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Waterstone Financial, Inc. Announces Results of Operations for the Quarter and the Nine Months Ended September 30, 2013



Waterstone Financial, Inc. Announces Results of Operations for the Quarter and
                   the Nine Months Ended September 30, 2013

PR Newswire

WAUWATOSA, Wis., Oct. 29, 2013

WAUWATOSA, Wis., Oct. 29, 2013 /PRNewswire/ -- Waterstone Financial, Inc.
(NASDAQ: WSBF), holding company for WaterStone Bank, reported pre-tax income
of $5.2 million and net income of $3.2 million for the third quarter of 2013. 
This compares to pre-tax income of $8.6 million and net income of $8.4 million
for the third quarter of 2012.  Year-to-date pre-tax and net income totaled
$20.7 million and $12.8 million, respectively, for the nine months ended
September 30, 2013 compared to $17.0 million and $16.8 million, respectively,
for the nine months ended September 30, 2012.  A valuation reserve against net
deferred tax assets released in the fourth quarter of 2012 minimized income
tax expense during the 2012 periods.  Net income per diluted share was $0.10
for the third quarter of 2013 as compared to $0.27 per diluted share for the
third quarter of 2012. 

"WaterStone Bank's earnings continue to improve due to improving asset quality
while Waterstone Mortgage has experienced declining volumes and margins, as is
widespread throughout the mortgage banking industry," said Doug Gordon,
President and Chief Executive Officer of Waterstone Financial. "Our capital
levels continue to increase, which will support further growth."

The company's community banking segment pre-tax income for the quarter ended
September 30, 2013 totaled $4.0 million compared to $1.1 million for the third
quarter of 2012.  Community banking operations were positively impacted by a
$2.2 million decline in real estate owned expense and a $1.0 million decline
in the quarterly provision for loan losses for the quarter ended September 30,
2013 as compared to the quarter ended September 30, 2012.  The company's
mortgage banking segment reported pre-tax income of $1.1 million for the
quarter ended September 30, 2013 compared to $7.2 million for the quarter
ended September 30, 2012.  Mortgage loans originated for sale in the third
quarter of 2013 totaled $441.5 million, a 7.6% decrease from the $477.9
million originated for sale in the third quarter of 2012.  Margins earned on
loans sold also declined in 2013 such that total mortgage banking revenue
decreased by 31.8% to $18.2 million in the third quarter of 2013 compared to
$26.7 million in the third quarter of 2012.  The decline in average sales
margins reflects a decrease in pricing and fees on all products in all
geographic markets and is reflective of general market conditions.  The
decline in revenue was partially offset by a 7.5% decline in compensation
expense to $13.5 million for the third quarter of 2013 compared to $14.6
million for the third quarter of 2012. 

Total nonperforming assets as a percentage of total assets declined to 5.04%
at September 30, 2013 from 6.66% at December 31, 2012 and 7.13% at September
30, 2012.  Total nonperforming assets declined 27.1% to $80.6 million at
September 30, 2013 from $110.6 million at December 31, 2012.  Total delinquent
loans declined 34.4% to $48.9 million at September 30, 2013 from $74.5 million
at December 31, 2012.  The provisions for loan losses totaled $1.0 million and
$4.0 million for the three and nine months ended September 30, 2013,
respectively.  The provisions for loan losses totaled $2.0 million and $7.1
million for the three and nine months ended September 30, 2012, respectively.

About Waterstone Financial, Inc.

Waterstone Financial, Inc. (NASDAQ: WSBF) is a single-bank, thrift holding
company headquartered in Wauwatosa, WI.  With $1.6 billion in assets at
September 30, 2013, Waterstone has eight community bank branches in the
metropolitan Milwaukee market and mortgage banking offices in 14 states around
the country.  Additional financial detail related to WaterStone Bank, SSB can
be found on the FDIC web site (www.fdic.gov) under the "Industry Analysis"
tab.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995.  Such forward-looking statements include, without limitation, statements
regarding expected financial and operating activities and results that are
preceded by, followed by, or that include words such as "may," "expects,"
"anticipates," "estimates" or "believes."  Such statements are subject to
important factors that could cause actual results to differ materially from
those anticipated by the forward-looking statements.  These factors include
(i) exposure to the deterioration in the commercial and residential real
estate markets which could result in increased charge-offs and increases in
the allowance for loan losses,  (ii) various other factors, including changes
in economic conditions affecting borrowers, new information regarding
outstanding loans and identification of additional problem loans, which could
require an increase in  the allowance for loan losses, (iii) Waterstone's
ability to maintain required levels of capital and other current and future
regulatory requirements, (iv) the impact of recent and future legislative
initiatives on the financial markets, and (v) those factors referenced in Item
1A. Risk Factors in Waterstone's Annual Report on Form 10-K for the year ended
December 31, 2012 and as may be described from time to time in Waterstone's
subsequent SEC filings, which factors are incorporated herein by reference.
 Readers are cautioned not to place undue reliance on these forward-looking
statements, which reflect only Waterstone's belief as of the date of this
press release.

WATERSTONE FINANCIAL, INC.
SUMMARY OF KEY QUARTERLY FINANCIAL DATA (unaudited)
(dollars in thousands)
                             2013                          2012
Performance Ratios:          Q3        Q2        Q1        Q4        Q3
Return on average assets     0.79%     1.21%     1.14%     4.28%     2.00%
Return on average equity     6.04%     9.42%     9.14%     37.42%    18.26%
Net interest margin          2.51%     2.60%     2.66%     2.67%     2.67%
Efficiency ratio             79.77%    74.93%    71.95%    80.64%    72.42%
Condensed Income Data:
Net interest income          $ 9,578   $ 9,921   $ 10,146  $ 10,256  $ 10,635
Provision for loan losses    1,000     1,200     1,760     1,200     2,000
Total noninterest income     21,030    26,707    23,033    25,174    27,775
Total noninterest expense    24,416    27,447    23,871    28,570    27,817
Income before income taxes   5,192     7,981     7,548     5,660     8,593
Income tax expense (benefit) 1,973     3,054     2,923     (12,420)  145
Net income                   $   3,219 $   4,927 $   4,625 $ 18,080  $  8,448
Asset Quality Data:
Allowance for loan losses    $ 24,708  $ 27,767  $ 29,298  $ 31,043  $ 30,967
Net charge-offs              4,059     2,731     3,505     1,124     3,691
Total past due loans         48,881    60,606    71,192    74,450    77,858
Real estate owned            23,147    29,983    30,799    35,974    43,837
Nonperforming assets to      5.04%     5.09%     5.93%     6.66%     7.13%
total assets
Average Balance Sheet Data:
Total assets                 1,610,910 1,628,967 1,647,387 1,682,241 1,676,685
Loans receivable and held    1,211,089 1,235,782 1,248,893 1,265,624 1,270,414
for sale
Mortgage-related securities  126,447   134,985   143,628   157,187   151,162
Total interest-earning       1,513,985 1,530,723 1,548,494 1,591,149 1,580,611
assets
Interest-bearing deposits    855,975   871,565   887,252   936,121   949,174
Borrowings                   485,488   485,199   485,259   483,445   487,078
Total interest-bearing       1,341,463 1,356,764 1,372,511 1,419,566 1,436,252
liabilities
Total shareholders' equity   211,307   209,699   205,297   192,231   183,534
Capital Ratios:
Equity to total assets at    13.32%    12.82%    12.72%    12.20%    11.00%
end of the period
Tier I capital to average    12.68%    12.17%    11.79%    11.13%    10.50%
assets (bank)
Tier I capital to            20.26%    17.60%    17.49%    16.07%    14.37%
risk-weighted assets (bank)
Total capital to             21.52%    18.87%    18.75%    17.34%    15.64%
risk-weighted assets (bank)

 

 

WATERSTONE FINANCIAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
                                             (Unaudited)
                                             September 30,   December 31,
                                             2013            2012
ASSETS
Cash and cash equivalents                    $        77,907 $          71,469
Securities available for sale (at fair       211,629         205,017
value)
Loans held for sale (at fair value)          97,184          133,613
Loans receivable, net of allowance for loan  1,067,468       1,102,629
losses
Office properties and equipment              28,484          26,935
Real estate owned                            23,147          35,974
Other assets                                 91,999          85,439
     Total assets                            $   1,597,818   $     1,661,076
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits                                     $      872,285  $        939,513
Borrowings                                   471,243         479,888
Other                                        41,457          39,041
     Total liabilities                       1,384,985       1,458,442
Common stock and additional paid-in capital  110,797         110,831
Retained earnings                            149,258         136,487
Unearned ESOP shares                         (1,067)         (1,708)
Accumulated other comprehensive              (894)           2,285
income(loss), net of taxes
Treasury shares, at cost                     (45,261)        (45,261)
     Total shareholders' equity              212,833         202,634
     Total liabilities and shareholders'     $   1,597,818   $     1,661,076
equity

 

 

WATERSTONE FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(in thousands, except per      For the Three Months For the Nine Months
share data)
                               Ended September 30,  Ended September 30,
                               2013         2012    2013         2012
Interest income:
   Loans                       $ 14,425     $15,943 $   44,500   $    48,834
   Mortgage-related securities 455          826     1,311        2,611
   Debt securities and         653          505     1,806        1,760
short-term investments
      Total interest income    15,533       17,274  47,617       53,205
Interest expense:
   Deposits                    1,237        1,938   4,055        7,804
   Borrowings                  4,718        4,701   13,917       13,711
      Total interest expense   5,955        6,639   17,972       21,515
      Net interest income      9,578        10,635  29,645       31,690
Provision for loan losses      1,000        2,000   3,960        7,100
   Net interest income after   8,578        8,635   25,685       24,590
provision for loan losses
Noninterest income:
   Mortgage banking income     18,173       26,668  65,616       63,376
   Other                       2,857        1,107   5,154        2,652
      Total noninterest income 21,030       27,775  70,770       66,028
Noninterest expense:
   Compensation and employee   16,575       17,823  53,001       43,425
benefits
   Occupancy, office furniture 2,218        1,820   5,995        5,229
and equipment
   Advertising                 718          697     2,339        2,021
   Real estate owned           (163)        1,991   (9)          6,265
   FDIC insurance premiums     516          916     1,569        2,730
   Other                       4,552        4,570   12,839       13,898
      Total noninterest        24,416       27,817  75,734       73,568
expense
      Income before income     5,192        8,593   20,721       17,050
taxes
Income taxes                   1,973        145     7,950        216
      Net income               $    3,219   $8,448  $   12,771   $     16,834
Income per share:
   Basic                       $      0.10  $0.27   $       0.41 $        0.54
   Diluted                     0.10         0.27    0.41         0.54
Weighted average shares
outstanding
   Basic                       31,163       31,064  31,144       31,045
   Diluted                     31,414       31,161  31,375       31,125

 

SOURCE Waterstone Financial, Inc.

Website: http://www.wsbonline.com
Contact: Heather Zydek, Community Relations Coordinator, 414.459.4183,
heatherzydek@wsbonline.com
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