Sometimes growth doesn’t look great on paper. That’s what Westfield Financial found out in last year’s fourth quarter as the company socked away cash to cover its provision for loan losses at the expense of its bottom line.
Westfield’s President and CEO, James C. Hagen, expressed confidence in the firm’s strategy.
“During 2014, we successfully executed several strategic initiatives,” Hagan said in a statement. “We have improved our balance sheet mix with loan growth of 13.7 percent year-over-year, while decreasing our securities portfolio. In addition, we introduced wealth management services, which is a new source of fee income for the bank, and also carefully managed non-interest expenses, which resulted in significant improvement in our efficiency ratio in 2014. Our outlook remains positive for continued loan growth as we start 2015.”
The holding company for Westfield Bank posted net income of $1.7 million for the quarter ended Dec. 31, 2014 and $6.2 million for the year, compared with $1.8 million and $6.8 million for the respective periods in 2013. It was the provision for loan losses – $275,000 and $1.6 million for the quarter and the year, compared with $120,000 and a credit of $256,000 for the same periods in 2013 – that had a negative impact on net income.
As the company expanded its market footprint into Northern Connecticut, it also increased total loans year-over-year by $87.3 million, or 13.7 percent, to $724.7 million in the fourth quarter. This included increases of $43.6 million in residential loans, $30.1 million in commercial and industrial loans, and $13.9 million in commercial real estate loans.
The allowance for loan losses was $7.9 million at year-end 2014, $7.7 million at Sept. 30, 2014 and $7.5 million at year-end 2013, representing 1.1 percent, 1.07 percent and 1.17 percent of total loans, respectively. This represents 90 percent, 86.8 percent and 288.4 percent of nonperforming loans at year-end 2014, Sept. 30, 2014 and year-end 2013, respectively.
Nonperforming loans were $8.8 million and $8.9 million, representing 1.22 percent and 1.23 percent of total loans at Dec. 31, 2014 and Sept. 30, 2014, respectively. Loans delinquent 30 to 89 days decreased $433,000 to $3.8 million at Dec. 31, 2014 from $4.3 million at Sept. 30, 2014. The company said it had no loans 90 or more days past due and still accruing interest.
Net interest and dividend income climbed year-over-year to $7.9 million in the fourth quarter and $31.1 million for the year, compared with $7.6 million and $30.7 million for the respective periods in 2013. The net interest margin for the full year increased 2 basis points from 2.58 percent in 2013 to 2.60 percent last year.
Meanwhile, non-interest income slid $266,000 to $1.1 million in the fourth quarter, as the net gain on sales of securities in this most recent quarter totaled $44,000 compared with $330,000 in the year-ago period.
On March 13, 2014, the company announced a repurchase program under which it may repurchase up to 1.97 million shares, or 10 percent of its outstanding common stock. At year-end 2014, there were 999,460 shares remaining under this repurchase program.
