2022 Executive Summary
To Our Corporators, Customers, Staff, and Neighbors
While international conflicts, economic turbulence, and falling financial markets dominated 2022, our 170th year in operation was still one of our most successful!
Total assets ended 2022 at nearly $1.3 billion, growing $47 million over 2021. Our loan portfolio grew by 11.7% to $725 million. In 2022, the bank originated $340 million in loans to individuals, businesses and municipalities across our market. With mortgage and other interest rates increasing, many customers chose adjustable rate mortgage loans, which helped increase the bank's mortgage portfolio. Our experienced lenders continue to find solutions to assist customers regardless of the interest rate environment.
Customers continue to seek the exceptional service we deliver, and in 2022 their deposits increased by 8%, reaching a record of nearly $1.075 billion. This deposit growth is developed one customer at a time, and Bath Savings' staff strives to make a positive difference for each one they encounter. This level of service provides our customers with trust and confidence and builds loyal relationships that connect the customer, the bank, our employees, and our community. Our newest office in Westbrook continues to grow steadily. In 2022, the Downtown Westbrook association recognized our Westbrook team with the Volunteer Group of the Year award, and our branch manager, Jessica McConnell, was named Volunteer of the Year. An impressive entrance to a new community!
The strength and safety of a bank is reflected in its Capital, and in 2022 our Capital ended the year at $150.4 million, providing a capital- to-asset ratio of 11.8%, more than double the 5% our federal regulators require to be considered “well capitalized.”
Total Capital declined, however, as the bank is required to record the change in the market value of our investment portfolios in our capital accounts. The after-tax change in Market Value of the bank's stock portfolio was -$5.4 million for the year, and the after-tax market value decline in our bond portfolio accounted for the remainder of overall equity decline. These temporary market value changes do not diminish the overall quality of our investment portfolios or the overall strength on the bank.
Despite turbulent financial markets causing market value declines, customers continue to choose Bath Savings Trust Company's personal service and custom investment strategies. Last year, our Trust and Investment professionals opened nearly 300 new accounts with assets of $90 million, ending the year with total client assets managed by Bath Savings Trust Company at $1.4 billion.
In 2022, the bank posted Net Income from Operating Activities of $13.3 million — $1.3 million less than 2021. The variance is due primarily to the reduction of other income. With fixed mortgage rates rising, the amount of fees from the sale of loans fell by $4.3 million as many customers chose adjustable rate products, which we retain in our loan portfolio. During 2022, the financial markets declined from record highs causing the market value of BSTC-managed assets to decline, as well as reducing trust fee income by $528 thousand for the year. Operating costs increased by 3.5%, while the bank's Net interest margin improved by $ 2.4 million for the year.
Last year, Bath Savings continued our long tradition of supporting the communities we serve. In 2022, the bank contributed $688 thousand to hundreds of nonprofit groups in our region, and our employees collectively contributed 3,500+ volunteer hours to nonprofit and charitable organizations.
Last summer, Executive Vice President Sherry Tremblay retired from Bath Savings after 35 years of service. We thank Sherry for her dedication and many contributions to the success of the bank. In February 2023, Vice President Patricia Lane, our manager in the Damariscotta office, retired after 35 years of service to the bank. We thank her for all she has done for Bath Savings and for our customers in that community.
In 2022, we were honored to again be named as one of the “Best Places to Work in Maine” by the Best Company Group, an independent workplace research firm. We are pleased to be recognized as an organization that creates an environment where people love to work and a culture where employees are satisfied.
While I am proud of our long history and pleased by our financial results, I am most excited about our future, thanks to our employees who work relentlessly to give customers a personalized and pleasant banking experience. Exceptional Service Without Exception: the foundation of our success!
Glenn L. Hutchinson, President & CEO