Waterstone Financial Inc. (WSBF) filed Quarterly Report for the period ended 2009-09-30.
Waterstone Mortgage Corp. is committed to providing customers with exceptional customer service. By providing clients with soundexpert advice as to the many different loan programs and options availablewe hope to take some of the mystery out of mortgage financing. For most peoplea 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 $76.25 million; its shares were traded at around $2.44 with and P/S ratio of 0.69.
Highlight of Business Operations:
General - Net loss for the nine months ended September 30, 2009 totaled $5.8 million, or $0.19 for both basic and diluted loss per share, compared to net loss of $30.1 million, or $0.99 for both basic and diluted loss per share, for the nine months ended September 30, 2008. The nine months ended September 30, 2009 generated an annualized loss on average assets of 0.41% and an annualized loss on average equity of 4.63%, compared to an annualized loss on average assets of 2.21% and an annualized loss on average equity of 20.02% for the comparable period in 2008. The net loss for the nine months ended September 30, 2009 reflects continuing deterioration in asset quality which resulted in a $19.1 million provision for loan losses during the current year. The current year to date provision represents a $15.5 million decrease from the $34.6 million provision for loan losses for the nine months ended September 30, 2008. Increases of $1.4 million in net interest income, $3.5 million in mortgage banking income, an $885,000 decrease in impairment charge on securities considered to be other than temporarily impaired and a decrease of $5.8 million in income tax expense for the first nine months of 2009 over the prior period were FDIC insurance expense increases of $1.7 million (which include the FDIC special assessment) and an increase in compensation expense of $524,000. 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 September 30, 2009 was 2.34% compared to 2.35% for the nine months ended September 30, 2008.
Interest income on loans decreased $3.2 million, or 4.7%, to $66.3 million during the nine months ended September 30, 2009 from $69.6 million during the nine months ended September 30, 2008. The decrease in interest income was primarily due to a 54 basis point decrease in the average yield on loans to 5.79% for the nine-month period ended September 30, 2009 from 6.23% for the comparable period in 2008. The decrease in interest income attributable to the decrease in the yield on loans was partially offset by a $40.3 million, or 2.7%, increase in the average balance of average loans outstanding to $1.53 billion during the nine months ended September 30, 2009 from $1.49 billion during the comparable period in 2008. In addition to the decrease in interest income due to a decrease in the average yield, $1.5 million of the overall decrease compared to the prior year related to interest income recognized on a loan during the nine months ended September 30, 2008 that had previously been recorded on the cost recovery method. The loan was originated to facilitate the sale of Company owned real estate during 2000 and the $1.5 million represented interest income that was collected but not recognized during the facilitation period. The loan was paid in full during the third quarter of 2008, which resulted in full recognition of interest collected in prior periods. This transaction had the affect of increasing the average yield on interest earning assets by 13 basis points for the nine months ended September 30, 2008. Unrecognized interest income on non-accrual loans totaled $4.9 million during the nine months ended September 30, 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 $3.2 million during the nine months ended September 30, 2008, effectively reducing the average yield on loans for that period by 28 basis points.
Compensation, payroll taxes and other employee benefit expense increased $524,000, or 4.1%, to $13.3 million during the nine months ended September 30, 2009 compared to $12.8 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 into the secondary market, total compensation, in the form of commissions, and payroll taxes increased $637,000, or 6.4%, to $10.8 million for the nine months ended September 30, 2009 compared to $10.1 million during the comparable period in 2008. Company paid health insurance expense increased $260,000 to $904,000 during the nine months ended September 30, 2009 compared to $645,000 during the comparable period in 2008. Partially offsetting the increase in compensation and health insurance expense, ESOP expense decreased $471,000, to $195,000 during the nine months ended September 30, 2009 compared to $666,000 during the comparable period in 2008. This decrease reflects the decrease in the Company s average share price during the nine months ended September 30, 2009 compared to the comparable period in 2008.
General - Net loss for the three months ended September 30, 2009 totaled $3.6 million, or $0.12 for both basic and diluted loss per share compared to net loss of $28.2 million, or $0.92 for both basic and diluted loss per share for the three months ended September 30, 2008. The three months ended September 30, 2009 generated an annualized loss on average assets of 0.74% and an annualized loss on average equity of 8.31%, compared to an annualized loss on average assets of 5.89% and an annualized loss on average equity of 56.14% for the comparable period in 2008. The decrease in our net loss in 2009 as compared with 2008 reflects a $14.4 million decrease in the provision for loan losses, an $8.6 million decrease in income tax expense and a $3.4 million increase in noninterest income, partially offset by a $1.1 million decrease in net interest income and a $683,000 increase in noninterest expense. Loan charge-off activity and specific loan reserves are discussed in additional detail in the Asset Quality section. The net interest margin for the three months ended September 30, 2009 was 2.46% compared to 2.69% for the three months ended September 30, 2008.
Interest income on loans decreased $3.2 million, or 12.7%, to $22.0 million for the three months ended September 30, 2009 compared to $25.2 million for the comparable period of 2008. The decrease resulted primarily from a 59 basis point decrease in the average yield on loans to 5.84% for the three-month period ended September 30, 2009 from 6.43% for the comparable period in 2008. The decrease in interest income due to the decline in average yield was compounded by a decrease of $62.2 million, or 4.0%, in the average loan balance to $1.49 billion during the three-month period ended September 30, 2009 from $1.55 billion during the comparable period in 2008. In addition to the decrease in interest income due to a decline in both average yield and average balance, $1.5 million of the overall decrease compared to the prior year related to interest income recognized on a loan during the nine months ended September 30, 2008 that had previously been recorded on the cost recovery method. The loan was originated to facilitate the sale of Company owned real estate during 2000 and the $1.5 million represented interest income that was collected but not recognized during the facilitation period. The loan was paid in full during the third quarter of 2008, which resulted in full recognition of interest collected in prior periods. This transaction had the affect of increasing the average yield on interest earning assets by 38 basis points for the three months ended September 30, 2008. Unrecognized interest income on non-accrual loans totaled $1.3 million during the three months ended September 30, 2009. This had the effect of reducing the average yield on loans during the same period by 35 basis points. Unrecognized interest income on non-accrual loans totaled $1.0 million during the three months ended September 30, 2008 effectively reducing the average yield on loans for that period by 26 basis points.
Compensation, payroll taxes and other employee benefit expense increased $427,000, or 9.5%, to $4.9 million during the three months ended September 30, 2009 compared to $4.5 million during the comparable period in 2008. This increase resulted primarily from an increase in compensation and payroll taxes. Due primarily to an increase in loan originations and sales in the secondary market, total compensation expense increased $302,000, or 8.4%, to $3.9 million for the three months ended compared to $3.6 million during the comparable period in 2008. In addition to an increase in compensation expenses, expense related to the Company s self funded health insurance plan increased $119,000, or 49.1%, to $361,000 during the three months ended September 30, 2009 compared to $242,000 during the comparable period in 2008.
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