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CST: 21/11/2019 18:37:47   

Waterstone Financial, Inc. Announces Results of Operations for the Quarter and Nine Months Ended September 30, 2019.

29 Days ago

WAUWATOSA, Wis., Oct. 23, 2019 (GLOBE NEWSWIRE) -- Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income of $10.9 million, or $0.42 per diluted share for the quarter ended September 30, 2019 compared to $8.7 million, or $0.31 per diluted share for the quarter ended September 30, 2018. Net income per diluted share was $1.03 for the nine months ended September 30, 2019 compared to net income per diluted share of $0.90 for the nine months ended September 30, 2018.

“We are pleased with our strong results in the third quarter,” said Douglas Gordon, CEO of Waterstone Financial, Inc. “We generated a record $14.5 million in consolidated quarterly pre-tax income, which represents a 26.6% increase over the prior year’s comparable quarter. The results reflect a record pre-tax quarter from the Community Banking segment and a very strong Mortgage Banking segment performance. During the quarter, the Community Banking segment remained disciplined with respect to cost management, while continuing to focus on future growth and the customer experience through the opening of a new branch. The Mortgage Banking segment had a strong performance due to increased production volumes of refinance products and a continued focus on improved efficiencies at the branch and corporate levels.” 

Highlights of the Quarter Ended September 30, 2019

Waterstone Financial, Inc. (Consolidated)

  • Consolidated net income of Waterstone Financial, Inc. totaled $10.9 million for the quarter ended September 30, 2019, compared to $8.7 million for the quarter ended September 30, 2018.
  • Consolidated return on average assets was 2.17% for the quarter ended September 30, 2019 compared to 1.80% for the quarter ended September 30, 2018.
  • Consolidated return on average equity was 11.15% for the quarter ended September 30, 2019 and 8.48% for the quarter ended September 30, 2018.  
  • The Company repurchased a total 495,000 shares on the open market during the quarter ended September 30, 2019 at an average price of $16.77 per share and a total of 1,341,900 shares repurchased at an average price of $16.68 per share during the nine months ended September 30, 2019.
  • Dividends declared totaled $0.12 per share during the quarter ended September 30, 2019 amounting to a total of $0.86 in dividends declared per share during the nine months ended September 30, 2019.

Community Banking Segment

  • Pre-tax income totaled $8.7 million for the quarter ended September 30, 2019, which represents a 1.0% increase compared to $8.6 million for the quarter ended September 30, 2018.
  • Net interest income totaled $13.9 million for the quarter ended September 30, 2019, which represents a 1.7% decrease compared to $14.1 million for the quarter ended September 30, 2018.
  • Average loans held for investment totaled $1.38 billion during the quarter ended September 30, 2019, which represents an increase of $36.7 million, or 2.7%, compared to the quarter ended September 30, 2018. Average loans held for investment increased $3.3 million, or 1.0% annualized, compared to $1.38 billion for the quarter ended June 30, 2019.
  • Net interest margin decreased 27 basis points to 2.80% for the quarter ended September 30, 2019 compared to 3.07% for the quarter September 30, 2018, which was a result of the increase in cost of funding as certificates of deposit and borrowings repriced at higher rates over the past year. Net interest margin decreased two basis points compared to 2.82% for the quarter ended June 30, 2019.
  • The segment had $150,000 negative provision for loan losses for the quarter ended September 30, 2019 compared to no provision for loan losses for loan losses for the quarter ended September 30, 2018. Net recoveries totaled $9,000 for the quarter ended September 30, 2019, compared to net recoveries of $63,000 for the quarter ended September 30, 2018.
  • Noninterest income increased $103,000 for the quarter ended September 30, 2019 compared to the quarter ended September 30, 2018 as loan prepayment fees and earnings on life insurance policies increased.
  • Noninterest expenses decreased $73,000 for the quarter ended September 30, 2019 compared to the quarter ended September 30, 2018. Compensation expenses decreased $360,000 as health insurance expense decreased. Other noninterest expenses decreased $118,000 as FDIC insurance premiums decreased. Offsetting the decreases, occupancy increased with the branch additions and real estate owned expenses increased due to lower gains on sale.
  • The efficiency ratio was 43.97% for the quarter ended September 30, 2019, compared to 44.06% for the quarter ended September 30, 2018.
  • Average deposits totaled $1.05 billion during the quarter ended September 30, 2019, an increase of $41.0 million, or 4.1%, compared to $1.01 billion during the quarter ended September 30, 2018.  Average deposits increased $4.2 million, or 1.6% annualized, compared to the quarter ended June 30, 2019.
  • Nonperforming assets as percentage of total assets was 0.41% at September 30, 2019, 0.37% at June 30, 2019, and 0.45% at September 30, 2018.
  • Past due loans as percentage of total loans was 0.62% at September 30, 2019, 0.61% at June 30, 2019, and 0.67% at September 30, 2018.

Mortgage Banking Segment

  • Pre-tax income totaled $5.7 million for the quarter ended September 30, 2019, compared to $2.8 million of pre-tax income for the quarter ended September 30, 2018.
  • Loan originations increased approximately $90.1 million, or 11.8%, to $851.3 million during the quarter ended September 30, 2019, compared to $761.2 million during the quarter ended September 30, 2018.  Origination volume relative to purchase activity accounted for 79.0% of originations for the quarter ended September 30, 2019 compared to 92.1% of total originations for the quarter ended September 30, 2018.
  • Mortgage banking income increased $3.4 million, or 10.2%, to $36.5 million for the quarter ended September 30, 2019, compared to $33.2 million for the quarter ended September 30, 2018.
  • Gross margin on loans sold decreased to 4.30% for the quarter ended September 30, 2019, compared to 4.39% for the quarter ended September 30, 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/State St, Brookfield, Fox Point/North Shore, Franklin/Hales Corners, Germantown/Menomonee Falls, Greenfield/Loomis Rd, Oak Creek/27th St, Oconomowoc/Lake Country, Pewaukee, Waukesha/Brookfield, West Allis/Greenfield Ave, and West Allis/National Ave, Wisconsin along with a commercial lending office in Minneapolis, Minnesota. WaterStone Bank is the parent company to Waterstone Mortgage, which has the ability to lend in 48 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 September 30,
For The Nine Months
Ended September 30,
    2019   2018   2019   2018  
    (In Thousands, except per share amounts)
Interest income:          
Loans $ 18,558   17,340   53,688   49,498  
Mortgage-related securities   737   643   2,260   1,925  
Debt securities, federal funds sold and short-term investments   1,083   1,063   3,515   2,949  
Total interest income   20,378   19,046   59,463   54,372  
Interest expense:          
Deposits   4,479   3,063   12,813   8,087  
Borrowings   2,745   2,133   7,579   5,574  
Total interest expense   7,224   5,196   20,392   13,661  
Net interest income   13,154   13,850   39,071   40,711  
Provision for loan losses   (80 ) 40   (730 ) (1,060 )
Net interest income after provision for loan losses   13,234   13,810   39,801   41,771  
Noninterest income:          
Service charges on loans and deposits   503   442   1,272   1,332  
Increase in cash surrender value of life insurance   728   695   1,579   1,496  
Mortgage banking income   36,062   32,653   93,526   88,930  
Other   201   272   564   805  
Total noninterest income   37,494   34,062   96,941   92,563  
Noninterest expenses:          
Compensation, payroll taxes, and other employee benefits   27,514   27,453   75,227   74,670  
Occupancy, office furniture, and equipment   2,629   2,751   8,085   7,995  
Advertising   913   1,224   2,834   3,084  
Data processing   1,003   809   2,641   2,057  
Communications   358   412   1,039   1,229  
Professional fees   954   583   2,438   1,930  
Real estate owned   24   (128 ) 75   63  
Loan processing expense   858   837   2,542   2,729  
Other   1,979   2,485   6,055   7,553  
Total noninterest expenses   36,232   36,426   100,936   101,310  
Income before income taxes   14,496   11,446   35,806   33,024  
Income tax expense   3,572   2,743   8,697   7,948  
Net income $ 10,924   8,703   27,109   25,076  
Income per share:          
Basic $ 0.42   0.32   1.04   0.91  
Diluted $ 0.42   0.31   1.03   0.90  
Weighted average shares outstanding:          
Basic   25,772   27,451   26,168   27,488  
Diluted   25,962   27,680   26,372   27,765  


 
WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
   September 30,  December 31,
    2019     2018  
  (Unaudited)  
Assets (In Thousands, except per share amounts)
Cash $ 45,366   $ 48,234  
Federal funds sold   11,268     25,100  
Interest-earning deposits in other financial institutions and other short term investments   9,556     12,767  
Cash and cash equivalents   66,190     86,101  
Securities available for sale (at fair value)   178,056     185,720  
Loans held for sale (at fair value)   237,772     141,616  
Loans receivable   1,385,333     1,379,148  
Less: Allowance for loan losses   12,547     13,249  
Loans receivable, net   1,372,786     1,365,899  
     
Office properties and equipment, net   24,889     24,524  
Federal Home Loan Bank stock (at cost)   22,050     19,350  
Cash surrender value of life insurance   69,309     67,550  
Real estate owned, net   1,887     2,152  
Prepaid expenses and other assets   32,490     22,469  
Total assets $ 2,005,429   $ 1,915,381  
     
Liabilities and Shareholders' Equity    
Liabilities:    
Demand deposits $ 122,309   $ 139,111  
Money market and savings deposits   184,183     163,511  
Time deposits   733,077     735,873  
Total deposits   1,039,569     1,038,495  
     
Borrowings   515,795     435,046  
Advance payments by borrowers for taxes   26,385     4,371  
Other liabilities   36,437     37,790  
Total liabilities   1,618,186     1,515,702  
     
Shareholders' equity:    
Preferred stock   -     -  
Common stock   271     285  
Additional paid-in capital   211,557     232,406  
Retained earnings   191,680     187,153  
Unearned ESOP shares   (16,914 )   (17,804 )
Accumulated other comprehensive income (loss), net of taxes   649     (2,361 )
Total shareholders' equity   387,243     399,679  
Total liabilities and shareholders' equity $ 2,005,429   $ 1,915,381  
     
Share Information    
Shares outstanding   27,147     28,463  
Book value per share $ 14.26   $ 14.04  
Closing market price $ 17.18   $ 16.76  
Price to book ratio   120.48 %   119.37 %


 
WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
SUMMARY OF KEY QUARTERLY FINANCIAL DATA
(Unaudited)
           
  At or For the Three Months Ended    
  September 30, June 30, March 31, December 31, September 30,
  2019 2019 2019 2018 2018
  (Dollars in Thousands, except per share amounts)  
Condensed Results of Operations:          
Net interest income $  13,154    12,981    12,936    13,466    13,850  
Provision for loan losses    (80 )  30    (680 )  -     40  
Total noninterest income    37,494    35,190    24,257    25,636    34,062  
Total noninterest expense    36,232    35,355    29,349    31,846    36,426  
Income before income taxes    14,496    12,786    8,524    7,256    11,446  
Income tax expense    3,572    3,143    1,982    1,578    2,743  
Net income $  10,924    9,643    6,542    5,678    8,703  
Income per share – basic $  0.42    0.37    0.25    0.21    0.32  
Income per share – diluted $  0.42    0.37    0.24    0.21    0.31  
Dividends declared per share $  0.12    0.12    0.62    0.12    0.12  
           
Performance Ratios (annualized):          
Return on average assets - QTD   2.17 % 1.95 % 1.39 % 1.18 % 1.80 %
Return on average equity - QTD   11.15 % 9.96 % 6.65 % 5.58 % 8.48 %
Net interest margin - QTD   2.80 % 2.82 % 2.93 % 2.99 % 3.07 %
           
Return on average assets - YTD   1.84 % 1.67 % 1.39 % 1.64 % 1.80 %
Return on average equity - YTD   9.21 % 8.28 % 6.65 % 7.60 % 8.25 %
Net interest margin - YTD   2.85 % 2.88 % 2.93 % 3.09 % 3.13 %
           
Asset Quality Ratios:          
Past due loans to total loans   0.62 % 0.61 % 0.46 % 0.50 % 0.67 %
Nonaccrual loans to total loans   0.46 % 0.41 % 0.49 % 0.48 % 0.48 %
Nonperforming assets to total assets   0.41 % 0.37 % 0.44 % 0.45 % 0.45 %
           


WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
SUMMARY OF QUARTERLY AVERAGE BALANCES AND YIELD/COSTS
(Unaudited)
           
  At or For the Three Months Ended
  September 30, June 30, March 31, December 31, September 30,
  2019 2019 2019 2018 2018
Average balances (Dollars in Thousands)
Interest-earning assets          
Loans receivable and held for sale 1,579,575   1,552,199   1,477,991   1,496,125   1,507,632  
Mortgage related securities 114,051   114,537   115,674   111,004   106,047  
Debt securities, federal funds sold and short term investments 169,621   180,111   194,669   179,232   176,733  
Total interest-earning assets 1,863,247   1,846,847   1,788,334   1,786,361   1,790,412  
Noninterest-earning assets 137,723   136,263   125,396   119,715   122,575  
Total assets 2,000,970   1,983,110   1,913,730   1,906,076   1,912,987  
           
Interest-bearing liabilities          
Demand accounts 37,015   35,744   36,268   36,941   37,936  
Money market and savings accounts 206,474   193,542   176,237   184,873   185,864  
Certificates of deposit 739,544   736,798   735,471   722,774   707,970  
Total interest-bearing deposits 983,033   966,084   947,976   944,588   931,770  
Borrowings 509,099   504,940   438,905   439,601   444,570  
Total interest-bearing liabilities 1,492,132   1,471,024   1,386,881   1,384,189   1,376,340  
Noninterest-bearing demand deposits 86,849   91,545   97,951   97,677   100,804  
Noninterest-bearing liabilities 33,130   32,143   30,027   20,219   28,632  
Total liabilities 1,612,111   1,594,712   1,514,859   1,502,085   1,505,776  
Equity 388,859   388,398   398,871   403,991   407,211  
Total liabilities and equity 2,000,970   1,983,110   1,913,730   1,906,076   1,912,987  
           
Average Yield/Costs (annualized)          
Loans receivable and held for sale 4.66 % 4.66 % 4.69 % 4.63 % 4.56 %
Mortgage related securities 2.56 % 2.68 % 2.66 % 2.58 % 2.41 %
Debt securities, federal funds sold and short term investments 2.53 % 2.50 % 2.73 % 2.52 % 2.39 %
Total interest-earning assets 4.34 % 4.32 % 4.35 % 4.29 % 4.22 %
           
Demand accounts 0.09 % 0.09 % 0.09 % 0.09 % 0.10 %
Money market and savings accounts 0.57 % 0.66 % 0.63 % 0.47 % 0.35 %
Certificates of deposit 2.24 % 2.19 % 2.04 % 1.82 % 1.62 %
Total interest-bearing deposits 1.81 % 1.80 % 1.71 % 1.49 % 1.30 %
Borrowings 2.14 % 2.06 % 2.08 % 2.10 % 1.90 %
Total interest-bearing liabilities 1.92 % 1.89 % 1.82 % 1.68 % 1.50 %


 

 
COMMUNITY BANKING SEGMENT
SUMMARY OF KEY QUARTERLY FINANCIAL DATA
(Unaudited)
             
    At or For the Three Months Ended
    September 30, June 30, March 31, December 31, September 30,
    2019 2019 2019 2018 2018
    (Dollars in Thousands)
Condensed Results of Operations:            
Net interest income $ 13,885   13,530   13,132   13,774   14,121  
Provision for loan losses   (150 ) -   (700 ) -   -  
Total noninterest income   1,415   1,079   881   911   1,312  
Noninterest expenses:            
Compensation, payroll taxes, and other employee benefits   4,075   4,671   4,756   4,761   4,435  
Occupancy, office furniture and equipment   942   944   972   842   826  
Advertising   202   220   181   185   183  
Data processing   588   493   457   422   414  
Communications   90   93   82   92   112  
Professional fees   223   160   268   339   257  
Real estate owned   24   19   32   (62 ) (128 )
Loan processing expense   -   -   -   -   -  
Other   583   635   489   571   701  
Total noninterest expense   6,727   7,235   7,237   7,150   6,800  
Income before income taxes   8,723   7,374   7,476   7,535   8,633  
Income tax expense   1,982   1,594   1,687   1,632   2,003  
Net income $ 6,741   5,780   5,789   5,903   6,630  
             
Efficiency ratio - QTD   43.97 % 49.52 % 51.64 % 48.69 % 44.06 %
Efficiency ratio - YTD   48.27 % 50.56 % 51.64 % 47.63 % 47.28 %


MORTGAGE BANKING SEGMENT
SUMMARY OF KEY QUARTERLY FINANCIAL DATA
(Unaudited)
           
  At or For the Three Months Ended
  September 30, June 30, March 31, December 31, September 30,
  2019 2019 2019 2018 2018
  (Dollars in Thousands)
Condensed Results of Operations:          
Net interest income $ (774 ) (529 ) (208 ) (332 ) (286 )
Provision for loan losses   70   30   20   -   40  
Total noninterest income   36,535   34,364   23,571   24,986   33,165  
Noninterest expenses:          
Compensation, payroll taxes, and other employee benefits   23,616   22,579   16,060   18,499   23,164  
Occupancy, office furniture and equipment   1,687   1,736   1,804   2,018   1,925  
Advertising   711   743   777   854   1,041  
Data processing   411   372   308   309   386  
Communications   268   260   246   290   300  
Professional fees   688   620   426   52   319  
Real estate owned   -   -   -   -   -  
Loan processing expense   858   879   805   643   837  
Other   1,725   1,186   1,912   2,297   2,064  
Total noninterest expense   29,964   28,375   22,338   24,962   30,036  
Income before income taxes   5,727   5,430   1,005   (308 ) 2,803  
Income tax expense   1,584   1,545   286   (62 ) 737  
Net income $ 4,143   3,885   719   (246 ) 2,066  
           
Efficiency ratio - QTD   83.79 % 83.86 % 95.61 % 101.25 % 91.35 %
Efficiency ratio - YTD   86.79 % 88.66 % 95.61 % 92.89 % 90.60 %
           
Loan Originations $ 851,297   793,254   501,432   600,156   761,206  
Purchase   79.0 % 87.6 % 89.9 % 91.1 % 92.1 %
Refinance   21.0 % 12.4 % 10.1 % 8.9 % 7.9 %
Gross margin on loans sold(1)   4.30 % 4.29 % 4.57 % 4.17 % 4.39 %

(1) - Gross margin on loans sold equals mortgage banking income (excluding the change in interest rate lock value) divided by total loan originations


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

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