Waterstone Financial, Inc. Announces Results of Operations for the Quarter Ended March 31, 2025

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. GerkeChief Financial Officer414-459-4012markgerke@wsbonline.com WATERSTONE FINANCIAL, INC. AND SUBSIDIARIESCONSOLIDATED 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 SUBSIDIARIESCONSOLIDATED 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 SUBSIDIARIESSUMMARY 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 SUBSIDIARIESSUMMARY 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 SEGMENTSUMMARY 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 SEGMENTSUMMARY 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

Waterstone Financial, Inc. Announces Results of Operations for the Quarter Ended March 31, 2025

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