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

Wauwatosa, WI – 4/22/2025 – 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.