Maryland
(State or Other Jurisdiction
of Incorporation)
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001-36271
(Commission File Number)
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90-1026709
(I.R.S. Employer Identification No.)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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[ ]
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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[ ]
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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[ ]
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
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[ ]
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
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Waterstone Financial, Inc.
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Date: April 22, 2016
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/s/ Mark R. Gerke |
Name: Mark R. Gerke
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Title: Chief Financial Officer
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●
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Consolidated net income of Waterstone Financial, Inc. totaled $3.9 million for the quarter ended March 31, 2016, compared to $3.0 million for the quarter ended March 31, 2015 and $3.1 million for the quarter ended December 31, 2015.
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●
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Return on average assets totaled 0.90% for the three months ended March 31, 2016 compared to 0.69% for the three months ended March 31, 2015.
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●
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Continued a share repurchase program, under which 242,700 shares were repurchased at an average price of $13.54 per share on the open market during the quarter ended March 31, 2016. Since the inception of the share repurchase plan in March of 2015, the Company has repurchased a total of 5,836,453 shares at an average cost of $12.96 per share.
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●
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Net income of the Community Banking segment totaled $2.5 million for the quarter ended March 31, 2016, which represents a 53.5% increase compared to net income of $1.6 million for the quarter ended March 31, 2015 and a 40.0% increase compared to net income of $1.8 million for the quarter ended December 31, 2015.
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●
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Net interest margin increased 17 bps to 2.48% for the three months ended March 31, 2016 compared to 2.31% for the three month period ended March 31, 2015.
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●
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Total loans increased $47.5 million, or 4.5%, to $1.11 billion at March 31, 2016 compared to $1.06 billion at March 31, 2015.
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●
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Total deposits increased $63.6 million, or 7.4%, to $918.3 million at March 31, 2016 compared to $854.7 million at March 31, 2015. Total core deposits increased $33.5 million, or 15.5%, to $249.0 million at March 31, 2016 compared to $215.5 million at March 31, 2015. The increase in core deposits was comprised of growth in demand deposits of $5.1 million or 5.3% and growth of money market and savings deposits of $28.3 million, or 23.9%.
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●
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Borrowings decreased $37.8 million to $396.2 million at March 31, 2016 from $434.0 million at March 31, 2015. A total of $50.0 million of fixed rate borrowings were paid off during the quarter with funds raised through our retail delivery channels.
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●
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Total non-performing assets decreased $3.0 million, or 11.3%, to $23.8 million at March 31, 2016 from $26.8 million at December 31, 2015 and decreased $28.8 million, or 54.8%, from $52.6 million at March 31, 2015.
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●
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Total past due loans decreased by $1.8 million, or 15.6%, to $9.7 million at March 31, 2016 from $11.5 million at December 31, 2015 and decreased $17.0 million, or 63.6% from $26.7 million at March 31, 2015.
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●
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Net income of the Mortgage Banking segment totaled $1.4 million for the quarter ended March 31, 2016, which was relatively flat compared to $1.4 million for the quarter ended March 31, 2015 and $1.2 million for the quarter ended December 31, 2015.
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●
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Loans originated by our mortgage banking subsidiary for the purpose of sale in the secondary market decreased $27.8 million, or 7.0%, to $371.2 million during the three months ended March 31, 2016, compared to $399.0 million for the three months ended March 31, 2015. The decrease in originations was driven by a decrease in the origination of mortgage refinance products, partially offset by an increase in the origination of loans made for the purpose of residential purchases, which yield a higher margin that refinance loans. Our origination efforts continue to be focused on loans made for the purpose of residential purchases, as opposed to mortgage refinance. Origination volume relative to purchase activity accounted for 85% and 75% of total originations for the three months ended March 31, 2016 and 2015, respectively. Offsetting the overall decrease in origination volumes, margin increased during the three months ended March 31, 2016, compared to the three months ended March 31, 2015.
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WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
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||||||||
CONSOLIDATED STATEMENTS OF INCOME
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(Unaudited)
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For The Three Months Ended March 31,
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2016
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2015
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(In Thousands, except per share amounts)
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Interest income:
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||||||||
Loans
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$
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13,784
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13,313
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Mortgage-related securities
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838
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839
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Debt securities, federal funds sold and short-term investments
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974
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866
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Total interest income
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15,596
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15,018
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Interest expense:
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||||||||
Deposits
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1,719
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1,353
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Borrowings
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3,894
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4,229
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Total interest expense
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5,613
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5,582
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Net interest income
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9,983
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9,436
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Provision for loan losses
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205
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335
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Net interest income after provision for loan losses
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9,778
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9,101
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Noninterest income:
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||||||||
Service charges on loans and deposits
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337
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406
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Increase in cash surrender value of life insurance
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241
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207
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Mortgage banking income
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20,614
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21,039
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Gain on sale of available for sale securities
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-
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44
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Other
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253
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337
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Total noninterest income
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21,445
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22,033
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Noninterest expenses:
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Compensation, payroll taxes, and other employee benefits
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17,686
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18,078
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Occupancy, office furniture, and equipment
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2,336
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2,443
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Advertising
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658
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653
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Data processing
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643
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575
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Communications
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342
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370
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Professional fees
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523
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497
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Real estate owned
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144
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543
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FDIC insurance premiums
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205
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336
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Other
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2,685
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2,933
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Total noninterest expenses
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25,222
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26,428
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Income before income taxes
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6,001
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4,706
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Income tax expense
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2,140
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1,690
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Net income
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$
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3,861
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3,016
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Income per share:
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Basic
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$
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0.14
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0.09
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Diluted
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$
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0.14
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0.09
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Weighted average shares outstanding:
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Basic
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26,966
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32,369
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Diluted
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27,279
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32,650
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WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
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March 31, 2016
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December 31, 2015
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(Unaudited)
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Assets
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(In Thousands, except per share amounts)
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Cash
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$
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79,077
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57,419
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Federal funds sold
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22,877
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20,297
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Interest-earning deposits in other financial institutions and other short term investments
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20,760
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22,755
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Cash and cash equivalents
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122,714
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100,471
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Securities available for sale (at fair value)
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267,733
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269,658
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Loans held for sale (at fair value)
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107,387
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166,516
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Loans receivable
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1,112,237
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1,114,934
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Less: Allowance for loan losses
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15,805
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16,185
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Loans receivable, net
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1,096,432
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1,098,749
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Office properties and equipment, net
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25,109
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25,328
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Federal Home Loan Bank stock (at cost)
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19,500
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19,500
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Cash surrender value of life insurance
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59,803
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49,562
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Real estate owned, net
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8,304
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9,190
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Prepaid expenses and other assets
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30,596
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23,755
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Total assets
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$
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1,737,578
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1,762,729
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Liabilities and Shareholders' Equity
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Liabilities:
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Demand deposits
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$
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101,934
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102,673
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Money market and savings deposits
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147,074
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140,631
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Time deposits
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669,288
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650,057
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Total deposits
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918,296
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893,361
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Borrowings
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396,222
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441,203
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Advance payments by borrowers for taxes
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9,375
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3,661
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Other liabilities
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20,259
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32,574
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Total liabilities
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1,344,152
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1,370,799
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Shareholders' equity:
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Common stock
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292
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294
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Additional paid-in capital
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317,552
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317,022
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Retained earnings
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170,586
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168,089
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Unearned ESOP shares
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(21,068
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)
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(21,365
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)
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Accumulated other comprehensive income, net of taxes
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2,442
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582
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Cost of shares repurchased
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(76,378
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)
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(72,692
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)
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Total shareholders' equity
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393,426
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391,930
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Total liabilities and shareholders' equity
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$
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1,737,578
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1,762,729
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Share Information
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Shares Outstanding
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29,148
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29,407
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Book Value per share
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$
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13.50
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13.33
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Closing market price
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$
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13.68
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14.10
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Price to book ratio
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101.35
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%
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105.79
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%
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Asset Quality Data
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Total non accrual loans
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$
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15,468
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17,604
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Real estate owned
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8,304
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9,190
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Total nonperforming assets
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$
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23,772
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26,794
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Total non accrual to total loans
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1.39
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%
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1.58
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%
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Total nonperforming assets to total assets
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1.37
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%
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1.52
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%
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Allowance for loan losses
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$
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15,805
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16,185
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Allowance for loan losses as a % to non-accrual loans
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102.18
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%
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91.94
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%
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WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
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SUMMARY OF KEY QUARTERLY FINANCIAL DATA
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(Unaudited)
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At or For the Three Months Ended
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March 31,
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December 31,
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September 30,
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June 30,
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March 31,
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2016
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2015
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2015
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2015
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2015
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(Dollars in Thousands)
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Condensed Results of Operations:
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Net interest income
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$
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9,983
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9,438
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9,910
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10,060
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9,436
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Provision for loan losses
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205
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245
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580
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805
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335
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Total noninterest income
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21,445
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22,850
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28,551
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31,040
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22,033
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Total noninterest expense
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25,222
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27,373
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29,786
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31,947
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26,428
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Income before income taxes
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6,001
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4,670
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8,095
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8,348
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4,706
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Income tax expense
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2,140
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1,599
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2,896
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3,064
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1,690
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Net income
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$
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3,861
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3,071
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5,199
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5,284
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3,016
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Income per share – basic
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$
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0.14
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0.11
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0.19
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0.17
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0.09
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Income per share – diluted
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$
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0.14
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0.11
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0.19
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0.17
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0.09
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Performance Ratios:
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Return on average assets - QTD
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0.90
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%
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0.69
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%
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1.18
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%
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1.21
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%
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0.69
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%
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Return on average equity - QTD
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3.95
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%
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3.10
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%
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5.21
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%
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5.04
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%
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2.71
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%
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Net interest margin - QTD
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2.48
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%
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2.26
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%
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2.39
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%
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2.46
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%
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2.31
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%
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Efficiency ratio - QTD
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80.25
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%
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84.78
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%
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77.44
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%
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77.73
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%
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83.98
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%
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Return on average assets - YTD
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0.90
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%
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0.94
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%
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1.03
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%
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0.95
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%
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0.69
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%
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||||||||||
Return on average equity - YTD
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3.95
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%
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3.99
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%
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4.26
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%
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3.83
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%
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2.71
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%
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||||||||||
Net interest margin - YTD
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2.48
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%
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2.36
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%
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2.38
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%
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2.38
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%
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2.31
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%
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Efficiency ratio - YTD
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80.25
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%
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80.61
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%
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79.40
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%
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80.44
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%
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83.98
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%
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WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
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SUMMARY OF SHARES REPURCHASED
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AS PART OF PUBLICLY ANNOUNCED PLANS
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For the quarter ended March 31, 2016
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Total shares repurchased
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242,700
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Total cost of shares (including commission)
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$
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3,284,982
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Average cost per share
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$
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13.54
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Total purchased under plan as of March 31, 2016
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Total shares repurchased
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5,836,453
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Total cost of shares (including commission)
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$
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75,640,918
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Average cost per share
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$
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12.96
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