• Waterstone Financial, Inc. Announces Results of Operations for the Quarter and Nine Months Ended September 30, 2022

    المصدر: Nasdaq GlobeNewswire / 26 أكتوبر 2022 16:01:01   America/New_York

    WAUWATOSA, Wis., Oct. 26, 2022 (GLOBE NEWSWIRE) -- Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income of $5.3 million, or $0.25 per diluted share for the quarter ended September 30, 2022 compared to $19.0 million, or $0.79 per diluted share for the quarter ended September 30, 2021. Net income per diluted share was $0.83 for the nine months ended September 30, 2022 compared to net income per diluted share of $2.43 for the nine months ended September 30, 2021.

    "We were pleased with the execution of the community banking segment as loan growth remained strong through the quarter,” said Douglas Gordon, Chief Executive Officer of Waterstone Financial, Inc. “We were able to grow our net interest income and expand margin at the community banking segment as we deployed our cash to fund loans. The results of the mortgage banking segment were disappointing and reflect the significant headwinds that the industry continues to face due to an increase in rates and resulting decline in demand. We continue to execute on cost containment measures, while we also seek opportunities to add production talent.”

    Highlights of the Quarter Ended September 30, 2022

    Waterstone Financial, Inc. (Consolidated)

    • Consolidated net income of Waterstone Financial, Inc. totaled $5.3 million for the quarter ended September 30, 2022, compared to $19.0 million for the quarter ended September 30, 2021.
    • Consolidated return on average assets was 1.08% for the quarter ended September 30, 2022 compared to 3.38% for the quarter ended September 30, 2021.
    • Consolidated return on average equity was 5.38% for the quarter ended September 30, 2022 and 17.25% for the quarter ended September 30, 2021.
    • Dividends declared during the quarter ended September 30, 2022 totaled $0.20 per common share.
    • We repurchased approximately 425,000 shares at a cost of $7.3 million, or $17.05 per share, during the quarter ended September 30, 2022.
    • Nonperforming assets as percentage of total assets was 0.27% at September 30, 2022, 0.39% at June 30, 2022, and 0.18% at September 30, 2021.
    • Past due loans as percentage of total loans was 0.48% at September 30, 2022, 0.60% at June 30, 2022, and 0.92% at September 30, 2021.
    • Book value per share was $16.86 at September 30, 2022 and $17.45 at December 31, 2021.  The decrease reflects an $0.80 per share impact resulting from an increase in the unrealized loss on available for sale securities.

    Community Banking Segment

    • Pre-tax income totaled $8.5 million for the quarter ended September 30, 2022, which represents a $309,000, or 3.5%, decrease compared to $8.9 million for the quarter ended September 30, 2021.
    • Net interest income totaled $15.5 million for the quarter ended September 30, 2022, which represents a $1.4 million, or 10.1%, increase compared to $14.1 million for the quarter ended September 30, 2021.
    • Average loans held for investment totaled $1.31 billion during the quarter ended September 30, 2022, which represents an increase of $55.4 million, or 4.4%, compared to $1.26 billion for the quarter ended September 30, 2021. Average loans held for investment increased $63.7 million compared to $1.25 billion for the quarter ended June 30, 2022.
    • Net interest margin increased 66 basis points to 3.34% for the quarter ended September 30, 2022 compared to 2.68% for the quarter ended September 30, 2021, which was a result of a decrease in the average balance of cash, as funds were utilized to fund loans held for investment, purchase investment securities and pay down borrowings. In addition, yields increased on loans receivable, loans held for sale, mortgage related securities, debt securities, federal funds sold and short term investments category. Net interest margin increased 32 basis points compared to 3.02% for the quarter ended June 30, 2022, driven by an increase in weighted average yield on loans and weighted average yield on average debt securities, federal funds sold and short term investments. In addition, excess cash was utilized to fund loans held for investment and pay down borrowings.
    • The segment had a provision for credit losses of $234,000 for the quarter ended September 30, 2022 compared to a negative provision for loan losses of $750,000 for the quarter ended September 30, 2021.  The increase was primarily due to an increase in loans held for investment during the quarter.
    • The efficiency ratio was 47.16% for the quarter ended September 30, 2022, compared to 48.74% for the quarter ended September 30, 2021.
    • Average deposits (excluding escrow accounts) totaled $1.19 billion during the quarter ended September 30, 2022, a decrease of $62.7 million, or 5.0%, compared to $1.25 billion during the quarter ended September 30, 2021. Average deposits decreased $14.9 million, or 4.9% annualized compared to the $1.21 billion for the quarter ended June 30, 2022.
    • Other noninterest expense increased $1.1 million to $1.5 million during the quarter ended September 30, 2022 compared to $422,000 during the quarter ended September 30, 2021. The increase was driven by fees paid to the mortgage banking segment for the purchase of single-family adjustable rate mortgage loans. These fees are eliminated in the consolidated statements of income.

    Mortgage Banking Segment

    • Pre-tax loss totaled $1.8 million for the quarter ended September 30, 2022, compared to $15.6 million for the quarter ended September 30, 2021.
    • There was a $4.0 million gain on sale of mortgage servicing rights during the three months ended September 30, 2021 compared to none during the three months ended September 30, 2022.
    • Loan originations decreased $286.4 million, or 26.9%, to $778.8 million during the quarter ended September 30, 2022, compared to $1.06 billion during the quarter ended September 30, 2021. Origination volume relative to purchase activity accounted for 90.4% of originations for the quarter ended September 30, 2022 compared to 73.8% of total originations for the quarter ended September 30, 2021.
    • Mortgage banking non-interest income decreased $24.0 million, or 46.8%, to $27.3 million for the quarter ended September 30, 2022, compared to $51.3 million for the quarter ended September 30, 2021.
    • Gross margin on loans sold decreased to 3.80% for the quarter ended September 30, 2022, compared to 4.54% for the quarter ended September 30, 2021. 
    • Total compensation, payroll taxes and other employee benefits decreased $7.1 million, or 24.6%, to $21.8 million during the quarter ended September 30, 2022 compared to $29.0 million during the quarter ended September 30, 2021. The decrease primarily related to decreased commission expense and branch manager compensation driven by decreased loan origination volume and branch profitability as gross margins decreased.
    • Other noninterest expense increased $301,000 to $2.6 million during the quarter ended September 30, 2022 compared to $2.3 million during the quarter ended September 30, 2021. The increase related to an increase in provision of loan sale losses.
    • During the nine months ended September 30, 2022 the segment has added 11 branches and a total of 130 loan origination personnel.  Losses associated with these new branches totaled approximately $683,000 for the quarter ended September 30, 2022 and $1.2 million for the nine months ended September 30, 2022. These branch losses are net of corporate revenue of approximately $492,000 for the quarter ended September 30, 2022 and $599,000 for the nine months ended September 30, 2022.

    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, Milwaukee/Oklahoma Ave, Oak Creek/27th St, Oak Creek/Howell Ave, Oconomowoc/Lake Country, Pewaukee, Waukesha, West Allis/Greenfield Ave, and West Allis/National Ave, Wisconsin. 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 statements or information that may constitute 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.”  Any such statements are based upon current expectations that involve a number of risks and uncertainties and are subject to important factors that could cause actual results to differ materially from those anticipated by the forward-looking statements.  Factors that might cause such a difference include changes in interest rates; demand for products and services; the degree of competition by traditional and nontraditional competitors; changes in banking regulation or actions by bank regulators; changes in tax laws; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in local real estate values; changes in the national and local economies, including significant disruption to financial market and other economic activity caused by the outbreak of COVID-19; and other factors, including risk 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, 
      2022  2021  2022  2021 
      (In Thousands, except per share amounts) 
    Interest income:                
    Loans $16,235  $16,131  $44,281  $49,214 
    Mortgage-related securities  903   471   2,326   1,448 
    Debt securities, federal funds sold and short-term investments  987   904   2,964   2,637 
    Total interest income  18,125   17,506   49,571   53,299 
    Interest expense:                
    Deposits  981   947   2,511   3,542 
    Borrowings  1,746   2,445   5,717   7,414 
    Total interest expense  2,727   3,392   8,228   10,956 
    Net interest income  15,398   14,114   41,343   42,343 
    Provision (credit) for credit losses (1)  332   (700)  304   (2,520)
    Net interest income after provision for loan losses  15,066   14,814   41,039   44,863 
    Noninterest income:                
    Service charges on loans and deposits  529   1,136   1,705   2,483 
    Increase in cash surrender value of life insurance  354   312   1,394   1,297 
    Mortgage banking income  26,064   46,547   83,749   150,587 
    Other  457   4,941   1,612   6,812 
    Total noninterest income  27,404   52,936   88,460   161,179 
    Noninterest expenses:                
    Compensation, payroll taxes, and other employee benefits  26,174   34,229   77,502   102,278 
    Occupancy, office furniture, and equipment  2,296   2,488   6,540   7,346 
    Advertising  1,137   835   3,004   2,570 
    Data processing  1,084   986   3,430   2,871 
    Communications  302   331   900   988 
    Professional fees  393   550   1,203   804 
    Real estate owned  1   1   6   (11)
    Loan processing expense  1,120   1,135   3,685   3,670 
    Other  3,187   2,768   9,408   9,104 
    Total noninterest expenses  35,694   43,323   105,678   129,620 
    Income before income taxes  6,776   24,427   23,821   76,422 
    Income tax expense  1,506   5,427   5,269   18,184 
    Net income $5,270  $19,000  $18,552  $58,238 
    Income per share:                
    Basic $0.25  $0.80  $0.84  $2.45 
    Diluted $0.25  $0.79  $0.83  $2.43 
    Weighted average shares outstanding:                
    Basic  21,342   23,785   22,193   23,790 
    Diluted  21,454   23,960   22,323   23,987 

    (1) The Company adopted ASU 2016-13 as of January 1, 2022.  The 2021 amount presented is calculated under the prior accounting standard. 

     
    WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

      September 30,  December 31, 
      2022  2021 
      (Unaudited)     
    Assets (In Thousands, except per share amounts) 
    Cash $37,231  $343,016 
    Federal funds sold  16,007   13,981 
    Interest-earning deposits in other financial institutions and other short term investments  19,703   19,725 
    Cash and cash equivalents  72,941   376,722 
    Securities available for sale (at fair value)  197,298   179,016 
    Loans held for sale (at fair value)  186,049   312,738 
    Loans receivable  1,354,465   1,205,785 
    Less: Allowance for credit losses ("ACL") - loans (1)  17,452   15,778 
    Loans receivable, net  1,337,013   1,190,007 
             
    Office properties and equipment, net  21,491   22,273 
    Federal Home Loan Bank stock (at cost)  15,750   24,438 
    Cash surrender value of life insurance  66,099   65,368 
    Real estate owned, net  148   148 
    Prepaid expenses and other assets  78,262   45,148 
    Total assets $1,975,051  $2,215,858 
             
    Liabilities and Shareholders' Equity        
    Liabilities:        
    Demand deposits $246,487  $214,409 
    Money market and savings deposits  346,960   392,314 
    Time deposits  593,681   626,663 
    Total deposits  1,187,128   1,233,386 
             
    Borrowings  319,951   477,127 
    Advance payments by borrowers for taxes  24,084   4,094 
    Other liabilities  67,714   68,478 
    Total liabilities  1,598,877   1,783,085 
             
    Shareholders' equity:        
    Preferred stock  -   - 
    Common stock  223   248 
    Additional paid-in capital  130,731   174,505 
    Retained earnings  277,514   273,398 
    Unearned ESOP shares  (13,353)  (14,243)
    Accumulated other comprehensive loss, net of taxes  (18,941)  (1,135)
    Total shareholders' equity  376,174   432,773 
    Total liabilities and shareholders' equity $1,975,051  $2,215,858 
             
    Share Information        
    Shares outstanding  22,318   24,795 
    Book value per share $16.86  $17.45 
             

     (1) The Company adopted ASU 2016-13 as of January 1, 2022.  The 2021 amount presented is calculated under the prior accounting standard.  


    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, 
      2022  2022  2022  2021  2021 
      (Dollars in Thousands, except per share amounts) 
    Condensed Results of Operations:                    
    Net interest income $15,398  $14,081  $11,864  $13,172  $14,114 
    Provision (credit) for credit losses (1)  332   48   (76)  (1,470)  (700)
    Total noninterest income  27,404   31,238   29,818   42,016   52,936 
    Total noninterest expense  35,694   35,050   34,935   40,974   43,323 
    Income before income taxes  6,776   10,221   6,823   15,684   24,427 
    Income tax expense  1,506   2,231   1,532   3,131   5,427 
    Net income $5,270  $7,990  $5,291  $12,553  $19,000 
    Income per share – basic $0.25  $0.36  $0.23  $0.53  $0.80 
    Income per share – diluted $0.25  $0.36  $0.23  $0.53  $0.79 
    Dividends declared per share $0.20  $0.20  $0.20  $0.70  $0.20 
                         
    Performance Ratios (annualized):                    
    Return on average assets - QTD  1.08%  1.61%  1.00%  2.22%  3.38%
    Return on average equity - QTD  5.38%  7.93%  5.00%  11.14%  17.25%
    Net interest margin - QTD  3.34%  3.02%  2.38%  2.47%  2.68%
                         
    Return on average assets - YTD  1.22%  1.30%  1.00%  3.20%  3.54%
    Return on average equity - YTD  6.09%  6.42%  5.00%  16.38%  18.08%
    Net interest margin - YTD  2.90%  2.69%  2.38%  2.68%  2.75%
                         
    Asset Quality Ratios:                    
    Past due loans to total loans  0.48%  0.60%  0.53%  0.59%  0.92%
    Nonaccrual loans to total loans  0.37%  0.59%  0.55%  0.46%  0.32%
    Nonperforming assets to total assets  0.27%  0.39%  0.34%  0.26%  0.18%
    Allowance for credit losses to loans receivable (1)  1.29%  1.35%  1.40%  1.31%  1.37%

    (1) The Company adopted ASU 2016-13 as of January 1, 2022.  The 2021 amounts presented are calculated under the prior accounting standard. 


    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, 
      2022  2022  2022  2021  2021 
    Average balances (Dollars in Thousands) 
    Interest-earning assets                    
    Loans receivable and held for sale $1,492,462  $1,433,452  $1,361,839  $1,517,984  $1,573,194 
    Mortgage related securities  172,807   168,000   138,863   119,709   108,743 
    Debt securities, federal funds sold and short term investments  162,211   269,823   519,116   475,574   409,559 
    Total interest-earning assets  1,827,480   1,871,275   2,019,818   2,113,267   2,091,496 
    Noninterest-earning assets  114,274   117,248   128,813   131,703   137,454 
    Total assets $1,941,754  $1,988,523  $2,148,631  $2,244,970  $2,228,950 
                         
    Interest-bearing liabilities                    
    Demand accounts $75,058  $70,674  $69,736  $70,762  $68,478 
    Money market, savings, and escrow accounts  398,643   412,321   404,413   398,210   391,599 
    Certificates of deposit  586,012   584,244   610,681   643,546   663,343 
    Total interest-bearing deposits  1,059,713   1,067,239   1,084,830   1,112,518   1,123,420 
    Borrowings  296,111   326,068   440,252   481,971   475,000 
    Total interest-bearing liabilities  1,355,824   1,393,307   1,525,082   1,594,489   1,598,420 
    Noninterest-bearing demand deposits  153,591   154,070   152,900   153,303   153,436 
    Noninterest-bearing liabilities  43,683   36,962   41,232   49,982   40,148 
    Total liabilities  1,553,098   1,584,339   1,719,214   1,797,774   1,792,004 
    Equity  388,656   404,184   429,417   447,196   436,946 
    Total liabilities and equity $1,941,754  $1,988,523  $2,148,631  $2,244,970  $2,228,950 
                         
    Average Yield/Costs (annualized)                    
    Loans receivable and held for sale  4.32%  4.07%  4.02%  3.96%  4.07%
    Mortgage related securities  2.07%  1.96%  1.76%  1.68%  1.72%
    Debt securities, federal funds sold and short term investments  2.41%  1.56%  0.72%  0.77%  0.88%
    Total interest-earning assets  3.93%  3.52%  3.02%  3.11%  3.32%
                         
    Demand accounts  0.08%  0.09%  0.08%  0.08%  0.08%
    Money market and savings accounts  0.21%  0.19%  0.21%  0.22%  0.24%
    Certificates of deposit  0.51%  0.37%  0.37%  0.40%  0.42%
    Total interest-bearing deposits  0.37%  0.28%  0.29%  0.31%  0.33%
    Borrowings  2.34%  1.95%  2.20%  2.09%  2.04%
    Total interest-bearing liabilities  0.80%  0.67%  0.84%  0.85%  0.84%


    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, 
      2022  2022  2022  2021  2021 
      (Dollars in Thousands) 
    Condensed Results of Operations:                    
    Net interest income $15,507  $13,710  $11,652  $13,197  $14,090 
    Provision (credit) for credit losses (1)  234   (41)  (140)  (1,500)  (750)
    Total noninterest income  1,116   1,640   1,432   1,459   1,726 
    Noninterest expenses:                    
    Compensation, payroll taxes, and other employee benefits  4,424   4,596   5,212   5,085   5,360 
    Occupancy, office furniture and equipment  955   876   937   960   909 
    Advertising  213   244   227   278   233 
    Data processing  539   531   608   531   531 
    Communications  108   63   94   100   122 
    Professional fees  123   118   114   151   130 
    Real estate owned  1   -   5   14   1 
    Loan processing expense  -   -   -   -   - 
    Other  1,477   1,006   600   651   422 
    Total noninterest expense  7,840   7,434   7,797   7,770   7,708 
    Income before income taxes  8,549   7,957   5,427   8,386   8,858 
    Income tax expense  1,983   1,658   1,167   1,690   2,092 
    Net income $6,566  $6,299  $4,260  $6,696  $6,766 
                         
    Efficiency ratio - QTD  47.16%  48.43%  59.59%  53.02%  48.74%
    Efficiency ratio - YTD  51.20%  53.57%  59.59%  48.58%  47.21%

    (1) The Company adopted ASU 2016-13 as of January 1, 2022.  The 2021 amounts presented are calculated under the prior accounting standard. 


    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, 
      2022  2022  2022  2021  2021 
      (Dollars in Thousands) 
    Condensed Results of Operations:                    
    Net interest income $(155) $370  $183  $(49) $(2)
    Provision (credit) for credit losses (2)  98   89   64   30   50 
    Total noninterest income  27,305   30,126   28,604   40,692   51,290 
    Noninterest expenses:                    
    Compensation, payroll taxes, and other employee benefits  21,864   21,311   20,438   27,866   28,981 
    Occupancy, office furniture and equipment  1,341   1,180   1,251   1,306   1,579 
    Advertising  924   718   678   680   602 
    Data processing  543   613   588   542   450 
    Communications  194   195   246   221   209 
    Professional fees  265   222   338   306   421 
    Real estate owned  -   -   -   -   - 
    Loan processing expense  1,120   1,134   1,431   940   1,135 
    Other  2,571   2,733   2,309   1,445   2,270 
    Total noninterest expense  28,822   28,106   27,279   33,306   35,647 
    (Loss) income before income taxes  (1,770)  2,301   1,444   7,307   15,591 
    Income tax (benefit) expense  (470)  578   377   1,443   3,341 
    Net (loss) income $(1,300) $1,723  $1,067  $5,864  $12,250 
                         
    Efficiency ratio - QTD  106.16%  92.16%  94.76%  81.95%  69.50%
    Efficiency ratio - YTD  97.42%  93.42%  94.76%  71.44%  68.71%
                         
    Loan originations $729,897  $778,760  $708,463  $993,113  $1,055,500 
    Purchase  94.2%  90.4%  77.3%  73.8%  73.8%
    Refinance  5.8%  9.6%  22.7%  26.2%  26.2%
    Gross margin on loans sold(1)  3.80%  3.76%  4.00%  4.18%  4.54%

    (1) Gross margin on loans sold equals mortgage banking income (excluding the change in interest rate lock value) divided by total loan originations
    (2) The Company adopted ASU 2016-13 as of January 1, 2022.  The 2021 amounts presented are calculated under the prior accounting standard.


    Contact: Mark R. Gerke
    Chief Financial Officer
    414-459-4012
    markgerke@wsbonline.com


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