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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January
28, 2025
WESTERN
NEW ENGLAND BANCORP, INC.
(Exact
name of registrant as specified in its charter)
| Massachusetts |
|
001-16767 |
|
73-1627673 |
| (State
or other jurisdiction of incorporation) |
|
(Commission
File Number) |
|
(I.R.S.
Employer
Identification No.) |
| 141
Elm Street |
|
| Westfield, Massachusetts |
01085 |
| (Address
of principal executive offices) |
(zip
code) |
Registrant's
telephone number, including area code: (413) 568-1911
(Former
name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:
☐ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities
registered pursuant to Section 12(b) of the Act:
| Title
of each class |
Trading
Symbol |
Name
of each exchange on which registered |
| Common
Stock, $0.01 par value per share |
WNEB |
NASDAQ |
Indicate
by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company ☐
If
an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
|
Item 2.02. |
Results of Operations and Financial Condition. |
On January
28, 2025, Western New England Bancorp, Inc. (the “Company”) issued a press release announcing its financial results for the
quarter and twelve months ended December 31, 2024. A copy of the press release is furnished as Exhibit 99.1 hereto and is hereby
incorporated by reference into this Item 2.02.
|
Item 7.01. |
Regulation FD Disclosure. |
On January 28, 2025, the Company
made available an investor presentation to be used during investor meetings. The slide show for the investor presentation is attached
to this report as Exhibit 99.2.
The
information contained in this Item 7.01 and Exhibits 99.1 and 99.2 attached hereto, is being furnished and shall not be deemed “filed”
for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to
the liabilities of that section, nor will such information or exhibits be deemed incorporated by reference into any filing made by the
Company under the Exchange Act or the Securities Act of 1933, as amended, whether made before or after the date hereof and regardless
of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such filing.
The furnishing of the information included in Item 7.01 of this Current Report on Form 8-K shall
not be deemed an admission as to the materiality of any information herein that is required to be disclosed solely by reason of Regulation
FD.
|
Item 9.01. |
Financial Statements and Exhibits. |
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) Exhibits.
The exhibits required by this item are set forth on the Exhibit Index
attached hereto.
|
Exhibit
Number |
|
Description |
| |
|
|
| 99.1 |
|
Press Release of Western New England Bancorp, Inc. dated January 28, 2025. |
| 99.2 |
|
Investor Presentation dated January 28, 2025 for Western New England Bancorp, Inc. |
| 104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| |
WESTERN NEW ENGLAND BANCORP, INC. |
| |
|
|
|
| |
By: |
/s/ Guida R. Sajdak |
|
| |
|
Guida R. Sajdak |
|
| |
|
Chief Financial Officer |
Dated: January 28, 2025
Western New England Bancorp, Inc. 8-K
Exhibit 99.1
For
further information contact:
James
C. Hagan, President and CEO
Guida
R. Sajdak, Executive Vice President and CFO
Meghan
Hibner, First Vice President and Investor Relations Officer
413-568-1911
WESTERN
NEW ENGLAND BANCORP, INC. REPORTS RESULTS FOR THREE MONTHS AND
YEAR
ENDED DECEMBER 31, 2024 AND DECLARES QUARTERLY CASH DIVIDEND
Westfield,
Massachusetts, January 28, 2025: Western New England Bancorp, Inc. (the “Company” or “WNEB”) (NasdaqGS:
WNEB), the holding company for Westfield Bank (the “Bank”), announced today the unaudited results of operations for
the three and twelve months ended December 31, 2024. For the three months ended December 31, 2024, the Company reported net income
of $3.3 million, or $0.16 per diluted share, compared to net income of $2.5 million, or $0.12 per diluted share, for the three
months ended December 31, 2023. On a linked quarter basis, net income was $3.3 million, or $0.16 per diluted share, for the three
months ended December 31, 2024, as compared to net income of $1.9 million, or $0.09 per diluted share, for the three months ended
September 30, 2024. For the twelve months ended December 31, 2024, net income was $11.7 million, or $0.56 per diluted share, compared
to net income of $15.1 million, or $0.70 per diluted share, for the twelve months ended December 31, 2023.
The
Company also announced that the Board of Directors declared a quarterly cash dividend of $0.07 per share on the Company’s
common stock. The dividend will be payable on or about February 26, 2025 to shareholders of record on February 12, 2025.
James
C. Hagan, President and Chief Executive Officer, commented, “I am pleased to report the results for the fourth quarter of
2024. Our strong, diversified, core deposit base was integral in effectively managing our funding costs over the last two years
during a rising rate environment. Our disciplined approach to managing our funding costs resulted in an increase in net interest
income for the second consecutive quarter in 2024.
As
we continue to manage the balance sheet, we remain focused on identifying initiatives to mitigate top line pressures and improve
efficiencies over the Company’s long-term. In 2024, total deposits increased $118.9 million, or 5.6%, and core deposits
represented 68.9% of total deposits as compared to 2023. The loan-to-deposit ratio decreased to 91.5%. We continue to focus on
extending credit within our markets and servicing the needs of our existing customer base while ensuring new opportunities present
the appropriate levels of risk and return.
Our
asset quality remains strong, with nonaccrual loans at 0.26% of total loans, and classified loans, which we define as special
mention and substandard loans, at 1.9% of total loans as of December 31, 2024. Our loan portfolio continues to perform well and
we continue to proactively identify and manage credit risk within the loan portfolio, consistent with our prudent credit culture.
The
Company is considered to be well-capitalized and we remain disciplined in our capital management strategies. During the twelve
months ended December 31, 2024, we repurchased 934,282 shares of the Company’s common stock at an average price per share
of $7.94. We continue to believe that buying back shares represents a prudent use of the Company’s capital. We are pleased
to be able to continue to return value to shareholders through share repurchases. Although the banking environment has been challenged,
our capital management strategies have been critical to sustaining growth in book value per share, which increased to $11.30,
while tangible book value per share, a non-GAAP financial measure, increased $0.33, or 3.2%, to $10.63 at December 31, 2024.”
Hagan
concluded, “Over the last few years, the banking industry as a whole experienced challenging headwinds, however, our team
remains focused on serving our customers and supporting our community. Our commitment to strong capital and liquidity levels gives
us a strong foundation to take advantage of opportunities in the markets we serve and to enhance shareholder value in the long
term.”
Key
Highlights:
Loans
and Deposits
Total
loans increased $42.9 million, or 2.1%, from $2.0 billion at December 31, 2023 to $2.1 billion at December 31, 2024. Residential
real estate loans, including home equity loans, increased $53.5 million, or 7.4%, commercial real estate loans decreased $4.0
million, or 0.4%, commercial and industrial loans decreased $5.7 million, or 2.7%, and consumer loans decreased $1.1 million,
or 19.8%.
Total
deposits increased $118.9 million, or 5.6%, from $2.1 billion at December 31, 2023 to $2.3 billion at December 31, 2024. Core
deposits, which the Company defines as all deposits except time deposits, increased $26.7 million, or 1.7%, from $1.5 billion,
or 71.5% of total deposits, at December 31, 2023, to $1.6 billion, or 68.9% of total deposits, at December 31, 2024. Time deposits
increased $92.2 million, or 15.1%, from $611.4 million at December 31, 2023 to $703.6 million at December 31, 2024. Brokered time
deposits, which are included in time deposits, totaled $1.7 million at December 31, 2024 and at December 31, 2023. The loan-to-deposit
ratio decreased from 94.6% at December 31, 2023 to 91.5% at December 31, 2024.
Liquidity
The
Company’s liquidity position remains strong with solid core deposit relationships, cash, unencumbered securities, a diversified
deposit base and access to diversified borrowing sources. At December 31, 2024, the Company had $1.1 billion in immediately available
liquidity, compared to $643.6 million in uninsured deposits, or 28.4% of total deposits, representing a coverage ratio of 171.8%.
Uninsured
deposits of the Bank’s customers are eligible for FDIC pass-through insurance if the customer opens an IntraFi Insured Cash
Sweep account or a reciprocal time deposit through the Certificate of Deposit Account Registry System. IntraFi allows for up to
$250.0 million per customer of pass-through FDIC insurance, which would more than cover each of the Bank’s deposit customers
if such customer desired to have such pass-through insurance.
Allowance
for Credit Losses and Credit Quality
At
December 31, 2024, the allowance for credit losses was $19.5 million, or 0.94% of total loans and 362.9% of nonperforming loans,
compared to $20.3 million, or 1.00% of total loans and 315.6% of nonperforming loans, at December 31, 2023. At December 31, 2024,
nonperforming loans totaled $5.4 million, or 0.26% of total loans, compared to $6.4 million, or 0.32% of total loans, at December
31, 2023. Total delinquent loans decreased $1.0 million, or 16.7%, from $6.0 million, or 0.30% of total loans, at December 31,
2023 to $5.0 million, or 0.24% of total loans, at December 31, 2024. At December 31, 2024 and December 31, 2023, the Company did
not have any other real estate owned.
Net
Interest Margin
The
net interest margin was 2.41% for the three months ended December 31, 2024, compared to 2.40% for the three months ended September
30, 2024. The net interest margin, on a tax-equivalent basis, was 2.43% for the three months ended December 31, 2024, compared
to 2.42% for the three months ended September 30, 2024.
Stock
Repurchase Program
On
May 22, 2024, the Board of Directors authorized a new stock repurchase plan (the “2024 Plan”) under which the Company
may repurchase up to 1.0 million shares, or approximately 4.6%, of the Company’s then-outstanding shares of common stock.
During
the three months ended December 31, 2024, the Company repurchased 220,000 shares of common stock under the 2024 Plan, with an
average price per share of $9.00. During the twelve months ended December 31, 2024, the Company repurchased 934,282 shares of
common stock under the 2024 Plan and the previously existing share repurchase plan, as applicable, with an average price per share
of $7.94. As of December 31, 2024, there were 472,318 shares of common stock available for repurchase under the 2024 Plan.
The
repurchase of shares under the stock repurchase program is administered through an independent broker. The shares of common
stock repurchased under the 2024 Plan have been and will continue to be purchased from time to time at prevailing market prices,
through open market or privately negotiated transactions, or otherwise, depending upon market conditions. There is no guarantee
as to the exact number, or value, of shares that will be repurchased by the Company, and the Company may discontinue repurchases
at any time that the Company’s management (“Management”) determines additional repurchases are not warranted.
The timing and amount of additional share repurchases under the 2024 Plan will depend on a number of factors, including the Company’s
stock price performance, ongoing capital planning considerations, general market conditions, and applicable legal requirements.
Book
Value and Tangible Book Value
The
Company’s book value per share was $11.30 at December 31, 2024, compared to $10.96 at December 31, 2023, while tangible
book value per share, a non-GAAP financial measure, increased $0.33, or 3.2%, from $10.30 at December 31, 2023 to $10.63 at December
31, 2024. See pages 20-22 for the related tangible book value calculation and a reconciliation of GAAP to non-GAAP financial measures.
Net
Income for the Three Months Ended December 31, 2024 Compared to the Three Months Ended September 30, 2024
The
Company reported an increase in net income of $1.4 million, or 72.7%, from $1.9 million, or $0.09 per diluted share, for the three
months ended September 30, 2024, to $3.3 million, or $0.16 per diluted share, for the three months ended December 31, 2024. Net
interest income increased $545,000, or 3.7%, the provision for credit losses decreased $1.7 million, non-interest income increased
$113,000, or 3.6%, and non-interest expense increased $520,000, or 3.6%. Return on average assets and return on average equity
were 0.49% and 5.48%, respectively, for the three months ended December 31, 2024, compared to 0.29% and 3.19%, respectively, for
the three months ended September 30, 2024.
Net
Interest Income and Net Interest Margin
On
a sequential quarter basis, net interest income, our primary driver of revenues, increased $545,000, or 3.7%, to $15.3 million
for the three months ended December 31, 2024, from $14.7 million for the three months ended September 30, 2024. The increase in
net interest income was primarily due to an increase in interest income of $746,000, or 2.7%, partially offset by an increase
in interest expense of $201,000, or 1.5%.
The
net interest margin was 2.41% for the three months ended December 31, 2024, compared to 2.40% for the three months ended September
30, 2024. The net interest margin, on a tax-equivalent basis, was 2.43% for the three months ended December 31, 2024, compared
to 2.42% for the three months ended September 30, 2024. During the three months ended December 31, 2024 and during the three months
ended September 30, 2024, the Company had a fair value hedge which contributed to an increase in the net interest margin of one
basis point for the three months ended December 31, 2024, compared to an increase of seven basis points during the three months
ended September 30, 2024. Excluding the interest income attributed to the fair value hedge, the net interest margin increased
seven basis points from 2.33% for the three months ended September 30, 2024 to 2.40% for the three months ended December 31, 2024,
respectively. The fair value hedge matured in October of 2024.
The
average yield on interest-earning assets, without the impact of tax-equivalent adjustments, was 4.52% for the three months ended
December 31, 2024, compared to 4.54% for the three months ended September 30, 2024. Excluding the impact of the fair value hedge
discussed above, the average yield on interest-earnings assets, without the impact of tax-equivalent adjustments, increased four
basis points to 4.51% during the three months ended December 31, 2024, compared to 4.47% during the three months ended September
30, 2024. The average loan yield, without the impact of tax-equivalent adjustments, was 4.86% for the three months ended December
31, 2024, compared to 4.90% for the three months ended September 30, 2024. Excluding the impact of the fair value hedge discussed
above, the average yield on loans, without the impact of tax-equivalent adjustments, increased two basis points to 4.84% during
the three months ended December 31, 2024, compared to 4.82% during the three months ended September 30, 2024. During the three
months ended December 31, 2024, average interest-earning assets increased $75.8 million, or 3.1% to $2.5 billion, primarily due
to an increase in average loans of $24.2 million, or 1.2%, an increase in average short-term investments, consisting of cash and
cash equivalents, of $44.8 million, or 139.7%, and an increase in average securities of $6.8 million, or 1.9%.
The
average cost of total funds, including non-interest bearing accounts and borrowings, decreased four basis points from 2.24% for
the three months ended September 30, 2024 to 2.20% for the three months ended December 31, 2024. The average cost of core deposits,
which the Company defines as all deposits except time deposits, increased five basis points to 0.98% for the three months ended
December 31, 2024, from 0.93% for the three months ended September 30, 2024. The average cost of time deposits decreased 13 basis
points from 4.44% for the three months ended September 30, 2024, to 4.31% for the three months ended December 31, 2024. The average
cost of borrowings, including subordinated debt, decreased one basis point from 5.05% for the three months ended September 30,
2024 to 5.04% for the three months ended December 31, 2024. Average demand deposits, an interest-free source of funds, increased
$20.0 million, or 3.6%, from $559.2 million, or 25.7% of total average deposits, for the three months ended September 30, 2024,
to $579.2 million, or 25.6% of total average deposits, for the three months ended December 31, 2024.
Provision
for (Reversal of) Credit Losses
During
the three months ended December 31, 2024, the Company recorded a reversal of credit losses of $762,000, compared to a provision
for credit losses of $941,000 during the three months ended September 30, 2024. The provision for credit losses includes a reversal
of credit losses on loans of $553,000 and a reversal of credit losses on unfunded loan commitments of $209,000. The reversal of
credit losses on loans was due to changes in the economic environment and related adjustments to the quantitative components of
the CECL methodology as well as changes in the loan portfolio mix. The provision for credit losses was determined by a number
of factors: the continued strong credit performance of the Company’s loan portfolio, changes in the loan portfolio mix and
Management’s consideration of existing economic conditions and the economic outlook from the Federal Reserve’s actions
to control inflation. The decrease in reserves on unfunded loan commitments was due to an decrease in commercial real estate unfunded
loan commitments of $19.5 million, or 10.0%, from $195.3 million at September 30, 2024 to $175.8 million at December 31,
2024. Management continues to monitor macroeconomic variables related to increasing interest rates, inflation and the concerns
of an economic downturn, and believes it is appropriately reserved for the current economic environment.
During
the three months ended December 31, 2024, the Company recorded net recoveries of $128,000, compared to net charge-offs of $98,000
for the three months ended September 30, 2024.
Non-Interest
Income
On
a sequential quarter basis, non-interest income increased $113,000, or 3.6%, to $3.3 million for the three months ended December
31, 2024, from $3.1 million for the three months ended September 30, 2024. During the three months ended December 31, 2024, service
charges and fees on deposits decreased $40,000, or 1.7%, to $2.3 million from the three months ended September 30, 2024. Income
from bank-owned life insurance (“BOLI”) increased $16,000, or 3.4%, from the three months ended September 30, 2024
to $486,000 for the three months ended December 31, 2024. During the three months ended December 31, 2024, the Company reported
$187,000 in other income from loan-level swap fees on commercial loans, compared to $74,000 during the three months ended September
30, 2024. During the three months ended December 31, 2024, the Company reported a loss of $11,000 from mortgage banking activities,
compared to income from mortgage banking activities of $246,000, during the three months ended September 30, 2024. During the
three months ended December 31, 2024, the Company reported unrealized losses on marketable equity securities of $9,000, compared
to unrealized gains of $10,000, during the three months ended September 30, 2024. During the three months ended December 31, 2024,
the Company reported gains on non-marketable equity investments of $300,000 and did not have comparable income during the three
months ended September 30, 2024.
Non-Interest
Expense
For
the three months ended December 31, 2024, non-interest expense increased $520,000, or 3.6%, to $14.9 million from $14.4 million
for the three months ended September 30, 2024. Salaries and related benefits increased $317,000, or 3.9%, primarily related to
incentive compensation accrual adjustments due to revised payout estimates and an increase in health insurance benefits. FDIC
insurance expense increased $51,000, or 15.1%, occupancy expense increased $39,000, or 3.2%, primarily due to snow removal costs
of $47,000, advertising expense increased $39,000, or 14.4%, data processing expense increased $31,000, or 3.6%, software expenses
increased $30,000, or 4.9%, furniture and equipment expense increased $22,000, or 4.6%, and other non-interest expense increased
$116,000, or 8.8%. These increases were partially offset by a decrease in professional fees of $69,000, or 12.8%, and a decrease
in debit card processing and ATM network costs of $56,000, or 8.6%.
For
the three months ended December 31, 2024 and the three months ended September 30, 2024, the efficiency ratio was 80.6%. For the
three months ended December 31, 2024, the adjusted efficiency ratio, a non-GAAP financial measure, was 81.9% compared to 80.7%
for the three months ended September 30, 2024. The increase in the adjusted efficiency ratio was driven by higher expenses during
the three months ended December 31, 2024. See pages 20-22 for the related adjusted efficiency ratio calculation and a reconciliation
of GAAP to non-GAAP financial measures.
Income
Tax Provision
Income
tax expense for the three months ended December 31, 2024 was $1.1 million, with an effective tax rate of 24.6%, compared to $618,000,
with an effective tax rate of 24.5%, for the three months ended September 30, 2024.
Net
Income for the Three Months Ended December 31, 2024 Compared to the Three Months Ended December 31, 2023
The
Company reported net income of $3.3 million, or $0.16 per diluted share, for the three months ended December 31, 2024, compared
to net income of $2.5 million, or $0.12 per diluted share, for the three months ended December 31, 2023. Net interest income decreased
$903,000, or 5.6%, provision for credit losses decreased $1.2 million, non-interest income increased $540,000, or 19.9%, and non-interest
expense increased $141,000, or 1.0%, during the same period. Return on average assets and return on average equity were 0.49%
and 5.48%, respectively, for the three months ended December 31, 2024, compared to 0.39% and 4.31%, respectively, for the three
months ended December 31, 2023.
Net
Interest Income and Net Interest Margin
Net
interest income decreased $903,000, or 5.6%, to $15.3 million, for the three months ended December 31, 2024, from $16.2 million
for the three months ended December 31, 2023. The decrease in net interest income was due to an increase in interest expense of
$2.7 million, or 25.7%, partially offset by an increase in interest and dividend income of $1.8 million, or 6.8%. During the three
months ended December 31, 2024 and the three months ended December 31, 2023, the Company had a fair value hedge which contributed
$74,000 to interest income during the three months ended December 31, 2024, compared to $459,000 during the three months ended
December 31, 2023. The fair value hedge matured in October of 2024. The increase in interest expense was a result of competitive
pricing on deposits due to the continued high interest rate environment and the unfavorable shift in the deposit mix from low
cost core deposits to high cost time deposits.
The
net interest margin was 2.41% for the three months ended December 31, 2024, compared to 2.64% for the three months ended December
31, 2023. The net interest margin, on a tax-equivalent basis, was 2.43% for the three months ended December 31, 2024, compared
to 2.66% for the three months ended December 31, 2023. The decrease in the net interest margin was primarily due to an increase
in the average cost of interest-bearing liabilities and the unfavorable shift in the deposit mix from low cost core deposits to
high cost time deposits, which was partially offset by an increase in the average yield on interest-earning assets. During the
three months ended December 31, 2024, the Company had a fair value hedge which contributed to an increase in the net interest
margin of one basis point, compared to an increase of eight basis points during the three months ended December 31, 2023. The
fair value hedge matured in October of 2024.
The
average yield on interest-earning assets, without the impact of tax-equivalent adjustments, was 4.52% for the three months ended
December 31, 2024, compared to 4.38% for the three months ended December 31, 2023. The average loan yield, without the impact
of tax-equivalent adjustments, was 4.86% for the three months ended December 31, 2024, compared to 4.71% for the three months
ended December 31, 2023. During the three months ended December 31, 2024, average interest-earning assets increased $89.9 million,
or 3.7%, to $2.5 billion, primarily due to an increase in average loans of $45.7 million, or 2.3%, an increase in average short-term
investments, consisting of cash and cash equivalents, of $34.0 million, or 79.3%, an increase in average securities of $6.4 million,
or 1.8%, and an increase in average other investments of $3.8 million, or 31.4%.
The
average cost of total funds, including non-interest bearing accounts and borrowings, increased 39 basis points from 1.81% for
the three months ended December 31, 2023, to 2.20% for the three months ended December 31, 2024. The average cost of core deposits,
which the Company defines as all deposits except time deposits, increased 22 basis points to 0.98% for the three months ended
December 31, 2024, from 0.76% for the three months ended December 31, 2023. The average cost of time deposits increased 53 basis
points from 3.78% for the three months ended December 31, 2023 to 4.31% for the three months ended December 31, 2024. The average
cost of borrowings, including subordinated debt, increased 21 basis points from 4.83% for the three months ended December 31,
2023 to 5.04% for the three months ended December 31, 2024. Average demand deposits, an interest-free source of funds, decreased
$9.6 million, or 1.6%, from $588.7 million, or 27.0% of total average deposits, for the three months ended December 31, 2023,
to $579.2 million, or 25.6% of total average deposits, for the three months ended December 31, 2024.
Provision
for (Reversal of) Credit Losses
During
the three months ended December 31, 2024, the Company recorded a reversal of credit losses of $762,000, compared to a provision
for credit losses of $486,000 during the three months ended December 31, 2023. The decrease was primarily due to a decrease in
unfunded commercial real estate loan commitments, as well as changes in the economic environment and related adjustments to the
quantitative components of the CECL methodology. The provision for credit losses was determined by a number of factors: the continued
strong credit performance of the Company’s loan portfolio, changes in the loan portfolio mix and Management’s consideration
of existing economic conditions and the economic outlook from the Federal Reserve’s actions to control inflation. Management
continues to monitor macroeconomic variables related to increasing interest rates, inflation and the concerns of an economic downturn,
and believes it is appropriately reserved for the current economic environment.
The
Company recorded net recoveries of $128,000 for the three months ended December 31, 2024, as compared to net charge-offs of $136,000
for the three months ended December 31, 2023.
Non-Interest
Income
Non-interest
income increased $540,000, or 19.9%, from $2.7 million for the three months ended December 31, 2023, to $3.3 million for the three
months ended December 31, 2024. Service charges and fees on deposits increased $18,000, or 0.8%, and income from BOLI increased
$54,000, or 12.5%, from the three months ended December 31, 2023 to the three months ended December 31, 2024. During the three
months ended December 31, 2024, the Company reported $187,000 in other income from loan-level swap fees on commercial loans and
did not have comparable income during the three months ended December 31, 2023. During the three months ended December 31, 2024,
the Company reported a loss of $11,000 from mortgage banking activities and did not have comparable loss during the three months
ended December 31, 2023. During the three months ended December 31, 2024 and the three months ended December 31, 2023, the Company
reported $9,000 and $1,000, respectively, in unrealized losses on marketable equity securities. During the three months ended
December 31, 2024, the Company reported a gain on non-marketable equity investments of $300,000 and did not have comparable non-interest
income during the three months ended December 31, 2023.
Non-Interest
Expense
For
the three months ended December 31, 2024, non-interest expense increased $141,000, or 1.0%, to $14.9 million from $14.8 million
for the three months ended December 31, 2023. During the three months ended December 31, 2023, the Company reached an agreement-in-principle
to settle purported class action lawsuits concerning the Company’s deposit products and related disclosures, specifically
involving overdraft fees and insufficient funds fees. This agreement-in-principle reflects our business decision to avoid the
costs, uncertainties and distractions of further litigation. Excluding the legal settlement accrual of $510,000 during the three
months ended December 31, 2023, non-interest expense increased $651,000, or 4.6%, from $14.3 million for the three months ended
December 31, 2023 to $14.9 million for the three months ended December 31, 2024.
Salaries
and related benefits increased $690,000, or 8.9%, to $8.4 million, primarily related to incentive compensation accrual adjustments
due to revised payout estimates and annual merit increases. Data processing expense increased $112,000, or 14.2%, occupancy expense
increased $58,000, or 4.8%, FDIC insurance expense increased $51,000, or 15.1%, software related expenses increased $44,000, or
7.4%, debit card processing and ATM network costs increased $34,000, or 6.0%, and furniture and equipment related expenses increased
$11,000, or 2.2%. These increases were partially offset by a decrease in professional fees of $203,000, or 30.1%, a decrease in
advertising expense of $67,000, or 17.8%, and a decrease in other non-interest expense of $589,000, or 29.1%. Excluding the $510,000
legal settlement accrual, other non-interest expense decreased $79,000, or 5.2%.
For
the three months ended December 31, 2024, the efficiency ratio was 80.6%, compared to 78.3% for the three months ended December
31, 2023. For the three months ended December 31, 2024, the adjusted efficiency ratio, a non-GAAP financial measure, was 81.9%
compared to 78.3% for the three months ended December 31, 2023. The increase in the efficiency ratio and the non-GAAP adjusted
efficiency ratio was primarily driven by lower revenues during the three months ended December 31, 2024, compared to the three
months ended December 31, 2023. See pages 20-22 for the related adjusted efficiency ratio calculation and a reconciliation of
GAAP to non-GAAP financial measures.
Income
Tax Provision
For
the three months ended December 31, 2024, income tax expense was $1.1 million, with an effective tax rate of 24.6%, compared to
$1.1 million, with an effective tax rate of 30.6%, for the three months ended December 31, 2023. For the three months ended December
31, 2023, the effective tax rate was negatively impacted by discrete items totaling $285,000.
Net
Income for the Twelve Months Ended December 31, 2024 Compared to the Twelve Months Ended December 31, 2023
For
the twelve months ended December 31, 2024, the Company reported net income of $11.7 million, or $0.56 per diluted share, compared
to $15.1 million, or $0.70 per diluted share, for the twelve months ended December 31, 2023. Net interest income decreased $8.1
million, or 11.9%, provision for credit losses decreased $1.5 million, non-interest income increased $2.0 million, or 18.4%, and
non-interest expense increased $78,000, or 0.1%, during the same period in 2023. Return on average assets and return on average
equity were 0.45% and 4.93% for the twelve months ended December 31, 2024, respectively, compared to 0.59% and 6.47% for the twelve
months ended December 31, 2023, respectively.
Net
Interest Income and Net Interest Margin
During
the twelve months ended December 31, 2024, net interest income decreased $8.1 million, or 11.9%, to $59.8 million, compared to
$67.9 million for the twelve months ended December 31, 2023. The decrease in net interest income was primarily due to an increase
in interest expense of $16.8 million, or 50.6%, partially offset by an increase in interest and dividend income of $8.7 million,
or 8.6%.
The
net interest margin for the twelve months ended December 31, 2024 was 2.45%, compared to 2.82% for the twelve months ended December
31, 2023. The net interest margin, on a tax-equivalent basis, was 2.47% for the twelve months ended December 31, 2024, compared
to 2.84% for the twelve months ended December 31, 2023.
The
average yield on interest-earning assets, without the impact of tax-equivalent adjustments, increased 30 basis points from 4.20%
for the twelve months ended December 31, 2023 to 4.50% for the twelve months ended December 31, 2024. The average yield on loans,
without the impact of tax-equivalent adjustments, increased 32 basis points from 4.54% for the twelve months ended December 31,
2023 to 4.86% for the twelve months ended December 31, 2024. During the twelve months ended December 31, 2024, average interest-earning
assets increased $33.5 million, or 1.4%, to $2.4 billion, compared to the twelve months ended December 31, 2023, primarily due
to an increase in average loans of $29.0 million, or 1.4%, an increase in average short-term investments, consisting of cash and
cash equivalents, of $12.8 million, or 62.5%, and an increase in average other investments of $2.2 million, or 18.1%, partially
offset by a decrease in average securities of $10.6 million, or 2.9%.
During
the twelve months ended December 31, 2024, the average cost of funds, including non-interest-bearing demand accounts and borrowings,
increased 70 basis points from 1.44% for the twelve months ended December 31, 2023 to 2.14%. For the twelve months ended December
31, 2024, the average cost of core deposits, including non-interest-bearing demand deposits, increased 24 basis points from 0.65%
for the twelve months ended December 31, 2023, to 0.89%. The average cost of time deposits increased 129 basis points from 3.03%
for the twelve months ended December 31, 2023 to 4.32% for the twelve months ended December 31, 2024. The average cost of borrowings,
which include borrowings and subordinated debt, increased 16 basis points from 4.84% for the twelve months ended December 31,
2023 to 5.00% for the twelve months ended December 31, 2024.
For
the twelve months ended December 31, 2024, average demand deposits, an interest-free source of funds, decreased $41.4 million,
or 6.9%, from $602.7 million, or 27.8% of total average deposits, for the twelve months ended December 31, 2023, to $561.3 million,
or 25.8% of total average deposits.
Provision
for (Reversal of) Credit Losses
During
the twelve months ended December 31, 2024, the Company recorded a reversal of credit losses of $665,000, compared to a provision
for credit losses of $872,000 during the twelve months ended December 31, 2023. The decrease in reserves was primarily due to
changes in the economic environment and related adjustments to the quantitative components of the CECL methodology. During the
twelve months ended December 31, 2024, the Company recorded net recoveries of $87,000, compared to net charge-offs of $2.0 million
for the twelve months ended December 31, 2023. The charge-offs during the twelve months ended December 31, 2023 were related to
one commercial relationship acquired in October 2016 from Chicopee Bancorp, Inc. Specifically, the Company recorded a $1.9 million
charge-off on the acquired commercial relationship, which represented the non-accretable credit mark that was required to be grossed-up
to the loan’s amortized cost basis with a corresponding increase to the allowance for credit losses under the CECL implementation.
The
decrease in the provision for credit losses was primarily due to changes in the loan mix as well as economic environment and related
adjustments to the quantitative components of the CECL methodology. The provision for credit losses was determined by a number
of factors: the continued strong credit performance of the Company’s loan portfolio, changes in the loan portfolio mix and
Management’s consideration of existing economic conditions and the economic outlook from the Federal Reserve’s actions
to control inflation. Management continues to monitor macroeconomic variables related to increasing interest rates, inflation
and the concerns of an economic downturn, and believes it is appropriately reserved for the current economic environment.
Non-Interest
Income
For
the twelve months ended December 31, 2024, non-interest income increased $2.0 million, or 18.4%, from $10.9 million for the twelve
months ended December 31, 2023 to $12.9 million. During the twelve months ended December 31, 2023, the Company recorded a non-recurring
final termination expense of $1.1 million related to the defined benefit pension plan termination. During the twelve months ended,
December 31, 2023, the Company also recorded a non-taxable gain of $778,000 on BOLI death benefits and did not have a comparable
gain during the twelve months ended December 31, 2024. Excluding the defined benefit pension plan termination expense and the
BOLI death benefit, non-interest income increased $1.6 million, or 14.6%.
During
the twelve months ended December 31, 2024, service charges and fees increased $346,000, or 3.9%, and income from BOLI increased
$91,000, or 5.0%, from $1.8 million for the twelve months ended December 31, 2023 to $1.9 million. During the twelve months ended
December 31, 2024, the Company recorded other income from loan-level swap fees on commercial loans of $261,000 and did not have
comparable income during the twelve months ended December 31, 2023. During the twelve months ended December 31, 2024, the Company
reported a gain of $1.3 million on non-marketable equity investments, compared to a gain of $590,000 during the twelve months
ended December 31, 2023. During the twelve months ended December 31, 2024, the Company reported a loss on the disposal of premises
and equipment of $6,000, compared to a loss of $3,000 during the twelve months ended December 31, 2023. During the twelve months
ended December 31, 2023, the Company also reported unrealized losses on marketable equity securities of $1,000, compared to unrealized
gains on marketable equity securities of $13,000 during the twelve months ended December 31, 2024.
Non-Interest
Expense
For
the twelve months ended December 31, 2024, non-interest expense increased $78,000, or 0.1%, to $58.4 million from the twelve months
ended December 31, 2023. During the twelve months ended December 31, 2023, the Company reached an agreement-in-principle to settle
purported class action lawsuits concerning the Company’s deposit products and related disclosures, specifically involving
overdraft fees and insufficient funds fees. This agreement-in-principle reflects our business decision to avoid the costs, uncertainties
and distractions of further litigation. Excluding the legal settlement accrual of $510,000, non-interest expense increased $588,000,
or 1.0%, from $57.8 million for the twelve months ended December 31, 2023 to $58.4 million for the twelve months ended December
31, 2024.
During
the same period, salaries and related benefits increased $472,000, or 1.5%, software expenses increased $208,000, or 9.0%, data
processing expense increased $320,000, or 10.1%, debit card processing and ATM network costs increased $298,000, or 13.9%, occupancy
expense increased $146,000, or 3.0%, due to higher repair and maintenance costs, real estate taxes, and depreciation expense.
FDIC insurance expense increased $139,000, or 10.5%. These increases were partially offset by a decrease in professional fees
of $571,000, or 20.9%, which is comprised of legal fees, audit and other professional fees. During the three months ended December
31, 2023, professional fees included legal fees related to the settlement of the purported class action lawsuits. Advertising
expense decreased $226,000, or 15.1%, and other non-interest expense, excluding the $510,000 legal settlement accrual, decreased
$199,000, or 3.5%.
For
the twelve months ended December 31, 2024, the efficiency ratio was 80.4%, compared to 74.0% for the twelve months ended December
31, 2023. For the twelve months ended December 31, 2024, the adjusted efficiency ratio, a non-GAAP financial measure, was 81.8%,
compared to 74.3% for the twelve months ended December 31, 2023. See pages 20-22 for the related efficiency ratio calculations
and a reconciliation of GAAP to non-GAAP financial measures.
Income
Tax Provision
For
the twelve months ended December 31, 2024, income tax expense was $3.3 million, with an effective tax rate of 22.0%, compared
to $4.5 million, with an effective tax rate of 23.1%, for twelve months ended December 31, 2023. The decrease in income tax expense
for the twelve months ended December 31, 2024 compared to the twelve months December 31, 2023 was due to lower income before taxes
in 2024.
Balance
Sheet
At
December 31, 2024, total assets were $2.7 billion, an increase of $88.5 million, or 3.5%, from December 31, 2023. The increase
in total assets was primarily due to an increase in total loans of $42.9 million, or 2.1%, an increase in cash and cash equivalents
of $37.6 million, or 130.4%, and an increase in investment securities of $5.5 million, or 1.5%.
Investments
At
December 31, 2024, the investment securities portfolio totaled $366.1 million, or 13.8% of total assets, compared to $360.7 million,
or 14.1% of total assets, at December 31, 2023. At December 31, 2024, the Company’s available-for-sale securities portfolio,
recorded at fair market value, increased $23.6 million, or 17.2%, from $137.1 million at December 31, 2023 to $160.7 million.
The held-to-maturity securities portfolio, recorded at amortized cost, decreased $18.4 million, or 8.2%, from $223.4 million at
December 31, 2023 to $205.0 million at December 31, 2024.
At
December 31, 2024, the Company reported unrealized losses on the available-for-sale securities portfolio of $31.2 million, or
16.2% of the amortized cost basis of the available-for-sale securities portfolio, compared to unrealized losses of $29.2 million,
or 17.5% of the amortized cost basis of the available-for-sale securities at December 31, 2023. At December 31, 2024, the Company
reported unrealized losses on the held-to-maturity securities portfolio of $39.4 million, or 19.2% of the amortized cost basis
of the held-to-maturity securities portfolio, compared to $35.7 million, or 16.0% of the amortized cost basis of the held-to-maturity
securities portfolio at December 31, 2023.
The
securities in which the Company may invest are limited by regulation. Federally chartered savings banks have authority to invest
in various types of assets, including U.S. Treasury obligations, securities of various government-sponsored enterprises, mortgage-backed
securities, certain certificates of deposit of insured financial institutions, repurchase agreements, overnight and short-term
loans to other banks, corporate debt instruments and marketable equity securities. The securities, with the exception of $4.6
million in corporate bonds, are issued by the United States government or government-sponsored enterprises and are therefore either
explicitly or implicitly guaranteed as to the timely payment of contractual principal and interest. These positions are deemed
to have no credit impairment, therefore, the disclosed unrealized losses with the securities portfolio relate primarily to changes
in prevailing interest rates. In all cases, price improvement in future periods will be realized as the issuances approach maturity.
Management
regularly reviews the portfolio for securities in an unrealized loss position. At December 31, 2024 and December 31, 2023, the
Company did not record any credit impairment charges on its securities portfolio and attributed the unrealized losses primarily
due to fluctuations in general interest rates or changes in expected prepayments and not due to credit quality. The primary objective
of the Company’s investment portfolio is to provide liquidity and to secure municipal deposit accounts while preserving
the safety of principal. The available-for-sale and held-to-maturity portfolios are both eligible for pledging to the Federal
Home Loan Bank (“FHLB”) as collateral for borrowings. The portfolios are comprised of high-credit quality investments
and both portfolios generated cash flows monthly from interest, principal amortization and payoffs, which support’s the
Bank's objective to provide liquidity.
Total
Loans
Total
loans increased $42.9 million, or 2.1%, from December 31, 2023, to $2.1 billion at December 31, 2024. The increase in total loans
was due to an increase in residential real estate loans, including home equity loans, of $53.5 million, or 7.4%, partially offset
by a decrease in commercial real estate loans of $4.0 million, or 0.4%, a decrease in commercial and industrial loans of $5.7
million, or 2.7% and a decrease in consumer loans of $1.1 million, or 19.8%. During the twelve months ended December 31, 2024,
the Company sold $20.1 million in fixed rate residential loans to the secondary market with servicing retained.
The
following table presents the summary of the loan portfolio by the major classification of the loan at the periods indicated:
| | |
December 31, 2024 | | |
December 31, 2023 | |
| | |
(Dollars in thousands) | |
| Commercial real estate loans: | |
| | | |
| | |
| Non-owner occupied | |
$ | 880,828 | | |
$ | 881,643 | |
| Owner-occupied | |
| 194,904 | | |
| 198,108 | |
| Total commercial real estate loans | |
| 1,075,732 | | |
| 1,079,751 | |
| | |
| | | |
| | |
| Residential real estate loans: | |
| | | |
| | |
| Residential | |
| 653,802 | | |
| 612,315 | |
| Home equity | |
| 121,857 | | |
| 109,839 | |
| Total residential real estate loans | |
| 775,659 | | |
| 722,154 | |
| | |
| | | |
| | |
| Commercial and industrial loans | |
| 211,656 | | |
| 217,447 | |
| | |
| | | |
| | |
| Consumer loans | |
| 4,391 | | |
| 5,472 | |
| Total gross loans | |
| 2,067,438 | | |
| 2,024,824 | |
| Unamortized premiums and net deferred loans fees and costs | |
| 2,751 | | |
| 2,493 | |
| Total loans | |
$ | 2,070,189 | | |
$ | 2,027,317 | |
Credit
Quality
Management
continues to closely monitor the loan portfolio for any signs of deterioration in borrowers’ financial condition and also
in light of speculation that commercial real estate values may deteriorate as the market continues to adjust to higher vacancies
and interest rates. We continue to proactively take steps to mitigate risk in our loan portfolio.
Total
delinquency was $5.0 million, or 0.24% of total loans, at December 31, 2024, compared to $6.0 million, or 0.30% of total loans
at December 31, 2023. At December 31, 2024, nonperforming loans totaled $5.4 million, or 0.26% of total loans, compared to $6.4
million, or 0.32% of total loans, at December 31, 2023. At December 31, 2024 and December 31, 2023, there were no loans 90 or
more days past due and still accruing interest. Total nonperforming assets totaled $5.4 million, or 0.20% of total assets, at
December 31, 2024, compared to $6.4 million, or 0.25% of total assets, at December 31, 2023. At December 31, 2024 and December
31, 2023, the Company did not have any other real estate owned. At December 31, 2024, the allowance for credit losses was $19.5
million, or 0.94% of total loans and 362.9% of nonperforming loans, compared to $20.3 million, or 1.00% of total loans and 315.6%
of nonperforming loans, at December 31, 2023. Total classified loans, defined as special mention and substandard loans, decreased
$1.1 million, or 2.8%, from $39.5 million, or 1.9% of total loans, at December 31, 2023 to $38.4 million, or 1.9% of total loans,
at December 31, 2024. Our commercial real estate portfolio is comprised of diversified property types and primarily within our
geographic footprint. At December 31, 2024, the commercial real estate portfolio totaled $1.1 billion, and represented 52.0% of
total loans. Of the $1.1 billion, $880.8 million, or 81.9%, was categorized as non-owner occupied commercial real estate and represented
325.2% of the Bank’s total risk-based capital. More details on the diversification of the loan portfolio are available in
the supplementary earnings presentation.
Deposits
Total
deposits increased $118.9 million, or 5.6%, from $2.1 billion at December 31, 2023 to $2.3 billion at December 31, 2024. Core
deposits, which the Company defines as all deposits except time deposits, increased $26.7 million, or 1.7%, from $1.5 billion,
or 71.5% of total deposits, at December 31, 2023, to $1.6 billion, or 68.9% of total deposits, at December 31, 2024. Non-interest-bearing
deposits decreased $14.0 million, or 2.4%, to $565.6 million, and represent 25.0% of total deposits, money market accounts increased
$27.1 million, or 4.3%, to $661.5 million, savings accounts decreased $5.8 million, or 3.1%, to $181.6 million and interest-bearing
checking accounts increased $19.3 million, or 14.7%, to $150.3 million.
Time
deposits increased $92.2 million, or 15.1%, from $611.4 million at December 31, 2023 to $703.6 million at December 31, 2024. Brokered
time deposits, which are included in time deposits, totaled $1.7 million at December 31, 2024 and at December 31, 2023. The Company
has experienced growth and movement in both money market accounts and time deposits as a result of relationship pricing, the current
interest rate environment, and customer behaviors, as opposed to time deposit specials or interest rate adjustments. We continue
our disciplined and focused approach to core relationship management and customer outreach to meet funding requirements and liquidity
needs, with an emphasis on retaining a long-term customer relationship base by competing for and retaining deposits in our local
market. At December 31, 2024, the Bank’s uninsured deposits represented 28.4% of total deposits, compared to 26.8% at December
31, 2023.
The
table below is a summary of our deposit balances for the periods noted:
| | |
December 31, 2024 | | |
September 30, 2024 | | |
December 31, 2023 | |
| | |
(Dollars in thousands) | |
| Core Deposits: | |
| | | |
| | | |
| | |
| Demand accounts | |
$ | 565,620 | | |
$ | 568,685 | | |
$ | 579,595 | |
| Interest-bearing accounts | |
| 150,348 | | |
| 140,332 | | |
| 131,031 | |
| Savings accounts | |
| 181,618 | | |
| 179,214 | | |
| 187,405 | |
| Money market accounts | |
| 661,478 | | |
| 635,824 | | |
| 634,361 | |
| Total Core Deposits | |
$ | 1,559,064 | | |
$ | 1,524,055 | | |
$ | 1,532,392 | |
| Time Deposits: | |
| 703,583 | | |
| 700,151 | | |
| 611,352 | |
| Total Deposits: | |
$ | 2,262,647 | | |
$ | 2,224,206 | | |
$ | 2,143,744 | |
FHLB
and Subordinated Debt
At
December 31, 2024, total borrowings decreased $33.4 million, or 21.3%, from $156.5 million at December 31, 2023 to $123.1 million.
At December 31, 2024, short-term borrowings decreased $10.7 million, or 66.5%, to $5.4 million, compared to $16.1 million at December
31, 2023. Long-term borrowings decreased $22.6 million, or 18.8%, from $120.6 million at December 31, 2023 to $98.0 million at
December 31, 2024. At December 31, 2024 and December 31, 2023, borrowings also consisted of $19.8 million and $19.7 million, respectively,
in fixed-to-floating rate subordinated notes.
The
Company utilized the Bank Term Funding Program (“BTFP”), which was created in March 2023 to enhance banking system
liquidity by allowing institutions to pledge certain securities at par value and borrow at a rate of ten basis points over the
one-year overnight index swap rate. The BTFP was available to federally insured depository institutions in the U.S., with advances
having a term of up to one year with no prepayment penalties. The BTFP ceased extending new advances in March 2024. At December
31, 2023, the Company’s outstanding balance under the BTFP was $90.0 million. There was no outstanding balance under the
BTFP at December 31, 2024.
As
of December 31, 2024, the Company had $461.6 million of additional borrowing capacity at the Federal Home Loan Bank, $382.9
million of additional borrowing capacity under the Federal Reserve Bank Discount Window and $25.0 million of other unsecured
lines of credit with correspondent banks.
Capital
At
December 31, 2024, shareholders’ equity was $235.9 million, or 8.9% of total assets, compared to $237.4 million, or 9.3%
of total assets, at December 31, 2023. The change was primarily attributable to an increase in accumulated other comprehensive
loss of $1.5 million, cash dividends paid of $5.9 million, repurchase of shares at a cost of $7.8 million, partially offset by
net income of $11.7 million. At December 31, 2024, total shares outstanding were 20,875,713. The Company’s regulatory capital
ratios continue to be strong and in excess of regulatory minimum requirements to be considered well-capitalized as defined by
regulators and internal Company targets.
| | |
December 31, 2024 | | |
December 31, 2023 | |
| | |
Company | | |
Bank | | |
Company | | |
Bank | |
| Total Capital (to Risk Weighted Assets) | |
| 14.38 | % | |
| 13.65 | % | |
| 14.67 | % | |
| 13.94 | % |
| Tier 1 Capital (to Risk Weighted Assets) | |
| 12.37 | % | |
| 12.64 | % | |
| 12.59 | % | |
| 12.88 | % |
| Common Equity Tier 1 Capital (to Risk Weighted Assets) | |
| 12.37 | % | |
| 12.64 | % | |
| 12.59 | % | |
| 12.88 | % |
| Tier 1 Leverage Ratio (to Adjusted Average Assets) | |
| 9.14 | % | |
| 9.34 | % | |
| 9.40 | % | |
| 9.62 | % |
Dividends
Although
the Company has historically paid quarterly dividends on its common stock and currently intends to continue to pay such dividends,
the Company’s ability to pay such dividends depends on a number of factors, including restrictions under federal laws and
regulations on the Company’s ability to pay dividends, and as a result, there can be no assurance that dividends will continue
to be paid in the future.
About
Western New England Bancorp, Inc.
Western
New England Bancorp, Inc. is a Massachusetts-chartered stock holding company and the parent company of Westfield Bank, CSB Colts,
Inc., Elm Street Securities Corporation, WFD Securities, Inc. and WB Real Estate Holdings, LLC. Western New England Bancorp, Inc.
and its subsidiaries are headquartered in Westfield, Massachusetts and operate 25 banking offices throughout western Massachusetts
and northern Connecticut. To learn more, visit our website at www.westfieldbank.com.
Forward-Looking
Statements
This
press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to the Company’s financial
condition, liquidity, results of operations, future performance, and business. Forward-looking statements may be identified by
the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,”
“estimated,” and “potential.” Examples of forward-looking statements include, but are not limited
to, estimates with respect to our financial condition, results of operations and business that are subject to various factors
which could cause actual results to differ materially from these estimates. These factors include, but are not limited to:
| ● | unpredictable
changes in general economic or political conditions, financial markets, fiscal, monetary and regulatory policies, including actual
or potential stress in the banking industry; |
| ● | the
duration and scope of potential pandemics, including the emergence of new variants and the response thereto; |
| ● | unstable
political and economic conditions which could materially impact credit quality trends and the ability to generate loans and gather
deposits; |
| ● | inflation
and governmental responses to inflation, including recent sustained increases and potential future increases in interest rates
that reduce margins; |
| ● | the
effect on our operations of governmental legislation and regulation, including changes in accounting regulation or standards,
the nature and timing of the adoption and effectiveness of new requirements under the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010, Basel guidelines, capital requirements and other applicable laws and regulations; |
| ● | significant
changes in accounting, tax or regulatory practices or requirements; |
| ● | new
legal obligations or liabilities or unfavorable resolutions of litigation; |
| ● | disruptive
technologies in payment systems and other services traditionally provided by banks; |
| ● | the
highly competitive industry and market area in which we operate; |
| ● | operational
risks or risk management failures by us or critical third parties, including without limitation with respect to data processing,
information systems, cybersecurity, technological changes, vendor issues, business interruption, and fraud risks; |
| ● | failure
or circumvention of our internal controls or procedures; |
| ● | changes
in the securities markets which affect investment management revenues; |
| ● | increases
in Federal Deposit Insurance Corporation deposit insurance premiums and assessments; |
| ● | the
soundness of other financial services institutions which may adversely affect our credit risk; |
| ● | certain
of our intangible assets may become impaired in the future; |
| ● | new
lines of business or new products and services, which may subject us to additional risks; |
| ● | changes
in key management personnel which may adversely impact our operations; |
| ● | severe
weather, natural disasters, acts of war or terrorism and other external events which could significantly impact our business;
and |
| ● | other
risk factors detailed from time to time in our SEC filings. |
Although
we believe that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially
from the results discussed in these forward-looking statements. You are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. We do not undertake any obligation to republish revised forward-looking statements
to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except to the extent
required by law.
WESTERN NEW ENGLAND BANCORP, INC. AND
SUBSIDIARIES
Consolidated Statements of Net Income
and Other Data
(Dollars in thousands, except per share
data)
(Unaudited)
| | |
Three Months Ended | | |
Twelve Months Ended | |
| | |
December 31, | | |
September 30, | | |
June 30, | | |
March 31, | | |
December 31, | | |
December 31, | |
| | |
2024 | | |
2024 | | |
2024 | | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| INTEREST AND DIVIDEND INCOME: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Loans | |
$ | 25,183 | | |
$ | 25,134 | | |
$ | 24,340 | | |
$ | 24,241 | | |
$ | 23,939 | | |
$ | 98,898 | | |
$ | 91,169 | |
| Securities | |
| 2,273 | | |
| 2,121 | | |
| 2,141 | | |
| 2,114 | | |
| 2,094 | | |
| 8,649 | | |
| 8,370 | |
| Other investments | |
| 214 | | |
| 189 | | |
| 148 | | |
| 136 | | |
| 140 | | |
| 687 | | |
| 558 | |
| Short-term investments | |
| 916 | | |
| 396 | | |
| 173 | | |
| 113 | | |
| 597 | | |
| 1,598 | | |
| 1,021 | |
| Total interest and dividend income | |
| 28,586 | | |
| 27,840 | | |
| 26,802 | | |
| 26,604 | | |
| 26,770 | | |
| 109,832 | | |
| 101,118 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| INTEREST EXPENSE: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Deposits | |
| 11,443 | | |
| 11,165 | | |
| 10,335 | | |
| 9,293 | | |
| 8,773 | | |
| 42,236 | | |
| 26,649 | |
| Short-term borrowings | |
| 60 | | |
| 71 | | |
| 186 | | |
| 283 | | |
| 123 | | |
| 600 | | |
| 1,589 | |
| Long-term debt | |
| 1,557 | | |
| 1,622 | | |
| 1,557 | | |
| 1,428 | | |
| 1,444 | | |
| 6,164 | | |
| 3,957 | |
| Subordinated debt | |
| 253 | | |
| 254 | | |
| 254 | | |
| 254 | | |
| 254 | | |
| 1,015 | | |
| 1,014 | |
| Total interest expense | |
| 13,313 | | |
| 13,112 | | |
| 12,332 | | |
| 11,258 | | |
| 10,594 | | |
| 50,015 | | |
| 33,209 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net interest and dividend income | |
| 15,273 | | |
| 14,728 | | |
| 14,470 | | |
| 15,346 | | |
| 16,176 | | |
| 59,817 | | |
| 67,909 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| (REVERSAL OF) PROVISION FOR CREDIT LOSSES | |
| (762 | ) | |
| 941 | | |
| (294 | ) | |
| (550 | ) | |
| 486 | | |
| (665 | ) | |
| 872 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net interest and dividend income after (reversal of) provision for credit losses | |
| 16,035 | | |
| 13,787 | | |
| 14,764 | | |
| 15,896 | | |
| 15,690 | | |
| 60,482 | | |
| 67,037 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| NON-INTEREST INCOME: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Service charges and fees on deposits | |
| 2,301 | | |
| 2,341 | | |
| 2,341 | | |
| 2,219 | | |
| 2,283 | | |
| 9,202 | | |
| 8,856 | |
| Income from bank-owned life insurance | |
| 486 | | |
| 470 | | |
| 502 | | |
| 453 | | |
| 432 | | |
| 1,911 | | |
| 1,820 | |
| Unrealized (loss) gain on marketable equity securities | |
| (9 | ) | |
| 10 | | |
| 4 | | |
| 8 | | |
| (1 | ) | |
| 13 | | |
| (1 | ) |
| (Loss) gain on sale of mortgages | |
| (11 | ) | |
| 246 | | |
| — | | |
| — | | |
| — | | |
| 235 | | |
| — | |
| Gain on non-marketable equity investments | |
| 300 | | |
| — | | |
| 987 | | |
| — | | |
| — | | |
| 1,287 | | |
| 590 | |
| Loss on disposal of premises and equipment | |
| — | | |
| — | | |
| — | | |
| (6 | ) | |
| — | | |
| (6 | ) | |
| (3 | ) |
| Loss on defined benefit plan termination | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (1,143 | ) |
| Gain on bank-owned life insurance death benefit | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 778 | |
| Other income | |
| 187 | | |
| 74 | | |
| — | | |
| — | | |
| — | | |
| 261 | | |
| — | |
| Total non-interest income | |
| 3,254 | | |
| 3,141 | | |
| 3,834 | | |
| 2,674 | | |
| 2,714 | | |
| 12,903 | | |
| 10,897 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| NON-INTEREST EXPENSE: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Salaries and employees benefits | |
| 8,429 | | |
| 8,112 | | |
| 7,901 | | |
| 8,244 | | |
| 7,739 | | |
| 32,686 | | |
| 32,214 | |
| Occupancy | |
| 1,256 | | |
| 1,217 | | |
| 1,218 | | |
| 1,363 | | |
| 1,198 | | |
| 5,054 | | |
| 4,908 | |
| Furniture and equipment | |
| 505 | | |
| 483 | | |
| 483 | | |
| 484 | | |
| 494 | | |
| 1,955 | | |
| 1,954 | |
| Data processing | |
| 900 | | |
| 869 | | |
| 846 | | |
| 862 | | |
| 788 | | |
| 3,477 | | |
| 3,157 | |
| Software | |
| 642 | | |
| 612 | | |
| 566 | | |
| 699 | | |
| 598 | | |
| 2,519 | | |
| 2,311 | |
| Debit/ATM card processing expense | |
| 593 | | |
| 649 | | |
| 643 | | |
| 552 | | |
| 559 | | |
| 2,437 | | |
| 2,139 | |
| Professional fees | |
| 471 | | |
| 540 | | |
| 581 | | |
| 569 | | |
| 674 | | |
| 2,161 | | |
| 2,732 | |
| FDIC insurance | |
| 389 | | |
| 338 | | |
| 323 | | |
| 410 | | |
| 338 | | |
| 1,460 | | |
| 1,321 | |
| Advertising | |
| 310 | | |
| 271 | | |
| 339 | | |
| 349 | | |
| 377 | | |
| 1,269 | | |
| 1,495 | |
| Other | |
| 1,431 | | |
| 1,315 | | |
| 1,414 | | |
| 1,250 | | |
| 2,020 | | |
| 5,410 | | |
| 6,119 | |
| Total non-interest expense | |
| 14,926 | | |
| 14,406 | | |
| 14,314 | | |
| 14,782 | | |
| 14,785 | | |
| 58,428 | | |
| 58,350 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| INCOME BEFORE INCOME TAXES | |
| 4,363 | | |
| 2,522 | | |
| 4,284 | | |
| 3,788 | | |
| 3,619 | | |
| 14,957 | | |
| 19,584 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| INCOME TAX PROVISION | |
| 1,075 | | |
| 618 | | |
| 771 | | |
| 827 | | |
| 1,108 | | |
| 3,291 | | |
| 4,516 | |
| NET INCOME | |
$ | 3,288 | | |
$ | 1,904 | | |
$ | 3,513 | | |
$ | 2,961 | | |
$ | 2,511 | | |
$ | 11,666 | | |
$ | 15,068 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic earnings per share | |
$ | 0.16 | | |
$ | 0.09 | | |
$ | 0.17 | | |
$ | 0.14 | | |
$ | 0.12 | | |
$ | 0.56 | | |
$ | 0.70 | |
| Weighted average shares outstanding | |
| 20,561,749 | | |
| 20,804,162 | | |
| 21,056,173 | | |
| 21,180,968 | | |
| 21,253,452 | | |
| 20,899,573 | | |
| 21,535,888 | |
| Diluted earnings per share | |
$ | 0.16 | | |
$ | 0.09 | | |
$ | 0.17 | | |
$ | 0.14 | | |
$ | 0.12 | | |
$ | 0.56 | | |
$ | 0.70 | |
| Weighted average diluted shares outstanding | |
| 20,701,276 | | |
| 20,933,833 | | |
| 21,163,762 | | |
| 21,271,323 | | |
| 21,400,664 | | |
| 21,016,358 | | |
| 21,610,329 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Other Data: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Return on average assets (1) | |
| 0.49 | % | |
| 0.29 | % | |
| 0.55 | % | |
| 0.47 | % | |
| 0.39 | % | |
| 0.45 | % | |
| 0.59 | % |
| Return on average equity (1) | |
| 5.48 | % | |
| 3.19 | % | |
| 6.03 | % | |
| 5.04 | % | |
| 4.31 | % | |
| 4.93 | % | |
| 6.47 | % |
| Efficiency ratio | |
| 80.56 | % | |
| 80.62 | % | |
| 78.20 | % | |
| 82.03 | % | |
| 78.27 | % | |
| 80.35 | % | |
| 74.04 | % |
| Adjusted efficiency ratio (2) | |
| 81.85 | % | |
| 80.67 | % | |
| 82.68 | % | |
| 82.04 | % | |
| 78.26 | % | |
| 81.80 | % | |
| 74.25 | % |
| Net interest margin | |
| 2.41 | % | |
| 2.40 | % | |
| 2.42 | % | |
| 2.57 | % | |
| 2.64 | % | |
| 2.45 | % | |
| 2.82 | % |
| Net interest margin, on a fully tax-equivalent basis | |
| 2.43 | % | |
| 2.42 | % | |
| 2.44 | % | |
| 2.59 | % | |
| 2.66 | % | |
| 2.47 | % | |
| 2.84 | % |
| (2) | The adjusted efficiency ratio (non-GAAP) represents the
ratio of operating expenses divided by the sum of net interest and dividend income and non-interest income, excluding realized
and unrealized gains and losses on securities, gain on non-marketable equity investments, loss on disposal of premises and equipment,
loss on defined benefit plan termination and gain on bank-owned life insurance death benefit. |
WESTERN NEW ENGLAND BANCORP, INC. AND
SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)
| | |
December 31, | | |
September 30, | | |
June 30, | | |
March 31, | | |
December 31, | |
| | |
2024 | | |
2024 | | |
2024 | | |
2024 | | |
2023 | |
| Cash and cash equivalents | |
$ | 66,450 | | |
$ | 72,802 | | |
$ | 53,458 | | |
$ | 22,613 | | |
$ | 28,840 | |
| Securities available-for-sale, at fair value | |
| 160,704 | | |
| 155,889 | | |
| 135,089 | | |
| 138,362 | | |
| 137,115 | |
| Securities held to maturity, at amortized cost | |
| 205,036 | | |
| 213,266 | | |
| 217,632 | | |
| 221,242 | | |
| 223,370 | |
| Marketable equity securities, at fair value | |
| 397 | | |
| 252 | | |
| 233 | | |
| 222 | | |
| 196 | |
| Federal Home Loan Bank of Boston and other restricted stock - at cost | |
| 5,818 | | |
| 7,143 | | |
| 7,143 | | |
| 3,105 | | |
| 3,707 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Loans | |
| 2,070,189 | | |
| 2,049,002 | | |
| 2,026,226 | | |
| 2,025,566 | | |
| 2,027,317 | |
| Allowance for credit losses | |
| (19,529 | ) | |
| (19,955 | ) | |
| (19,444 | ) | |
| (19,884 | ) | |
| (20,267 | ) |
| Net loans | |
| 2,050,660 | | |
| 2,029,047 | | |
| 2,006,782 | | |
| 2,005,682 | | |
| 2,007,050 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Bank-owned life insurance | |
| 77,056 | | |
| 76,570 | | |
| 76,100 | | |
| 75,598 | | |
| 75,145 | |
| Goodwill | |
| 12,487 | | |
| 12,487 | | |
| 12,487 | | |
| 12,487 | | |
| 12,487 | |
| Core deposit intangible | |
| 1,438 | | |
| 1,531 | | |
| 1,625 | | |
| 1,719 | | |
| 1,813 | |
| Other assets | |
| 73,044 | | |
| 71,492 | | |
| 75,521 | | |
| 76,206 | | |
| 74,848 | |
| TOTAL ASSETS | |
$ | 2,653,090 | | |
$ | 2,640,479 | | |
$ | 2,586,070 | | |
$ | 2,557,236 | | |
$ | 2,564,571 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total deposits | |
$ | 2,262,647 | | |
$ | 2,224,206 | | |
$ | 2,171,809 | | |
$ | 2,143,747 | | |
$ | 2,143,744 | |
| Short-term borrowings | |
| 5,390 | | |
| 4,390 | | |
| 6,570 | | |
| 11,470 | | |
| 16,100 | |
| Long-term debt | |
| 98,000 | | |
| 128,277 | | |
| 128,277 | | |
| 120,646 | | |
| 120,646 | |
| Subordinated debt | |
| 19,751 | | |
| 19,741 | | |
| 19,731 | | |
| 19,722 | | |
| 19,712 | |
| Securities pending settlement | |
| 8,622 | | |
| 2,513 | | |
| 102 | | |
| — | | |
| — | |
| Other liabilities | |
| 22,770 | | |
| 20,697 | | |
| 23,104 | | |
| 25,855 | | |
| 26,960 | |
| TOTAL LIABILITIES | |
| 2,417,180 | | |
| 2,399,824 | | |
| 2,349,593 | | |
| 2,321,440 | | |
| 2,327,162 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| TOTAL SHAREHOLDERS’ EQUITY | |
| 235,910 | | |
| 240,655 | | |
| 236,477 | | |
| 235,796 | | |
| 237,409 | |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | |
$ | 2,653,090 | | |
$ | 2,640,479 | | |
$ | 2,586,070 | | |
$ | 2,557,236 | | |
$ | 2,564,571 | |
WESTERN NEW ENGLAND BANCORP, INC. AND
SUBSIDIARIES
Other Data
(Dollars in thousands, except per share
data)
(Unaudited)
| | |
Three Months Ended | |
| | |
December 31, | | |
September 30, | | |
June 30, | | |
March 31, | | |
December 31, | |
| | |
2024 | | |
2024 | | |
2024 | | |
2024 | | |
2023 | |
| Shares outstanding at end of period | |
| 20,875,713 | | |
| 21,113,408 | | |
| 21,357,849 | | |
| 21,627,690 | | |
| 21,666,807 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Operating results: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net interest income | |
$ | 15,273 | | |
$ | 14,728 | | |
$ | 14,470 | | |
$ | 15,346 | | |
$ | 16,176 | |
| (Reversal of) provision for credit losses | |
| (762 | ) | |
| 941 | | |
| (294 | ) | |
| (550 | ) | |
| 486 | |
| Non-interest income | |
| 3,254 | | |
| 3,141 | | |
| 3,834 | | |
| 2,674 | | |
| 2,714 | |
| Non-interest expense | |
| 14,926 | | |
| 14,406 | | |
| 14,314 | | |
| 14,782 | | |
| 14,785 | |
| Income before income provision for income taxes | |
| 4,363 | | |
| 2,522 | | |
| 4,284 | | |
| 3,788 | | |
| 3,619 | |
| Income tax provision | |
| 1,075 | | |
| 618 | | |
| 771 | | |
| 827 | | |
| 1,108 | |
| Net income | |
| 3,288 | | |
| 1,904 | | |
| 3,513 | | |
| 2,961 | | |
| 2,511 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Performance Ratios: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net interest margin | |
| 2.41 | % | |
| 2.40 | % | |
| 2.42 | % | |
| 2.57 | % | |
| 2.64 | % |
| Net interest margin, on a fully tax-equivalent basis | |
| 2.43 | % | |
| 2.42 | % | |
| 2.44 | % | |
| 2.59 | % | |
| 2.66 | % |
| Interest rate spread | |
| 1.63 | % | |
| 1.60 | % | |
| 1.66 | % | |
| 1.85 | % | |
| 1.96 | % |
| Interest rate spread, on a fully tax-equivalent basis | |
| 1.65 | % | |
| 1.62 | % | |
| 1.67 | % | |
| 1.86 | % | |
| 1.98 | % |
| Return on average assets | |
| 0.49 | % | |
| 0.29 | % | |
| 0.55 | % | |
| 0.47 | % | |
| 0.39 | % |
| Return on average equity | |
| 5.48 | % | |
| 3.19 | % | |
| 6.03 | % | |
| 5.04 | % | |
| 4.31 | % |
| Efficiency ratio (GAAP) | |
| 80.56 | % | |
| 80.62 | % | |
| 78.20 | % | |
| 82.03 | % | |
| 78.27 | % |
| Adjusted efficiency ratio (non-GAAP) (1) | |
| 81.85 | % | |
| 80.67 | % | |
| 82.68 | % | |
| 82.04 | % | |
| 78.26 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Per Common Share Data: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic earnings per share | |
$ | 0.16 | | |
$ | 0.09 | | |
$ | 0.17 | | |
$ | 0.14 | | |
$ | 0.12 | |
| Earnings per diluted share | |
| 0.16 | | |
| 0.09 | | |
| 0.17 | | |
| 0.14 | | |
| 0.12 | |
| Cash dividend declared | |
| 0.07 | | |
| 0.07 | | |
| 0.07 | | |
| 0.07 | | |
| 0.07 | |
| Book value per share | |
| 11.30 | | |
| 11.40 | | |
| 11.07 | | |
| 10.90 | | |
| 10.96 | |
| Tangible book value per share (non-GAAP) (2) | |
| 10.63 | | |
| 10.73 | | |
| 10.41 | | |
| 10.25 | | |
| 10.30 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Asset Quality: | |
| | | |
| | | |
| | | |
| | | |
| | |
| 30-89 day delinquent loans | |
$ | 3,694 | | |
$ | 3,059 | | |
$ | 3,270 | | |
$ | 3,000 | | |
$ | 4,605 | |
| 90 days or more delinquent loans | |
| 1,301 | | |
| 1,253 | | |
| 2,280 | | |
| 1,716 | | |
| 1,394 | |
| Total delinquent loans | |
| 4,995 | | |
| 4,312 | | |
| 5,550 | | |
| 4,716 | | |
| 5,999 | |
| Total delinquent loans as a percentage of total loans | |
| 0.24 | % | |
| 0.21 | % | |
| 0.27 | % | |
| 0.23 | % | |
| 0.30 | % |
| Nonperforming loans | |
$ | 5,381 | | |
$ | 4,873 | | |
$ | 5,845 | | |
$ | 5,837 | | |
$ | 6,421 | |
| Nonperforming loans as a percentage of total loans | |
| 0.26 | % | |
| 0.24 | % | |
| 0.29 | % | |
| 0.29 | % | |
| 0.32 | % |
| Nonperforming assets as a percentage of total assets | |
| 0.20 | % | |
| 0.18 | % | |
| 0.23 | % | |
| 0.23 | % | |
| 0.25 | % |
| Allowance for credit losses as a percentage of nonperforming loans | |
| 362.93 | % | |
| 409.50 | % | |
| 332.66 | % | |
| 340.65 | % | |
| 315.64 | % |
| Allowance for credit losses as a percentage of total loans | |
| 0.94 | % | |
| 0.97 | % | |
| 0.96 | % | |
| 0.98 | % | |
| 1.00 | % |
| Net loan (recoveries) charge-offs | |
$ | (128 | ) | |
$ | 98 | | |
$ | 10 | | |
$ | (67 | ) | |
$ | 136 | |
| Net loan (recoveries) charge-offs as a percentage of average loans | |
| (0.01 | )% | |
| 0.00 | % | |
| 0.00 | % | |
| 0.00 | % | |
| 0.01 | % |
| (1) | The adjusted efficiency ratio (non-GAAP) represents the
ratio of operating expenses divided by the sum of net interest and dividend income and non-interest income, excluding realized
and unrealized gains and losses on securities, gain on non-marketable equity investments, loss on disposal of premises and equipment,
loss on defined benefit plan termination and gain on bank-owned life insurance death benefit. |
| (2) | Tangible book value per share (non-GAAP) represents the
value of the Company’s tangible assets divided by its current outstanding shares. |
The following table sets forth the information relating to our
average balances and net interest income for the three months ended December 31, 2024, September 30, 2024 and December 31, 2023
and reflects the average yield on interest-earning assets and average cost of interest-bearing liabilities for the periods indicated.
| | |
Three
Months Ended | |
| | |
December
31, 2024 | | |
September
30, 2024 | | |
December
31, 2023 | |
| | |
Average | | |
| | |
Average Yield/ | | |
Average | | |
| | |
Average Yield/ | | |
Average | | |
| | |
Average Yield/ | |
| | |
Balance | | |
Interest | | |
Cost(8) | | |
Balance | | |
Interest | | |
Cost(8) | | |
Balance | | |
Interest | | |
Cost(8) | |
| | |
(Dollars in thousands) | |
| ASSETS: | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Interest-earning
assets | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Loans(1)(2) | |
$ | 2,062,822 | | |
$ | 25,311 | | |
| 4.88 | % | |
$ | 2,038,593 | | |
$ | 25,253 | | |
| 4.93 | % | |
$ | 2,017,089 | | |
$ | 24,052 | | |
| 4.73 | % |
| Securities(2) | |
| 361,476 | | |
| 2,273 | | |
| 2.50 | | |
| 354,696 | | |
| 2,121 | | |
| 2.38 | | |
| 355,078 | | |
| 2,094 | | |
| 2.34 | |
| Other investments | |
| 15,924 | | |
| 214 | | |
| 5.35 | | |
| 15,904 | | |
| 189 | | |
| 4.73 | | |
| 12,119 | | |
| 140 | | |
| 4.58 | |
| Short-term investments(3) | |
| 76,795 | | |
| 916 | | |
| 4.75 | | |
| 32,043 | | |
| 396 | | |
| 4.92 | | |
| 42,826 | | |
| 597 | | |
| 5.53 | |
| Total
interest-earning assets | |
| 2,517,017 | | |
| 28,714 | | |
| 4.54 | | |
| 2,441,236 | | |
| 27,959 | | |
| 4.56 | | |
| 2,427,112 | | |
| 26,883 | | |
| 4.39 | |
| Total
non-interest-earning assets | |
| 155,538 | | |
| | | |
| | | |
| 153,585 | | |
| | | |
| | | |
| 158,435 | | |
| | | |
| | |
| Total
assets | |
$ | 2,672,555 | | |
| | | |
| | | |
$ | 2,594,821 | | |
| | | |
| | | |
$ | 2,585,547 | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| LIABILITIES
AND EQUITY: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Interest-bearing
liabilities | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Interest-bearing checking
accounts | |
$ | 149,231 | | |
| 264 | | |
| 0.70 | | |
$ | 131,133 | | |
| 271 | | |
| 0.82 | | |
$ | 139,894 | | |
| 260 | | |
| 0.74 | |
| Savings accounts | |
| 179,122 | | |
| 38 | | |
| 0.08 | | |
| 179,844 | | |
| 38 | | |
| 0.08 | | |
| 187,047 | | |
| 39 | | |
| 0.08 | |
| Money market accounts | |
| 654,965 | | |
| 3,553 | | |
| 2.16 | | |
| 621,340 | | |
| 3,172 | | |
| 2.03 | | |
| 657,407 | | |
| 2,716 | | |
| 1.64 | |
| Time
deposit accounts | |
| 700,324 | | |
| 7,588 | | |
| 4.31 | | |
| 688,797 | | |
| 7,684 | | |
| 4.44 | | |
| 603,860 | | |
| 5,758 | | |
| 3.78 | |
| Total interest-bearing
deposits | |
| 1,683,642 | | |
| 11,443 | | |
| 2.70 | | |
| 1,621,114 | | |
| 11,165 | | |
| 2.74 | | |
| 1,588,208 | | |
| 8,773 | | |
| 2.19 | |
| Borrowings | |
| 147,748 | | |
| 1,870 | | |
| 5.04 | | |
| 153,317 | | |
| 1,947 | | |
| 5.05 | | |
| 149,585 | | |
| 1,821 | | |
| 4.83 | |
| Interest-bearing
liabilities | |
| 1,831,390 | | |
| 13,313 | | |
| 2.89 | | |
| 1,774,431 | | |
| 13,112 | | |
| 2.94 | | |
| 1,737,793 | | |
| 10,594 | | |
| 2.42 | |
| Non-interest-bearing
deposits | |
| 579,168 | | |
| | | |
| | | |
| 559,224 | | |
| | | |
| | | |
| 588,748 | | |
| | | |
| | |
| Other
non-interest-bearing liabilities | |
| 23,380 | | |
| | | |
| | | |
| 23,466 | | |
| | | |
| | | |
| 27,847 | | |
| | | |
| | |
| Total
non-interest-bearing liabilities | |
| 602,548 | | |
| | | |
| | | |
| 582,690 | | |
| | | |
| | | |
| 616,595 | | |
| | | |
| | |
| Total liabilities | |
| 2,433,938 | | |
| | | |
| | | |
| 2,357,121 | | |
| | | |
| | | |
| 2,354,388 | | |
| | | |
| | |
| Total
equity | |
| 238,617 | | |
| | | |
| | | |
| 237,700 | | |
| | | |
| | | |
| 231,159 | | |
| | | |
| | |
| Total
liabilities and equity | |
$ | 2,672,555 | | |
| | | |
| | | |
$ | 2,594,821 | | |
| | | |
| | | |
$ | 2,585,547 | | |
| | | |
| | |
| Less:
Tax-equivalent adjustment(2) | |
| | | |
| (128 | ) | |
| | | |
| | | |
| (119 | ) | |
| | | |
| | | |
| (113 | ) | |
| | |
| Net
interest and dividend income | |
| | | |
$ | 15,273 | | |
| | | |
| | | |
$ | 14,728 | | |
| | | |
| | | |
$ | 16,176 | | |
| | |
| Net interest rate
spread(4) | |
| | | |
| | | |
| 1.63 | % | |
| | | |
| | | |
| 1.60 | % | |
| | | |
| | | |
| 1.96 | % |
| Net interest rate
spread, on a tax-equivalent basis(5) | |
| | | |
| | | |
| 1.65 | % | |
| | | |
| | | |
| 1.62 | % | |
| | | |
| | | |
| 1.98 | % |
| Net interest margin(6) | |
| | | |
| | | |
| 2.41 | % | |
| | | |
| | | |
| 2.40 | % | |
| | | |
| | | |
| 2.64 | % |
| Net interest margin,
on a tax-equivalent basis(7) | |
| | | |
| | | |
| 2.43 | % | |
| | | |
| | | |
| 2.42 | % | |
| | | |
| | | |
| 2.66 | % |
| Ratio
of average interest-earning assets to average interest-bearing liabilities | |
| | | |
| | | |
| 137.44 | % | |
| | | |
| | | |
| 137.58 | % | |
| | | |
| | | |
| 139.67 | % |
The following tables set forth the information relating to our
average balances and net interest income for the twelve months ended December 31, 2024 and 2023 and reflect the average yield on
interest-earning assets and average cost of interest-bearing liabilities for the periods indicated.
| | |
Twelve Months Ended December 31, | |
| | |
2024 | | |
2023 | |
| | |
Average Balance | | |
Interest | | |
Average
Yield/ Cost | | |
Average Balance | | |
Interest | | |
Average
Yield/ Cost | |
| | |
(Dollars in thousands) | |
| ASSETS: | |
| | |
| | |
| | |
| | |
| | |
| |
| Interest-earning assets | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Loans(1)(2) | |
$ | 2,035,149 | | |
$ | 99,369 | | |
| 4.88 | % | |
$ | 2,006,166 | | |
$ | 91,640 | | |
| 4.57 | % |
| Securities(2) | |
| 357,631 | | |
| 8,649 | | |
| 2.42 | | |
| 368,201 | | |
| 8,371 | | |
| 2.27 | |
| Other investments | |
| 14,669 | | |
| 687 | | |
| 4.68 | | |
| 12,425 | | |
| 558 | | |
| 4.49 | |
| Short-term investments(3) | |
| 33,254 | | |
| 1,598 | | |
| 4.81 | | |
| 20,459 | | |
| 1,021 | | |
| 4.99 | |
| Total interest-earning assets | |
| 2,440,703 | | |
| 110,303 | | |
| 4.52 | | |
| 2,407,251 | | |
| 101,590 | | |
| 4.22 | |
| Total non-interest-earning assets | |
| 155,056 | | |
| | | |
| | | |
| 155,511 | | |
| | | |
| | |
| Total assets | |
$ | 2,595,759 | | |
| | | |
| | | |
$ | 2,562,762 | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| LIABILITIES AND EQUITY: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Interest-bearing liabilities | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Interest-bearing checking accounts | |
$ | 136,861 | | |
| 1,022 | | |
| 0.75 | % | |
$ | 142,005 | | |
| 1,041 | | |
| 0.73 | % |
| Savings accounts | |
| 182,678 | | |
| 166 | | |
| 0.09 | | |
| 202,354 | | |
| 181 | | |
| 0.09 | |
| Money market accounts | |
| 631,197 | | |
| 12,242 | | |
| 1.94 | | |
| 697,621 | | |
| 9,529 | | |
| 1.37 | |
| Time deposit accounts | |
| 666,917 | | |
| 28,806 | | |
| 4.32 | | |
| 524,827 | | |
| 15,898 | | |
| 3.03 | |
| Total interest-bearing deposits | |
| 1,617,653 | | |
| 42,236 | | |
| 2.61 | | |
| 1,566,807 | | |
| 26,649 | | |
| 1.70 | |
| Short-term borrowings and long-term debt | |
| 155,560 | | |
| 7,779 | | |
| 5.00 | | |
| 135,532 | | |
| 6,560 | | |
| 4.84 | |
| Total interest-bearing liabilities | |
| 1,773,213 | | |
| 50,015 | | |
| 2.82 | | |
| 1,702,339 | | |
| 33,209 | | |
| 1.95 | |
| Non-interest-bearing deposits | |
| 561,264 | | |
| | | |
| | | |
| 602,652 | | |
| | | |
| | |
| Other non-interest-bearing liabilities | |
| 24,541 | | |
| | | |
| | | |
| 24,885 | | |
| | | |
| | |
| Total non-interest-bearing liabilities | |
| 585,805 | | |
| | | |
| | | |
| 627,537 | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total liabilities | |
| 2,359,018 | | |
| | | |
| | | |
| 2,329,876 | | |
| | | |
| | |
| Total equity | |
| 236,741 | | |
| | | |
| | | |
| 232,886 | | |
| | | |
| | |
| Total liabilities and equity | |
$ | 2,595,759 | | |
| | | |
| | | |
$ | 2,562,762 | | |
| | | |
| | |
| Less: Tax-equivalent adjustment (2) | |
| | | |
| (471 | ) | |
| | | |
| | | |
| (472 | ) | |
| | |
| Net interest and dividend income | |
| | | |
$ | 59,817 | | |
| | | |
| | | |
$ | 67,909 | | |
| | |
| Net interest rate spread (4) | |
| | | |
| | | |
| 1.68 | % | |
| | | |
| | | |
| 2.25 | % |
| Net interest rate spread, on a tax-equivalent basis (5) | |
| | | |
| | | |
| 1.70 | % | |
| | | |
| | | |
| 2.27 | % |
| Net interest margin (6) | |
| | | |
| | | |
| 2.45 | % | |
| | | |
| | | |
| 2.82 | % |
| Net interest margin, on a tax-equivalent basis (7) | |
| | | |
| | | |
| 2.47 | % | |
| | | |
| | | |
| 2.84 | % |
| Ratio of average interest-earning assets to average interest-bearing liabilities | |
| | | |
| | | |
| 137.64 | % | |
| | | |
| | | |
| 141.41 | % |
| (1) | Loans, including nonaccrual loans, are net of deferred
loan origination costs and unadvanced funds. |
| (2) | Loan and securities income are presented on a tax-equivalent basis using a tax rate of 21%. The
tax-equivalent adjustment is deducted from tax-equivalent net interest and dividend income to agree to the amount reported on the
consolidated statements of net income. |
| (3) | Short-term investments include federal funds sold. |
| (4) | Net interest rate spread represents the difference between the weighted average yield on interest-earning
assets and the weighted average cost of interest-bearing liabilities. |
| (5) | Net interest rate spread, on a tax-equivalent basis, represents the difference between the tax-equivalent
weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities. |
| (6) | Net interest margin represents net interest and dividend income as a percentage of average interest-earning
assets. |
| (7) | Net interest margin, on a tax-equivalent basis, represents tax-equivalent net interest and dividend
income as a percentage of average interest-earning assets. |
Reconciliation of Non-GAAP to GAAP
Financial Measures
The Company believes that certain non-GAAP
financial measures provide information to investors that is useful in understanding its results of operations and financial condition.
Because not all companies use the same calculation, this presentation may not be comparable to other similarly titled measures
calculated by other companies. A reconciliation of these non-GAAP financial measures is provided below.
| | |
For the quarter ended | |
| | |
12/31/2024 | | |
9/30/2024 | | |
6/30/2024 | | |
3/31/2024 | | |
12/31/2023 | |
| | |
(Dollars in thousands) | |
| | |
| | |
| | |
| | |
| | |
| |
| Loan interest (no tax adjustment) | |
$ | 25,183 | | |
$ | 25,134 | | |
$ | 24,340 | | |
$ | 24,241 | | |
$ | 23,939 | |
| Tax-equivalent adjustment | |
| 128 | | |
| 119 | | |
| 114 | | |
| 110 | | |
| 113 | |
| Loan interest (tax-equivalent basis) | |
$ | 25,311 | | |
$ | 25,253 | | |
$ | 24,454 | | |
$ | 24,351 | | |
$ | 24,052 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net interest income (no tax adjustment) | |
$ | 15,273 | | |
$ | 14,728 | | |
$ | 14,470 | | |
$ | 15,346 | | |
$ | 16,176 | |
| Tax equivalent adjustment | |
| 128 | | |
| 119 | | |
| 114 | | |
| 110 | | |
| 113 | |
| Net interest income (tax-equivalent basis) | |
$ | 15,401 | | |
$ | 14,847 | | |
$ | 14,584 | | |
$ | 15,456 | | |
$ | 16,289 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net interest income (no tax adjustment) | |
$ | 15,273 | | |
$ | 14,728 | | |
$ | 14,470 | | |
$ | 15,346 | | |
$ | 16,176 | |
| Less: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Fair value hedge interest income | |
| 74 | | |
| 434 | | |
| 447 | | |
| 443 | | |
| 459 | |
| Adjusted net interest income (non-GAAP) | |
$ | 15,199 | | |
$ | 14,294 | | |
$ | 14,023 | | |
$ | 14,903 | | |
$ | 15,717 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Average interest-earning assets | |
$ | 2,517,017 | | |
$ | 2,441,236 | | |
$ | 2,400,633 | | |
$ | 2,403,086 | | |
$ | 2,427,112 | |
| Net interest margin (no tax adjustment) | |
| 2.41 | % | |
| 2.40 | % | |
| 2.42 | % | |
| 2.57 | % | |
| 2.64 | % |
| Net interest margin, tax-equivalent | |
| 2.43 | % | |
| 2.42 | % | |
| 2.44 | % | |
| 2.59 | % | |
| 2.66 | % |
| Adjusted net interest margin, excluding fair value hedge interest income (non-GAAP) | |
| 2.40 | % | |
| 2.33 | % | |
| 2.35 | % | |
| 2.50 | % | |
| 2.57 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Book Value per Share (GAAP) | |
$ | 11.30 | | |
$ | 11.40 | | |
$ | 11.07 | | |
$ | 10.90 | | |
$ | 10.96 | |
| Non-GAAP adjustments: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Goodwill | |
| (0.60 | ) | |
| (0.59 | ) | |
| (0.58 | ) | |
| (0.58 | ) | |
| (0.58 | ) |
| Core deposit intangible | |
| (0.07 | ) | |
| (0.08 | ) | |
| (0.08 | ) | |
| (0.07 | ) | |
| (0.08 | ) |
| Tangible Book Value per Share (non-GAAP) | |
$ | 10.63 | | |
$ | 10.73 | | |
$ | 10.41 | | |
$ | 10.25 | | |
$ | 10.30 | |
| | |
For the quarter ended | |
| | |
12/31/2024 | | |
9/30/2024 | | |
6/30/2024 | | |
3/31/2024 | | |
12/31/2023 | |
| | |
(Dollars in thousands) | |
| | |
| | |
| | |
| | |
| | |
| |
| Efficiency Ratio: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Non-interest Expense (GAAP) | |
$ | 14,926 | | |
$ | 14,406 | | |
$ | 14,314 | | |
$ | 14,782 | | |
$ | 14,785 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net Interest Income (GAAP) | |
$ | 15,273 | | |
$ | 14,728 | | |
$ | 14,470 | | |
$ | 15,346 | | |
$ | 16,176 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Non-interest Income (GAAP) | |
$ | 3,254 | | |
$ | 3,141 | | |
$ | 3,834 | | |
$ | 2,674 | | |
$ | 2,714 | |
| Non-GAAP adjustments: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Unrealized losses (gains) on marketable equity securities | |
| 9 | | |
| (10 | ) | |
| (4 | ) | |
| (8 | ) | |
| 1 | |
| Gain on non-marketable equity investments | |
| (300 | ) | |
| — | | |
| (987 | ) | |
| — | | |
| — | |
| Loss on disposal of premises and equipment | |
| — | | |
| — | | |
| — | | |
| 6 | | |
| — | |
| Non-interest Income for Adjusted Efficiency Ratio (non-GAAP) | |
$ | 2,963 | | |
$ | 3,131 | | |
$ | 2,843 | | |
$ | 2,672 | | |
$ | 2,715 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total Revenue for Adjusted Efficiency Ratio (non-GAAP) | |
$ | 18,236 | | |
$ | 17,859 | | |
$ | 17,313 | | |
$ | 18,018 | | |
$ | 18,891 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Efficiency Ratio (GAAP) | |
| 80.56 | % | |
| 80.62 | % | |
| 78.20 | % | |
| 82.03 | % | |
| 78.27 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Adjusted Efficiency Ratio (Non-interest Expense (GAAP)/Total Revenue for Adjusted Efficiency Ratio (non-GAAP)) | |
| 81.85 | % | |
| 80.67 | % | |
| 82.68 | % | |
| 82.04 | % | |
| 78.26 | % |
| | |
For the twelve months ended | |
| | |
12/31/2024 | | |
12/31/2023 | |
| | |
(Dollars in thousands) | |
| | |
| | |
| |
| Loan income (no tax adjustment) | |
$ | 98,898 | | |
$ | 91,169 | |
| Tax-equivalent adjustment | |
| 471 | | |
| 472 | |
| Loan income (tax-equivalent basis) | |
$ | 99,369 | | |
$ | 91,641 | |
| | |
| | | |
| | |
| Net interest income (no tax adjustment) | |
$ | 59,817 | | |
$ | 67,909 | |
| Tax equivalent adjustment | |
| 471 | | |
| 472 | |
| | |
| | | |
| | |
| Net interest income (tax-equivalent basis) | |
$ | 60,288 | | |
$ | 68,381 | |
| | |
| | | |
| | |
| Net interest income (no tax adjustment) | |
$ | 59,817 | | |
$ | 67,909 | |
| Less: | |
| | | |
| | |
| Fair value hedge interest income | |
| 1,398 | | |
| 1,085 | |
| Adjusted net interest income (non-GAAP) | |
$ | 58,419 | | |
$ | 66,824 | |
| | |
| | | |
| | |
| Average interest-earning assets | |
$ | 2,440,703 | | |
$ | 2,407,251 | |
| Net interest margin (no tax adjustment) | |
| 2.45 | % | |
| 2.82 | % |
| Net interest margin, tax-equivalent | |
| 2.47 | % | |
| 2.84 | % |
| Adjusted net interest margin, excluding fair value hedge interest income (non-GAAP) | |
| 2.39 | % | |
| 2.77 | % |
| | |
| | | |
| | |
| Adjusted Efficiency Ratio: | |
| | | |
| | |
| Non-interest Expense (GAAP) | |
$ | 58,428 | | |
$ | 58,350 | |
| | |
| | | |
| | |
| Net Interest Income (GAAP) | |
$ | 59,817 | | |
$ | 67,909 | |
| | |
| | | |
| | |
| Non-interest Income (GAAP) | |
$ | 12,903 | | |
$ | 10,897 | |
| Non-GAAP adjustments: | |
| | | |
| | |
| Unrealized gains on marketable equity securities | |
| (13 | ) | |
| 1 | |
| Loss on disposal of premises and equipment, net | |
| 6 | | |
| 3 | |
| Gain on bank-owned life insurance | |
| — | | |
| (778 | ) |
| Gain on non-marketable equity investments | |
| (1,287 | ) | |
| (590 | ) |
| Loss on defined benefit plan curtailment | |
| — | | |
| 1,143 | |
| Non-interest Income for Adjusted Efficiency Ratio (non-GAAP) | |
$ | 11,609 | | |
$ | 10,676 | |
| Total Revenue for Adjusted Efficiency Ratio (non-GAAP) | |
$ | 71,426 | | |
$ | 78,585 | |
| | |
| | | |
| | |
| Efficiency Ratio (GAAP) | |
| 80.35 | % | |
| 74.04 | % |
| | |
| | | |
| | |
| Adjusted Efficiency Ratio (Non-interest Expense (GAAP)/Total Revenue for Adjusted Efficiency Ratio (non-GAAP)) | |
| 81.80 | % | |
| 74.25 | % |
Western New England Bancorp, Inc. 8-K
Exhibit 99.2
Local banking is better than ever. INVESTOR PRESENTATION 4TH QUARTER 2024
FORWARD - LOOKING STATEMENTS 2 We may, from time to time, make written or oral “forward - looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 , including statements contained in our filings with the Securities and Exchange Commission (the “SEC”), our reports to shareholders and in other communications by us . This Investor Presentation contains “forward - looking statements” with respect to the Company’s financial condition, liquidity , results of operations, future performance, and business . Forward - looking statements may be identified by the use of such words as “believe,” “expect,” “anticipate ,” “ should,” “planned,” “estimated,” and “potential . ” Examples of forward - looking statements include, but are not limited to, estimates with respect to our financial condition, results of operations and business that are subject to various factors which could cause actual results to differ materially from these estimates . These factors include, but are not limited to : • unpredictable changes in general economic or political conditions , financial markets, fiscal, monetary and regulatory policies, including actual or potential stress in the banking industry ; • the duration and scope of potential pandemics, including the emergence of new variants and the response thereto ; • unstable political and economic conditions which could materially impact credit quality trends and the ability to generate loans and gather deposits ; • inflation and governmental responses to inflation, including recent sustained increases and potential future increases in interest rates that reduce margins ; • the effect on our operations of governmental legislation and regulation, including changes in accounting regulation or standards, the nature and timing of the adoption and effectiveness of new requirements under the Dodd - Frank Wall Street Reform and Consumer Protection Act of 2010 , Basel guidelines, capital requirements and other applicable laws and regulations ; • significant changes in accounting, tax or regulatory practices or requirements ; • new legal obligations or liabilities or unfavorable resolutions of litigation ; • disruptive technologies in payment systems and other services traditionally provided by banks ; • the highly competitive industry and market area in which we operate ;
FORWARD - LOOKING STATEMENTS 3 • operational risks or risk management failures by us or critical third parties, including without limitation with respect to data processing, information systems, cybersecurity, technological changes, vendor issues, business interruption, and fraud risks ; • f ailure or circumvention of our internal controls or procedures ; • c hanges in the securities markets which affect investment management revenues ; • i ncreases in Federal Deposit Insurance Corporation deposit insurance premiums and assessments ; • the soundness of other financial services institutions which may adversely affect our credit risk; • certain of our intangible assets may become impaired in the future; • new lines of business or new products and services, which may subject us to additional risks; • changes in key management personnel which may adversely impact our operations; • severe weather, natural disasters, acts of war or terrorism and other external events which could significantly impact our business; and • other risk factors detailed from time to time in our SEC filings. Although we believe that the expectations reflected in such forward - looking statements are reasonable, actual results may differ materially from the results discussed in these forward - looking statements. You are cautioned not to place undue reliance on the se forward - looking statements, which speak only as of the date hereof. We do not undertake any obligation to republish revised for ward - looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events , except to the extent required by law.
WHO WE ARE Every day, we focus on showing Westfield Bank customers “ what better banking is all about . ” For us, the idea of better banking starts with putting customers first, while adhering to our core values . Our Core Values : • Integrity • Enhance Shareholder Value • Customer Focus • Community Focus Our Core Mission : Our purpose is to help customers succeed in our community, while creating and increasing shareholder value . The Company’s purpose drives the outcome we envision for Western New England Bancorp . 4 70 Center Street, Chicopee, MA.
SENIOR MANAGEMENT TEAM James C . Hagan, President & Chief Executive Officer Guida R . Sajdak, Executive Vice President, Chief Financial Officer & Treasurer Allen J . Miles III, Executive Vice President & Chief Lending Officer Kevin C . O’Connor, Executive Vice President & Chief Banking Officer Daniel A . Marini , Senior Vice President, Retail Banking & Marketing Leo R . Sagan, Jr . , Senior Vice President & Chief Risk Officer Filipe Goncalves, Senior Vice President & Chief Credit Officer Darlene Libiszewski , Senior Vice President & Chief Information Officer John E . Bonini , Senior Vice President & General Counsel Christine Phillips , Senior Vice President, Human Resources Director 5
4 Q2024 QUARTERLY EARNINGS 6 4Q2023 1Q2024 2Q2024 (2) 3Q2024 4Q2024 (1) ($ in thousands , except EPS ) $ 16,176 $ 15,346 $ 14,470 $ 14,728 $ 15,273 Net interest income 486 (550) (294) 941 (762) (Reversal of) provision for credit losses 2,714 2,674 3,834 3,141 3,254 Non - interest income 14,785 14,782 14,314 14,406 14,926 Non - interest expense 3,619 3,788 4,284 2,522 4,363 Income before taxes 1,108 827 771 618 1,075 Income tax expense $ 2,511 $ 2,961 $ 3,513 $ 1,904 $ 3,288 Net income $ 0.12 $ 0.14 $ 0.17 $ 0.09 $ 0.16 Diluted earnings per share (EPS) 0.39% 0.47% 0.55% 0.29% 0.49% Return on average assets (ROA) 4.31% 5.04% 6.03% 3.19% 5.48% Return on average equity (ROE) 2.64% 2.57% 2.42% 2.40% 2.41% Net interest margin 2.66% 2.59% 2.44% 2.42% 2.43% Net interest margin, on a tax - equivalent basis (1) Non - interest income includes a $300,000 gain on non - marketable equity investments. (2) Non - interest income includes a $987,000 gain on non - marketable equity investments.
NET INTEREST INCOME AND NET INTEREST MARGIN 7 $16.2 $15.3 $14.5 $14.7 $15.3 2.64% 2.57% 2.42% 2.40% 2.41% 2.20% 2.40% 2.60% 2.80% 4Q2023 1Q2024 2Q2024 3Q2024 4Q2024 $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 Net interest income ($) Net interest margin (%) On a sequential quarter basis, net interest income, our primary driver of revenues, increased $ 545 , 000 , or 3 . 7 % , to $ 15 . 3 million for the three months ended December 31 , 2024 , from $ 14 . 7 million for the three months ended September 30 , 2024 . The increase in net interest income was primarily due to an increase in interest income of $ 746 , 000 , or 2 . 7 % , partially offset by an increase in interest expense of $ 201 , 000 , or 1 . 5 % . The net interest margin was 2 . 41 % for the three months ended December 31 , 2024 compared to 2 . 40 % for the three months ended September 30 , 2024 . During the three months ended December 31 , 2024 and during the three months ended September 30 , 2024 , the Company had a fair value hedge which contributed to an increase in the net interest margin of one basis point for the three months ended December 31 , 2024 , compared to an increase of seven basis points during the three months ended September 30 , 2024 . Excluding the interest income attributed to the fair value hedge, the net interest margin increased seven basis points from 2 . 33 % for the three months ended September 30 , 2024 to 2 . 40 % for the three months ended December 31 , 2024 , respectively . The fair value hedge matured in October of 2024 . ($ in millions)
TOTAL LOANS 8 $2,017 $2,022 $2,017 $2,039 $2,063 4.73% 4.84% 4.88% 4.93% 4.88% 4.25% 4.35% 4.45% 4.55% 4.65% 4.75% 4.85% 4.95% 4Q2023 1Q2024 2Q2024 3Q2024 4Q2024 $2,000 $2,010 $2,020 $2,030 $2,040 $2,050 $2,060 $2,070 $2,080 Average Loans Outstanding Average Loans Outstanding Average Loan Yield, Tax-Equivalent Basis $2,027 $2,026 $2,026 $2,049 $2,070 4Q2023 1Q2024 2Q2024 3Q2024 4Q2024 $2,000 $2,010 $2,020 $2,030 $2,040 $2,050 $2,060 $2,070 $2,080 Period - end Loans Outstanding Total loans increased $ 42 . 9 million, or 2 . 1 % , from December 31 , 2023 , to $ 2 . 1 billion at December 31 , 2024 . Residential real estate loans, including home equity loans , increased $ 53 . 5 million, or 7 . 4 % , while commercial real estate loans decreased $ 4 . 0 million, or 0 . 4 % , commercial and industrial loans decreased $ 5 . 7 million, or 2 . 7 % , and consumer loans decreased $ 1 . 1 million, or 19 . 8 % . ($ in millions)
COMMERCIAL AND INDUSTRIAL LOANS 9 $217 $207 $216 $210 $212 4Q2023 1Q2024 2Q2024 3Q2024 4Q2024 $202 $204 $206 $208 $210 $212 $214 $216 $218 Total commercial and industrial (“C&I”) loans decreased $ 5 . 7 million, or 2 . 7 % , to $ 211 . 7 million at December 31 , 2024 , from $ 217 . 4 million at December 31 , 2023 . At December 31 , 2024 , total delinquent C&I loans were $ 61 , 000 . ($ in millions)
COMMERCIAL & INDUSTRIAL PORTFOLIO (1) 10 (1) % of total loans as of December 31, 2024. All other C&I , 2.4% Manufacturing , 2.1% Merchant Wholesalers , 1.4% Heavy and Civil Engineering Construction , 1.0% Hotels , 0.1% Construction, Sand & Gravel Mining , 1.1% Healthcare , 0.4% Specialty Trade Contractors , 0.4% Educational Services , 1.3%
COMMERCIAL REAL ESTATE LOANS 11 $1,080 $1,084 $1,057 $1,083 $1,075 4Q2023 1Q2024 2Q2024 3Q2024 4Q2024 $1,040 $1,045 $1,050 $1,055 $1,060 $1,065 $1,070 $1,075 $1,080 $1,085 $1,090 Total commercial real estate (“CRE”) loans decreased $ 4 . 0 million, or 0 . 4 % , to $ 1 . 1 billion from December 31 , 2023 to December 31 , 2024 . At December 31 , 2024 , total delinquent CRE loans were $ 285 , 000 . ($ in millions)
COMMERCIAL REAL ESTATE LOANS (CRE) (1) 12 ($ in thousands) (1) As of December 31, 2024. (2) The total RBC ratio is based on Westfield Bank’s capital and due to loan classifications, the percentage of total RBC ma y d iffer from the Call Report. At December 31 , 2024 , the commercial real estate portfolio totaled $ 1 . 1 billion, and represented 52 . 0 % of total gross loans . Of the $ 1 . 1 billion, $ 880 . 8 million, or 81 . 9 % , were categorized as non - owner occupied commercial real estate and $ 194 . 9 million , or 18 . 1 % , were categorized as owner - occupied commercial real estate . % of Total Risk - Based Bank Capital (RBC) (2) % of Total Loans % of CRE Portfolio Total Owner Occupied Non - Owner Occupied Property Type 73.9% 9.7% 18.6% $ 200,115 $ 23,013 $ 177,102 Office 66.4% 8.7% 16.7% 179,874 - 179,874 Apartment 62.1% 8.1% 15.6% 168,281 51,618 116,663 Industrial 43.2% 5.7% 10.9% 117,041 7,105 109,936 Retail 25.0% 3.3% 6.3% 67,702 30,471 37,231 Other 28.7% 3.8% 7.2% 77,628 6,402 71,226 Mixed Use 15.9% 2.1% 4.0% 43,133 - 43,133 Hotel/Hospitality 14.5% 1.9% 3.6% 39,259 36,554 2,705 Automotive Sales 13.9% 1.8% 3.5% 37,754 6,119 31,635 Adult Care/Assisted Living 12.6% 1.6% 3.2% 34,094 329 33,765 Self Storage 8.1% 1.1% 2.0% 22,047 - 22,047 Student Housing 11.4% 1.5% 2.9% 30,987 10,045 20,942 Warehouse 11.3% 1.5% 2.9% 30,711 7,518 23,193 Shopping Center 10.0% 1.3% 2.5% 27,106 15,730 11,376 School/Higher Education 397.1% 52.0% 100.0% $ 1,075,732 $ 194,904 $ 880,828 Total commercial real estate loans 397.1% 71.9% 325.2% % of Total Bank Risk - Based Capital 18.1% 81.9% % of Total CRE Loans
COMMERCIAL REAL ESTATE – NON - OWNER OCCUPIED (1) 13 At December 31 , 2024 , the non - owner occupied CRE portfolio totaled $ 880 . 8 million, or 325 . 2 % of total RBC . Of the $ 880 . 8 million, $ 458 . 3 million , or 52 . 0 % of non - owner occupied CRE, was concentrated in Massachusetts and $ 268 . 7 million, or 30 . 5 % of non - owner occupied CRE, was concentrated in Connecticut . At December 31 , 2024 , the apartment portfolio represented the largest concentration of non - owner occupied CRE at 66 . 4 % of t otal RBC with a weighted average LTV of 54 . 7 % . The office portfolio represented 65 . 4 % of total RBC with a weighted average LTV of 64 . 4 % . ($ in thousands) (1) As of December 31, 2024. (2) The total RBC ratio is based on Westfield Bank’s capital and due to loan classifications, the percentage of total RBC may differ fro m the Call Report . (3) Weighted average LTV is based on the original appraisal and the current loan balance. Weighted Average Loan to Value (LTV) (3) % of Total RBC (2) Total Other RI NH CT MA Property Type 54.7% 66.4% $179,874 $ - $ 27,740 $ - $ 37,212 $ 114,922 Apartment 64.4% 65.4% 177,102 11,405 - 40,237 62,906 62,554 Office 56.0% 43.1% 116,663 6,041 14,992 - 35,438 60,192 Industrial 55.4% 40.6% 109,936 10,859 6,219 13,752 23,551 55,555 Retail 57.7% 26.3% 71,226 4,713 13,062 - 21,552 31,899 Mixed Use 55.3% 13.7% 37,231 126 - 707 5,949 30,449 Other 51.8% 15.9% 43,133 - - - 22,320 20,813 Hotel/Hospitality 63.0% 12.5% 33,765 - - 784 8,548 24,433 Self Storage 58.6% 11.7% 31,635 - - - 16,546 15,089 Adult Care/Assisted Living 50.9% 8.6% 23,193 - - - 16,017 7,176 Shopping Center 44.5% 7.7% 20,942 217 - - 3,319 17,406 Warehouse 45.0% 4.2% 11,376 - - - - 11,376 School/Higher Education 72.4% 8.1% 22,047 347 2,660 15,323 3,717 Student Housing 39.5% 1.0% 2,705 - - - - 2,705 Automotive Sales 57.2% 325.2% $880,828 $ 33,708 $ 62,013 $ 58,140 $ 268,681 $ 458,286 Total non - owner occupied commercial real estate
COMMERCIAL REAL ESTATE – OFFICE BUILDINGS (1) 14 ($ in thousands) (1) As of December 31, 2024. (2) The total RBC ratio is based on Westfield Bank’s capital and due to loan classifications, the percentage of total RBC may dif fer from the Call Report. % of Total Bank RBC (2) % of Office Portfolio Total Owner Occupied Non - Owner Occupied By Collateral Type 43.4% 58.8% $ 117,644 $ 10,760 $ 106,884 Office/Medical 4.4% 6.0% 11,952 8,259 3,693 Office/Professional Metro 15.9% 21.5% 43,017 3,681 39,336 Office/Professional Suburban 10.2 % 13.7 % 27,502 313 27,189 Office/Professional Urban 73.9% 100.0% $ 200,115 $ 23,013 $ 177,102 Total Office Portfolio 73.9% 8.5% 65.4% Percent of RBC % of Total Bank RBC (2) % of Office Portfolio Total Owner Occupied Non - Owner Occupied By State 30.7% 41.5% $ 83,031 $ 20,477 $ 62,554 Massachusetts 24.2% 32.7% 65,442 2,536 62,906 Connecticut 14.9% 20.1% 40,237 - 40,237 New Hampshire 4.2 % 5.7 % 11,405 - 11,405 Other 73.9% 100.0% $ 200,115 $ 23,013 $ 177,102 Total Office Portfolio % of Total Bank RBC (2) % of Office Portfolio Total Owner Occupied Non - Owner Occupied By Risk Rating 70.5% 95.4% $ 190,809 $ 21,632 $ 169,177 Pass 3.2% 4.3% 8,649 724 7,925 Special Mention 0.2% 0.3% 657 657 - Substandard 73.9% 100.0% $ 200,115 $ 23,013 $ 177,102 Total Office Portfolio • As of December 31 , 2024 , the office portfolio totaled $ 200 . 1 million, or 73 . 9 % of RBC, and represented 18 . 6 % of total CRE loans . • Non - owner occupied office totaled $ 177 . 1 million, or 65 . 4 % of total RBC, and owner - occupied office totaled $ 23 . 0 million, or 8 . 5 % of total RBC . • Office exposure is concentrated in medical - office, totaling $ 117 . 6 million, or 58 . 8 % , of the total office portfolio . • Of the $ 200 . 1 million in total office, 41 . 5 % is concentrated in Massachusetts and 32 . 7 % is concentrated in Connecticut . The Company does not have any exposure in greater Boston or New York . • Of the $ 200 . 1 million in total office, 95 . 4 % of the office portfolio is in the pass - rated category . • There is approximately $ 36 . 8 million, or 18 . 4 % of the total office portfolio, maturing by the end of 2026 .
RESIDENTIAL REAL ESTATE LOANS AND CONSUMER LOANS 15 $728 $732 $751 $753 $780 4Q2023 1Q2024 2Q2024 3Q2024 4Q2024 $700 $710 $720 $730 $740 $750 $760 $770 $780 $790 Residential real estate loans , including home equity loans and consumer loans increased $ 52 . 4 million , or 7 . 2 % , to $ 780 . 1 million, from December 31 , 2023 to December 31 , 2024 . During the twelve months ended December 31 , 2024 , the Company sold $ 20 . 1 million in fixed rate residential loans to the secondary market . At December 31 , 2024 , the Company serviced $ 84 . 8 million in loans sold to the secondary market, with servicing retained, which are not included on the Company’s balance sheet under residential real estate loans . At December 31 , 2024 , total delinquent residential real estate loans and consumer loans totaled $ 4 . 6 million, or 0 . 6 % of total residential real estate loans and consumer loans . ($ in millions)
INVESTMENT PORTFOLIO 16 The held - to - maturity (“HTM”) and available - for - sale (“AFS”) securities portfolio represented 13 . 8 % of total assets at December 31 , 2024 and 14 . 1 % of total assets at December 31 , 2023 . The HTM unrealized losses, net of tax, were approximately $ 28 . 3 million, or 13 . 8 % , of the total HTM amortized cost basis . If the HTM losses, net of tax, were included in capital, the losses would represent 11 . 3 % of Tier 1 capital and negatively impact tangible common equity (“TCE”), a non - GAAP financial measure, by 1 . 1 % . The AFS unrealized losses, net of tax, were approximately $ 23 . 3 million , or 12 . 1 % of the total AFS amortized cost basis . As a percentage of Tier 1 capital, the AFS unrealized losses, net of tax, represented 9 . 3 % of Tier 1 capital and negatively impacted TCE, a non - GAAP financial measure, by 0 . 9 % . (1) Tier 1 Capital represents Westfield Bank’s Tier 1 Capital as of December 31, 2024. (2) Impact to TCE is net of tax. TCE is a non - GAAP measure. See slides 30 - 32 for the related TCE calculation and a reconciliation of GAAP to non - GAAP financial measures . The table below displays the investment portfolio as of December 31 , 2024 . Impact to TCE ( Non - GAAP) (2) Net of Tax Loss as a % of Tier 1 Capital (1) Net of Tax Loss as a % of Amortized Cost Basis Unrealized Loss, Net of Tax Fair Value % of Investment Portfolio’s Amortized Cost Basis Amortized Cost Basis At December 31, 2024 (Dollars in millions) - 1.1% - 11.3% - 13.8% ($28.3) $ 165.6 51.6% $ 205.0 HTM - 0.9% - 9.3% - 12.1% ($23.3) $ 160.7 48.4% $ 191.9 AFS - 2.0% - 20.6% - 13.0% ($ 51.6) $ 326.3 100.0% $ 396.9 Total Investments
TOTAL DEPOSITS 17 $1,532 $1,501 $1,500 $1,524 $1,559 4Q2023 1Q2024 2Q2024 3Q2024 4Q2024 $1,470 $1,480 $1,490 $1,500 $1,510 $1,520 $1,530 $1,540 $1,550 $1,560 $1,570 PERIOD - END CORE DEPOSITS Total deposits increased $ 118 . 9 million, or 5 . 6 % , from $ 2 . 1 billion at December 31 , 2023 to $ 2 . 3 billion at December 31 , 2024 . Core deposits, which the Company defines as all deposits except time deposits, increased $ 26 . 7 million, or 1 . 7 % , from $ 1 . 5 billion, or 71 . 5 % of total deposits, at December 31 , 2023 , to $ 1 . 6 billion, or 68 . 9 % of total deposits, at December 31 , 2024 . Time deposits increased $ 92 . 2 million, or 15 . 1 % , from $ 611 . 4 million at December 31 , 2023 to $ 703 . 6 million at December 31 , 2024 . At December 31 , 2 024 and December 31 , 2023 , uninsured deposits represented 28 . 4 % and 26 . 8 % , of total deposits, respectively . $611 $643 $672 $700 $704 4Q2023 1Q2024 2Q2024 3Q2024 4Q2024 $560 $580 $600 $620 $640 $660 $680 $700 $720 PERIOD - END TIME DEPOSITS (1) ($ in millions) (1) Includes $1.7 million in brokered deposits for all periods presented.
AVERAGE TOTAL DEPOSITS 18 $1,588 $1,576 $1,589 $1,621 $1,684 $589 $558 $549 $559 $579 1.60% 1.75% 1.94% 2.04% 2.01% -0.25% 0.25% 0.75% 1.25% 1.75% 2.25% 2.75% 3.25% 4Q2023 1Q2024 2Q2024 3Q2024 4Q2024 $500 $700 $900 $1,100 $1,300 $1,500 $1,700 $1,900 Average Deposits and Rates Interest-bearing deposits Non-interest-bearing deposits Average deposit cost Total average deposits, consisting of interest - bearing and non - interest bearing deposits, increased $ 82 . 5 million, or 3 . 8 % , from $ 2 . 2 billion for the three months ended September 30 , 2024 , to $ 2 . 3 billion, for the three months ended December 31 , 2024 . The average cost of deposits decreased three basis points, from 2 . 04 % for the three months ended September 30 , 2024 to 2 . 01 % for the three months ended December 31 , 2024 . ($ in millions)
AVERAGE CORE AND TIME DEPOSITS 19 $1,573 $1,506 $1,488 $1,492 $1,562 0.76% 0.76% 0.87% 0.93% 0.98% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% $1,300 $1,350 $1,400 $1,450 $1,500 $1,550 $1,600 $1,650 $1,700 $1,750 $1,800 Average Core Deposits and Rates During the three months ended December 31 , 2024 , average core deposits of $ 1 . 6 billion, including non - interest bearing deposits, increased $ 70 . 9 million , or 4 . 8 % , from the three months ended September 30 , 2024 . During the three months ended December 31 , 2024 , average time deposits of $ 700 . 3 million increased $ 11 . 5 million, or 1 . 7 % , from the three months ended September 30 , 2024 . During the three months ended December 31 , 2024 , the average cost of core deposits, including non - interest bearing demand deposits, increased five ( 5 ) basis points from the three months ended September 30 , 2024 , while the cost of time deposits decreased 13 basis points during the same period . ($ in millions) $604 $628 $650 $689 $700 3.78% 4.12% 4.39% 4.44% 4.31% 0.25% 0.75% 1.25% 1.75% 2.25% 2.75% 3.25% 3.75% 4.25% 4.75% $540 $560 $580 $600 $620 $640 $660 $680 $700 $720 Average Time Deposits and Rates
LOAN - TO - DEPOSIT RATIO 20 94.6% 94.5% 93.3% 92.1% 91.5% 4Q2023 1Q2024 2Q2024 3Q2024 4Q2024 90% 90% 91% 91% 92% 92% 93% 93% 94% 94% 95% 95% Period - end Loan - to - Deposit Ratio 71.5% 70.0% 69.1% 68.5% 68.9% 28.5% 30.0% 30.9% 31.5% 31.1% 4Q2023 1Q2024 2Q2024 3Q2024 4Q2024 0% 10% 20% 30% 40% 50% 60% 70% 80% Core Deposits and Time Deposits as a % of Total Deposits Core deposits/Total deposits Time deposits/Total deposits
WHOLESALE FUNDING 21 $156 $152 $155 $152 $123 4.83% 4.91% 5.00% 5.05% 5.04% 4.70% 4.75% 4.80% 4.85% 4.90% 4.95% 5.00% 5.05% 5.10% 4Q2023 1Q2024 2Q2024 3Q2024 4Q2024 $100 $110 $120 $130 $140 $150 $160 $170 Wholesale Funding (Includes $20 million in Subordinated Debt ) (1) FHLB Advances Average COF The Bank is considered to be well - capitalized as defined by regulators ( see slide 27 ) . The Bank’s Tier 1 Leverage Ratio to adjusted average assets was 9 . 34 % at December 31 , 2024 and 9 . 62 % at December 31 , 2023 . In addition, Westfield Bank’s TCE Ratio ( 2 ) , a non - GAAP financial measure, exceeds the Federal Home Loan Bank of Boston (“FHLB”) requirements to continue to utilize the FHLB as a funding source . At December 31 , 2024 , total borrowings decreased $ 33 . 4 million, or 21 . 3 % , from $ 156 . 5 million at December 31 , 2023 to $ 123 . 1 million . At December 31 , 2024 , short - term borrowings decreased $ 10 . 7 million, or 66 . 5 % , to $ 5 . 4 million , compared to $ 16 . 1 million at December 31 , 2023 , while long - term borrowings decreased $ 22 . 6 million, or 18 . 8 % , during the same period . The Company utilized the Bank Term Funding Program (“BTFP”), which was created in March 2023 to enhance banking system liquidity by allowing institutions to pledge certain securities at par value and borrow at a rate of ten basis points over the one - year overnight index swap rate . The BTFP was available to federally insured depository institutions in the U . S . , with advances having a term of up to one year with no prepayment penalties . The BTFP ceased extending new advances in March 2024 . At December 31 , 2023 , the Company’s outstanding balance under the BTFP was $ 90 . 0 million . There was no outstanding balances under the BTFP at December 31 , 2024 . At December 31 , 2024 , borrowings also consisted of $ 19 . 8 million in fixed - to - floating rate subordinated notes . (1) ($ in millions) (2) TCE is a non - GAAP measure. See slides 30 - 32 for the related TCE calculation and a reconciliation of GAAP to non - GAAP financial measures .
22 The Company’s liquidity position remains strong with solid core deposit relationships, cash, unencumbered securities and access to diversified borrowing sources . At December 31 , 2024 , the Company had available borrowing capacity with the FHLB of $ 461 . 6 million, including its overnight Ideal Way Line of Credit . In addition, at December 31 , 2024 , the Company had available borrowing capacity of $ 382 . 9 million from the Federal Reserve Discount Window, with no outstanding borrowings . At December 31 , 2024 , the Company also had available borrowing capacity of $ 25 . 0 million from two unsecured credit lines with correspondent banks, with no outstanding borrowings . At December 31 , 2024 , the Company had $ 1 . 1 billion in immediately available liquidity, compared to $ 643 . 6 million in uninsured deposits, or 28 . 4 % of total deposits, representing a coverage ratio of 172 % . Lastly, the Company has access to the brokered deposit market with approval from the Board of Directors to purchase brokered deposits in an amount not to exceed 10 % of total assets . At December 31 , 2024 , the Company had $ 1 . 7 million in brokered deposits included within time deposits on the balance sheet . LIQUIDITY Net Available Amount in Use at December 31 , 2024 Total Available ($ in millions) Internal Sources: $66.5 - $66.5 Cash and cash equivalents $156.3 - $156.3 Unpledged securities $ 13.2 - $ 13.2 Excess pledged securities External Sources: $461.6 $122.2 $574.3 FHLB $382.9 - $382.9 FRB Discount Window Other Unsecured: $25.0 - $25.0 Correspondent banks $ 1,105.5 $ 122.2 $ 1,218.2 Total Liquidity $643.6 Uninsured deposits 172% Liquidity/Total
________ Source: SNL Financial as of June 30, 2024 Note: Total number of Westfield Bank branches shown includes the Big E seasonal branch and online deposit channel. Three Wes tfi eld branches are located in Hampshire County, MA and four Westfield branches are located in Hartford County, CT outside of Springfield MSA. DEPOSIT MARKET SHARE IN HAMPDEN COUNTY, MA AS OF JUNE 30, 2024 23 Total Deposit Rank 2024 Parent Company Name Deposits in Market ($000) Market Share # of Branches 1 PeoplesBank 2,665,987 19.00% 12 1,762,519 13.1% 20 3 Westfield Bank 1,856,455 13.23% 20 2 TD Bank 2,110,916 15.04% 16 4 Bank of America 1,594,814 11.37% 8 5 Berkshire Bank 1,104,828 7.87% 11 6 M&T Bank 1,097,724 7.82% 14 7 KeyBank 1,012,085 7.21% 7 8 Citizens Bank 592,088 4.22% 10 9 Monson Savings Bank 583,716 4.16% 4 10 Country Bank 571,869 4.08% 4 11 New Valley Bank & Trust 287,901 2.05% 3
ASSET QUALITY INDICATORS 24 4Q2024 3Q2024 2Q2024 1Q2024 4Q2023 $5.0M $4.3M $5.6M $4.7M $6.0M Total delinquent loans 0.24% 0.21% 0.27% 0.23% 0.30% Delinquent loans as a % of total loans $5.4M $4.9M $5.8M $5.8M $6.4M Nonperforming loans (NPL) 0.26% 0.24% 0.29% 0.29% 0.32% NPL as a % of total loans 0.20% 0.18% 0.23% 0.23% 0.25% NPL as a % of total assets 0.94% 0.97% 0.96% 0.98% 1.00% Allowance for credit losses % of total loans 363% 410% 333% 341% 316% Allowance for credit losses % of NPL ($128K) $98K $10K ($67K) $136K Net charge - offs (recoveries) (0.01%) 0.00% 0.00% 0.00% 0.01% Net charge - offs (recoveries) as a % average loans During the three months ended December 31 , 2024 , the Company recorded net recoveries of $ 128 , 000 compared to net charge - offs of $ 98 , 000 for the three months ended September 30 , 2024 . During the twelve months ended December 31 , 2024 , the Company recorded net recoveries of $ 87 , 000 , compared to net charge - offs of $ 2 . 0 million during the twelve months ended December 31 , 2023 . The net charge - offs during the twelve months ended December 31 , 2023 were related to one commercial relationship acquired in October 2016 from Chicopee Bancorp, Inc . The Company recorded a $ 1 . 9 million charge - off on the acquired commercial relationship , which represented the non - accretable credit mark that was required to be grossed - up to the loan’s amortized cost basis with a corresponding increase to the allowance for credit losses under the CECL implementation .
ASSET QUALITY 25 Management continues to remain attentive to any signs of deterioration in borrowers’ financial conditions and is proactive in taking the appropriate steps to mitigate risk . The allowance for credit losses as a percentage of total loans was 0 . 94 % at December 31 , 2024 , compared to 1 . 00 % at December 31 , 2023 . At December 31 , 2024 , the allowance for credit losses as a percentage of nonperforming loans was 362 . 9 % , compared to 315 . 6 % at December 31 , 2023 . December 31, 2023 December 31, 2024 ACL / Total Loan Segment Loans Outstanding (1) ACL (1) ACL / Total Loan Segment Loans Outstanding (1) Allowance for Credit Losses (ACL) (1) 1.17% $ 217,447 $ 2,537 1.17% $ 211,656 $ 2,477 Commercial and industrial 1.40% 1,079,751 15,141 1.27% 1,075,732 13,677 Commercial real estate 0.35% 722,154 2,548 0.41% 775,659 3,156 Residential (2) 0.75% 5,472 41 4.99% 4,391 219 Consumer - - - - - - Unallocated 1.00% $ 2,024,824 $ 20,267 0.94% $ 2,067,438 $ 19,529 Total Loans (1) ( $ in thousands) (2) Includes home equity loans and home equity lines of credit .
ASSET QUALITY 26 4Q2024 3Q2024 2Q2024 1Q2024 4Q2023 ($ in millions) $11.4 $21.3 $14.6 $15.2 $5.8 Special Mention 0.6% 1.0% 0.7% 0.8% 0.3% % of Total Loans $27.0 $21.9 $22.1 $21.6 $33.7 Substandard 1.3% 1.1% 1.1% 1.1% 1.7% % of Total Loans $38.4 $43.2 $36.7 $36.8 $39.5 Total Classified Loans 1.9% 2.1% 1.8% 1.8% 1.9% % of Total Loans At December 31 , 2024 , total classified loans, defined as special mention and substandard loans, totaled $ 38 . 4 million, or 1 . 9 % of total loans, representing a decrease of $ 1 . 1 million , or 2 . 8 % , from December 31 , 2023 .
CAPITAL MANAGEMENT 27 We are well - capitalized with excess capital. Ratio at December 31, 2023 Ratio at December 31, 2024 Consolidated 9.40% 9.14% Tier 1 Leverage Ratio (to Adjusted Average Assets) 12.59% 12.37% Common Equity Tier 1 Capital (to Risk Weighted Assets) 12.59% 12.37% Tier 1 Capital (to Risk Weighted Assets) 14.67% 14.38% Total Capital (to Risk Weighted Assets) As of December 31 , 2024 , the Bank’s Tier 1 Leverage Ratio was 9 . 34 % . The Bank’s TCE ratio ( 1 ) , a non - GAAP financial measure, was 8 . 47 % at December 31 , 2024 . At December 31 , 2024 , the $ 23 . 3 million in AFS unrealized losses, net of tax, negatively impacted the TCE ratio by 0 . 9 % . If the HTM unrealized losses of $ 28 . 3 million, net of tax, were factored in, the TCE ratio would decrease to 7 . 42 % . Well Capitalized Ratio at December 31, 2023 Ratio at December 31, 2024 Westfield Bank 5.0% 9.62% 9.34% Tier 1 Leverage Ratio (to Adjusted Average Assets) 6.5% 12.88% 12.64% Common Equity Tier 1 Capital (to Risk Weighted Assets) 8.0% 12.88% 12.64% Tier 1 Capital (to Risk Weighted Assets) 10.0% 13.94% 13.65% Total Capital (to Risk Weighted Assets) (1) TCE is a non - GAAP measure. See slides 30 - 32 for the related TCE calculation and a reconciliation of GAAP to non - GAAP financial measures . x From a regulatory standpoint, we are well - capitalized with excess capital . x We take a prudent approach to capital management .
CAPITAL RETURN TO SHAREHOLDERS 28 # of Shares Year 2,189,276 2018 1,938,667 2019 1,391,496 2020 2,758,051 2021 720,975 2022 649,744 2023 200,000 1Q - 2024 269,841 2Q - 2024 244,441 3Q - 2024 220,000 4Q - 2024 Annual Dividends per Share Year $0.16 2018 $0.20 2019 $0.20 2020 $0.20 2021 $0.24 2022 $0.28 2023 $0.07 1Q - 2024 $0.07 2Q - 2024 $0.07 3Q - 2024 $0.07 4Q - 2024 Share Repurchases Dividends On May 22 , 2024 , the Board of Directors authorized a new stock repurchase plan (the “ 2024 Plan”) under which the Company may repurchase up to 1 . 0 million shares, or approximately 4 . 6 % , of the Company’s then - outstanding shares of common stock . During the three months ended December 31 , 2024 , the Company repurchased 220 , 000 shares of common stock under the 2024 Plan, with an average price per share of $ 9 . 00 . During the twelve months ended December 31 , 2024 , the Company repurchased 934 , 282 shares of common stock under the 2024 Plan and the previously existing share repurchase plan, as applicable, with an average price per share of $ 7 . 94 . As of December 31 , 2024 , there were 472 , 318 shares of common stock available for repurchase under the 2024 Plan .
CAPITAL MANAGEMENT 29 $10.96 $10.90 $11.07 $11.40 $11.30 $10.30 $10.25 $10.41 $10.73 $10.63 Book Value per Share Tangible Book Value per Share (non - GAAP) (1) Book Value Tangible Book Value (non-GAAP) The Company’s book value per share was $11.30 at December 31, 2024, compared to $10.96 at December 31, 2023, while tangible book value per share, a non - GAAP financial measure, increased $0.33, or 3.2%, from $10.30 at December 31, 2023 to $10.63 at December 31, 2024. ( 1) Tangible book value is a non - GAAP measure. See slides 30 - 32 for the related tangible book value calculation and a reconcilia tion of GAAP to non - GAAP financial measures.
APPENDIX: NON - GAAP TO GAAP RECONCILIATION 30 Reconciliation of Non - GAAP to GAAP Financial Measures The Company believes that certain non - GAAP financial measures provide information to investors that is useful in understanding i ts financial condition. Because not all companies use the same calculation, this presentation may not be comparable to other similarly title d measures calculated by other companies. A reconciliation of these non - GAAP financial measures is provided below. 12/31/2024 9/30/2024 6/30/2024 3/31/2024 12/31/2023 Loan interest (no tax adjustment) 25,183$ 25,134$ 24,340$ 24,241$ 23,939$ Tax-equivalent adjustment 128 119 114 110 113 Loan interest (tax-equivalent basis) 25,311$ 25,253$ 24,454$ 24,351$ 24,052$ Net interest income (no tax adjustment) 15,273$ 14,728$ 14,470$ 15,346$ 16,176$ Tax equivalent adjustment 128 119 114 110 113 Net interest income (tax-equivalent basis) 15,401$ 14,847$ 14,584$ 15,456$ 16,289$ Net interest income (no tax adjustment) 15,273$ 14,728$ 14,470$ 15,346$ 16,176$ Less: Fair value hedge interest income 74 434 447 443 459 Adjusted net interest income (non-GAAP) 15,199$ 14,294$ 14,023$ 14,903$ 15,717$ Average interest-earning assets 2,517,017$ 2,441,236$ 2,400,633$ 2,403,086$ 2,427,112$ Net interest margin (no tax adjustment) 2.41% 2.40% 2.42% 2.57% 2.64% Net interest margin, tax-equivalent 2.43% 2.42% 2.44% 2.59% 2.66% Adjusted net interest margin, excluding fair value hedge interest income (non-GAAP) 2.40% 2.33% 2.35% 2.50% 2.57% For the quarter ended (Dollars in thousands)
APPENDIX: NON - GAAP TO GAAP RECONCILIATION 31 Reconciliation of Non - GAAP to GAAP Financial Measures The Company believes that certain non - GAAP financial measures provide information to investors that is useful in understanding i ts financial condition. Because not all companies use the same calculation, this presentation may not be comparable to other similarly title d measures calculated by other companies. A reconciliation of these non - GAAP financial measures is provided below. 12/31/2024 9/30/2024 6/30/2024 3/31/2024 12/31/2023 Book Value per Share (GAAP) 11.30$ 11.40$ 11.07$ 10.90$ 10.96$ Non-GAAP adjustments: Goodwill (0.60) (0.59) (0.58) (0.58) (0.58) Core deposit intangible (0.07) (0.08) (0.08) (0.07) (0.08) Tangible Book Value per Share (non-GAAP) 10.63$ 10.73$ 10.41$ 10.25$ 10.30$ Total Bank Equity (GAAP) 240,994$ 245,786$ 241,867$ 241,480$ 242,780$ Non-GAAP adjustments: Goodwill (12,487) (12,487) (12,487) (12,487) (12,487) Core deposit intangible net of associated deferred tax (1,033) (1,101) (1,168) (1,236) (1,303) Tangible Capital (non-GAAP) 227,474$ 232,198$ 228,212$ 227,757$ 228,990$ Tangible Capital (non-GAAP) 227,474$ 232,198$ 228,212$ 227,757$ 228,990$ Unrealized losses on HTM securities net of tax (28,346) (22,083) (28,869) (28,441) (25,649) Adjusted Tangible Capital For Impact of Unrealized Losses on HTM Securities Net of Tax (non-GAAP) 199,128$ 210,115$ 199,343$ 199,316$ 203,341$ Common Equity Tier (CET) 1 Capital 250,748$ 250,543$ 251,849$ 251,394$ 250,734$ Total Assets for Leverage Ratio (non-GAAP) 2,684,740$ 2,608,171$ 2,575,093$ 2,572,525$ 2,607,260$ Tier 1 Leverage Ratio 9.34% 9.61% 9.78% 9.77% 9.62% Tangible Common Equity (non-GAAP) =Tangible Capital (non-GAAP)/Total Assets for Leverage Ratio (non-GAAP) 8.47% 8.90% 8.86% 8.85% 8.78% Adjusted Tangible Common Equity for HTM Impact (non- GAAP) = Adjusted Tangible Capital For Impact of Unrealized Losses on HTM Securities Net of Tax (non-GAAP)/Total Assets for Leverage Ratio (non-GAAP) 7.42% 8.06% 7.74% 7.75% 7.80% For the quarter ended (Dollars in thousands)
APPENDIX: NON - GAAP TO GAAP RECONCILIATION 32 Reconciliation of Non - GAAP to GAAP Financial Measures The Company believes that certain non - GAAP financial measures provide information to investors that is useful in understanding i ts financial condition. Because not all companies use the same calculation, this presentation may not be comparable to other similarly title d measures calculated by other companies. A reconciliation of these non - GAAP financial measures is provided below. 12/31/2024 9/30/2024 6/30/2024 3/31/2024 12/31/2023 Efficiency Ratio: Non-interest Expense (GAAP) 14,926$ 14,406$ 14,314$ 14,782$ 14,785$ Net Interest Income (GAAP) 15,273$ 14,728$ 14,470$ 15,346$ 16,176$ Non-Interest Income (GAAP) 3,254$ 3,141$ 3,834$ 2,674$ 2,714$ Non-GAAP adjustments: Unrealized losses (gains) on marketable equity securities 9 (10) (4) (8) 1 Gain on non-marketable equity investments (300) - (987) - - Loss on disposal of premises and equipment - - - 6 - Non-Interest Income for Adjusted Efficiency Ratio (non- GAAP) $ 2,963 $ 3,131 $ 2,843 $ 2,672 $ 2,715 Total Revenue for Adjusted Efficiency Ratio (non-GAAP) $ 18,236 $ 17,859 $ 17,313 $ 18,018 $ 18,891 Efficiency Ratio (GAAP) 80.56% 80.62% 78.20% 82.03% 78.27% Adjusted Efficiency Ratio (non-GAAP) = (Non-interest Expense (GAAP)/Total Revenue for Efficiency Ratio (non- GAAP)) 81.85% 80.67% 82.68% 82.04% 78.26% For the quarter ended (Dollars in thousands)
WESTFIELD BANK “WHAT BETTER BANKING’S ALL ABOUT” James C. Hagan , President and Chief Executive Officer Guida R. Sajdak , Executive Vice President and Chief Financial Officer Meghan Hibner , First Vice President and Investor Relations Officer 33 141 Elm Street, Westfield, MA
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