Exhibit 99.1
Westfield Financial, Inc. Reports Results for the Quarter and Year Ended December 31, 2011 and Declares Regular Dividend
WESTFIELD, Mass.--(BUSINESS WIRE)--January 25, 2012--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 December 31, 2011, compared to $1.3 million or $0.05 per diluted share, for the same period in 2010. For the year ended December 31, 2011, net income was $5.9 million, or $0.22 per diluted share, compared to $3.0 million, or $0.11 per diluted share, for the same period in 2010.
The increase in earnings for the year ended December 31, 2011 was the result of a $7.7 million decrease in the provision for loan losses to $1.2 million, compared to $8.9 million for the same period in 2010, partially offset by a decrease of $3.6 million in noninterest income and a $1.2 million increase in noninterest expense. The decrease in the provision for loan losses occurred because the 2010 period included the reserve for and subsequent charge-off of $7.2 million on a single commercial real estate loan.
Net interest income increased $626,000 to $7.5 million for the quarter ended December 31, 2011, compared to $6.9 million for the same period in 2010. The net interest margin, on a tax-equivalent basis, was 2.60% for the quarter ended December 31, 2011, compared to 2.40% for the same period in 2010. For the year ended December 31, 2011, net interest income increased $1.1 million to $30.5 million, compared to $29.4 million for the same period in 2010. The net interest margin, on a tax-equivalent basis, was 2.67% and 2.64% for the years ended December 31, 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 increased $128,000 to $1.1 million for the quarter ended December 31, 2011, compared to $982,000 for the same period in 2010. The increase for the quarter ended December 31, 2011 was primarily the result of an increase in net gains on the sale of securities of $60,000. For the year ended December 31, 2011, noninterest income decreased $3.6 million to $3.8 million, compared to $7.4 million for the same period in 2010, primarily the result of a decrease in net gains on the sale of securities of $3.6 million.
For the quarter ended December 31, 2011, noninterest expense increased $57,000 to $6.3 million, compared to the same period in 2010. For the year ended December 31, 2011, noninterest expense increased $1.2 million to $26.0 million, compared to $24.8 million for the same period in 2010. The increase in noninterest expense for the year ended December 31, 2011 was due to an increase in salaries and benefits of $845,000 related to regular annual adjustments as well as salaries and benefits related to the hiring of additional personnel.
Balance Sheet Growth
Total assets were $1.3 billion at December 31, 2011, showing an increase of $23.8 million, compared to December 31, 2010. Securities decreased $24.7 million to $630.0 million at December 31, 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 $44.0 million to $546.4 million at December 31, 2011 from $502.4 million at December 31, 2010. Residential loans increased $43.7 million to $192.5 million at December 31, 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 a total of $58.2 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 increased $1.3 million to $358.2 million at December 31, 2011 from $356.9 million at December 31, 2010.
Total deposits increased $32.7 million to $733.0 million at December 31, 2011 from $700.3 million at December 31, 2010. The increase in deposits was due to an increase in savings and money market accounts of $68.1 million to $245.6 million. Noninterest bearing checking accounts increased $15.0 million to $100.2 million. The increases in checking, savings and money market accounts were primarily due to a relationship-based product set introduced in 2010 which continued growth throughout 2011. Time deposit accounts decreased $38.2 million to $315.8 million at December 31, 2011, as customers have less incentive to lock up funds in time deposits because of the low interest rate environment.
Shareholders’ equity was $219.0 million and $221.2 million, which represented 17.3% and 17.8% of total assets at December 31, 2011 and December 31, 2010, respectively. The decrease in shareholders’ equity reflects the payment of regular and special dividends amounting to $14.3 million and the repurchase of 1.3 million shares of our common stock at a cost of $10.1 million, pursuant to the Company’s stock repurchase program. This was partially offset by an increase in other comprehensive income of $13.2 million primarily due to the change in market value of securities, net income of $5.9 million for the year ended December 31, 2011, an increase of $3.0 million related to the recognition of share-based compensation and the exercise of 81,741 stock options.
On May 25, 2010, the Board of Directors authorized the commencement of 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 2,676,041 shares purchased under the second repurchase program as of December 31, 2011. On December 22, 2011, the Board of Directors authorized an additional stock repurchase program under which the Company may purchase up to 1,333,496 shares, or 5% of its outstanding common stock. This new repurchase program will commence upon the completion of the previously announced program.
Credit Quality
The allowance for loan losses was $7.8 million at December 31, 2011 and $6.9 million at December 31, 2010. This represents 1.40% and 1.36% of total loans at December 31, 2011 and December 31, 2010, respectively, and 264.71% and 216.42% of nonperforming loans at December 31, 2011 and December 31, 2010, respectively.
An analysis of the changes in the allowance for loan losses is as follows:
| Three Months Ended | |||||||||||||||
| December 31, | September 30, | December 31, | |||||||||||||
| 2011 | 2011 | 2010 | |||||||||||||
| (In thousands) | |||||||||||||||
| Balance, beginning of period | $ | 7,087 | $ | 7,073 | $ | 8,168 | |||||||||
| Provision | 677 | 15 | 375 | ||||||||||||
| Charge-offs | (7 | ) | (17 | ) | (1,636 | ) | |||||||||
| Recoveries | 7 | 16 | 27 | ||||||||||||
| Balance, end of period | $ | 7,764 | $ | 7,087 | $ | 6,934 | |||||||||
Loans delinquent 30 – 89 days decreased $15.0 million to $1.8 million at December 31, 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 interest rate on this loan relationship was reduced from 6.25% to 4.25% for a period of one year and it is therefore classified as a troubled debt restructuring. As a result, for the quarter ended December 31, 2011, $275,000 was added to the provision for loan losses representing the reduction in cash flow from interest that occurs by reducing the interest rate to 4.25%.
Nonperforming loans decreased $271,000 to $2.9 million at December 31, 2011, compared to $3.2 million at December 31, 2010, representing 0.53% and 0.63% of total loans at December 31, 2011 and December 31, 2010, respectively. There are no loans 90 or more days past due and still accruing interest.
Declaration of Dividends
James C. Hagan, Chief Executive Officer stated, “On January 24, 2012, the Board of Directors declared a regular cash dividend of $0.06 per share payable on February 22, 2012 to all shareholders of record on February 8, 2012.”
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 | Year Ended | ||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | ||||||||||||||||||
| INTEREST AND DIVIDEND INCOME: | |||||||||||||||||||||
| Loans | $ | 6,381 | $ | 6,200 | $ | 25,318 | $ | 24,732 | |||||||||||||
| Securities | 4,530 | 4,836 | 19,624 | 21,383 | |||||||||||||||||
| Other investments - at cost | 15 | 7 | 62 | 24 | |||||||||||||||||
| Federal funds sold, interest-bearing deposits and other short-term investments | - | 3 | 1 | 8 | |||||||||||||||||
| Total interest and dividend income | 10,926 | 11,046 | 45,005 | 46,147 | |||||||||||||||||
| INTEREST EXPENSE: | |||||||||||||||||||||
| Deposits | 1,699 | 2,359 | 7,589 | 9,850 | |||||||||||||||||
| Long-term debt | 1,659 | 1,593 | 6,731 | 6,538 | |||||||||||||||||
| Short-term borrowings | 24 | 176 | 147 | 377 | |||||||||||||||||
| Total interest expense | 3,382 | 4,128 | 14,467 | 16,765 | |||||||||||||||||
| Net interest and dividend income | 7,544 | 6,918 | 30,538 | 29,382 | |||||||||||||||||
| PROVISION FOR LOAN LOSSES | 677 | 375 | 1,206 | 8,923 | |||||||||||||||||
| Net interest and dividend income after provision for loan losses | 6,867 | 6,543 | 29,332 | 20,459 | |||||||||||||||||
| NONINTEREST INCOME: | |||||||||||||||||||||
| Total other-than-temporary impairment losses on securities | - | (490 | ) | (603 | ) | (590 | ) | ||||||||||||||
| Portion of other-than-temporary impairment losses recognized in accumulated other comprehensive loss | - | 443 | 501 | 443 | |||||||||||||||||
| Net other-than-temporary impairment losses recognized in income | - | (47 | ) | (102 | ) | (147 | ) | ||||||||||||||
| Service charges and fees | 509 | 500 | 1,973 | 1,940 | |||||||||||||||||
| Income from bank-owned life insurance | 395 | 383 | 1,546 | 1,524 | |||||||||||||||||
| Gain on sales of securities, net | 206 | 146 | 414 | 4,072 | |||||||||||||||||
| (Loss) gain on sale of other real estate owned | - | - | (25 | ) | 1 | ||||||||||||||||
| Total noninterest income | 1,110 | 982 | 3,806 | 7,390 | |||||||||||||||||
| NONINTEREST EXPENSE: | |||||||||||||||||||||
| Salaries and employees benefits | 3,847 | 3,783 | 15,557 | 14,712 | |||||||||||||||||
| Occupancy | 645 | 667 | 2,671 | 2,620 | |||||||||||||||||
| Data processing | 480 | 497 | 1,917 | 1,940 | |||||||||||||||||
| Professional fees | 508 | 413 | 2,033 | 1,671 | |||||||||||||||||
| FDIC insurance | 128 | 197 | 683 | 751 | |||||||||||||||||
| OREO expense | 18 | 48 | 70 | 374 | |||||||||||||||||
| Other | 720 | 684 | 3,027 | 2,741 | |||||||||||||||||
| Total noninterest expense | 6,346 | 6,289 | 25,958 | 24,809 | |||||||||||||||||
| INCOME BEFORE INCOME TAXES | 1,631 | 1,236 | 7,180 | 3,040 | |||||||||||||||||
| INCOME TAX PROVISION (BENEFIT) | 102 | (103 | ) | 1,306 | 34 | ||||||||||||||||
| NET INCOME | $ | 1,529 | $ | 1,339 | $ | 5,874 | $ | 3,006 | |||||||||||||
| Basic earnings per share | $ | 0.06 | $ | 0.05 | $ | 0.22 | $ | 0.11 | |||||||||||||
| Weighted average shares outstanding | 26,106,911 | 26,807,171 | 26,482,064 | 27,595,014 | |||||||||||||||||
| Diluted earnings per share | $ | 0.06 | $ | 0.05 | $ | 0.22 | $ | 0.11 | |||||||||||||
| Weighted average diluted shares outstanding | 26,190,326 | 26,935,101 | 26,589,510 | 27,793,409 | |||||||||||||||||
| Other Data: | |||||||||||||||||||||
| Return on average assets (1) | 0.48 | % | 0.42 | % | 0.47 | % | 0.25 | % | |||||||||||||
| Return on average equity (1) | 2.71 | % | 2.31 | % | 2.65 | % | 1.25 | % | |||||||||||||
_______________
(1) Three month results have been annualized. | |||||||||||||||||||||
WESTFIELD FINANCIAL, INC. AND SUBSIDIARIES Consolidated Balance Sheets and Other Data (Dollars in thousands, except per share data) (Unaudited) | ||||||||||||
| December 31, | December 31, | |||||||||||
2011 | 2010 | |||||||||||
| Cash and cash equivalents | $ | 21,105 | $ | 11,611 | ||||||||
| Securities available for sale, at fair value | 617,537 | 642,467 | ||||||||||
| Federal Home Loan Bank of Boston and other restricted stock - at cost | 12,438 | 12,282 | ||||||||||
| Loans | 554,156 | 509,326 | ||||||||||
| Allowance for loan losses | 7,764 | 6,934 | ||||||||||
| Net loans | 546,392 | 502,392 | ||||||||||
| Bank-owned life insurance | 44,040 | 40,494 | ||||||||||
| Other real estate owned | 1,130 | 223 | ||||||||||
| Other assets | 20,622 | 30,020 | ||||||||||
| TOTAL ASSETS | $ | 1,263,264 | $ | 1,239,489 | ||||||||
| Total deposits | $ | 732,958 | $ | 700,335 | ||||||||
| Short-term borrowings | 52,985 | 62,937 | ||||||||||
| Long-term debt | 247,320 | 238,151 | ||||||||||
| Securities pending settlement | 363 | 7,791 | ||||||||||
| Other liabilities | 10,650 | 9,030 | ||||||||||
| TOTAL LIABILITIES | 1,044,276 | 1,018,244 | ||||||||||
| TOTAL SHAREHOLDERS' EQUITY | 218,988 | 221,245 | ||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 1,263,264 | $ | 1,239,489 | ||||||||
| Book value per share | $ | 8.14 | $ | 7.85 | ||||||||
| Other Data: | ||||||||||||
| 30- 89 day delinquent loans | $ | 1,848 | $ | 16,785 | ||||||||
| Nonperforming loans | 2,933 | 3,204 | ||||||||||
| Nonperforming loans as a percentage of total loans | 0.53 | % | 0.63 | % | ||||||||
| Nonperforming assets as a percentage of total assets | 0.32 | % | 0.28 | % | ||||||||
| Allowance for loan losses as a percentage of nonperforming loans | 264.71 | % | 216.42 | % | ||||||||
| Allowance for loan losses as a percentage of total loans | 1.40 | % | 1.36 | % | ||||||||
The following tables set forth the information relating to our average balance at, and net interest income for, the three months and years ended December 31, 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 December 31, | |||||||||||||||||||||||||||
| 2011 | 2010 | ||||||||||||||||||||||||||
| Average | Avg Yield/ | Average | Avg Yield/ | ||||||||||||||||||||||||
| Balance | Interest | Cost | Balance | Interest | Cost | ||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||
| ASSETS: | |||||||||||||||||||||||||||
| Interest-earning assets | |||||||||||||||||||||||||||
| Loans(1)(2) | $ | 544,577 | $ | 6,422 | 4.72 | % | $ | 495,580 | $ | 6,241 | 5.04 | % | |||||||||||||||
| Securities(2) | 618,421 | 4,719 | 3.05 | 652,991 | 5,001 | 3.06 | |||||||||||||||||||||
| Other investments - at cost | 14,123 | 15 | 0.42 | 13,739 | 7 | 0.20 | |||||||||||||||||||||
| Short-term investments(3) | 9,242 | - | 0.00 | 13,325 | 3 | 0.09 | |||||||||||||||||||||
| Total interest-earning assets | 1,186,363 | 11,156 | 3.76 | 1,175,635 | 11,252 | 3.83 | |||||||||||||||||||||
| Total noninterest-earning assets | 66,687 | 77,092 | |||||||||||||||||||||||||
| Total assets | $ | 1,253,050 | $ | 1,252,727 | |||||||||||||||||||||||
| LIABILITIES AND EQUITY: | |||||||||||||||||||||||||||
| Interest-bearing liabilities | |||||||||||||||||||||||||||
| NOW accounts | $ | 76,874 | 132 | 0.69 | $ | 84,020 | 242 | 1.15 | |||||||||||||||||||
| Savings accounts | 99,805 | 88 | 0.35 | 97,957 | 152 | 0.62 | |||||||||||||||||||||
| Money market accounts | 128,095 | 190 | 0.59 | 78,934 | 128 | 0.65 | |||||||||||||||||||||
| Time certificates of deposit | 319,382 | 1,289 | 1.61 | 356,203 | 1,837 | 2.06 | |||||||||||||||||||||
| Total interest-bearing deposits | 624,156 | 1,699 | 617,114 | 2,359 | |||||||||||||||||||||||
| Short-term borrowings and long-term debt | 295,868 | 1,683 | 2.28 | 306,532 | 1,769 | 2.31 | |||||||||||||||||||||
| Interest-bearing liabilities | 920,024 | 3,382 | 1.47 | 923,646 | 4,128 | 1.79 | |||||||||||||||||||||
| Noninterest-bearing deposits | 98,789 | 85,661 | |||||||||||||||||||||||||
| Other noninterest-bearing liabilities | 10,526 | 13,116 | |||||||||||||||||||||||||
| Total noninterest-bearing liabilities | 109,315 | 98,777 | |||||||||||||||||||||||||
| Total liabilities | 1,029,339 | 1,022,423 | |||||||||||||||||||||||||
| Total equity | 223,711 | 230,304 | |||||||||||||||||||||||||
| Total liabilities and equity | $ | 1,253,050 | $ | 1,252,727 | |||||||||||||||||||||||
| Less: Tax-equivalent adjustment(2) | (230 | ) | (206 | ) | |||||||||||||||||||||||
| Net interest and dividend income | $ | 7,544 | $ | 6,918 | |||||||||||||||||||||||
| Net interest rate spread(4) | 2.29 | % | 2.04 | % | |||||||||||||||||||||||
| Net interest margin(5) | 2.60 | % | 2.40 | % | |||||||||||||||||||||||
| Average interest-earning assets to average interest-bearing liabilities | |||||||||||||||||||||||||||
| 128.9 | 127.3 | ||||||||||||||||||||||||||
| For the Years Ended December 31, | ||||||||||||||||||||||||||||
| 2011 | 2010 | |||||||||||||||||||||||||||
| Average | Avg Yield/ | Average | Avg Yield/ | |||||||||||||||||||||||||
| Balance | Interest | Cost | Balance | Interest | Cost | |||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||
| ASSETS: | ||||||||||||||||||||||||||||
| Interest-earning assets | ||||||||||||||||||||||||||||
| Loans(1)(2) | $ | 536,084 | $ | 25,485 | 4.75 | % | $ | 482,215 | $ | 24,887 | 5.16 | % | ||||||||||||||||
| Securities(2) | 619,704 | 20,376 | 3.29 | 634,531 | 22,055 | 3.48 | ||||||||||||||||||||||
| Other investments - at cost | 14,034 | 61 | 0.43 | 12,900 | 24 | 0.19 | ||||||||||||||||||||||
| Short-term investments(3) | 7,503 | 1 | 0.01 | 13,948 | 8 | 0.06 | ||||||||||||||||||||||
| Total interest-earning assets | 1,177,325 | 45,923 | 3.90 | 1,143,594 | 46,974 | 4.11 | ||||||||||||||||||||||
| Total noninterest-earning assets | 70,133 | 78,842 | ||||||||||||||||||||||||||
| Total assets | $ | 1,247,458 | $ | 1,222,436 | ||||||||||||||||||||||||
| LIABILITIES AND EQUITY: | ||||||||||||||||||||||||||||
| Interest-bearing liabilities | ||||||||||||||||||||||||||||
| NOW accounts | $ | 85,094 | 762 | 0.90 | $ | 76,954 | 933 | 1.21 | ||||||||||||||||||||
| Savings accounts | 104,112 | 515 | 0.49 | 112,546 | 824 | 0.73 | ||||||||||||||||||||||
| Money market accounts | 99,319 | 619 | 0.62 | 56,082 | 358 | 0.64 | ||||||||||||||||||||||
| Time certificates of deposit | 332,327 | 5,693 | 1.71 | 347,590 | 7,735 | 2.23 | ||||||||||||||||||||||
| Total interest-bearing deposits | 620,852 | 7,589 | 593,172 | 9,850 | ||||||||||||||||||||||||
| Short-term borrowings and long-term debt | 303,909 | 6,878 | 2.26 | 296,752 | 6,915 | 2.33 | ||||||||||||||||||||||
| Interest-bearing liabilities | 924,761 | 14,467 | 1.56 | 889,924 | 16,765 | 1.88 | ||||||||||||||||||||||
| Noninterest-bearing deposits | 91,024 | 83,077 | ||||||||||||||||||||||||||
| Other noninterest-bearing liabilities | 9,754 | 9,513 | ||||||||||||||||||||||||||
| Total noninterest-bearing liabilities | 100,778 | 92,590 | ||||||||||||||||||||||||||
| Total liabilities | 1,025,539 | 982,514 | ||||||||||||||||||||||||||
| Total equity | 221,919 | 239,922 | ||||||||||||||||||||||||||
| Total liabilities and equity | $ | 1,247,458 | $ | 1,222,436 | ||||||||||||||||||||||||
| Less: Tax-equivalent adjustment(2) | (918 | ) | (827 | ) | ||||||||||||||||||||||||
| Net interest and dividend income | $ | 30,538 | $ | 29,382 | ||||||||||||||||||||||||
| Net interest rate spread(4) | 2.34 | % | 2.23 | % | ||||||||||||||||||||||||
| Net interest margin(5) | 2.67 | % | 2.64 | % | ||||||||||||||||||||||||
| Average interest-earning assets to average interest-bearing liabilities | ||||||||||||||||||||||||||||
| 127.3 | 128.5 | |||||||||||||||||||||||||||
(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
