NB Bancorp(NBBK) - 2024 Q2 - Quarterly Report

Financial Position - Total assets increased by $272.0 million, or 6.0%, to$ 4.81 billion as of June 30, 2024, from $4.53 billion as of December 31, 2023[120] - Cash and cash equivalents rose by$ 56.4 million, or 20.7%, to $328.9 million as of June 30, 2024, driven by deposit growth[120] - Net loans increased by$ 202.4 million, or 5.2%, to $4.06 billion as of June 30, 2024, with significant growth in commercial and industrial loans, which rose by$ 94.4 million, or 19.2%[122] - Deposits grew by $530.6 million, or 15.7%, to$ 3.92 billion as of June 30, 2024, with core deposits increasing by $414.2 million, or 12.9%[125] - Total liabilities increased to$ 3.862 billion, while shareholders' equity rose to $737.510 million as of June 30, 2024[149] Loan and Deposit Activity - The company had approximately$ 415.2 million in loans to borrowers in the cannabis industry as of June 30, 2024, up from $365.9 million at the end of 2023[123] - Brokered deposits increased by$ 116.4 million, or 63.4%, from December 31, 2023, reflecting a strategy to support overall liquidity[125] - The company originated $222.2 million of loans during the six months ended June 30, 2024[155] - The company experienced net increases in deposits of$ 530.6 million for the six months ended June 30, 2024[156] - Non-brokered certificates of deposit due within one year totaled $1.30 billion, representing 33.1% of total deposits[155] - As of June 30, 2024, the company had$ 300.0 million of brokered deposits, with an additional capacity of approximately $180.5 million[153] Income and Expenses - Net income for the quarter ended June 30, 2024, was$ 9.5 million, an increase of approximately $3.2 million, or 52.0%, compared to$ 6.2 million for the same quarter in 2023[126] - Interest and dividend income increased by $18.9 million, or 36.1%, to$ 71.1 million for the quarter ended June 30, 2024, primarily due to a $15.2 million, or 30.4%, increase in interest and fees on loans[126] - Noninterest expense increased by$ 3.9 million, or 17.4%, to $26.2 million for the quarter ended June 30, 2024, with salaries and employee benefits rising by$ 2.3 million, or 16.3%[130] - Net interest income rose by $14.4 million, or 22.9%, to$ 77.4 million for the six months ended June 30, 2024, driven by a $868.3 million, or 24.5%, increase in average interest-earning assets[141] - Noninterest income decreased by$ 2.5 million, or 27.6%, to $6.5 million for the six months ended June 30, 2024, compared to$ 9.0 million for the same period in 2023[144] Interest Rates and Margins - Average interest-earning assets increased by $851.8 million, or 23.3%, to$ 4.51 billion for the quarter ended June 30, 2024, with a yield increase of 61 basis points to 6.34%[128] - Total interest expense increased by $11.9 million, or 58.0%, to$ 32.4 million for the quarter ended June 30, 2024, driven by an increase in interest expense on deposit accounts by $14.1 million, or 80.8%[126] - The weighted average rate on certificates of deposit increased by 142 basis points to 5.04% for the quarter ended June 30, 2024, from 3.62% for the same quarter in 2023[126] - The yield on interest-earning assets increased by 76 basis points to 6.35% for the six months ended June 30, 2024, compared to 5.59% for the same period in 2023[138] - The net interest margin was 3.53% for the six months ended June 30, 2024, compared to 3.58% for the same period in 2023[149] Credit Losses and Provisions - Provision for credit losses recorded was$ 3.7 million for the quarter ended June 30, 2024, with $4.4 million related to loans, compared to a provision of$ 4.0 million for the same quarter in 2023[129] - The provision for credit losses was $8.1 million for the six months ended June 30, 2024, compared to$ 6.1 million for the same period in 2023, reflecting a 32.4% increase[143] Tax and Regulatory Compliance - The effective tax rate decreased to 20.0% for the quarter ended June 30, 2024, from 26.4% in the same quarter of 2023, due to income tax credits earned[133] - The company is categorized as well-capitalized and exceeds all regulatory capital requirements as of June 30, 2024[158] Economic Environment and Strategy - The company’s strategy focuses on diversifying into higher-yielding loans to improve net margins and manage interest rate risk[122] - The company continues to assess and manage risks related to economic uncertainties, including inflation and interest rate changes[110] - The primary impact of inflation on the company is reflected in increased operating costs, with interest rates having a more significant impact on performance[159]