Western New England Bancorp, Inc. · NASDAQ:WNEB
Western New England Bancorp — Q4 2020 Earnings Presentation
38 slides from Western New England Bancorp's earnings presentation, Feb 2, 2021
Slide 1: Local banking is better than ever. Investor Presentation
Local banking is better than ever. INVESTOR PRESENTATION
Slide 2: Forward-Looking Statements
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 report
Slide 3: Who We Are
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
Slide 4: Senior Management Team
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 Lender Officer Kevin C . O’Connor, Executive Vice President & Chief Banking Officer Louis
Slide 5: Connecticut Strategy
CONNECTICUT STRATEGY On Monday, July 6 th , the Bank’s Bloomfield branch officially opened for business . This was followed closely by the opening of the Bank’s West Hartford Financial Services Center, on Tuesday, July 21 st . These openings marked the Bank’s 24 th and 25 th branch locations, and es
Slide 6: Connecticut Strategy
CONNECTICUT STRATEGY The West Hartford Financial Services Center, located in West Hartford Center, will serve as the Bank’s regional hub in Connecticut . In addition to a full - service branch, it includes a suite of offices to support Residential Lending, Commercial Lending, Business & Government D
Slide 7: Winner
WINNER
Slide 8: Connecticut Strategy
CONNECTICUT STRATEGY The Bloomfield branch , located in the Copaco Shopping Center, is a full - service branch and includes drive - through teller and safe deposit services . The Copaco Shopping Center is composed of national and local brands and is a major shopping destination for the greater Bloom
Slide 9: Q2020 Earnings
4 Q2020 EARNINGS 9 ($ in thousands , except EPS) 4Q2020 3Q2020 2Q2020 1Q2020 4Q2019 Net interest income $ 18,795 $ 15,990 $ 15,092 $ 14,553 $ 14,924 Provision for loan losses 500 2,725 2,450 2,100 1,000 Non - interest income 2,462 2,177 2,087 2,525 2,406 Non - interest expense 14,338 12,853 12,245 1
Slide 10: Fourth Quarter 2020 Highlights
10 • Revenues (1) : Total revenue of $21.3 million increased $2.7 million, or 14.5%. • Pre - provision, pre - tax income: Increased $1.6 million, or 30.2%, to $6.9 million. • Net interest income: Increased $2.8 million, or 17.5% ( e xcluding Paycheck Protection Program (“PPP”) income, purchase accou
Slide 11: Net Interest Income
NET INTEREST INCOME 11 $14.6 $14.5 $13.9 $14.4 $15.3 2.90% 2.86% 2.74% 2.81% 3.30% 2.83% 2.85% 2.71% 2.80% 2.95% 2.25% 2.45% 2.65% 2.85% 3.05% 3.25% 3.45% 4Q2019 1Q2020 2Q2020 3Q2020 4Q2020 $13.0 $13.5 $14.0 $14.5 $15.0 $15.5 Net interest income, excludes PPP, Purchase Accounting Adjustments ("PAA")
Slide 12: Loans
LOANS 12 $1,774 $1,783 $1,807 $1,771 $1,748 4.29% 4.26% 3.97% 4.02% 3.94% 4.36% 4.26% 3.92% 3.88% 4.24% 3.70% 3.90% 4.10% 4.30% 4.50% 4.70% 4.90% 4Q2019 1Q2020 2Q2020 3Q2020 4Q2020 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 Average Loans Outstanding (excludes PPP loans ) Average Loans Outstanding Ave
Slide 13: CARES Act Modifications as of December 31, 2020
CARES ACT MODIFICATIONS AS OF DECEMBER 31, 2020 13 Loan Segment (1)(2) Remaining Modification Balance # of Loans Modified % of Total Loan Segment Balance Modified Commercial real estate $64.0 19 7.7% Commercial and industrial ( 3 ) 9.3 10 4.4% Residential real estate ( 4 ) 3.6 16 0.5% Consumer 0.0 2
Slide 14: Commercial and Industrial Loan Trends
COMMERCIAL AND INDUSTRIAL LOAN TRENDS 14 $249 $257 $231 $222 212 $222 $223 $167 4Q2019 1Q2020 2Q2020 3Q2020 4Q2020 $100 $150 $200 $250 $300 $350 $400 $450 $500 Commercial and Industrial Loans C&I Loans PPP Loans Commercial and industrial loans (“C&I”) of $ 379 . 1 million increased $ 130 . 2 million
Slide 15: Commercial Line of Credit Utilization
COMMERCIAL LINE OF CREDIT UTILIZATION 15 The table below breaks out the commercial line utilization since December 31, 2019. Balance 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 Pass - rated $32.9 $ 39.7 $ 42.6 $ 77.6 $ 65.4 Classified 15.3 16.9 20.1 20.7 20.2 Total: $48.2 $56.6 $ 62.7 $ 98.3
Slide 16: Commercial and Industrial Loans (Excludes PPP)
COMMERCIAL AND INDUSTRIAL LOANS (EXCLUDES PPP ) (1) 16 Auto Sales , 0.4% Educational Services , 0.6% Healthcare , 0.4% Heavy and Civil Engineering Construction , 0.8% Manufacturing , 2.9% Other , 3.6% Specialty Trade , 0.6% Transportation , 0.7% Wholesale Trade , 2.0% (1) % of total loans, excluding
Slide 17: Total COVID-Modifications – C&I Portfolio
TOTAL COVID - 19 MODIFICATIONS – C&I PORTFOLIO 17 Industry Balance (1) % of Total Loans Modified Balance Remaining # of Modified Accounts % of Segment Balance Modified Manufacturing $ 50.4 2.9% $ 143k 1 0.3% Wholesale Trade 34.6 2.0% - - - Specialty Trade 11.0 0.6% - - - Heavy and Civil Engineering
Slide 18: Small Business Protection Loans – Paycheck Protection Program
SMALL BUSINESS PROTECTION LOANS – PAYCHECK PROTECTION PROGRAM 18 Loan Amount Total Balance # of Loans Fee (%) $150,000 and under $32.0 912 5% $151,000 - $350,000 23.1 109 5% $351,000 - $2.0 million 56.4 77 3% Over $2.1 million 55.8 15 1% Total: $167.3 1,113 At December 31 , 2020 , the balance of PPP
Slide 19: Commercial Real Estate Loan Trends
COMMERCIAL REAL ESTATE LOAN TRENDS 19 $817 $836 $833 $812 $834 4Q2019 1Q2020 2Q2020 3Q2020 4Q2020 $800 $825 $850 • Commercial real estate (“CRE”) loans of $ 833 . 9 million increased $ 21 . 8 million, or 2 . 7 % , from the linked quarter, and increased $ 17 . 1 million, or 2 . 1 % , year - over - ye
Slide 20: Commercial Real Estate Loans – COVID-Modifications Granted
COMMERCIAL REAL ESTATE LOANS – COVID - 19 MODIFICATIONS GRANTED (1) 20 Property Type Balance % of Total Loans (2) Modified Balance Modified Loans (#) Balance Modified (%) Apartment $ 162.6 9.2% $ - - - Office 147.5 8.4% - - - Retail/Shopping 112.7 6.4% - - - Industrial/Warehouse 120.1 6.8% 3.0 1 2.5
Slide 21: Residential and Consumer Loan Trends
RESIDENTIAL AND CONSUMER LOAN TRENDS 21 $706 $708 $716 $718 $714 4Q2019 1Q2020 2Q2020 3Q2020 4Q2020 $700 $702 $704 $706 $708 $710 $712 $714 $716 $718 $720 Residential and Consumer Loans Period - end Loans Outstanding Residential loans, including home equity loans, and consumer loans decreased $ 4 .
Slide 22: Total Deposits
TOTAL DEPOSITS 22 $1,025 $1,057 $1,319 $1,363 $1,448 4Q2019 1Q2020 2Q2020 3Q2020 4Q2020 $550 $650 $750 $850 $950 $1,050 $1,150 $1,250 $1,350 $1,450 $1,550 Period - End Core Deposits Period - end core deposits of $ 1 . 4 billion increased $ 422 . 6 million , or 41 . 2 % , year - over - year and incre
Slide 23: Average Total Deposits
AVERAGE TOTAL DEPOSITS 23 $1,287 $1,300 $1,368 $1,421 $1,489 $388 $389 $505 $529 $535 1.05% 1.01% 0.82% 0.65% 0.44% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 4Q2019 1Q2020 2Q2020 3Q2020 4Q2020 $300 $500 $700 $900 $1,100 $1,300 $1,500 $1,700 $1,900 $2,100 Average Deposits and Rates Interest-bearing d
Slide 24: Average Core Deposits
AVERAGE CORE DEPOSITS 24 $1,021 $1,037 $1,233 $1,325 $1,404 0.34% 0.33% 0.27% 0.25% 0.23% 0.00% 0.05% 0.10% 0.15% 0.20% 0.25% 0.30% 0.35% 4Q2019 1Q2020 2Q2020 3Q2020 4Q2020 $500 $700 $900 $1,100 $1,300 $1,500 $1,700 $1,900 $2,100 Average Core Deposits and Rates Interest-bearing deposits Average depo
Slide 25: Average Time Deposits
AVERAGE TIME DEPOSITS 25 $654 $651 $640 $625 $620 2.15% 2.08% 1.87% 1.50% 0.92% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 4Q2019 1Q2020 2Q2020 3Q2020 4Q2020 $500 $550 $600 $650 $700 $750 $800 Average Time Deposits and Rates Interest-bearing deposits Average deposit cost Average time deposits of $ 620 . 4
Slide 26: Loan-to-Deposit Ratio
LOAN - TO - DEPOSIT RATIO 26 106% 106% 103% 98% 95% 4Q2019 1Q2020 2Q2020 3Q2020 4Q2020 88% 90% 92% 94% 96% 98% 100% 102% 104% 106% 108% Loan - to - Deposit Ratio 61% 62% 68% 68% 71% 39% 38% 32% 32% 29% 4Q2019 1Q2020 2Q2020 3Q2020 4Q2020 0% 10% 20% 30% 40% 50% 60% 70% 80% Core Deposits and Time Depos
Slide 27: Deposit Market Share in Hampden County, MA
________ Source: SNL Financial as of June 30, 2020. 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
Slide 28: FHLB and Payroll Protection Program Liquidity Facility
FHLB AND PAYROLL PROTECTION PROGRAM LIQUIDITY FACILITY 28 $241 $222 $197 $151 $58 $ - $ - $26 $ - $ - 4Q2019 1Q2020 2Q2020 3Q2020 4Q2020 $- $50 $100 $150 $200 $250 $300 Period - end FHLB and Payroll Protection Program Liquidity Facility FHLB PPPLF ($ in millions) At December 31, 2020, FHLB advances
Slide 29: Asset Quality
ASSET QUALITY 29 $9.9 $9.7 $10.4 $9.2 $7.8 0.56% 0.54% 0.59% 0.53% 0.45% 0.00% 0.20% 0.40% 0.60% 0.80% $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 Non - performing Loans ($ in millions) Non-performing loans Non-performing loans/Total Loans Excluding PPP Loans The Company has taken actions to identify, assess
Slide 30: Asset Quality Indicators
ASSET QUALITY INDICATORS 30 4Q2020 3Q2020 2Q2020 1Q2020 4Q2019 Total loans modified under the CARES Act $76.9M $66.3M $261.0M - - Loans modified as a % of total loans (1) 4.4% 3.8% 14.7% - - Total delinquent loans $ $13.5M $6.7M $12.0M $12.4M $13.8M Delinquent loans as a % of total loans (1) 0.77% 0
Slide 31: Asset Quality – Allowance for Loan Losses
ASSET QUALITY 31 ALLL = $ 21 . 2 million • Management believes it prudent to proactively increase the allowance for loan losses given the significant stress experienced in the economy due to continued business shutdowns and interruptions related to COVID - 19 , coupled with the Company’s belief that
Slide 32: Asset Quality – Watch List Loans
ASSET QUALITY 32 4Q2020 3Q2020 2Q2020 1Q2020 4Q2019 Special Mention $92.1 $94.8 $96.3 $35.9 $25.9 % of Total Loans (1) 5.2% 5.4% 5.4% 2.0% 1.5% Substandard $55.0 $52.6 $55.4 $59.6 $57.3 % of Total Loans (1) 3.1% 3.0% 3.1% 3.3% 3.2% Total Watch List Loans $147.1 $147.4 $151.7 $95.5 $83.2 % of Total L
Slide 33: Hotels – $56.3 Million, or 3.2% of Total Loans
HOTELS - $56.3 MILLION, OR 3.2% OF TOTAL LOANS (1) 33 The hotel industry has been significantly impacted by the pandemic and the widespread travel restrictions . We continue to maintain close contact with our borrowers and monitor industry updates . We performed a review of the hotel portfolio and t
Slide 34: Capital Management
CAPITAL MANAGEMENT 34 We are well - capitalized with excess capital. Consolidated Ratio Consolidated Capital Leverage Ratio 9.3% $223.3 Common Equity Tier 1 Ratio 13.4% $223.3 Tier 1 Capital Ratio 13.4% $223.3 Total Capital Ratio 14.7% $244.2 x From a regulatory standpoint, we are well - capitalized
Slide 35: Capital Return to Shareholders
CAPITAL RETURN TO SHAREHOLDERS 35 Year # of Shares 2017 606,391 2018 2,189,276 2019 1,938,667 2020 1,391,496 Year Annual Dividends per Share 2017 $0.12 2018 $0.16 2019 $0.20 2020 $0.20 Share Repurchases Dividends On January 29 , 2019 , the Board of Directors authorized the 2019 Plan under which the
Slide 36: Capital Management – Book Value per Share
CAPITAL MANAGEMENT 36 $8.97 $8.99 $8.95 $8.88 $8.74 $8.36 $8.39 $8.34 $8.27 $8.14 Book Value per Share Tangible Book Value per Share Book Value Tangible Book Value
Slide 37: Appendix: Non-GAAP to GAAP Reconciliation
APPENDIX: NON - GAAP TO GAAP RECONCILIATION 37 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 cal
Slide 38: Westfield Bank – What Better Banking's All About
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 , Vice President and Investor Relations Officer 38 141 Elm Street, Westfield, MA
Western New England Bancorp — Q4 2020 Earnings Presentation on 6ix