Waterstone Financial, Inc. (WSBF) SEC Filing 10-Q Quarterly report for the period ending Friday, March 31, 2017

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Waterstone Financial, Inc.
Ticker: WSBF CIK: 1569994

Exhibit 99.1

WATERSTONE FINANCIAL, INC.

WATERSTONE BANK

11200 W. PLANK CT.

WAUWATOSA, WI 53226

Contact: Mark R. Gerke

Chief Financial Officer

414.459.4012

markgerke@wsbonline.com

Waterstone Financial, Inc. Announces Results of Operations for the Quarter Ended March 31, 2017.

WAUWATOSA, WI – 04/28/2017 – Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income per diluted share of $0.24 for the quarter ended March 31, 2017, which represents a 71.4% increase compared to net income per diluted share of $0.14 for the quarter ended March 31, 2016.

"We continued to build off of our strong 2016 performance in the first quarter of 2017 as both the Community Banking and Mortgage Banking segments achieved record 1^st quarter net income," said Douglas Gordon, CEO of Waterstone Financial, Inc. "We generated $6.6 million in consolidated net income, which represents a 70.2% increase over prior year comparable quarter. The Community Banking segment benefited from strong loan growth, a lower cost of funds and reduced provision for loan loss due to continued improvement in loan portfolio quality. The Mortgage Banking segment achieved a total of $481.3 million in loan originations this quarter which was an increase of $110.1 million, or 29.7%, compared to last year."

Highlights of the Quarter Ended March 31, 2017

Waterstone Financial, Inc. (Consolidated)

●	Consolidated net income totaled $6.6 million for the quarter ended March 31, 2017, compared to $3.9 million for the quarter ended March 31, 2016.
●	Consolidated return on average assets totaled 1.54% for the quarter ended March 31, 2017 compared to 0.90% for the quarter ended March 31, 2016.

Community Banking Segment

●	Pre-tax income of the segment totaled $6.8 million for the quarter ended March 31, 2017, which represents an 86.4% increase compared to $3.7 million for the quarter ended March 31, 2016.
●	Total loans increased $17.0 million, or 1.4%, to $1.19 billion at March 31, 2017 compared to $1.18 billion at December 31, 2016.
●	Total deposits decreased $3.4 million, or 0.4%, to $946.0 million at March 31, 2017 compared to $949.4 million at December 31, 2016. The decrease in total deposits was driven by a $4.9 million, or 0.7%, decrease in time deposits and decline in money market and savings deposits of $2.5 million, or 1.5%. These decreases were partially offset by an increase of $4.0 million, or 3.3%, in demand deposits.
●	Provision for loan losses decreased $1.4 million to a negative provision of $1.3 million for the quarter ended March 31, 2017. The negative provision reflects the continued improvement in loan quality metrics including: non–accrual loans, loans classified as substandard or watch and loans past due.
●	Interest expense on borrowings decreased $1.8 million to $2.1 million for the quarter ended March 31, 2017, compared to $3.9 million for the quarter ended March 31, 2016. This decrease was primarily driven by a decrease in the average cost of borrowings that resulted from the maturity and replacement of fixed rate borrowings since the beginning of the prior year. The average cost of borrowings totaled 2.43% during the quarter ended March 31, 2017, compared to 3.91% during the quarter ended March 31, 2016.
●	Real estate owned expense increased $267,000, to $411,000 for the quarter ended March 31, 2017, compared to $144,000 for the quarter ended March 31, 2016. Real estate owned property writedowns increased $325,000 to $455,000 in the current year, facilitating a plan to liquidate certain aged properties.
●	The effective income tax rate amounted to 34.2% for the three months ended March 31, 2017 compared to 35.7% for the three months ended March 31, 2016. During the three months ended March 31, 2017, the Company recognized a benefit of approximately $350,000 related to stock awards exercised within the current period as a result of adopting the new stock compensation accounting standard.

Mortgage Banking Segments

●	Pre-tax income of the segment totaled $3.1 million for the quarter ended March 31, 2017, which represents a 32.9% increase compared to $2.3 million for the quarter ended March 31, 2016.
●	Loans originated for the purpose of sale in the secondary market increased $110.1 million, or 29.7%, to $481.3 million during the three months ended March 31, 2017, compared to $371.2 million for the three months ended March 31, 2016. 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 85.9% originations for the three months ended March 31, 2017 compared to 84.9% of total originations for the three months ended March 31, 2016.
●	Pre-tax income of the segment includes a $308,000 gain on the sale of mortgage servicing rights during the quarter ended March 31, 2017. There was no such comparable transaction in the prior year.

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The following information was filed by Waterstone Financial, Inc. (WSBF) on Friday, April 28, 2017 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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