2023 Annual Report

2023 Annual Report

Dear Stockholders:

Apollo Bancorp, Inc. delivered solid earnings in 2023, which was a challenging year for the banking industry.  Net income totaled $1,705,000 in 2023 compared with $1,909,000 reported in 2022.  Earnings per share totaled $3.28 in 2023 compared with $3.68 in 2022.  The most notable change during 2023 was much greater loan interest income, which was offset by significantly higher interest expense.

Comparing 2023 with 2022, net interest income increased 4.3% due to substantially higher loan interest income of $1,356,000, which was offset by an $899,000 increase in interest expense.  Loan balances outstanding grew a robust $16.8 million, or 10.9%, in a market environment characterized by higher interest rates and lower inventory of real estate.  Double-digit loan growth occurred in 2023 for the second consecutive year following 10.2% reported in 2022.

The loan portfolio is primarily secured by residential real estate, both investment properties and owner-occupied homes.  Sound credit policies and prudent underwriting have continued to serve the bank well as loan portfolio growth has been achieved while maintaining strong asset quality with few watchlist credits and low delinquency.

An industry-wide trend of deposit run-off started in 2022 and accelerated in 2023.  Higher interest rates in the capital markets as well as banking concerns and regulatory involvement were frequent topics in the national media in the early part of 2023. Much of the deposit growth of the pandemic era moved out of FDIC-insured institutions and into money market mutual funds due to higher interest rates.

Deposits decreased throughout the industry and Apollo Trust Company experienced an $11.8 million reduction of deposits. Combined with strong loan growth, borrowings increased $25.7 million in 2023.  Consequently, the net interest margin decreased throughout the year but still compared favorably with peer averages. The inverted yield curve has also reduced profitability due to spread compression.

Noninterest income decreased by $62,000 in 2023 compared with 2022 due to a variety of reasons.  Most notably was the $181,000 reduction in fiduciary income as the bank exited its longstanding responsibility as a corporate trustee.  This strategic decision was made due to business continuity risk of operating a small trust department with limited profitability.

Noninterest expenses increased 7.6% in 2023 compared with a 7.9% increase in 2022.  Ongoing challenges in a competitive labor market and frequent technology advancements have increased overhead.  There is strong demand for high performing staff, and operational innovations are needed to provide customers with outstanding service and necessary products to be competitive with larger banks.  I am also pleased to report that Stephanie Embry recently re-joined the bank as executive vice president and chief operating officer.

The quarterly dividend was increased from $0.55 to $0.56 per share, or 1.8%, in the fourth quarter and represented the fourteenth consecutive annual increase.  Dividends remain a priority and increased to $2.21 in 2023, which currently approximates a 6.2% yield.

The directors, officers and employees appreciate your continued support and thank you for your loyalty.


Nelson L. Person
President and CEO