Waterstone Financial, Inc. Announces Results of Operations for the Quarter and Six Months Ended June 30, 2025

WAUWATOSA, Wis., July 22, 2025 (GLOBE NEWSWIRE) -- Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income of $7.7 million, or $0.43 per diluted share, for the quarter ended June 30, 2025 compared to $5.7 million, or $0.31 per diluted share, for the quarter ended June 30, 2024. Net income per diluted share was $0.59 for the six months ended June 30, 2025 compared to net income per diluted share of $0.47 for the six months ended June 30, 2024.

“We are pleased with our performance during the quarter, which resulted in our highest quarterly earnings per share since the quarter ended December 31, 2021,” said William Bruss, Chief Executive Officer of Waterstone Financial, Inc. “The Community Banking segment achieved $2.4 million of growth in net interest income compared to the quarter ended June 30, 2024, primarily due to continued improvement in our cost of funds. We continue to maintain strong asset quality and experience minimal loan loss activity, resulting in releases from our allowance for credit losses. The Mortgage Banking segment recorded pre-tax income as seasonal loan origination volumes expanded during the quarter and professional fees normalized following the finalization of our legal settlement during the prior quarter. On a consolidated level, we continued to add to book value per share through strong earnings and an active share repurchase program.”

Highlights of the Quarter Ended June 30, 2025

Waterstone Financial, Inc. (Consolidated)

Consolidated net income of Waterstone Financial, Inc. totaled $7.7 million for the quarter ended June 30, 2025 compared to net income of $5.7 million for the quarter ended June 30, 2024.
Consolidated return on average assets (annualized) was 1.39% for the quarter ended June 30, 2025 and 1.02% for the quarter ended June 30, 2024.
Consolidated return on average equity (annualized) was 9.04% for the quarter ended June 30, 2025 and 6.84% for the quarter ended June 30, 2024.
Dividends declared during the quarter ended June 30, 2025 totaled $0.15 per common share.
During the quarter ended June 30, 2025, we repurchased approximately 508,000 shares at a cost (including the federal excise tax) of $6.5 million, or $12.80 per share. The share repurchases increased book value approximately $0.14 during the quarter ended June 30, 2025.
Nonperforming assets as a percentage of total assets was 0.37% at June 30, 2025, 0.35% at March 31, 2025, and 0.25% at June 30, 2024.
Past due loans as a percentage of total loans was 0.69% at June 30, 2025, 0.67% at March 31, 2025, and 0.76% at June 30, 2024.
Book value per share was $18.19 at June 30, 2025 and $17.53 at December 31, 2024.

Community Banking Segment

Pre-tax income totaled $7.6 million for the quarter ended June 30, 2025, which represents a $2.6 million, or 50.4%, increase compared to $5.1 million for the quarter ended June 30, 2024.
Net interest income totaled $13.6 million for the quarter ended June 30, 2025, which represents a $2.4 million, or 21.4%, increase compared to $11.2 million for the quarter ended June 30, 2024.
Average loans held for investment totaled $1.67 billion during the quarter ended June 30, 2025, which represents a decrease of $1.5 million, or 0.1%, compared to the quarter ended June 30, 2024. The decrease was primarily due to a decrease in single-family mortgages offset by increases in commercial real estate and multi-family mortgages. Average loans held for investment decreased $8.1 million compared to $1.67 billion for the quarter ended March 31, 2025. The decrease was primarily due to decrease in single-family mortgages.
Net interest margin increased 59 basis points to 2.60% for the quarter ended June 30, 2025 compared to 2.01% for the quarter ended June 30, 2024, which was primarily driven by an increase in weighted average yield on loans receivable and held for sale and decreases in the cost of borrowings and weighted average cost of deposits. Net interest margin increased 13 basis points compared to 2.47% for the quarter ended March 31, 2025, which was primarily driven by an increase in weighted average yield on loans receivable and held for sale and decreases in cost of borrowings and weighted average cost of deposits.
Past due loans at the community banking segment totaled $8.9 million at June 30, 2025, $7.6 million at March 31, 2025, and $9.3 million at June 30, 2024.
The segment had a negative provision for credit losses related to funded loans of $125,000 for the quarter ended June 30, 2025 compared to a negative provision for credit losses related to funded loans of $197,000 for the quarter ended June 30, 2024. The current quarter decrease was primarily due to decreases in multi-family qualitative risk factors, offset by an increase in the single-family loan qualitative factors primarily related to increases in internal asset quality risk factors and an increase in construction loan balances. The provision for credit losses related to unfunded loan commitments was $106,000 for the quarter ended June 30, 2025 compared to a negative provision for credit losses related to unfunded loan commitments of $82,000 for the quarter ended June 30, 2024. The provision for credit losses related to unfunded loan commitments for the quarter ended June 30, 2025 was due primarily to an increase in the loans approved that are currently waiting to close compared to the prior quarter end.
The efficiency ratio, a non-GAAP ratio, was 50.40% for the quarter ended June 30, 2025, compared to 62.37% for the quarter ended June 30, 2024.
Average core retail deposits (excluding brokered and escrow accounts) totaled $1.31 billion during the quarter ended June 30, 2025, an increase of $91.7 million, or 7.5%, compared to $1.22 billion during the quarter ended June 30, 2024. Average deposits increased $32.9 million, or 10.3% annualized, compared to $1.28 billion for the quarter ended March 31, 2025. The increases were primarily due to increases in checking, money market, and certificates of deposit balances. The segment had an average of $72.5 million in brokered certificate of deposits during the quarter ended June 30, 2025.

Mortgage Banking Segment

Pre-tax income totaled $2.0 million for the quarters ended June 30, 2025 and June 30, 2024.
Loan originations decreased $45.3 million, or 7.1%, to $588.8 million during the quarter ended June 30, 2025, compared to $634.1 million during the quarter ended June 30, 2024. Origination volume relative to purchase activity accounted for 91.7% of originations for the quarter ended June 30, 2025 compared to 92.7% of total originations for the quarter ended June 30, 2024.
Mortgage banking non-interest income decreased $2.4 million, or 9.7%, to $22.6 million for the quarter ended June 30, 2025, compared to $25.1 million for the quarter ended June 30, 2024.
Gross margin on loans sold totaled 3.84% for the quarter ended June 30, 2025, compared to 3.93% for the quarter ended June 30, 2024.
Total compensation, payroll taxes and other employee benefits decreased $574,000, or 3.4%, to $16.3 million during the quarter ended June 30, 2025 compared to $16.9 million during the quarter ended June 30, 2024. The decrease primarily related to decreased commission expense and salary expense offset by an increase in health insurance expense.

About Waterstone Financial, Inc.

Waterstone Financial, Inc. is the savings and loan holding company for WaterStone Bank, a community-focused financial institution established in 1921. WaterStone Bank offers a comprehensive suite of personal and business banking products and operates 14 branch locations across southeastern Wisconsin. WaterStone Bank is also the parent company of WaterStone Mortgage Corporation, a national lender licensed in 48 states.

With a long-standing commitment to innovation, integrity, and community service, Waterstone Financial, Inc. supports the financial and homeownership goals of customers nationwide. For more information about WaterStone Bank, go to http://www.wsbonline.com.

Forward-Looking Statements

This press release contains statements or information that may constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, without limitation, statements regarding expected financial and operating activities and results that are preceded by, followed by, or that include words such as “may,” “expects,” “anticipates,” “estimates” or “believes.” Any such statements are based upon current expectations that involve a number of risks and uncertainties and are subject to important factors that could cause actual results to differ materially from those anticipated by the forward-looking statements. Factors that might cause such a difference include changes in interest rates; demand for products and services; the degree of competition by traditional and nontraditional competitors; changes in banking regulation or actions by bank regulators; changes in tax laws; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in local real estate values; changes in the national and local economies; and other factors, including risk factors referenced in Item 1A. Risk Factors in Waterstone’s most recent Annual Report on Form 10-K and as may be described from time to time in Waterstone’s subsequent SEC filings, which factors are incorporated herein by reference. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect only Waterstone’s belief as of the date of this press release.

Non-GAAP Financial Measures

Management uses non-GAAP financial information in its analysis of the Company's performance. Management believes that this non-GAAP measure provides a greater understanding of ongoing operations and enhances comparability of results of operations with prior periods. The Company’s management believes that investors may use this non-GAAP measure to analyze the Company's financial performance without the impact of unusual items or events that may obscure trends in the Company’s underlying performance. This non-GAAP data should be considered in addition to results prepared in accordance with GAAP, and is not a substitute for, or superior to, GAAP results. Limitations associated with non-GAAP financial measures include the risks that persons might disagree as to the appropriateness of items included in this measure and that different companies might calculate this measure differently.

WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

	For The Three Months Ended June 30,						For The Six Months Ended June 30,
	2025			2024			2025			2024
	(In Thousands, except per share amounts)
Interest income:
Loans	$	25,875		$	25,601		$	50,953		$	50,085
Mortgage-related securities		1,253			1,125			2,444			2,223
Debt securities, federal funds sold and short-term investments		1,557			1,294			3,043			2,617
Total interest income		28,685			28,020			56,440			54,925
Interest expense:
Deposits		10,967			9,716			22,299			18,686
Borrowings		4,010			7,625			7,857			14,423
Total interest expense		14,977			17,341			30,156			33,109
Net interest income		13,708			10,679			26,284			21,816
Provision (credit) for credit losses		(9	)		(225	)		(567	)		(158	)
Net interest income after provision (credit) for loan losses		13,717			10,904			26,851			21,974
Noninterest income:
Service charges on loans and deposits		413			465			1,006			889
Increase in cash surrender value of life insurance		1,014			804			1,495			1,152
Mortgage banking income		22,559			24,838			38,287			44,906
Other		343			390			638			798
Total noninterest income		24,329			26,497			41,426			47,745
Noninterest expenses:
Compensation, payroll taxes, and other employee benefits		21,121			21,762			38,168			41,638
Occupancy, office furniture, and equipment		1,753			2,029			3,682			4,137
Advertising		746			987			1,469			1,901
Data processing		1,313			1,242			2,525			2,448
Communications		257			240			492			466
Professional fees		500			758			2,236			1,501
Real estate owned		(8	)		1			(18	)		14
Loan processing expense		817			861			1,737			1,907
Other		1,878			2,379			4,436			3,797
Total noninterest expenses		28,377			30,259			54,727			57,809
Income before income taxes		9,669			7,142			13,550			11,910
Income tax expense		1,942			1,430			2,787			3,160
Net income	$	7,727		$	5,712		$	10,763		$	8,750
Income per share:
Basic	$	0.43		$	0.31		$	0.59		$	0.47
Diluted	$	0.43		$	0.31		$	0.59		$	0.47
Weighted average shares outstanding:
Basic		17,989			18,524			18,127			18,772
Diluted		18,004			18,568			18,143			18,802

WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

	June 30,			December 31,
	2025			2024
	(Unaudited)
Assets	(In Thousands, except per share amounts)
Cash	$	63,178		$	35,182
Federal funds sold		7,465			4,302
Interest-earning deposits in other financial institutions and other short-term investments		280			277
Cash and cash equivalents		70,923			39,761
Securities available for sale (at fair value)		218,757			208,549
Loans held for sale (at fair value)		161,826			135,909
Loans receivable		1,664,273			1,680,576
Less: Allowance for credit losses ("ACL") - loans		17,800			18,247
Loans receivable, net		1,646,473			1,662,329

Office properties and equipment, net		18,874			19,389
Federal Home Loan Bank stock (at cost)		20,349			20,295
Cash surrender value of life insurance		76,287			74,612
Real estate owned, net		85			505
Prepaid expenses and other assets		42,986			48,259
Total assets	$	2,256,560		$	2,209,608

Liabilities and Shareholders' Equity
Liabilities:
Demand deposits	$	174,506		$	171,115
Money market and savings deposits		320,881			283,243
Time deposits		889,320			905,539
Total deposits		1,384,707			1,359,897

Borrowings		465,726			446,519
Advance payments by borrowers for taxes		21,083			5,630
Other liabilities		43,553			58,427
Total liabilities		1,915,069			1,870,473

Shareholders' equity:
Preferred stock		-			-
Common stock		188			193
Additional paid-in capital		84,106			91,214
Retained earnings		282,578			277,196
Unearned ESOP shares		(10,089	)		(10,682	)
Accumulated other comprehensive loss, net of taxes		(15,292	)		(18,786	)
Total shareholders' equity		341,491			339,135
Total liabilities and shareholders' equity	$	2,256,560		$	2,209,608

Share Information
Shares outstanding		18,776			19,343
Book value per share	$	18.19		$	17.53

WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES SUMMARY OF KEY QUARTERLY FINANCIAL DATA (Unaudited)

	At or For the Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
	2025			2025			2024			2024			2024
	(Dollars in Thousands, except per share amounts)
Condensed Results of Operations:
Net interest income	$	13,708		$	12,576		$	12,835		$	11,517		$	10,679
Provision (credit) for credit losses		(9	)		(558	)		367			(377	)		(225	)
Total noninterest income		24,329			17,097			19,005			22,552			26,497
Total noninterest expense		28,377			26,350			25,267			28,560			30,259
Income before income taxes		9,669			3,881			6,206			5,886			7,142
Income tax expense		1,942			845			996			1,158			1,430
Net income	$	7,727		$	3,036		$	5,210		$	4,728		$	5,712
Income per share – basic	$	0.43		$	0.17		$	0.28		$	0.26		$	0.31
Income per share – diluted	$	0.43		$	0.17		$	0.28		$	0.26		$	0.31
Dividends declared per common share	$	0.15		$	0.15		$	0.15		$	0.15		$	0.15

Performance Ratios (annualized):
Return on average assets - QTD		1.39	%		0.57	%		0.94	%		0.83	%		1.02	%
Return on average equity - QTD		9.04	%		3.61	%		6.05	%		5.55	%		6.84	%
Net interest margin - QTD		2.60	%		2.47	%		2.42	%		2.13	%		2.01	%

Return on average assets - YTD		0.99	%		0.57	%		0.84	%		0.81	%		0.79	%
Return on average equity - YTD		6.32	%		3.61	%		5.48	%		5.30	%		5.17	%
Net interest margin - YTD		2.54	%		2.47	%		2.17	%		2.09	%		2.08	%

Asset Quality Ratios:
Past due loans to total loans		0.69	%		0.67	%		0.95	%		0.63	%		0.76	%
Nonaccrual loans to total loans		0.49	%		0.45	%		0.34	%		0.32	%		0.33	%
Nonperforming assets to total assets		0.37	%		0.35	%		0.28	%		0.25	%		0.25	%
Allowance for credit losses - loans to loans receivable		1.07	%		1.08	%		1.09	%		1.07	%		1.10	%

WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES SUMMARY OF QUARTERLY AVERAGE BALANCES AND YIELD/COSTS (Unaudited)

	At or For the Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
	2025			2025			2024			2024			2024
Average balances	(Dollars in Thousands)
Interest-earning assets
Loans receivable and held for sale	$	1,812,065		$	1,768,617		$	1,819,574		$	1,870,627		$	1,859,608
Mortgage related securities		173,220			170,947			168,521			170,221			171,895
Debt securities, federal funds sold and short-term investments		131,710			123,004			124,658			115,270			107,992
Total interest-earning assets		2,116,995			2,062,568			2,112,753			2,156,118			2,139,495
Noninterest-earning assets		105,382			105,030			100,627			104,600			104,019
Total assets	$	2,222,377		$	2,167,598		$	2,213,380		$	2,260,718		$	2,243,514

Interest-bearing liabilities
Demand accounts	$	89,548		$	87,393		$	92,247		$	89,334		$	91,300
Money market, savings, and escrow accounts		320,908			300,686			306,478			304,116			293,483
Certificates of deposit - retail		830,550			818,612			810,340			786,228			758,252
Certificates of deposit - brokered		72,533			97,101			59,254			-			-
Total interest-bearing deposits		1,313,539			1,303,792			1,268,319			1,179,678			1,143,035
Borrowings		437,784			397,053			464,964			600,570			622,771
Total interest-bearing liabilities		1,751,323			1,700,845			1,733,283			1,780,248			1,765,806
Noninterest-bearing demand deposits		85,665			80,372			87,889			91,532			93,637
Noninterest-bearing liabilities		42,669			44,905			49,645			49,787			48,315
Total liabilities		1,879,657			1,826,122			1,870,817			1,921,567			1,907,758
Equity		342,720			341,476			342,563			339,151			335,756
Total liabilities and equity	$	2,222,377		$	2,167,598		$	2,213,380		$	2,260,718		$	2,243,514

Average Yield/Costs (annualized)
Loans receivable and held for sale		5.73	%		5.75	%		5.75	%		5.65	%		5.54	%
Mortgage related securities		2.90	%		2.83	%		2.67	%		2.66	%		2.63	%
Debt securities, federal funds sold and short-term investments		4.74	%		4.90	%		4.85	%		5.05	%		4.82	%
Total interest-earning assets		5.43	%		5.46	%		5.46	%		5.39	%		5.27	%

Demand accounts		0.11	%		0.11	%		0.11	%		0.11	%		0.11	%
Money market and savings accounts		2.07	%		2.10	%		2.00	%		1.94	%		1.89	%
Certificates of deposit – retail		4.11	%		4.33	%		4.53	%		4.54	%		4.41	%
Certificates of deposit - brokered		4.35	%		4.18	%		4.18	%		0.00	%		0.00	%
Total interest-bearing deposits		3.35	%		3.52	%		3.58	%		3.53	%		3.42	%
Borrowings		3.67	%		3.93	%		4.11	%		4.77	%		4.92	%
Total interest-bearing liabilities		3.43	%		3.62	%		3.72	%		3.95	%		3.95	%

COMMUNITY BANKING SEGMENT SUMMARY OF KEY QUARTERLY FINANCIAL DATA (Unaudited)

	At or For the Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
	2025			2025			2024			2024			2024
	(Dollars in Thousands)
Condensed Results of Operations:
Net interest income	$	13,640		$	12,403		$	12,886		$	12,250		$	11,234
Provision (credit) for credit losses		(19	)		(518	)		331			(302	)		(279	)
Total noninterest income		1,686			1,348			1,595			1,227			1,491
Noninterest expenses:
Compensation, payroll taxes, and other employee benefits		5,027			5,212			4,883			5,326			5,116
Occupancy, office furniture and equipment		920			1,076			825			904			983
Advertising		219			171			204			311			229
Data processing		806			712			691			720			687
Communications		99			100			89			80			72
Professional fees		196			347			196			190			177
Real estate owned		(8	)		(10	)		12			-			1
Loan processing expense		-			-			-			-			-
Other		466			596			563			602			672
Total noninterest expense		7,725			8,204			7,463			8,133			7,937
Income before income taxes		7,620			6,065			6,687			5,646			5,067
Income tax expense		1,400			1,427			1,399			941			718
Net income	$	6,220		$	4,638		$	5,288		$	4,705		$	4,349

Efficiency ratio - QTD (non-GAAP)		50.40	%		59.66	%		51.54	%		60.35	%		62.37	%
Efficiency ratio - YTD (non-GAAP)		54.78	%		59.66	%		59.58	%		62.58	%		63.77	%

MORTGAGE BANKING SEGMENT SUMMARY OF KEY QUARTERLY FINANCIAL DATA (Unaudited)
	At or For the Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
	2025			2025			2024			2024			2024
	(Dollars in Thousands)
Condensed Results of Operations:
Net interest loss	$	53		$	152		$	(92	)	$	(760	)	$	(552	)
Provision for credit losses		10			(40	)		36			(75	)		54
Total noninterest income		22,643			15,731			17,455			21,386			25,081
Noninterest expenses:
Compensation, payroll taxes, and other employee benefits		16,312			12,054			13,781			15,930			16,886
Occupancy, office furniture and equipment		833			853			754			953			1,046
Advertising		527			552			523			615			758
Data processing		507			498			542			570			549
Communications		158			135			135			152			168
Professional fees		303			1,373			917			379			569
Real estate owned		-			-			-			-			-
Loan processing expense		817			920			486			697			861
Other		1,230			1,751			814			1,261			1,641
Total noninterest expense		20,687			18,136			17,952			20,557			22,478
(Loss) income before income taxes (benefit) expense		1,999			(2,213	)		(625	)		144			1,997
Income tax (benefit) expense)		531			(588	)		(428	)		194			684
Net (loss) income	$	1,468		$	(1,625	)	$	(197	)	$	(50	)	$	1,313

Efficiency ratio - QTD (non-GAAP)		91.15	%		114.18	%		103.39	%		99.67	%		91.64	%
Efficiency ratio - YTD (non-GAAP)		100.63	%		114.18	%		97.74	%		96.23	%		94.62	%

Loan originations	$	588,838		$	387,729		$	470,650		$	558,729		$	634,109
Purchase		91.7	%		87.5	%		82.1	%		88.9	%		92.7	%
Refinance		8.3	%		12.5	%		17.9	%		11.1	%		7.3	%
Gross margin on loans sold⁽¹⁾		3.84	%		3.98	%		3.74	%		3.83	%		3.93	%

⁽¹⁾ Gross margin on loans sold equals mortgage banking income (excluding the change in interest rate lock value) divided by total loan originations.

Contact: Mark R. Gerke
Chief Financial Officer
414-459-4012
markgerke@wsbonline.com

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