Western New England Bancorp cut at Janney on ‘murky’ path to improved profit

As previously reported, Janney Montgomery Scott downgraded Western New England Bancorp to Neutral from Buy with an unchanged $9 fair value estimate. Q2 results topped expectations due to the reversal of credit losses and lower expenses, but recent challenges – including weakness in the core deposit franchise continuing to pressure net interest margin, increased reliance on higher cost CDs, and non-existent net loan growth over the last two years – will put the bank behind the curve when Fed easing starts, so the firm says it would “look elsewhere for profitability improvement leading to relative outperformance.”