January 30, 2025
Dear Marine Bank Shareholders:
We continue to prepare for the previously announced merger with ELGA Credit Union of Grand Blanc, Michigan. It is currently in the hands of the various regulatory agencies for review and approval. It appears the merger should be completed in the second quarter of this year.
As a reminder, the indicated price per share to the Marine Bancorp shareholders is $43.75, to be paid in cash to shareholders of record as of the closing date.
Again, our advice to all our shareholders is to locate your evidence of ownership (stock certificate or brokerage statement if held in the street name) in preparation to turn it over to our transfer agent at closing. More on that later in this letter.
All our merger preparations with the ELGA Team have been very positive and we believe this is a rewarding outcome for our shareholders, clients, employees and the communities we serve. ELGA will retain all the Marine employees who will then have the opportunity to offer ELGA’s extensive suite of consumer banking services, which will enhance our current offerings. Our commitment to our communities will not falter.
While we are preparing for the upcoming merger, we continue to focus on providing our clients with an exceptional banking experience throughout the merger and after its completion. Bauer Financial, a leading bank-rating organization, has acknowledged our efforts by awarding Marine Bank a 5-Star "Superior" rating.
Following are the financial results for Marine Bank's parent company, Marine Bancorp of Florida, Inc.
2024 Full Year Financial Summary
|
million $ |
Twelve Months Ended 12/31/2024 |
Twelve Months Ended 12/31/2023 |
% change |
|
Net Income |
2.832 |
4.614 |
-39% |
|
Total Assets |
646 |
654 |
-1% |
|
million $ |
|
|
|
|
Total Loans |
442 |
447 |
-1% |
|
Total Deposits |
568 |
582 |
-2% |
|
Total Checking + NOW |
245 |
255 |
-4% |
|
|
|
|
|
|
Marine Bancorp Tangible Book Value Per Common Share |
$20.83 |
$19.99 |
4% |
|
Actual YTD Earnings |
$1.55 |
$2.52 |
-38% |
|
Return on Shareholders’ Equity |
7.64% |
15.21% |
-50% |
|
million $ |
|
|
|
|
Non-Performing Assets |
0 |
120 |
-100% |
Quarter Over Quarter 2024 Financial Summary:.
|
million $ |
Quarter Ended 12/31/2024 |
Quarter Ended |
|
Quarterly Net Income |
0.795 |
0.565 |
|
Total Assets |
646 |
652 |
|
million $ |
|
|
|
Total Loans |
442 |
442 |
|
Total Deposits |
568 |
566 |
|
Total Checking + NOW |
245 |
239 |
|
|
|
|
|
Year-to-Date Earnings Per Share |
$1.55 |
$1.11 |
Financial Results
Net income for the year ending December 31, 2024, was $2.832 million, down from $4.614 million the year earlier, a 39% decrease. The decline in earnings is due primarily to the continued high-interest rate environment and the increased competition for deposits. Additionally, as previously announced, the Bank has entered into a definitive agreement to be acquired by ELGA Credit Union, which has resulted in $278 thousand in merger-related expenses. Additionally, the higher interest rates, and to a lesser extent the election, put a damper on lending activity, negatively impacting both the willingness and capacity of our borrowers to take on new obligations.
The fourth quarter net income improved over the third quarter with Federal Reserve rate reductions lowering our cost of funds and improving our net interest margin. Also, mortgage origination activity and income improved.
Asset and Loan Growth
Total Assets decreased $8 million, or 1%, from December 2023 to December 2024. During the same period, Total Loans were down slightly.
Total Assets decreased by $6 million in the fourth quarter of 2024 from the third quarter of 2024, and Total Loans remained relatively flat quarter over quarter.
Deposit Growth
Total Deposits as of December 31, 2024, were $568 million compared to $582 million the same time the previous year, a decrease of $14 million or 2%.
Our non-interest and interest-bearing checking accounts declined to $245 million as of December 31, 2024, compared to $255 million as of December 31, 2023, a decrease of $10 million or 4%.
We continue to open new accounts at a record pace but the average balances per account are decreasing as clients seek higher investment returns and use cash instead of borrowing for asset purchases due to the higher cost of credit. This is having a negative impact on both loans and deposits.
Maintaining core deposit growth and controlling our cost of funds has been an ongoing challenge. Our core checking account deposit base is still a respectable 43% of total deposits.
Credit Quality
Credit Quality continues to be very strong. As of December 31, 2024, we had zero non-performing assets. At this writing there are no non-performing assets.
Profitability
For the year ending December 31, 2024, the Return on Shareholders’ Equity (ROE) was 7.64% as compared to 15.21% for the year ended December 31, 2023.
Earnings per share were $1.55 for the twelve months ending December 31, 2024, compared to $2.52 for the same period in 2023.
Common Stock Book Value
The common stock tangible book value was $20.83 per share on December 31, 2024. The stock has been trading on the OTC marketplace for approximately $39.85, apparently in anticipation of the merger.
The Current Economic and Banking Situation
We previously discussed interest rate movements with the Federal Reserve reducing the short-term interest rates while the longer interest rates (specifically the ten-year treasury bonds) have actually increased in anticipation of continued inflation. This continued in the fourth quarter and in early 2025. The result is a more normal upward sloping yield curve (long-term rates are higher than short-term rates). This is a much better rate environment for banks but unfortunately the higher long-term rates lead to higher mortgage rates which continue to slow down housing and mortgage activity.
More on Our Merger with ELGA Credit Union
We continue to receive positive responses from our clients and employees regarding the announcement. ELGA Credit Union's focus on employees, clients, and the community aligns well with Marine's culture. We have complementary business lines, allowing both parties to benefit; Marine gains access to ELGA Credit Union's consumer banking expertise, while ELGA Credit Union gains access to Marine's business banking expertise, including our advanced treasury management services.
When the merger is complete you will continue banking with the same people, at the same locations, but with the addition of more services and potentially more locations in the future.” This promises to be an exciting year.
Marine Stock Ownership Evidence
This is a good time to ensure that you have your Marine Bancorp stock certificates safely in your possession (a Marine Bank safe deposit box) or that the account at your broker is accessible. Also please ensure the owner’s name on the certificate is valid, i.e. not a deceased person or discontinued business. This will ensure you can easily negotiate the proceeds check after you have surrendered the stock at closing. The lost stock certificate replacement process is arduous and costly.
What You Can Do
We focus on providing the best possible banking experience available. Please continue to refer your friends, family members, business associates and anyone you think will be a good client of your Bank.
We continue to receive five-star ratings from our clients, and we expect this to continue after the merger with ELGA Credit Union.
Please check our social media pages on Facebook and LinkedIn. They provide value-added banking and financial related information and news about your Bank. Your “likes” and “shares” are important so please follow us!
Sincerely yours,
William J. Penney
President, CEO & Chairman
Daniel R. Richey
Chairman of the Board