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CST: 25/08/2019 06:22:35   

Waterstone Financial, Inc. Announces Results of Operations for the Quarter Ended March 31, 2019

123 Days ago

WAUWATOSA, Wis., April 23, 2019 (GLOBE NEWSWIRE) -- Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income of $6.5 million, or $0.24 per diluted share for the quarter ended March 31, 2019 compared to $7.0 million, or $0.25 per diluted share for the quarter ended March 31, 2018.

“We achieved strong quarterly earnings driven by a record pre-tax earnings in the first quarter for the Community Banking segment,” said Douglas Gordon, CEO of Waterstone Financial, Inc. “Due to the consistent earnings and strong capital position, we were able to declare a $0.50 special dividend, in addition to our regular quarterly dividend and stock repurchases. We continue to maintain strong asset quality and remain disciplined with respect to expense management at the Community Banking segment. The Mortgage Banking segment’s performance rebounded compared to the linked quarter, driven by the elimination of underperforming offices and continued expense control measures.”

Highlights of the quarter ended March 31, 2019

Waterstone Financial, Inc. (Consolidated)

  • Consolidated net income of Waterstone Financial, Inc. totaled $6.5 million for the quarter ended March 31, 2019, compared to $7.0 million for the quarter ended March 31, 2018.
  • Consolidated return on average assets was 1.39% for the quarter ended March 31, 2019 compared to 1.57% for the quarter ended March 31, 2018.
  • Consolidated return on average equity was 6.65% for the quarter ended March 31, 2019 and 6.90% for the quarter ended March 31, 2018.
  • Dividends declared totaled $0.62 per share during the quarter ended March 31, 2019.
  • The Company repurchased a total 462,400 shares on the open market during the quarter ended March 31, 2019 at an average price of $16.53 per share.

Community Banking Segment

  • Pre-tax income of the segment totaled $7.5 million for the quarters ended March 31, 2019 and March 31, 2018.
  • Net interest income of the segment totaled $13.1 million for the quarter ended March 31, 2019 compared to $13.3 million for the quarter ended March 31, 2018.
  • Average loans held for investment totaled $1.38 billion during the quarter ended March 31, 2019, which represents an increase of $78.9 million, or 6.1% over the comparable quarter in the prior year. Average loans increased $10.4 million, or 3.1% annualized, compared to the quarter ended December 31, 2018.
  • Our net interest margin decreased 27 basis points to 2.93% for the quarter ended March 31, 2019 compared to 3.20% for the quarter ended March 31, 2018, which was a result of the increase in cost of deposits as certificates of deposit repriced at higher rates over the past year. Net interest margin decreased six basis points compared to 2.99% for the quarter ended December 31, 2018.
  • The segment had a negative provision for loan losses of $700,000 for the quarter ended March 31, 2019 compared to $900,000 for the quarter ended March 31, 2018. Asset quality continues to remain strong along with minimal net charge-offs.
  • Noninterest income decreased $58,000 for the quarter ended March 31, 2019 compared to the quarter ended March 31, 2018 as fees earned on loans decreased.
  • Noninterest expenses decreased $445,000 for the quarter ended March 31, 2019 compared to the quarter ended March 31, 2018 as compensation; communications; real estate owned; and other noninterest expenses decreased.
  • The efficiency ratio for the community banking segment improved 230 basis points to 51.64% for the quarter ended March 31, 2019, compared to 53.94% for the quarter ended March 31, 2018.
  • Average deposits totaled $1.04 billion during the quarter ended March 31, 2019, which represents an increase of $66.3 million, or 6.8%, over the comparable quarter in the prior year.  Average deposits increased $19.0 million, or 7.5% annualized, compared to the quarter ended December 31, 2018.
  • Nonperforming assets as percentage of total assets was 0.44% at March 31, 2019, 0.45% at December 31, 2018, and 0.54% at March 31, 2018.
  • Past due loans as percentage of total loans was 0.46% at March 31, 2019, 0.50% at December 31, 2018, and 0.53% at March 31, 2018.
  • Net charge-offs were $8,000 for the quarter ended March 31, 2019.  Net charge-offs were $7,000 for the quarter ended March 31, 2018.

Mortgage Banking Segment

  • The Mortgage Banking segment totaled a pre-tax income of $1.0 million for the quarter ended March 31, 2019, compared to $1.6 million of pre-tax income for the quarter ended March 31, 2018.
  • Loan originations decreased approximately $14.6 million to $501.4 million during the quarter ended March 31, 2019, compared to $516.0 million during the quarter ended March 31, 2018.  Origination volume relative to purchase activity accounted for 89.9% of originations for the quarter ended March 31, 2019 compared to 85.0% of total originations for the quarter ended March 31, 2018.
  • Mortgage banking income decreased $1.2 million, or 4.7%, to $23.6 million for the quarter ended March 31, 2019, compared to $24.7 million for the quarter ended March 31, 2018.
  • Gross margin on loans sold decreased 1.3% to 4.57% for the quarter ended March 31, 2019, compared to 4.63% for the quarter ended March 31, 2018. 

About Waterstone Financial, Inc.

Waterstone Financial, Inc. is the savings and loan holding company for WaterStone Bank. WaterStone Bank was established in 1921 and offers a full suite of personal and business banking products. The Bank has branches in Wauwatosa, Brookfield, Fox Point/North Shore, Franklin/Hales Corners, Germantown/Menomonee Falls, Greenfield, Oak Creek, Oconomowoc/Lake Country, Pewaukee, Waukesha/Brookfield, and West Allis, Wisconsin and a commercial lending office in Minneapolis, Minnesota. WaterStone Bank is the parent company to Waterstone Mortgage, which has the ability to lend in 47 states. For more information about WaterStone Bank, go to http://www.wsbonline.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements include, without limitation, statements regarding expected financial and operating activities and results that are preceded by, followed by, or that include words such as “may,” “expects,” “anticipates,” “estimates” or “believes.”  Such statements are subject to important factors that could cause actual results to differ materially from those anticipated by the forward-looking statements.  These factors include (i) exposure to the deterioration in the commercial and residential real estate markets which could result in increased charge-offs and increases in the allowance for loan losses,  (ii) various other factors, including changes in economic conditions affecting borrowers, new information regarding outstanding loans and identification of additional problem loans, which could require an increase in the allowance for loan losses, (iii) Waterstone’s ability to maintain required levels of capital and other current and future regulatory requirements, (iv) the impact of recent and future legislative initiatives on the financial markets, and (v) those factors referenced in Item 1A. Risk Factors in Waterstone’s most recent Annual Report on Form 10-K and as may be described from time to time in Waterstone’s subsequent SEC filings, which factors are incorporated herein by reference.  Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect only Waterstone’s belief as of the date of this press release.


WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
    For The Three Months Ended March 31,
    2019 2018
     
Interest income:    (In Thousands, except per share amounts) 
Loans $   17,104     15,458  
Mortgage-related securities     759     638  
Debt securities, federal funds sold and short-term investments     1,309     867  
Total interest income     19,172     16,963  
Interest expense:      
Deposits     3,990     2,314  
Borrowings     2,246     1,508  
Total interest expense     6,236     3,822  
Net interest income     12,936     13,141  
Provision for loan losses     (680 )   (880 )
Net interest income after provision for loan losses     13,616     14,021  
Noninterest income:      
Service charges on loans and deposits     379     399  
Increase in cash surrender value of life insurance     344     328  
Mortgage banking income     23,359     24,187  
Other     175     269  
Total noninterest income     24,257     25,183  
Noninterest expenses:      
Compensation, payroll taxes, and other employee benefits     20,639     20,983  
Occupancy, office furniture, and equipment     2,776     2,639  
Advertising     958     860  
Data processing     769     625  
Communications     328     382  
Professional fees     695     700  
Real estate owned     32     317  
Loan processing expense     805    988  
Other     2,347    2,653  
Total noninterest expenses     29,349     30,147  
Income before income taxes     8,524     9,057  
Income tax expense      1,982     2,104  
Net income  $   6,542     6,953  
Income per share:      
Basic $ 0.25   0.25  
Diluted $ 0.24   0.25  
Weighted average shares outstanding:      
Basic   26,499   27,509  
Diluted   26,720   27,802  
       


WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
    March 31,     December 31,  
  2019 2018
  (Unaudited)  
Assets (In Thousands, except per share amounts)
Cash $   77,381   $   48,234  
Federal funds sold     17,905       25,100  
Interest-earning deposits in other financial institutions and other short term investments     9,547       12,767  
Cash and cash equivalents     104,833       86,101  
Securities available for sale (at fair value)     184,224       185,720  
Loans held for sale (at fair value)     123,011       141,616  
Loans receivable     1,379,866       1,379,148  
Less: Allowance for loan losses     12,561       13,249  
Loans receivable, net     1,367,305       1,365,899  
     
Office properties and equipment, net     24,215       24,524  
Federal Home Loan Bank stock (at cost)     19,350       19,350  
Cash surrender value of life insurance     67,894       67,550  
Real estate owned, net     1,649       2,152  
Prepaid expenses and other assets     36,184       22,469  
Total assets $   1,928,665   $   1,915,381  
     
Liabilities and Shareholders' Equity    
Liabilities:    
Demand deposits $   128,470   $   139,111  
Money market and savings deposits     175,380       163,511  
Time deposits     733,491       735,873  
Total deposits     1,037,341       1,038,495  
     
Borrowings     448,451       435,046  
Advance payments by borrowers for taxes     11,409       4,371  
Other liabilities     46,996       37,790  
Total liabilities     1,544,197       1,515,702  
     
Shareholders' equity:    
Common stock     280       285  
Additional paid-in capital     331,128       330,327  
Retained earnings     177,303       187,153  
Unearned ESOP shares     (17,507 )     (17,804 )
Accumulated other comprehensive loss, net of taxes     (851 )     (2,361 )
Cost of shares repurchased     (105,885 )     (97,921 )
Total shareholders' equity     384,468       399,679  
Total liabilities and shareholders' equity $   1,928,665   $   1,915,381  
     
Share Information      
Shares outstanding     28,004       28,463  
Book value per share $   13.73   $   14.04  
Closing market price $   16.46   $   16.76  
Price to book ratio   119.88 %   119.37 %
     

 

WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
SUMMARY OF KEY QUARTERLY FINANCIAL DATA
(Unaudited)
           
  At or For the Three Months Ended
  March 31, December 31, September 30, June 30, March 31,
  2019 2018 2018 2018 2018
  (Dollars in Thousands, except per share amounts)
Condensed Results of Operations:          
Net interest income $  12,936    13,466    13,850    13,720    13,141  
Provision for loan losses    (680 )  -     40    (220 )  (880 )
Total noninterest income    24,257    25,636    34,062    33,318    25,183  
Total noninterest expense    29,349    31,846    36,426    34,737    30,147  
Income before income taxes    8,524    7,256    11,446    12,521    9,057  
Income tax expense    1,982    1,578    2,743    3,101    2,104  
Net income $  6,542    5,678    8,703    9,420    6,953  
Income per share – basic $  0.25    0.21    0.32    0.34    0.25  
Income per share – diluted  $  0.24    0.21    0.31    0.34    0.25  
Dividends declared per share $  0.62    0.12    0.12    0.12    0.62  
           
Performance Ratios:          
Return on average assets - QTD   1.39 % 1.18 % 1.80 % 2.02 % 1.57 %
Return on average equity - QTD   6.65 % 5.58 % 8.48 % 9.40 % 6.90 %
Net interest margin - QTD   2.93 % 2.99 % 3.07 % 3.14 % 3.18 %
           
Return on average assets - YTD   1.39 % 1.64 % 1.80 % 1.80 % 1.57 %
Return on average equity - YTD   6.65 % 7.60 % 8.25 % 8.13 % 6.90 %
Net interest margin - YTD   2.93 % 3.09 % 3.13 % 3.16 % 3.18 %
           
Asset Quality Ratios:          
Past due loans to total loans   0.46 % 0.50 % 0.67 % 0.54 % 0.53 %
Nonaccrual loans to total loans   0.49 % 0.48 % 0.48 % 0.46 % 0.50 %
Nonperforming assets to total assets   0.44 % 0.45 % 0.45 % 0.45 % 0.54 %
           


WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
SUMMARY OF QUARTERLY AVERAGE BALANCES AND YIELD/COSTS
(Unaudited)
           
  At or For the Three Months Ended
  March 31, December 31, September 30, June 30, March 31,
  2019 2018 2018 2018 2018
Average balances (Dollars in Thousands)
Interest-earning assets          
Loans receivable and held for sale $   1,477,991     1,496,125     1,507,632     1,451,507     1,398,043  
Mortgage related securities     115,674     111,004     106,047     109,879     113,688  
Debt securities, federal funds sold and short term investments     194,669     179,232     176,733     192,422     165,863  
Total interest-earning assets     1,788,334     1,786,361     1,790,412     1,753,808     1,677,594  
Noninterest-earning assets     125,396     119,715     122,575     119,291     113,317  
Total assets $   1,913,730     1,906,076     1,912,987     1,873,099     1,790,911  
           
Interest-bearing liabilities          
Demand accounts $   36,268     36,941     37,936     37,291     37,384  
Money market and savings accounts     176,237     184,873     185,864     166,587     153,226  
Certificates of deposit     735,471     722,774     707,970     707,758     697,644  
Total interest-bearing deposits     947,976     944,588     931,770     911,636     888,254  
Borrowings     438,905     439,601     444,570     445,064     379,115  
Total interest-bearing liabilities     1,386,881     1,384,189     1,376,340     1,356,700     1,267,369  
                       
Noninterest-bearing demand deposits     97,951     97,677     100,804     96,108     91,806  
Noninterest-bearing liabilities     30,027     20,219     28,632     18,266     22,828  
Total liabilities     1,514,859     1,502,085     1,505,776     1,471,074     1,382,003  
Equity     398,871     403,991     407,211     402,025     408,908  
Total liabilities and equity $   1,913,730     1,906,076     1,912,987     1,873,099     1,790,911  
           
Average Yield/Costs          
Loans receivable and held for sale   4.69 % 4.63 % 4.56 % 4.61 % 4.48 %
Mortgage related securities   2.66 % 2.58 % 2.41 % 2.35 % 2.28 %
Debt securities, federal funds sold and short term investments   2.73 % 2.52 % 2.39 % 2.12 % 2.12 %
Total interest-earning assets   4.35 % 4.29 % 4.22 % 4.20 % 4.10 %
           
Demand accounts   0.09 % 0.09 % 0.10 % 0.09 % 0.08 %
Money market and savings accounts   0.63 % 0.47 % 0.35 % 0.30 % 0.24 %
Certificates of deposit   2.04 % 1.82 % 1.62 % 1.46 % 1.29 %
Total interest-bearing deposits   1.71 % 1.49 % 1.30 % 1.19 % 1.06 %
Borrowings   2.08 % 2.10 % 1.90 % 1.74 % 1.61 %
Total interest-bearing liabilities   1.82 % 1.68 % 1.50 % 1.37 % 1.22 %
           

 

COMMUNITY BANKING SEGMENT
SUMMARY OF KEY QUARTERLY FINANCIAL DATA
(Unaudited)
           
  At or For the Three Months Ended
  March 31, December 31, September 30, June 30, March 31,
  2019 2018 2018 2018 2018
  (Dollars in Thousands)
Condensed Results of Operations:          
Net interest income $  13,132    13,774    14,121    13,747    13,304  
Provision for loan losses    (700 )  -     -     (250 )  (900 )
Total noninterest income    881    911    1,312    1,137    939  
Noninterest expenses:          
Compensation, payroll taxes, and other employee benefits    4,756    4,761    4,435    4,301    4,888  
Occupancy, office furniture and equipment    972    842    826    813    826  
Advertising    181    185    183    241    140  
Data processing    457    422    414    400    435  
Communications    82    92    112    121    100  
Professional fees    268    339    257    180    191  
Real estate owned    32    (62 )  (128 )  (126 )  317  
Loan processing expense    -     -     -     -     -   
Other    489    571    701    658    785  
Total noninterest expense    7,237    7,150    6,800    6,588    7,682  
Income before income taxes    7,476    7,535    8,633    8,546    7,461  
Income tax expense    1,687    1,632    2,003    1,970    1,668  
Net income $  5,789    5,903    6,630    6,576    5,793  
           
Efficiency ratio - QTD   51.64 % 48.69 % 44.06 % 44.27 % 53.94 %
Efficiency ratio - YTD   51.64 % 47.63 % 47.28 % 49.00 % 53.94 %
                       

   

MORTGAGE BANKING SEGMENT
SUMMARY OF KEY QUARTERLY FINANCIAL DATA
(Unaudited)
           
  At or For the Three Months Ended
  March 31, December 31, September 30, June 30, March 31,
  2019 2018 2018 2018 2018
  (Dollars in Thousands)
Condensed Results of Operations:          
Net interest income $  (208 )  (332 )  (286 )  (40 )  (192 )
Provision for loan losses    20    -     40    30    20  
Total noninterest income    23,571    24,986    33,165    32,547    24,731  
Noninterest expenses:          
Compensation, payroll taxes, and other employee benefits    16,060    18,499    23,164    22,078    16,241  
Occupancy, office furniture and equipment    1,804    2,018    1,925    1,792    1,813  
Advertising    777    854    1,041    759    720  
Data processing    308    309    386    224    186  
Communications    246    290    300    314    282  
Professional fees    426    52    319    458    514  
Real estate owned    -     -     -     -     -   
Loan processing expense    805    643    837    904    988  
Other    1,912    2,297    2,064    1,964    2,197  
Total noninterest expense    22,338    24,962    30,036    28,493    22,941  
Income before income taxes    1,005    (308 )  2,803    3,984    1,578  
Income tax expense    286    (62 )  737    1,133    435  
Net income $  719    (246 )  2,066    2,851    1,143  
           
Efficiency ratio - QTD   95.61 % 101.25 % 91.35 % 87.65 % 93.49 %
Efficiency ratio - YTD   95.61 % 92.89 % 90.60 % 90.16 % 93.49 %
           
Loan originations    501,432    600,156    761,206    721,184    516,020  
Purchase    89.9 % 91.1 % 92.1 % 92.6 % 85.1 %
Refiance   10.1 % 8.9 % 7.9 % 7.4 % 14.9 %
Gross margin on loans sold(1)   4.57 % 4.42 % 4.49 % 4.45 % 4.63 %
(1) - Gross margin on loans sold is the ratio of mortgage banking income (excluding the change in interest rate lock fair value) divided by total loan originations
           


Contact: Mark R. Gerke
Chief Financial Officer
414.459.4012
markgerke@wsbonline.com


 

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