SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
______________________
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________________ to ___________________
Commission file number 001-16767
Westfield Financial, Inc.
(Exact name of registrant as specified in its charter)
Massachusetts 73-1627673
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
141 Elm Street, Westfield, Massachusetts 01086
(Address of principal executive offices)
(Zip Code)
(413) 568-1911
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding twelve months (or for such
shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes_X_ No___.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
Outstanding at
Class November 1, 2002
----- ----------------
Common Stock 10,213,110
$.01 Par Value Per Share
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements of Westfield Financial, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited) - September 30, 2002
and December 31, 2001
Consolidated Statements of Income (Unaudited) - Three and
nine months ended September 30, 2002 and 2001
Consolidated Statements of Changes in Stockholders' Equity
(Unaudited) - Nine months ended September 30, 2002
Consolidated Statements of Cash Flows (Unaudited) - Nine months
ended September 30, 2002 and September 30, 2001
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Item 4. Controls and Procedures
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
1
WESTFIELD FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Balance Sheets - Unaudited
(Dollars in Thousands)
September 30, December 31,
2002 2001
------------- ------------
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ASSETS
Cash and due from banks $ 14,135 $ 14,169
Federal funds sold 27,380 34,267
Interest-bearing deposits 15,127 8,599
-------------------------
CASH AND CASH EQUIVALENTS 56,642 57,035
-------------------------
SECURITIES :
Available for sale-at estimated fair value 75,227 74,184
Held to maturity-at amortized cost (estimated fair
value of $ 37,046 in 2002, and $ 46,155 in 2001). 36,573 45,614
MORTGAGE BACKED SECURITIES:
Available for sale- at estimated fair value 84,824 87,150
Held to maturity- at amortized cost (estimated fair
value of $ 133,169 in 2002, and $ 81,367 in 2001). 131,416 81,007
FEDERAL HOME LOAN BANK OF 3,933 3,634
BOSTON AND OTHER STOCK
LOANS- Net of allowance for loan losses of $4,389
in 2002, and $3,923 in 2001 386,503 413,546
PREMISES AND EQUIPMENT, NET 13,033 13,581
ACCRUED INTEREST AND DIVIDENDS 4,017 4,201
OTHER ASSETS 3,229 2,780
-------------------------
TOTAL ASSETS $795,397 $782,732
=========================
LIABILITIES AND EQUITY
LIABILITIES
DEPOSITS :
Noninterest bearing $ 49,403 $ 48,247
Interest bearing 603,591 588,862
-------------------------
Total deposits 652,994 637,109
-------------------------
CUSTOMER REPURCHASE AGREEMENTS 9,928 6,061
OTHER LIABILITIES 6,732 8,245
-------------------------
TOTAL LIABILITIES 669,654 651,415
-------------------------
EQUITY :
Preferred stock - $.01 par value, 5,000,000 shares
authorized, none outstanding - -
Common stock - $.01 par value, 10,580,000 shares
authorized, 10,213,110 shares issued and outstanding 106 106
Additional paid-in capital 47,411 47,623
Unallocated Common Stock of Employee Stock Ownership Plan (5,621) -
Retained Earnings 83,607 81,808
Accumulated other comprehensive income 240 1,780
-------------------------
Total equity 125,743 131,317
-------------------------
TOTAL LIABILITIES AND EQUITY $795,397 $782,732
=========================
See accompanying notes to unaudited consolidated financial statements.
2
WESTFIELD FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Income - Unaudited
(Dollars in Thousands except per share data)
Three Months Nine Months
Ended September 30, Ended September 30,
2002 2001 2002 2001
---- ---- ---- ----
<s> <c> <c> <c> <c>
INTEREST AND DIVIDEND INCOME:
Residential and commercial real estate loans $ 4,987 $ 5,745 $ 15,475 $18,952
Securities and mortgage backed securities 3,391 3,332 10,302 8,943
Consumer loans 1,000 1,388 3,214 4,308
Commercial and industrial loans 1,025 940 2,846 2,671
Federal funds sold 100 54 270 342
Stocks 155 100 438 301
Interest bearing deposits 87 138 272 455
---------- ------- ---------- -------
Total interest and dividend income 10,745 11,697 32,817 35,972
---------- ------- ---------- -------
INTEREST EXPENSE:
Deposits 4,578 5,914 14,300 19,187
Customer repurchase agreements 59 49 160 200
Other borrowings - 26 - 26
---------- ------- ---------- -------
Total interest expense 4,637 5,989 14,460 19,413
---------- ------- ---------- -------
Net interest and dividend income 6,108 5,708 18,357 16,559
PROVISION FOR LOAN LOSSES 234 530 734 1,130
---------- ------- ---------- -------
Net interest and dividend income
after provision for loan losses 5,874 5,178 17,623 15,429
---------- ------- ---------- -------
NONINTEREST INCOME:
Service charges and fees 417 355 1,179 1,024
Gain (loss) on sales and writedowns
of securities, net (139) 452 (896) 622
---------- ------- ---------- -------
Total noninterest income 278 807 283 1,646
---------- ------- ---------- -------
NONINTEREST EXPENSE:
Salaries and employees benefits 2,286 1,909 6,932 5,680
Occupancy 472 501 1,352 1,311
Computer operations 387 360 1,162 1,111
Stationery, supplies, and postage 127 130 372 435
Other 948 863 2,947 2,722
---------- ------- ---------- -------
Total noninterest expense 4,220 3,763 12,765 11,259
---------- ------- ---------- -------
INCOME BEFORE INCOME TAXES 1,932 2,222 5,141 5,816
INCOME TAXES 661 758 1,755 1,980
---------- ------- ---------- -------
NET INCOME $ 1,271 $ 1,464 $ 3,386 $ 3,836
==============================================
Basic and diluted earnings per share $ 0.12 N/A $ 0.33 N/A
Average shares outstanding 10,298,797 N/A 10,403,483 N/A
See accompanying notes to unaudited consolidated financial statements.
3
WESTFIELD FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - UNAUDITED
(Dollars in Thousands)
Employee Accumulated
Additional Stock Other
Common Paid-in Retained Ownership Comprehensive
Stock Capital Earnings Plan Income Total
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Balance at January 1, 2002 $106 $47,623 $81,808 $ - $ 1,780 $131,317
Comprehensive income:
Net income - - 3,386 - - 3,386
Unrealized losses on securities arising
during the period, net of taxes of $1,098 - - - - (2,131) (2,131)
Reclassification for losses included
in net income, net of taxes $305 - - - - 591 591
--------
Comprehensive income 1,846
Purchase of common stock in connection
with employee benefit programs - - - (5,621) - (5,621)
Costs associated with stock conversion - (212) - - - (212)
Cash dividends declared - - (1,587) - - (1,587)
-------------------------------------------------------------------------
Balance at September 30, 2002 $106 $47,411 $83,607 $(5,621) $ 240 $125,743
=========================================================================
See the accompanying notes to unaudited consolidated financial statements.
4
Westfield Financial, Inc. and Subsidiaries
Consolidated Statements of Cash Flows- (Unaudited)
(Dollars in Thousands)
Nine Months
Ended Sept 30,
2002 2001
---- ----
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OPERATING ACTIVITIES:
Net Income $ 3,386 $ 3,836
Adjustments to reconcile net income to net
cash provided by operating activities
Provision for loan losses 734 1,130
Valuation adjustment of other real estate owned (77) (30)
Writedown of securities 1,251
Depreciation of premises and equipment 784 780
Net amortization of premiums and discounts on securities, 699 57
mortgage backed securities and mortgage loans
Gain on sale of OREO (62) -
Stock dividend received - (43)
Net realized securities gains (355) (622)
Deferred income tax benefit provision (2,895) 1
Changes in assets and liabilities:
Accrued interest and dividends 184 272
Other assets 512 (911)
Other liabilities 322 620
-------- --------
Net cash provided by operating activities 4,483 5,090
-------- --------
INVESTING ACTIVITIES:
Securities, held to maturity:
Purchases (13,996) (7,099)
Proceeds from calls,maturities and principal collections 23,045 20,909
Securities, available for sale:
Purchases (29,316) (16,692)
Proceeds from sales 4,222 4,854
Proceeds from calls,maturities and principal collections 20,069 20,167
Mortgage backed securities, held to maturity
Purchases (79,510) (54,638)
Principal collections 28,610 9,791
Mortgage backed securities, available for sale
Purchases (44,724) (23,749)
Proceeds from sales 20,214 48,042
Principal collections 27,372 18,355
Purchase of Federal Home Loan Bank of Boston (299) (188)
and other stock
Net decrease (increase) in loans 26,352 (23,794)
Proceeds from sale of other real estate owned 301 55
Net purchases of premises and equipment (236) (2,660)
-------- --------
Net cash used in investing activities (17,896) (6,647)
-------- --------
FINANCING ACTIVITIES:
Net increase in deposits 15,885 23,329
Net increase (decrease) in customer repurchase agreements 3,867 (1,334)
Purchase of common stock in connection with (5,621) -
employee benefit programs
Cash dividends paid (1,058) -
Stock issuance costs (53) -
-------- --------
Net cash provided by financing actvivities 13,020 21,995
-------- --------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS: (393) 20,438
Beginning of period 57,035 32,729
-------- --------
End of period $ 56,642 $ 53,167
======== ========
See the accompanying notes to the unadited consolidated financial statements
5
WESTFIELD FINANCIAL, INC.
AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001
1. REORGANIZATION AND STOCK OFFERING
On December 27, 2001, the Board of Trustees of Westfield Mutual Holding
Company ("Mutual Holding Company") completed a plan of reorganization (the
"Plan") whereby the Mutual Holding Company formed a mid-tier stock holding
company ("Westfield Financial, Inc." or the "Company") and exchanged 100%
of the common stock of Westfield Bank (the "Bank") for a majority interest
in Westfield Financial, Inc. Pursuant to the Plan, shares of Westfield
Financial, Inc. were offered for subscription by depositors with eligible
accounts at the Bank as of specified dates. The Company issued 10,580,000
shares of Common Stock (par value $0.01 per share) at a price of $10.00 per
share, of which 47% of these shares, or 4,972,600 shares, were sold to the
public, including depositors of the Bank and 53% of these shares, or
5,607,400 shares, were issued to the Mutual Holding Company. Net proceeds
from the stock offering totaled $47.7 million. Costs related to the
reorganization were charged against the proceeds from the shares sold in
the reorganization. Reorganization costs of approximately $2.1 million were
incurred.
In connection with the reorganization, a "Liquidation Account" was
established in an amount equal to the net worth of the Mutual Holding
Company set forth in its latest balance sheet contained in the
reorganization prospectus. The function of the Liquidation Account is to
establish a priority on liquidation to the assets of the Company to
Eligible Account Holders (as defined in the Plan) who continue to maintain
deposits in the Bank after the reorganization. In the unlikely event of a
complete liquidation of the Company, and only in such event, each Eligible
Account Holder would receive from the Liquidation Account a liquidation
distribution based on the their proportionate share of the then remaining
qualifying deposits.
Current regulations allow the Bank to pay dividends on its stock if its
regulatory capital would not thereby be reduced below the amount then
required for the aforementioned Liquidation Account. Also, capital
distribution regulations limit the Bank's ability to make capital
distributions which include dividends, stock redemptions and repurchases
and other transactions charged to the capital accounts based on their
capital level and supervisory condition. Federal regulations also limit any
repurchase of the stock for the Bank of its holding company for three years
after reorganization except for repurchases pursuant to an open-market
stock repurchase program with certain regulatory criteria and approval of
the FDIC.
Employee Stock Ownership Plan - In connection with the Reorganization,
Westfield Financial, Inc. established an Employee Stock Ownership Plan
("ESOP") for eligible employees. Employees employed with the Mutual Holding
Company, Westfield Financial, Inc. or the Bank who have completed one year
of service and have attained age 21 are eligible to participate.
To fund the purchase of up to 8% of the shares of common stock issued in
the reorganization, the ESOP Trust borrowed funds from the Company. The
loan to the ESOP Trust will be repaid principally from the Bank's
contributions to the ESOP Trust over a period of 30 years and the
collateral for the loan will be the Company's Common Stock purchased by the
ESOP Trust.
Shares purchased by the ESOP are held by a trustee for allocations among
participants as the loan is repaid. As of September 30, 2002, the ESOP
Trust had purchased 380,150 shares of the Company's Common Stock on the
open market. Of the 380,150 shares purchased by the ESOP Trust, 13,260
shares are committed to be released in 2002.
6
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations and Basis of Presentation - The Company operates a
state chartered stock savings bank subsidiary called Westfield Bank (the
"Bank"). The Bank's deposits are insured to the limits specified by the
Federal Deposit Insurance Corporation ("FDIC") and the Deposit Insurance
Fund ("DIF"), a corporation formed by the Massachusetts legislature. The
Bank operates ten branches in Western Massachusetts. The Bank's primary
source of revenue is earned by providing loans to small and middle-market
businesses and to residential property homeowners.
The Bank formed a wholly owned subsidiary, Elm Street Real Estate
Investments Inc., (the "REIT") in 1998. The REIT is 99.9% owned by the Bank
with the remaining 0.1% owned by other shareholders.
Westfield Securities Corp., a Massachusetts chartered security corporation,
was formed in 2001 by the Company for the primary purpose of holding
qualified investment securities.
Principles of Consolidation - The consolidated financial statements include
the accounts of the Company, the Bank, Westfield Securities Corp., and the
REIT. All material intercompany balances and transactions have been
eliminated in consolidation. Certain amounts in the prior year financial
statements have been reclassified to conform to the current year
presentation. In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments (consisting only
of normal recurring adjustments) necessary for a fair presentation of the
financial condition as of September 30, 2002, and the results of
operations, changes in stockholders' equity, comprehensive income and cash
flows for the three-month periods ended September 30, 2002 and 2001. The
results of operations for the three-months ended September 30, 2002 are not
necessarily indicative of the results of operations for the remainder of
the six-month period ending December 31, 2002. Certain information and note
disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United
States of America ("U.S. GAAP") have been omitted pursuant to the rules and
regulations of the Securities and Exchange Commission.
Estimates - The preparation of consolidated financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of income and expenses.
Actual results could differ from those estimates. Estimates that are
particularly susceptible to significant change in the near-term relate to
the determination of the fair value of financial instruments and the
allowance for loan losses.
3. NEW ACCOUNTING STANDARDS
In August 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 144 "Accounting for
the Impairment or Disposal of Long-Lived Assets", which superceded SFAS No.
121 and portions of APB Opinion No. 30. This statement addresses the
recognition of an impairment loss for long-lived assets to be held and
used, or disposed of by sale or otherwise. This statement is effective for
financial statements issued for fiscal years beginning December 15, 2001
and interim periods within those fiscal years. The adoption of this
statement did not have any effect on the Company's consolidated financial
statements.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections. This Statement addresses the accounting for sale-leaseback
transactions and the required accounting for certain lease modifications
that have economic effects that are similar to sale-leaseback transactions.
This statement is effective for fiscal year 2002. The adoption of this
statement is not expected to have a material effect on the Company's
financial statements.
7
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities". This Statement addresses
financial accounting and reporting for costs associated with exit or
disposal activities. This statement is effective December 31, 2002. The
adoption of this statement is not expected to have a material effect on the
Company's consolidated financial statements.
In October 2002, the FASB issued SFAS No. 147, "Acquisitions of Certain
Financial Institutions" which is effective October 1, 2002. SFAS No. 147
removes acquisitions of financial institutions from the scope of SFAS No.
72, "Accounting for Certain Acquisitions of Banking or thrift Institutions"
and FASB Interpretation No. 9, "Applying AFB Opinions No. 16 and 17 "When a
Savings and Loan Association or Similar Association is Acquired in a
Business Combination Accounted for by the Purchase Method" and requires
that those transactions be accounted for in accordance with SFAS No. 141,
"Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible
Assets". In addition, SFAS No. 147 amends SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets", to include in its scope long-
term customer relationship intangible assets of financial institutions. The
adoption of SFAS No. 147 on October 1, 2002 is not expected to have an
effect on the Company's condensed consolidated financial statements.
4. EARNINGS PER SHARE
Basic earnings per share represents income available to stockholders
divided by the weighted average number of common shares outstanding during
the period. Diluted earnings per share reflects additional common shares
that would have been outstanding if dilutive potential shares had been
issued or earned. Earnings per share data is presented for the three months
and nine months ended September 30, 2002 only, as the Company converted to
stock form on December 27, 2001; therefore per share information for the
three months and nine months ended September 30, 2001 are not applicable.
ITEM 2:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Forward-Looking Statements - This quarterly Report on Form 10-Q contains
certain statements that may be considered forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 193, as amended. The
Company's actual results could differ materially from those projected in
the forward-looking statements. Important factors that might cause such a
difference include: changes in national or regional economic conditions;
changes in loan default and charge-off rates; reductions in deposit levels
necessitating increased borrowing to fund loans and investments; changes in
interest rates; changes in the size and the nature of the Company's
competition; the extent and timing of legislative and regulatory reform;
and changes in the assumptions used in making such forward-looking
statements. The Company does not undertake and specifically declines any
obligation to publicly release the results 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.
CRITICAL ACCOUNTING POLICIES
Westfield Financial Inc.'s critical accounting policies given its current
business strategy and asset/liability structure are accounting for
nonperforming loans, the classification and valuation of securities and the
allowance for loan losses.
8
Westfield Financial Inc.'s general policy is to discontinue the accrual of
interest on loans when principal or interest payments are delinquent 90
days or more, or earlier if the loan is considered impaired. Any unpaid
amounts previously accrued on these loans are reversed from income.
Subsequent cash receipts are applied to the outstanding principal balance
or to interest income if, in the judgment of management, collection or
principal balance is not in question. Loans are returned to accrual status
when they become current as to both principal and interest and when
subsequent performance reduces the concern as to the collectibility of
principal and interest.
Securities, including mortgage-backed securities, which management has the
positive intent and ability to hold until maturity, are classified as held
to maturity and are carried at amortized cost. Securities, including
mortgage-backed securities, which have been identified as assets for which
there is not a positive intent to hold to maturity, are classified as
available for sale and are carried at fair value with unrealized gains and
losses, net of income taxes, reported as a separate component of equity.
Gains and losses on sales of available for sale securities are included in
non-interest income at the time of sale on a specific identification basis.
Securities that have experienced an other-than-temporary decline in value
are written down to fair value establishing, a new cost basis. Writedowns
of securities are included in non-interest income. Westfield Financial does
not acquire securities or mortgage-backed securities for purposes of
engaging in trading activities.
Westfield Financial Inc.'s methodology for assessing the appropriations of
the allowance for loan losses consists of two key components, which are a
specific allowance for identified problem or impaired loans and a formula
allowance for the remainder of the portfolio. Identified problem and
impaired loans are measured for impairment based on the present value of
expected future cash flows discounted at the loan's effective interest
rate, the loan's observable market price or the fair value of the
collateral, if the loan is collateral dependent. This evaluation is
inherently subjective as it requires material estimates that may be
susceptible to significant change. The appropriations of the allowance is
also reviewed by management based upon its evaluation of then-existing
economic and business conditions affecting the key lending areas of
Westfield Financial Inc. and other conditions, such as new loan products,
credit quality trends (including trended in non-performing loans expected
to result from existing condition), collateral values, loan volumes and
concentrations, specific industry conditions within portfolio segments that
existed as of the balance sheet date and the impact that such conditions
are believed to have on the collectibility of the loan portfolio. Although
management believes it has established and maintained the allowance for
loan losses at appropriate levels, future adjustments may be necessary if
economic, real estate and other conditions differ substantially from the
current operating environment.
COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2002 AND DECEMBER 31, 2001
Total assets increased $12.7 million to $795.4 million at September 30,
2002 from $782.7 million at December 31, 2001. Securities increased $40.0
million, or 13.9%, to $328.0 million at September 30, 2002 from $288.0
million at December 31, 2001. The increase in Securities was primarily
because of the decrease in total loans discussed later in this paragraph.
Federal funds sold decreased from $34.3 million at December 31, 2001 to
$27.4 million at September 30, 2002. This is a result of utilizing the
funds raised by the stock offering, which had been held in Federal Funds at
December 31, 2001, by investing in securities and originating loans.
Interest bearing deposits increased $14.7 million from $588.9 million at
December 31, 2001 to $603.6 million at September 30, 2002. Total loans
during this period decreased by $27.0 million, or 6.5%, to $386.5 million
at September 30, 2002, from $413.5 million at December 31, 2001. This
decrease is primarily the result of a decrease in residential real estate
loans due to the Bank's new loan referral program with a third party
mortgage company. Beginning on September 1, 2001, Westfield Bank began
referring its residential real estate borrowers to a third party mortgage
company. Residential real estate borrowers submit applications to Westfield
Bank, but the loan is closed on the books of the mortgage company.
Westfield Bank receives a fee of 65 basis points for each of these loans
originated by the third party mortgage company. Under the program,
substantially all of Westfield Bank's residential real estate loans are
underwritten and originated by the third party mortgage company, whose
underwriting standards were similar to those of Westfield Bank. Residential
real estate loans decreased by $37.6 million, or 17.7%, to $175.1 million
at September 30, 2002 from $212.7 million, at December 31, 2001. Net
commercial and industrial loans increased $19.0 million, or 40.0%, from
$47.0 million at December 31, 2001 to $66.0 million at September 30, 2002.
Consumer loans, including indirect auto loans, decreased $12.3 million, or
21.1%, to $46.0 million at September 30, 2002 from $58.3 million at
December 31, 2001. The decrease in consumer loans was due to Management's
decision to continue to curtail the origination of indirect auto loans.
9
Asset growth was funded primarily by an increase of $15.9 million in
deposits, to $653.0 million at September 30, 2002 from $637.1 million at
December 31, 2001. Customer repurchase agreements increased $3.8 million to
$9.9 million at September 30, 2002 from $6.1 million at December 31, 2001.
Customer repurchase agreements are agreements by Westfield Bank to sell to
and repurchase from the customer an interest in specific securities issued
by or guaranteed by the United States Government. This transaction settles
immediately on a same day basis in immediately available funds. Interest
paid is commensurate with other products of equal interest and credit risk.
Stockholders' equity at September 30, 2002 and December 31, 2001 was $125.7
million and $131.3 million, respectively, and representing 15.8% and 16.8%
of total assets. The decrease in stockholder's equity is comprised of net
income of $3.4 million for the nine months ended September 30, 2002, offset
by a decrease in net unrealized gains on securities available for sale of
$1.5 million, net of income taxes, the recording of the purchase of 380,150
shares of stock for the Company's Employee Stock Ownership Plan totaling
$5.6 million and the declaration by the Board of Directors of a $0.05 per
share dividend on March 26, 2002 and June 28, 2002 and September 24, 2002
totaling $1.6 million.
COMPARISON OF OPERATING RESULTS FOR THREE MONTHS ENDED SEPTEMBER 30, 2002,
AND 2001
General
Net income was $1.3 million for the three months ended September 30, 2002
compared to $1.5 million for the same period in 2001. The decrease was
attributable to net losses of $139,000 from sales and writedowns of
securities for the three months ended September 30, 2002 compared to net
gains on sales of securities of $452,000 for the same period in 2001.
Included in the net loss for the 2002 quarter was the writedown by $414,000
of certain equity securities whose impairment was determined to be other
than temporary. Non-interest expense increased $457,000, while federal and
state income taxes decreased $97,000 and net interest and dividend income
increased $400,000 compared to the prior year.
Interest and Dividend Income
Total interest and dividend income decreased $952,000 or 8.1%, to $10.7
million compared with $11.7 million for the same period in 2001. Interest
and dividend income from securities increased $63,000 to $3.6 million,
while interest income on loans decreased $1.1 million.
The decrease in interest income on loans was primarily the result of a
$34.0 million decrease in the average balance of residential real estate
loans. This decrease is primarily the result of our current residential
real loan referral program with a third party mortgage company. The
increase in interest and dividend income from securities was primarily the
result of an increase in the average balance of securities from $243.9
million for the quarter ended September 30, 2001 to $340.9 million for the
quarter ended September 30, 2002. This was offset by a decrease in average
yield from 5.85% to 4.26% for the quarter ended September 30, 2001 and 2002
respectively.
Interest Expense
Interest expense for the three months ended September 30, 2002 decreased
$1.4 million from the comparable 2001 period. This was attributable to a
decrease in average cost of interest-bearing liabilities of 113 basis
points from 4.16% from the three months ended September 20, 2001 to 3.03%
for the same period in 2002, partially offset by an increase of $36.1
million in the average balance of total interest-bearing liabilities.
10
Net Interest and Dividend Income
Net interest and dividend income for the three months ended September 30,
2002 was $6.1 million as compared to $5.7 million for 2001. Net interest
rate spread, the difference between the average total interest bearing
liabilities, decreased 16 basis points to 2.57% for 2002 period from 2.73%
for the prior year comparable period. The net interest margin, which is net
interest and dividend income divided by average total interest earning
assets, decreased 17 basis points to 3.11% for the three months ended
September 30, 2002 from 3.28% for the 2001 period.
Provision for Loan Losses
For the three months ended September 30, 2002, the Bank provided $234,000
for loan losses, compared to $530,000 for the same period in 2001. The
provision for loan losses brings the Bank's allowance for loan losses to a
level determined appropriate by management. The allowance for loan losses
at September 30, 2002 was $4.4 million as compared to $3.9 million at
December 31, 2001.
Commercial real estate and commercial and industrial loans increased $2.0
million or 1.2% for the quarter ended September 30, 2002. Management
considers these types of loans to contain more risk than conventional
residential mortgages, which declined by $11.9 million or 6.4% for the
quarter ended September 30, 2002. This resulted in an increase in the
allowance requirements for commercial real estate and commercial and
industrial loans and a decrease for residential real estate loans. Consumer
loans decreased from $49.6 million at June 31, 2002 to $46.0 million at
September 30, 2002 resulting in a decrease in the allowance requirement for
consumer loans. Nonaccrual loans remained relatively constant totaling $2.4
million at September 30, 2002 versus $2.7 million at December 31, 2001.
As a result of the detailed allowance methodology and consideration of the
above factors, management determined that an increase in the provision for
loan losses of $234,000 was appropriate.
The allowance for loan losses at the end of September 30, 2002 was 1.12% of
total loans compared with 0.94% at the end of 2001. The increase in the
coverage ratio reflects the changes in the loan portfolio described above.
Non-Interest Income
Non-interest income, which is comprised of service charges and fees, along
with gains, losses, and writedowns of securities, decreased $529,000 for
the three months ended September 30, 2002, primarily due to writedowns of
securities whose impairment was determined to be other than temporary of
$414,000, partially offset by securities gains of $275,000. Net losses from
sales and writedowns of securities for the three months ended September 30,
2002 were $139,000 as compared to net gains from sales of securities of
$452,000 for the quarter ended September 30, 2001.
Non-interest Expense
Noninterest expense for the three month ended September 30, 2002, was $4.2
million compared with $3.8 million for the same period in 2001. Employee
salaries and benefits for the quarter ended September 30, 2002 and 2001
were $2.3 million and $1.9 million, respectively. This increase in salaries
and benefits expense was primarily the result of a monthly accrual of
bonuses to be paid, based on performance criteria, in December 2002, which
in the prior year was expensed in December of that year. Also contributing
to this increase was a rise in employee retirement costs; the recording of
the Company's Employee Stock Ownership Plan expense; and a rise in salary
costs as a result of normal annual salary increases, as well as expenses
associated with the opening of two branches in 2001, which required the
hiring of additional personnel. Professional services expense for the three
months ended September 30, 2002 and 2001 was $210,000 and $90,000
respectively, the increase is primarily due to expenses associated with
operating as a publicly traded company.
11
Income Taxes
Income taxes decreased $97,000, or 12.8%, to $661,000 for the three months
ended September 30, 2002 compared to $758,000 for the same period in 2001.
The effective tax rate for both periods is approximately 34%. The effective
tax rate reflects the utilization of Westfield Securities Corp., a
qualified Massachusetts securities corporation, and Elm Street Real Estate
Investments, Inc., a qualified real estate investment trust.
Elm Street Real Estate Investments, Inc. ("Elm Street"), a subsidiary of
the Bank, was established in 1998 as a Delaware-chartered real estate
investment trust ("REIT"). During 1999, 2000 and 2001, the Bank received
dividends from Elm Street. In accordance with the Commonwealth of
Massachusetts Tax law, the Bank has claimed a deduction for the dividends
received from Elm Street for these years. The positive impact of the REIT
dividend received deduction on the Company's 1999, 2000 and 2001 reported
net income was approximately $499,000, $506,000 and $607,000, respectively.
The additional positive impact on the Company's reported net income for the
first nine months of 2002 was approximately $326,000.
The Company is aware that several other financial institutions operating in
the Commonwealth of Massachusetts with similar real estate investment trust
subsidiaries have recently received Notices of Intent to Assess additional
state excise taxes from the Massachusetts Department of Revenue (the
"DOR"), challenging the dividends received deduction claimed by those
institutions. The institutions that received these notices have indicated
their intention to appeal the assessments. It is uncertain whether the
Company will receive such a notice pertaining to its 1999, 2000 or 2001 tax
filings. However, if it does receive such a notice, the Company intends to
appeal any such assessment.
12
The following tables set forth the information relating to our average
balance and net interest income at and for the three months ending
September 30, 2002 and 2001 and reflect the average yield on assets and
average cost of liabilities for the periods indicated. Yields and costs are
derived by dividing interest income by the average balance of interest-
earning assets and interest expense by the average balance of interest-
bearing liabilities for the periods shown. Average balances are derived
from actual daily balances over the periods indicated. Interest income
includes fees earned from making changes in loan rates and terms and fees
earned when real estate loans are prepaid or refinanced.
WESTFIELD FINANCIAL
for the Three Months Ending September 30,
(Dollars in Thousands)
2002 2001
Average Avg Yield/ Average Avg Yield/
Interest Balance Cost Interest Balance Cost
-------- ------- ---------- -------- ------- ----------
<s> <c> <c> <c> <c> <c> <c>
Interest-Earning Assets
- -----------------------
Short Term Investments $ 100 $ 23,844 1.68% $ 54 $ 7,033 3.07%
Investment Securities 3,633 340,892 4.26 3,570 243,924 5.85
Loans 7,012 402,594 6.97 8,073 428,395 7.54
------- -------- ------- --------
Total Interest-Bearing Assets $10,745 $767,330 5.60 $11,697 $679,352 6.89
======= ======== ======= ========
Interest-Bearing Liabilities
- ----------------------------
NOW Accounts 143 41,157 1.39% 206 36,008 2.29%
Savings Accounts 129 44,361 1.16 112 42,489 1.05
Money Market Accounts 653 135,690 1.92 981 127,642 3.07
Time Deposits 3,653 382,196 3.82 4,615 362,083 5.10
Customer Repurchase Agreements
and Borrowings 59 9,132 2.58 75 8,261 3.63
------- -------- ------- --------
Total Interest-Bearing Liabilities $ 4,637 $612,536 3.03 $ 5,989 $576,483 4.16
======= ======== ======= ========
Net Interest Income/Interest
Rate Spread $ 6,108 2.57% $ 5,708 2.73%
======= ---- ======= ----
Net Interest Margin 3.11% 3.28%
---- ----
13
The following table shows how changes in interest rates and changes in the
volume of interest earning assets and interest-bearing liabilities have
affected the Company's interest income and interest expense during the
periods indicated. Information is provided in each category with respect
to:
* Interest income changes attributable to changes in volume (changes
in volume multiplied by prior rate);
* Interest income changes attributable to changes in rate (changes
in rate multiplied by prior volume); and
* The net change
The changes attributable to the combined impact of volume and rate have
been allocated proportionately to the changes due to volume and the changes
due to rate.
WESTFIELD FINANCIAL
VOLUME/RATE TABLE
for the Three Months Ending
September 30, 2002 vs. September 30, 2001
Interest-Earning Assets Volume Rate Net
- ----------------------- ------ ---- ---
<s> <c> <c> <c>
Short Term Investments $ 129 $ (83) $ 46
Investment Securities 1,419 (1,356) 63
Loans (486) (575) (1,061)
------ ------- -------
Net Change in Income on
Interest-Earning Assets 1,062 (2,014) (952)
------ ------- -------
Interest-Bearing Liabilities
- ----------------------------
NOW Accounts 29 (92) (63)
Savings Accounts 5 12 17
Money Market Accounts 62 (390) (328)
Time Deposits 256 (1,218) (962)
Customer Repurchase Agreements
and Borrowings 8 (24) (16)
------ ------- -------
Net Change in Expense on
Interest-Bearing Liabilities 360 (1,712) (1,352)
------ ------- -------
Net Change in Interest Income $ 702 $ (302) $ 400
====== ======= =======
14
COMPARISON OF OPERATING RESULTS FOR NINE MONTHS ENDED SEPTEMBER 30, 2002
AND 2001
General
Net income was $3.4 million for the nine months ended September 30, 2002, a
decrease of $450,000, or 11.7%, compared with net income of $3.8 million
for the 2001 comparable period. The decrease was primarily the result of
net losses from sales and writedowns of securities for the nine months
ended September 30, 2002 of $896,000 compared to a net gain from sales of
securities of $622,000 for the same period in 2001. Included in the net
loss of $896,000 for the 2002 period was $355,000 in net gains on the sale
of securities and a $1.3 million writedown of certain equity securities
whose impairment was determined to be other than temporary.
Interest and Dividend Income
Total interest and dividend income decreased $3.2 million, or 8.9%, to
$32.8 million for the nine months ended September 30, 2002 compared to
$36.0 million for the same period in 2001. Interest and dividends on
securities increased $1.3 million to $11.0 million from $9.7 million, while
interest income on loans decreased $4.4 million.
The increase in interest and dividend income on securities was the result
of $116.4 million increase in the average balance of securities from $215.5
million for the nine months ended September 30, 2001 to $331.9 million for
the same period in 2002, partially offset by the decrease of 158 basis
points in the average yield on securities from 6.00% for the period in 2001
to 4.42% for the same period 2002.
The decrease in interest income on loans was primarily the result of a $3.3
million decrease in interest on residential real estate loans. This was the
result of a decrease in average balance of residential real estate loans
from $244.2 million at September 30, 2001 to $192.9 million September 30,
2002 due to the securitization of our fixed rate mortgages and our current
residential real estate loan referral program with a third party mortgage
company.
Interest Expense
Interest expense for the nine months ended September 30, 2002 decreased
$5.0 million from the comparable 2001 period. This was attributable to a
decrease in average cost of interest-bearing liabilities of 128 basis
points from 4.47% from the nine months ended September 20, 2001 to 3.19%
for the same period in 2002, partially offset by an increase of $25.9
million in the average balance of total interest-bearing liabilities.
Net Interest and Dividend Income
Net interest and dividend income for the nine months ended September 30,
2002 increased $1.8 million, or 10.8% from $16.6 million in 2001 to $18.4
million in 2002. The net interest rate spread, the difference between the
average yield on average interest earning assets and the average cost of
average total interest bearing liabilities, decreased four basis points to
2.57% for 2002 from 2.61% for 2001. The net interest margin, which is net
interest and dividend income divided by average total interest earning
assets, decreased three basis points to 3.18% for 2002 from 3.21% for the
prior year comparable period.
Provision for Loan Losses
During the nine months ended September 30, 2002, the Bank provided $734,000
for loan losses, compared to $1.1 million for the comparable 2001 period.
The provision for loan losses brings the Bank's allowance for loan losses
to a level determined appropriate by management. The allowance for loan
losses at September 30, 2002 was $4.4 million as compared to $3.8 million
at September 30, 2001.
Commercial real estate and commercial and industrial loans increased $23.4
million or 16.0% for the nine months ended September 30, 2002. Management
considers these types of loans to contain more risk than conventional
residential mortgages, which declined by $37.6 million or 17.7% for the
nine months ended September 30, 2002. This resulted in an increase in the
allowance requirements for commercial real estate and
15
commercial and industrial loans and a decrease for residential real estate
loans. Consumer loans decreased from $58.3 million at December 31, 2001 to
$46.0 million at September 30, 2002 resulting in a decrease in the
allowance requirement for consumer loans. Nonaccrual loans decreased
$300,000 to $2.4 million at September 30, 2002 from $2.7 million at
December 31, 2001. As a result of the detailed allowance methodology and
consideration of the above factors, management determined that an increase
in the provision for loan losses of $734,000 was appropriate.
The allowance for loan losses at the end of September 30, 2002 was 1.12% of
total loans compared with 0.88% at September 30, 2001. The increase in the
average ratio reflects the changes in the loan portfolio described above.
Non-Interest Income
Non-interest income includes service fees on deposit accounts, other
service charges and net gains and losses on sale and writedowns of
securities. Non-interest income decreased $1.4 million to $283,000 for the
nine months ended September 30, 2002 from $1.6 million for the nine months
ended September 30, 2001. Net loss from sales and writedowns of securities
for the nine months ended September 30, 2002 were $896,000 as compared to
net gains from sales of securities of $622,000 for the nine months ended
September 30, 2001. Included in the net loss for the 2002 period was a
writedown of certain equity securities whose impairment was determined to
be other than temporary of $1.3 million and a net gain on sales of
securities of $355,000.
Non-Interest Expense
Non-interest expense increased $1.5 million, or 13.3%, to $12.8 million for
the nine months ended September 30, 2002 compared with $11.3 million for
the prior year. Salaries and benefits increased $1.2 million, or 21.0%, to
$6.9 million for the nine months ended September 30, 2002 compared to $5.7
million for the 2001 period, reflecting normal salary increases and a
monthly accrual of bonuses to be paid, based on performance criteria, in
December 2002, which in the prior year was expensed in December of that
year. Also contributing to this increase was a rise in employee retirement
costs; the recording of the Company's Employee Stock Ownership Plan expense
and a rise in salary costs as a result of normal annual salary increases as
well as expenses associated with the opening of two branches in June of
2001, which required the hiring of additional personnel.
Income Taxes
Income taxes expense decreased $225,000, or 11.4%, to $1.8 million for the
nine months ended September 30, 2002. The resulting 34% tax rate in 2002
was the same effective tax rate as the 2001 period. The effective tax rate
reflects the utilization of Westfield Securities Corp., a qualified
Massachusetts securities corporation, and Elm Street Real Estate
Investments, Inc., a qualified real estate investment trust.
Elm Street, a subsidiary of the Bank, was established as a Delaware-
chartered REIT. During 1999, 2000 and 2001, the Bank received dividends
from Elm Street. In accordance with the Commonwealth of Massachusetts Tax
law, the Bank has claimed a deduction for the dividends received from Elm
Street for these years. The positive impact of the REIT dividend received
deduction on the Company's 1999, 2000 and 2001 reported net income was
approximately $499,000, $506,000 and $607,000, respectively. The additional
positive impact on the Company's reported net income for the first nine
months of 2002 was approximately $326,000.
The Company is aware that several other financial institutions operating in
the Commonwealth of Massachusetts with similar real estate investment trust
subsidiaries have recently received Notices of Intent to Assess additional
state excise taxes from the Massachusetts Department of Revenue (the
"DOR"), challenging the dividends received deduction claimed by those
institutions. The institutions that received these notices have indicated
their intention to appeal the assessments. It is uncertain whether the
Company will receive such a notice pertaining to its 1999, 2000 or 2001 tax
filings. However, if it does receive such a notice, the Company intends to
appeal any such assessment.
16
The following tables set forth information relating to our average balance
and net interest income at and for the nine months ended September 30, 2002
and 2001 and reflects the average yield on assets and average cost of
liabilities for the periods indicated. Yields and costs are derived by
dividing interest income by the average balance of interest-earning assets
and interest expense by the average balance of interest-bearing liabilities
for the periods shown. Average balances are derived from actual daily
balances over the periods indicated. Interest income includes fees earned
from making changes in loan rates and terms and fees earned when real
estate loans are prepaid or refinanced.
WESTFIELD FINANCIAL
for the Nine Months Ending September 30,
(Dollars in Thousands)
2002 2001
Average Avg Yield/ Average Avg Yield/
Interest Balance Cost Interest Balance Cost
-------- ------- ---------- -------- ------- ----------
<s> <c> <c> <c> <c> <c> <c>
Interest-Earning Assets
- -----------------------
Short Term Investments $ 270 $ 21,511 1.67% $ 342 $ 9,484 4.81%
Investment Securities 11,012 331,884 4.42 9,699 215,513 6.00
Loans 21,535 406,701 7.06 25,931 452,468 7.64
------- -------- ------- --------
Total Interest-Bearing Assets $32,817 $760,096 5.76 $35,972 $677,465 7.08
======= ======== ======= ========
Interest-Bearing Liabilities
- ----------------------------
NOW Accounts 472 39,926 1.58% 599 34,776 2.30%
Savings Accounts 356 43,792 1.08 345 42,403 1.08
Money Market Accounts 1,943 131,660 1.97 2,965 120,585 3.28
Time Deposits 11,529 381,005 4.03 15,278 373,396 5.46
Customer Repurchase Agreements
and Borrowings 160 8,057 2.65 226 7,414 4.06
------- -------- ------- --------
Total Interest-Bearing Liabilities $14,460 $604,440 3.19 $19,413 $578,574 4.47
======= ======== ======= ========
Net Interest Income/Interest
Rate Spread $18,357 2.57% $16,559 2.61%
======= ---- ======= ----
Net Interest Margin 3.18% 3.21%
---- ----
17
The following table shows how changes in interest rates and changes in the
volume of interest earning assets and interest-bearing liabilities have
affected the Company's interest income and interest expense during the
periods indicated. Information is provided in each category with respect
to:
* Interest income changes attributable to changes in volume (changes
in volume multiplied by prior rate);
* Interest income changes attributable to changes in rate (changes
in rate multiplied by prior volume); and
* The net change
The changes attributable to the combined impact of volume and rate have
been allocated proportionately to the changes due to volume and the changes
due to rate.
WESTFIELD FINANCIAL
VOLUME/RATE TABLE
for the Nine Months Ending
September 30, 2002 vs. September 30, 2001
Interest-Earning Assets Volume Rate Net
- ----------------------- ------ ---- ---
<s> <c> <c> <c>
Short Term Investments $ 434 $ (506) $ (72)
Investment Securities 5,237 (3,924) 1,313
Loans (2,623) (1,773) (4,396)
------ ------- -------
Net Change in Income on
Interest-Earning Assets 3,048 (6,203) (3,155)
------ ------- -------
Interest-Bearing Liabilities
- ----------------------------
NOW Accounts 89 (216) (127)
Savings Accounts 11 (0) 11
Money Market Accounts 272 (1,294) (1,022)
Time Deposits 311 (4,060) (3,749)
Customer Repurchase Agreements
and Borrowings 20 (86) (66)
------ ------- -------
Net Change in Expense on
Interest-Bearing Liabilities 703 (5,656) (4,953)
------ ------- -------
Net Change in Interest Income $2,345 $ (547) $ 1,798
====== ======= =======
18
LIQUIDITY AND CAPITAL RESOURCES
The term "liquidity" refers to the Company's ability to generate adequate
amounts of cash to fund loan originations, loan purchases, withdrawals of
deposits and operating expenses. The Company's primary sources of liquidity
are deposits, scheduled amortization and prepayments of loan principal and
mortgage backed securities, maturities and calls of investment securities,
and funds provided by operations. The Bank also can borrow funds from the
Federal Home Loan Bank based on eligible collateral of loans and
securities. The Bank's maximum borrowing capacity from the Federal Home
Loan Bank at September 30, 2002 was approximately $122.5 million.
Liquidity management is both a daily and long term function of business
management. The measure of a Company's liquidity is its ability to meet its
cash commitments at all times with available cash or by conversion of other
assets to cash at a reasonable price. Loan repayments and maturing
investment securities are a relatively predictable source of funds.
However, deposit flow, calls of investment securities, and repayments of
loans and mortgage-backed securities are strongly influenced by interest
rates, general and local economic conditions and competition in the
marketplace. These factors reduce the predictability of the timing of these
sources of funds. Management believes that the Company has sufficient
liquidity to meet its current operating needs.
At September 30, 2002, the Company exceeded each of the applicable
regulatory capital requirements. The Company's leverage Tier 1 capital was
$123.6 million, or 27.3% of risk-weighted assets, and 15.6% of average
assets. The Company had a risk-based total capital of $128.0 million and a
risk-based capital ratio of 28.3%.
Quantitative measures established by regulation to ensure capital adequacy
require the Company and the Bank to maintain minimum amounts and ratios of
total and Tier I capital to risk weighted assets and to average assets.
Management believes, as of September 30, 2002, the Company and the Bank met
all capital adequacy requirements to which they were subject. As of
September 30, 2002, the most recent notification from the Federal Deposit
Insurance Corporation categorized the Bank as "well capitalized" under the
regulatory framework for prompt corrective action. To be categorized as
well capitalized, the Bank must maintain minimum total risk-based, Tier 1
risk-based and Tier 1 leverage ratios. There are no conditions or events
since that notification that management believes have changed the Bank's
category.
See the "Consolidated Statements of Cash Flows" in the Unaudited
Consolidated Financial Statements included in this Form 10-Q for the
sources and uses of cash flows for operating, investing and financing
activities for the nine months ended September 30, 2002 and September 30,
2001.
ITEM 3:
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Management believes that there have been no significant changes in the
reported market risks since December 31, 2001 as reported in Item 7A of the
Annual Report on Form 10-K.
ITEM 4:
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Chief Executive Officer and Chief Financial Officer of the Company have
evaluated the disclosure controls and procedures as of September 30, 2002
and concluded that the Company's disclosure controls and procedures are
functioning as intended to ensure that the information required to be
disclosed by the Company is recorded, processed, and reported within the
time period specified in the Securities and Exchange Commission rules and
forms.
Change in Internal Controls
There were no significant changes in internal controls or in other factors
that could significantly affect the internal controls subsequent to
September 30, 2002.
19
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
The Company's Chief Executive Officer and Chief Financial Officer
have furnished statements relating to the Company's Form 10-Q for the
quarter ended September 30, 2002 pursuant to 18 U.S.C. section 1350, as
adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002. These
statements are attached hereto as Exhibit 99.1.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - Exhibit 99.1
(b) Reports on Form 8K - None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Westfield Financial, Inc.
(Registrant)
By: /s/ Donald A. Williams
-------------------------------
Donald A. Williams
President/Chief Executive Officer
(Principal Executive Officer)
By: /s/ Michael J. Janosco, Jr.
------------------------------------
Michael J. Janosco, Jr.
Vice President/Chief Financial Officer
(Principal Accounting Officer)
20
CERTIFICATION
I, Donald A. Williams, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Westfield
Financial, Inc., (the "registrant").
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the period presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"), and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses
Date: November 14, 2002 By: /s/ Donald A. Williams
-------------------------------
Donald A. Williams
President/Chief Executive Officer
(Principal Executive Officer)
21
CERTIFICATION
I, Michael J. Janosoco, Jr., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Westfield
Financial, Inc., (the "registrant").
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the period presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"), and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses
Date: November 14, 2002 By: /s/ Michael J. Janosco
-------------------------------
Michael J. Janosco
Vice President/Chief Financial
Officer
(Principal Accounting Officer)
21