Questions? +1 (202) 335-3939 Login
Trusted News Since 1995
A service for global professionals · Thursday, March 28, 2024 · 699,437,066 Articles · 3+ Million Readers

Waterstone Financial, Inc. Announces Results of Operations for the Quarter and Year Ended December 31, 2022

/EIN News/ -- WAUWATOSA, Wis., Jan. 26, 2023 (GLOBE NEWSWIRE) -- Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income of $935,000, or $0.04 per diluted share for the quarter ended December 31, 2022 compared to $12.6 million, or $0.53 per diluted share for the quarter ended December 31, 2021. Net income per diluted share was $0.89 for the twelve months ended December 31, 2022 compared to net income per diluted share of $2.96 for the twelve months ended December 31, 2021.

“The quarter was mixed as the community banking segment continued to achieve excellent loan growth while the mortgage banking segment lagged with lower volumes and declining margins,” said Douglas Gordon, Chief Executive Officer of Waterstone Financial, Inc. “Net interest income grew in the quarter as we added $156.0 million to the loan portfolio and efficiently used our cash as interest rates continued to rise. The mortgage banking segment continues to face significant challenges as a result of increases in mortgage rates year-over-year and the decline in affordable housing inventories. We are focused on controlling expenses and being prepared to capitalize when the mortgage market improves.”

Highlights of the Quarter Ended December 31, 2022

Waterstone Financial, Inc. (Consolidated)

Consolidated net income of Waterstone Financial, Inc. totaled $935,000 for the quarter ended December 31, 2022, compared to $12.6 million for the quarter ended December 31, 2021.
Consolidated return on average assets was 0.19% for the quarter ended December 31, 2022 compared to 2.22% for the quarter ended December 31, 2021.
Consolidated return on average equity was 0.99% for the quarter ended December 31, 2022 and 11.14% for the quarter ended December 31, 2021.
Dividends declared during the quarter ended December 31, 2022 totaled $0.20 per common share.
We repurchased approximately 159,000 shares at a cost of $2.6 million, or $16.53 per share, during the quarter ended December 31, 2022.
Nonperforming assets as percentage of total assets was 0.22% at December 31, 2022, 0.27% at September 30, 2022, and 0.26% at December 31, 2021.
Past due loans as percentage of total loans was 0.41% at December 31, 2022, 0.48% at September 30, 2022, and 0.59% at December 31, 2021.
Book value per share was $16.71 at December 31, 2022 and $17.45 at December 31, 2021.  The decrease reflects an $0.79 per share impact resulting from an increase in the unrealized loss on available for sale securities. 
   

Community Banking Segment

Pre-tax income totaled $7.0 million for the quarter ended December 31, 2022, which represents a $1.4 million, or 16.4%, decrease compared to $8.4 million for the quarter ended December 31, 2021.
Net interest income totaled $15.7 million for the quarter ended December 31, 2022, which represents a $2.5 million, or 19.2%, increase compared to $13.2 million for the quarter ended December 31, 2021.
Average loans held for investment totaled $1.41 billion during the quarter ended December 31, 2022, which represents an increase of $201.9 million, or 16.7%, compared to $1.21 billion for the quarter ended December 31, 2021. Average loans held for investment increased $102.1 million compared to $1.31 billion for the quarter ended September 30, 2022.
The community banking segment purchased $112.0 million adjustable-rate loans that were originated by the mortgage banking segment during the quarter ended December 31, 2022. Other noninterest expense includes fees totaling $2.0 million during the quarter ended December 31, 2022 which were paid to the mortgage banking segment and eliminated on a consolidated basis.  
Net interest margin increased 82 basis points to 3.29% for the quarter ended December 31, 2022 compared to 2.47% for the quarter ended December 31, 2021, which was a result of a decrease in the average balance of cash, as funds were utilized to fund loans held for investment, purchase investment securities and pay down borrowings. In addition, yields increased on loans receivable, loans held for sale, mortgage related securities, debt securities, federal funds sold and short term investments category. Net interest margin decreased five basis points compared to 3.34% for the quarter ended September 30, 2022, 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 - loans of $290,000 for the quarter ended December 31, 2022 compared to a negative provision for loan losses of $1.5 million for the quarter ended December 31, 2021. The current quarter increase was primarily due to an increase in loans held for investment during the quarter. The provision for credit losses - unfunded commitments was $334,000 as the loan pipeline increased from the prior quarter end.   
The efficiency ratio was 54.49% for the quarter ended December 31, 2022, compared to 53.02% for the quarter ended December 31, 2021.
Average deposits (excluding escrow accounts) totaled $1.21 billion during the quarter ended December 31, 2022, a decrease of $35.3 million, or 2.8%, compared to $1.25 billion during the quarter ended December 31, 2021. Average deposits increased $18.1 million, or 6.1% annualized compared to the $1.19 billion for the quarter ended September 30, 2022 due to an increase in certificate of deposits rates attracting more customers.  
Other noninterest expense increased $1.8 million to $2.5 million during the quarter ended December 31, 2022 compared to $651,000 during the quarter ended December 31, 2021. The increase was driven by fees paid to the mortgage banking segment for the purchase of single-family adjustable rate mortgage loans.  See the note on the loans purchased from the mortgage banking segment above. These fees are eliminated in the consolidated statements of income.
   

Mortgage Banking Segment

Pre-tax loss totaled $6.5 million for the quarter ended December 31, 2022, compared to $7.3 million of pre-tax income for the quarter ended December 31, 2021.
Loan originations decreased $446.5 million, or 45.0%, to $546.6 million during the quarter ended December 31, 2022, compared to $993.1 million during the quarter ended December 31, 2021. Origination volume relative to purchase activity accounted for 95.6% of originations for the quarter ended December 31, 2022 compared to 73.8% of total originations for the quarter ended December 31, 2021.
Mortgage banking non-interest income decreased $22.6 million, or 55.6%, to $18.1 million for the quarter ended December 31, 2022, compared to $40.7 million for the quarter ended December 31, 2021.
Gross margin on loans sold decreased to 3.41% for the quarter ended December 31, 2022, compared to 4.18% for the quarter ended December 31, 2021.  
Total compensation, payroll taxes and other employee benefits decreased $10.5 million, or 37.6%, to $17.4 million during the quarter ended December 31, 2022 compared to $27.9 million during the quarter ended December 31, 2021. The decrease primarily related to decreased commission expense and branch manager compensation driven by decreased loan origination volume and branch profitability as gross margins decreased.
Other noninterest expense increased $1.1 million to $2.6 million during the quarter ended December 31, 2022 compared to $1.4 million during the quarter ended December 31, 2021. The increase related to an increase in provision of loan sale losses.
During the year ended December 31, 2022 the segment has added 11 branches and a total of 130 loan origination personnel.  Losses associated with these new branches totaled approximately $725,000 for the quarter ended December 31, 2022 and $1.9 million for the year ended December 31, 2022. These branch losses are net of corporate revenue of approximately $641,000 for the quarter ended December 31, 2022 and $1.2 million for the year ended December 31, 2022.
   

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, including significant disruption to financial market and other economic activity caused by the outbreak of COVID-19; 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.


WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

    For The Three Months Ended December 31,     For The Twelve Months Ended December 31,  
    2022     2021     2022     2021  
    (In Thousands, except per share amounts)  
Interest income:                                
Loans   $ 18,654     $ 15,152     $ 62,935     $ 64,366  
Mortgage-related securities     915       506       3,241       1,954  
Debt securities, federal funds sold and short-term investments     1,105       926       4,069       3,563  
Total interest income     20,674       16,584       70,245       69,883  
Interest expense:                                
Deposits     2,352       878       4,863       4,420  
Borrowings     2,711       2,534       8,428       9,948  
Total interest expense     5,063       3,412       13,291       14,368  
Net interest income     15,611       13,172       56,954       55,515  
Provision (credit) for credit losses (1)     664       (1,470 )     968       (3,990 )
Net interest income after provision for loan losses     14,947       14,642       55,986       59,505  
Noninterest income:                                
Service charges on loans and deposits     497       842       2,202       3,325  
Increase in cash surrender value of life insurance     344       318       1,738       1,615  
Mortgage banking income     15,811       40,448       99,560       191,035  
Other     443       408       2,055       7,220  
Total noninterest income     17,095       42,016       105,555       203,195  
Noninterest expenses:                                
Compensation, payroll taxes, and other employee benefits     22,063       32,837       99,565       135,115  
Occupancy, office furniture, and equipment     2,166       2,266       8,706       9,612  
Advertising     972       958       3,976       3,528  
Data processing     1,040       1,079       4,470       3,950  
Communications     289       321       1,189       1,309  
Professional fees     612       471       1,815       1,275  
Real estate owned     13       14       19       3  
Loan processing expense     1,059       940       4,744       4,610  
Other     3,170       2,088       12,578       11,192  
Total noninterest expenses     31,384       40,974       137,062       170,594  
Income before income taxes     658       15,684       24,479       92,106  
Income tax (benefit) expense     (277 )     3,131       4,992       21,315  
Net income   $ 935     $ 12,553     $ 19,487     $ 70,791  
Income per share:                                
Basic   $ 0.04     $ 0.53     $ 0.89     $ 2.98  
Diluted   $ 0.04     $ 0.53     $ 0.89     $ 2.96  
Weighted average shares outstanding:                                
Basic     20,966       23,598       21,884       23,741  
Diluted     21,069       23,802       22,010       23,931  


    December 31,     December 31,  
    2022     2021  
    (Unaudited)          
Assets   (In Thousands, except per share amounts)  
Cash   $ 33,700     $ 343,016  
Federal funds sold     10,683       13,981  
Interest-earning deposits in other financial institutions and other short-term investments     2,259       19,725  
Cash and cash equivalents     46,642       376,722  
Securities available for sale (at fair value)     196,588       179,016  
Loans held for sale (at fair value)     131,188       312,738  
Loans receivable     1,510,178       1,205,785  
Less: Allowance for credit losses ("ACL") - loans (1)     17,757       15,778  
Loans receivable, net     1,492,421       1,190,007  
                 
Office properties and equipment, net     21,105       22,273  
Federal Home Loan Bank stock (at cost)     17,357       24,438  
Cash surrender value of life insurance     66,443       65,368  
Real estate owned, net     145       148  
Prepaid expenses and other assets     59,783       45,148  
Total assets   $ 2,031,672     $ 2,215,858  
                 
Liabilities and Shareholders' Equity                
Liabilities:                
Demand deposits   $ 230,596     $ 214,409  
Money market and savings deposits     326,145       392,314  
Time deposits     642,271       626,663  
Total deposits     1,199,012       1,233,386  
                 
Borrowings     386,784       477,127  
Advance payments by borrowers for taxes     5,334       4,094  
Other liabilities     70,056       68,478  
Total liabilities     1,661,186       1,783,085  
                 
Shareholders' equity:                
Preferred stock     -       -  
Common stock     222       248  
Additional paid-in capital     128,550       174,505  
Retained earnings     274,246       273,398  
Unearned ESOP shares     (13,056 )     (14,243 )
Accumulated other comprehensive loss, net of taxes     (19,476 )     (1,135 )
Total shareholders' equity     370,486       432,773  
Total liabilities and shareholders' equity   $ 2,031,672     $ 2,215,858  
                 
Share Information                
Shares outstanding     22,174       24,795  
Book value per share   $ 16.71     $ 17.45  
                 


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,  
    2022     2022     2022     2022     2021  
    (Dollars in Thousands, except per share amounts)  
Condensed Results of Operations:                                        
Net interest income   $ 15,611     $ 15,398     $ 14,081     $ 11,864     $ 13,172  
Provision (credit) for credit losses (1)     664       332       48       (76 )     (1,470 )
Total noninterest income     17,095       27,404       31,238       29,818       42,016  
Total noninterest expense     31,384       35,694       35,050       34,935       40,974  
Income before income taxes     658       6,776       10,221       6,823       15,684  
Income tax (benefit) expense     (277 )     1,506       2,231       1,532       3,131  
Net income   $ 935     $ 5,270     $ 7,990     $ 5,291     $ 12,553  
Income per share – basic   $ 0.04     $ 0.25     $ 0.36     $ 0.23     $ 0.53  
Income per share – diluted   $ 0.04     $ 0.25     $ 0.36     $ 0.23     $ 0.53  
Dividends declared per share   $ 0.20     $ 0.20     $ 0.20     $ 0.20     $ 0.70  
                                         
Performance Ratios (annualized):                                        
Return on average assets - QTD     0.19 %     1.08 %     1.61 %     1.00 %     2.22 %
Return on average equity - QTD     0.99 %     5.38 %     7.93 %     5.00 %     11.14 %
Net interest margin - QTD     3.29 %     3.34 %     3.02 %     2.38 %     2.47 %
                                         
Return on average assets - YTD     0.96 %     1.22 %     1.30 %     1.00 %     3.20 %
Return on average equity - YTD     4.91 %     6.09 %     6.42 %     5.00 %     16.38 %
Net interest margin - YTD     3.00 %     2.90 %     2.69 %     2.38 %     2.68 %
                                         
Asset Quality Ratios:                                        
Past due loans to total loans     0.41 %     0.48 %     0.60 %     0.53 %     0.59 %
Nonaccrual loans to total loans     0.29 %     0.37 %     0.59 %     0.55 %     0.46 %
Nonperforming assets to total assets     0.22 %     0.27 %     0.39 %     0.34 %     0.26 %
Allowance for credit losses to loans receivable (1)     1.18 %     1.29 %     1.35 %     1.40 %     1.31 %

(1) The Company adopted ASU 2016-13 as of January 1, 2022.  The 2021 amounts presented are calculated under the prior accounting standard. 


WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
SUMMARY OF QUARTERLY AVERAGE BALANCES AND YIELD/COSTS
(Unaudited)

    At or For the Three Months Ended  
    December 31,     September 30,     June 30,     March 31,     December 31,  
    2022     2022     2022     2022     2021  
Average balances   (Dollars in Thousands)  
Interest-earning assets                                        
Loans receivable and held for sale   $ 1,578,790     $ 1,492,462     $ 1,433,452     $ 1,361,839     $ 1,517,984  
Mortgage related securities     170,209       172,807       168,000       138,863       119,709  
Debt securities, federal funds sold and short term investments     130,973       162,211       269,823       519,116       475,574  
Total interest-earning assets     1,879,972       1,827,480       1,871,275       2,019,818       2,113,267  
Noninterest-earning assets     122,643       114,274       117,248       128,813       131,703  
Total assets   $ 2,002,615     $ 1,941,754     $ 1,988,523     $ 2,148,631     $ 2,244,970  
                                         
Interest-bearing liabilities                                        
Demand accounts   $ 75,449     $ 75,058     $ 70,674     $ 69,736     $ 70,762  
Money market, savings, and escrow accounts     349,820       398,643       412,321       404,413       398,210  
Certificates of deposit     628,375       586,012       584,244       610,681       643,546  
Total interest-bearing deposits     1,053,644       1,059,713       1,067,239       1,084,830       1,112,518  
Borrowings     333,249       296,111       326,068       440,252       481,971  
Total interest-bearing liabilities     1,386,893       1,355,824       1,393,307       1,525,082       1,594,489  
Noninterest-bearing demand deposits     177,217       153,591       154,070       152,900       153,303  
Noninterest-bearing liabilities     63,866       43,683       36,962       41,232       49,982  
Total liabilities     1,627,976       1,553,098       1,584,339       1,719,214       1,797,774  
Equity     374,639       388,656       404,184       429,417       447,196  
Total liabilities and equity   $ 2,002,615     $ 1,941,754     $ 1,988,523     $ 2,148,631     $ 2,244,970  
                                         
Average Yield/Costs (annualized)                                        
Loans receivable and held for sale     4.69 %     4.32 %     4.07 %     4.02 %     3.96 %
Mortgage related securities     2.13 %     2.07 %     1.96 %     1.76 %     1.68 %
Debt securities, federal funds sold and short term investments     3.35 %     2.41 %     1.56 %     0.72 %     0.77 %
Total interest-earning assets     4.36 %     3.93 %     3.52 %     3.02 %     3.11 %
                                         
Demand accounts     0.08 %     0.08 %     0.09 %     0.08 %     0.08 %
Money market and savings accounts     0.67 %     0.21 %     0.19 %     0.21 %     0.22 %
Certificates of deposit     1.10 %     0.51 %     0.37 %     0.37 %     0.40 %
Total interest-bearing deposits     0.89 %     0.37 %     0.28 %     0.29 %     0.31 %
Borrowings     3.23 %     2.34 %     1.95 %     2.20 %     2.09 %
Total interest-bearing liabilities     1.45 %     0.80 %     0.67 %     0.84 %     0.85 %
                                         


COMMUNITY BANKING SEGMENT
SUMMARY OF KEY QUARTERLY FINANCIAL DATA
(Unaudited)

    At or For the Three Months Ended  
    December 31,     September 30,     June 30,     March 31,     December 31,  
    2022     2022     2022     2022     2021  
    (Dollars in Thousands)  
Condensed Results of Operations:                                        
Net interest income   $ 15,737     $ 15,507     $ 13,710     $ 11,652     $ 13,197  
Provision (credit) for credit losses (1)     624       234       (41 )     (140 )     (1,500 )
Total noninterest income     1,033       1,116       1,640       1,432       1,459  
Noninterest expenses:                                        
Compensation, payroll taxes, and other employee benefits     4,781       4,424       4,596       5,212       5,085  
Occupancy, office furniture and equipment     877       955       876       937       960  
Advertising     203       213       244       227       278  
Data processing     551       539       531       608       531  
Communications     92       108       63       94       100  
Professional fees     153       123       118       114       151  
Real estate owned     13       1       -       5       14  
Loan processing expense     -       -       -       -       -  
Other     2,468       1,477       1,006       600       651  
Total noninterest expense     9,138       7,840       7,434       7,797       7,770  
Income before income taxes     7,008       8,549       7,957       5,427       8,386  
Income tax expense     1,308       1,983       1,658       1,167       1,690  
Net income   $ 5,700     $ 6,566     $ 6,299     $ 4,260     $ 6,696  
                                         
Efficiency ratio - QTD     54.49 %     47.16 %     48.43 %     59.59 %     53.02 %
Efficiency ratio - YTD     52.10 %     51.20 %     53.57 %     59.59 %     48.58 %

(1) The Company adopted ASU 2016-13 as of January 1, 2022.  The 2021 amounts presented are calculated under the prior accounting standard. 


MORTGAGE BANKING SEGMENT
SUMMARY OF KEY QUARTERLY FINANCIAL DATA
(Unaudited)

    At or For the Three Months Ended  
    December 31,     September 30,     June 30,     March 31,     December 31,  
    2022     2022     2022     2022     2021  
    (Dollars in Thousands)  
Condensed Results of Operations:                                        
Net interest (loss) income   $ (241 )   $ (155 )   $ 370     $ 183     $ (49 )
Provision for credit losses (2)     40       98       89       64       30  
Total noninterest income     18,066       27,305       30,126       28,604       40,692  
Noninterest expenses:                                        
Compensation, payroll taxes, and other employee benefits     17,397       21,864       21,311       20,438       27,866  
Occupancy, office furniture and equipment     1,289       1,341       1,180       1,251       1,306  
Advertising     769       924       718       678       680  
Data processing     490       543       613       588       542  
Communications     197       194       195       246       221  
Professional fees     453       265       222       338       306  
Real estate owned     -       -       -       -       -  
Loan processing expense     1,059       1,120       1,134       1,431       940  
Other     2,584       2,571       2,733       2,309       1,445  
Total noninterest expense     24,238       28,822       28,106       27,279       33,306  
(Loss) income before income taxes     (6,453 )     (1,770 )     2,301       1,444       7,307  
Income tax (benefit) expense     (1,602 )     (470 )     578       377       1,443  
Net (loss) income   $ (4,851 )   $ (1,300 )   $ 1,723     $ 1,067     $ 5,864  
                                         
Efficiency ratio - QTD     135.98 %     106.16 %     92.16 %     94.76 %     81.95 %
Efficiency ratio - YTD     104.02 %     97.42 %     93.42 %     94.76 %     71.44 %
                                         
Loan originations   $ 546,628     $ 729,897     $ 778,760     $ 708,463     $ 993,113  
Purchase     95.6 %     94.2 %     90.4 %     77.3 %     73.8 %
Refinance     4.4 %     5.8 %     9.6 %     22.7 %     26.2 %
Gross margin on loans sold(1)     3.41 %     3.70 %     3.85 %     4.00 %     4.18 %

(1) Gross margin on loans sold equals mortgage banking income (excluding the change in interest rate lock value) divided by total loan originations

(2) The Company adopted ASU 2016-13 as of January 1, 2022.  The 2021 amounts presented are calculated under the prior accounting standard. 

Contact: Mark R. Gerke
Chief Financial Officer
414-459-4012
markgerke@wsbonline.com


Powered by EIN News


EIN Presswire does not exercise editorial control over third-party content provided, uploaded, published, or distributed by users of EIN Presswire. We are a distributor, not a publisher, of 3rd party content. Such content may contain the views, opinions, statements, offers, and other material of the respective users, suppliers, participants, or authors.

Submit your press release