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Waterstone Financial, Inc. Announces Results of Operations for the Quarter and Nine Months Ended September 30, 2024
Source: Nasdaq GlobeNewswire / 22 Oct 2024 15:00:00 America/Chicago
WAUWATOSA, Wis., Oct. 22, 2024 (GLOBE NEWSWIRE) -- Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income of $4.7 million, or $0.26 per diluted share, for the quarter ended September 30, 2024, compared to net income of $3.3 million, or $0.16 per diluted share for the quarter ended September 30, 2023. Net income per diluted share was $0.72 for the nine months ended September 30, 2024, compared to net income per diluted share of $0.46 for the nine months ended September 30, 2023.
“The Community Banking segment achieved growth in its loan and core deposit (excluding brokered deposits) balances,” said William Bruss, Chief Executive Officer of Waterstone Financial, Inc. “We continue to maintain strong asset quality metrics and remain in a net recovery position, resulting in a negative provision during the quarter. While the decrease in our wholesale borrowing rate during the quarter captures a portion of the benefit from the 50 bps cut in the Federal Funds rate during September, the competitive retail funding environment remains a headwind. The Mortgage Banking segment experienced a decrease in fundings; however, it remained profitable due in large part to our continued focus on cost control. Waterstone Financial, Inc. remained active in share repurchases and once again declared a dividend, as we are committed to shareholder returns.”
Highlights of the Quarter Ended September 30, 2024
Waterstone Financial, Inc. (Consolidated)
● Consolidated net income of Waterstone Financial, Inc. totaled $4.7 million for the quarter ended September 30, 2024, compared to net income of $3.3 million for the quarter ended September 30, 2023. ● Consolidated return on average assets was 0.83% for the quarter ended September 30, 2024, compared to 0.58% for the quarter ended September 30, 2023. ● Consolidated return on average equity was 5.55% for the quarter ended September 30, 2024, and 3.63% for the quarter ended September 30, 2023. ● Dividends declared during the quarter ended September 30, 2024, totaled $0.15 per common share. ● During the quarter ended September 30, 2024, we repurchased approximately 71,000 shares at a cost (including the federal excise tax) of $979,000, or $13.75 per share. ● Nonperforming assets as a percentage of total assets was 0.25% at September 30, 2024, 0.25% at June 30, 2024, and 0.20% at September 30, 2023. ● Past due loans as a percentage of total loans was 0.63% at September 30, 2024, 0.76% at June 30, 2024, and 0.53% at September 30, 2023. ● Book value per share was $17.58 at September 30, 2024 and $16.94 at December 31, 2023. Community Banking Segment
● Pre-tax income totaled $5.6 million for the quarter ended September 30, 2024, which represents a $14,000, or 0.2%, decrease compared to $5.7 million for the quarter ended September 30, 2023. ● Net interest income totaled $12.3 million for the quarter ended September 30, 2024, which represents a $181,000, or 1.5%, decrease compared to $12.4 million for the quarter ended September 30, 2023. ● Average loans held for investment totaled $1.69 billion during the quarter ended September 30, 2024, which represents an increase of $60.9 million, or 3.7%, compared to $1.63 billion for the quarter ended September 30, 2023. The increase was primarily due to increases in the construction, commercial real estate, and over four family mortgages. Average loans held for investment increased $19.7 million compared to $1.67 billion for the quarter ended June 30, 2024. The increase was primarily due to increases in construction and over four family mortgages. ● Net interest margin decreased 13 basis points to 2.13% for the quarter ended September 30, 2024, compared to 2.26% for the quarter ended September 30, 2023, which was a result of an increase in weighted average cost of deposits and borrowings as the federal funds rate increases resulted in increased funding rates. Net interest margin increased 12 basis points compared to 2.01% for the quarter ended June 30, 2024, primarily driven by an increase in weighted average yield on loans receivable and held for sale. ● Past due loans at the community banking segment totaled $8.0 million at September 30, 2024, $9.3 million at June 30, 2024, and $6.7 million at September 30, 2023. ● The segment had a negative provision for credit losses related to funded loans of $218,000 for the quarter ended September 30, 2024, compared to a provision for credit losses related to funded loans of $206,000 for the quarter ended September 30, 2023. The current quarter decrease was primarily due to a decrease in historical loss rates, net recoveries for the period, and improvements in certain internal asset quality metrics offset by an adjustment in the qualitative factors primarily related to increases in economic risks related to commercial real estate loans during the quarter. The negative provision for credit losses related to unfunded loan commitments was $84,000 for the quarter ended September 30, 2024, compared to a provision for credit losses related to unfunded loan commitments of $239,000 for the quarter ended September 30, 2023. The negative provision for credit losses related to unfunded loan commitments for the quarter ended September 30, 2024, was due primarily to a decrease of loans that are currently waiting to be funded compared to the prior quarter end. ● The efficiency ratio, a non-GAAP ratio, was 60.35% for the quarter ended September 30, 2024, compared to 54.43% for the quarter ended September 30, 2023. ● Average deposits (excluding escrow accounts) totaled $1.25 billion during the quarter ended September 30, 2024, an increase of $47.9 million, or 4.0%, compared to $1.20 billion during the quarter ended September 30, 2023. Average deposits increased $27.6 million, or 9.1% annualized, compared to $1.22 billion for the quarter ended June 30, 2024. The increases were primarily due to an increase in certificates of deposit balances. The segment had $2.0 million in brokered certificate of deposits at September 30, 2024. Mortgage Banking Segment
● Pre-tax income totaled $144,000 for the quarter ended September 30, 2024, compared to $2.1 million of pre-tax loss for the quarter ended September 30, 2023. ● Loan originations decreased $38.8 million, or 6.5%, to $558.7 million during the quarter ended September 30, 2024, compared to $597.6 million during the quarter ended September 30, 2023. Origination volume relative to purchase activity accounted for 88.9% of originations for the quarter ended September 30, 2024, compared to 95.4% of total originations for the quarter ended September 30, 2023. ● Mortgage banking non-interest income decreased $66,000, or 0.3%, to $21.4 million for the quarter ended September 30, 2024, compared to $21.5 million for the quarter ended September 30, 2023. ● Gross margin on loans sold totaled 3.83% for the quarter ended September 30, 2024, compared to 3.62% for the quarter ended September 30, 2023. ● Total compensation, payroll taxes and other employee benefits decreased $1.3 million, or 7.3%, to $15.9 million during the quarter ended September 30, 2024, compared to $17.2 million during the quarter ended September 30, 2023. The decrease primarily related to decreased salary expense and incentives expense driven by reduced employee headcount and a decrease in new branches added over the past year.
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.
Contact: Mark R. Gerke
Chief Financial Officer
414-459-4012
markgerke@wsbonline.comWATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)For The Three Months Ended September 30, For The Nine Months Ended September 30, 2024 2023 2024 2023 (In Thousands, except per share amounts) Interest income: Loans $ 26,590 $ 23,825 $ 76,675 $ 65,860 Mortgage-related securities 1,137 1,060 3,360 2,972 Debt securities, federal funds sold and short-term investments 1,464 1,492 4,081 3,682 Total interest income 29,191 26,377 84,116 72,514 Interest expense: Deposits 10,477 7,442 29,163 17,485 Borrowings 7,197 6,946 21,620 16,570 Total interest expense 17,674 14,388 50,783 34,055 Net interest income 11,517 11,989 33,333 38,459 Provision (credit) for credit losses (377 ) 445 (535 ) 1,091 Net interest income after provision (credit) for loan losses 11,894 11,544 33,868 37,368 Noninterest income: Service charges on loans and deposits 545 450 1,434 1,491 Increase in cash surrender value of life insurance 410 334 1,562 1,373 Mortgage banking income 21,294 21,172 66,200 59,856 Other 303 274 1,101 1,589 Total noninterest income 22,552 22,230 70,297 64,309 Noninterest expenses: Compensation, payroll taxes, and other employee benefits 21,017 21,588 62,655 64,035 Occupancy, office furniture, and equipment 1,857 1,993 5,994 6,302 Advertising 926 916 2,827 2,749 Data processing 1,297 1,229 3,745 3,441 Communications 232 243 698 719 Professional fees 569 745 2,070 1,779 Real estate owned - 1 14 3 Loan processing expense 697 722 2,604 2,672 Other 1,965 2,584 5,762 8,350 Total noninterest expenses 28,560 30,021 86,369 90,050 Income before income taxes 5,886 3,753 17,796 11,627 Income tax expense 1,158 500 4,318 2,212 Net income $ 4,728 $ 3,253 $ 13,478 $ 9,415 Income per share: Basic $ 0.26 $ 0.16 $ 0.72 $ 0.46 Diluted $ 0.26 $ 0.16 $ 0.72 $ 0.46 Weighted average shares outstanding: Basic 18,350 19,998 18,631 20,420 Diluted 18,445 20,022 18,677 20,473
WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITIONSeptember 30, December 31, 2024 2023 (Unaudited) Assets (In Thousands, except per share amounts) Cash $ 35,770 $ 30,667 Federal funds sold 5,359 5,493 Interest-earning deposits in other financial institutions and other short-term investments 278 261 Cash and cash equivalents 41,407 36,421 Securities available for sale (at fair value) 213,164 204,907 Loans held for sale (at fair value) 155,846 164,993 Loans receivable 1,695,403 1,664,215 Less: Allowance for credit losses ("ACL") - loans 18,198 18,549 Loans receivable, net 1,677,205 1,645,666 Office properties and equipment, net 19,450 19,995 Federal Home Loan Bank stock (at cost) 21,681 20,880 Cash surrender value of life insurance 69,601 67,859 Real estate owned, net 145 254 Prepaid expenses and other assets 45,837 52,414 Total assets $ 2,244,336 $ 2,213,389 Liabilities and Shareholders' Equity Liabilities: Demand deposits $ 180,449 $ 187,107 Money market and savings deposits 279,188 273,233 Time deposits 804,204 730,284 Total deposits 1,263,841 1,190,624 Borrowings 560,127 611,054 Advance payments by borrowers for taxes 27,847 6,607 Other liabilities 50,519 61,048 Total liabilities 1,902,334 1,869,333 Shareholders' equity: Preferred stock - - Common stock 194 203 Additional paid-in capital 92,789 103,908 Retained earnings 274,748 269,606 Unearned ESOP shares (10,979 ) (11,869 ) Accumulated other comprehensive loss, net of taxes (14,750 ) (17,792 ) Total shareholders' equity 342,002 344,056 Total liabilities and shareholders' equity $ 2,244,336 $ 2,213,389 Share Information Shares outstanding 19,457 20,315 Book value per share $ 17.58 $ 16.94 WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
SUMMARY OF KEY QUARTERLY FINANCIAL DATA
(Unaudited)At or For the Three Months Ended September 30, June 30, March 31, December 31, September 30, 2024 2024 2024 2023 2023 (Dollars in Thousands, except per share amounts) Condensed Results of Operations: Net interest income $ 11,517 $ 10,679 $ 11,137 $ 11,756 $ 11,989 Provision (credit) for credit losses (377 ) (225 ) 67 (435 ) 445 Total noninterest income 22,552 26,497 21,248 16,876 22,230 Total noninterest expense 28,560 30,259 27,550 29,662 30,021 Income (loss) before income taxes (benefit) 5,886 7,142 4,768 (595 ) 3,753 Income tax expense (benefit) 1,158 1,430 1,730 (555 ) 500 Net income (loss) $ 4,728 $ 5,712 $ 3,038 $ (40 ) $ 3,253 Income (loss) per share – basic $ 0.26 $ 0.31 $ 0.16 $ (0.00 ) $ 0.16 Income (loss) per share – diluted $ 0.26 $ 0.31 $ 0.16 $ (0.00 ) $ 0.16 Dividends declared per common share $ 0.15 $ 0.15 $ 0.15 $ 0.15 $ 0.15 Performance Ratios (annualized): Return on average assets - QTD 0.83 % 1.02 % 0.56 % -0.01 % 0.58 % Return on average equity - QTD 5.55 % 6.84 % 3.56 % -0.05 % 3.63 % Net interest margin - QTD 2.13 % 2.01 % 2.15 % 2.25 % 2.26 % Return on average assets - YTD 0.81 % 0.79 % 0.56 % 0.44 % 0.59 % Return on average equity - YTD 5.30 % 5.17 % 3.56 % 2.62 % 3.46 % Net interest margin - YTD 2.09 % 2.08 % 2.15 % 2.46 % 2.53 % Asset Quality Ratios: Past due loans to total loans 0.63 % 0.76 % 0.64 % 0.68 % 0.53 % Nonaccrual loans to total loans 0.32 % 0.33 % 0.29 % 0.29 % 0.25 % Nonperforming assets to total assets 0.25 % 0.25 % 0.23 % 0.23 % 0.20 % Allowance for credit losses - loans to loans receivable 1.07 % 1.10 % 1.11 % 1.11 % 1.12 % WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
SUMMARY OF QUARTERLY AVERAGE BALANCES AND YIELD/COSTS
(Unaudited)At or For the Three Months Ended September 30, June 30, March 31, December 31, September 30, 2024 2024 2024 2023 2023 Average balances (Dollars in Thousands) Interest-earning assets Loans receivable and held for sale $ 1,870,627 $ 1,859,608 $ 1,805,102 $ 1,797,988 $ 1,797,233 Mortgage related securities 170,221 171,895 172,077 172,863 174,202 Debt securities, federal funds sold and short-term investments 115,270 107,992 110,431 106,504 132,935 Total interest-earning assets 2,156,118 2,139,495 2,087,610 2,077,355 2,104,370 Noninterest-earning assets 104,600 104,019 103,815 105,073 105,714 Total assets $ 2,260,718 $ 2,243,514 $ 2,191,425 $ 2,182,428 $ 2,210,084 Interest-bearing liabilities Demand accounts $ 89,334 $ 91,300 $ 87,393 $ 91,868 $ 90,623 Money market, savings, and escrow accounts 304,116 293,483 281,171 302,121 306,806 Certificates of deposit 786,228 758,252 739,543 735,418 719,708 Total interest-bearing deposits 1,179,678 1,143,035 1,108,107 1,129,407 1,117,137 Borrowings 600,570 622,771 602,724 549,210 584,764 Total interest-bearing liabilities 1,780,248 1,765,806 1,710,831 1,678,617 1,701,901 Noninterest-bearing demand deposits 91,532 93,637 92,129 102,261 106,042 Noninterest-bearing liabilities 49,787 48,315 45,484 56,859 46,805 Total liabilities 1,921,567 1,907,758 1,848,444 1,837,737 1,854,748 Equity 339,151 335,756 342,981 344,691 355,336 Total liabilities and equity $ 2,260,718 $ 2,243,514 $ 2,191,425 $ 2,182,428 $ 2,210,084 Average Yield/Costs (annualized) Loans receivable and held for sale 5.65 % 5.54 % 5.46 % 5.36 % 5.26 % Mortgage related securities 2.66 % 2.63 % 2.57 % 2.48 % 2.41 % Debt securities, federal funds sold and short-term investments 5.05 % 4.82 % 4.82 % 4.94 % 4.45 % Total interest-earning assets 5.39 % 5.27 % 5.18 % 5.10 % 4.97 % Demand accounts 0.11 % 0.11 % 0.11 % 0.11 % 0.11 % Money market and savings accounts 1.94 % 1.89 % 1.79 % 1.64 % 1.54 % Certificates of deposit 4.54 % 4.41 % 4.19 % 3.76 % 3.43 % Total interest-bearing deposits 3.53 % 3.42 % 3.26 % 2.90 % 2.64 % Borrowings 4.77 % 4.92 % 4.54 % 4.83 % 4.71 % Total interest-bearing liabilities 3.95 % 3.95 % 3.71 % 3.53 % 3.35 % COMMUNITY BANKING SEGMENT
SUMMARY OF KEY QUARTERLY FINANCIAL DATA
(Unaudited)At or For the Three Months Ended September 30, June 30, March 31, December 31, September 30, 2024 2024 2024 2023 2023 (Dollars in Thousands) Condensed Results of Operations: Net interest income $ 12,250 $ 11,234 $ 11,598 $ 12,056 $ 12,431 Provision (credit) for credit losses (302 ) (279 ) 105 (550 ) 445 Total noninterest income 1,227 1,491 990 894 966 Noninterest expenses: Compensation, payroll taxes, and other employee benefits 5,326 5,116 5,360 5,397 4,618 Occupancy, office furniture and equipment 904 983 1,000 916 852 Advertising 311 229 174 363 200 Data processing 720 687 693 626 672 Communications 80 72 65 75 70 Professional fees 190 177 208 186 176 Real estate owned - 1 13 1 1 Loan processing expense - - - - - Other 602 672 691 628 703 Total noninterest expense 8,133 7,937 8,204 8,192 7,292 Income before income taxes 5,646 5,067 4,279 5,308 5,660 Income tax expense 941 718 1,639 1,234 1,121 Net income $ 4,705 $ 4,349 $ 2,640 $ 4,074 $ 4,539 Efficiency ratio - QTD (non-GAAP) 60.35 % 62.37 % 65.17 % 63.26 % 54.43 % Efficiency ratio - YTD (non-GAAP) 62.58 % 63.77 % 65.17 % 56.86 % 54.94 % MORTGAGE BANKING SEGMENT
SUMMARY OF KEY QUARTERLY FINANCIAL DATA
(Unaudited)At or For the Three Months Ended September 30, June 30, March 31, December 31, September 30, 2024 2024 2024 2023 2023 (Dollars in Thousands) Condensed Results of Operations: Net interest loss $ (760 ) $ (552 ) $ (541 ) $ (367 ) $ (550 ) Provision (credit) for credit losses (75 ) 54 (38 ) 115 - Total noninterest income 21,386 25,081 20,328 16,028 21,452 Noninterest expenses: Compensation, payroll taxes, and other employee benefits 15,930 16,886 14,756 14,881 17,186 Occupancy, office furniture and equipment 953 1,046 1,108 1,105 1,141 Advertising 615 758 740 667 716 Data processing 570 549 508 583 551 Communications 152 168 161 194 173 Professional fees 379 569 520 704 564 Real estate owned - - - - - Loan processing expense 697 861 1,046 756 722 Other 1,261 1,641 617 2,701 1,935 Total noninterest expense 20,557 22,478 19,456 21,591 22,988 Income (loss) before income taxes (benefit) 144 1,997 369 (6,045 ) (2,086 ) Income tax expense (benefit) 194 684 71 (1,827 ) (657 ) Net (loss) income $ (50 ) $ 1,313 $ 298 $ (4,218 ) $ (1,429 ) Efficiency ratio - QTD (non-GAAP) 99.67 % 91.64 % 98.33 % 137.86 % 109.98 % Efficiency ratio - YTD (non-GAAP) 96.23 % 94.62 % 98.33 % 116.99 % 111.63 % Loan originations $ 558,729 $ 634,109 $ 485,109 $ 458,363 $ 597,562 Purchase 88.9 % 92.7 % 93.0 % 95.7 % 95.4 % Refinance 11.1 % 7.3 % 7.0 % 4.3 % 4.6 % Gross margin on loans sold(1) 3.83 % 3.93 % 4.10 % 3.51 % 3.62 % (1) Gross margin on loans sold equals mortgage banking income (excluding the change in interest rate lock value) divided by total loan originations.
