 30, 2024, 76.8% of the loan portfolio held for investment was comprised of commercial and industrial loans, including mortgage warehouse lines of credit, commercial real estate and construction/land/land development loans, which were primarily originated within our legacy market areas of Texas, North Louisiana, and Mississippi, compared to 77.1% at December 31, 2023.

Previous wording

(1)Includes owner-occupied CRE of $948.6 million and $953.8 million at March 31, 2024, and 2023 respectively.

Current wording

(1)Includes owner-occupied CRE of $959.9 million and $953.8 million at June 30, 2024 and December 31, 2023, respectively.

Previous wording

At March 31, 2024, total LHFI were $7.90 billion, an increase of $239.1 million, or 3.1%, compared to $7.66 billion at December 31, 2023. The increase was primarily driven by loan growth of $98.4 million, $94.7 million and $71.0 million in construction/land/land development, commercial and industrial loans and mortgage warehouse lines of credit loans, respectively. Total LHFI at March 31, 2024, excluding mortgage warehouse lines of credit, were $7.50 billion, reflecting an increase of $168.1 million, or 2.3%, compared to December 31, 2023. Our lending focus continues to be on operating companies, including commercial loans and lines of credit, as well as owner-occupied commercial real estate loans.

Current wording

At June 30, 2024, total LHFI were $7.96 billion, an increase of $298.2 million, or 3.9%, compared to $7.66 billion at December 31, 2023. The increase was primarily driven by loan growth of $176.5 million, $84.3 million and $80.3 million in mortgage warehouse lines of credit loans, residential real estate, and CRE, respectively. Total LHFI at June 30, 2024, excluding mortgage warehouse lines of credit, were $7.45 billion, reflecting an increase of $121.7 million, or 1.7%, compared to December 31, 2023.

Previous wording

A significant portion, 30.6%, of our LHFI portfolio at March 31, 2024, consisted of CRE loans secured by real estate properties. Such loans can involve high principal loan amounts, and the repayment of these loans is dependent, in large part, on a borrower’s ongoing business operations or on income generated from the properties that are leased to third parties.

Current wording

A significant portion, 31.6%, of our LHFI portfolio at June 30, 2024, consisted of CRE loans secured by real estate properties. Such loans can involve high principal loan amounts, and the repayment of these loans is dependent, in large part, on a borrower’s ongoing business operations or on income generated from the properties that are leased to third parties.

Previous wording

Purchased loans that have experienced more than insignificant credit deterioration since origination are purchased credit deteriorated (“PCD”) loans. The Company evaluates acquired loans for deterioration in credit quality based on any of, but not limited to, the following: (1) nonaccrual status; (2) borrowers are experiencing financial difficulty which results in modification to the loan terms; (3) risk ratings of special mention, substandard or doubtful; (4) watchlist credits; and (5) delinquency status, including loans that are current on merger/acquisition date, but had previously been 60 days delinquent twice. An allowance for credit losses is determined using the same methodology as other individually evaluated loans. Subsequent changes to the allowance for credit losses are recorded through the provision for credit losses. We held approximately $32.1 million of unpaid principal balance PCD loans at March 31, 2024, and $34.8 million of unpaid principal balance PCD loans at December 31, 2023.

Current wording

Purchased loans that have experienced more than insignificant credit deterioration since origination are purchased credit deteriorated (“PCD”) loans. The Company evaluates acquired loans for deterioration in credit quality based on any of, but not limited to, the following: (1) nonaccrual status; (2) borrowers are experiencing financial difficulty which results in modification to the loan terms; (3) risk ratings of special mention, substandard or doubtful; (4) watchlist credits; and (5) delinquency status, including loans that are current on merger/acquisition date, but had previously been 60 days delinquent twice. An allowance for credit losses is determined using the same methodology as other individually evaluated loans. Subsequent changes to the allowance for credit losses are recorded through the provision for credit losses. We held approximately $28.1 million of unpaid principal balance PCD loans at June 30, 2024, and $34.8 million of unpaid principal balance PCD loans at December 31, 2023.

Previous wording

Nonperforming LHFI increased $10.3 million at March 31, 2024, compared to December 31, 2023, and nonperforming LHFI to LHFI increased to 0.51% compared to 0.39%. The $10.3 million increase in non-performing loans was primarily driven by 12 loan relationships being placed on non-accrual during the current period, seven contributing to the $4.7 million increase in commercial and industrial loans, and five contributing to the $3.7 million increase in commercial real estate loans. Please see Note 4 — Loans to our consolidated financial statements contained in Part I, Item 1 of this report for more information on nonperforming loans.

Current wording

Nonperforming LHFI increased $45.7 million at June 30, 2024, compared to December 31, 2023, and nonperforming LHFI to LHFI increased to 0.95% compared to 0.39%. The $45.7 million increase in non-performing loans was primarily driven by $33.0 million, or five loan relationships, related to the questioned loan activity mentioned above. Please see Note 4 — Loans to our consolidated financial statements contained in Part I, Item 1 of this report for more information on nonperforming loans.

Previous wording

The ALCL to nonperforming LHFI decreased to 243.3% at March 31, 2024, compared to 321.7% at December 31, 2023, primarily driven by an increase of $10.3 million in the Company’s nonperforming LHFI as explained in the preceding Nonperforming Assets section, offset by an increase of $1.5 million in the ALCL during the three months ended March 31, 2024, primarily due to a $1.0 million increase in the individually evaluated portion of the reserve when compared to December 31, 2023.

Current wording

The ALCL to nonperforming LHFI decreased to 133.05% at June 30, 2024, compared to 321.66% at December 31, 2023, primarily driven by an increase of $45.7 million in the Company’s nonperforming LHFI as explained in the preceding Nonperforming Assets section, offset by an increase of $4.0 million in the ALCL during the six months ended June 30, 2024.

Previous wording

Our securities portfolio totaled $1.21 billion at March 31, 2024, representing a decrease of $62.7 million, or 4.9%, from $1.27 billion at December 31, 2023. The decrease was primarily due to sales, maturities and calls, as well as normal principal paydowns during the three months ended March 31, 2024. Securities totaling $21.3 million were sold during the first quarter of 2024, and we realized a net loss of $403,000 on the sale.

Current wording

Our securities portfolio totaled $1.18 billion at June 30, 2024, representing a decrease of $93.9 million, or 7.4%, from $1.27 billion at December 31, 2023. The decrease was primarily due to sales, maturities and calls, as well as normal principal paydowns during the six months ended June 30, 2024.

Previous wording

Our available for sale portfolio totaled $1.19 billion at March 31, 2024, and represented 98.5% of our total security portfolio and is comprised of 48.7% mortgage-backed, 23.3% municipal, 5.2% treasury/agency, 14.1% collateralized mortgage obligations and 8.7% corporate/asset-backed securities. Our available for sale portfolio totaled $1.25 billion at December 31, 2023, and represented 98.6% of our total security portfolio and is comprised of 47.8% mortgage-backed, 22.5% municipal, 6.4% treasury/agency, 13.2% collateralized mortgage obligations and 10.1% corporate/asset-backed securities.

Current wording

Our available for sale portfolio totaled $1.16 billion at June 30, 2024, and represented 98.5% of our total security portfolio and is comprised of 48.4% mortgage-backed, 23.6% municipal, 14.4% collateralized mortgage obligations, 9.8% corporate/asset-backed securities and 3.8% treasury/agency. Our available for sale portfolio totaled $1.25 billion at December 31, 2023, and represented 98.6% of our total security portfolio and is comprised of 47.8% mortgage-backed, 22.5% municipal, 13.2% collateralized mortgage obligations, 10.1% corporate/asset-backed securities and 6.4% treasury/agency.

Previous wording

The securities portfolio had a weighted average effective duration of 4.34 years at March 31, 2024, compared to 4.28 years at December 31, 2023. For additional information regarding our securities portfolio, please see Note 3 — Securities in the condensed notes to our consolidated financial statements contained in Part I, Item 1 of this report.

Current wording

The securities portfolio had a weighted average effective duration of 4.28 years at June 30, 2024 and December 31, 2023. For additional information regarding our securities portfolio, please see Note 3 — Securities in the condensed notes to our consolidated financial statements contained in Part I, Item 1 of this report.

Previous wording

Total deposits increased at March 31, 2024, compared to December 31, 2023, primarily due to increases of $152.1 million, $114.6 million and $62.8 million in brokered time deposits, money market deposits and time deposits, respectively. Typically, higher interest rates and sustained inflation will cause customers to move liquid asset balances into higher interest-earning vehicles such as money market funds.

Current wording

Total deposits increased at June 30, 2024, compared to December 31, 2023, primarily due to increases of $191.8 million, $114.6 million and $54.7 million in brokered time deposits, money market deposits and time deposits, respectively, and partially offset by decreases of $53.0 million and $67.2 million in noninterest-bearing demand and interest-bearing demand, respectively. Typically, higher interest rates and sustained inflation will cause customers to move liquid asset balances into higher interest-earning vehicles such as money market funds.

Previous wording

Our average deposit balance was $8.44 billion for the three months ended March 31, 2024, an increase of $422.1 million, or 5.3%, from $8.02 billion for the three months ended March 31, 2023. The average annualized rate paid on our interest-bearing deposits for the three months ended March 31, 2024, was 3.85%, compared to 2.49% for the three months ended March 31, 2023.

Current wording

Our average deposit balance was $8.50 billion for the six months ended June 30, 2024, an increase of $360.1 million, or 4.4%, from $8.14 billion for the six months ended June 30, 2023. The average annualized rate paid on our interest-bearing deposits for the six months ended June 30, 2024, was 3.90%, compared to 2.78% for the six months ended June 30, 2023.

Previous wording

Average noninterest-bearing deposits during the three months ended March 31, 2024, were $1.87 billion, compared to $2.39 billion at March 31, 2023, a decrease of $525.7 million, or 22.0%, and represented 22.1% and 29.8% of average total deposits for the three months ended March 31, 2024 and 2023, respectively. Noninterest-bearing deposits are impacted by the higher interest rate environment, as customers move out of noninterest-bearing deposit balances into higher interest-earning investments.

Current wording

Average noninterest-bearing deposits during the six months ended June 30, 2024, were $1.88 billion, compared to $2.27 billion at June 30, 2023, a decrease of $385.1 million, or 17.0%, and represented 22.1% and 27.8% of average total deposits for the six months ended June 30, 2024 and 2023, respectively. Noninterest-bearing deposits are impacted by the higher interest rate environment, as customers have been moving out of noninterest-bearing deposit balances into higher interest-earning investments, however, this trend has been slowing as rates begin to stabilize.

Previous wording

At December 31, 2023, the Company had $34.7 million in subordinated promissory notes that were assumed in the merger with BTH (“BTH Notes”) with origination dates ranging from June 2015 to June 2021. After the five-year anniversary of issuance, the Company can redeem the BTH Notes in part or in full at the Company’s discretion and, if applicable, subject to receipt of any required regulatory approvals. Primarily due to the declining Tier 2 capital contribution of the BTH Notes, the Company elected to redeem all but $1.1 million of the BTH Notes during the three months ended March 31, 2024.

Current wording

At December 31, 2023, the Company had $34.7 million in subordinated promissory notes that were assumed in the merger with BTH (“BTH Notes”) with origination dates ranging from June 2015 to June 2021. After the five-year anniversary of issuance, the Company had the right to redeem the BTH Notes in part or in full at the Company’s discretion and, if applicable, subject to receipt of any required regulatory approvals. Primarily due to the declining Tier 2 capital contribution of the BTH Notes, the Company elected to redeem all but $1.1 million of the BTH Notes during the six months ended June 30, 2024.

Previous wording

At March 31, 2024 and December 31, 2023, we were eligible to borrow an additional $2.09 billion and $2.01 billion, respectively, from the FHLB.

Current wording

At June 30, 2024 and December 31, 2023, we were eligible to borrow an additional $2.06 billion and $2.01 billion, respectively, from the FHLB.

Previous wording

Additionally, at March 31, 2024, we had the ability to borrow $1.49 billion from the discount window at the Federal Reserve Bank of Dallas (“FRB”), with $1.72 billion in commercial and industrial loans pledged as collateral. There were no borrowings against this line at March 31, 2024, or December 31, 2023.

Current wording

Additionally, at June 30, 2024, we had the ability to borrow $1.37 billion from the discount window at the Federal Reserve Bank of Dallas (“FRB”), with $1.61 billion in commercial and industrial loans pledged as collateral. There were no borrowings against this line at June 30, 2024, or December 31, 2023.