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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)
Community Banking Segment
Mortgage Banking Segment
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) | |||||||||
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For The Three Months Ended September 30, |
For The Nine Months Ended September 30, |
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| 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 | % | ||
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WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
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SUMMARY OF KEY QUARTERLY FINANCIAL DATA
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(Unaudited)
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| 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 | % | |
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(1) - Gross margin on loans sold equals mortgage banking income (excluding the change in interest rate lock value) divided by total loan originations |
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Contact: Mark R. Gerke
Chief Financial Officer
414.459.4012
markgerke@wsbonline.com
