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, 2023. For the three
months ended December 31, 2023, the Company reported net income of
$2.5 million, or $0.12 per diluted share, compared to net income of
$9.0 million, or $0.42 per diluted share, for the three months
ended December 31, 2022. On a linked quarter basis, net income was
$2.5 million, or $0.12 per diluted share, as compared to net income
of $4.5 million, or $0.21 per diluted share, for the three months
ended September 30, 2023. For the twelve months ended December 31,
2023, net income was $15.1 million, or $0.70 per diluted share,
compared to net income of $25.9 million, or $1.18 per diluted
share, for the twelve months ended December 31, 2022.
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 21, 2024 to shareholders of record on February 7,
2024.
James C. Hagan, President and Chief Executive
Officer, commented, “We are pleased with our fourth quarter
results, showing loan growth with increasing loan yields. Total
loans increased $35.9 million, or 1.8%, since December 31, 2022,
while classified assets decreased 38.3% from December 31, 2022. The
Company also maintained a strong liquidity position, covering
approximately 146% of uninsured deposits as of December 31,
2023.
Additionally, during the twelve months ended
December 31, 2023, we repurchased 649,744 shares of our common
stock at an average price per share of $7.20. We believe that share
repurchases represent a prudent use of capital, especially when
they are accretive to book value. Management has and will continue
to remain focused on increasing shareholder value through various
capital management strategies.”
Hagan concluded, “Our team remains committed to
our community and to our existing and new customers. We continue to
be focused on true relationship banking, while providing continued
access to local decision makers in order to meet the financial
needs of all our customers. We believe our various growth, customer
and expense initiatives are creating positive impacts to our
performance and are positioning the Company for future growth and
increased profitability.”
Key Highlights:
Loans and DepositsAt December
31, 2023, total loans of $2.0 billion increased $35.9 million, or
1.8%, from December 31, 2022. The increase in total loans was due
to an increase in commercial real estate loans of $10.4 million, or
1.0%, and an increase in residential real estate loans, including
home equity loans, of $27.1 million, or 3.9%, partially offset by a
decrease in commercial and industrial loans of $2.4 million, or
1.1%.
At December 31, 2023, total deposits were $2.1
billion, a decrease of $85.7 million, or 3.8%, from December 31,
2022. Core deposits, which the Company defines as all deposits
except time deposits, decreased $285.4 million, or 15.7%, from $1.8
billion, or 81.5% of total deposits, at December 31, 2022, to $1.5
billion, or 71.5% of total deposits at December 31, 2023. The loan
to deposit ratio increased from 89.3% at December 31, 2022 to 94.6%
at December 31, 2023.
LiquidityThe 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,
2023, the Company had $839.1 million in immediate liquidity
compared to $574.9 million in uninsured deposits, or 26.8% of total
deposits, representing a coverage ratio of 146%. Uninsured deposits
of the Bank’s customers are eligible for FDIC pass-through
insurance if the customer opens an IntraFi Insured Cash Sweep (ICS)
account or a reciprocal time deposit through the Certificate of
Deposit Account Registry System (CDARS). 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
QualityAt December 31, 2023, the allowance for credit
losses was $20.3 million, or 1.00% of total loans and 315.6% of
nonperforming loans compared to $19.9 million, or 1.00% of total
loans and 350.0% of nonperforming loans at December 31, 2022. At
December 31, 2023, nonperforming loans totaled $6.4 million, or
0.32% of total loans, compared to $5.7 million, or 0.29% of total
loans, at December 31, 2022. Total delinquent loans increased $1.5
million, or 34.3%, from $4.5 million, or 0.22% of total loans, at
December 31, 2022 to $6.0 million, or 0.30% of total loans, at
December 31, 2023. At December 31, 2023 and December 31, 2022, the
Company did not have any other real estate
owned.
Net Interest MarginThe net
interest margin was 2.64% for the three months ended December 31,
2023 compared to 3.44% for the three months ended December 31, 2022
and 2.70% for the three months ended September 30, 2023. The net
interest margin, on a tax-equivalent basis, was 2.66% for the three
months ended December 31, 2023, compared to 3.47% for the three
months ended December 31, 2022 and 2.72% for the three months ended
September 30, 2023.
Stock Repurchase ProgramOn July
26, 2022, the Board of Directors authorized a stock repurchase plan
(the “2022 Plan”), pursuant to which the Company is authorized to
repurchase up to 1.1 million shares, representing approximately
5.0% of the Company’s outstanding common stock as of the time the
2022 Plan was announced. During the three months ended December 31,
2023, the Company repurchased 244,839 shares of common stock under
the 2022 Plan, with an average price per share of $7.09. During the
twelve months ended December 31, 2023, the Company repurchased
649,744 shares of common stock under the 2022 Plan, with an average
price per share of $7.20. As of December 31, 2023, there were
406,600 shares of common stock available for repurchase under the
2022 Plan.
The repurchase of shares under the stock
repurchase program is administered through an independent broker.
The shares of common stock repurchased under the 2022 Plan are
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 2022 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
ValueThe Company’s book value per share was $10.96 at
December 31, 2023 compared to $10.27 at December 31, 2022, while
tangible book value per share, a non-GAAP financial measure,
increased $0.69, or 7.2%, from $9.61 at December 31, 2022 to $10.30
at December 31, 2023. See pages 20-24 for the related tangible book
value calculation and a reconciliation of GAAP to non-GAAP
financial measures.
Westfield Bank Defined Benefit Pension
PlanThe Board of Directors previously announced the
termination of the Westfield Bank Defined Benefit Plan (the “DB
Plan”) on October 31, 2022, subject to required regulatory
approval. At December 31, 2022, the Company reversed $7.3 million
in net unrealized losses recorded in accumulated other
comprehensive income attributed to both the DB Plan curtailment
resulting from the termination of the DB Plan as well as changes in
discount rates. In addition, during the three months ended December
31, 2022, the Company recorded a gain on curtailment of $2.8
million through non-interest income. During the twelve months ended
December 31, 2023, the Company made an additional cash contribution
of $1.3 million in order to fully fund the DB Plan on a plan
termination basis. In addition, for those participants who did not
opt for a one-time lump sum payment, the Company funded $6.3
million to purchase a group annuity contract to transfer its
remaining liabilities under the DB Plan. During the twelve months
ended December 31, 2023, the Company recognized the final
termination expense of $1.1 million related to the DB Plan
termination, which was recorded through non-interest income.
Net Income for the Three Months Ended
December 31, 2023 Compared to the Three Months Ended September 30,
2023The Company reported net income of $2.5 million, or
$0.12 per diluted share, for the three months ended December 31,
2023, compared to net income of $4.5 million, or $0.21 per diluted
share, for the three months ended September 30, 2023. Net interest
income decreased $207,000, or 1.3%, non-interest income decreased
$898,000, or 24.9%, non-interest expense increased $667,000, or
4.7%, and the provision for credit losses increased $132,000, or
37.3%, during the same period. Return on average assets and return
on average equity were 0.39% and 4.31%, respectively, for the three
months ended December 31, 2023, compared to 0.70% and 7.60%,
respectively, for the three months ended September 30, 2023.
Net Interest Income and Net Interest
MarginOn a sequential quarter basis, net interest income,
our primary source of revenues, decreased $207,000, or 1.3%, for
the three months ended December 31, 2023, from $16.4 million for
the three months ended September 30, 2023 to $16.2 million. The
decrease in net interest income was primarily due to an increase in
interest expense of $1.1 million, or 11.3%, partially offset by an
increase in interest and dividend income of $869,000, or 3.4%. The
increase in interest expense was a result of competitive pricing on
deposits due to the continued high interest rate environment and
the shift in the deposit mix from low cost core deposits to high
cost time deposits.
The net interest margin was 2.64% for the three
months ended December 31, 2023 compared to 2.70% for the three
months ended September 30, 2023. The net interest margin, on a
tax-equivalent basis, was 2.66% for the three months ended December
31, 2023, compared to 2.72% for the three months ended September
30, 2023. The decrease in the net interest margin was primarily due
to an increase in the average cost of interest-bearing liabilities,
which was partially offset with an increase in the average yield on
interest-earning assets.
The average yield on interest-earning assets,
without the impact of tax-equivalent adjustments, was 4.38% for the
three months ended December 31, 2023, compared to 4.28% for the
three months ended September 30, 2023. The average loan yield,
without the impact of tax-equivalent adjustments, was 4.71% for the
three months ended December 31, 2023, compared to 4.64% for the
three months ended September 30, 2023. During the three months
ended December 31, 2023, average interest-earning assets increased
$24.1 million, or 1.0% to $2.4 billion, primarily due to an
increase in average short-term investments, consisting of cash and
cash equivalents, of $20.5 million, or 91.6%, and an increase in
average loans of $9.8 million, or 0.5%, both partially offset by a
decrease in average securities of $6.1 million, or 1.7%.
The average cost of total funds, including
non-interest bearing accounts and borrowings, increased 17 basis
points from 1.64% for the three months ended September 30, 2023 to
1.81% for the three months ended December 31, 2023. The average
cost of core deposits, which the Company defines as all deposits
except time deposits, increased 6 basis points to 0.76% for the
three months ended December 31, 2023, from 0.70% for the three
months ended September 30, 2023. The average cost of time deposits
increased 32 basis points from 3.46% for the three months ended
September 30, 2023 to 3.78% for the three months ended December 31,
2023. The average cost of borrowings, including subordinated debt,
increased 2 basis points from 4.81% for the three months ended
September 30, 2023 to 4.83% for the three months ended December 31,
2023. For the three months ended December 31, 2023, average demand
deposits, an interest-free source of funds, decreased $3.2 million,
or 0.5%, to $588.7 million, or 27.0% of total average deposits,
from $591.9 million, or 27.5% of total average deposits for the
three months ended September 30, 2023.
Provision for Credit
LossesDuring the three months ended December 31, 2023, the
Company recorded a provision for credit losses of $486,000,
compared to a provision for credit losses of $354,000 during the
three months ended September 30, 2023. The provision for credit
losses includes a $61,000 provision for unfunded commitments
primarily due to changes in the loss driver analysis for
construction loans, offset by the impact of a decrease in unfunded
loan commitments. Total unfunded loan commitments decreased $10.6
million, or 6.1%, to $162.3 million at December 31, 2023 from
$172.9 million at September 30, 2023. 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 Company also increased
the qualitative reserve to consider the potential losses resulting
from future recessionary pressures. 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 and
supportable forecast period.
During the three months ended December 31, 2023,
the Company recorded net charge-offs of $136,000, compared to net
charge-offs of $78,000 for the three months ended September 30,
2023.
Non-Interest IncomeOn a
sequential quarter basis, non-interest income decreased $898,000,
or 24.9%, to $2.7 million for the three months ended December 31,
2023, from $3.6 million for the three months ended September 30,
2023. Service charges and fees increased $138,000, or 6.4%, from
the three months ended September 30, 2023 to $2.3 million for the
three months ended December 31, 2023. Income from bank-owned life
insurance (“BOLI”) decreased $22,000, or 4.8%, from the three
months ended September 30, 2023 to $432,000 for the three months
ended December 31, 2023.
During the three months ended September 30,
2023, non-interest income included a non-taxable gain of $778,000
in BOLI death benefits. During the three months ended December 31,
2023, the Company did not have comparable non-taxable BOLI death
benefits. During the three months ended September 30, 2023, the
Company reported a gain on non-marketable equity investments of
$238,000. The Company did not have comparable non-interest income
during the three months ended December 31, 2023. During the three
months ended September 30, 2023, the Company reported a loss on the
disposal of premises and equipment of $3,000. The Company did not
have a comparable loss during the three months ended December 31,
2023. Excluding the BOLI death benefits of $778,000 and the gain on
non-marketable equity investments of $238,000, non-interest income
increased $118,000, or 4.5%, from the three months ended September
30, 2023 to the three months ended December 31, 2023.
Non-Interest ExpenseFor the
three months ended December 31, 2023, non-interest expense
increased $667,000, or 4.7%, from $14.1 million for the three
months ended September 30, 2023 to $14.8 million. Other expenses
increased $825,000, or 35.1%, for the three months ended December
31, 2023, as a result of a $510,000 legal settlement accrual.
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,
non-interest expense increased $157,000, or 1.1%, from the three
months ended September 30, 2023 to $14.3 million for the three
months ended December 31, 2023.
During the three months ended December 31, 2023,
occupancy expense increased $39,000, or 3.4%, from the three months
ended September 30, 2023, professional fees increased $31,000, or
4.8%, advertising expense increased $15,000, or 4.1%, and furniture
and equipment expense increased $12,000, or 2.5%. These increases
were partially offset by a decrease in salaries and employee
benefits of $216,000, or 2.7%, primarily due to lower incentive
compensation expense, data processing decreased $36,000, or 4.4%,
and FDIC insurance expense decreased $3,000, or 0.9%.
For the three months ended December 31, 2023,
the efficiency ratio was 78.3% compared to 70.6% for the three
months ended September 30, 2023. For the three months ended
December 31, 2023, the adjusted efficiency ratio, a non-GAAP
financial measure, was 78.3% compared to 74.4% for the three months
ended September 30, 2023. See pages 20-24 for the related
efficiency ratio calculations and a reconciliation of GAAP to
non-GAAP financial measures.
Income Tax ProvisionIncome tax
expense for the three months ended December 31, 2023 was $1.1
million with an effective tax rate of 30.6%, compared to income tax
expense of $1.0 million with an effective tax rate of 18.7%, for
the three months ended September 30, 2023. The effective tax rate
for the three months ended December 31, 2023 was negatively
impacted by discrete items totaling $285,000, while the lower
effective tax rate for September 30, 2023 was primarily due to the
non-taxable gain of $778,000 in BOLI death benefits.
Net Income for the Three Months Ended
December 31, 2023 Compared to the Three Months Ended December 31,
2022The Company reported net income of $2.5 million, or
$0.12 per diluted share, for the three months ended December 31,
2023, compared to net income of $9.0 million, or $0.42 per diluted
share, for the three months ended December 31, 2022. Net interest
income decreased $4.7 million, or 22.4%, non-interest income
decreased $2.9 million, or 52.0%, non-interest expense increased
$782,000, or 5.6%, and the provision for credit losses increased
$336,000, or 224.0%, during the same period. Return on average
assets and return on average equity were 0.39% and 4.31%,
respectively, for the three months ended December 31, 2023,
compared to 1.40% and 16.67%, respectively, for the three months
ended December 31, 2022.
Net Interest Income and Net Interest
MarginNet interest income decreased $4.7 million, or
22.4%, to $16.2 million, for the three months ended December 31,
2023, from $20.9 million for the three months ended December 31,
2022. The decrease in net interest income was due to an increase in
interest expense of $7.9 million, partially offset by an increase
in interest and dividend income of $3.2 million, or 13.5%. Interest
expense on deposits increased $6.6 million and interest expense on
borrowings increased $1.3 million. The increase in interest expense
was a result of competitive pricing on deposits due to the
continued higher interest rate environment and the shift in the
deposit mix from low cost core deposits to high cost time
deposits.
The net interest margin was 2.64% for the three
months ended December 31, 2023, compared to 3.44% for the three
months ended December 31, 2022. The net interest margin, on a
tax-equivalent basis, was 2.66% for the three months ended December
31, 2023, compared to 3.47% for the three months ended December 31,
2022. The decrease in the net interest margin was primarily due to
an increase in the average cost of interest-bearing liabilities,
which was partially offset with an increase in the average yield on
interest-earning assets.
The average yield on interest-earning assets,
without the impact of tax-equivalent adjustments, increased 48
basis points from 3.90% for the three months ended December 31,
2022 to 4.38% for the three months ended December 31, 2023. During
the three months ended December 31, 2023, average interest-earning
assets increased $25.4 million, or 1.1%, to $2.4 billion compared
to the three months ended December 31, 2022, primarily due to an
increase in average loans of $22.2 million, or 1.1%, an increase in
average short-term investments, consisting of cash and cash
equivalents, of $35.2 million, or 460.9%, and an increase in other
average investments of $1.5 million, or 13.9%, partially offset by
a decrease in average securities of $33.5 million, or 8.6%.
The average cost of funds, including
non-interest-bearing demand accounts and borrowings, increased 134
basis points, from 0.47% for the three months ended December 31,
2022 to 1.81% for the three months ended December 31, 2023.
The average cost of core deposits, which the
Company defines as all deposits except time deposits and which
include non-interest-bearing demand accounts, increased 42 basis
points, from 0.34% for the three months ended December 31, 2022 to
0.76% for the three months ended December 31, 2023. The average
cost of time deposits increased 313 basis points from 0.65% for the
three months ended December 31, 2022 to 3.78% for the three months
ended December 31, 2023. The average cost of borrowings, including
subordinated debt, increased 54 basis points from 4.29% for the
three months ended December 31, 2022 to 4.83% for the three months
ended December 31, 2023. For the three months ended December 31,
2023, average demand deposits, an interest-free source of funds,
decreased $75.1 million, or 11.3%, to $588.7 million, or 27.0% of
total average deposits, from $663.8 million, or 29.4% of total
average deposits for the three months ended December 31, 2022.
Provision for Credit
LossesDuring the three months ended December 31, 2023, the
Company recorded a provision for credit losses of $486,000 under
CECL, compared to a provision for credit losses of $150,000 during
the three months ended December 31, 2022 under the incurred loss
model. The increase in the provision for credit losses was
primarily due to 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 provisioned for
the current economic environment and supportable forecast period.
The Company recorded net charge-offs of $136,000 for the three
months ended December 31, 2023, as compared to net charge-offs of
$426,000 for the three months ended December 31, 2022.
Non-Interest IncomeNon-interest
income decreased $2.9 million, or 52.0%, to $2.7 million for the
three months ended December 31, 2023, from $5.7 million for the
three months ended December 31, 2022. During the three months ended
December 31, 2022, the Company recorded a curtailment gain related
to the DB Plan termination of $2.8 million through non-interest
income. Excluding the DB Plan termination curtailment gain,
non-interest income decreased $132,000, or 4.6%.
During the three months ended December 31, 2023,
service charges and fees on deposits decreased $46,000, or 2.0%,
primarily due to changes in the Company’s overdraft program that
were implemented in the first quarter of 2023. Income from BOLI
increased $4,000, or 0.9%, from $428,000 for the three months ended
December 31, 2022 to $432,000 for the three months ended December
31, 2023. During the three months ended December 31, 2022, the
Company reported a gain on non-marketable equity investments of
$70,000. The Company did not have comparable income during the
three months ended December 31, 2023. In addition, the Company
reported unrealized gains on marketable equity securities of
$19,000 during the three months ended December 31, 2022, compared
to unrealized losses on marketable equity securities of $1,000
during the three months ended December 31, 2023. Gains and losses
from the investment portfolio vary from quarter to quarter based on
market conditions, as well as the related yield curve and valuation
changes.
Non-Interest ExpenseFor the
three months ended December 31, 2023, non-interest expense
increased $782,000, or 5.6%, from $14.0 million for the three
months ended December 31, 2022 to $14.8 million. During the same
period, other expenses increased $842,000, or 36.1%, as a result of
a $510,000 legal settlement accrual. 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, non-interest expense
increased $272,000, or 1.9%, from $14.0 million, for the three
months ended December 31, 2022 to $14.3 million for the three
months ended December 31, 2023.
For the three months ended December 31, 2023,
compared to the three months ended December 31, 2022, advertising
expense increased $199,000, or 111.8%, due to timing of promotions
in 2022. FDIC insurance expense increased $83,000, or 32.5%, data
processing increased $64,000, or 8.8%, professional fees increased
$57,000, or 9.2%, and furniture and equipment expense increased
$15,000, or 3.1%. These increases were partially offset by a
decrease in salaries and employee benefits of $458,000, or 5.6%,
primarily due to lower incentive compensation expense, and a
decrease in occupancy expense of $20,000, or 1.6%.
For the three months ended December 31, 2023,
the efficiency ratio was 78.3% compared to 52.8% for the three
months ended December 31, 2022, primarily due to a $4.7 million, or
22.4% decrease in net interest income during the three months ended
December 31, 2023. For the three months ended December 31, 2023,
the adjusted efficiency ratio, a non-GAAP financial measure, was
78.3% compared to 59.3% for the three months ended December 31,
2022. See pages 20-24 for the related efficiency ratio calculations
and a reconciliation of GAAP to non-GAAP financial measures.
Income Tax ProvisionIncome tax
expense for the three months ended December 31, 2023 was $1.1
million with an effective tax rate of 30.6%, compared to $3.3
million with an effective tax rate of 26.9% for three months ended
December 31, 2022. The effective tax rate for the three months
ended December 31, 2023 was negatively impacted by discrete items
totaling $285,000.
Net Income for the Twelve Months Ended
December 31, 2023 Compared to the Twelve Months Ended December 31,
2022For the twelve months ended December 31, 2023, the
Company reported net income of $15.1 million, or $0.70 per diluted
share, compared to $25.9 million, or $1.18 per diluted share, for
the twelve months ended December 31, 2022. Return on average assets
and return on average equity were 0.59% and 6.47% for the twelve
months ended December 31, 2023, respectively, compared to 1.02% and
11.85% for the twelve months ended December 31, 2022,
respectively.
Net Interest Income and Net Interest
MarginDuring the twelve months ended December 31, 2023,
net interest income decreased $11.3 million, or 14.3%, to $67.9
million, compared to $79.2 million for the twelve months ended
December 31, 2022. The decrease in net interest income was due to
an increase in interest expense of $26.5 million, partially offset
by an increase in interest and dividend income of $15.2 million, or
17.7%.
The net interest margin for the twelve months
ended December 31, 2023 was 2.82%, compared to 3.31% during the
twelve months ended December 31, 2022. The net interest margin, on
a tax-equivalent basis, was 2.84% for the twelve months ended
December 31, 2023, compared to 3.33% for the twelve months ended
December 31, 2022.
The average yield on interest-earning assets,
without the impact of tax-equivalent adjustments, increased 62
basis points from 3.58% for the twelve months ended December 31,
2022 to 4.20% for the twelve months ended December 31, 2023. During
the twelve months ended December 31, 2023, average interest-earning
assets increased $10.3 million, or 0.4%, to $2.4 billion compared
to the twelve months ended December 31, 2022, primarily due to an
increase in average loans of $52.6 million, or 2.7%, and an
increase in average other investments of $2.1 million, or 20.8%,
partially offset by a decrease in average securities of $39.2
million, or 9.6%, and a decrease in average short-term investments,
consisting of cash and cash equivalents, of $5.3 million, or
20.4%.
During the twelve months ended December 31,
2023, the average cost of funds, including non-interest-bearing
demand accounts and borrowings, increased 115 basis points from
0.29% for the twelve months ended December 31, 2022 to 1.44%. For
the twelve months ended December 31, 2023, the average cost of core
deposits, including non-interest-bearing demand deposits, increased
45 basis points from 0.20% for the twelve months ended December 31,
2022 to 0.65% for the twelve months ended December 31, 2023. The
average cost of time deposits increased 262 basis points from 0.41%
for the twelve months ended December 31, 2022 to 3.03% during the
same period in 2023. The average cost of borrowings, which include
Federal Home Loan Bank (“FHLB”) advances and subordinated debt,
increased 58 basis points from 4.26% for the twelve months ended
December 31, 2022 to 4.84% for the twelve months ended December 31,
2023.
For the twelve months ended December 31, 2023,
average demand deposits, an interest-free source of funds,
decreased $45.3 million, or 7.0%, from $648.0 million, or 28.6% of
total average deposits, for the twelve months ended December 31,
2022, to $602.7 million, or 27.8% of total average deposits.
Provision for Credit
LossesDuring the twelve months ended December 31, 2023,
the Company recorded a provision for credit losses of $872,000
under the CECL model, compared to a provision for credit losses of
$700,000 during the twelve months ended December 31, 2022 under the
incurred loss model. The increase in reserves was primarily due to
changes in the economic environment and related adjustments to the
quantitative components of the CECL methodology. The Company
recorded net charge-offs of $2.0 million for the twelve months
ended December 31, 2023, as compared to net charge-offs of $556,000
for the twelve months ended December 31, 2022. The charge-offs for
the twelve months ended December 31, 2023 were related to one
commercial relationship acquired on October 21, 2016 from Chicopee
Bancorp, Inc., which was placed on nonaccrual status during the
first quarter of 2023. The Company recorded a $1.9 million
charge-off on the 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 CECL implementation. At
December 31, 2023, the Company had charged-off 61% of the total
relationship and the remaining exposure of $940,000 is
collateralized at this time.
Non-Interest IncomeFor the
twelve months ended December 31, 2023, non-interest income
decreased $2.4 million, or 18.3%, from $13.3 million for the twelve
months ended December 31, 2022 to $10.9 million for the twelve
months ended December 31, 2023. During the twelve months ended
December 31, 2023, the Company recorded a $1.1 million final
termination expense related to the DB Plan termination, compared to
a curtailment gain related to the DB Plan termination of $2.8
million, during the twelve months ended December 31, 2022. The
Company also recorded a non-taxable gain of $778,000 on BOLI death
benefits during the twelve months ended December 31, 2023. The
Company did not have comparable income during the twelve months
ended December 31, 2022. Excluding the termination expense and the
curtailment gain related to the DB Plan termination and the BOLI
death benefit, non-interest income increased $737,000, or 7.0%.
During the twelve months ended December 31,
2023, service charges and fees decreased $216,000, or 2.4%,
primarily due to changes in the Company’s overdraft program that
were implemented in 2023. Income from BOLI increased $95,000, or
5.5%, from $1.7 million for the twelve months ended December 31,
2022 to $1.8 million for the twelve months ended December 31, 2023.
Other income from loan-level swap fees on commercial loans
decreased $25,000 for the twelve months ended December 31, 2023.
During the twelve months ended December 31, 2023, the Company
reported a gain of $590,000 on non-marketable equity investments
compared to a gain of $422,000 during the twelve months ended
December 31, 2022. During the twelve months ended December 31,
2023, the Company reported a loss on the disposal of premises and
equipment of $3,000. The Company did not have comparable activity
during the same period in 2022. During the twelve months ended
December 31, 2022, the Company also reported unrealized losses on
marketable equity securities of $717,000, compared to unrealized
losses on marketable equity securities of $1,000 during the twelve
months ended December 31, 2023. During the twelve months ended
December 31, 2022, the Company reported realized losses on the sale
of securities of $4,000. The Company did not have a comparable gain
or loss during the same period in 2023.
Non-Interest ExpenseFor the
twelve months ended December 31, 2023, non-interest expense
increased $1.1 million, or 1.9%, to $58.4 million, compared to
$57.2 million for the twelve months ended December 31, 2022. The
increase in non-interest expense was primarily due to an increase
in other expense of $953,000, or 10.1%, as a result of a $510,000
legal settlement accrual. 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, non-interest expense increased $605,000, or
1.1%, from $57.2 million, for the twelve months ended December 31,
2022 to $57.8 million for the twelve months ended December 31,
2023.
During the same period, FDIC insurance expense
increased $273,000, or 26.0%, data processing increased $272,000,
or 9.4%, professional fees, which is comprised of legal fees, audit
and professional fees, increased $161,000, or 5.9%, due to the
recent settlement of litigation, and advertising expense increased
$87,000, or 6.2%. These increases were partially offset by a
decrease in salaries and employee benefits of $483,000, or 1.5%,
due to lower incentive compensation costs, occupancy expense
decreased $76,000, or 1.5%, and furniture and equipment expense
decreased $72,000, or 3.6%.
For the twelve months ended December 31, 2023,
the efficiency ratio was 74.0%, compared to 61.8% for the twelve
months ended December 31, 2022. For the twelve months ended
December 31, 2023, the adjusted efficiency ratio, a non-GAAP
financial measure, was 74.3%, compared to 63.6% for the twelve
months ended December 31, 2022. See pages 20-24 for the related
efficiency ratio calculations and a reconciliation of GAAP to
non-GAAP financial measures.
Income Tax ProvisionIncome tax
expense for the twelve months ended December 31, 2023 was $4.5
million, with an effective tax rate of 23.1%, compared to $8.7
million, with an effective tax rate of 25.2%, for twelve months
ended December 31, 2022. The decrease in income tax expense for the
twelve months ended December 31, 2023 compared to the twelve months
December 31, 2022 was due to lower income before income taxes in
2023.
Balance SheetAt December 31,
2023, total assets were $2.6 billion and increased $11.4 million,
or 0.4%, from December 31, 2022. The increase in total assets was
mainly related to an increase in total loans of $35.9 million, or
1.8%, partially offset by a decrease in investment securities of
$22.7 million, or 5.9%, to $360.7 million, and a decrease in cash
and cash equivalents of $1.5 million, or 5.0%, to $28.8
million.
InvestmentsAt December 31,
2023, the available-for-sale (“AFS”) and held-to-maturity (“HTM”)
securities portfolio represented 14.1% of total assets compared to
14.8% at December 31, 2022. At December 31, 2023, the Company’s AFS
securities portfolio, recorded at fair market value, decreased $9.9
million, or 6.7%, from $147.0 million at December 31, 2022 to
$137.1 million. The HTM securities portfolio, recorded at amortized
cost, decreased $6.8 million, or 3.0%, from $230.2 million at
December 31, 2022 to $223.4 million at December 31, 2023. The
marketable equity securities portfolio decreased $6.0 million, or
96.9%, from $6.2 million at December 31, 2022 to $196,000 at
December 31, 2023. The decrease in the AFS and HTM securities
portfolios was primarily due to amortization and payoffs recorded
during the twelve months ended December 31, 2023.
At December 31, 2023, the Company reported
unrealized losses on the AFS securities portfolio of $29.2 million,
or 17.5% of the amortized cost basis of the AFS securities
portfolio, compared to unrealized losses of $32.2 million, or 18.0%
of the amortized cost basis of the AFS securities at December 31,
2022. At December 31, 2023, the Company reported unrealized losses
on the HTM securities portfolio of $35.7 million, or 16.0%, of the
amortized cost basis of the HTM securities portfolio, compared to
$39.2 million, or 17.0% of the amortized cost basis of the HTM
securities portfolio at December 31, 2022.
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 $7.0 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, 2023 and
December 31, 2022, the Company did not record any 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 Company expects to
strategically redeploy available cash flows from the securities
portfolio to fund loan growth and deposit outflows.
Total LoansAt December 31,
2023, total loans increased $35.9 million, or 1.8%, to $2.0 billion
from December 31, 2022. Residential real estate loans, including
home equity loans, increased $27.1 million, or 3.9%, commercial
real estate loans increased $10.4 million, or 1.0%, and commercial
and industrial loans decreased $2.4 million, or 1.1%.
The following table is a summary of our
outstanding loan balances for the periods indicated:
| |
December
31, |
|
September
30, |
|
June
30, |
|
March
31, |
|
December
31, |
| |
2023 |
|
2023 |
|
2023 |
|
2023 |
|
2022 |
| |
(Dollars in
thousands) |
| |
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate loans |
$ |
1,079,751 |
|
|
$ |
1,080,361 |
|
|
$ |
1,075,429 |
|
|
$ |
1,079,664 |
|
|
$ |
1,069,323 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Residential
real estate loans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential |
612,315 |
|
|
606,221 |
|
|
597,812 |
|
|
595,097 |
|
|
589,503 |
|
|
Home equity |
109,839 |
|
|
107,561 |
|
|
107,044 |
|
|
105,801 |
|
|
105,557 |
|
|
Total residential real estate loans |
722,154 |
|
|
713,782 |
|
|
704,856 |
|
|
700,898 |
|
|
695,060 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Commercial
and industrial loans: |
|
|
|
|
|
|
|
|
|
|
PPP loans |
|
756 |
|
|
|
1,415 |
|
|
|
1,864 |
|
|
|
2,129 |
|
|
|
2,274 |
|
|
Commercial and industrial loans |
|
216,691 |
|
|
|
211,162 |
|
|
|
225,229 |
|
|
|
215,971 |
|
|
|
217,574 |
|
|
Total commercial and industrial loans |
|
217,447 |
|
|
|
212,577 |
|
|
|
227,093 |
|
|
|
218,100 |
|
|
|
219,848 |
|
| Consumer
loans |
|
5,472 |
|
|
|
5,768 |
|
|
|
5,986 |
|
|
|
5,667 |
|
|
|
5,045 |
|
|
Total gross loans |
|
2,024,824 |
|
|
|
2,012,488 |
|
|
|
2,013,364 |
|
|
|
2,004,329 |
|
|
|
1,989,276 |
|
| Unamortized
PPP loan fees |
|
(27 |
) |
|
|
(70 |
) |
|
|
(78 |
) |
|
|
(99 |
) |
|
|
(109 |
) |
| Unamortized
premiums and net deferred loans fees and costs |
|
2,520 |
|
|
|
2,402 |
|
|
|
2,307 |
|
|
|
2,269 |
|
|
|
2,233 |
|
|
Total loans |
$ |
2,027,317 |
|
|
$ |
2,014,820 |
|
|
$ |
2,015,593 |
|
|
$ |
2,006,499 |
|
|
$ |
1,991,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit QualityCredit quality
remains sound and our loan portfolio continues to perform well.
Total delinquency was 0.30% of total loans at December 31, 2023,
compared to 0.22% of total loans at December 31, 2022. At December
31, 2023, nonperforming loans totaled $6.4 million, or 0.32% of
total loans, compared to $5.7 million, or 0.29% of total loans, at
December 31, 2022. At December 31, 2023, there were no loans 90 or
more days past due and still accruing interest. Nonperforming
assets to total assets was 0.25% at December 31, 2023 and 0.22% at
December 31, 2022. At December 31, 2023 and at December 31, 2022,
the Company did not have any other real estate owned. The allowance
for credit losses as a percentage of total loans was 1.00% at
December 31, 2023 and at December 31, 2022. At December 31, 2023,
the allowance for credit losses as a percentage of nonperforming
loans was 315.6%, compared to 350.0% at December 31, 2022. Total
classified loans, defined as special mention and substandard loans,
decreased $24.5 million, or 38.3%, from $64.0 million, or 3.2% of
total loans, at December 31, 2022 to $39.5 million, or 1.9%, of
total loans at December 31, 2023. We continue to maintain diversity
among property types and within our geographic footprint. More
details on the diversification of the loan portfolio are available
in the supplementary earnings presentation. Management will
continue to remain attentive to any signs of deterioration in
borrowers’ financial conditions and is proactive in taking the
appropriate steps to mitigate risk.
DepositsTotal deposits
decreased $85.7 million, or 3.8%, from December 31, 2022, to $2.1
billion at December 31, 2023, due to industry-wide pressures and a
competitive market for deposits. Core deposits, which the Company
defines as all deposits except time deposits, decreased $285.4
million, or 15.7%, from $1.8 billion, or 81.5% of total deposits,
at December 31, 2022, to $1.5 billion, or 71.5% of total deposits,
at December 31, 2023. Money market accounts decreased $166.7
million, or 20.8%, to $634.4 million, non-interest-bearing deposits
decreased $65.9 million, or 10.2%, to $579.6 million, savings
accounts decreased $35.0 million, or 15.7%, to $187.4 million and
interest-bearing checking accounts decreased $17.7 million, or
11.9%, to $131.0 million. Time deposits increased $199.7 million,
or 48.5%, from $411.7 million at December 31, 2022 to $611.4
million at December 31, 2023. Brokered time deposits, which are
included in time deposits, totaled $1.7 million at December 31,
2023. The Company did not have any brokered deposits at December
31, 2022.
The table below is a summary of our deposit
balances for the periods noted:
| |
December
31, |
|
September
30, |
|
June
30, |
|
March
31, |
|
December
31, |
| |
2023 |
|
2023 |
|
2023 |
|
2023 |
|
2022 |
| |
(Dollars in
thousands) |
| Core
Deposits: |
|
|
|
|
|
|
|
|
|
|
Demand accounts |
$ |
579,595 |
|
|
$ |
593,601 |
|
|
$ |
584,511 |
|
|
$ |
625,656 |
|
|
$ |
645,571 |
|
|
Interest bearing accounts |
|
131,031 |
|
|
|
152,886 |
|
|
|
162,823 |
|
|
|
133,727 |
|
|
|
148,670 |
|
|
Savings accounts |
|
187,405 |
|
|
|
192,321 |
|
|
|
203,376 |
|
|
|
218,800 |
|
|
|
222,436 |
|
|
Money market accounts |
|
634,361 |
|
|
|
654,909 |
|
|
|
672,483 |
|
|
|
721,219 |
|
|
|
801,076 |
|
|
Total Core Deposits |
$ |
1,532,392 |
|
|
$ |
1,593,717 |
|
|
$ |
1,623,193 |
|
|
$ |
1,699,402 |
|
|
$ |
1,817,753 |
|
| |
|
|
|
|
|
|
|
|
|
| Time
Deposits: |
|
|
|
|
|
|
|
|
|
|
Time deposits less than $250,000 |
$ |
412,761 |
|
|
$ |
384,472 |
|
|
$ |
338,667 |
|
|
$ |
300,907 |
|
|
$ |
279,953 |
|
|
Time deposits of $250,000 or more |
|
198,591 |
|
|
|
198,114 |
|
|
|
196,114 |
|
|
|
156,819 |
|
|
|
131,737 |
|
|
Total Time Deposits: |
|
611,352 |
|
|
|
582,586 |
|
|
|
534,781 |
|
|
|
457,726 |
|
|
|
411,690 |
|
|
Total Deposits: |
$ |
2,143,744 |
|
|
$ |
2,176,303 |
|
|
$ |
2,157,974 |
|
|
$ |
2,157,128 |
|
|
$ |
2,229,443 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the twelve months ended December 31,
2023, the Company experienced a higher level of competition not
only from local competitors but also from money market funds and
Treasury notes that were offering higher returns. In addition, the
Company also saw a challenging shift in deposit mix from low cost
core deposits to high cost time deposits as customers migrated to
higher yields.
The Company continues to focus on the
maintenance, development, and expansion of its core deposit base to
meet funding requirements and liquidity needs, with an emphasis on
retaining a long-term customer relationship base by efficiently
competing for and retaining deposits in our local market. At
December 31, 2023, the Bank’s uninsured deposits represented 26.8%
of total deposits, compared to 30.8% at December 31, 2022.
BorrowingsAt December 31, 2023,
total borrowings increased $94.3 million, or 151.5%, from $62.2
million at December 31, 2022 to $156.5 million. Short-term
borrowings decreased $25.3 million, or 61.1%, to $16.1 million,
compared to $41.4 million at December 31, 2022. Long-term
borrowings increased $119.5 million, from $1.2 million at December
31, 2022, to $120.6 million at December 31, 2023, to replace
deposit attrition. Long-term borrowings consisted of $30.6 million
outstanding with the FHLB and $90.0 million outstanding under the
Federal Reserve Bank’s Bank Term Funding Program (“BTFP”). At
December 31, 2023, borrowings also consisted of $19.7 million in
fixed-to-floating rate subordinated notes.
LiquidityThe Company’s
liquidity position remains strong with solid core deposit
relationships, cash, unencumbered securities, a diversified deposit
base and access to diversified borrowing sources. On March 12,
2023, the Federal Reserve made available the BTFP, which enhances
the ability of banks to borrow greater amounts against certain
high-quality, unencumbered investments at par value.
During the twelve months ended December 31,
2023, the Company participated in the BTFP, which enabled the
Company to pay off higher rate FHLB advances. With the BTFP, the
Company has the ability to pay off the BTFP advance prior to
maturity without incurring a penalty or termination fee. The
Company advanced $90.0 million under the BTFP during the twelve
months ended December 31, 2023 and had $23.6 million in
availability under the BTFP as of December 31, 2023.
At December 31, 2023, the Company had available
borrowing capacity with the FHLB of $535.6 million, including
its overnight Ideal Way Line of Credit. In addition, at December
31, 2023, the Company had available borrowing capacity of $48.6
million from the Federal Reserve Discount Window, with no
outstanding borrowings. At December 31, 2023, 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, 2023, the Company has $632.8 million in
total available borrowing capacity, excluding cash and unencumbered
securities.
Hedging ProgramDuring the
twelve months ended December 31, 2023, the Company executed a $200
million fair value hedge on fixed-rate assets with maturities up to
18 months, where the Company exchanged, or swapped, fixed rate
payments for floating rate payments. The Company’s hedging program
aims to reduce the Company’s sensitivity to interest rates by
locking in a spread.
CapitalAt December 31, 2023,
shareholders’ equity was $237.4 million, or 9.3% of total assets,
compared to $228.1 million, or 8.9% of total assets, at December
31, 2022. The increase was primarily attributable to net income of
$15.1 million, partially offset by a decrease in accumulated other
comprehensive loss of $3.3 million, $5.0 million for the repurchase
of common stock and cash dividends paid of $6.1 million. At
December 31, 2023, total shares outstanding were 21,666,807.
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. Total Risk-Based Capital Ratio at December 31,
2023 was 14.7%, compared to 14.2% at December 31, 2022. The
Bank’s Tier 1 Leverage Ratio to adjusted average assets was 9.62%
at December 31, 2023 and 9.49% at December 31, 2022. The Bank’s
tangible common equity (“TCE”) to tangible assets ratio, a non-GAAP
financial measure, was 8.78% at December 31, 2023, compared to
8.52% at December 31, 2022. Fluctuations in the TCE ratio
were driven by the changes in the unrealized loss on
available-for-sale securities. TCE is a non-GAAP measure. See pages
20-24 for the related TCE to tangible assets ratio calculation and
a reconciliation of GAAP to non-GAAP financial measures.
DividendsAlthough 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 StatementsThis
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 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;
- changes in 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 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
Act 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;
- changes in business conditions and
inflation;
- 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 SUBSIDIARIESConsolidated
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, |
|
|
2023 |
2023 |
2023 |
2023 |
2022 |
2023 |
2022 |
| INTEREST AND
DIVIDEND INCOME: |
|
|
|
|
|
|
|
|
Loans |
$ |
23,939 |
|
$ |
23,451 |
|
$ |
22,450 |
|
$ |
21,329 |
|
$ |
21,274 |
|
$ |
91,169 |
|
$ |
77,264 |
|
|
Securities |
|
2,094 |
|
|
2,033 |
|
|
2,094 |
|
|
2,149 |
|
|
2,174 |
|
|
8,370 |
|
|
8,296 |
|
|
Other investments |
|
140 |
|
|
166 |
|
|
146 |
|
|
106 |
|
|
75 |
|
|
558 |
|
|
177 |
|
|
Short-term investments |
|
597 |
|
|
251 |
|
|
119 |
|
|
54 |
|
|
62 |
|
|
1,021 |
|
|
191 |
|
|
Total interest and dividend income |
|
26,770 |
|
|
25,901 |
|
|
24,809 |
|
|
23,638 |
|
|
23,585 |
|
|
101,118 |
|
|
85,928 |
|
|
|
|
|
|
|
|
|
|
| INTEREST
EXPENSE: |
|
|
|
|
|
|
|
|
Deposits |
|
8,773 |
|
|
7,704 |
|
|
6,069 |
|
|
4,103 |
|
|
2,206 |
|
|
26,649 |
|
|
5,352 |
|
|
Short-term borrowings |
|
123 |
|
|
117 |
|
|
646 |
|
|
703 |
|
|
272 |
|
|
1,589 |
|
|
330 |
|
|
Long-term debt |
|
1,444 |
|
|
1,444 |
|
|
995 |
|
|
74 |
|
|
- |
|
|
3,957 |
|
|
- |
|
|
Subordinated debt |
|
254 |
|
|
253 |
|
|
253 |
|
|
254 |
|
|
253 |
|
|
1,014 |
|
|
1,014 |
|
|
Total interest expense |
|
10,594 |
|
|
9,518 |
|
|
7,963 |
|
|
5,134 |
|
|
2,731 |
|
|
33,209 |
|
|
6,696 |
|
|
|
|
|
|
|
|
|
|
|
Net interest and dividend income |
|
16,176 |
|
|
16,383 |
|
|
16,846 |
|
|
18,504 |
|
|
20,854 |
|
|
67,909 |
|
|
79,232 |
|
|
|
|
|
|
|
|
|
|
| PROVISION
FOR (REVERSAL OF) CREDIT LOSSES |
|
486 |
|
|
354 |
|
|
420 |
|
|
(388 |
) |
|
150 |
|
|
872 |
|
|
700 |
|
|
|
|
|
|
|
|
|
|
|
Net interest and dividend income after provision for (reversal of)
credit losses |
|
15,690 |
|
|
16,029 |
|
|
16,426 |
|
|
18,892 |
|
|
20,704 |
|
|
67,037 |
|
|
78,532 |
|
|
|
|
|
|
|
|
|
|
| NON-INTEREST
INCOME: |
|
|
|
|
|
|
|
|
Service charges and fees |
|
2,283 |
|
|
2,145 |
|
|
2,241 |
|
|
2,187 |
|
|
2,329 |
|
|
8,856 |
|
|
9,072 |
|
|
Income from bank-owned life insurance |
|
432 |
|
|
454 |
|
|
494 |
|
|
440 |
|
|
428 |
|
|
1,820 |
|
|
1,725 |
|
|
Loss on sales of securities, net |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(4 |
) |
|
Unrealized (loss) gain on marketable equity securities |
|
(1 |
) |
|
- |
|
|
- |
|
|
- |
|
|
19 |
|
|
(1 |
) |
|
(717 |
) |
|
Loss on disposal of premises and equipment |
|
- |
|
|
(3 |
) |
|
- |
|
|
- |
|
|
- |
|
|
(3 |
) |
|
- |
|
|
Gain on sale of mortgages |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
2 |
|
|
Gain on non-marketable equity investments |
|
- |
|
|
238 |
|
|
- |
|
|
352 |
|
|
70 |
|
|
590 |
|
|
422 |
|
|
(Loss) gain on defined benefit plan termination |
|
- |
|
|
- |
|
|
(1,143 |
) |
|
- |
|
|
2,807 |
|
|
(1,143 |
) |
|
2,807 |
|
|
Gain on bank-owned life insurance death benefit |
|
- |
|
|
778 |
|
|
- |
|
|
- |
|
|
- |
|
|
778 |
|
|
- |
|
|
Other income |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
25 |
|
|
Total non-interest income |
|
2,714 |
|
|
3,612 |
|
|
1,592 |
|
|
2,979 |
|
|
5,653 |
|
|
10,897 |
|
|
13,332 |
|
|
|
|
|
|
|
|
|
|
| NON-INTEREST
EXPENSE: |
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
7,739 |
|
|
7,955 |
|
|
8,089 |
|
|
8,431 |
|
|
8,197 |
|
|
32,214 |
|
|
32,697 |
|
|
Occupancy |
|
1,198 |
|
|
1,159 |
|
|
1,203 |
|
|
1,348 |
|
|
1,218 |
|
|
4,908 |
|
|
4,984 |
|
|
Furniture and equipment |
|
494 |
|
|
482 |
|
|
492 |
|
|
486 |
|
|
479 |
|
|
1,954 |
|
|
2,026 |
|
|
Data processing |
|
788 |
|
|
824 |
|
|
792 |
|
|
753 |
|
|
724 |
|
|
3,157 |
|
|
2,885 |
|
|
Professional fees |
|
674 |
|
|
643 |
|
|
803 |
|
|
757 |
|
|
617 |
|
|
2,877 |
|
|
2,716 |
|
|
FDIC insurance |
|
338 |
|
|
341 |
|
|
290 |
|
|
352 |
|
|
255 |
|
|
1,321 |
|
|
1,048 |
|
|
Advertising |
|
377 |
|
|
362 |
|
|
339 |
|
|
417 |
|
|
178 |
|
|
1,495 |
|
|
1,408 |
|
|
Other |
|
3,177 |
|
|
2,352 |
|
|
2,543 |
|
|
2,352 |
|
|
2,335 |
|
|
10,424 |
|
|
9,471 |
|
|
Total non-interest expense |
|
14,785 |
|
|
14,118 |
|
|
14,551 |
|
|
14,896 |
|
|
14,003 |
|
|
58,350 |
|
|
57,235 |
|
|
|
|
|
|
|
|
|
|
| INCOME
BEFORE INCOME TAXES |
|
3,619 |
|
|
5,523 |
|
|
3,467 |
|
|
6,975 |
|
|
12,354 |
|
|
19,584 |
|
|
34,629 |
|
| |
|
|
|
|
|
|
|
| INCOME TAX
PROVISION |
|
1,108 |
|
|
1,033 |
|
|
704 |
|
|
1,671 |
|
|
3,320 |
|
|
4,516 |
|
|
8,742 |
|
| NET
INCOME |
$ |
2,511 |
|
$ |
4,490 |
|
$ |
2,763 |
|
$ |
5,304 |
|
$ |
9,034 |
|
$ |
15,068 |
|
$ |
25,887 |
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
$ |
0.12 |
|
$ |
0.21 |
|
$ |
0.13 |
|
$ |
0.24 |
|
$ |
0.42 |
|
$ |
0.70 |
|
$ |
1.18 |
|
|
Weighted average shares outstanding |
|
21,253,452 |
|
|
21,560,940 |
|
|
21,634,683 |
|
|
21,699,042 |
|
|
21,676,892 |
|
|
21,535,888 |
|
|
21,879,657 |
|
|
Diluted earnings per share |
$ |
0.12 |
|
$ |
0.21 |
|
$ |
0.13 |
|
$ |
0.24 |
|
$ |
0.42 |
|
$ |
0.70 |
|
$ |
1.18 |
|
|
Weighted average diluted shares outstanding |
|
21,400,664 |
|
|
21,680,113 |
|
|
21,648,235 |
|
|
21,716,869 |
|
|
21,751,409 |
|
|
21,610,329 |
|
|
21,938,323 |
|
|
|
|
|
|
|
|
|
|
|
Other Data: |
|
|
|
|
|
|
|
|
Return on average assets (1) |
|
0.39 |
% |
|
0.70 |
% |
|
0.43 |
% |
|
0.84 |
% |
|
1.40 |
% |
|
0.59 |
% |
|
1.02 |
% |
|
Return on average equity (1) |
|
4.31 |
% |
|
7.60 |
% |
|
4.72 |
% |
|
9.31 |
% |
|
16.67 |
% |
|
6.47 |
% |
|
11.85 |
% |
|
Efficiency ratio |
|
78.27 |
% |
|
70.61 |
% |
|
78.92 |
% |
|
69.34 |
% |
|
52.83 |
% |
|
74.04 |
% |
|
61.83 |
% |
|
Adjusted efficiency ratio (2) |
|
78.26 |
% |
|
74.38 |
% |
|
74.31 |
% |
|
70.49 |
% |
|
59.31 |
% |
|
74.25 |
% |
|
63.55 |
% |
|
Net interest margin |
|
2.64 |
% |
|
2.70 |
% |
|
2.81 |
% |
|
3.14 |
% |
|
3.44 |
% |
|
2.82 |
% |
|
3.31 |
% |
|
Net interest margin, on a fully tax-equivalent basis |
|
2.66 |
% |
|
2.72 |
% |
|
2.83 |
% |
|
3.16 |
% |
|
3.47 |
% |
|
2.84 |
% |
|
3.33 |
% |
|
(1) Annualized. |
|
(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, loss on disposal of
premises and equipment, gain on non-marketable equity investments,
gains and losses on defined benefit plan termination and gain on
bank-owned life insurance death benefit. |
| |
| |
| WESTERN NEW
ENGLAND BANCORP, INC. AND SUBSIDIARIESConsolidated
Balance Sheets(Dollars in
thousands)(Unaudited) |
| |
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
| |
2023 |
|
2023 |
|
2023 |
|
2023 |
|
2022 |
|
Cash and cash equivalents |
$ |
28,840 |
|
|
$ |
62,267 |
|
|
$ |
31,689 |
|
|
$ |
23,230 |
|
|
$ |
30,342 |
|
|
Available-for-sale securities, at fair value |
|
137,115 |
|
|
|
130,709 |
|
|
|
141,481 |
|
|
|
146,373 |
|
|
|
146,997 |
|
|
Held-to-maturity securities, at amortized cost |
|
223,370 |
|
|
|
225,020 |
|
|
|
222,900 |
|
|
|
226,996 |
|
|
|
230,168 |
|
| Marketable
equity securities, at fair value |
|
196 |
|
|
|
- |
|
|
|
- |
|
|
|
6,309 |
|
|
|
6,237 |
|
| Federal Home
Loan Bank of Boston and other restricted stock - at cost |
|
3,707 |
|
|
|
3,063 |
|
|
|
3,226 |
|
|
|
7,173 |
|
|
|
3,352 |
|
| |
|
|
|
|
|
|
|
|
|
| Loans |
|
2,027,317 |
|
|
|
2,014,820 |
|
|
|
2,015,593 |
|
|
|
2,006,499 |
|
|
|
1,991,400 |
|
| Allowance
for credit losses(1) |
|
(20,267 |
) |
|
|
(19,978 |
) |
|
|
(19,647 |
) |
|
|
(19,031 |
) |
|
|
(19,931 |
) |
| Net
loans |
|
2,007,050 |
|
|
|
1,994,842 |
|
|
|
1,995,946 |
|
|
|
1,987,468 |
|
|
|
1,971,469 |
|
| |
|
|
|
|
|
|
|
|
|
| Bank-owned
life insurance |
|
75,145 |
|
|
|
74,713 |
|
|
|
75,554 |
|
|
|
75,060 |
|
|
|
74,620 |
|
|
Goodwill |
|
12,487 |
|
|
|
12,487 |
|
|
|
12,487 |
|
|
|
12,487 |
|
|
|
12,487 |
|
| Core deposit
intangible |
|
1,813 |
|
|
|
1,906 |
|
|
|
2,000 |
|
|
|
2,094 |
|
|
|
2,188 |
|
| Other
assets |
|
74,848 |
|
|
|
79,998 |
|
|
|
77,001 |
|
|
|
74,825 |
|
|
|
75,290 |
|
| TOTAL
ASSETS |
$ |
2,564,571 |
|
|
$ |
2,585,005 |
|
|
$ |
2,562,284 |
|
|
$ |
2,562,015 |
|
|
$ |
2,553,150 |
|
| |
|
|
|
|
|
|
|
|
|
| Total
deposits |
$ |
2,143,744 |
|
|
$ |
2,176,303 |
|
|
$ |
2,157,974 |
|
|
$ |
2,157,128 |
|
|
$ |
2,229,443 |
|
| Short-term
borrowings |
|
16,100 |
|
|
|
8,890 |
|
|
|
7,190 |
|
|
|
98,990 |
|
|
|
41,350 |
|
| Long-term
debt |
|
120,646 |
|
|
|
121,178 |
|
|
|
121,178 |
|
|
|
31,178 |
|
|
|
1,178 |
|
| Subordinated
debt |
|
19,712 |
|
|
|
19,702 |
|
|
|
19,692 |
|
|
|
19,682 |
|
|
|
19,673 |
|
| Securities
pending settlement |
|
140 |
|
|
|
2,253 |
|
|
|
- |
|
|
|
- |
|
|
|
133 |
|
| Other
liabilities |
|
26,820 |
|
|
|
25,765 |
|
|
|
22,252 |
|
|
|
21,815 |
|
|
|
33,230 |
|
| TOTAL
LIABILITIES |
|
2,327,162 |
|
|
|
2,354,091 |
|
|
|
2,328,286 |
|
|
|
2,328,793 |
|
|
|
2,325,007 |
|
| |
|
|
|
|
|
|
|
|
|
| TOTAL
SHAREHOLDERS' EQUITY |
|
237,409 |
|
|
|
230,914 |
|
|
|
233,998 |
|
|
|
233,222 |
|
|
|
228,143 |
|
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$ |
2,564,571 |
|
|
$ |
2,585,005 |
|
|
$ |
2,562,284 |
|
|
$ |
2,562,015 |
|
|
$ |
2,553,150 |
|
|
(1) The Company adopted ASU 2016-13 on January 1, 2023 with a
modified retrospective approach. Accordingly, beginning with March
31, 2023, the allowance for credit losses was determined in
accordance with ASC 326, “Financial Instruments-Credit
Losses.” |
| |
|
|
|
|
|
|
|
|
|
| |
| WESTERN NEW
ENGLAND BANCORP, INC. AND SUBSIDIARIESOther
Data(Dollars in thousands, except per share
data)(Unaudited) |
| |
|
| |
Three Months Ended |
| |
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
| |
2023 |
|
2023 |
|
2023 |
|
2023 |
|
2022 |
| Shares
outstanding at end of period |
21,666,807 |
|
|
21,927,242 |
|
|
22,082,403 |
|
|
22,209,347 |
|
|
22,216,789 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating results: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
$ |
16,176 |
|
|
$ |
16,383 |
|
|
$ |
16,846 |
|
|
$ |
18,504 |
|
|
$ |
20,854 |
|
|
Provision for (reversal of) credit losses |
486 |
|
|
354 |
|
|
420 |
|
|
(388) |
|
|
150 |
|
|
Non-interest income |
2,714 |
|
|
3,612 |
|
|
1,592 |
|
|
2,979 |
|
|
5,653 |
|
|
Non-interest expense |
14,785 |
|
|
14,118 |
|
|
14,551 |
|
|
14,896 |
|
|
14,003 |
|
|
Income before income provision for income taxes |
3,619 |
|
|
5,523 |
|
|
3,467 |
|
|
6,975 |
|
|
12,354 |
|
|
Income tax provision |
1,108 |
|
|
1,033 |
|
|
704 |
|
|
1,671 |
|
|
3,320 |
|
|
Net income |
2,511 |
|
|
4,490 |
|
|
2,763 |
|
|
5,304 |
|
|
9,034 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Ratios: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin, on a fully tax-equivalent basis |
2.66% |
|
|
2.72% |
|
|
2.83% |
|
|
3.16% |
|
|
3.47% |
|
|
Interest rate spread, on a fully tax-equivalent basis |
1.98% |
|
|
2.09% |
|
|
2.29% |
|
|
2.76% |
|
|
3.26% |
|
|
Return on average assets |
0.39% |
|
|
0.70% |
|
|
0.43% |
|
|
0.84% |
|
|
1.40% |
|
|
Return on average equity |
4.31% |
|
|
7.60% |
|
|
4.72% |
|
|
9.31% |
|
|
16.67% |
|
|
Adjusted efficiency ratio (non-GAAP)(1) |
78.26% |
|
|
74.38% |
|
|
74.31% |
|
|
70.49% |
|
|
59.31% |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Per
Common Share Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per share |
$ |
0.12 |
|
|
$ |
0.21 |
|
|
$ |
0.13 |
|
|
$ |
0.24 |
|
|
$ |
0.42 |
|
|
Per diluted share |
0.12 |
|
|
0.21 |
|
|
0.13 |
|
|
0.24 |
|
|
0.42 |
|
|
Cash dividend declared |
0.07 |
|
|
0.07 |
|
|
0.07 |
|
|
0.07 |
|
|
0.06 |
|
|
Book value per share |
10.96 |
|
|
10.53 |
|
|
10.60 |
|
|
10.50 |
|
|
10.27 |
|
|
Tangible book value per share (non-GAAP) |
10.30 |
|
|
9.87 |
|
|
9.94 |
|
|
9.84 |
|
|
9.61 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Quality: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30-89 day delinquent loans |
$ |
4,605 |
|
|
$ |
4,097 |
|
|
$ |
4,092 |
|
|
$ |
1,669 |
|
|
$ |
2,578 |
|
|
90 days or more delinquent loans |
1,394 |
|
|
1,527 |
|
|
1,324 |
|
|
1,377 |
|
|
1,891 |
|
|
Total delinquent loans |
5,999 |
|
|
5,624 |
|
|
5,416 |
|
|
3,046 |
|
|
4,469 |
|
|
Total delinquent loans as a percentage of total loans |
0.30% |
|
|
0.28% |
|
|
0.27% |
|
|
0.15% |
|
|
0.22% |
|
|
Nonperforming loans |
$ |
6,421 |
|
|
$ |
6,290 |
|
|
$ |
5,755 |
|
|
$ |
5,794 |
|
|
$ |
5,694 |
|
|
Nonperforming loans as a percentage of total loans |
0.32% |
|
|
0.31% |
|
|
0.29% |
|
|
0.29% |
|
|
0.29% |
|
|
Nonperforming assets as a percentage of total assets |
0.25% |
|
|
0.24% |
|
|
0.22% |
|
|
0.23% |
|
|
0.22% |
|
|
Allowance for credit losses as a percentage of nonperforming
loans |
315,64% |
|
|
317.62% |
|
|
341.39% |
|
|
328.46% |
|
|
350.04% |
|
|
Allowance for credit losses as a percentage of total loans |
1.00% |
|
|
0.99% |
|
|
0.97% |
|
|
0.95% |
|
|
1.00% |
|
|
Net loan charge-offs (recoveries) |
$ |
136 |
|
|
$ |
78 |
|
|
$ |
(25) |
|
|
$ |
1,850 |
|
|
$ |
426 |
|
|
Net loan charge-offs (recoveries) as a percentage of average
loans |
0.01% |
|
|
0.00% |
|
|
0.00% |
|
|
0.09% |
|
|
0.02% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, loss on disposal of
premises and equipment, gain on non-marketable equity investments,
gains and losses on defined benefit plan termination and gain on
bank-owned life insurance death benefit. |
| |
The following table sets forth the information
relating to our average balances and net interest income for the
three months ended December 31, 2023, September 30, 2023 and
December 31, 2022 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, 2023 |
|
September 30, 2023 |
|
December 31, 2022 |
|
|
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) |
$ |
2,017,089 |
|
$ |
24,052 |
|
|
4.73 |
% |
|
$ |
2,007,267 |
|
$ |
23,568 |
|
|
4.66 |
% |
|
$ |
1,994,874 |
|
$ |
21,403 |
|
|
4.26 |
% |
|
Securities(2) |
|
355,078 |
|
|
2,094 |
|
|
2.34 |
|
|
|
361,216 |
|
|
2,033 |
|
|
2.23 |
|
|
|
388,529 |
|
|
2,175 |
|
|
2.22 |
|
| Other
investments |
|
12,119 |
|
|
140 |
|
|
4.58 |
|
|
|
12,155 |
|
|
166 |
|
|
5.42 |
|
|
|
10,638 |
|
|
75 |
|
|
2.80 |
|
| Short-term
investments(3) |
|
42,826 |
|
|
597 |
|
|
5.53 |
|
|
|
22,349 |
|
|
251 |
|
|
4.46 |
|
|
|
7,635 |
|
|
62 |
|
|
3.22 |
|
|
Total interest-earning assets |
|
2,427,112 |
|
|
26,883 |
|
|
4.39 |
|
|
|
2,402,987 |
|
|
26,018 |
|
|
4.30 |
|
|
|
2,401,676 |
|
|
23,715 |
|
|
3.92 |
|
|
Total non-interest-earning assets |
|
158,435 |
|
|
|
|
|
|
|
156,503 |
|
|
|
|
|
|
|
159,042 |
|
|
|
|
|
|
Total assets |
$ |
2,585,547 |
|
|
|
|
|
|
$ |
2,559,490 |
|
|
|
|
|
|
$ |
2,560,718 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing checking accounts |
$ |
139,894 |
|
|
260 |
|
|
0.74 |
|
|
$ |
144,792 |
|
|
269 |
|
|
0.74 |
|
|
$ |
149,928 |
|
|
206 |
|
|
0.55 |
|
| Savings
accounts |
|
187,047 |
|
|
39 |
|
|
0.08 |
|
|
|
195,020 |
|
|
41 |
|
|
0.08 |
|
|
|
221,964 |
|
|
39 |
|
|
0.07 |
|
| Money market
accounts |
|
657,407 |
|
|
2,716 |
|
|
1.64 |
|
|
|
656,066 |
|
|
2,488 |
|
|
1.50 |
|
|
|
862,523 |
|
|
1,375 |
|
|
0.63 |
|
| Time deposit
accounts |
|
603,860 |
|
|
5,758 |
|
|
3.78 |
|
|
|
563,135 |
|
|
4,906 |
|
|
3.46 |
|
|
|
359,555 |
|
|
586 |
|
|
0.65 |
|
|
Total interest-bearing deposits |
|
1,588,208 |
|
|
8,773 |
|
|
2.19 |
|
|
|
1,559,013 |
|
|
7,704 |
|
|
1.96 |
|
|
|
1,593,970 |
|
|
2,206 |
|
|
0.55 |
|
|
Borrowings |
|
149,585 |
|
|
1,821 |
|
|
4.83 |
|
|
|
149,507 |
|
|
1,814 |
|
|
4.81 |
|
|
|
48,579 |
|
|
525 |
|
|
4.29 |
|
|
Interest-bearing liabilities |
|
1,737,793 |
|
|
10,594 |
|
|
2.42 |
|
|
|
1,708,520 |
|
|
9,518 |
|
|
2.21 |
|
|
|
1,642,549 |
|
|
2,731 |
|
|
0.66 |
|
|
Non-interest-bearing deposits |
|
588,748 |
|
|
|
|
|
|
|
591,933 |
|
|
|
|
|
|
|
663,814 |
|
|
|
|
|
| Other
non-interest-bearing liabilities |
|
27,847 |
|
|
|
|
|
|
|
24,504 |
|
|
|
|
|
|
|
39,399 |
|
|
|
|
|
|
Total non-interest-bearing liabilities |
|
616,595 |
|
|
|
|
|
|
|
616,437 |
|
|
|
|
|
|
|
703,213 |
|
|
|
|
|
|
Total liabilities |
|
2,354,388 |
|
|
|
|
|
|
|
2,324,957 |
|
|
|
|
|
|
|
2,345,762 |
|
|
|
|
|
|
Total equity |
|
231,159 |
|
|
|
|
|
|
|
234,533 |
|
|
|
|
|
|
|
214,956 |
|
|
|
|
|
|
Total liabilities and equity |
$ |
2,585,547 |
|
|
|
|
|
|
$ |
2,559,490 |
|
|
|
|
|
|
$ |
2,560,718 |
|
|
|
|
|
| Less:
Tax-equivalent adjustment(2) |
|
|
|
(113 |
) |
|
|
|
|
|
|
|
(117 |
) |
|
|
|
|
|
|
|
(130 |
) |
|
|
|
| Net interest
and dividend income |
|
|
$ |
16,176 |
|
|
|
|
|
|
|
$ |
16,383 |
|
|
|
|
|
|
|
$ |
20,854 |
|
|
|
|
| Net interest
rate spread(4) |
|
|
|
|
1.96 |
% |
|
|
|
|
|
2.07 |
% |
|
|
|
|
|
3.24 |
% |
| Net interest
rate spread, on a tax-equivalent basis(5) |
|
|
|
|
1.98 |
% |
|
|
|
|
|
2.09 |
% |
|
|
|
|
|
3.26 |
% |
| Net interest
margin(6) |
|
|
|
|
2.64 |
% |
|
|
|
|
|
2.70 |
% |
|
|
|
|
|
3.44 |
% |
| Net interest
margin, on a tax-equivalent basis(7) |
|
|
|
|
2.66 |
% |
|
|
|
|
|
2.72 |
% |
|
|
|
|
|
3.47 |
% |
| Ratio of
average interest-earning |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
assets to average interest-bearing liabilities |
|
|
|
|
139.67 |
% |
|
|
|
|
|
140.65 |
% |
|
|
|
|
|
146.22 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following tables set forth the information
relating to our average balances and net interest income for the
twelve months ended December 31, 2023 and 2022 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, |
| |
2023 |
|
2022 |
|
|
AverageBalance |
|
Interest |
|
Average Yield/Cost |
|
AverageBalance |
|
Interest |
|
Average Yield/Cost |
|
|
(Dollars in
thousands) |
|
ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans(1)(2) |
$ |
2,006,166 |
|
$ |
91,640 |
|
|
4.57 |
% |
|
$ |
1,953,527 |
|
$ |
77,758 |
|
|
3.98 |
% |
|
Securities(2) |
|
368,201 |
|
|
8,371 |
|
|
2.27 |
|
|
|
407,444 |
|
|
8,299 |
|
|
2.04 |
|
| Other
investments |
|
12,425 |
|
|
558 |
|
|
4.49 |
|
|
|
10,289 |
|
|
177 |
|
|
1.72 |
|
| Short-term
investments(3) |
|
20,459 |
|
|
1,021 |
|
|
4.99 |
|
|
|
25,712 |
|
|
191 |
|
|
0.74 |
|
|
Total interest-earning assets |
|
2,407,251 |
|
|
101,590 |
|
|
4.22 |
|
|
|
2,396,972 |
|
|
86,425 |
|
|
3.61 |
|
|
Total non-interest-earning assets |
|
155,511 |
|
|
|
|
|
|
|
152,941 |
|
|
|
|
|
|
Total assets |
$ |
2,562,762 |
|
|
|
|
|
|
$ |
2,549,913 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing checking accounts |
$ |
142,005 |
|
|
1,041 |
|
|
0.73 |
% |
|
$ |
139,993 |
|
|
530 |
|
|
0.38 |
% |
| Savings
accounts |
|
202,354 |
|
|
181 |
|
|
0.09 |
|
|
|
222,267 |
|
|
161 |
|
|
0.07 |
|
| Money market
accounts |
|
697,621 |
|
|
9,529 |
|
|
1.37 |
|
|
|
890,763 |
|
|
3,187 |
|
|
0.36 |
|
| Time deposit
accounts |
|
524,827 |
|
|
15,898 |
|
|
3.03 |
|
|
|
363,258 |
|
|
1,474 |
|
|
0.41 |
|
|
Total interest-bearing deposits |
|
1,566,807 |
|
|
26,649 |
|
|
1.70 |
|
|
|
1,616,281 |
|
|
5,352 |
|
|
0.33 |
|
| Short-term
borrowings and long-term debt |
|
135,532 |
|
|
6,560 |
|
|
4.84 |
|
|
|
31,556 |
|
|
1,344 |
|
|
4.26 |
|
|
Total interest-bearing liabilities |
|
1,702,339 |
|
|
33,209 |
|
|
1.95 |
|
|
|
1,647,837 |
|
|
6,696 |
|
|
0.41 |
|
|
Non-interest-bearing deposits |
|
602,652 |
|
|
|
|
|
|
|
647,971 |
|
|
|
|
|
| Other
non-interest-bearing liabilities |
|
24,885 |
|
|
|
|
|
|
|
35,615 |
|
|
|
|
|
|
Total non-interest-bearing liabilities |
|
627,537 |
|
|
|
|
|
|
|
683,586 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
2,329,876 |
|
|
|
|
|
|
|
2,331,423 |
|
|
|
|
|
|
Total equity |
|
232,886 |
|
|
|
|
|
|
|
218,490 |
|
|
|
|
|
|
Total liabilities and equity |
$ |
2,562,762 |
|
|
|
|
|
|
$ |
2,549,913 |
|
|
|
|
|
| Less:
Tax-equivalent adjustment (2) |
|
|
|
(472 |
) |
|
|
|
|
|
|
|
(497 |
) |
|
|
|
| Net interest
and dividend income |
|
|
$ |
67,909 |
|
|
|
|
|
|
|
$ |
79,232 |
|
|
|
|
| Net interest
rate spread (4) |
|
|
|
|
2.25 |
% |
|
|
|
|
|
3.18 |
% |
| Net interest
rate spread, on a tax-equivalent basis (5) |
|
|
|
|
2.27 |
% |
|
|
|
|
|
3.20 |
% |
| Net interest
margin (6) |
|
|
|
|
2.82 |
% |
|
|
|
|
|
3.31 |
% |
| Net interest
margin, on a tax-equivalent basis (7) |
|
|
|
|
2.84 |
% |
|
|
|
|
|
3.33 |
% |
| Ratio of
average interest-earning |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
assets to average interest-bearing liabilities |
|
|
|
141.41 |
% |
|
|
|
|
|
145.46 |
% |
|
(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. |
|
(8) |
|
Annualized. |
|
|
|
|
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 |
| |
12/31/2023 |
|
9/30/2023 |
|
6/30/2023 |
|
3/31/2023 |
|
12/31/2022 |
| |
|
|
|
|
(In thousands) |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
Loans (no tax adjustment) |
$ |
23,939 |
|
|
$ |
23,451 |
|
|
$ |
22,450 |
|
|
$ |
21,329 |
|
|
$ |
21,274 |
|
|
Tax-equivalent adjustment |
|
113 |
|
|
|
117 |
|
|
|
122 |
|
|
|
120 |
|
|
|
129 |
|
|
Loans (tax-equivalent basis) |
$ |
24,052 |
|
|
$ |
23,568 |
|
|
$ |
22,572 |
|
|
$ |
21,449 |
|
|
$ |
21,403 |
|
| |
|
|
|
|
|
|
|
|
|
| Securities
(no tax adjustment) |
$ |
2,094 |
|
|
$ |
2,033 |
|
|
$ |
2,094 |
|
|
$ |
2,149 |
|
|
$ |
2,174 |
|
|
Tax-equivalent adjustment |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1 |
|
|
Securities (tax-equivalent basis) |
$ |
2,094 |
|
|
$ |
2,033 |
|
|
$ |
2,094 |
|
|
$ |
2,149 |
|
|
$ |
2,175 |
|
| |
|
|
|
|
|
|
|
|
|
| Net interest
income (no tax adjustment) |
$ |
16,176 |
|
|
$ |
16,383 |
|
|
$ |
16,846 |
|
|
$ |
18,504 |
|
|
$ |
20,854 |
|
| Tax
equivalent adjustment |
|
113 |
|
|
|
117 |
|
|
|
122 |
|
|
|
120 |
|
|
|
130 |
|
|
Net interest income (tax-equivalent basis) |
$ |
16,289 |
|
|
$ |
16,500 |
|
|
$ |
16,968 |
|
|
$ |
18,624 |
|
|
$ |
20,984 |
|
| |
|
|
|
|
|
|
|
|
|
| Net interest
income (no tax adjustment) |
$ |
16,176 |
|
|
$ |
16,383 |
|
|
$ |
16,846 |
|
|
$ |
18,504 |
|
|
$ |
20,854 |
|
| Less: |
|
|
|
|
|
|
|
|
|
|
Purchase accounting adjustments |
|
3 |
|
|
|
4 |
|
|
|
5 |
|
|
|
(62 |
) |
|
|
87 |
|
|
Prepayment penalties and fees |
|
7 |
|
|
|
14 |
|
|
|
43 |
|
|
|
- |
|
|
|
134 |
|
|
PPP Income |
|
46 |
|
|
|
12 |
|
|
|
26 |
|
|
|
15 |
|
|
|
18 |
|
| Adjusted net
interest income (non-GAAP) |
$ |
16,120 |
|
|
$ |
16,353 |
|
|
$ |
16,772 |
|
|
$ |
18,551 |
|
|
$ |
20,615 |
|
| |
|
|
|
|
|
|
|
|
|
| Average
interest-earning assets |
$ |
2,427,112 |
|
|
$ |
2,402,987 |
|
|
$ |
2,405,077 |
|
|
$ |
2,393,504 |
|
|
$ |
2,401,676 |
|
| Average
interest-earning assets, excluding average PPP loans |
$ |
2,425,923 |
|
|
$ |
2,401,460 |
|
|
$ |
2,403,076 |
|
|
$ |
2,391,305 |
|
|
$ |
2,399,297 |
|
| Net interest
margin (no tax adjustment) |
|
2.64 |
% |
|
|
2.70 |
% |
|
|
2.81 |
% |
|
|
3.14 |
% |
|
|
3.44 |
% |
| Net interest
margin, tax-equivalent |
|
2.66 |
% |
|
|
2.72 |
% |
|
|
2.83 |
% |
|
|
3.16 |
% |
|
|
3.47 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
For the quarter ended |
| |
12/31/2023 |
|
9/30/2023 |
|
6/30/2023 |
|
3/31/2023 |
|
12/31/2022 |
| |
|
|
|
|
(In thousands) |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
Book Value per Share (GAAP) |
$ |
10.96 |
|
|
$ |
10.53 |
|
|
$ |
10.60 |
|
|
$ |
10.50 |
|
|
$ |
10.27 |
|
| Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
(0.58 |
) |
|
|
(0.57 |
) |
|
|
(0.57 |
) |
|
|
(0.56 |
) |
|
|
(0.56 |
) |
|
Core deposit intangible |
|
(0.08 |
) |
|
|
(0.09 |
) |
|
|
(0.09 |
) |
|
|
(0.10 |
) |
|
|
(0.10 |
) |
| Tangible
Book Value per Share (non-GAAP) |
$ |
10.30 |
|
|
$ |
9.87 |
|
|
$ |
9.94 |
|
|
$ |
9.84 |
|
|
$ |
9.61 |
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| Total Bank
Equity (GAAP) |
$ |
242,780 |
|
|
$ |
234,612 |
|
|
$ |
240,041 |
|
|
$ |
238,887 |
|
|
$ |
233,882 |
|
| Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
(12,487 |
) |
|
|
(12,487 |
) |
|
|
(12,487 |
) |
|
|
(12,487 |
) |
|
|
(12,487 |
) |
|
Core deposit intangible net of associated deferred tax
liabilities |
|
(1,303 |
) |
|
|
(1,370 |
) |
|
|
(1,438 |
) |
|
|
(1,505 |
) |
|
|
(1,573 |
) |
| Tangible
Capital (non-GAAP) |
$ |
228,990 |
|
|
$ |
220,755 |
|
|
$ |
226,116 |
|
|
$ |
224,895 |
|
|
$ |
219,822 |
|
| |
|
|
|
|
|
|
|
|
|
| Tangible
Capital (non-GAAP) |
$ |
228,990 |
|
|
$ |
220,755 |
|
|
$ |
226,116 |
|
|
$ |
224,895 |
|
|
$ |
219,822 |
|
|
Unrealized losses on HTM securities net of tax |
|
(25,649 |
) |
|
|
(34,622 |
) |
|
|
(27,286 |
) |
|
|
(25,825 |
) |
|
|
(28,194 |
) |
| Adjusted
Tangible Capital for Impact of Unrealized Losses on HTM Securities
Net of Tax (non-GAAP) |
$ |
203,341 |
|
|
$ |
186,133 |
|
|
$ |
198,830 |
|
|
$ |
199,070 |
|
|
$ |
191,628 |
|
| |
|
|
|
|
|
|
|
|
|
| Common
Equity Tier (CET) 1 Capital |
$ |
250,734 |
|
|
$ |
249,441 |
|
|
$ |
249,340 |
|
|
$ |
247,996 |
|
|
$ |
244,864 |
|
|
Unrealized losses on HTM securities net of tax |
|
(25,649 |
) |
|
|
(34,622 |
) |
|
|
(27,286 |
) |
|
|
(25,825 |
) |
|
|
(28,194 |
) |
|
Unrealized losses on defined benefit plan net of tax |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,079 |
) |
|
|
(1,079 |
) |
| Adjusted CET
1 Capital for Impact of Net AFS Securities Losses (non-GAAP) |
$ |
225,085 |
|
|
$ |
214,819 |
|
|
$ |
222,054 |
|
|
$ |
221,092 |
|
|
$ |
215,591 |
|
| |
|
|
|
|
|
|
|
|
|
| Total Assets
for Leverage Ratio (non-GAAP) |
$ |
2,607,260 |
|
|
$ |
2,574,402 |
|
|
$ |
2,572,583 |
|
|
$ |
2,560,973 |
|
|
$ |
2,579,141 |
|
| |
|
|
|
|
|
|
|
|
|
| Tier 1
Leverage Ratio |
|
9.62 |
% |
|
|
9.69 |
% |
|
|
9.69 |
% |
|
|
9.68 |
% |
|
|
9.49 |
% |
| |
|
|
|
|
|
|
|
|
|
| Tangible
Common Equity (non-GAAP) = Tangible Capital (non-GAAP)/Total Assets
for Leverage Ratio (non-GAAP) |
|
8.78 |
% |
|
|
8.58 |
% |
|
|
8.79 |
% |
|
|
8.78 |
% |
|
|
8.52 |
% |
| |
|
|
|
|
|
|
|
|
|
| Adjusted
Tangible Common Equity for AFS Impact (non-GAAP) = Adjusted CET 1
Capital for Impact of Net AFS Securities Losses (non-GAAP)/Total
Assets for Leverage Ratio (non-GAAP) |
|
8.63 |
% |
|
|
8.34 |
% |
|
|
8.63 |
% |
|
|
8.63 |
% |
|
|
8.36 |
% |
| |
|
|
|
|
|
|
|
|
|
| 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) |
|
7.80 |
% |
|
|
7.23 |
% |
|
|
7.73 |
% |
|
|
7.77 |
% |
|
|
7.43 |
% |
| |
|
|
|
|
|
|
|
|
|
| |
For the quarter ended |
| |
12/31/2023 |
|
9/30/2023 |
|
6/30/2023 |
|
3/31/2023 |
|
12/31/2022 |
| |
(In thousands) |
| |
|
|
|
|
|
|
|
|
|
|
Income Before Income Taxes (GAAP) |
$ |
3,619 |
|
|
$ |
5,523 |
|
|
$ |
3,467 |
|
|
$ |
6,975 |
|
|
$ |
12,354 |
|
| Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
|
|
Provision for (reversal of) credit losses |
|
486 |
|
|
|
354 |
|
|
|
420 |
|
|
|
(388 |
) |
|
|
150 |
|
|
PPP Income |
|
(46 |
) |
|
|
(12 |
) |
|
|
(26 |
) |
|
|
(15 |
) |
|
|
(18 |
) |
|
Loss (gain) on defined benefit plan termination |
|
- |
|
|
|
- |
|
|
|
1,143 |
|
|
|
- |
|
|
|
(2,807 |
) |
|
Gain on bank-owned life insurance death benefit |
|
- |
|
|
|
(778 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Income
Before Taxes, Provision, PPP Income, Defined Benefit Termination
and Bank-Owned Life Insurance Death Benefit (non-GAAP) |
$ |
4,059 |
|
|
$ |
5,087 |
|
|
$ |
5,004 |
|
|
$ |
6,572 |
|
|
$ |
9,679 |
|
| |
|
|
|
|
|
|
|
|
|
| Efficiency
Ratio: |
|
|
|
|
|
|
|
|
|
| Non-interest
Expense (GAAP) |
$ |
14,785 |
|
|
$ |
14,118 |
|
|
$ |
14,551 |
|
|
$ |
14,896 |
|
|
$ |
14,003 |
|
| Non-interest
Expense for Adjusted Efficiency Ratio (non-GAAP) |
$ |
14,785 |
|
|
$ |
14,118 |
|
|
$ |
14,551 |
|
|
$ |
14,896 |
|
|
$ |
14,003 |
|
| |
|
|
|
|
|
|
|
|
|
| Net Interest
Income (GAAP) |
$ |
16,176 |
|
|
$ |
16,383 |
|
|
$ |
16,846 |
|
|
$ |
18,504 |
|
|
$ |
20,854 |
|
| |
|
|
|
|
|
|
|
|
|
| Non-interest
Income (GAAP) |
$ |
2,714 |
|
|
$ |
3,612 |
|
|
$ |
1,592 |
|
|
$ |
2,979 |
|
|
$ |
5,653 |
|
| Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
|
|
Unrealized losses (gains) on marketable equity securities |
|
1 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(19 |
) |
|
Gain on non-marketable equity investments |
|
- |
|
|
|
(238 |
) |
|
|
- |
|
|
|
(352 |
) |
|
|
(70 |
) |
|
Loss on disposal of premises and equipment |
|
- |
|
|
|
3 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Loss (gain) on defined benefit plan termination |
|
- |
|
|
|
- |
|
|
|
1,143 |
|
|
|
- |
|
|
|
(2,807 |
) |
|
Gain on bank-owned life insurance death benefit |
|
- |
|
|
|
(778 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
| Non-interest
Income for Adjusted Efficiency Ratio (non-GAAP) |
$ |
2,715 |
|
|
$ |
2,599 |
|
|
$ |
2,735 |
|
|
$ |
2,627 |
|
|
$ |
2,757 |
|
| Total
Revenue for Adjusted Efficiency Ratio (non-GAAP) |
$ |
18,891 |
|
|
$ |
18,982 |
|
|
$ |
19,581 |
|
|
$ |
21,131 |
|
|
$ |
23,611 |
|
| |
|
|
|
|
|
|
|
|
|
| Efficiency
Ratio (GAAP) |
|
78.27 |
% |
|
|
70.61 |
% |
|
|
78.92 |
% |
|
|
69.34 |
% |
|
|
52.83 |
% |
| |
|
|
|
|
|
|
|
|
|
| Adjusted
Efficiency Ratio (Non-interest Expense for Adjusted Efficiency
Ratio (non-GAAP)/Total Revenue for Adjusted Efficiency Ratio
(non-GAAP)) |
|
78.26 |
% |
|
|
74.38 |
% |
|
|
74.31 |
% |
|
|
70.49 |
% |
|
|
59.31 |
% |
| |
|
|
|
|
|
|
|
|
|
| |
For the twelve months ended |
| |
12/31/2023 |
|
12/31/2022 |
| |
(In thousands) |
| |
|
|
|
|
Loans (no tax adjustment) |
$ |
91,169 |
|
|
$ |
77,264 |
|
|
Tax-equivalent adjustment |
|
471 |
|
|
|
494 |
|
|
Loans (tax-equivalent basis) |
$ |
91,640 |
|
|
$ |
77,758 |
|
| |
|
|
|
| Securities
(no tax adjustment) |
$ |
8,370 |
|
|
$ |
8,296 |
|
|
Tax-equivalent adjustment |
|
1 |
|
|
|
3 |
|
|
Securities (tax-equivalent basis) |
$ |
8,371 |
|
|
$ |
8,299 |
|
| |
|
|
|
| Net interest
income (no tax adjustment) |
$ |
67,909 |
|
|
$ |
79,232 |
|
| Tax
equivalent adjustment |
|
472 |
|
|
|
497 |
|
|
Net interest income (tax-equivalent basis) |
$ |
68,381 |
|
|
$ |
79,729 |
|
| |
|
|
|
| Net interest
income (no tax adjustment) |
$ |
67,909 |
|
|
$ |
79,232 |
|
| Less: |
|
|
|
|
Purchase accounting adjustments |
|
(50 |
) |
|
|
175 |
|
|
Prepayment penalties and fees |
|
64 |
|
|
|
281 |
|
|
PPP Income |
|
99 |
|
|
|
728 |
|
| Adjusted net
interest income (non-GAAP) |
$ |
67,796 |
|
|
$ |
78,048 |
|
| |
|
|
|
| Average
interest-earning assets |
$ |
2,407,251 |
|
|
$ |
2,396,972 |
|
| Average
interest-earnings asset, excluding average PPP loans |
$ |
2,405,525 |
|
|
$ |
2,391,252 |
|
| Net interest
margin (no tax adjustment) |
|
2.82 |
% |
|
|
3.31 |
% |
| Net interest
margin, tax-equivalent |
|
2.84 |
% |
|
|
3.33 |
% |
| |
|
|
|
|
|
|
|
| |
For the twelve months ended |
| |
12/31/2023 |
|
12/31/2022 |
| |
(In thousands) |
| |
|
|
|
|
Income Before Income Taxes (GAAP) |
$ |
19,584 |
|
|
$ |
34,629 |
|
| Provision
for credit losses |
|
872 |
|
|
|
700 |
|
| PPP
Income |
|
(99 |
) |
|
|
(728 |
) |
| Gain on
bank-owned life insurance death benefit |
|
(778 |
) |
|
|
- |
|
| Loss (gain)
on defined benefit plan termination |
|
1,143 |
|
|
|
(2,807 |
) |
| Income
Before Taxes, Provision, PPP Income, Bank-Owned Life Insurance
Death Benefit and Defined Benefit Termination (non-GAAP) |
$ |
20,722 |
|
|
$ |
31,794 |
|
| |
|
|
|
| Adjusted
Efficiency Ratio: |
|
|
|
| Non-interest
Expense (GAAP) |
$ |
58,350 |
|
|
$ |
57,235 |
|
| Non-interest
Expense for Adjusted Efficiency Ratio (non-GAAP) |
$ |
58,350 |
|
|
$ |
57,235 |
|
| |
|
|
|
| Net Interest
Income (GAAP) |
$ |
67,909 |
|
|
$ |
79,232 |
|
| |
|
|
|
| Non-interest
Income (GAAP) |
$ |
10,897 |
|
|
$ |
13,332 |
|
| Non-GAAP
adjustments: |
|
|
|
|
Loss on disposal of premises and equipment |
|
3 |
|
|
|
4 |
|
|
Unrealized losses on marketable equity securities |
|
1 |
|
|
|
717 |
|
|
Gain on bank-owned life insurance death benefit |
|
(778 |
) |
|
|
- |
|
|
Gain on non-marketable equity investments |
|
(590 |
) |
|
|
(422 |
) |
|
Loss (gain) on defined benefit plan curtailment |
|
1,143 |
|
|
|
(2,807 |
) |
| Non-interest
Income for Adjusted Efficiency Ratio (non-GAAP) |
$ |
10,676 |
|
|
$ |
10,824 |
|
| Total
Revenue for Adjusted Efficiency Ratio (non-GAAP) |
$ |
78,585 |
|
|
$ |
90,056 |
|
| |
|
|
|
| Efficiency
Ratio (GAAP) |
|
74.04 |
% |
|
|
61.83 |
% |
| |
|
|
|
| Adjusted
Efficiency Ratio (Non-interest Expense for Adjusted Efficiency
Ratio (non-GAAP)/Total Revenue for Adjusted Efficiency Ratio
(non-GAAP)) |
|
74.25 |
% |
|
|
63.55 |
% |
| |
|
|
|
|
|
|
|
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
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