Form 8-K WESTFIELD FINANCIAL INC For: Jul 29

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

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FORM 8-K

 

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CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): July 29, 2015

 

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WESTFIELD FINANCIAL, INC.

(Exact name of registrant as specified in its charter)

 

Massachusetts (State or other jurisdiction of incorporation or organization)

001-16767 (Commission File Number)

73-1627673 (I.R.S. Employer Identification No.)

 

141 Elm Street

Westfield, Massachusetts 01085
(Address of principal executive offices, zip code)

 

Registrant's telephone number, including area code: (413) 568-1911

 

(Former name or former address, if changed since last report)

 

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02.

Results of Operations and Financial Condition 

On July 29, 2015, Westfield Financial, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended June 30, 2015.  The press release also announced the declaration of a regular cash dividend of $0.03 per share.  A copy of the press release is furnished as Exhibit 99.1 hereto and is hereby incorporated by reference into this Item 2.02.

The information contained in this current report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the Company under the Securities Act of 1933, as amended.

Item 9.01

Financial Statements and Exhibits.

 

(a) Not applicable.

 

(b) Not applicable.

 

(c) Not applicable.

 

(d) Exhibits.

 

The exhibits required by this item are set forth on the Exhibit Index attached hereto.

 

 

Exhibit Number		Description
99.1		Press Release, dated July 29, 2015

 

 

 

 

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 hereunto duly authorized.

 

 

	WESTFIELD FINANCIAL, INC.
	By:	/s/ Leo R. Sagan, Jr.
		Leo R. Sagan, Jr.
		Chief Financial Officer

 

Dated: July 29, 2015

 

 

 

EXHIBIT INDEX

 

 

Exhibit No.		Description
99.1		Press Release, dated July 29, 2015

 

 

 

 

 

 

 

 

 

Westfield Financial, Inc. 8-K

 

Exhibit 99.1

 

For further information contact: James C. Hagan, President & CEO Leo R. Sagan, Jr., CFO Meghan Hibner, VP Investor Relations Officer 413-568-1911

 

 

WESTFIELD FINANCIAL, INC. REPORTS RESULTS FOR THE QUARTER ENDED JUNE 30, 2015 AND DECLARES QUARTERLY DIVIDEND

 

Loan growth continues to be strong at 10.7% year-over-year

 

Westfield, Massachusetts, July 29, 2015: 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.

 

 

Credit Quality

 

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,
				2015				2015				2014
				(In thousands)
	Balance, beginning of period			$	8,035			$	7,948			$	7,567
	Provision				350				300				450
	Charge-offs				(101	)			(225	)			(13	)
	Recoveries				11				12				13
	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.

 

Forward-Looking Statements

 

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)

(Unaudited)

 

		Three Months Ended																				Six Months Ended
		June 30,				March 31,				December 31,				September 30,				June 30,				June 30,
		2015				2015				2014				2014				2014				2015				2014
INTEREST AND DIVIDEND INCOME:
Loans		$	7,371			$	7,229			$	7,331			$	7,135			$	6,821			$	14,601			$	13,378
Securities			3,049				2,885				3,079				3,147				3,256				5,935				6,662
Other investments - at cost			69				68				59				59				63				137				128
Federal funds sold, interest-bearing deposits and other short-term investments			5				6				2				2				3				11				9
Total interest and dividend income			10,494				10,188				10,471				10,343				10,143				20,684				20,177
INTEREST EXPENSE:
Deposits			1,380				1,341				1,300				1,298				1,288				2,721				2,580
Long-term debt			1,092				1,070				1,119				1,125				1,071				2,162				2,081
Short-term borrowings			243				187				174				86				83				431				160
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
NONINTEREST INCOME:
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
NONINTEREST EXPENSE:
Salaries and employees benefits			3,863				3,821				3,643				3,623				3,665				7,684				7,444
Occupancy			818				840				821				743				751				1,659				1,512
Data processing			559				585				616				600				610				1,143				1,125
Professional fees			488				472				447				495				483				959				994
FDIC insurance			188				193				205				166				177				381				342
Other			949				800				764				721				845				1,750				1,649
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
NET INCOME		$	1,364			$	1,338			$	1,661			$	1,510			$	1,342			$	2,702			$	2,990
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
Other Data:
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)

(Unaudited)

 

		June 30,				March 31,				December 31,				September 30,				June 30,
		2015				2015				2014				2014				2014
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 restricted stock - at cost			15,372				14,934				14,934				14,720				15,056
Loans			759,382				730,354				724,686				719,555				686,068
Allowance for loan losses			8,295				8,035				7,948				7,695				8,017
Net loans			751,087				722,319				716,738				711,860				678,051
Bank-owned life insurance			49,477				49,070				48,703				48,329				47,945
Other assets			30,749				29,660				27,106				25,699				24,951
TOTAL ASSETS		$	1,361,686			$	1,329,011			$	1,320,096			$	1,311,181			$	1,286,318
Total deposits		$	897,714			$	873,303			$	834,218			$	828,785			$	818,590
Short-term borrowings			111,251				82,625				93,997				78,685				59,751
Long-term debt			195,772				212,637				232,479				246,804				248,760
Securities pending settlement			—				—				—				137				67
Other liabilities			17,124				20,156				16,859				12,464				12,185
TOTAL LIABILITIES			1,221,861				1,188,721				1,177,553				1,166,875				1,139,353
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
Other Data:
30- 89 day delinquent loans		$	1,744			$	1,973			$	3,821			$	4,254			$	5,539
Nonperforming loans			8,013				8,340				8,830				8,867				3,225
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/
		Balance				Interest				Cost				Balance				Interest				Cost				Balance				Interest				Cost
		(Dollars in thousands)
ASSETS:
Interest-earning assets
Loans(1)(2)		$	742,475			$	7,401				3.99	%		$	727,447			$	7,260				3.99	%		$	665,024			$	6,857				4.12	%
Securities(2)			498,093				3,135				2.52				481,919				2,975				2.47				501,132				3,357				2.68
Other investments - at cost			16,460				69				1.68				16,234				68				1.68				16,546				63				1.52
Short-term investments(3)			11,231				5				0.18				15,744				6				0.15				19,912				3				0.06
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
Total assets		$	1,348,562											$	1,319,428											$	1,274,665
LIABILITIES AND EQUITY:
Interest-bearing liabilities
Interest-bearing accounts		$	35,954				20				0.22			$	38,079				21				0.22			$	41,797				26				0.25
Savings accounts			75,669				20				0.11				75,725				19				0.10				81,144				21				0.10
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
Interest-bearing liabilities			1,046,453				2,715				1.04				1,024,064				2,598				1.01				985,966				2,442				0.99
Noninterest-bearing deposits			143,323												134,902												130,033
Other noninterest-bearing liabilities			18,302												18,473												10,679
Total noninterest-bearing liabilities			161,625												153,375												140,712
Total liabilities			1,208,078												1,177,439												1,126,678
Total equity			140,484												141,990												147,987
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,
		2015												2014
		Average								Avg Yield/				Average								Avg Yield/
		Balance				Interest				Cost				Balance				Interest				Cost
		(Dollars in thousands)
ASSETS:
Interest-earning assets
Loans(1)(2)		$	735,003			$	14,662				3.99	%		$	653,007			$	13,452				4.12	%
Securities(2)			490,051				6,109				2.49				515,509				6,861				2.66
Other investments - at cost			16,347				138				1.69				17,035				128				1.50
Short-term investments(3)			13,475				11				0.16				16,483				9				0.11
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
Total assets		$	1,334,073											$	1,274,554
LIABILITIES AND EQUITY:
Interest-bearing liabilities
Interest-bearing checking		$	37,011				41				0.22			$	42,342				55				0.26
Savings accounts			75,697				39				0.10				80,805				41				0.10
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
Interest-bearing liabilities			1,035,320				5,314				1.03				984,645				4,821				0.98
Noninterest-bearing deposits			139,136												129,730
Other noninterest-bearing liabilities			18,384												9,883
Total noninterest-bearing liabilities			157,520												139,613
Total liabilities			1,192,840												1,124,258
Total equity			141,233												150,296
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.

 

 

 

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