Financial Reports
2023 Executive Summary
2023 was marked by the historic increase in interest rates. By the end of the year, Prime rate stood at 8.5% increasing from 3.25% in March 2022. In March 2023, Silicon Valley Bank failed as depositors rushed to withdraw funds causing the second largest bank failure in history. These events put interest rate and liquidity pressure on all banks in the country. The Federal Reserve set up an Emergency Bank Term Funding Program to help banks across the county manage the crises. I am pleased to report that Bath Savings did not need to access that program and finished 2023 even stronger than we were in 2022.
The bank's total assets grew by $78.4 million to end 2023 at $1.4 billion.
The bank's loan portfolio grew to $785.9 million during the year as customers turned to Bath Savings Institution as a safe, steady, and secure source of funds to finance their homes, their businesses, and their dreams. Last year we originated $322 million in new loans, with 60% of that amount provided to our commercial and business customers, and 40% to individuals for mortgage and consumer loans. We are fortunate to have exceptionally high quality borrowers who continue to strengthen the bank. At the end of December, we serviced nearly 7 thousand loans throughout our region with only 16 of those loans a payment or more past due. This means that 99.8% of our customers continue to pay us on time.
Cash and liquid assets increased by $21.5 million, ending 2023 at $46.6 million.
Capital is the measure of safety at any bank, and at the end of 2023, our total capital or reserves and undivided profits grew by $21.9 million, ending the year at nearly $172.4 million or 12.7% of total assets. This capital position is more than double what the federal regulators would require to be considered well capitalized.
By the end of 2023, we had more than 45 thousand deposit customers with deposits totaling nearly $1.1 billion.
Clients continue to choose Bath Savings Trust Company to manage their investments because they value the personal service and proven investment strategies designed for performance and protection. We believe that, especially during these turbulent times, it is important to have the guidance of our experienced team of local investment professionals providing advice from Front Street in Bath. Our trust officers provide the personal attention clients need and advice they can trust. By year's end, total assets managed by our trust company exceeded $1.6 billion.
In 2023, the bank posted Net Income from Operating Activities of $11.2 million, which was $2.1 million less than 2022. The variance is due primarily to the decrease in our net interest margin as interest paid to our depositors grew faster than interest we received from our loan and investment portfolios.
Trust fees account for three quarters of our other income, increase in managed asset fees more than offset the reduction in loan and other retail fees for the year, and total noninterest income grew to $10.9 million. Operating costs increased by 5.7% and totaled $30.6 million.
The market value of the bank's equity securities portfolio improved, net of taxes, by $4.6 million in 2023, so net income for 2023 totaled $15.9 million, nearly $8.0 million more than 2022.
Bath Savings continues to support our local communities. In 2023, the bank contributed nearly $700 thousand to hundreds of non-profit groups in our region. In addition, last year our officers and employees supported their communities by providing more than 3,300 volunteer hours to nonprofit and charitable organizations, both during and after business hours.
In May, Esther Pappas retired from our Board of Trustees. She served as a trustee of the bank for more than 25 years, and we thank her for her years of service and contributions to the bank.
In 2023, we were again named as one of the Best Places to Work in Maine. 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.
Special thanks to our officers and employees who embody the spirit of the bank's mission by delivering the exceptional service that sets us apart.
In these times of economic turbulence, customers need a bank they can trust, one where their funds are safe and decisions are made locally. Keeping your funds safe is the most important thing we do, so rest assured Bath Savings Institution will continue to protect your assets, your dreams, and your future.
Sincerely,
Glenn L. Hutchinson, President & CEO