Waterstone Financial profit falls in Q3

Tax expense, fewer mortgage refinancers cut into earnings

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Wauwatosa-based Waterstone Financial Inc. reported third quarter net income of $7.4 million, or 26 cents per share, down from $7.5 million, or 27 cents per share, in the third quarter of 2016.

WaterStone Bank
WaterStone Bankโ€™s Wauwatosa headquarters.

The WaterStone Bank parent attributed 2 cents of the decrease in earnings per share to a charge to income tax expense related to the write-off of a deferred tax asset.

For the community banking segment, net interest income was $13.1 million, up 16.7 percent from the year-ago quarter, driven by loan growth and a decrease in borrowing costs.

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Pre-tax income in the mortgage banking segment was $4.3 million, down from $6.8 million in the third quarter of 2016.

โ€œWe continue to execute at a high level of profitability, despite a number of challenges faced by the mortgage banking industry,โ€ said Douglas Gordon, chief executive officer of Waterstone Financial Inc. โ€œThe third quarter performance reflects continued improvement from the community banking segment. Driven by loan growth and a continued focus on expense management, the community banking segment achieved a record $7.5 million of pretax income for the quarter. The mortgage banking segment third quarter pretax income decreased $2.5 million to $4.3 million from last yearโ€™s total. The decline from last yearโ€™s record profitability is driven by a number of industry-wide challenges, including: a decrease in demand for refinance products, housing inventory shortages and weather-related disruptions.โ€

Waterstone Financial operates 11 WaterStone Bank branches in the Milwaukee area and a commercial lending office in Minneapolis. It also operates Waterstone Mortgage, with mortgage banking offices in 24 states.

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