The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Globe Investor

News Sources

Take control of your investments with the latest investing news and analysis

Press release from Business Wire

Westfield Financial, Inc. Reports Results for the Quarter and Six Months Ended June 30, 2010, and Announces a 20% Increase in Dividend

Wednesday, July 21, 2010

Westfield Financial, Inc. Reports Results for the Quarter and Six Months Ended June 30, 2010, and Announces a 20% Increase in Dividend11:51 EDT Wednesday, July 21, 2010 WESTFIELD, Mass. (Business Wire) -- Westfield Financial, Inc. (the “Company”) (NASDAQ:WFD), the holding company for Westfield Bank (the “Bank”), reported a net loss of $(386,000) or $(0.01) per diluted share, for the quarter ended June 30, 2010, compared to net income of $1.1 million, or $0.04 per diluted share, for the same period in 2009. For the six months ended June 30, 2010, net income was $1.0 million or $0.03 per diluted share, compared to $2.3 million or $0.08 per diluted share for the same period in 2009. The decrease in earnings was mainly the result of a $3.5 million increase in the provision for loan losses to $4.1 million for the three months ended June 30, 2010, compared to $590,000 for the same period in 2009. The provision for loan losses increased $2.9 million to $4.6 million for the six months ended June 30, 2010, compared to $1.7 million in the same period in 2009. The increase in the provision for loan losses was primarily due to the reserve for and subsequent charge-off of $3.6 million on a single commercial real estate loan. Net interest income decreased $382,000 to $7.4 million for the three months ended June 30, 2010, compared to $7.8 million for the same period in 2009. The net interest margin, on a tax-equivalent basis, was 2.70% for the three months ended June 30, 2010, compared to 3.00% for the same period in 2009. For the six months ended June 30, 2010, net interest income decreased $710,000 to $15.1 million, compared to $15.8 million for the same period in 2009. The net interest margin, on a tax-equivalent basis, was 2.79% and 3.11% for the six months ended June 30, 2010 and 2009, respectively. The margin decreased because the yield on interest-earning assets decreased more than the cost of interest-bearing liabilities. Westfield Financial experienced larger than normal amortization on its investment securities, particularly in the first quarter of 2010, which decreased the yield on securities. For the three months ended June 30, 2010, noninterest expense decreased $1.1 million to $5.9 million, compared to $7.0 million for the same period in 2009. For the six months ended June 30, 2010, noninterest expense decreased $1.1 million to $12.3 million, compared to $13.4 million for the same period in 2009. The decrease in noninterest expense was primarily the result of decreases in FDIC insurance expense and salaries and benefits. FDIC insurance expense decreased $523,000 to $168,000 for the three months ended June 30, 2010 from $691,000 for the same period in 2009. The FDIC insurance expense decreased $516,000 to $332,000 for the six months ended June 30, 2010 from $848,000 for the same period in 2009. Both the 2009 periods included the accrual for a special assessment that was imposed upon all banks at June 30, 2009, which for Westfield Bank amounted to $453,000. Salaries and benefits decreased $442,000 to $3.4 million for the three months ended June 30, 2010 from $3.9 million for the same period in 2009. Salaries and benefits decreased $749,000 to $7.2 million for the six months ended June 30, 2010 from $8.0 million for the same period in 2009. Noninterest income increased $908,000 to $2.0 million for the three months ended June 30, 2010, compared to $1.1 million for the same period in 2009. For the six months ended June 30, 2010, noninterest income increased $712,000 to $2.9 million, compared to $2.2 million for the same period in 2009. The increase was primarily the result of an increase in net gains on the sale of securities of $1.0 million and $1.1 million for the three and six months ended June 30, 2010, respectively. Balance Sheet Growth Total assets were $1.2 billion at June 30, 2010, which represents an increase of $43.5 million from December 31, 2009. Securities increased $57.4 million to $681.9 million at June 30, 2010 from $624.5 million at December 31, 2009. The increase in investment securities was the result of reinvesting funds from deposits, short-term borrowings and long-term debt as discussed below. Net loans increased by $919,000 to $470.1 million at June 30, 2010 from $469.1 million at December 31, 2009. Residential real estate loans increased $11.4 million to $110.5 million at June 30, 2010 from $99.1 million at December 31, 2009. Commercial real estate loans decreased $9.8 million to $219.3 million at June 30, 2010 from $229.1 at December 31, 2009. Total deposits increased $22.2 million to $670.2 million at June 30, 2010 from $648.0 million at December 31, 2009. The increase in deposits was due to increases in savings accounts and checking accounts. Regular savings accounts increased $16.5 million to $121.2 million, primarily due to an account which pays a higher interest rate than comparable products. Checking accounts increased $8.1 million to $158.6 million. The increases were primarily in noninterest-bearing checking accounts. These increases were partially offset by a $1.4 million decrease in time deposits which were $341.2 million at June 30, 2010. Short-term borrowings and long-term debt increased $28.8 million to $317.1 million at June 30, 2010. This was primarily due to an increase of $32.5 million in Federal Home Loan Bank borrowings. Current interest rates permit Westfield Financial to earn a more advantageous spread by borrowing funds and reinvesting in loans and securities. Shareholders' equity at June 30, 2010 and December 31, 2009 was $239.6 million and $247.3 million, respectively, which represented 19.4% of total assets as of June 30, 2010 and 20.8% of total assets as of December 31, 2009. The decrease in shareholders' equity is comprised of the repurchase of 588,848 shares for $4.9 million related to the stock repurchase plan, and dividends amounting to $7.0 million. This was partially offset by a $1.8 million increase in other comprehensive income, net income of $1.0 million and $1.4 million related to the accrual of share-based compensation. As previously reported, the Board of Directors voted to authorize the commencement of a repurchase program on January 22, 2008 authorizing the Company to repurchase up to 3,194,000 shares, or ten percent of its outstanding shares of common stock. This program was completed during the second quarter of 2010. On May 25, 2010, the Board of Directors voted to authorize the commencement of a second repurchase program, authorizing the repurchase of an additional 2,924,367 shares, or ten percent of its outstanding shares of common stock. There were no shares purchased under the second repurchase program at June 30, 2010. Credit Quality The allowance for loan losses was $7.8 million at June 30, 2010, and $7.6 million at December 31, 2009. This represents 1.64% of total loans at June 30, 2010, and 1.60% of total loans at December 31, 2009. At these levels, the allowance for loan losses as a percentage of nonperforming loans was 106% at June 30, 2010 and 140% at December 31, 2009. An analysis of the changes in the allowance for loan losses is as follows:     Three Months Ended June 30,         March 31,         June 30, 2010   2010   2009   (In thousands) Balance, beginning of period $ 7,551 $ 7,645 $ 7,276 Provision 4,120 500 590 Charge-offs (3,861 ) (616 ) (540 ) Recoveries   17     22     11     Balance, end of period $ 7,827   $ 7,551   $ 7,337   Nonperforming loans increased $1.9 million to $7.4 million at June 30, 2010, compared to $5.5 million at December 31, 2009. This represented 1.55% of total loans at June 30, 2010 and 1.15% of total loans at December 31, 2009. Nonperforming loans are primarily made up of three commercial relationships totaling $6.7 million. Charge-offs were $3.9 million for the quarter ended June 30, 2010. This was primarily due to the charge-off of $3.6 million on a single commercial real estate loan. The remaining balance on this loan was $3.6 million at June 30, 2010. Loans delinquent 30 – 89 days increased $16.1 million to $18.1 million at June 30, 2010 from $2.0 million at December 31, 2009. This was primarily due to a single commercial real estate relationship of $15.0 million in the hotel and lodging industry. Severe winter storms along the eastern seaboard in the first quarter of 2010 curtailed business travel, and as a result, hotel occupancy was negatively impacted. Management has assessed the value of the property and found it is sufficient to cover the loan and no impairment has been recorded for this relationship. Management will continue to closely monitor this relationship. There are no loans 90 or more days past due and still accruing interest. Dividend Declaration James C. Hagan, Chief Executive Officer stated, “On July 20, 2010, the Board of Directors declared a regular cash dividend of $0.06 per share. This represents a 20% increase in our regular quarterly dividend and is payable on August 18, 2010 to all shareholders of record on August 4, 2010.” About Westfield Financial, Inc. Westfield Financial, Inc. is the holding company for Westfield Bank, which is headquartered in Westfield, Massachusetts and operates through 11 banking offices in Agawam, East Longmeadow, Feeding Hills, Holyoke, Southwick, Springfield, West Springfield and Westfield, Massachusetts. The Bank's deposits are insured by the Federal Deposit Insurance Corporation. This press release contains certain forward-looking statements with respect to the financial condition, results of operations and business of Westfield Financial Corporation.The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.These forward- looking statements involve certain risks and uncertainties.Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the risks set forth under the caption “Risk Factors” in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009, and in subsequent filings with the Securities and Exchange Commission.The Company does not undertake and specifically declines any obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.         WESTFIELD FINANCIAL, INC. and SUBSIDIARIESConsolidated Statement of Operations and Other Data(Dollars in thousands, except per share data)(Unaudited)     Three Months EndedSix Months EndedJune 30,June 30,   2010     2009     2010     2009     INTEREST AND DIVIDEND INCOME: Loans $ 6,132 $ 6,460 $ 12,298 $ 12,919 Securities 5,461 6,511 11,249 13,151 Federal funds sold, interest-bearing deposits and other short-term investments 2 4 3 8 Total interest and dividend income   11,595     12,975     23,550     26,078     INTEREST EXPENSE: Deposits 2,495 3,290 5,109 6,565 Long-term debt 1,600 1,791 3,186 3,493 Short-term borrowings   76     88     139     194   Total interest expense   4,171     5,169     8,434     10,252     Net interest and dividend income 7,424 7,806 15,116 15,826   PROVISION FOR LOAN LOSSES   4,120     590     4,620     1,740     Net interest and dividend income after provision for loan losses 3,304 7,216 10,496 14,086   NONINTEREST INCOME: Total other-than-temporary impairment losses on securities - - (1,071 ) - Portion of other-than-temporary impairment losses recognized in accumulated other comprehensive loss - - 971 - Net other-than-temporary impairment losses recognized in income - - (100 ) - Service charges and fees 492 735 984 1,444 Income from bank-owned life insurance 368 363 726 714 Loss on prepayment of borrowings - (142 ) - (142 ) Gain on sales of securities, net 1,132 122 1,317 208 Loss on disposal of premises and equipment, net - - - (8 ) (Loss) gain on sale of other real estate owned   (6 )   -     1     -   Total noninterest income   1,986     1,078     2,928     2,216     NONINTEREST EXPENSE: Salaries and employees benefits 3,434 3,876 7,234 7,983 Occupancy 636 667 1,296 1,316 Data processing 497 421 982 857 Professional fees 443 518 867 920 FDIC insurance 168 691 332 848 OREO expense 21 38 264 38 Other   724     796     1,326     1,454   Total noninterest expense   5,923     7,007     12,301     13,416     (LOSS) INCOME BEFORE INCOME TAXES (633 ) 1,287 1,123 2,886   INCOME TAX (BENEFIT) PROVISION   (247 )   214     155     607   NET (LOSS) INCOME $ (386 ) $ 1,073   $ 968   $ 2,279     Basic (loss) earnings per share $ (0.01 ) $ 0.04 $ 0.03 $ 0.08   Weighted average shares outstanding 27,970,840 29,554,551 28,078,326 29,619,760   Diluted (loss) earnings per share $ (0.01 ) $ 0.04 $ 0.03 $ 0.08   Weighted average diluted shares outstanding 27,970,840 29,815,832 28,334,136 29,892,867   Other Data:   Return on average assets (1) (0.13 )% 0.38 % 0.16 % 0.41 %   Return on average equity (1) (0.64 )% 1.66 % 0.80 % 1.77 % _______________   (1) Three and six month results have been annualized.     WESTFIELD FINANCIAL, INC. and SUBSIDIARIESConsolidated Balance Sheets and Other Data(Dollars in thousands, except per share data)(Unaudited)     June 30,December 31,   2010     2009       Cash and cash equivalents $ 15,995 $ 28,719   Securities held to maturity, at cost 299,921 295,011 Securities available for sale, at fair value 369,948 319,121 Federal Home Loan Bank of Boston and other restricted stock - at cost 12,036 10,339   Loans 477,895 476,794 Allowance for loan losses   7,827     7,645   Net loans 470,068 469,149   Bank-owned life insurance 38,606 37,880   Other real estate owned 328 1,662   Other assets   28,046     29,529     TOTAL ASSETS $ 1,234,948   $ 1,191,410       Total deposits $ 670,190 $ 647,975   Short-term borrowings 90,716 74,499 Long-term debt 226,408 213,845 Other liabilities   7,995     7,792     TOTAL LIABILITIES 995,309 944,111     TOTAL SHAREHOLDERS' EQUITY   239,639     247,299     TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,234,948   $ 1,191,410       Book value per share $ 8.19 $ 8.29     Other Data:   30- 89 day delinquent loans $ 18,070 $ 2,002   Nonperforming loans 7,419 5,470   Nonperforming loans as a percentage of total loans 1.55 % 1.15 %   Nonperforming assets as a percentage of total assets 0.63 % 0.60 %   Allowance for loan losses as a percentage of nonperforming loans 105.50 % 139.76 %   Allowance for loan losses as a percentage of total loans 1.64 % 1.60 %               Three Months Ended June 30,   2010       2009   AverageBalance     Interest     Avg Yield/CostAverageBalanceInterestAvg Yield/Cost (Dollars in thousands) ASSETS:Interest-earning assets: Loans(1)(2) $ 471,510 $ 6,166 5.23 % $ 475,148 $ 6,488 5.46 % Securities(2) 642,372 5,602 3.49 568,521 6,630 4.66 Short-term investments(3)   14,018   2   0.06   20,760   4   0.08 Total interest-earning assets 1,127,900   11,770   4.17 1,064,429   13,122   4.93 Total noninterest-earning assets   79,236   72,380   Total assets $ 1,207,136 $ 1,136,809   LIABILITIES AND EQUITY:Interest-bearing liabilities: NOW accounts $ 73,813 227 1.23 $ 64,771 326 2.01 Savings accounts 117,805 225 0.76 80,531 235 1.17 Money market deposit accounts 48,494 89 0.73 53,870 127 0.94 Time certificates of deposit   343,344   1,954   2.28   335,403   2,602   3.10 Total interest-bearing deposits 583,456 2,495 534,575 3,290 Short-term borrowings and long-term debt   289,158   1,676   2.32   249,351   1,879   3.01 Interest-bearing liabilities   872,614   4,171   1.91   783,926   5,169   2.64 Noninterest-bearing deposits 83,015 80,865 Other noninterest-bearing liabilities   8,918   12,233 Total noninterest-bearing liabilities   91,933   93,098   Total liabilities 964,547 877,024 Total equity   242,589   259,785 Total liabilities and equity $ 1,207,136 $ 1,136,809 Less: Tax-equivalent adjustment(2)   (175 )   (147 ) Net interest and divided income $ 7,424   $ 7,806   Net interest rate spread(4) 2.26 % 2.29 % Net interest margin(5) 2.70 % 3.00 %   Ratio of average interest-earning assets to average interest-bearing liabilities 129.26  X 135.78  X     Six Months Ended June 30,   2010     2009   AverageBalance     Interest     Avg Yield/CostAverageBalance     Interest     Avg Yield/Cost (Dollars in thousands) ASSETS:Interest-earning assets: Loans(1)(2) $ 471,320 $ 12,365 5.25 % $ 474,910 $ 12,962 5.46 % Securities(2) 631,861 11,530 3.65 551,287 13,385 4.86 Short-term investments(3)   15,518   3   0.04   19,630   8   0.08 Total interest-earning assets 1,118,699   23,898   4.27 1,045,827   26,355   5.04 Total noninterest-earning assets   80,120   71,799   Total assets $ 1,198,819 $ 1,117,626   LIABILITIES AND EQUITY:Interest-bearing liabilities: NOW accounts $ 72,663 459 1.26 $ 60,730 576 1.90 Savings accounts 114,276 455 0.80 76,362 427 1.12 Money market deposit accounts 48,837 179 0.73 54,730 256 0.94 Time certificates of deposit   343,865   4,016   2.34   332,779   5,306   3.19 Total interest-bearing deposits 579,641 5,109 524,601 6,565 Short-term borrowings and long-term debt   284,614   3,325   2.34   242,330   3,687   3.04 Interest-bearing liabilities   864,255   8,434   1.95   766,931   10,252   2.67 Noninterest-bearing deposits 81,440 78,745 Other noninterest-bearing liabilities   8,512   11,603 Total noninterest-bearing liabilities   89,952   90,348   Total liabilities 954,207 857,279 Total equity   244,612   260,347 Total liabilities and equity $ 1,198,819 $ 1,117,626 Less: Tax-equivalent adjustment(2)   (348 )   (277 ) Net interest and divided income $ 15,116   $ 15,826   Net interest rate spread(4) 2.32 % 2.37 % Net interest margin(5) 2.79 % 3.11 % Ratio of average interest-earning assets to average interest-bearing liabilities 129.44  X 136.37  X   (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.