Exhibit 99.1
Waterstone Financial, Inc. Announces Results of Operations for the Quarter and the Six Months Ended June 30, 2013.
WAUWATOSA, WI – 7/30/2013 – Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income for the second quarter of 2013 of $4.9 million, compared to $6.2 million for the second quarter of 2012. Year-to-date net income totaled $9.6 million for the six months ended June 30, 2013 compared to $8.4 million for the six months ended June 30, 2012. Income before income taxes was $8.0 million for the three months and $15.5 million for the six months ended June 30, 2013 compared to $6.2 million and $8.5 million for the three and six months ended June 30, 2012. A valuation reserve against net deferred tax assets which was released in the fourth quarter of 2012 minimized book income tax expense through June 30, 2012. Net income per diluted share was $0.16 for the second quarter of 2013 as compared to $0.20 per diluted share for the second quarter of 2012.
"We've posted net income for six consecutive quarters, due in large part to the hard work of our dedicated employees," said Doug Gordon, President and Chief Executive Officer of the Company. "These continued positive results demonstrate the strength of the Company and will aid in our future growth."
The Waterstone mortgage banking segment reported pre-tax income of $4.4 million for the quarter ended June 30, 2013 compared to $5.4 million for the quarter ended June 30, 2012. Loans sold in the second quarter of 2013 were up 34% compared to the second quarter of 2012; however, margins earned on loans sold declined in 2013 such that total mortgage banking revenue increased by only 15% in 2013 compared to 2012. At the same time, compensation expense for the second quarter of 2013 increased by 36% over the second quarter of 2012 as commissions paid to loan officers increased in proportion to increases in loan production. The community banking segment pre-tax income for the quarter ended June 30, 2013 totaled $3.5 million compared to $628,000 for the second quarter of 2012. Community banking operations were positively impacted by a $2.8 million decline in real estate owned expense from $2.8 million in the second quarter of 2012 to $12,000 in the second quarter of 2013.
Credit quality continued its steady pace of improvement in the second quarter of 2013. Total nonperforming assets as a percentage of total assets declined to 5.10% at June 30, 2013 from 6.66% at December 31, 2012 and from 7.89% at June 30, 2012. Nonaccrual loans declined by 28.7% to $53.3 million at June 30, 2013 from $74.7 million at December 31, 2012 while real estate owned declined by 16.7% to $30.0 million from $36.0 million. This equates to a decline in total nonperforming assets of 24.8% to $83.2 million at June 30, 2013 from $110.6 million at December 31, 2012. Total delinquent loans declined 18.6% to $60.6 million at June 30, 2013 from $74.5 million at December 31, 2012. The provisions for loan losses totaled $1.2 million and $3.0 million for the three and six months ended June 30, 2013, respectively. The provisions for loan losses totaled $1.4 million and $5.1 million for the three and six months ended June 30, 2012, respectively.
About Waterstone Financial, Inc.
Waterstone Financial, Inc. (NASDAQ: WSBF) is a single-bank, thrift holding company headquartered in Wauwatosa, WI. With $1.63 billion in assets at June 30, 2013, Waterstone has eight community bank branches in the metropolitan Milwaukee market and mortgage banking offices in eleven states around the country. Additional financial detail related to WaterStone Bank, SSB can be found on the FDIC web site (www.fdic.gov) under the "Industry Analysis" tab.
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 Annual Report on Form 10-K for the year ended December 31, 2012 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.
WATERSTONE FINANCIAL, INC.
SUMMARY OF KEY QUARTERLY FINANCIAL DATA (unaudited)
(dollars in thousands)
| | 2013 | | | 2012 |
| | | Q2 | | | | Q1 | | | | Q4 | | | | Q3 | | | | Q2 | |
Performance Ratios: | | | | | | | | | | | | | | | | | | | | |
| Return on average assets | | | 1.21 | % | | | 1.14 | % | | | 4.28 | % | | | 2.00 | % | | | 1.45 | % |
| Return on average equity | | | 9.42 | % | | | 9.14 | % | | | 37.42 | % | | | 18.26 | % | | | 14.12 | % |
| Net interest margin | | | 2.60 | % | | | 2.66 | % | | | 2.67 | % | | | 2.67 | % | | | 2.65 | % |
| Efficiency ratio | | | 74.93 | % | | | 71.95 | % | | | 80.64 | % | | | 72.42 | % | | | 77.44 | % |
Condensed Income Data: | | | | | | | | | | | | | | | | | | | | |
| Net interest income | | $ | 9,921 | | | $ | 10,146 | | | $ | 10,256 | | | $ | 10,635 | | | $ | 10,628 | |
| Provision for loan losses | | | 1,200 | | | | 1,760 | | | | 1,200 | | | | 2,000 | | | | 1,425 | |
| Total noninterest income | | | 26,707 | | | | 23,033 | | | | 25,174 | | | | 27,775 | | | | 23,252 | |
| Total noninterest expense | | | 27.447 | | | | 23,871 | | | | 28,570 | | | | 27,817 | | | | 26,236 | |
| Income before income taxes | | | 7,981 | | | | 7,548 | | | | 5,660 | | | | 8,593 | | | | 6,219 | |
| Income tax expense (benefit) | | | 3,054 | | | | 2,923 | | | | (12,420 | ) | | | 145 | | | | 41 | |
| Net income | | $ | 4,927 | | | $ | 4,625 | | | $ | 18,080 | | | $ | 8,448 | | | $ | 6,178 | |
Asset Quality Data: | | | | | | | | | | | | | | | | | | | | |
| Allowance for loan losses | | $ | 27,767 | | | $ | 29,298 | | | $ | 31,043 | | | $ | 30,967 | | | $ | 32,658 | |
| Net charge-offs | | | 2,731 | | | | 3,505 | | | | 1,124 | | | | 3,691 | | | | 1,793 | |
| Total past due loans | | | 60,606 | | | | 71,192 | | | | 74,450 | | | | 77,858 | | | | 84,381 | |
| Impaired loans | | | 83,247 | | | | 90,981 | | | | 94,971 | | | | 107,725 | | | | 118,226 | |
| Real estate owned | | | 29,983 | | | | 30,799 | | | | 35,974 | | | | 43,837 | | | | 47,815 | |
Average Balance Sheet Data: | | | | | | | | | | | | | | | | | | | | |
| Total assets | | | 1,628,967 | | | | 1,647,387 | | | | 1,682,241 | | | | 1,676,685 | | | | 1,708,021 | |
| Loans receivable and held for sale | | | 1,235,782 | | | | 1,248,893 | | | | 1,265,624 | | | | 1,270,414 | | | | 1,275,192 | |
| Mortgage-related securities | | | 134,985 | | | | 143,628 | | | | 157,187 | | | | 151,162 | | | | 140,792 | |
| Total interest-earning assets | | | 1,530,723 | | | | 1,548,494 | | | | 1,591,149 | | | | 1,580,611 | | | | 1,611,163 | |
| Interest-bearing deposits | | | 871,565 | | | | 887,252 | | | | 936,121 | | | | 949,174 | | | | 1,009,215 | |
| Borrowings | | | 485,199 | | | | 485,259 | | | | 483,445 | | | | 487,078 | | | | 472,052 | |
| Total interest-bearing liabilities | | | 1,356,764 | | | | 1,372,511 | | | | 1,419,566 | | | | 1,436,252 | | | | 1,481,267 | |
| Total shareholders' equity | | | 209,699 | | | | 205,297 | | | | 192,231 | | | | 183,534 | | | | 175,537 | |
Capital Ratios: | | | | | | | | | | | | | | | | | | | | |
| Equity to total assets at end of the period | | | 12.82 | % | | | 12.72 | % | | | 12.20 | % | | | 11.00 | % | | | 10.46 | % |
| Tier I capital to average assets (bank) | | | 12.17 | % | | | 11.79 | % | | | 11.13 | % | | | 10.50 | % | | | 9.82 | % |
Tier I capital to risk-weighted assets (bank) | | | 17.60 | % | | | 17.49 | % | | | 16.07 | % | | | 14.37 | % | | | 13.84 | % |
Total capital to risk-weighted assets (bank) | | | 18.87 | % | | | 18.75 | % | | | 17.34 | % | | | 15.64 | % | | | 15.11 | % |
| | | | | | | | | | | | | | | | | | | | |
WATERSTONE FINANCIAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
| | June 30, | | | December 31, | |
| | 2013 | | | 2012 | |
| ASSETS | | | | | | |
| Cash and cash equivalents | | $ | 54,368 | | | $ | 71,469 | |
| Securities available for sale (at fair value) | | | 216,253 | | | | 205,017 | |
| Loans held for sale (at fair value) | | | 132,045 | | | | 133,613 | |
| Loans receivable, net of allowance for loan losses | | | 1,079,148 | | | | 1,102,629 | |
| Office properties and equipment | | | 27,781 | | | | 26,935 | |
| Real estate owned | | | 29,983 | | | | 35,974 | |
| Other assets | | | 93,298 | | | | 85,439 | |
| Total assets | | $ | 1,632,876 | | | $ | 1,661,076 | |
| | | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | |
| Deposits | | $ | 893,007 | | | $ | 939,513 | |
| Borrowings | | | 490,046 | | | | 479,888 | |
| Other | | | 40,478 | | | | 39,041 | |
| Total liabilities | | | 1,423,531 | | | | 1,458,442 | |
| Common stock and additional paid-in capital | | | 110,779 | | | | 110,831 | |
| Retained earnings | | | 146,039 | | | | 136,487 | |
| Unearned ESOP shares | | | (1,280 | ) | | | (1,708 | ) |
| Accumulated other comprehensive income(loss), net of taxes | | | (932 | ) | | | 2,285 | |
| Treasury shares, at cost | | | (45,261 | ) | | | (45,261 | ) |
| Total shareholders' equity | | | 209,345 | | | | 202,634 | |
| Total liabilities and shareholders' equity | | $ | 1,632,876 | | | $ | 1,661,076 | |
WATERSTONE FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
| (in thousands, except per share data) | | For the Three Months | | | For the Six Months | |
| | Ended June 30, | | | Ended June 30, | |
| | 2013 | | | 2012 | | | 2013 | | | 2012 | |
| Interest income: | | | | | | | | | | | | |
| Loans | | $ | 14,862 | | | $ | 16,320 | | | $ | 30,075 | | | $ | 32,892 | |
| Mortgage-related securities | | | 419 | | | | 921 | | | | 856 | | | | 1,784 | |
| Debt securities and short-term investments | | | 617 | | | | 548 | | | | 1,153 | | | | 1,255 | |
| Total interest income | | | 15,898 | | | | 17,789 | | | | 32,084 | | | | 35,931 | |
| Interest expense: | | | | | | | | | | | | | | | | |
| Deposits | | | 1,353 | | | | 2,663 | | | | 2,819 | | | | 5,867 | |
| Borrowings | | | 4,624 | | | | 4,497 | | | | 9,198 | | | | 9,010 | |
| Total interest expense | | | 5,977 | | | | 7,160 | | | | 12,017 | | | | 14,877 | |
| Net interest income | | | 9,921 | | | | 10,628 | | | | 20,067 | | | | 21,054 | |
| Provision for loan losses | | | 1,200 | | | | 1,425 | | | | 2,960 | | | | 5,100 | |
| Net interest income after provision for loan losses | | | 8,721 | | | | 9,203 | | | | 17,107 | | | | 15,954 | |
| Noninterest income: | | | | | | | | | | | | | | | | |
| Mortgage banking income | | | 25,455 | | | | 22,507 | | | | 47,443 | | | | 36,708 | |
| Other | | | 1,252 | | | | 744 | | | | 2,297 | | | | 1,545 | |
| Total noninterest income | | | 26,707 | | | | 23,251 | | | | 49,740 | | | | 38,253 | |
| Noninterest expense: | | | | | | | | | | | | | | | | |
| Compensation and employee benefits | | | 19,944 | | | | 13,976 | | | | 36,426 | | | | 25,603 | |
| Occupancy, office furniture and equipment | | | 1,862 | | | | 1,688 | | | | 3,778 | | | | 3,409 | |
| Advertising | | | 796 | | | | 769 | | | | 1,620 | | | | 1,324 | |
| Real estate owned | | | 12 | | | | 2,838 | | | | 153 | | | | 4,273 | |
| FDIC insurance premiums | | | 380 | | | | 872 | | | | 1,053 | | | | 1,813 | |
| Other | | | 4,453 | | | | 6,093 | | | | 8,288 | | | | 9,329 | |
| Total noninterest expense | | | 27,447 | | | | 26,236 | | | | 51,318 | | | | 45,751 | |
| Income before income taxes | | | 7,981 | | | | 6,218 | | | | 15,529 | | | | 8,456 | |
| Income taxes | | | 3,054 | | | | 41 | | | | 5,977 | | | | 71 | |
| Net income | | $ | 4,927 | | | $ | 6,177 | | | $ | 9,552 | | | $ | 8,385 | |
| Income per share: | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.16 | | | $ | 0.20 | | | $ | 0.31 | | | $ | 0.27 | |
| Diluted | | | 0.16 | | | | 0.20 | | | | 0.30 | | | | 0.27 | |
| Weighted average shares outstanding | | | | | | | | | | | | | | | | |
| Basic | | | 31,144,179 | | | | 31,045,148 | | | | 31,134,074 | | | | 31,034,644 | |
| Diluted | | | 31,368,319 | | | | 31,136,148 | | | | 31,351,540 | | | | 31,068,812 | |
