WSFS FINANCIAL CORP

Previous wording

WSFS Financial Corporation (WSFS, and together with its subsidiaries, the Company) is a savings and loan holding company headquartered in Wilmington, Delaware. Substantially all of our assets are held by our subsidiary, Wilmington Savings Fund Society, FSB (WSFS Bank or the Bank), one of the ten oldest bank and trust companies in the United States (U.S.) continuously operating under the same name. With $20.6 billion in assets and $80.5 billion in assets under management (AUM) and assets under administration (AUA) at March 31, 2024, WSFS Bank is the oldest and largest locally-managed bank and trust company headquartered in the Greater Philadelphia and Delaware region. As a federal savings bank that was formerly chartered as a state mutual savings bank, WSFS Bank enjoys a broader scope of permissible activities than most other financial institutions. A fixture in the community, we have been in operation for more than 192 years. In addition to our focus on stellar customer experience, we have continued to fuel growth and remain a leader in our community. We are a relationship-focused, locally-managed, community banking institution. Our mission is simple: “We Stand for Service.” Our strategy of “Engaged Associates, living our culture, enriching the communities we serve” focuses on exceeding customer expectations, delivering stellar experiences and building customer advocacy through highly-trained, relationship-oriented, friendly, knowledgeable and empowered Associates.

Current wording

WSFS Financial Corporation (WSFS, and together with its subsidiaries, the Company) is a savings and loan holding company headquartered in Wilmington, Delaware. Substantially all of our assets are held by our subsidiary, Wilmington Savings Fund Society, FSB (WSFS Bank or the Bank), one of the ten oldest bank and trust companies in the United States (U.S.) continuously operating under the same name. With $20.7 billion in assets and $84.9 billion in assets under management (AUM) and assets under administration (AUA) at June 30, 2024, WSFS Bank is the oldest and largest locally-managed bank and trust company headquartered in the Greater Philadelphia and Delaware region. As a federal savings bank that was formerly chartered as a state mutual savings bank, WSFS Bank enjoys a broader scope of permissible activities than most other financial institutions. A fixture in the community, we have been in operation for more than 192 years. In addition to our focus on stellar customer experience, we have continued to fuel growth and remain a leader in our community. We are a relationship-focused, locally-managed, community banking institution. Our mission is simple: “We Stand for Service.” Our strategy of “Engaged Associates, living our culture, enriching the communities we serve” focuses on exceeding customer expectations, delivering stellar experiences and building customer advocacy through highly-trained, relationship-oriented, friendly, knowledgeable and empowered Associates.

Previous wording

Our banking business had a total loan and lease portfolio of $13.0 billion as of March 31, 2024, which was funded primarily through commercial relationships and consumer and customer generated deposits. We have built a $10.0 billion commercial loan and lease portfolio by recruiting seasoned commercial lenders in our markets, offering the high level of service and flexibility typically associated with a community bank and through acquisitions. We also offer a broad variety of consumer loan products and retail securities brokerage through our retail branches, in addition to mortgage and title services through our branches and WSFS Mortgage®, our mortgage banking company specializing in a variety of residential mortgage and refinancing solutions. Our leasing business, conducted by NewLane Finance®, originates small business leases and provides commercial financing to businesses nationwide, targeting various equipment categories including technology, software, office, medical, veterinary and other areas. In addition, NewLane Finance® offers captive insurance through its subsidiary, Prime Protect.

Current wording

Our banking business had a total loan and lease portfolio of $13.1 billion as of June 30, 2024, which was funded primarily through commercial relationships and consumer and customer generated deposits. We have built a $10.1 billion commercial loan and lease portfolio by recruiting seasoned commercial lenders in our markets, offering the high level of service and flexibility typically associated with a community bank and through acquisitions. We also offer a broad variety of consumer loan products and retail securities brokerage through our retail branches, in addition to mortgage and title services through our branches and WSFS Mortgage®, our mortgage banking company specializing in a variety of residential mortgage and refinancing solutions. Our leasing business, conducted by NewLane Finance®, originates small business leases and provides commercial financing to businesses nationwide, targeting various equipment categories including technology, software, office, medical, veterinary and other areas. In addition, NewLane Finance® offers captive insurance through its subsidiary, Prime Protect.

Previous wording

Our Cash Connect® business is a premier provider of ATM vault cash, smart safe (safes that automatically accept, validate, record and hold cash in a secure environment) and other cash logistics services through strategic partnerships with several of the largest networks, manufacturers and service providers in the ATM industry. Cash Connect®services non-bank and WSFS-branded ATMs and smart safes nationwide, and manages approximately $2.0 billion in total cash and services approximately 36,900 non-bank ATMs and 9,100 smart safes nationwide. Cash Connect® provides related services such as online reporting and ATM cash management, predictive cash ordering and reconcilement services, armored carrier management, loss protection, ATM processing equipment sales and deposit safe cash logistics. Cash Connect®also supports 583 owned or branded ATMs for WSFS Bank Customers, which is one of the largest branded ATM networks in our market.

Current wording

Our Cash Connect® business is a premier provider of ATM vault cash, smart safe (safes that automatically accept, validate, record and hold cash in a secure environment) and other cash logistics services through strategic partnerships with several of the largest networks, manufacturers and service providers in the ATM industry. Cash Connect®services non-bank and WSFS-branded ATMs and smart safes nationwide, and manages approximately $1.7 billion in total cash and services approximately 33,100 non-bank ATMs and 9,400 smart safes nationwide. Cash Connect® provides related services such as online reporting and ATM cash management, predictive cash ordering and reconcilement services, armored carrier management, loss protection, ATM processing equipment sales and deposit safe cash logistics. Cash Connect®also supports 579 owned or branded ATMs for WSFS Bank Customers, which is one of the largest branded ATM networks in our market.

Previous wording

Our Wealth Management business provides a broad array of planning and advisory services, investment management, trust services, and credit and deposit products to individual, corporate and institutional clients. Combined, these businesses had$80.5 billion of AUM and AUA at March 31, 2024.

Current wording

Our Wealth Management business provides a broad array of planning and advisory services, investment management, trust services, and credit and deposit products to individual, corporate and institutional clients. Combined, these businesses had$84.9 billion of AUM and AUA at June 30, 2024.

Previous wording

As of March 31, 2024, we service our customers primarily from 114 offices located in Pennsylvania (57), Delaware (40), New Jersey (14), Florida (1) and Nevada (1) and Virginia (1), our ATM network, our website atwww.wsfsbank.com and our mobile app.

Current wording

As of June 30, 2024, we service our customers primarily from 114 offices located in Pennsylvania (57), Delaware (39), New Jersey (14), Florida (2) and Nevada (1) and Virginia (1), our ATM network, our website atwww.wsfsbank.com and our mobile app.

Previous wording

Highlights and Other Notables Items for Three Months Ended March 31, 2024

Current wording

Highlights and Other Notables Items for Three and Six Months Ended June 30, 2024

Previous wording

◦WSFS repurchased 492,368 sharesof common stock under the Company's share repurchase programs at an average price of$42.62 per share, for an aggregate purchase price of approximately$21.0 million.

Current wording

◦WSFS repurchased 897,461 sharesof common stock under the Company's share repurchase programs at an average price of$44.20 per share, for an aggregate purchase price of approximately$39.7 million.

Previous wording

◦The Bank and the Company continue to be well above well-capitalized across all measures of regulatory capital, with total common equity tier 1 capital of 14.00% and 13.29%, respectively, and total risk-based capital of 15.25% and 15.35%, respectively.

Current wording

◦The Bank and the Company continue to be well above well-capitalized across all measures of regulatory capital, with total common equity Tier 1 capital of 13.07% and 13.29%, respectively, and total risk-based capital of 14.32% and 15.34%, respectively.

Previous wording

Total assets decreased $15.4 million to $20.6 billion at March 31, 2024 compared to December 31, 2023. This decrease is primarily comprised of the following:

Current wording

Total assets increased $149.9 million to $20.7 billion at June 30, 2024 compared to December 31, 2023. This increase is primarily comprised of the following:

Previous wording

•Net loans and leases held for investment increased $206.9 million, primarily due to increases of $75.7 million in commercial mortgages, $53.7 million in consumer loans primarily from Spring EQ home equity loans, $51.8 million in commercial and industrial, $20.8 million in construction, and $10.2 million in commercial small business leases.

Current wording

•Net loans and leases held for investment increased $362.7 million, primarily due to increases of $99.1 million in commercial and industrial and $94.3 million in consumer loans primarily from Spring EQ home equity loans. Commercial mortgages increased $233.6 million with a corresponding decrease of $156.3 million in construction due to the migration of construction loans to permanent commercial mortgages. Additionally, owner-occupied commercial loans increased $54.6 million and residential mortgage loans increased $29.7 million.

Previous wording

•Other assets increased $19.4 million, primarily due to a $19.0 million increase in derivatives from our capital markets business due to changes in fair value and an $8.3 million increase to our deferred tax asset primarily related to unrealized losses on available-for-sale securities. The increase was partially offset by the settlement of $5.5 million in receivables related to bank-owned life insurance (BOLI) policies surrendered in 2023 and death benefits, and a $4.3 million decrease in the fair value of our cash flow hedges.

Current wording

•Other assets increased $59.5 million, primarily due to increases of $23.7 million in derivatives from our capital markets business due to changes in fair value, $13.1 million in our deferred tax asset primarily related to unrealized losses on available-for-sale securities, and $8.4 million in lease right of use asset due to additional leases entered into in 2024.

Previous wording

•Total investment securities decreased $121.1 million:

Current wording

•Total investment securities decreased $214.3 million:

Previous wording

◦Investment securities, available-for-sale decreased $112.3 million, primarily due to repayments, maturities and calls of $76.1 million and decreased market values of $52.6 million, partially offset by purchases of $17.2 million.

Current wording

◦Investment securities, available-for-sale decreased $194.6 million, primarily due to repayments, maturities and calls of $169.5 million and decreased market values of $64.6 million, partially offset by purchases of $41.1 million.

Previous wording

◦Investment securities, held-to-maturity decreased $8.8 million, primarily due to repayments, maturities and calls of $13.1 million, partially offset by $3.5 million of amortization of net unrealized losses on available-for-sale securities transferred to held-to-maturity.

Current wording

◦Investment securities, held-to-maturity decreased $19.7 million, primarily due to repayments, maturities and calls of $28.6 million, partially offset by $7.3 million of amortization of net unrealized losses on available-for-sale securities transferred to held-to-maturity.

Previous wording

•Goodwill and intangible assets decreased $4.2 million due to scheduled amortization of intangible assets.

Current wording

•Goodwill and intangible assets decreased $8.4 million due to scheduled amortization of intangible assets.

Previous wording

Total liabilities decreased $11.2 million to $18.1 billion at March 31, 2024 compared to December 31, 2023. This decrease is primarily comprised of the following:

Current wording

Total liabilities increased $141.3 million to $18.3 billion at June 30, 2024 compared to December 31, 2023. This increase is primarily comprised of the following:

Previous wording

•Other borrowed funds increased $229.8 million, primarily due to $235.0 million borrowed from the Bank Term Funding Program (BTFP) as a result of favorable terms and pricing.

Current wording

•Other borrowed funds increased $224.7 million, primarily due to $235.0 million borrowed from the Bank Term Funding Program (BTFP) as a result of favorable terms and pricing.

Previous wording

Stockholders’ equity of WSFS decreased $4.2 million between December 31, 2023 and March 31, 2024. This decrease was primarily due to an increase of $42.9 million in accumulated other comprehensive loss driven bymarket value decreases on available-for-sale mortgage-backed securities,$21.0 million from the repurchase of shares of common stock under our stock repurchase plan, and the payment of dividends on our common stock of $9.1 million, partially offset by $65.8 million of earnings.

Current wording

Stockholders’ equity of WSFS increased $11.9 million between December 31, 2023 and June 30, 2024. This increase was primarily due to $135.0 million of earnings, partially offset by $60.7 million from the repurchase of shares of common stock under our stock repurchase plan, an increase of $48.9 million in accumulated other comprehensive loss driven bymarket value decreases on available-for-sale mortgage-backed securities, and the payment of dividends on our common stock of $18.1 million.

Previous wording

Book value per share of common stock was $41.17 at March 31, 2024, an increase of $0.24 from $40.93 at December 31, 2023. Tangible book value per share of common stock (a non-GAAP financial measure) was $24.52 at March 31, 2024, an increase of $0.19 from $24.33 at December 31, 2023. We believe tangible book value per common share helps management and investors better understand and assess changes from period to period in stockholders’ equity exclusive of changes in intangible assets. This non-GAAP measure should be considered in addition to results prepared in accordance with Generally Accepted Accounting Principles in the U.S. (GAAP), and is not a substitute for, or superior to, GAAP results. For a reconciliation of tangible book value per common share to book value per share in accordance with GAAP, see "Reconciliation of Non-GAAP Measure to GAAP Measure."

Current wording

Book value per share of common stock was $42.01 at June 30, 2024, an increase of $1.08 from $40.93 at December 31, 2023. Tangible book value per share of common stock (a non-GAAP financial measure) was $25.20 at June 30, 2024, an increase of $0.87 from $24.33 at December 31, 2023. We believe tangible book value per common share helps management and investors better understand and assess changes from period to period in stockholders’ equity exclusive of changes in intangible assets. This non-GAAP measure should be considered in addition to results prepared in accordance with Generally Accepted Accounting Principles in the U.S. (GAAP), and is not a substitute for, or superior to, GAAP results. For a reconciliation of tangible book value per common share to book value per share in accordance with GAAP, see "Reconciliation of Non-GAAP Measure to GAAP Measure."

Previous wording

Not included in the Bank’s capital, WSFS separately held$163.7 million in cash to support share repurchases, potential dividends, acquisitions, strategic growth plans and other general corporate purposes.

Current wording

Not included in the Bank’s capital, WSFS separately held $330.5 million in cash to support share repurchases, potential dividends, acquisitions, strategic growth plans and other general corporate purposes.

Previous wording

As of March 31, 2024, the Company had$1.0 billion in cash, cash equivalents, and restricted cash. As of March 31, 2024, our estimated uninsured deposits were $5.9 billion, or 37% of total customer deposits, and our estimated unprotected deposits (uninsured and uncollateralized) were $4.5 billion, or 28% of total customer deposits.

Current wording

As of June 30, 2024, the Company had$1.0 billion in cash, cash equivalents, and restricted cash. As of June 30, 2024, our estimated uninsured deposits were $6.0 billion, or 37% of total customer deposits, and our estimated unprotected deposits (uninsured and uncollateralized) were $5.2 billion, or 32% of total customer deposits.

Previous wording

As of March 31, 2024, the Company had a readily available, secured borrowing capacity of $5.3 billion from the FHLB and $1.0 billion through the Federal Reserve Discount Window. In addition, the Company had $1.7 billion in unpledged securities that could be used to support additional borrowings and $0.6 billion of cash deposited with the Federal Reserve Bank.

Current wording

As of June 30, 2024, the Company had a readily available, secured borrowing capacity of $5.3 billion from the FHLB and $1.8 billion through the Federal Reserve Discount Window. In addition, the Company had $1.7 billion in unpledged securities that could be used to support additional borrowings and $0.4 billion of cash deposited with the Federal Reserve Bank.

Previous wording

Our primary cash contractual obligations relate to operating leases, long-term debt, credit obligations, and data processing. At March 31, 2024, we had $210.3 million in total contractual payments for ongoing leases that have remaining lease terms of less than one year to 21 years, which includes renewal options that are exercised at our discretion. For additional information on our operating leases, see Note 8 to the unaudited Consolidated Financial Statements. At March 31, 2024, we had obligations for principal payments on long-term debt including $67.0 million for our trust preferred borrowings, due June 1, 2035, $70.0 million in aggregate principal amount of fixed-to-floating rate subordinated notes due 2027, and $150.0 million for our senior debt, due December 15, 2030. Royal Bancshares Capital Trust I (Trust I) and Royal Bancshares Capital Trust II (Trust II) (collectively, the RBC Trusts), which were acquired from Bryn Mawr Bank Corporation, were utilized for the sole purpose of issuing and selling capital securities representing preferred beneficial interests. Although WSFS owns an aggregate of $0.8 million of the common securities of Trust I and Trust II, the RBC Trusts are not consolidated into the Company’s Consolidated Financial Statements. Inclusive of the fair value marks, WSFS assumed junior subordinated debentures owed to the RBC Trusts with a current carrying value of $11.8 million each, totaling $23.7 million. The Company records its investments in the RBC Trusts’ common securities of $0.4 million each as investments in unconsolidated entities and records dividend income upon declaration by Trust I and Trust II. The Company has fully and unconditionally guaranteed all of the obligations of the RBC Trusts, including any distributions and payments on liquidation or redemption of the capital securities. We are also contractually obligated to make interest payments on our long-term debt through their respective maturities.

Current wording

Our primary cash contractual obligations relate to operating leases, long-term debt, credit obligations, and data processing. At June 30, 2024, we had $224.7 million in total contractual payments for ongoing leases that have remaining lease terms of less than one year to 21 years, which includes renewal options that are exercised at our discretion. For additional information on our operating leases, see Note 8 to the unaudited Consolidated Financial Statements. At June 30, 2024, we had obligations for principal payments on long-term debt including $67.0 million for our trust preferred borrowings, due June 1, 2035, $70.0 million in aggregate principal amount of fixed-to-floating rate subordinated notes due 2027, and $150.0 million for our senior debt, due December 15, 2030. At June 30, 2024, we had advances of $800 million under the BTFP, due January 2025. Royal Bancshares Capital Trust I (Trust I) and Royal Bancshares Capital Trust II (Trust II) (collectively, the RBC Trusts), which were acquired from Bryn Mawr Bank Corporation, were utilized for the sole purpose of issuing and selling capital securities representing preferred beneficial interests. Although WSFS owns an aggregate of $0.8 million of the common securities of Trust I and Trust II, the RBC Trusts are not consolidated into the Company’s Consolidated Financial Statements. Inclusive of the fair value marks, WSFS assumed junior subordinated debentures owed to the RBC Trusts with a current carrying value of $11.9 million each, totaling $23.7 million. The Company records its investments in the RBC Trusts’ common securities of $0.4 million each as investments in unconsolidated entities and records dividend income upon declaration by Trust I and Trust II. The Company has fully and unconditionally guaranteed all of the obligations of the RBC Trusts, including any distributions and payments on liquidation or redemption of the capital securities. We are also contractually obligated to make interest payments on our long-term debt through their respective maturities.

Previous wording

Nonperforming assets decreased $8.6 million between December 31, 2023 and March 31, 2024. This decrease was primarily driven by the resolution of two nonperforming C&I loans during the quarter. The ratio of nonperforming assets to total assets decreased from 0.37% at December 31, 2023 to 0.33% at March 31, 2024.

Current wording

Nonperforming assets decreased $10.4 million between December 31, 2023 and June 30, 2024. This decrease was primarily driven by favorable resolutions and paydowns of multiple loans during the year and a charge-off on a commercial mortgage relationship. The ratio of nonperforming assets to total assets decreased from 0.37% at December 31, 2023 to 0.32% at June 30, 2024.

Previous wording

Our primary tool for achieving our asset/liability management strategies is to match maturities or repricing periods of interest rate-sensitive assets and liabilities to promote a favorable interest rate spread and mitigate exposure to fluctuations in interest rates. We regularly review our interest rate sensitivity and adjust the sensitivity within acceptable tolerance ranges. At March 31, 2024, interest-earning assets exceeded interest-bearing liabilities that mature or reprice within one year (interest-sensitive gap) by $38.5 million. Our interest-sensitive assets as a percentage of interest-sensitive liabilities within the one-year window was 100.42% at March 31, 2024 compared with 99.67% at December 31, 2023. Likewise, the one-year interest-sensitive gap as a percentage of total assets was 0.19% at March 31, 2024 compared with (0.14)% at December 31, 2023.

Current wording

Our primary tool for achieving our asset/liability management strategies is to match maturities or repricing periods of interest rate-sensitive assets and liabilities to promote a favorable interest rate spread and mitigate exposure to fluctuations in interest rates. We regularly review our interest rate sensitivity and adjust the sensitivity within acceptable tolerance ranges. At June 30, 2024, interest-bearing liabilities exceeded interest-earning assets that mature or reprice within one year (interest-sensitive gap) by $62.0 million. Our interest-sensitive assets as a percentage of interest-sensitive liabilities within the one-year window was 99.32% at June 30, 2024 compared with 99.67% at December 31, 2023. Likewise, the one-year interest-sensitive gap as a percentage of total assets was (0.30)% at June 30, 2024 compared with (0.14)% at December 31, 2023.

Previous wording

Three months ended March 31, 2024: Net income for the three months ended March 31, 2024 was $65.8 million, compared to $62.4 million for the three months ended March 31, 2023.

Current wording

Three months ended June 30, 2024: Net income for the three months ended June 30, 2024 was $69.3 million, compared to $68.7 million for the three months ended June 30, 2023.

Previous wording

•Net interest income decreased $7.3 million, primarily due to lagging increases in deposit pricing following rate hikes in 2023. See “Net Interest Income” for further information.

Current wording

•Net interest income decreased $7.4 million, primarily due to lagging increases in deposit pricing following rate hikes in 2023 and a continued shift to customer time deposits. See “Net Interest Income” for further information.

Previous wording

•Our provision for credit losses decreased $13.9 million, primarily due to lower provision across our commercial loan portfolios and our consumer partnership portfolio. See “Allowance for Credit Losses” for further information.

Current wording

•Our provision for credit losses increased $4.0 million, primarily due to a higher provision on our commercial mortgages portfolio. See “Allowance for Credit Losses” for further information.

Previous wording

•Noninterest income increased $12.7 million, primarily due to increases in income from Cash Connect® due to additional units added during the fourth quarter of 2023 and Wealth Management fee income. See “Noninterest Income” for further information.

Current wording

•Noninterest income increased $24.7 million, primarily due to increases in income from Cash Connect® due to additional customers added during the fourth quarter of 2023 and first half of 2024 and the higher rate environment, Wealth Management fee income, a gain on our Visa B derivative liability, post-close distributions from our investment in Spring EQ, and capital markets income. See “Noninterest Income” for further information.

Previous wording

•Noninterest expense increased $16.0 million, primarily due to higher Cash Connect® funding costs associated with a shift towards external funding, salaries and benefits, and the FDIC special assessment.

Current wording

•Noninterest expense increased $14.5 million, primarily due to higher salaries and benefits and Cash Connect® funding costs associated with a shift towards external funding, partially offset by decreases in net corporate development and restructuring costs, loan workout and OREO expenses, and professional fees.

Previous wording

Three months ended March 31, 2024: During the three months ended March 31, 2024, net interest income decreased $7.3 million from the three months ended March 31, 2023 primarily due to lagging deposit pricing increases following rate hikes in 2023. Net interest margin was 3.84% for the first quarter of 2024, a 41 basis point decrease compared to 4.25% for the first quarter of 2023 due toan unfavorable decrease of 48 basis points due to the lagging deposit pricing increases mentioned above and 3 basis points from purchase accounting accretion, partially offset by an increase of 10 basis points from our balance sheet size and mix.

Current wording

Three months ended June 30, 2024: During the three months ended June 30, 2024, net interest income decreased $7.4 million from the three months ended June 30, 2023 primarily due to lagging deposit pricing increases following rate hikes in 2023 and a continued shift to customer time deposits. Net interest margin was 3.85% for the second quarter of 2024, a 26 basis point decrease compared to 4.11% for the second quarter of 2023. The decrease was due toan unfavorable decrease of 40 basis points from the lagging deposit pricing increases mentioned above and 4 basis points from purchase accounting accretion, partially offset by an increase of 18 basis points from our balance sheet size and mix.

Previous wording

During the three months ended March 31, 2024, we recorded a provision for credit losses of $15.1 million, a decrease of $13.9 million, as compared with the provision for credit losses of $29.0 million for the three months ended March 31, 2023. This decrease was primarily due to lower losses across our commercial loan portfolios and our consumer partnership portfolio.

Current wording

During the six months ended June 30, 2024, we recorded a provision for credit losses of $35.0 million, a decrease of $9.9 million, as compared with the provision for credit losses of $44.8 million for the six months ended June 30, 2023. This decrease was primarily due to lower losses across most of our commercial loan portfolios and our consumer portfolio, partially offset by higher losses on our commercial mortgages portfolio.

Previous wording

The allowance for credit losses increased to $192.6 million at March 31, 2024 from $186.1 million at December 31, 2023. The ratio of allowance for credit losses to total loans and leases was 1.48% at March 31, 2024 and 1.46% at December 31, 2023.

Current wording

The allowance for credit losses increased to $198.3 million at June 30, 2024 from $186.1 million at December 31, 2023. The ratio of allowance for credit losses to total loans and leases was 1.51% at June 30, 2024 and 1.46% at December 31, 2023.

Previous wording

Three months ended March 31, 2024: During the three months ended March 31, 2024, noninterest income was $75.9 million, an increase of $12.7 million from $63.1 million during the three months ended March 31, 2023. The increase was primarily driven by $8.2 million from Cash Connect®due to the addition of ATM vault cash units during the fourth quarter of 2023 and the higher rate environment and $2.3 million in Wealth Management fees.

Current wording

Three months ended June 30, 2024: During the three months ended June 30, 2024, noninterest income was $91.6 million, an increase of $24.7 million from $66.9 million during the three months ended June 30, 2023. The increase was primarily driven by $11.0 million from Cash Connect®due to the addition of customers during the fourth quarter of 2023 and first half of 2024 and the higher rate environment, $5.3 million in Wealth Management fees, a $3.4 million gain due to the reduction of our Visa B derivative liability established from our previous sale of 360,000 shares in 2Q 2020, a $2.0 million gain from post-close distributions from our investment in Spring EQ, and $1.8 million in capital markets income.

Previous wording

Three months ended March 31, 2024: During the three months ended March 31, 2024, noninterest expense was $149.1 million, an increase of $16.0 million from $133.0 million for the three months ended March 31, 2023. The increase was primarily due to $11.3 million from other operating expense driven by higher funding costs from Cash Connect®due to a shift towards external funding, $3.0 million from salaries and benefits costs, and $1.3 million from the FDIC Special Assessment.

Current wording

Three months ended June 30, 2024: During the three months ended June 30, 2024, noninterest expense was $155.8 million, an increase of $14.5 million from $141.3 million for the three months ended June 30, 2023. The increase was primarily due to $10.9 million from salaries and benefits costs and $9.5 million from other operating expense driven by higher funding costs from Cash Connect®due to a shift towards external funding, partially offset by decreases of $2.6 million in net corporate development and restructuring costs, $1.8 million in loan workout and OREO expenses, and $1.3 million in professional fees.

Previous wording

We and our subsidiaries file a consolidated federal income tax return and separate state income tax returns. Income taxes are accounted for in accordance with ASC 740, Income Taxes, which requires the recording of deferred income taxes for tax consequences of temporary differences. We recorded income tax expense of $21.2 million during the three months ended March 31, 2024, compared to income tax expense of $20.9 million for the same period in 2023.

Current wording

We and our subsidiaries file a consolidated federal income tax return and separate state income tax returns. Income taxes are accounted for in accordance with ASC 740, Income Taxes, which requires the recording of deferred income taxes for tax consequences of temporary differences. We recorded income tax expense of $21.3 million and $42.5 million during the three and six months ended June 30, 2024, respectively, compared to income tax expense of $23.0 million and $44.0 million for the same periods in 2023, respectively.

Previous wording

Our effective tax rate was 24.4% for the three months ended March 31, 2024, compared to 25.0% for the same period in 2023. The effective tax rate for the three months ended March 31, 2024 decreased primarily due to an increase in projected tax benefits from our low-income housing tax credit investments, as well as a reduction in state income taxes.

Current wording

Our effective tax rate was 23.5% and 23.9% for the three and six months ended June 30, 2024, respectively, compared to 25.1% for both the three and six months ended June 30, 2023. The effective tax rate for the three and six months ended June 30, 2024 decreased primarily due to an increase in projected tax benefits from our low-income housing tax credit investments, solar tax credit investments made during the current quarter, as well as a reduction in state income taxes.

Previous wording

The effective tax rate reflects the recognition of certain tax benefits in the financial statements including those benefits from tax-exempt interest income, federal low-income housing tax credits, research and development tax credits and excess tax benefits from recognized stock compensation. These tax benefits are offset by the tax effect of stock-based compensation expense related to incentive stock options and a provision for state income tax expense. We frequently analyze our projections of taxable income and make adjustments to our provision for income taxes accordingly.

Current wording

The effective tax rate reflects the recognition of certain tax benefits in the financial statements including those benefits from tax-exempt interest income, federal low-income housing tax credits, solar tax credits, research and development tax credits, and excess tax benefits from recognized stock compensation. These tax benefits are offset by the tax effect of stock-based compensation expense related to incentive stock options, tax deficiencies from recognized stock compensation, and a provision for state income tax expense. We frequently analyze our projections of taxable income and make adjustments to our provision for income taxes accordingly.