Western New England Bancorp, Inc. · NASDAQ:WNEB
Western New England Bancorp — Q4 2023 Earnings Presentation
32 slides from Western New England Bancorp's earnings presentation, Jan 23, 2024
Slide 1: Local banking is better than ever. Investor Presentation Fourth Quarter 2023
Local banking is better than ever. INVESTOR PRESENTATION FOURTH 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 • 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, bus
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
4 Q2023 QUARTERLY EARNINGS 6 4Q2022 (4) 1Q2023 (1) 2Q2023 (1)(3) 3Q2023 (1)(2) 4Q2023 (1) ($ in thousands , except EPS) $ 20,854 $ 18,504 $ 16,846 $ 16,383 $ 16,176 Net interest income 150 (388) 420 354 486 Provision for (reversal of) credit losses 5,653 2,979 1,592 3,612 2,714 Non - interest income
Slide 7: Net Interest Income and Net Interest Margin
NET INTEREST INCOME AND NET INTEREST MARGIN 7 $20.9 $18.5 $16.8 $16.4 $16.2 3.44% 3.14% 2.81% 2.70% 2.64% 2.50% 2.60% 2.70% 2.80% 2.90% 3.00% 3.10% 3.20% 3.30% 3.40% 3.50% 4Q2022 1Q2023 2Q2023 3Q2023 4Q2023 $16.0 $17.0 $18.0 $19.0 $20.0 $21.0 $22.0 $23.0 $24.0 $25.0 Net interest income ($) Net inter
Slide 8: Total Loans
TOTAL LOANS 8 $1,995 $1,993 $2,007 $2,007 $2,017 4.23% 4.34% 4.49% 4.66% 4.73% 4.00% 4.20% 4.40% 4.60% 4.80% 5.00% 4Q2022 1Q2023 2Q2023 3Q2023 4Q2023 $1,900 $1,920 $1,940 $1,960 $1,980 $2,000 $2,020 $2,040 Average Loans Outstanding Average Loans Outstanding Average Loan Yield $1,989 $2,004 $2,016 $2
Slide 9: Commercial and Industrial Loans
COMMERCIAL AND INDUSTRIAL LOANS 9 $220 $218 $227 $213 $217 4Q2022 1Q2023 2Q2023 3Q2023 4Q2023 $205 $210 $215 $220 $225 $230 Total commercial and industrial (“C&I”) loans decreased $ 2 . 4 million, or 1 . 1 % , from $ 219 . 8 million at December 31 , 2022 , to $ 217 . 4 million at December 31 , 2023
Slide 10: Commercial & Industrial Portfolio
COMMERCIAL & INDUSTRIAL PORTFOLIO (1) 10 (1) % of total loans as of December 31, 2023 Manufacturing , 1.7% Sand and Gravel Mining , 1.1% Wholesale trade , 1.4% Educational Services, 0.8% Hotels , 0.1% Heavy and Civil Engineering Construction, 0.9% Specialty Trade, 0.6% All Other C&I, 4.0%
Slide 11: Commercial Real Estate Loans
COMMERCIAL REAL ESTATE LOANS 11 $1,069 $1,080 $1,075 $1,080 $1,080 4Q2022 1Q2023 2Q2023 3Q2023 4Q2023 $1,062 $1,064 $1,066 $1,068 $1,070 $1,072 $1,074 $1,076 $1,078 $1,080 $1,082 Total commercial real estate (“CRE”) loans increased $ 10 . 4 million, or 1 . 0 % , to $ 1 . 1 billion from December 31 ,
Slide 12: Commercial Real Estate Loans and Total Office Portfolio
COMMERCIAL REAL ESTATE LOANS AND TOTAL OFFICE PORTFOLIO 12 (1) As of December 31, 2023 Adult Care/Assisted Living, 1.6% Apartment, 8.2% Auto Sales, 1.9% College/School , 1.2% Hotel, 2.2% Industrial/Warehouse , 9.0% Mixed - Use, 1.5% Office, 11.3% Other , 3.0% Residential Non - Owner , 2.5% Self - St
Slide 13: Residential Real Estate Loans and Consumer Loans
RESIDENTIAL REAL ESTATE LOANS AND CONSUMER LOANS 13 $700 $707 $711 $720 $728 4Q2022 1Q2023 2Q2023 3Q2023 4Q2023 $685 $690 $695 $700 $705 $710 $715 $720 $725 $730 $735 Residential real estate loans , including home equity loans, and consumer loans increased $ 27 . 5 million , or 3 . 9 % , to $ 727 .
Slide 14: Investment Portfolio
INVESTMENT PORTFOLIO 14 The table below displays the investment portfolio as of December 31 , 2023 . At December 31 , 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 .
Slide 15: Total Deposits
TOTAL DEPOSITS 15 $1,818 $1,699 $1,623 $1,594 $1,532 4Q2022 1Q2023 2Q2023 3Q2023 4Q2023 $1,350 $1,400 $1,450 $1,500 $1,550 $1,600 $1,650 $1,700 $1,750 $1,800 $1,850 PERIOD - END CORE DEPOSITS At December 31 , 2023 , total deposits decreased $ 85 . 7 million, or 3 . 8 % , to $ 2 . 1 billion from Dece
Slide 16: Average Total Deposits
AVERAGE TOTAL DEPOSITS 16 $1,594 $1,564 $1,556 $1,559 $1,588 $664 $639 $591 $592 $589 0.39% 0.76% 1.13% 1.42% 1.60% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% 1.80% 4Q2022 1Q2023 2Q2023 3Q2023 4Q2023 $500 $700 $900 $1,100 $1,300 $1,500 $1,700 $1,900 $2,100 Average Deposits and Rates Inter
Slide 17: Historical Rate Paid and Betas on Core and Time Deposits
HISTORICAL RATE PAID AND BETAS ON CORE AND TIME DEPOSITS 17 (1) Core deposit beta excludes non - interest bearing accounts 11% 15% 18% 19% 27% 0.52% 0.82% 1.00% 1.11% 1.54% 0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 1.50% 1.75% 4Q2022 1Q2023 2Q2023 3Q2023 4Q2023 0% 5% 10% 15% 20% 25% 30% Core Deposit Beta
Slide 18: Average Core and Time Deposits
AVERAGE CORE AND TIME DEPOSITS 18 $1,898 $1,775 $1,645 $1,588 $1,573 0.34% 0.53% 0.64% 0.70% 0.76% 0.00% 0.10% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% 0.80% $1,000 $1,100 $1,200 $1,300 $1,400 $1,500 $1,600 $1,700 $1,800 $1,900 $2,000 Average Core Deposits and Rates Average core deposits, including non -
Slide 19: Loan-to-Deposit Ratio
LOAN - TO - DEPOSIT RATIO 19 89% 93% 93% 93% 95% 4Q2022 1Q2023 2Q2023 3Q2023 4Q2023 86% 87% 88% 89% 90% 91% 92% 93% 94% 95% Period - end Loan - to - Deposit Ratio 82% 79% 75% 73% 72% 18% 21% 25% 27% 28% 4Q2022 1Q2023 2Q2023 3Q2023 4Q2023 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Core Deposits and Time
Slide 20: Wholesale Funding
WHOLESALE FUNDING 20 $62 $150 $148 $150 $156 4Q2022 1Q2023 2Q2023 3Q2023 4Q2023 $- $20 $40 $60 $80 $100 $120 $140 $160 $180 Wholesale Funding (Includes $20 million in Subordinated Debt) The Bank is considered to be well - capitalized as defined by regulators (See Slide 27 ) . The Bank’s Tier 1 Lever
Slide 21: Liquidity Sources
21 Net Available Amount in Use at December 31, 2023 Total Available (In millions) Internal Sources: $28.8 - $28.8 Cash and cash equivalents $130.8 - $130.8 Unpledged securities $46.7 - $46.7 Excess pledged securities External Sources: $535.6 $65.6 $601.2 FHLB $23.6 $90.0 $113.6 FRB Bank Term Funding
Slide 22: Deposit Market Share in Hampden County, MA
________ Source: SNL Financial as of June 30, 2023. 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 4Q2023 3Q2023 2Q2023 1Q2023 4Q2022 $6.0M $5.6M $5.4M $3.0M $4.5M Total delinquent loans 0.30% 0.28% 0.27% 0.15% 0.22% Delinquent loans as a % of total loans $6.4M $6.3M $5.8M $5.8M $5.7M Nonperforming loans (NPL) 0.32% 0.31% 0.29% 0.29% 0.29% NPL as a % of total loans 0.2
Slide 24: Asset Quality
ASSET QUALITY 24 Management continues to remain attentive to any signs of deterioration in borrowers’ financial conditions and is proactive in taking the appropriate steps to mitigate risk . The allowance for credit losses as a percentage of total loans was 1 . 00 % at December 31 , 2023 , compared
Slide 25: Asset Quality
ASSET QUALITY 25 4Q2023 3Q2023 2Q2023 1Q2023 4Q2022 ($ in Millions) $5.8 $12.0 $11.8 $12.8 $14.1 Special Mention - - - $ 8.0 $ 7.6 Special Mention - Hotel $5.8 $12.0 $11.8 $20.8 $21.7 Total Special Mention 0.3% 0.6% 0.6% 1.0% 1.1% % of Total Loans $33.7 $33.6 $37.7 $40.4 $42.3 Substandard 1.7% 1.7%
Slide 26: Capital Management
CAPITAL MANAGEMENT 26 We are well - capitalized with excess capital. Ratio at December 31, 2022 Ratio at December 31, 2023 Consolidated 9.27% 9.40% Leverage Ratio 12.18% 12.59% Common Equity Tier 1 Ratio 12.18% 12.59% Tier 1 Capital Ratio 14.20% 14.67% Total Capital Ratio As of December 31 , 2023 ,
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 155,161 3Q - 2023 244,839 4Q - 2023 649,744 Total 2023: Annual Dividends per Share Year $0.16 2018 $0.20 2019 $0.20 2020 $0.20 2021 $0.24 20
Slide 28: Capital Management
CAPITAL MANAGEMENT 28 $10.27 $10.50 $10.60 $10.53 $10.96 $9.61 $9.84 $9.94 $9.87 $10.30 Book Value per Share Tangible Book Value per Share (non - GAAP) (1) Book Value Tangible Book Value (non-GAAP) Book value per share increased $0.69, or 6.7%, from $10.27 at December 31, 2022 to $10.96 at December
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 , First Vice President and Investor Relations Officer 32 141 Elm Street, Westfield, MA
Western New England Bancorp — Q4 2023 Earnings Presentation on 6ix