FIRSTSUN CAPITAL BANCORP

Previous wording

FirstSun Capital Bancorp, headquartered in Denver, Colorado, is the financial holding company for Sunflower Bank, National Association, which is headquartered in Dallas, Texas and operates as Sunflower Bank, First National 1870 and Guardian Mortgage. We conduct a full-service community banking and trust business through our wholly-owned subsidiaries—Sunflower Bank, Logia Portfolio Management, LLC, and FEIF Capital Partners, LLC. Sunflower Bank is currently regulated by the Office of the Comptroller of the Currency. We have filed applications to convert Sunflower Bank to a state chartered bank regulated by the Texas Department of Banking and to seek membership with the Federal Reserve later this year.

Current wording

FirstSun Capital Bancorp, headquartered in Denver, Colorado, is the financial holding company for Sunflower Bank, National Association, which is headquartered in Dallas, Texas and operates as Sunflower Bank, First National 1870 and Guardian Mortgage. We conduct a full-service community banking and trust business through our wholly-owned subsidiaries—Sunflower Bank, Logia Portfolio Management, LLC, and FEIF Capital Partners, LLC. Sunflower Bank is currently regulated by the Office of the Comptroller of the Currency. In connection with our proposed merger with HomeStreet, we have filed applications to convert Sunflower Bank to a state chartered bank regulated by the Texas Department of Banking and to seek membership with the Federal Reserve.

Previous wording

We offer a full range of relationship-focused services to meet our clients’ personal, business and wealth management financial objectives, with a branch network in Texas, Kansas, Colorado, New Mexico, and Arizona and mortgage capabilities in 43 states. Our product lines include commercial and industrial loans, commercial real estate loans, residential mortgage, public finance and other consumer loans, and a variety of commercial and consumer deposit products, including noninterest-bearing accounts, interest-bearing demand products, savings accounts, money market accounts and certificates of deposit. We also offer wealth management and trust products including personal trust and agency accounts, employee benefit and retirement related trust and agency accounts, investment management and advisory agency accounts, and foundation and endowment trust and agency accounts. We also offer online banking and bill payment services, online cash management, safe deposit box rentals, debit card and ATM card services and the availability of a network of ATMs for our customers.

Current wording

We offer a full range of relationship-focused services to meet our clients’ personal, business and wealth management financial objectives, with a branch network in Texas, Kansas, Colorado, New Mexico, and Arizona, multiple loan production offices in Southern California, and mortgage capabilities in 43 states. Our product lines include commercial and industrial loans, commercial real estate loans, residential mortgage, public finance and other consumer loans, and a variety of commercial and consumer deposit products, including noninterest-bearing accounts, interest-bearing demand products, savings accounts, money market accounts and certificates of deposit. We also offer wealth management and trust products including personal trust and agency accounts, employee benefit and retirement related trust and agency accounts, investment management and advisory agency accounts, and foundation and endowment trust and agency accounts. We also offer online banking and bill payment services, online cash management, safe deposit box rentals, debit card and ATM card services and the availability of a network of ATMs for our customers.

Previous wording

On January 16, 2024, FirstSun and HomeStreet entered into a definitive merger agreement. Under the merger agreement, FirstSun will continue as the surviving entity and Sunflower Bank will continue as the surviving bank. On April 30, 2024, FirstSun and HomeStreet entered into an amendment to the merger agreement that, among other things, increased total capital raised in connection with the merger, revised the share exchange ratio pursuant to which the HomeStreet shareholders will receive FirstSun common stock, and reduced the termination fee payable by HomeStreet in certain circumstances. The amendment was unanimously approved by the Boards of Directors of each of FirstSun and HomeStreet. On June 18, 2024, HomeStreet’s shareholders approved the merger agreement. For more complete information related to the Merger Agreement and Amendment see Proposed Merger with HomeStreet in Note 1 - Organization and Basis of Presentation in our unaudited consolidated financial statements included elsewhere in this report.

Current wording

On January 16, 2024, FirstSun and HomeStreet entered into a definitive merger agreement. Under the merger agreement, FirstSun will continue as the surviving entity and Sunflower Bank will continue as the surviving bank. On April 30, 2024, FirstSun and HomeStreet entered into an amendment to the merger agreement that, among other things, increased total capital raised in connection with the merger, revised the share exchange ratio pursuant to which the HomeStreet shareholders will receive FirstSun common stock, and reduced the termination fee payable by HomeStreet in certain circumstances. The amendment was unanimously approved by the Boards of Directors of each of FirstSun and HomeStreet. On June 18, 2024, HomeStreet’s shareholders approved the merger agreement.

Previous wording

•Net income of $24.6 million, $0.88 per diluted share (excluding merger costs, $25.2 million, $0.90 per diluted share, see the “Non-GAAP Financial Measures and Reconciliations” below)

Current wording

•Net income of $22.4 million, $0.79 per diluted share (excluding merger costs, $23.7 million, $0.84 per diluted share, see the “Non-GAAP Financial Measures and Reconciliations” below)

Previous wording

•24.2% noninterest income to total revenue 1

Current wording

•22.5% noninterest income to total revenue 1

Previous wording

Net income totaled $24.6 million, or $0.88 per diluted share, for the second quarter of 2024, compared to $28.0 million, or $1.11 per diluted share, for the second quarter of 2023. Net income for the second quarter of 2024 was negatively impacted by $0.6 million of merger costs, net of tax, or $0.02 per diluted share. The return on average total assets was 1.26% for the second quarter of 2024, compared to 1.49% for the second quarter of 2023, and the return on average stockholders’ equity was 10.03% for the second quarter of 2024, compared to 13.54% for the second quarter of 2023. Second quarter of 2024 merger costs, net of tax negatively affected return on average total assets by 0.03% and return on average stockholders’ equity by 0.25%.

Current wording

Net income totaled $22.4 million, or $0.79 per diluted share, for the third quarter of 2024, compared to $25.2 million, or $1.00 per diluted share, for the third quarter of 2023. Net income for the third quarter of 2024 was negatively impacted by $1.2 million of merger costs, net of tax, or $0.05 per diluted share. The return on average total assets was 1.13% for the third quarter of 2024, compared to 1.34% for the third quarter of 2023, and the return on average stockholders’ equity was 8.79% for the third quarter of 2024, compared to 12.03% for the third quarter of 2023. Third quarter of 2024 merger costs, net of tax, negatively affected return on average total assets by 0.06% and return on average stockholders’ equity by 0.48%.

Previous wording

Net income totaled $36.9 million, or $1.32 per diluted share, for the six months ended June 30, 2024, compared to $54.3 million, or $2.14 per diluted share, for the same period in 2023. Net income for the six months ended June 30, 2024 were negatively impacted by a $10.6 million provision for credit loss on a specific customer in our C&I loan portfolio, net of tax, or $0.38 per diluted share, and $2.9 million in merger costs, net of tax, or $0.11 per diluted share. The return on average total assets was 0.95% for the six months ended June 30, 2024, compared to 1.46%, for the same period in 2023, and the return on average stockholders’ equity was 7.62% for the six months ended June 30, 2024, compared to 13.46%, for the same period in 2023. For the six months ended June 30, 2024, merger costs, net of tax negatively affected return on average total assets by 0.08% and return on average stockholders’ equity by 0.60%.

Current wording

Net income totaled $59.3 million, or $2.12 per diluted share, for the nine months ended September 30, 2024, compared to $79.5 million, or $3.13 per diluted share, for the same period in 2023. Net income for the nine months ended September 30, 2024 was negatively impacted by a $10.6 million provision for credit loss on a specific customer in our C&I loan portfolio, net of tax, or $0.38 per diluted share, and $4.2 million in merger costs, net of tax, or $0.15 per diluted share. The return on average total assets was 1.01% for the nine months ended September 30, 2024, compared to 1.42%, for the same period in 2023, and the return on average stockholders’ equity was 8.02% for the nine months ended September 30, 2024, compared to 12.97%, for the same period in 2023. For the nine months ended September 30, 2024, merger costs, net of tax, negatively affected return on average total assets by 0.07% and return on average stockholders’ equity by 0.56%.

Previous wording

The non-GAAP financial measures presented below are used by our management and our Board of Directors on a regular basis in addition to our GAAP results to facilitate the assessment of our financial performance. Management believes these non-GAAP financial measures enhance an investor’s understanding of our financial results by providing a meaningful basis for period-to-period comparisons, assisting in operating results analysis, and predicting future performance. This information supplements our GAAP reported results, and should not be viewed in isolation from, or as a substitute for, our GAAP results. Accordingly, this financial information should be read in conjunction with our consolidated financial statements and notes thereto for the three and six months ended June 30, 2024, included elsewhere in this report. Non-GAAP financial measures exclude certain items that are included in the financial results presented in accordance with GAAP. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although these non-GAAP financial measures are frequently used by investors to evaluate a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. These non-GAAP measures are not necessarily comparable to similar measures that may be represented by other companies.

Current wording

The non-GAAP financial measures presented below are used by our management and our Board of Directors on a regular basis in addition to our GAAP results to facilitate the assessment of our financial performance. Management believes these non-GAAP financial measures enhance an investor’s understanding of our financial results by providing a meaningful basis for period-to-period comparisons, assisting in operating results analysis, and predicting future performance. This information supplements our GAAP reported results, and should not be viewed in isolation from, or as a substitute for, our GAAP results. Accordingly, this financial information should be read in conjunction with our consolidated financial statements and notes thereto for the three and nine months ended September 30, 2024, included elsewhere in this report. Non-GAAP financial measures exclude certain items that are included in the financial results presented in accordance with GAAP. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although these non-GAAP financial measures are frequently used by investors to evaluate a company, they have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. These non-GAAP measures are not necessarily comparable to similar measures that may be represented by other companies.

Previous wording

Income (loss) before income taxes increased $6.2 million to $4.8 million for the six months ended June 30, 2024, compared to a loss of $1.4 million for the same period in 2023. The period over period increase was primarily due to anincrease in net interest income and an increase in revenue from mortgage banking services, partially offset by an increase in salary and employee benefits. Net interest income increased$4.6 million to$8.0 million for thesix months ended June 30, 2024, compared to$3.4 million for the same period in 2023, primarily due to higher average balance and higher average yield on residential real estate loans. Revenue from mortgage banking services increased$2.0 million to$21.7 million for thesix months ended June 30, 2024, compared to$19.7 million for the same period in 2023, primarily due to an increase in revenue related to net sale gains and fees from mortgage loan originations, including fair value changes in the held-for-sale portfolio and hedging activity. Salary and employee benefits increased$1.6 million to$15.6 million for thesix months ended June 30, 2024, compared to$14.0 million for the same period in 2023, primarily due to higher levels of variable compensation associated with an increase in mortgage loan originations.

Current wording

Income before income taxes increased $1.5 million to $2.7 million for the third quarter of 2024, compared to $1.2 million for the same period in 2023. The period over period increase was primarily due to an increase in net interest income and increase in revenue from mortgage banking services, partially offset by an increase in provision for credit losses and increase in salary and employee benefits. Net interest income increased $3.8 million to $5.0 million for the third quarter of 2024, compared to $1.2 million for the same period in 2023, primarily due to higher average balance and higher average yield on residential real estate loans. Revenue from mortgage banking services increased $1.5 million to $9.4 million for the third quarter of 2024, compared to $7.9 million for the same period in 2023, primarily due to an increase in revenue related to net sale gains and fees from mortgage loan originations, including fair value changes in the held-for-sale portfolio and hedging activity. Provision (release) for credit losses increased $1.1 million to $(1.4) million for the third quarter of 2024, compared to $(2.4) million for the same period in 2023, primarily due to growth in our residential mortgage portfolio. Salary and employee benefits increased $2.5 million to $8.3 million for the third quarter of 2024, compared to $5.8 million for the same period in 2023, primarily due to higher levels of variable compensation associated with an increase in mortgage loan originations. Identifiable assets for our Mortgage Operations segment increased $176.8 million to $1.0 billion at September 30, 2024 from $0.9 billion at September 30, 2023. The growth in identifiable assets was primarily driven by organic growth in our residential mortgage portfolio.

Previous wording

Income before income taxes increased $0.7 million to $1.7 million for the second quarter of 2024, compared to $1.0 million for the same period in 2023. The period over period increase was primarily due to an increase in net interest income partially offset by an increase in salary and employee benefits. Net interest income increased $3.0 million to $4.5 million for the second quarter of 2024, compared to $1.5 million for the same period in 2023, primarily due to higher average balance and higher average yield on residential real estate loans. Salary and employee benefits increased $1.2 million to $8.4 million for the second quarter of 2024, compared to $7.3 millionfor the same period in 2023, primarily due to higher levels of variable compensation associated with an increase in mortgage loan originations. Identifiable assets for our Mortgage Operations segment grew by $0.2 billion to $1.0 billion at June 30, 2024 from $0.8 billion at June 30, 2023. The growth in identifiable assets was primarily driven by organic growth in our residential mortgage portfolio.

Current wording

September 30, 2024, compared to $4.5 million for the same period in 2023, primarily due to higher average balance and higher average yield on residential real estate loans. Revenue from mortgage banking services increased $3.5 million to $31.2 million for the nine months ended September 30, 2024, compared to $27.6 million for the same period in 2023, primarily due to an increase in revenue related to net sale gains and fees from mortgage loan originations, including fair value changes in the held-for-sale portfolio and hedging activity. Salary and employee benefits increased $4.0 million to $23.9 million for the nine months ended September 30, 2024, compared to $19.9 million for the same period in 2023, primarily due to higher levels of variable compensation associated with an increase in mortgage loan originations.

Previous wording

Our net interest income was $72.9 million for the second quarter of 2024, a decrease of $0.9 million, or 1.3%, compared to the same period in 2023. Interest income on loans increased by $9.9 million for the second quarter of 2024, compared to the same period in 2023. Interest income on investment securities increased by $0.5 million for the second quarter of 2024, compared to the same period in 2023. Interest expense from total interest-bearing liabilities increased by $13.4 million for the second quarter of 2024, compared to the same period in 2023.

Current wording

Our net interest income was $76.2 million for the third quarter of 2024, an increase of $2.7 million, or 3.7%, compared to the same period in 2023. Interest income on loans increased by $8.9 million for the third quarter of 2024, compared to the same period in 2023. Interest income on investment securities increased by $0.5 million for the third quarter of 2024, compared to the same period in 2023. Interest income on interest-bearing cash and other assets increased by $2.7 million for the third quarter of 2024, compared to the same period in 2023. Interest expense from total interest-bearing liabilities increased by $9.4 million for the third quarter of 2024, compared to the same period in 2023.

Previous wording

Total average loans grew to $6.4 billion at June 30, 2024, an increase of $0.2 billion or 2.6%, compared to June 30, 2023, due to organic growth in our loan portfolio. Yield on loans increased 46 basis points for the second quarter of 2024, compared to the same period in 2023, primarily due to the elevated interest rate environment for the second quarter of 2024 as compared to the lower, yet rising interest rate environment for the second quarter of 2023, its impact on variable rate loans, and higher yields on new originations.

Current wording

Total average loans grew to $6.5 billion at September 30, 2024, an increase of $0.3 billion or 4.5%, compared to September 30, 2023, due to organic growth in our loan portfolio. Yield on loans increased 27 basis points for the third quarter of 2024, compared to the same period in 2023, primarily due to the elevated interest rate environment for the third quarter of 2024 as compared to the lower, yet rising interest rate environment for the third quarter of 2023, its impact on variable rate loans, and higher yields on new originations.

Previous wording

Average interest-bearing liabilities increased $0.3 billion, or 6.3%, for the second quarter of 2024, compared to the same period in 2023, primarily to support the growth in our loan portfolio. Average interest-bearing deposits increased $0.7 billion, or 15.7%, for the second quarter of 2024, compared to the same period in 2023. Average FHLB borrowings decreased $0.3 billion, or 72.3%, for the second quarter of 2024, compared to the same period in 2023.

Current wording

Average interest-bearing liabilities increased $0.4 billion, or 7.5%, for the third quarter of 2024, compared to the same period in 2023, primarily to support the growth in our loan portfolio. Average interest-bearing deposits increased $0.3 billion, or 7.0%, for the third quarter of 2024, compared to the same period in 2023. Average FHLB borrowings increased $0.1 billion, or 60.8%, for the third quarter of 2024, compared to the same period in 2023.

Previous wording

Our net interest margin was 4.02% for the second quarter of 2024, compared to 4.24% for the same period in 2023, a decrease of 22 basis points. We experienced a 45 basis point increase in yield from earning assets while our total cost of funds increased by 90 basis points, for the second quarter of 2024 as compared to the same period in 2023. In the second quarter of 2024, compared to the same period in 2023, we saw the level of increase in our total cost of funds exceed the level of increase in yield from earning assets primarily as a result of the mix shift within our deposit base to certificates of deposits and the overall rising deposit cost across all deposit products.

Current wording

Our net interest margin was 4.10% for the third quarter of 2024, compared to 4.23% for the same period in 2023, a decrease of 13 basis points. We experienced a 25 basis point increase in yield from earning assets while our total cost of funds increased by 53 basis points, for the third quarter of 2024 as compared to the same period in 2023. In the third quarter of 2024, compared to the same period in 2023, we saw the level of increase in our total cost of funds exceed the level of increase in yield from earning assets primarily as a result of the continued intense competition for deposits amidst the elevated interest rate environment and mix shift to higher cost deposit products, including certificate of deposit and interest bearing demand accounts.

Previous wording

Our net interest income was $143.7 million for the six months ended June 30, 2024, a decrease of $4.2 million, or 2.9%, compared to the same period in 2023. Interest income on loans increased by $23.5 million for the six months ended June 30, 2024, compared to the same period in 2023. Interest income on investment securities increased by $0.9 million for the six months ended June 30, 2024, compared to the same period in 2023. Interest expense from total interest-bearing liabilities increased by $31.9 million for the six months ended June 30, 2024, compared to the same period in 2023.

Current wording

Our net interest income was $219.9 million for the nine months ended September 30, 2024, a decrease of $1.5 million, or 0.7%, compared to the same period in 2023. Interest income on loans increased by $32.4 million for the nine months ended September 30, 2024, compared to the same period in 2023. Interest income on investment securities increased by $1.4 million for the nine months ended September 30, 2024, compared to the same period in 2023. Interest income on interest-bearing cash and other assets increased by $6.0 million for the nine months ended September 30, 2024, compared to the same period in 2023. Interest expense from total interest-bearing liabilities increased by $41.3 million for the nine months ended September 30, 2024, compared to the same period in 2023.

Previous wording

Total average loans grew to $6.3 billion at June 30, 2024, an increase of $0.2 billion, compared to June 30, 2023, primarily due to organic growth in our loan portfolios. Yield on loans increased 52 basis points for the six months ended June 30, 2024, compared to the same period in 2023, primarily due to the elevated interest rate environment for the six months ended June 30, 2024 as compared to the lower, yet rising interest rate environment for the same period in 2023, its impact on variable rate loans, and higher yields on new originations.

Current wording

Total average loans grew to $6.4 billion at September 30, 2024, an increase of $0.2 billion, compared to September 30, 2023, primarily due to organic growth in our loan portfolios. Yield on loans increased 44 basis points for the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to the elevated interest rate environment for the nine months ended September 30, 2024 as compared to the lower, yet rising interest rate environment for the same period in 2023, its impact on variable rate loans, and higher yields on new originations.

Previous wording

Average interest-bearing liabilities increased $0.4 billion, or 7.7%, for the six months ended June 30, 2024, compared to the same period in 2023. Average interest-bearing deposits increased $0.7 billion, or 17.4%, for the six months ended June 30, 2024, compared to the same period in 2023. Average FHLB borrowings decreased $0.3 billion, or 73.9%, for the six months ended June 30, 2024, compared to the same period in 2023.

Current wording

Average interest-bearing liabilities increased $0.4 billion, or 7.6%, for the nine months ended September 30, 2024, compared to the same period in 2023. Average interest-bearing deposits increased $0.6 billion, or 13.6%, for the nine months ended September 30, 2024, compared to the same period in 2023. Average FHLB borrowings decreased $0.2 billion, or 62.5%, for the nine months ended September 30, 2024, compared to the same period in 2023.

Previous wording

Our net interest margin was 4.00% for the six months ended June 30, 2024, compared to 4.31% for the same period in 2023, a decrease of 31 basis points. We experienced a 52 basis point increase in yield from earning assets and our total cost of funds increased by 110 basis points for the six months ended June 30, 2024, compared to the same period in 2023. In the six months ended June 30, 2024, we saw the level of increase in our total cost of funds exceed the level of increase in yield from earning assets primarily as a result of the mix shift within our deposit base to certificates of deposits and the overall rising deposit cost across all deposit products.

Current wording

Our net interest margin was 4.04% for the nine months ended September 30, 2024, compared to 4.28% for the same period in 2023, a decrease of 24 basis points. We experienced a 43 basis point increase in yield from earning assets and our total cost of funds increased by 91 basis points for the nine months ended September 30, 2024, compared to the same period in 2023. In the nine months ended September 30, 2024, we saw the level of increase in our total cost of funds exceed the level of increase in yield from earning assets primarily as a result of the continued intense competition for deposits amidst the elevated interest rate environment and mix shift to higher cost deposit products, including certificate of deposit and interest bearing demand accounts.

Previous wording

As of and for the six months ended June 30,:

Current wording

As of and for the nine months ended September 30,:

Previous wording

We had a provision for credit losses of $1.2 million for the second quarter of 2024, compared to $4.4 million for the same period in 2023, primarily due to lesser loan growth and more stable credit quality indicators in the loan portfolio.

Current wording

We had a provision for credit losses of $5.0 million for the third quarter of 2024, compared to $3.9 million for the same period in 2023, primarily due to loan growth and deterioration on a specific customer relationship in our loan portfolio.

Previous wording

We had a provision for credit losses of $17.7 million for the six months ended June 30, 2024, compared to $7.8 million for the same period in 2023. The increase in the provision for credit losses for the six months ended June 30, 2024 was primarily due toa $17.4 million charge-off on a specific customer in our C&I loan portfolio in the first quarter of 2024.

Current wording

We had a provision for credit losses of $22.7 million for the nine months ended September 30, 2024, compared to $11.7 million for the same period in 2023. The increase in the provision for credit losses for the nine months ended September 30, 2024 was primarily due to a $14.1 million provision for credit loss on a specific customer in our C&I loan portfolio in the first quarter of 2024.

Previous wording

Service charges on deposit accounts includes overdraft and non-sufficient funds charges, treasury management services provided to our business customers, and other maintenance fees on deposit accounts. For the second quarter of 2024, service charges on deposit accounts increased $0.6 million, compared to the same period in 2023, primarily due to increased treasury management service fee income.

Current wording

Service charges on deposit accounts includes overdraft and non-sufficient funds charges, treasury management services provided to our business customers, and other maintenance fees on deposit accounts. For the third quarter of 2024, service charges on deposit accounts increased $0.8 million, compared to the same period in 2023, primarily due to increased treasury management service fee income.

Previous wording

Credit and debit card fees represent interchange income from credit and debit card activity and referral fees earned from processing fees on card transactions by our business customers. Credit and debit card fees decreased $0.1 million for the second quarter of 2024 compared to the same period in 2023, as card transaction volumes decreased slightly.

Current wording

Credit and debit card fees represent interchange income from credit and debit card activity and referral fees earned from processing fees on card transactions by our business customers. Credit and debit card fees decreased $0.2 million for the third quarter of 2024 compared to the same period in 2023, as card transaction volumes decreased slightly.

Previous wording

Trust and investment advisory fees represent fees we receive in connection with our investment advisory and custodial management services of investment accounts. Trust and investment advisory fees were largely unchanged for the second quarter of 2024 as compared to the same period in 2023.

Current wording

Trust and investment advisory fees represent fees we receive in connection with our investment advisory and custodial management services of investment accounts. Trust and investment advisory fees were largely unchanged for the third quarter of 2024 as compared to the same period in 2023.

Previous wording

For the second quarter of 2024, income from mortgage banking services decreased $0.6 million, compared to the same period in 2023. Total loan originations sold were $282.5 million for the second quarter of 2024, an increase of $34.8 million from $247.8 million for the same period in 2023. The increase in loan originations sold and higher margins, resulted in the increase in revenue related to net sale gains and fees from loan originations, including fair value changes in the held-for-sale portfolio and hedging activity. MSR capitalization and changes in fair value, net of derivative activity, decreased $1.9 million in the second quarter of 2024, compared to the same period in 2023. The decrease in revenue related to our MSRs was primarily the result of changes in market interest rates and our corresponding hedging positions. We recognize fair value adjustments to our MSR asset, which includes changes in assumptions to the valuation model and pay-offs and pay-downs of the MSR portfolio. We also maintain a hedging strategy to manage a portion of the risk associated with changes in the fair value of our MSR portfolio. Changes in fair value of the derivative instruments used to economically hedge the MSRs are also included as a component of income from mortgage banking services. Due to a number of factors and until we see a change in these factors, including elevated interest rates, low inventory in the housing market and lower refinance volumes, for the immediate future, we do not expect revenue from mortgage banking activities to return to levels seen in prior years which will reduce the amount of income from mortgage banking services, net, recorded in future periods in comparison to prior year periods.

Current wording

For the third quarter of 2024, income from mortgage banking services increased $1.4 million, compared to the same period in 2023. Total loan originations for sale were $305.2 million for the third quarter of 2024, an increase of $105.1 million from $200.1 million for the same period in 2023. Despite slightly declining margins, the increase in loan originations sold resulted in the increase in revenue related to net sale gains and fees from loan originations, including fair value changes in the held-for-sale portfolio and hedging activity. We retain servicing rights on the majority of mortgage loans that we sell, which drove the increase in servicing income of $0.4 million to $4.3 million for the third quarter of 2024, from $4.0 million for the same period in 2023. MSR capitalization and changes in fair value, net of derivative activity, increased $0.1 million in the third quarter of 2024, compared to the same period in 2023. The increase in revenue related to our MSRs was primarily the result of changes in market interest rates and our corresponding hedging positions. We recognize fair value adjustments to our MSR asset, which includes changes in assumptions to the valuation model and pay-offs and pay-downs of the MSR portfolio. We also maintain a hedging strategy to manage a portion of the risk associated with changes in the fair value of our MSR portfolio. Changes in fair value of the derivative instruments used to economically hedge the MSRs are also included as a component of income from mortgage banking services. Due to a number of factors and until we see a change in these factors, including elevated interest rates, low inventory in the housing market and lower refinance volumes, for the immediate future, we do not expect revenue from mortgage banking activities to return to levels seen in prior years which will reduce the amount of income from mortgage banking services, net, recorded in future periods in comparison to prior year periods.

Previous wording

For the six months ended June 30, 2024, service charges on deposit accounts increased $1.3 million, compared to the same period in 2023, primarily due to increased treasury management service fee income.

Current wording

For the nine months ended September 30, 2024, service charges on deposit accounts increased $2.1 million, compared to the same period in 2023, primarily due to increased treasury management service fee income.

Previous wording

Credit and debit card fees decreased $0.2 million for the six months ended June 30, 2024 compared to the same period in 2023, as card transaction volumes decreased slightly.

Current wording

Credit and debit card fees decreased $0.4 million for the nine months ended September 30, 2024 compared to the same period in 2023, as card transaction volumes decreased slightly.

Previous wording

Trust and investment advisory fees were largely unchanged for the six months ended June 30, 2024 as compared to the same period in 2023.

Current wording

Trust and investment advisory fees were largely unchanged for the nine months ended September 30, 2024 as compared to the same period in 2023.

Previous wording

For the six months ended June 30, 2024, income from mortgage banking services increased $1.5 million, compared to the same period in 2023. Total loan originations for sale were $492.4 million for the six months ended June 30, 2024, an increase of $58.5 million from $433.9 million for the same period in 2023. The increase in loan originations sold and higher margins, resulted in the increase in revenue related to net sale gains and fees from loan originations, including fair value changes in the held-for-sale portfolio and hedging activity. We retain servicing rights on the majority of mortgage loans that we sell, which drove the increase in servicing income of $0.6 million to $8.3 million for the six months ended June 30, 2024, from $7.7 million for the six months ended June 30, 2023. MSR capitalization and changes in fair value, net of derivative activity, decreased $1.6 million in the six months ended June 30, 2024, compared to the same period in 2023. The decrease in revenue related to our MSRs was primarily the result of changes in market interest rates and our corresponding hedging positions.

Current wording

For the nine months ended September 30, 2024, income from mortgage banking services increased $2.9 million, compared to the same period in 2023. Total loan originations for sale were $797.6 million for the nine months ended September 30, 2024, an increase of $163.6 million from $634.0 million for the same period in 2023. The increase in loan originations sold and higher margins, resulted in the increase in revenue related to net sale gains and fees from loan originations, including fair value changes in the held-for-sale portfolio and hedging activity. We retain servicing rights on the majority of mortgage loans that we sell, which drove the increase in servicing income of $1.0 million to $12.6 million for the nine months ended September 30, 2024, from $11.6 million for the nine months ended September 30, 2023. MSR capitalization and changes in fair value, net of derivative activity, decreased $1.5 million in the nine months ended September 30, 2024, compared to the same period in 2023. The decrease in revenue related to our MSRs was primarily the result of changes in market interest rates and our corresponding hedging positions.

Previous wording

Other noninterest income increased $0.3 million for the six months ended June 30, 2024 compared to the same period in 2023, primarily due to an increase in income from BOLI.

Current wording

Other noninterest income increased $1.7 million for the nine months ended September 30, 2024 compared to the same period in 2023, primarily due to an increase in the fair value of investments related to our deferred compensation plan and an increase in income from BOLI.

Previous wording

Salary and employee benefits increased $5.8 million to $39.8 million for the second quarter of 2024, from $34.1 million for the same period in 2023, primarily due to increased headcount, including the hiring of C&I bankers, and higher variable compensation due to an increase in mortgage loan originations.

Current wording

Salary and employee benefits increased $5.3 million to $39.3 million for the third quarter of 2024, from $34.0 million for the same period in 2023, primarily due to increased headcount, including the hiring of C&I bankers, and higher variable compensation due to an increase in mortgage loan originations.

Previous wording

Noninterest expense for the second quarter of 2024 included $1.0 million in merger related expenses. There were no merger related expenses for the same period in 2023.

Current wording

Noninterest expense for the third quarter of 2024 included $1.6 million in merger related expenses. There were no merger related expenses for the same period in 2023.

Previous wording

Salary and employee benefits increased $8.1 million to $77.2 million for the six months ended June 30, 2024, from $69.1 million for the same period in 2023, primarily due to increased headcount, including the hiring of C&I bankers, and higher variable compensation due to an increase in mortgage loan originations.

Current wording

Salary and employee benefits increased $13.4 million to $116.5 million for the nine months ended September 30, 2024, from $103.1 million for the same period in 2023, primarily due to increased headcount, including the hiring of C&I bankers, and higher variable compensation due to an increase in mortgage loan originations.

Previous wording

Amortization of intangible assets decreased $1.6 million to $1.5 million for the six months ended June 30, 2024, from $3.1 million for the same period in 2023, primarily due to accelerated amortization in the second quarter of 2023 of our core deposit intangible asset recognized in conjunction with a prior acquisition.

Current wording

Amortization of intangible assets decreased $1.9 million to $2.1 million for the nine months ended September 30, 2024, from $4.0 million for the same period in 2023, primarily due to accelerated amortization in the second quarter of 2023 of our core deposit intangible asset recognized in conjunction with a prior acquisition.

Previous wording

Merger related expenses for the six months ended June 30, 2024 were $3.5 million. There were no merger related expenses during the same period in 2023.

Current wording

Merger related expenses for the nine months ended September 30, 2024 were $5.2 million. There were no merger related expenses during the same period in 2023.

Previous wording

We had income tax expense for the second quarter of 2024 of $6.5 million, compared to income tax expense of $7.7 million for the same period in 2023. The decrease in income tax expense was due to our decreased income during the second quarter of 2024. Our effective tax rate was 21.0% for the second quarter of 2024, compared to 21.5% for the same period in 2023.

Current wording

We had income tax expense for the third quarter of 2024 of $6.1 million, compared to income tax expense of $6.8 million for the same period in 2023. The decrease in income tax expense was due to a decline in income during the third quarter of 2024, compared to the same period in 2023. Our effective tax rate was 21.5% for the third quarter of 2024, compared to 21.1% for the same period in 2023.

Previous wording

We had income tax expense for the six months ended June 30, 2024 of $9.5 million, compared to $14.8 million for the same period in 2023. The decrease in income tax expense was primarily due to our decreased income during the period ended June 30, 2024. Our effective tax rate was 20.5% for the six months ended June 30, 2024, compared to 21.4% for the same period in 2023.

Current wording

We had income tax expense for the nine months ended September 30, 2024 of $15.7 million, compared to $21.6 million for the same period in 2023. The decrease in income tax expense was primarily due to a decline in income during the period ended September 30, 2024, compared to the same period in 2023. Our effective tax rate was 20.9% for the nine months ended September 30, 2024, compared to 21.3% for the same period in 2023.

Previous wording

Our total assets were $8.0 billion and $7.9 billion, total liabilities were $7.0 billion and $7.0 billion, and total stockholders’ equity was $1.0 billion and $0.9 billion at June 30, 2024 and December 31, 2023, respectively.

Current wording

Our total assets were $8.1 billion and $7.9 billion, total liabilities were $7.1 billion and $7.0 billion, and total stockholders’ equity was $1.0 billion and $0.9 billion at September 30, 2024 and December 31, 2023, respectively.

Previous wording

Our securities available-for-sale decreased by $25.1 million to $491.6 million at June 30, 2024, compared to December 31, 2023. The decrease was primarily due to amortization of the portfolio. During the period ended June 30, 2024, the securities held-to-maturity decreased $0.7 million to $36.3 million.

Current wording

Our securities available-for-sale decreased by $19.9 million to $496.8 million at September 30, 2024, compared to December 31, 2023. The decrease was primarily due to amortization of the portfolio. During the period ended September 30, 2024, the securities held-to-maturity decreased $1.1 million to $35.9 million.

Previous wording

The following table shows the weighted average yield to average life of each category of investment securities as of June 30, 2024:

Current wording

The following table shows the weighted average yield to average life, which considers expected prepayments, of each category of investment securities as of September 30, 2024: