Fentura Financial, Inc. Announces First Quarter 2024 Earnings (Unaudited)
Dollars in thousands except per share amounts. Certain items in the prior period financial statements have been reclassified to conform with the March 31, 2024 presentation.
FENTON, Mich., April 26, 2024 (GLOBE NEWSWIRE) -- Fentura Financial, Inc. (OTCQX: FETM) announces quarterly net income results of $2,790 for the three months ended March 31, 2024.Ronald L. Justice, President and CEO, stated, “I am pleased with the progress we continue to make navigating a difficult operating environment as a result of challenges created by a multi-decades high increase in short-term interest rates over the last twenty-four months and a historically long and deep inversion of the yield curve. While this has impacted the level of profitability we experienced prior to this period, we ended the first quarter with record total assets and shareholders’ equity. I believe these positive trends demonstrate our long-standing commitment to provide our local communities with leading financial solutions, as well as our efforts to maintain excellent asset quality. In fact, our tangible book value per share increased 10.3% to a record of $29.38 per share at March 31, 2024, representing our continued success growing shareholder capital.”
Mr. Justice continued, “We expect the economic and interest rate environment to remain challenging throughout 2024. We remain focused on strengthening our balance sheet by reducing our reliance of borrowed funds and increasing our cash and investment portfolio, while also benefiting from historically high asset quality. As a result of these efforts over the past twelve months, we reduced borrowings by $80.6 million, increased our cash and investment portfolio by $12.1 million, and we have experienced little to no net charge-offs over the last five consecutive quarters. In addition, I am encouraged by the progress we are making enhancing our loan-to-deposit ratio, which improved from 104.58% at December 31, 2023, to 100.54% at March 31, 2024. As you can see, our business model remains adaptable, resilient, and positioned to deliver solid financial results throughout various economic and interest rate cycles.”
Following is a discussion of our financial performance as of, and for the three months ended March 31, 2024. At the end of this document is a list of abbreviations and acronyms.
*Results of Operations (unaudited)*
The following table outlines our QTD results of operations and provides certain performance measures as of, and for the three months ended:
*3/31/2024* *12/31/2023* *9/30/2023* *6/30/2023* *3/31/2023*
*INCOME STATEMENT DATA*
Interest income $ 21,541 $ 21,033 $ 20,416 $ 19,553 $ 18,679
Interest expense 9,315 8,526 7,757 6,469 5,335
Net interest income 12,226 12,507 12,659 13,084 13,344
Credit loss expense (reversal) (43 ) (190 ) (309 ) 205 236
Noninterest income 2,355 2,145 2,338 2,460 2,328
Noninterest expenses 11,166 10,121 10,594 11,320 10,633
Federal income tax expense 668 937 937 793 959
Net income $ 2,790 $ 3,784 $ 3,775 $ 3,226 $ 3,844
*PER SHARE*
Earnings $ 0.63 $ 0.85 $ 0.85 $ 0.73 $ 0.87
Dividends $ 0.11 $ 0.10 $ 0.10 $ 0.10 $ 0.10
Tangible book value^(1) $ 29.38 $ 28.92 $ 27.64 $ 27.16 $ 26.64
Quoted market value
High $ 27.20 $ 27.20 $ 23.74 $ 21.21 $ 24.10
Low $ 24.00 $ 22.26 $ 19.10 $ 18.70 $ 21.10
Close^(1) $ 24.40 $ 27.20 $ 23.74 $ 19.35 $ 21.31
*PERFORMANCE RATIOS*
Return on average assets 0.63 % 0.86 % 0.86 % 0.76 % 0.92 %
Return on average shareholders' equity 7.98 % 11.11 % 11.27 % 9.89 % 12.32 %
Return on average tangible shareholders' equity 8.55 % 11.94 % 12.14 % 10.67 % 13.34 %
Efficiency ratio 76.58 % 69.08 % 70.64 % 72.83 % 67.85 %
Yield on average earning assets (FTE) 5.15 % 5.06 % 4.92 % 4.85 % 4.75 %
Rate on interest bearing liabilities 3.11 % 2.90 % 2.66 % 2.35 % 2.02 %
Net interest margin to average earning assets (FTE) 2.92 % 3.01 % 3.05 % 3.25 % 3.40 %
*BALANCE SHEET DATA*^*(1)*
Total investment securities $ 103,210 $ 107,615 $ 109,543 $ 117,563 $ 122,995
Gross loans $ 1,461,465 $ 1,473,471 $ 1,483,720 $ 1,472,288 $ 1,457,173
Allowance for credit losses $ 15,300 $ 15,400 $ 15,400 $ 15,400 $ 15,220
Total assets $ 1,764,629 $ 1,738,952 $ 1,744,939 $ 1,718,819 $ 1,749,073
Total deposits $ 1,438,408 $ 1,394,182 $ 1,401,797 $ 1,380,192 $ 1,353,918
Borrowed funds $ 178,500 $ 198,500 $ 201,050 $ 200,550 $ 259,050
Total shareholders' equity $ 141,074 $ 138,702 $ 132,902 $ 130,690 $ 128,247
Net loans to total deposits 100.54 % 104.58 % 104.75 % 105.56 % 106.50 %
Common shares outstanding 4,484,447 4,470,871 4,466,221 4,460,053 4,453,951
*QTD BALANCE SHEET AVERAGES*
Total assets $ 1,771,614 $ 1,740,526 $ 1,739,510 $ 1,706,147 $ 1,687,175
Earning assets $ 1,683,708 $ 1,649,091 $ 1,646,848 $ 1,617,593 $ 1,595,605
Interest bearing liabilities $ 1,205,162 $ 1,165,064 $ 1,156,835 $ 1,105,807 $ 1,072,417
Total shareholders' equity $ 140,574 $ 135,157 $ 132,860 $ 130,860 $ 126,495
Total tangible shareholders' equity $ 131,204 $ 125,723 $ 123,349 $ 121,274 $ 116,834
Earned common shares outstanding 4,449,376 4,443,463 4,437,415 4,427,890 4,421,584
Unvested stock grants 31,821 26,018 26,668 29,916 29,007
Total common shares outstanding 4,481,197 4,469,481 4,464,083 4,457,806 4,450,591
*ASSET QUALITY*
Nonperforming loans to gross loans^(1) 0.39 % 0.38 % 0.24 % 0.16 % 0.19 %
Nonperforming assets to total assets^(1) 0.34 % 0.35 % 0.23 % 0.16 % 0.17 %
Allowance for credit losses to gross loans^(1) 1.05 % 1.05 % 1.04 % 1.05 % 1.04 %
Net charge-offs (recoveries) to QTD average gross loans — % (0.01 )% (0.03 )% — % — %
Credit loss expense (reversal) to QTD average gross loans — % (0.01 )% (0.02 )% 0.01 % 0.02 %
*CAPITAL RATIOS*^*(1)*
Total capital to risk weighted assets 12.27 % 11.91 % 11.59 % 11.31 % 11.08 %
Tier 1 capital to risk weighted assets 11.17 % 10.82 % 10.51 % 10.23 % 10.02 %
CET1 capital to risk weighted assets 10.17 % 9.83 % 9.53 % 9.25 % 9.04 %
Tier 1 leverage ratio 8.78 % 8.77 % 8.58 % 8.55 % 8.47 %
^(1)At end of period
The following table outlines our YTD results of operations and provides certain performance measures as of, and for the three months ended (unaudited):
*3/31/2024* *3/31/2023* *3/31/2022* *3/31/2021* *3/31/2020*
*INCOME STATEMENT DATA*
Interest income $ 21,541 $ 18,679 $ 12,301 $ 11,919 $ 11,070
Interest expense 9,315 5,335 599 676 2,145
Net interest income 12,226 13,344 11,702 11,243 8,925
Credit loss expense (reversal) (43 ) 236 502 212 1,542
Noninterest income 2,355 2,328 2,808 3,906 4,575
Noninterest expenses 11,166 10,633 10,167 9,083 7,748
Federal income tax expense 668 959 757 1,198 858
Net income $ 2,790 $ 3,844 $ 3,084 $ 4,656 $ 3,352
*PER SHARE*
Earnings $ 0.63 $ 0.87 $ 0.69 $ 1.00 $ 0.72
Dividends $ 0.11 $ 0.10 $ 0.09 $ 0.08 $ 0.08
Tangible book value^(1) $ 29.38 $ 26.64 $ 24.97 $ 24.75 $ 21.56
Quoted market value
High $ 27.20 $ 24.10 $ 29.25 $ 24.75 $ 26.00
Low $ 24.00 $ 21.10 $ 27.10 $ 21.90 $ 12.55
Close^(1) $ 24.40 $ 21.31 $ 27.90 $ 23.30 $ 15.50
*PERFORMANCE RATIOS*
Return on average assets 0.63 % 0.92 % 0.86 % 1.50 % 1.28 %
Return on average shareholders' equity 7.98 % 12.32 % 10.53 % 15.86 % 13.01 %
Return on average tangible shareholders' equity 8.55 % 13.34 % 11.49 % 16.38 % 13.54 %
Efficiency ratio 76.58 % 67.85 % 70.07 % 59.96 % 57.39 %
Yield on average earning assets (FTE) 5.15 % 4.75 % 3.70 % 4.01 % 4.47 %
Rate on interest bearing liabilities 3.11 % 2.02 % 0.29 % 0.37 % 1.28 %
Net interest margin to average earning assets (FTE) 2.92 % 3.40 % 3.52 % 3.79 % 3.61 %
*BALANCE SHEET DATA*^*(1)*
Total investment securities $ 103,210 $ 122,995 $ 151,579 $ 89,772 $ 76,312
Gross loans $ 1,461,465 $ 1,457,173 $ 1,139,351 $ 1,028,117 $ 865,577
Allowance for credit losses $ 15,300 $ 15,220 $ 11,000 $ 11,100 $ 7,250
Total assets $ 1,764,629 $ 1,749,073 $ 1,435,485 $ 1,303,175 $ 1,071,181
Total deposits $ 1,438,408 $ 1,353,918 $ 1,252,892 $ 1,122,508 $ 883,837
Borrowed funds $ 178,500 $ 259,050 $ 52,000 $ 49,000 $ 71,500
Total shareholders' equity $ 141,074 $ 128,247 $ 121,346 $ 119,360 $ 104,829
Net loans to total deposits 100.54 % 106.50 % 90.06 % 90.60 % 97.11 %
Common shares outstanding 4,484,447 4,453,951 4,459,544 4,673,914 4,675,499
*YTD BALANCE SHEET AVERAGES*
Total assets $ 1,771,614 $ 1,687,175 $ 1,448,545 $ 1,259,119 $ 1,049,245
Earning assets $ 1,683,708 $ 1,595,605 $ 1,348,647 $ 1,206,411 $ 997,089
Interest bearing liabilities $ 1,205,162 $ 1,072,417 $ 831,200 $ 735,159 $ 672,564
Total shareholders' equity $ 140,574 $ 126,495 $ 118,759 $ 119,034 $ 103,646
Total tangible shareholders' equity $ 131,204 $ 116,834 $ 108,862 $ 115,298 $ 99,558
Earned common shares outstanding 4,449,376 4,421,584 4,451,607 4,664,893 4,659,279
Unvested stock grants 31,821 29,007 27,466 21,922 13,481
Total common shares outstanding 4,481,197 4,450,591 4,479,073 4,686,815 4,672,760
*ASSET QUALITY*
Nonperforming loans to gross loans^(1) 0.39 % 0.19 % 0.20 % 0.79 % 0.10 %
Nonperforming assets to total assets^(1) 0.34 % 0.17 % 0.19 % 0.62 % 0.12 %
Allowance for credit losses to gross loans^(1) 1.05 % 1.04 % 0.97 % 1.08 % 0.84 %
Net charge-offs (recoveries) to YTD average gross loans — % — % — % — % 0.01 %
Credit loss expense (reversal) to YTD average gross loans — % 0.02 % 0.05 % 0.02 % 0.18 %
*CAPITAL RATIOS*^*(1)*
Total capital to risk weighted assets 12.27 % 11.08 % 12.07 % 15.02 % 14.44 %
Tier 1 capital to risk weighted assets 11.17 % 10.02 % 11.13 % 13.84 % 13.58 %
CET1 capital to risk weighted assets 10.17 % 9.04 % 9.94 % 12.34 % 11.92 %
Tier 1 leverage ratio 8.78 % 8.47 % 9.07 % 10.31 % 10.97 %
^(1)At end of period
*Income Statement Breakdown and Analysis*
*Quarter to Date* *3/31/2024* *12/31/2023* *9/30/2023* *6/30/2023* *3/31/2023*
*Net income* *$* *2,790* *$* *3,784* *$* *3,775* *$* *3,226* *$* *3,844*
Acquisition related items (net of tax)
Amortization of core deposit intangibles 36 60 60 60 60
Total acquisition related items (net of tax) 36 60 60 60 60
Other nonrecurring items (net of tax)
Proxy contest related expenses — — — 413 —
Prepayment penalties collected (58 ) (85 ) (29 ) (95 ) (9 )
Total other nonrecurring items (net of tax) (58 ) (85 ) (29 ) 318 (9 )
*Adjusted net income from operations* *$* *2,768* *$* *3,759* *$* *3,806* *$* *3,604* *$* *3,895*
*Net interest income* *$* *12,226* *$* *12,507* *$* *12,659* *$* *13,084* *$* *13,344*
Prepayment penalties collected (73 ) (107 ) (37 ) (120 ) (12 )
*Adjusted net interest income* *$* *12,153* *$* *12,400* *$* *12,622* *$* *12,964* *$* *13,332*
*PERFORMANCE RATIOS*
*Based on adjusted net income from operations*
Earnings per share $ 0.62 $ 0.85 $ 0.86 $ 0.81 $ 0.88
Return on average assets 0.63 % 0.86 % 0.87 % 0.85 % 0.94 %
Return on average shareholders' equity 7.92 % 11.03 % 11.37 % 11.05 % 12.49 %
Return on average tangible shareholders' equity 8.49 % 11.86 % 12.24 % 11.92 % 13.52 %
Efficiency ratio 76.65 % 69.06 % 70.31 % 69.51 % 67.41 %
*Based on adjusted net interest income*
Yield on average earning assets (FTE) 5.13 % 5.03 % 4.91 % 4.82 % 4.75 %
Rate on interest bearing liabilities 3.11 % 2.90 % 2.66 % 2.35 % 2.02 %
Net interest margin to average earning assets (FTE) 2.90 % 2.98 % 3.04 % 3.22 % 3.40 %
*Year to Date March 31* *Variance* *2024* *2023* *Amount* *%*
*Net income* *$* *2,790* *$* *3,844* *$* *(1,054* *)* *(27.42* *)**%*
Acquisition related items (net of tax)
Amortization of core deposit intangibles 36 60 (24 ) (40.00 )%
Total acquisition related items (net of tax) 36 60 (24 ) (40.00 )%
Other nonrecurring items (net of tax)
Proxy contest related expenses — — — N/M
Prepayment penalties collected (58 ) (9 ) (49 ) 544.44 %
Total other nonrecurring items (net of tax) (58 ) (9 ) (49 ) 544.44 %
*Adjusted net income from operations* *$* *2,768* *$* *3,895* *$* *(1,127* *)* *(28.93* *)%*
*Net interest income* *$* *12,226* *$* *13,344* *$* *(1,118* *)* *(8.38* *)%*
Prepayment penalties collected (73 ) (12 ) (61 ) 508.33 %
*Adjusted net interest income* *$* *12,153* *$* *13,332* *$* *(1,179* *)* *(8.84* *)%*
*PERFORMANCE RATIOS*
*Based on adjusted net income from operations*
Earnings per share $ 0.62 $ 0.88 $ (0.26 ) (29.55 )%
Return on average assets 0.63 % 0.94 % (0.31 )%
Return on average shareholders' equity 7.92 % 12.49 % (4.57 )%
Return on average tangible shareholders' equity 8.49 % 13.52 % (5.03 )%
Efficiency ratio 76.65 % 67.41 % 9.24 %
*Based on adjusted net interest income*
Yield on average earning assets (FTE) 5.13 % 4.75 % 0.38 %
Rate on interest bearing liabilities 3.11 % 2.02 % 1.09 %
Net interest margin to average earning assets (FTE) 2.90 % 3.40 % (0.50 )%
*Average Balances, Interest Rate, and Net Interest Income*
The following tables present the daily average amount outstanding for each major category of interest earning assets, nonearning assets, interest bearing liabilities, and noninterest bearing liabilities. These tables also present an analysis of interest income and interest expense for the periods indicated. All interest income is reported on a FTE basis using a federal income tax rate of 21%. Loans in nonaccrual status, for the purpose of the following computations, are included in the average loan balances.
Net interest income is the amount by which interest income on earning assets exceeds the interest expenses on interest bearing liabilities. Net interest income, which includes loan fees, is influenced by changes in the balance and mix of assets and liabilities and market interest rates. We exert some control over these factors; however, FRB monetary policy and competition have a significant impact. For analytical purposes, net interest income is adjusted to a FTE basis by adding the income tax savings from interest on tax exempt loans, and nontaxable investment securities, thus making period-to-period comparisons more meaningful.
*Three Months Ended* *March 31, 2024* *December 31, 2023* *March 31, 2023* *Average Balance* *Tax Equivalent Interest* *Average Yield / Rate* *Average Balance* *Tax Equivalent Interest* *Average Yield / Rate* *Average Balance* *Tax Equivalent Interest* *Average Yield / Rate*
*Interest earning assets*
Total loans $ 1,471,130 $ 19,609 5.36 % $ 1,477,899 $ 19,633 5.27 % $ 1,447,375 $ 17,854 5.00 %
Taxable investment securities 94,199 359 1.53 % 95,263 374 1.56 % 109,671 435 1.61 %
Nontaxable investment securities 11,963 67 2.25 % 12,166 68 2.22 % 14,287 81 2.30 %
Interest earning cash and cash equivalents 97,237 1,319 5.46 % 54,584 760 5.52 % 14,035 153 4.42 %
Federal Home Loan Bank stock 9,179 201 8.81 % 9,179 212 9.16 % 10,237 173 6.85 %
*Total earning assets* *1,683,708* *21,555* *5.15* *%* *1,649,091* *21,047* *5.06* *%* *1,595,605* *18,696* *4.75* *%*
*Nonearning assets*
Allowance for credit losses (15,400 ) (15,444 ) (15,145 )
Premises and equipment, net 14,392 14,875 15,453
Accrued income and other assets 88,914 92,004 91,262
*Total assets* *$* *1,771,614* *$* *1,740,526* *$* *1,687,175*
*Interest bearing liabilities*
Interest bearing demand deposits $ 421,597 $ 3,559 3.40 % $ 413,681 $ 3,540 3.40 % $ 359,223 $ 2,078 2.35 %
Savings deposits 272,296 413 0.61 % 279,197 421 0.60 % 341,154 473 0.56 %
Time deposits 326,747 3,644 4.49 % 271,375 2,709 3.96 % 166,518 1,012 2.46 %
Borrowed funds 184,522 1,699 3.70 % 200,811 1,856 3.67 % 205,522 1,772 3.50 %
*Total interest bearing liabilities* *1,205,162* *9,315* *3.11* *%* *1,165,064* *8,526* *2.90* *%* *1,072,417* *5,335* *2.02* *%*
*Noninterest bearing liabilities*
Noninterest bearing deposits 417,089 424,859 474,686
Accrued interest and other liabilities 8,789 15,446 13,577
Shareholders' equity 140,574 135,157 126,495
*Total liabilities and shareholders' equity* *$* *1,771,614* *$* *1,740,526* *$* *1,687,175*
*Net interest income (FTE)* *$* *12,240* *$* *12,521* *$* *13,361*
*Net interest margin to earning assets (FTE)* *2.92* *%* *3.01* *%* *3.40* *%*
*Volume and Rate Variance Analysis*The following table sets forth the effect of volume and rate changes on interest income and expense for the periods indicated. For the purpose of this table, changes in interest due to volume and rate were determined as follows:
Volume – change in volume multiplied by the previous period's rate.
Rate – change in the FTE rate multiplied by the previous period's volume.
The change in interest due to both volume and rate has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each.
*Three Months Ended* *Three Months Ended* *March 31, 2024* *March 31, 2024* *Compared To* *Compared To* *December 31, 2023* *March 31, 2023* *Increase (Decrease) Due to* *Increase (Decrease) Due to* *Volume* *Rate* *Net* *Volume* *Rate* *Net*
*Changes in interest income*
Total loans $ (568 ) $ 544 $ (24 ) $ 326 $ 1,429 $ 1,755
Taxable investment securities (6 ) (9 ) (15 ) (56 ) (20 ) (76 )
Nontaxable investment securities (5 ) 4 (1 ) (12 ) (2 ) (14 )
Interest earning cash and cash equivalents 616 (57 ) 559 1,121 45 1,166
Federal Home Loan Bank stock — (11 ) (11 ) (99 ) 127 28
*Total changes in interest income* *37* *471* *508* *1,280* *1,579* *2,859*
*Changes in interest expense*
Interest bearing demand deposits 19 — 19 414 1,067 1,481
Savings deposits (38 ) 30 (8 ) (279 ) 219 (60 )
Time deposits 565 370 935 1,417 1,215 2,632
Borrowed funds (252 ) 95 (157 ) (574 ) 501 (73 )
*Total changes in interest expense* *294* *495* *789* *978* *3,002* *3,980*
*Net change in net interest income (FTE)* *$* *(257* *)* *$* *(24* *)* *$* *(281* *)* *$* *302* *$* *(1,423* *)* *$* *(1,121* *)*
*Average Yield/Rate for the Three Months Ended* *3/31/2024* *12/31/2023* *9/30/2023* *6/30/2023* *3/31/2023*
Total earning assets 5.15 % 5.06 % 4.92 % 4.85 % 4.75 %
Total interest bearing liabilities 3.11 % 2.90 % 2.66 % 2.35 % 2.02 %
*Net interest margin to earning assets (FTE)* *2.92* *%* *3.01* *%* *3.05* *%* *3.25* *%* *3.40* *%*
*Quarter to Date Net Interest Income (FTE)* *3/31/2024* *12/31/2023* *9/30/2023* *6/30/2023* *3/31/2023*
Interest income $ 21,541 $ 21,033 $ 20,416 $ 19,553 $ 18,679
FTE adjustment 14 14 14 17 17
Total interest income (FTE) 21,555 21,047 20,430 19,570 18,696
Total interest expense 9,315 8,526 7,757 6,469 5,335
*Net interest income (FTE)* *$* *12,240* *$* *12,521* *$* *12,673* *$* *13,101* *$* *13,361*
*Noninterest Income*
*Three Months Ended* *3/31/2024* *12/31/2023* *9/30/2023* *6/30/2023* *3/31/2023*
Service charges and fees
Trust and investment services 641 433 572 583 549
ATM and debit card 512 549 568 570 531
Service charges on deposit accounts 140 211 244 224 218
Total 1,293 1,193 1,384 1,377 1,298
Net gain on sales of commercial loans 296 226 — 95 —
Net gain on sales of residential mortgage loans 143 96 164 198 161
Change in fair value of equity investments (10 ) 42 (28 ) (16 ) 15
Changes in the fair value of MSR (96 ) (108 ) 119 (8 ) 107
Other
Mortgage servicing fees 394 398 398 406 406
Change in cash surrender value of corporate owned life insurance 204 192 181 178 172
Other 131 106 120 230 169
Total 729 696 699 814 747
*Total noninterest income* *$* *2,355* *$* *2,145* *$* *2,338* *$* *2,460* *$* *2,328*
*Memo items:*
Residential mortgage operations $ 441 $ 386 $ 681 $ 596 $ 674
*Three Months Ended March 31* *Variance* *2024* *2023* *Amount* *%*
Service charges and fees
Trust and investment services $ 641 $ 549 $ 92 16.76 %
ATM and debit card 512 531 (19 ) (3.58 )%
Service charges on deposit accounts 140 218 (78 ) (35.78 )%
Total 1,293 1,298 (5 ) (0.39 )%
Net gain on sales of commercial loans 296 — 296 N/M
Net gain on sales of residential mortgage loans 143 161 (18 ) (11.18 )%
Change in fair value of equity investments (10 ) 15 (25 ) (166.67 )%
Changes in the fair value of MSR (96 ) 107 (203 ) (189.72 )%
Other
Mortgage servicing fees 394 406 (12 ) (2.96 )%
Change in cash surrender value of corporate owned life insurance 204 172 32 18.60 %
Other 131 169 (38 ) (22.49 )%
Total 729 747 (18 ) (2.41 )%
*Total noninterest income* *$* *2,355* *$* *2,328* *$* *27* *1.16* *%*
*Memo items:*
Residential mortgage operations $ 441 $ 674 $ (233 ) (34.57 )%
Residential Mortgage Operations
Residential mortgage operations includes net gains on sales of loans, net mortgage servicing rights income, and mortgage servicing fees.
Net gain on sales of residential mortgage loans represents the income earned on the sale of residential mortgage loans into the secondary market. Although increases in interest rates and limited inventories have significantly driven down the volume of new originations and refinancing activity, we continue to actively sell residential mortgage loans into the secondary market. During the first quarter of 2024, residential mortgage originations sold into the secondary market totaled $6,385. We expect this trend to continue in future periods.
Changes in the fair value of MSR are highly correlated to changes in interest rates and prepayment speeds. During the first quarter of 2024, the fair value of the servicing portfolio decreased primarily due to a decline in the size of the servicing portfolio as the portfolio declined by $5,605. Mortgage servicing rights are expected to continue to decline due to likely further reductions in the size of our servicing portfolio as paydowns and maturities are expected to outpace new originations.
Mortgage servicing fees includes the fees earned for servicing loans that have been sold into the secondary market. The annual decrease in mortgage servicing fees is directly related to the size of the serviced portfolio. Due to reduced levels of secondary market originations and prepayments, the serviced loan portfolio declined by $16,961, or 2.67%, since March 31, 2023. We expect mortgage servicing fees to trend modestly downward in future periods due to decreased secondary market originations.
All Other Noninterest Income
Trust and investment services includes income earned from contracts with customers to manage assets for investment and/or to transact on their accounts through the wealth management and trust department. We transitioned our wealth management program to a new platform in 2023, which provides our clients a full range of leading investment services and solutions. Trust services and wealth management fees are subject to market fluctuations and interest rate changes. We expect trust and investment services fees to modestly increase in future periods.
ATM and debit card income represents fees earned on ATM and debit card transactions. We expect these fees to approximate current levels in 2024.
Service charges on deposit accounts includes fees earned from deposit customers for transaction-based charges, account maintenance and overdraft services. Service charges on deposit accounts are expected to approximate current levels throughout the remainder of the year.
Net gain on sales of commercial loans represents the income earned from the sale of commercial loans into the secondary market. During the first quarter of 2024, we sold the guaranteed portion of select SBA loans. We anticipate this strategy throughout the remainder of the year.
Change in cash surrender value of corporate owned life insurance is expected to modestly increase throughout 2024.
Other includes miscellaneous other income items, none of which are individually significant.
*Noninterest Expenses*
*Three Months Ended* *3/31/2024* *12/31/2023* *9/30/2023* *6/30/2023* *3/31/2023*
Compensation and benefits $ 6,066 $ 5,521 $ 5,592 $ 5,492 $ 5,792
Professional services 894 695 726 1,237 766
Furniture and equipment 727 696 668 685 726
Occupancy 623 610 591 589 635
Data processing 547 505 576 565 513
Advertising and promotional 348 139 506 509 451
Loan and collection 322 301 232 457 240
Other
FDIC insurance premiums 299 270 330 330 201
ATM and debit card 171 158 153 179 161
Telephone and communication 109 103 115 100 119
Amortization of core deposit intangibles 45 76 75 76 76
Other general and administrative 1,015 1,047 1,030 1,101 953
Total 1,639 1,654 1,703 1,786 1,510
*Total noninterest expenses* *$* *11,166* *$* *10,121* *$* *10,594* *$* *11,320* *$* *10,633*
*Three Months Ended*
*March 31* *Variance* *2024* *2023* *Amount* *%*
Compensation and benefits $ 6,066 $ 5,792 $ 274 4.73 %
Professional services 894 766 128 16.71 %
Furniture and equipment 727 726 1 0.14 %
Occupancy 623 635 (12 ) (1.89 )%
Data processing 547 513 34 6.63 %
Advertising and promotional 348 451 (103 ) (22.84 )%
Loan and collection 322 240 82 34.17 %
Other
FDIC insurance premiums 299 201 98 48.76 %
ATM and debit card 171 161 10 6.21 %
Telephone and communication 109 119 (10 ) (8.40 )%
Amortization of core deposit intangibles 45 76 (31 ) (40.79 )%
Other general and administrative 1,015 953 62 6.51 %
Total 1,639 1,510 129 8.54 %
*Total noninterest expenses* *$* *11,166* *$* *10,633* *$* *533* *5.01* *%*
Compensation and benefits includes salaries, commissions and incentives, employee benefits, and payroll taxes. Compensation and benefits increased in the first quarter of 2024 due to an increase in the size of the organization, merit increases, and market based adjustments. While there continues to be meaningful wage pressure, we expect a modest increase in overall compensation and benefits throughout 2024. These increases will be partially offset by decreases in commissions as loan originations continue to slow. This trend is expected to continue in future periods.
Professional services include expenses relating to third-party professional services. These services include, but are not limited to, regulatory, auditing, consulting, and legal. The increase in professional services during the second quarter of 2023 was due to an increase in expenses resulting from a proxy contest relating to our 2023 annual meeting of stockholders. The consulting and legal fees related to this matter totaled approximately $523. Professional services expenses are expected to approximate current levels in future periods.
Furniture and equipment and occupancy expenses primarily consist of depreciation, repairs and maintenance, certain service contracts, and other related items. These expenses are expected to approximate current levels throughout 2024.
Data processing primarily includes the expenses relating to our core data processor. Data processing expenses are expected to modestly increase throughout 2024 due to annual contractual increases from our core data processor.
Advertising and promotional expenses includes media costs and any donations or sponsorships. The increase in such expenses in the first quarter of 2024 is a result of enhanced marketing efforts to attract new and expand existing customer loan and deposit account relationships, as well as an increase in homeownership grants. Total advertising and promotional expenses are expected to decline in 2024 due to the expiration of certain long-term sponsorship commitments.
Loan and collection includes expenses related to the origination and collection of loans. The increase in such expenses in 2024 is due increased levels of home ownership grants. Loan and collection expenses are expected to approximate current levels in future periods as loan growth is expected to approximate current levels.
FDIC insurance premiums typically fluctuate each period based on the size of the balance sheet, capital position and overall risk profile. These expenses have increased due to the FDIC increasing its assessment rate for all insured institutions effective January 1, 2023. FDIC insurance premiums are expected to approximate current levels.
ATM and debit card expenses fluctuate based on customer and non-customer utilization of ATMs and customer debit card volumes. We expect these fees to approximate current levels in future periods.
Telephone and communication includes expenses relating to our communication systems. These expenses are expected to approximate current levels in future periods.
Amortization of core deposit intangibles relates to the core deposits acquired from Community Bancorp, Inc. on December 31, 2016 and FSB on December 1, 2021. These core deposit intangibles are being amortized using an accelerated sum-of-years-digits method over their estimated useful lives of seven years. The core deposit intangibles associated with the acquisition of Community Bancorp, Inc. were fully amortized as of December 31, 2023. The core deposit intangibles associated with the acquisition of FSB will be amortized through 2028.
Other general and administrative includes miscellaneous other expense items. These expenses have increased partially due to an increase in fraudulent activity (check, ACH and identity theft) on customer accounts. Other general and administrative expenses are expected to approximate current levels in future periods.
*Balance Sheet Breakdown and Analysis*
*3/31/2024* *12/31/2023* *9/30/2023* *6/30/2023* *3/31/2023*
*ASSETS*
Cash and due from banks $ 132,349 $ 90,661 $ 83,365 $ 59,181 $ 100,496
Total investment securities 103,210 107,615 109,543 117,563 122,995
Residential mortgage loans held-for-sale, at fair value 1,067 747 1,037 1,106 875
Gross loans 1,461,465 1,473,471 1,483,720 1,472,288 1,457,173
Less allowance for credit losses 15,300 15,400 15,400 15,400 15,220
Net loans 1,446,165 1,458,071 1,468,320 1,456,888 1,441,953
All other assets 81,838 81,858 82,674 84,081 82,754
*Total assets* *$* *1,764,629* *$* *1,738,952* *$* *1,744,939* *$* *1,718,819* *$* *1,749,073*
*LIABILITIES AND SHAREHOLDERS' EQUITY*
Total deposits $ 1,438,408 $ 1,394,182 $ 1,401,797 $ 1,380,192 $ 1,353,918
Total borrowed funds 178,500 198,500 201,050 200,550 259,050
Accrued interest payable and other liabilities 6,647 7,568 9,190 7,387 7,858
*Total liabilities* *1,623,555* *1,600,250* *1,612,037* *1,588,129* *1,620,826*
*Total shareholders' equity* *141,074* *138,702* *132,902* *130,690* *128,247*
*Total liabilities and shareholders' equity* *$* *1,764,629* *$* *1,738,952* *$* *1,744,939* *$* *1,718,819* *$* *1,749,073*
*3/31/2024 vs 12/31/2023* *3/31/2024 vs 3/31/2023* *Variance* *Variance* *Amount* *%* *Amount* *%*
*ASSETS*
Cash and due from banks $ 41,688 45.98 % $ 31,853 31.70 %
Total investment securities (4,405 ) (4.09 )% (19,785 ) (16.09 )%
Residential mortgage loans held-for-sale, at fair value 320 42.84 % 192 21.94 %
Gross loans (12,006 ) (0.81 )% 4,292 0.29 %
Less allowance for credit losses (100 ) (0.65 )% 80 0.53 %
Net loans (11,906 ) (0.82 )% 4,212 0.29 %
All other assets (20 ) (0.02 )% (916 ) (1.11 )%
*Total assets* *$* *25,677* *1.48* *%* *$* *15,556* *0.89* *%*
*LIABILITIES AND SHAREHOLDERS' EQUITY*
Total deposits $ 44,226 3.17 % $ 84,490 6.24 %
Total borrowed funds (20,000 ) (10.08 )% (80,550 ) (31.09 )%
Accrued interest payable and other liabilities (921 ) (12.17 )% (1,211 ) (15.41 )%
*Total liabilities* *23,305* *1.46* *%* *2,729* *0.17* *%*
*Total shareholders' equity* *2,372* *1.71* *%* *12,827* *10.00* *%*
*Total liabilities and shareholders' equity* *$* *25,677* *1.48* *%* *$* *15,556* *0.89* *%*
Cash and due from banks
*3/31/2024* *12/31/2023* *9/30/2023* *6/30/2023* *3/31/2023*
*Cash and due from banks*
Noninterest bearing $ 26,128 $ 29,997 $ 35,121 $ 33,028 $ 24,376
Interest bearing 106,221 60,664 48,244 26,153 76,120
*Total* *$* *132,349* *$* *90,661* *$* *83,365* *$* *59,181* *$* *100,496* *3/31/2024 vs 12/31/2023* *3/31/2024 vs 3/31/2023* *Variance* *Variance* *Amount* *%* *Amount* *%*
*Cash and due from banks*
Noninterest bearing $ (3,869 ) (12.90 )% $ 1,752 7.19 %
Interest bearing 45,557 75.10 % 30,101 39.54 %
*Total* *$* *41,688* *45.98* *%* *$* *31,853* *31.70* *%*
Cash and due from banks fluctuates from period to period based on loan demand and variances in deposit account balances.
Primary and secondary liquidity sources
The following table outlines our primary and secondary sources of liquidity as of:
*3/31/2024* *12/31/2023* *9/30/2023* *6/30/2023* *3/31/2023*
Cash and cash equivalents $ 132,349 $ 90,661 $ 83,365 $ 59,181 $ 100,496
Fair value of unpledged investment securities 73,680 80,247 82,103 82,041 102,368
FHLB borrowing availability 190,000 170,000 170,000 170,000 111,500
Unsecured lines of credit 23,000 20,000 20,000 20,000 20,000
Funds available through the Fed Discount Window 107 111 110 119 119
Parent company line of credit 3,500 3,500 950 1,450 1,450
*Total liquidity sources* *$* *422,636* *$* *364,519* *$* *356,528* *$* *332,791* *$* *335,933*
The increase in cash and cash equivalents in the first quarter of 2024 was due to an increase in total deposits (see "Total deposits" below). The decrease in fair value of unpledged investment securities during 2023 was due to pledging additional securities in our investment portfolio for deposit relationships with collateral agreements. The increase in FHLB borrowing availability during the first quarter of 2024 was due to less utilization of FHLB advances as loan growth has moderated in recent periods.
In addition to the above liquidity sources, we also have the option of utilizing wholesale funding sources, such as brokered NOW accounts, brokered time deposits, and internet time deposits. Although wholesale funding sources are typically more expensive than core deposits and other liquidity sources, they are an integral part of our overall asset and liability management strategy.
Investment securities
*3/31/2024* *12/31/2023* *9/30/2023* *6/30/2023* *3/31/2023*
Available-for-sale
U.S. Government and federal agency $ 20,427 $ 22,425 $ 23,420 $ 24,411 $ 24,402
State and municipal 20,403 20,460 20,992 21,110 22,649
Mortgage backed residential 47,505 49,076 50,786 52,704 54,595
Certificates of deposit 2,729 2,728 3,956 6,679 7,426
Collateralized mortgage obligations - agencies 22,778 23,320 24,062 24,680 25,275
Unrealized gain/(loss) on available-for-sale securities (13,027 ) (12,760 ) (15,958 ) (14,536 ) (13,940 )
Total available-for-sale 100,815 105,249 107,258 115,048 120,407
Held-to-maturity state and municipal 877 878 879 1,081 1,168
Equity securities 1,518 1,488 1,406 1,434 1,420
*Total investment securities* *$* *103,210* *$* *107,615* *$* *109,543* *$* *117,563* *$* *122,995* *3/31/2024 vs 12/31/2023* *3/31/2024 vs 3/31/2023* *Variance* *Variance* *Amount* *%* *Amount* *%*
Available-for-sale
U.S. Government and federal agency (1,998 ) (8.91 )% $ (3,975 ) (16.29 )%
State and municipal (57 ) (0.28 )% (2,246 ) (9.92 )%
Mortgage backed residential (1,571 ) (3.20 )% (7,090 ) (12.99 )%
Certificates of deposit 1 0.04 % (4,697 ) (63.25 )%
Collateralized mortgage obligations - agencies (542 ) (2.32 )% (2,497 ) (9.88 )%
Unrealized gain/(loss) on available-for-sale securities (267 ) 2.09 % 913 (6.55 )%
Total available-for-sale (4,434 ) (4.21 )% (19,592 ) (16.27 )%
Held-to-maturity state and municipal (1 ) (0.11 )% (291 ) (24.91 )%
Equity securities 30 2.02 % 98 6.90 %
*Total investment securities* *$* *(4,405* *)* *(4.09* *)%* *$* *(19,785* *)* *(16.09* *)%*
The amortized cost and fair value of AFS investment securities as of March 31, 2024 were as follows:
*Maturing* *Due in One Year or Less* *After One Year But Within Five Years* *After Five Years But Within Ten Years* *After Ten Years* *Securities with Variable Monthly Payments or Noncontractual Maturities* *Total*
U.S. Government and federal agency $ 7,484 $ 12,943 $ — $ — $ — $ 20,427
State and municipal 2,922 15,247 1,114 1,120 — 20,403
Mortgage backed residential — 47,505 47,505
Certificates of deposit 2,729 — — — — 2,729
Collateralized mortgage obligations - agencies — — — — 22,778 22,778
*Total amortized cost* *$* *13,135* *$* *28,190* *$* *1,114* *$* *1,120* *$* *70,283* *$* *113,842*
*Fair value* *$* *12,639* *$* *25,791* *$* *1,012* *$* *1,037* *$* *60,336* *$* *100,815*
The amortized cost and fair value of HTM investment securities as of March 31, 2024 were as follows:
*Maturing* *Due in One Year or Less* *After One Year But Within Five Years* *After Five Years But Within Ten Years* *After Ten Years* *Securities with Variable Monthly Payments or Noncontractual Maturities* *Total*
State and municipal $ 427 $ 295 $ 155 $ — $ — $ 877
Fair value $ 424 $ 285 $ 151 $ — $ — $ 860
Total investment securities have declined in recent periods primarily due to maturities and prepayments. As a result of the current liquidity environment and overall market conditions, we have not replenished maturing securities with new purchases.
Residential mortgage loans held-for-sale, at fair value
Loans HFS represent the fair value of loans that have been committed to be sold to the secondary market, but have not yet been delivered. The level of loans HFS fluctuates based on loan demand as well as the timing of loan deliveries to the secondary market.
Loans and allowance for credit losses
As outlined in the following tables, our loan portfolio has moderated throughout the past 12 months. During the first quarter of 2024, gross loans declined $12,006, primarily due to an acceleration of commercial loan payoffs. As a result of current market conditions, we expect minimal loan growth in 2024. Specifically, our commercial pipeline has declined significantly, and the requests that are being presented are lower dollar balances and often carry an SBA guarantee.
The following tables outline the composition and changes in the loan portfolio as of:
*3/31/2024* *12/31/2023**
* *9/30/2023* *6/30/2023* *3/31/2023*
Commercial and industrial $ 114,772 $ 118,089 $ 125,330 $ 120,985 $ 111,557
Commercial real estate 867,270 870,693 874,870 870,761 874,690
*Total commercial loans* *982,042* *988,782* *1,000,200* *991,746* *986,247*
Residential mortgage 426,762 431,836 431,740 430,065 418,987
Home equity 48,568 48,380 47,069 45,689 46,909
*Total residential real estate loans* *475,330* *480,216* *478,809* *475,754* *465,896*
Consumer 4,093 4,473 4,711 4,788 5,030
*Gross loans* *1,461,465* *1,473,471* *1,483,720* *1,472,288* *1,457,173*
Allowance for credit losses (15,300 ) (15,400 ) (15,400 ) (15,400 ) (15,220 )
*Loans, net* *$* *1,446,165* *$* *1,458,071* *$* *1,468,320* *$* *1,456,888* *$* *1,441,953*
*Memo items:*
Residential mortgage loans serviced for others $ 619,160 $ 624,765 $ 631,697 $ 632,018 $ 636,121 *3/31/2024 vs 12/31/2023* *3/31/2024 vs 3/31/2023* *Variance* *Variance* *Amount* *%**
* *Amount* *%*
Commercial and industrial $ (3,317 ) (2.81 )% $ 3,215 2.88 %
Commercial real estate (3,423 ) (0.39 )% (7,420 ) (0.85 )%
*Total commercial loans* *(6,740* *)* *(0.68* *)%* *(4,205* *)* *(0.43* *)%*
Residential mortgage (5,074 ) (1.17 )% 7,775 1.86 %
Home equity 188 0.39 % 1,659 3.54 %
*Total residential real estate loans* *(4,886* *)* *(1.02* *)%* *9,434* *2.02* *%*
Consumer (380 ) (8.50 )% (937 ) (18.63 )%
*Gross loans* *(12,006* *)* *(0.81* *)%* *4,292* *0.29* *%*
Allowance for credit losses 100 (0.65 )% (80 ) 0.53 %
*Loans, net* *$* *(11,906* *)* *(0.82* *)%* *$* *4,212* *0.29* *%*
*Memo items:*
Residential mortgage loans serviced for others $ (5,605 ) (0.90 )% $ (16,961 ) (2.67 )%
The following table presents historical loan balances by portfolio segment as of:
*3/31/2024* *12/31/2023* *9/30/2023* *6/30/2023* *3/31/2023*
Loans collectively evaluated
Commercial and industrial $ 112,542 $ 115,665 $ 124,860 $ 120,854 $ 111,426
Commercial real estate 867,270 870,524 874,701 870,580 874,509
Residential mortgage 423,881 429,109 428,927 428,147 416,879
Home equity 48,388 48,136 46,898 45,535 46,761
Consumer 4,093 4,473 4,711 4,788 5,020
Subtotal 1,456,174 1,467,907 1,480,097 1,469,904 1,454,595
Loans individually evaluated
Commercial and industrial 2,230 2,424 470 131 131
Commercial real estate — 169 169 181 181
Residential mortgage 2,881 2,727 2,813 1,918 2,108
Home equity 180 244 171 154 148
Consumer — — — — 10
Subtotal 5,291 5,564 3,623 2,384 2,578
*Gross Loans* *$* *1,461,465* *$* *1,473,471* *$* *1,483,720* *$* *1,472,288* *$* *1,457,173*
The following table presents historical allowance for credit losses allocations by portfolio segment as of:
*3/31/2024* *12/31/2023* *9/30/2023* *6/30/2023* *3/31/2023*
Allowance for credit losses for collectively evaluated loans
Commercial and industrial $ 1,300 $ 1,407 $ 1,362 $ 1,488 $ 1,324
Commercial real estate 8,359 8,467 8,703 8,991 8,765
Residential mortgage 4,202 4,409 4,439 4,453 4,576
Home equity 305 321 315 325 416
Consumer 38 44 36 40 49
Unallocated 670 355 294 49 —
Subtotal 14,874 15,003 15,149 15,346 15,130
Allowance for credit losses for individually evaluated loans
Commercial and industrial 423 363 248 15 3
Commercial real estate — — — — —
Residential mortgage 3 34 3 39 77
Home equity — — — — —
Consumer — — — — 10
Unallocated — — — — —
Subtotal 426 397 251 54 90
*Allowance for credit losses* *$* *15,300* *$* *15,400* *$* *15,400* *$* *15,400* *$* *15,220*
Commercial and industrial $ 1,723 $ 1,770 $ 1,610 $ 1,503 $ 1,327
Commercial real estate 8,359 8,467 8,703 8,991 8,765
Residential mortgage 4,205 4,443 4,442 4,492 4,653
Home equity 305 321 315 325 416
Consumer 38 44 36 40 59
Unallocated 670 355 294 49 —
*Allowance for credit losses* *$* *15,300* *$* *15,400* *$* *15,400* *$* *15,400* *$* *15,220*
Loan concentration analysis
As a result of the current economic conditions, there continues to be a heightened focus in the financial industry for non-owner occupied commercial real estate loans, most specifically retail and office space industries. While we continue to monitor various industries that have been impacted by the pandemic, we also continue to monitor the effects of inflation, supply chain disruption, rising interest rates, and office space usage associated with an increased remote workforce. The overall credit quality indicators of non-owner occupied commercial real estate loan portfolio have remained strong. Performance is based on debt service coverage ratio, loan to value ratio and payment trends. As of March 31, 2024, there were no delinquencies in the non-owner occupied commercial real estate loan portfolio. We expect the non-owner occupied commercial real estate loan portfolio to experience insignificant growth, if any, in future periods.
The net lease pool is the largest pool in the non-owner occupied commercial real estate portfolio. Risk associated within this pool is minimal as these are national or regional tenants that are well vetted during origination and annually thereafter. Risk is further minimized in this pool as locations are spread out nationally.
We have exposure in our loan portfolio to Rite Aid in the net lease and retail strip center non-owner occupied commercial real estate pools. During the fourth quarter of 2023, Rite Aid, which operates over 2,000 retail pharmacies across 17 states, filed for Chapter 11 bankruptcy protection. Exposure in the net lease pool whereas Rite Aid is a single tenant consists of six loans totaling $9,976. Exposure in the retail strip center pool whereas Rite Aid is a tenant consists of three loans totaling $17,174. One loan in the retail strip center pool has been reported on the Rite Aid store closure listing, however, the loan is well-secured. We continue to actively monitor the status of the Rite Aid's filing and exit strategy from bankruptcy.
With the ongoing pressures on the office sector due to remote work capabilities and less required office space, we continue to monitor the office pool more closely for potential deterioration. It is not expected that there will be much, if any, impact on portfolio performance in this pool in the near future due to existing lease terms, tenant mix, office size, and strong underwriting at origination. Due to current economic uncertainty and the pressures noted above, it is unlikely that we will seek new loan originations in the non-owner occupied office pool in 2024.
Below is a description of each industry pool within the non-owner occupied commercial real estate loan portfolio:
Net lease: Loans in this pool represent national credit tenants (or franchisees of the same) or large regional tenants with excellent credit. These loans are typically single tenant net lease credits with strong debt service coverage ratios and lease terms that extend beyond the maturity of the loan.
Retail strip centers: Loans in this pool represent loans collateralized by retail strip centers. The tenant base within this pool consists primarily of retail space whose average lease periods run between one and ten years. Larger strip centers are usually anchored by a national or regional tenant. Guarantors in this category typically have large liquid reserves.
Office: Loans in this pool represent loans collateralized by non-owner occupied office buildings. The tenant base includes legal and other professional services whose average lease periods run from three to fifteen years.
Special use: Loans in this pool represent loans collateralized by special use buildings, which include hotels, motels, assisted living and nursing homes that are not classified as construction or SBA loans.
Industrial: Loans in this pool represent investment properties used for manufacturing and production.
Medical office: Loans in this pool represent loans collateralized by non-owner occupied medical office buildings. The tenant base includes medical services whose average lease periods run from three to fifteen years.
Self storage: Loans in this pool represent self storage buildings. Loan terms are generally five years or less and the lease terms of the units are typically on a month-to-month basis.
Mixed use: Loans in this pool represent loans collateralized by mixed use real estate. The tenant base within this pool consists primarily of office-retail, office-residential or retail-residential space. The properties are most often purchased by individuals for investment purposes.
Retail: Loans in this pool represent loans collateralized by single tenant retail buildings whose average lease periods run over five years.
The following tables present the composition of current and historical non-owner occupied commercial real estate loans, based on loan collateral, by industry pool:
*3/31/2024* *12/31/2023* *9/30/2023* *6/30/2023* *3/31/2023*
Net lease $ 147,103 $ 149,056 $ 160,077 $ 159,199 $ 161,392
Retail strip centers 107,834 98,588 96,567 96,310 95,726
Office 61,657 61,822 62,959 62,062 59,867
Special use 58,278 58,710 57,612 57,978 41,932
Industrial 22,575 28,380 28,906 28,661 29,025
Medical office 25,380 25,842 28,591 28,752 30,363
Self storage 25,660 23,455 21,993 22,169 22,265
Mixed use 17,174