What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-03-11 compared with 2021-03-11 · 430 added, 343 removed, 933 unchanged (45% of the section changed)

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As of December

31, 2020, the Bank had 25 branches and 25 free-standing automated teller machines (“ATMs”), and an additional 23 seasonal

or temporary ATMs, serving Hampden County and Hampshire County in western Massachusetts and northern Connecticut.

The Bank also

provides a variety of banking services including automated teller machines, 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

31, 2021, the Bank had twenty-five branches and seventeen freestanding automated teller machines (“ATMs”), and an

additional five seasonal or temporary ATMs.

The Bank also conducts business through an additional six freestanding and thirty

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.

All branch and ATM locations serve Hampden County and Hampshire County in western Massachusetts and Hartford

County and Tolland County in northern Connecticut.

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

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”).

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and West Hartford, Connecticut.

We operate full-service ATMs at our branch locations and we also have 25 free-standing ATM locations

in Chicopee, Holyoke, Ludlow, Southwick, Springfield, West Springfield and Westfield, Massachusetts and 23 traveling/seasonal

In addition, we provide online banking services, including online deposit account opening and residential mortgage and consumer

loan applications through our website at www.westfieldbank.com.

markets served by our branches are primarily suburban market areas located in western Massachusetts and in northern Connecticut.

Our middle market and commercial real estate lending team is located in Springfield, the Pioneer Valley’s primary urban

Westfield, Massachusetts, is located near the intersection of U.S.

We operate full-service ATMs at our branch locations and have 17 freestanding ATM locations in

Chicopee, Holyoke, Ludlow, Southwick, Springfield, West Springfield and Westfield, Massachusetts and 5 traveling/seasonal ATMs.

The Bank also conducts business through an additional six freestanding and thirty 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, we provide online

banking services, including online deposit account opening and residential mortgage and consumer loan applications through our

website at www.westfieldbank.com.

markets served by our branches are primarily suburban markets located in western Massachusetts and in northern Connecticut.

Massachusetts, is located near the intersection of U.S.

Interstates 90 (the Massachusetts Turnpike) and 91.

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.

diversified mix of industry groups also operate within Hampden and Hampshire County, including manufacturing, health care, higher

education, wholesale and retail trade and service.

The economy of our primary market area has benefited from the presence of large

employers such as Baystate Medical Center, Big Y World Class Supermarkets, University of Massachusetts, MassMutual Financial Group,

Berkshire Medical Center, Mercy Medical Center, MGM Springfield, Peter Pan Bus Lines, Westover Air Reserve Base, Westfield-Barnes

Regional Airport, Smith and Wesson, Inc.

and Yankee Candle Company.

Other employment and economic activity is provided by financial

institutions, nine other colleges and universities, eight other 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 called

the Big E, the largest fair in the northeast, the Basketball Hall of Fame, Six Flags New England and MGM.

Company faces significant competition to attract and retain customers within existing and neighboring geographic markets.

competition stems from national and larger regional banks, numerous local savings banks, commercial banks, cooperative banks and

credit unions which have a large presence in the region.

Competition for loans, deposits and cash management services, and investment

advisory assets also comes from other businesses that provide financial services, including consumer finance companies, mortgage

brokers and lenders, private lenders, insurance companies, securities brokerage firms, institutional mutual funds, registered

investment advisors, non-bank electronic payment and funding channels, internet-based banks and other financial intermediaries.

Our middle market

and commercial real estate lending team is located in Springfield, the Pioneer Valley’s primary urban market.

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.

Financial Services Center in West Hartford serves as our Connecticut hub, housing employees across all commercial and retail lines

Our 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.

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 our primary markets have benefited from

the presence of large employers such as Baystate Medical Center, Big Y World Class Markets, MassMutual Financial Group, Mercy

Medical Center/Trinity Health of New England, MGM Springfield and Westover Air Reserve Base in Massachusetts, and Air National

Guard, Collins Aerospace, Kaman Aerospace Corporation, Lego Systems Inc., Stanadyne LLC and Talcott Resolution Life Insurance

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.

Bank faces significant competition to attract and retain customers within existing and neighboring geographic markets.

This competition

stems from national and larger regional banks, numerous local savings banks, commercial banks, cooperative banks and credit unions

which have a large presence in the region.

Competition for loans, deposits and cash management services, and investment advisory

assets also comes from other businesses that provide financial services, including consumer finance companies, mortgage brokers

and lenders, private lenders, insurance companies, securities brokerage firms, institutional mutual funds, registered investment

advisors, non-bank electronic payment and funding channels, internet-based banks and other financial intermediaries.

expect competition to increase in the future as a result of legislative, regulatory and technological changes and the continuing

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June 30, 2021, 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 16 banks and thrifts with offices in Hampden County.

Capital Management

in Hampden County, which was the second largest market share out of the 16 banks and thrifts with offices in Hampden County.

remain focused on being a good corporate citizen and creating a culture where we prioritize providing an exceptional customer

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The Company believes that it has had and continues to have good employee relations.

human capital management strategy ensures we leverage the talent needed, not just for today, but also for our future.

Our employees

are the foundation of our success and are responsible for upholding our guiding principles, of integrity, trust, empathy, collaboration,

talent management strategy ensures we leverage the talent needed, not just for today, but also for our future.

Our employees are

the foundation of our success and are responsible for upholding our guiding principles of integrity, trust, empathy, collaboration,

work ethic, courage, inclusion and positive attitude.

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institutions that teach skills or knowledge relevant to the financial services industry.

Each year, we attract rising juniors

and seniors from colleges and universities across our footprint.

They work directly with business areas where they have the opportunity

to be assigned a position upon graduation.

Each year, we also attract rising juniors

and seniors from colleges and universities across our footprint who have the opportunity to be assigned a position with the Company

upon graduation.

and Diversity

Company strives to create an intentionally inclusive, diverse and thriving workplace where each person feels valued,

respected and understood.

The Company aims to maintain a workplace that presents a respectful,

productive environment for everyone and enables individuals to achieve their full potential.

At December 31, 2020, our

employees were representative of our commitment to recruit, develop, and retain diverse individuals,

wherein approximately 68% of our employees were women and 20% of our employees are either ethnic minorities, veterans,

or persons with disabilities.

We remain focused on bolstering our workforce through inclusive hiring and retention practices,

which we feel reflects and better serves our communities.

Company strives to create an intentionally inclusive, diverse and thriving workplace where each person feels valued, respected

and understood as well as a respectful, productive environment where everyone is encouraged to achieve their full potential.

December 31, 2021, our employees were representative of our commitment to recruit, develop, and retain diverse individuals, wherein approximately

65% of our employees were women and 21% of our employees are either ethnic minorities, veterans or persons with disabilities.

We remain focused on bolstering our workforce through inclusive hiring and retention practices, which we feel reflects and better

serves our communities.

and Safety/Well-Being

safety, health and wellness of our employees is considered a top priority.

The COVID-19 pandemic has presented a unique challenge

with regard to maintaining employee safety while continuing successful operations.

Through teamwork and the adaptability of our

employees, we were able to transition, over a short period of time, the substantial majority of our non-customer-facing employees

to effectively working from remote locations and ensuring a safely-distanced working environment for employees performing customer-facing

activities at banking and operational centers.

All employees have been asked not to come to work when they experience signs or

symptoms of a possible COVID-19 illness and have been provided additional paid time off to cover compensation during such absences.

On an ongoing basis, the Company promotes the health and wellness of its employees and striving to keep the employee portion of

health care premiums competitive with local competition.

Lending Activities.

The safety, health and wellness of our employees is considered a top priority.

The COVID-19 pandemic has presented a unique challenge with regard to maintaining employee safety while continuing successful operations.

All employees have returned to working in person;

however, when they experience signs or symptoms of a possible COVID-19 illness, they

have been asked not to come to work and test for COVID-19 as necessary.

We follow the Center for Disease Control (“CDC”) guidance

as to when employees may return to in-person work.

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’s loan portfolio totaled $1.9 billion, or 73.5% of total assets, at December 31, 2021, compared to $1.9

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The relationship is

primarily secured by commercial real estate located in Springfield, Massachusetts.

At December 31, 2020, this relationship was

performing in accordance with its original terms.

primarily secured by business assets and commercial real estate located in Agawam, Massachusetts.

At December 31, 2021, this relationship

was performing in accordance with its original terms.

Real Estate Loans and Commercial and Industrial Loans .

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or mixed-use facilities, or other commercial properties, and are generally guaranteed by the principals of the borrower.

real estate loans generally have repayment periods of approximately fifteen to twenty years.

real estate loans generally have repayment periods of approximately fifteen to thirty years.

Variable interest rate loans in the

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of one to three years.

At both December 31, 2020 and December 31, 2019, there was $103.3 million in commercial construction loans

included within commercial real estate loans.

At December 31, 2021 and December 31, 2020, there was $83.2 million and $103.3 million, respectively, in

commercial construction loans included within commercial real estate loans.

December 31, 2021, our total commercial and industrial loan portfolio totaled $226.7 million, or 12.2% of our total loans, with

commercial and industrial loans totaling $201.3 million, or 10.8% of total loans, and Paycheck Protection Program (“PPP”)

loans totaling $167.3 million at December 31, 2020.

This compares to commercial and industrial loans of $248.9 million, or 14.0%

of total loans, at December 31, 2019.

Commercial and industrial loans include seasonal 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.

Variable rate loans and lines in this

portfolio have interest rates that are periodically adjusted, with loans generally having fixed initial periods.

Commercial and

industrial loans have average repayment periods of one to seven years.

Our commercial and industrial loan portfolio does not have

any significant loan concentration by type of property or borrower.

loans totaling $25.3 million, or 1.4% of total loans.

This compares to our total commercial and industrial loan portfolio of $379.1

million, or 19.7% of total loans, at December 31, 2020, with commercial and industrial loans totaling $211.8 million, or 11.0%

of total loans, and PPP loans totaling $167.3 million, or 8.7% of total loans.

Commercial and industrial loans include seasonal

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

Variable rate loans and lines in this portfolio have interest rates that are periodically adjusted, with loans generally

having fixed initial periods.

Commercial and industrial loans have average repayment periods of one to seven years.

Our commercial

and industrial loan portfolio does not have any significant loan concentration by type of property or borrower.

largest concentration of commercial loans to an industry was to hotels and accommodation, which comprised approximately 6.8% of

the commercial loan portfolio as of December 31, 2021.

At December 31, 2021, our largest commercial and industrial loan relationship

was $24.2 million to a hardware merchant wholesaler.

The loan relationship is secured by business assets and real estate.

31, 2021, this relationship was performing according to its original terms.

a Preferred Lender with the Small Business Administration (“SBA”), the Company offered PPP loans through the March

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1.4% of total loans, at December 31, 2021.

largest concentration of commercial loans to an industry was to hotels and accommodation, which comprised approximately 5.5% of

the commercial loan portfolio inclusive of commercial and industrial owner-occupied real estate loans as of December 31, 2020.

At December 31, 2020, our largest commercial and industrial loan relationship was $22.9 million to a college.

The loan relationship

is secured by business assets and real estate.

At December 31, 2020, this relationship was performing according to its original

of credit are conditional commitments issued by the Company to guarantee the financial obligation or performance of a customer

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loans, and $604.7 million, or 31.4%, of total loans, respectively.

In 2020 and 2019, the Company did not purchase any residential

real estate loans.

Company originates and funds residential real estate loans secured by one-to-four family residential properties primarily located

in western Massachusetts and northern Connecticut.

The Company processes and underwrites all of its originations internally through

its Residential Loan Center located in Westfield, MA.

These residential properties may serve as the borrower’s primary residence,

or as vacation homes or investment properties.

Loans are originated in amounts up to 97% of the lesser of the appraised value

or purchase price of the property.

Private mortgage insurance is required on all loans with a loan-to-value ratios greater than

In addition, financing is provided for the construction of owner-occupied primary and secondary residences.

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.

The Company originates and funds residential real estate loans

secured by one-to-four family residential properties primarily located in western Massachusetts and northern Connecticut.

Company processes and underwrites all of its originations internally through its Residential Loan Center located in Westfield,

residential properties may serve as the borrower’s primary residence, or as vacation homes or investment properties.

are originated in amounts up to 97% of the lesser of the appraised value or purchase price of the property.

Private mortgage insurance

is required on all loans with a loan-to-value ratios greater than 80%.

In addition, financing is provided for the construction

of owner-occupied primary and secondary residences.

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.

on the current interest rate environment, management may elect to sell those fixed and adjustable rate residential mortgage loans

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with Fannie Mae, Freddie Mac and the FHLB.

In order to reduce interest rate risk, at December 31, 2020 and December 31, 2019,

the Company serviced $38.1 million and $48.2 million, respectively, in residential loans sold to the secondary market.

The servicing

rights will continue to be retained on all loans sold over the life of the loan.

The largest owner-occupied residential real estate

loan was $1.7 million and was performing according to its original terms as of December 31, 2020.

In order to reduce interest rate risk, during the twelve months ended December 31,

2021, the Company sold $59.7 million of fixed rate, low coupon residential real estate loans to the secondary market.

no loans sold during 2020.

At December 31, 2021 and December 31, 2020, the Company serviced $88.2 million and $38.1 million, respectively,

in residential loans sold to the secondary market.

The servicing rights will likely continue to be retained on all loans sold

over the life of the loan.

The largest owner-occupied residential real estate loan was $2.0 million and was performing according

to its original terms as of December 31, 2021.

Equity Loans.

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eligible borrowers meeting certain requirements, the line availability may be extended for an additional interest only period.

December 31, 2020, consumer loans totaled $5.2 million, or 0.2%, of total loans and $5.7 million, or 0.4%, of total loans, at

December 31, 2019.

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.

Management, however, believes that offering consumer loan products helps to expand and

create stronger ties to our existing customer base by increasing the number of customer relationships and providing cross-marketing

opportunities.

December 31, 2021 and December 31, 2020, consumer loans totaled $4.3 million, or 0.2%, of total loans and $5.2 million, or 0.2%,

of total loans, respectively.

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.

Management, however, believes that offering consumer loan products

helps to expand and create stronger ties to our existing customer base by increasing the number of customer relationships and

providing cross-marketing opportunities.

We offer a variety of consumer loans to retail customers in the communities we serve.

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.

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.

following table presents the composition of our loan portfolio in dollar amounts and in percentages of the total portfolio at

the dates indicated.

in thousands)

estate loans:

At December 31,

(Dollars in thousands)

Real estate loans:

and industrial loans:

and industrial

Residential one-to-four family

Total real estate loans

Commercial and industrial loans:

Commercial and industrial

PPP loan fees

and deferred loan fees and costs, net

for loan losses

Total commercial and industrial

Total gross loans

Unamortized PPP loan fees

Unamortized premiums and net deferred loan fees and costs

Allowance for loan losses

Total loans, net

Maturity and Repricing.

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as due in within one year.

December 31, 2020

to three years

to five years

to twenty years

due after one year

PPP loan fees

deferred loan origination fees and costs and premiums

for loan losses

following table presents, as of December 31, 2020, the dollar amount of all loans contractually due or scheduled to reprice after

December 31, 2021, and whether such loans have fixed interest rates or adjustable interest rates.

After December 31, 2021

estate loans:

At December 31, 2021

Commercial Real Estate

Residential One-to-Four Family

Commercial and Industrial

(In thousands)

Within one year

After one year:

One to three years

Three to five years

Five to ten years

Ten to twenty years

Over twenty years

Total due after one year

Total amount due:

Unamortized PPP loan fees

Net deferred loan origination fees and costs and premiums

Allowance for loan losses

The following table presents, as of December 31, 2021, the dollar amount of all loans contractually due or scheduled to reprice after December 31, 2022, and whether such loans have fixed interest rates or adjustable interest rates.

Due After December 31, 2022

(In thousands)

Real estate loans:

and industrial

Residential one-to-four family

Commercial real estate

Total real estate loans

Commercial and industrial

Total other loans

following table presents our loan originations, purchases and principal payments for the years indicated:

the Years Ended December 31,

outstanding at beginning of year

For the Years Ended December 31,

(In thousands)

Balance outstanding at beginning of year

Originations:

Total mortgage

and industrial loans

repayments, unadvanced funds and other, net

charge-offs, net

Real estate loans:

Residential one-to-four family

Total mortgage originations

Commercial and industrial loans

Paycheck Protection Program ("PPP")

Consumer loans

Total originations

Principal repayments, unadvanced funds and other, net

Sales of residential one-to-four family loans to secondary market

Loan charge-offs, net

Total deductions

Ending balance

a high level of asset quality continues to be one of the Company’s key objectives.

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of Directors on a monthly basis.

These reports include information on concentration levels, delinquent loans, non-accrual loans,

criticized loans and foreclosed real estate, as well as our actions and plans to cure the non-accrual status of the loans and

to dispose of the foreclosed property.

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.

Company contracts with an external loan review company to review the internal risk ratings assigned to loans in the commercial

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Company’s adversely classified loans (defined as "Substandard (6)", "Doubtful (7)" or "Loss (8)")

(8)”) totaled $55.0 million, or 2.9% of total loans, at December 31, 2020 and $57.3 million, or 3.2%, of total loans, at

December 31, 2019.

Adversely classified loans that were performing but possessed potential weaknesses and, as a result, could

ultimately become non-performing loans totaled $47.2 million, or 2.4% of total loans, at December 31, 2020 and $47.5 million,

or 2.7% of total loans, at December 31, 2019.

The remaining balance of adversely classified loans were non-accrual loans totaling

$7.8 million, or 0.40% of total loans, at December 31, 2020 and $9.9 million, or 0.56% of total loans, at December 31, 2019.

totaled $31.1 million, or 1.7% of total loans, at December 31, 2021 and $55.0 million, or 2.9%, of total loans, at December 31,

Adversely classified loans that were performing but possessed potential weaknesses and, as a result, could ultimately become

nonperforming loans totaled $26.4 million, or 1.4% of total loans, at December 31, 2021 and $47.2 million, or 2.4% of total loans,

at December 31, 2020.

The remaining balance of adversely classified loans were nonaccrual loans totaling $4.7 million, or 0.3%

of total loans, at December 31, 2021 and $7.8 million, or 0.4% of total loans, at December 31, 2020.

impaired loans totaled $20.5 million, or 1.1% of total loans, at December 31, 2021 and $29.1 million, or 1.5% of total loans,

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Total accruing impaired loans totaled $15.5 million and $21.3 million at December 31, 2021 and December

2019, respectively, while non-accrual impaired loans totaled $7.8 million and $9.9 million as of December 31, 2020 and December

31, 2020, respectively, while nonaccrual impaired loans totaled $5.0 million and $7.8 million as of December 31, 2021 and December

31, 2020, respectively.

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for collateral or credit deterioration.

December 31, 2020, 2019, 2018, non-accrual loans totaled $7.8 million, or 0.41% of total loans, $9.9 million, or 0.56% of total

December 31, 2021, 2020, 2019, nonaccrual loans totaled $5.0 million, or 0.27% of total loans, $7.8 million, or 0.41% of total

loans, and $9.9 million, and 0.56% of total loans, respectively.

If all non-accrual loans had been performing in accordance with

If all nonaccrual loans had been performing in accordance with

their terms, we would have earned additional interest income of $262,000, $275,000 and $651,000 for the years ended December 31,

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December 31, 2021, 2020 and 2019, the Company carried no OREO balances.

following table presents information regarding non-performing commercial real estate loans, commercial and industrial term loans,

following table presents information regarding nonperforming commercial real estate loans, commercial and industrial term loans,

residential real estate loans, consumer loans, and foreclosed real estate as of the dates indicated.

All loans where the payment

is 90 days or more in arrears as of the closing date of each month are placed on non-accrual status unless the loan is well secured

is 90 days or more in arrears as of the closing date of each month are placed on nonaccrual status unless the loan is well secured

and in the process of collection.

in thousands)

Non-accrual real estate

non-accrual real estate loans

and industrial

non-accrual other loans

Total non-performing

real estate, net

non-performing assets (1)

Non-performing loans

to total loans

Non-performing assets

to total assets

At December 31,

(Dollars in thousands)

Nonaccrual real estate loans:

Residential one-to-four family

Commercial real estate

Total nonaccrual real estate loans

Commercial and industrial

Total nonaccrual other loans

Total nonperforming loans

Foreclosed real estate, net

nonperforming assets (1)

Nonperforming loans to total loans

Nonperforming assets to total assets

Troubled debt restructurings on accrual status not included above totaled $4.1 million, $9.8 million, $1.5 million, $2.4

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specifically known and other credit risks associated with the portfolio.

The Company has deferred the adoption of the Current

Expected Credit Loss allowance methodology, as permitted by its classification as a Smaller Reporting Company by the Securities

and Exchange Commission.

Company maintains an allowance for loan losses to absorb losses inherent in the loan portfolio based on ongoing quarterly assessments

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These factors include current economic and business conditions that affect our key lending

areas, collateral values, loan volumes and concentrations, credit quality trends such as non-performing loans, delinquency and

areas, collateral values, loan volumes and concentrations, credit quality trends such as nonperforming loans, delinquency and

loan losses, and specific industry concentrations within the portfolio segments that may impact the collectability of the loan

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Management closely monitors the credit quality of individual

delinquent and non-performing relationships, the levels of impaired and adversely classified loans, net charge-offs, the growth

delinquent and nonperforming relationships, the levels of impaired and adversely classified loans, net charge-offs, the growth

and composition of the loan portfolio, expansion in geographic market area, and any material changes in underwriting criteria,

and the strength of the local and national economy, among other factors.

level of delinquent and non-performing assets is largely a function of economic conditions and the overall banking environment

level of delinquent and nonperforming assets is largely a function of economic conditions and the overall banking environment

and the individual business circumstances of borrowers.

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The allowance for loan losses to total loans

ratio, excluding PPP loans, was 1.20% at December 31, 2020.

Based on the foregoing, as well as management’s judgment as

to the existing credit risks inherent in the loan portfolio, management believes that the Company’s allowance for loan losses

is adequate to absorb probable losses from specifically known and other probable credit risks associated with the portfolio as

of December 31, 2020.

ratio, excluding PPP loans, was 1.08% and 1.20%, at December 31, 2021 and 2020, respectively.

on the foregoing, as well as management's judgment as to the existing credit risks inherent in the loan portfolio, management

believes that the Company's allowance for loan losses is adequate to absorb probable losses from specifically known and other

probable credit risks associated with the portfolio as of December 31, 2021.

following table presents the activity in our allowance for loan losses and other ratios at or for the dates indicated.

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at beginning of year

one-to-four family

and industrial

one-to-four family

and industrial

Net (charge-offs) recoveries

for loan losses

(charge-offs) recoveries

provision for loan losses

at end of year

loans receivable (1)

Average loans outstanding

loans outstanding

for loan losses as a percent of total loans receivable

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loans charged-off as a percent of average loans outstanding

Does not include premiums, deferred costs and fees, or the allowance for loan losses.

A summary of the components

of the allowance for loan losses is as follows:

not include premiums, deferred costs and fees, or the allowance for loan losses.

summary of the components of the allowance for loan losses is as follows:

(In thousands)

and industrial

Commercial real estate

Residential real estate:

Residential one-to-four

Commercial and industrial

(In thousands)

one-to-four family

and industrial

For the years ended

December 31, 2020 and December 31, 2019, the Company recorded a provision of $7.8 million and $2.7 million, respectively, to the

allowance for loan losses based on our evaluation of the items discussed above.

We believe that the allowance for loan losses

adequately reflects the level of incurred losses in the current loan portfolio as of December 31, 2020.

the years ended December 31, 2021 and December 31, 2020, the Company recorded a credit for loan losses of $925,000, compared to

a provision for loan losses of $7.8 million to the allowance for loan losses based on our evaluation of the items discussed above.

We believe that the allowance for loan losses adequately reflects the level of incurred losses in the current loan portfolio as

of December 31, 2021.

of Allowance for Loan Losses .

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the percent of loans in each category to total loans, excluding PPP loans.

Allowance for

estate mortgage:

and industrial loans

allowances for loan losses

Allowance for

Loan Category

of Allowance for Loan Losses

Balances by Category

of Loans in Each Category to Total Loans

of Allowance for Loan Losses

Balances by Category

of Loans in Each Category to Total Loans

of Allowance for Loan Losses

Balances by Category

of Loans in Each Category to Total Loans

(In thousands)

Commercial real estate

Real estate mortgage:

one-to-four family

Commercial and industrial

Consumer loans

Total allowances for loan

of Allowance for Loan Losses

Balances by Category

of Loans in Each Category to Total Loans

of Allowance for Loan Losses

Balances by Category

of Loans in Each Category to Total Loans

estate mortgage:

one-to-four family

and industrial loans

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values, timing of principal payments and credit risk are considered when purchasing securities.

Company’s investment portfolio activities are an integral part of the overall asset liability management program of the

Company's investment portfolio activities are an integral part of the overall asset liability management program of the Company.

The investment function provides readily available funds to support loan growth, as well as to meet withdrawals and maturities

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loans to other banks, corporate debt instruments and marketable equity securities.

of the balance sheet dates reflected in this annual report, available-for-sale securities are carried at fair value.

On a quarterly

basis, we review securities available-for-sale with a decline in fair value below the amortized cost of the investment to determine

whether the decline in fair value is temporary or other-than-temporary (“OTTI”).

In estimating OTTI losses for securities

available-for-sale, impairment is required to be recognized if (1) we intend to sell the security;

(2) it is “more likely

than not” that we will be required to sell the security before recovery of its amortized cost basis;

or (3) for debt securities,

the present value of expected cash flows is not sufficient to recover the entire amortized cost basis.

For all impaired debt securities

that we intend to sell, or more likely than not will be required to sell, the full amount of the other-than-temporary impairment

is recognized through earnings.

For all other impaired debt securities, credit-related other-than-temporary impairment is recognized

through earnings, while non-credit-related other-than-temporary impairment is recognized in other comprehensive income/loss, net

of applicable taxes.

Prior to January 1, 2018, marketable equity securities were evaluated for OTTI based upon the severity and

duration of the impairment and, if deemed to be other than temporary, the declines in fair value were reflected in earnings as

realized losses.

Marketable equity securities are measured at fair value with changes in fair value reported on the Company’s

income statement as a component of non-interest income, regardless of whether such gains and losses are realized.

of the balance sheet dates reflected in this annual report, held-to-maturity securities are carried at amortized cost and available-for-sale

securities are carried at fair value.

On a quarterly basis, we review debt securities with a decline in fair value below the amortized

cost of the investment to determine whether the decline in fair value is temporary or other-than-temporary (“OTTI”).

In estimating OTTI losses for debt securities, impairment is required to be recognized if (1) we intend to sell the security;

(2) it is “more likely than not” that we will be required to sell the security before recovery of its amortized cost

or (3) for debt securities, the present value of expected cash flows is not sufficient to recover the entire amortized

For all impaired debt securities that we intend to sell, or more likely than not will be required to sell, the full

amount of the other-than-temporary impairment is recognized through earnings.

For all other impaired debt securities, credit-related

other-than-temporary impairment is recognized through earnings, while non-credit-related other-than-temporary impairment is recognized

in other comprehensive income/loss, net of applicable taxes.

Prior to January 1, 2018, marketable equity securities were evaluated

for OTTI based upon the severity and duration of the impairment and, if deemed to be other than temporary, the declines in fair

value were reflected in earnings as realized losses.

Marketable equity securities are measured at fair value with changes in fair

value reported on the Company’s income statement as a component of non-interest income, regardless of whether such gains

and losses are realized.

reports investment transactions, portfolio allocation, effective duration, market value at risk and projected cash flows to the

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following table sets forth the composition of our securities portfolio at the dates indicated.

(In thousands)

Available-for-sale:

Debt securities:

Government-sponsored

enterprise obligations

and municipal bonds

State and municipal bonds

debt securities

Mortgage-backed

Government-sponsored

Mortgage-backed securities:

Government-sponsored mortgage-backed

government guaranteed mortgage-backed securities

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available-for-sale securities

Held-to-maturity:

Debt securities:

Treasury securities

debt securities

Mortgage-backed securities:

Government-sponsored

mortgage-backed securities

held-to-maturity

Portfolio Maturities .

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of prepayments or redemptions that may occur.

More than One Year

More than Five Years

Weighted average yield is calculated using the amortized cost and yield to maturity

of securities divided by the total amortized cost of the segment, and does not adjust for tax-equivalent basis for any tax-exempt

than One Year

than Five Years

than Ten Years

securities available-for-sale:

in thousands)

Available-for-sale:

Government-sponsored

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and municipal bonds

debt securities available-for-sale

debt securities

Mortgage-backed

securities available-for-sale:

Government-sponsored

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Government guaranteed residential mortgage-backed

mortgage-backed securities available-for-sale

mortgage-backed securities

available-for-sale

Held-to-maturity:

Treasury securities

debt securities

Mortgage-backed

Government-sponsored

residential mortgage-backed

mortgage-backed securities

held-to-maturity

have traditionally been the principal source of the Company’s funds.

The Company offers commercial checking, business and

municipal savings accounts, term certificates of deposit, money market and business sweep accounts, and Interest on Lawyers Trust

A broad selection of competitive retail deposit products are also offered, including personal checking accounts earning

interest, savings accounts, money market accounts, individual retirement accounts and time deposits.

Terms on time deposits are

offered 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.

determines the interest rates offered on deposit accounts based on current and expected economic conditions, competition, liquidity

needs, the volatility of existing deposits, the asset/liability position of the Company and the overall objectives of the Company

regarding the growth and retention of relationships.

The Company may also utilize brokered deposits, both term and overnight,

from a number of available sources, as part of the Company’s asset liability management strategy and as an alternative to

borrowed funds to support asset growth in excess of internally generated deposits.

Brokered deposits along with borrowed funds

may be referred to as wholesale funding.

At December 31, 2020 and 2019, brokered deposits were included within time deposits and

totaled $55.3 million and $21.5 million, respectively.

The Company offers commercial checking, small business,

nonprofit and municipal checking, money market and sweep accounts, as well as certificates of deposit and specialty products including

escrow management accounts, Interest on Lawyers Trust Accounts, and Interest on Real Estate Brokers Trust Accounts.

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 certificates of deposit 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.

determines the interest rates offered on deposit accounts based on current and expected economic conditions, competition, and

the Bank’s liquidity needs, volatility of existing deposits, asset/liability position and overall objectives regarding the

growth and retention of relationships.

We may also utilize brokered deposits, both term and overnight, from a number of available

sources, as part of our asset liability management strategy and as an alternative to borrowed funds to support asset growth in

excess of internally generated deposits.

Brokered deposits along with borrowed funds may be referred to as wholesale funding.

At December 31, 2020, brokered deposits were included within time deposits and totaled $55.3 million.

There were no brokered deposits

on the balance sheet at December 31, 2021.

deposits (defined as regular accounts, money market accounts, interest-bearing and noninterest-bearing demand accounts) represented

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following table sets forth the distribution of our deposit accounts, by account type, at the dates indicated.

in thousands)

Interest-bearing

checking accounts

market accounts

Average Rates

(Dollars in thousands)

Demand deposits

Interest-bearing checking accounts

Regular savings accounts

Money market accounts

Total core deposit accounts

Time deposits:

Due within the year

Over 1 year through 3 years

Total time deposit accounts

The following table sets forth the uninsured portion of our core deposit

accounts, by account type, at the dates indicated.

(Dollars in thousands)

Core deposit accounts:

within the year

1 year through 3 years

Demand deposits

Interest-bearing checking accounts

Regular savings accounts

Total core deposit accounts

The following table sets forth the uninsured portion of our time deposits,

by remaining maturity.

(Dollars in thousands)

Time deposit accounts:

3 months or less

Over 3 months through 6 months

Over 6 months through 12 months

Over 12 months

Total time deposit accounts

_______________

(1) Uninsured

deposits for the periods indicated have been estimated using the same methodologies and assumptions

used for the Bank’s regulatory reporting requirements.

Deposit Maturities.

summary of time deposits totaling $250,000 or more by maturity is as follows:

months or less

3 months through 6 months

6 months through 12 months

(In thousands)

Over 3 months through

Over 6 months through

Over 12 months

Deposit Balances by Rates.

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than Three Years

0.10% and under

0.11% to 0.20%

0.21% to 0.30%

0.31% to 0.40%

0.41% and over

Sources of Funds.

discussed above, deposit gathering has been the Company's principal source of funds.

Asset growth in excess of deposits

may be funded through cash flows from our loan and investment portfolios, or the following sources:

Asset growth in excess of deposits may be

funded through cash flows from our loan and investment portfolios, or the following sources:

borrowing capacity includes borrowing arrangements at the FHLB, the Federal Reserve Bank (“FRB”), and borrowing arrangements

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of the Company’s asset-liability management program.

The Company also has an overnight Ideal Way line of credit with the

FHLB for $9.5 million for the years ended December 31, 2020 and 2019.

Interest on this line of credit is payable at a rate determined

and reset by the FHLB on a daily basis.

The outstanding principal is due daily but the portion not repaid will be automatically

There were no advances outstanding under this line at December 31, 2020 and 2019, respectively.

At December 31, 2021, the Bank had $480.5 million in additional borrowing

capacity from the FHLB.

Company also has an overnight Ideal Way line of credit with the FHLB for $9.5 million.

Interest on this line of credit is payable

at a rate determined and reset by the FHLB on a daily basis.

The outstanding principal is due daily but the portion not repaid

will be automatically renewed.

There were no advances outstanding under this line at December 31, 2021 and December 31, 2020,

respectively.

Company has an available line of credit of $6.6 million with the FRB Discount Window at an interest rate determined and reset

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portfolio not otherwise pledged.

As of December 31, 2020 and 2019, there were no advances outstanding under this line of credit.

In addition, the Company has access to the Federal Reserve Bank’s PPP Loan Facility (“PPPLF”), which carries

a fixed rate for the term of the advance with interest due at maturity.

The Bank secures the borrowings by pledging eligible

PPP loans as collateral for the borrowings.

There were no advances outstanding under the PPPLF at December 31, 2020 or December

At December 31, 2021 and December 31, 2020, there were no advances outstanding under this line.

Company also has pre-established, non-collateralized overnight borrowing arrangements with large national and regional correspondent

banks to provide additional overnight and short-term borrowing capacity for the Company.

The Company has a $15.0 million line

of credit with a correspondent bank and a $50.0 million line of credit with another correspondent bank, both at an interest rate

determined and reset on a daily basis.

At December 31, 2020 and 2019, we had no advances outstanding under these lines.

Bank also provides access to insurance and investment products through Westfield Investment Services.

In conjunction with our

acquisition of Chicopee Savings Bank in October of 2016, the Company retained a partnership with LPL Financial (“LPL”),

a third-party registered broker-dealer, while discontinuing our strategic alliance with the previous service provider, Charter

Oak, a division of MassMutual.

Westfield Investment Services is in the business of helping clients meet all of their financial

Westfield Investment Services representatives provide a broad range of wealth management, investment, insurance and financial

planning services and strategic asset management services.

The Company has $65.0 million in available

lines of credit with correspondent banks at interest rates determined and reset on a daily basis.

At December 31, 2021 and December

31, 2020, we had no advances outstanding under these lines.

debt consists of FHLB advances with an original maturity of one year or more.

At December 31, 2021, we had $2.7 million in long-term

debt with the FHLB, compared to $57.9 million in long-term debt with the FHLB at December 31, 2020.

Bank also provides access to insurance and investment products through Westfield Investment Services through a partnership with

LPL Financial (“LPL”), a third-party registered broker-dealer.

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.

and advisory services are offered through LPL, a registered investment advisor and broker-dealer (member FINRA/SIPC).

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The Company is a Massachusetts-chartered stock holding

company as a registered savings and loan holding company under the Home Owners’ Loan Act (the “HOLA”), as amended,

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,”

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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 Western New England Bancorp and the Bank are subject to federal and state laws and

regulations, including regulations of the FRB and the OCC, respectively.

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

The subsidiaries of Western New England Bancorp and the Bank are subject to federal and state laws and regulations,

including regulations of the FRB and the OCC, respectively.

forth below is a description of the significant elements of the laws and regulations applicable to Western New England Bancorp

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of at least 10.5%.

The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and increased

by 0.625% on each subsequent January 1, until reaching 2.5% on January 1, 2019.

Capital Rules provide for a number of deductions from and adjustments to CET1.

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FRB and FDIC adopted a final rule intended to simply the Capital Rules described above for non-advanced approaches institutions.

Institutions may implement the provisions of the simplification rule beginning on January 1, 2020 and must implement them by April

The transition provisions to the Capital Rules issued by these agencies in November 2017 will cease to apply to an institution

in the quarter in which it adopts the simplification rule.

Institutions were required to implement the provisions of the simplification rule by April 1, 2020.

The transition provisions

to the Capital Rules issued by these agencies in November 2017 ceased to apply to an institution in the quarter in which it adopted

the simplification rule.

addition, under the current general risk-based capital rules, the effects of accumulated other comprehensive income or loss (“AOCI”)

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impact on the Company’s or the Bank’s consolidated capital levels.

Company is in compliance with the targeted capital ratios under the Capital Rules at December 31, 2020.

The Bank is subject to

the Capital Rules as well.

We believe that Western New England Bancorp and the Bank are in compliance with the targeted capital

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, 2021.

September 2019, the Office of the Comptroller of the Currency, the Federal Reserve Board and the FDIC adopted a final rule that

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Company and the Bank evaluated the simplified Capital Rules to determine our adoption status for the applicable filings periods

beginning in 2020 and elected to opt-out of the community bank leverage ratio framework.

beginning in 2020 and decided not to opt in to the community bank leverage ratio framework.

Corrective Action.

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most recent notification from the OCC categorized the Bank as “well-capitalized” under the PCA framework.

619 of the Dodd-Frank Act, commonly known as the Volcker Rule, restricts the ability of banking entities, such as Western New

England Bancorp, to:

(i) engage in “proprietary trading” and (ii) invest in or sponsor certain types of funds (“Covered

Funds”), subject to certain limited exceptions.

The implementing regulation defines a Covered Fund to include certain investments

such as collateralized loan obligation (“CLO”) and collateralized debt obligation securities.

The regulation also

provides, among other exemptions, an exemption for CLOs meeting certain requirements.

As of December 31, 2020, Western New England

Bancorp is compliant with the Volcker Rule.

Bank derives its lending and investment powers from the HOLA and its implementing regulations promulgated by the OCC.

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level of commercial real estate lending.

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.

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.

Thrift Lender Test.

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Requirements.

regulations require insured depository institutions to maintain non-interest earning reserves against their transaction accounts

(primary interest-bearing and regular checking accounts).

The Bank’s required reserves can be in the form of vault cash.

If vault cash does not fully satisfy the required reserves, they may be satisfied in the form of a balance maintained with the

Federal Reserve Bank of Boston.

regulations authorize the Federal Reserve Board to require insured depository institutions to maintain non-interest earning reserves

against their transaction accounts (primary interest-bearing and regular checking accounts).

The Bank’s required reserves

can be in the form of vault cash.

If vault cash does not fully satisfy the required reserves, they may be satisfied in the form

of a balance maintained with the Federal Reserve Bank of Boston.

Currently, there is no reserve requirement because the Federal

Reserve Board reduced the reserve requirement to zero percent.

Privacy and Data Security.

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to implement several of these provisions.

As of May 11, 2018, the Bank must comply with the new Customer Due Diligence Rule, which

clarifies and strengthens the existing obligations for identifying new and existing customers and explicitly include risk-based

procedures for conducting ongoing customer due diligence.

Financial institutions also are required to establish internal anti-money

laundering programs.

The effectiveness of institutions in combating money laundering activities is a factor to be considered in

any application submitted by an insured depository institution under the Bank Merger Act.

Western New England Bancorp 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.

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 include risk-based procedures for

conducting ongoing customer due diligence.

Financial institutions also are required to establish internal anti-money laundering

The effectiveness of institutions in combating money laundering activities is a factor to be considered in any application

submitted by an insured depository institution under the Bank Merger Act.

Western New England Bancorp 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.

Fair Credit Reporting Act’s Red Flags Rule requires financial institutions with covered accounts (e.g.

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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

The Dodd-Frank Act mandated additional loan data collection points in addition to authorizing the CFPB to require

other data collection points under implementing Regulation C.

Most of the provisions of the HMDA Rule went into effect on January

1, 2018 and apply to data collected in 2018 and reporting in 2019 and later years.

The HMDA Rule adopts a uniform loan volume

threshold for all financial institutions, modifies the types of transactions that are subject to collection and reporting, expands

the loan data information being collected and reported, and modifies procedures for annual submission and annual public disclosures.

reporting and disclosure of certain residential mortgage transactions under the Home Mortgage Disclosure Act (the "HMDA Rules").

The Dodd-Frank Act mandated additional loan data collection points in addition to authorizing the CFPB to require other data collection

points under implementing Regulation C.

Most of the provisions of the HMDA Rule went into effect on January 1, 2018 and apply

to data collected in 2018 and reporting in 2019 and later years.

The HMDA Rule adopts a uniform loan volume threshold for all

financial institutions, modifies the types of transactions that are subject to collection and reporting, expands the loan data

information being collected and reported, and modifies procedures for annual submission and annual public disclosures.

regulatory agencies have increasingly used a general consumer protection statute to address "unethical" or otherwise

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business