UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  July 27, 2020
WATERSTONE FINANCIAL, INC.
(Exact name of Registrant as specified in its charter)

Maryland
(State or Other Jurisdiction
of Incorporation)
001-36271
(Commission File Number)
90-1026709
(I.R.S. Employer Identification No.)

11200 W. Plank Ct, Wauwatosa, Wisconsin 53226
(Address of principal executive offices)

(414) 761-1000
Registrant's telephone number, including area code

Not Applicable
(Former Name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
 Trading Symbol
 
Name of each exchange on which registered
Common Stock, $0.01 Par Value
 
WSBF 
 
The NASDAQ Stock Market, LLC

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
 
 
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
 
 
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities and Exchange Act of 1934 (§240.12b-2 of this chapter).

¨ Emerging growth company

¨ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
 


Item 2.02 Results of Operations and Financial Condition.

On July 27, 2020, Waterstone Financial, Inc. issued a press release announcing its financial results for the quarter and six months ended June 30, 2020.  A copy of the press release is being furnished to the Securities and Exchange Commission as Exhibit 99.1 attached to this report and incorporated by reference.


Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit No.          Description

99.1          Press release of Waterstone Financial, Inc. issued July 27, 2020.

 
 








 
 
 
- 2 -

 
 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


Waterstone Financial, Inc.
   


Date:  July 27, 2020
/s/ Mark R. Gerke

Name: Mark R. Gerke

Title: Chief Financial Officer


 





 
 
 
 
 
- 3 -

 
 
 
EXHIBIT INDEX




Exhibit No.    Description
 
 99.1                          Press release of Waterstone Financial, Inc. issued July 27, 2020.

 
 







 
 
 
 
- 4 -
Exhibit 99.1
 
 
WATERSTONE FINANCIAL, INC.
WATERSTONE BANK
11200 W. PLANK CT.
WAUWATOSA, WI 53226
 
Contact:  Mark R. Gerke
Chief Financial Officer
414.459.4012
markgerke@wsbonline.com

Exhibit 99.1

Waterstone Financial, Inc. Announces Results of Operations for the Quarter and Six Months Ended June 30, 2020.
WAUWATOSA, WI – 07/27/2020 – Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income of $20.9 million, or $0.85 per diluted share for the quarter ended June 30, 2020 compared to $9.6 million, or $0.37 per diluted share for the quarter ended June 30, 2019. Net income per diluted share was $1.08 for the six months ended June 30, 2020 compared to net income per diluted share of $0.61 for the six months ended June 30, 2019.
“Our success this quarter exemplifies the synergies that exist between our community bank and its wholly owned independent mortgage subsidiary”, said Douglas Gordon, CEO of Waterstone Financial, Inc. “The funding and capital provided by the Bank, combined with the exceptional sales culture of the mortgage company resulted in record quarterly earnings. Waterstone Mortgage reached a new quarterly record, achieving more than $1.1 billion in loan originations, helping nearly 5,000 homeowners either purchase or refinance a residence. In the Community Bank segment, we successfully launched our new digital banking platform, which will provide our consumer and business customers with additional banking tools and an enhanced user experience. Our employees have embraced the challenges in this unprecedented environment and navigated through the turbulent times, exhibiting their continued hard work and dedication.”

Highlights of the Quarter Ended June 30, 2020

Waterstone Financial, Inc. (Consolidated)

Consolidated net income of Waterstone Financial, Inc. totaled $20.9 million for the quarter ended June 30, 2020, compared to $9.6 million for the quarter ended June 30, 2019.
Consolidated return on average assets was 3.87% for the quarter ended June 30, 2020 compared to 1.95% for the quarter ended June 30, 2019.
Consolidated return on average equity was 22.39% for the quarter ended June 30, 2020 and 9.96% for the quarter ended June 30, 2019.
Dividends declared totaled $0.12 per share and we repurchased $6.1 million of shares during the quarter ended June 30, 2020 as a result of our strong financial position.







- 5 -

Community Banking Segment

Pre-tax income totaled $4.7 million for the quarter ended June 30, 2020, which represents a 36.5% decrease compared to $7.4 million for the quarter ended June 30, 2019.
Net interest income totaled $13.7 million for the quarter ended June 30, 2020, which represents a 1.3% increase compared to $13.5 million for the quarter ended June 30, 2019.
Average loans held for investment totaled $1.42 billion during the quarter ended June 30, 2020, which represents an increase of $44.5 million, or 3.2%, compared to $1.38 billion for the quarter ended June 30, 2019. The $29.8 million of loans originated throughout the quarter ended June 30, 2020 for the Paycheck Protection Program (PPP) contributed to the growth. Average loans held for investment increased $27.5 million, or 7.9% annualized, compared to $1.39 billion for the quarter ended March 31, 2020.
Net interest margin decreased 20 basis points to 2.62% for the quarter ended June 30, 2020 compared to 2.82% for the quarter ended June 30, 2019, which was a result of the decrease in yield of interest-earning assets as rates on loans, investments, and cash decreased. Net interest margin decreased six basis points compared to 2.68% for the quarter ended March 31, 2020.
The segment had a $4.3 million provision for loan losses for the quarter ended June 30, 2020 compared to no provision for loan losses for the quarter ended June 30, 2019. The provision expense recorded during the second quarter of 2020 primarily consisted of an increased allocation related to the economic qualitative factor, across all portfolio segments, driven by the pandemic and its significant impact on the economy and employment. Net recoveries totaled $8,000 for the quarter ended June 30, 2020, compared to net recoveries of $26,000 for the quarter ended June 30, 2019.
Noninterest income increased $1.9 million for the quarter ended June 30, 2020 compared to the quarter ended June 30, 2019 as fees earned on swaps and prepayment penalty fees increased.
Noninterest expense increased $394,000 for the quarter ended June 30, 2020 compared to the quarter ended June 30, 2019. Compensation, payroll taxes and other employee benefits expense increased $235,000 as salaries increased due to annual merit increases and additional branches added in late 2019.  In addition, the increase in total compensation reflects an increase in variable and incentive based awards. Data processing expense increased $185,000 as we transitioned to a new digital platform in the quarter.
The efficiency ratio was 45.86% for the quarter ended June 30, 2020, compared to 49.52% for the quarter ended June 30, 2019.
Average deposits (excluding escrow accounts) totaled $1.13 billion during the quarter ended June 30, 2020, an increase of $85.3 million, or 8.2%, compared to $1.04 billion during the quarter ended June 30, 2019. Average deposits increased $50.2 million, or 18.7% annualized compared to the $1.08 billion for the quarter ended March 31, 2020 as the average deposit account balance increased approximately 6.5%.
Nonperforming assets as percentage of total assets was 0.28% at June 30, 2020, 0.36% at March 31, 2020, and 0.37% at June 30, 2019.
Past due loans as percentage of total loans was 0.45% at June 30, 2020, 0.78% at March 31, 2020, and 0.61% at June 30, 2019.
The PPP loans totaled $29.8 million as of June 30, 2020.
The Company had modified 191 loans aggregating $113.9 million consisting of payment of interest (deferral of principal) for a period ranging from 90 to 180 days as of June 30, 2020. In addition, the Company had modified 16 loans aggregating $7.9 million consisting of the deferral of principal and interest for a period of three to eight months.

Mortgage Banking Segment

Pre-tax income totaled $23.2 million for the quarter ended June 30, 2020, compared to $5.4 million for the quarter ended June 30, 2019.
Loan originations increased $349.4 million, or 44.1%, to $1.14 billion during the quarter ended June 30, 2020, compared to $793.3 million during the quarter ended June 30, 2019. Origination volume relative to purchase activity accounted for 55.5% of originations for the quarter ended June 30, 2020 compared to 87.6% of total originations for the quarter ended June 30, 2019.
Mortgage banking income increased $29.9 million, or 86.9%, to $64.2 million for the quarter ended June 30, 2020, compared to $34.4 million for the quarter ended June 30, 2019.
Gross margin on loans sold increased to 5.45% for the quarter ended June 30, 2020, compared to 4.29% for the quarter ended June 30, 2019.
Total compensation, payroll taxes and other employee benefits increased $9.6 million, or 42.3%, to $32.1 million during the quarter ended June 30, 2020 compared to $22.6 million during the quarter ended June 30, 2019.  The increase primarily related to increased commission expense and branch manager compensation driven by increased loan origination volume and branch profitability.
Other noninterest expense increased $2.1 million, or 173.1%, to $3.2 million during the quarter ended June 30, 2020 compared to $1.2 million during the quarter ended June 30, 2019.  The increase related to a $1.5 million increase in the provision for losses on loans sold to the secondary market in anticipation of increased losses that result from both early payoff and early default provisions with investors.  If triggered, the default provisions require a return of servicing release premium or an obligation to repurchase the loan.  The increased provision is driven by both an increase in the number and volume of loans sold, as well as expectations of increased defaults resulting from COVID-19 pandemic challenges faced by borrowers.




- 6 -

About Waterstone Financial, Inc.

Waterstone Financial, Inc. is the savings and loan holding company for WaterStone Bank. WaterStone Bank was established in 1921 and offers a full suite of personal and business banking products. The Bank has branches in Wauwatosa/State St, Brookfield, Fox Point/North Shore, Franklin/Hales Corners, Germantown/Menomonee Falls, Greenfield/Loomis Rd, Oak Creek/27th St, Oak Creek/Howell Ave, Oconomowoc/Lake Country, Pewaukee, Waukesha/Brookfield, West Allis/Greenfield Ave, and West Allis/National Ave, Wisconsin along with a commercial lending office in Minneapolis, Minnesota. WaterStone Bank is the parent company to Waterstone Mortgage, which has the ability to lend in 48 states. For more information about WaterStone Bank, go to http://www.wsbonline.com.

Forward-Looking Statements

This press release contains statements or information that may constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements include, without limitation, statements regarding expected financial and operating activities and results that are preceded by, followed by, or that include words such as “may,” “expects,” “anticipates,” “estimates” or “believes.”  Any such statements are based upon current expectations that involve a number of risks and uncertainties and are subject to important factors that could cause actual results to differ materially from those anticipated by the forward-looking statements.  Factors that might cause such a difference include changes in interest rates; demand for products and services; the degree of competition by traditional and nontraditional competitors; changes in banking regulation or actions by bank regulators; changes in tax laws; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in local real estate values; changes in the national and local economies, including significant disruption to financial market and other economic activity caused by the outbreak of COVID-19; and other factors, including risk factors referenced in Item 1A. Risk Factors in Waterstone’s most recent Annual Report on Form 10-K and as may be described from time to time in Waterstone’s subsequent SEC filings, which factors are incorporated herein by reference.  Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect only Waterstone’s belief as of the date of this press release.













- 7 -

WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF INCOME
 
(Unaudited)
 
 
 
For The Three Months Ended June 30,
   
For The Six Months Ended June 30,
 
 
 
2020
   
2019
   
2020
   
2019
 
 
 
(In Thousands, except per share amounts)
 
Interest income:
                       
Loans
 
$
18,493
   
$
18,026
   
$
36,180
   
$
35,130
 
Mortgage-related securities
   
670
     
764
     
1,372
     
1,523
 
Debt securities, federal funds sold and short-term investments
   
698
     
1,123
     
1,761
     
2,432
 
Total interest income
   
19,861
     
19,913
     
39,313
     
39,085
 
Interest expense:
                               
Deposits
   
3,947
     
4,344
     
8,265
     
8,334
 
Borrowings
   
2,665
     
2,588
     
5,273
     
4,834
 
Total interest expense
   
6,612
     
6,932
     
13,538
     
13,168
 
Net interest income
   
13,249
     
12,981
     
25,775
     
25,917
 
Provision for loan losses
   
4,500
     
30
     
5,285
     
(650
)
Net interest income after provision for loan losses
   
8,749
     
12,951
     
20,490
     
26,567
 
Noninterest income:
                               
Service charges on loans and deposits
   
2,231
     
390
     
2,712
     
769
 
Increase in cash surrender value of life insurance
   
520
     
507
     
873
     
851
 
Mortgage banking income
   
63,774
     
34,105
     
94,180
     
57,464
 
Other
   
379
     
188
     
603
     
363
 
Total noninterest income
   
66,904
     
35,190
     
98,368
     
59,447
 
Noninterest expenses:
                               
Compensation, payroll taxes, and other employee benefits
   
36,889
     
27,074
     
61,290
     
47,713
 
Occupancy, office furniture, and equipment
   
2,534
     
2,680
     
5,275
     
5,456
 
Advertising
   
864
     
963
     
1,764
     
1,921
 
Data processing
   
1,095
     
869
     
2,101
     
1,638
 
Communications
   
317
     
353
     
655
     
681
 
Professional fees
   
1,077
     
789
     
2,909
     
1,484
 
Real estate owned
   
33
     
19
     
44
     
51
 
Loan processing expense
   
1,208
     
879
     
2,284
     
1,684
 
Other
   
3,672
     
1,729
     
6,575
     
4,076
 
Total noninterest expenses
   
47,689
     
35,355
     
82,897
     
64,704
 
Income before income taxes
   
27,964
     
12,786
     
35,961
     
21,310
 
Income tax expense
   
7,016
     
3,143
     
8,944
     
5,125
 
Net income
 
$
20,948
   
$
9,643
   
$
27,017
   
$
16,185
 
Income per share:
                               
Basic
 
$
0.86
   
$
0.37
   
$
1.08
   
$
0.61
 
Diluted
 
$
0.85
   
$
0.37
   
$
1.08
   
$
0.61
 
Weighted average shares outstanding:
                               
Basic
   
24,464
     
26,242
     
24,934
     
26,370
 
Diluted
   
24,513
     
26,412
     
25,071
     
26,572
 



- 8 -

WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 
 
 
June 30,
   
December 31,
 
 
 
2020
   
2019
 
 
 
(Unaudited)
       
Assets
 
(In Thousands, except per share amounts)
 
Cash
 
$
63,636
   
$
52,814
 
Federal funds sold
   
11,992
     
12,704
 
Interest-earning deposits in other financial institutions and other short term investments
   
1,291
     
8,782
 
Cash and cash equivalents
   
76,919
     
74,300
 
Securities available for sale (at fair value)
   
164,112
     
178,476
 
Loans held for sale (at fair value)
   
383,389
     
220,123
 
Loans receivable
   
1,433,803
     
1,388,031
 
Less: Allowance for loan losses
   
17,734
     
12,387
 
Loans receivable, net
   
1,416,069
     
1,375,644
 
 
               
Office properties and equipment, net
   
24,183
     
25,028
 
Federal Home Loan Bank stock (at cost)
   
26,720
     
21,150
 
Cash surrender value of life insurance
   
70,718
     
69,665
 
Real estate owned, net
   
702
     
748
 
Prepaid expenses and other assets
   
54,761
     
31,213
 
Total assets
 
$
2,217,573
   
$
1,996,347
 
 
               
Liabilities and Shareholders' Equity
               
Liabilities:
               
Demand deposits
 
$
171,016
   
$
130,063
 
Money market and savings deposits
   
247,233
     
197,942
 
Time deposits
   
739,417
     
739,771
 
Total deposits
   
1,157,666
     
1,067,776
 
 
               
Borrowings
   
599,102
     
483,562
 
Advance payments by borrowers for taxes
   
20,828
     
4,212
 
Other liabilities
   
54,358
     
47,111
 
Total liabilities
   
1,831,954
     
1,602,661
 
 
               
Shareholders' equity:
               
Preferred stock
   
-
     
-
 
Common stock
   
258
     
271
 
Additional paid-in capital
   
192,762
     
211,997
 
Retained earnings
   
205,863
     
197,393
 
Unearned ESOP shares
   
(16,023
)
   
(16,617
)
Accumulated other comprehensive income, net of taxes
   
2,759
     
642
 
Total shareholders' equity
   
385,619
     
393,686
 
Total liabilities and shareholders' equity
 
$
2,217,573
   
$
1,996,347
 
 
               
Share Information
               
Shares outstanding
   
25,843
     
27,148
 
Book value per share
 
$
14.92
   
$
14.50
 
Closing market price
 
$
14.83
   
$
19.03
 
Price to book ratio
   
99.40
%
   
131.24
%





- 9 -

WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
 
SUMMARY OF KEY QUARTERLY FINANCIAL DATA
 
(Unaudited)
 
                               
   
At or For the Three Months Ended
 
   
June 30,
   
March 31,
   
December 31,
   
September 30,
   
June 30,
 
   
2020
   
2020
   
2019
   
2019
   
2019
 
   
(Dollars in Thousands, except per share amounts)
       
Condensed Results of Operations:
                             
Net interest income
 
$
13,249
   
$
12,526
   
$
13,126
   
$
13,154
   
$
12,981
 
Provision for loan losses
   
4,500
     
785
     
(170
)
   
(80
)
   
30
 
Total noninterest income
   
66,904
     
31,464
     
33,809
     
37,494
     
35,190
 
Total noninterest expense
   
47,689
     
35,208
     
35,337
     
36,232
     
35,355
 
Income before income taxes
   
27,964
     
7,997
     
11,768
     
14,496
     
12,786
 
Income tax expense
   
7,016
     
1,928
     
2,974
     
3,572
     
3,143
 
Net income
 
$
20,948
   
$
6,069
   
$
8,794
   
$
10,924
   
$
9,643
 
Income per share – basic
 
$
0.86
   
$
0.24
   
$
0.34
   
$
0.42
   
$
0.37
 
Income per share – diluted
 
$
0.85
   
$
0.24
   
$
0.34
   
$
0.42
   
$
0.37
 
Dividends declared per share
 
$
0.12
   
$
0.62
   
$
0.12
   
$
0.12
   
$
0.12
 
                                         
Performance Ratios (annualized):
                                       
Return on average assets - QTD
   
3.87
%
   
1.21
%
   
1.75
%
   
2.17
%
   
1.95
%
Return on average equity - QTD
   
22.39
%
   
6.24
%
   
8.91
%
   
11.15
%
   
9.96
%
Net interest margin - QTD
   
2.62
%
   
2.68
%
   
2.79
%
   
2.80
%
   
2.82
%
                                         
Return on average assets - YTD
   
2.59
%
   
1.21
%
   
1.82
%
   
1.84
%
   
1.67
%
Return on average equity - YTD
   
14.03
%
   
6.24
%
   
9.14
%
   
9.21
%
   
8.28
%
Net interest margin - YTD
   
2.65
%
   
2.68
%
   
2.83
%
   
2.85
%
   
2.88
%
                                         
Asset Quality Ratios:
                                       
Past due loans to total loans
   
0.45
%
   
0.78
%
   
0.47
%
   
0.62
%
   
0.61
%
Nonaccrual loans to total loans
   
0.39
%
   
0.48
%
   
0.51
%
   
0.46
%
   
0.41
%
Nonperforming assets to total assets
   
0.28
%
   
0.36
%
   
0.39
%
   
0.41
%
   
0.37
%
Allowance for loan loss to loans receivable
   
1.24
%
   
0.94
%
   
0.89
%
   
0.91
%
   
0.92
%







- 10 -


WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
 
SUMMARY OF QUARTERLY AVERAGE BALANCES AND YIELD/COSTS
 
(Unaudited)
 
 
                             
 
 
At or For the Three Months Ended
 
 
 
June 30,
   
March 31,
   
December 31,
   
September 30,
   
June 30,
 
 
 
2020
   
2020
   
2019
   
2019
   
2019
 
Average balances
 
(Dollars in Thousands)
 
Interest-earning assets
                             
Loans receivable and held for sale
 
$
1,759,970
   
$
1,562,097
   
$
1,573,190
   
$
1,579,575
   
$
1,552,199
 
Mortgage related securities
   
105,727
     
112,089
     
110,426
     
114,051
     
114,537
 
Debt securities, federal funds sold and short term investments
   
164,306
     
206,485
     
183,447
     
169,621
     
180,111
 
    Total interest-earning assets
   
2,030,003
     
1,880,671
     
1,867,063
     
1,863,247
     
1,846,847
 
Noninterest-earning assets
   
147,342
     
132,283
     
125,904
     
137,723
     
136,263
 
    Total assets
 
$
2,177,345
   
$
2,012,954
   
$
1,992,967
   
$
2,000,970
   
$
1,983,110
 
 
                                       
Interest-bearing liabilities
                                       
Demand accounts
 
$
45,289
   
$
39,886
   
$
38,650
   
$
37,015
   
$
35,744
 
Money market, savings, and escrow accounts
   
252,500
     
218,942
     
215,332
     
206,474
     
193,542
 
Certificates of deposit
   
730,573
     
734,147
     
737,726
     
739,544
     
736,798
 
    Total interest-bearing deposits
   
1,028,362
     
992,975
     
991,708
     
983,033
     
966,084
 
Borrowings
   
609,863
     
495,595
     
485,482
     
509,099
     
504,940
 
    Total interest-bearing liabilities
   
1,638,225
     
1,488,570
     
1,477,190
     
1,492,132
     
1,471,024
 
Noninterest-bearing demand deposits
   
115,605
     
92,627
     
85,815
     
86,849
     
91,545
 
Noninterest-bearing liabilities
   
47,140
     
40,609
     
38,580
     
33,130
     
32,143
 
    Total liabilities
   
1,800,970
     
1,621,806
     
1,601,585
     
1,612,111
     
1,594,712
 
Equity
   
376,375
     
391,148
     
391,382
     
388,859
     
388,398
 
    Total liabilities and equity
 
$
2,177,345
   
$
2,012,954
   
$
1,992,967
   
$
2,000,970
   
$
1,983,110
 
 
                                       
Average Yield/Costs (annualized)
                                       
Loans receivable and held for sale
   
4.23
%
   
4.55
%
   
4.68
%
   
4.66
%
   
4.66
%
Mortgage related securities
   
2.55
%
   
2.52
%
   
2.58
%
   
2.56
%
   
2.68
%
Debt securities, federal funds sold and short term investments
   
1.71
%
   
2.07
%
   
2.19
%
   
2.53
%
   
2.50
%
    Total interest-earning assets
   
3.93
%
   
4.16
%
   
4.31
%
   
4.34
%
   
4.32
%
 
                                       
Demand accounts
   
0.08
%
   
0.08
%
   
0.10
%
   
0.09
%
   
0.09
%
Money market and savings accounts
   
0.74
%
   
0.78
%
   
0.66
%
   
0.57
%
   
0.66
%
Certificates of deposit
   
1.91
%
   
2.13
%
   
2.20
%
   
2.24
%
   
2.19
%
    Total interest-bearing deposits
   
1.54
%
   
1.75
%
   
1.79
%
   
1.81
%
   
1.80
%
Borrowings
   
1.76
%
   
2.12
%
   
2.20
%
   
2.14
%
   
2.06
%
    Total interest-bearing liabilities
   
1.62
%
   
1.87
%
   
1.92
%
   
1.92
%
   
1.89
%


- 11 -



COMMUNITY BANKING SEGMENT
 
SUMMARY OF KEY QUARTERLY FINANCIAL DATA
 
(Unaudited)
 
 
                             
 
 
At or For the Three Months Ended
 
 
 
June 30,
   
March 31,
   
December 31,
   
September 30,
   
June 30,
 
 
 
2020
   
2020
   
2019
   
2019
   
2019
 
 
 
(Dollars in Thousands)
 
Condensed Results of Operations:
                             
Net interest income
 
$
13,701
   
$
12,908
   
$
13,472
   
$
13,885
   
$
13,530
 
Provision for loan losses
   
4,325
     
750
     
(200
)
   
(150
)
   
-
 
Total noninterest income
   
2,936
     
1,028
     
1,645
     
1,415
     
1,079
 
Noninterest expenses:
                                       
Compensation, payroll taxes, and other employee benefits
   
4,906
     
5,168
     
4,693
     
4,075
     
4,671
 
Occupancy, office furniture and equipment
   
866
     
1,014
     
894
     
942
     
944
 
Advertising
   
297
     
248
     
317
     
202
     
220
 
Data processing
   
678
     
605
     
583
     
588
     
493
 
Communications
   
91
     
97
     
93
     
90
     
93
 
Professional fees
   
226
     
198
     
162
     
223
     
160
 
Real estate owned
   
33
     
11
     
(251
)
   
24
     
19
 
Loan processing expense
   
-
     
-
     
-
     
-
     
-
 
Other
   
532
     
580
     
498
     
583
     
635
 
Total noninterest expense
   
7,629
     
7,921
     
6,989
     
6,727
     
7,235
 
Income before income taxes
   
4,683
     
5,265
     
8,328
     
8,723
     
7,374
 
Income tax expense
   
574
     
1,154
     
2,033
     
1,982
     
1,594
 
Net income
 
$
4,109
   
$
4,111
   
$
6,295
   
$
6,741
   
$
5,780
 
 
                                       
Efficiency ratio - QTD
   
45.86
%
   
56.84
%
   
46.23
%
   
43.97
%
   
49.52
%
Efficiency ratio - YTD
   
50.86
%
   
56.84
%
   
47.74
%
   
48.27
%
   
50.56
%




- 12 -

MORTGAGE BANKING SEGMENT
 
SUMMARY OF KEY QUARTERLY FINANCIAL DATA
 
(Unaudited)
 
 
                             
 
 
At or For the Three Months Ended
 
 
 
June 30,
   
March 31,
   
December 31,
   
September 30,
   
June 30,
 
 
 
2020
   
2020
   
2019
   
2019
   
2019
 
 
 
(Dollars in Thousands)
 
Condensed Results of Operations:
                             
Net interest income
 
$
(511
)
 
$
(379
)
 
$
(399
)
 
$
(774
)
 
$
(529
)
Provision for loan losses
   
175
     
35
     
30
     
70
     
30
 
Total noninterest income
   
64,218
     
30,798
     
32,440
     
36,535
     
34,364
 
Noninterest expenses:
                                       
Compensation, payroll taxes, and other employee benefits
   
32,139
     
19,387
     
21,975
     
23,616
     
22,579
 
Occupancy, office furniture and equipment
   
1,668
     
1,727
     
1,627
     
1,687
     
1,736
 
Advertising
   
567
     
652
     
734
     
711
     
743
 
Data processing
   
413
     
395
     
402
     
411
     
372
 
Communications
   
226
     
241
     
227
     
268
     
260
 
Professional fees
   
850
     
1,620
     
1,000
     
688
     
620
 
Real estate owned
   
-
     
-
     
30
     
-
     
-
 
Loan processing expense
   
1,208
     
1,076
     
746
     
858
     
879
 
Other
   
3,239
     
2,552
     
1,918
     
1,725
     
1,186
 
Total noninterest expense
   
40,310
     
27,650
     
28,659
     
29,964
     
28,375
 
Income before income taxes
   
23,222
     
2,734
     
3,352
     
5,727
     
5,430
 
Income tax expense
   
6,440
     
768
     
921
     
1,584
     
1,545
 
Net income
 
$
16,782
   
$
1,966
   
$
2,431
   
$
4,143
   
$
3,885
 
 
                                       
Efficiency ratio - QTD
   
63.27
%
   
90.90
%
   
89.44
%
   
83.79
%
   
83.86
%
Efficiency ratio - YTD
   
72.20
%
   
90.90
%
   
87.47
%
   
86.79
%
   
88.66
%
 
                                       
Loan originations
 
$
1,142,683
   
$
708,840
   
$
777,073
   
$
851,297
   
$
793,254
 
Purchase
   
55.5
%
   
68.3
%
   
72.1
%
   
79.0
%
   
87.6
%
Refinance
   
44.5
%
   
31.7
%
   
27.9
%
   
21.0
%
   
12.4
%
Gross margin on loans sold(1)
   
5.45
%
   
4.08
%
   
4.27
%
   
4.30
%
   
4.29
%
(1) - Gross margin on loans sold equals mortgage banking income (excluding the change in interest rate lock value) divided by total loan originations
 


- 13 -