Westfield Financial, Inc. (the “Company”) (NasdaqGS:WFD), the holding company for Westfield Bank (the “Bank”), reported net income of $1.5 million, or $0.08 per diluted share, for the quarter ended September 30, 2014, compared to $1.6 million, or $0.08 per diluted share, for the quarter ended September 30, 2013. For the nine months ended September 30, 2014, net income was $4.5 million, or $0.25 per diluted share, compared to $4.9 million, or $0.24 per diluted share, for the same period in 2013.
As a result of the significant loan growth experienced by the Bank over the past four quarters, both the three and nine months ended September 30, 2014 included an expense for the provision for loan losses of $750,000 and $1.3 million, respectively, whereas the comparable 2013 periods included credits to the provision for loan losses of $71,000 and $376,000, respectively. The Company recorded credits to the provision for loan losses in the 2013 periods as a result of improved credit quality. In the 2014 periods, the increase to the provision for loan losses reflects significant loan growth and stabilized good credit.
As the increase in the loan loss provision is largely a result of favorable loan growth, yet the impact is negative to current period earnings, the Company feels that pretax, pre-provision net income, exclusive of securities gains and other infrequent items (“adjusted net income”), is an appropriate measure that reflects the improvement being made in the Company’s core franchise. A reconciliation of adjusted net income to GAAP pretax net income is provided in the financial table at the end of this press release. As shown in the financial table, the Company recorded $2.5 million of pre-tax, pre-provision net income for the third quarter of 2014, an increase of 27.5% over $2.0 million for the third quarter of 2013. For the nine months ended September 30, 2014, pretax, pre-provision net income was $6.9 million, an increase of 16.3% over $5.9 million for the same period in 2013.
Selected financial highlights for third quarter 2014 include:
- Total loans increased $99.4 million, or 16.0%, to $719.6 million at September 30, 2014 compared to $620.2 million at September 30, 2013. This was primarily due to increases in commercial and industrial loans of $39.0 million, residential loans of $30.7 million, and commercial real estate loans of $29.8 million. On a sequential-quarter basis, total loans increased $33.5 million, or 4.9%, to $719.6 million for the third quarter of 2014. This was primarily due to increases in commercial and industrial loans of $17.8 million, residential loans of $14.5 million, and commercial real estate loans of $1.2 million.
- Securities declined $46.7 million, or 9.1%, to $510.9 million at September 30, 2014, compared to $557.6 million at September 30, 2013. On a sequential-quarter basis, securities increased by $14.9 million, or 3.0%, at September 30, 2014, compared to $496.0 million at June 30, 2014.
- Net interest and dividend income was $7.8 million for both the quarters ended September 30, 2014 and September 30, 2013. On a sequential-quarter basis, net interest and dividend income increased $133,000 for the quarter ended September 30, 2014, compared to the quarter ended June 30, 2014.
- The net interest margin for the quarter ended September 30, 2014 decreased 4 basis points to 2.58%, as compared to 2.62% for the third quarter of 2013. On a sequential-quarter basis, the net interest margin decreased 3 basis points for the quarter ended September 30, 2014 compared to the quarter ended June 30, 2014.
- Noninterest expense decreased $503,000 to $6.3 million for the quarter ended September 30, 2014, compared to $6.9 million for the quarter ended September 30, 2013. On a sequential-quarter basis, noninterest expense decreased by $186,000 for the quarter ended September 30, 2014, compared to $6.5 million for the quarter ended June 30, 2014.
President and CEO, James C. Hagan stated, “Our performance demonstrates our commitment to execute on our strategy of organic growth and attractive expansion opportunities. I am pleased with our continued loan growth initiatives over the past four quarters. During the third quarter of 2014, our Middle Market and Commercial Real Estate Lending teams successfully completed their move to downtown Springfield, Massachusetts. Our plans to open a full-service branch in Enfield, Connecticut are moving forward with an expected opening date in mid-November. Our Springfield and Enfield expansion gives us proximity to the I-91 corridor and will give us better access to the borrowers and centers of influence in the greater-Springfield area and northern Connecticut.”
Additional Income Statement Discussion
Net interest and dividend income was $7.8 million for both the quarter ended September 30, 2014 and September 30, 2013. The net interest margin decreased 4 basis points to 2.58% for the quarter ended September 30, 2014, compared to 2.62% for the quarter ended September 30, 2013. The yield on average interest-earning assets decreased 5 basis points, while the cost of average interest-bearing liabilities decreased 1 basis point.
Net interest and dividend income increased $56,000 to $23.2 million for the nine months ended September 30, 2014, as compared to $23.1 million for the same period in 2013. The net interest margin for the nine months ended September 30, 2014 increased 2 basis points to 2.61%, as compared to 2.59% for the same period in 2013. The cost of average interest-bearing liabilities decreased 6 basis points, partially offset by a decrease of 2 basis points in the yield on average interest-earning assets.
Noninterest income increased $256,000 to $1.3 million for the quarter ended September 30, 2014, compared to $1.0 million for the same period in 2013. The third quarter of 2014 included net gains on sales of securities of $226,000, whereas the third quarter of 2013 included securities gains of $546,000, partially offset by a loss on prepayment of borrowings of $540,000.
Noninterest expense decreased $503,000 to $6.3 million for the quarter ended September 30, 2014, compared to $6.9 million for the same period in 2013. This was primarily due to a decrease in salaries and benefits of $436,000, primarily as a result of a decrease of $265,000 in employee benefit costs. Noninterest expense decreased $741,000 to $19.4 million from $20.2 million for the nine months ended September 30, 2014, compared to the same period in 2013, primarily driven by a $618,000 decrease in salaries and benefits. The efficiency ratio, excluding non-core items, was 71.5% for the third quarter of 2014, compared to 77.6% for the same period in 2013 and 73.8% and 77.3% for the nine months ended September 30, 2014 and 2013, respectively.
Additional Balance Sheet Discussion
Total deposits increased $35.3 million, or 4.4%, to $828.8 million at September 30, 2014, compared to $793.5 million at September 30, 2013. This was primarily due to increases in money market accounts of $24.8 million, term accounts of $10.1 million, and checking accounts of $7.3 million, partially offset by a decrease in regular savings accounts of $6.8 million. Total deposits increased $10.2 million, or 1.2%, to $828.8 million at September 30, 2014, compared to $818.6 million at June 30, 2014. This was primarily due to increases in money market accounts of $10.1 million and time deposits of $5.3 million. In addition, short-term borrowings and long term debt increased $15.5 million to $325.5 million at September 30, 2014, compared to $310.0 million at September 30, 2013. This was primarily due to an increase in borrowings from the Federal Home Loan Bank.
Shareholders’ equity was $144.3 million at September 30, 2014 and $147.0 million at June 30, 2014, which represented 11.0% and 11.4% of total assets, respectively. The decrease in shareholders’ equity during the quarter reflects the repurchase of 347,471 shares of common stock for $2.5 million (an average price of $7.20 per share) and the payment of a quarterly dividend of $1.1 million. This was partially offset by net income of $1.5 million for the quarter ended September 30, 2014.
On March 13, 2014, 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 September 30, 2014, there were 1,086,009 shares remaining under this repurchase program.
Credit Quality
The allowance for loan losses was $7.7 million at September 30, 2014, $8.0 million at June 30, 2014 and $7.3 million at September 30, 2013, representing 1.07%, 1.17% and 1.18% of total loans, respectively. This represents 86.8%, 248.6% and 249.3% of nonperforming loans at September 30, 2014, June 30, 2014 and September 30, 2013, respectively.
An analysis of the changes in the allowance for loan losses is as follows:
| Three Months Ended | |||||||||||||||||
| September 30, | June 30, | September 30, | |||||||||||||||
| 2014 | 2014 | 2013 | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Balance, beginning of period | $ | 8,017 | $ | 7,567 | $ | 7,473 | |||||||||||
| Provision (credit) | 750 | 450 | (71 | ) | |||||||||||||
| Charge-offs | (1,076 | ) | (13 | ) | (116 | ) | |||||||||||
| Recoveries | 4 | 13 | 25 | ||||||||||||||
| Balance, end of period | $ | 7,695 | $ | 8,017 | $ | 7,311 | |||||||||||
During the third quarter of 2014, nonperforming loans increased $5.6 million to $8.9 million from June 30, 2014, representing 1.23% of total loans at September 30, 2014. The increase was due primarily to one commercial and industrial loan relationship of $6.8 million. The loan relationship pertains to a manufacturing business that has maintained a relationship for over 15 years with the Bank and has faced a slowdown in sales. For the three months ended September 30, 2014, a charge off of $950,000 was recorded as a result of impairment to this relationship.
Impaired loans decreased $8.3 million for the three months ended September 30, 2014, primarily resulting from a single commercial real estate relationship of $14.3 million, which was returned to the general pool for allowance measurement. Loans delinquent 30 – 89 days decreased $1.2 million to $4.3 million at September 30, 2014 from $5.5 million at June 30, 2014. 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 November 26, 2014 to all shareholders of record on November 12, 2014. Mr. Hagan stated, “The dividend represents an attractive yield and payout ratio in line with industry norms. This better enables us to emphasize strategies which increase tangible book value. We have continued to actively repurchase shares at attractive levels in an effort to rationalize our capital levels.”
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 11 banking offices located in Agawam, East Longmeadow, Feeding Hills, Holyoke, Southwick, Springfield, West Springfield and Westfield, Massachusetts and one banking office in Granby, 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, 2013, 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.
Non-GAAP Financial Measures
This press release and the reconciliation table included herein includes the following non-GAAP financial measures: adjusted net income. A description of the adjusted calculations and reconciliation to the comparable GAAP financial measures is provided in the accompanying table titled “Reconciliation of Adjusted Net Income to GAAP Pretax Net Income.” Company management uses these non-GAAP financial measures to monitor and evaluate its operating results and trends on an on-going basis, and internally for operating, budgeting and financial planning purposes. Company management believes the non-GAAP information is useful for investors by offering the ability to better identify trends in our business and better understand how management evaluates the business. These non-GAAP measures have limitations, however, because they do not include all items of income and expense that affect the Company. These non-GAAP financial measures are not prepared in accordance with, and should not be considered in isolation of, or as an alternative to, measurements required by GAAP.
| WESTFIELD FINANCIAL, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||||
| RECONCILIATION OF ADJUSTED NET INCOME TO GAAP PRETAX NET INCOME - UNAUDITED | ||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||||
| Quarter Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||||||||||
| 2014 | 2013 | Change | 2014 | 2013 | Change | |||||||||||||||||||||||||||||
| Income before income taxes | $ | 2,001 | $ | 2,057 | $ | 5,861 | $ | 6,285 | ||||||||||||||||||||||||||
| Add back: provision (credit) for loan losses | 750 | (71 | ) | 1,300 | (376 | ) | ||||||||||||||||||||||||||||
| Pretax, pre-provision net income | 2,751 | 1,986 | 7,161 | 5,909 | ||||||||||||||||||||||||||||||
| Adjust for infrequent items: | ||||||||||||||||||||||||||||||||||
| Gains on sales of securities, net | (226 | ) | (546 | ) | (276 | ) | (2,796 | ) | ||||||||||||||||||||||||||
| Loss on prepayment of borrowings | - | 540 | - | 3,370 | ||||||||||||||||||||||||||||||
| Gain on bank-owned life insurance death benefit | - | - | - | (563 | ) | |||||||||||||||||||||||||||||
| Adjusted net income | $ | 2,525 | $ | 1,980 | 27.5 | % | $ | 6,885 | $ | 5,920 | 16.3 | % | ||||||||||||||||||||||
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 | Nine Months Ended | ||||||||||||||||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | September 30, | ||||||||||||||||||||||||||||||
| 2014 | 2014 | 2014 | 2013 | 2013 | 2014 | 2013 | |||||||||||||||||||||||||||||
| INTEREST AND DIVIDEND INCOME: | |||||||||||||||||||||||||||||||||||
| Loans | $ | 7,135 | $ | 6,821 | $ | 6,557 | $ | 6,458 | $ | 6,371 | $ | 20,513 | $ | 18,950 | |||||||||||||||||||||
| Securities | 3,147 | 3,256 | 3,406 | 3,594 | 3,954 | 9,808 | 11,926 | ||||||||||||||||||||||||||||
| Other investments - at cost | 59 | 63 | 65 | 33 | 20 | 187 | 60 | ||||||||||||||||||||||||||||
| Federal funds sold, interest-bearing deposits and other short-term investments | 2 | 3 | 6 | 4 | 3 | 11 | 6 | ||||||||||||||||||||||||||||
| Total interest and dividend income | 10,343 | 10,143 | 10,034 | 10,089 | 10,348 | 30,519 | 30,942 | ||||||||||||||||||||||||||||
| INTEREST EXPENSE: | |||||||||||||||||||||||||||||||||||
| Deposits | 1,298 | 1,288 | 1,291 | 1,358 | 1,390 | 3,877 | 4,167 | ||||||||||||||||||||||||||||
| Long-term debt | 1,125 | 1,071 | 1,011 | 1,051 | 1,094 | 3,207 | 3,540 | ||||||||||||||||||||||||||||
| Short-term borrowings | 86 | 83 | 77 | 73 | 36 | 245 | 101 | ||||||||||||||||||||||||||||
| Total interest expense | 2,509 | 2,442 | 2,379 | 2,482 | 2,520 | 7,329 | 7,808 | ||||||||||||||||||||||||||||
| Net interest and dividend income | 7,834 | 7,701 | 7,655 | 7,607 | 7,828 | 23,190 | 23,134 | ||||||||||||||||||||||||||||
| PROVISION (CREDIT) FOR LOAN LOSSES | 750 | 450 | 100 | 120 | (71 | ) | 1,300 | (376 | ) | ||||||||||||||||||||||||||
| Net interest and dividend income after provision for loan losses | 7,084 | 7,251 | 7,555 | 7,487 | 7,899 | 21,890 | 23,510 | ||||||||||||||||||||||||||||
| NONINTEREST INCOME: | |||||||||||||||||||||||||||||||||||
| Service charges and fees | 655 | 632 | 670 | 625 | 615 | 1,958 | 1,779 | ||||||||||||||||||||||||||||
| Income from bank-owned life insurance | 384 | 386 | 379 | 388 | 388 | 1,150 | 1,161 | ||||||||||||||||||||||||||||
| Gain on bank-owned life insurance death benefit | - | - | - | - | - | - | 563 | ||||||||||||||||||||||||||||
| Loss on prepayment of borrowings | - | - | - | - | (540 | ) | - | (3,370 | ) | ||||||||||||||||||||||||||
| Gain on sales of securities, net | 226 | 21 | 29 | 330 | 546 | 276 | 2,796 | ||||||||||||||||||||||||||||
| Total noninterest income | 1,265 | 1,039 | 1,078 | 1,343 | 1,009 | 3,384 | 2,929 | ||||||||||||||||||||||||||||
| NONINTEREST EXPENSE: | |||||||||||||||||||||||||||||||||||
| Salaries and employees benefits | 3,623 | 3,665 | 3,778 | 3,774 | 4,059 | 11,066 | 11,684 | ||||||||||||||||||||||||||||
| Occupancy | 743 | 751 | 761 | 731 | 733 | 2,255 | 2,167 | ||||||||||||||||||||||||||||
| Data processing | 600 | 610 | 515 | 586 | 602 | 1,725 | 1,754 | ||||||||||||||||||||||||||||
| Professional fees | 495 | 483 | 512 | 497 | 499 | 1,489 | 1,536 | ||||||||||||||||||||||||||||
| FDIC insurance | 166 | 177 | 165 | 162 | 169 | 508 | 493 | ||||||||||||||||||||||||||||
| Other | 721 | 845 | 803 | 738 | 789 | 2,370 | 2,520 | ||||||||||||||||||||||||||||
| Total noninterest expense | 6,348 | 6,531 | 6,534 | 6,488 | 6,851 | 19,413 | 20,154 | ||||||||||||||||||||||||||||
| INCOME BEFORE INCOME TAXES | 2,001 | 1,759 | 2,099 | 2,342 | 2,057 | 5,861 | 6,285 | ||||||||||||||||||||||||||||
| INCOME TAX PROVISION | 491 | 417 | 451 | 533 | 476 | 1,360 | 1,339 | ||||||||||||||||||||||||||||
| NET INCOME | $ | 1,510 | $ | 1,342 | $ | 1,648 | $ | 1,809 | $ | 1,581 | $ | 4,501 | $ | 4,946 | |||||||||||||||||||||
| Basic earnings per share | $ | 0.08 | $ | 0.07 | $ | 0.09 | $ | 0.09 | $ | 0.08 | $ | 0.25 | $ | 0.24 | |||||||||||||||||||||
| Weighted average shares outstanding | 17,910,223 | 18,308,828 | 18,812,795 | 19,379,466 | 19,583,632 | 18,340,642 | 20,315,076 | ||||||||||||||||||||||||||||
| Diluted earnings per share | $ | 0.08 | $ | 0.07 | $ | 0.09 | $ | 0.09 | $ | 0.08 | $ | 0.25 | $ | 0.24 | |||||||||||||||||||||
| Weighted average diluted shares outstanding | 17,910,223 | 18,308,828 | 18,812,795 | 19,379,466 | 19,583,632 | 18,340,642 | 20,315,094 | ||||||||||||||||||||||||||||
| Other Data: | |||||||||||||||||||||||||||||||||||
| Return on average assets (1) | 0.46 | % | 0.42 | % | 0.52 | % | 0.57 | % | 0.49 | % | 0.47 | % | 0.51 | % | |||||||||||||||||||||
| Return on average equity (1) | 4.12 | % | 3.64 | % | 4.38 | % | 4.61 | % | 3.96 | % | 4.05 | % | 3.86 | % | |||||||||||||||||||||
| Efficiency ratio (2) | 71.54 | 74.91 | 75.07 | 75.27 | 77.58 | 73.82 | 77.30 | ||||||||||||||||||||||||||||
| Net interest margin | 2.58 | % | 2.61 | % | 2.63 | % | 2.57 | % | 2.62 | % | 2.61 | % | 2.59 | % | |||||||||||||||||||||
| (1) Three and nine 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) | |||||||||||||||||||||||||||||
| September 30, | June 30, | March 31, | December 31, | September 30, | |||||||||||||||||||||||||
| 2014 | 2014 | 2014 | 2013 | 2013 | |||||||||||||||||||||||||
| Cash and cash equivalents | $ | 14,429 | $ | 39,362 | $ | 21,370 | $ | 19,742 | $ | 28,418 | |||||||||||||||||||
| Securities available for sale, at fair value | 212,460 | 192,754 | 233,899 | 243,204 | 242,957 | ||||||||||||||||||||||||
| Securities held to maturity, at cost | 283,684 | 288,199 | 292,019 | 295,013 | 298,988 | ||||||||||||||||||||||||
| Federal Home Loan Bank of Boston and other restricted stock - at cost | 14,720 | 15,056 | 15,631 | 15,631 | 15,631 | ||||||||||||||||||||||||
| Loans | 719,555 | 686,068 | 648,240 | 637,427 | 620,154 | ||||||||||||||||||||||||
| Allowance for loan losses | 7,695 | 8,017 | 7,567 | 7,459 | 7,311 | ||||||||||||||||||||||||
| Net loans | 711,860 | 678,051 | 640,673 | 629,968 | 612,843 | ||||||||||||||||||||||||
| Bank-owned life insurance | 48,329 | 47,945 | 47,558 | 47,179 | 46,791 | ||||||||||||||||||||||||
| Other assets | 25,699 | 24,951 | 23,866 | 26,104 | 25,703 | ||||||||||||||||||||||||
| TOTAL ASSETS | $ | 1,311,181 | $ | 1,286,318 | $ | 1,275,016 | $ | 1,276,841 | $ | 1,271,331 | |||||||||||||||||||
| Total deposits | $ | 828,785 | $ | 818,590 | $ | 806,695 | $ | 817,112 | $ | 793,510 | |||||||||||||||||||
| Short-term borrowings | 78,685 | 59,751 | 58,460 | 48,197 | 61,784 | ||||||||||||||||||||||||
| Long-term debt | 246,804 | 248,760 | 248,568 | 248,377 | 248,184 | ||||||||||||||||||||||||
| Securities pending settlement | 137 | 67 | 195 | 299 | - | ||||||||||||||||||||||||
| Other liabilities | 12,464 | 12,185 | 9,512 | 8,712 | 10,954 | ||||||||||||||||||||||||
| TOTAL LIABILITIES | 1,166,875 | 1,139,353 | 1,123,430 | 1,122,697 | 1,114,432 | ||||||||||||||||||||||||
| TOTAL SHAREHOLDERS' EQUITY | 144,306 | 146,965 | 151,586 | 154,144 | 156,899 | ||||||||||||||||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 1,311,181 | $ | 1,286,318 | $ | 1,275,016 | $ | 1,276,841 | $ | 1,271,331 | |||||||||||||||||||
| Book value per share | $ | 7.67 | $ | 7.67 | $ | 7.66 | $ | 7.65 | $ | 7.57 | |||||||||||||||||||
| Other Data: | |||||||||||||||||||||||||||||
| 30- 89 day delinquent loans | $ | 4,254 | $ | 5,539 | $ | 5,382 | $ | 3,459 | $ | 1,860 | |||||||||||||||||||
| Nonperforming loans | 8,867 | 3,225 | 3,095 | 2,586 | 2,933 | ||||||||||||||||||||||||
| Nonperforming loans as a percentage of total loans | 1.23 | % | 0.47 | % | 0.48 | % | 0.41 | % | 0.47 | % | |||||||||||||||||||
| Nonperforming assets as a percentage of total assets | 0.68 | % | 0.25 | % | 0.24 | % | 0.20 | % | 0.23 | % | |||||||||||||||||||
| Allowance for loan losses as a percentage of nonperforming loans | 86.78 | % | 248.59 | % | 244.49 | % | 288.44 | % | 249.27 | % | |||||||||||||||||||
| Allowance for loan losses as a percentage of total loans | 1.07 | % | 1.17 | % | 1.17 | % | 1.17 | % | 1.18 | % | |||||||||||||||||||
The following tables set forth the information relating to our average balances and net interest income for the three months ended September 30, 2014, June 30, 2014, and September 30, 2013, and the nine months ended September 30, 2014 and 2013, and reflect the average yield on interest-earning assets and average cost of interest-bearing liabilities for the periods indicated.
| Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
| September 30, 2014 | June 30, 2014 | September 30, 2013 | |||||||||||||||||||||||||||||||||||||||||||||
| 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) | $ | 703,736 | $ | 7,170 | 4.08 | % | $ | 665,024 | $ | 6,857 | 4.12 | % | $ | 609,876 | $ | 6,409 | 4.20 | % | |||||||||||||||||||||||||||||
| Securities(2) | 492,948 | 3,245 | 2.63 | 501,132 | 3,357 | 2.68 | 573,955 | 4,077 | 2.84 | ||||||||||||||||||||||||||||||||||||||
| Other investments - at cost | 16,129 | 59 | 1.46 | 16,546 | 63 | 1.52 | 17,537 | 20 | 0.46 | ||||||||||||||||||||||||||||||||||||||
| Short-term investments(3) | 12,399 | 2 | 0.06 | 19,912 | 3 | 0.06 | 9,373 | 3 | 0.13 | ||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | 1,225,212 | 10,476 | 3.42 | 1,202,614 | 10,280 | 3.42 | 1,210,741 | 10,509 | 3.47 | ||||||||||||||||||||||||||||||||||||||
| Total noninterest-earning assets | 72,984 | 72,051 | 73,123 | ||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 1,298,196 | $ | 1,274,665 | $ | 1,283,864 | |||||||||||||||||||||||||||||||||||||||||
| LIABILITIES AND EQUITY: | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing accounts | $ | 38,889 | 22 | 0.23 | $ | 41,797 | 26 | 0.25 | $ | 45,756 | 34 | 0.30 | |||||||||||||||||||||||||||||||||||
| Savings accounts | 78,860 | 20 | 0.10 | 81,144 | 21 | 0.10 | 85,960 | 26 | 0.12 | ||||||||||||||||||||||||||||||||||||||
| Money market accounts | 227,554 | 225 | 0.40 | 213,227 | 208 | 0.39 | 206,674 | 206 | 0.40 | ||||||||||||||||||||||||||||||||||||||
| Time certificates of deposit | 342,281 | 1,031 | 1.20 | 341,041 | 1,033 | 1.21 | 330,222 | 1,124 | 1.36 | ||||||||||||||||||||||||||||||||||||||
| Total interest-bearing deposits | 687,584 | 1,298 | 677,209 | 1,288 | 668,612 | 1,390 | |||||||||||||||||||||||||||||||||||||||||
| Short-term borrowings and long-term debt | 318,357 | 1,211 | 1.52 | 308,757 | 1,154 | 1.50 | 326,785 | 1,130 | 1.38 | ||||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities | 1,005,941 | 2,509 | 1.00 | 985,966 | 2,442 | 0.99 | 995,397 | 2,520 | 1.01 | ||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing deposits | 133,817 | 130,033 | 119,462 | ||||||||||||||||||||||||||||||||||||||||||||
| Other noninterest-bearing liabilities | 13,139 | 10,679 | 10,676 | ||||||||||||||||||||||||||||||||||||||||||||
| Total noninterest-bearing liabilities | 146,956 | 140,712 | 130,138 | ||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | 1,152,897 | 1,126,678 | 1,125,535 | ||||||||||||||||||||||||||||||||||||||||||||
| Total equity | 145,299 | 147,987 | 158,329 | ||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 1,298,196 | $ | 1,274,665 | $ | 1,283,864 | |||||||||||||||||||||||||||||||||||||||||
| Less: Tax-equivalent adjustment(2) | (133 | ) | (137 | ) | (161 | ) | |||||||||||||||||||||||||||||||||||||||||
| Net interest and dividend income | $ | 7,834 | $ | 7,701 | $ | 7,828 | |||||||||||||||||||||||||||||||||||||||||
| Net interest rate spread(4) | 2.42 | % | 2.43 | % | 2.46 | % | |||||||||||||||||||||||||||||||||||||||||
| Net interest margin(5) | 2.58 | % | 2.61 | % | 2.62 | % | |||||||||||||||||||||||||||||||||||||||||
| Ratio of average interest-earning | |||||||||||||||||||||||||||||||||||||||||||||||
| assets to average interest-bearing liabilities | 121.80 | 121.97 | 121.63 | ||||||||||||||||||||||||||||||||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||||||||||
| 2014 | 2013 | ||||||||||||||||||||||||||||||
| Average | Avg Yield/ | Average | Avg Yield/ | ||||||||||||||||||||||||||||
| Balance | Interest | Cost | Balance | Interest | Cost | ||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||
| ASSETS: | |||||||||||||||||||||||||||||||
| Interest-earning assets | |||||||||||||||||||||||||||||||
| Loans(1)(2) | $ | 670,102 | $ | 20,622 | 4.10 | % | $ | 599,844 | $ | 19,063 | 4.24 | % | |||||||||||||||||||
| Securities(2) | 507,906 | 10,107 | 2.65 | 598,405 | 12,322 | 2.75 | |||||||||||||||||||||||||
| Other investments - at cost | 16,730 | 187 | 1.49 | 17,164 | 60 | 0.47 | |||||||||||||||||||||||||
| Short-term investments(3) | 15,107 | 11 | 0.10 | 6,895 | 6 | 0.12 | |||||||||||||||||||||||||
| Total interest-earning assets | 1,209,845 | 30,927 | 3.41 | 1,222,308 | 31,451 | 3.43 | |||||||||||||||||||||||||
| Total noninterest-earning assets | 72,676 | 68,481 | |||||||||||||||||||||||||||||
| Total assets | $ | 1,282,521 | $ | 1,290,789 | |||||||||||||||||||||||||||
| LIABILITIES AND EQUITY: | |||||||||||||||||||||||||||||||
| Interest-bearing liabilities | |||||||||||||||||||||||||||||||
| Interest-bearing checking | $ | 41,178 | 77 | 0.25 | $ | 47,812 | 106 | 0.30 | |||||||||||||||||||||||
| Savings accounts | 80,150 | 61 | 0.10 | 89,220 | 98 | 0.15 | |||||||||||||||||||||||||
| Money market accounts | 217,283 | 625 | 0.38 | 192,378 | 564 | 0.39 | |||||||||||||||||||||||||
| Time certificates of deposit | 341,256 | 3,114 | 1.22 | 327,894 | 3,399 | 1.38 | |||||||||||||||||||||||||
| Total interest-bearing deposits | 679,867 | 3,877 | 657,304 | 4,167 | |||||||||||||||||||||||||||
| Short-term borrowings and long-term debt | 311,954 | 3,452 | 1.48 | 335,662 | 3,641 | 1.45 | |||||||||||||||||||||||||
| Interest-bearing liabilities | 991,821 | 7,329 | 0.99 | 992,966 | 7,808 | 1.05 | |||||||||||||||||||||||||
| Noninterest-bearing deposits | 131,107 | 116,320 | |||||||||||||||||||||||||||||
| Other noninterest-bearing liabilities | 10,981 | 10,242 | |||||||||||||||||||||||||||||
| Total noninterest-bearing liabilities | 142,088 | 126,562 | |||||||||||||||||||||||||||||
| Total liabilities | 1,133,909 | 1,119,528 | |||||||||||||||||||||||||||||
| Total equity | 148,612 | 171,261 | |||||||||||||||||||||||||||||
| Total liabilities and equity | $ | 1,282,521 | $ | 1,290,789 | |||||||||||||||||||||||||||
| Less: Tax-equivalent adjustment(2) | (408 | ) | (509 | ) | |||||||||||||||||||||||||||
| Net interest and dividend income | $ | 23,190 | $ | 23,134 | |||||||||||||||||||||||||||
| Net interest rate spread(4) | 2.42 | % | 2.38 | % | |||||||||||||||||||||||||||
| Net interest margin(5) | 2.61 | % | 2.59 | % | |||||||||||||||||||||||||||
| Ratio of average interest-earning | |||||||||||||||||||||||||||||||
| assets to average interest-bearing liabilities | 121.98 | 123.10 | |||||||||||||||||||||||||||||
(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.
Contacts:
James C. Hagan, 413-568-1911
President
& CEO
or
Leo R. Sagan, Jr., 413-568-1911
CFO
or
Meghan
Hibner, 413-568-1911
VP Investor Relations Officer
