Waterstone Financial, Inc. Announces Results of Operations for the Quarter and the Six Months Ended June 30, 2013

WAUWATOSA, Wis., July 30, 2013 /PRNewswire/ -- Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income for the second quarter of 2013 of $4.9 million, compared to $6.2 million for the second quarter of 2012.  Year-to-date net income totaled $9.6 million for the six months ended June 30, 2013 compared to $8.4 million for the six months ended June 30, 2012.  Income before income taxes was $8.0 million for the three months and $15.5 million for the six months ended June 30, 2013 compared to $6.2 million and $8.5 million for the three and six months ended June 30, 2012. A valuation reserve against net deferred tax assets which was released in the fourth quarter of 2012 minimized book income tax expense through June 30, 2012.  Net income per diluted share was $0.16 for the second quarter of 2013 as compared to $0.20 per diluted share for the second quarter of 2012. 

"We've posted net income for six consecutive quarters, due in large part to the hard work of our dedicated employees," said Doug Gordon, President and Chief Executive Officer of the Company. "These continued positive results demonstrate the strength of the Company and will aid in our future growth."

The Waterstone mortgage banking segment reported pre-tax income of $4.4 million for the quarter ended June 30, 2013 compared to $5.4 million for the quarter ended June 30, 2012.  Loans sold in the second quarter of 2013 were up 34% compared to the second quarter of 2012; however, margins earned on loans sold declined in 2013 such that total mortgage banking revenue increased by only 15% in 2013 compared to 2012.  At the same time, compensation expense for the second quarter of 2013 increased by 36% over the second quarter of 2012 as commissions paid to loan officers increased in proportion to increases in loan production.  The community banking segment pre-tax income for the quarter ended June 30, 2013 totaled $3.5 million compared to $628,000 for the second quarter of 2012.  Community banking operations were positively impacted by a $2.8 million decline in real estate owned expense from $2.8 million in the second quarter of 2012 to $12,000 in the second quarter of 2013.

Credit quality continued its steady pace of improvement in the second quarter of 2013.  Total nonperforming assets as a percentage of total assets declined to 5.10% at June 30, 2013 from 6.66% at December 31, 2012 and from 7.89% at June 30, 2012.  Nonaccrual loans declined by 28.7% to  $53.3 million at June 30, 2013 from $74.7 million at December 31, 2012 while real estate owned declined by 16.7% to $30.0 million from $36.0 million.  This equates to a decline in total nonperforming assets of 24.8% to $83.2 million at June 30, 2013 from $110.6 million at December 31, 2012.  Total delinquent loans declined 18.6% to $60.6 million at June 30, 2013 from $74.5 million at December 31, 2012.  The provisions for loan losses totaled $1.2 million and $3.0 million for the three and six months ended June 30, 2013, respectively.  The provisions for loan losses totaled $1.4 million and $5.1 million for the three and six months ended June 30, 2012, respectively.

About Waterstone Financial, Inc.

Waterstone Financial, Inc. (NASDAQ: WSBF) is a single-bank, thrift holding company headquartered in Wauwatosa, WI.  With $1.63 billion in assets at June 30, 2013, Waterstone has eight community bank branches in the metropolitan Milwaukee market and mortgage banking offices in eleven states around the country.  Additional financial detail related to WaterStone Bank, SSB can be found on the FDIC web site (www.fdic.gov) under the "Industry Analysis" tab.

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, 2012 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.

 

SUMMARY OF KEY QUARTERLY FINANCIAL DATA (unaudited)

(dollars in thousands)




2013

2012


Q2

Q1

Q4

Q3

Q2

Performance Ratios:






Return on average assets

1.21%

1.14%

4.28%

2.00%

1.45%

Return on average equity

9.42%

9.14%

37.42%

18.26%

14.12%

Net interest margin

2.60%

2.66%

2.67%

2.67%

2.65%

Efficiency ratio

74.93%

71.95%

80.64%

72.42%

77.44%

Condensed Income Data:






Net interest income

$ 9,921

$ 10,146

$ 10,256

$ 10,635

$ 10,628

Provision for loan losses

1,200

1,760

1,200

2,000

1,425

Total noninterest income

26,707

23,033

25,174

27,775

23,252

Total noninterest expense

27.447

23,871

28,570

27,817

26,236

Income before income taxes

7,981

7,548

5,660

8,593

6,219

Income tax expense (benefit)

3,054

2,923

(12,420)

145

41

Net income

$   4,927

$   4,625

$ 18,080

$  8,448

$  6,178

Asset Quality Data:






Allowance for loan losses

$ 27,767

$ 29,298

$ 31,043

$ 30,967

$ 32,658

Net charge-offs

2,731

3,505

1,124

3,691

1,793

Total past due loans

60,606

71,192

74,450

77,858

84,381

Impaired loans

83,247

90,981

94,971

107,725

118,226

Real estate owned

29,983

30,799

35,974

43,837

47,815

Average Balance Sheet Data:






Total assets

1,628,967

1,647,387

1,682,241

1,676,685

1,708,021

Loans receivable and held for sale

1,235,782

1,248,893

1,265,624

1,270,414

1,275,192

Mortgage-related securities

134,985

143,628

157,187

151,162

140,792

Total interest-earning assets

1,530,723

1,548,494

1,591,149

1,580,611

1,611,163

Interest-bearing deposits

871,565

887,252

936,121

949,174

1,009,215

Borrowings

485,199

485,259

483,445

487,078

472,052

Total interest-bearing liabilities

1,356,764

1,372,511

1,419,566

1,436,252

1,481,267

Total shareholders' equity

209,699

205,297

192,231

183,534

175,537

Capital Ratios:






Equity to total assets at end of the period

12.82%

12.72%

12.20%

11.00%

10.46%

Tier I capital to average assets (bank)

12.17%

11.79%

11.13%

10.50%

9.82%

Tier I capital to risk-weighted assets (bank)

17.60%

17.49%

16.07%

14.37%

13.84%

Total capital to risk-weighted assets (bank)

18.87%

18.75%

17.34%

15.64%

15.11%







                                                              

 

WATERSTONE FINANCIAL, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS



(in thousands)




(Unaudited)



June 30,

December 31,


2013

2012

ASSETS



Cash and cash equivalents

$        54,368

$          71,469

Securities available for sale (at fair value)

216,253

205,017

Loans held for sale (at fair value)

132,045

133,613

Loans receivable, net of allowance for loan losses

1,079,148

1,102,629

Office properties and equipment

27,781

26,935

Real estate owned

29,983

35,974

Other assets

93,298

85,439

     Total assets

$   1,632,876

$     1,661,076




LIABILITIES AND SHAREHOLDERS' EQUITY



Deposits

$      893,007

$        939,513

Borrowings

490,046

479,888

Other

40,478

39,041

     Total liabilities

1,423,531

1,458,442

Common stock and additional paid-in capital

110,779

110,831

Retained earnings

146,040

136,487

Unearned ESOP shares

(1,281)

(1,708)

Accumulated other comprehensive income(loss), net of taxes

(932)

2,285

Treasury shares, at cost

(45,261)

(45,261)

     Total shareholders' equity

209,345

202,634

     Total liabilities and shareholders' equity

$   1,632,876

$     1,661,076

 

 

 

WATERSTONE FINANCIAL, INC.

 

CONSOLIDATED STATEMENTS OF INCOME (unaudited)





(in thousands, except per share data)

For the Three Months

For the Six Months


Ended June 30,

Ended June 30,


2013

2012

2013

2012

Interest income:





   Loans

$ 14,862

$16,320

$   30,075

$    32,892

   Mortgage-related securities

419

921

856

1,784

   Debt securities and short-term investments

617

548

1,153

1,255

      Total interest income

15,898

17,789

32,084

35,931

Interest expense:





   Deposits

1,353

2,663

2,819

5,867

   Borrowings

4,624

4,497

9,198

9,010

      Total interest expense

5,977

7,160

12,017

14,877

      Net interest income

9,921

10,628

20,067

21,054

Provision for loan losses

1,200

1,425

2,960

5,100

   Net interest income after provision for loan losses

8,721

9,203

17,107

15,954

Noninterest income:





   Mortgage banking income

25,455

22,507

47,443

36,708

   Other

1,252

744

2,298

1,545

      Total noninterest income

26,707

23,251

49,741

38,253

Noninterest expense:





   Compensation and employee benefits

19,944

13,976

36,426

25,603

   Occupancy, office furniture and equipment

1,862

1,688

3,777

3,409

   Advertising

796

769

1,620

1,324

   Real estate owned

12

2,838

154

4,273

   FDIC insurance premiums

380

872

1,053

1,813

   Other

4,453

6,093

8,288

9,329

      Total noninterest expense

27,447

26,236

51,318

45,751

      Income before income taxes

7,981

6,218

15,530

8,456

Income taxes

3,054

41

5,978

71

      Net income

$    4,927

$6,177

$   9,552

$      8,385

Income per share:





   Basic

$      0.16

$0.20

$       0.31

$        0.27

   Diluted

0.16

0.20

0.30

0.27

Weighted average shares outstanding





   Basic

31,144,179

31,045,148

31,134,074

31,034,644

   Diluted

31,368,319

31,136,148

31,351,540

31,068,812

 

 

SOURCE Waterstone Financial, Inc.



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