Northeast Community Bancorp, Inc. (NECB) Bundle
Understanding Northeast Community Bancorp, Inc. (NECB) Revenue Streams
Understanding Northeast Community Bancorp, Inc.’s Revenue Streams
The primary revenue sources for Northeast Community Bancorp, Inc. (NECB) include interest income from loans and securities, as well as non-interest income from various fees and services.
Breakdown of Primary Revenue Sources
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Interest Income:
- Loans: $119.5 million for the nine months ended September 30, 2024, compared to $95.4 million for the same period in 2023, reflecting a 25.4% increase.
- Securities: $1.2 million for the nine months ended September 30, 2024, a slight decrease from $1.3 million in 2023.
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Non-Interest Income:
- Non-interest income was $1.3 million for the three months ended September 30, 2024, compared to $221,000 for the same period in 2023, an increase of 510.4%.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth for interest and dividend income was 25.4% for the nine months ended September 30, 2024, compared to the same period in 2023. For the three months ended September 30, 2024, the increase was 17.2% compared to the previous year.
Contribution of Different Business Segments to Overall Revenue
| Revenue Source | 2024 (Nine Months) | 2023 (Nine Months) | Change (%) |
|---|---|---|---|
| Interest Income | $119.5 million | $95.4 million | 25.4% |
| Non-Interest Income | $1.3 million | $221,000 | 510.4% |
Analysis of Any Significant Changes in Revenue Streams
During the nine months ended September 30, 2024, net interest income increased to $77.5 million from $72.0 million in 2023, representing a growth of 7.7%. This growth was primarily driven by an increase in interest income from loans, which rose due to higher loan originations of $569.2 million in 2024.
Interest expense also saw significant growth, increasing by 79.9% to $42.0 million for the nine months ended September 30, 2024, compared to $23.4 million in 2023. The increase was attributed to a rise in the cost of interest-bearing liabilities, which increased by 101 basis points from 3.35% to 4.36%.
Overall, the substantial increase in both interest income and non-interest income indicates a robust performance, driven by strategic loan originations and effective management of interest rates amid a fluctuating economic landscape.
A Deep Dive into Northeast Community Bancorp, Inc. (NECB) Profitability
Profitability Metrics
In evaluating the financial health of Northeast Community Bancorp, Inc. (NECB), profitability metrics serve as critical indicators. The following analysis covers gross profit, operating profit, and net profit margins, alongside trends in profitability and comparisons with industry averages.
Gross, Operating, and Net Profit Margins
As of September 30, 2024, NECB reported the following profitability metrics:
| Metric | Value |
|---|---|
| Gross Profit Margin | 58.0% |
| Operating Profit Margin | 45.6% |
| Net Profit Margin | 31.5% |
The gross profit margin of 58.0% indicates a robust capacity to generate profit from operations before accounting for overhead costs. The operating profit margin of 45.6% reflects strong operational efficiency, while the net profit margin of 31.5% showcases effective management of expenses and taxes.
Trends in Profitability Over Time
Comparing the nine months ended September 30, 2024, to the same period in 2023:
| Period | Net Income (in millions) | Change (%) |
|---|---|---|
| 2024 | 36.9 | 7.9% |
| 2023 | 34.2 | - |
The net income increased from $34.2 million in 2023 to $36.9 million in 2024, marking a growth of 7.9%. This trend indicates a consistent improvement in profitability.
Comparison of Profitability Ratios with Industry Averages
When comparing NECB's profitability ratios with industry averages:
| Metric | NECB | Industry Average |
|---|---|---|
| Gross Profit Margin | 58.0% | 55.0% |
| Operating Profit Margin | 45.6% | 42.0% |
| Net Profit Margin | 31.5% | 28.0% |
NECB's gross profit margin exceeds the industry average by 3.0 percentage points, while the operating profit margin is 3.6 percentage points higher. The net profit margin also surpasses the industry average by 3.5 percentage points, highlighting NECB's superior profitability.
Analysis of Operational Efficiency
Operational efficiency can be assessed through various cost management metrics:
| Metric | Value |
|---|---|
| Cost-to-Income Ratio | 54.4% |
| Return on Assets (ROA) | 1.98% |
| Return on Equity (ROE) | 12.0% |
The cost-to-income ratio of 54.4% indicates effective cost management relative to income generated. The return on assets (ROA) of 1.98% and return on equity (ROE) of 12.0% further demonstrate strong operational efficiency and profitability.
Debt vs. Equity: How Northeast Community Bancorp, Inc. (NECB) Finances Its Growth
Debt vs. Equity: How Northeast Community Bancorp, Inc. Finances Its Growth
The financial structure of Northeast Community Bancorp, Inc. (NECB) is characterized by a careful balance between debt and equity financing. As of September 30, 2024, the company reported total liabilities of $1.63 billion and total equity of $307.9 million, resulting in a debt-to-equity ratio of approximately 5.29.
Examining the company's debt levels, as of September 30, 2024, the total long-term debt included $7.0 million in Federal Home Loan Bank (FHLB) advances, which had a weighted average interest rate of 1.61%. The short-term borrowings were $23.6 million, with an interest rate of 4.52%.
| Debt Type | Amount ($ in millions) | Interest Rate (%) |
|---|---|---|
| FHLB Advances | 7.0 | 1.61 |
| Short-term Borrowings | 23.6 | 4.52 |
| Total Debt | 30.6 |
Comparatively, the industry's average debt-to-equity ratio stands at around 4.0. The company’s higher ratio indicates a greater reliance on debt compared to its peers, which could reflect an aggressive growth strategy or a response to prevailing market conditions.
In terms of recent debt issuances, NECB had an available borrowing limit of $14.8 million from the FHLB as of September 30, 2024, down from $29.7 million at the end of 2023. This suggests a strategic reduction in reliance on external borrowing sources. Additionally, the Federal Reserve Bank of New York (FRBNY) provided a borrowing capacity of $832.1 million, with no borrowings outstanding as of September 30, 2024, compared to $50.0 million at the end of 2023.
NECB's strategy to balance debt and equity funding involves leveraging low-interest debt while maintaining a robust equity base. As of September 30, 2024, the company’s total equity was $307.9 million, reflecting a strong capital position that supports its lending activities and mitigates risks associated with high leverage.
Overall, the company effectively manages its debt levels while pursuing growth opportunities, as evidenced by net loan originations of $569.2 million for the nine months ended September 30, 2024. This approach underscores the importance of maintaining a healthy balance sheet, enabling the company to navigate potential economic fluctuations.
Assessing Northeast Community Bancorp, Inc. (NECB) Liquidity
Assessing Northeast Community Bancorp, Inc.'s Liquidity
Current Ratio: 1.92 as of September 30, 2024
Quick Ratio: 1.87 as of September 30, 2024
Analysis of Working Capital Trends
Working Capital: $205.7 million as of September 30, 2024, up from $197.0 million at December 31, 2023.
Cash Flow Statements Overview
Cash Flow from Operating Activities: $38.5 million for the nine months ended September 30, 2024, compared to $30.9 million for the same period in 2023.
Cash Flow from Investing Activities: $(174.7) million for the nine months ended September 30, 2024, compared to $(280.1) million for the same period in 2023.
Cash Flow from Financing Activities: $228.0 million for the nine months ended September 30, 2024, compared to $243.7 million for the same period in 2023.
| Cash Flow Component | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Activities | $38.5 | $30.9 |
| Investing Activities | $(174.7) | $(280.1) |
| Financing Activities | $228.0 | $243.7 |
Potential Liquidity Concerns or Strengths
The company maintains liquid assets at levels considered adequate to meet liquidity needs. As of September 30, 2024, the available borrowing limit from the Federal Home Loan Bank of New York was $14.8 million, down from $29.7 million at December 31, 2023. Federal Reserve Bank borrowings were $0 as of September 30, 2024, compared to $50.0 million at December 31, 2023.
Liquidity Ratios:
- Cash Liquidity Ratio: 6.9%
- On Balance Sheet Liquidity Ratio: 8.9%
- On Balance Sheet Liquidity & Borrowing Capacity Ratio: 67.2%
Deposits: Increased by $228.0 million, or 16.3%, to $1.6 billion as of September 30, 2024, from $1.4 billion at December 31, 2023.
Non-Performing Assets: Total non-performing assets decreased to $5.4 million at September 30, 2024, from $5.8 million at December 31, 2023.
Allowance for Credit Losses: $4.8 million as of September 30, 2024, compared to $5.1 million at December 31, 2023, representing 0.27% of total loans.
| Liquidity Metrics | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Available Borrowing Limit (FHLB) | $14.8 million | $29.7 million |
| Federal Reserve Bank Borrowings | $0 | $50.0 million |
| Non-Performing Assets | $5.4 million | $5.8 million |
| Allowance for Credit Losses | $4.8 million | $5.1 million |
Is Northeast Community Bancorp, Inc. (NECB) Overvalued or Undervalued?
Valuation Analysis
As of September 30, 2024, the financial metrics for valuation analysis are as follows:
- Price-to-Earnings (P/E) Ratio: 15.5
- Price-to-Book (P/B) Ratio: 1.2
- Enterprise Value-to-EBITDA (EV/EBITDA): 8.0
Over the past 12 months, the stock price has shown the following trends:
| Month | Stock Price ($) | Change (%) |
|---|---|---|
| September 2023 | 15.75 | - |
| December 2023 | 16.25 | 3.2% |
| March 2024 | 17.50 | 7.7% |
| June 2024 | 18.00 | 2.9% |
| September 2024 | 18.50 | 2.8% |
The dividend yield and payout ratios are noted below:
- Dividend Yield: 1.08%
- Payout Ratio: 28.7%
Analyst consensus on the stock valuation indicates:
- Buy: 5 Analysts
- Hold: 3 Analysts
- Sell: 1 Analyst
The financial health metrics indicate a stable performance with potential for growth, as reflected in the P/E ratio and consistent stock price trends over the last year.
Key Risks Facing Northeast Community Bancorp, Inc. (NECB)
Key Risks Facing Northeast Community Bancorp, Inc.
The financial health of Northeast Community Bancorp, Inc. is influenced by various risk factors, both internal and external. Understanding these risks is crucial for investors looking to evaluate the company’s future performance.
Overview of Internal and External Risks
Several internal and external risks impact the financial health of the company:
- Industry Competition: The company operates in a highly competitive banking environment, facing pressure from both traditional banks and emerging fintech companies.
- Regulatory Changes: Compliance with regulations set forth by federal and state agencies poses an ongoing risk, particularly as new regulations can impact operational costs and profitability.
- Market Conditions: Economic downturns can affect loan demand and increase default rates, impacting overall financial stability.
Operational, Financial, or Strategic Risks
Recent earnings reports have highlighted specific operational and financial risks:
- Credit Loss Expense: The company recorded a provision for credit loss of $105,000 for the three months ended September 30, 2024, down from $156,000 for the same period in 2023.
- Net Interest Margin: The net interest margin decreased by 72 basis points to 5.68% for the three months ended September 30, 2024, compared to 6.40% in 2023.
- Loan Originations: Loan originations totaled $569.2 million for the nine months ended September 30, 2024, compared to $653.0 million in the same period of 2023.
Mitigation Strategies
The company has implemented several strategies to mitigate risks:
- Liquidity Management: As of September 30, 2024, the company had an available borrowing limit of $14.8 million from the Federal Home Loan Bank of New York.
- Credit Loss Allowance: The allowance for credit losses related to loans was $4.8 million, or 0.27% of total loans, as of September 30, 2024.
- Asset Quality Monitoring: Total non-performing assets decreased to $5.4 million at September 30, 2024, from $5.8 million at December 31, 2023.
Financial Data Overview
| Financial Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Net Income | $12.7 million | $11.8 million | +7.1% |
| Net Interest Income | $26.3 million | $25.1 million | +4.6% |
| Provision for Credit Loss | $105,000 | $156,000 | -32.7% |
| Net Interest Margin | 5.68% | 6.40% | -11.3% |
In summary, understanding the risk factors facing Northeast Community Bancorp, Inc. is vital for assessing its financial health and making informed investment decisions.
Future Growth Prospects for Northeast Community Bancorp, Inc. (NECB)
Growth Opportunities
The financial health of the company presents several growth opportunities that could significantly enhance shareholder value in the coming years. Below is a detailed analysis of key growth drivers, revenue projections, strategic initiatives, and competitive advantages.
Key Growth Drivers
- Product Innovations: The company has focused on developing new financial products tailored to meet the evolving needs of its customer base. This includes the introduction of competitive interest rates on deposits, which increased total deposits by $228.0 million, or 16.3%, to $1.6 billion as of September 30, 2024, from $1.4 billion at December 31, 2023.
- Market Expansions: The company has expanded its geographical footprint, enhancing its market presence and access to new customers. This strategic move is expected to drive further loan originations, which totaled $569.2 million for the nine months ended September 30, 2024.
- Acquisitions: Pursuing strategic acquisitions remains a priority. The company is evaluating potential targets that align with its growth objectives to bolster its asset base and market share.
Future Revenue Growth Projections
Future revenue growth is projected based on the increasing demand for loans and deposits. The total interest and dividend income increased by $24.2 million, or 25.4%, to $119.5 million for the nine months ended September 30, 2024, up from $95.4 million in the same period of 2023. Analysts forecast continued revenue growth as interest rates remain favorable.
Earnings Estimates
Net income for the nine months ended September 30, 2024, was $36.9 million, representing a 7.9% increase from $34.2 million in the same period of 2023. Future earnings estimates will largely depend on the successful execution of growth strategies and the overall economic environment.
Strategic Initiatives and Partnerships
- Partnerships: The company is exploring partnerships with fintech firms to enhance digital banking services, aiming to attract a younger demographic and improve customer engagement.
- Technology Investments: Significant investments in technology are being made to streamline operations and improve customer experience, which is expected to enhance profitability.
Competitive Advantages
The company is well-positioned for growth due to several competitive advantages:
- Strong Asset Base: Total assets increased by $203.8 million, or 11.6%, to $2.0 billion as of September 30, 2024.
- Robust Credit Quality: The allowance for credit losses related to loans decreased to $4.8 million, or 0.27% of total loans, as of September 30, 2024. This reflects strong credit quality and risk management practices.
- Efficient Cost Structure: Despite an increase in non-interest expenses, the growth in net interest income was greater, resulting in a positive impact on profitability.
| Metrics | September 30, 2024 | December 31, 2023 | Change |
|---|---|---|---|
| Total Assets | $2.0 billion | $1.8 billion | $203.8 million (11.6%) |
| Total Deposits | $1.6 billion | $1.4 billion | $228.0 million (16.3%) |
| Net Income | $36.9 million | $34.2 million | $2.7 million (7.9%) |
| Loan Originations | $569.2 million | N/A | N/A |
| Interest Income | $119.5 million | $95.4 million | $24.2 million (25.4%) |
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Updated on 16 Nov 2024
Resources:
- Northeast Community Bancorp, Inc. (NECB) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Northeast Community Bancorp, Inc. (NECB)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Northeast Community Bancorp, Inc. (NECB)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.