New Waterstone(US:WSBF)2024-11-04 21:14Financial Performance - Net income for the community banking segment was $4.7 million for Q3 2024, up from $4.5 million in Q3 2023, reflecting a 4.4% increase[174]. - Earnings per share increased to $0.26 in Q3 2024 from $0.16 in Q3 2023, reflecting a significant improvement in profitability[180]. - Annualized return on average assets improved to 0.83% in Q3 2024 from 0.58% in Q3 2023, indicating better asset utilization[180]. - Annualized return on average equity increased to 5.55% in Q3 2024 from 3.63% in Q3 2023, showcasing enhanced shareholder value[180]. - Net income for the nine months ended September 30, 2024, was $11.7 million, down from $14.6 million in the same period of 2023[201]. Income and Expenses - Net interest income decreased by $181,000 to $12.3 million in Q3 2024 compared to $12.4 million in Q3 2023, primarily due to a $3.4 million increase in interest expense on deposits and borrowings[174]. - Total compensation and employee benefits decreased by $1.3 million, or 7.3%, to $15.9 million in Q3 2024 compared to $17.2 million in Q3 2023, driven by reduced headcount[179]. - Total noninterest expenses decreased by $1.5 million, or 4.9%, to $28.6 million compared to $30.0 million in the prior year[197]. - Compensation, payroll taxes, and other employee benefits expense decreased by $2.6 million, or 5.3%, to $47.6 million for the nine months ended September 30, 2024[207]. Mortgage Banking - The mortgage banking segment reported a net loss of $50,000 in Q3 2024, an improvement from a net loss of $1.4 million in Q3 2023[177]. - Mortgage loan originations decreased by $38.8 million, or 6.5%, to $558.7 million in Q3 2024 compared to $597.6 million in Q3 2023[177]. - Total mortgage banking noninterest income decreased by $66,000, or 0.3%, to $21.4 million in Q3 2024 compared to $21.5 million in Q3 2023[177]. - Mortgage banking income increased due to a rise in gross margin on loans originated and sold, which increased by 5.9% despite a decrease in loan origination volumes[194]. - The company originated $1.68 billion in mortgage loans during the nine months ended September 30, 2024, a 0.9% increase from $1.66 billion in the prior year[204]. - Mortgage banking income rose by $6.3 million, or 10.6%, to $66.2 million during the nine months ended September 30, 2024, compared to $59.9 million in the prior year[222]. Interest Income and Expense - Interest income on loans increased by $2.8 million, or 11.6%, to $26.6 million, driven by a 39 basis point increase in average yield and a $60.9 million, or 3.7%, increase in average loans held for investment[189]. - Interest expense on time deposits rose by $2.7 million, or 44.1%, to $9.0 million, primarily due to a 111 basis point increase in average cost of time deposits[189]. - Interest expense on time deposits rose by $10.8 million, or 76.5%, to $25.0 million, primarily due to a 163 basis point increase in average cost[216]. - Interest expense on borrowings increased by $5.1 million, or 30.5%, to $21.6 million due to a 53 basis point increase in the cost of borrowings[216]. Asset and Liability Management - Total assets increased by $30.9 million, or 1.4%, to $2.24 billion at September 30, 2024, from $2.21 billion at December 31, 2023[227]. - Total deposits increased by $73.2 million to $1.26 billion at September 30, 2024, driven by a $73.9 million increase in time deposits[234]. - Loans receivable held for investment increased by $31.2 million to $1.70 billion at September 30, 2024, primarily due to increases in multi-family, construction, and commercial real estate loans[230]. - Average balance of borrowings increased by $15.8 million to $600.6 million during the three months ended September 30, 2024[189]. Credit Quality - The provision for credit losses was negative $377,000 for the three months ended September 30, 2024, compared to a provision of $445,000 for the same period in 2023[191]. - The allowance for credit losses decreased to $18.2 million at September 30, 2024, with a negative provision of $439,000 for the nine months ended September 30, 2024[232]. - Total non-accrual loans increased by $560,000, or 11.6%, to $5.4 million as of September 30, 2024, compared to $4.8 million as of December 31, 2023[244]. - The ratio of non-accrual loans to total loans receivable was 0.32% at September 30, 2024, up from 0.29% at December 31, 2023[244]. - Total loans past due decreased by $628,000, or 5.6%, to $10.6 million at September 30, 2024, from $11.3 million at December 31, 2023[248]. Regulatory and Compliance - The company exceeded all regulatory capital requirements and is considered "well capitalized" under regulatory guidelines as of September 30, 2024[269]. - The effective income tax rate increased to 19.7% for the three months ended September 30, 2024, compared to 13.3% in the same period of 2023[199]. - Income tax expense totaled $4.3 million for the nine months ended September 30, 2024, with an effective tax rate of 24.3%, compared to 19.0% in the prior year[226]. - There have been no changes in the Company's internal control over financial reporting during the fiscal quarter[279]. - The Company has not identified any material effects on its internal control over financial reporting[279]. Cash Flow and Liquidity - Primary uses of cash included $1.66 billion in funding loans held for sale and $145.0 million for payoffs of long-term borrowings during the nine months ended September 30, 2024[258]. - Primary sources of cash included $1.74 billion in proceeds from the sale of loans held for sale and $150.0 million in long-term borrowings during the nine months ended September 30, 2024[259]. - As of September 30, 2024, the company had $41.4 million in cash and cash equivalents, down from $62.3 million in 2023[262]. - The company had $325.3 million in uninsured deposits from approximately 1,354 customers as of September 30, 2024[264]. Shareholder Actions - Shareholders' equity decreased by $2.1 million to $342.0 million at September 30, 2024, primarily due to dividends declared and stock repurchases[238]. - The company authorized a stock repurchase program for 2,000,000 shares, with approximately 1.9 million shares remaining as of September 30, 2024[268]. Interest Rate Risk Management - At September 30, 2024, a 100 basis point increase in interest rates is projected to decrease net interest income by 7.08%[275]. - 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[272].