• Waterstone Financial, Inc. Announces Results of Operations for the Quarter Ended March 31, 2023

    Source: Nasdaq GlobeNewswire / 25 Apr 2023 15:01:00   America/Chicago

    WAUWATOSA, Wis., April 25, 2023 (GLOBE NEWSWIRE) -- Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income of $2.2 million, or $0.10 per diluted share for the quarter ended March 31, 2023, compared to $5.3 million, or $0.23 per diluted share for the quarter ended March 31, 2022. 

    "The Community Banking segment achieved an 18% increase in year over year pre-tax income, while our Mortgage Banking segment, as well as the entire mortgage industry, continue to be challenged by higher mortgage rates and a nationwide housing inventory shortage,” said Douglas Gordon, Chief Executive Officer of Waterstone Financial, Inc. “Despite the mortgage industry headwinds, we will continue to position our mortgage segment to take advantage of future improvements in the industry.”

    Highlights of the Quarter Ended March 31, 2023

    Waterstone Financial, Inc. (Consolidated)

    • Consolidated net income of Waterstone Financial, Inc. totaled $2.2 million for the quarter ended March 31, 2023, compared to $5.3 million for the quarter ended March 31, 2022.
    • Consolidated return on average assets was 0.43% for the quarter ended March 31, 2023, compared to 1.00% for the quarter ended March 31, 2022.
    • Consolidated return on average equity was 2.35% for the quarter ended March 31, 2023, and 5.00% for the quarter ended March 31, 2022.
    • Dividends declared during the quarter ended March 31, 2023, totaled $0.20 per common share.
    • We repurchased approximately 373,000 shares at a cost of $5.8 million, or $15.65 per share, during the quarter ended March 31, 2023.
    • Nonperforming assets as percentage of total assets was 0.22% at March 31, 2023, 0.22% at December 31, 2022, and 0.34% at March 31, 2022.
    • Past due loans as percentage of total loans was 0.64% at March 31, 2023, 0.41% at December 31, 2022, and 0.53% at March 31, 2022.
    • Book value per share was $16.73 at March 31, 2023 and $16.71 at December 31, 2022.  

    Community Banking Segment

    • Pre-tax income totaled $6.4 million for the quarter ended March 31, 2023, which represents a $1.0 million, or 18.5%, increase compared to $5.4 million for the quarter ended March 31, 2022.
    • Net interest income totaled $14.0 million for the quarter ended March 31, 2023, which represents a $2.4 million, or 20.2%, increase compared to $11.7 million for the quarter ended March 31, 2022.
    • Average loans held for investment totaled $1.53 billion during the quarter ended March 31, 2023, which represents an increase of $326.6 million, or 27.1%, compared to $1.20 billion for the quarter ended March 31, 2022. The increase was primarily due to increases in the single-family and multi-family mortgages. Average loans held for investment increased $118.3 million compared to $1.41 billion for the quarter ended December 31, 2022. The increase was primarily due to increases in the single-family and multi-family mortgages.
    • The community banking segment purchased $27.4 million adjustable-rate loans that were originated by the mortgage banking segment during the quarter ended March 31, 2023.    
    • Net interest margin increased 50 basis points to 2.88% for the quarter ended March 31, 2023, compared to 2.38% for the quarter ended March 31, 2022, which was a result of a decrease in the average balance of cash, as funds were utilized to fund loans held for investment, and purchase investment securities. 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 decreased 41 basis points compared to 3.29% for the quarter ended December 31, 2022, driven by an increase in weighted average cost of deposits and borrowings as the federal funds rate increases resulted in increased funding rates.
    • The segment had a negative provision for credit losses - loans of $96,000 for the quarter ended March 31, 2023, compared to a provision for credit losses - loans of $17,000 for the quarter ended March 31, 2022.  The current quarter decrease was primarily due to a decrease in loan loss rates. The provision for credit losses - unfunded commitments was $484,000 for the quarter ended March 31, 2023, compared to a negative provision for credit losses - unfunded commitments of $157,000 for the quarter ended March 31, 2022. The increase for the quarter ended March 31, 2023, was due primarily to three significant construction loans that have not funded.
    • The efficiency ratio, a non-GAAP ratio, was 54.53% for the quarter ended March 31, 2023, compared to 59.59% for the quarter ended March 31, 2022.
    • Average deposits (excluding escrow accounts) totaled $1.17 billion during the quarter ended March 31, 2023, a decrease of $56.9 million, or 4.6%, compared to $1.23 billion during the quarter ended March 31, 2022. Average deposits decreased $37.3 million, or 12.3% annualized, compared to the $1.21 billion for the quarter ended December 31, 2022.
    • Other noninterest expense increased $296,000 to $896,000 during the quarter ended March 31, 2023, compared to $600,000 during the quarter ended March 31, 2022. The increase was driven by fees paid to the mortgage banking segment for the purchase of single-family adjustable-rate mortgage loans.  These fees totaled $383,000 during the quarter ended March 31, 2023, compared to $181,000 during the quarter ended March 31, 2022.

    Mortgage Banking Segment

    • Pre-tax loss totaled $3.7 million for the quarter ended March 31, 2023, compared to $1.4 million of pre-tax income for the quarter ended March 31, 2022.
    • Loan originations decreased $265.8 million, or 37.5%, to $442.7 million during the quarter ended March 31, 2023, compared to $708.5 million during the quarter ended March 31, 2022. Origination volume relative to purchase activity accounted for 96.5% of originations for the quarter ended March 31, 2023, compared to 77.3% of total originations for the quarter ended March 31, 2022.
    • Mortgage banking non-interest income decreased $10.7 million, or 37.2%, to $18.0 million for the quarter ended March 31, 2023, compared to $28.6 million for the quarter ended March 31, 2022.
    • Gross margin on loans sold decreased to 3.78% for the quarter ended March 31, 2023, compared to 4.00% for the quarter ended March 31, 2022.
    • During the quarter ended March 31, 2023, the Company sold mortgage servicing rights related to $318.3 million in loans receivable and with a book value of $2.8 million for $3.4 million resulting in a gain on sale of $601,000. There was no comparable sale during the quarter ended March 31, 2022. As of March 31, 2023, the Company maintained servicing rights related to $116.6 million in loans previously sold to third parties.
    • Total compensation, payroll taxes and other employee benefits decreased $5.3 million, or 26.1%, to $15.1 million during the quarter ended March 31, 2023, compared to $20.4 million during the quarter ended March 31, 2022. The decrease primarily related to decreased commission expense and salary expense driven by decreased loan origination volume and reduced employee headcount.

    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; 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.

    Non-GAAP Financial Measures

    Management uses non-GAAP financial information in its analysis of the Company's performance. Management believes that this non-GAAP measure provides a greater understanding of ongoing operations and enhance comparability of results of operations with prior periods. The Company’s management believes that investors may use this non-GAAP measure to analyze the Company's financial performance without the impact of unusual items or events that may obscure trends in the Company’s underlying performance. This non-GAAP data should be considered in addition to results prepared in accordance with GAAP, and is not a substitute for, or superior to, GAAP results.  Limitations associated with non-GAAP financial measures include the risks that persons might disagree as to the appropriateness of items included in this measure and that different companies might calculate this measure differently. 


    WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF INCOME
    (Unaudited)
       
     For The Three Months
    Ended March 31,    		 
     2023  2022 
     (In Thousands, except per share amounts) 
    Interest income:       
    Loans$19,885  $13,500 
    Mortgage-related securities 943   602 
    Debt securities, federal funds sold and short-term investments 1,062   928 
    Total interest income 21,890   15,030 
    Interest expense:       
    Deposits 4,088   779 
    Borrowings 4,007   2,387 
    Total interest expense 8,095   3,166 
    Net interest income 13,795   11,864 
    Provision (credit) for credit losses 460   (76)
    Net interest income after provision for loan losses 13,335   11,940 
    Noninterest income:       
    Service charges on loans and deposits 430   510 
    Increase in cash surrender value of life insurance 325   316 
    Mortgage banking income 16,770   28,275 
    Other 1,029   717 
    Total noninterest income 18,554   29,818 
    Noninterest expenses:       
    Compensation, payroll taxes, and other employee benefits 20,052   25,535 
    Occupancy, office furniture, and equipment 2,263   2,188 
    Advertising 889   905 
    Data processing 1,122   1,202 
    Communications 251   340 
    Professional fees 416   461 
    Real estate owned 1   5 
    Loan processing expense 1,018   1,431 
    Other 3,095   2,868 
    Total noninterest expenses 29,107   34,935 
    Income before income taxes 2,782   6,823 
    Income tax expense 627   1,532 
    Net income$2,155  $5,291 
    Income per share:       
    Basic$0.10  $0.23 
    Diluted$0.10  $0.23 
    Weighted average shares outstanding:       
    Basic 20,890   23,132 
    Diluted 20,980   23,311 


    WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
          
     March 31,  December 31, 
     2023  2022 
     (Unaudited)     
    Assets(In Thousands, except per share amounts) 
    Cash$45,922  $33,700 
    Federal funds sold 8,010   10,683 
    Interest-earning deposits in other financial institutions and other short-term investments 260   2,259 
    Cash and cash equivalents 54,192   46,642 
    Securities available for sale (at fair value) 200,440   196,588 
    Loans held for sale (at fair value) 161,325   131,188 
    Loans receivable 1,550,219   1,510,178 
    Less: Allowance for credit losses ("ACL") - loans 17,744   17,757 
    Loans receivable, net 1,532,475   1,492,421 
            
    Office properties and equipment, net 20,716   21,105 
    Federal Home Loan Bank stock (at cost) 23,873   17,357 
    Cash surrender value of life insurance 66,294   66,443 
    Real estate owned, net 145   145 
    Prepaid expenses and other assets 55,039   59,783 
    Total assets$2,114,499  $2,031,672 
            
    Liabilities and Shareholders' Equity       
    Liabilities:       
    Demand deposits$205,930  $230,596 
    Money market and savings deposits 301,089   326,145 
    Time deposits 675,866   642,271 
    Total deposits 1,182,885   1,199,012 
            
    Borrowings 501,696   386,784 
    Advance payments by borrowers for taxes 13,434   5,334 
    Other liabilities 50,677   70,056 
    Total liabilities 1,748,692   1,661,186 
            
    Shareholders' equity:       
    Preferred stock -   - 
    Common stock 219   222 
    Additional paid-in capital 123,448   128,550 
    Retained earnings 272,269   274,246 
    Unearned ESOP shares (12,760)  (13,056)
    Accumulated other comprehensive loss, net of taxes (17,369)  (19,476)
    Total shareholders' equity 365,807   370,486 
    Total liabilities and shareholders' equity$2,114,499  $2,031,672 
            
    Share Information       
    Shares outstanding 21,867   22,174 
    Book value per share$16.73  $16.71 


    WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
    SUMMARY OF KEY QUARTERLY FINANCIAL DATA
    (Unaudited)
     
     At or For the Three Months Ended 
     March 31,  December 31,  September 30,  June 30,  March 31, 
     2023  2022  2022  2022  2022 
     (Dollars in Thousands, except per share amounts) 
    Condensed Results of Operations:                   
    Net interest income$13,795  $15,611  $15,398  $14,081  $11,864 
    Provision (credit) for credit losses 460   664   332   48   (76)
    Total noninterest income 18,554   17,095   27,404   31,238   29,818 
    Total noninterest expense 29,107   31,384   35,694   35,050   34,935 
    Income before income taxes 2,782   658   6,776   10,221   6,823 
    Income tax (benefit) expense 627   (277)  1,506   2,231   1,532 
    Net income$2,155  $935  $5,270  $7,990  $5,291 
    Income per share – basic$0.10  $0.04  $0.25  $0.36  $0.23 
    Income per share – diluted$0.10  $0.04  $0.25  $0.36  $0.23 
    Dividends declared per common share$0.20  $0.20  $0.20  $0.20  $0.20 
                        
    Performance Ratios (annualized):                   
    Return on average assets - QTD 0.43%  0.19%  1.08%  1.61%  1.00%
    Return on average equity - QTD 2.35%  0.99%  5.38%  7.93%  5.00%
    Net interest margin - QTD 2.88%  3.29%  3.34%  3.02%  2.38%
                        
    Return on average assets - YTD 0.43%  0.96%  1.22%  1.30%  1.00%
    Return on average equity - YTD 2.35%  4.91%  6.09%  6.42%  5.00%
    Net interest margin - YTD 2.88%  3.00%  2.90%  2.69%  2.38%
                        
    Asset Quality Ratios:                   
    Past due loans to total loans 0.64%  0.41%  0.48%  0.60%  0.53%
    Nonaccrual loans to total loans 0.29%  0.29%  0.37%  0.59%  0.55%
    Nonperforming assets to total assets 0.22%  0.22%  0.27%  0.39%  0.34%
    Allowance for credit losses - loans to loans receivable 1.14%  1.18%  1.29%  1.35%  1.40%


    WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
    SUMMARY OF QUARTERLY AVERAGE BALANCES AND YIELD/COSTS
    (Unaudited)
       
     At or For the Three Months Ended 
     March 31,  December 31,  September 30,  June 30,  March 31, 
     2023  2022  2022  2022  2022 
    Average balances(Dollars in Thousands) 
    Interest-earning assets                   
    Loans receivable and held for sale$1,654,942  $1,578,790  $1,492,462  $1,433,452  $1,361,839 
    Mortgage related securities 170,218   170,209   172,807   168,000   138,863 
    Debt securities, federal funds sold and short-term investments 115,962   130,973   162,211   269,823   519,116 
    Total interest-earning assets 1,941,122   1,879,972   1,827,480   1,871,275   2,019,818 
    Noninterest-earning assets 107,009   122,643   114,274   117,248   128,813 
    Total assets$2,048,131  $2,002,615  $1,941,754  $1,988,523  $2,148,631 
                        
    Interest-bearing liabilities                   
    Demand accounts$68,564  $75,449  $75,058  $70,674  $69,736 
    Money market, savings, and escrow accounts 322,220   349,820   398,643   412,321   404,413 
    Certificates of deposit 648,531   628,375   586,012   584,244   610,681 
    Total interest-bearing deposits 1,039,315   1,053,644   1,059,713   1,067,239   1,084,830 
    Borrowings 441,716   333,249   296,111   326,068   440,252 
    Total interest-bearing liabilities 1,481,031   1,386,893   1,355,824   1,393,307   1,525,082 
    Noninterest-bearing demand deposits 143,296   177,217   153,591   154,070   152,900 
    Noninterest-bearing liabilities 51,840   63,866   43,683   36,962   41,232 
    Total liabilities 1,676,167   1,627,976   1,553,098   1,584,339   1,719,214 
    Equity 371,964   374,639   388,656   404,184   429,417 
    Total liabilities and equity$2,048,131  $2,002,615  $1,941,754  $1,988,523  $2,148,631 
                        
    Average Yield/Costs (annualized)                   
    Loans receivable and held for sale 4.87%  4.69%  4.32%  4.07%  4.02%
    Mortgage related securities 2.25%  2.13%  2.07%  1.96%  1.76%
    Debt securities, federal funds sold and short-term investments 3.71%  3.35%  2.41%  1.56%  0.72%
    Total interest-earning assets 4.57%  4.36%  3.93%  3.52%  3.02%
                        
    Demand accounts 0.08%  0.08%  0.08%  0.09%  0.08%
    Money market and savings accounts 1.26%  0.67%  0.21%  0.19%  0.21%
    Certificates of deposit 1.92%  1.10%  0.51%  0.37%  0.37%
    Total interest-bearing deposits 1.60%  0.89%  0.37%  0.28%  0.29%
    Borrowings 3.68%  3.23%  2.34%  1.95%  2.20%
    Total interest-bearing liabilities 2.22%  1.45%  0.80%  0.67%  0.84%


    COMMUNITY BANKING SEGMENT
    SUMMARY OF KEY QUARTERLY FINANCIAL DATA
    (Unaudited)
       
     At or For the Three Months Ended 
     March 31,  December 31,  September 30,  June 30,  March 31, 
     2023  2022  2022  2022  2022 
     (Dollars in Thousands) 
    Condensed Results of Operations:                   
    Net interest income$14,008  $15,737  $15,507  $13,710  $11,652 
    Provision (credit) for credit losses 388   624   234   (41)  (140)
    Total noninterest income 987   1,033   1,116   1,640   1,432 
    Noninterest expenses:                   
    Compensation, payroll taxes, and other employee benefits 5,168   4,781   4,424   4,596   5,212 
    Occupancy, office furniture and equipment 1,031   877   955   876   937 
    Advertising 184   203   213   244   227 
    Data processing 601   551   539   531   608 
    Communications 78   92   108   63   94 
    Professional fees 218   153   123   118   114 
    Real estate owned 1   13   1   -   5 
    Loan processing expense -   -   -   -   - 
    Other 896   2,468   1,477   1,006   600 
    Total noninterest expense 8,177   9,138   7,840   7,434   7,797 
    Income before income taxes 6,430   7,008   8,549   7,957   5,427 
    Income tax expense 1,600   1,308   1,983   1,658   1,167 
    Net income$4,830  $5,700  $6,566  $6,299  $4,260 
                        
    Efficiency ratio - QTD (non-GAAP) 54.53%  54.49%  47.16%  48.43%  59.59%
    Efficiency ratio - YTD (non-GAAP) 54.53%  52.10%  51.20%  53.57%  59.59%


    MORTGAGE BANKING SEGMENT
    SUMMARY OF KEY QUARTERLY FINANCIAL DATA
    (Unaudited)
       
     At or For the Three Months Ended 
     March 31,  December 31,  September 30,  June 30,  March 31, 
     2023  2022  2022  2022  2022 
     (Dollars in Thousands) 
    Condensed Results of Operations:                   
    Net interest (loss) income$(282) $(241) $(155) $370  $183 
    Provision for credit losses 72   40   98   89   64 
    Total noninterest income 17,951   18,066   27,305   30,126   28,604 
    Noninterest expenses:                   
    Compensation, payroll taxes, and other employee benefits 15,099   17,397   21,864   21,311   20,438 
    Occupancy, office furniture and equipment 1,232   1,289   1,341   1,180   1,251 
    Advertising 705   769   924   718   678 
    Data processing 516   490   543   613   588 
    Communications 173   197   194   195   246 
    Professional fees 188   453   265   222   338 
    Real estate owned -   -   -   -   - 
    Loan processing expense 1,018   1,059   1,120   1,134   1,431 
    Other 2,403   2,584   2,571   2,733   2,309 
    Total noninterest expense 21,334   24,238   28,822   28,106   27,279 
    (Loss) income before income taxes (3,737)  (6,453)  (1,770)  2,301   1,444 
    Income tax (benefit) expense (1,002)  (1,602)  (470)  578   377 
    Net (loss) income$(2,735) $(4,851) $(1,300) $1,723  $1,067 
                        
    Efficiency ratio - QTD (non-GAAP) 120.74%  135.98%  106.16%  92.16%  94.76%
    Efficiency ratio - YTD (non-GAAP) 120.74%  104.02%  97.42%  93.42%  94.76%
                        
    Loan originations$442,710  $546,628  $729,897  $778,760  $708,463 
    Purchase 96.5%  95.6%  94.2%  90.4%  77.3%
    Refinance 3.5%  4.4%  5.8%  9.6%  22.7%
    Gross margin on loans sold (1) 3.78%  3.41%  3.70%  3.85%  4.00%

    (1) Gross margin on loans sold equals mortgage banking income (excluding the change in interest rate lock value) divided by total loan originations

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


Share on,