Waterstone Financial Inc. (WSBF, Financial) filed Quarterly Report for the period ended 2009-06-30.
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 $155.3 million; its shares were traded at around $4.97 with and P/S ratio of 1.4.
Net Interest Income - Net interest income increased by $2.5 million or 13.7%, to $20.7 million during the six months ended June 30, 2009 as compared to $18.2 million during the comparable period in 2008. Net interest income continues to be positively affected by a decrease in interest rates in 2009, as compared to 2008 and given that our interest bearing liabilities have repriced at a faster rate than our interest earning assets. The increase in net interest income resulted primarily from a 29 basis point increase in our interest rate spread to 2.11% for the six month period ended June 30, 2009 from 1.82% for the comparable period in 2008. The 29 basis point increase in the interest rate spread resulted from a 68 basis point decrease in the cost of interest bearing liabilities, which was partially offset by a 39 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 $45.3 million, or 32.5%, to $94.3 million for the six months ended June 30, 2009 from $139.6 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 $32.9 million for the six months ended June 30, 2009 compared to $10.8 million for the six months ended June 30, 2008. The average balance of the allowance for loan losses totaled $26.4 million for the six months ended June 30, 2009 compared to $13.9 million for the six months ended June 30, 2008.
Compensation, payroll taxes and other employee benefit expense increased $97,000, or 1.2%, to $8.4 million during the six months ended June 30, 2009 compared to $8.3 million during the comparable period in 2008. This increase resulted primarily from an increase in compensation and payroll taxes and health insurance expense, partially offset by a reduction in expense related to the ESOP. Due primarily to an increase in loan sales on the secondary market, total compensation, in the form of commissions, and payroll taxes increased $335,000, or 5.1%, to $6.9 million for the six months ended compared to $6.5 million during the comparable period in 2008. Expense related to the Company s health insurance plan increased $141,000 to $543,000 during the six months ended June 30, 2009 compared to $402,000 during the comparable period in 2008. Partially offsetting the increase in expense related to compensation and health insurance, expense related to the Company s ESOP decreased $362,000, to $106,000 during the six months ended June 30, 2009 compared to $468,000 during the comparable period in 2008. This decrease reflects the decrease in the Company s average share price during the six months ended June 30, 2009 compared to the comparable period in 2008.
Total Interest Income - Total interest income decreased $435,000, or 1.7%, to $24.8 million during the three months ended June 30, 2009 compared to $25.2 million for the three months ended June 30, 2008. Interest income on loans decreased $432,000, or 1.9%, to $22.1 million for the three months ended June 30, 2009 compared to $22.5 million for the comparable period of 2008. The decrease resulted primarily from a 24 basis point decrease in the average yield on loans to 5.77% for the three-month period ended June 30, 2009 from 6.01% for the comparable period in 2008. The decrease in interest income due to the decline in average yield was partially offset by an increase of $48.1 million, or 3.2%, in the average loan balance to $1.54 billion during the three-month period ended June 30, 2009 from $1.49 billion during the comparable period in 2008. Unrecognized interest income on non-accrual loans totaled $1.7 million during the three months ended June 30, 2009. This had the effect of reducing the average yield on loans during the same period by 44 basis points. Unrecognized interest income on non-accrual loans totaled $1.1 million during the three months ended June 30, 2008 effectively reducing the average yield on loans for that period by 29 basis points.
Net Interest Income - Net interest income increased by $702,000 or 7.2%, to $10.5 million during the three months ended June 30, 2009 as compared to $9.8 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 at a faster rate than our interest earning assets. The increase in net interest income resulted primarily from a 20 basis point increase in our interest rate spread to 2.13% for the three month period ended June 30, 2009 from 1.93% for the comparable period in 2008. The 20 basis point increase in the interest rate spread resulted from a 57 basis point decrease in the cost of interest bearing liabilities, which was partially offset by a 37 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 $48.4 million, or 35.5%, to $87.9 million for the three months ended June 30, 2009 from $136.3 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 $39.4 million for the three months ended June 30, 2009 compared to $11.8 million for the three months ended June 30, 2008. The average balance of the allowance for loan losses totaled $28.0 million for the three months ended June 30, 2009 compared to $14.7 million for the three months ended June 30, 2008.
Real estate owned expense decreased $468,000, or 54.6%, to $389,000 for the three months ended June 30, 2009 compared to $857,000 during the three months ended June 30, 2008, as a result of a significant gain recognized during the quarter ended June 30, 2009 on the sale of two properties. Real estate owned expense includes the net gain or loss recognized upon the sale of a real estate property acquired through foreclosure, as well as the net operating and carrying costs related to the properties. During the three months ended June 30, 2009, net operational expenses increased $312,000 to $947,000 from $635,000 during the comparable period in 2008. The increase in net operational expense compared to the prior period results from an increase in the number of foreclosed properties. The average balance of real estate owned totaled $39.4 million for the three months ended June 30, 2009 compared to $11.8 million for the three months ended June 30, 2008. Net gains on the sale of real estate owned totaled $558,000 during the three months ended June 30, 2009, compared to a net loss of $222,000 during the comparable period in 2008. Gains related to the sale of real estate owned during the second quarter of 2009 included a multi-family residential property that was originally acquired in the first quarter of 2009 that sold at a gain of $399,000 and a multi-family residential property that was originally acquired in the fourth quarter of 2008 that sold at a gain of $233,000.
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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 $155.3 million; its shares were traded at around $4.97 with and P/S ratio of 1.4.
Highlight of Business Operations:
General - Net loss for the six months ended June 30, 2009 totaled $2.3 million, or $0.07 for both basic and diluted loss per share compared to net loss of $1.9 million, or $0.06 for both basic and diluted earnings per share for the six months ended June 30, 2008. The six months ended June 30, 2009 generated an annualized loss on average assets of 0.24% and an annualized loss on average equity of 2.66%, compared to an annualized loss on average assets of 0.22% and an annualized loss on average equity of 1.92% for the comparable period in 2008. The comparable net losses for the two periods reflect continuing asset quality issues resulting in a $10.2 million provision for loan losses for the six months ended June 30, 2009. The current year to date provision represents a $1.1 million decrease from the $11.3 million provision for loan losses for the six months ended June 30, 2008. Increases of $2.5 million in net interest income and of $1.9 million in mortgage banking income for the first six months of 2009 over the prior period were offset by securities impairment charges of $1.1 million, FDIC insurance expense increases of $1.3 million (which include the FDIC special assessment) and a reduction in income tax benefits of $2.8 million. Loan charge-off activity and specific loan reserves are discussed in additional detail in the Asset Quality section. The net interest margin for the six months ended June 30, 2009 was 2.28% compared to 2.15% for the six months ended June 30, 2008.Net Interest Income - Net interest income increased by $2.5 million or 13.7%, to $20.7 million during the six months ended June 30, 2009 as compared to $18.2 million during the comparable period in 2008. Net interest income continues to be positively affected by a decrease in interest rates in 2009, as compared to 2008 and given that our interest bearing liabilities have repriced at a faster rate than our interest earning assets. The increase in net interest income resulted primarily from a 29 basis point increase in our interest rate spread to 2.11% for the six month period ended June 30, 2009 from 1.82% for the comparable period in 2008. The 29 basis point increase in the interest rate spread resulted from a 68 basis point decrease in the cost of interest bearing liabilities, which was partially offset by a 39 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 $45.3 million, or 32.5%, to $94.3 million for the six months ended June 30, 2009 from $139.6 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 $32.9 million for the six months ended June 30, 2009 compared to $10.8 million for the six months ended June 30, 2008. The average balance of the allowance for loan losses totaled $26.4 million for the six months ended June 30, 2009 compared to $13.9 million for the six months ended June 30, 2008.
Compensation, payroll taxes and other employee benefit expense increased $97,000, or 1.2%, to $8.4 million during the six months ended June 30, 2009 compared to $8.3 million during the comparable period in 2008. This increase resulted primarily from an increase in compensation and payroll taxes and health insurance expense, partially offset by a reduction in expense related to the ESOP. Due primarily to an increase in loan sales on the secondary market, total compensation, in the form of commissions, and payroll taxes increased $335,000, or 5.1%, to $6.9 million for the six months ended compared to $6.5 million during the comparable period in 2008. Expense related to the Company s health insurance plan increased $141,000 to $543,000 during the six months ended June 30, 2009 compared to $402,000 during the comparable period in 2008. Partially offsetting the increase in expense related to compensation and health insurance, expense related to the Company s ESOP decreased $362,000, to $106,000 during the six months ended June 30, 2009 compared to $468,000 during the comparable period in 2008. This decrease reflects the decrease in the Company s average share price during the six months ended June 30, 2009 compared to the comparable period in 2008.
Total Interest Income - Total interest income decreased $435,000, or 1.7%, to $24.8 million during the three months ended June 30, 2009 compared to $25.2 million for the three months ended June 30, 2008. Interest income on loans decreased $432,000, or 1.9%, to $22.1 million for the three months ended June 30, 2009 compared to $22.5 million for the comparable period of 2008. The decrease resulted primarily from a 24 basis point decrease in the average yield on loans to 5.77% for the three-month period ended June 30, 2009 from 6.01% for the comparable period in 2008. The decrease in interest income due to the decline in average yield was partially offset by an increase of $48.1 million, or 3.2%, in the average loan balance to $1.54 billion during the three-month period ended June 30, 2009 from $1.49 billion during the comparable period in 2008. Unrecognized interest income on non-accrual loans totaled $1.7 million during the three months ended June 30, 2009. This had the effect of reducing the average yield on loans during the same period by 44 basis points. Unrecognized interest income on non-accrual loans totaled $1.1 million during the three months ended June 30, 2008 effectively reducing the average yield on loans for that period by 29 basis points.
Net Interest Income - Net interest income increased by $702,000 or 7.2%, to $10.5 million during the three months ended June 30, 2009 as compared to $9.8 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 at a faster rate than our interest earning assets. The increase in net interest income resulted primarily from a 20 basis point increase in our interest rate spread to 2.13% for the three month period ended June 30, 2009 from 1.93% for the comparable period in 2008. The 20 basis point increase in the interest rate spread resulted from a 57 basis point decrease in the cost of interest bearing liabilities, which was partially offset by a 37 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 $48.4 million, or 35.5%, to $87.9 million for the three months ended June 30, 2009 from $136.3 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 $39.4 million for the three months ended June 30, 2009 compared to $11.8 million for the three months ended June 30, 2008. The average balance of the allowance for loan losses totaled $28.0 million for the three months ended June 30, 2009 compared to $14.7 million for the three months ended June 30, 2008.
Real estate owned expense decreased $468,000, or 54.6%, to $389,000 for the three months ended June 30, 2009 compared to $857,000 during the three months ended June 30, 2008, as a result of a significant gain recognized during the quarter ended June 30, 2009 on the sale of two properties. Real estate owned expense includes the net gain or loss recognized upon the sale of a real estate property acquired through foreclosure, as well as the net operating and carrying costs related to the properties. During the three months ended June 30, 2009, net operational expenses increased $312,000 to $947,000 from $635,000 during the comparable period in 2008. The increase in net operational expense compared to the prior period results from an increase in the number of foreclosed properties. The average balance of real estate owned totaled $39.4 million for the three months ended June 30, 2009 compared to $11.8 million for the three months ended June 30, 2008. Net gains on the sale of real estate owned totaled $558,000 during the three months ended June 30, 2009, compared to a net loss of $222,000 during the comparable period in 2008. Gains related to the sale of real estate owned during the second quarter of 2009 included a multi-family residential property that was originally acquired in the first quarter of 2009 that sold at a gain of $399,000 and a multi-family residential property that was originally acquired in the fourth quarter of 2008 that sold at a gain of $233,000.
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