Waterstone Financial, Inc. Announces Results of Operations for the Quarter and Year Ended December 31, 2021 - Form 8-K

Waterstone Financial, Inc. Announces Results of Operations for the Quarter and Year Ended December 31, 2021.

Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income of $12.6 million, or $0.53 per diluted share for the quarter ended December 31, 2021 compared to $27.8 million, or $1.17 per diluted share for the quarter ended December 31, 2020. Net income per diluted share was $2.96 for the year ended December 31, 2021 compared to net income per diluted share of $3.30 for the year ended December 31, 2020.

The CARES Act, signed into law at the end of March 2020, allowed for a temporary delay in the adoption of accounting guidance under Accounting Standards Codification Topic 326, "Financial Instruments - Credit Losses ("CECL") until the earlier of December 31, 2020 or the 60th day after the end of the COVID-19 national emergency. During the quarter ended June 30, 2020, pursuant to the CARES Act and guidance from the Securities and Exchange Commission ("SEC") and Financial Accounting Standards Board ("FASB"), we elected to delay adoption of CECL. On December 27, 2020, the Consolidated Appropriations Act, 2021 was signed into law. Among other provisions, this Act extended the temporary delay on the adoption of CECL until January 1, 2022. We have elected to continue to delay adoption of CECL. As a result, our financial statements for the quarter and year ended September 30, 2021 include an allowance for loan losses that was prepared under the existing incurred loss methodology.

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, Milwaukee/Oklahoma Ave, Oak Creek/27th St, Oak Creek/Howell Ave, Oconomowoc/Lake Country, Pewaukee, Waukesha, West Allis/Greenfield Ave, and West Allis/National Ave, Wisconsin. 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.

WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
		December 31,			December 31,
		2021			2020
		(Unaudited)
Assets		(In Thousands, except per share amounts)
Cash		$	343,016			$	56,190
Federal funds sold			13,981				18,847
Interest-earning deposits in other financial institutions and other short term investments			19,725				19,730
Cash and cash equivalents			376,722				94,767
Securities available for sale (at fair value)			179,016				159,619
Loans held for sale (at fair value)			312,738				402,003
Loans receivable			1,205,785				1,375,137
Less: Allowance for loan losses			15,778				18,823
Loans receivable, net			1,190,007				1,356,314
Office properties and equipment, net			22,273				23,722
Federal Home Loan Bank stock (at cost)			24,438				26,720
Cash surrender value of life insurance			65,368				63,573
Real estate owned, net			148				322
Prepaid expenses and other assets			45,148				57,547
Total assets		$	2,215,858			$	2,184,587
Liabilities and Shareholders' Equity
Liabilities:
Demand deposits		$	214,409			$	188,225
Money market and savings deposits			392,314				295,317
Time deposits			626,663				701,328
Total deposits			1,233,386				1,184,870
Borrowings			477,127				508,074
Advance payments by borrowers for taxes			4,094				3,522
Other liabilities			68,478				75,003
Total liabilities			1,783,085				1,771,469
Shareholders' equity:
Preferred stock			-				-
Common stock			248				251
Additional paid-in capital			174,505				180,684
Retained earnings			273,398				245,287
Unearned ESOP shares			(14,243	)			(15,430	)
Accumulated other comprehensive income, net of taxes			(1,135	)			2,326
Total shareholders' equity			432,773				413,118
Total liabilities and shareholders' equity		$	2,215,858			$	2,184,587
Share Information
Shares outstanding			24,795				25,088
Book value per share		$	17.45			$	16.47
Closing market price		$	21.86			$	18.82
Price to book ratio			125.27	%			114.27	%

		At or For the Three Months Ended
		December 31,			September 30,			June 30,			March 31,			December 31,
		2021			2021			2021			2021			2020
Average balances		(Dollars in Thousands)
Interest-earning assets
Loans receivable and held for sale		$	1,517,984			$	1,573,194			$	1,655,078			$	1,657,260			$	1,775,455
Mortgage related securities			119,709				108,743				100,056				90,457				91,199
Debt securities, federal funds sold and short term investments			475,574				409,559				308,105				273,929				217,356
Total interest-earning assets			2,113,267				2,091,496				2,063,239				2,021,646				2,084,010
Noninterest-earning assets			131,703				137,454				143,375				147,781				147,573
Total assets		$	2,244,970			$	2,228,950			$	2,206,614			$	2,169,427			$	2,231,583
Interest-bearing liabilities
Demand accounts		$	70,762			$	68,478			$	63,610			$	55,552			$	53,771
Money market, savings, and escrow accounts			398,210				391,599				350,270				314,418				304,467
Certificates of deposit			643,546				663,343				690,196				705,712				726,132
Total interest-bearing deposits			1,112,518				1,123,420				1,104,076				1,075,682				1,084,370
Borrowings			481,971				475,000				480,054				482,665				546,070
Total interest-bearing liabilities			1,594,489				1,598,420				1,584,130				1,558,347				1,630,440
Noninterest-bearing demand deposits			153,303				153,436				141,648				138,446				128,665
Noninterest-bearing liabilities			49,982				40,148				45,658				50,188				64,001
Total liabilities			1,797,774				1,792,004				1,771,436				1,746,981				1,823,106
Equity			447,196				436,946				435,178				422,446				408,477
Total liabilities and equity		$	2,244,970			$	2,228,950			$	2,206,614			$	2,169,427			$	2,231,583
Average Yield/Costs (annualized)
Loans receivable and held for sale			3.96	%			4.07	%			3.99	%			4.06	%			4.08	%
Mortgage related securities			1.68	%			1.72	%			1.95	%			2.20	%			2.30	%
Debt securities, federal funds sold and short term investments			0.77	%			0.88	%			1.12	%			1.30	%			1.59	%
Total interest-earning assets			3.11	%			3.32	%			3.47	%			3.60	%			3.75	%
Demand accounts			0.08	%			0.08	%			0.08	%			0.07	%			0.07	%
Money market and savings accounts			0.22	%			0.24	%			0.23	%			0.32	%			0.53	%
Certificates of deposit			0.40	%			0.42	%			0.50	%			0.72	%			1.20	%
Total interest-bearing deposits			0.31	%			0.33	%			0.39	%			0.57	%			0.96	%
Borrowings			2.09	%			2.04	%			2.06	%			2.10	%			1.97	%
Total interest-bearing liabilities			0.85	%			0.84	%			0.90	%			1.05	%			1.30	%