Exhibit 99.1
Wauwatosa Holdings, Inc. Announces Results of Operations for the Fourth Quarter and Year Ended December 31, 2006.
WAUWATOSA, WI – 02/05/2007– Wauwatosa Holdings, Inc. (NASDAQ: WAUW) reported 2006 fourth quarter net income of $2.3 million, or $0.07 per share, as compared to a loss of $709,000, or a loss of $0.02 per share in the fourth quarter of 2005. Net income for the year ended December 31, 2006 was $8.1 million, or $0.24 per share, as compared to $6.0 million for the 12 months ended December 31, 2005.
Effective October 4, 2005, Wauwatosa Savings Bank completed its reorganization into a mutual holding company and concurrently Wauwatosa Holdings, Inc. completed its initial public offering of common stock. On November 15, 2005, Wauwatosa Holdings announced that it had changed its fiscal year-end from June 30 to December 31. As a result, operating data for the 12 months ended December 31, 2005 has not been previously reported and per share data for the period is not applicable.
The single most significant difference between fourth quarter 2006 and fourth quarter 2005 operating results is the contribution of 556,442 shares of Wauwatosa Holdings, Inc. common stock to the Waukesha County Community Foundation, Inc. in connection with the October 2005 reorganization. This charitable contribution totaled $5.6 million and was expensed in the fourth quarter of 2005. There was no contribution expense in 2006.
Net interest income decreased $1.3 million, or 12.2% for the three months ended December 31, 2006 compared to the same three months in 2005. This is in spite of a 9.1% increase in average earning assets for the fourth quarter of 2006 versus 2005. The interest rate spread for the fourth quarter of 2006 was 1.85% compared to 2.34% for the fourth quarter of 2005. It is anticipated that the interest rate spread will continue to decline during 2007 as our cost of funding continues to increase more rapidly than the yield on our interest-earning assets. As Wauwatosa Holdings is dependent upon net interest income for approximately 85% of its total revenue, a continued decline in the interest rate spread will significantly impact net income.
Wauwatosa Savings Bank acquired Waterstone Mortgage Corporation, a mortgage broker, in the first quarter of 2006. As a result, other income for the fourth quarter includes $357,000 in mortgage banking income, while there was no comparable income in 2005. In addition, the Wauwatosa Holdings, Inc. 2006 fourth quarter loan loss provision was $468,000 less than that of the fourth quarter of 2005, a 56.7% decline. This is in contrast to an increase in the loan loss provision for the year ended December 31, 2006 to $2.2 million from $1.9 million for the 12 months ended December 31, 2005, a 15.3% increase. Net charge-offs for the fourth quarter of 2006 were $255,000, or 0.02% of total average loans outstanding during the quarter and $381,000 in 2005, or 0.03% of total average loans in the comparable prior period. At December 31, 2006, the allowance for loan losses was 0.52% of total loans compared to 0.40% at December 31, 2005. Nonperforming loans were 2.10% of total loans at December 31, 2006 and 1.39% at December 31, 2005.
Assets at year-end totaled $1.6 billion compared to $1.5 billion at December 31, 2005. Book value per share was $7.29 on December 31, 2006 compared to $7.01 on the same date in 2005. Total net loans receivable were $1.4 billion at the end of 2006 and $1.3 billion on December 31, 2005.
Cautionary Statements
The discussions in this news release which are not historical statements contain forward-looking statements that involve risk and uncertainties. Statements which are not historical statements include those in the future tense or which use terms such as “believe,” “expect,” and “anticipate.” Wauwatosa Holdings, Inc. actual future results could differ in important and material ways from those discussed. Many factors could cause or contribute to such differences. These factors include changing interest rates and related yield curves, changes in demand for loans or other services, competition from other institutions, actual verses estimated loan loss experience, other general economic and political developments, plus factors discussed in our filings with the Securities and Exchange Commission.
WAUWATOSA HOLDINGS, INC.
FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS
Three months ended | Years ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||
(In thousands except ratios and per share data) | ||||||||||||||||
Operations Data: | ||||||||||||||||
Net interest income | $ | 9,623 | $ | 10,959 | $ | 38,449 | $ | 40,199 | ||||||||
Provision for loan losses | 358 | 826 | 2,201 | 1,909 | ||||||||||||
Noninterest income | 1,289 | 1,267 | 5,202 | 3,526 | ||||||||||||
Noninterest expense | 6,944 | 12,578 | 28,698 | 29,646 | ||||||||||||
Income (loss) before income taxes | 3,610 | (1,178 | ) | 12,752 | 12,170 | |||||||||||
Income tax expense (benefit) | 1,326 | (469 | ) | 4,699 | 6,127 | |||||||||||
Net income (loss) | 2,284 | (709 | ) | 8,053 | 6,043 | |||||||||||
Selected Financial Ratios: | ||||||||||||||||
Yield on earning assets | 6.12 | % | 5.81 | % | 6.03 | % | 5.84 | % | ||||||||
Cost of funds | 4.27 | 3.47 | 4.03 | 3.28 | ||||||||||||
Interest rate spread | 1.85 | 2.34 | 2.00 | 2.56 | ||||||||||||
Return (loss) on average assets | 0.54 | (0.18 | ) | 0.50 | 0.43 | |||||||||||
Return (loss) on average equity | 3.77 | (1.39 | ) | 3.41 | 4.52 | |||||||||||
Average equity to average assets | 14.35 | 13.27 | 14.79 | 9.41 | ||||||||||||
Non-interest expense to average assets | 1.65 | 3.27 | 1.80 | 2.09 | ||||||||||||
Allowance for loan losses to total loans outstanding | 0.52 | 0.40 | 0.52 | 0.40 | ||||||||||||
Per Share: | ||||||||||||||||
Basic earnings (loss) per share | $ | 0.07 | $ | (0.02 | ) | $ | 0.24 | n/a | ||||||||
Diluted earnings (loss) per share | 0.07 | (0.02 | ) | 0.24 | n/a | |||||||||||
Book value per share | 7.29 | 7.01 | 7.29 | $ | 7.01 | |||||||||||
Weighted average shares outstanding | 33,105,046 | 33,135,424 | 33,076,565 | n/a | ||||||||||||
Shares outstanding at December 31 | 33,114,539 | 33,038,385 | 33,114,539 | 33,038,385 |
December 31, | Percent | |||||||||||
2006 | 2005 | Change | ||||||||||
(Unaudited) | ||||||||||||
(Dollars in thousands) | ||||||||||||
Financial Condition: | ||||||||||||
Total assets | $ | 1,648,470 | $ | 1,511,209 | 9.1 | % | ||||||
Loans receivable, net | 1,365,712 | 1,300,768 | 5.0 | |||||||||
Securities available for sale | 117,330 | 121,955 | (3.8 | ) | ||||||||
Deposits | 1,036,218 | 1,045,593 | (0.9 | ) | ||||||||
Borrowings | 334,003 | 201,212 | 66.0 | |||||||||
Total equity | 241,272 | 231,696 | 4.1 | |||||||||
Allowance for loan losses | 7,195 | 5,250 | 37.0 | |||||||||
Non-performing assets | 29,408 | 18,280 | 60.9 |
WAUWATOSA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended | Years ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
(In thousands except per share data) | ||||||||||||||||
Interest income: | ||||||||||||||||
Loans | $ | 21,509 | $ | 19,599 | $ | 83,822 | $ | 74,020 | ||||||||
Mortgage-related securities | 1,207 | 913 | 4,263 | 2,466 | ||||||||||||
Debt securities, federal funds sold and short-term investments | 1,971 | 974 | 4,143 | 3,250 | ||||||||||||
Total interest income | 24,687 | 21,486 | 92,228 | 79,736 | ||||||||||||
Interest expense: | ||||||||||||||||
Deposits | 11,281 | 8,975 | 42,038 | 35,468 | ||||||||||||
Borrowings | 3,783 | 1,552 | 11,741 | 4,069 | ||||||||||||
Total interest expense | 15,064 | 10,527 | 53,779 | 39,537 | ||||||||||||
Net interest income | 9,623 | 10,959 | 38,449 | 40,199 | ||||||||||||
Provision for loan losses | 358 | 826 | 2,201 | 1,909 | ||||||||||||
Net interest income after provision for loan losses | 9,265 | 10,133 | 36,248 | 38,290 | ||||||||||||
Noninterest income: | ||||||||||||||||
Service charges on loans and deposits | 520 | 629 | 2,021 | 1,745 | ||||||||||||
Increase in cash surrender value of life insurance | 180 | 151 | 1,055 | 805 | ||||||||||||
Gain (loss) on sale of securities | (35 | ) | — | (819 | ) | 12 | ||||||||||
Mortgage banking income | 357 | — | 2,109 | — | ||||||||||||
Other | 267 | 487 | 836 | 964 | ||||||||||||
Total noninterest income | 1,289 | 1,267 | 5,202 | 3,526 | ||||||||||||
Noninterest expenses: | ||||||||||||||||
Compensation, payroll taxes, and other employee benefits | 3,715 | 4,376 | 16,209 | 13,133 | ||||||||||||
Occupancy, office furniture, and equipment | 1,168 | 966 | 4,304 | 3,571 | ||||||||||||
Advertising | 423 | 353 | 1,369 | 1,355 | ||||||||||||
Data processing | 229 | 490 | 1,730 | 1,412 | ||||||||||||
Charitable contributions | — | 5,122 | — | 5,685 | ||||||||||||
Communications expense | 232 | 142 | 700 | 619 | ||||||||||||
Professional Fees | 450 | 409 | 1,243 | 926 | ||||||||||||
Other | 727 | 720 | 3,143 | 2,945 | ||||||||||||
Total noninterest expenses | 6,944 | 12,578 | 28,698 | 29,646 | ||||||||||||
Income (loss) before income taxes | 3,610 | (1,178 | ) | 12,752 | 12,170 | |||||||||||
Income tax expense (benefit) | 1,326 | (469 | ) | 4,699 | 6,127 | |||||||||||
Net income (loss) | $ | 2,284 | $ | (709 | ) | $ | 8,053 | $ | 6,043 | |||||||
Basic earnings (loss) per share | $ | 0.07 | $ | (0.02 | ) | 0.24 | n/a | |||||||||
Diluted earnings (loss) per share | $ | 0.07 | $ | (0.02 | ) | 0.24 | n/a |
WAUWATOSA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31, | ||||||||
2006 | 2005 | |||||||
(Dollars in thousands) | ||||||||
(Unaudited) | ||||||||
Assets | ||||||||
Cash | $ | 26,745 | $ | 8,761 | ||||
Federal funds sold | 19,458 | 5,388 | ||||||
Short term investments | 27,604 | 2,349 | ||||||
Cash and cash equivalents | 73,807 | 16,498 | ||||||
Securities available-for-sale (at fair value): | 117,330 | 121,955 | ||||||
Loans held for sale | 5,387 | — | ||||||
Loans receivable | 1,372,907 | 1,306,018 | ||||||
Allowance for loan losses | (7,195 | ) | (5,250 | ) | ||||
Loans receivable, net | 1,365,712 | 1,300,768 | ||||||
Office properties and equipment, net | 32,625 | 25,022 | ||||||
Federal Home Loan Bank stock, at cost | 17,213 | 14,406 | ||||||
Cash surrender value of life insurance | 24,152 | 22,792 | ||||||
Prepaid expenses and other assets | 12,244 | 9,768 | ||||||
Total assets | $ | 1,648,470 | 1,511,209 | |||||
Liabilities and Shareholders’ Equity | ||||||||
Liabilities: | ||||||||
Demand deposits | $ | 58,407 | $ | 82,290 | ||||
Money market and savings deposits | 94,472 | 33,565 | ||||||
Time deposits | 883,339 | 929,738 | ||||||
Total deposits | 1,036,218 | 1,045,593 | ||||||
Federal Home Loan Bank advances short-term | 41,224 | 87,209 | ||||||
Federal Home Loan Bank advances long-term | 292,779 | 114,003 | ||||||
Advance payments by borrowers for taxes | 190 | 181 | ||||||
Other liabilities | 36,787 | 32,527 | ||||||
Total liabilities | 1,407,198 | 1,279,513 | ||||||
Shareholders’ equity: | ||||||||
Common Stock (par value — $.01; 200,000,000 shares authorized; 33,723,750 shares issued; 33,076,565 and 33,038,385 shares outstanding 2006 and 2005) | 337 | 337 | ||||||
Additional Paid-In Capital | 104,182 | 103,859 | ||||||
Accumulated other comprehensive loss (net of taxes) | (1,225 | ) | (1,571 | ) | ||||
Retained earnings, substantially restricted | 144,809 | 136,756 | ||||||
Unearned ESOP shares | (6,831 | ) | (7,685 | ) | ||||
Total shareholders’ equity | 241,272 | 231,696 | ||||||
Total liabilities and shareholders’ equity | $ | 1,648,470 | 1,511,209 | |||||