ECB Bancorp(ECBK) - 2024 Q4 - Annual Report

Financial Performance - Net income for the year ended December 31, 2024, was $4.0 million, a decrease of 11.1% from $4.5 million in 2023[243]. - Net income was $4.0 million for the year ended December 31, 2024, a decrease of $465,000, or 10.4%, compared to $4.5 million for the year ended December 31, 2023[266]. - Interest and dividend income increased by $12.3 million, or 22.4%, to $67.0 million for the year ended December 31, 2024, from $54.8 million for the year ended December 31, 2023[267]. - Total interest expense increased by $12.1 million, or 40.3%, to $42.1 million for the year ended December 31, 2024, from $30.0 million for the year ended December 31, 2023[271]. - Net interest and dividend income before provision for credit losses was $25.0 million for the year ended December 31, 2024, an increase of $198,000, or 0.8%, compared to $24.8 million for the year ended December 31, 2023[273]. - Noninterest income increased by $174,000, or 16.5%, to $1.2 million for the year ended December 31, 2024, compared to $1.1 million for the year ended December 31, 2023[275]. - Provision for credit losses decreased by $629,000, or 78.3%, to $174,000 for the year ended December 31, 2024, compared to $803,000 for the year ended December 31, 2023[274]. Asset and Loan Portfolio - As of December 31, 2024, the total loan portfolio comprised $422.8 million (36.9%) in one-to-four family residential real estate loans, $344.0 million (30.0%) in multifamily real estate loans, and $229.0 million (20.0%) in commercial real estate loans[242]. - The commercial real estate and multifamily real estate loan portfolios increased to $229.0 million and $344.0 million, respectively, at December 31, 2024, from $196.4 million and $287.4 million in 2023[247]. - Total gross loans increased by $97.2 million, or 9.3%, to $1.15 billion at December 31, 2024, from $1.05 billion at December 31, 2023[259]. - The company originated and purchased $160.4 million in loans for the year ended December 31, 2024, compared to $268.1 million in 2023[303]. - The company had outstanding commitments to originate loans of $21.5 million as of December 31, 2024[308]. Deposits and Funding - Brokered deposits amounted to $125.6 million as of December 31, 2024, supplementing customer deposits[242]. - Deposits increased by $130.3 million, or 15.0%, to $998.5 million at December 31, 2024, from $868.2 million at December 31, 2023[263]. - The level of brokered time deposits was $125.6 million at December 31, 2024, compared to $115.5 million in 2023[304]. - Non-brokered certificates of deposit due within one year totaled $321.7 million, representing 32.2% of total deposits as of December 31, 2024[302]. - The company experienced net increases in deposits of $130.3 million for the year ended December 31, 2024, compared to $150.1 million in 2023[304]. Capital and Equity - Total shareholders' equity increased by $3.4 million, or 2.0%, to $168.3 million at December 31, 2024, from $164.9 million at December 31, 2023[265]. - At December 31, 2024, the company exceeded all regulatory capital requirements and was categorized as well-capitalized[307]. Interest Rate Risk Management - The company has implemented strategies to manage interest rate risk, including maintaining capital levels above regulatory thresholds and diversifying the loan portfolio[285][286]. - The company began utilizing interest rate swaps in January 2024 to further manage interest rate risk exposure[286]. - A 200 basis point increase in interest rates is projected to decrease net interest income by 4.2%, while a decrease of the same magnitude would result in a 1.2% decline[290]. - Economic Value of Equity (EVE) is estimated to decrease by 18.7% with a 200 basis point increase in interest rates, while a decrease of 200 basis points would increase EVE by 13.6%[296]. - The net interest rate spread decreased to 1.19% in 2024 from 1.46% in 2023, indicating a tighter margin between interest-earning assets and interest-bearing liabilities[280][281]. Operational Developments - The company opened its third branch in Woburn, MA, in 2023 and is evaluating further branch expansion opportunities[249]. - The company is committed to maintaining a strong liquidity position and anticipates sufficient funds to meet current funding commitments[306]. - The primary impact of inflation on the company’s operations is reflected in increased operating costs, with interest rates having a more significant impact on performance[311]. Asset Quality - Non-performing assets totaled $2.0 million, representing 0.14% of total assets as of December 31, 2024, compared to $1.2 million or 0.09% in 2023[249]. - The allowance for credit losses was deemed adequate at December 31, 2024, with a potential increase of $2.4 million if prepayment rates decreased by 50%[255]. - Interest-bearing liabilities totaled $1,075,440, with total interest-bearing deposits at $858,353, reflecting an increase in funding costs[280].