WSBF Waterstone Financial Inc

Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income of $5.2 million, or $0.28 per diluted share, for the quarter ended December 31, 2024, compared to net loss of $40,000, or less than $0.01 per diluted share, for the quarter ended December 31, 2023. Net income per diluted share was $1.01 for the year ended December 31, 2024, compared to net income per diluted share of $0.46 for the year ended December 31, 2023.

“We are pleased with the company's performance compared to the prior year and looking to build off of the positives from 2024,” said William Bruss, Chief Executive Officer of Waterstone Financial, Inc. “We achieved loan growth, achieved core deposit growth (excluding brokered certificates of deposit), and continued to maintain strong asset quality metrics. The interest rate environment created challenges for both the Community Banking and Mortgage Banking segments even with the 100 bps cut in the Federal Funds rate during the second half of the year. The Mortgage Banking segment remained profitable due in large part to our continued focus on cost control as funding volumes are still facing headwinds from the higher fixed-rate mortgage rates. Waterstone Financial, Inc. remained active in share repurchases and continued to pay out dividends, as we are committed to shareholder returns.” 

Highlights of the Quarter Ended December 31, 2024

Waterstone Financial, Inc. (Consolidated)

• Consolidated net income of Waterstone Financial, Inc. totaled $5.2 million for the quarter ended December 31, 2024, compared to a net loss of $40,000 for the quarter ended December 31, 2023.
• Consolidated return on average assets was 0.94% for the quarter ended December 31, 2024, compared to (0.01)% for the quarter ended December 31, 2023.
• Consolidated return on average equity was 6.05% for the quarter ended December 31, 2024, and (0.05)% for the quarter ended December 31, 2023.
• Dividends declared during the quarter ended December 31, 2024, totaled $0.15 per common share.
• During the quarter ended December 31, 2024, we repurchased approximately 194,000 shares at a cost (including the federal excise tax) of $2.8 million, or $14.43 per share.
• Nonperforming assets as a percentage of total assets was 0.28% at December 31, 2024, 0.25% at September 30, 2024, and 0.23% at December 31, 2023.
• Past due loans as a percentage of total loans was 0.95% at December 31, 2024, 0.63% at September 30, 2024, and 0.68% at December 31, 2023. 
• Book value per share was $17.53 at December 31, 2024, and $16.94 at December 31, 2023. 

Community Banking Segment

• Pre-tax income totaled $6.7 million for the quarter ended December 31, 2024, which represents a $1.4 million, or 26.0%, increase compared to $5.3 million for the quarter ended December 31, 2023.
• Net interest income totaled $12.9 million for the quarter ended December 31, 2024, which represents a $830,000, or 6.9%, increase compared to $12.1 million for the quarter ended December 31, 2023.
• Average loans held for investment totaled $1.68 billion during the quarter ended December 31, 2024, which represents an increase of $21.5 million, or 1.3%, compared to $1.66 billion for the quarter ended December 31, 2023. The increase was primarily due to increases in the construction, commercial real estate, and multi-family mortgages. Average loans held for investment decreased $6.3 million compared to $1.69 billion for the quarter ended September 30, 2024. The decrease was primarily due to decreases in construction and one- to four-family mortgages.
• Net interest margin increased 17 basis points to 2.42% for the quarter ended December 31, 2024 compared to 2.25% for the quarter ended December 31, 2023, which was primarily driven by an increase in weighted average yield on loans receivable and held for sale offset by a result of an increase in weighted average cost of deposits and borrowings as the federal funds rate increases resulted in increased funding rates. Net interest margin increased 29 basis points compared to 2.13% for the quarter ended September 30, 2024, primarily driven by an increase in weighted average yield on loans receivable and held for sale and a decrease in weighted average cost of borrowings. 
• Past due loans at the community banking segment totaled $12.8 million at December 31, 2024, $8.0 million at September 30, 2024, and $7.9 million at December 31, 2023.
• The segment had a provision for credit losses related to funded loans of $61,000 for the quarter ended December 31, 2024, compared to a negative provision for credit losses related to funded loans of $17,000 for the quarter ended December 31, 2023. The current quarter increase was primarily due to an increase in the qualitative factors primarily related to increases in economic risks related to commercial real estate loans during the quarter offset by a decrease in historical loss rates. The provision for credit losses related to unfunded loan commitments was $270,000 for the quarter ended December 31, 2024, compared to a negative provision for credit losses related to unfunded loan commitments of $533,000 for the quarter ended December 31, 2023. The provision for credit losses related to unfunded loan commitments for the quarter ended December 31, 2024, was due primarily to an increase of construction loans that are currently waiting to be funded compared to the prior quarter end.
• The efficiency ratio, a non-GAAP ratio, was 51.54% for the quarter ended December 31, 2024, compared to 63.26% for the quarter ended December 31, 2023.
• Average core deposits (excluding brokered and escrow accounts) totaled $1.27 billion during the quarter ended December 31, 2024, an increase of $65.8 million, or 5.4%, compared to $1.21 billion during the quarter ended December 31, 2023. Average deposits increased $28.8 million, or 9.2% annualized, compared to $1.25 billion for the quarter ended September 30, 2024. The increases were primarily due to an increase in certificates of deposit balances. The segment had $94.3 million in brokered certificate of deposits at December 31, 2024.

Mortgage Banking Segment

• Pre-tax loss totaled $625,000 for the quarter ended December 31, 2024, compared to a $6.0 million of pre-tax loss for the quarter ended December 31, 2023.
• Loan originations increased $12.3 million, or 2.7%, to $470.7 million during the quarter ended December 31, 2024, compared to $458.4 million during the quarter ended December 31, 2023. Origination volume relative to purchase activity accounted for 82.1% of originations for the quarter ended December 31, 2024, compared to 95.7% of total originations for the quarter ended December 31, 2023.
• Mortgage banking non-interest income increased $1.4 million, or 8.9%, to $17.5 million for the quarter ended December 31, 2024, compared to $16.0 million for the quarter ended December 31, 2023.
• Gross margin on loans sold totaled 3.74% for the quarter ended December 31, 2024, compared to 3.51% for the quarter ended December 31, 2023.
• Total compensation, payroll taxes and other employee benefits decreased $1.1 million, or 7.4%, to $13.8 million during the quarter ended December 31, 2024, compared to $14.9 million during the quarter ended December 31, 2023. The decrease primarily related to decreased salary expense, health insurance expense, and sign-on incentives driven by reduced employee headcount and fewer new branches added over the past year.

About Waterstone Financial, Inc.

Waterstone Financial, Inc. is the savings and loan holding company for WaterStone Bank. WaterStone Bank was established in 1921 and offers a full suite of personal and business banking products. The Bank has branches in Wauwatosa/State St, Brookfield, Fox Point/North Shore, Franklin/Hales Corners, Germantown/Menomonee Falls, Greenfield/Loomis Rd, Milwaukee/Oklahoma Ave, Oak Creek/27th St, Oak Creek/Howell Ave, Oconomowoc/Lake Country, Pewaukee, Waukesha, West Allis/Greenfield Ave, and West Allis/National Ave, Wisconsin. WaterStone Bank is the parent company to Waterstone Mortgage, which has the ability to lend in 48 states. 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 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 EndedDecember 31,								For The Twelve Months EndedDecember 31,
		2024				2023				2024				2023
		(In Thousands, except per share amounts)
Interest income:
Loans		$	26,391			$	24,288			$	103,066			$	90,148
Mortgage-related securities			1,136				1,081				4,496				4,053
Debt securities, federal funds sold and short-term investments			1,525				1,325				5,606				5,007
Total interest income			29,052				26,694				113,168				99,208
Interest expense:
Deposits			11,410				8,253				40,573				25,738
Borrowings			4,807				6,685				26,427				23,255
Total interest expense			16,217				14,938				67,000				48,993
Net interest income			12,835				11,756				46,168				50,215
Provision (credit) for credit losses			367				(435	)			(168	)			656
Net interest income after provision (credit) for loan losses			12,468				12,191				46,336				49,559
Noninterest income:
Service charges on loans and deposits			626				328				2,060				1,819
Increase in cash surrender value of life insurance			407				337				1,969				1,710
Mortgage banking income			17,365				15,830				83,565				75,686
Other			607				381				1,708				1,970
Total noninterest income			19,005				16,876				89,302				81,185
Noninterest expenses:
Compensation, payroll taxes, and other employee benefits			18,423				20,061				81,078				84,096
Occupancy, office furniture, and equipment			1,579				2,021				7,573				8,323
Advertising			727				1,030				3,554				3,779
Data processing			1,233				1,212				4,978				4,653
Communications			224				269				922				988
Professional fees			1,114				907				3,184				2,686
Real estate owned			12				1				26				4
Loan processing expense			486				756				3,090				3,428
Other			1,469				3,405				7,231				11,755
Total noninterest expenses			25,267				29,662				111,636				119,712
Income (loss) before income taxes (benefit)			6,206				(595	)			24,002				11,032
Income tax expense (benefit)			996				(555	)			5,314				1,657
Net income (loss)		$	5,210			$	(40	)		$	18,688			$	9,375
Income (loss) per share:
Basic		$	0.28			$	(0.00	)		$	1.01			$	0.47
Diluted		$	0.28			$	(0.00	)		$	1.01			$	0.46
Weighted average shares outstanding:
Basic			18,335				19,380				18,556				20,158
Diluted			18,396				19,398				18,589				20,196

WATERSTONE FINANCIAL, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
		December 31,				December 31,
		2024				2023
		(Unaudited)
Assets		(In Thousands, except per share amounts)
Cash		$	35,182			$	30,667
Federal funds sold			4,302				5,493
Interest-earning deposits in other financial institutions and other short term investments			277				261
Cash and cash equivalents			39,761				36,421
Securities available for sale (at fair value)			208,549				204,907
Loans held for sale (at fair value)			135,909				164,993
Loans receivable			1,680,576				1,664,215
Less: Allowance for credit losses ("ACL") - loans			18,247				18,549
Loans receivable, net			1,662,329				1,645,666
Office properties and equipment, net			19,389				19,995
Federal Home Loan Bank stock (at cost)			20,295				20,880
Cash surrender value of life insurance			74,612				67,859
Real estate owned, net			505				254
Prepaid expenses and other assets			48,259				52,414
Total assets		$	2,209,608			$	2,213,389
Liabilities and Shareholders' Equity
Liabilities:
Demand deposits		$	171,115			$	187,107
Money market and savings deposits			283,243				273,233
Time deposits			905,539				730,284
Total deposits			1,359,897				1,190,624
Borrowings			446,519				611,054
Advance payments by borrowers for taxes			5,630				6,607
Other liabilities			58,427				61,048
Total liabilities			1,870,473				1,869,333
Shareholders' equity:
Preferred stock			-				-
Common stock			193				203
Additional paid-in capital			91,214				103,908
Retained earnings			277,196				269,606
Unearned ESOP shares			(10,682	)			(11,869	)
Accumulated other comprehensive loss, net of taxes			(18,786	)			(17,792	)
Total shareholders' equity			339,135				344,056
Total liabilities and shareholders' equity		$	2,209,608			$	2,213,389
Share Information
Shares outstanding			19,343				20,315
Book value per share		$	17.53			$	16.94

WATERSTONE FINANCIAL, INC. AND SUBSIDIARIESSUMMARY OF KEY QUARTERLY FINANCIAL DATA(Unaudited)
		At or For the Three Months Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
		2024				2024				2024				2024				2023
		(Dollars in Thousands, except per share amounts)
Condensed Results of Operations:
Net interest income		$	12,835			$	11,517			$	10,679			$	11,137			$	11,756
Provision (credit) for credit losses			367				(377	)			(225	)			67				(435	)
Total noninterest income			19,005				22,552				26,497				21,248				16,876
Total noninterest expense			25,267				28,560				30,259				27,550				29,662
Income (loss) before income taxes (benefit)			6,206				5,886				7,142				4,768				(595	)
Income tax expense (benefit)			996				1,158				1,430				1,730				(555	)
Net income (loss)		$	5,210			$	4,728			$	5,712			$	3,038			$	(40	)
Income (loss) per share – basic		$	0.28			$	0.26			$	0.31			$	0.16			$	(0.00	)
Income (loss) per share – diluted		$	0.28			$	0.26			$	0.31			$	0.16			$	(0.00	)
Dividends declared per common share		$	0.15			$	0.15			$	0.15			$	0.15			$	0.15
Performance Ratios (annualized):
Return on average assets - QTD			0.94	%			0.83	%			1.02	%			0.56	%			-0.01	%
Return on average equity - QTD			6.05	%			5.55	%			6.84	%			3.56	%			-0.05	%
Net interest margin - QTD			2.42	%			2.13	%			2.01	%			2.15	%			2.25	%
Return on average assets - YTD			0.84	%			0.81	%			0.79	%			0.56	%			0.44	%
Return on average equity - YTD			5.48	%			5.30	%			5.17	%			3.56	%			2.62	%
Net interest margin - YTD			2.17	%			2.09	%			2.08	%			2.15	%			2.46	%
Asset Quality Ratios:
Past due loans to total loans			0.95	%			0.63	%			0.76	%			0.64	%			0.68	%
Nonaccrual loans to total loans			0.34	%			0.32	%			0.33	%			0.29	%			0.29	%
Nonperforming assets to total assets			0.28	%			0.25	%			0.25	%			0.23	%			0.23	%
Allowance for credit losses - loans to loans receivable			1.09	%			1.07	%			1.10	%			1.10	%			1.11	%

WATERSTONE FINANCIAL, INC. AND SUBSIDIARIESSUMMARY OF QUARTERLY AVERAGE BALANCES AND YIELD/COSTS(Unaudited)
		At or For the Three Months Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
		2024				2024				2024				2024				2023
Average balances		(Dollars in Thousands)
Interest-earning assets
Loans receivable and held for sale		$	1,819,574			$	1,870,627			$	1,859,608			$	1,805,102			$	1,797,988
Mortgage related securities			168,521				170,221				171,895				172,077				172,863
Debt securities, federal funds sold and short term investments			124,658				115,270				107,992				110,431				106,504
Total interest-earning assets			2,112,753				2,156,118				2,139,495				2,087,610				2,077,355
Noninterest-earning assets			100,627				104,600				104,019				103,815				105,073
Total assets		$	2,213,380			$	2,260,718			$	2,243,514			$	2,191,425			$	2,182,428
Interest-bearing liabilities
Demand accounts		$	92,247			$	89,334			$	91,300			$	87,393			$	91,868
Money market, savings, and escrow accounts			306,478				304,116				293,483				281,171				302,121
Certificates of deposit - retail			810,340				786,228				758,252				739,543				735,418
Certificates of deposit - brokered			59,254				-				-				-				-
Total interest-bearing deposits			1,268,319				1,179,678				1,143,035				1,108,107				1,129,407
Borrowings			464,964				600,570				622,771				602,724				549,210
Total interest-bearing liabilities			1,733,283				1,780,248				1,765,806				1,710,831				1,678,617
Noninterest-bearing demand deposits			87,889				91,532				93,637				92,129				102,261
Noninterest-bearing liabilities			49,645				49,787				48,315				45,484				56,859
Total liabilities			1,870,817				1,921,567				1,907,758				1,848,444				1,837,737
Equity			342,563				339,151				335,756				342,981				344,691
Total liabilities and equity		$	2,213,380			$	2,260,718			$	2,243,514			$	2,191,425			$	2,182,428
Average Yield/Costs (annualized)
Loans receivable and held for sale			5.75	%			5.65	%			5.54	%			5.46	%			5.36	%
Mortgage related securities			2.67	%			2.66	%			2.63	%			2.57	%			2.48	%
Debt securities, federal funds sold and short term investments			4.85	%			5.05	%			4.82	%			4.82	%			4.94	%
Total interest-earning assets			5.46	%			5.39	%			5.27	%			5.18	%			5.10	%
Demand accounts			0.11	%			0.11	%			0.11	%			0.11	%			0.11	%
Money market and savings accounts			2.00	%			1.94	%			1.89	%			1.79	%			1.64	%
Certificates of deposit - retail			4.53	%			4.54	%			4.41	%			4.19	%			3.76	%
Certificates of deposit - brokered			4.18	%			0.00	%			0.00	%			0.00	%			0.00	%
Total interest-bearing deposits			3.58	%			3.53	%			3.42	%			3.26	%			2.90	%
Borrowings			4.11	%			4.77	%			4.92	%			4.54	%			4.83	%
Total interest-bearing liabilities			3.72	%			3.95	%			3.95	%			3.71	%			3.53	%

COMMUNITY BANKING SEGMENTSUMMARY OF KEY QUARTERLY FINANCIAL DATA(Unaudited)
		At or For the Three Months Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
		2024				2024				2024				2024				2023
		(Dollars in Thousands)
Condensed Results of Operations:
Net interest income		$	12,886			$	12,250			$	11,234			$	11,598			$	12,056
Provision (credit) for credit losses			331				(302	)			(279	)			105				(550	)
Total noninterest income			1,595				1,227				1,491				990				894
Noninterest expenses:
Compensation, payroll taxes, and other employee benefits			4,883				5,326				5,116				5,360				5,397
Occupancy, office furniture and equipment			825				904				983				1,000				916
Advertising			204				311				229				174				363
Data processing			691				720				687				693				626
Communications			89				80				72				65				75
Professional fees			196				190				177				208				186
Real estate owned			12				-				1				13				1
Loan processing expense			-				-				-				-				-
Other			563				602				672				691				628
Total noninterest expense			7,463				8,133				7,937				8,204				8,192
Income before income taxes			6,687				5,646				5,067				4,279				5,308
Income tax expense			1,399				941				718				1,639				1,234
Net income		$	5,288			$	4,705			$	4,349			$	2,640			$	4,074
Efficiency ratio - QTD (non-GAAP)			51.54	%			60.35	%			62.37	%			65.17	%			63.26	%
Efficiency ratio - YTD (non-GAAP)			59.58	%			62.58	%			63.77	%			65.17	%			56.86	%

MORTGAGE BANKING SEGMENTSUMMARY OF KEY QUARTERLY FINANCIAL DATA(Unaudited)
		At or For the Three Months Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
		2024				2024				2024				2024				2023
		(Dollars in Thousands)
Condensed Results of Operations:
Net interest loss		$	(92	)		$	(760	)		$	(552	)		$	(541	)		$	(367	)
Provision (credit) for credit losses			36				(75	)			54				(38	)			115
Total noninterest income			17,455				21,386				25,081				20,328				16,028
Noninterest expenses:
Compensation, payroll taxes, and other employee benefits			13,781				15,930				16,886				14,756				14,881
Occupancy, office furniture and equipment			754				953				1,046				1,108				1,105
Advertising			523				615				758				740				667
Data processing			542				570				549				508				583
Communications			135				152				168				161				194
Professional fees			917				379				569				520				704
Real estate owned			-				-				-				-				-
Loan processing expense			486				697				861				1,046				756
Other			814				1,261				1,641				617				2,701
Total noninterest expense			17,952				20,557				22,478				19,456				21,591
(Loss) income before income taxes (benefit) expense			(625	)			144				1,997				369				(6,045	)
Income tax (benefit) expense			(428	)			194				684				71				(1,827	)
Net (loss) income		$	(197	)		$	(50	)		$	1,313			$	298			$	(4,218	)
Efficiency ratio - QTD (non-GAAP)			103.39	%			99.67	%			91.64	%			98.33	%			137.86	%
Efficiency ratio - YTD (non-GAAP)			97.74	%			96.23	%			94.62	%			98.33	%			116.99	%
Loan originations		$	470,650			$	558,729			$	634,109			$	485,109			$	458,363
Purchase			82.1	%			88.9	%			92.7	%			93.0	%			95.7	%
Refinance			17.9	%			11.1	%			7.3	%			7.0	%			4.3	%
Gross margin on loans sold(1)			3.74	%			3.83	%			3.93	%			4.10	%			3.51	%

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