ECB Bancorp, Inc. operates as the bank holding company for Everett Co-operative Bank that provides various banking products and services.
The company conducts business from its full-service banking offices located in Everett, Massachusetts, Lynnfield, Massachusetts and Woburn, Massachusetts, which are located in the greater Boston metropolitan area in Middlesex and Essex counties. The company considers its deposit market area to be Middlesex, Essex and Suffolk counties, Massachusetts and the co...
ECB Bancorp, Inc. operates as the bank holding company for Everett Co-operative Bank that provides various banking products and services.
The company conducts business from its full-service banking offices located in Everett, Massachusetts, Lynnfield, Massachusetts and Woburn, Massachusetts, which are located in the greater Boston metropolitan area in Middlesex and Essex counties. The company considers its deposit market area to be Middlesex, Essex and Suffolk counties, Massachusetts and the company’s primary lending area to be these counties, as well as Norfolk County, Massachusetts, which are located primarily within the Route 128 corridor outside of Boston.
The company’s business primarily consists of taking deposits from the general public and investing those deposits, together with funds generated from operations, in one-to-four family residential real estate loans, commercial real estate and multifamily real estate loans, construction and land loans and home equity lines of credit and loans. The company also invests in securities, primarily consisting of the U.S. government and federal agency obligations, mortgage-backed securities and corporate bonds. The company offers a variety of deposit accounts, including certificate of deposit accounts, IRAs, money market accounts, savings accounts and both interest-bearing and noninterest-bearing checking accounts. The company is similarly focused on enhancing its retail operations.
The bank is subject to comprehensive regulation and examination by the Massachusetts Commission of Banks (‘Commissioner’), as its chartering agency, and the Federal Deposit Insurance Corporation (‘FDIC’) as its primary federal regulator and primary insurer of its deposits.
Market Area
The company considers Middlesex, Essex and Suffolk counties, Massachusetts as the company’s primary market area for gathering deposits, and each of these counties as well as Norfolk County, Massachusetts as the company’s primary lending market area. The company’s main office and two additional branch offices are located in Middlesex and Essex counties, all of which are located in the greater Boston metropolitan area. While the company occasionally makes loans secured by properties located outside of the company’s primary lending market, these loans are generally to borrowers with whom the company has an existing relationship and who have a presence within the company’s primary lending market.
The company’s market area has a high concentration of financial institutions, including large money center and regional banks, community banks, credit unions and other non-bank financial service providers. The company is a small community savings institution.
Lending Activities
The company’s principal lending activity is originating one-to-four family residential real estate loans, commercial real estate and multifamily real estate loans, construction and land loans and home equity lines of credit and loans. To a much lesser extent, the company also originates commercial and consumer loans. Subject to market conditions and the company’s asset-liability analysis, the company expects to continue to grow its commercial real estate and multifamily loan portfolios, as well as the company’s one-to-four family residential real estate loan portfolio. The company also originates for sale and sells a portion of the fixed-rate one-to-four family residential real estate loans that the company originates that generally have terms of 15 years or greater, on a servicing-released, limited or no recourse basis, while retaining shorter-term fixed-rate and all adjustable-rate one-to-four family residential real estate loans in order to manage the duration and time to repricing of the company’s loan portfolio.
One-to-Four Family Residential Real Estate Lending. The focus of the company’s lending has long been the origination of long-term loans secured by mortgages on owner-occupied one-to-four family residences. The vast majority of the one-to-four family residential real estate loans that the company originates are secured by properties located in the company’s primary market area.
The company’s one-to-four family residential real estate loans are generally underwritten according to Fannie Mae guidelines, and the company refers to loans that conform to such guidelines as ‘conforming loans’. The company generally originates both fixed- and adjustable-rate one-to-four family residential real estate loans in amounts up to the maximum conforming loan limits as established by the Federal Housing Finance Agency (‘FHFA’). The company also originates loans above the FHFA limit, which are referred to as ‘jumbo loans’. The company generally underwrites jumbo loans in a manner similar to conforming loans.
The company originates both fixed-rate and adjustable-rate one-to-four family residential real estate loans. The company’s fixed-rate and adjustable-rate one-to-four family residential real estate loans are originated with terms of up to 30 years.
The company originates its adjustable-rate one-to-four family residential real estate loans with initial interest rate adjustment periods of three, five, seven and 10 years, based on changes in a designated market index.
A portion of the company’s one-to-four family residential real estate loans are for the financing of residential condominium units.
Generally, the company sells a portion of the fixed-rate one-to-four family residential real estate loans that the company originates with terms that are generally greater than 15 years. The majority of loans that the company sells are sold to the secondary market with servicing released.
The company generally does not offer ‘interest-only’ mortgage loans on one-to-four family residential real estate loans nor does the company offers loans that provide for negative amortization of principal, such as ‘Option ARM’ loans, where the borrower can pay less than the interest owed on his loan, resulting in an increased principal balance during the life of the loan. Additionally, the company does not offer ‘subprime loans’ (loans that are made with low down-payments to borrowers with weakened credit histories typically characterized by payment delinquencies, previous charge-offs, judgments, bankruptcies, or borrowers with questionable repayment capacity as evidenced by low credit scores or high debt-burden ratios) or Alt-A loans (defined as loans having less than full documentation).
The company offers one-to-four family residential real estate loans secured by non-owner occupied properties.
Commercial Real Estate and Multifamily Lending. The company’s commercial real estate loans are secured primarily by multifamily apartment building, retail and mixed-use properties, light industrial properties, manufacturing facilities and office buildings, almost all of which are located in the company’s primary market area. The company’s multifamily loans are secured primarily by five or more-unit residential buildings.
The company generally originates adjustable-rate commercial real estate and multifamily real estate loans with maximum terms of up to 30 years. From time to time the company will also originate fixed rate loans in these portfolios.
Construction and Land Loans. The company makes construction loans, primarily to developers, contractors and builders of apartment buildings, single-family homes and condominiums and individuals for the construction of their primary residences. The company also makes a limited amount of land loans that will be used for residential or commercial development. Land loans also include loans secured by land purchased for investment purposes.
The company’s construction loans are fixed- and adjustable-rate, interest-only loans that provide for the payment of interest during the construction phase, which is usually up to 12 to 24 months or in some cases up to 36 months for more complex projects.
Home Equity Loans and Lines of Credit. In addition to one-to-four family residential real estate loans, the company offers home equity loans and lines of credit that are secured by the borrower’s primary, secondary residence or investment property.
The company’s home equity loans are primarily originated with fixed rates of interest with terms of up to 15 years. Home equity loans and lines of credit are generally secured by junior mortgages and have greater risk than one-to-four family residential real estate loans secured by first mortgages.
Commercial Loans. The company makes commercial loans and lines of credit primarily to small businesses in the company’s market area. These loans and lines of credit are generally secured by business assets, such as equipment and accounts receivable. Commercial loans and lines of credit are made with both adjustable and fixed-interest rates and for terms generally up to 60 months or on demand.
Consumer Lending. To a much lesser extent, the company offers a variety of consumer loans to individuals who reside or work in the company’s market area, including new and used automobile loans, unsecured overdraft lines of credit and loans secured by savings accounts.
Investment Activities
At December 31, 2023, the company’s investment portfolio primarily consisted of debt securities issued by the U.S. Treasury, the U.S. government sponsored enterprises, mortgage-backed securities, and corporate debt securities.
Deposits
The company’s deposits are generated primarily from residents within the company’s primary market area. The company offers a selection of deposit accounts, including noninterest-bearing and interest-bearing demand accounts, money market accounts, savings accounts and certificates of deposit.
All of the company’s deposits are fully insured due to the additional insurance provided to a Massachusetts cooperative bank, such as the bank, under the Depositors Insurance Fund, a private industry-sponsored insurance fund in Massachusetts that insures all deposits at Everett Co-operative Bank above FDIC limits.
Subsidiary and Other Activities
Everett Co-operative Bank has one subsidiary, First Everett Securities Corporation, Inc. (‘FESC, Inc.’), a Massachusetts corporation, which is engaged in the buying, selling and holding of investment securities.
Supervision and Regulation
As a registered bank holding company, the company is regulated by the Board of Governors of the Federal Reserve Board (the ‘Federal Reserve Board’). The bank also is a member of and owns stock in the Federal Home Loan Bank of Boston, which is one of the 11 regional banks in the Federal Home Loan Bank System.
In addition, the company must comply with significant anti-money laundering and anti-terrorism laws and regulations, Community Reinvestment Act laws and regulations, and fair lending laws and regulations. The bank must comply with consumer protection regulations issued by the Consumer Financial Protection Bureau, as enforced by the FDIC.
The company is a bank holding company within the meaning of Bank Holding Company of 1956, as amended. As such, the company is registered with the Federal Reserve Board and is subject to regulations, examinations, supervision and reporting requirements applicable to bank holding companies.
The common stock of the company is registered with the Securities and Exchange Commission. The company is subject to the information, proxy solicitation, insider trading restrictions and other requirements under the Securities Exchange Act of 1934.
The bank’s deposits are insured up to applicable limits by the FDIC and by the Depositors Insurance Fund for amounts in excess of the FDIC insurance limits. The bank is subject to extensive regulation by the Commissioner, as its chartering agency, and by the FDIC, its primary federal regulator and deposit insurer.
In addition, the bank is subject to Massachusetts consumer protection, Community Reinvestment Act, civil rights laws and regulations. Everett Co-operative Bank received a ‘Satisfactory’ Community Reinvestment Act rating in its most recent federal examination.
The bank’s authority to extend credit to its directors, executive officers and 10% shareholders, as well as to entities controlled by such persons, is governed by the requirements of Sections 22(g) and 22(h) of the Federal Reserve Act and Regulation O of the Federal Reserve Board.
The Deposit Insurance Fund of the FDIC insures deposits at FDIC-insured financial institutions, such as the bank, generally up to a maximum of $250,000 per separately insured depositor.
The bank is subject to the USA PATRIOT Act, which gives federal agencies additional powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing, and broadened anti-money laundering requirements.
The deposit operations of the bank also are subject to, among others, the:
Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records;
Check Clearing for the 21st Century Act (also known as ‘Check 21’), which gives ‘substitute checks,’ such as digital check images and copies made from that image, the same legal standing as the original paper check; and
Electronic Funds Transfer Act and Regulation E promulgated thereunder, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services.
The Sarbanes-Oxley Act of 2002 is intended to improve corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities laws. The company has policies, procedures and systems designed to comply with these regulations, and the company review and document such policies, procedures and systems to ensure continued compliance with these regulations.
Everett Co-operative Bank is a member of the Federal Home Loan Bank System.
History
ECB Bancorp, Inc. was founded in 1890. The company, a Maryland corporation, was incorporated in 2022.
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