ECB Bancorp Inc MD
For the period ended Jun 30, 2024. Filed Aug 9, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 9, 2024
ECBK$21.45-0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-10.
0000950170-24-057540
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-09.
0000950170-24-094509
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 102 previous paragraphs and 128 current paragraphs.
60 unchanged; 37 reworded; 22 added; 5 removed; 0 previous and 9 current paragraphs rearranged.
Tables are not compared: 4 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (22)
Current report
Investment Securities Held to Maturity. Investment securities held to maturity increased $3.5 million, or 4.5%, to $80.5 million as of June 30, 2024 from $77.0 million as of December 31, 2023 due to purchases of investment securities.
Current report
Loans. Gross loans increased $63.7 million, or 6.1%, to $1.11 billion at June 30, 2024 from $1.05 billion at December 31, 2023.
Current report
Residential real estate loans increased $8.2 million, or 2.0%, to $418.3 million at June 30, 2024 from $410.1 million at December 31, 2023.
Current report
Home equity lines of credit increased $4.6 million, or 14.0%, to $38.0 million at June 30, 2024 from $33.4 million at December 31, 2023.
Current report
Interest and Dividend Income. Interest and dividend income increased $2.7 million, or 20.0%, to $16.4 million for the three months ended June 30, 2024 from $13.7 million for the three months ended June 30, 2023. This increase was due to a $2.1 million increase in interest and fees on loans, a $112,000 increase in interest and dividends on investment securities and a $571,000 increase in interest on short term investments. The increase in interest and fees on loans was driven by an increase of $99.0 million in the average balance of the loan portfolio to $1.10 billion for the three months ended June 30, 2024 from $998.1 million for the three months ended June 30, 2023, as well as an increase in the average yield of 33 basis points to 5.20% during the three months ended
Current report
Average interest-earning assets increased $134.8 million, to $1.28 billion for the three months ended June 30, 2024 from $1.15 billion for the three months ended June 30, 2023. The yield on interest-earning assets increased 35 basis points to 5.07% for the three months ended June 30, 2024 from 4.72% for the three months ended June 30, 2023.
Current report
Interest Expense. Total interest expense increased $3.1 million, or 43.0%, to $10.4 million for the three months ended June 30, 2024 from $7.3 million for the three months ended June 30, 2023. Interest expense on deposit accounts increased $3.1 million, or 61.4%, to $8.2 million for the three months ended June 30, 2024 from $5.1 million for the three months ended June 30, 2023, primarily due to an increase in the cost of interest bearing deposits of 98 basis points to 3.91% for the three months ended June 30, 2024 from 2.93% for the three months ended June 30, 2023 and an increase in the average balance of interest-bearing deposits of $146.8 million, or 21.2%, to $838.7 million for the three months ended June 30, 2024 from $692.0 million for the three months ended June 30, 2023. Interest expense on FHLB advances increased $17,000, or 0.8%, to $2.2 million for the three months ended June 30, 2024 from $2.2 million for the three months ended June 30, 2023, primarily due to an increase in the cost of FHLB advances of 13 basis points to 3.99% for the three months ended June 30, 2024 from 3.86% for the three months ended June 30, 2023, partially offset by an decrease in the average balance of FHLB advances of $5.1 million, or 2.3%, to $223.1 million for the three months ended June 30, 2024 from $228.3 million for the three months ended June 30, 2023.
Current report
Provision for Credit Losses. Based on management’s analysis of the adequacy of the allowance for credit losses, a provision for credit losses of $292,000 was recorded for the three months ended June 30, 2024, compared to a provision for credit losses of $0 for the three months ended June 30, 2023. The provision for credit losses for the quarter ended June 30, 2024 was driven by loan growth. The $0 provision for credit losses for the quarter ended June 30, 2023 included a provision for loan losses, offset by a benefit to the provision for off balance sheet commitments.
Current report
Advertising and promotions decreased $102,000, or 49.0%. We have strategically reduced certain advertising costs in an effort to manage overall noninterest expenses;
Current report
Professional fees decreased $64,000, or 21.7%, primarily due to higher legal and consulting costs during the 2023 period related to operating a new publicly traded company; and
Current report
FDIC deposit insurance expense decreased $88,000, or 31.2%. During the second quarter of 2023 there were increases in the assessment rates charged by the FDIC.
Current report
Income Tax Expense. We recorded a provision for income tax expense of $272,000 for the three months ended June 30, 2024, compared to a provision for income tax expense of $503,000 for the three months ended June 30, 2023, reflecting effective tax rates of 25.6% and 26.1%, respectively.
Current report
Net Income. We recorded net income of $1.4 million for the six months ended June 30, 2024, compared to net income of $2.3 million for the six months ended June 30, 2023. The decrease in net income was driven by a decrease in net interest and dividend income after the provision for loan losses as well as an increase in noninterest expense, partially offset by an increase in noninterest income.
Current report
Average interest-earning assets increased $153.1 million, to $1.26 billion for the six months ended June 30, 2024 from $1.11 billion for the six months ended June 30, 2023. The yield on interest-earning assets increased 40 basis points to 5.03% for the six months ended June 30, 2024 from 4.63% for the six months ended June 30, 2023.
Current report
Interest Expense. Total interest expense increased $7.2 million, or 55.7%, to $20.2 million for the six months ended June 30, 2024 from $12.9 million for the six months ended June 30, 2023. Interest expense on deposit accounts increased $6.7 million, or 74.8%, to $15.7 million for the six months ended June 30, 2024 from $9.0 million for the six months ended June 30, 2023, primarily due to an increase in the cost of interest bearing deposits of 118 basis points to 3.85% for the six months ended June 30, 2024 from
Current report
Noninterest Income. Noninterest income increased $124,000, or 26.4%, to $594,000 for the six months ended June 30, 2024 from $470,000 for the six months ended June 30, 2023. The increase was driven by increases in income from bank-owned life insurance, net gains on sales of loans and customer service fees. The table below sets forth our noninterest income for the six months ended June 30, 2024 and 2023:
Current report
Noninterest Expense. Noninterest expense increased $968,000, or 10.5%, to $10.2 million for the six months ended June 30, 2024 from $9.2 million for the six months ended June 30, 2023. Significant changes are as follows:
Current report
Salaries and employee benefits increased $732,000, or 12.8%, driven by $484,000 in stock based compensation recorded in the six months ended June 30, 2024, related to the 2023 Equity Incentive Plan. There were no stock based compensation costs in the six months ended June 30, 2023 related to this plan;
Current report
Director compensation increased $176,000, or 73.3%, driven by $165,000 in stock based compensation recorded in the six months ended June 30, 2024, related to the 2023 Equity Incentive Plan. There were no stock based compensation costs in the six months ended June 30, 2023 related to this plan; and
Current report
Advertising and promotions decreased $139,000, or 37.0%. We have strategically reduced certain advertising costs in an effort to manage overall noninterest expenses.
Current report
(1) Excludes interest and dividends on cost method investments of $422,000 and $217,000 for the six months ended June 30, 2024 and 2023, respectively.
Current report
(5) Annualized
Removed paragraphs (5)
Previous report
Loans. Net loans increased $31.2 million, or 3.0%, to $1.07 billion at March 31, 2024 from $1.04 billion at December 31, 2023.
Previous report
Average interest-earning assets increased $171.8 million, to $1.25 billion for the three months ended March 31, 2024 from $1.08 billion for the three months ended March 31, 2023. The yield on interest-earning assets increased 46 basis points to 4.99% for the three months ended March 31, 2024 from 4.53% for the three months ended March 31, 2023.
Previous report
Occupancy and equipment expense increased $70,000, or 34.3%, driven by our new Woburn, MA branch office;
Previous report
Data processing costs increased $69,000, or 28.5%, driven by both increased core processor operating costs as well as costs related to our new online deposit account opening platform; and
Previous report
FDIC deposit insurance expense increased $54,000, or 43.2%, driven by an increase in our asset size.
Reworded paragraphs (37)
Previous wording
Management’s discussion and analysis of the financial condition and results of operations at and for the three months ended March 31, 2024 and 2023 is intended to assist in understanding the financial condition and results of operations of the Company. The information contained in this section should be read in conjunction with the unaudited financial statements and the notes thereto, appearing on Part I, Item 1 of this quarterly report on Form 10-Q.
Current wording
Management’s discussion and analysis of the financial condition and results of operations at and for the three and six months ended June 30, 2024 and 2023 is intended to assist in understanding the financial condition and results of operations of the Company. The information contained in this section should be read in conjunction with the unaudited financial statements and the notes thereto, appearing on Part I, Item 1 of this quarterly report on Form 10-Q.
Previous wording
The Company estimates credit losses on a collective basis for loans sharing similar risk characteristics using a quantitative model combined with an assessment of certain qualitative factors designed to address forecast risk and model risk inherent in the quantitative model output. Management's judgement is required for the selection and application of these factors which are derived from historical loss experience as well as assumptions surrounding expected future losses and economic forecasts.
Current wording
The Company estimates credit losses on a collective basis for loans sharing similar risk characteristics using a quantitative model combined with an assessment of certain qualitative factors designed to address forecast risk and model risk inherent in the quantitative model output. Management's judgment is required for the selection and application of these factors which are derived from historical loss experience as well as assumptions surrounding expected future losses and economic forecasts.
Previous wording
Loans that no longer share similar risk characteristics with any pools of assets are subject to individual assessment and are removed from the collectively assessed pools to avoid double counting. For the loans that are individually assessed, the Company uses either a discounted cash flow (“DCF”) approach or a fair value of collateral approach. The latter approach is used for loans deemed to be collateral dependent or when foreclosure is probable. Changes in these judgements and assumptions could be due to a number of circumstances which may have a direct impact on the provision for credit losses and may result in changes to the amount of allowance. The allowance for credit losses is increased by the provision for credit losses and by recoveries of loans previously charged off. Credit losses are charged against the allowance when management's assessments confirm that the Company will not collect the full amortized cost basis of a loan.
Current wording
Loans that no longer share similar risk characteristics with any pools of assets are subject to individual assessment and are removed from the collectively assessed pools to avoid double counting. For the loans that are individually assessed, the Company uses either a discounted cash flow (“DCF”) approach or a fair value of collateral approach. The latter approach is used for loans deemed to be collateral dependent or when foreclosure is probable. Changes in these judgments and assumptions could be due to a number of circumstances which may have a direct impact on the provision for credit losses and may result in changes to the amount of allowance. The allowance for credit losses is increased by the provision for credit losses and by recoveries of loans previously charged off. Credit losses are charged against the allowance when management's assessments confirm that the Company will not collect the full amortized cost basis of a loan.
Previous wording
Total Assets. Total assets increased $23.1 million, or 1.8%, to $1.30 billion at March 31, 2024 from $1.28 billion at December 31, 2023. The increase was primarily the result of increases in loans.
Current wording
Total Assets. Total assets increased $55.6 million, or 4.3%, to $1.34 billion at June 30, 2024 from $1.28 billion at December 31, 2023. The increase was primarily the result of increases in loans.
Previous wording
Cash and Cash Equivalents. Cash and cash equivalents decreased $6.7 million, or 5.6%, to $112.4 million at March 31, 2024 from $119.0 million at December 31, 2023. Cash and cash equivalents decreased primarily due to the deployment of these funds into loans.
Current wording
Cash and Cash Equivalents. Cash and cash equivalents decreased $7.6 million, or 6.4%, to $111.4 million at June 30, 2024 from $119.0 million at December 31, 2023. Cash and cash equivalents decreased primarily due to the deployment of these funds into loans.
Previous wording
Investment Securities Available for Sale. Investment securities available for sale decreased $2.5 million, or 50.0%, to $2.5 million as of March 31, 2024 from $5.0 million as of December 31, 2023 due to maturities. No securities were sold during the three months ended March 31, 2024.
Current wording
Investment Securities Available for Sale. Investment securities available for sale decreased $5.0 million, or 100.0%, to $0 as of June 30, 2024 from $5.0 million as of December 31, 2023 due to maturities. No securities were sold during the six months ended June 30, 2024.
Previous wording
Multi-family real estate loans increased $23.8 million, or 8.3%, to $311.1 million at March 31, 2024 from $287.4 million at December 31, 2023.
Current wording
Multi-family real estate loans increased $28.8 million, or 10.0%, to $316.2 million at June 30, 2024 from $287.4 million at December 31, 2023.
Previous wording
Commercial real estate loans increased $5.8 million, or 2.9%, to $202.1 million at March 31, 2024 from $196.4 million at December 31, 2023.
Current wording
Commercial real estate loans increased $14.5 million, or 7.4%, to $210.9 million at June 30, 2024 from $196.4 million at December 31, 2023.
Previous wording
Commercial loans increased $5.1 million, or 55.7%, to $14.4 million at March 31, 2024 from $9.2 million at December 31, 2023.
Current wording
Commercial loans increased $5.0 million, or 53.9%, to $14.2 million at June 30, 2024 from $9.2 million at December 31, 2023.
Previous wording
Construction loans decreased $4.6 million, or 4.1%, to $107.4 million at March 31, 2024 from $112.0 million at December 31, 2023.
Current wording
Construction loans increased $2.6 million, or 2.3%, to $114.6 million at June 30, 2024 from $112.0 million at December 31, 2023.
Previous wording
Federal Home Loan Bank stock. The Federal Home Loan Bank (FHLB) is a cooperative bank that provides services to its member banking institutions. The primary reason for our membership in the FHLB is to gain access to a reliable source of wholesale funding and as a tool to manage interest rate risk. The purchase of stock in the FHLB is a requirement for a member to gain access to funding. We purchase and/or are subject to redemption of FHLB stock proportional to the volume of funding received and view the holdings as a necessary long-term investment for the purpose of balance sheet liquidity and not for investment return. We held an investment in FHLB stock of $9.8 million and $9.9 million at March 31, 2024 and December 31, 2023, respectively. The amount of stock we are required to purchase is in proportion to our FHLB borrowings and level of total assets. Accordingly, the decrease in the FHLB stock is due to decreased borrowings.
Current wording
Federal Home Loan Bank stock. The Federal Home Loan Bank (FHLB) is a cooperative bank that provides services to its member banking institutions. The primary reason for our membership in the FHLB is to gain access to a reliable source of wholesale funding and as a tool to manage interest rate risk. The purchase of stock in the FHLB is a requirement for a member to gain access to funding. We purchase and/or are subject to redemption of FHLB stock proportional to the volume of funding received and view the holdings as a necessary long-term investment for the purpose of balance sheet liquidity and not for investment return. We held an investment in FHLB stock of $9.6 million and $9.9 million at June 30, 2024 and December 31, 2023, respectively. Accordingly, the decrease in the FHLB stock is due to decreased borrowings.
Previous wording
Bank-owned Life Insurance. We invest in bank-owned life insurance to help offset the costs of our employee benefit plan obligations. Bank-owned life insurance also generally provides noninterest income that is nontaxable. Bank-owned life insurance increased $118,000, or 0.8%, to $14.6 million at March 31, 2024 from $14.5 million at December 31, 2023. The increase was due to an increase of $118,000 in the cash surrender value of our bank-owned life insurance portfolio during the three months ended March 31, 2024.
Current wording
Bank-owned Life Insurance. We invest in bank-owned life insurance to help offset the costs of our employee benefit plan obligations. Bank-owned life insurance also generally provides noninterest income that is nontaxable. Bank-owned life insurance increased $234,000, or 1.6%, to $14.7 million at June 30, 2024 from $14.5 million at December 31, 2023. The increase was due to an increase of $234,000 in the cash surrender value of our bank-owned life insurance portfolio during the six months ended June 30, 2024.
Previous wording
Deposits. Deposits increased $33.4 million, or 3.9%, to $901.6 million at March 31, 2024 from $868.2 million at December 31, 2023.
Current wording
Deposits. Deposits increased $64.6 million, or 7.4%, to $932.8 million at June 30, 2024 from $868.2 million at December 31, 2023.
Previous wording
Certificates of deposit increased $37.1 million, or 7.4%, to $535.6 million at March 31, 2024 from $498.5 million at December 31, 2023.
Current wording
Certificates of deposit increased $66.1 million, or 13.3%, to $564.6 million at June 30, 2024 from $498.5 million at December 31, 2023.
Previous wording
Money market deposit accounts increased $18.6 million, or 14.2%, to $150.0 million at March 31, 2024 from $131.4 million at December 31, 2023.
Current wording
Money market deposit accounts increased $26.7 million, or 20.3%, to $158.1 million at June 30, 2024 from $131.4 million at December 31, 2023.
Previous wording
Savings accounts decreased $17.8 million, or 12.9%, to $120.0 million at March 31, 2024 from $137.8 million at December 31, 2023.
Current wording
Savings accounts decreased $25.2 million, or 18.4%, to $112.6 million at June 30, 2024 from $137.8 million at December 31, 2023.
Previous wording
Interest bearing checking accounts decreased $2.6 million, or 11.9%, to $19.5 million at March 31, 2024 from $22.2 million at December 31, 2023.
Current wording
Interest bearing checking accounts decreased $2.4 million, or 10.8%, to $19.8 million at June 30, 2024 from $22.2 million at December 31, 2023.
Previous wording
Demand deposit accounts decreased $1.8 million, or 2.3%, to $76.5 million at March 31, 2024 from $78.3 million at December 31, 2023.
Current wording
Demand deposit accounts decreased $541,000, or 0.7%, to $77.8 million at June 30, 2024 from $78.3 million at December 31, 2023.
Previous wording
Core deposits (defined as all deposits other than certificates of deposit) decreased $3.7 million, or 1.0%, to $366.1 million at March 31, 2024 from $369.7 million at December 31, 2023.
Current wording
Core deposits (defined as all deposits other than certificates of deposit) decreased $1.5 million, or 0.4%, to $368.2 million at June 30, 2024 from $369.7 million at December 31, 2023.
Previous wording
Shareholders' Equity. Total shareholders' equity increased $888,000, or 0.5%, to $165.8 million at March 31, 2024 from $164.9 million at December 31, 2023. This increase is primarily the result of earnings of $621,000 and an increase of $453,000 in accumulated other comprehensive income (“AOCI”). The increase in AOCI was driven by an increase in the fair value of cash flow hedges entered into during the quarter ended March 31, 2024. Partially offsetting these increases to shareholders' equity was a decrease in additional paid-in capital of $276,000. This decrease was driven by $629,000 in shares repurchased under our share repurchase plan, partially offset by an increase in Additional Paid In Capital of $443,000 related to stock based compensation and ESOP shares committed to be released. Our book value per share increased $0.19 to $17.94 at March 31, 2024 from $17.75 at December 31, 2023.
Current wording
Shareholders' Equity. Total shareholders' equity increased $1.6 million, or 0.9%, to $166.5 million at June 30, 2024 from $164.9 million at December 31, 2023. This increase is primarily the result of earnings of $1.4 million and an increase of $427,000 in accumulated other comprehensive income (“AOCI”). The increase in AOCI was driven by an increase in the fair value of cash flow hedges entered into during the six months ended June 30, 2024. Partially offsetting these increases to shareholders' equity was a decrease in additional paid-in capital of $457,000. This decrease was driven by $1.2 million in shares repurchased under our share repurchase plan, partially offset by an increase in Additional Paid In Capital of $699,000 related to stock based compensation and ESOP shares committed to be released. Our book value per share increased by $0.34 to $18.09 at June 30, 2024 from $17.75 at December 31, 2023.
Previous wording
Net Income. We recorded net income of $621,000 for the three months ended March 31, 2024, compared to net income of $901,000 for the three months ended March 31, 2023.
Current wording
Net Income. We recorded net income of $791,000 for the three months ended June 30, 2024, compared to net income of $1.4 million for the three months ended June 30, 2023. The decrease in net income was driven by a decrease in net interest and dividend income after the provision for loan losses as well as an increase in noninterest expense, partially offset by an increase in noninterest income.
Previous wording
Net Interest and Dividend Income. Net interest and dividend income decreased $463,000, or 7.3%, to $5.9 million for the three months ended March 31, 2024 from $6.4 million for the three months ended March 31, 2023, primarily due to a decrease in the net interest rate spread of 65 basis points to 1.16% for the three months ended March 31, 2024 from 1.81% for the three months ended March 31, 2023, as well as a $6.3 million decrease in the average balance of net interest-earning assets during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The decrease in the net interest rate spread was due to an increase in the cost of interest-bearing liabilities that exceeded the increase in the yield on interest-earning assets resulting from the significant increase in market interest rates that directly impact our funding costs. The net interest margin decreased 54 basis points to 1.84% for the three months ended March 31, 2024 from 2.38% for the three months ended March 31, 2023.
Current wording
Net Interest and Dividend Income. Net interest and dividend income decreased $386,000, or 6.0%, to $6.0 million for the three months ended June 30, 2024 from $6.4 million for the three months ended June 30, 2023, primarily due to a decrease in the net interest rate spread of 42 basis points to 1.14% for the three months ended June 30, 2024 from 1.56% for the three months ended June 30, 2023, as well as a $6.9 million decrease in the average balance of net interest-earning assets during the three months ended June 30, 2024 as compared to the three months ended June 30, 2023. The decrease in the net interest rate spread was due to an increase in the cost of interest-bearing liabilities that exceeded the increase in the yield on interest-earning assets resulting from the significant increase in market interest rates that directly impact our funding costs. The net interest margin decreased 36 basis points to 1.82% for the three months ended June 30, 2024 from 2.18% for the three months ended June 30, 2023.
Previous wording
Noninterest Income. Noninterest income increased $78,000, or 34.1%, to $307,000 for the three months ended March 31, 2024 from $229,000 for the three months ended March 31, 2023. The increase was driven by $35,000 in net gains on sales of loans in the quarter ended March 31, 2024 as there were no loan sales during the quarter ended March 31, 2023.The table below sets forth our noninterest income for three months ended March 31, 2024 and 2023:
Current wording
Noninterest Income. Noninterest income increased $49,000, or 20.4%, to $289,000 for the three months ended June 30, 2024 from $240,000 for the three months ended June 30, 2023. The increase was driven by increases in income from bank-owned life insurance, net gains on sales of loans and customer service fees. The table below sets forth our noninterest income for three months ended June 30, 2024 and 2023:
Previous wording
Noninterest Expense. Noninterest expense increased $735,000, or 16.3%, to $5.2 million for the three months ended March 31, 2024 from $4.5 million for the three months ended March 31, 2023. Significant changes are as follows:
Current wording
Noninterest Expense. Noninterest expense increased $236,000, or 5.0%, to $4.9 million for the three months ended June 30, 2024 from $4.7 million for the three months ended June 30, 2023. Significant changes are as follows:
Previous wording
Salaries and employee benefits increased $426,000, or 14.8%, driven by $242,000 in stock-based compensation recorded in the quarter ended March 31, 2024, related to the 2023 Equity Incentive Plan. There were no stock-based based compensation costs in the quarter ended March 31, 2023 related to this plan;
Current wording
Salaries and employee benefits increased $307,000, or 10.9%, driven by $242,000 in stock based compensation recorded in the three months ended June 30, 2024, related to the 2023 Equity Incentive Plan. There were no stock based compensation costs in the three months ended June 30, 2023 related to this plan;
Previous wording
Director compensation increased $90,000, or 75.6%, driven by $82,000 in stock-based compensation recorded in the quarter ended March 31, 2024, related to the 2023 Equity Incentive Plan. There were no stock-based compensation costs in the quarter ended March 31, 2023 related to this plan;
Current wording
Director compensation increased $90,000, or 75.6%, driven by $82,000 in stock based compensation recorded in the three months ended June 30, 2024, related to the 2023 Equity Incentive Plan. There were no stock based compensation costs in the three months ended June 30, 2023 related to this plan;
Previous wording
(1) Excludes interest and dividends on cost method investments of $207,000 and $58,000 for the three months ended March 31, 2024 and 2023, respectively.
Current wording
(1) Excludes interest and dividends on cost method investments of $214,000 and $159,000 for the three months ended June 30, 2024 and 2023, respectively.
Previous wording
Interest and Dividend Income. Interest and dividend income increased $3.6 million, or 30.1%, to $15.7 million for the three months ended March 31, 2024 from $12.1 million for the three months ended March 31, 2023. This increase was due to a $2.5 million increase in interest and fees on loans, a $204,000 increase in interest and dividends on investment securities and a $909,000 increase in other interest income. The increase in interest and fees on loans was driven by an increase of $115.0 million in the average balance of the loan portfolio to $1.06 billion for the three months ended March 31, 2024 from $942.9 million for the three months ended March 31, 2023, as well as an increase in the average yield of 41 basis points to 5.11% during the three months ended March 31, 2024 from 4.70% during the three months ended March 31, 2023. The yield for the three months ended March 31, 2024 benefited from new loans with higher rates as well as adjustable rate loans repricing higher. The increase in interest and dividend income on investment securities was driven by an increase in the yield on securities of 30 basis points to 2.78% during the three months ended March 31, 2024 from 2.48% during the three months ended March 31, 2023. The increase in other interest income resulted primarily from an increase of $58.5 million in the average balance of short term investments to $109.0 million for the three months ended March 31, 2024 from $50.5 million for the three months ended March 31, 2023 as well as an increase in the yield on short term investments of 87 basis points to 5.48% during the three months ended March 31, 2024 from 4.61% during the three months ended March 31, 2023. The increase in yield was driven by increases in the rate paid on reserves at the Federal Reserve Bank.
Current wording
Interest and Dividend Income. Interest and dividend income increased $6.4 million, or 24.8%, to $32.1 million for the six months ended June 30, 2024 from $25.7 million for the six months ended June 30, 2023. This increase was due to a $4.6 million increase in interest and fees on loans, a $316,000 increase in interest and dividends on investment securities and a $1.5 million increase in interest on short term investments. The increase in interest and fees on loans was driven by an increase of $106.8 million in the average balance of the loan portfolio to $1.08 billion for the six months ended June 30, 2024 from $970.7 million for the six months ended June 30, 2023, as well as an increase in the average yield of 36 basis points to 5.15% during the six months ended June 30, 2024 from 4.79% during the six months ended June 30, 2023. The yield for the six months ended June 30, 2024 benefited from new loans with higher rates as well as adjustable rate loans repricing higher. The increase in interest and dividend income on investment securities was driven by an increase in the yield on securities of 32 basis points to 2.81% during the six months ended June 30, 2024 from 2.49% during the six months ended June 30, 2023. The increase in other interest income resulted primarily from an increase of $47.9 million in the average balance of short term investments to $107.1 million for the six months ended June 30, 2024 from $59.2 million for the six months ended June 30, 2023 as well as an increase in the yield on short term investments of 59 basis points to 5.48% during the six months ended June 30, 2024 from 4.89% during the six months ended June 30, 2023. The increase in yield was driven by increases in the rate paid on reserves at the Federal Reserve Bank.
Previous wording
Interest Expense. Total interest expense increased $4.1 million, or 71.9%, to $9.8 million for the three months ended March 31, 2024 from $5.7 million for the three months ended March 31, 2023. Interest expense on deposit accounts increased $3.6 million, or 92.1%, to $7.5 million for the three months ended March 31, 2024 from $3.9 million for the three months ended March 31, 2023, primarily due to an increase in the cost of interest bearing deposits of 138 basis points to 3.78% for the three months ended March 31, 2024 from 2.4% for the three months ended March 31, 2023 and an increase in the average balance of interest-bearing deposits of $139.1 million, or 21.0%, to $799.9 million for the three months ended March 31, 2024 from $660.8 million for the three months ended March 31, 2023. Interest expense on FHLB advances increased $488,000, or 27.4%, to $2.3 million for the three months ended March 31, 2024 from $1.8 million for the three months ended March 31, 2023, primarily due to an increase in the average balance of FHLB advances of $39.0 million, or 20.7%, to $227.2 million for the three months ended March 31, 2024 from $188.2 million for the three months ended March 31, 2023 as well as an increase in the cost of FHLB advances of 18 basis points to 4.01% for the three months ended March 31, 2024 from 3.83% for the three months ended March 31, 2023. The increase in FHLB advances was used to fund loan growth and for liquidity management.
Current wording
2.67% for the six months ended June 30, 2023 and an increase in the average balance of interest-bearing deposits of $142.8 million, or 21.1%, to $819.3 million for the six months ended June 30, 2024 from $676.5 million for the six months ended June 30, 2023. Interest expense on FHLB advances increased $507,000, or 12.8%, to $4.5 million for the six months ended June 30, 2024 from $4.0 million for the six months ended June 30, 2023, primarily due to an increase in the average balance of FHLB advances of $16.8 million, or 8.1%, to $225.2 million for the six months ended June 30, 2024 from $208.3 million for the six months ended June 30, 2023 as well as an increase in the cost of FHLB advances of 15 basis points to 4.00% for the six months ended June 30, 2024 from 3.85% for the six months ended June 30, 2023. The increase in FHLB advances was used to fund loan growth and for liquidity management.
Previous wording
Provision for Credit Losses. Based on management’s analysis of the adequacy of the allowance for credit losses, a provision for credit losses of $147,000 was recorded for the three months ended March 31, 2024, compared to a provision for credit losses of $879,000 for the three months ended March 31, 2023. The decrease in the provision for credit losses was driven by lower loan growth during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.
Current wording
Provision for Credit Losses. Based on management’s analysis of the adequacy of the allowance for credit losses, a provision for credit losses of $438,000 was recorded for the six months ended June 30, 2024, compared to a provision for credit losses of $879,000 for the six months ended June 30, 2023. The decrease in the provision for credit losses was driven by lower loan growth during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023.
Previous wording
Income Tax Expense. Income tax expense decreased $108,000, or 33.9%, to $211,000 for the three months ended March 31, 2024 from $319,000 for the three months ended March 31, 2023. The effective tax rate was 25.4% and 26.1% for the three months ended March 31, 2024 and 2023, respectively.
Current wording
Income Tax Expense. Income tax expense decreased $341,000, or 41.4%, to $482,000 for the six months ended June 30, 2024 from $823,000 for the six months ended June 30, 2023. The effective tax rate was 25.4% and 26.1% for the six months ended June 30, 2024 and 2023, respectively.
Previous wording
Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities, and proceeds from maturities of securities. We are also able to borrow from the Federal Home Loan Bank of Boston and the Atlantic Community Bankers Bank. At March 31, 2024, we had outstanding advances of $224.0 million from the Federal Home Loan Bank. At March 31, 2024, we had unused borrowing capacity of $292.4 million with the Federal Home Loan Bank and $10.0 million with the Atlantic Community Bankers Bank.
Current wording
Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities, and proceeds from maturities of securities. We are also able to borrow from the Federal Home Loan Bank of Boston, the Federal Reserve Bank and the Atlantic Community Bankers Bank. At June 30, 2024, we had outstanding advances of $224.0 million from the Federal Home Loan Bank. At June 30, 2024, we had unused borrowing capacity of $277.6 million with the Federal Home Loan Bank, $14.7 million with the Federal Reserve Bank and $10.0 million with the Atlantic Community Bankers Bank.
Previous wording
At March 31, 2024, we had $41.1 million in loan commitments outstanding. In addition to commitments to originate and purchase loans, we had $75.1 million in unused lines of credit to borrowers and $47.8 million in unadvanced construction loans.
Current wording
At June 30, 2024, we had $34.3 million in loan commitments outstanding. In addition to commitments to originate and purchase loans, we had $76.7 million in unused lines of credit to borrowers and $49.8 million in unadvanced construction loans.
Previous wording
Non brokered certificates of deposit due within one year of March 31, 2024 totaled $197.4 million, or 29.8%, of total deposits. If these deposits do not remain with us, we may be required to seek other sources of funds, including brokered deposits and FHLB advances. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or before March 31, 2025, or on our savings and money market accounts.
Current wording
Non brokered certificates of deposit due within one year of June 30, 2024 totaled $215.1 million, or 23.1%, of total deposits. If these deposits do not remain with us, we may be required to seek other sources of funds, including brokered deposits and FHLB advances. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or before June 30, 2025, or on our savings and money market accounts.
Previous wording
Our primary investing activity is originating loans. During the three months ended March 31, 2024 and the year ended December 31, 2023, we originated and purchased $52.6 million and $268.1 million of loans, respectively.
Current wording
Our primary investing activity is originating loans. During the six months ended June 30, 2024 and the year ended December 31, 2023, we originated and purchased $112.8 million and $268.1 million of loans, respectively.
Previous wording
Financing activities consist primarily of activity in deposit accounts and FHLB advances. We experienced net increases in deposits of $33.4 million and $150.1 million for the three months ended March 31, 2024 and the year ended December 31, 2023, respectively. At March 31, 2024 and December 31, 2023, the level of brokered time deposits was $125.5 million and $115.5 million, respectively. Deposit flows are affected primarily by the overall level of interest rates and the interest rates and products offered by us and our competitors. FHLB advances decreased by $10.0 million for the three months ended March 31, 2024, compared to an increase of $60.0 million for the year ended December 31, 2023.
Current wording
Financing activities consist primarily of activity in deposit accounts and FHLB advances. We experienced net increases in deposits of $64.6 million and $150.1 million for the six months ended June 30, 2024 and the year ended December 31, 2023, respectively. At June 30, 2024 and December 31, 2023, the level of brokered time deposits was $125.5 million and $115.5 million, respectively. Deposit flows are affected primarily by the overall level of interest rates and the interest rates and products offered by us and our competitors. FHLB advances decreased by $10.0 million for the six months ended June 30, 2024, compared to an increase of $60.0 million for the year ended December 31, 2023.
Previous wording
For additional information, see the consolidated statements of cash flows for the three months ended March 31, 2024 and 2023 included as part of the consolidated financial statements appearing elsewhere in this Form 10-Q.
Current wording
For additional information, see the consolidated statements of cash flows for the six months ended June 30, 2024 and 2023 included as part of the consolidated financial statements appearing elsewhere in this Form 10-Q.
Rearranged current paragraphs (9)
Current report — wording carried from elsewhere
June 30, 2024 from 4.87% during the three months ended June 30, 2023. The yield for the three months ended June 30, 2024 benefited from new loans with higher rates as well as adjustable rate loans repricing higher. The increase in interest and dividend income on investment securities was driven by an increase in the yield on securities of 36 basis points to 2.86% during the three months ended June 30, 2024 from 2.50% during the three months ended June 30, 2023. The increase in other interest income resulted primarily from an increase of $37.4 million in the average balance of short term investments to $105.2 million for the three months ended June 30, 2024 from $67.8 million for the three months ended June 30, 2023 as well as an increase in the yield on short term investments of 37 basis points to 5.48% during the three months ended June 30, 2024 from 5.11% during the three months ended June 30, 2023. The increase in yield was driven by increases in the rate paid on reserves at the Federal Reserve Bank.
Current report — wording carried from elsewhere
Comparison of Operating Results for the Six Months Ended June 30, 2024 and June 30, 2023
Current report — wording carried from elsewhere
Net Interest and Dividend Income. Net interest and dividend income decreased $852,000, or 6.7%, to $11.9 million for the six months ended June 30, 2024 from $12.8 million for the six months ended June 30, 2023, primarily due to a decrease in the net interest rate spread of 53 basis points to 1.15% for the six months ended June 30, 2024 from 1.68% for the six months ended June 30, 2023, as well as a $6.6 million decrease in the average balance of net interest-earning assets during the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. The decrease in the net interest rate spread was due to an increase in the cost of interest-bearing liabilities that exceeded the increase in the yield on interest-earning assets resulting from the significant increase in market interest rates that directly impact our funding costs. The net interest margin decreased 45 basis points to 1.83% for the six months ended June 30, 2024 from 2.28% for the six months ended June 30, 2023.
Current report — wording carried from elsewhere
The table below sets forth our noninterest expense for the six months ended June 30, 2024 and 2023:
Current report — wording carried from elsewhere
Average Balances and Yields. The following table sets forth average balance sheets, average yields and costs, and certain other information for the periods indicated. Average balances are daily average balances. Non-accrual loans are included in average balances only. Average yields include the effect of deferred costs and fees, discounts, and premiums that are amortized or accreted to interest income or interest expense.
Current report — wording carried from elsewhere
(2) 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.
Current report — wording carried from elsewhere
(3) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
Current report — wording carried from elsewhere
(4) Net interest margin represents net interest income divided by average total interest-earning assets.
Current report — wording carried from elsewhere
Rate/Volume Analysis. The following tables present the effects of changing rates and volumes on our net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior period volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The total column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately based on the changes due to rate and the changes due to volume. There were no out-of-period items or adjustments required to be excluded from the table below.