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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
______________________
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
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 (I.R.S. Employer
incorporation or organization) 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_X_ No___.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
Outstanding at
Class August 7, 2002
----- --------------
Common Stock 10,255,510
$1.00 Par Value Per Share
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements of Westfield Financial, Inc.
Consolidated Balance Sheets (Unaudited) - June 30, 2002
and December 31, 2001
Consolidated Statements of Income (Unaudited) - Three
and six months ended June 30, 2002 and June 30, 2001
Consolidated Statements of Changes in Stockholders' Equity
(Unaudited) - Six months ended June 30, 2002
Consolidated Statements of Cash Flows (Unaudited) - Six
months ended June 30, 2002 and June 30, 2001
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3. Liquidity and Capital Resources
Item 4. Quantitative and Qualitative Disclosures about Market Risk
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
1
Westfield Financial Inc. and Subsidiaries
Consolidated Balance Sheets -(Unaudited)
(Dollars in Thousands Except Share Data)
June 30, December 31,
2002 2001
-------- ------------
ASSETS
Cash and due from banks $ 14,972 $ 14,169
Federal funds sold 18,817 34,267
Interest-bearing deposits 21,964 8,599
-------- --------
CASH AND CASH EQUIVALENTS 55,753 57,035
-------- --------
SECURITIES :
Available for sale-at estimated fair value 84,815 74,184
Held to maturity-at amortized cost (estimated fair
value of $38,147 in 2002, and $ 46,155 in 2001). 37,581 45,614
MORTGAGE BACKED SECURITIES:
Available for sale- at estimated fair value 82,439 87,150
Held to maturity- at amortized cost (estimated fair
value of $107,522 in 2002, and $81,367 in 2001). 106,661 81,007
FEDERAL HOME LOAN BANK OF 3,933 3,634
BOSTON AND OTHER STOCK
LOANS- Net of allowance for loan losses of $4,319
in 2002, and $3,923 in 2001 400,108 413,546
PREMISES AND EQUIPMENT, NET 13,173 13,581
ACCRUED INTEREST AND DIVIDENDS 3,885 4,201
OTHER ASSETS 3,068 2,780
-------- --------
TOTAL ASSETS $791,416 $782,732
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
DEPOSITS :
Noninterest bearing $ 47,470 $ 48,247
Interest bearing 600,568 588,862
-------- --------
Total deposits 648,038 637,109
-------- --------
CUSTOMER REPURCHASE AGREEMENTS 7,751 6,061
OTHER LIABILITIES 7,096 8,245
-------- --------
TOTAL LIABILITIES 662,885 651,415
-------- --------
STOCKHOLDERS' EQUITY :
Preferred stock - $.01 par value, 5,000,000 shares
authorized, none outstanding - -
Common stock - $.01 par value, 10,580,000 shares
authorized, 10,396,160, shares issued and
outstanding, at June 30, 2002. 106 106
Additional paid-in capital 47,411 47,623
Unallocated Common Stock of Employee Stock Ownership Plan (2,879) -
Retained Earnings 82,866 81,808
Accumulated and other comprehensive income 1,027 1,780
-------- --------
TOTAL STOCKHOLDERS' EQUITY 128,531 131,317
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $791,416 $782,732
======== ========
See accompanying notes to unaudited consolidated financial statements
2
Westfield Financial Inc. and Subsidiaries
Consolidated Statements of Income - (Unaudited)
(Dollars in Thousands)
Three Months Six Months
Ended June 30, Ended June 30,
2002 2001 2002 2001
---- ---- ---- ----
INTEREST AND DIVIDEND INCOME:
Residential and commercial real estate loans $ 5,183 $ 6,437 $ 10,489 $13,207
Securities and mortgage backed securities 3,417 2,926 6,911 5,611
Consumer loans 1,070 1,436 2,214 2,920
Commercial and industrial loans 970 876 1,821 1,732
Federal funds sold 68 72 170 288
Stocks 166 94 282 201
Interest bearing deposits 91 175 185 318
---------- ------- ---------- -------
Total interest and dividend income 10,965 12,016 22,072 24,277
---------- ------- ---------- -------
INTEREST EXPENSE:
Deposits 4,753 6,517 9,722 13,273
Customer Repurchase Agreements 58 66 101 151
---------- ------- ---------- -------
Total Interest Expense 4,811 6,582 9,823 13,424
---------- ------- ---------- -------
Net interest and dividend income 6,154 5,434 12,249 10,853
PROVISION FOR LOAN LOSSES 200 272 500 600
---------- ------- ---------- -------
Net interest and dividend income
after provision for loan losses 5,954 5,162 11,749 10,253
---------- ------- ---------- -------
NONINTEREST INCOME:
Service charges and fees 384 314 763 669
Gain (loss) on sales and writedowns
of securities, net (509) 141 (757) 170
---------- ------- ---------- -------
Total noninterest income (125) 455 6 839
---------- ------- ---------- -------
NONINTEREST EXPENSE:
Salaries and employee benefits 2,300 1,925 4,646 3,772
Occupancy 459 453 879 811
Computer operations 412 439 774 751
Stationery, supplies, and postage 131 170 245 305
Other 968 948 2,001 1,859
---------- ------- ---------- -------
Total noninterest expense 4,270 3,935 8,545 7,498
---------- ------- ---------- -------
INCOME BEFORE INCOME TAXES 1,559 1,682 3,210 3,594
INCOME TAXES 531 572 1,094 1,222
---------- ------- ---------- -------
NET INCOME $ 1,028 $ 1,110 $ 2,116 $ 2,372
========== ======= ========== =======
Basic and diluted earnings per share $ 0.10 N/A $ 0.20 N/A
Average shares outstanding 10,418,907 N/A 10,456,694 N/A
See accompanying notes to unaudited consolidated financial statements.
3
WESTFIELD FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - UNAUDITED
(Dollars in Thousands)
Unallocated
Stock of Accumulated
Additional Employee Other
Common Paid-in Retained Stock Ownership Comprehensive
Stock Capital Earnings Plan Income Total
Balance at January 1, 2002 $106 $47,623 $81,808 $ - $ 1,780 $131,317
Comprehensive income:
Net income - - 2,116 - - 2,116
Unrealized losses on securities arising
during the period, net of taxes of $645 - - - - (1,253) (1,253)
Reclassification for losses included
in net income, net of taxes of $257 - - - - 500 500
--------
Comprehensive income 1,363
Purchase of common stock in connection
with employee stock ownership plan (2,879) (2,879)
Costs associated with stock conversion (212) (212)
Cash dividends declared - - (1,058) - (1,058)
-------------------------------------------------------------------------------
Balance at June 30, 2002 $106 $47,411 $82,866 $(2,879) $ 1,027 $128,531
==== ======= ======= ======== ======= ========
See accompanying notes to unaudited consolidated financial statements.
4
Westfield Financial, Inc. and Subsidiaries
Consolidated Statements of Cash Flows- (Unaudited)
(Dollars in Thousands)
Six Months
Ended June 30,
2002 2001
---- ----
OPERATING ACTIVITIES:
Net Income $ 2,116 $ 2,372
Adjustments to reconcile net income to net
cash provided by operating activities
Provision for Loan Losses 500 600
Valuation adjustment of other real estate owned (77) -
Writedown of securities 837 -
Depreciation of premises and equipment 524 449
Net amortization of premiums and discounts on securities,
mortgage backed securities and mortgage loans 349 77
Gain on sale of OREO (62) (17)
Net realized securities gains (81) (170)
Deferred income tax provision (1,538) (86)
Changes in assets and liabilities:
Accrued interest and dividends 316 2
Other assets (528) (1,176)
Other liabilities 133 (5)
-------- --------
Net cash provided by operating activities 2,489 2,046
-------- --------
INVESTING ACTIVITIES:
Securities, held to maturity:
Purchases (10,996) (6,099)
Proceeds from calls,maturities and principal collections 19,036 15,019
Securities, available for sale:
Purchases (29,226) (13,257)
Proceeds from sales 2,336 4,325
Proceeds from calls,maturities and principal collections 14,010 15,162
Mortgage backed securities, held to maturity
Purchases (45,384) (37,740)
Principal collections 17,444 5,948
Mortgage backed securities, available for sale
Purchases (20,612) (11,383)
Proceeds from sales 9,083 14,776
Principal collections 18,458 10,893
Purchase of Federal Home Loan Bank of Boston
and other stock (299) (188)
Net decrease (increase) in loans 13,001 (17,258)
Proceeds from sale of other real estate owned 363 89
Net purchases of premises and equipment (116) (2,095)
-------- --------
Net cash used in investing activities (12,902) (21,808)
-------- --------
FINANCING ACTIVITIES:
Net increase in deposits 10,929 10,266
Net increase (decrease) in customer repurchase agreements 1,690 (2,700)
Purchase of common stock in connection with
employee benefit programs (2,879)
Cash dividends declared (529)
Stock issuance costs (80) -
-------- --------
Net cash used in financing actvivities 9,131 7,566
-------- --------
NET DECREASE IN CASH AND
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS: (1,282) (12,196)
Beginning of period 57,035 32,729
-------- --------
End of period $ 55,753 $ 20,533
======== ========
See the accompanying notes to the unadited consolidated financial statements
5
WESTFIELD FINANCIAL, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
QUARTER AND SIX MONTHS ENDED JUNE 30, 2002 AND 2001
1. REORGANIZATION AND STOCK OFFERING
On December 27, 2001, the Board of Trustees of Westfield Mutual Holding
Company ("Mutual Holding Company") completed a plan of reorganization (the
"Plan") whereby the Mutual Holding Company formed a mid-tier stock holding
company ("Westfield Financial, Inc." or the "Company") and exchanged 100%
of the common stock of Westfield Bank (the "Bank") for a majority interest
in Westfield Financial, Inc. Pursuant to the Plan, shares of Westfield
Financial, Inc. were offered for subscription by depositors with eligible
accounts at the Bank as of specified dates. The Company issued 10,580,000
shares of Common Stock (par value $0.01 per share) at a price of $10.00 per
share, of which 47% of these shares, or 4,972,600 shares, were sold to the
public, including depositors of the Bank and 53% of these shares, or
5,607,400 shares, were issued to the Mutual Holding Company. Net proceeds
from the stock offering totaled $47.7 million. Costs related to the
reorganization were charged against the proceeds from the shares sold in
the reorganization. Reorganization costs of approximately $2.1 million were
incurred.
In connection with the reorganization, a "Liquidation Account" was
established in an amount equal to the net worth of the Mutual Holding
Company set forth in its latest balance sheet contained in the
reorganization prospectus. The function of the Liquidation Account is to
establish a priority on liquidation to the assets of the Company to
Eligible Account Holders (as defined in the Plan) who continue to maintain
deposits in the Bank after the reorganization. In the unlikely event of a
complete liquidation of the Company, and only in such event, each Eligible
Account Holder would receive from the Liquidation Account a liquidation
distribution based on the their proportionate share of the then remaining
qualifying deposits.
Current regulations allow the Bank to pay dividends on its stock if its
regulatory capital would not thereby be reduced below the amount then
required for the aforementioned Liquidation Account. Also, capital
distribution regulations limit the Bank's ability to make capital
distributions which include dividends, stock redemptions and repurchases
and other transactions charged to the capital accounts based on their
capital level and supervisory condition. Federal regulations also limit any
repurchase of the stock for the Bank of its holding company for three years
after reorganization except for repurchases pursuant to an open-market
stock repurchase program with certain regulatory criteria and approval of
the FDIC.
Employee Stock Ownership Plan - In connection with the Reorganization,
Westfield Financial, Inc. established an Employee Stock Ownership Plan
("ESOP") for eligible employees. Employees employed with Mutual Holding
Company, Westfield Financial, Inc. or the Bank who have completed one year
of service and have attained age 21 are eligible to participate.
To fund the purchase of up to 8% of the shares of common stock issued in
the reorganization, the ESOP Trust borrowed funds from the Company. The
loan to the ESOP Trust will be repaid principally from the Bank's
contributions to the ESOP Trust over a period of 30 years and the
collateral for the loan will be the Company's Common Stock purchased by the
ESOP Trust.
Shares purchased by the ESOP are held by a trustee for allocations among
participants as the loan is repaid. As of June 30, 2002, the ESOP Trust had
purchased 197,100 shares of the Company's Common Stock on the open market.
Of the 197,100 shares purchased by the ESOP Trust, 13,260 shares are
committed to be released in 2002.
6
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations and Basis of Presentation - The Company operates a
state chartered stock savings bank subsidiary called Westfield Bank (the
"Bank"). The Bank's deposits are insured to the limits specified by the
Federal Deposit Insurance Corporation ("FDIC") and the Deposit Insurance
Fund ("DIF"), a corporation formed by the Massachusetts' legislature. The
Bank operates ten branches in Western Massachusetts. The Bank's primary
source of revenue is earned by providing loans to small and middle-market
businesses and to residential property homeowners.
The Bank formed a wholly owned subsidiary, Elm Street Real Estate
Investments Inc., (the "REIT") in 1998. The REIT is 99.9% owned by the Bank
with the remaining 0.1% owned by other shareholders.
Westfield Securities Corp., a Massachusetts chartered security corporation,
was formed in 2001 by the Company for the primary purpose of holding
qualified investment securities.
Principles of Consolidation - The consolidated financial statements include
the accounts of the Company, the Bank, Westfield Securities Corp., and the
REIT. All material intercompany balances and transactions have been
eliminated in consolidation. Certain amounts in the prior year financial
statements have been reclassified to conform to the current year
presentation.
Estimates - The preparation of consolidated financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of income and expenses for
each. Actual results could differ from those estimates. Estimates that are
particularly susceptible to significant change in the near-term relate to
the determination of the fair value of financial instruments and the
allowance for loan losses.
3. NEW ACCOUNTING STANDARDS
In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 141, "Business
Combinations". SFAS No. 141 requires the purchase method of accounting for
business combinations initiated after June 30, 2001 and eliminates the
pooling-of-interests method.
In July 2001, the FASB issued SFAS No. 142 "Goodwill and Other Intangible
Assets", which became effective January 1, 2002. SFAS No. 141 requires,
among other things, the discontinuance of goodwill amortization, the
reclassification of certain existing recognized intangibles as goodwill,
the reassessment of the useful lives of existing recognized intangibles and
the identification of reporting units for purposes of assessing potential
future impairments of goodwill. SFAS 142 also requires a transitional
goodwill impairment test six months from the date of adoption.
In August 2001, the FASB issued SFAS No. 144 "Accounting for the Impairment
or Disposal of Long-Lived Assets", which superceded SFAS No. 121 and
portions of APB Opinion No. 30. This statement addresses the recognition of
an impairment loss for long-lived assets to be held and used, or disposed
of by sale or otherwise. This statement is effective for financial
statements issued for fiscal years beginning December 15, 2001 and interim
periods within those fiscal years.
The adoption of these standards did not have any effect on the Company's
consolidated financial statements.
In April 2002, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of
FASB Statement No. 13, and Technical Corrections ("SFAS No. 145"). The
adoption of SFAS No. 145 is not expected to have a material effect on the
Corporation's consolidated financial statements.
7
In June 2002, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 146, "Accounting for Costs Associated with Exit or Disposal Activities"
("SFAS No. 146"). The adoption of SFAS No. 146 is not expected to have a
material effect on the Corporation's Consolidated financial statements.
4. EARNINGS PER SHARE
Basic earnings per share represents income available to stockholders
divided by the weighted average number of common shares outstanding during
the period. Diluted earnings per share reflects additional common shares
that would have been outstanding if dilutive potential shares had been
issued or earned. Earnings per share data is presented for the three months
and six months ended June 30, 2002 only, as the Company converted to stock
form on December 27, 2001; therefore per share information for the first
three months and six months of 2001 are not applicable.
ITEM 2:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Forward Looking Statements - This quarterly Report on Form 10-Q contains
certain statements that may be considered forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 193, as amended. The
Company's actual results could differ materially from those projected in
the forward-looking statements. Important factors that might cause such a
difference include: changes in national or regional economic conditions;
changes in loan default and charge-off rates; reductions in deposit levels
necessitating increased borrowing to fund loans and investments; changes in
interest rates; changes in the size and the nature of the Company's
competition; the extent and timing of legislative and regulatory reform;
and changes in the assumptions used in making such forward-looking
statements. The Company does not undertake and specifically declines any
obligation to publicly release the results 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.
CRITICAL ACCOUNTING POLICIES
Westfield Financial Inc.'s critical accounting policies given its current
business strategy and asset/liability structure are accounting for
nonperforming loans, the allowance for loan losses and provision for loan
losses and the classification of securities as either held to maturity or
available for sale.
Securities, including mortgage backed securities, which management has the
positive intent and ability to hold until maturity are classified as held
to maturity and are carried at amortized cost. Securities, including
mortgage-backed securities, which have been identified as assets for which
there is not a positive intent to hold to maturity are classified as
available for sale and are carried at fair value with unrealized gains and
losses, net of income taxes, reported as a separate component of equity.
Westfield Financial does not acquire securities or mortgage backed
securities for purposes of engaging in trading activities.
Westfield Financial Inc.'s general policy is to discontinue the accrual of
interest on loans when principal or interest payments are delinquent 90
days or more, or earlier if the loan is considered impaired. Any unpaid
amounts previously accrued on these loans are reversed from income.
Subsequent cash receipts are applied to the outstanding principal balance
or to interest income if, in the judgement of management, collection or
principal balance is not in question. Loans are returned to accrual status
when they become current as to both principal and interest and when
subsequent performance reduces the concern as to the collectibility of
principal and interest. Loan fees and certain direct loan origination costs
are deferred, and the net fee or cost is recognized as an adjustment to
interest income over the estimated average lives of the related loans.
Compensation to an auto dealer is normally based upon a spread that a
dealer adds on the loan base rate set by Westfield Financial Inc. The
compensation is paid to an automobile dealer shortly after the loan is
originated. Westfield Financial Inc.'s records the amount as a deferred
cost that is amortized over the life of the loans in relation to the
interest paid by the consumer.
8
Westfield Financial Inc.'s methodology for assessing the appropriations of
the allowance for loan losses consists of two key components, which are a
specific allowance for identified problem or impaired loans and a formula
allowance for the remainder of the portfolio. Identified problem and
impaired loans are measured for impairment based on the present value of
expected future cash flows discounted at the loan's effective interest
rate, the loan's observable market price or the fair value of the
collateral, if the loan is collateral dependent. This evaluation is
inherently subjective as it requires material estimates that may be
susceptible to significant change. The appropriations of the allowance is
also reviewed by management based upon its evaluation of then-existing
economic and business conditions affecting the key lending areas of
Westfield Financial Inc. and other conditions, such as new loan products,
credit quality trends (including trended in non-performing loans expected
to result from existing condition), collateral values, loan volumes and
concentrations, specific industry conditions within portfolio segments that
existed as of the balance sheet date and the impact that such conditions
are believed to have on the collectibility of the loan portfolio. Although
management believes it has established and maintained the allowance for
loan losses at appropriate levels, future adjustments may be necessary if
economic, real estate and other conditions differ substantially from the
current operating environment.
COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 2002 AND DECEMBER 31, 2001
Total assets increased $8.7 million to $791.4 million at June 30, 2002 from
$782.7 million at December 31, 2001. Securities increased $23.5 million, or
8.2%, to $311.5 million at June 30, 2002 from $288.0 million at December
31, 2001. Federal funds sold decreased from $34.3 million at December 31,
2001 to $18.8 million at June 30, 2002. This is a result of utilizing the
funds raised by the stock offering, which had been held in Federal Funds at
December 31, 2001, by investing in securities and originating loans.
Interest bearing deposits increased $13.4 million from $8.6 million at
December 31, 2001 to $22.0 million at June 30, 2002. Total loans during
this period decreased by $13.1 million, or 3.1%, to $404.4 million at June
30, 2002, from $417.5 million at December 31, 2001. This decrease is
primarily the result of a decrease in residential real estate loans due to
the Bank's new loan referral program with a third party mortgage company.
Residential real estate loans decreased by $25.7 million, or 12.1%, to
$187.0 million at June 30, 2002 from $212.7 million, at December 31, 2001.
Net commercial and industrial loans increased $18.4 million, or 39.2%, from
$47.0 million at December 31, 2001 to $65.4 million at June 30, 2002.
Consumer loans, including indirect auto loans, decreased $8.7 million, or
14.9%, to $49.6 million at June 30,2002 from $58.3 million at December 31,
2001. The decrease in consumer loans was due to Management's decision to
continue to curtail the origination of indirect auto loans.
Asset growth was funded primarily by an increase of $10.9 million in
deposits, to $648.0 million at June 30, 2002 from $637.1 million at
December 31, 2001. Customer repurchase agreements increased $1.7 million to
$7.8 million at June 30, 2002 from $6.1 million at December 31, 2001. A
"Customer Repurchase Agreement" is an agreement by Westfield Bank to sell
to and repurchase from the customer an interest in specific securities
issued by or guaranteed by the United States Government. This transaction
settles immediately on a same day basis in immediately available funds.
Interest paid is commensurate with other products of equal interest and
credit risk.
Stockholders' equity at June 30, 2002 and December 31, 2001 was $128.5
million and $131.3 million, respectively, and representing 16.2% and 16.8%
of total assets. The decrease in stockholder's equity is comprised of net
income of $2.1 million for the six months ended June 30, 2002, offset by a
decrease in net unrealized gains on securities available for sale of
$753,000, net of income taxes, the recording of the purchase of 197,100
shares of stock for the Company's Employee Stock Ownership Plan totaling
$2.9 million and the declaration by the Board of Directors of a $0.05 per
share dividend on March 26 and June 28, 2002 totaling $1.1 million.
COMPARISON OF OPERATING RESULTS FOR THREE MONTHS ENDED JUNE 30, 2002, AND
2001
General
Net income was $1.0 million for the three months ended June 30, 2002
compared to $1.1 million for the same period in 2001. The decrease was
attributable to net losses of $509,000 from sales and writedowns of
securities for the three months ended June 30, 2002 compared to net gains
on sales of securities of $141,000 for the same period in 2001. Included in
the net loss for the 2002 quarter was the writedown by $533,000 of certain
equity securities whose impairment was determined to be other than
9
temporary. Non-interest expense increased $335,000, while federal and state
income taxes decreased $41,000 and net interest and dividend income
increased $720,000 compared to the prior year.
Interest and Dividend Income
Total interest and dividend income decreased $1.0 million or, 8.3%, to
$11.0 million compared with $12.0 million for the same period in 2001.
Interest and dividend income from securities increased $491,000 to $3.4
million from $2.9 million, while interest income on loans decreased $1.5
million.
The decrease in interest income on loans was primarily the result of a $1.2
million decrease in residential real estate loans. This decrease is
primarily the result of the securitization of our fixed rate mortgages and
our current residential real loan referral program with a third party
mortgage company. The increase in interest and dividend income from
securities was primarily the result of an increase in the average balance
of securities from $214.6 million for the quarter ended June 30, 2001 to
$336.4 million for the quarter ended June 30, 2002. This was partially
offset by a decrease in average yield from 5.96% to 4.37% for the quarter
ended June 30, 2001 and 2002 respectively.
Interest Expense
Interest expense for the three months ended June 30, 2002 decreased $1.8
million from the comparable 2001 period. This was attributable to a
decrease in average cost of interest-bearing liabilities of 136 basis
points from 4.54% from the three months ended June 20, 2001 to 3.18% for
the same period in 2002, partially offset by an increase of $24.6 million
in the average balance of total interest-bearing liabilities.
Net Interest and Dividend Income
Net interest and dividend income for the three months ended June 30, 2002
was $6.2 million as compared to $5.4 million for 2001. Net interest rate
spread, the difference between the average total interest bearing
liabilities, increased seven basis points to 2.59% for 2002 period from
2.52% for the prior year comparable period. The net interest margin, which
is net interest and dividend income divided by average total interest
earning assets, increased five basis points to 3.25% for the three months
ended June 30, 2002 from 3.20% for the 2001 period.
Provision for Loan Losses
For the three months ended June 30, 2002, the Bank provided $200,000 for
loan losses, compared to $272,000 for the same period in 2001. The
provision for loan losses brings the Bank's allowance for loan losses to a
level determined appropriate by management. The allowance for loan losses
at June 30, 2002 was $4.3 million as compared to $3.9 million at December
31, 2001.
Commercial real estate and commercial and industrial loans increased $11.2
million or 7.2% for the quarter ended June 30, 2002. Management considers
these types of loans to contain more risk than conventional residential
mortgages, which declined by $9.2 million or 4.7% for the quarter ended
June 30, 2002. This resulted in an increase in the allowance requirements
for commercial real estate and commercial and industrial loans and a
decrease for residential real estate loans. Consumer loans decreased from
$53.4 million at March 31, 2002 to $49.6 million at June 30, 2002 resulting
in a decrease in the allowance requirement for consumer loans. Nonaccrual
loans totaled $2.9 million at June 30, 2002 and $2.7 million at December
31, 2001.
As a result of the detailed allowance methodology and consideration of the
above factors, management determined that an increase in the provision for
loan losses of $200,000 was appropriate.
The allowance for loan losses at the end of June 30, 2002 was 1.07% of
total loans compared with 0.94% at the end of 2001. The increase in the
coverage ratio reflects the changes in the loan portfolio described above.
10
Non-Interest Income
Non-interest income decreased $580,000 for the three months ended June 30,
2002, primarily due to writedowns of securities whose impairment was
determined to be other than temporary of $533,000, partially offset by
securities gains of $24,000. Net losses from sales and writedowns of
securities for the three months ended June 30, 2002 were $509,000 as
compared to net gains from sales of securities of $141,000 for the quarter
ended June 30, 2001.
Noninterest Expense
Noninterest expense for the three months ended June 30, 2002, was $4.3
million compared with $3.9 million for the same period in 2001. Employee
salaries and benefits for the quarter ended June 30, 2002 and 2001 were
$2.3 million and $1.9 million, respectively. This increase in salaries and
benefits expense was primarily the result of a monthly accrual of bonuses
to be paid, based on performance criteria, in December 2002, which in the
prior year was expensed in December of that year. Also contributing to this
increase was a rise in employee retirement costs; the recording of the
Company's Employee Stock Ownership Plan expense; and a rise in salary costs
as a result of normal annual salary increases, as well as expenses
associated with the opening of two branches in 2001, which required the
hiring of additional personnel. Professional services expense for the three
months ended June 30, 2002 and 2001 was $229,000 and $112,000 respectively,
the increase is primarily due to expenses associated with operating as a
publicly traded company.
Income Taxes
Income taxes decreased $41,000, or 7.2%, to $531,000 for the three months
ended June 30, 2002 compared to $572,000 for the same period in 2001. The
effective tax rate for both periods is approximately 34%. The effective tax
rate reflects the utilization of Westfield Securities Corp., a qualified
Massachusetts securities corporation, and Elm Street Real Estate
Investments, Inc., a qualified real estate investment trust.
Elm Street Real Estate Investments, Inc. ("Elm Street"), a subsidiary of
the Bank, was established in as a Delaware-chartered real estate investment
trust ("REIT"). During 1999, 2000 and 2001, the Bank received dividends
from Elm Street. In accordance with the Commonwealth of Massachusetts Tax
law, the Bank has claimed a deduction for the dividends received from Elm
Street for these years. The positive impact of the REIT dividend received
deduction on the Company's 1999, 2000 and 2001 reported net income was
approximately $499,000, $506,000 and $607,000, respectively. The additional
positive impact on the Company's reported net income for the first six
months of 2002 was approximately $198,000.
The Company is aware that several other financial institutions operating in
the Commonwealth of Massachusetts with similar real estate investment trust
subsidiaries have recently received Notices of Intent to Assess additional
state excise taxes from the Massachusetts Department of Revenue (the
"DOR"), challenging the dividends received deduction claimed by those
institutions. The institutions that received these notices have indicated
their intention to appeal the assessments. It is uncertain whether the
Company will receive such a notice pertaining to its 1999, 2000 or 2001 tax
filings. However, if it does receive such a notice, the Company intends to
appeal any such assessment.
11
The following tables set for the information relating to our average
balance and net interest income at and for the three months ending June 30,
2002 and 2001 and reflect the average yield on assets and average cost of
liabilities for the periods indicated. Yields and costs are derived by
dividing interest income by the average balance of interest-earning assets
and interest expense by the average balance of interest-bearing liabilities
for the periods shown. Average balances are derived from actual daily
balances over the periods indicated. Interest income includes fees earned
from making changes in loan rates and terms and fees earned when real
estate loans are prepaid or refinanced.
Analysis of Net Interest Income
Three Months Ended June 30,
(Dollars in Thousands)
2002 2001
Average Avg Yield/ Average Avg Yield/
Interest Balance Cost Interest Balance Cost
-------- ------- ---------- -------- ------- ----------
Interest-Earning Assets
- -----------------------
Short Term Investments $ 68 $ 16,463 1.65% $ 72 $ 6,179 4.66%
Investment Securities 3,674 336,424 4.37 3,195 214,571 5.96
Loans 7,223 406,925 7.10 8,749 459,925 7.61
-------------------- --------------------
Total Interest-Earning Assets $10,965 $759,812 5.77% $12,016 $680,675 7.06%
======= ======== ======= ========
Interest-Bearing Liabilities
- ----------------------------
NOW Accounts $ 171 $ 40,226 1.70% $ 199 $ 35,014 2.27%
Savings Accounts 116 44,436 1.04 127 42,584 1.19
Money Market Accounts 655 131,101 2.00 955 119,346 3.20
Time Deposits 3,811 380,546 4.01 5,235 376,504 5.56
Customer Repurchase
Agreements 58 8,544 2.72 66 6,800 3.88
-------------------- --------------------
Total Interest-Bearing Liabilities $ 4,811 $604,853 3.18% $ 6,582 $580,248 4.54%
======= ======== ======= ========
Net Interest Income/Interest
Rate Spread $ 6,154 2.59% $ 5,434 2.52%
======= ---- ======= ----
Net Interest Margin 3.25% 3.20%
---- ----
12
The following table shows how changes in interest rates and changes in the
volume of interest earning assets and interest-bearing liabilities have
affected the Company's interest income and interest expense during the
periods indicated. Information is provided in each category with respect
to:
* Interest income changes attributable to changes in volume
(changes in volume multiplied by prior rate);
* Interest income changes attributable to changes in rate (changes
in rate multiplied by prior volume); and
* The net change
The changes attributable to the combined impact of volume and rate have
been allocated proportionately to the changes due to volume and the changes
due to rate.
RATE/VOLUME ANALYSIS
Three Months Ended June 30, 2002 compared to June 30, 2001
Increase (decrease) due to:
(Dollars in thousands)
Interest-Earning Assets Volume Rate Net
- ----------------------- ------ ---- ---
Short Term Investments $ 120 $ (124) $ (4)
Investment Securities 1,814 (1,335) 479
Loans (1,008) (518) (1,526)
------- ------- -------
Net Change in Income on
Interest-Earning Assets 926 (1,977) (1,051)
------- ------- -------
Interest-Bearing Liabilities
- ----------------------------
NOW Accounts 30 (58) (28)
Savings Accounts 6 (17) (11)
Money Market Accounts 94 (394) (300)
Time Deposits 56 (1,480) (1,424)
Customer Repurchase Agreements 17 (25) (8)
------- ------- -------
Net Change in Expense on
Interest-Bearing Liabilities 203 (1,974) (1,771)
------- ------- -------
Net Change in Interest Income $ 723 $ (3) $ 720
======= ======= =======
13
COMPARISON OF OPERATING RESULTS FOR SIX MONTHS ENDED JUNE 30, 2002 AND 2001
General
Net income of $2.1 million for the six months ended June 30, 2002, a
decrease of $256,000 or 10.8%, compared with net income of $2.4 million for
the 2001 comparable period. The decrease was primarily the result of net
losses from sales and writedowns of securities for the six months ended
June 30, 2002 of $757,000 compared to a net gain from sales of securities
of $170,000 for the same period in 2001. Included in the net loss of
$757,000 for the 2002 quarter was $81,000 in net gains on the sale of
securities and a $837,000 writedown of certain equity securities whose
impairment was determined to be other than temporary.
Interest and Dividend Income
Total interest and dividend income decreased $2.2 million or 9.1%, to $22.1
million for the six months ended June 30, 2002 compared to $24.3 million
for the same period in 2001. Interest and dividends on securities increased
$1.3 million to $6.9 million from $5.6 million, while interest income on
loans decreased $3.3 million.
The increase in interest and dividend income on securities was the result
of $126.2 million increase in the average balance of securities from $201.1
million for the six months ended June 30, 2001 to $327.3 million for the
same period in 2002, partially offset by the decrease of 159 basis points
in the average yield on securities from 6.10% for the period in 2001 to
4.51% for the same period 2002.
The decrease in interest income on loans was primarily the result of a $2.7
million decrease in interest on residential real estate loans. This was the
result of a decrease in total residential real estate loans from $211.4
million at June 30, 2001 to $187.0 million June 30, 2002 due to the
securitization of our fixed rate mortgages and our current residential real
estate loan referral program with a third party mortgage company.
Interest Expense
Interest expense for the six months ended June 30, 2002 decreased $3.6
million from the comparable 2001 period. This was attributable to a
decrease in average cost of interest-bearing liabilities of 136 basis
points from 4.63% from the six months ended June 20, 2001 to 3.27% for the
same period in 2002, partially offset by an increase of $20.7 million in
the average balance of total interest-bearing liabilities.
Net Interest and Dividend Income
Net interest and dividend income for the six months ended June 30, 2002
increased $1.4 million, or 12.9% from $10.9 million in 2001 to $12.2
million in 2002. The net interest rate spread, the difference between the
average yield on average interest earning assets and the average cost of
average total interest bearing liabilities, increased two basis points to
2.57% for 2002 from 2.55% for 2001. The net interest margin, which is net
interest and dividend income divided by average total interest earning
assets, increased three basis points to 3.27% for 2002 from 3.24% for the
prior year comparable period.
14
Provision for Loan Losses
During the six months ended June 30, 2002, the Bank provided $500,000 for
loan losses, compared to $600,000 for the comparable 2001 period. The
provision for loan losses brings the Bank's allowance for loan losses to a
level determined appropriate by management. The allowance for loan losses
at June 30, 2002 was $4.3 million as compared to $3.6 million at June 30,
2001.
Commercial real estate and commercial and industrial loans increased $25.3
million or 17.8% for the six months ended June 30, 2002. Management
considers these types of loans to contain more risk than conventional
residential mortgages, which declined by $24.3 million or 11.5% for the six
months ended June 30, 2002. This resulted in an increase in the allowance
requirements for commercial real estate and commercial and industrial loans
and a decrease for residential real estate loans. Consumer loans decreased
from $67.3 million at June 30, 2001 to $49.6 million at June 30, 2002
resulting in a decrease in the allowance requirement for consumer loans.
Nonaccrual loans increased $619,000 to $2.9 million at June 30, 2002 from
$2.3 million at June 30, 2001. As a result of the detailed allowance
methodology and consideration of the above factors, management determined
that an increase in the provision for loan losses of $500,000 was
appropriate.
The allowance for loan losses at the end of June 30, 2002 was 1.07% of
total loans compared with 0.84% at June 30, 2001. The increase in the
average ratio reflects the changes in the loan portfolio described above.
Non-Interest Income
Non-interest income includes service fees on deposit accounts, other
service charges and net gains and losses on sale and writedowns of
securities. Total non-interest income decreased $833,000 to $6,000 for the
six months ended June 30, 2002 from $839,000 for the six months ended June
30, 2001. Net loss from sales and writedowns of securities for the six
months ended June 30, 2002 were $757,000 as compared to net gains from
sales of securities of $170,000 for the six months ended June 30, 2001.
Included in the net loss for the 2002 period was a writedown of certain
equity securities whose impairment was determined to be other than
temporary of $837,000 and a net gain on sales of securities of $81,000.
Non-Interest Expense
Total non-interest expense increased $1.0 million, or 14.0%, to $8.5
million for the six months ended June 30, 2002 compared with $7.5 million
for the prior year. Salaries and benefits increased $874,000, or 23.2% to
$4.6 million for the six months ended June 30, 2002 compared to $3.8
million for the 2001 period, reflecting normal salary increases and
additional staffing costs associated with the hiring and training of
additional employees to staff the new Liberty Street, Springfield Branch
and Northampton Street, Holyoke Branch which both opened in June 2001.
Occupancy expense increased $68,000, or 8.4%, from $811,000 for the six
months ended June 30, 2001 to $879,000 for the same period in 2002. This
increase was also the result of the opening of two new branches in June
2001.
Income Taxes
Income taxes expense decreased $128,000, or 10.5%, to $1.1 million for the
six months ended June 30, 2002. The resulting 34% tax rate in 2002 was the
same effective tax rate as the 2001 period. The effective tax rate reflects
the utilization of Westfield Securities Corp., a qualified Massachusetts
securities corporation, and Elm Street Real Estate Investments, Inc., a
qualified real estate investment trust.
Elm Street Real Estate Investments, Inc. ("Elm Street"), a subsidiary of
the Bank, was established as a Delaware-chartered real estate investment
trust ("REIT"). During 1999, 2000 and 2001, the Bank received dividends
from Elm Street. In accordance with the Commonwealth of Massachusetts Tax
law, the Bank has claimed a deduction for the dividends received from Elm
Street for these years. The positive impact of the REIT dividend received
deduction on the Company's 1999, 2000 and 2001 reported net income
15
was approximately $499,000, $506,000 and $607,000, respectively. The
additional positive impact on the Company's reported net income for the
first six months of 2002 was approximately $198,000.
The Company is aware that several other financial institutions operating in
the Commonwealth of Massachusetts with similar real estate investment trust
subsidiaries have recently received Notices of Intent to Assess additional
state excise taxes from the Massachusetts Department of Revenue (the
"DOR"), challenging the dividends received deduction claimed by those
institutions. The institutions that received these notices have indicated
their intention to appeal the assessments. It is uncertain whether the
Company will receive such a notice pertaining to its 1999, 2000 or 2001 tax
filings. However, if it does receive such a notice, the Company intends to
appeal any such assessment.
The following tables set for the information relating to our average
balance and net interest income at and for the six months ending June 30,
2002 and 2001 and reflect the average yield on assets and average cost of
liabilities for the periods indicated. Yields and costs are derived by
dividing interest income by the average balance of interest-earning assets
and interest expense by the average balance of interest-bearing liabilities
for the periods shown. Average balances are derived from actual daily
balances over the periods indicated. Interest income includes fees earned
from making changes in loan rates and terms and fees earned when real
estate loans are prepaid or refinanced.
Analysis of Net Interest Income
Six Months Ended June 30,
(Dollar in Thousands)
2002 2001
Average Avg Yield/ Average Avg Yield/
Interest Balance Cost Interest Balance Cost
-------- ------- ---------- -------- ------- ----------
Interest-Earning Assets
- -----------------------
Short Term Investments $ 170 $ 20,326 1.67% $ 288 $ 10,730 5.37%
Investment Securities 7,378 327,305 4.51 6,130 201,072 6.10
Loans 14,524 408,788 7.11 17,859 464,704 7.69
-------------------- --------------------
Total Interest-Earning Assets $22,072 $756,419 5.84 $24,277 $676,506 7.18
======= ======== ======= ========
Interest-Bearing Liabilities
- ----------------------------
NOW Accounts $ 329 $ 39,299 1.67% $ 392 $ 34,149 2.30%
Savings Accounts 227 43,503 1.04 234 42,359 1.10
Money Market Accounts 1,290 129,611 1.99 1,984 116,998 3.39
Time Deposits 7,876 380,399 4.14 10,663 379,146 5.62
Customer Repurchase
Agreements 101 7,511 2.69 151 6,983 4.32
-------------------- --------------------
Total Interest-Bearing Liabilities $ 9,823 $600,323 3.27 $13,424 $579,635 4.63
======= ======== ======= ========
Net Interest Income/Interest
Rate Spread $12,249 2.57% $10,853 2.55%
======= ---- ======= ----
Net Interest Margin 3.27% 3.24%
---- ----
16
The following table shows how changes in interest rates and changes in the
volume of interest earning assets and interest-bearing liabilities have
affected the Company's interest income and interest expense during the
periods indicated. Information is provided in each category with respect
to:
* Interest income changes attributable to changes in volume
(changes in volume multiplied by prior rate);
* Interest income changes attributable to changes in rate (changes
in rate multiplied by prior volume); and
* The net change
The changes attributable to the combined impact of volume and rate have
been allocated proportionately to the changes due to volume and the changes
due to rate.
RATE/VOLUME ANALYSIS
Six Months Ended June 30, 2002 compared to June 30, 2001
Increase (decrease) due to:
(Dollars in thousands)
Interest-Earning Assets Volume Rate Net
- ----------------------- ------ ---- ---
Short Term Investments $ 258 $ (376) $ (118)
Investment Securities 3,848 (2,600) 1,248
Loans (2,149) (1,186) (3,335)
------- ------- -------
Net Change in Income on
Interest-Earning Assets 1,957 (4,162) (2,205)
------- ------- -------
Interest-Bearing Liabilities
- ----------------------------
NOW Accounts 59 (122) (63)
Savings Accounts 6 (13) (7)
Money Market Accounts 214 (908) (694)
Time Deposits 35 (2,822) (2,787)
Customer Repurchase
Agreements 11 (61) (50)
------- ------- -------
Net Change in Expense on
Interest-Bearing Liabilities 325 (3,926) (3,601)
------- ------- -------
Net Change in Interest Income $1,632 $ (236) $ 1,396
======= ======= =======
- -------------------------------------------------------------------------------
17
ITEM 3:
LIQUIDITY AND CAPITAL RESOURCES
The term "liquidity" refers to the Company's ability to generate adequate
amounts of cash to fund loan originations, loan purchases, withdrawals of
deposits and operating expenses. The Company's primary sources of liquidity
are deposits, scheduled amortization and prepayments of loan principal and
mortgage backed securities, maturities and calls of investment securities,
and funds provided by operations. The Bank also can borrow funds from the
Federal Home Loan Bank based on eligible collateral of loans and
securities. The Bank's maximum borrowing capacity form the Federal Home
Loan Bank at June 30, 2002 was approximately $130.2 million.
Liquidity management is both a daily and long term function of business
management. The measure of a Company's liquidity is its ability to meet its
cash commitments at all times with available cash or by conversion of other
assets to cash at a reasonable price. Loan repayments and maturing
investment securities are a relatively predictable source of funds.
However, deposit flow, calls of investment securities, and repayments of
loans and mortgage-backed securities are strongly influenced by interest
rates, general and local economic conditions and competition in the
marketplace. These factors reduce the predictability of the timing of these
sources of funds. Management believes that the Company has sufficient
liquidity to meet its current operating needs.
At June 30, 2002, the Company exceeded each of the applicable regulatory
capital requirements. The Company's leverage Tier 1 capital was $126.8
million, or 27.3% of risk-weighted assets, and 16.1% of average assets. The
Company had a risk-based total capital of $131.1 million and a risk-based
capital ratio of 28.3%.
Quantitative measures established by regulation to ensure capital adequacy
require the Company and the Bank to maintain minimum amounts and ratios of
total and Tier I capital to risk weighted assets and to average assets.
Management believes, as of June 30, 2002, the Company and the Bank met all
capital adequacy requirements to which they were subject. As of June 30,
2002, the most recent notification from the Federal Deposit Insurance
Corporation categorized the Bank as "well capitalized" under the regulatory
framework for prompt corrective action. To be categorized as well
capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-
based and Tier 1 leverage ratios. There are no conditions or events since
that notification that management believes have changed the Bank's
category.
See the "Consolidated Statements of Cash Flows" in the Unaudited
Consolidated Financial Statements included in this Form 10-Q for the
sources and uses of cash flows for operating and financing activities for
the six months ended June 30, 2002 and June 30, 2001.
ITEM 4:
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Management believes that there have been no significant changes in the
reported market risks since December 31, 2001 as reported in Item 7A of the
Annual Report on Form 10-K.
18
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its annual meeting of shareholders on July 26, 2002
(the "Meeting"). The annual meeting was initially scheduled for June 28,
2002, but was later adjourned to July 26, 2002. All of the proposals
submitted to the shareholders at the Meeting were approved. The proposals
submitted to shareholders and the tabulation of votes for each proposal is
as follows:
1. Election of four candidates to the board of directors.
The number of votes cast with respect to this matter is as follows:
Nominee For Withheld
Robert T. Crowley, Jr. 10,020,317 122,706
Harry C. Lane 10,009,738 133,285
William H. McClure 10,019,617 123,406
Paul R. Pohl 10,019,887 123,136
There were no broker held non-voted shares represented at the Meeting
with respect to this matter.
2. Approval of the Westfield Financial, Inc. 2002 Stock Option Plan.
The number of votes cast with respect to this matter was as follows:
For Against Abstain
- --- ------- -------
8,233,766 445,560 179,328
There were no broker held non-voted shares represented at the Meeting
with respect to this matter.
3. Approval of the Westfield Financial, Inc. 2002 Recognition and
Retention Plan.
The number of votes cast with respect to this matter was as follows:
For Against Abstain
- --- ------- -------
8,246,363 429,767 182,524
There were no broker held non-voted shares represented at the Meeting
with respect to this matter.
19
Item 5. Other Information
The Company's Chief Executive Officer and Chief Financial Officer
have furnished statements relating to the Company's Form 10-Q for the
quarter ended June 30, 2002 pursuant to 18 U.S.C. section 1350, as adopted
pursuant to section 906 of the Sarbanes-Oxley Act of 2002. These statements
are attached hereto as Exhibit 99.1.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - Exhibit 99.1
(b) Reports on Form 8K - None
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 thereunto duly authorized.
Westfield Financial, Inc.
(Registrant)
By: /s/ Donald A. Williams
----------------------
Donald A. Williams
President/Chief Executive Officer
(Principal Executive Officer)
By: /s/ Michael J. Janosco Jr.
--------------------------
Michael J. Janosco, Jr.
Vice President/Chief Financial Officer
(Principal Accounting Officer)
August 9, 2002
20