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

WAUWATOSA, Wis., Oct. 29, 2013 /PRNewswire/ -- Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported pre-tax income of $5.2 million and net income of $3.2 million for the third quarter of 2013.  This compares to pre-tax income of $8.6 million and net income of $8.4 million for the third quarter of 2012.  Year-to-date pre-tax and net income totaled $20.7 million and $12.8 million, respectively, for the nine months ended September 30, 2013 compared to $17.0 million and $16.8 million, respectively, for the nine months ended September 30, 2012.  A valuation reserve against net deferred tax assets released in the fourth quarter of 2012 minimized income tax expense during the 2012 periods.  Net income per diluted share was $0.10 for the third quarter of 2013 as compared to $0.27 per diluted share for the third quarter of 2012. 

"WaterStone Bank's earnings continue to improve due to improving asset quality while Waterstone Mortgage has experienced declining volumes and margins, as is widespread throughout the mortgage banking industry," said Doug Gordon, President and Chief Executive Officer of Waterstone Financial. "Our capital levels continue to increase, which will support further growth."

The company's community banking segment pre-tax income for the quarter ended September 30, 2013 totaled $4.0 million compared to $1.1 million for the third quarter of 2012.  Community banking operations were positively impacted by a $2.2 million decline in real estate owned expense and a $1.0 million decline in the quarterly provision for loan losses for the quarter ended September 30, 2013 as compared to the quarter ended September 30, 2012.  The company's mortgage banking segment reported pre-tax income of $1.1 million for the quarter ended September 30, 2013 compared to $7.2 million for the quarter ended September 30, 2012.  Mortgage loans originated for sale in the third quarter of 2013 totaled $441.5 million, a 7.6% decrease from the $477.9 million originated for sale in the third quarter of 2012.  Margins earned on loans sold also declined in 2013 such that total mortgage banking revenue decreased by 31.8% to $18.2 million in the third quarter of 2013 compared to $26.7 million in the third quarter of 2012.  The decline in average sales margins reflects a decrease in pricing and fees on all products in all geographic markets and is reflective of general market conditions.  The decline in revenue was partially offset by a 7.5% decline in compensation expense to $13.5 million for the third quarter of 2013 compared to $14.6 million for the third quarter of 2012. 

Total nonperforming assets as a percentage of total assets declined to 5.04% at September 30, 2013 from 6.66% at December 31, 2012 and 7.13% at September 30, 2012.  Total nonperforming assets declined 27.1% to $80.6 million at September 30, 2013 from $110.6 million at December 31, 2012.  Total delinquent loans declined 34.4% to $48.9 million at September 30, 2013 from $74.5 million at December 31, 2012.  The provisions for loan losses totaled $1.0 million and $4.0 million for the three and nine months ended September 30, 2013, respectively.  The provisions for loan losses totaled $2.0 million and $7.1 million for the three and nine months ended September 30, 2012, respectively.

About Waterstone Financial, Inc.

Waterstone Financial, Inc. (NASDAQ: WSBF) is a single-bank, thrift holding company headquartered in Wauwatosa, WI.  With $1.6 billion in assets at September 30, 2013, Waterstone has eight community bank branches in the metropolitan Milwaukee market and mortgage banking offices in 14 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.

SOURCE Waterstone Financial, Inc.