2020 ANNUAL REPORT JOURNEY WELL 2020 ANNUAL REPORT NEWBURYPORT BANK 2020 ANNUAL REPORT Purpose, People and Growth: The Pandemic Shaped Our Journey Without Impacting Our Results. Making a Difference in 2020 “ Our financial results exceeded our growth goals and greatest expectations alike.” Impressive problem solving and execution resulted in a remarkable year with a further strengthened balance sheet and a solid income statement that enabled us to make strategic investments in our future. I am proud to share that we exceeded our goal in total assets. We experienced new customers, new relationships and new referrals. We were part of the solution to address the challenges our businesses and our communities faced during the pandemic. The Bank took on a leadership role with the Paycheck Protection Program (PPP) by providing funding, often in under 24 hours, and ultimately helped 589 businesses keep their doors open and safeguard over 8,600 jobs. Our financial results exceeded our growth goals and greatest expectations alike. • Asset growth goal of 12% exceeded; we ended the year at $1.21 billion, up 16%. To our Customers, Corporators, Employees and Directors, • Deposit growth goal of 12% exceeded; we ended the year with $768.6 million, up 15%. Our purpose begins with people. Improving people’s lives, strengthening businesses and • Net income goal of $3 million exceeded; we ended the year with $5.8 million. making our communities more vibrant each day is what drives us. • Net interest income goal of $33 million exceeded; we ended the year with $36.2 million. The year 2020 and the global pandemic challenged all of our norms and values. I am • Net interest spread goal of 2.77% exceeded; we ended the year with a 3.10% spread. humbled and honored by our people at Newburyport Bank and how they maintained our • Net interest margin goal of 3.06% exceeded; we ended the year with 3.28%. mission to serve our customers and communities with wisdom, courage and care. It is with great pride I report that we achieved superior customer engagement this year while also delivering our strongest financial growth results in years. Our Commercial Lending Division had a record year. Total commercial loan balances were $616.8 million, a 34% increase year over year. Having more development officers in 2020 The Plan was in Place. connecting with our community businesses, as well as referrals from our Private Client Group, drove growth across commercial and industrial, small business, and municipal We were not immune to uncertainty when the pandemic struck. We had, however, the segments. Additionally, our relationship with BancAlliance and its national leveraged credits benefit of a fully prepared multi-year strategic plan that provided the financial insight, added $8.0 million in new commercial loans to our balance sheet. business objectives and affirmation of our values to guide our next move. We shared with our team that we anticipated no reductions in staff, compensation or benefits. All we asked Our Residential Real Estate Lending Division new loan originations exceeded the prior year for was a commitment to safety and to the goals in our strategic plan. by 27% growth to $170.5 million. We were able to help, with fast turnaround and thoughtful guidance, more than 318 households with first mortgages. Furthering the strength of our It soon became clear that our customers wanted to see and talk with us, and we with them. asset base, our team was able to more than double the gain on sold loans to $1.5 million as We swiftly put in place robust safety procedures so that our team and our customers could compared to the prior year. be comfortable and protected. We took the bold move to have our customers walk through our doors and became one of the first banks in our region to fully re-open its lobbies. For the remainder of the year, we continued our planned journey with investments in talent, facilities, technology, products and services, and branding to deliver sustained profitable growth. 2 3 NEWBURYPORT BANK 2020 ANNUAL REPORT Deposits totaled $889.4 million as of December 31, 2020. This was a 16% increase from Exciting Transformations Include New $768.6 million at year-end 2019. Demand deposit accounts grew by 65%. Retail Banking grew checking accounts by 29%. Government Banking and Private Client Group grew Lending Center, Advanced Technology and deposits by 135%. Modernized In-Person Banking Model Net income for 2020 was $5.8 million, up from $4.3 million in 2019. This result reflects the decision to stay the course with our investments in people, systems, brand and technology in the first half of the year together with the continuation of low interest rates. Creation of Newburyport Bank’s Lending Center Positioned as Premier. Our vision at Newburyport Bank is to remain a strong, independent, community partner that helps neighbors and businesses navigate life’s Journey Well. As we continually aspire to that vision, our key objective is to become the premier full-service community bank in the Greater Seacoast region. We see the year 2021 building on the successful path we have forged. A new Chief Talent Officer will help us train existing staff, hire new associates, conduct succession planning and strategically scale in alignment with our growth plan. Notably, Our new Newburyport Bank Lending Center, 43 Main Street, Amesbury, MA we will grow our commercial and industrial lending business with superior leadership and a larger team. Extraordinary growth of our Lending Division prompted the development of a new facility. The newly established Newburyport Bank Lending Center is now a much-appreciated base Investments in technology, mobile banking services and in our communities will attract a for our expanding Consumer and Residential lending teams. broader range of customers. Our new brand identity will enter its third year with continued marketing energy and attractive branch facilities, contributing to our ability to outgrow our peers. I’m proud of all that we accomplished in 2020. Our purpose and our team exemplified a spirit of community and gift of generosity that is at the heart of this organization. Thank you for The New Branch Experience: 2020 Design Upgrades letting us join you on your life’s journey. Journey Well, Lloyd L. Hamm, Jr. President and CEO Newburyport Bank Core Values: Design renovations upgrade the banking experience at our Newbury and Amesbury offices. We will treat customers, co-workers and We are investing in our customers’ comfort and in our future with exciting new branch design renovations featuring the “Universal Banker Model.” This model offers advantages community members with respect, fairness for customers and bankers alike. The design reduces the amount of time required by the and unwavering commitment to a high customer to connect with a banker and all but eliminates traditional teller lines. Highly standard of integrity and professionalism. skilled bankers are prepared to handle needs from simple to complex. For the bank, the design advances the type of business our skilled branch staff can conduct, requires less space, and ultimately strives to deliver elevated customer satisfaction. 4 5 NEWBURYPORT BANK 2020 ANNUAL REPORT New Technology Platform Brings Speed, President’s Award Features, Safety and Scale Ronald Richer - Internal Service Excellence The COVID-19 pandemic produced many unique situations that 5 required immediate and strategic responses. Ron and his team Account consolidations and changes responded with vision, creativity, and enthusiastic problem By investing in stronger solving. Some of the many projects included: installing Plexiglas® WELCOME TO AN technologies and Checking Accounts Even Better Journey. between cubicles; establishing a “lifeboat” site; swiftly closing operational efficiencies, CURRENT ACCOUNT CHANGING TO ACCOUNT IMPACTS and coordinating the sanitation of branches; posting signage No monthly maintenance fee. we’re investing in better Basic Checking Free Personal Checking No charge per check. and doorbells at branches as conditions continually evolved; Monthly maintenance fee $8 (from $10). Minimum balance $500 (from $1,000). banking services for Companion Checking NOW account Minimum opening balance $100 (from $1,000). establishing our PPP “hot” site and providing our Bank team with Maintenance fee waived when minimum our customers. Navigator Checking NOW account balance met or direct deposit. the personal protective equipment needed to enable us to operate Navigator Business Commercial Checking No change. Checking safely with each other and the public. Stephanie Santos - External Service Excellence 2020 COMPUTER SYSTEMS UPGRADE GUIDE Stephanie joined the Bank in 2019 with the mission to build our Business Banking Division. Her vital role became all the Technology investment in the new computer systems brings a new level of innovation and service. more critical with the arrival of the pandemic and the financial uncertainty it caused our business clients. We turned to Stephanie, Our 2020 computer systems upgrade is driving exciting levels of innovation and service. her team, and the entire Bank staff to quickly build capabilities and We now have expanded online and mobile services, and streamlined registration to procedures to respond professionally and effectively to the Small significantly improve the customer experience. Our upgrade to the new computing platform Business Association’s Paycheck Protection Program (PPP) needs. demonstrates our commitment to investing in the safest and most convenient banking Stephanie’s exceptional leadership was the essential element in our experiences for our customers while further enabling the Bank to scale with ease. overwhelming success with this program. Stephanie’s outstanding performance continues to impress existing and new customers with the benefits of banking with Newburyport Bank. 6 7 NEWBURYPORT BANK 2020 ANNUAL REPORT New Hires COVID-19 Sal DeFranco, Assistant Vice President, Business Banking Officer The challenges brought on by COVID-19 brought out the best in Newburyport Bank.