New Waterstone(US:WSBF)2023-08-02 20:08Financial Performance - Net income for the community banking segment was $5.2 million for the three months ended June 30, 2023, down from $6.3 million in the same period of 2022 [163]. - Net income for the six months ended June 30, 2023, totaled $10.0 million, a decrease from $10.6 million for the same period in 2022 [186]. - Earnings per share (basic) decreased to $0.30 for the six months ended June 30, 2023, from $0.59 for the same period in 2022 [195]. - The mortgage banking segment reported a net loss of $4.0 million for the six months ended June 30, 2023, compared to a net income of $2.8 million for the same period in 2022 [192]. Income and Expenses - Net interest income decreased by $472,000 to $13.2 million for the three months ended June 30, 2023, compared to $13.7 million in 2022 [163]. - Total noninterest income decreased by $7.7 million, or 24.7%, to $23.5 million, primarily due to declines in mortgage banking income and other income [182]. - Total noninterest expenses decreased by $4.1 million, or 11.8%, to $30.9 million for the three months ended June 30, 2023, compared to $35.1 million for the same period in 2022 [184]. - Total noninterest income decreased by $19.0 million, or 31.1%, to $42.1 million, mainly due to declines in mortgage banking income and service charges on loans and deposits [208]. - Total noninterest expenses decreased by $10.0 million, or 14.2%, to $60.0 million for the six months ended June 30, 2023, compared to $70.0 million for the same period in 2022 [210]. Loans and Mortgage Banking - Mortgage loans originated for sale totaled $623.3 million, a decrease of $155.4 million, or 20.0%, from $778.8 million in the prior year [167]. - Mortgage loan originations decreased by $421.2 million, or 28.3%, to $1.07 billion for the six months ended June 30, 2023, compared to $1.49 billion for the same period in 2022 [192]. - Mortgage banking income fell by $7.5 million, or 25.5%, to $21.9 million, resulting from a decrease in loan origination volume by $185.6 million, or 24.8% [183]. - Mortgage banking income fell by $19.0 million, or 32.9%, to $38.7 million, attributed to a $468.0 million, or 32.4%, decrease in total loan origination volume [209]. Credit Losses and Provisions - The provision for credit losses was $158,000 for the three months ended June 30, 2023, compared to a negative provision of $41,000 in the same period of 2022 [164]. - The provision for credit losses was $186,000 for the three months ended June 30, 2023, compared to a negative provision of $48,000 for the same period in 2022 [180]. - Provision for credit losses was $546,000 for the six months ended June 30, 2023, compared to a negative provision of $181,000 for the same period in 2022 [187]. - The allowance for credit losses increased by $617,000 to $18.4 million at June 30, 2023, with a provision for credit losses of $623,000 during the same period [219]. Assets and Deposits - Total deposits decreased by 1.0% to $1.19 billion as of June 30, 2023, with a minimal deposit outflow in the first half of the year [161]. - Total assets grew to $2.16 billion as of June 30, 2023, compared to $1.99 billion in the prior year [178]. - Total assets increased by $198.2 million, or 9.8%, to $2.23 billion at June 30, 2023, primarily due to an increase in loans held for investment and loans held for sale [213]. - Cash and cash equivalents rose by $14.5 million, or 31.2%, to $61.2 million at June 30, 2023, reflecting increased funding sources from borrowings [214]. Interest Income and Expense - Interest income on loans increased by $7.6 million, or 52.3%, to $22.2 million, driven by a 98 basis point increase in average yield and a $339.6 million, or 27.2%, increase in average loans held for investment [179]. - Interest expense on time deposits rose by $4.3 million, or 794.3%, to $4.9 million, attributed to a 243 basis point increase in average cost and a $111.1 million increase in average balance [179]. - Interest expense on time deposits surged by $6.8 million, or 621.8%, to $7.9 million, primarily due to a 201 basis point increase in average cost [205]. Capital and Shareholder Equity - The company remains well capitalized with a Total Capital ratio of 22.43% as of June 30, 2023 [161]. - Shareholders' equity decreased by $14.7 million to $355.8 million at June 30, 2023, primarily due to dividends and stock repurchases [259]. - WaterStone Bank exceeded all regulatory capital requirements and is considered "well capitalized" under regulatory guidelines as of June 30, 2023 [261]. Interest Rate Risk Management - The company has implemented strategies to manage interest rate risk, including emphasizing variable rate loans and shortening the expected average life of the investment portfolio [265]. - The Asset/Liability Committee meets at least weekly to review asset/liability policies and interest rate risk position [264]. - The company’s interest rate risk exposure is evaluated quarterly through simulation analysis [266]. - As of June 30, 2023, a 100 basis point instantaneous increase in interest rates is projected to decrease forecast net interest income over the next 12 months by 2.37% [269]. Legal and Regulatory Matters - The company is currently involved in legal proceedings initiated by Mutual of Omaha Mortgage, Inc. regarding employee hiring practices [273]. - There have been no changes in the company's internal control over financial reporting that materially affect its effectiveness [272]. - The company’s disclosure controls and procedures have been evaluated as effective by the CEO and CFO [271].