Westfield Financial, Inc. Reports Results for the Quarter and Six Months Ended June...

Westfield Financial, Inc. Reports Results for the Quarter and Six Months Ended June 30, 2008

WESTFIELD, Mass.--(Business Wire)--
Westfield Financial, Inc. (the "Company") (NASDAQ:WFD), the
holding company for Westfield Bank (the "Bank"), reported net income
of $2.1 million, or $0.07 per diluted share, for the quarter ended
June 30, 2008 compared to $1.9 million, or $0.06 per diluted share,
for the same period in 2007. For the six months ended June 30, 2008,
net income was $4.0 million, or $0.13 per diluted share, compared to
$3.9 million, or $0.13 per diluted share for the same period in 2007.

The increase in earnings was primarily the result of an increase
in net interest income, partially offset by increased noninterest
expenses and an increase in the provision for loan losses. Net
interest income increased $540,000 to $8.0 million for the three
months ended June 30, 2008 compared to $7.4 million for the same
period in 2007. The net interest margin, on a tax equivalent basis,
was 3.23% for the three months ended June 30, 2008, compared to 3.25%
for the same period in 2007.

For the six months ended June 30, 2008, net interest income
increased $727,000 to $15.7 million, compared to $14.9 million for the
same period in 2007. The net interest margin, on a tax equivalent
basis, was 3.20% and 3.31% for the six months ended June 30, 2008 and
2007, respectively.

The increase in net interest income for the three and six months
ended June 30, 2008 was a result of an increase in the average
balances of investment securities and loans, which was funded
primarily through an increase in short-term borrowings and long-term
debt.

For the three months ended June 30, 2008, noninterest expense was
$5.7 million compared to $5.6 million for the same period in 2007.
This increase was primarily due to an increase of $198,000 in salaries
and benefits to $3.5 million for the three months ended June 30, 2008.
Expenses related to share-based compensation increased $192,000 for
the three months ended June 30, 2008 as a result of new grants of
restricted stock and stock options in the third quarter of 2007.

For the six months ended June 30, 2008, noninterest expense was
$11.5 million compared to $10.9 million for the same period in 2007.
This increase was primarily due to an increase of $492,000 in salaries
and benefits to $7.1 million for the six months ended June 30, 2008.
Expenses related to share-based compensation increased $394,000 for
the six months ended June 30, 2008 as a result of new grants,
described above. In addition, expenses related to employee health
insurance increased $92,000 due to normal increases in this area.

The provision for loans losses was $240,000 for the three months
ended June 30, 2008 compared to $75,000 for the same period in 2007.
For the six months ended June 30, 2008, the provision for loan losses
was $415,000 compared to $175,000 for the same period in 2007. The
factors that influenced the increase in the provision for loan losses
primarily include an increase in the commercial loan portfolio and an
increase in non-performing loans due to the deterioration of one
commercial loan relationship, each described below.

The six months ended June 30, 2008 also includes a net gain of
$9,000 on the sale and writedown of securities. In the first quarter
of 2008, Westfield Financial reported a writedown $310,000 on
preferred stock issued by Freddie Mac, a government-sponsored
enterprise. Management deemed the impaired value of this preferred
stock to be other than temporary. Westfield Financial's book value
remaining on preferred stock issued by Freddie Mac is $690,000 at June
30, 2008. The writedown was offset by net gains of $319,000 for the
six months ended June 30, 2008 on the sale of other investment
securities. There were no gains, losses, or writedowns related to
investment securities for the same period in 2007.

Balance Sheet Growth

Total assets increased $29.6 million to $1.1 billion at June 30,
2008 from $1.0 billion at December 31, 2007.

Net loans increased by $19.8 million to $434.7 million at June 30,
2008 from $414.9 million at December 31, 2007. The increase in net
loans was primarily the result of an increase in commercial and
industrial loans and commercial real estate loans. Commercial and
industrial loans increased $15.5 million to $132.0 million at June 30,
2008 from $116.5 million at December 31, 2007. Commercial real estate
loans increased $13.1 million to $203.1 million at June 30, 2008 from
$190.0 million at December 31, 2007. The increases in commercial and
industrial and commercial real estate loans were due to increased loan
originations. Residential real estate loans decreased $7.7 million at
June 30, 2008 from December 31, 2007. The Bank does not originate or
hold subprime mortgage loans.

Investment securities decreased $6.2 million to $516.6 million at
June 30, 2008 from $522.8 million at December 31, 2007. Investment
securities decreased as funds received from securities which matured
or paid down were used to originate loans.

Asset growth was funded primarily through a $60.6 million increase
in short-term borrowings and long-term debt, which totaled $200.9
million at June 30, 2008. This was primarily due to $48.5 million in
new long-term debt, in the form of institutional repurchase
agreements, at June 30, 2008. The slope of the yield curve provided
opportunities to earn a spread by borrowing funds and reinvesting in
loans and securities.

Total deposits decreased $16.2 million to $586.5 million at June
30, 2008 from $602.7 million at December 31, 2007. The decrease in
deposits was due to a decrease in time deposits and money market
accounts, partially offset by an increase in regular savings and
checking accounts. Money market accounts decreased $7.7 million to
$66.9 million at June 30, 2008. Time deposits decreased $29.4 million
to $323.9 million at June 30, 2008. Management placed less emphasis on
gathering time deposits in favor of using other types of funding, such
as borrowings. Management believes that doing so helped to control
funding costs.

These decreases were partially offset by increases of $14.1
million in regular savings and $6.7 million in checking accounts. The
increases in both regular savings and checking accounts were fueled by
new products with higher interest rates than the Bank's other
comparable products.

Stockholders' equity at June 30, 2008 and December 31, 2007 was
$273.7 million and $286.5 million, respectively, which represented
25.6% of total assets as of June 30, 2008 and 27.6% of total assets as
of December 31, 2007. The decrease in stockholders' equity is the
result of the repurchase of 983,471 shares for $9.8 million related to
the stock repurchase plan, along with regular and special dividends
amounting to $7.5 million. This was partially offset by net income of
$4.0 million for the six months ended June 30, 2008 and the issuance
of 433,110 shares of common stock amounting to $1.9 million in
connection with stock option exercises. All of the stock options
exercised during the six months ended June 30, 2008 were granted in
2002.

As previously reported, the Board of Directors voted to authorize
the commencement of a repurchase program on January 22, 2008 which
authorized Westfield Financial to repurchase up to 3,194,000 shares,
or ten percent of its outstanding shares of common stock.

Credit Quality

Nonperforming loans increased $1.9 million to $3.1 million at June
30, 2008 compared to $1.2 million at December 31, 2007. This
represented 0.69% of total loans at June 30, 2008 and 0.29% of total
loans at December 31, 2007. The increase was the result of a single
agricultural commercial loan relationship of $1.8 million. The loan
relationship is primarily secured by real estate. Management does not
anticipate incurring significant losses on this relationship.

The allowance for loan losses was $6.1 million at June 30, 2008
and $5.7 million at December 31, 2007. This represents 1.39% of total
loans at June 30, 2008 and 1.36% of total loans at December 31, 2007.
At these levels, the allowance for loan losses as a percentage of
nonperforming loans was 200% at June 30, 2008 and 476% at December 31,
2007.

Dividend Declaration

Donald A. Williams, Chairman and Chief Executive Officer stated,
"On July 22, 2008, the Board of Directors declared a regular cash
dividend of $0.05 per share, payable on August 21, 2008 to all
shareholders of record on August 7, 2008."

Westfield Bank is headquartered in Westfield, Massachusetts and
operates through 11 banking offices in Agawam, East Longmeadow,
Holyoke, Southwick, Springfield, West Springfield and Westfield,
Massachusetts. The Bank's deposits are insured by the Federal Deposit
Insurance Corporation.

This press release contains "forward-looking statements" which may
be identified by the use of such words as "believe," "expect,"
"anticipate," "should," "planned," "estimated," and "potential."
Examples of forward-looking statements include, but are not limited
to, estimates with respect to the Company's financial condition and
results of operation and business that are subject to various factors
which could cause actual results to differ materially from these
estimates including, but not limited to, changes in the real estate
market or local economy, changes in interest rates, changes in laws
and regulations to which we are subject, and competition in our
primary market area. The Company disclaims any obligation to
subsequently revise 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.

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WESTFIELD FINANCIAL, INC. and SUBSIDIARIES
Selected Consolidated Statement of Operations and Other Data
($ in thousands, except per share data)
(Unaudited)

Three Months Ended Six Months Ended
June 30, June 30,

2008 2007 2008 2007
---------- ---------- ---------- ----------

Interest and dividend
income $13,547 $13,059 $27,316 $25,903
Interest expense 5,594 5,646 11,655 10,969
---------- ---------- ---------- ----------

Net interest and dividend
income 7,953 7,413 15,661 14,934
Provision for loan losses 240 75 415 175
---------- ---------- ---------- ----------

Net interest and dividend
income after
provision for loan
losses 7,713 7,338 15,246 14,759
Noninterest income 951 974 1,816 1,793
Noninterest expense 5,733 5,581 11,517 10,887
---------- ---------- ---------- ----------

Income before income taxes 2,931 2,731 5,545 5,665
Income taxes 811 826 1,564 1,740
---------- ---------- ---------- ----------
Net income $2,120 $1,905 $3,981 $3,925
========== ========== ========== ==========

Basic earnings per share
(1) $0.07 $0.06 $0.14 $0.13

Average shares outstanding
(1) 29,300,122 30,120,536 29,388,895 30,107,957

Diluted earnings per share
(1) $0.07 $0.06 $0.13 $0.13

Diluted average shares
outstanding (1) 29,698,152 30,575,244 29,845,175 30,625,328

Other Data:

Return on Average Assets
(1) 0.79% 0.77% 0.75% 0.80%

Return on Average Equity
(1) 3.07% 2.61% 2.84% 2.71%

Net Interest Margin (2) 3.23% 3.25% 3.20% 3.31%

_______________

(1) Three and six month results have been annualized.
(2) Net interest margin is calculated on a tax equivalent basis.
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WESTFIELD FINANCIAL, INC. and SUBSIDIARIES
Selected Consolidated Balance Sheet and Other Data
($ in thousands, except per share data)
(Unaudited)

June 30, December 31,
2008 2007
---------- ------------

Total assets $1,069,412 $1,039,784
Securities held to maturity 256,558 278,619
Securities available for sale 260,087 244,229
Stock in Federal Home Loan Bank of Boston and
other
restricted stock 8,446 7,510

Loans 440,805 420,628
Allowance for loan losses 6,127 5,726
---------- ------------
Net loans 434,678 414,902

Total deposits 586,460 602,676

Short-term borrowings 47,395 35,268

Long-term debt 153,500 105,000

Stockholders' equity 273,699 286,532

Book value per share 8.72 8.97

Other Data:

Nonperforming loans $3,063 $1,202

Nonperforming loans as a percentage of total
assets 0.29% 0.12%

Nonperforming loans as a percentage of total
loans 0.69% 0.29%

Allowance for loan losses as a percentage of
nonperforming loans 200% 476%

Allowance for loan losses as a percentage of
total loans 1.39% 1.36%
*T

Westfield Financial, Inc.
Donald A. Williams, Chairman & CEO
Michael J. Janosco Jr., CFO
413-568-1911

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