MORE THAN JUST A BANK. A PARTNER YOU CAN BANK ON. 2023 ANNUAL REPORT NBTC.COM MEMBER FDIC TRUE PARTNER –SINCE 1960–
A PARTNER OUR CLIENTS CAN COUNT ON TO DELIVER.
Dear Clients, Colleagues and Friends:
For over 60 years, Northern Bank has been driven by an entrepreneurial spirit and guided by common sense. No matter the economic cycle, we stay true to our beliefs and stick to our business model. It’s very simple — we seek out and invest in small and medium size businesses run by ambitious people who are driven by the same type of entrepreneurial spirit. When others were distracted by massive and immediate gains to be had financing crypto currency operations, we stuck to our model. When our peers deployed excess liquidity into large, low-yielding, long-term securities portfolios, we stuck to our model. We have consistently dedicated our capital and resources to help our clients grow their businesses and realize their dreams, and we always will.
Our commonsense approach has served the Bank and our clients well. As predicted, 2023 closed with an exceptionally strong Return On Average Assets (ROAA), Return on Average Equity (ROAE), Net Interest Margin (NIM), and Efficiency Ratio. Our strong financial performance was realized on top of significant investments in our operational capabilities.
When we say that we are “your partner for growth,” we not only mean it, we live it. Our capital position is as strong as it has been in our history. Our loan and funding portfolios are diverse and able to absorb rapid interest rate increases like we have seen over the past twelve months, and then some.
As always, we remain committed to supporting and giving back to our communities through employee volunteerism, corporate sponsorships, and donations from the Northern Bank Charitable Foundation.
We have never been satisfied with the status quo and we never will be. We strive to be a true partner to our clients, employees and communities, and to be the best commercial bank. No reservations. No excuses. The best commercial bank.
I am confident about our future and the opportunities for growth that lie ahead in 2024.
Very truly yours,
JAMES J. MAWN President & CEO Northern Bank, 275 Mishawum Road, Woburn, MA
01801
1 MORE THAN JUST A BANK.
WHERE WE STARTED Founded in 1960
WHERE WE ARE TODAY
32,000+ clients
273 employees
13 branches
From humble beginnings to nationwide reach.
Over 60 years ago, Northern Bank was started by two brothers in order to aid small businesses in Woburn, Massachusetts. Today, we serve communities throughout Massachusetts and partner with businesses across the country. Wherever our clients are and whatever they need, we’re here to get the deal done. MORE THAN JUST A
WHAT WE’VE ACHIEVED 3x increase in assets in 10 years
83% employee headcount increase in 10 years 4x+
2 December 2013 – December 2023 2019 2014 2016 2015 2013 2017 2018 2020 2021 2022 $3.11B $1.09B
BANK. A PARTNER THAT GROWS WITH YOU.
2023 Statement of Condition
ASSETS
Cash and Balances Due from Depository Institutions
Noninterest Bearing Balances
Balances
3
Interest-Bearing
Securities Available-For-Sale Securities, at market Equities Loans Held For Sale Loans and Leases, Net of Unearned Income Less: Allowance for Loan and Lease Losses Loans and Leases, Net of Unearned Income and Allowance Premises and Fixed Assets Other Assets Total Assets Liabilities Non-Interest Bearing Deposits Interest Bearing Deposits Borrowings Other Liabilities Total Liabilities Equity Capital Common Stock Surplus Undivided Profits and Capital Reserves Accumulated Other Comprehensive Income Total Equity Capital Total Liabilities and Stockholder’s Equity Outstanding Standby Letters of Credit Pledged Securities Market Value – Securities Book Value – Securities Net Impact on Stockholders Equity $7,105 100,008 96,779 1,150 309 2,530,372 (45,678) 2,484,694 45,612 98,790 $2,834,447 $682,384 1,580,093 126,621 36,847 $2,425,945 $600 168,495 245,856 (6,449) $408,502 $2,834,447 $19,708 49,585 96,779 104,243 ($5,618) 2022 (in thousands) 2023 (in thousands) $6,909 177,566 83,853 1,205 125 2,737,817 (50,671) 2,687,146 44,020 113,779 $3,114,603 $549,968 2,003,502 76,543 48,690 $2,678,703 $600 168,495 272,958 (6,153) $435,900 $3,114,603 $6,211 18,774 83,853 89,680 ($4,387)
You can depend on us to be financially safe and sound — since 1960.
Return on Average Assets (ROAA)
Return on average assets, as compared to return on equity, shows a balance sheet with strong performance that does not rely on “levering up” to fund a low-yielding securities portfolio. *Northern Bank’s return on equity is also strong, providing substantial capital accretion over time.
Net Interest Margin (NIM)
Higher net interest margin reflects an operating model built on commercial lending, without leveraging the balance sheet to fund a low yielding securities portfolio.
Return on Average Equity (ROAE)
Return on average equity is a financial ratio that measures the performance of a bank based on its average shareholders’ equity outstanding. Typically, ROAE refers to a company’s performance over a fiscal year.
Efficiency Ratio (ER)
An efficiency ratio is a calculation that illustrates a bank’s profitability. It shows how much a bank spends to generate each dollar of revenue.
4
MORE THAN JUST A BANK.
AN INNOVATOR READY TO MEET TODAY’S CHALLENGES.
During the summer, we advanced Northern Digital Solutions (NDS), whose mission is to develop cutting edge, proprietary digital products and customer solutions for Northern Bank that can also be sold to other institutions. NDS combines deep expertise in financial technologies and operations to help develop business agility and intelligence. Its solutions improve a financial institution’s bottom-line, increase operational efficiency and manage risk.
In 2023, Northern Bank established a collection of companies and digital financial solutions all aimed at improving the banking experience for both customers and fellow bankers.
NDS’s first product is its Cash Consolidator (CC) solution, reshaping the commercial lending business by reducing lending risk, and streamlining cash management for bank customers. For bankers, the CC solution automates the process of protecting cash collateral and accelerates deposit inflows. For business customers, CC provides one-stop visibility and consolidating and reconciling cash from all their CC connected banks and accounts.
5
During the spring, Northern Bank — in partnership with ZSuite Technologies, Inc. — began offering a pair of digital solutions aimed at making banking easier for landlords and property owners.
During January 2023, we launched Northern Home Loans (NHL), a new subsidiary that now manages all current and future residential lending.
By expanding our mortgage operation, Northern Bank can now provide customers with more flexibility, increased lending options and greater access to competitive rates. NHL widens the Bank’s geographical reach and is now ready to serve customers who are in the market for a vacation home or move to another state.
ZEscrow automates the processes and procedures necessary to open, close, maintain and service escrow, trust and custodial accounts. It is an ideal solution for Northern Bank customers who require escrow solutions with self-serve capabilities.
ZRent is a digital ACH rent collection tool that simplifies the monthly rent collection process for landlords and property managers. With ZRent, customers no longer need to collect and process paper checks.
The addition of ZEscrow and ZRent bolsters Northern Bank’s cash management service offerings to property management professionals.
Northern Bank’s deposit suite specifically provides property management companies with escrow master, tenant escrow savings and HOA reserve savings accounts.
6
MORE THAN JUST A BANK.
A VALUABLE RESOURCE FOR CUSTOMERS.
CUSTOMER SERVICE
Responsive service kept customer satisfaction high.
OUR U.S.-BASED, EMPLOYEE-STAFFED CONTACT CENTER EXPERIENCED A BUSY 2023
56,000 calls received
12% increase in calls received year-over-year
23,000 calls made
15% increase in calls made year-over-year
CUSTOMERS ARE EXTREMELY SATISFIED WITH NORTHERN BANK’S PRODUCTS AND SERVICES 4.4/5.0
189
7
overall customer satisfaction
Net Promoter Score
4.4/5.0
customers surveyed
1031 EXCHANGE
Experts kept the real estate investor community in the know.
When choosing a 1031 Exchange partner, many opt for the safety and soundness of one backed by an FDIC insured bank.
Leveraging 1031 Exchange — where homeowners can defer capital gains taxes on rental or investment properties — is a hands-on business because of the many intricacies related to tax codes. Our experts canvassed the U.S. in 2023, educating realtors, commercial brokers, attorneys, CPAs and investors about the process.
The team attended or hosted more than 40 webinars, podcasts, continuing education classes and industry conferences all aimed at creating greater awareness and understanding of the 1031 Exchange business.
8
MORE THAN JUST A BANK. A COMPANY BUILT ON INGENUITY AND PERSEVERANCE.
Northern Bank was started by two entrepreneurs who had the vision, ingenuity and perseverance to pave their own way. It should be no surprise that those are exactly the same attributes we look for in our employees. We don’t follow a traditional path, but we are confident that our compass is true.
OUR VALUES
Striving for excellence is in our DNA.
The “Northern PEAK” has four core company values that guide all employees:
PERFORMANCE
We perform each task with professionalism. We are committed to operational excellence and outstanding customer service.
EXECUTION
We focus on executing each task in a timely and efficient manner. We deliver on our commitments.
ATTITUDE
We demonstrate pride in Northern Bank. We are enthusiastic and create positive energy. We maintain a positive and open attitude toward new ideas.
KNOWLEDGE
We master every aspect of our jobs and always pursue growth. We learn from our experiences. We expand our knowledge through development opportunities and learning from colleagues.
DIVERSITY MATTERS
At Northern Bank, we recognize, respect and celebrate the diverse backgrounds and perspectives of all people and value the learning and cultural opportunities a richly diverse workplace and community provide. We are committed to creating a culture and environment that is inclusive of all our employees, because it is their uniqueness and individual traits and characteristics that make them who they are and enable them to contribute in a way no one else can.
9
Words matter. Some words are empty slogans, others are meant to stifle any conversation or debate, but some words mean a lot — like “stay true” or “true partner.” These words carry deep meaning. We’re not interested in window dressing, but rather real actions that help us stay true to our foundational principles.
KATHY HARRIS Chief Human Resources Officer, SVP
10
EMPLOYEE APPRECIATION
Together we celebrate our employees’ dedication.
Every year, we recognize our employees in March as part of Northern Bank’s “Employee Appreciation Week.” A daily trivia contest, free Red Sox tickets, cheesecake and the return of “Pizza Friday” were among the many highlights of this year’s celebration.
Morning coffee and bagels kept employees running throughout the day and everyone was busy deciding on a gift from The Northern Shop. The online store features hats, sweatshirts, mobile power banks, vests and more.
11
Our team is now as strong as it has ever been. We’re projecting that strength to our clients and the communities we serve. Our success and that strength is a direct result of your (employee) commitment.
JIM MAWN President and CEO
12
MORE THAN JUST A BANK. A BUSINESS THAT UNDERSTANDS SMALL BUSINESS.
At Northern Bank, we know what drives entrepreneurs. It’s the desire to fill a need in the community that no one else can. That’s why our founders started Northern bank all those decades ago, to give entrepreneurs a place to bank that understood their needs and shared their dreams.
Northern Bank’s commitment to serving small business customers was on full display in 2023 when it launched its “True Partner” advertising campaign during all Boston Red Sox home game broadcasts on WEEI-FM Boston (93.7).
Northern Bank’s “success stories” brought to life the various financial challenges and solutions a variety of small businesses face.
The series kicked off highlighting four clients, including the owner of a national computer coding education business, a child daycare owner in Woburn, MA, a local Crumbl Cookies franchisee in Saugus, MA and an insurance agency operator in Stoneham, MA.
13
14 Email Phone number First name Last name SUBMIT home run for your business. Let’s talk! STORY BY RUTH AGBAJI | CODE WIZ When Ruth Agbaji, CEO of Code Wiz, was ready to grow her business, she turned to Northern Bank to help her expand her franchise. READ MORE Did you strike out getting a loan from your bank? STORY BY JESSICA AND BRENT GARIANO CRUMBL COOKIES An SBA loan was just what Jessica and Brent Gariano needed to launch a Crumbl Cookies franchise location in Saugus. READ MORE Does your bank show up to play? MEMBER FDIC SMALL BUSINESS OWNERS Does your bank hit it out of the park? Every day we’re helping small businesses grow. Check out these Success Stories from our clients to learn more about all the ways Northern Bank can help you hit a home run for your business. TRUE PARTNER –SINCE 1960–SMALL BUSINESS MONTH 2023 SMALL BUSINESS CHALLENGE #1 Managing Business Cash Flow Does your business bank cover all the bases? MEMBER FDIC
MORE THAN JUST A BANK. A CONTRIBUTING MEMBER OF OUR COMMUNITIES.
You can find Northern Bank employees all over Middlesex County and beyond. We sit on various nonprofit boards and are very active in local area chamber of commerce and rotary clubs. We coach youth sports, attend town wide parades and make charitable donations to those who need it most in the communities we serve.
15
Yomaira “B” Rosario, our new branch development manager in Woburn Center, recently joined the local Chamber of Commerce to welcome Studio Café, a new business in town. Here are (L-R): Studio Café owner Christopher Titus, Chamber Director Chris Kisiel, Chamber President Electra Govoni and B Rosario.
Twice a year, we offer the community a free service that safely and privately destroys personal documents through a partnership with Shred-it®, a leading provider in information destruction.
16
Northern Bank was proud to branch out in 2023 by supporting the local arts. The bank served as the presenting sponsor of a stage play about the life of Whitey Bulger. New York Times bestselling authors Casey Sherman (far right) and Dave Wedge (far left) adapted their book into a play, which they produced alongside Ruvé McDonough. The “one night only” event happened on May 16 at the Wilbur Theatre in Boston followed by an afterparty at the Revere Hotel.
COMMUNITY GIVING
We believe that helping our communities grow, helps us all.
Through charitable foundation grants, community sponsorships and corporate giving in 2023, the Northern Bank Charitable Foundation awarded:
$703,653 donated ACROSS
84 organizations
VOLUNTEERISM
Over the course of 2023, Northern Bank employees volunteered for a number of event and activities.
991 hours logged
91 employees
293 activities
34 organizations
17
A portion of volunteer hours were driven by 24 Northern Bank hosted events that include:
Financial literacy through Junior Achievement and the FDIC Money Smart Program with three onsite events for Somerville High School students to learn from Northern Bank employees.
The fight against homelessness with Heading Home through two “Up & Out Moves”, the adoption of the Medford Family Life Shelter through seasonal activities, and the 2023 Heading4Home campaign which brought together eight community banks to raise awareness and $300,000 in fundraising.
Boys & Girls Club, “After the Bell” Program, at the Altavesta and Shamrock Elementary Schools where Northern Bank employees helped students with schoolwork.
18
GIVING HIGHLIGHTS
Heading4Home— for good.
Northern Bank’s Heading4Home campaign organized an effort to raise $300,000 for nonprofit Heading Home, which works to end homelessness in Greater Boston.
Northern Bank and representatives from seven other community banks in September presented Heading Home with a check on the Fenway Park diamond prior to a Red Sox game. The effort — created to raise funds and awareness for homelessness prevention — was advertised on WEEI-FM during select Sox broadcasted in 2023.
“We are excited and proud to see community banks in Massachusetts come together in the fight against homelessness,” said Northern Bank President and CEO Jim Mawn.
“As community bankers, we represent a powerful force because of our collective commitment to the communities we serve. We are uniquely positioned to give back in a meaningful way.
Thank you to all the banks for your participation — we cannot wait to do this again next year!”
Last year, Heading Home, established in 1974, supported more than 2,000 people and secured permanent housing for 150 families. This included 1,128 children, whose average age was 8-years-old.
19
Congratulations to our 2023 Scholarship winner!
The Northern Bank Charitable Foundation annually administers the James E. McGarry Jr. Scholarship Fund. The $5,000 college scholarship, established in 2014, honors the late “Jim” McGarry of Woburn for his 50 years of service to Northern Bank. It also pays tribute to his lifelong affinity for local fire and police departments.
Ryan T. Bellemore, of Westford Academy, earned the 2023 scholarship in recognition of his seven academic awards, excellent test scores and high GPA. Bellemore, whose father Timothy is a Westford firefighter, regularly volunteers at local fire departments and works as a ski patroller at Nashoba Valley Ski Area in Westford, MA.
“Ryan impressed us with his commitment to academic success and community service,” said Michelle Arnold, Northern Bank Charitable Foundation Committee Member. “We look forward to awarding another deserving candidate in 2024.”
Northern Bank volunteers lend a hand to displaced family.
Northern Bank employees helped a displaced family move into permanent housing through nonprofit Heading Home’s “Up & Out” program.
Employee volunteers moved the family of three into its new home in Dorchester, Massachusetts and outfitted it with a variety of household essentials donated by their bank colleagues.
The benefiting family — a single mom with two kids ages 13 and 11 — was ecstatic when the home was revealed to them in June 2023.
A non-profit organization, Heading Home’s mission is to end homelessness in Greater Boston by providing a supported pathway to self-sufficiency that begins with a home, together with critical services such as life skills, financial literacy, and job training.
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All 2023 Donations
Big Brothers Big Sisters of Central Mass/MetroWest
Birthday Wishes
Boys and Girls Club of Greater Billerica
Boys & Girls Clubs of MetroWest
Chesterbrook Community Foundation
City Kids Inc.
Council of Social Concern
Cradles to Crayons
Dignity Matters, Inc.
Dunkin’ Joy in Childhood Foundation Inc.
Gifts of Hope Unlimited, Inc.
Habitat for Humanity
North Central Massachusetts, Inc.
Habitat for Humanity of Greater Lowell
Heading Home, Inc.
Junior Achievement of Greater Boston (aka JA of Northern NE)
Just A Start
Lazarus House Ministries
Melrose Farmer’s Market — The Snap Program — Melrose Market Community LLC DBA Melrose Farmer’s Market
Merrimack Valley Housing Partnership Inc. (MVHP)
Metropolitan Boston Housing Partnership, Inc. (dba Metro Housing | Boston)
Minuteman Senior Services
Mission of Deeds, Inc.
Mystic Valley Elder Services
Nashoba Learning Group
National Brain Tumor Society
NuPath Inc.
People Helping People, Inc. — Burlington Food Pantry
Raising A Reader Massachusetts (RAR-MA)
Rise Above Foundation
Ron Burton Training Village
Second Chances, Inc.
Sudbury Community Food Pantry
The Elizabeth Peabody House
The Hillinger PIL Fund
The James E. McGarry Jr. Scholarship Fund
The Joey Domenici Foundation
Woburn Host Lions Charities Inc.
YMCA of Greater Boston (North Suburban — Woburn, Burbank-Reading, Waltham Y’s)
$5,000 $10,000 $10,000 $2,500 $6,000 $2,500 $10,000 $10,000 $2,500 $40,000 $5,000 $30,000 $2,500 $250,228 $10,000 $10,000 $3,000 $5,000 $15,000 $15,000 $20,000 $10,000 $5,000 $40,000 $25,000 $2,500 $5,000 $15,000 $10,000 $12,500 $5,000 $10,000 $2,500 $10,000 $5,000 $1,500 $5,000 $15,000
$643,228
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Northern Bank Charitable Foundation 2023 Grants
TOTAL
Northern Bank 2023 Donations
AAPIEC Inc. — Asian American Pacific Islanders for Equality and Change Inc.
Boys & Girls Clubs of Woburn
Breakthrough Greater Boston
Cambridge Center for Adult Education
Camp Casco
Cystic Fibrosis Foundation
Daniel’s Table Inc.
Drake Academy of Excellence
English At Large
Frances Drake PTO
Friends of Horn Pond
Friends of Melrose Memorial Hall
Friends of Roberts Field Inc.
Friends of Stoneham — Troop 513
Friends of the JV Fletcher Library
Friends of Woburn Basketball
General John Nixon Elementary School PTO
Girls Incorporated of Greater Lowell
Goodnow Library Foundation
Greater Boston Stage Company
Kaylash
Lions Club International — Woburn Breakfast
Lions Club International — Woburn Middlesex
Massachusetts 4-H Foundation
Minuteman Senior Services
Mission Ready
Reading Scholarship Foundation, Inc.
St. Charles School
Stoneham Business & Community Educational Foundation
Stoneham Central Middle School PTO
Stoneham Coalition for a Safe and Healthy Community
Stoneham Community Development Corporation
Stoneham Historical Society & Museum
Stoneham Little League
Stoneham Sabers Baseball
Stoneham Veterans Committee (Veterans Day Memorial Run & Field of Honor)
Stoneham Youth Lacrosse
Thangaat Raas Garba Event
The Food Drive
The Guild for Human Services
The James E. McGarry Jr. Scholarship Fund
The Silver Unicorn Bookstore
VNA Hospice & Palliative Care
Westford Historical Society and Museum
Woburn Memorial High School
Woburn Pee Wee Football
American Cancer Society (Multiple Locations/Events)
$2,500 $1,000 $2,500 $2,500 $2,500 $1,500 $2,000 $500 $250 $600 $1,000 $500 $500 $250 $1,000 $1,000 $500 $1,000 $1,000 $1,000 $2,000 $125 $200 $750 $600 $1,000 $1,000 $1,000 $500 $1,000 $500 $500 $1,000 $1,000 $250 $1,000 $1,000 $15,000 $750 $1,000 $500 $1,000 $2,000 $800 $350 $500 $1,500
$60,425 TOTAL 22
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