NB Bancorp, Inc. Reports Full Year 2023 Financial Results

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

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

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

SELECTED FINANCIAL HIGHLIGHTS

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

BALANCE SHEET

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

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

NET INTEREST INCOME

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

NONINTEREST INCOME

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

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

NONINTEREST EXPENSE

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

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

ASSET QUALITY

• The allowance for credit losses was $32.2 million as of December 31, 2023, or 0.83% of total gross loans, compared to $25.0 million, or 0.83% of total loans at December 31, 2022. The Company recorded provisions for credit losses of $13.9 million for 2023, compared to $6.7 million in 2022. The Company's provision for credit losses recognized in 2023 include $4.2 million of provisions for unfunded commitments. On January 1, 2023, the Company adopted the current expected credit loss ("CECL") methodology.
• Non-performing loans totaled $10.8 million at December 31, 2023, a decrease of $2.1 million from $12.9 million at the end of 2022. Delinquencies were $10.0 million at December 31, 2023, a decrease of $2.9 million from December 31, 2022. Net charge-offs for 2023 amounted to $3.6 million, or 10 basis points of average loans.
• The Company's loan portfolio consists of primarily commercial real estate and multifamily loans, one- to four-family residential real estate loans, construction and land development loans, commercial and industrial loans and consumer loans. These loans are primarily made to individuals and businesses located in our primary lending market area, which is the Greater Boston metropolitan area and surrounding communities in Massachusetts, eastern Connecticut, southern New Hampshire and Rhode Island.
• The Company's $210.0 million multifamily real estate loan portfolio consists of high-quality, performing loans primarily located in the Greater Boston area, primarily all of which are adjustable-rate loans.
• The Company's $197.2 million office portfolio is predominantly located in the Greater Boston suburbs and mostly consists of Class A and B office space. The typical use of these office loans are medical and lab space and do not consist of high-rise towers located in Boston.

ANNOUNCEMENT OF THE 2024 ANNUAL MEETING OF SHAREHOLDERS

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

ABOUT NB BANCORP, INC.

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

Non-GAAP Financial Measures

In addition to results presented in accordance with generally accepted accounting principles ("GAAP"), this press release contains certain non-GAAP financial measures, including net income excluding conversion and IPO-related expenses, noninterest expense excluding conversion and IPO-related expenses, earnings per share excluding conversion and IPO-related expenses, return on average assets excluding conversion and IPO-related expenses, return on average shareholders' equity excluding conversion and IPO-related expenses, efficiency ratio excluding conversion and IPO-related expenses, tangible shareholders' equity, tangible assets, tangible book value per share, and efficiency ratio. The Company's management believes that the supplemental non-GAAP information is utilized by regulators and market analysts to evaluate a company's financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.

Forward-Looking Statements

Statements in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. We may also make forward-looking statements in other documents we file with the Securities and Exchange Commission (the "SEC"), in our annual reports to our stockholders, in press releases and other written materials, and in oral statements made by our officers, directors or employees. You can identify forward-looking statements by the use of the words "believe," "expect," "anticipate," "intend," "estimate," "assume," "outlook," "will," "should," and other expressions that predict or indicate future events and trends and which do not relate to historical matters. Although the Company believes that these forward-looking statements are based on reasonable estimates and assumptions, they are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors. You should not place undue reliance on our forward-looking statements. You should exercise caution in interpreting and relying on forward looking statements because they are subject to significant risks, uncertainties and other factors which are, in some cases, beyond the Company's control. The Company's actual results could differ materially from those projected in the forward-looking statements as a result of, among other factors, changes in general business and economic conditions on a national basis and in the local markets in which the Company operates, including changes which adversely affect borrowers' ability to service and repay loans; changes in customer behavior due to political, business and economic conditions, including inflation and concerns about liquidity; turbulence in the capital and debt markets; reductions in net interest income resulting from interest rate volatility as well as changes in the balances and mix of loans and deposits; changes in interest rates and real estate values; changes in loan collectability and increases in defaults and charge-off rates; decreases in the value of securities and other assets, adequacy of credit loss reserves, or deposit levels necessitating increased borrowing to fund loans and investments; changing government regulation; competitive pressures from other financial institutions; changes in legislation or regulation and accounting principles, policies and guidelines; cybersecurity incidents, fraud, natural disasters, and future pandemics; the risk that the Company may not be successful in the implementation of its business strategy; the risk that intangibles recorded in the Company's financial statements will become impaired; changes in assumptions used in making such forward-looking statements; and the other risks and uncertainties detailed in the Company's Registration Statement Form S-1 and updated by our Quarterly Report on Form 10-Q and other filings submitted to the SEC. These statements speak only as of the date of this release and the Company does not undertake any obligation to update or revise any of these forward-looking statements to reflect events or circumstances occurring after the date of this communication or to reflect the occurrence of unanticipated events.

NB BANCORP, INC. CONSOLIDATED BALANCE SHEETS (Unaudited) (Dollars in thousands, except share and per share data)
	December 31, 2023			December 31, 2022
Assets
Cash and due from banks	$	90,485		$	131,073
Federal funds sold		182,106			25,472
Total cash and cash equivalents		272,591			156,545
Available-for-sale securities, at fair value		189,465			245,480
Total loans		3,889,279			3,015,445
Allowance for credit losses		(32,222)			(25,028)
Net loans		3,857,057			2,990,417
Accrued interest receivable		17,284			10,837
Banking premises and equipment, net		35,531			35,344
Depositors Insurance Fund, at cost		139			139
Federal Home Loan Bank stock, at cost		14,558			13,182
Federal Reserve Bank stock, at cost		10,323			8,104
Non-public investments		13,713			10,592
Bank-owned life insurance ("BOLI")		50,516			49,006
Prepaid expenses and other assets		53,109			57,167
Income tax refunds receivable		-			4,134
Deferred income tax asset		19,126			11,388
Total assets	$	4,533,412		$	3,592,335
Liabilities and shareholders' equity
Deposits	$	3,387,348		$	2,886,743
Mortgagors' escrow accounts		4,229			4,064
FHLB borrowings		283,338			293,082
Accrued expenses and other liabilities		81,325			52,399
Accrued retirement liabilities		19,213			11,982
Total liabilities		3,775,453			3,248,270
Commitments and contingencies
Shareholders' equity
Preferred stock, $0.01 par value, 5,000,000 shares authorized; no shares issued and outstanding		-			-
Common stock, $0.01 par value, 120,000,000 shares authorized; 42,705,729 issued and outstanding at December 31, 2023, no shares issued and outstanding at December 31, 2022		427			-
Additional paid-in capital		417,030			-
Unallocated common shares held by Employee Stock Ownership Plan		(13,774)			-
Retained earnings		366,173			358,466
Accumulated other comprehensive loss		(11,897)			(14,401)
Total shareholders' equity		757,959			344,065
Total liabilities and shareholders' equity	$	4,533,412		$	3,592,335

NB BANCORP, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in thousands, except share and per share data)
		For the years ended December 31,
		2023			2022
INTEREST AND DIVIDEND INCOME
Interest and fees on loans		$	211,973		$	113,760
Interest and dividends on investment securities			4,773			4,954
Interest on cash equivalents and other			3,755			1,798
Total interest and dividend income			220,501			120,512
INTEREST EXPENSE
Interest on deposits			76,394			12,689
Interest on FHLB borrowings			14,050			2,859
Total interest expense			90,444			15,548
NET INTEREST INCOME			130,057			104,964
PROVISION FOR CREDIT LOSSES
Provision for credit losses - allowance for credit losses			9,657			6,700
Provision for credit losses - allowance for unfunded commitments			4,228			-
Total provision for credit losses			13,885			6,700
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES			116,172			98,264
NONINTEREST INCOME
Gain from bargain purchase and assumption agreement			-			1,070
Customer service fees			7,817			5,138
Increase in cash surrender value of BOLI			1,510			1,157
Mortgage banking income			581			595
Swap contract income			2,153			1,262
Employee retention credit income			3,452			-
Other income			64			53
Total noninterest income			15,577			9,275
NONINTEREST EXPENSE
Salaries and employee benefits			68,344			47,466
Director and professional service fees			6,232			4,758
Occupancy and equipment expenses			5,192			4,354
Data processing expenses			7,500			5,657
Charitable contribution expense			20,335			1,066
Marketing expenses			2,747			2,338
FDIC and state insurance assessments			4,707			1,829
General and administrative expenses			4,848			3,683
Total noninterest expense			119,905			71,151
INCOME BEFORE TAXES			11,844			36,388
INCOME TAXES			2,019			6,323
NET INCOME		$	9,825		$	30,065
Weighted average common shares outstanding			42,018,229			N/A
Earnings per share (basic)		$	0.23			N/A

	NB BANCORP, INC. NON-GAAP RECONCILIATION (Unaudited) (Dollars in thousands)
		Years Ended December 31,
		2023			2022
	Net income (GAAP)	$	9,825		$	30,065
	Add:
	Noninterest expense components:
	Needham Bank Charitable Foundation contribution resulting from IPO		19,082			-
	One-time conversion and IPO-related compensation expense		7,931			-
	Defined benefit pension termination expense		1,900			-
	Permanent tax differences resulting from public company tax laws (1)		3,680			-
	Total impact of non-GAAP adjustment	$	32,593		$	-
	Less net tax benefit associated with non-GAAP adjustments		8,096			-
	Non-GAAP adjustments, net of tax		24,497			-
	Net income excluding conversion and IPO-related expenses (non-GAAP)	$	34,322		$	30,065
	Weighted average common shares outstanding		42,018,229			N/A
	Earnings per share excluding conversion and IPO-related expenses (non-GAAP)	$	0.82			N/A
(1)	These amounts are reflected in income tax expense and reflect amounts related to current year compensation and a write-down for future LTIP vesting amounts that are not expected to be deductible on a tax return. These amounts are not included in the calculation of the tax benefit associated with non-GAAP adjustments
		Years Ended December 31,
		2023			2022
	Noninterest expense (GAAP)	$	119,905		$	71,151
	Subtract:
	Noninterest expense components:
	Needham Bank Charitable Foundation contribution resulting from IPO		19,082			-
	One-time conversion and IPO-related compensation expense		7,931			-
	Defined benefit pension termination expense		1,900			-
	Total impact of non-GAAP noninterest expense adjustments		28,913			-
	Noninterest expense excluding conversion and IPO-related expenses (non-GAAP)	$	90,992		$	71,151
		Years Ended December 31,
		2023			2022
	Net income excluding conversion and IPO-related expenses (non-GAAP)	$	34,322		$	30,065
	Average assets		3,973,093			3,118,890
	Return on average assets excluding conversion and IPO-related expenses (non-GAAP)		0.86 %			0.96 %
	Average shareholders' equity		365,120			331,872
	Return on average shareholders' equity excluding conversion and IPO-related expenses (non-GAAP)		9.40 %			9.06 %
		As of December 31,
		2023			2022
	Total shareholders' equity (GAAP)	$	757,959		$	344,065
	Subtract:
	Intangible assets (core deposit intangible)		1,227			1,377
	Total tangible shareholders' equity (non-GAAP)		756,732			342,688
	Total assets (GAAP)		4,533,412			3,592,335
	Subtract:
	Intangible assets (core deposit intangible)		1,227			1,377
	Total tangible assets (non-GAAP)	$	4,532,185		$	3,590,958
	Tangible stockholders' equity / tangible assets (non-GAAP)		16.7 %			9.5 %
	Total common shares outstanding		42,705,729			N/A
	Tangible book value per share (non-GAAP)	$	17.72			N/A
	HIDDEN_ROW
		Years Ended December 31,
		2023			2022
	Noninterest expense excluding conversion and IPO-related expenses (non-GAAP)	$	90,992		$	71,151
	Total revenue		145,634			114,239
	Efficiency ratio excluding conversion and IPO-related expenses (non-GAAP)		62.5 %			62.3 %

NB BANCORP, INC. SELECT FINANCIAL HIGHLIGHTS (Unaudited) (Dollars in thousands, except per share amounts)
	As of and for the years ended December 31,
	2023			2022
Earnings data
Net interest income	$	130,057		$	104,964
Noninterest income		15,577			9,275
Total revenue		145,634			114,239
Provision for credit losses		13,885			6,700
Noninterest expense		119,905			71,151
Pre-tax income		11,844			36,388
Net income		9,825			30,065
Net income excluding conversion and IPO-related expenses (non-GAAP)		34,322			30,065
Noninterest expense excluding conversion and IPO-related expenses (non-GAAP)		90,992			71,151
Per share data
Earnings per share	$	0.23			N/A
Earnings per share excluding conversion and IPO-related expenses (non-GAAP)		0.82			N/A
Book value per share		17.75			N/A
Tangible book value per share (non-GAAP)		17.72			N/A
Profitability
Return on average assets		0.25 %			0.96 %
Return on average assets excluding conversion and IPO-related expenses (non-GAAP)		0.86 %			0.96 %
Return on average shareholders' equity		2.69 %			9.06 %
Return on average shareholders' equity excluding conversion and IPO-related expenses (non-GAAP)		9.40 %			9.06 %
Net interest margin		3.41 %			3.49 %
Cost of deposits		2.34 %			0.48 %
Efficiency ratio		82.3 %			62.3 %
Efficiency ratio excluding conversion and IPO-related expenses (non-GAAP)		62.5 %			62.3 %
Balance sheet
Total assets	$	4,533,412		$	3,592,335
Total loans		3,889,279			3,015,445
Total deposits		3,387,348			2,886,743
Total shareholders' equity		757,959			344,065
Asset quality
Allowance for credit losses (ACL)	$	32,222		$	25,028
ACL / Total nonperforming loans (NPLs)		297.8 %			194.5 %
Total NPLs / Total loans		0.28 %			0.43 %
Net charge-offs / Average total loans		0.10 %			0.00 %
Capital ratios
Shareholders' equity / Total assets		16.7 %			9.6 %
Tangible shareholders' equity / tangible assets (non-GAAP)		16.7 %			9.5 %

SOURCE Needham Bank