ECB Bancorp(ECBK) - 2023 Q4 - Annual Report

Financial Performance - For the year ended December 31, 2023, net income was $4.5 million, an increase from$2.7 million in 2022, which was impacted by a $2.3 million after-tax charge related to a charitable foundation contribution[26]. - The provision for credit losses for 2023 was$1,210,000, down from $2,940,000 in 2022, indicating a decrease of 58.8$7,200,000 in 2022 to $8,591,000 in 2023, reflecting a rise of 19.3$2,000, while recoveries were $1,000, resulting in net charge-offs of$(1,000)[114]. Loan Portfolio - As of December 31, 2023, the total loan portfolio comprised $410.1 million (39.1$287.4 million (27.4%) in multifamily real estate loans, and $196.4 million (18.7$1,048.6 million, with a net total of $1,039.8 million after accounting for deferred loan fees and allowance for credit losses[50]. - The commercial real estate loan portfolio was valued at$196.4 million, accounting for 18.7% of the total loan portfolio, while multifamily real estate loans totaled $287.4 million, representing 27.4$14.4 million in jumbo loans during the year ended December 31, 2023[55]. - Construction and land loans totaled $112.0 million, representing 10.7$33.9 million[70][71]. Lending Policies and Strategy - The company has revised its lending policies to increase lending limits and the types of loans retained in its portfolio[31]. - The company aims to compete effectively against larger banks by providing personalized service and quicker decision-making[35]. - The company expects to continue growing its commercial real estate and multifamily loan portfolios, as well as its one-to-four family residential real estate loan portfolio[47]. - The company plans to continue investing in personnel and technology to support its growth strategy, which may increase non-interest expenses[34]. Market and Competition - The market share in Middlesex County was 0.75%, ranking 26th out of 48 financial institutions, and 0.60% in Essex County, ranking 24th out of 35[46]. - Competition for loans is expected to remain intense due to regulatory and technological changes, as well as the consolidation trend in the financial services industry[45]. - The unemployment rate in the Boston-Cambridge-Newton area was 3.1% in December 2023, slightly lower than the Massachusetts state rate of 3.2% and the national rate of 3.7%[41]. Deposits and Borrowings - Total deposits increased to $868.2 million in 2023 from$718.1 million in 2022, reflecting a growth of approximately 20.9%[135]. - Core deposits totaled $369.7 million, representing 42.6$19.6 million as of December 31, 2023[131]. - Total borrowings were $234.0 million, with$200.8 million of borrowing capacity remaining with the FHLB as of December 31, 2023[138]. Credit Quality and Allowance for Credit Losses - Total non-performing loans amounted to $1.213 million as of December 31, 2023, compared to$656,000 in 2022, indicating an increase in non-performing assets[107]. - The total non-performing loans to total loans ratio was 0.12% as of December 31, 2023, up from 0.07% in 2022[107]. - The allowance for credit losses to non-performing loans ratio decreased from 1,097.56% in 2022 to 708.24% in 2023[116]. - Special mention assets increased to $1.282 million in 2023 from$467,000 in 2022, reflecting potential credit concerns[111]. Regulatory Compliance and Capital - Everett Co-operative Bank's capital ratios exceeded all applicable requirements as of December 31, 2023[166]. - The bank is considered "well capitalized" with a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 8.0% or greater, and a leverage ratio of 5.0% or greater[176][180]. - The company is subject to regulations under the Sarbanes-Oxley Act of 2002, ensuring compliance with corporate responsibility and accuracy in disclosures[198]. - The bank is required to comply with privacy regulations, including disclosing its privacy policy to customers annually[184].