Part I [Item 1. Business](index=5&type=section&id=ITEM%201.%20BUSINESS.) Western New England Bancorp, Inc. is a community-focused holding company with $2.7 billion in assets, operating through Westfield Bank in Massachusetts and Connecticut | Metric | Value (as of Dec 31, 2024) | | :--- | :--- | | Consolidated Total Assets | $2.7 billion | | Total Net Loans | $2.1 billion | | Total Deposits | $2.3 billion | | Total Shareholders' Equity | $235.9 million | - The Company's primary business is conducted through its wholly-owned subsidiary, Westfield Bank, a federally-chartered savings bank established in 1853[16](index=16&type=chunk)[17](index=17&type=chunk)[19](index=19&type=chunk) - The Bank operates 25 branches and numerous ATMs across Hampden and Hampshire counties in Massachusetts, and Hartford and Tolland counties in Connecticut[17](index=17&type=chunk)[21](index=21&type=chunk) - As of June 30, 2024, the company held the **third-largest market share** in Hampden County, with approximately 13.2% of total deposits[26](index=26&type=chunk) Human Capital - As of December 31, 2024, the Bank employed **335 people** (286 full-time and 49 part-time), with an average employee tenure of 8.8 years[29](index=29&type=chunk) - The company invests in talent development through programs like the Corporate Leadership Development Program, which had 24 participants in 2024, and offers educational reimbursement for employees[31](index=31&type=chunk) Lending Activities - The company's primary lending focus is on generating high-quality commercial loan relationships, including commercial real estate, construction, and commercial and industrial loans[39](index=39&type=chunk) - The regulatory limit on loans to one borrower was **$40.6 million** as of December 31, 2024; the company's largest lending relationship had a total exposure of $22.8 million[37](index=37&type=chunk) - During fiscal year 2024, the company sold **$20.1 million** in fixed-rate residential loans to the secondary market while retaining servicing rights, a strategy to manage interest rate risk[57](index=57&type=chunk) Loan Portfolio Composition (as of Dec 31, 2024) | Loan Category | Amount (in thousands) | Percent of Total | | :--- | :--- | :--- | | **Commercial Real Estate** | **$1,075,732** | **52.0%** | | Non-owner occupied | $880,828 | 42.6% | | Owner occupied | $194,904 | 9.4% | | **Residential Real Estate** | **$775,659** | **37.5%** | | Residential one-to-four family | $653,802 | 31.6% | | Home equity | $121,857 | 5.9% | | **Commercial and Industrial** | **$211,656** | **10.3%** | | **Consumer** | **$4,391** | **0.2%** | | **Total Gross Loans** | **$2,067,438** | **100.0%** | Asset Quality - Total criticized loans (Special Mention and Substandard) remained stable at **1.9% of total loans**, amounting to $38.4 million at year-end 2024 compared to $39.5 million at year-end 2023[77](index=77&type=chunk) - The company recorded **net recoveries of $87,000** in 2024, a significant improvement from net charge-offs of $2.0 million in 2023[85](index=85&type=chunk) - The company recorded a **reversal of credit losses of $665,000** for the year ended December 31, 2024, compared to a provision for credit losses of $872,000 in the prior year[100](index=100&type=chunk) Key Asset Quality Ratios | Metric | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Nonperforming loans to total loans | 0.26% | 0.32% | | Allowance for credit losses to total loans | 0.94% | 1.00% | | Allowance for credit losses to nonperforming loans | 362.93% | 315.64% | Investment Activities - At year-end 2024, the available-for-sale portfolio had **unrealized losses of $31.2 million**, and the held-to-maturity portfolio had **unrealized losses of $39.4 million**, attributed to interest rate fluctuations[113](index=113&type=chunk) Investment Securities Portfolio (as of Dec 31, 2024) | Security Type | Amortized Cost (in thousands) | Fair Value (in thousands) | | :--- | :--- | :--- | | **Available-for-sale** | **$191,940** | **$160,704** | | Debt securities | $24,424 | $21,068 | | Mortgage-backed securities | $167,516 | $139,636 | | **Held-to-maturity** | **$205,036** | **$165,606** | | Debt securities | $6,066 | $5,788 | | Mortgage-backed securities | $198,970 | $159,818 | Deposits - Total deposits increased to **$2.3 billion** at year-end 2024 from $2.1 billion at year-end 2023[114](index=114&type=chunk) - Core deposits represented **68.9% of total deposits** at December 31, 2024, down from 71.5% at the end of 2023, indicating a shift towards higher-cost time deposits[117](index=117&type=chunk) - Uninsured deposits increased to **28.4% of total deposits** at year-end 2024 from 26.8% at year-end 2023[116](index=116&type=chunk) Other Sources of Funds - Total borrowings decreased by 24.4% to **$103.4 million** at year-end 2024, driven by the repayment of $90.0 million borrowed under the Bank Term Funding Program (BTFP)[132](index=132&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk) - As of December 31, 2024, the company had significant available liquidity, including **$464.1 million** in borrowing capacity from the FHLB and **$382.9 million** from the FRB Discount Window[134](index=134&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk) - The company has **$19.8 million** in 4.875% fixed-to-floating rate subordinated notes outstanding, which qualify as Tier 2 capital[140](index=140&type=chunk)[141](index=141&type=chunk) Supervision and Regulation - The company is a savings and loan holding company regulated by the Federal Reserve Board (FRB), while its subsidiary, Westfield Bank, is regulated by the Office of the Comptroller of the Currency (OCC)[147](index=147&type=chunk)[148](index=148&type=chunk) - The company and the Bank are subject to Basel III capital rules, requiring minimum ratios for CET1 (7.0%), Tier 1 (8.5%), and Total capital (10.5%)[164](index=164&type=chunk)[170](index=170&type=chunk) - As of December 31, 2024, the Bank was categorized as **"well-capitalized"** under the Prompt Corrective Action (PCA) framework[172](index=172&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=ITEM%201A.%20RISK%20FACTORS.) The company faces significant risks from interest rate volatility, credit concentrations, competition, cybersecurity threats, and extensive government regulation - The company's earnings are highly sensitive to interest rate changes, as **net interest income accounted for 82.3% of total revenues** in 2024[214](index=214&type=chunk)[215](index=215&type=chunk) - The loan portfolio's concentration in commercial real estate, commercial & industrial, and consumer loans may expose the company to **greater credit risk** than traditional residential mortgage lending[217](index=217&type=chunk)[218](index=218&type=chunk) - The allowance for credit losses is based on significant management estimates (CECL model), and if these estimates prove inadequate, it could **materially affect the company's financial condition**[220](index=220&type=chunk)[223](index=223&type=chunk)[225](index=225&type=chunk) - The company operates in a highly regulated environment, and changes in laws or regulations could **increase costs and limit business opportunities**[248](index=248&type=chunk)[249](index=249&type=chunk) - **Cybersecurity threats** pose a significant risk that could disrupt operations, compromise confidential information, and result in financial loss and reputational damage[257](index=257&type=chunk) [Item 1C. Cybersecurity](index=50&type=section&id=ITEM%201C.%20CYBERSECURITY.) Cybersecurity risk is managed through a board-overseen framework that includes management committees, employee training, and third-party monitoring - The Board's Finance and Risk Management Committee has **ultimate oversight** of the company's enterprise risk management framework, including cybersecurity risks[289](index=289&type=chunk) - The company utilizes a management-level Strategic Technology Oversight Committee (TOC) and an ISO Metrics Oversight Committee to manage and monitor cybersecurity threats[281](index=281&type=chunk)[282](index=282&type=chunk) - The cybersecurity program includes regular employee training, social engineering tests, independent audits, penetration testing, and **continuous monitoring by a third-party Security Operations Center**[283](index=283&type=chunk)[287](index=287&type=chunk)[288](index=288&type=chunk) [Item 2. Properties](index=52&type=section&id=ITEM%202.%20PROPERTIES.) The company operates from its main office and 25 banking locations with a net book value of $24.4 million in owned premises and equipment - The company operates through **25 banking offices** and eight free-standing ATMs, supplemented by additional third-party serviced ATMs[295](index=295&type=chunk) - The net book value of owned premises and equipment was **$24.4 million** as of December 31, 2024[295](index=295&type=chunk) [Item 3. Legal Proceedings](index=55&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS.) The company settled two class-action lawsuits regarding overdraft fees for approximately $510,000, with the expense recorded in 2023 - The company settled two class-action lawsuits concerning overdraft and insufficient funds fees for approximately **$510,000**[301](index=301&type=chunk)[303](index=303&type=chunk) - The settlement expense was recorded in non-interest expense for the year ended December 31, 2023, and the court granted final approval in January 2025[303](index=303&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities](index=56&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY,%20RELATED%20SHAREHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES.) The company's stock (NASDAQ: WNEB) has an active repurchase program, with 237,695 shares bought back in Q4 2024 - On May 21, 2024, the Board authorized a new stock repurchase plan for up to **1,000,000 shares** of common stock[311](index=311&type=chunk) - As of December 31, 2024, **472,318 shares remained available for repurchase** under the current program[311](index=311&type=chunk) Share Repurchases | Period (2024) | Total Shares Purchased | Average Price Paid per Share ($) | | :--- | :--- | :--- | | October | 95,000 | 8.76 | | November | 54,383 | 9.04 | | December | 88,312 | 9.26 | | **Q4 Total** | **237,695** | **9.01** | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=58&type=section&id=ITEM%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS.) Net income declined to $11.7 million in 2024 due to net interest margin compression, despite asset growth and a reversal of credit losses - The company's growth-oriented strategy focuses on increasing commercial and residential lending, growing core deposits, and improving efficiency through technology investments[320](index=320&type=chunk)[322](index=322&type=chunk) Key Financial Results | Metric | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Net Income | $11.7 million | $15.1 million | | Diluted EPS | $0.56 | $0.70 | | Net Interest Income | $59.8 million | $67.9 million | | (Reversal) Provision for Credit Losses | ($0.67 million) | $0.87 million | Comparison of Financial Condition - Total assets increased by $88.5 million (3.5%) to **$2.7 billion** at year-end 2024[343](index=343&type=chunk) - Net loans grew by $42.9 million (2.1%) to **$2.1 billion**, led by a $53.5 million increase in residential real estate loans[349](index=349&type=chunk) - Total deposits grew by $118.9 million (5.6%) to **$2.3 billion**, with time deposits increasing 15.1% while core deposits grew 1.7%[386](index=386&type=chunk)[387](index=387&type=chunk) - Shareholders' equity decreased slightly to $235.9 million, while **tangible book value per share increased to $10.63** from $10.30[392](index=392&type=chunk)[393](index=393&type=chunk) Commercial Real Estate (CRE) Concentrations - The company holds a significant concentration in commercial real estate loans, which totaled **$1.1 billion (52.0% of total loans)** at year-end 2024[353](index=353&type=chunk)[361](index=361&type=chunk) - Non-owner occupied CRE loans totaled $880.8 million, representing **325.2% of the bank's total risk-based capital**[353](index=353&type=chunk)[366](index=366&type=chunk) - Office-related CRE loans totaled **$200.1 million** (73.9% of total bank risk-based capital) as of December 31, 2024, down from $216.2 million in the prior year[376](index=376&type=chunk)[379](index=379&type=chunk) CRE Portfolio by Property Type (Top 5) | CRE Property Type (Top 5) | Balance (in thousands) | % of CRE Portfolio | | :--- | :--- | :--- | | Office Portfolio | $200,115 | 18.6% | | Apartment | $179,874 | 16.7% | | Industrial | $168,281 | 15.6% | | Retail | $117,041 | 10.9% | | Mixed Use | $77,628 | 7.2% | Comparison of Operating Results - Net interest income **decreased by $8.1 million (11.9%)** in 2024 due to a $16.8 million increase in interest expense that outpaced an $8.7 million increase in interest income[397](index=397&type=chunk) - The **net interest margin compressed to 2.45%** in 2024 from 2.82% in 2023, as the average cost of funds rose 70 basis points while the average yield on interest-earning assets rose only 30 basis points[398](index=398&type=chunk)[399](index=399&type=chunk)[400](index=400&type=chunk) - Non-interest income increased by $2.0 million (18.4%) to **$12.9 million**, driven by higher gains on non-marketable equity investments and new income from loan-level swap fees[407](index=407&type=chunk)[408](index=408&type=chunk) - Non-interest expense remained flat at **$58.4 million**, as increases in salaries and FDIC insurance were offset by a decrease in professional fees[409](index=409&type=chunk)[410](index=410&type=chunk) Liquidity and Capital Resources - Primary sources of liquidity include deposits, loan repayments, and borrowings from the FHLB, and the company maintains sufficient liquidity to meet funding needs[413](index=413&type=chunk)[414](index=414&type=chunk) - At December 31, 2024, the company had **$464.1 million** in available borrowing capacity with the FHLB and **$382.9 million** with the FRB Discount Window[415](index=415&type=chunk)[416](index=416&type=chunk) - The company and the Bank **exceeded all regulatory capital requirements** to be considered "well-capitalized" as of December 31, 2024[424](index=424&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=81&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK.) The company's primary market risk is interest rate sensitivity, with net interest income projected to fall 4.4% in a +200 bps rate shock scenario - The company's interest rate management strategy aims to limit fluctuations in net interest income by coordinating asset and liability decisions and managing the duration of its portfolio[431](index=431&type=chunk)[433](index=433&type=chunk) Net Interest Income Sensitivity Analysis | Interest Rate Scenario | Estimated Change in Net Interest Income (Year 1) | | :--- | :--- | | +200 basis points | -4.4% | | -200 basis points | +3.9% | [Item 8. Financial Statements and Supplementary Data](index=81&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA.) This section presents the audited consolidated financial statements for fiscal year 2024, which received an unqualified opinion from the auditor - The financial statements were prepared in conformity with U.S. GAAP and audited by Wolf & Company, P.C., who issued an **unqualified opinion**[490](index=490&type=chunk)[491](index=491&type=chunk) - A critical audit matter identified was the **Allowance for Credit Losses** for loans evaluated on a pooled basis, due to the significant judgment and complexity involved in the CECL methodology[497](index=497&type=chunk)[498](index=498&type=chunk)[499](index=499&type=chunk) [Item 9A. Controls and Procedures](index=81&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES.) Management and the independent auditor concluded that the company's disclosure controls and internal controls over financial reporting were effective - Management concluded that the company's **disclosure controls and procedures were effective** as of the end of the fiscal year[450](index=450&type=chunk) - Management's assessment, based on the COSO framework, concluded that **internal control over financial reporting was effective** as of December 31, 2024[451](index=451&type=chunk) - The independent auditor, Wolf & Company, P.C., issued an **unqualified opinion** on the effectiveness of the company's internal control over financial reporting[456](index=456&type=chunk) Part III [Items 10-14](index=84&type=section&id=ITEMS%2010-14) Details regarding governance, compensation, and security ownership are incorporated by reference from the 2025 Proxy Statement - Information for Part III (Items 10, 11, 12, 13, and 14) is **incorporated by reference** from the company's Proxy Statement for the 2025 Annual Meeting of Shareholders[466](index=466&type=chunk)[467](index=467&type=chunk)[468](index=468&type=chunk)[469](index=469&type=chunk) Part IV [Item 15. Exhibits and Financial Statement Schedules](index=85&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES.) This section lists all exhibits filed with the Form 10-K, including material contracts and required certifications - This section provides an index of all exhibits filed with the Form 10-K, including organizational documents, descriptions of securities, material contracts, and various certifications[474](index=474&type=chunk)[475](index=475&type=chunk)[476](index=476&type=chunk)

Western New England Bancorp (WNEB) reported $18.53 million in revenue for the quarter ended December 2024, representing a year-over-year decline of 1.9%. EPS of $0.16 for the same period compares to $0.12 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $18.06 million, representing a surprise of +2.59%. The company delivered an EPS surprise of +33.33%, with the consensus EPS estimate being $0.12.While investors scrutinize revenue and earnings changes year-over-year and how they co ...

Western New England Bancorp (WNEB) came out with quarterly earnings of $0.16 per share, beating the Zacks Consensus Estimate of $0.12 per share. This compares to earnings of $0.12 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 33.33%. A quarter ago, it was expected that this bank holding company would post earnings of $0.10 per share when it actually produced earnings of $0.09, delivering a surprise of -10%.Over the last four ...

Western New England Bancorp, Inc. 8-K Exhibit 99.1 For further information contact: James C. Hagan, President and CEO Guida R. Sajdak, Executive Vice President and CFO Meghan Hibner, First Vice President and Investor Relations Officer 413-568-1911 WESTERN NEW ENGLAND BANCORP, INC. REPORTS RESULTS FOR THREE MONTHS AND YEAR ENDED DECEMBER 31, 2024 AND DECLARES QUARTERLY CASH DIVIDEND Westfield, Massachusetts, January 28, 2025: Western New England Bancorp, Inc. (the "Company" or "WNEB") (NasdaqGS: WNEB), the h ...

WESTFIELD, Mass., Jan. 28, 2025 (GLOBE NEWSWIRE) -- Western New England Bancorp, Inc. (the “Company” or “WNEB”) (NasdaqGS: WNEB), the holding company for Westfield Bank (the “Bank”), announced today the unaudited results of operations for the three and twelve months ended December 31, 2024. For the three months ended December 31, 2024, the Company reported net income of $3.3 million, or $0.16 per diluted share, compared to net income of $2.5 million, or $0.12 per diluted share, for the three months ended De ...

Financial Performance - Net income for Q3 2024 was $1.9 million, or $0.09 per diluted share, a decrease of 57.8% from $4.5 million, or $0.21 per diluted share in Q3 2023[189] - Net income for the three months ended September 30, 2024, was $1.9 million, or $0.09 per diluted share, compared to $4.5 million, or $0.21 per diluted share, for the same period in 2023[245] - Net income for the nine months ended September 30, 2024, was $8.4 million, or $0.40 per diluted share, down from $12.6 million, or $0.58 per diluted share in the same period of 2023[262] Interest Income and Expenses - Net interest income decreased by $1.7 million, or 10.1%, to $14.7 million in Q3 2024, primarily due to a $3.6 million increase in interest expense, or 37.8%[190] - Net interest income decreased by $1.7 million, or 10.1%, for the three months ended September 30, 2024[245] - Net interest income decreased by $7.2 million, or 13.9%, to $44.5 million for the nine months ended September 30, 2024, compared to $51.7 million for the same period in 2023[270] - Interest expense increased by $3.6 million, or 37.8%, primarily due to competitive pricing on deposits and a shift from low-cost core deposits to high-cost time deposits[251] - Interest expense on deposits increased by $3.5 million, or 44.9%, for the three months ended September 30, 2024[251] Asset and Loan Growth - Total assets increased by $75.9 million, or 3.0%, to $2.6 billion as of September 30, 2024, driven by a 152.4% increase in cash and cash equivalents[195] - Total loans increased by $21.7 million, or 1.1%, to $2.0 billion, with residential real estate loans rising by $26.4 million, or 3.7%[201] - Average interest-earning assets increased by $38.2 million, or 1.6%, to $2.4 billion, driven by a $31.3 million increase in average loans[254] Credit Quality - Total delinquency decreased to $4.3 million, or 0.21% of total loans, down from $6.0 million, or 0.30% at the end of 2023[202] - The allowance for credit losses as a percentage of total loans was 0.97% as of September 30, 2024, compared to 1.00% at December 31, 2023[203] - The company recorded a provision for credit losses of $941,000 in Q3 2024, compared to $354,000 in Q3 2023[191] - Provision for credit losses was $941,000 for the three months ended September 30, 2024, compared to $354,000 for the same period in 2023, reflecting an increase in the loan portfolio[257] Capital and Liquidity - Shareholders' equity at September 30, 2024, was $240.7 million, or 9.1% of total assets, compared to $237.4 million, or 9.3% of total assets, at December 31, 2023[242] - The Total Risk-Based Capital Ratio was 14.4% at September 30, 2024, compared to 14.7% at December 31, 2023[243] - The Company had $1.1 billion in immediately available liquidity at September 30, 2024[241] - The company exceeded all applicable regulatory capital requirements and was categorized as "well-capitalized" under the regulatory framework[302] Deposits - Total deposits increased by $80.5 million, or 3.8%, from $2.1 billion at December 31, 2023, to $2.2 billion at September 30, 2024[235] - Core deposits decreased by $8.3 million, or 0.5%, from $1.5 billion, or 71.5% of total deposits, at December 31, 2023, to $1.5 billion, or 68.5% of total deposits, at September 30, 2024[235] - Uninsured deposits represented 27.7% of total deposits at September 30, 2024, compared to 26.8% at December 31, 2023[236] Efficiency and Expenses - Non-interest income decreased by $471,000, or 13.0%, from $3.6 million in Q3 2023 to $3.1 million in Q3 2024[259] - Non-interest expense increased by $288,000, or 2.0%, to $14.4 million in Q3 2024 from $14.1 million in Q3 2023[260] - The efficiency ratio rose to 80.6% in Q3 2024 compared to 70.6% in Q3 2023, indicating lower revenues[261] - The efficiency ratio increased to 80.3% for the nine months ended September 30, 2024, compared to 72.7% for the same period in 2023[281] Tax and Other Expenses - Income tax expense for Q3 2024 was $618,000, with an effective tax rate of 24.5%, up from $1.0 million and 18.7% in Q3 2023[262] - Income tax expense for the nine months ended September 30, 2024, was $2.2 million, with an effective tax rate of 20.9%[282] Market and Regulatory Compliance - The bank's Tier 1 Leverage Ratio was 9.61% as of September 30, 2024, above the minimum requirement of 4.00%[306] - There have been no material changes in the company's assessment of market risk since the 2023 Annual Report[310] - The company has not identified any changes in internal control over financial reporting that materially affected its controls during the last fiscal quarter[312]

Western New England Bancorp (WNEB) reported $17.87 million in revenue for the quarter ended September 2024, representing a year-over-year decline of 10.7%. EPS of $0.09 for the same period compares to $0.21 a year ago.The reported revenue represents a surprise of +2.75% over the Zacks Consensus Estimate of $17.39 million. With the consensus EPS estimate being $0.10, the EPS surprise was -10.00%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expec ...

Western New England Bancorp (WNEB) came out with quarterly earnings of $0.09 per share, missing the Zacks Consensus Estimate of $0.10 per share. This compares to earnings of $0.21 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -10%. A quarter ago, it was expected that this bank holding company would post earnings of $0.11 per share when it actually produced earnings of $0.17, delivering a surprise of 54.55%.Over the last four ...

Financial Performance - For the three months ended September 30, 2024, net income was $1.9 million, or $0.09 per diluted share, a decrease from $4.5 million, or $0.21 per diluted share, for the same period in 2023[2]. - For the three months ended September 30, 2024, net income was $1.9 million, or $0.09 per diluted share, down from $4.5 million, or $0.21 per diluted share, for the same period in 2023, representing a decrease of 57.8%[22]. - Net interest income decreased by $1.7 million, or 10.1%, to $14.7 million for the three months ended September 30, 2024, primarily due to an increase in interest expense of $3.6 million, or 37.8%[23]. - Non-interest income decreased by $471,000, or 13.0%, to $3.1 million for the three months ended September 30, 2024, compared to $3.6 million for the same period in 2023[29]. - Non-interest expense increased by $288,000, or 2.0%, to $14.4 million for the three months ended September 30, 2024, from $14.1 million for the same period in 2023[30]. - Return on average assets and return on average equity for the nine months ended September 30, 2024, were 0.44% and 4.74%, respectively, down from 0.66% and 7.19% for the same period in 2023[34]. - Net interest income for the quarter was $14,728 thousand, compared to $14,470 thousand in the previous quarter, reflecting an increase of 1.8%[85]. - Net income decreased to $1,904 thousand for the quarter, down from $3,513 thousand in the prior quarter, a decline of 45.8%[85]. Asset and Deposit Growth - Total deposits increased by $80.5 million, or 3.8%, to $2.2 billion from year-end 2023, while total loans increased by $21.7 million, or 1.1%, to $2.0 billion[5][6]. - Total assets were $2.6 billion, an increase of $75.9 million, or 3.0%, from December 31, 2023[47]. - Total deposits rose to $2,224,206 thousand, up from $2,171,809 thousand, marking a growth of 2.4%[84]. - Total loans increased to $25,134 million, up from $24,340 million in the previous quarter, representing a growth of 3.3%[74]. Credit Quality - The allowance for credit losses was $20.0 million, or 0.97% of total loans, with nonperforming loans totaling $4.9 million, or 0.24% of total loans[8]. - The provision for credit losses was $941,000 for the three months ended September 30, 2024, compared to a reversal of $294,000 in the previous quarter[17]. - The provision for credit losses increased to $941,000 for the three months ended September 30, 2024, compared to $354,000 for the same period in 2023, reflecting a growing loan portfolio and economic conditions[27]. - Total delinquency was $4.3 million, or 0.21% of total loans, at September 30, 2024, down from $6.0 million, or 0.30% at December 31, 2023[55]. - Nonperforming loans totaled $4.9 million, or 0.24% of total loans, at September 30, 2024, compared to $6.4 million, or 0.32% at December 31, 2023[55]. Efficiency and Cost Management - The efficiency ratio for the three months ended September 30, 2024, was 80.6%, compared to 70.6% for the same period in 2023, indicating a decline in operational efficiency[31]. - The efficiency ratio increased to 80.3% for the nine months ended September 30, 2024, compared to 72.7% for the same period in 2023[45]. - The efficiency ratio improved to 80.62%, compared to 82.03% in the same quarter last year, indicating better cost management[82]. - The efficiency ratio (GAAP) increased to 80.62% from 78.20% in the prior quarter, indicating a decline in operational efficiency[85]. Interest Margin and Yield - The net interest margin was 2.40% for the three months ended September 30, 2024, compared to 2.42% for the previous quarter[9][14]. - The average yield on interest-earning assets increased to 4.54% for the three months ended September 30, 2024, compared to 4.28% for the same period in 2023[25]. - The net interest margin decreased to 2.40% for the three months ended September 30, 2024, compared to 2.70% for the same period in 2023, primarily due to increased interest expenses[24]. - The net interest margin for the nine months ended September 30, 2024, was 2.46%, down from 2.88% for the same period in 2023[36]. - The net interest rate spread for the three months ended September 30, 2024, was 1.60%, compared to 2.07% for the same period in 2023[89]. Shareholder Value - The Company repurchased 714,282 shares of common stock at an average price of $7.61 during the nine months ended September 30, 2024[4][10]. - Book value per share increased to $11.40 at September 30, 2024, up from $10.96 at December 31, 2023, while tangible book value per share increased to $10.73, a rise of 4.2%[11]. - Shareholders' equity was $240.7 million, or 9.1% of total assets, at September 30, 2024, compared to $237.4 million, or 9.3% at December 31, 2023[64]. - The Company's total Risk-Based Capital Ratio was 14.4% at September 30, 2024, down from 14.7% at December 31, 2023[64].

Financial Performance - Net income for Q2 2024 was $3.5 million, or $0.17 per diluted share, up from $2.8 million, or $0.13 per diluted share in Q2 2023, while net income for the first half of 2024 was $6.5 million, down from $8.1 million in the same period of 2023[153]. - Net income for the three months ended June 30, 2024, was $3.5 million, or $0.17 per diluted share, compared to $2.8 million, or $0.13 per diluted share, for the same period in 2023[199]. - Net income for the six months ended June 30, 2024, was $6.5 million, or $0.31 per diluted share, compared to $8.1 million, or $0.37 per diluted share, for the same period in 2023[216]. Interest Income and Expenses - Net interest income decreased by $2.4 million, or 14.1%, to $14.5 million in Q2 2024, primarily due to an increase in interest expense of $4.4 million, or 54.9%[154]. - Net interest income decreased by $2.4 million, or 14.1%, for the three months ended June 30, 2024[199]. - Interest expense increased by $4.4 million, or 54.9%, primarily due to a $4.3 million increase in interest expense on deposits, which rose by 70.3%[204]. - The average cost of total funds increased by 77 basis points to 2.16% for the three months ended June 30, 2024, from 1.39% for the same period in 2023[207]. - The average cost of time deposits increased by 165 basis points to 4.39% for the three months ended June 30, 2024, from 2.74% for the same period in 2023[207]. - The average cost of total funds increased by 92 basis points from 1.15% for the six months ended June 30, 2023, to 2.07% for the same period in 2024[224]. - The average cost of time deposits increased by 199 basis points from 2.27% for the six months ended June 30, 2023, to 4.26% for the same period in 2024[224]. Asset and Loan Management - Total assets increased by $21.5 million, or 0.8%, to $2.6 billion as of June 30, 2024, driven by an increase in cash and cash equivalents of $24.6 million, or 85.4%[159]. - Total loans decreased by $1.1 million, or 0.1%, to $2.0 billion as of June 30, 2024, with commercial real estate loans decreasing by $23.2 million, or 2.1%[165]. - The investment securities portfolio totaled $353.0 million, or 13.6% of total assets, as of June 30, 2024, down from $360.7 million, or 14.1% at December 31, 2023[160]. - Total deposits increased by $28.1 million, or 1.3%, from $2.1 billion at December 31, 2023, to $2.2 billion at June 30, 2024[191]. - Core deposits decreased by $32.3 million, or 2.1%, from $1.5 billion at December 31, 2023, to $1.5 billion at June 30, 2024, representing 69.1% of total deposits[191]. Credit Quality and Losses - Total delinquency was $5.6 million, or 0.27% of total loans, at June 30, 2024, down from $6.0 million, or 0.30% at December 31, 2023[166]. - The allowance for credit losses as a percentage of total loans was 0.96% at June 30, 2024, compared to 1.00% at December 31, 2023[166]. - The Company recorded a reversal of credit losses of $294,000 in Q2 2024, compared to a provision for credit losses of $420,000 in Q2 2023[156]. - The provision for credit losses recorded a reversal of $294,000 for the three months ended June 30, 2024, compared to a provision of $420,000 for the same period in 2023[209]. - The company recorded net charge-offs of $10,000 for the three months ended June 30, 2024, compared to net recoveries of $25,000 for the same period in 2023[210]. - The company recorded net recoveries of $57,000 for the six months ended June 30, 2024, compared to net charge-offs of $1.8 million for the same period in 2023[226]. Capital and Liquidity - Shareholders' equity at June 30, 2024, was $236.5 million, or 9.1% of total assets, compared to $237.4 million, or 9.3% of total assets, at December 31, 2023[197]. - The Company reported a total Risk-Based Capital Ratio of 14.7% at June 30, 2024, consistent with the ratio at December 31, 2023[197]. - The company had $1.1 billion in immediate available liquidity at June 30, 2024, compared to $574.4 million in uninsured deposits, representing a coverage ratio of 186%[196]. - The company had $437.4 million of additional borrowing capacity at the Federal Home Loan Bank as of June 30, 2024[195]. - Total capital to risk-weighted assets ratio was 14.70% as of June 30, 2024, exceeding the minimum requirement of 8.00%[253]. Commercial Real Estate Portfolio - The company's commercial real estate loan portfolio increased by 33.3% over the prior 36 months, totaling $1.1 billion[174]. - Non-owner occupied commercial real estate loans accounted for $864.6 million, or 42.7% of total gross loans, representing 318.2% of total bank risk-based capital as of June 30, 2024[180]. - The total commercial real estate loans as of June 30, 2024, were $1.056 billion, which is 52.2% of total gross loans[177]. - The owner-occupied CRE portfolio totaled $191.9 million, accounting for 70.6% of total bank risk-based capital, with a weighted average LTV of 56.5%[183]. - The total office portfolio includes $94.6 million in non-owner occupied loans, which is 40.6% of the office portfolio[186]. - The company has established internal maximum limits on CRE as an asset class and sub-limits by property class to manage exposure during changing economic conditions[176]. - The company maintains heightened risk management procedures and strong underwriting criteria for its commercial real estate portfolio[176]. Non-Interest Income and Expenses - Non-interest income increased by $2.2 million, or 140.8%, to $3.8 million for the three months ended June 30, 2024, compared to $1.6 million for the same period in 2023[211]. - Non-interest income increased by $1.9 million, or 42.4%, to $6.5 million for the six months ended June 30, 2024, compared to $4.6 million for the same period in 2023[227]. - Non-interest expense decreased by $237,000, or 1.6%, to $14.3 million for the three months ended June 30, 2024, from $14.6 million for the same period in 2023[213]. - Non-interest expense (GAAP) decreased to $14,314 thousand for the three months ended June 30, 2024, compared to $14,551 thousand for the same period in 2023, reflecting a reduction of 1.6%[236]. Efficiency and Ratios - The efficiency ratio was 78.2% for the three months ended June 30, 2024, compared to 78.9% for the same period in 2023[214]. - The efficiency ratio increased to 80.1% for the six months ended June 30, 2024, compared to 73.8% for the same period in 2023[230]. - The adjusted efficiency ratio (non-GAAP) improved to 82.68% for the three months ended June 30, 2024, compared to 74.31% in the prior year[237]. Market Risk and Commitments - The company has significant commitments to extend credit and provide financial guarantees, subject to strict credit control assessments[256]. - There are no off-balance sheet arrangements that materially affect the company's financial condition[257]. - The company has not identified any material changes in its sensitivity to market risk since the 2023 Annual Report[258].