Western New England Bancorp, Inc. · NASDAQ:WNEB
Western New England Bancorp — Q3 2023 Earnings Presentation
33 slides from Western New England Bancorp's earnings presentation, Oct 24, 2023
Slide 1: Western New England Bancorp Investor Presentation Third Quarter 2023
Western New England Bancorp INVESTOR PRESENTATION THIRD QUARTER 2023 than ever.
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS 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 sh
Slide 3: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS + 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
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 Focus
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 Ill, Executive Vice President & Chief Lender Officer Kevin C. O’Connor, Executive Vice President & Chief Banking Officer Daniel A.
Slide 6: Celebrating 170 Years
CELEBRATING 170 YEARS On July 1, 2023, the Bank celebrated its 170" anniversary, proudly serving its customers and communities since 1853. The milestone marked 170 years of continued growth and expansion in the western Massachusetts and Connecticut marketplaces. Ongoing activities include special ma
Slide 7: 3Q2023 Quarterly Earnings
3Q2023 QUARTERLY EARNINGS ($ in thousands, excey 3Q2023 (1 2Q2023 (2X3) 1Q2023 (2) 4Q2022 (4) 3Q2022 Net interest income $ 16,383 $ 16,846 $ 18,504 $ 20,854 $ 20,288 Provision for (reversal of) credit losses 364 420 (388) 150 675 Non-interest income 3,612 1,592 2,979 5,653 2,590 Non-interest expense
Slide 8: Net Interest Income and Net Interest Margin
NET INTEREST INCOME AND NET INTEREST MARGIN $25.0 3.44% 3.50% $24.0 8 < iw 3.40% $23.0 S509 $22.0 5.20% $20.9 3.10% $21.0 $20.0 aa $.00% 2.90% sia0 2.70% 2.80% $160 2.70% $17.0 bales $164 2.60% $16.0 2.50% 3Q2022 42022 102023 202023 302023 Net interest income ($) — Net interest margin (%) On a seque
Slide 9: Total Loans
TOTAL LOANS Average Loans Outstanding Period-end Loans Outstanding $2,020 $2,020 — $2,007 $2,007 490% $2,018 ‘ mais, $2,000 $1,995 i $1,993 Iyeo% 4.70% $2,010 $2,006 $2,005 2,004 $1,980 4.50% $2,000 $1,995 4.30% $1,990 $1,989 $1,960 $1,985. 4.10% $1,980 $1,940 $1,975 3.90% 3Q2022 4Q2022 102023 20202
Slide 10: Commercial and Industrial Loans
COMMERCIAL AND INDUSTRIAL LOANS $235 $232 $230 $227 $225 $220 $220 $218 $215 $213 $210 $205 $200 302022 402022 102023 202023 302023 Total commercial and industrial (*C&I") loans decreased $7.3 million, or 3.3%, from $219.8 million at December 31, 2022, to $212.5 milion at September 30, 2023. At Sept
Slide 11: Commercial & Industrial Portfolio
COMMERCIAL & INDUSTRIAL PORTFOLIO “) _ Manufacturing, 1.9% All Other C&l, 3.6% _ _Sand and Gravel Mining, 1.1% Specialty Trade, 0.5% __ ___Wholesale trade, 1.6% Heavy and Civil Engineering Construction, 0.9% ______ Educational Services, 0.9%
Slide 12: Commercial Real Estate Loans
COMMERCIAL REAL ESTATE LOANS $1,085 $1,082 $1,080 $1,080 $1,080 $1,075 $1,075 $1,070 $1,069 $1,065 $1,060 302022 402022 102023 202023 302023 Total commercial real estate (“CRE”) loans increased $11.0 million, or 1.0%, to $1.1 billion from December 31, 2022 to September 30, 2023. At September 30, 202
Slide 13: Commercial Real Estate Loans and Total Office Portfolio
COMMERCIAL REAL ESTATE LOANS AND TOTAL OFFICE PORTFOLIO Commercial Real Estate As a Percentage of Total Loans") Student Housing, 1.2% Adult Care/Assisted Living, 1.6% Retail Shopping, 8.2% Apartment, 8.2% Auto Sales, Self-Storage, 1.9% 1.3% 1.2% Residential Non-Owner, 2.6% \ \ Hotel, 2.3% Other, 3.0
Slide 14: Residential Real Estate Loans and Consumer Loans
RESIDENTIAL REAL ESTATE LOANS AND CONSUMER LOANS $725 $720 $720 $715 S711 $710 $707 $705 $700 $700 $695, $691 $690 $685, $680 $675 302022 402022 102023 202023 302023 Residential real estate loans, including home equity loans, and consumer loans increased $20.0 million, or 2.9%, to $720.0 million, fr
Slide 15: Investment Portfolio
INVESTMENT PORTFOLIO The table below displays the investment portf lio as of September 30, 2023. At September 30, 2023, held-to-maturity ("HTM") and available-for-sale (“AFS") securities represented 57% and 43%, respectively, of the total investment portfolio's amortized cost basis. Unrealized losse
Slide 16: Total Deposits
TOTAL DEPOSITS PERIOD-END CORE DEPOSITS PERIOD-END TIME DEPosits™ $2,500 $700 $583 $600 $1,944 $2,000 eine $536 $1,699 51.623 §1,504 $500 $458 $412 $1,500 $400 gaya $1,000 $300 $200 $500 $100 s s- 302022 402022 102023 202023 302023 302022 402022 102023 202023 302023 At September 30, 2023, total depo
Slide 17: Average Total Deposits
AVERAGE TOTAL DEPOSITS Average Deposits and Rates 1.60% $2,100 1.42% 1.40% $1,900 $1,594 113% $1,700 $1,615 1564, " 1.20% $1556 $1,559 4.00% $1,500 00% Zz 0.80% 1,300 80% : afl 0.60% $1,100 oy, $900 ran _ 0.40% $700 $659 $664 $639 $591 $592 0.20% $55 (iam im = = mo 3Q2022 4Q2022 102023 2Q2023 32023
Slide 18: Historical Rate Paid and Betas on Core and Time Deposits
HISTORICAL RATE PAID AND BETAS ON CORE AND TIME DEPOSITS Core Deposit Beta‘ ") Core deposit betas lagged early in the cycle 20% 18% 100% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 19% an1% 3Q2022 402022 102023 202023 302023 1.25% 1.00% 0.75% 0.50% 0.25% 0.00% Core Deposit Beta, cumulative — Cost of Core Dep
Slide 19: Average Core and Time Deposits
AVERAGE CORE AND TIME DEPOSITS Average Core Deposits and Rates Average Time Deposits and Rates $2,500 0.80% 0.70% 0.70% $2,000 0.60% $1,500 60% 0.40% $1,000 0.30% 0.20% ‘$500 0.10% $- 0.00% oY ght ¢ PP 8 s ss FS s Average core deposits, including non-interest bearing deposits, decreased $57.3 millio
Slide 20: Loan-to-Deposit Ratio
LOAN-TO-DEPOSIT RATIO Core Deposits and Time Deposits as a % Period-end Loan-to-Deposit Ratio of Total Deposits ue 90% — a5% 93% 93% 93% 82% sy, 93% % 80% % 75% 73% 92% 70% 1% 60% 90% 50% 80% 89% 40% 38% 88% 30% 27% 25% jon | 87% 20% 5% . 0% 85% s0n022 aque 402028 202024 saz028 32022 402022 102023 2
Slide 21: Wholesale Funding
WHOLESALE FUNDING $160 $140 $120 $100 $80 $60 $40 $20 Wholesale Funding (Includes $20 million in Subordinated Debt) $62 $42 302022 402022 $150 102023 $148 202023 $150 302023 ‘The Bank is considered to be well-capitalized as defined by regulators (See Slide 27). In addition, The Bank's TCE Ratio”), a
Slide 22: Liquidity
LIQUIDITY Amount in Use at Total September Available 30, 2023 Internal Sources: Cash and cash equivalents 28 - Unpiedged securities Siz20 . Excess pledged - securities ee External Sources: FHLB $598.9 $47.3 FRB Bank Term Funding Program ns) sono FRB Discount Window cn - Other Unsecured: Corresponden
Slide 23: Deposit Market Share in Hampden County, MA
DEPOSIT MARKET SHARE IN HAMPDEN COUNTY, MAAS OF JUNE 30, 2023 Total Deposit Deposits in Rank 2023___ Parent Company Name Market ($000) Market Share _# of Branches PeoplesBank 2,271,591 16.96% 13 2 TD Bank 2,029,147 15.15% 16 4 M&T Bank 1,143,383 8.54% 14 s Berkshire Bank 1,142,092 8.53% 1. 6 KeyBank
Slide 24: Asset Quality Indicators
ASSET QUALITY INDICATORS 3020221) 420228) __ 120230) 202023 302023) Total delinquent loans $3.3M $4.5M $3.0M $5.4M $5.6M Delinquent loans as a % of total loans 0.16% 0.22% 0.15% 0.27% 0.28% Nonperforming loans (NPL) $4.4M $5.7M $5.8M $5.8M $6.3M NPL as a % of total loans 0.22% 0.29% 0.29% 0.29% 0.31
Slide 25: Asset Quality
ASSET QUALITY ‘June 30, 2023 ‘September 30, 2023 ALLL ALLL Total Loan Total Loan ALLL) Loans Outstanding) __ Segment ALLL) Loans Outstanding) _ Segment Commercial and industrial $1,487 $227,093 0.65% $1,968 $212,577 0.93%) commercial real estate 15,752 1,075,429 1.46% 15,573, 1,080,361 1.44%] [Resid
Slide 26: Asset Quality
ASSET QUALITY ( i) 3Q202211) 4020220) 1020231 202023?) Special Mention $39.8 $14.1 $12.8 $11.8 Special Mention - Hotel $17.6 $7.6 $8.0 = : Total Special Mention $57.4 $21.7 $20.8 $11.8 $12.0 % of Total Loans 2.9% 1.1% 1.0% 0.6% 0.6% ‘Substandard $28.4 $42.3 $40.4 $37.7 $33.6 % of Total Loans 1.4% 21
Slide 27: Capital Management
CAPITAL MANAGEMENT We are well-capitalized with excess capital. Ratio at ‘As of September 30, 2023, the TCE ratio), a non-GAAP. September 30, Ratio at Gonssiaaiod 2023 December 31, 2022 financial measure, was 8.58% after factoring in $28.7 million ees ar a in net AOC! unrealized losses. If the HTM n
Slide 28: Capital Return to Shareholders
CAPITAL RETURN TO SHAREHOLDERS Share Repurchases Dividends Annual Dividends Year # of Shares Year per Share 2018 2,189,276 2018 $0.16 2019 1,938,667 2019 $0.20 2020 1,391,496 2020 $0.20 2021 2,758,051 2021 $0.20 2022 720,975 2022 $0.24 10-2023 125,000 10-2023 $0.07 20-2023 124,744 2Q-2023 $0.07 3Q-2
Slide 29: Capital Management
CAPITAL MANAGEMENT Book Value per Share Tangible Book Value per Share (non-GAAP)\) $10.50 $10.60 $10.53 $10.27 $0.84 9.04 $0.87 $9.61 $9.52 | | | 2 vo vo a0” an on™ 0 go Book Value ™ Tangible Book Value (non-GAAP) Book value per share increased $0.26, or 2.5%, from $10.27 at December 31, 2022 to $10
Slide 30: Appendix: Non-GAAP to GAAP Reconciliation
APPENDIX: NON-GAAP TO GAAP RECONCILIATION 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 financial condition. Because not all companies use the same calculation,
Slide 31: Appendix: Non-GAAP to GAAP Reconciliation
APPENDIX: NON-GAAP TO GAAP RECONCILIATION III" Reconciliation of Non-GAAP to GAAP Financial Measures. ——~—~—~—SCSCS<7S;7SPSCS ‘The Company believes that certain non-GAAP financial measures provide information to investors that is useful in understanding its financial condition. Because not all compa
Slide 32: Appendix: Non-GAAP to GAAP Reconciliation
APPENDIX: NON-GAAP TO GAAP RECONCILIATION 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 financial condition, Because not all companies use the eame calculation,
Slide 33: Westfield Bank
WESTFIELD BANK “WHAT BETTER BANKING’S ALL ABOUT” James C. Hagan, President and Chief Executive Officer 141 Elm Stroot, Westéiold, MA Guida R. Sajdak, Executive Vice President and Chief Financial Officer Meghan Hibner, First Vice President and Investor Relations Officer
Western New England Bancorp — Q3 2023 Earnings Presentation on 6ix