WAUWATOSA, Wis., Oct. 24, 2014 /PRNewswire/ -- Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income for the third quarter of 2014 of $4.8 million, compared to $3.8 million for the quarter ended June 30, 2014 and $3.2 million for the quarter ended September 30, 2013. Net income per diluted share was $0.14 for the third quarter of 2014 as compared to $0.11 per diluted share for the second quarter of 2014 and $0.09 per diluted share for the third quarter of 2013.
"The community banking and mortgage banking segments performed well during the quarter with revenue and net income up in both segments on a linked quarter and year-over-year basis, reflecting our balance sheet growth, improving credit quality, and focus on operating efficiency," said Doug Gordon, President and Chief Executive Officer of the Company.
The increase in net income compared to the previous quarter and the same quarter in the prior year was attributable to both the community banking and mortgage banking segments. Community banking segment net income totaled $3.4 million for the quarter ended September 30, 2014 compared to $2.8 million for quarter ended June 30, 2014 and $2.5 million for the quarter ended September 30, 2013. Community banking operations were positively impacted by a $1.2 million increase in net interest income to $10.5 million during the third quarter of 2014 compared to $9.3 million during the third quarter of 2013. Net income for the community banking segment was also positively impacted by a $750,000 decline in provision for loan losses from $1.0 million during the third quarter of 2013 to $250,000 in the third quarter of 2014 due to the improving credit quality metrics set forth below. Expense related to real estate owned returned to a more normalized level during the quarter ended September 30, 2014, compared to the quarter ended September 30, 2013, which was positively impacted by property sales with significant gains.
Mortgage banking segment net income totaled $1.2 million for the quarter ended September 30, 2014 compared to $1.0 million for quarter ended June 30, 2014 and $639,000 for the quarter ended September 30, 2013. Mortgage banking operations were positively impacted by a 13.3% increase in the volume of loans originated and sold as well as a 6.3% increase in the margins earned on loan sales during the quarter ended September 30, 2014 compared to the quarter ended September 30, 2013.
Credit quality continued its steady pace of improvement during the third quarter of 2014. Nonaccrual loans have declined by 6.3% to $43.1 million at September 30, 2014 from $46.0 million at June 30, 2014 and have declined 15.4% from $51.0 million at December 31, 2013. Total past due loans declined 21.1% to $34.6 million at September 30, 2014 from $43.9 million at June 30, 2014 and have declined 21.3% from $44.0 million at December 31, 2013. Total loans past due less than 90 days have declined 69.6% to $5.3 million at September 30, 2014 from $17.3 million at June 30, 2014 and have declined 60.1% from $13.2 million from December 31, 2013. The level of loans past due less than 90 days, which represent an early stage indicator of future potential loan loss, is at its lowest level in approximately ten years.
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, Brookfield, Franklin/Hales Corners, Germantown/Menomonee Falls, Oak Creek, Oconomowoc/Lake Country, Pewaukee, Waukesha/Brookfield, West Allis, Wisconsin and a commercial lending branch in Maple Grove, Minnesota. WaterStone Bank is the parent company to Waterstone Mortgage, which offers mortgage banking offices in 16 states. For more information about WaterStone Bank, go to http://www.wsbonline.com.
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. AND SUBSIDIARIES | |||||||
SUMMARY OF KEY QUARTERLY FINANCIAL DATA | |||||||
(unaudited) | |||||||
2014 | 2013 | ||||||
Q3 | Q2 | Q1 | Q4 | Q3 | |||
(Dollars in Thousands) | |||||||
Performance Ratios: | |||||||
Return on average assets | 1.05% | 0.85% | 0.42% | 0.46% | 0.79% | ||
Return on average equity | 4.23% | 3.27% | 1.87% | 3.58% | 6.04% | ||
Net interest margin | 2.55% | 2.53% | 2.31% | 2.43% | 2.51% | ||
Efficiency ratio | 77.62% | 81.65% | 88.32% | 88.04% | 79.77% | ||
Condensed Results of Operations: | |||||||
Net interest income | $ 10,914 | $ 10,610 | $ 9,700 | $ 9,561 | $ 9,578 | ||
Provision for loan losses | 315 | 285 | 250 | 572 | 1,000 | ||
Total noninterest income | 23,911 | 23,196 | 17,058 | 17,029 | 21,030 | ||
Total noninterest expense | 27,030 | 27,603 | 23,632 | 23,410 | 24,416 | ||
Income before income taxes | 7,480 | 5,918 | 2,876 | 2,608 | 5,192 | ||
Income tax expense | 2,715 | 2,148 | 993 | 671 | 1,973 | ||
Net income | $ 4,765 | $ 3,770 | $ 1,883 | $ 1,937 | $ 3,219 | ||
Asset Quality Data: | |||||||
Total non accrual loans | $ 43,136 | $ 46,021 | $ 47,317 | $ 50,961 | $ 57,422 | ||
Real estate owned | 25,837 | 22,117 | 22,543 | 22,663 | 23,147 | ||
Total nonperforming assets | $ 68,973 | $ 68,138 | $ 69,860 | $ 73,624 | $ 80,569 | ||
Loans past due less than 90 days | $ 5,280 | $ 17,337 | $ 16,829 | $ 13,231 | $ 13,538 | ||
Loans past due 90 days or more | 29,345 | 26,548 | 25,611 | 30,780 | 35,343 | ||
Total past due loans | $ 34,625 | $ 43,885 | $ 42,440 | $ 44,011 | $ 48,881 | ||
Allowance for loan losses | 20,439 | 21,227 | 23,391 | 24,264 | 24,708 | ||
Net charge offs | 1,103 | 2,449 | 1,123 | 1,016 | 4,059 | ||
Average Balance Sheet Data: | |||||||
Total assets | 1,797,932 | 1,788,404 | 1,806,023 | 1,660,026 | 1,610,910 | ||
Loans receivable and held for sale | 1,277,634 | 1,299,046 | 1,162,205 | 1,165,624 | 1,211,089 | ||
Mortgage-related securities | 183,356 | 166,748 | 125,871 | 126,490 | 126,447 | ||
Total interest-earning assets | 1,700,077 | 1,680,225 | 1,706,289 | 1,557,874 | 1,513,985 | ||
Interest-bearing deposits | 836,817 | 807,831 | 887,679 | 916,248 | 855,975 | ||
Borrowings | 438,644 | 453,211 | 444,823 | 464,035 | 485,488 | ||
Total interest-bearing liabilities | 1,275,461 | 1,261,042 | 1,332,502 | 1,445,487 | 1,341,463 | ||
Total shareholders' equity | 446,615 | 461,965 | 407,977 | 214,539 | 211,307 |
WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES | |||||
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | |||||
(Unaudited) | |||||
September 30, 2014 | December 31, 2013 | ||||
Assets | (In Thousands, except share data) | ||||
Cash | $ | 110,848 | 428,832 | ||
Federal funds sold | 25,732 | 93 | |||
Interest-earning deposits in other financial institutions and other short term investments | 4,702 | 244 | |||
Cash and cash equivalents | 141,282 | 429,169 | |||
Securities available for sale (at fair value) | 279,373 | 213,418 | |||
Loans held for sale (at fair value) | 144,193 | 97,021 | |||
Loans receivable | 1,111,719 | 1,092,676 | |||
Less: Allowance for loan losses | 20,439 | 24,264 | |||
Loans receivable, net | 1,091,280 | 1,068,412 | |||
Office properties and equipment, net | 26,274 | 27,090 | |||
Federal Home Loan Bank stock (at cost) | 17,500 | 17,500 | |||
Cash surrender value of life insurance | 50,640 | 39,378 | |||
Real estate owned | 25,837 | 22,663 | |||
Prepaid expenses and other assets | 22,946 | 32,388 | |||
Total assets | $ | 1,799,325 | 1,947,039 | ||
Liabilities and Shareholders' Equity | |||||
Liabilities: | |||||
Demand deposits | $ | 90,600 | 93,275 | ||
Money market and savings deposits | 119,974 | 513,716 | |||
Time deposits | 664,577 | 637,750 | |||
Total deposits | 875,151 | 1,244,741 | |||
Short-term borrowings | - | 21,197 | |||
Long-term borrowings | 434,000 | 434,000 | |||
Advance payments by borrowers for taxes | 23,129 | 2,482 | |||
Other liabilities | 18,532 | 30,147 | |||
Total liabilities | 1,350,812 | 1,732,567 | |||
Shareholders' equity: | |||||
Common stock (par value $.01 per share) | 344 | 341 | |||
Additional paid-in capital | 313,841 | 110,480 | |||
Retained earnings | 156,611 | 151,195 | |||
Unearned ESOP shares | (22,848) | (854) | |||
Accumulated other comprehensive (loss) income, net of taxes | 565 | (1,429) | |||
Treasury shares (2,724,353 shares), at cost | - | (45,261) | |||
Total shareholders' equity | 448,513 | 214,472 | |||
Total liabilities and shareholders' equity | $ | 1,799,325 | 1,947,039 |
WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES | |||||
CONSOLIDATED STATEMENTS OF INCOME | |||||
(Unaudited) | |||||
Three months ended | Nine months ended | ||||
September 30, 2014 | September 30, 2014 | ||||
2014 | 2013 | 2014 | 2013 | ||
(In Thousands, except per share amounts) | |||||
Interest income: | |||||
Loans | $ | 14,942 | 14,425 | 43,178 | 44,500 |
Mortgage-related securities | 835 | 455 | 2,142 | 1,311 | |
Debt securities, federal funds sold and short-term investments | 823 | 653 | 2,474 | 1,806 | |
Total interest income | 16,600 | 15,533 | 47,794 | 47,617 | |
Interest expense: | |||||
Deposits | 1,337 | 1,237 | 3,522 | 4,055 | |
Borrowings | 4,349 | 4,718 | 13,048 | 13,917 | |
Total interest expense | 5,686 | 5,955 | 16,570 | 17,972 | |
Net interest income | 10,914 | 9,578 | 31,224 | 29,645 | |
Provision for loan losses | 315 | 1,000 | 850 | 3,960 | |
Net interest income after provision for loan losses | 10,599 | 8,578 | 30,374 | 25,685 | |
Noninterest income: | |||||
Service charges on loans and deposits | 317 | 316 | 904 | 1,029 | |
Increase in cash surrender value of life insurance | 630 | 528 | 1,082 | 929 | |
Mortgage banking income | 22,053 | 18,173 | 58,743 | 65,616 | |
(Loss) gain on sale of available for sale securities | - | - | - | (9) | |
Other | 911 | 2,013 | 3,436 | 3,205 | |
Total noninterest income | 23,911 | 21,030 | 64,165 | 70,770 | |
Noninterest expenses: | |||||
Compensation, payroll taxes, and other employee benefits | 18,169 | 16,575 | 51,418 | 53,001 | |
Occupancy, office furniture, and equipment | 2,577 | 2,218 | 7,883 | 5,995 | |
Advertising | 678 | 718 | 2,252 | 2,339 | |
Data processing | 582 | 516 | 1,701 | 1,476 | |
Communications | 430 | 398 | 1,250 | 1,148 | |
Professional fees | 441 | 626 | 1,471 | 1,762 | |
Real estate owned | 665 | (163) | 1,918 | (9) | |
FDIC insurance premiums | 336 | 516 | 1,046 | 1,569 | |
Other | 3,152 | 3,012 | 9,325 | 8,453 | |
Total noninterest expenses | 27,030 | 24,416 | 78,264 | 75,734 | |
Income before income taxes | 7,480 | 5,192 | 16,275 | 20,721 | |
Income tax expense | 2,715 | 1,973 | 5,857 | 7,950 | |
Net income | $ | 4,765 | 3,219 | 10,418 | 12,771 |
Income per share: | |||||
Basic | $ | 0.14 | 0.09 | 0.31 | 0.37 |
Diluted | $ | 0.14 | 0.09 | 0.31 | 0.37 |
Weighted average shares outstanding: | |||||
Basic | 33,003 | 34,196 | 33,759 | 34,174 | |
Diluted | 33,232 | 34,471 | 33,997 | 34,428 |
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SOURCE Waterstone Financial, Inc.