• Western New England Bancorp, Inc. Reports Results for Three Months and Year Ended December 31, 2021 and Announces 20% Increase in Quarterly Cash Dividend

    Source: Nasdaq GlobeNewswire / 25 Jan 2022 15:05:01   America/Chicago

    WESTFIELD, Mass., Jan. 25, 2022 (GLOBE NEWSWIRE) -- Western New England Bancorp, Inc. (the “Company” or “WNEB”) (NasdaqGS: WNEB), the holding company for Westfield Bank (the “Bank”), announced today the unaudited results of operations for the three and twelve months ended December 31, 2021. For the three months ended December 31, 2021, the Company reported net income of $6.2 million, or $0.28 per diluted share, compared to net income of $5.0 million, or $0.20 per diluted share, for the three months ended December 31, 2020. On a linked quarter basis, net income was $6.2 million, or $0.28 per diluted share, as compared to net income of $6.0 million, or $0.27 per diluted share, for the three months ended September 30, 2021. For the twelve months ended December 31, 2021, net income was $23.7 million, or $1.02 per diluted share, compared to net income of $11.2 million, or $0.45 per diluted share, for the twelve months ended December 31, 2020.

    The Company also announced that the Board of Directors declared a quarterly cash dividend of $0.06 per share on its common stock, representing an increase of $0.01 per share, or 20%, as compared to the prior quarter. The dividend will be payable on or about February 23, 2022 to shareholders of record on February 9, 2022.

    “We are pleased to announce record results for the Company for 2021 along with a strong fourth quarter,” said James C. Hagan, President and Chief Executive Officer. “In 2021, the Company saw significant loan production, increased PPP fees, lower cost of funds and asset quality metrics that achieved historical lows. These results were highlighted by increases in our low-cost core deposit categories, with core deposits as a whole increasing $402 million, or 27.7%, as well as increases in our commercial and residential lending production.

    Our fourth quarter results represent our continuing sound balance sheet management and net interest margin stabilization. As we emerge from the pandemic, we are able to focus on more traditional and profitable banking activities, which assisted the Company in achieving record profitability in 2021.

    Our priority, as we enter 2022, is our continuing loan production growth funded through utilizing our excess liquidity from our strong core deposit growth. Commercial real estate activity has steadily grown as we continue to add new customer relationships. The success of our lending services is fueling profitability and providing new market opportunities for the Company especially in the Connecticut marketplace. During the fourth quarter of 2021, commercial real estate loans increased $62 million, or 6.8%, and increased $146 million, or 17.5%, year-over-year. Residential mortgage originations, which have been a strong driver of new customer relationships, and non-interest income through gains on the sale of residential loans to the secondary market, have enabled us to participate in the residential housing market while reducing our reliance on long-term, low-interest rate loans. In 2021, the Company reported $1.4 million in non-interest income from strong mortgage banking activities.”

    Mr. Hagan concluded, “We remain optimistic for a positive and strong banking environment in 2022. As we enter the new year, the management team would like to thank our customers, employees, Board of Directors and our shareholders for their support as we continue to grow our Company now and into the future.”

    COVID-19 Response and Actions:

    As a Preferred Lender with the Small Business Administration (“SBA”), the Company was in a position to react immediately to the Paycheck Protection Program (“PPP”) component of the March 27, 2020 stimulus bill known as the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) launched by the U.S Department of the Treasury and the SBA. As of December 31, 2021, the Company had received funding approval from the SBA for 2,146 applications totaling $302.2 million.

    As of December 31, 2021, the Company processed 1,982 PPP loan forgiveness applications totaling $276.9 million. Total PPP loans decreased $141.9 million, or 84.9%, from $167.3 million at December 31, 2020 to $25.3 million at December 31, 2021.

    As PPP loans are forgiven, the Company is accelerating the recognition of PPP loan origination fees that were being amortized over the original lives of the loans. The majority of the PPP loan portfolio has been repaid through forgiveness and earnings were favorably impacted by the additional PPP origination fee income during the year ended December 31, 2021. During the twelve months ended December 31, 2021, the Company recognized $6.8 million in PPP loan origination fee income and PPP interest income (“PPP income”), compared to $4.8 million during the twelve months ended December 31, 2020. As of December 31, 2021, the Company had $781,000 in remaining deferred PPP loan processing fees.

    The table below breaks out the PPP income recognized for the periods noted:

     For the Three Months Ended
     December 31,
    2021    		 September 30,
    2021    		 June 30,
    2021    		 March 31,
    2021    		 December 31,
    2020
     ($ in thousands)
      
    PPP origination fee income$868  $1,556  $1,240  $1,999  $1,760 
    PPP interest income 105   201   387   412   512 
    Total PPP Income$ 973  $ 1,757  $ 1,627  $ 2,411  $ 2,272 


    In addition to participating in the PPP, the Company granted deferred loan payments for impacted commercial, residential and consumer borrowers who experienced financial hardship due to COVID-19. As of December 31, 2021, modifications granted under the CARES Act declined to nine loans in the amount of $42.5 million, or 2.3% of total loans, excluding PPP loans. As of December 31, 2021, of the $42.5 million in remaining modifications granted under the CARES Act, eight loans in the amount of $33.5 million, or 78.8%, of the remaining modifications, were granted to the hotel industry, and one loan in the amount of $9.0 million was granted to an assisted living facility. Of the $42.5 million in remaining outstanding modifications, $33.5 million, or 78.8%, have resumed interest only payments.

    The table below breaks out the remaining modifications granted under the CARES Act at December 31, 2021:

          Remaining CARES Act Modifications
    Loan Segment(1)(2) Total Loan Segment Balance at December 31, 2021 % of Total Loans Modification Balance # of Loans Modified
    		 % of Loan Segment
    Balance
    ($ in millions)            
    Commercial real estate(3) $980.0   53.3% $41.9   7   4.3%
    Commercial and industrial  201.3   11.0%  0.6   2   0.3%
    Residential real estate  652.1   35.5%  -   -   - 
    Consumer  4.3   0.2%  -   -   - 
    Total $ 1,837.7   100.0% $ 42.5   9   2.3%


    _________________________
     (1)Excludes PPP loans of $25.3 million and the related deferred fees.
     (2)Residential includes home equity loans and lines of credit.
     (3)The remaining modification balance includes $32.9 million making their interest only payments and resuming regular payments in January of 2022.
       

    The Company continues to monitor COVID-19’s ongoing impact on its business and customers, however, the extent to which COVID-19 continues to impact its results and operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, the emergence of new variants and the direct and indirect economic effects of the pandemic and related containment measures.

    Key Highlights:

    Loans and Deposits

    At December 31, 2021, total loans were $1.9 billion, a decrease of $62.7 million, or 3.3%, from December 31, 2020. Excluding PPP loans, total loans increased $79.3 million, or 4.5%, from December 31, 2020, and increased $52.1 million, or 2.9%, from the linked quarter. Commercial real estate loans increased $146.0 million, or 17.5%, from December 31, 2020 to December 31, 2021, and increased $62.4 million, or 6.8%, from the linked quarter.

    Total deposits increased $213.2 million, or 10.5%, from $2.0 billion at December 31, 2020 to $2.3 billion at December 31, 2021. Core deposits, which include non-interest bearing demand accounts, increased $401.5 million, or 27.7%, from $1.4 billion, or 71.0% of total deposits, at December 31, 2020, to $1.8 billion, or 82.1% of total deposits at December 31, 2021. The loan to deposit ratio decreased from 94.6% at December 31, 2020 to 82.8% at December 31, 2021.

    Allowance for Loan Losses and Credit Quality

    At December 31, 2021, the allowance for loan losses as a percentage of total loans and as a percentage of non-performing loans was 1.06% and 398.6%, respectively. At December 31, 2021, non-performing loans totaled $5.0 million, or 0.27% of total loans, compared to $5.6 million, or 0.31% of total loans, at September 30, 2021, and $7.8 million, or 0.41% of total loans, at December 31, 2020. Total delinquency decreased $11.4 million, or 84.2%, from 0.70% of total loans at December 31, 2020 to 0.11% of total loans at December 31, 2021.

    Net Interest Margin

    The net interest margin was 3.08% for the three months ended December 31, 2021 compared to 3.18% for the three months ended September 30, 2021. The net interest margin, on a tax-equivalent basis, was 3.10% for the three months ended December 31, 2021, compared to 3.20% for the three months ended September 30, 2021.

    Repurchases

    On October 27, 2020, the Company announced that the Board of Directors authorized a stock repurchase plan (the “2020 Plan”) under which the Company was authorized to purchase up to 1.3 million shares, or 5% of its outstanding common stock. On May 20, 2021, the Company announced the completion of the 2020 Plan. On April 27, 2021, the Company announced that the Board of Directors authorized a stock repurchase plan (the “2021 Plan”) under which the Company is authorized to repurchase up to 2.4 million shares, or 10% of its outstanding common stock. During the three months ended December 31, 2021, the Company repurchased 192,078 shares of common stock under the 2021 Plan. During the twelve months ended December 31, 2021, the Company repurchased 2,758,051 shares under both the 2020 Plan and 2021 Plan at an average price of $8.33. At December 31, 2021, there were 677,319 shares available for repurchase under the 2021 Plan.

    The shares repurchased under the 2021 Plan will be purchased from time to time at prevailing market prices, through open market or privately negotiated transactions, or otherwise, depending upon market conditions. There is no guarantee as to the exact number, or value, of shares that will be repurchased by the Company, and the Company may discontinue repurchases at any time that management determines additional repurchases are not warranted. The timing and amount of additional share repurchases under the 2021 Plan will depend on a number of factors, including the Company’s stock price performance, ongoing capital planning considerations, general market conditions, and applicable legal requirements.

    Capital Management

    Book value per share was $9.87 at December 31, 2021, compared to $8.97 at December 31, 2020, while tangible book value per share increased $0.85, or 10.2%, from $8.36 at December 31, 2020 to $9.21 at December 31, 2021. As of December 31, 2021, the Company’s and the Bank’s regulatory capital ratios continued to exceed the levels required to be considered “well-capitalized” under federal banking regulations.

    Net Income for the Three Months Ended December 31, 2021 Compared to the Three Months Ended September 30, 2021

    The Company reported net income of $6.2 million, or $0.28 per diluted share, for the three months ended December 31, 2021, compared to net income of $6.0 million, or $0.27 per diluted share, for the three months ended September 30, 2021. Return on average assets and return on average equity were 0.97% and 11.22%, respectively, for the three months ended December 31, 2021, as compared to 0.96% and 10.85%, respectively, for the three months ended September 30, 2021.

    Net Interest Income and Net Interest Margin

    On a sequential quarter basis, net interest income decreased $183,000, or 1.0%, to $18.6 million for the three months ended December 31, 2021, from $18.8 million for the three months ended September 30, 2021. The decrease in net interest income was primarily due to a decrease in interest and dividend income of $312,000, or 1.5%, partially offset by a decrease in interest expense of $129,000, or 8.8%.

    During the three months ended December 31, 2021 and the three months ended September 30, 2021, interest and dividend income included PPP income of $973,000 and $1.8 million, respectively. During the three months ended December 31, 2021, the Company recorded $31,000 in positive purchase accounting adjustments, compared to negative purchase accounting adjustments of $56,000 during the three months ended September 30, 2021. Excluding PPP income and purchase accounting adjustments, net interest income increased $688,000, or 4.1%, from the three months ended September 30, 2021 to the three months ended December 31, 2021.

    The net interest margin was 3.08% for the three months ended December 31, 2021 compared to 3.18% for the three months ended September 30, 2021. The net interest margin, on a tax-equivalent basis, was 3.10% for the three months ended December 31, 2021, compared to 3.20% for the three months ended September 30, 2021. Excluding PPP income, the net interest margin was 2.97% for the three months ended December 31, 2021, compared to 2.99% for the three months ended September 30, 2021. The average yield on interest-earning assets was 3.30% for the three months ended December 31, 2021, compared to 3.43% for the three months ended September 30, 2021. The average loan yield was 3.88% for the three months ended December 31, 2021, compared to 3.97% for the three months ended September 30, 2021.

    During the three months ended December 31, 2021, average interest-earning assets increased $56.7 million, or 2.4%, to $2.4 billion, primarily due to an increase in average securities of $48.1 million, or 13.6%, and an increase in average short-term investments of $26.1 million, or 24.7%, partially offset by a decrease in average loans of $17.6 million, or 0.9%. Excluding PPP loans, average loans increased $21.2 million, or 1.2%, from the three months ended September 30, 2021 to the three months ended December 31, 2021.

    The average cost of total funds, including non-interest bearing accounts and borrowings, decreased three basis points from 0.26% for the three months ended September 30, 2021 to 0.23% for the three months ended December 31, 2021. The average cost of core deposits, including non-interest bearing demand deposits, decreased one basis point to 15 basis points for the three months ended December 31, 2021, from 16 basis points for the three months ended September 30, 2021. The average cost of time deposits decreased eight basis points from 0.47% for the three months ended September 30, 2021 to 0.39% for the three months ended December 31, 2021. The average cost of borrowings, including subordinated debt, increased 19 basis points from 4.25% for the three months ended September 30, 2021 to 4.44% for the three months ended December 31, 2021, due to the issuance of $20.0 million in subordinated debt during the three months ended June 30, 2021. Average FHLB borrowings decreased $1.3 million, or 30.3%, from $4.3 million for the three months ended September 30, 2021 to $3.0 million for the three months ended December 31, 2021. Average demand deposits, an interest-free source of funds, increased $38.9 million, or 6.3%, from $615.5 million, or 28.0% of total average deposits, for the three months ended September 30, 2021, to $654.4 million, or 28.9% of total average deposits, for the three months ended December 31, 2021.

    Provision for Loan Losses

    For the three months ended December 31, 2021, the provision for loan losses increased $400,000 to $300,000, from a credit for loan losses of $100,000 for the three months ended September 30, 2021. The increase in the provision for loan losses was primarily due to the increase in the commercial real estate portfolio during the quarter. Management continues to assess the exposure of the Company’s loan portfolio to the COVID-19 pandemic, economic trends and their potential effect on asset quality. The Company has deferred the adoption of the Current Expected Credit Loss allowance methodology, as permitted by its classification as a Smaller Reporting Company by the Securities and Exchange Commission. For a breakout of the Company’s credit concentration, please see the “Credit Quality” section in this release. Management will continue to closely monitor portfolio conditions and reevaluate the adequacy of the allowance.

    The Company recorded net charge-offs of $350,000 for the three months ended December 31, 2021, as compared to net recoveries of $67,000 for the three months ended September 30, 2021. At December 31, 2021, non-performing loans totaled $5.0 million, or 0.27% of total loans and total delinquency as a percentage of total loans was 0.11%.

    Non-Interest Income

    On a sequential quarter basis, non-interest income increased $561,000, or 17.0%, to $3.9 million for the three months ended December 31, 2021, from $3.3 million for the three months ended September 30, 2021. During the three months ended December 31, 2021, non-interest income included the recognition of $555,000 in bank-owned life insurance (“BOLI”) death benefits. The increase in non-interest income was also due to a $352,000 gain on non-marketable equity investments. During the three months ended December 31, 2021, service charges and fees increased $138,000, or 6.5%, from the three months ended September 30, 2021. Mortgage banking income from the sale of fixed rate residential real estate loans decreased $376,000, or 56.5%, from $665,000 for the three months ended September 30, 2021 to $289,000 for the three months ended December 31, 2021. During the three months ended December 31, 2021, the Company reported unrealized losses on marketable equity securities of $96,000, compared to an unrealized gain of $11,000 during the three months ended September 30, 2021. Income from BOLI was $486,000 for the three months ended December 31, 2021, compared to $485,000 for the three months ended September 30, 2021.

    Non-Interest Expense

    For the three months ended December 31, 2021, non-interest expense decreased $95,000, or 0.7%, to $14.0 million, from the three months ended September 30, 2021. Salaries and employee benefits increased $100,000, or 1.2%, to $8.3 million, primarily due to production and incentive accruals. Occupancy expense increased $20,000, or 1.8%, and furniture and equipment expenses increased $15,000, or 2.8%. Data processing increased $28,000, or 4.0%, professional fees decreased $98,000, or 17.0%, FDIC insurance expense decreased $71,000, or 26.0%, advertising expense decreased $83,000, or 24.1%, and other non-interest expense was $2.3 million and was virtually unchanged from the linked quarter. For the three months ended December 31, 2021, the efficiency ratio was 64.4%, compared to 63.6% for the three months ended September 30, 2021.

    Income Tax Provision

    Income tax expense for the three months ended December 31, 2021 was $2.0 million, or an effective tax rate of 24.3%, compared to $2.1 million, or an effective tax rate of 25.9%, for three months ended September 30, 2021. The decrease in the Company’s effective tax rate was primarily due to BOLI death benefits recognized during the three months ended December 31, 2021.

    Net Income for the Three Months Ended December 31, 2021 Compared to the Three Months Ended December 31, 2020.

    The Company reported net income of $6.2 million, or $0.28 per diluted share, for the three months ended December 31, 2021, compared to net income of $5.0 million, or $0.20 per diluted share, for the three months ended December 31, 2020. Return on average assets and return on average equity were 0.97% and 11.22%, respectively, for the three months ended December 31, 2021, as compared to 0.83% and 8.62%, respectively, for the three months ended December 31, 2020.

    Net Interest Income and Net Interest Margin

    Net interest income decreased $213,000, or 1.1%, to $18.6 million, for the three months ended December 31, 2021, from $18.8 million for the three months ended December 31, 2020. The decrease in net interest income was due to a decrease in interest and dividend income of $1.8 million, or 8.2%, partially offset by a decrease in interest expense of $1.6 million, or 53.9%. The decrease in interest expense was due to a $1.2 million, or 51.7%, decrease in interest expense on deposits and a decrease in interest expense on borrowings of $403,000, or 61.4%. Net interest income for the three months ended December 31, 2021 includes PPP income of $973,000, compared to $2.3 million during the three months ended December 31, 2020. Excluding PPP income, net interest income increased $1.1 million, or 6.6%.

    During the three months ended December 31, 2021 and the three months ended December 31, 2020, the Company recognized prepayment penalties of $21,000 and $135,000, respectively. In addition, interest income for the three months ended December 31, 2021 includes $31,000 in positive purchase accounting adjustments, compared to $929,000 for the three months ended December 31, 2020, as well as past due interest and late charges totaling $193,000 due to the full payoff of a $3.5 million credit-marked substandard classified loan. Excluding the adjustments above, net interest income increased $2.4 million, or 15.4%, from $15.3 million during the three months ended December 31, 2020, to $17.6 million during the three months ended December 31, 2021.

    The net interest margin was 3.08% for the three months ended December 31, 2021, compared to 3.30%, for the three months ended December 31, 2020. The net interest margin, on a tax-equivalent basis, was 3.10% for the three months ended December 31, 2021, compared to 3.32% for the three months ended December 31, 2020. Excluding the adjustments discussed above, the net interest margin expanded two basis points from 2.95% for the three months ended December 31, 2020 to 2.97% for the three months ended December 31, 2021.

    The average loan yield decreased 34 basis points from 4.22% for the three months ended December 31, 2020 to 3.88% for the three months ended December 31, 2021. The fully tax-equivalent average yield on interest-earning assets decreased 51 basis points from 3.83% for the three months ended December 31, 2020 to 3.32% for the three months ended December 31, 2021.

    During the three months ended December 31, 2021, the average cost of total funds, including non-interest bearing demand accounts and borrowings, decreased 31 basis points from 0.54% for the three months ended December 31, 2020 to 0.23% or the three months ended December 31, 2021. The average cost of core deposits, including non-interest bearing demand deposits, decreased eight basis points from 0.23% for the three months ended December 31, 2020 to 0.15% for the three months ended December 31, 2021. The average cost of time deposits decreased 53 basis points from 0.92% for the three months ended December 31, 2020 to 0.39% for the three months ended December 31, 2021. The average cost of borrowings, including subordinated debt, increased 220 basis points from 2.24% for the three months ended December 31, 2020 to 4.44% for the three months ended December 31, 2021, due to the issuance of $20.0 million in subordinated debt. Average FHLB borrowings decreased $113.7 million, or 97.4%, from $116.7 million for the three months ended December 31, 2020 to $3.0 million for the three months ended December 31, 2021. For the three months ended December 31, 2021, average demand deposits of $654.3 million, an interest-free source of funds, represented 28.9% of average total deposits, and increased $119.5 million, or 22.3%, from the three months ended December 31, 2020.

    During the three months ended December 31, 2021, average interest-earning assets increased $130.8 million, or 5.8%, to $2.4 billion compared to the three months ended December 31, 2020. The increase was primarily due to an increase in securities of $206.1 million, or 105.3%, and an increase in short-term investments of $29.2 million, or 28.5%, partially offset by a decrease in average loans of $102.8 million, or 5.3%. Excluding average PPP loans, average interest-earnings assets increased $294.1 million, or 14.3%, and average loans increased $60.4 million, or 3.5%, from the three months ended December 31, 2020 to the three months ended December 31, 2021.

    Provision for Loan Losses

    The provision for loan losses decreased $200,000, or 40.0%, from $500,000 for the three months ended December 31, 2020 to $300,000 for the three months ended December 31, 2021. The Company recorded net charge-offs of $350,000 for the three months ended December 31, 2021, as compared to net charges-offs of $35,000 for the three months ended December 31, 2020.

    Non-Interest Income

    Non-interest income increased $1.4 million, or 56.6%, to $3.9 million for the three months ended December 31, 2021, from $2.5 million for the three months ended December 31, 2020. During the three months ended December 31, 2021, non-interest income included the recognition of $555,000 in BOLI death benefits. Excluding the BOLI death benefits, non-interest income increased $839,000, or 34.1%. The increase was also due to a gain on non-marketable equity investments of $352,000. Service charges and fees increased $300,000, or 15.2%, income from BOLI increased $42,000, or 9.5%, and mortgage banking income from the sale of fixed rate residential real estate loans increased $289,000 for the three months ended December 31, 2021. During the three months ended December 31, 2021, the Company reported unrealized losses on marketable equity securities of $96,000, compared unrealized losses on marketable equity securities of $24,000 during the three months ended December 31, 2020.

    Non-Interest Expense

    For the three months ended December 31, 2021, non-interest expense decreased $415,000, or 2.9%, to $13.9 million from $14.3 million, for the three months ended December 31, 2020. During the three months ended December 31, 2020, the Company prepaid $50.0 million of FHLB borrowings. The transaction was accounted for as an early debt extinguishment resulting in a loss of $987,000. Excluding the loss, non-interest expense increased $572,000, or 4.3%, from the three months ended December 31, 2020 to the three months ended December 31, 2021. Salaries and employee benefits expenses increased $469,000, or 6.0%, to $8.3 million, due to normal annual salary increases as well as higher production and incentive accruals. Furniture and equipment increased $186,000, or 51.4%, other non-interest expense increased $108,000, or 5.0%, and data processing expense increased $15,000, or 2.1%. These increases were partially offset by a decrease in FDIC expense of $98,000, or 32.7%, from $300,000 during the three months ended December 31, 2020 to $202,000 during the three months ended December 31, 2021. Occupancy expense decreased $17,000, or 1.5%, advertising expenses decreased $47,000, or 15.2%, and professional fees decreased $44,000, or 8.4%. The efficiency ratio was 64.4% for the three months ended December 31, 2021 compared to 62.7% for the three months ended December 31, 2020.

    Income Tax Provision

    Income tax expense for the three months ended December 31, 2021 was $2.0 million, or an effective tax rate of 24.3%, compared to $1.4 million, or an effective tax rate of 21.9%, for three months ended December 31, 2020. The increase in the Company’s effective tax rate was primarily due to the effect of higher pre-tax income for the fiscal year ended December 31, 2021.

    Net Income for the Twelve Months Ended December 31, 2021 Compared to the Twelve Months Ended December 31, 2020

    For the twelve months ended December 31, 2021, the Company reported net income of $23.7 million, or $1.02 per diluted share, compared to $11.2 million, or $0.45 per diluted share, for the twelve months ended December 31, 2020. For the twelve months ended December 31, 2021, income before provision for loan losses and taxes increased $8.9 million, or 40.6%, from the twelve months ended December 31, 2020. Return on average assets and return on average equity were 0.96% and 10.64% for the twelve months ended December 31, 2021, respectively, compared to 0.48% and 4.86% for the twelve months ended December 31, 2020, respectively.

    Net Interest Income and Net Interest Margin

    During the twelve months ended December 31, 2021, net interest income increased $8.7 million, or 13.6%, to $73.2 million, compared to $64.4 million for the twelve months ended December 31, 2020. The increase in net interest income was due to a decrease in interest expense of $11.8 million, or 63.8%, partially offset by a decrease in interest and dividend income of $3.0 million, or 3.7%. For the twelve months ended December 31, 2021, interest and dividend income included $6.8 million in PPP income, compared to $4.8 million during the twelve months ended December 31, 2020. During the twelve months ended December 31, 2020, the Company recorded $976,000 in positive purchase accounting adjustments and $193,000 in interest income and late charges from the full payoff of a $3.5 million credit-marked substandard classified loan, compared to $55,000 in positive purchase accounting adjustments during the twelve months ended December 31, 2021. The Company recorded prepayment penalties of $181,000 and $409,000 during the twelve months ended December 31, 2021 and 2020, respectively. Excluding the items mentioned above, net interest income increased $8.3 million, or 14.3%, from the same period in 2020. The decrease in interest expense of $11.8 million, or 63.8%, was due to a decrease in interest expense on deposits of $8.0 million, or 59.2%, and a decrease in interest expense on borrowings of $3.8 million, or 77.6%.

    The net interest margin for the twelve months ended December 31, 2021 was 3.14%, compared to 2.93% for the twelve months ended December 31, 2020. The net interest margin, on a tax-equivalent basis, was 3.16% for the twelve months ended December 31, 2021, compared to 2.95% for the twelve months ended December 31, 2020. Excluding the adjustments discussed above, the net interest margin increased from 2.83% for the twelve months ended December 31, 2020 to 2.99% for the twelve months ended December 31, 2021.

    The average yield on interest-earning assets decreased 34 basis points from 3.77% for the twelve months ended December 31, 2020 to 3.43% for the twelve months ended December 31, 2021. The yield on average loans decreased from 4.05% during the twelve months ended December 31, 2020 to 3.93% during the twelve months ended December 31, 2021. Excluding the adjustments discussed above of $6.9 million and $6.4 million for the twelve months ended December 31, 2021 and 2020, respectively, the yield on average loans decreased 23 basis points from 4.02% for the twelve months ended December 31, 2020 to 3.79% for the twelve months ended December 31, 2021.

    During the twelve months ended December 31, 2021, the average cost of total funds, including non-interest bearing demand accounts and borrowings, decreased 59 basis points from 0.89% for the twelve months ended December 31, 2020 to 0.30%. For the twelve months ended December 31, 2021, the average cost of core deposits, including non-interest-bearing demand deposits, decreased 10 basis points to 0.17%, from 0.27% for same period in 2020. The average cost of time deposits decreased 107 basis points from 1.60% for the twelve months ended December 31, 2020 to 0.53% during the same period in 2021. The average cost of borrowings increased 45 basis points from 2.59% for the twelve months ended December 31, 2020 to 3.04% for the twelve months ended December 31, 2021 due to the issuance of $20.0 million in subordinated debt during the twelve months ended December 31, 2021.

    For the twelve months ended December 31, 2021, average demand deposits, an interest-free source of funds, increased $119.4 million, or 24.4%, from $489.6 million, or 26.0% of total average deposits, for the twelve months ended December 31, 2020 to $609.0 million, or 28.0% of total average deposits, for the twelve months ended December 31, 2021.

    During the twelve months ended December 31, 2021, average interest-earning assets increased $132.2 million, or 6.0%, to $2.3 billion. The increase in average interest-earning assets was due to an increase in average securities of $105.5 million, or 49.2%, and an increase in short-term investments of $66.1 million, or 144.1%, partially offset by a decrease in average loans of $34.7 million, or 1.8%. Excluding average PPP loans of $110.6 million, average interest-earning assets increased $167.1 million or 8.1%, and average loans remained unchanged at $1.8 billion.

    Provision for Loan Losses

    The provision for loan losses decreased $8.7 million, or 111.9%, from $7.8 million, for the twelve months ended December 31, 2020, to a credit for loan losses of $925,000, for the twelve months ended December 31, 2021. As previously mentioned, this increase was reflective of the impact of the COVID-19 pandemic on the Company’s allowance for loan losses including the previously acquired Chicopee portfolio.

    The Company recorded net charge-offs of $445,000 for the twelve months ended December 31, 2021, as compared to net charge-offs of $720,000 for the twelve months ended December 31, 2020. During the twelve months ended December 31, 2021, the Company recorded charge-offs of $645,000, compared to $963,000 during the same period in 2020. During the twelve months ended December 31, 2021, the Company recorded recoveries of $200,000, compared to recoveries of $243,000 during the same period in 2020.

    Non-Interest Income

    For the twelve months ended December 31, 2021, non-interest income of $12.6 million increased $3.3 million, or 35.8%, compared to $9.3 million for the twelve months ended December 31, 2020. During the twelve months ended December 31, 2021, non-interest income included the recognition of $555,000 in BOLI death benefits. Excluding the BOLI death benefits, non-interest income increased $2.8 million, or 30.1%.

    Service charges and fees increased $1.3 million, or 18.3%, primarily due to an increase in card-based transaction usage across our checking account base. Mortgage banking income was $1.4 million for the twelve months ended December 31, 2021, due to the sale of fixed rate residential real estate loans to the secondary market. During the twelve months ended December 31, 2021, the Company sold $59.7 million in loans to the secondary market. The Company did not sell any fixed rate residential real estate loans during the twelve months ended December 31, 2020. Income from bank-owned life insurance increased $103,000, or 5.7%, and other income from loan-level swap fees on commercial loans decreased $596,000, or 91.1%.

    During the twelve months ended December 31, 2021, the Company reported unrealized losses on marketable equity securities of $168,000, compared to unrealized gains of $109,000 during the twelve months ended December 31, 2020. In addition, during the twelve months ended December 31, 2021, the Company reported realized losses on the sale of securities of $72,000 and a gain of $898,000 on non-marketable equity securities, compared to realized gains of $2.0 million on the sale of securities during the twelve months ended December 31, 2020. During the twelve months ended December 31, 2021, the Company reported a loss on derivatives of $402,000, compared to a loss on derivatives of $2.4 million during the twelve months ended December 31, 2020.

    Non-Interest Expense

    For the twelve months ended December 31, 2021, non-interest expense increased $3.2 million, or 6.2%, to $54.9 million compared to $51.8 million, for the twelve months ended December 31, 2020. During the three months ended December 31, 2020, the Company prepaid $50.0 million of FHLB borrowings. The transaction was accounted for as an early debt extinguishment resulting in a loss of $987,000, compared to $45,000 during the twelve months ended December 31, 2021. Excluding these losses, non-interest expense increased $4.1 million, or 8.1%, from the twelve months ended December 31, 2020 to the twelve months ended December 31, 2021.

    The increase in non-interest expense was primarily due to an increase in salaries and employee benefits expenses of $2.9 million, or 9.7%. The increase in salary and employee benefits was due to several factors, including higher commissions and incentives associated with increased residential loan production as well as annual staff salary increases. Furniture and equipment increased $547,000, or 35.6%, other non-interest income increased $647,000, or 8.1%, advertising expense increased $186,000, or 16.8%, and occupancy expense increased $136,000, or 3.0%. FDIC insurance expense decreased $34,000, or 3.3%, professional fees decreased $187,000, or 7.9%, and data processing fees remain flat at $2.9 million. For the twelve months ended December 31, 2021, the efficiency ratio was 64.6%, compared to 68.6% for the twelve months ended December 31, 2020.

    Income Tax Provision

    Income tax expense for the twelve months ended December 31, 2021 was $8.0 million, or an effective tax rate of 25.3%, compared to $2.9 million, or an effective tax rate of 20.8%, for twelve months ended December 31, 2020. The increase in the Company’s effective tax rate was primarily due to the effect of higher pre-tax income for the fiscal year ended December 31, 2021.

    Balance Sheet

    At December 31, 2021, total assets were $2.5 billion, an increase of $172.5 million, or 7.3%, from December 31, 2020. During the twelve months ended December 31, 2021, cash and cash equivalents increased $16.0 million, or 18.3%, to $103.5 million, investment securities increased $214.7 million, or 100.4%, to $428.5 million and total loans, excluding PPP loans, increased $79.3 million, or 4.5%, to $1.8 billion. The high level of cash and cash equivalents is due to an increase in core deposits as well as PPP loan payoffs.

    Investments

    At December 31, 2021, the Company’s available-for-sale securities portfolio decreased $7.5 million, or 3.7%, from $201.9 million at December 31, 2020 to $194.4 million at December 31, 2021. The held-to-maturity securities portfolio, recorded at amortized cost, totaled $222.3 million at December 31, 2021. The Company did not hold any held-to-maturity securities in 2020. The Company allocated some of its excess liquidity to the investment portfolio as an alternative to cash and cash equivalents. This shift from overnight investments to held-to-maturity securities will assist the Company with managing the yield on interest-earning assets in the low interest rate environment that we are experiencing while providing ongoing cash flows from payments and pay downs. The primary objective of the investment portfolio is to provide liquidity and maximize income while preserving the safety of principal.

    Loans

    Total loans were $1.9 billion as of December 31, 2021, a decrease of $62.7 million, or 3.3%, from December 31, 2020, primarily due to a decrease in PPP loans of $141.9 million, or 84.9%. Excluding PPP loans, total loans increased $79.3 million, or 4.5%, driven by an increase in commercial real estate loans of $146.0 million, or 17.5%, partially offset by a decrease in commercial and industrial loans of $10.5 million, or 4.9%. Residential real estate loans, which include home equity loans, decreased $56.5 million, or 8.0%, as we continue to sell low coupon, fixed rate residential loans to the secondary market in order to diversify our loan mix and reduce our interest rate risk. In accordance with the Company’s asset/liability management strategy, during the twelve months ended December 31, 2021, the Company sold $59.7 million of fixed rate, low coupon residential real estate loans to the secondary market. There were no loans sold during 2020. As of December 31, 2021, the Company serviced $88.2 million in loans sold to the secondary market, compared to $38.1 million at December 31, 2020. Servicing rights will likely continue to be retained on all loans written and sold to the secondary market.

    The following table is a summary of our outstanding loan balances for the periods indicated:

     December 31, 2021 December 31, 2020
     (Dollars in thousands)
      
    Commercial real estate loans$979,969  $833,949 
        
    Residential real estate loans:   
    Residential 552,332   604,719 
    Home equity 99,759   103,905 
    Total residential real estate loans 652,091   708,624 
        
    Commercial and industrial loans   
    PPP loans 25,329   167,258 
    Commercial and industrial loans 201,340   211,823 
    Total commercial and industrial loans 226,669   379,081 
        
    Consumer loans 4,250   5,192 
    Total gross loans 1,862,979   1,926,846 
    Unamortized PPP loan fees (781)  (3,050)
    Unamortized premiums and net deferred loans fees and costs 2,518   3,587 
    Total loans$1,864,716  $1,927,383 


    Credit Quality

    Management continues to remain attentive to any signs of deterioration in borrowers’ financial conditions and is proactive in taking the appropriate steps to mitigate risk. At December 31, 2021, nonperforming loans totaled $5.0 million, or 0.27% of total loans, compared to $7.8 million, or 0.41% of total loans, at December 31, 2020. At December 31, 2021, there were no loans 90 or more days past due and still accruing interest. Nonperforming assets to total assets, was 0.20% at December 31, 2021, compared to 0.33% at December 31, 2020. The allowance for loan losses as a percentage of total loans, was 1.06% at December 31, 2021, compared to 1.10% at December 31, 2020. At December 31, 2021, the allowance for loan losses as a percentage of nonperforming loans was 398.6%, compared to 269.8% at December 31, 2020.

    Deposits

    At December 31, 2021, total deposits were $2.3 billion, an increase of $213.2 million, 10.5%, from December 31, 2020, primarily due to an increase in core deposits of $401.5 million, or 27.7%. Core deposits, which the Company defines as all deposits except time deposits, increased from $1.4 billion, or 71.0% of total deposits, at December 31, 2020, to $1.8 billion, or 82.1% of total deposits, at December 31, 2021. Non-interest-bearing deposits increased $99.5 million, or 18.4%, to $641.3 million, interest-bearing checking accounts increased $50.8 million, or 53.5%, to $145.7 million, savings accounts increased $41.7 million, or 24.5%, to $212.0 million, and money market accounts increased $209.5 million, or 32.7%, to $850.3 million. The increase in core deposits can be attributed to the government stimulus, lower consumer spending, PPP loan proceeds deposited into borrower checking accounts, as well as the three new branches opened in 2020. We anticipate that some of the deposit growth from PPP will be temporary as customers look to make capital improvements and diversify investments as risk from the COVID-19 pandemic eases over time. 

    Time deposits decreased $188.3 million, or 31.9%, from $590.3 million at December 31, 2020 to $402.0 million at December 31, 2021. Brokered deposits, which are included within time deposits, totaled $55.3 million at December 31, 2020. The Company did not have any brokered deposits at December 31, 2021.

    FHLB and Subordinated Debt

    At December 31, 2021, total borrowings decreased $35.6 million, or 61.5%, from $57.9 million at December 31, 2020, to $22.3 million. FHLB advances decreased $55.2 million, or 95.4%, to $2.7 million and subordinated debt issued during the three months ended June 30, 2021 totaled $20.0 million at December 31, 2021.

    Capital

    At December 31, 2021, shareholders’ equity was $223.7 million, or 8.8% of total assets, compared to $226.6 million, or 9.6% of total assets, at December 31, 2020. The decrease in shareholders’ equity reflects $23.1 million for the repurchase of the Company’s common stock, the payment of regular cash dividends of $4.7 million and an increase in accumulated other comprehensive loss of $1.0 million, partially offset by net income of $23.7 million. Total shares outstanding as of December 31, 2021 were 22,656,515.

    Capital Management

    The Company’s book value per share was $9.87 at December 31, 2021 compared to $8.97 at December 31, 2020, while tangible book value per share increased $0.85, or 10.2%, from $8.36 at December 31, 2020 to $9.21 at December 31, 2021. As of December 31, 2021, the Company’s and the Bank’s regulatory capital ratios continued to exceed the levels required to be considered “well-capitalized” under federal banking regulations.

    The Company’s regulatory capital ratios remain in compliance with regulatory “well capitalized” requirements and internal target minimal levels. At December 31, 2021, the Company’s Tier 1 leverage, common equity tier 1 capital, and total risk-based capital ratios were 8.8%, 12.1%, and 14.3%, respectively, and the Bank’s Tier 1 leverage, common equity tier 1 capital, and total risk-based capital ratios were 8.9%, 12.3%, and 13.3%, respectively, compared with regulatory “well capitalized” minimums of 5.00%, 6.5%, and 10.00%, respectively.

    Dividends

    Although the Company has historically paid quarterly dividends on its common stock and currently intends to continue to pay such dividends, the Company’s ability to pay such dividends depends on a number of factors, including restrictions under federal laws and regulations on the Company’s ability to pay dividends, and as a result, there can be no assurance that dividends will continue to be paid in the future.

    About Western New England Bancorp, Inc.

    Western New England Bancorp, Inc. is a Massachusetts-chartered stock holding company and the parent company of Westfield Bank, CSB Colts, Inc., Elm Street Securities Corporation, WFD Securities, Inc. and WB Real Estate Holdings, LLC. Western New England Bancorp, Inc. and its subsidiaries are headquartered in Westfield, Massachusetts and operate 25 banking offices throughout western Massachusetts and northern Connecticut. To learn more, visit our website at www.westfieldbank.com.

    Forward-Looking Statements

    This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to the Company’s financial condition, liquidity, results of operations, future performance, business, measures being taken in response to the COVID-19 pandemic and the impact of the COVID-19 pandemic on the Company’s business. Forward-looking statements may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” and “potential.”  Examples of forward-looking statements include, but are not limited to, estimates with respect to our financial condition, results of operations and business that are subject to various factors which could cause actual results to differ materially from these estimates.  These factors include, but are not limited to:

    • the duration and scope of the COVID-19 pandemic and the local, national and global impact of COVID-19;
    • actions governments, businesses and individuals take in response to the COVID-19 pandemic;
    • the speed and effectiveness of vaccine and treatment developments and their deployment, including public adoption rates of COVID-19 vaccines;
    • the emergence of new COVID-19 variants, such as the Omicron variant, and the response thereto;
    • the pace of recovery when the COVID-19 pandemic subsides;
    • changes in the interest rate environment that reduce margins;
    • the effect on our operations of governmental legislation and regulation, including changes in accounting regulation or standards, the nature and timing of the adoption and effectiveness of new requirements under the Dodd-Frank Act Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”), Basel guidelines, capital requirements and other applicable laws and regulations;
    • the highly competitive industry and market area in which we operate;
    • general economic conditions, either nationally or regionally, resulting in, among other things, a deterioration in credit quality;
    • changes in business conditions and inflation;
    • changes in credit market conditions;
    • the inability to realize expected cost savings or achieve other anticipated benefits in connection with business combinations and other acquisitions;
    • changes in the securities markets which affect investment management revenues;
    • increases in Federal Deposit Insurance Corporation deposit insurance premiums and assessments;
    • changes in technology used in the banking business;
    • the soundness of other financial services institutions which may adversely affect our credit risk;
    • certain of our intangible assets may become impaired in the future;
    • our controls and procedures may fail or be circumvented;
    • new lines of business or new products and services, which may subject us to additional risks;
    • changes in key management personnel which may adversely impact our operations;
    • severe weather, natural disasters, acts of war or terrorism and other external events which could significantly impact our business; and
    • other factors detailed from time to time in our SEC filings.

    Although we believe that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from the results discussed in these forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We do not undertake any obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except to the extent required by law.


    WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES
    Consolidated Statements of Net Income and Other Data
    (Dollars in thousands, except per share data)
    (Unaudited)

     Three Months EndedTwelve Months Ended
     December 31,September 30,June 30,March 31,December 31,December 31,
     2021202120212021202020212020
    INTEREST AND DIVIDEND INCOME:       
    Loans$18,089 $18,670 $18,321 $19,120 $20,727 $74,200 $77,837 
    Securities 1,763  1,500  1,277  854  825  5,394  4,342 
    Other investments 25  28  28  35  130  116  587 
    Short-term investments 49  40  26  24  26  139  109 
    Total interest and dividend income 19,926  20,238  19,652  20,033  21,708  79,849  82,875 
            
    INTEREST EXPENSE:       
    Deposits 1,091  1,217  1,466  1,734  2,257  5,508  13,500 
    Long-term debt -  -  185  273  656  458  3,333 
    Subordinated debt 253  256  197  -  -  706  - 
    Short-term borrowings -  -  -  -  -  -  1,612 
    Total interest expense 1,344  1,473  1,848  2,007  2,913  6,672  18,445 
            
    Net interest and dividend income 18,582  18,765  17,804  18,026  18,795  73,177  64,430 
            
    PROVISION (CREDIT) FOR LOAN LOSSES 300  (100) (1,200) 75  500  (925) 7,775 
            
    Net interest and dividend income after provision (credit) for loan losses 18,282  18,865  19,004  17,951  18,295  74,102  56,655 
            
    NON-INTEREST INCOME:       
    Service charges and fees 2,270  2,132  2,075  1,883  1,970  8,360  7,067 
    Income from bank-owned life insurance 486  485  500  441  444  1,912  1,809 
    Bank-owned life insurance death benefit 555  -  -  -  -  555  - 
    Gain (loss) on sales of securities, net -  2  (12) (62) -  (72) 1,965 
    Unrealized (loss) gain on marketable equity securities (96) 11  6  (89) (24) (168) 109 
    Gain on sale of mortgages 289  665  242  227  -  1,423  - 
    Gain on non-marketable equity investments 352  -  -  546  -  898  - 
    Loss on interest rate swap terminations -  -  (402) -  -  (402) (2,353)
    Other income -  -  -  58  72  58  654 
    Total non-interest income 3,856  3,295  2,409  3,004  2,462  12,564  9,251 
            
    NON-INTEREST EXPENSE:       
    Salaries and employees benefits 8,275  8,175  8,054  7,682  7,806  32,186  29,349 
    Occupancy 1,144  1,124  1,099  1,289  1,161  4,656  4,520 
    Furniture and equipment 548  533  513  490  362  2,084  1,537 
    Data processing 726  698  758  721  711  2,903  2,901 
    Professional fees 477  575  589  544  521  2,185  2,372 
    FDIC insurance 202  273  225  298  300  998  1,032 
    Advertising 262  345  347  338  309  1,292  1,106 
    Loss on prepayment of borrowings -  -  45  -  987  45  987 
    Other 2,289  2,295  2,044  1,965  2,181  8,593  7,946 
    Total non-interest expense 13,923  14,018  13,674  13,327  14,338  54,942  51,750 
            
    INCOME BEFORE INCOME TAXES 8,215  8,142  7,739  7,628  6,419  31,724  14,156 
            
    INCOME TAX PROVISION 1,995  2,106  2,087  1,837  1,406  8,025  2,941 
    NET INCOME$6,220 $6,036 $5,652 $5,791 $5,013 $23,699 $11,215 
            
    Basic earnings per share$0.28 $0.27 $0.24 $0.24 $0.20 $1.02 $0.45 
    Weighted average shares outstanding 22,097,968  22,620,387  23,722,903  24,486,146  24,754,681  23,223,633  25,047,195 
    Per diluted share$0.28 $0.27 $0.24 $0.24 $0.20 $1.02 $0.45 
    Weighted average diluted shares outstanding 22,203,876  22,714,429  23,773,562  24,543,554  24,763,022  23,300,637  25,062,476 
            
    Other Data:       
    Return on average assets (1) 0.97% 0.96% 0.92% 0.98% 0.83% 0.96% 0.48%
    Return on average equity (1) 11.22% 10.85% 10.16% 10.35% 8.62% 10.64% 4.86%
    Efficiency ratio (2) 64.38% 63.58% 66.09% 64.58% 62.74% 64.64% 68.64%
    Net interest margin, on a fully tax-equivalent basis 3.10% 3.20% 3.08% 3.26% 3.32% 3.16% 2.95%


    _________________________
     (1)Annualized.
     (2)The efficiency ratio represents the ratio of operating expenses divided by the sum of net interest and dividend income and non-interest income, excluding realized and unrealized gains and losses on securities, gain on non-marketable equity investments, bank-owned life insurance death benefit, loss on interest rate swap termination and loss on prepayment of borrowings.
       


    WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES
    Consolidated Balance Sheets
    (Dollars in thousands)
    (Unaudited)

     December 31, September 30, June 30, March 31, December 31,
      2021  2021  2021  2021  2020
    Cash and cash equivalents$103,456  $148,496  $105,494  $132,124  $87,444 
    Securities available-for-sale, at fair value 194,352   208,030   231,166   195,454   201,880 
    Securities held to maturity, at amortized cost 222,272   154,403   107,783   63,960   - 
    Marketable equity securities, at fair value 11,896   11,970   11,936   11,906   11,968 
    Federal Home Loan Bank of Boston and other restricted stock - at cost 2,594   2,698   4,036   4,492   5,160 
              
    Loans 1,864,716   1,846,150   1,876,988   1,924,868   1,927,383 
    Allowance for loan losses (19,787)  (19,837)  (19,870)  (21,227)  (21,157)
    Net loans 1,844,929   1,826,313   1,857,118   1,903,641   1,906,226 
              
    Bank-owned life insurance 72,895   74,286   73,801   73,301   72,860 
    Goodwill 12,487   12,487   12,487   12,487   12,487 
    Core deposit intangible 2,563   2,656   2,750   2,844   2,937 
    Other assets 70,981   69,459   70,035   63,320   64,924 
    TOTAL ASSETS$2,538,425  $2,510,798  $2,476,606  $2,463,529  $2,365,886 
              
    Total deposits$2,251,305  $2,224,842  $2,180,648  $2,154,133  $2,038,130 
    Long-term debt 2,653   3,829   4,990   42,676   57,850 
    Subordinated debt 19,633   19,623   19,614   -   - 
    Securities pending settlement -   -   461   152   160 
    Other liabilities 41,146   44,162   47,222   43,712   43,106 
    TOTAL LIABILITIES 2,314,737   2,292,456   2,252,935   2,240,673   2,139,246 
              
    TOTAL SHAREHOLDERS' EQUITY 223,688   218,342   223,671   222,856   226,640 
    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$2,538,425  $2,510,798  $2,476,606  $2,463,529  $2,365,886 


    WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES
    Other Data
    (Dollars in thousands, except per share data)
    (Unaudited)

     Three Months Ended
     December 31, September 30,
    		 June 30,
    		 March 31,
    		 December 31,
     2021 2021
    		 2021
    		 2021
    		 2020
    Shares outstanding at end of period 22,656,515   22,848,781   24,070,399   24,583,958   25,276,193 
                        
    Operating results:                   
    Net interest income$18,582  $18,765  $17,804  $18,026  $18,795 
    Provision (credit) for loan losses 300   (100)  (1,200)  75   500 
    Non-interest income 3,856   3,295   2,409   3,004   2,462 
    Non-interest expense 13,923   14,018   13,674   13,327   14,338 
    Income before income provision for income taxes 8,215   8,142   7,739   7,628   6,419 
    Income tax provision 1,995   2,106   2,087   1,837   1,406 
    Net income 6,220   6,036   5,652   5,791   5,013 
                        
    Performance Ratios:                   
    Net interest margin, on a fully tax-equivalent basis 3.10%
    		  3.20%  3.08%  3.26%  3.32%
    Interest rate spread, on a fully tax-equivalent basis 2.99%  3.09%  2.94%  3.10%  3.11%
    Return on average assets 0.97%  0.96%  0.92%  0.98%  0.83%
    Return on average equity 11.22%  10.85%  10.16%  10.35%  8.62%
    Efficiency ratio 64.38%  63.58%  66.09%  64.58%  62.74%
                        
    Per Common Share Data:                   
    Basic earnings per share$0.28  $0.27  $0.24  $0.24  $0.20 
    Per diluted share 0.28   0.27   0.24   0.24   0.20 
    Cash dividend declared 0.05   0.05   0.05   0.05   0.05 
    Book value per share 9.87   9.56   9.29   9.07   8.97 
    Tangible book value per share 9.21   8.89   8.66   8.44   8.36 
                        
    Asset Quality:                   
    30-89 day delinquent loans$1,102  $1,619  $2,607  $7,216  $11,403 
    90 days or more delinquent loans 1,039   1,446   1,808   2,058   2,119 
    Total delinquent loans 2,141   3,065   4,415   9,274   13,522 
    Total delinquent loans as a percentage of total loans 0.11%  0.17%  0.24%  0.48%  0.70%
    Total delinquent loans as a percentage of total loans, excluding PPP 0.12%  0.17%  0.25%  0.53%  0.77%
    Nonperforming loans$4,964  $5,632  $5,989  $6,782  $7,841 
    Nonperforming loans as a percentage of total loans 0.27%  0.31%  0.32%  0.35%  0.41%
    Nonperforming loans as a percentage of total loans, excluding PPP 0.27%  0.32%  0.34%  0.39%  0.45%
    Nonperforming assets as a percentage of total assets 0.20%  0.22%  0.24%  0.28%  0.33%
    Nonperforming assets as a percentage of total assets, excluding PPP 0.20%  0.23%  0.25%  0.30%  0.36%
    Allowance for loan losses as a percentage of nonperforming loans 398.61%  352.22%  331.77%  312.99%  269.83%
    Allowance for loan losses as a percentage of total loans 1.06%  1.07%  1.06%  1.10%  1.10%
    Allowance for loan losses as a percentage of total loans, excluding PPP 1.08%  1.11%  1.12%  1.21%  1.20%
    Net loan charge-offs (recoveries)$350  $(67) $157  $5  $35 
    Net loan charge-offs as a percentage of average assets 0.01%  0.00%
    		  0.01%  0.00%  0.00%


    The following tables set forth the information relating to our average balances and net interest income for the three months ended December 31, 2021, September 30, 2021, and December 31, 2020 and reflect the average yield on interest-earning assets and average cost of interest-bearing liabilities for the periods indicated.

     Three Months Ended
     December 31, 2021 September 30, 2021 December 31, 2020
     Average    Average Yield/ Average    Average Yield/ Average    Average Yield/
     Balance Interest(8) Cost(9) Balance Interest(8) Cost(9) Balance Interest(8) Cost(9)
     (Dollars in thousands)
    ASSETS:                       
    Interest-earning assets                       
    Loans(1)(2)$1,850,162  $18,197   3.90% $1,867,769  $18,776   3.99% $1,952,947  $20,831   4.24%
    Securities(2) 401,811   1,764   1.74   353,690   1,501   1.68   195,752   827   1.68 
    Other investments 10,654   25   0.93   10,525   28   1.06   12,335   130   4.19 
    Short-term investments(3) 131,770   49   0.15   105,733   40   0.15   102,542   26   0.10 
    Total interest-earning assets 2,394,397   20,035   3.32   2,337,717   20,345   3.45   2,263,576   21,814   3.83 
    Total non-interest-earning assets 149,151         148,383         142,051       
    Total assets$2,543,548        $2,486,100        $2,405,627       
                            
    LIABILITIES AND EQUITY:                       
    Interest-bearing liabilities                       
    Interest-bearing checking accounts$132,028   106   0.32% $115,091   96   0.33% $97,985   118   0.48%
    Savings accounts 214,961   36   0.07   212,711   35   0.07   169,778   34   0.08 
    Money market accounts 849,023   546   0.26   813,528   562   0.27   601,267   664   0.44 
    Time deposit accounts 410,149   403   0.39   445,379   524   0.47   620,428   1,441   0.92 
    Total interest-bearing deposits 1,606,161   1,091   0.27   1,586,709   1,217   0.30   1,489,458   2,257   0.60 
    Short-term borrowings and long-term debt 22,614   253   4.44   23,920   256   4.25   116,721   656   2.24 
    Total interest-bearing liabilities 1,628,775   1,344   0.33   1,610,629   1,473   0.36   1,606,179   2,913   0.72 
    Non-interest-bearing deposits 654,334         615,468         534,771       
    Other non-interest-bearing liabilities 40,428         39,381         33,353       
    Total non-interest-bearing liabilities 694,762         654,849         568,124       
    Total liabilities 2,323,537         2,265,478         2,174,303       
    Total equity 220,011         220,622         231,324       
    Total liabilities and equity$2,543,548        $2,486,100        $2,405,627       
    Less: Tax-equivalent adjustment (2)   (109)        (107)        (106)    
    Net interest and dividend income  $18,582        $18,765        $18,795     
    Net interest rate spread (4)     2.97%      3.07%      3.09%
    Net interest rate spread, on a tax-equivalent basis (5)     2.99%      3.09%      3.11%
    Net interest margin (6)     3.08%      3.18%      3.30%
    Net interest margin, on a tax-equivalent basis (7)     3.10%      3.20%      3.32%
    Ratio of average interest-earning assets to average interest-bearing liabilities     147.01%      145.14%      140.93%


    The following tables set forth the information relating to our average balances and net interest income for the twelve months ended December 31, 2021 and 2020 and reflect the average yield on interest-earning assets and average cost of interest-bearing liabilities for the periods indicated.

     Twelve Months Ended December 31,
      2021
    		  2020
     Average
    Balance    		 Interest (8) Average Yield/
    Cost(9)    		 Average
    Balance    		 Interest (8) Average Yield/
    Cost(9)
     (Dollars in thousands)
    ASSETS:               
    Interest-earning assets               
    Loans(1)(2)$1,887,926  $74,620   3.95% $1,922,607  $78,284   4.07%
    Securities(2) 319,778   5,398   1.69   214,312   4,360   2.03 
    Other investments 10,242   115   1.12   14,915   587   3.94 
    Short-term investments(3) 111,931   139   0.12   45,858   109   0.24 
    Total interest-earning assets 2,329,877   80,272   3.45   2,197,692   83,340   3.79 
    Total non-interest-earning assets 147,980         140,725       
    Total assets$2,477,857        $2,338,417       
                    
    LIABILITIES AND EQUITY:               
    Interest-bearing liabilities               
    Interest-bearing checking accounts$109,648   399   0.36% $86,086   387   0.45%
    Savings accounts 205,394   154   0.07   153,073   136   0.09 
    Money market accounts 776,725   2,412   0.31   521,692   2,838   0.54 
    Time deposit accounts 477,067   2,543   0.53   634,111   10,139   1.60 
    Total interest-bearing deposits 1,568,834   5,508   0.35   1,394,962   13,500   0.97 
    Short-term borrowings and long-term debt 38,294   1,164   3.04   190,752   4,945   2.59 
    Total interest-bearing liabilities 1,607,128   6,672   0.42   1,585,714   18,445   1.16 
    Non-interest-bearing deposits 608,936         489,602       
    Other non-interest-bearing liabilities 39,108         32,251       
    Total non-interest-bearing liabilities 648,044         521,853       
                    
    Total liabilities 2,255,172         2,107,567       
    Total equity 222,685         230,850       
    Total liabilities and equity$2,477,857        $2,338,417       
    Less: Tax-equivalent adjustment (2)   (423)        (465)    
    Net interest and dividend income  $73,177        $64,430     
    Net interest rate spread (4)     3.01%      2.61%
    Net interest rate spread, on a tax-equivalent basis (5)     3.03%      2.63%
    Net interest margin (6)     3.14%      2.93%
    Net interest margin, on a tax-equivalent basis (7)     3.16%      2.95%
    Ratio of average interest-earning assets to average interest-bearing liabilities     144.97%      138.59%


    _________________________
     (1)Loans, including nonaccrual loans, are net of deferred loan origination costs and unadvanced funds.
     (2)Loan and securities income are presented on a tax-equivalent basis using a tax rate of 21%. The tax-equivalent adjustment is deducted from tax-equivalent net interest and dividend income to agree to the amount reported on the consolidated statements of net income.
     (3)Short-term investments include federal funds sold.
     (4)Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
     (5)Net interest rate spread, on a tax-equivalent basis, represents the difference between the tax-equivalent weighted average yield on interest-earning assets and the tax-equivalent weighted average cost of interest-bearing liabilities.
     (6)Net interest margin represents net interest and dividend income as a percentage of average interest-earning assets.
     (7)Net interest margin, on a tax-equivalent basis, represents tax-equivalent net interest and dividend income as a percentage of average interest-earning assets.
     (8)Acquired loans, time deposits and borrowings are recorded at fair value at the time of acquisition. The fair value marks on the loans, time deposits and borrowings acquired accrete and amortize into net interest income over time. For the three months ended December 31, 2021, September 30, 2021 and December 31, 2020, the loan accretion income and interest expense reduction on time deposits and borrowings increased (decreased) net interest income $31,000, ($56,000) and $929,000, respectively, and for the twelve months ended December 31, 2021 and December 31, 2020, the loan accretion income and interest expense reduction on time deposits and borrowings increased net interest income $55,000 and $976,000, respectively. Excluding these items, net interest margin, on a tax-equivalent basis, for the three months ended December 31, 2021, September 30, 2021 and December 31, 2020 was 3.10%, 3.19% and 3.16%, respectively, and the net interest margin, on a tax-equivalent basis, for the twelve months ended December 31, 2021 and December 31, 2020 was 3.16% and 2.91%, respectively.
     (9)Annualized.
       

    For further information contact:
    James C. Hagan, President and CEO
    Guida R. Sajdak, Executive Vice President and CFO
    Meghan Hibner, Vice President and Investor Relations Officer
    413-568-1911


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