Western New England Bancorp, Inc. operates as the bank holding company for Westfield Bank that provides a full range of commercial and retail products and services, as well as wealth management financial products.
The bank is a full-service, community oriented financial institution. The bank conducts business through an additional freestanding and 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...
Western New England Bancorp, Inc. operates as the bank holding company for Westfield Bank that provides a full range of commercial and retail products and services, as well as wealth management financial products.
The bank is a full-service, community oriented financial institution. The bank conducts business through an additional freestanding and 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 bank also provides a variety of banking services including telephone and online banking, remote deposit capture, cash management services, overdraft facilities, night deposit services, and safe deposit facilities. As a member of the Federal Deposit Insurance Corporation (“FDIC”), the bank’s deposits are insured up to the maximum FDIC insurance coverage limits. The bank is also a member of the Federal Home Loan Bank of Boston (FHLB).
Subsidiary Activities.
Westfield Bank: The Company conducts its principal business activities through its wholly owned subsidiary Westfield Bank.
WFD Securities, Inc. (WFD): WFD is a Massachusetts chartered security corporation, for the primary purpose of holding qualified securities.
Westfield Bank has three wholly owned subsidiaries that are included in the Company’s consolidated financial statements:
Elm Street Securities Corporation (Elm): Elm is a Massachusetts-chartered security corporation, formed for the primary purpose of holding qualified securities.
WB Real Estate Holdings, LLC. (WB): WB is a Massachusetts-chartered limited liability company formed for the primary purpose of holding other real estate owned (OREO).
CSB Colts, Inc. (CSB Colts): CSB Colts is a Massachusetts-chartered security corporation, formed for the primary purpose of holding qualified securities.
Market Area
The bank’s primary lending and deposit market areas include all of Hampden County and Hampshire County in western Massachusetts and Hartford and Tolland Counties in northern Connecticut. The bank operates 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. The comopany operates full-service ATMs at its branch locations and has freestanding ATM locations in Holyoke, Southwick, Springfield, West Springfield and Westfield, Massachusetts. The bank also conducts business through an additional freestanding and 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. In addition, the company provides online banking services, including online deposit account opening and residential mortgage and consumer loan applications through its website at www.westfieldbank.com.
The markets served by the company’s branches are primarily suburban markets located in western Massachusetts and in northern Connecticut. Westfield, Massachusetts, is located near the intersection of U.S. Interstates 90 (the Massachusetts Turnpike) and 91. The company’s middle market and commercial real estate lending team is located in Springfield, the Pioneer Valley’s primary urban market. The Pioneer Valley of western Massachusetts encompasses the sixth largest metropolitan area in New England. The Springfield Metropolitan area covers a relatively diverse area ranging from densely populated urban areas, such as Springfield, to outlying rural areas. The company’s Financial Services Center in West Hartford serves as its Connecticut hub, housing employees across all commercial and retail lines of business. The company’s markets fall within New England’s Knowledge Corridor, an interstate partnership of regional economic development, planning, business, tourism and educational institutions that work together to advance the region’s economic progress.
A diversified mix of industry groups are concentrated in western Massachusetts and northern Connecticut, including manufacturing, health care, higher education, wholesale and retail trade and service. The economies of the company’s primary markets have benefited from the presence of large employers, such as Baystate Medical Center, Big Y World Class Markets, Center for Human Development, Holyoke Medical Center, MassMutual Financial Group, Mercy Medical Center/Trinity Health of New England, Mestek, Inc., MGM Springfield, Verizon and Westover Air Reserve Base in Massachusetts, and Aetna, Inc., Air National Guard, Collins Aerospace, Connecticut Children’s Medical Center, Hartford Financial Services Group, Hartford Hospital, Institute of Living, Kaman Aerospace Corporation, Lego Systems Inc., Talcott Resolution Life Insurance Company and Travelers Indemnity Company in Connecticut. Other employment and economic activity is provided by financial institutions, colleges and universities, hospitals, and a variety of wholesale and retail trade business. Our Hampden County market also enjoys a strong tourism business with attractions such as the Eastern States Exposition, which operates The Big E, the largest fair in the northeast, the Basketball Hall of Fame, MGM Springfield and Six Flags New England.
Lending Activities
The bank’s lending limit to any one borrower is subject to regulation by the OCC. The bank continually monitors its loan portfolio to review compliance with new and existing regulations.
The bank offers a variety of loan products to its customers, including residential and commercial real estate mortgage loans, commercial loans, and installment loans. The bank primarily extends loans to customers located within the company’s footprint.
The company’s primary lending focus is to generate high quality commercial loan relationships achieved through active business development efforts, long-term relationships with established commercial developers, community involvement, and focused marketing strategies. 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 individuals may include conventional residential mortgage loans, home equity loans and lines, residential construction loans on owner-occupied primary and secondary residences, and secured and unsecured personal loans and lines of credit. The company manages its loan portfolio to avoid concentration by industry, relationship size, and source of repayment to lessen its credit risk exposure.
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. During the course of their review, the third party examines a sample of loans, including new loans, existing relationships over certain dollar amounts and classified loans. The company’s internal residential origination and underwriting staff originate residential loans and are responsible for compliance with residential lending regulations, consumer protection and internal policy guidelines. The company’s internal compliance department monitors the residential loan origination activity for regulatory compliance.
Commercial Real Estate Loans and Commercial and Industrial Loans.
The company originates commercial real estate loans throughout its market area for the purpose of acquiring, developing, and refinancing commercial real estate where the property is the primary collateral securing the loan. These loans are typically secured by a variety of commercial and industrial property types, including one-to-four and multi-family apartment buildings, office, industrial, or mixed-use facilities, or other commercial properties, and are generally guaranteed by the principals of the borrower. Commercial real estate loans generally have repayment periods of approximately fifteen to thirty years. Variable interest rate loans in the commercial real estate loan portfolio have a variety of adjustment terms and underlying interest rate indices, and are generally fixed for an initial period before periodic rate adjustments begin.
Commercial construction loans may include the development of residential housing and condominium projects, the development of commercial and industrial use property, and loans for the purchase and improvement of raw land. These loans are secured in whole or in part by underlying real estate collateral and are generally guaranteed by the principals of the borrowers. Construction lenders work to cultivate long-term relationships with established developers. The company limits the amount of financing provided to any single developer for the construction of properties built on a speculative basis. Funds for construction projects are disbursed as pre-specified stages of construction are completed.
Commercial and industrial loans include revolving lines of credit, working capital loans, equipment financing and term loans. Commercial and industrial credits may be unsecured loans and lines to financially strong borrowers, loans secured in whole or in part by real estate unrelated to the principal purpose of the loan or secured by inventories, equipment, or receivables, and are generally guaranteed by the principals of the borrower.
Letters of credit are conditional commitments issued by the company to guarantee the financial obligation or performance of a customer to a third party. The company participates with other banks in the financing of certain commercial projects. In some cases, the company may act as the lead lender, originating and servicing the loans, but participating out a portion of the funding to other banks.
Residential Real Estate Loans.
The company originates and funds residential real estate loans, including first mortgages, home equity loans, and home equity lines, secured by one-to-four family residential properties primarily located in western Massachusetts and northern Connecticut.
These residential properties may serve as the borrower’s primary residence, or as vacation homes or investment properties. Residential mortgage loans may have terms of up to 30 years at either fixed or adjustable rates of interest. Fixed and adjustable rate residential mortgage loans are generally originated using secondary market underwriting and documentation standards. 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.
The company may retain or sell the servicing when selling the loans. The company is an approved servicer with Fannie Mae and an approved seller and servicer with Freddie Mac and the FHLB.
Home Equity Loans
The company originates home equity revolving loans and lines of credit for one-to-four family residential properties with maximum original loan-to-value ratios generally up to 85%.
Consumer Loans.
Consumer loans are generally originated at higher interest rates than residential and commercial real estate loans, but they also generally tend to have a higher credit risk than residential real estate loans because they are usually unsecured or secured by rapidly depreciable assets. The company offers a variety of consumer loans to retail customers in the communities we serve. Examples of the company’s consumer loans include automobile loans, spa and pool loans, collateral loans and personal lines of credit tied to deposit accounts to provide overdraft protection.
Commercial Real Estate Loans: Loans in this segment include commercial real estate, multi-family dwellings, owner-occupied commercial real estate and income producing investment properties, as well as commercial construction loans for commercial development projects throughout New England.
Residential Real Estate Loans: This portfolio segment consists of first mortgages, home equity loans, and home equity lines secured by one-to-four family residential properties. First mortgages may be underwritten to a maximum loan-to-value of 97% for owner-occupied homes, 90% for second homes and 85% for investment properties. Mortgages with loan-to-values greater than 80% require private mortgage insurance. Equity loans and lines are underwritten to 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 company’s loan policies. The overall health of the economy, including unemployment rates and housing pricing, will have an effect on the credit quality in this segment.
Commercial and Industrial Loans: Loans in this segment include commercial business loans and are generally secured by assignments of corporate assets and personal guarantees of the business owners. Repayment is expected from the cash flows of the business.
Consumer loans: Loans in this segment are both secured and unsecured and repayment is dependent on the credit quality of the individual borrower.
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. A broad selection of competitive retail deposit products are also offered, including interest-bearing and noninterest-bearing checking, money market and savings accounts, as well as time deposits and individual retirement accounts, with terms on time deposits ranging from three months to sixty months. As a member of the FDIC, the bank’s depositors are provided deposit protection up to the maximum FDIC insurance coverage limits.
Cash Management Services
In addition to the deposit products, 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
The company participates in the IntraFi Network which provides depositors with FDIC pass-through insurance. Depositors can open a reciprocal time deposit through the Certificate of Deposit Account Registry Service (CDARS) or an Insured Cash Sweep Service (ICS) account. The company uses CDARS and ICS to place client funds into time deposit accounts and money market accounts, respectively, into other participating banks.
Investment Portfolio
As of December 31, 2023, the company’s investment portfolio included government-sponsored enterprise obligations; state and municipal bonds; corporate bonds; government-sponsored mortgage-backed securities; and U.S. government guaranteed mortgage-backed securities.
Supervision and Regulation
The company is subject to the jurisdiction of the SEC and is subject to the disclosure and other regulatory requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, as administered by the SEC.
The bank is regulated by the Office of the Comptroller of the Currency (‘OCC’).
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. In addition, the Federal Reserve Board has enforcement authority over the company and its non-savings association subsidiaries.
Westfield Bank is organized as a federal savings association under the HOLA. The bank is subject to the supervision of, and to regular examination by, the OCC as its chartering authority and primary federal regulator. To a limited extent, the bank is also subject to the supervision and regulation of the FDIC as its deposit insurer. Financial products and services offered by the company and the bank are subject to federal consumer protection laws and implementing regulations promulgated by the Consumer Financial Protection Bureau (the ‘CFPB’).
The company and the bank are also subject to oversight by state attorneys general for compliance with state consumer protection laws. The bank’s deposits are insured by the FDIC up to the applicable deposit insurance limits in accordance with FDIC laws and regulations. The bank is a member of the FHLB and is subject to the rules and requirements of the FHLB. The subsidiaries of the company and the bank are subject to federal and state laws and regulations, including regulations of the FRB and the OCC, respectively.
The company is a savings and loan holding company as defined by the HOLA. The bank derives its lending and investment powers from the HOLA and its implementing regulations promulgated by the OCC.
The bank received a rating of ‘Outstanding’ on its most recent Community Reinvestment Act examination.
The company and the bank are subject to a number of federal and state laws designed to protect borrowers and promote fair lending. 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.
The deposits of the bank are insured up to applicable limits by the DIF of the FDIC. The bank is subject to deposit insurance assessments to maintain the DIF. The bank is a member of the FHLB.
The bank must also comply with the Customer Due Diligence Rule, which clarifies and strengthens the existing obligations for identifying new and existing customers and explicitly includes risk-based procedures for conducting ongoing customer due diligence. The company and the bank have in place a Bank Secrecy Act and Patriot Act compliance program and engage in limited transactions with foreign financial institutions or foreign persons.
History
The company was founded in 1853. The company was incorporated in 2006. The company was formerly known as Westfield Financial, Inc. and changed its name to Western New England Bancorp, Inc. in 2016.
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