Westfield Financial, Inc. (the “Company”) (NasdaqGS:WFD), the holding company for Westfield Bank (the “Bank”), reported net income of $1.4 million, or $0.06 per diluted share, for the quarter ended September 30, 2012, compared to $974,000, or $0.04 per diluted share, for the quarter ended June 30, 2012, and $1.5 million, or $0.06 per diluted share, for the quarter ended September 30, 2011.
For the nine months ended September 30, 2012, net income was $4.7 million, or $0.19 per diluted share, compared to $4.3 million, or $0.16 per diluted share, for the same period in 2011.
Selected financial highlights for the third quarter 2012 include:
- Net interest and dividend income was stable at $7.7 million for both the quarter ended September 30, 2012, and June 30, 2012, respectively. The net interest margin decreased 6 basis points from the second quarter 2012. This resulted from a decrease of 6 basis points in the yield on interest-earning assets partially offset by a decrease of 3 basis points in the cost of interest-bearing liabilities and an increase in interest-earning assets of $12.5 million.
- Noninterest income increased $280,000 primarily due to increases of $107,000 in income from bank-owned life insurance (“BOLI”) and $70,000 in fee income from the third-party mortgage company. In the second quarter 2012, management redeemed certain BOLI policies, which resulted in a charge to noninterest income of $102,000 for transferring the policies to a different carrier. In the third quarter 2012, the Bank recorded an increase of $70,000 in fees from the third-party mortgage company which was due to the referral of low rate residential loans to the mortgage company, rather than retaining them on the Bank’s balance sheet.
- Commercial real estate loans increased $6.1 million to $240.4 million and residential loans increased $1.0 million to $223.8 million. This was offset by a decrease of $8.3 million in commercial and industrial loans, which were $115.4 million at September 30, 2012. Commercial and industrial loans were impacted by lower utilization of lines of credit, which decreased by $4.8 million during the quarter. While in prior quarters management has used residential loan growth to supplement the loan portfolio, the long-term strategy remains focused on commercial lending. The Company hired two experienced commercial lenders during the second half of 2012.
Income Statement Discussion and AnalysisNet interest and dividend income was stable at $7.7 million for both the third and second quarters of 2012. The net interest margin, on a tax-equivalent basis, was 2.52% for the third quarter 2012, compared to 2.58% for the second quarter 2012. This resulted from a decrease of 6 basis points in the yield on interest-earning assets partially offset by a decrease of 3 basis points in the cost of interest-bearing liabilities and an increase in interest-earning assets of $12.5 million.
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