Pioneer Bancorp IncMD
For the period ended Mar 31, 2024. Filed May 13, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2024 · Filed May 13, 2024
PBFS$18.35+0.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-12-31; filed 2024-02-13.
0001558370-24-001058
Item 2. - Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-03-31; filed 2024-05-13.
0001558370-24-007956
Item 2. - Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 127 previous paragraphs and 131 current paragraphs.
64 unchanged; 56 reworded; 5 added; 5 removed; 2 previous and 6 current paragraphs rearranged.
Tables are not compared: 49 previous and 48 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (5)
Current report
Charter Conversion
Current report
On April 1, 2024, the Bank completed its conversion to a national bank following approval of the conversion by the Office of the Comptroller of the Currency (the “OCC”), the regulator of national banks. Following the completion of the conversion, the Bank will operate under the name “Pioneer Bank, National Association” and be subject to the supervision, regulation and examination by the OCC. The Bank will continue to operate in the same mutual holding company structure as it did prior to the conversion, with the Company and Pioneer Bancorp, MHC as the Bank’s parent bank holding companies.
Current report
Interest income on interest-earning deposits with banks and other increased $537,000 to $2.0 million for the three months ended March 31, 2024 from $1.5 million for the three months ended March 31, 2023. Interest income on interest-earning deposits with banks and other increased due to a $18.2 million increase in average balances on interest-earning deposits with banks and other to $148.5 million for the three months ended March 31, 2024 from $130.3 million for the three months ended March 31, 2023 primarily due to a net increase in deposits, as well as a 88 basis points increase in the average yield on interest-earning deposits with banks and other to 5.62% for the three months ended March 31, 2024 from 4.74% for the three months ended March 31, 2023 primarily due to an increase in yields on interest-earning deposits with banks due to rising market interest rates.
Current report
on new loans and securities. Average interest-earning assets decreased by $41.6 million from $1.79 billion for the nine months ended March 31, 2023 to $1.75 billion for the nine months ended March 31, 2024 due to decreases in the average balances of securities and interest-earning deposits and other.
Current report
Total substandard loans decreased $47.4 million to $21.8 million at March 31, 2024 from $69.2 million at June 30, 2023 primarily due to the upgrades of several commercial real estate loan relationships out of the substandard category and payoffs/paydowns on several commercial real estate loan relationships. The upgrades were primarily related to the upgrade to the special mention category of two commercial real estate loan relationships, a $16.5 million loan secured by a hotel and a $4.9 million loan secured by a senior housing facility, as well as the upgrade to the pass category of two commercial real estate loan relationships, a $5.0 million loan relationship secured by a hotel/banquet facility, and a $3.1 million loan secured by a senior housing facility. The payoffs/paydowns were primarily related to the partial payoff/refinance and upgrade of a $8.1 million commercial real estate loan relationship, the payoff of a $1.8 million commercial real estate loan and $4.3 million in paydowns on a commercial real estate loan relationship secured by various multi-family properties.
Removed paragraphs (5)
Previous report
Proposed Charter Conversion
Previous report
On December 29, 2023, the Bank filed an application with the Office of the Comptroller of the Currency (the “OCC”) to convert from a New York chartered stock savings bank to a national bank (the “Application”). If the Application is approved, the Bank will no longer be a New York savings bank subject to the regulation and examination of the New York State Department of Financial Services (“NYSDFS”) and will become a national bank subject to the regulation and examination of the OCC. In addition, the FDIC would no longer be the Bank’s federal prudential regulator but would continue to be the insurer of its deposits in accordance with federal law. We cannot provide assurance as to whether the Application will be approved or the timing of any approval.
Previous report
and other liabilities of $1.5 million to $27.5 million for the three months ended December 31, 2023 from $26.0 million for the three months ended December 31, 2022.
Previous report
Interest income on interest-earning deposits with banks and other decreased $1.5 million to $2.2 million for the six months ended December 31, 2023 from $3.7 million for the six months ended December 31, 2022. Interest income on interest-earning deposits with banks and other decreased due to a $179.1 million decrease in average balances on interest-earning deposits with banks and other to $80.1 million for the six months ended December 31, 2023 from $259.2 million for the six months ended December 31, 2022 primarily due to the funding of loans, offset in part by a 272 basis points increase in the average yield on interest-earning deposits with banks and other to 5.57% for the six months ended December 31, 2023 from 2.85% for the six months ended December 31, 2022 primarily as a result of the increase in the Federal Funds target rate during calendar year 2022 and continuing in the first half of calendar year 2023.
Previous report
Total substandard loans decreased $33.1 million to $36.1 million at December 31, 2023 from $69.2 million at June 30, 2023 primarily due to the migration from substandard to special mention of three commercial real estate loan relationships totaling $16.7 million, $4.9 million and $3.1 million secured by a hotel and two separate senior housing facilities, respectively. The decrease was also due to the migration from substandard to pass of one commercial real estate loan relationship totaling $5.0 million and secured by a hotel/banquet facilities and one commercial and industrial loan relationship totaling $1.8 million and secured by business assets. These decreases were partially offset by one commercial real estate loan relationship totaling $3.3 million that migrated from special mention to substandard, secured by a theater.
Reworded paragraphs (56)
Previous wording
Insurance premiums include expense related to various insurance policies, excluding federal deposit insurance premiums.
Current wording
Insurance premiums include expenses related to various insurance policies, excluding federal deposit insurance premiums.
Previous wording
On December 28, 2023, the Company completed a balance sheet repositioning, by selling $74.5 million of lower-yielding available-for-sale securities with an average book yield of approximately 0.83% and weighted average remaining life of 2.2 years, recognizing a pre-tax loss on the sale of $5.6 million. Proceeds from the sale have been redeployed into interest-earning deposits with banks with an estimated average book yield of 5.40% and ultimately the Company intends to reinvest the proceeds into securities available for sale and loans yielding current market rates during the upcoming quarter. We estimate that the repositioning transaction will improve the Company’s interest income by approximately $3.4 million over the next twelve months and is designed to provide the Company with greater flexibility in managing balance sheet growth. The transaction had a neutral impact on shareholders’ equity and book value per share as of the date of the sale, as unrealized losses on securities available for sale are already accounted for as a deduction to shareholders’ equity. This transaction is expected to have a favorable impact on the Company’s net income, net interest margin, return on average assets, and return on average equity beginning in the quarter ending March 31, 2024.
Current wording
On December 28, 2023, the Company completed a balance sheet repositioning, by selling $74.5 million of lower-yielding available for sale securities with an average book yield of approximately 0.83% and weighted average remaining life of 2.2 years, recognizing a pre-tax loss on the sale of $5.6 million. Proceeds from the sale were initially redeployed into interest-earning deposits with banks with an average book yield of 5.40% and ultimately the Company reinvested the proceeds into loans and securities available for sale yielding current market rates during the quarter ended March 31, 2024. The transaction had a neutral impact on shareholders’ equity and book value per share as of the date of the sale, as unrealized losses on securities available for sale are already accounted for as a deduction to shareholders’ equity. Beginning in the quarter ended March 31, 2024, this transaction began to have a favorable impact on the Company’s net income, net interest margin, return on average assets, and return on average equity.
Previous wording
On July 13, 2023, the Company, through its subsidiary, Pioneer Financial Services, Inc., completed the acquisition of certain assets of Hudson Financial LLC, a company engaged in the wealth management services business in the Hudson Valley Region of New York. The Company paid an aggregate of $2.0 million in cash and recorded $1.5
Current wording
On July 13, 2023, the Company, through its subsidiary, Pioneer Financial Services, Inc., completed the acquisition of certain assets of Hudson Financial LLC, a company engaged in the wealth management services business in the Hudson Valley Region of New York. The Company paid an aggregate of $2.0 million in cash and recorded $1.5 million in contingent consideration payable to acquire the assets and recorded a $1.4 million customer list intangible asset and goodwill in the amount of $2.1 million in conjunction with the acquisition. The effects of the acquired assets
Previous wording
million in contingent consideration payable to acquire the assets and recorded a $1.4 million customer list intangible asset and goodwill in the amount of $2.1 million in conjunction with the acquisition. The effects of the acquired assets have been included in the consolidated financial statements since the acquisition date. This acquisition was made to expand the Company’s wealth management services activities.
Current wording
have been included in the consolidated financial statements since the acquisition date. This acquisition was made to expand the Company’s wealth management services activities.
Previous wording
For additional details regarding legal, other proceedings and related matters see “Item 1 Consolidated Financial Statements – Note 9 – Commitments and Contingent Liabilities – Legal Proceedings and Other Contingent Liabilities.”
Current wording
While the Bank has been reimbursed in the past by its insurer for certain legal fees and expenses associated with this matter, the Bank does not expect to recognize any such insurance recoveries in the future, as the applicable policy limits and deductibles have been exceeded. For additional details regarding legal, other proceedings and related matters see “Item 1 – Consolidated Financial Statements – Note 9 – Commitments and Contingent Liabilities – Legal Proceedings and Other Contingent Liabilities.”
Previous wording
Allowance for Credit Losses. The allowance for credit losses consists of the allowance for credit losses on loans, securities held to maturity and unfunded commitments. Effective July 1, 2023, the measurement of Current Expensed Credit Losses (“CECL”) on financial instruments requires an estimate of the credit losses expected over the life of an exposure (or pool of exposures). The estimate of expected credit losses under the CECL approach is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. Historical loss experience is generally the starting point for estimating expected credit losses. The Company then considers whether the historical loss experience should be adjusted for asset-specific risk characteristics or current conditions at the reporting date that did not exist over the period from which historical experience was used. Finally, the Company considers forecasts about future economic conditions that are reasonable and supportable. On a case-by-case basis, the Company may conclude that a loan should be evaluated on an individual basis based on its disparate risk characteristics. When the Company determines that a loan no longer shares similar risk characteristics with other loans in the portfolio, the allowance will be determined on an individual basis using the present value of expected cash flows or, for collateral-dependent loans, the estimated fair value of the collateral, as applicable. The allowance for credit losses on loans and securities held to maturity, as reported in our consolidated statements of condition, are adjusted by a provision for credit losses, which is recognized in earnings, and reduced by the charge-offs, net of recoveries. The allowance for credit losses on unfunded commitments represents the expected credit losses on off-balance sheet commitments such as unfunded commitments to extend credit and standby letters of credit. However, a liability is not recognized for commitments unconditionally cancellable by the Company. The allowance for credit losses on unfunded commitments is determined by estimating future draws and applying the expected loss rates on those draws and is included in other
Current wording
Allowance for Credit Losses. The allowance for credit losses consists of the allowance for credit losses on loans, securities held to maturity and unfunded commitments. Effective July 1, 2023, the measurement of Current Expected Credit Losses (“CECL”) on financial instruments requires an estimate of the credit losses expected over the life of an exposure (or pool of exposures). The estimate of expected credit losses under the CECL approach is based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. Historical loss experience is generally the starting point for estimating expected credit losses. The Company then considers whether the historical loss experience should be adjusted for asset-specific risk characteristics or current conditions at the reporting date that did not exist over the period from which historical experience was used. Finally, the Company considers forecasts about future economic conditions that are reasonable and supportable. On a case-by-case basis, the Company may conclude that a loan should be evaluated on an individual basis based on its disparate risk characteristics. When the Company determines that a loan no longer shares similar risk characteristics with other loans in the portfolio, the allowance will be determined on an individual basis using the present value of expected cash flows or, for collateral-dependent loans, the estimated fair value of the collateral, as applicable. The allowance for credit losses on loans and securities held to maturity, as reported in our consolidated statements of condition, are adjusted by a provision for credit losses, which is recognized in earnings, and reduced by the charge-offs, net of recoveries. The allowance for credit losses on unfunded commitments represents the expected credit losses on off-balance sheet commitments such as unfunded commitments to extend credit and standby letters of credit. However, a liability is not recognized for commitments unconditionally cancellable by the Company. The allowance for credit losses on unfunded commitments is
Previous wording
liabilities on the Company’s consolidated statements of condition. All loan information presented as of June 30, 2023 or a prior date is presented in accordance with previously applicable GAAP (the incurred loss method).
Current wording
determined by estimating future draws and applying the expected loss rates on those draws and is included in other liabilities on the Company’s consolidated statements of condition. All loan information presented as of June 30, 2023 or a prior date is presented in accordance with previously applicable GAAP (the incurred loss method).
Previous wording
Fair Value Measurements. The fair value of a financial instrument is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the particular asset or liability in an orderly transaction between market participants on the measurement date. We estimate the fair value of a financial instrument and any related asset impairment using a variety of valuation methods. Where financial instruments are actively traded and have quoted market prices, quoted market prices as of the measurement date are used for fair value. When the financial instruments are not actively traded, other observable market inputs, such as quoted prices of securities with similar characteristics, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data, may be used, if available, to determine fair value. When observable market prices
Current wording
Fair Value Measurements. The fair value of a financial instrument is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the particular asset or liability in an orderly transaction between market participants on the measurement date. We estimate the fair value of a financial instrument and any related asset impairment using a variety of valuation methods. Where financial instruments are actively traded and have quoted market prices, quoted market prices as of the measurement date are used for fair value. When the financial instruments are not actively traded, other observable market inputs, such as quoted prices of securities with similar characteristics, quoted prices in markets that are not active or other inputs that are observable or can be
Previous wording
do not exist, we estimate fair value. These estimates are subjective in nature and imprecision in estimating these factors can impact the amount of revenue or loss recorded.
Current wording
corroborated by observable market data, may be used, if available, to determine fair value. When observable market prices do not exist, we estimate fair value. These estimates are subjective in nature and imprecision in estimating these factors can impact the amount of revenue or loss recorded.
Previous wording
Total Assets. Total assets of $1.85 billion at December 31, 2023 decreased $3.3 million, or 0.2%, from $1.86 billion at June 30, 2023. The decrease was due primarily to a decrease of $111.3 million, or 25.8% in securities available for sale and a decrease of $10.9 million, or 7.2%, in cash and cash equivalents, largely offset in by an increase of $119.6 million, or 10.5%, in net loans receivable as we shifted the composition of interest-earning assets from securities available for sale to net loans receivable.
Current wording
Total Assets. Total assets of $1.98 billion at March 31, 2024 increased $125.6 million, or 6.8%, from $1.86 billion at June 30, 2023. The increase was due primarily to an increase of $168.0 million, or 14.7%, in net loans receivable, and an increase of $96.1 million, or 63.8% in cash and cash equivalents, offset in part by a decrease of $134.8 million, or 31.2% in securities available for sale.
Previous wording
Cash and Cash Equivalents. Total cash and cash equivalents of $139.6 million at December 31, 2023, decreased $10.9 million, or 7.2%, from $150.5 million at June 30, 2023. This decrease was primarily a result of a net decrease in deposits of $19.8 million coupled with an increase in net loans receivable of $119.6 million, offset in part by a decrease in securities available for sale of $111.3 million during the six months ended December 31, 2023.
Current wording
Cash and Cash Equivalents. Total cash and cash equivalents of $246.5 million at March 31, 2024, increased $96.1 million, or 63.8%, from $150.5 million at June 30, 2023. This increase was primarily a result of a net increase in deposits of $106.2 million, a decrease in securities available for sale of $134.8 million, offset by an increase in net loans receivable of $168.0 million, and during the nine months ended March 31, 2024.
Previous wording
Securities Available for Sale. Total securities available for sale of $320.4 million at December 31, 2023 decreased $111.3 million, or 25.8%, from $431.7 million at June 30, 2023. The decrease was primarily due to sales of $74.5 million and maturities of $71.8 million, offset in part by purchases of U.S. Government and agency obligations and municipal obligations of $26.6 million and a decrease in net unrealized losses of $13.2 million (including a $5.6 million decrease related to losses realized from the sale of securities available for sale described in “Recent Developments”) during the six months ended December 31, 2023.
Current wording
Securities Available for Sale. Total securities available for sale of $296.9 million at March 31, 2024 decreased $134.8 million, or 31.2%, from $431.7 million at June 30, 2023. The decrease was primarily due to sales of $74.5 million and maturities of $100.0 million, offset in part by purchases of U.S. Government and agency obligations and municipal obligations of $30.3 million and a decrease in net unrealized losses of $13.6 million (including a $5.6 million decrease related to losses realized from the sale of securities available for sale described in “Recent Developments”) during the nine months ended March 31, 2024.
Previous wording
Net Loans Receivable. Net loans receivable of $1.26 billion at December 31, 2023 increased $119.6 million, or 10.5%, from $1.14 billion at June 30, 2023. By loan category, residential mortgage loans increased by $105.3 million, or 22.7%, to $568.5 million at December 31, 2023 from $463.2 million at June 30, 2023, commercial construction loans increased by $13.9 million, or 15.0%, to $106.6 million at December 31, 2023 from $92.7 million at June 30, 2023, home equity loans and lines of credit increased by $6.9 million, or 8.1%, to $92.4 million at December 31, 2023 from $85.5 million at June 30, 2023. These increases were partially offset by a decrease in commercial and industrial loans of $5.6 million, or 5.8%, to $91.7 million at December 31, 2023 from $97.3 million at June 30, 2023 and a decrease in consumer
Current wording
Net Loans Receivable. Net loans receivable of $1.31 billion at March 31, 2024 increased $168.0 million, or 14.7%, from $1.14 billion at June 30, 2023. By loan category, residential mortgage loans increased by $143.2 million, or 30.9%, to $606.4 million at March 31, 2024 from $463.2 million at June 30, 2023, commercial construction loans increased by $14.7 million, or 15.9%, to $107.4 million at March 31, 2024 from $92.7 million at June 30, 2023, commercial real estate loans increased by $4.0 million, or 1.0%, to $415.2 million at March 31, 2024 from $411.2 million at June 30, 2023, and home equity loans and lines of credit increased by $7.3 million, or 8.6%, to $92.8 million at March 31, 2024 from $85.5 million at June 30, 2023. These increases were partially offset by a decrease in consumer loans of $2.1 million, or 12.7%, to $14.7 million at March 31, 2024 from $16.8 million at June 30, 2023. Commercial and industrial loans were unchanged at $97.3 million at March 31, 2024 and June 30, 2023.
Previous wording
The increase in residential mortgage loans was primarily related to the Bank’s asset allocation shift, using investment securities cash flow and cash to fund higher yielding assets. The Bank’s relationship with a third-party mortgage banking company facilitated a significant increase in residential mortgage loan volume, despite the rising interest rate environment. The increase in commercial construction loans was due to funding of increased construction commitments. The increase in home equity loans and lines of credit was due to increased utilization rates of home equity lines of credit. The decrease in commercial and industrial loans was due to lower utilization rates of commercial and industrial lines of credit.
Current wording
The increase in residential mortgage loans was primarily related to the Bank’s asset allocation shift, using investment securities cash flow and cash to fund higher yielding assets. The Bank’s relationship with a third-party mortgage banking company facilitated a significant increase in residential mortgage loan volume, despite the rising interest rate environment. The increase in commercial construction loans was due to funding of increased construction commitments. The increase in home equity loans and lines of credit was due to increased utilization rates of home equity lines of credit.
Previous wording
Deposits. Total deposits of $1.52 billion at December 31, 2023 decreased $19.7 million, or 1.3%, from $1.54 billion at June 30, 2023. By deposit category, non-interest-bearing demand accounts decreased by $52.4 million, or 10.0%, to $473.7 million at December 31, 2023 from $526.1 million at June 30, 2023 and savings accounts decreased by $23.7 million, or 8.0%, to $273.3 million at December 31, 2023 from $297.0 million at June 30, 2023. These decreases were partially offset by an increase in certificates of deposit by $33.0 million, or 28.2%, to $150.0 million at December 31, 2023 from $117.0 million at June 30, 2023 (included in certificates of deposit were brokered deposits which decreased by $4.9 million to $31.6 million at December 31, 2023 from $36.5 million at June 30, 2023), an increase in demand accounts by $21.8 million, or 15.7%, to $160.6 million at December 31, 2023 from $138.8 million at June 30, 2023 and an increase in money market accounts by $1.6 million, or 0.3%, to $464.5 million at December 31, 2023 from $462.9 million at June 30, 2023.
Current wording
Deposits. Total deposits of $1.65 billion at March 31, 2024 increased $106.2 million, or 6.9%, from $1.54 billion at June 30, 2023. By deposit category, money market accounts increased by $73.0 million, or 15.8%, to $535.9 million at March 31, 2024 from $462.9 million at June 30, 2023, demand accounts increased by $69.3 million, or 49.9%, to $208.1 million at March 31, 2024 from $138.8 million at June 30, 2023, and certificates of deposit increased by $25.1 million, or 21.5%, to $142.1 million at March 31, 2024 from $117.0 million at June 30, 2023 (included in certificates of deposit were brokered deposits which decreased by $21.8 million to $14.7 million at March 31, 2024 from $36.5 million at June 30, 2023). These increases were partially offset by a decrease in non-interest-bearing demand accounts by $33.6 million, or 6.4%, to $492.5 million at March 31, 2024 from $526.1 million at June 30, 2023 and a decrease in savings accounts by $27.6 million, or 9.3%, to $269.4 million at March 31, 2024 from $297.0 million at June 30, 2023.
Previous wording
The decrease in non-interest-bearing demand and savings accounts was primarily related to migration of funds to higher interest-bearing accounts. The increase in certificates of deposit was primarily related to a migration of funds from savings and other lower rate interest-bearing accounts. The increase in demand accounts was primarily related to an increase in deposits by one large deposit relationship. The effects of the Federal Reserve Board’s rapidly tightening monetary policy, inflation, and higher rate alternatives continued to have an impact on deposit balances in the second fiscal quarter of 2024. As of December 31, 2023 and June 30, 2023, estimated uninsured deposits, net of collateralized deposits, totaled $239.6 million and $228.4 million, or 15.7% and 14.8% of total deposits, respectively.
Current wording
The increase in demand accounts and money market accounts was primarily related to growth in municipal deposits due to seasonality. The increase in certificates of deposit was primarily related to a migration of funds from non-interest-bearing demand, savings, and other lower rate interest-bearing accounts. The decrease in non-interest-bearing demand and savings accounts was primarily related to migration of funds to higher interest-bearing accounts. As of March 31, 2024 and June 30, 2023, estimated uninsured deposits, net of collateralized deposits, totaled $229.4 million and $228.4 million, or 13.9% and 14.8% of total deposits, respectively.
Previous wording
Total Shareholders’ Equity. Total shareholders’ equity of $283.8 million at December 31, 2023 increased $17.1 million, or 6.4%, from $266.7 million at June 30, 2023 primarily as a result of net income of $6.6 million, a decrease in accumulated other comprehensive loss of $9.7 million and the net increase of $507,000 related to the day-one CECL adjustment during the six months ended December 31, 2023.
Current wording
Total Shareholders’ Equity. Total shareholders’ equity of $289.0 million at March 31, 2024 increased $22.3 million, or 8.3%, from $266.7 million at June 30, 2023 primarily as a result of net income of $11.3 million, an increase in accumulated other comprehensive income of $10.1 million and the net increase of $507,000 related to the day-one CECL adjustment during the nine months ended March 31, 2024.
Previous wording
General. Net income decreased by $3.0 million to $3.2 million for the three months ended December 31, 2023 as compared to $6.2 million for the three months ended December 31, 2022. The decrease was primarily due to an increase in non-interest expense of $2.3 million, an increase in provision for credit losses of $1.5 million and a decrease in net interest income of $1.0 million, partially offset by an increase in non-interest income of $889,000 and a decrease in income tax expense of $970,000.
Current wording
General. Net income decreased by $1.3 million to $4.7 million for the three months ended March 31, 2024 as compared to $6.0 million for the three months ended March 31, 2023. The decrease was primarily due to an increase in non-interest expense of $2.3 million, and a decrease in net interest income of $185,000, partially offset by an increase in non-interest income of $984,000 and a decrease in income tax expense of $307,000.
Previous wording
Interest and Dividend Income. Interest and dividend income increased $3.5 million, or 19.5%, to $21.5 million for the three months ended December 31, 2023, from $18.0 million for the three months ended December 31, 2022 due to increases in interest income on loans and securities, offset in part by a decrease in interest income on interest-earning deposits with banks and other. The increase was the result of a 92 basis points increase in the average yield on interest-earning assets to 4.96% for the three months ended December 31, 2023, from 4.04% for the three months ended December 31, 2022. The increase in the average yield on interest-earning assets was driven by an increase in variable rate loan yields and yields on interest-earning deposits with banks due to rising market interest rates, as well as due to market related increases in interest rates on new loans and securities. Average interest-earning assets decreased by $40.8 million from $1.79 billion for the three months ended December 31, 2022 to $1.75 billion for the three months ended December 31, 2023.
Current wording
Interest and Dividend Income. Interest and dividend income increased $4.3 million, or 23.1%, to $23.1 million for the three months ended March 31, 2024, from $18.8 million for the three months ended March 31, 2023 due to increases in interest income on loans and interest-earning deposits with banks and other, offset in part by a decrease in interest income on securities. The increase was the result of an 85 basis points increase in the average yield on interest-earning assets to 5.30% for the three months ended March 31, 2024, from 4.45% for the three months ended March 31, 2023. The increase in the average yield on interest-earning assets was driven by an increase in variable rate loan yields and yields on interest-earning deposits with banks due to rising market interest rates, as well as due to market related increases in interest rates on new loans. Average interest-earning assets increased by $46.1 million from $1.74 billion for the three months ended March 31, 2023 to $1.79 billion for the three months ended March 31, 2024 due to the increase in the average balance of loans.
Previous wording
Interest income on loans increased $9.3 million, or 36.9%, to $34.3 million for the six months ended December 31, 2023 from $25.0 million for the six months ended December 31, 2022. Interest income on loans increased due to a $186.6 million increase in the average balance of loans to $1.21 billion for the six months ended December 31, 2023 from $1.02 billion for the six months ended December 31, 2022, coupled with a 78 basis points increase in the average yield on loans to 5.71% for the six months ended December 31, 2023 from 4.93% for the six months ended December 31, 2022. The increase in the average balance of loans was principally due to purchases of residential mortgage loans. The increase in average yield on loans was primarily due to loans tied to variable short-term rates which increased during the six months ended December 31, 2023 and market related increases in interest rates on new loans as compared to the same period in the prior year.
Current wording
Interest income on loans increased $4.0 million, or 27.8%, to $18.7 million for the three months ended March 31, 2024 from $14.7 million for the three months ended March 31, 2023. Interest income on loans increased due to a $221.7 million increase in the average balance of loans to $1.30 billion for the three months ended March 31, 2024 from $1.08 billion for the three months ended March 31, 2023, coupled with a 30 basis points increase in the average yield on loans to 5.92% for the three months ended March 31, 2024 from 5.62% for the three months ended March 31, 2023. The increase in the average balance of loans was principally due to purchases of residential mortgage loans. The increase in average yield on loans was primarily due to loans tied to variable short-term rates which increased during the three months
Previous wording
Interest income on securities increased $78,000, or 3.1%, to $2.6 million for the three months ended December 31, 2023 from $2.5 million for the three months ended December 31, 2022. Interest income on securities increased due to a 57 basis points increase in the average yield on securities to 2.42% for the three months ended December 31, 2023 from 1.85% for the three months ended December 31, 2022, offset in part by a $112.9 million decrease in the average balance of securities to $430.5 million for the three months ended December 31, 2023 from $543.4 million for the three months ended December 31, 2022. The increase in average yield on securities was due to higher market rates of interest for new securities that were purchased during the three months ended December 31, 2023 partially replacing scheduled maturities of lower yielding U.S. government and agency and municipal obligation securities. The decrease in the average balance of securities was due to maturities of U.S. government and agency and municipal obligation securities outpacing purchases throughout the later part of fiscal year 2023 and continuing during the six months ended December 31, 2023. The balance sheet repositioning transaction discussed in “Recent Developments” is expected to have a favorable impact on the average yield on securities beginning in the quarter ending March 31, 2024.
Current wording
Interest income on securities decreased $283,000, or 10.8%, to $2.3 million for the three months ended March 31, 2024 from $2.6 million for the three months ended March 31, 2023. Interest income on securities decreased due to a $193.8 million decrease in the average balance of securities to $337.4 million for the three months ended March 31, 2024 from $531.2 million for the three months ended March 31, 2023, offset in part by a 80 basis points increase in the average yield on securities to 2.82% for the three months ended March 31, 2024 from 2.02% for the three months ended March 31, 2023. The decrease in the average balance of securities was due to the sales of U.S. government and agency securities, and maturities of U.S. government and agency and municipal obligation securities, outpacing purchases during the three months ended March 31, 2024, in conjunction with an asset allocation shift, using investment securirties cash flow to fund higher yielding assets. The increase in average yield on securities was due to higher market rates of interest for new securities that were purchased during the three and nine months ended March 31, 2024 partially replacing scheduled maturities of lower yielding U.S. government and agency and municipal obligation securities.
Previous wording
Interest Expense. Interest expense increased $4.5 million to $5.4 million for the three months ended December 31, 2023 from $844,000 for the three months ended December 31, 2022 as a result of an increase in interest expense on deposits and on borrowings and other. The increase was primarily due to a 169 basis points increase in the average cost of interest-bearing liabilities to 2.01% for the three months ended December 31, 2023 from 0.32% for the three months ended December 31, 2022, as well as a shift in interest-bearing liabilities mix to higher interest rate liability accounts.
Current wording
Interest Expense. Interest expense increased $4.5 million to $5.8 million for the three months ended March 31, 2024 from $1.3 million for the three months ended March 31, 2023 as a result of increases in interest expense on deposits and on borrowings and other. The increase was primarily due to a 160 basis points increase in the average cost of interest-bearing liabilities to 2.11% for the three months ended March 31, 2024 from 0.51% for the three months ended March 31, 2023, as well as a shift in the mix of interest-bearing liabilities to higher interest rate liability accounts.
Previous wording
Interest expense on interest-bearing deposits increased $4.5 million to $5.1 million for the three months ended December 31, 2023 from $632,000 for the three months ended December 31, 2022. Interest expense on interest-bearing deposits increased primarily due to a 170 basis points increase in the average cost of interest-bearing deposits to 1.95% for the three months ended December 31, 2023 from 0.25% for the three months ended December 31, 2022, as well as a shift in interest-bearing deposit mix to higher interest rate deposit accounts and an increase in average interest-bearing deposits of $32.5 million to $1.04 billion for the three months ended December 31, 2023 from $1.01 billion for the three months ended December 31, 2022. The increase in the average cost of interest-bearing deposits was primarily due to the increase in market interest rates and a shift in the mix of deposits to higher-cost money market deposits and certificates of deposit. The increase in the average balance of interest-bearing deposits was due to higher average certificates of deposit balances (included in certificates of deposit were brokered deposits which increased by $13.3 million, on average, for the three months ended December 31, 2023 as compared to the same period in the prior year).
Current wording
Interest expense on interest-bearing deposits increased $4.5 million to $5.5 million for the three months ended March 31, 2024 from $1.0 million for the three months ended March 31, 2023. Interest expense on interest-bearing deposits increased primarily due to a 164 basis points increase in the average cost of interest-bearing deposits to 2.07% for the three months ended March 31, 2024 from 0.43% for the three months ended March 31, 2023, as well as a shift in the mix of interest-bearing deposits to higher interest rate deposit accounts and an increase in average interest-bearing deposits of $96.0 million to $1.09 billion for the three months ended March 31, 2024 from $990.6 million for the three months ended March 31, 2023. The increase in the average cost of interest-bearing deposits was primarily due to the increase in market interest rates and a shift in the mix of deposits to higher-cost money market deposits and certificates of deposit. The increase in the average balance of interest-bearing deposits was due to higher average certificates of deposit balances (included in certificates of deposit were brokered deposits which increased by $4.7 million, on average, for the three months ended March 31, 2024 as compared to the same period in the prior year).
Previous wording
Interest expense on borrowings and other liabilities increased $93,000 to $305,000 for the three months ended December 31, 2023 from $212,000 for the three months ended December 31, 2022 due primarily to the increase in average cost of borrowings and other liabilities of 119 basis points to 4.47% for the three months ended December 31, 2023 from 3.28% for the three months ended December 31, 2022, as a result of the increase in the Federal Funds target rate throughout calendar year 2022 and continued in the first half of calendar year 2023, coupled with an increase in average borrowings
Current wording
Interest expense on borrowings and other liabilities increased $34,000 to $248,000 for the three months ended March 31, 2024 from $214,000 for the three months ended March 31, 2023 due primarily to the increase in average cost of borrowings and other liabilities of 73 basis points to 4.60% for the three months ended March 31, 2024 from 3.87% for the three months ended March 31, 2023, as a result of the increase in the Federal Funds target rate throughout calendar year 2022 and continued in the first half of calendar year 2023, offset in part by a decrease in average borrowings and other liabilities of $686,000 to $22.1 million for the three months ended March 31, 2024 from $22.8 million for the three months ended March 31, 2023.
Previous wording
We continue to monitor the effects the precipitous increase in market rates are having on deposit rates and we anticipate the impact will lead to a continued increase in rates on deposits and other interest-bearing liabilities. The expected increase in rates on deposits is reflective of our strategy to maintain a strong core deposit base and continue to provide competitive offerings to customers. We have been and will be proactive in managing customer relationships with depositors, particularly larger consumer, commercial and municipal customers, as an important component of this strategy. In addition, we expect the increase in funding costs due to higher deposit costs, the increase in use of brokered deposits and potentially an increase in the use of higher cost wholesale borrowings may result in continued pressure on net interest margin over the next quarter.
Current wording
We continue to monitor the effects the increase in market rates are having on deposit rates and we anticipate the impact will lead to a continued increase in rates on deposits and other interest-bearing liabilities. The expected increase in rates on deposits is reflective of our strategy to maintain a strong core deposit base and continue to provide competitive offerings to customers. We have been and will be proactive in managing customer relationships with depositors, particularly larger consumer, commercial and municipal customers, as an important component of this strategy. In addition,
Previous wording
Net Interest Income. Net interest income decreased $1.0 million, or 6.1%, to $16.1 million for the three months ended December 31, 2023 compared to $17.1 million for the three months ended December 31, 2022 as net interest margin decreased 15 basis points to 3.70% for the three months ended December 31, 2023 from 3.85% for the three months ended December 31, 2022. Additionally, net interest-earning assets decreased by $74.8 million to $680.5 million for the three months ended December 31, 2023 from $755.3 million for the three months ended December 31, 2022 as a result of a shift in deposit mix which increased interest-bearing deposits, as well as a decrease in securities and interest-earning deposits. Net interest rate spread decreased 78 basis points to 2.94% for the three months ended December 31, 2023 from 3.72% for the three months ended December 31, 2022.
Current wording
Net Interest Income. Net interest income of $17.3 million for the three months ended March 31, 2024 decreased $185,000, or 1.1%, compared to $17.5 million for the three months ended March 31, 2023 as net interest margin decreased 18 basis points to 3.96% for the three months ended March 31, 2024 from 4.14% for the three months ended March 31, 2023. Additionally, net interest-earning assets decreased by $49.1 million to $678.8 million for the three months ended March 31, 2024 from $727.9 million for the three months ended March 31, 2023 as a result of a shift in deposit mix which increased interest-bearing deposits, as well as a decrease in securities. Net interest rate spread decreased 75 basis points to 3.19% for the three months ended March 31, 2024 from 3.94% for the three months ended March 31, 2023.
Previous wording
Provision for Credit Losses. The provision for credit losses was $1.1 million for the three months ended December 31, 2023 as compared to a credit to the provision of $400,000 for the three months ended December 31, 2022. The provision for credit losses for the three months ended December 31, 2023 was primarily due to growth in the loan portfolio. Non-performing assets were $12.0 million, or 0.65% of total assets, at December 31, 2023, compared to $17.7 million, or 0.96% of total assets, at June 30, 2023 and $18.5 million, or 1.01% of total assets, at December 31, 2022. The allowance for credit losses on loans was $21.4 million at December 31, 2023 and $22.2 million at December 31, 2022, representing 1.66% and 2.08% of total loans outstanding, respectively. Net charge-offs were $366,000, or an annualized 0.12% of average loans, for the three months ended December 31, 2023 compared to net recoveries of $22,000, or an annualized (0.01%) of average loans, for the three months ended December 31, 2022.
Current wording
Provision for Credit Losses. The provision for credit losses was $80,000 for the three months ended March 31, 2024 as compared to no provision for the three months ended March 31, 2023. The provision for credit losses for the three months ended March 31, 2024 was primarily due to growth in the loan portfolio offset in part by improvements in asset quality. Non-performing assets were $8.7 million, or 0.44% of total assets, at March 31, 2024, compared to $17.7 million, or 0.96% of total assets, at June 30, 2023 and $10.1 million, or 0.54% of total assets, at March 31, 2023. The allowance for credit losses on loans was $21.6 million at March 31, 2024 and $22.2 million at March 31, 2023, representing 1.62% and 2.00% of total loans outstanding, respectively. Net charge-offs were $20,000, or an annualized 0.01% of average loans, for the three months ended March 31, 2024 compared to net recoveries of $22,000, or an annualized (0.01%) of average loans, for the three months ended March 31, 2023.
Previous wording
Non-Interest Income. Non-interest income increased $658,000, or 8.5%, to $8.4 million for the six months ended December 31, 2023 as compared to $7.8 million for the six months ended December 31, 2022. Noninterest income increased primarily as a result of $6.0 million of income from the previously announced settlement of litigation as described in “Recent Developments” and also from a $816,000 increase in insurance and wealth management income, offset in part by a $5.6 million loss on sale of securities available for sale from the balance sheet repositioning transaction as described in “Recent Developments”. The increase in insurance and wealth management services income was primarily due to the acquisition of Hudson Financial LLC which expanded our wealth management business into the Hudson Valley Region of New York.
Current wording
Non-Interest Income. Non-interest income increased $984,000, or 30.3%, to $4.2 million for the three months ended March 31, 2024 as compared to $3.3 million for the three months ended March 31, 2023. Noninterest income increased primarily from a $583,000 increase in insurance and wealth management services income and a $445,000 increase in net gain on equity securities. The increase in insurance and wealth management services income was primarily due to the acquisition of Hudson Financial LLC which expanded our wealth management business into the Hudson Valley Region of New York. The net gain on equity securities was primarily related to the Bank’s sale of its entire equity securities portfolio in March 2024, which was done in conjunction with the previously announced conversion to a national bank.
Previous wording
Non-Interest Expense. Non-interest expense increased $4.8 million, or 19.0%, to $30.2 million for the six months ended December 31, 2023 as compared to $25.4 million for the six months ended December 31, 2022. The increase was primarily due to an increase in professional fees of $3.6 million, an increase in salaries and employee benefits expense of $569,000 and an increase in data processing of $390,000. Professional fees increased due to legal fees and expenses. Salaries and employee benefits expense increased due to compensation expense from annual merit increases. Data processing expense increased due to an increase in online, mobile and other banking transaction volumes.
Current wording
Non-Interest Expense. Non-interest expense increased $2.3 million, or 17.8%, to $15.4 million for the three months ended March 31, 2024 as compared to $13.1 million for the three months ended March 31, 2023. The increase was primarily due to an increase in professional fees of $1.9 million, and an increase in salaries and employee benefits expense of $319,000. Professional fees increased due to increased legal fees and expenses. Salaries and employee benefits expense increased due to compensation expense from annual merit increases.
Previous wording
Income Tax Expense. Income tax expense decreased $970,000 to $822,000 for the three months ended December 31, 2023 as compared to $1.8 million for the three months ended December 31, 2022 primarily due to a decrease in income before income taxes. Our effective tax rate was 20.5% for the three months ended December 31, 2023 compared to 22.5% for the three months ended December 31, 2022.
Current wording
Income Tax Expense. Income tax expense decreased $307,000 to $1.3 million for the three months ended March 31, 2024 as compared to $1.6 million for the three months ended March 31, 2023 primarily due to a decrease in income before income taxes. Our effective tax rate was 22.1% for the three months ended March 31, 2024 compared to 21.4% for the three months ended March 31, 2023.
Previous wording
Comparison of Operating Results for the Six Months Ended December 31, 2023 and December 31, 2022
Current wording
Comparison of Operating Results for the Nine Months Ended March 31, 2024 and March 31, 2023
Previous wording
General. Net income decreased by $4.8 million to $6.6 million for the six months ended December 31, 2023 as compared to $11.4 million for the six months ended December 31, 2022. The decrease was primarily due to an increase in non-interest expense of $4.8 million and an increase in provision for credit losses of $2.2 million, partially offset by a decrease in income tax expense of $1.3 million, an increase in non-interest income of $658,000 and an increase in net interest income of $175,000.
Current wording
General. Net income decreased by $6.1 million to $11.3 million for the nine months ended March 31, 2024 as compared to $17.4 million for the nine months ended March 31, 2023. The decrease was primarily due to an increase in non-interest expense of $7.2 million and an increase in provision for credit losses of $2.2 million, partially offset by a decrease in income tax expense of $1.6 million, and an increase in non-interest income of $1.6 million.
Previous wording
Interest and Dividend Income. Interest and dividend income increased $8.4 million, or 25.5%, to $41.6 million for the six months ended December 31, 2023, from $33.2 million for the six months ended December 31, 2022 due to increases in interest income on loans and securities, offset in part by a decrease in interest income on interest-earning deposits with banks and other. The increase was the result of a 118 basis points increase in the average yield on interest-earning assets to 4.85% for the six months ended December 31, 2023, from 3.67% for the six months ended December 31, 2022. The increase in the average yield on interest-earning assets was driven by an increase in variable rate loan yields and yields on interest-earning deposits with banks due to rising market interest rates, as well as due to market related increases in interest rates on new loans and securities. Average interest-earning assets decreased by $84.7 million from $1.81 billion for the six months ended December 31, 2022 to $1.72 billion for the six months ended December 31, 2023.
Current wording
Interest and Dividend Income. Interest and dividend income increased $12.9 million, or 24.7%, to $64.8 million for the nine months ended March 31, 2024, from $51.9 million for the nine months ended March 31, 2023 due to increases in interest income on loans and securities, offset in part by a decrease in interest income on interest-earning deposits with banks and other. The increase was the result of a 108 basis points increase in the average yield on interest-earning assets to 4.97% for the nine months ended March 31, 2024, from 3.89% for the nine months ended March 31, 2023. The increase in the average yield on interest-earning assets was driven by an increase in variable rate loan yields and yields on interest-earning deposits with banks due to rising market interest rates, as well as due to market related increases in interest rates
Previous wording
Interest income on loans increased $4.2 million, or 31.2%, to $17.7 million for the three months ended December 31, 2023 from $13.5 million for the three months ended December 31, 2022. Interest income on loans increased due to a $201.8 million increase in the average balance of loans to $1.24 billion for the three months ended December 31, 2023 from $1.04 billion for the three months ended December 31, 2022, coupled with a 52 basis points increase in the average yield on loans to 5.80% for the three months ended December 31, 2023 from 5.28% for the three months ended December 31, 2022. The increase in the average balance of loans was principally due to purchases of residential mortgage loans. The increase in average yield on loans was primarily due to loans tied to variable short-term rates which increased during the three months ended December 31, 2023 and market related increases in interest rates on new loans as compared to the same period in the prior year.
Current wording
Interest income on loans increased $13.3 million, or 33.6%, to $53.0 million for the nine months ended March 31, 2024 from $39.7 million for the nine months ended March 31, 2023. Interest income on loans increased due to a $198.3 million increase in the average balance of loans to $1.24 billion for the nine months ended March 31, 2024 from $1.04 billion for the nine months ended March 31, 2023, coupled with a 62 basis points increase in the average yield on loans to 5.74% for the nine months ended March 31, 2024 from 5.12% for the nine months ended March 31, 2023. The increase in the average balance of loans was principally due to purchases of residential mortgage loans. The increase in average yield on loans was primarily due to loans tied to variable short-term rates which increased during the nine months ended March 31, 2024 and market related increases in interest rates on new loans as compared to the same period in the prior year.
Previous wording
Interest income on securities increased $712,000, or 16.0%, to $5.2 million for the six months ended December 31, 2023 from $4.5 million for the six months ended December 31, 2022. Interest income on securities increased due to a 68 basis points increase in the average yield on securities to 2.35% for the six months ended December 31, 2023 from 1.67% for the six months ended December 31, 2022, offset in part by an $92.3 million decrease in the average balance of securities to $438.3 million for the six months ended December 31, 2023 from $530.6 million for the six months ended December 31, 2022. The increase in average yield on securities was due to higher market rates of interest for new securities that were purchased during the six months ended December 31, 2023 replacing scheduled maturities of lower yielding U.S. government and agency and municipal obligation securities. The decrease in the average balance of securities was due to maturities of U.S. government and agency and municipal obligation securities outpacing purchases throughout the later part of fiscal year 2023 and continuing during the six months ended December 31, 2023. The balance sheet repositioning transaction discussed in “Recent Developments” is expected to have a favorable impact on the average yield on securities beginning in the quarter ending March 31, 2024.
Current wording
Interest income on securities increased $429,000, or 6.1%, to $7.5 million for the nine months ended March 31, 2024 from $7.1 million for the nine months ended March 31, 2023. Interest income on securities increased due to a 70 basis points increase in the average yield on securities to 2.48% for the nine months ended March 31, 2024 from 1.78% for the nine months ended March 31, 2023, offset in part by a $125.9 million decrease in the average balance of securities to $404.9 million for the nine months ended March 31, 2024 from $530.8 million for the nine months ended March 31, 2023. The increase in average yield on securities was due to higher market rates of interest for new securities that were purchased during the nine months ended March 31, 2024 replacing scheduled maturities of lower yielding U.S. government and agency and municipal obligation securities. The decrease in the average balance of securities was due to sales of U.S. government and agency securities, including the balance sheet repositioning transaction discussed in “Recent Developments” and maturities of U.S. government and agency and municipal obligation securities outpacing purchases throughout the later part of fiscal year 2023 and continuing during the nine months ended March 31, 2024, in conjunction with an asset allocation shift, using investment securities cash flow to fund higher yielding assets.
Previous wording
Interest income on interest-earning deposits with banks and other decreased $787,000 to $1.2 million for the three months ended December 31, 2023 from $2.0 million for the three months ended December 31, 2022. Interest income on interest-earning deposits with banks and other decreased due to a $129.7 million decrease in average balances on interest-earning deposits with banks and other to $83.6 million for the three months ended December 31, 2023 from $213.3 million for the three months ended December 31, 2022 primarily due to the funding of loans, offset in part by a 196 basis points increase in the average yield on interest-earning deposits with banks and other to 5.64% for the three months ended December 31, 2023 from 3.68% for the three months ended December 31, 2022 primarily as a result of the increase in the Federal Funds target rate during calendar year 2022 and continuing in the first half of calendar year 2023.
Current wording
Interest income on interest-earning deposits with banks and other decreased $940,000 to $4.3 million for the nine months ended March 31, 2024 from $5.2 million for the nine months ended March 31, 2023. Interest income on interest-earning deposits with banks and other decreased due to a $114.1 million decrease in average balances on interest-earning deposits with banks and other to $102.7 million for the nine months ended March 31, 2024 from $216.8 million for the nine months ended March 31, 2023 primarily due to the funding of loans, offset in part by a 235 basis points increase in the average yield on interest-earning deposits with banks and other to 5.55% for the nine months ended March 31, 2024 from 3.20% for the nine months ended March 31, 2023 primarily as a result of the increase in the Federal Funds target rate during calendar year 2022 and continuing in the first half of calendar year 2023.
Previous wording
Interest Expense. Interest expense increased $8.3 million to $9.7 million for the six months ended December 31, 2023 from $1.4 million for the six months ended December 31, 2022 as a result of an increase in interest expense on deposits and on borrowings and other. The increase was primarily due to a 158 basis points increase in the average cost of interest-bearing liabilities to 1.84% for the six months ended December 31, 2023 from 0.26% for the six months ended December 31, 2022, as well as a shift in interest-bearing liabilities mix to higher interest rate liability accounts.
Current wording
Interest Expense. Interest expense increased $12.8 million to $15.4 million for the nine months ended March 31, 2024 from $2.6 million for the nine months ended March 31, 2023 as a result of increases in interest expense on deposits and on borrowings and other. The increase was primarily due to a 159 basis points increase in the average cost of interest-bearing liabilities to 1.93% for the nine months ended March 31, 2024 from 0.34% for the nine months ended March 31, 2023, as well as a shift in the mix of interest-bearing liabilities to higher interest rate liability accounts.
Previous wording
Interest expense on interest-bearing deposits increased $8.0 million to $9.0 million for the six months ended December 31, 2023 from $1.0 million for the six months ended December 31, 2022. Interest expense on interest-bearing deposits increased primarily due to a 156 basis points increase in the average cost of interest-bearing deposits to 1.76% for the six months ended December 31, 2023 from 0.20% for the six months ended December 31, 2022, as well as a shift in interest-bearing deposit mix to higher interest rate deposit accounts, offset in part by a decrease in average interest-bearing deposits of $15.7 million to $1.02 billion for the six months ended December 31, 2023 from $1.04 billion for the six months ended December 31, 2022. The increase in the average cost of interest-bearing deposits was primarily due to the increase in market interest rates and a shift in the mix of deposits to higher costing money market deposits and certificates of deposit.
Current wording
Interest expense on interest-bearing deposits increased $12.5 million to $14.6 million for the nine months ended March 31, 2024 from $2.1 million for the nine months ended March 31, 2023. Interest expense on interest-bearing deposits increased primarily due to a 160 basis points increase in the average cost of interest-bearing deposits to 1.87% for the nine months ended March 31, 2024 from 0.27% for the nine months ended March 31, 2023, as well as a shift in interest-bearing deposit mix to higher interest rate deposit accounts, and an increase in average interest-bearing deposits of $20.5 million to $1.04 billion for the nine months ended March 31, 2024 from $1.02 billion for the nine months ended March 31, 2023. The increase in the average cost of interest-bearing deposits was primarily due to the increase in market interest rates and a shift in the mix of deposits to higher costing money market deposits and certificates of deposit. The increase in average balance of interest-bearing deposits was due to higher average certificates of deposit balances (included in certificates of deposit were brokered deposits which increased by $8.8 million, on average, for the nine months ended March 31, 2024 as compared to the same period in the prior year).
Previous wording
Interest expense on borrowings and other liabilities increased $293,000 to $617,000 for the six months ended December 31, 2023 from $324,000 for the six months ended December 31, 2022 due primarily to the increase in average cost of borrowings and other liabilities of 156 basis points to 4.47% for the six months ended December 31, 2023 from 2.91% for the six months ended December 31, 2022, as a result of the increase in the Federal Funds target rate throughout calendar year 2022 and continued in the first half of calendar year 2023, coupled with an increase in average borrowings and other liabilities of $5.5 million to $27.7 million for the six months ended December 31, 2023 from $22.2 million for the six months ended December 31, 2022.
Current wording
Interest expense on borrowings and other liabilities increased $327,000 to $865,000 for the nine months ended March 31, 2024 from $538,000 for the nine months ended March 31, 2023 due primarily to the increase in average cost of borrowings and other liabilities of 127 basis points to 4.48% for the nine months ended March 31, 2024 from 3.21% for the nine months ended March 31, 2023, as a result of the increase in the Federal Funds target rate throughout calendar year 2022 and continued in the first half of calendar year 2023, coupled with an increase in average borrowings and other liabilities of $3.4 million to $25.8 million for the nine months ended March 31, 2024 from $22.4 million for the nine months ended March 31, 2023.
Previous wording
We continue to monitor the effects the precipitous increase in market rates are having on deposit rates and we anticipate the impact will lead to a continued increase in rates on deposits and other interest-bearing liabilities. The expected increase in rates on deposits is reflective of our strategy to maintain a strong core deposit base and continue to provide competitive offerings to customers. We have been and will be proactive in managing customer relationships with depositors, particularly larger consumer, commercial and municipal customers, as an important component of this strategy. In addition, we expect the increase in funding costs due to higher deposit costs, the increase in use of brokered deposits and potentially an increase in the use of higher cost wholesale borrowings may result in continued pressure on net interest margin over the next quarter.
Current wording
We continue to monitor the effects the increase in market rates are having on deposit rates and we anticipate the impact will lead to a continued increase in rates on deposits and other interest-bearing liabilities. The expected increase in rates on deposits is reflective of our strategy to maintain a strong core deposit base and continue to provide competitive offerings to customers. We have been and will be proactive in managing customer relationships with depositors, particularly larger consumer, commercial and municipal customers, as an important component of this strategy. In addition, we expect the increase in funding costs due to higher deposit costs, potentially an increase in use of brokered deposits and potentially an increase in the use of higher cost wholesale borrowings may result in continued pressure on net interest margin over the next quarter.
Showing the first 40 of 56 pairs. Open the source sections for the rest.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
ended March 31, 2024 and market related increases in interest rates on new loans as compared to the same period in the prior year.
Current report — wording carried from elsewhere
we expect the increase in funding costs due to higher deposit costs, potentially an increase in use of brokered deposits and potentially an increase in the use of higher cost wholesale borrowings may result in continued pressure on net interest margin over the next quarter.
Current report — wording carried from elsewhere
utilized. Material changes to these and other relevant factors may result in greater volatility to the allowance for credit losses, and therefore, greater volatility to our reported earnings.
Current report — wording carried from elsewhere
deposit markets. We cannot predict what the impact of the events described in “Recent Developments – Mann Entities Related Fraudulent Activity” above may have on our Liquidity and Capital Resources beyond the third quarter of fiscal 2024.
Current report — wording carried from elsewhere
capitalized institutions under the prompt corrective action regulations. There have been no conditions or events since the notification that management believes have changed the Bank’s or Pioneer Commercial Bank’s capital classification.
Current report — wording carried from elsewhere
$34.5 million of commitments to purchase residential mortgage loans and $7.1 million of unfunded commitments under consumer lines of credit. In addition, at March 31, 2024, we had $20.8 million in standby letters of credit outstanding.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
loans of $2.1 million, or 12.6%, to $14.7 million at December 31, 2023 from $16.8 million at June 30, 2023. Commercial real estate loans were unchanged at $411.2 million at December 31, 2023 as compared to June 30, 2023.
Previous report — wording carried elsewhere
of recoveries. All loan information presented as of June 30, 2023 or a prior date is presented in accordance with previously applicable GAAP (the incurred loss method).