Loading, Please Wait...
WAUWATOSA, Wis., Jan. 30, 2019 (GLOBE NEWSWIRE) -- Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income of $5.7 million, or $0.21 per diluted share for the quarter ended December 31, 2018 compared to $3.1 million, or $0.11 per diluted share for the quarter ended December 31, 2017. Net income per diluted share was $1.11 for the year ended December 31, 2018 compared to net income per diluted share of $0.93 for the year ended December 31, 2017. The results of operations for the quarter and year ended December 31, 2017 each include a $2.7 million charge to income tax expense related to the Company's deferred tax asset revaluation that resulted from legislation that reduced the corporate federal income tax rate. Excluding the impact of this revaluation, net income per diluted share(1) for the quarter and year ended December 31, 2017 were $0.21 and $1.03, respectively.
“We are pleased with the performance of our Community Banking segment as we achieved our 12th consecutive comparative quarter with growth in pre-tax income,” said Douglas Gordon, CEO of Waterstone Financial, Inc. “We have exhibited the ability to grow this segment while maintaining our culture for asset quality and expense management. As a result of our profitability and financial strength, we were able to deploy capital by rewarding our shareholders with $0.98 per share in dividends, while also repurchasing 1.1 million shares of stock during the year. Our Mortgage Banking segment’s performance has declined due to a challenging housing market causing margin compression, and the expenses related to closing unprofitable branches and rightsizing staff.”
Highlights of the Quarter Ended December 31, 2018
Waterstone Financial, Inc. (Consolidated)
(1) For notes on non-GAAP financial measures, see pages 4 and 11
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, 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.
Non-GAAP Financial Measures
This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles (GAAP). The Company’s management uses these non-GAAP financial measures, including earnings per share excluding deferred tax revaluation, return on average assets excluding deferred tax revaluation, return on average assets excluding deferred tax revaluation, and return on average equity excluding deferred tax revaluation to provide meaningful supplemental information regarding our performance. These measures typically adjust GAAP performance measures to adjust for non-recurring transactions. Since the presentation of these GAAP performance measures and their impact differ between companies, management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company’s core business. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the tables of this release.
| WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES | |||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||
| (Unaudited) | |||||
| For The Three Months Ended December 31, | For The Year Ended December 31, | ||||
| 2018 | 2017 | 2018 | 2017 | ||
| (In Thousands, except per share amounts) | |||||
| Interest income: | |||||
| Loans | $ | 17,468 | 15,746 | 66,966 | 60,824 |
| Mortgage-related securities | 723 | 625 | 2,648 | 2,646 | |
| Debt securities, federal funds sold and short-term investments | 1,137 | 945 | 4,086 | 3,625 | |
| Total interest income | 19,328 | 17,316 | 73,700 | 67,095 | |
| Interest expense: | |||||
| Deposits | 3,540 | 2,125 | 11,627 | 7,739 | |
| Borrowings | 2,322 | 1,867 | 7,896 | 8,623 | |
| Total interest expense | 5,862 | 3,992 | 19,523 | 16,362 | |
| Net interest income | 13,466 | 13,324 | 54,177 | 50,733 | |
| Provision for loan losses | - | - | (1,060) | (1,166) | |
| Net interest income after provision for loan losses | 13,466 | 13,324 | 55,237 | 51,899 | |
| Noninterest income: | |||||
| Service charges on loans and deposits | 348 | 477 | 1,680 | 1,625 | |
| Increase in cash surrender value of life insurance | 352 | 331 | 1,848 | 1,807 | |
| Loss on sale of available for sale securities | - | - | - | (107) | |
| Mortgage banking income | 24,221 | 27,270 | 113,151 | 120,044 | |
| Other | 715 | 103 | 1,520 | 1,044 | |
| Total noninterest income | 25,636 | 28,181 | 118,199 | 124,413 | |
| Noninterest expenses: | |||||
| Compensation, payroll taxes, and other employee benefits | 23,114 | 23,352 | 97,784 | 97,084 | |
| Occupancy, office furniture, and equipment | 2,860 | 2,591 | 10,855 | 10,178 | |
| Advertising | 1,039 | 919 | 4,123 | 3,333 | |
| Data processing | 735 | 585 | 2,792 | 2,439 | |
| Communications | 382 | 390 | 1,611 | 1,560 | |
| Professional fees | 397 | 703 | 2,327 | 2,656 | |
| Real estate owned | (62) | 121 | 1 | 379 | |
| Loan processing expense | 643 | 766 | 3,372 | 3,062 | |
| Other | 2,738 | 2,891 | 10,291 | 11,188 | |
| Total noninterest expenses | 31,846 | 32,318 | 133,156 | 131,879 | |
| Income before income taxes | 7,256 | 9,187 | 40,280 | 44,433 | |
| Income tax expense | 1,578 | 6,072 | 9,526 | 18,469 | |
| Net income | $ | 5,678 | 3,115 | 30,754 | 25,964 |
| Income per share: | |||||
| Basic | $ | 0.21 | 0.11 | 1.12 | 0.95 |
| Diluted | $ | 0.21 | 0.11 | 1.11 | 0.93 |
| Weighted average shares outstanding: | |||||
| Basic | 26,994 | 27,522 | 27,363 | 27,467 | |
| Diluted | 27,218 | 27,914 | 27,634 | 27,899 | |
| WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES | ||||
| CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | ||||
| December 31, | December 31, | |||
| 2018 | 2017 | |||
| (Unaudited) | ||||
| Assets | (In Thousands, except per share amounts) | |||
| Cash | $ | 48,234 | $ | 22,306 |
| Federal funds sold | 25,100 | 17,034 | ||
| Interest-earning deposits in other financial institutions and other short term investments | 12,767 | 9,267 | ||
| Cash and cash equivalents | 86,101 | 48,607 | ||
| Securities available for sale (at fair value) | 185,720 | 199,707 | ||
| Loans held for sale (at fair value) | 141,616 | 149,896 | ||
| Loans receivable | 1,379,148 | 1,291,814 | ||
| Less: Allowance for loan losses | 13,249 | 14,077 | ||
| Loans receivable, net | 1,365,899 | 1,277,737 | ||
| Office properties and equipment, net | 24,524 | 22,941 | ||
| Federal Home Loan Bank stock (at cost) | 19,350 | 16,875 | ||
| Cash surrender value of life insurance | 67,550 | 65,996 | ||
| Real estate owned, net | 2,152 | 4,558 | ||
| Prepaid expenses and other assets | 22,469 | 20,084 | ||
| Total assets | $ | 1,915,381 | $ | 1,806,401 |
| Liabilities and Shareholders' Equity | ||||
| Liabilities: | ||||
| Demand deposits | $ | 139,111 | $ | 129,597 |
| Money market and savings deposits | 163,511 | 148,804 | ||
| Time deposits | 735,873 | 688,979 | ||
| Total deposits | 1,038,495 | 967,380 | ||
| Borrowings | 435,046 | 386,285 | ||
| Advance payments by borrowers for taxes | 4,371 | 4,876 | ||
| Other liabilities | 37,790 | 35,756 | ||
| Total liabilities | 1,515,702 | 1,394,297 | ||
| Shareholders' equity: | ||||
| Common stock | 285 | 295 | ||
| Additional paid-in capital | 330,327 | 326,655 | ||
| Retained earnings | 187,153 | 183,358 | ||
| Unearned ESOP shares | (17,804) | (18,991) | ||
| Accumulated other comprehensive loss, net of taxes | (2,361) | (477) | ||
| Cost of shares repurchased | (97,921) | (78,736) | ||
| Total shareholders' equity | 399,679 | 412,104 | ||
| Total liabilities and shareholders' equity | $ | 1,915,381 | $ | 1,806,401 |
| Share Information | ||||
| Shares Outstanding | 28,463 | 29,501 | ||
| Book Value per share | $ | 14.04 | $ | 13.97 |
| Closing market price | $ | 16.76 | $ | 17.05 |
| Price to book ratio | 119.37% | 122.05% | ||
| WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES | ||||||
| SUMMARY OF KEY QUARTERLY FINANCIAL DATA | ||||||
| (Unaudited) | ||||||
| At or For the Three Months Ended | ||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||
| 2018 | 2018 | 2018 | 2018 | 2017 | ||
| (Dollars in Thousands) | ||||||
| Condensed Results of Operations: | ||||||
| Net interest income | $ | 13,466 | 13,850 | 13,720 | 13,141 | 13,324 |
| Provision for loan losses | - | 40 | (220) | (880) | - | |
| Total noninterest income | 25,636 | 34,062 | 33,318 | 25,183 | 28,181 | |
| Total noninterest expense | 31,846 | 36,426 | 34,737 | 30,147 | 32,318 | |
| Income before income taxes | 7,256 | 11,446 | 12,521 | 9,057 | 9,187 | |
| Income tax expense | 1,578 | 2,743 | 3,101 | 2,104 | 6,072 | |
| Net income | $ | 5,678 | 8,703 | 9,420 | 6,953 | 3,115 |
| Income per share – basic | $ | 0.21 | 0.32 | 0.34 | 0.25 | 0.11 |
| Income per share – diluted | $ | 0.21 | 0.31 | 0.34 | 0.25 | 0.11 |
| Dividends declared per share | $ | 0.12 | 0.12 | 0.12 | 0.62 | 0.12 |
| Performance Ratios: | ||||||
| Return on average assets - QTD | 1.18% | 1.80% | 2.02% | 1.57% | 0.67% | |
| Return on average equity - QTD | 5.58% | 8.48% | 9.40% | 6.90% | 2.98% | |
| Net interest margin - QTD | 2.99% | 3.07% | 3.14% | 3.18% | 3.08% | |
| Return on average assets - YTD | 1.64% | 1.80% | 1.80% | 1.57% | 1.43% | |
| Return on average equity - YTD | 7.60% | 8.25% | 8.13% | 6.90% | 6.32% | |
| Net interest margin - YTD | 3.09% | 3.13% | 3.16% | 3.18% | 3.00% | |
| Asset Quality Ratios: | ||||||
| Past due loans to total loans | 0.50% | 0.67% | 0.54% | 0.53% | 0.45% | |
| Non accrual loans to total loans | 0.48% | 0.48% | 0.46% | 0.50% | 0.47% | |
| Non performing assets to total assets | 0.45% | 0.45% | 0.45% | 0.54% | 0.59% | |
| WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES | |||||
| SUMMARY OF QUARTERLY AVERAGE BALANCES AND YIELD/COSTS | |||||
| (Unaudited) | |||||
| At or For the Three Months Ended | |||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |
| 2018 | 2018 | 2018 | 2018 | 2017 | |
| Average balances | (Dollars in Thousands) | ||||
| Interest earning assets | |||||
| Loans receivable and held for sale | 1,496,125 | 1,507,632 | 1,451,507 | 1,398,043 | 1,402,271 |
| Mortgage related securities | 111,004 | 106,047 | 109,879 | 113,688 | 115,414 |
| Debt securities, federal funds sold and short term investments | 179,232 | 176,733 | 192,422 | 165,863 | 199,006 |
| Total interest earning assets | 1,786,361 | 1,790,412 | 1,753,808 | 1,677,594 | 1,716,691 |
| Non interest earning assets | 119,715 | 122,575 | 119,291 | 113,317 | 120,943 |
| Total assets | 1,906,076 | 1,912,987 | 1,873,099 | 1,790,911 | 1,837,634 |
| Interest bearing liabilities | |||||
| Demand accounts | 36,941 | 37,936 | 37,291 | 37,384 | 37,600 |
| Money market and savings accounts | 184,873 | 185,864 | 166,587 | 153,226 | 170,262 |
| Certificates of deposit | 722,774 | 707,970 | 707,758 | 697,644 | 686,266 |
| Total interest-bearing deposits | 944,588 | 931,770 | 911,636 | 888,254 | 894,128 |
| Borrowings | 439,601 | 444,570 | 445,064 | 379,115 | 406,821 |
| Total interest-bearing liabilities | 1,384,189 | 1,376,340 | 1,356,700 | 1,267,369 | 1,300,949 |
| Noninterest bearing demand deposits | 97,677 | 100,804 | 96,108 | 91,806 | 93,735 |
| Noninterest bearing liabilities | 20,219 | 28,632 | 18,266 | 22,828 | 28,188 |
| Total liabilities | 1,502,085 | 1,505,776 | 1,471,074 | 1,382,003 | 1,422,872 |
| Equity | 403,991 | 407,211 | 402,025 | 408,908 | 414,762 |
| Total liabilities and equity | 1,906,076 | 1,912,987 | 1,873,099 | 1,790,911 | 1,837,634 |
| Average Yield/Costs | |||||
| Loans receivable and held for sale | 4.63% | 4.56% | 4.61% | 4.48% | 4.45% |
| Mortgage related securities | 2.58% | 2.41% | 2.35% | 2.28% | 2.15% |
| Debt securities, federal funds sold and short term investments | 2.52% | 2.39% | 2.12% | 2.12% | 1.88% |
| Total interest earning assets | 4.29% | 4.22% | 4.20% | 4.10% | 4.00% |
| Demand accounts | 0.09% | 0.10% | 0.09% | 0.08% | 0.08% |
| Money market and savings accounts | 0.47% | 0.35% | 0.30% | 0.24% | 0.20% |
| Certificates of deposit | 1.82% | 1.62% | 1.46% | 1.29% | 1.17% |
| Total interest-bearing deposits | 1.49% | 1.30% | 1.19% | 1.06% | 0.94% |
| Borrowings | 2.10% | 1.90% | 1.74% | 1.61% | 1.82% |
| Total interest-bearing liabilities | 1.68% | 1.50% | 1.37% | 1.22% | 1.22% |
|
COMMUNITY BANKING SEGMENT
SUMMARY OF KEY QUARTERLY FINANCIAL DATA (Unaudited) |
||||||
| At or For the Three Months Ended | ||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||
| 2018 | 2018 | 2018 | 2018 | 2017 | ||
| (Dollars in Thousands) | ||||||
| Condensed Results of Operations: | ||||||
| Net interest income | $ | 13,774 | 14,121 | 13,747 | 13,304 | 13,375 |
| Provision for loan losses | - | - | (250) | (900) | - | |
| Total noninterest income | 911 | 1,312 | 1,137 | 939 | 974 | |
| Noninterest expenses: | ||||||
| Compensation, payroll taxes, and other employee benefits | 4,761 | 4,435 | 4,301 | 4,888 | 4,531 | |
| Occupancy, office furniture and equipment | 842 | 826 | 813 | 826 | 771 | |
| Advertising | 185 | 183 | 241 | 140 | 144 | |
| Data processing | 422 | 414 | 400 | 435 | 399 | |
| Communications | 92 | 112 | 121 | 100 | 101 | |
| Professional fees | 339 | 257 | 180 | 191 | 173 | |
| Real estate owned | (62) | (128) | (126) | 317 | 121 | |
| Loan processing expense | - | - | - | - | - | |
| Other | 571 | 701 | 658 | 785 | 699 | |
| Total noninterest expense | 7,150 | 6,800 | 6,588 | 7,682 | 6,939 | |
| Income before income taxes | 7,535 | 8,633 | 8,546 | 7,461 | 7,410 | |
| Income tax expense | 1,632 | 2,003 | 1,970 | 1,668 | 5,570 | |
| Net income | $ | 5,903 | 6,630 | 6,576 | 5,793 | 1,840 |
| Efficiency ratio - QTD | 48.69% | 44.06% | 44.27% | 53.94% | 48.36% | |
| Efficiency ratio - YTD | 47.63% | 47.28% | 49.00% | 53.94% | 49.98% | |
| MORTGAGE BANKING SEGMENT | ||||||
| SUMMARY OF KEY QUARTERLY FINANCIAL DATA | ||||||
| (Unaudited) | ||||||
| At or For the Three Months Ended | ||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | ||
| 2018 | 2018 | 2018 | 2018 | 2017 | ||
| (Dollars in Thousands) | ||||||
| Condensed Results of Operations: | ||||||
| Net interest income | $ | (332) | (286) | (40) | (192) | (72) |
| Provision for loan losses | - | 40 | 30 | 20 | - | |
| Total noninterest income | 24,986 | 33,165 | 32,547 | 24,731 | 27,645 | |
| Noninterest expenses: | ||||||
| Compensation, payroll taxes, and other employee benefits | 18,499 | 23,164 | 22,078 | 16,241 | 18,943 | |
| Occupancy, office furniture and equipment | 2,018 | 1,925 | 1,792 | 1,813 | 1,820 | |
| Advertising | 854 | 1,041 | 759 | 720 | 775 | |
| Data processing | 309 | 386 | 224 | 186 | 182 | |
| Communications | 290 | 300 | 314 | 282 | 289 | |
| Professional fees | 52 | 319 | 458 | 514 | 512 | |
| Real estate owned | - | - | - | - | - | |
| Loan processing expense | 643 | 837 | 904 | 988 | 766 | |
| Other | 2,297 | 2,064 | 1,964 | 2,197 | 2,504 | |
| Total noninterest expense | 24,962 | 30,036 | 28,493 | 22,941 | 25,791 | |
| Income before income taxes | (308) | 2,803 | 3,984 | 1,578 | 1,782 | |
| Income tax expense | (62) | 737 | 1,133 | 435 | 509 | |
| Net income | $ | (246) | 2,066 | 2,851 | 1,143 | 1,273 |
| Efficiency ratio - QTD | 101.25% | 91.35% | 87.65% | 93.49% | 93.54% | |
| Efficiency ratio - YTD | 92.89% | 90.60% | 90.16% | 93.49% | 86.93% | |
| Loan Originations | 600,156 | 761,206 | 721,184 | 516,020 | 600,265 | |
| Purchase | 91.1% | 92.1% | 92.6% | 85.1% | 86.7% | |
| Refiance | 8.9% | 7.9% | 7.4% | 14.9% | 13.3% | |
| GAAP RECONCILIATION TO NON-GAAP | ||||
| FINANCIAL MEASURES | ||||
| (Unaudited) | ||||
| For the Three Months Ended | For the Year Ended | |||
| December 31, | December 31, | |||
| 2017 | 2017 | |||
| (In thousands, except per share amounts) | ||||
| Net income | $ | 3,115 | 25,964 | |
| Deferred tax asset revaluation | 2,718 | 2,718 | ||
| Net income excluding deferred tax asset revaluation | $ | 5,833 | $ | 28,682 |
| Diluted weighted average shares outstanding | 27,914 | 27,899 | ||
| Net income per diluted share | $ | 0.11 | $ | 0.93 |
| Deferred tax asset revaluation adjustment | $ | 0.10 | $ | 0.10 |
| Net income per diluted share excluding deferred tax asset revaluation | $ | 0.21 | $ | 1.03 |
| Net income excluding deferred tax asset revaluation | $ | 5,833 | $ | 28,682 |
| Average assets | 1,837,634 | 1,810,234 | ||
| Return on average assets | 0.67% | 1.43% | ||
| Deferred tax asset revaluation adjustment | 0.59% | 0.15% | ||
| Return on average assets excluding deferred tax asset revaluation | 1.26% | 1.58% | ||
| Net income excluding deferred tax asset revaluation | $ | 5,833 | $ | 28,682 |
| Average equity | 414,762 | 410,937 | ||
| Return on average equity | 2.98% | 6.32% | ||
| Deferred tax asset revaluation adjustment | 2.60% | 0.66% | ||
| Return on average equity excluding deferred tax asset revaluation | 5.58% | 6.98% | ||
Contact: Mark R. Gerke
Chief Financial Officer
414.459.4012
markgerke@wsbonline.com
