Western New England Bancorp(WNEB) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section provides the unaudited consolidated financial statements and management's discussion and analysis for the reporting period Item 1. Financial Statements This section presents the unaudited consolidated financial statements, including balance sheets, income statements, cash flows, and detailed notes Consolidated Balance Sheets Total assets increased to $2.71 billion by June 30, 2025, driven by growth in net loans and cash equivalents Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $2,711,149 | $2,653,090 | | Total cash and cash equivalents | $93,308 | $66,450 | | Net loans | $2,072,898 | $2,050,660 | | Total investment securities | $376,900 | $366,137 | | Total Liabilities | $2,471,721 | $2,417,180 | | Total deposits | $2,330,113 | $2,262,647 | | Total borrowings | $121,811 | $123,141 | | Total Shareholders' Equity | $239,428 | $235,910 | Consolidated Statements of Net Income Net income for Q2 2025 rose to $4.6 million, primarily due to increased net interest income Net Income Performance (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $17,642 | $14,470 | $33,176 | $29,816 | | Reversal of Credit Losses | $(615) | $(294) | $(473) | $(844) | | Non-interest Income | $3,411 | $3,834 | $6,170 | $6,508 | | Non-interest Expense | $15,656 | $14,314 | $30,840 | $29,096 | | Net Income | $4,590 | $3,513 | $6,893 | $6,474 | | Diluted EPS | $0.23 | $0.17 | $0.34 | $0.31 | Consolidated Statements of Cash Flows Net cash provided by operating activities was $5.6 million, with a $26.9 million net increase in cash and equivalents Cash Flow Summary - Six Months Ended June 30 (in thousands) | Cash Flow Category | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $5,578 | $3,135 | | Net cash (used in) provided by investing activities | $(37,067) | $1,834 | | Net cash provided by financing activities | $58,347 | $19,649 | | Net Change in Cash and Cash Equivalents | $26,858 | $24,618 | | Cash and cash equivalents, end of period | $93,308 | $53,458 | Notes to Consolidated Financial Statements This section details accounting policies, earnings per share, investment and loan portfolios, goodwill, and fair value measurements - The company operates as a single reportable segment, providing banking services primarily in western Massachusetts and northern Connecticut[161] - The Chief Operating Decision Maker (CODM) evaluates performance based on the consolidated results of the company as a whole[161] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses financial condition, operating results, and liquidity, highlighting strategies for lending growth and deposit expansion Overview and Strategy The company's growth strategy focuses on expanding lending, increasing core deposits, and investing in technology to enhance shareholder value - Key strategic objectives include increasing market share to improve profitability and efficiency[166] - Growing the commercial loan portfolio and related deposits[166] - Expanding the retail banking deposit franchise and investing in people, systems, and technology[166] - Growing revenues and book value per share, paying dividends, and utilizing stock repurchases[166] Comparison of Financial Condition (June 30, 2025 vs. Dec 31, 2024) Total assets increased by $58.1 million to $2.7 billion, driven by growth in loans, cash, and investment securities - Total assets increased by $58.1 million, or 2.2%, to $2.7 billion from December 31, 2024[171] - Gross loans increased by $22.1 million (1.1%), driven by growth in residential real estate (+3.8%) and commercial and industrial loans (+10.8%), partially offset by a decrease in commercial real estate loans (-2.7%)[176] - Total deposits grew by $67.5 million (3.0%), with core deposits (all deposits except time deposits) increasing by $81.4 million (5.2%)[209] - Shareholders' equity increased by $3.5 million to $239.4 million, with regulatory capital ratios remaining strong and well-capitalized[215] Comparison of Operating Results Net income for Q2 2025 increased to $4.6 million, with net interest margin expanding to 2.80% due to higher asset yields Quarterly Performance Comparison (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income | $4.6M | $3.5M | +31.4% | | Diluted EPS | $0.23 | $0.17 | +35.3% | | Net Interest Income | $17.6M | $14.5M | +21.9% | | Net Interest Margin | 2.80% | 2.42% | +38 bps | Six-Month Performance Comparison (2025 vs 2024) | Metric | 6M 2025 | 6M 2024 | Change | | :--- | :--- | :--- | :--- | | Net Income | $6.9M | $6.5M | +6.2% | | Diluted EPS | $0.34 | $0.31 | +9.7% | | Net Interest Income | $33.2M | $29.8M | +11.3% | | Net Interest Margin | 2.64% | 2.50% | +14 bps | - A reversal of credit losses of $615,000 was recorded in Q2 2025, largely due to a $624,000 recovery on a previously charged-off commercial relationship[230] - Non-interest expense increased 9.4% for the quarter and 6.0% for the six-month period, primarily driven by higher salaries and benefits[234][254] Liquidity and Capital Resources The company maintains strong liquidity and capital, with significant borrowing capacity and regulatory ratios exceeding 'well-capitalized' minimums - Primary liquidity sources are deposits, loan and security amortization/prepayments, and operational funds[260] Available Borrowing Capacity as of June 30, 2025 | Source | Available Capacity | | :--- | :--- | | FHLB | $452.7 million | | FRB Discount Window | $383.8 million | | Correspondent Banks | $25.0 million | Consolidated Capital Ratios as of June 30, 2025 | Ratio | Actual | Minimum for Adequacy | | :--- | :--- | :--- | | Total Capital (to RWA) | 14.42% | 8.00% | | Tier 1 Capital (to RWA) | 12.40% | 6.00% | | Common Equity Tier 1 (to RWA) | 12.40% | 4.50% | | Tier 1 Leverage Ratio | 9.10% | 4.00% | Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes in market risk assessment have occurred since the 2024 Annual Report - There have been no material changes in the company's market risk assessment since the 2024 Annual Report[276] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective, 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, 2025[277] - No material changes to internal control over financial reporting were identified during the last fiscal quarter[278] PART II – OTHER INFORMATION This section provides other information, including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings The company is not involved in any material pending legal proceedings beyond routine business litigation - The company reports no material pending legal proceedings outside of the ordinary course of business[279] Item 1A. Risk Factors No additional material changes in risk factors have been identified since the 2024 fiscal year-end - No material changes to risk factors are reported since the 2024 Annual Report[280] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 290,609 shares at an average price of $9.45 and initiated a new 1,000,000 share repurchase plan Share Repurchases - Q2 2025 | Period | Total Shares Purchased | Average Price Paid ($) | | :--- | :--- | :--- | | April 2025 | 43,291 | 9.29 | | May 2025 | 222,318 | 9.49 | | June 2025 | 25,000 | 9.37 | | Total | 290,609 | 9.45 | - The Board authorized a new stock repurchase plan (the "2025 Plan") in April 2025 for up to 1,000,000 shares[287] Item 5. Other Information No Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during the quarter - No new or terminated Rule 10b5-1 trading plans were reported for directors or officers during the quarter[286] Item 6. Exhibits This section lists filed exhibits, including CEO/CFO certifications and Inline XBRL financial statements