
Financial Performance Overview Earnings Summary Net income for Q1 2024 rose to $11.4 million, with diluted EPS of $0.86, reflecting strong loan portfolio performance Q1 2024 vs Q1 2023 Earnings Comparison | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Income | $11.4 million | $11.2 million | | Basic EPS | $0.87 | $0.77 | | Diluted EPS | $0.86 | $0.77 | - The company attributes its strong earnings to the robust performance of its loan portfolio, with continued high demand for construction lending in specific high-demand areas3 Key Performance Highlights Strong profitability and efficiency maintained in Q1 2024, with 9.4% net interest income growth and $731.3 million in loan commitments Key Performance Metrics for Q1 2024 | Metric | Value | | :--- | :--- | | Return on Average Assets | 2.50% | | Return on Average Equity | 15.88% | | Efficiency Ratio | 37.91% | - Net interest income increased by $2.1 million, or 9.4%, to $25.0 million for the three months ended March 31, 2024, compared to the same period in 202310 - Commitments, loans-in-process, and standby letters of credit outstanding grew to $731.3 million at March 31, 2024, from $719.6 million at the end of 202310 Financial Condition Analysis (Balance Sheet) Overall Balance Sheet Changes Total assets grew 5.8% to $1.9 billion by March 31, 2024, driven by increases in net loans, cash, and total deposits Balance Sheet Summary (QoQ) | Balance Sheet Item | March 31, 2024 | Dec 31, 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total Assets | $1.9 billion | $1.8 billion | +$102.8 million | +5.8% | | Net Loans | $1.6 billion | $1.6 billion | +$67.8 million | +4.3% | | Cash & Cash Equivalents | $107.4 million | $68.7 million | +$38.8 million | +56.5% | | Total Deposits | $1.5 billion | $1.4 billion | +$112.0 million | +8.0% | Asset Analysis Asset growth was fueled by $180.5 million in new loan originations, primarily construction loans, increasing net loans by 4.3% - Net loans increased by $67.8 million, primarily due to $180.5 million in new loan originations during the quarter8 - Construction loans were the main driver of loan growth, with $170.9 million in new originations8 - Cash and cash equivalents increased by $38.8 million (56.5%) to $107.4 million, largely as a result of deposit growth5 Liabilities Analysis Total deposits increased 8.0% to $1.5 billion due to competitive rates, while total borrowings decreased by $17.0 million - A strategy of offering competitive interest rates led to a $112.0 million increase in total deposits16 - The deposit mix shifted, with certificates of deposit increasing by $90.9 million and NOW/money market accounts by $60.1 million, while savings and non-interest-bearing demand deposits decreased16 - Federal Home Loan Bank advances and Federal Reserve Bank borrowings decreased by a combined $17.0 million17 Stockholders' Equity Analysis Stockholders' equity increased 3.4% to $288.9 million, primarily from $11.4 million net income, offsetting repurchases and dividends - The $9.6 million increase in stockholders' equity was primarily due to net income of $11.4 million20 - Growth in equity was partially offset by stock repurchases totaling $1.2 million and dividends paid and declared of $1.3 million20 Results of Operations (Income Statement) Net Interest Income Net interest income grew 9.4% to $25.0 million, but rising funding costs compressed net interest margin by 88 basis points to 5.75% Net Interest Income Analysis (Q1 2024 vs Q1 2023) | Metric | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $25.0 million | $22.8 million | +9.4% | | Total Interest & Dividend Income | $38.1 million | $28.5 million | +33.7% | | Total Interest Expense | $13.1 million | $5.7 million | +131.5% | | Net Interest Margin | 5.75% | 6.63% | -88 bps | - The decrease in net interest margin was due to the increase in the cost of interest-bearing liabilities outpacing the increase in the yield on interest-earning assets26 Credit Loss Expense A $165,000 credit loss expense reduction was recorded in Q1 2024 due to favorable economic trends, with minimal net charge-offs - A credit loss expense reduction of $165,000 was recorded in Q1 2024, compared to an expense of $1,000 in Q1 202327 - The reduction was primarily attributed to a $145,000 credit for loans due to favorable economic trends27 - Charge-offs were minimal at $21,000, consistent with the prior-year period, and related to unpaid overdrafts28 Non-Interest Income Non-interest income declined 50.3% to $554,000, impacted by unrealized losses, lower loan fees, and wealth management disposition Non-Interest Income Breakdown (Q1 2024 vs Q1 2023) | Component | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | Total Non-Interest Income | $554,000 | $1,115,000 | -50.3% | | Unrealized (Loss)/Gain on Equity Securities | ($82,000) | $225,000 | -$307,000 | | Other Loan Fees & Service Charges | $462,000 | $607,000 | -$145,000 | | Investment Advisory Fees | $0 | $117,000 | -$117,000 | Non-Interest Expense Non-interest expense increased 18.2% to $9.7 million, mainly due to higher salaries, employee benefits, and other operating costs - Total non-interest expense increased by $1.5 million, or 18.2%, from $8.2 million in Q1 202333 - The primary drivers of the increase were salaries and employee benefits (+$809,000) and other operating expenses (+$543,000)33 Income Taxes Income tax expense was $4.7 million for the quarter, with an effective tax rate of 29.0% Income Tax Summary (Q1 2024 vs Q1 2023) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Income Tax Expense | $4.7 million | $4.5 million | | Effective Tax Rate | 29.0% | 28.7% | Key Metrics and Risk Management Asset Quality Asset quality remained strong with non-performing assets stable at $5.8 million, and the allowance for credit losses at 0.30% of total loans - Non-performing assets were stable at $5.8 million at both March 31, 2024, and December 31, 202335 Asset Quality Ratios | Ratio | March 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Non-performing assets to total assets | 0.31% | 0.33% | | Allowance for credit losses to total loans | 0.30% | 0.32% | Capital The company maintains a robust capital position, with a tier 1 leverage ratio of 14.65%, and continues its stock repurchase program - The Bank's capital position is strong, with a tier 1 leverage capital ratio of 14.65% and a total risk-based capital ratio of 13.78% as of March 31, 202439 - The company is executing its second stock repurchase program, having bought back 1,015,980 shares for $16.0 million under this plan as of March 31, 202441 Consolidated Financial Statements Consolidated Statements of Financial Condition This section provides the unaudited consolidated balance sheet as of March 31, 2024, detailing assets, liabilities, and stockholders' equity Consolidated Statements of Financial Condition (In thousands) | ASSETS | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total cash and cash equivalents | $107,448 | $68,671 | | Net loans | $1,649,647 | $1,581,804 | | Total assets | $1,866,908 | $1,764,135 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Total deposits | $1,512,002 | $1,400,036 | | Borrowings | $47,000 | $64,000 | | Total liabilities | $1,577,984 | $1,484,810 | | Total stockholders' equity | $288,924 | $279,325 | | Total liabilities and stockholders' equity | $1,866,908 | $1,764,135 | Consolidated Statements of Income This section presents the unaudited consolidated income statement for Q1 2024 and Q1 2023, detailing revenues, expenses, and net income Consolidated Statements of Income (In thousands) | | Quarter Ended March 31, 2024 | Quarter Ended March 31, 2023 | | :--- | :--- | :--- | | Total Interest Income | $38,121 | $28,511 | | Total Interest Expense | $13,135 | $5,673 | | Net Interest Income | $24,986 | $22,838 | | Provision for credit loss | ($165) | $1 | | Total Non-Interest Income | $554 | $1,115 | | Total Non-Interest Expenses | $9,681 | $8,191 | | INCOME BEFORE PROVISION FOR INCOME TAXES | $16,024 | $15,761 | | PROVISION FOR INCOME TAXES | $4,650 | $4,517 | | NET INCOME | $11,374 | $11,244 | Selected Consolidated Financial Data This section summarizes key financial data, performance ratios, loan portfolio composition, asset quality, and regulatory capital ratios Selected Performance Ratios | Ratio | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Earnings per share - diluted | $0.86 | $0.77 | | Return on average total assets | 2.50% | 3.10% | | Return on average shareholders' equity | 15.88% | 16.98% | | Net interest margin | 5.75% | 6.63% | | Efficiency ratio | 37.91% | 34.20% | Selected Asset Quality and Capital Ratios (as of March 31, 2024) | Ratio | Value | | :--- | :--- | | Non-performing assets to total assets | 0.31% | | Tier 1 leverage ratio | 14.65% | | Total capital to risk-weighted assets | 13.78% | Net Interest Margin Analysis This section details average balances, interest income/expense, and yields/costs for assets and liabilities, illustrating net interest margin Net Interest Margin Analysis Summary (Q1 2024 vs Q1 2023) | | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Average Yield on Interest-Earning Assets | 8.77% | 8.28% | | Average Cost of Interest-Bearing Liabilities | 4.29% | 2.74% | | Net Interest Spread | 4.48% | 5.54% | | Net Interest Margin | 5.75% | 6.63% | Company Information and Disclosures About NorthEast Community Bancorp NorthEast Community Bancorp is the holding company for NorthEast Community Bank, headquartered in White Plains, New York, operating eleven branches and three loan production offices - The company is the holding company for NorthEast Community Bank and is headquartered in White Plains, New York42 Forward Looking Statement This section cautions that forward-looking statements are subject to risks and uncertainties, including market interest rates, economic conditions, and regulatory policies - The press release includes forward-looking statements subject to risks and uncertainties, including changes in market interest rates, economic conditions, and regulatory policies43