Western New England Bancorp (WNEB) 8-K Strong Loan Growth Results in Continued Improvement in Balance Sheet Composition

Westfield Financial, Inc. 8-K

Exhibit 99.1

For further information contact:

James C. Hagan, President & CEO

Leo R. Sagan, Jr., CFO

Meghan Hibner, VP Investor Relations Officer

413-568-1911

WESTFIELD FINANCIAL, INC. REPORTS RESULTS FOR THE QUARTER ENDED JUNE 30, 2016 AND
DECLARES QUARTERLY DIVIDEND

Strong Loan Growth Results in Continued Improvement in Balance Sheet Composition

Westfield, Massachusetts, July 27, 2016:Westfield Financial, Inc. (the “Company” or “Westfield”) (NasdaqGS:WFD), the holding company for Westfield Bank (the “Bank”), reported net income of $389,000, or $0.02 per basic and diluted share, for the quarter ended June 30, 2016, compared to $1.4 million, or $0.08 per basic and diluted share, for the quarter ended June 30, 2015. For the six months ended June 30, 2016, net income was $2.4 million, or $0.14 per basic and diluted share, compared to $2.7 million, or $0.15 per basic and diluted share, for the same period in 2015.

The quarter and six months ended June 30, 2016 were impacted by non-recurring expenses of $929,000 and $1.1 million, respectively, related to our previously announced and pending merger with Chicopee Bancorp, Inc. (“Chicopee”). The transaction is expected to close in the fourth quarter of 2016, subject to customary closing conditions, including receipt of regulatory approvals and the approvals of the shareholders of Westfield and Chicopee. Excluding these non-recurring expenses, net income before income taxes for the quarter and six months ended June 30, 2016 was $1.6 million and $4.5 million, respectively, compared to $1.8 million and $3.6 million a year ago.

Selected financial highlights include:

• Total loans increased $146.8 million, or 19.3%, to $906.2 million at June 30, 2016 compared to $759.4 million at June 30, 2015. This was primarily due to increases in residential loans of $96.9 million and commercial real estate loans of $50.7 million, partially offset by a decrease in commercial and industrial loans of $3.8 million. On a sequential-quarter basis, total loans increased $79.2 million, or 9.6%, during the second quarter of 2016. This was due to increases in residential loans of $52.9 million, commercial real estate loans of $15.7 million and commercial and industrial loans of $9.7 million.
• Securities decreased $208.9 million, or 40.4%, to $307.8 million at June 30, 2016, compared to $516.7 million at June 30, 2015. The decrease in securities was primarily driven by sales of securities, with the proceeds used to fund loan growth and pay down Federal Home Loan Bank (“FHLB”) borrowings, both strategic initiatives to improve the balance sheet mix. On a sequential-quarter basis, securities decreased $8.5 million, or 2.7%, at June 30, 2016.
• Short-term borrowings and long-term debt decreased a total of $84.3 million, or 27.5%, to $222.7 million at June 30, 2016 compared to $307.0 million at June 30, 2015. On a sequential-quarter basis, short-term borrowings and long-term debt decreased $26.8 million, or 10.7%, during the second quarter of 2016. This is consistent with Management’s intent to reduce reliance on wholesale funding.
• Net interest and dividend income increased $223,000 to $8.0 million for the quarter ended June 30, 2016 compared to $7.8 million for the comparable 2015 period. Net interest margin increased 12 basis points to 2.62% for the three months ended June 30, 2016 from 2.50% in the comparable 2015 period. On a sequential-quarter basis, net interest and dividend income decreased $241,000 for the quarter ended June 30, 2016, primarily due to the timing of redeploying funds from lower yielding short-term investments into loans. On a sequential quarter basis, the net interest margin was relatively flat at 2.62% for the quarter ended June 30, 2016, compared to 2.61% for the quarter ended March 31, 2016.

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James C. Hagan, President and CEO stated, “We continue to actively focus on the improvement of our balance sheet mix by increasing loans and decreasing securities. During the first quarter 2016, we took advantage of market conditions to further reduce our securities portfolio, which created a large cash position at March 31, 2016. We were successful in utilizing the cash for loan growth while also reducing our reliance on wholesale funding during the second quarter 2016.”

Hagan went on to say, “We’re very excited about our previously announced pending merger with Chicopee Bancorp and continue to work diligently through the approval process. The complimentary nature of our branch footprints creates opportunity for growth and expansion into new markets for Westfield, which will be extremely favorable for the shareholders, customers, employees and communities of both institutions.”

Additional Income Statement Discussion

Net interest and dividend income increased $875,000 to $16.2 million for the six months ended June 30, 2016, as compared to $15.4 million for the six months ended June 30, 2015. The net interest margin for the six months ended June 30, 2016 increased 10 basis points to 2.61%, as compared to 2.51% for the same period in 2015. This was a result of an increase of 11 basis points in the yield on average interest-earning assets along with the cost of average interest-bearing liabilities remaining stable compared to the same period.

Non-interest income increased $15,000 to $1.3 million for the quarter ended June 30, 2016, compared to $1.2 million for the quarter ended June 30, 2015. For the six months ended June 30, 2016, non-interest income decreased $198,000 to $2.3 million, compared to $2.5 million for the same period in 2015. Net gains on the sales of securities decreased $410,000 for the six months ended 2016, while service charges and fees increased $266,000 for the same period.

Non-interest expense increased $1.1 million to $8.0 million from $6.9 million for the quarter ended June 30, 2016, compared to the same period in 2015. Non-interest expense increased $1.5 million to $15.1 million from $13.6 million for the six months ended June 30, 2016, compared to the same period in 2015. The increases for both periods were primarily due to merger related expenses of $929,000 and $1.1 million, respectively. The efficiency ratio was 80.4% and 77.0% for the six months ended June 30, 2016 and 2015, respectively.

Additional Balance Sheet Discussion

Cash and cash equivalents decreased $133.9 million on a sequential-quarter basis, to $21.3 million at June 30, 2016 compared to $155.2 million at March 31, 2016. The Bank sold $136.8 million in securities at the end of the first quarter 2016 which resulted in a larger than normal cash and cash equivalent balance at March 31, 2016. The funds were redeployed throughout the second quarter 2016, primarily to fund loan growth and pay down borrowings. Cash and cash equivalents increased $7.6 million compared to $13.7 million at June 30, 2015.

Total deposits increased $23.2 million, or 2.6%, to $920.9 million at June 30, 2016, compared to $897.7 million at June 30, 2015. This was primarily due to increases in money market accounts of $35.8 million and checking accounts of $6.5 million, offset partially by a decrease in term accounts of $19.1 million. The decrease in term accounts from June 30, 2015 was primarily due to a $13.4 million decrease in brokered and listing service deposits. Total deposits decreased $7.2 million, or 0.8%, to $920.9 million at June 30, 2016, compared to $928.1 million at March 31, 2016. This was primarily due to an $11.9 million decrease in brokered and listing service deposits.

Shareholders’ equity was $144.6 million at June 30, 2016 and $143.0 million at March 31, 2016, which represented 11.1% and 10.5% of total assets at June 30 and March 31, 2016, respectively. The increase in shareholders’ equity during the quarter reflects an increase in accumulated other comprehensive income of $1.5 million and net income of $389,000, both partially offset by the payment of regular dividends of $519,000 for the quarter ended June 30, 2016.

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Credit Quality

The allowance for loan losses was $9.6 million, $8.9 million and $8.3 million at June 30, 2016, March 31, 2016 and June 30, 2015, representing 1.06%, 1.07% and 1.09% of total loans, respectively. This represents 119.0%, 106.8% and 103.5% of nonperforming loans, respectively. The provision for loan losses of $625,000 recorded in the second quarter was primarily the result of growth in the loan portfolio.

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

	Three Months Ended
	June 30,			March 31,			June 30,
	2016			2016			2015
	(In thousands)
Balance, beginning of period	$	8,855		$	8,840		$	8,035
Provision		625			(600	)		350
Charge-offs		(18	)		(243	)		(101	)
Recoveries		108			858			11
Balance, end of period	$	9,570		$	8,855		$	8,295

Nonperforming loans were $8.0 million and $8.3 million, representing 0.89% and 1.00% of total loans at June 30, 2016 and March 31, 2016, respectively. Loans delinquent 30 – 89 days increased $1.2 million to $2.5 million at June 30, 2016 from $1.4 million at March 31, 2016. There are no loans 90 or more days past due and still accruing interest.

Declaration of Quarterly Dividend

The Board of Directors approved the declaration of a quarterly cash dividend of $0.03 per share. The dividend is payable on August 24, 2016 to all shareholders of record on August 10, 2016.

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 operate through 13 banking offices located in Agawam, East Longmeadow, Feeding Hills, Holyoke, Southwick, Springfield, West Springfield and Westfield, Massachusetts, and Granby and Enfield, Connecticut.  To learn more, visit our website at www.westfieldbank.com.

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, 2015, as amended by Amendment No. 1 to our Annual Report on Form 10-K for the year ended December 31, 2015, 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.

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WESTFIELD FINANCIAL, INC. AND SUBSIDIARIES

Consolidated Statements of Income and Other Data

(Dollars in thousands, except share and per share data)

(Unaudited)

	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,
	2016			2016			2015			2015			2015			2016			2015
INTEREST AND DIVIDEND INCOME:
Loans	$	8,639		$	8,250		$	8,072		$	7,849		$	7,371		$	16,889		$	14,601
Securities		1,750			2,554			2,609			2,997			3,049			4,305			5,935
Other investments - at cost		136			132			133			126			69			268			137
Federal funds sold, interest-bearing deposits and other short-term investments		29			25			6			2			5			53			11
Total interest and dividend income		10,554			10,961			10,820			10,974			10,494			21,515			20,684
INTEREST EXPENSE:
Deposits		1,535			1,472			1,436			1,414			1,380			3,007			2,721
Long-term debt		461			842			889			1,083			1,092			1,303			2,162
Short-term borrowings		556			404			342			317			243			960			431
Total interest expense		2,552			2,718			2,667			2,814			2,715			5,270			5,314
Net interest and dividend income		8,002			8,243			8,153			8,160			7,779			16,245			15,370
PROVISION FOR LOAN LOSSES		625			(600	)		475			150			350			25			650
Net interest and dividend income after provision for loan losses		7,377			8,843			7,678			8,010			7,429			16,220			14,720
NONINTEREST INCOME:
Service charges and fees		859			884			865			789			840			1,743			1,477
Income from bank-owned life insurance		403			361			378			374			407			764			774
Loss on prepayment of borrowings		—			(915	)		—			(429	)		(278	)		(915	)		(871	)
Gain on sales of securities, net		(2	)		685			(1	)		414			276			683			1,093
Total noninterest income		1,260			1,015			1,242			1,148			1,245			2,275			2,473
NONINTEREST EXPENSE:
Salaries and employees benefits		3,910			3,871			3,822			3,903			3,863			7,781			7,684
Occupancy		804			801			795			784			818			1,605			1,659
Data processing		626			621			582			636			559			1,247			1,143
Professional fees		545			516			568			596			488			1,061			959
FDIC insurance		190			190			208			212			188			380			381
Merger related expenses		929			154			55			—			—			1,083			—
Other		994			919			960			736			949			1,913			1,750
Total noninterest expense		7,998			7,072			6,990			6,867			6,865			15,070			13,576
INCOME BEFORE INCOME TAXES		639			2,786			1,930			2,291			1,809			3,425			3,617
INCOME TAX PROVISION		250			822			529			680			445			1,072			915
NET INCOME	$	389		$	1,964		$	1,401		$	1,611		$	1,364		$	2,353		$	2,702
Basic earnings per share	$	0.02		$	0.11		$	0.08		$	0.09		$	0.08		$	0.14		$	0.15
Weighted average shares outstanding		17,337,955			17,304,088			17,329,248			17,461,472			17,519,562			17,321,022			17,601,575
Diluted earnings per share	$	0.02		$	0.11		$	0.08		$	0.09		$	0.08		$	0.14		$	0.15
Weighted average diluted shares outstanding		17,337,955			17,304,088			17,329,248			17,461,472			17,519,562			17,321,022			17,601,575
Other Data:
Return on average assets (1)		0.12	%		0.58	%		0.41	%		0.47	%		0.41	%		0.35	%		0.41	%
Return on average equity (1)		1.14	%		5.61	%		3.99	%		4.69	%		3.89	%		3.40	%		3.86	%
Efficiency ratio (2)		86.33	%		74.54	%		74.39	%		73.66	%		76.06	%		80.36	%		77.04	%
Net interest margin		2.62	%		2.61	%		2.58	%		2.53	%		2.50	%		2.61	%		2.51	%

__________

(1) Annualized.

(2) The efficiency ratio represents the ratio of operating expenses divided by the sum of net interest and dividend income and noninterest income, excluding gain and loss on sale of securities, gain on bank-owned life insurance death benefit and loss on prepayment of borrowings.

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WESTFIELD FINANCIAL, INC. AND SUBSIDIARIES

Consolidated Balance Sheets and Other Data

(Dollars in thousands, except per share data)

(Unaudited)

	June 30,			March 31,			December 31,			September 30,			June 30,
	2016			2016			2015			2015			2015
Cash and cash equivalents	$	21,267		$	155,194		$	13,703		$	21,980		$	13,694
Securities available for sale, at fair value		296,565			302,224			182,590			191,324			245,004
Securities held to maturity, at cost		—			—			238,219			248,757			256,303
Federal Home Loan Bank of Boston and other  restricted stock - at cost		11,267			14,080			15,074			15,839			15,372
Loans		906,212			826,963			818,213			806,893			759,382
Allowance for loan losses		9,570			8,855			8,840			8,372			8,295
Net loans		896,642			818,108			809,373			798,521			751,087
Bank-owned life insurance		50,994			50,591			50,230			49,852			49,477
Other assets		29,570			28,747			30,741			30,942			30,749
TOTAL ASSETS	$	1,306,305		$	1,368,944		$	1,339,930		$	1,357,215		$	1,361,686
Total deposits	$	920,912		$	928,124		$	900,363		$	909,041		$	897,714
Short-term borrowings		144,707			158,593			128,407			121,222			111,251
Long-term debt		78,032			90,943			153,358			166,407			195,772
Trades pending settlement		—			30,570			—			—			—
Other liabilities		18,085			17,719			18,336			20,937			17,124
TOTAL LIABILITIES		1,161,736			1,225,949			1,200,464			1,217,607			1,221,861
TOTAL SHAREHOLDERS’ EQUITY		144,569			142,995			139,466			139,608			139,825
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,306,305		$	1,368,944		$	1,339,930		$	1,357,215		$	1,361,686
Book value per share	$	7.89		$	7.83		$	7.63		$	7.59		$	7.56
Other Data:
30- 89 day delinquent loans	$	2,547		$	1,358		$	2,876		$	5,882		$	1,744
Nonperforming loans		8,043			8,288			8,080			7,347			8,013
Nonperforming loans as a percentage of total loans		0.89	%		1.00	%		0.99	%		0.91	%		1.06	%
Nonperforming assets as a percentage of total assets		0.62	%		0.61	%		0.60	%		0.54	%		0.59	%
Allowance for loan losses as a percentage of nonperforming loans		118.99	%		106.84	%		109.41	%		113.95	%		103.52	%
Allowance for loan losses as a percentage of total loans		1.06	%		1.07	%		1.08	%		1.04	%		1.09	%

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The following tables set forth the information relating to our average balances and net interest income for the three months ended June 30, 2016, March 31, 2016, and June 30, 2015, and the six months ended June 30, 2016 and 2015, and reflect the average yield on interest-earning assets and average cost of interest-bearing liabilities for the periods indicated.

	Three Months Ended
	June 30, 2016								March 31, 2016								June 30, 2015
	Average					Avg Yield/			Average					Avg Yield/			Average					Avg Yield/
	Balance		Interest			Cost			Balance		Interest			Cost			Balance		Interest			Cost
	(Dollars in thousands)
ASSETS:
Interest-earning assets
Loans(1)(2)	$	869,877	$	8,672			3.99	%	$	823,335	$	8,280			4.02	%	$	742,475	$	7,401			3.99	%
Securities(2)		297,797		1,764			2.37			411,034		2,590			2.52			498,093		3,135			2.52
Other investments - at cost		15,349		136			3.54			16,051		132			3.29			16,460		69			1.68
Short-term investments(3)		54,892		29			0.21			28,276		25			0.35			11,231		5			0.18
Total interest-earning assets		1,237,915		10,601			3.43			1,278,696		11,027			3.45			1,268,259		10,610			3.35
Total noninterest-earning assets		73,371								80,510								80,303
Total assets	$	1,311,286							$	1,359,206							$	1,348,562
LIABILITIES AND EQUITY:
Interest-bearing liabilities
Interest-bearing accounts	$	32,337		21			0.26		$	30,531		20			0.26		$	35,954		20			0.22
Savings accounts		76,627		23			0.12			76,958		20			0.10			75,669		20			0.11
Money market accounts		266,056		265			0.40			248,597		227			0.37			236,322		208			0.35
Time certificates of deposit		393,585		1,226			1.25			398,598		1,205			1.21			390,616		1,132			1.16
Total interest-bearing deposits		768,605		1,535						754,684		1,472						738,561		1,380
Short-term borrowings and long-term debt		231,827		1,017			1.75			290,069		1,246			1.72			307,892		1,335			1.73
Interest-bearing liabilities		1,000,432		2,552			1.02			1,044,753		2,718			1.04			1,046,453		2,715			1.04
Noninterest-bearing deposits		161,639								155,887								143,323
Other noninterest-bearing liabilities		11,611								17,987								18,302
Total noninterest-bearing liabilities		173,250								173,874								161,625
Total liabilities		1,173,682								1,218,627								1,208,078
Total equity		137,604								140,579								140,484
Total liabilities and equity	$	1,311,286							$	1,359,206							$	1,348,562
Less: Tax-equivalent adjustment(2)				(47	)							(66	)							(116	)
Net interest and dividend income			$	8,002							$	8,243							$	7,779
Net interest rate spread(4)							2.41	%							2.41	%							2.31	%
Net interest margin(5)							2.62	%							2.61	%							2.50	%
Ratio of average interest-earning assets to average interest-bearing liabilities							123.74								122.39								121.20

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	Six Months Ended June 30,
	2016								2015
	Average					Avg Yield/			Average					Avg Yield/
	Balance		Interest			Cost			Balance		Interest			Cost
	(Dollars in thousands)
ASSETS:
Interest-earning assets
Loans(1)(2)	$	846,606	$	16,950			4.00	%	$	735,003	$	14,662			3.99	%
Securities(2)		354,415		4,353			2.46			490,051		6,109			2.49
Other investments - at cost		15,700		268			3.41			16,347		138			1.69
Short-term investments(3)		41,584		53			0.25			13,475		11			0.16
Total interest-earning assets		1,258,305		21,624			3.44			1,254,876		20,920			3.33
Total noninterest-earning assets		76,940								79,197
Total assets	$	1,335,245							$	1,334,073
LIABILITIES AND EQUITY:
Interest-bearing liabilities
Interest-bearing checking	$	31,434		41			0.26		$	37,011		41			0.22
Savings accounts		76,792		42			0.11			75,697		39			0.10
Money market accounts		257,327		492			0.38			234,878		429			0.37
Time certificates of deposit		396,091		2,432			1.23			379,600		2,212			1.17
Total interest-bearing deposits		761,644		3,007						727,186		2,721
Short-term borrowings and long-term debt		260,948		2,263			1.73			308,134		2,593			1.68
Interest-bearing liabilities		1,022,592		5,270			1.03			1,035,320		5,314			1.03
Noninterest-bearing deposits		158,763								139,136
Other noninterest-bearing liabilities		14,799								18,384
Total noninterest-bearing liabilities		173,562								157,520
Total liabilities		1,196,154								1,192,840
Total equity		139,091								141,233
Total liabilities and equity	$	1,335,245							$	1,334,073
Less: Tax-equivalent adjustment(2)				(109	)							(236	)
Net interest and dividend income			$	16,245							$	15,370
Net interest rate spread(4)							2.41	%							2.30	%
Net interest margin(5)							2.61	%							2.51	%
Ratio of average interest-earning assets to average interest-bearing liabilities							123.05								121.21

__________

(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.

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