Western New England Bancorp(US:WNEB)2024-08-09 20:09Financial 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].