[PART I – FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section presents the unaudited consolidated financial statements, management's discussion and analysis, market risk disclosures, and internal controls for the reporting period [Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20of%20Western%20New%20England%20Bancorp%2C%20Inc.%20and%20Subsidiaries%20%28Unaudited%29) This section presents the unaudited consolidated financial statements, highlighting the adoption of CECL and a decrease in net income due to interest margin compression [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets%20%E2%80%93%20June%2030%2C%202023%20and%20December%2031%2C%202022) Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$2,562.3** | **$2,553.2** | | Cash and cash equivalents | $31.7 | $30.3 | | Loans, net | $1,995.9 | $1,971.5 | | Total Investment Securities (AFS & HTM) | $364.4 | $377.2 | | Goodwill | $12.5 | $12.5 | | **Total Liabilities** | **$2,328.3** | **$2,325.0** | | Total deposits | $2,158.0 | $2,229.4 | | Long-term debt | $121.2 | $1.2 | | **Total Shareholders' Equity** | **$234.0** | **$228.1** | - Total assets slightly increased to **$2.56 billion**, driven by a **$24.5 million** increase in net loans, while total deposits decreased by **$71.5 million**[16](index=16&type=chunk) [Consolidated Statements of Net Income](index=6&type=section&id=Consolidated%20Statements%20of%20Net%20Income%20%E2%80%93%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202023%20and%202022) Net Income Performance (in millions, except per share data) | Metric | Q2 2023 | Q2 2022 | Six Months 2023 | Six Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $16.8 | $19.4 | $35.4 | $38.1 | | Provision for credit losses | $0.4 | $0.3 | $0.03 | ($0.1) | | Non-interest Income | $1.6 | $2.7 | $4.6 | $5.1 | | Non-interest Expense | $14.6 | $14.4 | $29.4 | $28.9 | | **Net Income** | **$2.8** | **$5.5** | **$8.1** | **$10.9** | | **Diluted EPS** | **$0.13** | **$0.25** | **$0.37** | **$0.49** | - Net income for Q2 2023 was **$2.8 million**, a **49.9% decrease** from **$5.5 million** in Q2 2022. The decline was primarily driven by a **$2.6 million** decrease in net interest income, as interest expense on deposits rose sharply from **$990 thousand** to **$6.1 million** year-over-year[18](index=18&type=chunk) - For the six months ended June 30, 2023, net income was **$8.1 million**, down **25.7%** from **$10.9 million** in the prior-year period, reflecting sustained pressure on net interest income[18](index=18&type=chunk) [Consolidated Statements of Comprehensive Income](index=8&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%E2%80%93%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202023%20and%202022) Comprehensive Income (Loss) (in millions) | Metric | Q2 2023 | Q2 2022 | Six Months 2023 | Six Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $2.8 | $5.5 | $8.1 | $10.9 | | Other Comprehensive Income (Loss) | ($0.1) | ($6.0) | $1.8 | ($14.4) | | **Comprehensive Income (Loss)** | **$2.6** | **($0.5)** | **$9.9** | **($3.6)** | - For the six months ended June 30, 2023, Other Comprehensive Income was positive **$1.8 million**, a significant improvement from a loss of **$14.4 million** in the same period of 2022. This was mainly due to smaller unrealized losses on available-for-sale securities and gains related to the defined benefit pension plan termination[21](index=21&type=chunk) [Consolidated Statements of Changes in Shareholders' Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity%20%E2%80%93%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202023%20and%202022) - Total shareholders' equity increased from **$228.1 million** at December 31, 2022, to **$234.0 million** at June 30, 2023. The increase was driven by comprehensive income of **$9.9 million**, partially offset by common stock repurchases (**$2.1 million**) and cash dividends paid (**$3.1 million**)[25](index=25&type=chunk)[26](index=26&type=chunk) - The company repurchased **270,840 shares** of common stock for approximately **$2.1 million** during the first six months of 2023[25](index=25&type=chunk)[26](index=26&type=chunk) [Consolidated Statements of Cash Flows](index=13&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20%E2%80%93%20Six%20Months%20Ended%20June%2030%2C%202023%20and%202022) Cash Flow Summary (in millions) | Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($1.7) | $8.5 | | Net cash used in investing activities | ($6.1) | ($107.3) | | Net cash provided by financing activities | $9.2 | $42.9 | | **Net Change in Cash and Cash Equivalents** | **$1.3** | **($55.9)** | - Financing activities provided **$9.2 million** in cash, primarily from the issuance of **$120.0 million** in long-term debt, which offset a net decrease in deposits of **$71.5 million**[32](index=32&type=chunk) - Investing activities used **$6.1 million** in cash, a significant reduction from the **$107.3 million** used in the prior-year period, mainly due to a large decrease in net loan originations[32](index=32&type=chunk) [Notes to Consolidated Financial Statements](index=15&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) - On January 1, 2023, the Company adopted the CECL accounting standard (ASU 2016-13), which replaced the incurred loss methodology with an expected loss methodology for financial assets. This resulted in a net increase to retained earnings of **$9 thousand**, including a **$1.2 million** increase to the allowance for credit losses on loans and a new **$918 thousand** allowance for off-balance sheet exposures[41](index=41&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk) [Management's Discussion and Analysis (MD&A)](index=48&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and operating results, noting decreased net income and margin due to rising interest expenses, stable assets, and increased borrowings [Overview and Strategy](index=48&type=section&id=Overview%20and%20Strategy) - The company's growth-oriented strategy focuses on increasing commercial and residential lending, expanding its retail deposit franchise, and investing in technology to enhance customer experience and efficiency[158](index=158&type=chunk)[160](index=160&type=chunk) - Key strategic goals include growing revenues, increasing book value, paying competitive dividends, and utilizing stock repurchases to enhance shareholder value. The company also considers growth through strategic acquisitions[160](index=160&type=chunk) [Comparison of Financial Condition (June 30, 2023 vs. Dec 31, 2022)](index=49&type=section&id=Comparison%20of%20Financial%20Condition) - Total assets increased by **$9.1 million** (**0.4%**) to **$2.6 billion**, primarily due to a **$24.1 million** (**1.2%**) increase in total gross loans[166](index=166&type=chunk)[173](index=173&type=chunk) - Total deposits decreased by **$71.5 million** (**3.2%**), with core deposits falling by **$194.6 million**, while time deposits grew by **$123.1 million**, indicating a shift to higher-cost funding[176](index=176&type=chunk) - Total borrowings increased significantly by **$85.9 million** (**138.1%**) to **$148.1 million**, mainly through a **$120.0 million** increase in long-term borrowings to replace deposit outflows[179](index=179&type=chunk) - The allowance for credit losses as a percentage of total loans was **0.97%** at June 30, 2023, compared to **1.00%** at December 31, 2022[174](index=174&type=chunk) - Shareholders' equity increased by **$5.9 million** to **$234.0 million**, driven by net income and a decrease in accumulated other comprehensive loss[181](index=181&type=chunk) [Comparison of Operating Results (Q2 2023 vs. Q2 2022)](index=52&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20Three%20Months%20Ended%20June%2030%2C%202023%20and%202022) Q2 Operating Results Highlights | Metric | Q2 2023 | Q2 2022 | Change | | :--- | :--- | :--- | :--- | | Net Income | $2.8M | $5.5M | -49.9% | | Diluted EPS | $0.13 | $0.25 | -48.0% | | Net Interest Income | $16.8M | $19.4M | -13.1% | | Net Interest Margin | 2.81% | 3.24% | -43 bps | | Non-interest Income | $1.6M | $2.7M | -41.9% | - The decrease in net interest income was driven by a **535.0%** increase in interest expense, primarily from higher deposit costs, which outpaced the **20.2%** growth in interest and dividend income[192](index=192&type=chunk) - Non-interest income decreased by **$1.1 million**, mainly due to a **$1.1 million** final termination expense for the Defined Benefit Pension Plan[202](index=202&type=chunk) - The provision for credit losses was **$0.4 million**, an increase from **$0.3 million** in the prior-year quarter, reflecting changes in the economic environment under the new CECL model[199](index=199&type=chunk) [Comparison of Operating Results (Six Months 2023 vs. Six Months 2022)](index=58&type=section&id=Comparison%20of%20Operating%20Results%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202023%20and%202022) Six-Month Operating Results Highlights | Metric | H1 2023 | H1 2022 | Change | | :--- | :--- | :--- | :--- | | Net Income | $8.1M | $10.9M | -25.7% | | Diluted EPS | $0.37 | $0.49 | -24.5% | | Net Interest Income | $35.4M | $38.1M | -7.2% | | Net Interest Margin | 2.97% | 3.21% | -24 bps | - The decrease in net interest income was due to a **424.1%** increase in interest expense, which overshadowed the **19.4%** increase in interest and dividend income[214](index=214&type=chunk) - A provision for credit losses of **$32 thousand** was recorded, compared to a reversal of **$125 thousand** in the prior-year period. Net charge-offs were **$1.8 million**, primarily related to a single acquired commercial loan relationship, with no impact to earnings due to CECL implementation adjustments[218](index=218&type=chunk)[219](index=219&type=chunk) - Non-interest expense increased by **$0.6 million** (**1.9%**), driven by higher professional fees, FDIC insurance, and data processing costs[222](index=222&type=chunk) [Liquidity and Capital Resources](index=65&type=section&id=Liquidity%20and%20Capital%20Resources) - Primary liquidity sources include deposits, loan and security repayments, and FHLB/FRB borrowings. The company actively manages liquidity to fund loan originations and deposit withdrawals[230](index=230&type=chunk) - As of June 30, 2023, the company had significant available borrowing capacity, including **$380.1 million** from the FHLB and **$27.4 million** from the FRB's Bank Term Funding Program (BTFP)[231](index=231&type=chunk) - Material cash commitments include **$9.5 million** for its core processing vendor and **$10.6 million** in undiscounted lease liabilities[239](index=239&type=chunk) Regulatory Capital Ratios (Bank Level) - June 30, 2023 | Ratio | Actual | Minimum To Be Well-Capitalized | | :--- | :--- | :--- | | Total Risk-Based Capital | 13.49% | 10.00% | | Tier 1 Risk-Based Capital | 12.49% | 8.00% | | Common Equity Tier 1 Capital | 12.49% | 6.50% | | Tier 1 Leverage Ratio | 9.69% | 5.00% | [Quantitative and Qualitative Disclosures About Market Risk](index=68&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, with simulations showing net interest income sensitivity to rate changes, potentially mitigated by derivatives Net Interest Income Sensitivity Analysis (at June 30, 2023) | Interest Rate Change | Estimated Change in Net Interest Income (1-12 Months) | | :--- | :--- | | +200 basis points | -1.6% | | -200 basis points | +0.8% | - The company's earnings are currently asset-sensitive in a falling rate environment and liability-sensitive in a rising rate environment, as indicated by the simulation results[253](index=253&type=chunk) [Controls and Procedures](index=70&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2023[256](index=256&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[257](index=257&type=chunk) [PART II – OTHER INFORMATION](index=71&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section provides information on legal proceedings, risk factors, and details of the company's common stock repurchase program [Legal Proceedings](index=71&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to ordinary legal actions but does not anticipate any material adverse effects on its financial condition - The company states that it is not involved in any material legal proceedings that would have a significant adverse impact[258](index=258&type=chunk) [Risk Factors](index=71&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors were reported since the previous filings - No material changes in risk factors were reported for the quarter[259](index=259&type=chunk) [Share Repurchases](index=71&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 126,944 shares of common stock in Q2 2023, with 806,600 shares remaining under the authorized plan Common Stock Repurchases (Q2 2023) | Period | Total Shares Purchased | Average Price Paid per Share ($) | | :--- | :--- | :--- | | April 2023 | — | — | | May 2023 | 82,795 | $6.26 | | June 2023 | 44,149 | $6.09 | | **Total** | **126,944** | **$6.20** | - The Board of Directors authorized a stock repurchase plan (the "2022 Plan") on July 26, 2022, for up to **1.1 million** shares[261](index=261&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number: 001-16767 Western New England Bancorp, Inc. (Exact name of registrant as specified in its charter) Massachusetts 73-16 ...

Loan Portfolio and Asset Quality - The company's loan portfolio totaled $2.0 billion, representing 78.0% of total assets as of December 31, 2022, compared to $1.9 billion or 73.5% of total assets as of December 31, 2021[36]. - As of December 31, 2022, the total loan portfolio amounted to $1.99 billion, an increase from $1.86 billion in 2021[57]. - Commercial real estate loans reached $1.1 billion, representing 53.8% of total loans, up from $980 million or 52.6% in 2021[41]. - The commercial and industrial loan portfolio totaled $219.8 million, accounting for 11.0% of total loans, a decrease from 12.2% in 2021[45]. - Home equity loans stood at $105.6 million, or 5.3% of total loans, compared to $99.8 million, or 5.4% in 2021[54]. - At December 31, 2022, the residential real estate loan portfolio totaled $589.5 million, maintaining 29.6% of total loans[51]. - Total loans outstanding as of December 31, 2022, amounted to $1,991.4 million, an increase from $1,864.7 million in 2021[73]. - Criticized loans totaled $64.0 million, or 3.2% of total loans, down from $82.6 million, or 4.4% of total loans, at December 31, 2021[66]. - Adversely classified loans were $42.3 million, or 2.1% of total loans, compared to $31.1 million, or 1.7% in 2021[67]. - Nonaccrual loans stood at $5.7 million, or 0.29% of total loans, slightly up from $5.0 million, or 0.27% in 2021[70]. - The allowance for loan losses was $19.9 million, representing 1.00% of total loans outstanding, compared to 1.06% in 2021[73]. - Total impaired loans were $18.4 million, or 0.9% of total loans, down from $20.5 million, or 1.1% in 2021[68]. - The company reported net charge-offs of $556,000 for the period, with total loan charge-offs to daily average loans outstanding at 0.03%[73]. - The company plans to adopt the Current Expected Credit Loss (CECL) methodology effective January 1, 2023, using a Discounted Cash Flow (DCF) model for estimating potential loan losses[74]. - The company maintains a high level of asset quality, with ongoing monitoring of the loan portfolio and independent credit analyses for loans above a specific threshold[62]. - Management believes the allowance for loan losses is adequate to absorb probable losses as of December 31, 2022[83]. Employee and Diversity Statistics - The company employed 337 total employees as of December 31, 2022, with 289 employed full-time and 48 part-time[32]. - Approximately 66% of the company's employees were women, and 18% were ethnic minorities, veterans, or persons with disabilities as of December 31, 2022[30]. - The company has a comprehensive employee benefit program, including group medical, dental, and vision insurance, a 401(k) Safe Harbor Plan, and an employee stock ownership plan[34]. - The company has successfully attracted and retained qualified staff, employing a total of 337 individuals as of December 31, 2022[32]. Market Position and Competition - As of June 30, 2022, the company held approximately 13.7% of the deposits in Hampden County, making it the second largest market share out of 16 banks and thrifts in the area[29]. - The company expects increased competition in the financial services industry due to legislative, regulatory, and technological changes[28]. - The largest commercial lending relationship was $32.2 million, secured by business assets and real estate, performing according to original terms[46]. - The largest concentration of commercial loans was to hotels and accommodation, comprising approximately 6.9% of the commercial loan portfolio[46]. Regulatory Environment and Compliance - The company is subject to extensive regulation under federal and state laws, impacting its operational and financial strategies[119]. - The Capital Rules established a new capital framework for U.S. banking organizations, which the company is subject to as a savings and loan holding company[132]. - The minimum capital ratios required under the Capital Rules include a CET1 to risk-weighted assets ratio of at least 7%, Tier 1 capital to risk-weighted assets ratio of at least 8.5%, and Total capital to risk-weighted assets ratio of at least 10.5%[136]. - As of December 31, 2022, the Company and the Bank were in compliance with the targeted capital ratios under the Capital Rules[140]. - The Bank was categorized as "well-capitalized" under the Prompt Corrective Action framework, meeting the total risk-based capital ratio of at least 10% and CET1 risk-based capital ratio of at least 6.5%[143]. - The Company and the Bank decided not to opt into the community bank leverage ratio framework despite being eligible, maintaining a leverage ratio of greater than 9%[141]. - The Bank met the Qualified Thrift Lender test in each of the prior 12 months, ensuring compliance with federal regulations[150]. - The Bank received an "Outstanding" rating on its most recent Community Reinvestment Act examination, indicating strong performance in meeting credit needs[151]. - The FDIC's deposit insurance limit is $250,000 per depositor, per insured bank, ensuring protection for customer deposits[159]. - The Company and the Bank are subject to a risk-based assessment system for deposit insurance premiums, which considers capital levels and supervisory ratings[159]. - The Capital Rules mandate a capital conservation buffer of 2.5% of CET1, which is designed to absorb losses during economic stress[136]. - The implementation of the Capital Rules did not have a material impact on the Company's or the Bank's consolidated capital levels[139]. - The Federal Reserve Board has reduced the reserve requirement to zero percent, impacting the Bank's required reserves[163]. - The Bank is compliant with the Federal Home Loan Bank System's capital stock requirements as of December 31, 2022[162]. Financial Performance and Deposits - Total deposits increased to $2,264,252 thousand in 2022, up from $2,177,770 thousand in 2021, reflecting a growth of approximately 4.0%[102]. - Core deposits represented 81.5% of total deposits as of December 31, 2022, down from 82.2% in 2021[100]. - Demand deposits increased to $647,971 thousand in 2022, representing 28.6% of total deposits, compared to $608,936 thousand and 28.0% in 2021[102]. - The total amount of time deposit accounts was $363,258 thousand in 2022, down from $477,067 thousand in 2021[102]. - The average rate for interest-bearing checking accounts was 0.38% in 2022, slightly up from 0.36% in 2021[102]. - The total core deposit accounts decreased to $590,224 thousand in 2022 from $686,212 thousand in 2021[104]. - The weighted average rate for time deposits was 0.41% in 2022, down from 0.53% in 2021[102]. - Time deposits of $250,000 or more totaled $131,737 thousand with a weighted average rate of 2.54% as of December 31, 2022, compared to $65,860 thousand and 0.47% in 2021[108]. Lending Programs and Initiatives - The Company offered PPP loans totaling $2.3 million, or 0.1% of total loans, at December 31, 2022[47]. - PPP loans had an interest rate of 1.0% and a two-year loan term, extended to five years for loans granted after June 5, 2020[47]. - The SBA guarantees 100% of the PPP loans made to eligible borrowers, with forgiveness available if employee and compensation levels are maintained[47]. - Eligible businesses could apply for PPP loans up to the lesser of 2.5 times their average monthly payroll costs or $10.0 million[47]. - Principal and interest payments on PPP loans were deferred from six months to ten months from the date of disbursement[47]. - 60% of the loan proceeds must be used for payroll expenses, with the remaining 40% for other qualifying expenses to qualify for forgiveness[47].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number: 001-16767 Western New England Bancorp, Inc. (Exact name of registrant as specified in its charter) Massachusetts 7 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number: 001-16767 (State or other jurisdiction of incorporation or organization) (IRS Employer Identification Number) 141 Elm S ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number: 001-16767 Western New England Bancorp, Inc. (Exact name of registrant as specified in its charter) Massachusetts 73-16 ...

Part I [Item 1. Business](index=5&type=section&id=Item%201.%20Business) Western New England Bancorp, Inc. is a Massachusetts-chartered bank holding company with $2.5 billion in assets, focusing on commercial real estate lending and operating 25 branches under extensive regulation - Total Assets: **$2.5 billion**[18](index=18&type=chunk) - Total Net Loans: **$1.8 billion**[18](index=18&type=chunk) - Total Deposits: **$2.3 billion**[18](index=18&type=chunk) - Total Shareholders' Equity: **$0.2237 billion**[18](index=18&type=chunk) - Westfield Bank is a full-service community financial institution with **25 branches** and numerous ATMs serving Massachusetts and Connecticut[19](index=19&type=chunk) - The company's primary lending focus is on commercial relationships, including commercial real estate, construction, and commercial and industrial loans[34](index=34&type=chunk) - As of June 30, 2021, the company held approximately **14.0% of deposits in Hampden County**, ranking second among 16 banks and thrifts[28](index=28&type=chunk) [Lending Activities](index=7&type=section&id=Lending%20Activities) The company's $1.9 billion loan portfolio is dominated by commercial real estate (52.6%), with active management to mitigate concentration and interest rate risks Loan Portfolio Composition (December 31, 2021 vs 2020) | Loan Category | 2021 Amount (Millions) | % of Total (2021) | 2020 Amount (Millions) | % of Total (2020) | | :--- | :--- | :--- | :--- | :--- | | Commercial Real Estate | $980.0 | 52.6% | $833.9 | 43.3% | | Residential One-to-Four Family | $552.3 | 29.6% | $604.7 | 31.4% | | Home Equity | $99.8 | 5.4% | $103.9 | 5.4% | | Commercial and Industrial (incl. PPP) | $226.7 | 12.2% | $379.1 | 19.7% | | Consumer | $4.3 | 0.2% | $5.2 | 0.2% | | **Total Gross Loans** | **$1,863.0** | **100.0%** | **$1,926.8** | **100.0%** | - In 2021, the company sold **$59.7 million** of fixed-rate, low-coupon residential real estate loans to the secondary market to reduce interest rate risk, with no loans sold in 2020[51](index=51&type=chunk) - Paycheck Protection Program (PPP) loans decreased significantly from **$167.3 million** at year-end 2020 to **$25.3 million** at year-end 2021 due to loan forgiveness[43](index=43&type=chunk)[45](index=45&type=chunk) [Asset Quality](index=13&type=section&id=Asset%20Quality) Asset quality improved in 2021, with nonperforming assets and criticized loans decreasing, and a credit for loan losses recorded due to reduced pandemic-related provisions Nonperforming Assets Trend | Metric | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Total Nonperforming Loans | $5.0 million | $7.8 million | | Foreclosed Real Estate, net | $0 | $0 | | **Total Nonperforming Assets** | **$5.0 million** | **$7.8 million** | | Nonperforming Loans to Total Loans | 0.27% | 0.41% | | Nonperforming Assets to Total Assets | 0.20% | 0.33% | - Criticized loans decreased to **$82.6 million (4.4% of total loans)** at year-end 2021 from **$147.1 million (7.6% of total loans)** at year-end 2020[65](index=65&type=chunk) - The allowance for loan losses was **1.06% of total loans** at December 31, 2021, down slightly from **1.10%** at year-end 2020, and **1.08%** excluding government-guaranteed PPP loans in 2021 compared to **1.20%** in 2020[82](index=82&type=chunk) - The company recorded a credit for loan losses of **$925,000** in 2021, compared to a provision of **$7.8 million** in 2020, which was significantly increased due to COVID-19 economic uncertainties[88](index=88&type=chunk) [Investment Activities](index=20&type=section&id=Investment%20Activities) The investment portfolio grew to $414.1 million in 2021, primarily in mortgage-backed and debt securities, with a new held-to-maturity segment for liquidity and returns Securities Portfolio Composition (Amortized Cost) | Security Type | Dec 31, 2021 (Millions) | Dec 31, 2020 (Millions) | | :--- | :--- | :--- | | **Available-for-sale** | | | | Debt Securities | $18.3 | $18.3 | | Mortgage-backed Securities | $180.7 | $182.3 | | **Held-to-maturity** | | | | Debt Securities | $10.0 | $0 | | Mortgage-backed Securities | $212.3 | $0 | | **Total** | **$421.3** | **$200.6** | - The investment portfolio is an integral part of the company's asset liability management, providing liquidity and maximizing returns while ensuring safety and diversification[95](index=95&type=chunk) [Deposits and Other Funding](index=24&type=section&id=Deposits%20and%20Other%20Funding) Total deposits increased to $2.3 billion in 2021, driven by core deposits, while FHLB borrowings significantly decreased, diversifying funding sources Deposit Composition | Deposit Type | Dec 31, 2021 (Millions) | % of Total (2021) | Dec 31, 2020 (Millions) | % of Total (2020) | | :--- | :--- | :--- | :--- | :--- | | Demand Deposits (Noninterest-bearing) | $641.3 | 28.4% | $541.8 | 26.5% | | Interest-bearing Checking | $145.7 | 6.5% | $94.9 | 4.7% | | Regular Savings | $217.6 | 9.6% | $175.6 | 8.6% | | Money Market | $850.3 | 37.7% | $640.8 | 31.4% | | Time Deposits | $402.0 | 17.8% | $590.3 | 28.9% | | **Total Deposits** | **$2,256.9** | **100.0%** | **$2,043.4** | **100.0%** | - Core deposits represented **82.1% of total deposits** at year-end 2021, an increase from **71.0%** at year-end 2020, indicating a shift to lower-cost funding sources[108](index=108&type=chunk) - The company has access to significant borrowing capacity, including **$480.5 million** from the FHLB and **$65.0 million** in lines of credit with correspondent banks as of December 31, 2021[121](index=121&type=chunk)[124](index=124&type=chunk) [Supervision and Regulation](index=28&type=section&id=Supervision%20and%20Regulation) The company and its bank are extensively regulated by federal and state authorities, complying with Basel III capital standards and maintaining a "well-capitalized" status - As a savings and loan holding company, WNEB is regulated by the Federal Reserve Board, while Westfield Bank, a federal savings association, is primarily regulated by the OCC[131](index=131&type=chunk)[132](index=132&type=chunk) - The company and the Bank are subject to the Basel III Capital Rules, requiring minimum ratios for Common Equity Tier 1, Tier 1, and Total Capital, plus a capital conservation buffer, with both entities in compliance at year-end 2021[141](index=141&type=chunk)[145](index=145&type=chunk)[149](index=149&type=chunk) - Under Prompt Corrective Action (PCA) regulations, the Bank was categorized as "well-capitalized" as of December 31, 2021[153](index=153&type=chunk) - The Bank met the Qualified Thrift Lender (QTL) test, requiring at least **65% of its portfolio assets** in qualified thrift investments[158](index=158&type=chunk)[159](index=159&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) Key risks include COVID-19 impacts, credit risk in the loan portfolio, interest rate volatility, intense competition, regulatory changes like LIBOR transition, and cybersecurity threats - The COVID-19 pandemic continues to pose a risk, potentially leading to higher credit losses, reduced demand for products, and other negative impacts on financial performance[188](index=188&type=chunk)[189](index=189&type=chunk) - The loan portfolio, with its concentration in commercial real estate and commercial/industrial loans, carries a higher risk of loss compared to residential real estate loans[191](index=191&type=chunk)[192](index=192&type=chunk) - Interest rate volatility could adversely affect net interest income, as the repricing of assets and liabilities may not occur in tandem[202](index=202&type=chunk) - The planned phase-out of LIBOR after 2021 and transition to an alternative reference rate like SOFR could adversely impact the value of financial instruments and require changes to risk models and hedging strategies[211](index=211&type=chunk)[212](index=212&type=chunk) - The company faces significant cybersecurity risks, including cyber-attacks and data breaches, which could disrupt operations, compromise confidential information, and result in financial loss[225](index=225&type=chunk)[226](index=226&type=chunk) [Item 2. Properties](index=49&type=section&id=Item%202.%20Properties) The company operates 25 banking offices and numerous ATMs across Massachusetts and Connecticut, with owned premises and equipment valued at $26.2 million - The company operates a network of **25 banking offices** and numerous ATMs, with a combination of owned and leased properties[244](index=244&type=chunk) - The net book value of owned premises and equipment was **$26.2 million** as of December 31, 2021[244](index=244&type=chunk) [Item 3. Legal Proceedings](index=54&type=section&id=Item%203.%20Legal%20Proceedings) The company is not involved in any material pending legal proceedings beyond routine business operations, with no expected material adverse effects - There are no material pending legal proceedings against the company outside of the ordinary course of business[250](index=250&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities](index=54&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Shareholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on NASDAQ (WNEB), with 22.6 million shares outstanding, and it actively repurchased shares in Q4 2021 - The company's common stock is listed on the NASDAQ Global Select Market under the ticker symbol "WNEB"[252](index=252&type=chunk) Issuer Purchases of Equity Securities (Q4 2021) | Period | Total Shares Purchased | Average Price Paid per Share ($) | Shares Purchased as Part of Publicly Announced Program | | :--- | :--- | :--- | :--- | | October 2021 | 155,240 | 8.89 | 155,240 | | November 2021 | — | — | — | | December 2021 | 50,720 | 8.76 | 36,838 | | **Total** | **205,960** | **8.86** | **192,078** | - On April 27, 2021, the Board authorized a new stock repurchase plan for up to **2,400,000 shares**, or **10%** of its outstanding common stock[262](index=262&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=56&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net income more than doubled to $23.7 million in 2021, driven by increased net interest income, a credit for loan losses, and asset growth funded by deposits Key Performance Indicators (2021 vs. 2020) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Net Income | $23.7 million | $11.2 million | | Diluted EPS | $1.02 | $0.45 | | Net Interest Income | $73.2 million | $64.4 million | | (Credit) Provision for Loan Losses | ($0.9 million) | $7.8 million | | Net Interest Margin | 3.14% | 2.93% | - The significant increase in net income was primarily due to lower interest expense, a credit for loan losses, and higher non-interest income[267](index=267&type=chunk) - Total assets increased by **$172.5 million (7.3%)** to **$2.5 billion**, while total deposits increased by **$213.5 million (10.5%)** to **$2.3 billion**[297](index=297&type=chunk)[304](index=304&type=chunk) - The company processed **1,982 PPP loan forgiveness applications** totaling **$276.9 million** as of December 31, 2021, leading to a decrease in the PPP loan balance to **$25.3 million**[274](index=274&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=72&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages interest rate risk using an asset/liability model, with sensitivity analysis showing potential impacts on net interest income from rate changes Net Interest Income Sensitivity Analysis (as of Dec 31, 2021) | Change in Interest Rates | Estimated Change in NII (1-12 Months) | Estimated Change in NII (13-24 Months) | | :--- | :--- | :--- | | +200 basis points | -3.9% | -4.5% | | -100 basis points | -2.8% | -8.6% | - The company's main market risk is interest rate risk, which affects net interest income and the market value of assets and liabilities[344](index=344&type=chunk) [Item 9A. Controls and Procedures](index=73&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and independent auditors concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2021 - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[363](index=363&type=chunk) - Based on an assessment using the COSO framework, management concluded that internal control over financial reporting was effective as of December 31, 2021[364](index=364&type=chunk) - The independent auditor provided an unqualified opinion on the effectiveness of the Company's internal control over financial reporting as of December 31, 2021[369](index=369&type=chunk) Part III [Items 10-14](index=76&type=section&id=Items%2010-14) Information for Items 10-14, covering governance, compensation, and related matters, is incorporated by reference from the 2022 Proxy Statement - Information regarding directors, executive officers, corporate governance, executive compensation, and other related matters is incorporated by reference from the company's Proxy Statement[377](index=377&type=chunk)[378](index=378&type=chunk)[379](index=379&type=chunk) Part IV [Item 15. Exhibits and Financial Statement Schedules](index=76&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists exhibits for the 10-K, with consolidated financial statements in Item 8 and schedules omitted as information is provided elsewhere - The consolidated financial statements are referenced in Item 8, and all required financial statement schedules have been omitted because the necessary information is provided elsewhere or is not applicable[380](index=380&type=chunk)[381](index=381&type=chunk) Financial Statements and Supplementary Data [Consolidated Financial Statements](index=84&type=section&id=Consolidated%20Financial%20Statements) Consolidated financial statements show total assets grew to $2.54 billion in 2021, with net income significantly increasing to $23.7 million Consolidated Balance Sheet Highlights | Account | Dec 31, 2021 (Millions) | Dec 31, 2020 (Millions) | | :--- | :--- | :--- | | Total Assets | $2,538.4 | $2,365.9 | | Loans, Net | $1,844.9 | $1,906.2 | | Total Deposits | $2,256.9 | $2,043.4 | | Total Liabilities | $2,314.7 | $2,139.2 | | Total Shareholders' Equity | $223.7 | $226.6 | Consolidated Income Statement Highlights | Account | 2021 (Millions) | 2020 (Millions) | 2019 (Millions) | | :--- | :--- | :--- | :--- | | Net Interest Income | $73.2 | $64.4 | $58.0 | | (Credit) Provision for Loan Losses | ($0.9) | $7.8 | $2.7 | | Non-interest Income | $12.6 | $9.3 | $9.7 | | Non-interest Expense | $54.9 | $51.8 | $47.8 | | **Net Income** | **$23.7** | **$11.2** | **$13.3** | [Notes to Consolidated Financial Statements](index=92&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, loan and investment portfolios, deposits, borrowings, regulatory capital, and employee benefit plans, including COVID-19 impacts - The allowance for loan losses methodology includes a qualitative factor for the economic impact of COVID-19, which was added in March 2020[446](index=446&type=chunk) - In April 2021, the company issued **$20 million** in **4.875% fixed-to-floating rate subordinated notes**, which qualify as Tier 2 capital[541](index=541&type=chunk)[542](index=542&type=chunk) - The company's and the Bank's regulatory capital ratios exceeded the levels required to be considered "well-capitalized" under federal banking regulations as of December 31, 2021[593](index=593&type=chunk) - During 2021, the company repurchased **2,758,051 shares** of its common stock at an average price of **$8.33 per share**[597](index=597&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number: 001-16767 Western New England Bancorp, Inc. (Exact name of registrant as specified in its charter) Massachusetts 7 ...

Financial Performance - Net income for the three months ended June 30, 2021, was $5.6 million, or $0.24 diluted earnings per share, compared to $2.0 million, or $0.08 diluted earnings per share, for the same period in 2020[146] - Net income for the three months ended June 30, 2021, was $5.7 million, or $0.24 per diluted share, a 179.7% increase from $2.0 million, or $0.08 per diluted share, for the same period in 2020[179] - Net income for the six months ended June 30, 2021, was $11.4 million, or $0.47 diluted earnings per share, compared to $4.1 million, or $0.16 diluted earnings per share, for the same period in 2020[201] Interest Income and Margin - Net interest income increased by $2.7 million, or 18.0%, to $17.8 million for the three months ended June 30, 2021, from $15.1 million for the same period in 2020[147] - Net interest income for the six months ended June 30, 2021, was $35.8 million, up from $29.6 million in 2020[201] - The net interest margin was 3.06% for the three months ended June 30, 2021, compared to 2.74% for the same period in 2020[147] - The net interest margin for the six months ended June 30, 2021, was 3.15%, compared to 2.80% for the same period in 2020[204] Loan Loss Provision and Credit Quality - The provision for loan losses was a credit of $1.2 million for the three months ended June 30, 2021, compared to a provision of $2.5 million for the same period in 2020[146] - The provision for loan losses for the three months ended June 30, 2021, was a credit of $1.2 million, compared to a provision of $2.5 million for the same period in 2020, reflecting an improvement in economic forecasts[194] - Nonperforming loans totaled $6.0 million, or 0.34% of total loans, down from $7.8 million, or 0.45% at December 31, 2020[171] - The allowance for loan losses as a percentage of total loans was 1.12% at June 30, 2021, compared to 1.20% at December 31, 2020[171] Loan Portfolio and PPP Loans - Total PPP loans decreased by $61.7 million, or 36.9%, from $167.3 million at December 31, 2020, to $105.5 million at June 30, 2021[153] - The Company processed 1,341 PPP loan forgiveness applications totaling $196.7 million as of June 30, 2021[154] - Modifications granted under the CARES Act declined to $57.0 million, or 3.2% of total loans, excluding PPP loans, as of June 30, 2021[157] - The Company anticipates that the majority of the PPP loan portfolio will be repaid through forgiveness by the end of 2021[154] Assets and Deposits - As of June 30, 2021, total assets increased by $110.7 million, or 4.7%, to $2.5 billion compared to December 31, 2020[166] - Core deposits increased by $279.2 million, or 19.3%, from December 31, 2020, to $1.7 billion, or 79.2% of total deposits[172] - Average demand deposits increased by $98.4 million, or 19.5%, to $603.3 million, representing 27.9% of total average deposits[191] - Average demand deposits increased by $135.8 million, or 30.4%, from $446.7 million for the six months ended June 30, 2020, to $582.5 million for the same period in 2021[212] Expenses and Efficiency - Non-interest income increased by $322,000, or 15.4%, to $2.4 million for the three months ended June 30, 2021, with service charges and fees rising by $516,000, or 33.1%[196] - Non-interest expense rose by $1.4 million, or 11.7%, to $13.7 million for the three months ended June 30, 2021, driven by a $887,000 increase in salaries and benefits[199] - The efficiency ratio improved to 66.1% for the three months ended June 30, 2021, from 71.5% in the same period in 2020[199] - Non-interest expense increased by $2.4 million, or 9.9%, to $27.0 million for the six months ended June 30, 2021[220] Capital and Borrowing - Shareholders' equity was $223.7 million, or 9.0% of total assets, as of June 30, 2021, down from $226.6 million, or 9.6% at December 31, 2020[175] - The Company authorized a stock repurchase plan to repurchase up to 2.4 million shares, or 10% of its outstanding common stock[177] - Total Capital to Risk Weighted Assets for the consolidated entity was $261,914 thousand, representing a ratio of 15.19% as of June 30, 2021, exceeding the minimum requirement of 8.00%[230] - At June 30, 2021, the company had $511.7 million in available borrowing capacity with the FHLB[226] Tax and Other Considerations - The effective tax rate increased to 27.0% for the three months ended June 30, 2021, compared to 18.6% for the same period in 2020, due to higher pre-tax projected income[200] - Income tax expense for the six months ended June 30, 2021, was $3.9 million, with an effective tax rate of 25.5%[221] - The company reported no off-balance sheet arrangements that could materially affect its financial condition[233] - There have been no material changes in the company's assessment of sensitivity to market risk since the 2020 Annual Report[234]

PART I [Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20of%20Western%20New%20England%20Bancorp%2C%20Inc.%20and%20Subsidiaries%28Unaudited%29) This section presents Western New England Bancorp, Inc.'s unaudited consolidated financial statements, including balance sheets, income, comprehensive income, equity, and cash flows, with detailed notes [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets%20%E2%80%93%20March%2031%2C%202021%20and%20December%2031%2C%202020) Total assets increased to **$2.46 billion** by March 31, 2021, driven by cash and deposits, while shareholders' equity slightly decreased Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $132,124 | $87,444 | | Loans, net | $1,903,641 | $1,906,226 | | Total Assets | $2,463,529 | $2,365,886 | | Total deposits | $2,154,133 | $2,038,130 | | Total Liabilities | $2,240,673 | $2,139,246 | | Total Shareholders' Equity | $222,856 | $226,640 | [Consolidated Statements of Net Income](index=7&type=section&id=Consolidated%20Statements%20of%20Net%20Income%20%E2%80%93%20Three%20Months%20Ended%20March%2031%2C%202021%20and%202020) Net income significantly increased to **$5.8 million** in Q1 2021, driven by higher net interest income and a lower provision for loan losses Net Income Performance (in thousands, except per share data) | Metric | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net interest and dividend income | $18,026 | $14,553 | | Provision for loan losses | $75 | $2,100 | | Non-interest income | $3,004 | $2,525 | | Non-interest expense | $13,327 | $12,314 | | Net income | $5,791 | $2,080 | | Diluted earnings per share | $0.24 | $0.08 | [Consolidated Statements of Comprehensive Income](index=9&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20%E2%80%93%20Three%20Months%20Ended%20March%2031%2C%202021%20and%202020) Comprehensive income decreased to **$2.7 million** in Q1 2021, primarily due to unrealized holding losses on available-for-sale securities Comprehensive Income (in thousands) | Component | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net income | $5,791 | $2,080 | | Other comprehensive (loss) income | $(3,057) | $2,700 | | **Comprehensive income** | **$2,734** | **$4,780** | [Consolidated Statements of Changes in Shareholders' Equity](index=10&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity%20%E2%80%93%20Three%20Months%20Ended%20March%2031%2C%202021%20and%202020) Shareholders' equity decreased to **$222.9 million** due to common stock repurchases and cash dividends, partially offset by comprehensive income - Key activities impacting shareholders' equity in Q1 2021 included net income of **$5.8 million**, an other comprehensive loss of **$3.1 million**, common stock repurchases of **$5.8 million**, and cash dividends of **$1.2 million**[22](index=22&type=chunk)[23](index=23&type=chunk) [Consolidated Statements of Cash Flows](index=12&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20%E2%80%93%20Three%20Months%20Ended%20March%2031%2C%202021%20and%202020) Cash and cash equivalents increased by **$44.7 million** in Q1 2021, driven by financing activities, largely from increased deposits, offsetting investing outflows Cash Flow Summary (in thousands) | Activity | Q1 2021 | Q1 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $11,002 | $12,053 | | Net cash used in investing activities | $(60,260) | $(10,741) | | Net cash provided by financing activities | $93,938 | $622 | | **Net change in cash and cash equivalents** | **$44,680** | **$1,934** | [Notes to Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed notes explain accounting policies and financial data, covering loan portfolio, securities, share-based compensation, and subsequent events - The company operates 25 banking offices in Massachusetts and Connecticut, with primary revenue from interest on loans and securities[30](index=30&type=chunk) - The allowance for loan losses methodology was updated in March 2020 to include a qualitative factor for the "Economic Impact of COVID-19"[56](index=56&type=chunk) - Subsequent to the quarter end, the company completed a **$20 million** subordinated notes offering and authorized a new stock repurchase plan for up to **2.4 million** shares[139](index=139&type=chunk)[141](index=141&type=chunk) [Management's Discussion and Analysis (MD&A)](index=44&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2021 financial performance, highlighting increased net income driven by higher net interest income and lower loan loss provision, alongside strong financial condition - The company's growth-oriented strategy focuses on increasing commercial and residential lending, growing core deposits, and investing in technology[144](index=144&type=chunk)[146](index=146&type=chunk) - As of March 31, 2021, loan modifications under the CARES Act declined **74%** to **$66.9 million** (**3.8%** of total loans, ex-PPP) from a peak of **$261.0 million**[156](index=156&type=chunk) Paycheck Protection Program (PPP) Loan Status as of March 31, 2021 | Round | Original Loan Amount ($M) | Original of Loans | Balance Outstanding ($M) | of Loans Remaining | | :--- | :--- | :--- | :--- | :--- | | Round 1 and 2 | $223.1 | 1,386 | $98.5 | 340 | | Round 3 | $71.6 | 660 | $71.6 | 660 | | **Total** | **$294.7** | **2,046** | **$170.1** | **1,000** | [Comparison of Financial Condition](index=49&type=section&id=COMPARISON%20OF%20FINANCIAL%20CONDITION%20AT%20MARCH%2031%2C%202021%20AND%20DECEMBER%2031%2C%202020) Total assets grew by **$97.6 million** to **$2.5 billion** in Q1 2021, driven by increased cash and investment securities, with deposits rising and equity slightly decreasing - Total assets increased by **$97.6 million**, or **4.1%**, from December 31, 2020[166](index=166&type=chunk) - Core deposits grew by **$183.5 million**, or **12.7%**, representing **75.7%** of total deposits, up from **71.0%** at year-end 2020[169](index=169&type=chunk) - Nonperforming loans decreased to **$6.8 million** (**0.39%** of total loans, ex-PPP) from **$7.8 million** (**0.45%** of total loans, ex-PPP) at year-end 2020[168](index=168&type=chunk) [Comparison of Operating Results](index=50&type=section&id=COMPARISON%20OF%20OPERATING%20RESULTS%20FOR%20THE%20THREE%20MONTHS%20ENDED%20MARCH%2031%2C%202021%20AND%20MARCH%2031%2C%202020) Net income significantly increased in Q1 2021, driven by higher net interest income from lower funding costs and a sharp decrease in loan loss provision - Net interest income increased by **$3.5 million** (**23.9%**) YoY, primarily due to a **$3.8 million** (**65.6%**) decrease in interest expense[183](index=183&type=chunk) - The provision for loan losses decreased by **$2.0 million** (**96.4%**) YoY, reflecting a more stable economic outlook[190](index=190&type=chunk) - The net interest margin (tax-equivalent) expanded to **3.26%** from **2.89%** in Q1 2020, benefiting from lower deposit costs[185](index=185&type=chunk) - Non-interest income increased by **$479,000** (**19.0%**) YoY, mainly due to a gain on non-marketable equity investments and mortgage banking income[193](index=193&type=chunk) [Liquidity and Capital Resources](index=55&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with substantial borrowing capacity and regulatory capital ratios exceeding 'well-capitalized' requirements Regulatory Capital Ratios (Bank) as of March 31, 2021 | Ratio | Actual | Minimum to be Well-Capitalized | | :--- | :--- | :--- | | Total Capital (to Risk Weighted Assets) | 13.85% | 10.00% | | Tier 1 Capital (to Risk Weighted Assets) | 12.60% | 8.00% | | Common Equity Tier 1 Capital | 12.60% | 6.50% | | Tier 1 Leverage Ratio | 8.81% | 5.00% | - At March 31, 2021, the company had available borrowing capacity of **$453.3 million** with the FHLB, plus lines of credit with the FRB and correspondent banks[200](index=200&type=chunk)[201](index=201&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in the company's assessment of market risk sensitivity have occurred since its 2020 Annual Report on Form 10-K - There have been no material changes in the company's market risk profile since its 2020 Annual Report[208](index=208&type=chunk) [Controls and Procedures](index=57&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO have certified that the company's disclosure controls and procedures were effective as of March 31, 2021[209](index=209&type=chunk) - No material changes in internal control over financial reporting occurred during the last fiscal quarter[211](index=211&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=58&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to ordinary legal proceedings, but believes pending matters are covered by insurance or would not materially affect the company - The company reports no material legal proceedings that would have a significant adverse effect on its financial condition[212](index=212&type=chunk) [Risk Factors](index=58&type=section&id=Item%201A.%20Risk%20Factors) No material changes in the company's risk factors have occurred since the filing of its 2020 Annual Report on Form 10-K - No material changes to the company's risk factors are reported for the period since December 31, 2020[213](index=213&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **711,635** common shares at an average of **$8.12** per share in Q1 2021, with **326,936** shares remaining for repurchase Common Stock Repurchases in Q1 2021 | Period | Total Shares Purchased | Average Price Paid per Share ($) | | :--- | :--- | :--- | | January 2021 | 106,476 | 6.79 | | February 2021 | 52,616 | 8.13 | | March 2021 | 552,543 | 8.37 | | **Total** | **711,635** | **8.12** | - As of March 31, 2021, **326,936** shares were still available for repurchase under the existing plan authorized in October 2020[217](index=217&type=chunk) [Other Information](index=59&type=section&id=Item%205.%20Other%20Information) No other information required for disclosure under this item was reported for the quarter - No information was reported under this item[220](index=220&type=chunk) [Exhibits](index=59&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL-formatted financial statements - Exhibits filed include Sarbanes-Oxley Act certifications (302 and 906) and XBRL interactive data files[221](index=221&type=chunk)