Western New England Bancorp, Inc. Debt Disclosure
| 8. | LONG-TERM DEBT |
FHLB Advances. The following advances are collateralized by a blanket lien on our residential real estate loans and certain eligible commercial real estate loans.
| Amount | Weighted Average Rate | ||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||
| (In thousands) | |||||||||||||||||
| Fixed-rate advances maturing: | |||||||||||||||||
| 2021 | $ | — | $ | 42,388 | — | % | 1.5 | % | |||||||||
| 2022 | 1,475 | 14,284 | 0.1 | 0.4 | |||||||||||||
| 2023 | 532 | 532 | — | — | |||||||||||||
| 2024 | 646 | 646 | — | — | |||||||||||||
| Total long-term advances | $ | 2,653 | $ | 57,850 | 0.1 | % | 1.2 | % | |||||||||
Cash paid for interest on long-term FHLB advances totaled $513,000, $3.6 million, and $4.4 million for the years ended December 31, 2021, 2020, and 2019, respectively.
Subordinated Debt.
On April 20, 2021, the Company completed an offering of $20 million in aggregate principal amount of its 4.875% fixed-to-floating rate subordinated notes (the “Notes”) to certain qualified institutional buyers in a private placement transaction.
Unless earlier redeemed, the Notes mature on May 1, 2031. The Notes will bear interest from the initial issue date to, but excluding, May 1, 2026, or the earlier redemption date, at a fixed rate of 4.875% per annum, payable quarterly in arrears on May 1, August 1, November 1 and February 1 of each year, beginning August 1, 2021, and from and including May 1, 2026, but excluding the maturity date or earlier redemption date, equal to the benchmark rate, which is the 90-day average secured overnight financing rate, plus 412 basis points, determined on the determination date of the applicable interest period, payable quarterly in arrears on May 1, August 1, November 1 and February 1 of each year. The Company may also redeem the Notes, in whole or in part, on or after May 1, 2026, and at any time upon the occurrence of certain events, subject in each case to the approval of the Board of Governors of the Federal Reserve System (the “Federal Reserve”). The Notes were designed to qualify as Tier 2 capital under the Federal Reserve’s capital adequacy regulations.
The Notes are presented net of issuance costs of $367,000 as of December 31, 2021, which are being amortized into interest expense over the life of the Notes. Amortization of issuance costs into interest expense was $27,000 for the year ended December 31, 2021. Cash paid for interest on subordinated debt totaled $545,000 for the year ended December 31, 2021.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2021 | Mar 11, 2022 | Showing above |
| 2019 | Mar 11, 2020 | |
| 2018 | Mar 13, 2019 | |
| 2016 | Mar 15, 2017 | |
| 2015 | Mar 11, 2016 | |
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.