investor relations overview

A Message from the President & CEO

On behalf of the board of directors of Andover Bancorp, Inc. and the employees of Andover Bank, I am pleased to report on the strong operating performance of the bank in 2023, as we prepare to celebrate our 140th year in operation.

2023 was a challenging year for banks as we continued to adapt to an evolving economic environment after the pandemic. Since early 2022, the Federal Reserve Bank has increased short-term interest rates at their fastest pace in over 40 years, from virtually 0% to over 5%. This rapid rise in rates to fight excessive inflation has caused liquidity disruptions in the banking community, leading to several high-profile bank failures earlier in the year.

Principled conservative management strategies have always been the hallmark of our operating philosophy. In advance of the market disruptions, we made a concerted effort to focus on liquidity, regulatory capital levels, loan portfolio asset quality, reducing wholesale borrowings, and maintaining strong funding sources. I am proud to report that our time-tested community-based banking model has weathered the economic volatility well and has the bank in good position to take advantage of market opportunities that typically arise at this point in the credit cycle.

While net income for the year of $3,778,297 decreased by 22.5% from last year’s net earnings of $4,873,015, these results surpassed our budgeted expectations based on an uncertain economic outlook. Higher interest expense on deposits was the main factor impacting year-over-year earnings. Noninterest income improved by 9.7%. Earnings per share of $1.80 decreased 21.4% from last year’s $2.29 earnings per share. Return on average assets was 0.67% and return on average equity adjusted for other comprehensive losses was 7.93%. 

In comparing the change in the balance sheet from 2022, total deposits remained relatively unchanged at $524.6 million, and representative of our strong core deposit franchise. It should be noted that the bank had no brokered deposits or wholesale borrowings at year’s end. Net loans decreased by $8.8 million, or 3.2%, to $266.5 million, primarily because of considerably higher borrowing rates and caution associated with our balance sheet strategy. Total assets decreased by $13.2 million, or 2.3%, to $558.0 million. Stockholders’ equity increased by $6.6 million, or 48.2%, to $20.3 million, and was positively impacted by an increase in the market value of our securities portfolio caused by reduced market interest rates at year-end. The bank remains very well-capitalized as our Tier 1 equity capital ratio of 9.76% and Total Risk-Based capital ratio of 22.79% are both higher than 2022 and significantly above the regulatory requirements to be well-capitalized of 6.0% and 10.5%.

Asset quality remains exceptionally strong, as total loan delinquency remains well below 1%. Net charge-offs for the year were below $10,000 as total asset quality continues to compare favorably to our peer groups and indicates the bank continues to operate in a safe and sound manner.

I am honored to announce that 2023 marks the 41st consecutive year the bank has paid a dividend and increased the amount of the dividend from the prior year. This record dividend performance is unmatched in the State of Ohio and serves as testimony to our operating performance and capital position. Total dividends declared for 2023 were $0.75 per share, compared to $0.745 per share in 2022. Our focus remains on driving long-term franchise value for you, our shareholders.

We have spent considerable time and resources over the past couple of years investing in the necessary infrastructure needed for future growth to transform the way we do business. These efforts continue as several areas of the bank undergo changes that we feel will create improved customer experiences and better position us to compete in an ever-evolving financial services landscape. We feel confident that these changes will positively impact our performance for years to come.

I am proud to report the bank continues to be recognized in our community and among our peers. The bank received the 2023 United Way of Ashtabula County’s Community Builder Award. This award recognizes an organization whose philanthropic endeavors in Ashtabula County have added significant value and made a lasting impact in the community. We also received the Rivel Excellence Award for brand awareness and recognition. We were one of ten financial institutions in northeast Ohio to receive this award that focuses on market share and customer satisfaction. Finally, the bank received the Reader’s Choice Award from The Star Beacon as Ashtabula County’s best bank for the 2nd year in a row. My sincere thanks go to our employees, who are the primary reason the bank receives recognitions like these.

It truly is an honor and a privilege to serve as President of an institution that has been focused on strengthening the communities we serve since 1884. Our continued success has been based on the principled business philosophies set forth by our Board of Directors, who provide steadfast guidance and vision, our greatest asset, our employees, who work unselfishly to deliver these results, and you, our shareholders, for your continued confidence and support of your local community bank.

Stephen E. Varckette
President and
Chief Executive Officer