PB Bankshares(PBBK) - 2023 Q4 - Annual Report

Financial Performance - Net income for the year ended December 31, 2023, was $1.9 million, a decrease of$ 195,000 compared to $2.1 million for the year ended December 31, 2022[229]. - Net income decreased$ 195,000 to $1.9 million for the year ended December 31, 2023, due to a$ 1.4 million increase in noninterest expense[269]. - Net income for 2023 was $1,919 million, a decrease from$ 2,114 million in 2022, representing a decline of 9.2%[313]. - Noninterest income decreased by $632,000, or 44.6%, to$ 785,000 for 2023, primarily due to losses from the disposal of premises and equipment[286]. - Total noninterest expenses increased by $1.4 million, or 16.2%, to$ 9.8 million in 2023, driven by higher salaries and employee benefits[288]. - Income tax expense rose by $14,000, or 2.6%, to$ 545,000 for 2023, with an effective tax rate of 22.1% compared to 20.1% in 2022[289]. Asset and Deposit Growth - Total assets increased by $53.2 million, or 13.8%, to$ 439.7 million at December 31, 2023, from $386.5 million at December 31, 2022[253]. - Deposits rose by$ 43.5 million, or 15.0%, from $289.5 million at December 31, 2022, to$ 333.0 million at December 31, 2023[225]. - Core deposits increased by $11.1 million, or 6.3%, to$ 187.5 million at December 31, 2023, from $176.4 million at December 31, 2022[234]. - Cash and cash equivalents increased by$ 15.2 million, or 88.5%, to $32.4 million at December 31, 2023 from$ 17.2 million at December 31, 2022[256]. - Total deposits increased to $332,966 million in 2023, up from$ 289,495 million in 2022, reflecting an increase of 15.0%[310]. Loan Portfolio and Credit Quality - The commercial real estate and commercial and industrial loan portfolios grew from $166.4 million, or 54.5% of total loans, at December 31, 2022, to$ 201.4 million, or 61.7% of total loans, at December 31, 2023[230]. - Gross loans increased by $53.2 million, or 15.3%, during 2023[225]. - Net loans receivable increased$ 20.5 million, or 6.8%, to $321.4 million at December 31, 2023, primarily due to a$ 36.3 million increase in commercial real estate loans, which rose 24.4%[257]. - The allowance for credit losses rose to $4,511,000 in 2023, up from$ 3,992,000 in 2022, indicating a 13% increase[397]. - Total non-accrual loans increased to $1,421,000 in 2023, compared to$ 1,049,000 in 2022, reflecting a rise of 35.5%[399]. - The total provision for credit losses decreased to $632,000 in 2023 from$ 1,200,000 in 2022, a reduction of 47.4%[398]. Interest Income and Expense - Total interest income increased $6.0 million, or 43.5%, to$ 19.8 million for the year ended December 31, 2023, resulting from a 123 basis points increase in the average yield on interest-earning assets[270]. - Interest income on loans increased $4.2 million, or 32.9%, to$ 17.0 million for 2023, driven by a 92 basis points increase in the average yield on loans[271]. - Interest expense increased $4.7 million, or 161.1%, to$ 7.7 million for the year ended December 31, 2023, due to increases in interest expense on deposits and borrowings[276]. - The net interest margin improved to 3.07% in 2023 from 2.97% in 2022, while the net interest rate spread decreased to 2.71%[292]. - Net interest income increased by $1.3 million, or 11.5%, to$ 12.1 million for the year ended December 31, 2023, compared to $10.9 million for 2022[279]. Borrowings and Liquidity - Total borrowings from the Federal Home Loan Bank of Pittsburgh increased$ 7.5 million, or 15.7%, to $55.1 million at December 31, 2023[267]. - The liquidity ratio averaged 13.7% for the year ended December 31, 2023, significantly above the target of 5.0%[298]. - The company maintained the ability to borrow approximately$ 178.5 million from the Federal Home Loan Bank of Pittsburgh as of December 31, 2023[297]. - Maximum borrowing capacity increased from $155,601,000 in 2022 to$ 178,468,000 in 2023, secured by qualifying loans[420]. Stockholder Equity and Share Repurchase - Stockholders' equity increased $1.0 million, or 2.2%, to$ 47.0 million at December 31, 2023, attributed to net income of $1.9 million for 2023[268]. - The company repurchased 165,109 shares of common stock for$ 2,145,000 in 2023, compared to 40,289 shares for $530,000 in 2022[321]. Accounting and Regulatory Compliance - The Company accounts for income taxes in accordance with FASB ASC Topic 740, resulting in current and deferred income tax expense[366]. - The Company adopted ASC 326 on January 1, 2023, establishing a reserve for unfunded loan commitments of$ 177,000, which reduced retained earnings by $140,000[383]. - The adjustment recorded at the adoption of ASC 326 established a reserve for credit losses based on historical experience and reasonable forecasts[383].