KATAHDIN BANKSHARES CORP. ANNUAL REPORT
2023
DEAR FELLOW SHAREHOLDERS,
It is with pleasure that I share this update on the progress we've made, the milestones we have achieved, and the success that has shaped our Company.
2023 Financial Recap
The dedication and hard work of our team, coupled with strategic decisions, have propelled us to new heights and are reflected in the following financial results.
Net income for 2023 totaled $9,907,000, or $3.08 per share. Earnings per share increased 3.7% over 2022. Return on average assets was 0.99% and return on average equity was 11.99%. Both are solid numbers. Tangible book value per share improved to $25.76 per share.
Net interest income rose by $2,433,000, or 7.6%, despite higher deposit costs after the Federal Reserve hiked interest rates eleven times since spring of 2022.
Non-interest income remained flat in total and across most categories. Noninterest expense continued to rise and is mostly attributed to a $820,000 salary and employee benefits increase as salary inflation continues to work its way through the tight labor market. A slowing of the national rate of inflation is welcome news, and only time will tell if this trend continues.
The balance sheet showed modest growth, with total assets rising 5.2%, or $50,708,000. Loans increased $49,471,000 year over year. Most of the growth was in the commercial portfolio while residential production was slowed due to higher interest rates. We continued to be cautious in growing our loan portfolio due to economic uncertainty, competitor pricing, or terms we did not always feel met our credit standards. Our strong asset quality has continued, but we know that it will not indefinitely remain as good as we have seen over the prior four years. The Bank currently maintains an adequate allowance for credit losses on loans and strong capital levels to protect against potential losses.
We continue our practice of prospecting for core deposit growth and actively call on both existing customers and prospects to gain new business. Competition for deposits is intense, and yields on deposit accounts have risen with customer demand for higher rates. The Bank's ability to grow loans in the State of Maine has traditionally been much less difficult than growing deposits. We emphasize to all staff the importance of attaining new deposit relationships to maintain a strong balance sheet and asset-liability position. Our task continues to be achieving growth in earning assets at profitable yields, while maintaining an adequate net interest margin.
In addition to returning increased dividends to shareholders in 2023 over 2022, our capital levels remain strong, and we are well-capitalized by regulatory authorities. Our present goal is to increase dividends in 2024 as well.
Further detailed commentary on our financials appears in the Company Overview and Results of Operations section of this report.
Operating Environment
We find that operating under current circumstances for community banks is challenging on several fronts. Asset-liability management (ALM) in today's higher interest rate environment is difficult, as the rate hikes seen in 2022 and 2023 caused bank balance sheets to "reset" in nearly real- time. We have followed a somewhat conservative path and have stuck to our ALM process throughout the interest rate increases. This disciplined approach to pricing and structure has served us well so far. No one knows what the future holds regarding interest rates, and we try to maintain a balanced position.
The regulatory environment is demanding, with the failure of three banks early last year intensifying regulatory scrutiny in general. New rules such as extensive collection of data from commercial customers and a rewrite of Community Reinvestment Act (CRA) regulations lead several additional regulatory initiatives. Having to give more attention to regulatory matters takes time away from our core business of serving our customers.
Staffing and the labor market remain a challenge, particularly for certain positions. Higher wages are required to attract talent and the availability of workers is constrained in some geographic areas. We hope that this situation improves.
Despite headwinds, we have found that many consumers and small businesses respond favorably to our brand of community-invested, responsive, locally owned and managed banking. We see exciting potential to tap into markets where we currently have a small presence, while maintaining our excellent market position in northern Maine. Each and every employee on our team is committed to delivering a great customer experience that exceeds expectations.
Shareholder Meeting & Voting
We invite you to join us at the Annual Shareholders' Meeting on Monday, May 6, 2024, at 11:00 a.m. The meeting will return to the Center for Community Health Education at Houlton Regional Hospital. Even if you cannot attend the meeting, I encourage every shareholder to participate by submitting their
proxy votes. You can conveniently vote online, by mail, or by telephone, and it will only require a few minutes of your time.
Achievements
In addition to our financial success, I am also pleased to report that our Company received several notable recognitions over the past year. We were named one of the Top 200 publicly traded community banks in the United States by American Banker Magazine for the fourth consecutive year. Our family-friendly policies, employee benefits package, and company culture helped us to receive the 2023 Best Place for Working Parents® designation as well as being named one of the Best Places to Work in Maine for the sixth consecutive year.
105YEARS IN
BUSINESS
1918-2023
FINANCIAL HIGHLIGHTS AS OF 12/31/23
KTHN STOCK | TOTAL ASSETS |
Supporting our Team and Communities
It brings me great joy to recount the number of employee advancements. Throughout 2023, we promoted ten employees to advanced roles within the Company and welcomed three new commercial services officers.
As part of our commitment to helping our friends and neighbors in need, Katahdin employees and directors donated their time to support 186 unique organizations across Maine for a total of 6,700 hours. A portion of those hours was spent teaching financial literacy, reaching nearly 1,300 unique learners in 2023.
$22.15
NET INCOME
$1.03
BILLION
RETURN ON AVG EQUITY
Moving Forward Together
Goals for 2024 include expansion of our franchise throughout Maine by focusing on assisting customers with their personal and business financial goals. I am confident we can continue to grow our market share and move our Company forward.
Thank you for your investment in and support of Katahdin Trust. I encourage you to connect and follow along with us on social media for the latest on employee highlights, bank news, photos, and updates.
As always, if you have questions regarding the Company or this report, feel free to contact us.
Sincerely,
$9.91 11.99%
MILLION
EARNINGS PER SHARE | TOTAL DEPOSITS |
$3.08 $893.4
Jon J. Prescott President & CEO
MILLION
BOARD OF DIRECTORS
3
STEVEN L. RICHARDSON
CHAIRMAN
Partner,
Richardson's Hardware
Patten, Maine
Director since 1978
RICHARD J. YORK, SR.
VICE CHAIRMAN
Owner,
York's of Houlton
Houlton, Maine
Director since 1997
JON J. PRESCOTT
PRESIDENT & CEO
Katahdin Bankshares Corp. and Katahdin Trust Company Houlton, Maine
Director since 1997
KEITH P. BOURGOIN, CPA Managing Partner, Haverlock, Estey & Curran, LLC Hampden, Maine
Director since 2018
BENJAMIN D. CARLISLE
President,
Prentiss & Carlisle
Bangor, Maine
Director since 2023
RICHARD B. HARNUM, JR.
President,
Harnum Holdings
Hampden, Maine
Director since 2017
JULIE A. LIBBY Retired from the asset management industry Presque Isle, Maine Director since 2023
KATAHDIN BANKSHARES CORP. ANNUAL REPORT 2023
MARIANNA
PUTNAM LIDDELL, ESQ.
Partner,
Pierce Atwood LLP
Yarmouth, Maine
Director since 2018
KIMBERLEY A. NILES
Owner and Director,
State of Granite, LLC
Atkinson, New Hampshire
Director since 2015
PAUL R. POWERS
President,
Powers Roofing & Sheet Metal, Inc.
Owner,
B.J.J. Powers Enterprises
Caribou, Maine
Director since 2000
ABOUT THE BOARD
Our ten Directors are local leaders committed to the success of our Company. Each one cares deeply about the communities we serve because they live, work, and enjoy our region just like we do. Their diverse backgrounds help provide insight and leadership in the oversight of our Bank with an average tenure of 14.5 years.
< 5 YEARS
2
10+ YEARS
4
5-9 YEARS
4
EXECUTIVE MANAGEMENT TEAM
JON J. PRESCOTT
President
Chief Executive Officer
ANGELA TENNETT BUTLER
Executive Vice President
Chief Banking Officer
NATASHA R. McCARTHY, SHRM- CP
Executive Vice President
Chief Human Resources Officer
MATTHEW M. NIGHTINGALE
Executive Vice President
Treasurer & Chief Financial Officer
KRISTA K. PUTNAM, CFMP
Executive Vice President
Chief Marketing Officer
OUR CULTURE
Our 177 employees work together across various departments, including accounting, commercial, customer service, data processing, human resources, information technology, lending, marketing, retail, and operations. Each department strives for a common goal of helping our customers with their financial goals while achieving the highest level of customer satisfaction possible.
We are committed to supporting our employees' professional and personal needs by promoting from within and providing an excellent benefits package and family-friendly policies. It was an honor to be named one of the 2023 Best Places to Work in Maine and Best Place for Working Parents®.
Whether through direct financial support, in-kind donations, or volunteer time by our employees and board of directors, our support of charitable initiatives focuses on programs that we believe can have a meaningful impact on our communities.
Work with us | Bank with us |
We're proud to be recognized for our company | |
spirit, benefits package, and family-friendly policies | |
that support our employees and their families. | |
OUR PROMISE
To provide community banking at its best and exceed customer expectations by offering personalized financial solutions to help individuals, businesses, and local communities manage their money and reach their goals.
WE ARE COMMITTED TO:
- Providing quality financial service by giving each and every customer courteous, personal and professional attention. Our employees will be well trained; knowledgeable and motivated at all times to fulfill our customers' financial needs.
- Continued growth and increased shareholder value at levels in line with maintaining a strong capital position.
- Helping businesses grow and prosper.
- Treating all people fairly and equally.
- Meeting the financial needs of the communities we serve, consistent with maintaining safe and sound banking practices.
- Remaining an independent, locally owned and managed community bank that adds to the quality of life of the communities we serve.
Working with Joe has been unbelievably extremely easy. It was just a conversation like you were going to meet up with an old family friend! He was great to work with. He was understanding and he was
great at communicating.
I would absolutely recommend anyone
to go to Katahdin Trust to get any
type of loan. I feel like they want local businesses and their local communities to succeed."
Miranda Bragan
Owner, Legacy Ranch and Event Center
Mars Hill, Maine
Katahdin Trust Customer Since 2021
OFFICERS
As of 1/31/2024
James Amabile, VP
Maine Financial Group
Commercial Services Officer
Tori Barber, VP
Training Manager
Annette Beaton, VP
Community Banking Officer
Bradley Berthiaume, SVP
Financial Consultant
Katahdin Financial Services
Vicki Bessette, VP
Commercial Services Officer
Adam Bither, VP
Financial Consultant
Katahdin Financial Services
Cindy Boot, AVP
Commercial Services Officer
Alexis Brown
Branch Manager &
Community Banking Officer
David Cambridge, SVP
Commercial Services Officer
Aaron Cannan, SVP
Commercial Services Officer
Lauren Carpenter
Branch Manager &
Community Banking Officer
Samuel Clockedile, VP
Marketing Officer
Albert "Joe" Clukey II, VP
Community Banking Officer
Tabitha Corey, AVP
Quality Control Loan Analyst
Melissa Dahlgren, VP
Community Banking Team Leader
Jessica Dahms, AVP
Commercial Loan Processing Manager
Nicholas DiMatteo, SVP
Commercial Services Officer
Janet Doak, AVP
Branch Manager &
Community Banking Officer
Eunice Fish
Branch Manager &
Community Banking Officer
Sue Fox, AVP
Appraisal Department Manager
Whitney Francis
Bank Operations Officer
Angela Franck, AVP
Branch Manager &
Community Banking Officer
Sarah Gardiner, AVP
Senior Credit Analyst
Leslie Gardner, SVP
Retail Lending
Allissa Given, AVP
Branch Manager &
Community Banking Officer
Candice Glover
Technical Training & Software Officer
Alison Gould, AVP
Commercial Services Officer
Casey Gove
Data Security Officer
Billi Griffeth, SVP
Community Banking
Blake Hamel
Maine Financial Group
Commercial Services Officer
Searra Herbert
Community Banking Officer & Cash Management Specialist
Katherine Hill, SVP
Bank Operations Manager
Justin Jamison, SVP
Commercial Services Officer
Russell Johnston, VP
Commercial Services Officer
Michaela King
Community Banking Officer & Cash Management Specialist
Rebecca Kord, VP
Community Banking Team Leader
Teresa Lincoln
Executive Assistant
Willian Lucy, VP
Managed Assets
Tannis Lundin
Bank Operations Officer
Susan Lunn, SVP
Compliance Officer
Jeremy MacArthur
Network Administration Officer
Karyn MacLeod, VP
Commercial Services Officer
Valerie Maynard
Senior Credit Administration Assistant
Susan McCarthy, VP
Maine Financial Group Manager
-
Commercial Services Officer
James Nelson, VP Commercial Services Officer
Kevin Plourde, SVP
Credit Administrator
Joseph Porter, SVP
Controller
Barrett Potter, VP
Internal Control &
Information Security Officer
Andrew Putnam, SVP
Chief Information Officer
Craig Robinson, AVP
Commercial Services Officer
Jasmine Rockwell, AVP
Loan Operations Manager
Scott Rossignol, AVP
System Administrator
Sarah Silliboy, VP
BSA Officer
Peggy Smith, VP
Branch Manager &
Community Banking Officer
Craig Staples, VP
Commercial Services Officer
Pamela Ward, VP
Credit Control
Jessica Weeks, AVP
Deposit Operations Manager
Danelle Weston, VP
Retail Underwriting Manager
Miranda Wotton, VP
Electronic Banking &
Cash Management
KATAHDINTRUST.COM
6
2023 EMPLOYEE &
COMMUNITY IMPACT
| | |
$248k | 385 | $3,000 |
Total Giving | Local Non-Profit | Raised through employee donations |
Organizations Supported | for St. Apollonia Dental Clinic |
$118k | 6,500+ | 1,294 |
Total Down Payment Assistance | Volunteer Hours | Students learned about financial |
for 5 First-Time Homebuyers | literacy and good money habits | |
from our employees | ||
2023 COMMITMENT TO COMMUNITY
Top of the
Mountain Award
Ruba Haddad
Ruba joined Katahdin Trust in 2021 as a Digital
Marketing Specialist. In addition to leading Katahdin's Financial Literacy initiative, she is actively involved with The Houlton Rotary Club, Mill Pond School PTO, Nickerson Lake Wilderness Preservation, and Jobs for Maine's Grads.
Congratulations, Ruba, on receiving this award and for your commitment to making a positive impact in your local community!
UNAUDITED
SELECTED FINANCIAL DATA
The summary consolidated financial and other data should be read in conjunction with, and is qualified in its entirety by, the Company's current and prior years' annual reports and regulatory filings. Dollars in thousands, except share and per share data.
As of or for the Years Ended December 31, | 2023 | 2022 | 2021 | 2020 | 2019 | ||||||
Balance Sheet Data | |||||||||||
Total assets | $ | 1,034,246 | $ | 983,538 | $ | 940,499 | $ | 937,007 | $ | 850,909 | |
Total investments (1) | 156,070 | 147,736 | 111,739 | 95,973 | 103,173 | ||||||
Total loans | 798,993 | 749,522 | 730,303 | 746,593 | 701,016 | ||||||
Allowance for credit losses on loans | (7,975) | (7,428) | (7,803) | (7,454) | (6,293) | ||||||
Total deposits | 893,381 | 857,566 | 820,187 | 809,024 | 714,418 | ||||||
Shareholders' equity | 87,806 | 79,664 | 83,604 | 76,202 | 68,879 | ||||||
Summary of Operations | |||||||||||
Interest and dividend income | $ | 46,468 | $ | 36,163 | $ | 34,735 | $ | 36,373 | $ | 36,314 | |
Interest expense | 12,041 | 4,169 | 4,066 | 6,443 | 8,872 | ||||||
Net interest income | 34,427 | 31,994 | 30,669 | 29,930 | 27,442 | ||||||
Credit loss expense (benefit) | 106 | (500) | 135 | 1,260 | 460 | ||||||
Net interest income after the provision for loan losses | 34,321 | 32,494 | 30,534 | 28,670 | 26,982 | ||||||
Non-interest income | 4,757 | 4,786 | 5,099 | 5,833 | 5,089 | ||||||
Amortization of investments in limited partnerships (11) | 236 | 236 | 236 | 1,166 | 107 | ||||||
Non-interest expense | 26,769 | 25,233 | 23,856 | 22,803 | 21,969 | ||||||
Income before income taxes | 12,073 | 11,811 | 11,541 | 10,534 | 9,995 | ||||||
Income taxes (11) | 2,166 | 2,087 | 2,068 | 1,015 | 1,836 | ||||||
Net income | $ | 9,907 | $ | 9,724 | $ | 9,473 | $ | 9,519 | $ | 8,159 | |
Less dividends on preferred stock | - | - | - | - | 474 | ||||||
Net income available to common shareholders | $ | 9,907 | $ | 9,724 | $ | 9,473 | $ | 9,519 | $ | 7,685 | |
Per Common Shares and Common Shares Outstanding | |||||||||||
Net income, basic (2) | $ | 3.08 | $ | 2.97 | $ | 2.88 | $ | 2.88 | $ | 2.31 | |
Net income, diluted (2) | 3.08 | 2.97 | 2.88 | 2.88 | 2.31 | ||||||
Book value (3) | 27.57 | 24.49 | 25.41 | 23.16 | 20.77 | ||||||
Tangible book value (3) | 25.76 | 22.70 | 23.63 | 21.43 | 19.05 | ||||||
Weighted average common shares outstanding: (4) | |||||||||||
Basic | 3,217,650 | 3,276,837 | 3,290,788 | 3,299,905 | 3,326,912 | ||||||
Diluted | 3,217,650 | 3,276,837 | 3,290,788 | 3,299,905 | 3,326,912 | ||||||
Common shares outstanding at period end | 3,198,393 | 3,276,492 | 3,323,450 | 3,332,638 | 3,369,207 | ||||||
Adjusted common shares outstanding at period end (5) | 3,184,746 | 3,253,289 | 3,290,605 | 3,290,151 | 3,316,671 | ||||||
Selected Performance Ratios | 1.02% | 1.00% | |||||||||
Return on average assets | 0.99% | 1.02% | 0.99% | ||||||||
Return on average common shareholders' equity | 11.99 | 12.39 | 11.75 | 13.26 | 11.73 | ||||||
Net interest spread (6) | 3.56 | 3.50 | 3.22 | 3.18 | 3.44 | ||||||
Net interest margin (7) | 3.73 | 3.63 | 3.52 | 3.45 | 3.51 | ||||||
Efficiency ratio (8) | 68.93 | 69.09 | 66.70 | 63.78 | 67.87 | ||||||
Asset Quality Ratios | 1.00% | 0.99% | 1.07% | ||||||||
Allowance for credit losses to period end loans | 1.00% | 0.90% | |||||||||
Allowance for credit losses to non-performing loans (9) | 1,115.98 | 351.11 | 278.39 | 155.43 | 117.05 | ||||||
Non-performing loans to period end loans (9) (12) | 0.09 | 0.28 | 0.38 | 0.64 | 0.77 | ||||||
Non-performing assets to total assets (10) (12) | 0.07 | 0.22 | 0.30 | 0.52 | 0.64 | ||||||
Capital Ratios (Katahdin Trust Company) | 15.89% | 15.45% | 15.67% | ||||||||
Total risk-based capital ratio | 14.98% | 13.75% | |||||||||
Tier 1 risk-based capital ratio | 14.81 | 14.42 | 14.50 | 13.81 | 12.75 | ||||||
Common equity tier 1 risk-based capital ratio | 14.81 | 14.42 | 14.50 | 13.81 | 12.75 | ||||||
Tier 1 capital ratio (Leverage ratio) | 10.80 | 10.99 | 10.14 | 9.52 | 9.65 | ||||||
Other Data | |||||||||||
Number of full and limited service banking offices | 16 | 16 | 16 | 16 | 16 | ||||||
Number of full-time equivalent employees | 167 | 165 | 162 | 161 | 171 | ||||||
Katahdin Financial Services Assets Under Management | $ | 184,757 | $ | 195,446 | $ | 191,140 | $ | 159,970 | $ | 135,063 | |
- Consists of investment securities and FHLB stock. (2) Computed based on the weighted average number of common shares outstanding during each period.(3) Book value and Tangible Book Value are calculated using Adjusted Common Shares Outstanding at period end. (4) Weighted Average Common Shares Outstanding less weighted average unallocated ESOP shares. Used for calculating Earnings per Common Share. (5) Common Shares Outstanding at period end less unallocated ESOP shares period end. Since unearned ESOP shares are deducted from capital, this adjustment deducts the unallocated shares from shares outstanding for calculating book value and tangible book value. (6) Net interest spread is the difference between the average yield on interest-earning assets and the average cost of interest- bearing liabilities. (7) Net interest margin is the net interest income divided by the average interest-earning assets. (8) Efficiency ratio is non-interest expense (excluding Amortization of Investments in Limited Partnerships) divided by the sum of net interest income and non-interest income. (9) Non-performing loans consist of non-accrual loans and restructured loans, where applicable. (10) Non-performing assets consist of non-accrual loans, restructured loans, and foreclosed assets, where applicable. (11) The Bank invested in federal historic tax credits which were recognized as a reduction of federal tax expense. Ammortization of the corresponding investment was accounted for in other expenses through Amortizaton of Investments in Limited Partnerships. (12) As of January 1, 2023, the Company adopted ASU No. 2022-02Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures which eliminates the accounting guidance for troubled debt restructurings. Troubled debt restructured loans are included in the numbers for 2019-2022.
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Katahdin Bankshares Corporation published this content on 27 February 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 March 2024 22:06:01 UTC.
