LINKBANCORP(LNKB) - 2024 Q4 - Annual Report

Financial Performance - Net income for the year ended December 31, 2024, was $26.2 million, or $0.71 per diluted share, an increase of $38.2 million compared to a net loss of $12.0 million for the year ended December 31, 2023[266]. - Interest income increased to $158.7 million for the year ended December 31, 2024, compared to $65.2 million for the year ended December 31, 2023, primarily due to an increase in average loans and yields[273]. - Net interest income before provision for credit losses increased by $61.2 million, or 158.05%, to $99.9 million for the year ended December 31, 2024, compared to $38.7 million for the year ended December 31, 2023[272]. - Non-interest income increased by $7.8 million to $8.9 million in 2024, driven by a $3.1 million increase in service charges on deposit accounts due to the Partners Merger[278]. - Income tax expense for 2024 totaled $7.4 million compared to a benefit of $3.4 million in 2023, with an effective tax rate of 22.0%[280]. Asset and Loan Growth - Total assets increased by $209.5 million, or 7.8%, to $2.88 billion as of December 31, 2024, compared to $2.67 billion at December 31, 2023[235]. - Loans receivable rose by 6.0%, from $2.13 billion at December 31, 2023, to $2.26 billion at December 31, 2024[235]. - Net loans receivable increased by $124.8 million, or 5.93%, from $2.10 billion in 2023 to $2.23 billion in 2024[243]. - Commercial real estate loans grew by $114.5 million, or 9.51%, from $1.20 billion in 2023 to $1.32 billion in 2024[244]. - Multifamily loans increased by $35.0 million, contributing to a year-end balance of $211.8 million[244]. Deposit Activity - The Company experienced a net increase in deposits of $153.4 million during 2024[240]. - Total deposits grew by $161.8 million or 7.4%, from $2.20 billion at December 31, 2023 to $2.36 billion at December 31, 2024[254]. - Demand deposits, both interest-bearing and non-interest bearing, contributed to the increase in total deposits, with interest-bearing demand deposits rising by 23.4%[255]. - The average balance of total deposits increased from $1.09 billion in 2023 to $2.33 billion in 2024, with an average rate paid of 2.19%[259]. Credit Quality and Losses - The allowance for credit losses increased to $26.4 million, representing 1.17% of total loans[249]. - The ratio of non-accrual loans to total loans was 0.74% as of December 31, 2024, compared to 0.33% in 2023[249]. - Total non-accrual loans amounted to $16.7 million, or 0.74% of total loans[249]. - Total non-performing loans increased by $9.9 million, with non-performing loans as a percentage of total loans rising from 0.33% at December 31, 2023 to 0.76% at December 31, 2024[251]. - Provision for credit losses decreased by $9.0 million from $9.3 million in 2023 to $257 thousand in 2024, primarily due to no required provision for non-PCD loans acquired in the Partners Merger[276]. Mergers and Acquisitions - The Company completed the merger with Partners Bancorp on November 30, 2023, enhancing its market presence[221]. - The Company anticipates completing the New Jersey Branch Sale on March 31, 2025, subject to customary closing conditions[220]. - The increase in non-interest expenses included $4.1 million in amortization of intangible assets from the Partners Merger[279]. Interest Rates and Borrowings - The average corporate borrowing rate increased to around 7% by the end of 2024, up from a low of 2.3% in 2020[233]. - Long-term borrowings increased to $40.0 million in 2024, with a fixed interest rate of 4.827% maturing in February 2026[260]. - Subordinated debt with a carrying value of $21.9 million was assumed as part of the Partners Merger, with fixed rates ranging from 6.0% to 6.875%[262]. - The average yield of loans increased by 90 basis points from 5.48% for the year ended December 31, 2023, to 6.38% for the year ended December 31, 2024[273]. Market Conditions - Real GDP increased by 2.3% during 2024, with consumer spending contributing significantly to this growth[231]. - The S&P 500 finished 2024 up 23.3%, indicating a strong market performance despite economic uncertainties[231]. Liquidity Management - The Company aims to maintain sufficient liquidity to fund operations and meet loan demand, with liquidity management being a daily and long-term function[282]. - The Company had available borrowing capacity of approximately $723.8 million with the Federal Home Loan Bank as of December 31, 2024[287]. - The Company has total uninsured deposits of $807.5 million as of December 31, 2024, which includes $44.2 million of municipal deposits exceeding FDIC insurance limits[259]. Interest Expense - Interest expense increased by $32.3 million, or 122.11%, to $58.8 million for the year ended December 31, 2024, compared to $26.5 million for the year ended December 31, 2023[274]. - The increase in interest expense on time deposits was impacted by an increase in average interest rate paid, which increased 119 basis points from 3.29% for the year ended December 31, 2023, to 4.48% for the year ended December 31, 2024[275].