WESTFIELD, Mass.--(BUSINESS WIRE)--Westfield Financial, Inc. (the “Company”) (NasdaqGS:WFD), the holding company for Westfield Bank (the “Bank”), reported net income of $1.4 million, or $0.08 per diluted share, for the quarter ended June 30, 2015, compared to $1.3 million, or $0.07 per diluted share, for the quarter ended June 30, 2014. For the six months ended June 30, 2015, net income was $2.7 million, or $0.15 per diluted share, compared to $3.0 million, or $0.16 per diluted share, for the same period in 2014.
Selected financial highlights for second quarter 2015 include:
- Total loans increased $73.3 million, or 10.7%, to $759.4 million at June 30, 2015 compared to $686.1 million at June 30, 2014. This was primarily due to increases in residential loans of $47.3 million, commercial and industrial loans of $23.4 million and commercial real estate loans of $2.1 million. On a sequential-quarter basis, total loans increased $29.0 million, or 4.0%, for the second quarter of 2015. This was due to an increase in residential loans of $19.7 million and commercial and industrial loans of $8.1 million.
- Securities increased $20.7 million, or 4.2%, to $516.7 million at June 30, 2015, compared to $496.0 million at June 30, 2014. On a sequential-quarter basis, securities were relatively flat at June 30, 2015, compared to $515.2 million at March 31, 2015.
- Net interest and dividend income increased $78,000 to $7.8 million for the quarter ended June 30, 2015 compared to $7.7 million for the comparable 2014 period. On a sequential-quarter basis, net interest and dividend income increased $189,000 for the quarter ended June 30, 2015, compared to the quarter ended March 31, 2015.
- The Bank prepaid $10.0 million in Federal Home Loan Bank borrowings with a weighted average rate of 2.77% and incurred a prepayment expense of $278,000 in the second quarter 2015 in order to eliminate a higher-cost liability. Net gains on the sales of securities of $276,000 were used to partially offset the prepayment expense.
- Noninterest expense increased $334,000 to $6.9 million for the quarter ended June 30, 2015 compared to the second quarter of 2014. On a sequential-quarter basis, noninterest expense increased by $154,000 for the quarter ended June 30, 2015, compared to $6.7 million for the quarter ended March 31, 2015. The efficiency ratio, excluding non-core items, was 76.1% for the second quarter of 2015, compared to 78.1% for the quarter ended March 31, 2015.
President and CEO, James C. Hagan stated, “Over the past twelve months, we have seen significant momentum in our efforts to grow both the loan portfolio and our deposit base. With loans increasing 10.7% year-over-year, we are demonstrating our commitment to growing our core customer franchise. We are also pleased to announce that Christopher Fager, Assistant Vice President Commercial Lending, has recently joined Westfield Bank’s commercial team. Christopher brings over six years of banking experience and is based in our commercial lending office in downtown Springfield, which was established in August 2014.
We continue to see success in Westfield Bank’s recent market expansion into northern Connecticut. Our two Connecticut offices now have over $36.6 million in deposits. The Granby, Connecticut office has been open just over two years and Enfield, Connecticut opened in November 2014. The customer base in the Connecticut market is very receptive to our brand of banking and our objective is to continue to develop loan and deposit relationships.”
Hagan continued, “In addition, we remain committed to utilizing excess capital to improve shareholder value through our repurchase program, shareholder dividends and organic growth.”
Additional Income Statement Discussion
Net interest and dividend income was $15.4 million for both the six months ended June 30, 2015 and 2014. The net interest margin for the six months ended June 30, 2015 decreased 11 basis points to 2.51%, as compared to 2.62% for the same period in 2014. This was a result of a decrease of 7 basis points in the yield on average interest-earning assets along with a 5 basis point increase in the cost of average interest-bearing liabilities.
The net interest margin for the quarter ended June 30, 2015 decreased 11 basis point to 2.50%, as compared to 2.61% for the second quarter of 2014. On a sequential-quarter basis, the net interest margin decreased 2 basis points for the quarter ended June 30, 2015 compared to the quarter ended March 31, 2015.
Non-interest income increased $206,000 to $1.2 million for the quarter ended June 30, 2015, compared to $1.0 million for the same period in 2014. This was primarily due to an increase of $40,000 in debit card interchange fees and a one-time payment pertaining to a vendor contract negotiation, which resulted in a net increase of $130,000.
Non-interest expense was $6.9 million for the quarter ended June 30, 2015, compared to $6.5 million for the same period in 2014. Non-interest expense increased $510,000 to $13.6 million from $13.1 million for the six months ended June 30, 2015, compared to the same period in 2014. Salaries and benefits increased $240,000 and occupancy expense increased $147,000. This was driven by opening of a new branch in November 2014 along with normal increases in these areas. On a sequential quarter basis, other expenses increased $149,000 to $949,000 for June 30, 2015, primarily due to management’s decision to allocate more of the advertising, marketing and sponsorships expense during the second quarter. The efficiency ratio, excluding non-core items, was 77.0% and 75.0% for the six months ended June 30, 2015 and 2014, respectively.
Additional Balance Sheet Discussion
Total deposits increased $79.1 million, or 9.7%, to $897.7 million at June 30, 2015, compared to $818.6 million at June 30, 2014. This was primarily due to increases in term accounts of $61.0 million, money market accounts of $18.2 million and checking accounts of $5.3 million, partially offset by a decrease in savings accounts of $5.3 million. On a consecutive quarter basis, total deposits increased $24.4 million, or 2.7%, to $897.7 million at June 30, 2015, compared to $873.3 million at March 31, 2015. In addition, short-term borrowings and long term debt increased $11.8 million to $307.0 million at June 30, 2015, compared to $295.3 million at March 31, 2015.
Shareholders’ equity was $139.8 million at June 30, 2015 and $140.3 million at March 31, 2015, which represented 10.3% and 10.6% of total assets, respectively. The decrease in shareholders’ equity during the quarter reflects a decrease in accumulated other comprehensive income of $1.0 million, the repurchase of 62,686 shares of common stock for $470,000 (an average price of $7.50 per share) and the payment of a quarterly dividend of $526,000. This was offset by net income of $1.3 million for the quarter ended June 30, 2015.
On March 13, 2015, the Company announced a repurchase program under which it may repurchase up to 1,970,000 shares, or 10% of its outstanding common stock. At June 30, 2015, there were 711,733 shares remaining under this repurchase program.
The allowance for loan losses was $8.3 million at June 30, 2015 and $8.0 million at March 31, 2015 and June 30, 2014, representing 1.09%, 1.10% and 1.17% of total loans, respectively. This represents 103.5%, 96.3% and 248.6% of nonperforming loans at June 30, 2015, March 31, 2015 and June 30, 2014, respectively.
An analysis of the changes in the allowance for loan losses is as follows:
|Three Months Ended|
|June 30,||March 31,||June 30,|
|Balance, beginning of period||$||8,035||$||7,948||$||7,567|
|Balance, end of period||$||8,295||$||8,035||$||8,017|
Nonperforming loans were $8.0 million and $8.3 million, representing 1.06% and 1.14% of total loans at June 30, 2015 and March 31, 2015, respectively. Loans delinquent 30 – 89 days decreased $229,000 to $1.7 million at June 30, 2015 from $2.0 million at March 31, 2015. There are no loans 90 or more days past due and still accruing interest.
Declaration of Quarterly Dividend
The Board of Directors approved the declaration of a quarterly cash dividend of $0.03 per share. The dividend is payable on August 26, 2015 to all shareholders of record on August 12, 2015.
About Westfield Financial, Inc.
Westfield Financial, Inc. is a Massachusetts-chartered stock holding company and the parent company of Westfield Bank, Elm Street Securities Corporation, WFD Securities, Inc. and WB Real Estate Holdings, LLC. Westfield Financial and its subsidiaries are headquartered in Westfield, Massachusetts and operate through 13 banking offices located in Agawam, East Longmeadow, Feeding Hills, Holyoke, Southwick, Springfield, West Springfield and Westfield, Massachusetts, and Granby and Enfield, Connecticut. To learn more, visit our website at www.westfieldbank.com.
The Company wishes to caution readers not to place undue reliance on any such forward-looking statements contained in this press release, which speak only as of the date made. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014, and in subsequent filings with the Securities and Exchange Commission. The Company and the Bank do not undertake and specifically decline any obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
WESTFIELD FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Income and Other Data
(Dollars in thousands, except share and per share data)
|Three Months Ended||Six Months Ended|
|June 30,||March 31,||December 31,||September 30,||June 30,||June 30,|
|INTEREST AND DIVIDEND INCOME:|
|Other investments - at cost||69||68||59||59||63||137||128|
Federal funds sold, interest-bearing deposits
|Total interest and dividend income||10,494||10,188||10,471||10,343||10,143||20,684||20,177|
|Total interest expense||2,715||2,598||2,593||2,509||2,442||5,314||4,821|
|Net interest and dividend income||7,779||7,590||7,878||7,834||7,701||15,370||15,356|
|PROVISION FOR LOAN LOSSES||350||300||275||750||450||650||550|
|Net interest and dividend income after provision for loan losses||7,429||7,290||7,603||7,084||7,251||14,720||14,806|
|Service charges and fees||840||638||659||655||632||1,477||1,303|
|Income from bank-owned life insurance||407||367||374||384||386||774||765|
|Loss on prepayment of borrowings||(278||)||(593||)||-||-||-||(871||)||-|
|Gain on sales of securities, net||276||817||44||226||21||1,093||50|
|Total noninterest income||1,245||1,229||1,077||1,265||1,039||2,473||2,118|
|Salaries and employees benefits||3,863||3,821||3,643||3,623||3,665||7,684||7,444|
|Total noninterest expense||6,865||6,711||6,496||6,348||6,531||13,576||13,066|
|INCOME BEFORE INCOME TAXES||1,809||1,808||2,184||2,001||1,759||3,617||3,858|
|INCOME TAX PROVISION||445||470||523||491||417||915||868|
|Basic earnings per share||$||0.08||$||0.08||$||0.09||$||0.08||$||0.07||$||0.15||$||0.16|
|Weighted average shares outstanding||17,519,562||17,684,498||17,718,143||17,910,223||18,308,828||17,601,575||18,559,419|
|Diluted earnings per share||$||0.08||$||0.08||$||0.09||$||0.08||$||0.07||$||0.15||$||0.16|
|Weighted average diluted shares outstanding||17,519,562||17,684,498||17,718,143||17,910,223||18,308,828||17,601,575||18,559,419|
|Return on average assets (1)||0.41||%||0.41||%||0.50||%||0.46||%||0.42||%||0.41||%||0.47||%|
|Return on average equity (1)||3.89||%||3.82||%||4.57||%||4.12||%||3.64||%||3.86||%||4.01||%|
|Efficiency ratio (2)||76.06||%||78.08||%||72.90||%||71.54||%||74.91||%||77.04||%||74.99||%|
|Net interest margin||2.50||%||2.52||%||2.56||%||2.58||%||2.61||%||2.51||%||2.62||%|
(1) Three month results have been annualized.
(2) The efficiency ratio represents the ratio of operating expenses divided by the sum of net interest and dividend income and noninterest income, excluding gain and loss on sale of securities, gain on bank-owned life insurance death benefit and loss on prepayment of borrowings.
WESTFIELD FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Balance Sheets and Other Data
(Dollars in thousands, except per share data)
|June 30,||March 31,||December 31,||September 30,||June 30,|
|Cash and cash equivalents||$||13,694||$||12,719||$||18,785||$||14,429||$||39,362|
|Securities available for sale, at fair value||245,004||233,591||215,750||212,460||192,754|
|Securities held to maturity, at cost||256,303||266,718||278,080||283,684||288,199|
Federal Home Loan Bank of Boston and other
|Allowance for loan losses||8,295||8,035||7,948||7,695||8,017|
|Bank-owned life insurance||49,477||49,070||48,703||48,329||47,945|
|Securities pending settlement||-||-||-||137||67|
|TOTAL SHAREHOLDERS' EQUITY||139,825||140,290||142,543||144,306||146,965|
|TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY||$||1,361,686||$||1,329,011||$||1,320,096||$||1,311,181||$||1,286,318|
|Book value per share||$||7.56||$||7.56||$||7.61||$||7.67||$||7.67|
|30- 89 day delinquent loans||$||1,744||$||1,973||$||3,821||$||4,254||$||5,539|
|Nonperforming loans as a percentage of total loans||1.06||%||1.14||%||1.22||%||1.23||%||0.47||%|
|Nonperforming assets as a percentage of total assets||0.59||%||0.63||%||0.67||%||0.68||%||0.25||%|
|Allowance for loan losses as a percentage of nonperforming loans||103.52||%||96.34||%||90.01||%||86.78||%||248.59||%|
|Allowance for loan losses as a percentage of total loans||1.09||%||1.10||%||1.10||%||1.07||%||1.17||%|
The following tables set forth the information relating to our average balances and net interest income for the three months ended June 30, 2015, March 31, 2015, and June 30, 2014, and the six months ended June 30, 2015 and 2014, and reflect the average yield on interest-earning assets and average cost of interest-bearing liabilities for the periods indicated.
|Three Months Ended|
|June 30, 2015||March 31, 2015||June 30, 2014|
|Average||Avg Yield/||Average||Avg Yield/||Average||Avg Yield/|
|(Dollars in thousands)|
|Other investments - at cost||16,460||69||1.68||16,234||68||1.68||16,546||63||1.52|
|Total interest-earning assets||1,268,259||10,610||3.35||1,241,344||10,309||3.32||1,202,614||10,280||3.42|
|Total noninterest-earning assets||80,303||78,084||72,051|
|LIABILITIES AND EQUITY:|
|Money market accounts||236,322||208||0.35||233,418||220||0.38||213,227||208||0.39|
|Time certificates of deposit||390,616||1,132||1.16||368,463||1,081||1.17||341,041||1,033||1.21|
|Total interest-bearing deposits||738,561||1,380||715,685||1,341||677,209||1,288|
|Short-term borrowings and long-term debt||307,892||1,335||1.73||308,379||1,257||1.63||308,757||1,154||1.50|
|Other noninterest-bearing liabilities||18,302||18,473||10,679|
|Total noninterest-bearing liabilities||161,625||153,375||140,712|
|Total liabilities and equity||$||1,348,562||$||1,319,429||$||1,274,665|
|Less: Tax-equivalent adjustment(2)||(116||)||(121||)||(137||)|
|Net interest and dividend income||$||7,779||$||7,590||$||7,701|
|Net interest rate spread(4)||2.31||%||2.31||%||2.43||%|
|Net interest margin(5)||2.50||%||2.52||%||2.61||%|
|Ratio of average interest-earning|
|assets to average interest-bearing liabilities||121.20||121.22||121.97|
|Six Months Ended June 30,|
|Average||Avg Yield/||Average||Avg Yield/|
|(Dollars in thousands)|
|Other investments - at cost||16,347||138||1.69||17,035||128||1.50|
|Total interest-earning assets||1,254,876||20,920||3.33||1,202,034||20,450||3.40|
|Total noninterest-earning assets||79,197||72,520|
|LIABILITIES AND EQUITY:|
|Money market accounts||234,878||429||0.37||212,062||401||0.38|
|Time certificates of deposit||379,600||2,212||1.17||340,736||2,083||1.22|
|Total interest-bearing deposits||727,186||2,721||675,945||2,580|
|Short-term borrowings and long-term debt||308,134||2,593||1.68||308,700||2,241||1.45|
|Other noninterest-bearing liabilities||18,384||9,883|
|Total noninterest-bearing liabilities||157,520||139,613|
|Total liabilities and equity||$||1,334,073||$||1,274,554|
|Less: Tax-equivalent adjustment(2)||(236||)||(273||)|
|Net interest and dividend income||$||15,370||$||15,356|
|Net interest rate spread(4)||2.30||%||2.42||%|
|Net interest margin(5)||2.51||%||2.62||%|
|Ratio of average interest-earning|
|assets to average interest-bearing liabilities||121.21||122.08|
(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.