Groton ― Chelsea Groton Bank’s net operating income hit $17.4 million in its most recent annual report released this week, an increase of 5.4 percent from the previous year as continued hiring at Electric Boat fuels a positive economic outlook locally.

Chelsea Groton’s net income for the year ending Dec. 31, 2023, was even better compared with the previous calendar year, showing the bank $16.8 million in the black versus reported profits of only $4.9 million the year before. The difference in the numbers is largely explained by large unrealized losses in the bank’s investment portfolio as bond prices were crushed by zooming interest rates in 2022, while last year the bond market stabilized.

In 2022, Chelsea Groton showed more than $2.7 million in actual securities losses, plus nearly $8.3 million in paper losses; last year, the numbers turned around with more than $470,000 in actual gains and more than $2.75 million in paper gains. Accounting rules first enacted in 2019 on the federal level now make the net operating income more conducive to comparison year-over-year than the traditional net income, bank President and CEO Tony Joyce said, because it excludes one-time gains or losses from securities investments.

“Overall a good year, solid year,” Joyce said in an interview Tuesday at his executive office while assessing the 2023 numbers officially released Wednesday. “Three to four percent growth in this market, I'll take that.”

Joyce said 2023 was a challenging year for the region’s largest community bank as already-high interest rates climbed a bit higher and then plateaued, putting the squeeze on profit margins and slightly reducing total deposits. But the bright spot for the local economy continued to be high employment at EB, which is growing jobs locally at a rate of more than 5,000 a year, and continued good consumer spending numbers, Joyce said.

“Right now locally with the employment picture, I don't think it gets a lot brighter than what we're looking at right now,” Joyce said. “Our big challenge frankly is we're a big residential mortgage lender with mortgage rates back up to around 7, just under 7(%) and no housing inventory at all. It'kind of puts a lot of sand in the gears for a mortgage operation.”

Still, Chelsea Groton, with $1.6 billion in assets, was responsible for a larger percentage of New London County’s residential loans than any other local bank last year (the national brand Rocket Mortgage continues to be No. 1 overall), closing more than 950 loans, including 105 for first-time home-buyers.

Joyce said local bankers had expected the second half of this year might lead to a refinancing boom for people forced to pay the current high interest rates on mortgages, but so far that does not appear to be materializing as the Federal Reserve fights high inflation with relatively high interest rates. But Joyce is pretty confident that the high rates will not spiral the economy into a recession.

“I think it feels like we're headed for a reasonably soft landing,” Joyce said. “I don't see a recession looming on the horizon right now.”

As for Chelsea Groton, Joyce vowed to keep its bricks and mortar operations intact despite what he said are “all these non-bank competitors nipping away at little parts of your business.” He believes personal relationships still matter for a big percentage of the local population, and that’s why the bank is in the final phase of reimagining its branches to make them more geared toward the individual client rather than the institution’s products.

“We want to bring you all the capability of a bigger lender, but the personal touch of a local person,” he said.

Similarly, the bank continues to give away more than $600,000 annually to local charitable groups through the Chelsea Bank Foundation and another $200,000 directly from operations.

In other related news out of Wednesday’s annual meeting, Daniel L. King, Jeanette Ziegler, Richard Lisitano, Kristin L. Wainwright and Andrew S. Bond were named corporators of the bank. King is an attorney partner in Lahan & King LLC of Norwich; Ziegler is chief operating officer for Native Americans in Philanthropy and a resident of Oakdale; Lisitano is president of L+M Healthcare; Wainwright is a partner at Tobin, Carberry, O’Malley, Riley & Selinger, and Bond is vice president of planning at EB.

l.howard@theday.com