Waterstone Financial profit falls in Q3

Tax expense, fewer mortgage refinancers cut into earnings

WaterStone Bank
WaterStone Bank's Wauwatosa headquarters.

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 Bank’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.

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

“We continue to execute at a high level of profitability, despite a number of challenges faced by the mortgage banking industry,” said Douglas Gordon, chief executive officer of Waterstone Financial Inc. “The 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 year’s total. The decline from last year’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.”

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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Molly Dill, former BizTimes Milwaukee managing editor.

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