New Waterstone(US:WSBF)2021-05-05 19:16Financial Performance - Net income for the community banking segment increased to $7.3 million for Q1 2021, up from $4.1 million in Q1 2020, reflecting a significant improvement in financial performance [164]. - Total net income for the three months ended March 31, 2021, was $21.3 million, a significant increase from $6.1 million in the same period of 2020, representing a 251.5% growth [171]. - Earnings per share (EPS) increased to $0.90 for basic and $0.89 for diluted, compared to $0.24 for both in the prior year [171]. - Annualized return on average assets rose to 3.99% from 1.21%, and return on average equity increased to 20.49% from 6.24% [171]. Income Sources - Net interest income rose by $1.3 million to $14.2 million in Q1 2021 compared to $12.9 million in Q1 2020, driven by decreased interest expense [164]. - The mortgage banking segment reported net income of $14.0 million for Q1 2021, a substantial increase from $2.0 million in Q1 2020 [168]. - Total noninterest income rose by $24.7 million, or 78.6%, to $56.2 million, driven primarily by a 78.9% increase in mortgage banking income [183]. Loan Activity - Mortgage loan originations reached $1.12 billion in Q1 2021, representing a 57.3% increase from $708.8 million in Q1 2020, primarily due to a surge in refinance products [168]. - Total loan origination volume increased by $421.4 million, or 61.3%, to $1.11 billion during the three months ended March 31, 2021 [183]. - Average loans increased by $95.2 million, or 6.1%, while the average balance of loans held for sale surged by $141.6 million, or 84.0% [180]. Noninterest Expenses - Total noninterest expenses increased by $7.8 million, or 22.1%, to $43.0 million for the three months ended March 31, 2021, compared to $35.2 million for the same period in 2020 [184]. - Compensation, payroll taxes, and other employee benefits in the mortgage banking segment rose by $9.9 million, or 50.9%, to $29.3 million due to increased commission expenses and branch manager pay [184]. Asset and Deposit Growth - Total assets increased by $13.4 million, or 0.6%, to $2.20 billion at March 31, 2021, driven by higher cash and cash equivalents and prepaid expenses [186]. - Cash and cash equivalents surged by $103.6 million, or 109.4%, to $198.4 million at March 31, 2021, reflecting increased deposits and advance payments by borrowers for taxes [187]. - Total deposits rose by $34.8 million to $1.22 billion at March 31, 2021, with increases in money market, savings, demand, and time deposits [194]. Loan Losses and Recoveries - The provision for loan losses was a negative $1.1 million for the quarter, compared to a provision of $750,000 in the same quarter of 2020 [181]. - The allowance for loan losses decreased by $1.0 million to $17.8 million at March 31, 2021, due to improved economic factors reducing the required allowance [192]. - Net recoveries for the three months ended March 31, 2021, were $27,000, or 0.01% of average loans annualized, compared to net recoveries of $54,000, or less than 0.02% for the same period in 2020 [220]. Regulatory Compliance and Capital Position - The company maintained all capital ratios above regulatory requirements as of March 31, 2021, indicating a strong capital position despite potential credit losses [161]. - WaterStone Bank exceeded all regulatory capital requirements and is considered "well capitalized" under regulatory guidelines as of March 31, 2021 [235]. - Shareholders' equity increased by $17.6 million to $430.7 million at March 31, 2021, primarily due to net income and additional paid-in capital from stock options exercised [198]. Interest Rate Management - Interest rate risk management strategies include emphasizing variable rate loans and reducing the expected average life of the investment portfolio [244]. - A 100 basis point increase in interest rates is projected to increase net interest income by 5.95%, while a decrease of the same magnitude would decrease it by 4.41% [248].