Waterstone Financial, Inc. Announces Results of Operations for the Quarter and Six Months Ended June 30, 2017

WAUWATOSA, Wis., July 26, 2017 /PRNewswire/ -- Waterstone Financial, Inc. WSBF, holding company for WaterStone Bank, reported net income per diluted share of $0.32 for the quarter ended June 30, 2017, which represents a 10.3% increase compared to net income per diluted share of $0.29 for the quarter ended June 30, 2016.  Net income per diluted share was $0.55 for the six months ended June 30, 2017, compared to net income per diluted share of $0.43 for the six months ended June 30, 2016.

"We are pleased with our strong results in the second quarter," said Douglas Gordon, CEO of Waterstone Financial, Inc. "We generated a record $13.5 million in consolidated quarterly pretax income, which represents a 10.0% increase over prior year comparable quarter. The Community Banking segment continued to have strong loan growth and improved net interest margin during the quarter.  The Mortgage Banking segment achieved a quarterly record of $737.9 million in loan originations this quarter which represents a 9.3% growth rate over the second quarter of 2016."

Highlights of the Quarter Ended June 30, 2017

Waterstone Financial, Inc. (Consolidated)

• Consolidated net income of Waterstone Financial, Inc. totaled $8.9 million for the quarter ended June 30, 2017, compared to $7.8 million for the quarter ended June 30, 2016.
• Consolidated net income of Waterstone Financial, Inc. totaled $15.5 million for the six months ended June 30, 2017, compared to $11.6 million for the six months ended June 30, 2016.
• Consolidated return on average assets totaled 1.99% for the quarter ended June 30, 2017 compared to 1.78% for the quarter ended June 30, 2016.
• Consolidated return on average assets totaled 1.77% for the six months ended June 30, 2017 compared to 1.34% for the six months ended June 30, 2016.
• Declared and paid a special dividend of $0.50 per share during the quarter ended June 30, 2017.

Community Banking Segment

• Pre-tax income of the segment totaled $6.9 million for the quarter ended June 30, 2017, which represents a 45.5% increase compared to $4.7 million for the quarter ended June 30, 2016.
• Net interest income totaled $12.4 million for the quarter ended June 30, 2017, which represents a 24.8% increase compared to $10.0 million for the quarter ended June 30, 2016. The increase in net interest income, which was driven by loan growth and a decrease in borrowing costs, drove our net interest margin to 3.00% for the quarter ended June 30, 2017 compared to 2.50% for the quarter ended June 30, 2016.
• Average loans held for investment totaled $1.20 billion during the quarter ended June 30, 2017, which represents an increase of $89.3 million, or 8.0% over the comparable quarter in the prior year. Total loans increased $47.9 million, or 4.1%, to $1.23 billion at June 30, 2017 compared to $1.18 billion at December 31, 2016.
• Interest expense on borrowings decreased $1.5 million to $2.2 million for the quarter ended June 30, 2017, compared to $3.7 million for the quarter ended June 30, 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 2.26% during the quarter ended June 30, 2017, compared to 3.88% during the quarter ended June 30, 2016.
• Driven by margin expansion and continued cost control efforts, the efficiency ratio for the segment improved to 48.8% for the quarter ended June 30, 2017, compared to 57.6% for the quarter ended June 30, 2016.
• Nonperforming assets as percentage of total assets decreased to 0.71% as of June 30, 2017, compared to 0.76% at March 31, 2017 and 1.11% at June 30, 2016.

Mortgage Banking Segments

• Pre-tax income of the segment totaled $6.7 million for the quarter ended June 30, 2017, which represents an 11.5% decrease compared to $7.5 million for the quarter ended June 30, 2016.
• Loans originated for the purpose of sale in the secondary market increased $62.8 million, or 9.3%, to $737.9 million during the quarter ended June 30, 2017, compared to $675.1 million for the quarter ended June 30, 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 91.7% originations for the quarter ended June 30, 2017 compared to 88.5% of total originations for the quarter ended June 30, 2016.
• Gross margins on loans sold decreased approximately 5% during the quarter ended June 30, 2017, compared to the quarter ended June 30, 2016.

About Waterstone Financial, Inc.

Waterstone Financial, Inc. WSBF 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 offers mortgage banking offices in 24 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.

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SOURCE Waterstone Financial, Inc.