Economic Conditions and Risks - Changes in interest rates may negatively impact the ability to originate real estate loans and realize gains from asset sales, affecting overall earnings[295]. - A deterioration in local economic conditions could lead to increased loan delinquencies and adversely affect financial performance[299]. - The company faces risks from potential downgrades of U.S. government securities, which could impact funding and collateral requirements[309]. - The reliance on wholesale funding strategies may adversely affect net interest margin and profitability if core deposits cannot be generated[312]. - The company’s exposure to economic conditions is heightened due to a high concentration of loans secured by real estate in its primary market area[301]. - The financial services industry is interrelated, and defaults or concerns about other institutions could lead to market-wide liquidity problems[311]. - The Federal Reserve Board's monetary policies could adversely affect the company's financial condition and results of operations[325]. Financial Performance and Growth - Total assets increased to 4,533,391 thousand in 2023, representing a growth of 13.9%[519]. - Net loans rose to 3,857,057 thousand in 2023, marking an increase of 11.3%[519]. - Total deposits grew to 3,387,327 thousand in 2023, reflecting a 23.3% increase[519]. - Net interest income after provision for credit losses reached 117,836 thousand in 2023, an increase of 26.5%[522]. - Net income surged to 9,825 thousand in 2023, representing a growth of 328.5%[522]. - Earnings per share (basic and diluted) increased to 0.23 in 2023, reflecting a growth of 365.2%[522]. - Total comprehensive income for 2024 was 12,329 thousand in 2023, indicating a growth of 272.5%[525]. Regulatory and Compliance Issues - Regulatory changes and compliance costs may adversely affect operations and increase operational costs[317]. - The company is subject to stringent capital requirements, including a common equity Tier 1 capital ratio of 4.5% and a total capital ratio of 8.0%[327]. - The capital conservation buffer is set at 2.5%, resulting in minimum ratios of 7.0% for common equity Tier 1 capital and 10.5% for total capital[327]. - The company may face regulatory actions if unable to comply with capital requirements, potentially leading to lower returns on equity[329]. - Non-compliance with anti-money laundering laws could result in fines, penalties, and restrictions on business activities[324]. Operational and Technological Risks - The company relies on technology for operations, making it vulnerable to failures, interruptions, or security breaches[346]. - The introduction of new products and services may impose additional costs and expose the company to operational risks, including fraud and cybersecurity threats[343]. - The company has established policies and procedures to prevent or limit the impact of system failures, interruptions, and security breaches, including privacy breaches and cyber-attacks[347]. - The company outsources a majority of its data processing requirements to third-party providers, exposing it to risks if these vendors do not perform according to contractual agreements[349]. - The company became a public reporting company following its initial public offering in December 2023, which will increase operating expenses and require additional compliance and accounting staff[355]. - The company may face challenges in maintaining effective internal controls as a public company, which could adversely affect its business and stock price[355]. Investment and Securities - The company has approximately 4.9 million on AFS securities during the year ended December 31, 2024[307]. - Unrealized losses on AFS securities due to market conditions could require recognition of impairments, adversely affecting future results[306]. - The company held 242,844 shares of Federal Reserve Bank stock valued at approximately 10.3 million as of December 31, 2023[616]. - The company’s investment in the Reinventure Capital Fund increased to a carrying value of 318,000[619]. - The company does not intend to sell any of its securities prior to the recovery of the amortized cost, as declines in fair value are attributed to market changes in interest rates[613]. Loan Portfolio and Credit Losses - The allowance for credit losses increased to 32,222 thousand in 2023, reflecting a rise of 20.0%[519]. - The total amortized cost of nonaccrual loans increased from 13,856,000 in 2024, indicating a rise of approximately 28.5%[641]. - The company reversed 116,000 in 2023, showing a significant increase in interest reversals[641]. - The total amount of consumer loans as of December 31, 2024, was 204,871,000 in 2023, marking an increase of about 19.4%[640]. - The aging of loans receivable shows that current loans totaled 3,873,400,000 in 2023, reflecting a growth of approximately 11.1%[640]. Revenue and Expenses - The Company reported total revenues from contracts with customers of 7,592,000 in 2023, reflecting a year-over-year increase of 2.5%[586]. - ATM and interchange income increased to 1,334,000 in 2023, representing a growth of 48.4%[586]. - Non-sufficient funds (NSF) and overdraft fees rose to 527,000 in 2023, marking a 16.5% increase[586]. - The Company’s advertising expenses were 2.7 million, and 101,989 thousand in 2024 from $121,344 thousand in 2023, a reduction of 15.9%[522].
NB Bancorp(NBBK) - 2024 Q4 - Annual Report