Exhibit 99.1
Westfield Financial, Inc. Reports Results for the Quarter Ended September 30, 2011 and Declares Regular Dividend
WESTFIELD, Mass.--(BUSINESS WIRE)--October 26, 2011--Westfield Financial, Inc. (the “Company”) (NasdaqGS:WFD), the holding company for Westfield Bank (the “Bank”), reported net income of $1.5 million, or $0.06 per diluted share, for the quarter ended September 30, 2011, compared to $699,000 or $0.03 per diluted share, for the same period in 2010. For the nine months ended September 30, 2011, net income was $4.3 million, or $0.16 per diluted share, compared to $1.7 million, or $0.06 per diluted share, for the same period in 2010.
The increase in earnings was mainly the result of a $3.9 million decrease in the provision for loan losses to $15,000 for the three months ended September 30, 2011, compared to $3.9 million for the same period in 2010. The provision for loan losses decreased $8.0 million to $529,000 for the nine months ended September 30, 2011, compared to $8.5 million in the same period in 2010. The decreases in the provision for loan losses occurred because the 2010 periods included the reserve for and subsequent charge-off of $7.2 million on a single commercial real estate loan.
Net interest income increased $270,000 to $7.6 million for the three months ended September 30, 2011, compared to $7.3 million for the same period in 2010. The net interest margin, on a tax-equivalent basis, was 2.64% for the three months ended September 30, 2011, compared to 2.58% for the same period in 2010. For the nine months ended September 30, 2011, net interest income increased $530,000 to $23.0 million, compared to $22.5 million for the same period in 2010. The net interest margin, on a tax-equivalent basis, was 2.69% and 2.72% for the nine months ended September 30, 2011 and 2010, respectively. Net interest income was favorably impacted by an increase in loans, which generally have higher yields than investments, along with a decrease in the cost of funds due to the lower interest rate environment.
Noninterest income decreased $2.5 million to $943,000 for the three months ended September 30, 2011, compared to $3.4 million for the same period in 2010. For the nine months ended September 30, 2011, noninterest income decreased $3.7 million to $2.7 million, compared to $6.4 million for the same period in 2010. The decreases were primarily the result of a decrease in net gains on the sale of securities of $2.5 million and $3.7 million for the three and nine months ended September 30, 2011 and 2010, respectively.
For the three months ended September 30, 2011, noninterest expense increased $455,000 to $6.6 million, compared to $6.2 million for the same period in 2010. For the nine months ended September 30, 2011, noninterest expense increased $1.1 million to $19.6 million, compared to $18.5 million for the same period in 2010. Salaries and benefits increased $336,000 for the three months ended September 30, 2011 and $780,000 for the nine months ended September 30, 2011, compared to the same periods in 2010, primarily due to normal salary and benefits increases.
Balance Sheet Growth
Total assets were $1.3 billion at September 30, 2011, showing an increase of $23.3 million, compared to December 31, 2010. Securities decreased $14.4 million to $640.3 million at September 30, 2011 from $654.7 million at December 31, 2010. The decrease in securities was the result of using cash flow from securities to fund the loan portfolio as discussed below.
Net loans increased by $35.1 million to $537.5 million at September 30, 2011 from $502.4 million at December 31, 2010. Residential loans increased $44.1 million to $192.9 million at September 30, 2011 from $148.8 million at December 31, 2010. Through the Company’s long standing relationship with a third-party mortgage company, it originated and purchased $52.5 million in residential loans within and contiguous to its market area as a means of diversifying its loan portfolio and improving net interest income. In addition, commercial and industrial loans and commercial real estate loans decreased $8.9 million to $348.0 million at September 30, 2011 from $356.9 million at December 31, 2010.
Total deposits increased $20.2 million to $720.5 million at September 30, 2011 from $700.3 million at December 31, 2010. The increase in deposits was due to an increase in checking accounts of $13.1 million to $181.9 million, and an increase in savings and money market accounts of $38.3 million to $215.8 million. The increases in checking, savings and money market accounts were primarily due to a relationship-based product set introduced in 2010 which continues to show growth in 2011. Time deposit accounts decreased $31.2 million to $322.8 million at September 30, 2011, as customers have less incentive to lock up funds in time deposits because of the low interest rate environment.
Shareholders’ equity was $229.8 million and $221.2 million, which represented 18.2% and 17.8% of total assets at September 30, 2011 and December 31, 2010, respectively. The increase in shareholders’ equity reflects an increase in other comprehensive income of $15.2 million primarily due to the change in market value of securities, net income of $4.3 million for the nine months ended September 30, 2011, an increase of $2.2 million related to the recognition of share-based compensation and the exercise of 34,646 stock options. This was partially offset by the payment of regular and special dividends amounting to $8.8 million and the repurchase of 554,228 shares of our common stock at a cost of $4.5 million, pursuant to the Company’s current stock repurchase plan.
On May 25, 2010, the Board of Directors authorized the commencement the Company’s current stock repurchase program, authorizing the repurchase of up to 2,924,367 shares, or ten percent of the Company’s outstanding shares of common stock. There were 1,926,079 shares purchased under the second repurchase program as of September 30, 2011.
Credit Quality
The allowance for loan losses was $7.1 million at September 30, 2011 and $6.9 million at December 31, 2010. This represents 1.30% and 1.36% of total loans at September 30, 2011 and December 31, 2010, respectively, and 254.47% and 216.42% of nonperforming loans at September 30, 2011 and December 31, 2010, respectively.
An analysis of the changes in the allowance for loan losses is as follows:
| Three Months Ended | ||||||||||||
| September 30, | June 30, | September 30, | ||||||||||
| 2011 | 2011 | 2010 | ||||||||||
| (In thousands) | ||||||||||||
| Balance, beginning of period | $ | 7,073 | $ | 6,999 | $ | 7,827 | ||||||
| Provision | 15 | 175 | 3,928 | |||||||||
| Charge-offs | (17 | ) | (256 | ) | (3,604 | ) | ||||||
| Recoveries | 16 | 155 | 17 | |||||||||
| Balance, end of period | $ | 7,087 | $ | 7,073 | $ | 8,168 | ||||||
Nonperforming loans decreased $419,000 to $2.8 million at September 30, 2011, compared to $3.2 million at December 31, 2010, representing 0.51% and 0.63% of total loans at September 30, 2011 and December 31, 2010, respectively. At September 30, 2011, nonperforming loans were primarily made up of three commercial relationships totaling $1.9 million. There are no loans 90 or more days past due and still accruing interest.
Loans delinquent 30 – 89 days decreased $9.2 million to $7.6 million at September 30, 2011 from $16.8 million at December 31, 2010. The decrease in loans delinquent is mainly the result of a single commercial real estate relationship of $15.0 million in the hotel and lodging industry that was brought within 30 days of their payment due date. The delinquent loans at September 30, 2011 are primarily comprised of two commercial relationships, one of which became delinquent as of September 30, 2011 for the first time in its history. This $3.0 million loan was brought within 30 days of their payment due date on October 3, 2011 which was the first business day of the fourth quarter.
Declaration of Dividends
James C. Hagan, Chief Executive Officer stated, “On October 25, 2011, the Board of Directors declared a regular cash dividend of $0.06 per share and a special cash dividend of $0.15 per share. Both the regular and special dividends are payable on November 23, 2011 to all shareholders of record on November 9, 2011.”
About Westfield Bank
The Bank is headquartered in Westfield, Massachusetts and operates through 11 banking offices in Agawam, East Longmeadow, Feeding Hills, Holyoke, Southwick, Springfield, West Springfield and Westfield, Massachusetts. The Bank’s deposits are insured by the Federal Deposit Insurance Corporation.
Forward-Looking Statements
The Company wishes to caution readers not to place undue reliance on any such forward-looking statements contained in this press release, which speak only as of the date made. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2010, and in subsequent filings with the Securities and Exchange Commission. In addition, the forward-looking statements included in this press release represent our views as of the date of this release. The Company and the Bank do not undertake and specifically decline any obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
WESTFIELD FINANCIAL, INC. AND SUBSIDIARIES Consolidated Statements of Income and Other Data (Dollars in thousands, except per share data) (Unaudited) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| INTEREST AND DIVIDEND INCOME: | ||||||||||||||||
| Loans | $ | 6,459 | $ | 6,234 | $ | 18,936 | $ 18,532 | |||||||||
| Securities | 4,701 | 5,309 | 15,096 | 16,547 | ||||||||||||
| Other investments | 14 | 5 | 46 | 17 | ||||||||||||
Federal funds sold, interest-bearing deposits and other | - | 2 | 1 | 5 | ||||||||||||
| Total interest and dividend income | 11,174 | 11,550 | 34,079 | 35,101 | ||||||||||||
| INTEREST EXPENSE: | ||||||||||||||||
| Deposits | 1,811 | 2,381 | 5,891 | 7,490 | ||||||||||||
| Long-term debt | 1,716 | 1,759 | 5,071 | 4,946 | ||||||||||||
| Short-term borrowings | 28 | 61 | 122 | 200 | ||||||||||||
| Total interest expense | 3,555 | 4,201 | 11,084 | 12,636 | ||||||||||||
| Net interest and dividend income | 7,619 | 7,349 | 22,995 | 22,465 | ||||||||||||
| PROVISION FOR LOAN LOSSES | 15 | 3,928 | 529 | 8,548 | ||||||||||||
Net interest and dividend income after provision for loan | 7,604 | 3,421 | 22,466 | 13,917 | ||||||||||||
| NONINTEREST INCOME: | ||||||||||||||||
| Total other-than-temporary impairment losses on securities | (536 | ) | - | (576 | ) | (1,071 | ) | |||||||||
Portion of other-than-temporary impairment losses | 474 | - | 474 | 971 | ||||||||||||
Net other-than-temporary impairment losses recognized | (62 | ) | - | (102 | ) | (100 | ) | |||||||||
| Service charges and fees | 501 | 456 | 1,465 | 1,440 | ||||||||||||
| Income from bank-owned life insurance | 398 | 380 | 1,150 | 1,140 | ||||||||||||
| Gain on sales of securities, net | 131 | 2,609 | 208 | 3,926 | ||||||||||||
| (Loss) gain on sale of other real estate owned | (25 | ) | - | (25 | ) | 1 | ||||||||||
| Total noninterest income | 943 | 3,445 | 2,696 | 6,407 | ||||||||||||
| NONINTEREST EXPENSE: | ||||||||||||||||
| Salaries and employees benefits | 3,997 | 3,661 | 11,710 | 10,930 | ||||||||||||
| Occupancy | 691 | 656 | 2,027 | 1,952 | ||||||||||||
| Data processing | 473 | 461 | 1,437 | 1,443 | ||||||||||||
| Professional fees | 524 | 391 | 1,525 | 1,258 | ||||||||||||
| FDIC insurance | 207 | 223 | 555 | 555 | ||||||||||||
| OREO expense | 31 | 62 | 52 | 326 | ||||||||||||
| Other | 716 | 730 | 2,307 | 2,056 | ||||||||||||
| Total noninterest expense | 6,639 | 6,184 | 19,613 | 18,520 | ||||||||||||
| INCOME BEFORE INCOME TAXES | 1,908 | 682 | 5,549 | 1,804 | ||||||||||||
| INCOME TAX PROVISION (BENEFIT) | 414 | (17 | ) | 1,204 | 137 | |||||||||||
| NET INCOME | $ | 1,494 | $ | 699 | $ | 4,345 | $ 1,667 | |||||||||
| Basic earnings per share | $ | 0.06 | $ | 0.03 | $ | 0.16 | $ 0.06 | |||||||||
| Weighted average shares outstanding | 26,443,449 | 27,432,114 | 26,608,490 | 27,860,516 | ||||||||||||
| Diluted earnings per share | $ | 0.06 | $ | 0.03 | $ | 0.16 | $ 0.06 | |||||||||
| Weighted average diluted shares outstanding | 26,544,257 | 27,586,142 | 26,723,947 | 28,082,399 | ||||||||||||
| Other Data: | ||||||||||||||||
| Return on average assets (1) | 0.48 | % | 0.22 | % | 0.47 | % |
0.18 | % | ||||||||
| Return on average equity (1) | 2.65 | % | 1.15 | % | 2.62 | % | 0.92 | % | ||||||||
_______________
(1) Results have been annualized.
WESTFIELD FINANCIAL, INC. AND SUBSIDIARIES Consolidated Balance Sheets and Other Data (Dollars in thousands, except per share data) (Unaudited) | |||||||
| September 30, | December 31, | ||||||
| 2011 | 2010 | ||||||
| Cash and cash equivalents | $ | 19,565 | $ | 11,611 | |||
| Securities available for sale, at fair value | 627,908 | 642,467 | |||||
| Federal Home Loan Bank of Boston and other restricted stock - at cost | 12,438 | 12,282 | |||||
| Loans | 544,599 | 509,326 | |||||
| Allowance for loan losses | 7,087 | 6,934 | |||||
| Net loans | 537,512 | 502,392 | |||||
| Bank-owned life insurance | 43,644 | 40,494 | |||||
| Other real estate owned | 1,130 | 223 | |||||
| Other assets | 20,604 | 30,020 | |||||
| TOTAL ASSETS | $ | 1,262,801 | $ | 1,239,489 | |||
| Total deposits | $ | 720,514 | $ | 700,335 | |||
| Short-term borrowings | 55,544 | 62,937 | |||||
| Long-term debt | 247,240 | 238,151 | |||||
| Securities pending settlement | - | 7,791 | |||||
| Other liabilities | 9,699 | 9,030 | |||||
| TOTAL LIABILITIES | 1,032,997 | 1,018,244 | |||||
| TOTAL SHAREHOLDERS' EQUITY | 229,804 | 221,245 | |||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 1,262,801 | $ | 1,239,489 | |||
| Book value per share | $ | 8.31 | $ | 7.85 | |||
| Other Data: | |||||||
| 30- 89 day delinquent loans | $ | 7,612 | $ | 16,785 | |||
| Nonperforming loans | 2,785 | 3,204 | |||||
| Nonperforming loans as a percentage of total loans | 0.51 | % | 0.63 | % | |||
| Nonperforming assets as a percentage of total assets | 0.31 | % | 0.28 | % | |||
| Allowance for loan losses as a percentage of nonperforming loans | 254.47 | % | 216.42 | % | |||
| Allowance for loan losses as a percentage of total loans | 1.30 | % | 1.36 | % | |||
The following tables set forth the information relating to our average balance at, and net interest income for, the three and nine months ended September 30, 2011 and 2010, and reflect the average yield on interest-earning assets and average cost of interest-bearing liabilities for the periods indicated.
| Three Months Ended September 30, | |||||||||||||||||||
| 2011 | 2010 | ||||||||||||||||||
| Average | Avg Yield/ | Average | Avg Yield/ | ||||||||||||||||
| Balance | Interest | Cost | Balance | Interest | Cost | ||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||
| ASSETS: | |||||||||||||||||||
| Interest-earning assets | |||||||||||||||||||
| Loans(1)(2) | $ | 547,539 | $ | 6,498 | 4.75 | % | $ | 490,283 | $ | 6,273 | 5.12 | % | |||||||
| Securities(2) | 608,580 | 4,881 | 3.21 | 645,275 | 5,474 | 3.39 | |||||||||||||
| Other investments | 14,048 | 14 | 0.40 | 13,551 | 5 | 0.15 | |||||||||||||
| Short-term investments(3) | 8,080 | - | 0.00 | 11,481 | 2 | 0.07 | |||||||||||||
| Total interest-earning assets | 1,178,247 | 11,393 | 3.87 | 1,160,590 | 11,754 | 4.05 | |||||||||||||
| Total noninterest-earning assets | 69,586 | 78,019 | |||||||||||||||||
| Total assets | $ | 1,247,833 | $ | 1,238,609 | |||||||||||||||
| LIABILITIES AND EQUITY: | |||||||||||||||||||
| Interest-bearing liabilities | |||||||||||||||||||
| NOW accounts | $ | 86,425 | 172 | 0.80 | $ | 78,329 | 233 | 1.19 | |||||||||||
| Savings accounts | 103,297 | 112 | 0.43 | 123,033 | 216 | 0.70 | |||||||||||||
| Money market accounts | 104,479 | 165 | 0.63 | 47,485 | 51 | 0.43 | |||||||||||||
| Time certificates of deposit | 326,909 | 1,362 | 1.67 | 346,304 | 1,881 | 2.17 | |||||||||||||
| Total interest-bearing deposits | 621,110 | 1,811 | 595,151 | 2,381 | |||||||||||||||
| Short-term borrowings and long-term debt | 300,448 | 1,744 | 2.32 | 310,853 | 1,820 | 2.34 | |||||||||||||
| Interest-bearing liabilities | 921,558 | 3,555 | 1.54 | 906,004 | 4,201 | 1.85 | |||||||||||||
| Noninterest-bearing deposits | 93,139 | 83,714 | |||||||||||||||||
| Other noninterest-bearing liabilities | 9,179 | 8,580 | |||||||||||||||||
| Total noninterest-bearing liabilities | 102,318 | 92,294 | |||||||||||||||||
| Total liabilities | 1,023,876 | 998,298 | |||||||||||||||||
| Total equity | 223,957 | 240,311 | |||||||||||||||||
| Total liabilities and equity | $ | 1,247,833 | $ | 1,238,609 | |||||||||||||||
| Less: Tax-equivalent adjustment(2) | (219 | ) | (204 | ) | |||||||||||||||
| Net interest and dividend income | $ | 7,619 | $ | 7,349 | |||||||||||||||
| Net interest rate spread(4) | 2.33 | % | 2.20 | % | |||||||||||||||
| Net interest margin(5) | 2.64 | % | 2.58 | % | |||||||||||||||
| Average interest-earning | |||||||||||||||||||
assets to average interest-bearing liabilities | 127.9 | % | 128.1 | % | |||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||
| 2011 | 2010 | ||||||||||||||||||
| Average | Avg Yield/ | Average | Avg Yield/ | ||||||||||||||||
| Balance | Interest | Cost | Balance | Interest | Cost | ||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||
| ASSETS: | |||||||||||||||||||
| Interest-earning assets | |||||||||||||||||||
| Loans(1)(2) | $ | 533,222 | $ | 19,057 | 4.77 | % | $ | 477,710 | $ | 18,642 | 5.20 | % | |||||||
| Securities(2) | 620,136 | 15,632 | 3.36 | 628,307 | 17,031 | 3.61 | |||||||||||||
| Other investments | 14,004 | 46 | 0.44 | 12,621 | 17 | 0.18 | |||||||||||||
| Short-term investments(3) | 6,918 | 1 | 0.02 | 14,158 | 5 | 0.05 | |||||||||||||
| Total interest-earning assets | 1,174,280 | 34,736 | 3.94 | 1,132,796 | 35,695 | 4.20 | |||||||||||||
| Total noninterest-earning assets | 71,294 | 79,432 | |||||||||||||||||
| Total assets | $ | 1,245,574 | $ | 1,212,228 | |||||||||||||||
| LIABILITIES AND EQUITY: | |||||||||||||||||||
| Interest-bearing liabilities | |||||||||||||||||||
| NOW accounts | $ | 87,864 | 630 | 0.96 | $ | 74,572 | 691 | 1.24 | |||||||||||
| Savings accounts | 105,563 | 427 | 0.54 | 117,462 | 672 | 0.76 | |||||||||||||
| Money market accounts | 89,621 | 430 | 0.64 | 48,382 | 230 | 0.63 | |||||||||||||
| Time certificates of deposit | 336,689 | 4,404 | 1.74 | 344,687 | 5,897 | 2.28 | |||||||||||||
| Total interest-bearing deposits | 619,737 | 5,891 | 585,103 | 7,490 | |||||||||||||||
| Short-term borrowings and long-term debt | 306,619 | 5,193 | 2.26 | 293,456 | 5,146 | 2.34 | |||||||||||||
| Interest-bearing liabilities | 926,356 | 11,084 | 1.60 | 878,559 | 12,636 | 1.92 | |||||||||||||
| Noninterest-bearing deposits | 88,408 | 82,207 | |||||||||||||||||
| Other noninterest-bearing liabilities | 9,494 | 8,299 | |||||||||||||||||
| Total noninterest-bearing liabilities | 97,902 | 90,506 | |||||||||||||||||
| Total liabilities | 1,024,258 | 969,065 | |||||||||||||||||
| Total equity | 221,316 | 243,163 | |||||||||||||||||
| Total liabilities and equity | $ | 1,245,574 | $ | 1,212,228 | |||||||||||||||
| Less: Tax-equivalent adjustment(2) | (657 | ) | (594 | ) | |||||||||||||||
| Net interest and dividend income | $ | 22,995 | $ | 22,465 | |||||||||||||||
| Net interest rate spread(4) | 2.35 | % | 2.28 | % | |||||||||||||||
| Net interest margin(5) | 2.69 | % | 2.72 | % | |||||||||||||||
| Average interest-earning | |||||||||||||||||||
assets to average interest-bearing liabilities | 126.8 | % | 128.9 | % | |||||||||||||||
(1) Loans, including non-accrual loans, are net of deferred loan origination costs and unadvanced funds.
(2) Securities, loan income and net interest income are presented on a tax-equivalent basis using a tax rate of 34%. The tax-equivalent adjustment is deducted from tax-equivalent net interest and dividend income to agree to the amount reported on the statements of operations.
(3) Short-term investments include federal funds sold.
(4) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
(5) Net interest margin represents tax-equivalent net interest and dividend income as a percentage of average interest-earning assets.
CONTACT:
Westfield Financial, Inc.
James C. Hagan, 413-568-1911
President & CEO
or
Leo R. Sagan, Jr., 413-568-1911
CFO