PR Newswire
MARIETTA, Ohio, Oct. 24, 2023
MARIETTA, Ohio, Oct. 24, 2023 /PRNewswire/ -- Peoples Bancorp Inc. ("Peoples") (Nasdaq: PEBO) today announced results for the three and nine months ended September 30, 2023. Peoples reported net income of $31.9 million for the third quarter of 2023, representing earnings per diluted common share of $0.90. In comparison, Peoples reported net income of $21.1 million, representing earnings per diluted common share of $0.64, for the second quarter of 2023, and net income of $26.0 million, representing earnings per diluted common share of $0.92, for the third quarter of 2022. For the nine months ended September 30, 2023, Peoples recorded net income of $79.5 million, or $2.47 per diluted common share, compared to $74.4 million, or $2.65 per diluted common share, for the nine months ended September 30, 2022.
The provision for (recovery of) credit losses recorded represents the amount needed to maintain the appropriate level of the allowance for credit losses based on management's quarterly estimates. The provision for credit losses negatively impacted earnings per diluted common share by $0.09 for the third quarter of 2023, compared to $0.19 for the second quarter of 2023, and $0.05 for the third quarter of 2022. For the first nine months of 2023, the provision negatively impacted earnings per diluted common share by $0.33, compared to the release of provision positively impacting earnings per diluted common share by $0.16 for the first nine months of 2022.
Non-core items, and the related tax effect of each, in net income primarily included acquisition-related expenses and a $2.4 million pension settlement charge recognized in the third quarter of 2023. Non-core items negatively impacted earnings per diluted common share by $0.16 for the third quarter of 2023, $0.28 for the second quarter of 2023, and $0.01 for the third quarter of 2022. Non-core items negatively impacted earnings per diluted share by $0.52 and $0.07 for the nine months ended September 30, 2023 and 2022, respectively.
"We are proud to continue our trend of strong earnings and asset quality. We generated record net income and we had many other positive metrics for the third quarter and the first nine months of 2023 compared to prior periods," said Chuck Sulerzyski, President and Chief Executive Officer. "We are looking forward to capitalizing on our recent successes and will continue to develop our relationships with our clients. Our associates are focused on working together to identify client needs and improve our overall client experience."
Pension Plan Termination
During the third quarter of 2023, Peoples terminated its pension plan by settling the remaining benefit obligation of $7.7 million. The pension plan had been closed to new entrants since January 1, 2010. Peoples recorded a settlement charge of $2.4 million in the third quarter of 2023 in relation to the termination of the pension plan. Peoples does not anticipate further expenses related to the termination.
Completion of the Limestone Merger:
As of close of business on April 30, 2023, Peoples completed its previously announced merger with Limestone Bancorp, Inc. ("Limestone"), a bank holding company headquartered in Louisville, Kentucky, and the parent company of Limestone Bank, pursuant to a definitive Agreement and Plan of Merger (the "Merger Agreement") dated October 24, 2022. Under the terms of the Merger Agreement, Limestone merged with and into Peoples, and immediately thereafter Limestone Bank merged with and into Peoples' wholly-owned subsidiary, Peoples Bank (collectively, the "Limestone Merger"), in a transaction valued at $177.9 million. Peoples recorded acquisition-related expenses primarily related to the Limestone Merger which included $4.4 million and $15.7 million in other non-interest expense for the third quarter and the nine months ended September 30, 2023, respectively. For the third quarter of 2023, the $4.4 million of acquisition-related non-interest expense consisted of $2.1 million in other non-interest expense, $1.3 million in data processing and software expense, $0.6 million in salaries and employee benefit costs, and $0.4 million in professional fees. For the nine months ended September 30, 2023, the $15.7 million of acquisition-related non-interest expense primarily consisted of $5.7 million in salaries and employee benefit costs, $5.5 million in professional fees, $3.0 million in other non-interest expense, $1.3 million in data processing and software expense, and $0.2 million in various other non-interest expense line items. The other non-interest expenses were primarily due to $1.8 million of early contract termination fees on Limestone contracts driven by the system conversions, which took place in the third quarter of 2023.
Investment Portfolio Restructuring:
During the first quarter of 2023, Peoples executed the sales of $96.7 million of its lower yielding available-for-sale investment securities for an after-tax loss of $1.6 million. Proceeds from the sales were used to pay down overnight borrowings. The loss on the sale of these available-for-sale investment securities had a nominal impact on tangible book value as such loss was previously reflected in capital through accumulated other comprehensive loss. The realized losses recognized due to these transactions are projected to be earned back within the 2023 fiscal year.
Statement of Operations Highlights:
- Net interest income for the third quarter of 2023 increased $8.4 million, or 10%, compared to the linked quarter and increased $26.2 million, or 39%, compared to the third quarter of 2022.
- Net interest margin increased 16 basis points to 4.70% for the third quarter of 2023, compared to 4.54% for the linked quarter and increased 53 basis points compared to 4.17% for the third quarter of 2022.
- The increase in net interest margin for the third quarter of 2023 compared to the linked quarter was primarily driven by a full quarter of accretion on the acquired Limestone portfolio in the third quarter compared to only two months in the second quarter. The third quarter was also impacted by a true-up of $3.6 million to the preliminary Limestone-related accretion recorded in the second quarter of 2023, $1.9 million of which would have benefited the net interest margin for the second quarter of 2023.
- The increase in net interest income for the third quarter of 2023 compared to the third quarter of 2022 was driven by increases in market interest rates and the accretion on the acquired Limestone portfolio.
- Peoples recorded a provision for credit losses of $4.1 million for the third quarter of 2023, compared to a provision for credit losses of $8.0 million for the second quarter of 2023, and a provision for credit losses of $1.8 million for the third quarter of 2022.
- The provision for credit losses in the third quarter of 2023 was driven by (i) loan growth, (ii) an increase in net charge-offs, (iii) updates to our prepayment, curtailment, and funding rates, and (iv) a deterioration in macro-economic conditions used within the current expected credit loss ("CECL") model, partially offset by the release of reserves on individually analyzed loans.
- Net charge-offs were $2.3 million, or 0.15% of average total loans annualized, for the third quarter of 2023, compared to $1.2 million, or 0.09%, for the linked quarter and $1.7 million, or 0.15%, for the third quarter of 2022.
- Total non-interest income, excluding net gains and losses, for the third quarter of 2023 increased $0.7 million, or 3%, compared to the linked quarter, and increased $3.1 million, or 15%, compared to the third quarter of 2022.
- The increase in non-interest income, excluding gains and losses, for the third quarter of 2023 when compared to the second quarter of 2023 was primarily due to increases in other non-interest income and bank owned life insurance income due to a death benefit recognized in the third quarter of 2023, partially offset by a decrease in lease income. The increase in other non-interest income was attributable to an increase in operating lease income, which was partially offset by operating lease expense recognized in other non-interest expense when compared to the linked quarter.
- Total non-interest income, excluding net gains and losses, for the first nine months of 2023 was 21% of total revenue (defined as net interest income plus total non-interest income excluding net gains and losses).
- Total non-interest expense for the third quarter of 2023 increased $1.1 million, or 2%, compared to the linked quarter and increased $19.4 million, or 37%, compared to the third quarter of 2022.
- The increase in total non-interest expense for the third quarter of 2023 when compared to the linked quarter was primarily attributable to increases in other non-interest expense, data processing and software expenses, and amortization of other intangible assets. The increase in other non-interest expense was due to expenses recognized in relation to the pension plan termination, Limestone acquisition-related expenses, and operating lease depreciation expenses. The increase in total non-interest expense was partially offset by decreases in professional fees and salaries and employee benefit costs, due to lower acquisition-related expenses.
- Excluding acquisition-related expenses, total non-interest expense for the third quarter of 2023 increased $7.3 million when compared to the linked quarter, primarily due to increases in (i) other non-interest expenses, (ii) salaries and employee benefit costs, and (iii) data processing and software expense. The increase in other non-interest expenses was primarily due to the previously discussed pension plan termination and operating lease expenses and a full quarter of expense from Limestone in the third quarter of 2023 compared to only two months in the linked quarter.
- For the third quarter of 2023, the efficiency ratio was 58.4% compared to 62.7% for the linked quarter. When adjusted for non-core items, the efficiency ratio was 52.5% for the third quarter of 2023 compared to 53.3% for the linked quarter.
Balance Sheet Highlights:
- Period-end total loan and lease balances at September 30, 2023 increased $109.8 million, or 7% annualized, compared to June 30, 2023.
- The increases in period-end and average total loan and lease balances were primarily the result of growth in (i) commercial real estate loans, (ii) premium finance loans and (iii) leases, partially offset by reductions in construction loans and commercial and industrial loans. The increase in average total loan and lease balances was also impacted by a full quarter of loan balances acquired in the Limestone Merger compared to only two months in the linked quarter.
- Asset quality metrics remained stable during the quarter.
- Delinquency trends remained stable as loans considered current comprised 99.0% of the loan portfolio at both September 30, 2023 and at June 30, 2023.
- Nonperforming assets at September 30, 2023 increased $0.6 million compared to June 30, 2023. The increase was primarily attributable to increases in nonperforming leases, which were largely offset by decreases in nonperforming commercial real estate loans.
- Criticized loans decreased $6.7 million during the third quarter of 2023 when compared to June 30, 2023. The decrease was primarily driven by criticized loan pay-offs, partially offset by loan downgrades.
- Classified loans increased $13.9 million during the third quarter of 2023 when compared to June 30, 2023. The increase was primarily driven by loan downgrades, partially offset by classified loan pay-offs.
- Period-end total deposit balances at September 30, 2023 increased $77.6 million, or 1%, compared to at June 30, 2023.
- The increase was driven by growth in (i) retail certificates of deposit, (ii) governmental deposit accounts and (iii) brokered deposits, partially offset by reductions in (i) savings accounts, (ii) non-interest-bearing checking accounts and (iii) interest-bearing checking accounts.
- The percentages of retail deposit balances and commercial deposit balances of the total deposit balance at September 30, 2023 were 79% and 21%, respectively, compared to 78% and 22%, respectively, at June 30, 2023.
- Total demand deposit balances were 39% and 42% of total deposit balances at September 30, 2023 and at June 30, 2023, respectively.
- Total loan balances were 86% of total deposit balances at both September 30, 2023 and June 30, 2023.
- Deposit balances that exceeded the Federal Deposit Insurance Corporation ("FDIC") insurance limit of $250,000 were 31% of total deposits at September 30, 2023 and 32% of total deposits at June 30, 2023. Peoples pledges investment securities against certain governmental deposit accounts, which collateralized $812.7 million, or 42%, of the uninsured deposit balances at September 30, 2023.
Net Interest Income:
Net interest income was $93.3 million for the third quarter of 2023, an increase of $8.4 million, or 10%, compared to the linked quarter. The increase in net interest income was primarily due to a full quarter of net interest income provided by the Limestone Merger in the third quarter compared to only two months of net interest income in the linked quarter. Net interest margin was 4.70% for the third quarter of 2023, compared to 4.54% for the linked quarter. The increase in net interest margin was primarily driven by a full quarter of the accretion on the acquired Limestone portfolio compared to two months in the linked quarter. The increase in net interest margin was also impacted by a true-up of $3.6 million in the third quarter of 2023 to the preliminary Limestone-related accretion, $1.9 million of which would have benefited the second quarter of 2023. Also impacting the increases in net interest income and net interest margin was six basis points of improvement in investment yields due to sales of lower-yielding investment securities and a full quarter of yields from the securities acquired in the Limestone Merger compared to two months in the linked quarter. Partially offsetting these benefits was an increase in interest expense resulting from a shift in the composition of funding sources to retail and brokered certificates of deposits ("CDs") from non-interest bearing deposits combined with an increase in market interest rates for deposits and other funding sources.
Net interest income for the third quarter of 2023 increased $26.2 million, or 39%, compared to the third quarter of 2022. Net interest margin for the third quarter of 2023 increased 53 basis points compared to 4.17% for the third quarter of 2022. The increase in net interest income compared to the third quarter of 2022 was driven by increases in market interest rates, the Limestone Merger, and organic growth.
Accretion income, net of amortization expense, from acquisitions was $9.8 million for the third quarter of 2023, $4.5 million for the second quarter of 2023 and $2.8 million for the third quarter of 2022, which added 49 basis points, 24 basis points and 16 basis points, respectively, to net interest margin. The increases in accretion income for the third quarter of 2023 when compared to the linked quarter and the third quarter of 2022 were driven by accretion from the Limestone Merger and the aforementioned third quarter 2023 true-up to the preliminary Limestone-related accretion.
For the first nine months of 2023, net interest income increased $68.2 million, or 37%, compared to the first nine months of 2022, while net interest margin increased 93 basis points to 4.74%. The increase in net interest income was driven by increases in market interest rates, the additional net interest income from the Limestone Merger, and improvement in investment yields. Partially offsetting these benefits was an increase in interest expense resulting from a shift in the composition of funding sources combined with an increase in market interest rates for deposits and other funding sources.
Accretion income, net of amortization expense, from acquisitions was $16.3 million for the nine months ended September 30, 2023, compared to $9.4 million for the nine months ended September 30, 2022, which added 30 and 20 basis points, respectively, to net interest margin. The increase in accretion income for the first nine months of 2023 compared to the same period in 2022 was due to higher accretion recognized from the Limestone Merger than was recorded due to the acquisitions of Vantage Financial, LLC ("Vantage") and NS Leasing, LLC ("NSL") and the merger with Premier Financial Bancorp, Inc. ("Premier") in the prior period.
Provision for (Recovery of) Credit Losses:
The provisions for credit losses were $4.1 million, $8.0 million, and $1.8 million for the third quarter of 2023, the linked quarter, and the third quarter of 2022, respectively. The provision for credit losses for the third quarter of 2023 was driven by (i) loan growth, (ii) an increase in net charge-offs, (iii) updates to our prepayment, curtailment and funding rates, and (iv) a deterioration in macro-economic conditions used within the CECL model, partially offset by the release of reserves on individually analyzed loans. The provision for credit losses in the linked quarter was due to a provision of $9.4 million for the non-purchased credit deteriorated loans acquired in the Limestone Merger, partially offset by the release of reserves of $1.7 million on individually analyzed loans and a recovery of $1.0 million due to improvements in macro-economic conditions. The provision for credit losses for the third quarter of 2022 was largely attributable to a deterioration of macro-economic conditions, partially offset by a release of reserves on individually analyzed loans.
The provision for credit losses for the first nine months of 2023 was $13.9 million, compared to a recovery of credit losses of $5.8 million for the first nine months of 2022. The provision for credit losses during the first nine months of 2023 was driven by (i) the addition of the provision for the non-purchased credit deteriorated loans acquired in the Limestone Merger, (ii) loan growth and (ii) economic forecast deterioration, partially offset by a reduction in the reserves for individually analyzed loans and the use of updated loss drivers. The recovery of credit losses for the first nine months of 2022 was primarily due to the impact of economic assumptions used in the CECL model.
Net charge-offs for the third quarter of 2023 were $2.3 million, or 0.15% of average total loans annualized, compared to net charge-offs of $1.2 million, or 0.09% of average total loans annualized, for the linked quarter and net charge-offs of $1.7 million, or 0.15% of average total loans annualized, for the third quarter of 2022. Net charge-offs for the first nine months of 2023 were $5.1 million, or 0.13% of average total loans annualized, compared to net charge-offs of $5.1 million, or 0.15% annualized, for the first nine months of 2022. For additional information on credit trends and the allowance for credit losses, see the "Asset Quality" section below.
Net Gains and Losses:
Net gains and losses include gains and losses on investment securities, asset disposals and other transactions, which are included in total non-interest income on the Consolidated Statements of Operations. The net loss realized during the third quarter of 2023 was $0.3 million, compared to net losses of $1.8 million and $14,000 for the linked quarter and the third quarter of 2022, respectively. The net loss for the third quarter of 2023 was due to $0.3 million of net losses on repossessed assets. The net loss for the linked quarter was primarily due to the $1.6 million write-down of an other real estate owned ("OREO") property due to a pending sale of the property.
The net loss realized during the first nine months of 2023 was $4.3 million, compared to $207,000 for the first nine
months of 2022. The net loss for the first nine months of 2023 was primarily driven by the $2.0 million pre-tax ($1.6 million after-tax) net loss on the sales of the available-for-sale investment securities during the first quarter of 2023, as mentioned above, and the $1.6 million write-down of the OREO property during the second quarter of 2023, as mentioned above. The net loss recognized in the first nine months of 2022 was attributable to (i) a $119,000 loss recorded on repossessed assets, (ii) a $44,000 loss on the sale of investment securities in order to reinvest into higher-yielding securities, and (iii) an adjustment to the gain on sale of loans recognized in the fourth quarter of 2021 due to a measurement period adjustment to the acquisition-date fair value of Premier loans acquired that were subsequently sold.
Total Non-interest Income, Excluding Net Gains and Losses:
Total non-interest income, excluding net gains and losses, for the third quarter of 2023 increased $0.7 million compared to the linked quarter. The increase in non-interest income, excluding net gains and losses, was due to a $1.4 million increase in other non-interest income and a $0.5 million increase in bank owned life insurance income, mostly offset by a $1.8 million decrease in lease income. The increase in other non-interest income was attributable to a $1.0 million increase in operating lease income, which was partially offset by a $0.6 million increase in operating lease expense recognized in other non-interest expense when compared to the linked quarter. Bank owned life insurance income increased primarily due to a death benefit of $0.4 million recognized in the third quarter of 2023.
Compared to the third quarter of 2022, non-interest income, excluding net gains and losses, increased $3.1 million, due to (i) a $1.5 million increase in other non-interest income, (ii) a $1.2 million increase in electronic banking income, (iii) a $0.7 million increase in deposit account service charges, (iv) a $0.7 million increase in bank owned life insurance income due to the aforementioned death benefit, and (v) a $0.6 million increase in insurance income. The increase in other non-interest income was due to the increase in operating lease income mentioned above. Insurance income increased due to new business and market increases for premiums. The other increases were primarily due to the additional customers brought in from the Limestone Merger when compared to the third quarter of 2022.
For the first nine months of 2023, total non-interest income, excluding gains and losses, increased $7.6 million, or 13%, compared to the first nine months of 2022. The increase was driven by (i) a $2.4 million increase in electronic banking income, (ii) a $1.7 million increase in insurance income due to growth in the property and casualty insurance line, (iii) a $1.4 million increase in deposit account service charges, (iv) a $1.4 million increase in other non-interest income, and (v) a $1.0 million increase in bank owned life insurance income. The increase in other non-interest income was due to the increase in operating lease income mentioned above. Insurance income increased due to new business and market increases for premiums. Bank owned life insurance income increased primarily due to the aforementioned death benefit. The other increases were primarily due to the additional customers brought in from the Limestone Merger when compared to the first nine months of 2022.
Total Non-interest Expense:
Total non-interest expenses for the third quarter and the nine months ended September 30, 2023 were impacted by the Limestone Merger and acquisition-related non-interest expenses. Total acquisition-related non-interest expenses added $4.4 million and $15.7 million, respectively, across various line-items within non-interest expense. During the third quarter of 2023, the acquisition-related expenses recognized were primarily attributable to early contract termination fees, system conversion costs, salaries and employee benefit costs, and professional fees attributable to the Limestone Merger. For the second quarter of 2023, the acquisition-related non-interest expenses were primarily attributable to salaries and employee benefit costs and professional fees related to the Limestone Merger.
The table below summarizes the amount of acquisition-related expenses for each line item that is a component of non-interest expense. Acquisition-related expenses are considered a non-core non-interest expense by Peoples. This information is used by Peoples to provide information useful to investors in understanding Peoples' operating performance and trends.
Three Months Ended | Nine Months Ended | ||||||||
September 30, | June 30, | September 30, | September 30, | ||||||
(Dollars in thousands) | 2023 | 2023 | 2022 | 2023 | 2022 | ||||
Non-interest expense: | |||||||||
Salaries and employee benefit costs | $ 36,608 | $ 38,025 | $ 28,618 | $ 106,661 | $ 83,932 | ||||
Net occupancy and equipment expense | 5,501 | 5,380 | 4,813 | 15,836 | 14,669 | ||||
Professional fees | 3,456 | 7,438 | 2,832 | 13,775 | 8,784 | ||||
Data processing and software expense | 6,288 | 4,728 | 3,279 | 15,578 | 9,228 | ||||
Amortization of other intangible assets | 3,280 | 2,800 | 2,023 | 7,951 | 5,765 | ||||
Electronic banking expense | 1,836 | 1,832 | 2,648 | 5,159 | 8,134 | ||||
Marketing expense | 1,267 | 1,357 | 1,136 | 3,554 | 2,991 | ||||
FDIC insurance premiums | 1,260 | 1,464 | 709 | 3,525 | 2,921 | ||||
Franchise tax expense | 772 | 872 | 1,075 | 2,678 | 2,941 | ||||
Communication expense | 752 | 724 | 599 | 2,089 | 1,873 | ||||
Other loan expenses | 856 | 538 | 511 | 2,133 | 1,788 | ||||
Other non-interest expense | 9,820 | 5,465 | 4,010 | 19,859 | 10,755 | ||||
Total non-interest expense | 71,696 | 70,623 | 52,253 | 198,798 | 153,781 | ||||
Acquisition-related non-interest expense: | |||||||||
Salaries and employee benefit costs | 562 | 5,125 | — | 5,708 | 29 | ||||
Net occupancy and equipment expense | 2 | 20 | 7 | 31 | 36 | ||||
Professional fees | 429 | 4,812 | 221 | 5,532 | 1,791 | ||||
Data processing and software expense | 1,289 | 1 | 129 | 1,290 | 410 | ||||
Electronic banking expense | — | 115 | — | 115 | (92) | ||||
Marketing expense | 38 | 14 | 5 | 61 | 45 | ||||
Communication expense | 1 | — | — | 1 | 1 | ||||
Other loan expenses | — | 1 | — | 1 | — | ||||
Other non-interest expense | 2,113 | 621 | (23) | 2,955 | 94 | ||||
Total acquisition-related non-interest expense | 4,434 | 10,709 | 339 | 15,694 | 2,314 | ||||
Non-interest expense excluding acquisition- | |||||||||
Salaries and employee benefit costs | 36,046 | 32,900 | 28,618 | 100,953 | 83,903 | ||||
Net occupancy and equipment expense | 5,499 | 5,360 | 4,806 | 15,805 | 14,633 | ||||
Professional fees | 3,027 | 2,626 | 2,611 | 8,243 | 6,993 | ||||
Data processing and software expense | 4,999 | 4,727 | 3,150 | 14,288 | 8,818 | ||||
Amortization of other intangible assets | 3,280 | 2,800 | 2,023 | 7,951 | 5,765 | ||||
Electronic banking expense | 1,836 | 1,717 | 2,648 | 5,044 | 8,226 | ||||
Marketing expense | 1,229 | 1,343 | 1,131 | 3,493 | 2,946 | ||||
FDIC insurance premiums | 1,260 | 1,464 | 709 | 3,525 | 2,921 | ||||
Franchise tax expense | 772 | 872 | 1,075 | 2,678 | 2,941 | ||||
Communication expense | 751 | 724 | 599 | 2,088 | 1,872 | ||||
Other loan expenses | 856 | 537 | 511 | 2,132 | 1,788 | ||||
Other non-interest expense | 7,707 | 4,844 | 4,033 | 16,904 | 10,661 | ||||
Total non-interest expense excluding acquisition- | $ 67,262 | $ 59,914 | $ 51,914 | $ 183,104 | $ 151,467 | ||||
Total non-interest expense increased $1.1 million, or 2%, for the three months ended September 30, 2023, compared to the linked quarter. Excluding acquisition-related expense, total non-interest expense increased $7.3 million, or 12%, primarily due to increases of (i) $3.1 million in salaries and employee benefit costs, (ii) $2.9 million in other non-interest expense, (iii) $0.5 million in amortization of other intangible assets, and (iv) $0.4 million in professional fees. For the third quarter of 2023, additional total non-interest expenses from the Limestone Merger excluding acquisition-related expenses, were $7.2 million compared to $5.4 million in the linked quarter. The increase in the third quarter of 2023 total non-interest expenses attributable to the Limestone Merger, excluding acquisition-related expense, when compared to the linked quarter was due to a full quarter of expenses in the third quarter from the Limestone Merger compared to only two months of expenses in the linked quarter. Excluding the impact from the Limestone Merger, the increase in other non-interest expenses was also due to the previously discussed pension plan settlement charge as well as a $0.6 million increase in operating lease depreciation expenses. The increases in salaries and employee benefit costs and data processing and professional fees were primarily due to growth.
Compared to the third quarter of 2022, total non-interest expense for the third quarter of 2023 increased $19.4 million, or 37%. Excluding acquisition-related expenses, non-interest expenses increased $15.3 million, or 30%, primarily due to a $7.4 million increase in salaries and employee benefit costs, a $3.7 million increase in other non-interest expense, a $1.8 million increase in data processing and software expense, and a $1.3 million increase in amortization of other intangible assets. The increases were impacted by total non-interest expenses attributable to the Limestone Merger, excluding acquisition-related expense, which added $7.2 million throughout the non-interest expense line items. A majority of the remaining variance, excluding acquisition-related expense, was due to the Limestone Merger. The increase in other non-interest expenses was primarily due to the previously discussed pension plan settlement charges and a $0.9 million increase in operating lease depreciation expenses, while the other increases were
