Net income increased 14 percent to $1.6 million for the quarter ended Sept. 30, compared with the same quarter last year, at Westfield Financial.
Net income for the nine month period ended Sept. 30 also increased by 5.2 percent to $4.9 million over the comparable period last year at the holding company for Westfield Bank.
The bank also experienced a 6.4 percent, or $37.5 million, increase in its total loans, driven primarily by increases in commercial lending. In a statement, the company said that year-over-year, commercial real estate loans increased $17 million, commercial and industrial loans $11 million and residential loans $10 million. On a linked-quarter basis, total loans increased $13.6 million, or 2.2 percent, to $620.2 million for the third quarter. That was primarily due to an increase in commercial real estate loans of $13.7 million.
The allowance for loan losses was $7.3 million at Sept. 30 and $7.5 million at June 30, representing 1.18 percent and 1.23 percent of total loans, respectively. This represents 249.3 percent and 228.4 percent of nonperforming loans at Sept. 30, and June 30, respectively.
The net interest margin for the nine months ended Sept. 30, increased 4 basis points to 2.59 percent, compared with 2.55 percent for the first nine months of 2012.
Net interest and dividend income increased $288,000 to $23.1 million for the nine months ended Sept.30, compared with $22.8 million for the same period in 2012.
A portion of the investment securities portfolio was reclassified from available-for-sale to held-to-maturity during the third quarter 2013. At Sept. 30, securities classified as held-to-maturity totaled $299 million or 55.2 percent of debt securities and mortgage-backed securities, as compared with $174 million or 29.4 percent, at June 30.
As of Sept.30, the company had entered into several forward-starting interest rate swap contracts with a combined notional value of $155 million. The swap contracts have start dates ranging from the fourth quarter 2013 to the third quarter 2016 and have durations ranging from four to six years. This hedge strategy converts the LIBOR-based rate of interest on certain FHLB advances to fixed interest rates, thereby protecting the company from floating interest rate variability and reducing future volatility in tangible book value and accumulated other comprehensive income.
The bank prepaid a repurchase agreement in the amount of $9.5 million and incurred a prepayment expense of $540,000 for the third quarter 2013. The repurchase agreement had a cost of 2.86 percent. The prepayment of the repurchase agreement resulted in a decrease in the cost of funds.
