NorthEast Community Bancorp, Inc./MD/ [NECB] Filings

10-Q 1 necb-20230630x10q.htm 10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-40589

NorthEast Community Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Maryland

86-3173858

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

325 Hamilton Avenue

White Plains, New York 10601

(Address of Principal Executive Offices)

(914) 684-2500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	NECB	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer		Accelerated filer	

Non-accelerated filer	☒	Smaller reporting company	☒	Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 8, 2023, there were 14,969,938 shares of the registrant’s common stock outstanding.

Table of Contents

TABLE OF CONTENTS


`
		Page

Part I	Financial Information	3

Item 1.	Financial Statements	3

	Consolidated Statements of Financial Condition as of June 30, 2023 and December 31, 2022 (Unaudited)	3

	Consolidated Statements of Income for the Three and Six Months Ended June 30, 2023 and 2022 (Unaudited)	5

	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2023 and 2022 (Unaudited)	6

	Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2023 and 2022 (Unaudited)	7

	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022 (Unaudited)	8

	Notes to Condensed Consolidated Financial Statements (Unaudited)	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	52

Item 4.	Controls and Procedures	54

Part II	Other Information	54

Item 1.	Legal Proceedings	54

Item 1A.	Risk Factors	54

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54

Item 3.	Defaults Upon Senior Securities	54

Item 4.	Mine Safety Disclosures	55

Item 5.	Other Information	55

Item 6.	Exhibits	55

Exhibit Index		56

Signatures		57

Table of Contents

PART I —FINANCIAL INFORMATION

Item 1. Financial Statements

NORTHEAST COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited)


	June 30,		December 31,
	2023		2022

	(In thousands, except share
	and per share amounts)
ASSETS
Cash and amounts due from depository institutions	$	14,345	$	13,210
Interest-bearing deposits		105,530		82,098
Total cash and cash equivalents		119,875		95,308
Certificates of deposit		100		100
Equity securities		18,143		18,041
Securities available-for-sale, at fair value		-		1
Securities held-to-maturity (net of allowance for credit losses of $135, fair value of $12,818 and $22,865, respectively )		15,777		26,395
Loans receivable		1,391,543		1,217,321
Deferred loan costs, net		243		372
Allowance for credit losses		(4,400)		(5,474)
Net loans		1,387,386		1,212,219
Premises and equipment, net		25,646		26,063
Investments in restricted stock, at cost		929		1,238
Bank owned life insurance		24,772		25,896
Accrued interest receivable		10,532		8,597
Goodwill		200		200
Real estate owned		1,456		1,456
Property held for investment		1,426		1,444
Right of Use Assets – Operating		2,055		2,312
Right of Use Assets – Financing		353		355
Other assets		7,002		5,338
Total assets	$	1,615,652	$	1,424,963
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities:
Deposits:
Non-interest bearing	$	329,236	$	376,302
Interest bearing		986,580		745,653
Total deposits		1,315,816		1,121,955
Advance payments by borrowers for taxes and insurance		2,153		2,369
Federal Home Loan Bank advances		14,000		21,000
Lease Liability – Operating		2,109		2,363
Lease Liability – Financing		552		533
Accounts payable and accrued expenses		11,462		14,754
Total liabilities		1,346,092		1,162,974

See notes to interim unaudited consolidated financial statements.

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NORTHEAST COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (continued)

(Unaudited)


	June 30,		December 31,
	2023		2022

	(In thousands, except share
	and per share amounts)
Stockholders’ equity:
Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued or outstanding	$	—	$	—
Common stock, $0.01 par value; 75,000,000 shares authorized; 15,036,938 shares and 16,049,454 shares issued and outstanding, respectively		150		161
Additional paid-in capital		123,054		136,434
Unearned Employee Stock Ownership Plan (“ESOP”) shares		(6,997)		(7,432)
Retained earnings		153,182		132,670
Accumulated other comprehensive income		171		156
Total stockholders’ equity		269,560		261,989
Total liabilities and stockholders’ equity	$	1,615,652	$	1,424,963

See notes to interim unaudited consolidated financial statements.

Table of Contents

NORTHEAST COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022

	(In thousands, except per share amounts)
INTEREST INCOME:
Loans	$	30,494	$	14,412	$	58,069	$	27,473
Interest-earning deposits		219		249		452		304
Securities		1,001		177		1,705		335
Total Interest Income		31,714		14,838		60,226		28,112
INTEREST EXPENSE:
Deposits		7,609		1,160		13,161		2,337
Borrowings		78		127		190		288
Financing lease		9		9		19		19
Total Interest Expense		7,696		1,296		13,370		2,644
Net Interest Income		24,018		13,542		46,856		25,468
Provision for credit loss		610		-		611		-
Net Interest Income after Provision for Credit Loss		23,408		13,542		46,245		25,468
NON-INTEREST INCOME:
Other loan fees and service charges		447		627		1,054		1,018
Gain on disposition of equipment		-		46		-		46
Earnings on bank owned life insurance		553		150		704		297
Investment advisory fees		113		120		229		257
Unrealized gain (loss) on equity securities		(123)		(430)		102		(1,064)
Other		30		23		46		40
Total Non-Interest Income		1,020		536		2,135		594
NON-INTEREST EXPENSES:
Salaries and employee benefits		4,837		3,613		9,378		7,441
Occupancy expense		605		562		1,274		1,166
Equipment		300		276		604		566
Outside data processing		554		479		1,069		915
Advertising		238		51		288		105
Real estate owned expense		21		21		41		52
Other		2,326		2,005		4,417		3,982
Total Non-Interest Expenses		8,881		7,007		17,071		14,227
INCOME BEFORE PROVISION FOR INCOME TAXES		15,547		7,071		31,309		11,835
PROVISION FOR INCOME TAXES		4,460		1,678		8,978		2,797
NET INCOME	$	11,087	$	5,393	$	22,331	$	9,038

EARNINGS PER COMMON SHARE – BASIC	$	0.75	$	0.35	$	1.56	$	0.58
EARNINGS PER COMMON SHARE – DILUTED		0.75		0.35		1.56		0.58
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – BASIC		14,700		15,544		14,322		15,534
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING – DILUTED		14,731		15,544		14,361		15,534

See notes to interim unaudited consolidated financial statements.

Table of Contents

NORTHEAST COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022

	(In thousands)				(In thousands)
Net Income	$	11,087	$	5,393	$	22,331	$	9,038
Other comprehensive income:
Defined benefit pension:
Reclassification adjustments out of accumulated other comprehensive income:
Amortization of actuarial loss (gain)		(8)		6		(16)		13
Actuarial loss arising during period		18		23		36		40
Total		10		29		20		53
Income tax effect¹		(2)		(7)		(5)		(12)
Total other comprehensive income		8		22		15		41
Total Comprehensive Income	$	11,095	$	5,415	$	22,346	$	9,079

¹Amounts are included in provision for income taxes in the consolidated statements of income.

See notes to interim unaudited consolidated financial statements.

Table of Contents

NORTHEAST COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Three and Six Months Ended June 30, 2023 and 2022

(Unaudited)


											Accumulated
					Additional						Other
	Number of		Common		Paid- in		Unearned		Retained		Comprehensive
	Shares, net		Stock		Capital		ESOP Shares		Earnings		Income		Total

	(In thousands, except share and per share amounts)

Balance – December 31, 2022		16,049,454	$	161	$	136,434	$	(7,432)	$	132,670	$	156	$	261,989
Net income		—		—		—		—		11,244		—		11,244
Other comprehensive income		—		—		—		—		—		7		7
Cash dividend declared ($0.06 per share)		—		—		—		—		(875)		—		(875)
Stock repurchases		(723,626)		(8)		(10,514)		—		—		—		(10,522)
Compensation expense related to restricted stock awards		—		—		241		—		—		—		241
Compensation expense related to stock options		—		—		192		—		—		—		192
Cumulative effect of adoption of ASU 2016-13		—		—		—		—		(99)		—		(99)
ESOP shares earned		—		—		109		217		—		—		326
Balance - March 31, 2023		15,325,828	$	153	$	126,462	$	(7,215)	$	142,940	$	163	$	262,503
Net income		—		—		—		—		11,087		—		11,087
Other comprehensive income		—		—		—		—		—		8		8
Cash dividend declared ($0.06 per share)		—		—		—		—		(845)		—		(845)
Stock repurchases		(288,890)		(3)		(3,917)		—		—		—		(3,920)
Compensation expense related to restricted stock awards		—		—		241		—		—		—		241
Compensation expense related to stock options		—		—		192		—		—		—		192
ESOP shares earned		—		—		76		218		—		—		294
Balance – June 30, 2023		15,036,938	$	150	$	123,054	$	(6,997)	$	153,182	$	171	$	269,560

											Accumulated
					Additional						Other
	Number of		Common		Paid- in		Unearned		Retained		Comprehensive
	Shares, net		Stock		Capital		ESOP Shares		Earnings		Loss		Total

	(In thousands, except share and per share amounts)

Balance – December 31, 2021		16,377,936	$	164	$	145,335	$	(8,301)	$	114,323	$	(139)	$	251,382
Net income		—		—		—		—		3,645		—		3,645
Other comprehensive income		—		—		—		—		—		19		19
Cash dividend declared ($0.06 per share)		—		—		—		—		(931)		—		(931)
ESOP shares earned		—		—		41		217		—		—		258
Balance - March 31, 2022		16,377,936	$	164	$	145,376	$	(8,084)	$	117,037	$	(120)	$	254,373
Net income		—		—		—		—		5,393		—		5,393
Other comprehensive income		—		—		—		—		—		22		22
Cash dividend declared ($0.06 per share)		—		—		—		—		(3,722)		—		(3,722)
ESOP shares earned		—		—		28		218		—		—		246
Balance - June 30, 2022		16,377,936	$	164	$	145,404	$	(7,866)	$	118,708	$	(98)	$	256,312

See notes to interim unaudited consolidated financial statements.

Table of Contents

NORTHEAST COMMUNITY BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
	2023		2022

	(In thousands)
Cash Flows from Operating Activities:
Net income	$	22,331	$	9,038
Adjustments to reconcile net income to net cash provided by operating activities:
Net amortization (accretion) of securities premiums and discounts, net		17		(8)
Provision for credit losses		611		-
Depreciation

NorthEast Community Bancorp, Inc./MD/ [NECB] Filings
10-Q	[2023-08-10]
10-Q	[2023-05-12]
10-K	[2023-03-30]
10-Q	[2022-11-10]
10-Q	[2022-08-12]
10-Q	[2022-05-13]
10-K	[2022-03-30]
10-Q	[2021-11-12]
10-Q	[2021-08-13]
10-Q	[2021-06-28]
S-1	[2021-03-08]