NB Bancorp, Inc. (the “Company”) (Nasdaq Capital Market: NBBK), the holding company of Needham Bank (the “Bank”), today announced its third quarter 2024 financial results.
SELECTED FINANCIAL HIGHLIGHTS FOR THE THIRD QUARTER OF 2024
— Net income of $8.4 million, or $0.21 per diluted share, compared to net income of $9.5 million, or $0.24 per diluted share, for the prior quarter. Operating net income, excluding one-time charges, amounted to $13.1 million, or $0.33 per diluted share for the current quarter. One-time charges include:
— Loss on the sale of available-for sale securities amounting to $1.9 million;
— Tax expense and a modified endowment contract penalty related to the surrender of bank-owned life insurance (“BOLI”) policies of $1.6 million, and;
— Tax expense related to a basis write-down of solar income tax credits of $2.5 million, partially offset by;
— Reversal of previously recognized amortization related to solar income tax credit investments during the first six months of the year, amounting to $913 thousand.
— Gross loans increased $151.8 million, or 3.7%, to $4.25 billion, from the prior quarter.
— Net interest margin increased 5 basis points to 3.51% during the current quarter from 3.46% in the prior quarter.
— A portfolio of available-for-sale securities was sold at a $1.9 million net loss during the current quarter, with the proceeds reinvested into higher-yielding securities, which were restructured to mitigate portfolio risk and increase yield. The securities sold had an average yield of 0.97% with remaining duration of 2.4 years and were reinvested into securities with an average yield of 4.27% and average duration of 4.1 years. The earn-back period on the loss from the sale of the available-for-sale securities is expected to be approximately 2.5 years. The newly purchased securities carry a lower risk weight than the securities sold, mitigating risk in the Bank’s available-for-sale securities portfolio.
— During the current quarter, the Bank surrendered $46.7 million of existing BOLI policies that were earning an annualized yield of 3.08%. Prior to the surrender of the policies, the Bank took out an additional $50.0 million of BOLI policies, which are currently yielding 4.81%. As a result of the surrender of the BOLI policies, the Bank incurred $1.6 million of tax and penalty, which the Bank expects to earn back in less than 2 years. The insurance carriers have six months to pay out the surrendered policies, and as a result, the Bank expects BOLI to be at higher balances and to continue earning income related to the increase in cash surrender value until the proceeds are received, which will further shorten the earn-back period on the tax and penalty amount.
— During the current quarter, the Bank charged off $5.3 million of loans, including $4.0 million related to one non-owner-occupied commercial real estate office loan, which was a purchased participation loan. As a result of the deterioration of this loan, management engaged a third-party loan review firm to review our remaining real estate office loan portfolio, which was completed and did not result in any additional criticized loans or downgrades to our current risk ratings.
— Asset quality remains strong:
— Annualized net charge-offs increased forty-one basis points to 0.50% of average total loans during the current quarter from 0.09% of average total loans during the prior quarter. Non-performing loans decreased to $16.0 million, or 0.38% of total loans during the current quarter from $20.7 million, or 0.51% of total loans during the prior quarter.
— The increase in annualized net charge-offs and the decrease in non-performing loans was primarily due to the charge-off of a $4.0 million office participation loan during the quarter, along with the payoff of a $2.2 million construction loan at par.
— Provision for credit losses for the third quarter amounted to $2.6 million, a decrease from $3.7 million in the prior quarter, contributing to a decrease in the allowance for credit losses (“ACL”) of $252 thousand and decreasing the ACL as a percentage of total loans to 0.89%.
— During the quarter, the Bank adopted Accounting Standards Update (“ASU”) 2023-02, with a modified retrospective adoption reflected as of January 1, 2024, to record solar income tax credit investments under the proportional amortization method (“PAM”), whereby the solar income tax credit investments are amortized in proportion to the amount of overall benefits received from the investment. As a result of the adoption, the amortization of solar income tax credit investments where the credits were received in prior years was reflected as a retained earnings adjustment, which resulted in a $10.1 million reduction to retained earnings, along with a corresponding reduction in non-public investments. Additionally, $913 thousand of amortization expense related to these investments that was recorded during the first six months of 2024 was also reversed during the current quarter to apply retrospective treatment to the beginning of the year. The impact of adopting PAM on current quarter results amounted to $18.0 million in income tax expense, which included $2.5 million of a deferred tax liability related to the write-down of the basis of the investment. This was partially offset by a reduction in income tax expense of $17.3 million from the recognition of income tax credits during the quarter.
— Total deposits increased $124.9 million, or 3.2%, from the prior quarter. Brokered deposits increased by $29.9 million or 10.0% from the prior quarter, while the remaining $95.0 million increase represents core deposit growth of 2.6%, for the quarter.
— FHLB advances increased $55.5 million during the quarter, primarily in short-term advances, which were used to fund loan growth and the BOLI policy purchase.
— Borrowings and brokered deposits totaled 8.9% of total assets, an increase from 7.5% at the prior quarter end.
— Strong capital position of 14.9% shareholders’ equity to total assets and 14.9% tangible shareholders’ equity to tangible assets.
— Book value per share and tangible book value per share were $17.50 and $17.48, respectively, which increased from $17.19 and $17.17, respectively in the prior quarter. The increase in tangible book value per share was due to net income for the current quarter of $8.4 million and a $4.0 million reduction in accumulated other comprehensive loss.
“We continued with another strong quarter, with loan growth of 3.7%, primarily funded by deposits, which grew 3.2% during the quarter. We have shown another quarter of strong, but disciplined loan growth, with the ability to self-fund from our continued growth in deposits. Operating net income was $0.33 per share for the quarter, excluding the one-time charges taken during the quarter, which is expected to help our earnings run rate going forward. While we took a large charge-off during the current quarter, we are confident that the credit quality in the rest of our portfolio remains strong. Our balance sheet remains a strength as we head into the fourth quarter and we are optimistic about our opportunities as we look to close out our first full year as a public company,” said Joseph Campanelli, Chairman, President and Chief Executive Officer. “Tangible book value per share grew $0.31 during the quarter, and the Company continues to be disciplined in our capital management.”
BALANCE SHEET
Total assets amounted to $5.00 billion as of September30,2024, representing an increase of $202.8 million, or 4.2%, from June30,2024.
— Cash and cash equivalents decreased $11.9 million, or 3.6%, to $317.0 million from $328.9 million, in the prior quarter as a result of loan growth outpacing deposit growth.
— Net loans increased to $4.21 billion, representing an increase of $152.0 million, or 3.7%, from the prior quarter as demand for new originations continued. The current quarter growth was primarily seen in construction and land development loans, which increased $88.5 million, or 15.3%, commercial real estate loans excluding multi-family loans, which increased $55.7 million or 4.6%, consumer loans, which increased $13.1 million, or 5.9%, and residential real estate loans, which increased $9.5 million, or 0.8%; offset partially by a decrease in commercial and industrial loans of $19.4 million, or 3.3%.
— BOLI assets increased to $101.7 million from $51.3 million, a $50.4 million, or 98.2%, increase from the prior quarter as a result of the BOLI transaction noted previously.
— Prepaid expenses and other assets increased $24.8 million, or 50.0%, to $74.6 million from $49.7 million, primarily from an increase in income tax receivable of $18.9 million, as a result of the solar income tax credits earned during the current quarter.
— Non-public investments decreased to $5.7 million from $16.1 million, a $10.4 million, or 64.8%, decrease from the prior quarter as a result of the amortization of solar income tax credit investments under PAM due to the adoption of ASU 2023-02, as described previously.
— Deposits totaled $4.04 billion representing an increase of $124.9 million, or 3.2%, from the prior quarter. The increase in deposits was the result of growth in customer deposits, primarily certificates of deposit, which increased $78.6 million, or 4.9%, from the prior quarter, along with money market accounts, which increased $68.6 million, or 7.1%. Additionally, brokered deposits increased $29.9 million, or 10.0%, from the prior quarter. The above increases were partially offset by decreases in the balances of non-interest-bearing deposits of $28.4 million, or 4.8%, and NOW accounts of $23.0 million, or 6.5%.
— FHLB borrowings increased to $116.3 million from $60.8 million, a $55.5 million, or 91.2%, increase during the current quarter as a result of the need to fund the BOLI transaction described previously.
— Shareholders’ equity was $747.4 million, representing an increase of $13.1 million, or 1.8%, from the prior quarter, primarily as a result of $8.4 million of net income and a $4.0 million decrease in accumulated other comprehensive loss due to interest rate changes during the current quarter.
NET INTEREST INCOME
Net interest income was $41.3 million for the quarter ended September30,2024, compared to $38.7 million for the prior quarter, representing an increase of $2.6 million, or 6.7%.
— The increase in interest income during the quarter ended September 30, 2024 was primarily attributable to increases in the average balance of loans, which contributed $3.4 million, and increases in the average rate on loans, which contributed $1.9 million. These increases were partially offset by decreases in the average balance and average rate on short-term investments, which decreased interest income by $204 thousand and $164 thousand, respectively, during the quarter ended September 30, 2024.
— The increase in interest expense for the quarter ended September 30, 2024 was primarily driven by increases in the average balance of certificates of deposit, which increased interest expense by $1.3 million, increases in the average balance of money market accounts, which increased interest expense by $408 thousand and increases in the average rate on money market accounts, which increased interest expense by $151 thousand.
NONINTEREST INCOME
Noninterest income was $1.3 million for the quarter ended September30,2024, compared to $3.0 million for the prior quarter, representing a decrease of $1.7 million, or 57.6%.
— Net loss on sale of available-for-sale securities increased $1.9 million, or 100.0%, during the quarter as a result of the loss trades executed to restructure the securities portfolio for higher yields and lower risk.
— Swap contract income was $375 thousand, compared to $265 thousand in the prior quarter, representing an increase of $110 thousand, or 41.5%, due to increased swap contract originations.
— Customer service fee income was $2.0 million, compared to $1.9 million in the prior quarter, representing an increase of $91 thousand, or 4.9%, as a result of a higher volume of fees earned during the current quarter.
NONINTEREST EXPENSE
Noninterest expense for the quarter ended September30,2024 was $24.6 million, representing a decrease of $1.6 million, or 6.2%, from the prior quarter.
— General and administrative expenses decreased $1.6 million, or 93.2%, for the quarter ended September 30, 2024, primarily as a result of the adoption of ASU 2023-02 under the PAM method which reclassified the amortization of solar tax credit investments from general and administration expenses to income tax expense.
— Salaries and employee benefits were $17.2 million for the quarter ended September 30, 2024, representing an increase of $456 thousand, or 2.7%, from the prior quarter, primarily due to increased employee compensation of $308 thousand, increased bonus expense of $194 thousand and additional ESOP compensation expense of $134 thousand; partially offset by reductions in 401(k) matching expenses of $100 thousand and employee benefits expenses of $68 thousand.
— Director and professional service fees decreased $275 thousand during the quarter ended September 30, 2024, primarily as a result of decreased appraisal fees of $142 thousand and decreased professional services expenses of $97 thousand.
— Marketing and charitable contributions decreased $253 thousand during the quarter ended September 30, 2024, primarily as a result of decreased public relations costs of $94 thousand, decreased broadcast media costs of $48 thousand and decreased promotional costs of $45 thousand.
INCOME TAXES
Income tax expense for the quarter ended September30,2024 was $7.0 million, representing a $4.6 million increase, or 195.4%, from the prior quarter. The increase was primarily driven by the adoption of PAM under ASU 2023-02. The effective tax rate for the current quarter was 45.5%, compared to 20.0% in the prior quarter. The primary driver of the increase in the effective tax was the income tax expense for the basis reduction on the solar income tax credits, which resulted in $2.5 million of income tax expense, along with the BOLI-related tax and penalty, which amounted to $1.6 million of additional tax expense. Excluding these two items, the effective tax rate would have been 18.8%.
COMMERCIAL REAL ESTATE PORTFOLIO
Commercial real estate loans increased $60.8 million, or 4.1%, to $1.55 billion, during the quarter ended September30,2024.
— Cannabis facility commercial real estate loans increased $49.1 million, or 18.3%, during the quarter ended September 30, 2024. The Company’s cannabis facility commercial real estate portfolio is secured entirely by the underlying commercial real estate of the borrower operation. The vast majority of the loan portfolio balances have a loan-to-value ratio of 65% or lower, with appraisal reports taking a blended approach (using both cannabis and non-cannabis use real estate sales comparables, which are generally more conservative). The portfolio has geographic dispersion, with lower dollar exposure loans remaining local and larger dollar exposure loans generally tied to multi-state operators with a more national footprint. All cannabis facility loan relationships were pass-rated and current at the end of the current quarter.
— The Company’s $272.6 million multi-family real estate loan portfolio consists of high-quality, performing loans primarily located in the Greater Boston area, primarily all of which are adjustable-rate loans.
— The Company’s $215.4 million office portfolio consists principally of suburban Class A and B office space used as medical and traditional offices. The portfolio does not consist of high-rise towers located in Boston.
ASSET QUALITY
— The ACL amounted to $37.6 million as of September 30, 2024, or 0.89% of total gross loans, compared to $37.9 million, or 0.92% of total loans at June 30, 2024. The Company recorded provisions for credit losses of $2.6 million during the quarter ended September 30, 2024, compared to $3.7 million for the prior quarter, which included a provision of $5.0 million for loans and a release of $2.4 million for unfunded commitments in the current quarter. The provision of $5.0 million for credit losses on loans was mainly the result of the $4.0 million charge-off of one commercial real estate office participation loan coupled with loan growth during the current quarter. The release of $2.4 million for unfunded commitments was mainly the result of reduced qualitative factors and reduced balances of unfunded construction loan commitments.
— Non-performing loans totaled $16.0 million as of September 30, 2024, a decrease of $4.7 million, or 22.8%, from $20.7 million at the end of the prior quarter. The decrease was primarily due to one commercial real estate office participation loan, which had previously been on non-accrual at June 30, 2024, being charged off during the quarter ended September 30, 2024, along with one construction loan amounting to $2.2 million that paid off during the quarter.
— During the quarter ended September 30, 2024, the Company recorded total net charge-offs of $5.2 million, or 0.50% of average total loans on an annualized basis, compared to $878 thousand, or 0.09% of average total loans on an annualized basis, in the prior quarter. The increase in net charge-offs during the quarter ended September 30, 2024 was due to a $4.0 million charge-off of one commercial real estate office participation loan and $1.3 million of purchased consumer loan charge-offs.
— The Company’s loan portfolio consists primarily of commercial real estate and multi-family loans, one-to-four-family residential real estate loans, construction and land development loans, commercial and industrial loans and consumer loans. These loans are primarily made to individuals and businesses located in our primary lending market area, which is the Greater Boston metropolitan area and surrounding communities in Massachusetts, eastern Connecticut, southern New Hampshire and Rhode Island.
ABOUT NB BANCORP, INC.
NB Bancorp, Inc. (Nasdaq Capital Market: NBBK) is the registered bank holding company of Needham Bank. Needham Bank is headquartered in Needham, Massachusetts, which is approximately 17 miles southwest of Boston’s financial district. Known as the “Builder’s Bank,” Needham Bank has been helping individuals, businesses and non-profits build for their futures since 1892.
Needham Bank offers an array of tech-forward products and services that businesses and consumers use to manage their financial needs. We have the financial expertise typically found at much larger institutions and the local knowledge and commitment you can only find at a community bank. For more information, please visit https://NeedhamBank.com. Needham Bank is a member of FDIC and DIF.
Non-GAAP Financial Measures
In addition to results presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), this press release contains certain non-GAAP financial measures, including operating net income, operating noninterest expense, operating noninterest income, operating earnings per share, basic, operating earnings per share, diluted, operating return on average assets, operating return on average shareholders’ equity, operating efficiency ratio, tangible shareholders’ equity, tangible assets, tangible book value per share, and efficiency ratio. The Company’s management believes that the supplemental non-GAAP information is utilized by regulators and market analysts to evaluate a Company’s financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.
Forward-Looking Statements
Statements in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. We may also make forward-looking statements in other documents we file with the Securities and Exchange Commission (the “SEC”), in our annual reports to our stockholders, in press releases and other written materials, and in oral statements made by our officers, directors or employees. You can identify forward-looking statements by the use of the words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “assume,” “outlook,” “will,” “should,” and other expressions that predict or indicate future events and trends and which do not relate to historical matters.
Although the Company believes that these forward-looking statements are based on reasonable estimates and assumptions, they are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Company’s control. The Company’s actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, changes in general business and economic conditions on a national basis and in the local markets in which the Company operates, including changes which adversely affect borrowers’ ability to service and repay loans; changes in customer behavior due to political, business and economic conditions, including inflation and concerns about liquidity; turbulence in the capital and debt markets; reductions in net interest income resulting from interest rate volatility as well as changes in the balances and mix of loans and deposits; changes in interest rates and real estate values; changes in loan collectability and increases in defaults and charge-off rates; decreases in the value of securities and other assets, adequacy of credit loss reserves, or deposit levels necessitating increased borrowing to fund loans and investments; changing government regulation; competitive pressures from other financial institutions; changes in legislation or regulation and accounting principles, policies and guidelines; cybersecurity incidents, fraud, natural disasters, and future pandemics; the risk that the Company may not be successful in the implementation of its business strategy; the risk that intangibles recorded in the Company’s financial statements will become impaired; changes in assumptions used in making such forward-looking statements;
and the other risks and uncertainties detailed in the Company’s Form 10-K and updated by our Quarterly Report on Form 10-Q and other filings submitted to the SEC. These statements speak only as of the date of this release and the Company does not undertake any obligation to update or revise any of these forward-looking statements to reflect events or circumstances occurring after the date of this communication or to reflect the occurrence of unanticipated events.
NB BANCORP, INC.
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands, except per share data)
As of and for the three months ended
September30,2024 June30,2024 September30,2023
Earnings data
Net interest income $ 41,324 $ 38,722 $ 33,484
Noninterest income 1,265 2,981 3,138
Total revenue 42,589 41,703 36,622
Provision for credit losses 2,623 3,667 1,965
Noninterest expense 24,586 26,214 23,088
Pre-tax income 15,380 11,822 11,569
Net income 8,383 9,453 8,467
Operating net income (non-GAAP) 13,116 9,858 8,467
Operating noninterest expense (non-GAAP) 25,499 25,708 23,088
Per share data
Earnings per share, basic $ 0.21 $ 0.24 N/A
Earnings per share, diluted 0.21 0.24 N/A
Operating earnings per share, basic (non-GAAP) 0.33 0.25 N/A
Operating earnings per share, diluted (non-GAAP) 0.33 0.25 N/A
Book value per share 17.50 17.19 N/A
Tangible book value per share (non-GAAP) 17.48 17.17 N/A
Profitability
Return on average assets 0.68% 0.81% 0.81%
Operating return on average assets (non-GAAP) 1.07% 0.84% 0.81%
Return on average shareholders' equity 4.42% 5.13% 9.24%
Operating return on average shareholders' equity (non-GAAP) 6.91% 5.35% 9.24%
Net interest margin 3.51% 3.46% 3.36%
Cost of deposits 3.37% 3.33% 2.49%
Efficiency ratio 57.73% 62.86% 63.04%
Operating efficiency ratio (non-GAAP) 57.36% 61.65% 63.04%
Balance sheet, end of period
Total assets $ 5,002,557 $ 4,799,777 $ 4,231,792
Total loans 4,249,074 4,097,278 3,715,151
Total deposits 4,042,817 3,917,905 3,436,659
Total shareholders' equity 747,449 734,312 365,701
Asset quality
Allowance for credit losses (ACL) $ 37,605 $ 37,857 $ 31,889
ACL / Total non-performing loans (NPLs) 234.9% 182.6% 246.3%
Total NPLs / Total loans 0.38% 0.51% 0.35%
Net charge-offs (annualized) / Average total loans (0.50)% (0.09)% (0.17)%
Capital ratios
Shareholders' equity / Total assets 14.94% 15.30% 8.64%
Tangible shareholders' equity / tangible assets (non-GAAP) 14.92% 15.28% 8.61%
NB BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except share and per share data)
As of September30,2024 change from
September30,2024 June30,2024 September30,2023 June30,2024 September30,2023
Assets
Cash and due from banks $ 148,187 $ 170,255 $ 102,452 $ (22,068) (13.0)% $ 45,735 44.6%
Federal funds sold 168,862 158,687 31,382 10,175 6.4% 137,480 438.1%
Total cash and cash equivalents 317,049 328,942 133,834 (11,893) (3.6)% 183,215 136.9%
Available-for-sale securities, at fair value 202,541 205,065 196,943 (2,524) (1.2)% 5,598 2.8%
Loans receivable, net of deferred fees 4,249,074 4,097,278 3,715,151 151,796 3.7% 533,923 14.4%
Allowance for credit losses (37,605) (37,857) (31,889) 252 (0.7)% (5,716) 17.9%
Net loans 4,211,469 4,059,421 3,683,262 152,048 3.7% 528,207 14.3%
Accrued interest receivable 18,671 19,007 15,846 (336) (1.8)% 2,825 17.8%
Banking premises and equipment, net 34,802 35,290 35,964 (488) (1.4)% (1,162) (3.2)%
Federal Home Loan Bank ("FHLB") stock, at cost 6,848 4,767 17,622 2,081 43.7% (10,774) (61.1)%
Federal Reserve Bank stock, at cost 11,769 11,333 9,797 436 3.8% 1,972 20.1%
Non-public investments 5,654 16,053 10,502 (10,399) (64.8)% (4,848) (46.2)%
Bank-owned life insurance ("BOLI") 101,736 51,321 50,123 50,415 98.2% 51,613 103.0%
Prepaid expenses and other assets 74,550 49,706 65,751 24,844 50.0% 8,799 13.4%
Deferred income tax asset 17,468 18,872 12,148 (1,404) (7.4)% 5,320 43.8%
Total assets $ 5,002,557 $ 4,799,777 $ 4,231,792 $ 202,780 4.2% $ 770,765 18.2%
Liabilities and shareholders' equity
Deposits $ 4,042,817 $ 3,917,905 $ 3,436,659 $ 124,912 3.2% $ 606,158 17.6%
Mortgagors' escrow accounts 4,401 4,022 3,953 379 9.4% 448 11.3%
FHLB borrowings 116,335 60,835 345,634 55,500 91.2% (229,299) (66.3)%
Accrued expenses and other liabilities 69,524 62,624 65,368 6,900 11.0% 4,156 6.4%
Accrued retirement liabilities 22,031 20,079 14,477 1,952 9.7% 7,554 52.2%
Total liabilities 4,255,108 4,065,465 3,866,091 189,643 4.7% 389,017 10.1%
Shareholders' equity:
Preferred stock, $0.01 par value, 5,000,000 shares authorized; no shares
issued and outstanding - - - - 0.0% - 0.0%
Common stock, $0.01 par value, 120,000,000 shares authorized; 42,705,729
issued and outstanding at September 30 and June 30, 2024, respectively, no shares issued
and outstanding at September 30, 2023 427 427 - - 0.0% 427 0.0%
Additional paid-in capital 417,013 416,845 - 168 0.0% 417,013 0.0%
Unallocated common shares held by the Employee Stock Ownership Plan ("ESOP") (45,407) (46,002) - 595 (1.3)% (45,407) 0.0%
Retained earnings 382,561 374,177 379,792 8,384 2.2% 2,769 0.7%
Accumulated other comprehensive loss (7,145) (11,135) (14,091) 3,990 (35.8)% 6,946 (49.3)%
Total shareholders' equity 747,449 734,312 365,701 13,137 1.8% 381,748 104.4%
Total liabilities and shareholders' equity $ 5,002,557 4,799,777 $ 4,231,792 $ 202,780 4.2% $ 770,765 18.2%
NB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except share and per share data)
For the Three Months Ended Three Months Ended September30,2024
Change From Three Months Ended
September30,2024 June30,2024 September30,2023 June30,2024 September30,2023
INTEREST AND DIVIDEND INCOME
Interest and fees on loans $ 70,518 $ 65,271 $ 56,702 $ 5,247 8.0% $ 13,816 24.4%
Interest on investment securities 1,768 1,690 1,105 78 4.6% 663 60.0%
Interest and dividends on cash equivalents and other 3,717 4,161 1,791 (444) (10.7)% 1,926 107.5%
Total interest and dividend income 76,003 71,122 59,598 4,881 6.9% 16,405 27.5%
INTEREST EXPENSE
Interest on deposits 33,612 31,579 20,789 2,033 6.4% 12,823 61.7%
Interest on borrowings 1,067 821 5,325 246 30.0% (4,258) (80.0)%
Total interest expense 34,679 32,400 26,114 2,279 7.0% 8,565 32.8%
NET INTEREST INCOME 41,324 38,722 33,484 2,602 6.7% 7,840 23.4%
PROVISION FOR CREDIT LOSSES
Provision for credit losses - loans 4,997 4,429 1,965 568 12.8% 3,032 154.3%
(Release of) provision for credit losses - unfunded commitments (2,374) (762) - (1,612) 211.5% (2,374) 0.0%
Total provision for credit losses 2,623 3,667 1,965 (1,044) (28.5)% 658 33.5%
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES 38,701 35,055 31,519 3,646 10.4% 7,182 22.8%
NONINTEREST INCOME
Customer service fees 1,963 1,872 1,689 91 4.9% 274 16.2%
Increase in cash surrender value of BOLI 414 404 374 10 2.5% 40 10.7%
Mortgage banking income 367 428 101 (61) (14.3)% 266 263.4%
Swap contract income 375 265 950 110 41.5% (575) (60.5)%
Loss on sale of available-for-sale securities, net (1,868) - - (1,868) 100.0% (1,868) 0.0%
Other income 14 12 24 2 16.7% (10) (41.7)%
Total noninterest income 1,265 2,981 3,138 (1,716) (57.6)% (1,873) (59.7)%
NONINTEREST EXPENSE
Salaries and employee benefits 17,202 16,746 14,659 456 2.7% 2,543 17.3%
Director and professional service fees 1,995 2,270 1,609 (275) (12.1)% 386 24.0%
Occupancy and equipment expenses 1,394 1,461 1,279 (67) (4.6)% 115 9.0%
Data processing expenses 2,226 2,325 2,017 (99) (4.3)% 209 10.4%
Marketing and charitable contribution expenses 842 1,095 918 (253) (23.1)% (76) (8.3)%
FDIC and state insurance assessments 812 633 1,215 179 28.3% (403) (33.2)%
General and administrative expenses 115 1,684 1,391 (1,569) (93.2)% (1,276) (91.7)%
Total noninterest expense 24,586 26,214 23,088 (1,628) (6.2)% 1,498 6.5%
INCOME BEFORE TAXES 15,380 11,822 11,569 3,558 30.1% 3,811 32.9%
INCOME TAXES 6,997 2,369 3,102 4,628 195.4% 3,895 125.6%
NET INCOME $ 8,383 $ 9,453 $ 8,467 $ (1,070) (11.3)% $ (84) (1.0)%
Weighted average common shares outstanding, basic 39,289,271 39,289,271 N/A - 0.0% N/A N/A
Weighted average common shares outstanding, diluted 39,289,271 39,289,271 N/A - 0.0% N/A N/A
Earnings per share, basic $ 0.21 $ 0.24 $ N/A $ (0.03) (11.3)% $ N/A N/A
Earnings per share, diluted $ 0.21 $ 0.24 $ N/A $ (0.03) (11.3)% $ N/A N/A
NB BANCORP, INC.
AVERAGE BALANCES, INTEREST EARNED/PAID & AVERAGE YIELDS
(Unaudited)
(Dollars in thousands)
Forthe Three Months Ended
September30,2024 June30,2024 September30,2023
Average Average Average
Outstanding Average Outstanding Average Outstanding Average
Balance Interest Yield/Rate(4) Balance Interest Yield/Rate(4) Balance Interest Yield/Rate(4)
Interest-earning assets:
Loans $ 4,188,504 $ 70,518 6.70 % $ 3,987,452 $ 65,271 6.58 % $ 3,623,804 $ 56,702 6.21 %
Securities 204,273 1,768 3.44 % 204,336 1,690 3.33 % 204,074 1,105 2.15 %
Other investments (5) 30,707 223 2.89 % 28,474 299 4.22 % 39,696 780 7.80 %
Short-term investments (5) 264,394 3,494 5.26 % 279,559 3,862 5.56 % 81,380 1,011 4.93 %
Total interest-earning assets 4,687,878 76,003 6.45 % 4,499,821 71,122 6.36 % 3,948,954 59,598 5.99 %
Non-interest-earning assets 240,821 238,370 216,254
Allowance for credit losses (38,495) (34,735) (32,062)
Total assets $ 4,890,204 $ 4,703,456 $ 4,133,146
Interest-bearing liabilities:
Savings accounts $ 112,632 15 0.05 % $ 117,701 15 0.05 % $ 136,241 17 0.05 %
NOW accounts 327,484 180 0.22 % 328,192 204 0.25 % 337,799 158 0.19 %
Money market accounts 876,933 8,943 4.06 % 836,757 8,384 4.03 % 806,815 5,623 2.77 %
Certificates of deposit and individual 1,941,143 24,474 5.02 % 1,834,480 22,976 5.04 % 1,445,885 14,991 4.11 %
retirement accounts
Total interest-bearing deposits 3,258,192 33,612 4.10 % 3,117,130 31,579 4.07 % 2,726,740 20,789 3.02 %
FHLB advances 85,156 1,067 4.98 % 61,968 821 5.33 % 383,549 5,325 5.51 %
Total interest-bearing liabilities 3,343,348 34,679 4.13 % 3,179,098 32,400 4.10 % 3,110,289 26,114 3.33 %
Non-interest-bearing deposits 713,566 694,669 582,507
Other non-interest-bearing liabilities 78,681 88,364 76,881
Total liabilities 4,135,595 3,962,131 3,769,677
Shareholders' equity 754,609 741,325 363,469
Total liabilities and shareholders' $ 4,890,204 $ 4,703,456 $ 4,133,146
equity
Net interest income $ 41,324 $ 38,722 $ 33,484
Net interest rate spread (1) 2.32 % 2.26 % 2.66 %
Net interest-earning assets (2) $ 1,344,530 $ 1,320,723 $ 838,665
Net interest margin (3) 3.51 % 3.46 % 3.36 %
Average interest-earning assets to 140.22 % 141.54 % 126.96 %
interest-bearing liabilities
(1) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities. (2) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities. (3) Net interest margin represents net interest income divided by average total interest-earning assets. (4) Annualized (5) Other investments are comprised of FRB stock, FHLB stock and swap collateral accounts. Short-term investments are comprised of cash and cash equivalents.
NB BANCORP, INC.
COMMERCIAL REAL ESTATE BY COLLATERAL TYPE
(Unaudited)
(Dollars in thousands)
September30,2024
Owner-Occupied Non-Owner- Balance Percentage
Occupied
Cannabis Facility $ 301,931 $ 15,334 $ 317,265 20%
Multi-Family - 272,561 272,561 18%
Office 30,455 184,895 215,350 14%
Industrial 109,341 53,608 162,949 10%
Hospitality 55 157,027 157,082 10%
Special Purpose 80,575 54,010 134,585 9%
Retail 30,232 93,432 123,664 8%
Other 39,990 57,268 97,258 6%
Mixed-Use 8,509 63,292 71,801 5%
Total commercial real estate $ 601,088 $ 951,427 $ 1,552,515 100%
June30,2024 Change From Three Months Ended September30,2024
Owner- Non- Balance Percentage Owner- Non- Balance Percentage
Occupied Owner- Occupied Owner-
Occupied Occupied
Cannabis Facility $ 252,741 $ 15,408 $ 268,149 18% $ 49,190 $ (74) $ 49,116 18%
Multi-Family - 267,544 267,544 18% - 5,017 5,017 2%
Office 32,793 189,157 221,950 15% (2,338) (4,262) (6,600) (3)%
Industrial 106,755 52,142 158,897 11% 2,586 1,466 4,052 3%
Hospitality 61 148,955 149,016 10% (6) 8,072 8,066 5%
Special Purpose 80,001 54,229 134,230 9% 574 (219) 355 0%
Retail 29,675 102,562 132,237 9% 557 (9,130) (8,573) (6)%
Other 32,701 54,840 87,541 6% 7,289 2,428 9,717 11%
Mixed-Use 8,563 63,628 72,191 5% (54) (336) (390) (1)%
Total commercial real estate $ 543,290 $ 948,465 $ 1,491,755 100% $ 57,798 $ 2,962 $ 60,760 4%
September30,2023 Change From Three Months Ended September30,2024
Owner- Non- Balance Percentage Owner- Non- Balance Percentage
Occupied Owner- Occupied Owner-
Occupied Occupied
Cannabis Facility $ 143,818 $ 16,327 $ 160,145 12% $ 158,113 $ (993) $ 157,120 98%
Multi-Family - 208,879 208,879 16% - 63,682 63,682 30%
Office 28,060 173,920 201,980 16% 2,395 10,975 13,370 7%
Industrial 103,749 54,332 158,081 12% 5,592 (724) 4,868 3%
Hospitality 37 147,521 147,558 11% 18 9,506 9,524 6%
Special Purpose 84,951 56,734 141,685 11% (4,376) (2,724) (7,100) (5)%
Retail 26,595 103,751 130,346 10% 3,637 (10,319) (6,682) (5)%
Other 24,268 40,889 65,157 5% 15,722 16,379 32,101 49%
Mixed-Use 8,842 62,765 71,607 6% (333) 527 194 0%
Total commercial real estate $ 420,320 $ 865,118 $ 1,285,438 100% $ 20,260 $ 12,645 $ 32,905 3%
NB BANCORP, INC.
NON-GAAP RECONCILIATION
(Unaudited)
(Dollars in thousands)
For the Three Months Ended
September30,2024 June30,2024 September30,2023
Net income (GAAP) $ 8,383 $ 9,453 $ 8,467
Add (Subtract):
Adjustments to net income:
Losses on sales of securities available for sale, net 1,868 - -
Income tax expense on solar tax credit investment basis reduction 2,503 - -
BOLI surrender tax and modified endowment contract penalty 1,552 - -
Adjustment for adoption of ASU 2023-02 (913) 506 -
Total adjustments to net income $ 5,010 $ 506 $ -
Less net tax benefit (cost) associated with losses on sales of securities available for sale, net and reversal of previously
taken amortization of solar tax credit investments 277 101 -
Non-GAAP adjustments, net of tax 4,733 405 -
Operating net income (non-GAAP) $ 13,116 $ 9,858 $ 8,467
Weighted average common shares outstanding, basic 39,289,271 39,289,271 N/A
Weighted average common shares outstanding, diluted 39,289,271 39,289,271 N/A
Operating earnings per share, basic (non-GAAP) 0.33 0.25 N/A
Operating earnings per share, diluted (non-GAAP) 0.33 0.25 N/A
Noninterest expense (GAAP) $ 24,586 $ 26,214 $ 23,088
Subtract (Add):
Noninterest expense components:
Adjustment for adoption of ASU 2023-02 (913) 506 -
Total impact of non-GAAP noninterest expense adjustments $ (913) $ 506 $ -
Noninterest expense on an operating basis (non-GAAP) $ 25,499 $ 25,708 $ 23,088
Noninterest income (GAAP) $ 1,265 $ 2,981 $ 3,138
Subtract (Add):
Noninterest expense components:
Losses on sales of securities available for sale, net (1,868) - -
Total impact of non-GAAP noninterest income adjustments $ (1,868) $ - $ -
Noninterest income on an operating basis (non-GAAP) $ 3,133 $ 2,981 $ 3,138
Operating net income (non-GAAP) $ 13,116 $ 9,858 $ 8,467
Average assets 4,890,204 4,703,456 4,133,146
Operating return on average assets (non-GAAP) 1.07% 0.84% 0.81%
Average shareholders' equity 754,609 741,325 363,469
Operating return on average shareholders' equity (non-GAAP) 6.91% 5.35% 9.24%
Noninterest expense on an operating basis (non-GAAP) $ 25,499 $ 25,708 $ 23,088
Total revenue (net interest income plus total noninterest income on an operating basis) (non-GAAP) 44,457 41,703 36,622
Operating efficiency ratio (non-GAAP) 57.36% 61.65% 63.04%
As of
September30,2024 June30,2024 September30,2023
Total shareholders' equity (GAAP) $ 747,449 $ 734,312 $ 365,701
Subtract:
Intangible assets (core deposit intangible) 1,116 1,153 1,265
Total tangible shareholders' equity (non-GAAP) 746,333 733,159 364,436
Total assets (GAAP) 5,002,557 4,799,777 4,231,792
Subtract:
Intangible assets (core deposit intangible) 1,116 1,153 1,265
Total tangible assets (non-GAAP) $ 5,001,441 $ 4,798,624 $ 4,230,527
Tangible shareholders' equity / tangible assets (non-GAAP) 14.92% 15.28% 8.61%
Total common shares outstanding 42,705,729 42,705,729 N/A
Tangible book value per share (non-GAAP) $ 17.48 $ 17.17 $ N/A
NB BANCORP, INC.
ASSET QUALITY - NON-PERFORMING ASSETS (1)
(Unaudited)
(Dollars in thousands)
September30,2024 June30,2024 September30,2023
Real estate loans:
One to four-family residential $ 5,070 $ 4,251 $ 3,903
Home equity 1,060 636 592
Commercial real estate 3,030 7,056 430
Construction and land development 10 2,237 2,414
Commercial and industrial 4,743 4,575 4,615
Consumer 2,099 1,974 993
Total $ 16,012 $ 20,729 $ 12,947
Total non-performing loans to total loans 0.38% 0.51% 0.35%
Total non-performing assets to total assets 0.32% 0.43% 0.31%
(1) Non-performing loans and assets are comprised of non-accrual loans
NB BANCORP, INC.
ASSET QUALITY - PROVISION, ALLOWANCE, AND NET (CHARGE-OFFS) RECOVERIES
(Unaudited)
(Dollars in thousands)
Forthe Three Months Ended
September30,2024 June30,2024 September30,2023
Allowance for credit losses at beginning of the period $ 37,857 $ 34,306 $ 31,473
Provision for credit losses 4,997 4,429 1,965
Charge-offs:
One-to-Four-Family Residential - - 379
Commercial and industrial - 22 679
Consumer 1,305 924 699
Commercial real estate 4,000 - -
Total charge-offs 5,305 946 1,757
Recoveries of loans previously charged off:
Commercial and industrial 12 14 12
Consumer 44 54 196
Total recoveries 56 68 208
Net (charge-offs) recoveries (5,249) (878) (1,549)
Allowance for credit losses at end of the period $ 37,605 $ 37,857 $ 31,889
Allowance to non-performing loans 234.9% 182.6% 246.3%
Allowance to total loans outstanding at the end of the period 0.89% 0.92% 0.86%
Net (charge-offs) recoveries (annualized) to average loans (0.50)% (0.09)% (0.17)%
outstanding during the period
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SOURCE Needham Bank
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