New Waterstone(WSBF) - 2021 Q4 - Annual Report

Mortgage Banking - Waterstone Financial's mortgage banking subsidiary, Waterstone Mortgage Corporation, originated $4.20 billion in mortgage loans held for sale during the year ended December 31, 2021[18]. - Waterstone Mortgage Corporation originated $4.23 billion in mortgage loans held for sale during the year ended December 31, 2021, a decrease of $201.7 million, or 4.6%, from the previous year[95]. - Total mortgage banking income decreased by $39.1 million, or 16.5%, to $197.6 million during the year ended December 31, 2021, compared to $236.7 million in 2020[95]. - The gross margin on loans originated and sold decreased by 11.6% for the year ended December 31, 2021, compared to the previous year[95]. - Loans originated for the purchase of residential property comprised 69.5% of total originations during the year ended December 31, 2021, up from 61.1% in 2020[96]. Loan Portfolio - As of December 31, 2021, WaterStone Bank's loan portfolio comprised 24.9% in one- to four-family residential loans ($300.5 million), 44.6% in multi-family residential loans ($538.0 million), and 20.8% in commercial real estate loans ($250.7 million)[29]. - As of December 31, 2021, total loans amounted to $1,205.8 million, with a decrease from $1,375.1 million in 2020, representing a decline of approximately 12.3%[31]. - One- to four-family residential mortgage loans totaled $300.5 million, accounting for 24.9% of total loans, down from 31.0% in 2020[35]. - Multi-family loans reached $538.0 million, representing 44.6% of total loans, a slight decrease from 44.8% in 2020[38]. - Commercial real estate loans totaled $250.7 million, or 20.8% of total loans, with an average loan balance of approximately $946,000[46][47]. Loan Losses and Non-Performing Assets - The allowance for loan losses was $15.8 million, compared to $18.8 million in 2020, indicating a reduction of 16.3%[31]. - Total non-accrual loans increased to $5.6 million as of December 31, 2021, compared to $5.5 million at December 31, 2020, reflecting a 0.46% ratio of non-accrual loans to total loans receivable[64]. - The total non-performing assets amounted to $5.7 million as of December 31, 2021, compared to $5.9 million at December 31, 2020[64]. - The company recorded $12,000 in loan principal charge-offs during the year ended December 31, 2021[64]. - The provision for loan losses was a credit of $3.99 million for the year ended December 31, 2021, compared to a provision of $6.34 million in 2020[87]. Deposits and Market Position - WaterStone Bank had a market share of 1.5% of all deposits in the Milwaukee-Waukesha metropolitan area, ranking 10th out of 46 financial institutions as of June 30, 2021[26]. - Total deposits increased by $48.5 million, or 4.1%, from December 31, 2020 to December 31, 2021, driven by a 25.5% increase in total transaction accounts[117]. - Total deposits increased to $1,250.845 million in 2021, up from $1,161.936 million in 2020, representing a growth of 7.6%[120]. - Certificates of deposit comprised 50.8% of total customer deposits as of December 31, 2021, with a weighted average cost of 0.51%[113]. - The average balance of transaction accounts was $575.350 million in 2021, with a weighted average yield of 0.17%[120]. Regulatory Compliance and Capital - WaterStone Bank's capital to assets ratio was 17.08% as of December 31, 2021, significantly above the minimum requirement of 6%[152]. - As of December 31, 2021, WaterStone Bank was classified as well-capitalized with a common equity Tier 1 ratio of 24.50% and a total risk-based capital ratio of 25.52%[163]. - WaterStone Bank's Required Liquidity Ratio was 8.0% as of December 31, 2021, in compliance with Wisconsin regulations[167]. - WaterStone Bank must maintain a minimum common equity Tier 1 capital ratio of 4.5% and a Tier 1 leverage ratio of 4.0% under federal regulations[153]. - The Federal Deposit Insurance Corporation insures deposits at WaterStone Bank up to a maximum of $250,000[147]. Investment Portfolio - Waterstone Financial's investment subsidiary, Wauwatosa Investments, Inc., manages the majority of the consolidated investment portfolio[20]. - The investment portfolio is primarily comprised of securities classified as available for sale, with no investment securities sold during the years ended December 31, 2021, 2020, and 2019[99]. - As of December 31, 2021, the mortgage-backed securities portfolio totaled $19.5 million with a weighted average yield of 2.34% and a weighted average remaining life of 6.3 years[102]. - The collateralized mortgage obligations portfolio amounted to $99.3 million, yielding a weighted average of 1.54% and having a weighted average remaining life of 3.5 years[103]. - Private-label mortgage-backed securities totaled $2.9 million, with a weighted average yield of 2.80% and a weighted average remaining life of 0.8 years[104]. Employee and Corporate Governance - The company had 870 full-time equivalent employees as of December 31, 2021, with a focus on attracting and retaining top talent[123]. - The company offers comprehensive compensation and benefits packages, including a 401k Plan and Employee Stock Ownership Plan[124]. - WaterStone Bank was rated "satisfactory" in its Community Reinvestment Act compliance during its most recent regulatory examination[177]. - Waterstone Financial is subject to regulatory capital requirements that are equally stringent as those applicable to its subsidiary depository institutions[186]. - Regulation O requires that any proposed loan to an insider be approved in advance by a majority of the board of directors[172].