Rhinebeck Bancorp Inc
For the period ended Sep 30, 2024. Filed Nov 12, 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 12, 2024
RBKB$13.24+1.8%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 2024-08-08.
0001751783-24-000038
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-12.
0001751783-24-000046
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 61 previous paragraphs and 62 current paragraphs.
28 unchanged; 27 reworded; 7 added; 6 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 43 previous and 44 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
Investment Securities Available for Sale. Available for sale securities decreased $22.9 million, or 11.9%, due to the balance sheet restructuring, which resulted in sales of $70.6 million of lower-yielding securities, and paydowns, calls and maturities of $27.3 million, partially offset by purchases in higher-yielding securities of $56.7 million and a decrease in unrealized loss on available for sale securities of $18.4 million. The restructuring decreased the average life of the securities portfolio, and improved the Company’s earnings stream going forward, beginning in the fourth quarter of 2024. The securities sold had a yield of 1.11% and a weighted average life of approximately 5.8 years. The proceeds were reinvested into assets yielding 4.22% with an approximate weighted average life of 2.7 years.
Current report
Net Income. Net loss for the third quarter of 2024 was $8.1 million, compared to net income of $1.2 million for the third quarter of 2023. Diluted loss per share was $0.75 for the third quarter of 2024, compared to earnings per share of $0.11 for the same quarter a year ago. Interest and dividend income increased $506,000, or 3.3%, interest expense increased $465,000, or 7.9%, the provision for credit losses decreased $21,000, or 2.3%, non-interest income decreased $11.7 million, or 709.2%, non-interest expense increased $266,000, or 3.0%, and taxes decreased $2.6 million, or 752.2%, between comparable quarters.
Current report
Net loss for the nine months ended September 30, 2024 totaled $6.0 million, compared to net income of $3.5 million for the same period in 2023. Diluted loss per share was $0.55 for the first nine months of 2024 compared to earnings per share of $0.32 for the first nine months of 2023. Interest and dividend income increased $2.4 million, or 5.3%, interest expense increased $3.5 million, or 21.3%, the provision for credit losses decreased $53,000, non-interest income decreased $11.4 million, or 260.0%, non-interest expense decreased $402,000, or 1.5%, and taxes decreased $2.6 million, or 270.6%, between comparable periods.
Current report
Both the third quarter and nine months of 2024 results reflected a $12.0 million pre-tax loss from the previously announced balance sheet restructuring.
Current report
Non-Interest Expense. Non-interest expense totaled $9.1 million for the third quarter of 2024, an increase of $266,000, or 3.0%, over the comparable period in 2023. The increase was primarily due to a $370,000 increase in salaries and benefits related primarily due to higher production commissions and higher medical insurance costs. This increase was partially offset by a $109,000 decrease in other non-interest expense primarily due to a decrease in lending operations expense.
Current report
Income Taxes. The income tax benefit for the third quarter of 2024 totaled $2.2 million at a negative effective tax rate of 21.72%, compared to a provision of $343,000 at an effective tax rate of 21.72% in the prior year’s comparable quarter. The decrease in the provision for income taxes in the third quarter of 2024 reflected a lower pre-tax income when compared to the prior year’s comparable quarter and a taxbenefit resulting from a $12.0 million pre-tax loss on the sale of available-for-sale investment securities.
Current report
The income tax benefit for the first nine months of 2024 totaled $1.6 million at a negative effective tax rate of 21.50%, compared to a provision of $958,000 at an effective tax rate of 21.66% for the first nine months of 2023. The decrease in the effective tax rate in the first half of 2024, as compared to the same period a year ago, was primarily due to the pre-tax loss on the sale of investment securities as previously mentioned.
Removed paragraphs (6)
Previous report
Investment Securities Available for Sale. Investment securities available for sale decreased $17.7 million, or 9.2%, to $174.3 million at June 30, 2024 from $192.0 million at December 31, 2023, primarily due to paydowns, calls and maturities of $18.0 million, partially offset by a decrease in the unrealized loss of $379,000. The proceeds from the maturity of securities were primarily used to paydown the advances from the Federal Home Loan Bank.
Previous report
Net Income. Net income for the three months ended June 30, 2024 decreased $456,000, or 31.9%, to $975,000, or $0.09 per diluted share, compared to net income of $1.4 million, or $0.13 per diluted share, for the three months ended June 30, 2023. Interest and dividend income increased $837,000, or 5.6%, interest expense increased $1.0 million, or 17.7%, the provision for credit losses increased $899,000, or 198.9%, non-interest income increased $156,000, or 11.5%, non-interest expense decreased $342,000, or 3.7%, and taxes decreased $108,000, or 27.7%, between comparable quarters.
Previous report
Net income for the six months ended June 30, 2024 decreased $133,000, or 6.0%, to $2.1 million, or $0.19 per diluted share, compared to net income of $2.2 million, or $0.20 per diluted share, for the six months ended June 30, 2023. Interest and dividend income increased $1.9 million, or 6.3%, interest expense increased $3.0 million, or 28.9%, the provision for credit losses decreased $32,000, non-interest income increased $286,000, or 10.5%, non-interest expense decreased $668,000, or 3.6%, and taxes decreased $12,000, or 2.0%, between comparable periods.
Previous report
Non-Interest Expense. Non-interest expense totaled $8.9 million for the second quarter of 2024, a decrease of $342,000, or 3.7%, over the comparable period in 2023. The decrease was primarily due to a $158,000, or 25.6%, decrease in professional fees as consulting fees on our indirect automobile lending business were reduced in 2024. FDIC deposit insurance and other insurance decreased $93,000, or 26.3%, primarily due a decreased assessment rate while salaries and occupancy expenses decreased $40,000 and $25,000, respectively, due to a reduction in force in our indirect automobile business and a branch closure in the first quarter of 2024. Marketing expense and other non-interest expense decreased $28,000 and $12,000, respectively, while data processing fees increased $15,000 during the second quarter of 2024 as compared to 2023.
Previous report
Income Taxes. Income taxes decreased by $108,000, or 27.7%, for the three months ended June 30, 2024 as compared to the same three-month period in 2023 as our income before income taxes decreased. Our effective tax rate for the three months ended June 30, 2024 was 22.43% compared to 21.42% for the three months ended June 30, 2023.
Previous report
Income taxes decreased by $12,000, or 2.0%, for the six months ended June 30, 2024 as compared to the same six month period in 2023 as our income before income taxes decreased. Our effective tax rate for the six months ended June, 2024 was 22.34% compared to 21.62% for the six months ended June 30, 2023.
Reworded paragraphs (27)
Previous wording
Management’s discussion and analysis of financial condition and results of operations at June 30, 2024 and December 31, 2023, and for the three and six months ended June 30, 2024 and 2023, is intended to assist in understanding the financial condition and results of operations of the Company and the Bank. The information contained in this section should be read in conjunction with the unaudited financial statements and the notes thereto appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Current wording
Management’s discussion and analysis of financial condition and results of operations at September 30, 2024 and December 31, 2023, and for the three and nine months ended September 30, 2024 and 2023, is intended to assist in understanding the financial condition and results of operations of the Company and the Bank. The information contained in this section should be read in conjunction with the unaudited financial statements and the notes thereto appearing in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Previous wording
Total Assets. Total assets were $1.28 billion at June 30, 2024 as compared to $1.31 billion at December 31, 2023, a decrease of $37.2 million, or 2.8%. Loans receivable decreased by $26.5 million, or 2.6%, available for sale securities decreased $17.7 million, or 9.2%, premises and equipment decreased $3.2 million, or 18.3%, and Federal Home Loan Bank stock decreased $2.1 million, or 32.3%. The decreases were partially offset by an increase in cash of $12.3 million, or 55.6%.
Current wording
Total Assets. Total assets were $1.27 billion at September 30, 2024 as compared to $1.31 billion at December 31, 2023, a decrease of $47.1 million, or 3.6%. Loans receivable decreased by $44.0 million, or 4.4%, available for sale securities decreased $22.9 million, or 11.9%, premises and equipment decreased $3.5 million, or 20.0%, Federal Home Loan Bank stock decreased $3.0 million, or 46.1%, and deferred tax assets decreased $2.1 million, or 21.1%. The decreases were partially offset by an increase in cash of $24.3 million, or 109.6%.
Previous wording
Cash and Cash Equivalents. Cash and cash equivalents increased $12.3 million, or 55.6%, to $34.4 million at June 30, 2024 from $22.1 million at December 31, 2023, primarily due to an increase in deposits held at the Federal Reserve Bank of New York with proceeds from maturing loans and securities.
Current wording
Cash and Cash Equivalents. Cash and cash equivalents increased $24.3 million, or 109.6%, to $46.4 million at September 30, 2024 from $22.1 million at December 31, 2023, primarily due to an increase in deposits held at the FHLB, Federal Reserve Bank of New York and other interest-bearing depository accounts with proceeds resulting from principal payments from loans and security sales.
Previous wording
Net Loans. Total net loans receivable were $982.4 million at June 30, 2024, a decrease of $26.5 million, or 2.6%, as compared to $1.01 billion at December 31, 2023. The decrease was primarily due to a decrease in indirect automobile loans of $50.7 million, or 12.9%, reflecting a strategic decision to decrease that loan portfolio as a percentage of our balance sheet. At June 30, 2024, indirect automobile loans were 26.9% of assets, compared to 30.0% at December 31, 2023. Partially offsetting the decreases in automobile loans were increases in commercial real estate loans of $19.5 million, or 4.6%, residential real estate loans of $5.3 million, or 6.9%, and commercial and industrial loans of $1.8 million, or 2.0%, as production on these lines increased. Non-accrual loans remained relatively stable at $4.2 million, decreasing $4,000, or 0.1%, between June 30, 2024 and December 31, 2023.
Current wording
Net Loans. Total net loans receivable were $964.9 million at September 30, 2024, a decrease of $44.0 million, or 4.4%, as compared to $1.01 billion at December 31, 2023. The decrease was primarily due to a decrease in indirect automobile loans of $75.3 million, or 19.1%, reflecting a strategic decision to decrease that loan portfolio as a percentage of our balance sheet. At September 30, 2024, indirect automobile loans were 25.2% of assets, compared to 30.0% at December 31, 2023. Partially offsetting the decreases in automobile loans were increases in commercial real estate loans of $27.0 million, or 6.3%, and residential real estate loans of $8.3 million, or 10.8%. Non-accrual loans increased by $511,000, or 12.2%, between December 31, 2023 and September 30, 2024.
Previous wording
Federal Home Loan Bank Stock**.** FHLB stock decreased $2.1 million, or 32.3%, to $4.4 million at June 30, 2024 from $6.5 million at December 31, 2023, primarily due to a reduction in mandatory ownership of FHLB stock in connection with the pay-off of $48.3 million in advances during the six months ended June 30, 2024.
Current wording
Federal Home Loan Bank Stock**.** FHLB stock decreased $3.0 million, or 46.1%, to $3.5 million at September 30, 2024 from $6.5 million at December 31, 2023, primarily due to a reduction in mandatory ownership of FHLB stock in connection with the pay-off of $68.3 million in advances during the nine months ended September 30, 2024.
Previous wording
Premises and Equipment. Premises and equipment decreased $3.2 million, or 18.3%, to $14.3 million at June 30, 2024 from $17.6 million at December 31, 2023 as the Bank’s Beacon branch office was sold in February of 2024 for $2.9 million. The sale included the land and building as well of all branch furniture and equipment. All of the branch accounts were redomiciled to the customer’s next nearest Bank branch and all employees were placed in open positions.
Current wording
Premises and Equipment. Premises and equipment decreased $3.5 million, or 20.0%, to $14.1 million at September 30, 2024 from $17.6 million at December 31, 2023 as the Bank’s Beacon branch office was sold in February of 2024 for $2.9 million. The sale included the land and building as well as all branch furniture and equipment. All of the branch accounts were redomiciled to the customer’s next nearest Bank branch and all employees were placed in open positions.
Previous wording
Total Liabilities. Total liabilities decreased $39.7 million, or 3.3%, to $1.16 billion at June 30, 2024 from $1.20 billion at December 31, 2023, primarily due to a decrease in Federal Home Loan Bank advances of $48.3 million, partially offset by an increase in mortgagors’ escrow accounts of $2.8 million, an increase in deposits of $1.4 million and an increase of $4.3 million in accrued expenses and other liabilities mainly due to an increase in collateralized borrowings on interest rate swaps.
Current wording
Total Liabilities. Total liabilities decreased $56.0 million, or 4.7%, to $1.14 billion at September 30, 2024 from $1.20 billion at December 31, 2023, primarily due to a decreases in Federal Home Loan Bank advances of $68.3 million and mortgagors’ escrow accounts of $5.7 million. These decreases were partly offset by an increase in deposits of $15.7 million and an increase of $2.3 million in accrued expenses and other liabilities.
Previous wording
Deposits. Deposits increased $1.4 million, or 0.1%, to $1.032 billion at June 30, 2024 from $1.031 billion at December 31, 2023. For the six months ended June 30, 2024, interest-bearing accounts increased $10.5 million, or 1.3%, to $791.2 million, while non-interest bearing balances decreased $9.0 million, or 3.6%, to $240.8 million. Of the interest bearing accounts, time deposits increased $19.8 million, or 6.2%, at June 30, 2024, while transaction accounts (including NOW, savings and money market accounts) decreased $9.3 million, or 2.0%. The continued growth in interest-bearing deposits was primarily due a shift in deposits from non-interest bearing and lower-yielding transaction accounts to higher-yielding time deposits and money market accounts as customers sought higher interest rates, contributing to the decrease in non-interest bearing and lower interest-bearing deposits.
Current wording
Deposits. Deposits increased $15.7 million, or 1.5%, to $1.05 billion at September 30, 2024 from $1.03 billion at December 31, 2023. For the nine months ended September 30, 2024, interest-bearing accounts increased $8.6 million, or 1.1%, to $789.3 million, while non-interest bearing balances increased $7.1 million, or 2.8%, to $256.9 million. Of the interest bearing accounts, time deposits increased $25.4 million, or 8.0%, at September 30, 2024, while transaction accounts (including NOW, savings and money market accounts) decreased $16.8 million, or 3.6%. The continued growth in interest-bearing time deposits was primarily due a shift in deposits from lower-yielding transaction accounts to higher-yielding time deposits and money market accounts as customers sought higher interest rates.
Previous wording
We participate in reciprocal deposit programs, obtained through the Certificate Deposit Account Registry Service (CDARS) and IntraFi Cash Service (ICS) networks, that provide access to FDIC-insured deposit products in aggregate amounts exceeding the current limits for depositors. This allows us to maintain deposits that might otherwise be uninsured. Our reciprocal deposits obtained through the CDARS and ICS networks totaled $44.5 million and $40.0 million at June 30, 2024 and December 31, 2023, respectively. We had no brokered deposits at either June 30, 2024 or December 31, 2023.
Current wording
We participate in reciprocal deposit programs, obtained through the Certificate Deposit Account Registry Service (CDARS) and IntraFi Cash Service (ICS) networks, that provide access to FDIC-insured deposit products in aggregate amounts exceeding the current limits for depositors. This allows us to maintain deposits that might otherwise be uninsured. Our reciprocal deposits obtained through the CDARS and ICS networks totaled $42.9 million and $40.0 million at September 30, 2024 and December 31, 2023, respectively. We had no brokered deposits at either September 30, 2024 or December 31, 2023.
Previous wording
Mortgagors’ escrow accounts.** **Mortgagors’ escrow accounts increased $2.8 million, or 29.7%, from $9.3 million at December 31, 2023 to $12.0 million at June 30, 2024, primarily due to the timing of tax disbursements.
Current wording
Mortgagors’ escrow accounts.** **Mortgagors’ escrow accounts decreased $5.7 million, or 61.7%, from $9.3 million at December 31, 2023 to $3.6 million at September 30, 2024, primarily due to the timing of tax disbursements.
Previous wording
Advances from the Federal Home Loan Bank. Advances from the Federal Home Loan Bank decreased $48.3 million, or 37.7%, from $128.1 million at December 31, 2023 to $79.8 million at June 30, 2024, primarily due to a reduction in the origination of indirect automobile loans and the use of proceeds from maturities to pay down the debt.
Current wording
Advances from the Federal Home Loan Bank. Advances from the Federal Home Loan Bank decreased $68.3 million, or 53.3%, from $128.1 million at December 31, 2023 to $59.8 million at September 30, 2024, primarily due the use of proceeds from the sales of securities and a reduction in the origination of indirect automobile loans to pay down the debt.
Previous wording
Stockholders’ Equity. Stockholders' equity increased $2.5 million, or 2.2%, to $116.2 million at June 30, 2024 from $113.7 million at December 31, 2023. The increase was primarily due to net income of $2.1 million and a $326,000 decrease in accumulated other comprehensive loss, primarily reflecting valuation changes in our available-for-sale securities portfolio due to current financial market conditions. At June 30, 2024, the Company’s book value per share was $10.49 and the Company’s ratio of stockholders’ equity-to-total assets was 9.11%. At December 31, 2023, the Company’s book value per share was $10.27 and the Company’s ratio of stockholders’ equity-to-total assets was 8.66%. Unearned common stock held by the Bank’s employee stock ownership plan was $3.2 million and $3.3 million at June 30, 2024 and December 31, 2023, respectively.
Current wording
Stockholders’ Equity. Stockholders' equity increased $9.0 million, or 7.9%, to $122.7 million at September 30, 2024. The increase was primarily due to a $14.8 million decrease in accumulated other comprehensive loss primarily reflecting efforts of the balance sheet restructuring as well as the 50 basis point decrease in market interest rates, which was partially offset by a net loss of $5.6 million. At September 30, 2024, the Company’s book value per share was $11.06 and the Company’s ratio of stockholders’ equity-to-total assets was 9.69%. At December 31, 2023, the Company’s book value per share was $10.27 and the Company’s ratio of stockholders’ equity-to-total assets was 8.66%. Unearned common stock held by the Bank’s employee stock ownership plan was $3.1 million and $3.3 million at September 30, 2024 and December 31, 2023, respectively.
Previous wording
Comparison of Operating Results for the Three and Six Months Ended June 30, 2024 and 2023
Current wording
Comparison of Operating Results for the Three and Nine Months Ended September 30, 2024 and 2023
Previous wording
Net Interest Income. Net interest income decreased $163,000, or 1.8%, to $9.1 million for the three months ended June 30, 2024, compared to $9.3 million for the three months ended June 30, 2023. The ratio of average interest-earning assets to average interest-bearing liabilities decreased 1.0% to 131.95% while the net interest margin increased by 11 basis points to 3.08% when comparing the second quarter of 2024 to the same quarter in 2023.
Current wording
Net Interest Income. Net interest income increased $41,000, or 0.4%, to $9.7 million for the three months ended September 30, 2024. The ratio of average interest-earning assets to average interest-bearing liabilities increased 1.5% to 135.00% while the net interest margin increased by 17 basis points to 3.26% when comparing the third quarter of 2024 to the same quarter in 2023.
Previous wording
Net interest income decreased $1.1 million, or 5.9%, to $18.0 million for the six months ended June 30, 2024, compared to $19.2 million for the six months ended June 30, 2023. The ratio of average interest-earning assets to average interest-bearing liabilities decreased 2.0% to 131.92% while our net interest margin decreased by 9 basis points to 3.00% when comparing the first six months of 2024 to the same period in 2023.
Current wording
Net interest income decreased $1.1 million, or 3.8%, to $27.7 million for the nine months ended September 30, 2024, compared to $28.8 million for the nine months ended September 30, 2023. The ratio of average interest-earning assets to average interest-bearing liabilities decreased 0.9% to 132.92% while our net interest margin decreased by 1 basis point to 3.08% when comparing the first nine months of 2024 to the same period in 2023.
Previous wording
Interest Income. Interest income increased $837,000, or 5.6%, to $15.8 million for the three months ended June 30, 2024 from $14.9 million for the comparable 2023 period primarily due to the rising interest rate environment, offset by a decrease in the average balance of loans and available for sale securities. The average yield of interest-earning assets increased by 54 basis points to 5.31% and the average balance of interest-earning assets decreased $61.4 million, or 4.9%. The average yield on loans increased 58 basis points, while the average yield on available for sale securities decreased 25 basis points. For the three months ended June 30, 2024, the average balance of loans decreased $13.8 million, while the average balance of available for sale securities decreased $37.4 million when compared to the three months ended June 30, 2023.
Current wording
Interest Income. Interest income increased $506,000, or 3.3%, to $16.0 million for the three months ended September 30, 2024, from $15.5 million for the comparable 2023 period primarily due to the rising interest rate environment, offset by a decrease in the average balance of loans and available for sale securities. The average yield of interest-earning assets increased by 43 basis points to 5.39% and the average balance of interest-earning assets decreased $58.1 million, or 4.7%. The average yield on loans increased 39 basis points, while the average yield on available for sale securities increased 31 basis points. For the three months ended September 30, 2024, the average balance of loans decreased $25.6 million, while the average balance of available for sale securities decreased $29.5 million when compared to the three months ended September 30, 2023.
Previous wording
Interest income increased $1.9 million, or 6.3%, to $31.4 million for the six months ended June 30, 2024 from $29.5 million for the comparable 2023 period. Interest and fees on loans increased due to the rising interest rate environment while interest and dividends on securities decreased as the yields and the average balance decreased. For the six months ended June 30, 2024, the average balance of loans decreased $3.6 million, while the average balance of available for sale securities decreased $34.7 million when compared to the six months ended June 30, 2023. The average yield on loans increased 45 basis points, while the average yield on available for sale securities decreased 6 basis points. The average yield of interest-earning assets increased by 46 basis points to 5.22% and the average balance of interest-earning assets decreased $42.2 million, or 3.4%.
Current wording
Interest income increased $2.4 million, or 5.3%, to $47.5 million for the nine months ended September 30, 2024 from $45.1 million for the comparable 2023 period. Interest and fees on loans increased due to the rising interest rate environment while interest and dividends on securities decreased as the average balance decreased. For the nine months ended September 30, 2024, the average balance of loans decreased $11.0 million, while the average balance of available for sale securities decreased $33.0 million when compared to the nine months ended September 30, 2023. The average yield on loans increased 42 basis points, while the average yield on available for sale securities increased 6 basis points. The average yield of interest-earning assets increased by 45 basis points to 5.28% and the average balance of interest-earning assets decreased $47.6 million, or 3.8%.
Previous wording
Interest Expense. Interest expense increased $1.0 million, or 17.7%, from $5.6 million for the quarter ended June 30, 2023, to $6.6 million for the quarter ended June 30, 2024. The average cost of interest-bearing liabilities increased 55 basis points to 2.95% for the quarter ended June 30, 2024, due to the current interest rate environment and a greater proportion of deposits consisting of higher-yielding certificates of deposit. The average balance of total interest-bearing liabilities decreased $37.3 million, or 4.0%, to $905.7 million due to a decrease of $82.0 million, or 15.4%, in the average balance of our core interest-bearing deposits (consisting of savings, NOW and money market accounts) as depositors sought higher yields in the increasing interest rate environment, partially offset by an increase of $51.3 million, or 17.8%, in the average balance of certificates of deposit. Between the three months ended June 30, 2023 and 2024, the average cost of Federal Home Loan Bank advances decreased by 18 basis points and the average balance also decreased by $9.4 million.
Current wording
Interest Expense. Interest expense increased $465,000, or 7.9%, from $5.9 million for the quarter ended September 30, 2023, to $6.3 million for the quarter ended September 30, 2024. The average cost of interest-bearing liabilities increased 38 basis points to 2.88% for the quarter ended September 30, 2024, due to the current interest rate environment and a greater proportion of deposits consisting of higher-yielding certificates of deposit. The average balance of total interest-bearing liabilities decreased $57.2 million, or 6.1%, to $876.9 million primarily due to a decrease of $73.2 million, or 13.9%, in the average balance of our core interest-bearing deposits (consisting of savings, NOW and money market accounts) as depositors sought higher yields in the increasing interest rate environment, partially offset by an increase of $53.0 million, or 18.2%, in the average balance of certificates of deposit. Between the three months ended September 30, 2023 and 2024, the average cost of Federal Home Loan Bank advances decreased by 55 basis points and the average balance also decreased by $36.1 million.
Previous wording
Interest expense increased $3.0 million, or 28.9%, from $10.4 million for the six months ended June 30, 2023, to $13.4 million for the six months ended June 30, 2024. The average cost of interest-bearing liabilities increased 68 basis points to 2.93% for the six-month periods ended June 30, 2024, due to the current interest rate environment and a greater proportion of deposits consisting of higher-rate certificates of deposit, while the average balance of total interest-bearing liabilities decreased $12.7 million, or 1.4%, to $917.0 million. Between the six months ended June 30, 2023 and 2024, the average cost of Federal Home Loan Bank advances increased by 4 basis points, while the average balance increased by $26.7 million. A decrease of $110.8 million, or 19.6%, in the average balance of core interest-bearing deposits (consisting of savings, NOW and money market accounts) was partially offset by an increase of $70.4 million, or 26.4%, in the average balance of certificates of deposit as depositors sought higher yields in the increasing interest rate environment.
Current wording
Interest expense increased $3.5 million, or 21.3%, from $16.3 million for the nine months ended September 30, 2023, to $19.7 million for the nine months ended September 30, 2024. The average cost of interest-bearing liabilities increased 59 basis points to 2.92% for the nine-month period ended September 30, 2024, due to the current interest rate environment and a greater proportion of deposits consisting of higher-rate certificates of deposit, while the average balance of total interest-bearing liabilities decreased $27.7 million, or 3.0%, to $903.5 million. Between the nine months ended September 30, 2023 and 2024, the average cost of Federal Home Loan Bank advances decreased by 9 basis points, while the average balance increased by $5.6 million. A decrease of $98.1 million, or 17.8%, in the average balance of core interest-bearing deposits (consisting of savings, NOW and money market accounts) was partially offset by an increase of $64.5 million, or 23.5%, in the average balance of certificates of deposit as depositors sought higher yields in the increasing interest rate environment.
Previous wording
Provision for Credit Losses. The provision for credit losses on loans increased by $899,000, or 198.9%, from a credit of $452,000 for the quarter ended June 30, 2023 to an expense of $447,000 for the quarter ended June 30, 2024. The credit to the provision for the three months ended June 30, 2023 was primarily attributable to a decrease in loan balances, particularly indirect automobile loans, and a $710,000 charge-off on a leveraged loan, which reduced the credit that would have otherwise been taken. The provision for credit losses on loans decreased by $32,000, or 5.7%, from $562,000 for the six months ended June 30, 2023 to $530,000 for the six months ended June 30, 2024, primarily due to a small decrease in loan balances.
Current wording
Provision for Credit Losses. The provision for credit losses decreased by $21,000, or 2.3%, from $910,000 for the quarter ended September 30, 2023 to $889,000 for the quarter ended September 30, 2024. The provision for credit losses decreased by $53,000, or 3.6%, from $1.47 million for the nine months ended September 30, 2023 to $1.42 million for the nine months ended September 30, 2024. These decreases to the provision for the three months and the nine months ended September 30, 2024 were primarily attributable to a decrease in loan balances, primarily indirect automobile loans.
Previous wording
Net charge-offs increased $211,000 from $622,000 for the second quarter of 2023 to $833,000 for the second quarter of 2024. The increase was primarily due to increased net charge-offs in indirect automobile loans of $465,000 and a $275,000 charge-off on a commercial real estate property, partially offset by a $623,000 reduction in net charge-offs of commercial and industrial loans. Net charge-offs increased $48,000, or 4.6% to $1.1 million for the first six months of 2024. The percentage of overdue account balances to total loans decreased to 1.58% as of June 30, 2024, from 1.90% as of December 31, 2023, while non-performing assets decreased $29,000, or 0.7%, to $4.2 million at June 30, 2024.
Current wording
Net charge-offs decreased $41,000 from $385,000 for the third quarter of 2023 to $344,000 for the third quarter of 2024. The decrease was primarily due to decreased net charge-offs in indirect automobile loans of $216,000 and recoveries in residential real estate and commercial loans in the third quarter of 2023. Net charge-offs increased $8,000, or 0.6%, to $1.4 million for the first nine months of 2024. The percentage of overdue account balances to total loans decreased to 1.62% as of September 30, 2024, from 1.90% as of December 31, 2023, while non-performing assets increased $486,000, or 11.6%, to $4.7 million at September 30, 2024.
Previous wording
Non-Interest Income. Non-interest income totaled $1.5 million for the three months ended June 30, 2024, an increase of $156,000, or 11.5%, from the comparable period in 2023, due primarily to an increase of $144,000, or 61.5%, in investment advisory income resulting from the improved market and economic conditions, an increase of $24,000 in the cash surrender value of life insurance and an increase of $18,000 in service charges on deposit accounts, partially offset by decreases in the gain on sales of loans of $17,000 and a $19,000 gain on disposal of premises and equipment in 2023.
Current wording
Non-Interest (Loss) Income. Non-interest loss totaled $10.0 million for the three months ended September 30, 2024, a decrease of $11.7 million, from non-interest income of $1.6 million for the comparable period in 2023, due primarily to the $12.0 million loss on sale of investment securities resulting from the previously mentioned balance sheet restructuring. Excluding the securities loss, non-interest income for the third fiscal quarter of 2024 would have been $2.0 million compared to $1.6 million for the three months ended September 30, 2023. The Company recorded an increase of $54,000, or 16.8%, in investment advisory income resulting from the improved market and economic conditions, an increase of $194,000 related to gains on life insurance, an increase of $35,000 in service charges on deposit accounts, an increase of $22,000 in the cash surrender value of life insurance, and an increase in the gain on sales of loans of $20,000.
Previous wording
Non-interest income totaled $3.0 million for the six months ended June 30, 2024, an increase of $286,000, or 10.5%, from the comparable period in 2023, due primarily to an increase of $216,000, or 39.8%, in investment advisory income resulting from the improved market and economic conditions, an increase of $48,000 in the cash surrender value of life insurance, an increase of $53,000 in service charges on deposit accounts, and an increase in the gain on sales of loans of $19,000, partially offset by a decrease of $54,000 on the disposal of premises and equipment.
Current wording
Non-interest loss totaled $7.0 million for the nine months ended September 30, 2024, a decrease of $11.4 million, from non-interest income of $4.4 million for the comparable period in 2023, due primarily to the $12.0 million loss on sale of investment securities resulting from the previously mentioned balance sheet restructuring. Excluding the securities loss, non-interest income for the nine months ended September 30, 2024 would have been $5.0 million compared to $4.4 million for the nine months ended September 30, 2023. The Company recorded an increase of $270,000, or 31.3%, in investment advisory income resulting from the improved market and economic conditions, an increase of $194,000 related to gains on life insurance, an increase of $88,000 in service charges on deposit accounts, an increase of $70,000, or 14.2%, in the cash surrender value of life insurance, and an increase in the gain on sales of loans of $39,000, partially offset by a decrease of $54,000 on the disposal of premises and equipment.
Previous wording
Non-interest expense totaled $17.8 million for the first six months of 2024, a decrease of $668,000, or 3.6%, over the comparable period in 2023. The decrease was primarily due to a $288,000, or 2.8%, decrease in salaries and benefits due to a Company-wide reduction in force of approximately 5% in the first quarter of 2023 and a further reduction in force in the first quarter of 2024 with the Company’s strategic decision to reduce its indirect automobile business. FDIC deposit insurance and other insurance decreased $122,000, or 19.2%, primarily due a decreased assessment rate while professional fees decreased $110,000, or 11.2%. Occupancy expense decreased $51,000, or 2.4%, due to a branch closure in the first quarter of 2024 and other non-interest expense decreased $120,000, or 3.7%, primarily due to decreased retail banking expenses.
Current wording
Non-interest expense totaled $26.9 million for the first nine months of 2024, a decrease of $402,000, or 1.5%, over the comparable period in 2023. The decrease was primarily due to a $229,000, or 4.7%, decrease in other non-interest expense, primarily due to decreased retail banking and lending expenses. FDIC deposit insurance and other insurance decreased $121,000, or 13.1%, primarily due to a decreased assessment rate while professional fees decreased $90,000, or 6.1%. Occupancy expense decreased $66,000, or 2.1%, due to a branch closure in the first quarter of 2024. These decreases were partially offset by an $82,000 increase in salaries and benefits and a $42,000 increase in data processing costs.
Previous wording
Average Balance Sheets for the Three and Six Months Ended June 30, 2024 and 2023
Current wording
Average Balance Sheets for the Three and Nine Months Ended September 30, 2024 and 2023
Previous wording
As reported in the Consolidated Statements of Cash Flows, cash flows are classified for financial reporting purposes as operating, investing, or financing cash flows. Net cash provided by operating activities was $8.5 million for the six months ended June 30, 2024 as compared to $4.4 million for the six months ended June 30, 2023. These amounts differ from our net income because of a variety of cash receipts and disbursements that did not affect net income for the respective periods. Net cash provided by investing activities was $47.9 million for the six months ended June 30, 2024, and $19.5 million for the six months ended June 30, 2023, principally reflecting our investment security and loan activities in the respective periods. A cash inflow of $25.3 million for a decrease in loans was the primary contributor to the cash provided by investing activities for the six months ended June 30, 2024 as opposed to a cash inflow of $6.3 million for a decrease in loans for the six months ended June 30, 2023. Deposit and borrowing cash flows have traditionally comprised most of our financing activities, which resulted in a net cash outflow of $44.1 million in the six months ended June 30, 2024, due primarily to a paydown of debt, compared to a net cash outflow of $1.4 million in the comparable 2023 period caused by an increase in debt offset by a decrease in deposits.
Current wording
As reported in the Consolidated Statements of Cash Flows, cash flows are classified for financial reporting purposes as operating, investing, or financing cash flows. Net cash provided by operating activities was $4.9 million for the nine months ended September 30, 2024 as compared to $6.9 million for the nine months ended September 30, 2023. These amounts differ from our net income because of a variety of cash receipts and disbursements that did not affect net income for the respective periods. Net cash provided by investing activities was $77.7 million for the nine months ended September 30, 2024, and $12.6 million for the nine months ended September 30, 2023, principally reflecting our investment security and loan activities in the respective periods. A cash inflow of $42.1 million for a decrease in loans was the primary contributor to the cash provided by investing activities for the nine months ended September 30, 2024 as opposed to a cash outflow of $11.6 million for an increase in loans for the nine months ended September 30, 2023. Deposit and borrowing cash flows have traditionally comprised most of our financing activities, which resulted in a net cash outflow of $58.3 million in the nine months ended September 30, 2024, due primarily to a paydown of debt, compared to a net cash outflow of $24.1 million in the comparable 2023 period caused by an increase in debt offset by a decrease in deposits.
Previous wording
The Bank has access to a preapproved secured line of credit with the FHLB which totaled $637,912 at June 30, 2024. Additional funds available under this line are not included in the table above as we do not consider it to be as readily accessible as the funds above.
Current wording
The Bank has access to a preapproved secured line of credit with the FHLB which totaled $633,017 at September 30, 2024. Additional funds available under this line are not included in the table above as we do not consider it to be as readily accessible as the funds above.