Western New England Bancorp WNEB Form 8-K filing Earnings

WESTERN NEW ENGLAND BANCORP, INC. 8-K

Exhibit 99.1

WESTERN NEW ENGLAND BANCORP, INC. REPORTS RESULTS FOR THREE AND SIX MONTHS ENDED JUNE 30, 2026, AND DECLARES QUARTERLY CASH DIVIDEND

Westfield, Massachusetts, July 28, 2026: Western New England Bancorp, Inc. (the “Company” or “WNEB”) (NasdaqGS: WNEB), the holding company for Westfield Bank (the “Bank”), announced today the unaudited results of operations for the three and six months ended June 30, 2026. For the three months ended June 30, 2026, the Company reported net income of $3.6 million, or $0.18 per diluted share, compared to net income of $4.6 million, or $0.23 per diluted share, for the three months ended June 30, 2025. On a linked quarter basis, net income was $3.6 million, or $0.18 per diluted share, as compared to net income of $4.8 million, or $0.24 per diluted share, for the three months ended March 31, 2026. For the six months ended June 30, 2026, net income was $8.4 million, or $0.42 per diluted share, compared to net income of $6.9 million, or $0.34 per diluted share, for the six months ended June 30, 2025.

The Company also announced that its Board of Directors declared a quarterly cash dividend of $0.07 per share on the Company’s common stock. The dividend will be payable on or about August 26, 2026 to shareholders of record on August 12, 2026.

James C. Hagan, President and Chief Executive Officer, commented, “I am pleased to report the results for the second quarter of 2026. Our diversified loans and deposits, along with our disciplined approach to managing funding costs, resulted in an increase in the net interest margin to 3.00%. At June 30, 2026, core deposits and non-interest-bearing deposits represented 69.4% and 25.0% of total deposits, respectively, while the average cost of deposits stood at 1.74% for the three months ended June 30, 2026.

We continue to focus on extending credit within our markets and servicing the needs of our existing customer base while ensuring new opportunities present the appropriate risk-adjusted return. Consistent with our prudent credit culture, we continue to proactively identify and manage credit risk within the loan portfolio. At June 30, 2026, our asset quality remained strong, with total delinquency at 0.21% of total loans, and total nonaccrual loans at 0.35% of total loans.”

Hagan concluded, “We remain disciplined in our capital management strategies. During the six months ended June 30, 2026, we repurchased 381,000 shares of common stock and have 491,465 shares of common stock available for repurchase under the 2025 Repurchase Plan. We remain committed to delivering long-term value to shareholders through capital management strategies, which include continued loan growth, share repurchases and quarterly cash dividends.”

Key Highlights:

Loans and Deposits

At June 30, 2026, total loans increased $9.9 million, or 0.5%, from $2.2 billion, or 79.7% of total assets, at December 31, 2025, to $2.2 billion, or 80.2% of total assets. The increase was primarily driven by an increase in residential real estate loans, including home equity loans, of $31.7 million, or 3.7%, and an increase in commercial and industrial loans of $12.5 million, or 5.6%, partially offset by a decrease in commercial real estate loans of $33.7 million, or 3.1%. At June 30, 2026, total deposits of $2.4 billion increased $40.5 million, or 1.7%, from December 31, 2025, primarily due to an increase in time deposits of $45.8 million, or 6.6%.

Allowance for Credit Losses and Credit Quality

At June 30, 2026, the allowance for credit losses was $20.2 million, or 0.92% of total loans, compared to $20.3 million, or 0.93% of total loans, at December 31, 2025. The allowance for credit losses, as a percentage of nonaccrual loans, was 260.2% and 393.2% at June 30, 2026, and December 31, 2025, respectively. At June 30, 2026, nonaccrual loans totaled $7.8 million, or 0.35% of total loans, compared to $5.2 million, or 0.24% of total loans, at December 31, 2025. Total delinquent loans increased from $3.1 million, or 0.14% of total loans, at December 31, 2025, to $4.7 million, or 0.21% of total loans, at June 30, 2026. Of the $4.7 million in past due loans, 95.1% are residential real estate loans. At June 30, 2026, and December 31, 2025, the Company did not have any other real estate owned.

Net Interest Margin

The net interest margin increased five basis points from 2.95% for the three months ended March 31, 2026 to 3.00% for the three months ended June 30, 2026. The net interest margin, on a tax-equivalent basis, increased five basis points from 2.97% for the three months ended March 31, 2026, to 3.02% for the three months ended June 30, 2026.

Stock Repurchase Program

On April 22, 2025, the Board of Directors authorized the 2025 Repurchase Plan (“2025 Plan”), pursuant to which the Company may repurchase up to 1.0 million shares of its common stock, or approximately 4.8%, of the Company’s then-outstanding shares of common stock. During the three months ended June 30, 2026, the Company repurchased 195,000 shares of its common stock at an average price per share of $13.80. For the six months ended June 30, 2026, the Company repurchased 381,000 shares of its common stock at an average price per share of $13.64. As of June 30, 2026, there were 491,465 shares of common stock available for repurchase under the 2025 Plan.

The repurchase of shares under the 2025 Plan is administered through an independent broker. The shares of common stock repurchased under the 2025 Plan have been and will continue to be purchased from time to time at prevailing market prices, through open market or privately negotiated transactions, or otherwise, depending upon market conditions. There is no guarantee as to the exact number, or value, of shares that will be repurchased by the Company, and the Company may discontinue repurchases at any time that the Company’s management (“Management”) determines additional repurchases are not warranted. The timing and amount of additional share repurchases under the 2025 Plan will depend on a number of factors, including the Company’s stock price performance, ongoing capital planning considerations, general market conditions, and applicable legal requirements.

Book Value and Tangible Book Value

The Company’s book value per share was $12.39 at June 30, 2026, compared to $12.16 at December 31, 2025, while tangible book value per share, a non-GAAP financial measure, increased $0.23, or 2.0%, from $11.49 at December 31, 2025, to $11.72 at June 30, 2026. See pages 19-21 for the related tangible book value calculation and a reconciliation of GAAP to non-GAAP financial measures.

Building Sale

Subsequent to the end of the reporting period, on July 10, 2026, the Company successfully completed the sale of its two buildings located at 219 and 229 Exchange Street, Chicopee, Massachusetts to the City of Chicopee. The transaction resulted in a total gross cash consideration of $2.4 million and a preliminary estimated gain on sale of approximately $717,000, which will be recognized in the consolidated financial statements for the third quarter of 2026. The staff was reassigned from this Chicopee facility to other locations within the organization which will yield operational efficiencies.

Net Income for the Three Months Ended June 30, 2026 Compared to the Three Months Ended March 31, 2026

For the three months ended June 30, 2026, the Company reported net income of $3.6 million, or $0.18 per diluted share, compared to $4.8 million, or $0.24 per diluted share, for the three months ended March 31, 2026. Net interest income increased $496,000, or 2.6%, the provision for credit losses increased $1.5 million, non-interest income decreased $39,000, or 1.1%, and non-interest expense increased $347,000, or 2.2%. Return on average assets and return on average equity were 0.53% and 5.84%, respectively, for the three months ended June 30, 2026, compared to 0.71% and 7.77%, respectively, for the three months ended March 31, 2026.

Net Interest Income and Net Interest Margin

Net interest income, our primary driver of revenues, increased $496,000, or 2.6%, from $18.8 million for the three months ended March 31, 2026, to $19.3 million for the three months ended June 30, 2026. The increase in net interest income was due to an increase in interest and dividend income of $500,000, or 1.7%, driven by higher interest income from loans. During the same period, interest expense on deposits increased $380,000, or 3.8%, which was offset by a decrease in interest expense on borrowings of $376,000, or 25.4%.

During the three months ended June 30, 2026, the net interest margin was 3.00%, compared to 2.95% for the three months ended March 31, 2026. The net interest margin, on a tax-equivalent basis, was 3.02% for the three months ended June 30, 2026, compared to 2.97% for the three months ended March 31, 2026. The average yield on interest-earning assets, without the impact of tax-equivalent adjustments, increased three basis points from 4.74% for the three months ended March 31, 2026, to 4.77% for the three months ended June 30, 2026. The average loan yield, without the impact of tax-equivalent adjustments, increased three basis points from 5.09% for the three months ended March 31, 2026, to 5.12% for the three months ended June 30, 2026. During the same period, average loans increased $3.3 million, or 0.2%, and average short-term investments increased $1.2 million, or 4.8%, while average securities decreased $8.1 million, or 2.2%, and average other investments decreased $1.4 million, or 9.1%.

For the three months ended June 30, 2026, the average cost of core deposits, which the Company defines as all deposits except time deposits, was 1.03%, compared to 1.02% for the three months ended March 31, 2026. The average cost of time deposits decreased three basis points from 3.41% for the three months ended March 31, 2026, to 3.38% for the three months ended June 30, 2026. The average cost of borrowings, including subordinated debt, increased 40 basis points from 4.75% for the three months ended March 31, 2026, to 5.15% for the three months ended June 30, 2026. Average demand deposits, an interest-free source of funds, increased $4.6 million, or 0.8%, from $588.5 million, or 25.1% of total average deposits, for the three months ended March 31, 2026, to $593.1 million, or 24.9% of total average deposits, for the three months ended June 30, 2026. For the three months ended June 30, 2026, the average cost of total funds, including non-interest bearing accounts and borrowings, decreased two basis points to 1.86%.

Provision for (Reversal of) Credit Losses

The provision for credit losses was $1.6 million during the three months ended June 30, 2026, compared to $75,000, during the three months ended March 31, 2026. The increase in the provision for credit losses was primarily due to a partial charge-off of $1.8 million on a non-owner occupied commercial real estate participation loan relationship (“participation loan”) secured by an office building. The Company does not have any additional exposure to the borrower or guarantor involved in the participation loan. In June 2026, the Company was notified by the lead bank of the participation loan that on June 4, 2026, the borrower filed for Chapter 11 Bankruptcy (“Bankruptcy Filing”). Immediately prior to notification of the Bankruptcy Filing, the Company’s 40% portion of the participation loan had a carrying value of $3.4 million and the borrower was then current with its scheduled payments.

During the three months ended June 30, 2026, due to the Bankruptcy Filing, the Company downgraded the participation loan to substandard, placed the loan on nonaccrual status and recognized a partial charge-off of $1.8 million. At June 30, 2026, the Company’s portion of the remaining carrying value of the participation loan was $1.6 million, down from the $3.5 million carrying value at March 31, 2026. The Company currently expects full recovery of the remaining carrying value through the anticipated sale of the underlying collateral. Management continues to monitor macroeconomic variables related to increasing interest rates, tariffs, inflation and concerns of an economic downturn, and believes it is appropriately reserved for the current economic environment.

During the three months ended June 30, 2026, the Company recorded net charge-offs of $1.8 million, or 0.33% of average loans, on an annualized basis, compared to net charge-offs of $55,000, or 0.01% of average loans, on an annualized basis, for the three months ended March 31, 2026. The increase in net charge-offs during the three months ended June 30, 2026 was due to the $1.8 million charge-off of the participation loan discussed above.

Non-Interest Income

For the three months ended June 30, 2026, non-interest income of $3.4 million decreased $39,000, or 1.1%, from the three months ended March 31, 2026. During the three months ended March 31, 2026, non-interest income included the recognition of $449,000 in bank-owned life insurance (“BOLI”) death benefits. Excluding the BOLI death benefits, non-interest income increased $409,000, or 13.7%. Service charges and fees on deposits increased $291,000, or 13.7%, from $2.1 million for the three months ended March 31, 2026, to $2.4 million for the three months ended June 30, 2026. For the three months ended June 30, 2026, and the three months ended March 31, 2026, wealth management income totaled $389,000 and $390,000, respectively. During the same period, assets under management increased from $235.6 million at March 31, 2026, to $256.6 million at June 30, 2026, reflecting net investment appreciation and assets acquired.

Income from BOLI increased $59,000, or 12.4%, from the three months ended March 31, 2026, to $535,000 for the three months ended June 30, 2026. During the three months ended June 30, 2026, the Company reported unrealized gains on marketable equity securities of $47,000, compared to unrealized losses of $13,000 during the three months ended March 31, 2026.

Non-Interest Expense

For the three months ended June 30, 2026, non-interest expense increased $347,000, or 2.2%, to $16.4 million from the three months ended March 31, 2026. During the three months ended June 30, 2026, salaries and employee benefits increased $247,000, or 2.7%, primarily due to one additional day of payroll expense. Data processing expense increased $140,000, or 17.1%, professional fees increased $113,000, or 22.2%, software related expenses increased $23,000, or 3.3%, advertising expense increased $15,000, or 3.4%, and other non-interest expense increased $115,000, or 9.1%. These increases were partially offset by a decrease in occupancy expense of $243,000, or 15.6%, from the three months ended March 31, 2026. During the three months ended March 31, 2026, occupancy expense included $240,000 in snow removal expense. The Company did not have a comparable expense during the three months ended June 30, 2026. Furniture and equipment expense decreased $29,000, or 6.7%, debit card processing and ATM network costs decreased $19,000, or 2.9%, and FDIC insurance expense decreased $15,000, or 3.8%.

For the three months ended June 30, 2026, and the three months ended March 31, 2026, the efficiency ratio was 72.0% and 71.9%, respectively. For the three months ended June 30, 2026, the adjusted efficiency ratio, a non-GAAP financial measure, was 72.2% compared to 73.4% for the three months ended March 31, 2026. See pages 19-21 for the related efficiency ratio and adjusted efficiency ratio calculations and a reconciliation of GAAP to non-GAAP financial measures.

Income Tax Provision

Income tax expense for the three months ended June 30, 2026 was $1.2 million, with an effective tax rate of 25.1%, compared to $1.4 million, with an effective tax rate of 22.6%, for the three months ended March 31, 2026.

Net Income for the Three Months Ended June 30, 2026 Compared to the Three Months Ended June 30, 2025

The Company reported a decrease in net income of $992,000, or 21.6%, from $4.6 million, or $0.23 per diluted share, for the three months ended June 30, 2025, to $3.6 million, or $0.18 per diluted share, for the three months ended June 30, 2026. Net interest income increased $1.7 million, or 9.5%, provision for credit losses increased $2.2 million, non-interest income decreased $17,000, or 0.5%, and non-interest expense increased $699,000, or 4.5%. Return on average assets and return on average equity were 0.53% and 5.84%, respectively, for the three months ended June 30, 2026, compared to 0.69% and 7.76%, respectively, for the three months ended June 30, 2025.

Net Interest Income and Net Interest Margin

Net interest income increased $1.7 million, or 9.5%, to $19.3 million, for the three months ended June 30, 2026, from $17.6 million for the three months ended June 30, 2025. The increase in net interest income was due to an increase in interest and dividend income of $1.2 million, or 3.9%, and a decrease in interest expense of $510,000, or 4.3%. During the three months ended June 30, 2026, and the three months ended June 30, 2025, the Company recorded prepayment penalties related to payoffs in the commercial real estate portfolio of $82,000 and $425,000, respectively. Excluding the prepayment penalties, net interest income increased $2.0 million, or 11.7%. The increase in interest and dividend income was primarily due to an increase in average loans of $108.6 million, or 5.2%, and an increase of seven basis points in the average loan yield, without the impact of tax-equivalent adjustments, from the three months ended June 30, 2025 to the three months ended June 30, 2026.

The net interest margin increased 20 basis points from 2.80% for the three months ended June 30, 2025 to 3.00% for the three months ended June 30, 2026. The net interest margin, on a tax-equivalent basis, increased 20 basis points from 2.82% for the three months ended June 30, 2025 to 3.02% for the three months ended June 30, 2026. Excluding the prepayment penalties discussed above, the net interest margin increased 25 basis points from 2.73% for the three months ended June 30, 2025 to 2.98%, for the three months ended June 30, 2026.

The average yield on interest-earning assets, without the impact of tax-equivalent adjustments, increased eight basis points from 4.69% for the three months ended June 30, 2025 to 4.77%, for the three months ended June 30, 2026. The average loan yield, without the impact of tax-equivalent adjustments, increased seven basis points from 5.05% for the three months ended June 30, 2025, to 5.12% for the three months ended June 30, 2026. During the three months ended June 30, 2026, average interest-earning assets increased $55.9 million, or 2.2%, to $2.6 billion, primarily due to an increase in average loans of $108.6 million, or 5.2%, partially offset by a decrease in average short-term investments, consisting of cash and cash equivalents, of $32.6 million, or 55.6%, and a decrease in average securities of $19.2 million, or 5.1%.

The average cost of total funds, including non-interest bearing accounts and borrowings, decreased 12 basis points from 1.98% for the three months ended June 30, 2025, to 1.86% for the three months ended June 30, 2026. The average cost of core deposits, which the Company defines as all deposits except time deposits, increased two basis points from 1.01% for the three months ended June 30, 2025, to 1.03% for the three months ended June 30, 2026. The average cost of time deposits decreased 31 basis points from 3.69% for the three months ended June 30, 2025, to 3.38% for the three months ended June 30, 2026. The average cost of borrowings, including subordinated debt, increased 11 basis points from 5.04% for the three months ended June 30, 2025, to 5.15%, for the three months ended June 30, 2026. Average demand deposits, an interest-free source of funds, increased $20.3 million, or 3.5%, from $572.8 million, or 24.9% of total average deposits, for the three months ended June 30, 2025, to $593.1 million, or 24.9% of total average deposits, for the three months ended June 30, 2026.

Provision for (Reversal of) Credit Losses

The Company recorded a provision for credit losses of $1.6 million during the three months ended June 30, 2026, compared to a reversal of credit losses of $615,000 during the three months ended June 30, 2025. The increase in the provision for credit losses was primarily due to the charge-off of $1.8 million on the participation loan discussed above. The reversal of credit losses, during the three months ended June 30, 2025, was a result of a recovery in the amount of $624,000 on a charged-off commercial relationship acquired on October 21, 2016 from Chicopee Bancorp, Inc. Management continues to monitor macroeconomic variables related to increasing interest rates, tariffs, inflation and concerns of an economic downturn, and believes it is appropriately reserved for the current economic environment.

The Company recorded net charge-offs of $1.8 million, or 0.33% of average loans, on an annualized basis, for the three months ended June 30, 2026, compared to net recoveries of $585,000, or 0.11% of average loans, on an annualized basis, for the three months ended June 30, 2025. The increase in net charge-offs during the three months ended June 30, 2026 was due to the $1.8 million charge-off of the participation loan discussed above.

Non-Interest Income

Non-interest income decreased $17,000, or 0.5%, to $3.4 million for the three months ended June 30, 2026 from $3.4 million for the three months ended June 30, 2025. During the three months ended June 30, 2026, service charges and fees on deposits increased $187,000, or 8.4%, wealth management income increased $96,000, or 32.8%, income from BOLI increased $19,000, or 3.7%, from $516,000 for the three months ended June 30, 2025, to $535,000 for the three months ended June 30, 2026. During the three months ended June 30, 2026 and the three months ended June 30, 2025, the Company reported unrealized gains on marketable equity securities of $47,000 and $25,000, respectively. During the three months ended June 30, 2025, the Company reported a gain of $243,000 on non-marketable equity investments and did not have comparable income during the three months ended June 30, 2026. During the three months ended June 30, 2025, the Company reported $95,000 in other income from loan-level swap fees on commercial loans and did not have comparable income during the three months ended June 30, 2026.

Non-Interest Expense

For the three months ended June 30, 2026, non-interest expense increased $699,000, or 4.5%, to $16.4 million from $15.7 million for the three months ended June 30, 2025. The increase in non-interest expense was due to an increase in salaries and benefits of $645,000, or 7.3%, an increase in software related expense of $67,000, or 10.4%, an increase in occupancy expense of $54,000, or 4.3%, an increase in other non-interest expense of $31,000, or 2.3%, an increase in data processing expense of $28,000, or 3.0%, and an increase in advertising and marketing expense of $14,000, or 3.2%. These increases were partially offset by a decrease in furniture and equipment expense of $87,000, or 17.7%, a decrease in debit card and ATM processing fees of $30,000, or 4.5%, and a decrease in FDIC insurance expense of $22,000, or 5.5%.

For the three months ended June 30, 2026, the efficiency ratio was 72.0%, compared to 74.4% for the three months ended June 30, 2025. For the three months ended June 30, 2026, the adjusted efficiency ratio, a non-GAAP financial measure, was 72.2% compared to 75.3% for the three months ended June 30, 2025. The decreases in the efficiency ratio and the adjusted efficiency ratio were driven by an increase in total revenues, defined as the sum of net interest income and non-interest income, during the three months ended June 30, 2026, compared to the three months ended June 30, 2025. See pages 19-21 for the related ratio calculation and a reconciliation of GAAP to non-GAAP financial measures.

Income Tax Provision

Income tax expense for the three months ended June 30, 2026, was $1.2 million, or an effective tax rate of 25.1%, compared to $1.4 million, or an effective tax rate of 23.7%, for the three months ended June 30, 2025. The increase is due to higher projected pre-tax income for the twelve months ended December 31, 2026.

Net Income for the Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025

For the six months ended June 30, 2026, the Company reported net income of $8.4 million, or $0.42 per diluted share, compared to $6.9 million, or $0.34 per diluted share, for the six months ended June 30, 2025. Net interest income increased $5.0 million, or 15.0%, provision for credit losses increased $2.1 million, non-interest income increased $657,000, or 10.6%, and non-interest expense increased $1.5 million, or 4.9%, during the same period. Return on average assets and return on average equity were 0.62% and 6.80% for the six months ended June 30, 2026, respectively, compared to 0.52% and 5.87% for the six months ended June 30, 2025, respectively.

Net Interest Income and Net Interest Margin

During the six months ended June 30, 2026, net interest income increased $5.0 million, or 15.0%, to $38.1 million, compared to $33.2 million for the six months ended June 30, 2025. The increase in net interest income was due to an increase in interest and dividend income of $3.0 million, or 5.2%, driven by higher interest income from loans, and a decrease in interest expense of $2.0 million, or 7.9%. The decrease in interest expense was due to a decrease in interest expense on deposits of $1.5 million, or 6.8%, and a decrease in interest expense on borrowings of $480,000, or 15.7%.

The net interest margin increased 33 basis points from 2.64%, for the six months ended June 30, 2025, to 2.97% for the six months ended June 30, 2026. The net interest margin, on a tax-equivalent basis, increased 33 basis points from 2.66%, for the six months ended June 30, 2025, to 2.99% for the six months ended June 30, 2026. During the six months ended June 30, 2026, and the six months ended June 30, 2025, the Company recorded $98,000 and $425,000, respectively, in prepayment penalties related to payoffs in the commercial portfolio. Excluding the prepayment penalties, the net interest margin increased 35 basis points from 2.61% for the six months ended June 30, 2025, to 2.96% for the six months ended June 30, 2026.

The average yield on interest-earning assets, without the impact of tax-equivalent adjustments, was 4.76% for the six months ended June 30, 2026, compared to 4.63% for the six months ended June 30, 2025. The average loan yield, without the impact of tax-equivalent adjustments, was 5.11% for the six months ended June 30, 2026, compared to 4.97% for the six months ended June 30, 2025. During the six months ended June 30, 2026, average interest-earning assets increased $58.5 million, or 2.3%, to $2.6 billion, from the same period in 2025. The increase was primarily due to an increase in average loans of $110.8 million, or 5.3%, partially offset by a decrease in average short-term investments, consisting of cash and cash equivalents, of $41.8 million, or 62.2%, and a decrease in average securities of $10.3 million, or 2.8%.

The average cost of total funds, including non-interest bearing accounts and borrowings, decreased 20 basis points from 2.07% for the six months ended June 30, 2025, to 1.87% for the six months ended June 30, 2026. The average cost of core deposits, which the Company defines as all deposits except time deposits, decreased three basis points to 1.02% for the six months ended June 30, 2026, from 1.05% for the six months ended June 30, 2025. The average cost of time deposits decreased 50 basis points from 3.90% for the six months ended June 30, 2025, to 3.40% for the six months ended June 30, 2026. The average cost of borrowings, including subordinated debt, decreased 13 basis points from 5.04% for the six months ended June 30, 2025, to 4.91% for the six months ended June 30, 2026. Average demand deposits, an interest-free source of funds, increased $19.6 million, or 3.4%, from $571.2 million, or 24.8% of total average deposits, for the six months ended June 30, 2025, to $590.8 million, or 25.0% of total average deposits, for the six months ended June 30, 2026.

Provision for (Reversal of) Credit Losses

The Company recorded a provision for credit losses of $1.6 million during the six months ended June 30, 2026, compared to a reversal of credit losses of $473,000 during the six months ended June 30, 2025. The increase in the provision for credit losses was primarily due to the partial charge-off of $1.8 million on the participation loan discussed above. The provision for credit losses was also determined by a number of factors: the continued overall strong credit performance of the Company’s diversified loan portfolio, changes in the loan portfolio mix and Management’s consideration of existing economic conditions and the economic outlook from the Federal Reserve’s actions to control inflation. Management continues to monitor macroeconomic variables related to increasing interest rates, tariffs, inflation and concerns of an economic downturn, and believes it is appropriately reserved for the current economic environment.

The Company recorded net charge-offs of $1.8 million, or 0.34% of average loans, on an annualized basis, for the six months ended June 30, 2026, as compared to net recoveries of $556,000, or 0.11%, of average loans, on an annualized basis, for the six months ended June 30, 2025. The increase in net charge-offs during the six months ended June 30, 2026 was due to the $1.8 million charge-off of the participation loan discussed above. During the six months ended June 30, 2025, the Company recorded a recovery of $624,000 on a previously charged-off commercial relationship acquired on October 21, 2016 from Chicopee Bancorp, Inc.

Non-Interest Income

For the six months ended June 30, 2026, non-interest income increased $657,000, or 10.6%, from $6.2 million during the six months ended June 30, 2025, to $6.8 million. During the six months ended June 30, 2026, non-interest income included the recognition of $450,000 in BOLI death benefits. Excluding the BOLI death benefits, non-interest income increased $207,000, or 3.4%. During the same period, service charges and fees on deposits increased $295,000, or 6.9%, wealth management income increased $225,000, or 40.6%, and income from BOLI increased $22,000, or 2.2%.

During the six months ended June 30, 2025, the Company reported a gain of $243,000 on non-marketable equity investments and did not have comparable income during the six months ended June 30, 2026. During the six months ended June 30, 2025, the Company reported $95,000 in other income from loan-level swap fees on commercial loans and did not have comparable income during the six months ended June 30, 2026. During the six months ended June 30, 2026, the Company reported unrealized gains on marketable equity securities of $34,000, compared to unrealized gains on marketable equity securities of $20,000 during the six months ended June 30, 2025. Gains and losses from the investment portfolio vary from quarter to quarter based on market conditions, as well as the related yield curve and valuation changes. During the six months ended June 30, 2025, the Company reported $11,000 in gains from mortgage banking activities and did not have comparable gains or losses during the six months ended June 30, 2026.

Non-Interest Expense

For the six months ended June 30, 2026, non-interest expense increased $1.5 million, or 4.9%, to $32.4 million, compared to $30.8 million for the six months ended June 30, 2025. The increase in non-interest expense was primarily due to an increase in salaries and employee benefits of $1.5 million, or 8.5%, due to annual merit increases and increases in health insurance benefits. During the same period, occupancy expense increased $204,000, or 7.6%, due to an increase in snow removal costs of $111,000, or 76.6%. Software related expenses increased $97,000, or 7.4%, debit card and ATM processing fees increased $56,000, or 4.5%, and advertising expense increased $27,000, or 3.1%. These increases were partially offset by a decrease in furniture and equipment expense of $141,000, or 14.4%, a decrease in FDIC insurance expense of $61,000, or 7.3%, a decrease in other non-interest expense of $49,000, or 1.8%, a decrease in professional fees of $38,000, or 3.3%, and a decrease in data processing expense of $33,000, or 1.8%.

For the six months ended June 30, 2026, the efficiency ratio was 72.0% compared to 78.4% for the six months ended June 30, 2025. For the six months ended June 30, 2026, the adjusted efficiency ratio, a non-GAAP financial measure, was 72.7%, compared to 78.9% for the six months ended June 30, 2025. The decreases in the efficiency ratio and the adjusted efficiency ratio were driven by higher revenues, defined as the sum of net interest income and non-interest income, during the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The adjusted efficiency ratio is a non-GAAP measure. See pages 19-21 for the related efficiency ratio calculation and a reconciliation of GAAP to non-GAAP financial measures.

Income Tax Provision

Income tax expense for the six months ended June 30, 2026, was $2.6 million, representing an effective tax rate of 23.7%, compared to $2.1 million, representing an effective tax rate of 23.2%, for the six months ended June 30, 2025. The increase is due to higher projected pre-tax income for the twelve months ended December 31, 2026.

Balance Sheet

At June 30, 2026, total assets were $2.7 billion, a decrease of $4.2 million, or 0.1%, from December 31, 2025. The decrease in total assets was primarily due to a decrease in investment securities of $12.2 million, or 3.4%, and a decrease in cash and cash equivalents of $2.7 million, or 6.7%, partially offset by an increase in total loans of $9.9 million, or 0.5%.

Investments

At June 30, 2026, the investment securities portfolio totaled $353.0 million, or 12.9% of total assets, compared to $365.2 million, or 13.3% of total assets, at December 31, 2025. At June 30, 2026, the Company’s available-for-sale securities portfolio, recorded at fair market value, decreased $5.2 million, or 3.0%, from $175.8 million at December 31, 2025 to $170.6 million. The held-to-maturity securities portfolio, recorded at amortized cost, decreased $7.1 million, or 3.8%, from $188.8 million at December 31, 2025, to $181.7 million at June 30, 2026.

At June 30, 2026, the Company reported net unrealized losses on the available-for-sale securities portfolio of $22.9 million, or 11.8% of the amortized cost basis of the available-for-sale securities portfolio, compared to unrealized losses of $22.4 million, or 11.3% of the amortized cost basis of the available-for-sale securities at December 31, 2025. At June 30, 2026, the Company reported net unrealized losses on the held-to-maturity securities portfolio of $30.5 million, or 16.8% of the amortized cost basis of the held-to-maturity securities portfolio, compared to $30.3 million, or 16.1% of the amortized cost basis of the held-to-maturity securities portfolio at December 31, 2025.

The securities in which the Company may invest are limited by regulation. Federally chartered savings banks have authority to invest in various types of assets, including U.S. Treasury obligations, securities of various government-sponsored enterprises, mortgage-backed securities, certain certificates of deposit of insured financial institutions, repurchase agreements, overnight and short-term loans to other banks, corporate debt instruments and marketable equity securities. The securities, with the exception of $13.1 million in corporate bonds, are issued by the United States government or government-sponsored enterprises and are therefore either explicitly or implicitly guaranteed as to the timely payment of contractual principal and interest. These positions are deemed to have no credit impairment, therefore, the disclosed unrealized losses within the securities portfolio relate primarily to changes in prevailing interest rates. In all cases, price improvement in future periods will be realized as the issuances approach maturity.

Management regularly reviews the portfolio for securities in an unrealized loss position. At June 30, 2026, and December 31, 2025, the Company did not record any credit impairment charges on its securities portfolio and attributed the unrealized losses primarily due to fluctuations in general interest rates or changes in expected prepayments and not due to credit quality. The primary objective of the Company’s investment portfolio is to provide liquidity and to secure municipal deposit accounts while preserving the safety of principal. The available-for-sale and held-to-maturity portfolios are both eligible for pledging to the Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) as collateral for borrowings. The portfolios are comprised of high-credit quality investments and both portfolios generated cash flows monthly from interest, principal amortization and payoffs, which supports the Bank's objective to provide liquidity.

Total Loans

Total loans increased $9.9 million, or 0.5%, from $2.2 billion, or 79.7% of total assets, at December 31, 2025, to $2.2 billion, or 80.2% of total assets, at June 30, 2026. The increase in total loans was primarily driven by an increase in residential real estate loans, including home equity loans, of $31.7 million, or 3.7%, an increase in commercial and industrial loans of $12.5 million, or 5.6%, partially offset by a decrease in commercial real estate loans of $33.7 million, or 3.1%. The decrease in commercial real estate loans was primarily driven by an increased level of prepayments in the commercial real estate loan portfolio and the partial charge-off of $1.8 million on the participation loan discussed above. Non-owner occupied commercial real estate loans decreased $27.3 million, or 3.0%, to $883.0 million, or 40.3% of total loans and owner-occupied commercial real estate loans decreased $6.5 million, or 3.4%, to $182.4 million, or 8.3% of total loans.

Credit Quality

Total delinquency was $4.7 million, or 0.21% of total loans, at June 30, 2026, compared to $3.1 million, or 0.14% of total loans at December 31, 2025. Of the $4.7 million in past due loans, 95.1% are residential real estate loans. At June 30, 2026, nonaccrual loans totaled $7.8 million, or 0.35% of total loans, compared to $5.2 million, or 0.24% of total loans, at December 31, 2025. The increase in nonaccrual loans at June 30, 2026 was primarily attributable to the participation loan discussed above, which was placed on nonaccrual status following the borrower’s Bankruptcy Filing. At June 30, 2026, and December 31, 2025, there were no loans 90 or more days past-due and still accruing interest. Total nonperforming assets, defined as nonaccrual loans and other real estate owned, totaled $7.8 million, or 0.28% of total assets, at June 30, 2026, compared to $5.2 million, or 0.19% of total assets, at December 31, 2025. At June 30, 2026, and December 31, 2025, the Company did not have any other real estate owned.

At June 30, 2026, the allowance for credit losses was $20.2 million, or 0.92% of total loans and 260.2% of nonaccrual loans, compared to $20.3 million, or 0.93% of total loans and 393.2% of nonaccrual loans, at December 31, 2025. The decrease in the allowance for credit losses as a percentage of nonaccrual loans was due to the increase in nonaccrual loans from $5.2 million at December 31, 2025, to $7.8 million at June 30, 2026. Management continues to closely monitor the loan portfolio for any signs of weakness due to the speculation that commercial real estate values may deteriorate as the market continues to adjust to higher vacancies and higher interest rates as well as any signs of deterioration in the borrower’s financial condition. Management continues to proactively take steps to mitigate risk in the loan portfolio.

At June 30, 2026, total criticized loans, defined as special mention and substandard loans, totaled $63.9 million, or 2.9% of total loans, compared to $39.7 million, or 1.8% of total loans, at December 31, 2025. Loans designated special mention, which are not considered classified, increased $23.1 million, from $17.2 million, or 0.8% of total loans, at December 31, 2025, to $40.3 million, or 1.8% of total loans, at June 30, 2026. During the same period, substandard loans increased $1.1 million, or 4.9%, to $23.6 million, or 1.1% of total loans.

Of the $40.3 million in loans designated special mention at June 30, 2026, $17.8 million, or 44.2%, are commercial and industrial loans, and $22.5 million, or 55.8%, are commercial real estate loans. Of the $23.6 million in loans categorized substandard at June 30, 2026, $7.2 million, or 30.5%, are commercial and industrial loans, $10.5 million, or 44.5%, are commercial real estate loans, and $5.9 million, or 25.0%, are residential real estate loans. Of the total $63.9 million in criticized loans at June 30, 2026, 95.6% are current and paying as agreed.

The increase in special mention loans from December 31, 2025, to June 30, 2026, resulted from the downgrade of two commercial relationships totaling $21.5 million, from pass risk ratings to special mention. The increase in substandard loans from December 31, 2025, to June 30, 2026, resulted from the downgrade of the participation loan with a carrying value of $1.6 million, net of the $1.8 million charge-off, discussed above.

Our commercial real estate portfolio is comprised of diversified property types and primarily within our geographic footprint. At June 30, 2026, the commercial real estate portfolio totaled $1.1 billion and represented 48.6% of total loans. Of the $1.1 billion, $883.0 million, or 82.9% of the commercial real estate portfolio, was categorized as non-owner occupied commercial real estate and represented 317.6% of the Bank’s total risk-based capital. More details on the diversification of the loan portfolio are available in the supplementary earnings presentation.

Deposits

At June 30, 2026, total deposits were $2.4 billion and increased $40.5 million, or 1.7%, from December 31, 2025. Core deposits, which the Company defines as all deposits except time deposits, decreased $5.3 million, or 0.3%, from $1.7 billion, or 70.8% of total deposits, at December 31, 2025, to $1.7 billion, or 69.4% of total deposits, at June 30, 2026. Non-interest-bearing deposits increased $6.1 million, or 1.0%, to $600.6 million, and represented 25.0% of total deposits, money market accounts increased $2.7 million, or 0.4%, to $718.4 million, and savings accounts increased $6.6 million, or 3.5%, to $193.2 million. These increases were partially offset by a decrease in interest-bearing checking accounts of $20.7 million, or 11.9%, to $153.5 million.

At June 30, 2026, time deposits increased $45.8 million, or 6.6%, from $689.9 million at December 31, 2025, to $735.7 million. The Company did not have brokered time deposits at June 30, 2026 and December 31, 2025. We continue our disciplined and focused approach to core relationship management and customer outreach to meet funding requirements and liquidity needs, with an emphasis on retaining a long-term core customer relationship base by competing for and retaining deposits in our local market.

At June 30, 2026, the Bank’s uninsured deposits totaled $722.7 million, or 30.1% of total deposits, compared to $697.6 million, or 29.5% of total deposits, at December 31, 2025. Uninsured amounts were based on the portion of customer account balances that exceeded the FDIC limit of $250,000. At June 30, 2026, there was one consumer deposit relationship, which is our largest deposit relationship, with a household concentration comprising 5.8% of total deposits, compared to 5.0% of total deposits at December 31, 2025. The next largest deposit relationship is to a local municipality with a concentration of 1.3% of total deposits at June 30, 2026, and 1.9% at December 31, 2025.

FHLB and Subordinated Debt

At June 30, 2026, total borrowings decreased $43.5 million, or 41.0%, from $106.1 million at December 31, 2025, to $62.6 million. At June 30, 2026, short-term borrowings increased $4.5 million, or 33.7%, to $17.7 million, compared to $13.3 million at December 31, 2025. At June 30, 2026, long-term borrowings decreased $48.0 million, or 65.8%, to $25.0 million from $73.0 million at December 31, 2025.

At June 30, 2026, and December 31, 2025, borrowings also consisted of $19.8 million in fixed-to-floating rate subordinated notes (“Notes”). On April 20, 2021, the Company issued $20.0 million in aggregate principal amount of fixed-to-floating rate Notes due on May 1, 2031. On May 1, 2026, the Company’s Notes converted from an annual fixed rate of 4.875% to a floating rate equal to the 90-day average secured overnight financing rate (“SOFR”) plus 412 basis points. The Company has the ability to call 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 System (the “Federal Reserve”). The Notes were designed to qualify as Tier 2 capital under the Federal Reserve’s capital adequacy regulations.

As of June 30, 2026, the Company had $547.5 million of additional borrowing capacity at the FHLB, $392.7 million of additional borrowing capacity under the FRB Discount Window and $25.0 million of other unsecured lines of credit with correspondent banks.

Capital

At June 30, 2026, shareholders’ equity was $248.3 million, or 9.1% of total assets, compared to $247.6 million, or 9.1% of total assets, at December 31, 2025. The change was primarily attributable to net income of $8.4 million, partially offset by cash dividends paid of $2.8 million and the repurchase of 381,000 shares at a cost of $5.2 million. At June 30, 2026, total shares outstanding were 20,045,872. The Company’s regulatory capital ratios continue to be strong and in excess of regulatory minimum requirements to be considered well-capitalized as defined by regulators and internal Company targets.

Dividends

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

About Western New England Bancorp, Inc.

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

WESTERN NEW ENGLAND BANCORP, INC. AND SUBSIDIARIES

Other Data

(Dollars in thousands, except per share data)

(Unaudited)

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The following table sets forth the information relating to our average balances and net interest income for the three months ended June 30, 2026, March 31, 2026 and June 30, 2025 and reflects the average yield on interest-earning assets and average cost of interest-bearing liabilities for the periods indicated.

The following tables set forth the information relating to our average balances and net interest income for the six months ended June 30, 2026 and 2025 and reflect the average yield on interest-earning assets and average cost of interest-bearing liabilities for the periods indicated.

Reconciliation of Non-GAAP to GAAP Financial Measures

The Company believes that certain non-GAAP financial measures provide information to investors that is useful in understanding its results of operations and financial condition. Because not all companies use the same calculation, this presentation may not be comparable to other similarly titled measures calculated by other companies. A reconciliation of these non-GAAP financial measures is provided below.