Waterstone Financial, Inc. Announces Results of Operations for the Quarter and Twelve Months Ended December 31, 2025

WAUWATOSA, Wisc., Jan. 28, 2026 (GLOBE NEWSWIRE) -- Waterstone Financial, Inc. (NASDAQ:WSBF), holding company for WaterStone Bank, reported net income of $7.7 million, or $0.44 per diluted share, for the quarter ended December 31, 2025 compared to $5.2 million, or $0.28 per diluted share, for the quarter ended December 31, 2024. Net income totaled $7.9 million, or $0.45 per diluted share, for the quarter ended September 30, 2025. Net income per diluted share was $1.48 for the twelve months ended December 31, 2025 compared to net income per diluted share of $1.01 for the twelve months ended December 31, 2024.

"We ended 2025 on a high note as net interest margin, deposit growth, and strong asset quality metrics resulted in our best quarterly pretax income since June 2022," said William Bruss, Chief Executive Officer of Waterstone Financial, Inc. "The Community Banking segment achieved growth in net interest income of $2.6 million, or 20.4%, compared to the quarter ended December 31, 2024 as net interest margin grew to 2.89% for the quarter. The increases were primarily due to growth in yield on our loans held for investment and a reduction of our cost of funds. Strong asset quality and another quarter of net recoveries resulted in a release from our allowance for credit losses. The Mortgage Banking segment recorded a third straight quarter of pre-tax income due to an increase in refinance activity as rates decreased periodically throughout the quarter. We increased our book value per share $0.53 during the quarter with continued strong earnings, share repurchase program, and improving valuations on our investment security portfolio, prior to declaring a quarterly dividend of $0.15 per share. In total, $5.3 million was returned to shareholders through buybacks and dividends in the quarter."

Highlights of the Quarter Ended December 31, 2025

Waterstone Financial, Inc. (Consolidated)

• Consolidated net income of Waterstone Financial, Inc. totaled $7.7 million for the quarter ended December 31, 2025 compared to net income of $5.2 million for the quarter ended December 31, 2024.
• Consolidated return on average assets (annualized) was 1.35% for the quarter ended December 31, 2025 and 0.94% for the quarter ended December 31, 2024.
• Consolidated return on average equity (annualized) was 8.74% for the quarter ended December 31, 2025 and 6.05% for the quarter ended December 31, 2024.
• Dividends declared during the quarter ended December 31, 2025 totaled $0.15 per common share.
• During the quarter ended December 31, 2025, we repurchased approximately 174,000 shares at a cost (including the federal excise tax) of $2.7 million, or $15.62 per share.
• Nonperforming assets as a percentage of total assets was 0.29% at December 31, 2025, 0.27% at September 30, 2025, and 0.28% at December 31, 2024.
• Past due loans as a percentage of total loans was 0.86% at December 31, 2025, 0.50% at September 30, 2025, and 0.90% at December 31, 2024.
• Book value per share was $19.03 at December 31, 2025 and $17.53 at December 31, 2024.
  
  
  
  

Community Banking Segment

• Pre-tax income totaled $9.1 million for the quarter ended December 31, 2025, which represents a $2.4 million, or 35.5%, increase compared to $6.7 million for the quarter ended December 31, 2024.
• Net interest income totaled $15.5 million for the quarter ended December 31, 2025, which represents a $2.6 million, or 20.4%, increase compared to $12.9 million for the quarter ended December 31, 2024.
• Average loans held for investment totaled $1.71 billion during the quarter ended December 31, 2025, which represents an increase of $30.3 million, or 1.8%, compared to the quarter ended December 31, 2024. The increase was primarily due to increases in multi-family and commercial real estate mortgages offset by a decrease in single-family mortgages. Average loans held for investment increased $30.1 million compared to $1.68 billion for the quarter ended September 30, 2025. The increase was primarily due to increases in multi-family and commercial real estate mortgages. The ending loan balance decreased $39.3 million from September 30, 2025 due to a few significant construction loan payoffs at year end.
• Net interest margin increased 47 basis points to 2.89% for the quarter ended December 31, 2025 compared to 2.42% for the quarter ended December 31, 2024, 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 13 basis points compared to 2.76% for the quarter ended September 30, 2025, which was primarily driven by decreases in cost of borrowings and weighted average cost of deposits.
• Past due loans at the community banking segment totaled $10.4 million at December 31, 2025, $6.8 million at September 30, 2025, and $12.8 million at December 31, 2024.
• The segment had a negative provision for credit losses related to funded loans of $252,000 for the quarter ended December 31, 2025 compared to a provision for credit losses related to funded loans of $61,000 for the quarter ended December 31, 2024. The current quarter decrease was primarily due to decreases in multi-family and construction loan balances. The negative provision for credit losses related to unfunded loan commitments was $266,000 for the quarter ended December 31, 2025 compared to a provision for credit losses related to unfunded loan commitments of $270,000 for the quarter ended December 31, 2024. The negative provision for credit losses related to unfunded loan commitments for the quarter ended December 31, 2025 was due primarily to decreases in the construction loans waiting to be funded and the loan pipeline compared to the prior quarter end.
• The efficiency ratio, a non-GAAP ratio, was 49.23% for the quarter ended December 31, 2025, compared to 51.54% for the quarter ended December 31, 2024.
• Average core retail deposits (excluding brokered and escrow accounts) totaled $1.32 billion during the quarter ended December 31, 2025, an increase of $49.0 million, or 3.8%, compared to $1.27 billion during the quarter ended December 31, 2024 due primarily to increases in money market and certificate of deposits balances. Average deposits increased $11.9 million, or 3.6% annualized, compared to $1.31 billion for the quarter ended September 30, 2025. The segment had an average of $105.5 million in brokered certificate of deposits during the quarter ended December 31, 2025 compared to $59.3 million during the quarter ended December 31, 2024.
  
  
  
  

Mortgage Banking Segment

• Pre-tax income totaled $900,000 for the quarter ended December 31, 2025, compared to a pretax loss of $625,000 for the quarter ended December 31, 2024.
• Loan originations increased $64.0 million, or 13.6%, to $534.6 million during the quarter ended December 31, 2025, compared to $470.7 million during the quarter ended December 31, 2024. Origination volume relative to purchase activity accounted for 78.9% of originations for the quarter ended December 31, 2025 compared to 82.1% of total originations for the quarter ended December 31, 2024.
• Mortgage banking non-interest income increased $2.7 million, or 15.6%, to $20.2 million for the quarter ended December 31, 2025, compared to $17.5 million for the quarter ended December 31, 2024.
• Gross margin on loans sold totaled 3.80% for the quarter ended December 31, 2025, compared to 3.74% for the quarter ended December 31, 2024.
• Total compensation, payroll taxes and other employee benefits increased $1.7 million or 12.4%, to $15.5 million during the quarter ended December 31, 2025 compared to $13.8 million during the quarter ended December 31, 2024. The increase primarily related to increased commission expense, manager pay expense, bonus expense, and health insurance expense.
  
  
  
  

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.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.

WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
		For The Three Months Ended December 31,								For The Twelve Months Ended December 31,
		2025				2024				2025				2024
		(In Thousands, except per share amounts)
Interest income:
Loans		$	27,175			$	26,391			$	104,753			$	103,066
Mortgage-related securities			1,406				1,136				5,215				4,496
Debt securities, federal funds sold and short-term investments			1,531				1,525				6,140				5,606
Total interest income			30,112				29,052				116,108				113,168
Interest expense:
Deposits			10,693				11,410				43,519				40,573
Borrowings			3,708				4,807				15,855				26,427
Total interest expense			14,401				16,217				59,374				67,000
Net interest income			15,711				12,835				56,734				46,168
Provision (credit) for credit losses			(558	)			367				(1,394	)			(168		)
Net interest income after provision (credit) for loan losses			16,269				12,468				58,128				46,336
Noninterest income:
Service charges on loans and deposits			461				626				2,085				2,060
Increase in cash surrender value of life insurance			540				407				2,561				1,969
Mortgage banking income			20,063				17,365				79,225				83,565
Other			395				607				1,316				1,708
Total noninterest income			21,459				19,005				85,187				89,302
Noninterest expenses:
Compensation, payroll taxes, and other employee benefits			20,917				18,423				79,619				81,078
Occupancy, office furniture, and equipment			1,824				1,579				7,194				7,573
Advertising			696				727				2,877				3,554
Data processing			1,206				1,233				4,941				4,978
Communications			232				224				973				922
Professional fees			219				1,114				2,835				3,184
Real estate owned			(298	)			12				(312	)			26
Loan processing expense			571				486				2,996				3,090
Other			2,310				1,469				8,747				7,231
Total noninterest expenses			27,677				25,267				109,870				111,636
Income before income taxes			10,051				6,206				33,445				24,002
Income tax expense			2,338				996				7,043				5,314
Net income		$	7,713			$	5,210			$	26,402			$	18,688
Income per share:
Basic		$	0.44			$	0.28			$	1.48			$	1.01
Diluted		$	0.44			$	0.28			$	1.48			$	1.01
Weighted average shares outstanding:
Basic			17,466				18,335				17,837				18,556
Diluted			17,507				18,396				17,867				18,589

WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
		December 31,				December 31,
		2025				2024
		(Unaudited)
Assets		(In Thousands, except per share amounts)
Cash		$	63,560			$	35,182
Federal funds sold			7,255				4,302
Interest-earning deposits in other financial institutions and other short-term investments			292				277
Cash and cash equivalents			71,107				39,761
Securities available for sale (at fair value)			230,848				208,549
Loans held for sale (at fair value)			145,057				135,909
Loans receivable			1,675,552				1,680,576
Less: Allowance for credit losses ("ACL") - loans			17,478				18,247
Loans receivable, net			1,658,074				1,662,329
Office properties and equipment, net			18,855				19,389
Federal Home Loan Bank stock (at cost)			19,804				20,295
Cash surrender value of life insurance			77,353				74,612
Real estate owned, net			424				505
Prepaid expenses and other assets			37,985				48,259
Total assets		$	2,259,507			$	2,209,608
Liabilities and Shareholders' Equity
Liabilities:
Demand deposits		$	175,595			$	171,115
Money market and savings deposits			329,031				283,243
Time deposits			932,646				905,539
Total deposits			1,437,272				1,359,897
Borrowings			412,258				446,519
Advance payments by borrowers for taxes			2,996				5,630
Other liabilities			57,589				58,427
Total liabilities			1,910,115				1,870,473
Shareholders' equity:
Preferred stock			-				-
Common stock			184				193
Additional paid-in capital			78,014				91,214
Retained earnings			292,957				277,196
Unearned ESOP shares			(9,496	)			(10,682	)
Accumulated other comprehensive loss, net of taxes			(12,267	)			(18,786	)
Total shareholders' equity			349,392				339,135
Total liabilities and shareholders' equity		$	2,259,507			$	2,209,608
Share Information
Shares outstanding			18,360				19,343
Book value per share		$	19.03			$	17.53

WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES SUMMARY OF KEY QUARTERLY FINANCIAL DATA (Unaudited)
		At or For the Three Months Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
		2025				2025				2025				2025				2024
		(Dollars in Thousands, except per share amounts)
Condensed Results of Operations:
Net interest income		$	15,711			$	14,739			$	13,708			$	12,576			$	12,835
Provision (credit) for credit losses			(558	)			(269	)			(9	)			(558	)			367
Total noninterest income			21,459				22,302				24,329				17,097				19,005
Total noninterest expense			27,677				27,466				28,377				26,350				25,267
Income before income taxes			10,051				9,844				9,669				3,881				6,206
Income tax expense			2,338				1,918				1,942				845				996
Net income		$	7,713			$	7,926			$	7,727			$	3,036			$	5,210
Income per share – basic		$	0.44			$	0.45			$	0.43			$	0.17			$	0.28
Income per share – diluted		$	0.44			$	0.45			$	0.43			$	0.17			$	0.28
Dividends declared per common share		$	0.15			$	0.15			$	0.15			$	0.15			$	0.15
Performance Ratios (annualized):
Return on average assets - QTD			1.35	%			1.42	%			1.39	%			0.57	%			0.94	%
Return on average equity - QTD			8.74	%			9.14	%			9.04	%			3.61	%			6.05	%
Net interest margin - QTD			2.89	%			2.76	%			2.60	%			2.47	%			2.42	%
Return on average assets - YTD			1.19	%			1.13	%			0.99	%			0.57	%			0.84	%
Return on average equity - YTD			7.62	%			7.23	%			6.32	%			3.61	%			5.48	%
Net interest margin - YTD			2.68	%			2.61	%			2.54	%			2.47	%			2.17	%
Asset Quality Ratios:
Past due loans to total loans			0.86	%			0.50	%			0.69	%			0.67	%			0.90	%
Nonaccrual loans to total loans			0.37	%			0.35	%			0.49	%			0.45	%			0.34	%
Nonperforming assets to total assets			0.29	%			0.27	%			0.37	%			0.35	%			0.28	%
Allowance for credit losses - loans to loans receivable			1.04	%			1.03	%			1.07	%			1.08	%			1.09	%

WATERSTONE FINANCIAL, INC. AND SUBSIDIARIES SUMMARY 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,
		2025				2025				2025				2025				2024
Average balances		(Dollars in Thousands)
Interest-earning assets
Loans receivable and held for sale		$	1,842,908			$	1,809,600			$	1,812,065			$	1,768,617			$	1,819,574
Mortgage related securities			180,434				178,063				173,220				170,947				168,521
Debt securities, federal funds sold and short-term investments			133,781				131,165				131,710				123,004				124,658
Total interest-earning assets			2,157,123				2,118,828				2,116,995				2,062,568				2,112,753
Noninterest-earning assets			107,462				103,434				105,382				105,030				100,627
Total assets		$	2,264,585			$	2,222,262			$	2,222,377			$	2,167,598			$	2,213,380
Interest-bearing liabilities
Demand accounts		$	92,292			$	90,015			$	89,548			$	87,393			$	92,247
Money market, savings, and escrow accounts			339,368				334,300				320,908				300,686				306,478
Certificates of deposit - retail			823,586				823,274				830,550				818,612				810,340
Certificates of deposit - brokered			105,496				61,814				72,533				97,101				59,254
Total interest-bearing deposits			1,360,742				1,309,403				1,313,539				1,303,792				1,268,319
Borrowings			419,541				440,968				437,784				397,053				464,964
Total interest-bearing liabilities			1,780,283				1,750,371				1,751,323				1,700,845				1,733,283
Noninterest-bearing demand deposits			89,673				88,799				85,665				80,372				87,889
Noninterest-bearing liabilities			44,688				39,136				42,669				44,905				49,645
Total liabilities			1,914,644				1,878,306				1,879,657				1,826,122				1,870,817
Equity			349,941				343,956				342,720				341,476				342,563
Total liabilities and equity		$	2,264,585			$	2,222,262			$	2,222,377			$	2,167,598			$	2,213,380
Average Yield/Costs (annualized)
Loans receivable and held for sale			5.85	%			5.84	%			5.73	%			5.75	%			5.75	%
Mortgage related securities			3.09	%			3.04	%			2.90	%			2.83	%			2.67	%
Debt securities, federal funds sold and short-term investments			4.54	%			4.74	%			4.74	%			4.90	%			4.85	%
Total interest-earning assets			5.54	%			5.53	%			5.43	%			5.46	%			5.46	%
Demand accounts			0.11	%			0.11	%			0.11	%			0.11	%			0.11	%
Money market and savings accounts			2.09	%			2.04	%			2.07	%			2.10	%			2.00	%
Certificates of deposit – retail			3.78	%			3.92	%			4.11	%			4.33	%			4.53	%
Certificates of deposit - brokered			3.89	%			4.11	%			4.35	%			4.18	%			4.18	%
Total interest-bearing deposits			3.12	%			3.19	%			3.35	%			3.52	%			3.58	%
Borrowings			3.51	%			3.86	%			3.67	%			3.93	%			4.11	%
Total interest-bearing liabilities			3.21	%			3.36	%			3.43	%			3.62	%			3.72	%

COMMUNITY BANKING SEGMENT SUMMARY OF KEY QUARTERLY FINANCIAL DATA (Unaudited)
		At or For the Three Months Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
		2025				2025				2025				2025				2024
		(Dollars in Thousands)
Condensed Results of Operations:
Net interest income		$	15,521			$	14,617			$	13,640			$	12,403			$	12,886
Provision (credit) for credit losses			(518	)			(276	)			(19	)			(518	)			331
Total noninterest income			1,305				1,359				1,686				1,348				1,595
Noninterest expenses:
Compensation, payroll taxes, and other employee benefits			5,646				5,036				5,027				5,212				4,883
Occupancy, office furniture and equipment			1,026				907				920				1,076				825
Advertising			250				213				219				171				204
Data processing			741				733				806				712				691
Communications			103				108				99				100				89
Professional fees			185				200				196				347				196
Real estate owned			(298	)			4				(8	)			(10	)			12
Loan processing expense			-				-				-				-				-
Other			630				617				466				596				563
Total noninterest expense			8,283				7,818				7,725				8,204				7,463
Income before income taxes			9,061				8,434				7,620				6,065				6,687
Income tax expense			2,063				1,518				1,400				1,427				1,399
Net income		$	6,998			$	6,916			$	6,220			$	4,638			$	5,288
Efficiency ratio - QTD (non-GAAP)			49.23	%			48.94	%			50.40	%			59.66	%			51.54	%
Efficiency ratio - YTD (non-GAAP)			51.76	%			52.71	%			54.78	%			59.66	%			59.58	%

MORTGAGE BANKING SEGMENT SUMMARY OF KEY QUARTERLY FINANCIAL DATA (Unaudited)
		At or For the Three Months Ended
		December 31,				September 30,				June 30,				March 31,				December 31,
		2025				2025				2025				2025				2024
		(Dollars in Thousands)
Condensed Results of Operations:
Net interest income (loss)		$	205			$	103			$	53			$	152			$	(92	)
Provision (credit) for credit losses			(40	)			7				10				(40	)			36
Total noninterest income			20,172				20,985				22,643				15,731				17,455
Noninterest expenses:
Compensation, payroll taxes, and other employee benefits			15,489				15,716				16,312				12,054				13,781
Occupancy, office furniture and equipment			798				781				833				853				754
Advertising			446				499				527				552				523
Data processing			465				475				507				498				542
Communications			129				141				158				135				135
Professional fees			33				180				303				1,373				917
Real estate owned			-				-				-				-				-
Loan processing expense			571				688				817				920				486
Other			1,586				1,271				1,230				1,751				814
Total noninterest expense			19,517				19,751				20,687				18,136				17,952
Income (loss) before income taxes expense (benefit)			900				1,330				1,999				(2,213	)			(625	)
Income tax expense (benefit)			244				382				531				(588	)			(428	)
Net income (loss)		$	656			$	948			$	1,468			$	(1,625	)		$	(197	)
Efficiency ratio - QTD (non-GAAP)			95.78	%			93.66	%			91.15	%			114.18	%			103.39	%
Efficiency ratio - YTD (non-GAAP)			97.56	%			98.17	%			100.63	%			114.18	%			97.74	%
Loan originations		$	534,646			$	539,404			$	588,838			$	387,729			$	470,650
Purchase			78.9	%			90.1	%			91.7	%			87.5	%			82.1	%
Refinance			21.1	%			9.9	%			8.3	%			12.5	%			17.9	%
Gross margin on loans sold(1)			3.80	%			3.87	%			3.84	%			3.98	%			3.74	%

⁽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

[email protected]