NB Bancorp, Inc. (the “Company”) (Nasdaq Capital Market:NBBK), the holding company of Needham Bank (the “Bank”), today announced its fourth quarter 2024 financial results. The Company reported net income of $15.6 million, or $0.40 per diluted share, compared to net income of $8.4 million, or $0.21 per diluted share, for the prior quarter. Operating net income, excluding one-time charges, amounted to $13.3 million, or $0.34 per diluted share, compared to operating net income of $13.1 million, or $0.33 per diluted share for the prior quarter.
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“We completed our first full year as a public company with a strong financial performance. Results for the fourth quarter include operating net income of $0.34 per share for the quarter and another quarter where our deposit growth outpaced loan growth, which were both impressive, at 3.3% and 2.0%, respectively. Tangible book value ended the year at $17.89, as we are happy to announce the commencement of our first share repurchase program, whereby we plan to prudently manage our capital levels as we head into 2025 with continued growth opportunities,” commented Joseph Campanelli, Chairman, President and Chief Executive Officer. “Our first year as a public company was successful in many facets and we look forward to continued growth and success as we begin our second year of continuing to create shareholder value,” Campanelli continued.
The Company announced today that ithas adopted a stock repurchase program for up to2,135,286 shares of the Company's common stock, which equals approximately 5.0% of the shares currently outstanding.This is the Company's first stock repurchase program since completing its mutual-to-stock conversion and related stock offering in December 2023.
SELECTED FINANCIAL HIGHLIGHTS FOR THE FOURTH QUARTER OF 2024
— Net income of $15.6 million, or $0.40 per diluted share, compared to net income of $8.4 million, or $0.21 per diluted share, for the prior quarter. Operating net income, excluding one-time charges, amounted to $13.3 million, or $0.34 per diluted share, compared to operating net income of $13.1 million, or $0.33 per diluted share for the prior quarter. One-time charges during the current quarter include:
— Tax benefit related to an adjustment to a basis write-down of solar income tax credits of $2.5 million, partially offset by;
— Tax expense and a modified endowment contract penalty related to the surrender of bank-owned life insurance (“BOLI”) policies of $153 thousand.
— Net interest margin expanded one basis point to 3.52% during the current quarter from 3.51% in the prior quarter.
— Gross loans increased $84.1 million, or 2.0%, to $4.33 billion, from $4.25 billion the prior quarter.
— Total deposits increased $135.0 million, or 3.3%, from the prior quarter. Core deposits, which the Company considers to be all non-brokered deposits, increased $154.9 million, or 4.2%, for the current quarter, offset partially by a decrease in brokered deposits of $19.9 million or 6.0% from the prior quarter.
— Book value per share and tangible book value per share were $17.92 and $17.89, respectively, which increased from $17.50 and $17.48, respectively in the prior quarter. The increase in tangible book value per share was due to net income for the current quarter of $15.6 million and reversal of prior year deferred tax liabilities related to the adoption of the proportional amortization method (“PAM”) on solar income tax credits of $2.3 million.
BALANCE SHEET Total assets amounted to $5.16 billion as of December31,2024, representing an increase of $155.3 million, or 3.1%, from September30,2024.
— Cash and cash equivalents increased $46.8 million, or 14.8%, to $363.9 million from $317.0 million in the prior quarter, as a result of deposit growth outpacing loan growth.
— Net loans increased to $4.29 billion, representing an increase of $82.9 million, or 2.0%, from the prior quarter as demand for new originations continued. The current quarter growth was primarily seen in commercial real estate loans, which increased $143.9 million, or 9.3%, residential real estate loans, which increased $20.9 million or 1.7%, and consumer loans, which increased $10.1 million, or 4.3%, offset partially by a decrease in construction and land development loans of $83.1 million, or 12.5%, and a decrease in commercial and industrial loans of $7.1 million, or 1.3%.
— Prepaid expenses and other assets decreased $14.9 million, or 20.0%, to $59.5 million from $74.4 million, primarily from a decrease in income tax receivables of $14.9 million, as a result of the year-end true-up for deferred tax assets.
— Deferred income tax assets increased $12.8 million, or 73.5%, to $30.3 million from $17.5 million, as a result of the deferred tax assets from year-end true-up of solar tax credit carryforwards.
— Deposits totaled $4.18 billion, representing an increase of $135.0 million, or 3.3%, from the prior quarter. The increase in deposits was the result of growth in customer deposits, primarily money market accounts, which increased $91.9 million, or 8.9%, non-interest-bearing demand deposits, which increased $62.6 million, or 11.2% and NOW accounts which increased $22.9 million, or 6.9%. The above increases were partially offset by certificates of deposit, which decreased $20.1 million, or 1.2%, from the prior quarter, along with brokered deposits, which decreased $20.1 million, or 6.1%, from the prior quarter.
— FHLB borrowings increased to $120.8 million from $116.3 million, a $4.5 million, or 3.9%, increase during the current quarter as a result of the need to fund loan growth and maintain adequate cash levels.
— Shareholders' equity was $765.2 million, representing an increase of $17.7 million, or 2.4%, from the prior quarter, primarily as a result of $15.6 million of net income and a $2.3 million reversal of prior year deferred tax liabilities related to the adoption of PAM on solar income tax credits. Shareholders' equity to total assets and tangible shareholders' equity to tangible assets were both 14.8% at the end of the quarter.
NET INTEREST INCOME Net interest income was $42.5 million for the quarter ended December31,2024, compared to $41.3 million for the prior quarter, representing an increase of $1.2 million, or 2.9%.
— The increase in interest income during the quarter ended December 31, 2024 was primarily attributable to increases in the average balance of loans, which contributed $1.5 million, increases in the average rate on other investments, which contributed $354 thousand and increases in the average balances of securities, which contributed $249 thousand. These increases were partially offset by decreases in the average rate on loans, which reduced interest income by $993 thousand during the quarter ended December 31, 2024.
— Interest expense remained unchanged for the quarter ended December 31, 2024 from the prior quarter.
NONINTEREST INCOME Noninterest income was $3.8 million for the quarter ended December31,2024, compared to $1.3 million for the prior quarter, representing an increase of $2.5 million, or 198.9%.
— Net loss on sale of available-for-sale securities decreased $1.9 million, or 100.0%, to $0 during the quarter with no security sales during the current quarter compared to the loss trades executed to restructure the securities portfolio for higher yields and lower risk during the prior quarter.
— BOLI income was $1.0 million, compared to $414 thousand in the prior quarter, representing an increase of $635 thousand, or 153.4%, due to the BOLI restructure to higher rates in the prior quarter and carrying $50.0 million in additional BOLI policies while the older policies are in the process of being surrendered.
NONINTEREST EXPENSE Noninterest expense for the quarter ended December31,2024 was $25.6 million, representing an increase of $1.0 million, or 4.2%, from the prior quarter.
— General and administrative expenses increased $1.6 million, or 1,432.2%, for the quarter ended December 31, 2024, primarily as a result of the adoption of Financial Accounting Standards Board Accounting Standards Update (“ASU”) 2023-02 under the proportional amortization method (“PAM”), which reclassified amounts recognized in the first and second quarters of 2024 related to the amortization of solar tax credit investments from general and administration expenses to income tax expense during the prior quarter.
— Director and professional service fees increased $433 thousand during the quarter ended December 31, 2024, primarily as a result of increased consulting fees of $232 thousand, increased legal expenses of $130 thousand, and increased professional services of $79 thousand.
— Data processing expenses increased $252 thousand during the quarter ended December 31, 2024, primarily a result of increased IT infrastructure costs of $104 thousand and increased electronic banking and deposit service expenses of $120 thousand.
— FDIC and state assessments increased $229 thousand during the quarter ended December 31, 2024, primarily a result of increased FDIC assessment rates.
— Salaries and employee benefits were $15.7 million for the quarter ended December 31, 2024, representing a decrease of $1.5 million, or 8.5%, from the prior quarter, primarily driven by a decrease in incentive compensation expenses as the Company trued-up its bonus and other compensation amounts for year-end; partially offset by increased employee compensation of $179 thousand from the prior quarter.
INCOME TAXES Income tax expense for the quarter ended December31,2024 was $3.7 million, representing a $3.3 million, or 47.6%, decrease from the prior quarter. The decrease was primarily driven by the reversal of a deferred tax liability related to the adoption of PAM under ASU 2023-02. The effective tax rate for the current quarter was 19.0%, compared to 45.5% in the prior quarter. The primary driver of the decrease in the effective tax rate was the income tax benefit for reversal of a deferred tax liability related to the adoption of PAM, which resulted in $2.5 million of income tax benefit. Excluding this item, the effective tax rate (non-GAAP) would have been 32.0%.
COMMERCIAL REAL ESTATE PORTFOLIO Commercial real estate loans increased $143.9 million, or 9.3%, to $1.70 billion, during the quarter ended December31,2024.
— Cannabis facility commercial real estate loans increased $8.8 million, or 2.8%, during the quarter ended December 31, 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 comparable real estate sales, which we believe are generally more conservative).
— The cannabis facility 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 $333.0 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 $182.8 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 allowance for credit losses (“ACL”) amounted to $38.7 million as of December 31, 2024, or 0.89% of total gross loans, compared to $37.6 million, or 0.89% of total loans at September 30, 2024. The Company recorded provisions for credit losses of $1.4 million during the quarter ended December 31, 2024, compared to $2.6 million for the prior quarter, which included a provision of $1.6 million for loans and a release of $214 thousand for unfunded commitments in the current quarter.
— Non-performing loans totaled $13.9 million as of December 31, 2024, a decrease of $2.2 million, or 13.5%, from $16.0 million at the end of the prior quarter. The decrease was primarily due to the reduction in one-to-four family residential loans on non-accrual of $2.1 million during the quarter ended December 31, 2024.
— During the quarter ended December 31, 2024, the Company recorded total net charge-offs of $479 thousand, or 0.04% of average total loans on an annualized basis, compared to $5.2 million, or 0.50% of average total loans on an annualized basis, in the prior quarter. The decrease in net charge-offs during the quarter ended December 31, 2024 was due to a $4.0 million charge-off of one commercial real estate office participation loan during the prior quarter and a $462 thousand decrease in purchased consumer loan charge-offs, along with a $308 thousand increase in recoveries during the quarter.
— 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.
SHARE REPURCHASE PLAN The Company announced today that ithas adopted a share repurchase program for up to2,135,286 shares of common stock, which equals approximately 5.0% of the shares currently issued and outstanding.
— Shares may be repurchased in open market or private transactions, through block trades, or pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities and Exchange Commission (“SEC”).
— Repurchases will be made at management's discretion at prices management considers to be attractive and in the best interests of both the Company and its shareholders, subject to the availability of shares, general market conditions, the trading price of the stock, alternative uses for capital, and the Company's financial performance. Open market purchases may be subject to the limitations set forth in Rule 10b-18 of the SEC and other applicable legal requirements.
— The timing and amount of share repurchases under the share repurchase plan may be suspended, terminated or modified by the Company at any time for any reason, including market conditions, the cost of repurchasing shares, the availability of alternative investment opportunities, liquidity, and other factors deemed appropriate. These factors may also affect the timing and amount of share repurchases.
The Company is not obligated to repurchase any particular number of shares or any shares in any specific time period.
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.
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