Waterstone Financial, Inc. (NASDAQ:WSBF) Files An 8-K Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review
(a) On May 12, 2020, the Audit Committee of the Board of Directors of Waterstone Financial, Inc. (the “Company”) concluded that the Company’s interim consolidated financial statements and related disclosures, contained in the Company’s Earnings Release for the period ended March 31, 2020, as filed on Form 8-K on April 28, 2020 should no longer be relied upon. The accounting matters underlying the Audit Committee’s conclusion relate to the inclusion of the impact of a subsequent event that occurred on May 6, 2020. On that date, the Company was notified of an award for the plaintiff in a lawsuit in which the Company is defendant. The details of this lawsuit has been included in the notes to consolidated financial statements in previously filed financial statements under the heading Herrington et al. v. Waterstone Mortgage Corporation. On May 6, 2020, the arbitrator in this arbitration issued an award that would allow Herrington to recover $1.1 million in attorney fees and costs. The Company retains the right to challenge the award in Court, through a motion to vacate or modify the award. Even if the award is confirmed and a judgment is entered, it retains its appellate rights to challenge the award. The Company continues to assess its avenues for appeal, however, given these recent developments, the Company does believe that it has met the criteria with respect to recognizing a loss contingency under relevant accounting principles. As such, the Company has recorded a loss reserve with respect to this matter for approximately $1.1 million, as of March 31, 2020. As a result, relative to figures previously disclosed in the earnings release, net income was reduced by approximately $802,000 to $6.1 million for the three months ended March 31, 2020 and diluted earnings per share was reduced by $0.03 to $0.24 for the three months ended March 31, 2020.
The Company intends to file its Quarterly Report on Form 10-Q for the period ended March 31, 2020, containing interim consolidated financial statements, and related notes, for the period ended March 31, 2020, that will include the impact of the event noted above. The Company intends to file its Quarterly Report on Form 10-Q by May 15, 2020.
About Waterstone Financial, Inc. (NASDAQ:WSBF)
Waterstone Financial, Inc. is the holding company of WaterStone Bank SSB (WaterStone Bank). WaterStone Bank is a community bank. The Company operates in two segments: community banking and mortgage banking. The community banking segment provides consumer and business banking products and services. Its consumer products include loan products, deposit products, and personal investment services. Its business banking products include loans for working capital, inventory and general corporate use, commercial real estate construction loans, and deposit accounts. The mortgage banking segment, which is conducted through Waterstone Mortgage Corporation, consists of originating residential mortgage loans primarily for sale in the secondary market. As of December 31, 2015, WaterStone Bank conducted its community banking business from 11 banking offices located in Milwaukee, Washington and Waukesha Counties, Wisconsin, as well as a loan production office in Minneapolis, Minnesota.
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