Exhibit 99.1
FOR IMMEDIATE RELEASE
For further information contact:
Donald A. Williams, Chairman & CEO
Michael J. Janosco Jr., CFO
413-568-1911
Westfield Financial, Inc. Reports Results for the Quarter and Six Months Ended
June 30, 2008
Westfield, Massachusetts, July 23, 2008: Westfield Financial, Inc. (the
"Company") (NASDAQ:WFD), the holding company for Westfield Bank (the "Bank"),
reported net income of $2.1 million, or $0.07 per diluted share, for the
quarter ended June 30, 2008 compared to $1.9 million, or $0.06 per diluted
share, for the same period in 2007. For the six months ended June 30, 2008, net
income was $4.0 million, or $0.13 per diluted share, compared to $3.9 million,
or $0.13 per diluted share for the same period in 2007.
The increase in earnings was primarily the result of an increase in net
interest income, partially offset by increased noninterest expenses and an
increase in the provision for loan losses. Net interest income increased
$540,000 to $8.0 million for the three months ended June 30, 2008 compared to
$7.4 million for the same period in 2007. The net interest margin, on a tax
equivalent basis, was 3.23% for the three months ended June 30, 2008, compared
to 3.25% for the same period in 2007.
For the six months ended June 30, 2008, net interest income increased $727,000
to $15.7 million, compared to $14.9 million for the same period in 2007. The
net interest margin, on a tax equivalent basis, was 3.20% and 3.31% for the six
months ended June 30, 2008 and 2007, respectively.
The increase in net interest income for the three and six months ended June 30,
2008 was a result of an increase in the average balances of investment
securities and loans, which was funded primarily through an increase in
short-term borrowings and long-term debt.
For the three months ended June 30, 2008, noninterest expense was $5.7 million
compared to $5.6 million for the same period in 2007. This increase was
primarily due to an increase of $198,000 in salaries and benefits to $3.5
million for the three months ended June 30, 2008. Expenses related to
share-based compensation increased $192,000 for the three months ended June 30,
2008 as a result of new grants of restricted stock and stock options in the
third quarter of 2007.
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For the six months ended June 30, 2008, noninterest expense was $11.5 million
compared to $10.9 million for the same period in 2007. This increase was
primarily due to an increase of $492,000 in salaries and benefits to $7.1
million for the six months ended June 30, 2008. Expenses related to share-based
compensation increased $394,000 for the six months ended June 30, 2008 as a
result of new grants, described above. In addition, expenses related to
employee health insurance increased $92,000 due to normal increases in this
area.
The provision for loans losses was $240,000 for the three months ended June 30,
2008 compared to $75,000 for the same period in 2007. For the six months ended
June 30, 2008, the provision for loan losses was $415,000 compared to $175,000
for the same period in 2007. The factors that influenced the increase in the
provision for loan losses primarily include an increase in the commercial loan
portfolio and an increase in non-performing loans due to the deterioration of
one commercial loan relationship, each described below.
The six months ended June 30, 2008 also includes a net gain of $9,000 on the
sale and writedown of securities. In the first quarter of 2008, Westfield
Financial reported a writedown $310,000 on preferred stock issued by Freddie
Mac, a government-sponsored enterprise. Management deemed the impaired value of
this preferred stock to be other than temporary. Westfield Financial's book
value remaining on preferred stock issued by Freddie Mac is $690,000 at June
30, 2008. The writedown was offset by net gains of $319,000 for the six months
ended June 30, 2008 on the sale of other investment securities. There were no
gains, losses, or writedowns related to investment securities for the same
period in 2007.
Balance Sheet Growth
Total assets increased $29.6 million to $1.1 billion at June 30, 2008 from $1.0
billion at December 31, 2007.
Net loans increased by $19.8 million to $434.7 million at June 30, 2008 from
$414.9 million at December 31, 2007. The increase in net loans was primarily
the result of an increase in commercial and industrial loans and commercial
real estate loans. Commercial and industrial loans increased $15.5 million to
$132.0 million at June 30, 2008 from $116.5 million at December 31, 2007.
Commercial real estate loans increased $13.1 million to $203.1 million at June
30, 2008 from $190.0 million at December 31, 2007. The increases in commercial
and industrial and commercial real estate loans were due to increased loan
originations. Residential real estate loans decreased $7.7 million at June 30,
2008 from December 31, 2007. The Bank does not originate or hold subprime
mortgage loans.
Investment securities decreased $6.2 million to $516.6 million at June 30, 2008
from $522.8 million at December 31, 2007. Investment securities decreased as
funds received from securities which matured or paid down were used to
originate loans.
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Asset growth was funded primarily through a $60.6 million increase in
short-term borrowings and long-term debt, which totaled $200.9 million at June
30, 2008. This was primarily due to $48.5 million in new long-term debt, in the
form of institutional repurchase agreements, at June 30, 2008. The slope of the
yield curve provided opportunities to earn a spread by borrowing funds and
reinvesting in loans and securities.
Total deposits decreased $16.2 million to $586.5 million at June 30, 2008 from
$602.7 million at December 31, 2007. The decrease in deposits was due to a
decrease in time deposits and money market accounts, partially offset by an
increase in regular savings and checking accounts. Money market accounts
decreased $7.7 million to $66.9 million at June 30, 2008. Time deposits
decreased $29.4 million to $323.9 million at June 30, 2008. Management placed
less emphasis on gathering time deposits in favor of using other types of
funding, such as borrowings. Management believes that doing so helped to
control funding costs.
These decreases were partially offset by increases of $14.1 million in regular
savings and $6.7 million in checking accounts. The increases in both regular
savings and checking accounts were fueled by new products with higher interest
rates than the Bank's other comparable products.
Stockholders' equity at June 30, 2008 and December 31, 2007 was $273.7 million
and $286.5 million, respectively, which represented 25.6% of total assets as of
June 30, 2008 and 27.6% of total assets as of December 31, 2007. The decrease
in stockholders' equity is the result of the repurchase of 983,471 shares for
$9.8 million related to the stock repurchase plan, along with regular and
special dividends amounting to $7.5 million. This was partially offset by net
income of $4.0 million for the six months ended June 30, 2008 and the issuance
of 433,110 shares of common stock amounting to $1.9 million in connection with
stock option exercises. All of the stock options exercised during the six
months ended June 30, 2008 were granted in 2002.
As previously reported, the Board of Directors voted to authorize the
commencement of a repurchase program on January 22, 2008 which authorized
Westfield Financial to repurchase up to 3,194,000 shares, or ten percent of its
outstanding shares of common stock.
Credit Quality
Nonperforming loans increased $1.9 million to $3.1 million at June 30, 2008
compared to $1.2 million at December 31, 2007. This represented 0.69% of total
loans at June 30, 2008 and 0.29% of total loans at December 31, 2007. The
increase was the result of a single agricultural commercial loan relationship
of $1.8 million. The loan relationship is primarily secured by real estate.
Management does not anticipate incurring significant losses on this
relationship.
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The allowance for loan losses was $6.1 million at June 30, 2008 and $5.7
million at December 31, 2007. This represents 1.39% of total loans at June 30,
2008 and 1.36% of total loans at December 31, 2007. At these levels, the
allowance for loan losses as a percentage of nonperforming loans was 200% at
June 30, 2008 and 476% at December 31, 2007.
Dividend Declaration
Donald A. Williams, Chairman and Chief Executive Officer stated, "On July 22,
2008, the Board of Directors declared a regular cash dividend of $0.05 per
share, payable on August 21, 2008 to all shareholders of record on August 7,
2008."
Westfield Bank is headquartered in Westfield, Massachusetts and operates
through 11 banking offices in Agawam, East Longmeadow, Holyoke, Southwick,
Springfield, West Springfield and Westfield, Massachusetts. The Bank's deposits
are insured by the Federal Deposit Insurance Corporation.
This press release contains "forward-looking statements" which may be
identified by the use of such words as "believe," "expect," "anticipate,"
"should," "planned," "estimated," and "potential." Examples of forward-looking
statements include, but are not limited to, estimates with respect to the
Company's financial condition and results of operation and business that are
subject to various factors which could cause actual results to differ
materially from these estimates including, but not limited to, changes in the
real estate market or local economy, changes in interest rates, changes in laws
and regulations to which we are subject, and competition in our primary market
area. The Company disclaims any obligation to subsequently revise any
forward-looking statements to reflect events or circumstances after the date of
such statements, or to reflect the occurrence of anticipated or unanticipated
events.
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WESTFIELD FINANCIAL, INC. and SUBSIDIARIES
Selected Consolidated Statement of Operations and Other Data
($ in thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
---- ---- ---- ----
Interest and dividend income $ 13,547 $ 13,059 $ 27,316 $ 25,903
Interest expense 5,594 5,646 11,655 10,969
----------- ----------- ----------- -----------
Net interest and dividend income 7,953 7,413 15,661 14,934
Provision for loan losses 240 75 415 175
----------- ----------- ----------- -----------
Net interest and dividend income after
provision for loan losses 7,713 7,338 15,246 14,759
Noninterest income 951 974 1,816 1,793
Noninterest expense 5,733 5,581 11,517 10,887
----------- ----------- ----------- -----------
Income before income taxes 2,931 2,731 5,545 5,665
Income taxes 811 826 1,564 1,740
----------- ----------- ----------- -----------
Net income $ 2,120 $ 1,905 $ 3,981 $ 3,925
=========== =========== =========== ===========
Basic earnings per share (1) $ 0.07 $ 0.06 $ 0.14 $ 0.13
Average shares outstanding (1) 29,300,122 30,120,536 29,388,895 30,107,957
Diluted earnings per share (1) $ 0.07 $ 0.06 $ 0.13 $ 0.13
Diluted average shares outstanding (1) 29,698,152 30,575,244 29,845,175 30,625,328
OTHER DATA:
Return on Average Assets (1) 0.79% 0.77% 0.75% 0.80%
Return on Average Equity (1) 3.07% 2.61% 2.84% 2.71%
Net Interest Margin (2) 3.23% 3.25% 3.20% 3.31%
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(1) Three and six month results have been annualized.
(2) Net interest margin is calculated on a tax equivalent basis.
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WESTFIELD FINANCIAL, INC. and SUBSIDIARIES
Selected Consolidated Balance Sheet and Other Data
($ in thousands, except per share data)
(Unaudited)
June 30, December 31,
2008 2007
---- ----
Total assets $1,069,412 $1,039,784
Securities held to maturity 256,558 278,619
Securities available for sale 260,087 244,229
Stock in Federal Home Loan Bank of Boston
and other restricted stock 8,446 7,510
Loans 440,805 420,628
Allowance for loan losses 6,127 5,726
---------- ----------
Net loans 434,678 414,902
Total deposits 586,460 602,676
Short-term borrowings 47,395 35,268
Long-term debt 153,500 105,000
Stockholders' equity 273,699 286,532
Book value per share 8.72 8.97
Other Data:
Nonperforming loans $ 3,063 $ 1,202
Nonperforming loans as a percentage of total assets 0.29% 0.12%
Nonperforming loans as a percentage of total loans 0.69% 0.29%
Allowance for loan losses as a percentage of
nonperforming loans 200% 476%
Allowance for loan losses as a percentage of
total loans 1.39% 1.36%
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