Waterstone Financial Inc. (WSBF, Financial) filed Quarterly Report for the period ended 2009-03-31.
Waterstone Mortgage Corp. is committed to providing customers with exceptional customer service. By providing clients with sound expert advice as to the many different loan programs and options available we hope to take some of the mystery out of mortgage financing. For most people a mortgage loan is the largest financial transaction they will ever make. Waterstone's expert loan consultants are able to walk you through the mortgage process and put your mind at ease during the application and approval process. Waterstone Financial Inc. has a market cap of $155.7 million; its shares were traded at around $4.98 with and P/S ratio of 1.5.
Total Interest Income - Total interest income increased $414,000, or 1.7%, to $25.0 million during the three months ended March 31, 2009 compared to $24.6 million for the three months ended March 31, 2008. Interest income on loans increased $388,000, or 1.8%, to $22.3 million for the three months ended March 31, 2009 compared to $21.9 million for the comparable period of 2008. The increase resulted primarily from an increase of $135.6 million, or 9.4%, in the average loan balance to $1.57 billion during the three-month period ended March 31, 2009 from $1.44 billion during the comparable period in 2008. The increase in average balance was partially offset by a 36 basis point decrease in the average yield on loans to 5.75% for the three-month period ended March 31, 2009 from 6.11% for the comparable period in 2008. Unrecognized interest income on non-accrual loans totaled $1.7 million during the three months ended March 31, 2009. This had the effect of reducing the average yield on loans during the same period by 43 basis points. Unrecognized interest income on non-accrual loans totaled $1.0 million during the three months ended March 31, 2008 effectively reducing the average yield on loans for that period by 29 basis points.
Finally, interest income from debt securities, federal funds sold and short-term investments decreased $65,000, or 7.4%, to $812,000 for the three months ended March 31, 2009 compared to $877,000 for the comparable period in 2008. This was due to a 73 basis point decrease in the average yield on other earning assets to 2.62% for the three months ended March 31, 2009 from 3.35% for the comparable period in 2008, partially offset by an increase of $20.6 million, or 19.6%, in the average balance of other earning assets to $125.8 million during the three months ended March 31, 2009 from $105.1 million during the comparable period in 2008. The average balance of debt securities, federal funds sold and short-term investments includes FHLBC stock of $21.7 million and $19.7 million for the three month-periods ended March 31, 2009 and March 31, 2008, respectively. On October 10, 2007, the FHLBC entered into a consensual cease and desist order with its regulator, the Federal Housing Finance Board. Under the terms of the order, dividend declarations are subject to the prior written approval of the Federal Housing Finance Board. The FHLBC has not declared a dividend since it entered into the cease and desist order. At the request of the FHLBC, on July 24, 2008, the Finance Board amended the cease and desist order to allow the FHLBC to redeem incremental purchases of capital stock tied to increased levels of borrowing through advances after repayment of those new advances.
Net Interest Income - Net interest income increased by $1.8 million or 21.1%, to $10.3 million during the three months ended March 31, 2009 as compared to $8.5 million during the comparable period in 2008. Net interest income continues to be positively affected by a steeper yield curve in 2009, as compared to 2008 and given that our interest bearing liabilities have repriced faster than our interest earning assets. The increase resulted primarily from a 42 basis point increase in our interest rate spread to 2.08% for the three month period ended March 31, 2009 from 1.67% for the comparable period in 2008. The 42 basis point increase in the interest rate spread resulted from a 76 basis point decrease in the cost of interest bearing liabilities, which was partially offset by a 35 basis point decrease in the yield on interest earning assets. The increase in net interest income resulting from an increase in our net interest rate spread was partially offset by a decrease in net average earning assets of $43.1 million, or 30.0%, to $100.8 million for the three months ended March 31, 2009 from $143.9 million from the comparable period in 2008. The decrease in net average earning assets was primarily attributable to an increase in loans transferred to real estate owned and an increase in the allowance for loan losses. The average balance of real estate owned totaled $26.4 million for the three months ended March 31, 2009 compared to $9.7 million for the three months ended March 31, 2008. The average balance of the allowance for loan losses totaled $24.8 million for the three months ended March 31, 2009 compared to $13.1 million for the three months ended March 31, 2008.
Compensation, payroll taxes and other employee benefit expense decreased $15,000, or 0.4%, to $3.8 million during the three months ended March 31, 2009. This decrease resulted primarily from a reduction in expense related to the ESOP, partially offset by an increase in health insurance benefit expense. Expense related to the Company s ESOP decreased $185,000, or 79.4%, to $48,000 during the three months ended March 31, 2009 compared to $233,000 during the comparable period in 2008. This decrease reflects the decrease in the Company s average share price during the three months ended March 31, 2009 compared to the comparable period in 2008. Expense related to the Company s self-insured employee health benefit plan increased $122,000, or 49.8%, to $367,000 during the three months ended March 31, 2009 from $245,000 during the comparable period in 2008.
Total Assets - Total assets increased by $37.8 million, or 2.0%, to $1.92 billion at March 31, 2009 from $1.89 billion at December 31, 2008. The increase in total assets is reflected in increases in cash and cash equivalents of $42.8 million and loans held for sale of $15.3 million and an increase in real estate owned of $6.9 million. These increases were partially offset by a decrease in loans receivable of $24.4 million and an increase in the allowance for loan losses of $3.7 million.
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Waterstone Mortgage Corp. is committed to providing customers with exceptional customer service. By providing clients with sound expert advice as to the many different loan programs and options available we hope to take some of the mystery out of mortgage financing. For most people a mortgage loan is the largest financial transaction they will ever make. Waterstone's expert loan consultants are able to walk you through the mortgage process and put your mind at ease during the application and approval process. Waterstone Financial Inc. has a market cap of $155.7 million; its shares were traded at around $4.98 with and P/S ratio of 1.5.
Highlight of Business Operations:
General - Net loss for the three months ended March 31, 2009 totaled $3.6 million, or $0.12 for both basic and diluted loss per share compared to net income of $609,000, or $0.02 for both basic and diluted earnings per share for the three months ended March 31, 2008. The three months ended March 31, 2009 generated an annualized loss on average assets of 0.76% and an annualized loss on average equity of 8.68%, compared to a return on average assets of 0.14% and a return on average equity of 1.22% for the comparable period in 2008. The net loss reflects deteriorating asset quality resulting in a $4.5 million increase in the provision for loan losses. During the first quarter, the Company received updated appraisals on a number of properties that collateralize nonperforming loans. The decline in value noted in the appraisals, in addition to the continued downturn in the local real estate market, contributed to the Company recording a provision for loan losses of $7.2 million during the first quarter. The impact of the increase in provision for loan losses was compounded by a decrease in noninterest income which includes a $907,000 loss on impairment of securities and a $904,000 increase in noninterest expense which includes a $438,000 increase in real estate owned expense. These were partially offset by a $1.8 million increase in net interest income and a $413,000 increase in income tax benefit. Loan charge-off activity and specific loan reserves are discussed in additional detail in the Asset Quality section. The net interest margin for the nine months ended March 31, 2009 was 2.28% compared to 2.03% for the three months ended March 31, 2008.Total Interest Income - Total interest income increased $414,000, or 1.7%, to $25.0 million during the three months ended March 31, 2009 compared to $24.6 million for the three months ended March 31, 2008. Interest income on loans increased $388,000, or 1.8%, to $22.3 million for the three months ended March 31, 2009 compared to $21.9 million for the comparable period of 2008. The increase resulted primarily from an increase of $135.6 million, or 9.4%, in the average loan balance to $1.57 billion during the three-month period ended March 31, 2009 from $1.44 billion during the comparable period in 2008. The increase in average balance was partially offset by a 36 basis point decrease in the average yield on loans to 5.75% for the three-month period ended March 31, 2009 from 6.11% for the comparable period in 2008. Unrecognized interest income on non-accrual loans totaled $1.7 million during the three months ended March 31, 2009. This had the effect of reducing the average yield on loans during the same period by 43 basis points. Unrecognized interest income on non-accrual loans totaled $1.0 million during the three months ended March 31, 2008 effectively reducing the average yield on loans for that period by 29 basis points.
Finally, interest income from debt securities, federal funds sold and short-term investments decreased $65,000, or 7.4%, to $812,000 for the three months ended March 31, 2009 compared to $877,000 for the comparable period in 2008. This was due to a 73 basis point decrease in the average yield on other earning assets to 2.62% for the three months ended March 31, 2009 from 3.35% for the comparable period in 2008, partially offset by an increase of $20.6 million, or 19.6%, in the average balance of other earning assets to $125.8 million during the three months ended March 31, 2009 from $105.1 million during the comparable period in 2008. The average balance of debt securities, federal funds sold and short-term investments includes FHLBC stock of $21.7 million and $19.7 million for the three month-periods ended March 31, 2009 and March 31, 2008, respectively. On October 10, 2007, the FHLBC entered into a consensual cease and desist order with its regulator, the Federal Housing Finance Board. Under the terms of the order, dividend declarations are subject to the prior written approval of the Federal Housing Finance Board. The FHLBC has not declared a dividend since it entered into the cease and desist order. At the request of the FHLBC, on July 24, 2008, the Finance Board amended the cease and desist order to allow the FHLBC to redeem incremental purchases of capital stock tied to increased levels of borrowing through advances after repayment of those new advances.
Net Interest Income - Net interest income increased by $1.8 million or 21.1%, to $10.3 million during the three months ended March 31, 2009 as compared to $8.5 million during the comparable period in 2008. Net interest income continues to be positively affected by a steeper yield curve in 2009, as compared to 2008 and given that our interest bearing liabilities have repriced faster than our interest earning assets. The increase resulted primarily from a 42 basis point increase in our interest rate spread to 2.08% for the three month period ended March 31, 2009 from 1.67% for the comparable period in 2008. The 42 basis point increase in the interest rate spread resulted from a 76 basis point decrease in the cost of interest bearing liabilities, which was partially offset by a 35 basis point decrease in the yield on interest earning assets. The increase in net interest income resulting from an increase in our net interest rate spread was partially offset by a decrease in net average earning assets of $43.1 million, or 30.0%, to $100.8 million for the three months ended March 31, 2009 from $143.9 million from the comparable period in 2008. The decrease in net average earning assets was primarily attributable to an increase in loans transferred to real estate owned and an increase in the allowance for loan losses. The average balance of real estate owned totaled $26.4 million for the three months ended March 31, 2009 compared to $9.7 million for the three months ended March 31, 2008. The average balance of the allowance for loan losses totaled $24.8 million for the three months ended March 31, 2009 compared to $13.1 million for the three months ended March 31, 2008.
Compensation, payroll taxes and other employee benefit expense decreased $15,000, or 0.4%, to $3.8 million during the three months ended March 31, 2009. This decrease resulted primarily from a reduction in expense related to the ESOP, partially offset by an increase in health insurance benefit expense. Expense related to the Company s ESOP decreased $185,000, or 79.4%, to $48,000 during the three months ended March 31, 2009 compared to $233,000 during the comparable period in 2008. This decrease reflects the decrease in the Company s average share price during the three months ended March 31, 2009 compared to the comparable period in 2008. Expense related to the Company s self-insured employee health benefit plan increased $122,000, or 49.8%, to $367,000 during the three months ended March 31, 2009 from $245,000 during the comparable period in 2008.
Total Assets - Total assets increased by $37.8 million, or 2.0%, to $1.92 billion at March 31, 2009 from $1.89 billion at December 31, 2008. The increase in total assets is reflected in increases in cash and cash equivalents of $42.8 million and loans held for sale of $15.3 million and an increase in real estate owned of $6.9 million. These increases were partially offset by a decrease in loans receivable of $24.4 million and an increase in the allowance for loan losses of $3.7 million.
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