0001569994-19-000003.txt : 20190130 0001569994-19-000003.hdr.sgml : 20190130 20190130160125 ACCESSION NUMBER: 0001569994-19-000003 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20190130 ITEM INFORMATION: Results of Operations and Financial Condition FILED AS OF DATE: 20190130 DATE AS OF CHANGE: 20190130 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Waterstone Financial, Inc. CENTRAL INDEX KEY: 0001569994 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 000000000 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-36271 FILM NUMBER: 19551930 BUSINESS ADDRESS: STREET 1: 11200 WEST PLANK COURT CITY: WAUWATOSA STATE: WI ZIP: 53226 BUSINESS PHONE: (414) 761-1000 MAIL ADDRESS: STREET 1: 11200 WEST PLANK COURT CITY: WAUWATOSA STATE: WI ZIP: 53226 8-K 1 form8k.htm
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  January 30, 2019
WATERSTONE FINANCIAL, INC.
(Exact name of Registrant as specified in its charter)

Maryland
(State or Other Jurisdiction
of Incorporation)
001-36271
(Commission File Number)
90-1026709
(I.R.S. Employer Identification No.)

11200 W. Plank Ct, Wauwatosa, Wisconsin 53226
(Address of principal executive offices)

(414) 761-1000
Registrant's telephone number, including area code

Not Applicable
(Former Name or former address, if changed since last report)


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:
 
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
 
 
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
 
 
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities and Exchange Act of 1934 (§240.12b-2 of this chapter).

¨ Emerging growth company

¨ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.02 Results of Operations and Financial Condition.

On January 30, 2019, Waterstone Financial, Inc. issued a press release announcing its financial results for the quarter and year ended December 31, 2018.  A copy of the press release is being furnished to the Securities and Exchange Commission as Exhibit 99.1 attached to this report and incorporated by reference

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit No. Description

99.1                          Press release of Waterstone Financial, Inc. issued January 30, 2019.




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
- 2 -
 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Waterstone Financial, Inc.
   
Date:  January 30, 2019
/s/ Mark R. Gerke
Name: Mark R. Gerke
Title: Chief Financial Officer

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
- 3 -
 
 
 
EXHIBIT INDEX




Exhibit No.    Description
 
 99.1                          Press release of Waterstone Financial, Inc. issued January 30, 2019.

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
- 4 -
 EX-99.1 2 exhibit991.htm
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 Year Ended December 31, 2018.
WAUWATOSA, WI – 01/30/2019 – Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income of $5.7 million, or $0.21 per diluted share for the quarter ended December 31, 2018 compared to $3.1 million, or $0.11 per diluted share for the quarter ended December 31, 2017. Net income per diluted share was $1.11 for the year ended December 31, 2018 compared to net income per diluted share of $0.93 for the year ended December 31, 2017. The results of operations for the quarter and year ended December 31, 2017 each include a $2.7 million charge to income tax expense related to the Company's deferred tax asset revaluation that resulted from legislation that reduced the corporate federal income tax rate. Excluding the impact of this revaluation, net income per diluted share(1) for the quarter and year ended December 31, 2017 were $0.21 and $1.03, respectively.
“We are pleased with the performance of our Community Banking segment as we achieved our 12th consecutive comparative quarter with growth in pre-tax income,” said Douglas Gordon, CEO of Waterstone Financial, Inc. “We have exhibited the ability to grow this segment while maintaining our culture for asset quality and expense management. As a result of our profitability and financial strength, we were able to deploy capital by rewarding our shareholders with $0.98 per share in dividends, while also repurchasing 1.1 million shares of stock during the year. Our Mortgage Banking segment’s performance has declined due to a challenging housing market causing margin compression, and the expenses related to closing unprofitable branches and rightsizing staff.”

Highlights of the Quarter Ended December 31, 2018

Waterstone Financial, Inc. (Consolidated)

·
Consolidated net income of Waterstone Financial, Inc. totaled $5.7 million for the quarter ended December 31, 2018, compared to $5.8 million(1) for the quarter ended December 31, 2017 adjusted for the deferred tax revaluation ($3.1 million on a GAAP basis).
·
Consolidated net income of Waterstone Financial, Inc. totaled $30.8 million for the year ended December 31, 2018, compared to $28.7 million(1) for the year ended December 31, 2017 adjusted for the deferred tax revaluation ($26.0 million on a GAAP basis).
·
Consolidated return on average assets totaled 1.18% for the quarter ended December 31, 2018 compared to 1.26%(1) for the quarter ended December 31, 2017 adjusted for the deferred tax revaluation (0.67% on a GAAP basis).
·
Consolidated return on average assets totaled 1.64% for the year ended December 31, 2018 compared to 1.58%(1) for the year ended December 31, 2017 adjusted for the deferred tax revaluation (1.43% on a GAAP basis).
·
Consolidated return on average equity totaled 5.58% for the quarter ended December 31, 2018 and 5.58%(1) for the quarter ended December 31, 2017 adjusted for the deferred tax revaluation (2.98% on a GAAP basis).
·
Consolidated return on average equity totaled 7.60% for the year ended December 31, 2018 compared to 6.98%(1) for the year ended December 31, 2017 adjusted for the deferred tax revaluation (6.32% on a GAAP basis).

(1)  For notes on non-GAAP financial measures, see pages 7 and 14
·
Dividends declared totaled $0.12 per share during the quarter ended December 31, 2018 amounting to a total of $0.98 in dividends declared per share during the year ended December 31, 2018.
·
Repurchased a total 587,700 shares on the open market during the quarter ended December 31, 2018 at an average price of $16.59 per share. For the year ended, repurchased a total of 1.1 million shares at an average price of $16.81.



- 5 -
 
Community Banking Segment

·
Pre-tax income of the segment totaled $7.5 million for the quarter ended December 31, 2018 compared to $7.4 million for the quarter ended December 31, 2017.
·
Net interest income of the segment totaled $13.8 million for the quarter ended December 31, 2018 compared to $13.4 million for the quarter ended December 31, 2017.
·
Average loans held for investment totaled $1.37 billion during the quarter ended December 31, 2018, which represents an increase of $93.0 million, or 7.3% over the comparable quarter in the prior year. Average loans increased $23.2 million, or 6.9% annualized, compared to the quarter ended September 30, 2018.
·
Our net interest margin decreased nine bps to 2.99% for the quarter ended December 31, 2018 compared to 3.08% for the quarter ended December 31, 2017, which was a result of the increase in cost of deposits as certificates of deposit repriced at higher rates.
·
Noninterest income decreased $63,000 for the quarter ended December 31, 2018 compared to the quarter ended December 31, 2017 as fees earned on loans decreased.
·
Noninterest expenses increased $211,000 for the quarter ended December 31, 2018 compared to the quarter ended December 31, 2017 as compensation; occupancy, office furniture, and equipment; and other noninterest expenses increased.
·
The efficiency ratio for the community banking segment increased 33 bps to 48.69% for the quarter ended December 31, 2018, compared to 48.36% for the quarter ended December 31, 2017 as compensation expenses rose slightly.
·
Average deposits totaled $1.02 billion during the quarter ended December 31, 2018, which represents an increase of $61.8 million, or 6.5%, over the comparable quarter in the prior year.  Average deposits increased $13.5 million, or 5.4% annualized, compared to the quarter ended September 30, 2018.
·
Nonperforming assets as percentage of total assets was 0.45% at December 31, 2018, 0.45% at September 30, 2018, and 0.59% at December 31, 2017.
·
Past due loans as percentage of total loans was 0.50% at December 31, 2018, 0.67% at September 30, 2018, and 0.45% at December 31, 2017.
·
Net recoveries were $232,000, or 0.02% as a percentage of average loans for the year ending December 31, 2018.  Net charge-offs were $786,000, or 0.06% of average loans for the year ending December 31, 2017.

Mortgage Banking Segment

·
The Mortgage Banking segment totaled a pretax loss of $308,000 for the quarter ended December 31, 2018, compared to $1.8 million of pretax income for the quarter ended December 31, 2017.
·
Loan originations decreased approximately $109,000 to $600.2 million during the quarter ended December 31, 2018, compared to $600.3 million during the quarter ended December 31, 2017.  Origination volume relative to purchase activity accounted for 91.1% of originations for the quarter ended December 31, 2018 compared to 86.7% of total originations for the quarter ended December 31, 2017.
·
Mortgage banking revenues decreased $2.7 million, or 9.6%, to $25.0 million for the quarter ended December 31, 2018, compared to $27.6 million for the quarter ended December 31, 2017.
·
Gross margin on loans sold decreased 11.4% to 4.2% during the quarter ended December 31, 2018, compared to the quarter ended December 31, 2017.

- 6 -
 
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.

Non-GAAP Financial Measures
This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles (GAAP). The Company’s management uses these non-GAAP financial measures, including earnings per share excluding deferred tax revaluation, return on average assets excluding deferred tax revaluation, return on average assets excluding deferred tax revaluation, and return on average equity excluding deferred tax revaluation to provide meaningful supplemental information regarding our performance. These measures typically adjust GAAP performance measures to adjust for non-recurring transactions. Since the presentation of these GAAP performance measures and their impact differ between companies, management believes presentations of these non-GAAP financial measures provide useful supplemental information that is essential to a proper understanding of the operating results of the Company’s core business. These non-GAAP disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.  Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in the tables of this release.




- 7 -
 

WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
  
CONSOLIDATED STATEMENTS OF INCOME
  
(Unaudited)
  
 
  
For The Three Months Ended December 31,
    
For The Year Ended December 31,
  
 
  
2018
    
2017
    
2018
    
2017
  
 
  
(In Thousands, except per share amounts)
  
Interest income:
                        
Loans
  
$
17,468
      
15,746
      
66,966
      
60,824
  
Mortgage-related securities
    
723
      
625
      
2,648
      
2,646
  
Debt securities, federal funds sold and short-term investments
    
1,137
      
945
      
4,086
      
3,625
  
Total interest income
    
19,328
      
17,316
      
73,700
      
67,095
  
Interest expense:
                                
Deposits
    
3,540
      
2,125
      
11,627
      
7,739
  
Borrowings
    
2,322
      
1,867
      
7,896
      
8,623
  
Total interest expense
    
5,862
      
3,992
      
19,523
      
16,362
  
Net interest income
    
13,466
      
13,324
      
54,177
      
50,733
  
Provision for loan losses
    
-
      
-
      
(1,060
)
    
(1,166
)
Net interest income after provision for loan losses
    
13,466
      
13,324
      
55,237
      
51,899
  
Noninterest income:
                                
Service charges on loans and deposits
    
348
      
477
      
1,680
      
1,625
  
Increase in cash surrender value of life insurance
    
352
      
331
      
1,848
      
1,807
  
Loss on sale of available for sale securities
    
-
      
-
      
-
      
(107
)
Mortgage banking income
    
24,221
      
27,270
      
113,151
      
120,044
  
Other
    
715
      
103
      
1,520
      
1,044
  
Total noninterest income
    
25,636
      
28,181
      
118,199
      
124,413
  
Noninterest expenses:
                                
Compensation, payroll taxes, and other employee benefits
    
23,114
      
23,352
      
97,784
      
97,084
  
Occupancy, office furniture, and equipment
    
2,860
      
2,591
      
10,855
      
10,178
  
Advertising
    
1,039
      
919
      
4,123
      
3,333
  
Data processing
    
735
      
585
      
2,792
      
2,439
  
Communications
    
382
      
390
      
1,611
      
1,560
  
Professional fees
    
397
      
703
      
2,327
      
2,656
  
Real estate owned
    
(62
)
    
121
      
1
      
379
  
Loan processing expense
    
643
      
766
      
3,372
      
3,062
  
Other
    
2,738
      
2,891
      
10,291
      
11,188
  
Total noninterest expenses
    
31,846
      
32,318
      
133,156
      
131,879
  
Income before income taxes
    
7,256
      
9,187
      
40,280
      
44,433
  
Income tax expense
    
1,578
      
6,072
      
9,526
      
18,469
  
Net income
  
$
5,678
      
3,115
      
30,754
      
25,964
  
Income per share:
                                
Basic
  
$
0.21
      
0.11
      
1.12
      
0.95
  
Diluted
  
$
0.21
      
0.11
      
1.11
      
0.93
  
Weighted average shares outstanding:
                                
Basic
    
26,994
      
27,522
      
27,363
      
27,467
  
Diluted
    
27,218
      
27,914
      
27,634
      
27,899
  


- 8 -
 
WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
  
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
  
 
  
December 31,
    
December 31,
  
 
  
2018
    
2017
  
 
  
(Unaudited)
        
Assets
  
(In Thousands, except per share amounts)
  
Cash
  
$
48,234
    
$
22,306
  
Federal funds sold
    
25,100
      
17,034
  
Interest-earning deposits in other financial institutions and other short term investments
    
12,767
      
9,267
  
Cash and cash equivalents
    
86,101
      
48,607
  
Securities available for sale (at fair value)
    
185,720
      
199,707
  
Loans held for sale (at fair value)
    
141,616
      
149,896
  
Loans receivable
    
1,379,148
      
1,291,814
  
Less: Allowance for loan losses
    
13,249
      
14,077
  
Loans receivable, net
    
1,365,899
      
1,277,737
  
 
                
Office properties and equipment, net
    
24,524
      
22,941
  
Federal Home Loan Bank stock (at cost)
    
19,350
      
16,875
  
Cash surrender value of life insurance
    
67,550
      
65,996
  
Real estate owned, net
    
2,152
      
4,558
  
Prepaid expenses and other assets
    
22,469
      
20,084
  
Total assets
  
$
1,915,381
    
$
1,806,401
  
 
                
Liabilities and Shareholders' Equity
                
Liabilities:
                
Demand deposits
  
$
139,111
    
$
129,597
  
Money market and savings deposits
    
163,511
      
148,804
  
Time deposits
    
735,873
      
688,979
  
Total deposits
    
1,038,495
      
967,380
  
 
                
Borrowings
    
435,046
      
386,285
  
Advance payments by borrowers for taxes
    
4,371
      
4,876
  
Other liabilities
    
37,790
      
35,756
  
Total liabilities
    
1,515,702
      
1,394,297
  
 
                
Shareholders' equity:
                
Common stock
    
285
      
295
  
Additional paid-in capital
    
330,327
      
326,655
  
Retained earnings
    
187,153
      
183,358
  
Unearned ESOP shares
    
(17,804
)
    
(18,991
)
Accumulated other comprehensive loss, net of taxes
    
(2,361
)
    
(477
)
Cost of shares repurchased
    
(97,921
)
    
(78,736
)
Total shareholders' equity
    
399,679
      
412,104
  
Total liabilities and shareholders' equity
  
$
1,915,381
    
$
1,806,401
  
 
                
Share Information
                
Shares Outstanding
    
28,463
      
29,501
  
Book Value per share
  
$
14.04
    
$
13.97
  
Closing market price
  
$
16.76
    
$
17.05
  
Price to book ratio
    
119.37
%
    
122.05
%


- 9 -
 
WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
  
SUMMARY OF KEY QUARTERLY FINANCIAL DATA
  
(Unaudited)
  
 
                              
 
  
At or For the Three Months Ended
  
 
  
December 31,
    
September 30,
    
June 30,
    
March 31,
    
December 31,
  
 
  
2018
    
2018
    
2018
    
2018
    
2017
  
 
  
(Dollars in Thousands)
  
Condensed Results of Operations:
                              
Net interest income
  
$
13,466
      
13,850
      
13,720
      
13,141
      
13,324
  
Provision for loan losses
    
-
      
40
      
(220
)
    
(880
)
    
-
  
Total noninterest income
    
25,636
      
34,062
      
33,318
      
25,183
      
28,181
  
Total noninterest expense
    
31,846
      
36,426
      
34,737
      
30,147
      
32,318
  
Income before income taxes
    
7,256
      
11,446
      
12,521
      
9,057
      
9,187
  
Income tax expense
    
1,578
      
2,743
      
3,101
      
2,104
      
6,072
  
Net income
  
$
5,678
      
8,703
      
9,420
      
6,953
      
3,115
  
Income per share – basic
  
$
0.21
      
0.32
      
0.34
      
0.25
      
0.11
  
Income per share – diluted
  
$
0.21
      
0.31
      
0.34
      
0.25
      
0.11
  
Dividends declared per share
  
$
0.12
      
0.12
      
0.12
      
0.62
      
0.12
  
 
                                        
Performance Ratios:
                                        
Return on average assets - QTD
    
1.18
%
    
1.80
%
    
2.02
%
    
1.57
%
    
0.67
%
Return on average equity - QTD
    
5.58
%
    
8.48
%
    
9.40
%
    
6.90
%
    
2.98
%
Net interest margin - QTD
    
2.99
%
    
3.07
%
    
3.14
%
    
3.18
%
    
3.08
%
 
                                        
Return on average assets - YTD
    
1.64
%
    
1.80
%
    
1.80
%
    
1.57
%
    
1.43
%
Return on average equity - YTD
    
7.60
%
    
8.25
%
    
8.13
%
    
6.90
%
    
6.32
%
Net interest margin - YTD
    
3.09
%
    
3.13
%
    
3.16
%
    
3.18
%
    
3.00
%
 
                                        
Asset Quality Ratios:
                                        
Past due loans to total loans
    
0.50
%
    
0.67
%
    
0.54
%
    
0.53
%
    
0.45
%
Non accrual loans to total loans
    
0.48
%
    
0.48
%
    
0.46
%
    
0.50
%
    
0.47
%
Non performing assets to total assets
    
0.45
%
    
0.45
%
    
0.45
%
    
0.54
%
    
0.59
%





- 10 -
 
WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
  
SUMMARY OF QUARTERLY AVERAGE BALANCES AND YIELD/COSTS
  
(Unaudited)
  
 
                              
 
  
At or For the Three Months Ended
  
 
  
December 31,
    
September 30,
    
June 30,
    
March 31,
    
December 31,
  
 
  
2018
    
2018
    
2018
    
2018
    
2017
  
Average balances
  
(Dollars in Thousands)
  
Interest earning assets
                              
Loans receivable and held for sale
    $
1,496,125
      
1,507,632
      
1,451,507
      
1,398,043
      
1,402,271
  
Mortgage related securities
    
111,004
      
106,047
      
109,879
      
113,688
      
115,414
  
Debt securities, federal funds sold and short term investments
    
179,232
      
176,733
      
192,422
      
165,863
      
199,006
  
    Total interest earning assets
    
1,786,361
      
1,790,412
      
1,753,808
      
1,677,594
      
1,716,691
  
Non interest earning assets
    
119,715
      
122,575
      
119,291
      
113,317
      
120,943
  
    Total assets
    $
1,906,076
      
1,912,987
      
1,873,099
      
1,790,911
      
1,837,634
  
 
                                        
Interest bearing liabilities
                                        
Demand accounts
   $
36,941
      
37,936
      
37,291
      
37,384
      
37,600
  
Money market and savings accounts
    
184,873
      
185,864
      
166,587
      
153,226
      
170,262
  
Certificates of deposit
    
722,774
      
707,970
      
707,758
      
697,644
      
686,266
  
    Total interest-bearing deposits
    
944,588
      
931,770
      
911,636
      
888,254
      
894,128
  
Borrowings
    
439,601
      
444,570
      
445,064
      
379,115
      
406,821
  
    Total interest-bearing liabilities
    
1,384,189
      
1,376,340
      
1,356,700
      
1,267,369
      
1,300,949
  
Noninterest bearing demand deposits
    
97,677
      
100,804
      
96,108
      
91,806
      
93,735
  
Noninterest bearing liabilities
    
20,219
      
28,632
      
18,266
      
22,828
      
28,188
  
    Total liabilities
    
1,502,085
      
1,505,776
      
1,471,074
      
1,382,003
      
1,422,872
  
Equity
    
403,991
      
407,211
      
402,025
      
408,908
      
414,762
  
    Total liabilities and equity
    $
1,906,076
      
1,912,987
      
1,873,099
      
1,790,911
      
1,837,634
  
 
                                        
Average Yield/Costs
                                        
Loans receivable and held for sale
    
4.63
%
    
4.56
%
    
4.61
%
    
4.48
%
    
4.45
%
Mortgage related securities
    
2.58
%
    
2.41
%
    
2.35
%
    
2.28
%
    
2.15
%
Debt securities, federal funds sold and short term investments
    
2.52
%
    
2.39
%
    
2.12
%
    
2.12
%
    
1.88
%
    Total interest earning assets
    
4.29
%
    
4.22
%
    
4.20
%
    
4.10
%
    
4.00
%
 
                                        
Demand accounts
    
0.09
%
    
0.10
%
    
0.09
%
    
0.08
%
    
0.08
%
Money market and savings accounts
    
0.47
%
    
0.35
%
    
0.30
%
    
0.24
%
    
0.20
%
Certificates of deposit
    
1.82
%
    
1.62
%
    
1.46
%
    
1.29
%
    
1.17
%
    Total interest-bearing deposits
    
1.49
%
    
1.30
%
    
1.19
%
    
1.06
%
    
0.94
%
Borrowings
    
2.10
%
    
1.90
%
    
1.74
%
    
1.61
%
    
1.82
%
    Total interest-bearing liabilities
    
1.68
%
    
1.50
%
    
1.37
%
    
1.22
%
    
1.22
%



- 11 -
 
COMMUNITY BANKING SEGMENT
  
SUMMARY OF KEY QUARTERLY FINANCIAL DATA
  
(Unaudited)
  
 
                              
 
  
At or For the Three Months Ended
  
 
  
December 31,
    
September 30,
    
June 30,
    
March 31,
    
December 31,
  
 
  
2018
    
2018
    
2018
    
2018
    
2017
  
 
  
(Dollars in Thousands)
  
Condensed Results of Operations:
                              
Net interest income
  
$
13,774
      
14,121
      
13,747
      
13,304
      
13,375
  
Provision for loan losses
    
-
      
-
      
(250
)
    
(900
)
    
-
  
Total noninterest income
    
911
      
1,312
      
1,137
      
939
      
974
  
Noninterest expenses:
                                        
Compensation, payroll taxes, and other employee benefits
    
4,761
      
4,435
      
4,301
      
4,888
      
4,531
  
Occupancy, office furniture and equipment
    
842
      
826
      
813
      
826
      
771
  
Advertising
    
185
      
183
      
241
      
140
      
144
  
Data processing
    
422
      
414
      
400
      
435
      
399
  
Communications
    
92
      
112
      
121
      
100
      
101
  
Professional fees
    
339
      
257
      
180
      
191
      
173
  
Real estate owned
    
(62
)
    
(128
)
    
(126
)
    
317
      
121
  
Loan processing expense
    
-
      
-
      
-
      
-
      
-
  
Other
    
571
      
701
      
658
      
785
      
699
  
Total noninterest expense
    
7,150
      
6,800
      
6,588
      
7,682
      
6,939
  
Income before income taxes
    
7,535
      
8,633
      
8,546
      
7,461
      
7,410
  
Income tax expense
    
1,632
      
2,003
      
1,970
      
1,668
      
5,570
  
Net income
  
$
5,903
      
6,630
      
6,576
      
5,793
      
1,840
  
 
                                        
Efficiency ratio - QTD
    
48.69
%
    
44.06
%
    
44.27
%
    
53.94
%
    
48.36
%
Efficiency ratio - YTD
    
47.63
%
    
47.28
%
    
49.00
%
    
53.94
%
    
49.98
%


- 12 -
 

MORTGAGE BANKING SEGMENT
  
SUMMARY OF KEY QUARTERLY FINANCIAL DATA
  
(Unaudited)
  
 
                              
 
  
At or For the Three Months Ended
  
 
  
December 31,
    
September 30,
    
June 30,
    
March 31,
    
December 31,
  
 
  
2018
    
2018
    
2018
    
2018
    
2017
  
 
  
(Dollars in Thousands)
  
Condensed Results of Operations:
                              
Net interest income
  
$
(332
)
    
(286
)
    
(40
)
    
(192
)
    
(72
)
Provision for loan losses
    
-
      
40
      
30
      
20
      
-
  
Total noninterest income
    
24,986
      
33,165
      
32,547
      
24,731
      
27,645
  
Noninterest expenses:
                                        
Compensation, payroll taxes, and other employee benefits
    
18,499
      
23,164
      
22,078
      
16,241
      
18,943
  
Occupancy, office furniture and equipment
    
2,018
      
1,925
      
1,792
      
1,813
      
1,820
  
Advertising
    
854
      
1,041
      
759
      
720
      
775
  
Data processing
    
309
      
386
      
224
      
186
      
182
  
Communications
    
290
      
300
      
314
      
282
      
289
  
Professional fees
    
52
      
319
      
458
      
514
      
512
  
Real estate owned
    
-
      
-
      
-
      
-
      
-
  
Loan processing expense
    
643
      
837
      
904
      
988
      
766
  
Other
    
2,297
      
2,064
      
1,964
      
2,197
      
2,504
  
Total noninterest expense
    
24,962
      
30,036
      
28,493
      
22,941
      
25,791
  
Income before income taxes
    
(308
)
    
2,803
      
3,984
      
1,578
      
1,782
  
Income tax expense
    
(62
)
    
737
      
1,133
      
435
      
509
  
Net income
  
$
(246
)
    
2,066
      
2,851
      
1,143
      
1,273
  
 
                                        
Efficiency ratio - QTD
    
101.25
%
    
91.35
%
    
87.65
%
    
93.49
%
    
93.54
%
Efficiency ratio - YTD
    
92.89
%
    
90.60
%
    
90.16
%
    
93.49
%
    
86.93
%
 
                                        
Loan Originations
    
600,156
      
761,206
      
721,184
      
516,020
      
600,265
  
Purchase
    
91.1
%
    
92.1
%
    
92.6
%
    
85.1
%
    
86.7
%
Refiance
    
8.9
%
    
7.9
%
    
7.4
%
    
14.9
%
    
13.3
%


- 13 -
 
GAAP RECONCILIATION TO NON-GAAP
  
FINANCIAL MEASURES
  
(Unaudited)
  
 
  
For the Three Months Ended
    
For the Year Ended
  
 
  
December 31,
    
December 31,
  
 
  
2017
    
2017
  
 
  
(In thousands, except per share amounts)
  
Net income
  
$
3,115
      
25,964
  
Deferred tax asset revaluation
    
2,718
      
2,718
  
Net income excluding deferred tax asset revaluation
  
$
5,833
    
$
28,682
  
Diluted weighted average shares outstanding
    
27,914
      
27,899
  
 
                
Net income per diluted share
  
$
0.11
    
$
0.93
  
Deferred tax asset revaluation adjustment
  
$
0.10
    
$
0.10
  
Net income per diluted share excluding deferred tax asset revaluation
  
$
0.21
    
$
1.03
  
 
                
Net income excluding deferred tax asset revaluation
  
$
5,833
    
$
28,682
  
Average assets
    
1,837,634
      
1,810,234
  
 
                
Return on average assets
    
0.67
%
    
1.43
%
Deferred tax asset revaluation adjustment
    
0.59
%
    
0.15
%
Return on average assets excluding deferred tax asset revaluation
    
1.26
%
    
1.58
%
 
                
Net income excluding deferred tax asset revaluation
  
$
5,833
    
$
28,682
  
Average equity
    
414,762
      
410,937
  
 
                
Return on average equity
    
2.98
%
    
6.32
%
Deferred tax asset revaluation adjustment
    
2.60
%
    
0.66
%
Return on average equity excluding deferred tax asset revaluation
    
5.58
%
    
6.98
%







- 14 -