Current Report


 
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):                                                                                                           March 16, 2010
 
Waterstone Financial, Inc.
(Exact name of registrant as specified in its charter)
 
 
 Federally Chartered Corporation   000-5 1507    20-3598485 
 (State or other jurisdiction
incorporation)
 
 (Commission File
Number)
   (I.R.S. Employer Identification No.)
         
         
11200 W Plank Ct, Wauwatosa, Wisconsin        53226 
 (Address of principal executive offices)        (Zip Code)
         
                      Registrant's telephone number, including area code:    414-761-1000
         
     Not Applicable    
 
                      
                   
Former name or former address, if changed since last report
 
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 provision:
 
[ ] 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))

 
 
 
 


 
Item 2.02 Results of Operations and Financial Condition.
 
 
On March 16, 2010, Waterstone Financial, Inc. issued a press release announcing an adjustment to its results of operations for the year ended December 31, 2009 as previously reported on February 12, 2010.  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

(a) Not Applicable.

(b) Not Applicable.

(c) Not Applicable

(d) Exhibits

Exhibit No.                        Description

99.1
Press release of Waterstone Financial, Inc. dated March 16, 2010.

 

 


 
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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.
 
March 16, 2010                                                                                                               By:  Richard C. Larson
Name: Richard C. Larson Title:
Chief Financial Officer
 
 


 
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Exhibit 99.1
 
Waterstone Financial, Inc. Adjusts Results of Operations for Year Ended December 31, 2009.
 
WAUWATOSA, WI – 03/16/2010– Waterstone Financial, Inc. (NASDAQ: WSBF) announced today that the 2009 annual unaudited results of operations as reported on February 12 would be adjusted due to the under accrual of Federal Deposit Insurance Corporation (FDIC) insurance premiums at December 31, 2009.  In completing its year-end closing process subsequent to the February 12 announcement, management determined that its accrual for FDIC insurance premiums payable at December 31, 2009 was understated by $1.9 million.
 
Adjusted Results
 
The adjustment for accrued FDIC insurance premiums increased total non-interest expense by $1.9 million which was partially offset by an increase in income tax benefit of $657,000 for a net increase in net loss of $1.3 million to an audited net loss of $10.1 million or $0.33 per share.  Adjusted Waterstone capital as a percentage of assets as of December 31, 2009 is 9.0%.  The WaterStone Bank adjusted Tier I regulatory capital ratio at December 31, 2009 was 8.7% and the ratio of total regulatory capital to risk-weighted assets was 13.7%.  WaterStone Bank continues to exceed all minimum regulatory capital requirements.
 
About Waterstone Financial, Inc.

Waterstone Financial, Inc. (NASDAQ: WSBF) is a thrift holding company headquartered in Wauwatosa, WI.  With $1.87 billion in assets at December 31, 2009, Waterstone has eight community bank branches in the metropolitan Milwaukee market.

Forward-Looking Statements

This press release contains 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.”  Such statements are subject to important factors that could cause actual results to differ materially from those anticipated by the forward-looking statements.  These factors include (i) exposure to the deterioration in the commercial and residential real estate markets which could result in increased charge-offs and increases in the allowance for loan losses,  (ii) various other factors, including changes in economic conditions affecting borrowers, new information regarding outstanding loans and identification of additional problem loans, which could require an increase in  the allowance for loan losses, (iii) Waterstone’s ability to maintain required levels of capital and other current and future regulatory requirements, (iv) the impact of recent and future legislative initiatives on the financial markets, and (v) those factors referenced in Item 1A. Risk Factors in Waterstone’s Annual Report on Form 10-K for the year ended December 31, 2008 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.  
 

 



 
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  WATERSTONE FINANCIAL, INC.  
  FINANCIAL HIGHLIGHTS  
             
   
  At or for the Years ended
December 31,
       
      2009  2008     % Change  
      (in thousands except ratios)        
      (Unaudited)        
Asset Quality Data:
           
      Provision for loan losses
  $ 26,687     $ 37,629       (29.1 ) %    
      Net charge-offs
    23,359       25,301       (7.7 )    
      Allowance for loan losses
    28,494       25,167       13.2      
      Non-performing loans
    75,313       107,730       (30.1 )    
      Non-performing assets
    126,242       132,383       (4.6 )    
     Total loans past due
    113,416       145,920       (22.3 )    
      Performing loans past due
    38,103       38,190       (0.2 )    
                             
     Allowance for loan losses to loans receivable
    2.01 %     1.61   %        
 
 
     Allowance for loan losses to non-performing loans
    37.83        23.36              
     Net charge-offs to average loans outstanding
    1.54       1.67               
     Total non-performing loans to loans receivable
    5.30       6.91               
     Total non-performing assets to total assets
    6.76       7.02               
                       
Selected Financial Ratios:
                     
  Performance Ratios:
                     
      Return (loss) on average assets
    (0.53 )     (1.44  )            
      Return (loss) on average equity
    (6.12 )     (13.76 )            
      Interest rate margin
    2.41       2.32               
      Interest rate spread
    2.25       2.04               
      Yield on loans receivable
    5.78       6.13               
      Cost of deposits
    2.87       3.76               
      Efficiency ratio
    72.84       71.52               
                             
  Capital Ratios:
                           
      Equity to total assets at end of the period
    9.02       9.08               
     Total capital to risk weighted assets (bank only)
    13.74       12.84               
     Tier I capital to risk-weighted assets (bank only)
    12.48       11.58               
     Tier I capital to average assets (bank only)
    8.71       8.93               
                       
Per Share:
                     
      Earnings (loss) per share
  $ (0.33 )   $ (0.87 )            
      Diluted earnings (loss) per share
    (0.33 )     (0.87 )            
      Book value per share
    5.39       5.48              
      Weighted average shares outstanding
    30,680,285       30,556,004              
      Shares outstanding at December 31
    31,250,097       31,249,897              

 
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WATERSTONE FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS


   
Years ended December 31,
       
   
2009
   
2008
   
% Change
 
   
(In Thousands, except per share amounts)
       
Interest income:
                 
     Loans
  $ 87,847       92,860       (5.4 )
     Mortgage-related securities
    7,101       7,679       (7.5 )
     Debt securities, federal funds sold and
                       
          short-term investments
    3,540       3,539       0.0  
               Total interest income
    98,488       104,078       (5.4 )
Interest expense:
                       
     Deposits
    34,484       42,250       (18.4 )
     Borrowings
    20,093       20,777       (3.3 )
               Total interest expense
    54,577       63,027       (13.4 )
               Net interest income
    43,911       41,051       7.0  
Provision for loan losses
    26,687       37,629       (29.1 )
               Net interest income after provision for loan losses
    17,224       3,422       403.3  
Noninterest income:
                       
     Service charges on loans and deposits
    1,191       1,656       (28.1 )
     Increase in cash surrender value of life insurance
    1,236       1,444       (14.4 )
     Total other-than-temporary investment losses
    (7,255 )     -       -  
     Portion of loss recognized in other comprehensive  income (before tax)
    6,143       -       -  
         Net impairment losses recognized in earnings
    (1,112 )     (1,997 )     (44.3 )
     Mortgage banking income
    9,976       4,296       132.2  
     Other
    917       892       2.8  
               Total noninterest income
    12,208       6,291       94.1  
Noninterest expenses:
                       
     Compensation, payroll taxes, and other employee benefits
    17,335       17,080       1.5  
     Occupancy, office furniture, and equipment
    4,822       4,779       0.9  
     Advertising
    876       1,155       (24.2 )
     Data processing
    1,413       1,377       2.6  
     Communications
    693       692       0.1  
     Professional fees
    1,334       924       44.4  
     Real estate owned
    6,434       4,551       41.4  
     Other
    7,969       3,302       141.3  
               Total noninterest expenses
    40,876       33,860       20.7  
               Loss before income taxes
    (11,444 )     (24,147 )     (52.6 )
Income tax (benefit) expense
    (1,306 )     2,299       (156.8 )
               Net loss
  $ (10,138 )     (26,446 )     (61.7 )
Loss per share:
                       
     Basic
  $ (0.33 )     (0.87 )        
     Diluted
  $ (0.33 )     (0.87 )        
Weighted average shares outstanding:
                       
     Basic
    30,680,285       30,556,004          
     Diluted
    30,680,285       30,556,004          
 
 

 
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WATERSTONE FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 

 
   
December 31,
       
   
2009
   
2008
   
% Change
 
  Assets
 
(In Thousands, except share data)
       
Cash
  $ 57,234       14,847       285.5  
Federal funds sold
    9,631       9,002       7.0  
Interest-earning deposits in other financial institutions
                    -  
    and other short term investments
    4,255       -       -  
     Cash and cash equivalents
    71,120       23,849       198.2  
Securities available for sale (at fair value)
    205,415       179,887       14.2  
Securities held to maturity (at amortized cost)
                       
  fair value of $1,930 in 2009 and $8,165 in 2008
    2,648       9,938       (73.4 )
Loans held for sale
    45,052       12,993       246.7  
Loans receivable
    1,420,010       1,559,758       (9.0 )
Less: Allowance for loan losses
    28,494       25,167       13.2  
     Loans receivable, net
    1,391,516       1,534,591       (9.3 )
                         
Office properties and equipment, net
    29,144       30,560       (4.6 )
Federal Home Loan Bank stock, at cost
    21,653       21,653       0.0  
Cash surrender value of life insurance
    33,941       32,399       4.8  
Real estate owned
    50,929       24,653       106.6  
Prepaid expenses and other assets
    16,848       14,909       13.0  
     Total assets
  $ 1,868,266       1,885,432       (0.9 )
                         
  Liabilities and Shareholders’ Equity
                       
Liabilities:
                       
Demand deposits
  $ 61,420       53,434       14.9  
Money market and savings deposits
    92,028       100,930       (8.8 )
Time deposits
    1,011,442       1,041,533       (2.9 )
     Total deposits
    1,164,890       1,195,897       (2.6 )
                         
Short-term borrowings
    73,900       4,100       1702.4  
Long-term borrowings
    434,000       482,900       (10.1 )
Advance payments by borrowers for taxes
    630       862       (26.9 )
Other liabilities
    26,254       30,406       (13.7 )
     Total liabilities
    1,699,674       1,714,165       (0.8 )
                         
Shareholders’ equity:
                       
Preferred stock (par value $.01 per share)
                       
     Authorized - 20,000,000 shares, no shares issued
    -       -       -  
Common stock (par value $.01 per share)
                       
     Authorized - 200,000,000 shares in 2009 and 2008
                       
     Issued - 33,974,250 in 2009 and 2008
                       
     Outstanding -  31,250,097 in 2009 and 31,250,897 in 2008
    340       340       0.0  
Additional paid-in capital
    108,883       107,839       1.0  
Accumulated other comprehensive income (loss), net of taxes
    (2,001 )     (6,449 )     (69.0 )
Retained earnings
    110,900       119,921       (7.5 )
Unearned ESOP shares
    (4,269 )     (5,123 )     (16.7 )
Treasury shares (2,724,353 shares), at cost
    (45,261 )     (45,261 )     0.0  
     Total shareholders’ equity
    168,592       171,267       (1.6 )
     Total liabilities and shareholders’ equity
  $ 1,868,266       1,885,432       (0.9 )
 
 


 
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