WAUWATOSA, Wis., April 22, 2025 (GLOBE NEWSWIRE) -- Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income of $3.0 million, or $0.17 per diluted share, for the quarter ended March 31, 2025, compared to $3.0 million, or $0.16 per diluted share, for the quarter ended March 31, 2024.
"The Community Banking segment continues to perform well in a challenging interest rate environment,” said William Bruss, Chief Executive Officer of Waterstone Financial, Inc. "We increased net interest income 6.9% at the Community Banking segment and net interest margin increased 32 bps compared to the quarter ended March 31, 2024. Asset quality continues to remain strong and low historical loan losses are reflected in the decrease in provision for credit losses during the quarter. The Mortgage Banking segment pre-tax loss reflects a market-wide decrease in loan origination volumes and elevated legal expense associated with the final settlement of a previously disclosed lawsuit. In spite of the results of the Mortgage Banking segment, Waterstone Financial, Inc. exceeded the prior year's same quarter earnings per share, added to book value per share through our share repurchase program and maintained our strong quarterly dividend."
Highlights of the Quarter Ended March 31, 2025
Waterstone Financial, Inc. (Consolidated)
Consolidated net income of Waterstone Financial, Inc. totaled $3.0 million for the quarters ended March 31, 2025 and March 31, 2024.
Consolidated return on average assets (annualized) was 0.57% for the quarter ended March 31, 2025 and 0.56% for the quarter ended March 31, 2024.
Consolidated return on average equity (annualized) was 3.61% for the quarter ended March 31, 2025 and 3.56% for the quarter ended March 31, 2024.
Dividends declared during the quarter ended March 31, 2025 totaled $0.15 per common share.
During the quarter ended March 31, 2025, we repurchased approximately 237,000 shares at a cost (including the federal excise tax) of $3.2 million, or $13.37 per share.
Nonperforming assets as a percentage of total assets was 0.35% at March 31, 2025, 0.28% at December 31, 2024, and 0.23% at March 31, 2024.
Past due loans as a percentage of total loans was 0.67% at March 31, 2025, 0.95% at December 31, 2024, and 0.64% at March 31, 2024.
Book value per share was $17.70 at March 31, 2025 and $17.53 at December 31, 2024.
Community Banking Segment
Pre-tax income totaled $6.1 million for the quarter ended March 31, 2025, which represents a $1.8 million, or 41.7%, increase compared to $4.3 million for the quarter ended March 31, 2024.
Net interest income totaled $12.4 million for the quarter ended March 31, 2025, which represents a $805,000, or 6.9%, increase compared to $11.6 million for the quarter ended March 31, 2024.
Average loans held for investment totaled $1.67 billion during the quarter ended March 31, 2025, which represents an increase of $10.7 million, or 0.6%, compared to $1.66 billion for the quarter ended March 31, 2024. The increase was primarily due to increases in the commercial real estate and multi-family mortgages. Average loans held for investment decreased $6.8 million compared to $1.68 billion for the quarter ended December 31, 2024. The decrease was primarily due to decreases in construction and multi-family mortgages.
Net interest margin increased 32 basis points to 2.47% for the quarter ended March 31, 2025 compared to 2.15% for the quarter ended March 31, 2024, which was primarily driven by an increase in weighted average yield on loans receivable and held for sale and decrease in cost of borrowings offset by an increase in weighted average cost of deposits. Net interest margin increased five basis points compared to 2.42% for the quarter ended December 31, 2024, primarily driven by decreases in weighted average cost of deposits and borrowings.
Past due loans at the community banking segment totaled $7.6 million at March 31, 2025, $12.8 million at December 31, 2024, and $8.1 million at March 31, 2024.
The segment had a negative provision for credit losses related to funded loans of $314,000 for the quarter ended March 31, 2025 compared to a provision for credit losses related to funded loans of $35,000 for the quarter ended March 31, 2024. The current quarter decrease was primarily due to decreases in historical loss rates and loan portfolio balances offset by an increase in the commercial real estate loan qualitative factors primarily related to increases in economic risks and internal asset quality risks. The negative provision for credit losses related to unfunded loan commitments was $204,000 for the quarter ended March 31, 2025 compared to a provision for credit losses related to unfunded loan commitments of $70,000 for the quarter ended March 31, 2024. The negative provision for credit losses related to unfunded loan commitments for the quarter ended March 31, 2025 was due primarily to a decrease in construction loans that are currently waiting to be funded compared to the prior quarter end and decrease in historical loss rates.
The efficiency ratio, a non-GAAP ratio, was 59.66% for the quarter ended March 31, 2025, compared to 65.17% for the quarter ended March 31, 2024.
Average core retail deposits (excluding brokered and escrow accounts) totaled $1.28 billion during the quarter ended March 31, 2025, an increase of $87.6 million, or 7.4%, compared to $1.19 billion during the quarter ended March 31, 2024. Average deposits increased $2.9 million, or 0.9% annualized, compared to $1.27 billion for the quarter ended December 31, 2024. The increases were primarily due to an increase in certificates of deposit balances. The segment had $84.1 million in brokered certificate of deposits at March 31, 2025.
Mortgage Banking Segment
Pre-tax loss totaled $2.2 million for the quarter ended March 31, 2025, compared to a $369,000 of pre-tax income for the quarter ended March 31, 2024.
Loan originations decreased $97.4 million, or 20.1%, to $387.7 million during the quarter ended March 31, 2025, compared to $485.1 million during the quarter ended March 31, 2024. Origination volume relative to purchase activity accounted for 87.5% of originations for the quarter ended March 31, 2025 compared to 93.0% of total originations for the quarter ended March 31, 2024.
Mortgage banking non-interest income decreased $4.6 million, or 22.6%, to $15.7 million for the quarter ended March 31, 2025, compared to $20.3 million for the quarter ended March 31, 2024.
Gross margin on loans sold totaled 3.98% for the quarter ended March 31, 2025, compared to 4.10% for the quarter ended March 31, 2024.
Professional fees increased $853,000, or 164.0%, to $1.4 million for the quarter ended March 31, 2025, compared to $520,000 for the quarter ended March 31, 2024. The increase was primarily related to legal services and the finalization of a settlement related to a previously disclosed legal matter during the three months ended March 31, 2025. The Company maintained a $1.3 million accrual related to this legal matter as of December 31, 2024.
Total compensation, payroll taxes and other employee benefits decreased $2.7 million, or 18.3%, to $12.1 million during the quarter ended March 31, 2025 compared to $14.8 million during the quarter ended March 31, 2024. The decrease primarily related to decreased commission expense, branch manager pay, salary expense, and sign-on incentives driven by reduced employee headcount and a decrease in loan origination volumes and branch profitability.
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, visit 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 enhance 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.
Contact: Mark R. Gerke Chief Financial Officer 414-459-4012 markgerke@wsbonline.com
WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
For The Three Months Ended March 31,
2025
2024
(In Thousands, except per share amounts)
Interest income:
Loans
$
25,078
$
24,484
Mortgage-related securities
1,191
1,098
Debt securities, federal funds sold and short-term investments
1,486
1,323
Total interest income
27,755
26,905
Interest expense:
Deposits
11,332
8,970
Borrowings
3,847
6,798
Total interest expense
15,179
15,768
Net interest income
12,576
11,137
Provision (credit) for credit losses
(558
)
67
Net interest income after provision (credit) for loan losses
13,134
11,070
Noninterest income:
Service charges on loans and deposits
593
424
Increase in cash surrender value of life insurance
481
348
Mortgage banking income
15,728
20,068
Other
295
408
Total noninterest income
17,097
21,248
Noninterest expenses:
Compensation, payroll taxes, and other employee benefits
17,047
19,876
Occupancy, office furniture, and equipment
1,929
2,108
Advertising
723
914
Data processing
1,212
1,206
Communications
235
226
Professional fees
1,736
743
Real estate owned
(10
)
13
Loan processing expense
920
1,046
Other
2,558
1,418
Total noninterest expenses
26,350
27,550
Income before income taxes
3,881
4,768
Income tax expense
845
1,730
Net income
$
3,036
$
3,038
Income per share:
Basic
$
0.17
$
0.16
Diluted
$
0.17
$
0.16
Weighted average shares outstanding:
Basic
18,267
19,021
Diluted
18,280
19,036
WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
March 31,
December 31,
2025
2024
(Unaudited)
Assets
(In Thousands, except per share amounts)
Cash
$
37,459
$
35,182
Federal funds sold
5,550
4,302
Interest-earning deposits in other financial institutions and other short term investments
280
277
Cash and cash equivalents
43,289
39,761
Securities available for sale (at fair value)
213,615
208,549
Loans held for sale (at fair value)
116,290
135,909
Loans receivable
1,663,519
1,680,576
Less: Allowance for credit losses ("ACL") - loans
17,905
18,247
Loans receivable, net
1,645,614
1,662,329
Office properties and equipment, net
19,223
19,389
Federal Home Loan Bank stock (at cost)
18,351
20,295
Cash surrender value of life insurance
75,093
74,612
Real estate owned, net
135
505
Prepaid expenses and other assets
43,757
48,259
Total assets
$
2,175,367
$
2,209,608
Liabilities and Shareholders' Equity
Liabilities:
Demand deposits
$
170,183
$
171,115
Money market and savings deposits
296,203
283,243
Time deposits
914,814
905,539
Total deposits
1,381,200
1,359,897
Borrowings
395,853
446,519
Advance payments by borrowers for taxes
12,628
5,630
Other liabilities
44,326
58,427
Total liabilities
1,834,007
1,870,473
Shareholders' equity:
Preferred stock
-
-
Common stock
193
193
Additional paid-in capital
90,470
91,214
Retained earnings
277,521
277,196
Unearned ESOP shares
(10,386
)
(10,682
)
Accumulated other comprehensive loss, net of taxes
(16,438
)
(18,786
)
Total shareholders' equity
341,360
339,135
Total liabilities and shareholders' equity
$
2,175,367
$
2,209,608
Share Information
Shares outstanding
19,281
19,343
Book value per share
$
17.70
$
17.53
WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES SUMMARY OF KEY QUARTERLY FINANCIAL DATA (Unaudited)
At or For the Three Months Ended
March 31,
December 31,
September 30,
June 30,
March 31,
2025
2024
2024
2024
2024
(Dollars in Thousands, except per share amounts)
Condensed Results of Operations:
Net interest income
$
12,576
$
12,835
$
11,517
$
10,679
$
11,137
Provision (credit) for credit losses
(558
)
367
(377
)
(225
)
67
Total noninterest income
17,097
19,005
22,552
26,497
21,248
Total noninterest expense
26,350
25,267
28,560
30,259
27,550
Income before income taxes
3,881
6,206
5,886
7,142
4,768
Income tax expense
845
996
1,158
1,430
1,730
Net income
$
3,036
$
5,210
$
4,728
$
5,712
$
3,038
Income per share – basic
$
0.17
$
0.28
$
0.26
$
0.31
$
0.16
Income per share – diluted
$
0.17
$
0.28
$
0.26
$
0.31
$
0.16
Dividends declared per common share
$
0.15
$
0.15
$
0.15
$
0.15
$
0.15
Performance Ratios (annualized):
Return on average assets - QTD
0.57
%
0.94
%
0.83
%
1.02
%
0.56
%
Return on average equity - QTD
3.61
%
6.05
%
5.55
%
6.84
%
3.56
%
Net interest margin - QTD
2.47
%
2.42
%
2.13
%
2.01
%
2.15
%
Return on average assets - YTD
0.57
%
0.84
%
0.81
%
0.79
%
0.56
%
Return on average equity - YTD
3.61
%
5.48
%
5.30
%
5.17
%
3.56
%
Net interest margin - YTD
2.47
%
2.17
%
2.09
%
2.08
%
2.15
%
Asset Quality Ratios:
Past due loans to total loans
0.67
%
0.95
%
0.63
%
0.76
%
0.64
%
Nonaccrual loans to total loans
0.45
%
0.34
%
0.32
%
0.33
%
0.29
%
Nonperforming assets to total assets
0.35
%
0.28
%
0.25
%
0.25
%
0.23
%
Allowance for credit losses - loans to loans receivable
1.08
%
1.09
%
1.07
%
1.10
%
1.10
%
WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES SUMMARY OF QUARTERLY AVERAGE BALANCES AND YIELD/COSTS (Unaudited)
At or For the Three Months Ended
March 31,
December 31,
September 30,
June 30,
March 31,
2025
2024
2024
2024
2024
Average balances
(Dollars in Thousands)
Interest-earning assets
Loans receivable and held for sale
$
1,768,617
$
1,819,574
$
1,870,627
$
1,859,608
$
1,805,102
Mortgage related securities
170,947
168,521
170,221
171,895
172,077
Debt securities, federal funds sold and short term investments
123,004
124,658
115,270
107,992
110,431
Total interest-earning assets
2,062,568
2,112,753
2,156,118
2,139,495
2,087,610
Noninterest-earning assets
105,030
100,627
104,600
104,019
103,815
Total assets
$
2,167,598
$
2,213,380
$
2,260,718
$
2,243,514
$
2,191,425
Interest-bearing liabilities
Demand accounts
$
87,393
$
92,247
$
89,334
$
91,300
$
87,393
Money market, savings, and escrow accounts
300,686
306,478
304,116
293,483
281,171
Certificates of deposit - retail
818,612
810,340
786,228
758,252
739,543
Certificates of deposit - brokered
97,101
59,254
-
-
-
Total interest-bearing deposits
1,303,792
1,268,319
1,179,678
1,143,035
1,108,107
Borrowings
397,053
464,964
600,570
622,771
602,724
Total interest-bearing liabilities
1,700,845
1,733,283
1,780,248
1,765,806
1,710,831
Noninterest-bearing demand deposits
80,372
87,889
91,532
93,637
92,129
Noninterest-bearing liabilities
44,905
49,645
49,787
48,315
45,484
Total liabilities
1,826,122
1,870,817
1,921,567
1,907,758
1,848,444
Equity
341,476
342,563
339,151
335,756
342,981
Total liabilities and equity
$
2,167,598
$
2,213,380
$
2,260,718
$
2,243,514
$
2,191,425
Average Yield/Costs (annualized)
Loans receivable and held for sale
5.75
%
5.75
%
5.65
%
5.54
%
5.46
%
Mortgage related securities
2.83
%
2.67
%
2.66
%
2.63
%
2.57
%
Debt securities, federal funds sold and short term investments
4.90
%
4.85
%
5.05
%
4.82
%
4.82
%
Total interest-earning assets
5.46
%
5.46
%
5.39
%
5.27
%
5.18
%
Demand accounts
0.11
%
0.11
%
0.11
%
0.11
%
0.11
%
Money market and savings accounts
2.10
%
2.00
%
1.94
%
1.89
%
1.79
%
Certificates of deposit - retail
4.33
%
4.53
%
4.54
%
4.41
%
4.19
%
Certificates of deposit - brokered
4.18
%
4.18
%
0.00
%
0.00
%
0.00
%
Total interest-bearing deposits
3.52
%
3.58
%
3.53
%
3.42
%
3.26
%
Borrowings
3.93
%
4.11
%
4.77
%
4.92
%
4.54
%
Total interest-bearing liabilities
3.62
%
3.72
%
3.95
%
3.95
%
3.71
%
COMMUNITY BANKING SEGMENT SUMMARY OF KEY QUARTERLY FINANCIAL DATA (Unaudited)
At or For the Three Months Ended
March 31,
December 31,
September 30,
June 30,
March 31,
2025
2024
2024
2024
2024
(Dollars in Thousands)
Condensed Results of Operations:
Net interest income
$
12,403
$
12,886
$
12,250
$
11,234
$
11,598
Provision (credit) for credit losses
(518
)
331
(302
)
(279
)
105
Total noninterest income
1,348
1,595
1,227
1,491
990
Noninterest expenses:
Compensation, payroll taxes, and other employee benefits
5,212
4,883
5,326
5,116
5,360
Occupancy, office furniture and equipment
1,076
825
904
983
1,000
Advertising
171
204
311
229
174
Data processing
712
691
720
687
693
Communications
100
89
80
72
65
Professional fees
347
196
190
177
208
Real estate owned
(10
)
12
-
1
13
Loan processing expense
-
-
-
-
-
Other
596
563
602
672
691
Total noninterest expense
8,204
7,463
8,133
7,937
8,204
Income before income taxes
6,065
6,687
5,646
5,067
4,279
Income tax expense
1,427
1,399
941
718
1,639
Net income
$
4,638
$
5,288
$
4,705
$
4,349
$
2,640
Efficiency ratio - QTD (non-GAAP)
59.66
%
51.54
%
60.35
%
62.37
%
65.17
%
Efficiency ratio - YTD (non-GAAP)
59.66
%
59.58
%
62.58
%
63.77
%
65.17
%
MORTGAGE BANKING SEGMENT SUMMARY OF KEY QUARTERLY FINANCIAL DATA (Unaudited)
At or For the Three Months Ended
March 31,
December 31,
September 30,
June 30,
March 31,
2025
2024
2024
2024
2024
(Dollars in Thousands)
Condensed Results of Operations:
Net interest income (loss)
$
152
$
(92
)
$
(760
)
$
(552
)
$
(541
)
Provision (credit) for credit losses
(40
)
36
(75
)
54
(38
)
Total noninterest income
15,731
17,455
21,386
25,081
20,328
Noninterest expenses:
Compensation, payroll taxes, and other employee benefits
12,054
13,781
15,930
16,886
14,756
Occupancy, office furniture and equipment
853
754
953
1,046
1,108
Advertising
552
523
615
758
740
Data processing
498
542
570
549
508
Communications
135
135
152
168
161
Professional fees
1,373
917
379
569
520
Real estate owned
-
-
-
-
-
Loan processing expense
920
486
697
861
1,046
Other
1,751
814
1,261
1,641
617
Total noninterest expense
18,136
17,952
20,557
22,478
19,456
(Loss) income before income taxes (benefit) expense
(2,213
)
(625
)
144
1,997
369
Income tax (benefit) expense
(588
)
(428
)
194
684
71
Net (loss) income
$
(1,625
)
$
(197
)
$
(50
)
$
1,313
$
298
Efficiency ratio - QTD (non-GAAP)
114.18
%
103.39
%
99.67
%
91.64
%
98.33
%
Efficiency ratio - YTD (non-GAAP)
114.18
%
97.74
%
96.23
%
94.62
%
98.33
%
Loan originations
$
387,729
$
470,650
$
558,729
$
634,109
$
485,109
Purchase
87.5
%
82.1
%
88.9
%
92.7
%
93.0
%
Refinance
12.5
%
17.9
%
11.1
%
7.3
%
7.0
%
Gross margin on loans sold(1)
3.98
%
3.74
%
3.83
%
3.93
%
4.10
%
(1) Gross margin on loans sold equals mortgage banking income (excluding the change in interest rate lock value) divided by total loan originations
