FIRST HAWAIIAN INC

Previous wording

The foregoing factors should not be considered an exhaustive list and should be read together with the risk factors and other cautionary statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2024. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by applicable law.

Current wording

The foregoing factors should not be considered an exhaustive list and should be read together with the risk factors and other cautionary statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 and Quarterly Report on Form 10-Q for the quarters ended March 31, 2024 and June 30, 2024. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by applicable law.

Previous wording

Hawaii’s economy remains relatively resilient in the wake of high consumer prices and the August 2023 wildfires that continue to affect the island of Maui. According to the State of Hawaii Department of Labor and Industrial Relations, the statewide seasonally adjusted unemployment rate decreased to 2.9% at June 30, 2024, compared to 3.0% at June 30, 2023. Nationally, the seasonally adjusted unemployment rate was 4.1% at June 30, 2024 compared to 3.6% at June 30, 2023.

Current wording

Hawaii’s economy remains relatively resilient in the wake of high consumer prices and the August 2023 wildfires that continue to affect the island of Maui. According to the State of Hawaii Department of Labor and Industrial Relations, the statewide seasonally adjusted unemployment rate increased to 2.9% at September 30, 2024, compared to 2.8% at September 30, 2023. Nationally, the seasonally adjusted unemployment rate was 4.1% at September 30, 2024 compared to 3.8% at September 30, 2023.

Previous wording

Domestic visitor arrivals for the state remain strong, with the average daily domestic passenger counts for the first six months of 2024 relatively similar to the average daily passenger counts during the first six months of 2023, according to the Hawaii Tourism Authority. International visitor arrivals from Japan in the first six months of 2024 have increased significantly as compared to the first six months of each of the last three years, but the level of arrivals from Japan remains below pre-pandemic levels due to the weak yen.

Current wording

Domestic visitor arrivals for the state remain stable, with the average daily domestic passenger counts for the first nine months of 2024 relatively similar to the average daily passenger counts during the first nine months of 2023, according to the Hawaii Tourism Authority. International visitor arrivals from Japan in the first nine months of 2024 have increased significantly as compared to the first nine months of each of the last three years, but the level of arrivals from Japan remains below pre-pandemic levels due to the weak yen.

Previous wording

The local Oahu housing market has remained relatively stable, but is experiencing some softening as compared to previous years primarily due to high interest rates. According to the Honolulu Board of Realtors, the volume of single-family home sales increased by 6.7%, while condominium sales decreased by 5.8%, in each case when comparing the first six months of 2024 with the same period in 2023. When comparing the first six months of 2024 with the same period in 2022, however, the volume of single-family home sales decreased by 30.3%, while condominium sales decreased by 39.6%. The median price of a single-family home sold on Oahu in the first six months of 2024 was $1,085,000, an increase of 3.3% from the same period in 2023. The median price of a condominium sold on Oahu in the first six months of 2024 was $510,000, an increase of 2.0% from the same period in 2023. As of June 30, 2024, months of inventory of single-family homes and condominiums on Oahu remained low at approximately 3.0 and 4.7 months, respectively.

Current wording

The local Oahu housing market has remained relatively stable, but is experiencing some softening as compared to previous years primarily due to high interest rates. According to the Honolulu Board of Realtors, the volume of single-family home sales increased by 5.8%, while condominium sales decreased by 5.6%, in each case when comparing the first nine months of 2024 with the same period in 2023. When comparing the first nine months of 2024 with the same period in 2022, however, the volume of single-family home sales decreased by 26.5%, while condominium sales decreased by 35.0%. The median price of a single-family home sold on Oahu in the first nine months of 2024 was $1,100,000, an increase of 4.8% from the same period in 2023. The median price of a condominium sold on Oahu in the first nine months of 2024 was $510,000, an increase of 1.0% from the same period in 2023. As of September 30, 2024, months of inventory of single-family homes and condominiums on Oahu remained low at approximately 3.4 and 5.2 months, respectively.

Previous wording

We also expect that the aftermath of the wildfires will continue to impact commercial activity throughout the island of Maui, but there remains much uncertainty as to how long it will take Maui to rebuild, return tourism to historic levels, and recover economically. Visitor counts to Maui in the first half of 2024 are up from August 2023, especially with the re-opening of West Maui in late 2023, but are still lower than in the first half of 2023 and before the COVID-19 pandemic in 2019.

Current wording

We also expect that the aftermath of the wildfires will continue to impact commercial activity throughout the island of Maui, but there remains much uncertainty as to how long it will take Maui to rebuild, return tourism to historic levels, and recover economically. Although the visitor count to Maui has been steadily increasing since August 2023, especially with the re-opening of West Maui in late 2023, visitor arrivals in the first three quarters of 2024 are still lower than visitor arrivals in the first three quarters of 2023 and before the COVID-19 pandemic in 2019.

Previous wording

As of June 30, 2024, the Company was “well-capitalized” and met all applicable regulatory capital requirements, including a Common Equity Tier 1 capital ratio of 12.73%, compared to the minimum requirement of 4.50%. For additional discussions regarding our capital and liquidity positions and related risks, refer to the sections titled “Liquidity and Capital Resources” and “Capital” in this MD&A.

Current wording

As of September 30, 2024, the Company was “well-capitalized” and met all applicable regulatory capital requirements, including a Common Equity Tier 1 capital ratio of 13.03%, compared to the minimum requirement of 4.50%. For additional discussions regarding our capital and liquidity positions and related risks, refer to the sections titled “Liquidity and Capital Resources” and “Capital” in this MD&A.

Previous wording

Economic conditions and therefore our results of operations may be impacted by a variety of other factors as well, such as other natural disasters, an economic slowdown or recession, financial market volatility, supply chain disruptions, monetary and fiscal policy measures, heightened geopolitical tensions, fluctuations in interest rates and foreign currency exchange rates, the political and regulatory environment, changes to the U.S. Federal budget and potential changes in tax laws.

Current wording

Economic conditions and therefore our results of operations may be impacted by a variety of other factors as well, such as other natural disasters, an economic slowdown or recession, financial market volatility, supply chain disruptions, monetary and fiscal policy measures, heightened geopolitical tensions, fluctuations in foreign currency exchange rates and interest rates, such as the most recently announced 0.5% interest rate cut by the Federal Reserve, the political and regulatory environment, including the outcome of the U.S. 2024 elections, changes to the U.S. Federal budget and potential changes in tax laws.

Previous wording

Net income was $61.9 million for the three months ended June 30, 2024, a decrease of $0.5 million or 1% as compared to the same period in 2023. Basic and diluted earnings per share were both $0.48 per share for the three months ended June 30, 2024, a decrease of $0.01 per share or 2% as compared to the same period in 2023. The decrease in net income was primarily due to a $7.1 million decrease in net interest income and a $1.2 million increase in noninterest expense. This was partially offset by a $4.4 million increase in noninterest income and a $3.2 million decrease in the provision for credit losses (the “Provision”).

Current wording

Net income was $61.5 million for the three months ended September 30, 2024, an increase of $3.3 million or 6% as compared to the same period in 2023. Basic and diluted earnings per share were both $0.48 per share for the three months ended September 30, 2024, an increase of $0.02 per share or 4% as compared to the same period in 2023. The increase in net income was primarily due to a $7.2 million increase in noninterest income and a $3.2 million decrease in the provision for income taxes. This was partially offset by a $6.8 million increase in noninterest expense and a $0.4 million decrease in net interest income.

Previous wording

Our return on average total assets was 1.04% for the three months ended June 30, 2024, an increase of three basis points from the same period in 2023, and our return on average total stockholders’ equity was 9.91% for the three months ended June 30, 2024, a decrease of 77 basis points from the same period in 2023. Our return on average tangible assets was 1.08% for the three months ended June 30, 2024, an increase of three basis points from the same period in 2023, and our return on average tangible stockholders’ equity was 16.42% for the three months ended June 30, 2024, a decrease of 215 basis points from the same period in 2023, primarily due to an increase in average tangible equity. Our efficiency ratio was 59.22% for the three months ended June 30, 2024 compared to 57.96% for the same period in 2023.

Current wording

Our return on average total assets was 1.02% for the three months ended September 30, 2024, an increase of nine basis points from the same period in 2023, and our return on average total stockholders’ equity was 9.45% for the three months ended September 30, 2024, a decrease of 31 basis points from the same period in 2023. Our return on average tangible assets was 1.06% for the three months ended September 30, 2024, an increase of nine basis points from the same period in 2023, and our return on average tangible stockholders’ equity was 15.35% for the three months ended September 30, 2024, a decrease of 149 basis points from the same period in 2023, primarily due to an increase in average tangible equity, which resulted in part from a decrease in net unrealized losses in our investment securities portfolio, partially offset by higher net income. Our efficiency ratio was 59.77% for the three months ended September 30, 2024 compared to 58.31% for the same period in 2023.

Previous wording

Net income was $116.1 million for the six months ended June 30, 2024, a decrease of $13.1 million or 10% as compared to the same period in 2023. Basic and diluted earnings per share were both $0.91 per share for the six months ended June 30, 2024, a decrease of $0.10 per share or 10% as compared to the same period in 2023. The decrease in net income was primarily due to a $19.9 million decrease in net interest income and a $11.5 million increase in noninterest expense, partially offset by a $6.8 million increase in noninterest income, a $5.8 million decrease in the provision for income taxes and a $5.7 million decrease in the Provision.

Current wording

Net income was $177.6 million for the nine months ended September 30, 2024, a decrease of $9.8 million or 5% as compared to the same period in 2023. Basic earnings per share was $1.39 per share for the nine months ended September 30, 2024, a decrease of $0.08 per share or 5% as compared to the same period in 2023. Diluted earnings per share was $1.38 per share for the nine months ended September 30, 2024, a decrease of $0.09 per share or 6% as compared to the same period in 2023. The decrease in net income was primarily due to a $20.3 million decrease in net interest income and an $18.2 million increase in noninterest expense. This was partially offset by a $14.0 million increase in noninterest income, a $9.0 million decrease in the provision for income taxes and a $5.8 million decrease in the Provision.

Previous wording

Our return on average total assets was 0.97% for the six months ended June 30, 2024, a decrease of nine basis points from the same period in 2023, and our return on average total stockholders’ equity was 9.32% for the six months ended June 30, 2024, a decrease of 191 basis points for the same period in 2023. Our return on average tangible assets was 1.01% for the six months ended June 30, 2024, a decrease of nine basis points from the same period in 2023, and our return on average tangible stockholders’ equity was 15.48% for the six months ended June 30, 2024, a decrease of 417 basis points from the same period in 2023, primarily due to an increase in average tangible equity and lower net income driven by higher deposit funding costs. Our efficiency ratio was 60.69% for the six months ended June 30, 2024 compared to 56.17% for the same period in 2023.

Current wording

Our return on average total assets was 0.99% for the nine months ended September 30, 2024, a decrease of two basis points from the same period in 2023, and our return on average total stockholders’ equity was 9.37% for the nine months ended September 30, 2024, a decrease of 135 basis points for the same period in 2023. Our return on average tangible assets was 1.03% for the nine months ended September 30, 2024, a decrease of three basis points from the same period in 2023, and our return on average tangible stockholders’ equity was 15.43% for the nine months ended September 30, 2024, a decrease of 325 basis points from the same period in 2023, primarily due to an increase in average tangible equity, which resulted in part from a decrease in net unrealized losses in our investment securities portfolio, and lower net income. Our efficiency ratio was 60.38% for the nine months ended September 30, 2024 compared to 56.86% for the same period in 2023.

Previous wording

Our results for the six months ended June 30, 2024 were highlighted by the following:

Current wording

Our results for the nine months ended September 30, 2024 were highlighted by the following:

Previous wording

For the six months ended June 30, 2024, we continued to maintain high levels of liquidity and adequate reserves for credit losses. We also remained well-capitalized. Common Equity Tier 1 (“CET1”) was 12.73% as of June 30, 2024, an increase of 34 basis points from December 31, 2023. The increase in CET1 was primarily due to earnings for the six months ended June 30, 2024, partially offset by the dividends declared and paid to the Company’s stockholders.

Current wording

For the nine months ended September 30, 2024, we continued to maintain high levels of liquidity and adequate reserves for credit losses. We also remained well-capitalized. Common Equity Tier 1 (“CET1”) was 13.03% as of September 30, 2024, an increase of 64 basis points from December 31, 2023. The increase in CET1 was primarily due to earnings for the nine months ended September 30, 2024, partially offset by the dividends declared and paid to the Company’s stockholders.

Previous wording

Net interest income, on a fully taxable-equivalent basis, was $154.4 million for the three months ended June 30, 2024, a decrease of $6.8 million or 4% compared to the same period in 2023. Our net interest margin was 2.92% for the three months ended June 30, 2024, an increase of one basis point from the same period in 2023. The decrease in net interest income, on a fully taxable-equivalent basis, was primarily due to higher deposit funding costs, partially offset by higher earning asset yields driven by the higher yields in our loan and lease portfolio during the three months ended June 30, 2024, compared to the same period in 2023. Deposit funding costs were $85.6 million for the three months ended June 30, 2024, an increase of $27.5 million or 47% compared to the same period in 2023, primarily due to an increase in interest rates. Rates paid on our interest-bearing deposits were 2.58% for the three months ended June 30, 2024, an increase of 76 basis points compared to the same period in 2023, primarily due to increases in our money market, time and savings deposits. The yield on our loan and lease portfolio was 5.67% for the three months ended June 30, 2024, an increase of 45 basis points as compared to the same period in 2023. We experienced an increase in our yields from total loans and leases primarily due to increases in yields from our adjustable-rate commercial real estate loans and commercial and industrial loans, which are largely based on the Secured Overnight Financing Rate (“SOFR”), in addition to higher rates on loans that originated during the period.

Current wording

Net interest income, on a fully taxable-equivalent basis, was $157.8 million for the three months ended September 30, 2024, a decrease of $0.8 million or 1% compared to the same period in 2023. Our net interest margin was 2.95% for the three months ended September 30, 2024, an increase of nine basis points from the same period in 2023. The decrease in net interest income, on a fully taxable-equivalent basis, was primarily due to higher deposit funding costs and lower average balances in our investment securities portfolio. This was partially offset by higher earning asset yields driven by higher yields in our loan and lease portfolio and higher average balances on our interest-bearing deposits in other banks during the three months ended September 30, 2024, compared to the same period in 2023. Deposit funding costs were $87.5 million for the three months ended September 30, 2024, an increase of $12.8 million or 17% compared to the same period in 2023, primarily due to an increase in interest rates. Rates paid on our interest-bearing deposits were 2.58% for the three months ended September 30, 2024, an increase of 35 basis points compared to the same period in 2023, primarily due to rate increases. For the three months ended September 30, 2024, the average balance of our investment securities portfolio was $6.0 billion, a decrease of $1.0 billion or 15% compared to the same period in 2023, primarily due to payments and maturities, in addition to the sale of securities in late 2023. The yield on our loan and lease portfolio was 5.74% for the three months ended September 30, 2024, an increase of 35 basis points as compared to the same period in 2023, primarily due to higher rates on new loan originations. For the three months ended September 30, 2024, the average balance on our interest-bearing deposits in other banks was $1.0 billion, an increase of $411.8 million or 68% compared to the same period in 2023.

Previous wording

For the six months ended June 30, 2024 and 2023, average balances, related income and expenses, on a fully taxable-equivalent basis, and resulting yields and rates are presented in Table 5. An analysis of the change in net interest income, on a fully taxable-equivalent basis, is presented in Table 6.

Current wording

For the nine months ended September 30, 2024 and 2023, average balances, related income and expenses, on a fully taxable-equivalent basis, and resulting yields and rates are presented in Table 5. An analysis of the change in net interest income, on a fully taxable-equivalent basis, is presented in Table 6.

Previous wording

Net interest income, on a fully taxable-equivalent basis, was $310.3 million for the six months ended June 30, 2024, a decrease of $19.6 million or 6% compared to the same period in 2023. Our net interest margin was 2.91% for the six months ended June 30, 2024, a decrease of 10 basis points from the same period in 2023. The decrease in net interest income, on a fully taxable-equivalent basis, was driven by the interest rate environment and was primarily due to higher deposit funding costs and lower average balances in our investment securities portfolio. This was partially offset by higher earning asset yields driven by higher yields in our loan and lease portfolio and higher average balances on our interest-bearing deposits in other banks during the six months ended June 30, 2024. Deposit funding costs were $169.8 million for the six months ended June 30, 2024, an increase of $68.4 million or 67% compared to the same period in 2023 primarily due to an increase in interest rates. Rates paid on our interest-bearing deposits were 2.56% for the six months ended June 30, 2024, an increase of 96 basis points compared to the same period in 2023, primarily due to increases in our money market, time and savings deposits. For the six months ended June 30, 2024, the average balance of our investment securities portfolio was $6.1 billion, a decrease of $1.2 billion or 16% compared to the same period in 2023, primarily due to payments and maturities, in addition to the sale of securities in 2023. The yield on our loan and lease portfolio was 5.65% for the six months ended June 30, 2024, an increase of 56 basis points as compared to the same period in 2023. We experienced an increase in our yields from total loans and leases primarily due to increases in yields from our adjustable-rate commercial real estate loans, commercial and industrial loans and construction loans, which are largely based on the SOFR, in addition to higher rates on loans that originated during the period. For the six months ended June 30, 2024, the average balance on our interest-bearing deposits in other banks was $815.9 million, an increase of $380.7 million or 87% compared to the same period in 2023.

Current wording

Net interest income, on a fully taxable-equivalent basis, was $468.1 million for the nine months ended September 30, 2024, a decrease of $20.5 million or 4% compared to the same period in 2023. Our net interest margin was 2.93% for the nine months ended September 30, 2024, a decrease of three basis points from the same period in 2023. The decrease in net interest income, on a fully taxable-equivalent basis, was driven by the interest rate environment and was primarily due to higher deposit funding costs and lower average balances in our investment securities portfolio. This was partially offset by higher earning asset yields driven by higher yields in our loan and lease portfolio and higher average balances on our interest-bearing deposits in other banks during the nine months ended September 30, 2024. Deposit funding costs were $257.3 million for the nine months ended September 30, 2024, an increase of $81.3 million or 46% compared to the same period in 2023 primarily due to an increase in interest rates. Rates paid on our interest-bearing deposits were 2.57% for the nine months ended September 30, 2024, an increase of 75 basis points compared to the same period in 2023, primarily due to rate increases. For the nine months ended September 30, 2024, the average balance of our investment securities portfolio was $6.1 billion, a decrease of $1.1 billion or 16% compared to the same period in 2023, primarily due to payments and maturities, in addition to the sale of securities in late 2023. The yield on our loan and lease portfolio was 5.68% for the nine months ended September 30, 2024, an increase of 49 basis points as compared to the same period in 2023 primarily to increased yields from our adjustable-rate loans and higher rates on loans that originated during the period. For the nine months ended September 30, 2024, the average balance on our interest-bearing deposits in other banks was $884.6 million, an increase of $391.0 million or 79% compared to the same period in 2023.

Previous wording

The Federal Reserve influences the general market rates of interest, including the deposit and loan rates offered by many financial institutions. Our loan portfolio is affected by changes in the prime interest rate. The prime rate began in 2023 at 7.50% and increased 100 basis points (25 basis points each in February, March, May and July) to end the year at 8.50%, where it remained as at the end of the second quarter of 2024. As noted above, our loan portfolio is also impacted by changes in the SOFR. At June 30, 2024, the one-month and three-month CME Term SOFR interest rates were 5.34% and 5.32%, respectively. At June 30, 2023, the one-month and three-month CME Term SOFR interest rates were 5.14% and 5.27%, respectively. The target range for the federal funds rate, which is the cost of immediately available overnight funds, began in 2023 at 4.25% to 4.50%, and increased 100 basis points to end the year at 5.25% to 5.50%, where it remained as at the end of the second quarter of 2024.

Current wording

The Federal Reserve influences the general market rates of interest, including the deposit and loan rates offered by many financial institutions. Our loan portfolio is affected by changes in the prime interest rate. The prime rate began in 2023 at 7.50% and increased 100 basis points (25 basis points each in February, March, May and July) to end the year at 8.50%. In September 2024, the prime rate decreased 50 basis points to 8.00%, where it remained as at the end of the third quarter of 2024. Our loan portfolio is also impacted by changes in the SOFR. At September 30, 2024, the one-month and three-month CME Term SOFR interest rates were 4.85% and 4.59%, respectively. At September 30, 2023, the one-month and three-month CME Term SOFR interest rates were 5.32% and 5.40%, respectively. The target range for the federal funds rate, which is the cost of immediately available overnight funds, began in 2023 at 4.25% to 4.50%, and increased 100 basis points to end the year at 5.25% to 5.50%. As of August 31, 2024, the federal funds rate was in the range of 5.25% to 5.50%. Effective September 19, 2024, the Federal Reserve decreased the federal funds rate to a range of 4.75% to 5.00%. There continues to be uncertainty in the changing market and economic conditions, including the possibility of additional measures that could be taken by the Federal Reserve and other government agencies related to the overall macroeconomic environment.

Previous wording

The Provision was $1.8 million for the three months ended June 30, 2024, a decrease of $3.2 million or 64% as compared to the same period in 2023. The decrease in the Provision for the three months ended June 30, 2024 was primarily due to decreases in the provision for construction loans, home equity lines and commercial and industrial loans and the provision for unfunded commercial real estate and construction commitments. This was partially offset by increases in the provision for residential mortgage loans and commercial real estate loans. We recorded net charge-offs of loans and leases of $2.5 million and $3.5 million for the three months ended June 30, 2024 and 2023, respectively. This represented net charge-offs of 0.07% and 0.10% of average loans and leases, on an annualized basis, for the three months ended June 30, 2024 and 2023, respectively. The Provision was $8.1 million for the six months ended June 30, 2024, a decrease of $5.7 million or 41% as compared to the same period in 2023. The decrease was primarily due to decreases in the provision for consumer loans, home equity lines and construction loans and the provision for unfunded construction and home equity line commitments. This was partially offset by increases in the provision for residential mortgage loans, commercial real estate loans and lease financing. We recorded net charge-offs of loans and leases of $6.3 million and $6.8 million for the six months ended June 30, 2024 and 2023, respectively. This represented net charge-offs of 0.09% and 0.10% of average loans and leases, on an annualized basis, for the six months ended June 30, 2024 and 2023, respectively. The ACL was $160.5 million as of June 30, 2024, an increase of $4.0 million or 3% from December 31, 2023 and represented 1.12% of total outstanding loans and leases as of June 30, 2024 compared to 1.09% of total outstanding loans and leases as of December 31, 2023. The reserve for unfunded commitments was $33.4 million as of June 30, 2024, compared to $35.6 million as of December 31, 2023. The Provision is recorded to maintain the ACL and the reserve for unfunded commitments at levels deemed adequate by management based on the factors noted in the “Risk Governance and Quantitative and Qualitative Disclosures About Market Risk — Credit Risk” section of this MD&A.

Current wording

The Provision was $7.4 million for the three months ended September 30, 2024, a decrease of $0.1 million or 1% as compared to the same period in 2023. We recorded net charge-offs of loans and leases of $3.9 million and net recoveries of $0.3 million for the three months ended September 30, 2024 and 2023, respectively. This represented net charge-offs of 0.11% and net recoveries of 0.01% of average loans and leases, on an annualized basis, for the three months ended September 30, 2024, and 2023, respectively. The Provision was $15.5 million for the nine months ended September 30, 2024, a decrease of $5.8 million or 27% as compared to the same period in 2023. The decrease was primarily due to decreases in the provision for construction loans and home equity lines and the provision for unfunded commercial and industrial and construction commitments. This was partially offset by increases in the provision for residential mortgage loans, consumer loans and commercial and industrial loans. We recorded net charge-offs of loans and leases of $10.2 million and $6.5 million for the nine months ended September 30, 2024 and 2023, respectively. This represented net charge-offs of 0.10% and 0.06% of average loans and leases, on an annualized basis, for the nine months ended September 30, 2024 and 2023, respectively. The ACL was $163.7 million as of September 30, 2024, an increase of $7.2 million or 5% from December 31, 2023 and represented 1.15% of total outstanding loans and leases as of September 30, 2024 compared to 1.09% of total outstanding loans and leases as of December 31, 2023. The reserve for unfunded commitments was $33.7 million as of September 30, 2024, compared to $35.6 million as of December 31, 2023. The Provision is recorded to maintain the ACL and the reserve for unfunded commitments at levels deemed adequate by management based on the factors noted in the “Risk Governance and Quantitative and Qualitative Disclosures About Market Risk — Credit Risk” section of this MD&A.

Previous wording

Table 7 presents the major components of noninterest income for the three months ended June 30, 2024 and 2023 and Table 8 presents the major components of noninterest income for the six months ended June 30, 2024 and 2023:

Current wording

Table 7 presents the major components of noninterest income for the three months ended September 30, 2024 and 2023 and Table 8 presents the major components of noninterest income for the nine months ended September 30, 2024 and 2023:

Previous wording

Total noninterest income was $51.8 million for the three months ended June 30, 2024, an increase of $4.4 million or 9% as compared to the same period in 2023. Total noninterest income was $103.1 million for the six months ended June 30, 2024, an increase of $6.8 million or 7% as compared to the same period in 2023.

Current wording

Total noninterest income was $53.3 million for the three months ended September 30, 2024, an increase of $7.2 million or 16% as compared to the same period in 2023. Total noninterest income was $156.4 million for the nine months ended September 30, 2024, an increase of $14.0 million or 10% as compared to the same period in 2023.

Previous wording

Service charges on deposit accounts were $7.8 million for the three months ended June 30, 2024, an increase of $0.5 million or 8% as compared to the same period in 2023. This increase was primarily due to a $0.7 million increase in account analysis service charges. Service charges on deposit accounts were $15.3 million for the six months ended June 30, 2024, an increase of $0.9 million or 6% as compared to the same period in 2023. This increase was primarily due to a $1.2 million increase in account analysis service charges, partially offset by a $0.3 million decrease in overdraft and checking account fees.

Current wording

Service charges on deposit accounts were $7.8 million for the three months ended September 30, 2024, an increase of $0.3 million or 3% as compared to the same period in 2023. Service charges on deposit accounts were $23.1 million for the nine months ended September 30, 2024, an increase of $1.1 million or 5% as compared to the same period in 2023. This increase was primarily due to a $2.1 million increase in account analysis service charges, partially offset by a $1.0 million decrease in overdraft and checking account fees.

Previous wording

Credit and debit card fees were $15.9 million for the three months ended June 30, 2024, an increase of $0.4 million or 3% as compared to the same period in 2023. This increase was primarily due to a $1.2 million decrease in network association dues, a $0.8 million increase in debit card interchange fees and a $0.7 million increase in interchange settlement fees, partially offset by a $1.1 million decrease in merchant service revenues and a $1.0 million decrease in ATM interchange and surcharge fees. Credit and debit card fees were $32.0 million for the six months ended June 30, 2024, an increase of $0.3 million or 1% as compared to the same period in 2023.

Current wording

Credit and debit card fees were $17.5 million for the three months ended September 30, 2024, an increase of $1.8 million or 11% as compared to the same period in 2023. This increase was primarily due to a $1.0 million decrease in network association dues, a $0.8 million increase in debit card interchange fees, a $0.6 million increase in merchant service revenues and a $0.5 million increase in interchange settlement fees, partially offset by a $0.9 million decrease in ATM interchange and surcharge fees. Credit and debit card fees were $49.6 million for the nine months ended September 30, 2024, an increase of $2.1 million or 4% as compared to the same period in 2023. This increase was primarily due to a $2.6 million decrease in network association dues, a $2.4 million increase in debit card interchange fees and a $1.7 million increase in interchange settlement fees. This was partially offset by a $2.8 million decrease in ATM interchange and surcharge fees, a $1.1 million decrease in merchant service revenues and a $0.6 million decrease in rental fees from credit card terminals.

Previous wording

Other service charges and fees were $11.0 million for the three months ended June 30, 2024, an increase of $2.0 million or 22% as compared to the same period in 2023. This increase was primarily due to a $1.8 million increase in fees from annuities and securities. Other service charges and fees were $20.9 million for the six months ended June 30, 2024, an increase of $2.7 million or 15% as compared to the same period in 2023. This increase was primarily due to a $2.4 million increase in fees from annuities and securities and a $0.2 million increase in insurance income.

Current wording

Other service charges and fees were $11.8 million for the three months ended September 30, 2024, an increase of $2.2 million or 24% as compared to the same period in 2023. This increase was primarily due to a $2.1 million increase in fees from annuities and securities. Other service charges and fees were $32.7 million for the nine months ended September 30, 2024, an increase of $5.0 million or 18% as compared to the same period in 2023. This increase was primarily due to a $4.5 million increase in fees from annuities and securities and a $0.3 million increase in insurance income.

Previous wording

Trust and investment services income was $9.4 million for the three months ended June 30, 2024, a minimal change as compared to the same period in 2023. Trust and investment services income was $19.8 million for the six months ended June 30, 2024, an increase of $0.7 million or 4% as compared to the same period in 2023. This increase was primarily due to a $0.2 million increase in irrevocable trust fees and a $0.2 million increase in money market fund management fees.

Current wording

Trust and investment services income was $9.1 million for the three months ended September 30, 2024, a decrease of $0.7 million or 7% as compared to the same period in 2023. This decrease was primarily due to a $0.9 million decrease in investment management fees. Trust and investment services income was $28.9 million for the nine months ended September 30, 2024, an increase of $0.1 million as compared to the same period in 2023.

Previous wording

BOLI income was $3.4 million for the three months ended June 30, 2024, an increase of $0.1 million or 3% as compared to the same period in 2023. BOLI income was $7.6 million for the six months ended June 30, 2024, a decrease of $0.7 million or 9% as compared to the same period in 2023. This decrease was primarily due to a $1.7 million decrease in death benefit proceeds from life insurance policies, partially offset by a $0.9 million increase in BOLI earnings.

Current wording

BOLI income was $4.5 million for the three months ended September 30, 2024, an increase of $2.6 million as compared to the same period in 2023. This increase was primarily due to a $2.4 million increase in BOLI earnings and a $0.3 million increase in death benefit proceeds from life insurance policies. BOLI income was $12.1 million for the nine months ended September 30, 2024, an increase of $1.9 million or 18% as compared to the same period in 2023. This increase was primarily due to a $3.3 million increase in BOLI earnings, partially offset by a $1.4 million decrease in death benefit proceeds from life insurance policies.

Previous wording

Other noninterest income was $4.3 million for the three months ended June 30, 2024, an increase of $1.4 million or 50% as compared to the same period in 2023. This increase was primarily due to $1.9 million in insurance proceeds received in the three months ended June 30, 2024, a $0.5 million decrease in net losses recognized in income related to derivative contracts, a $0.2 million increase in income due to adjustments to certain liabilities assumed as a result of the Reorganization Transactions and a $0.2 million decrease in interest paid on collateral payments related to derivative instruments. This was partially offset by a $0.8 million decrease in customer-related interest rate swap fees, and a $0.8 million decrease in volume-based incentives. Other noninterest income was $7.4 million for the six months ended June 30, 2024, an increase of $2.9 million or 66% as compared to the same period in 2023. This increase was primarily due to $3.9 million in insurance proceeds received in the six months ended June 30, 2024, a $0.9 million decrease in net losses recognized in income related to derivative contracts and a $0.5 million decrease in interest paid on collateral payments related to derivative instruments. This was partially offset by a $0.9 million decrease in customer-related interest rate swap fees, a $0.8 million decrease in volume-based incentives, a $0.5 million decrease in income due to adjustments to certain liabilities assumed as a result of the Reorganization Transactions and a $0.3 million decrease in market adjustments on mutual funds purchased.

Current wording

Other noninterest income was $2.6 million for the three months ended September 30, 2024, an increase of $0.9 million or 56% as compared to the same period in 2023. This increase was primarily due to a $1.5 million tax refund received during the three months ended September 30, 2024, a $0.7 million increase in customer-related interest rate swap fees, a $0.3 million increase in income due to adjustments to certain liabilities assumed as a result of the Reorganization Transactions, $0.2 million in insurance proceeds received in the three months ended September 30, 2024, and a $0.2 million increase in net credit card equipment sales. This was partially offset by a $1.2 million increase in net losses recognized in income related to derivative contracts and a $0.9 million decrease in volume-based incentives. Other noninterest income was $10.0 million for the nine months ended September 30, 2024, an increase of $3.9 million or 63% as compared to the same period in 2023. This increase was primarily due to $4.1 million in insurance proceeds received in the nine months ended September 30, 2024 and a $1.5 million tax refund received during the nine months ended September 30, 2024, partially offset by a $1.7 million decrease in volume-based incentives.

Previous wording

Table 9 presents the major components of noninterest expense for the three months ended June 30, 2024 and 2023 and Table 10 presents the major components of noninterest expense for the six months ended June 30, 2024 and 2023:

Current wording

Table 9 presents the major components of noninterest expense for the three months ended September 30, 2024 and 2023 and Table 10 presents the major components of noninterest expense for the nine months ended September 30, 2024 and 2023:

Previous wording

Total noninterest expense was $122.1 million for the three months ended June 30, 2024, an increase of $1.2 million or 1% as compared to the same period in 2023. Total noninterest expense was $250.9 million for the six months ended June 30, 2024, an increase of $11.5 million or 5% as compared to the same period in 2023.

Current wording

Total noninterest expense was $126.1 million for the three months ended September 30, 2024, an increase of $6.8 million or 6% as compared to the same period in 2023. Total noninterest expense was $377.0 million for the nine months ended September 30, 2024, an increase of $18.2 million or 5% as compared to the same period in 2023.

Previous wording

Salaries and employee benefits expense was $57.7 million for the three months ended June 30, 2024, a decrease of $0.2 million as compared to the same period in 2023. Salaries and employee benefits expense was $117.0 million for the six months ended June 30, 2024, an increase of $3.1 million or 3% as compared to the same period in 2023. This increase was primarily due to a $2.2 million increase in incentive compensation, a $1.9 million decrease in payroll and benefit costs being deferred as loan origination costs, a $1.1 million increase in base salaries and related payroll taxes, a $0.8 million adjustment made to the deferred compensation plan as a result of market conditions and a $0.4 million increase in group health plan costs. This was partially offset by a $2.0 million expense for payments accrued in the quarter ended June 30, 2023 in connection with separation agreements executed with two executive officers, $0.9 million in severance payments accrued in the quarter ended June 30, 2023 for other employee terminations as part of an effort to reduce operating costs and a $0.5 million decrease in employee overtime pay expense.

Current wording

Salaries and employee benefits expense was $59.6 million for the three months ended September 30, 2024, an increase of $3.6 million or 6% as compared to the same period in 2023. This increase was primarily due to a $3.7 million increase in incentive compensation, a $0.7 million increase in retirement plan expenses and a $0.4 million increase in other compensation, primarily related to adjustments made to the deferred compensation plan as a result of market conditions, partially offset by a decrease in nonrecurring separation agreements and severance costs. Additionally, these increases were partially offset by a $0.6 million decrease in base salaries and related payroll taxes and a $0.6 million decrease in state unemployment tax expense. Salaries and employee benefits expense was $176.6 million for the nine months ended September 30, 2024, an increase of $6.7 million or 4% as compared to the same period in 2023. This increase was primarily due to a $5.9 million increase in incentive compensation, a $2.0 million decrease in payroll and benefit costs being deferred as loan origination costs, a $1.1 million increase in retirement plan expenses, a $0.7 million increase in group health plan costs and a $0.5 million increase in base salaries and related payroll taxes. This was partially offset bya $1.6 million decrease in other compensation, primarily related to nonrecurring separation agreements and severance costs recorded during the nine months ended September 30, 2023, partially offset by adjustments made to the deferred compensation plan as a result of market conditions. Other decreases includeda $0.8 million decrease in employee overtime pay expense and a $0.7 million decrease in state unemployment tax expense.

Previous wording

Contracted services and professional fees were $16.1 million for the three months ended June 30, 2024, a decrease of $1.4 million or 8% as compared to the same period in 2023. This decrease was primarily due to a $1.5 million decrease in outside services, primarily attributable to technology-related projects, marketing and new customer services. Contracted services and professional fees were $31.8 million for the six months ended June 30, 2024, a decrease of $2.0 million or 6% as compared to the same period in 2023. This decrease was primarily due to a $2.2 million decrease in outside services, primarily attributable to technology-related projects, marketing and new customer services.

Current wording

Contracted services and professional fees were $14.6 million for the three months ended September 30, 2024, a decrease of $1.8 million or 11% as compared to the same period in 2023. This decrease was primarily due to a $1.3 million decrease in outside services, primarily attributable to technology-related projects, marketing and new customer services and a $0.5 million decrease in audit, legal and consultant fees. Contracted services and professional fees were $46.4 million for the nine months ended September 30, 2024, a decrease of $3.8 million or 7% as compared to the same period in 2023. This decrease was primarily due to a $3.5 million decrease in outside services, primarily attributable to non-technology-related projects, marketing and new customer services and a $0.3 million decrease in audit, legal and consultant fees.

Previous wording

Occupancy expense was $7.4 million for the three months ended June 30, 2024, a decrease of $0.2 million or 2% as compared to the same period in 2023. Occupancy expense was $14.3 million for the six months ended June 30, 2024, a decrease of $1.0 million or 7% as compared to the same period in 2023. This decrease was primarily due to a $0.6 million increase in net sublease rental income and a $0.5 million decrease in building maintenance expense.

Current wording

Occupancy expense was $6.9 million for the three months ended September 30, 2024, an increase of $0.2 million or 3% as compared to the same period in 2023. Occupancy expense was $21.3 million for the nine months ended September 30, 2024, a decrease of $0.8 million or 4% as compared to the same period in 2023. This decrease was primarily due to a $0.6 million increase in net sublease rental income and a $0.3 million decrease in building depreciation.

Previous wording

Equipment expense was $13.2 million for the three months ended June 30, 2024, an increase of $2.2 million or 20% as compared to the same period in 2023. This increase was primarily due to a $2.1 million increase in technology-related amortization and licensing and maintenance fees. Equipment expense was $26.6 million for the six months ended June 30, 2024, an increase of $5.9 million or 28% as compared to the same period in 2023. This increase was primarily due to a $5.7 million increase in technology-related amortization and licensing and maintenance fees.

Current wording

Equipment expense was $13.1 million for the three months ended September 30, 2024, an increase of $1.3 million or 11% as compared to the same period in 2023. This increase was primarily due to a $1.3 million increase in technology-related amortization and licensing and maintenance fees. Equipment expense was $39.7 million for the nine months ended September 30, 2024, an increase of $7.1 million or 22% as compared to the same period in 2023. This increase was primarily due to a $7.0 million increase in technology-related amortization and licensing and maintenance fees.

Previous wording

Regulatory assessment and fees were $3.8 million for the three months ended June 30, 2024, an increase of $0.1 million or 4% as compared to the same period in 2023. Regulatory assessment and fees were $11.9 million for the six months ended June 30, 2024, an increase of $4.4 million or 59% as compared to the same period in 2023. This increase was primarily due to increases in the FDIC insurance assessment. During 2023, the FDIC approved a final rule for a special assessment to replenish the deposit insurance fund following bank failures occurring earlier in the year. As a result, the Company previously recorded a related loss of $16.3 million in the fourth quarter of 2023. During the first quarter of 2024, the FDIC issued a notice that the original loss estimate related to the 2023 bank failures was subsequently increased and that this increase would result in an additional assessment expense to affected institutions. The Company estimated a related loss of $4.1 million, which was recorded in the first quarter of 2024.

Current wording

Regulatory assessment and fees were $3.4 million for the three months ended September 30, 2024, a decrease of $0.7 million or 18% as compared to the same period in 2023. This decrease was primarily due to a decrease in the FDIC insurance assessment. Regulatory assessment and fees were $15.3 million for the nine months ended September 30, 2024, an increase of $3.7 million or 32% as compared to the same period in 2023. During 2023, the FDIC approved a final rule for a special assessment to replenish the deposit insurance fund following bank failures occurring earlier in the year. As a result, the Company previously recorded a related loss of $16.3 million in the fourth quarter of 2023. During the first quarter of 2024, the FDIC issued a notice that the original loss estimate related to the 2023 bank failures was subsequently increased and that this increase would result in an additional assessment expense to affected institutions. The Company estimated a related loss of $4.1 million, which was recorded in the first quarter of 2024. This estimate was later adjusted by $0.3 million in the third quarter of 2024 to bring the net loss related to the special assessment to $3.8 million for the nine months ended September 30, 2024.

Previous wording

Advertising and marketing expense was $1.8 million for the three months ended June 30, 2024, a decrease of $0.1 million or 7% as compared to the same period in 2023. Advertising and marketing expense was $4.4 million for the six months ended June 30, 2024, an increase of $0.5 million or 13% as compared to the same period in 2023. This increase was primarily due to a $0.5 million increase in advertising costs.

Current wording

Advertising and marketing expense was $1.8 million for the three months ended September 30, 2024, a decrease of $0.5 million or 21% as compared to the same period in 2023. This decrease was primarily due to a $0.5 million decrease in advertising costs. Advertising and marketing expense was $6.2 million for the nine months ended September 30, 2024, a minimal change as compared to the same period in 2023.

Previous wording

Card rewards program expense was $8.7 million for the three months ended June 30, 2024, an increase of $1.0 million or 14% as compared to the same period in 2023. This increase was primarily due to a $0.6 million increase in credit card cash reward redemptions and a $0.4 million increase in interchange fees paid to our credit card partners. Card rewards program expense was $17.2 million for the six months ended June 30, 2024, an increase of $1.5 million or 9% as compared to the same period in 2023. This increase was primarily due to a $0.9 million increase in credit card cash reward redemptions and a $0.8 million increase in interchange fees paid to our credit card partners.

Current wording

Card rewards program expense was $8.7 million for the three months ended September 30, 2024, an increase of $0.3 million or 4% as compared to the same period in 2023. Card rewards program expense was $25.9 million for the nine months ended September 30, 2024, an increase of $1.8 million or 7% as compared to the same period in 2023. This increase was primarily due to a $1.3 million increase in credit card cash reward redemptions and a $1.0 million increase in interchange fees paid to our credit card partners, partially offset by a $0.4 million decrease in international transaction fees.

Previous wording

Other noninterest expense was $13.4 million for the three months ended June 30, 2024, a decrease of $0.3 million or 2% as compared to the same period in 2023. Other noninterest expense was $27.6 million for the six months ended June 30, 2024, a decrease of $0.8 million or 3% as compared to the same period in 2023. This decrease was primarily due to a $0.6 million decrease in pension-related expenses, a $0.5 million decrease in business privilege tax expense, and a $0.3 million decrease in other insurance expense. This was partially offset by a $0.7 million increase in operational losses.

Current wording

Other noninterest expense was $18.0 million for the three months ended September 30, 2024, an increase of $4.3 million or 31% as compared to the same period in 2023. This increase was primarily due to a $3.8 million increase in expense due to adjustments to certain liabilities assumed as a result of the Reorganization Transactions and a $1.7 million increase in operational losses and other charge-offs, partially offset by a $0.6 million decrease in business privilege tax expense and a $0.4 million decrease in losses incurred due to natural disasters. Other noninterest expense was $45.7 million for the nine months ended September 30, 2024, an increase of $3.5 million or 8% as compared to the same period in 2023. This increase was primarily due to a $3.8 million increase in expense due to adjustments to certain liabilities assumed as a result of the Reorganization Transactions, a $2.4 million increase in operational losses and other charge-offs and $0.7 million in costs associated with a fund acquired by the Company. This was partially offset by a $1.1 million decrease in business privilege tax expense, a $0.9 million decrease in pension-related expenses, a $0.6 million decrease in losses incurred due to natural disasters and a $0.4 million decrease in other insurance expense.

Previous wording

The provision for income taxes was $18.8 million (an effective tax rate of 23.30%) for the three months ended June 30, 2024, compared with a provision for income taxes of $19.0 million (an effective tax rate of 23.30%) for the same period in 2023. The provision for income taxes was $35.3 million (an effective tax rate of 23.30%) for the six months ended June 30, 2024, compared with a provision for income taxes of $41.0 million (an effective tax rate of 24.10%) for the same period in 2023. The change in the effective tax rate was partially due to a reduction in pre-tax income for the six months ended June 30, 2024.

Current wording

The provision for income taxes was $15.0 million (an effective tax rate of 19.56%) for the three months ended September 30, 2024, compared with a provision for income taxes of $18.1 million (an effective tax rate of 23.76%) for the same period in 2023. The provision for income taxes was $50.2 million (an effective tax rate of 22.04%) for the nine months ended September 30, 2024, compared with a provision for income taxes of $59.2 million (an effective tax rate of 24.00%) for the same period in 2023. The change in the effective tax rate for both the three and nine months ended September 30, 2024 was primarily due to a $3.8 million decrease in the provision for income taxes due to the aforementioned adjustments to certain liabilities assumed as a result of the Reorganization Transactions.

Previous wording

Our business segments are Retail Banking, Commercial Banking and Treasury and Other. Table 11 summarizes net income from our business segments for the three and six months ended June 30, 2024 and 2023. Additional information about operating segment performance is presented in “Note 17. Reportable Operating Segments” contained in our unaudited interim consolidated financial statements.

Current wording

Our business segments are Retail Banking, Commercial Banking and Treasury and Other. Table 11 summarizes net income from our business segments for the three and nine months ended September 30, 2024 and 2023. Additional information about operating segment performance is presented in “Note 17. Reportable Operating Segments” contained in our unaudited interim consolidated financial statements.

Previous wording

Net income for the Retail Banking segment was $58.2 million for the three months ended June 30, 2024, an increase of $21.1 million or 57% as compared to the same period in 2023. The increase in net income for the Retail Banking segment was primarily due to a $20.5 million increase in net interest income, a $5.0 million decrease in noninterest expense and a $2.5 million increase in noninterest income, partially offset by a $7.3 million increase in the provision for income taxes. The increase in net interest income was primarily due to higher deposit spreads. The decrease in noninterest expense was primarily due to lower overall expenses that were allocated to the Retail Banking segment, partially offset by an increase in salaries and benefits expense. The increase in noninterest income was primarily due to increases in other service charges and fees and service charges on deposit accounts. The increase in the provision for income taxes was primarily due to the increase in pretax income.

Current wording

Net income for the Retail Banking segment was $58.0 million for the three months ended September 30, 2024, an increase of $9.5 million or 20% as compared to the same period in 2023. The increase in net income for the Retail Banking segment was primarily due to a $7.3 million increase in net interest income, a $4.9 million decrease in noninterest expense and a $1.8 million increase in noninterest income, partially offset by a $3.3 million increase in the provision for income taxes and a $1.0 million increase in the Provision. The increase in net interest income was primarily due to higher deposit spreads. The decrease in noninterest expense was primarily due to lower overall expenses that were allocated to the Retail Banking segment and a decrease in business privilege tax expense, partially offset by an increase in operational losses. The increase in noninterest income was primarily due to an increase in other service charges and fees, partially offset by a decrease in trust and investment services income. The increase in the provision for income taxes was primarily due to the increase in pretax income. The increase in the Provision was primarily due to higher allocated provision expenses to the Retail Banking segment.

Previous wording

Net income for the Retail Banking segment was $114.4 million for the six months ended June 30, 2024, an increase of $35.8 million or 46% as compared to the same period in 2023. The increase in net income for the Retail Banking segment was primarily due to a $39.6 million increase in net interest income, a $4.3 million increase in noninterest income and a $4.2 million decrease in noninterest expense, partially offset by an $11.9 million increase in the provision for income taxes. The increase in net interest income was primarily due to higher deposit and loan spreads. The increase in noninterest income was primarily due to increases in other service charges and fees, trust and investment services income and service charges on deposit accounts. The decrease in noninterest expense was primarily due to lower overall expenses that were allocated to the Retail Banking segment, partially offset by increases in salaries and benefits expense and regulatory assessment and fees. The increase in the provision for income taxes was primarily due to the increase in pretax income.

Current wording

Net income for the Retail Banking segment was $172.4 million for the nine months ended September 30, 2024, an increase of $45.3 million or 36% as compared to the same period in 2023. The increase in net income for the Retail Banking segment was primarily due to a $46.9 million increase in net interest income, a $9.0 million decrease in noninterest expense and a $6.0 million increase in noninterest income, partially offset by a $15.2 million increase in the provision for income taxes and a $1.4 million increase in the Provision. The increase in net interest income was primarily due to higher deposit and loan spreads. The decrease in noninterest expense was primarily due to lower overall expenses that were allocated to the Retail Banking segment, partially offset by increases in salaries and benefits expense and regulatory assessment and fees. The increase in noninterest income was primarily due to increases in other service charges and fees, service charges on deposit accounts and net mortgage servicing rights income. The increase in the provision for income taxes was primarily due to the increase in pretax income. The increase in the Provision was primarily due to higher allocated provision expenses to the Retail Banking segment.