WATERSTONE FINANCIAL, INC. WAUWATOSA, Wis., Feb. 24, 2017 /PRNewswire/ -- Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income per diluted share of $0.23 for the quarter ended December 31, 2016, which represents a 109.1% increase compared to net income per diluted share of $0.11 for the quarter ended December 31, 2015. Net income per diluted share was $0.93 for the year ended December 31, 2016, compared to net income per diluted share of $0.56 for the year ended December 31, 2015.
"We capped off a record annual performance during 2016 with a 128.0% increase in consolidated quarterly pre-tax earnings relative to the prior year," said Douglas Gordon, CEO of Waterstone Financial, Inc. "This marked the 10(th) consecutive comparable quarter of pre-tax earnings growth. The Community Banking segment benefited from strong loan and deposit growth, growth in net interest margin driven by the refinancing of maturing wholesale borrowings and reduced expenses driven by continued improvement in asset quality. The Mortgage Banking segment hit a milestone of $2.5 billion of loan originations this year and continued to expand its national presence by opening 11 new branch locations. The strong performance achieved by both segments resulted in an annual increase in consolidated pre-tax earnings of 62.7%."
Highlights of the Quarter and Year Ended December 31, 2016
Waterstone Financial, Inc. (Consolidated)
-- Consolidated net income totaled $6.4 million for the quarter ended
December 31, 2016, compared to $3.1 million for the quarter ended
December 31, 2015.
-- Consolidated net income totaled $25.5 million for the year ended
December 31, 2016, compared to $16.6 million for the year ended December
31, 2015.
-- Consolidated return on average assets totaled 1.44% for the three months
ended December 31, 2016 compared to 0.69% for the three months ended
December 31, 2015.
-- Consolidated return on average assets totaled 1.45% for the year ended
December 31, 2016 compared to 0.94% for the year ended December 31,
2015.
Community Banking Segment
-- Pre-tax income of the segment totaled $6.4 million for the quarter ended
December 31, 2016, which represents a 140.5% increase compared to $2.6
million for the quarter ended December 31, 2015.
-- Pre-tax income of the segment totaled a record $21.0 million, which
represents an 80.0% increase compared to $11.7 million during the year
ended December 31, 2015.
-- Total loans increased $63.0 million, or 5.6%, to $1.18 billion at
December 31, 2016 compared to $1.11 billion at December 31, 2015. Loan
growth of 5.6% was the highest year over year growth in eight years.
-- Total deposits increased $56.1 million, or 6.3%, to $949.4 million at
December 31, 2016 compared to $893.4 million at December 31, 2015. Total
transaction deposits increased $39.5 million, or 16.2%, to $282.8
million at December 31, 2016 compared to $243.3 million at December 31,
2015. The increase in transaction deposits was composed of growth in
demand deposits of $17.7 million or 17.2% and growth of money market and
savings deposits of $21.8 million, or 15.5%.
-- Borrowings decreased $54.0 million to $387.2 million at December 30,
2016 from $441.2 million at December 31, 2015. A total of $220.0 million
of fixed rate borrowings, at a weighted average rate of 4.35% matured
during the year ended December 31, 2016. A total of $100.0 million of
these funds were replaced with long-term FHLB advances at a weighted
average rate of 0.78%. An additional $65.0 million were replaced with
short-term advances at a weighted average rate of 0.61%. The remaining
maturities were satisfied with excess liquidity and funds raised through
retail delivery channels.
-- Total non-performing assets decreased $10.8 million, or 40.4%, to $16.0
million at December 31, 2016 from $26.8 million at December 31, 2015.
Non-performing assets represent 0.89% of total assets as of December 31,
2016.
-- Total past due loans decreased by $3.3 million, or 28.9%, to $8.2
million at December 31, 2016 from $11.5 million at December 31, 2015.
Past due loans represent 0.7% of total loans as of December 31, 2016.
Mortgage Banking Segments
-- Pre-tax income of the segment totaled $4.3 million for the quarter ended
December 31, 2016, which represents a 124.8% increase compared to $1.9
million for the quarter ended December 31, 2015.
-- Pre-tax income of the segment totaled a record $20.9 million, which
represents a 49.1% increase compared to $14.0 million during the year
ended December 31, 2015.
-- Loans originated for the purpose of sale in the secondary market
increased $181.4 million, or 41.1%, to $622.5 million during the three
months ended December 31, 2016, compared to $441.0 million for the three
months ended December 31, 2015. The increase in originations was driven
by an increase in the origination of loans made for the purpose of
residential purchases, which yield a higher margin than refinance loans,
along with an increase in the origination of mortgage refinance
products. Origination efforts continue to be focused on loans made for
the purpose of residential purchases, as opposed to mortgage refinance.
Origination volume relative to purchase activity improved and accounted
for 77% originations for the three months ended December 31, 2016
compared to 60% of total originations for the three months ended
December 31, 2015.
-- Year-to-date origination volume increased approximately 20% compared to
2015. Origination volume relative to purchase activity accounted for 83%
and 84% of total originations for the year ended December 31, 2016 and
2015, respectively.
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, Waterstone has 11 community bank branches in the metropolitan Milwaukee market, a loan production office in Minneapolis, Minnesota, and mortgage banking offices in 22 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 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.
WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For The Three Months Ended For The Year Ended
December 31, December 31,
2016 2015 2016 2015
---- ---- ---- ----
(In Thousands, except per share amounts)
Interest income:
Loans $14,574 13,680 57,185 55,175
Mortgage-related securities 677 778 3,048 3,229
Debt securities, federal funds
sold and short-term investments 811 950 3,503 3,559
--- --- ----- -----
Total interest income 16,062 15,408 63,736 61,963
Interest expense:
Deposits 1,887 1,628 7,364 5,879
Borrowings 2,204 4,342 12,928 17,240
----- ----- ------ ------
Total interest expense 4,091 5,970 20,292 23,119
----- ----- ------ ------
Net interest income 11,971 9,438 43,444 38,844
Provision for loan losses 40 245 380 1,965
--- --- --- -----
Net interest income after
provision for loan losses 11,931 9,193 43,064 36,879
Noninterest income:
Service charges on loans and
deposits 490 435 2,232 1,648
Increase in cash surrender value
of life insurance 321 222 1,767 1,417
Mortgage banking income 29,923 21,994 121,069 99,318
Gain on sale of available for
sale securities - - - 44
Other 423 199 1,297 2,047
--- --- ----- -----
Total noninterest income 31,157 22,850 126,365 104,474
------ ------ ------- -------
Noninterest expenses:
Compensation, payroll taxes, and
other employee benefits 24,088 19,169 95,056 81,753
Occupancy, office furniture, and
equipment 2,273 2,283 9,347 9,287
Advertising 769 827 2,743 2,947
Data processing 623 557 2,520 2,354
Communications 374 363 1,462 1,416
Professional fees 649 583 2,135 2,354
Real estate owned 55 789 399 2,664
FDIC insurance premiums 115 207 615 1,058
Other 3,495 2,595 13,158 11,701
----- ----- ------ ------
Total noninterest expenses 32,441 27,373 127,435 115,534
------ ------ ------- -------
Income before income taxes 10,647 4,670 41,994 25,819
Income tax expense 4,248 1,599 16,462 9,249
----- ----- ------ -----
Net income $6,399 3,071 25,532 16,570
===== ===== ======
Income per share:
Basic $0.23 0.11 0.94 0.57
Diluted $0.23 0.11 0.93 0.56
Weighted average shares
outstanding:
Basic 27,217 27,018 27,037 29,161
Diluted 27,699 27,349 27,374 29,431
WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31,
------------
2016 2015
---- ----
(Unaudited)
Assets (In Thousands, except per share
amounts)
Cash $7,878 $57,419
Federal funds sold 26,828 20,297
Interest-earning
deposits in other
financial institutions
and other short term
investments 12,511 22,755
------ ------
Cash and cash equivalents 47,217 100,471
Securities available for
sale (at fair value) 226,795 269,658
Loans held for sale (at
fair value) 225,248 166,516
Loans receivable 1,177,884 1,114,934
Less: Allowance for loan
losses 16,029 16,185
------ ------
Loans receivable, net 1,161,855 1,098,749
Office properties and
equipment, net 23,655 25,328
Federal Home Loan Bank
stock (at cost) 13,275 19,500
Cash surrender value of
life insurance 61,509 49,562
Real estate owned, net 6,118 9,190
Prepaid expenses and
other assets 24,947 23,755
------ ------
Total assets $1,790,619 $1,762,729
========== ==========
Liabilities and Shareholders' Equity
Liabilities:
Demand deposits $120,371 $102,673
Money market and savings
deposits 162,456 140,631
Time deposits 666,584 650,057
------- -------
Total deposits 949,411 893,361
Borrowings 387,155 441,203
Advance payments by
borrowers for taxes 4,716 3,661
Other liabilities 38,647 32,574
------ ------
Total liabilities 1,379,929 1,370,799
Shareholders' equity:
Common stock 294 294
Additional paid-in
capital 322,934 317,022
Retained earnings 184,565 168,089
Unearned ESOP shares (20,178) (21,365)
Accumulated other
comprehensive income,
net of taxes (378) 582
Cost of shares
repurchased (76,547) (72,692)
------- -------
Total shareholders'
equity 410,690 391,930
------- -------
Total liabilities and
shareholders' equity $1,790,619 $1,762,729
========== ==========
Share Information
Shares Outstanding 29,430 29,407
Book Value per share $13.95 $13.33
Closing market price $18.40 $14.10
Price to book ratio 131.85% 105.79%
Asset Quality Data
Total non accrual loans $9,857 $17,604
Real estate owned 6,118 9,190
----- -----
Total nonperforming
assets $15,975 $26,794
Total non accrual to
total loans 0.84% 1.58%
Total nonperforming
assets to total assets 0.89% 1.52%
WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
SUMMARY OF KEY QUARTERLY FINANCIAL DATA
(Unaudited)
At or For the Three Months Ended
December 31, September 30, June 30, March 31, December 31,
2016 2016 2016 2016 2015
---- ---- ---- ---- ----
(Dollars in Thousands)
Condensed Results of
Operations:
Net interest income $11,971 11,325 10,165 9,983 9,438
Provision for loan
losses 40 135 - 205 245
Total noninterest
income 31,157 37,412 36,351 21,445 22,850
Total noninterest
expense 32,441 35,541 34,231 25,222 27,373
------ ------ ------ ------ ------
Income before income
taxes 10,647 13,061 12,285 6,001 4,670
Income tax expense 4,248 5,556 4,518 2,140 1,599
Net income $6,399 7,505 7,767 3,861 3,071
====== ===== ===== ===== =====
Income per share -
basic $0.23 0.28 0.29 0.14 0.11
Income per share -
diluted $0.23 0.27 0.29 0.14 0.11
Dividends declared
per share $0.12 0.08 0.08 0.05 0.05
Performance Ratios:
Return on average
assets -QTD 1.44% 1.66% 1.78% 0.90% 0.69%
Return on average
equity -QTD 6.19% 7.36% 7.86% 3.95% 3.10%
Net interest margin -
QTD 2.88% 2.70% 2.50% 2.48% 2.26%
Efficiency ratio -
QTD 75.22% 72.92% 73.59% 80.25% 84.78%
Return on average
assets -YTD 1.45% 1.45% 1.34% 0.90% 0.94%
Return on average
equity -YTD 6.33% 6.38% 5.89% 3.95% 3.99%
Net interest margin -
YTD 2.64% 2.56% 2.49% 2.48% 2.36%
Efficiency ratio -
YTD 75.05% 74.99% 76.28% 80.25% 80.61%
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SOURCE Waterstone Financial, Inc.
