Western New England Bancorp(US:WNEB)2024-05-07 20:06Financial Performance - Net income for the three months ended March 31, 2024, was $3.0 million, or $0.14 per diluted share, down from $5.3 million, or $0.24 per diluted share for the same period in 2023[140]. - Net income for the three months ended March 31, 2024, was $3.0 million, or $0.14 per diluted share, down from $5.3 million, or $0.24 per diluted share for the same period in 2023, reflecting a decrease of 43.4%[161]. - Non-interest income decreased by $305,000, or 10.2%, to $2.7 million for the three months ended March 31, 2024, from $3.0 million in the same period of 2023[178]. - Non-interest expense decreased by $114,000, or 0.8%, to $14.8 million for the three months ended March 31, 2024, compared to $14.9 million for the same period in 2023[180]. - Income tax expense for the three months ended March 31, 2024, was $827,000, with an effective tax rate of 21.8%, compared to $1.7 million and 24.0% for the same period in 2023[182]. Interest Income and Expenses - Net interest income decreased by $3.2 million, or 17.1%, to $15.3 million for the three months ended March 31, 2024, compared to $18.5 million for the same period in 2023[141]. - The average yield on interest-earning assets increased by 44 basis points from 4.01% for the three months ended March 31, 2023, to 4.45% for the same period in 2024[172]. - The net interest margin was 2.57% for the three months ended March 31, 2024, down from 3.14% for the same period in 2023, indicating a decline in profitability[171]. - The average cost of funds increased by 106 basis points from 0.91% for the three months ended March 31, 2023, to 1.97% for the same period in 2024[173]. - Interest expense increased by $6.1 million, or 119.3%, while interest and dividend income rose by $3.0 million, or 12.5%, highlighting a significant rise in funding costs[170]. - The average cost of time deposits surged by 241 basis points from 1.71% for the three months ended March 31, 2023, to 4.12% for the same period in 2024[173]. Asset and Loan Management - Total assets as of March 31, 2024, were $2.6 billion, a decrease of $7.3 million, or 0.3%, from December 31, 2023[145]. - Total loans decreased by $1.8 million, or 0.1%, to $2.0 billion as of March 31, 2024, with commercial and industrial loans down by $10.1 million, or 4.7%[151]. - The allowance for credit losses as a percentage of total loans was 0.98% as of March 31, 2024, compared to 1.00% at December 31, 2023[153]. - Nonperforming loans totaled $5.8 million, or 0.29% of total loans, down from $6.4 million, or 0.32% of total loans, at December 31, 2023[152]. - The Company recorded a reversal of credit losses of $550,000 for the three months ended March 31, 2024, compared to a reversal of $388,000 for the same period in 2023[140]. - Net recoveries were $67,000 for the three months ended March 31, 2024, a significant improvement from net charge-offs of $1.9 million in the same period of 2023[176]. Capital and Equity - As of March 31, 2024, shareholders' equity was $235.8 million, representing 9.2% of total assets, a slight decrease from $237.4 million or 9.3% at December 31, 2023[159]. - The Bank's Total Risk-Based Capital Ratio remained strong at 14.7% as of March 31, 2024, consistent with the previous quarter[160]. - Total Capital to Risk Weighted Assets ratio for the Bank was 13.96% as of March 31, 2024, exceeding the minimum requirement of 8.00%[205]. - Tier 1 Capital to Risk Weighted Assets ratio for the Bank was 12.92% as of March 31, 2024, above the minimum requirement of 6.00%[205]. - Common Equity Tier 1 Capital to Risk Weighted Assets ratio for the Bank was 12.92% as of March 31, 2024, surpassing the minimum requirement of 4.50%[205]. - Tier 1 Leverage Ratio for the Bank was 9.77% as of March 31, 2024, exceeding the minimum requirement of 4.00%[205]. - The Company exceeded all applicable regulatory capital requirements as of March 31, 2024, categorized as "well-capitalized" under the regulatory framework[202]. Strategic Initiatives - The Company plans to grow its commercial loan portfolio and increase deposit relationships to enhance profitability and efficiency[140]. - The Company is considering growth through acquisitions to expand its market presence and product offerings[140]. - The Company does not anticipate any material capital expenditures during the calendar year 2024, except for strategic initiatives[201]. - The Company has significant commitments to extend credit and provide financial guarantees, subject to strict credit control assessments[205]. Market Risk and Sensitivity - There have been no material changes in the Company's assessment of sensitivity to market risk since the 2023 Annual Report[207]. - There are no off-balance sheet arrangements that could materially affect the Company's financial condition[206]. Borrowing and Commitments - At March 31, 2024, the company had $517.7 million in available borrowing capacity with the FHLB, down from $40.6 million in outstanding borrowings[190]. - The company had approximately $95.9 million in loan commitments and letters of credit to borrowers as of March 31, 2024[197]. - The Company completed an offering of $20 million in aggregate principal amount of its 4.875% Notes, with $19.7 million outstanding as of March 31, 2024[200].