FOR IMMEDIATE RELEASE For further information contact: Donald A. Williams, President & CEO Michael J. Janosco Jr., CFO 413-568-1911 Westfield Financial, Inc. Reports Results for the Quarter Ended June 30, 2003 Westfield, Massachusetts, July 23, 2003: (AMEX:WFD) Westfield Financial, Inc. (the "Company"), the holding company for Westfield Bank (the "Bank"), reported net income of $2.7 million or $0.27 per basic and diluted share for the quarter ended June 30, 2003, compared to net income of $1.0 million or $0.10 per basic share for the same period in 2002. As previously reported, the Company has entered into an agreement with the Massachusetts Department of Revenue ("DOR") to settle the issue related to taxes owed on dividends received from the Bank's Real Estate Investment Trust ("REIT") subsidiary in 2002 and prior tax years. Under the agreement, the Company will pay 50% of the amount including interest that would have been owed under legislation that was enacted in March, 2003. The payment is a deductible expense for federal tax purposes. During the first quarter of 2003, the Company accrued an amount of $2.9 million, net of federal benefit, related to the REIT. As a result of the settlement with the DOR, the Company's second quarter financial results includes a credit of approximately $1.45 million, representing a reversal of 50% of the charge taken in the first quarter. Net interest and dividend income for the three months ended June 30, 2003 was $5.4 million compared with $6.2 million for the quarter ended June 30, 2002. For the quarter ended June 30, 2003, net interest and dividend income was negatively affected by the Company's decision to invest in Bank Owned Life Insurance. Income from Bank Owned Life Insurance was $196,000 for the quarter ended June 30, 2003 and is reflected in noninterest income. In addition, the Company's transition to its residential loan program with a third party mortgage company and high levels of refinancing activity resulted in lower interest and dividend income. Net interest margin for the quarters ended June 30, 2003 and 2002 was 2.87% and 3.25%, respectively. The provision for loan losses for the three months ended June 30, 2003 and 2002 was $150,000 and $200,000, respectively. 1 Net gains from sales of securities for the three months ended June 30, 2003 were $53,000 as compared to net losses from sales and writedowns of securities of $509,000 for the quarter ended 2002. Included in the net loss for the 2002 quarter was a $533,000 writedown of certain equity securities whose impairment was determined to be other than temporary. Other noninterest income for the three months ended June 30, 2003 was $639,000 as compared to $384,000 for the same period in 2002. The increase was the result of income on Bank Owned Life Insurance of $196,000 for the quarter ended June 30, 2003 as compared to $0 for the quarter ended June 30, 2002 and fees received of $105,000 for the quarter ended June 30, 2003 from the Bank's current residential real estate loan program with a third party mortgage company as compared to $33,000 for the same period in 2002. Noninterest expense for the three months ended June 30, 2003 was $4.5 million compared with $4.3 million for the same period in 2002. This was primarily the result of an increase in stock based benefit plan expense of $150,000 and an increase in charitable contributions of $108,000 as part of the Bank's 150 year anniversary celebration program during the second quarter of 2003. Total assets decreased $3.1 million to $809.9 million at June 30, 2003 from $813.0 million at December 31, 2002. Securities decreased by $23.7 million or 6.31% to $351.9 million at June 30, 2003 from $375.6 million at December 31, 2002. Net loans increased by $9.8 million, or 2.7%, to $367.0 million at June 30, 2003 from $357.2 million at December 31, 2002. Residential real estate loans decreased $24.5 million to $133.4 million at June 30, 2003. The decrease was primarily the result of the current residential loan program with a third party mortgage company and continued maturities and refinancings. Indirect auto loans decreased $10.0 million to $23.8 million while commercial real estate loans increased $23.5 million to $124.4 million and commercial non real estate loans increased $21.2 million to $82.7 million at June 30, 2003 from $61.5 million at December 31, 2002 respectively. During the first quarter of 2003 the Bank invested $15.7 million in Bank Owned Life Insurance (BOLI). Total deposits amounted to $656.0 million at June 30, 2003 and $656.1 million at December 31, 2002. 2 Stockholders' equity at June 30, 2003 and December 31, 2002 was $125.0 million and $126.7 million, respectively, representing 15.4% and 15.6% of total assets. The change is primarily comprised of a net income of $1,127,000 for the six months ended June 30, 2003, a decrease in net unrealized gains on securities available for sale of $401,000, net of income taxes, the recording of the purchase of 128,700 shares of stock for the Company's stock benefit plans amounting to $2,002,000 and the declaration of a $0.05 a share cash dividend on January 28, 2003 and April 22, 2003 amounting to $1,058,000. Mr. Donald A. Williams, President and Chief Executive Officer of the Company stated, "The Board of Directors declared a $0.05 cash dividend on July 22, 2003 to all shareholders of record on August 7, 2003 payable on August 22, 2003". The Bank is headquartered in Westfield, Massachusetts and operates through 10 banking offices in Agawam, East Longmeadow, Holyoke, Southwick, Springfield, West Springfield and Westfield, Massachusetts. The Bank's deposits are insured by the Federal Deposit Insurance Corporation and the Depositors Insurance Fund. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements contained in this news release, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future period in any current statements. The Company and the Bank do not undertake and specifically decline any obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. 3 WESTFIELD FINANCIAL, INC. and SUBSIDIARIES Selected Consolidated Balance Sheet and Other Data ($ in thousands, except per share data) (Unaudited) June 30, December 31, 2003 2002 -------- ------------ <s> <c> <c> Total assets $ 809,920 $ 812,980 Securities held to maturity 226,391 205,299 Securities available for sale 125,511 170,310 Loans 371,395 361,480 Allowance for loan losses (4,348) (4,325) --------- --------- Net loans 367,047 357,155 Total deposits 655,990 656,065 Stockholders' equity 124,962 126,699 Book value per share 12.45 12.25 Other Data: Nonperforming loans $ 2,078 $ 2,383 Nonperforming loans as a percentage of total assets 0.26% 0.29% Nonperforming loans as a percentage of total loans 0.56% 0.66% Allowance for loan losses as a percent of nonperforming loans 209% 181% Allowance for loan losses as a percentage of total loans 1.17% 1.20% 4 WESTFIELD FINANCIAL, INC. and SUBSIDIARIES Selected Consolidated Statement of Operations and Other Data ($ in thousands, except per share data) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2003 2002 2003 2002 ---- ---- ---- ---- <s> <c> <c> <c> <c> Interest and dividend income $ 8,991 $ 10,965 $ 18,664 $ 22,072 Interest expense 3,575 4,811 7,532 9,823 ----------- ----------- ----------- ----------- Interest and dividend income 5,416 6,154 11,132 12,249 Provision for loan losses 150 200 350 500 ----------- ----------- ----------- ----------- Net interest and dividend income after provision for loan losses 5,266 5,954 10,782 11,749 Net gains (losses) on sales of securities available for sale 53 (509) 113 (757) Other noninterest income 639 384 1,264 763 Other noninterest expense 4,478 4,270 9,107 8,545 ----------- ----------- ----------- ----------- Income before income taxes 1,480 1,559 3,052 3,210 Income taxes (1,253) 531 1,925 1,094 ----------- ----------- ----------- ----------- Net income $ 2,733 $ 1,028 $ 1,127 $ 2,116 =========== =========== =========== =========== Basic earnings per share $ 0.27 $ 0.10 $ 0.11 $ 0.20 Average shares outstanding 10,038,710 10,418,907 10,071,541 10,456,694 Diluted earning per share $ 0.27 $ 0.10 $ 0.11 $ 0.20 Diluted average shares outstanding 10,297,174 10,418,907 10,311,146 10,456,694 Other Data: Return on Average Assets (1) 1.36% 0.52% 0.28% 0.54% Return on Average Equity (1) 8.95% 3.20% 1.83% 3.28% Net Interest Margin 2.87% 3.25% 2.95% 3.27% <FN> ___________________ (1) Three and six month results have been annualized. </FN> 5