A Massachusetts Bank With Investor Potential

| About: Westfield Financial, (WFD)


Westfield Financial Inc (NASDAQ:WFD), a holding company for the Westfield Bank within western Massachusetts may be of interest to investors. Presently the bank is modestly small with 11 full service branches. However recent expansion plans and a quarterly dividend could provide investors with reasons to consider looking at the firm. Presently shares of WFD are trading around 7.57. This is just slightly off a 52-week high of 7.94 and modestly above a 52-week low of 6.45. Year to date shares are trading up around 3.84 %. Recently upgraded from hold to buy by The Street, WFD could be the extra kick investors are searching for.

Investor Value

Investors should look to the following information as support for a possible investment in WFD:

  • WFD recently announced plans to expand into a new market by building the firm's first full-service branch outside of Massachusetts. The planned Granby, Conn., branch would expose the bank to new customers and increase the bank's regional foothold. The first Connecticut branch would be the bank's 12th location.

  • WFD has recently been buying back outstanding shares. On November 5, 2012, the bank announced that it had completed the repurchase of 1,278,560 outstanding shares. Additionally on December 6, 2012, WFD announced that it would begin another round of share buybacks under which the company would repurchase up to 2,472,000 outstanding shares.

  • WFD pays a dividend of .24 annually. This works out to be around 3.10% annualized, which is well in line with regional peers. The company's dividend has a history of being paid asymmetrically meaning that first- and third-quarter dividends are historically slightly less than 1/3 the size of second- and fourth-quarter dividends. In 2012 the first- and third-quarter dividends were 0.06 per share while the second- and fourth-quarter dividends were 0.16 per share.

  • WFD has experienced some heavy insider buying. Midway through the fourth quarter the Chief Investment Officer made a $199.3K purchase of shares of WFD stock.

  • WFD has grown its total assets year over year for the past three years. As stated in the anual report many factors contributed to these increases including an increase in deposits, an improved securities portfolio, and the reinvestment of cash into the bank's loan portfolio. Assets information is represented in the chart below:


Total Assets*

Dec 2010


Dec 2011


Dec 2012


*Numbers in Thousands


Investors should make strong note of the fact the WFD has demonstrated a commitment to share buyback programs. Six-month performance since the completion of the November share buyback and the announcement of the current buyback has remained strong, as demonstrated by $1.00 gains per share during that time. Investors should also make note of the dividend that remains in line with regional peers. A 3% dividend yield, insider purchasing, and a share buyback plan should give investors grounds for committing more research and time to WFD. With expansion in the works investors could be surprised by the bank's growth potential.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Investors should complete their own due diligence before making investment decisions.