PEOPLES FINANCIAL SERVICES CORP
For the period ended Jun 30, 2024. Filed Aug 7, 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.
Jun 30, 2024 · Filed Aug 7, 2024
PFIS$72.24-1.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-08.
0001558370-24-007305
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0001558370-24-011338
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 117 previous paragraphs and 111 current paragraphs.
45 unchanged; 56 reworded; 7 added; 12 removed; 4 previous and 3 current paragraphs rearranged.
Tables are not compared: 17 previous and 20 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 (7)
Current report
Commercial and industrial loans increased $88.3 million, or 32.6% annualized, to $632.0 million at June 30, 2024 compared to $543.7 million at December 31, 2023.
Current report
Peoples reported net income of $6.7 million, or $0.95 per diluted share for the six months ended June 30, 2024, a decrease of 60.3% when compared to $17.0 million, or $2.37 per diluted share for the comparable period of 2023. The decrease in earnings in the six months ended June 30, 2024 is a result of lower net interest income of $7.0 million as higher interest income on earning assets, due to increased loan rates, was more than offset by increased funding costs, higher operating expenses of $3.1 million, a $2.2 million increase to the provision for credit losses, and a decrease of $0.3 million in non-interest income. Higher noninterest expenses were mainly due to $1.5 million in merger related expenses, higher occupancy and equipment related expenses of $0.9 million, and higher other expenses of $0.8 million, partially offset by a decrease of $0.3 million in salaries and benefits.
Current report
For the six months ended June 30, 2024, a provision for credit losses of $1.3 million was recorded due to the establishment of a specific reserve for an individually evaluated loan along with higher pooled loan reserves. Pooled loan reserves increased due to loan growth and a higher model loss rate that was primarily attributed to the loan portfolio’s favorable performance versus peers, and new loan originations. The provision in the prior six month period included a credit of $0.9 million which was attributed to various factors, including updated economic assumptions as well as changes in qualitative factors, portfolio composition and asset quality.
Current report
Noninterest income for the three months ended June 30, 2024 was $3.5 million, relatively unchanged from the same quarter a year ago. Decreases to service charges, fees, and commissions, were partially offset by increases in interest rate swap revenue.
Current report
Noninterest income was $6.9 million for the six months ended June 30, 2024 and $7.2 million for the comparable period ended June 30, 2023. The primary driver of the decrease was a $0.2 million reduction in interest rate swap revenue. The year ago period also included a gain of $81 thousand on the sale of available for sale investment securities.
Current report
expense due in part to inflationary price increases. Other expenses increased $0.4 million primarily due to the write-down of the Company’s former East Stroudsburg branch.
Current report
Noninterest expense for the six months ended June 30, 2024 was $36.2 million, an increase of $3.1 million or 9.2% from $33.2 million for the six months ended June 30, 2023. The increase was due primarily to $0.9 million in higher occupancy and technology related expenses, $1.4 million in acquisition related expenses, and an increase of $0.8 million in other expenses, which include a $0.4 million write-down the aforementioned former branch and a $0.6 million increase to the provision for unfunded commitments.
Removed paragraphs (12)
Previous report
In addition to these risks, acquisitions and business combinations present risks other than those presented by the nature of the business acquired. Acquisitions and business combinations and, specifically, the Merger may be substantially more expensive to complete than originally anticipated, and the anticipated benefits may be significantly harder - or take longer - to achieve than expected, if they are achieved at all. As regulated financial institutions, our pursuit of attractive
Previous report
acquisition and business combination opportunities could be negatively impacted by regulatory delays or other regulatory issues. Regulatory and/or legal issues related to the pre-acquisition operations of an acquired or combined business may cause reputational harm to Peoples following the acquisition or combination, and integration of the acquired or combined business with ours may result in additional future costs arising as a result of those issues.
Previous report
Additional factors that could cause actual results to differ materially include the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the definitive merger agreement between Peoples and FNCB; the outcome of any legal proceedings that may be instituted against Peoples or FNCB; the possibility that the proposed strategic combination will not close when expected or at all because required regulatory, shareholder or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all, or are obtained subject to conditions that are not anticipated (and the risk that required regulatory approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the proposed transaction).
Previous report
Merger with FNCB
Previous report
On September 27, 2023, Peoples entered into the Merger Agreement with FNCB, the parent company of FNCB Bank, pursuant to which FNCB will merge with and into Peoples, with the Company as the surviving entity. Immediately after such merger, FNCB Bank will merge with and into Peoples Bank, with Peoples Bank as the surviving bank and a wholly-owned subsidiary of Peoples. Under the terms of the Merger Agreement, which has been unanimously approved by the boards of directors of both companies, shareholders of FNCB will be entitled to receive a fixed exchange ratio of 0.1460 shares of the Company's common stock for each share of the FNCB’s common stock. The shareholders of both Peoples and FNCB approved the merger at their respective special shareholders' meetings held on March 22, 2024. On October 27, 2023, Peoples and FNCB jointly filed a Federal Deposit Insurance Corporation ("FDIC") Interagency Bank Merger Application with the FDIC New York and the Company filed a Pennsylvania Bank Merger Application with the Pennsylvania Department of Banking and Securities. Completion of the merger remains subject to customary closing conditions, including receipt of all required regulatory approvals.
Previous report
The Merger Agreement provides certain termination rights for both the Company and FNCB and further provides that a termination fee of $4.8 million will be payable by either the Company or FNCB, as applicable, upon termination of the Merger Agreement under certain circumstances. The foregoing summary is not complete and is qualified in all respects by reference to the actual language of the Merger Agreement filed by the Company as Exhibit 2.1 to this Quarterly Report on Form 10-Q. Pending regulatory approval, the Company expects the merger to be consummated in the second half of 2024, however, there can be no assurance that the transaction will be consummated by such date, or at all.
Previous report
Notes to the Consolidated Financial Statements referred to in the Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) are incorporated by reference into the MD&A. Certain prior period amounts may have been reclassified to conform with the current year’s presentation. Any reclassifications did not have any effect on our operating results or financial position.
Previous report
market value. Federal funds sold balances decreased to $69.7 million at March 31, 2024 from $144.7 million at December 31, 2023.
Previous report
$0.41 per share payable on June 14, 2024 to shareholders of record as of May 31, 2024. Further dividends, however, must necessarily depend upon earnings, financial condition, appropriate legal restrictions and other factors relevant at the time the Board of Directors considers payment of dividends. In accordance with the Merger Agreement, after the effective time of the Merger, Peoples intends to pay a quarterly cash dividend in an amount no less than $0.6175 per share, provided sufficient fund are legally available and Peoples and Peoples Bank each will remain “well-capitalized” under applicable laws, unless the Board of Directors determines otherwise upon the approval of at least 75 percent of the directors.
Previous report
For the three months ended March 31, net interest income, decreased $3.7 million to $19.3 million in 2024 from $23.0 million in 2023 due primarily to higher deposit costs.
Previous report
For the three months ended March 31, interest income earning assets increased $4.7 million to $39.0 million in 2024 as compared to $34.3 million in 2023.
Previous report
Noninterest income for the three months ended March 31, 2024 was $3.4 million, a decrease of $0.3 million or 7.4% from $3.7 million in the same quarter a year ago. The decrease was primarily due to $0.2 million lower swap related revenue on reduced origination volume and a gain in the year ago period from the sale of investment securities.
Reworded paragraphs (56)
Previous wording
This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to risks and uncertainties. These statements are based on assumptions and may describe future plans, strategies and expectations of Peoples Financial Services Corp. and its subsidiaries including statements with respect to the proposed merger between the Company and FNCB Bancorp, Inc. (FNCB) under the Agreement and Plan of Merger, dated September 27, 2023 (Merger Agreement) pursuant to which FNCB will merge with and into Peoples, with Peoples as the surviving entity, along with the transaction occurring immediately after such merger, whereby FNCB’s wholly owned subsidiary, FNCB Bank will merge with and into Peoples Bank, with Peoples Bank as the surviving bank and a wholly-owned subsidiary of Peoples (Merger), that are subject to significant risks and uncertainties, and are subject to change based on various factors (some of which are beyond our control). These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar expressions. All statements in this report, other than statements of historical facts, are forward-looking statements.
Current wording
This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to risks and uncertainties. These statements are based on assumptions and may describe future plans, strategies and expectations of Peoples Financial Services Corp. and its subsidiaries that are subject to significant risks and uncertainties, and are subject to change based on various factors (some of which are beyond our control). These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar expressions. All statements in this report, other than statements of historical facts, are forward-looking statements.
Previous wording
Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Important factors that could cause our actual results to differ materially from those in the forward-looking statements include, but are not limited to: macroeconomic trends; the effects of any recession in the United States; the impact on financial markets from geopolitical conflicts such as the military conflict between Russia and Ukraine and the conflict in Israel; risks associated with business combinations, including, but not limited to the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the Merger Agreement; the possibility that the parties may be unable to achieve expected synergies and operating efficiencies in the Merger within the expected timeframes or at all and to successfully integrate operations of FNCB and FNCB Bank and those of Peoples and Peoples Bank, which may be more difficult, time consuming or costly than expected; diversion of management's attention from ongoing business operations and opportunities; effects of the announcement, pendency or completion of the proposed merger on the ability of Peoples to retain customers and retain and hire key personnel and maintain relationships with their vendors, and on their operating results and businesses generally; changes in interest rates; economic conditions, particularly in our market area; legislative and regulatory changes and the ability to comply with the significant laws and regulations governing the banking and financial services business; monetary and fiscal policies of the U.S. government, including policies of the U.S. Department of Treasury and the Federal Reserve System; adverse developments in the financial industry generally, such as the recent bank failures, responsive measures to mitigate and manage such developments, related supervisory and regulatory actions and costs, and related impacts on customer and client behavior; credit risk associated with lending activities and changes in the quality and composition of our loan and investment portfolios; demand for loan and other products; deposit flows; competition; changes in the values of real estate and other collateral securing the loan portfolio, particularly in our market area; changes in relevant accounting principles and guidelines; inability of third party service providers to perform; and our ability to prevent, detect and respond to cyberattacks. Additional factors that may affect our results are discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023, in Part II, Item 1A of this report and in reports we file with the Securities and Exchange Commission from time to time.
Current wording
Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Important factors that could cause our actual results to differ materially from those in the forward-looking statements include, but are not limited to: macroeconomic trends; the effects of any recession in the United States; the impact on financial markets from geopolitical conflicts such as the military conflict between Russia and Ukraine and the conflict in Israel; risks associated with business combinations, including, the possibility that we may be unable to achieve expected synergies and operating efficiencies in the merger with FNCB within the expected timeframes or at all and to successfully integrate operations of FNCB and FNCB Bank and those of Peoples and Peoples Bank, which may be more difficult, time consuming or costly than expected; diversion of management's attention from ongoing business operations and opportunities; effects of the completion of the FNCB merger on the ability of Peoples to retain customers and retain and hire key personnel and maintain relationships with their vendors, and on their operating results and businesses generally; changes in interest rates; economic conditions, particularly in our market area; legislative and regulatory changes and the ability to comply with the significant laws and regulations governing the banking and financial services business; monetary and fiscal policies of the U.S. government, including policies of the U.S. Department of Treasury and the Federal Reserve System; adverse developments in the financial industry generally, such as the recent bank failures, responsive measures to mitigate and manage such developments, related supervisory and regulatory actions and costs, and related impacts on customer and client behavior; credit risk associated with lending activities and changes in the quality and composition of our loan and investment portfolios; demand for loan and other products; deposit flows; competition; changes in the values of real estate and other collateral securing the loan portfolio, particularly in our market area; changes in relevant accounting principles and guidelines; inability of third party service providers to perform; and our ability to prevent, detect and respond to cyberattacks. Additional factors that may affect our results are discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023, in Part II, Item 1A of this report and in reports we file with the Securities and Exchange Commission from time to time.
Previous wording
Total assets decreased $73.2 million or 7.9% annualized from December 31, 2023, to $3.7 billion at March 31, 2024. The decrease in assets during the three months was primarily due to decreases in federal funds sold, utilized in part to fund the seasonal outflow of deposits. Total loans increased $8.5 million since December 31, 2023 and totaled $2.9 billion at March 31, 2024. Investments decreased $6.1 million due primarily to principal payments and adjustments in
Current wording
Total assets decreased $126.2 million or 6.8% annualized from December 31, 2023, to $3.6 billion at June 30, 2024. The decrease in assets during the six months was primarily due to decreases in federal funds sold, utilized in part to fund loan growth and seasonal outflow of deposits. Total loans increased $19.7 million since December 31, 2023 and totaled $2.9 billion at June 30, 2024. Investments decreased $17.0 million due primarily to maturities, principal payments and adjustments in market value. There were no Federal funds sold balances at June 30, 2024 compared to a balance of $144.7 million at December 31, 2023.
Previous wording
Deposits decreased $75.1 million to $3.2 billion at March 31, 2024 from $3.3 billion at December 31, 2023, due in part to seasonal outflows. Interest-bearing deposits decreased $53.8 million to $2.6 billion compared to $2.6 billion at December 31, 2023. Non-interest bearing deposits decreased $21.3 million to $623.4 million from $644.7 million as of December 31, 2023. Total short-term borrowings at March 31, 2024 were $20.3 million, an increase of $2.7 million from $17.6 million at December 31, 2023. Long term debt and subordinated debentures remained unchanged at $25.0 million and $33.0 million respectively at March 31, 2024 and December 31, 2023. Total stockholders’ equity decreased $0.4 million from $340.4 million at year-end 2023 to $340.0 million at March 31, 2024 due to an increase to accumulated other comprehensive loss resulting from a decrease in unrealized loss on available for sale investment securities and the payment of the first quarter dividend, offset by net income.
Current wording
Deposits decreased $214.1 million to $3.1 billion at June 30, 2024 from $3.3 billion at December 31, 2023, due in part to seasonal municipal deposit outflows. Interest-bearing deposits decreased $190.4 million to $2.4 billion compared to $2.6 billion at December 31, 2023. Non-interest bearing deposits decreased $23.7 million to $621.0 million from $644.7 million as of December 31, 2023. Total short-term borrowings at June 30, 2024 were $104.3 million, an increase of $86.7 million from $17.6 million at December 31, 2023. Long term debt and subordinated debentures remained unchanged at $25.0 million and $33.0 million respectively at June 30, 2024 and December 31, 2023. Total stockholders’ equity increased $0.4 million from $340.4 million at year-end 2023 to $340.8 million at June 30, 2024 due to net income, partially offset by an increase to accumulated other comprehensive loss resulting from an increase in unrealized loss on available for sale investment securities and the payment of the dividends.
Previous wording
The unrealized losses on the held to maturity portfolio totaled $13.3 million and $13.2 million at March 31, 2024 and December 31, 2023, respectively. For the three months ended March 31, 2024, total assets averaged $3.7 billion, an increase of $101.9 million from $3.6 billion for the same period of 2023.
Current wording
The unrealized losses on the held to maturity portfolio totaled $13.4 million and $13.2 million at June 30, 2024 and December 31, 2023, respectively. For the six months ended June 30, 2024, total assets averaged $3.6 billion, and increased $29.8 million from the same period of 2023.
Previous wording
The majority of the investment portfolio is classified as available for sale, which allows for greater flexibility in using the investment portfolio for liquidity purposes by allowing securities to be sold when market opportunities occur. Investment securities available for sale totaled $394.4 million at March 31, 2024, a decrease of $4.5 million, or 1.1% from $398.9 million at December 31, 2023. The decrease was primarily due to principal payments combined with a decrease in value due to market value adjustments.
Current wording
The majority of the investment portfolio is classified as available for sale, which allows for greater flexibility in using the investment portfolio for liquidity purposes by allowing securities to be sold when market opportunities occur. Investment securities available for sale totaled $385.2 million at June 30, 2024, a decrease of $13.7 million, or 3.4% from $398.9 million at December 31, 2023. The decrease was primarily due to maturities and principal payments combined with a decrease in fair value due to market value adjustments.
Previous wording
Investment securities held to maturity, which consisted of 86.6% of mortgage-backed securities issued or guaranteed by U.S. Government agency and U.S. Government-sponsored entities, totaled $83.3 million at March 31, 2024, a decrease of $1.6 million from $84.9 million at December 31, 2023. Held to maturity securities had a market value of $70.0 million at March 31, 2024 compared to $71.7 million at December 31, 2023.
Current wording
Investment securities held to maturity, which consisted of 86.3% of mortgage-backed securities issued or guaranteed by U.S. Government agency and U.S. Government-sponsored entities, totaled $81.6 million at June 30, 2024, a decrease of $3.3 million, or 3.4% from $84.9 million at December 31, 2023. Held to maturity securities had a market value of $68.2 million at June 30, 2024 compared to $71.7 million at December 31, 2023.
Previous wording
For the three months ended March 31, 2024, the investment portfolio averaged $533.9 million, a decrease of $65.8 million or 11.0% compared to $599.7 million for the same period last year. Average tax-exempt municipal bonds have decreased $13.5 million or 13.5% to $86.9 million for the three months ended March 31, 2024 from $100.4 million during the comparable period of 2023. The tax-equivalent yield on the investment portfolio decreased 3 basis points to 1.80% for the three months ended March 31, 2024, from 1.83% for the comparable period of 2023.
Current wording
For the six months ended June 30, 2024, the investment portfolio averaged $531.7 million, a decrease of $47.1 million or 8.1% compared to $578.8 million for the same period last year. Average tax-exempt municipal bonds have decreased $7.7 million or 8.2% to $86.6 million for the six months ended June 30, 2024 from $94.3 million during the comparable period of 2023. The FTE yield on the investment portfolio increased 2 basis points to 1.80% for the six months ended June 30, 2024, from 1.78% for the comparable period of 2023.
Previous wording
Securities available for sale are carried at fair value, with unrealized gains or losses net of deferred income taxes reported in the Accumulated Other Comprehensive Loss (AOCL) component of stockholders’ equity. We reported net unrealized losses, included as a separate component of stockholders’ equity of $42.2 million net of deferred income taxes of $11.8 million at March 31, 2024, and net unrealized losses of $40.3 million, net of deferred income taxes of $11.3 million, at December 31, 2023.
Current wording
Securities available for sale are carried at fair value, with unrealized gains or losses net of deferred income taxes reported in the Accumulated Other Comprehensive Loss component of stockholders’ equity. We reported net unrealized losses, included as a separate component of stockholders’ equity of $42.1 million net of a deferred income tax benefit of $11.8 million at June 30, 2024, and net unrealized losses of $40.3 million, net of deferred income tax benefit of $11.3 million, at December 31, 2023.
Previous wording
Total loans increased $8.5 million or 1.2% annualized since December 31, 2023 and totaled $2.9 billion. Loan growth is consistent with the Company's current balance sheet strategy to slow loan growth and build on balance sheet liquidity. Our loan growth is due primarily to increases in commercial and industrial loans.
Current wording
Total loans increased $19.7 million or 1.4% annualized since December 31, 2023 and totaled $2.9 billion at June 30, 2024. This level of loan growth is consistent with the Company's current balance sheet strategy to slow loan growth and build on balance sheet liquidity. The loan growth that was achieved was due primarily to increases in commercial and industrial loans.
Previous wording
Commercial real estate loans decreased $79.3 million or 17.1% annualized, to $1.8 billion at March 31, 2024 compared to $1.9 billion at December 31, 2023 due to decreased activity in all our markets.
Current wording
Commercial real estate loans decreased $69.5 million or 7.5% annualized, to $1.8 billion at June 30, 2024 compared to $1.9 billion at December 31, 2023.
Previous wording
Consumer loans decreased $4.0 million, or 4.8% on an annualized basis, to $78.3 million at March 31, 2024 compared to $82.3 million at December 31, 2023, primarily from a decrease of $3.7 million in the indirect auto loans portfolio.
Current wording
Consumer loans decreased $8.0 million, or 19.6% on an annualized basis, to $74.2 million at June 30, 2024 compared to $82.3 million at December 31, 2023, from a decrease of $8.6 million in the indirect auto loans portfolio, partially offset by an increase in the remainder of our consumer portfolios.
Previous wording
Residential real estate loans increased $0.7 million, or 0.8% on an annualized basis, to $361.5 million at March 31, 2024 compared to $360.8 million at December 31, 2023. The increase in residential mortgages is due to increased home equity loan activity.
Current wording
Residential real estate loans increased $8.9 million, or 4.9% on an annualized basis, to $369.7 million at June 30, 2024 compared to $360.8 million at December 31, 2023. The increase in residential mortgages was due to increased home equity line activity.
Previous wording
For the three months ended March 31, 2024, total loans averaged $2.9 billion, an increase of $87.9 million or 3.2% compared to $2.8 billion for the same period of 2023. The tax-equivalent yield on the entire loan portfolio was 5.04% for the three months ended March 31, 2024, a 38 basis point increase from the comparable period last year. The increase in yield is primarily due to the FOMC interest rate hikes during the last fifteen months and its corresponding effect on ouroffering rates on new originations and the indices at which our adjustable and floating rate loans reprice.
Current wording
For the six months ended June 30, 2024, total loans averaged $2.9 billion, an increase of $53.2 million or 1.9% compared to $2.8 billion for the same period of 2023. The FTE yield on the entire loan portfolio was 5.07% for the six months ended June 30, 2024, a 35 basis point increase from the comparable period last year. The increase in yield was primarily due to the FOMC interest rate increases in 2022 and through July 2023 and the corresponding effect those increases had on ouroffering rates on new originations and the indices at which our adjustable and floating rate loans reprice.
Previous wording
Unused commitments at March 31, 2024, totaled $535.3 million, consisting of $473.5 million in unfunded commitments of existing loan facilities and $61.8 million in standby letters of credit. Due to fixed maturity dates, specified conditions within these instruments, and the ultimate needs of our customers, many will expire without being drawn upon. We believe that amounts actually drawn upon can be funded in the normal course of operations and, therefore, do not represent a significant liquidity risk to us. In comparison, unused commitments at December 31, 2023 totaled $587.6 million, consisting of $525.4 million in unfunded commitments of existing loans and $62.2 million in standby letters of credit.
Current wording
Unused commitments at June 30, 2024, totaled $513.3 million, consisting of $469.6 million in unfunded commitments of existing loan facilities and $43.7 million in standby letters of credit. Due to fixed maturity dates, specified conditions within these instruments, and the ultimate needs of our customers, many will expire without being drawn upon. We believe that amounts actually drawn upon can be funded in the normal course of operations and, therefore, do not represent a significant liquidity risk to us. In comparison, unused commitments at December 31, 2023 totaled $587.6 million, consisting of $525.4 million in unfunded commitments of existing loans and $62.2 million in standby letters of credit.
Previous wording
Nonperforming assets increased by $2.8 million during the first three months of 2024. Nonperforming assets totaled $7.7 million or 0.21% of total assets at March 31, 2024, an increase from $4.9 million or 0.13% of total assets at December 31, 2023.
Current wording
Nonperforming assets increased by $2.2 million during the first six months of 2024. Nonperforming assets totaled $7.1 million or 0.20% of total assets at June 30, 2024, an increase from $4.9 million or 0.13% of total assets at December 31, 2023.
Previous wording
Loans on nonaccrual status increased $3.1 million to $7.1 million at March 31, 2024 from $4.0 million at December 31, 2023. Nonaccrual loans increased due primarily to placing a collateral dependent real estate loan on nonaccrual as the primary source of repayment is in doubt and there are limited secondary sources of repayment. Potential loss is mitigated as the loan carries the guarantee of a government agency for a significant amount of the outstanding balance. There were no foreclosed properties at March 31, 2024 and at December 31, 2023.
Current wording
Loans on nonaccrual status increased $3.2 million to $7.1 million at June 30, 2024 from $4.0 million at December 31, 2023. Nonaccrual loans increased due primarily to placing a collateral dependent real estate loan on nonaccrual as the primary source of repayment is in doubt and there are limited secondary sources of repayment. Potential loss is mitigated as the loan carries a 70 percent guarantee of a government agency for a significant amount of the outstanding balance. There was one foreclosed property at June 30, 2024 in the amount of $27 thousand. There were no foreclosed properties at December 31, 2023.
Previous wording
The allowance for credit losses equaled $22.6 million or 0.79% of loans, net at March 31, 2024 compared to $21.9 million or 0.77% of loans, net, at December 31, 2023. Loans charged-off, net of recoveries, for the three months ended March 31, 2024, equaled $6 thousand and less than 0.01% of average loans, compared to $9 thousand and less than 0.01% of average loans for the comparable period last year.
Current wording
The allowance for credit losses equaled $23.1 million or 0.81% of loans, net at June 30, 2024 compared to $21.9 million or 0.77% of loans, net, at December 31, 2023. Loans charged-off, net of recoveries, for the six months ended June 30, 2024, equaled $76 thousand and less than 0.01% of average loans, compared to $34 thousand and less than 0.01% of average loans for the comparable period last year.
Previous wording
For the three months ended March 31, 2024, total deposits decreased $75.1 million or 9.2% annualized to $3.2 billion from $3.3 billion at December 31, 2023. Noninterest-bearing deposits decreased $21.3 million, or 13.3% annualized and interest-bearing deposits decreased $53.8 million, or 8.2% annualized during the three months ended March 31, 2024. The decrease in deposits was due to a $12.5 million decrease in retail and commercial accounts and a $62.6 million decrease in municipal deposits.
Current wording
For the six months ended June 30, 2024, total deposits decreased $214.1 million or 13.1% annualized to $3.1 billion from $3.3 billion at December 31, 2023. Noninterest-bearing deposits decreased $23.7 million, or 7.4% annualized and interest-bearing deposits decreased $190.4 million, or 14.5% annualized during the six months ended June 30, 2024. The
Previous wording
March 31, 2024 from $429.0 million at December 31, 2023 as depositors moved funds to higher rate products. Time deposits less than $250 thousand increased $11.6 million to $517.0 million at March 31, 2024, from $505.4 million at December 31, 2023. Time deposits $250 thousand or more increased $12.8 million to $134.1 million at March 31, 2024 from $121.3 million at year end 2023.
Current wording
Interest-bearing checking, NOW, and money market accounts decreased $172.1 million to $1.4 billion at June 30, 2024 from $1.6 billion at December 31, 2023 due in part to seasonal municipal outflows and depositors shifting to higher earning products both internally and externally. Savings accounts decreased $31.2 million to $397.8 million as of June 30, 2024 from $429.0 million at December 31, 2023 as depositors moved funds to higher rate products. Time deposits less than $250 thousand decreased $0.5 million to $504.9 million at June 30, 2024, from $505.4 million at December 31, 2023. Time deposits $250 thousand or more increased $13.5 million to $134.8 million at June 30, 2024 from $121.3 million at year end 2023.
Previous wording
The deposit base consisted of 42.8% retail accounts, 33.5% commercial accounts, 15.6% municipal relationships and 8.1% brokered deposits at March 31, 2024. At March 31, 2024, total estimated uninsured deposits, were approximately $798.6 million, or 24.9% of total deposits; as compared to approximately $883.5 million, or 26.9% of total deposits at December 31, 2023. Included in the uninsured total at March 31, 2024 is $345.8 million of municipal deposits collateralized by letters of credit issued by the FHLB and pledged investment securities, and $1.2 million of affiliate company deposits. As an additional resource to our uninsured depositors, we offer all depositors access to IntraFi's CDARS and ICS programs which allows deposit customers to obtain full FDIC deposit insurance while maintaining their relationship with our Bank.
Current wording
The deposit base consisted of 42.8% retail accounts, 34.7% commercial accounts, 14.4% municipal relationships and 8.1% brokered deposits at June 30, 2024. At June 30, 2024, total estimated uninsured deposits were approximately $744.7 million, or 24.3% of total deposits; as compared to approximately $883.5 million, or 26.9% of total deposits at December 31, 2023. Included in the uninsured total at June 30, 2024 is $292.9 million of municipal deposits collateralized by letters of credit issued by the FHLB and pledged investment securities, and $0.7 million of affiliate company deposits. As an additional resource to our uninsured depositors, we offer all depositors access to IntraFi's CDARS and ICS programs which allows deposit customers to obtain full FDIC deposit insurance while maintaining their relationship with our Bank.
Previous wording
For the three months ended March 31, interest-bearing deposits averaged $2.6 billion in 2024 compared to $2.3 billion in 2023, an increase of $255.9 million or 10.9%. The cost of interest-bearing deposits was 2.90% in 2024 compared to 1.68% for the same period last year. For the first three months, the overall cost of interest-bearing liabilities, including the cost of borrowed funds, was 2.96% in 2024 and 1.85% in 2023. The higher costs are due primarily to increases in interest rates paid on deposits in order to attract and retain current balances. We anticipate that funding costs will continue to increase in the near-term regardless of any FOMC rate adjustments, local competition for deposits and the cost of alternative funding.
Current wording
For the six months ended June 30, interest-bearing deposits averaged $2.5 billion in 2024 compared to $2.4 billion in 2023, an increase of $128.8 million or 5.3%. The cost of interest-bearing deposits was 2.91% in 2024 compared to 1.95% for the same period last year. For the first six months, the cost of total deposits, including noninterest-bearing deposits, was 2.33% in 2024 and 1.49% in 2023. The higher costs are due primarily to increases in interest rates paid in order to attract and retain current balances.
Previous wording
Overall, total borrowings were $78.3 million at March 31, 2024, which included a combination of other borrowings, long-term debt, and subordinated debt, compared to $75.6 million at December 31, 2023, an increase of $2.7 million. There were no overnight borrowings at March 31, 2024 and at December 31, 2023. Other borrowings, which include cash collateral pledged by derivative counterparties to offset interest rate exposure, totaled $20.3 million compared to $17.6 million at December 31, 2023. Higher market interest rates resulted in heightened exposure requiring an increase to pledged cash collateral. Long-term debt was $25.0 million at March 31, 2024 and at year end 2023. Subordinated debt outstanding at March 31, 2024 and December 31, 2023 was $33.0 million.
Current wording
Overall, total borrowings were $162.3 million at June 30, 2024, which included short-term borrowings, long-term debt, other borrowings and subordinated debt, compared to $75.6 million at December 31, 2023, an increase of $86.7 million. At June 30, 2024, other borrowings, which include cash collateral pledged by derivative counterparties to offset interest rate exposure, totaled $20.4 million compared to $17.6 million at December 31, 2023. Higher market interest rates resulted in heightened exposure requiring an increase to pledged cash collateral. FHLB short-term borrowings totaled $83.9 million at June 30, 2024, compared to none at December 31, 2023, as the increase was due to funding the outflow of deposits. . Long-term debt was $25.0 million at June 30, 2024 and at year end 2023. Subordinated debt outstanding at June 30, 2024 and December 31, 2023 was $33.0 million.
Previous wording
Market risk is the risk to our earnings or financial position resulting from adverse changes in market rates or prices, such as interest rates, foreign exchange rates or equity prices. Our exposure to market risk is primarily IRR associated with our lending, investing and deposit-gathering activities. During the normal course of business, we are not exposed to foreign exchange risk or commodity price risk. Our exposure to IRR can be explained as the potential for change in our reported earnings and/or the market value of our net worth. Variations in interest rates affect earnings by changing net interest income and the level of other interest-sensitive income and operating expenses. Interest rate changes also affect the underlying economic value of our assets, liabilities and off-balance sheet items. These changes arise because the present value of future cash flows, and often the cash flows themselves, change with interest rates. The effects of the changes in these present values reflect the change in our underlying economic value and provide a basis for the expected change in future earnings related to interest rates. IRR is inherent in the role of banks as financial intermediaries. However, a bank with a high degree of IRR may experience lower earnings, impaired liquidity and capital positions, and
Current wording
Market risk is the risk to our earnings or financial position resulting from adverse changes in market rates or prices, such as interest rates, foreign exchange rates or equity prices. Our exposure to market risk is primarily IRR associated with our lending, investing and deposit-gathering activities. During the normal course of business, we are not exposed to foreign exchange risk or commodity price risk. Our exposure to IRR can be explained as the potential for change in our reported earnings and/or the market value of our net worth. Variations in interest rates affect earnings by changing net interest income and the level of other interest-sensitive income and operating expenses. Interest rate changes also affect
Previous wording
Our cumulative one-year RSA/RSL ratio equaled 1.23% at March 31, 2024, an increase from 0.73% at December 31, 2023. As previously mentioned, a positive gap indicates that if interest rates increase, our earnings would likely be favorably impacted. Given the current economic conditions and outlook, along with the action by the FOMC to increase the federal funds rate we should experience increased net interest income. The overall focus of ALCO is to maintain a well-balanced interest rate risk position in order to safeguard future earnings. The current position at March 31, 2024, indicates that the amount of RSA repricing within one year would exceed that of RSL, thereby causing net interest income to increase as market rates increase. However, these forward-looking statements are qualified in the aforementioned section entitled “Cautionary Note Regarding Forward-Looking Statements” in this Management’s Discussion and Analysis.
Current wording
Our cumulative one-year RSA/RSL ratio equaled 1.10% at June 30, 2024, an increase from 0.73% at December 31, 2023. As previously mentioned, a positive gap indicates that if interest rates increase, our earnings would likely be favorably impacted. Given the current economic conditions and outlook, we should experience increased net interest income. The overall focus of ALCO is to maintain a well-balanced interest rate risk position in order to safeguard future earnings. The current position at June 30, 2024, indicates that the amount of RSA repricing within one year would exceed that of RSL, thereby causing net interest income to increase as market rates increase. However, these forward-looking statements are qualified in the aforementioned section entitled “Cautionary Note Regarding Forward-Looking Statements” in this Management’s Discussion and Analysis.
Previous wording
As the static gap report fails to address the dynamic changes in the balance sheet composition or prevailing interest rates, we utilize a simulation model to enhance our asset/liability management. This model is used to create pro forma net interest income scenarios under various interest rate shocks. Model results at March 31, 2024, produced results similar to those indicated by the one-year static gap position. In addition, parallel and instantaneous shifts in interest rates under various interest rate shocks resulted in changes in net interest income that were well within ALCO policy limits during
Current wording
As the static gap report fails to address the dynamic changes in the balance sheet composition or prevailing interest rates, we utilize a simulation model to enhance our asset/liability management. This model is used to create pro forma net interest income scenarios under various interest rate shocks. Model results at June 30, 2024, produced results similar to those indicated by the one-year static gap position. In addition, parallel and instantaneous shifts in interest rates under various interest rate shocks resulted in changes in net interest income that were well within ALCO policy limits during the first year of simulation. We will continue to monitor our IRR throughout 2024 and endeavor to employ deposit and loan pricing strategies and direct the reinvestment of loan and investment repayments in order to manage our IRR position.
Previous wording
Our ALCO generally meets quarterly, and most recently met in February to review our interest rate risk profile, capital adequacy and liquidity. At March 31, 2024, the Company’s cash and due from banks balances were $110.0 million. Our maximum borrowing capacity with the FHLB as of March 31, 2024 was $1.2 billion, of which $25.0 million was outstanding in borrowings, $279.9 billion was outstanding in the form of irrevocable standby letters of credit, and $941.2 million was available. Additionally, the Company maintains $425.6 million of availability at the Federal Reserve Bank’s Discount Window through the pledging of securities and through a borrower-in-custody of collateral arrangement, which enables us to pledge certain loans not being used as collateral elsewhere. The Company also maintains an available for sale investment securities portfolio, comprised primarily of highly liquid U.S. Treasury securities, highly-rated municipal securities and U.S. agency-backed mortgage backed securities. This portfolio serves as an additional source of liquidity and capital. At March 31, 2024, the Company’s available for sale investment securities portfolio totaled $394.4 million, $86.8 million of which were unencumbered. We believe our liquidity is adequate to meet both present and future financial obligations and commitments on a timely basis.
Current wording
Our ALCO generally meets quarterly, and most recently met in May to review our interest rate risk profile, capital adequacy and liquidity. At June 30, 2024, the Company’s cash and due from banks balances were $50.0 million. Our maximum borrowing capacity with the FHLB as of June 30, 2024 was $1.3 billion, of which $108.9 million was outstanding in borrowings, $239.5 million was outstanding in the form of irrevocable standby letters of credit, and $924.4 million was available. Additionally, the Company maintains $413.5 million of availability at the Federal Reserve Bank’s Discount Window, through the pledging of securities and through a borrower-in-custody of collateral arrangement, which enables us to pledge certain loans not being used as collateral elsewhere. The Company also maintains an available for sale investment securities portfolio, comprised primarily of highly liquid U.S. Treasury securities, highly-rated municipal securities and U.S. agency-backed mortgage backed securities. This portfolio serves as an additional source of liquidity and capital. At June 30, 2024, the Company’s available for sale investment securities portfolio totaled $385.2 million, $83.1 million of which were unencumbered. We believe our liquidity is adequate to meet both present and future financial obligations and commitments on a timely basis.
Previous wording
We employ a number of analytical techniques in assessing the adequacy of our liquidity position. One such technique is the use of ratio analysis to determine the extent of our reliance on noncore funds to fund our investments and loans maturing after March 31, 2024. Our noncore funds at March 31, 2024, were comprised of time deposits in denominations of $100 thousand or more, brokered deposits and other borrowings. These funds are not considered to be a strong source of liquidity because they are very interest rate sensitive and are considered to be highly volatile. At
Current wording
We employ a number of analytical techniques in assessing the adequacy of our liquidity position. One such technique is the use of ratio analysis to determine the extent of our reliance on noncore funds to fund our investments and loans maturing after June 30, 2024. Our noncore funds at June 30, 2024, were comprised of time deposits in denominations of $100 thousand or more, brokered deposits and other borrowings. These funds are not considered to be a strong source of liquidity because they are very interest rate sensitive and are considered to be highly volatile. At June 30, 2024, our net noncore funding dependence ratio, the difference between noncore funds and short-term investments to long-term assets, was 18.9%, while our net short-term noncore funding dependence ratio, noncore funds maturing within one-year, less short-term investments to long-term assets equaled 10.2%. Comparatively, our overall noncore dependence ratio at year-end 2023 was 12.1% and our net short-term noncore funding dependence ratio was 4.7%, indicating that our reliance on noncore funds has increased overall due to exhausting our federal funds sold balance of $144.7 million and increasing short-term borrowings to fund the outflow of deposits during the first six months of 2024.
Previous wording
The Consolidated Statements of Cash Flows present the changes in cash and cash equivalents from operating, investing and financing activities. Cash and cash equivalents, consisting of cash on hand, cash items in the process of collection, deposit balances with other banks and federal funds sold, decreased $77.4 million during the three months ended March 31, 2024. Cash and cash equivalents increased $102.7 million for the same period last year. For the three months ended March 31, 2024, net cash outflows of $75.3 million from financing activities and $5.3 million from investing activities were partially offset by net cash inflows of $3.2 million from operating activities. For the same period of 2023, net cash inflows of $4.5 million from operating activities and $112.4 million from financing activities were offset by net cash outflows of $14.2 million from investing activities.
Current wording
The Consolidated Statements of Cash Flows present the changes in cash and cash equivalents from operating, investing and financing activities. Cash and cash equivalents, consisting of cash on hand, cash items in the process of collection, deposit balances with other banks and federal funds sold, decreased $137.4 million during the six months ended June 30, 2024. Cash and cash equivalents increased $98.8 million for the same period last year. For the six months ended June 30, 2024, net cash outflows of $133.2 million from financing activities and $9.2 million from investing activities were partially offset by net cash inflows of $5.0 million from operating activities. For the same period of 2023, net cash inflows of $17.6 million from operating activities and $104.2 million from financing activities were partially offset by net cash outflows of $22.9 million from investing activities.
Previous wording
Operating activities provided net cash of $3.2 million for the three months ended March 31, 2024, and $4.5 million for the corresponding three months of 2023. Net income, adjusted for the effects of gains and losses along with noncash transactions such as depreciation and the provision for credit losses, is the primary source of funds from operations.
Current wording
Operating activities provided net cash of $5.0 million for the six months ended June 30, 2024, and $17.6 million for the corresponding six months of 2023. Net income, adjusted for the effects of gains and losses along with noncash transactions such as depreciation and the provision for credit losses, is the primary source of funds from operations.
Previous wording
Investing activities primarily include transactions related to our lending activities and investment portfolio. Investing activities used net cash of $5.3 million for the three months ended March 31, 2024, compared to using net cash of $14.2 million for the same period of 2023. A net increase in loans was the primary factor causing the net cash outflow from investing activities in both periods. The year ago period included proceeds from the sale of investment securities to fund a portion of the strong loan growth.
Current wording
Investing activities primarily include transactions related to our lending activities and investment portfolio. Investing activities used net cash of $9.2 million for the six months ended June 30, 2024, compared to using net cash of $22.9 million for the same period of 2023. A net increase in loans was the primary factor causing the net cash outflow from investing activities in both periods. The current period included proceeds of $10.9 million from the maturities, calls and principal payments of investments, while the year ago period included proceeds from the sale of investment securities to fund a portion of the strong loan growth.
Previous wording
Financing activities used net cash of $75.3 million for the three months ended March 31, 2024, and provided net cash of $112.4 million for the corresponding three months of 2023. In 2024, deposit decreases caused the net cash outflow in financing activity. The year ago period included new long-term borrowings and the addition of brokered deposits to build our cash position. While a portion of the outflow is seasonal, we continue to seek deposits from new markets and customers as well as existing customers, including municipalities and school districts.
Current wording
Financing activities used net cash of $133.2 million for the six months ended June 30, 2024, and provided net cash of $104.2 million for the corresponding six months of 2023. In 2024, deposit decreases caused the net cash outflow in financing activity. The year ago period included new long-term borrowings and the addition of brokered deposits to build our cash position. While a portion of the outflow is seasonal, we continue to seek deposits from new markets and customers as well as existing customers, including municipalities and school districts.
Previous wording
Stockholders’ equity totaled $340.0 million or $48.18 per share at March 31, 2024, compared to $340.4 million or $48.35 per share at December 31, 2023. Stockholders’ equity decreased during the three month period ended March 31, 2024 primarily due to dividend payout of $2.9 million and an increase to other comprehensive loss of $1.1 million due to changes in market values of available for sale securities, partially offset bynet income of $3.5 million for the three months ended March 31, 2024.
Current wording
Stockholders’ equity totaled $340.8 million or $48.29 per share at June 30, 2024, compared to $340.4 million or $48.35 per share at December 31, 2023. Stockholders’ equity increased during the six month period ended June 30, 2024 primarily due to earnings, offset by a dividend payout of $5.8 million and an increase to other comprehensive loss of $0.9 million, due to changes in market values of available for sale securities.
Previous wording
Dividends declared equaled $0.41 per share for the three months ended March 31, 2024 and 2023. The dividend payout ratio was 83.7% for the three months ended March 31, 2024 and 39.0% for the same period of 2023. The Company has paid cash dividends since its formation as a bank holding company in 1986. It is the present intention of the Board of Directors to continue this dividend payment policy. The Board declared on April 26, 2024 a second quarter dividend of
Current wording
Dividends declared equaled $0.82 per share for the six months ended June 30, 2024 and $0.82 per share for the same period of 2023. The dividend payout ratio was 85.4% for the six months ended June 30, 2024 and 34.5% for the same period of 2023. The Company has paid cash dividends since its formation as a bank holding company in 1986. The Board declared on July 26, 2024 a third quarter dividend of $0.6175 per share payable on September 13, 2024 to shareholders of record as of August 30, 2024. The increase in the quarterly cash dividend was contemplated as part of the Merger Agreement between the Company and FNCB. It is the present intention of the Board of Directors to continue this dividend payment policy. Further dividends, however, must necessarily depend upon earnings, financial condition, appropriate legal restrictions and other factors relevant at the time the Board of Directors considers payment of dividends.
Previous wording
The adequacy of capital is reviewed on an ongoing basis with reference to the size, composition and quality of resources and regulatory guidelines. We seek to maintain a level of capital sufficient to support existing assets and anticipated asset growth, maintain favorable access to capital markets, and preserve high quality credit ratings. At March 31, 2024, Peoples Bank’s Tier 1 capital to total average assets was 9.63% as compared to 9.34% at December 31, 2023. Peoples Bank’s Tier 1 capital to risk weighted asset ratio was 12.94% and the total capital to risk weighted asset ratio was 13.79% at March 31, 2024. These ratios were 13.01% and 13.82% at December 31, 2023. Peoples Bank’s common equity Tier 1 to risk weighted asset ratio was 12.94% at March 31, 2024 compared to 13.01% at December 31, 2023. Peoples Bank met all capital adequacy requirements and was deemed to be well-capitalized under regulatory standards at March 31, 2024.
Current wording
The adequacy of capital is reviewed on an ongoing basis with reference to the size, composition and quality of resources and regulatory guidelines. We seek to maintain a level of capital sufficient to support existing assets and anticipated asset growth, maintain favorable access to capital markets, and preserve high quality credit ratings. At June 30, 2024, Peoples Bank’s Tier 1 capital to total average assets was 9.82% as compared to 9.34% at December 31, 2023. Peoples Bank’s Tier 1 capital to risk weighted asset ratio was 13.09% and the total capital to risk weighted asset ratio was 13.95% at June 30, 2024. These ratios were 13.01% and 13.82% at December 31, 2023. Peoples Bank’s common equity Tier 1 to risk weighted asset ratio was 13.09% at June 30, 2024 compared to 13.01% at December 31, 2023. Peoples Bank met all capital adequacy requirements and was deemed to be well-capitalized under regulatory standards at June 30, 2024.
Previous wording
Peoples reported net income of $3.5 million or $0.49 per diluted share for the three months ended March 31, 2024, a 54.3% decrease when compared to $7.6 million or $1.05 per share for the comparable period of 2023. Quarterly net income included lower net interest income of $3.7 million due to higher deposit costs. Noninterest income decreased by $0.3 million on lower swap revenue. Expenses increased by $1.6 million, which included expenses associated with the proposed merger of $0.5 million, increases to occupancy and equipment expenses of $0.6 million and $0.7 million in higher other expenses due mainly to a $0.7 million increase to the provision for unfunded commitments expense in the period partially offset by lower salary expenses of $0.2 million. Provision for income tax decreased by $0.9 million on lower earnings.
Current wording
Peoples reported net income of $3.3 million or $0.46 per diluted share for the three months ended June 30, 2024, a 65.2% decrease when compared to $9.4 million or $1.31 per share for the comparable period of 2023. Quarterly net income included lower net interest income of $3.2 million due to higher deposit costs. Noninterest income was in line with the year ago period. Non-interest expenses increased by $1.5 million, which included merger related expenses of $1.0 million, increases to occupancy and equipment expenses of $0.3 million, higher professional services expenses of $0.2 million, and $0.2 million in higher other expenses. Provision for income tax decreased by $1.4 million on lower earnings.
Previous wording
Return on average assets (“ROA”) measures our net income in relation to total assets. Our annualized ROA was 0.38% for the first quarter of 2024 compared to 0.86% for the same period of 2023. Return on average equity (“ROE”) indicates how effectively we can generate net income on the capital invested by stockholders. Our annualized ROE was 4.09% for the first quarter of 2024 compared to 9.43% for the comparable period in 2023. The declines in our annualized ROA and ROE were due primarily to a lower level of net income.
Current wording
Return on average assets (“ROA”) measures our net income in relation to total assets. Our annualized ROA was 0.37% for the second quarter of 2024 compared to 1.04% for the same period of 2023. Return on average equity (“ROE”) indicates how effectively we can generate net income on the capital invested by stockholders. Our annualized ROE was 3.88% for the second quarter of 2024 compared to 11.42% for the comparable period in 2023. The declines in our annualized ROA and ROE were due primarily to a lower level of net income.
Previous wording
The following table reconciles the non-GAAP financial measures of FTE net interest income for the three months ended March 31, 2024 and 2023:
Current wording
The following table reconciles the non-GAAP financial measures of FTE net interest income for the three and six months ended June 30, 2024 and 2023:
Previous wording
The efficiency ratio is noninterest expenses, less amortization of intangible assets and acquisition related expenses, as a percentage of FTE net interest income plus noninterest income less gains on equity securities and gains on sale of assets. The following table reconciles the non-GAAP financial measures of the efficiency ratio to GAAP for the three months ended March 31, 2024 and 2023:
Current wording
The efficiency ratio is noninterest expenses, less amortization of intangible assets and acquisition related expenses, as a percentage of FTE net interest income plus noninterest income less gains on equity securities and gains on sale of assets. Management monitors the efficiency ratio to determine how well it is managing its operating expenses; a lower efficiency ratio is generally preferable as it indicates the Company is spending less to generate income. The Company is continuing to pursue opportunities to reduce expenses as a percentage of operating revenues.
Previous wording
Changes in net interest income are measured by the net interest spread and net interest margin. Net interest spread, the difference between the average yield earned on earning assets and the average rate incurred on interest-bearing liabilities, illustrates the effects changing interest rates have on profitability. Net interest margin, net interest income as a percentage of earning assets, is a more comprehensive ratio, as it reflects not only the spread, but also the change in the composition of interest-earning assets and interest-bearing liabilities. Tax-exempt loans and investments carry pre-tax yields lower than their taxable counterparts. Therefore, in order to make the analysis of net interest income more comparable, tax-exempt income and yields are reported herein on a tax-equivalent basis using the prevailing federal statutory tax rate of 21.0% in 2024 and 2023.
Current wording
Changes in net interest income are measured by the net interest spread and net interest margin. Net interest spread, the difference between the average yield earned on earning assets and the average rate incurred on interest-bearing liabilities, illustrates the effects changing interest rates have on profitability. Net interest margin, net interest income as a percentage of earning assets, is a more comprehensive ratio, as it reflects not only the spread, but also the change in the composition of interest-earning assets and interest-bearing liabilities. Tax-exempt loans and investments carry pre-tax yields lower than their taxable counterparts. Therefore, in order to make the analysis of net interest income more comparable, tax-exempt income and yields are reported herein on a FTE basis, as FTE net interest income using the prevailing federal statutory tax rate of 21.0% in 2024 and 2023.
Showing the first 40 of 56 pairs. Open the source sections for the rest.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
decrease in deposits was due to an $80.7 million decrease in retail and commercial accounts, a $121.3 million decrease in municipal deposits, and a $12.1 million decrease in brokered deposits.
Current report — wording carried from elsewhere
the underlying economic value of our assets, liabilities and off-balance sheet items. These changes arise because the present value of future cash flows, and often the cash flows themselves, change with interest rates. The effects of the changes in these present values reflect the change in our underlying economic value and provide a basis for the expected change in future earnings related to interest rates. IRR is inherent in the role of banks as financial intermediaries. However, a bank with a high degree of IRR may experience lower earnings, impaired liquidity and capital positions, and most likely, a greater risk of insolvency. Therefore, banks must carefully evaluate IRR to promote safety and soundness in their activities.
Current report — wording carried from elsewhere
The following table reconciles the non-GAAP financial measures of the efficiency ratio to GAAP for the three and six months ended June 30, 2024 and 2023:
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
Interest-bearing checking, NOW, and money market accounts decreased $64.7 million to $1.5 billion at March 31, 2024 from $1.6 billion at December 31, 2023 due in part to seasonal municipal outflows and depositors shifting to higher earning products both internally and externally. Savings accounts decreased $13.6 million to $415.5 million as of
Previous report — wording carried elsewhere
most likely, a greater risk of insolvency. Therefore, banks must carefully evaluate IRR to promote safety and soundness in their activities.
Previous report — wording carried elsewhere
the first year of simulation. We will continue to monitor our IRR throughout 2024 and endeavor to employ deposit and loan pricing strategies and direct the reinvestment of loan and investment repayments in order to manage our IRR position.
Previous report — wording carried elsewhere
March 31, 2024, our net noncore funding dependence ratio, the difference between noncore funds and short-term investments to long-term assets, was 15.0%, while our net short-term noncore funding dependence ratio, noncore funds maturing within one-year, less short-term investments to long-term assets equaled 5.4%. Comparatively, our overall noncore dependence ratio at year-end 2023 was 12.1% and our net short-term noncore funding dependence ratio was 4.7%, indicating that our reliance on noncore funds has increased overall due to increases in larger time deposit balances and our dependence in short-term non-core funding as decreases in our short term investments outpaced decreases to our short term non-core funds.