NB Bancorp, Inc. Reports Second Quarter 2024 Financial Results

NEEDHAM, Mass., July 24, 2024 /PRNewswire/ -- NB Bancorp, Inc. (the "Company") (Nasdaq Capital Market: NBBK), the holding company of Needham Bank, today announced its second quarter 2024 financial results.

SELECTED FINANCIAL HIGHLIGHTS FOR THE SECOND QUARTER OF 2024

• Net income of $9.5 million, or $0.24 per diluted share, compared to net income of $8.7 million, or $0.22 per diluted share, for the prior quarter.
• Gross loans increased $142.7 million, or 3.6%, to $4.10 billion, from the prior quarter.
• Net interest margin on a fully-tax equivalent basis decreased 15 basis points to 3.45%.
• Asset quality remains strong:
  • Annualized net charge-offs of 0.09% of average total loans and non-performing loans of $20.7 million, or 0.51% of total loans. All of the charge-offs in the quarter were in the purchased consumer loan portfolio.
  • The increase in non-performing loans was primarily due to a $6.2 million office loan that was placed on non-accrual during the quarter. The Company also reserved $1.0 million against this loan during the quarter in the allowance for credit losses ("ACL").
  • Provision for the ACL was $3.7 million, down from $4.4 million in the prior quarter and contributing to an increase in the ACL of $3.6 million, increasing ACL as a percentage of total loans to 0.92%.
• Total deposits increased $145.9 million, or 3.9%, from the prior quarter. There was no change in the brokered deposit balance, therefore the $145.9 million increase represents core deposit growth of 4.2%, for the quarter.
• Borrowings and brokered deposits totaled 7.5% of total assets, compared to 7.8% in the prior quarter.
• Strong capital position with 15.5% shareholders' equity to total assets and 15.5% tangible shareholders' equity to tangible assets.
• Book value per share and tangible book value per share were $17.43 and $17.41, respectively.

"We had a very successful second quarter, with loans growing 3.6% during the quarter while deposit growth continues to outpace the loan growth. We continue to see strong loan demand in our market and have continued to show that we can generate deposits to keep pace with the loan demand. Net income was $0.24 per share for the quarter, and we are poised to head into the third quarter in a strong balance sheet position," said Joseph Campanelli, Chairman, President and Chief Executive Officer. "Tangible book value per share grew $0.25 during the quarter and the Company continues to be disciplined in our capital management."

BALANCE SHEET
Total assets were $4.81 billion as of June 30, 2024, representing an increase of $155.4 million, or 3.3%, from March 31, 2024.

• Cash and cash equivalents increased to $328.9 million from $315.0 million, a $13.9 million, or 4.4%, increase from the prior quarter as a result of net income, deposit growth outpacing loan growth and cash received from investment paydowns.
• Available-for-sale securities decreased $2.1 million, or 1.0%, from the prior quarter, to $205.1 million, due to paydowns and maturities that were replaced after the end of the quarter.
• Net loans increased to $4.06 billion, representing an increase of $139.1 million, or 3.5%, from the prior quarter as demand for new originations continued. The main driver of the new growth was in commercial and industrial loans, which increased $87.3 million, or 17.5%, construction and land development loans, which increased $43.1 million or 8.0%, commercial real estate loans, which increased $28.8 million, or 2.4%, and residential real estate loans, which increased $22.3 million, or 1.9%, partially offset by a decline in multi-family residential loans of $53.6 million, or 16.7%.
• Deposits totaled $3.92 billion representing an increase of $145.9 million, or 3.9%, from the prior quarter. The increase in deposits was the result of growth in customer deposits, primarily certificates of deposit, which increased $131.3 million, or 9.0%, from the prior quarter, along with NOW accounts, which increased $16.2 million, or 4.8%.
• Shareholders' equity was $744.5 million, representing an increase of $10.6 million, or 1.4%, from the prior quarter, primarily as a result of $9.5 million from net income during the quarter.

NET INTEREST INCOME
Net interest income was $38.7 million for the quarter ended June 30, 2024, compared to $38.6 million for the prior quarter, representing an increase of $89 thousand, or 0.2%.

• The increase in interest income during the quarter ended June 30, 2024 was primarily attributable to increases in the average balance of loans and other interest-earning assets, which contributed $2.9 million.
• The increase in interest expense for the quarter ended June 30, 2024 was primarily driven by increases in rates on interest-bearing deposits, which increased interest expense by $1.9 million, along with increases in volume on interest-bearing deposits, which increased interest expense by $1.5 million.

NONINTEREST INCOME
Noninterest income was $3.0 million for the quarter ended June 30, 2024, compared to $3.5 million for the prior quarter, representing a decrease of $520 thousand, or 14.9%.

• Other income was $12 thousand, compared to $623 thousand in the prior quarter, representing a decrease of $611 thousand, or 98.1%, due to a one-time debit card brand signing bonus in the prior quarter.
• Swap contract income was $265 thousand, compared to $487 thousand in the prior quarter, representing a decrease of $222 thousand, or 45.6%, due to fewer swap contract originations.
• Mortgage banking income increased $318 thousand, or 289.1%, from the prior quarter, primarily driven by a higher volume of residential loan sales during the current quarter.

NONINTEREST EXPENSE
Noninterest expense for the quarter ended June 30, 2024 was $26.2 million, representing an increase of $649 thousand, or 2.5%, from the prior quarter.

• Director and professional service fees increased $362 thousand during the quarter ended June 30, 2024 due to increases in professional service fees during the current quarter.
• Marketing and charitable contributions increased $353 thousand during the quarter ended June 30, 2024, primarily as a result of increased public relations costs of $149 thousand, agency fees of $67 thousand and promotional costs of $71 thousand.
• Data processing expenses increased $330 thousand during the quarter ended June 30, 2024 due to investments in information systems and technology resulting in $198 thousand in increased management information systems expenses, $52 thousand in electronic banking expenses and $45 thousand in information technology infrastructure systems.
• Federal Deposit Insurance Corporation and state insurance assessments expense increased $272 thousand, or 75.3%, to $633 thousand, due to asset growth.
• Salaries and employee benefits were $16.7 million for the quarter ended June 30, 2024, representing a decrease of $814 thousand, or 4.6%, from the prior quarter, primarily due to a decline in payroll taxes of $655 thousand, decreased salaries expense of $375 thousand and a one-time $390 thousand pension termination charge in the prior quarter, partially offset by an increase in long-term incentive plan expenses of $375 thousand and increased employee bonus expenses of $94 thousand.

INCOME TAXES
Income tax expense for the quarter ended June 30, 2024 was $2.4 million, representing a $1.1 million decrease, or 31.1%, from the prior quarter. The decrease was primarily driven by investment tax credits received in the current quarter. The effective tax rate for the current quarter was 20.0%, compared to 28.3% in the prior quarter due to income tax credits received in the current quarter, compared to none received in the prior quarter.

COMMERCIAL REAL ESTATE PORTFOLIO
Commercial real estate loans decreased $24.8 million, or 1.6%, to $1.49 billion, during the quarter ended June 30, 2024.

• Multi-family loans decreased $53.6 million, or 16.7%, as a result of a significant loan payoff, along with fewer originations during the quarter.
• Decreases noted above were partially offset by an increase in other commercial real estate loans of $30.9 million, or 45.2%, during the quarter resulting from continued originations.
• The Company's $267.5 million multi-family real estate loan portfolio consists of high-quality, performing loans primarily located in the Greater Boston area, primarily all of which are adjustable-rate loans.
• The Company's $199.1 million office portfolio is predominantly located in the Greater Boston suburbs and mostly consists of Class A and B office space. The majority of these office loans are medical and lab space and do not consist of high-rise towers located in Boston.

ASSET QUALITY

• The allowance for credit losses was $37.9 million as of June 30, 2024, or 0.92% of total gross loans, compared to $34.3 million, or 0.87% of total loans at March 31, 2024. The Company recorded provisions for credit losses of $3.7 million during the quarter ended June 30, 2024, compared to $4.4 million for the prior quarter, which included a provision of $4.4 million for loans and a credit of $762 thousand for unfunded commitments from a reduction in commitments.
• Non-performing loans totaled $20.7 million as of June 30, 2024, an increase of $9.9 million, or 91.8%, from $10.8 million at the end of the prior quarter. The increase was primarily due to one office loan that was placed on non-accrual during the quarter.
• During the quarter ended June 30, 2024, the Company recorded total net charge-offs of $878 thousand, or 0.09% of average total loans on an annualized basis, compared to $1.8 million, or 0.19% on an annualized basis of average total loans in the prior quarter. The net charge-offs during the quarter ended June 30, 2024 were due to charge-offs of purchased consumer loans, primarily home improvement and solar loans.
• The Company's loan portfolio consists primarily of commercial real estate and multi-family loans, one-to four-family residential real estate loans, construction and land development loans, commercial and industrial loans and consumer loans. These loans are primarily made to individuals and businesses located in our primary lending market area, which is the Greater Boston metropolitan area and surrounding communities in Massachusetts, eastern Connecticut, southern New Hampshire and Rhode Island.

ABOUT NB BANCORP, INC.
NB Bancorp, Inc. (Nasdaq Capital Market: NBBK) is the registered bank holding company of Needham Bank. Needham Bank is headquartered in Needham, Massachusetts, which is approximately 17 miles southwest of Boston's financial district. Known as the "Builder's Bank," Needham Bank has been helping individuals, businesses and non-profits build for their futures since 1892. Needham Bank offers an array of tech-forward products and services that businesses and consumers use to manage their financial needs. We have the financial expertise typically found at much larger institutions and the local knowledge and commitment you can only find at a community bank. For more information, please visit https://NeedhamBank.com. Needham Bank is a member of FDIC and DIF.

Non-GAAP Financial Measures
In addition to results presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"), this press release contains certain non-GAAP financial measures, including 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 Form 10-K and updated by our Quarterly Report on Form 10-Q and other filings submitted to the SEC. These statements speak only as of the date of this release and the Company does not undertake any obligation to update or revise any of these forward-looking statements to reflect events or circumstances occurring after the date of this communication or to reflect the occurrence of unanticipated events.