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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Waterstone Financial Inc | NASDAQ:WSBF | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.01 | 0.08% | 12.26 | 4.94 | 14.49 | 12.42 | 12.25 | 12.25 | 33,899 | 21:06:23 |
Maryland
|
90-1026709
|
(State or other jurisdiction of incorporation or organization)
|
(IRS Employer Identification No.)
|
11200 W. Plank Court Wauwatosa, Wisconsin
|
53226
|
(Address of principal executive offices)
|
(Zip Code)
|
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
|
Large accelerated filer ☐
|
Accelerated filer ☒
|
Non-accelerated filer ☐
|
Smaller reporting company ☐
|
Emerging growth company ☐
|
Page No.
|
|
PART I. FINANCIAL INFORMATION
|
|
Item l. Financial Statements
|
|
PART II. OTHER INFORMATION
|
|
|
(Unaudited)
|
|||||||
September 30, 2020
|
December 31, 2019
|
|||||||
Assets
|
(Dollars In Thousands, except share and per share data)
|
|||||||
Cash
|
$
|
54,681
|
$
|
52,814
|
||||
Federal funds sold
|
21,151
|
12,704
|
||||||
Interest-earning deposits in other financial institutions and other short term investments
|
10,730
|
8,782
|
||||||
Cash and cash equivalents
|
86,562
|
74,300
|
||||||
Securities available for sale (at fair value)
|
153,201
|
178,476
|
||||||
Loans held for sale (at fair value)
|
385,803
|
220,123
|
||||||
Loans receivable
|
1,434,132
|
1,388,031
|
||||||
Less: Allowance for loan losses
|
18,844
|
12,387
|
||||||
Loans receivable, net
|
1,415,288
|
1,375,644
|
||||||
Office properties and equipment, net
|
23,961
|
25,028
|
||||||
Federal Home Loan Bank stock (at cost)
|
26,720
|
21,150
|
||||||
Cash surrender value of life insurance
|
63,255
|
69,665
|
||||||
Real estate owned, net
|
772
|
748
|
||||||
Prepaid expenses and other assets
|
65,260
|
31,213
|
||||||
Total assets
|
$
|
2,220,822
|
$
|
1,996,347
|
||||
Liabilities and Shareholders’ Equity
|
||||||||
Liabilities:
|
||||||||
Demand deposits
|
$
|
169,218
|
$
|
130,063
|
||||
Money market and savings deposits
|
271,283
|
197,942
|
||||||
Time deposits
|
744,150
|
739,771
|
||||||
Total deposits
|
1,184,651
|
1,067,776
|
||||||
Borrowings
|
552,126
|
483,562
|
||||||
Advance payments by borrowers for taxes
|
25,987
|
4,212
|
||||||
Other liabilities
|
58,629
|
47,111
|
||||||
Total liabilities
|
1,821,393
|
1,602,661
|
||||||
Shareholders’ equity:
|
||||||||
Preferred stock (par value $0.01 per share)
|
||||||||
Authorized - 50,000,000 shares at September 30, 2020 and at December 31, 2019, no shares issued
|
-
|
-
|
||||||
Common stock (par value $0.01 per share)
|
||||||||
Authorized - 100,000,000 shares at September 30, 2020 and at December 31, 2019
|
||||||||
Issued - 25,220,036 at September 30, 2020 and 27,148,411 at December 31, 2019
|
||||||||
Outstanding - 25,220,036 at September 30, 2020 and 27,148,411 at December 31, 2019
|
252
|
271
|
||||||
Additional paid-in capital
|
182,960
|
211,997
|
||||||
Retained earnings
|
229,289
|
197,393
|
||||||
Unearned ESOP shares
|
(15,727
|
)
|
(16,617
|
)
|
||||
Accumulated other comprehensive income, net of taxes
|
2,655
|
642
|
||||||
Total shareholders’ equity
|
399,429
|
393,686
|
||||||
Total liabilities and shareholders’ equity
|
$
|
2,220,822
|
$
|
1,996,347
|
|
Three months ended September 30,
|
Nine months ended September 30,
|
||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
(In Thousands, except per share amounts)
|
||||||||||||||||
Interest income:
|
||||||||||||||||
Loans
|
$
|
18,224
|
$
|
18,558
|
$
|
54,404
|
$
|
53,688
|
||||||||
Mortgage-related securities
|
588
|
737
|
1,960
|
2,260
|
||||||||||||
Debt securities, federal funds sold and short-term investments
|
732
|
1,083
|
2,493
|
3,515
|
||||||||||||
Total interest income
|
19,544
|
20,378
|
58,857
|
59,463
|
||||||||||||
Interest expense:
|
||||||||||||||||
Deposits
|
3,495
|
4,479
|
11,760
|
12,813
|
||||||||||||
Borrowings
|
2,640
|
2,745
|
7,913
|
7,579
|
||||||||||||
Total interest expense
|
6,135
|
7,224
|
19,673
|
20,392
|
||||||||||||
Net interest income
|
13,409
|
13,154
|
39,184
|
39,071
|
||||||||||||
Provision (credit) for loan losses
|
1,025
|
(80
|
)
|
6,310
|
(730
|
)
|
||||||||||
Net interest income after provision for loan losses
|
12,384
|
13,234
|
32,874
|
39,801
|
||||||||||||
Noninterest income:
|
||||||||||||||||
Service charges on loans and deposits
|
672
|
503
|
3,384
|
1,272
|
||||||||||||
Increase in cash surrender value of life insurance
|
714
|
728
|
1,587
|
1,579
|
||||||||||||
Mortgage banking income
|
72,112
|
36,062
|
166,292
|
93,526
|
||||||||||||
Other
|
2,265
|
201
|
2,868
|
564
|
||||||||||||
Total noninterest income
|
75,763
|
37,494
|
174,131
|
96,941
|
||||||||||||
Noninterest expenses:
|
||||||||||||||||
Compensation, payroll taxes, and other employee benefits
|
39,405
|
27,514
|
100,695
|
75,227
|
||||||||||||
Occupancy, office furniture, and equipment
|
2,469
|
2,629
|
7,744
|
8,085
|
||||||||||||
Advertising
|
861
|
913
|
2,625
|
2,834
|
||||||||||||
Data processing
|
922
|
1,003
|
3,023
|
2,641
|
||||||||||||
Communications
|
339
|
358
|
994
|
1,039
|
||||||||||||
Professional fees
|
4,738
|
954
|
7,647
|
2,438
|
||||||||||||
Real estate owned
|
11
|
24
|
55
|
75
|
||||||||||||
Loan processing expense
|
1,336
|
858
|
3,620
|
2,542
|
||||||||||||
Other
|
2,920
|
1,979
|
9,495
|
6,055
|
||||||||||||
Total noninterest expenses
|
53,001
|
36,232
|
135,898
|
100,936
|
||||||||||||
Income before income taxes
|
35,146
|
14,496
|
71,107
|
35,806
|
||||||||||||
Income tax expense
|
8,853
|
3,572
|
17,797
|
8,697
|
||||||||||||
Net income
|
$
|
26,293
|
$
|
10,924
|
$
|
53,310
|
$
|
27,109
|
||||||||
Income per share:
|
||||||||||||||||
Basic
|
$
|
1.08
|
$
|
0.42
|
$
|
2.16
|
$
|
1.04
|
||||||||
Diluted
|
$
|
1.08
|
$
|
0.42
|
$
|
2.15
|
$
|
1.03
|
||||||||
Weighted average shares outstanding:
|
||||||||||||||||
Basic
|
24,297
|
25,772
|
24,720
|
26,168
|
||||||||||||
Diluted
|
24,380
|
25,962
|
24,842
|
26,372
|
|
Three months ended September 30,
|
Nine months ended September 30,
|
||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
(In Thousands)
|
||||||||||||||||
Net income
|
$
|
26,293
|
$
|
10,924
|
$
|
53,310
|
$
|
27,109
|
||||||||
Other comprehensive (loss) income, net of tax:
|
||||||||||||||||
Net unrealized holding (loss) gain on available for sale securities:
|
||||||||||||||||
Net unrealized holding (loss) gain arising during the period, net of tax benefit (expense) of $41, $2, $(754), $(1,125), respectively
|
(104
|
)
|
(6
|
)
|
2,013
|
3,010
|
||||||||||
Total other comprehensive (loss) income
|
(104
|
)
|
(6
|
)
|
2,013
|
3,010
|
||||||||||
Comprehensive income
|
$
|
26,189
|
$
|
10,918
|
$
|
55,323
|
$
|
30,119
|
|
Common Stock
|
Additional
Paid-In
Capital
|
Retained
Earnings
|
Unearned
ESOP
Shares
|
Accumulated
Other
Comprehensive Income (Loss)
|
Total
Shareholders'
Equity
|
||||||||||||||||||||||
Shares
|
Amount
|
|||||||||||||||||||||||||||
For the nine months ended Septeber 30, 2020
|
(In Thousands, except per share amounts)
|
|||||||||||||||||||||||||||
Balances at January 1, 2020
|
27,148
|
$
|
271
|
$
|
211,997
|
$
|
197,393
|
$
|
(16,617
|
)
|
$
|
642
|
$
|
393,686
|
||||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
53,310
|
-
|
-
|
53,310
|
|||||||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
-
|
-
|
2,013
|
2,013
|
|||||||||||||||||||||
Total comprehensive income
|
55,323
|
|||||||||||||||||||||||||||
ESOP shares committed to be released to Plan participants
|
-
|
-
|
327
|
-
|
890
|
-
|
1,217
|
|||||||||||||||||||||
Cash dividend declared, $0.86 per share
|
-
|
-
|
-
|
(21,414
|
)
|
-
|
-
|
(21,414
|
)
|
|||||||||||||||||||
Stock compensation activity, net of tax
|
222
|
3
|
2,783
|
-
|
-
|
-
|
2,786
|
|||||||||||||||||||||
Stock compensation expense
|
-
|
-
|
553
|
-
|
-
|
-
|
553
|
|||||||||||||||||||||
Purchase of common stock returned to authorized but unissued
|
(2,150
|
)
|
(22
|
)
|
(32,700
|
)
|
-
|
-
|
-
|
(32,722
|
)
|
|||||||||||||||||
Balances at September 30, 2020
|
25,220
|
$
|
252
|
$
|
182,960
|
$
|
229,289
|
$
|
(15,727
|
)
|
$
|
2,655
|
$
|
399,429
|
||||||||||||||
For the nine months ended September 30, 2019
|
(In Thousands, except per share amounts)
|
|||||||||||||||||||||||||||
Balances at January 1, 2019
|
28,463
|
$
|
285
|
$
|
232,406
|
$
|
187,153
|
$
|
(17,804
|
)
|
$
|
(2,361
|
)
|
$
|
399,679
|
|||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
27,109
|
-
|
-
|
27,109
|
|||||||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
-
|
-
|
3,010
|
3,010
|
|||||||||||||||||||||
Total comprehensive income
|
30,119
|
|||||||||||||||||||||||||||
ESOP shares committed to be released to Plan participants
|
-
|
-
|
429
|
-
|
890
|
-
|
1,319
|
|||||||||||||||||||||
Cash dividend declared, $0.86 per share
|
-
|
-
|
-
|
(22,582
|
)
|
-
|
-
|
(22,582
|
)
|
|||||||||||||||||||
Stock based compensation activity
|
47
|
-
|
603
|
-
|
-
|
-
|
603
|
|||||||||||||||||||||
Stock compensation expense
|
-
|
-
|
832
|
-
|
-
|
-
|
832
|
|||||||||||||||||||||
Purchase of common stock returned to authorized but unissued
|
(1,363
|
)
|
(14
|
)
|
(22,713
|
)
|
-
|
-
|
-
|
(22,727
|
)
|
|||||||||||||||||
Balances at September 30, 2019
|
27,147
|
$
|
271
|
$
|
211,557
|
$
|
191,680
|
$
|
(16,914
|
)
|
$
|
649
|
$
|
387,243
|
|
Common Stock
|
Additional
Paid-In
Capital
|
Retained
Earnings
|
Unearned
ESOP
Shares
|
Accumulated
Other
Comprehensive Income (Loss)
|
Total
Shareholders'
Equity
|
||||||||||||||||||||||
Shares
|
Amount
|
|||||||||||||||||||||||||||
For the three months ended Septeber 30, 2020
|
(In Thousands, except per share amounts)
|
|||||||||||||||||||||||||||
Balances at July 1, 2020
|
25,843
|
$
|
258
|
$
|
192,762
|
$
|
205,863
|
$
|
(16,023
|
)
|
$
|
2,759
|
$
|
385,619
|
||||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
26,293
|
-
|
-
|
26,293
|
|||||||||||||||||||||
Other comprehensive loss
|
-
|
-
|
-
|
-
|
-
|
(104
|
)
|
(104
|
)
|
|||||||||||||||||||
Total comprehensive income
|
26,189
|
|||||||||||||||||||||||||||
ESOP shares committed to be released to Plan participants
|
-
|
-
|
99
|
-
|
296
|
-
|
395
|
|||||||||||||||||||||
Cash dividend declared, $0.12 per share
|
-
|
-
|
-
|
(2,867
|
)
|
-
|
-
|
(2,867
|
)
|
|||||||||||||||||||
Stock compensation activity, net of tax
|
177
|
2
|
2,253
|
-
|
-
|
-
|
2,255
|
|||||||||||||||||||||
Stock compensation expense
|
-
|
-
|
164
|
-
|
-
|
-
|
164
|
|||||||||||||||||||||
Purchase of common stock returned to authorized but unissued
|
(800
|
)
|
(8
|
)
|
(12,318
|
)
|
-
|
-
|
-
|
(12,326
|
)
|
|||||||||||||||||
Balances at September 30, 2020
|
25,220
|
$
|
252
|
$
|
182,960
|
$
|
229,289
|
$
|
(15,727
|
)
|
$
|
2,655
|
$
|
399,429
|
||||||||||||||
For the three months ended September 30, 2019
|
(In Thousands, except per share amounts)
|
|||||||||||||||||||||||||||
Balances at July 1, 2019
|
27,626
|
$
|
276
|
$
|
219,262
|
$
|
183,820
|
$
|
(17,210
|
)
|
$
|
655
|
$
|
386,803
|
||||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
10,924
|
-
|
-
|
10,924
|
|||||||||||||||||||||
Other comprehensive loss
|
-
|
-
|
-
|
-
|
-
|
(6
|
)
|
(6
|
)
|
|||||||||||||||||||
Total comprehensive income
|
10,918
|
|||||||||||||||||||||||||||
ESOP shares committed to be released to Plan participants
|
-
|
-
|
148
|
-
|
296
|
-
|
444
|
|||||||||||||||||||||
Cash dividend declared, $0.12 per share
|
-
|
-
|
-
|
(3,064
|
)
|
-
|
-
|
(3,064
|
)
|
|||||||||||||||||||
Stock based compensation activity
|
16
|
-
|
209
|
-
|
-
|
-
|
209
|
|||||||||||||||||||||
Stock compensation expense
|
-
|
-
|
234
|
-
|
-
|
-
|
234
|
|||||||||||||||||||||
Purchase of common stock returned to authorized but unissued
|
(495
|
)
|
(5
|
)
|
(8,296
|
)
|
-
|
-
|
-
|
(8,301
|
)
|
|||||||||||||||||
Balances at September 30, 2019
|
27,147
|
$
|
271
|
$
|
211,557
|
$
|
191,680
|
$
|
(16,914
|
)
|
$
|
649
|
$
|
387,243
|
|
Nine months ended September 30,
|
|||||||
2020
|
2019
|
|||||||
(In Thousands)
|
||||||||
Operating activities:
|
||||||||
Net income
|
$
|
53,310
|
$
|
27,109
|
||||
Adjustments to reconcile net income to used in operating activities:
|
||||||||
Provision (credit) for loan losses
|
6,310
|
(730
|
)
|
|||||
Provision for depreciation
|
1,901
|
1,829
|
||||||
Deferred taxes
|
(2,445
|
)
|
1,303
|
|||||
Stock based compensation
|
553
|
832
|
||||||
Net amortization of premium/discount on debt and mortgage related securities
|
102
|
164
|
||||||
Amortization of unearned ESOP shares
|
1,217
|
1,319
|
||||||
Amortization and impairment of mortgage servicing rights
|
774
|
167
|
||||||
Gain on sale of loans held for sale
|
(171,374
|
)
|
(96,024
|
)
|
||||
Loans originated for sale
|
(3,063,835
|
)
|
(2,092,948
|
)
|
||||
Proceeds on sales of loans originated for sale
|
3,069,529
|
2,092,816
|
||||||
Gain on death benefit on bank owned life insurance
|
(1,456
|
)
|
-
|
|||||
Decrease (increase) in accrued interest receivable
|
181
|
(248
|
)
|
|||||
Increase in cash surrender value of life insurance
|
(1,587
|
)
|
(1,579
|
)
|
||||
(Decrease) increase in accrued interest on deposits and borrowings
|
(245
|
)
|
92
|
|||||
Decrease in prepaid tax expense
|
2,794
|
1,812
|
||||||
Net gain related to real estate owned
|
(5
|
)
|
(20
|
)
|
||||
Change in other assets and other liabilities
|
(12,074
|
)
|
(4,185
|
)
|
||||
Net cash used in operating activities
|
(116,350
|
)
|
(68,291
|
)
|
||||
Investing activities:
|
||||||||
Net increase in loans receivable
|
(46,322
|
)
|
(7,102
|
)
|
||||
Purchases of:
|
||||||||
FHLB stock
|
(5,570
|
)
|
(2,700
|
)
|
||||
Mortgage related securities
|
(4,455
|
)
|
(12,121
|
)
|
||||
Debt securities
|
(5,000
|
)
|
-
|
|||||
Bank owned life insurance
|
(180
|
)
|
(180
|
)
|
||||
Premises and equipment, net
|
(917
|
)
|
(2,247
|
)
|
||||
Proceeds from:
|
||||||||
Principal repayments on mortgage-related securities
|
33,635
|
21,920
|
||||||
Maturities of debt securities
|
3,760
|
1,835
|
||||||
Sales of real estate owned
|
353
|
1,204
|
||||||
Proceeds from death benefit on bank owned life insurance
|
9,633
|
-
|
||||||
Net cash (used in) provided by investing activities
|
(15,063
|
)
|
609
|
|||||
Financing activities:
|
||||||||
Net increase in deposits
|
116,875
|
1,074
|
||||||
Net change in short term borrowings
|
68,564
|
40,749
|
||||||
Repayment of long term debt
|
-
|
(125,000
|
)
|
|||||
Proceeds from long term debt
|
-
|
165,000
|
||||||
Cash paid for advance payments by borrowers for taxes
|
9,870
|
10,961
|
||||||
Cash dividends on common stock
|
(21,698
|
)
|
(22,889
|
)
|
||||
Purchase of common stock returned to authorized but unissued
|
(32,722
|
)
|
(22,727
|
)
|
||||
Proceeds from stock option exercises
|
2,786
|
603
|
||||||
Net cash provided by financing activities
|
143,675
|
47,771
|
||||||
Increase (decrease) in cash and cash equivalents
|
12,262
|
(19,911
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
74,300
|
86,101
|
||||||
Cash and cash equivalents at end of period
|
$
|
86,562
|
$
|
66,190
|
||||
Supplemental information:
|
||||||||
Cash paid or credited during the period for:
|
||||||||
Income tax payments
|
$
|
17,448
|
$
|
6,709
|
||||
Interest payments
|
19,918
|
20,300
|
||||||
Noncash activities:
|
||||||||
Loans receivable transferred to real estate owned
|
369
|
946
|
||||||
Dividends declared but not paid in other liabilities
|
3,217
|
3,492
|
•
|
Duration, extent and severity of COVID-19;
|
•
|
Effect of government assistance; and
|
•
|
Unemployment and effect on economies and markets.
|
|
September 30, 2020
|
|||||||||||||||
Amortized cost
|
Gross unrealized gains
|
Gross unrealized losses
|
Fair value
|
|||||||||||||
(In Thousands)
|
||||||||||||||||
Mortgage-backed securities
|
$
|
24,872
|
$
|
1,228
|
$
|
-
|
$
|
26,100
|
||||||||
Collateralized mortgage obligations:
|
||||||||||||||||
Government sponsored enterprise issued
|
57,424
|
2,095
|
-
|
59,519
|
||||||||||||
Private-label issued
|
3,595
|
55
|
-
|
3,650
|
||||||||||||
Mortgage-related securities
|
85,891
|
3,378
|
-
|
89,269
|
||||||||||||
Government sponsered enterprise bonds
|
2,500
|
-
|
(1
|
)
|
2,499
|
|||||||||||
Municipal securities
|
47,970
|
2,192
|
-
|
50,162
|
||||||||||||
Other debt securities
|
12,500
|
-
|
(1,229
|
)
|
11,271
|
|||||||||||
Debt securities
|
62,970
|
2,192
|
(1,230
|
)
|
63,932
|
|||||||||||
$
|
148,861
|
$
|
5,570
|
$
|
(1,230
|
)
|
$
|
153,201
|
|
December 31, 2019
|
|||||||||||||||
Amortized cost
|
Gross unrealized gains
|
Gross unrealized losses
|
Fair value
|
|||||||||||||
(In Thousands)
|
||||||||||||||||
Mortgage-backed securities
|
$
|
33,773
|
$
|
422
|
$
|
(45
|
)
|
$
|
34,150
|
|||||||
Collateralized mortgage obligations:
|
||||||||||||||||
Government sponsored enterprise issued
|
81,232
|
776
|
(254
|
)
|
81,754
|
|||||||||||
Mortgage-related securities
|
115,005
|
1,198
|
(299
|
)
|
115,904
|
|||||||||||
Municipal securities
|
51,898
|
1,795
|
(1
|
)
|
53,692
|
|||||||||||
Other debt securities
|
10,000
|
-
|
(1,120
|
)
|
8,880
|
|||||||||||
Debt securities
|
61,898
|
1,795
|
(1,121
|
)
|
62,572
|
|||||||||||
$
|
176,903
|
$
|
2,993
|
$
|
(1,420
|
)
|
$
|
178,476
|
|
Amortized
Cost
|
Fair
Value
|
||||||
(In Thousands)
|
||||||||
Debt and other securities
|
||||||||
Due within one year
|
$
|
5,512
|
$
|
5,556
|
||||
Due after one year through five years
|
36,877
|
37,925
|
||||||
Due after five years through ten years
|
20,581
|
20,451
|
||||||
Due after ten years
|
-
|
-
|
||||||
Mortgage-related securities
|
85,891
|
89,269
|
||||||
$
|
148,861
|
$
|
153,201
|
|
September 30, 2020
|
|||||||||||||||||||||||
Less than 12 months
|
12 months or longer
|
Total
|
||||||||||||||||||||||
Fair value
|
Unrealized loss
|
Fair value
|
Unrealized loss
|
Fair value
|
Unrealized loss
|
|||||||||||||||||||
(In Thousands)
|
||||||||||||||||||||||||
Mortgage-backed securities
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||||
Collateralized mortgage obligations:
|
||||||||||||||||||||||||
Government sponsored enterprise issued
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Private label issued
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Government sponsored enterprise bonds
|
2,499
|
(1
|
)
|
-
|
-
|
2,499
|
(1
|
)
|
||||||||||||||||
Municipal securities
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Other debt securities
|
2,476
|
(24
|
)
|
8,795
|
(1,205
|
)
|
11,271
|
(1,229
|
)
|
|||||||||||||||
$
|
4,975
|
$
|
(25
|
)
|
$
|
8,795
|
$
|
(1,205
|
)
|
$
|
13,770
|
$
|
(1,230
|
)
|
|
December 31, 2019
|
|||||||||||||||||||||||
Less than 12 months
|
12 months or longer
|
Total
|
||||||||||||||||||||||
Fair value
|
Unrealized loss
|
Fair value
|
Unrealized loss
|
Fair value
|
Unrealized loss
|
|||||||||||||||||||
(In Thousands)
|
||||||||||||||||||||||||
Mortgage-backed securities
|
$
|
2,929
|
$
|
(20
|
)
|
$
|
2,849
|
$
|
(25
|
)
|
$
|
5,778
|
$
|
(45
|
)
|
|||||||||
Collateralized mortgage obligations:
|
||||||||||||||||||||||||
Government sponsored enterprise issued
|
21,723
|
(136
|
)
|
7,180
|
(118
|
)
|
28,903
|
(254
|
)
|
|||||||||||||||
Municipal securities
|
100
|
(1
|
)
|
-
|
-
|
100
|
(1
|
)
|
||||||||||||||||
Other debt securities
|
-
|
-
|
8,880
|
(1,120
|
)
|
8,880
|
(1,120
|
)
|
||||||||||||||||
$
|
24,752
|
$
|
(157
|
)
|
$
|
18,909
|
$
|
(1,263
|
)
|
$
|
43,661
|
$
|
(1,420
|
)
|
|
September 30, 2020
|
December 31, 2019
|
||||||
(In Thousands)
|
||||||||
Mortgage loans:
|
||||||||
Residential real estate:
|
||||||||
One- to four-family
|
$
|
452,491
|
$
|
480,280
|
||||
Multi-family
|
599,637
|
584,859
|
||||||
Home equity
|
15,410
|
18,071
|
||||||
Construction and land
|
66,726
|
37,033
|
||||||
Commercial real estate
|
241,248
|
236,703
|
||||||
Consumer
|
783
|
832
|
||||||
Commercial loans
|
57,837
|
30,253
|
||||||
$
|
1,434,132
|
$
|
1,388,031
|
|
As of September 30, 2020
|
|||||||||||||||||||||||
1-59 Days Past Due (1)
|
60-89 Days Past Due (2)
|
90 Days or Greater
|
Total Past Due
|
Current (3)
|
Total Loans
|
|||||||||||||||||||
(In Thousands)
|
||||||||||||||||||||||||
Mortgage loans:
|
||||||||||||||||||||||||
Residential real estate:
|
||||||||||||||||||||||||
One- to four-family
|
$
|
1,608
|
$
|
-
|
$
|
2,647
|
$
|
4,255
|
$
|
448,236
|
$
|
452,491
|
||||||||||||
Multi-family
|
-
|
-
|
314
|
314
|
599,323
|
599,637
|
||||||||||||||||||
Home equity
|
50
|
-
|
40
|
90
|
15,320
|
15,410
|
||||||||||||||||||
Construction and land
|
-
|
51
|
-
|
51
|
66,675
|
66,726
|
||||||||||||||||||
Commercial real estate
|
699
|
-
|
51
|
750
|
240,498
|
241,248
|
||||||||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
783
|
783
|
||||||||||||||||||
Commercial loans
|
95
|
-
|
-
|
95
|
57,742
|
57,837
|
||||||||||||||||||
Total
|
$
|
2,452
|
$
|
51
|
$
|
3,052
|
$
|
5,555
|
$
|
1,428,577
|
$
|
1,434,132
|
|
As of December 31, 2019
|
|||||||||||||||||||||||
1-59 Days Past Due (1)
|
60-89 Days Past Due (2)
|
90 Days or Greater
|
Total Past Due
|
Current (3)
|
Total Loans
|
|||||||||||||||||||
(In Thousands)
|
||||||||||||||||||||||||
Mortgage loans:
|
||||||||||||||||||||||||
Residential real estate:
|
||||||||||||||||||||||||
One- to four-family
|
$
|
1,179
|
$
|
638
|
$
|
3,969
|
$
|
5,786
|
$
|
474,494
|
$
|
480,280
|
||||||||||||
Multi-family
|
-
|
-
|
360
|
360
|
584,499
|
584,859
|
||||||||||||||||||
Home equity
|
-
|
10
|
-
|
10
|
18,061
|
18,071
|
||||||||||||||||||
Construction and land
|
-
|
-
|
-
|
-
|
37,033
|
37,033
|
||||||||||||||||||
Commercial real estate
|
-
|
-
|
303
|
303
|
236,400
|
236,703
|
||||||||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
832
|
832
|
||||||||||||||||||
Commercial loans
|
6
|
-
|
-
|
6
|
30,247
|
30,253
|
||||||||||||||||||
Total
|
$
|
1,185
|
$
|
648
|
$
|
4,632
|
$
|
6,465
|
$
|
1,381,566
|
$
|
1,388,031
|
|
One- to
Four- Family
|
Multi-Family
|
Home Equity
|
Construction and Land
|
Commercial Real Estate
|
Consumer
|
Commercial
|
Total
|
||||||||||||||||||||||||
(In Thousands)
|
||||||||||||||||||||||||||||||||
Nine months ended September 30, 2020
|
||||||||||||||||||||||||||||||||
Balance at beginning of period
|
$
|
4,907
|
$
|
4,138
|
$
|
201
|
$
|
610
|
$
|
2,145
|
$
|
14
|
$
|
372
|
$
|
12,387
|
||||||||||||||||
Provision (credit) for loan losses
|
854
|
1,703
|
(6
|
)
|
1,004
|
2,300
|
33
|
422
|
6,310
|
|||||||||||||||||||||||
Charge-offs
|
(9
|
)
|
(5
|
)
|
(13
|
)
|
-
|
-
|
(10
|
)
|
-
|
(37
|
)
|
|||||||||||||||||||
Recoveries
|
132
|
17
|
22
|
2
|
11
|
-
|
-
|
184
|
||||||||||||||||||||||||
Balance at end of period
|
$
|
5,884
|
$
|
5,853
|
$
|
204
|
$
|
1,616
|
$
|
4,456
|
$
|
37
|
$
|
794
|
$
|
18,844
|
|
One- to
Four- Family
|
Multi-Family
|
Home Equity
|
Construction and Land
|
Commercial Real Estate
|
Consumer
|
Commercial
|
Total
|
||||||||||||||||||||||||
(In Thousands)
|
||||||||||||||||||||||||||||||||
Three months ended September 30, 2020
|
||||||||||||||||||||||||||||||||
Balance at beginning of period
|
$
|
5,715
|
$
|
5,870
|
$
|
218
|
$
|
1,153
|
$
|
4,124
|
$
|
38
|
$
|
616
|
$
|
17,734
|
||||||||||||||||
Provision (credit) for loan losses
|
100
|
(25
|
)
|
(18
|
)
|
462
|
328
|
-
|
178
|
1,025
|
||||||||||||||||||||||
Charge-offs
|
(2
|
)
|
-
|
-
|
-
|
-
|
(1
|
)
|
-
|
(3
|
)
|
|||||||||||||||||||||
Recoveries
|
71
|
8
|
4
|
1
|
4
|
-
|
-
|
88
|
||||||||||||||||||||||||
Balance at end of period
|
$
|
5,884
|
$
|
5,853
|
$
|
204
|
$
|
1,616
|
$
|
4,456
|
$
|
37
|
$
|
794
|
$
|
18,844
|
|
One- to
Four- Family
|
Multi-
Family
|
Home
Equity
|
Construction
and Land
|
Commercial
Real Estate
|
Consumer
|
Commercial
|
Total
|
||||||||||||||||||||||||
(In Thousands)
|
||||||||||||||||||||||||||||||||
Allowance related to loans individually evaluated for impairment
|
$
|
24
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
24
|
||||||||||||||||
Allowance related to loans collectively evaluated for impairment
|
5,860
|
5,853
|
204
|
1,616
|
4,456
|
37
|
794
|
18,820
|
||||||||||||||||||||||||
Balance at end of period
|
$
|
5,884
|
$
|
5,853
|
$
|
204
|
$
|
1,616
|
$
|
4,456
|
$
|
37
|
$
|
794
|
$
|
18,844
|
||||||||||||||||
Loans individually evaluated for impairment
|
$
|
8,035
|
$
|
616
|
$
|
75
|
$
|
-
|
$
|
6,037
|
$
|
-
|
$
|
-
|
$
|
14,763
|
||||||||||||||||
Loans collectively evaluated for impairment
|
444,456
|
599,021
|
15,335
|
66,726
|
235,211
|
783
|
57,837
|
1,419,369
|
||||||||||||||||||||||||
Total gross loans
|
$
|
452,491
|
$
|
599,637
|
$
|
15,410
|
$
|
66,726
|
$
|
241,248
|
$
|
783
|
$
|
57,837
|
$
|
1,434,132
|
|
One- to
Four-Family
|
Multi-
Family
|
Home
Equity
|
Construction
and Land
|
Commercial
Real Estate
|
Consumer
|
Commercial
|
Total
|
||||||||||||||||||||||||
(In Thousands)
|
||||||||||||||||||||||||||||||||
Allowance related to loans individually evaluated for impairment
|
$
|
32
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
7
|
$
|
-
|
$
|
-
|
$
|
39
|
||||||||||||||||
Allowance related to loans collectively evaluated for impairment
|
4,875
|
4,138
|
201
|
610
|
2,138
|
14
|
372
|
12,348
|
||||||||||||||||||||||||
Balance at end of period
|
$
|
4,907
|
$
|
4,138
|
$
|
201
|
$
|
610
|
$
|
2,145
|
$
|
14
|
$
|
372
|
$
|
12,387
|
||||||||||||||||
Loans individually evaluated for impairment
|
$
|
8,725
|
$
|
667
|
$
|
84
|
$
|
-
|
$
|
581
|
$
|
-
|
$
|
-
|
$
|
10,057
|
||||||||||||||||
Loans collectively evaluated for impairment
|
471,555
|
584,192
|
17,987
|
37,033
|
236,122
|
832
|
30,253
|
1,377,974
|
||||||||||||||||||||||||
Total gross loans
|
$
|
480,280
|
$
|
584,859
|
$
|
18,071
|
$
|
37,033
|
$
|
236,703
|
$
|
832
|
$
|
30,253
|
$
|
1,388,031
|
|
One
to Four- Family
|
Multi-Family
|
Home
Equity
|
Construction
and Land
|
Commercial
Real Estate
|
Consumer
|
Commercial
|
Total
|
||||||||||||||||||||||||
(In Thousands)
|
||||||||||||||||||||||||||||||||
At September 30, 2020
|
||||||||||||||||||||||||||||||||
Substandard
|
$
|
8,035
|
$
|
616
|
$
|
261
|
$
|
-
|
$
|
325
|
$
|
-
|
$
|
721
|
$
|
9,958
|
||||||||||||||||
Watch
|
6,983
|
-
|
6
|
4,330
|
12,193
|
-
|
4,242
|
27,754
|
||||||||||||||||||||||||
Pass
|
437,473
|
599,021
|
15,143
|
62,396
|
228,730
|
783
|
52,874
|
1,396,420
|
||||||||||||||||||||||||
$
|
452,491
|
$
|
599,637
|
$
|
15,410
|
$
|
66,726
|
$
|
241,248
|
$
|
783
|
$
|
57,837
|
$
|
1,434,132
|
|||||||||||||||||
At December 31, 2019
|
||||||||||||||||||||||||||||||||
Substandard
|
$
|
8,725
|
$
|
668
|
$
|
285
|
$
|
-
|
$
|
581
|
$
|
-
|
$
|
754
|
$
|
11,013
|
||||||||||||||||
Watch
|
5,975
|
-
|
3
|
-
|
1,412
|
-
|
847
|
8,237
|
||||||||||||||||||||||||
Pass
|
465,580
|
584,191
|
17,783
|
37,033
|
234,710
|
832
|
28,652
|
1,368,781
|
||||||||||||||||||||||||
$
|
480,280
|
$
|
584,859
|
$
|
18,071
|
$
|
37,033
|
$
|
236,703
|
$
|
832
|
$
|
30,253
|
$
|
1,388,031
|
|
As of September 30, 2020
|
|||||||||||||||
Recorded
Investment
|
Unpaid
Principal
|
Reserve
|
Cumulative
Charge-Offs
|
|||||||||||||
(In Thousands)
|
||||||||||||||||
Total Impaired with Reserve
|
||||||||||||||||
One- to four-family
|
$
|
210
|
$
|
210
|
$
|
24
|
$
|
-
|
||||||||
Multi-family
|
-
|
-
|
-
|
-
|
||||||||||||
Home equity
|
-
|
-
|
-
|
-
|
||||||||||||
Construction and land
|
-
|
-
|
-
|
-
|
||||||||||||
Commercial real estate
|
-
|
-
|
-
|
-
|
||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
||||||||||||
Commercial
|
-
|
-
|
-
|
-
|
||||||||||||
210
|
210
|
24
|
-
|
|||||||||||||
Total Impaired with no Reserve
|
||||||||||||||||
One- to four-family
|
7,825
|
8,820
|
-
|
995
|
||||||||||||
Multi-family
|
616
|
1,427
|
-
|
811
|
||||||||||||
Home equity
|
75
|
75
|
-
|
-
|
||||||||||||
Construction and land
|
-
|
-
|
-
|
-
|
||||||||||||
Commercial real estate
|
6,037
|
6,037
|
-
|
-
|
||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
||||||||||||
Commercial
|
-
|
-
|
-
|
-
|
||||||||||||
14,553
|
16,359
|
-
|
1,806
|
|||||||||||||
Total Impaired
|
||||||||||||||||
One- to four-family
|
8,035
|
9,030
|
24
|
995
|
||||||||||||
Multi-family
|
616
|
1,427
|
-
|
811
|
||||||||||||
Home equity
|
75
|
75
|
-
|
-
|
||||||||||||
Construction and land
|
-
|
-
|
-
|
-
|
||||||||||||
Commercial real estate
|
6,037
|
6,037
|
-
|
-
|
||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
||||||||||||
Commercial
|
-
|
-
|
-
|
-
|
||||||||||||
$
|
14,763
|
$
|
16,569
|
$
|
24
|
$
|
1,806
|
|
As of December 31, 2019
|
|||||||||||||||
Recorded
Investment
|
Unpaid
Principal
|
Reserve
|
Cumulative
Charge-Offs
|
|||||||||||||
(In Thousands)
|
||||||||||||||||
Total Impaired with Reserve
|
||||||||||||||||
One- to four-family
|
$
|
217
|
$
|
217
|
$
|
32
|
$
|
-
|
||||||||
Multi-family
|
-
|
-
|
-
|
-
|
||||||||||||
Home equity
|
-
|
-
|
-
|
-
|
||||||||||||
Construction and land
|
-
|
-
|
-
|
-
|
||||||||||||
Commercial real estate
|
7
|
416
|
7
|
409
|
||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
||||||||||||
Commercial
|
-
|
-
|
-
|
-
|
||||||||||||
224
|
633
|
39
|
409
|
|||||||||||||
Total Impaired with no Reserve
|
||||||||||||||||
One- to four-family
|
8,508
|
9,531
|
-
|
1,023
|
||||||||||||
Multi-family
|
667
|
1,491
|
-
|
824
|
||||||||||||
Home equity
|
84
|
84
|
-
|
-
|
||||||||||||
Construction and land
|
-
|
-
|
-
|
-
|
||||||||||||
Commercial real estate
|
574
|
574
|
-
|
-
|
||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
||||||||||||
Commercial
|
-
|
-
|
-
|
-
|
||||||||||||
9,833
|
11,680
|
-
|
1,847
|
|||||||||||||
Total Impaired
|
||||||||||||||||
One- to four-family
|
8,725
|
9,748
|
32
|
1,023
|
||||||||||||
Multi-family
|
667
|
1,491
|
-
|
824
|
||||||||||||
Home equity
|
84
|
84
|
-
|
-
|
||||||||||||
Construction and land
|
-
|
-
|
-
|
-
|
||||||||||||
Commercial real estate
|
581
|
990
|
7
|
409
|
||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
||||||||||||
Commercial
|
-
|
-
|
-
|
-
|
||||||||||||
$
|
10,057
|
$
|
12,313
|
$
|
39
|
$
|
2,256
|
|
Nine months ended September 30,
|
|||||||||||||||
2020
|
2019
|
|||||||||||||||
Average
Recorded
Investment
|
Interest
Paid
|
Average
Recorded
Investment
|
Interest
Paid
|
|||||||||||||
(In Thousands)
|
||||||||||||||||
Total Impaired with Reserve
|
||||||||||||||||
One- to four-family
|
$
|
214
|
$
|
12
|
$
|
265
|
$
|
11
|
||||||||
Multi-family
|
-
|
-
|
-
|
-
|
||||||||||||
Home equity
|
-
|
-
|
-
|
-
|
||||||||||||
Construction and land
|
-
|
-
|
-
|
-
|
||||||||||||
Commercial real estate
|
-
|
-
|
11
|
-
|
||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
||||||||||||
Commercial
|
-
|
-
|
-
|
-
|
||||||||||||
214
|
12
|
276
|
11
|
|||||||||||||
Total Impaired with no Reserve
|
||||||||||||||||
One- to four-family
|
7,986
|
353
|
7,779
|
358
|
||||||||||||
Multi-family
|
643
|
61
|
715
|
60
|
||||||||||||
Home equity
|
78
|
3
|
129
|
6
|
||||||||||||
Construction and land
|
-
|
-
|
-
|
-
|
||||||||||||
Commercial real estate
|
6,059
|
208
|
660
|
19
|
||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
||||||||||||
Commercial
|
-
|
-
|
-
|
-
|
||||||||||||
14,766
|
625
|
9,283
|
443
|
|||||||||||||
Total Impaired
|
||||||||||||||||
One- to four-family
|
8,200
|
365
|
8,044
|
369
|
||||||||||||
Multi-family
|
643
|
61
|
715
|
60
|
||||||||||||
Home equity
|
78
|
3
|
129
|
6
|
||||||||||||
Construction and land
|
-
|
-
|
-
|
-
|
||||||||||||
Commercial real estate
|
6,059
|
208
|
671
|
19
|
||||||||||||
Consumer
|
-
|
-
|
-
|
-
|
||||||||||||
Commercial
|
-
|
-
|
-
|
-
|
||||||||||||
$
|
14,980
|
$
|
637
|
$
|
9,559
|
$
|
454
|
|
As of September 30, 2020
|
|||||||||||||||||||||||
Accruing
|
Non-accruing
|
Total
|
||||||||||||||||||||||
Amount
|
Number
|
Amount
|
Number
|
Amount
|
Number
|
|||||||||||||||||||
(Dollars in Thousands)
|
||||||||||||||||||||||||
One- to four-family
|
$
|
2,736
|
2
|
$
|
564
|
4
|
$
|
3,300
|
6
|
|||||||||||||||
Multi-family
|
-
|
-
|
272
|
2
|
272
|
2
|
||||||||||||||||||
Commercial real estate
|
5,986
|
2
|
-
|
-
|
5,986
|
2
|
||||||||||||||||||
$
|
8,722
|
4
|
$
|
836
|
6
|
$
|
9,558
|
10
|
|
As of December 31, 2019
|
|||||||||||||||||||||||
Accruing
|
Non-accruing
|
Total
|
||||||||||||||||||||||
Amount
|
Number
|
Amount
|
Number
|
Amount
|
Number
|
|||||||||||||||||||
(Dollars in Thousands)
|
||||||||||||||||||||||||
One- to four-family
|
$
|
2,740
|
2
|
$
|
685
|
5
|
$
|
3,425
|
7
|
|||||||||||||||
Multi-family
|
-
|
-
|
308
|
2
|
308
|
2
|
||||||||||||||||||
Commercial real estate
|
278
|
1
|
7
|
1
|
285
|
2
|
||||||||||||||||||
$
|
3,018
|
3
|
$
|
1,000
|
8
|
$
|
4,018
|
11
|
|
As of September 30, 2020
|
|||||||||||||||||||||||
Performing in
accordance with
modified terms
|
In Default
|
Total
|
||||||||||||||||||||||
Amount
|
Number
|
Amount
|
Number
|
Amount
|
Number
|
|||||||||||||||||||
(Dollars in Thousands)
|
||||||||||||||||||||||||
Interest reduction and principal forbearance
|
$
|
3,535
|
6
|
$
|
-
|
-
|
$
|
3,535
|
6
|
|||||||||||||||
Interest reduction
|
311
|
3
|
-
|
-
|
311
|
3
|
||||||||||||||||||
Principal forbearance
|
5,712
|
1
|
-
|
-
|
5,712
|
1
|
||||||||||||||||||
$
|
9,558
|
10
|
$
|
-
|
-
|
$
|
9,558
|
10
|
|
As of December 31, 2019
|
|||||||||||||||||||||||
Performing in
accordance with
modified terms
|
In Default
|
Total
|
||||||||||||||||||||||
Amount
|
Number
|
Amount
|
Number
|
Amount
|
Number
|
|||||||||||||||||||
(Dollars in Thousands)
|
||||||||||||||||||||||||
Interest reduction and principal forbearance
|
$
|
3,246
|
6
|
$
|
448
|
2
|
$
|
3,694
|
8
|
|||||||||||||||
Interest reduction
|
324
|
3
|
-
|
-
|
324
|
3
|
||||||||||||||||||
$
|
3,570
|
9
|
$
|
448
|
2
|
$
|
4,018
|
11
|
|
September 30, 2020
|
December 31, 2019
|
||||||
(Dollars in Thousands)
|
||||||||
Non-accrual loans:
|
||||||||
Residential real estate:
|
||||||||
One- to four-family
|
$
|
5,299
|
$
|
5,985
|
||||
Multi-family
|
616
|
667
|
||||||
Home equity
|
75
|
70
|
||||||
Construction and land
|
-
|
-
|
||||||
Commercial real estate
|
51
|
303
|
||||||
Commercial
|
-
|
-
|
||||||
Consumer
|
-
|
-
|
||||||
Total non-accrual loans
|
$
|
6,041
|
$
|
7,025
|
||||
Total non-accrual loans to total loans receivable
|
0.42
|
%
|
0.51
|
%
|
||||
Total non-accrual loans to total assets
|
0.27
|
%
|
0.35
|
%
|
|
September 30, 2020
|
December 31, 2019
|
||||||
(In Thousands)
|
||||||||
One- to four-family
|
$
|
70
|
$
|
46
|
||||
Multi-family
|
-
|
-
|
||||||
Construction and land
|
1,256
|
1,256
|
||||||
Commercial real estate
|
-
|
-
|
||||||
Total real estate owned
|
1,326
|
1,302
|
||||||
Valuation allowance at end of period
|
(554
|
)
|
(554
|
)
|
||||
Total real estate owned, net
|
$
|
772
|
$
|
748
|
|
Nine months ended September 30,
|
|||||||
2020
|
2019
|
|||||||
(In Thousands)
|
||||||||
Real estate owned at beginning of the period
|
$
|
748
|
$
|
2,152
|
||||
Transferred from loans receivable
|
369
|
946
|
||||||
Sales (net of gains / losses)
|
(345
|
)
|
(1,201
|
)
|
||||
Write downs
|
-
|
-
|
||||||
Other
|
-
|
(10
|
)
|
|||||
Real estate owned at the end of the period
|
$
|
772
|
$
|
1,887
|
|
Nine months ended September 30,
|
|||||||
2020
|
2019
|
|||||||
(In Thousands)
|
||||||||
Mortgage servicing rights at beginning of the period
|
$
|
282
|
$
|
109
|
||||
Additions
|
8,936
|
225
|
||||||
Amortization
|
(754
|
)
|
(68
|
)
|
||||
Sales
|
-
|
-
|
||||||
Mortgage servicing rights at end of the period
|
8,464
|
266
|
||||||
Valuation allowance during the period
|
(42
|
)
|
(99
|
)
|
||||
Mortgage servicing rights at end of the period, net
|
$
|
8,422
|
$
|
167
|
Estimate for the period ending December 31:
|
(In Thousands)
|
|||
2020
|
$
|
596
|
||
2021
|
2,609
|
|||
2022
|
1,550
|
|||
2023
|
1,374
|
|||
2024
|
940
|
|||
Thereafter
|
1,353
|
|||
Total
|
$
|
8,422
|
|
(In Thousands)
|
|||
Within one year
|
$
|
701,230
|
||
More than one to two years
|
38,658
|
|||
More than two to three years
|
2,430
|
|||
More than three to four years
|
686
|
|||
More than four through five years
|
1,146
|
|||
$
|
744,150
|
|
September 30, 2020
|
December 31, 2019
|
||||||||||||||
Balance
|
Weighted Average Rate
|
Balance
|
Weighted Average Rate
|
|||||||||||||
(Dollars in Thousands)
|
||||||||||||||||
Short term:
|
||||||||||||||||
Repurchase agreement
|
$
|
48,126
|
3.25
|
%
|
$
|
13,562
|
4.66
|
%
|
||||||||
Federal Home Loan Bank, Chicago
|
34,000
|
0.13
|
%
|
-
|
-
|
|||||||||||
Long term:
|
||||||||||||||||
Federal Home Loan Bank, Chicago advances maturing:
|
||||||||||||||||
2027
|
50,000
|
1.73
|
%
|
50,000
|
1.73
|
%
|
||||||||||
2028
|
255,000
|
2.37
|
%
|
255,000
|
2.37
|
%
|
||||||||||
2029
|
165,000
|
1.61
|
%
|
165,000
|
1.61
|
%
|
||||||||||
$
|
552,126
|
2.02
|
%
|
$
|
483,562
|
2.11
|
%
|
|
September 30, 2020
|
December 31, 2019
|
||||||
(In Thousands)
|
||||||||
Financial instruments whose contract amounts represent potential credit risk:
|
||||||||
Commitments to extend credit under amortizing loans (1)
|
$
|
18,290
|
$
|
13,389
|
||||
Commitments to extend credit under home equity lines of credit (2)
|
13,742
|
13,776
|
||||||
Unused portion of construction loans (3)
|
77,017
|
90,439
|
||||||
Unused portion of business lines of credit
|
19,558
|
14,623
|
||||||
Standby letters of credit
|
1,296
|
885
|
|
Three months ended September 30,
|
Nine months ended September 30,
|
||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
(In Thousands, except per share amounts)
|
||||||||||||||||
Net income
|
$
|
26,293
|
$
|
10,924
|
$
|
53,310
|
$
|
27,109
|
||||||||
Weighted average shares outstanding
|
24,297
|
25,772
|
24,720
|
26,168
|
||||||||||||
Effect of dilutive potential common shares
|
83
|
190
|
122
|
204
|
||||||||||||
Diluted weighted average shares outstanding
|
24,380
|
25,962
|
24,842
|
26,372
|
||||||||||||
Basic earnings per share
|
$
|
1.08
|
$
|
0.42
|
$
|
2.16
|
$
|
1.04
|
||||||||
Diluted earnings per share
|
$
|
1.08
|
$
|
0.42
|
$
|
2.15
|
$
|
1.03
|
|
Fair Value Measurements Using
|
|||||||||||||||
September 30, 2020
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
(In Thousands)
|
||||||||||||||||
Assets
|
||||||||||||||||
Available-for-sale securities
|
||||||||||||||||
Mortgage-backed securities
|
$
|
26,100
|
$
|
-
|
$
|
26,100
|
$
|
-
|
||||||||
Collateralized mortgage obligations
|
||||||||||||||||
Government sponsored enterprise issued
|
59,519
|
-
|
59,519
|
-
|
||||||||||||
Private-label issued
|
3,650
|
-
|
3,650
|
-
|
||||||||||||
Government sponsored enterprise bonds
|
2,499
|
-
|
2,499
|
-
|
||||||||||||
Municipal securities
|
50,162
|
-
|
50,162
|
-
|
||||||||||||
Other debt securities
|
11,271
|
-
|
11,271
|
-
|
||||||||||||
Loans held for sale
|
385,803
|
-
|
385,803
|
-
|
||||||||||||
Mortgage banking derivative assets
|
12,600
|
-
|
-
|
12,600
|
||||||||||||
Interest rate swap assets
|
5,794
|
-
|
5,794
|
-
|
||||||||||||
Liabilities
|
||||||||||||||||
Mortgage banking derivative liabilities
|
445
|
-
|
-
|
445
|
||||||||||||
Interest rate swap liabilities
|
5,794
|
-
|
5,794
|
-
|
|
Fair Value Measurements Using
|
|||||||||||||||
December 31, 2019
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
(In Thousands)
|
||||||||||||||||
Assets
|
||||||||||||||||
Available-for-sale securities
|
||||||||||||||||
Mortgage-backed securities
|
$
|
34,150
|
$
|
-
|
$
|
34,150
|
$
|
-
|
||||||||
Collateralized mortgage obligations
|
||||||||||||||||
Government sponsored enterprise issued
|
81,754
|
-
|
81,754
|
-
|
||||||||||||
Municipal securities
|
53,692
|
-
|
53,692
|
-
|
||||||||||||
Other debt securities
|
8,880
|
-
|
8,880
|
-
|
||||||||||||
Loans held for sale
|
220,123
|
-
|
220,123
|
-
|
||||||||||||
Mortgage banking derivative assets
|
1,835
|
-
|
-
|
1,835
|
||||||||||||
Interest rate swap assets
|
680
|
-
|
680
|
-
|
||||||||||||
Liabilities
|
||||||||||||||||
Mortgage banking derivative liabilities
|
-
|
-
|
-
|
-
|
||||||||||||
Interest rate swap liabilities
|
680
|
-
|
680
|
-
|
|
Nine months ended September 30,
|
|||||||
2020
|
2019
|
|||||||
(In Thousands)
|
||||||||
Mortgage derivative, net balance at the beginning of the period
|
$
|
1,835
|
$
|
898
|
||||
Mortgage derivative gain, net
|
10,320
|
2,345
|
||||||
Mortgage derivative, net balance at the end of the period
|
$
|
12,155
|
$
|
3,243
|
|
Fair Value Measurements Using
|
|||||||||||||||
September 30, 2020
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
(In Thousands)
|
||||||||||||||||
Impaired loans, net (1)
|
$
|
186
|
$
|
-
|
$
|
-
|
$
|
186
|
||||||||
Real estate owned
|
772
|
-
|
-
|
772
|
||||||||||||
Impaired mortgage servicing rights
|
235
|
-
|
-
|
235
|
|
Fair Value Measurements Using
|
|||||||||||||||
December 31, 2019
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
(In Thousands)
|
||||||||||||||||
Impaired loans, net (1)
|
$
|
185
|
$
|
-
|
$
|
-
|
$
|
185
|
||||||||
Real estate owned
|
748
|
-
|
-
|
748
|
||||||||||||
Impaired mortgage servicing rights
|
206
|
-
|
-
|
206
|
|
Significant Unobservable
Input Value
|
|||||||||||||||||
Fair Value at
September 30, 2020
|
Valuation
Technique
|
Significant
Unobservable
Inputs
|
Minimum
Value
|
Maximum
Value
|
Weighted Average
|
|||||||||||||
Mortgage banking derivatives, net
|
$
|
12,155
|
Pricing models
|
Pull through rate
|
12.0
|
%
|
95.0
|
%
|
86.0
|
%
|
||||||||
Impaired loans
|
186
|
Market approach
|
Discount rates applied to appraisals
|
15.0
|
%
|
15.0
|
%
|
15.0
|
%
|
|||||||||
Real estate owned
|
772
|
Market approach
|
Discount rates applied to appraisals
|
13.0
|
%
|
59.0
|
%
|
48.0
|
%
|
|||||||||
Mortgage servicing rights
|
235
|
Pricing models
|
Prepayment rate
|
7.9
|
%
|
36.4
|
%
|
15.2
|
%
|
|||||||||
Discount rate
|
9.5
|
%
|
14.3
|
%
|
10.0
|
%
|
||||||||||||
Cost to service
|
$
|
76.46
|
$
|
164.13
|
$
|
83.17
|
|
September 30, 2020
|
December 31, 2019
|
||||||||||||||||||||||||||||||||||||||
Carrying
amount
|
Fair Value
|
Carrying
amount
|
Fair Value
|
|||||||||||||||||||||||||||||||||||||
Total
|
Level 1
|
Level 2
|
Level 3
|
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||||||||||||||||||||||
(In Thousands)
|
||||||||||||||||||||||||||||||||||||||||
Financial Assets
|
||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents
|
$
|
86,562
|
$
|
86,562
|
$
|
86,562
|
$
|
-
|
$
|
-
|
$
|
74,300
|
$
|
74,300
|
$
|
65,800
|
$
|
8,500
|
$
|
-
|
||||||||||||||||||||
Securities available-for-sale
|
153,201
|
153,201
|
-
|
153,201
|
-
|
178,476
|
178,476
|
-
|
178,476
|
-
|
||||||||||||||||||||||||||||||
Loans held for sale
|
385,803
|
385,803
|
-
|
385,803
|
-
|
220,123
|
220,123
|
-
|
220,123
|
-
|
||||||||||||||||||||||||||||||
Loans receivable
|
1,434,132
|
1,448,660
|
-
|
-
|
1,448,660
|
1,388,031
|
1,426,224
|
-
|
-
|
1,426,224
|
||||||||||||||||||||||||||||||
FHLB stock
|
26,720
|
26,720
|
-
|
26,720
|
-
|
21,150
|
21,150
|
-
|
21,150
|
-
|
||||||||||||||||||||||||||||||
Accrued interest receivable
|
5,163
|
5,163
|
5,163
|
-
|
-
|
5,344
|
5,344
|
5,344
|
-
|
-
|
||||||||||||||||||||||||||||||
Mortgage servicing rights
|
8,422
|
9,926
|
-
|
-
|
9,926
|
282
|
282
|
-
|
-
|
282
|
||||||||||||||||||||||||||||||
Mortgage banking derivative assets
|
12,600
|
12,600
|
-
|
-
|
12,600
|
1,835
|
1,835
|
-
|
-
|
1,835
|
||||||||||||||||||||||||||||||
Interest rate swap asset
|
5,794
|
5,794
|
-
|
5,794
|
-
|
680
|
680
|
-
|
680
|
-
|
||||||||||||||||||||||||||||||
Financial Liabilities
|
||||||||||||||||||||||||||||||||||||||||
Deposits
|
1,184,651
|
1,185,424
|
440,501
|
744,923
|
-
|
1,067,776
|
1,070,083
|
328,005
|
742,078
|
-
|
||||||||||||||||||||||||||||||
Advance payments by borrowers for taxes
|
25,987
|
25,987
|
25,987
|
-
|
-
|
4,212
|
4,212
|
4,212
|
-
|
-
|
||||||||||||||||||||||||||||||
Borrowings
|
552,126
|
572,521
|
-
|
572,521
|
-
|
483,562
|
483,846
|
-
|
483,846
|
-
|
||||||||||||||||||||||||||||||
Accrued interest payable
|
1,314
|
1,314
|
1,314
|
-
|
-
|
1,559
|
1,559
|
1,559
|
-
|
-
|
||||||||||||||||||||||||||||||
Mortgage banking derivative liabilities
|
445
|
445
|
-
|
-
|
445
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||
Interest rate swap liability
|
5,794
|
5,794
|
-
|
5,794
|
-
|
680
|
680
|
-
|
680
|
-
|
|
As of or for the three months ended September 30, 2020
|
|||||||||||||||
Community
Banking
|
Mortgage
Banking
|
Holding Company and
Other
|
Consolidated
|
|||||||||||||
(In Thousands)
|
||||||||||||||||
Net interest income (expense)
|
$
|
13,461
|
$
|
(58
|
)
|
$
|
6
|
$
|
13,409
|
|||||||
Provision for loan losses
|
1,000
|
25
|
-
|
1,025
|
||||||||||||
Net interest income (expense) after provision for loan losses
|
12,461
|
(83
|
)
|
6
|
12,384
|
|||||||||||
Noninterest income
|
3,104
|
73,143
|
(484
|
)
|
75,763
|
|||||||||||
Noninterest expenses:
|
||||||||||||||||
Compensation, payroll taxes, and other employee benefits
|
5,000
|
34,559
|
(154
|
)
|
39,405
|
|||||||||||
Occupancy, office furniture and equipment
|
874
|
1,595
|
-
|
2,469
|
||||||||||||
Advertising
|
252
|
609
|
-
|
861
|
||||||||||||
Data processing
|
490
|
426
|
6
|
922
|
||||||||||||
Communications
|
113
|
226
|
-
|
339
|
||||||||||||
Professional fees
|
266
|
4,465
|
7
|
4,738
|
||||||||||||
Real estate owned
|
11
|
-
|
-
|
11
|
||||||||||||
Loan processing expense
|
-
|
1,336
|
-
|
1,336
|
||||||||||||
Other
|
818
|
2,444
|
(342
|
)
|
2,920
|
|||||||||||
Total noninterest expenses
|
7,824
|
45,660
|
(483
|
)
|
53,001
|
|||||||||||
Income before income taxes
|
7,741
|
27,400
|
5
|
35,146
|
||||||||||||
Income tax expense
|
1,565
|
7,284
|
4
|
8,853
|
||||||||||||
Net income
|
$
|
6,176
|
$
|
20,116
|
$
|
1
|
$
|
26,293
|
||||||||
Total assets
|
$
|
2,118,968
|
$
|
458,526
|
$
|
(356,672
|
)
|
$
|
2,220,822
|
|
As of or for the three months ended September 30, 2019
|
|||||||||||||||
Community
Banking
|
Mortgage
Banking
|
Holding Company and
Other
|
Consolidated
|
|||||||||||||
(In Thousands)
|
||||||||||||||||
Net interest income (expense)
|
$
|
13,885
|
$
|
(774
|
)
|
$
|
43
|
$
|
13,154
|
|||||||
Provision for loan losses
|
(150
|
)
|
70
|
-
|
(80
|
)
|
||||||||||
Net interest income (expense) after provision for loan losses
|
14,035
|
(844
|
)
|
43
|
13,234
|
|||||||||||
Noninterest income
|
1,415
|
36,535
|
(456
|
)
|
37,494
|
|||||||||||
Noninterest expenses:
|
||||||||||||||||
Compensation, payroll taxes, and other employee benefits
|
4,075
|
23,616
|
(177
|
)
|
27,514
|
|||||||||||
Occupancy, office furniture and equipment
|
942
|
1,687
|
-
|
2,629
|
||||||||||||
Advertising
|
202
|
711
|
-
|
913
|
||||||||||||
Data processing
|
588
|
411
|
4
|
1,003
|
||||||||||||
Communications
|
90
|
268
|
-
|
358
|
||||||||||||
Professional fees
|
223
|
688
|
43
|
954
|
||||||||||||
Real estate owned
|
24
|
-
|
-
|
24
|
||||||||||||
Loan processing expense
|
-
|
858
|
-
|
858
|
||||||||||||
Other
|
583
|
1,725
|
(329
|
)
|
1,979
|
|||||||||||
Total noninterest expenses
|
6,727
|
29,964
|
(459
|
)
|
36,232
|
|||||||||||
Income before income taxes
|
8,723
|
5,727
|
46
|
14,496
|
||||||||||||
Income tax expense
|
1,982
|
1,584
|
6
|
3,572
|
||||||||||||
Net income
|
$
|
6,741
|
$
|
4,143
|
$
|
40
|
$
|
10,924
|
||||||||
Total assets
|
$
|
1,969,835
|
$
|
301,565
|
$
|
(265,971
|
)
|
$
|
2,005,429
|
|
As of or for the nine months ended September 30, 2020
|
|||||||||||||||
Community
Banking
|
Mortgage
Banking
|
Holding Company and
Other
|
Consolidated
|
|||||||||||||
(In Thousands)
|
||||||||||||||||
Net interest income (expense)
|
$
|
40,070
|
$
|
(948
|
)
|
$
|
62
|
$
|
39,184
|
|||||||
Provision for loan losses
|
6,075
|
235
|
-
|
6,310
|
||||||||||||
Net interest income (expense) after provision for loan losses
|
33,995
|
(1,183
|
)
|
62
|
32,874
|
|||||||||||
Noninterest income
|
7,068
|
168,159
|
(1,096
|
)
|
174,131
|
|||||||||||
Noninterest expenses:
|
||||||||||||||||
Compensation, payroll taxes, and other employee benefits
|
15,074
|
86,085
|
(464
|
)
|
100,695
|
|||||||||||
Occupancy, office furniture and equipment
|
2,754
|
4,990
|
-
|
7,744
|
||||||||||||
Advertising
|
797
|
1,828
|
-
|
2,625
|
||||||||||||
Data processing
|
1,773
|
1,234
|
16
|
3,023
|
||||||||||||
Communications
|
301
|
693
|
-
|
994
|
||||||||||||
Professional fees
|
690
|
6,935
|
22
|
7,647
|
||||||||||||
Real estate owned
|
55
|
-
|
-
|
55
|
||||||||||||
Loan processing expense
|
-
|
3,620
|
-
|
3,620
|
||||||||||||
Other
|
1,930
|
8,235
|
(670
|
)
|
9,495
|
|||||||||||
Total noninterest expenses
|
23,374
|
113,620
|
(1,096
|
)
|
135,898
|
|||||||||||
Income before income taxes
|
17,689
|
53,356
|
62
|
71,107
|
||||||||||||
Income tax expense
|
3,293
|
14,492
|
12
|
17,797
|
||||||||||||
Net income
|
$
|
14,396
|
$
|
38,864
|
$
|
50
|
$
|
53,310
|
|
As of or for the nine months ended September 30, 2019
|
|||||||||||||||
Community
Banking
|
Mortgage
Banking
|
Holding Company and
Other
|
Consolidated
|
|||||||||||||
(In Thousands)
|
||||||||||||||||
Net interest income (expense)
|
$
|
40,547
|
$
|
(1,511
|
)
|
$
|
35
|
$
|
39,071
|
|||||||
Provision (credit) for loan losses
|
(850
|
)
|
120
|
-
|
(730
|
)
|
||||||||||
Net interest income (expense) after provision for loan losses
|
41,397
|
(1,631
|
)
|
35
|
39,801
|
|||||||||||
Noninterest income
|
3,375
|
94,470
|
(904
|
)
|
96,941
|
|||||||||||
Noninterest expenses:
|
||||||||||||||||
Compensation, payroll taxes, and other employee benefits
|
13,502
|
62,255
|
(530
|
)
|
75,227
|
|||||||||||
Occupancy, office furniture and equipment
|
2,858
|
5,227
|
-
|
8,085
|
||||||||||||
Advertising
|
603
|
2,231
|
-
|
2,834
|
||||||||||||
Data processing
|
1,538
|
1,091
|
12
|
2,641
|
||||||||||||
Communications
|
265
|
774
|
-
|
1,039
|
||||||||||||
Professional fees
|
651
|
1,734
|
53
|
2,438
|
||||||||||||
Real estate owned
|
75
|
-
|
-
|
75
|
||||||||||||
Loan processing expense
|
-
|
2,542
|
-
|
2,542
|
||||||||||||
Other
|
1,707
|
4,823
|
(475
|
)
|
6,055
|
|||||||||||
Total noninterest expenses
|
21,199
|
80,677
|
(940
|
)
|
100,936
|
|||||||||||
Income before income taxes
|
23,573
|
12,162
|
71
|
35,806
|
||||||||||||
Income tax expense
|
5,263
|
3,415
|
19
|
8,697
|
||||||||||||
Net income
|
$
|
18,310
|
$
|
8,747
|
$
|
52
|
$
|
27,109
|
|
Three months ended September 30, 2020
|
Three months ended September 30, 2019
|
Nine months ended September 30, 2020
|
Nine months ended September 30, 2019
|
||||||||||||
(In Thousands)
|
||||||||||||||||
Operating lease cost
|
$
|
786
|
$
|
809
|
$
|
2,380
|
$
|
2,371
|
||||||||
Variable cost
|
134
|
111
|
374
|
527
|
||||||||||||
Short-term lease cost
|
184
|
230
|
563
|
757
|
||||||||||||
Total
|
$
|
1,104
|
$
|
1,150
|
$
|
3,317
|
$
|
3,655
|
|
Nine months ended September 30, 2020
|
|||
(Dollars in Thousands)
|
||||
Cash paid for amounts included in the measurement of lease liabilities
|
||||
Operating cash flows from operating leases
|
$
|
2,689
|
||
Initial recognition of right of use asset
|
474
|
|||
Initial recognition of lease liabilities
|
474
|
|||
Weighted average remaining lease term - operating leases, in years
|
2.7
|
|||
Weighted average discount rate - operating leases
|
5.3
|
%
|
Maturity analysis
|
Operating leases
|
|||
(In Thousands)
|
||||
One year or less
|
$
|
2,930
|
||
More than one year through two years
|
1,988
|
|||
More than two years through three years
|
1,511
|
|||
More than three years through four years
|
715
|
|||
More than four years through five years
|
92
|
|||
More than five years
|
918
|
|||
Total lease payments
|
8,154
|
|||
Present value discount
|
(1,182
|
)
|
||
Lease liability
|
$
|
6,972
|
●
|
Statements of our goals, intentions and expectations;
|
|
●
|
Statements regarding our business plans, prospects, growth and operating strategies;
|
|
●
|
Statements regarding the quality of our loan and investment portfolio; and
|
|
●
|
Estimates of our risks and future costs and benefits.
|
●
|
general economic conditions, either nationally or in our market area, including employment prospects, that are different than expected;
|
|
●
|
the effect of any pandemic; including COVID-19;
|
|
●
|
competition among depository and other financial institutions;
|
|
●
|
inflation and changes in the interest rate environment that reduce our margins and yields, our mortgage banking revenues, the fair value of financial instruments or the origination levels in our lending business, or increase the level of defaults, losses or prepayments on loans we have made and make whether held in portfolio or sold in the secondary markets;
|
|
●
|
adverse changes in the securities or secondary mortgage markets;
|
|
●
|
changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements;
|
|
●
|
changes in monetary or fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board;
|
|
●
|
our ability to manage market risk, credit risk and operational risk in the current economic conditions;
|
|
●
|
our ability to enter new markets successfully and capitalize on growth opportunities;
|
|
●
|
our ability to successfully integrate acquired entities;
|
|
●
|
decreased demand for our products and services;
|
|
●
|
changes in tax policies or assessment policies;
|
|
●
|
the inability of third-party providers to perform their obligations to us;
|
|
●
|
changes in consumer demand, spending, borrowing and savings habits;
|
|
●
|
changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board;
|
|
●
|
our ability to retain key employees;
|
|
●
|
cyber attacks, computer viruses and other technological risks that may breach the security of our websites or other systems to obtain unauthorized access to confidential information and destroy data or disable our systems;
|
|
●
|
technological changes that may be more difficult or expensive than expected;
|
|
●
|
the ability of third-party providers to perform their obligations to us;
|
|
●
|
the effects of any federal government shutdown;
|
|
●
|
the ability of the U.S. Government to manage federal debt limits;
|
|
●
|
significant increases in our loan losses; and
|
|
●
|
changes in the financial condition, results of operations or future prospects of issuers of securities that we own.
|
•
|
The CARES Act allows 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 after the end of the COVID-19 national emergency. During the quarter ended March 31, 2020, pursuant to the recently-enacted CARES Act and guidance from the Securities and Exchange Commission (“SEC”) and Financial Accounting Standards Board (“FASB”), we elected to delay adoption of CECL. Our September 30, 2020 financial statements include an allowance for loan losses that was prepared under the existing incurred loss methodology.
|
•
|
Under the CARES Act, loans less than 30 days past due as of December 31, 2019 and COVID-19 modifications are considered current. A financial institution suspended the requirements under accounting principles generally accepted in the United States (US GAAP) for loan modifications related to COVID-19 that would otherwise be categorized as a troubled debt restructuring (“TDR”). This includes a suspension of the requirement to determine impairment of these modifications for accounting purposes. In keeping with regulatory guidance to work with borrowers during this unprecedented situation, the Company has executed a payment deferral program for our lending clients that are adversely affected by the pandemic. As of September 30, 2020, the Company had modified eight loans totaling $3.2 million consisting of principal or principal and interest. In accordance with the CARES Act issued in April 2020, these short-term deferrals are not considered troubled debt restructurings.
|
•
|
The CARES Act authorized the Small Business Administration (“SBA”) to temporarily guarantee loans under a new loan program call the Paycheck Protection Program (“PPP”). As a qualified SBA lender, we were automatically authorized to originate PPP loans. The Company is actively participating in assisting our customers with applications for resources through the program. PPP loans will have: (a) an interest rate of 1.0%, (b) a five-year loan term to maturity for loans made on or after June 5, 2020 (loans made prior to June 5, 2020 have a two-year term, however borrowers and lenders may mutually agree to extend the maturity for such loans to five years); and (c) principal and interest payments deferred for six months from the date of disbursement. The SBA will guarantee 100% of the PPP loans made to eligible borrowers. The entire principal amount of the borrower’s PPP loan, including any accrued interest, is eligible to be reduced by the loan forgiveness amount under the PPP. As of September 30, 2020, we have funded 279 loans totaling $30.1 million. The $30.1 million is outstanding as of September 30, 2020.
|
|
Three months ended September 30,
|
|||||||
2020
|
2019
|
|||||||
(Dollars in Thousands, except per share amounts)
|
||||||||
Net income
|
$
|
26,293
|
10,924
|
|||||
Earnings per share - basic
|
1.08
|
0.42
|
||||||
Earnings per share - diluted
|
1.08
|
0.42
|
||||||
Annualized return on average assets
|
4.78
|
%
|
2.17
|
%
|
||||
Annualized return on average equity
|
26.30
|
%
|
11.15
|
%
|
||||
|
Three months ended September 30,
|
|||||||||||||||||||||||
2020
|
2019
|
|||||||||||||||||||||||
Average Balance
|
Interest
|
Yield/Cost
|
Average Balance
|
Interest
|
Yield/Cost
|
|||||||||||||||||||
(Dollars in Thousands)
|
||||||||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Loans receivable and held for sale (1)
|
$
|
$1,766,715
|
$
|
$18,224
|
4.10
|
%
|
$
|
$1,579,575
|
$
|
$18,558
|
4.66
|
%
|
||||||||||||
Mortgage related securities (2)
|
96,529
|
588
|
2.42
|
%
|
114,051
|
737
|
2.56
|
%
|
||||||||||||||||
Debt securities, federal funds sold and short-term investments (2)(3)
|
166,160
|
801
|
1.92
|
%
|
169,621
|
1,157
|
2.71
|
%
|
||||||||||||||||
Total interest-earning assets
|
2,029,404
|
19,613
|
3.84
|
%
|
1,863,247
|
20,452
|
4.35
|
%
|
||||||||||||||||
Noninterest-earning assets
|
160,526
|
137,723
|
||||||||||||||||||||||
Total assets
|
$
|
$2,189,930
|
$
|
$2,000,970
|
||||||||||||||||||||
Liabilities and equity
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Demand accounts
|
$
|
$50,590
|
11
|
0.09
|
%
|
$
|
$37,015
|
8
|
0.09
|
%
|
||||||||||||||
Money market, savings, and escrow accounts
|
282,349
|
473
|
0.67
|
%
|
206,474
|
298
|
0.57
|
%
|
||||||||||||||||
Time deposits
|
741,265
|
3,011
|
1.62
|
%
|
739,544
|
4,173
|
2.24
|
%
|
||||||||||||||||
Total interest-bearing deposits
|
1,074,204
|
3,495
|
1.29
|
%
|
983,033
|
4,479
|
1.81
|
%
|
||||||||||||||||
Borrowings
|
531,588
|
2,640
|
1.98
|
%
|
509,099
|
2,745
|
2.14
|
%
|
||||||||||||||||
Total interest-bearing liabilities
|
1,605,792
|
6,135
|
1.52
|
%
|
1,492,132
|
7,224
|
1.92
|
%
|
||||||||||||||||
Noninterest-bearing liabilities
|
||||||||||||||||||||||||
Noninterest-bearing deposits
|
129,911
|
86,849
|
||||||||||||||||||||||
Other noninterest-bearing liabilities
|
56,451
|
33,130
|
||||||||||||||||||||||
Total noninterest-bearing liabilities
|
186,362
|
119,979
|
||||||||||||||||||||||
Total liabilities
|
1,792,154
|
1,612,111
|
||||||||||||||||||||||
Equity
|
397,776
|
388,859
|
||||||||||||||||||||||
Total liabilities and equity
|
$
|
$2,189,930
|
$
|
$2,000,970
|
||||||||||||||||||||
Net interest income / Net interest rate spread (4)
|
13,478
|
2.32
|
%
|
13,228
|
2.43
|
%
|
||||||||||||||||||
Less: taxable equivalent adjustment
|
69
|
0.01
|
%
|
74
|
0.01
|
%
|
||||||||||||||||||
Net interest income / Net interest rate spread, as reported
|
$
|
$13,409
|
2.31
|
%
|
$
|
$13,154
|
2.42
|
%
|
||||||||||||||||
Net interest-earning assets (5)
|
$
|
$423,612
|
$
|
$371,115
|
||||||||||||||||||||
Net interest margin (6)
|
2.63
|
%
|
2.80
|
%
|
||||||||||||||||||||
Tax equivalent effect
|
0.01
|
%
|
0.02
|
%
|
||||||||||||||||||||
Net interest margin on a fully tax equivalent basis (6)
|
2.64
|
%
|
2.82
|
%
|
||||||||||||||||||||
Average interest-earning assets to average interest-bearing liabilities
|
126.38
|
%
|
124.87
|
%
|
|
Three months ended September 30,
|
|||||||||||
2020 versus 2019
|
||||||||||||
Increase (Decrease) due to
|
||||||||||||
Volume
|
Rate
|
Net
|
||||||||||
(In Thousands)
|
||||||||||||
Interest income:
|
||||||||||||
Loans receivable and held for sale (1)(2)
|
$
|
2,030
|
$
|
(2,364
|
)
|
$
|
(334
|
)
|
||||
Mortgage related securities (3)
|
(107
|
)
|
(42
|
)
|
(149
|
)
|
||||||
Debt securities, federal funds sold and short-term investments (3)(4)
|
(23
|
)
|
(333
|
)
|
(356
|
)
|
||||||
Total interest-earning assets
|
1,900
|
(2,739
|
)
|
(839
|
)
|
|||||||
Interest expense:
|
||||||||||||
Demand accounts
|
3
|
-
|
3
|
|||||||||
Money market, savings, and escrow accounts
|
118
|
57
|
175
|
|||||||||
Time deposits
|
10
|
(1,172
|
)
|
(1,162
|
)
|
|||||||
Total interest-earning deposits
|
131
|
(1,115
|
)
|
(984
|
)
|
|||||||
Borrowings
|
150
|
(255
|
)
|
(105
|
)
|
|||||||
Total interest-bearing liabilities
|
281
|
(1,370
|
)
|
(1,089
|
)
|
|||||||
Net change in net interest income
|
$
|
1,619
|
$
|
(1,369
|
)
|
$
|
250
|
●
|
Interest income on loans decreased $334,000 due primarily to a 56 basis point decrease in average yield on loans as London Interbank Offered Rate (LIBOR) and U.S. Treasury rates continued to decrease offset by an increase of $187.1 million, or 11.8%, in average loans. The increase in average loan balance was driven by a $49.7 million, or 3.6%, increase in the average balance of loans held in portfolio and by an increase of $137.5 million, or 68.8%, in the average balance of loans held for sale.
|
|
●
|
Interest income from mortgage-related securities decreased $149,000 as the yield decreased 14 basis points and the average balance decreased $17.5 million.
|
|
●
|
Interest income from other interest-earning assets (comprised of debt securities, federal funds sold and short-term investments) decreased $351,000 due to a 78 basis point decrease in the average yield. The decrease in average yield was primarily driven by the decrease in federal funds rate over the past year and as higher yielding securities have matured. The average balance decreased $3.5 million to $166.2 million due to a lower municipal securities balances as maturities that occurred throughout the past 12 months were not replaced due to market conditions. Offsetting those decreases, the balance of FHLB stock increased with additional FHLB borrowings.
|
|
●
|
Interest expense on time deposits decreased $1.2 million, or 27.8%, primarily due to a 62 basis point decrease in average cost of time deposits. Offset the decrease in average cost of time deposits, the average balance of time deposits increased $1.7 million compared to the prior year period.
|
|
●
|
Interest expense on money market, savings, and escrow accounts increased $175,000, or 58.7%, due primarily to a 10 basis point increase in average cost of money market, savings, and escrow accounts along with an increase in average balance of $75.9 million. Money market accounts have been a focus over the year and the Company has aggressively marketed new customers through various new offerings and new branches that opened within the past 12 months.
|
|
●
|
Interest expense on borrowings decreased $105,000, or 3.8%, due to a decrease in the average cost of borrowings of 16 basis points to 1.98% during the three months ended September 30, 2020 compared to 2.14% during the three months ended September 30, 2019. The decrease in the cost of borrowings resulted from the new short-term fundings borrowed at a lower rate. Offsetting the decrease in rate, the average borrowing volume increased $22.5 million to $531.6 million during the three months ended September 30, 2020, compared to $509.1 million during the three months ended September 30, 2019. The increase was primarily due to the funding of the loans held for sale.
|
|
Three months ended September 30,
|
|||||||||||||||
2020
|
2019
|
$ Change
|
% Change
|
|||||||||||||
(Dollars in Thousands)
|
||||||||||||||||
Service charges on loans and deposits
|
$
|
672
|
$
|
503
|
$
|
169
|
33.6
|
%
|
||||||||
Increase in cash surrender value of life insurance
|
714
|
728
|
(14
|
)
|
(1.9
|
)%
|
||||||||||
Mortgage banking income
|
72,112
|
36,062
|
36,050
|
100.0
|
%
|
|||||||||||
Other
|
2,265
|
201
|
2,064
|
1,026.9
|
%
|
|||||||||||
Total noninterest income
|
$
|
75,763
|
$
|
37,494
|
$
|
38,269
|
102.1
|
%
|
●
|
The increase in mortgage banking income was primarily the result of an increase in loan origination volume and gross margin on loans originated and sold. Gross margin on loans originated and sold is the ratio of mortgage banking income (excluding the change in interest rate lock fair value) divided by total loan originations. Total loan origination volume on a consolidated basis increased $445.8 million, or 54.2%, to $1.27 billion during the three months ended September 30, 2020 compared to $822.8 million during the three months ended September 30, 2019. Gross margin on loans originated and sold increased 26.5% at the mortgage banking segment. See "Comparison of Mortgage Banking Segment Results of Operations for the Three Months Ended September 30, 2020 and 2019" above for additional discussion of the increase in mortgage banking income.
|
|
●
|
Service charges on loans and deposits increased primarily due to loan prepayment fees and fees earned on loan swaps.
|
|
●
|
The decrease in cash surrender value of life insurance was due primarily to an decrease in balance as death benefit proceeds were received on two policies.
|
|
●
|
The increase in other noninterest income was due primarily to increases in gain from death benefit on bank owned life insurance, mortgage servicing fee income, wealth management revenue, and rental income. Mortgage servicing fee income increased as loans sold with servicing rights retained increased due to market conditions.
|
|
Three months ended September 30,
|
|||||||||||||||
2020
|
2019
|
$ Change
|
% Change
|
|||||||||||||
(Dollars in Thousands)
|
||||||||||||||||
Compensation, payroll taxes, and other employee benefits
|
$
|
39,405
|
$
|
27,514
|
$
|
11,891
|
43.2
|
%
|
||||||||
Occupancy, office furniture and equipment
|
2,469
|
2,629
|
(160
|
)
|
(6.1
|
)%
|
||||||||||
Advertising
|
861
|
913
|
(52
|
)
|
(5.7
|
)%
|
||||||||||
Data processing
|
922
|
1,003
|
(81
|
)
|
(8.1
|
)%
|
||||||||||
Communications
|
339
|
358
|
(19
|
)
|
(5.3
|
)%
|
||||||||||
Professional fees
|
4,738
|
954
|
3,784
|
396.6
|
%
|
|||||||||||
Real estate owned
|
11
|
24
|
(13
|
)
|
(54.2
|
)%
|
||||||||||
Loan processing expense
|
1,336
|
858
|
478
|
55.7
|
%
|
|||||||||||
Other
|
2,920
|
1,979
|
941
|
47.5
|
%
|
|||||||||||
Total noninterest expenses
|
$
|
53,001
|
$
|
36,232
|
$
|
16,769
|
46.3
|
%
|
●
|
Compensation, payroll taxes and other employee benefits expense at our mortgage banking segment increased $10.9 million, or 46.3%, to $34.6 million during the three months ended September 30, 2020. The increase in compensation expense was primarily a result of an increase in commission expense as fundings increased and branch manager pay increased as branches were more profitable.
|
|
●
|
Compensation, payroll taxes and other employee benefits expense at the community banking segment increased $925,000, or 22.7%, to $5.0 million during the three months ended September 30, 2020. The increase was due primarily to an increase in salaries expense due to annual raises and additional branches, health insurance expense as claims increased, and variable compensation as executives are eligible for an increased bonus.
|
|
●
|
Occupancy, office furniture and equipment expense at the mortgage banking segment decreased $92,000 to $1.6 million during the three months ended September 30, 2020, primarily resulting from lower rent expense offset by an increase in computer equipment expense to accomodate remote working.
|
|
●
|
Occupancy, office furniture and equipment expense at the community banking segment decreased $68,000 to $874,000 during the three months ended September 30, 2020. The decrease was due primarily to decreased computer and furniture and equipment expenses.
|
|
●
|
Advertising expense decreased $52,000, or 5.7%, to $861,000 during the three months ended September 30, 2020. This was primarily due to marketing decreases at the mortgage banking segment as volumes were largely driven by lower rates. Advertising at the community banking segment increased due to promotions for deposit customers.
|
|
●
|
Data processing expense decreased $81,000, or 8.1%, to $922,000 during the three months ended September 30, 2020. This was primarily due to conversion expenses for the new ditigal banking platform rollout at the community banking segment during the three months ended September 30, 2019.
|
|
●
|
Professional fees increased $3.8 million to $4.7 million during the three months ended September 30, 2020. This was primarily due to a $4.25 million tentative legal settlement (see further discussion in Note 10 - Commitments, Off-Balance Sheet Arrangements, and Contingent Liabilities of the notes to unaudited consolidated financial statements for additional information).
|
|
●
|
Loan processing expense increased $478,000, or 55.7%, to $1.3 million during the three months ended September 30, 2020. This was primarily due to an increase in loan costs associated with the increased application volumes as mortgage rates declined.
|
|
●
|
Other noninterest expense increased $941,000, or 47.5%, to $2.9 million during the three months ended September 30, 2020. The increase at the mortgage banking segment was primarily due to amortization of mortgage servicing rights as the value of the servicing portfolio has increased in 2020 compared to 2019. Additionally, other noninterest expenses increased at the community banking segment as the FDIC issued a credit for the three months ended September 30, 2019 but not for the three months ended September 30, 2020.
|
|
Nine months ended September 30,
|
|||||||
2020
|
2019
|
|||||||
(Dollars in Thousands, except per share amounts)
|
||||||||
Net income
|
$
|
53,310
|
$
|
$27,109
|
||||
Earnings per share - basic
|
2.16
|
1.04
|
||||||
Earnings per share - diluted
|
2.15
|
1.03
|
||||||
Annualized return on average assets
|
3.35
|
%
|
1.84
|
%
|
||||
Annualized return on average equity
|
18.02
|
%
|
9.21
|
%
|
||||
|
Nine months ended September 30,
|
|||||||||||||||||||||||
2020
|
2019
|
|||||||||||||||||||||||
Average Balance
|
Interest
|
Yield/Cost
|
Average Balance
|
Interest
|
Yield/Cost
|
|||||||||||||||||||
(Dollars in Thousands)
|
||||||||||||||||||||||||
Assets
|
||||||||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Loans receivable and held for sale (1)
|
$
|
$1,696,493
|
$
|
$54,404
|
4.28
|
%
|
$
|
$1,536,532
|
$
|
$53,688
|
4.67
|
%
|
||||||||||||
Mortgage related securities (2)
|
104,752
|
1,960
|
2.50
|
%
|
114,748
|
2,260
|
2.63
|
%
|
||||||||||||||||
Debt securities, federal funds sold and short-term investments (2)(3)
|
178,775
|
2,703
|
2.02
|
%
|
181,375
|
3,741
|
2.76
|
%
|
||||||||||||||||
Total interest-earning assets
|
1,980,020
|
59,067
|
3.98
|
%
|
1,832,655
|
59,689
|
4.35
|
%
|
||||||||||||||||
Noninterest-earning assets
|
146,959
|
133,530
|
||||||||||||||||||||||
Total assets
|
$
|
$2,126,979
|
$
|
$1,966,185
|
||||||||||||||||||||
Liabilities and equity
|
||||||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Demand accounts
|
$
|
$45,275
|
27
|
0.08
|
%
|
$
|
$36,345
|
23
|
0.08
|
%
|
||||||||||||||
Money market, savings, and escrow accounts
|
251,377
|
1,364
|
0.72
|
%
|
192,195
|
891
|
0.62
|
%
|
||||||||||||||||
Time deposits
|
735,350
|
10,369
|
1.88
|
%
|
737,286
|
11,899
|
2.16
|
%
|
||||||||||||||||
Total interest-bearing deposits
|
1,032,002
|
11,760
|
1.52
|
%
|
965,826
|
12,813
|
1.77
|
%
|
||||||||||||||||
Borrowings
|
545,631
|
7,913
|
1.94
|
%
|
484,572
|
7,579
|
2.09
|
%
|
||||||||||||||||
Total interest-bearing liabilities
|
1,577,633
|
19,673
|
1.67
|
%
|
1,450,398
|
20,392
|
1.88
|
%
|
||||||||||||||||
Noninterest-bearing liabilities
|
||||||||||||||||||||||||
Noninterest-bearing deposits
|
112,777
|
92,075
|
||||||||||||||||||||||
Other noninterest-bearing liabilities
|
41,502
|
30,345
|
||||||||||||||||||||||
Total noninterest-bearing liabilities
|
154,279
|
122,420
|
||||||||||||||||||||||
Total liabilities
|
1,731,912
|
1,572,818
|
||||||||||||||||||||||
Equity
|
395,067
|
393,367
|
||||||||||||||||||||||
Total liabilities and equity
|
$
|
$2,126,979
|
$
|
$1,966,185
|
||||||||||||||||||||
Net interest income / Net interest rate spread (4)
|
39,394
|
2.31
|
%
|
39,297
|
2.47
|
%
|
||||||||||||||||||
Less: taxable equivalent adjustment
|
210
|
0.01
|
%
|
226
|
0.01
|
%
|
||||||||||||||||||
Net interest income / Net interest rate spread, as reported
|
$
|
$39,184
|
2.30
|
%
|
$
|
$39,071
|
2.46
|
%
|
||||||||||||||||
Net interest-earning assets (5)
|
$
|
$402,387
|
$
|
$382,257
|
||||||||||||||||||||
Net interest margin (6)
|
2.64
|
%
|
2.85
|
%
|
||||||||||||||||||||
Tax equivalent effect
|
0.02
|
%
|
0.02
|
%
|
||||||||||||||||||||
Net interest margin on a fully tax equivalent basis (6)
|
2.66
|
%
|
2.87
|
%
|
||||||||||||||||||||
Average interest-earning assets to average interest-bearing liabilities
|
125.51
|
%
|
126.36
|
%
|
|
Nine months ended September 30,
|
|||||||||||
2020 versus 2019
|
||||||||||||
Increase (Decrease) due to
|
||||||||||||
Volume
|
Rate
|
Net
|
||||||||||
(In Thousands)
|
||||||||||||
Interest income:
|
||||||||||||
Loans receivable and held for sale (1)(2)
|
$
|
5,385
|
$
|
(4,669
|
)
|
$
|
716
|
|||||
Mortgage related securities (3)
|
(176
|
)
|
(124
|
)
|
(300
|
)
|
||||||
Debt securities, federal funds sold and short-term investments (3) (4)
|
(55
|
)
|
(983
|
)
|
(1,038
|
)
|
||||||
Total interest-earning assets
|
5,154
|
(5,776
|
)
|
(622
|
)
|
|||||||
Interest expense:
|
||||||||||||
Demand accounts
|
4
|
-
|
4
|
|||||||||
Money market, savings, and escrow accounts
|
310
|
163
|
473
|
|||||||||
Time deposits
|
(30
|
)
|
(1,500
|
)
|
(1,530
|
)
|
||||||
Total interest-earning deposits
|
284
|
(1,337
|
)
|
(1,053
|
)
|
|||||||
Borrowings
|
776
|
(442
|
)
|
334
|
||||||||
Total interest-bearing liabilities
|
1,060
|
(1,779
|
)
|
(719
|
)
|
|||||||
Net change in net interest income
|
$
|
4,094
|
$
|
(3,997
|
)
|
$
|
97
|
(1) |
Interest income includes net deferred loan fee amortization income of $948,000 and $458,000 for the nine months ended September 30, 2020 and 2019, respectively.
|
●
|
Interest income on loans increased $716,000 due primarily to an increase of $160.0 million, or 10.4%, in average loans offset by a 39 basis point decrease in average yield on loans as LIBOR and U.S. Treasury rates continue to decrease. The increase in average loan balance was driven by a $37.4 million, or 2.7%, increase in the average balance of loans held in portfolio and by an increase of $122.5 million, or 76.9%, in the average balance of loans held for sale.
|
|
●
|
Interest income from mortgage related securities decreased $300,000 primarily as the yield decreased 13 basis points. Additionally, the average balance decreased $10.0 million.
|
|
●
|
Interest income from other interest-earning assets (comprised of debt securities, federal funds sold and short-term investments) decreased $1.0 million due to a 73 basis point decrease in the average yield. The decrease in average yield was primarily driven by the decrease in federal funds rate over the past year and as higher yielding securities have matured. The average balance decreased $2.6 million to $178.8 million due to lower municipal securities balances as maturities occurred throughout the past 12 months and were not replaced due to market conditions. Offsetting those decreases, the balance of FHLB stock increased with additional FHLB borrowings.
|
|
●
|
Interest expense on time deposits decreased $1.5 million, or 12.9%, primarily due to a 28 basis point decrease in average cost of time deposits. Additionally, the average balance of time deposits decreased $1.9 million compared to the prior year period.
|
|
●
|
Interest expense on money market, savings, and escrow accounts increased $473,000, or 53.1%, due primarily to a 10 basis point increase in average cost of money market, savings, and escrow accounts along with an increase in average balance of $59.2 million. Money market accounts have been a focus over the year and the Company has aggressively marketed new customers through various new offerings and new branches that opened within the past 12 months.
|
|
●
|
Interest expense on borrowings increased $334,000, or 4.4%, due to an increase of $61.1 million to $545.6 million in average borrowing volume during the nine months ended September 30, 2020. The increase was primarily due to the funding of the loans held for sale. Offsetting the increase in volume, the average cost of borrowings decreased 15 basis points to 1.94% during the nine months ended September 30, 2020, compared to 2.09% during the nine months ended September 30, 2019. The decrease in the cost of borrowings resulted from the new short-term fundings borrowed at a lower rate.
|
|
Nine months ended September 30,
|
|||||||||||||||
2020
|
2019
|
$ Change
|
% Change
|
|||||||||||||
(Dollars in Thousands)
|
||||||||||||||||
Service charges on loans and deposits
|
$
|
3,384
|
$
|
1,272
|
$
|
2,112
|
166.0
|
%
|
||||||||
Increase in cash surrender value of life insurance
|
1,587
|
1,579
|
8
|
0.5
|
%
|
|||||||||||
Mortgage banking income
|
166,292
|
93,526
|
72,766
|
77.8
|
%
|
|||||||||||
Other
|
2,868
|
564
|
2,304
|
408.5
|
%
|
|||||||||||
Total noninterest income
|
$
|
174,131
|
$
|
96,941
|
$
|
77,190
|
79.6
|
%
|
●
|
The increase in mortgage banking income was primarily the result of an increase in loan origination volume and gross margin on loans originated and sold. Gross margin on loans originated and sold is the ratio of mortgage banking income (excluding the change in interest rate lock fair value) divided by total loan originations. Total loan origination volume on a consolidated basis increased $970.9 million, or 46.4%, to $3.06 billion during the nine months ended September 30, 2020 compared to $2.09 billion during the nine months ended September 30, 2019. Gross margin on loans originated and sold increased 17.8% at the mortgage banking segment. See "Comparison of Mortgage Banking Segment Results of Operations for the Nine Months Ended September 30, 2020 and 2019" above for additional discussion of the increase in mortgage banking income.
|
|
●
|
Service charges on loans and deposits increased primarily due to loan prepayment fees and fees earned on loan swaps.
|
|
●
|
The increase in cash surrender value of life insurance was due primarily to an increase in average balance.
|
|
●
|
The increase in other noninterest income was due primarily to increases in gain from death benefit on bank owned life insurance, mortgage servicing fee income, wealth management revenue, and rental income. Mortgage servicing fee income increased as loans sold with servicing rights retained increased due to market conditions.
|
|
Nine months ended September 30,
|
|||||||||||||||
2020
|
2019
|
$ Change
|
% Change
|
|||||||||||||
(Dollars in Thousands)
|
||||||||||||||||
Compensation, payroll taxes, and other employee benefits
|
$
|
$100,695
|
$
|
75,227
|
$
|
25,468
|
33.9
|
%
|
||||||||
Occupancy, office furniture and equipment
|
7,744
|
8,085
|
(341
|
)
|
(4.2
|
)%
|
||||||||||
Advertising
|
2,625
|
2,834
|
(209
|
)
|
(7.4
|
)%
|
||||||||||
Data processing
|
3,023
|
2,641
|
382
|
14.5
|
%
|
|||||||||||
Communications
|
994
|
1,039
|
(45
|
)
|
(4.3
|
)%
|
||||||||||
Professional fees
|
7,647
|
2,438
|
5,209
|
213.7
|
%
|
|||||||||||
Real estate owned
|
55
|
75
|
(20
|
)
|
(26.7
|
)%
|
||||||||||
Loan processing expense
|
3,620
|
2,542
|
1,078
|
42.4
|
%
|
|||||||||||
Other
|
9,495
|
6,055
|
3,440
|
56.8
|
%
|
|||||||||||
Total noninterest expenses
|
$
|
$135,898
|
$
|
100,936
|
$
|
34,962
|
34.6
|
%
|
●
|
Compensation, payroll taxes and other employee benefit expense at our mortgage banking segment increased $23.8 million, or 38.3%, to $86.1 million for the nine months ended September 30, 2020. The increase in compensation expense was primarily a result of an increase in commission expense as fundings increased and branch manager pay increased as branches were more profitable.
|
|
●
|
Compensation, payroll taxes and other employee benefits expense at the community banking segment increased $1.6 million, or 11.6%, to $15.1 million during the nine months ended September 30, 2020. The increase was due primarily to an increase in salaries expense due to annual raises, health insurance expense as claims increased, and variable compensation as executives are eligible for an increased bonus. Offsetting the increases, equity award expense decreased as a majority of awards granted in 2015 had a final vesting in 2019.
|
|
●
|
Occupancy, office furniture and equipment expense at the mortgage banking segment decreased $237,000 to $5.0 million during the nine months ended September 30, 2020, resulting from lower rent expense as a result of underperforming branches closing. Offsetting the decreases, computer expenses increased to accomodate remote working.
|
|
●
|
Occupancy, office furniture and equipment expense at the community banking segment decreased $104,000 to $2.8 million during the nine months ended September 30, 2020. The decrease was due primarily to lower computer, furniture and equipment, and snow plowing expense.
|
|
●
|
Advertising expense decreased $403,000 at the mortgage banking segment as lower rates generated customer activity. Offsetting the decrease at the mortgage banking segment, advertising increased $194,000 at the community banking segment to promote the opening of a new branch, the new digital banking platform, and promotions for deposit customers.
|
|
●
|
Data processing expense increased $382,000, or 14.5%, to $3.0 million during the nine months ended September 30, 2020. This was primarily due to the new ditigal banking platform rollout at the community banking segment and new contracts at the mortgage banking segment as technology investments continue to increase.
|
|
●
|
Professional fees expense increased $5.2 million, or 213.7%, to $7.6 million primarily as a result of an increase in legal fees at the mortgage banking segment for a $4.25 million tentative legal settlement (see further discussion in Note 10 - Commitments, Off-Balance Sheet Arrangements, and Contingent Liabilities of the notes to unaudited consolidated financial statements for additional information) and ongoing litigation costs along with an increase in audit expense at the community banking segment.
|
|
●
|
Loan processing expense increased $1.1 million, or 42.4%, to $3.6 million during the nine months ended September 30, 2020. This was primarily due to an increase in loan costs associated with the application volumes as mortgage rates declined.
|
|
●
|
Other noninterest expense increased $3.4 million for the nine months ended September 30, 2020 due to an increase at the mortgage banking segment. The increase at the mortgage banking segment was primarily due to an increased provision for loan sale losses as there was additional uncertainity regarding selling loans to third party investors from COVID-19 pandemic challenges. Additionally, amortization of mortgage servicing rights increased as the value of the servicing portfolio has increased in 2020 compared to 2019. Other noninterest expenses increased at the community banking segment due primarily to loan related costs for the nine months ended September 30, 2020 along with a decrease in other regulator fees.
|
|
For the
|
For the
|
||||||||||
Nine months ended September 30,
|
Year Ended
|
|||||||||||
2020
|
2019
|
December 31, 2019
|
||||||||||
(In Thousands)
|
||||||||||||
Real estate loans originated for investment:
|
||||||||||||
Residential
|
||||||||||||
One- to four-family
|
$
|
90,290
|
$
|
66,113
|
$
|
95,461
|
||||||
Multi-family
|
133,027
|
64,301
|
110,136
|
|||||||||
Home equity
|
4,914
|
3,756
|
5,804
|
|||||||||
Construction and land
|
41,418
|
48,567
|
59,814
|
|||||||||
Commercial real estate
|
26,637
|
24,645
|
49,710
|
|||||||||
Total real estate loans originated for investment
|
296,286
|
207,382
|
320,925
|
|||||||||
Consumer loans originated for investment
|
275
|
55
|
55
|
|||||||||
Commercial business loans originated for investment
|
41,944
|
5,426
|
7,517
|
|||||||||
Total loans originated for investment
|
$
|
338,505
|
$
|
212,863
|
$
|
328,497
|
||||||
|
At September 30,
|
At December 31,
|
||||||
2020
|
2019
|
|||||||
(Dollars in Thousands)
|
||||||||
Non-accrual loans:
|
||||||||
Residential
|
||||||||
One- to four-family
|
$
|
5,299
|
$
|
5,985
|
||||
Multi-family
|
616
|
667
|
||||||
Home equity
|
75
|
70
|
||||||
Construction and land
|
-
|
-
|
||||||
Commercial real estate
|
51
|
303
|
||||||
Commercial
|
-
|
-
|
||||||
Consumer
|
-
|
-
|
||||||
Total non-accrual loans
|
6,041
|
7,025
|
||||||
Real estate owned
|
||||||||
One- to four-family
|
70
|
46
|
||||||
Multi-family
|
-
|
-
|
||||||
Construction and land
|
1,256
|
1,256
|
||||||
Commercial real estate
|
-
|
-
|
||||||
Total real estate owned
|
1,326
|
1,302
|
||||||
Valuation allowance at end of period
|
(554
|
)
|
(554
|
)
|
||||
Total real estate owned, net
|
772
|
748
|
||||||
Total nonperforming assets
|
$
|
6,813
|
$
|
7,773
|
||||
Total non-accrual loans to total loans
|
0.42
|
%
|
0.51
|
%
|
||||
Total non-accrual loans to total assets
|
0.27
|
%
|
0.35
|
%
|
||||
Total nonperforming assets to total assets
|
0.31
|
%
|
0.39
|
%
|
|
At or for the Nine Months
|
|||||||
Ended September 30,
|
||||||||
2020
|
2019
|
|||||||
(In Thousands)
|
||||||||
Balance at beginning of period
|
$
|
7,025
|
$
|
6,555
|
||||
Additions
|
2,327
|
2,241
|
||||||
Transfers to real estate owned
|
(369
|
)
|
(946
|
)
|
||||
Charge-offs
|
(3
|
)
|
(8
|
)
|
||||
Returned to accrual status
|
(1,563
|
)
|
(237
|
)
|
||||
Principal paydowns and other
|
(1,376
|
)
|
(1,292
|
)
|
||||
Balance at end of period
|
$
|
6,041
|
$
|
6,313
|
|
As of September 30, 2020
|
|||||||||||
Accruing
|
Non-accruing
|
Total
|
||||||||||
(In Thousands)
|
||||||||||||
One- to four-family
|
$
|
2,736
|
$
|
564
|
$
|
3,300
|
||||||
Multi-family
|
-
|
272
|
272
|
|||||||||
Commercial real estate
|
5,986
|
-
|
5,986
|
|||||||||
$
|
8,722
|
$
|
836
|
$
|
9,558
|
|||||||
As of December 31, 2019
|
||||||||||||
Accruing
|
Non-accruing
|
Total
|
||||||||||
(In Thousands)
|
||||||||||||
One- to four-family
|
$
|
2,740
|
$
|
685
|
$
|
3,425
|
||||||
Multi-family
|
-
|
308
|
308
|
|||||||||
Commercial real estate
|
278
|
7
|
285
|
|||||||||
$
|
3,018
|
$
|
1,000
|
$
|
4,018
|
|
September 30, 2020
|
|||
Loan modifications:
|
||||
Residential real estate:
|
||||
One- to four-family
|
$
|
2,915
|
||
Commercial real estate
|
225
|
|||
Commercial
|
32
|
|||
Total loan modifications
|
$
|
3,172
|
||
Total loan modifications to total loans receivable
|
0.22
|
%
|
|
At September 30,
|
At December 31,
|
||||||
2020
|
2019
|
|||||||
(Dollars in Thousands)
|
||||||||
Loans past due less than 90 days
|
$
|
2,503
|
$
|
1,833
|
||||
Loans past due 90 days or more
|
3,052
|
4,632
|
||||||
Total loans past due
|
$
|
5,555
|
$
|
6,465
|
||||
Total loans past due to total loans receivable
|
0.39
|
%
|
0.47
|
%
|
●
|
Applying an updated adjustment factor (as described previously) to an existing appraisal;
|
|
●
|
Confirming that the physical condition of the real estate has not significantly changed since the last valuation date;
|
|
●
|
Comparing the estimated current value of the collateral to that of updated sales values experienced on similar collateral;
|
|
●
|
Comparing the estimated current value of the collateral to that of updated values seen on current appraisals of similar collateral; and
|
|
●
|
Comparing the estimated current value to that of updated listed sales prices on our real estate owned and that of similar properties (not owned by the Company).
|
|
At or for the Nine Months
|
|||||||
Ended September 30,
|
||||||||
2020
|
2019
|
|||||||
(Dollars in Thousands)
|
||||||||
Balance at beginning of period
|
$
|
12,387
|
$
|
13,249
|
||||
Provision (credit) for loan losses
|
6,310
|
(730
|
)
|
|||||
Charge-offs:
|
||||||||
Mortgage
|
||||||||
One- to four-family
|
9
|
69
|
||||||
Multi-family
|
5
|
2
|
||||||
Home equity
|
13
|
44
|
||||||
Commercial real estate
|
-
|
2
|
||||||
Construction and land
|
-
|
-
|
||||||
Consumer
|
10
|
5
|
||||||
Commercial
|
-
|
-
|
||||||
Total charge-offs
|
37
|
122
|
||||||
Recoveries:
|
||||||||
Mortgage
|
||||||||
One- to four-family
|
132
|
116
|
||||||
Multi-family
|
17
|
13
|
||||||
Home equity
|
22
|
19
|
||||||
Commercial real estate
|
11
|
2
|
||||||
Construction and land
|
2
|
-
|
||||||
Consumer
|
-
|
-
|
||||||
Commercial
|
-
|
-
|
||||||
Total recoveries
|
184
|
150
|
||||||
Net recoveries
|
(147
|
)
|
(28
|
)
|
||||
Allowance at end of period
|
$
|
18,844
|
$
|
12,547
|
||||
Ratios:
|
||||||||
Allowance for loan losses to non-accrual loans at end of period
|
311.94
|
%
|
198.75
|
%
|
||||
Allowance for loan losses to loans receivable at end of period
|
1.31
|
%
|
0.91
|
%
|
||||
Net recoveries to average loans outstanding (annualized)
|
(0.01
|
)%
|
0.00
|
%
|
||||
(Provision) credit for loan losses to net recoveries
|
(4,292.52
|
)%
|
2,607.14
|
%
|
||||
Net recoveries to beginning of the period allowance (annualized)
|
(1.59
|
)%
|
(0.28
|
)%
|
|
More than
|
More than
|
||||||||||||||||||
One Year
|
Three Years
|
Over
|
||||||||||||||||||
One Year
|
Through
|
Through
|
Five
|
|||||||||||||||||
Total
|
or Less
|
Three Years
|
Five Years
|
Years
|
||||||||||||||||
(In Thousands)
|
||||||||||||||||||||
Demand deposits (3)
|
$
|
169,218
|
$
|
$169,218
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Money market and savings deposits (3)
|
271,283
|
271,283
|
-
|
-
|
-
|
|||||||||||||||
Time deposit (3)
|
744,150
|
701,230
|
41,088
|
1,832
|
-
|
|||||||||||||||
Repurchase agreements (3)
|
48,126
|
48,126
|
-
|
-
|
-
|
|||||||||||||||
Federal Home Loan Bank advances (1)
|
504,000
|
34,000
|
-
|
-
|
470,000
|
|||||||||||||||
Operating leases (2)
|
8,925
|
2,958
|
3,500
|
1,549
|
918
|
|||||||||||||||
$
|
1,745,702
|
$
|
$1,226,815
|
$
|
$44,588
|
$
|
$3,381
|
$
|
$470,918
|
|
More than
|
More than
|
||||||||||||||||||
One Year
|
Three Years
|
Over
|
||||||||||||||||||
One Year
|
Through
|
Through
|
Five
|
|||||||||||||||||
Total
|
or Less
|
Three Years
|
Five Years
|
Years
|
||||||||||||||||
(In Thousands)
|
||||||||||||||||||||
Real estate loan commitments (1)
|
$
|
18,290
|
$
|
18,290
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Unused portion of home equity lines of credit (2)
|
13,742
|
13,742
|
-
|
-
|
-
|
|||||||||||||||
Unused portion of construction loans (3)
|
77,017
|
77,017
|
-
|
-
|
-
|
|||||||||||||||
Unused portion of business lines of credit
|
19,558
|
19,558
|
-
|
-
|
-
|
|||||||||||||||
Standby letters of credit
|
1,296
|
1,296
|
-
|
-
|
-
|
|||||||||||||||
Total Other Commitments
|
$
|
129,903
|
$
|
129,903
|
$
|
-
|
$
|
-
|
$
|
-
|
|
Immediate Change in Rates
|
|||||||||||||||
+300
|
+200
|
+100
|
-100
|
|||||||||||||
(Dollar Amounts in Thousands)
|
||||||||||||||||
As of September 30, 2020
|
||||||||||||||||
Dollar Change
|
$
|
$1,115
|
1,519
|
982
|
(1,993
|
)
|
||||||||||
Percentage Change
|
1.95
|
%
|
2.65
|
1.71
|
(3.48
|
)
|
Period
|
Total Number of Shares Purchased
|
Average Price Paid per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plans
|
Maximum
Number of Shares that May Yet Be Purchased Under the Plan(a) |
||||||||||||
July 1, 2020 - July 31, 2020
|
52,650
|
$
|
$15.31
|
52,650
|
1,947,350
|
|||||||||||
August 1, 2020 - August 31, 2020
|
299,990
|
15.57
|
299,990
|
1,647,360
|
||||||||||||
September 1, 2020 - Setember 30, 2020
|
447,322
|
15.31
|
447,322
|
1,200,038
|
||||||||||||
Total
|
799,962
|
$
|
$15.41
|
799,962
|
1,200,038
|
(a)
|
On July 21, 2020, the Board of Directors announced the completion of the then-existing stock repurchase plan and authorized the repurchase of 2,000,000 shares of common stock pursuant to a new share repurchase plan. The maximum amount of shares were purchased under this plan.
|
Exhibit No.
|
Description
|
Filed Herewith
|
|||||
Form of Incentive Stock Option Agreement (1)
|
|||||||
Form of Non-Qualified Stock Option Agreement (1)
|
|||||||
Form of Restricted Stock Award Agreement (1)
|
|||||||
Form of Performance Based Restricted Stock Unit Agreement (1)
|
|||||||
Form of Performance Based Restricted Stock Award Agreement (1)
|
|||||||
Sarbanes-Oxley Act Section 302 Certification signed by the Chief Executive Officer of Waterstone Financial, Inc.
|
X
|
||||||
Sarbanes-Oxley Act Section 302 Certification signed by the Chief Financial Officer of Waterstone Financial, Inc.
|
X
|
||||||
Certification pursuant to 18 U.S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 signed by the Chief Executive Officer of Waterstone Financial, Inc.
|
X
|
||||||
Certification pursuant to 18 U.S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 signed by the Chief Financial Officer of Waterstone Financial, Inc.
|
X
|
||||||
101
|
The following financial statements from Waterstone Financial, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, formatted in Inline Extensive Business Reporting Language (XBRL): (i) consolidated statements of financial condition, (ii) consolidated statements of income, (iii) consolidated statements of comprehensive income, (iv) consolidated statements of changes in shareholders' equity, (v) consolidated statements of cash flows and (vi) the notes to consolidated financial statements.
|
X
|
|||||
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
X
|
WATERSTONE FINANCIAL, INC.
(Registrant)
|
||||
Date: November 4, 2020
|
||||
/s/ Douglas S. Gordon
|
||||
Douglas S. Gordon
|
||||
Chief Executive Officer
Principal Executive Officer
|
||||
Date: November 4, 2020
|
||||
/s/ Mark R. Gerke
|
||||
Mark R. Gerke
|
||||
Chief Financial Officer
Principal Financial Officer
|
1 Year Waterstone Financial Chart |
1 Month Waterstone Financial Chart |
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