XNAS:WFD Westfield Financial Inc Quarterly Report 10-Q Filing - 3/31/2012

Effective Date 3/31/2012

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a50266156.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
______________________

FORM 10-Q


S           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012

OR

£           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____.


Commission file number 001-16767

Westfield Financial, Inc.
 (Exact name of registrant as specified in its charter)

Massachusetts
73-1627673
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)

141 Elm Street, Westfield, Massachusetts 01086
(Address of principal executive offices)
(Zip Code)

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


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes S  No £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) Yes S  No £.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):

      Large accelerated filer £
Accelerated filer S
   
      Non-accelerated filer £
Smaller reporting company £

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes £  No S

At May 1, 2012 the registrant had 26,602,101 shares of common stock, $.01 par value, issued and outstanding.
 
 
 
 

 
 
 
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FORWARD–LOOKING STATEMENTS
 
This Quarterly Report on Form 10-Q contains “forward-looking statements.”  These forward-looking statements are made in good faith pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.  The words “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan” and similar expressions are intended to identify forward-looking statements.  These forward-looking statements may be subject to significant known and unknown risks, uncertainties and other factors, 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.

Although we believe that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from the results discussed in these forward-looking statements.  You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.  Westfield Financial undertakes no obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
 
 
 
i

 
 
 
PART I – FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS.
WESTFIELD FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(Dollars in thousands)
 
   
March 31,
   
December 31,
   
2012
   
2011
ASSETS
         
Cash and due from banks
  $ 11,585     $ 10,953  
Federal funds sold
    165       131  
Interest-bearing deposits and other short-term investments
    5,454       10,021  
             Cash and cash equivalents
    17,204       21,105  
                 
SECURITIES AVAILABLE FOR SALE – AT FAIR VALUE
    645,913       617,537  
                 
FEDERAL HOME LOAN BANK OF BOSTON AND OTHER RESTRICTED STOCK - AT COST
    12,243       12,438  
                 
LOANS - Net of allowance for loan losses of $7,803 at March 31, 2012 and $7,764 at December 31, 2011
    550,570       546,392  
                 
PREMISES AND EQUIPMENT, NET
    11,082       10,997  
                 
ACCRUED INTEREST RECEIVABLE
    4,146       4,022  
                 
BANK-OWNED LIFE INSURANCE
    44,153       44,040  
                 
DEFERRED TAX ASSET, NET
    2,954       1,863  
                 
OTHER REAL ESTATE OWNED
    1,130       1,130  
                 
OTHER ASSETS
    4,218       3,740  
TOTAL ASSETS
  $ 1,293,613     $ 1,263,264  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
               
LIABILITIES:
               
DEPOSITS :
               
    Noninterest-bearing
  $ 103,417     $ 100,157  
    Interest-bearing
    645,213       632,801  
          Total deposits
    748,630       732,958  
                 
SHORT-TERM BORROWINGS
    70,237       52,985  
                 
LONG-TERM DEBT
    248,275       247,320  
SECURITIES PENDING SETTLEMENT
    -       363  
OTHER LIABILITIES
    10,960       10,650  
TOTAL LIABILITIES
    1,078,102       1,044,276  
                 
SHAREHOLDERS' EQUITY:
               
Preferred stock - $.01 par value, 5,000,000 shares authorized, none outstanding at March 31, 2012 and
               
        December 31, 2011     -       -  
Common stock - $.01 par value, 75,000,000 shares authorized, 26,602,101 shares issued and
               
        outstanding at March 31, 2012; 26,918,250 shares issued and outstanding at December 31, 2011     266       269  
Additional paid-in capital
    171,532       173,615  
Unearned compensation - ESOP
    (8,978 )     (9,119 )
Unearned compensation - Equity Incentive Plan
    (940 )     (1,228 )
Retained earnings
    47,867       47,735  
Accumulated other comprehensive income
    5,764       7,716  
   Total shareholders' equity
    215,511       218,988  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
  $ 1,293,613     $ 1,263,264  
See accompanying notes to unaudited consolidated financial statements.
 
 
 
 
1

 
 
WESTFIELD FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED
(Dollars in thousands, except per share data)
 
   
Three Months
   
Ended March 31,
   
2012
   
2011
 
INTEREST AND DIVIDEND INCOME:
           
Debt securities, taxable
  $ 3,844     $ 4,811  
Residential and commercial real estate loans
    5,039       4,674  
Commercial and industrial loans
    1,302       1,443  
Debt securities, tax-exempt
    423       419  
Consumer loans
    40       49  
Equity securities
    45       47  
Other investments - at cost
    22       14  
Total interest and dividend income
    10,715       11,457  
INTEREST EXPENSE:
               
Deposits
    1,637       2,106  
Long-term debt
    1,631       1,645  
Short-term borrowings
    30       59  
Total interest expense
    3,298       3,810  
Net interest and dividend income
    7,417       7,647  
PROVISION FOR LOAN LOSSES
    220       339  
Net interest and dividend income after provision for loan losses
    7,197       7,308  
                 
NONINTEREST INCOME (LOSS):
               
Total other-than-temporary impairment losses on debt securities
    -       (345 )
Portion of other-than-temporary impairment losses recognized in accumulated other
               
        comprehensive loss on debt securities     -       313  
Net other-than-temporary impairment losses recognized in income
    -       (32 )
Service charges and fees
    509       441  
Income from bank-owned life insurance
    459       366  
Gain on sales of securities, net
    1,585       31  
Total noninterest income
    2,553       806  
NONINTEREST EXPENSE:
               
Salaries and employees benefits
    4,277       3,953  
Occupancy
    705       678  
Computer operations
    527       486  
Professional fees
    437       439  
OREO expense
    17       8  
FDIC insurance assessment
    143       208  
Other
    738       768  
Total noninterest expense
    6,844       6,540  
INCOME BEFORE INCOME TAXES
    2,906       1,574  
INCOME TAX PROVISION
    567       288  
NET INCOME
  $ 2,339     $ 1,286  
                 
EARNINGS PER COMMON SHARE:
               
Basic earnings per share
  $ 0.09     $ 0.05  
Weighted average shares outstanding
    25,449,759       26,746,102  
Diluted earnings per share
  $ 0.09     $ 0.05  
Weighted average diluted shares outstanding
    25,502,311       26,875,244  
See accompanying notes to unaudited consolidated financial statements.
 
 
 
2

 
 
WESTFIELD FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME – UNAUDITED
       
   
Three Months Ended March 31,
   
2012
   
2011
 
   
(In thousands)
 
             
Net income
  $ 2,339     $ 1,286  
                 
Other comprehensive income (loss):
               
Unrealized gains (losses) on securities:
               
Unrealized holding losses on available for sale securities
  $ (1,443 )   $ (1,649 )
Reclassification adjustment for gains realized in income
    (1,585 )     (31 )
Other-than-temporary impairment losses on available-for-sale securities
    -       32  
Net unrealized losses
    (3,028 )     (1,648 )
Tax effect
    1,051       570  
Net-of-tax amount
    (1,977 )     (1,078 )
                 
Defined benefit plans:
               
Reclassification adjustments for items reflected in earnings:
               
Actuarial loss
    39       29  
Transition asset
    (2 )     (3 )
Net adjustments pertaining to defined benefit plans
    37       26  
Tax effect
    (12 )     (9 )
Net-of-tax amount
    25       17  
                 
Other comprehensive loss
    (1,952 )     (1,061 )
                 
Comprehensive income
  $ 387     $ 225  
 
 
 
3

 
 
WESTFIELD FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - UNAUDITED
THREE MONTHS ENDED MARCH 31, 2012 AND 2011
(Dollars in thousands, except share data)
   
   
Common Stock
   
Additional Paid-in Capital
   
Unearned Compensation- ESOP
   
Unearned Compensation- Equity Incentive Plan
   
Retained Earnings
   
Accumulated Other Comprehensive Income (Loss)
   
Total
 
 
Shares
   
Par
Value
 
                                                 
BALANCE, DECEMBER 31, 2010
    28,166,419     $ 282     $ 181,842     $ (9,701 )   $ (2,158 )   $ 56,496     $ (5,516 )   $ 221,245  
Net income
    -       -       -       -       -       1,286       -       1,286  
Other comprehensive loss
    -       -       -       -       -       -       (1,061 )     (1,061 )
Common stock held by ESOP committed to be released (86,586 shares)
    -       -       46       145       -       -       -       191  
Share-based compensation - stock options
    -       -       200       -       -       -       -       200  
Share-based compensation - equity incentive plan
    -       -       -       -       291       -       -       291  
Excess tax benefits from equity incentive plan
    -       -       5       -       -       -       -       5  
Common stock repurchased
    (155,555 )     (2 )     (1,361 )     -       -       -       -       (1,363 )
Issuance of common stock in connection with stock option exercises
    34,646       -       294       -       -       (141 )     -       153  
Excess tax benefits in connection with stock option exercises
    -       -       18       -       -       -       -       18  
Cash dividends declared ($0.06 per share)
    -       -       -       -       -       (1,609 )     -       (1,609 )
BALANCE, MARCH 31, 2011
    28,045,510     $ 280     $ 181,044     $ (9,556 )   $ (1,867 )   $ 56,032     $ (6,577 )   $ 219,356  
                                                                 
BALANCE, DECEMBER 31, 2011
    26,918,250     $ 269     $ 173,615     $ (9,119 )   $ (1,228 )   $ 47,735     $ 7,716     $ 218,988  
Net income
    -       -       -       -       -       2,339       -       2,339  
Other comprehensive loss
    -       -       -       -       -       -       (1,952 )     (1,952 )
Common stock held by ESOP committed to be released (84,261 shares)
    -       -       25       141       -       -       -       166  
Share-based compensation - stock options
    -       -       196       -       -       -       -       196  
Share-based compensation - equity incentive plan
    -       -       -       -       288       -       -       288  
Excess tax benefits from equity incentive plan
    -       -       3       -       -       -       -       3  
Common stock repurchased
    (493,226 )     (5 )     (3,956 )     -       -       -       -       (3,961 )
Issuance of common stock in connection with stock option exercises
    177,077       2       1,454       -       -       (678 )     -       778  
Excess tax benefits in connection with stock option exercises
    -       -       195       -       -       -       -       195  
Cash dividends declared ($0.06 per share)
    -       -       -       -       -       (1,529 )     -       (1,529 )
BALANCE, MARCH 31, 2012
    26,602,101     $ 266     $ 171,532     $ (8,978 )   $ (940 )   $ 47,867     $ 5,764     $ 215,511  
   
See accompanying notes to unaudited consolidated financial statements
 
 
 
 
4

 
 
WESTFIELD FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASHFLOWS
(Dollars in thousands)
   
Three Months Ended March 31,
   
2012
   
2011
 
OPERATING ACTIVITIES:
           
Net income
  $ 2,339     $ 1,286  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Provision for loan losses
    220       339  
Depreciation and amortization of premises and equipment
    266       307  
Net amortization of premiums and discounts on securities and mortgage loans
    952       904  
Net amortization of premiums on modified debt
    53       -  
Share-based compensation expense
    484       491  
Amortization of ESOP expense
    166       191  
Excess tax benefits from equity incentive plan
    (3 )     (5 )
Excess tax benefits in connection with stock option exercises
    (195 )     (18 )
Net gains on sales of securities
    (1,585 )     (31 )
Other than temporary impairment losses on securities
    -       32  
Deferred income tax benefit
    (52 )     (53 )
Income from bank-owned life insurance
    (459 )     (366 )
Changes in assets and liabilities:
               
Accrued interest receivable
    (124 )     22  
Other assets
    (132 )     368  
Other liabilities
    544       (378 )
Net cash provided by operating activities
    2,474       3,089  
INVESTING ACTIVITIES:
               
Securities, available for sale:
               
Purchases
    (152,055 )     (65,842 )
Proceeds from sales
    100,285       50,893  
Proceeds from calls, maturities, and principal collections
    21,015       23,671  
Purchase of residential mortgages
    (14,696 )     (23,888 )
Loan originations and principal payments, net
    10,272       7,580  
Purchase of Federal Home Loan Bank of Boston stock
    -       (72 )
Proceeds from redemption of Federal Home Loan Bank of Boston stock
    195       -  
Purchases of premises and equipment
    (351 )     (72 )
Purchase of bank-owned life insurance
    -       (2,000 )
Net cash used in investing activities
    (35,335 )     (9,730 )
FINANCING ACTIVITIES:
               
Net increase in deposits
    15,672       7,200  
Net change in short-term borrowings
    17,252       (7,799 )
Repayment of long-term debt
    (46,731 )     (2,000 )
Proceeds from long-term debt
    47,633       14,032  
Cash dividends paid
    (1,529 )     (1,609 )
Common stock repurchased
    (4,313 )     (1,363 )
Issuance of common stock in connection with stock option exercises
    778       153  
Excess tax benefits in connection with equity incentive plan
    3       5  
Excess tax benefits in connection with stock option exercises
    195       18  
Net cash provided by financing activities
    28,960       8,637  
                 
NET CHANGE IN CASH AND CASH EQUIVALENTS:
    (3,901 )     1,996  
Beginning of year
    21,105       11,611  
End of year
  $ 17,204     $ 13,607  
                 
Supplemental cashflow information:
               
Interest paid
  $ 3,217     $ 3,820  
Taxes paid
    70       51  
Settlement of common stock repurchased     352       -  
   
See the accompanying notes to unaudited consolidated financial statements
 
 
 
5

 
 
WESTFIELD FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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