Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Waterstone Financial, Inc. Announces Results of Operations for the Quarter and Six Months Ended June 30, 2023 By: Waterstone Financial, Inc. via GlobeNewswire July 25, 2023 at 16:02 PM EDT WAUWATOSA, Wis, July 25, 2023 (GLOBE NEWSWIRE) -- Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income of $4.0 million, or $0.20 per diluted share for the quarter ended June 30, 2023 compared to $8.0 million, or $0.36 per diluted share for the quarter ended June 30, 2022. Net income per diluted share was $0.30 for the six months ended June 30, 2023 compared to net income per diluted share of $0.58 for the six months ended June 30, 2022. “The Community Banking segment’s continued strong asset quality metrics and growing loan portfolio stand out as bring spots in an otherwise challenging environment,” said Douglas Gordon, Chief Executive Officer of Waterstone Financial, Inc. “While we achieved marginally better performance compared to recent quarters, the Mortgage Banking segment loss continues to reflect an industry that is challenged by low levels of housing inventory and higher mortgage rates. Both dynamics have resulted in lower volumes and margins for the mortgage banking inventory. In spite of the challenges in the market, we announced a 2,000,000 share repurchase program during the quarter, as we believe in the long-term success of the Company and providing a high level of total return to our shareholders.” Highlights of the Quarter Ended June 30, 2023 Waterstone Financial, Inc. (Consolidated) ●Consolidated net income of Waterstone Financial, Inc. totaled $4.0 million for the quarter ended June 30, 2023, compared to $8.0 million for the quarter ended June 30, 2022.●Consolidated return on average assets was 0.74% for the quarter ended June 30, 2023 compared to 1.61% for the quarter ended June 30, 2022.●Consolidated return on average equity was 4.41% for the quarter ended June 30, 2023 and 7.93% for the quarter ended June 30, 2022.●Dividends declared during the quarter ended June 30, 2023 totaled $0.20 per common share.●We repurchased approximately 511,000 shares at a cost (including the excise tax) of $7.3 million, or $14.32 per share, during the quarter ended June 30, 2023.●We authorized a new share repurchase program during the quarter that allows to repurchase up to 2,000,000 million shares issued and outstanding.●Nonperforming assets as percentage of total assets was 0.19% at June 30, 2023, 0.22% at March 31, 2023, and 0.39% at June 30, 2022.●Past due loans as a percentage of total loans was 0.50% at June 30, 2023, 0.64% at March 31, 2023, and 0.60% at June 30, 2022.●Book value per share was $16.64 at June 30, 2023 and $16.71 at December 31, 2022. Community Banking Segment ●Pre-tax income totaled $6.4 million for the quarter ended June 30, 2023, which represents a $1.6 million, or 19.9%, decrease compared to $8.0 million for the quarter ended June 30, 2022.●Past due loans at the community banking segment was $5.7 million at June 30, 2023, $7.5 million at March 31, 2023, and $5.8 million at June 30, 2022.●Net interest income totaled $13.2 million for the quarter ended June 30, 2023, which represents a $472,000, or 3.4%, decrease compared to $13.7 million for the quarter ended June 30, 2022.●Average loans held for investment totaled $1.59 billion during the quarter ended June 30, 2023, which represents an increase of $339.6 million, or 27.2%, compared to $1.25 billion for the quarter ended June 30, 2022. The increase was primarily due to increases in the single-family and multi-family mortgages. Average loans held for investment increased $55.5 million compared to $1.53 billion for the quarter ended March 31, 2023. The increase was primarily due to an increase in the single-family mortgages.●The community banking segment purchased $59.9 million adjustable-rate loans that were originated by the mortgage banking segment during the quarter ended June 30, 2023.●Net interest margin decreased 55 basis points to 2.47% for the quarter ended June 30, 2023 compared to 3.02% for the quarter ended June 30, 2022, 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 decreased 41 basis points compared to 2.88% for the quarter ended March 31, 2023, 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 provision for credit losses related to funded loans of $619,000 for the quarter ended June 30, 2023 compared to a provision for credit losses related to funded loans of $170,000 for the quarter ended June 30, 2022. The current quarter increase was primarily due to an increase in originations and loan balance. The negative provision for credit losses related to unfunded loan commitments was $462,000 for the quarter ended June 30, 2023 compared to a negative provision for credit losses related to unfunded loan commitments of $211,000 for the quarter ended June 30, 2022. The decrease for the quarter ended June 30, 2023 was due primarily to a decrease of loans in the loan commitment pipeline as loan funding activity increased during the quarter.●The efficiency ratio, a non-GAAP ratio, was 55.81% for the quarter ended June 30, 2023, compared to 48.43% for the quarter ended June 30, 2022.●Average deposits (excluding escrow accounts) totaled $1.18 billion during the quarter ended June 30, 2023, a decrease of $24.3 million, or 2.0%, compared to $1.21 billion during the quarter ended June 30, 2022. Average deposits increased $9.7 million, or 3.3% annualized, compared to the $1.17 billion for the quarter ended March 31, 2023.●Other noninterest expense increased $635,000 to $1.6 million during the quarter ended June 30, 2023 compared to $1.0 million during the quarter ended June 30, 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 $1.1 million during the quarter ended June 30, 2023 compared to $504,000 during the quarter ended June 30, 2022. Mortgage Banking Segment ●Pre-tax loss totaled $1.4 million for the quarter ended June 30, 2023, compared to $2.3 million of pre-tax income for the quarter ended June 30, 2022.●Loan originations decreased $155.4 million, or 20.0%, to $623.3 million during the quarter ended June 30, 2023, compared to $778.8 million during the quarter ended June 30, 2022. Origination volume relative to purchase activity accounted for 96.4% of originations for the quarter ended June 30, 2023 compared to 90.4% of total originations for the quarter ended June 30, 2022.●Mortgage banking non-interest income decreased $7.1 million, or 23.5%, to $23.0 million for the quarter ended June 30, 2023, compared to $30.1 million for the quarter ended June 30, 2022.●Gross margin on loans sold decreased to 3.73% for the quarter ended June 30, 2023, compared to 3.85% for the quarter ended June 30, 2022.●Total compensation, payroll taxes and other employee benefits decreased $3.4 million, or 15.9%, to $17.9 million during the quarter ended June 30, 2023 compared to $21.3 million during the quarter ended June 30, 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 June 30, For The Six Months Ended June 30, 2023 2022 2023 2022 (In Thousands, except per share amounts) Interest income: Loans $22,150 $14,546 $42,035 $28,046 Mortgage-related securities 969 821 1,912 1,423 Debt securities, federal funds sold and short-term investments 1,128 1,049 2,190 1,977 Total interest income 24,247 16,416 46,137 31,446 Interest expense: Deposits 5,955 751 10,043 1,530 Borrowings 5,617 1,584 9,624 3,971 Total interest expense 11,572 2,335 19,667 5,501 Net interest income 12,675 14,081 26,470 25,945 Provision (credit) for credit losses 186 48 646 (28)Net interest income after provision for loan losses 12,489 14,033 25,824 25,973 Noninterest income: Service charges on loans and deposits 611 666 1,041 1,176 Increase in cash surrender value of life insurance 714 724 1,039 1,040 Mortgage banking income 21,914 29,410 38,684 57,685 Other 286 438 1,315 1,155 Total noninterest income 23,525 31,238 42,079 61,056 Noninterest expenses: Compensation, payroll taxes, and other employee benefits 22,395 25,793 42,447 51,328 Occupancy, office furniture, and equipment 2,046 2,056 4,309 4,244 Advertising 944 962 1,833 1,867 Data processing 1,090 1,144 2,212 2,346 Communications 225 258 476 598 Professional fees 618 349 1,034 810 Real estate owned 1 - 2 5 Loan processing expense 932 1,134 1,950 2,565 Other 2,671 3,354 5,766 6,221 Total noninterest expenses 30,922 35,050 60,029 69,984 Income before income taxes 5,092 10,221 7,874 17,045 Income tax expense 1,085 2,231 1,712 3,763 Net income $4,007 $7,990 $6,162 $13,282 Income per share: Basic $0.20 $0.36 $0.30 $0.59 Diluted $0.20 $0.36 $0.30 $0.58 Weighted average shares outstanding: Basic 20,384 22,126 20,635 22,626 Diluted ��20,431 22,229 20,702 22,768 WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION June 30, 2023 December 31, 2022 (Unaudited) Assets (In Thousands, except per share amounts) Cash $53,364 $33,700 Federal funds sold 7,563 10,683 Interest-earning deposits in other financial institutions and other short-term inv. 263 2,259 Cash and cash equivalents 61,190 46,642 Securities available for sale (at fair value) 195,011 196,588 Loans held for sale (at fair value) 203,268 131,188 Loans receivable 1,614,684 1,510,178 Less: Allowance for credit losses ("ACL") - loans 18,374 17,757 Loans receivable, net 1,596,310 1,492,421 Office properties and equipment, net 20,335 21,105 Federal Home Loan Bank stock (at cost) 26,798 17,357 Cash surrender value of life insurance 67,188 66,443 Real estate owned, net 145 145 Prepaid expenses and other assets 59,580 59,783 Total assets $2,229,825 $2,031,672 Liabilities and Shareholders' Equity Liabilities: Demand deposits $197,102 $230,596 Money market and savings deposits 280,758 326,145 Time deposits 709,108 642,271 Total deposits 1,186,968 1,199,012 Borrowings 614,877 386,784 Advance payments by borrowers for taxes 20,610 5,334 Other liabilities 51,607 70,056 Total liabilities 1,874,062 1,661,186 Shareholders' equity: Preferred stock - - Common stock 214 222 Additional paid-in capital 116,611 128,550 Retained earnings 272,229 274,246 Unearned ESOP shares (12,463) (13,056)Accumulated other comprehensive loss, net of taxes (20,828) (19,476)Total shareholders' equity 355,763 370,486 Total liabilities and shareholders' equity $2,229,825 $2,031,672 Share Information Shares outstanding 21,376 22,174 Book value per share $16.64 $16.71 WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES SUMMARY OF KEY QUARTERLY FINANCIAL DATA (Unaudited) At or For the Three Months Ended June 30, March 31, December 31, September |30, June 30, 2023 2023 2022 2022 2022 (Dollars in Thousands, except per share amounts) Condensed Results of Operations: Net interest income $12,675 $13,795 $15,611 $15,398 $14,081 Provision for credit losses 186 460 664 332 48 Total noninterest income 23,525 18,554 17,095 27,404 31,238 Total noninterest expense 30,922 29,107 31,384 35,694 35,050 Income before income taxes 5,092 2,782 658 6,776 10,221 Income tax (benefit) expense 1,085 627 (277) 1,506 2,231 Net income $4,007 $2,155 $935 $5,270 $7,990 Income per share – basic $0.20 $0.10 $0.04 $0.25 $0.36 Income per share – diluted $0.20 $0.10 $0.04 $0.25 $0.36 Dividends declared per common share $0.20 $0.20 $0.20 $0.20 $0.20 Performance Ratios (annualized): Return on average assets - QTD 0.74% 0.43% 0.19% 1.08% 1.61%Return on average equity - QTD 4.41% 2.35% 0.99% 5.38% 7.93%Net interest margin - QTD 2.47% 2.88% 3.29% 3.34% 3.02% Return on average assets - YTD 0.59% 0.43% 0.96% 1.22% 1.30%Return on average equity - YTD 3.37% 2.35% 4.91% 6.09% 6.42%Net interest margin - YTD 2.67% 2.88% 3.00% 2.90% 2.69% Asset Quality Ratios: Past due loans to total loans 0.50% 0.64% 0.41% 0.48% 0.60%Nonaccrual loans to total loans 0.26% 0.29% 0.29% 0.37% 0.59%Nonperforming assets to total assets 0.19% 0.22% 0.22% 0.27% 0.39%Allowance for credit losses - loans to loans receivable 1.14% 1.14% 1.18% 1.29% 1.35% WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES SUMMARY OF QUARTERLY AVERAGE BALANCES AND YIELD/COSTS (Unaudited) At or For the Three Months Ended June 30, March 31, December 31, September 30, June 30, 2023 2023 2022 2022 2022 Average balances (Dollars in Thousands) Interest-earning assets Loans receivable and held for sale $1,759,001 $1,654,942 $1,578,790 $1,492,462 $1,433,452 Mortgage related securities 171,938 170,218 170,209 172,807 168,000 Debt securities, federal funds sold and short-term investments 123,195 115,962 130,973 162,211 269,823 Total interest-earning assets 2,054,134 1,941,122 1,879,972 1,827,480 1,871,275 Noninterest-earning assets 108,320 107,009 122,643 114,274 117,248 Total assets $2,162,454 $2,048,131 $2,002,615 $1,941,754 $1,988,523 Interest-bearing liabilities Demand accounts $69,147 $68,564 $75,449 $75,058 $70,674 Money market, savings, and escrow accounts 305,576 322,220 349,820 398,643 412,321 Certificates of deposit 695,310 648,531 628,375 586,012 584,244 Total interest-bearing deposits 1,070,033 1,039,315 1,053,644 1,059,713 1,067,239 Borrowings 551,545 441,716 333,249 296,111 326,068 Total interest-bearing liabilities 1,621,578 1,481,031 1,386,893 1,355,824 1,393,307 Noninterest-bearing demand deposits 130,291 143,296 177,217 153,591 154,070 Noninterest-bearing liabilities 46,446 51,840 63,866 43,683 36,962 Total liabilities 1,798,315 1,676,167 1,627,976 1,553,098 1,584,339 Equity 364,139 371,964 374,639 388,656 404,184 Total liabilities and equity $2,162,454 $2,048,131 $2,002,615 $1,941,754 $1,988,523 Average Yield/Costs (annualized) Loans receivable and held for sale 5.05% 4.87% 4.69% 4.32% 4.07%Mortgage related securities 2.26% 2.25% 2.13% 2.07% 1.96%Debt securities, federal funds sold and short-term investments 3.67% 3.71% 3.35% 2.41% 1.56%Total interest-earning assets 4.73% 4.57% 4.36% 3.93% 3.52% Demand accounts 0.09% 0.08% 0.08% 0.08% 0.09%Money market and savings accounts 1.42% 1.26% 0.67% 0.21% 0.19%Certificates of deposit 2.80% 1.92% 1.10% 0.51% 0.37%Total interest-bearing deposits 2.23% 1.60% 0.89% 0.37% 0.28%Borrowings 4.08% 3.68% 3.23% 2.34% 1.95%Total interest-bearing liabilities 2.86% 2.22% 1.45% 0.80% 0.67% COMMUNITY BANKING SEGMENT SUMMARY OF KEY QUARTERLY FINANCIAL DATA (Unaudited) At or For the Three Months Ended June 30, March 31, December 31, September 30, June 30, 2023 2023 2022 2022 2022 (Dollars in Thousands) Condensed Results of Operations: Net interest income $13,238 $14,008 $15,737 $15,507 $13,710 Provision (credit) for credit losses 158 388 624 234 (41)Total noninterest income 1,540 987 1,033 1,116 1,640 Noninterest expenses: Compensation, payroll taxes, and other employee benefits 4,683 5,168 4,781 4,424 4,596 Occupancy, office furniture and equipment 873 1,031 877 955 876 Advertising 230 184 203 213 244 Data processing 602 601 551 539 531 Communications 72 78 92 108 63 Professional fees 146 218 153 123 118 Real estate owned 1 1 13 1 - Loan processing expense - - - - - Other 1,641 896 2,468 1,477 1,006 Total noninterest expense 8,248 8,177 9,138 7,840 7,434 Income before income taxes 6,372 6,430 7,008 8,549 7,957 Income tax expense 1,182 1,600 1,308 1,983 1,658 Net income $5,190 $4,830 $5,700 $6,566 $6,299 Efficiency ratio - QTD (non-GAAP) 55.81% 54.53% 54.49% 47.16% 48.43%Efficiency ratio - YTD (non-GAAP) 55.17% 54.53% 52.10% 51.20% 53.57% MORTGAGE BANKING SEGMENT SUMMARY OF KEY QUARTERLY FINANCIAL DATA (Unaudited) At or For the Three Months Ended June 30, March 31, December 31, September 30, June 30, 2023 2023 2022 2022 2022 (Dollars in Thousands) Condensed Results of Operations: Net interest (loss) income $(622) $(282) $(241) $(155) $370 Provision for credit losses 28 72 40 98 89 Total noninterest income 23,041 17,951 18,066 27,305 30,126 Noninterest expenses: Compensation, payroll taxes, and other employee benefits 17,929 15,099 17,397 21,864 21,311 Occupancy, office furniture and equipment 1,173 1,232 1,289 1,341 1,180 Advertising 714 705 769 924 718 Data processing 480 516 490 543 613 Communications 153 173 197 194 195 Professional fees 466 188 453 265 222 Real estate owned - - - - - Loan processing expense 932 1,018 1,059 1,120 1,134 Other 1,914 2,403 2,584 2,571 2,733 Total noninterest expense 23,761 21,334 24,238 28,822 28,106 (Loss) income before income taxes (1,370) (3,737) (6,453) (1,770) 2,301 Income tax (benefit) expense (126) (1,002) (1,602) (470) 578 Net (loss) income $(1,244) $(2,735) $(4,851) $(1,300) $1,723 Efficiency ratio - QTD (non-GAAP) 105.99% 120.74% 135.98% 106.16% 92.16%Efficiency ratio - YTD (non-GAAP) 112.49% 120.74% 104.02% 97.42% 93.42% Loan originations $623,342 $442,710 $546,628 $729,897 $778,760 Purchase 96.4% 96.5% 95.6% 94.2% 90.4%Refinance 3.6% 3.5% 4.4% 5.8% 9.6%Gross margin on loans sold(1) 3.73% 3.78% 3.41% 3.70% 3.85% (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. GerkeChief Financial Officer414-459-4012markgerke@wsbonline.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Waterstone Financial, Inc. Announces Results of Operations for the Quarter and Six Months Ended June 30, 2023 By: Waterstone Financial, Inc. via GlobeNewswire July 25, 2023 at 16:02 PM EDT WAUWATOSA, Wis, July 25, 2023 (GLOBE NEWSWIRE) -- Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income of $4.0 million, or $0.20 per diluted share for the quarter ended June 30, 2023 compared to $8.0 million, or $0.36 per diluted share for the quarter ended June 30, 2022. Net income per diluted share was $0.30 for the six months ended June 30, 2023 compared to net income per diluted share of $0.58 for the six months ended June 30, 2022. “The Community Banking segment’s continued strong asset quality metrics and growing loan portfolio stand out as bring spots in an otherwise challenging environment,” said Douglas Gordon, Chief Executive Officer of Waterstone Financial, Inc. “While we achieved marginally better performance compared to recent quarters, the Mortgage Banking segment loss continues to reflect an industry that is challenged by low levels of housing inventory and higher mortgage rates. Both dynamics have resulted in lower volumes and margins for the mortgage banking inventory. In spite of the challenges in the market, we announced a 2,000,000 share repurchase program during the quarter, as we believe in the long-term success of the Company and providing a high level of total return to our shareholders.” Highlights of the Quarter Ended June 30, 2023 Waterstone Financial, Inc. (Consolidated) ●Consolidated net income of Waterstone Financial, Inc. totaled $4.0 million for the quarter ended June 30, 2023, compared to $8.0 million for the quarter ended June 30, 2022.●Consolidated return on average assets was 0.74% for the quarter ended June 30, 2023 compared to 1.61% for the quarter ended June 30, 2022.●Consolidated return on average equity was 4.41% for the quarter ended June 30, 2023 and 7.93% for the quarter ended June 30, 2022.●Dividends declared during the quarter ended June 30, 2023 totaled $0.20 per common share.●We repurchased approximately 511,000 shares at a cost (including the excise tax) of $7.3 million, or $14.32 per share, during the quarter ended June 30, 2023.●We authorized a new share repurchase program during the quarter that allows to repurchase up to 2,000,000 million shares issued and outstanding.●Nonperforming assets as percentage of total assets was 0.19% at June 30, 2023, 0.22% at March 31, 2023, and 0.39% at June 30, 2022.●Past due loans as a percentage of total loans was 0.50% at June 30, 2023, 0.64% at March 31, 2023, and 0.60% at June 30, 2022.●Book value per share was $16.64 at June 30, 2023 and $16.71 at December 31, 2022. Community Banking Segment ●Pre-tax income totaled $6.4 million for the quarter ended June 30, 2023, which represents a $1.6 million, or 19.9%, decrease compared to $8.0 million for the quarter ended June 30, 2022.●Past due loans at the community banking segment was $5.7 million at June 30, 2023, $7.5 million at March 31, 2023, and $5.8 million at June 30, 2022.●Net interest income totaled $13.2 million for the quarter ended June 30, 2023, which represents a $472,000, or 3.4%, decrease compared to $13.7 million for the quarter ended June 30, 2022.●Average loans held for investment totaled $1.59 billion during the quarter ended June 30, 2023, which represents an increase of $339.6 million, or 27.2%, compared to $1.25 billion for the quarter ended June 30, 2022. The increase was primarily due to increases in the single-family and multi-family mortgages. Average loans held for investment increased $55.5 million compared to $1.53 billion for the quarter ended March 31, 2023. The increase was primarily due to an increase in the single-family mortgages.●The community banking segment purchased $59.9 million adjustable-rate loans that were originated by the mortgage banking segment during the quarter ended June 30, 2023.●Net interest margin decreased 55 basis points to 2.47% for the quarter ended June 30, 2023 compared to 3.02% for the quarter ended June 30, 2022, 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 decreased 41 basis points compared to 2.88% for the quarter ended March 31, 2023, 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 provision for credit losses related to funded loans of $619,000 for the quarter ended June 30, 2023 compared to a provision for credit losses related to funded loans of $170,000 for the quarter ended June 30, 2022. The current quarter increase was primarily due to an increase in originations and loan balance. The negative provision for credit losses related to unfunded loan commitments was $462,000 for the quarter ended June 30, 2023 compared to a negative provision for credit losses related to unfunded loan commitments of $211,000 for the quarter ended June 30, 2022. The decrease for the quarter ended June 30, 2023 was due primarily to a decrease of loans in the loan commitment pipeline as loan funding activity increased during the quarter.●The efficiency ratio, a non-GAAP ratio, was 55.81% for the quarter ended June 30, 2023, compared to 48.43% for the quarter ended June 30, 2022.●Average deposits (excluding escrow accounts) totaled $1.18 billion during the quarter ended June 30, 2023, a decrease of $24.3 million, or 2.0%, compared to $1.21 billion during the quarter ended June 30, 2022. Average deposits increased $9.7 million, or 3.3% annualized, compared to the $1.17 billion for the quarter ended March 31, 2023.●Other noninterest expense increased $635,000 to $1.6 million during the quarter ended June 30, 2023 compared to $1.0 million during the quarter ended June 30, 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 $1.1 million during the quarter ended June 30, 2023 compared to $504,000 during the quarter ended June 30, 2022. Mortgage Banking Segment ●Pre-tax loss totaled $1.4 million for the quarter ended June 30, 2023, compared to $2.3 million of pre-tax income for the quarter ended June 30, 2022.●Loan originations decreased $155.4 million, or 20.0%, to $623.3 million during the quarter ended June 30, 2023, compared to $778.8 million during the quarter ended June 30, 2022. Origination volume relative to purchase activity accounted for 96.4% of originations for the quarter ended June 30, 2023 compared to 90.4% of total originations for the quarter ended June 30, 2022.●Mortgage banking non-interest income decreased $7.1 million, or 23.5%, to $23.0 million for the quarter ended June 30, 2023, compared to $30.1 million for the quarter ended June 30, 2022.●Gross margin on loans sold decreased to 3.73% for the quarter ended June 30, 2023, compared to 3.85% for the quarter ended June 30, 2022.●Total compensation, payroll taxes and other employee benefits decreased $3.4 million, or 15.9%, to $17.9 million during the quarter ended June 30, 2023 compared to $21.3 million during the quarter ended June 30, 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 June 30, For The Six Months Ended June 30, 2023 2022 2023 2022 (In Thousands, except per share amounts) Interest income: Loans $22,150 $14,546 $42,035 $28,046 Mortgage-related securities 969 821 1,912 1,423 Debt securities, federal funds sold and short-term investments 1,128 1,049 2,190 1,977 Total interest income 24,247 16,416 46,137 31,446 Interest expense: Deposits 5,955 751 10,043 1,530 Borrowings 5,617 1,584 9,624 3,971 Total interest expense 11,572 2,335 19,667 5,501 Net interest income 12,675 14,081 26,470 25,945 Provision (credit) for credit losses 186 48 646 (28)Net interest income after provision for loan losses 12,489 14,033 25,824 25,973 Noninterest income: Service charges on loans and deposits 611 666 1,041 1,176 Increase in cash surrender value of life insurance 714 724 1,039 1,040 Mortgage banking income 21,914 29,410 38,684 57,685 Other 286 438 1,315 1,155 Total noninterest income 23,525 31,238 42,079 61,056 Noninterest expenses: Compensation, payroll taxes, and other employee benefits 22,395 25,793 42,447 51,328 Occupancy, office furniture, and equipment 2,046 2,056 4,309 4,244 Advertising 944 962 1,833 1,867 Data processing 1,090 1,144 2,212 2,346 Communications 225 258 476 598 Professional fees 618 349 1,034 810 Real estate owned 1 - 2 5 Loan processing expense 932 1,134 1,950 2,565 Other 2,671 3,354 5,766 6,221 Total noninterest expenses 30,922 35,050 60,029 69,984 Income before income taxes 5,092 10,221 7,874 17,045 Income tax expense 1,085 2,231 1,712 3,763 Net income $4,007 $7,990 $6,162 $13,282 Income per share: Basic $0.20 $0.36 $0.30 $0.59 Diluted $0.20 $0.36 $0.30 $0.58 Weighted average shares outstanding: Basic 20,384 22,126 20,635 22,626 Diluted ��20,431 22,229 20,702 22,768 WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION June 30, 2023 December 31, 2022 (Unaudited) Assets (In Thousands, except per share amounts) Cash $53,364 $33,700 Federal funds sold 7,563 10,683 Interest-earning deposits in other financial institutions and other short-term inv. 263 2,259 Cash and cash equivalents 61,190 46,642 Securities available for sale (at fair value) 195,011 196,588 Loans held for sale (at fair value) 203,268 131,188 Loans receivable 1,614,684 1,510,178 Less: Allowance for credit losses ("ACL") - loans 18,374 17,757 Loans receivable, net 1,596,310 1,492,421 Office properties and equipment, net 20,335 21,105 Federal Home Loan Bank stock (at cost) 26,798 17,357 Cash surrender value of life insurance 67,188 66,443 Real estate owned, net 145 145 Prepaid expenses and other assets 59,580 59,783 Total assets $2,229,825 $2,031,672 Liabilities and Shareholders' Equity Liabilities: Demand deposits $197,102 $230,596 Money market and savings deposits 280,758 326,145 Time deposits 709,108 642,271 Total deposits 1,186,968 1,199,012 Borrowings 614,877 386,784 Advance payments by borrowers for taxes 20,610 5,334 Other liabilities 51,607 70,056 Total liabilities 1,874,062 1,661,186 Shareholders' equity: Preferred stock - - Common stock 214 222 Additional paid-in capital 116,611 128,550 Retained earnings 272,229 274,246 Unearned ESOP shares (12,463) (13,056)Accumulated other comprehensive loss, net of taxes (20,828) (19,476)Total shareholders' equity 355,763 370,486 Total liabilities and shareholders' equity $2,229,825 $2,031,672 Share Information Shares outstanding 21,376 22,174 Book value per share $16.64 $16.71 WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES SUMMARY OF KEY QUARTERLY FINANCIAL DATA (Unaudited) At or For the Three Months Ended June 30, March 31, December 31, September |30, June 30, 2023 2023 2022 2022 2022 (Dollars in Thousands, except per share amounts) Condensed Results of Operations: Net interest income $12,675 $13,795 $15,611 $15,398 $14,081 Provision for credit losses 186 460 664 332 48 Total noninterest income 23,525 18,554 17,095 27,404 31,238 Total noninterest expense 30,922 29,107 31,384 35,694 35,050 Income before income taxes 5,092 2,782 658 6,776 10,221 Income tax (benefit) expense 1,085 627 (277) 1,506 2,231 Net income $4,007 $2,155 $935 $5,270 $7,990 Income per share – basic $0.20 $0.10 $0.04 $0.25 $0.36 Income per share – diluted $0.20 $0.10 $0.04 $0.25 $0.36 Dividends declared per common share $0.20 $0.20 $0.20 $0.20 $0.20 Performance Ratios (annualized): Return on average assets - QTD 0.74% 0.43% 0.19% 1.08% 1.61%Return on average equity - QTD 4.41% 2.35% 0.99% 5.38% 7.93%Net interest margin - QTD 2.47% 2.88% 3.29% 3.34% 3.02% Return on average assets - YTD 0.59% 0.43% 0.96% 1.22% 1.30%Return on average equity - YTD 3.37% 2.35% 4.91% 6.09% 6.42%Net interest margin - YTD 2.67% 2.88% 3.00% 2.90% 2.69% Asset Quality Ratios: Past due loans to total loans 0.50% 0.64% 0.41% 0.48% 0.60%Nonaccrual loans to total loans 0.26% 0.29% 0.29% 0.37% 0.59%Nonperforming assets to total assets 0.19% 0.22% 0.22% 0.27% 0.39%Allowance for credit losses - loans to loans receivable 1.14% 1.14% 1.18% 1.29% 1.35% WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES SUMMARY OF QUARTERLY AVERAGE BALANCES AND YIELD/COSTS (Unaudited) At or For the Three Months Ended June 30, March 31, December 31, September 30, June 30, 2023 2023 2022 2022 2022 Average balances (Dollars in Thousands) Interest-earning assets Loans receivable and held for sale $1,759,001 $1,654,942 $1,578,790 $1,492,462 $1,433,452 Mortgage related securities 171,938 170,218 170,209 172,807 168,000 Debt securities, federal funds sold and short-term investments 123,195 115,962 130,973 162,211 269,823 Total interest-earning assets 2,054,134 1,941,122 1,879,972 1,827,480 1,871,275 Noninterest-earning assets 108,320 107,009 122,643 114,274 117,248 Total assets $2,162,454 $2,048,131 $2,002,615 $1,941,754 $1,988,523 Interest-bearing liabilities Demand accounts $69,147 $68,564 $75,449 $75,058 $70,674 Money market, savings, and escrow accounts 305,576 322,220 349,820 398,643 412,321 Certificates of deposit 695,310 648,531 628,375 586,012 584,244 Total interest-bearing deposits 1,070,033 1,039,315 1,053,644 1,059,713 1,067,239 Borrowings 551,545 441,716 333,249 296,111 326,068 Total interest-bearing liabilities 1,621,578 1,481,031 1,386,893 1,355,824 1,393,307 Noninterest-bearing demand deposits 130,291 143,296 177,217 153,591 154,070 Noninterest-bearing liabilities 46,446 51,840 63,866 43,683 36,962 Total liabilities 1,798,315 1,676,167 1,627,976 1,553,098 1,584,339 Equity 364,139 371,964 374,639 388,656 404,184 Total liabilities and equity $2,162,454 $2,048,131 $2,002,615 $1,941,754 $1,988,523 Average Yield/Costs (annualized) Loans receivable and held for sale 5.05% 4.87% 4.69% 4.32% 4.07%Mortgage related securities 2.26% 2.25% 2.13% 2.07% 1.96%Debt securities, federal funds sold and short-term investments 3.67% 3.71% 3.35% 2.41% 1.56%Total interest-earning assets 4.73% 4.57% 4.36% 3.93% 3.52% Demand accounts 0.09% 0.08% 0.08% 0.08% 0.09%Money market and savings accounts 1.42% 1.26% 0.67% 0.21% 0.19%Certificates of deposit 2.80% 1.92% 1.10% 0.51% 0.37%Total interest-bearing deposits 2.23% 1.60% 0.89% 0.37% 0.28%Borrowings 4.08% 3.68% 3.23% 2.34% 1.95%Total interest-bearing liabilities 2.86% 2.22% 1.45% 0.80% 0.67% COMMUNITY BANKING SEGMENT SUMMARY OF KEY QUARTERLY FINANCIAL DATA (Unaudited) At or For the Three Months Ended June 30, March 31, December 31, September 30, June 30, 2023 2023 2022 2022 2022 (Dollars in Thousands) Condensed Results of Operations: Net interest income $13,238 $14,008 $15,737 $15,507 $13,710 Provision (credit) for credit losses 158 388 624 234 (41)Total noninterest income 1,540 987 1,033 1,116 1,640 Noninterest expenses: Compensation, payroll taxes, and other employee benefits 4,683 5,168 4,781 4,424 4,596 Occupancy, office furniture and equipment 873 1,031 877 955 876 Advertising 230 184 203 213 244 Data processing 602 601 551 539 531 Communications 72 78 92 108 63 Professional fees 146 218 153 123 118 Real estate owned 1 1 13 1 - Loan processing expense - - - - - Other 1,641 896 2,468 1,477 1,006 Total noninterest expense 8,248 8,177 9,138 7,840 7,434 Income before income taxes 6,372 6,430 7,008 8,549 7,957 Income tax expense 1,182 1,600 1,308 1,983 1,658 Net income $5,190 $4,830 $5,700 $6,566 $6,299 Efficiency ratio - QTD (non-GAAP) 55.81% 54.53% 54.49% 47.16% 48.43%Efficiency ratio - YTD (non-GAAP) 55.17% 54.53% 52.10% 51.20% 53.57% MORTGAGE BANKING SEGMENT SUMMARY OF KEY QUARTERLY FINANCIAL DATA (Unaudited) At or For the Three Months Ended June 30, March 31, December 31, September 30, June 30, 2023 2023 2022 2022 2022 (Dollars in Thousands) Condensed Results of Operations: Net interest (loss) income $(622) $(282) $(241) $(155) $370 Provision for credit losses 28 72 40 98 89 Total noninterest income 23,041 17,951 18,066 27,305 30,126 Noninterest expenses: Compensation, payroll taxes, and other employee benefits 17,929 15,099 17,397 21,864 21,311 Occupancy, office furniture and equipment 1,173 1,232 1,289 1,341 1,180 Advertising 714 705 769 924 718 Data processing 480 516 490 543 613 Communications 153 173 197 194 195 Professional fees 466 188 453 265 222 Real estate owned - - - - - Loan processing expense 932 1,018 1,059 1,120 1,134 Other 1,914 2,403 2,584 2,571 2,733 Total noninterest expense 23,761 21,334 24,238 28,822 28,106 (Loss) income before income taxes (1,370) (3,737) (6,453) (1,770) 2,301 Income tax (benefit) expense (126) (1,002) (1,602) (470) 578 Net (loss) income $(1,244) $(2,735) $(4,851) $(1,300) $1,723 Efficiency ratio - QTD (non-GAAP) 105.99% 120.74% 135.98% 106.16% 92.16%Efficiency ratio - YTD (non-GAAP) 112.49% 120.74% 104.02% 97.42% 93.42% Loan originations $623,342 $442,710 $546,628 $729,897 $778,760 Purchase 96.4% 96.5% 95.6% 94.2% 90.4%Refinance 3.6% 3.5% 4.4% 5.8% 9.6%Gross margin on loans sold(1) 3.73% 3.78% 3.41% 3.70% 3.85% (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. GerkeChief Financial Officer414-459-4012markgerke@wsbonline.com
WAUWATOSA, Wis, July 25, 2023 (GLOBE NEWSWIRE) -- Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income of $4.0 million, or $0.20 per diluted share for the quarter ended June 30, 2023 compared to $8.0 million, or $0.36 per diluted share for the quarter ended June 30, 2022. Net income per diluted share was $0.30 for the six months ended June 30, 2023 compared to net income per diluted share of $0.58 for the six months ended June 30, 2022. “The Community Banking segment’s continued strong asset quality metrics and growing loan portfolio stand out as bring spots in an otherwise challenging environment,” said Douglas Gordon, Chief Executive Officer of Waterstone Financial, Inc. “While we achieved marginally better performance compared to recent quarters, the Mortgage Banking segment loss continues to reflect an industry that is challenged by low levels of housing inventory and higher mortgage rates. Both dynamics have resulted in lower volumes and margins for the mortgage banking inventory. In spite of the challenges in the market, we announced a 2,000,000 share repurchase program during the quarter, as we believe in the long-term success of the Company and providing a high level of total return to our shareholders.” Highlights of the Quarter Ended June 30, 2023 Waterstone Financial, Inc. (Consolidated) ●Consolidated net income of Waterstone Financial, Inc. totaled $4.0 million for the quarter ended June 30, 2023, compared to $8.0 million for the quarter ended June 30, 2022.●Consolidated return on average assets was 0.74% for the quarter ended June 30, 2023 compared to 1.61% for the quarter ended June 30, 2022.●Consolidated return on average equity was 4.41% for the quarter ended June 30, 2023 and 7.93% for the quarter ended June 30, 2022.●Dividends declared during the quarter ended June 30, 2023 totaled $0.20 per common share.●We repurchased approximately 511,000 shares at a cost (including the excise tax) of $7.3 million, or $14.32 per share, during the quarter ended June 30, 2023.●We authorized a new share repurchase program during the quarter that allows to repurchase up to 2,000,000 million shares issued and outstanding.●Nonperforming assets as percentage of total assets was 0.19% at June 30, 2023, 0.22% at March 31, 2023, and 0.39% at June 30, 2022.●Past due loans as a percentage of total loans was 0.50% at June 30, 2023, 0.64% at March 31, 2023, and 0.60% at June 30, 2022.●Book value per share was $16.64 at June 30, 2023 and $16.71 at December 31, 2022. Community Banking Segment ●Pre-tax income totaled $6.4 million for the quarter ended June 30, 2023, which represents a $1.6 million, or 19.9%, decrease compared to $8.0 million for the quarter ended June 30, 2022.●Past due loans at the community banking segment was $5.7 million at June 30, 2023, $7.5 million at March 31, 2023, and $5.8 million at June 30, 2022.●Net interest income totaled $13.2 million for the quarter ended June 30, 2023, which represents a $472,000, or 3.4%, decrease compared to $13.7 million for the quarter ended June 30, 2022.●Average loans held for investment totaled $1.59 billion during the quarter ended June 30, 2023, which represents an increase of $339.6 million, or 27.2%, compared to $1.25 billion for the quarter ended June 30, 2022. The increase was primarily due to increases in the single-family and multi-family mortgages. Average loans held for investment increased $55.5 million compared to $1.53 billion for the quarter ended March 31, 2023. The increase was primarily due to an increase in the single-family mortgages.●The community banking segment purchased $59.9 million adjustable-rate loans that were originated by the mortgage banking segment during the quarter ended June 30, 2023.●Net interest margin decreased 55 basis points to 2.47% for the quarter ended June 30, 2023 compared to 3.02% for the quarter ended June 30, 2022, 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 decreased 41 basis points compared to 2.88% for the quarter ended March 31, 2023, 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 provision for credit losses related to funded loans of $619,000 for the quarter ended June 30, 2023 compared to a provision for credit losses related to funded loans of $170,000 for the quarter ended June 30, 2022. The current quarter increase was primarily due to an increase in originations and loan balance. The negative provision for credit losses related to unfunded loan commitments was $462,000 for the quarter ended June 30, 2023 compared to a negative provision for credit losses related to unfunded loan commitments of $211,000 for the quarter ended June 30, 2022. The decrease for the quarter ended June 30, 2023 was due primarily to a decrease of loans in the loan commitment pipeline as loan funding activity increased during the quarter.●The efficiency ratio, a non-GAAP ratio, was 55.81% for the quarter ended June 30, 2023, compared to 48.43% for the quarter ended June 30, 2022.●Average deposits (excluding escrow accounts) totaled $1.18 billion during the quarter ended June 30, 2023, a decrease of $24.3 million, or 2.0%, compared to $1.21 billion during the quarter ended June 30, 2022. Average deposits increased $9.7 million, or 3.3% annualized, compared to the $1.17 billion for the quarter ended March 31, 2023.●Other noninterest expense increased $635,000 to $1.6 million during the quarter ended June 30, 2023 compared to $1.0 million during the quarter ended June 30, 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 $1.1 million during the quarter ended June 30, 2023 compared to $504,000 during the quarter ended June 30, 2022. Mortgage Banking Segment ●Pre-tax loss totaled $1.4 million for the quarter ended June 30, 2023, compared to $2.3 million of pre-tax income for the quarter ended June 30, 2022.●Loan originations decreased $155.4 million, or 20.0%, to $623.3 million during the quarter ended June 30, 2023, compared to $778.8 million during the quarter ended June 30, 2022. Origination volume relative to purchase activity accounted for 96.4% of originations for the quarter ended June 30, 2023 compared to 90.4% of total originations for the quarter ended June 30, 2022.●Mortgage banking non-interest income decreased $7.1 million, or 23.5%, to $23.0 million for the quarter ended June 30, 2023, compared to $30.1 million for the quarter ended June 30, 2022.●Gross margin on loans sold decreased to 3.73% for the quarter ended June 30, 2023, compared to 3.85% for the quarter ended June 30, 2022.●Total compensation, payroll taxes and other employee benefits decreased $3.4 million, or 15.9%, to $17.9 million during the quarter ended June 30, 2023 compared to $21.3 million during the quarter ended June 30, 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 June 30, For The Six Months Ended June 30, 2023 2022 2023 2022 (In Thousands, except per share amounts) Interest income: Loans $22,150 $14,546 $42,035 $28,046 Mortgage-related securities 969 821 1,912 1,423 Debt securities, federal funds sold and short-term investments 1,128 1,049 2,190 1,977 Total interest income 24,247 16,416 46,137 31,446 Interest expense: Deposits 5,955 751 10,043 1,530 Borrowings 5,617 1,584 9,624 3,971 Total interest expense 11,572 2,335 19,667 5,501 Net interest income 12,675 14,081 26,470 25,945 Provision (credit) for credit losses 186 48 646 (28)Net interest income after provision for loan losses 12,489 14,033 25,824 25,973 Noninterest income: Service charges on loans and deposits 611 666 1,041 1,176 Increase in cash surrender value of life insurance 714 724 1,039 1,040 Mortgage banking income 21,914 29,410 38,684 57,685 Other 286 438 1,315 1,155 Total noninterest income 23,525 31,238 42,079 61,056 Noninterest expenses: Compensation, payroll taxes, and other employee benefits 22,395 25,793 42,447 51,328 Occupancy, office furniture, and equipment 2,046 2,056 4,309 4,244 Advertising 944 962 1,833 1,867 Data processing 1,090 1,144 2,212 2,346 Communications 225 258 476 598 Professional fees 618 349 1,034 810 Real estate owned 1 - 2 5 Loan processing expense 932 1,134 1,950 2,565 Other 2,671 3,354 5,766 6,221 Total noninterest expenses 30,922 35,050 60,029 69,984 Income before income taxes 5,092 10,221 7,874 17,045 Income tax expense 1,085 2,231 1,712 3,763 Net income $4,007 $7,990 $6,162 $13,282 Income per share: Basic $0.20 $0.36 $0.30 $0.59 Diluted $0.20 $0.36 $0.30 $0.58 Weighted average shares outstanding: Basic 20,384 22,126 20,635 22,626 Diluted ��20,431 22,229 20,702 22,768 WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION June 30, 2023 December 31, 2022 (Unaudited) Assets (In Thousands, except per share amounts) Cash $53,364 $33,700 Federal funds sold 7,563 10,683 Interest-earning deposits in other financial institutions and other short-term inv. 263 2,259 Cash and cash equivalents 61,190 46,642 Securities available for sale (at fair value) 195,011 196,588 Loans held for sale (at fair value) 203,268 131,188 Loans receivable 1,614,684 1,510,178 Less: Allowance for credit losses ("ACL") - loans 18,374 17,757 Loans receivable, net 1,596,310 1,492,421 Office properties and equipment, net 20,335 21,105 Federal Home Loan Bank stock (at cost) 26,798 17,357 Cash surrender value of life insurance 67,188 66,443 Real estate owned, net 145 145 Prepaid expenses and other assets 59,580 59,783 Total assets $2,229,825 $2,031,672 Liabilities and Shareholders' Equity Liabilities: Demand deposits $197,102 $230,596 Money market and savings deposits 280,758 326,145 Time deposits 709,108 642,271 Total deposits 1,186,968 1,199,012 Borrowings 614,877 386,784 Advance payments by borrowers for taxes 20,610 5,334 Other liabilities 51,607 70,056 Total liabilities 1,874,062 1,661,186 Shareholders' equity: Preferred stock - - Common stock 214 222 Additional paid-in capital 116,611 128,550 Retained earnings 272,229 274,246 Unearned ESOP shares (12,463) (13,056)Accumulated other comprehensive loss, net of taxes (20,828) (19,476)Total shareholders' equity 355,763 370,486 Total liabilities and shareholders' equity $2,229,825 $2,031,672 Share Information Shares outstanding 21,376 22,174 Book value per share $16.64 $16.71 WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES SUMMARY OF KEY QUARTERLY FINANCIAL DATA (Unaudited) At or For the Three Months Ended June 30, March 31, December 31, September |30, June 30, 2023 2023 2022 2022 2022 (Dollars in Thousands, except per share amounts) Condensed Results of Operations: Net interest income $12,675 $13,795 $15,611 $15,398 $14,081 Provision for credit losses 186 460 664 332 48 Total noninterest income 23,525 18,554 17,095 27,404 31,238 Total noninterest expense 30,922 29,107 31,384 35,694 35,050 Income before income taxes 5,092 2,782 658 6,776 10,221 Income tax (benefit) expense 1,085 627 (277) 1,506 2,231 Net income $4,007 $2,155 $935 $5,270 $7,990 Income per share – basic $0.20 $0.10 $0.04 $0.25 $0.36 Income per share – diluted $0.20 $0.10 $0.04 $0.25 $0.36 Dividends declared per common share $0.20 $0.20 $0.20 $0.20 $0.20 Performance Ratios (annualized): Return on average assets - QTD 0.74% 0.43% 0.19% 1.08% 1.61%Return on average equity - QTD 4.41% 2.35% 0.99% 5.38% 7.93%Net interest margin - QTD 2.47% 2.88% 3.29% 3.34% 3.02% Return on average assets - YTD 0.59% 0.43% 0.96% 1.22% 1.30%Return on average equity - YTD 3.37% 2.35% 4.91% 6.09% 6.42%Net interest margin - YTD 2.67% 2.88% 3.00% 2.90% 2.69% Asset Quality Ratios: Past due loans to total loans 0.50% 0.64% 0.41% 0.48% 0.60%Nonaccrual loans to total loans 0.26% 0.29% 0.29% 0.37% 0.59%Nonperforming assets to total assets 0.19% 0.22% 0.22% 0.27% 0.39%Allowance for credit losses - loans to loans receivable 1.14% 1.14% 1.18% 1.29% 1.35% WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES SUMMARY OF QUARTERLY AVERAGE BALANCES AND YIELD/COSTS (Unaudited) At or For the Three Months Ended June 30, March 31, December 31, September 30, June 30, 2023 2023 2022 2022 2022 Average balances (Dollars in Thousands) Interest-earning assets Loans receivable and held for sale $1,759,001 $1,654,942 $1,578,790 $1,492,462 $1,433,452 Mortgage related securities 171,938 170,218 170,209 172,807 168,000 Debt securities, federal funds sold and short-term investments 123,195 115,962 130,973 162,211 269,823 Total interest-earning assets 2,054,134 1,941,122 1,879,972 1,827,480 1,871,275 Noninterest-earning assets 108,320 107,009 122,643 114,274 117,248 Total assets $2,162,454 $2,048,131 $2,002,615 $1,941,754 $1,988,523 Interest-bearing liabilities Demand accounts $69,147 $68,564 $75,449 $75,058 $70,674 Money market, savings, and escrow accounts 305,576 322,220 349,820 398,643 412,321 Certificates of deposit 695,310 648,531 628,375 586,012 584,244 Total interest-bearing deposits 1,070,033 1,039,315 1,053,644 1,059,713 1,067,239 Borrowings 551,545 441,716 333,249 296,111 326,068 Total interest-bearing liabilities 1,621,578 1,481,031 1,386,893 1,355,824 1,393,307 Noninterest-bearing demand deposits 130,291 143,296 177,217 153,591 154,070 Noninterest-bearing liabilities 46,446 51,840 63,866 43,683 36,962 Total liabilities 1,798,315 1,676,167 1,627,976 1,553,098 1,584,339 Equity 364,139 371,964 374,639 388,656 404,184 Total liabilities and equity $2,162,454 $2,048,131 $2,002,615 $1,941,754 $1,988,523 Average Yield/Costs (annualized) Loans receivable and held for sale 5.05% 4.87% 4.69% 4.32% 4.07%Mortgage related securities 2.26% 2.25% 2.13% 2.07% 1.96%Debt securities, federal funds sold and short-term investments 3.67% 3.71% 3.35% 2.41% 1.56%Total interest-earning assets 4.73% 4.57% 4.36% 3.93% 3.52% Demand accounts 0.09% 0.08% 0.08% 0.08% 0.09%Money market and savings accounts 1.42% 1.26% 0.67% 0.21% 0.19%Certificates of deposit 2.80% 1.92% 1.10% 0.51% 0.37%Total interest-bearing deposits 2.23% 1.60% 0.89% 0.37% 0.28%Borrowings 4.08% 3.68% 3.23% 2.34% 1.95%Total interest-bearing liabilities 2.86% 2.22% 1.45% 0.80% 0.67% COMMUNITY BANKING SEGMENT SUMMARY OF KEY QUARTERLY FINANCIAL DATA (Unaudited) At or For the Three Months Ended June 30, March 31, December 31, September 30, June 30, 2023 2023 2022 2022 2022 (Dollars in Thousands) Condensed Results of Operations: Net interest income $13,238 $14,008 $15,737 $15,507 $13,710 Provision (credit) for credit losses 158 388 624 234 (41)Total noninterest income 1,540 987 1,033 1,116 1,640 Noninterest expenses: Compensation, payroll taxes, and other employee benefits 4,683 5,168 4,781 4,424 4,596 Occupancy, office furniture and equipment 873 1,031 877 955 876 Advertising 230 184 203 213 244 Data processing 602 601 551 539 531 Communications 72 78 92 108 63 Professional fees 146 218 153 123 118 Real estate owned 1 1 13 1 - Loan processing expense - - - - - Other 1,641 896 2,468 1,477 1,006 Total noninterest expense 8,248 8,177 9,138 7,840 7,434 Income before income taxes 6,372 6,430 7,008 8,549 7,957 Income tax expense 1,182 1,600 1,308 1,983 1,658 Net income $5,190 $4,830 $5,700 $6,566 $6,299 Efficiency ratio - QTD (non-GAAP) 55.81% 54.53% 54.49% 47.16% 48.43%Efficiency ratio - YTD (non-GAAP) 55.17% 54.53% 52.10% 51.20% 53.57% MORTGAGE BANKING SEGMENT SUMMARY OF KEY QUARTERLY FINANCIAL DATA (Unaudited) At or For the Three Months Ended June 30, March 31, December 31, September 30, June 30, 2023 2023 2022 2022 2022 (Dollars in Thousands) Condensed Results of Operations: Net interest (loss) income $(622) $(282) $(241) $(155) $370 Provision for credit losses 28 72 40 98 89 Total noninterest income 23,041 17,951 18,066 27,305 30,126 Noninterest expenses: Compensation, payroll taxes, and other employee benefits 17,929 15,099 17,397 21,864 21,311 Occupancy, office furniture and equipment 1,173 1,232 1,289 1,341 1,180 Advertising 714 705 769 924 718 Data processing 480 516 490 543 613 Communications 153 173 197 194 195 Professional fees 466 188 453 265 222 Real estate owned - - - - - Loan processing expense 932 1,018 1,059 1,120 1,134 Other 1,914 2,403 2,584 2,571 2,733 Total noninterest expense 23,761 21,334 24,238 28,822 28,106 (Loss) income before income taxes (1,370) (3,737) (6,453) (1,770) 2,301 Income tax (benefit) expense (126) (1,002) (1,602) (470) 578 Net (loss) income $(1,244) $(2,735) $(4,851) $(1,300) $1,723 Efficiency ratio - QTD (non-GAAP) 105.99% 120.74% 135.98% 106.16% 92.16%Efficiency ratio - YTD (non-GAAP) 112.49% 120.74% 104.02% 97.42% 93.42% Loan originations $623,342 $442,710 $546,628 $729,897 $778,760 Purchase 96.4% 96.5% 95.6% 94.2% 90.4%Refinance 3.6% 3.5% 4.4% 5.8% 9.6%Gross margin on loans sold(1) 3.73% 3.78% 3.41% 3.70% 3.85% (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. GerkeChief Financial Officer414-459-4012markgerke@wsbonline.com
