Categories: PR Newswire

NB Bancorp, Inc. Reports Full Year 2023 Financial Results

NEEDHAM, Mass., Feb. 28, 2024 /PRNewswire/ — NB Bancorp, Inc. (the “Company”) (Nasdaq Capital Market: NBBK), the holding company of Needham Bank, today announced its 2023 financial results.

Concurrent with its mutual-to-stock conversion and as described in the prospectus for its initial public offering (“IPO”), the Company made a one-time donation of $2.0 million in cash and 1.7 million shares of common stock to the Needham Bank Charitable Foundation at a total market value of $19.1 million. This contribution, in addition to a one-time conversion and IPO-related compensation, pension termination expense and tax expense related to the impact of public company tax laws resulted in net income of $9.8 million for the year ended December 31, 2023, compared to net income of $30.1 million reported for the year ended December 31, 2022. Net income excluding conversion and IPO-related expenses, which excludes these one-time amounts, was $34.3 million for the year ended December 31, 2023, compared to $30.1 million reported for the prior year.

“The capital that the Company raised from its IPO will be transformative as we move forward. It will provide us with the ability to grow in a safe and prudent manner, allowing us to be selective in how we deploy the capital into growing market share and serving our customers’ needs,” said Joseph Campanelli, Chairman, President and Chief Executive Officer. “The team’s efforts in completing the IPO were exceptional. We look forward to continue building on our 132-year history of serving the local communities.”

SELECTED FINANCIAL HIGHLIGHTS

  • Net income was $9.8 million for 2023, which was negatively impacted by the previously mentioned one-time expenses, most significantly the $19.1 million expense for the cash and stock contribution to the Needham Bank Charitable Foundation.
  • Net income, excluding conversion and IPO-related expenses, was $34.3 million for the year ended December 31, 2023.
  • Book value and tangible book value per share were $17.75 and $17.72, respectively, at December 31, 2023.

BALANCE SHEET

Total assets were $4.53 billion as of December 31, 2023, representing an increase of $941.1 million, or 26.2%, from December 31, 2022.

  • Cash and cash equivalents increased to $272.6 million from $156.5 million, a $116.0 million, or 74.1%, increase from the prior year as a result of the conversion and IPO on December 27, 2023.
  • Net loans were $3.86 billion, representing an increase of $866.6 million, or 29.0%, from the prior year as demand for new originations continued. The main driver of the new growth was in commercial real estate loans, which grew $372.0 million, or 36.8%, commercial and industrial loans, which grew $240.5 million, or 97.2%, and residential real estate, which grew $187.1 million, or 18.6%, year-over-year. The growth in residential lending was driven from new originations, of which $38.9 million was fixed rate and $144.4 million was adjustable rate, at a weighted average rate of 6.77% at December 31, 2023.
  • Deposits totaled $3.39 billion representing an increase of $500.6 million, or 17.3%, from the prior year. The increase in deposits from December 31, 2022 was the result of growth in customer deposits, primarily certificates of deposit, which increased $287.4 million, or 23.8% from prior year, along with money market account and noninterest-bearing demand deposit accounts, which increased by $229.1 million, or 34.7%, and $83.0 million, or 18.6%, respectively from December 31, 2022.
  • Shareholders’ equity was $758.0 million, representing an increase of $413.9 million, or 120.3%, from the prior year. The primary driver for the increase was the capital raised during the Company’s mutual-to-stock conversion and IPO, which was completed on December 27, 2023.

NET INTEREST INCOME

Net interest income was $130.1 million for the year ended December 31, 2023, compared to $105.0 million for the prior year, representing an increase of $25.1 million, or 23.9%. The net interest margin was 3.41% for 2023, representing a decrease of eight basis points from the prior year, primarily due to the unprecedented rapid increase in interest rates, which caused an increase in the cost of liabilities used to fund the Company’s loan growth. The increase in interest income was attributable to increases from both rates and volume, which contributed $53.9 million and $46.1 million, respectively. The increase in interest expense for 2023 was primarily driven by increases in rates, which increased interest expense by $54.8 million, along with increases in volume, which increased interest expense by $20.1 million.

NONINTEREST INCOME

Noninterest income was $15.6 million for 2023, compared to $9.3 million for the prior year, representing an increase of $6.3 million, or 67.9%.

  • Customer service fees increased $2.7 million, or 52.1%, from prior year, primarily driven by higher account cash management service charges.
  • Swap contract income was $2.2 million for 2023, compared to $1.3 million in the prior year, representing an increase of $891 thousand.
  • Employee Retention Credit income was $3.5 million in 2023 compared to none in 2022 as the Company received a one-time IRS credit.

NONINTEREST EXPENSE

Noninterest expense for 2023 was $119.9 million, representing an increase of $48.8 million, or 68.5%, from the prior year, and included one-time costs associated with the Company’s mutual-to-stock conversion during the year ended December 31, 2023. Noninterest expense excluding conversion and IPO-related expenses for 2023 was $91.0 million, which represents a $19.9 million, or 27.9%, increase from 2022 as the Company continued to invest in infrastructure to support growth.

  • Charitable contributions expense in 2023 of $20.3 million included $19.1 million of expense resulting from the contribution to the Needham Bank Charitable Foundation in connection with the Company’s mutual-to-stock conversion and IPO.
  • Salaries and benefits were $68.3 million in 2023, representing an increase of $20.9 million from the prior year, primarily due to an $8.3 million increase in employee bonuses for efforts related to the mutual-to-stock conversion and IPO, a $5.5 million increase in salaries and a $1.1 million increase in health insurance benefits, both due to increased head count, and a $1.5 million increase in pension expense as a result of the termination of the Company’s defined benefit plan.
  • Federal Deposit Insurance Corporation and state insurance assessments expense increased by $2.9 million, or 157.4%, to $4.7 million, as a result of asset growth by the Company.

ASSET QUALITY

  • The allowance for credit losses was $32.2 million as of December 31, 2023, or 0.83% of total gross loans, compared to $25.0 million, or 0.83% of total loans at December 31, 2022. The Company recorded provisions for credit losses of $13.9 million for 2023, compared to $6.7 million in 2022. The Company’s provision for credit losses recognized in 2023 include $4.2 million of provisions for unfunded commitments. On January 1, 2023, the Company adopted the current expected credit loss (“CECL”) methodology.
  • Non-performing loans totaled $10.8 million at December 31, 2023, a decrease of $2.1 million from $12.9 million at the end of 2022. Delinquencies were $10.0 million at December 31, 2023, a decrease of $2.9 million from December 31, 2022. Net charge-offs for 2023 amounted to $3.6 million, or 10 basis points of average loans.
  • The Company’s loan portfolio consists of primarily commercial real estate and multifamily 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.
  • The Company’s $210.0 million multifamily 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 $197.2 million office portfolio is predominantly located in the Greater Boston suburbs and mostly consists of Class A and B office space. The typical use of these office loans are medical and lab space and do not consist of high-rise towers located in Boston.

ANNOUNCEMENT OF THE 2024 ANNUAL MEETING OF SHAREHOLDERS

The Company’s Board of Directors has set the date for its 2024 annual meeting of shareholders to be held on Wednesday, May 22, 2024. The annual meeting will be held over the Internet in a virtual meeting format. The record date for shareholders entitled to vote at the meeting will be Monday, April 1, 2024. Shareholders of record will receive additional details and instructions for meeting participation in the proxy materials that will be made available to them in April.

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 generally accepted accounting principles (“GAAP”), this press release contains certain non-GAAP financial measures, including net income excluding conversion and IPO-related expenses, noninterest expense excluding conversion and IPO-related expenses, earnings per share excluding conversion and IPO-related expenses, return on average assets excluding conversion and IPO-related expenses, return on average shareholders’ equity excluding conversion and IPO-related expenses, efficiency ratio excluding conversion and IPO-related expenses, 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 Registration Statement Form S-1 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.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except share and per share data)

December 31, 2023

December 31, 2022

Assets

 Cash and due from banks

$

90,485

$

131,073

 Federal funds sold

182,106

25,472

    Total cash and cash equivalents

272,591

156,545

 Available-for-sale securities, at fair value

189,465

245,480

 Total loans

3,889,279

3,015,445

 Allowance for credit losses

(32,222)

(25,028)

    Net loans

3,857,057

2,990,417

 Accrued interest receivable

17,284

10,837

 Banking premises and equipment, net

35,531

35,344

 Depositors Insurance Fund, at cost

139

139

 Federal Home Loan Bank stock, at cost

14,558

13,182

 Federal Reserve Bank stock, at cost

10,323

8,104

 Non-public investments

13,713

10,592

 Bank-owned life insurance (“BOLI”)

50,516

49,006

 Prepaid expenses and other assets

53,109

57,167

 Income tax refunds receivable

4,134

 Deferred income tax asset

19,126

11,388

    Total assets

$

4,533,412

$

3,592,335

Liabilities and shareholders’ equity

 Deposits

$

3,387,348

$

2,886,743

 Mortgagors’ escrow accounts

4,229

4,064

 FHLB borrowings

283,338

293,082

 Accrued expenses and other liabilities

81,325

52,399

 Accrued retirement liabilities

19,213

11,982

    Total liabilities

3,775,453

3,248,270

 Commitments and contingencies 

Shareholders’ equity

Preferred stock, $0.01 par value, 5,000,000 shares authorized; no shares issued and outstanding

Common stock, $0.01 par value, 120,000,000 shares authorized; 42,705,729 issued and outstanding    

    at December 31, 2023, no shares issued and outstanding at December 31, 2022

427

 Additional paid-in capital

417,030

 Unallocated common shares held by Employee Stock Ownership Plan

(13,774)

 Retained earnings

366,173

358,466

 Accumulated other comprehensive loss

(11,897)

(14,401)

    Total shareholders’ equity

757,959

344,065

    Total liabilities and shareholders’ equity

$

4,533,412

$

3,592,335

 

NB BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except share and per share data)

For the years ended December 31,

2023

2022

INTEREST AND DIVIDEND INCOME

Interest and fees on loans

$

211,973

$

113,760

Interest and dividends on investment securities

4,773

4,954

Interest on cash equivalents and other

3,755

1,798

   Total interest and dividend income

220,501

120,512

INTEREST EXPENSE

Interest on deposits

76,394

12,689

Interest on FHLB borrowings

14,050

2,859

   Total interest expense

90,444

15,548

NET INTEREST INCOME

130,057

104,964

PROVISION FOR CREDIT LOSSES

Provision for credit losses – allowance for credit losses

9,657

6,700

Provision for credit losses – allowance for unfunded commitments

4,228

   Total provision for credit losses

13,885

6,700

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES

116,172

98,264

NONINTEREST INCOME

Gain from bargain purchase and assumption agreement

1,070

Customer service fees

7,817

5,138

Increase in cash surrender value of BOLI

1,510

1,157

Mortgage banking income

581

595

Swap contract income

2,153

1,262

Employee retention credit income

3,452

Other income

64

53

   Total noninterest income

15,577

9,275

NONINTEREST EXPENSE

Salaries and employee benefits

68,344

47,466

Director and professional service fees

6,232

4,758

Occupancy and equipment expenses

5,192

4,354

Data processing expenses

7,500

5,657

Charitable contribution expense

20,335

1,066

Marketing expenses

2,747

2,338

FDIC and state insurance assessments

4,707

1,829

General and administrative expenses

4,848

3,683

   Total noninterest expense

119,905

71,151

INCOME BEFORE TAXES

11,844

36,388

INCOME TAXES

2,019

6,323

NET INCOME

$

9,825

$

30,065

Weighted average common shares outstanding

42,018,229

N/A

Earnings per share (basic)

$

0.23

N/A

 

NB BANCORP, INC.
NON-GAAP RECONCILIATION
(Unaudited)
(Dollars in thousands)

Years Ended December 31,

2023

2022

Net income (GAAP)

$

9,825

$

30,065

Add:

Noninterest expense components:

Needham Bank Charitable Foundation contribution resulting from IPO

19,082

One-time conversion and IPO-related compensation expense

7,931

Defined benefit pension termination expense

1,900

Permanent tax differences resulting from public company tax laws (1)

3,680

Total impact of non-GAAP adjustment

$

32,593

$

Less net tax benefit associated with non-GAAP adjustments

8,096

Non-GAAP adjustments, net of tax

24,497

Net income excluding conversion and IPO-related expenses (non-GAAP)

$

34,322

$

30,065

Weighted average common shares outstanding

42,018,229

N/A

Earnings per share excluding conversion and IPO-related expenses (non-GAAP)

$

0.82

N/A

(1)

These amounts are reflected in income tax expense and reflect amounts related to current year compensation and a write-down for future
LTIP vesting amounts that are not expected to be deductible on a tax return. These amounts are not included in the calculation of the tax
benefit associated with non-GAAP adjustments

Years Ended December 31,

2023

2022

Noninterest expense (GAAP)

$

119,905

$

71,151

Subtract:

Noninterest expense components:

Needham Bank Charitable Foundation contribution resulting from IPO

19,082

One-time conversion and IPO-related compensation expense

7,931

Defined benefit pension termination expense

1,900

Total impact of non-GAAP noninterest expense adjustments

28,913

Noninterest expense excluding conversion and IPO-related expenses (non-GAAP)

$

90,992

$

71,151

Years Ended December 31,

2023

2022

Net income excluding conversion and IPO-related expenses (non-GAAP)

$

34,322

$

30,065

Average assets

3,973,093

3,118,890

Return on average assets excluding conversion and IPO-related expenses (non-GAAP)

0.86 %

0.96 %

Average shareholders’ equity

365,120

331,872

Return on average shareholders’ equity excluding conversion and IPO-related expenses (non-GAAP)

9.40 %

9.06 %

As of December 31,

2023

2022

Total shareholders’ equity (GAAP)

$

757,959

$

344,065

Subtract:

Intangible assets (core deposit intangible)

1,227

1,377

Total tangible shareholders’ equity (non-GAAP)

756,732

342,688

Total assets (GAAP)

4,533,412

3,592,335

Subtract:

Intangible assets (core deposit intangible)

1,227

1,377

Total tangible assets (non-GAAP)

$

4,532,185

$

3,590,958

Tangible stockholders’ equity / tangible assets (non-GAAP)

16.7 %

9.5 %

Total common shares outstanding

42,705,729

N/A

Tangible book value per share (non-GAAP)

$

17.72

N/A

HIDDEN_ROW

Years Ended December 31,

2023

2022

Noninterest expense excluding conversion and IPO-related expenses (non-GAAP)

$

90,992

$

71,151

Total revenue

145,634

114,239

Efficiency ratio excluding conversion and IPO-related expenses (non-GAAP)

62.5 %

62.3 %

 

NB BANCORP, INC.
SELECT FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands, except per share amounts)

As of and for the years ended
December 31,

2023

2022

Earnings data

   Net interest income

$

130,057

$

104,964

   Noninterest income

15,577

9,275

   Total revenue

145,634

114,239

   Provision for credit losses

13,885

6,700

   Noninterest expense

119,905

71,151

   Pre-tax income

11,844

36,388

   Net income

9,825

30,065

   Net income excluding conversion and IPO-related expenses (non-GAAP)

34,322

30,065

   Noninterest expense excluding conversion and IPO-related expenses (non-GAAP)

90,992

71,151

Per share data

   Earnings per share

$

0.23

 N/A

   Earnings per share excluding conversion and IPO-related expenses (non-GAAP)

0.82

 N/A

   Book value per share

17.75

 N/A

   Tangible book value per share (non-GAAP)

17.72

 N/A

Profitability

   Return on average assets

0.25 %

0.96 %

   Return on average assets excluding conversion and IPO-related expenses (non-GAAP)

0.86 %

0.96 %

   Return on average shareholders’ equity

2.69 %

9.06 %

   Return on average shareholders’ equity excluding conversion and IPO-related expenses (non-GAAP)

9.40 %

9.06 %

   Net interest margin

3.41 %

3.49 %

   Cost of deposits

2.34 %

0.48 %

   Efficiency ratio

82.3 %

62.3 %

   Efficiency ratio excluding conversion and IPO-related expenses (non-GAAP)

62.5 %

62.3 %

Balance sheet

   Total assets

$

4,533,412

$

3,592,335

   Total loans

3,889,279

3,015,445

   Total deposits

3,387,348

2,886,743

   Total shareholders’ equity

757,959

344,065

Asset quality

   Allowance for credit losses (ACL)

$

32,222

$

25,028

   ACL / Total nonperforming loans (NPLs)

297.8 %

194.5 %

   Total NPLs / Total loans

0.28 %

0.43 %

   Net charge-offs / Average total loans

0.10 %

0.00 %

Capital ratios

   Shareholders’ equity / Total assets

16.7 %

9.6 %

   Tangible shareholders’ equity / tangible assets (non-GAAP)

16.7 %

9.5 %

 

View original content:https://www.prnewswire.com/news-releases/nb-bancorp-inc-reports-full-year-2023-financial-results-302074935.html

SOURCE Needham Bank

Dayang Norazhar

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