NB Bancorp Inc

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

This Quarterly Report on Form 10-Q contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “indicate,” “would,” “believe,” “contemplate,” “continue,” “intend,” “target” and words of similar meaning. These forward-looking statements include, but are not limited to:

Current wording

This Quarterly Report on Form 10-Q contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “indicate,” “would,” “contemplate,” “continue,” “intend,” “target” and words of similar meaning. These forward-looking statements include, but are not limited to:

Previous wording

There are no material changes to the critical accounting policies disclosed in NB Bancorp, Inc.’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 28, 2024.

Current wording

There are no material changes to the critical accounting policies disclosed in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 28, 2024.

Previous wording

The Company estimates the allowance for credit losses in accordance with the CECL methodology for loans measured at amortized cost. The allowance for credit losses is established based upon the Company's current estimate of expected lifetime credit losses. Arriving at an appropriate amount of allowance for credit losses involves a high degree of judgment.

Current wording

The Company estimates the allowance for credit losses in accordance with the CECL methodology for loans measured at amortized cost. The allowance for credit losses is established based upon the Company's current estimate of expected lifetime credit losses.

Previous wording

We classify our investments in debt securities as available-for-sale, which are carried at fair value. We obtain our fair values from one or more third-party services. This service’s fair value calculations are based on quoted market prices when such prices are available. If quoted market prices are not available, estimates of fair value are computed using a variety of techniques, including extrapolation from the quoted prices of similar instruments or recent trades for thinly traded securities, fundamental analysis, or through obtaining purchase quotes. Due to the subjective nature of the valuation process, it is possible that the actual fair values of these investments could differ from the estimated amounts, thereby affecting our financial position, results of operations and cash flows.

Current wording

We classify our debt securities as available-for-sale, which are carried at fair value. We obtain our fair values from one or more third-party services. These services’ fair value calculations are based on quoted market prices when such prices are available. If quoted market prices are not available, estimates of fair value are computed using a variety of techniques, including extrapolation from the quoted prices of similar instruments or recent trades for thinly traded securities, fundamental analysis, or through obtaining purchase quotes. Due to the subjective nature of the valuation process, it is possible that the actual fair values of these investments could differ from the estimated amounts, thereby affecting our financial position, results of operations and cash flows.

Previous wording

Total Assets. Total assets increased $116.6 million, or 2.6%, to $4.65 billion as of March 31, 2024 from $4.53 billion as of December 31, 2023. The increase was primarily driven by increases in net loans, cash and cash equivalents and available-for-sale securities, offset, in part, by decreases in FHLB stock.

Current wording

Total Assets. Total assets increased $272.0 million, or 6.0%, to $4.81 billion as of June 30, 2024 from $4.53 billion as of December 31, 2023. The increase was primarily driven by increases in net loans, cash and cash equivalents and available-for-sale securities.

Previous wording

Cash and Cash Equivalents. Cash and cash equivalents increased $42.4 million, or 15.6%, to $315.0 million as of March 31, 2024 from $272.6 million as of December 31, 2023. The increase in cash and cash equivalents was due to deposit growth outpacing loan and investment growth.

Current wording

Cash and Cash Equivalents. Cash and cash equivalents increased $56.4 million, or 20.7%, to $328.9 million as of June 30, 2024 from $272.6 million as of December 31, 2023. The increase in cash and cash equivalents was due to deposit growth outpacing loan and investment growth, offset partially by paydowns of Federal Home Loan Bank borrowings.

Previous wording

Securities Available for Sale. Securities available for sale increased $17.7 million, or 9.3%, to $207.2 million as of March 31, 2024 from $189.5 million as of December 31, 2023 due to purchases of U.S. treasuries and government agency securities. No securities were sold during the three months ended March 31, 2024.

Current wording

Securities Available for Sale. Securities available for sale increased $15.6 million, or 8.2%, to $205.1 million as of June 30, 2024 from $189.5 million as of December 31, 2023 due to purchases of U.S. treasuries, government agency and corporate bond debt securities. No securities were sold during the three and six months ended June 30, 2024.

Previous wording

Loans. Net loans increased $63.3 million, or 1.6%, to $3.92 billion as of March 31, 2024 from $3.86 billion as of December 31, 2023. The primary driver of the increase from December 31, 2023 to March 31, 2024 was multi-family residential loans, which increased $111.1 million, or 52.9%; and commercial real estate loans, which increased $25.5 million, or 2.2%; offset partially by an $87.4 million, or 14.0%, decrease in construction and development loans, as $111.0 million of construction and development loans converted to multi-family loans during the quarter. The increase in our loan portfolio reflects our strategy to prudently grow the balance sheet by continuing to diversify into these higher-yielding loans to improve net margins and manage interest rate risk.

Current wording

Loans. Net loans increased $202.4 million, or 5.2%, to $4.06 billion as of June 30, 2024 from $3.86 billion as of December 31, 2023. The primary driver of the increase was commercial and industrial loans, which increased $94.4 million, or 19.2%; multi-family residential loans, which increased $57.6 million, or 27.4%; commercial real estate loans, which increased $54.4 million, or 4.6%; one-to-four family residential loans, which increased $21.2 million, or 1.9%; and consumer loans, which increased $18.6 million, or 9.1%; offset partially by a $46.5 million, or 7.5%, decrease in construction and development loans, as $111.0 million of construction and development loans converted to multi-family loans. The increase in our loan portfolio reflects our strategy to prudently grow the balance sheet by continuing to diversify into these higher-yielding loans to improve net margins and manage interest rate risk.

Previous wording

Federal Home Loan Bank (“FHLB”) Stock. The FHLB is a cooperative bank that provides services to its member financial 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. We held an investment in FHLB stock of $4.4 million and $14.6 million as of 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 from December 31, 2023 to March 31, 2024 is due to decreased FHLB borrowings.

Current wording

Federal Home Loan Bank (“FHLB”) Stock. The FHLB is a cooperative bank that provides services to its member financial 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. We held an investment in FHLB stock of $4.8 million and $14.6 million as of June 30, 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 from December 31, 2023 to June 30, 2024 is due to the decrease in FHLB borrowings.

Previous wording

Prepaid Expenses and Other Assets. Prepaid expenses and other assets consist primarily of right of use assets related to our long-term leases and derivatives with a positive fair value. These assets increased $3.2 million, or 6.0%, to $56.3 million as of March 31, 2024 from $53.1 million as of December 31, 2023. The increase resulted primarily from a $1.5 million increase in the fair value of derivatives as a result of market and interest rate factors, as well as, the one-time recognition of a $610,000 credit and debit card branding signing bonus, which was recorded as income but not yet received.

Current wording

Prepaid Expenses and Other Assets. Prepaid expenses and other assets consist primarily of right of use assets related to our long-term leases and derivatives with a positive fair value. These assets increased $2.2 million, or 4.2%, to $55.3 million as of June 30, 2024 from $53.1 million as of December 31, 2023. The increase resulted primarily from a $1.2 million increase in the fair value of derivatives as a result of market and interest rate factors, as well as, an $1.0 million increase in prepaid expenses resulting from new or renewed contracts.

Previous wording

Deposits. Deposits increased $384.7 million, or 11.4%, to $3.77 billion as of March 31, 2024 from $3.39 billion as of December 31, 2023. Core deposits (which we define as all deposits including certificates of deposit, other than brokered deposits) increased $268.3 million, or 8.4%, to $3.47 billion as of March 31, 2024 from $3.20 billion as of December 31, 2023. The increase in deposits was the result of growth in customer deposits, primarily certificates of deposit, which increased $150.2 million, or 11.4% from the prior quarter, along with money market accounts and noninterest-bearing demand deposit accounts, which increased $76.3 million, or 8.6%, and $51.3 million, or 9.7%, respectively, from December 31, 2023. Additionally, brokered deposits increased $116.4 million, or 63.4%, from December 31, 2023, as a result of lower rates versus alternative funding sources and to support overall liquidity.

Current wording

Deposits. Deposits increased $530.6 million, or 15.7%, to $3.92 billion as of June 30, 2024 from $3.39 billion as of December 31, 2023. Core deposits (which we define as all deposits including certificates of deposit, other than brokered deposits) increased $414.2 million, or 12.9%, to $3.62 billion as of June 30, 2024 from $3.20 billion as of December 31, 2023. The increase in deposits was the result of growth in customer deposits, primarily certificates of deposit, which increased $281.5 million, or 21.4%, from the prior quarter, along with money market accounts and noninterest-bearing demand deposit accounts, which increased $78.7 million, or 8.9%, and $60.7 million, or 11.5%, respectively, from December 31, 2023. Additionally, brokered deposits increased $116.4 million, or 63.4%, from December 31, 2023, as a result of lower rates versus alternative funding sources and to support overall liquidity.

Previous wording

The Company had $315.5 million and $277.2 million in deposits from the cannabis industry as of March 31, 2024 and December 31, 2023, respectively.

Current wording

The Company had $292.0 million and $277.2 million in deposits from the cannabis industry as of June 30, 2024 and December 31, 2023, respectively.

Previous wording

FHLB Borrowings. FHLB borrowings decreased $222.5 million, or 78.5%, to $60.8 million as of March 31, 2024 from $283.3 million as of December 31, 2023. The decrease in FHLB borrowings was the result of growth in brokered deposits due to lower rates and overall deposit growth.

Current wording

FHLB Borrowings. FHLB borrowings decreased $222.5 million, or 78.5%, to $60.8 million as of June 30, 2024 from $283.3 million as of December 31, 2023. The decrease in FHLB borrowings was the result of overall deposit growth and growth in brokered deposits due to lower rates.

Previous wording

Accrued expenses and other liabilities. Accrued expenses and other liabilities decreased $20.6 million, or 25.3%, to $60.8 million as of March 31, 2024 from $81.3 million as of December 31, 2023. The decrease resulted from $15.8 million in IPO-related and other accrued expenses and $9.5 million in incentive bonuses being paid during the three months ended March 31, 2024; offset in part by increased accruals for federal taxes of $1.4 million resulting from increased effective tax rates, increased fair value of derivative liabilities of $1.5 million resulting from market conditions and interest rate movements and increased accrued payroll of $1.1 million due to increased headcount.

Current wording

Accrued expenses and other liabilities. Accrued expenses and other liabilities decreased $23.2 million, or 28.6%, to $58.1 million as of June 30, 2024 from $81.3 million as of December 31, 2023. The decrease resulted from $15.8 million in IPO-related and other accrued expenses, $9.5 million in incentive bonuses being paid, and a $5.3 million reduction in accrued income taxes due to tax credits earned; partially offset by increased accrued interest on brokered deposits due to higher average outstanding balances, increased fair value of derivative liabilities of $1.2 million resulting from market conditions and interest rate movements and an increase for a due to broker related to the settlement of a corporate bond debt security as of June 30, 2024.

Previous wording

Shareholders’ Equity. Total shareholders’ equity decreased $24.1 million, or 3.2%, to $733.8 million as of March 31, 2024 from $758.0 million at December 31, 2023, due to the $32.8 million increase in the unallocated common shares held by the ESOP resulting from the purchase of shares on the open market to fund the ESOP as a result of the conversion; offset partially by $8.7 million in net income the three months ended March 31, 2024.

Current wording

Shareholders’ Equity. Total shareholders’ equity decreased $13.5 million, or 1.8%, to $744.5 million as of June 30, 2024 from $758.0 million at December 31, 2023, due to the $32.2 million increase in the unallocated common shares held by the ESOP resulting from the purchase of shares on the open market to fund the ESOP as a result of the conversion, offset partially by $18.2 million in net income for the six months ended June 30, 2024.

Previous wording

Interest and Dividend Income. Interest and dividend income increased $22.2 million, or 48.2%, to $68.2 million for the quarter ended March 31, 2024 from $46.0 million for the quarter ended March 31, 2023, primarily due to a $20.2 million, or 46.3% increase in interest and fees on loans. The increase in interest and fees on loans was primarily due to an increase of $809.3 million in the average balance of the loan portfolio to $3.90 billion for the quarter ended March 31, 2024 from $3.09 billion for the quarter ended March 31, 2023 and an increase of 86 basis points in the weighted average yield for the loan portfolio to 6.60% for March 31, 2024 from 5.74% for March 31, 2023, reflecting the growth of our consumer and commercial portfolios.

Current wording

Interest and Dividend Income. Interest and dividend income increased $18.9 million, or 36.1%, to $71.1 million for the quarter ended June 30, 2024 from $52.2 million for the quarter ended June 30, 2023, primarily due to a $15.2 million, or 30.4%, increase in interest and fees on loans and a $3.4 million, or 796.1%, increase in interest on short-term investments. The increase in interest and fees on loans was primarily due to an increase of $639.9 million, or 19.1%, in the average balance of the loan portfolio to $3.99 billion for the quarter ended June 30, 2024 from $3.35 billion for the quarter ended June 30, 2023 and an increase of 58 basis points in the weighted average yield for the loan portfolio to 6.58% for the quarter ended June 30, 2024 from 6.00% for the quarter ended June 30,2023, reflecting the growth of our commercial and consumer loan portfolios. The increase in interest on short-term investments was primarily due to an increase of $244.6 million, or 699.9%, in the average balance of short-term investments to $279.6 million for the quarter ended June 30, 2024 from $35.0 million for the quarter ended June 30, 2023.

Previous wording

Average interest-earning assets increased $886.1 million, to $4.31 billion for the quarter ended March 31, 2024 from $3.42 billion for the quarter ended March 31, 2023. The yield on interest-earning assets increased 91 basis points to 6.36% for the quarter ended March 31, 2024 from 5.45% for the quarter ended March 31, 2023.

Current wording

Average interest-earning assets increased $851.8 million, to $4.51 billion for the quarter ended June 30, 2024 from $3.66 billion for the quarter ended June 30, 2023. The yield on interest-earning assets increased 61 basis points to 6.34% for the quarter ended June 30, 2024 from 5.73% for the quarter ended June 30, 2023.

Previous wording

Interest Expense. Total interest expense increased $14.8 million, or 99.7%, to $29.6 million for the quarter ended March 31, 2024 from $14.8 million for the quarter ended March 31, 2023. Interest expense on deposit accounts increased $15.9 million, or 129.5%, to $28.2 million for the quarter ended March 31, 2024 from $12.3 million for the quarter ended March 31, 2023, due to an increase in the weighted average rate on certificates of deposit of 192 basis points to 4.89% as of March 31, 2024 from 2.97% as of March 31, 2023, an increase in the weighted average rate on money market accounts of 207 basis points to 3.67% as of March 31, 2024 from 1.60% as of March 31, 2023 and an increase in the average balance of certificates of deposit of $346.7 million to $1.67 billion as of March 31, 2024 from $1.32 billion as of March 31, 2023.

Current wording

Interest Expense. Total interest expense increased $11.9 million, or 58.0%, to $32.4 million for the quarter ended June 30, 2024 from $20.5 million for the quarter ended June 30, 2023. Interest expense on deposit accounts increased $14.1 million, or 80.8%, to $31.6 million for the quarter ended June 30, 2024 from $17.5 million for the quarter ended June 30,2023. The increase was due to an increase in the average balance of certificates of deposit of $512.6 million to $1.83 billion June 30, 2024 from $1.32 billion for the quarter ended June 30, 2023, an increase in the weighted average rate on certificates of deposit of 142 basis points to 5.04% for the quarter ended June 30, 2024 from 3.62% for the quarter ended June 30, 2023, and an increase in the weighted average rate on money market accounts of 140 basis points to 4.03% for the quarter ended June 30, 2024 from 2.63% for the quarter ended June 30, 2023.

Previous wording

Interest expense on FHLB borrowings decreased $1.2 million, or 46.4%, to $1.3 million for the quarter ended March 31, 2024 from $2.5 for the quarter ended March 31, 2023. The average balance of FHLB advances decreased $101.3 million, or 50.6%, to $98.9 million for the quarter ended March 31, 2024 from $200.2 million for the quarter ended March 31, 2023. The decrease in the average balance of FHLB advances was the result of growth in brokered deposits due to lower rates, as well as, overall deposit growth.

Current wording

Interest expense on FHLB borrowings decreased $2.2 million, or 73.0%, to $821,000 for the quarter ended June 30, 2024 from $3.0 million for the quarter ended June 30, 2023. The average balance of FHLB borrowings decreased $170.1 million, or 73.3%, to $62.0 million for the quarter ended June 30, 2024 from $232.1 million for the quarter ended June 30, 2023. The decrease in the average balance of FHLB borrowings was the result of growth in brokered deposits due to lower rates, as well as, overall deposit growth.

Previous wording

Net Interest Income. Net interest income increased $7.4 million, or 23.8%, to $38.6 million for the quarter ended March 31, 2024 from $31.2 million for the quarter ended March 31, 2023, primarily due to a $886.1 million increase in the average balance of interest-earning assets to $4.31 billion as of March 31, 2024 from $3.42 billion as of March 31, 2023 and an increase in the weighted average yield on interest-earning assets of 91 basis points to 6.36% as of March 31, 2024 from 5.45% as of March 31,2023.

Current wording

Net Interest Income. Net interest income increased $7.0 million, or 22.0%, to $38.7 million for the quarter ended June 30, 2024 from $31.7 million for the quarter ended June 30, 2023, primarily due to an $851.8 million, or 23.3%, increase in the average balance of interest-earning assets to $4.51 billion for the quarter ended June 30, 2024 from $3.66 billion for the quarter ended June 30, 2023 and an increase in the weighted average yield on interest-earning assets of 61 basis points to 6.34% June 30, 2024 from 5.73% June 30,2023.

Previous wording

These increases were offset partially by an increase in the weighted average rate on interest-bearing liabilities of 166 basis points to 3.88% as of March 31, 2024 from 2.22% as of March 31, 2023 and an increase in the average balance of interest-bearing liabilities of $362.5 million, or 13.4%, to $3.07 billion as of March 31, 2024 from $2.70 billion as of March 31, 2023.

Current wording

These increases were offset partially by an increase in the weighted average rate on interest-bearing liabilities of 125 basis points to 4.10% for the quarter ended June 30, 2024 from 2.85% June 30, 2023 and an increase in the average balance of interest-bearing liabilities of $297.5 million, or 10.3%, to $3.18 billion June 30, 2024 from $2.88 billion June 30, 2023.

Previous wording

Provision for Credit Losses. Based on management’s analysis of the adequacy of the allowance for credit losses, a provision of $4.4 million was recorded for the quarter ended March 31, 2024, of which only $3.9 million related to the provision for credit losses on loans, compared to a provision of $2.1 million for the quarter 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 of $3.7 million was recorded for the quarter ended June 30, 2024, of which $4.4 million related to the provision for credit losses on loans, compared to a provision of $4.0 million for the quarter ended June 30, 2024. The increase of $471,000, or 11.9%, in the provision for loans was primarily due to the overall increase in the size of the loan portfolio.

Previous wording

The table below sets forth our noninterest expense for the quarters ended March 31, 2024 and 2023:

Current wording

Noninterest Expense. Noninterest expense increased $3.9 million, or 17.4%, to $26.2 million for the quarter ended June 30, 2024 from $22.3 million for the quarter ended June 30, 2023. Salaries and employee benefit expenses increased $2.3 million, or 16.3%, resulted primarily from the hiring of additional employees consistent with our business strategy to grow the Bank, normal annual salary raises, $628,000 in ESOP compensation expenses and $677,000 in long-term incentive plan expenses during the quarter ended June 30,2024. Data processing expenses increased $603,000, or 35.0%, during the quarter ended June 30, 2024, primarily the result of higher electronic banking, information technology and system costs. Director and professional service fees increased $558,000, or 32.6%, during the quarter ended June 30,2024, primarily the result of higher legal fees, lending services, appraisal fee and external audit costs. The table below sets forth our noninterest expense for the quarters ended June 30, 2024 and 2023:

Previous wording

Income Tax Expense. Income tax expense increased $210,000, or 6.5%, to $3.4 million for the quarter ended March 31, 2024 from $3.2 million for the quarter ended March 31, 2023. The effective tax rate was 28.3% and 27.0% for the quarter ended March 31, 2024 and 2023, respectively.

Current wording

Income Tax Expense. Income tax expense increased $139,000, or 6.2%, to $2.4 million for the quarter ended June 30, 2024 from $2.2 million for the quarter ended June 30, 2023. The effective tax rate was 20.0% and 26.4% for the quarter ended June 30,2024 and 2023, respectively. The decrease in the effective tax rate was a result of income tax credits earned during the quarter ended June 30, 2024.

Previous wording

Net Income. Net income was $8.7 million for the quarter ended March 31, 2024, compared to net income of $8.8 million for the quarter ended March 31, 2023, a decrease of approximately $51,000, or 1.0%. The decrease was primarily due to a $2.5 million, or 11.0%, increase in noninterest expense, a $2.4 million, or 40.3% decrease in non-interest income, a $2.3 million, or 113.8%, increase in the provision for credit losses and a $210,000, or 6.5%, increase in income tax expense, partially offset by a $7.4 million, or 23.8% increase in net interest income.

Current wording

Net Income. Net income was $18.2 million for the six months ended June 30, 2024, compared to net income of $15.0 million the six months ended June 30, 2023, an increase of approximately $3.2 million, or 21.0%. The increase was primarily due to a $14.4 million, or 22.9%, increase in net interest income, partially offset by a $6.4 million, or 14.1%, increase in noninterest expense, a $2.5 million, or 27.6% decrease in non-interest income, a $2.0 million, or 32.4%, increase in the provision for credit losses and a $349,000 million, or 6.4%, increase in income tax expense.

Previous wording

The increase of $2.3 million, or 113.8%, in the provision was primarily due to the overall increase in the size of the loan portfolio and increases in the qualitative factors on loans collateralized by offices and purchased consumer loans, along with the provision for unfunded commitments.

Current wording

Provision for Credit Losses. Based on management’s analysis of the adequacy of the allowance for credit losses, a provision of $8.1 million was recorded for the six months ended June 30, 2024, of which $8.3 million related to the provision for credit losses on loans, compared to a provision of $6.1 million for the six months ended June 30,2023. The increase of $2.0 million, or 32.4%, in the total provision for credit losses was primarily due to the overall increase in the size of the loan portfolio and increases in the qualitative factors on loans collateralized by offices and purchased consumer loans.

Previous wording

Noninterest Income. Noninterest income decreased $2.4 million, or 40.3%, to $3.5 million for the quarter ended March 31, 2024 from $5.9 million for the quarter ended March 31, 2023. The decrease resulted primarily from one-time employee retention credit income during the quarter ended March 31, 2023; offset partially by an increase in other income resulting from a one-time debit and credit card branding signing bonus of $610,000 during the quarter ended March 31, 2024. The table below sets forth our noninterest income for the quarters ended March 31, 2024 and 2023:

Current wording

Noninterest Income. Noninterest income decreased $2.5 million, or 27.6%, to $6.5 million for the six months ended June 30, 2024 from $9.0 million for the six months ended June 30, 2023. The decrease resulted primarily from one-time employee retention credit income during the six months ended June 30, 2023; offset partially by an increase in other income resulting from a one-time debit and credit card branding signing bonus of $610,000 and increased customer service fees of $484,000 during the six months ended June 30, 2024.

Previous wording

Noninterest Expense. Noninterest expense increased $2.5 million, or 11.0%, to $25.6 million for the quarter ended March 31, 2024 from $23.0 million for the quarter ended March 31, 2023. Salaries and employee benefit expenses increased $2.6 million, or 17.2%, resulted primarily from the hiring of additional employees consistent with our business strategy to grow the Bank, as well as, $588,000 in ESOP compensation expenses, $390,000 in pension expenses and normal annual salary increases during the quarter ended March 31, 2024.

Current wording

Noninterest Expense. Noninterest expense increased $6.4 million, or 14.1%, to $51.8 million for the six months ended June 30, 2024 from $45.4 million for the six months ended June 30, 2023. Salaries and employee benefit expenses increased $4.9 million, or 16.8%, primarily from the hiring of additional employees consistent with our business strategy to grow the Bank, normal annual salary increases, $1.2 million in ESOP compensation expenses and $976,000 in long term incentive plan expenses during the six months ended June 30, 2024. Data processing expenses increased $881,000, or 25.6%, during the six months ended June 30,2024, primarily the result of higher electronic banking, information technology and system costs. Director and profession service fees increased $802,000, or 23.8%, during the six months ended June 30, 2024, primarily the result of higher legal fees, lending services, appraisal fee and external audit costs. The table below sets forth our noninterest expense for the six months ended June 30, 2024 and 2023:

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 FHLB and the Discount Window at the Federal Reserve Bank of Boston. As of March 31, 2024, we had outstanding advances of $60.8 million from the FHLB. As of March 31, 2024, we had unused borrowing capacity of $762.6 million with the FHLB and $45.0 million available with the Discount Window at the Federal Reserve Bank of Boston. Additionally, as of March 31, 2024, we had $300.0 million of brokered deposits and pursuant to our internal liquidity policy, which allows us to utilize brokered deposits up to 10.0% of our total assets, we had an additional capacity of up to approximately $165.0 million of brokered deposits.

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 FHLB and the Discount Window at the Federal Reserve Bank of Boston (“FRB”). As of June 30, 2024, we had outstanding advances of $60.8 million from the FHLB. As of June 30, 2024, we had unused borrowing capacity of $770.0 million with the FHLB and $42.5 million available with the FRB. Additionally, as of June 30, 2024, we had $300.0 million of brokered deposits and pursuant to our internal liquidity policy, which allows us to utilize brokered deposits up to 10.0% of our total assets, we had an additional capacity of up to approximately $180.5 million of brokered deposits.

Previous wording

At March 31, 2024, we had $73.7 million in commitments to originate loans outstanding. In addition, we had $472.0 million in unused lines of credit to borrowers, $594.4 million in unadvanced construction loans and $7.3 million in letters of credit outstanding.

Current wording

At June 30, 2024, we had $20.8 million in commitments to originate loans outstanding. In addition, we had $413.5 million in unused lines of credit to borrowers, $506.0 million in unadvanced construction loans and $6.7 million in letters of credit outstanding.

Previous wording

Non-brokered certificates of deposit due within one year of March 31, 2024 totaled $1.25 billion, or 33.1%, 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 non-brokered certificates of deposit due on or before March 31, 2025, or on our other interest-bearing deposit accounts.

Current wording

Non-brokered certificates of deposit due within one year of June 30,2024 totaled $1.30 billion, or 33.1%, 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 non-brokered certificates of deposit due on or before June 30, 2025, or on our other interest-bearing deposit accounts. We believe, however, based on historical experience and current market interest rates that we will retain upon maturity a large portion of our certificates of deposit with maturities of one year or less as of June 30, 2024.

Previous wording

Our primary investing activity is originating loans. During the three months ended March 31, 2024, we originated $67.6 million of loans.

Current wording

Our primary investing activity is originating loans. During the six months ended June 30, 2024, we originated $222.2 million of loans.

Previous wording

Financing activities consist primarily of activity in deposit accounts and FHLB advances. We experienced net increases in deposits of $384.7 million for the three months ended March 31, 2024. At March 31, 2024 and December 31, 2023, the level of brokered time deposits was $300.0 million and $183.6 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 $222.5 million for the three months ended March 31, 2024.

Current wording

Financing activities consist primarily of activity in deposit accounts and FHLB advances. We experienced net increases in deposits of $530.6 million for the six months ended June 30, 2024. At June 30, 2024 and December 31, 2023, the level of brokered time deposits was $300.0 million and $183.6 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 $222.5 million for the six months ended June 30, 2024.

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.