Western New England Bancorp, Inc. · NASDAQ:WNEB
Western New England Bancorp — Q1 2023 Earnings Presentation
32 slides from Western New England Bancorp's earnings presentation, Apr 25, 2023
Slide 1: Investor Presentation First Quarter 2023
Local banking is better than ever. INVESTOR PRESENTATION FIRST QUARTER 2023
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: Forward-Looking Statements
FORWARD - LOOKING STATEMENTS 3 • uncertainty about the discontinued use of LIBOR and the transition to an alternative rate ; • changes in business conditions and inflation ; • operational risks or risk management failures by us or critical third parties, including without limitation with respect to
Slide 4: 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 5: 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 Daniel
Slide 6: 1Q2023 Quarterly Earnings
1Q2023 QUARTERLY EARNINGS 6 1Q2022 2Q2022 3Q2022 4Q2022 (2) 1Q2023 (1) ($ in thousands , except EPS) $ 18,698 $ 19,392 $ 20,288 $ 20,854 $ 18,504 Net interest income (425) 300 675 150 (388) (Reversal of) provision for credit losses 2,348 2,741 2,590 5,653 2,979 Non - interest income 14,456 14,433 14
Slide 7: Net Interest Income and Net Interest Margin
NET INTEREST INCOME AND NET INTEREST MARGIN 7 $18.7 $19.4 $20.3 $20.9 $18.5 3.18% 3.24% 3.35% 3.44% 3.14% 2.50% 2.60% 2.70% 2.80% 2.90% 3.00% 3.10% 3.20% 3.30% 3.40% 3.50% 1Q2022 2Q2022 3Q2022 4Q2022 1Q2023 $16.5 $17.5 $18.5 $19.5 $20.5 $21.5 $22.5 $23.5 $24.5 Net interest income ($) Net interest ma
Slide 8: Total Loans
TOTAL LOANS 8 $1,895 $1,950 $1,974 $1,995 $1,993 3.84% 3.81% 3.93% 4.23% 4.34% 3.50% 3.60% 3.70% 3.80% 3.90% 4.00% 4.10% 4.20% 4.30% 4.40% 1Q2022 2Q2022 3Q2022 4Q2022 1Q2023 $1,840 $1,860 $1,880 $1,900 $1,920 $1,940 $1,960 $1,980 $2,000 Average Loans Outstanding Average Loans Outstanding Average Loa
Slide 9: Commercial and Industrial Loans
COMMERCIAL AND INDUSTRIAL LOANS 9 $216 $218 $232 $220 $218 1Q2022 2Q2022 3Q2022 4Q2022 1Q2023 $205 $210 $215 $220 $225 $230 $235 Commercial and industrial (“C&I”) loans of $ 218 . 1 million at March 31 , 2023 decreased $ 1 . 7 million, or 0 . 8 % , from December 31 , 2022 . At December 31 , 2022 , t
Slide 10: C&I Portfolio
C&I PORTFOLIO (1) 10 (1) % of total loans as of March 31, 2023 Manufacturing , 1.67% Sand and Gravel Mining , 1.16% Wholesale trade , 2.19% Educational services , 0.83% Hotels , 0.14% Heavy and civil engineering construction , 0.99% Specialty trade , 0.42% All other C&I , 3.46%
Slide 11: Commercial Real Estate Loans
COMMERCIAL REAL ESTATE LOANS 11 $1,039 $1,075 $1,082 $1,069 $1,080 1Q2022 2Q2022 3Q2022 4Q2022 1Q2023 $1,000 $1,025 $1,050 $1,075 $1,100 Commercial real estate (“CRE”) loans of $ 1 . 1 billion at March 31 , 2023 increased $ 10 . 3 million, or 1 . 0 % , from December 31 , 2022 . At March 31 , 2023 ,
Slide 12: Commercial Real Estate Loans
COMMERCIAL REAL ESTATE LOANS 12 (1) % of total loans at March 31, 2023 Adult Care/Assisted Living , 1.7% Apartment , 7.5% Auto Sales , 2.0% College/School , 1.3% Hotel , 2.7% Industrial/Warehouse , 8.3% Mixed - use , 1.6% Office , 12.4% Other , 2.9% Residential Non - Owner , 2.8% Self - Storage , 1.
Slide 13: Residential Real Estate Loans and Consumer Loans
RESIDENTIAL REAL ESTATE LOANS AND CONSUMER LOANS 13 $669 $681 $691 $700 $707 1Q2022 2Q2022 3Q2022 4Q2022 1Q2023 $650 $675 $700 $725 At March 31 , 2023 , residential real estate loans , including home equity loans, and consumer loans increased $ 6 . 5 million, or 0 . 9 % , from December 31 , 2022 . A
Slide 14: Investment Portfolio
INVESTMENT PORTFOLIO 14 The table below displays the investment portfolio as of March 31 , 2023 . At March 31 , 2023 , held - to - maturity (“HTM”) and available - for - sale (“AFS”) securities represented 56 % and 44 % , respectively, of the total investment portfolio’s amortized cost basis . Unrea
Slide 15: Total Deposits
TOTAL DEPOSITS 15 $1,899 $1,952 $1,944 $1,818 $1,699 1Q2022 2Q2022 3Q2022 4Q2022 1Q2023 $1,550 $1,600 $1,650 $1,700 $1,750 $1,800 $1,850 $1,900 $1,950 $2,000 PERIOD - END CORE DEPOSITS At March 31 , 2023 , core deposits of $ 1 . 7 billion, which the Company defines as all deposits except time deposi
Slide 16: Average Total Deposits
AVERAGE TOTAL DEPOSITS 16 $1,618 $1,639 $1,615 $1,594 $1,564 $633 $636 $659 $664 $639 0.18% 0.17% 0.20% 0.39% 0.76% 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% 0.80% 1Q2022 2Q2022 3Q2022 4Q2022 1Q2023 $500 $700 $900 $1,100 $1,300 $1,500 $1,700 $1,900 $2,100 Average Deposits and Rates Interest-be
Slide 17: Historical Rate Paid and Betas
HISTORICAL RATE PAID AND BETAS 17 (1) Core deposit beta excludes non - interest bearing accounts 12% 7% 11% 15% 0.22% 0.28% 0.52% 0.82% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 2Q2022 3Q2022 4Q2022 1Q2023 0% 2% 4% 6% 8% 10% 12% 14% 16% Core Deposit Beta (1) Core Deposit Beta, cumulative Cost of Core Depo
Slide 18: Average Core and Time Deposits
AVERAGE CORE AND TIME DEPOSITS 18 $1,862 $1,909 $1,934 $1,898 $1,775 0.14% 0.15% 0.19% 0.34% 0.53% 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% $1,650 $1,700 $1,750 $1,800 $1,850 $1,900 $1,950 Average Core Deposits and Rates Average core deposits, including non - interest bearing deposits, decreased $
Slide 19: Granular Deposit Base – March 31, 2023
GRANULAR DEPOSIT BASE – MARCH 31, 2023 19 ($ in millions) Consumer Insured Deposits , 89% Consumer Uninsured Deposits , 11% Consumer Deposits 89,500 accounts Average Account Balance $16,000 Total Consumer Deposits $1.4 billion 65% of Total Deposits Commercial Insured Deposits , 41% Commercial Uninsu
Slide 20: Loan-to-Deposit Ratio
LOAN - TO - DEPOSIT RATIO 20 85% 86% 88% 89% 93% 1Q2022 2Q2022 3Q2022 4Q2022 1Q2023 80% 82% 84% 86% 88% 90% 92% 94% Period - end Loan - to - Deposit Ratio 83% 85% 85% 82% 79% 17% 15% 15% 18% 21% 1Q2022 2Q2022 3Q2022 4Q2022 1Q2023 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Core Deposits and Time Deposits
Slide 21: Wholesale Funding
WHOLESALE FUNDING 21 $2 $1 $16 $36 $125 4.40% 4.45% 4.50% 4.55% 4.60% 4.65% 4.70% 1Q2022 2Q2022 3Q2022 4Q2022 1Q2023 $- $20 $40 $60 $80 $100 $120 $140 Federal Home Loan Bank Borrowings (Excludes $20 million in Subordinated Debt) The Bank is considered to be well - capitalized as defined by regulator
Slide 22: Deposit Market Share in Hampden County, MA
________ Source: SNL Financial as of June 30, 2022. 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 23: Asset Quality Indicators
ASSET QUALITY INDICATORS 23 1Q2023 (2) 4Q2022 (2) 3Q2022 (2) 2Q2022 (1) 1Q2022 (1) $ - $ - $ - $9.1M $12.1M Total loans modified under the CARES Act - % - % - % 0.5% 0.6% Loans modified as a % of total loans $3.0M $4.5M $3.3M $2.2M $2.8M Total delinquent loans 0.15% 0.22% 0.16% 0.11% 0.15% Delinquen
Slide 24: Asset Quality
ASSET QUALITY 24 Management continues to remain attentive to any signs of deterioration in borrowers’ financial conditions and is proactive in taking the appropriate steps to mitigate risk . The allowance for loan losses as a percentage of total loans was 0 . 95 % at March 31 , 2023 , compared to 1
Slide 25: Asset Quality
ASSET QUALITY 25 1Q2023 (2) 4Q2022 (2) 3Q2022 (2) 2Q2022 (1) 1Q2022 (1) ($ in Millions) $12.8 $14.1 $39.8 $22.0 $28.1 Special Mention $ 8.0 $ 7.6 $17.6 $18.3 $27.1 Special Mention - Hotel $20.8 $21.7 $57.4 $40.3 $55.2 Total Special Mention 1.0% 1.1% 2.9% 2.0% 2.9% % of Total Loans $40.4 $42.3 $28.4
Slide 26: Capital Management
CAPITAL MANAGEMENT 26 We are well - capitalized with excess capital. Ratio at December 31, 2022 Ratio at March 31, 2023 Consolidated 9.27% 9.46% Leverage Ratio 12.18% 12.20% Common Equity Tier 1 Ratio 12.18% 12.20% Tier 1 Capital Ratio 14.20% 14.17% Total Capital Ratio x From a regulatory standpoint
Slide 27: Capital Return to Shareholders
CAPITAL RETURN TO SHAREHOLDERS 27 # of Shares Year 2,189,276 2018 1,938,667 2019 1,391,496 2020 2,758,051 2021 720,975 2022 125,000 1Q - 2023 Annual Dividends per Share Year $0.16 2018 $0.20 2019 $0.20 2020 $0.20 2021 $0.24 2022 $0.07 1Q - 2023 Share Repurchases Dividends On July 26 , 2022 , the Boa
Slide 28: Capital Management
CAPITAL MANAGEMENT 28 $9.87 $9.63 $9.58 $9.52 $10.27 $10.50 $9.21 $8.97 $8.92 $8.85 $9.61 $9.84 Book Value per Share Tangible Book Value per Share (non - GAAP) (1) Book Value Tangible Book Value (non-GAAP) Book value per share increased $0.23, or 2.2%, from $10.27 at December 31, 2022 to $10.50 at M
Slide 29: Appendix: Non-GAAP to GAAP Reconciliation
APPENDIX: NON - GAAP TO GAAP RECONCILIATION 29 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 30: Appendix: Non-GAAP to GAAP Reconciliation
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 cal
Slide 31: Appendix: Non-GAAP to GAAP Reconciliation
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 cal
Slide 32: 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 , Senior Vice President and Investor Relations Officer 32 141 Elm Street, Westfield, MA
Western New England Bancorp — Q1 2023 Earnings Presentation on 6ix