NB Bancorp(NBBK) - 2023 Q3 - Quarterly Report

Part I. Financial Information Financial Statements The unaudited statements show significant growth in assets, loans, and deposits, reflecting the adoption of CECL and ongoing expansion Consolidated Balance Sheet Highlights (in thousands) | Metric | September 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Assets | $4,231,792 | $3,592,335 | | Loans Receivable, net | $3,683,262 | $2,990,417 | | Total Deposits | $3,436,659 | $2,886,743 | | FHLB Borrowings | $345,634 | $293,082 | | Total Equity | $365,701 | $344,065 | Consolidated Income Statement Highlights (in thousands) | Metric | Nine Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Net Interest Income | $95,200 | $73,888 | | Provision for Credit Losses | $7,984 | $4,100 | | Non-Interest Income | $12,322 | $6,903 | | Net Income | $23,444 | $18,037 | - The financial statements belong to NB Financial, MHC, as the conversion to NB Bancorp, Inc was not yet complete[6] - The company adopted the CECL standard (ASC 326) on January 1, 2023, which decreased retained earnings by $2.1 million[17][32] - Loans to the cannabis industry increased significantly to $158.5 million from $58.3 million at year-end 2022[64] - The company is converting from a mutual to a stock holding company, incurring $1.8 million in deferred costs[170][171] - The Bank was considered well-capitalized with a Community Bank Leverage Ratio of 9.13%, exceeding the minimum requirement[111] Management's Discussion and Analysis (MD&A) Management discusses strong loan and deposit growth, rising net interest income, and strategies for managing risk - Net loans grew by $692.8 million, driven by commercial real estate (+$273.4M) and commercial and industrial (+$224.3M) loans[189] - Deposits grew by $549.9 million, with core deposits increasing by $476.3 million, partly due to industry turmoil and branch expansion[191][192][193] - Noninterest income was boosted by a one-time $3.5 million employee retention credit and a $1.9 million increase in customer service fees[222][223] - The provision for credit losses increased by $3.9 million, primarily due to significant loan portfolio growth[221] - The company maintains substantial liquidity from deposits and has access to $465.8 million from the FHLB and $45.3 million from the Federal Reserve[245] - The Bank exceeded all regulatory capital requirements and was categorized as well-capitalized as of September 30, 2023[251] Year-to-Date Performance vs. Prior Year (Nine Months Ended Sep 30) | Metric (in millions) | 2023 | 2022 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $95.2 | $73.9 | +$21.3 | +28.8% | | Provision for Credit Losses | $8.0 | $4.1 | +$3.9 | +94.7% | | Noninterest Income | $12.3 | $6.9 | +$5.4 | +78.5% | | Noninterest Expense | $67.5 | $52.4 | +$15.2 | +29.0% | | Net Income | $23.4 | $18.0 | +$5.4 | +30.0% | Interest Rate Sensitivity Analysis (as of Sep 30, 2023) | Rate Shock (bps) | % Change in Net Interest Income | % Change in Economic Value of Equity | | :--- | :--- | :--- | | +300 | -3.5% | -2.8% | | +200 | -2.4% | -1.3% | | +100 | -0.9% | -0.2% | | -100 | 0.0% | -1.5% | | -200 | -0.7% | -5.0% | Controls and Procedures Management concluded that the company's disclosure controls and internal financial reporting controls were effective - Management concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[255] - No material changes in internal control over financial reporting occurred during the quarter[256] Part II. Other Information Legal Proceedings and Other Disclosures The company reports no material legal actions and notes its status as an emerging growth company exempts it from certain disclosures - The company is subject to various legal actions from the normal course of business, which are not expected to have a material effect[258] - As an emerging growth company, disclosures for Risk Factors and Market Risk are not required[254][259]