Waterstone Financial, Inc. Announces Results of Operations for the Quarter and Six Months Ended June 30, 2015

Jul 24, 2015, 16:05 ET from Waterstone Financial, Inc.

WAUWATOSA, Wis., July 24, 2015 /PRNewswire/ -- Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income of $5.3 million for the quarter ended June 30, 2015, compared to $3.0 million for the quarter ended March 31, 2015 and $3.8 million for the quarter ended June 30, 2014. For the quarter ended June 30, 2015, net income per diluted share was $0.17 as compared to $0.09 for the quarter ended March 31, 2015 and $0.11 for the quarter ended June 30, 2014.  Net income totaled $8.3 million, or $0.26 per diluted share for the six months ended June 30, 2015, compared to $5.7 million, or $0.16 per diluted share for the six months ended June 30, 2014.

2nd Quarter 2015 Highlights and Net Income for the Six Months Ended June 30, 2015

  • Mortgage banking segment net income totaled $2.9 million for the quarter ended June 30, 2015 compared to $1.0 million for the quarter ended June 30, 2014. The quarter ended June 30, 2015 represents the fourth consecutive quarter in which the mortgage banking segment has outperformed the prior year comparative quarter. Mortgage banking operations were positively impacted by a higher volume of loans originated during the second quarter of 2015 compared to the second quarter of 2014. Loans originated for sale on the secondary market increased 26.3% to $596 million during the quarter ended June 30, 2015, compared to $472 million during the quarter ended June 30, 2014. Mortgage banking segment net income totaled $4.3 million for the six months ended June 30, 2015, compared to $1.0 million for the six months ended June 30, 2014.
  • Community banking segment net income totaled $2.4 million for the quarter ended June 30, 2015 compared to $2.8 million for the quarter ended June 30, 2014. The quarter ended June 30, 2015 included $1.1 million in writedowns to the carrying value of real estate owned, reflecting a plan to facilitate the liquidation of aged properties. The quarter ended June 30, 2014 included $440,000 in writedowns to real estate owned. Community banking segment net income totaled $4.0 million for the six months ended June 30, 2015, compared to $4.6 million for the six months ended June 30, 2014.
  • Total non-performing assets decreased $9.5 million, or 18.1%, to $43.0 million at June 30, 2015 from $52.6 million at March 31, 2015 and decreased $25.1 million, or 36.8%, from $68.1 million at June 30, 2014.
  • Past due loans decreased by $3.0 million, or 11.2%, to $23.7 million at June 30, 2015 from $26.7 million at March 31, 2015 and decreased $20.1 million, or 45.9% from $43.9 million at June 30, 2014. Loans past due less than 90 days decreased by $1.1 million, or 16.1%, to $5.6 million at June 30, 2015 from $6.7 million at March 31, 2015 and decreased $11.7 million, or 67.7%, from $17.4 million at June 30, 2014.
  • Total loans receivable increased $29.8 million, or 2.8%, to $1.09 billion at June 30, 2015 from $1.06 billion at March 31, 2015.
  • Continued a share purchase program, under which 3,895,015 shares were repurchased at an average price of $12.89 per share on the open market during the quarter ended June 30, 2015.

"The momentum of our Mortgage Banking growth continued into the second quarter wherein the division originated a record number of new purchase loans," said Douglas Gordon, President and Chief Executive Officer of the Company.  "Loan growth in our Banking segment was also very strong and nonperforming assets continue to decline, strengthening our balance sheet."

About Waterstone Financial, Inc.

Waterstone Financial, Inc. (NASDAQ: WSBF) is a single-bank, holding company headquartered in Wauwatosa, WI. With $1.7 billion in assets at June 30, 2015, Waterstone has nine community bank branches in the metropolitan Milwaukee market, a loan production office in Minneapolis, Minnesota, and mortgage banking offices in seventeen 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 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)

Three months ended June 30,

Six months ended June 30,

2015

2014

2015

2014

(In Thousands, except per share amounts)

Interest income:

  Loans

$

14,065

14,568

27,378

28,236

  Mortgage-related securities

820

748

1,659

1,307

  Debt securities, federal funds sold and short-term investments

857

825

1,723

1,651

    Total interest income

15,742

16,141

30,760

31,194

Interest expense:

  Deposits

1,358

1,125

2,711

2,185

  Borrowings

4,324

4,406

8,553

8,699

    Total interest expense

5,682

5,531

11,264

10,884

    Net interest income

10,060

10,610

19,496

20,310

Provision for loan losses

805

285

1,140

535

    Net interest income after provision for loan losses

9,255

10,325

18,356

19,775

Noninterest income:

  Service charges on loans and deposits

443

333

849

587

  Increase in cash surrender value of life insurance

352

305

559

452

  Mortgage banking income

29,577

22,188

50,616

36,690

  Gain on sale of available for sale securities

-

-

44

-

  Other

668

370

1,005

2,526

    Total noninterest income

31,040

23,196

53,073

40,255

Noninterest expenses:

  Compensation, payroll taxes, and other employee benefits

23,272

18,190

41,350

33,249

  Occupancy, office furniture, and equipment

2,269

2,621

4,712

5,306

  Advertising

712

838

1,365

1,574

  Data processing

630

559

1,205

1,118

  Communications

351

398

721

820

  Professional fees

632

522

1,129

1,030

  Real estate owned

686

705

1,229

1,253

  FDIC insurance premiums

271

304

607

710

  Other

3,124

3,466

6,057

6,174

    Total noninterest expenses

31,947

27,603

58,375

51,234

    Income before income taxes

8,348

5,918

13,054

8,796

Income tax expense

3,064

2,148

4,754

3,142

  Net income

$

5,284

3,770

8,300

5,654

Income per share:

  Basic

$

0.17

0.11

0.26

0.17

  Diluted

$

0.17

0.11

0.26

0.16

Weighted average shares outstanding:

  Basic

29,841

34,021

31,098

34,143

  Diluted

31,190

34,252

31,413

34,385

Performance Ratios:

  Return on average assets 

1.21%

0.85%

0.95%

0.63%

  Return on average equity 

5.04%

3.27%

3.83%

2.62%

  Net interest margin 

2.46%

2.53%

2.38%

2.42%

 

WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

June 30,

December 31,

2015

2014

(Unaudited)

Assets

(In Thousands, except share data)

Cash

$              28,631

145,846

Federal funds sold

11,623

21,268

Interest-earning deposits in other financial institutions and other short term investments

7,857

5,706

Cash and cash equivalents

48,111

172,820

Securities available for sale (at fair value)

269,495

273,443

Loans held for sale (at fair value)

207,920

125,073

Loans receivable

1,094,589

1,094,990

Less: Allowance for loan losses

18,360

18,706

Loans receivable, net

1,076,229

1,076,284

Office properties and equipment, net

24,859

25,562

Federal Home Loan Bank stock (at cost)

19,500

17,500

Cash surrender value of life insurance

51,587

50,848

Real estate owned, net

14,326

18,706

Prepaid expenses and other assets

25,196

23,144

Total assets

$         1,737,223

1,783,380

Liabilities and Shareholders' Equity

Liabilities:

Demand deposits

$              96,969

92,162

Money market and savings deposits

121,549

119,163

Time deposits

631,796

652,635

Total deposits

850,314

863,960

Borrowings

444,000

434,000

Advance payments by borrowers for taxes

16,634

4,991

Other liabilities

24,837

30,192

Total liabilities

1,335,785

1,333,143

Shareholders' equity:

Common stock

307

344

Additional paid-in capital

315,922

313,894

Retained earnings

162,575

157,304

Unearned ESOP shares

(21,958)

(22,552)

Accumulated other comprehensive income, net of taxes

114

1,247

Cost of shares repurchased

(55,522)

-

Total shareholders' equity

401,438

450,237

Total liabilities and shareholders' equity

$         1,737,223

1,783,380

Share Information 

Shares Outstanding - excluding unallocated ESOP shares

28,705

32,418

Shares Outstanding - including unallocated ESOP shares

30,707

34,420

Book Value per share - excluding unallocated ESOP shares

$                13.98

13.89

Book Value per share - including unallocated ESOP shares

$                13.07

13.08

Closing market price

$                13.20

13.15

Price to book ratio - excluding unallocated ESOP shares

94.39%

95.73%

Price to book ratio - including unallocated ESOP shares

100.97%

100.53%

Asset Quality Data

Total non accrual loans

$              28,715

38,011

Real estate owned

14,326

18,706

Total nonperforming assets

$              43,041

56,717

Total non accrual to total loans

2.62%

3.47%

Total nonperforming assets to total assets

2.48%

3.18%

Allowance for loan losses

$              18,360

18,706

Allowance for loan losses as a % to non-accrual loans

63.94%

49.21%

 

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,

2015

2015

2014

2014

2014

(Dollars in Thousands)

Condensed Results of Operations:

Net interest income

$10,060

9,436

10,083

10,914

10,610

Provision for loan losses

805

335

300

315

285

Total noninterest income

31,040

22,033

20,403

23,911

23,196

Total noninterest expense

31,947

26,428

26,553

27,030

27,603

Income before income taxes

8,348

4,706

3,633

7,480

5,918

Income tax expense

3,064

1,690

1,319

2,715

2,148

Net income

$5,284

3,016

2,314

4,765

3,770

Income per share – basic

$0.17

0.09

0.08

0.14

0.11

Income per share – diluted 

$0.17

0.09

0.08

0.14

0.11

 

WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES

SUMMARY OF SHARES REPURCHASED

For the quarter ended June 30, 2015

Total shares repurchased

3,895,015

Total cost of shares (including commission)

$ 50,219,805

Average cost per share

$          12.89

For the six months ended June 30, 2015

Total shares repurchased

4,276,815

Total cost of shares (including commission)

$ 55,172,608

Average cost per share

$          12.90

 

SOURCE Waterstone Financial, Inc.



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