Western New England Bancorp, Inc. · NASDAQ:WNEB
Western New England Bancorp — Q2 2023 Earnings Presentation
32 slides from Western New England Bancorp's earnings presentation, Jul 25, 2023
Slide 1: Investor Presentation Second Quarter 2023
Local banking is better than ever. INVESTOR PRESENTATION SECOND 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: Quarterly Earnings
2 Q2023 QUARTERLY EARNINGS 6 2Q2022 3Q2022 4Q2022 (3) 1Q2023 (2) 2Q2023 (1)(2) ($ in thousands , except EPS) $ 19,392 $ 20,288 $ 20,854 $ 18,504 $ 16,846 Net interest income 300 675 150 (388) 420 Provision for (reversal of) credit losses 2,741 2,590 5,653 2,979 1,592 Non - interest income 14,433 14,
Slide 7: Net Interest Income and Net Interest Margin
NET INTEREST INCOME AND NET INTEREST MARGIN 7 $19.4 $20.3 $20.9 $18.5 $16.8 3.24% 3.35% 3.44% 3.14% 2.81% 2.50% 2.60% 2.70% 2.80% 2.90% 3.00% 3.10% 3.20% 3.30% 3.40% 3.50% 2Q2022 3Q2022 4Q2022 1Q2023 2Q2023 $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 $1,950 $1,974 $1,995 $1,993 $2,007 3.81% 3.93% 4.23% 4.34% 4.49% 3.50% 3.70% 3.90% 4.10% 4.30% 4.50% 4.70% 2Q2022 3Q2022 4Q2022 1Q2023 2Q2023 $1,900 $1,920 $1,940 $1,960 $1,980 $2,000 $2,020 Average Loans Outstanding Average Loans Outstanding Average Loan Yield $1,974 $2,006 $1,989 $2,
Slide 9: Commercial and Industrial Loans
COMMERCIAL AND INDUSTRIAL LOANS 9 $218 $232 $220 $218 $227 2Q2022 3Q2022 4Q2022 1Q2023 2Q2023 $210 $215 $220 $225 $230 $235 Total commercial and industrial (“C&I”) loans increased $ 7 . 3 million, or 3 . 3 % , from $ 219 . 8 million at December 31 , 2022 , to $ 227 . 1 million at June 30 , 2023 . At
Slide 10: C&I Portfolio
C&I PORTFOLIO (1) 10 (1) % of total loans as of June 30, 2023 Manufacturing , 1.8% Sand and Gravel Mining , 1.2% Wholesale trade , 2.0% Educational Services, 1.3% Hotels , 0.1% Heavy and Civil Engineering Construction, 1.0% Specialty Trade, 0.5% All Other C&I, 3.4%
Slide 11: Commercial Real Estate Loans
COMMERCIAL REAL ESTATE LOANS 11 $1,075 $1,082 $1,069 $1,080 $1,075 2Q2022 3Q2022 4Q2022 1Q2023 2Q2023 $1,050 $1,075 $1,100 Total commercial real estate (“CRE”) loans increased $ 6 . 1 million, or 0 . 6 % , to $ 1 . 1 billion from December 31 , 2022 to June 30 , 2023 . At June 30 , 2023 , total CRE d
Slide 12: Commercial Real Estate Loans
COMMERCIAL REAL ESTATE LOANS 12 (1) As of June 30, 2023 Adult Care/Assisted Living, 1.7% Apartment, 7.6% Auto Sales, 1.9% College/School , 1.3% Hotel, 2.3% Industrial/Warehouse , 9.0% Mixed - Use, 1.5% Office, 11.6% Other , 3.0% Residential Non - Owner , 2.8% Self - Storage , 1.1% Retail Shopping, 8
Slide 13: Residential Real Estate Loans and Consumer Loans
RESIDENTIAL REAL ESTATE LOANS AND CONSUMER LOANS 13 $681 $691 $700 $707 $711 2Q2022 3Q2022 4Q2022 1Q2023 2Q2023 $650 $675 $700 $725 Residential real estate loans , including home equity loans, and consumer loans increased $ 10 . 7 million , or 1 . 5 % , to $ 710 . 8 million, from December 31 , 2022
Slide 14: Investment Portfolio
INVESTMENT PORTFOLIO 14 The table below displays the investment portfolio as of June 30 , 2023 . At June 30 , 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 . Unreali
Slide 15: Total Deposits
TOTAL DEPOSITS 15 $1,952 $1,944 $1,818 $1,699 $1,623 2Q2022 3Q2022 4Q2022 1Q2023 2Q2023 $- $500 $1,000 $1,500 $2,000 $2,500 PERIOD - END CORE DEPOSITS At June 30 , 2023 , total deposits were $ 2 . 2 billion, a decrease of $ 71 . 5 million, or 3 . 2 % , from December 31 , 2022 . At June 30 , 2023 , c
Slide 16: Average Total Deposits
AVERAGE TOTAL DEPOSITS 16 $1,639 $1,615 $1,594 $1,564 $1,556 $636 $659 $664 $639 $591 0.17% 0.20% 0.39% 0.76% 1.13% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 2Q2022 3Q2022 4Q2022 1Q2023 2Q2023 $500 $700 $900 $1,100 $1,300 $1,500 $1,700 $1,900 $2,100 Average Deposits and Rates Interest-bearing deposi
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% 18% 0.22% 0.28% 0.52% 0.82% 1.00% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 2Q2022 3Q2022 4Q2022 1Q2023 2Q2023 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% Core Deposit Beta Core Deposit Beta, cumulat
Slide 18: Average Core and Time Deposits
AVERAGE CORE AND TIME DEPOSITS 18 $1,909 $1,934 $1,898 $1,775 $1,645 0.15% 0.19% 0.34% 0.53% 0.64% 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% $1,500 $1,550 $1,600 $1,650 $1,700 $1,750 $1,800 $1,850 $1,900 $1,950 $2,000 Average Core Deposits and Rates Average core deposits, including non - inter
Slide 19: Granular Deposit Base – June 30, 2023
GRANULAR DEPOSIT BASE – JUNE 30, 2023 19 ($ in millions) Consumer Insured Deposits , 90% Consumer Uninsured Deposits , 10% Consumer Deposits 92,365 accounts Average Account Balance $ 15,000 Total Consumer Deposits $1.4 billion 64% of Total Deposits Commercial Insured Deposits , 61% Commercial Uninsu
Slide 20: Loan-to-Deposit Ratio
LOAN - TO - DEPOSIT RATIO 20 86% 88% 89% 93% 93% 2Q2022 3Q2022 4Q2022 1Q2023 2Q2023 82% 84% 86% 88% 90% 92% 94% Period - end Loan - to - Deposit Ratio 85% 85% 82% 79% 75% 15% 15% 18% 21% 25% 2Q2022 3Q2022 4Q2022 1Q2023 2Q2023 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Core Deposits and Time Deposits as
Slide 21: Wholesale Funding
WHOLESALE FUNDING 21 $1 $16 $36 $125 $128 4.56% 4.58% 4.60% 4.62% 4.64% 4.66% 4.68% 4.70% 2Q2022 3Q2022 4Q2022 1Q2023 2Q2023 $- $20 $40 $60 $80 $100 $120 $140 Wholesale Funding (Excludes $20 million in Subordinated Debt) The Bank is considered to be well - capitalized as defined by regulators (See S
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 2Q2023 (2) 1Q2023 (2) 4Q2022 (2) 3Q2022 (1) 2Q2022 (1) $ - $ - $ - $ - $9.1M Total loans modified under the CARES Act - % - % - % - % 0.5% Loans modified as a % of total loans $5.4M $3.0M $4.5M $3.3M $2.2M Total delinquent loans 0.27% 0.15% 0.22% 0.16% 0.11% Delinquent lo
Slide 24: Asset Quality
ASSET QUALITY 24 Management continues to remain attentive to any signs of deterioration in borrowers’ financial conditions and is proactive in taking the appropriate steps to mitigate risk . The allowance for loan losses as a percentage of total loans was 0 . 97 % at June 30 , 2023 , compared to 0 .
Slide 25: Asset Quality
ASSET QUALITY 25 2Q2023 (2) 1Q2023 (2) 4Q2022 (2) 3Q2022 (1) 2Q2022 (1) ($ in Millions) $11.8 $12.8 $14.1 $39.8 $22.0 Special Mention - $ 8.0 $ 7.6 $17.6 $18.3 Special Mention - Hotel $11.8 $20.8 $21.7 $57.4 $40.3 Total Special Mention 0.6% 1.0% 1.1% 2.9% 2.0% % of Total Loans $37.7 $40.4 $42.3 $28.
Slide 26: Capital Management
CAPITAL MANAGEMENT 26 We are well - capitalized with excess capital. Ratio at December 31, 2022 Ratio at June 30, 2023 Consolidated 9.27% 9.45% Leverage Ratio 12.18% 12.17% Common Equity Tier 1 Ratio 12.18% 12.17% Tier 1 Capital Ratio 14.20% 14.16% Total Capital Ratio As of June 30 , 2023 , the TCE
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 124,744 2Q - 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 $0.07 2Q - 2023 Share Repurchases Div
Slide 28: Capital Management
CAPITAL MANAGEMENT 28 $9.63 $9.58 $9.52 $10.27 $10.50 $10.60 $8.97 $8.92 $8.85 $9.61 $9.84 $9.94 Book Value per Share Tangible Book Value per Share (non - GAAP) (1) Book Value Tangible Book Value (non-GAAP) Book value per share increased $0.33, or 3.2%, from $10.27 at December 31, 2022 to $10.60 at
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 — Q2 2023 Earnings Presentation on 6ix