New Waterstone(US:WSBF)2021-11-09 19:37Financial Performance - Net income for the community banking segment increased to $6.8 million for Q3 2021, up from $6.2 million in Q3 2020, with net interest income rising by $629,000 to $14.1 million [192]. - The mortgage banking segment reported a net income of $12.3 million for Q3 2021, down from $20.1 million in Q3 2020, with mortgage loan originations decreasing by $241.2 million, or 18.6% [196]. - Net income for the three months ended September 30, 2021, was $19,000, a decrease from $26,293 in the same period of 2020 [199]. - Net income for the nine months ended September 30, 2021, increased by $7.3 million to $21.6 million compared to $14.4 million for the same period in 2020 [219]. - Earnings per share increased to $2.45 for the nine months ended September 30, 2021, compared to $2.16 for the same period in 2020 [227]. Income and Expenses - Total noninterest income in the mortgage banking segment decreased by $21.9 million, or 29.9%, to $51.3 million in Q3 2021 compared to $73.1 million in Q3 2020 [196]. - Total noninterest income decreased by $22.8 million, or 30.1%, to $52.9 million for the three months ended September 30, 2021, compared to $75.8 million for the same period in 2020 [214]. - Total noninterest expenses decreased by $9.7 million, or 18.3%, to $43.3 million for the three months ended September 30, 2021, compared to $53.0 million for the same period in 2020 [216]. - Total noninterest income decreased by $12.9 million, or 7.4%, to $161.2 million during the nine months ended September 30, 2021, primarily due to a decrease in mortgage banking income [239]. Loan Performance - The provision for loan losses was a negative $750,000 for Q3 2021, compared to a provision of $1.0 million in Q3 2020 [193]. - The provision for loan losses was a negative $2.5 million for the nine months ended September 30, 2021, compared to a provision of $6.3 million for the same period in 2020 [237]. - The allowance for loan losses decreased by $2.0 million to $16.8 million at September 30, 2021, reflecting improvements in economic factors [249]. - Total loans past due increased by $3.3 million, or 42.2%, to $11.2 million at September 30, 2021, from $7.9 million at December 31, 2020 [274]. Capital and Assets - The company maintained capital ratios above regulatory requirements as of September 30, 2021, despite potential adverse impacts from credit losses [190]. - Shareholders' equity increased by $29.5 million to $442.6 million at September 30, 2021, primarily due to net income and additional paid-in capital [256]. - Total assets increased by $49.5 million, or 2.3%, to $2.23 billion at September 30, 2021, driven by increases in cash and cash equivalents and securities available for sale [244]. - Total deposits increased by $61.7 million to $1.25 billion at September 30, 2021, primarily due to a $76.4 million increase in money market and savings deposits [252]. Interest Income and Expense - Net interest income increased by $705,000, or 5.3%, to $14.1 million compared to $13.4 million in the prior year [210]. - Interest income on loans decreased by $2.1 million due to an 11.0% decrease in average loans and a three basis point decrease in average yield [211]. - Interest expense on time deposits decreased by $2.3 million, or 76.7%, primarily due to a 120 basis point decrease in average cost [211]. - Total interest-earning assets amounted to $2,091,496, generating a net interest margin of 2.68% [202]. Market Conditions - The gross margin on loans originated and sold decreased by 16.4% in Q3 2021 compared to Q3 2020, reflecting increased competition in the mortgage market [196]. - The mix of loan types shifted towards conventional loans, which comprised 76.1% of total originations in Q3 2021, compared to 75.6% in Q3 2020 [197]. - The percentage of origination volume related to purchase activity increased to 68.2% from 61.9% for the nine months ended September 30, 2021, compared to the same period in 2020 [224]. Cash Flow and Liquidity - Cash and cash equivalents increased by $263.8 million, or 278.4%, to $358.6 million at September 30, 2021, primarily due to increased deposits and advance payments by borrowers for taxes [245]. - The company had $470.0 million in long-term advances from the FHLB with maturities in 2027, 2028, and 2029, providing additional liquidity [294]. - The company had outstanding commitments to originate loans receivable of $44.6 million and unfunded commitments under construction loans of $69.2 million as of September 30, 2021 [296]. Regulatory Compliance - The company exceeded all regulatory capital requirements and is considered "well capitalized" under regulatory guidelines as of September 30, 2021 [299]. - A 100 basis point increase in interest rates is projected to increase net interest income by 8.08% over the next 12 months, while a decrease of the same magnitude would decrease it by 5.56% [313].