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What changed in Western New England Bancorp, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Western New England Bancorp, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+423 added−375 removedSource: 10-K (2025-03-10) vs 10-K (2024-03-08)

Top changes in Western New England Bancorp, Inc.'s 2024 10-K

423 paragraphs added · 375 removed · 302 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

158 edited+47 added−49 removed165 unchanged
Biggest changeYears Ended December 31, 2023 2022 (1) (Dollars in thousands) Allowance for credit losses to total loans outstanding 1.00 % 1.00 % Allowance for credit losses $ 20,267 $ 19,931 Total loans outstanding $ 2,027,317 $ 1,991,400 Nonaccrual loans to total loans outstanding 0.32 % 0.29 % Nonaccrual loans $ 6,421 $ 5,694 Total loans outstanding $ 2,027,317 $ 1,991,400 Allowance for credit losses to nonaccrual loans 315.64 % 350.04 % Allowance for credit losses $ 20,267 $ 19,931 Nonaccrual loans $ 6,421 $ 5,694 Net charge-offs (recoveries) during the period to daily average loans outstanding: Residential one-to-four family recoveries to daily average loans outstanding 0.00 % (0.01 )% Net recoveries during the period $ (23 ) $ (30 ) Average amount outstanding $ 601,843 $ 576,502 Commercial real estate charge-offs to daily average loans outstanding 0.07 % 0.03 % Net charge-offs during the period $ 755 $ 337 Average amount outstanding $ 1,076,523 $ 1,052,345 Commercial and industrial charge-offs to daily average loans outstanding 0.57 % 0.03 % Net charge-offs during the period $ 1,213 $ 69 Average amount outstanding $ 213,903 $ 216,547 Home equity (recoveries) charge-offs to daily average loans outstanding 0.00 % 0.03 % Net (recoveries) charge-offs during the period $ (3 ) $ 26 Average amount outstanding $ 108,057 $ 103,565 Consumer charge-offs to daily average loans outstanding 1.66 % 3.37 % Net charge-offs during the period $ 97 $ 154 Average amount outstanding $ 5,840 $ 4,568 Total Loan Charge-offs to Daily Average Loans Outstanding 0.10 % 0.03 % Net charge-offs during the period $ 2,039 $ 556 Average amount outstanding $ 2,006,166 $ 1,953,527 (1) The Company adopted ASU 2016-13 on January 1, 2023 with a modified retrospective approach.
Biggest changeYears Ended December 31, 2024 2023 (Dollars in thousands) Allowance for credit losses to total loans outstanding 0.94 % 1.00 % Allowance for credit losses $ 19,529 $ 20,267 Total loans outstanding $ 2,070,189 $ 2,027,317 Nonperforming loans to total loans outstanding 0.26 % 0.32 % Nonperforming loans $ 5,381 $ 6,421 Total loans outstanding $ 2,070,189 $ 2,027,317 Allowance for credit losses to nonperforming loans 362.93 % 315.64 % Allowance for credit losses $ 19,529 $ 20,267 Nonperforming loans $ 5,381 $ 6,421 Net charge-offs (recoveries) during the period to daily average loans outstanding: Residential one-to-four family charge-offs (recoveries) to daily average loans outstanding 0.01 % 0.00 % Net charge-offs (recoveries) during the period $ 32 $ (23 ) Average amount outstanding $ 631,570 $ 601,843 Commercial real estate (recoveries) charge-offs to daily average loans outstanding (0.02 )% 0.07 % Net (recoveries) charge-offs during the period $ (206 ) $ 755 Average amount outstanding $ 1,072,779 $ 1,076,523 Commercial and industrial (recoveries) charge-offs to daily average loans outstanding (0.07 )% 0.57 % Net (recoveries) charge-offs during the period $ (152 ) $ 1,213 Average amount outstanding $ 210,343 $ 213,903 Home equity charge-offs (recoveries) to daily average loans outstanding 0.10 % 0.00 % Net charge-offs (recoveries) during the period $ 121 $ (3 ) Average amount outstanding $ 115,595 $ 108,057 Consumer charge-offs to daily average loans outstanding 2.43 % 1.66 % Net charge-offs during the period $ 118 $ 97 Average amount outstanding $ 4,862 $ 5,840 Total loan (recoveries) charge-offs to daily average loans outstanding 0.00 % 0.10 % Net (recoveries) charge-offs during the period $ (87 ) $ 2,039 Average amount outstanding $ 2,035,149 $ 2,006,166 15 During the year ended December 31, 2024, the Company recorded net recoveries of $87,000, compared to net charge-offs of $2.0 million for the twelve months ended December 31, 2023.
The Company is a Massachusetts-chartered stock holding company and a registered savings and loan holding company under the Home Owners’ Loan Act (the “HOLA”), as amended, and is subject to the supervision of and regular examination by the Board of Governors of the Federal Reserve System (the “FRB,” the “Federal Reserve Board” or the “Federal Reserve”) as its primary federal regulator.
The Company is a Massachusetts-chartered stock holding company and a registered savings and loan holding company under the Home Owners’ Loan Act, as amended (the “HOLA”), and is subject to the supervision of and regular examination by the Board of Governors of the Federal Reserve System (the “FRB,” the “Federal Reserve Board” or the “Federal Reserve”) as its primary federal regulator.
In addition, certain assets are includable as “qualified thrift investments” in an amount up to 20% of portfolio assets, including certain consumer loans and loans in “credit-needy” areas. 30 The Bank may also satisfy the QTL test by qualifying as a “domestic building and loan association” as defined in the Internal Revenue Code.
In addition, certain assets are includable as “qualified thrift investments” in an amount up to 20% of portfolio assets, including certain consumer loans and loans in “credit-needy” areas. The Bank may also satisfy the QTL Test by qualifying as a “domestic building and loan association” as defined in the Internal Revenue Code.
Westfield Investment Services representatives provide a broad range of wealth management, investment, insurance, financial planning and strategic asset management services, helping clients meet all of their financial needs. 25 Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates.
Westfield Investment Services representatives provide a broad range of wealth management, investment, insurance, financial planning and strategic asset management services, helping clients meet all of their financial needs. Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates.
If an insured depository institution fails, insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of unsecured, non-deposit creditors, including the parent bank holding company, with respect to any extensions of credit they have made to such insured depository institution. Federal Home Loan Bank System.
If an insured depository institution fails, insured and uninsured depositors, along with the FDIC, will have priority in payment ahead of unsecured, non-deposit creditors, including the parent bank holding company, with respect to any extensions of credit they have made to such insured depository institution. 32 Federal Home Loan Bank System.
If vault cash does not fully satisfy the required reserves, they may be satisfied in the form of a balance maintained with the FRB. Currently, there is no reserve requirement because the Federal Reserve Board reduced the reserve requirement to zero percent. 32 Financial Privacy and Data Security.
If vault cash does not fully satisfy the required reserves, they may be satisfied in the form of a balance maintained with the FRB. Currently, there is no reserve requirement because the Federal Reserve Board reduced the reserve requirement to zero percent. Financial Privacy and Data Security.
Blocked assets (e.g., property and bank deposits) cannot be paid out, withdrawn, set off or transferred in any manner without an OFAC license. Failure to comply with these sanctions could have legal and reputational consequences. 33 Home Mortgage Disclosure Act (“HMDA”).
Blocked assets (e.g., property and bank deposits) cannot be paid out, withdrawn, set off or transferred in any manner without an OFAC license. Failure to comply with these sanctions could have legal and reputational consequences. Home Mortgage Disclosure Act (“HMDA”).
The default and severity factors used to calculate the allowance for credit losses for loans that share similar risk characteristics with other loans are adjusted for differences between the historical period used to calculate historical default and loss severity rates and expected conditions over the remaining lives of the loans in the portfolio related to: (1) lending policies and procedures; (2) international, national, regional and local economic business conditions and developments that affect the collectability of the portfolio; (3) the nature and volume of the loan portfolio including the terms of the loans; (4) the experience, ability, and depth of the lending management and other relevant staff; (5) the volume and severity of past due and adversely classified loans and the volume of nonaccrual loans; (6) the quality of our loan review system and (7) the value of underlying collateral for collateralized loans.
The default and severity factors used to calculate the allowance for credit losses for loans that share similar risk characteristics with other loans are adjusted for differences between the historical period used to calculate historical default and loss severity rates and expected conditions over the remaining lives of the loans in the portfolio related to: (1) lending policies and procedures; (2) international, national, regional and local economic business conditions and developments that affect the collectability of the portfolio; (3) the nature and volume of the loan portfolio including the terms of the loans; (4) the experience, ability, and depth of the lending management and other relevant staff; (5) the volume and severity of past due and adversely classified loans and the volume of nonperforming loans; (6) the quality of our loan review system and (7) the value of underlying collateral for collateralized loans.
These laws include, among others, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, various state law counterparts, and the Consumer Financial Protection Act of 2010. Transactions with Affiliates and Loans to Insiders.
These laws include, among others, the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Truth in Lending Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, various state law counterparts, and the Consumer Financial Protection Act of 2010. 31 Transactions with Affiliates and Loans to Insiders.
In general, these enforcement actions may be initiated in response to unsafe or unsound practices, and any violation of laws and regulations. 31 Standards for Safety and Soundness. The Bank is subject to certain standards designed to maintain the safety and soundness of individual insured depository institutions and the banking system.
In general, these enforcement actions may be initiated in response to unsafe or unsound practices, and any violation of laws and regulations. Standards for Safety and Soundness. The Bank is subject to certain standards designed to maintain the safety and soundness of individual insured depository institutions and the banking system.
Examples of our consumer loans include automobile loans, spa and pool loans, collateral loans and personal lines of credit tied to deposit accounts to provide overdraft protection. The following table presents the composition of our loan portfolio in dollar amounts and in percentages of the total portfolio at the dates indicated.
Examples of our consumer loans include automobile loans, spa and pool loans, collateral loans and personal lines of credit tied to deposit accounts to provide overdraft protection. 10 The following table presents the composition of our loan portfolio in dollar amounts and in percentages of the total portfolio at the dates indicated.
In the event of a savings and loan holding company’s bankruptcy, any commitment by the savings and loan holding company to a federal banking agency to maintain the capital of a subsidiary insured depository institution will be assumed by the bankruptcy trustee and entitled to priority of payment. Dividends.
In the event of a savings and loan holding company’s bankruptcy, any commitment by the savings and loan holding company to a federal banking agency to maintain the capital of a subsidiary insured depository institution will be assumed by the bankruptcy trustee and entitled to priority of payment. 27 Dividends.
On December 18, 2015, the federal banking agencies jointly issued a “Statement on Prudent Risk Management for Commercial Real Estate Lending” reminding banks of the need to engage in risk management practices for commercial real estate lending. Qualified Thrift Lender Test.
On December 18, 2015, the federal banking agencies jointly issued a “Statement on Prudent Risk Management for Commercial Real Estate Lending” reminding banks of the need to engage in risk management practices for commercial real estate lending. 30 Qualified Thrift Lender Test.
The Company and the Bank evaluated the simplified Capital Rules to determine our adoption status for the applicable filings periods beginning in 2020 and decided not to opt in to the community bank leverage ratio framework. Prompt Corrective Action.
The Company and the Bank evaluated the simplified Capital Rules to determine our adoption status for the applicable filings periods beginning in 2020 and decided not to opt in to the community bank leverage ratio framework. 29 Prompt Corrective Action.
During the year ended December 31, 2023, the Company recorded a $1.9 million charge-off on the relationship, which represented the non-accretable credit mark that was required to be grossed-up to the loan’s amortized cost basis with a corresponding increase to the allowance for credit losses under the Current Expected Credit Losses (“CECL”) implementation.
During the year ended December 31, 2023, the Company recorded a $1.9 million charge-off on the acquired commercial relationship, which represented the non-accretable credit mark that was required to be grossed-up to the loan’s amortized cost basis with a corresponding increase to the allowance for credit losses under the Current Expected Credit Losses (“CECL”) implementation. Allowance for Credit Losses .
The Bank operates twenty-five banking offices in Agawam, Chicopee, Feeding Hills, East Longmeadow, Holyoke, Huntington, Ludlow, South Hadley, Southwick, Springfield, Ware, West Springfield and Westfield, Massachusetts and Bloomfield, Enfield, Granby and West Hartford, Connecticut. We operate full-service ATMs at our branch locations and have ten freestanding ATM locations in Holyoke, Southwick, Springfield, West Springfield and Westfield, Massachusetts.
The Bank operates twenty-five banking offices in Agawam, Chicopee, Feeding Hills, East Longmeadow, Holyoke, Huntington, Ludlow, South Hadley, Southwick, Springfield, Ware, West Springfield and Westfield, Massachusetts and Bloomfield, Enfield, Granby and West Hartford, Connecticut. We operate full-service ATMs at our branch locations and have eight freestanding ATM locations in Holyoke, Southwick, Springfield, West Springfield and Westfield, Massachusetts.
The implementation of the Capital Rules did not have a material impact on the Company’s or the Bank’s consolidated capital levels. The Bank is subject to the Capital Rules as well. The Company and the Bank are each in compliance with the targeted capital ratios under the Capital Rules at December 31, 2023.
The implementation of the Capital Rules did not have a material impact on the Company’s or the Bank’s consolidated capital levels. The Bank is subject to the Capital Rules as well. The Company and the Bank are each in compliance with the targeted capital ratios under the Capital Rules at December 31, 2024.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Net Interest and Dividend Income” for information relating to the average balances and costs of our deposit accounts for the years ended December 31, 2023, 2022 and 2021. Cash Management Services.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Net Interest and Dividend Income” for information relating to the average balances and costs of our deposit accounts for the years ended December 31, 2024, 2023 and 2022. Cash Management Services.
The Bank, as a member of the FHLB, is required to acquire and hold shares of capital stock in the FHLB. Required percentages of stock ownership are subject to change by the FHLB, and the Bank was in compliance with this requirement with an investment in FHLB capital stock at December 31, 2023.
The Bank, as a member of the FHLB, is required to acquire and hold shares of capital stock in the FHLB. Required percentages of stock ownership are subject to change by the FHLB, and the Bank was in compliance with this requirement with an investment in FHLB capital stock at December 31, 2024.
The Bank’s loan policies contain an internal rating system which evaluates the overall risk of a problem loan. The Company performs an internal analysis of the loan portfolio in order to identify and quantify loans with higher than normal risk.
The Bank’s Loan Policy contain an internal rating system which evaluates the overall risk of a problem loan. The Company performs an internal analysis of the loan portfolio in order to identify and quantify loans with higher than normal risk.
The maximum amount of credit that the FHLB will extend varies from time to time, depending on its policies and the amount of qualifying collateral the member can pledge. The Bank had satisfied its collateral requirement at December 31, 2023.
The maximum amount of credit that the FHLB will extend varies from time to time, depending on its policies and the amount of qualifying collateral the member can pledge. The Bank had satisfied its collateral requirement at December 31, 2024.
On October 15, 2015, pursuant to section 1094 of the Dodd-Frank Act, the CFPB issued amended rules in regards to the collection, reporting and disclosure of certain residential mortgage transactions under the Home Mortgage Disclosure Act (the “HMDA Rules”).
On October 15, 2015, pursuant to section 1094 of the Dodd-Frank Act, the CFPB issued amended rules in regards to the collection, reporting and disclosure of certain residential mortgage transactions under the HMDA (the “HMDA Rules”).
As of December 31, 2023, management concluded that there were no incurred credit losses at December 31, 2023 as all unrealized losses were related to interest rate fluctuations rather than any underlying credit quality of the issuers.
As of December 31, 2024, management concluded that there were no incurred credit losses at December 31, 2024 as all unrealized losses were related to interest rate fluctuations rather than any underlying credit quality of the issuers.
As of December 31, 2023, the Bank was “well-capitalized” under the PCA framework. 29 Business Activities. The Bank derives its lending and investment powers from the HOLA and its implementing regulations promulgated by the OCC. Those laws and regulations limit the Bank’s authority to invest in certain types of assets and to make certain types of loans.
As of December 31, 2024, the Bank was “well-capitalized” under the PCA framework. Business Activities. The Bank derives its lending and investment powers from the HOLA and its implementing regulations promulgated by the OCC. Those laws and regulations limit the Bank’s authority to invest in certain types of assets and to make certain types of loans.
These reports include information on concentration levels, delinquent loans, nonaccrual loans, criticized loans and foreclosed real estate, as well as our actions and plans to cure the nonaccrual status of the loans and to dispose of the foreclosed property.
These reports include information on concentration levels, delinquent loans, nonperforming loans, criticized loans and foreclosed real estate, as well as our actions and plans to cure the nonperforming status of the loans and to dispose of the foreclosed property.
The Bank is a member of the FHLB, which is one of the regional Federal Home Loan Banks comprising the Federal Home Loan Bank System. Each Federal Home Loan Bank serves as a central credit facility primarily for its member institutions.
The Bank is a member of the Federal Home Loan Bank of Boston, which is one of the regional Federal Home Loan Banks comprising the Federal Home Loan Bank System. Each Federal Home Loan Bank serves as a central credit facility primarily for its member institutions.
As of December 31, 2023, the Bank had twenty-five branches and ten freestanding automated teller machines (“ATMs”). The Bank also conducts business through an additional fourteen freestanding and thirty-three seasonal or temporary ATMs that are owned and serviced by a third party, whereby the Bank pays a rental fee and shares in the surcharge revenue.
As of December 31, 2024, the Bank had twenty-five branches and eight freestanding automated teller machines (“ATMs”). The Bank also conducts business through an additional fourteen freestanding and thirty-three seasonal or temporary ATMs that are owned and serviced by a third party, whereby the Bank pays a rental fee and shares in the surcharge revenue.
Generally at the end of ten years, the line may be frozen to future advances, and principal plus interest payments are collected over a fifteen-year amortization schedule. Consumer Loans. At December 31, 2023 and December 31, 2022, consumer loans totaled $5.5 million, or 0.3%, of total loans and $5.0 million, or 0.3%, of total loans, respectively.
Generally at the end of ten years, the line may be frozen to future advances, and principal plus interest payments are collected over a fifteen-year amortization schedule. Consumer Loans. At December 31, 2024 and December 31, 2023, consumer loans totaled $4.4 million, or 0.2%, of total loans and $5.5 million, or 0.3%, of total loans, respectively.
Western New England Bancorp cannot predict whether any such legislation will be enacted, and, if enacted, the effect that it or any implementing regulations would have on the financial condition or results of operations of Western New England Bancorp.
Western New England Bancorp cannot predict whether any such legislation and regulatory initiatives will be enacted or implemented, and, if enacted or implemented, the effect that it or any implementing regulations would have on the financial condition or results of operations of Western New England Bancorp.
The charge-offs during the year ended December 31, 2023 were related to one commercial relationship acquired on October 21, 2016 from Chicopee Bancorp, Inc., which was recently placed on nonaccrual status.
The charge-offs during the year ended December 31, 2023 were related to one commercial relationship acquired on October 21, 2016 from Chicopee Bancorp, Inc., which was placed on nonperforming status.
In September 2019, the Office of the Comptroller of the Currency, the Federal Reserve Board and the FDIC adopted a final rule that was intended to further simplify the Capital Rules for depository institutions and their holding companies that have less than $10 billion in total consolidated assets, such as us, if such institutions meet certain qualifying criteria.
In September 2019, the OCC, the Federal Reserve Board and the FDIC adopted a final rule that was intended to further simplify the Capital Rules for depository institutions and their holding companies that have less than $10 billion in total consolidated assets, such as us, if such institutions meet certain qualifying criteria.
Loans made to businesses, non-profits, and professional practices may include commercial mortgage loans, construction and land development loans, commercial and industrial loans, including lines of credit and letters of credit.
Loans made to businesses, non-profits, and professional practices may include commercial real estate loans, construction and land development loans, commercial and industrial loans, including lines of credit and letters of credit.
At the 2012, 2017, and 2023 Annual Meeting of Shareholders, Western New England Bancorp’s shareholders voted on a non-binding, advisory basis to hold a non-binding, advisory vote on the compensation of named executive officers of Western New England Bancorp annually. In light of the results, the Western New England Bancorp Board of Directors determined to hold the vote annually.
At the 2012, 2017, and 2023 Annual Meeting of Shareholders, Western New England Bancorp’s shareholders voted on a non-binding, advisory basis to hold a non-binding, advisory vote on the compensation of named executive officers of Western New England Bancorp annually. In light of the results, the Board determined to hold the vote annually. Future Legislative and Regulatory Initiatives.
In accordance with agreements with the FHLB, the qualified collateral must be free and clear of liens, pledges and encumbrances. At December 31, 2023, the Bank had pledged $601.2 million of eligible collateral to support borrowing capacity at the FHLB of Boston. This relationship is an integral component of the Company’s asset-liability management program.
In accordance with agreements with the FHLB, the qualified collateral must be free and clear of liens, pledges and encumbrances. At December 31, 2024, the Bank had pledged $906.0 million of eligible collateral to support borrowing capacity at the FHLB of Boston. This relationship is an integral component of the Company’s asset-liability management program.
Changes in federal laws permit affiliation among banks, securities firms and insurance companies, which promotes a competitive environment in the financial services industry. 5 At June 30, 2023, which is the most recent date for which data is available from the FDIC, we held approximately 14.0% of the deposits in Hampden County, which was the third largest market share out of the seventeen banks and thrifts with offices in Hampden County.
Changes in federal laws permit affiliation among banks, securities firms and insurance companies, which promotes a competitive environment in the financial services industry. 5 At June 30, 2024, which is the most recent date for which data is available from the FDIC, we held approximately 13.2% of the deposits in Hampden County, which was the third largest market share out of the eighteen banks and thrifts with offices in Hampden County.
Other Real Estate Owned (“OREO”) Assets acquired through, or in lieu of, loan foreclosures are held for sale and are initially recorded at fair value less cost to sell at the date of foreclosure, establishing a new cost basis.
Assets acquired through, or in lieu of, loan foreclosures are held for sale and are initially recorded at fair value less cost to sell at the date of foreclosure, establishing a new cost basis.
Repayment is expected from the cash flows of the business. A weakened economy, and resultant decreased consumer spending, will have an effect on the credit quality in this segment. Consumer loans . Loans in this segment are both secured and unsecured and repayment is dependent on the credit quality of the individual borrower.
A weakened economy and resultant decreased consumer spending will have an effect on the credit quality in this segment. Consumer loans . Loans in this segment are both secured and unsecured and repayment is dependent on the credit quality of the individual borrower.
Discounted Cash Flow Method (“DCF”) In estimating the component of the allowance for credit losses for loans that share similar risk characteristics with other loans, such loans are segregated into loan classes. Loans are designated into loan classes based on loans pooled by product types and similar risk characteristics or areas of risk concentration.
Allowance for Credit Losses Methodology In estimating the component of the allowance for credit losses for loans that share similar risk characteristics with other loans, such loans are segregated into loan classes. Loans are designated into loan classes based on loans pooled by product types and similar risk characteristics or areas of risk concentration.
Classified loans that were performing but possessed potential weaknesses and, as a result, could ultimately become nonperforming loans totaled $27.7 million, or 1.4% of total loans, at December 31, 2023 and $36.6 million, or 1.8% of total loans, at December 31, 2022.
Classified loans that were performing but possessed potential weaknesses and, as a result, could ultimately become nonperforming loans totaled $21.6 million, or 1.0% of total loans, at December 31, 2024 and $27.7 million, or 1.4% of total loans, at December 31, 2023.
The Company maintains a comprehensive employee benefit program providing, among other benefits, group medical, dental and vision insurance, health savings accounts and flexible spending accounts, life insurance and disability insurance, a 401(k) Safe Harbor Plan with a competitive company match, an employee stock ownership plan (“ESOP”), short-term and long-term incentive compensation programs, tuition reimbursement, paid time off, including vacation days and paid holidays, and wellness and employee assistance programs.
The Company maintains a comprehensive employee benefit program providing, among other benefits, group medical, dental and vision insurance, health savings accounts and flexible spending accounts, life insurance and disability insurance, a 401(k) Safe Harbor Plan with a competitive company match, an employee stock ownership plan, short-term and long-term incentive compensation programs, tuition reimbursement, paid time off, including vacation days and paid holidays, and wellness and employee assistance programs. 6 Workplace Health and Safety The safety, health and wellness of our employees is considered a top priority.
Nonaccrual impaired loans totaled $6.4 million as of December 31, 2023, while individually analyzed and impaired nonaccrual loans totaled $5.7 million as of December 31, 2022. In management’s opinion, all impaired loan balances at December 31, 2023 and 2022, were supported by expected future cash flows or, for those collateral dependent loans, the net realizable value of the underlying collateral.
Nonperforming individually evaluated loans totaled $5.4 million as of December 31, 2024, while nonperforming individually evaluated loans totaled $6.4 million as of December 31, 2023. In management’s opinion, all individually evaluated loan balances at December 31, 2024 and 2023, were supported by expected future cash flows or, for those collateral dependent loans, the net realizable value of the underlying collateral.
If all nonaccrual loans had been performing in accordance with their terms, we would have earned additional interest income of $373,000, $257,000 and $262,000 for the years ended December 31, 2023, 2022 and 2021, respectively.
If all nonperforming loans had been performing in accordance with their terms, we would have earned additional interest income of $373,000, $373,000 and $257,000 for the years ended December 31, 2024, 2023 and 2022, respectively. 14 OREO.
The Capital Rules: (i) require a capital measure called “Common Equity Tier 1” (“CET1”) and related regulatory capital ratio of CET1 to risk-weighted assets; (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting certain revised requirements; (iii) mandate that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital; and (iv) expand the scope of the deductions from and adjustments to capital as compared to existing regulations.
The Capital Rules became effective on January 1, 2015, subject to phase-in periods for certain components and other provisions. 28 The Capital Rules: (i) require a capital measure called “Common Equity Tier 1” (“CET1”) and related regulatory capital ratio of CET1 to risk-weighted assets; (ii) specify that Tier 1 capital consists of CET1 and “Additional Tier 1 capital” instruments meeting certain revised requirements; (iii) mandate that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital; and (iv) expand the scope of the deductions from and adjustments to capital as compared to existing regulations.
Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell. Costs relating to development and improvement of property are capitalized, whereas costs relating to the holding of property are expensed.
Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell. Costs relating to development and improvement of property are capitalized, whereas costs relating to the holding of property are expensed. At December 31, 2024 and 2023, the Company carried no OREO balances.
At December 31, 2023 and December 31, 2022, there were $28.7 million and $250,000, respectively, in CDARS deposits reported within time deposits, and $35.1 million and $3.2 million, respectively, in ICS accounts reflected within core deposits. 21 Deposit Distribution and Weighted Average Rates.
At December 31, 2024 and December 31, 2023, there were $36.9 million and $28.7 million, respectively, in CDARS deposits reported within time deposits, and $22.3 million and $35.1 million, respectively, in ICS accounts reflected within core deposits. 21 Deposit Distribution and Weighted Average Rates.
Western New England Bancorp is traded on the NASDAQ under the ticker symbol “WNEB” and is subject to the NASDAQ stock market rules. At December 31, 2023, WNEB had consolidated total assets of $2.6 billion, total net loans of $2.0 billion, total deposits of $2.1 billion and total shareholders’ equity of $237.4 million.
Western New England Bancorp is traded on the NASDAQ under the ticker symbol “WNEB” and is subject to the NASDAQ stock market rules. At December 31, 2024, WNEB had consolidated total assets of $2.7 billion, total net loans of $2.1 billion, total deposits of $2.3 billion and total shareholders’ equity of $235.9 million.
Individual rates offered are dependent on the associated degree of credit risk, term, underwriting and servicing costs, loan amount, and the extent of other banking relationships maintained with the borrower, and may be subject to interest rate floors.
Individual rates offered are dependent on the associated degree of credit risk, term, underwriting and servicing costs, loan amount, and the extent of other banking relationships maintained with the borrower, and may be subject to interest rate floors. Rates are also subject to competitive pressures, the current interest rate environment, availability of funds, and government regulations.
Total short-term borrowings and long-term debt outstanding and weighted average rates at the periods indicated are presented below: December 31, 2023 December 31, 2022 Balance Outstanding (In millions) Weighted Average Rate Balance Outstanding (In millions) Weighted Average Rate Short-term borrowings $ 16.1 5.47 % $ 41.4 4.37 % Long-term debt 120.6 4.73 1.2 — Total $ 136.7 4.82 % $ 42.6 4.25 % The Bank has additional borrowing capacity at the FHLB up to a certain percentage of the value of qualified collateral.
Total short-term borrowings and long-term debt outstanding and weighted average rates at the periods indicated are presented below: December 31, 2024 December 31, 2023 Balance Outstanding Weighted Average Rate Balance Outstanding Weighted Average Rate (Dollars in millions) Short-term borrowings $ 5.4 4.33 % $ 16.1 5.47 % Long-term debt 98.0 4.97 120.6 4.73 Total $ 103.4 4.94 % $ 136.7 4.82 % The Bank has additional borrowing capacity at the FHLB up to a certain percentage of the value of qualified collateral.
The Company’s loan policies require that management continuously monitor the status of the loan portfolio and report to the Board of Directors on a monthly basis.
The Company’s Loan Policy requires that management continuously monitor the status of the loan portfolio and report to the Board on a monthly basis.
The Company contracts with an external third-party loan review company to review the internal credit ratings assigned to loan relationships in the commercial loan portfolio on a pre-determined schedule, based on the type, size, rating, and overall risk of the loan.
The Company employs a seasoned commercial lending staff, with commercial lenders to support the Company’s loan growth strategy. The Company contracts with an external third-party loan review company to review the internal credit ratings assigned to loan relationships in the commercial loan portfolio on a pre-determined schedule, based on the type, size, rating, and overall risk of the loan.
The remaining balance of classified loans were nonaccrual loans totaling $6.0 million, or 0.3% of total loans, at December 31, 2023 and $5.7 million, or 0.3% of total loans, at December 31, 2022.
The remaining balance of classified loans were nonperforming loans totaling $5.4 million, or 0.3% of total loans, at December 31, 2024 and $6.0 million, or 0.3% of total loans, at December 31, 2023.
At December 31, 2023, the Company reported unrealized losses on the HTM securities portfolio of $35.7 million, or 16.0%, of the amortized cost basis of the HTM securities portfolio, compared to $39.2 million, or 17.0% of the amortized cost basis of the HTM securities portfolio at December 31, 2022.
At December 31, 2024, the Company reported unrealized losses on the held-to-maturity securities portfolio of $39.4 million, or 19.2% of the amortized cost basis of the held-to-maturity securities portfolio, compared to $35.7 million, or 16.0% of the amortized cost basis of the held-to-maturity securities portfolio at December 31, 2023.
Future Legislative and Regulatory Initiatives. Various legislative and regulatory initiatives are introduced by Congress, state legislatures and different financial regulatory agencies. Such initiatives may include proposals to expand or contract the powers of bank holding companies, savings and loan holding companies and/or depository institutions.
Various legislative and regulatory initiatives are introduced by Congress, state legislatures and different financial regulatory agencies. Such initiatives may include proposals to expand or contract the powers of bank holding companies, savings and loan holding companies and/or depository institutions, and may also include changes in priorities and operations of regulatory agencies in connection with new leadership.
Loans to One Borrower. Generally, a federal savings bank may not make a loan or extend credit to a single borrower or related group of borrowers in excess of 15% of unimpaired capital and surplus.
Loans to One Borrower. Generally, a federal savings bank may not make a loan or extend credit to a single borrower or related group of borrowers if the aggregate of all loans or extensions of credit to that single borrower or related group of borrowers would be in excess of 15% of the bank’s unimpaired capital and surplus.
Loans identified as containing a loss are partially charged-off or fully charged-off. 12 The “criticized” risk rating (5) and the “classified” risk ratings (6-8) are detailed below: 5 – Special Mention- Loans rated 5 are considered “ Special Mention ” and may exhibit potential credit weaknesses or downward trends and are being monitored by management.
The “criticized” risk rating (5) and the “classified” risk ratings (6-8) are detailed below: 5 – Special Mention- Loans rated 5 are considered “ Special Mention ” and may exhibit potential credit weaknesses or downward trends and are being monitored by management.
The underlying cash flows generated by the properties or operations can be adversely impacted by a downturn in the economy due to increased vacancy rates or diminished cash flows, which in turn, would have an effect on the credit quality in this segment.
The underlying cash flows generated by the properties or operations can be adversely impacted by a downturn in the economy due to increased vacancy rates or diminished cash flows, which in turn, would have an effect on the credit quality in this segment. Management obtains financial information annually and continually monitors the cash flows of these loans.
At December 31, 2023, the Company had a $15.0 million line of credit with a correspondent bank and a $10.0 million line of credit with another correspondent bank, both at an interest rate determined and reset on a daily basis. As of December 31, 2023 and December 31, 2022, there were no advances outstanding under these lines. Subordinated Debt.
At December 31, 2024, the Company had borrowing capacity with two correspondent banks consisting of a $15.0 million and a $10.0 million unsecured lines of credit, both arrangements were at an interest rate determined and reset on a daily basis. As of December 31, 2024 and December 31, 2023, there were no advances outstanding under these lines. Subordinated Debt.
Workplace Health and Safety The safety, health and wellness of our employees is considered a top priority. On an ongoing basis, the Company promotes the health and wellness of its employees and strives to keep the employee portion of health care premiums competitive with local competition.
On an ongoing basis, the Company promotes the health and wellness of its employees and strives to keep the employee portion of health care premiums competitive with local competition.
The Company participates with other banks in the financing of certain commercial projects. Participating loans with other institutions provide banks the opportunity to retain customer relationships and reduce credit risk exposure among each participating bank, while providing customers with larger credit facilities than the individual bank might be willing or able to offer independently.
Participating in loans with other institutions provides the Company with the opportunity to retain customer relationships and reduce credit risk exposure among each participating bank, while providing the customer with larger credit facilities than the Company might be willing to, or able to, offer independently.
In addition, the Company closely monitors classified loans, defined as substandard, doubtful, and loss for signs of deterioration to mitigate the growth in nonaccrual loans, including performing additional due diligence, updating valuations and requiring additional financial reporting from the borrower.
In addition, the Company closely monitors classified loans, defined as substandard, doubtful, and loss for signs of deterioration to mitigate the growth in nonperforming loans, including performing additional due diligence, updating valuations and requiring additional financial reporting from the borrower. Loans identified as containing a loss are partially charged-off or fully charged-off.
At December 31, 2023, commercial and industrial impaired loans with a recorded investment of $517,000 carried a related reserve amount of $179,000. No impaired loans required a specific reserve at December 31, 2022. Management closely monitors these relationships for collateral or credit deterioration.
At December 31, 2024, commercial and industrial individually evaluated loans with a recorded investment of $494,000 carried a related reserve amount of $156,000. At December 31, 2023, commercial and industrial individually evaluated loans with a recorded investment of $517,000 carried a related reserve amount of $179,000. Management closely monitors these relationships for collateral or credit deterioration.
This model calculates an expected loss percentage for each loan class by considering the probability of default, using life-of-loan analysis periods for all loan segments, and the historical severity of loss, based on the aggregate net lifetime losses incurred per loan class.
The discounted cash flow (“DCF”) model calculates an expected loss percentage for each loan class by considering the probability of default, using life-of-loan analysis periods for the commercial and industrial, commercial real estate, residential real estate loan segments, and the historical severity of loss, based on the aggregate net lifetime losses incurred per loan class.
We are dedicated to providing a workplace for our employees that is inclusive, supportive, and free of any form of discrimination or harassment; rewarding and recognizing our employees based on their individual results and performance as well as that of their department and the Company overall; and recognizing and respecting all of the characteristics and differences that make each of our employees unique.
We strive to create a workplace for our employees that is inclusive, supportive, and free of any form of discrimination or harassment; rewarding and recognizing our employees based on their individual results and performance as well as that of their department and the Company overall.
Categories of off-balance sheet credit exposures correspond to the loan portfolio segments described above. Management evaluates the need for a reserve on unfunded loan commitments in a manner consistent with loans held for investment. Based on the foregoing, management believes that the Company is appropriately provisioned for the current economic environment and supportable forecast period as of December 31, 2023.
Management evaluates the need for a reserve on unfunded loan commitments in a manner consistent with loans held for investment. Based on the foregoing, management believes that the Company is appropriately provisioned for the current economic environment and supportable forecast period as of December 31, 2024.
The following table sets forth the Company’s average deposit balances and weighted average rates for the periods presented: For the Years Ended December 31, 2023 2022 2021 Amount Percent Weighted Average Rates Amount Percent Weighted Average Rates Amount Percent Weighted Average Rates (Dollars in thousands) Demand deposits $ 602,652 27.8 % — % $ 647,971 28.6 % — % $ 608,936 28.0 % — % Interest-bearing checking 142,005 6.5 0.73 139,993 6.2 0.38 109,648 5.0 0.36 Regular savings 202,354 9.3 0.09 222,267 9.8 0.07 205,394 9.4 0.07 Money market 697,621 32.2 1.37 890,763 39.4 0.36 776,725 35.7 0.31 Total core deposits 1,644,632 75.8 0.65 1,900,994 84.0 0.20 1,700,703 78.1 0.17 Time deposits 524,827 24.2 3.03 363,258 16.0 0.41 477,067 21.9 0.53 Total deposits $ 2,169,459 100.0 % 1.23 % $ 2,264,252 100.0 % 0.24 % $ 2,177,770 100.0 % 0.25 % The following table sets forth the maturity of time deposits at the dates indicated: At December 31, 2023 2022 2021 Amount Percent Weighted Average Rates Amount Percent Weighted Average Rates Amount Percent Weighted Average Rates (Dollars in thousands) Due within the year $ 596,292 97.5 % 3.81 % $ 288,697 70.1 % 0.69 % $ 363,290 90.3 % 0.34 % Over 1 year through 3 years 12,472 2.1 0.85 119,117 28.9 2.91 32,411 8.1 0.85 Over 3 years 2,588 0.4 0.05 3,876 1.0 0.14 6,279 1.6 0.31 Total time deposits $ 611,352 100.0 % 3.73 % $ 411,690 100.0 % 1.33 % $ 401,980 100.0 % 0.38 % 22 The following table sets forth the uninsured portion of our core deposit accounts, by account type, at the dates indicated.
The following table sets forth the Company’s average deposit balances and weighted average rates for the periods presented: For the Years Ended December 31, 2024 2023 2022 Amount Percent Weighted Average Rates Amount Percent Weighted Average Rates Amount Percent Weighted Average Rates (Dollars in thousands) Demand accounts $ 561,264 25.8 % — % $ 602,652 27.8 % — % $ 647,971 28.6 % — % Interest-bearing accounts 136,861 6.3 0.75 142,005 6.5 0.73 139,993 6.2 0.38 Savings accounts 182,678 8.4 0.09 202,354 9.3 0.09 222,267 9.8 0.07 Money market accounts 631,197 29.0 1.94 697,621 32.2 1.37 890,763 39.4 0.36 Total core deposits 1,512,000 69.5 0.89 1,644,632 75.8 0.65 1,900,994 84.0 0.20 Time deposits 666,917 30.5 4.32 524,827 24.2 3.03 363,258 16.0 0.41 Total deposits $ 2,178,917 100.0 % 1.94 % $ 2,169,459 100.0 % 1.23 % $ 2,264,252 100.0 % 0.24 % The following table sets forth the maturity of time deposits at the dates indicated: At December 31, 2024 2023 2022 Amount Percent Weighted Average Rates Amount Percent Weighted Average Rates Amount Percent Weighted Average Rates (Dollars in thousands) Due within the year $ 694,916 98.8 % 4.26 % $ 596,292 97.5 % 3.81 % $ 288,697 70.1 % 0.69 % Over 1 year through 3 years 6,403 0.9 0.60 12,472 2.1 0.85 119,117 28.9 2.91 Over 3 years 2,264 0.3 3.54 2,588 0.4 0.05 3,876 1.0 0.14 Total time deposits $ 703,583 100.0 % 4.23 % $ 611,352 100.0 % 3.73 % $ 411,690 100.0 % 1.33 % 22 The following table sets forth the uninsured portion of our core deposit accounts, by account type, at the dates indicated.
The Notes were designed to qualify as Tier 2 capital under the Federal Reserve’s capital adequacy regulations. Financial Services. Westfield Bank also provides access to insurance and investment products through Westfield Investment Services through LPL Financial (“LPL”), a third-party registered broker-dealer.
The Notes were designed to qualify as Tier 2 capital under the Federal Reserve’s capital adequacy regulations. At December 31, 2024, $19.8 million aggregate principle amount of the Notes was outstanding. 25 Financial Services. Westfield Bank also provides access to insurance and investment products through Westfield Investment Services through LPL Financial (“LPL”), a third-party registered broker-dealer.
During 2023, twenty-seven employees were nominated to participate in the program and successfully completed the program. In addition, the Company offers educational reimbursement programs to employees enrolled in pre-approved degree or certification programs at accredited institutions that teach skills or knowledge relevant to the financial services industry.
In addition, the Company offers educational reimbursement programs to employees enrolled in pre-approved degree or certification programs at accredited institutions that teach skills or knowledge relevant to the financial services industry.
Variable rate loans and lines in this portfolio have interest rates that are periodically adjusted, with term loans generally having fixed initial periods.
Variable rate loans and lines in this portfolio have interest rates that are periodically adjusted, with term loans generally having fixed initial periods. Commercial and industrial loans have average repayment periods of one to seven years.
At December 31, 2023, the Company reported unrealized losses on the AFS securities portfolio of $29.2 million, or 17.5% of the amortized cost basis of the AFS securities portfolio, compared to unrealized losses of $32.2 million, or 18.0% of the amortized cost basis of the AFS securities at December 31, 2022.
At December 31, 2024, the Company reported unrealized losses on the available-for-sale securities portfolio of $31.2 million, or 16.2% of the amortized cost basis of the available-for-sale securities portfolio, compared to unrealized losses of $29.2 million, or 17.5% of the amortized cost basis of the available-for-sale securities at December 31, 2023.
Our largest lending exposure was a $24.9 million commercial lending relationship, of which $9.9 million was outstanding at December 31, 2023. This relationship is primarily secured by business assets and commercial real estate located in Agawam, Massachusetts. At December 31, 2023, this relationship was performing in accordance with its original terms.
At December 31, 2024, our largest lending relationship, primarily secured by business assets and commercial real estate located in Agawam, Massachusetts, had a total loan exposure of $22.8 million, of which $7.7 million was outstanding. At December 31, 2024, this loan was performing in accordance with their original repayment terms.
Home equity loans and lines are secured by first or second mortgages on one-to-four family owner-occupied properties. Equity loans and lines are underwritten by a maximum combined loan-to-value of 85% of the appraised value of the property. Underwriting approval is dependent on review of the borrower’s ability to repay and credit history in accordance with the Bank’s loan policies.
Home equity loans and lines of credit are secured by first or second mortgages on one-to-four family owner-occupied properties. Equity loans and lines of credit are underwritten by a maximum combined loan-to-value of 85% of the appraised value of the property.
Total nonaccrual loans totaled $6.4 million, or 0.32% of total loans, at December 31, 2023, and $5.7 million, or 0.29% of total loans, at December 31, 2022.
Total nonperforming loans totaled $5.4 million, or 0.26% of total loans, at December 31, 2024, and $6.4 million, or 0.32% of total loans, at December 31, 2023.
The Company offers a wide variety of deposit products, including commercial, small business, nonprofit and municipal checking, money market and sweep accounts, as well as time deposits.
Customer deposits represent the primary source of the Bank’s funds for lending and other investment purposes. The Company offers a wide variety of deposit products, including commercial, small business, nonprofit and municipal checking, money market and sweep accounts, as well as time deposits.
At December 31, 2023 2022 2021 (Dollars in thousands) Core deposits: (1) Demand deposits $ 156,646 $ 177,464 $ 194,735 Interest-bearing checking 64,097 105,644 104,985 Regular savings 2,243 3,218 76,753 Money market 226,536 303,898 309,739 Total core deposits $ 449,522 $ 590,224 $ 686,212 The following table sets forth the uninsured portion of our time deposits, by remaining maturity.
At December 31, 2024 2023 2022 (Dollars in thousands) Core deposits: (1) Demand accounts $ 145,995 $ 156,646 $ 177,464 Interest-bearing accounts 95,735 64,097 105,644 Savings accounts 5,423 2,243 3,218 Money market accounts 244,214 226,536 303,898 Total core deposits $ 491,367 $ 449,522 $ 590,224 The following table sets forth the uninsured portion of our time deposits, by remaining maturity.
Proposed legislation and regulatory initiatives could change banking statutes and the operating environment of Western New England Bancorp in substantial and unpredictable ways. If enacted, such legislation could increase or decrease the cost of doing business, limit or expand permissible activities or affect the competitive balance among banks, savings associations, credit unions, and other financial institutions.
If enacted or implemented, such legislation and regulatory initiatives could increase or decrease the cost of doing business, limit or expand permissible activities or affect the competitive balance among banks, savings associations, credit unions, and other financial institutions.
In addition to the deposit products discussed above, commercial and municipal customers may take advantage of cash management services including remote deposit capture, Automated Clearing House credit and debit origination, check payment fraud prevention, international and domestic wire transfers and corporate credit cards. IntraFi/CDARS . We participate in the IntraFi Network which provides depositors with FDIC pass-through insurance.
In addition to the deposit products discussed above, commercial and municipal customers may take advantage of cash management services including remote deposit capture, Automated Clearing House credit and debit origination, check payment fraud prevention, international and domestic wire transfers and corporate credit cards. IntraFi Network, Certificate of Deposit Account Registry Service (“CDARS”) and Insured Cash Sweep Service (“ICS” ) .
In general, the HOLA restricts the business activities of savings and loan holding companies to those permitted for financial holding companies under the BHC Act.
Western New England Bancorp is a savings and loan holding company as defined by the HOLA. In general, the HOLA restricts the business activities of savings and loan holding companies to those permitted for financial holding companies under the BHC Act.
At December 31, 2023 (Dollars in thousands) Time deposits: (1) 3 months or less $ 46,151 Over 3 months through 6 months 71,554 Over 6 months through 12 months 7,482 Over 12 months 232 Total time deposits $ 125,419 _______________ (1) Uninsured deposits for the periods indicated have been estimated using the same methodologies and assumptions used for the Bank’s regulatory reporting requirements.
At December 31, 2024 (Dollars in thousands) Time deposits: (1) 3 months or less $ 31,089 Over 3 months through 6 months 99,595 Over 6 months through 12 months 21,525 Over 12 months — Total time deposits $ 152,209 (1) Uninsured deposits for the periods indicated have been estimated using the same methodologies and assumptions used for the Bank’s regulatory reporting requirements.
A change in any statute, regulation or policy applicable to Western New England Bancorp may have a material effect on the results of Western New England Bancorp and its subsidiaries. 26 Federal Savings and Loan Holding Company Regulation. Western New England Bancorp is a savings and loan holding company as defined by the HOLA.
Statutes, regulations and policies are subject to ongoing review by Congress, state legislatures and federal and state agencies. A change in any statute, regulation or policy applicable to Western New England Bancorp may have a material effect on the results of Western New England Bancorp and its subsidiaries. Federal Savings and Loan Holding Company Regulation.
Total impaired loans totaled $29.7 million, or 1.5% of total loans, at December 31, 2023, while individually analyzed and impaired loans totaled $18.4 million, or 0.9% of total loans, at December 31, 2022. Total accruing impaired loans totaled $23.3 million at December 31, 2023, while individually analyzed and impaired loans totaled $12.7 million at December 31, 2022.
Total individually evaluated loans totaled $14.3 million, or 0.7% of total loans, at December 31, 2024, while individually evaluated loans totaled $29.7 million, or 1.5% of total loans, at December 31, 2023. Total accruing individually evaluated loans totaled $8.9 million at December 31, 2024, while accruing individually evaluated loans totaled $23.3 million at December 31, 2023.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

26 edited+5 added−5 removed170 unchanged
Biggest changeWe Operate In a Highly-Regulated Environment That is Subject to Extensive Government Supervision and Regulation, Which May Interfere With Our Ability to Conduct Business and May Adversely Impact the Results of our Operations. Banking regulations are primarily intended to protect depositors’ funds, federal deposit insurance funds and the banking system as a whole, not the interests of stockholders.
Biggest changeAny such increase in funding costs or restrictions could have a negative impact on the Company’s net interest income and, consequently, on its results of operations and financial condition. 42 We Operate In a Highly-Regulated Environment That is Subject to Extensive Government Supervision and Regulation, Which May Interfere With Our Ability to Conduct Business and May Adversely Impact the Results of our Operations.
If a concentration is determined to exist, the Company may incur additional operating expenses in order to comply with additional risk management practices and increased capital requirements which could have a material adverse effect on the Company’s financial condition and results of operations. 42 Sources of External Funding Could Become Restricted and Impact the Company’s Liquidity.
If a concentration is determined to exist, the Company may incur additional operating expenses in order to comply with additional risk management practices and increased capital requirements which could have a material adverse effect on the Company’s financial condition and results of operations. Sources of External Funding Could Become Restricted and Impact the Company’s Liquidity.
While the Company pays interest expense to fund nonperforming assets, no interest income is recorded on nonaccrual loans or other real estate owned, thereby adversely affecting income and returns on assets and equity. In addition, loan administration and workout costs increase, resulting in additional reductions of earnings.
While the Company pays interest expense to fund nonperforming assets, no interest income is recorded on nonperforming loans or other real estate owned, thereby adversely affecting income and returns on assets and equity. In addition, loan administration and workout costs increase, resulting in additional reductions of earnings.
However, if our assumptions are wrong or overall economic conditions are significantly different than anticipated, our hedging and other risk mitigation strategies may be ineffective and may adversely impact our financial condition and results of operations. Our Loan Portfolio Includes Loans with a Higher Risk of Loss.
However, if our assumptions are wrong or overall economic conditions are significantly different than anticipated, our hedging and other risk mitigation strategies may be ineffective and may adversely impact our financial condition and results of operations. 37 Our Loan Portfolio Includes Loans with a Higher Risk of Loss.
Among other sources of funds, the Company, from time to time, relies on brokered deposits to provide funds with which to make loans and provide for other liquidity needs. At December 31, 2023, the Bank had $1.7 million in brokered time deposits. One of the Bank’s sources for deposits is CDARS.
Among other sources of funds, the Company, from time to time, relies on brokered deposits to provide funds with which to make loans and provide for other liquidity needs. At December 31, 2024 and 2023, the Bank had $1.7 million in brokered time deposits. One of the Bank’s sources for deposits is CDARS.
If the Company’s Board of Directors should determine in the future that there is a need to obtain additional capital through the issuance of additional shares of the Company’s common stock or securities convertible into shares of common stock, such issuances could result in dilution to existing stockholders’ ownership interest.
If the Board should determine in the future that there is a need to obtain additional capital through the issuance of additional shares of the Company’s common stock or securities convertible into shares of common stock, such issuances could result in dilution to existing stockholders’ ownership interest.
In addition, commercial real estate and commercial and industrial loans may also involve relatively large loan balances to individual borrowers or groups of borrowers. 37 These loans also have greater credit risk than residential real estate for the following reasons: ● Commercial Real Estate Loans.
In addition, commercial real estate and commercial and industrial loans may also involve relatively large loan balances to individual borrowers or groups of borrowers. These loans also have greater credit risk than residential real estate for the following reasons: ● Commercial Real Estate Loans.
RISK FACTORS An investment in the Company’s common stock is subject to a variety of risks and uncertainties including, without limitation, those set forth below, any of which could cause the Company’s actual results to vary materially from recent results, or from the other forward looking statements that the Company may make from time to time in news releases, annual reports and other written or oral communications.
An investment in the Company’s common stock is subject to a variety of risks and uncertainties including, without limitation, those set forth below, any of which could cause the Company’s actual results to vary materially from recent results, or from the other forward looking statements that the Company may make from time to time in news releases, annual reports and other written or oral communications.
Our business may be affected by unfavorable or uncertain economic conditions such as the level and volatility of interest rates, availability and market conditions of financing, business activity or investor or business confidence, unexpected changes in gross domestic product, economic growth or its sustainability, inflation, supply chain disruptions, consumer spending, employment levels, labor shortages, wage inflation, federal government shutdowns, developments related to the U.S. federal debt ceiling, energy prices, home prices, commercial property values, bankruptcies, fluctuations or other significant changes in both debt and equity capital markets and currencies, liquidity of financial markets and the availability and cost of capital and credit, natural disasters, epidemics and pandemics (including COVID-19), terrorist attacks, acts of war or a combination of these or other factors.
Our business has been and may in the future continue to be affected by unfavorable or uncertain economic conditions such as the level and volatility of interest rates, availability and market conditions of financing, business activity or investor or business confidence, unexpected changes in gross domestic product, economic growth or its sustainability, inflation, supply chain disruptions, consumer spending, employment levels, labor shortages, wage inflation, federal government shutdowns, developments related to the U.S. federal debt ceiling, energy prices, home prices, commercial property values, bankruptcies, fluctuations or other significant changes in both debt and equity capital markets and currencies, liquidity of financial markets and the availability and cost of capital and credit, natural disasters, epidemics and pandemics (including COVID-19), terrorist attacks, acts of war or a combination of these or other factors.
Financial laws, regulations and policies are subject to amendment by Congress, state legislatures and federal and state regulatory agencies. Changes to statutes, regulations or policies, including changes in the interpretation of regulations or policies, could materially impact our business.
Financial laws, regulations and policies are subject to amendment by Congress, state legislatures and federal and state regulatory agencies. Changes to statutes, regulations or policies, including changes in the interpretation of regulations or policies and changes in enforcement and regulatory priorities, could materially impact our business.
The occurrence of events which adversely affect the global, national and regional economies, like the COVID-19 pandemic, may have a negative impact on our business. Like other financial institutions, our business relies upon the ability and willingness of our customers to transact business with us, including banking, borrowing and other financial transactions.
The occurrence of events which adversely affect the global, national and regional economies may have a negative impact on our business. Like other financial institutions, our business relies upon the ability and willingness of our customers to transact business with us, including banking, borrowing and other financial transactions.
The financial services industry is undergoing rapid technological change with frequent introductions of new technology-driven products and services and technological advances are likely to intensify competition. The effective use of technology increases efficiency and enables financial institutions to better serve customers and to reduce costs.
The financial services industry is undergoing rapid technological change with frequent introductions of new technology-driven products and services and technological advances are likely to intensify competition. The effective use of technology, including emerging technologies, increases efficiency and enables financial institutions to better serve customers and to reduce costs.
For the years ended December 31, 2023, 2022 and 2021, our net interest income was $67.9 million, $79.2 million, and $73.2 million, respectively. The amount of our net interest income is influenced by the overall interest rate environment, competition, and the amount of our interest-earning assets relative to the amount of our interest-bearing liabilities.
For the years ended December 31, 2024, 2023 and 2022, our net interest income was $59.8 million, $67.9 million, and $79.2 million, respectively. The amount of our net interest income is influenced by the overall interest rate environment, competition, and the amount of our interest-earning assets relative to the amount of our interest-bearing liabilities.
The Company’s earnings and cash flows are largely dependent upon its net interest income, meaning the difference between interest income earned on interest-earning assets and interest expense paid on interest-bearing liabilities. Net interest income is the most significant component of our net income, accounting for approximately 86.2% of total revenues in 2023.
The Company’s earnings and cash flows are largely dependent upon its net interest income, meaning the difference between interest income earned on interest-earning assets and interest expense paid on interest-bearing liabilities. Net interest income is the most significant component of our net income, accounting for approximately 82.3% of total revenues in 2024.
In the event that one or more of these factors were to result in a decrease in our net interest income, we do not have significant sources of fee income to make up for decreases in net interest income. Events Similar to the COVID-19 Pandemic Could Adversely Affect our Business Activities, Financial Condition, and Results of Operations.
In the event that one or more of these factors were to result in a decrease in our net interest income, we do not have significant sources of fee income to make up for decreases in net interest income. Events Impacting Global, National and Regional Economies Could Adversely Affect our Business Activities, Financial Condition, and Results of Operations.
The economy in the United States and globally has experienced volatility in recent years and may continue to do so for the foreseeable future, particularly as a result of the COVID-19 pandemic. There can be no assurance that economic conditions will not worsen.
The economy in the United States and globally has experienced volatility in recent years and may continue to do so for the foreseeable future, particularly as a result of regulatory changes from the new administration. There can be no assurance that economic conditions will not worsen.
As discussed above, changes in interest rates could hurt our profits, as inflation increases and market interest rates rise, the value of the Company’s investment securities, particularly those with longer maturities, would decrease, although this effect can be less pronounced for floating rate instruments.
Additionally, the Federal Reserve has raised certain benchmark interest rates in response to this elevated inflation. As discussed above, changes in interest rates could hurt our profits, as inflation increases and market interest rates rise, the value of the Company’s investment securities, particularly those with longer maturities, would decrease, although this effect can be less pronounced for floating rate instruments.
At December 31, 2023, the Bank has $28.7 million in CDARS reciprocal deposits and $35.1 million in Insured Cash Sweep or ICS network deposits. These amounts, are reciprocal and are not considered brokered deposits under recent regulatory reform. The Company, as Part of its Strategic Plans, Periodically Considers Potential Acquisitions.
At December 31, 2024, the Bank has $36.9 million in CDARS reciprocal deposits and $22.3 million in ICS network deposits. These amounts, are reciprocal and are not considered brokered deposits under recent regulatory reform. The Company, as Part of its Strategic Plans, Periodically Considers Potential Acquisitions.
The Company also occupies owned and leased premises where branches and other bank facilities are located. While the Company’s lending, foreclosure and facilities policies and guidelines are intended to exclude properties with an unreasonable risk of contamination, hazardous substances could exist on some of the properties that the Company may own, acquire, manage or occupy.
While the Company’s lending, foreclosure and facilities policies and guidelines are intended to exclude properties with an unreasonable risk of contamination, hazardous substances could exist on some of the properties that the Company may own, acquire, manage or occupy. Environmental laws could force the Company to clean up the properties at the Company’s expense.
Similarly, if the Board of Directors decides to grant additional stock awards or options for the purchase of shares of common stock, the issuance of such additional stock awards and/or the issuance of additional shares upon the exercise of such options would expose stockholders to dilution.
Similarly, if the Board decides to grant additional stock awards or options for the purchase of shares of common stock, the issuance of such additional stock awards and/or the issuance of additional shares upon the exercise of such options would expose stockholders to dilution. The Company’s Financial Condition and Results of Operation Rely in Part on Management Estimates and Assumptions.
These regulations affect the Company’s lending practices, capital structure, investment practices, dividend policy and growth, among other things. In particular, regulators are increasingly focused on liquidity risk after the bank failures of 2023.
Banking regulations are primarily intended to protect depositors’ funds, federal deposit insurance funds and the banking system as a whole, not the interests of stockholders. These regulations affect the Company’s lending practices, capital structure, investment practices, dividend policy and growth, among other things. In particular, regulators are increasingly focused on liquidity risk after the bank failures of 2023.
The adoption of this ASU did not have a material adverse effect on the Company’s financial condition and results of operation. Increases in the Company’s Nonperforming Assets Could Adversely Affect the Company’s Results of Operations and Financial Condition in the Future. Nonperforming assets adversely affect net income in various ways.
Increases in the Company’s Nonperforming Assets Could Adversely Affect the Company’s Results of Operations and Financial Condition in the Future. Nonperforming assets adversely affect net income in various ways.
These estimates and assumptions affect the reported values of assets and liabilities at the balance sheet date and income and expenses for the years then ended. Changes in those estimates resulting from continuing change in the economic environment and other factors will be reflected in the financial statements and results of operations in future periods.
Changes in those estimates resulting from continuing change in the economic environment and other factors will be reflected in the financial statements and results of operations in future periods.
The Company’s Financial Condition and Results of Operation Rely in Part on Management Estimates and Assumptions. In preparing the financial statements in conformity with GAAP, management is required to exercise judgment in determining many of the methodologies, estimates and assumptions to be utilized.
In preparing the financial statements in conformity with GAAP, management is required to exercise judgment in determining many of the methodologies, estimates and assumptions to be utilized. These estimates and assumptions affect the reported values of assets and liabilities at the balance sheet date and income and expenses for the years then ended.
Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. Inflation continued at elevated levels in 2023 and inflationary pressures may remain elevated in 2024. Additionally, the Federal Reserve has raised certain benchmark interest rates in response to this elevated inflation.
Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money.
When a borrower defaults on a loan secured by real property, the Company may purchase the property in foreclosure or accept a deed to the property surrendered by the borrower. The Company may also take over the management of commercial properties whose owners have defaulted on loans.
The Company is Subject to Environmental Risks Associated with Real Estate Held as Collateral or Occupied. When a borrower defaults on a loan secured by real property, the Company may purchase the property in foreclosure or accept a deed to the property surrendered by the borrower.
Removed
In response to the economic conditions resulting from the COVID-19 pandemic, the Federal Reserve Board’s target Fed Funds Rate was reduced to nearly 0% in March 2020. However, in a series of actions to combat rising inflation that began in March 2022, the Federal Reserve Board raised the Fed Funds Rate to 4.50% - 4.75% as of February 1, 2023.
Added
During 2024, the Federal Reserve Board began reducing the federal funds rate, which had been raised significantly during 2022 and 2023 to combat rising inflation in the U.S.
Removed
On January 1, 2023, the Company adopted ASU 2016-13 Financial Instruments – Credit Losses ( Topic 326 ): Measurement of Credit Losses on Financial Instruments , which replaced the incurred loss methodology with an expected loss methodology that is referred to as CECL methodology.
Added
Notwithstanding these reductions, there can be no assurances that the Federal Reserve Board will continue to cut the target federal funds rate in 2025 and it may remain open to increasing rates further should inflation dynamics remain unfavorable.
Removed
A public health crisis such as the COVID-19 pandemic is no exception, and its adverse health and economic effects may adversely impact our business and financial condition. The Company is Subject to Environmental Risks Associated with Real Estate Held as Collateral or Occupied.
Added
While the Federal Reserve began reducing the federal funds rate in 2024, there can be no assurances that the Federal Reserve will continue to cut target funds rates in 2025 and it may remain open to increasing rates further should inflation dynamics remain unfavorable in 2025.
Removed
Environmental laws could force the Company to clean up the properties at the Company’s expense.
Added
The Company may also take over the management of commercial properties whose owners have defaulted on loans. The Company also occupies owned and leased premises where branches and other bank facilities are located.
Removed
In particular, regulators are increasingly focused on liquidity risk after the bank failures of 2023. Any such increase in funding costs or restrictions could have a negative impact on the Company’s net interest income and, consequently, on its results of operations and financial condition.
Added
The 2023 collapse and subsequent regulatory takeover of certain U.S. regional banks may result in modifications or additional laws which we could be subject to, including potentially increasing capital requirements, modifying regulations related to liquidity risk management, deposit concentrations, capital adequacy and other oversight requirements.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed2 unchanged
Biggest changeLocation Ownership Year Opened Year of Lease or License Expiration Main Office: 141 Elm Street Westfield, MA Owned 1964 N/A Technology Center: 9-13 Chapel Street Westfield, MA Leased 2015 2028 Retail Lending: 136 Elm Street Westfield, MA Owned 2011 N/A Commercial Lending & Middle Market: 1500 Main Street Springfield, MA Leased 2014 2024 Commercial Lending/Credit Admin and Training Center: 219/229 Exchange Street Chicopee, MA Owned 2009/1998 N/A Branch Offices: 206 Park Street West Springfield, MA Owned 1957 N/A 655 Main Street Agawam, MA Owned 1968 N/A 26 Arnold Street Westfield, MA Owned 1976 N/A 300 Southampton Road Westfield, MA Owned 1987 N/A 462 College Highway Southwick, MA Owned 1990 N/A 382 North Main Street East Longmeadow, MA Leased 1997 2027 1500 Main Street Springfield, MA Leased 2006 2028 51 Location Ownership Year Opened Year of Lease or License Expiration 1650 Northampton Street Holyoke, MA Owned 2001 N/A 560 East Main Street Westfield, MA Owned 2007 N/A 237 South Westfield Street Feeding Hills, MA Leased 2009 2028 12 East Granby Road Granby, CT Owned 2021 N/A 47 Palomba Drive Enfield, CT Leased 2014 2024 39 Morgan Road West Springfield, MA Owned 2005 N/A 1342 Liberty Street (1) Springfield, MA Owned 2008 N/A 70 Center Street Chicopee, MA Owned 1973 N/A 569 East Street Chicopee, MA Owned 1976 N/A 599 Memorial Drive Chicopee, MA Leased 1977 2027 435 Burnett Road Chicopee, MA Owned 1990 N/A 477A Center Street Ludlow, MA Leased 2002 2032 350 Palmer Road Ware, MA Leased 2009 2027 32 Willamansett Street South Hadley, MA Leased 2008 2027 14 Russell Road Huntington, MA Owned 2020 N/A 337 Cottage Grove Road Bloomfield, CT Leased 2020 2035 977 Farmington Avenue West Hartford, CT Leased 2020 2030 52 Location Ownership Year Opened Year of Lease or License Expiration ATMs (2) : 516 Carew Street Springfield, MA Leased 2002 2024 1000 State Street Springfield, MA Leased 2003 2024 788 Memorial Avenue West Springfield, MA Leased 2006 2025 2620 Westfield Street West Springfield, MA Tenant at will 2006 N/A 98 Southwick Road Westfield, MA Leased 2006 2026 115 West Silver Street Westfield, MA Tenant at will 2005 N/A 98 Lower Westfield Road Holyoke, MA Leased 2010 2025 Westfield State University 577 Western Avenue Westfield, MA Ely Hall Tenant at will 2010 N/A Wilson Hall Tenant at will 2010 N/A 208 College Highway Southwick, MA Leased 2010 2025 110 Cherry Street Holyoke, MA Tenant at will 2018 N/A 291 Springfield Street Chicopee, MA Tenant at will 2015 N/A Springfield Visitors Center 1319 Main Street Springfield, MA Leased 2018 2026 Union Station 55 Frank B.
Biggest changeLocation Ownership Year Opened Year of Lease or License Expiration Main Office: 141 Elm Street Westfield, MA Owned 1964 N/A Technology Center: 9-13 Chapel Street Westfield, MA Leased 2015 2028 Retail Lending: 136 Elm Street Westfield, MA Owned 2011 N/A Commercial Lending & Middle Market: 1500 Main Street Springfield, MA Leased 2014 2025 Commercial Lending/Credit Admin and Training Center: 219/229 Exchange Street Chicopee, MA Owned 2009/1998 N/A Branch Offices: 206 Park Street West Springfield, MA Owned 1957 N/A 655 Main Street Agawam, MA Owned 1968 N/A 26 Arnold Street Westfield, MA Owned 1976 N/A 300 Southampton Road Westfield, MA Owned 1987 N/A 462 College Highway Southwick, MA Owned 1990 N/A 382 North Main Street East Longmeadow, MA Leased 1997 2027 1500 Main Street Springfield, MA Leased 2006 2028 51 Location Ownership Year Opened Year of Lease or License Expiration 1650 Northampton Street Holyoke, MA Owned 2001 N/A 560 East Main Street Westfield, MA Owned 2007 N/A 237 South Westfield Street Feeding Hills, MA Leased 2009 2028 12 East Granby Road Granby, CT Owned 2021 N/A 47 Palomba Drive Enfield, CT Leased 2014 2029 39 Morgan Road West Springfield, MA Owned 2005 N/A 1342 Liberty Street (1) Springfield, MA Owned 2008 N/A 70 Center Street Chicopee, MA Owned 1973 N/A 569 East Street Chicopee, MA Owned 1976 N/A 599 Memorial Drive Chicopee, MA Leased 1977 2027 435 Burnett Road Chicopee, MA Owned 1990 N/A 477A Center Street Ludlow, MA Leased 2002 2032 350 Palmer Road Ware, MA Leased 2009 2027 32 Willamansett Street South Hadley, MA Leased 2008 2027 14 Russell Road Huntington, MA Owned 2020 N/A 337 Cottage Grove Road Bloomfield, CT Leased 2020 2035 977 Farmington Avenue West Hartford, CT Leased 2020 2030 52 Location Ownership Year Opened Year of Lease or License Expiration ATMs (2) : 1000 State Street Springfield, MA Leased 2003 2025 788 Memorial Avenue West Springfield, MA Leased 2006 2025 2620 Westfield Street West Springfield, MA Leased 2005 2029 98 Southwick Road Westfield, MA Leased 2006 2026 115 West Silver Street Westfield, MA Tenant at will 2005 N/A 98 Lower Westfield Road Holyoke, MA Leased 2010 2025 Westfield State University 577 Western Avenue Westfield, MA Ely Hall Tenant at will 2010 N/A 208 College Highway Southwick, MA Leased 2010 2025 110 Cherry Street Holyoke, MA Tenant at will 2018 N/A 291 Springfield Street Chicopee, MA Tenant at will 2015 N/A Springfield Visitors Center 1319 Main Street Springfield, MA Leased 2018 2026 Union Station 55 Frank B.
ITEM 2. PROPERTIES. The Company currently conducts business through our twenty-five banking offices, ten free-standing ATMs and an additional fourteen free-standing and thirty-three seasonal or temporary ATMs that are owned and serviced by a third party, whereby the Bank pays a rental fee and shares in the surcharge revenue.
ITEM 2. PROPERTIES. The Company currently conducts business through our twenty-five banking offices, eight free-standing ATMs and an additional fourteen free-standing and thirty-three seasonal or temporary ATMs that are owned and serviced by a third party, whereby the Bank pays a rental fee and shares in the surcharge revenue.
The following table sets forth certain information regarding our properties as of December 31, 2023. As of this date, the premises and equipment, net of depreciation, owned by us had an aggregate net book value of $25.6 million. We believe that our existing facilities are sufficient for our current needs.
The following table sets forth certain information regarding our properties as of December 31, 2024. As of this date, the premises and equipment, net of depreciation, owned by us had an aggregate net book value of $24.4 million. We believe that our existing facilities are sufficient for our current needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

4 edited+1 added−0 removed5 unchanged
Biggest changeOn January 5, 2024, the cases were refiled as a single action in federal court in Massachusetts, where the plaintiffs have moved for preliminarily approval of a class settlement, under which the Bank expects to pay damages of approximately $510,000 in exchange for the dismissal with prejudice and release of all claims that were or could have been asserted in the putative class action lawsuits on behalf of the plaintiffs and all putative settlement class members.
Biggest changeUnder the terms of the settlement agreement, the Bank agreed to pay approximately $510,000 in exchange for the dismissal with prejudice and release of all claims that were or could have been asserted in the putative class action lawsuits on behalf of the plaintiffs and all putative settlement class members.
ITEM 3. LEGAL PROCEEDINGS. During the fiscal year ended December 31, 2023, except as set forth below, the Company was not involved in any material pending legal proceedings as a plaintiff or as a defendant, other than routine legal proceedings occurring in the ordinary course of business.
ITEM 3. LEGAL PROCEEDINGS. During the fiscal year ended December 31, 2024, except as set forth below, the Company was not involved in any material pending legal proceedings as a plaintiff or as a defendant, other than routine legal proceedings occurring in the ordinary course of business.
The Bank retained outside litigation counsel in these matters, and discussions to find a mutually acceptable resolution, including an arms-length mediation before a neutral mediator, proceeded between the parties.
The Bank retained outside litigation counsel in these matters, and discussions to find a mutually acceptable resolution, including an arms-length mediation before a neutral mediator, proceeded between the parties. On December 29, 2023, the parties entered into an agreement to settle both actions on a class basis.
The proposed settlement remains subject to preliminary court approval, notice to class members, and final court approval. The $510,000 in settlement expense was included in non-interest expense in the Company’s Consolidated Statements of Net Income for the year ended December 31, 2023.
On January 23, 2025 the Court granted final approval of the settlement. During the year ended December 31, 2023, the $510,000 in settlement expense was included in non-interest expense in the Company’s Consolidated Statements of Net Income.
Added
Pursuant to the settlement agreement and for purposes of effectuating the settlement, on January 5, 2024, the cases were refiled as a single action in federal court in Massachusetts.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+1 added−1 removed4 unchanged
Biggest changePeriod Total Number of Shares Purchased Average Price Paid per Share ($) Total Number of Shares Purchased as Part of Publicly Announced Programs Maximum Number of Shares that May Yet Be Purchased Under the Program (1) October 1 - 31, 2023 228,427 7.08 228,427 423,012 November 1 - 30, 2023 16,412 7.31 16,412 406,600 December 1 - 31, 2023 (2) 15,596 8.95 — 406,600 Total 260,435 7.20 244,839 406,600 ___________________________ (1) On July 26, 2022, the Board of Directors approved an additional stock repurchase plan authorizing the Company to purchase up to 1,100,000 shares, or 5%, of its outstanding common stock.
Biggest changePeriod Total Number of Shares Purchased Average Price Paid per Share ($) Total Number of Shares Purchased as Part of Publicly Announced Programs Maximum Number of Shares that May Yet Be Purchased Under the Program (1)(2) October 1 - 31, 2024 95,000 8.76 95,000 597,318 November 1 - 30, 2024 54,383 9.04 54,383 542,935 December 1 - 31, 2024 (2) 88,312 9.26 70,617 472,318 Total 237,695 9.01 220,000 472,318 (1) On May 21, 2024, the Board authorized an additional stock repurchase plan (the “2024 Plan”) under which the Company may purchase up to 1,000,000 shares of common stock, or 4.6%, of its outstanding common stock, as of the date the 2024 Plan was adopted.
Recent Sales of Unregistered Securities. There were no sales by the Company of unregistered securities during the year ended December 31, 2023. Purchases of Equity Securities by the Issuer and Affiliated Purchasers. The following table sets forth information with respect to purchases made by the Company during the three months ended December 31, 2023.
Recent Sales of Unregistered Securities. There were no sales by the Company of unregistered securities during the year ended December 31, 2024. Purchases of Equity Securities by the Issuer and Affiliated Purchasers. The following table sets forth information with respect to purchases made by the Company during the three months ended December 31, 2024.
Such number of shareholders does not reflect the number of persons or entities holding stock in nominee name through banks, brokerage firms and other nominees. Dividend Policy. The Company maintains a dividend reinvestment and direct stock purchase plan (the "DRSPP").
Such number of shareholders does not reflect the number of persons or entities holding stock in nominee name through banks, brokerage firms and other nominees. Dividend Policy. The Company maintains a dividend reinvestment and direct stock purchase plan (the “DRSPP”).
The following graph compares our total cumulative shareholder return (which assumes the reinvestment of all dividends) by an investor who invested $100.00 on December 31, 2018 to December 31, 2023, to the total return by an investor who invested $100.00 in the S&P U.S. Banks Index $1 Billion - $5 Billion, the S&P U.S.
The following graph compares our total cumulative shareholder return (which assumes the reinvestment of all dividends) by an investor who invested $100.00 on December 31, 2019 to December 31, 2024, to the total return by an investor who invested $100.00 in the S&P U.S. Banks Index $1 Billion - $5 Billion, the S&P U.S.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information. The Company’s common stock is currently listed on NASDAQ under the trading symbol “WNEB.” As of December 31, 2023, there were 21,666,807 shares of the Company’s common stock outstanding by approximately 1,921 shareholders, as obtained through our transfer agent.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information. The Company’s common stock is currently listed on NASDAQ under the trading symbol “WNEB.” As of December 31, 2024, there were 20,875,713 shares of the Company’s common stock outstanding by approximately 1,862 shareholders, as obtained through our transfer agent.
(2) Repurchase of 15,596 shares related to tax obligations for shares of restricted stock that vested on December 31, 2023 under our 2014 Omnibus Incentive Plan. These repurchases were reported by each reporting person on January 4, 2024. 55 Stock Performance Graph.
The 2024 Plan commenced upon the completion of the prior existing repurchase plan on June 6, 2024. (2) Repurchase of 17,695 shares related to tax obligations for shares of restricted stock that vested on December 31, 2024 under our 2021 Omnibus Incentive Plan. These repurchases were reported by each reporting person on January 3, 2025. 55 Stock Performance Graph.
BMI Banks New England Region Index and the NASDAQ Bank Index Period Ending Index 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 Western New England Bancorp, Inc. 100.00 97.97 72.50 94.38 104.75 103.62 S&P U.S. Banks $1 Billion - $5 Billion 100.00 124.65 112.84 152.84 137.84 139.95 S&P U.S.
BMI Banks New England Region Index and the NASDAQ Bank Index Period Ending Index 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 Western New England Bancorp, Inc. 100.00 74.00 96.33 106.92 105.77 112.14 S&P U.S. Banks $1 Billion - $5 Billion 100.00 90.53 122.61 110.58 112.28 129.43 S&P U.S.
Removed
BMI Banks New England Region Index 100.00 118.96 103.03 143.80 131.71 121.68 NASDAQ Bank Index 100.00 124.38 115.04 164.44 137.65 132.92 56
Added
BMI Banks New England Region Index 100.00 86.61 120.88 110.72 102.29 127.05 NASDAQ Bank Index 100.00 92.50 132.19 110.67 106.87 128.85 56

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

104 edited+67 added−18 removed52 unchanged
Biggest changeFor the twelve months ended 12/31/2023 12/31/2022 12/31/2021 (In thousands) Loans (no tax adjustment) $ 91,169 $ 77,264 $ 74,200 Tax-equivalent adjustment (1) 471 494 420 Loans (tax-equivalent basis) $ 91,640 $ 77,758 $ 74,620 Securities (no tax adjustment) $ 8,370 $ 8,296 $ 5,394 Tax-equivalent adjustment (1) 1 3 4 Securities (tax-equivalent basis) $ 8,371 $ 8,299 $ 5,398 Net interest income (no tax adjustment) $ 67,909 $ 79,232 $ 73,177 Tax equivalent adjustment (1) 472 497 424 Net interest income (tax-equivalent basis) $ 68,381 $ 79,729 $ 73,601 Net interest income (no tax adjustment) $ 67,909 $ 79,232 $ 73,177 Less: Purchase accounting adjustments (50 ) 175 (55 ) Prepayment penalties and fees 64 281 181 PPP fee income 99 728 6,769 Adjusted net interest income (non-GAAP) $ 67,796 $ 78,048 $ 66,282 Average interest-earning assets $ 2,407,251 $ 2,396,972 $ 2,329,877 Average interest-earnings asset, excluding average PPP loans $ 2,405,525 $ 2,391,252 $ 2,219,286 Net interest margin (no tax adjustment) 2.82 % 3.31 % 3.14 % Net interest margin, tax-equivalent 2.84 % 3.33 % 3.16 % Adjusted net interest margin, excluding purchase accounting adjustments, PPP fee income and prepayment penalties (non-GAAP) 2.82 % 3.26 % 2.99 % 63 At or for the twelve months ended 12/31/2023 12/31/2022 12/31/2021 (In thousands) Book Value per Share (GAAP) $ 10.96 $ 10.27 $ 9.87 Non-GAAP adjustments: Goodwill (0.58 ) (0.56 ) (0.55 ) Core deposit intangible (0.08 ) (0.10 ) (0.11 ) Tangible Book Value per Share (non-GAAP) $ 10.30 $ 9.61 $ 9.21 Income Before Income Taxes (GAAP) $ 19,584 $ 34,629 $ 31,724 Non-GAAP adjustments: Provision for (reversal of) credit losses 872 700 (925 ) PPP Income (99 ) (728 ) (6,769 ) Gain on bank-owned life insurance death benefit (778 ) - — Loss (gain) on defined benefit plan termination 1,143 (2,807 ) — Income Before Taxes, Provision, PPP Income, Bank-Owned Life Insurance Death Benefit and Defined Benefit Termination (non-GAAP) $ 20,722 $ 31,794 $ 24,030 Adjusted Efficiency Ratio: Non-interest Expense (GAAP) $ 58,350 $ 57,235 $ 54,942 Non-GAAP adjustments: Loss on prepayment of borrowings — — (45 ) Non-interest Expense for Adjusted Efficiency Ratio (non-GAAP) $ 58,350 $ 57,235 $ 54,897 Net Interest Income (GAAP) $ 67,909 $ 79,232 $ 73,177 Non-interest Income (GAAP) $ 10,897 $ 13,332 $ 12,564 Non-GAAP adjustments: Loss on disposal of premises and equipment 3 — — Loss on securities, net — 4 72 Unrealized losses on marketable equity securities 1 717 168 Loss on interest rate swap termination — — 402 Gain on bank-owned life insurance death benefit (778 ) — — Gain on non-marketable equity investments (590 ) (422 ) (898 ) Loss (gain) on defined benefit plan termination 1,143 (2,807 ) — Non-interest Income for Adjusted Efficiency Ratio (non-GAAP) $ 10,676 $ 10,824 $ 12,308 Total Revenue for Adjusted Efficiency Ratio (non-GAAP) $ 78,585 $ 90,056 $ 85,485 Efficiency Ratio (GAAP) 74.04 % 61.83 % 64.08 % Adjusted Efficiency Ratio (Non-interest Expense for Adjusted Efficiency Ratio (non-GAAP)/Total Revenue for Adjusted Efficiency Ratio (non-GAAP)) 74.25 % 63.55 % 64.64 % (1) The tax equivalent adjustment is based upon a 21% tax rate for 2023, 2022 and 2021. 64 Comparison of Financial Condition at December 31, 2023 and December 31, 2022.
Biggest changeFor the twelve months ended 12/31/2024 12/31/2023 12/31/2022 (Dollars in thousands) Loans (no tax adjustment) $ 98,898 $ 91,169 $ 77,264 Tax-equivalent adjustment (1) 471 471 494 Loans (tax-equivalent basis) $ 99,369 $ 91,640 $ 77,758 Securities (no tax adjustment) $ 8,649 $ 8,370 $ 8,296 Tax-equivalent adjustment (1) — 1 3 Securities (tax-equivalent basis) $ 8,649 $ 8,371 $ 8,299 Net interest income (no tax adjustment) $ 59,817 $ 67,909 $ 79,232 Tax equivalent adjustment (1) 471 472 497 Net interest income (tax-equivalent basis) $ 60,288 $ 68,381 $ 79,729 Net interest income (no tax adjustment) $ 59,817 $ 67,909 $ 79,232 Less: Fair value hedge interest income 1,398 1,085 — Adjusted net interest income (non-GAAP) $ 58,419 $ 66,824 $ 79,232 Average interest-earning assets $ 2,440,703 $ 2,407,251 $ 2,396,972 Net interest margin (no tax adjustment) 2.45 % 2.82 % 3.31 % Net interest margin, tax-equivalent 2.47 % 2.84 % 3.33 % Adjusted net interest margin, excluding fair value hedge interest income (non-GAAP) 2.39 % 2.77 % 3.31 % 63 At or for the twelve months ended 12/31/2024 12/31/2023 12/31/2022 (Dollars in thousands) Book Value per Share (GAAP) $ 11.30 $ 10.96 $ 10.27 Non-GAAP adjustments: Goodwill (0.60 ) (0.58 ) (0.56 ) Core deposit intangible (0.07 ) (0.08 ) (0.10 ) Tangible Book Value per Share (non-GAAP) $ 10.63 $ 10.30 $ 9.61 Adjusted Efficiency Ratio: Non-interest Expense (GAAP) $ 58,428 $ 58,350 $ 57,235 Net Interest Income (GAAP) $ 59,817 $ 67,909 $ 79,232 Non-interest Income (GAAP) $ 12,903 $ 10,897 $ 13,332 Non-GAAP adjustments: Loss on disposal of premises and equipment 6 3 — Loss on securities, net — — 4 Unrealized (gain) loss on marketable equity securities (13 ) 1 717 Gain on bank-owned life insurance death benefit — (778 ) — Gain on non-marketable equity investments (1,287 ) (590 ) (422 ) Loss (gain) on defined benefit plan termination — 1,143 (2,807 ) Non-interest Income for Adjusted Efficiency Ratio (non-GAAP) $ 11,609 $ 10,676 $ 10,824 Total Revenue for Adjusted Efficiency Ratio (non-GAAP) $ 71,426 $ 78,585 $ 90,056 Efficiency Ratio (GAAP) 80.35 % 74.04 % 61.83 % Adjusted Efficiency Ratio (Non-interest Expense (GAAP)/Total Revenue for Adjusted Efficiency Ratio (non-GAAP)) 81.80 % 74.25 % 63.55 % (1) The tax equivalent adjustment is based upon a 21% tax rate for 2024, 2023 and 2022. 64 Comparison of Financial Condition at December 31, 2024 and December 31, 2023.
Non-interest income includes service fees and charges, income on bank-owned life insurance, gains on sales of mortgages, gains on non-marketable equity investments and gains (losses) on securities. Non-interest expense includes salaries and employee benefits, occupancy expenses, data processing, advertising expense, FDIC insurance assessment, professional fees and other general and administrative expenses. Critical Accounting Policies.
Non-interest income includes service fees and charges, income on bank-owned life insurance, gains (losses) on sales of mortgages, gains (losses) on non-marketable equity investments and gains (losses) on securities. Non-interest expense includes salaries and employee benefits, occupancy expenses, data processing, advertising expense, FDIC insurance assessment, professional fees and other general and administrative expenses. Critical Accounting Policies.
The credit loss estimation process involves procedures to appropriately consider the unique characteristics of loan portfolio segments, which consist of commercial real estate loans, residential real estate loans, commercial and industrial loans, and consumer loans. These segments are further disaggregated into loan classes, the level at which credit risk is monitored.
The credit loss estimation process involves procedures to appropriately consider the unique characteristics of loan portfolio segments, which consist of commercial real estate loans, residential real estate loans, commercial and industrial loans, and consumer loans. These segments are further disaggregated into loan classes, the level at which credit risk is monitored.
For each of these pools, the Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, time to recovery, probability of default, and loss given default. The modeling of expected prepayment speeds, curtailment rates, and time to recovery are based on historical internal data.
For each of these pools, the Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, time to recovery, probability of default, and loss given default. The modeling of expected prepayment speeds, curtailment rates, and time to recovery are based on historical internal data.
This process includes estimates which involve modeling loss projections attributable to existing loan balances, and considering historical experience, current conditions, and future expectations for pools of loans over a reasonable and supportable forecast period.
This process includes estimates which involve modeling loss projections attributable to existing loan balances, and considering historical experience, current conditions, and future expectations for pools of loans over a reasonable and supportable forecast period.
These interest rate swaps are designated as cash flow hedges and involve the receipt of variable rate amounts from a counterparty in exchange for our making fixed payments. Recent Accounting Pronouncements. Refer to Note 1 to our consolidated financial statements for a summary of the recent accounting pronouncements. Impact of Inflation and Changing Prices.
These interest rate swaps are designated as cash flow hedges and involve the receipt of variable rate amounts from a counterparty in exchange for our making fixed payments. 79 Recent Accounting Pronouncements. Refer to Note 1 to our consolidated financial statements for a summary of the recent accounting pronouncements. Impact of Inflation and Changing Prices.
In addition to the informational disclosure in the notes to the consolidated financial statements, our policy on this accounting policy is described in detail in the applicable sections of “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Senior management has discussed the development and selection of this accounting policy and the related disclosures with the Audit Committee of our Board of Directors.
In addition to the informational disclosure in the notes to the consolidated financial statements, our policy on this accounting policy is described in detail in the applicable sections of “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Senior management has discussed the development and selection of this accounting policy and the related disclosures with the Audit Committee of the Board.
In order to achieve the Company’s objectives of managing interest rate risk, the Asset and Liability Management Committee (“ALCO”) meets periodically to discuss and monitor the market interest rate environment relative to interest rates that are offered on our products. ALCO presents quarterly reports to the Board of Directors which includes the Company’s interest rate risk position and liquidity position.
In order to achieve the Company’s objectives of managing interest rate risk, the Asset and Liability Management Committee (“ALCO”) meets periodically to discuss and monitor the market interest rate environment relative to interest rates that are offered on our products. ALCO presents quarterly reports to the Board which includes the Company’s interest rate risk position and liquidity position.
Our financial condition is affected by our ability to borrow at attractive rates, retain deposits at market rates and other market conditions. We consider our sources of liquidity to be adequate to meet expected funding needs and also to be responsive to changing interest rate markets. Interest Rate Risk.
Our financial condition is affected by our ability to borrow at attractive rates, retain deposits at market rates and other market conditions. We consider our sources of liquidity to be adequate to meet expected funding needs and also to be responsive to changing interest rate markets. 78 Interest Rate Risk.
We monitor interest rate sensitivity so that we can adjust our asset and liability mix in a timely manner and minimize the negative effects of changing rates. 71 The Company’s liquidity sources are vulnerable to various uncertainties beyond our control.
We monitor interest rate sensitivity so that we can adjust our asset and liability mix in a timely manner and minimize the negative effects of changing rates. The Company’s liquidity sources are vulnerable to various uncertainties beyond our control.
Periodically, if deemed appropriate, we may use interest rate swaps, floors and caps, which are common derivative financial instruments, to hedge our interest rate exposure to interest rate movements. The Board of Directors has approved hedging policy statements governing the use of these instruments.
Periodically, if deemed appropriate, we may use interest rate swaps, floors and caps, which are common derivative financial instruments, to hedge our interest rate exposure to interest rate movements. The Board has approved hedging policy statements governing the use of these instruments.
The decrease in income tax expense for the twelve months ended December 31, 2023 compared to the twelve months December 31, 2022 was due to lower income before income taxes in 2023. Liquidity and Capital Resources. The term “liquidity” refers to our ability to generate adequate amounts of cash to fund loan originations, loan purchases, deposit withdrawals and operating expenses.
The decrease in income tax expense for the twelve months ended December 31, 2024 compared to the twelve months December 31, 2023 was due to lower income before taxes in 2024. Liquidity and Capital Resources. The term “liquidity” refers to our ability to generate adequate amounts of cash to fund loan originations, loan purchases, deposit withdrawals and operating expenses.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion should be read in conjunction with the Company’s Consolidated Financial Statements and notes thereto, each appearing elsewhere in this Annual Report on Form 10-K. Management’s discussion focuses on 2023 results compared to 2022.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion should be read in conjunction with the Company’s Consolidated Financial Statements and notes thereto, each appearing elsewhere in this Annual Report on Form 10-K. Management’s discussion focuses on 2024 results compared to 2023.
At December 31, 2023 and 2022, the Company held $423,000 of Atlantic Community Bankers Bank stock. The stock is restricted and carried in other assets at cost. The stock is evaluated for impairment based on an estimate of the ultimate recovery to the par value. Loans.
At December 31, 2024 and 2023, the Company held $423,000 of Atlantic Community Bankers Bank stock. The stock is restricted and carried in other assets at cost. The stock is evaluated for impairment based on an estimate of the ultimate recovery to the par value. Loans.
For more information regarding the Company’s use of Non-GAAP financial measures see “Explanation of Use of Non-GAAP Financial Measurements.” Average Balance Sheet. The following table sets forth information relating to the Company for the years ended December 31, 2023, 2022 and 2021.
For more information regarding the Company’s use of Non-GAAP financial measures see “Explanation of Use of Non-GAAP Financial Measurements.” Average Balance Sheet. The following table sets forth information relating to the Company for the years ended December 31, 2024, 2023 and 2022.
At December 31, 2023, the Company and the Bank exceeded each of the applicable regulatory capital requirements (See Note 13, Regulatory Capital , to our consolidated financial statements for further information on our regulatory requirements).
At December 31, 2024, the Company and the Bank exceeded each of the applicable regulatory capital requirements (See Note 13, Regulatory Capital , to our consolidated financial statements for further information on our regulatory requirements).
The Company recorded a $1.9 million charge-off on the relationship, which represented the non-accretable credit mark that was required to be grossed-up to the loan’s amortized cost basis with a corresponding increase to the allowance for credit losses under CECL implementation.
Specifically, the Company recorded a $1.9 million charge-off on the acquired commercial relationship, which represented the non-accretable credit mark that was required to be grossed-up to the loan’s amortized cost basis with a corresponding increase to the allowance for credit losses under the CECL implementation.
The Company’s primary activities are the origination of commercial real estate loans, commercial and industrial loans and residential real estate loans, as well as and the purchase of mortgage-backed and other investment securities. During the year ended December 31, 2023, we originated $225.6 million in loans, compared to $447.4 million in 2022.
The Company’s primary activities are the origination of commercial real estate loans, commercial and industrial loans and residential real estate loans, as well as and the purchase of mortgage-backed and other investment securities. During the year ended December 31, 2023, we originated $336.4 million in loans, compared to $225.6 million in 2023.
(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. See “Explanation of Use of Non-GAAP Financial Measurements”. (6) Net interest margin represents net interest and dividend income as a percentage of average interest-earning assets.
(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. See “Explanation of Use of Non-GAAP Financial Measurements.” (6) Net interest margin represents net interest and dividend income as a percentage of average interest-earning assets.
The results for the twelve months ended December 31, 2023 showed decreases in net interest income and non-interest income, as well as increases in non-interest expense and the provision for credit losses.
The results for the twelve months ended December 31, 2024 showed decreases in net interest income and the provision for credit losses, as well as increases in non-interest income and non-interest expense.
As of December 31, 2023 and December 31, 2022, there were no advances outstanding under either of these lines. On March 12, 2023, the FRB made available the BTFP, which enhances the ability of banks to borrow greater amounts against certain high-quality, unencumbered investments at par value.
As of December 31, 2024 and December 31, 2023, there were no advances outstanding under either of these lines. On March 12, 2023, the FRB made available the BTFP, which enhanced the ability of banks to borrow greater amounts against certain high-quality, unencumbered investments at par value.
Principal payments expected to be made on our lease liabilities during the twelve months ended December 31, 2024 were $1.5 million. The remaining lease liability payments totaled $8.4 million and are expected to be made after December 31, 2024 (See Note 12, Leases , to our consolidated financial statements for further information on our lease obligations).
Principal payments expected to be made on our lease liabilities during the twelve months ended December 31, 2025 were $1.5 million. The remaining lease liability payments totaled $7.4 million and are expected to be made after December 31, 2025 (See Note 12, Leases , to our consolidated financial statements for further information on our lease obligations).
For a discussion of 2022 results compared to 2021, refer to Part II, Item 7 of our Annual Report filed on Form 10-K, which was filed with the SEC on March 10, 2023. Overview.
For a discussion of 2023 results compared to 2022, refer to Part II, Item 7 of our Annual Report filed on Form 10-K, which was filed with the SEC on March 8, 2024. Overview.
(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. See “Explanation of Use of Non-GAAP Financial Measurements”. 61 Rate/Volume Analysis .
(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. See “Explanation of Use of Non-GAAP Financial Measurements.” 61 Rate/Volume Analysis .
Accrued interest receivable on loans held for investment was $7.5 million at December 31, 2023 and is excluded from the estimate of credit losses. 58 This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant change.
Accrued interest receivable on loans held for investment was $7.4 million at December 31, 2024 and is excluded from the estimate of credit losses. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant change.
The Bank is required to purchase FHLB stock at par value in association with advances from the FHLB. The stock is classified as a restricted investment and carried at cost which management believes approximates fair value. The Company’s investment in FHLB capital stock amounted to $3.2 million and $2.9 million at December 31, 2023 and December 31, 2022, respectively.
The Bank is required to purchase FHLB stock at par value in association with advances from the FHLB. The stock is classified as a restricted investment and carried at cost which management believes approximates fair value. The Company’s investment in FHLB capital stock amounted to $5.4 million and $3.2 million at December 31, 2024 and December 31, 2023, respectively.
The quantitative component of the ACL on loans is model-based and utilizes a forward-looking macroeconomic forecast. The Company uses a discounted cash flow method, incorporating probability of default and loss given default forecasted based on statistically derived economic variable loss drivers, to estimate expected credit losses.
The quantitative component of the ACL on loans is model-based and utilizes a forward-looking macroeconomic forecast. For commercial real estate loans, residential real estate loans, and commercial and industrial loans, the Company uses a discounted cash flow method, incorporating probability of default and loss given default forecasted based on statistically derived economic variable loss drivers, to estimate expected credit losses.
Our leases have remaining lease terms of less than one year to fifteen years, some of which include options to extend the leases for additional five-year terms up to ten years. Undiscounted lease liabilities totaled $9.9 million as of December 31, 2023.
Our leases have remaining lease terms of less than one year to fourteen years, some of which include options to extend the leases for additional five-year terms up to ten years. Undiscounted lease liabilities totaled $8.9 million as of December 31, 2024.
FHLB has stated that it expects to be able to continue to pay dividends, redeem excess capital stock, and provide competitively priced advances in the future. At December 31, 2023 and December 31, 2022, outstanding borrowings from the FHLB were $40.6 million and $36.2 million, respectively.
FHLB has stated that it expects to be able to continue to pay dividends, redeem excess capital stock, and provide competitively priced advances in the future. At December 31, 2024 and December 31, 2023, outstanding borrowings from the FHLB were $98.0 million and $40.6 million, respectively.
Cash and cash equivalents is comprised of cash on hand and amounts due from banks, interest-earning deposits in other financial institutions and federal funds sold. Cash and cash equivalents totaled $28.8 million, or 1.1% of total assets, at December 31, 2023 and $30.3 million, or 1.2% of total assets, at December 31, 2022.
Cash and cash equivalents is comprised of cash on hand and amounts due from banks, interest-earning deposits in other financial institutions and federal funds sold. Cash and cash equivalents totaled $66.5 million, or 2.5% of total assets, at December 31, 2024 and $28.8 million, or 1.1% of total assets, at December 31, 2023.
At December 31, 2023, time deposit accounts scheduled to mature within one year totaled $596.3 million. Based on the Company’s deposit retention experience and current pricing strategy, we anticipate that a significant portion of these time deposits will remain on deposit.
At December 31, 2024, time deposit accounts scheduled to mature within one year totaled $694.9 million. Based on the Company’s deposit retention experience and current pricing strategy, we anticipate that a significant portion of these time deposits will remain on deposit.
Maturing investment securities are a relatively predictable source of funds. However, deposit flows, calls of securities and prepayments of loans and mortgage-backed securities are strongly influenced by interest rates, general and local economic conditions and competition in the marketplace. These factors reduce the predictability of the timing of these sources of funds.
However, deposit flows, calls of securities and prepayments of loans and mortgage-backed securities are strongly influenced by interest rates, general and local economic conditions and competition in the marketplace. These factors reduce the predictability of the timing of these sources of funds.
Net interest and dividend income is the difference between the interest income earned on interest-earning assets and the interest paid on interest-bearing liabilities. Interest-earning assets consist primarily of commercial real estate loans, commercial and industrial loans, residential real estate loans and securities.
Our consolidated results of operations depend primarily on net interest and dividend income. Net interest and dividend income is the difference between the interest income earned on interest-earning assets and the interest paid on interest-bearing liabilities. Interest-earning assets consist primarily of commercial real estate loans, commercial and industrial loans, residential real estate loans and securities.
The Company has an available line of credit of $48.6 million with the FRB Discount Window at an interest rate determined and reset on a daily basis. Borrowings from the FRB Discount Window are secured by certain securities from the Company’s investment portfolio not otherwise pledged.
The Company has an available line of credit of $382.9 million with the FRB Discount Window at an interest rate determined and reset on a daily basis. Borrowings from the FRB Discount Window are secured by certain eligible loan collateral and securities from the Company’s investment portfolio not otherwise pledged.
For the twelve months ended December 31, 2023, the adjusted efficiency ratio, a non-GAAP financial measure, was 74.3%, compared to 63.6% for the twelve months ended December 31, 2022. For more information regarding the Company’s use of Non-GAAP financial measures see “Explanation of Use of Non-GAAP Financial Measurements.” Income Taxes.
For the twelve months ended December 31, 2024, the adjusted efficiency ratio, a non-GAAP financial measure, was 81.8%, compared to 74.3% for the twelve months ended December 31, 2023. For more information regarding the Company’s use of Non-GAAP financial measures see “Explanation of Use of Non-GAAP Financial Measurements.” 75 Income Taxes.
You should read the following financial results for the year ended December 31, 2023 in the context of this strategy. 57 For the twelve months ended December 31, 2023, net income was $15.1 million, or $0.70 diluted earnings per share, compared to net income of $25.9 million, or $1.18 diluted earnings per share, for the twelve months ended December 31, 2022.
You should read the following financial results for the year ended December 31, 2024 in the context of this strategy. 57 For the twelve months ended December 31, 2024, net income was $11.7 million, or $0.56 diluted earnings per share, compared to net income of $15.1 million, or $0.70 diluted earnings per share, for the twelve months ended December 31, 2023.
Estimated Changes in Net Interest Income Changes in Interest Rates At December 31, 2023 At December 31, 2022 1 – 12 Months +200 basis points -4.1 % -3.9 % -200 basis points 3.4 % 2.2 % 13 – 24 Months +200 basis points -0.4 % 0.2 % -200 basis points 23.3 % 11.4 % 72 The preceding sensitivity analysis does not represent a forecast of net interest income, nor do the calculations represent any actions that management may undertake in response to changes in interest rates.
Estimated Changes in Net Interest Income Changes in Interest Rates At December 31, 2024 At December 31, 2023 1 – 12 Months UP 200 basis points -4.4% -4.1% DOWN 200 basis points 3.9% 3.4% 13 – 24 Months UP 200 basis points 7.5% -0.4% DOWN 200 basis points 24.6% 23.3% ________________________ The preceding sensitivity analysis does not represent a forecast of net interest income, nor do the calculations represent any actions that management may undertake in response to changes in interest rates.
Total remaining contractual obligations outstanding with this vendor as of December 31, 2023 were estimated to be $11.6 million, with $5.4 million expected to be paid within one year and the remaining $6.2 million to be paid within the next three years. Further, the Company has operating leases for certain of its banking offices and ATMs.
Total remaining contractual obligations outstanding with this vendor as of December 31, 2024 were estimated to be $7.1 million, with $6.1 million expected to be paid within one year and the remaining $1.0 million to be paid within the next three years. Further, the Company has operating leases for certain of its banking offices and ATMs.
The net interest margin, on a tax-equivalent basis, was 2.84% for the twelve months ended December 31, 2023, compared to 3.33% for the twelve months ended December 31, 2022.
The net interest margin, on a tax-equivalent basis, was 2.47% for the twelve months ended December 31, 2024, compared to 2.84% for the twelve months ended December 31, 2023.
For the twelve months ended December 31, 2023, the average cost of core deposits, including non-interest-bearing demand deposits, increased 45 basis points from 0.20% for the twelve months ended December 31, 2022 to 0.65% for the twelve months ended December 31, 2023.
For the twelve months ended December 31, 2024, the average cost of core deposits, including non-interest-bearing demand deposits, increased 24 basis points from 0.65% for the twelve months ended December 31, 2023, to 0.89%.
At December 31, 2023, we had $535.6 million in available borrowing capacity with the FHLB. We have the ability to increase our borrowing capacity with the FHLB by pledging investment securities or additional loans.
At December 31, 2024, we had $464.1 million in available borrowing capacity with the FHLB. We have the ability to increase our borrowing capacity with the FHLB by pledging investment securities or additional loans.
During the twelve months ended December 31, 2023, average interest-earning assets increased $10.3 million, or 0.4%, to $2.4 billion compared to the twelve months ended December 31, 2022, primarily due to an increase in average loans of $52.6 million, or 2.7%, and an increase in average other investments of $2.1 million, or 20.8%, partially offset by a decrease in average securities of $39.2 million, or 9.6%, and a decrease in average short-term investments, consisting of cash and cash equivalents, of $5.3 million, or 20.4%.
During the twelve months ended December 31, 2024, average interest-earning assets increased $33.5 million, or 1.4%, to $2.4 billion, compared to the twelve months ended December 31, 2023, primarily due to an increase in average loans of $29.0 million, or 1.4%, an increase in average short-term investments, consisting of cash and cash equivalents, of $12.8 million, or 62.5%, and an increase in average other investments of $2.2 million, or 18.1%, partially offset by a decrease in average securities of $10.6 million, or 2.9%.
The average yield on interest-earning assets, without the impact of tax-equivalent adjustments, increased 62 basis points from 3.58% for the twelve months ended December 31, 2022 to 4.20% for the twelve months ended December 31, 2023.
The average yield on interest-earning assets, without the impact of tax-equivalent adjustments, increased 30 basis points from 4.20% for the twelve months ended December 31, 2023 to 4.50% for the twelve months ended December 31, 2024.
(2) Loan and securities income are presented on a tax-equivalent basis using a tax rate of 21% for 2023, 2022 and 2021. 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. See “Explanation of Use of Non-GAAP Financial Measurements”.
(2) Loan and securities income are presented on a tax-equivalent basis using a tax rate of 21% for 2024, 2023 and 2022. 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.
At December 31, 2023, the Company had approximately $92.0 million in loan commitments and letters of credit to borrowers and approximately $352.5 million in available home equity and other unadvanced lines of credit. Deposit inflows and outflows are affected by the level of interest rates, the products and interest rates offered by competitors and by other factors.
At December 31, 2024, the Company had approximately $122.4 million in loan commitments and letters of credit to borrowers and approximately $343.1 million in available home equity and other unadvanced lines of credit. Deposit inflows and outflows are affected by the level of interest rates, the products and interest rates offered by competitors and by other factors.
(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.
See “Explanation of Use of Non-GAAP Financial Measurements.” (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.
During the twelve months ended December 31, 2023, the average cost of funds, including non-interest-bearing demand accounts and borrowings, increased 115 basis points from 0.29% for the twelve months ended December 31, 2022 to 1.44%.
During the twelve months ended December 31, 2024, the average cost of funds, including non-interest-bearing demand accounts and borrowings, increased 70 basis points from 1.44% for the twelve months ended December 31, 2023 to 2.14%.
Although management believes it has established and maintained the allowance for credit losses at adequate levels for the current economic environment and supportable forecast period, if management’s assumptions and judgments prove to be incorrect due to changes in the economic environment and related adjustments to the quantitative components of the CECL methodology, and the allowance for credit losses is not adequate to absorb forecasted losses, our earnings and capital could be significantly and adversely affected.
The expected loss estimates for the consumer loan segment are based on historical loss rates using the WARM method. 58 Although management believes it has established and maintained the allowance for credit losses at adequate levels for the current economic environment and supportable forecast period, if management’s assumptions and judgments prove to be incorrect due to changes in the economic environment and related adjustments to the quantitative components of the CECL methodology, and the allowance for credit losses is not adequate to absorb forecasted losses, our earnings and capital could be significantly and adversely affected.
At December 31, 2023, the Company reported unrealized losses on the HTM securities portfolio of $35.7 million, or 16.0%, of the amortized cost basis of the HTM securities portfolio, compared to $39.2 million, or 17.0% of the amortized cost basis of the HTM securities portfolio at December 31, 2022.
At December 31, 2024, the Company reported unrealized losses on the held-to-maturity securities portfolio of $39.4 million, or 19.2% of the amortized cost basis of the held-to-maturity securities portfolio, compared to $35.7 million, or 16.0% of the amortized cost basis of the held-to-maturity securities portfolio at December 31, 2023.
During the year ended December 31, 2023, total loans increased $35.9 million, or 1.8%, compared to an increase of $126.7 million, or 6.8%, for the year ended December 31, 2022.
During the year ended December 31, 2024, total loans increased $42.9 million, or 2.1%, compared to an increase of $35.9 million, or 1.8%, for the year ended December 31, 2023.
Tangible book value is a Non-GAAP measure. For more information regarding the Company’s use of Non-GAAP financial measures see “Explanation of Use of Non-GAAP Financial Measurements.” As of December 31, 2023, 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. Pension Plan.
For more information regarding the Company’s use of Non-GAAP financial measures see “Explanation of Use of Non-GAAP Financial Measurements.” As of December 31, 2024, 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. Assets under Management.
For the twelve months ended December 31, 2023, average demand deposits, an interest-free source of funds, decreased $45.3 million, or 7.0%, from $648.0 million, or 28.6% of total average deposits, for the twelve months ended December 31, 2022, to $602.7 million, or 27.8% of total average deposits. Provision for Credit Losses.
For the twelve months ended December 31, 2024, average demand deposits, an interest-free source of funds, decreased $41.4 million, or 6.9%, from $602.7 million, or 27.8% of total average deposits, for the twelve months ended December 31, 2023, to $561.3 million, or 25.8% of total average deposits. Provision for Credit Losses.
Return on average assets and return on average equity were 0.59% and 6.47% for the twelve months ended December 31, 2023, respectively, compared to 1.02% and 11.85% for the twelve months ended December 31, 2022, respectively. Net Interest Income and Net Interest Margin.
Return on average assets and return on average equity were 0.45% and 4.93% for the twelve months ended December 31, 2024, respectively, compared to 0.59% and 6.47% for the twelve months ended December 31, 2023, respectively. Net Interest Income and Net Interest Margin.
At December 31, 2023, total assets were $2.6 billion, an increase of $11.4 million, or 0.4%, from December 31, 2022. The balance sheet composition and changes since December 31, 2022 are discussed below. Cash and Cash Equivalents.
At December 31, 2024, total assets were $2.7 billion, an increase of $88.5 million, or 3.5%, from December 31, 2023. The balance sheet composition and changes since December 31, 2023 are discussed below. Cash and Cash Equivalents.
For the twelve months ended December 31, 2023, the Company reported net income of $15.1 million, or $0.70 per diluted share, compared to $25.9 million, or $1.18 per diluted share, for the twelve months ended December 31, 2022.
General. For the twelve months ended December 31, 2024, the Company reported net income of $11.7 million, or $0.56 per diluted share, compared to $15.1 million, or $0.70 per diluted share, for the twelve months ended December 31, 2023.
The average cost of borrowings, which include FHLB advances and subordinated debt, increased 58 basis points from 4.26% for the twelve months ended December 31, 2022 to 4.84% for the twelve months ended December 31, 2023.
The average cost of borrowings, which include borrowings and subordinated debt, increased 16 basis points from 4.84% for the twelve months ended December 31, 2023 to 5.00% for the twelve months ended December 31, 2024.
Income tax expense for the twelve months ended December 31, 2023 was $4.5 million, with an effective tax rate of 23.1%, compared to $8.7 million, with an effective tax rate of 25.2%, for twelve months ended December 31, 2022.
For the twelve months ended December 31, 2024, income tax expense was $3.3 million, with an effective tax rate of 22.0%, compared to $4.5 million, with an effective tax rate of 23.1%, for twelve months ended December 31, 2023.
Reverse repurchase agreements are agreements that allow us to borrow money using our securities as collateral. We also have outstanding at any time, a significant number of commitments to extend credit and provide financial guarantees to third parties. These arrangements are subject to strict credit control assessments. Guarantees specify limits to our obligations.
We also have outstanding at any time, a significant number of commitments to extend credit and provide financial guarantees to third parties. These arrangements are subject to strict credit control assessments. Guarantees specify limits to our obligations.
The Company may also redeem the Notes, in whole or in part, on or after May 1, 2026, and at any time upon the occurrence of certain events, subject in each case to the approval of the Board of Governors of the Federal Reserve (See Note 8, Long-Term Debt , to our consolidated financial statements for further information on our long-term debt). 70 We do not anticipate any material capital expenditures during the calendar year 2024, except in pursuance of the Company’s strategic initiatives.
The Company may also redeem the Notes, in whole or in part, on or after May 1, 2026, and at any time upon the occurrence of certain events, subject in each case to the approval of the Board of Governors of the Federal Reserve (See Note 8, Long-Term Debt , to our consolidated financial statements for further information on our long-term debt).
In addition, the Company completed an offering of $20 million in aggregate principal amount of its 4.875% fixed-to-floating rate subordinated notes (the “Notes”) to certain qualified institutional buyers in a private placement transaction on April 20, 2021. Unless earlier redeemed, the Notes mature on May 1, 2031.
In addition, the Company completed an offering of $20 million in aggregate principal amount of its 4.875% Notes to certain qualified institutional buyers in a private placement transaction on April 20, 2021. Unless earlier redeemed, the Notes mature on May 1, 2031. At December 31, 2024, $19.8 million aggregate principle amount of the Notes was outstanding.
At December 31, 2023, the Company reported unrealized losses on the AFS securities portfolio of $29.2 million, or 17.5% of the amortized cost basis of the AFS securities portfolio, compared to unrealized losses of $32.2 million, or 18.0% of the amortized cost basis of the AFS securities at December 31, 2022.
At December 31, 2024, the Company reported unrealized losses on the available-for-sale securities portfolio of $31.2 million, or 16.2% of the amortized cost basis of the available-for-sale securities portfolio, compared to unrealized losses of $29.2 million, or 17.5% of the amortized cost basis of the available-for-sale securities at December 31, 2023.
During the twelve months ended December 31, 2023, the Company reported a gain of $590,000 on non-marketable equity investments compared to a gain of $422,000 during the twelve months ended December 31, 2022. During the twelve months ended December 31, 2023, the Company reported a loss on the disposal of premises and equipment of $3,000.
During the twelve months ended December 31, 2024, the Company reported a gain of $1.3 million on non-marketable equity investments, compared to a gain of $590,000 during the twelve months ended December 31, 2023.
During the twelve months ended December 31, 2023, net interest income decreased $11.3 million, or 14.3%, to $67.9 million, compared to $79.2 million for the twelve months ended December 31, 2022.
During the twelve months ended December 31, 2024, net interest income decreased $8.1 million, or 11.9%, to $59.8 million, compared to $67.9 million for the twelve months ended December 31, 2023.
During the twelve months ended December 31, 2023, net interest income decreased $11.3 million, or 14.3%, to $67.9 million, compared to $79.2 million for the twelve months ended December 31, 2022.
During the twelve months ended December 31, 2024, net interest income decreased $8.1 million, or 11.9%, to $59.8 million, compared to $67.9 million for the twelve months ended December 31, 2023.
The decrease in net interest income was due to an increase in interest expense of $26.5 million, partially offset by an increase in interest and dividend income of $15.2 million, or 17.7%. The net interest margin for the twelve months ended December 31, 2023 was 2.82%, compared to 3.31% during the twelve months ended December 31, 2022.
The decrease in net interest income was primarily due to an increase in interest expense of $16.8 million, or 50.6%, partially offset by an increase in interest and dividend income of $8.7 million, or 8.6%. 73 The net interest margin for the twelve months ended December 31, 2024 was 2.45%, compared to 2.82% for the twelve months ended December 31, 2023.
The decrease in net interest income was due to an increase in interest expense of $26.5 million, partially offset by an increase in interest and dividend income of $15.2 million, or 17.7%.
The decrease in net interest income was primarily due to an increase in interest expense of $16.8 million, or 50.6%, partially offset by an increase in interest and dividend income of $8.7 million, or 8.6%.
Loan interest and yield data does not include any accrued interest from non-accruing loans. 59 For the Years Ended December 31, 2023 2022 2021 Average Average Yield/ Average Average Yield/ Average Average Yield/ Balance Interest Cost Balance Interest Cost Balance Interest Cost (Dollars in thousands) ASSETS: Interest-earning assets Loans(1)(2) $ 2,006,166 $ 91,640 4.57 % $ 1,953,527 $ 77,758 3.98 % $ 1,887,926 $ 74,620 3.95 % Securities(2) 368,201 8,371 2.27 407,444 8,299 2.04 319,778 5,398 1.69 Other investments - at cost 12,425 558 4.49 10,289 177 1.72 10,242 115 1.12 Short-term investments(3) 20,459 1,021 4.99 25,712 191 0.74 111,931 139 0.12 Total interest-earning assets 2,407,251 101,590 4.22 2,396,972 86,425 3.61 2,329,877 80,272 3.45 Total non-interest-earning assets 155,511 152,941 147,980 Total assets $ 2,562,762 $ 2,549,913 $ 2,477,857 LIABILITIES AND EQUITY: Interest-bearing liabilities Interest-bearing checking accounts $ 142,005 1,041 0.73 $ 139,993 530 0.38 $ 109,648 399 0.36 Savings accounts 202,354 181 0.09 222,267 161 0.07 205,394 154 0.07 Money market accounts 697,621 9,529 1.37 890,763 3,187 0.36 776,725 2,412 0.31 Time deposits 524,827 15,898 3.03 363,258 1,474 0.41 477,067 2,543 0.53 Total interest-bearing deposits 1,566,807 26,649 1.70 1,616,281 5,352 0.33 1,568,834 5,508 0.35 Short-term borrowings and long-term debt 135,532 6,560 4.84 31,556 1,344 4.26 38,294 1,164 3.04 Interest-bearing liabilities 1,702,339 33,209 1.95 1,647,837 6,696 0.41 1,607,128 6,672 0.42 Non-interest-bearing deposits 602,652 647,971 608,936 Other non-interest-bearing liabilities 24,885 35,615 39,108 Total non-interest-bearing liabilities 627,537 683,586 648,044 Total liabilities 2,329,876 2,331,423 2,255,172 Total equity 232,886 218,490 222,685 Total liabilities and equity $ 2,562,762 $ 2,549,913 $ 2,477,857 Less: Tax-equivalent adjustment(2) (472 ) (497 ) (424 ) Net interest and dividend income $ 67,909 $ 79,232 $ 73,177 Net interest rate spread(4) 2.25 % 3.18 % 3.01 % Net interest rate spread, on a tax-equivalent basis(5) 2.27 % 3.20 % 3.03 % Net interest margin(6) 2.82 % 3.31 % 3.14 % Net interest margin, on a tax-equivalent basis(7) 2.84 % 3.33 % 3.16 % Ratio of average interest-earning assets to average interest-bearing liabilities 141.41 % 145.46 % 144.97 % 60 (1) Loans, including nonaccrual loans, are net of deferred loan origination costs and unadvanced funds.
Loan interest and yield data does not include any accrued interest from non-accruing loans. 59 For the Years Ended December 31, 2024 2023 2022 Average Average Yield/ Average Average Yield/ Average Average Yield/ Balance Interest Cost Balance Interest Cost Balance Interest Cost (Dollars in thousands) ASSETS: Interest-earning assets Loans(1)(2) $ 2,035,149 $ 99,369 4.88 % $ 2,006,166 $ 91,640 4.57 % $ 1,953,527 $ 77,758 3.98 % Securities(2) 357,631 8,649 2.42 368,201 8,371 2.27 407,444 8,299 2.04 Other investments - at cost 14,669 687 4.68 12,425 558 4.49 10,289 177 1.72 Short-term investments(3) 33,254 1,598 4.81 20,459 1,021 4.99 25,712 191 0.74 Total interest-earning assets 2,440,703 110,303 4.52 2,407,251 101,590 4.22 2,396,972 86,425 3.61 Total non-interest-earning assets 155,056 155,511 152,941 Total assets $ 2,595,759 $ 2,562,762 $ 2,549,913 LIABILITIES AND EQUITY: Interest-bearing liabilities Interest-bearing checking accounts $ 136,861 1,022 0.75 $ 142,005 1,041 0.73 $ 139,993 530 0.38 Savings accounts 182,678 166 0.09 202,354 181 0.09 222,267 161 0.07 Money market accounts 631,197 12,242 1.94 697,621 9,529 1.37 890,763 3,187 0.36 Time deposits 666,917 28,806 4.32 524,827 15,898 3.03 363,258 1,474 0.41 Total interest-bearing deposits 1,617,653 42,236 2.61 1,566,807 26,649 1.70 1,616,281 5,352 0.33 Short-term borrowings and long-term debt 155,560 7,779 5.00 135,532 6,560 4.84 31,556 1,344 4.26 Interest-bearing liabilities 1,773,213 50,015 2.82 1,702,339 33,209 1.95 1,647,837 6,696 0.41 Non-interest-bearing deposits 561,264 602,652 647,971 Other non-interest-bearing liabilities 24,541 24,885 35,615 Total non-interest-bearing liabilities 585,805 627,537 683,586 Total liabilities 2,359,018 2,329,876 2,331,423 Total equity 236,741 232,886 218,490 Total liabilities and equity $ 2,595,759 $ 2,562,762 $ 2,549,913 Less: Tax-equivalent adjustment(2) (471 ) (472 ) (497 ) Net interest and dividend income $ 59,817 $ 67,909 $ 79,232 Net interest rate spread(4) 1.68 % 2.25 % 3.18 % Net interest rate spread, on a tax-equivalent basis(5) 1.70 % 2.27 % 3.20 % Net interest margin(6) 2.45 % 2.82 % 3.31 % Net interest margin, on a tax-equivalent basis(7) 2.47 % 2.84 % 3.33 % Ratio of average interest-earning assets to average interest-bearing liabilities 137.64 % 141.41 % 145.46 % 60 (1) Loans, including nonperforming loans, are net of deferred loan origination costs and unadvanced funds.
Although management believes it has established and maintained the allowance for credit losses at appropriate levels for the current economic environment and supportable forecast period, future adjustments may be necessary if economic, real estate and other conditions differ substantially from the current operating environment. Non-Interest Income.
Management continues to monitor macroeconomic variables related to increasing interest rates, inflation and the concerns of an economic downturn, and believes it is appropriately reserved for the current economic environment. 74 Although management believes it has established and maintained the allowance for credit losses at appropriate levels for the current economic environment and supportable forecast period, future adjustments may be necessary if economic, real estate and other conditions differ substantially from the current operating environment.
Core deposits, which the Company defines as all deposits except time deposits, decreased $285.4 million, or 15.7%, from $1.8 billion, or 81.5% of total deposits, at December 31, 2022, to $1.5 billion, or 71.5% of total deposits, at December 31, 2023.
Core deposits, which the Company defines as all deposits except time deposits, increased $26.7 million, or 1.7%, from $1.5 billion, or 71.5% of total deposits, at December 31, 2023, to $1.6 billion, or 68.9% of total deposits, at December 31, 2024.
The Company indirectly utilizes the earnings on BOLI to offset the cost of the Company’s benefit plans. The cash surrender value of BOLI was $75.1 million and $74.6 million at December 31, 2023 and 2022, respectively. Deposits.
BOLI. The Company indirectly utilizes the earnings on BOLI to offset the cost of the Company’s benefit plans. The cash surrender value of BOLI was $77.1 million and $75.1 million at December 31, 2024 and 2023, respectively, and was issued by eleven insurance companies rated investment grade or better. Deposits.
The Company does not have any balloon or other payments due on any long-term obligations or any off-balance sheet items other than the commitments and unused lines of credit noted above. Off-Balance Sheet Arrangements.
We do not anticipate any material capital expenditures during the calendar year 2025, except in pursuance of the Company’s strategic initiatives. The Company does not have any balloon or other payments due on any long-term obligations or any off-balance sheet items other than the commitments and unused lines of credit noted above. 77 Off-Balance Sheet Arrangements.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Increase (Decrease) Due to Increase (Decrease) Due to Volume Rate Net Volume Rate Net Interest-earning assets (In thousands) (In thousands) Loans (1) $ 2,095 $ 11,787 $ 13,882 $ 2,593 $ 545 $ 3,138 Investment securities (1) (799 ) 871 72 1,480 1,421 2,901 Other investments - at cost 37 344 381 1 60 61 Short-term investments (39 ) 869 830 (107 ) 159 52 Total interest-earning assets 1,294 13,871 15,165 3,967 2,185 6,152 Interest-bearing liabilities Interest-bearing checking accounts 8 503 511 110 21 131 Savings accounts (14 ) 34 20 13 (6 ) 7 Money market accounts (691 ) 7,033 6,342 354 421 775 Time deposits 656 13,768 14,424 (607 ) (462 ) (1,069 ) Short-term borrowing and long-term debt 4,428 788 5,216 (205 ) 385 180 Total interest-bearing liabilities 4,387 22,126 26,513 (335 ) 359 24 Change in net interest and dividend income $ (3,093 ) $ (8,255 ) $ (11,348 ) $ 4,302 $ 1,826 $ 6,128 (1) Securities and loan income and net interest income are presented on a tax-equivalent basis using a tax rate of 21% for 2023, 2022 and 2021.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Increase (Decrease) Due to Increase (Decrease) Due to Volume Rate Net Volume Rate Net Interest-earning assets (Dollars in thousands) (Dollars in thousands) Loans (1) $ 1,323 $ 6,406 $ 7,729 $ 2,095 $ 11,787 $ 13,882 Investment securities (1) (240 ) 518 278 (799 ) 871 72 Other investments - at cost 101 28 129 37 344 381 Short-term investments 639 (62 ) 577 (39 ) 869 830 Total interest-earning assets 1,823 6,890 8,713 1,294 13,871 15,165 Interest-bearing liabilities Interest-bearing checking accounts (39 ) 20 (19 ) 8 503 511 Savings accounts (18 ) 3 (15 ) (14 ) 34 20 Money market accounts (907 ) 3,620 2,713 (691 ) 7,033 6,342 Time deposits 4,304 8,604 12,908 656 13,768 14,424 Short-term borrowing and long-term debt 969 250 1,219 4,428 788 5,216 Total interest-bearing liabilities 4,309 12,497 16,806 4,387 22,126 26,513 Change in net interest and dividend income $ (2,486 ) $ (5,607 ) $ (8,093 ) $ (3,093 ) $ (8,255 ) $ (11,348 ) (1) Securities and loan income and net interest income are presented on a tax-equivalent basis using a tax rate of 21% for 2024, 2023 and 2022.
The average cost of time deposits increased 262 basis points from 0.41% for the twelve months ended December 31, 2022 to 3.03% during the same period in 2023.
The average cost of time deposits increased 129 basis points from 3.03% for the twelve months ended December 31, 2023 to 4.32% for the twelve months ended December 31, 2024.
The Company also recorded a non-taxable gain of $778,000 on BOLI death benefits during the twelve months ended December 31, 2023. The Company did not have comparable income during the twelve months ended December 31, 2022.
During the twelve months ended, December 31, 2023, the Company also recorded a non-taxable gain of $778,000 on BOLI death benefits and did not have a comparable gain during the twelve months ended December 31, 2024. Excluding the defined benefit pension plan termination expense and the BOLI death benefit, non-interest income increased $1.6 million, or 14.6%.
At December 31, 2023, the Bank’s uninsured deposits represented 26.8% of total deposits, compared to 30.8% at December 31, 2022. 65 Borrowed Funds. At December 31, 2023, total borrowings increased $94.3 million, or 151.5%, from $62.2 million at December 31, 2022 to $156.5 million.
At December 31, 2024, the Bank’s uninsured deposits represented 28.4% of total deposits, compared to 26.8% at December 31, 2023. Borrowed Funds. At December 31, 2024, total borrowings decreased $33.4 million, or 21.3%, from $156.5 million at December 31, 2023 to $123.1 million.
With the BTFP, the Company has the ability to pay off the BTFP advance prior to maturity without incurring a penalty or termination fee. 69 At December 31, 2023, long-term debt included $90.0 million in outstanding advances under the BTFP with a weighted average fixed rate of 4.71%.
During the year ended December 31, 2023, the Company participated in the BTFP, which enabled the Company to pay off higher rate FHLB advances. At December 31, 2023, long-term debt included $90.0 million in outstanding advances under the BTFP with a weighted average fixed rate of 4.71%.
Because many commitments and almost all guarantees expire without being funded in whole or in part, the contract amounts are not estimates of future cash flows. We are also obligated under agreements with the FHLB to repay borrowed funds and are obligated under leases for certain of our branches and equipment.
Because many commitments and almost all guarantees expire without being funded in whole or in part, the contract amounts are not estimates of future cash flows.
The increase in reserves was primarily due to changes in the economic environment and related adjustments to the quantitative components of the CECL methodology. The Company recorded net charge-offs of $2.0 million for the twelve months ended December 31, 2023, as compared to net charge-offs of $556,000 for the twelve months ended December 31, 2022.
During the twelve months ended December 31, 2024, the Company recorded a reversal of credit losses of $665,000, compared to a provision for credit losses of $872,000 during the twelve months ended December 31, 2023. The decrease in reserves was primarily due to changes in the economic environment and related adjustments to the quantitative components of the CECL methodology.
The Company did not have comparable activity during the same period in 2022. During the twelve months ended December 31, 2022, the Company also reported unrealized losses on marketable equity securities of $717,000, compared to unrealized losses on marketable equity securities of $1,000 during the twelve months ended December 31, 2023.
During the twelve months ended December 31, 2023, the Company also reported unrealized losses on marketable equity securities of $1,000, compared to unrealized gains on marketable equity securities of $13,000 during the twelve months ended December 31, 2024. Non-Interest Expense.
The increase was primarily attributable to net income of $15.1 million, partially offset by a decrease in accumulated other comprehensive loss of $3.3 million, $5.0 million for the repurchase of common stock and cash dividends paid of $6.1 million. At December 31, 2023, total shares outstanding were 21,666,807.
The change was primarily attributable to an increase in accumulated other comprehensive loss of $1.5 million, cash dividends paid of $5.9 million, repurchase of shares at a cost of $7.8 million, partially offset by net income of $11.7 million. At December 31, 2024, total shares outstanding were 20,875,713.

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