Waterstone Financial, Inc. (WSBF) SEC Filing 10-K Annual report for the fiscal year ending Saturday, December 31, 2016

Waterstone Financial, Inc. Announces Results of Operations for the Quarter and Year Ended December 31, 2016.

WAUWATOSA, WI – 02/24/2017 – 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.

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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%.

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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.

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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, WI.  With $1.8 billion in assets Waterstone has eleven 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.