Waterstone Financial, Inc. Announces Results Of Operations For The Three Months Ended March 31, 2026

2026-04-23 04:16:48

(MENAFN- GlobeNewsWire - Nasdaq) WAUWATOSA, Wis., April 23, 2026 (GLOBE NEWSWIRE) -- Waterstone Financial, Inc. (NASDAQ: WSBF), holding company for WaterStone Bank, reported net income of $6.0 million, or $0.34 per diluted share, for the quarter ended March 31, 2026, compared to $3.0 million, or $0.17 per diluted share, for the quarter ended March 31, 2025. Net income totaled $7.7 million, or $0.44 per diluted share, for the quarter ended December 31, 2025.

“We started 2026 on a strong note due to continued net interest margin expansion and increased loan origination volumes at the mortgage banking segment,” said William Bruss, Chief Executive Officer of Waterstone Financial, Inc.“The community banking segment had a record first quarter net interest income of $15.2 million, which represented a $2.8 million, or 22.8%, increase compared to the quarter ended March 31, 2025, as net interest margin grew to 2.97% for the quarter. The increases were primarily due to continued growth in yield on our loans held for investment and reduction of our cost of funds. We did increase our allowance for credit losses due to certain external qualitative factors even though asset quality metrics continue to stay strong. The mortgage banking segment increased pre-tax income $2.2 million due to an increase in loan origination activity as rates decreased periodically throughout the quarter. We increased our book value per share $0.33 during the quarter with continued strong earnings and the share repurchase program, prior to declaring an increased quarterly dividend of $0.17 per share. In total, $7.3 million was returned to shareholders through buybacks and dividends in the quarter.”

Highlights of the Quarter Ended March 31, 2026

Waterstone Financial, Inc. (Consolidated)

Consolidated net income of Waterstone Financial, Inc. totaled $6.0 million for the quarter ended March 31, 2026 compared to net income of $3.0 million for the quarter ended December 31, 2025.
Consolidated return on average assets (annualized) was 1.10% for the quarter ended March 31, 2026 and 0.57% for the quarter ended March 31, 2025.
Consolidated return on average equity (annualized) was 6.88% for the quarter ended March 31, 2026 and 3.61% for the quarter ended March 31, 2025.
Dividends declared during the quarter ended March 31, 2026 totaled $0.17 per common share.
During the quarter ended March 31, 2026, we repurchased approximately 246,000 shares at a cost (including the federal excise tax) of $4.4 million, or $17.89 per share.
Nonperforming assets as a percentage of total assets was 0.35% at March 31, 2026, 0.29% at December 31, 2025, and 0.35% at March 31, 2025.
Past due loans as a percentage of total loans was 0.58% at March 31, 2026, 0.86% at December 31, 2025, and 0.67% at March 31, 2025.
Book value per share was $19.19 at March 31, 2026 and $19.03 at December 31, 2025.

Community Banking Segment

Pre-tax income totaled $7.5 million for the quarter ended March 31, 2026, which represents a $1.4 million, or 23.7%, increase compared to $6.1 million for the quarter ended March 31, 2025.
Net interest income totaled $15.2 million for the quarter ended March 31, 2026, which represents a $2.8 million, or 22.8%, increase compared to $12.4 million for the quarter ended March 31, 2025.
Average loans held for investment totaled $1.68 billion during the quarter ended March 31, 2026, which represents an increase of $3.8 million, or 0.2%, compared to $1.67 billion for the quarter ended March 31, 2025. The increase was primarily due to increases in multi-family, construction, and commercial real estate mortgages offset by a decrease in single-family mortgages. Average loans held for investment decreased $33.3 million compared to $1.71 billion for the quarter ended December 31, 2025. The decrease was primarily due to a decrease in single-family real estate mortgages.
Net interest margin increased 50 basis points to 2.97% for the quarter ended March 31, 2026 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 the cost of borrowings and weighted average cost of deposits. Net interest margin increased eight basis points compared to 2.89% for the quarter ended December 31, 2025, 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.
Past due loans at the community banking segment totaled $6.9 million at March 31, 2026, $10.4 million at December 31, 2025, and $7.6 million at March 31, 2025.
The segment had a provision for credit losses related to funded loans of $240,000 for the quarter ended March 31, 2026 compared to a negative provision for credit losses related to funded loans of $314,000 for the quarter ended March 31, 2025. The current quarter increase was primarily due to increases in multi-family and construction loan balances along with an increase in multi-family external qualitative factors. The provision for credit losses related to unfunded loan commitments was $44,000 for the quarter ended March 31, 2026 compared to a negative provision for credit losses related to unfunded loan commitments of $204,000 for the quarter ended March 31, 2025. The provision for credit losses related to unfunded loan commitments for the quarter ended March 31, 2026 was due primarily to an increase of the loan pipeline balance at quarter end.
The efficiency ratio, a non-GAAP ratio, was 52.48% for the quarter ended March 31, 2026, compared to 59.66% for the quarter ended March 31, 2025.
Average core retail deposits (excluding brokered and escrow accounts) totaled $1.33 billion during the quarter ended March 31, 2026, an increase of $54.8 million, or 4.3%, compared to $1.28 billion during the quarter ended March 31, 2025 due primarily to increases in money market and demand deposits balances. Average core retail deposits increased $8.7 million, or 2.6% annualized, compared to $1.32 billion for the quarter ended December 31, 2025. The segment had an average of $110.2 million in brokered certificate of deposits during the quarter ended March 31, 2026 compared to $97.1 million during the quarter ended March 31, 2025.

Mortgage Banking Segment

Pre-tax income totaled $22,000 for the quarter ended March 31, 2026, compared to a pre-tax loss of $2.2 million for the quarter ended March 31, 2025.
Loan originations increased $120.6 million, or 31.1%, to $508.3 million during the quarter ended March 31, 2026, compared to $387.7 million during the quarter ended March 31, 2025. Origination volume relative to purchase activity accounted for 73.9% of originations for the quarter ended March 31, 2026 compared to 87.5% of total originations for the quarter ended March 31, 2025.
Mortgage banking non-interest income increased $3.4 million, or 21.5%, to $19.1 million for the quarter ended March 31, 2026, compared to $15.7 million for the quarter ended March 31, 2025.
Gross margin on loans sold totaled 3.65% for the quarter ended March 31, 2026, compared to 3.98% for the quarter ended March 31, 2025.
Total compensation, payroll taxes and other employee benefits increased $2.4 million or 20.1%, to $14.5 million during the quarter ended March 31, 2026 compared to $12.1 million during the quarter ended March 31, 2025. The increase primarily related to increased commission expense, manager pay expense, production incentive expense, and salary expense.
Professional fees decreased $1.2 million, or 88.9%, to $152,000 for the quarter ended March 31, 2026, compared to $1.4 million for the quarter ended March 31, 2025. The decrease was primarily related to legal services and the finalization of a settlement during the three months ended March 31, 2025.

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 wsbonline .

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.

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

	For The Three Months Ended March 31,
	2026		2025
	(In Thousands, except per share amounts)
Interest income:
Loans	$	25,951		$	25,078
Mortgage-related securities		1,454			1,191
Debt securities, federal funds sold and short-term investments		1,610			1,486
Total interest income		29,015			27,755
Interest expense:
Deposits		10,373			11,332
Borrowings		3,179			3,847
Total interest expense		13,552			15,179
Net interest income		15,463			12,576
Provision (credit) for credit losses		264			(558	)
Net interest income after provision (credit) for loan losses		15,199			13,134
Noninterest income:
Service charges on loans and deposits		374			593
Increase in cash surrender value of life insurance		549			481
Mortgage banking income		18,950			15,728
Other		355			295
Total noninterest income		20,228			17,097
Noninterest expenses:
Compensation, payroll taxes, and other employee benefits		19,842			17,047
Occupancy, office furniture, and equipment		1,966			1,929
Advertising		617			723
Data processing		1,258			1,212
Communications		258			235
Professional fees		383			1,736
Real estate owned		2			(10	)
Loan processing expense		1,029			920
Other		2,520			2,558
Total noninterest expenses		27,875			26,350
Income before income taxes		7,552			3,881
Income tax expense		1,555			845
Net income	$	5,997		$	3,036
Income per share:
Basic	$	0.35		$	0.17
Diluted	$	0.34		$	0.17
Weighted average shares outstanding:
Basic		17,373			18,267
Diluted		17,430			18,280

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

	March 31,			December 31,
	2026			2025
	(Unaudited)
Assets	(In Thousands, except per share amounts)
Cash	$	38,759			$	63,560
Federal funds sold		5,598				7,255
Interest-earning deposits in other financial institutions and other short term investments		296				292
Cash and cash equivalents		44,653				71,107
Securities available for sale (at fair value)		237,024				230,848
Loans held for sale (at fair value)		144,350				145,057
Loans receivable		1,684,312				1,675,552
Less: Allowance for credit losses ("ACL") - loans		17,709				17,478
Loans receivable, net		1,666,603				1,658,074

Office properties and equipment, net		19,273				18,855
Federal Home Loan Bank stock (at cost)		18,760				19,804
Cash surrender value of life insurance		77,902				77,353
Real estate owned, net		318				424
Prepaid expenses and other assets		42,335				37,985
Total assets	$	2,251,218			$	2,259,507

Liabilities and Shareholders' Equity
Liabilities:
Demand deposits	$	181,758			$	175,595
Money market and savings deposits		342,527				329,031
Time deposits		914,502				932,646
Total deposits		1,438,787				1,437,272

Borrowings		413,034				412,258
Advance payments by borrowers for taxes		11,128				2,996
Other liabilities		40,058				57,589
Total liabilities		1,903,007				1,910,115

Shareholders' equity:
Preferred stock		-				-
Common stock		182				184
Additional paid-in capital		74,488				78,014
Retained earnings		296,027				292,957
Unearned ESOP shares		(9,199	)			(9,496	)
Accumulated other comprehensive loss, net of taxes		(13,287	)			(12,267	)
Total shareholders' equity		348,211				349,392
Total liabilities and shareholders' equity	$	2,251,218			$	2,259,507

Share Information
Shares outstanding		18,146				18,360
Book value per share	$	19.19			$	19.03

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,
	2026			2025			2025		2025		2025
	(Dollars in Thousands, except per share amounts)
Condensed Results of Operations:
Net interest income	$	15,463			$	15,711		$	14,739		$	13,708		$	12,576
Provision (credit) for credit losses		264				(558	)		(269	)		(9	)		(558	)
Total noninterest income		20,228				21,459			22,302			24,329			17,097
Total noninterest expense		27,875				27,677			27,466			28,377			26,350
Income before income taxes		7,552				10,051			9,844			9,669			3,881
Income tax expense		1,555				2,338			1,918			1,942			845
Net income	$	5,997			$	7,713		$	7,926		$	7,727		$	3,036
Income per share – basic	$	0.35			$	0.44		$	0.45		$	0.43		$	0.17
Income per share – diluted	$	0.34			$	0.44		$	0.45		$	0.43		$	0.17
Dividends declared per common share	$	0.17			$	0.15		$	0.15		$	0.15		$	0.15

Performance Ratios (annualized):
Return on average assets - QTD		1.10	%			1.35	%		1.42	%		1.39	%		0.57	%
Return on average equity - QTD		6.88	%			8.74	%		9.14	%		9.04	%		3.61	%
Net interest margin - QTD		2.97	%			2.89	%		2.76	%		2.60	%		2.47	%

Return on average assets - YTD		1.10	%			1.19	%		1.13	%		0.99	%		0.57	%
Return on average equity - YTD		6.88	%			7.62	%		7.23	%		6.32	%		3.61	%
Net interest margin - YTD		2.97	%			2.68	%		2.61	%		2.54	%		2.47	%

Asset Quality Ratios:
Past due loans to total loans		0.58	%			0.86	%		0.50	%		0.69	%		0.67	%
Nonaccrual loans to total loans		0.44	%			0.37	%		0.35	%		0.49	%		0.45	%
Nonperforming assets to total assets		0.35	%			0.29	%		0.27	%		0.37	%		0.35	%
Allowance for credit losses - loans to loans receivable		1.05	%			1.04	%		1.03	%		1.07	%		1.08	%

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,
	2026			2025			2025		2025		2025
Average balances	(Dollars in Thousands)
Interest-earning assets
Loans receivable and held for sale	$	1,788,736			$	1,842,908		$	1,809,600		$	1,812,065		$	1,768,617
Mortgage related securities		183,980				180,434			178,063			173,220			170,947
Debt securities, federal funds sold and short term investments		137,861				133,781			131,165			131,710			123,004
Total interest-earning assets		2,110,577				2,157,123			2,118,828			2,116,995			2,062,568
Noninterest-earning assets		108,366				107,462			103,434			105,382			105,030
Total assets	$	2,218,943			$	2,264,585		$	2,222,262		$	2,222,377		$	2,167,598

Interest-bearing liabilities
Demand accounts	$	90,133			$	92,292		$	90,015		$	89,548		$	87,393
Money market, savings, and escrow accounts		343,416				339,368			334,300			320,908			300,686
Certificates of deposit - retail		817,019				823,586			823,274			830,550			818,612
Certificates of deposit - brokered		110,192				105,496			61,814			72,533			97,101
Total interest-bearing deposits		1,360,760				1,360,742			1,309,403			1,313,539			1,303,792
Borrowings		377,438				419,541			440,968			437,784			397,053
Total interest-bearing liabilities		1,738,198				1,780,283			1,750,371			1,751,323			1,700,845
Noninterest-bearing demand deposits		88,975				89,673			88,799			85,665			80,372
Noninterest-bearing liabilities		38,073				44,688			39,136			42,669			44,905
Total liabilities		1,865,246				1,914,644			1,878,306			1,879,657			1,826,122
Equity		353,697				349,941			343,956			342,720			341,476
Total liabilities and equity	$	2,218,943			$	2,264,585		$	2,222,262		$	2,222,377		$	2,167,598

Average Yield/Costs (annualized)
Loans receivable and held for sale		5.88	%			5.85	%		5.84	%		5.73	%		5.75	%
Mortgage related securities		3.21	%			3.09	%		3.04	%		2.90	%		2.83	%
Debt securities, federal funds sold and short term investments		4.74	%			4.54	%		4.74	%		4.74	%		4.90	%
Total interest-earning assets		5.58	%			5.54	%		5.53	%		5.43	%		5.46	%

Demand accounts		0.11	%			0.11	%		0.11	%		0.11	%		0.11	%
Money market and savings accounts		2.25	%			2.09	%		2.04	%		2.07	%		2.10	%
Certificates of deposit - retail		3.68	%			3.78	%		3.92	%		4.11	%		4.33	%
Certificates of deposit - brokered		3.82	%			3.89	%		4.11	%		4.35	%		4.18	%
Total interest-bearing deposits		3.09	%			3.12	%		3.19	%		3.35	%		3.52	%
Borrowings		3.42	%			3.51	%		3.86	%		3.67	%		3.93	%
Total interest-bearing liabilities		3.16	%			3.21	%		3.36	%		3.43	%		3.62	%

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,
	2026			2025			2025		2025		2025
	(Dollars in Thousands)
Condensed Results of Operations:
Net interest income	$	15,226			$	15,521		$	14,617		$	13,640		$	12,403
Provision (credit) for credit losses		284				(518	)		(276	)		(19	)		(518	)
Total noninterest income		1,153				1,305			1,359			1,686			1,348
Noninterest expenses:
Compensation, payroll taxes, and other employee benefits		5,575				5,646			5,036			5,027			5,212
Occupancy, office furniture and equipment		1,103				1,026			907			920			1,076
Advertising		212				250			213			219			171
Data processing		765				741			733			806			712
Communications		112				103			108			99			100
Professional fees		228				185			200			196			347
Real estate owned		2				(298	)		4			(8	)		(10	)
Loan processing expense		-				-			-			-			-
Other		598				630			617			466			596
Total noninterest expense		8,595				8,283			7,818			7,725			8,204
Income before income taxes		7,500				9,061			8,434			7,620			6,065
Income tax expense		1,538				2,063			1,518			1,400			1,427
Net income	$	5,962			$	6,998		$	6,916		$	6,220		$	4,638

Efficiency ratio - QTD (non-GAAP)		52.48	%			49.23	%		48.94	%		50.40	%		59.66	%
Efficiency ratio - YTD (non-GAAP)		52.48	%			51.76	%		52.71	%		54.78	%		59.66	%

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,
	2026			2025			2025		2025		2025
	(Dollars in Thousands)
Condensed Results of Operations:
Net interest income	$	214			$	205		$	103		$	53		$	152
Provision (credit) for credit losses		(20	)			(40	)		7			10			(40	)
Total noninterest income		19,121				20,172			20,985			22,643			15,731
Noninterest expenses:
Compensation, payroll taxes, and other employee benefits		14,471				15,489			15,716			16,312			12,054
Occupancy, office furniture and equipment		863				798			781			833			853
Advertising		405				446			499			527			552
Data processing		490				465			475			507			498
Communications		146				129			141			158			135
Professional fees		152				33			180			303			1,373
Real estate owned		-				-			-			-			-
Loan processing expense		1,029				571			688			817			920
Other		1,777				1,586			1,271			1,230			1,751
Total noninterest expense		19,333				19,517			19,751			20,687			18,136
Income (loss) before income taxes expense (benefit)		22				900			1,330			1,999			(2,213	)
Income tax expense (benefit)		10				244			382			531			(588	)
Net income (loss)	$	12			$	656		$	948		$	1,468		$	(1,625	)

Efficiency ratio - QTD (non-GAAP)		99.99	%			95.78	%		93.66	%		91.15	%		114.18	%
Efficiency ratio - YTD (non-GAAP)		99.99	%			97.56	%		98.17	%		100.63	%		114.18	%

Loan originations	$	508,314			$	534,646		$	539,404		$	588,838		$	387,729
Purchase		73.9	%			78.9	%		90.1	%		91.7	%		87.5	%
Refinance		26.1	%			21.1	%		9.9	%		8.3	%		12.5	%
Gross margin on loans sold⁽¹⁾		3.65	%			3.80	%		3.87	%		3.84	%		3.98	%

⁽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
...

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