New Waterstone(WSBF) - 2020 Q2 - Quarterly Report

Financial Performance - Net income for the community banking segment was $4.1 million for Q2 2020, down from $5.8 million in Q2 2019, while net interest income increased to $13.7 million from $13.5 million [189]. - The mortgage banking segment reported a net income of $16.8 million for Q2 2020, significantly up from $3.9 million in Q2 2019, with mortgage loan originations increasing by 44.1% to $1.14 billion [193]. - Net income for the three months ended June 30, 2020, was $20.9 million, up from $9.6 million in 2019, representing a 117.5% increase [197]. - Net income for the six months ended June 30, 2020 was $27.0 million, compared to $16.2 million for the same period in 2019, representing a year-over-year increase of 66.8% [221]. - Net income in the mortgage banking segment totaled $18.7 million for the six months ended June 30, 2020, compared to $4.6 million for the same period in 2019 [218]. - Earnings per share (EPS) increased to $0.86 for basic and $0.85 for diluted, compared to $0.37 for both in the prior year [197]. - Earnings per share for the six months ended June 30, 2020 was $1.08, compared to $0.61 for the same period in 2019 [221]. Income and Expenses - Total noninterest income for the community banking segment rose by $1.9 million, primarily due to increased loan fees, including prepayment fees and fees from loan swaps [191]. - Total mortgage banking noninterest income increased by 86.9% to $64.2 million in Q2 2020, driven by higher loan volume and improved gross margins [193]. - Total noninterest income rose by $31.7 million, or 90.1%, to $66.9 million during the three months ended June 30, 2020, compared to $35.2 million in 2019 [208]. - Total noninterest expenses increased by $12.3 million, or 34.9%, to $47.7 million for the three months ended June 30, 2020 compared to $35.4 million for the same period in 2019 [210]. - Total noninterest expenses increased by $18.2 million, or 28.1%, to $82.9 million during the six months ended June 30, 2020 [236]. - Total compensation, payroll taxes, and other employee benefits increased by $9.6 million, or 42.3%, to $32.1 million for the three months ended June 30, 2020, compared to $22.6 million for the same period in 2019 [196]. - Compensation, payroll taxes, and other employee benefits increased by $12.9 million, or 33.4%, to $51.5 million for the six months ended June 30, 2020 compared to $38.6 million for the same period in 2019 [220]. Loan Performance - The provision for loan losses was $4.3 million for Q2 2020, compared to no provision in Q2 2019, reflecting adjustments for increased unemployment rates [190]. - The provision for loan losses was $4.5 million for the three months ended June 30, 2020, compared to $30,000 in the same period of 2019, reflecting economic challenges due to the COVID-19 pandemic [206]. - Provision for loan losses was $5.1 million for the six months ended June 30, 2020, compared to a negative provision of $700,000 for the same period in 2019 [213]. - The provision for loan losses recorded during the current year reflects an increased allocation related to the economic conditions due to the COVID-19 pandemic [278]. - The total loan modifications under the CARES Act amounted to $121.8 million, representing 8.49% of total loans receivable as of June 30, 2020 [268]. - The company modified 191 loans totaling $113.9 million under COVID-19 payment deferral programs, with modifications ranging from 90 to 180 days [182]. - The company modified $113.9 million of loans for a period ranging from 90 to 180 days, consisting of principal payment deferral as of June 30, 2020 [266]. Asset and Liability Management - Total assets increased by $221.2 million, or 11.1%, to $2.22 billion at June 30, 2020, from $2.00 billion at December 31, 2019 [238]. - Total deposits increased by $89.9 million to $1.16 billion at June 30, 2020, primarily from money market and savings deposits [247]. - Total borrowings increased by $115.5 million, or 23.9%, to $599.1 million at June 30, 2020, with significant short-term FHLB borrowings [248]. - The company had $727.9 million in certificates of deposit scheduled to mature in one year or less [291]. - Total contractual obligations as of June 30, 2020, amounted to $1.77 billion, with significant portions due within one year [297]. - The company is considered "well capitalized" under regulatory guidelines, exceeding all regulatory capital requirements [295]. Market and Economic Conditions - The company experienced a significant increase in refinance products, which rose by $410.3 million, or 417.0%, due to decreasing mortgage rates [193]. - The gross margin on loans originated and sold increased by 27.0% in Q2 2020, reflecting heightened industry demand due to low mortgage rates [193]. - A 100 basis point increase in interest rates is projected to increase net interest income by 1.90% over the next 12 months, while a decrease of 100 basis points would decrease it by 3.76% [308]. - 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 [304]. Equity and Shareholder Information - Shareholders' equity decreased by $8.1 million to $385.6 million at June 30, 2020, primarily due to dividend declarations and stock repurchases [251]. - The company repurchased 9,727,753 shares at an average price of $14.25 under previously approved stock repurchase plans [294].