Heritage merce p(HTBK)2025-03-07 23:52Financial Performance - For the year ended December 31, 2024, net income was 0.66 per average diluted common share, a decrease from 1.05 per average diluted common share in 2023[283]. - Net interest income decreased by 11% to 183.2 million in 2023[284]. - Total noninterest income decreased by 3% to 9.0 million in 2023[284]. - Total noninterest expense increased to 101.1 million in 2023[284]. - The efficiency ratio increased to 65.88% for the year ended December 31, 2024, compared to 52.57% in 2023[284]. - The effective income tax rate for 2024 was 28.5%, a slight decrease from 28.7% in 2023[318]. - Annualized return on average tangible common equity for 2024 was 8.05%, a decrease from 13.57% in 2023[441]. Deposits and Loans - Deposit balances grew by 10% year-over-year, while loan growth was steady at 4%[281]. - Total deposits increased by 4.8 billion at December 31, 2024, compared to 141.6 million, or 4%, to 3.4 billion at December 31, 2023[288]. - The loan to deposit ratio was 72.45% at December 31, 2024, compared to 76.52% at December 31, 2023[288]. - Noninterest-bearing demand deposits decreased by 1.2 billion at December 31, 2024[288]. - The average balance of deposit accounts increased to 177,000 at December 31, 2023[396]. Credit Quality - Provision for credit losses on loans was 749,000 in 2023[284]. - Nonperforming assets totaled 49.0 million, or 1.40% of total loans, representing 638.49% of nonperforming loans at December 31, 2024[288]. - Total nonaccrual loans increased to 6,818,000 at December 31, 2023[370]. - Loans 90 days past due and still accruing decreased to 889,000 at December 31, 2023[370]. - The allowance for credit losses on loans increased by 632,000 in specific reserves for individually evaluated loans and a 3.3 billion, representing 69% of total deposits and approximately 155% of estimated uninsured deposits at December 31, 2024[286]. - The total capital ratio was 15.6% at December 31, 2024, exceeding the well-capitalized regulatory guideline of 10.0%[290]. - Common Equity Tier 1 capital increased to 511.8 million at December 31, 2023[414]. - Total shareholders' equity increased to 672.9 million in 2023, representing a growth of 2.5%[419]. - The Company announced a share repurchase program authorized for up to 3.3 billion, representing 69% of total deposits[406]. Asset Management - Total assets increased by 9% to 5.2 billion at December 31, 2023, primarily related to growth in client deposits[322]. - Securities available-for-sale decreased by 42% to 442.6 million at December 31, 2023[322]. - The net pre-tax unrealized loss on the available-for-sale securities portfolio was 93.0 million, representing 9.5% of total shareholders' equity at December 31, 2024[332]. Operational Efficiency - Noninterest expense for the year ended December 31, 2024 increased 12% to 101.1 million for 2023, primarily due to higher salaries and employee benefits, rent expense, and professional fees[314]. - Full-time equivalent employees increased to 355 at December 31, 2024, from 349 at December 31, 2023[316]. - Client services expenses rose by 56% to 2.5 million in 2023[314]. - Professional fees increased by 25% to 4.4 million in 2023[314]. Interest Rates and Projections - The estimated increase in annual net interest income for a +400 basis points change in interest rates is projected to be 124,156 thousand, or 9.0%, with a +400 basis points change in interest rates[430]. - The company did not use interest rate derivatives to hedge its interest rate risk as of December 31, 2024[443].