FB Financial Corp
For the period ended Sep 30, 2024. Filed Nov 4, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 4, 2024
FBK$54.17-0.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-05.
0001649749-24-000170
Item 2. Management’s discussion and analysis of financial condition and results of operationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-04.
0001649749-24-000199
Item 2. Management’s discussion and analysis of financial condition and results of operationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 216 previous paragraphs and 222 current paragraphs.
119 unchanged; 85 reworded; 16 added; 12 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 37 previous and 37 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
Noninterest income for the three months ended September 30, 2024 decreased by $24.5 million to a loss of $16.5 million, compared to $8.0 million for the three months ended September 30, 2023. The decrease was primarily the result of management’s election to sell $318.6 million of AFS debt securities, which resulted in a $40.2 million net loss on investment securities during the three months ended September 30, 2024 compared to a $14.2 million net loss on investment securities primarily related to the sale of $76.6 million of AFS debt securities during the three months ended September 30, 2023. Refer to the section “Other earnings assets” for additional information on the sale of the AFS debt securities.
Current report
Income before taxes from the Banking segment decreased for the nine months ended September 30, 2024 to $93.2 million, compared to $116.4 million for the nine months ended September 30, 2023. Net interest income increased by $2.6 million to $304.0 million during the nine months ended September 30, 2024 compared to $301.4 million during the nine months ended September 30, 2023. Provisions for credit losses on loans HFI and unfunded loan commitments resulted in $5.1 million of provision expense during the nine months ended September 30, 2024 compared to $2.3 million during the nine months ended September 30, 2023. The Banking segment recorded a noninterest loss of $19.7 million in the nine months ended September 30, 2024 as compared to income of $18.9 million in the nine months ended September 30, 2023. This decrease includes a net loss on investment securities of $56.4 million associated with the sale of $526.4 million AFS debt securities during the nine months ended September 30, 2024 compared with a net loss on investment securities of $14.2 million as noted above for the nine months ended September 30, 2023. Noninterest expense decreased to
Current report
$186.0 million for nine months ended September 30, 2024 compared to $201.7 million for the nine months ended September 30, 2023 due to decreases in salaries, advertising, legal and professional fees and franchise tax expense.
Current report
Net interest income was relatively flat for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023, increasing $1.4 million to $310.1 million from $308.6 million. Increases in interest income of $35.1 million were largely offset by increases in interest expense of $33.6 million for the nine months ended September 30, 2024 compared to the prior period. The increase in interest income for the current year period was driven by an increase in yields on average earning assets incrementally offset by decreases in the average volume of interest-bearing deposits with other financial institutions. The increase in interest expense was primarily driven increases in the rate paid on interest-bearing liabilities.
Current report
We recognized a provision for credit losses on loans HFI for the nine months ended September 30, 2024 and 2023 of $7.6 million and $13.6 million, respectively. The current period provision on loans HFI is due to growth in loan balances for most loan categories offset by significant decreases in construction lending. For the nine months ended September 30, 2023, the increase in the provision for credit losses on loans HFI was driven by a single commercial and industrial relationship moving to nonaccrual status during the period and the deteriorating economic forecasts.
Current report
Net loss from investment securities was $40.2 million and $14.2 million for the three months ended September 30, 2024 and 2023, respectively. The net loss from investment securities during the three months ended September 30, 2024 is the result of management’s election to sell $318.6 million of AFS debt securities to reinvest the proceeds of the sale into higher yielding AFS debt securities compared to a $14.2 million net loss on investment securities primarily related to the sale of $76.6 million of AFS debt securities during the three months ended September 30, 2023. Refer to the section “Other earnings assets” for additional information on the sale of the AFS debt securities.
Current report
Noninterest income amounted to $17.1 million for the nine months ended September 30, 2024, a decrease of $38.1 million, or 69%, as compared to $55.2 million for the nine months ended September 30, 2023. The decrease in noninterest income was driven by the net loss from investment securities, offset by increases in investment services and trust income and BOLI income recognized in other noninterest income.
Current report
Other income increased $1.3 million to $8.8 million during the nine months ended September 30, 2024 as compared to $7.5 million during the nine months ended September 30, 2023. This increase was primarily related to a $2.1 million increase in BOLI income resulting from a cash life insurance benefit during the nine months ended September 30, 2024 offset by a $0.9 million gain during the nine months ended September 30, 2023 associated with the change in fair value of the commercial loans held for sale portfolio that was exited during the year ended December 31, 2023.
Current report
Noninterest expense decreased by $6.8 million, or 8%, during the three months ended September 30, 2024 to $76.2 million as compared to $83.0 million in the three months ended September 30, 2023. The decrease in noninterest expense was attributable to a decrease in salaries, commissions and employee benefits.
Current report
Noninterest expense decreased by $21.0 million, or 9%, during the nine months ended September 30, 2024 to $223.7 million as compared to $244.7 million in the nine months ended September 30, 2023. The decrease in noninterest expense was attributable to a decrease in salaries, commissions and employee benefits, legal and professional fees, advertising expense, and franchise tax expense recognized in other noninterest expense offset slightly by a FDIC special assessment expense.
Current report
Management has made an effort to reduce exposure to construction lending during three and nine months ended September 30, 2024. The reduction in construction balances and related allowance offset some of the additional allowance needed related to growth in other loan segments.
Current report
In addition to customers seeking higher rates on noninterest-bearing deposit balances, customers also migrated from money market account balances to interest-bearing checking accounts. Money market and savings deposits decreased by $106.4 million from December 31, 2023.
Current report
Brokered and internet time deposits increased by $368.4 million to $519.2 million as of September 30, 2024 compared to December 31, 2023. The increase was driven by an issuance of brokered deposits of $369.1 million at an average coupon of 4.15% as we took advantage of favorable relative terms available during the quarter.
Current report
During the three months ended September 30, 2024, we sold $318.5 million of AFS debt securities with a weighted average yield of 2.25% and reinvested the proceeds of the sales into AFS securities with a weighted average yield of 5.25%. The sales resulted in a loss on securities of $40.2 million. We primarily sold low yielding mortgage-backed securities and municipal securities. Including the reinvestment of these proceeds into higher yielding U.S. government agency and mortgage-backed securities, we purchased $457.4 million of AFS debt securities during the three months ended September 30, 2024. Maturities, prepayments and calls of AFS debt securities totaled $89.9 million for the three months ended September 30, 2024.
Current report
During the nine months ended September 30, 2024, we sold $526.4 million of AFS debt securities, resulting in a loss on securities of $56.4 million. We primarily sold fixed rate, deeply discounted mortgage bonds and low yielding municipal bonds and reinvested the proceeds into U.S. government agency AFS debt securities and a blend of fixed and floating rate securities to achieve the best accretion profile for the Bank. Including the reinvestment of these proceeds, we purchased $824.0 million of AFS debt securities during the nine months ended September 30, 2024. Maturities, prepayments and calls of AFS debt securities totaled $224.1 million for the nine months ended September 30, 2024.
Current report
During the three and nine months ended September 30, 2023, we sold $76.6 million of AFS debt securities, contributing to a net loss on securities of $14.2 million. During the three and nine months ended September 30, 2023, we purchased $92.9 million and $93.8 million of AFS debt securities, respectively. During the three and nine months ended September 30, 2023, maturities, prepayments and calls of AFS debt securities totaled $33.0 million and $91.4 million, respectively.
Removed paragraphs (12)
Previous report
Noninterest income for the three months ended June 30, 2024 increased by $1.8 million to $25.6 million, up from $23.8 million for the three months ended June 30, 2023. The increase was primarily due to a $2.1 million cash life insurance benefit during the three months ended June 30, 2024.
Previous report
Income before taxes from the Banking segment increased for the three months ended June 30, 2024 to $50.2 million, compared to $46.3 million for the three months ended June 30, 2023. Net interest income increased by $1.6 million to $101.5 million during the three months ended June 30, 2024 compared to $99.9 million during the three months ended June 30, 2023. Provisions for credit losses on loans HFI and unfunded loan commitments resulted in $2.4 million of provision expense during the three months ended June 30, 2024 compared to a reversal of $1.1 million of provision expense during the three months ended June 30, 2023. Noninterest income increased to $13.5 million in the three months ended June 30, 2024 as compared to $11.5 million in the three months ended June 30, 2023 due to a $2.1 million cash life insurance benefit during the three months ended June 30, 2024. Noninterest expense decreased to $62.3 million for three months ended June 30, 2024 compared to $66.2 million for the three months ended June 30, 2023 due primarily to a decrease in salaries associated with our efficiency and scalability initiatives.
Previous report
Origination and other loan fees impacted our NIM by 4 basis points and 13 basis points for the three months ended June 30, 2024 and 2023, respectively. The decrease was primarily due to an updated methodology for deferrals.
Previous report
Net interest income decreased $3.4 million to $203.5 million for the six months ended June 30, 2024 as compared to $206.9 million for the six months ended June 30, 2023. The change in net interest income was driven by an increase in interest income of $23.6 million, driven largely by an increase in yields on average earning assets, more than offset by an increase in interest expense of $27.0 million, stemming from an increase in the rates on the average interest-bearing liabilities. Interest income was $354.9 million for the six months ended June 30, 2024 compared to $331.3 million for the six months ended June 30, 2023. This increase was primarily driven by increases in yields on loans HFI and taxable investment securities, partially offset by a decrease in average interest-bearing deposits with other financial institutions. Total interest income represents an increase in yield on interest-earning assets to 6.09% for the six months ended June 30, 2024 compared with 5.53% for the six months ended June 30, 2023.
Previous report
Origination and other loan fees impacted our NIM by 5 basis points and 12 basis points for the six months ended June 30, 2024 and 2023, respectively. The decrease was primarily due to an updated methodology for deferrals.
Previous report
We recognized a provision for credit losses on loans HFI for the six months ended June 30, 2024 and 2023 of $5.8 million and $7.6 million, respectively. The current period provision on loans HFI resulted from management’s best estimate of losses over the life of loans in our portfolio in accordance with the CECL approach and was impacted by projected deterioration in the CRE portfolio which was adjusted qualitatively. For the six months ended June 30, 2023, the increase in the provision for credit losses on loans HFI was driven by an increase in loans HFI outstanding period-over-period and the increased possibility of a future recession and inflationary pressures.
Previous report
Noninterest income amounted to $25.6 million for the three months ended June 30, 2024, an increase of $1.8 million, or 8%, as compared to $23.8 million for the three months ended June 30, 2023. Changes in selected components of noninterest income in the above table are discussed below.
Previous report
Other income increased $2.1 million to $4.6 million during the three months ended June 30, 2024 as compared to $2.5 million during the three months ended June 30, 2023. This increase is primarily related to a $2.1 million cash life insurance benefit during the three months ended June 30, 2024.
Previous report
Noninterest expense decreased by $6.2 million during the three months ended June 30, 2024 to $75.1 million as compared to $81.3 million in the three months ended June 30, 2023. Changes in selected components of noninterest expense in the above table are discussed below.
Previous report
Noninterest expense decreased by $14.2 million during the six months ended June 30, 2024 to $147.5 million as compared to $161.7 million in the six months ended June 30, 2023. Changes in selected components of noninterest expense in the above table are discussed below.
Previous report
As a ratio of ACL to loans HFI by loan type, our construction portfolio incurred the largest increases period-over-period. Our construction portfolio is heavily reliant on the strength of the economy; and therefore, it is adversely affected by inflation and high interest rates.
Previous report
During the three months ended June 30, 2024, we purchased $85.0 million in AFS debt securities. No AFS debt securities were purchased during the three months ended June 30, 2023. During the six months ended June 30, 2024 and 2023, we purchased $366.6 million and $0.9 million in AFS debt securities, respectively. There were no AFS debt securities sold during the three months ended June 30, 2024 or 2023. During the six months ended June 30, 2024, we sold $207.9 million in AFS debt securities, with a weighted average yield of 2.14% and reinvested the proceeds of the sales into available-for-sale securities with a weighted average yield of 5.94%. The sales resulted in a pre-tax loss on securities of $16.2 million. We primarily sold agency collateralized mortgage obligations, agency mortgage-backed securities, U.S. Treasury and municipal securities. We reinvested the proceeds from the sales primarily into U.S. government agency AFS debt securities in order to increase the effective yield of our portfolio. There were no AFS debt securities sold during the six months ended June 30, 2023. During the three months ended June 30, 2024 and 2023, maturities and calls of AFS debt securities totaled $67.6 million and $31.6 million, respectively. During the six months ended June 30, 2024 and 2023, maturities and calls of AFS debt securities totaled $134.2 million and $58.4 million, respectively.
Reworded paragraphs (85)
Previous wording
The following is a discussion of our financial condition as of June 30, 2024 and December 31, 2023, and our results of operations for the three and six months ended June 30, 2024 and 2023, and should be read in conjunction with our audited consolidated financial statements set forth in our Annual Report on Form 10-K for the year ended December 31, 2023, that was filed with the SEC on February 27, 2024, and with the accompanying unaudited notes to the condensed consolidated financial statements set forth in this Report.
Current wording
The following is a discussion of our financial condition as of September 30, 2024 and December 31, 2023, and our results of operations for the three and nine months ended September 30, 2024 and 2023, and should be read in conjunction with our audited consolidated financial statements set forth in our Annual Report on Form 10-K for the year ended December 31, 2023, that was filed with the SEC on February 27, 2024, and with the accompanying unaudited notes to the condensed consolidated financial statements set forth in this Report.
Previous wording
(3)ROAA and ROAE is calculated by dividing annualized net income or loss for that period by our average assets or average equity for the same period.
Current wording
(3)ROAA and ROAE is calculated by dividing annualized net income or loss by average assets or average equity.
Previous wording
(4)Includes $22,354, $20,225 and $21,229 of optional rights to repurchase delinquent GNMA loans as of June 30, 2024, June 30, 2023 and December 31, 2023, respectively.
Current wording
(4)Includes $30,537, $22,074 and $21,229 of optional rights to repurchase delinquent GNMA loans as of September 30, 2024, September 30, 2023 and December 31, 2023, respectively.
Previous wording
Our net income increased during the three months ended June 30, 2024 to $40.0 million from $35.3 million for the three months ended June 30, 2023. Diluted earnings per common share were $0.85 and $0.75 for the three months ended June 30, 2024 and 2023, respectively. Our net income represented a ROAA of 1.30% and 1.10% for the three months ended June 30, 2024 and 2023, respectively, and a ROAE of 10.9% and 10.3% for the same periods. Our ROATCE for the three months ended June 30, 2024 and 2023 were 13.1% and 12.6%, respectively. See “GAAP reconciliation and management explanation of non-GAAP financial measures” in this Report for a discussion of tangible common equity and return on average tangible common equity.
Current wording
Our net income decreased during the three months ended September 30, 2024 to $10.2 million from $19.2 million for the three months ended September 30, 2023. Diluted earnings per common share were $0.22 and $0.41 for the three months ended September 30, 2024 and 2023, respectively. Our net income represented a ROAA of 0.32% and 0.61% for the three months ended September 30, 2024 and 2023, respectively, and a ROAE of 2.67% and 5.46% for the same periods. Our ROATCE for the three months ended September 30, 2024 and 2023 were 3.19% and 6.67%, respectively. See “GAAP reconciliation and management explanation of non-GAAP financial measures” in this Report for a discussion of tangible common equity and return on average tangible common equity.
Previous wording
During the three months ended June 30, 2024, our net interest income increased to $102.6 million compared with $101.5 million in the three months ended June 30, 2023. Our net interest margin, on a tax-equivalent basis, increased to 3.57% for the three months ended June 30, 2024 as compared to 3.40% for the three months ended June 30, 2023. The increase in net interest margin was primarily driven by higher interest rates mostly offset by the decreases in our volume of interest-earning assets and interest-bearing liabilities.
Current wording
During the three months ended September 30, 2024, our net interest income increased to $106.0 million compared with $100.9 million in the three months ended September 30, 2023. Our net interest margin, on a tax-equivalent basis, increased to 3.55% for the three months ended September 30, 2024 as compared to 3.42% for the three months ended September 30, 2023. The increase in net interest margin was primarily driven by higher rates for loans HFI and taxable AFS debt securities offset by a smaller increase in the volume of interest-earnings assets compared to interest-bearing liabilities.
Previous wording
Noninterest expense decreased to $75.1 million for the three months ended June 30, 2024, compared with $81.3 million for the three months ended June 30, 2023. The decrease in noninterest expense is due to decreases in salaries, commissions and employee benefits of $5.8 million primarily related to the Company's efficiency and scalability initiatives and updated methodology of deferrals for loan fees and loan origination expenses.
Current wording
Noninterest expense decreased to $76.2 million for the three months ended September 30, 2024, compared with $83.0 million for the three months ended September 30, 2023. The decrease in noninterest expense is due to decreases in salaries, commissions and employee benefits of $7.0 million primarily related to the Company’s efficiency and scalability initiatives and updated methodology of deferrals for loan fees and loan origination expenses.
Previous wording
Our net income decreased during the six months ended June 30, 2024 to $67.9 million from $71.7 million for the six months ended June 30, 2023. Diluted earnings per common share were $1.45 and $1.53 for the six months ended June 30, 2024 and 2023, respectively. Our net income represented a ROAA of 1.09% and 1.13% for the six months ended June 30, 2024 and 2023, respectively, and a ROAE of 9.31% and 10.6% for the same periods. Our ROATCE for the six months ended June 30, 2024 and 2023 were 11.2% and 13.1%, respectively. See “GAAP reconciliation and management explanation of non-GAAP financial measures” in this Report for a discussion of tangible common equity and return on average tangible common equity.
Current wording
Our net income decreased during the nine months ended September 30, 2024 to $78.2 million from $90.9 million for the nine months ended September 30, 2023. Diluted earnings per common share were $1.67 and $1.94 for the nine months ended September 30, 2024 and 2023, respectively. Our net income represented a ROAA of 0.83% and 0.95% for the nine months ended September 30, 2024 and 2023, respectively, and a ROAE of 7.02% and 8.86% for the same periods. Our ROATCE for the nine months ended September 30, 2024 and 2023 were 8.45% and 10.9%, respectively. See “GAAP reconciliation and management explanation of non-GAAP financial measures” in this Report for a discussion of tangible common equity and return on average tangible common equity.
Previous wording
During the six months ended June 30, 2024, our net interest income decreased to $202.1 million from $205.2 million for the six months ended June 30, 2023. Our net interest margin, on a tax-equivalent basis, increased to 3.49% for the six months ended June 30, 2024 as compared to 3.45% for the six months ended June 30, 2023. The increase in net interest margin was primarily driven by higher interest rates, which impacted both interest-earnings assets and interest-bearing liabilities, partially offset by a decrease in volume of our interest-earnings assets.
Current wording
During the nine months ended September 30, 2024, our net interest income increased to $308.1 million from $306.1 million for the nine months ended September 30, 2023. Our net interest margin, on a tax-equivalent basis, increased to 3.51% for the nine months ended September 30, 2024 as compared to 3.44% for the nine months ended September 30, 2023. The increase in net interest margin was primarily driven by higher interest rates mostly offset by our volume of interest-earnings assets decreasing compared to an increase in our interest-bearing liabilities.
Previous wording
Noninterest income for the six months ended June 30, 2024 decreased by $13.6 million to $33.6 million, down from $47.2 million for the six months ended June 30, 2023. The decrease in noninterest income was primarily due to a $16.2 million net loss on investment securities primarily related to the sale of $207.9 million of available-for-sale securities. Refer to the section “Other earnings assets” for additional information on the sale of the available-for sale securities. The decrease was partially offset by a $1.5 million increase in investment services and trust income during the six months ended June 30, 2024.
Current wording
Noninterest income for the nine months ended September 30, 2024 decreased by $38.1 million to $17.1 million, down from $55.2 million for the nine months ended September 30, 2023. The decrease in noninterest income was primarily due to a $56.4 million net loss on investment securities related to the sale of $526.4 million of AFS debt securities during the nine months ended September 30, 2024 compared to a $14.2 million net loss on investment securities primarily related to the sale of $76.6 million of AFS debt securities during the nine months ended September 30, 2023. Refer to the section “Other earnings assets” for additional information on the sale of the AFS debt securities. The decrease was partially offset by a $2.1 million increase in investment services and trust income and a $2.1 million cash life insurance benefit during the nine months ended September 30, 2024.
Previous wording
Noninterest expense decreased to $147.5 million for the six months ended June 30, 2024, compared with $161.7 million for the six months ended June 30, 2023. The decrease in noninterest expense is due to decreases in salaries, commissions and employee benefits of $10.0 million primarily related to the Company's efficiency and scalability initiatives and updated methodology of deferrals for loan fees and loan origination expenses. Additionally, the decrease is reflective of decreases in legal and professional expenses, advertising and franchise tax expense.
Current wording
Noninterest expense decreased to $223.7 million for the nine months ended September 30, 2024, compared with $244.7 million for the nine months ended September 30, 2023. The decrease in noninterest expense is due to decreases in salaries, commissions and employee benefits of $16.9 million primarily related to the Company’s efficiency and scalability initiatives and updated methodology of deferrals for loan fees and loan origination expenses. Additionally, the decrease is reflective of decreases in advertising, legal and professional expenses and franchise tax expense.
Previous wording
Income before taxes from the Banking segment decreased for the six months ended June 30, 2024 to $82.9 million, compared to $93.1 million for the six months ended June 30, 2023. Net interest income decreased by $2.0 million to $200.2 million during the six months ended June 30, 2024 compared to $202.2 million during the six months ended June 30, 2023. Provisions for credit losses on loans HFI and unfunded loan commitments resulted in $3.3 million of provision expense during the six months ended June 30, 2024 compared to a reversal of $0.9 million of provision expense during the six months ended June 30, 2023. Noninterest income decreased to $8.7 million in the six months ended June 30, 2024 as compared to $23.0 million in the six months ended June 30, 2023. This decrease includes a net loss on investment securities of $16.2 million primarily associated with the sale of $207.9 million available-for-sale securities during the six months ended June 30, 2024 compared with a net gain on investment securities of $41 thousand for the six months ended June 30, 2023. Noninterest expense decreased to $122.7 million for six months ended June 30, 2024 compared to $133.0 million for the six months ended June 30, 2023 due to decreases in salaries, legal and professional fees, advertising and franchise tax expense.
Current wording
Income before taxes from the Banking segment decreased for the three months ended September 30, 2024 to $10.8 million, compared to $23.4 million for the three months ended September 30, 2023. Net interest income increased by $5.0 million to $104.3 million during the three months ended September 30, 2024 compared to $99.4 million during the three months ended September 30, 2023. Provisions for credit losses on loans HFI and unfunded loan commitments resulted in $1.9 million of provision expense during the three months ended September 30, 2024 compared to $3.3 million during the three months ended September 30, 2023. The Banking segment recorded a noninterest loss of $28.4 million in the three months ended September 30, 2024 compared to a $4.0 million loss in the three months ended September 30, 2023. This decrease includes a net loss on investment securities of $40.2 million associated with the sale of $318.6 million AFS debt securities during the three months ended September 30, 2024 compared to a $14.2 million net loss on investment securities primarily related to the sale of $76.6 million of AFS debt securities during the three months ended September 30, 2023. Noninterest expense decreased to $63.3 million for three months ended September 30, 2024 compared to $68.7 million for the three months ended September 30, 2023 due primarily to a decrease in salaries associated with our efficiency and scalability initiatives and updated methodology of deferrals for loan fees and loan origination expenses.
Previous wording
Activity in our Mortgage segment resulted in a pre-tax net contribution of $0.7 million for the three months ended June 30, 2024 compared to a $1.2 million pre-tax net loss for the three months ended June 30, 2023. Net interest income was $1.1 million for the three months ended June 30, 2024 and $1.6 million for the three months ended June 30, 2023. Provisions for credit losses on loans HFI and unfunded loan commitments resulted in a reversal of $0.2 million of provision expense during the three months ended June 30, 2024 compared to $0.1 million of provision expense during the three months ended June 30, 2023. Mortgage banking income decreased $0.3 million to $11.9 million during the three months ended June 30, 2024 compared to $12.2 million for the three months ended June 30, 2023. As noted below, mortgage banking income includes origination fees and realized gains and losses on the sale of mortgage loans, change in fair value of mortgage loans and derivatives, and mortgage loan servicing fees, which includes the net change in fair value of MSRs and related derivatives. Mortgage banking income is initially driven by the recognition of interest rate lock commitments at fair value at inception of the IRLCs. This is subsequently adjusted for changes in the overall interest rate environment offset by derivative contracts entered into to mitigate the interest rate exposure. Upon sale of the loan, the net fair value gain is reclassified as a realized gain on sale.
Current wording
Activity in our Mortgage segment resulted in a pre-tax net contribution of $0.6 million for the three months ended September 30, 2024 compared to a $0.2 million pre-tax net loss for the three months ended September 30, 2023. Net interest income was $1.7 million for the three months ended September 30, 2024 and $1.6 million for the three months ended September 30, 2023. Provisions for credit losses on loans HFI and unfunded loan commitments resulted in provision expense of $0.1 million during the three months ended September 30, 2024 compared to a reversal of $0.4 million of provision expense during the three months ended September 30, 2023. Mortgage banking income decreased $0.4 million to $11.6 million during the three months ended September 30, 2024 compared to $12.0 million for the three months ended September 30, 2023. As noted below, mortgage banking income includes origination fees and realized gains and losses on the sale of mortgage loans, change in fair value of mortgage loans and derivatives, and mortgage loan servicing fees, which includes the net change in fair value of MSRs and related derivatives. Mortgage banking income is initially driven by the recognition of interest rate lock commitments at fair value at inception. This is subsequently adjusted for changes in the overall interest rate environment offset by derivative contracts entered into to mitigate the interest rate exposure. Upon sale of the loan, the net fair value gain is reclassified as a realized gain on sale.
Previous wording
Noninterest expense for the three months ended June 30, 2024 and 2023 was $12.8 million and $15.1 million, respectively. This decrease is reflective of a decrease in salaries associated with our efficiency and scalability initiatives.
Current wording
Noninterest expense for the three months ended September 30, 2024 and 2023 was $12.9 million and $14.3 million, respectively. This decrease is reflective of a decrease in salaries and employee benefits associated with our efficiency and scalability initiatives.
Previous wording
Activity in our Mortgage segment resulted in a pre-tax net contribution of $2.2 million for the six months ended June 30, 2024 compared to a $1.9 million pre-tax net loss for the six months ended June 30, 2023. Net interest income was $1.9 million for the six months ended June 30, 2024 compared to $3.0 million for the six months ended June 30, 2023. Provisions for credit losses on loans HFI and unfunded loan commitments resulted in a reversal of $0.3 million of provision expense during the six months ended June 30, 2024 compared to $0.4 million of provision expense during the six months ended June 30, 2023. Mortgage banking income increased $0.2 million to $24.5 million during the six months ended June 30, 2024 compared to $24.3 million for the six months ended June 30, 2023.
Current wording
Activity in our Mortgage segment resulted in a pre-tax net contribution of $3.3 million for the nine months ended September 30, 2024 compared to a $2.0 million pre-tax net loss for the nine months ended September 30, 2023. Net interest income was $4.1 million for the nine months ended September 30, 2024 compared to $4.7 million for the nine months ended September 30, 2023. Provisions for credit losses on loans HFI and unfunded loan commitments resulted in a reversal of $0.2 million of provision expense during the nine months ended September 30, 2024 compared to a reversal of $0.1 million of provision expense during the nine months ended September 30, 2023. Mortgage banking income decreased $0.3 million to $36.0 million during the nine months ended September 30, 2024 compared to $36.3 million for the nine months ended September 30, 2023.
Previous wording
The components of mortgage banking income for the six months ended June 30, 2024 and 2023 were as follows:
Current wording
The components of mortgage banking income for the nine months ended September 30, 2024 and 2023 were as follows:
Previous wording
Noninterest expense for the six months ended June 30, 2024 and 2023 was $24.8 million and $28.8 million, respectively. This decrease is reflective of a decrease in salaries associated with our efficiency and scalability initiatives.
Current wording
Noninterest expense for the nine months ended September 30, 2024 and 2023 was $37.8 million and $43.1 million, respectively. This decrease is reflective of a decrease in salaries and employee benefits associated with our efficiency and scalability initiatives.
Previous wording
Throughout the following discussion of our operating results, we present our net interest income, net interest margin and efficiency ratio on a fully tax-equivalent basis. The fully tax-equivalent basis adjusts for the tax-favored status of net interest income from certain loans and investments.
Current wording
Throughout the following discussion of our operating results, we present our net interest income, net interest margin and core efficiency ratio on a fully tax-equivalent basis. The fully tax-equivalent basis adjusts for the tax-favored status of net interest income from certain loans and investments.
Previous wording
Our tax-exempt income is converted to a tax-equivalent basis by adjusting for the combined federal and blended state statutory income tax rate of 26.06% for the three and six months ended June 30, 2024 and 2023.
Current wording
Our tax-exempt income is converted to a tax-equivalent basis by adjusting for the combined federal and blended state statutory income tax rate of 26.06% for the three and nine months ended September 30, 2024 and 2023.
Previous wording
During the three and six months ended June 30, 2024, the U.S. Treasury yield curve became less inverted as long-term note and bond rates increased at a faster pace than shorter-term note rates. The curve remained inverted as of June 30, 2024, which is in contrast to the more normalized upward sloping U.S. Treasury yield curve exhibited during the three and six months ended June 30, 2023. The Federal Funds Target Rate range was 5.25% - 5.50% as of both June 30, 2024 and December 31, 2023. The target range for the federal funds rate has remained at 5.25% to 5.50% since the Federal Open Market Committee’s July 26, 2023 meeting.
Current wording
During the three and nine months ended September 30, 2024, the U.S. Treasury yield curve continued its path towards normalization and became less inverted as long-term note and bond rates decreased at a slower pace than shorter-term note rates. The curve remained inverted as of September 30, 2024, which is in contrast to the more normalized upward sloping U.S. Treasury yield curve exhibited during the three and nine months ended September 30, 2023. The Federal Funds Target Rate range was 4.75% - 5.00% and 5.25% - 5.50% as of September 30, 2024 and December 31, 2023, respectively. During the Federal Open Market Committee’s September 18, 2024 meeting, the federal funds rate was lowered 50 basis points, which was the first rate change since July 2023.
Previous wording
Net interest income increased to $103.3 million for the three months ended June 30, 2024 as compared to $102.4 million for the three months ended June 30, 2023. The change in net interest income was driven by a $7.0 million increase in interest income mostly offset by an increase in interest expense of $6.2 million. Further discussion of the changes to interest income and expense are discussed below.
Current wording
Net interest income increased to $106.6 million for the three months ended September 30, 2024 as compared to $101.8 million for the three months ended September 30, 2023. The change in net interest income was driven by a $11.5 million increase in interest income partially offset by an increase in interest expense of $6.6 million. Further discussion of the changes to interest income and expense are discussed below.
Previous wording
Interest income was $178.1 million for the three months ended June 30, 2024, compared to $171.0 million for the three months ended June 30, 2023, an increase of $7.0 million, which was primarily driven by an increase in yields on loans HFI and taxable investment securities, partially offset by a decrease in average interest-bearing deposits with other financial institutions and loans HFI.
Current wording
Interest income was $186.2 million for the three months ended September 30, 2024, compared to $174.7 million for the three months ended September 30, 2023, an increase of $11.5 million, which was primarily driven by an increase in yields and somewhat by an increase in volume of loans HFI and taxable investment securities.
Previous wording
Interest income on loans HFI increased $5.8 million to $154.2 million for the three months ended June 30, 2024 from $148.4 million for the three months ended June 30, 2023 primarily due to higher yields. The yield on loans HFI was 6.70% for the three months ended June 30, 2024, up 36 basis points from the three months ended June 30, 2023.
Current wording
Interest income on loans HFI increased $4.7 million to $157.8 million for the three months ended September 30, 2024 from $153.0 million for the three months ended September 30, 2023 primarily due to higher yields with a secondary driver of increased volume. The yield on loans HFI was 6.70% for the three months ended September 30, 2024, up 16 basis points from the three months ended September 30, 2023.
Previous wording
Interest income on taxable investment securities increased $5.5 million to $12.0 million for the three months ended June 30, 2024 from $6.5 million for the three months ended June 30, 2023 due to the reinvestment of proceeds from the sale of AFS debt securities that were sold during the second half of 2023 and first quarter of 2024 to higher yielding U.S. government agency securities. The yield on taxable investment securities increased 140 basis points to 3.29% for the three months ended June 30, 2024 compared to 1.89% for the three months ended June 30, 2023.
Current wording
Interest income on taxable investment securities increased $7.5 million to $13.9 million for the three months ended September 30, 2024 from $6.4 million for the three months ended September 30, 2023 due to the reinvestment of proceeds from the sale of AFS debt securities that were sold during the second half of 2023 and first nine months of 2024 to higher yielding U.S. government agency and mortgage-backed securities. The yield on taxable investment securities increased 184 basis points to 3.73% for the three months ended September 30, 2024 compared to 1.89% for the three months ended September 30, 2023.
Previous wording
Interest expense was $74.8 million for the three months ended June 30, 2024, an increase of $6.2 million as compared to the three months ended June 30, 2023. The primary driver was an increase in interest expense on interest-bearing deposit accounts stemming from an increase in the rate paid on those balances. Interest expense on money market and customer time deposits increased during the period by $6.8 million and $3.2 million, respectively, from the three months ended June 30, 2023. These increases were most significantly influenced by increases in rates paid on these average balances. The average rate on money market deposits increased 50 basis points to 3.93% for the three months ended June 30, 2024 from 3.43% for the three months ended June 30, 2023. The average rate on customer time deposits increased 100 basis points to 4.00% for the three months ended June 30, 2024 from 3.00% for the three months ended June 30, 2023. Total cost of interest-bearing deposits was 3.52% for the three months ended June 30, 2024 compared to 3.06% for the three months ended June 30, 2023. As interest rates on deposits increase, we tend to experience some movement between deposit types as customers seek higher interest rates and shift from noninterest-bearing deposit accounts to interest-bearing deposit products.
Current wording
Interest expense was $79.6 million for the three months ended September 30, 2024, an increase of $6.6 million as compared to the three months ended September 30, 2023. The increase in interest expense was driven equally by an increase in the average balance of interest-bearing liabilities which increased interest expense $3.6 million and an increase in the rate paid on interest-bearing liabilities which increased interest expense $3.0 million over the comparative time period. Increases in average balances of interest-bearing liabilities were led by brokered and internet time deposits of $140.0 million for the three months ended September 30, 2024 due to the issuance of brokered deposits as we took advantage of favorable relative terms available during the quarter. Notable contributors to the increase in interest expense are attributable to the rate paid on interest-bearing liabilities, including money market and customer time deposits, which increased $2.7 million and $1.6 million, respectively, from the three months ended September 30, 2023. These increases were most significantly influenced by increases in rates paid on these balances. The average rate on money market deposits increased 15 basis points to 3.93% for the three months ended September 30, 2024 from 3.78% for the three months ended September 30, 2023. The average rate on customer time deposits increased 60 basis points to 3.97% for the three months ended September 30, 2024 from 3.37% for the three months ended September 30, 2023.
Previous wording
Interest income on loans HFI increased $21.3 million to $309.2 million for the six months ended June 30, 2024 from $287.9 million for the six months ended June 30, 2023 due primarily to increasing yields. The average yield on loans HFI increased by 47 basis points period-over-period to 6.67% for the six months ended June 30, 2024 from 6.20% for the six months ended June 30, 2023.
Current wording
Interest income on loans HFI increased $26.0 million to $466.9 million for the nine months ended September 30, 2024 from $440.9 million for the nine months ended September 30, 2023 due primarily to increasing yields. The average yield on loans HFI increased by 37 basis points period-over-period to 6.68% for the nine months ended September 30, 2024 from 6.31% for the nine months ended September 30, 2023.
Previous wording
The components of our loan yield for the six months ended June 30, 2024 and 2023 were as follows:
Current wording
The components of our loan yield for the nine months ended September 30, 2024 and 2023 were as follows:
Previous wording
Interest income on taxable investment securities increased $8.0 million to $21.1 million for the six months ended June 30, 2024 from $13.1 million for the six months ended June 30, 2023 due to the reinvestment of proceeds from the sale of AFS debt securities that were sold during the second half of 2023 and first quarter of 2024 to higher yielding U.S. government agency securities. The yield on taxable investment securities increased 106 basis points to 2.96% for the six months ended June 30, 2024 compared to 1.90% for the six months ended June 30, 2023.
Current wording
Interest income on taxable investment securities increased $15.6 million to $35.0 million for the nine months ended September 30, 2024 from $19.4 million for the nine months ended September 30, 2023 due to the reinvestment of proceeds from the sale of AFS debt securities that were sold during the second half of 2023 and first and third quarters of 2024 to higher yielding U.S. government agency securities and mortgage-backed securities. The yield on taxable investment securities increased 133 basis points to 3.22% for the nine months ended September 30, 2024 compared to 1.89% for the nine months ended September 30, 2023.
Previous wording
Interest income on interest-bearing deposits with other financial institutions decreased to $13.7 million for the six months ended June 30, 2024 from $18.8 million for the six months ended June 30, 2023 due to a decrease in volume of interest-bearing deposits with other financial institutions partially offset by higher yields. The average balance of interest-bearing deposits with other financial institutions decreased $284.3 million to $509.3 million for the six months ended June 30, 2024 from $793.6 million for the six months ended June 30, 2023. The yield on interest-bearing deposits with other financial institutions increased 62 basis points to 5.41% for the six months ended June 30, 2024 compared to 4.79% for the six months ended June 30, 2023.
Current wording
Interest income on interest-bearing deposits with other financial institutions decreased to $23.2 million for the nine months ended September 30, 2024 from $28.5 million for the nine months ended September 30, 2023 due to a decrease in volume of interest-bearing deposits with other financial institutions partially offset by higher yields. The average balance of interest-bearing deposits with other financial institutions decreased $187.0 million to $573.9 million for the nine months ended September 30, 2024 from $760.9 million for the nine months ended September 30, 2023. The yield on interest-bearing deposits with other financial institutions increased 41 basis points to 5.41% for the nine months ended September 30, 2024 compared to 5.00% for the nine months ended September 30, 2023.
Previous wording
Interest expense was $151.4 million for the six months ended June 30, 2024, an increase of $27.0 million as compared to $124.5 million for the six months ended June 30, 2023. The increase was largely attributed to a rise in the rate paid on interest-bearing deposit accounts, most notably, on money market and customer time deposit products. Interest expense on money market deposits increased $19.9 million to $74.5 million for the six months ended June 30, 2024 compared to $54.6 million for the six months ended June 30, 2023. Interest expense on customer time deposits increased $8.1 million to $27.9 million for the six months ended June 30, 2024 from $19.9 million for the six months ended June 30, 2023. The average rate on money market deposits increased 74 basis points to 3.93% for the six months ended June 30, 2024 from 3.19% for the six months ended June 30, 2023. The average rate on customer time deposits increased 118 basis points to 3.95% for the six months ended June 30, 2024 from 2.77% for the six months ended June 30, 2023. Total cost of interest-bearing deposits was 3.51% for the six months ended June 30, 2024 compared to 2.80% for the six months ended June 30, 2023.
Current wording
Interest expense was $231.0 million for the nine months ended September 30, 2024, an increase of $33.6 million as compared to $197.4 million for the nine months ended September 30, 2023. The increase was largely attributed to a rise in the rate paid on interest-bearing deposit accounts, most notably, on money market and customer time deposit products. Interest expense on money market deposits increased $22.6 million to $112.0 million for the nine months ended September 30, 2024 compared to $89.5 million for the nine months ended September 30, 2023. Interest expense on customer time deposits increased $9.6 million to $41.4 million for the nine months ended September 30, 2024 from $31.8 million for the nine months ended September 30, 2023. The average rate on money market deposits increased 53 basis points to 3.93% for the nine months ended September 30, 2024 from 3.40% for the nine months ended September 30, 2023. The average rate on customer time deposits increased 99 basis points to 3.96% for the nine months ended September 30, 2024 from 2.97% for the nine months ended September 30, 2023. Total cost of interest-bearing deposits was 3.53% for the nine months ended September 30, 2024 compared to 2.97% for the nine months ended September 30, 2023.
Previous wording
The average balance of other borrowings increased $129.8 million to $131.3 million for the six months ended June 30, 2024 compared to $1.5 million for the six months ended June 30, 2023. As a result, interest expense on other borrowings increased to $3.1 million for the six months ended June 30, 2024 compared to $16 thousand for the six months ended June 30, 2023. The yield on other borrowings increased 271 basis points to 4.81% for the six months ended June 30, 2024 compared to 2.10% for the six months ended June 30, 2023. The increase is due primarily of borrowings from the Bank Term Funding Program. Refer to the section “Borrowings” for additional information on the BTFP.
Current wording
The average balance of other borrowings increased $127.9 million to $129.4 million for the nine months ended September 30, 2024 compared to $1.5 million for the nine months ended September 30, 2023. As a result, interest expense on other borrowings increased to $4.7 million for the nine months ended September 30, 2024 compared to $23 thousand for the nine months ended September 30, 2023. The yield on other borrowings increased 275 basis points to 4.83% for the nine months ended September 30, 2024 compared to 2.08% for the nine months ended September 30, 2023. The increase is due primarily of borrowings from the Bank Term Funding Program, which was paid-off at the end of this quarter. Refer to the section “Borrowings” for additional information on the BTFP.
Previous wording
(2)Interest income includes the effects of taxable-equivalent adjustments using a U.S. federal income tax rate and, where applicable, state income tax to increase tax-exempt interest income to a tax-equivalent basis. The net tax-equivalent adjustment amounts included in income were $1.3 million and $1.7 million for six months ended June 30, 2024 and 2023, respectively.
Current wording
(2)Interest income includes the effects of taxable-equivalent adjustments using a U.S. federal income tax rate and, where applicable, state income tax to increase tax-exempt interest income to a tax-equivalent basis. The net tax-equivalent adjustment amounts included in income were $2.0 million and $2.5 million for nine months ended September 30, 2024 and 2023, respectively.
Previous wording
(3)Includes average net unrealized losses on investment securities available for sale of $196.1 million and $217.4 million for the six months ended June 30, 2024 and 2023, respectively.
Current wording
(3)Includes average net unrealized losses on investment securities available for sale of $181.9 million and $222.5 million for the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
(4)Includes average of optional rights to repurchase government guaranteed GNMA mortgage loans previously sold that have become past due greater than 90 days of $20.8 million and $21.7 million for the six months ended June 30, 2024 and 2023, respectively.
Current wording
(4)Includes average of optional rights to repurchase government guaranteed GNMA mortgage loans previously sold that have become past due greater than 90 days of $22.3 million and $21.1 million for the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
The tables below present the components of the changes in net interest income for the six months ended June 30, 2024 and 2023. For each major category of interest-earning assets and interest-bearing liabilities, information is provided with respect to changes due to average volume and changes due to interest rates, with the changes in both volume and interest rates allocated to these two categories based on the proportionate absolute changes in each category.
Current wording
The tables below present the components of the changes in net interest income for the nine months ended September 30, 2024 and 2023. For each major category of interest-earning assets and interest-bearing liabilities, information is provided with respect to changes due to average volume and changes due to interest rates, with the changes in both volume and interest rates allocated to these two categories based on the proportionate absolute changes in each category.
Previous wording
(2)Interest income includes the effects of the tax-equivalent adjustments to increase tax-exempt interest income to a tax-equivalent basis. The net taxable-equivalent adjustment amounts included was $1.3 million and $1.7 million for the six months ended June 30, 2024 and 2023, respectively.
Current wording
(2)Interest income includes the effects of the tax-equivalent adjustments to increase tax-exempt interest income to a tax-equivalent basis. The net taxable-equivalent adjustment amounts included was $2.0 million and $2.5 million for the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
Our allowance for credit losses calculation as of June 30, 2024 resulted from management’s best estimate of losses over the life of loans and unfunded commitments in our portfolio in accordance with the CECL approach. Our calculation included qualitative adjustments for projected slower GDP growth over the next two to three years and expected elevated unemployment levels. We also considered the current global economic environment, including continued pressures on supply chains (and more specifically, oil and energy) and increased uncertainty due to geopolitical turmoil and its impact on the U.S. economy. These factors may continue to lead to increased volatility in forecasted macroeconomic variables, a key input to our calculated level of allowance for credit losses.
Current wording
Our allowance for credit losses calculation as of September 30, 2024 resulted from management’s best estimate of losses over the life of loans and unfunded commitments in our portfolio in accordance with the CECL approach. Our calculation included forecasts for projected slower GDP growth over the next two to three years and expected elevated unemployment levels. We also considered the current global economic environment, including continued pressures on supply chains (and more specifically, oil and energy) and increased uncertainty due to geopolitical turmoil and its impact on the U.S. economy. These factors may continue to lead to increased volatility in forecasted macroeconomic variables, a key input to our calculated level of allowance for credit losses.
Previous wording
We recognized a provision for credit losses on loans HFI of $3.9 million and $2.6 million for the three months ended June 30, 2024 and 2023, respectively. The increase in our provision for credit losses on loans HFI during the three months ended June 30, 2024 was primarily due to increases in specific reserves for individually evaluated relationships offset by reductions in reserves for construction loans. The reduction for construction loans is primarily due to reduction in balances outstanding for the portfolio. For the three months ended June 30, 2023, the decrease in the provision for credit losses on loans HFI was driven by slowed loan growth in our loans HFI combined with the economic variables signaling a possible recession in our forward-looking model.
Current wording
We recognized a provision for credit losses on loans HFI of $1.9 million and $6.0 million for the three months ended September 30, 2024 and 2023, respectively. The decrease in our provision for credit losses on loans HFI during the three months ended September 30, 2024 was primarily due to reductions in balances outstanding for construction loans offset by growth in other classes of financing receivable in our loan portfolio. For the three months ended September 30, 2023, the decrease in the provision for credit losses on loans HFI was driven by decreased loan growth in our loans HFI combined with the economic variables signaling a possible recession in our forward-looking model partially offset by an increase in the provision for credit losses on loans HFI due to a single commercial and industrial relationship moving to nonaccrual status during the three months ended September 30, 2023.
Previous wording
We also estimate expected credit losses on off-balance sheet loan commitments that are not accounted for as derivatives. When applying the CECL methodology to estimate expected credit loss, we consider the likelihood that funding will occur, the contractual period of exposure to credit loss, the risk of loss, historical loss experience, and current conditions along with expectations of future economic conditions. We recorded a reversal of provision for credit losses on unfunded commitments of $1.7 million and $3.7 million for the three months ended June 30, 2024 and 2023, respectively. The reversal is due to a $37.6 million decrease in our unfunded commitments during the three months ended June 30, 2024, including a $73.8 million decrease in our construction portfolio.
Current wording
We also estimate expected credit losses on off-balance sheet loan commitments that are not accounted for as derivatives. When applying the CECL methodology to estimate expected credit loss, we consider the likelihood that funding will occur, the contractual period of exposure to credit loss, the risk of loss, historical loss experience, and current conditions along with expectations of future economic conditions. We recorded a provision expense for credit losses on unfunded commitments of $0.1 million and a reversal of provision expense of $3.2 million for the three months ended September 30, 2024 and 2023, respectively. The reversal is due to a $9.3 million decrease in our unfunded commitments during the three months ended September 30, 2024, including a $6.7 million decrease in our construction portfolio. Commitments increased in commercial and industrial and residential real estate line of credit portfolios offset by reductions in construction and commercial real estate.
Previous wording
During the six months ended June 30, 2024 and 2023, it was determined that all AFS debt securities that experienced a decline in fair value below amortized cost basis were due to noncredit-related factors. Therefore, there was no provision for credit losses recognized on AFS debt securities during the six months ended June 30, 2024 or 2023.
Current wording
During the three months ended September 30, 2024 and 2023 it was determined that all AFS debt securities that experienced a decline in fair value below amortized cost basis were due to noncredit-related factors. Therefore, there was no provision for credit losses recognized on AFS debt securities during the three months ended September 30, 2024 or 2023.
Previous wording
We recorded a reversal of provision for credit losses on unfunded commitments of $2.8 million and $8.2 million for the six months ended June 30, 2024 and 2023, respectively. The reversal of provision for credit losses on unfunded commitments for the six months ended June 30, 2024 and 2023 is primarily due to management's concentrated effort to reduce unfunded loan commitments during the periods indicated including a $209.1 million and a $496.0 million decrease in our construction category as these projects moved to permanent financing for the six months ended June 30, 2024 and 2023, respectively. As such, this resulted in a $2.7 million and $8.1 million decrease in required ACL related to the unfunded commitments in our construction portfolio for the six months ended June 30, 2024 and 2023, respectively.
Current wording
We recorded a reversal of provision for credit losses on unfunded commitments of $2.7 million and $11.4 million for the nine months ended September 30, 2024 and 2023, respectively. The reversal of provision for credit losses on unfunded commitments for the nine months ended September 30, 2024 and 2023 is primarily due to management's concentrated effort to reduce unfunded loan commitments during the periods indicated including a $215.7 million and a $716.8 million decrease in our construction category as these projects primarily moved to permanent financing for the nine months ended nine months ended September 30, 2024 and 2023, respectively. Decreases in commitment balances for construction and commercial real estate were offset by increases in commercial and industrial and residential segments. This resulted in a $2.7 million and $11.4 million decrease in required ACL related to the unfunded commitments for the nine months ended September 30, 2024 and 2023, respectively.
Showing the first 40 of 85 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
More broadly, total cost of interest-bearing deposits was 3.58% for the three months ended September 30, 2024 compared to 3.33% for the three months ended September 30, 2023. As interest rates on deposits increase, we tend to experience some movement between deposit types as customers seek higher interest rates and shift from noninterest-bearing deposit accounts to interest-bearing deposit products.
Current report — wording carried from elsewhere
We also sell loan participations to unaffiliated third-parties as part of our credit risk management and balance sheet management strategy. During the three months ended September 30, 2024 and 2023, we sold $7.5 million and $14.5 million in loan participations, respectively. During the nine months ended September 30, 2024 and 2023, we sold $24.5 million and $30.8 million in loan participations, respectively. All loans, whether or not we act as a participant, are underwritten to the same standards as all other loans we originate. We believe our loan portfolio is well-balanced, which provides us with the opportunity to grow while monitoring our loan concentrations.