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Waterstone Financial, Inc. Announces Results Of Operations For The Quarter And The Six Months Ended June 30, 2014

WAUWATOSA, Wis., Aug. 1, 2014 /PRNewswire/ -- Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income for the second quarter of 2014 of $3.8 million, compared to $1.9 million for the quarter ended March 31, 2014 and $4.9 million for the second quarter of 2013. Net income per diluted share was $0.11 for the second quarter of 2014 as compared to $0.14 per diluted share for the second quarter of 2013.

"Our community banking operations generated solid loan growth and increasing net income. However, our overall results continue to be impacted by the decline in originations and margins the mortgage industry is experiencing," said Doug Gordon, President and Chief Executive Officer of the Company. "We continue to execute an organic growth strategy to further leverage the capital raised in the first quarter of 2014."

During the quarter, the community banking segment increased loans receivable before allowance for loan losses from $1.10 billion at March 31, 2014 to $1.12 billion at June 30, 2014. The community banking segment net income for the quarter ended June 30, 2014 totaled $2.8 million compared to $2.2 million for the second quarter of 2013. Community banking operations were positively impacted by a $950,000 decline in provision for loan losses from $1.2 million in the second quarter of 2013 to $250,000 in the second quarter of 2014 due to the improving credit quality metrics set forth below. Net income was also positively impacted by a $361,000 increase in net interest income to $10.1 million during the second quarter of 2014 compared to $9.7 million during the second quarter of 2013. The positive impact of the reduction in provision for loan losses and increase in net interest income was partially offset by an increase in real estate owned expense from $12,000 in the second quarter of 2013 to $705,000 in the second quarter of 2014. The mortgage banking segment reported net income of $1.0 million for the quarter ended June 30, 2014 compared to $2.6 million for the quarter ended June 30, 2013. The decrease in mortgage banking income was the result of a decrease in the volume of loans originated and sold as well as a decrease in the margins earned on loan sales in 2014 compared to 2013.

Credit quality continued its steady pace of improvement in the second quarter of 2014. Total nonperforming assets as a percentage of total assets remained consistent at 3.78% at both June 30, 2014 and December 31, 2013 and declined from 5.10% at June 30, 2013. Nonaccrual loans declined by 10% to $46.0 million at June 30, 2014 from $51.0 million at December 31, 2013 while real estate owned declined marginally to $22.1 million from $22.7 million during the same period. This equates to a decline in total nonperforming assets of 8% to $68.1 million at June 30, 2014 from $73.6 million at December 31, 2013. Nonaccrual loans declined by 14% to  $46.0 million at June 30, 2014 from $53.3 million at June 30, 2013 while real estate owned declined by 26% to $22.1 million at June 30, 2014 from $30.0 million at June 30, 2013. This equates to a decline in total nonperforming assets of 18% to $68.1 million at June 30, 2014 from $83.2 million at June 30, 2013. Total delinquent loans declined by 28% to $43.9 million at June 30, 2014 from $60.6 million at June 30, 2013.

About Waterstone Financial, Inc.
Waterstone Financial, Inc. (NASDAQ: WSBF) is a single-bank, holding company headquartered in Wauwatosa, Wis. With $1.8 billion in assets at June 30, 2014, Waterstone has nine community bank branches in the metropolitan Milwaukee market, a loan production office in Minneapolis, Minnesota, and mortgage banking offices in eighteen 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, 2013 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)



2014

2013


Q2

Q1

Q4

Q3

Q2

Performance Ratios:

(dollars in thousands)

Return on average assets

0.85%

0.42%

0.46%

0.79%

1.21%

Return on average equity

3.27%

1.87%

3.58%

6.04%

9.42%

Net interest margin

2.53%

2.31%

2.43%

2.51%

2.60%

Efficiency ratio

81.65%

88.32%

88.04%

79.77%

74.93%







Condensed Income Data:






Net interest income

$ 10,610

$ 9,700

$ 9,561

$ 9,578

$ 9,921

Provision for loan losses

285

250

572

1,000

1,200

Total noninterest income

23,196

17,058

17,029

21,030

26,707

Total noninterest expense

27,603

23,632

23,410

24,416

27,447

Income before income taxes

5,918

2,876

2,608

5,192

7,981

Income tax expense

2,148

993

671

1,973

3,054

Net income

$   3,770

$   1,883

$ 1,937

$  3,219

$  4,927







Asset Quality Data:






Allowance for loan losses

$  21,227

$ 23,391

$ 24,264

$ 24,708

$ 27,767

Net charge-offs

2,449

1,123

1,016

4,059

2,731

Total past due loans

43,885

42,440

44,011

48,881

60,606

Real estate owned

22,117

22,543

22,663

23,147

29,983







Average Balance Sheet Data:






Total assets

1,788,404

1,806,023

1,660,026

1,610,910

1,628,967

Loans receivable and held for sale

1,229,046

1,162,205

1,165,624

1,211,089

1,235,782

Mortgage-related securities

166,748

125,871

126,490

126,447

134,985

Total interest-earning assets

1,680,225

1,706,289

1,557,874

1,513,985

1,530,723

Interest-bearing deposits

807,831

887,679

916,248

855,975

871,565

Borrowings

453,211

444,823

464,035

485,488

485,199

Total interest-bearing liabilities

1,261,042

1,332,502

1,445,487

1,341,463

1,356,764

Total shareholders' equity

461,965

407,977

214,539

211,307

209,699

 

 

WATERSTONE FINANCIAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS



(Unaudited)



June 30,

December 31,


2014

2013

ASSETS

(in thousands)

Cash and cash equivalents

$     112,566

$        429,169

Securities available for sale (at fair value)

278,701

213,418

Loans held for sale (at fair value)

168,470

97,021

Loans receivable, net of allowance for loan losses

1,099,430

1,068,412

Office properties and equipment

26,936

27,090

Federal Home Loan Bank stock (at cost)

17,500

17,500

Cash surrender value of life insurance

50,010

39,378

Real estate owned

22,117

22,663

Prepaid expenses and other assets

26,662

32,388

     Total assets

$   1,802,392

$     1,947,039


LIABILITIES AND SHAREHOLDERS' EQUITY



Deposits

$  848,638

$     1,244,741

Borrowings

454,686

455,197

Advance payments by borrowers for taxes

16,610

2,482

Other liabilities

24,449

30,147

     Total liabilities

1,344,383

1,732,567

Common stock and additional paid-in capital

344

341

Additional paid-in capital

313,803

110,480

Retained earnings

153,409

151,195

Unearned ESOP shares

(10,292)

(854)

Accumulated other comprehensive income, net of taxes

745

(1,429)

Treasury shares, at cost

-

(45,261)

     Total shareholders' equity

458,009

214,472

     Total liabilities and shareholders' equity

$  1,802,392

$     1,947,039

 

 

WATERSTONE FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)



For the Three Months

For the Six Months


Ended June 30,

Ended June 30,


2014

2013

2014

2013


(in thousands, except per share data)

Interest income:





   Loans

$  14,568

$ 14,862

$   28,236

$   30,075

   Mortgage-related securities

748

419

1,307

856

   Debt securities and short-term investments

825

617

1,651

1,153

      Total interest income

16,141

15,898

31,194

32,084

Interest expense:





   Deposits

1,125

1,353

2,185

2,819

   Borrowings

4,406

4,624

8,699

9,198

      Total interest expense

5,531

5,977

10,884

12,017

      Net interest income

10,610

9,921

20,310

20,067

Provision for loan losses

285

1,200

535

2,960

   Net interest income after provision for loan losses

10,325

8,721

19,775

17,107

Noninterest income:





   Mortgage banking income

22,188

25,455

36,690

47,443

   Other

1,008

1,252

3,565

2,297

      Total noninterest income

23,196

26,707

40,255

49,740

Noninterest expense:





   Compensation and employee benefits

18,190

19,944

33,249

36,426

   Occupancy, office furniture and equipment

2,621

1,862

5,306

3,778

   Advertising

838

796

1,574

1,620

   Real estate owned

705

12

1,253

153

   FDIC insurance premiums

304

380

710

1,053

   Other

4,945

4,453

9,142

8,288

      Total noninterest expense

27,603

27,447

51,234

51,318

      Income before income taxes

5,918

7,981

8,796

15,529

Income taxes

2,148

3,054

3,142

5,977

      Net income

$   3,770

$    4,927

$   5,654

$   9,552

Income per share:





   Basic

$     0.11

$      0.14

$     0.17

$       0.28

   Diluted

0.11

0.14

0.16

0.28

 

SOURCE Waterstone Financial, Inc.

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