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CST: 09/12/2019 22:29:18   

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

138 Days ago

WAUWATOSA, Wisc., July 24, 2019 (GLOBE NEWSWIRE) -- Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income of $9.6 million, or $0.37 per diluted share for the quarter ended June 30, 2019 compared to $9.4 million, or $0.34 per diluted share for the quarter ended June 30, 2018. Net income per diluted share was $0.61 for the six months ended June 30, 2019 compared to net income per diluted share of $0.59 for the six months ended June 30, 2018.

“We achieved a record second quarter net income of $9.6 million and diluted earnings per share of $0.37,” said Douglas Gordon, CEO of Waterstone Financial, Inc. “The Community Banking segment continues to focus on organic growth, maintaining strong asset quality and making strategic investments for the future. The Mortgage Banking segment executed well in the second quarter including originating its highest loan volume for a month of May. As a result of our continued strong performance and well capitalized position, we were able to enter into a new share repurchase program during the quarter and continue declaring a quarterly dividend showing our commitment to increasing shareholder value.”

Highlights of the Quarter Ended June 30, 2019

Waterstone Financial, Inc. (Consolidated)

  • Consolidated net income of Waterstone Financial, Inc. totaled $9.6 million for the quarter ended June 30, 2019, compared to $9.4 million for the quarter ended June 30, 2018.
  • Consolidated return on average assets was 1.95% for the quarter ended June 30, 2019 compared to 2.02% for the quarter ended June 30, 2018.
  • Consolidated return on average equity was 9.96% for the quarter ended June 30, 2019 and 9.40% for the quarter ended June 30, 2018.  
  • The Company repurchased a total 384,500 shares on the open market during the quarter ended June 30, 2019 at an average price of $16.74 per share for a total of 846,900 shares at an average price of $16.62 per share during the six months ended June 30, 2019.
  • Dividends declared totaled $0.12 per share during the quarter ended June 30, 2019 amounting to a total of $0.74 in dividends declared per share during the six months ended June 30, 2019.

Community Banking Segment

  • Pre-tax income of the segment totaled $7.4 million for the quarter ended June 30, 2019, which represents a 13.7% decrease compared to $8.5 million for the quarter ended June 30, 2018.
  • Net interest income of the segment totaled $13.5 million for the quarter ended June 30, 2019, which represents a 1.6% decrease compared to $13.7 million for the quarter ended June 30, 2018.
  • Average loans held for investment totaled $1.38 billion during the quarter ended June 30, 2019, which represents an increase of $47.3 million, or 3.6% over the comparable quarter in the prior year. Average loans held for investment decreased $228,000, or 0.1% annualized, compared to $1.38 billion for the quarter ended March 31, 2019.
  • Net interest margin decreased 32 basis points to 2.82% for the quarter ended June 30, 2019 compared to 3.14% for the quarter ended June 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 nine basis points compared to 2.93% for the quarter ended March 31, 2019.
  • The segment had no provision for loan losses for the quarter ended June 30, 2019 compared to a negative provision for loan loss of $250,000 for the quarter ended June 30, 2018. Net recoveries totaled $26,000 for the quarter ended June 30, 2019, compared to net recoveries of $154,000 for the quarter ended June 30, 2018.
  • Noninterest income decreased $58,000 for the quarter ended June 30, 2019 compared to the quarter ended June 30, 2018 as fees earned on loans decreased.
  • Noninterest expenses increased $647,000 for the quarter ended June 30, 2019 compared to the quarter ended June 30, 2018 as compensation, occupancy, data processing, and real estate owned increased.
  • The efficiency ratio for the community banking segment totaled 49.52% for the quarter ended June 30, 2019, compared to 44.26% for the quarter ended June 30, 2018.
  • Average deposits totaled $1.04 billion during the quarter ended June 30, 2019, which represents an increase of $50.7 million, or 5.1%, over the comparable quarter in the prior year.  Average deposits increased $4.3 million, or 1.6% annualized, compared to the quarter ended March 31, 2019.
  • Nonperforming assets as percentage of total assets was 0.37% at June 30, 2019, 0.44% at March 31, 2019, and 0.45% at June 30, 2018.
  • Past due loans as percentage of total loans was 0.61% at June 30, 2019, 0.46% at March 31, 2019, and 0.54% at June 30, 2018.

Mortgage Banking Segment

  • The Mortgage Banking segment totaled a pre-tax income of $5.4 million for the quarter ended June 30, 2019, compared to $4.0 million of pre-tax income for the quarter ended June 30, 2018.
  • Loan originations increased approximately $72.1 million to $793.3 million during the quarter ended June 30, 2019, compared to $721.2 million during the quarter ended June 30, 2018.  Origination volume relative to purchase activity accounted for 87.6% of originations for the
  • quarter ended June 30, 2019 compared to 92.6% of total originations for the quarter ended June 30, 2018.
  • Mortgage banking income increased $1.8 million, or 5.6%, to $34.4 million for the quarter ended June 30, 2019, compared to $32.5 million for the quarter ended June 30, 2018.
  • Gross margin on loans sold decreased 4.7% to 4.29% for the quarter ended June 30, 2019, compared to 4.50% for the quarter ended June 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, 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 June 30, For The Six Months Ended June 30,
    2019 2018 2019 2018
    (In Thousands, except per share amounts)
Interest income:          
Loans $  18,026  16,700  35,130  32,158
Mortgage-related securities    764  644  1,523  1,282
Debt securities, federal funds sold and short-term investments    1,123  1,019  2,432  1,886
Total interest income    19,913  18,363  39,085  35,326
Interest expense:          
Deposits    4,344  2,710  8,334  5,024
Borrowings    2,588  1,933  4,834  3,441
Total interest expense    6,932  4,643  13,168  8,465
Net interest income    12,981  13,720  25,917  26,861
Provision for loan losses    30  (220)  (650)  (1,100)
Net interest income after provision for loan losses    12,951  13,940  26,567  27,961
Noninterest income:          
Service charges on loans and deposits    390  491  769  890
Increase in cash surrender value of life insurance    507  473  851  801
Mortgage banking income    34,105  32,090  57,464  56,277
Other    188  264  363  533
Total noninterest income    35,190  33,318  59,447  58,501
Noninterest expenses:          
Compensation, payroll taxes, and other employee benefits    27,074  26,234  47,713  47,217
Occupancy, office furniture, and equipment    2,680  2,605  5,456  5,244
Advertising    963  1,000  1,921  1,860
Data processing    869  623  1,638  1,248
Communications    353  435  681  817
Professional fees    789  647  1,484  1,347
Real estate owned    19  (126)  51  191
Loan processing expense    879  904  1,684  1,892
Other    1,729  2,415  4,076  5,068
Total noninterest expenses    35,355  34,737  64,704  64,884
Income before income taxes    12,786  12,521  21,310  21,578
Income tax expense    3,143  3,101  5,125  5,205
Net income $  9,643  9,420  16,185  16,373
Income per share:          
Basic $ 0.37 0.34 0.61 0.60
Diluted $ 0.37 0.34 0.61 0.59
Weighted average shares outstanding:          
Basic   26,242 27,504 26,370 27,506
Diluted   26,412 27,742 26,572 27,790
           
           
           


WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
  June 30, December 31,
  2019 2018
  (Unaudited)  
Assets (In Thousands, except per share amounts)
Cash $  47,253 $  48,234
Federal funds sold  13,339  25,100
Interest-earning deposits in other financial institutions and other short term investments  9,553  12,767
Cash and cash equivalents  70,145  86,101
Securities available for sale (at fair value)  182,862  185,720
Loans held for sale (at fair value)  244,052  141,616
Loans receivable  1,370,727  1,379,148
Less: Allowance for loan losses  12,617  13,249
Loans receivable, net  1,358,110  1,365,899
     
Office properties and equipment, net  24,978  24,524
Federal Home Loan Bank stock (at cost)  22,275  19,350
Cash surrender value of life insurance  68,581  67,550
Real estate owned, net  1,684  2,152
Prepaid expenses and other assets  42,451  22,469
Total assets $  2,015,138 $  1,915,381
     
Liabilities and Shareholders' Equity    
Liabilities:    
Demand deposits $  127,123 $  139,111
Money market and savings deposits  182,222  163,511
Time deposits  745,651  735,873
Total deposits  1,054,996  1,038,495
     
Borrowings  518,681  435,046
Advance payments by borrowers for taxes  18,852  4,371
Other liabilities  35,806  37,790
Total liabilities  1,628,335  1,515,702
     
Shareholders' equity:    
Preferred stock  -  -
Common stock  276  285
Additional paid-in capital  331,600  330,327
Retained earnings  183,820  187,153
Unearned ESOP shares  (17,210)  (17,804)
Accumulated other comprehensive loss, net of taxes  655  (2,361)
Cost of shares repurchased  (112,338)  (97,921)
Total shareholders' equity  386,803  399,679
Total liabilities and shareholders' equity $  2,015,138 $  1,915,381
     
Share Information    
Shares outstanding  27,626  28,463
Book value per share $  14.00 $  14.04
Closing market price $  17.06 $  16.76
Price to book ratio 121.86% 119.37%


WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
SUMMARY OF KEY QUARTERLY FINANCIAL DATA
(Unaudited)
           
  At or For the Three Months Ended
  June 30, March 31, December 31, September 30, June 30,
  2019 2019 2018 2018 2018
  (Dollars in Thousands, except per share amounts)
Condensed Results of Operations:          
Net interest income $  12,981  12,936  13,466  13,850  13,720
Provision for loan losses  30  (680)  -   40  (220)
Total noninterest income  35,190  24,257  25,636  34,062  33,318
Total noninterest expense  35,355  29,349  31,846  36,426  34,737
Income before income taxes  12,786  8,524  7,256  11,446  12,521
Income tax expense  3,143  1,982  1,578  2,743  3,101
Net income $  9,643  6,542  5,678  8,703  9,420
Income per share – basic $  0.37  0.25  0.21  0.32  0.34
Income per share – diluted $  0.37  0.24  0.21  0.31  0.34
Dividends declared per share $  0.12  0.62  0.12  0.12  0.12
           
Performance Ratios (annualized):          
Return on average assets - QTD 1.95% 1.39% 1.18% 1.80% 2.02%
Return on average equity - QTD 9.96% 6.65% 5.58% 8.48% 9.40%
Net interest margin - QTD 2.82% 2.93% 2.99% 3.07% 3.14%
           
Return on average assets - YTD 1.67% 1.39% 1.64% 1.80% 1.80%
Return on average equity - YTD 8.28% 6.65% 7.60% 8.25% 8.13%
Net interest margin - YTD 2.88% 2.93% 3.09% 3.13% 3.16%
           
Asset Quality Ratios:          
Past due loans to total loans 0.61% 0.46% 0.50% 0.67% 0.54%
Nonaccrual loans to total loans 0.41% 0.49% 0.48% 0.48% 0.46%
Nonperforming assets to total assets 0.37% 0.44% 0.45% 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
  June 30, March 31, December 31, September 30, June 30,
  2019 2019 2018 2018 2018
Average balances (Dollars in Thousands)
Interest-earning assets          
Loans receivable and held for sale  1,552,199  1,477,991  1,496,125  1,507,632  1,451,507
Mortgage related securities  114,537  115,674  111,004  106,047  109,879
Debt securities, federal funds sold and short term investments  180,111  194,669  179,232  176,733  192,422
  Total interest-earning assets  1,846,847  1,788,334  1,786,361  1,790,412  1,753,808
Noninterest-earning assets  136,263  125,396  119,715  122,575  119,291
  Total assets  1,983,110  1,913,730  1,906,076  1,912,987  1,873,099
           
Interest-bearing liabilities          
Demand accounts  35,744  36,268  36,941  37,936  37,291
Money market and savings accounts  193,542  176,237  184,873  185,864  166,587
Certificates of deposit  736,798  735,471  722,774  707,970  707,758
  Total interest-bearing deposits  966,084  947,976  944,588  931,770  911,636
Borrowings  504,940  438,905  439,601  444,570  445,064
  Total interest-bearing liabilities  1,471,024  1,386,881  1,384,189  1,376,340  1,356,700
Noninterest-bearing demand deposits  91,545  97,951  97,677  100,804  96,108
Noninterest-bearing liabilities  32,143  30,027  20,219  28,632  18,266
  Total liabilities  1,594,712  1,514,859  1,502,085  1,505,776  1,471,074
Equity  388,398  398,871  403,991  407,211  402,025
  Total liabilities and equity  1,983,110  1,913,730  1,906,076  1,912,987  1,873,099
           
Average Yield/Costs (annualized)          
Loans receivable and held for sale 4.66% 4.69% 4.63% 4.56% 4.61%
Mortgage related securities 2.68% 2.66% 2.58% 2.41% 2.35%
Debt securities, federal funds sold and short term investments 2.50% 2.73% 2.52% 2.39% 2.12%
  Total interest-earning assets 4.32% 4.35% 4.29% 4.22% 4.20%
           
Demand accounts 0.09% 0.09% 0.09% 0.10% 0.09%
Money market and savings accounts 0.66% 0.63% 0.47% 0.35% 0.30%
Certificates of deposit 2.19% 2.04% 1.82% 1.62% 1.46%
  Total interest-bearing deposits 1.80% 1.71% 1.49% 1.30% 1.19%
Borrowings 2.06% 2.08% 2.10% 1.90% 1.74%
  Total interest-bearing liabilities 1.89% 1.82% 1.68% 1.50% 1.37%
           


COMMUNITY BANKING SEGMENT
SUMMARY OF KEY QUARTERLY FINANCIAL DATA
(Unaudited)
             
    At or For the Three Months Ended
    June 30, March 31, December 31, September 30, June 30,
    2019 2019 2018 2018 2018
    (Dollars in Thousands)
Condensed Results of Operations:            
Net interest income $  13,530  13,132  13,774  14,121  13,747
Provision for loan losses    -  (700)  -  -  (250)
Total noninterest income    1,079  881  911  1,312  1,137
Noninterest expenses:            
Compensation, payroll taxes, and other employee benefits    4,671  4,756  4,761  4,435  4,301
Occupancy, office furniture and equipment    944  972  842  826  813
Advertising    220  181  185  183  241
Data processing    493  457  422  414  400
Communications    93  82  92  112  121
Professional fees    160  268  339  257  180
Real estate owned    19  32  (62)  (128)  (126)
Loan processing expense    -  -  -  -  -
Other   635 489 571 701 658
Total noninterest expense   7,235 7,237 7,150 6,800 6,588
Income before income taxes   7,374 7,476 7,535 8,633 8,546
Income tax expense   1,594 1,687 1,632 2,003 1,970
Net income $ 5,780 5,789 5,903 6,630 6,576
             
Efficiency ratio - QTD   49.52% 51.64% 48.69% 44.06% 44.26%
Efficiency ratio - YTD   50.56% 51.64% 47.63% 47.28% 48.99%
             


MORTGAGE BANKING SEGMENT
SUMMARY OF KEY QUARTERLY FINANCIAL DATA
(Unaudited)
           
  At or For the Three Months Ended
  June 30, March 31, December 31, September 30, June 30,
  2019 2019 2018 2018 2018
  (Dollars in Thousands)
Condensed Results of Operations:          
Net interest income $  (529)  (208)  (332)  (286)  (40)
Provision for loan losses  30  20  -   40  30
Total noninterest income  34,364  23,571  24,986  33,165  32,547
Noninterest expenses:          
Compensation, payroll taxes, and other employee benefits  22,579  16,060  18,499  23,164  22,078
Occupancy, office furniture and equipment  1,736  1,804  2,018  1,925  1,792
Advertising  743  777  854  1,041  759
Data processing  372  308  309  386  224
Communications  260  246  290  300  314
Professional fees  620  426  52  319  458
Real estate owned  -   -   -   -   - 
Loan processing expense  879  805  643  837  904
Other  1,186  1,912  2,297  2,064  1,964
Total noninterest expense  28,375  22,338  24,962  30,036  28,493
Income before income taxes  5,430  1,005  (308)  2,803  3,984
Income tax expense  1,545  286  (62)  737  1,133
Net income $  3,885  719  (246)  2,066  2,851
           
Efficiency ratio - QTD 83.86% 95.61% 101.25% 91.35% 87.65%
Efficiency ratio - YTD 88.66% 95.61% 92.89% 90.60% 90.16%
           
Loan Originations $  793,254  501,432  600,156  761,206  721,184
Purchase 87.6% 89.9% 91.1% 92.1% 92.6%
Refinance 12.4% 10.1% 8.9% 7.9% 7.4%
Gross margin on loans sold(1) 4.29% 4.57% 4.17% 4.39% 4.50%
(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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