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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): October 23, 2024
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 October 23, 2024,
Western New England Bancorp, Inc. (the “Company”) issued a press release announcing its financial results for the quarter
and nine months ended September 30, 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 October 23, 2024,
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.
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: October 23, 2024
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 AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND DECLARES QUARTERLY CASH DIVIDEND
Westfield, Massachusetts, October 23,
2024: 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 nine months
ended September 30, 2024. For the three months ended September 30, 2024, the Company reported net income of $1.9 million, or $0.09
per diluted share, compared to net income of $4.5 million, or $0.21 per diluted share, for the three months ended September 30,
2023. On a linked quarter basis, net income was $1.9 million, or $0.09 per diluted share, as compared to net income of $3.5 million,
or $0.17 per diluted share, for the three months ended June 30, 2024. For the nine months ended September 30, 2024, net income
was $8.4 million, or $0.40 per diluted share, compared to net income of $12.6 million, or $0.58 per diluted share, for the nine
months ended September 30, 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 November 21, 2024 to shareholders of record on November 7, 2024.
James C. Hagan, President and Chief Executive
Officer, commented, “We believe our Company continues to be well positioned with strong capital and access to various liquidity
sources. Our financial performance has been largely impacted by the unprecedented interest rate cycle and higher funding costs
in response to the sustained increase in interest rates over the last 18-24 months. While it remains unclear whether the recent
decrease in interest rates represents an end to this trend, the balance sheet is positioned to benefit from this decrease and the
challenge will begin to subside as our liabilities begin to reprice lower. As we continue to manage the balance sheet in this uncertain
interest rate environment, we remain focused on expense management initiatives to mitigate top line pressures and improve efficiencies
over the Company’s long-term. The Company also continues to focus on our core business to grow loans and deposits as well
as retention of our customers. Total deposits increased $80.5 million, or 3.8%, and total loans increased $21.7 million, or 1.1%,
from year-end. Our asset quality remains strong, with nonperforming loans to total loans of 0.24% at September 30, 2024.”
Hagan concluded, “The Company is
considered to be well-capitalized as defined by the regulators and we remain disciplined in our capital management strategies.
During the nine months ended September 30, 2024, we repurchased 714,282 shares of the Company’s common stock at an average
price per share of $7.61. We continue to believe that buying back shares represents a prudent use of the Company’s capital
and 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
$0.44, or 4.0%, while tangible book value per share increased $0.43, or 4.2%, to $10.73. The management team remains focused and
well positioned to serve our community and to enhance shareholder value over the long term.”
Key Highlights:
Loans and Deposits
At September 30, 2024, total loans were
$2.0 billion and increased $21.7 million, or 1.1%, from December 31, 2023. The increase in total loans was due to an increase in
commercial real estate loans of $3.0 million, or 0.3%, an increase in residential real estate loans, including home equity loans,
of $26.4 million, or 3.7%, partially offset by a decrease in commercial and industrial loans of $7.0 million, or 3.2%.
At September 30, 2024, total deposits were
$2.2 billion and increased $80.5 million, or 3.8%, from December 31, 2023. Core deposits, which the Company defines as all deposits
except time deposits, decreased $8.3 million, or 0.5%, from $1.5 billion, or 71.5% of total deposits, at December 31, 2023, to
$1.5 billion, or 68.5% of total deposits at September 30, 2024. Time deposits increased $88.8 million, or 14.5%, from $611.4 million
at December 31, 2023 to $700.2 million at September 30, 2024. Brokered time deposits, which are included in time deposits, totaled
$1.7 million at September 30, 2024 and at December 31, 2023. The loan-to-deposit ratio decreased from 94.6% at December 31, 2023
to 92.1% at September 30, 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 September 30, 2024, the Company had $1.1 billion in immediately available liquidity, compared to $615.0 million
in uninsured deposits, or 27.7% of total deposits, representing a coverage ratio of 183%. 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 Loan Losses and Credit
Quality
At September 30, 2024, the allowance for
credit losses was $20.0 million, or 0.97% of total loans and 409.5% 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 September 30, 2024, nonperforming loans totaled $4.9
million, or 0.24% of total loans, compared to $6.4 million, or 0.32% of total loans, at December 31, 2023. Total delinquent loans
decreased $1.7 million, or 28.3%, from $6.0 million, or 0.30% of total loans, at December 31, 2023 to $4.3 million, or 0.21% of
total loans, at September 30, 2024. At September 30, 2024 and December 31, 2023, the Company did not have any other real estate
owned.
Net Interest Margin
The net interest margin was 2.40% for the
three months ended September 30, 2024 compared to 2.42% for the three months ended June 30, 2024. The net interest margin, on a
tax-equivalent basis, was 2.42% for the three months ended September 30, 2024, compared to 2.44% for the three months ended June
30, 2024.
Stock Repurchase Program
On June 10, 2024, the Company announced
the completion of its previously authorized stock repurchase plan (the “2022 Plan”) pursuant to which the Company was
authorized to repurchase up to 1.1 million shares, or approximately 5% of its outstanding common stock, as of the date the 2022
Plan was adopted. 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 September
30, 2024, the Company repurchased 244,441 shares of common stock under the 2024 Plan, with an average price per share of $8.18.
During the nine months ended September 30, 2024, the Company repurchased 714,282 shares of common stock with an average price per
share of $7.61. As of September 30, 2024, there were 692,318 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 $11.40 at September 30, 2024 compared to $10.96 at December 31, 2023, while tangible book value per share, a non-GAAP financial
measure, increased $0.43, or 4.2%, from $10.30 at December 31, 2023 to $10.73 at September 30, 2024. See pages 19-21 for the related
tangible book value calculation and a reconciliation of GAAP to non-GAAP financial measures.
Net Income for the Three Months Ended
September 30, 2024 Compared to the Three Months Ended June 30, 2024
The Company reported net income of $1.9
million, or $0.09 per diluted share, for the three months ended September 30, 2024, compared to net income of $3.5 million, or
$0.17 per diluted share, for the three months ended June 30, 2024. Net interest income increased $258,000, or 1.8%, the provision
for credit losses increased $1.2 million, non-interest income decreased $693,000, or 18.1%, and non-interest expense increased
$92,000, or 0.6%. Return on average assets and return on average equity were 0.29% and 3.19%, respectively, for the three months
ended September 30, 2024, compared to 0.55% and 6.03%, respectively, for the three months ended June 30, 2024.
Net Interest Income and Net Interest
Margin
On a sequential quarter basis, net interest
income, our primary driver of revenues, increased $258,000, or 1.8%, to $14.7 million for the three months ended September 30,
2024, from $14.5 million for the three months ended June 30, 2024. The increase in net interest income was primarily due to an
increase in interest income of $1.0 million, or 3.9%, partially offset by an increase in interest expense of $780,000, or 6.3%.
The net interest margin was 2.40% for the
three months ended September 30, 2024, compared to 2.42% for the three months ended June 30, 2024. The net interest margin, on
a tax-equivalent basis, was 2.42% for the three months ended September 30, 2024, compared to 2.44% for the three months ended June
30, 2024. 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 by an increase in the average yield on interest-earning assets. During the three months ended September
30, 2024 and the three months ended June 30, 2024, the Company had a fair value hedge which contributed to an increase in the net
interest margin of seven basis points. Excluding the interest income attributed to the fair value hedge, the net interest margin
was 2.33% and 2.35%, for the three months ended September 30, 2024 and the three months ended June 30, 2024, respectively. The
fair value hedge is scheduled to mature in October of 2024.
The average yield on interest-earning assets,
without the impact of tax-equivalent adjustments, was 4.54% for the three months ended September 30, 2024, compared to 4.49% for
the three months ended June 30, 2024. The average loan yield, without the impact of tax-equivalent adjustments, was 4.90% for the
three months ended September 30, 2024, compared to 4.85% for the three months ended June 30, 2024. During the three months ended
September 30, 2024, average interest-earning assets increased $40.6 million, or 1.7% to $2.4 billion, primarily due to an increase
in average loans of $21.5 million, or 1.1%, an increase in average short-term investments, consisting of cash and cash equivalents,
$17.7 million, or 123.6%, and an increase in average other investments of $1.6 million, or 11.0%.
The average cost of total funds, including
non-interest bearing accounts and borrowings, increased eight basis points from 2.16% for the three months ended June 30, 2024
to 2.24% for the three months ended September 30, 2024. The average cost of core deposits, which the Company defines as all deposits
except time deposits, increased six basis points to 0.93% for the three months ended September 30, 2024, from 0.87% for the three
months ended June 30, 2024. The average cost of time deposits increased five basis points from 4.39% for the three months ended
June 30, 2024 to 4.44% for the three months ended September 30, 2024. The average cost of borrowings, including subordinated debt,
increased five basis points from 5.00% for the three months ended June 30, 2024 to 5.05% for the three months ended September 30,
2024. Average demand deposits, an interest-free source of funds, increased $10.4 million, or 1.9%, from $548.8 million, or 25.7%
of total average deposits, for the three months ended June 30, 2024, to $559.2 million, or 25.7% of total average deposits, for
the three months ended September 30, 2024.
Provision for (Reversal of) Credit Losses
During the three months ended September
30, 2024, the Company recorded a provision for credit losses of $941,000, compared to a reversal for credit losses of $294,000
during the three months ended June 30, 2024. The provision for credit losses includes a provision for credit losses on loans of
$609,000 and a reserve on unfunded loan commitments of $332,000. The increase in the provision for 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
growth in the loan portfolio. 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 increase in reserves
on unfunded loan commitments was due to an increase in commercial real estate unfunded loan commitments of $33.5 million, or 20.7%,
from $161.8 million at June 30, 2024 to $195.3 million at September 30, 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 September
30, 2024, the Company recorded net charge-offs of $98,000, compared to net charge-offs of $10,000 for the three months ended June
30, 2024.
Non-Interest Income
On a sequential quarter basis, non-interest
income decreased $693,000, or 18.1%, to $3.1 million for the three months ended September 30, 2024, from $3.8 million for the three
months ended June 30, 2024. Service charges and fees on deposits were $2.3 million for the three months ended September 30, 2024
and the three months ended June 30, 2024. Income from bank-owned life insurance (“BOLI”) decreased $32,000, or 6.4%,
from the three months ended June 30, 2024 to $470,000, for the three months ended September 30, 2024. During the three months ended
September 30, 2024, the Company reported $74,000 in other income from loan-level swap fees on commercial loans and did not have
comparable income during the three months ended June 30, 2024. During the three months ended September 30, 2024, the Company sold
$20.1 million in fixed rate residential loans to the secondary market and reported income from mortgage banking activities of $246,000
and did not have comparable income during the three months ended June 30, 2024. During the three months ended September 30, 2024
and the three months ended June 30, 2024, the Company reported unrealized gains on marketable equity securities of $10,000 and
$4,000, respectively. During the three months ended June 30, 2024, the Company reported a gain on non-marketable equity investments
of $987,000 and did not have comparable gains or losses from non-marketable equity investments during the three months ended September
30, 2024.
Non-Interest Expense
For the three months ended September 30,
2024, non-interest expense increased $92,000, or 0.6%, to $14.4 million from $14.3 million for the three months ended June 30,
2024. Salaries and employee benefits increased $211,000, or 2.7%, to $8.1 million, software expenses increased $46,000, or 8.1%,
data processing expense increased $23,000, or 2.7%, FDIC insurance expense increased $15,000, or 4.6%, and debit card and ATM processing
fees increased $6,000, or 0.9%. During the same period, these increases were partially offset by a decrease in professional fees
of $41,000, or 7.1%, a decrease in advertising expense of $68,000, or 20.1%, a decrease in occupancy expense of $1,000, or 0.1%,
and a decrease in other non-interest expense of $99,000, or 7.0%.
For the three months ended September 30,
2024, the efficiency ratio was 80.6%, compared to 78.2% for the three months ended June 30, 2024. For the three months ended September
30, 2024, the adjusted efficiency ratio, a non-GAAP financial measure, was 80.7% compared to 82.7% for the three months ended June
30, 2024. The increases in the efficiency ratio and the adjusted efficiency ratio were driven by lower revenues, defined as the
sum of net interest income and non-interest income, during the three months ended September 30, 2024. See pages 19-21 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 September 30, 2024 was $618,000, or an effective tax rate of 24.5%, compared to $771,000, or an effective tax rate of 18.0%,
for the three months ended June 30, 2024. The increase in the effective tax rate for the three months ended September 30, 2024
was driven by the Company’s projections of pre-tax income for the year ending December 31, 2024.
Net Income for the Three Months Ended
September 30, 2024 Compared to the Three Months Ended September 30, 2023.
The Company reported net income of $1.9
million, or $0.09 per diluted share, for the three months ended September 30, 2024, 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 $1.7 million, or 10.1%, provision
for credit losses increased $587,000, non-interest income decreased $471,000, or 13.0%, and non-interest expense increased $288,000,
or 2.0%, during the same period. Return on average assets and return on average equity were 0.29% and 3.19%, respectively, for
the three months ended September 30, 2024, compared to 0.70% and 7.60%, respectively, for the three months ended September 30,
2023.
Net Interest Income and Net Interest
Margin
Net interest income decreased $1.7 million,
or 10.1%, to $14.7 million, for the three months ended September 30, 2024, from $16.4 million for the three months ended September
30, 2023. The decrease in net interest income was due to an increase in interest expense of $3.6 million, or 37.8%, partially offset
by an increase in interest and dividend income of $1.9 million, or 7.5%. Interest expense on deposits increased $3.5 million, or
44.9%, and interest expense on borrowings increased $133,000, or 7.3%. The increase in interest expense was a result of competitive
pricing on deposits due to the continued higher 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 2.40% for the
three months ended September 30, 2024, compared to 2.70% for the three months ended September 30, 2023. The net interest margin,
on a tax-equivalent basis, was 2.42% for the three months ended September 30, 2024, 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 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 September 30, 2024 and the
three months ended September 30, 2023, the Company had a fair value hedge which contributed to an increase in the net interest
margin of seven basis points. Excluding the interest income from the fair value hedge, the net interest margin was 2.33% and 2.64%,
for the three months ended September 30, 2024 and three months ended September 30, 2023, respectively. The fair value hedge is
scheduled to mature in October of 2024.
The average yield on interest-earning assets,
without the impact of tax-equivalent adjustments, was 4.54% for the three months ended September 30, 2024, compared to 4.28% for
the three months ended September 30, 2023. The average loan yield, without the impact of tax-equivalent adjustments, was 4.90%
for the three months ended September 30, 2024, compared to 4.64% for the three months ended September 30, 2023. During the three
months ended September 30, 2024, average interest-earning assets increased $38.2 million, or 1.6% to $2.4 billion, primarily due
to an increase in average loans of $31.3 million, or 1.6%, an increase in average short-term investments, consisting of cash and
cash equivalents, of $9.7 million, or 43.4%, an increase in average other investments of $3.7 million, or 30.8%, partially offset
by a decrease in average securities of $6.5 million, or 1.8%.
The average cost of total funds, including
non-interest bearing accounts and borrowings, increased 60 basis points from 1.64% for the three months ended September 30, 2023
to 2.24% for the three months ended September 30, 2024. The average cost of core deposits, which the Company defines as all deposits
except time deposits, increased 23 basis points to 0.93% for the three months ended September 30, 2024, from 0.70% for the three
months ended September 30, 2023. The average cost of time deposits increased 98 basis points from 3.46% for the three months ended
September 30, 2023 to 4.44% for the three months ended September 30, 2024. The average cost of borrowings, including subordinated
debt, increased 24 basis points from 4.81% for the three months ended September 30, 2023 to 5.05% for the three months ended September
30, 2024. Average demand deposits, an interest-free source of funds, decreased $32.7 million, or 5.5%, from $591.9 million, or
27.5% of total average deposits, for the three months ended September 30, 2023, to $559.2 million, or 25.7% of total average deposits,
for the three months ended September 30, 2024.
Provision for Credit Losses
During the three months ended September
30, 2024, the Company recorded a provision for credit losses of $941,000, compared to a provision for credit losses of $354,000,
during the three months ended September 30, 2023. The increase was primarily due to an increase in the loan portfolio, specifically
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 charge-offs of
$98,000 for the three months ended September 30, 2024, as compared to net charge-offs of $78,000 for the three months ended September
30, 2023.
Non-Interest Income
Non-interest income decreased $471,000,
or 13.0%, from $3.6 million for the three months ended September 30, 2023 to $3.1 million for the three months ended September
30, 2024. Service charges and fees on deposits increased $196,000, or 9.1%, and income from BOLI increased $16,000, or 3.5%, from
the three months ended September 30, 2023 to the three months ended September 30, 2024. During the three months ended September
30, 2024, the Company reported $74,000 in other income from loan-level swap fees on commercial loans and did not have comparable
income during the three months ended September 30, 2023. During the three months ended September 30, 2024, the Company reported
income of $246,000 in mortgage banking activities due to the sale of fixed rate residential loans and did not have comparable income
during the three months ended September 30, 2023. During the three months ended September 30, 2024, the Company reported $10,000
in unrealized gains of marketable equity securities and did not have comparable income during the three months ended September
30, 2023. During the three months ended September 30, 2023, the Company reported a gain on non-marketable equity investments of
$238,000 and did not have comparable non-interest income during the three months ended September 30, 2024. During the three months
ended September 30, 2023, non-interest income included a non-taxable gain of $778,000 on BOLI death benefits. The Company did not
have comparable income during the three months ended September 30, 2024. During the three months ended September 30, 2023, the
Company reported a loss on the sales of premises and equipment of $3,000 and did not have comparable expense during the three months
ended September 30, 2024.
Non-Interest Expense
For the three months ended September 30,
2024, non-interest expense increased $288,000, or 2.0%, to $14.4 million from $14.1 million, for the three months ended September
30, 2023. Salaries and employee benefits increased $157,000, or 2.0%, to $8.1 million, debit card and ATM processing fees increased
$87,000, or 15.5%, software expenses increased $83,000, or 15.7%, occupancy expense increased $58,000, or 5.0%, data processing
expense increased $45,000, or 5.5%, other non-interest income increased $54,000, or 4.3%, and furniture and equipment related expenses
increased $1,000, or 0.2%. These increases were partially offset by a decrease in professional fees of $103,000, or 16.0%, a decrease
in advertising expense of $91,000, or 25.1%, and a decrease in FDIC insurance expense of $3,000, or 0.9%.
For the three months ended September 30,
2024, the efficiency ratio was 80.6%, compared to 70.6% for the three months ended September 30, 2023. For the three months ended
September 30, 2024, the adjusted efficiency ratio, a non-GAAP financial measure, was 80.7% compared to 74.4% for the three months
ended September 30, 2023. The increases in the efficiency ratio and the non-GAAP adjusted efficiency ratio were driven by lower
revenues during the three months ended September 30, 2024, compared to the three months ended September 30, 2023. See pages 19-21
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 September 30, 2024 was $618,000, or an effective tax rate of 24.5%, compared to $1.0 million, or an effective tax rate of
18.7%, for the three months ended September 30, 2023. The effective tax rate for the three months ended September 30, 2023 included
$778,000 in non-taxable BOLI death benefits.
Net Income for the Nine Months Ended
September 30, 2024 Compared to the Nine Months Ended September 30, 2023
For the nine months ended September 30,
2024, the Company reported net income of $8.4 million, or $0.40 per diluted share, compared to $12.6 million, or $0.58 per diluted
share, for the nine months ended September 30, 2023. Return on average assets and return on average equity were 0.44% and 4.74%
for the nine months ended September 30, 2024, respectively, compared to 0.66% and 7.19% for the nine months ended September 30,
2023, respectively.
Net Interest Income and Net Interest
Margin
During the nine months ended September
30, 2024, net interest income decreased $7.2 million, or 13.9%, to $44.5 million, compared to $51.7 million for the nine months
ended September 30, 2023. The decrease in net interest income was due to an increase in interest expense of $14.1 million, or 62.3%,
partially offset by an increase in interest and dividend income of $6.9 million, or 9.3%. The $14.1 million increase in interest
expense was primarily due to an increase of $12.9 million, or 72.3%, in interest expense on deposits as a result of competitive
pricing and an unfavorable shift in the deposit mix from low cost core deposits to high cost time deposits.
The net interest margin for the nine months
ended September 30, 2024 was 2.46%, compared to 2.88% during the nine months ended September 30, 2023. The net interest margin,
on a tax-equivalent basis, was 2.48% for the nine months ended September 30, 2024, compared to 2.90% for the nine 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 and the unfavorable shift in the deposit mix from low cost core to high cost time deposits, which was partially offset
by an increase in the average yield on interest-earning assets. During the nine months ended September 30, 2024 and the nine months
ended September 30, 2023, the Company had a fair value hedge which contributed to an increase in the net interest margin of seven
and three basis points, respectively. Excluding the interest income from the fair value hedge, the net interest margin was 2.39%
and 2.85%, for the nine months ended September 30, 2024 and the nine months ended September 30, 2023, respectively. The fair value
hedge is scheduled to mature in October of 2024.
The average yield on interest-earning assets,
without the impact of tax-equivalent adjustments, was 4.49% for the nine months ended September 30, 2024, compared to 4.14% for
the nine months ended September 30, 2023. The average loan yield, without the impact of tax-equivalent adjustments, was 4.86% for
the nine months ended September 30, 2024, compared to 4.49% for the nine months ended September 30, 2023. During the nine months
ended September 30, 2024, average interest-earning assets increased $14.5 million, or 0.6%, to $2.4 billion, from the same period
in 2023. The increase was primarily due to an increase in average loans of $23.4 million, or 1.2%, an increase in average short-term
investments, consisting of cash and cash equivalents, of $5.7 million, or 44.2%, and an increase in other interest-earning assets
of $1.7 million, or 13.7%, partially offset by a decrease in average securities of $16.3 million, or 4.4%.
The average cost of total funds, including
non-interest bearing accounts and borrowings, increased 80 basis points from 1.32% for the nine months ended September 30, 2023
to 2.12% for the nine months ended September 30, 2024. The average cost of core deposits, which the Company defines as all deposits
except time deposits, increased 24 basis points to 0.86% for the nine months ended September 30, 2024, from 0.62% for the nine
months ended September 30, 2023. The average cost of time deposits increased 160 basis points from 2.72% for the nine months ended
September 30, 2023 to 4.32% for the nine months ended September 30, 2024. The average cost of borrowings, including subordinated
debt, increased 15 basis points from 4.84% for the nine months ended September 30, 2023 to 4.99% for the nine months ended September
30, 2024. Average demand deposits, an interest-free source of funds, decreased $52.1 million, or 8.6%, from $607.3 million, or
28.0% of total average deposits, for the nine months ended September 30, 2023, to $555.3 million, or 25.8% of total average deposits,
for the nine months ended September 30, 2024.
Provision for Credit Losses
During the nine months ended September
30, 2024, the Company recorded a provision for credit losses of $97,000, compared to a provision for credit losses of $386,000
during the nine months ended September 30, 2023. The decrease 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.
During the nine months ended September
30, 2024, the Company recorded net charge-offs of $41,000 compared to net charge-offs of $1.9 million for the nine months ended
September 30, 2023. The charge-offs during the nine months ended September 30, 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 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.
Non-Interest Income
For the nine months ended September 30,
2024, non-interest income increased $1.5 million, or 17.9%, from $8.2 million during the nine months ended September 30, 2023 to
$9.6 million. Service charges and fees on deposits increased $328,000, or 5.0%, and income from BOLI increased $37,000, or 2.7%.
During the nine months ended September
30, 2024, the Company reported a gain of $987,000 on non-marketable equity investments, compared to a gain of $590,000 during the
nine months ended September 30, 2023. During the nine months ended September 30, 2024, the Company reported income of $246,000
from mortgage banking activities due to the sale of fixed rate residential real estate loans and did not have comparable income
during the nine months ended September 30, 2023. During the nine months ended September 30, 2024, the Company reported $74,000
in other income from loan-level swap fees on commercial loans and did not have comparable income during the nine months ended September
30, 2023. During the nine months ended September 30, 2024, the Company reported $22,000 in unrealized gains of marketable equity
securities and did not have comparable income during the nine months ended September 30, 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. During
the nine months ended September 30, 2024, the Company reported a loss on the sales of premises and equipment of $6,000 compared
to $3,000 during the nine months ended September 30, 2023. During the nine months ended September 30, 2023, the Company recorded
a $1.1 million final termination expense related to the defined benefit pension plan (the “DB Plan”) termination. The
Company did not have comparable income or expense during the nine months ended September 30, 2024. During the nine months ended
September 30, 2023, non-interest income included a non-taxable gain of $778,000 on BOLI death benefits. The Company did not have
comparable income during the nine months ended September 30, 2024.
Non-Interest Expense
For the nine months ended September 30,
2024, non-interest expense decreased $63,000, or 0.1%, to $43.5 million, compared to $43.6 million for the nine months ended September
30, 2023. The decrease in non-interest expense was primarily due to a decrease in professional fees of $513,000, or 23.3%, a decrease
in salaries and employee benefits of $218,000, or 0.9%, a decrease in advertising expense of $159,000, or 14.2%, a decrease in
other non-interest expense of $120,000, or 2.9%, and a decrease in furniture and equipment related expense of $10,000, or 0.7%.
These decreases were partially offset by an increase in software related expenses of $309,000, or 19.7%, an increase in debit card
and ATM processing fees of $264,000, or 16.7%, an increase in data processing of $208,000, or 8.8%, an increase in FDIC insurance
expense of $88,000, or 9.0%, and an increase in occupancy expense of $88,000, or 2.4%.
For the nine months ended September 30,
2024, the efficiency ratio was 80.3%, compared to 72.7% for the nine months ended September 30, 2023. For the nine months ended
September 30, 2024, the adjusted efficiency ratio, a non-GAAP financial measure, was 81.8% compared to 73.0% for the nine months
ended September 30, 2023. The increases in the efficiency ratio and the non-GAAP adjusted efficiency ratio were driven by lower
revenues during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. See pages 19-21
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 nine months
ended September 30, 2024 was $2.2 million, representing an effective tax rate of 20.9%, compared to $3.4 million, representing
an effective tax rate of 21.3%, for nine months ended September 30, 2023.
Balance Sheet
At September 30, 2024, total assets were
$2.6 billion, an increase of $75.9 million, or 3.0%, from December 31, 2023. The increase in total assets was primarily due to
an increase in cash and cash equivalents of $44.0 million, or 152.4%, an increase in total loans of $21.7 million, or 1.1%, and
an increase in investment securities of $8.7 million, or 2.4%.
Investments
At September 30, 2024, the investment securities
portfolio totaled $369.4 million, or 14.0% of total assets, compared to $360.7 million, or 14.1%, of total assets, at December
31, 2023. At September 30, 2024, the Company’s available-for-sale (“AFS”) securities portfolio, recorded at fair
market value, increased $18.8 million, or 13.7%, from $137.1 million at December 31, 2023 to $155.9 million. The held-to-maturity
(“HTM”) securities portfolio, recorded at amortized cost, decreased $10.1 million, or 4.5%, from $223.4 million at
December 31, 2023 to $213.3 million at September 30, 2024.
At September 30, 2024, the Company reported
unrealized losses on the AFS securities portfolio of $24.6 million, or 13.6% of the amortized cost basis of the AFS securities
portfolio, compared to unrealized losses of $29.2 million, or 17.5% of the amortized cost basis of the AFS securities at December
31, 2023. At September 30, 2024, the Company reported unrealized losses on the HTM securities portfolio of $30.7 million, or 14.4%,
of the amortized cost basis of the HTM securities portfolio, compared to $35.7 million, or 16.0% of the amortized cost basis of
the HTM 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 September 30, 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 Company
expects to strategically redeploy available cash flows from the securities portfolio to fund loan growth and deposit outflows.
Total Loans
Total loans increased $21.7 million, or
1.1%, from December 31, 2023, to $2.0 billion at September 30, 2024. The increase in total loans was due to an increase in commercial
real estate loans of $3.0 million, or 0.3%, an increase in residential real estate loans, including home equity loans, of $26.4
million, or 3.7%, partially offset by a decrease in commercial and industrial loans of $7.0 million, or 3.2%. During the three
months ended September 30, 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:
| | |
September 30, 2024 | | |
December 31, 2023 | |
| | |
(Dollars in thousands) | |
| Commercial real estate loans: | |
| | | |
| | |
| Non-owner occupied | |
$ | 878,265 | | |
$ | 881,643 | |
| Owner-occupied | |
| 204,524 | | |
| 198,108 | |
| Total commercial real estate loans | |
| 1,082,789 | | |
| 1,079,751 | |
| | |
| | | |
| | |
| Residential real estate loans: | |
| | | |
| | |
| Residential | |
| 631,649 | | |
| 612,315 | |
| Home equity | |
| 116,923 | | |
| 109,839 | |
| Total residential real estate loans | |
| 748,572 | | |
| 722,154 | |
| | |
| | | |
| | |
| Commercial and industrial loans | |
| 210,390 | | |
| 217,447 | |
| | |
| | | |
| | |
| Consumer loans | |
| 4,631 | | |
| 5,472 | |
| Total gross loans | |
| 2,046,382 | | |
| 2,024,824 | |
| Unamortized premiums and net deferred loans fees and costs | |
| 2,620 | | |
| 2,493 | |
| Total loans | |
$ | 2,049,002 | | |
$ | 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 $4.3 million, or
0.21% of total loans, at September 30, 2024, compared to $6.0 million, or 0.30% of total loans at December 31, 2023. At September
30, 2024, nonperforming loans totaled $4.9 million, or 0.24% of total loans, compared to $6.4 million, or 0.32% of total loans,
at December 31, 2023. Total nonperforming assets totaled $4.9 million, or 0.18% of total assets, at September 30, 2024, compared
to $6.4 million, or 0.25% of total assets, at December 31, 2023. At September 30, 2024 and December 31, 2023, there were no loans
90 or more days past due and still accruing interest. At September 30, 2024 and December 31, 2023, the Company did not have any
other real estate owned.
At September 30, 2024, the allowance for
credit losses as a percentage of total loans was 0.97% as compared to 1.00% at December 31, 2023. At September 30, 2024, the allowance
for credit losses as a percentage of nonperforming loans was 409.5% as compared to 315.6% at December 31, 2023.
Total classified loans, defined as special
mention and substandard loans, increased $3.7 million, or 9.4%, from $39.5 million, or 1.9% of total loans, at December 31, 2023
to $43.2 million, or 2.1%, of total loans at September 30, 2024. 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.
Deposits
Total deposits increased $80.5 million,
or 3.8%, from $2.1 billion at December 31, 2023 to $2.2 billion at September 30, 2024. Core deposits, which the Company defines
as all deposits except time deposits, decreased $8.3 million, or 0.5%, from $1.5 billion, or 71.5% of total deposits, at December
31, 2023, to $1.5 billion, or 68.5% of total deposits, at September 30, 2024. Non-interest-bearing deposits decreased $10.9 million,
or 1.9%, to $568.7 million, money market accounts increased $1.5 million, or 0.2%, to $635.8 million, savings accounts decreased
$8.2 million, or 4.4%, to $179.2 million and interest-bearing checking accounts increased $9.3 million, or 7.1%, to $140.3 million.
Time deposits increased $88.8 million, or 14.5%, from $611.4 million at December 31, 2023 to $700.2 million at September 30, 2024.
Brokered time deposits, which are included in time deposits, totaled $1.7 million at September 30, 2024 and at December 31, 2023.
The table below is a summary of our deposit
balances for the periods noted:
| | |
September 30, 2024 | | |
June 30, 2024 | | |
December 31, 2023 | |
| | |
(Dollars in thousands) | |
| Core Deposits: | |
| | | |
| | | |
| | |
| Demand accounts | |
$ | 568,685 | | |
$ | 553,329 | | |
$ | 579,595 | |
| Interest-bearing accounts | |
| 140,332 | | |
| 149,100 | | |
| 131,031 | |
| Savings accounts | |
| 179,214 | | |
| 186,171 | | |
| 187,405 | |
| Money market accounts | |
| 635,824 | | |
| 611,501 | | |
| 634,361 | |
| Total Core Deposits | |
$ | 1,524,055 | | |
$ | 1,500,101 | | |
$ | 1,532,392 | |
| Time Deposits: | |
| 700,151 | | |
| 671,708 | | |
| 611,352 | |
| Total Deposits: | |
$ | 2,224,206 | | |
$ | 2,171,809 | | |
$ | 2,143,744 | |
During the nine months ended September
30, 2024, the Company continued to experience an unfavorable shift in deposit mix from low cost core deposits to high cost time
deposits as customers continue to migrate to higher deposit rates. 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 competing for and retaining deposits in our local market. At September 30, 2024, the Bank’s
uninsured deposits represented 27.7% of total deposits, compared to 26.8% at December 31, 2023.
FHLB and Subordinated Debt
At September 30, 2024, total borrowings
decreased $4.1 million, or 2.6%, from $156.5 million at December 31, 2023 to $152.4 million. Short-term borrowings decreased $11.7
million, or 72.7%, to $4.4 million, compared to $16.1 million at December 31, 2023. Long-term borrowings increased $7.6 million,
or 6.3%, from $120.6 million at December 31, 2023 to $128.3 million at September 30, 2024. At September 30, 2024 and December 31,
2023, borrowings also consisted of $19.7 million 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 were no outstanding balance under the BTFP at September 30, 2024.
As of September 30, 2024, the Company had
$452.0 million of additional borrowing capacity at the Federal Home Loan Bank, $404.9 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 September 30, 2024, shareholders’
equity was $240.7 million, or 9.1% of total assets, compared to $237.4 million, or 9.3% of total assets, at December 31, 2023.
The change was primarily attributable to a decrease in accumulated other comprehensive loss of $3.4 million, cash dividends paid
of $4.5 million, repurchase of shares at a cost of $5.6 million, partially offset by net income of $8.4 million. At September 30,
2024, total shares outstanding were 21,113,408.
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 was 14.4% at September 30, 2024 and 14.7% at December 31, 2023.
The Bank’s Tier 1 Leverage Ratio to adjusted average assets was 9.61% at September 30, 2024 and 9.62% at December 31, 2023.
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
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; |
| ● | 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
SUBSIDIARIES
Consolidated Statements of Net Income
and Other Data
(Dollars in thousands, except per share
data)
Unaudited)
| | |
Three Months Ended | | |
Nine Months Ended | |
| | |
September 30, | | |
June 30, | | |
March 31, | | |
December 31, | | |
September 30, | | |
September 30, | |
| | |
2024 | | |
2024 | | |
2024 | | |
2023 | | |
2023 | | |
2024 | | |
2023 | |
| INTEREST AND DIVIDEND INCOME: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Loans | |
$ | 25,134 | | |
$ | 24,340 | | |
$ | 24,241 | | |
$ | 23,939 | | |
$ | 23,451 | | |
$ | 73,715 | | |
$ | 67,230 | |
| Securities | |
| 2,121 | | |
| 2,141 | | |
| 2,114 | | |
| 2,094 | | |
| 2,033 | | |
| 6,376 | | |
| 6,276 | |
| Other investments | |
| 189 | | |
| 148 | | |
| 136 | | |
| 140 | | |
| 166 | | |
| 473 | | |
| 418 | |
| Short-term investments | |
| 396 | | |
| 173 | | |
| 113 | | |
| 597 | | |
| 251 | | |
| 682 | | |
| 424 | |
| Total interest and dividend income | |
| 27,840 | | |
| 26,802 | | |
| 26,604 | | |
| 26,770 | | |
| 25,901 | | |
| 81,246 | | |
| 74,348 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| INTEREST EXPENSE: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Deposits | |
| 11,165 | | |
| 10,335 | | |
| 9,293 | | |
| 8,773 | | |
| 7,704 | | |
| 30,793 | | |
| 17,876 | |
| Short-term borrowings | |
| 71 | | |
| 186 | | |
| 283 | | |
| 123 | | |
| 117 | | |
| 540 | | |
| 1,466 | |
| Long-term debt | |
| 1,622 | | |
| 1,557 | | |
| 1,428 | | |
| 1,444 | | |
| 1,444 | | |
| 4,607 | | |
| 2,513 | |
| Subordinated debt | |
| 254 | | |
| 254 | | |
| 254 | | |
| 254 | | |
| 253 | | |
| 762 | | |
| 760 | |
| Total interest expense | |
| 13,112 | | |
| 12,332 | | |
| 11,258 | | |
| 10,594 | | |
| 9,518 | | |
| 36,702 | | |
| 22,615 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net interest and dividend income | |
| 14,728 | | |
| 14,470 | | |
| 15,346 | | |
| 16,176 | | |
| 16,383 | | |
| 44,544 | | |
| 51,733 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| PROVISION FOR (REVERSAL OF) CREDIT LOSSES | |
| 941 | | |
| (294 | ) | |
| (550 | ) | |
| 486 | | |
| 354 | | |
| 97 | | |
| 386 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net interest and dividend income after provision for (reversal of) credit losses | |
| 13,787 | | |
| 14,764 | | |
| 15,896 | | |
| 15,690 | | |
| 16,029 | | |
| 44,447 | | |
| 51,347 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| NON-INTEREST INCOME: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Service charges and fees on deposits | |
| 2,341 | | |
| 2,341 | | |
| 2,219 | | |
| 2,283 | | |
| 2,145 | | |
| 6,901 | | |
| 6,573 | |
| Income from bank-owned life insurance | |
| 470 | | |
| 502 | | |
| 453 | | |
| 432 | | |
| 454 | | |
| 1,425 | | |
| 1,388 | |
| Unrealized gain (loss) on marketable equity securities | |
| 10 | | |
| 4 | | |
| 8 | | |
| (1 | ) | |
| — | | |
| 22 | | |
| — | |
| Gain on sale of mortgages | |
| 246 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 246 | | |
| — | |
| Gain on non-marketable equity investments | |
| — | | |
| 987 | | |
| — | | |
| — | | |
| 238 | | |
| 987 | | |
| 590 | |
| Loss on disposal of premises and equipment | |
| — | | |
| — | | |
| (6 | ) | |
| — | | |
| (3 | ) | |
| (6 | ) | |
| (3 | ) |
| Loss on defined benefit plan termination | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (1,143 | ) |
| Gain on bank-owned life insurance death benefit | |
| — | | |
| — | | |
| — | | |
| — | | |
| 778 | | |
| — | | |
| 778 | |
| Other income | |
| 74 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 74 | | |
| — | |
| Total non-interest income | |
| 3,141 | | |
| 3,834 | | |
| 2,674 | | |
| 2,714 | | |
| 3,612 | | |
| 9,649 | | |
| 8,183 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| NON-INTEREST EXPENSE: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Salaries and employees benefits | |
| 8,112 | | |
| 7,901 | | |
| 8,244 | | |
| 7,739 | | |
| 7,955 | | |
| 24,257 | | |
| 24,475 | |
| Occupancy | |
| 1,217 | | |
| 1,218 | | |
| 1,363 | | |
| 1,198 | | |
| 1,159 | | |
| 3,798 | | |
| 3,710 | |
| Furniture and equipment | |
| 483 | | |
| 483 | | |
| 484 | | |
| 494 | | |
| 482 | | |
| 1,450 | | |
| 1,460 | |
| Data processing | |
| 869 | | |
| 846 | | |
| 862 | | |
| 788 | | |
| 824 | | |
| 2,577 | | |
| 2,369 | |
| Software | |
| 612 | | |
| 566 | | |
| 699 | | |
| 598 | | |
| 529 | | |
| 1,877 | | |
| 1,568 | |
| Debit/ATM card processing expense | |
| 649 | | |
| 643 | | |
| 552 | | |
| 559 | | |
| 562 | | |
| 1,844 | | |
| 1,580 | |
| Professional fees | |
| 540 | | |
| 581 | | |
| 569 | | |
| 674 | | |
| 643 | | |
| 1,690 | | |
| 2,203 | |
| FDIC insurance | |
| 338 | | |
| 323 | | |
| 410 | | |
| 338 | | |
| 341 | | |
| 1,071 | | |
| 983 | |
| Advertising | |
| 271 | | |
| 339 | | |
| 349 | | |
| 377 | | |
| 362 | | |
| 959 | | |
| 1,118 | |
| Other | |
| 1,315 | | |
| 1,414 | | |
| 1,250 | | |
| 2,020 | | |
| 1,261 | | |
| 3,979 | | |
| 4,099 | |
| Total non-interest expense | |
| 14,406 | | |
| 14,314 | | |
| 14,782 | | |
| 14,785 | | |
| 14,118 | | |
| 43,502 | | |
| 43,565 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| INCOME BEFORE INCOME TAXES | |
| 2,522 | | |
| 4,284 | | |
| 3,788 | | |
| 3,619 | | |
| 5,523 | | |
| 10,594 | | |
| 15,965 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| INCOME TAX PROVISION | |
| 618 | | |
| 771 | | |
| 827 | | |
| 1,108 | | |
| 1,033 | | |
| 2,216 | | |
| 3,408 | |
| NET INCOME | |
$ | 1,904 | | |
$ | 3,513 | | |
$ | 2,961 | | |
$ | 2,511 | | |
$ | 4,490 | | |
$ | 8,378 | | |
$ | 12,557 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic earnings per share | |
$ | 0.09 | | |
$ | 0.17 | | |
$ | 0.14 | | |
$ | 0.12 | | |
$ | 0.21 | | |
$ | 0.40 | | |
$ | 0.58 | |
| Weighted average shares outstanding | |
| 20,804,162 | | |
| 21,056,173 | | |
| 21,180,968 | | |
| 21,253,452 | | |
| 21,560,940 | | |
| 21,013,003 | | |
| 21,631,067 | |
| Diluted earnings per share | |
$ | 0.09 | | |
$ | 0.17 | | |
$ | 0.14 | | |
$ | 0.12 | | |
$ | 0.21 | | |
$ | 0.40 | | |
$ | 0.58 | |
| Weighted average diluted shares outstanding | |
| 20,933,833 | | |
| 21,163,762 | | |
| 21,271,323 | | |
| 21,400,664 | | |
| 21,680,113 | | |
| 21,122,208 | | |
| 21,681,251 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Other Data: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Return on average assets (1) | |
| 0.29 | % | |
| 0.55 | % | |
| 0.47 | % | |
| 0.39 | % | |
| 0.70 | % | |
| 0.44 | % | |
| 0.66 | % |
| Return on average equity (1) | |
| 3.19 | % | |
| 6.03 | % | |
| 5.04 | % | |
| 4.31 | % | |
| 7.60 | % | |
| 4.74 | % | |
| 7.19 | % |
| Efficiency ratio | |
| 80.62 | % | |
| 78.20 | % | |
| 82.03 | % | |
| 78.27 | % | |
| 70.61 | % | |
| 80.27 | % | |
| 72.71 | % |
| Adjusted efficiency ratio (2) | |
| 80.67 | % | |
| 82.68 | % | |
| 82.04 | % | |
| 78.26 | % | |
| 74.38 | % | |
| 81.79 | % | |
| 72.98 | % |
| Net interest margin | |
| 2.40 | % | |
| 2.42 | % | |
| 2.57 | % | |
| 2.64 | % | |
| 2.70 | % | |
| 2.46 | % | |
| 2.88 | % |
| Net interest margin, on a fully tax-equivalent basis | |
| 2.42 | % | |
| 2.44 | % | |
| 2.59 | % | |
| 2.66 | % | |
| 2.72 | % | |
| 2.48 | % | |
| 2.90 | % |
| (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)
| | |
September 30, | | |
June 30, | | |
March 31, | | |
December 31, | | |
September 30, | |
| | |
2024 | | |
2024 | | |
2024 | | |
2023 | | |
2023 | |
| Cash and cash equivalents | |
$ | 72,802 | | |
$ | 53,458 | | |
$ | 22,613 | | |
$ | 28,840 | | |
$ | 62,267 | |
| Securities available-for-sale, at fair value | |
| 155,889 | | |
| 135,089 | | |
| 138,362 | | |
| 137,115 | | |
| 130,709 | |
| Securities held to maturity, at amortized cost | |
| 213,266 | | |
| 217,632 | | |
| 221,242 | | |
| 223,370 | | |
| 225,020 | |
| Marketable equity securities, at fair value | |
| 252 | | |
| 233 | | |
| 222 | | |
| 196 | | |
| — | |
| Federal Home Loan Bank of Boston and other restricted stock - at cost | |
| 7,143 | | |
| 7,143 | | |
| 3,105 | | |
| 3,707 | | |
| 3,063 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Loans | |
| 2,049,002 | | |
| 2,026,226 | | |
| 2,025,566 | | |
| 2,027,317 | | |
| 2,014,820 | |
| Allowance for credit losses | |
| (19,955 | ) | |
| (19,444 | ) | |
| (19,884 | ) | |
| (20,267 | ) | |
| (19,978 | ) |
| Net loans | |
| 2,029,047 | | |
| 2,006,782 | | |
| 2,005,682 | | |
| 2,007,050 | | |
| 1,994,842 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Bank-owned life insurance | |
| 76,570 | | |
| 76,100 | | |
| 75,598 | | |
| 75,145 | | |
| 74,713 | |
| Goodwill | |
| 12,487 | | |
| 12,487 | | |
| 12,487 | | |
| 12,487 | | |
| 12,487 | |
| Core deposit intangible | |
| 1,531 | | |
| 1,625 | | |
| 1,719 | | |
| 1,813 | | |
| 1,906 | |
| Other assets | |
| 71,492 | | |
| 75,521 | | |
| 76,206 | | |
| 74,848 | | |
| 79,998 | |
| TOTAL ASSETS | |
$ | 2,640,479 | | |
$ | 2,586,070 | | |
$ | 2,557,236 | | |
$ | 2,564,571 | | |
$ | 2,585,005 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total deposits | |
$ | 2,224,206 | | |
$ | 2,171,809 | | |
$ | 2,143,747 | | |
$ | 2,143,744 | | |
$ | 2,176,303 | |
| Short-term borrowings | |
| 4,390 | | |
| 6,570 | | |
| 11,470 | | |
| 16,100 | | |
| 8,890 | |
| Long-term debt | |
| 128,277 | | |
| 128,277 | | |
| 120,646 | | |
| 120,646 | | |
| 121,178 | |
| Subordinated debt | |
| 19,741 | | |
| 19,731 | | |
| 19,722 | | |
| 19,712 | | |
| 19,702 | |
| Securities pending settlement | |
| 2,513 | | |
| 102 | | |
| — | | |
| — | | |
| 2,253 | |
| Other liabilities | |
| 20,697 | | |
| 23,104 | | |
| 25,855 | | |
| 26,960 | | |
| 25,765 | |
| TOTAL LIABILITIES | |
| 2,399,824 | | |
| 2,349,593 | | |
| 2,321,440 | | |
| 2,327,162 | | |
| 2,354,091 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| TOTAL SHAREHOLDERS' EQUITY | |
| 240,655 | | |
| 236,477 | | |
| 235,796 | | |
| 237,409 | | |
| 230,914 | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | |
$ | 2,640,479 | | |
$ | 2,586,070 | | |
$ | 2,557,236 | | |
$ | 2,564,571 | | |
$ | 2,585,005 | |
WESTERN NEW ENGLAND BANCORP, INC. AND
SUBSIDIARIES
Other Data
(Dollars in thousands, except per share
data)
(Unaudited)
| | |
Three Months Ended | |
| | |
September 30, | | |
June 30, | | |
March 31, | | |
December 31, | | |
September 30, | |
| | |
2024 | | |
2024 | | |
2024 | | |
2023 | | |
2023 | |
| Shares outstanding at end of period | |
| 21,113,408 | | |
| 21,357,849 | | |
| 21,627,690 | | |
| 21,666,807 | | |
| 21,927,242 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Operating results: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net interest income | |
$ | 14,728 | | |
$ | 14,470 | | |
$ | 15,346 | | |
$ | 16,176 | | |
$ | 16,383 | |
| Provision for (reversal of) credit losses | |
| 941 | | |
| (294 | ) | |
| (550 | ) | |
| 486 | | |
| 354 | |
| Non-interest income | |
| 3,141 | | |
| 3,834 | | |
| 2,674 | | |
| 2,714 | | |
| 3,612 | |
| Non-interest expense | |
| 14,406 | | |
| 14,314 | | |
| 14,782 | | |
| 14,785 | | |
| 14,118 | |
| Income before income provision for income taxes | |
| 2,522 | | |
| 4,284 | | |
| 3,788 | | |
| 3,619 | | |
| 5,523 | |
| Income tax provision | |
| 618 | | |
| 771 | | |
| 827 | | |
| 1,108 | | |
| 1,033 | |
| Net income | |
| 1,904 | | |
| 3,513 | | |
| 2,961 | | |
| 2,511 | | |
| 4,490 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Performance Ratios: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net interest margin | |
| 2.40 | % | |
| 2.42 | % | |
| 2.57 | % | |
| 2.64 | % | |
| 2.70 | % |
| Net interest margin, on a fully tax-equivalent basis | |
| 2.42 | % | |
| 2.44 | % | |
| 2.59 | % | |
| 2.66 | % | |
| 2.72 | % |
| Interest rate spread | |
| 1.60 | % | |
| 1.66 | % | |
| 1.85 | % | |
| 1.96 | % | |
| 2.07 | % |
| Interest rate spread, on a fully tax-equivalent basis | |
| 1.62 | % | |
| 1.67 | % | |
| 1.86 | % | |
| 1.98 | % | |
| 2.09 | % |
| Return on average assets | |
| 0.29 | % | |
| 0.55 | % | |
| 0.47 | % | |
| 0.39 | % | |
| 0.70 | % |
| Return on average equity | |
| 3.19 | % | |
| 6.03 | % | |
| 5.04 | % | |
| 4.31 | % | |
| 7.60 | % |
| Efficiency ratio (GAAP) | |
| 80.62 | % | |
| 78.20 | % | |
| 82.03 | % | |
| 78.27 | % | |
| 70.61 | % |
| Adjusted efficiency ratio (non-GAAP) (1) | |
| 80.67 | % | |
| 82.68 | % | |
| 82.04 | % | |
| 78.26 | % | |
| 74.38 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Per Common Share Data: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic earnings per share | |
$ | 0.09 | | |
$ | 0.17 | | |
$ | 0.14 | | |
$ | 0.12 | | |
$ | 0.21 | |
| Earnings per diluted share | |
| 0.09 | | |
| 0.17 | | |
| 0.14 | | |
| 0.12 | | |
| 0.21 | |
| Cash dividend declared | |
| 0.07 | | |
| 0.07 | | |
| 0.07 | | |
| 0.07 | | |
| 0.07 | |
| Book value per share | |
| 11.40 | | |
| 11.07 | | |
| 10.90 | | |
| 10.96 | | |
| 10.53 | |
| Tangible book value per share (non-GAAP) (2) | |
| 10.73 | | |
| 10.41 | | |
| 10.25 | | |
| 10.30 | | |
| 9.87 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Asset Quality: | |
| | | |
| | | |
| | | |
| | | |
| | |
| 30-89 day delinquent loans | |
$ | 3,059 | | |
$ | 3,270 | | |
$ | 3,000 | | |
$ | 4,605 | | |
$ | 4,097 | |
| 90 days or more delinquent loans | |
| 1,253 | | |
| 2,280 | | |
| 1,716 | | |
| 1,394 | | |
| 1,527 | |
| Total delinquent loans | |
| 4,312 | | |
| 5,550 | | |
| 4,716 | | |
| 5,999 | | |
| 5,624 | |
| Total delinquent loans as a percentage of total loans | |
| 0.21 | % | |
| 0.27 | % | |
| 0.23 | % | |
| 0.30 | % | |
| 0.28 | % |
| Nonperforming loans | |
$ | 4,873 | | |
$ | 5,845 | | |
$ | 5,837 | | |
$ | 6,421 | | |
$ | 6,290 | |
| Nonperforming loans as a percentage of total loans | |
| 0.24 | % | |
| 0.29 | % | |
| 0.29 | % | |
| 0.32 | % | |
| 0.31 | % |
| Nonperforming assets as a percentage of total assets | |
| 0.18 | % | |
| 0.23 | % | |
| 0.23 | % | |
| 0.25 | % | |
| 0.24 | % |
| Allowance for credit losses as a percentage of nonperforming loans | |
| 409.50 | % | |
| 332.66 | % | |
| 340.65 | % | |
| 315.64 | % | |
| 317.62 | % |
| Allowance for credit losses as a percentage of total loans | |
| 0.97 | % | |
| 0.96 | % | |
| 0.98 | % | |
| 1.00 | % | |
| 0.99 | % |
| Net loan charge-offs (recoveries) | |
$ | 98 | | |
$ | 10 | | |
$ | (67 | ) | |
$ | 136 | | |
$ | 78 | |
| Net loan charge-offs (recoveries) as a percentage of average loans | |
| 0.00 | % | |
| 0.00 | % | |
| 0.00 | % | |
| 0.01 | % | |
| 0.00 | % |
| (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 September 30, 2024, June 30, 2024 and September 30, 2023 and
reflects the average yield on interest-earning assets and average cost of interest-bearing liabilities for the periods indicated.
| | |
Three Months Ended | |
| | |
September 30, 2024 | | |
June 30, 2024 | | |
September 30, 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) | |
$ | 2,038,593 | | |
$ | 25,253 | | |
| 4.93 | % | |
$ | 2,017,127 | | |
$ | 24,454 | | |
| 4.88 | % | |
$ | 2,007,267 | | |
$ | 23,568 | | |
| 4.66 | % |
| Securities(2) | |
| 354,696 | | |
| 2,121 | | |
| 2.38 | | |
| 354,850 | | |
| 2,141 | | |
| 2.43 | | |
| 361,216 | | |
| 2,033 | | |
| 2.23 | |
| Other investments | |
| 15,904 | | |
| 189 | | |
| 4.73 | | |
| 14,328 | | |
| 148 | | |
| 4.15 | | |
| 12,155 | | |
| 166 | | |
| 5.42 | |
| Short-term investments(3) | |
| 32,043 | | |
| 396 | | |
| 4.92 | | |
| 14,328 | | |
| 173 | | |
| 4.86 | | |
| 22,349 | | |
| 251 | | |
| 4.46 | |
| Total interest-earning assets | |
| 2,441,236 | | |
| 27,959 | | |
| 4.56 | | |
| 2,400,633 | | |
| 26,916 | | |
| 4.51 | | |
| 2,402,987 | | |
| 26,018 | | |
| 4.30 | |
| Total non-interest-earning assets | |
| 153,585 | | |
| | | |
| | | |
| 156,701 | | |
| | | |
| | | |
| 156,503 | | |
| | | |
| | |
| Total assets | |
$ | 2,594,821 | | |
| | | |
| | | |
$ | 2,557,334 | | |
| | | |
| | | |
$ | 2,559,490 | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| LIABILITIES AND EQUITY: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Interest-bearing liabilities | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Interest-bearing checking accounts | |
$ | 131,133 | | |
| 271 | | |
| 0.82 | | |
$ | 131,449 | | |
| 253 | | |
| 0.77 | | |
$ | 144,792 | | |
| 269 | | |
| 0.74 | |
| Savings accounts | |
| 179,844 | | |
| 38 | | |
| 0.08 | | |
| 185,690 | | |
| 51 | | |
| 0.11 | | |
| 195,020 | | |
| 41 | | |
| 0.08 | |
| Money market accounts | |
| 621,340 | | |
| 3,172 | | |
| 2.03 | | |
| 622,062 | | |
| 2,930 | | |
| 1.89 | | |
| 656,066 | | |
| 2,488 | | |
| 1.50 | |
| Time deposit accounts | |
| 688,797 | | |
| 7,684 | | |
| 4.44 | | |
| 650,054 | | |
| 7,101 | | |
| 4.39 | | |
| 563,135 | | |
| 4,906 | | |
| 3.46 | |
| Total interest-bearing deposits | |
| 1,621,114 | | |
| 11,165 | | |
| 2.74 | | |
| 1,589,255 | | |
| 10,335 | | |
| 2.62 | | |
| 1,559,013 | | |
| 7,704 | | |
| 1.96 | |
| Borrowings | |
| 153,317 | | |
| 1,947 | | |
| 5.05 | | |
| 160,484 | | |
| 1,997 | | |
| 5.00 | | |
| 149,507 | | |
| 1,814 | | |
| 4.81 | |
| Interest-bearing liabilities | |
| 1,774,431 | | |
| 13,112 | | |
| 2.94 | | |
| 1,749,739 | | |
| 12,332 | | |
| 2.83 | | |
| 1,708,520 | | |
| 9,518 | | |
| 2.21 | |
| Non-interest-bearing deposits | |
| 559,224 | | |
| | | |
| | | |
| 548,781 | | |
| | | |
| | | |
| 591,933 | | |
| | | |
| | |
| Other non-interest-bearing liabilities | |
| 23,466 | | |
| | | |
| | | |
| 24,453 | | |
| | | |
| | | |
| 24,504 | | |
| | | |
| | |
| Total non-interest-bearing liabilities | |
| 582,690 | | |
| | | |
| | | |
| 573,234 | | |
| | | |
| | | |
| 616,437 | | |
| | | |
| | |
| Total liabilities | |
| 2,357,121 | | |
| | | |
| | | |
| 2,322,973 | | |
| | | |
| | | |
| 2,324,957 | | |
| | | |
| | |
| Total equity | |
| 237,700 | | |
| | | |
| | | |
| 234,361 | | |
| | | |
| | | |
| 234,533 | | |
| | | |
| | |
| Total liabilities and equity | |
$ | 2,594,821 | | |
| | | |
| | | |
$ | 2,557,334 | | |
| | | |
| | | |
$ | 2,559,490 | | |
| | | |
| | |
| Less: Tax-equivalent adjustment(2) | |
| | | |
| (119 | ) | |
| | | |
| | | |
| (114 | ) | |
| | | |
| | | |
| (117 | ) | |
| | |
| Net interest and dividend income | |
| | | |
$ | 14,728 | | |
| | | |
| | | |
$ | 14,470 | | |
| | | |
| | | |
$ | 16,383 | | |
| | |
| Net interest rate spread(4) | |
| | | |
| | | |
| 1.60 | % | |
| | | |
| | | |
| 1.66 | % | |
| | | |
| | | |
| 2.07 | % |
| Net interest rate spread, on a tax-equivalent basis(5) | |
| | | |
| | | |
| 1.62 | % | |
| | | |
| | | |
| 1.67 | % | |
| | | |
| | | |
| 2.09 | % |
| Net interest margin(6) | |
| | | |
| | | |
| 2.40 | % | |
| | | |
| | | |
| 2.42 | % | |
| | | |
| | | |
| 2.70 | % |
| Net interest margin, on a tax-equivalent basis(7) | |
| | | |
| | | |
| 2.42 | % | |
| | | |
| | | |
| 2.44 | % | |
| | | |
| | | |
| 2.72 | % |
| Ratio of average interest-earning assets to
average interest-bearing liabilities | |
| | | |
| | | |
| 137.58 | % | |
| | | |
| | | |
| 137.20 | % | |
| | | |
| | | |
| 140.65 | % |
The following tables set forth the information relating to our
average balances and net interest income for the nine months ended September 30, 2024 and 2023 and reflect the average yield on
interest-earning assets and average cost of interest-bearing liabilities for the periods indicated.
| | |
Nine Months Ended September 30, | |
| | |
2024 | | |
2023 | |
| | |
Average Balance | | |
Interest | | |
Average Yield/ Cost(8) | | |
Average Balance | | |
Interest | | |
Average Yield/ Cost(8) | |
| | |
(Dollars in thousands) | |
| ASSETS: | |
| | |
| | |
| | |
| | |
| | |
| |
| Interest-earning assets | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Loans(1)(2) | |
$ | 2,025,858 | | |
$ | 74,058 | | |
| 4.88 | % | |
$ | 2,002,485 | | |
$ | 67,586 | | |
| 4.51 | % |
| Securities(2) | |
| 356,340 | | |
| 6,376 | | |
| 2.39 | | |
| 372,623 | | |
| 6,276 | | |
| 2.25 | |
| Other investments | |
| 14,248 | | |
| 473 | | |
| 4.43 | | |
| 12,528 | | |
| 418 | | |
| 4.46 | |
| Short-term investments(3) | |
| 18,634 | | |
| 682 | | |
| 4.89 | | |
| 12,922 | | |
| 424 | | |
| 4.39 | |
| Total interest-earning assets | |
| 2,415,080 | | |
| 81,589 | | |
| 4.51 | | |
| 2,400,558 | | |
| 74,704 | | |
| 4.16 | |
| Total non-interest-earning assets | |
| 154,894 | | |
| | | |
| | | |
| 154,525 | | |
| | | |
| | |
| Total assets | |
$ | 2,569,974 | | |
| | | |
| | | |
$ | 2,555,083 | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| LIABILITIES AND EQUITY: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Interest-bearing liabilities | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Interest-bearing checking accounts | |
$ | 132,708 | | |
| 759 | | |
| 0.76 | % | |
$ | 142,716 | | |
| 780 | | |
| 0.73 | % |
| Savings accounts | |
| 183,872 | | |
| 128 | | |
| 0.09 | | |
| 207,513 | | |
| 142 | | |
| 0.09 | |
| Money market accounts | |
| 623,216 | | |
| 8,689 | | |
| 1.86 | | |
| 711,173 | | |
| 6,813 | | |
| 1.28 | |
| Time deposit accounts | |
| 655,700 | | |
| 21,217 | | |
| 4.32 | | |
| 498,193 | | |
| 10,141 | | |
| 2.72 | |
| Total interest-bearing deposits | |
| 1,595,496 | | |
| 30,793 | | |
| 2.58 | | |
| 1,559,595 | | |
| 17,876 | | |
| 1.53 | |
| Short-term borrowings and long-term debt | |
| 158,183 | | |
| 5,909 | | |
| 4.99 | | |
| 130,796 | | |
| 4,739 | | |
| 4.84 | |
| Total interest-bearing liabilities | |
| 1,753,679 | | |
| 36,702 | | |
| 2.80 | | |
| 1,690,391 | | |
| 22,615 | | |
| 1.79 | |
| Non-interest-bearing deposits | |
| 555,253 | | |
| | | |
| | | |
| 607,338 | | |
| | | |
| | |
| Other non-interest-bearing liabilities | |
| 24,931 | | |
| | | |
| | | |
| 23,886 | | |
| | | |
| | |
| Total non-interest-bearing liabilities | |
| 580,184 | | |
| | | |
| | | |
| 631,224 | | |
| | | |
| | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total liabilities | |
| 2,333,863 | | |
| | | |
| | | |
| 2,321,615 | | |
| | | |
| | |
| Total equity | |
| 236,111 | | |
| | | |
| | | |
| 233,468 | | |
| | | |
| | |
| Total liabilities and equity | |
$ | 2,569,974 | | |
| | | |
| | | |
$ | 2,555,083 | | |
| | | |
| | |
| Less: Tax-equivalent adjustment (2) | |
| | | |
| (343 | ) | |
| | | |
| | | |
| (356 | ) | |
| | |
| Net interest and dividend income | |
| | | |
$ | 44,544 | | |
| | | |
| | | |
$ | 51,733 | | |
| | |
| Net interest rate spread (4) | |
| | | |
| | | |
| 1.70 | % | |
| | | |
| | | |
| 2.35 | % |
| Net interest rate spread, on a tax-equivalent basis (5) | |
| | | |
| | | |
| 1.71 | % | |
| | | |
| | | |
| 2.37 | % |
| Net interest margin (6) | |
| | | |
| | | |
| 2.46 | % | |
| | | |
| | | |
| 2.88 | % |
| Net interest margin, on a tax-equivalent basis (7) | |
| | | |
| | | |
| 2.48 | % | |
| | | |
| | | |
| 2.90 | % |
| Ratio of average interest-earning assets to
average interest-bearing liabilities | |
| | | |
| | | |
| 137.72 | % | |
| | | |
| | | |
| 142.01 | % |
| (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 | |
| | |
9/30/2024 | | |
6/30/2024 | | |
3/31/2024 | | |
12/31/2023 | | |
9/30/2023 | |
| | |
(Dollars in thousands) | |
| Loan interest (no tax adjustment) | |
$ | 25,134 | | |
$ | 24,340 | | |
$ | 24,241 | | |
$ | 23,939 | | |
$ | 23,451 | |
| Tax-equivalent adjustment | |
| 119 | | |
| 114 | | |
| 110 | | |
| 113 | | |
| 117 | |
| Loan interest (tax-equivalent basis) | |
$ | 25,253 | | |
$ | 24,454 | | |
$ | 24,351 | | |
$ | 24,052 | | |
$ | 23,568 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net interest income (no tax adjustment) | |
$ | 14,728 | | |
$ | 14,470 | | |
$ | 15,346 | | |
$ | 16,176 | | |
$ | 16,383 | |
| Tax equivalent adjustment | |
| 119 | | |
| 114 | | |
| 110 | | |
| 113 | | |
| 117 | |
| Net interest income (tax-equivalent basis) | |
$ | 14,847 | | |
$ | 14,584 | | |
$ | 15,456 | | |
$ | 16,289 | | |
$ | 16,500 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Average interest-earning assets | |
$ | 2,441,236 | | |
$ | 2,400,633 | | |
$ | 2,403,086 | | |
$ | 2,427,112 | | |
$ | 2,402,987 | |
| Net interest margin (no tax adjustment) | |
| 2.40 | % | |
| 2.42 | % | |
| 2.57 | % | |
| 2.64 | % | |
| 2.70 | % |
| Net interest margin, tax-equivalent | |
| 2.42 | % | |
| 2.44 | % | |
| 2.59 | % | |
| 2.66 | % | |
| 2.72 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Book Value per Share (GAAP) | |
$ | 11.40 | | |
$ | 11.07 | | |
$ | 10.90 | | |
$ | 10.96 | | |
$ | 10.53 | |
| Non-GAAP adjustments: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Goodwill | |
| (0.59 | ) | |
| (0.58 | ) | |
| (0.58 | ) | |
| (0.58 | ) | |
| (0.57 | ) |
| Core deposit intangible | |
| (0.08 | ) | |
| (0.08 | ) | |
| (0.07 | ) | |
| (0.08 | ) | |
| (0.09 | ) |
| Tangible Book Value per Share (non-GAAP) | |
$ | 10.73 | | |
$ | 10.41 | | |
$ | 10.25 | | |
$ | 10.30 | | |
$ | 9.87 | |
| | |
For the quarter ended | |
| | |
9/30/2024 | | |
6/30/2024 | | |
3/31/2024 | | |
12/31/2023 | | |
9/30/2023 | |
| | |
(Dollars in thousands) | |
| Efficiency Ratio: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Non-interest Expense (GAAP) | |
$ | 14,406 | | |
$ | 14,314 | | |
$ | 14,782 | | |
$ | 14,785 | | |
$ | 14,118 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net Interest Income (GAAP) | |
$ | 14,728 | | |
$ | 14,470 | | |
$ | 15,346 | | |
$ | 16,176 | | |
$ | 16,383 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Non-interest Income (GAAP) | |
$ | 3,141 | | |
$ | 3,834 | | |
$ | 2,674 | | |
$ | 2,714 | | |
$ | 3,612 | |
| Non-GAAP adjustments: | |
| | | |
| | | |
| | | |
| | | |
| | |
| Unrealized (gains) losses on marketable equity securities | |
| (10 | ) | |
| (4 | ) | |
| (8 | ) | |
| 1 | | |
| — | |
| Gain on non-marketable equity investments | |
| — | | |
| (987 | ) | |
| — | | |
| — | | |
| (238 | ) |
| Loss on disposal of premises and equipment | |
| — | | |
| — | | |
| 6 | | |
| — | | |
| 3 | |
| Gain on bank-owned life insurance death benefit | |
| — | | |
| — | | |
| — | | |
| — | | |
| (778 | ) |
| Non-interest Income for Adjusted Efficiency Ratio (non-GAAP) | |
$ | 3,131 | | |
$ | 2,843 | | |
$ | 2,672 | | |
$ | 2,715 | | |
$ | 2,599 | |
| Total Revenue for Adjusted Efficiency Ratio (non-GAAP) | |
$ | 17,859 | | |
$ | 17,313 | | |
$ | 18,018 | | |
$ | 18,891 | | |
$ | 18,982 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Efficiency Ratio (GAAP) | |
| 80.62 | % | |
| 78.20 | % | |
| 82.03 | % | |
| 78.27 | % | |
| 70.61 | % |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Adjusted Efficiency Ratio (Non-interest Expense (GAAP)/Total Revenue for Adjusted Efficiency Ratio (non-GAAP)) | |
| 80.67 | % | |
| 82.68 | % | |
| 82.04 | % | |
| 78.26 | % | |
| 74.38 | % |
| | |
For the nine months ended | |
| | |
9/30/2024 | | |
9/30/2023 | |
| | |
(Dollars in thousands) | |
| Loan income (no tax adjustment) | |
$ | 73,715 | | |
$ | 67,230 | |
| Tax-equivalent adjustment | |
| 343 | | |
| 356 | |
| Loan income (tax-equivalent basis) | |
$ | 74,058 | | |
$ | 67,586 | |
| | |
| | | |
| | |
| Net interest income (no tax adjustment) | |
$ | 44,544 | | |
$ | 51,733 | |
| Tax equivalent adjustment | |
| 343 | | |
| 356 | |
| Net interest income (tax-equivalent basis) | |
$ | 44,887 | | |
$ | 52,089 | |
| | |
| | | |
| | |
| Average interest-earning assets | |
$ | 2,415,080 | | |
$ | 2,400,558 | |
| Net interest margin (no tax adjustment) | |
| 2.46 | % | |
| 2.88 | % |
| Net interest margin, tax-equivalent | |
| 2.48 | % | |
| 2.90 | % |
| | |
| | | |
| | |
| Adjusted Efficiency Ratio: | |
| | | |
| | |
| Non-interest Expense (GAAP) | |
$ | 43,502 | | |
$ | 43,565 | |
| | |
| | | |
| | |
| Net Interest Income (GAAP) | |
$ | 44,544 | | |
$ | 51,733 | |
| | |
| | | |
| | |
| Non-interest Income (GAAP) | |
$ | 9,649 | | |
$ | 8,183 | |
| | |
| | | |
| | |
| Non-GAAP adjustments: | |
| | | |
| | |
| Unrealized gains on marketable equity securities | |
| (22 | ) | |
| — | |
| Loss on disposal of premises and equipment, net | |
| 6 | | |
| 3 | |
| Gain on bank-owned life insurance | |
| — | | |
| (778 | ) |
| Gain on non-marketable equity investments | |
| (987 | ) | |
| (590 | ) |
| Loss on defined benefit plan curtailment | |
| — | | |
| 1,143 | |
| Non-interest Income for Adjusted Efficiency Ratio (non-GAAP) | |
$ | 8,646 | | |
$ | 7,961 | |
| Total Revenue for Adjusted Efficiency Ratio (non-GAAP) | |
$ | 53,190 | | |
$ | 59,694 | |
| | |
| | | |
| | |
| Efficiency Ratio (GAAP) | |
| 80.27 | % | |
| 72.71 | % |
| | |
| | | |
| | |
| Adjusted Efficiency Ratio (Non-interest Expense (GAAP)/Total Revenue for Adjusted Efficiency Ratio (non-GAAP)) | |
| 81.79 | % | |
| 72.98 | % |
Western New England Bancorp, Inc.
8-K
Exhibit 99.2
Local banking is better than ever. INVESTOR PRESENTATION 3RD 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 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 • 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 ; • 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
3 Q2024 QUARTERLY EARNINGS 6 ($ in thousands , except EPS ) 3Q2024 2Q2024 (1) 1Q2024 4Q2023 3Q2023 (2) (3) Net interest income $ 14,728 $ 14,470 $ 15,346 $ 16,176 $ 16,383 P rovision for (reversal of) credit losses 941 (294) (550) 486 354 Non - interest income 3,141 3,834 2,674 2,714 3,612 Non - interest expense 14,406 14,314 14,782 14,785 14,118 Income before taxes 2,522 4,284 3,788 3,619 5,523 Income tax expense 618 771 827 1,108 1,033 Net income $ 1,904 $ 3,513 $ 2,961 $ 2,511 $ 4,490 Diluted earnings per share (EPS) $ 0.09 $ 0.17 $ 0.14 $ 0.12 $ 0.21 Return on average assets (ROA) 0.29% 0.55% 0.47% 0.39% 0.70% Return on average equity (ROE) 3.19% 6.03% 5.04% 4.31% 7.60% Net interest margin 2.40% 2.42% 2.57% 2.64% 2.70% Net interest margin, on a tax - equivalent basis 2.42% 2.44% 2.59% 2.66% 2.72% (1) Non - interest income includes a $987,000 gain on non - marketable equity investments. (2) Non - interest income includes a non - taxable $778,000 gain on bank - owned life insurance death benefits. (3) Non - interest income includes a $238,000 gain on non - marketable equity investments.
NET INTEREST INCOME AND NET INTEREST MARGIN 7 $16.4 $16.2 $15.3 $14.5 $14.7 2.70% 2.64% 2.57% 2.42% 2.40% 2.20% 2.40% 2.60% 2.80% 3Q2023 4Q2023 1Q2024 2Q2024 3Q2024 $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 $ 258 , 000 , or 1 . 8 % , to $ 14 . 7 million for the three months ended September 30 , 2024 , from $ 14 . 5 million for the three months ended June 30 , 2024 . The increase in net interest income was primarily due to an increase in interest income of $ 1 . 0 million, or 3 . 9 % , partially offset by an increase in interest expense of $ 780 , 000 , or 6 . 3 % . The net interest margin was 2 . 40 % for the three months ended September 30 , 2024 compared to 2 . 42 % for the three months ended June 30 , 2024 . ($ in millions)
TOTAL LOANS 8 $2,007 $2,017 $2,022 $2,017 $2,039 4.66% 4.73% 4.84% 4.88% 4.93% 4.00% 4.20% 4.40% 4.60% 4.80% 5.00% 3Q2023 4Q2023 1Q2024 2Q2024 3Q2024 $1,900 $1,920 $1,940 $1,960 $1,980 $2,000 $2,020 $2,040 $2,060 $2,080 $2,100 Average Loans Outstanding Average Loans Outstanding Average Loan Yield, Tax-Equivalent Basis $2,015 $2,027 $2,026 $2,026 $2,049 3Q2023 4Q2023 1Q2024 2Q2024 3Q2024 $1,990 $2,000 $2,010 $2,020 $2,030 $2,040 $2,050 $2,060 Period - end Loans Outstanding At September 30 , 2024 , total loans increased $ 21 . 7 million, or 1 . 1 % , to $ 2 . 0 billion from December 31 , 2023 . C ommercial real estate loans increased $ 3 . 0 million, or 0 . 3 % , residential real estate loans, including home equity loans, increased $ 26 . 4 million, or 3 . 7 % , partially offset by a decrease in commercial and industrial loans of $ 7 . 0 million, or 3 . 2 % . ($ in millions)
COMMERCIAL AND INDUSTRIAL LOANS 9 $213 $217 $207 $216 $210 3Q2023 4Q2023 1Q2024 2Q2024 3Q2024 $202 $204 $206 $208 $210 $212 $214 $216 $218 Total commercial and industrial (“C&I”) loans decreased $ 7 . 0 million, or 3 . 2 % , to $ 210 . 4 million at September 30 , 2024 , from $ 217 . 4 million at December 31 , 2023 . At September 30 , 2024 , total delinquent C&I loans totaled $ 9 , 000 . ($ in millions)
COMMERCIAL & INDUSTRIAL PORTFOLIO (1) 10 (1) % of total loans as of September 30, 2024. Manufacturing, 2.2% Merchant Wholesalers, 1.3% Construction, Sand & Gravel Mining, 1.1% All other C&I, 4.0% Healthcare, 0.5% Educational Services, 1.2%
COMMERCIAL REAL ESTATE LOANS 11 $1,080 $1,080 $1,084 $1,057 $1,083 3Q2023 4Q2023 1Q2024 2Q2024 3Q2024 $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 increased $ 3 . 0 million, or 0 . 3 % , to $ 1 . 1 billion from December 31 , 2023 to September 30 , 2024 . At September 30 , 2024 , total CRE delinquency was $ 171 , 000 , or 0 . 02 % of total CRE loans . ($ in millions)
COMMERCIAL REAL ESTATE LOANS (CRE) (1) 12 ($ in thousands) (1) As of September 30, 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 September 30 , 2024, the commercial real estate portfolio totaled $1.1 billion, and represented 52.9% of total gross loans. Of the $1.1 billion, $878.3 million, or 81.1%, were categorized as non - owner occupied commercial real estate and $204.5 million, or 18.9%, were categorized as owner - occupied commercial real estate. Property Type Non - Owner Occupied Owner Occupied Total % of CRE Portfolio % of Total Loans % of Total Risk - Based Bank Capital (RBC)(2) Office 179,530 33,146 212,676 19.6% 10.4% 78.4% Apartment 182,612 - 182,612 16.9% 8.9% 67.3% Industrial 110,377 52,420 162,797 15.0% 8.0% 60.0% Retail 109,481 5,327 114,808 10.6% 5.6% 42.3% Other 63,805 29,903 93,708 8.7% 4.6% 34.5% Mixed Use 71,904 6,433 78,337 7.2% 3.8% 28.9% Hotel/Hospitality 43,522 - 43,522 4.0% 2.1% 16.0% Automotive Sales 2,736 37,092 39,828 3.7% 1.9% 14.7% Adult Care/Assisted Living 31,843 6,119 37,962 3.5% 1.9% 14.0% Warehouse 20,973 10,168 31,141 2.9% 1.5% 11.5% Shopping Center 23,428 7,653 31,081 2.9% 1.5% 11.5% School/Higher Education 11,609 15,919 27,528 2.5% 1.3% 10.1% Self Storage 26,445 344 26,789 2.5% 1.3% 9.9% Total commercial real estate loans $ 878,265 $ 204,524 $1,082,789 100.0% 52.9% 399.1% % of Total Bank Risk - Based Capital 323.7% 75.4% 399.1% % of Total CRE Loans 81.1% 18.9% 52.9%
COMMERCIAL REAL ESTATE – NON - OWNER OCCUPIED (1) 13 At September 30, 2024, the non - owner occupied CRE portfolio totaled $ 878.3 million, or 323.7% of total RBC. Of the $878.3 million, $455.2 million , or 51.8% of non - owner occupied CRE, was concentrated in Massachusetts and $ 264.6 million, or 30.1% of non - owner occupied CRE, was concentrated in Connecticut. At September 30 , 2024, the apartment portfolio represented the largest concentration of non - owner occupied CRE at 67.3% of t otal RBC with a weighted average LTV of 55.5%. The office portfolio represented 66.2% of total RBC with a weighted average LTV of 65.2%. ($ in thousands) (1) As of September 30, 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. Property Type MA CT NH RI Other Total % of Total RBC(2) Weighted Average Loan to Value (LTV) (3) Apartment 111,894 36,948 4,971 28,799 - 182,612 67.3% 55.5% Office 63,397 64,120 40,559 - 11,454 179,530 66.2% 65.2% Industrial 57,793 33,537 - 12,968 6,079 110,377 40.7% 58.4% Retail 54,731 23,814 13,758 6,256 10,922 109,481 40.4% 56.5% Mixed Use 32,380 21,669 - 13,124 4,731 71,904 26.5% 58.1% Other 38,547 21,409 3,374 - 475 63,805 23.5% 56.5% Hotel/Hospitality 20,991 22,531 - - - 43,522 16.0% 52.3% Adult Care/Assisted Living 15,243 16,600 - - - 31,843 11.7% 58.9% Self Storage 21,260 4,398 787 - - 26,445 9.7% 62.8% Shopping Center 7,228 16,200 - - - 23,428 8.6% 51.4% Warehouse 17,415 3,339 - - 219 20,973 7.7% 44.6% School/Higher Education 11,609 - - - - 11,609 4.3% 45.4% Automotive Sales 2,736 - - - - 2,736 1.0% 39.9% Total non - owner commercial real estate $ 455,224 $ 264,565 $ 63,449 $ 61,147 $ 33,880 $878,265 323.7% 57.9%
COMMERCIAL REAL ESTATE – OFFICE BUILDINGS (1) 14 ($ in thousands) (1) As of September 30, 2024. (2) The total RBC ratio is based on Westfield Bank’s capital. Non - Owner Occupied Owner Occupied Total % of Office Portfolio % of Total Bank RBC (2) By Collateral Type Office/Medical $ 107,718 $ 20,849 $ 128,567 60.5% 47.4% Office/Professional Metro 3,899 8,109 12,008 5.6% 4.4% Office/Professional Suburban 40,840 3,867 44,707 21.0% 16.5% Office/Professional Urban 27,073 321 27,394 12.9% 10.1% Total Office Portfolio $ 179,530 $ 33,146 $ 212,676 100.0% 78.4% Percent of RBC 66.2% 12.2% 78.4% Non - Owner Occupied Owner Occupied Total % of Office Portfolio % of Total Bank RBC (2) By State Massachusetts $ 63,397 $ 30,575 $ 93,972 44.2% 34.6% Connecticut 64,120 2,571 66,691 31.4% 24.6% New Hampshire 40,559 - 40,559 19.1% 14.9% Other 11,454 - 11,454 5.4% 4.2% Total Office Portfolio $ 179,530 $ 33,146 $ 212,676 100.0% 78.4% Non - Owner Occupied Owner Occupied Total % of Office Portfolio % of Total Bank RBC (2) By Risk Rating Pass $ 171,359 $ 31,736 $ 203,095 95.5% 74.9% Special Mention 7,993 744 8,737 4.1% 3.2% Substandard 178 666 844 0.4% 0.3% Total Office Portfolio $ 179,530 $ 33,146 $ 212,676 100.0% 78.4% • As of September 30 , 2024 , the office portfolio totaled $ 212 . 7 million, or 78 . 4 % of RBC, and represented 19 . 6 % of total CRE loans . • Non - owner occupied office totaled $ 179 . 5 million, or 66 . 2 % of total RBC, and owner - occupied office totaled $ 33 . 1 million, or 12 . 2 % of total RBC . • Office exposure is concentrated in medical - office, totaling $ 128 . 6 million, or 60 . 5 % , of the total office portfolio . • Of the $ 212 . 7 million in total office, 44 . 2 % is concentrated in Massachusetts and 31 . 4 % is concentrated in Connecticut . The Company does not have any exposure in greater Boston or New York . • Of the $ 212 . 7 million in total office, 95 . 5 % of the office portfolio is in the pass - rated category . • There is approximately $ 37 . 1 million, or 17 . 4 % of the total office portfolio, maturing by the end of 2026 .
RESIDENTIAL REAL ESTATE LOANS AND CONSUMER LOANS 15 $720 $728 $732 $751 $753 3Q2023 4Q2023 1Q2024 2Q2024 3Q2024 $700 $710 $720 $730 $740 $750 $760 Residential real estate loans , including home equity loans, and consumer loans increased $ 25 . 6 million , or 3 . 5 % , to $ 753 . 2 million, from December 31 , 2023 to September 30 , 2024 . During the nine months ended September 30 , 2024 , the Company sold $ 20 . 1 million in fixed rate residential loans to the secondary market . At September 30 , 2024 , the Company serviced $ 85 . 7 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 September 30 , 2024 , total delinquent residential real estate loans and consumer loans totaled $ 4 . 1 million, or 0 . 5 % 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 14 . 0 % of total assets at September 30 , 2024 and 14 . 1 % of total assets, at December 31 , 2023 . The HTM unrealized losses were approximately $ 30 . 7 million, or 14 . 4 % , of the total HTM amortized cost basis . If the HTM losses, net of tax, were included in capital, the losses would represent 8 . 8 % of Tier 1 capital and negatively impact tangible common equity (“TCE”), a non - GAAP financial measure, by 0 . 8 % . The AFS unrealized losses were approximately $ 24 . 6 million, or 13 . 6 % of the total AFS amortized cost basis . As a percentage of Tier 1 capital, the AFS unrealized losses, net of tax, represented 7 . 3 % of Tier 1 capital and negatively impacted TCE, a non - GAAP financial measure, by 0 . 7 % . (1) Tier 1 Capital represents Westfield Bank’s Tier 1 Capital as of September 30, 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 September 30 , 2024 . At September 30, 2024 Amortized Cost Basis % of Investment Portfolio’s Amortized Cost Basis Fair Value Unrealized Loss Loss as a % of Amortized Cost Basis Net of Tax Loss % of Tier 1 Capital (1) Impact to TCE (Non - GAAP) (2) (Dollars in millions) HTM $213.3 54.2% $ 182.5 ($30.7) - 14.4% - 8.8% - 0.8% AFS $ 180.5 45.8% $ 155.9 ($24.6) - 13.6% - 7.3% - 0.7% Total Investments $ 393.8 100.0% $ 338.4 ($55.3) - 14.1% - 16.1% - 1.5%
TOTAL DEPOSITS 17 $1,594 $1,532 $1,501 $1,500 $1,524 3Q2023 4Q2023 1Q2024 2Q2024 3Q2024 $1,440 $1,460 $1,480 $1,500 $1,520 $1,540 $1,560 $1,580 $1,600 $1,620 PERIOD - END CORE DEPOSITS Total deposits increased $ 80 . 5 million, or 3 . 8 % , from $ 2 . 1 billion at December 31 , 2023 to $ 2 . 2 billion at September 30 , 2024 . Core deposits, which the Company defines as all deposits except time deposits, decreased $ 8 . 3 million, or 0 . 5 % , from $ 1 . 5 billion, or 71 . 5 % of total deposits, at December 31 , 2023 , to $ 1 . 5 billion, or 68 . 5 % of total deposits, at September 30 , 2024 . Time deposits increased $ 88 . 8 million, or 14 . 5 % , from $ 611 . 4 million at December 31 , 2023 to $ 700 . 2 million at September 30 , 2024 . At September 30 , 2024 and December 31 , 2023 , uninsured deposits represented 27 . 7 % and 26 . 8 % , of total deposits, respectively . $583 $611 $643 $672 $700 3Q2023 4Q2023 1Q2024 2Q2024 3Q2024 $- $100 $200 $300 $400 $500 $600 $700 $800 PERIOD - END TIME DEPOSITS (1) ($ in millions) (1) Includes $1.7 million in brokered deposits beginning with the quarter ended September 30, 2023.
AVERAGE TOTAL DEPOSITS 18 $1,559 $1,588 $1,576 $1,589 $1,621 $592 $589 $558 $549 $559 1.42% 1.60% 1.75% 1.94% 2.04% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3Q2023 4Q2023 1Q2024 2Q2024 3Q2024 $500 $700 $900 $1,100 $1,300 $1,500 $1,700 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 $ 42 . 3 million, or 2 . 0 % , from $ 2 . 1 billion for the three months ended June 30 , 2024 , to $ 2 . 2 billion, for the three months ended September 30 , 2024 . The average cost of deposits increased ten ( 10 ) basis points, from 1 . 94 % for the three months ended June 30 , 2024 to 2 . 04 % for the three months ended September 30 , 2024 . ($ in millions)
AVERAGE CORE AND TIME DEPOSITS 19 $1,588 $1,573 $1,506 $1,488 $1,492 0.70% 0.76% 0.76% 0.87% 0.93% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% $1,000 $1,100 $1,200 $1,300 $1,400 $1,500 $1,600 $1,700 $1,800 Average Core Deposits and Rates During the three months ended September 30 , 2024 , average core deposits of $ 1 . 5 billion, including non - interest bearing deposits, increased $ 3 . 6 million, or 0 . 2 % , from the three months ended June 30 , 2024 . During the three months ended September 30 , 2024 , average time deposits of $ 688 . 8 million increased $ 38 . 7 million, or 6 . 0 % , from the three months ended June 30 , 2024 . During the three months ended September 30 , 2024 , the average cost of core deposits, including non - interest bearing demand deposits, increased six ( 6 ) basis points from the three months ended June 30 , 2024 , while the cost of time deposits increased five ( 5 ) basis points during the same period . ($ in millions) $563 $604 $628 $650 $689 3.46% 3.78% 4.12% 4.39% 4.44% 0.25% 0.75% 1.25% 1.75% 2.25% 2.75% 3.25% 3.75% 4.25% 4.75% $300 $350 $400 $450 $500 $550 $600 $650 $700 Average Time Deposits and Rates
LOAN - TO - DEPOSIT RATIO 20 92.6% 94.6% 94.5% 93.3% 92.1% 3Q2023 4Q2023 1Q2024 2Q2024 3Q2024 91% 91% 92% 92% 93% 93% 94% 94% 95% 95% Period - end Loan - to - Deposit Ratio 73.2% 71.5% 70.0% 69.1% 68.5% 26.8% 28.5% 30.0% 30.9% 31.5% 3Q2023 4Q2023 1Q2024 2Q2024 3Q2024 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 $150 $156 $152 $155 $152 4.81% 4.83% 4.91% 5.00% 5.05% 4.65% 4.70% 4.75% 4.80% 4.85% 4.90% 4.95% 5.00% 5.05% 5.10% 3Q2023 4Q2023 1Q2024 2Q2024 3Q2024 $100 $110 $120 $130 $140 $150 $160 $170 Wholesale Funding (Includes $20 million in Subordinated Debt) 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 . 61 % at September 30 , 2024 and 9 . 62 % at December 31 , 2023 . In addition, Westfield Bank’s TCE Ratio( 1 ), 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 September 30 , 2024 , total borrowings decreased $ 4 . 1 million, or 2 . 6 % , from $ 156 . 5 million at December 31 , 2023 to $ 152 . 4 million . Short - term borrowings decreased $ 11 . 7 million, or 72 . 7 % , to $ 4 . 4 million , at September 30 , 2024 , compared to $ 16 . 1 million at December 31 , 2023 , while long - term borrowings increased $ 7 . 6 million, or 6 . 3 % , 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 were no outstanding balances under the BTFP at September 30 , 2024 . At September 30 , 2024 , borrowings also consisted of $ 19 . 7 million in fixed - to - floating rate subordinated notes . (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 .
22 The Company’s liquidity position remains strong with solid core deposit relationships, cash, unencumbered securities and access to diversified borrowing sources . At September 30 , 2024 , the Company had available borrowing capacity with the FHLB of $ 452 . 0 million, including its overnight Ideal Way Line of Credit . In addition, at September 30 , 2024 , the Company had available borrowing capacity of $ 404 . 9 million from the Federal Reserve Discount Window, with no outstanding borrowings . At September 30 , 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 September 30 , 2024 , the Company had $ 1 . 1 billion in immediately available liquidity, compared to $ 615 . 0 million in uninsured deposits, or 27 . 7 % of total deposits, representing a coverage ratio of 183 % . 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 September 30 , 2024 , the Company had $ 1 . 7 million in brokered deposits included within time deposits on the balance sheet . LIQUIDITY ($ in millions) Total Available Amount in Use at September 30, 2024 Net Available Internal Sources: Cash and cash equivalents $72.8 - $72.8 Unpledged securities $150.8 - $150.8 Excess pledged securities $ 18.9 - $ 18.9 External Sources: FHLB $596.1 $153.6 $452.0 FRB Discount Window $ 404.9 - $ 404.9 Other Unsecured: Correspondent banks $25.0 - $25.0 Total Liquidity $ 1,268.5 $153.6 $ 1,124.4 Uninsured deposits $615.0 Liquidity/Total 183%
________ 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 3Q2023 4Q2023 1Q2024 2Q2024 3Q2024 Total delinquent loans $5.6M $6.0M $4.7M $5.6M $4.3M Delinquent loans as a % of total loans 0.28% 0.30% 0.23% 0.27% 0.21% Nonperforming loans (NPL) $6.3M $6.4M $5.8M $5.8M $4.9M NPL as a % of total loans 0.31% 0.32% 0.29% 0.29% 0.24% NPL as a % of total assets 0.24% 0.25% 0.23% 0.23% 0.18% Allowance for credit losses % of total loans 0.99% 1.00% 0.98% 0.96% 0.97% Allowance for credit losses % of NPL 318% 316% 341% 333% 410% Net charge - offs (recoveries) $78K $136K ($67K) $10K $98K Net charge - offs (recoveries) as a % average loans 0.00% 0.01% 0.00% 0.00% 0.00% 3Q2023 4Q2023 1Q2024 During the three months ended September 30 , 2024 , the Company recorded net charge - offs of $ 98 , 000 compared to net charge - offs of $ 10 , 000 for the three months ended June 20 , 2024 . Nonperforming loans to total loans were 0 . 24 % at September 30 , 2024 compared to 0 . 29 % at June 30 , 2024 .
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 . 97 % at September 30 , 2024 , compared to 1 . 00 % at December 31 , 2023 . At September 30 , 2024 , the allowance for credit losses as a percentage of nonperforming loans was 409 . 5 % , compared to 315 . 6 % at December 31 , 2023 . September 30, 2024 December 31, 2023 ACL (1) Loans Outstanding (1) ACL / Total Loan Segment ACL (1) Loans Outstanding (1) ACL / Total Loan Segment Commercial and industrial $ 2,467 $ 210,390 1.17% $ 2,537 $ 217,447 1.17% Commercial real estate 14,220 1,082,789 1.31% 15,141 1,079,751 1.40% Residential (2) 3,038 748,572 0.41% 2,548 722,154 0.35% Consumer 230 4,631 4.97% 41 5,472 0.75% Unallocated - - - - - - Total Loans $ 19,955 $ 2,046,382 0.97% $ 20,267 $ 2,024,824 1.00% (1) ( $ in thousands) (2) Includes home equity loans and home equity lines of credit .
ASSET QUALITY 26 ($ in millions) 3Q2023 4Q2023 1Q2024 2Q2024 3Q2024 Special Mention $12.0 $5.8 $15.2 $14.6 $21.3 % of Total Loans 0.6% 0.3% 0.8% 0.7% 1.0% Substandard $33.6 $33.7 $21.6 $22.1 $21.9 % of Total Loans 1.7% 1.7% 1.1% 1.1% 1.1% Total Classified Loans $45.6 $39.5 $36.8 $36.7 $43.2 % of Total Loans 2.3% 1.9% 1.8% 1.8% 2.1% At September 30 , 2024 , total Classified Loans totaled $ 43 . 2 million, or 2 . 1 % of total loans, representing an increase of $ 3 . 7 million , or 9 . 4 % , from December 31 , 2023 .
CAPITAL MANAGEMENT 27 We are well - capitalized with excess capital. Consolidated Ratio at September 30, 2024 Ratio at December 31, 2023 Leverage Ratio 9.40% 9.40% Common Equity Tier 1 Ratio 12.39% 12.59% Tier 1 Capital Ratio 12.39% 12.59% Total Capital Ratio 14.44% 14.67% As of September 30 , 2024 , the Bank’s Tier 1 Leverage Ratio was 9 . 61 % . The Bank’s TCE ratio ( 1 ) , a non - GAAP financial measure, was 8 . 90 % at September 30 , 2024 . At September 30 , 2024 , the $ 24 . 6 million in AFS unrealized losses, net of tax, negatively impacted the TCE ratio by 0 . 7 % . If the HTM unrealized losses of $ 30 . 7 million, net of tax, were factored in, the TCE ratio would decrease to 8 . 06 % . Westfield Bank Ratio at September 30, 2024 Ratio at December 31, 2023 Well Capitalized Leverage Ratio 9.61% 9.62% 5.0% Common Equity Tier 1 Ratio 12.66% 12.88% 6.5% Tier 1 Capital Ratio 12.66% 12.88% 8.0% Total Capital Ratio 13.71% 13.94% 10.0% (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 Year # of Shares 2018 2,189,276 2019 1,938,667 2020 1,391,496 2021 2,758,051 2022 720,975 2023 649,744 1Q - 2024 200,000 2Q - 2024 269,841 3Q - 2024 244,441 Year Annual Dividends per Share 2018 $0.16 2019 $0.20 2020 $0.20 2021 $0.20 2022 $0.24 2023 $0.28 1Q - 2024 $0.07 2Q - 2024 $0.07 3Q - 2024 $0.07 Share Repurchases Dividends On June 10 , 2024 , the Company announced the completion of its previously authorized stock repurchase plan (the “ 2022 Plan”) pursuant to which the Company was authorized to repurchase up to 1 . 1 million shares, or approximately 5 % of its outstanding common stock, as of the date the 2022 Plan was adopted . 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 September 30 , 2024 , the Company repurchased 244 , 441 shares of common stock under the 2024 Plan, with an average price per share of $ 8 . 18 . During the nine months ended September 30 , 2024 , the Company repurchased 714 , 282 shares of common stock with an average price per share of $ 7 . 61 . As of September 30 , 2024 , there were 692 , 318 shares of common stock available for repurchase under the 2024 Plan .
CAPITAL MANAGEMENT 29 $10.53 $10.96 $10.90 $11.07 [VALUE] $9.87 $10.30 $10.25 $10.41 [VALUE] Book Value per Share Tangible Book Value per Share (non - GAAP) (1) Book Value Tangible Book Value (non-GAAP) Book value per share increased $0.44, or 4.0%, from $10.96 at December 31, 2023 to $11.40 at September 30, 2024. Tangible book value per share, a non - GAAP measure, increased $0.43, or 4.2%, from $10.30 at December 31, 2023 to $10.73 at September 30, 2024. ( 1) Tangible book value is a non - GAAP measure. See slides 30 - 32 for the related tangible book value calculation and a reconcilia tion of GAAP to non - GAAP financial measures.
APPENDIX: NON - GAAP TO GAAP RECONCILIATION 30 Reconciliation of Non - GAAP to GAAP Financial Measures The Company believes that certain non - GAAP financial measures provide information to investors that is useful in understanding i ts financial condition. Because not all companies use the same calculation, this presentation may not be comparable to other similarly title d measures calculated by other companies. A reconciliation of these non - GAAP financial measures is provided below. 9/30/2024 6/30/2024 3/31/2024 12/31/2023 9/30/2023 Loan interest (no tax adjustment) 25,134$ 24,340$ 24,241$ 23,939$ 23,451$ Tax-equivalent adjustment 119 114 110 113 117 Loan interest (tax-equivalent basis) 25,253$ 24,454$ 24,351$ 24,052$ 23,568$ Net interest income (no tax adjustment) 14,728$ 14,470$ 15,346$ 16,176$ 16,383$ Tax equivalent adjustment 119 114 110 113 117 Net interest income (tax-equivalent basis) 14,847$ 14,584$ 15,456$ 16,289$ 16,500$ Average interest-earning assets 2,441,236$ 2,400,633$ 2,403,086$ 2,427,112$ 2,402,987$ Net interest margin (no tax adjustment) 2.40% 2.42% 2.57% 2.64% 2.70% Net interest margin, tax-equivalent 2.42% 2.44% 2.59% 2.66% 2.72% Book Value per Share (GAAP) 11.40$ 11.07$ 10.90$ 10.96$ 10.53$ Non-GAAP adjustments: Goodwill (0.59) (0.58) (0.58) (0.58) (0.57) Core deposit intangible (0.08) (0.08) (0.07) (0.08) (0.09) Tangible Book Value per Share (non-GAAP) 10.73$ 10.41$ 10.25$ 10.30$ 9.87$ 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. 9/30/2024 6/30/2024 3/31/2024 12/31/2023 9/30/2023 Total Bank Equity (GAAP) 245,786$ 241,867$ 241,480$ 242,780$ 234,612$ Non-GAAP adjustments: Goodwill (12,487) (12,487) (12,487) (12,487) (12,487) Core deposit intangible net of associated (1,101) (1,168) (1,236) (1,303) (1,370) Tangible Capital (non-GAAP) 232,198$ 228,212$ 227,757$ 228,990$ 220,755$ Tangible Capital (non-GAAP) 232,198$ 228,212$ 227,757$ 228,990$ 220,755$ Unrealized losses on HTM securities net of tax (22,083) (28,869) (28,441) (25,649) (34,622) Adjusted Tangible Capital For Impact of Unrealized Losses on HTM Securities Net of Tax (non-GAAP) 210,115$ 199,343$ 199,316$ 203,341$ 186,133$ Common Equity Tier (CET) 1 Capital 250,543$ 251,849$ 251,394$ 250,734$ 249,441$ Total Assets for Leverage Ratio (non-GAAP) 2,608,171$ 2,575,093$ 2,572,525$ 2,607,260$ 2,574,402$ Tier 1 Leverage Ratio 9.61% 9.78% 9.77% 9.62% 9.69% Tangible Common Equity (non-GAAP) =Tangible Capital (non-GAAP)/Total Assets for Leverage Ratio (non-GAAP) 8.90% 8.86% 8.85% 8.78% 8.58% 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) 8.06% 7.74% 7.75% 7.80% 7.23% 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. 9/30/2024 6/30/2024 3/31/2024 12/31/2023 9/30/2023 Efficiency Ratio: Non-interest Expense (GAAP) 14,406$ 14,314$ 14,782$ 14,785$ 14,118$ Net Interest Income (GAAP) 14,728$ 14,470$ 15,346$ 16,176$ 16,383$ Non-Interest Income (GAAP) 3,141$ 3,834$ 2,674$ 2,714$ 3,612$ Non-GAAP adjustments: Unrealized (gains) losses on marketable equity securities (10) (4) (8) 1 - Gain on non-marketable equity investments - (987) - - (238) Loss on disposal of premises and equipment - - 6 - 3 Gain on bank-owned life insurance death benefit - - - - (778) Non-Interest Income for Adjusted Efficiency Ratio (non- GAAP) $ 3,131 $ 2,843 $ 2,672 $ 2,715 $ 2,599 Total Revenue for Adjusted Efficiency Ratio (non-GAAP) $ 17,859 $ 17,313 $ 18,018 $ 18,891 $ 18,982 Efficiency Ratio (GAAP) 80.62% 78.20% 82.03% 78.27% 70.61% Adjusted Efficiency Ratio (non-GAAP) = (Non-interest Expense (GAAP)/Total Revenue for Efficiency Ratio (non- GAAP)) 80.67% 82.68% 82.04% 78.26% 74.38% 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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