·	Consolidated net income of Waterstone Financial, Inc. totaled $7.4 million for the quarter ended September 30, 2017, compared to $7.5 million for the quarter ended September 30, 2016.

·	Consolidated net income of Waterstone Financial, Inc. totaled $22.8 million for the nine months ended September 30, 2017, compared to $19.1 million for the nine months ended September 30, 2016.

·	Consolidated return on average assets totaled 1.56% for the quarter ended September 30, 2017 compared to 1.66% for the quarter ended September 30, 2016.

·	Consolidated return on average assets totaled 1.70% for the nine months ended September 30, 2017 compared to 1.45% for the nine months ended September 30, 2016.

·	Repurchased 72,700 shares through our buyback program at an average cost of $17.51 per share and declared a dividend of $0.12 per share during the quarter ended September 30, 2017.

 

Community Banking Segment

 

·	Pre-tax income of the segment totaled $7.5 million for the quarter ended September 30, 2017, which represents a 19.5% increase compared to $6.2 million for the quarter ended September 30, 2016.

·

Net interest income totaled $13.1 million for the quarter ended September 30, 2017, which represents a 16.7% increase compared to $11.2 million for the quarter ended September 30, 2016.  The increase in net interest income, which was driven by loan growth and a decrease in borrowing costs, drove our net interest margin to 2.95% for the quarter ended September 30, 2017 compared to 2.70% for the quarter ended September 30, 2016.

·

Average loans held for investment totaled $1.25 billion during the quarter ended September 30, 2017, which represents an increase of $120.3 million, or 10.7% over the comparable quarter in the prior year.  Total loans increased $83.3 million, or 7.1%, to $1.26 billion at September 30, 2017 compared to $1.18 billion at December 31, 2016.

·	Driven by margin expansion and continued cost control efforts, the efficiency ratio for the segment improved to 47.78% for the quarter ended September 30, 2017, compared to 50.85% for the quarter ended September 30, 2016.

·	Nonperforming assets as percentage of total assets decreased to 0.62% as of September 30, 2017, compared to 0.71% at June 30, 2017 and 1.01% at September 30, 2016.

 

Mortgage Banking Segment

·	Pre-tax income of the segment totaled $4.3 million for the quarter ended September 30, 2017, which represents a 36.3% decrease compared to $6.8 million for the quarter ended September 30, 2016.

·

Loans originated for the purpose of sale in the secondary market decreased $48.0 million, or 6.8%, to $662.1 million during the quarter ended September 30, 2017, compared to $710.1 million for the quarter ended September 30, 2016.  The decrease in originations was driven by a 46.5% decrease in the origination of loans made for the purpose of mortgage refinance.  Driven by an expansion of our branch network, origination volumes of loans made for the purpose of residential purchases increased 3.1% compared to the comparative quarter in the prior year.  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 89.6% of originations for the quarter ended September 30, 2017 compared to 81.7% of total originations for the quarter ended September 30, 2016.

·	Gross margins on loans sold decreased approximately 1.5% during the quarter ended September 30, 2017, compared to the quarter ended September 30, 2016.

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About Waterstone Financial, Inc.

Waterstone Financial, Inc. (NASDAQ: WSBF) is the savings and loan holding company for WaterStone Bank. WaterStone Bank was established in 1921 and offers a full suite of personal and business banking products. The Bank has branches in Wauwatosa, Brookfield, Fox Point/North Shore, Franklin/Hales Corners, Germantown/Menomonee Falls, Greenfield, Oak Creek, Oconomowoc/Lake Country, Pewaukee, Waukesha/Brookfield, and West Allis, Wisconsin and a commercial lending office in Minneapolis, Minnesota. WaterStone Bank is the parent company to Waterstone Mortgage, which offers mortgage banking offices in 25 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.

 

 

 

 

 

 

 

 

 

WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
		For The Three Months Ended September 30,								For The Nine Months Ended September 30,
		2017				2016				2017				2016
		(In Thousands, except per share amounts)
Interest income:
Loans		$	15,855				14,754				45,078				42,611
Mortgage-related securities			647				743				2,021				2,371
Debt securities, federal funds sold and short-term investments			951				833				2,680				2,692
Total interest income			17,453				16,330				49,779				47,674
Interest expense:
Deposits			1,981				1,923				5,614				5,477
Borrowings			2,439				3,082				6,756				10,724
Total interest expense			4,420				5,005				12,370				16,201
Net interest income			13,033				11,325				37,409				31,473
Provision for loan losses			20				135				(1,166	)			340
Net interest income after provision for loan losses			13,013				11,190				38,575				31,133
Noninterest income:
Service charges on loans and deposits			300				789				1,148				1,742
Increase in cash surrender value of life insurance			688				734				1,476				1,446
Loss on sale of available for sale securities			-				-				(107	)			-
Mortgage banking income			31,863				35,552				92,774				91,146
Other			203				337				941				874
Total noninterest income			33,054				37,412				96,232				95,208
Noninterest expenses:
Compensation, payroll taxes, and other employee benefits			26,153				27,573				73,732				70,968
Occupancy, office furniture, and equipment			2,533				2,319				7,587				7,074
Advertising			821				661				2,414				1,974
Data processing			623				616				1,854				1,897
Communications			394				374				1,170				1,088
Professional fees			629				474				1,953				1,486
Real estate owned			(20	)			37				258				344
FDIC insurance premiums			129				140				366				500
Other			3,054				3,347				10,227				9,663
Total noninterest expenses			34,316				35,541				99,561				94,994
Income before income taxes			11,751				13,061				35,246				31,347
Income tax expense			4,362				5,556				12,397				12,214
Net income		$	7,389				7,505				22,849				19,133
Income per share:
Basic		$	0.27				0.28				0.83				0.71
Diluted		$	0.26				0.27				0.82				0.70
Weighted average shares outstanding:
Basic			27,532				27,043				27,449				26,976
Diluted			27,953				27,429				27,927				27,283

WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
		September 30,				December 31,
		2017				2016
		(Unaudited)
Assets		(In Thousands, except per share amounts)
Cash		$	39,308			$	7,878
Federal funds sold			34,916				26,828
Interest-earning deposits in other financial institutions and other short term investments			18,367				12,511
Cash and cash equivalents			92,591				47,217
Securities available for sale (at fair value)			200,840				226,795
Loans held for sale (at fair value)			175,137				225,248
Loans receivable			1,261,160				1,177,884
Less: Allowance for loan losses			14,063				16,029
Loans receivable, net			1,247,097				1,161,855
Office properties and equipment, net			22,889				23,655
Federal Home Loan Bank stock (at cost)			18,450				13,275
Cash surrender value of life insurance			65,665				61,509
Real estate owned, net			4,568				6,118
Prepaid expenses and other assets			26,891				24,947
Total assets		$	1,854,128			$	1,790,619
Liabilities and Shareholders' Equity
Liabilities:
Demand deposits		$	123,133			$	120,371
Money market and savings deposits			148,607				162,456
Time deposits			685,033				666,584
Total deposits			956,773				949,411
Borrowings			435,503				387,155
Advance payments by borrowers for taxes			25,107				4,716
Other liabilities			24,815				38,647
Total liabilities			1,442,198				1,379,929
Shareholders' equity:
Common stock			295				294
Additional paid-in capital			325,753				322,934
Retained earnings			183,578				184,565
Unearned ESOP shares			(19,288	)			(20,178	)
Accumulated other comprehensive income (loss), net of taxes			328				(378	)
Cost of shares repurchased			(78,736	)			(76,547	)
Total shareholders' equity			411,930				410,690
Total liabilities and shareholders' equity		$	1,854,128			$	1,790,619
Share Information
Shares Outstanding			29,483				29,430
Book Value per share		$	13.97			$	13.95
Closing market price		$	19.50			$	18.40
Price to book ratio			139.58	%			131.85	%

WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
SUMMARY OF KEY QUARTERLY FINANCIAL DATA
(Unaudited)
		At or For the Three Months Ended
		September 30,				June 30,				March 31,				December 31,				September 30,
		2017				2017				2017				2016				2016
						(Dollars in Thousands)
Condensed Results of Operations:
Net interest income		$	13,033				12,481				11,895				11,971				11,325
Provision for loan losses			20				25				(1,211	)			40				135
Total noninterest income			33,054				37,241				25,937				31,157				37,412
Total noninterest expense			34,316				36,187				29,058				32,441				35,541
Income before income taxes			11,751				13,510				9,985				10,647				13,061
Income tax expense			4,362				4,622				3,413				4,248				5,556
Net income		$	7,389				8,888				6,572				6,399				7,505
Income per share – basic		$	0.27				0.32				0.24				0.23				0.28
Income per share – diluted		$	0.26				0.32				0.24				0.23				0.27
Dividends declared per share		$	0.12				0.62				0.12				0.12				0.08
Performance Ratios:
Return on average assets - QTD			1.56	%			1.99	%			1.54	%			1.44	%			1.66	%
Return on average equity - QTD			7.12	%			8.70	%			6.44	%			6.19	%			7.36	%
Net interest margin - QTD			2.95	%			3.00	%			2.97	%			2.88	%			2.70	%
Community Banking Segment
Efficiency ratio - QTD			47.78	%			48.76	%			55.69	%			51.00	%			50.85	%
Return on average assets - YTD			1.70	%			1.77	%			1.54	%			1.45	%			1.45	%
Return on average equity - YTD			7.42	%			7.56	%			6.44	%			6.33	%			6.38	%
Net interest margin - YTD			2.97	%			2.98	%			2.97	%			2.64	%			2.56	%
Community Banking Segment
Efficiency ratio - YTD			50.56	%			52.09	%			55.69	%			55.40	%			57.06	%
Asset Quality Ratios:
Past due loans to total loans			0.71	%			0.74	%			0.71	%			0.70	%			0.76	%
Non accrual loans to total loans			0.56	%			0.70	%			0.67	%			0.84	%			0.93	%
Non performing assets to total assets			0.62	%			0.71	%			0.76	%			0.89	%			1.01	%