WATERSTONE FINANCIAL, INC. WAUWATOSA, Wis., Oct. 24, 2014 /PRNewswire/ -- Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income for the third quarter of 2014 of $4.8 million, compared to $3.8 million for the quarter ended June 30, 2014 and $3.2 million for the quarter ended September 30, 2013. Net income per diluted share was $0.14 for the third quarter of 2014 as compared to $0.11 per diluted share for the second quarter of 2014 and $0.09 per diluted share for the third quarter of 2013.
"The community banking and mortgage banking segments performed well during the quarter with revenue and net income up in both segments on a linked quarter and year-over-year basis, reflecting our balance sheet growth, improving credit quality, and focus on operating efficiency," said Doug Gordon, President and Chief Executive Officer of the Company.
The increase in net income compared to the previous quarter and the same quarter in the prior year was attributable to both the community banking and mortgage banking segments. Community banking segment net income totaled $3.4 million for the quarter ended September 30, 2014 compared to $2.8 million for quarter ended June 30, 2014 and $2.5 million for the quarter ended September 30, 2013. Community banking operations were positively impacted by a $1.2 million increase in net interest income to $10.5 million during the third quarter of 2014 compared to $9.3 million during the third quarter of 2013. Net income for the community banking segment was also positively impacted by a $750,000 decline in provision for loan losses from $1.0 million during the third quarter of 2013 to $250,000 in the third quarter of 2014 due to the improving credit quality metrics set forth below. Expense related to real estate owned returned to a more normalized level during the quarter ended September 30, 2014, compared to the quarter ended September 30, 2013, which was positively impacted by property sales with significant gains.
Mortgage banking segment net income totaled $1.2 million for the quarter ended September 30, 2014 compared to $1.0 million for quarter ended June 30, 2014 and $639,000 for the quarter ended September 30, 2013. Mortgage banking operations were positively impacted by a 13.3% increase in the volume of loans originated and sold as well as a 6.3% increase in the margins earned on loan sales during the quarter ended September 30, 2014 compared to the quarter ended September 30, 2013.
Credit quality continued its steady pace of improvement during the third quarter of 2014. Nonaccrual loans have declined by 6.3% to $43.1 million at September 30, 2014 from $46.0 million at June 30, 2014 and have declined 15.4% from $51.0 million at December 31, 2013. Total past due loans declined 21.1% to $34.6 million at September 30, 2014 from $43.9 million at June 30, 2014 and have declined 21.3% from $44.0 million at December 31, 2013. Total loans past due less than 90 days have declined 69.6% to $5.3 million at September 30, 2014 from $17.3 million at June 30, 2014 and have declined 60.1% from $13.2 million from December 31, 2013. The level of loans past due less than 90 days, which represent an early stage indicator of future potential loan loss, is at its lowest level in approximately ten years.
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, Franklin/Hales Corners, Germantown/Menomonee Falls, Oak Creek, Oconomowoc/Lake Country, Pewaukee, Waukesha/Brookfield, West Allis, Wisconsin and a commercial lending branch in Maple Grove, Minnesota. WaterStone Bank is the parent company to Waterstone Mortgage, which offers mortgage banking offices in 16 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 Annual Report on Form 10-K for the year ended December 31, 2013 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
SUMMARY OF KEY QUARTERLY FINANCIAL DATA
(unaudited)
2014 2013
---- ----
Q3 Q2 Q1 Q4 Q3
--- --- --- --- ---
(Dollars in Thousands)
Performance Ratios:
Return on average assets 1.05% 0.85% 0.42% 0.46% 0.79%
Return on average equity 4.23% 3.27% 1.87% 3.58% 6.04%
Net interest margin 2.55% 2.53% 2.31% 2.43% 2.51%
Efficiency ratio 77.62% 81.65% 88.32% 88.04% 79.77%
Condensed Results of Operations:
Net interest income $10,914 $10,610 $9,700 $9,561 $9,578
Provision for loan losses 315 285 250 572 1,000
Total noninterest income 23,911 23,196 17,058 17,029 21,030
Total noninterest expense 27,030 27,603 23,632 23,410 24,416
Income before income taxes 7,480 5,918 2,876 2,608 5,192
Income tax expense 2,715 2,148 993 671 1,973
Net income $4,765 $3,770 $1,883 $1,937 $3,219
====== ====== ====== ====== ======
Asset Quality Data:
Total non accrual loans $43,136 $46,021 $47,317 $50,961 $57,422
Real estate owned 25,837 22,117 22,543 22,663 23,147
Total nonperforming assets $68,973 $68,138 $69,860 $73,624 $80,569
======= ======= ======= ======= =======
Loans past due less than 90 days $5,280 $17,337 $16,829 $13,231 $13,538
Loans past due 90 days or more 29,345 26,548 25,611 30,780 35,343
Total past due loans $34,625 $43,885 $42,440 $44,011 $48,881
======= ======= ======= ======= =======
Allowance for loan losses 20,439 21,227 23,391 24,264 24,708
Net charge offs 1,103 2,449 1,123 1,016 4,059
Average Balance Sheet Data:
Total assets 1,797,932 1,788,404 1,806,023 1,660,026 1,610,910
Loans receivable and held for
sale 1,277,634 1,299,046 1,162,205 1,165,624 1,211,089
Mortgage-related securities 183,356 166,748 125,871 126,490 126,447
Total interest-earning assets 1,700,077 1,680,225 1,706,289 1,557,874 1,513,985
Interest-bearing deposits 836,817 807,831 887,679 916,248 855,975
Borrowings 438,644 453,211 444,823 464,035 485,488
Total interest-bearing
liabilities 1,275,461 1,261,042 1,332,502 1,445,487 1,341,463
Total shareholders' equity 446,615 461,965 407,977 214,539 211,307
WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
September 30, 2014 December 31, 2013
------------------ -----------------
Assets (In Thousands, except share
data)
Cash $110,848 428,832
Federal funds sold 25,732 93
Interest-earning deposits in
other financial institutions
and other short term
investments 4,702 244
----- ---
Cash and cash equivalents 141,282 429,169
Securities available for sale
(at fair value) 279,373 213,418
Loans held for sale (at fair
value) 144,193 97,021
Loans receivable 1,111,719 1,092,676
Less: Allowance for loan
losses 20,439 24,264
------ ------
Loans receivable, net 1,091,280 1,068,412
Office properties and
equipment, net 26,274 27,090
Federal Home Loan Bank stock
(at cost) 17,500 17,500
Cash surrender value of life
insurance 50,640 39,378
Real estate owned 25,837 22,663
Prepaid expenses and other
assets 22,946 32,388
------ ------
Total assets $1,799,325 1,947,039
Liabilities and Shareholders' Equity
Liabilities:
Demand deposits $90,600 93,275
Money market and savings
deposits 119,974 513,716
Time deposits 664,577 637,750
------- -------
Total deposits 875,151 1,244,741
Short-term borrowings - 21,197
Long-term borrowings 434,000 434,000
Advance payments by borrowers
for taxes 23,129 2,482
Other liabilities 18,532 30,147
------ ------
Total liabilities 1,350,812 1,732,567
Shareholders' equity:
Common stock (par value $.01
per share) 344 341
Additional paid-in capital 313,841 110,480
Retained earnings 156,611 151,195
Unearned ESOP shares (22,848) (854)
Accumulated other
comprehensive (loss) income,
net of taxes 565 (1,429)
Treasury shares (2,724,353
shares), at cost - (45,261)
--- -------
Total shareholders' equity 448,513 214,472
------- -------
Total liabilities
and shareholders'
equity $1,799,325 1,947,039
WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended Nine months ended
September 30, 2014 September 30, 2014
------------------ ------------------
2014 2013 2014 2013
---- ---- ---- ----
(In Thousands, except per share
amounts)
Interest income:
Loans $14,942 14,425 43,178 44,500
Mortgage-related securities 835 455 2,142 1,311
Debt securities, federal funds sold
and short-term investments 823 653 2,474 1,806
--- --- ----- -----
Total interest income 16,600 15,533 47,794 47,617
Interest expense:
Deposits 1,337 1,237 3,522 4,055
Borrowings 4,349 4,718 13,048 13,917
----- ----- ------ ------
Total interest expense 5,686 5,955 16,570 17,972
----- ----- ------ ------
Net interest income 10,914 9,578 31,224 29,645
Provision for loan losses 315 1,000 850 3,960
--- ----- --- -----
Net interest income after provision
for loan losses 10,599 8,578 30,374 25,685
------ ----- ------ ------
Noninterest income:
Service charges on loans and deposits 317 316 904 1,029
Increase in cash surrender value of
life insurance 630 528 1,082 929
Mortgage banking income 22,053 18,173 58,743 65,616
(Loss) gain on sale of available for
sale securities - - - (9)
Other 911 2,013 3,436 3,205
--- ----- ----- -----
Total noninterest income 23,911 21,030 64,165 70,770
------ ------ ------ ------
Noninterest expenses:
Compensation, payroll taxes, and other
employee benefits 18,169 16,575 51,418 53,001
Occupancy, office furniture, and
equipment 2,577 2,218 7,883 5,995
Advertising 678 718 2,252 2,339
Data processing 582 516 1,701 1,476
Communications 430 398 1,250 1,148
Professional fees 441 626 1,471 1,762
Real estate owned 665 (163) 1,918 (9)
FDIC insurance premiums 336 516 1,046 1,569
Other 3,152 3,012 9,325 8,453
----- ----- ----- -----
Total noninterest expenses 27,030 24,416 78,264 75,734
------ ------ ------ ------
Income before income taxes 7,480 5,192 16,275 20,721
Income tax expense 2,715 1,973 5,857 7,950
----- ----- ----- -----
Net income $4,765 3,219 10,418 12,771
===== ===== ======
Income per share:
Basic $0.14 0.09 0.31 0.37
Diluted $0.14 0.09 0.31 0.37
Weighted average shares outstanding:
Basic 33,003 34,196 33,759 34,174
Diluted 33,232 34,471 33,997 34,428
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SOURCE Waterstone Financial, Inc.
