Western New England Bancorp(WNEB) - 2023 Q3 - Quarterly Report

Financial Performance - Net income for Q3 2023 was $4.5 million, or $0.21 per diluted share, down from $6.0 million, or $0.28 per diluted share in Q3 2022, representing a decrease of 25%[158] - The Company reported net income of $4.5 million, or $0.21 per diluted share, for the three months ended September 30, 2023, compared to $6.0 million, or $0.28 per diluted share, for the same period in 2022[181] - Net income for the nine months ended September 30, 2023, was $12.6 million, or $0.58 per diluted share, down from $16.9 million, or $0.77 per diluted share, for the same period in 2022[203] Interest Income and Expenses - Net interest income decreased by $3.9 million, or 19.2%, to $16.4 million in Q3 2023, primarily due to an increase in interest expense of $8.1 million[158] - Net interest income decreased by $3.9 million, or 19.2%, to $16.4 million for the three months ended September 30, 2023, compared to $20.3 million for the same period in 2022[190] - For the nine months ended September 30, 2023, net interest income decreased by $6.7 million, or 11.4%, to $51.7 million compared to $58.4 million for the same period in 2022[213] - Interest expense increased by $18.7 million, or 470.4%, primarily due to a $14.7 million increase in interest expense on deposits, and a $3.9 million increase on borrowings[213] Asset and Loan Growth - Total assets increased by $31.8 million, or 1.3%, to $2.6 billion as of September 30, 2023, driven by a $23.4 million increase in total loans[164] - Total loans increased by $23.4 million, or 1.2%, to $2.0 billion, with residential real estate loans rising by $18.7 million, or 2.7%[169] - Average interest-earning assets increased by $5.2 million, or 0.2%, to $2.4 billion for the nine months ended September 30, 2023[214] Deposits and Borrowings - Total deposits decreased by $53.1 million, or 2.4%, to $2.2 billion, with core deposits declining by $224.0 million, or 12.3%[171] - Total borrowings increased by $87.6 million, or 140.8%, from $62.2 million at December 31, 2022, to $149.8 million[174] - As of September 30, 2023, total deposits were $2,176,303 thousand, a slight increase from $2,157,974 thousand in June 2023[172] Credit Quality - The allowance for credit losses as a percentage of total loans was 0.99% at September 30, 2023, compared to 1.00% at December 31, 2022[170] - Nonperforming loans totaled $6.3 million, or 0.31% of total loans, an increase from $5.7 million, or 0.29% at December 31, 2022[170] - The Company recorded net charge-offs of $1.9 million for the nine months ended September 30, 2023, compared to $129,000 for the same period in 2022[159] Efficiency and Ratios - The efficiency ratio increased to 70.6% for the three months ended September 30, 2023, compared to 62.7% for the same period in 2022[201] - The efficiency ratio for the nine months ended September 30, 2023, was 72.7%, up from 65.5% for the same period in 2022[220] - The Company's total Risk-Based Capital Ratio was 14.4% at September 30, 2023, compared to 14.2% at December 31, 2022, indicating strong capital levels[180] Strategic Initiatives - The Company plans to grow its commercial loan portfolio and expand retail banking deposit relationships as part of its growth strategy[158] - The Company is considering growth through acquisitions to enhance its product offerings and shareholder value[158] Market Sensitivity and Risk - The Company executed a $200 million fair value hedge on fixed-rate assets to reduce sensitivity to interest rates[178] - There have been no material changes in the Company's assessment of sensitivity to market risk since the last report[244] Other Financial Metrics - The average yield on interest-earning assets increased to 4.28% for the three months ended September 30, 2023, compared to 3.59% for the same period in 2022[192] - The average cost of total funds increased by 139 basis points to 1.64% for the three months ended September 30, 2023, from 0.25% for the same period in 2022[193] - Book value per share (GAAP) increased to $10.53 as of September 30, 2023, from $9.52 in the same period of 2022[226]