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What changed in First Seacoast Bancorp, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of First Seacoast Bancorp, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+354 added−276 removedSource: 10-K (2024-03-29) vs 10-K (2023-03-24)

Top changes in First Seacoast Bancorp, Inc.'s 2023 10-K

354 paragraphs added · 276 removed · 237 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

134 edited+53 added−16 removed203 unchanged
Biggest changeAt December 31, 2022 2021 Allowance for Loan Losses Percent of Allowance in Category to Total Allocated Allowance Percent of Loans in Each Category to Total Loans Allowance for Loan Losses Percent of Allowance in Category to Total Allocated Allowance Percent of Loans in Each Category to Total Loans (Dollars in thousands) One- to four-family residential real estate $ 2,048 57.74 % 62.86 % $ 2,139 60.04 % 62.45 % Commercial real estate 942 26.57 % 20.12 % 833 23.38 % 19.22 % Acquisition, development and land 138 3.89 % 4.62 % 178 5.00 % 5.70 % Commercial and industrial 184 5.19 % 6.01 % 194 5.45 % 7.16 % Home equity loans and lines of credit 81 2.28 % 2.54 % 63 1.77 % 1.85 % Multi-family 54 1.52 % 2.05 % 80 2.25 % 2.40 % Consumer 100 2.81 % 1.80 % 75 2.11 % 1.22 % Total allocated allowance $ 3,547 100.00 % 100.00 % $ 3,562 100.00 % 100.00 % Unallocated 34 28 Total $ 3,581 $ 3,590 The Company measures and records its allowance for loan losses based upon an incurred loss model.
Biggest changeAt December 31, 2023 2022 Allowance for Credit Losses on Loans Percent of Allowance in Category to Total Allocated Allowance Percent of Loans in Each Category to Total Loans Allowance for Loan Losses Percent of Allowance in Category to Total Allocated Allowance Percent of Loans in Each Category to Total Loans (Dollars in thousands) One- to four-family residential real estate $ 1,601 47.64 % 62.55 % $ 2,048 57.74 % 62.81 % Commercial real estate 830 24.70 % 20.13 % 942 26.57 % 20.04 % Acquisition, development and land 105 3.12 % 4.07 % 138 3.89 % 4.59 % Commercial and industrial 236 7.02 % 5.93 % 184 5.19 % 5.98 % Home equity loans and lines of credit 156 4.64 % 3.28 % 81 2.28 % 2.52 % Multi-family 76 2.26 % 1.76 % 54 1.52 % 2.03 % Consumer 357 10.62 % 2.28 % 100 2.81 % 2.03 % Total allocated allowance $ 3,361 100.00 % 100.00 % $ 3,547 100.00 % 100.00 % Unallocated 29 34 Total $ 3,390 $ 3,581 The Company measures and records its ACL based upon an expected loss model.
The foreclosure process generally would begin when a loan becomes 120 days delinquent. We do not pursue multiple collections processes, such as considering modifications or workouts, while proceeding with foreclosure. When a commercial loan or commercial real estate loan becomes 10 days past due, we contact the customer by mailing a late notice.
The foreclosure process generally would begin 10 when a loan becomes 120 days delinquent. We do not pursue multiple collections processes, such as considering modifications or workouts, while proceeding with foreclosure. When a commercial loan or commercial real estate loan becomes 10 days past due, we contact the customer by mailing a late notice.
Treasury obligations, securities of various government-sponsored enterprises and municipal governments, deposits at the Federal Home Loan Bank, time deposits of federally insured institutions, investment grade corporate bonds, corporate subordinated debt and investment grade marketable equity securities. We also are required to maintain an investment in Federal Home Loan Bank stock.
Treasury obligations, securities of various government-sponsored enterprises and municipal governments, deposits at the Federal Home Loan Bank, time deposits of federally insured institutions, investment grade corporate bonds, corporate subordinated debt and investment grade marketable equity securities. We are also required to maintain an investment in Federal Home Loan Bank stock.
The operations of First Seacoast Bank also are subject to the: • Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; • Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; 24 • Check Clearing for the 21st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check; • The USA PATRIOT Act, which requires savings associations to, among other things, establish broadened anti-money laundering compliance programs and due diligence policies and controls to ensure the detection and reporting of money laundering.
The operations of First Seacoast Bank also are subject to the: • Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; • Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; 25 • Check Clearing for the 21st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check; • The USA PATRIOT Act, which requires savings associations to, among other things, establish broadened anti-money laundering compliance programs and due diligence policies and controls to ensure the detection and reporting of money laundering.
Future increases in market interest rates are likely to result in additional unrealized losses on available-for-sale securities, which would reduce our stockholders’ equity. However, because the Bank made a permitted election to opt-out from the inclusion of accumulated other comprehensive income/(loss) in the calculation of its regulatory capital, accumulated other comprehensive income/loss does not affect our regulatory capital levels.
Future increases in market interest rates are likely to result in additional unrealized losses on available-for-sale securities, which would reduce our stockholders’ equity. However, because the Bank made a permitted election to opt-out from the inclusion of accumulated other comprehensive loss in the calculation of its regulatory capital, accumulated other comprehensive loss does not affect our regulatory capital levels.
We sell selected conforming, 15-year and 30-year fixed-rate one- to four-family residential real estate loans that we originate, on a servicing-retained basis, when we are able to, and strategically retain non-eligible fixed-rate and adjustable-rate one- to four-family residential real estate loans in order to manage the duration and time to repricing of our one- to four-family residential loan portfolio.
We sell selected conforming, 15-year and 30-year fixed-rate one- to four-family residential real estate loans that we originate, on a servicing-retained basis, when we are able 9 to, and strategically retain non-eligible fixed-rate and adjustable-rate one- to four-family residential real estate loans in order to manage the duration and time to repricing of our one- to four-family residential loan portfolio.
Commercial real estate construction loans are generally structured as interest-only for up to 18 months, with a loan-to-value of 80% of the appraised value on a completed basis or a loan-to-cost of completion ratio of up to 85%. We also originate commercial constructions loans with an initial loan-to-value ratio of 90% when coupled with the U.S.
Commercial real estate construction loans are generally structured as interest-only for up to 18 months, with a loan-to-value of 80% of the appraised value on a completed basis or a loan-to-cost of completion ratio of up to 85%. We may also originate commercial constructions loans with an initial loan-to-value ratio of 90% when coupled with the U.S.
Loans are reviewed on a regular basis. Management determines that a loan is impaired or non-performing when it is probable at least a portion of the loan will not be collected in accordance with the original terms due to a deterioration in the financial condition of the borrower or the value of the underlying collateral if the loan is collateral-dependent.
Loans are reviewed on a regular basis. Management determines that a loan is non-performing when it is probable at least a portion of the loan will not be collected in accordance with the original terms due to a deterioration in the financial condition of the borrower or the value of the underlying collateral if the loan is collateral-dependent.
While scheduled loan payments and income on earning assets are relatively stable sources of funds, deposit inflows and outflows can vary widely and are influenced by prevailing interest rates, market conditions and levels of competition. Deposits. Our deposits are generated primarily from residents within our primary market area.
While scheduled loan payments and income on earning assets are relatively stable sources of funds, deposit inflows and outflows can vary widely and are influenced by prevailing interest rates, market conditions and levels of competition. 18 Deposits. Our deposits are generated primarily from residents within our primary market area.
Many provisions of the Dodd-Frank Act involve delayed effective dates and/or require implementing regulations. The implementation of the legislation is an ongoing process. The Dodd-Frank Act has resulted in, and may continue to result in, an increased regulatory burden and increased compliance, operating and interest expense for First Seacoast Bank.
Many provisions of the Dodd-Frank Act involve delayed effective dates and/or require implementation of regulations. The implementation of the legislation is an ongoing process. The Dodd-Frank Act has resulted in, and may continue to result in, an increased regulatory burden and increased compliance, operating and interest expense for First Seacoast Bank.
Because of the uncertainties inherent in estimating construction costs, as well as the market value of the completed project and the effects of governmental regulation of real property, it is relatively difficult to accurately evaluate the total funds required to complete a project and the related loan-to-value ratio.
Because of the uncertainties inherent in estimating construction costs, as well as the market value of the completed project and the effects of governmental regulation of real property, it is relatively difficult to accurately evaluate the total funds required to complete a project and the 7 related loan-to-value ratio.
All investment transactions are reviewed at the next regularly scheduled meeting of the board of directors. All of our investment securities are classified as available-for-sale. 16 We have legal authority to invest in various types of liquid assets, including U.S.
All investment transactions are reviewed at the next regularly scheduled meeting of the board of directors. All of our investment securities are classified as available-for-sale. We have legal authority to invest in various types of liquid assets, including U.S.
Each quarter, or more often if a potential loss triggering event occurs, we assess our available-for-sale securities. We consider the extent and duration of any unrealized losses and the financial condition and near term prospects of the issuers.
Each quarter, or more often if a potential loss triggering event occurs, we assess our available-for-sale securities. We consider the extent of any unrealized losses and the financial condition and near term prospects of the issuers.
These fixed-to-floating subordinated notes were issued by banks located in our market area. 17 Sources of Funds General. Deposits have traditionally been our primary source of funds for use in lending and investment activities.
These fixed-to-floating subordinated notes were issued by banks located in our market area. Sources of Funds General. Deposits have traditionally been our primary source of funds for use in lending and investment activities.
Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations. 20 In determining the amount of risk-weighted assets for purposes of calculating risk-based capital ratios, an institution’s assets, including certain off-balance sheet assets (e.g., recourse obligations, direct credit substitutes, residual interests), are multiplied by a risk weight factor assigned by the regulations based on the risk deemed inherent in the type of asset.
Calculation of all types of regulatory capital is subject to deductions and adjustments specified in the regulations. 21 In determining the amount of risk-weighted assets for purposes of calculating risk-based capital ratios, an institution’s assets, including certain off-balance sheet assets (e.g., recourse obligations, direct credit substitutes, residual interests), are multiplied by a risk weight factor assigned by the regulations based on the risk deemed inherent in the type of asset.
At December 31, 2022, we do not intend to sell our available-for-sale securities and it was unlikely that we would have had to sell them before recovery of their amortized cost, which may be at maturity, and we believed that the unrealized losses were primarily due to market interest rate fluctuations and not changes in credit quality. U.S.
At December 31, 2023, we do not intend to sell our available-for-sale securities and it was unlikely that we would have had to sell them before recovery of their amortized cost, which may be at maturity, and we believed that the unrealized losses were primarily due to market interest rate fluctuations and not changes in credit quality. U.S.
The voting members of the Loan Officers Review Committee consist of our President and Chief Executive Officer, Senior Vice President – Chief Financial Officer, Senior Vice President – Senior Commercial Loan Officer, Senior Vice President – Senior Retail Loan Officer, Senior Vice President – Bank Administration and Risk Management Officer.
The voting members of the Loan Officers Review Committee consist of our President and Chief Executive Officer, Executive Vice President – Chief Financial Officer, Senior Vice President – Senior Commercial Loan Officer, Senior Vice President – Senior Retail Loan Officer, Senior Vice President – Bank Administration and Risk Management Officer and Vice President – Retail Loan Production Officer.
The following tables set forth the contractual maturities of our total loan portfolio at December 31, 2022. Demand loans, loans having no stated repayment schedule or maturity and overdraft loans are reported as being due in one year or less. The table presents contractual maturities and does not reflect repricing or the effect of prepayments. Actual maturities may differ.
The following tables set forth the contractual maturities of our total loan portfolio at December 31, 2023. Demand loans, loans having no stated repayment schedule or maturity and overdraft loans are reported as being due in one year or less. The table presents contractual maturities and does not reflect repricing or the effect of prepayments. Actual maturities may differ.
While we have the authority under applicable law to invest in derivative securities, we have no investments in derivative securities. Accumulated Other Comprehensive Income/(Loss) and Available-for-Sale Securities.
While we have the authority under applicable law to invest in derivative securities, we have no investments in derivative securities. Accumulated Other Comprehensive Loss and Available-for-Sale Securities.
The Dodd-Frank Act made noncompliance with the QTL test subject to agency enforcement action for a violation of law. At December 31, 2022, First Seacoast Bank satisfied the QTL test. Capital Distributions. Federal regulations govern capital distributions by a federal savings association, which include cash dividends, stock repurchases and other transactions charged to the savings association’s capital account.
The Dodd-Frank Act made noncompliance with the QTL test subject to agency enforcement action for a violation of law. At December 31, 2023, First Seacoast Bank satisfied the QTL test. Capital Distributions. Federal regulations govern capital distributions by a federal savings association, which include cash dividends, stock repurchases and other transactions charged to the savings association’s capital account.
Pursuant to 2020 federal legislation, the CBLR was temporarily lowered to 8%, transitioning back to 9% by year-ended 2021. Throughout 2022, the Bank did not make an election to use the CBLR. At December 31, 2022, First Seacoast Bank’s capital exceeded all applicable requirements including the applicable capital conservation buffer. Loans-to-One Borrower.
Pursuant to 2020 federal legislation, the CBLR was temporarily lowered to 8%, transitioning back to 9% by year-ended 2021. Throughout 2023, the Bank did not make an election to use the CBLR. At December 31, 2023, First Seacoast Bank’s capital exceeded all applicable requirements including the applicable capital conservation buffer. Loans-to-One Borrower.
As such, it is grouped with any other capital losses for the year to which it is carried and is used to offset any capital gains. Any loss remaining after the five-year carryover period that has not been deducted is no longer deductible. At December 31, 2022, the Company had no capital loss carryovers. Corporate Dividends.
As such, it is grouped with any other capital losses for the year to which it is carried and is used to offset any capital gains. Any loss remaining after the five-year carryover period that has not been deducted is no longer deductible. At December 31, 2023, the Company had no capital loss carryovers. Corporate Dividends.
The results of operations are also affected by the level of operating expenses, the provision for loan losses, the impact of federal and state income taxes, the relative levels of interest rates and local and national economic activity. Investment management services are offered through FSB Wealth Management. FSB Wealth Management is a division of First Seacoast Bank.
The results of operations are also affected by the level of operating expenses, the provision for credit losses, the impact of federal and state income taxes, the relative levels of interest rates and local and national economic activity. Investment management services are offered through FSB Wealth Management. FSB Wealth Management is a division of First Seacoast Bank.
We may obtain advances from the Federal Home Loan Bank upon the security of our capital stock in the Federal Home Loan Bank and certain of our mortgage loans. Such advances may be made pursuant to several different credit programs, each of which has its own interest rate and range of maturities.
We may obtain advances from the Federal Home Loan Bank (“FHLB”) upon the security of our capital stock in the FHLB and certain of our mortgage loans. Such advances may be made pursuant to several different credit programs, each of which has its own interest rate and range of maturities.
First Seacoast Bank received an “Outstanding” rating in its most recent Community Reinvestment Act federal evaluation. 22 Transactions with Related Parties. A federal savings association’s authority to engage in transactions with its affiliates is limited by Sections 23A and 23B of the Federal Reserve Act and federal regulation.
First Seacoast Bank received an “Outstanding” rating in its most recent Community Reinvestment Act federal evaluation. 23 Transactions with Related Parties. A federal savings association’s authority to engage in transactions with its affiliates is limited by Sections 23A and 23B of the Federal Reserve Act and federal regulation.
We intend to expand our commercial and industrial lending activities in order to diversify our loan portfolio, increase our yield and offer a full range of products to our commercial customers. However, these loans have greater credit risk than one- to four-family residential real estate loans.
We continue to expand our commercial and industrial lending activities in order to diversify our loan portfolio, increase our yield and offer a full range of products to our commercial customers. However, these loans have greater credit risk than one- to four-family residential real estate loans.
All employees are required to stay at home when they experience signs or symptoms of a possible COVID-19 illness and are provided paid time off during such absences. Employee retention helps us operate efficiently and achieve our business objectives.
All employees are encouraged to stay at home when they experience signs or symptoms of a possible COVID-19 illness and are provided paid time off during such absences. Employee retention helps us operate efficiently and achieve our business objectives.
FSB Service Corporation, Inc., which is inactive, is the sole and wholly-owned subsidiary of First Seacoast Bank. 19 Regulation and Supervision General As a federal savings bank, First Seacoast Bank is subject to examination, supervision and regulation, primarily by the Office of the Comptroller of the Currency, and, secondarily, by the FDIC as deposits insurer.
FSB Service Corporation, Inc., which is inactive, is the sole and wholly-owned subsidiary of First Seacoast Bank. 20 Regulation and Supervision General As a federal savings bank, First Seacoast Bank is subject to examination, supervision and regulation, primarily by the Office of the Comptroller of the Currency, and, secondarily, by the FDIC as deposits insurer.
We do not currently know of any practice, condition or violation that may lead to termination of our deposit insurance. 23 Federal Home Loan Bank System. First Seacoast Bank is a member of the Federal Home Loan Bank System, which consists of 11 regional Federal Home Loan Banks.
We do not currently know of any practice, condition or violation that may lead to termination of our deposit insurance. 24 Federal Home Loan Bank System. First Seacoast Bank is a member of the Federal Home Loan Bank System, which consists of 11 regional Federal Home Loan Banks.
As of December 31, 2022, First Seacoast Bank complied with the loans-to-one borrower limitations. Standards for Safety and Soundness. Federal law requires each federal banking agency to prescribe certain standards for all insured depository institutions.
As of December 31, 2023, First Seacoast Bank complied with the loans-to-one borrower limitations. Standards for Safety and Soundness. Federal law requires each federal banking agency to prescribe certain standards for all insured depository institutions.
The Office of the Comptroller of the Currency may also take any one of a number of discretionary supervisory actions against undercapitalized federal savings associations, including the issuance of a capital directive and the replacement of senior executive officers and directors. 21 At December 31, 2022, First Seacoast Bank met the criteria for being considered “well capitalized,” which means that its total risk-based capital ratio exceeded 10%, its Tier 1 risk-based ratio exceeded 8.0%, its common equity Tier 1 ratio exceeded 6.5% and its leverage ratio exceeded 5.0%.
The Office of the Comptroller of the Currency may also take any one of a number of discretionary supervisory actions against undercapitalized federal savings associations, including the issuance of a capital directive and the replacement of senior executive officers and directors. 22 At December 31, 2023, First Seacoast Bank met the criteria for being considered “well capitalized,” which means that its total risk-based capital ratio exceeded 10%, its Tier 1 risk-based ratio exceeded 8.0%, its common equity Tier 1 ratio exceeded 6.5% and its leverage ratio exceeded 5.0%.
Generally accepted accounting principles in the United States require that unrealized gains and losses on available-for-sale securities be reported as a separate component of stockholders’ equity as a component of accumulated other comprehensive income.
Generally accepted accounting principles in the United States require that unrealized gains and losses on available-for-sale securities be reported as a separate component of stockholders’ equity as a component of accumulated other comprehensive loss.
As of December 31, 2022, First Seacoast Bank complied with this requirement. Dodd-Frank Act The Dodd-Frank Act created the Consumer Financial Protection Bureau, which has broad powers to supervise and enforce consumer protection laws.
As of December 31, 2023, First Seacoast Bank complied with this requirement. Dodd-Frank Act The Dodd-Frank Act created the Consumer Financial Protection Bureau, which has broad powers to supervise and enforce consumer protection laws.
Costs relating to the development and improvement of the property, however, are capitalized to the extent of estimated fair value, less estimated costs to sell. At December 31, 2022 and 2021, we had no foreclosed assets. Classified Assets .
Costs relating to the development and improvement of the property, however, are capitalized to the extent of estimated fair value, less estimated costs to sell. At December 31, 2023 and 2022, we had no foreclosed assets. Classified Assets .
At December 31, 2022, we had corporate debt totaling $0.5 million, which constituted 0.5% of our securities portfolio. This fixed-to-floating corporate note was issued by a minority-led Community Development Financial Institution. Corporate Subordinated Debt. At December 31, 2022, we had corporate subordinated debt totaling $5.0 million, which constituted 4.7% of our securities portfolio.
At December 31, 2023, we had corporate debt totaling $0.5 million, which constituted 0.4% of our securities portfolio. This fixed-to-floating corporate note was issued by a minority-led Community Development Financial Institution. Corporate Subordinated Debt. At December 31, 2023, we had corporate subordinated debt totaling $9.0 million, which constituted 7.4% of our securities portfolio.
We sell a portion of fixed-rate conforming loans that we originate on a servicing-retained basis. Secondary market investors that purchase our loans may include Freddie Mac, the New Hampshire Housing Finance Authority and other investors. At December 31, 2022, 3.1% of our one- to four-family residential real estate loans were adjustable-rate loans.
We sell a portion of fixed-rate conforming loans that we originate on a servicing-retained basis. Secondary market investors that purchase our loans may include Freddie Mac, the New Hampshire Housing Finance Authority and other investors. At December 31, 2023, 3.9% of our one- to four-family residential real estate loans were adjustable-rate loans.
At December 31, 2022, the average loan balance outstanding in the acquisition, development and land loan portfolio was $313,000. We originate loans to finance the construction or rehabilitation of owner-occupied one- to four-family residential properties to the prospective homeowners primarily located in our market area. Upon completion of construction, such loans convert to permanent mortgage loans.
At December 31, 2023, the average loan balance outstanding in the acquisition, development and land loan portfolio was $388,000. We originate loans to finance the construction or rehabilitation of owner-occupied one- to four-family residential properties to the prospective homeowners primarily located in our market area. Upon completion of construction, such loans convert to permanent mortgage loans.
In addition, commercial and industrial loans often result in larger outstanding balances to single borrowers, or related groups of borrowers, and also generally require substantially greater evaluation and oversight efforts. Accordingly, financial information is obtained from the borrowers to evaluate cash flow sufficiency and is periodically updated during the life of the loan.
In addition, commercial and industrial loans often result in larger outstanding balances to single borrowers, or related groups of borrowers, and also generally require substantially greater evaluation and oversight efforts. Accordingly, financial information is obtained from the borrowers to evaluate cash flow sufficiency and is periodically updated during the life of the loan. Home Equity Loans and Lines of Credit.
These concessions include a modification of terms, such as a reduction of the stated interest rate or loan balance, a reduction of accrued interest, an extension of the maturity date at an interest rate lower than current market rate for a new loan with similar risk or some combination thereof to facilitate payment. TDRs are considered impaired loans.
These concessions included a modification of terms, such as a reduction of the stated interest rate or loan balance, a reduction of accrued interest, an extension of the maturity date at an interest rate lower than current market rate for a new loan with similar risk or some combination thereof to facilitate payment. TDRs were considered impaired loans.
Adjustable Rate Loans. The following table sets forth our fixed- and adjustable-rate loans at December 31, 2022 that are contractually due after December 31, 2023.
Adjustable Rate Loans. The following table sets forth our fixed- and adjustable-rate loans at December 31, 2023 that are contractually due after December 31, 2024.
Generally, loans 90 days or more past due are placed on non-accrual status and classified “substandard.” Management reviews the status of each impaired loan on our watch list on a quarterly basis.
Generally, loans 90 days or more past due are placed on non-accrual status and classified “substandard.” Management reviews the status of each individually evaluated loan on our watch list on a quarterly basis.
The amount of the allowance is based on management’s evaluation of the collectability of the loan portfolio, including the nature of the portfolio, credit concentrations, trends in historical loss experience, specific impaired loans, potential problem loans and economic conditions. Allowances for impaired loans are generally determined based on collateral values or the present value of estimated cash flows.
The amount of the ALL was based on management’s evaluation of the collectability of the loan portfolio, including the nature of the portfolio, credit concentrations, trends in historical loss experience, specific impaired loans, potential problem loans and economic conditions. Allowances for impaired loans are generally determined based on collateral values or the present value of estimated cash flows.
At December 31, 2022, our largest land loan had an outstanding balance of $134,000, and it was performing in accordance with its original repayment terms. Land development loans generally involve greater credit risk than long-term financing on developed real estate.
At December 31, 2023, our largest land loan had an outstanding balance of $563,000, and it was performing in accordance with its original repayment terms. Land development loans generally involve greater credit risk than long-term financing on developed real estate.
The Company is amortizing the customer list intangible on a straight-line basis over a ten-year period. During the year ended December 31, 2022 and 2021, $34,000 and $13,000 of amortization expense was recorded, respectively. First Seacoast Bank is active in the communities we serve.
The Company is amortizing the customer list intangible on a straight-line basis over a ten-year period. During the year ended December 31, 2023 and 2022, $30,000 and $34,000 of amortization expense was recorded, respectively. First Seacoast Bank is active in the communities we serve.
Government-Sponsored Enterprises Obligations. At December 31, 2022, we had government-sponsored enterprise obligations issued by various U.S. Government agencies totaling $1.8 million, which constituted 1.7% of our securities portfolio. The Company invests primarily in Federal Farm Credit Bank and Federal National Mortgage Association ("FNMA" or "Fannie Mae"). U.S. Government Agency Small Business Administration Pools.
Government-Sponsored Enterprises Obligations. At December 31, 2023, we had government-sponsored enterprise obligations issued by various U.S. Government agencies totaling $1.4 million, which constituted 1.1% of our securities portfolio. The Company invests primarily in Federal Farm Credit Bank and Federal National Mortgage Association ("FNMA" or "Fannie Mae"). U.S. Government Agency Small Business Administration Pools.
On August 17, 2021, the Bank entered into a definitive agreement with an investment advisory and wealth management firm (the “seller”) to purchase certain of its client accounts and client relationships for a purchase price of $347,000 (included in other assets at December 31, 2022 and 2021, net of amortization), of which $172,000 was paid at closing.
On August 17, 2021, the Bank entered into a definitive agreement with an investment advisory and wealth management firm (the “seller”) to purchase certain of its client accounts and client relationships for a final adjusted purchase price of $324,000 (included in other assets at December 31, 2023 and 2022, net of amortization), of which $172,000 was paid at closing.
At December 31, 2022, our largest commercial real estate construction loan had an outstanding balance of $1.5 million, and it was performing in accordance with its original repayment terms. Construction loans generally involve greater credit risk than financing improved real estate, because funds are advanced upon the security of the project, which is of uncertain value before its completion.
At December 31, 2023, our largest commercial real estate construction loan had an outstanding balance of $2.0 million, and it was performing in accordance with its original repayment terms. Construction loans generally involve greater credit risk than financing improved real estate, because funds are advanced upon the security of the project, which is of uncertain value before its completion.
Changes in economic conditions, such as the economic uncertainties of COVID-19, that are not in the control of the borrower or lender could affect the value of the collateral for the loan or the future cash flow of the property. Additionally, any decline in real estate values may be more pronounced for commercial and multi-family real estate than residential properties.
Changes in economic conditions that are not in the control of the borrower or lender could affect the value of the collateral for the loan or the future cash flow of the property. Additionally, any decline in real estate values may be more pronounced for commercial and multi-family real estate than residential properties.
We also purchase participation interests in commercial and multi-family real estate loans in which we are not the lead originating lender. At December 31, 2022 and 2021, we had outstanding participation interests totaling $16.5 million and $21.3 million, respectively.
We also purchase participation interests in commercial and multi-family real estate loans in which we are not the lead originating lender. At December 31, 2023 and 2022, we had outstanding participation interests totaling $15.3 million and $16.5 million, respectively.
Management’s periodic evaluation of the adequacy of the allowance is based on various factors, including, but not limited to, management’s ongoing review and grading of loans, facts and issues related to specific loans, historical loan loss and delinquency experience, trends in past due and non-accrual loans, existing risk characteristics of specific loans or loan pools, the fair value of underlying collateral, current economic conditions and other qualitative and quantitative factors which could affect potential credit losses.
Management’s periodic evaluation of the adequacy of the ALL was based on various factors, including, but not limited to, management’s ongoing review and grading of loans, facts and issues related to specific loans, historical loan loss and delinquency experience, trends in past due and non-accrual loans, existing risk characteristics of specific loans or loan pools, the fair value of underlying collateral, current economic conditions and other qualitative and quantitative factors which would affect potential credit losses. 15 Allowance for Credit Losses on Loans .
A financial institution’s deduction for charitable contributions is limited to 10% of its federal taxable income with the excess carried forward to the succeeding five taxable years. Any contributions remaining after the five-year carryover period that has not been deducted is no longer deductible. At December 31, 2022, the Company had $633,000 of charitable contribution carryovers. 26 Capital Loss Carryovers.
A financial institution’s deduction for charitable contributions is limited to 10% of its federal taxable income with the excess carried forward to the succeeding five taxable years. Any contributions remaining after the five-year carryover period that has not been deducted is no longer deductible. At December 31, 2023, the Company had $654,000 of charitable contribution carryovers. 27 Capital Loss Carryovers.
As of December 31, 2022 and 2021, approximately $23.0 million and $17.4 million, respectively, of purchased client accounts are included in total assets under management. The client accounts purchased are recorded as a customer list intangible asset. Identifiable intangible assets that are subject to amortization will be reviewed for impairment, at least annually, based on their fair value.
As of December 31, 2023 and 2022, approximately $25.7 million and $23.0 million of purchased client accounts are included in total assets under management, respectively. The client accounts purchased are recorded as a customer list intangible asset. Identifiable intangible assets that are subject to amortization will be reviewed for impairment, at least annually, based on their fair value.
As of December 31, 2022, we had 81 total employees and 80 full-time equivalent employees. Our employees are not represented by any collective bargaining group. Management believes that we have a good working relationship with our employees. The safety, health and wellness of our employees is a top priority.
As of December 31, 2023, we had 76 total/full-time equivalent employees. Our employees are not represented by any collective bargaining group. Management believes that we have a good working relationship with our employees. The safety, health and wellness of our employees is a top priority.
For the years ended December 31, 2022 and 2021, we sold $637,000 and $6.2 million, respectively, of our one- to four-family residential real estate loans. In addition to purchasing consumer loans secured by manufactured housing properties, as discussed above under “Consumer Loans,” we purchase one- to four-family jumbo residential real estate loans to supplement our own origination efforts.
For the years ended December 31, 2023 and 2022, we sold $417,000 and $637,000, respectively, of our one- to four-family residential real estate loans. In addition to purchasing consumer loans secured by manufactured housing properties, as discussed above under “Consumer Loans,” we purchase one- to four-family jumbo residential real estate loans to supplement our own origination efforts.
Our one- to four-family residential loan portfolio consists of mortgage loans that enable borrowers to purchase or refinance existing homes, substantially all of which are collateralized by the primary residence of the borrower. At December 31, 2022, we had $251.4 million of loans secured by one- to four-family residential real estate, representing 62.9% of our total loan portfolio.
Our one- to four-family residential loan portfolio consists of mortgage loans that enable borrowers to purchase or refinance existing homes, substantially all of which are collateralized by the primary residence of the borrower. At December 31, 2023, we had $268.9 million of loans secured by one- to four-family residential real estate, representing 62.5% of our total loan portfolio.
We refer to loans that conform to such guidelines as “conforming loans.” To a lesser extent, we also originate loans above the conforming limits, which are referred to as “jumbo loans.” We generally underwrite jumbo loans in a manner similar to conforming loans. At December 31, 2022, 96.9% of our one- to four-family residential real estate loans were fixed-rate loans.
We refer to loans that conform to such guidelines as “conforming loans.” We also originate loans above the conforming limits, which are referred to as “jumbo loans.” We generally underwrite jumbo loans in a manner similar to conforming loans. At December 31, 2023, 96.1% of our one- to four-family residential real estate loans were fixed-rate loans.
By law, all savings and loan holding companies must serve as a source of financial and managerial strength to their subsidiary depository institutions. 25 Dividends and Stock Repurchases. The Federal Reserve Board has issued a policy statement regarding the payment of dividends by holding companies.
By law, all savings and loan holding companies must serve as a source of financial and managerial strength to their subsidiary depository institutions. 26 Dividends and Stock Repurchases. The Federal Reserve Board has issued a policy statement regarding the payment of dividends and other capital distributions by holding companies.
Loans on non-accrual status at the date of modification are initially classified as a non-accrual TDR. Our policy provides that TDR loans are returned to accrual status after a period of satisfactory and reasonable future payment performance under the terms of the restructuring. Satisfactory payment performance is generally no less than six consecutive months of timely payments.
Loans on non-accrual status at the date of modification were initially classified as a non-accrual TDR. Our policy provided that TDR loans were returned to accrual status after a period of satisfactory and reasonable future payment performance under the terms of the restructuring. Satisfactory payment performance was generally no less than six consecutive months of timely payments.
Although we believe that we use the best information available to establish the allowance for loan losses, future adjustments to the allowance for loan losses may be necessary and results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations.
Although we believe that we use the best information available to establish the ACL, future adjustments to the ACL may be necessary and results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations.
At December 31, 2022, our largest individual residential construction loan outstanding was $1.7 million and it was performing in accordance with its original repayment terms. 7 We also originate loans to finance the construction of commercial properties, primarily owner-occupied properties located in our market area. Upon completion of construction, such loans generally convert to permanent commercial mortgage loans.
At December 31, 2023, our largest individual residential construction loan outstanding was $774,000 and it was performing in accordance with its original repayment terms. We also originate loans to finance the construction of commercial properties, primarily owner-occupied properties located in our market area. Upon completion of construction, such loans generally convert to permanent commercial mortgage loans.
This loan was performing in accordance with its original repayment terms at December 31, 2022. At December 31, 2022, the average loan balance outstanding in the multi-family real estate loans portfolio was $744,000, and the largest individual multi-family real estate loan outstanding was a $4.6 million participation loan secured by a 204-unit property.
This loan was performing in accordance with its original repayment terms at December 31, 2023. At December 31, 2023, the average loan balance outstanding in the multi-family real estate loans portfolio was $758,000, and the largest individual multi-family real estate loan outstanding was a $4.5 million participation loan secured by a 204-unit property.
This loan was performing in accordance with its original repayment terms at December 31, 2022. Acquisition, Development and Land Loans. At December 31, 2022, acquisition, development and land loans were $18.5 million, or 4.6%, of our total loan portfolio. These loans consist of residential construction loans, commercial and multi-family real estate construction loans and land loans.
This loan was performing in accordance with its original repayment terms at December 31, 2023. Acquisition, Development and Land Loans. At December 31, 2023, acquisition, development and land loans were $17.5 million, or 4.1%, of our total loan portfolio. These loans consist of residential construction loans, commercial and multi-family real estate construction loans and land loans.
Because of uncertainties associated with regional economic conditions, collateral values and future cash flows on impaired loans, it is reasonably possible that management’s estimate of probable credit losses inherent in the loan portfolio and the related allowance may change materially in the near-term.
Because of uncertainties associated with regional economic conditions, collateral values and future cash flows on impaired loans, it was reasonably possible that management’s estimate of probable credit losses inherent in the loan portfolio and the related ALL would change materially in the near-term.
The allowance for loan losses allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories.
The ACL and ALL allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories.
We work with a third-party construction management firm that reviews each project before we approve the loan and continues to monitor and inspect the project during the construction phase, as disbursements are made.
Small Business Administration 504 Loan program. We work with a third-party construction management firm that reviews each project before we approve the loan and continues to monitor and inspect the project during the construction phase, as disbursements are made.
During 2022 and 2021, we purchased $1.3 million and $14.1 million, respectively, of one- to four-family jumbo residential real estate loans secured by properties located in the greater Boston market. As of December 31, 2022, the portfolio of purchased residential real estate loans had outstanding principal balances of $25.1 million and were performing in accordance with their original repayment terms.
During 2023 and 2022, we purchased $780,000 and $1.3 million, respectively, of one- to four-family jumbo residential real estate loans secured by properties located in the greater Boston market. As of December 31, 2023, the portfolio of purchased residential real estate loans had outstanding principal balances of $24.7 million and were performing in accordance with their original repayment terms.
A financial institution may carry net operating losses forward indefinitely but is limited to 80% of each subsequent year's taxable income. At December 31, 2022, the Company had $2.7 million of net operating loss carryovers. Charitable Contribution Carryovers.
A financial institution may carry net operating losses forward indefinitely but is limited to 80% of each subsequent year's taxable income. At December 31, 2023, the Company had $9.8 million of net operating loss carryovers. Charitable Contribution Carryovers.
As an integral part of their examination process, the Office of the Comptroller of the Currency will periodically review our allowance for loan losses, and as a result of such reviews, we may have to adjust our allowance for loan losses.
As an integral part of their examination process, the Office of the Comptroller of the Currency will periodically review our ACL, and as a result of such reviews, we may have to adjust our ACL.
At December 31, 2022, we had government-sponsored mortgage-backed securities and collateralized mortgage obligations issued by the FHLMC, FNMA and Government National Mortgage Association (“GNMA”) totaling $28.0 million, which constituted 26.4% of our securities portfolio. Mortgage-backed securities are securities issued in the secondary market that are collateralized by pools of mortgages.
At December 31, 2023, we had government-sponsored mortgage-backed securities and collateralized mortgage obligations issued by the FHLMC, FNMA and Government National Mortgage Association (“GNMA”) totaling $38.2 million, which constituted 31.4% of our securities portfolio. Mortgage-backed securities are securities issued in the secondary market that are collateralized by pools of mortgages.
At December 31, 2022, commercial construction loan balances totaled $6.6 million, or 1.7% of our total loan portfolio, with an additional $6.2 million available for advance to borrowers.
At December 31, 2023, commercial construction loan balances totaled $11.4 million, or 2.7% of our total loan portfolio, with an additional $7.6 million available for advance to borrowers.
We also originate loans to finance the acquisition and development of land. Land development loans are generally secured by vacant land located in our primary market and in process of improvement. At December 31, 2022, land development loan balances were $945,000, or 0.2%, of our total loan portfolio.
We also originate loans to finance the acquisition and development of land. Land development loans are generally secured by vacant land located in our primary market and in process of improvement. At December 31, 2023, land development loan balances were $1.2 million, or 0.3%, of our total loan portfolio.
At December 31, 2022 2021 (Dollars in thousands) Non-accrual loans: One- to four-family residential real estate $ 84 $ 722 Commercial real estate — — Acquisition, development and land — — Commercial and industrial — — Home equity loans and lines of credit — 115 Multi-family — — Consumer 5 — Total non-accrual loans $ 89 $ 837 Accruing loans past due 90 days or more — — Total non-performing loans $ 89 $ 837 Total real estate owned — — Total non-performing assets $ 89 $ 837 Total accruing troubled debt restructurings 189 — Total non-performing assets and accruing troubled debt restructurings $ 278 $ 837 Total non-performing loans as a percent of total loans 0.02 % 0.22 % Total non-performing assets as a percent of total assets 0.02 % 0.17 % Total non-performing assets and accruing troubled debt restructurings as a percent of total assets 0.05 % 0.17 % Non-performing Loans.
At December 31, 2023 2022 (Dollars in thousands) Non-accrual loans: One- to four-family residential real estate $ 127 $ 84 Commercial real estate — — Acquisition, development and land — — Commercial and industrial — — Home equity loans and lines of credit 14 — Multi-family — — Consumer — 5 Total non-accrual loans $ 141 $ 89 Accruing loans past due 90 days or more — — Total non-performing loans $ 141 $ 89 Total real estate owned — — Total non-performing assets $ 141 $ 89 Total accruing troubled debt restructurings — 189 Total non-performing assets and accruing troubled debt restructurings $ 141 $ 278 Total non-performing loans as a percent of total loans 0.03 % 0.02 % Total non-performing assets as a percent of total assets 0.02 % 0.02 % Total non-performing assets and accruing troubled debt restructurings as a percent of total assets 0.02 % 0.05 % Non-performing Loans.
At December 31, 2022, we had government-sponsored small business investment company (“SBIC”) pools issued and guaranteed by the SBA totaling $8.4 million, which constituted 7.9% of our securities portfolio. An SBIC is a privately owned and managed investment fund licensed and regulated by the SBA.
At December 31, 2023, we had government-sponsored small business investment company (“SBIC”) pools issued and guaranteed by the SBA totaling $15.6 million, which constituted 12.8% of our securities portfolio. An SBIC is a privately owned and managed investment fund licensed and regulated by the SBA.
The allowance is increased by a provision for loan losses, which is charged to expense and reduced by full and partial charge-offs, net of recoveries. Changes in the allowance relating to impaired loans are charged or credited to the provision for loan losses.
The ALL was increased by a provision for loan losses, which was charged to expense and reduced by full and partial charge-offs, net of recoveries. Changes in the ALL relating to impaired loans were charged or credited to the provision for loan losses.
At December 31, 2022, based on the 15% limitation, our loans-to-one-borrower limit was approximately $8.0 million. At December 31, 2022, our largest loan relationship with one borrower was for $7.1 million. These loans are secured primarily by owner-occupied commercial real estate properties which were performing in accordance with their original repayment terms.
At December 31, 2023, based on the 15% limitation, our loans-to-one-borrower limit was approximately $8.4 million. At December 31, 2023, our largest loan relationship with one borrower was for $6.7 million. These loans are secured primarily by commercial real estate which were performing in accordance with their original repayment terms.
When a loan is determined to be impaired, the measurement of the loan in the allowance for loan losses is based on present value of expected future cash flows, except that all collateral-dependent loans are measured for impairment based on the fair value of the collateral.
When a loan is determined to be non-performing, the measurement of the loan in the allowance for credit losses ("ACL") is based on present value of expected future cash flows, except that all collateral-dependent loans are measured for non-performance based on the fair value of the collateral.
An SBIC uses its own capital, plus funds borrowed with an SBA guarantee, to make equity and debt investments in qualifying small businesses. Municipal Bonds. At December 31, 2022, we had municipal bonds totaling $62.4 million, which constituted 58.8% of our securities portfolio, with an average maturity of 18 years. These securities often provide slightly higher after-tax yields than U.S.
An SBIC uses its own capital, plus funds borrowed with an SBA guarantee, to make equity and debt investments in qualifying small businesses. Municipal Bonds. At December 31, 2023, we had municipal bonds totaling $54.7 million, which constituted 44.9% of our securities portfolio, with an average maturity of 20 years. These securities often provide slightly higher after-tax yields than U.S.
In addition, repayment of these loans can be dependent on the sale of the property to third parties, and the ultimate sale or rental of the property may not occur as anticipated. Commercial and Industrial Loans . At December 31, 2022, we had $24.1 million of commercial and industrial loans representing 6.0% of our total loan portfolio.
In addition, repayment of these loans can be dependent on the sale of the property to third parties, and the ultimate sale or rental of the property may not occur as anticipated. Commercial and Industrial Loans . At December 31, 2023, we had $25.5 million of commercial and industrial loans representing 5.9% of our total loan portfolio.
The following table sets forth the allowance for loan losses allocated by loan category, the total loan balances by category and the percent of loans in each category to total loans at the dates indicated.
The following table sets forth the ACL and ALL allocated by loan category, the total loan balances by category and the percent of loans in each category to total loans at the dates indicated.
At December 31, 2022 and 2021, uninsured time deposits totaled $2.8 million and $1.8 million, respectively. The following table sets forth the maturity of uninsured time deposits as of December 31, 2022 and 2021.
At December 31, 2023 and 2022, uninsured time deposits totaled $7.4 million and $2.8 million, respectively. The following table sets forth the maturity of uninsured time deposits as of December 31, 2023 and 2022.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table sets forth information regarding our offices as of December 31, 2022: Location Leased or Owned Year Acquired or Leased Net Book Value of Real Property (In thousands) Main Office: Owned 1890 $ 1,233 633 Central Avenue Dover, NH 03820 Branch Offices: 6 Eastern Avenue Owned 1974 $ 936 Barrington, NH 03825 7A Mill Road Leased 1979 $ 27 Durham, NH 03824 1650 Woodbury Avenue Owned 1987 $ 876 Portsmouth, NH 03801 17 Wakefield Street Owned 2009 $ 1,108 Rochester, NH 03867 We believe that current facilities are adequate to meet our present and foreseeable needs, subject to possible future expansion.
Biggest changeThe following table sets forth information regarding our offices as of December 31, 2023: Location Leased or Owned Year Acquired or Leased Net Book Value of Real Property (In thousands) Main Office and Annex: Owned 1890 $ 1,202 633/629 Central Avenue Dover, NH 03820 Branch Offices: 6 Eastern Avenue Owned 1974 $ 917 Barrington, NH 03825 7A Mill Road Leased 1979 $ 34 Durham, NH 03824 1650 Woodbury Avenue Owned 1987 $ 833 Portsmouth, NH 03801 17 Wakefield Street Owned 2009 $ 1,086 Rochester, NH 03867 We believe that current facilities are adequate to meet our present and foreseeable needs, subject to possible future expansion.
ITEM 2. Pr operties As of December 31, 2022, the net book value of our land, building and equipment was $4.2 million.
ITEM 2. Pr operties As of December 31, 2023, the net book value of our land, building and equipment was $4.1 million.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAt December 31, 2022, we were not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows. ITEM 4. Mine Saf ety Disclosures Not applicable. 28 PART II
Biggest changeAt December 31, 2023, we were not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows. ITEM 4. Mine Saf ety Disclosures Not applicable. 30 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDuring the quarter ended December 31, 2022, First Seacoast Bancorp (a federal Corporation) did not repurchase any shares of its common stock. The repurchase program of First Seacoast Bancorp (a federal corporation) was terminated effective January 19, 2023, in connection with the consummation of the conversion of First Seacoast Bancorp, MHC from mutual to stock form.
Biggest changeThe repurchase program of First Seacoast Bancorp (a federal corporation) was terminated effective January 19, 2023, in connection with the consummation of the conversion of First Seacoast Bancorp, MHC from mutual to stock form. The Company did not repurchase any shares of its common stock during the quarter ended December 31, 2023.
There were no sales of unregistered securities during the year ended December 31, 2022.
There were no sales of unregistered securities during the year ended December 31, 2023.
As of March 14, 2023, we had 371 stockholders of record (excluding the number of persons or entities holding stock in street name through various brokerage firms), and 5,075,345 shares of common stock outstanding.
As of March 22, 2024, we had 342 stockholders of record (excluding the number of persons or entities holding stock in street name through various brokerage firms), and 5,077,164 shares of common stock outstanding.
On September 30, 2020, the board of directors of First Seacoast Bancorp (a federal corporation), predecessor to the Company, authorized the repurchase of up to 136,879 shares of common stock of First Seacoast Bancorp (a federal corporation). As of December 31, 2022, First Seacoast Bancorp (a federal corporation) had repurchased 136,879 shares of its common stock.
On September 23, 2020, the board of directors of First Seacoast Bancorp (a federal corporation), predecessor to the Company, authorized the repurchase of up to 114,403 shares of common stock (adjusted for conversion of First Seacoast Bancorp, Inc.) of First Seacoast Bancorp (a federal corporation).
Added
As of December 31, 2022, First Seacoast Bancorp (a federal corporation) had repurchased 114,403 shares of its common stock (adjusted for conversion of First Seacoast Bancorp, Inc.).

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeAt or For the Year Ended December 31, 2022 2021 2020 (In thousands, except per share data) Selected Financial Condition Data: Total assets $ 537,424 $ 487,074 $ 443,062 Total loans 402,505 376,641 368,142 Total deposits 382,363 393,243 327,381 Total borrowings 99,397 29,462 52,322 Total stockholders' equity 49,337 60,468 58,861 Book value per share $ 8.14 $ 9.88 $ 9.72 Selected Operating Data: Interest and dividend income $ 16,610 $ 15,495 $ 15,850 Interest expense 1,747 1,235 3,174 Net interest and dividend income 14,863 14,260 12,676 Provision for loan losses — 205 480 Net interest and dividend income after provision for loan losses 14,863 14,055 12,196 Non-interest income 888 2,249 2,046 Non-interest expense 16,767 13,082 13,187 (Loss) income before income tax (benefit) expense (1,016 ) 3,222 1,055 Income tax (benefit) expense (451 ) 601 (24 ) Net (loss) income $ (565 ) $ 2,621 $ 1,079 Share Data: Average shares outstanding, basic 5,767,325 5,817,509 5,865,098 Average shares outstanding, diluted 5,767,325 5,817,509 5,865,098 Total shares outstanding 6,064,298 6,123,337 6,058,024 Basic (loss) earnings per share $ (0.10 ) $ 0.45 $ 0.18 Diluted (loss) earnings per share $ (0.10 ) $ 0.45 $ 0.18 30 At or For the Year Ended December 31, 2022 2021 2020 Performance Ratios: Return on average assets (1) (0.11 )% 0.55 % 0.24 % Return on average equity (2) (1.05 )% 4.38 % 1.85 % Interest rate spread (3) 2.86 % 2.94 % 2.65 % Net interest margin (4) 2.99 % 3.04 % 2.88 % Non-interest expenses as a percent of average assets 3.27 % 2.73 % 2.91 % Efficiency ratio (5) 106.45 % 79.24 % 89.57 % Average interest-earning assets as a percent of average interest-bearing liabilities 136.99 % 139.51 % 131.48 % Average equity as a percent of average assets (6) 10.47 % 12.48 % 12.91 % Capital Ratios (First Seacoast Bank Only): Total Capital (to risk-weighted assets) 15.53 % 17.87 % 17.92 % Tier 1 Capital (to risk-weighted assets) 14.45 % 16.63 % 16.72 % Common Equity Tier 1 (to risk-weighted assets) 14.45 % 16.63 % 16.72 % Tier 1 Capital (to average assets) 9.20 % 9.92 % 10.59 % Asset Quality Ratios: Allowance for loan losses as a percent of total loans 0.89 % 0.95 % 0.91 % Allowance for loan losses as a percent of non-performing loans 4,023.60 % 428.91 % 378.05 % Net recoveries (charge-offs) as a percent of average outstanding loans during the year — 0.01 % — Non-performing loans as a percent of total loans 0.02 % 0.22 % 0.24 % Non-performing loans as a percent of total assets 0.02 % 0.17 % 0.20 % Non-performing assets as a percent of total assets 0.02 % 0.17 % 0.20 % Other Data: Number of offices 5 5 5 Number of full-time equivalent employees 80 81 78 (1) Represents net income divided by average total assets.
Biggest changeAt or For the Year Ended December 31, 2023 2022 2021 (In thousands, except per share data) Selected Financial Condition Data: Total assets $ 571,035 $ 537,424 $ 487,074 Total loans 430,031 402,505 376,641 Total deposits 404,798 382,363 393,243 Total borrowings 93,007 99,397 29,462 Total stockholders' equity 66,618 49,337 60,468 Book value per share (1) $ 13.12 $ 9.73 $ 11.81 Selected Operating Data: Interest and dividend income $ 20,590 $ 16,610 $ 15,495 Interest expense 9,080 1,747 1,235 Net interest and dividend income 11,510 14,863 14,260 Provision for credit losses 188 — 205 Net interest and dividend income after provision for credit losses 11,322 14,863 14,055 Non-interest (loss) income (2,007 ) 888 2,249 Non-interest expense 16,027 16,767 13,082 (Loss) income before income tax expense (benefit) (6,712 ) (1,016 ) 3,222 Income tax expense (benefit) 3,944 (451 ) 601 Net (loss) income $ (10,656 ) $ (565 ) $ 2,621 Share Data (1) : Average shares outstanding, basic 4,650,916 4,820,330 4,862,274 Average shares outstanding, diluted 4,650,916 4,820,330 4,862,274 Total shares outstanding 5,077,164 5,068,637 5,117,982 Basic (loss) earnings per share $ (2.29 ) $ (0.12 ) $ 0.54 Diluted (loss) earnings per share $ (2.29 ) $ (0.12 ) $ 0.54 (1) Adjusted for conversion of the former First Seacoast Bancorp, MHC. 32 At or For the Year Ended December 31, 2023 2022 2021 Performance Ratios: Return on average assets (1) (1.93 )% (0.11 )% 0.55 % Return on average equity (2) (15.10 )% (1.05 )% 4.38 % Interest rate spread (3) 1.59 % 2.86 % 2.94 % Net interest margin (4) 2.16 % 2.99 % 3.04 % Non-interest expenses as a percent of average assets 2.91 % 3.27 % 2.73 % Efficiency ratio (5) 168.65 % 106.45 % 79.24 % Average interest-earning assets as a percent of average interest-bearing liabilities 133.23 % 136.99 % 139.51 % Average equity as a percent of average assets (6) 12.81 % 10.47 % 12.48 % Capital Ratios (First Seacoast Bank Only): Total Capital (to risk-weighted assets) 15.32 % 15.53 % 17.87 % Tier 1 Capital (to risk-weighted assets) 14.27 % 14.45 % 16.63 % Common Equity Tier 1 (to risk-weighted assets) 14.27 % 14.45 % 16.63 % Tier 1 Capital (to average assets) 9.19 % 9.20 % 9.92 % Asset Quality Ratios: Allowance for credit losses on loans as a percent of total loans 0.79 % 0.89 % 0.95 % Allowance for credit losses on loans as a percent of non-performing loans 2,404.26 % 4,023.60 % 428.91 % Net recoveries as a percent of average outstanding loans during the year — — 0.01 % Non-performing loans as a percent of total loans 0.03 % 0.02 % 0.22 % Non-performing loans as a percent of total assets 0.02 % 0.02 % 0.17 % Non-performing assets as a percent of total assets 0.02 % 0.02 % 0.17 % Other Data: Number of offices 5 5 5 Number of full-time equivalent employees 76 80 81 (1) Represents net loss divided by average total assets.
No tax-equivalent yield adjustments have been made, as the effects would be immaterial. All average balances are daily average balances. Non-accrual loans are included in the computation of average balances only. The yields set forth below include the effect of net deferred fee income, discounts and premiums that are amortized or accreted to interest income or interest expense.
No tax-equivalent yield adjustments have been made, as the effects would be immaterial. All average balances are daily average balances. Non-accrual loans are included in the computation of average balances only. The yields set forth below include the effect of net deferred fee expense, discounts and premiums that are amortized or accreted to interest income or interest expense.
These techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. 33 Certain of the Company's financial assets are measured at fair value on a recurring or non-recurring basis.
These techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Certain of the Company's financial assets are measured at fair value on a recurring or non-recurring basis.
Management determines that a loan is impaired or non-performing when it is probable at least a portion of the loan will not be collected in accordance with the original terms due to a deterioration in the financial condition of the borrower or the value of the underlying collateral if the loan is collateral-dependent.
Management determines that a loan is non-performing when it is probable at least a portion of the loan will not be collected in accordance with the original terms due to a deterioration in the financial condition of the borrower or the value of the underlying collateral if the loan is collateral dependent.
These fair value measurements are significantly impacted by changes in market interest rates and current economic conditions as compared to the coupon rates for the derivatives. We obtain a monthly interest rate volatility report to monitor the volatility of our derivatives portfolio.
These fair value measurements are significantly impacted by changes in market interest rates and current economic conditions as compared to 36 the coupon rates for the derivatives. We obtain a monthly interest rate volatility report to monitor the volatility of our derivatives portfolio.
In recent years, we have sought to supplement these originations by focusing on originating higher yielding commercial real estate loans (including owner-occupied and non-owner-occupied commercial real estate and multi-family real estate loans), construction loans, commercial and industrial loans and home equity loans and lines of credit.
In recent years, we have sought to supplement these originations by focusing on originating higher 33 yielding commercial real estate loans (including owner-occupied and non-owner-occupied commercial real estate and multi-family real estate loans), construction loans, commercial and industrial loans and home equity loans and lines of credit.
(2) Represents net income divided by average equity. (3) Represents the difference between the weighted average yield on average interest-earning assets and the weighted average cost of average interest-bearing liabilities. (4) Represents net interest income divided by average interest-earning assets. (5) Represents non-interest expense divided by the sum of net interest and dividend income and non-interest income.
(2) Represents net loss divided by average equity. (3) Represents the difference between the weighted average yield on average interest-earning assets and the weighted average cost of average interest-bearing liabilities. (4) Represents net interest income divided by average interest-earning assets. (5) Represents non-interest expense divided by the sum of net interest and dividend income and non-interest income.
Factors such as inflation, recession, and instability in financial markets, among other factors beyond our control, may affect interest rates. 41 In a rising interest rate environment, we would expect that the rates on our deposits and borrowings would reprice upwards faster than the rates on our long-term loans and investments, which would be expected to compress our interest rate spread and have a negative effect on our profitability.
Factors such as inflation, recession, and instability in financial markets, among other factors beyond our control, may affect interest rates. 43 In a rising interest rate environment, we would expect that the rates on our deposits and borrowings would reprice upwards faster than the rates on our long-term loans and investments, which would be expected to compress our interest rate spread and have a negative effect on our profitability.
Under these circumstances, we are subject to reinvestment risk as we may have to redeploy such loan or securities proceeds into lower-yielding assets, which might also negatively impact our income. If interest rates rise, we expect that our economic value of equity would decrease.
Under these circumstances, we are subject to reinvestment risk as we may have to redeploy such loan or securities proceeds into lower-yielding assets, which might also negatively impact our income. If interest rates rise, we expect that our economic value of equity will decrease.
The reported amount of this component may be impacted by portfolio growth trends and concentrations, levels and trends of delinquencies and local and national economic trends and conditions. The allocated component relates to loans that are classified as impaired. Generally, our impaired loans are collateral-dependent and impairment is measured through the collateral method.
The reported amount of this component may be impacted by portfolio growth trends and concentrations, levels and trends of delinquencies and local and National economic trends and conditions. The allocated component related to loans that are classified as impaired. Generally, our impaired loans are collateral-dependent and impairment is measured through the collateral method.
We consider our primary lending market area to be Strafford and Rockingham Counties in New Hampshire and York County in southern Maine. 29 Selected Financial Data The following tables set forth selected historical financial and other data for the Company at the dates and for the periods indicated.
We consider our primary lending market area to be Strafford and Rockingham Counties in New Hampshire and York County in southern Maine. 31 Selected Financial Data The following tables set forth selected historical financial and other data for the Company at the dates and for the periods indicated.
At December 31, 2022 and 2021, fair values of loans are estimated on an exit price basis incorporating discounts for credit, liquidity and marketability factors. At December 31, 2022 and 2021, these factors have not materially impacted the estimated fair values of loans as compared to their carrying amounts.
At December 31, 2023 and 2022, fair values of loans are estimated on an exit price basis incorporating discounts for credit, liquidity and marketability factors. At December 31, 2023 and 2022, these factors have not materially impacted the estimated fair values of loans as compared to their carrying amounts.
Emerging Growth Company Status Under the JOBS Act, a company with total annual gross revenues of less than $1.07 billion (adjusted for inflation) during its most recently completed fiscal year qualifies as an “emerging growth company.” The Company qualifies as an emerging growth company under the JOBS Act.
Emerging Growth Company Status Under the JOBS Act, a company with total annual gross revenues of less than $1.235 billion (adjusted for inflation) during its most recently completed fiscal year qualifies as an “emerging growth company.” The Company qualifies as an emerging growth company under the JOBS Act.
We have been successful in maintaining strong asset quality in recent years. Our ratio of non-performing assets as a percent of total assets was 0.02%, 0.17% and 0.20%, at December 31, 2022, 2021 and 2020, respectively. We attribute this historical credit quality to a conservative credit culture and an effective credit risk management environment.
We have been successful in maintaining strong asset quality in recent years. Our ratio of non-performing assets as a percent of total assets was 0.02%, 0.02% and 0.17%, at December 31, 2023, 2022 and 2021, respectively. We attribute this historical credit quality to a conservative credit culture and an effective credit risk management environment.
Accordingly, although the table provides an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our NPV and will differ from actual results. Economic Value of Equity.
Accordingly, although the table provides an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our NPV and will differ from actual results.
Non-performing Assets. Non-performing assets include loans that are 90 or more days past due or on non-accrual status, including TDRs on non-accrual status, and real estate and other loan collateral acquired through foreclosure and repossession.
Non-performing Assets. Non-performing assets include loans that are 90 or more days past due or on non-accrual status and real estate and other loan collateral acquired through foreclosure and repossession.
The information at and for the year ended December 31, 2020 is derived in part from audited consolidated financial statements that are not included in this annual report.
The information at and for the year ended December 31, 2021 is derived in part from audited consolidated financial statements that are not included in this annual report.
At the same date, our analysis estimated that, in the event of an instantaneous 200 basis point decrease in interest rates, the Bank would experience a 10.2% increase in the economic value of equity. Any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on our financial condition, liquidity and results of operations.
At the same date, our analysis estimated that, in the event of an instantaneous 200 basis point decrease in interest rates, the Bank would experience a 11.3% increase in the economic value of equity. Any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on our financial condition, liquidity and results of operations.
Net cash used by investing activities, which consists primarily of disbursements for loan originations and loan purchases and the purchase of securities available-for-sale, offset by principal collections on loans, proceeds from sales, maturities and principal payments received on securities available-for-sale, was $58.1 million and $43.5 million for the years ended December 31, 2022 and 2021, respectively.
Net cash used by investing activities, which consists primarily of disbursements for loan originations and loan purchases and the purchase of securities available-for-sale, offset by principal collections on loans, proceeds from sales, maturities and principal payments received on securities available-for-sale, was $39.5 million and $58.1 million for the years ended December 31, 2023 and 2022, respectively.
We currently calculate NPV under the assumptions that interest rates increase 100, 200, 300 and 400 basis points from current market rates and that interest rates decrease 100, 200, 300 and 400 basis points from current market rates. 40 The following table presents the estimated changes in our net portfolio value that would result from changes in market interest rates as of December 31, 2022 and 2021.
We currently calculate NPV under the assumptions that interest rates increase 100, 200, 300 and 400 basis points from current market rates and that interest rates decrease 100, 200, 300 and 400 basis points from current market rates. 42 The following table presents the estimated changes in our net portfolio value that would result from changes in market interest rates as of December 31, 2023 and 2022.
We anticipate that we will have sufficient funds to meet our current funding commitments. We have no material commitments for capital expenditures as of December 31, 2022. Our current strategy is to increase core deposits and utilize FHLB advances and brokered deposits to fund loan growth.
We anticipate that we will have sufficient funds to meet our current funding commitments. We have no material commitments for capital expenditures as of December 31, 2023. Our current strategy is to increase core deposits and utilize FHLB and FRB advances, as well as brokered deposits, to fund loan growth.
This may include certain impaired loans reported at the fair value of the underlying collateral. The Company has no non-financial assets or non-financial liabilities measured at fair value on a recurring or non-recurring basis.
This may include certain individually evaluated loans reported at the fair value of the underlying collateral. The Company has no non-financial assets or non-financial liabilities measured at fair value on a recurring or non-recurring basis.
Additionally, at December 31, 2022, we had an overnight line of credit with the Federal Home Loan Bank for up to $3.0 million and unsecured Fed Funds borrowing lines of credit with two correspondent banks for up to $5.0 million. At December 31, 2022, there were no outstanding balances under any of these additional credit facilities.
Additionally, at December 31, 2023 and 2022, we had an overnight line of credit with the FHLB for up to $3.0 million and unsecured Fed Funds borrowing lines of credit with two correspondent banks for up to $5.0 million. At December 31, 2023 and 2022, there were no outstanding balances under any of these additional credit facilities.
Our allowance for loan losses as a percent of total loans decreased from 0.95% at December 31, 2021 to 0.89% at December 31, 2022, which primarily reflects the impact of our consideration of the current economic conditions that affect the qualitative factors used in the determination of the allowance for loan losses as they have evolved over these periods from the impact of the COVID-19 pandemic to inflationary pressures and geopolitical concerns, among other considerations.
Our ALL as a percent of total loans decreased from 0.95% at December 31, 2021 to 0.89% at December 31, 2022, which primarily reflected the impact of our consideration of the then current economic conditions that affect the qualitative factors used in the determination of the ALL as they have evolved over these periods from the impact of the COVID-19 pandemic to inflationary pressures and geopolitical concerns, among other considerations.
The following information is only a summary and should be read in conjunction with our consolidated financial statements and the notes thereto beginning on page 42 of this annual report. The information at and for the years ended December 31, 2022 and 2021 is derived in part from the audited consolidated financial statements included in this annual report.
The following information is only a summary and should be read in conjunction with our consolidated financial statements and the notes thereto of this annual report. The information at and for the years ended December 31, 2023 and 2022 is derived in part from the audited consolidated financial statements included in this annual report.
(4) Net deferred fee (expense) income included in loan interest totaled $(194,000) and $587,000 for the years ended December 31, 2022 and 2021, respectively. 39 Rate/Volume Analysis The following table presents the effects of changing rates and volumes on our net interest income for the years indicated.
(4) Net deferred fee expense included in loan interest totaled $374,000 and $194,000 for the years ended December 31, 2023 and 2022, respectively. 41 Rate/Volume Analysis The following table presents the effects of changing rates and volumes on our net interest income for the years indicated.
The weighted average rate of borrowings increased to 1.64% for the year ended December 31, 2022 from 1.57% for the year ended December 31, 2021 due primarily to an increase in market interest rates. Net Interest and Dividend Income.
The weighted average rate of borrowings increased to 4.70% for the year ended December 31, 2023 from 1.64% for the year ended December 31, 2022 due primarily to an increase in market interest rates. Net Interest and Dividend Income.
Accordingly, our consolidated financial statements may not be comparable to companies that comply with such new or revised accounting standards. 34 A company loses emerging growth company status on the earlier of: (i) the last day of the fiscal year of the company during which it had total annual gross revenues of $1.07 billion or more (adjusted for inflation); (ii) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the company pursuant to an effective registration statement under the Securities Act of 1933 (which will be December 31, 2024 for the Company); (iii) the date on which such company has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (iv) the date on which such company is deemed to be a “large accelerated filer” under Securities and Exchange Commission regulations (generally, at least $700 million of voting and non-voting equity held by non-affiliates).
A company loses emerging growth company status on the earlier of: (i) the last day of the fiscal year of the company during which it had total annual gross revenues of $1.235 billion or more (adjusted for inflation); (ii) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the company pursuant to an effective registration statement under the Securities Act of 1933 (which will be December 31, 2024 for the Company); (iii) the date on which such company has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; or (iv) the date on which such company is deemed to be a “large accelerated filer” under Securities and Exchange Commission regulations (generally, at least $700 million of voting and non-voting equity held by non-affiliates).
As of December 31, 2022 and 2021, the portfolios of purchased loans had outstanding principal balances of $30.5 million and $29.7 million, respectively, and were performing in accordance with their original repayment terms.
As of December 31, 2023 and 2022, the portfolios of purchased loans had outstanding principal balances of $33.3 million and $30.5, respectively, and were performing in accordance with their original repayment terms.
Core deposits (which we define as all deposits except for time deposits), particularly non-interest-bearing demand deposits, represent a low-cost, stable source of funds. Core deposits were 83.9% of our total deposits at December 31, 2022. We also rely on higher cost Federal Home Loan Bank borrowings as a supplemental funding source.
Core deposits (which we define as all deposits except for time deposits), particularly non-interest-bearing demand deposits, represent a low-cost, stable source of funds. Core deposits were 77.5% of our total deposits at December 31, 2023. We also rely on higher cost Federal Home Loan Bank and Federal Reserve Bank borrowings as supplemental funding sources.
At December 31, 2022 and 2021, there were no financial assets or liabilities measured at fair value on a non-recurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (i.e., where there is evidence of impairment).
At December 31, 2023 and 2022, there were no financial assets or liabilities measured at fair value on a non-recurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances.
We believe the following estimates are both important to the presentation of our consolidated financial condition and results of operations and require subjective or complex judgments and, therefore, we consider the accounting policies and estimates discussed below to be critical.
We believe the calculation of the ACL and the measurement of the fair value of financial instruments are both important to the presentation of our consolidated financial condition and results of operations and require subjective or complex judgments and, therefore, we consider the accounting policies and estimates discussed below to be critical.
The average balance of interest-bearing deposits increased $4.7 million, or 1.6%, to $297.0 million for the year ended December 31, 2022 from $292.4 million for the year ended December 31, 2021 primarily as a result of an increase in the average balance of NOW and demand and savings deposits offset by a decrease in the average balances of money market and time deposits.
The average balance of interest-bearing deposits increased $22.2 million, or 7.5%, to $319.2 million for the year ended December 31, 2023 from $297.0 million for the year ended December 31, 2022 primarily as a result of an increase in the average balance of money market, savings and time deposits offset by a decrease in the average balances of NOW and demand deposits.
When a loan is determined to be impaired, the measurement of the loan in the allowance for loan losses is based on present value of expected future cash flows, except that all collateral-dependent loans are measured for impairment based on the fair value of the collateral.
When a loan is determined to be non-performing, the measurement of the loan in the ACL on loans is based on present value of expected future cash flows, except that all collateral-dependent loans are measured for non-performance based on the fair value of the collateral.
We have no current plans or intentions regarding any such expansion plans. These strategies are unchanged from disclosed business strategies in previous annual reports. We intend to continue to pursue these business strategies, subject to changes necessitated by future market conditions, regulatory restrictions and other factors. COVID-19 has impacted economic conditions, customer behaviors, credit and asset quality and liquidity.
We have no current plans or intentions regarding any such expansion plans. These strategies are unchanged from disclosed business strategies in previous annual reports. We intend to continue to pursue these business strategies, subject to changes necessitated by future market conditions, regulatory restrictions and other factors.
The effective tax rate was (44.4)% and 18.7% for the years ended December 31, 2022 and 2021, respectively. Loss before income tax benefit was $1.0 million for the year ended December 31, 2022 as compared to $3.2 million of income before income tax expense for the year ended December 31, 2021.
The effective tax rate was 58.8% and (44.4)% for the years ended December 31, 2023 and 2022, respectively. Loss before income tax expense (benefit) was $6.7 million for the year ended December 31, 2023 as compared to $1.0 million for the year ended December 31, 2022.
Comparison of Financial Condition at December 31, 2022 and December 31, 2021 Total Assets. Total assets were $537.4 million as of December 31, 2022, an increase of $50.3 million, or 10.3%, when compared to total assets of $487.1 million at December 31, 2021. The increase was due primarily to an increase in securities available-for-sale and net loans.
Comparison of Financial Condition at December 31, 2023 and December 31, 2022 Total Assets. Total assets were $571.0 million as of December 31, 2023, an increase of $33.6 million, or 6.3%, when compared to total assets of $537.4 million at December 31, 2022. The increase was due primarily to increases in securities available-for-sale and net loans.
Management is not aware of any conditions or events that would change First Seacoast Bank’s categorization as well-capitalized. 42 Recent Accounting Developments For a discussion of the impact of recent accounting pronouncements, see Note 3 of the notes to our consolidated financial statements of this annual report.
See Note 17 of the notes to our consolidated financial statements of this annual report. Management is not aware of any conditions or events that would change First Seacoast Bank’s categorization as well-capitalized.
Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements. Modeling changes require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates.
Modeling changes require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates.
Deposits decreased $10.9 million, or 2.8%, to $382.4 million at December 31, 2022 from $393.2 million at December 31, 2021 primarily as a result of a decrease in core deposits offset by an increase in time deposits.
Deposits increased $22.4 million, or 5.9%, to $404.8 million at December 31, 2023 from $382.4 million at December 31, 2022 primarily as a result of an increase in time deposits, offset by a decrease in core deposits.
The decrease in core deposits was due to a $5.9 million, or 5.9%, decrease in non-interest bearing accounts, a decrease in money market deposits of $10.4 million, or 14.6%, and a decrease in savings deposits of $2.4 million, or 4.2%, partially offset by a $4.4 million, or 4.1%, increase in NOW accounts and demand deposits.
The decrease in core deposits was due to a $26.9 million, or 29.0%, decrease in non-interest bearing accounts and a decrease in NOW accounts and demand deposits of $14.5 million, or 13.0%, offset by an increase in money market deposits of $24.4 million, or 40.1%, and an increase in savings deposits of $9.9 million, or 18.0%.
The increase in marketing during the year ended December 31, 2022 included a $150,000 donation to the First Seacoast Community Foundation, Inc. Income Taxes. Income tax benefit was $451,000 for the year ended December 31, 2022 compared to an income tax expense of $601,000 for the year ended December 31, 2021.
Included in marketing for the year ended December 31, 2022 was a one-time $150,000 donation to the First Seacoast Community Foundation, Inc. Income Taxes. Income tax expense (benefit) increased $4.4 million to a $3.9 million income tax expense for the year ended December 31, 2023 compared to an income tax benefit of $451,000 for the year ended December 31, 2022.
This increase was due to a $28.6 million, or 6.1%, increase in the balance of average interest-earning assets, consisting primarily of increases in the average balances of loans and debt securities, offset by an increase of $27.1 million, or 8.1%, in the average balance of interest-bearing liabilities, consisting primarily of an increase in the average balance of borrowings, during the year ended December 31, 2022.
This decrease was due to an increase of $37.1 million, or 10.2%, in the average balance of interest-bearing liabilities, consisting primarily of an increase in the average balance of borrowings and time deposits, during the year ended December 31, 2023 offset by a $35.8 million, or 7.2%, increase in the average balance of interest-earning assets, consisting primarily of increases in the average balances of loans and non-taxable debt securities.
Our deposits are generated primarily from residents within our primary market area. We offer a selection of deposit accounts, including non-interest-bearing and interest-bearing checking accounts, savings accounts, money market accounts and time deposits, for both individuals and businesses.
We offer a selection of deposit accounts, including non-interest-bearing and interest-bearing checking accounts, savings accounts, money market accounts and time deposits, for both individuals and businesses.
At December 31, 2022, our ratio of net loans to deposits was 104.3% and our Federal Home Loan Bank borrowings totaled $99.4 million. We continue to focus on expanding core deposits by leveraging our business development officers and commercial lending and retail relationships. • Grow organically and through opportunistic acquisitions or de novo branching.
At December 31, 2023, our ratio of net loans to deposits was 105.4% and our borrowings from these supplemental funding sources totaled $93.0 million. We continue to focus on expanding core deposits by leveraging our business development officers and commercial lending and retail relationships. • Grow organically and through opportunistic acquisitions or de novo branching.
Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for at least six consecutive months and the ultimate collectability of the total contractual principal and interest is no longer in doubt. 36 Non-performing loans were $89,000, or 0.02% of total loans, at December 31, 2022, compared to $837,000, or 0.22% of total loans, at December 31, 2021.
Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for at least six consecutive months and the ultimate collectability of the total contractual principal and interest is no longer in doubt.
The Bank’s economic value of equity analysis as of December 31, 2022 estimated that, in the event of an instantaneous 200 basis point increase in interest rates, the Bank would experience a 16.7% decrease in economic value of equity.
The Bank’s economic value of equity analysis as of December 31, 2023 estimated that, in the event of an instantaneous 200 basis point increase in interest rates, the Bank would experience a 21.5% decrease in economic value of equity which was above the policy limit of 20%.
The allowance for loan losses consists of general, allocated and unallocated components. The general component is based primarily on our average historical loss rates for the preceding three years adjusted for qualitative factors stratified by our loan segments.
Prior to the adoption of the new accounting standard for credit losses, the ALL consisted of general, allocated and unallocated components. The general component was based primarily on our average historical loss rates for the preceding three years adjusted for qualitative factors stratified by our loan segments.
Net cash provided by financing activities, consisting primarily of activity in deposit accounts, Federal Home Loan Bank and Federal Reserve Bank advances, was $58.7 million and $41.7 million for the years ended December 31, 2022 and 2021, respectively. We are committed to maintaining a strong liquidity position. We monitor our liquidity position on a daily basis.
Net cash provided by financing activities, consisting primarily of proceeds from the sale of common stock, activity in deposit accounts, FHLB and FRB advances, was $39.2 million and $58.7 million for the years ended December 31, 2023 and 2022, respectively. We are committed to maintaining a strong liquidity position. We monitor our liquidity position daily.
Non-interest income decreased $1.4 million, or 60.5%, to $888,000 for the year ended December 31, 2022 compared to $2.2 million for the year ended December 31, 2021.
Non-interest income decreased $2.9 million, or 326.0%, to $(2.0) million for the year ended December 31, 2023 compared to $888,000 for the year ended December 31, 2022.
The amount of dividends that the Bank may declare and pay to the Company is governed by applicable bank regulations. At December 31, 2022, First Seacoast Bancorp (a federal corporation) (on an unconsolidated basis) had liquid assets of $9.3 million.
The amount of dividends that the Bank may declare and pay to the Company is governed by applicable bank regulations. At December 31, 2023, the Company (on an unconsolidated basis) had liquid assets of $20.4 million. At December 31, 2023, First Seacoast Bank exceeded all of its regulatory capital requirements.
Net interest and dividend income increased $603,000, or 4.2%, to $14.9 million for the year ended December 31, 2022 from $14.3 million for the year ended December 31, 2021.
Net interest and dividend income decreased $3.4 million, or 22.6%, to $11.5 million for the year ended December 31, 2023 from $14.9 million for the year ended December 31, 2022.
When the measurement of the impaired loan is less than the recorded investment in the loan, the impairment is recorded through the allowance for loan losses. At December 31, 2022 and 2021, the collateral values of collateral-dependent impaired loans was sufficient and no impairment charge was necessary.
When the measurement of the impaired loan is less than the recorded investment in the loan, the impairment is recorded through the ALL. At December 31, 2022, the collateral values of collateral-dependent impaired loans was sufficient and no impairment charge was necessary. The unallocated component was maintained to cover uncertainties that could affect management’s estimate of probable losses.
Cash and Due From Banks. Cash and due from banks increased $1.7 million, or 24.3%, to $8.3 million at December 31, 2022 from $6.6 million at December 31, 2021.
Cash and Due From Banks. Cash and due from banks decreased $2.2 million, or 26.4%, to $6.1 million at December 31, 2023 from $8.3 million at December 31, 2022.
Net interest margin decreased to 2.99% for the year ended December 31, 2022 from 3.04% for the year ended December 31, 2021 due primarily to an increase in the weighted average rate of interest-bearing liabilities offset partially by an increase in the weighted average yield on debt securities. Provision for Loan Losses.
Net interest margin decreased to 2.16% for the year ended December 31, 2023 from 2.99% for the year ended December 31, 2022 due primarily to an increase in the average rate of borrowings and interest-bearing deposits offset by an increase in the average yield on interest-earning assets. Provision for Credit Losses.
We also continue to sell selected, conforming 15-year and 30-year fixed rate mortgage loans to the secondary market on a servicing retained basis, providing us a recurring source of revenue from loan servicing income and gains on the sale of such loans. 35 Our allowance for loan losses was $3.6 million at December 31, 2022 and 2021.
We also continue to consider selling selected, conforming 15-year and 30-year fixed rate mortgage loans to the secondary market on a servicing retained basis as market conditions allow, providing us a recurring source of revenue from loan servicing income and gains on the sale of such loans.
The increase in salaries and benefits during the year ended December 31, 2022 was due primarily to a $1.5 million charge to withdraw from the Pentegra DB Plan, to filling certain open positions and associated recruitment fees, normal salary increases and the recognition of previously unearned compensation associated with the restricted stock awards granted in 2021.
The decrease in salaries and benefits during the year ended December 31, 2023 was due primarily to a non-recurring $1.5 million charge incurred in 2022 to withdraw from the Pentegra DB Plan offset by the recognition of previously unearned compensation associated with restricted stock awards granted in 2021 and compensation expense associated with incentive and non-statutory stock options granted in May 2023.
The weighted average yield on interest-earning assets increased 3 basis points to 3.34% for the year ended December 31, 2022 from 3.31% for the year ended December 31, 2021.
Average interest-earning assets increased $35.8 million, or 7.2%, to $532.8 million for the year ended December 31, 2023 from $497.0 million for the year ended December 31, 2022. The weighted average yield on interest-earning assets increased 52 basis points to 3.86% for the year ended December 31, 2023 from 3.34% for the year ended December 31, 2022.
Total interest expense increased $512,000, or 41.5%, to $1.7 million for the year ended December 31, 2022 from $1.2 million for the year ended December 31, 2021. Interest expense on deposits increased $97,000 for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Total interest expense increased $7.3 million, or 419.8%, to $9.1 million for the year ended December 31, 2023 from $1.7 million for the year ended December 31, 2022. Interest expense on deposits increased $4.7 million, or 666.2%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Core deposits (defined as all deposits other than time deposits) decreased $14.3 million, or 4.3%, to $320.6 million at December 31, 2022 from $334.9 million at December 31, 2021.
Core deposits (defined as all deposits other than time deposits) decreased $7.1 million, or 2.2%, to $313.5 million at December 31, 2023 from $320.6 million at December 31, 2022.
Comparison of Operating Results for the Years Ended December 31, 2022 and 2021 Net Income. Net loss was $565,000 for the year ended December 31, 2022, compared to net income of $2.6 million for the year ended December 31, 2021, a decrease of $3.2 million, or 121.6%.
Comparison of Operating Results for the Years Ended December 31, 2023 and 2022 Net Loss. Net loss was $10.7 million for the year ended December 31, 2023, compared to a net loss of $565,000 for the year ended December 31, 2022, an increase of $10.1 million.
Net deferred loan costs increased $799,000, or 48.4%, to $2.4 million at December 31, 2022 from $1.7 million at December 31, 2021 due primarily to the increase in deferred costs on one- to four-family residential mortgage loans, consumer loans and commercial loan fees and costs.
Net deferred loan costs increased $183,000, or 7.5%, to $2.6 million at December 31, 2023 from $2.4 million at December 31, 2022 due primarily to the increase in deferred costs on consumer loans.
Commercial and industrial loans decreased $2.8 million, or 10.4%, to $24.1 million at December 31, 2022 from $26.9 million at December 31, 2021. Home equity loans and lines of credit increased $3.2 million, or 46.3%, to $10.2 million at December 31, 2022 from $6.9 million at December 31, 2021.
Home equity loans and lines of credit increased $3.9 million, or 38.7%, to $14.1 million at December 31, 2023 from $10.2 million at December 31, 2022. Multi-family real estate loans decreased $604,000, or 7.4%, to $7.6 million at December 31, 2023 from $8.2 million at December 31, 2022.
Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations. Our critical accounting policies involve the calculation of the allowance for loan losses and the measurement of the fair value of financial instruments.
Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations. As noted above, effective January 1, 2023, the Company adopted the new accounting standard for credit losses.
The extended transition period is generally one year, although it may vary for any particular accounting pronouncement. We have opted to take advantage of the benefits of this extended transition period.
The extended transition period is generally one year, although it may vary for any particular accounting pronouncement. We have opted to take advantage of the benefits of this extended transition period. Accordingly, our consolidated financial statements may not be comparable to companies that comply with such new or revised accounting standards.
The decrease was related primarily to a $3.7 million, or 28.2%, increase in non-interest expense and a $1.4 million, or 60.5%, decrease in non-interest income offset by a $808,000, or 5.7%, increase in net interest and dividend income after provision for loan losses and a $1.1 million decrease in provision for income taxes during the year ended December 31, 2022.
This increase was due to a $3.5 million, or 23.8%, decrease in net interest and dividend income after provision for credit losses, a $2.9 million, or 326.0%, decrease in non-interest income and a $4.4 million increase in income tax expense, offset by a $740,000, or 4.4%, decrease in non-interest expense during the year ended December 31, 2023.
We believe our name change to “First Seacoast Bank” in 2019 enhanced our brand and market visibility and associates us by name with the market area and communities we serve.
(6) Represents average equity divided by average total assets. Business Strategy We believe we enjoy a strong, positive reputation among our customers and in our market area. We believe our name change to “First Seacoast Bank” in 2019 enhanced our brand and market visibility and associates us by name with the market area and communities we serve.
While we are committed to the business strategies noted above, we recognize the challenges and uncertainties of the current environment and plan to execute these strategies as market conditions allow. 32 Critical Accounting Policies and Critical Accounting Estimates The discussion and analysis of the financial condition and results of operations are based on our consolidated financial statements, which are prepared in conformity with generally accepted accounting principles used in the United States of America.
Critical Accounting Policies and Critical Accounting Estimates The discussion and analysis of the financial condition and results of operations are based on our consolidated financial statements, which are prepared in conformity with generally accepted accounting principles used in the United States of America.
The levels of these assets are dependent on our operating, financing, lending and investing activities during any given period. Our cash flows are comprised of three primary classifications: cash flows from operating activities; investing activities and financing activities. Net cash provided by operating activities was $973,000 and $2.4 million for the years ended December 31, 2022 and 2021, respectively.
The levels of these assets are dependent on our operating, financing, lending and investing activities during any given period. 44 Our cash flows are comprised of three primary classifications: cash flows from operating activities; investing activities and financing activities.
The decrease in the effective tax rate for 2022 as compared to 2021 was primarily due to the loss before income tax benefit and the amount of non-taxable income as a percentage of loss before income tax benefit in the current year as compared to the prior year offset in part by an increase in the valuation allowance. 38 Average Balance Sheets The following tables set forth average balance sheets, average yields and costs and certain other information at the date and for the years indicated.
The increase in the effective tax rate for 2023 as compared to 2022 was due primarily to the establishment of a 100% valuation allowance for all deferred tax assets. 40 Average Balance Sheets The following tables set forth average balance sheets, average yields and costs and certain other information at the date and for the years indicated.
The average balance of borrowings increased $22.7 million, or 55.1%, to $63.9 million for the year ended December 31, 2022 from $41.2 million for the year ended December 31, 2021.
The average balance of borrowings increased $14.9 million, or 23.3%, to $78.8 million for the year ended December 31, 2023 from $63.9 million for the year ended December 31, 2022.
The weighted average rate of interest-bearing deposits increased to 0.23% for the year ended December 31, 2022 from 0.20% for the year ended December 31, 2021 due primarily to an increase in market interest rates. Interest expense on borrowings consists of interest on advances from the Federal Home Loan Bank and the Federal Reserve Bank.
The weighted average rate of interest-bearing deposits increased to 1.67% for the year ended December 31, 2023 from 0.23% for the year ended December 31, 2022 due primarily to an increase in market interest rates and to respond to deposit pricing by competitors.
As of December 31, 2022: Net Portfolio Value ("NPV") NPV as Percent of Portfolio Value of Assets Basis Point ("bp") Change in Interest Rates Dollar Amount Dollar Change Percent Change NPV Ratio Change (Dollars in thousands) 400 bp $ 64,978 $ (31,915 ) (32.9 )% 15.3 % $ (401 ) 300 bp 72,904 (23,989 ) (24.8 ) 16.4 (284 ) 200 bp 80,715 (16,178 ) (16.7 ) 17.5 (180 ) 100 bp 89,144 (7,749 ) (8.0 ) 18.5 (78 ) 0 96,893 — — 19.3 — (100) bp 102,856 5,963 6.2 19.6 37 (200) bp 106,776 9,883 10.2 19.6 35 (300) bp 107,095 10,202 10.5 19.0 (29 ) (400) bp 99,984 3,091 3.2 17.3 (199 ) As of December 31, 2021: Net Portfolio Value ("NPV") NPV as Percent of Portfolio Value of Assets Basis Point ("bp") Change in Interest Rates Dollar Amount Dollar Change Percent Change NPV Ratio Change (Dollars in thousands) 400 bp $ 46,403 $ (9,528 ) (17.0 )% 11.2 % $ (23 ) 300 bp 49,878 (6,053 ) (10.8 ) 11.6 12 200 bp 53,103 (2,828 ) (5.1 ) 11.8 35 100 bp 55,794 (137 ) (0.2 ) 11.9 43 0 55,931 — — 11.4 — (100) bp 47,729 (8,202 ) (14.7 ) 9.5 (195 ) The percent change to NPV in the -100 bp change in interest rates scenario was -14.7% at December 31, 2021 versus a policy limit of -10.0%.
As of December 31, 2023: Net Portfolio Value ("NPV") NPV as Percent of Portfolio Value of Assets Basis Point ("bp") Change in Interest Rates Dollar Amount Dollar Change Percent Change NPV Ratio Change (Dollars in thousands) 400 bp $ 38,063 $ (29,082 ) (43.3 )% 8.4 % $ (434 ) 300 bp 45,307 (21,838 ) (32.5 ) 9.6 (310 ) 200 bp 52,710 (14,435 ) (21.5 ) 10.8 (194 ) 100 bp 60,749 (6,396 ) (9.5 ) 11.9 (78 ) 0 67,145 — — 12.7 — (100) bp 72,043 4,898 7.3 13.2 45 (200) bp 74,730 7,585 11.3 13.2 49 (300) bp 74,371 7,226 10.8 12.7 4 (400) bp 67,366 221 0.3 11.3 (141 ) As of December 31, 2022: Net Portfolio Value ("NPV") NPV as Percent of Portfolio Value of Assets Basis Point ("bp") Change in Interest Rates Dollar Amount Dollar Change Percent Change NPV Ratio Change (Dollars in thousands) 400 bp $ 64,978 $ (31,915 ) (32.9 )% 15.3 % $ (401 ) 300 bp 72,904 (23,989 ) (24.8 ) 16.4 (284 ) 200 bp 80,715 (16,178 ) (16.7 ) 17.5 (180 ) 100 bp 89,144 (7,749 ) (8.0 ) 18.5 (78 ) 0 96,893 — — 19.3 — (100) bp 102,856 5,963 6.2 19.6 37 (200) bp 106,776 9,883 10.2 19.6 35 (300) bp 107,095 10,202 10.5 19.0 (29 ) (400) bp 99,984 3,091 3.2 17.3 (199 ) Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements.
At December 31, 2022, non-performing loans consist primarily of a residential mortgage loan to a deceased borrower which had an outstanding balance of $84,000. The property has an estimated market value of $420,000.
At December 31, 2022, non-performing loans consisted primarily of a residential mortgage loan to a deceased borrower which had an outstanding balance of $84,000. The property was sold in April 2023 and the outstanding loan balance was paid in full. At December 31, 2023 and 2022, we had no foreclosed assets.
Interest expense on borrowings increased $397,000, or 61.2%, to $1.0 million for the year ended December 31, 2022 from $649,000 for the year ended December 31, 2021 primarily due to an increase in the average balance of borrowings and market interest rates partially offset by the retirement of $20.0 million of long-term borrowings from the FHLB in advance of their scheduled maturities in late 2021.
Interest expense on borrowings increased $2.7 million, or 254.6%, to $3.7 million for the year ended December 31, 2023 from $1.0 million for the year ended December 31, 2022 primarily due to an increase in the average balance of borrowings and an increase in market interest rates.
The weighted average yield for all other interest-earning assets increased to 2.25% for the year ended December 31, 2022 from 1.42% for the year ended December 31, 2021 due primarily to the investment in higher-yielding taxable and non-taxable debt securities. Interest Expense.
The weighted 39 average yield for all other interest-earning assets increased to 3.12% for the year ended December 31, 2023 from 2.25% for the year ended December 31, 2022 due primarily to an increase in market interest rates. Interest Expense.
For the Year Ended December 31, 2022 2021 Average Outstanding Balance Interest Average Yield/Rate Average Outstanding Balance Interest Average Yield/Rate (Dollars in thousands) Interest-earning assets: Loans (4) $ 385,202 $ 14,092 3.66 % $ 372,385 $ 14,129 3.79 % Taxable debt securities 52,736 995 1.89 % 29,629 375 1.27 % Non-taxable debt securities 49,782 1,316 2.64 % 38,744 895 2.31 % Interest-bearing deposits with other banks 6,571 89 1.35 % 25,681 73 0.28 % Federal Home Loan Bank stock 2,733 118 4.32 % 1,962 23 1.17 % Total interest-earning assets 497,024 16,610 3.34 % 468,401 15,495 3.31 % Non-interest-earning assets 15,832 11,432 Total assets $ 512,856 $ 479,833 Interest-bearing liabilities: NOW and demand deposits $ 112,504 $ 139 0.12 % $ 105,940 $ 126 0.12 % Money market deposits 66,936 151 0.23 % 73,810 105 0.14 % Savings deposits 62,471 82 0.13 % 54,626 32 0.06 % Time deposits 55,129 311 0.56 % 57,988 323 0.56 % Total interest-bearing deposits 297,040 683 0.23 % 292,364 586 0.20 % Borrowings 63,916 1,046 1.64 % 41,220 649 1.57 % Other 1,864 18 0.97 % 2,169 — — Total interest-bearing liabilities 362,820 1,747 0.48 % 335,753 1,235 0.37 % Non-interest-bearing deposits 92,576 80,295 Other noninterest-bearing liabilities 3,782 3,898 Total liabilities 459,178 419,946 Total equity 53,678 59,887 Total liabilities and equity $ 512,856 $ 479,833 Net interest income $ 14,863 $ 14,260 Net interest rate spread (1) 2.86 % 2.94 % Net interest-earning assets (2) $ 134,204 $ 132,648 Net interest margin (3) 2.99 % 3.04 % Average interest-earning assets as a percent of interest-bearing liabilities 136.99 % 139.51 % (1) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
For the Year Ended December 31, 2023 2022 Average Outstanding Balance Interest Average Yield/Rate Average Outstanding Balance Interest Average Yield/Rate (Dollars in thousands) Interest-earning assets: Loans (4) $ 414,601 $ 16,896 4.08 % $ 385,202 $ 14,092 3.66 % Taxable debt securities 52,622 1,521 2.89 % 52,736 995 1.89 % Non-taxable debt securities 56,928 1,735 3.05 % 49,782 1,316 2.64 % Interest-bearing deposits with other banks 5,872 201 3.42 % 6,571 89 1.35 % Federal Home Loan Bank stock 2,820 237 8.40 % 2,733 118 4.32 % Total interest-earning assets 532,843 20,590 3.86 % 497,024 16,610 3.34 % Non-interest-earning assets 18,485 15,832 Total assets $ 551,328 $ 512,856 Interest-bearing liabilities: NOW and demand deposits $ 101,947 $ 402 0.39 % $ 112,504 $ 139 0.12 % Money market deposits 74,045 1,830 2.47 % 66,936 151 0.23 % Savings deposits 65,802 1,004 1.53 % 62,471 82 0.13 % Time deposits 77,406 2,095 2.71 % 55,129 311 0.56 % Total interest-bearing deposits 319,200 5,331 1.67 % 297,040 683 0.23 % Borrowings 78,839 3,709 4.70 % 63,916 1,046 1.64 % Other 1,894 40 2.13 % 1,864 18 0.97 % Total interest-bearing liabilities 399,933 9,080 2.27 % 362,820 1,747 0.48 % Non-interest-bearing deposits 76,533 92,576 Other noninterest-bearing liabilities 4,299 3,782 Total liabilities 480,765 459,178 Total equity 70,563 53,678 Total liabilities and equity $ 551,328 $ 512,856 Net interest income $ 11,510 $ 14,863 Net interest rate spread (1) 1.59 % 2.86 % Net interest-earning assets (2) $ 132,910 $ 134,204 Net interest margin (3) 2.16 % 2.99 % Average interest-earning assets as a percent of interest-bearing liabilities 133.23 % 136.99 % (1) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average rate of interest-bearing liabilities.
Based upon management’s analysis of the allowance for loan losses, no provision for loan losses was recorded for the year ended December 31, 2022 compared to $205,000 for the year ended December 31, 2021. 37 Non-Interest Income.
Based upon management’s analysis of the ACL, a $188,000 provision for credit losses expense was recorded for the year ended December 31, 2023 compared to $-0- for the year ended December 31, 2022.
Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, principal and interest payments on loans and securities, proceeds from the sale of loans and proceeds from sales and maturities of securities.
Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures.
Non-interest expense increased $3.7 million, or 28.2%, to $16.8 million for the year ended December 31, 2022 from $13.1 million for the year ended December 31, 2021.
Non-Interest Expense. Non-interest expense decreased $740,000, or 4.4%, to $16.0 million for the year ended December 31, 2023 from $16.8 million for the year ended December 31, 2022.

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