investor relations overview

A Message from the President & CEO

I am excited to report that we achieved record earnings for 2020. Net income of $4,258,282 increased 14% over last year’s earnings of $3,723,317. Earnings per share of $1.85 increased 19% over last year’s $1.56 per share. Return on average assets was 0.89% and return on average equity was 9.32%. Earnings were positively impacted by strong loan demand, declining interest expense associated with the drop in market interest rates, and tight expense controls.

While I’ve reported on the many challenges community banks have faced over the past few years, who could have predicted a pandemic would rise to the top of the list? Our strategic objectives were temporarily suspended as we adapted to the constantly changing circumstances. I’m proud to report that our response was driven by our mission to improve the communities we serve as we provided relief to over a hundred customers that had their finances adversely impacted by the virus. We closed nearly 350 loans totaling over $16 million to small businesses through the government’s Paycheck Protection Program (PPP). Community banks made 65% of these loans, which saved an estimated 33.7 million jobs in our great nation. Because of our strong capital position, supporting our communities never came into question.

Andover Bank continues to be recognized as a leader in our industry by achieving several distinguished recognitions, both nationally and locally. American Banker magazine once again recognized the bank as a top 200 publicly-traded community bank under $2 billion in assets, as measured by a 3-year average of return on average equity. The bank was also recognized as a Bauer 5-Star rated bank. We have maintained this highest ranking continuously for over 26 years. At the Greater Ashtabula Chamber of Commerce’s annual meeting, the bank received the Business Excellence Award in response to our pandemic efforts mentioned above. Truly, these recognitions would not be possible without the incredible efforts of our excellent, “essential” employees, who performed so well through these difficult times. 

For the second year in a row, we experienced record balance sheet growth. Total assets increased by $100.0 million, or 23%, net loans increased by $34.2 million, or 16%, and deposits increased by $90.1 million, or 25%. The growth resulted from a combination of factors, including government stimulus as a result of the pandemic and outstanding organic growth in households as our expansive marketing and rebranding efforts continue to drive new relationships, and ultimately new revenue, for the bank. I’m also proud to report that we have taken a significant step by hiring an executive to lead our small business banking program, also part of our strategic initiatives moving forward.

Because of our strong capital position and earnings, we continued our strong dividend performance with a total dividend declared for 2020 of $0.735 per share for an increase of 0.68% over the $0.73 per share dividend declared in 2019. We are pleased to announce that this is our 38th consecutive year of paying and increasing the dividend from the prior year. Since the beginning of 2015, the bank has paid over $10 million in dividends to shareholders. As a shareholder, you can be proud of your investment in the bank as measured by strong earnings per share, above peer group return on average equity, liquidity, and cash flow measured by your dividends. These factors demonstrate the long-term financial strength and stability of Andover Bank.

We continue to experience strong asset quality as evidenced by our delinquency rate, which decreased from 2019 and was below 0.50% at year-end. In addition to low delinquency levels, the bank also recovered more than was charged off for the year. This is the first time that has happened in many years. These results compare favorably to our peer group and indicate that that we are not only very profitable, but operate in a very safe and sound manner.

2020 was a significant year as two of our longest serving directors retired from the board. A. David Morrow and Robert L. Taylor retired in October and December, respectively. These individuals served the bank with distinction for over 30 years each. We send many thanks and well wishes from the entire Andover Bank family to these special men for their unwavering commitment to the bank. I’m proud to report that we have added the following new directors to the board: Andrea L. Morris, Dr. Trista S. Warren, and Patrick Groner, Jr. Each is uniquely qualified to serve and they all bring new enthusiasm to our board as we continue to build on the legacy of our past. Welcome!

I am proud to report on our solid performance for 2019. Net income was $3,723,317, or $1.56 per share, which reflects similar results from last year’s strong earnings of $3,823,456, or $1.57 per share. Return on average assets was 0.91% and return on average equity was 9.21%. Earnings were negatively impacted in the net interest margin by the dramatic increase in interest expense that we anticipated and I commented on in last year’s annual report as a result of rapidly rising short-term rates throughout 2018. This and the successful growth of new deposits in general, contributed to interest expense on deposits rising by 87% over 2018’s results. Earnings were favorably impacted by strong loan demand that facilitated liquidating some lower yielding securities at a gain and redeploying those funds into higher yielding loan assets.

None of these accomplishments would be possible without the strong vision and guidance of the board of directors. However, I am most proud of the dedication and commitment from our greatest asset, our employees. They exceeded expectations in a difficult year and I am honored and humbled for the opportunity to lead them. Lastly, I want to recognize you, our shareholder. Your capital investment in Andover Bank and belief in the community banking philosophy make all our efforts possible.

On behalf of the board of directors and employees, thank you for your continued support and encouragement. It is greatly appreciated.

Stephen E. Varckette
President and
Chief Executive Officer