Western New England Bancorp (WNEB) 8-K Results of Operations and Financial Condition

Exhibit 99.1

Westfield Financial, Inc. Reports Results for the Quarter Ended March 31, 2013, Declares Regular and Special Dividends and Announces 5% Repurchase Program

WESTFIELD, Mass.--(BUSINESS WIRE)--May 1, 2013--Westfield Financial, Inc. (the “Company”) (NasdaqGS:WFD), the holding company for Westfield Bank (the “Bank”), reported net income of $1.8 million, or $0.08 per diluted share, for the quarter ended March 31, 2013, compared to $1.6 million, or $0.07 per diluted share, for the quarter ended December 31, 2012, and $2.3 million, or $0.09 per diluted share, for the quarter ended March 31, 2012.

Selected financial highlights for the first quarter 2013 include:

• The net interest margin increased 12 bp to 2.59% for the quarter ended March 31, 2013, compared to 2.47% for the quarter ended December 31, 2012. Net interest and dividend income increased $76,000 to $7.7 million for the quarter ended March 31, 2013, compared to $7.6 million for the quarter ended December 31, 2012. The decrease in the cost of average interest-bearing liabilities was greater than the decrease in the yield on average interest-earning assets, primarily due to the prepayment of repurchase agreements in the first quarter 2013 and also late in the fourth quarter 2012.
• The Bank prepaid repurchase agreements in the amount of $9.0 million and incurred a prepayment expense of $1.4 million for the first quarter 2013. The repurchase agreements had a weighted average cost of 3.77%. The Bank previously announced that during the last week of December 2012, it prepaid repurchase agreements in the amount $28.0 million which had a weighted average cost of 3.06%. This resulted in a prepayment expense of $1.0 million incurred in the quarter ended December 31, 2012. The prepayments of repurchase agreements resulted in a decrease to the cost of funds and an increase to the net interest margin.
• During the first quarter 2013, total loans increased $1.4 million to $596.3 million. This was primarily due to an increase in residential loans of $4.2 million to $223.9 million and an increase in commercial and industrial loans of $181,000 to $126.2 million. Commercial real estate loans decreased $2.3 million to $243.5 million at March 31, 2013.
• The Company repurchased 941,080 shares of its common stock pursuant to its stock repurchase program for a total of $7.1 million, which equates to 4.1% of the outstanding shares as of December 31, 2012. The shares were repurchased at an average price of $7.52.
• The credit for loan losses was $235,000 for the first quarter 2013 as a result of continued improvement in the overall risk profile of the commercial loan portfolio. Classified loans that previously carried higher allowances showed considerable improvement, resulting in a lower allowance.

Income Statement Discussion and Analysis

Net interest and dividend income increased $76,000 to $7.7 million for the quarter ended March 31, 2013, compared to $7.6 million for the quarter ended December 31, 2012. The net interest margin increased 12 bp to 2.59% for the quarter ended March 31, 2013, compared to 2.47% for the quarter ended December 31, 2012. The cost of average interest-bearing liabilities decreased 14 basis points, which was partially offset by a decrease of 2 basis points in the yield on average interest-earning assets. The decrease in the cost of funds was primarily due to the prepayment of repurchase agreements in the first quarter 2013 and also late in the fourth quarter 2012.

Net interest and dividend income increased $253,000 to $7.7 million for the three months ended March 31, 2013, as compared to $7.4 million for the same period in 2012. The increase in income was primarily due to a 32 bp decrease in the cost of average interest-bearing liabilities and an increase of $21.6 million in average interest-earning assets, partially offset by a 20 bp decrease in the yield on average interest-earning assets.

Noninterest income decreased $402,000 for the first quarter 2013 compared to the fourth quarter 2012. The fourth quarter 2012 included fee income of $156,000 from a specific commercial loan transaction. In addition, fee income from the third-party mortgage company decreased $131,000 because of management’s decision to retain more residential loans on the balance sheet rather than refer them to the third-party mortgage company.

Net gains on sales of securities were $1.4 million for the first quarter 2013. Management sold mortgage-backed securities that were expected to prepay rapidly and decrease the expected yield. The Bank also prepaid repurchase agreements in the amount of $9.0 million and incurred a prepayment expense of $1.4 million.

Noninterest income decreased $1.6 million for the quarter ended March 31, 2013, compared to the same period in 2012. The 2013 period included a loss of $1.4 million on prepayment of repurchase agreements compared to none in the 2012 period. In addition, net gains on sales of securities were $1.4 million for the quarter ended March 31, 2013, compared to $1.6 million for the same period in 2012.

Noninterest expense decreased $237,000 to $6.5 million for the first quarter 2013, compared to $6.7 million for the fourth quarter 2012. Salaries and benefits decreased $130,000 to $3.8 million in the first quarter 2013 primarily due to the completion of vesting of certain stock-based compensation during the fourth quarter 2012. The fourth quarter 2012 also included $189,000 in other real estate owned (“OREO”) expense primarily due to the write down of an OREO property.

Noninterest expense decreased $335,000 for the quarter ended March 31, 2013, compared to the same period in 2012. This was primarily the result of a decrease in salaries and benefits of $469,000 primarily due to the completion of vesting of certain stock-based compensation in the fourth quarter 2012.

Balance Sheet Growth

Total assets were stable at $1.3 billion at March 31, 2013 and December 31, 2012. Securities decreased $4.4 million to $631.4 million at March 31, 2013, compared to $635.8 million at December 31, 2012.

During the first quarter 2013, total loans increased $1.4 million to $596.3 million. This was primarily due to an increase in residential loans of $4.2 million to $223.9 million and an increase in commercial and industrial loans of $181,000 to $126.2 million. Commercial real estate loans decreased $2.3 million to $243.5 million at March 31, 2013.

Total deposits increased $18.8 million to $772.2 million at March 31, 2013, compared to $753.4 million at December 31, 2012, primarily due to an increase in money market accounts of $19.2 million.

Shareholders’ equity was $179.0 million and $189.2 million, which represented 13.7% and 14.5% of total assets at March 31, 2013, and December 31, 2012, respectively. The decrease in shareholders’ equity during the quarter reflects the repurchase of 941,080 shares of our common stock at a cost of $7.1 million pursuant to the Company’s stock repurchase program, the payment of regular dividends amounting to $1.3 million and a decrease in other comprehensive income of $3.8 million due to the change in fair value of securities. This was partially offset by net income of $1.8 million for the quarter ended March 31, 2013.

On December 7, 2012, the Board of Directors authorized a stock repurchase program under which the Company may purchase up to 2,427,000 shares, or 10% of its outstanding common stock. There were 65,582 shares remaining to be purchased under the repurchase program as of March 31, 2013. These shares were repurchased in April 2013, thus completing the program.

Credit Quality

The allowance for loan losses was $7.6 million at March 31, 2013, and $7.8 million at December 31, 2012, representing 1.27% and 1.31% of total loans, respectively. This represents 255.8% and 259.0% of nonperforming loans at March 31, 2013, and December 31, 2012, respectively.

An analysis of the changes in the allowance for loan losses is as follows:

	Three Months Ended
	March 31,			December 31,			March 31,
	2013			2012			2012
	(In thousands)
Balance, beginning of period	$	7,794		$	8,176		$	7,764
Provision (credit)		(235	)		-			220
Charge-offs		(154	)		(399	)		(199	)
Recoveries		160			17			18
Balance, end of period	$	7,565		$	7,794		$	7,803

During the first quarter 2013, nonperforming loans decreased $52,000 to $3.0 million, representing 0.50% of total loans at March 31, 2013. Loans delinquent 30 – 89 days were $1.9 million at March 31, 2013, and $1.2 million December 31, 2012. There are no loans 90 or more days past due and still accruing interest.

Declaration of Regular and Special Dividends

James C. Hagan, Chief Executive Officer stated, “The Board of Directors approved the declaration of a regular cash dividend of $0.06 per share and a special cash dividend of $0.05 per share. Both dividends are payable on May 29, 2013, to all shareholders of record on May 15, 2013.”

Announcement of 5% Stock Repurchase Program

Mr. Hagan also announced that the Company’s Board of Directors has authorized a stock repurchase program under which the Company may repurchase up to 1,092,000 shares, or 5% of its outstanding common stock as of April 30, 2013. The Company completed its previous stock repurchase program on April 5, 2013.

About Westfield Financial, Inc.

Westfield Financial, Inc. is a Massachusetts-chartered stock holding company and the parent company of Westfield Bank, Elm Street Securities Corporation, WFD Securities, Inc. and WB Real Estate Holdings, LLC. Westfield Financial and its subsidiaries are 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 also recently announced plans to open a full service banking center with branch services, a 24 hour deposit imaging ATM, and a residential and commercial lender at the Granby Village Shops in Granby, Connecticut. This will be our first location outside of western Massachusetts.

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, 2012, and in subsequent filings with the Securities and Exchange Commission. 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
	March 31,			December 31,			March 31,
	2013			2012			2012
INTEREST AND DIVIDEND INCOME:
Loans	$	6,271		$	6,369		$	6,381
Securities		4,057			4,228			4,312
Other investments - at cost		19			23			22
Federal funds sold, interest-bearing deposits and other short-term investments		2			6			-
Total interest and dividend income		10,349			10,626			10,715
INTEREST EXPENSE:
Deposits		1,387			1,478			1,637
Long-term debt		1,258			1,534			1,631
Short-term borrowings		34			20			30
Total interest expense		2,679			3,032			3,298
Net interest and dividend income		7,670			7,594			7,417
(CREDIT) PROVISION FOR LOAN LOSSES		(235	)		-			220
Net interest and dividend income after (credit) provision for loan losses		7,905			7,594			7,197
NONINTEREST INCOME:
Service charges and fees		572			933			509
Income from bank-owned life insurance		385			387			384
Gain on bank-owned life insurance death benefit		-			-			75
Loss on prepayment of borrowings		(1,426	)		(1,017	)		-
Gain on sales of securities, net		1,427			1,051			1,585
Total noninterest income		958			1,354			2,553
NONINTEREST EXPENSE:
Salaries and employees benefits		3,808			3,938			4,277
Occupancy		705			703			705
Data processing		526			511			527
Professional fees		510			470			437
OREO expense		22			189			17
FDIC insurance		161			161			143
Other		783			774			738
Total noninterest expense		6,515			6,746			6,844
INCOME BEFORE INCOME TAXES		2,348			2,202			2,906
INCOME TAX PROVISION		566			648			567
NET INCOME	$	1,782		$	1,554		$	2,339
Basic earnings per share	$	0.08		$	0.07		$	0.09
Weighted average shares outstanding		21,102,021			23,041,733			25,449,759
Diluted earnings per share	$	0.08		$	0.07		$	0.09
Weighted average diluted shares outstanding		21,102,075			23,041,733			25,502,311
Other Data:
Return on average assets (1)		0.56	%		0.47	%		0.74	%
Return on average equity (1)		3.97	%		3.09	%		4.30	%
(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)
	March 31,			December 31,			March 31,
	2013			2012			2012
Cash and cash equivalents	$	19,183		$	11,761		$	17,204
Securities available for sale, at fair value		616,155			621,507			645,913
Federal Home Loan Bank of Boston and other restricted stock - at cost		15,242			14,269			12,243
Loans		596,264			594,918			558,373
Allowance for loan losses		7,565			7,794			7,803
Net loans		588,699			587,124			550,570
Bank-owned life insurance		46,607			46,222			44,153
Other real estate owned		-			964			1,130
Other assets		20,967			19,615			22,400
TOTAL ASSETS	$	1,306,853		$	1,301,462		$	1,293,613
Total deposits	$	772,196		$	753,413		$	748,630
Short-term borrowings		55,827			69,934			70,237
Long-term debt		289,600			278,861			248,275
Other liabilities		10,250			10,067			10,960
TOTAL LIABILITIES		1,127,873			1,112,275			1,078,102
TOTAL SHAREHOLDERS' EQUITY		178,980			189,187			215,511
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,306,853		$	1,301,462		$	1,293,613
Book value per share	$	8.17		$	8.28		$	8.10
Other Data:
30- 89 day delinquent loans	$	1,919		$	1,162		$	4,045
Nonperforming loans		2,957			3,009			2,759
Nonperforming loans as a percentage of total loans		0.50	%		0.51	%		0.49	%
Nonperforming assets as a percentage of total assets		0.23	%		0.31	%		0.30	%
Allowance for loan losses as a percentage of nonperforming loans		255.83	%		259.02	%		282.82	%
Allowance for loan losses as a percentage of total loans		1.27	%		1.31	%		1.40	%

The following tables sets forth the information relating to our average balance at, and net interest income for, the three months ended March 31, 2013, December 31, 2012 and March 31, 2012, and reflect the average yield on interest-earning assets and average cost of interest-bearing liabilities for the periods indicated.

	Three Months Ended
	March 31, 2013							December 31, 2012
	Average					Avg Yield/		Average					Avg Yield/
	Balance		Interest			Cost		Balance		Interest			Cost
	(Dollars in thousands)
ASSETS:
Interest-earning assets
Loans(1)(2)	$	590,290	$	6,309		4.28	%	$	585,026	$	6,408		4.38	%
Securities(2)		613,288		4,202		2.74			642,554		4,396		2.74
Other investments - at cost		16,671		19		0.46			15,929		23		0.58
Short-term investments(3)		8,016		2		0.10			13,330		6		0.18
Total interest-earning assets		1,228,265		10,532		3.43			1,256,839		10,833		3.45
Total noninterest-earning assets		65,848							62,744
Total assets	$	1,294,113						$	1,319,583
LIABILITIES AND EQUITY:
Interest-bearing liabilities
NOW accounts	$	50,195		37		0.29		$	56,089		46		0.33
Savings accounts		91,770		37		0.16			92,432		38		0.16
Money market accounts		174,218		165		0.38			177,358		189		0.43
Time certificates of deposit		326,384		1,148		1.41			323,952		1,205		1.49
Total interest-bearing deposits		642,567		1,387					649,831		1,478
Short-term borrowings and long-term debt		346,382		1,292		1.49			345,033		1,554		1.80
Interest-bearing liabilities		988,949		2,679		1.08			994,864		3,032		1.22
Noninterest-bearing deposits		112,947							112,139
Other noninterest-bearing liabilities		10,050							12,732
Total noninterest-bearing liabilities		122,997							124,871
Total liabilities		1,111,946							1,119,735
Total equity		182,167							199,848
Total liabilities and equity	$	1,294,113						$	1,319,583
Less: Tax-equivalent adjustment(2)				(183	)						(207	)
Net interest and dividend income			$	7,670						$	7,594
Net interest rate spread(4)						2.35	%						2.23	%
Net interest margin(5)						2.59	%						2.47	%
Average interest-earning assets to average interest-bearing liabilities						124.20							126.33

(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 income.

(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.

	Three Months Ended March 31,
	2013				2012
	Average		Avg Yield/		Average		Avg Yield/
	Balance	Interest	Cost		Balance	Interest	Cost
	(Dollars in thousands)
ASSETS:
Interest-earning assets
Loans(1)(2)	$ 590,290	$ 6,309	4.28	%	$ 555,460	$ 6,420	4.62	%
Securities(2)	613,288	4,202	2.74		622,854	4,497	2.89
Other investments - at cost	16,671	19	0.46		14,298	22	0.62
Short-term investments(3)	8,016	2	0.10		14,040	-	0.00
Total interest-earning assets	1,228,265	10,532	3.43		1,206,652	10,939	3.63
Total noninterest-earning assets	65,848				64,916
Total assets	$ 1,294,113				$ 1,271,568
LIABILITIES AND EQUITY:
Interest-bearing liabilities
NOW accounts	$ 50,195	37	0.29		$ 68,230	102	0.60
Savings accounts	91,770	37	0.16		97,957	65	0.27
Money market accounts	174,218	165	0.38		157,086	228	0.58
Time certificates of deposit	326,384	1,148	1.41		315,493	1,242	1.57
Total interest-bearing deposits	642,567	1,387			638,766	1,637
Short-term borrowings and long-term debt	346,382	1,292	1.49		305,014	1,661	2.18
Interest-bearing liabilities	988,949	2,679	1.08		943,780	3,298	1.40
Noninterest-bearing deposits	112,947				99,491
Other noninterest-bearing liabilities	10,050				10,317
Total noninterest-bearing liabilities	122,997				109,808
Total liabilities	1,111,946				1,053,588
Total equity	182,167				217,980
Total liabilities and equity	$ 1,294,113				$ 1,271,568
Less: Tax-equivalent adjustment(2)		(183)				(224)
Net interest and dividend income		$ 7,670				$ 7,417
Net interest rate spread(4)			2.35	%			2.23	%
Net interest margin(5)			2.59	%			2.55	%
Average interest-earning assets to average interest-bearing liabilities			124.20				127.85

(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 income.

(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, President & CEO, 413-568-1911
or
Leo R. Sagan, Jr., CFO, 413-568-1911