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 and Nine Months Ended September 30, 2018.
WAUWATOSA, WI – 10/23/2018 – Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income of $8.7 million, or $0.31 per diluted share for the quarter ended September 30, 2018 compared to $7.4 million, or $0.26 per diluted share for the quarter ended September 30, 2017. Net income per diluted share was $0.90 for the nine months ended September 30, 2018 compared to net income per diluted share of $0.82 for the nine months ended September 30, 2017.
"We executed a strong third quarter performance with net income of $8.7 million and earnings per share of $0.31," said Douglas Gordon, CEO of Waterstone Financial, Inc. "We followed up a record 2nd quarter net income with record net income for a 3rd quarter, based largely upon the strength of the Community Banking segment. The Community Banking segment had a 36.4% growth in net income which reflected continued net interest margin improvement and expense management. The Mortgage Banking segment underperformed last year's profitability due to margin compression in the third quarter of 2018 which resulted in greater branch losses. The industry continues to face pressures as market competition remains strong from lower refinancing activity and diminished levels of housing inventory. In an effort to improve profitability, we closed a number of underperforming branches which negatively impacted the bottom line for the quarter.  However, we achieved a record origination month in August due to the addition of the New Mexico branch at the end of the second quarter."

Highlights of the Quarter Ended September 30, 2018

Waterstone Financial, Inc. (Consolidated)

·
Consolidated net income of Waterstone Financial, Inc. totaled $8.7 million for the quarter ended September 30, 2018, compared to $7.4 million for the quarter ended September 30, 2017.
·
Consolidated return on average assets totaled 1.80% for the quarter ended September 30, 2018 compared to 1.56% for the quarter ended September 30, 2017.
·
Consolidated return on average equity increased 136 bps to 8.48% for the quarter ended September 30, 2018 compared to 7.12% for the quarter ended September 30, 2017.
·
The effective income tax rate amounted to 24.0% for the quarter ended September 30, 2018 compared to 37.1% for the quarter ended September 30, 2017 primarily as a result of the Tax Cuts and Jobs Act reducing the federal rate from 35% to 21%.
·
Dividends declared totaled $0.12 per share during the quarter ended September 30, 2018 amounting to a total of $0.86 in dividends declared per share during the nine months ended September 30, 2018.
·
Repurchased a total 321,900 shares on the open market during the quarter ended September 30, 2018 at an average price of $17.02 per share. For the nine months ended, repurchased a total of 527,500 shares at an average price of $17.06.

 

 

- 5 -

 
 
Community Banking Segment

·
Pre-tax income of the segment totaled $8.6 million for the quarter ended September 30, 2018, which represents a 15.8% increase compared to $7.5 million for the quarter ended September 30, 2017.
·
Net interest income of the segment totaled $14.1 million for the quarter ended September 30, 2018, which represents a 7.6% increase compared to $13.1 million for the quarter ended September 30, 2017. Our net interest margin increased 12 bps to 3.07% for the quarter ended September 30, 2018 compared to 2.95% for the quarter ended September 30, 2017, which was driven by loan growth along with a decrease in borrowing costs.
·
Noninterest income increased $151,000 million for the quarter ended September 30, 2018 compared to the quarter ended September 30, 2017 as fees earned on loans increased.
·
Noninterest expenses decreased for the quarter ended September 30, 2018 compared to the quarter ended September 30, 2017 as compensation and real estate owned expenses decreased.
·
Driven by net interest margin expansion and continued cost control efforts, the efficiency ratio for the community banking segment improved to 44.1% for the quarter ended September 30, 2018, compared to 47.8% for the quarter ended September 30, 2017. This was a quarterly record for the Community Banking Segment.
·
Average loans held for investment totaled $1.34 billion during the quarter ended September 30, 2018, which represents an increase of $91.3 million, or 7.3% over the comparable quarter in the prior year.
·
Average deposits totaled $1.01 billion during the quarter ended September 30, 2018, which represents an increase of $48.3 million, or 5.0%, over the comparable quarter in the prior year.
·
Nonperforming assets as percentage of total assets was 0.45% at September 30, 2018 and June 30, 2018 and 0.62% at September 30, 2017.

Mortgage Banking Segment

·
Pre-tax income of the segment totaled $2.8 million for the quarter ended September 30, 2018, which represents a 35.0% decrease compared to $4.3 million for the quarter ended September 30, 2017.
·
Loan originations increased $76.7 million, or 11.2%, to $761.2 million during the quarter ended September 30, 2018, compared to $684.5 million during the quarter ended September 30, 2017.  Origination volume relative to purchase activity accounted for 92.1% of originations for the quarter ended September 30, 2018 compared to 89.6% of total originations for the quarter ended September 30, 2017.
·
Gross margins on loans sold decreased approximately 10% during the quarter ended September 30, 2018, compared to the quarter ended September 30, 2017.

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, Brookfield, Fox Point/North Shore, Franklin/Hales Corners, Germantown/Menomonee Falls, Greenfield, Oak Creek, Oconomowoc/Lake Country, Pewaukee, Waukesha/Brookfield, and West Allis, Wisconsin and a commercial lending office in Minneapolis, Minnesota. WaterStone Bank is the parent company to Waterstone Mortgage, which has the ability to lend in 47 states. For more information about WaterStone Bank, go to http://www.wsbonline.com.
 

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.
 
 
- 6 -

 
 
 
 
 
WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF INCOME
 
(Unaudited)
           
 
   
For The Three Months Ended September 30,
   
For The Nine Months Ended September 30,
 
   
2018
   
2017
   
2018
   
2017
 
   
(In Thousands, except per share amounts)
       
Interest income:
                       
Loans
 
$
17,340
     
15,855
     
49,498
     
45,078
 
Mortgage-related securities
   
643
     
647
     
1,925
     
2,021
 
Debt securities, federal funds sold and short-term investments
   
1,063
     
951
     
2,949
     
2,680
 
Total interest income
   
19,046
     
17,453
     
54,372
     
49,779
 
Interest expense:
                               
Deposits
   
3,063
     
1,981
     
8,087
     
5,614
 
Borrowings
   
2,133
     
2,439
     
5,574
     
6,756
 
Total interest expense
   
5,196
     
4,420
     
13,661
     
12,370
 
Net interest income
   
13,850
     
13,033
     
40,711
     
37,409
 
Provision for loan losses
   
40
     
20
     
(1,060
)
   
(1,166
)
Net interest income after provision for loan losses
   
13,810
     
13,013
     
41,771
     
38,575
 
Noninterest income:
                               
Service charges on loans and deposits
   
442
     
300
     
1,332
     
1,148
 
Increase in cash surrender value of life insurance
   
695
     
688
     
1,496
     
1,476
 
Loss on sale of available for sale securities
   
-
     
-
     
-
     
(107
)
Mortgage banking income
   
32,653
     
31,863
     
88,930
     
92,774
 
Other
   
272
     
203
     
805
     
941
 
Total noninterest income
   
34,062
     
33,054
     
92,563
     
96,232
 
Noninterest expenses:
                               
Compensation, payroll taxes, and other employee benefits
   
27,453
     
26,153
     
74,670
     
73,732
 
Occupancy, office furniture, and equipment
   
2,751
     
2,533
     
7,995
     
7,587
 
Advertising
   
1,224
     
821
     
3,084
     
2,414
 
Data processing
   
809
     
623
     
2,057
     
1,854
 
Communications
   
412
     
394
     
1,229
     
1,170
 
Professional fees
   
583
     
629
     
1,930
     
1,953
 
Real estate owned
   
(128
)
   
(20
)
   
63
     
258
 
FDIC insurance premiums
   
131
     
129
     
361
     
366
 
Other
   
3,191
     
3,054
     
9,921
     
10,227
 
Total noninterest expenses
   
36,426
     
34,316
     
101,310
     
99,561
 
Income before income taxes
   
11,446
     
11,751
     
33,024
     
35,246
 
Income tax expense
   
2,743
     
4,362
     
7,948
     
12,397
 
Net income
 
$
8,703
     
7,389
     
25,076
     
22,849
 
Income per share:
                               
Basic
 
$
0.32
     
0.27
     
0.91
     
0.83
 
Diluted
 
$
0.31
     
0.26
     
0.90
     
0.82
 
Weighted average shares outstanding:
                               
Basic
   
27,451
     
27,532
     
27,488
     
27,449
 
Diluted
   
27,680
     
27,953
     
27,765
     
27,927
 
 
 
 
- 7 -

 
 
 
WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES     
 
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION     
 
 
   
September 30,
   
December 31,
 
   
2018
   
2017
 
   
(Unaudited)
       
Assets
 
(In Thousands, except per share amounts)
 
Cash
 
$
32,966
   
$
22,306
 
Federal funds sold
   
18,352
     
17,034
 
Interest-earning deposits in other financial institutions and other short term investments
   
7,538
     
9,267
 
Cash and cash equivalents
   
58,856
     
48,607
 
Securities available for sale (at fair value)
   
179,076
     
199,707
 
Loans held for sale (at fair value)
   
192,674
     
149,896
 
Loans receivable
   
1,357,656
     
1,291,814
 
Less: Allowance for loan losses
   
13,226
     
14,077
 
Loans receivable, net
   
1,344,430
     
1,277,737
 
                 
Office properties and equipment, net
   
22,417
     
22,941
 
Federal Home Loan Bank stock (at cost)
   
19,575
     
16,875
 
Cash surrender value of life insurance
   
67,198
     
65,996
 
Real estate owned, net
   
2,170
     
4,558
 
Prepaid expenses and other assets
   
33,007
     
20,084
 
Total assets
 
$
1,919,403
   
$
1,806,401
 
                 
Liabilities and Shareholders' Equity
               
Liabilities:
               
Demand deposits
 
$
130,969
   
$
129,597
 
Money market and savings deposits
   
159,742
     
148,804
 
Time deposits
   
713,739
     
688,979
 
Total deposits
   
1,004,450
     
967,380
 
                 
Borrowings
   
451,132
     
386,285
 
Advance payments by borrowers for taxes
   
30,460
     
4,876
 
Other liabilities
   
28,717
     
35,756
 
Total liabilities
   
1,514,759
     
1,394,297
 
                 
Shareholders' equity:
               
Common stock
   
291
     
295
 
Additional paid-in capital
   
329,743
     
326,655
 
Retained earnings
   
184,697
     
183,358
 
Unearned ESOP shares
   
(18,101
)
   
(18,991
)
Accumulated other comprehensive loss, net of taxes
   
(3,808
)
   
(477
)
Cost of shares repurchased
   
(88,178
)
   
(78,736
)
Total shareholders' equity
   
404,644
     
412,104
 
Total liabilities and shareholders' equity
 
$
1,919,403
   
$
1,806,401
 
                 
Share Information
               
Shares Outstanding
   
29,050
     
29,501
 
Book Value per share
 
$
13.93
   
$
13.97
 
Closing market price
 
$
17.15
   
$
17.05
 
Price to book ratio
   
123.12
%
   
122.05
%
 
 
 
- 8 -

 
 
 
 
WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
 
SUMMARY OF KEY QUARTERLY FINANCIAL DATA
 
(Unaudited)
 
                               
   
At or For the Three Months Ended
                   
   
September 30,
   
June 30,
   
March 31,
   
December 31,
   
September 30,
 
   
2018
   
2018
   
2018
   
2017
   
2017
 
   
(Dollars in Thousands)
                   
Condensed Results of Operations:
                             
Net interest income
 
$
13,850
   
$
13,720
     
13,141
     
13,324
     
13,033
 
Provision for loan losses
   
40
     
(220
)
   
(880
)
   
-
     
20
 
Total noninterest income
   
34,062
     
33,318
     
25,183
     
28,181
     
33,054
 
Total noninterest expense
   
36,426
     
34,737
     
30,147
     
32,318
     
34,316
 
Income before income taxes
   
11,446
     
12,521
     
9,057
     
9,187
     
11,751
 
Income tax expense
   
2,743
     
3,101
     
2,104
     
6,072
     
4,362
 
Net income
 
$
8,703
   
$
9,420
     
6,953
     
3,115
     
7,389
 
Income per share – basic
 
$
0.32
   
$
0.34
     
0.25
     
0.11
     
0.27
 
Income per share – diluted
 
$
0.31
   
$
0.34
     
0.25
     
0.11
     
0.26
 
Dividends declared per share
 
$
0.12
   
$
0.12
     
0.62
     
0.12
     
0.12
 
                                         
Performance Ratios:
                                       
Return on average assets - QTD
   
1.80
%
   
2.02
%
   
1.57
%
   
0.67
%
   
1.56
%
Return on average equity - QTD
   
8.48
%
   
9.40
%
   
6.90
%
   
2.98
%
   
7.12
%
Net interest margin - QTD
   
3.07
%
   
3.14
%
   
3.18
%
   
3.08
%
   
2.95
%
                                         
Return on average assets - YTD
   
1.80
%
   
1.80
%
   
1.57
%
   
1.43
%
   
1.70
%
Return on average equity - YTD
   
8.25
%
   
8.13
%
   
6.90
%
   
6.32
%
   
7.42
%
Net interest margin - YTD
   
3.13
%
   
3.16
%
   
3.18
%
   
3.00
%
   
2.97
%
                                         
Asset Quality Ratios:
                                       
Past due loans to total loans
   
0.67
%
   
0.54
%
   
0.53
%
   
0.45
%
   
0.71
%
Non accrual loans to total loans
   
0.48
%
   
0.46
%
   
0.50
%
   
0.47
%
   
0.56
%
Non performing assets to total assets
   
0.45
%
   
0.45
%
   
0.54
%
   
0.59
%
   
0.62
%
 
 
 
 
 
- 9 -

 
 
 
COMMUNITY BANKING SEGMENT
 
SUMMARY OF KEY QUARTERLY FINANCIAL DATA
 
(Unaudited)
 
 
                             
 
 
At or For the Three Months Ended
 
 
 
September 30,
   
June 30,
   
March 31,
   
December 31,
   
September 30,
 
 
 
2018
   
2018
   
2018
   
2017
   
2017
 
 
 
(Dollars in Thousands)
 
Condensed Results of Operations:
                             
Net interest income
 
$
14,121
   
$
13,747
     
13,304
     
13,375
     
13,120
 
Provision for loan losses
   
-
     
(250
)
   
(900
)
   
-
     
-
 
Total noninterest income
   
1,312
     
1,137
     
939
     
974
     
1,161
 
Total noninterest expense
   
6,800
     
6,588
     
7,682
     
6,939
     
6,824
 
Income before income taxes
   
8,633
     
8,546
     
7,461
     
7,410
     
7,457
 
Income tax expense
   
2,003
     
1,970
     
1,668
     
5,570
     
2,597
 
Net income
 
$
6,630
   
$
6,576
     
5,793
     
1,840
     
4,860
 
 
                                       
Efficiency ratio - QTD
   
44.06
%
   
44.27
%
   
53.94
%
   
48.36
%
   
47.78
%
Efficiency ratio - YTD
   
47.28
%
   
49.00
%
   
53.94
%
   
49.98
%
   
50.56
%
 
 
 
MORTGAGE BANKING SEGMENT
 
SUMMARY OF KEY QUARTERLY FINANCIAL DATA
 
(Unaudited)
 
 
                             
 
 
At or For the Three Months Ended
 
 
 
September 30,
   
June 30,
   
March 31,
   
December 31,
   
September 30,
 
 
 
2018
   
2018
   
2018
   
2017
   
2017
 
 
 
(Dollars in Thousands)
 
Condensed Results of Operations:
                             
Net interest income
 
$
(286
)
 
$
(40
)
   
(192
)
   
(72
)
   
(102
)
Provision for loan losses
   
40
     
30
     
20
     
-
     
20
 
Total noninterest income
   
33,165
     
32,547
     
24,731
     
27,645
     
32,318
 
Total noninterest expense
   
30,036
     
28,493
     
22,941
     
25,791
     
27,882
 
Income before income taxes
   
2,803
     
3,984
     
1,578
     
1,782
     
4,314
 
Income tax expense
   
737
     
1,133
     
435
     
509
     
1,767
 
Net income
 
$
2,066
   
$
2,851
     
1,143
     
1,273
     
2,547
 
 
                                       
Efficiency ratio - QTD
   
91.35
%
   
87.65
%
   
93.49
%
   
93.54
%
   
86.55
%
Efficiency ratio - YTD
   
90.60
%
   
90.16
%
   
93.49
%
   
86.93
%
   
85.00
%
 
                                       
Loan Originations
   
761,206
     
721,184
     
516,020
     
600,265
     
684,500
 
Purchase
   
92.1
%
   
92.6
%
   
85.1
%
   
86.7
%
   
89.6
%
Refinance
   
7.9
%
   
7.4
%
   
14.9
%
   
13.3
%
   
10.4
%
 
 
 
 
 
 
 
 
- 10 -

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Download Annual and Quarterly Reports as PDF, Word and Excel Documents
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Intrinsic Value Calculator


Intrinsic Value Calculator
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Financial Stability Report


Financial Stability Report
Screenshot of financial stability report for Coco-Cola (2019)
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Our Financial Stability reports uses up to 10 years of financial ratios to determine the health of a company's EPS, Dividends, Book Value, Return on Equity, Current Ratio and Debt-to-Equity

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