MUNCY COLUMBIA FINANCIAL Corp

Previous wording

The ACL consists of two components, a specific component and a general component. The specific component relates to loans that are individually analyzed for impairment. For such loans, an allowance is established when the discounted cash flows, collateral value or observable market price of the loan is lower than the carrying value of that loan. The general component covers all other loans and is based on historical loss experience adjusted. The general reserve component of the ACL is based on pools of performing loans segregated by loan segment. Historical loss factors are applied based on historical losses in each risk rating category to determine the appropriate reserve related to those loans.

Current wording

The ACL consists of two components, a specific component and a general component. The specific component relates to loans that are individually analyzed for impairment. For such loans, an allowance is established when the discounted cash flows, collateral value or observable market price of the loan is lower than the carrying value of that loan. The general component covers all other loans and is based on historical loss experience as adjusted for qualitative factors. The general reserve component of the ACL is based on pools of performing loans segregated by loan segment. Historical loss factors are applied based on historical losses in each risk rating category to determine the appropriate reserve related to those loans.

Previous wording

For the three and six months ended June 30, 2024, the Corporation incurred pre-tax merger-related expenses related to the MBF transaction of $201,000 and $297,000, respectively, compared to $449,000 for the three and six months ended June 30, 2023. Merger-related expenses include voluntary severance and similar expenses as well as expenses related to conversion of MBF’s core banking system into the Corporation’s core system and legal and other professional expenses.

Current wording

For the three and nine months ended September 30, 2024, the Corporation incurred pre-tax merger-related expenses related to the MBF transaction of $43,000 and $340,000, respectively, compared to $757,000 and $1,206,000, respectively, for the three and nine months ended September 30, 2023. Merger-related expenses include voluntary severance and similar expenses as well as expenses related to conversion of MBF’s core banking system into the Corporation’s core system and legal and other professional expenses.

Previous wording

Total assets at June 30, 2024, were $1.592 billion, a decrease of $47.5 million, or 2.9% from $1.640 billion at December 31, 2023. The change in total assets primarily reflected decreases in available-for-sale debt securities and restricted investment in bank stocks, partially offset by increases in cash and cash equivalents and loans receivable. Available-for-sale debt securities decreased $78.5 million and restricted investment in bank stocks decreased $2.3 million. Cash and cash equivalents increased $3.1 million and gross loans receivable increased $32.2 million. Total liabilities at June 30, 2024, were $1.434 billion, a decrease of $51.3 million, or 3.5% from $1.486 billion at December 31, 2023. Deposit balances increased by $115.0 million, short-term borrowings decreased $163.2 million and long-term borrowings decreased $4.9 million since December 31, 2023.

Current wording

Total assets at September 30, 2024, were $1.607 billion, a decrease of $32.5 million, or 2.0% from $1.640 billion at December 31, 2023. The change in total assets primarily reflected decreases in available-for-sale debt securities, restricted investment in bank stocks and deferred tax assets, net, partially offset by increases in cash and cash equivalents and loans receivable. Available-for-sale debt securities decreased $77.8 million, restricted investment in bank stocks decreased $2.9 million and deferred tax assets, net, decreased $3.7 million. Cash and cash equivalents increased $9.7 million and gross loans receivable increased $44.2 million. Total liabilities at September 30, 2024, were $1.438 billion, a decrease of $47.9 million, or 3.2% from $1.486 billion at December 31, 2023. Deposit balances increased by $139.8 million, short-term borrowings decreased $179.5 million and long-term borrowings decreased $10.0 million since December 31, 2023.

Previous wording

Total average assets increased 64.9% from $957.6 million for the three months ended June 30, 2023, to $1.579 billion for the three months ended June 30, 2024, primarily related to the MBF merger. Average earning assets were $1.483 billion for the three months ended June 30, 2024 and $893.3 million for the three months ended June 30, 2023. Average interest-bearing liabilities were $1.150 billion for the three months ended June 30, 2024 and $685.2 million for the three months ended June 30, 2023.

Current wording

Total average assets increased 66.0% from $965.3 million for the three months ended September 30, 2023, to $1.602 billion for the three months ended September 30, 2024, primarily related to the MBF merger. Average earning assets were $1.493 billion for the three months ended September 30, 2024 and $898.2 million for the three months ended September 30, 2023. Average interest-bearing liabilities were $1.162 billion for the three months ended September 30, 2024 and $697.6 million for the three months ended September 30, 2023.

Previous wording

Total average assets increased 65.9% from $954.9 million for the six months ended June 30, 2023, to $1.585 billion for the six months ended June 30, 2024, primarily related to the MBF merger. Average earning assets were $1.488 billion for the six months ended June 30, 2024 and $891.2 million for the six months ended June 30, 2023. Average interest-bearing liabilities were $1.161 billion for the six months ended June 30, 2024 and $684.4 million for the six months ended June 30, 2023.

Current wording

Total average assets increased 65.9% from $958.4 million for the nine months ended September 30, 2023, to $1.590 billion for the nine months ended September 30, 2024, primarily related to the MBF merger. Average earning assets were $1.490 billion for the nine months ended September 30, 2024 and $893.5 million for the nine months ended September 30, 2023. Average interest-bearing liabilities were $1.160 billion for the nine months ended September 30, 2024 and $688.8 million for the nine months ended September 30, 2023.

Previous wording

Available-for-sale debt securities decreased $78.5 million to $334.8 million at June 30, 2024 from $413.3 million at December 31, 2023. On January 17, 2024, the Corporation sold available-for-sale debt securities with a total market value of $50.3 million, the proceeds of which were utilized to paydown short-term FHLB borrowings. Securities sold included $34.2 million of US government agency securities, $15.5 million of mortgaged-backed securities and $563,000 of collateralized mortgage obligations. In addition to the securities sold, the Corporation received proceeds from paydowns, calls and maturities of available-for-sale debt securities of $26.1 million during the six months ended June 30, 2024.

Current wording

Available-for-sale debt securities decreased $77.8 million to $335.5 million at September 30, 2024 from $413.3 million at December 31, 2023. On January 17, 2024, the Corporation sold available-for-sale debt securities with a total market value of $50.3 million, the proceeds of which were utilized to paydown short-term FHLB borrowings. Securities sold included $34.2 million of US government agency securities, $15.5 million of mortgaged-backed securities and $563,000 of collateralized mortgage obligations. In addition to the securities sold, the Corporation received proceeds from paydowns, calls and maturities of available-for-sale debt securities of $35.9 million during the nine months ended September 30, 2024. Partially offsetting these changes was an increase in fair value of available-for-sale debt securities of $7.9 million for the nine months ended September 30, 2024.

Previous wording

Restricted investment in bank stocks decreased $2.3 million to $8.1 million at June 30, 2024 from $10.4 million at December 31, 2023. This decrease is directly attributable to the decrease in required FHLB stock holdings due to the paydown in short and long-term FHLB borrowings.

Current wording

Restricted investment in bank stocks decreased $2.9 million to $7.5 million at September 30, 2024 from $10.4 million at December 31, 2023. This decrease is directly attributable to the decrease in required FHLB stock holdings due to the paydown in short and long-term FHLB borrowings.

Previous wording

Cash and cash equivalents increased $3.1 million or 16.9% from $18.4 million at December 31, 2023 to $21.5 million at June 30, 2024. This increase is primarily related to increased branch cash levels as well as the timing of items clearing through correspondent bank balances.

Current wording

Cash and cash equivalents increased $9.7 million or 52.7% from $18.4 million at December 31, 2023 to $28.1 million at September 30, 2024. This increase is primarily related to increased excess cash balances held at the federal reserve, increased branch cash levels as well as the timing of items clearing through correspondent bank balances.

Previous wording

Gross loans not held for sale increased 3.0% to $1.101 billion at June 30, 2024 from $1.068 billion at December 31, 2023. This increase is related to strong loan demand in the first six months of 2024.

Current wording

Gross loans not held for sale increased 4.1% to $1.113 billion at September 30, 2024 from $1.068 billion at December 31, 2023. This increase is related to strong loan demand in the first nine months of 2024.

Previous wording

Interest-bearing deposits increased $117.6 million to $1.002 billion at June 30, 2024 from $884.7 million at December 31, 2023. Noninterest-bearing deposits decreased 1.0% from $266.0 million at December 31, 2023 to $263.4 million at June 30, 2024. The increase in interest-bearing deposits during the six months ended June 30, 2024 was as a result of a strategic initiative to reposition customer repurchase agreements, which are classified as short-term borrowings, into core deposit accounts. The Bank anticipates a continued migration of customer repurchase accounts from short-term borrowings to interest bearing deposits throughout the remainder of 2024. The decrease in noninterest-bearing deposits was as a result of the migration of deposits from noninterest-bearing to interest bearing due to the interest rate environment.

Current wording

Interest-bearing deposits increased $136.3 million to $1.021 billion at September 30, 2024 from $884.7 million at December 31, 2023. Noninterest-bearing deposits increased 1.3% from $266.0 million at December 31, 2023 to $269.5 million at September 30, 2024. The increase in interest-bearing deposits during the nine months ended September 30, 2024 was as a result of a strategic initiative to reposition customer repurchase agreements, which are classified as short-term borrowings, into core deposit accounts. The Bank anticipates a continued migration of customer repurchase accounts from short-term borrowings to interest bearing deposits throughout the remainder of 2024. The increase in noninterest-bearing deposits was as a result of overall organic deposit growth for the nine months ended September 30, 2024.

Previous wording

Short-term borrowings decreased $163.2 million to $89.3 million at June 30, 2024 from $252.5 million at December 31, 2023. This change was primarily related to the migration of customer repurchase agreements as well as a paydown in short-term FHLB borrowings during the quarter as discussed above.

Current wording

Short-term borrowings decreased $179.5 million to $73.0 million at September 30, 2024 from $252.5 million at December 31, 2023. This change was primarily related to the migration of customer repurchase agreements as well as a paydown in short-term FHLB borrowings during the quarter as discussed above.

Previous wording

Long-term borrowings were $65.6 million at June 30, 2024 compared to $70.4 million at December 31, 2023. This decrease is primarily related to a $5.0 million long-term borrowing maturity during the first quarter 2024.

Current wording

Long-term borrowings were $60.5 million at September 30, 2024 compared to $70.5 million at December 31, 2023. This decrease is primarily related to $10.2 million in long-term borrowing maturities during the nine months ended September 30, 2024.

Previous wording

Total stockholder’s equity increased by $3.8 million, or 2.5%, from $153.8 million at December 31, 2023, to $157.6 million at June 30, 2024. The increase is primarily attributable to earnings, net of cash dividends, partially offset by an increase in accumulated other comprehensive loss due to changes in the fair values of available-for-sale investment securities. Accumulated other comprehensive loss amounted to $16.9 million as of June 30, 2024 and $15.0 million as of December 31, 2023.

Current wording

Total stockholder’s equity increased by $15.5 million, or 10.1%, from $153.8 million at December 31, 2023, to $169.3 million at September 30, 2024. The increase is primarily attributable to earnings, net of cash dividends, along with a decrease in accumulated other comprehensive loss due to changes in the fair values of available-for-sale debt securities. Accumulated other comprehensive loss amounted to $8.8 million as of September 30, 2024 and $15.0 million as of December 31, 2023.

Previous wording

The loan-to-deposit ratio is a key measurement of liquidity. Our loan-to-deposit ratio decreased from 92.0% as of December 31, 2023 to 86.2% as of June 30, 2024 due to the asset/liability mix changes noted above, and remains within internal policy limits.

Current wording

The loan-to-deposit ratio is a key measurement of liquidity. Our loan-to-deposit ratio decreased from 92.0% as of December 31, 2023 to 85.5% as of September 30, 2024 due to the asset/liability mix changes noted above, and remains within internal policy limits.

Previous wording

At June 30, 2024, the investment portfolio was comprised principally of available-for-sale debt securities including, fixed-rate, taxable and tax-exempt obligations of state and political subdivisions and fixed-rate and floating-rate securities issued by U.S. government or U.S. government-sponsored agencies, which include agencies, mortgage-backed securities and collateralized mortgage obligations, or CMOs. Additionally, the Corporation holds equity investments in the stock of certain publicly traded bank holding companies. Except for U.S. government and government-sponsored agencies, there were no securities of any individual issuer that exceeded 10.0% of shareholders’ equity as of June 30, 2024.

Current wording

At September 30, 2024, the investment portfolio was comprised principally of available-for-sale debt securities including, fixed-rate, taxable and tax-exempt obligations of state and political subdivisions and fixed-rate and floating-rate securities issued by U.S. government or U.S. government-sponsored agencies, which include agencies, mortgage-backed securities and collateralized mortgage obligations, or CMOs. Additionally, the Corporation holds equity investments in the stock of certain publicly traded bank holding companies. Except for U.S. government and government-sponsored agencies, there were no securities of any individual issuer that exceeded 10.0% of stockholders’ equity as of September 30, 2024.

Previous wording

The majority of the Corporation’s debt securities are fixed-rate instruments and inherently subject to interest rate risk, as the value of fixed-rate securities fluctuates with changes in interest rates. Generally, a security’s value reacts inversely with changes in interest rates. Available-for-sale securities are carried at fair value, with unrealized gains or losses reported in the accumulated other comprehensive income or loss component of stockholder’s equity, net of deferred income taxes. At June 30, 2024, the Corporation reported a net unrealized loss, included in accumulated other comprehensive loss, of $16.9 million, net of deferred income taxes of $4.5 million, an increase of $1.9 million compared to the net unrealized holding loss of $15.0 million, net of deferred income taxes of $4.0 million, at December 31, 2023. Any future changes in interest rates could result in changes in the fair value of the Corporation’s securities portfolio and capital position. However, accumulated other comprehensive income and loss related to available-for-sale debt securities is excluded from regulatory capital and does not have an impact on the Corporation’s regulatory capital ratios.

Current wording

The majority of the Corporation’s debt securities are fixed-rate instruments and inherently subject to interest rate risk, as the value of fixed-rate securities fluctuates with changes in interest rates. Generally, a security’s value reacts inversely with changes in interest rates. Available-for-sale securities are carried at fair value, with unrealized gains or losses reported in the accumulated other comprehensive income or loss component of stockholder’s equity, net of deferred income taxes. At September 30, 2024, the Corporation reported a net unrealized loss, included in accumulated other comprehensive loss, of $8.8 million, net of deferred income taxes of $2.4 million, a decrease of $3.8 million compared to the net unrealized holding loss of $15.0 million, net of deferred income taxes of $4.0 million, at December 31, 2023. Any future changes in interest rates could result in changes in the fair value of the Corporation’s securities portfolio and capital position. However, accumulated other comprehensive income and loss related to available-for-sale debt securities is excluded from regulatory capital and does not have an impact on the Corporation’s regulatory capital ratios.

Previous wording

At June 30, 2024 and December 31, 2023, the Corporation had $1.1 million and $1.3 million in equity securities recorded at fair value, respectively. The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three and six months ended June 30, 2024 and 2023:

Current wording

At September 30, 2024 and December 31, 2023, the Corporation had $1.3 million in equity securities recorded at fair value. The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three and nine months ended September 30, 2024 and 2023:

Previous wording

Gross loans receivable increased 3.0% from $1.068 billion at December 31, 2023 to $1.101 billion at June 30, 2024. The percentage distribution in the loan portfolio is shown in the tables below:

Current wording

Gross loans receivable increased 4.1% from $1.068 billion at December 31, 2023 to $1.113 billion at September 30, 2024. The percentage distribution in the loan portfolio is shown in the tables below:

Previous wording

As of June 30, 2024, commercial real estate loans totaled $367.9 million or 33.4% of total gross loans. Of this amount commercial mortgage loans represented $327.8 million or 29.8% of total gross loans and student housing loans represented $40.1 million or 3.6% of total gross loans. The following table presents the distribution of commercial mortgage loans and related percentage of the total loan portfolio as of June 30, 2024 and December 31, 2023:

Current wording

As of September 30, 2024, commercial real estate loans totaled $360.3 million or 32.3% of total gross loans. Of this amount commercial mortgage loans represented $319.7 million or 28.7% of total gross loans and student housing loans represented $40.6 million or 3.6% of total gross loans. The following table presents the distribution of commercial mortgage loans and related percentage of the total loan portfolio as of September 30, 2024 and December 31, 2023:

Previous wording

Total non-performing assets amounted to $7,736,000, or 0.49% of total assets at June 30, 2024, as compared to $4,476,000, or 0.27% of total assets at December 31, 2023. For the six months ended June 30, 2024, the increase in non-performing assets was primarily attributable to one real estate loan relationship with an aggregate balance of $2,221,000 which was placed on nonaccrual status during the first quarter. This relationship is well secured, and the Bank is working closely with the borrower to bring the relationship to a current status. The Bank does not expect to incur a credit loss related to this relationship at this time.

Current wording

Total non-performing assets amounted to $8,575,000, or 0.53% of total assets at September 30, 2024, as compared to $4,476,000, or 0.27% of total assets at December 31, 2023. For the nine months ended September 30, 2024, the increase in non-performing assets was primarily attributable to one real estate loan relationship with an aggregate balance of $2,221,000 which was placed on nonaccrual status during the first quarter. This relationship is well secured, and the Bank is working closely with the borrower to bring the relationship to a current status. The Bank does not expect to incur a credit loss related to this relationship at this time.

Previous wording

The following tables summarize the average balances outstanding and average interest rates for each major category of deposits for the three and six month periods ending June 30, 2024 and 2023, respectively:

Current wording

The following tables summarize the average balances outstanding and average interest rates for each major category of deposits for the three and nine month periods ending September 30, 2024 and 2023, respectively:

Previous wording

The Corporation believes its deposit product offerings are properly structured to attract and retain core low-cost deposit relationships. The average cost of interest-bearing deposits for the three months ended June 30, 2024, and 2023, was 1.84% and 0.47%, respectively. The increased cost was primarily attributable to the increases in rates and increased pricing competition. The average cost of interest-bearing deposits for the six months ended June 30, 2024, and 2023, was 1.72% and 0.42%, respectively. The increased cost was primarily attributable to the increases in rates and increased pricing competition.

Current wording

The Corporation believes its deposit product offerings are properly structured to attract and retain core low-cost deposit relationships. The average cost of interest-bearing deposits for the three months ended September 30, 2024, and 2023, was 1.92% and 0.54%, respectively. The increased cost was primarily attributable to the increases in rates and increased pricing competition. The average cost of interest-bearing deposits for the nine months ended September 30, 2024, and 2023, was 1.79% and 0.46%, respectively. The increased cost was primarily attributable to the increases in rates and increased pricing competition.

Previous wording

At June 30, 2024, estimated uninsured deposits, or the portion of deposit accounts which exceeded the Federal Deposit Corporation insurance limit, totaled $337.5 million. Of this amount, $137.0 million was collateralized by securities pledged by the Corporation or letters of credit issued through the Federal Home Loan Bank of Pittsburgh. Time deposits of $250,000 or more totaled approximately $100.1 million at June 30, 2024.

Current wording

At September 30, 2024, estimated uninsured deposits, or the portion of deposit accounts which exceeded the Federal Deposit Corporation insurance limit, totaled $366.0 million. Of this amount, $155.1 million was collateralized by securities pledged by the Corporation or letters of credit issued through the Federal Home Loan Bank of Pittsburgh. Time deposits of $250,000 or more totaled approximately $109.5 million at September 30, 2024.

Previous wording

Short-term borrowings consist primarily of securities sold under agreements to repurchase and periodic overnight or short-term Federal Home Loan Bank advances. Average short-term borrowings amounted to 10.3% and 13.8% of total interest-bearing liabilities for the three and six months ended June 30, 2024, respectively, as compared to 27.3% and 26.9% for the three and six months ended June 30, 2023, respectively. This change was primarily related to the migration of customer repurchase agreements as well as a paydown in short-term FHLB borrowings during 2024 as discussed above.

Current wording

Short-term borrowings consist primarily of securities sold under agreements to repurchase and periodic overnight or short-term Federal Home Loan Bank advances. Average short-term borrowings amounted to 7.9% and 11.8% of total interest-bearing liabilities for the three and nine months ended September 30, 2024, respectively, as compared to 27.7% and 27.2% for the three and nine months ended September 30, 2023, respectively. This change was primarily related to the migration of customer repurchase agreements as well as a paydown in short-term FHLB borrowings during 2024 as discussed above.

Previous wording

Long-term borrowings consist of advances due to the FHLB - Pittsburgh. Under terms of a blanket agreement, the loans are secured by certain qualifying assets of the Bank which consist principally of first mortgage loans. The carrying value of these collateralized items was $800.7 million at June 30, 2024. The Bank has lines of credit with the Federal Reserve Bank Discount Window, FHLB – Pittsburgh, and Atlantic Community Bankers Bank in the aggregate amount of $572.7 million at June 30, 2024. The unused portion of these lines of credit was $399.2 million at June 30, 2024.

Current wording

Long-term borrowings consist of advances due to the FHLB - Pittsburgh. Under terms of a blanket agreement, the loans are secured by certain qualifying assets of the Bank which consist principally of first mortgage loans. The carrying value of these collateralized items was $820.8 million at September 30, 2024. The Bank has lines of credit with the Federal Reserve Bank Discount Window, FHLB – Pittsburgh, and Atlantic Community Bankers Bank in the aggregate amount of $587.3 million at September 30, 2024. The unused portion of these lines of credit was $469.9 million at September 30, 2024.

Previous wording

Net income for the quarter ended June 30, 2024 was $4,707,000, or $1.32 per share compared to net income of $1,462,000, or $0.71 per share for the same period in 2023. Net income for the six months ended June 30, 2024 was $8,743,000, or $2.45 per share compared to $3,402,000, or $1.64 per share for the same period in 2023. The increase in net income for the three and six months ended June 30, 2024, compared to the same periods in 2023, was primarily attributable to the MBF merger.

Current wording

Net income for the quarter ended September 30, 2024 was $5,056,000, or $1.42 per share compared to net income of $1,171,000, or $0.56 per share for the same period in 2023. Net income for the nine months ended September 30, 2024 was $13,799,000, or $3.86 per share compared to $4,573,000, or $2.20 per share for the same period in 2023. The increase in net income for the three and nine months ended September 30, 2024, compared to the same periods in 2023, was primarily attributable to the MBF merger.

Previous wording

Net interest income increased $7.5 million, or 151.6% to $12.4 million for the three months ended June 30, 2024, from $4.9 million for the three months ended June 30, 2023. Non-interest income was $2.4 million for the three months ended June 30, 2024, an increase of $0.7 million, or 41.8%, from $1.7 million for the three months ended June 30, 2023, which primarily related to increases in service charges and fees, interchange fees and other non-interest income. Non-interest expense was $9.2 million for the three months ended June 30, 2024, an increase of $4.3 million, or 89.3%, from $4.9 million for the three months ended June 30, 2023, which was primarily related to increases in expenses related to the MBF merger.

Current wording

Net interest income increased $7.9 million, or 161.2% to $12.8 million for the three months ended September 30, 2024, from $4.9 million for the three months ended September 30, 2023. Non-interest income was $2.7 million for the three months ended September 30, 2024, an increase of $1.2 million, or 78.4%, from $1.5 million for the three months ended September 30, 2023, which primarily related to increases in service charges and fees, gains (losses) on marketable equity securities, interchange fees and other non-interest income. Non-interest expense was $9.4 million for the three months ended September 30, 2024, an increase of $4.1 million, or 77.6%, from $5.3 million for the three months ended September 30, 2023, which was primarily related to increases in expenses related to the MBF merger.

Previous wording

Net interest income increased $14.2 million, or 140.2% to $24.3 million for the six months ended June 30, 2024, from $10.1 million for the six months ended June 30, 2023. Non-interest income was $5.0 million for the six months ended June 30, 2024, an increase of $1.6 million, or 48.6%, from $3.3 million for the six months ended June 30, 2023, which primarily related to increases in interchange fees and other non-interest income. Non-interest expense was $18.8 million for the six months ended June 30, 2024, an increase of $9.2 million, or 94.7%, from $9.7 million for the six months ended June 30, 2023, which was primarily related to increases in expenses related to the MBF merger.

Current wording

Net interest income increased $22.1 million, or 147.0% to $37.1 million for the nine months ended September 30, 2024, from $15.0 million for the nine months ended September 30, 2023. Non-interest income was $7.7 million for the nine months ended September 30, 2024, an increase of $2.8 million, or 57.9%, from $4.9 million for the nine months ended September 30, 2023, which primarily related to increases in service charges and fees, interchange fees and other non-interest income. Non-interest expense was $28.2 million for the nine months ended September 30, 2024, an increase of $13.3 million, or 88.7%, from $14.9 million for the nine months ended September 30, 2023, which was primarily related to increases in expenses related to the MBF merger.

Previous wording

For the three and six months ended June 30, 2024, the annualized return on average assets was 1.20% and 1.11%, respectively, compared to 0.71% and 0.72% for the respective periods of 2023. The annualized return on average equity was 12.28% and 11.40%, respectively, for the three and six months ended June 30, 2024, and 7.63% and 7.64%, respectively, for the comparable periods of 2023. The Corporation declared and paid dividends to holders of common stock of $0.44 per share for the second quarter of 2024 and $0.88 per share for the six months ended June 30, 2024, compared to $0.43 and $0.85 per share, respectively, for the quarter-to-date and year-to-date periods of 2023.

Current wording

For the three and nine months ended September 30, 2024, the annualized return on average assets was 1.26% and 1.13%, respectively, compared to 0.63% and 0.69% for the respective periods of 2023. The annualized return on average equity was 12.34% and 11.39%, respectively, for the three and nine months ended September 30, 2024, and 6.78% and 7.35%, respectively, for the comparable periods of 2023. The Corporation declared and paid dividends to holders of common stock of $0.44 per share for the third quarter of 2024 and $1.32 per share for the nine months ended September 30, 2024, compared to $0.43 and $1.28 per share, respectively, for the quarter-to-date and year-to-date periods of 2023.

Previous wording

Net interest income on a tax-equivalent basis increased $7.6 million, or 152.4%, to $12.6 million for the three months ended June 30, 2024 from $5.0 million for the comparable period of 2023. The increase in tax-equivalent net interest income primarily reflected an increase in tax equivalent interest income of $12.4 million, or 154.1%, to $20.5 million from $8.1 million, comparing the second quarters of 2024 and 2023, respectively, partially offset by an increase in interest expense of $4.8 million, to $7.8 million for the second quarter of 2024 from $3.1 million for the same quarter of 2023. The tax-equivalent net interest margin, a key measurement used in the banking industry to measure income from earning assets relative to the cost to fund those assets, is calculated by dividing tax-equivalent net interest income by average interest-earning assets. The Corporation’s tax-equivalent net interest margin increased 118 basis points to 3.43% for the second quarter of 2024 from 2.25% for the same quarter of 2023. Additionally, rate spread, the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities shown on a fully tax-equivalent basis, increased 98 basis points to 2.81% for the three months ended June 30, 2024 from 1.83% for the same three months of 2023.

Current wording

Net interest income on a tax-equivalent basis increased $8.1 million, or 161.9%, to $13.1 million for the three months ended September 30, 2024 from $5.0 million for the comparable period of 2023. The increase in tax-equivalent net interest income primarily reflected an increase in tax equivalent interest income of $12.6 million, or 148.5%, to $21.1 million from $8.5 million, comparing the third quarters of 2024 and 2023, respectively, partially offset by an increase in interest expense of $4.5 million, to $8.0 million for the third quarter of 2024 from $3.5 million for the same quarter of 2023. The tax-equivalent net interest margin, a key measurement used in the banking industry to measure income from earning assets relative to the cost to fund those assets, is calculated by dividing tax-equivalent net interest income by average interest-earning assets. The Corporation’s tax-equivalent net interest margin increased 127 basis points to 3.48% for the third quarter of 2024 from 2.21% for the same quarter of 2023. Additionally, rate spread, the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities shown on a fully tax-equivalent basis, increased 110 basis points to 2.87% for the three months ended September 30, 2024 from 1.77% for the same three months of 2023.

Previous wording

The $12.4 million, or 154.1%, increase in tax-equivalent interest income comparing the three months ended June 30, 2024 and 2023 largely reflected an increase in the tax-equivalent yield on average earning assets, coupled with significant growth in average earning assets related to the MBF merger. The tax-equivalent yield on average earning assets increased 193 basis points to 5.55% for the second quarter of 2024 from 3.62% for the same quarter of 2023, which resulted in a corresponding $5.0 million increase to tax-equivalent interest income. Specifically, the tax-equivalent yield on the loan portfolio increased 175 basis points to 6.58% from 4.83% comparing the second quarters of 2024 and 2023, which was due primarily to net accretion of loan fair value adjustments recorded in conjunction with the MBF merger as well as the continued repricing of existing loans in the Corporation’s portfolio. Additionally, the tax-equivalent yield on the investment portfolio increased 77 basis points to 2.46% for the second quarter of 2024 from 1.69% for the same quarter of 2023. These yield increases resulted in corresponding increases in tax-equivalent interest income of $4.7 million, and $232,000, respectively. Additionally, total average earning assets increased $621.1 million, or 64.9%, to $1.483 billion for the three months ended June 30, 2024, from $957.6 million for the same three months of 2023, which resulted in a corresponding increase in tax-equivalent interest income of $7.5 million. Specifically, average total loans increased $563.8 million, or 103.2%, to $1.110 billion for the second quarter of 2024 from $546.1 million for the same quarter of 2023, which largely reflected the impact of the MBF merger along with strong organic loan demand. The increase in the average loan balances resulted in a corresponding increase to tax-equivalent interest income of $6.8 million comparing the three months ended June 30, 2024, and 2023. Meanwhile, total securities averaged $368.2 million for the second quarter of 2024, an increase of $22.6 million, or 6.5%, from $345.6 million for the same quarter of 2023, which caused a corresponding increase to tax-equivalent interest income of $561,000.

Current wording

The $12.6 million, or 148.5%, increase in tax-equivalent interest income comparing the three months ended September 30, 2024 and 2023 largely reflected an increase in the tax-equivalent yield on average earning assets, coupled with significant growth in average earning assets related to the MBF merger. The tax-equivalent yield on average earning assets increased 187 basis points to 5.62% for the third quarter of 2024 from 3.75% for the same quarter of 2023, which resulted in a corresponding $5.1 million increase to tax-equivalent interest income. Specifically, the tax-equivalent yield on the loan portfolio increased 167 basis points to 6.64% from 4.97% comparing the third quarters of 2024 and 2023, which was due primarily to net accretion of loan fair value adjustments recorded in conjunction with the MBF merger as well as the continued repricing of existing loans in the Corporation’s portfolio. Additionally, the tax-equivalent yield on the investment portfolio increased 70 basis points to 2.44% for the third quarter of 2024 from 1.74% for the same quarter of 2023. These yield increases resulted in corresponding increases in tax-equivalent interest income of $4.7 million, and $341,000, respectively. Additionally, total average earning assets increased $595.0 million, or 66.2%, to $1.493 billion for the three months ended September 30, 2024, from $898.2 million for the same three months of 2023, which resulted in a corresponding increase in tax-equivalent interest income of $7.5 million. Specifically, average total loans increased $569.9 million, or 102.9%, to $1.124 billion for the third quarter of 2024 from $554.0 million for the same quarter of 2023, which largely reflected the impact of the MBF merger along with strong organic loan demand. The increase in the average loan balances resulted in a corresponding increase to tax-equivalent interest income of $7.1 million comparing the three months ended September 30, 2024, and 2023. Meanwhile, total securities averaged $361.4 million for the third quarter of 2024, an increase of $23.5 million, or 6.9%, from $338.0 million for the same quarter of 2023, which caused a corresponding increase to tax-equivalent interest income of $412,000.

Previous wording

The increase in interest expense of $4.8 million was primarily due to an increase in funding costs, coupled with growth in average interest-bearing liabilities. The Corporation experienced a 95 basis point increase in the cost of funds to 2.74% for the three months ended June 30, 2024, from 1.79% for the same three months of 2023, which resulted in a corresponding increase in interest expense of $3.8 million. The Corporation increased deposit rates and offered promotional certificate of deposit rates in response to rising market rates and increased competition. Specifically, the average rate paid for interest-bearing deposits increased 169 basis points to 2.34% for the second quarter of 2024 from 0.65% for the same period of 2023, resulting in a corresponding increase to interest expense of $3.6 million. The average rates paid on interest bearing demand deposits increased 200 basis points, resulting in a corresponding increase to interest expense of $1.6 million. Comparing the second quarters of 2024 and 2023, the average rates paid for money market deposits and time deposits, increased 77 basis points and 218 basis points, respectively, resulting in corresponding increases to interest expense of $212,000 and $1.8 million, respectively. Additionally, the Corporation experienced an increase in wholesale borrowing costs. Comparing the three months ended June 30, 2024 and 2023, the average rate paid for borrowed fund increased 32 basis points to 4.85% from 4.53%, respectively, and resulted in a corresponding increase to interest expense of $179,000. Average interest-bearing liabilities increased $464.9 million, or 67.9%, to $1.150 billion for the three months ended June 30, 2024, from $685.2 million for the same three months of 2023. The increase in average interest-bearing liabilities resulted in a corresponding increase to interest expense of $997,000. Average interest-bearing deposits increased $481.4 million, or 99.4%, to $965.7 million from $484.3 million comparing the second quarters of 2024 and 2023, respectively. The increase in average interest-bearing deposits resulted in a corresponding increase to interest expense of $1.2 million. Average time deposits increased $210.0 million, or 164.1%, to $338.0 million for the three months ended June 30, 2024, from $128.0 million for the same three months of 2023, due to the MBF merger as well as changing customer deposit preferences due to the economic and rate environment continued to result in deposit migration from non-maturity deposits to higher-costing time deposits. The increase in average time deposit balances resulted in additional interest expense of $982,000. Partially offsetting the increase in interest expense due to higher deposit balances was a reduction in total borrowings. Average total borrowings decreased $16.5 million, or 8.2%, to $184.4 million for the second quarter of 2024 compared to $200.9 million for the same quarter of 2023, resulting in a decrease in interest expense of $2…

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Current wording

The increase in interest expense of $4.5 million was primarily due to an increase in funding costs, coupled with growth in average interest-bearing liabilities. The Corporation experienced a 76 basis point increase in the cost of funds to 2.75% for the three months ended September 30, 2024, from 1.99% for the same three months of 2023, which resulted in a corresponding increase in interest expense of $3.9 million. The Corporation increased deposit rates and offered promotional certificate of deposit rates in response to rising market rates and increased competition. Specifically, the average rate paid for interest-bearing deposits increased 168 basis points to 2.42% for the third quarter of 2024 from 0.74% for the same period of 2023, resulting in a corresponding increase to interest expense of $3.8 million. The average rates paid on interest bearing demand deposits increased 218 basis points, resulting in a corresponding increase to interest expense of $1.9 million. Comparing the third quarters of 2024 and 2023, the average rates paid for money market deposits and time deposits, increased 75 basis points and 190 basis points, respectively, resulting in corresponding increases to interest expense of $217,000 and $1.7 million, respectively. Additionally, the Corporation experienced an increase in wholesale borrowing costs. Comparing the three months ended September 30, 2024 and 2023, the average rate paid for borrowed funds increased 9 basis points to 4.83% from 4.74%, respectively, and resulted in a corresponding increase to interest expense of $83,000. Average interest-bearing liabilities increased $464.3 million, or 66.6%, to $1.162 billion for the three months ended September 30, 2024, from $697.6 million for the same three months of 2023. The increase in average interest-bearing liabilities resulted in a corresponding increase to interest expense of $632,000. Average interest-bearing deposits increased $527.2 million, or 110.0%, to $1.007 billion from $479.4 million comparing the third quarters of 2024 and 2023, respectively. The increase in average interest-bearing deposits resulted in a corresponding increase to interest expense of $1.4 million. Average time deposits increased $215.7 million, or 167.1%, to $344.7 million for the three months ended September 30, 2024, from $129.0 million for the same three months of 2023, due to the MBF merger as well as changing customer deposit preferences due to the economic and rate environment continued to result in deposit migration from non-maturity deposits to higher-costing time deposits. The increase in average time deposit balances resulted in additional interest expense of $1.1 million. Partially offsetting the increase in interest expense due to higher deposit balances was a reduction in total borrowings. Average total borrowings decreased $62.9 million, or 28.8%, to $155.2 million for the third quarter of 2024 compared to $218.1 million for the same quarter of 2023, resulting in a decrease in i…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

On a year-to-date basis, tax equivalent net interest income increased $14.6 million, or 141.3%, to $24.9 million for the six months ended June 30, 2024, from $10.3 million for the comparable period of 2023. The increase in tax-equivalent net interest income for the year-to-date period was largely due to a $24.9 million, or 157.8%, increase in tax equivalent interest income, to $40.6 million, from $15.8 million for 2023, partially offset by an increase in interest expense of $10.3 million, or 189.0%, to $15.8 million for the six months ended June 30, 2024, from $5.5 million for the six months ended June 30, 2023. Similar to the quarterly period, the $24.9 million or 157.8%, increase in year-to-date tax equivalent interest income was primarily due to higher earning-asset yields, coupled with an increase in average earning assets balances primarily related to the MBF merger. The tax-equivalent yield on average earning assets increased 193 basis points to 5.49% for the first half of 2024 from 3.56% in 2023, which resulted in a corresponding increase of $10.2 million to tax-equivalent interest income. The tax-equivalent yield on loans increased 178 basis points, while the tax-equivalent yield on investments increased 79 basis points comparing the year-to-date periods of 2024 and 2023, which resulted in corresponding increases in tax-equivalent interest income of $9.7 million and $557,000, respectively. Regarding earning-asset volumes, total average earning assets increased $596.7 million, or 67.0%, to $1.488 billion for the six months ended June 30 ,2024, from $891.2 million for the same period of 2023, which resulted in a corresponding increase in tax-equivalent interest income of $14.7 million. Similar to the quarterly period, this was primarily due to an increase in average total loans which increased $561.7 million, or 103.6%, to $1.104 billion for the six months ended June 30, 2024, from $542.3 million’ for the same comparable period of 2023, which was primarily as a result of the MBF merger and strong organic loan demand. This increase resulted in a corresponding increase in tax-equivalent interest income of $13.4 million.

Current wording

On a year-to-date basis, tax equivalent net interest income increased $22.6 million, or 148.0%, to $37.9 million for the nine months ended September 30, 2024, from $15.3 million for the comparable period of 2023. The increase in tax-equivalent net interest income for the year-to-date period was largely due to a $37.5 million, or 154.5%, increase in tax equivalent interest income, to $61.7 million, from $24.3 million for 2023, partially offset by an increase in interest expense of $14.8 million, or 165.7%, to $23.8 million for the nine months ended September 30, 2024, from $9.0 million for the nine months ended September 30, 2023. Similar to the quarterly period, the $22.6 million or 148.0%, increase in year-to-date tax equivalent interest income was primarily due to higher earning-asset yields, coupled with an increase in average earning assets balances primarily related to the MBF merger. The tax-equivalent yield on average earning assets increased 191 basis points to 5.54% for the first nine months of 2024 from 3.63% for the same period in 2023, which resulted in a corresponding increase of $22.6 million to tax-equivalent interest income. The tax-equivalent yield on loans increased 174 basis points, while the tax-equivalent yield on investments increased 77 basis points comparing the year-to-date periods of 2024 and 2023, which resulted in corresponding increases in tax-equivalent interest income of $21.2 million and $1.3 million, respectively. Regarding earning-asset volumes, total average earning assets increased $596.0 million, or 66.7%, to $1.490 billion for the nine months ended September 30, 2024, from $893.5 million for the same period of 2023, which resulted in a corresponding increase in tax-equivalent interest income of $14.9 million. Similar to the quarterly period, this was primarily due to an increase in average total loans which increased $564.5 million, or 103.3%, to $1.111 billion for the nine months ended September 30, 2024, from $546.2 million` for the same comparable period of 2023, which was primarily as a result of the MBF merger and strong organic loan demand. This increase resulted in a corresponding increase in tax-equivalent interest income of $13.7 million.

Previous wording

The $10.3 million, or 189.0%, increase in year-to-date interest expense was largely due to higher funding costs, coupled with an increase in average interest-bearing liabilities related to the MBF merger. The Corporation experienced a 113 basis point increase in the cost of interest-bearing liabilities to 2.74% for the first half of 2024 compared to 1.61% for the same period of 2023, which resulted in a corresponding increase to interest expense of $7.4 million. For the six months ended June 30, 2024, the cost of interest-bearing deposits increased 162 basis points, to 2.20%, compared to 0.58% for the six months ended June 30, 2023. This resulted in a corresponding increase to interest expense of $6.7 million. Average interest-bearing liabilities increased $476.3 million, or 69.6%, to $1.161 billion for the six months ended June 30, 2024, from $684.4 million for the same six months of 2023, resulting in a corresponding increase to interest expense of $2.9 million. Comparing the year-to-date periods of 2024 and 2023, average interest-bearing deposits increased $439.1 million, or 89.0%, to $932.2 million from $493.1 million, respectively, increasing interest expense by $2.1 million. Average total borrowings increased $37.3 million, or 19.5%, to $228.5 million for the six months ended June 30, 2024 compared to $191.2 million for the same period of 2023, resulting in an increase in interest expense of $784,000.

Current wording

The $14.8 million, or 165.7%, increase in year-to-date interest expense was largely due to higher funding costs, coupled with an increase in average interest-bearing liabilities related to the MBF merger. The Corporation experienced a 100 basis point increase in the cost of interest-bearing liabilities to 2.74% for the first nine months of 2024 compared to 1.74% for the same period of 2023, which resulted in a corresponding increase to interest expense of $12.5 million. For the nine months ended September 30, 2024, the cost of interest-bearing deposits increased 165 basis points, to 2.28%, compared to 0.63% for the nine months ended September 30, 2023. This resulted in a corresponding increase to interest expense of $11.7 million. Average interest-bearing liabilities increased $471.4 million, or 68.4%, to $1.160 billion for the nine months ended September 30, 2024, from $688.8 million for the same nine months of 2023, resulting in a corresponding increase to interest expense of $2.4 million. Comparing the year-to-date periods of 2024 and 2023, average interest-bearing deposits increased $467.8 million, or 95.8%, to $956.3 million from $488.5 million, respectively, increasing interest expense by $2.4 million. Average total borrowings increased $3.6 million, or 1.8%, to $203.9 million for the nine months ended September 30, 2024 compared to $200.3 million for the same period of 2023, resulting in an increase in interest expense of $23,000.

Previous wording

The following Average Balance Sheet and Rate Analysis tables presents the average assets, actual income or expense and the average yield on assets, liabilities and stockholders’ equity for the three and six months ended June 30, 2024 and 2023.

Current wording

The following Average Balance Sheet and Rate Analysis tables presents the average assets, actual income or expense and the average yield on assets, liabilities and stockholders' equity for the three and nine months ended September 30, 2024 and 2023.

Previous wording

To enhance the understanding of the effects of volumes (the average balance of earning assets and costing liabilities) and average interest rate fluctuations on the Consolidated Balance Sheets as it pertains to net interest income, the table below reflects these changes for the three and six months ended June 30, 2024 versus the three and six months ended June 30, 2023:

Current wording

To enhance the understanding of the effects of volumes (the average balance of earning assets and costing liabilities) and average interest rate fluctuations on the Consolidated Balance Sheets as it pertains to net interest income, the table below reflects these changes for the three and nine months ended September 30, 2024 versus the three and nine months ended September 30, 2023:

Previous wording

For the three and six months ended June 30, 2024, the Corporation recorded a $36,000 and $137,000 provision for credit losses on loans, respectively, compared to a $4,000 and $422,000 credit, respectively, for the three and six months ended June 30, 2023. For the three and six months ended June 30, 2024, the provision for credit losses primarily reflects an increase in volume in the loan portfolio during the quarters. For the three and six months ended June 30, 2023, the credit was primarily related to improved economic forecasts and ongoing low charge-off experience.

Current wording

For the three and nine months ended September 30, 2024, the Corporation recorded a $151,000 and $288,000 provision for credit losses on loans, respectively, compared to a $172,000 and $594,000 credit, respectively, for the three and nine months ended September 30, 2023. For the three and nine months ended September 30, 2024, the provision for credit losses primarily reflects an increase in volume in the loan portfolio along with changes in qualitative factors. For the three and nine months ended September 30, 2023, the credit was primarily related to improved economic forecasts and ongoing low charge-off experience.

Previous wording

Total non-interest income increased $713,000 or 41.8% to $2.4 million for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. Service charges and fees increased $153,000 due to an increased number of accounts and increased transaction volumes due to the MBF merger. Earnings on bank-owned life insurance increased $116,000 or 102.7% from $113,000 to $229,000 due to an increase in cash surrender values related to the MBF merger. Interchange fees increased $245,000 or 55.4% due to an increase in the volume of transactions due to the MBF merger and continued increase in electronic payments. Other non-interest income increased $156,000 or 68.1% due to incentives received in conjunction with the launch of a debit card reissuance project and an increase in other miscellaneous income.

Current wording

Total non-interest income increased $1.2 million or 78.4% to $2.7 million for the three months ended September 30, 2024, compared to the three months ended September 30, 2023. Service charges and fees increased $250,000 due to an increased number of accounts and increased transaction volumes due to the MBF merger. Earnings on bank-owned life insurance increased $123,000 or 108.8% from $113,000 to $236,000 due to an increase in cash surrender values related to the MBF merger. Gains (losses) on marketable equity securities increased $281,000 or 238.1% due to an increase in the fair value of equity securities held during the third quarter. Interchange fees increased $236,000 or 55.1% due to an increase in the volume of transactions due to the MBF merger and continued increase in electronic payments. Other non-interest income increased $201,000 or 94.4% due primarily to increases in merchant services income and secondary market mortgage servicing fees.

Previous wording

For the six months ended June 30, 2024, total non-interest income increased $1.6 million or 48.6% to $5.0 million, compared to $3.3 million for the six months ended June 30, 2023. Similar to the quarterly period, increases in service charges and fees, earnings on bank-owned life insurance and interchange fees of $243,000, $234,000 and $440,000, respectively, were all related to the MBF merger. Other non-interest income increased $545,000 or 102.8% due primarily to incentives received in conjunction with the launch of a debit card reissuance project as well as a governmental grant recorded in the first quarter in conjunction with the completion of a solar energy project.

Current wording

For the nine months ended September 30, 2024, total non-interest income increased $2.8 million or 57.9% to $7.7 million, compared to $4.9 million for the nine months ended September 30, 2023. Similar to the quarterly period, increases in service charges and fees, earnings on bank-owned life insurance and interchange fees of $493,000, $357,000 and $676,000, respectively, were all related to the MBF merger. Gains (losses) on marketable equity securities increased $273,000 or 103.0% due to an increase in the fair value of equity securities held during the nine months ended September 30, 2024. Other non-interest income increased $746,000 or 100.4% due primarily to incentives received in conjunction with the launch of a debit card reissuance project as well as a governmental grant recorded in the first quarter in conjunction with the completion of a solar energy project.

Previous wording

Total non-interest expense increased $4.3 million or 89.3% from $4.9 million for the three months ended June 30, 2023, to $9.2 million for the three months ended June 30, 2024. The MBF merger has contributed significantly to increases in all components of non-interest expense. Salaries and employee benefits increased $2.2 million, occupancy increased $261,000, data processing and telecommunications increased $572,000, automated teller machine and interchange increased $115,000 and other non-interest expense increased $521,000. All of these increases relate to the closing of the MBF merger on November 11, 2023. Merger-related expenses totaled $201,000 and amortization of intangibles totaled $549,000 for the three months ended June 30, 2024, compared to $449,000 and $0 for the three months ended June 30, 2023.

Current wording

Total non-interest expense increased $4.1 million or 77.6% from $5.3 million for the three months ended September 30, 2023, to $9.4 million for the three months ended September 30, 2024. The MBF merger has contributed significantly to increases in all components of non-interest expense. Salaries and employee benefits increased $2.4 million, occupancy increased $318,000, Pennsylvania shares tax increased $309,000, data processing and telecommunications increased $487,000 and other non-interest expense increased $417,000. All of these increases relate to the closing of the MBF merger on November 11, 2023. Merger-related expenses totaled $43,000 and amortization of intangibles totaled $558,000 for the three months ended September 30, 2024, compared to $757,000 and $0 for the three months ended September 30, 2023.