General. Westfield Financial is a Massachusetts-chartered stock holding company and the parent company of Westfield Bank (the “Bank”). Westfield Financial was formed in 2001 in connection with its reorganization from a federally-chartered mutual holding company to a Massachusetts-chartered stock holding company with the second step conversion being completed in 2007. The Bank was formed in 1853 and is a federally-chartered savings bank regulated by the Office of Comptroller of the Currency (“OCC”). As a community bank, we focus on servicing commercial customers, including commercial and industrial lending and commercial deposit relationships. We believe that this business focus is best for our long term success and viability, and complements our existing commitment to high quality customer service.
Elm Street Securities Corporation, a Massachusetts-chartered corporation, was formed by us for the primary purpose of holding qualified investment securities. In February 2007, we formed WFD Securities, Inc., a Massachusetts-chartered corporation, for the primary purpose of holding qualified investment securities. In October 2009, we formed WB Real Estate Holdings, LLC, a Massachusetts-chartered limited liability company, for the primary purpose of holding real property acquired as security for debts previously contracted by the Bank.
Market Area. We operate 12 banking offices in Agawam, East Longmeadow, Holyoke, Southwick, Springfield, West Springfield and Westfield, Massachusetts. We also have thirteen free-standing ATM locations in Feeding Hills, Holyoke, Springfield, West Springfield and Westfield, Massachusetts. Our primary deposit gathering area is concentrated in the communities surrounding these locations and our primary lending area includes all of Hampden County in western Massachusetts. In addition, we provide online banking services through our website located at www.westfieldbank.com.
The markets served by our branches are primarily suburban in character, as we operate only one office in Springfield, the Pioneer Valley’s primary urban market. Westfield, Massachusetts, is located in the Pioneer Valley near the intersection of U.S. Interstates 90 (the Massachusetts Turnpike) and 91. The Pioneer Valley of western Massachusetts encompasses the fourth largest metropolitan area in New England. The Springfield Metropolitan area covers a relatively diverse area ranging from densely populated urban areas, such as Springfield, to outlying rural areas.
Competition. We face intense competition both in making loans and attracting deposits. Our primary market area is highly competitive and we face direct competition from approximately 19 financial institutions, many with a local, state-wide or regional presence and, in some cases, a national presence. Many of these financial institutions are significantly larger than us and have greater financial resources. Our competition for loans comes principally from commercial banks, savings institutions, mortgage banking firms, credit unions, finance companies, mutual funds, insurance companies and brokerage and investment banking firms. Historically, our most direct competition for deposits has come from savings and commercial banks. We face additional competition for deposits from internet-based institutions, credit unions, brokerage firms and insurance companies.
Lending Activities
Loan Portfolio Composition. Our loan portfolio primarily consists of commercial real estate loans, commercial and industrial loans, residential real estate loans, home equity loans, and consumer loans.
At December 31, 2011, we had total loans of $553.1 million, of which 55.0% were adjustable rate loans and 45.0% were fixed rate loans. Commercial real estate loans and commercial and industrial loans totaled $232.5 million and $125.7 million, respectively. The remainder of our loans at December 31, 2011 consisted of residential real estate loans, home equity loans and consumer loans. Residential real estate and home equity loans outstanding at December 31, 2011 totaled $192.5 million. Consumer loans outstanding at December 31, 2011 were $2.4 million.
The interest rates we charge on loans are affected principally by the demand for loans, the supply of money available for lending purposes and the interest rates offered by our competitors. These factors are, in turn, affected by general and local economic conditions, monetary policies of the federal government, including the Federal Reserve Board, legislative tax policies and governmental budgetary matters. The following table presents the composition of our loan portfolio in dollar amounts and in percentages of the total portfolio at the dates indicated.
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At December 31,
2011
2010
2009
2008
2007
Percent of
Amount
Total
(Dollars in thousands)
Real estate loans:
Commercial
Residential
Home equity
Total real estate loans
Other loans
Commercial and industrial
Consumer, other
Total other loans
Total loans
Unearned premiums and net deferred
loan fees and costs, net
Allowance for loan losses
Total loans, net
3
Loan Maturity and Repricing. The following table shows the repricing dates or contractual maturity dates as of December 31, 2011. The table does not reflect prepayments or scheduled principal amortization. Demand loans, loans having no stated maturity, and overdrafts are shown as due in within one year.
At December 31, 2011
Commercial
Residential
Real Estate
Home Equity
Commercia
and
Industrial
Consumer
Loans
Totals
(In thousands)
Amount due:
Within one year
After one year:
One to three years
Three to five years
Five to ten years
Ten to twenty years
Over twenty years
Total due after one year
Total amount due:
unearned premiums
Loans, net
The following table presents, as of December 31, 2011, the dollar amount of all loans contractually due or scheduled to reprice after December 31, 2012, and whether such loans have fixed interest rates or adjustable interest rates.
Due After December 31, 2012
Fixed
Adjustable
Total
Real estate loans
Commercial real estate
Total real estate loans
Other loans
Consumer
Total other loans
Total loans
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