15 unchanged sentences
Our consumer lending products are primarily originated on a nationwide basis through relationships with dealerships and financing partners.
−Removed: Our commercial banking products and services are delivered through a relationship banking model and include commercial and industrial (“C&I”), construction and investor commercial real estate, single tenant lease financing, public finance, healthcare finance, small business lending, franchise finance and commercial deposits and treasury management.
−Removed: Our C&I team provides credit solutions such as lines of credit, term loans, owner-occupied commercial real estate loans and
−Removed: corporate credit cards on a regional basis to commercial borrowers primarily in the Midwest and Southwest regions of the United States.
−Removed: We primarily offer construction and investor commercial real estate loans in the Midwest and Southwest regions of the United States and single tenant lease financing on a nationwide basis.
+Added: Our commercial banking products and services are delivered through a relationship banking model or through strategic partnerships and include commercial and industrial (“C&I”), construction and investor commercial real estate, single tenant lease financing, public finance, healthcare finance, small business lending, franchise finance and commercial deposits and treasury management.
+Added: Our C&I team provides credit solutions such as lines of credit, term loans, owner-occupied commercial real estate loans and corporate credit cards on a regional basis to commercial borrowers primarily in the Midwest and Southwest regions of the United States.
+Added: We offer construction, investor commercial real estate loans, as well as single tenant lease financing on a nationwide basis.
Our public finance team provides a range of public and municipal lending and leasing products to government entities on a nationwide basis.
3 unchanged sentences
Subsequent to Provide being acquired, the acquiring institution has retained most, if not all, of Provide’s loan origination activity and our healthcare finance loan balances have declined.
−Removed: Our franchise finance business was established in July 2021 in conjunction with our business relationship with ApplePie Capital, a financial technology (“fintech”) company that specializes in providing financing to franchisees in various industry segments.
+Added: Our franchise finance business was established in July 2021 in conjunction with our business relationship with ApplePie Capital, a company that specializes in providing financing to franchisees in various industry segments across the United States.
Our commercial deposits and treasury management team works with the other commercial teams to provide deposit products and treasury management services to our commercial and municipal lending customers as well as pursues commercial deposit opportunities in business segments where we have no credit relationships.
We believe that we differentiate ourselves from larger financial institutions by providing a full suite of services to emerging small businesses and entrepreneurs on a nationwide basis.
−Removed: We are one of the fastest-growing lenders in the Small Business Administration (“SBA”) 7(a) program, closing more than $308.5 million in SBA 7(a) loans during the nine months ended September 30, 2023, and ranked as the 9 th largest SBA 7(a) lender for the SBA’s 2023 fiscal year.
+Added: We are one of the fastest-growing lenders in the Small Business Administration (“SBA”) 7(a) program, closing more than $98.3 million in SBA 7(a) loans during the three months ended March 31, 2024, and currently rank as one of the top 10 largest SBA 7(a) lenders for the SBA’s year-to-date 2024 fiscal year.
We also offer a top-ranked small business checking account product to our country’s entrepreneurs.
We continue to scale up this business with the goal of driving increased earnings and profitability in future periods.
−Removed: We also offer payment, deposit, card and lending products and services through fintech partnerships, which we plan to grow in future periods.
+Added: We also offer payment, deposit, card and lending products and services through partnerships with financial technology companies and platforms (“fintechs”).
With the rapid evolution of technology that enables consumers and small businesses to manage their finances digitally, fintechs are addressing a significantly growing marketplace.
2 unchanged sentences
Furthermore, we believe partnering with select fintechs will allow us to further diversify our revenue sources, acquire lower-cost deposits and pursue additional asset generation capabilities.
−Removed: As of September 30, 2023, the Company had consolidated assets of $5.2 billion, consolidated deposits of $4.1 billion and stockholders’ equity of $347.7 million.
+Added: As of March 31, 2024, the Company had consolidated assets of $5.3 billion, consolidated deposits of $4.3 billion and stockholders’ equity of $366.7 million.
Results of Operations
−Removed: During the third quarter 2023, net income was $3.4 million, or $0.39 diluted earnings per share, compared to third quarter 2022 net income of $8.4 million, or $0.89 diluted earnings per share, representing a decrease in net income of $5.0 million, or 59.6%, and a decrease in diluted earnings per share of $0.50, or 56.2%.
−Removed: During the nine months ended September 30, 2023, net income was $4.3 million, or $0.48 per diluted share, compared to the nine months ended September 30, 2022 net income of $29.2 million, or $3.01 per diluted share, resulting in a decrease in net income of $24.9 million, or 85.4%.
−Removed: The $5.0 million decrease in net income for the third quarter 2023 compared to the third quarter 2022 was due primarily to a decrease of $6.6 million, or 27.6%, in net interest income, an increase of $1.8 million, or 9.8%, in noninterest expense and an increase of $1.1 million, or 118.2%, in provision for credit losses, partially offset by an increase of $3.1 million, or 71.6%, in noninterest income and a decrease of $1.3 million, or 133.0%, in income tax expense.
−Removed: The decrease in net income for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 was due primarily to a $20.3 million, or 27.0%, decrease in net interest income, a $10.2 million, or 355.3%, increase in provision for credit losses and a $4.6 million, or 8.4%, increase in noninterest expense, partially offset by a $6.9 million, or 171.3%, decrease in income tax expense and a $3.3 million, or 21.2%, increase in noninterest income.
−Removed: Due to the steep decline in consumer mortgage volumes and the negative outlook for consumer mortgage lending over the next several years, the Company decided to exit its consumer mortgage business during the first quarter 2023.
−Removed: This included its nationwide digital direct-to-consumer mortgage platform that originated residential loans for sale in the secondary market, as well as its local traditional consumer mortgage and construction-to-permanent business.
−Removed: In connection with this decision, the Company recognized $3.1 million of mortgage operations and exit costs during the first quarter 2023, which contributed to the increase in noninterest expense compared to the nine months ended September 30, 2022.
−Removed: The Company also recognized only $0.1 million of mortgage banking revenue during the nine months ended September 30, 2023, down from $4.5 million in the nine months ended September 30, 2022, as it immediately began winding down its existing pipeline following the decision to exit the business.
−Removed: Additionally, during the nine months ended September 30, 2023, the Company recognized a partial charge-off of $6.9 million related to a commercial and industrial participation loan with a balance of $9.8 million prior to the partial charge-off, that was moved to nonaccrual status late in the first quarter 2023.
−Removed: This action contributed to the increase in the provision for credit losses as compared to the nine months ended September 30, 2022.
−Removed: The Company received payment for the remaining balance of the participation loan during the second quarter 2023.
−Removed: During the third quarter 2023, return on average assets (“ROAA”), return on average shareholders’ equity (“ROAE”), and return on average tangible common equity (“ROATCE”) were 0.26%, 3.79%, and 3.84%, respectively, compared to 0.82%, 9.01%, and 9.13%, respectively, for the third quarter 2022.
−Removed: During the nine months ended September 30, 2023, ROAA, ROAE and ROATCE were 0.12%, 1.59%, and 1.61%, respectively, compared to 0.94%, 10.40%, and 10.53%, respectively, for the nine months ended September 30, 2022.
−Removed: During the third quarter 2022, the Company recognized a $0.1 million write-down of software.
−Removed: Excluding this item, adjusted net income for the third quarter 2022 was $8.5 million and adjusted diluted earnings per share was $0.90.
−Removed: Additionally, for the third quarter 2022, adjusted ROAA, adjusted ROAE and adjusted ROATCE were 0.83%, 9.12% and 9.24%, respectively.
−Removed: Excluding the impact of exiting consumer mortgage and the partial charge-off, adjusted net income for the nine months ended September 30, 2023 was $12.1 million and adjusted diluted earnings per share was $1.35.
−Removed: Additionally, for the nine months ended September 30, 2023, adjusted ROAA, adjusted ROAE and adjusted ROATCE were 0.34%, 4.50% and 4.56%, respectively.
−Removed: During the nine months ended September 30, 2022, the Company recognized a nonrecurring consulting fee associated with a special project of $0.9 million, paid a $0.5 million discretionary inflation bonus to certain employees, recognized accelerated equity compensation expense of $0.3 million related to several retirements, incurred acquisition-related expenses of $0.3 million and recognized a $0.1 million write-down of software.
−Removed: Excluding these items, adjusted net income for the nine months ended September 30, 2022 was $30.8 million and adjusted diluted earnings per share was $3.17.
−Removed: Additionally, for the nine months ended September 30, 2022, adjusted ROAA, adjusted ROAE and adjusted ROATCE were 0.99%, 11.00% and 11.13%, respectively.
+Added: During the first quarter 2024, net income was $5.2 million, or $0.59 diluted earnings per share, compared to a net loss of $3.0 million, or $0.33 diluted loss per share, during the first quarter 2023, representing an increase in net income of $8.2 million and an increase in diluted earnings per share of $0.92.
+Added: The $8.2 million increase in net income for the first quarter 2024 compared to the first quarter 2023 was due primarily to a $7.0 million, or 74.0%, decrease in the provision for credit losses, an increase of $2.9 million, or 53.3%, in noninterest income and a $1.2 million, or 5.9%, increase in net interest income, partially offset by a $2.8 million increase in income tax expense.
+Added: During the first quarter 2024, return on average assets (“ROAA”), return on average shareholders’ equity (“ROAE”), and return on average tangible common equity (“ROATCE”) were 0.40%, 5.64%, and 5.71%, respectively, compared to (0.26%), (3.37%), and (3.41%), respectively, for the first quarter 2023.
+Added: During the first quarter 2023, the Company had a partial charge-off of a C&I participation loan of $6.9 million, $3.1 million of mortgage operations and exit costs and $0.1 million of mortgage revenue.
+Added: Excluding these items, adjusted net income for the first quarter 2023 was $4.8 million and adjusted diluted earnings per share was $0.53.
+Added: Additionally, for the first quarter 2023, adjusted ROAA, adjusted ROAE and adjusted ROATCE were 0.43%, 5.36% and 5.44%, respectively.
Refer to the “Reconciliation of Non-GAAP Financial Measures” section of Part I, Item 2 of this report, Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information.
5 unchanged sentences
Three Months Ended
−Removed: September 30, 2023 June 30, 2023 September 30, 2022
+Added: March 31, 2024 December 31, 2023 March 31, 2023
(dollars in thousands) Average Balance Interest /Dividends Yield /Cost Average Balance Interest /Dividends Yield /Cost Average Balance Interest /Dividends Yield /Cost
6 unchanged sentences
Total interest-earning assets 5,030,216 68,165 5.45 % 4,984,133 66,272 5.28 % 4,499,782 52,033 4.69 %
−Removed: Allowance for credit losses (35,601) (36,671) (29,423)
+Added: Allowance for credit losses - loans (38,611) (36,792) (35,075)
Noninterest-earning assets 216,331 206,944 182,449
29 unchanged sentences
See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of this measure to its most directly comparable GAAP measure.
−Removed: Nine Months Ended
−Removed: September 30, 2023 September 30, 2022
−Removed: (dollars in thousands) Average Balance Interest /Dividends Yield /Cost Average Balance Interest /Dividends Yield /Cost
−Removed: Interest-earning assets
−Removed: Loans, including
−Removed: loans held-for-sale $ 3,647,243 $ 139,647 5.12 % $ 3,057,768 $ 100,246 4.38 %
−Removed: Securities - taxable 531,197 11,742 2.96 % 547,759 7,489 1.83 %
−Removed: Securities - non-taxable 72,829 2,570 4.72 % 77,236 1,068 1.85 %
−Removed: Other earning assets 499,835 19,211 5.14 % 321,262 2,436 1.01 %
−Removed: Total interest-earning assets 4,751,104 173,170 4.87 % 4,004,025 111,239 3.71 %
−Removed: Allowance for credit losses (35,784) (28,671)
−Removed: Noninterest-earning assets 190,590 163,512
−Removed: Total assets $ 4,905,910 $ 4,138,866
−Removed: Interest-bearing liabilities
−Removed: Interest-bearing demand deposits $ 360,573 $ 4,540 1.68 % $ 336,311 $ 1,429 0.57 %
−Removed: Savings accounts 31,494 202 0.86 % 61,647 232 0.50 %
−Removed: Money market accounts 1,293,728 37,151 3.84 % 1,416,984 8,006 0.76 %
−Removed: BaaS - brokered deposits 23,246 716 4.12 % 79,613 1,019 1.71 %
−Removed: Certificates and brokered deposits 1,971,705 59,676 4.05 % 1,122,097 12,339 1.47 %
−Removed: Total interest-bearing deposits 3,680,746 102,285 3.72 % 3,016,652 23,025 1.02 %
−Removed: Other borrowed funds 719,577 15,788 2.93 % 613,609 12,790 2.79 %
−Removed: Total interest-bearing liabilities 4,400,323 118,073 3.59 % 3,630,261 35,815 1.32 %
−Removed: Noninterest-bearing deposits 126,647 115,142
−Removed: Other noninterest-bearing liabilities 19,535 18,273
−Removed: Total liabilities 4,546,505 3,763,676
−Removed: Shareholders’ equity 359,405 375,190
−Removed: Total liabilities and shareholders’ equity $ 4,905,910 $ 4,138,866
−Removed: Net interest income $ 55,097 $ 75,424
−Removed: Interest rate spread 1
−Removed: Net interest margin 2
−Removed: Net interest margin - FTE 3
−Removed: 1 Yield on total interest-earning assets minus cost of total interest-bearing liabilities.
−Removed: 2 Net interest income divided by total average interest-earning assets (annualized).
−Removed: 3 On an FTE basis assuming a 21% tax rate.
−Removed: Net interest income is adjusted to reflect income from assets such as municipal loans and securities that are exempt from Federal income taxes.
−Removed: This is to recognize the income tax savings that facilitates a comparison between taxable and tax-exempt assets.
−Removed: The Company believes that it is a standard practice in the banking industry to present net interest margin and net interest income on a fully-taxable equivalent basis, as these measures provide useful information to make peer comparisons.
−Removed: Net interest margin - FTE represents a non-GAAP financial measure.
−Removed: See “Reconciliation of Non-GAAP Financial Measures” for a reconciliation of this measure to its most directly comparable GAAP measure.
Rate/Volume Analysis
1 unchanged sentence
The change in interest not due solely to volume or rate has been allocated in proportion to the absolute dollar amounts of the change in each.
−Removed: Three Months Ended September 30, 2023 vs.
−Removed: June 30, 2023 Due to Changes in Three Months Ended September 30, 2023 vs.
−Removed: September 30, 2022 Due to Changes in Nine Months Ended September 30, 2023 vs.
−Removed: September 30, 2022 Due to Changes in
−Removed: (in thousands) Volume Rate Net Volume Rate Net Volume Rate Net
+Added: Three Months Ended March 31, 2024 vs.
+Added: December 31, 2023 Due to Changes in Three Months Ended March 31, 2024 vs.
+Added: March 31, 2023 Due to Changes in
+Added: (in thousands) Volume Rate Net Volume Rate Net
Interest income
9 unchanged sentences
Increase (decrease) in net interest income $ 61 $ 866 $ 927 $ 1,372 $ (212) $ 1,160
−Removed: Net interest income for the third quarter 2023 was $17.4 million, a decrease of $6.6 million, or 27.6%, compared to $24.0 million for the third quarter 2022.
−Removed: The decrease in net interest income was the result of a $30.5 million, or 202.1%, increase in total interest expense to $45.6 million for the third quarter 2023 from $15.1 million for the third quarter 2022, partially offset by a $23.9 million, or 61.2%, increase in total interest income to $63.0 million for the third quarter 2023 from $39.1 million for the third quarter 2022.
−Removed: Net interest income for the nine months ended September 30, 2023 was $55.1 million, a decrease of $20.3 million, or 27.0%, compared to $75.4 million for the nine months ended September 30, 2022.
−Removed: The decrease in net interest income was the result of an $82.3 million, or 229.7%, increase in total interest expense to $118.1 million for the nine months ended September 30, 2023 from $35.8 million for the nine months ended September 30, 2022.
−Removed: The increase in total interest expense was partially offset by a $61.9 million, or 55.7%, increase in total interest income to $173.2 million for the nine months ended September 30, 2023 from $111.2 million for the nine months ended September 30, 2022.
−Removed: The increase in total interest income for the third quarter 2023 compared to third quarter 2022 was due primarily to a $14.3 million, or 41.1%, increase in interest earned on loans, $7.6 million, or 604.4%, increase in income from other earning assets and a $2.0 million, or 63.3%, increase in interest earned on securities.
−Removed: The increase in income from loans was due primarily to a 91 bp increase in the yield earned on loans, including loans held-for-sale, as well as an increase of $525.2 million, or 16.5%, in the average balance of loans, including loans held-for-sale, compared to the third quarter 2022.
−Removed: The yield earned on other earning assets increased 275 bps and the average balance of other earning assets increased $464.9 million, or 246.7%.
+Added: Net interest income for the first quarter 2024 was $20.7 million, an increase of $1.2 million, or 5.9%, compared to $19.6 million for the first quarter 2023.
+Added: The increase in net interest income was the result of a $16.1 million, or 31.0%, increase in total interest income to $68.2 million for the first quarter 2024 from $52.0 million for the first quarter 2023, partially offset by a $15.0 million, or 46.1%, increase in total interest expense to $47.4 million for the first quarter 2024 from $32.5 million for the first quarter 2023.
+Added: The increase in total interest income for the first quarter 2024 compared to first quarter 2023 was due primarily to an increase in interest earned on loans, resulting from an increase of 77 bps in the yield on loans, including loans held-for-sale, as well as an increase of $309.4 million, or 8.6%, in the average balance of loans, including loans held-for-sale.
+Added: The yield earned on other earning assets also increased 99 bps and the average balance of other earning assets increased $102.8 million, or 31.0%.
The increase in the average balance of other earning assets was due primarily to carrying higher cash balances.
−Removed: The average balance of securities increased $15.9 million, or 2.6%, while the yield earned on the securities portfolio increased 123 bps for the third quarter 2023 compared to the third quarter 2022.
−Removed: The increase in the yields earned on loans, other earning assets and securities was due to the continued rise in interest rates during the fourth quarter 2022 and into 2023.
−Removed: The yield on funded portfolio originations was 8.92% in the third quarter 2023, an increase of 362 bps compared to the third quarter 2022.
−Removed: The increase in total interest income for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 was due primarily to an increase in interest earned on loans resulting from an increase of 74 bps in the yield on loans, including loans held-for-sale, as well as an increase of $589.5 million, or 19.3%, in the average balance of loans, including loans held-for-sale.
−Removed: The yield on other earning assets increased 413 bps and the average balance of other earning assets increased $178.6 million, or 55.6%.
−Removed: In addition, while the average balance of securities decreased $21.0 million, or 3.4%, the yield earned on the securities portfolio increased 134 bps for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022.
−Removed: The increase in the yields earned on loans, other earning assets and securities was due to the continued rise in interest rates during the fourth quarter 2022 and into 2023.
−Removed: The yield on funded portfolio originations was 8.29% for the nine months ended September 30, 2023, an increase of 324 bps compared to the nine months ended September 30, 2022.
−Removed: The increase in total interest expense for the third quarter 2023 compared to the third quarter 2022 was due primarily to increases of $20.8 million, or 471.9%, in interest expense associated with certificates and brokered deposits, $8.0 million, or 173.7%, in interest expense associated with money market accounts, $1.6 million, or 286.8%, in interest expense associated with interest-bearing demand deposits, and $0.7 million, or 15.6%, in interest expense associated with other borrowed funds.
−Removed: The increase in interest expense related to certificates and brokered deposits was driven by an increase of 279 bps in the cost of these deposits, as well as an increase of $1.2 billion, or 115.4%, in the average balance of these deposits.
−Removed: The increase in the average balance of these deposits was driven by strong consumer and small business demand for certificates of deposits in 2023, as well as the funding of brokered deposits earlier in 2023 to supplement on-balance sheet liquidity.
−Removed: The increase in interest expense related to money market accounts was driven primarily by an increase of 271 bps in the cost of these deposits, partially offset by a decrease in the average balance of these deposits of $139.0 million, or 10.2%.
−Removed: The increase in interest expense related to interest-bearing demand deposits was due primarily to a 154 bp increase in the cost of these deposits, as well as an increase of $45.4 million, or 13.3%, in the average balance of these deposits.
−Removed: The increase in interest expense related to other borrowed funds was due primarily to additional long-term FHLB advances in the second half of 2022 at rates lower than market deposit costs, as the cost of the borrowed funds increased only 7 bps while the average balance increased 12.8%.
−Removed: The increase in the overall cost of deposits was due primarily to the continued rise in interest rates during the fourth quarter 2022 and into 2023.
−Removed: However, the pace of increase in deposit costs during the third quarter was the slowest experienced by the Company in the past five quarters.
−Removed: The increase in total interest expense for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 was due primarily to increases of $47.3 million, or 383.6%, in interest expense associated with certificates and brokered deposits, $29.1 million, or 364.0%, in interest expense associated with money market accounts, $3.1 million, or 217.7%, in interest expense associated with interest-bearing demand deposits and $3.0 million, or 23.4%, in interest expense associated with other borrowed funds.
+Added: The average balance of securities increased $118.2 million, or 20.2%, while the yield earned on the securities portfolio increased 76 bps for the first quarter 2024 compared to the first quarter 2023.
+Added: The increase in the yields earned on loans, other earning assets and securities was due to the impact of the continued elevated interest rate environment on both existing and newly-originated interest-earnings assets.
+Added: As a result of the higher interest rate environment, the yield on funded portfolio originations was 8.84% in the first quarter 2024, an increase of 108 bps compared to the first quarter 2023.
+Added: The increase in total interest expense for the first quarter 2024 compared to the first quarter 2023 was due primarily to increases of $12.5 million, or 90.5%, in interest expense associated with certificates and brokered deposits.
The increase in interest expense related to certificates and brokered deposits was driven by an increase of 132 bps in the cost of these deposits, as well as an increase of $598.5 million, or 36.3%, in the average balance of these deposits.
−Removed: The increase in the average balance of these deposits was driven by strong consumer and small business demand for certificates of deposits in 2023, as well as the funding of brokered deposits during the fourth quarter 2022 and earlier in 2023 to supplement on-balance sheet liquidity.
−Removed: The increase in interest expense related to money market accounts was driven primarily by an increase of 308 bps in the cost of these deposits, partially offset by a decrease of $123.3 million, or 8.7%, in the average balance of these deposits.
−Removed: The increase in interest expense related to interest-bearing demand deposits was due primarily to a 111 bp increase in the cost of these deposits, as well as an increase of $24.3 million, or 7.2%, in the average balance of these deposits.
−Removed: The increase in interest expense related to other borrowed funds was due primarily to additional long-term FHLB advances in the second half of 2022 at rates lower than market deposit costs, as the cost of the borrowed funds increased only 14 bps while the average balance increased 17.3%.
−Removed: The increase in the overall cost of deposits was due primarily to the continued rise in interest rates during the fourth quarter 2022 and into 2023.
−Removed: However, as mentioned above, the pace of increase in deposit costs during the third quarter was the slowest experienced by the Company in the past five quarters.
−Removed: Overall, the cost of total interest-bearing liabilities for the third quarter 2023 increased 224 bps to 3.91% from 1.67% for the third quarter 2022.
−Removed: The cost of total interest-bearing liabilities for the nine months ended September 30, 2023 increased 227 bps to 3.59% from 1.32% for the nine months ended September 30, 2022.
−Removed: The increase in the cost of funds for both the three and nine months ended September 30, 2023 reflects the rapid rise in interest rates in late 2022 and 2023.
−Removed: Net interest margin (“NIM”) was 1.39% for the third quarter 2023 compared to 2.40% for the third quarter 2022, a decrease of 101 bps.
−Removed: On a fully-taxable equivalent (“FTE”) basis, NIM was 1.49% for the third quarter 2023 compared to 2.53% for the third quarter 2022, a decrease of 104 bps.
−Removed: NIM was 1.55% for the nine months ended September 30, 2023 compared to 2.52% for the nine months ended September 30, 2022, a decrease of 97 bps.
−Removed: FTE NIM was 1.66% for the nine months ended September 30, 2023 compared to 2.65% for the nine months ended September 30, 2022, a decrease of 99 bps.
−Removed: The decrease in both the three and nine months ended September 30, 2023 NIM and FTE NIM compared to the three and nine months ended September 30, 2022 reflects the increase in the cost of interest-bearing liabilities, partially offset by the increase in earning asset yields noted above.
+Added: The increase in the average balance of these deposits was driven by strong consumer and small business demand for certificates of deposits, partially offset by lower brokered deposit balances as the Company used on-balance sheet liquidity to pay down balances throughout 2023 and the first quarter 2024.
+Added: Overall, the cost of total interest-bearing liabilities for the first quarter 2024 increased 87 bps to 4.06% from 3.19% for the first quarter 2023.
+Added: The increase in the cost of funds for the three months ended March 31, 2024 reflects the impact of the continued elevated interest rate environment throughout 2023 and into 2024.
+Added: Net interest margin (“NIM”) was 1.66% for the first quarter 2024 compared to 1.76% for the first quarter 2023, a decrease of 10 bps.
+Added: On a fully-taxable equivalent (“FTE”) basis, NIM was 1.75% for the first quarter 2023 compared to 1.89% for the first quarter 2023, a decrease of 14 bps.
+Added: The decrease in the first quarter 2024 NIM and FTE NIM compared to the first quarter 2023 reflects the increase in the cost of interest-bearing liabilities of 87 bps, partially offset by the increase in earning asset yields noted above.
Noninterest Income
−Removed: The following table presents noninterest income for the last five completed fiscal quarters and the nine months ended September 30, 2023 and 2022.
−Removed: Three Months Ended Nine Months Ended
−Removed: (in thousands) September 30,
−Removed: 2023 June 30,
−Removed: 2023 March 31,
+Added: The following table presents noninterest income for the last five completed fiscal quarters.
+Added: Three Months Ended
+Added: (in thousands) March 31,
2024 December 31,
2023 September 30,
−Removed: 2022 September 30,
−Removed: 2023 September 30,
+Added: 2023 June 30,
+Added: 2023 March 31,
Service charges and fees $ 220 $ 216 $ 208 $ 218 $ 209
5 unchanged sentences
Total noninterest income $ 8,347 $ 7,401 $ 7,407 $ 5,871 $ 5,446
−Removed: During the third quarter 2023, noninterest income was $7.4 million, representing an increase of $3.1 million, or 71.6%, compared to $4.3 million for the third quarter 2022.
−Removed: The increase in noninterest income was due primarily to increases in gain on sale of loans, net loan servicing revenue and other income, partially offset by a decrease in revenue from mortgage banking activities.
−Removed: The increase of $2.9 million, or 105.3%, in gain on sale of loans was due to an increase in the volume of U.S.
−Removed: Small Business Administration (“SBA”) 7(a) guaranteed loan sales, partially offset by lower net premiums.
+Added: During the first quarter 2024, noninterest income was $8.3 million, representing an increase of $2.9 million, or 53.3%, compared to $5.4 million for the first quarter 2023.
+Added: The increase in noninterest income was due primarily to increases in gain on sale of loans, other income and net loan servicing revenue, partially offset by a decrease in revenue from mortgage banking activities.
+Added: The increase of $2.5 million, or 60.9%, in gain on sale of loans was due to an increase in U.S.
+Added: Small Business Administration (“SBA”) 7(a) guaranteed loan sales, as well as an increase in gain on sale margins.
The increase of $0.3 million, or 89.7%, in other income is due primarily to income from fund investments.
−Removed: The increase in loan servicing revenue reflects the growth in the Company’s SBA servicing portfolio, as origination volume has increased compared to the third quarter 2022.
−Removed: The decrease in mortgage banking revenue was due to the Company’s exit from the mortgage business in the first quarter 2023.
−Removed: During the nine months ended September 30, 2023, noninterest income was $18.7 million, an increase of $3.3 million, or 21.2%, compared to $15.5 million for the nine months ended September 30, 2022.
−Removed: The increase in noninterest income was due primarily to increases in gain on sale of loans, net loan servicing revenue and other income, partially offset by a decrease in mortgage banking activities.
−Removed: The increase of $6.0 million, or 70.4%, in gain on sale of loans was due to an increase in the volume of SBA 7(a) guaranteed loan sales, partially offset by lower net premiums.
−Removed: The increase in net loan servicing revenue was due to growth in the balance of the Company’s SBA 7(a) servicing portfolio, as well as slower prepayment speeds in first nine months of 2023 compared to first nine months of 2022.
−Removed: The increase in other income was due primarily to income from fund investments.
+Added: The increase in loan servicing revenue was due primarily to growth in the balance of the Company’s SBA 7 (a) servicing portfolio.
The decrease in mortgage banking revenue was due to the Company’s exit from the mortgage business in the first quarter 2023.
Noninterest Expense
−Removed: The following table presents noninterest expense for the last five completed fiscal quarters and the nine months ended September 30, 2023 and 2022.
−Removed: Three Months Ended Nine Months Ended
−Removed: (in thousands) September 30,
−Removed: 2023 June 30,
−Removed: 2023 March 31,
+Added: The following table presents noninterest expense for the last five completed fiscal quarters.
+Added: Three Months Ended
+Added: (in thousands) March 31,
2024 December 31,
2023 September 30,
−Removed: 2022 September 30,
−Removed: 2023 September 30,
+Added: 2023 June 30,
+Added: 2023 March 31,
Salaries and employee benefits $ 11,796 $ 11,055 $ 11,767 $ 10,706 $ 11,794
7 unchanged sentences
Total noninterest expense $ 21,023 $ 20,056 $ 19,756 $ 18,670 $ 20,954
−Removed: Noninterest expense for the third quarter 2023 was $19.8 million, compared to $18.0 million for the third quarter 2022.
−Removed: The increase of $1.8 million, or 9.8%, was due primarily to a $1.3 million increase in salaries and employee benefits, a $0.8 million increase in deposit insurance premium, a $0.5 million increase in other, a $0.2 million increase in data processing and a $0.2 million increase in loan expenses, partially offset by a $0.5 million decrease in marketing, advertising and promotion expense and a $0.5 million decrease in premises and equipment.
−Removed: The increase in salaries and employee benefits was due primarily to increased headcount and higher incentive compensation in small business and construction lending.
+Added: Noninterest expense for the first quarter 2024 and 2023 was $21.0 million, comparable to the first quarter 2023.
+Added: The increase of less than $0.1 million, or 0.3%, was due primarily to a $0.6 million increase in deposit insurance premium and a $0.2 million increase in other, partially offset by a $0.5 million decrease in loan expenses, $0.1 million decrease in marketing, advertising and promotion expense and a $0.1 million decrease in data processing.
The increase in deposit insurance premium was due primarily to year-over-year asset growth and changes in the composition of the loans and deposit portfolios.
The increase in other expense was due to various expenses, none of which were individually significant.
−Removed: The increase in data processing expense was due to variable deposit activity-based expenses.
−Removed: The decrease in marketing, advertising and promotion expense was due primarily to cost savings from the Company’s exit from the mortgage business in the first quarter 2023.
−Removed: The decrease in premises and equipment was due primarily to a decrease in property tax expense.
−Removed: Noninterest expense for the nine months ended September 30, 2023 was $59.4 million, compared to $54.8 million for the nine months ended September 30, 2022.
−Removed: The increase of $4.6 million, or 8.4%, was due primarily to increases of $3.1 million in salaries and benefits, $1.7 million in deposit insurance premium, $1.0 million in loan expenses and $0.7 million in other expenses, partially offset by a $1.7 million decrease in consulting and professional fees and a $0.7 million decrease in marketing, advertising and promotion expense.
−Removed: During the nine months ended September 30, 2022, the Company paid a $0.5 million discretionary inflation bonus to certain employees and recognized accelerated equity compensation expense of $0.3 million related to several retirements.
−Removed: Excluding these items, salaries and employee benefits increased $3.9 million in 2023.
−Removed: The increase in salaries and employee benefits was due primarily to mortgage exit costs, as well as an increase in headcount and higher incentive compensation in small business and construction lending.
−Removed: The increase in deposit insurance premium was due mainly to year-over-year asset growth, as well as the composition of loans and deposits.
−Removed: The increase in loan expenses was due primarily to mortgage exit costs and accrued contract expenses, as well as higher third-party loan servicing fees and other miscellaneous lending costs.
−Removed: The increase in other expense was due to various expenses, none of which were individually significant.
−Removed: The decrease in consulting and professional fees was due primarily to consulting fees related to a special project that occurred in the first quarter 2022, as well as lower legal fees in 2023.
+Added: The decrease in loan expenses was due primarily to expenses incurred in the first quarter 2023 as a result of the Company’s exit from the mortgage business, partially offset by higher third-party loan servicing fees and other miscellaneous lending costs.
The decrease in marketing, advertising and promotion expense was due primarily to cost savings from the Company’s exit from the mortgage business in the first quarter 2023.
−Removed: The Company recorded an income tax benefit of $0.3 million for the third quarter 2023, compared to an income tax provision of $1.0 million and an effective tax rate of 10.5% for the third quarter 2022.
−Removed: The Company recorded an income tax benefit of $2.9 million for the nine months ended September 30, 2023, compared to an income tax provision of $4.1 million and an effective tax rate of 12.2% for the nine months ended September 30, 2022.
−Removed: The income tax benefits recognized during 2023 reflect the impact of the partial charge-off of the commercial and industrial participation loan and the mortgage exit costs earlier in the year, as well as the benefit of tax exempt income relative to stated pre-tax income.
+Added: The decrease in data processing was due primarily to variable deposit activity-based expenses.
+Added: In the first quarter 2023, the Company incurred $2.2 million in severance costs as a result of its decision to exit the mortgage business.
+Added: Excluding these costs, salaries and employee benefits increased $2.2 million, or 22.4%, in the first quarter 2024, compared to the first quarter 2023.
+Added: The increase was due primarily to continued staffing growth and higher incentive compensation in small business lending, as well as higher incentive compensation accruals based on the increase in net income in the first quarter 2024 compared to first quarter 2023.
+Added: The Company recorded an income provision tax provision of $0.4 million and an effective tax rate of 7.6% for the first quarter 2024, compared to an income tax benefit of $2.3 million for the first quarter 2023.
Financial Condition
2 unchanged sentences
Balance Sheet Data:
+Added: 2024 December 31,
2023 September 30,
1 unchanged sentence
2023 March 31,
−Removed: 2023 December 31,
−Removed: 2022 September 30,
Total assets $ 5,340,667 $ 5,167,572 $ 5,169,023 $ 4,947,049 $ 4,721,319
7 unchanged sentences
Total shareholders’ equity 366,739 362,795 347,744 354,332 355,572
−Removed: Total assets increased $625.9 million, or 13.8%, to $5.2 billion at September 30, 2023 compared to $4.5 billion at December 31, 2022.
−Removed: The increase was due primarily to increases in loan and cash balances, and was funded by growth in deposit balances of $642.3 million, or 18.7%.
−Removed: As of September 30, 2023, total shareholders’ equity was $347.7 million, a decrease of $17.2 million, or 4.7%, compared to December 31, 2022.
−Removed: The decrease in shareholders’ equity was due primarily to stock repurchase activity, an increase in accumulated other comprehensive loss and the day 1 CECL adjustment, partially offset by net income earned during the period.
−Removed: Tangible common equity totaled $343.1 million as of September 30, 2023, representing a decrease of $17.2 million, or 4.8%, compared to December 31, 2022.
−Removed: The ratio of total shareholders’ equity to total assets decreased to 6.73% as of September 30, 2023 from 8.03% as of December 31, 2022, and the ratio of tangible common equity to tangible assets decreased to 6.64% as of September 30, 2023 from 7.94% as of December 31, 2022.
−Removed: Book value per common share decreased 0.4% to $40.11 as of September 30, 2023 from $40.26 as of December 31, 2022.
−Removed: Tangible book value per share decreased 0.4% to $39.57 as of September 30, 2023 from $39.74 as of December 31, 2022.
−Removed: The slight decline in both book value per common share and tangible book value per share reflects the declines in total shareholders’ equity and tangible common equity, partially offset by the effect of stock repurchase activity during the year.
+Added: Total assets increased $173.1 million, or 3.3%, to $5.3 billion at March 31, 2024 compared to $5.2 billion at December 31, 2023.
+Added: The increase was due primarily to increases in cash balances and loans, driven by growth in deposit balances of $206.8 million, or 5.1%.
+Added: As of March 31, 2024, total shareholders’ equity was $366.7 million, an increase of $3.9 million, or 1.1%, compared to December 31, 2023.
+Added: The increase in shareholders’ equity was due primarily to the net income earned during the quarter, partially offset by an increase in accumulated other comprehensive loss.
+Added: Tangible common equity totaled $362.1 million as of March 31, 2024, representing an increase of $3.9 million, or 1.1%, compared to December 31, 2023.
+Added: The ratio of total shareholders’ equity to total assets decreased to 6.87% as of March 31, 2024 from 7.02% as of December 31, 2023, and the ratio of tangible common equity to tangible assets decreased to 6.79% as of March 31, 2024 from 6.94% as of December 31, 2023.
+Added: Book value per common share increased 1.0% to $42.37 as of March 31, 2024 from $41.97 as of December 31, 2023.
+Added: Tangible book value per share increased 1.0% to $41.83 as of March 31, 2024 from $41.43 as of December 31, 2023.
+Added: The increase in both book value per common share and tangible book value per share was driven primarily by the increase in total shareholders’ equity and tangible common equity.
Refer to the “Reconciliation of Non-GAAP Financial Measures” section of Part I, Item 2 of this report, Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information.
1 unchanged sentence
The following table presents a summary of the Company’s loan portfolio for the last five completed fiscal quarters.
−Removed: (dollars in thousands) September 30,
−Removed: 2023 June 30,
−Removed: 2023 March 31,
+Added: (dollars in thousands) March 31,
2024 December 31,
2023 September 30,
+Added: 2023 June 30,
+Added: 2023 March 31,
Commercial loans
17 unchanged sentences
Total loans 3,909,804 100.0 % 3,840,220 100.0 % 3,735,068 100.0 % 3,646,832 100.0 % 3,607,242 100.0 %
−Removed: Allowance for credit losses 2
−Removed: (36,452) (36,058) (36,879) (31,737) (29,866)
+Added: Allowance for credit losses - loans (40,891) (38,774) (36,452) (36,058) (36,879)
Net loans $ 3,868,913 $ 3,801,446 $ 3,698,616 $ 3,610,774 $ 3,570,363
−Removed: 1 Includes carrying value adjustments of $29.0 million, $30.5 million, $31.5 million, $32.5 million and $33.9 million related to terminated interest rate swaps associated with public finance loans as of September 30, 2023, June 30, 2023, March 31, 2023, December 31, 2022 and September 30, 2022, respectively.
−Removed: 2 Beginning January 1, 2023, the allowance calculation is based on the CECL methodology.
−Removed: Prior to January 1, 2023, the allowance calculation was based on the incurred loss methodology.
−Removed: Total loans were $3.7 billion as of September 30, 2023, an increase of $235.7 million, or 6.7%, compared to December 31, 2022.
−Removed: Total commercial loan balances were $2.9 billion as of September 30, 2023, up $188.9 million, or 7.0%, from December 31, 2022.
−Removed: Total consumer loan balances were $786.5 million as of September 30, 2023, an increase of $53.2 million, or 7.3%, compared to December 31, 2022.
−Removed: Compared to December 31, 2022, the increase in commercial loan balances was driven by growth in the franchise finance, small business lending, construction and investor commercial real estate portfolios.
−Removed: The increase was partially offset by planned decreases in the fixed-rate public finance and single tenant lease financing, as well as continued runoff in the healthcare finance portfolio.
−Removed: The increase in consumer loans was due to higher balances in the recreational vehicles and trailers loan portfolios, in addition to funded residential mortgages and draws on construction/perm loans that were in the pipeline prior to exiting the business.
+Added: 1 Includes carrying value adjustments of $26.9 million, $27.8 million, $29.0 million, $30.5 million and $31.5 million related to terminated interest rate swaps associated with public finance loans as of March 31, 2024, December 31, 2023, September 30, 2023, June 30, 2023 and March 31, 2023, respectively.
+Added: Total loans were $3.9 billion as of March 31, 2024, an increase of $69.6 million, or 1.8%, compared to December 31, 2023.
+Added: Total commercial loan balances were $3.1 billion as of March 31, 2024, up $75.2 million, or 2.5%, from December 31, 2023.
+Added: Total consumer loan balances were $793.4 million as of March 31, 2024, a decrease of $3.5 million, or 0.4%, compared to December 31, 2023.
+Added: Compared to December 31, 2023, the increase in commercial loan balances was driven by growth in the construction, small business lending and franchise finance portfolios.
+Added: These increases were partially offset by a decrease in the fixed-rate public finance portfolio, as well as continued runoff in the healthcare finance portfolio.
+Added: The slight decrease in consumer loan balances was due primarily to a decrease in the residential mortgage portfolio, partially offset by an increase in the trailers portfolio.
Asset Quality
2 unchanged sentences
The following table provides a summary of the Company’s nonperforming assets for the last five completed fiscal quarters.
−Removed: (dollars in thousands) September 30,
−Removed: 2023 June 30,
−Removed: 2023 March 31,
+Added: (dollars in thousands) March 31,
2024 December 31,
2023 September 30,
+Added: 2023 June 30,
+Added: 2023 March 31,
Nonaccrual loans
4 unchanged sentences
9,532 6,824 4,443 3,729 3,797
+Added: Franchise finance 295 303 — — —
Total commercial loans 9,827 7,127 4,443 5,134 8,074
5 unchanged sentences
Past Due 90 days and accruing loans
+Added: Commercial loans:
+Added: Franchise finance 230 — — — —
+Added: Total commercial loans 230 — — — —
Consumer loans:
19 unchanged sentences
2 Includes the impact of nonperforming small business lending loans, which are guaranteed by the U.S.
−Removed: Total nonperforming loans decreased $1.6 million, or 21.8%, to $5.9 million as of September 30, 2023 compared to $7.5 million as of December 31, 2022 due primarily to an owner-occupied commercial real estate loan that was returned to accrual status during the quarter.
−Removed: Total nonperforming assets decreased $1.5 million, or 19.8%, to $6.1 million as of September 30, 2023, compared to $7.6 million as of December 31, 2022, due primarily to the owner-occupied commercial real estate loan mentioned above, partially offset by an increase in OREO.
−Removed: As of September 30, 2023, the Company had one residential mortgage property in OREO with a carrying value of $0.1 million.
−Removed: As of December 31, 2022, the Company did not own any OREO.
−Removed: Troubled Debt Restructurings
−Removed: With the adoption ASU 2022-02, effective January 1, 2023, TDR accounting was eliminated.
−Removed: Total TDRs as of December 31, 2022 were $5.5 million.
−Removed: There were two portfolio residential mortgage loans and one small business lending loan classified as new TDRs during the twelve months ended December 31, 2022 with pre-modification and post-modification balances totaling $1.6 million.
−Removed: The following table provides a summary of troubled debt restructurings.
−Removed: (in thousands) September 30,
−Removed: 2023 June 30,
−Removed: 2023 March 31,
+Added: Total nonperforming loans increased $3.1 million, or 31.0%, to $13.1 million as of March 31, 2024 compared to $10.0 million as of December 31, 2023 due primarily to an increase in nonperforming loans in small business lending and residential mortgage loans during the quarter.
+Added: Total nonperforming assets increased $3.1 million, or 30.0%, to $13.4 million as of March 31, 2024, compared to $10.4 million as of December 31, 2023, due primarily to the increases in nonperforming small business lending and residential mortgage loans mentioned above.
+Added: The Company had two residential mortgage properties in OREO with a carrying value of $0.4 million at both March 31, 2024 and December 31, 2023.
+Added: Allowance for Credit Losses - Loans
+Added: The following table provides a rollforward of the allowance for credit losses for the last five completed fiscal quarters.
+Added: Three Months Ended
+Added: (dollars in thousands) March 31,
2024 December 31,
2023 September 30,
−Removed: Troubled debt restructurings – nonaccrual $ — $ — $ — $ 2,864 $ 2,342
−Removed: Troubled debt restructurings – performing — — — 2,658 2,410
−Removed: Total troubled debt restructurings $ — $ — $ — $ 5,522 $ 4,752
−Removed: Allowance for Credit Losses - Loans
−Removed: The following table provides a rollforward of the allowance for credit losses for the last five completed fiscal quarters and the nine months ended September 30, 2023 and 2022.
−Removed: Three Months Ended Nine Months Ended
−Removed: (dollars in thousands) September 30,
2023 June 30,
2023 March 31,
−Removed: 2023 December 31,
−Removed: 2022 September 30,
−Removed: 2022 September 30,
−Removed: 2023 September 30,
−Removed: Balance, beginning of period, December 31, 2022 $ 36,058 $ 36,879 $ 31,737 $ 29,866 $ 29,153 $ 31,737 $ 27,841
+Added: Balance, beginning of period $ 38,774 $ 36,452 $ 36,058 $ 36,879 $ 31,737
Adoption of ASU 2016-13 (CECL) — — — — 2,962
9 unchanged sentences
Other consumer 175 164 120 150 232
−Removed: Tax refund advance loans — — — — — — 1,860
Total losses charged off 533 1,245 1,518 1,864 7,257
Commercial and industrial 2 23 2 217 1
−Removed: Single tenant lease financing — — — — — — 1,231
Small business lending 40 23 14 37 3
8 unchanged sentences
Investor commercial real estate 0.00 % 0.00 % 0.59 % 0.00 % 0.00 %
−Removed: Single tenant lease financing 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % (0.19 %)
Healthcare finance 0.00 % 0.25 % 0.00 % 0.02 % 0.00 %
1 unchanged sentence
Franchise finance 0.00 % 0.00 % 0.00 % 0.17 % 0.00 %
−Removed: Total commercial net charge-offs (recoveries) 0.06 % 0.10 % 1.02 % 0.01 % 0.01 % 0.46 % (0.06 %)
+Added: Total commercial net charge-offs 0.03 % 0.03 % 0.06 % 0.10 % 1.02 %
Residential mortgage 0.07 % 0.08 % 0.06 % 0.00 % 0.00 %
1 unchanged sentence
Other consumer 0.21 % 0.22 % 0.18 % 0.21 % 0.25 %
−Removed: Tax refund advance loans 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 11.84 %
Total consumer net charge-offs 0.11 % 0.03 % 0.02 % 0.03 % 0.09 %
Total net charge-offs to average loans 0.05 % 0.12 % 0.16 % 0.17 % 0.82 %
−Removed: The allowance for credit losses (“ACL”) was $36.5 million as of September 30, 2023, compared to $31.7 million as of December 31, 2022.
−Removed: The increase in the ACL reflects the day one current expected credit losses (“CECL”) adjustment of $3.0 million, overall growth in the loan portfolio, changes in certain economic forecasts that impacted quantitative loss rates, adjustments to qualitative factors for certain portfolios, and specific reserves placed on certain loans.
−Removed: The ACL as a percentage of total loans was 0.98% at September 30, 2023, compared to 0.91% at December 31, 2022.
−Removed: The ACL as a percentage of
−Removed: nonperforming loans increased to 619.4% as of September 30, 2023, compared to 426.0% as of December 31, 2022, due to the increase in the ACL, as well as the decline in nonperforming loans.
−Removed: Net charge-offs of $1.5 million were recognized during the third quarter 2023, resulting in net charge-offs to average loans of 0.16%, compared to net charge-offs to average loans of 0.02% for the third quarter 2022.
−Removed: The increase in net charge-offs was due primarily to an increase in charge-offs in small business lending and a loss on the sale of one investor commercial real estate participation loan executed by the lead bank.
−Removed: During the nine months ended September 30, 2023, the Company recorded net charge-offs of $10.2 million, compared to net charge-offs of $0.8 million during the nine months ended September 30, 2022.
−Removed: The increase in net charge-offs for the nine months ended September 30, 2023 was driven primarily by the $6.9 million partial charge-off of a C&I participation loan that was placed on nonaccrual status and subsequently charged off during the first quarter 2023, as well as an increase in charge-offs in small business lending and a loss on the sale of one investor commercial real estate participation loan executed by the lead bank.
−Removed: The provision for credit losses in the third quarter 2023 was $1.9 million, compared to $0.9 million for the third quarter 2022.
−Removed: During the nine months ended September 30, 2023, the provision for credit losses was $13.1 million, compared to $2.9 million during the nine months ended September 30, 2022.
−Removed: The increase in the provision for credit losses for the three and nine months ended September 30, 2023 was driven primarily by increases in net charge-offs, as well as increases in specific reserves and unfunded commitments, partially offset by the positive impact of economic forecasts on certain portfolios.
+Added: The allowance for credit losses - loans (“ACL”) was $40.9 million as of March 31, 2024, compared to $38.8 million as of December 31, 2023.
+Added: The increase in the ACL reflects the addition of specific reserves on nonperforming small business lending loans, as well as loan growth, partially offset by the positive impact of economic data on forecasted loss rates and qualitative factors on other portfolios.
+Added: The ACL as a percentage of total loans was 1.05% at March 31, 2024, compared to 1.01% at December 31, 2023.
+Added: The ACL as a percentage of nonperforming loans decreased to 333.4% as of March 31, 2024, compared to 425.0% as of December 31, 2023, due primarily to the increase in the nonperforming loans.
+Added: Net charge-offs of $0.5 million were recognized during the first quarter 2024, resulting in net charge-offs to average loans of 0.05%, compared to net charge-offs of $7.2 million, or 0.82% of average loans, for the first quarter 2023.
+Added: in net charge-offs was due primarily to a $6.9 million partial charge-off of a C&I participation loan that was placed on nonaccrual status during the first quarter 2023, partially offset by an increase in charge-offs in small business lending.
+Added: The provision for credit losses - loans in the first quarter 2024 was $2.6 million, compared to $9.4 million for the first quarter 2023.
+Added: The decrease in the provision for credit losses - loans for the first quarter 2024 was driven primarily by the partial charge-off of the C&I participation loan mentioned above that occurred in the first quarter 2023, partially offset by the specific reserves related to small business lending and growth in certain loan portfolios.
Investment Securities Portfolio
−Removed: The following tables present the amortized cost and approximate fair value of our investment portfolio by security type for the last five completed fiscal quarters.
+Added: The following tables present the amortized cost and approximate fair value of our investment securities portfolio by security type for the last five completed fiscal quarters.
(in thousands)
−Removed: Amortized Cost September 30,
−Removed: 2023 June 30,
−Removed: 2023 March 31,
+Added: Amortized Cost March 31,
2024 December 31,
2023 September 30,
+Added: 2023 June 30,
+Added: 2023 March 31,
Securities available-for-sale
7 unchanged sentences
Total available-for-sale 522,965 513,315 507,632 424,891 436,520
−Removed: Securities held-to-maturity, net
+Added: Securities held-to-maturity, net carrying value
Municipal securities 13,381 13,889 13,900 13,913 13,932
2 unchanged sentences
Corporate securities 37,805 40,747 41,722 41,711 44,214
−Removed: Total held-to-maturity, net 231,928 230,605 210,761 189,168 191,057
+Added: Total held-to-maturity, net carrying value 235,738 227,153 231,928 230,605 210,761
Total securities $ 758,703 $ 740,468 $ 739,560 $ 655,496 $ 647,281
(in thousands)
−Removed: Approximate Fair Value September 30,
−Removed: 2023 June 30,
−Removed: 2023 March 31,
+Added: Approximate Fair Value March 31,
2024 December 31,
2023 September 30,
+Added: 2023 June 30,
+Added: 2023 March 31,
Securities available-for-sale
14 unchanged sentences
Total securities $ 696,651 $ 682,427 $ 652,477 $ 588,037 $ 588,296
−Removed: The approximate fair value of available-for-sale investment securities increased $60.4 million, or 15.5%, to $450.8 million as of September 30, 2023, compared to $390.4 million as of December 31, 2022.
−Removed: The increase was due primarily to increases of $63.4 million U.S.
−Removed: Government-sponsored agencies, $20.3 million in asset-backed securities - commercial and $8.1 million in private label mortgage-backed securities - residential, partially offset by decreases of $22.0 million in agency mortgage-backed securities - residential, $6.6 million in corporate securities and $4.5 million in municipal securities.
−Removed: The increase was caused primarily by new purchase activity for certain available-for-sale portfolios, partially offset by a decline in fair value resulting from the continued rise in interest rates, as well as net paydown activity.
+Added: The approximate fair value of available-for-sale investment securities increased $7.6 million, or 1.6%, to $482.4 million as of March 31, 2024, compared to $474.9 million as of December 31, 2023.
+Added: The increase was due primarily to increases of $13.8 million in agency mortgage-backed securities - residential, $1.5 million in private label mortgage-backed securities - residential, partially offset by decreases of $3.1 million in U.S.
+Added: Government-sponsored agencies, $2.2 million in corporate securities, and $1.0 million in municipal securities.
+Added: This increase was caused primarily by new purchase activity within certain available-for-sale portfolios, partially offset by a decline in fair value resulting from an increase in market interest rates, as well as net paydown activity.
+Added: As of March 31, 2024, the Company had securities with a net carrying value of $235.7 million designated as held-to-maturity compared to $227.2 million as of December 31, 2023.
+Added: The increase was due primarily to purchases of CRA-eligible agency mortgage-backed securities - residential.
Accrued Income and Other Assets
−Removed: Accrued income and other assets increased $8.6 million, or 19.1%, to $53.5 million at September 30, 2023 compared to $44.9 million at December 31, 2022.
−Removed: The increase was due primarily to increases of $6.1 million in deferred tax assets and $2.5 million in fund investments.
+Added: Accrued income and other assets increased $12.3 million, or 24.0%, to $63.4 million at March 31, 2024 compared to $51.1 million at December 31, 2023.
+Added: The increase was due primarily to a $6.6 million increase in equity investments and a $1.2 million increase in prepaid assets.
Accrued Expenses and Other Liabilities
−Removed: Accrued expenses and other liabilities increased $0.6 million, or 3.9%, to $15.1 million at September 30, 2023, compared to $14.5 million at December 31, 2022.
−Removed: The increase was due primarily to increases of $3.6 million in the reserve for unfunded commitments resulting from the adoption of CECL in 2023, as well as new origination activity, $0.5 million in accrued salary and benefits and $0.4 million in other accrued expenses, partially offset by decreases of $2.3 million in other liabilities, $1.3 million in accrued taxes and $0.2 million in accrued property taxes.
+Added: Accrued expenses and other liabilities increased $2.7 million, or 19.3%, to $16.9 million at March 31, 2024, compared to $14.2 million at December 31, 2023.
+Added: The increase was due primarily to an increase of $4.4 million in accrued expenses related to a security that was purchased in the first quarter 2024, but settled in the subsequent quarter, partially offset by decreases of $1.2 million in accrued salary and benefits and $0.5 million in derivative liability due to changes in fair value.
The following table presents the composition of the Company’s deposit base for the last five completed fiscal quarters.
−Removed: (dollars in thousands) September 30,
−Removed: 2023 June 30,
−Removed: 2023 March 31,
+Added: (dollars in thousands) March 31,
2024 December 31,
2023 September 30,
+Added: 2023 June 30,
+Added: 2023 March 31,
Noninterest-bearing deposits $ 130,760 3.1 % $ 123,464 3.0 % $ 125,265 3.1 % $ 119,291 3.1 % $ 140,449 3.9 %
6 unchanged sentences
Total deposits $ 4,273,768 100.0 % $ 4,066,973 100.0 % $ 4,083,545 100.0 % $ 3,854,308 100.0 % $ 3,622,290 100.0 %
−Removed: Total deposits increased $642.3 million, or 18.7%, to $4.1 billion as of September 30, 2023, compared to $3.4 billion as of December 31, 2022.
−Removed: This increase was due primarily to increases of $750.0 million, or 85.8%, in certificates of deposits, $91.9 million, or 15.9%, in brokered deposits, $39.3 million, or 11.7%, in interest-bearing demand deposits and $28.3 million, or 207.8%, in BaaS - brokered deposits, partially offset by decreases of $196.1 million, or 13.8%, in money market accounts, $50.1 million, or 28.6%, in noninterest-bearing deposits and $21.0 million, or 46.9%, in savings accounts.
−Removed: The increase in certificates of deposits and brokered deposits was due primarily to strong consumer and small business demand for certificates of deposits in 2023, as well as the funding of brokered deposits earlier in 2023 to supplement on-balance sheet liquidity.
−Removed: The increase in interest-bearing demand deposits was due primarily to growth in BaaS - brokered deposits.
−Removed: The increase in BaaS - brokered deposits was driven by higher payments volume.
−Removed: The decrease in money market accounts was due primarily to certain customer activity that can be periodically volatile, as well as certain higher-cost relationships that were exited during 2023.
−Removed: The decline in noninterest-bearing deposits was due primarily to drawdowns from commercial real estate development and construction clients contributing equity to projects the Company is financing.
−Removed: The decrease in savings accounts was due primarily to customer withdrawal activity.
−Removed: Uninsured deposit balances represented 23% of total deposits at September 30, 2023, down from 33% at December 31, 2022.
+Added: Total deposits increased $206.8 million, or 5.1%, to $4.3 billion as of March 31, 2024, compared to $4.1 billion as of December 31, 2023.
+Added: This increase was due primarily to increases of $133.8 million, or 8.3%, in certificates of deposits, $33.5 million, or 45.0%, in BaaS - brokered deposits and $20.6 million, or 5.1%, in interest-bearing demand deposits.
+Added: The increase in certificates of deposits and brokered deposits was due primarily to strong consumer and small business demand for certificates of deposits in 2024.
+Added: The increase in interest-bearing demand deposits was due primarily to growth in fintech partnership deposits.
+Added: The increase in BaaS - brokered deposits was driven by higher payments volumes.
+Added: Uninsured deposit balances represented 26% of total deposits at March 31, 2024, up from 25% at December 31, 2023.
These balances include Indiana-based municipal deposits, which are insured by the Indiana Board for Depositories, as well as larger balance accounts under contractual agreements that only allow withdrawal under certain conditions.
−Removed: After subtracting these types of deposits, the adjusted uninsured deposit balance decreases to 17%, down from 24% as of December 31, 2022.
−Removed: Recent Debt Offerings
−Removed: In August 2021, the Company issued $60.0 million aggregate principal amount of 3.75% Fixed-to-Floating Rate Subordinated Notes due 2031 (the “2031 Notes”) in a private placement.
−Removed: The 2031 Notes initially bear a fixed interest rate of 3.75% per year to, but excluding, September 1, 2026, and thereafter a floating rate equal to the then-current benchmark rate (initially three-month Term SOFR plus 3.11%).
−Removed: The 2031 Notes are scheduled to mature on September 1, 2031.
−Removed: The 2031 Notes are unsecured subordinated obligations of the Company and may be repaid, without penalty, on any interest payment date on or after September 1, 2026.
−Removed: The 2031 Notes are intended to qualify as Tier 2 capital under regulatory guidelines.
−Removed: Pursuant to the terms of a Registration Rights Agreement between the Company and the initial purchasers of the 2031 Notes, the Company offered to exchange the 2031 Notes for subordinated notes that are registered under the Securities Act of 1933, as amended, and have substantially the same terms as the 2031 Notes.
−Removed: On December 30, 2021, the Company completed an exchange of $59.3 million principal amount of the unregistered 2031 Notes for registered 2031 Notes in satisfaction of its obligations under the registration rights agreement.
−Removed: Holders of $0.7 million of unregistered 2031 Notes did not participate in the exchange.
+Added: After subtracting these types of deposits, the adjusted uninsured deposit balance drops to 20%, compared to 19% as of December 31, 2023.
Regulatory Capital Requirements
11 unchanged sentences
Failure to maintain the minimum Common Equity Tier 1 capital ratio plus the capital conservation buffer will result in potential restrictions on a banking institution’s ability to pay dividends, repurchase stock and/or pay discretionary compensation to its employees.
−Removed: The following tables present actual and required capital ratios as of September 30, 2023 and December 31, 2022 for the Company and the Bank under the Basel III Capital Rules.
−Removed: The minimum required capital amounts presented include the minimum required capital levels as of September 30, 2023 and December 31, 2022, which are based on the Basel III Capital Rules.
+Added: The following tables present actual and required capital ratios as of March 31, 2024 and December 31, 2023 for the Company and the Bank under the Basel III Capital Rules.
+Added: The minimum required capital amounts presented include the minimum required capital levels as of March 31, 2024 and December 31, 2023, which are based on the Basel III Capital Rules.
Capital levels required to be considered well capitalized are based upon prompt corrective action regulations, as amended to reflect the changes under the Basel III Capital Rules.
−Removed: As permitted by the federal banking regulatory agencies, the Company has elected the option to delay the impact of the day one adoption of ASC 326.
+Added: As permitted by the federal banking regulatory agencies, the Company elected the option to delay the impact of the day one adoption of ASC 326.
The transition adjustments of $4.5 million will be phased into the regulatory capital calculations over a three-year period, with 25% of the adjustment recognized in 2023, 50% of the adjustment recognized in 2024, 75% of the adjustment recognized in 2025 and 100% of the adjustment recognized in 2026.
1 unchanged sentence
(dollars in thousands) Capital Amount Ratio Capital Amount Ratio Capital Amount Ratio
−Removed: As of September 30, 2023:
+Added: As of March 31, 2024:
Common equity tier 1 capital to risk-weighted assets
26 unchanged sentences
Shareholders’ Dividends
−Removed: The Company’s Board of Directors declared a cash dividend of $0.06 per share of common stock payable October 16, 2023 to shareholders of record as of September 29, 2023.
+Added: The Company’s Board of Directors declared a cash dividend of $0.06 per share of common stock payable April 15, 2024 to shareholders of record as of March 28, 2024.
The Company expects to continue to pay cash dividends on a quarterly basis;
however, the declaration and amount of any future cash dividends will be subject to the sole discretion of the Board of Directors and will depend upon many factors, including the Company’s results of operations, financial condition, capital requirements, regulatory and contractual restrictions (including with respect to the Company’s outstanding subordinated debt), business strategy and other factors deemed relevant by the Board of Directors.
−Removed: As of September 30, 2023, the Company had $107.0 million principal amount of subordinated debt outstanding evidenced by the 2029 Notes, 2030 Note and 2031 Notes.
+Added: As of March 31, 2024, the Company had $107.0 million principal amount of subordinated debt outstanding evidenced by the 2029 Notes, 2030 Note and 2031 Notes.
The agreements that govern our outstanding subordinated debt prohibit the Company from paying any dividends on its common stock or making any other distributions to shareholders at any time when there shall have occurred, and be continuing to occur, an event of default under the applicable agreement.
4 unchanged sentences
If the Company is unable to secure such capital at favorable terms, its ability to take advantage of such opportunities could be adversely affected.
−Removed: In October 2021, the Company’s Board of Directors approved a stock repurchase program authorizing the repurchase of up to $30.0 million, which was subsequently increased to $35.0 million, of our outstanding common stock from time to time on the open market or in privately negotiated transactions.
−Removed: The stock repurchase authorization was scheduled to expire on December 31, 2022.
−Removed: Under this program, the Company repurchased 855,956 shares of common stock through December 19, 2022, at an average price of $36.31, for a total investment of $31.1 million.
−Removed: In December 2022, the Company’s Board of Directors approved a new stock repurchase program authorizing the repurchase of up to $25.0 million of the Company’s outstanding stock from time to time on the open market or in privately negotiated transactions.
−Removed: The stock repurchase program is scheduled to expire on December 31, 2023, and replaces the stock repurchase program mentioned above.
−Removed: Under this program, the Company repurchased 509,022 shares of common stock through September 30, 2023, at an average price of $18.92, for a total investment of $9.6 million.
+Added: On December 19, 2022, the Company's Board of Directors approved a new stock repurchase program to replace the prior program.
+Added: The new program authorized the repurchase of up to $25.0 million of our outstanding common stock from time to time on the open market or in privately negotiated transactions.
+Added: The stock repurchase authorization is scheduled to expire on December 31, 2024.
+Added: Under this program, the Company repurchased 559,522 shares of common stock through March 31, 2024, at an average price of $19.06, for a total investment of $10.7 million.
Various factors determine the amount and timing of our share repurchases, including our capital requirements, organic growth and other strategic opportunities, economic and market conditions (including the trading price of our stock), and regulatory and legal considerations.
6 unchanged sentences
The Company holds cash and investment securities that qualify as liquid assets to maintain adequate liquidity to ensure safe and sound operations and meet its financial commitments.
−Removed: At September 30, 2023, on a consolidated basis, the Company had $972.0 million in cash and cash equivalents and investment securities available-for-sale and $31.7 million in loans held-for-sale that were generally available for its cash needs.
+Added: At March 31, 2024, on a consolidated basis, the Company had $963.7 million in cash and cash equivalents and investment securities available-for-sale and $22.6 million in loans held-for-sale that were generally available for its cash needs.
The Company can also generate funds from wholesale funding sources and collateralized borrowings.
−Removed: At September 30, 2023, the Bank had the ability to borrow an additional $1.2 billion from the FHLB, the Federal Reserve and correspondent bank Fed Funds lines of credit, which when combined with cash balances, totaled $1.7 billion and represented 182% of adjusted uninsured deposit balances.
+Added: At March 31, 2024, the Bank had the ability to borrow an additional $1.3 billion from the FHLB, the Federal Reserve and correspondent bank Fed Funds lines of credit, which when combined with cash balances, totaled $1.7 billion and represented 203% of adjusted uninsured deposit balances.
The Company is a separate legal entity from the Bank and must provide for its own liquidity.
1 unchanged sentence
The Company’s primary sources of funds are cash maintained at the holding company level and dividends from the Bank, the payment of which is subject to regulatory limits.
−Removed: At September 30, 2023, the Company, on an unconsolidated basis, had $10.6 million in cash generally available for its cash needs, which is in excess of its current annual regular shareholder dividend and operating expenses.
+Added: At March 31, 2024, the Company, on an unconsolidated basis, had $7.0 million in cash for debt servicing and operating expenses.
The Company uses its sources of funds primarily to meet ongoing financial commitments, including withdrawals by depositors, credit commitments to borrowers, operating expenses and capital expenditures.
−Removed: At September 30, 2023, approved outstanding loan commitments, including unused lines of credit and standby letters of credit, amounted to $668.2 million.
−Removed: Certificates of deposits and brokered deposits scheduled to mature in one year or less at September 30, 2023 totaled $1.4 billion.
+Added: At March 31, 2024, approved outstanding loan commitments, including unused lines of credit and standby letters of credit, amounted to $726.5 million.
+Added: Certificates of deposits and brokered deposits scheduled to mature in one year or less at March 31, 2024 totaled $1.3 billion.
Management is not aware of any other events or regulatory requirements that, if implemented, are likely to have a material effect on either the Company’s or the Bank’s liquidity.
1 unchanged sentence
This Management’s Discussion and Analysis contains financial information determined by methods other than in accordance with GAAP.
−Removed: Non-GAAP financial measures, specifically tangible common equity, tangible assets, tangible book value per common share, tangible common equity to tangible assets, average tangible common equity, return on average tangible common equity, total interest income - FTE, net interest income - FTE, net interest margin - FTE, adjusted total revenue, adjusted noninterest income, adjusted noninterest expense, adjusted income before income taxes, adjusted income tax (benefit) provision, adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, adjusted return on average shareholders’ equity and adjusted return on average tangible common equity are used by the Company’s management to measure the strength of its capital and analyze profitability, including its ability to generate earnings on tangible capital invested by its shareholders.
+Added: Non-GAAP financial measures, specifically tangible common equity, tangible assets, tangible book value per common share, tangible common equity to tangible assets, average tangible common equity, return on average tangible common equity, total interest income - FTE, net interest income - FTE, net interest margin - FTE, adjusted total revenue, adjusted noninterest income, adjusted noninterest expense, adjusted income before income taxes, adjusted income tax provision (benefit), adjusted net income, adjusted diluted earnings per share, adjusted return on average assets, adjusted return on average shareholders’ equity and adjusted return on average tangible common equity are used by the Company’s management to measure the strength of its capital and analyze profitability, including its ability to generate earnings on tangible capital invested by its shareholders.
The Company also believes that it is a standard practice in the banking industry to present total interest income, net interest income and net interest margin on a fully-taxable equivalent basis, as those measures provide useful information for peer comparisons.
Although the Company believes these non-GAAP financial measures provide a greater understanding of its business, they should not be considered a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP financial measures that may be presented by other companies.
−Removed: Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the following table for the last five completed fiscal quarters and the nine months ended September 30, 2023 and 2022.
−Removed: (dollars in thousands, except share and per share data) Three Months Ended Nine Months Ended
+Added: Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the following table for the last five completed fiscal quarters.
+Added: (dollars in thousands, except share and per share data) Three Months Ended
+Added: 2024 December 31,
2023 September 30,
1 unchanged sentence
2023 March 31,
−Removed: 2023 December 31,
−Removed: 2022 September 30,
−Removed: 2022 September 30,
−Removed: 2023 September 30,
Total equity - GAAP $ 366,739 $ 362,795 $ 347,744 $ 354,332 $ 355,572
17 unchanged sentences
Return on average tangible common equity 5.71 % 4.72 % 3.84 % 4.40 % (3.41 %)
−Removed: (dollars in thousands, except share and per share data) Three Months Ended Nine Months Ended
+Added: (dollars in thousands, except share and per share data) Three Months Ended
+Added: 2024 December 31,
2023 September 30,
1 unchanged sentence
2023 March 31,
−Removed: 2023 December 31,
−Removed: 2022 September 30,
−Removed: 2022 September 30,
−Removed: 2023 September 30,
Total interest income $ 68,165 $ 66,272 $ 63,015 $ 58,122 $ 52,033
11 unchanged sentences
1 Assuming a 21% tax rate
−Removed: (dollars in thousands, except share and per share data) Three Months Ended Nine Months Ended
+Added: (dollars in thousands, except share and per share data) Three Months Ended
+Added: 2024 December 31,
2023 September 30,
1 unchanged sentence
2023 March 31,
−Removed: 2023 December 31,
−Removed: 2022 September 30,
−Removed: 2022 September 30,
−Removed: 2023 September 30,
Total Revenue- GAAP $ 29,081 $ 27,208 $ 24,785 $ 24,016 $ 25,020
6 unchanged sentences
Mortgage-related costs — — — — (3,052)
−Removed: Acquisition-related expenses — — — — — — (273)
−Removed: Nonrecurring consulting fee — — — — — — (875)
−Removed: Write-down of Software — — — — (125) — (125)
−Removed: Discretionary inflation bonus — — — — — — (531)
−Removed: Accelerated equity compensation — — — — — — (289)
Adjusted noninterest expense $ 21,023 $ 20,056 $ 19,756 $ 18,670 $ 17,902
3 unchanged sentences
Partial charge-off of C&I participation loan — — — — 6,914
−Removed: Acquisition-related expenses — — — — — — 273
−Removed: Nonrecurring consulting fee — — — — — — 875
−Removed: Write-down of Software — — — — 125 — 125
−Removed: Discretionary inflation bonus — — — — — — 531
−Removed: Accelerated equity compensation — — — — — — 289
Adjusted income before income taxes $ 5,610 $ 3,558 $ 3,083 $ 3,648 $ 4,552
−Removed: Income tax (benefit) provision - GAAP $ (326) $ (234) $ (2,332) $ 503 $ 987 $ (2,892) $ 4,056
+Added: Income tax provision (benefit) - GAAP $ 429 $ (585) $ (326) $ (234) $ (2,332)
Mortgage-related revenue — — — — (14)
1 unchanged sentence
Partial charge-off of C&I participation loan — — — — 1,452
−Removed: Acquisition-related expenses — — — — — — 57
−Removed: Nonrecurring consulting fee — — — — — — 184
−Removed: Write-down of Software — — — — 26 — 26
−Removed: Discretionary inflation bonus — — — — — — 112
−Removed: Accelerated equity compensation — — — — — — 61
−Removed: Adjusted income tax (benefit) provision $ (326) $ (234) $ (253) $ 503 $ 1,013 $ (813) $ 4,496
+Added: Adjusted income tax provision (benefit) $ 429 $ (585) $ (326) $ (234) $ (253)
1 Assuming a 21% tax rate
−Removed: (dollars in thousands, except share and per share data) Three Months Ended Nine Months Ended
+Added: (dollars in thousands, except share and per share data) Three Months Ended
+Added: 2024 December 31,
2023 September 30,
1 unchanged sentence
2023 March 31,
−Removed: 2023 December 31,
−Removed: 2022 September 30,
−Removed: 2022 September 30,
−Removed: 2023 September 30,
Net income (loss) - GAAP $ 5,181 $ 4,143 $ 3,409 $ 3,882 $ (3,017)
2 unchanged sentences
Partial charge-off of C&I participation loan — — — — 5,462
−Removed: Acquisition-related expenses — — — — — — 216
−Removed: Nonrecurring consulting fee — — — — — — 691
−Removed: Write-down of Software — — — — 99 — 99
−Removed: Discretionary inflation bonus — — — — — — 419
−Removed: Accelerated equity compensation — — — — — — 228
Adjusted net income $ 5,181 $ 4,143 $ 3,409 $ 3,882 $ 4,805
4 unchanged sentences
Effect of partial charge-off of C&I participation loan — — — — 0.60
−Removed: Effect of nonrecurring consulting fee — — — — — — 0.07
−Removed: Effect of write-down of software — — — — 0.01 — 0.01
−Removed: Effect of discretionary inflation bonus — — — — — — 0.04
−Removed: Effect of accelerated equity compensation — — — — — — 0.02
Adjusted diluted earnings per share $ 0.59 $ 0.48 $ 0.39 $ 0.44 $ 0.53
Return on average assets 0.40 % 0.32 % 0.26 % 0.32 % (0.26 %)
−Removed: Effect of mortgage-related revenue 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 %
Effect of mortgage-related costs 0.00 % 0.00 % 0.00 % 0.00 % 0.21 %
Effect of partial charge-off of C&I participation loan 0.00 % 0.00 % 0.00 % 0.00 % 0.48 %
−Removed: Effect of acquisition-related expenses 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.01 %
−Removed: Effect of nonrecurring consulting fee 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.02 %
−Removed: Effect of write-down of software 0.00 % 0.00 % 0.00 % 0.00 % 0.01 % 0.00 % 0.00 %
−Removed: Effect of discretionary inflation bonus 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.01 %
−Removed: Effect of accelerated equity compensation 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.01 %
Adjusted return on average assets 0.40 % 0.32 % 0.26 % 0.32 % 0.43 %
2 unchanged sentences
Effect of mortgage-related costs 0.00 % 0.00 % 0.00 % 0.00 % 2.69 %
−Removed: (dollars in thousands, except share and per share data) Three Months Ended Nine Months Ended
−Removed: September 30,
−Removed: 2023 June 30,
−Removed: 2023 March 31,
−Removed: 2023 December 31,
−Removed: 2022 September 30,
−Removed: 2022 September 30,
−Removed: 2023 September 30,
Effect of partial charge-off of C&I participation loan 0.00 % 0.00 % 0.00 % 0.00 % 6.10 %
−Removed: Effect of acquisition-related expenses 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.08 %
−Removed: Effect of nonrecurring consulting fee 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.25 %
−Removed: Effect of write-down of software 0.00 % 0.00 % 0.00 % 0.00 % 0.11 % 0.00 % 0.04 %
−Removed: Effect of discretionary inflation bonus 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.15 %
−Removed: Effect of accelerated equity compensation 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.08 %
Adjusted return on average shareholders' equity 5.64 % 4.66 % 3.79 % 4.35 % 5.36 %
3 unchanged sentences
Effect of partial charge-off of C&I participation loan 0.00 % 0.00 % 0.00 % 0.00 % 6.18 %
−Removed: Effect of acquisition-related expenses 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.08 %
−Removed: Effect of nonrecurring consulting fee 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.25 %
−Removed: Effect of write-down of software 0.00 % 0.00 % 0.00 % 0.00 % 0.11 % 0.00 % 0.04 %
−Removed: Effect of discretionary inflation bonus 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.15 %
−Removed: Effect of accelerated equity compensation 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % 0.08 %
Adjusted return on average tangible common equity 5.71 % 4.72 % 3.84 % 4.40 % 5.44 %
Critical Accounting Policies and Estimates
−Removed: There have been changes in the Company’s critical accounting policies or estimates from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022.
−Removed: Refer to Note 1 Basis of Presentation for further details.
+Added: There have been no material changes in the Company’s critical accounting policies or estimates from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2023.
Recent Accounting Pronouncements
5 unchanged sentences
Cash flow hedges are used to convert certain variable rate liabilities into fixed rate liabilities.
−Removed: At September 30, 2023 and December 31, 2022, the Company had interest rate swaps with notional amounts of $220 million and $260.0 million, respectively.
−Removed: Additionally, prior to the Company’s decision to exit its consumer mortgage business in the first quarter 2023, we entered into forward contracts related to our mortgage banking business to hedge the exposures we have from commitments to extend new residential mortgage loans to our customers and from our mortgage loans held-for-sale.
−Removed: At September 30, 2023, the Company did not have any commitments to sell residential real estate loans.
−Removed: At December 31, 2022, the Company had commitments to sell residential real estate loans of $17.0 million.
+Added: At both March 31, 2024 and December 31, 2023, the Company had interest rate swaps with notional amounts of $200.0 million.
Refer to Note 13 to the condensed consolidated financial statements for additional information about derivative financial instruments.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.